WARRANT AGREEMENT
WARRANT AGREEMENT dated as of January 31, 1998 between LAMONTS APPAREL,
INC., a corporation duly organized and validly existing under the laws of
Delaware (as reorganized pursuant to Chapter 11, title 11 of the United
States Code) (the "Company") and ________________ ("Holder").
The Company has agreed that upon the effective date of the Plan (as
hereinafter defined) and as specified thereunder it will issue Warrants (as
hereinafter defined) to the holders (including Holder) of options under the
Lamonts Apparel, Inc. 1998 Stock Option Plan (the "Stock Option Plan"),
providing for the purchase of shares of Stock (as hereinafter defined) of the
Company, in the manner hereinafter provided. Accordingly, the parties hereto
agree as follows:
SECTION 1. DEFINITIONS ACCOUNTING TERMS AND DETERMINATIONS. As used
herein:
"AFFILIATE" shall mean, as to any Person, any other Person which
directly or indirectly controls, or is under common control with, or is
controlled by, such Person and, if such Person is an individual, any member
of the immediate family (including parents, spouse and children) of such
individual and any trust whose principal beneficiary is such individual or
one or more members of such immediate family and any Person who is controlled
by any such member or trust. As used in this definition, "CONTROL"
(including, with its correlative meanings, "CONTROLLED BY" and "UNDER COMMON
CONTROL WITH") shall mean possession, directly or indirectly, of the power to
direct or cause the direction of management or policies (whether through
ownership of securities or partnership or other ownership interests, by
contract or otherwise), PROVIDED that, in any event, any Person which owns
directly or indirectly 20% or more of the securities having ordinary voting
power for the election of directors or other governing body of a corporation
or 20% or more of the partnership or other ownership interests of any other
Person will be deemed to control such corporation or other Person.
Notwithstanding the foregoing, (a) no individual shall be deemed to be an
Affiliate of a corporation, solely by reason of his or her being an officer
or director of such corporation, and (b) neither Holder nor any of its
Affiliates shall be deemed to be an Affiliate of the Company.
"BANKRUPTCY COURT" shall mean the United States Bankruptcy Court for the
Western District of Washington at Seattle.
"BOARD" shall mean the Board of Directors of the Company.
"BUSINESS DAY" shall mean any day on which commercial banks are not
authorized or required to close in New York City.
"COMMISSION" shall mean the Securities and Exchange Commission or any
other similar or successor agency of the Federal government administering the
Securities Act and/or the Securities Exchange Act of 1934, as amended from
time to time.
"COMPANY" shall have the meaning set forth at the head of this Agreement.
"CONTROL" shall mean, with respect to any Person, the power to exercise,
directly or indirectly, a controlling influence over the management or
policies of such Person.
"DATE OF ISSUANCE" shall have the meaning assigned to such term in the
form of Warrant Certificate attached as Annex 1 hereto.
"EXPIRATION DATE" shall have the meaning assigned to such term in the
form of Warrant Certificate attached as Annex 1 hereto.
"GOVERNMENTAL AUTHORITY" shall mean any nation or government, any state
or other political subdivision thereof, and any entity exercising executive,
legislative, judicial, regulatory or administrative functions of or
pertaining to government, and any corporation or other entity owned or
controlled (whether through ownership of securities or other ownership
interests, by contract or otherwise) by any of the foregoing.
"HOLDER" shall have the meaning set forth at the head of this Agreement
and each other Person who acquires the original Warrant Certificate or any
Warrant Certificate issued upon transfer, division, combination, partial
exercise of Warrants or in replacement or substitution therefor or who
acquires Warrant Shares pursuant to the provisions of this Agreement.
"INCLUDE" and "INCLUDING" shall be construed as if followed by the
phrase "without being limited to".
"LIEN" shall mean, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of
such asset. For purposes of this Agreement, a Person shall be deemed to own
subject to a Lien any asset which it has acquired or holds subject to the
interest of a vendor or lessor under any conditional sale agreement, capital
lease or other title retention agreement relating to such asset.
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"PERSON" shall mean a corporation, an association, a partnership, a
joint venture, an organization, a business, an individual or a Governmental
Authority.
"PLAN" shall mean the Company's Chapter 11 Plan of Reorganization.
"REGISTRATION RIGHTS AGREEMENT" shall mean the Grant of Registration
Rights of even date herewith between the Company and the other parties
signatory thereto relating to the registration of the Registrable Securities
(as defined therein) under and pursuant to the Securities Act, substantially
in the form attached as Annex 2 hereto, as said Registration Rights Agreement
shall be modified and supplemented and in effect from time to time.
"RESTRICTED SECURITIES" shall mean the Warrants and any Warrant Shares
or other securities which have been issued or are issuable upon the exercise
of such Warrants until such time as any such Restricted Securities (i) have
been sold pursuant to an effective registration statement under the
Securities Act or (ii) are distributed pursuant to Rule 144 (or any similar
provision then in force) under the Securities Act and if it has so requested,
the Company has received an opinion of counsel (either its own counsel or, if
the Company so requests, counsel to the holders of such Restricted
Securities) reasonably acceptable to the Company that such Restricted
Securities may be so transferred without registration or pursuant to an
exemption under the Securities Act, and in each such instance the Company has
delivered new Warrant Certificates not bearing the legend prescribed by
SECTION 2.03 hereof.
"RULE 144" shall mean Rule 144 promulgated by the Commission under the
Securities Act (or any successor or similar rule then in force).
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, or
any similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"STOCK" shall mean the Company's Class A Common Stock, $.01 par value,
and/or any security of any class or preference of the Company which has
either (a) the right to vote with the holders of the common stock of the
Company generally in the election of the board of directors of the Company or
(b) the right to any amounts payable (i) with respect to profits of the
Company or (ii) in the event of any voluntary or involuntary liquidation,
dissolution or winding-up of the Company in each of clauses (i) or (ii) other
than the repayment of the consideration originally paid for such security
together with a fixed or formula-based return on such consideration
consistent with the security's priority of payment.
"STOCK UNIT" shall have the meaning assigned to such term in the Warrant
Certificate.
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"STOCKHOLDER" shall mean any Person (excluding any Holder) who owns any
shares of common or preferred Stock of the Company (or any successor thereto).
"SUBSIDIARY" of any Person shall mean any corporation of which at least
a majority of the outstanding shares of stock having by the terms thereof
ordinary voting power to elect a majority of the board of directors of such
corporation (irrespective of whether or not at the time stock of any other
class or classes of such corporation shall have or might have voting power by
reason of the happening of any contingency) is at the time directly or
indirectly owned or controlled by such Person or one or more of the
Subsidiaries of such Person or by such Person and one or more of the
Subsidiaries of such Person.
"TRANSFER" shall mean, unless the context otherwise requires, any
disposition of any Restricted Securities, or of any interest in any thereof,
which would constitute an offer or sale thereof within the meaning of the
Securities Act.
"WARRANT CERTIFICATE(S)" shall have the meaning assigned to such term in
SECTION 2.01.
"WARRANT(S)" shall have the meaning assigned to such term in SECTION
2.01.
"WARRANT SHARES" shall mean (i) the shares of Stock purchased or
purchasable by the Holders of the Warrants upon the exercise thereof,
including any Stock into which such Stock may thereafter be changed or
converted, and (ii) if required hereunder, any additional shares of Stock
issued or distributed by way of a dividend, stock split or other distribution
in respect of the Stock referred to in clause (i) above, or acquired by way
of any rights offering or similar offering made in respect of the Stock
referred to in clause (i) above.
(c) References herein and in the Warrants to the Stock outstanding "on
a fully diluted basis" at any time shall mean the number of shares of Stock
then issued and outstanding, assuming full conversion, exercise and exchange
of all outstanding warrants, options and rights to purchase Stock, and all
securities of any type that shall be (or may become) exchangeable for, or
exercisable or convertible into Stock, including the Warrants.
(d) Except as otherwise may be expressly provided herein, all
accounting terms used herein shall be interpreted in accordance with
generally accepted accounting principles consistently applied. All
calculations made for the purposes of determining compliance with the terms
of this Agreement and the Warrants shall (except as otherwise may be
expressly provided herein) be made by application of generally accepted
accounting principles consistently applied.
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SECTION 2. ISSUANCE AND EXECUTION OF WARRANTS.
2.01 AUTHORIZATION AND ISSUANCE OF SHARES AND WARRANTS. The Company has
authorized in accordance with the Plan: (a) the issuance of a warrant
certificate substantially in the form of ANNEX 1 to this Agreement ("Warrant
Certificate" or "Warrant Certificates") evidencing warrants to purchase Stock
Units representing shares of Stock (such Warrant Certificate(s), Warrant
Certificates issued upon transfer, partial exercise, division or combination
of, or in substitution or replacement for any Warrant Certificate or the
rights to purchase Stock evidenced by each of the foregoing, is, as the
context requires, sometimes referred to herein as a "Warrant" or "Warrants");
and (b) the issuance of such number of shares of Stock as shall permit the
compliance by the Company with its obligations to issue Stock pursuant to the
Warrants. In addition, the Warrant Certificates may have such letters,
numbers or other marks of identification or designation and such legends,
summaries, or endorsements stamped, printed, lithographed or engraved thereon
as the Company may deem appropriate and as are not inconsistent with the
provisions of this Agreement, or as, in any particular case, may be required
to comply with any law or with any rule or regulation of any regulatory
authority or agency, or to conform to customary usage, provided, however,
that no such change shall be made which affects the duties or obligations of
the Company without the consent of the Company.
2.02 EXECUTION AND DELIVERY OF WARRANT CERTIFICATES. The Warrant
Certificates shall be executed on behalf of the Company by its Chairman or
President or any Vice President and attested to by its Secretary or Assistant
Secretary, either manually or by facsimile signature printed thereon. In
case any authorized officer of the Company who shall have signed any of the
Warrant Certificates shall cease to be such officer of the Company either
before or after delivery thereof by the Company to the Holder, the signature
of such person on such Warrant Certificates shall be valid nevertheless and
such Warrant Certificate may be issued and delivered to the person entitled
to receive the Warrants represented thereby with the same force and effect as
though the person who signed such Warrant Certificates had not ceased to be
such officer of the Company. The Warrant Certificate originally issued to
Holder shall be delivered on the effective date of the Plan. The Company
shall maintain books (the "Warrant Register") for the registration of
Warrants and the registration of transfers of Warrants.
2.03 TRANSFER AND EXCHANGE OF WARRANTS. Subject to the restrictions on
transferability set forth in the Stock Option Plan:
(a) Warrant Certificates evidencing Restricted Securities and only
such Warrant Certificates will bear a legend in substantially the following
form:
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THE WARRANTS EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS
AND CONDITIONS OF THE LAMONTS APPAREL, INC. 1998 STOCK OPTION PLAN
WHICH PROVIDES, AMONG OTHER THINGS, THAT SUCH WARRANTS ARE
NON-TRANSFERABLE.
NEITHER THE EXERCISE OF THE WARRANTS EVIDENCED BY THIS CERTIFICATE
NOR THE ISSUANCE OF SECURITIES ISSUABLE UPON EXERCISE THEREOF HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE,
AND SUCH SECURITIES MAY NOT BE SOLD OR TRANSFERRED UNLESS SUCH
TRANSFER IS PURSUANT TO (i) A REGISTRATION STATEMENT IN EFFECT WITH
RESPECT TO SUCH SECURITIES UNDER THE SECURITIES ACT AND THE RULES
AND REGULATIONS THEREUNDER OR (ii) AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE STATE SECURITIES
LAWS AND IF IT HAS SO REQUESTED, THE COMPANY HAS RECEIVED AN OPINION
OF COUNSEL (EITHER ITS OWN COUNSEL OR, IF THE COMPANY SO REQUESTS,
COUNSEL TO THE HOLDERS OF SUCH SECURITIES) REASONABLY ACCEPTABLE TO
THE COMPANY THAT SUCH SECURITIES MAY BE SO TRANSFERRED.
(b) Following the transfer or exchange of a Restricted Security or
Securities (other than pursuant to an effective registration statement under the
Securities Act) the transferor of such Restricted Security or Securities shall,
upon request of the Company, deliver to the Company an opinion of counsel, in
substance reasonably satisfactory to the Company, to the effect that such
Restricted Security to be issued upon such transfer or exchange may be so issued
without the foregoing legend.
(c) Subject to paragraph (a) above, the Company shall register the
transfer of all or any whole number of Warrants covered by any outstanding
Warrant Certificate in the Warrant Register upon surrender at the Company of
Warrant Certificates accompanied by a written instrument or instruments of
transfer, in form reasonably satisfactory to the Company, duly executed by the
registered Holder or his attorney duly authorized in writing. Upon any such
registration of transfer a new Warrant Certificate shall be issued to the
transferee and the surrendered Warrant Certificate shall promptly be canceled by
the Company. Warrant Certificates may be exchanged at the option of the Holder
thereof, upon surrender, properly endorsed by the registered Holders, at the
Company, with written
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instructions, for other Warrant Certificates evidencing in the aggregate a
like number of Warrants. The Company may require the payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any such exchange or transfer.
2.04 TRANSFER AND EXCHANGE OF WARRANTS. All the restrictions imposed by
this SECTION 2 upon the transferability of the Restricted Securities shall cease
and terminate as to any particular Restricted Security when such Restricted
Security shall have been effectively registered under the Securities Act and
applicable state securities laws and sold by the Holder thereof in accordance
with such registration or sold under and pursuant to Rule 144. Whenever the
restrictions imposed by this SECTION 2 shall terminate as to any Restricted
Security as herein above provided, the Holder thereof shall be entitled to
receive from the Company, without expense (other than any tax or governmental
charge that may be imposed), a new certificate evidencing such Restricted
Security not bearing the restrictive legend otherwise required to be borne by a
certificate evidencing such Restricted Security.
SECTION 3. REPRESENTATIONS AND WARRANTIES. The Company represents and
warrants to the Holders as follows:
3.01 EXISTENCE, QUALIFICATION. The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware.
3.02 NO BREACH. Subject to confirmation by the Bankruptcy Court of the
Plan contemplating and approving the issuance of the Warrants which are the
subject of this Agreement, the execution, delivery and performance of this
Agreement, the Warrants and the Registration Rights Agreement by the Company,
the issuance of the Warrants and the consummation of the transactions
contemplated hereby and thereby will not (a) violate the certificate of
incorporation or by-laws of the Company, (b) violate any loan or credit
agreement to which the Company is a party or is bound, or constitute a breach of
or default under any other instrument or agreement to which the Company is a
party or is bound which is material to the business or properties of the Company
taken as a whole, (c) violate any judgment, order, injunction, decree or award
against or binding upon the Company, (d) result in the creation of any Lien upon
any of the properties or assets of the Company, or (e) violate any law, rule or
regulation relating to the Company except, in each such case as would not have a
material adverse effect on the Company.
3.03 CORPORATE ACTION. Subject to confirmation by the Bankruptcy Court of
the Plan contemplating and approving the issuance of the Warrants which are the
subject of this Agreement, the Company has all necessary corporate power and
authority to execute, deliver and perform its obligations under this Agreement,
the Warrants and the Registration Rights Agreement; the execution, delivery and
performance by the Company of this Agreement, the
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Warrants and the Registration Rights Agreement have been duly authorized by
all necessary corporate action (including all necessary stockholder action)
on the part of the Company; this Agreement has been duly executed and
delivered by the Company and constitutes, and the Registration Rights
Agreement when executed and delivered by the Company will constitute, the
legal, valid and binding obligations of the Company, enforceable against the
Company in accordance with their respective terms, except to the extent that
enforcement thereof may be limited by (a) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to or affecting creditors' rights generally, or (b) general
principles of equity (regardless of whether such enforcement is considered in
a proceeding in equity or at law); the Warrants, when executed, issued and
delivered pursuant to this Agreement will constitute the legal, valid and
binding obligations of the Company, enforceable against the Company in
accordance with their terms, except to the extent that enforcement thereof
may be limited by (a) bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to or affecting
creditors' rights generally, or (b) general principles of equity (regardless
of whether such enforcement is considered in a proceeding in equity or at
law); the Warrant Shares initially covered by the Warrants will be duly and
validly authorized and reserved for issuance and shall, when paid for, issued
and delivered in accordance with the Warrants, be duly and validly issued,
fully paid and nonassessable and free and clear of any Liens; and none of the
Warrant Shares issued pursuant to the terms hereof or the Warrants shall be
in violation of any preemptive rights of any Stockholder.
3.04 APPROVALS. Subject to confirmation by the Bankruptcy Court of the
Company's Plan contemplating and approving the issuance of the Warrants which
are the subject of this Agreement, except as contemplated by the Registration
Rights Agreement, no authorizations, approvals or consents of, and no filings or
registrations with, any Governmental Authority or any other Person which shall
not have been obtained on or prior to the Date of Issuance are necessary for the
execution, delivery or performance by the Company of this Agreement, the
Warrants or the Registration Rights Agreement or for the validity or
enforceability thereof.
3.05 PUBLIC UTILITY HOLDING COMPANY ACT. The Company is not a "holding
company", or an "affiliate" of a "holding company" or a "subsidiary company" of
a "holding company", within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
3.06 CAPITALIZATION. As of the date of issuance of the original Warrants
to Holder, the capitalization of the Company consists solely of common Stock and
options and warrants to acquire common Stock.
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SECTION 4. CERTAIN DISPOSITIONS OF SECURITIES. Notwithstanding anything
in this Agreement (including SECTION 2) or the Warrants to the contrary, but
subject to compliance with the Securities Act and the requirement as to
legending of the certificates for Restricted Securities specified in SECTION
2.03, any Holder shall have the right to transfer any or all of its
Restricted Securities:
(a) to any Person who at the time owns (directly or indirectly) at least a
majority of the shares of such Holder;
(b) to any Person at least a majority of whose shares shall at the time be
owned (directly or indirectly) by such Holder or by any Person who owns
(directly or indirectly) at least a majority of the shares of such Holder; or
(c) to another Holder.
The party to which Restricted Securities are transferred pursuant to the
immediately preceding sentence shall be deemed to be a Holder of such Restricted
Securities and subject to the provisions of this Agreement, and each such
transferee shall execute a Joinder Agreement confirming that such transferee
agrees to be bound by all the provisions of this Agreement applicable to Holders
so long as he, she or it continues to own any of the Restricted Securities so
transferred to such transferee.
SECTION 5. HOLDERS, RIGHTS.
5.01 DELIVERY EXPENSES. If any Holder surrenders any Warrant Certificate
or Warrant Shares to the Company or a transfer agent of the Company for exchange
for instruments of other denominations or registered in another name or names,
the Company shall cause such new instruments to be issued and shall deliver, in
each case at the cost of the Holder, from the office of such Holder from or to
the Company or its transfer agent, the surrendered instrument and any new
instruments issued in substitution or replacement for the surrendered
instrument.
5.02 TAXES. The Company shall pay all taxes (other than federal, state or
local income taxes) which may be payable in connection with the execution and
delivery of this Agreement or the Registration Rights Agreement or the issuance
of the Warrants and Warrant Shares hereunder or in connection with any
modification of this Agreement, the Registration Rights Agreement or the
Warrants and shall hold each Holder harmless without limitation as to time
against any and all liabilities with respect to all such taxes. The Company
shall not, however, be required to pay any tax which may be payable in respect
of any transfer involved in the issue and delivery of shares of Stock in a name
other than that
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in which a Warrant is registered, and no such issue or delivery shall be made
unless and until the Person requesting such issue has paid to the Company the
amount of any such tax, or has established, to the satisfaction of the
Company, that such tax has been paid. The obligations of the Company under
this SECTION 5.02 shall survive any termination of this Agreement or the
Registration Rights Agreement, and any cancellation or termination of the
Warrants.
5.03 REPLACEMENT OF INSTRUMENTS. Upon receipt by the Company of evidence
reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any certificate or instrument evidencing any
Warrants or Warrant Shares, and
(a) in the case of loss, theft or destruction, of indemnity reasonably
satisfactory to it, or
(b) in the case of mutilation, upon surrender or cancellation, thereof,
the Company, at the Holder's expense, shall execute, register and deliver, in
lieu thereof, a new certificate or instrument for (or evidencing the right to
purchase) an equal number of Warrants or Warrant Shares.
5.04 CERTAIN RESTRICTIONS. The Company shall not at any time enter into an
agreement or other instrument, and has not entered into an agreement currently
in effect, making performance hereunder or the issuance of shares of Stock upon
the exercise of any Warrant a default under any such agreement or instrument.
5.05 INDEMNIFICATION. Each party hereto hereby irrevocably indemnifies the
other and saves it harmless against any and all reasonable out of pocket losses,
expenses or liabilities, including judgments, costs and reasonable counsel fees
and expenses arising out of or in connection with a breach of this Agreement,
except as a direct result of the gross negligence, bad faith or willful
misconduct of such other party.
SECTION 6. MISCELLANEOUS.
6.01 WAIVER. No failure on the part of any Holder to exercise and no delay
in exercising, and no course of dealing with respect to, any right, power or
privilege under this Agreement, the Warrants or the Registration Rights
Agreement shall operate as a waiver thereof, nor shall any single or partial
exercise of any right, power or privilege under this Agreement, the Warrants or
the Registration Rights Agreement preclude any other or further exercise thereof
or the exercise of any other right, power or privilege. The remedies provided
herein are cumulative and not exclusive of any remedies provided by law.
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6.02 NOTICES.
(a) All notices, requests and other communications provided for herein and
in the Warrants (including any waivers or consents under, this Agreement and the
Warrants) shall be given or made in writing,
(i) if to the Company:
Lamonts Apparel, Inc.
00000 Xxxxxxx Xxxx X.X.
Xxxxxxxx, XX 00000
Attention: Xx. Xxxxxx Xxxxxxxxxx
with a copy to:
Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Attention: Xxxxxxx X. Xxxxxxxx, Esq.
(ii) if to Holder:
________________
________________
________________
________________
(iii) if to any other person who is the registered Holder of any
Warrants or Warrant Shares, to the address for such Holder as it appears in
the stock or warrant ledger of the Company; or, in the case of any Holder, at
such other address as shall be designated by such party in a notice to the
Company; or, in the case of the Company, at such other address as the Company
may designate in a notice to the Holders.
(b) All such notices, requests and other communications shall be: (i)
personally delivered, sent by courier guaranteeing overnight delivery or sent
by registered or certified mail, return receipt requested, postage prepaid,
in each case given or addressed as aforesaid; and (ii) effective upon receipt.
6.03 EXPENSES, ETC. The Company agrees to pay or reimburse the Holders for
all reasonable out-of-pocket costs and expenses of the Holders (including the
reasonable fees
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and expenses of Goulston & Storrs, special Boston counsel to Holder, and
other reasonable legal fees and expenses), in connection with this Agreement
but only to the extent provided in the Amended Loan Agreement.
6.04 AMENDMENTS, ETC. Any provision of this Agreement may be amended or
modified only by an instrument in writing signed by (a) the Company and (b) the
Holders of at least a majority of the Warrant Shares issued or issuable upon
exercise of the Warrants; PROVIDED, HOWEVER, that no such amendment or waiver
shall, without the written consent of all Holders of such shares and Warrants at
the time outstanding, amend this SECTION 6.04.
6.05 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
permitted assigns.
6.06 SURVIVAL.
(a) All representations and warranties made by the Company herein or in
any certificate or other instrument delivered by it or on its behalf under this
Agreement or the Registration Rights Agreement shall be considered to have been
relied upon by each Holder and shall survive the issuance of the Warrants or the
Warrant Shares regardless of any investigation made by or on behalf of any
Holder. All statements in any such certificate or other instrument so delivered
shall constitute representations and warranties by the Company hereunder.
(b) All representations and warranties made by the Holders herein shall be
considered to have been relied upon by the Company and shall survive the
issuance to the Holders of the Warrants or the Warrant Shares regardless of any
investigation made by the Company or on its behalf.
6.07 CAPTIONS. The captions and section headings appearing herein are
included solely for convenience of reference and are not intended to affect the
interpretation of any provision of this Agreement.
6.08 COUNTERPARTS. This Agreement may be executed on counterpart signature
pages or in any number of counterparts, all of which taken together shall
constitute one and the same instrument and any of the parties hereto may execute
this Agreement by signing any such counterpart signature page or counterpart.
6.09 GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the law of the State of New York applicable to contracts
executed in and to be fully performed in such State.
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6.10 SEVERABILITY. If any one or more of the provisions contained herein,
or the application thereof in any circumstance, is held invalid, illegal or
unenforceable, the validity, legality and enforceability of any such provision
in every other respect and of the remaining provisions contained herein shall
not be affected or impaired thereby.
6.11 DEFECTS IN NOTICE. Failure to file any certificate or notice or to
mail any notice, or any defect in any certificate or notice pursuant to this
Agreement shall not affect in any way the rights of any registered Holder of a
Warrant Certificate or the legality or validity of any adjustment made pursuant
to the provisions of the Warrant, or any transaction giving rise to any such
adjustment, or the legality or validity of any action taken or to be taken by
the Company.
6.12 INCORPORATION OF STOCK OPTION PLAN. The Stock Option Plan and the
Employee Non-Qualified Stock Option Agreement of even date herewith (the
"Stock Option Agreement") between the Company and the Holder are hereby
incorporated by reference and made a part hereof, and the Warrants and this
Warrant Agreement are subject to all terms and conditions of the Stock Option
Plan and the Stock Option Agreement, including, without limitation, terms
relating to vesting set forth on Exhibit A to the Stock Option Plan. To the
extent any term or condition set forth in this Agreement is inconsistent with
any term or condition in the Stock Option Plan or the Stock Option Agreement,
the terms and conditions of the Stock Option Plan or the Stock Option
Agreement, as the case may be, shall govern.
SECTION 7. OPTION FOR BINDING ARBITRATION.
At the sole and exclusive option of the Holders (from time to time) of a
majority of the Warrant Shares issued or issuable upon exercise of the Warrants,
exercised by written notice to the Company, any dispute arising out of or
relating to this Agreement shall be finally settled by arbitration pursuant to
the JAMS/ENDISPUTE Comprehensive Arbitrators Rules and Procedures then in effect
(the "Rules"), as modified by this SECTION 7. Within fifteen (15) Business Days
following such written request by such majority Holders to submit a dispute to
arbitration, the parties shall select a retired judge or other neutral third
party mutually acceptable to the parties to serve as the sole arbitrator of the
dispute. In the event the parties are unable to select a mutually acceptable
arbitrator within such fifteen day period, the JAMS/ENDISPUTE administrator (the
"Administrator") shall select the arbitrator. Each arbitrator selected
hereunder will disclose to each party any conflict of interest or potential
conflict of interest and, if any such conflict or potential conflict exists, the
Administrator shall, unless otherwise agreed to by the parties, select a
different arbitrator. The parties (including without limitation all Holders who
are parties to such arbitration) will be bound by the arbitrator's
determination(s), which will constitute a final, binding and
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non-appealable adjudication on the merits. The arbitration shall be
conducted in the Commonwealth of Massachusetts at a location to be determined
by the arbitrator. The prevailing party(ies) in any arbitration hereunder
will be entitled to recover all costs, including reasonable attorneys' fees,
charges and disbursements from the opposing party(ies). Judgment on any
arbitration award may be entered in any court having jurisdiction. It is the
intent of the parties that the arbitration be conducted and the dispute
resolved in as expeditious a manner as reasonably possible consistent with
the Rules.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Warrant
Agreement as of the date first above written.
LAMONTS APPAREL, INC.
By____________________________________
Name:
Title:
______________________________________
[Holder]
15
Annex 1
to
Warrant Agreement
[Form of Warrant Certificate]
WARRANT CERTIFICATE
THE WARRANTS EVIDENCED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND
CONDITIONS OF THE LAMONTS APPAREL, INC. 1998 STOCK OPTION PLAN WHICH
PROVIDES, AMONG OTHER THINGS, THAT SUCH WARRANTS ARE NON-TRANSFERABLE.
NEITHER THE EXERCISE OF THE WARRANTS EVIDENCED BY THIS CERTIFICATE NOR
THE ISSUANCE OF SECURITIES ISSUABLE UPON EXERCISE THEREOF HAVE BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR PURSUANT TO THE SECURITIES LAWS OF ANY STATE, AND SUCH SECURITIES
MAY NOT BE SOLD OR TRANSFERRED UNLESS SUCH TRANSFER IS PURSUANT TO (i) A
REGISTRATION STATEMENT IN EFFECT WITH RESPECT TO SUCH SECURITIES UNDER THE
SECURITIES ACT AND THE RULES AND REGULATIONS THEREUNDER OR (ii) AN EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND ANY APPLICABLE
STATE SECURITIES LAWS AND IF IT HAS SO REQUESTED, THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL (EITHER ITS OWN COUNSEL OR, IF THE COMPANY SO REQUESTS,
COUNSEL TO THE HOLDERS OF SUCH SECURITIES) REASONABLY ACCEPTABLE TO THE
COMPANY THAT SUCH SECURITIES MAY BE SO TRANSFERRED.
No. of Warrants: _____ Warrant Certificate No. __
WARRANT CERTIFICATE
to Purchase Stock of
LAMONTS APPAREL, INC.
Expiring as set forth in the first paragraph hereof
i
THIS IS TO CERTIFY THAT ________________ or his assigns, is the holder
of the above number of Warrants. Each such Warrant entitles the holder
thereof to purchase from time to time from LAMONTS APPAREL, INC., a Delaware
corporation (the "Company") on the terms of this Warrant Certificate, (i) at
any time on or after the Date of Issuance, but not later than 5:00 p.m., New
York time, on January 31, 2002 (the "Stock Unit Expiration Date"), 14 Stock
Units (as hereinafter defined and subject to adjustment as provided herein)
at a purchase price of $1.25 per Stock Unit (the "Stock Unit Exercise Price")
and (ii) at any time on or after the first date on which the Aggregate Equity
Trading Value equals or exceeds $25 million, but not later than 5:00 p.m.,
New York time, on January 31, 2008 (the "Adjustment Unit Expiration Date"), 1
Stock Unit at a purchase price of $.01 per Stock Unit (the "Adjustment Unit
Exercise Price"); provided that the portion of each Warrant described in this
clause (ii) shall not be exercisable unless and until the portion of such
Warrant described in clause (i) above shall have been exercised in full, in
each case subject to the terms and conditions hereinbelow provided.
SECTION 1. CERTAIN DEFINITIONS. (a) Each capitalized term used herein
without definition shall have the meaning assigned thereto (or incorporated
by reference) in the Warrant Agreement (as hereinafter defined).
(b) As used in this Warrant Certificate, unless the context otherwise
required:
"ADDITIONAL STOCK" shall mean all shares of Stock issued by the Company
on or after the Date of Issuance and all shares of Stock issuable by the
Company after the Date of Issuance on conversion or exercise of other rights
under Convertible Securities, other than, in each case, Excluded Securities.
For purposes hereof Excluded Securities means:
(i) the original Warrant Shares and any additional Warrant Shares
or Convertible Securities (including shares issuable upon exercise thereof)
issuable or issued upon exercise of the Warrants;
(ii) the Class A Warrants and the Class B Warrants and any shares
of Stock issuable or issued upon the exercise thereof (including, following
any adjustments required under the terms of such warrants, any additional
Class A Warrants or Class B Warrants or shares of Stock issuable or issued
upon the exercise thereof);
(iii) the Gordian Warrants and any shares of Stock issuable or
issued upon the exercise thereof (including, following any adjustments
required under the terms of such warrants, any additional Gordian Warrants or
shares of Stock issuable or issued upon the exercise thereof);
ii
(iv) up to 1,708,729 shares of Stock issuable pursuant to the
Company's 1998 Stock Option Plan (as such number may be adjusted by reason of
transactions of the type described in SECTION 4.01);
(v) up to 9,000,000 shares of Stock issued and outstanding on the
Date of Issuance;
(vi) Stock or Convertible Securities (including shares issuable
upon exercise or conversion of Convertible Securities) issued in any
transaction for which an adjustment is otherwise made (or not required to be
made) pursuant to the terms hereof; and/or
(vii) shares of Stock issued in a bona fide registered public
offering.
"AGGREGATE EQUITY TRADING VALUE" means, as of any date, the product of
(a) the Fair Market Value per share of Stock, and (b) the total number of
issued and outstanding shares of Stock as of such date (assuming for purposes
of determining such number of shares the exercise in full of all in the money
options outstanding on such date to purchase shares of Stock and the exercise
of all Class B Warrants which are exercisable as of such date).
"CLASS A WARRANTS" means the Class A Warrants issued by the Company
pursuant to the Company's Plan of Reorganization.
"CLASS B WARRANTS" means the Class B Warrants issued by the Company
pursuant to the Company's Plan of Reorganization.
"CLOSING PRICE" means, for any date, the last sale price reported in the
WALL STREET JOURNAL or other trade publication regular way or, in case no
such reported sale takes place on such date, the average of the last reported
bid and asked prices regular way, in either case on the principal national
securities exchange on which the Stock is listed if that is the principal
market for the Stock or, if not listed on any national securities exchange or
if such national securities exchange is not the principal market for the
Stock, the average of the closing high bid and low asked prices as reported
by the National Association of Securities Dealers, Inc. Automated Quotation
System or its successor, if any, or if the Stock is not so reported, as
furnished by the National Quotation Bureau, Inc., or if such firm is not then
engaged in the business of reporting such prices, as furnished by any similar
firm then engaged in such business and selected by the Company or, if there
is no such firm, as furnished by any NASD member selected by the Company.
"COMPANY" shall have the meaning set forth at the head of this Warrant
Certificate.
iii
"CONVERTIBLE SECURITIES" shall mean evidences of indebtedness, shares of
Stock or other securities which are convertible or exercisable into or
exchangeable for shares of Additional Stock, either immediately or upon the
arrival of a specified date or the happening of a specified event.
"DATE OF ISSUANCE" shall mean January 31, 1998.
"EXERCISE PRICE" shall mean the Stock Unit Exercise Price or the
Adjustment Unit Exercise Price, as the case may be.
"EXPIRATION DATE" shall mean the Stock Unit Expiration Date or the
Adjustment Unit Expiration Date, as the case may be.
"FAIR MARKET VALUE" of shares of Stock shall mean (a) if the Stock is
listed on a national securities exchange or quoted on a national quotation
system, the average of the daily Closing Prices of the Stock for the five (5)
trading days immediately preceding the date of exercise or the sale date
under SECTION 4, as applicable, or (b) if the Stock is not so listed or
quoted, the fair market value thereof as determined in good faith by the
Company's Board of Directors.
"GORDIAN WARRANTS" means those certain warrants exercisable for Stock
having a value not to exceed $200,000 (based on the Normalized Share Price as
set forth in such warrants), issued by the Company to Gordian Group, L.P.
pursuant to the Company's Plan of Reorganization.
"INCLUDE" and "INCLUDING" shall be construed as if followed by the
phrase "without being limited to,".
"STOCK UNIT" shall mean one share of Stock, as such Stock was
constituted on the Date of Issuance, and thereafter shall mean such number of
shares (excluding fractional shares) of Stock and other securities, cash or
other property as shall result from the adjustments specified in SECTION 4
and SECTION 5.
"WARRANT AGREEMENT" shall mean the Warrant Agreement dated as of January
31, 1998, between the Company and the initial holder of the Warrants
evidenced by this Warrant Certificate, as such Warrant Agreement shall be
modified and supplemented and in effect from time to time.
iv
"WARRANTS" shall mean: (i) the Warrants evidenced by this Warrant
Certificate originally issued by the Company pursuant to the Warrant Agreement
on the Date of Issuance, (ii) the additional New Class C Warrants (as defined in
and issued in accordance with the Plan) and (iii) all Warrants issued upon
transfer, division or combination of, or in substitution or replacement for, any
Warrants described in clause (i) or (ii).
(c) References in this Warrant Certificate to the Stock outstanding "on a
fully diluted basis" at any time shall mean the number of shares of Stock then
issued and outstanding, assuming full conversion, exercise and exchange of all
warrants, options and rights to purchase such Stock and all securities of any
type that shall be (or may become) exchangeable for, or exercisable or
convertible into, such Stock, including the Warrants.
SECTION 2. EXERCISE AND ISSUANCE.
2.01 EXERCISE OF WARRANTS. To exercise some or all or the Warrants
evidenced by this Warrant Certificate, in whole or in part, the Holder hereof
shall deliver to the Company, at its office maintained for such purpose pursuant
to SECTION 11.01, (a) a written notice of such Holder's election to exercise
Warrants (or any portion thereof), which notice shall specify the number of
Warrants being exercised and the number of Stock Units to be purchased pursuant
to such exercise, (b) a certified or bank check or checks payable to the Company
in an aggregate amount equal to the aggregate applicable Exercise Price for the
number of Stock Units specified in clause (a) above or a written request from
the Holder that the exercise be made pursuant to the provisions of SECTION 2.02,
and (c) this Warrant Certificate. Such notice may be in substantially the form
of exercise set out at the end of this Warrant Certificate. Upon receipt
thereof, the Company shall, as promptly as practicable and in any event within
10 Business Days thereafter, cause to be executed and delivered to such Holder a
stock certificate or certificates representing the aggregate number of duly and
validly issued, fully paid and nonassessable Warrant Shares issuable upon such
exercise, free and clear of any Liens. Notwithstanding anything herein to the
contrary, any partial exercise of a Warrant shall conform to the provisions of
the proviso at the end of the first paragraph of this Warrant Certificate.
2.02 OPTIONAL EXERCISE. In addition to and without limiting the rights of
the Holder hereof under the terms of this Warrant Certificate and the Warrant
Agreement, the Holder may exercise some or all of the Warrants evidenced by this
Warrant Certificate in whole or in part at any time or from time to time prior
to its expiration for some or all of a number of shares of Stock of the Company
having an aggregate Fair Market Value on the date of such exercise equal to the
amount by which (a) the Fair Market Value of the number of shares of such Stock
designated for exercise by the Holder hereof on the date of the exercise exceeds
(b) the aggregate applicable Exercise Price for such shares in effect at such
time. The
v
following equations illustrate how many shares of Stock would then be
issued upon exercise pursuant to this SECTION 2.02 with respect to Stock as to
which the Holder has elected the option under this SECTION 2.02:
Let FMV = Fair Market Value per share of Stock at date of exercise.
PSP = Per share applicable Exercise Price at date of exercise.
N = Number of shares of Stock desired to be exercised.
X = Number of shares of Stock issued upon exercise.
X = (FMV)(N)-(PSP)(N)
-----------------
FMV
No payment of any cash or other consideration to the Company shall be required
from the Holder in connection with any optional exercise of the Warrants
evidenced by this Warrant Certificate pursuant to this SECTION 2.02. Such
exercise shall be effective upon the date of receipt by the Company of the
original of this Warrant Certificate surrendered for cancellation and a written
request from the Holder hereof that the exercise pursuant to this section be
made, or at such later date as may be specified in such request.
2.03 ISSUANCE. The stock certificate or certificates for Warrant Shares so
delivered shall be in such denominations as may be specified in such notice and
shall be registered in the name of such Holder or such other name or names as
shall be designated in such notice. Such stock certificate or certificates
shall be deemed to have been issued and such Holder or any other Person so
designated to be named therein shall be deemed to have become a holder of record
of such shares, including to the extent permitted by law the right to vote such
shares or to consent or to receive notice as a stockholder, as of the time such
notice and payment is received by the Company as aforesaid. If less than all of
the Warrants evidenced by this Warrant Certificate shall have been exercised or
any Warrant shall have been exercised only in part, the Company shall, at the
time of delivery of said stock certificate or certificates, execute and deliver
to such Holder a new Warrant Certificate, dated the Date of Issuance, evidencing
the balance of the Warrants (and/or portion of Warrants) held by such Holder
following such partial exercise and the rights of such Holder to purchase the
remaining Stock Units called for by this Warrant Certificate, which new Warrant
Certificate shall in all other respects be identical with this Warrant
Certificate, or, at the request of such Holder, appropriate notation may be made
on this Warrant Certificate and the same returned to such Holder.
All shares of Stock issuable upon the exercise of the Warrants evidenced
hereby shall, upon payment therefor in accordance herewith, be duly and validly
issued, fully paid and nonassessable and free and clear of any Liens.
vi
The Company shall not issue fractional shares of Stock upon any exercise
of the Warrants evidenced by this Warrant Certificate.
Notwithstanding anything herein to the contrary, the Company shall not be
obligated to issue any shares of Stock to the extent such issuance is otherwise
prohibited by law, including federal or state securities law, but the Company
shall use all best efforts to effect such issuance.
SECTION 3. TRANSFER, DIVISION AND COMBINATION. Subject to SECTION 11.04,
this Warrant Certificate, the Warrants evidenced hereby and all rights hereunder
are transferable, in whole or in part, on the books of the Company to be
maintained for such purpose, upon surrender of this Warrant Certificate at the
office of the Company maintained for such purpose pursuant to SECTION 11.01,
together with a written assignment of this Warrant Certificate (in substantially
the form annexed hereto) duly executed by the Holder hereof or its agent or
attorney and payment of funds sufficient to pay any stock transfer taxes payable
hereunder by the Holder hereof upon the making of such transfer. Upon such
surrender and payment the Company shall, subject to SECTION 11.04 and the
immediately following sentence, execute and deliver one or more new Warrant
Certificates in the name of the assignee or assignees and in the denominations
specified in such instrument of assignment, and this Warrant Certificate shall
promptly be canceled. If and when this Warrant Certificate is assigned in blank
(in case the restrictions on transferability referred to in SECTION 11.04 shall
have been terminated), the Company may (but shall not be obliged to) treat the
bearer hereof as the absolute owner of this Warrant Certificate for all purposes
and the Company shall not be affected by any notice to the contrary. This
Warrant Certificate, if properly assigned in compliance with this SECTION 3 and
SECTION 11.04, may be exercised by an assignee for the purchase of shares of
Stock without having a new Warrant Certificate or Warrants issued. Each
assignee, by accepting a new Warrant Certificate issued to such assignee or this
Warrant Certificate assigned in blank, agrees to be bound by the restrictions on
the transferability of the Warrants evidenced hereby set forth in this Warrant
Certificate and the Warrant Agreement, and each such assignee shall execute a
Joinder Agreement in the form attached hereto confirming that such assignee
agrees to be bound by all the provisions of this Warrant Certificate and the
Warrant Agreement applicable to Holders so long as he, she or it continues to
own any of the Warrants or Warrant Shares, as the case may be, so transferred to
such assignee.
The Warrants evidenced hereby may, subject to SECTION 11.04, be divided or
combined with other Warrants upon presentation of this Warrant Certificate at
the aforesaid office of the Company, together with a written notice specifying
the names and denominations in which new Warrants are to be issued, signed by
the Holder hereof or its authorized agent or attorney. Subject to compliance
with the next preceding paragraph and
vii
with SECTION 11.04, as to any transfer which may be involved in such division
or combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or combined in
accordance with such notice.
The Company shall maintain at its aforesaid office books for the
registration and transfer of the Warrants.
SECTION 4. ADJUSTMENTS.
4.01 STOCK DIVIDENDS, SUBDIVISIONS AND COMBINATIONS. In case at any time
or from time to time the Company shall
(1) take a record of the holders of its Stock for the purpose of
entitling them to receive a dividend payable in, or other distribution of,
Stock, or
(2) subdivide its outstanding shares of Stock into a larger number
of shares of Stock, or
(3) combine its outstanding shares of Stock into a smaller number
of shares of Stock,
then the number of shares of Stock comprising a Stock Unit or otherwise issuable
upon the exercise of the Warrants evidenced by this Warrant Certificate,
immediately after the happening of any such event shall be adjusted so as to
consist of the number of shares of Stock which a record holder of the number of
shares of Stock for which all Warrants evidenced by this Warrant Certificate are
exercisable immediately prior to the happening of such event would own or be
entitled to receive after the happening of such event.
4.02 ISSUANCE OF ADDITIONAL COMMON STOCK. In case at any time or from time
to time the Company shall (except as hereinafter provided) issue to any Person
any Additional Stock which is common Stock (or Convertible Securities
convertible into common Stock) for a consideration per share of such common
Stock (or which would produce consideration per share of such common Stock on
conversion of, or exercise of rights under, such Convertible Securities) which
is less than (a) with respect to any issuance incident to the consolidation or
merger of the Company with, or the sale, lease or transfer of all or
substantially all the Company's assets to the party identified in that certain
letter dated as of September 26, 1997 between the Company and Specialty
Investment I LLC (or in connection with a financing related to any such
transaction), the Fair Market Value of a share of common Stock, and (b) with
respect to any other such issuance, (i) on or prior to the first date on which
the Aggregate Equity Trading Value equals or exceeds $20 million, the greater
viii
of the Exercise Price or the Fair Market Value of a share of common Stock or
(ii) after the first date on which the Aggregate Equity Trading Value equals
or exceeds $20 million, the Fair Market Value of a share of common Stock,
then the number of shares of common Stock comprising a Stock Unit shall be
increased to that number determined by multiplying the number of shares of
common Stock comprising a Stock Unit immediately prior to such adjustment by
a fraction (a) the numerator of which shall be the total number of shares of
common Stock outstanding (on a fully-diluted basis) immediately prior to the
issuance of such Additional Stock plus the number of such shares of such
common Additional Stock (assuming conversion or exercise of such Additional
Stock if such Additional Stock is Convertible Securities), and (b) the
denominator of which shall be the number of shares of such common Stock
outstanding (on a fully-diluted basis) immediately prior to the issuance of
such Additional Stock PLUS the number of shares of common Stock which could
be purchased with the aggregate consideration paid for such common Additional
Stock at an assumed price per share equal to (i) on or prior to the first
date on which the Aggregate Equity Trading Value equals or exceeds $20
million, the greater of the Exercise Price or the Fair Market Value of a
share of common Stock or (ii) after the first date on which the Aggregate
Equity Trading Value equals or exceeds $20 million, the Fair Market Value of
a share of common Stock. For purposes of this SECTION 4.02, such calculation
shall be made on the date of actual issuance of such Additional Stock. No
adjustment of the number of shares of common Stock comprising a Stock Unit
shall be made under this SECTION 4.02 upon the issuance of any Additional
Stock which is issued pursuant to the exercise of any options, warrants or
other subscription or purchase rights or pursuant to the exercise of any
conversion or exchange rights in any Convertible Securities, if any such
adjustment shall previously have been made upon the issuance of such options,
warrants or other rights or upon the issuance of such Convertible Securities
(or upon the issuance of any option, warrant or other rights therefor).
4.03 ISSUANCE OF ADDITIONAL STOCK OTHER THAN COMMON STOCK. In case at
any time or from time to time the Company shall (except as hereinafter provided)
issue to any Person any Additional Stock which is not subject to adjustment
under SECTION 4.02 (and other than in connection with an adjustment under
Section 4.01) for a consideration per share which is less than the Fair Market
Value of such Stock, then the number of shares of common Stock comprising a
Stock Unit shall be increased to that number determined by multiplying the
number of shares of common Stock comprising a Stock Unit immediately prior to
such adjustment by a fraction (a) the numerator of which shall be the total
number of shares of common Stock outstanding (on a fully-diluted basis)
immediately prior to the issuance of such Additional Stock MULTIPLIED BY the
Fair Market Value per share of common Stock immediately prior to the issuance of
such Additional Stock and (b) the denominator of which shall be (i) the total
number of shares of such common Stock outstanding (on a fully-diluted basis)
immediately prior to the issuance of such common Additional Stock MULTIPLIED BY
ix
such Fair Market Value per share LESS (ii) the aggregate Fair Market Value of
the Additional Stock so issued LESS the aggregate consideration received by the
Company for such Additional Stock. For purposes of this SECTION 4.03, such
calculation shall be made on the date of actual issuance of such Additional
Stock. No adjustment of the number of shares of common Stock comprising a Stock
Unit shall be made under this SECTION 4.03 upon the issuance of any Additional
Stock which is issued pursuant to the exercise of any options, warrants or other
subscription or purchase rights or pursuant to the exercise of any conversion or
exchange rights in any Convertible Securities, if any such adjustment shall
previously have been made upon the issuance of such options, warrants or other
rights or upon the issuance of such Convertible Securities (or upon the issuance
of any option, warrant or other rights therefor).
4.04 SUPERSEDING ADJUSTMENT OF STOCK UNIT. If, at any time after any
adjustment of the number of shares of Stock comprising a Stock Unit shall have
been made hereunder on the basis of the issuance of options, warrants or other
rights or the issuance of other Convertible Securities, or after any new
adjustment of the number of shares comprising a Stock Unit shall have been made
pursuant to this SECTION 4.04,
(1) such options, warrants or rights or the right of conversion or
exchange in such other Convertible Securities shall expire, and a portion
of such options, warrants or rights, or the right of conversion, exercise
or exchange in respect of a portion of such other Convertible Securities,
as the case may be, shall not have been exercised, or
(2) the consideration per share, for which shares of Additional Stock
are issuable pursuant to such options, warrants or rights or the terms of
such other Convertible Securities, shall be increased,
such previous adjustment shall be rescinded and annulled and the shares of
Additional Stock which were deemed to have been issued by virtue of the
computation made in connection with the adjustment so rescinded and annulled
shall no longer be deemed to have been issued by virtue of such computation.
Thereupon, a recomputation shall be made on the basis of
(3) treating the number of shares of Additional Stock, if any,
theretofore actually issued or issuable pursuant to the previous exercise
of such options, warrants or rights or such right of conversion or
exchange, as having been issued on the date or dates of such issuance as
determined for purposes of such previous adjustment and for the
consideration actually received and receivable therefor, and
x
(4) treating any such options, warrants or rights or any such
other Convertible Securities which then remain outstanding as having been
granted or issued immediately after the time of such increase of the
consideration per share for such shares of Stock as are issuable under such
options, warrants or rights or other Convertible Securities,
and, if and to the extent called for by the foregoing provisions of this
SECTION 4 on the basis aforesaid, a new adjustment of the number of shares
comprising a Stock Unit shall be made, which new adjustment shall supersede the
previous adjustment so rescinded and annulled.
4.05 OTHER PROVISIONS APPLICABLE TO ADJUSTMENTS UNDER THIS SECTION 4. The
following provisions shall be applicable to the making of adjustments of the
number of shares of Stock comprising a Stock Unit hereinbefore provided for in
this SECTION 4:
(1) TREASURY STOCK. The sale or other disposition of any issued
shares of Stock owned or held by or for the account of the Company shall be
deemed an issuance thereof for purposes of this SECTION 4.
(2) COMPUTATION OF CONSIDERATION. To the extent that any shares of
Additional Stock or any options, warrants or other rights to subscribe for
or purchase any shares of Additional Stock or any Convertible Securities
shall be issued for a cash consideration, the consideration received by the
Company therefor shall be deemed to be the amount of cash received by the
Company therefor, or, if such shares of Additional Stock or Convertible
Securities are offered by the Company for subscription, the subscription
price, or, if such shares of Additional Stock or Convertible Securities are
sold to underwriters or dealers for public offering without a subscription
offering, the initial public offering price, in any such case excluding any
amounts paid or receivable for accrued interest or accrued dividends and
without deduction of any compensation, discounts or expenses paid or
incurred by the Company for and in the underwriting of, or otherwise in
connection with, the issue thereof. To the extent that such issuance shall
be for a consideration other than cash, then, except as herein otherwise
expressly provided, the amount of such consideration shall be deemed to be
the fair value of such consideration at the time of such issuance as
determined in good faith by the Board of Directors of the Company. The
consideration for any shares of Additional Stock issuable pursuant to any
options, warrants or other rights to subscribe for or purchase the same
shall be the consideration received or receivable by the Company for
issuing such options, warrants or other rights, plus the additional
consideration payable to the Company upon the exercise of such options,
warrants or other rights. The consideration for any shares of Additional
Stock issuable pursuant to the terms of any Convertible
xi
Securities shall be the consideration received or receivable by the Company
for issuing any options, warrants or other rights to subscribe for or
purchase such Convertible Securities, plus the consideration paid or
payable to the Company in respect of the subscription for or purchase of
such Convertible Securities, plus the additional consideration, if any,
payable to the Company upon the exercise of the right of conversion,
exercise or exchange in such Convertible Securities. In case of the
issuance at any time of any shares of Additional Stock or Convertible
Securities in payment or satisfaction of any dividend upon any class of
stock other than common stock, the Company shall be deemed to have received
for such shares of Additional Stock or Convertible Securities a
consideration equal to the amount of such dividend so paid or satisfied.
(3) WHEN ADJUSTMENTS TO BE MADE. The adjustments required by the
foregoing provisions of this SECTION 4 shall be made whenever and as often
as any specified event requiring an adjustment shall occur. For the
purpose of any adjustment, any specified event shall be deemed to have
occurred at the close of business on the date of its occurrence.
(4) FRACTIONAL INTERESTS. In computing adjustments under this
SECTION 4, the Company shall not be required upon the exercise of Warrants
evidenced by this Warrant Certificate to issue fractional Warrant Shares
(it being agreed that the number of Warrant Shares issuable upon any such
exercise shall be rounded to the nearest whole number).
(5) WHEN ADJUSTMENT NOT REQUIRED. If the Company shall take a record
of the holders of its Stock for the purpose of entitling them to receive a
dividend or distribution or subscription or purchase rights and shall,
thereafter and before the distribution thereof to stockholders, legally
abandon its plan to pay or deliver such dividend, distribution,
subscription or purchase rights, then thereafter no adjustment shall be
required by reason of the taking of such record and any such adjustment
previously made in respect thereof shall be rescinded and annulled.
SECTION 5. CONSOLIDATION, MERGER, ETC.
5.01 CONSOLIDATION, MERGER, ETC. In case a consolidation or merger of the
Company shall be effected with another Person on or after the Date of Issuance,
or the sale, lease or transfer of all or substantially all its assets to another
Person shall be effected on or after the Date of Issuance, then, as condition of
such consolidation, merger, sale, lease or transfer, lawful and adequate
provision shall be made whereby the registered Holder of this Warrant
Certificate shall thereafter have the right to purchase and receive upon the
basis and
xii
upon the terms and conditions specified herein (including the payment of any
applicable Exercise Price) and in lieu of each Stock Unit immediately
theretofore purchasable and receivable upon the exercise of each of the
Warrants evidenced hereby, such shares of stock, securities, cash or other
property which would have been receivable upon such consolidation, merger,
sale, lease or transfer by the holder of the number of shares of Stock
comprising the aggregate of all Stock Units immediately prior to such event
if all Warrants evidenced by this Warrant Certificate were fully exercisable
and had been exercised in full immediately prior to such consolidation,
merger, sale, lease or transfer. In any such case, appropriate and equitable
provision also shall be made with respect to the rights and interests of the
registered Holder of this Warrant Certificate to the end that the provisions
hereof (including SECTION 4) and of the Warrant Agreement and the
Registration Rights Agreement shall thereafter be applicable, as nearly as
may be, in relation of any shares of stock, securities, cash or other
property thereafter deliverable upon the exercise of any Warrants evidenced
by this Warrant Certificate. The Company shall not effect any such
consolidation, merger, sale, lease or transfer unless prior to or
simultaneously with the consummation thereof the successor Person (if other
than the Company) resulting from such consolidation or merger or the Person
purchasing, leasing or otherwise acquiring such assets shall assume the
obligation to deliver to such Holder such shares of stock, securities, cash
or other property as, in accordance with the foregoing provisions, such
Holder may be entitled to purchase. The above provisions of this SECTION
5.01 shall similarly apply to successive consolidations, mergers, sales,
leases or transfers. Notwithstanding the foregoing, in the event the Company
consummates a consolidation or merger with, or the sale, lease or transfer of
all or substantially all its assets to, the party identified in that certain
letter dated as of September 26, 1997, between the Company and Specialty
Investment I LLC within one year from the Date of Issuance, the Stock Unit
Exercise Price for a Stock Unit in effect immediately prior thereto shall be
increased by 25% and the Stock Unit Expiration Date shall be extended by one
year. No other adjustment shall be made to the Stock Unit Exercise Price or
the Stock Unit Expiration Date as a result of such consolidation, merger,
sale, lease or transfer.
SECTION 6. NOTICE TO WARRANT CERTIFICATE HOLDERS.
6.01 NOTICE OF ADJUSTMENT OF STOCK UNIT OR EXERCISE PRICE. Whenever the
number of shares of Stock comprising a Stock Unit shall be adjusted pursuant to
SECTION 4, the Company shall forthwith obtain a certificate signed by
independent accountants of recognized national standing, selected by the Company
and reasonably acceptable to the holders of Warrants entitled to purchase a
majority of the Stock Units covered by all of the Warrants, setting forth, in
reasonable detail, the event requiring the adjustment and the method by which
such adjustment was calculated (including a statement of the fair value of any
evidences of indebtedness, shares of stock, other securities or property or
warrants or other subscription or purchase rights referred to in SECTION 4.05(2)
or SECTION 5) and
xiii
specifying the number of shares of Stock comprising a Stock Unit and (if such
adjustment was made pursuant to SECTION 4.01 or SECTION 5) describing the
number and kind of any other securities comprising a Stock Unit, and any
change in the purchase price or prices thereof, after giving effect to such
adjustment or change. The Company shall promptly, and in any case within 45
days after the making of such adjustment, cause a signed copy of such
certificate to be delivered to the Holder of this Warrant Certificate in
accordance with SECTION 11.02. The Company shall keep at its office or
agency, maintained for the purpose pursuant to SECTION 11.01, copies of all
such certificates and cause the same to be available for inspection at said
office during normal business hours by any Holder of this Warrant Certificate
or any prospective permitted purchaser of Warrants designated by any such
Holder.
6.02 NOTICE OF CERTAIN CORPORATE ACTION. In case the Company shall propose
(a) to pay any dividend to the holders of its Stock or to make any other
distribution to the holders of its Stock, or (b) to offer to the holders of its
Stock rights to subscribe for or to purchase any Additional Stock or shares of
stock of any class or any other securities, rights or options, or (c) to effect
any reclassification of its Stock (other than a reclassification involving only
the subdivision, or combination, of outstanding shares of Stock), or (d) to
effect any capital reorganization, or (e) to effect any consolidation, merger or
sale, lease, transfer or other disposition of all or substantially all of its
property, assets or business, or (f) to effect the liquidation, dissolution or
winding up of the Company, then, in each such case, the Company shall give to
the Holder of this Warrant Certificate, in accordance with SECTION 11.02, a
notice of such proposed action, which shall specify the date on which a record
is to be taken for the purposes of such stock dividend, distribution or rights,
or the date on which such reclassification, reorganization, consolidation,
merger, sale, lease, transfer, disposition, liquidation, dissolution or winding
up is to take place, if any such date is to be fixed, and shall also set forth
such facts with respect thereto as shall be reasonably necessary to indicate the
effect of such action on the Stock and the number and kind of any other shares
of stock which a Holder is entitled in accordance herewith, and the purchase
price or prices thereof, after giving effect to any adjustment which will be
required as a result of such action. Such notice shall be so given in the case
of any action covered by CLAUSE (a) or (b) above at least 10 Business Days prior
to the record date for determining holders of the Stock for purposes of such
action, and in the case of any other such action, at least 10 Business Days
prior to the date of the taking of such proposed action or the date of
participation therein by the holders of Stock, whichever shall be the earlier.
SECTION 7. RESERVATION AND AUTHORIZATION OF STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY. The Company shall at all times reserve
and keep available for issue upon the exercise or conversion of Warrants such
number of its authorized but unissued shares of Stock as shall be sufficient to
permit the exercise or conversion in full of
xiv
all outstanding Warrants. All shares of Stock which shall be so issuable,
when issued upon exercise of any Warrant and payment of the Exercise Price
therefor, or upon such conversion, as the case may be, shall be duly and
validly issued, fully paid and nonassessable and free and clear of any Liens.
Before taking any action which would result in an adjustment in the number
of shares of Stock issuable upon exercise of any Warrant evidenced by this
Warrant Certificate or which would cause an adjustment reducing the price per
share of common Stock below the then par value, if any, of the shares of common
Stock issuable upon exercise of any Warrant evidenced by this Warrant
Certificate, the Company shall take any corporate action which is necessary in
order that the Company may validly and legally issue fully paid and
nonassessable shares of Stock free and clear of any Liens upon the exercise of
any Warrant evidenced by this Warrant Certificate immediately after the taking
of such action.
Before taking any action which would result in an adjustment in the number
of shares of Stock issuable upon exercise of any Warrant evidenced by this
Warrant Certificate or in the Exercise Price, the Company shall obtain all such
authorizations or exemptions thereof, or consents thereto, as may be necessary
from any public regulatory body or bodies having jurisdiction thereof.
If any shares of Stock required to be reserved for issue upon exercise or
conversion of any Warrant evidenced by this Certificate require registration
with any Governmental Authority under any federal or state law (otherwise than
in connection with a registration under the Securities Act or applicable state
securities laws) before such shares may be so issued, the Company shall in good
faith and as expeditiously as possible and at its expense endeavor to cause such
shares to be duly registered.
SECTION 8. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS. In the
case of all dividends or other distributions by the Company to the holders of
Stock, the Company shall in each such case take such a record of such holders as
of the close of business on a Business Day.
The Company shall not at any time, except upon complete dissolution,
liquidation or winding up, close its stock transfer books or Warrant transfer
books so as to result in preventing or delaying the exercise, conversion or
transfer of any Warrant, unless otherwise required by any applicable federal,
state or local law.
SECTION 9. EXPENSES, TRANSFER TAXES AND OTHER CHARGES. The Company shall
pay any and all expenses, transfer taxes (other than income taxes) and other
charges, including all costs associated with the preparation, issue and delivery
of stock or warrant certificates,
xv
that are incurred in respect of the issuance or delivery of shares of Stock
upon exercise or conversion of Warrants pursuant to SECTION 2. The Company
shall not, however, be required to pay any tax which may be payable in
respect of any transfer involved in the issue and delivery of shares of Stock
in a name other than that in which this Warrant Certificate is registered,
and no such issue or delivery shall be made unless and until the Person
requesting such issue has paid to the Company the amount of any such tax, or
has established, to the satisfaction of the Company, that such tax has been
paid.
SECTION 10. NO VOTING RIGHTS. Except as expressly provided herein or in
the Warrant Agreement, the Warrants evidenced by this Warrant Certificate shall
not entitle the Holder hereof to any voting rights or other rights as a
stockholder of the Company.
SECTION 11. MISCELLANEOUS.
11.01 OFFICE OF THE COMPANY. So long as any of the Warrants evidenced
by this Warrant Certificate remain outstanding, the Company shall maintain an
office in the continental United States of America where this Warrant
Certificate may be presented for exercise, transfer, division or combination
of the Warrants evidenced hereby as herein provided. Such office shall be at
the Company's principal executive office, unless and until the Company shall
designate and maintain some other office for such purposes and give notice
thereof to the Holder of this Warrant Certificate.
11.02 NOTICES GENERALLY. Any notices and other communications pursuant
to the provisions hereof shall be sent in accordance with SECTION 6.02 of the
Warrant Agreement.
11.03 AMENDMENTS. The terms of the Warrants evidenced by this Warrant
Certificate may be amended, and the observance of any term therein may be
waived, but only with the written consent of the holders of Warrants
evidencing a majority of the total number of Stock Units at the time
purchasable upon the exercise of all then outstanding Warrants. For the
purposes of determining whether the holders of outstanding Warrants entitled
to purchase a requisite number of Stock Units at any time have taken any
action authorized by this Warrant Certificate, any Warrants owned by the
Company or any Affiliate of the Company shall be deemed not to be outstanding.
11.04 RESTRICTIONS ON TRANSFERABILITY. The Warrants evidenced by this
Warrant Certificate and the Warrant Shares shall be transferable only upon
compliance with the conditions specified in SECTION 2 of the Warrant
Agreement and the Registration Rights Agreement therein referred to, which
conditions are intended to ensure compliance with the provisions of the
Securities Act in respect of the transfer of such Warrants or any Warrant
xvi
Shares, and any Holder of this Warrant Certificate shall be bound by the
provisions of (and entitled to the benefits of) said SECTION 2 and said
Registration Rights Agreement.
11.05 GOVERNING LAW. This Warrant Certificate and the Warrants
evidenced hereby shall be governed by, and construed in accordance with, the
law of the State of New York applicable to contracts executed in and to be
fully performed in such State.
11.06 LIMITATION OF LIABILITY. No provision hereof, in the absence of
affirmative action by the Holder hereof to purchase shares of Stock, and no
mere enumeration herein of the rights or privileges of the Holder hereof,
shall give rise to any liability of such Holder for the Exercise Price or as
a stockholder of the Company, whether such liability is asserted by the
Company, any creditor of the Company or any other Person.
SECTION 12. REPRESENTATIONS AND WARRANTIES OF THE HOLDER. The Holder
represents and warrants to the Company as follows:
12.01 PURCHASE ENTIRELY FOR OWN ACCOUNT. The Warrants evidenced by
this Warrant Certificate are being acquired and, if such Warrants are
exercised, the Stock issuable upon such exercise will be acquired, for
investment for such Holder's own account, not as a nominee or agent, and not
with a view to the resale or distribution of any part thereof in violation of
the federal or state securities laws.
12.02 INVESTMENT EXPERIENCE. The Holder represents that it can bear
the economic risk of its investment and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the investment in the Warrants evidenced by this Warrant Certificate
and the Stock issuable upon exercise thereof. The Holder also represents it
has not been organized solely for the purpose of acquiring Warrants evidenced
by this Warrant Certificate or the Stock issuable upon exercise thereof.
12.03 RESTRICTED SECURITIES. The Holder understands that the Warrants
evidenced by this Warrant Certificate and the Stock issuable upon exercise of
such Warrants are characterized as "restricted securities" under the federal
securities laws inasmuch as they are being acquired from the Company in a
transaction not involving a public offering and have not been registered
under the Securities Act nor qualified under applicable state securities laws
and that under such laws and applicable regulations such securities may not
be resold without registration under the Securities Act, except in certain
limited circumstances. In this connection, the Holder represents that it is
familiar with Rule 144, as presently in effect, and understands the resale
limitations imposed thereby and by the Securities Act.
xvii
IN WITNESS WHEREOF, the Company has duly executed this Warrant
Certificate.
Dated: January 31, 1998 LAMONTS APPAREL, INC.
By____________________________________
Name: Xxxx X. Xxxxxxxxxxx
Title: Chairman of the Board,
President and Chief Executive
Officer
xviii
FORM OF ASSIGNMENT
(To be executed by the registered Holder hereof)
FOR VALUE RECEIVED the undersigned hereby sells, assigns and transfers
all the rights of the undersigned under the within certificate with respect
to the number of Warrants evidenced thereby set forth hereinbelow unto:
NAME OF ASSIGNEE ADDRESS NUMBER OF WARRANTS
Dated:_________________ __________________________________
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FORM OF EXERCISE
----------------
(To be executed by the registered Holder hereof)
The undersigned hereby exercises _________Warrants evidenced by the within
certificate to subscribe for and purchase:
Stock Units of Lamonts Apparel, Inc. at the Stock Unit Exercise Price
-----
Stock Units of Lamonts Apparel Inc. at the Adjustment Unit Exercise
----- Price
and herewith makes payment therefor in full. Kindly issue certificates and/or
other instruments covering Stock Units in accordance with the instructions given
below. A new Warrant Certificate for the unexercised balance of the Warrants
(including any unexercised portion of any Warrant) covered by the within
certificate, if any, will be registered in the name of the undersigned.
In exercising its rights to purchase such Stock, the undersigned hereby
confirms that it will not sell or transfer such Stock unless such transfer is
pursuant to (i) a registration statement in effect with respect to such
securities under the Securities Act of 1933, as amended (the "Securities Act")
and the rules and regulations thereunder or (ii) an exemption from the
registration requirements of the Securities Act and any applicable state
securities laws.
Dated:
---------------- ----------------------------------
Instructions for registration of Stock Units
------------------------------
Name (please print)
Social Security or Other Identifying Number:
-------------------
Address:
------------------------------
------------------------------
------------------------------
xx
JOINDER AGREEMENT
JOINDER AGREEMENT, dated the date set forth below, between LAMONTS APPAREL,
INC., a Delaware corporation ("the Company") and the undersigned stockholder or
warrant holder of the Company.
A. Reference is made to that certain Warrant Agreement dated as of
January 31, 1998 (as modified and supplemented and in effect from time to time,
the "WARRANT AGREEMENT"), between the Company and Holder and to the Registration
Rights Agreement. Each capitalized term used but not defined herein shall have
the meaning assigned to such term in the Warrant Agreement.
B. The Warrant Agreement requires that certain transferees of shares of
Stock or Warrants execute and deliver to the Company and each Holder this
Joinder Agreement.
In consideration of the foregoing and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
undersigned hereby acknowledges receipt of copies of the Warrant Agreement and
the Registration Rights Agreement and agrees to be bound by the terms and
provisions of the Warrant Agreement and the Registration Rights Agreement as
though [he/she/it] were an original party thereto.
IN WITNESS WHEREOF, the undersigned has signed this Joinder Agreement on
the date set forth below.
Date:
---------------- -----------------------------------
Description of transferred securities, name of
transferor, and date of transfer:
-----------------------------------
-----------------------------------
Acknowledged and Agreed to as
of the date written above:
LAMONTS APPAREL, INC.
By
-------------------------
Name:
Title:
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