EDISON BROTHERS STORES, INC.
and
CHASEMELLON SHAREHOLDER SERVICES, L.L.C.
as Warrant Agent
Warrants to Purchase 1,008,791 Shares of Common Stock
__________________
WARRANT AGREEMENT
Dated as of September 26, 1997
TABLE OF CONTENTS
Page
1. DEFINITIONS 1
2. APPOINTMENT OF WARRANT AGENT 6
2.1. Appointment 6
3. REGISTRATION, FORM AND EXECUTION OF WARRANTS 6
3.1. Registration 6
3.2. Form of Warrant 6
3.3. Countersignature of Warrants 7
4. EXERCISE OF WARRANTS 7
4.1. Manner of Exercise 7
4.2. Payment of Taxes 8
4.3. Fractional Shares 9
5. TRANSFER, DIVISION AND COMBINATION 9
5.1. Transfer 9
5.2. Division and Combination 9
5.3. Maintenance of Books 10
6. ADJUSTMENTS 10
6.1. Stock Dividends, Subdivisions and Combinations 10
6.2. Certain Distributions 10
6.3. Issuance of Rights to Purchase Common Stock at
Below Daily Market Price 11
6.4.Issuance of Common Stock Below Daily Market Price 13
6.5. Reorganization, Reclassification, Merger,
Consolidation or Disposition 14
6.6. Other Provisions Applicable to Adjustments 15
6.7. Certain Limitations 17
7. NOTICES TO WARRANT HOLDERS 17
7.1. Notice of Adjustments 17
7.2. Notice of Corporate Action 18
8. NO IMPAIRMENT 18
9. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION
WITH OR APPROVAL OF ANY GOVERNMENTAL AUTHORITY 19
10. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS 20
11. RESTRICTIONS ON TRANSFERABILITY 20
11.1. Restrictive Legend 20
12. LOSS OR MUTILATION 21
13. OFFICE OF COMPANY 21
14. REPURCHASE BY COMPANY OF WARRANTS 21
14.1. Option to Repurchase Warrants 21
14.2. Payment of Repurchase Price 22
15. WARRANT AGENT. 22
15.1.Merger or Consolidation or Change of Name of Warrant
Agent 22
15.2.Certain Terms and Conditions Concerning the Warrant
Agent 22
15.3. Change of Warrant Agent. 25
15.4.Disposition of Proceeds on Exercise of Warrants,
Inspection of Warrant Agreement 26
16. MISCELLANEOUS 26
16.1. Limitation of Liability 26
16.2. Notice Generally 26
16.3. Successors and Assigns 27
16.4. Amendment 27
16.5. Severability 28
16.6. Headings 28
16.7. Governing Law 28
16.8. Counterparts 28
EXHIBITS
Exhibit A - Form of Warrant Certificate
Exhibit B - Warrant Agent Fees
THIS WARRANT AGREEMENT (this Warrant Agreement ), dated as of
September 26, 1997, is made by and between Edison Brothers Stores, Inc., a
Delaware corporation (the Company ), and ChaseMellon Shareholder Services,
L.L.C., a New Jersey limited liability company, as warrant agent (the
Warrant Agent ).
W I T N E S S E T H:
WHEREAS, the Company proposes to issue, to holders of Allowed
Edison Equity Interests, warrants, as hereinafter described (the Warrants
), to purchase up to an aggregate of 1,008,791 shares of its Common Stock
pursuant to Section 4.8 of the Plan, as confirmed by the United States
Bankruptcy Court for the District of Delaware (the Court ), by order
entered September 9, 1997, under title 11 of the United States Code; and
WHEREAS, the Company has requested the Warrant Agent to act on
behalf of the Company, and the Warrant Agent is willing so to act, in
connection with the issuance, division, transfer, exchange and exercise of
Warrants;
NOW, THEREFORE, in consideration of the foregoing and for the
purpose of defining the terms and provisions of the Warrants and the
respective rights and obligations thereunder and hereunder of the Company,
the Warrant Agent, and the Holders, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged
and affirmed, the Company and the Warrant Agent hereby agree as follows:
1. DEFINITIONS.
As used in this Warrant Agreement, the following terms have the
respective meanings set forth below:
Additional Shares of Common Stock shall mean all shares of
Common Stock issued by the Company after the Effective Date, other than
Warrant Stock.
Allowed shall have the meaning assigned to such term in the
Plan.
Business Day shall mean any day that is not a Saturday or
Sunday or a day on which banks are required or permitted to be closed in
the State of New York.
Common Stock shall mean (except where the context otherwise
indicates) the Common Stock, $.01 par value per share, of the Company as
constituted on the Effective Date, and any capital stock into which such
Common Stock may thereafter be changed, and shall also include (1) capital
stock of the Company of any other class (regardless of how denominated)
issued to the holders of shares of Common Stock upon any reclassification
thereof which is also not preferred as to dividends or assets over any
other class of stock of the Company and which is not subject to redemption
and (2) shares of common stock of any successor or acquiring corporation
received by or distributed to the holders of Common Stock of the Company in
the circumstances contemplated by Section 6.5.
Company shall have the meaning assigned to such term in the
first paragraph of this Warrant Agreement.
Convertible Securities shall mean evidences of indebtedness,
shares of stock or other securities which are convertible into or
exchangeable for Additional Shares of Common Stock, either immediately or
upon the occurrence of a specified date or a specified event.
Court shall have the meaning assigned to such term in the
recitals to this Warrant Agreement.
Current Warrant Price shall mean, in respect of a share of
Common Stock at any date herein specified, the price at which a share of
Common Stock may be purchased pursuant to this Warrant Agreement on such
date.
Daily Market Price shall mean, in respect of any share of
Common Stock on any Trading Day, (1) the last sale price on such day on the
principal stock exchange on which such Common Stock is then listed or
admitted to trading or (2) if no sale takes place on such day on any such
exchange, the average of the last reported closing bid and asked prices on
such day as officially quoted on any such exchange. If the Common Stock is
not then listed or admitted to trading on any stock exchange, the Daily
Market Price shall be the average of the last reported closing bid and
asked prices on such day in the over-the-counter market, as furnished by
the National Association of Securities Dealers Automatic Quotation System
or the National Quotation Bureau, Inc.; provided, that if neither such
corporation at the time is engaged in the business of reporting such
prices, the Daily Market Price shall be as furnished by any similar firm
then engaged in such business, or if there is no such firm, as furnished by
any member of the NASD selected mutually by the Majority Holders and the
Company or, if they cannot agree upon such selection, as selected by two
such members of the NASD, one of which shall be selected by the Majority
Holders and one of which shall be selected by the Company. If the Common
Stock is not reported in the over-the-counter market and no member of the
NASD selected pursuant to the preceding sentence will furnish the Daily
Market Price, then the Daily Market Price shall be as determined in good
faith by the Board of Directors of the Company, whose determination shall
be conclusive.
Debtors shall mean, collectively, the Company, Edison Brothers
Apparel Stores, Inc., Edison Brothers Shoe Stores, Inc., Edison Paymaster,
Inc., Edison Brothers Redevelopment Corporation, Edbro Missouri Realty
Company, Inc., Edison Alabama Stores, Inc., Edison Arkansas Stores, Inc.,
Edison Colorado Stores, Inc., Edison Brothers Company, Edison Hawaii
Stores, Inc., Edison Illinois Stores, Inc., Edison Kansas Stores, Inc.,
Edison Kentucky Stores, Inc., Edison Louisiana Stores, Inc., Edison
Maryland Stores, Inc., Edison Massachusetts Stores, Inc., Edison Michigan
Stores, Inc., Edison Minnesota Stores, Inc., Edison Mississippi Stores,
Inc., Edison Nebraska Stores, Inc., Edison New Jersey Stores, Inc., Edison
New Mexico Stores, Inc., Edison New York Stores, Inc., Edison Ohio Stores,
Inc., Edison Oklahoma Stores, Inc., Edison Oregon Stores, Inc., Edison
Pennsylvania Stores, Inc., Edison Tennessee Stores, Inc., Edison Texas
Stores, Inc., Edison Utah Stores, Inc., Edbro Ohio Realty, Inc., EBSS-
Montana, Inc., EBSS-North Central, Inc., EBSS-Indiana, Inc., EBSS-Iowa,
Inc., EBSS-Kansas, Inc., EBSS-Wisconsin, Inc., EBSS-Northeast, Inc., EBSS-
South, Inc., EBSS-Mideast, Inc., EBSS-Michigan, Inc., EBSS-East, Inc., EBSS-
Ohio, Inc., EBSS-Pennsylvania, Inc., EBSS-Texas, Inc., EBSS-West, Inc.,
Edison Puerto Rico Stores, Inc., Ebscat, Inc., Edison Brothers Mall
Entertainment, Inc., Horizon Entertainment, Edison Brothers Stores
International, Inc., Edisur, Inc., EBS Holdings Corp., Xxxxxx Xxxxxxxx
Warehouse, Inc., Edbro California USG-2, Inc., Edbro Missouri USG-2, Inc.,
Edbro California USG-1, Inc., Industrial Design, Inc., Xxxxxxx Clothes,
Inc., Z&Z Fashions, Ltd., Xxxxxxx-Rossville, Inc., Time-Out Family
Amusement Centers, Inc., Tofac of Puerto Rico, Inc., Sacha Shoes, Inc. and
Xxxxxx'x of California.
Edison Equity Interest shall have the meaning assigned to such
term in the Plan.
Effective Date shall have the meaning set forth in the Plan.
Expiration Date shall mean the date that is the eight-year
anniversary of the Effective Date or, if such date is not a Business Day,
the next succeeding Business Day.
Fully Diluted Outstanding shall mean, when used with reference
to Common Stock, at any date as of which the number of shares thereof is to
be determined, all shares of Common Stock Outstanding at such date and all
shares of Common Stock issuable in respect of any Warrants to purchase, or
securities convertible into or exchangeable for, shares of Common Stock
outstanding on such date which would be deemed outstanding in accordance
with GAAP for purposes of determining book value or net income per share.
GAAP shall mean generally accepted accounting principles in the
United States of America as from time to time in effect.
Holder shall mean the Person in whose name a Warrant is
registered in the warrant register of the Company maintained by or on
behalf of the Company for such purpose.
Insider shall mean any person, as such term is defined in
Section (a)(2) of Rule 144 under the Securities Act, that is the beneficial
owner, as such term is used in such Rule 144, of ten percent (10%) or more
of any class of equity securities (or other equity interest) of the
Company.
Majority Holders shall mean the Holders of Warrants exercisable
for in excess of 50% of the aggregate number of shares of Common Stock then
purchasable upon exercise of all Warrants.
NASD shall mean the National Association of Securities Dealers,
Inc., or any successor corporation thereto.
Other Property shall have the meaning set forth in Section 6.2.
Outstanding shall mean, when used with reference to Common
Stock, at any date as of which the number of shares thereof is to be
determined, all issued shares of Common Stock, except shares then owned or
held by or for the account of Company or any subsidiary thereof, and shall
include all shares issuable in respect of outstanding scrip or any
certificates representing fractional interests in shares of Common Stock.
Permitted Issuances shall mean (i) the issuance of the
Warrants, (ii) the issuance of warrants or stock options to the Company's
management and other employees for the purchase of up to 800,000 shares of
Common Stock pursuant and subject to the 1997 Stock Option Plan of the
Company, (iii) the issuance of warrants or stock options to the Company's
non-employee directors for the purchase of up to 200,000 shares of Common
Stock pursuant and subject to the 1997 Directors Stock Option Plan of the
Company, (iv) the issuance of warrants or stock options to the Company's
directors, management or other employees for the purchase of Common Stock
pursuant to any other stock option plan of the Company, (v) the issuance of
shares of Common Stock upon exercise of the warrants and options referred
to in clauses (i), (ii), (iii) and (iv), and (vi) all other issuances of
Common Stock and warrants or stock options by the Company expressly
authorized by the Plan.
Person shall mean any individual, sole proprietorship,
partnership, joint venture, trust, incorporated organization, association,
corporation, limited liability company, limited liability partnership,
institution, public benefit corporation, entity or government (whether
federal, state, county, city, municipal or otherwise, including, without
limitation, any instrumentality, division, agency, body or department
thereof).
Plan shall mean the Debtors' Amended Joint Plan of
Reorganization Under Chapter 11 of the United States Bankruptcy Code, as it
may be further amended or modified.
Pricing Period shall have the meaning set forth in Section
14.1.
Repurchase Price shall have the meaning set forth in Section
14.1.
Securities Act shall mean the Securities Act of 1933, as
amended, and the rules and regulations adopted by the Securities and
Exchange Commission thereunder.
Trading Day shall mean any day on which the principal stock
exchange on which the Common Stock is listed or admitted to trading is open
or, if the Common Stock is not then listed or admitted to trading on any
stock exchange, any day on which the National Association of Securities
Dealers Automatic Quotation System or the National Quotation Bureau Inc.
reports prices in respect of securities or, if neither such corporation is
then engaged in such business, any day on which the member of the NASD
selected as specified in the proviso set forth in the definition of Daily
Market Price furnishes prices for securities.
Warrant Agent shall have the meaning assigned to such term in
the first paragraph of this Warrant Agreement and shall include any
successor Warrant Agent hereunder.
Warrant Agent's Principal Office shall mean the principal
office of the Warrant Agent in New York City, New York (or such other
office of the Warrant Agent or any successor thereto hereunder acceptable
to the Company as set forth in a written notice provided to the Company and
the Holders).
Warrant Agreement shall have the meaning assigned to such term
in the first paragraph of this Warrant Agreement.
Warrant Price shall mean an amount equal to (1) the number of
shares of Common Stock being purchased upon exercise of a Warrant pursuant
to Section 4.1, multiplied by (2) the Current Warrant Price as of the date
of such exercise.
Warrant Stock shall mean the shares of Common Stock purchased
by the Holders of the Warrants upon the exercise thereof.
Warrants shall have the meaning assigned to such term in the
recitals to this Warrant Agreement, and shall include all warrants issued
upon transfer, division or combination of, or in substitution for, any
thereof. All Warrants shall at all times be identical as to terms and
conditions and date, except as to the number of shares of Common Stock for
which they may be exercised.
2. APPOINTMENT OF WARRANT AGENT.
2.1. Appointment. The Company hereby appoints the Warrant Agent to
act as agent for the Company in accordance with the instructions set forth
in this Warrant Agreement, and the Warrant Agent hereby accepts such
appointment.
3. REGISTRATION, FORM AND EXECUTION OF WARRANTS.
3.1. Registration. All Warrants shall be numbered and shall be
registered in a warrant register maintained at the Warrant Agent's
Principal Office by the Warrant Agent as they are issued. The Company and
the Warrant Agent shall be entitled to treat a Holder as the owner in fact
for all purposes whatsoever of each Warrant registered in such Holder's
name.
3.2. Form of Warrant. The text of each Warrant and of the Election to
Purchase Form and Assignment Form shall be substantially as set forth in
Exhibit A attached hereto. Each Warrant shall be executed on behalf of the
Company by its President or one of its Vice Presidents, under its corporate
seal reproduced thereon or facsimile thereof attested by its Secretary or
an Assistant Secretary. The signature of any of such officers on the
Warrants may be manual or facsimile.
Warrants bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall
bind the Company, notwithstanding that such individuals or any one of them
shall have ceased to hold such offices prior to the delivery of such
Warrants or did not hold such offices on the date of this Warrant
Agreement.
Warrants shall be dated as of the date of countersignature
thereof by the Warrant Agent either upon initial issuance or upon division,
exchange, substitution or transfer.
3.3. Countersignature of Warrants. Each Warrant shall be manually
countersigned by the Warrant Agent (or any successor to the Warrant Agent
then acting as warrant agent under this Warrant Agreement) and shall not be
valid for any purpose unless so countersigned. Warrants may be
countersigned, however, by the Warrant Agent (or by its successor as
warrant agent hereunder) and may be delivered by the Warrant Agent,
notwithstanding that the persons whose manual signatures appear thereon as
proper officers of the Company shall have ceased to be such officers at the
time of such countersignature, issuance or delivery. The Warrant Agent
shall, upon written instructions of the President, a Vice President, the
Secretary, or an Assistant Secretary of the Company, countersign, issue and
deliver Warrants entitling the Holders thereof to purchase not more than
1,008,791 shares of Common Stock (subject to adjustment as set forth
herein) and shall countersign and deliver Warrants as otherwise provided in
this Warrant Agreement.
4. EXERCISE OF WARRANTS
4.1. Manner of Exercise. From and after the Effective Date and until
5:00 p.m., New York City time, on the Expiration Date, a Holder may
exercise any of its Warrants, on any Business Day, for all or any part of
the number of shares of Common Stock purchasable hereunder.
In order to exercise a Warrant, in whole or in part, a Holder
shall deliver to the Company at the Warrant Agent's Principal Office, (1) a
written notice of such Holder's election to exercise such Warrant, which
notice shall include the number of shares of Common Stock to be purchased,
(2) payment of the Warrant Price for the account of the Company and
(3) such Warrant. Such notice shall be substantially in the form of the
Election to Purchase Form set forth on the reverse side of the form of
Warrant Certificate attached as Exhibit A hereto, duly executed by such
Holder or its agent or attorney. Upon receipt thereof, the Warrant Agent
shall, as promptly as practicable, and in any event within five Business
Days thereafter, deliver or cause to be delivered to such Holder an
executed certificate or certificates representing the aggregate number of
full shares of Common Stock issuable upon such exercise, together with cash
in lieu of any fraction of a share, as hereinafter provided. The stock
certificate or certificates so delivered shall be, to the extent possible,
in such denomination or denominations as such Holder shall request in the
notice and shall be registered in the name of such Holder or, subject to
Section 11, such other name as shall be designated in such notice. A
Warrant shall be deemed to have been exercised and such 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 for all purposes, as of the date
such notice, together with the check or checks and such Warrant, is
received by the Warrant Agent as described above and all taxes required to
be paid by such Holder, if any, pursuant to Section 4.2 prior to the
issuance of such shares have been paid. If any Warrant shall have been
exercised in part, the Warrant Agent shall, at the time of delivery of the
certificate or certificates representing Warrant Stock, deliver to the
Holder a new Warrant evidencing the rights of such Holder to purchase the
unpurchased shares of Common Stock called for by such Warrant, which new
Warrant shall in all other respects be identical with the Warrant exercised
in part, or, at the request of such Holder, appropriate notation may be
made on such exercised Warrant and the same returned to such Holder.
Notwithstanding any provision herein to the contrary, the Warrant Agent
shall not be required to register shares in the name of any Person who
acquired a Warrant (or part thereof) or any Warrant Stock otherwise than in
accordance with such Warrant and this Warrant Agreement.
Payment of the Warrant Price shall be made at the option of the
Holder by certified or official bank check or any combination thereof, duly
executed by such Holder or by such Holder's attorney duly authorized in
writing.
4.2. Payment of Taxes. All shares of Common Stock issuable upon the
exercise of any Warrant pursuant to the terms hereof shall be validly
issued, fully paid and nonassessable and without any preemptive rights.
The Company shall pay any documentary stamp taxes attributable to the
initial issuance of shares of Common Stock issuable upon the exercise of
Warrants; provided, however, that the Company shall not be required to pay
any tax or taxes which may be payable in respect of any transfer involved
in the issue or delivery of any certificates for shares of Common Stock in
a name other than that of the Holder of Warrants in respect of which such
shares are issued and the Company shall not be required to issue and
deliver the certificates for such shares unless and until such Holder has
paid to the Company the amount of any tax which may be payable in respect
of any transfer involved in such issuance or delivery or shall establish to
the satisfaction of the Company that all such taxes have been paid. Other
than with respect to such documentary stamp taxes, the Holder shall pay all
expenses in connection with, and all taxes and other governmental charges
that may be imposed with respect to, the issue or delivery of shares of
Common Stock issuable upon the exercise of any Warrant.
4.3. Fractional Shares. The Company shall not be required to issue a
fractional share of Common Stock upon exercise of any Warrant. As to any
fraction of a share which the Holder of one or more Warrants, the rights
under which are exercised in the same transaction, would otherwise be
entitled to purchase upon such exercise, the Company shall pay a cash
adjustment in respect of such final fraction in an amount equal to the same
fraction of the average of the Daily Market Price per share of Common Stock
for the 5 consecutive Trading Days preceding the date of exercise.
5. TRANSFER, DIVISION AND COMBINATION.
5.1. Transfer. Subject to compliance with Section 11, transfer of any
Warrant and all rights hereunder, in whole or in part, shall be registered
in the warrant register of the Company to be maintained for such purpose at
the Warrant Agent's Principal Office, upon surrender of such Warrant at the
Warrant Agent's Principal Office, together with a written assignment of
such Warrant substantially in the form set forth on the reverse side of the
form of Warrant Certificate attached as Exhibit A hereto duly executed by
the Holder or its agent or attorney and payment of all funds sufficient to
pay any taxes payable upon the making of such transfer. Upon such
surrender and, if required, such payment, and subject to Section 9, the
Company shall execute and the Warrant Agent shall countersign and deliver a
new Warrant or Warrants in the name of the assignee or assignees and in the
denomination specified in such instrument of assignment, and shall issue to
the assignor a new Warrant evidencing the portion of such Warrant not so
assigned, and the surrendered Warrant shall promptly be canceled. A
Warrant, if properly assigned in compliance with Section 11, may be
exercised by a new Holder for the purchase of shares of Common Stock
without having a new Warrant issued.
5.2. Division and Combination. Subject to Section 11, any Warrant may
be divided or combined with other Warrants upon presentation thereof at the
Warrant Agent's Principal Office, together with a written notice specifying
the names and denominations in which new Warrants are to be issued, signed
by the Holder or its agent or attorney. Subject to compliance with Section
5.1 and Section 11, as to any transfer which may be involved in such
division or combination, the Company shall execute and the Warrant Agent
shall countersign and deliver a new Warrant or Warrants in exchange for the
Warrant or Warrants to be divided or combined in accordance with such
notice.
5.3. Maintenance of Books. The Warrant Agent agrees to maintain, at
the Warrant Agent's Principal Office, the warrant register for the
registration and the registration of transfer of the Warrants.
6. ADJUSTMENTS.
The number of shares of Common Stock for which a Warrant is
exercisable, and the price at which such shares may be purchased upon
exercise of a Warrant, shall be subject to adjustment from time to time as
set forth in this Section 6.
6.1. Stock Dividends, Subdivisions and Combinations. If at any time
the Company shall:
(a) pay a dividend or otherwise effect a distribution of
Additional Shares of Common Stock,
(b) subdivide its outstanding shares of Common Stock into a
larger number of shares of Common Stock, or
(c) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock,
then (i) the number of shares of Common Stock for which a Warrant is
exercisable immediately after the occurrence of any such event shall be
adjusted to equal the number of shares of Common Stock that a record holder
of the same number of shares of Common Stock for which a Warrant is
exercisable immediately prior to the occurrence of such event would own or
be entitled to receive immediately after the occurrence of such event; and
(ii) the Current Warrant Price shall be concurrently adjusted to equal
(A) the Current Warrant Price in effect immediately prior to such
adjustment multiplied by the number of shares of Common Stock for which a
Warrant is exercisable immediately prior to such adjustment divided by (B)
the number of shares for which a Warrant is exercisable immediately after
such adjustment.
6.2. Certain Distributions. If at any time the Company shall:
(a) distribute to all holders of record of Common Stock
evidences of indebtedness or any shares of capital stock, securities,
property or assets of any nature whatsoever (other than Permitted
Issuances or regularly scheduled cash dividends payable out of
earnings or earned surplus legally available for payment of dividends
or any transaction covered by Section 6.1, 6.3, 6.4 or 6.5), or
(b) distribute to all holders of record of Common Stock
options, warrants or other rights to acquire, subscribe for or
purchase any evidences of indebtedness or any shares of capital stock,
securities, property or assets of any nature whatsoever (other than
Permitted Issuances or options, warrants or other rights covered by
Section 6.3 hereof),
then (i) the number of shares of Common Stock for which a Warrant is
exercisable immediately after the occurrence of any such event shall be
adjusted to equal the product obtained by multiplying the number of shares
of Common Stock for which a Warrant is exercisable immediately prior to
such adjustment by a fraction (A) the numerator of which shall be the
average of the Daily Market Price per share of Common Stock for the 5
consecutive Trading Days preceding the record date for such distribution
and (B) the denominator of which shall be such average Daily Market Price
per share of Common Stock minus the amount allocable to one share of Common
Stock of the fair value (as determined in good faith by the Board of
Directors of the Company) of any and all such evidences of indebtedness,
shares of stock, other securities or property or warrants or other
subscription, acquisition or purchase rights so distributed; and (ii) the
Current Warrant Price shall be concurrently reduced to equal (A) the
Current Warrant Price in effect immediately prior to such adjustment
multiplied by the number of shares of Common Stock for which a Warrant is
exercisable immediately prior to such adjustment divided by (B) the number
of shares of Common Stock for which a Warrant is exercisable immediately
after such adjustment. A reclassification of the Common Stock (other than
a change in par value, or from par value to no par value or from no par
value to par value) into shares of Common Stock and shares of any other
class of capital stock of the Company shall be deemed a distribution by the
Company to the holders of its Common Stock of such shares of such other
class of stock within the meaning of this Section 6.2 and, if the
outstanding shares of Common Stock shall be changed into a larger or
smaller number of shares of Common Stock as a part of such
reclassification, such change shall be deemed a subdivision or combination,
as the case may be, of the outstanding shares of Common Stock within the
meaning of Section 6.1 (provided that, in any such case, the adjustment
provided for in Section 6.1 shall be effected after the adjustment provided
for in this Section 6.2).
6.3. Issuance of Rights to Purchase Common Stock at Below Daily Market
Price. If at any time the Company shall distribute to all holders of
record of Common Stock options, warrants or other rights to subscribe for
or purchase any Additional Shares of Common Stock or any Convertible
Securities (other than Permitted Issuances or any transaction covered by
Section 6.5), whether or not the rights to exchange, subscribe or convert
thereunder are immediately exercisable, and the consideration per share for
which Common Stock is issuable upon the exercise of such options, warrants
or other rights (or, in the case of options, warrants or other rights to
subscribe for or purchase Convertible Securities, the consideration per
share for which Common Stock is issuable upon the exercise of such options,
warrants or other rights and conversion of such Convertible Securities)
shall be less than the average of the Daily Market Price per share of
Common Stock for the 5 consecutive Trading Days immediately prior to the
date of such distribution, then (i) the number of shares of Common Stock
for which a Warrant is exercisable immediately after the occurrence of any
such distribution shall be adjusted to equal the product obtained by
multiplying the number of shares of Common Stock for which a Warrant is
exercisable immediately prior to such distribution by a fraction (A) the
numerator of which shall be the number of shares of Common Stock
Outstanding immediately prior to such distribution plus the total number of
Additional Shares of Common Stock issuable upon the exercise of such
options, warrants or other rights (or, in the case of options, warrants or
other rights to subscribe for or purchase Convertible Securities, issuable
upon the exercise of such options, warrants or other rights and conversion
of such Convertible Securities) and (B) the denominator of which shall be
the number of shares of Common Stock Outstanding immediately prior to such
distribution plus the number of shares of Common Stock which the aggregate
consideration to be paid for all such Additional Shares of Common Stock
issuable upon the exercise of such options, warrants or other rights (or,
in the case of options, warrants or other rights to subscribe for or
purchase Convertible Securities, issuable upon the exercise of such
options, warrants or other rights and conversion of such Convertible
Securities) would purchase at the average of the Daily Market Price per
share of Common Stock for the 5 consecutive Trading Days immediately prior
to the date of such distribution; and (ii) the Current Warrant Price shall
be concurrently reduced to equal (A) the Current Warrant Price in effect
immediately prior to such adjustment multiplied by the number of shares of
Common Stock for which a Warrant is exercisable immediately prior to such
adjustment divided by (B) the number of shares of Common Stock for which a
Warrant is exercisable immediately after such adjustment. No further
adjustments of the number of shares for which Warrants are exercisable or
of the Current Warrant Price shall be made upon the actual issuance of such
Common Stock upon exercise of such options, warrants or other rights (or
the conversion of such Convertible Securities); provided, however, that in
the event any such options, warrants or other rights to subscribe for or
purchase any Additional Shares of Common Stock or any Convertible
Securities are not exercised (or, in the case of Convertible Securities,
are not converted) prior to the respective expiration dates thereof, then,
on each such expiration date, the number of shares of Common Stock for
which a Warrant is exercisable and the Current Warrant Price shall be
readjusted to reverse the adjustment made pursuant to this Section 6.3 in
respect of such number(s) of options, warrants or other rights to subscribe
for or purchase any Additional Shares of Common Stock or any Convertible
Securities that were not exercised (or, in the case of Convertible
Securities, were not converted) prior to such expiration date.
Notwithstanding anything to the contrary set forth in this Section 6.3, in
the event the Company shall distribute any options, warrants or other
rights to purchase any Additional Shares of Common Stock or any Convertible
Securities (other than Permitted Issuances or any transaction covered by
Section 6.5) pursuant to any so-called poison pill or shareholders'
rights or similar plan or agreement, the distribution of separate
certificates representing such options, warrants or rights subsequent to
their initial distribution shall be deemed to be the distribution thereof
for purposes of this Section 6.3; provided that the Company may, in lieu of
making any adjustment pursuant to this Section 6.3 upon such a distribution
of separate certificates, make proper provision so that each Holder of
Warrants who exercises such Warrants (or any portion thereof) (A) after
such initial distribution but before such distribution of separate
certificates shall be entitled to receive upon such exercise shares of
Common Stock issued with such options, warrants or other rights and (B)
after such distribution of separate certificates and prior to the
expiration, redemption or termination of such options, warrants or other
rights shall be entitled to receive upon such exercise, in addition to the
shares of Common Stock issuable upon such exercise, the same number of such
options, warrants or other rights as would have accompanied such shares of
Common Stock had such Warrants been exercised immediately prior to such
distribution of separate certificates.
6.4. Issuance of Common Stock Below Daily Market Price. If the
Company shall at any time, directly or indirectly, sell or issue shares of
Common Stock (whether originally issued or from the Company's treasury), or
options, warrants or other rights to subscribe for or purchase any
Additional Shares of Common Stock or any Convertible Securities (other than
(x) Permitted Issuances and (y) securities issued in any of the
transactions described in Section 6.1, 6.2, 6.3 or 6.5 or issued upon the
exercise or conversion of any such securities) for consideration per share
of Common Stock that is less than the average of the Daily Market Price per
share of Common Stock for the 5 consecutive Trading Days immediately prior
to such sale or issuance, then (i) the number of shares of Common Stock for
which a Warrant is exercisable immediately after the occurrence of any such
sale or issuance shall be adjusted to equal the product obtained by
multiplying the number of shares of Common Stock for which a Warrant is
exercisable immediately prior to such sale or issuance by a fraction (A)
the numerator of which shall be the total number of shares of Common Stock
Outstanding immediately after such sale or issuance, and (B) the
denominator of which shall be the sum of the number of shares of Common
Stock Outstanding immediately prior to such sale or issuance plus the
number of shares of Common Stock which the aggregate consideration received
for such sale or issuance would purchase at the average of the Daily Market
Price per share of Common Stock for the 5 consecutive Trading Days
immediately prior to the date of such sale or issuance (for the purpose of
such adjustment, the shares of Common Stock that the holder of any such
options, warrants, rights or Convertible Securities shall be entitled to
receive upon the exercise or conversion thereof shall be deemed to be
Outstanding immediately after such sale or issuance, and the consideration
received by the Company therefor shall be deemed to be the consideration
received by the Company for such options, warrants, rights or Convertible
Securities plus the consideration that the holder of any such options,
warrants, rights or Convertible Securities would be required to pay or
surrender upon the exercise or conversion thereof); and (ii) the Current
Warrant Price shall be concurrently reduced to equal (A) the Current
Warrant Price in effect immediately prior to such adjustment multiplied by
the number of shares of Common Stock for which a Warrant is exercisable
immediately prior to such adjustment divided by (B) the number of shares of
Common Stock for which a Warrant is exercisable immediately after such
adjustment. Notwithstanding the foregoing, in the event any such options,
warrants or other rights to subscribe for or purchase any Additional Shares
of Common Stock or any Convertible Securities are not exercised (or, in the
case of Convertible Securities, are not converted) prior to the respective
expiration dates thereof, then, on each such expiration date, the number of
shares of Common Stock for which a Warrant is exercisable and the Current
Warrant Price shall be readjusted to reverse the adjustment made pursuant
to this Section 6.4 in respect of such number(s) of options, warrants or
other rights to subscribe for or purchase any Additional Shares of Common
Stock or any Convertible Securities that were not exercised (or, in the
case of Convertible Securities, were not converted) prior to such
expiration date.
6.5. Reorganization, Reclassification, Merger, Consolidation or
Disposition. In case the Company shall reorganize its capital, reclassify
its capital stock, consolidate or merge with or into another corporation
(where the Company is not the surviving corporation or where there is a
change in or distribution with respect to the Common Stock of the Company),
or sell, transfer or otherwise dispose of all or substantially all its
property, assets or business to another Person, and, pursuant to the terms
of such reorganization, reclassification, merger, consolidation or
disposition, shares of common stock of the successor or acquiring
corporation, or any cash, shares of stock or other securities, property or
assets of any nature whatsoever (including warrants or other subscription
or purchase rights) in addition to or in lieu of common stock of the
successor or acquiring corporation ( Other Property ) are to be received by
or distributed to the holders of Common Stock of the Company, then each
Holder shall have the right thereafter to receive, upon exercise of a
Warrant, the number of shares of common stock of the successor or acquiring
corporation or of the Company, if it is the surviving corporation, and
Other Property receivable upon or as a result of such reorganization,
reclassification, merger, consolidation or disposition by a holder of the
number of shares of Common Stock for which a Warrant is exercisable
immediately prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition, the successor or
acquiring corporation (if other than the Company) shall expressly assume
the due and punctual observance and performance of each and every covenant
and condition of this Warrant Agreement and the Warrants to be performed
and observed by the Company and all the obligations and liabilities
hereunder, subject to such modifications as may be deemed appropriate (as
determined by resolution of the Board of Directors of the Company) in order
to provide for adjustments of shares of the Common Stock for which a
Warrant is exercisable which shall be as nearly equivalent as practicable
to the adjustments provided for in this Section 6. For purposes of this
Section 6.5, common stock of the successor or acquiring corporation shall
include stock of such corporation of any class which is not preferred as to
dividends or assets over any other class of stock of such corporation and
which is not subject to redemption and shall also include any evidences of
indebtedness, shares of stock or other securities which are convertible
into or exchangeable for any such stock, either immediately or upon the
arrival of a specified date or the happening of a specified event and any
warrants or other rights to subscribe for or purchase any such stock. The
foregoing provisions of this Section 6.5 shall similarly apply to
successive reorganizations, reclassifications, mergers, consolidations or
dispositions.
6.6. Other Provisions Applicable to Adjustments. The following
provisions shall be applicable to the making of adjustments of the number
of shares of Common Stock for which Warrants are exercisable and the
Current Warrant Price provided for in this Section 6:
(a) Computation of Consideration. To the extent that any
Additional Shares of Common Stock or any Convertible Securities or any
options, warrants or other rights to subscribe for or purchase any
Additional Shares of Common Stock or any Convertible Securities shall be
issued for cash consideration, the consideration received by the Company
therefor shall be the amount of the cash received by the Company therefor,
or, if such Additional Shares of Common Stock or Convertible Securities are
offered by the Company for subscription, the subscription price. To the
extent that such issuance shall be for 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. In case any Additional Shares of Common Stock or
any Convertible Securities or any options, warrants or other rights to
subscribe for or purchase such Additional Shares of Common Stock or
Convertible Securities shall be issued in connection with any merger in
which the Company issues any securities, the amount of consideration
therefor shall be deemed to be the fair value, as determined in good faith
by the Board of Directors of the Company, of such portion of the assets and
business of the nonsurviving corporation as such Board in good faith shall
determine to be attributable to such Additional Shares of Common Stock,
Convertible Securities, options, warrants or other rights, as the case may
be. The consideration for any Additional Shares of Common Stock issuable
pursuant to any options, warrants or other rights to subscribe for or
purchase the same shall be the consideration received by the Company for
issuing such options, warrants or other rights plus any additional
consideration payable to the Company upon exercise of such options,
warrants or other rights. The consideration for any Additional Shares of
Common Stock issuable pursuant to the terms of any Convertible Securities
shall be the consideration received by the Company for issuing 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
exercise of the right of conversion or exchange in such Convertible
Securities. In case of the issuance at any time of any Additional Shares
of Common Stock or Convertible Securities in payment or satisfaction of any
dividends upon any class of stock other than Common Stock, the Company
shall be deemed to have received for such Additional Shares of Common Stock
or Convertible Securities a consideration equal to the amount of such
dividend so paid or satisfied.
(b) When Adjustments Are to Be Made. The adjustments required
by this Section 6 shall be made whenever and as often as any specified
event requiring an adjustment shall occur, except that any adjustment of
the number of shares of Common Stock for which Warrants are exercisable
that would otherwise be required may be postponed (except in the case of a
subdivision or combination of shares of the Common Stock, as provided for
in Section 6.1) up to, but not beyond, the date of exercise if such
adjustment either by itself or with other adjustments not previously made
adds or subtracts less than 1% of the shares of Common Stock for which
Warrants are exercisable immediately prior to the making of such
adjustment. Any adjustment representing a change of less than such minimum
amount (except as aforesaid) which is postponed shall be carried forward
and made as soon as such adjustment, together with other adjustments
required by this Section 6 and not previously made, would result in a
minimum adjustment or on the date of exercise. 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.
(c) Fractional Interests. In computing adjustments under this
Section 6, fractional interests in Common Stock shall be rounded up or down
to the nearest whole share.
6.7. Certain Limitations. Notwithstanding anything herein to the
contrary, the Company agrees not to enter into any transaction which, by
reason of any adjustment hereunder, would cause the Current Warrant Price
to be less than the par value per share of Common Stock.
7. NOTICES TO WARRANT HOLDERS.
7.1. Notice of Adjustments. Whenever the number of shares of Common
Stock for which a Warrant is exercisable, or whenever the price at which a
share of such Common Stock may be purchased upon exercise of the Warrants,
shall be adjusted pursuant to Section 6, the Company shall forthwith
prepare a certificate to be executed by the chief financial officer of the
Company setting forth, in reasonable detail, the event requiring the
adjustment and the method by which such adjustment was calculated,
specifying the number of shares of Common Stock for which a Warrant is
exercisable and describing the number and kind of any other shares of stock
or Other Property for which a Warrant is exercisable, and any change in the
purchase price or prices thereof, after giving effect to such adjustment or
change. The Company shall promptly cause a signed copy of such certificate
to be delivered to each Holder in accordance with Section 16.1. The
Company shall keep at its office or agency designated by the Company
pursuant to Section 13 copies of all such certificates and cause the same
to be available for inspection at said office during normal business hours
by any Holder or any prospective purchaser of a Warrant designated by a
Holder thereof.
7.2. Notice of Corporate Action. If at any time
(a) The Company shall take a record of the holders of its Common
Stock for the purpose of entitling them to receive a dividend (other than a
regularly scheduled cash dividend payable out of earnings or earned surplus
legally available for the payment of dividends under the laws of the
jurisdiction of incorporation of the Company) or other distribution, or
(b) there shall be any capital reorganization of the Company,
any reclassification or recapitalization of the capital stock of the
Company or any consolidation or merger of the Company with, or any sale,
transfer or other disposition of all or substantially all the property,
assets or business of the Company to, another corporation, or
(c) there shall be a voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then, in any one or more of such cases, the Company shall give to each
Holder (i) prompt written notice of the date on which a record date shall
be selected for such dividend, distribution or right or for determining
rights to vote in respect of any such reorganization, reclassification,
merger, consolidation, sale, transfer, disposition, dissolution,
liquidation or winding up, and (ii) in the case of any such reorganization,
reclassification, merger, consolidation, sale, transfer, disposition,
dissolution, liquidation or winding up, at least 10 days' prior written
notice of the date when the same shall take place. Such notice in
accordance with the foregoing clause also shall specify (i) the date on
which any such record is taken for the purpose of such dividend,
distribution or right, the date on which the holders of Common Stock shall
be entitled to any such dividend, distribution or right, and the amount and
character thereof, and (ii) the date and time on which any such
reorganization, reclassification, merger, consolidation, sale, transfer,
disposition, dissolution, liquidation or winding up takes place. Each such
written notice shall be sufficiently given if addressed to such Holder at
the last address of such Holder appearing on the books of the Company and
delivered in accordance with Section 16.1.
8. NO IMPAIRMENT.
The Company shall not by any action, including, without
limitation, amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger, dissolution,
issue or sale of securities or any other voluntary action, avoid or seek to
avoid the observance or performance of any of the terms of this Warrant
Agreement or any Warrant, but will at all times in good faith assist in the
carrying out of all such terms and in the taking of all such actions as may
be necessary or appropriate to protect the rights of Holders against
impairment. Without limiting the generality of the foregoing, the Company
will (1) not increase the par value of any shares of Common Stock
receivable upon the exercise of a Warrant above the amount payable therefor
upon such exercise immediately prior to such increase in par value, (2)
take all such action as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable shares
of Common Stock upon the exercise of any Warrant and (3) use good faith
efforts to obtain all such authorizations, exemptions or consents from any
public regulatory body having jurisdiction thereof as may be necessary to
enable the Company to perform its obligations under this Warrant Agreement.
9. RESERVATION AND AUTHORIZATION OF COMMON STOCK; REGISTRATION WITH OR
APPROVAL OF ANY GOVERNMENTAL AUTHORITY.
From and after the Effective Date, the Company shall at all times
reserve and keep available for issue upon the exercise of Warrants such
number of its authorized but unissued shares of Common Stock as will be
sufficient to permit the exercise in full of all outstanding Warrants. All
shares of Common Stock which shall be so issuable, when issued upon
exercise of any Warrant and payment therefor in accordance with the terms
of this Warrant Agreement and such Warrant, shall be duly and validly
issued and fully paid and nonassessable, and not subject to preemptive
rights.
Before taking any action which would cause an adjustment reducing
the Current Warrant Price below the then par value, if any, of the shares
of Common Stock issuable upon exercise of the Warrants, the Company shall
take any corporate action which may be necessary in order that the Company
may validly and legally issue fully paid and nonassessable shares of such
Common Stock at such adjusted Current Warrant Price.
The Company shall use reasonable good faith efforts to cooperate
with each Holder of a Warrant and each holder of Common Stock in supplying
such information as may be reasonably requested by such holder for such
holder to complete and file any information or reporting forms currently or
hereafter required by the Securities and Exchange Commission as a condition
to the availability of an exemption from the Securities Act for the sale of
any Warrant or Common Stock.
The Company shall file all reports required to be filed by it
under the Securities Act and the Securities Exchange Act of 1934, as
amended, and the rules and regulations adopted by the Securities and
Exchange Commission thereunder, and will use commercially reasonable
efforts to take such further action as any Holder may reasonably request to
enable such Holder to sell Warrant Stock pursuant to Rule 144 or Rule 144A
adopted by the Securities and Exchange Commission under the Securities Act.
The Company shall send or make available to each Holder copies of such
annual, quarterly or current reports, proxy statements and other reports
and documents sent or made available by the Company to its stockholders at
the same time these reports, statements or documents are sent or made
available to the stockholders.
10. TAKING OF RECORD; STOCK AND WARRANT TRANSFER BOOKS.
In the case of all dividends or other distributions by the
Company to the holders of its Common Stock with respect to which any
provision of Section 6, if any, refers to the taking of a record of such
holders, the Company will in each such case take such a record and will
take such record as of the close of business on a Business Day. The
Company will not at any time, except upon dissolution, liquidation or
winding up of the Company, close its stock transfer books or Warrant
transfer books so as to result in preventing or delaying the exercise or
transfer of any Warrant.
11. RESTRICTIONS ON TRANSFERABILITY.
The Warrants and the Warrant Stock shall not be transferred,
hypothecated or assigned before satisfaction of the applicable conditions,
if any, specified by Section 11.1. All Holders, by their acceptance of a
Warrant, agree to be bound by the provisions of this Section 11.
11.1. Restrictive Legend. All certificates representing Warrants
shall be stamped or otherwise imprinted with a legend in substantially the
following form with respect to any Holder who cannot certify that it is not
an Insider (to the extent such certification is required by the Plan):
THIS WARRANT AND THE WARRANT STOCK (AS DEFINED HEREIN) HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY APPLICABLE STATE SECURITIES LAWS, AND ARE SUBJECT TO THE
PROVISIONS (INCLUDING THE RESTRICTIONS ON TRANSFER) SET FORTH IN
THE WARRANT AGREEMENT BETWEEN EDISON BROTHERS STORES, INC. AND
CHASEMELLON SHAREHOLDER SERVICES, L.L.C., AS WARRANT AGENT, DATED
SEPTEMBER 26, 1997. THIS WARRANT AND THE WARRANT STOCK MAY NOT
(AND THE HOLDER OF THIS CERTIFICATE, BY ACCEPTANCE OF THIS
CERTIFICATE, AGREES THAT THIS WARRANT AND THE WARRANT STOCK MAY
NOT AND WILL NOT) BE SOLD OR OTHERWISE TRANSFERRED, PLEDGED, OR
HYPOTHECATED UNLESS AND UNTIL SUCH RESTRICTIONS ARE COMPLIED WITH
AND SUCH WARRANTS AND THE WARRANT STOCK ARE REGISTERED UNDER SUCH
ACT, AND SUCH STATE LAW, OR AN OPINION OF COUNSEL SATISFACTORY TO
THE COMPANY IS OBTAINED TO THE EFFECT THAT SUCH REGISTRATION IS
NOT REQUIRED.
12. LOSS OR MUTILATION.
Upon receipt by the Company and the Warrant Agent from any Holder
of evidence reasonably satisfactory to them of the ownership of and the
loss, theft, destruction or mutilation of such Holder's Warrant and
indemnity reasonably satisfactory to them, and in case of mutilation upon
surrender and cancellation thereof, the Company will execute and the
Warrant Agent will countersign and deliver in lieu hereof a new Warrant of
like tenor to such Holder; provided, in the case of mutilation, no
indemnity shall be required if such Warrant in identifiable form is
surrendered to the Company or the Warrant Agent for cancellation.
13. OFFICE OF COMPANY.
As long as any of the Warrants remain outstanding, the Company
shall maintain an office or agency (which may be the principal executive
offices of the Company) where the Warrants may be presented for exercise,
registration of transfer, division or combination as provided in this
Warrant Agreement. The Company shall initially maintain such an agency at
the Warrant Agent's Principal Offices. The Company shall promptly notify
each Holder of any change in such office or agency.
14. REPURCHASE BY COMPANY OF WARRANTS.
14.1. Option to Repurchase Warrants. If the Daily Market Price
for Common Stock exceeds 200% of the Current Warrant Price on any 10
Trading Days (whether or not consecutive) during any period of 15
consecutive Trading Days (the Pricing Period ), the Company shall have the
right, upon prior written notice to any Holder (which shall be delivered no
later than 20 days following the end of the applicable Pricing Period or,
if such day is not a Business Day, the next succeeding Business Day), to
repurchase from such Holder, from any source of funds legally available
therefor, on the 45th day following delivery of such notice (or, if such
day is not a Business Day, the next succeeding Business Day) and in the
manner set forth in Section 14.2 below, each Warrant then held by such
Holder for an amount equal to one dollar ($1.00) (the Repurchase Price );
provided, however, that nothing herein shall preclude the exercise by such
Holder of any portion of such Warrant exercisable at any time prior to such
repurchase.
14.2. Payment of Repurchase Price. On the date of any repurchase
of Warrants pursuant to this Section 14, each Holder shall assign to
Company such Holder's Warrant being repurchased, without any representation
or warranty, by the surrender of such Holder's Warrant to the Company at
the Warrant Agent's Principal Office against payment therefor of the
Repurchase Price by check issued by the Company.
15. WARRANT AGENT.
15.1. Merger or Consolidation or Change of Name of Warrant Agent.
Any corporation into which the Warrant Agent may be merged or with which it
may be consolidated, or any corporation resulting from any merger or
consolidation to which the Warrant Agent shall be a party, or any
corporation succeeding to the corporate trust business of the Warrant
Agent, shall be the successor to the Warrant Agent hereunder without the
execution or filing of any paper or any further act on the part of any of
the parties hereto; provided that such corporation must be eligible for
appointment as a successor Warrant Agent under the provisions of Section
15.3 hereof. If at the time such successor to the Warrant Agent shall
succeed to the agency created by this Warrant Agreement any of the Warrants
shall have been countersigned but not delivered, any such successor to the
Warrant Agent may adopt the countersignature of the predecessor Warrant
Agent and deliver such Warrants so countersigned; and if at that time any
of the Warrants shall not have been countersigned, any successor to the
Warrant Agent may countersign such Warrants either in the name of the
predecessor Warrant Agent or in the name of the successor Warrant Agent;
and in all such cases Warrants shall have the full force provided in the
Warrants and in this Warrant Agreement. If at any time the name of the
Warrant Agent shall be changed and at such time any of the Warrants shall
have been countersigned but not delivered, the Warrant Agent may adopt the
countersignatures under its prior name and deliver such Warrants so
countersigned; and if at that time any of the Warrants shall not have been
countersigned, the Warrant Agent may countersign such Warrants either in
its prior name or in its changed name; and in all such cases such Warrants
shall have the full force provided in the Warrants and in this Warrant
Agreement.
15.2. Certain Terms and Conditions Concerning the Warrant Agent.
The Warrant Agent undertakes the duties and obligations imposed by this
Warrant Agreement upon the following terms and conditions, by all of which
the Company and the Holders, by their acceptance of Warrants, shall be
bound:
(a) Correctness of Statements. The statements contained
herein and in the Warrants shall be taken as statements of the Company and
the Warrant Agent assumes no responsibility for the correctness of any of
the same except such as describe the Warrant Agent or action taken by it.
The Warrant Agent assumes no responsibility with respect to the
distribution of the Warrants except as herein otherwise provided.
(b) Breach of Covenants. The Warrant Agent shall not be
responsible for any failure of the Company to comply with any of the
covenants contained in this Warrant Agreement or in the Warrants to be
complied with specifically by the Company.
(c) Performance of Duties. The Warrant Agent may execute
and exercise any of the rights or powers hereby vested in it or perform any
duty hereunder either itself or by or through its attorneys or agents
(which shall not include its employees) and shall not be responsible for
the misconduct or negligence of any agent appointed with due care.
(d) Reliance on Counsel. The Warrant Agent may consult at
any time with legal counsel satisfactory to it (who may be counsel for the
Company) and the Warrant Agent shall incur no liability or responsibility
to the Company or to any Holder in respect of any action taken, suffered or
omitted by it hereunder in good faith and in accordance with the opinion or
the advice of such counsel provided that such counsel shall have been
selected with due care.
(e) Proof of Actions Taken. Whenever in the performance of
its duties under this Warrant Agreement the Warrant Agent shall deem it
necessary or desirable that any fact or matter be proved or established by
the Company prior to taking or suffering any action hereunder, such fact or
matter (unless other evidence in respect thereof be herein specifically
prescribed) may be deemed conclusively to be proved and established by a
certificate signed by the President, the Chief Financial Officer or the
Secretary of the Company and delivered to the Warrant Agent; and such
certificate shall be full authorization to the Warrant Agent for any action
taken or suffered in good faith by it under the provisions of this Warrant
Agreement in reliance upon such certificate.
(f) Compensation. The Company agrees to pay the Warrant
Agent reasonable compensation as set forth in the fee schedule attached
hereto as Exhibit B for all services rendered by the Warrant Agent in the
performance of its duties under this Warrant Agreement, to reimburse the
Warrant Agent for all expenses, taxes and governmental charges and other
charges of any kind and nature incurred by the Warrant Agent in the
performance of its duties under this Warrant Agreement, and to indemnify
the Warrant Agent and save it harmless against any and all liabilities,
including judgments, costs and counsel fees, for anything done or omitted
by the Warrant Agent in the performance of its duties under this Warrant
Agreement except as a result of the Warrant Agent's negligence or bad
faith.
(g) Legal Proceedings. The Warrant Agent shall be under no
obligation to institute any action, suit or legal proceeding or to take any
other action likely to involve expense unless the Company or one or more
Holders shall furnish the Warrant Agent with reasonable security and
indemnity for any costs and expenses that may be incurred, but this
provision shall not affect the power of the Warrant Agent to take such
action as the Warrant Agent may consider proper, whether with or without
any such security or indemnity. All rights of action under this Warrant
Agreement or under any of the Warrants may be enforced by the Warrant Agent
without the possession of any of the Warrants or the production thereof at
any trial or other proceeding relative thereto, and any such action, suit
or proceeding instituted by the Warrant Agent shall be brought in its name
as Warrant Agent, and any recovery of judgment shall be for the ratable
benefit of the Holders, as their respective rights or interests may appear.
(h) Other Transactions in Securities of the Company. The
Warrant Agent and any stockholder, director, officer or employee of the
Warrant Agent may buy, sell or deal in any of the Warrants or other
securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or
lend money to the Company or otherwise act as fully and freely as though it
were not Warrant Agent under this Warrant Agreement. Nothing herein shall
preclude the Warrant Agent from acting in any other capacity for the
Company or for any other legal entity.
(i) Liability of Warrant Agent. The Warrant Agent shall
act hereunder solely as agent, and its duties shall be determined solely by
the provisions hereof. The Warrant Agent shall not be liable for anything
that it may do or refrain from doing in connection with this Warrant
Agreement except for its own negligence or bad faith.
(j) Reliance on Documents. The Warrant Agent will not
incur any liability or responsibility to the Company or to any Holder for
any action taken in reliance on any notice, resolution, waiver, consent,
order, certificate, or other paper, document or instrument reasonably
believed by it to be genuine and to have been signed, sent or presented by
the proper party or parties.
(k) Validity of Agreements. The Warrant Agent shall not be
under any responsibility in respect of the validity of this Warrant
Agreement or the execution and delivery hereof (except the due execution
and delivery hereof by the Warrant Agent) or in respect of the validity or
execution of any Warrant (except its countersignature and delivery
thereof); nor shall the Warrant Agent by any act hereunder be deemed to
make any representation or warranty as to the authorization or reservation
of any Warrant Stock (or other stock) to be issued pursuant to this Warrant
Agreement or any Warrant, or as to whether any Warrant Stock (or other
stock) will, when issued, be validly issued, fully paid and nonassessable,
or as to the Warrant Price or the number or amount of Warrant Stock or
other securities or other property issued upon exercise of any Warrant.
(l) Instructions from Company. The Warrant Agent is hereby
authorized and directed to accept instructions with respect to the
performance of its duties hereunder from the President, the Chief Financial
Officer or the Secretary of the Company, and to apply to such officers for
advice or instructions in connection with its duties, and shall not be
liable for any action taken or suffered to be taken by it in good faith in
accordance with instructions of any such officer or officers.
15.3. Change of Warrant Agent. The Warrant Agent may resign and
be discharged from its duties under this Warrant Agreement by giving to the
Company 30 days' advance notice in writing. The Warrant Agent may be
removed by like notice to the Warrant Agent from the Company. If the
Warrant Agent shall resign or be removed or shall otherwise become
incapable of acting, the Company shall appoint a successor to the Warrant
Agent. If the Company shall fail to make such appointment within a period
of 30 days after such removal or after it has been notified in writing of
such resignation or incapacity by the resigning or incapacitated Warrant
Agent, then any Holder may apply to the Court for the appointment of a
successor to the Warrant Agent. Pending the appointment of the successor
warrant agent, the Company shall perform the duties of the Warrant Agent.
Any successor warrant agent, whether appointed by the Company or the Court,
shall be a bank or trust company, in good standing, incorporated under the
laws of the United States of America or any state thereof and having at the
time of its appointment as warrant agent a combined capital and surplus of
at least $50,000,000. After appointment, the successor warrant agent shall
be vested with the same powers, rights, duties and responsibilities as if
it had been originally named as Warrant Agent without further act or deed;
but the former Warrant Agent shall deliver and transfer to the successor
warrant agent any property at the time held by it hereunder, and execute
and deliver any further assurance, conveyance, act or deed necessary for
the purpose. Failure to give any notice provided for in this Section 15.3,
however, or any defect therein, shall not affect the legality or validity
of the resignation or removal of the Warrant Agent or the appointment of
the successor warrant agent, as the case may be. In the event of such
resignation or removal, the successor warrant agent shall mail, first
class, to each Holder, written notice of such removal or resignation and
the name and address of such successor warrant agent.
15.4. Disposition of Proceeds on Exercise of Warrants, Inspection
of Warrant Agreement. The Warrant Agent shall account promptly to the
Company with respect to Warrants exercised and concurrently pay to the
Company all immediately available funds and any other consideration
received by the Warrant Agent for the purchase of the Warrant Stock through
the exercise of such Warrants. The Warrant Agent shall, upon request of
the Company from time to time, deliver to the Company such complete reports
of registered ownership of the Warrants and such complete records or
transactions with respect to the Warrants and the shares of Common Stock as
the Company may request. The Warrant Agent shall also make available to
the Company for inspection by the Company's agents or employees, from time
to time as the Company may request, such original books of accounts and
records maintained by the Warrant Agent in connection with the issuance and
exercise of Warrants hereunder, such inspections to occur at the Warrant
Agent's Principal Office. The Warrant Agent shall keep copies of this
Warrant Agreement and any notices given or received hereunder available for
inspection by the Company or the Holders at the Warrant Agent's Principal
Office. The Company shall supply the Warrant Agent from time to time with
such numbers of copies of this Warrant Agreement as the Warrant Agent may
request.
16. MISCELLANEOUS.
16.1. Limitation of Liability. No provision hereof, in the
absence of affirmative action by a Holder to purchase shares of Common
Stock, and no enumeration herein of the rights or privileges of a Holder,
shall impose on any such Holder an obligation to purchase any Common Stock
or any liability as a stockholder of the Company, whether such obligation
or liability is asserted by the Company or by creditors of the Company.
16.2. Notice Generally. Any notice, demand, request, consent,
approval, declaration, delivery or other communication hereunder to be made
pursuant to the provisions of this Warrant Agreement shall be sufficiently
given or made if in writing and either delivered in person with receipt
acknowledged or sent by registered or certified mail, return receipt
requested, postage prepaid, or by telecopy and confirmed by telecopy
answerback, addressed as follows:
(a) If to any Holder or holder of Warrant Stock, at
its last known address appearing on the warrant register of the
Company maintained for such purpose.
(b) If to Company at
Edison Brothers Stores, Inc.
000 Xxxxx Xxxxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: Xxxx X. Xxxxx
Telecopy Number: (000) 000-0000
(c) If to Warrant Agent at
ChaseMellon Shareholder Services, L.L.C.
000 Xxxxxx Xxxxxx
Xx. Xxxxx, Xxxxxxxx 00000
Attention: H. Xxxxxx Xxxxxxxx
Telecopy Number: (000) 000-0000
or at such other address as may be substituted by notice given as herein
provided. The giving of any notice required hereunder may be waived in
writing by the party entitled to receive such notice. Every notice,
demand, request, consent, approval, declaration, delivery or other
communication hereunder shall be deemed to have been duly given or served
on the date on which personally delivered, with receipt acknowledged,
telecopied and confirmed by telecopy answerback or three Business Days
after the same shall have been deposited in the United States mail (by
registered or certified mail, return receipt requested, postage prepaid),
whichever is earlier.
16.3. Successors and Assigns. All covenants and provisions of
this Warrant Agreement by or for the benefit of the Company or the Warrant
Agent shall bind and inure to the benefit of their respective successors
and assigns hereunder.
16.4. Amendment. This Warrant Agreement and the Warrants may be
modified or amended or the provisions hereof and thereof waived with the
written consent of the Company, the Warrant Agent and the Majority Holders,
provided that no Warrant may be modified or amended to reduce the number of
shares of Common Stock for which such Warrant is exercisable or to increase
the price at which such shares may be purchased upon exercise of such
Warrant (before giving effect to any adjustment as provided herein and
therein) without the prior written consent of the Holder thereof.
16.5. Severability. Wherever possible, each provision of this
Warrant Agreement shall be interpreted in such manner as to be effective
and valid under applicable law, but if any provision of this Warrant
Agreement shall be prohibited by or invalid under applicable law, such
provision shall be ineffective to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Warrant Agreement.
16.6. Headings. The headings used in this Warrant Agreement are
for the convenience of reference only and shall not, for any purpose, be
deemed a part of this Warrant Agreement.
16.7. Governing Law. THIS WARRANT AGREEMENT AND THE WARRANTS
SHALL BE GOVERNED BY THE LAWS OF THE STATE OF DELAWARE, WITHOUT REGARD TO
THE PROVISIONS THEREOF RELATING TO CONFLICT OF LAWS.
16.8. Counterparts. This Warrant Agreement may be executed in any
number of counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together
constitute but one and the same instrument.
IN WITNESS WHEREOF, each of the Company and the Warrant Agent has
caused this Warrant Agreement to be duly executed by its duly authorized
officers as of the date first above written.
EDISON BROTHERS STORES, INC.
By:/S/
Name: Xxxxx X. Xxxxxx, Xx.
Title: Executive Vice President and
Chief Financial Officer
CHASEMELLON SHAREHOLDER SERVICES,
L.L.C., as Warrant Agent
By:/S/
Name:
Title:
EXHIBIT A
[FORM OF FACE OF WARRANT CERTIFICATE]
[NOTE: THE FOLLOWING LEGEND WILL BE ADDED ON WARRANTS OF ANY
HOLDER WHO CANNOT CERTIFY THAT IT IS NOT AN INSIDER:
THIS WARRANT AND THE WARRANT STOCK (AS DEFINED HEREIN) HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY
APPLICABLE STATE SECURITIES LAWS, AND ARE SUBJECT TO THE PROVISIONS
(INCLUDING THE RESTRICTIONS ON TRANSFER) SET FORTH IN THE WARRANT
AGREEMENT BETWEEN EDISON BROTHERS STORES, INC. AND CHASEMELLON
SHAREHOLDER SERVICES, L.L.C., AS WARRANT AGENT, DATED SEPTEMBER 26,
1997. THIS WARRANT AND THE WARRANT STOCK MAY NOT (AND THE HOLDER OF
THIS CERTIFICATE, BY ACCEPTANCE OF THIS CERTIFICATE, AGREES THAT THIS
WARRANT AND THE WARRANT STOCK MAY NOT AND WILL NOT) BE SOLD OR
OTHERWISE TRANSFERRED, PLEDGED, OR HYPOTHECATED UNLESS AND UNTIL SUCH
RESTRICTIONS ARE COMPLIED WITH AND SUCH WARRANTS AND THE WARRANT STOCK
ARE REGISTERED UNDER SUCH ACT, AND SUCH STATE LAW, OR AN OPINION OF
COUNSEL SATISFACTORY TO THE COMPANY IS OBTAINED TO THE EFFECT THAT
SUCH REGISTRATION IS NOT REQUIRED. ]
EDISON BROTHERS STORES, INC.
Warrant to purchase Common Stock, par value $0.01 per share, of Edison
Brothers Stores, Inc.
Warrant Certificate No.: Number of Warrants:
CUSIP No.
See Reverse for Certain Definitions
Exercisable from and after September 26, 1997 until 5:00 p.m., New
York City time, on September 26, 2005.
This Warrant Certificate certifies that ____________________, or
registered assigns, is the registered holder of the number of Warrants set
forth above, expiring at 5:00 p.m., New York City time, on September 26,
2005 or, if such date is not a Business Day, the next succeeding Business
Day (the Warrants ), to purchase Common Stock, par value $0.01 per share
(the Common Stock ), of Edison Brothers Stores, Inc., a Delaware
corporation (the Company ). The Common Stock issuable upon exercise of
Warrants is hereinafter referred to as the Warrant Stock. Subject to the
immediately succeeding paragraph, each Warrant entitles the holder upon
exercise to purchase from the Company on or before 5:00 p.m., New York City
time, on September 26, 2005, or, if such date is not a Business Day, the
next succeeding Business Day, one share of Common Stock, subject to
adjustment as set forth herein and in the Warrant Agreement dated as of
September 26, 1997 (the Warrant Agreement ) by and between the Company and
ChaseMellon Shareholder Services, L.L.C., as warrant agent (the Warrant
Agent ), in whole or in part, at the initial purchase price of $16.40 per
share, on and subject to the terms and conditions set forth herein and in
the Warrant Agreement. Such purchase shall be payable in lawful money of
the United States of America by certified or official bank check or any
combination thereof to the order of the Warrant Agent for the account of
the Company at the principal office of the Warrant Agent, subject to the
conditions set forth herein and in the Warrant Agreement. The number of
shares of Common Stock for which each Warrant is exercisable, and the price
at which such shares may be purchased upon exercise of each Warrant, are
subject to adjustment upon the occurrence of certain events as set forth in
the Warrant Agreement. Whenever the number of shares of Common Stock for
which a Warrant is exercisable, or the price at which a share of such
Common Stock may be purchased upon exercise of the Warrants, is adjusted
pursuant to the Warrant Agreement, the Company shall cause to be given to
each of the registered holders of the Warrants at such holders' addresses
appearing on the Warrant register written notice of such adjustment by
first class mail postage pre-paid.
No Warrant may be exercised before 1:00 p.m., New York City time, on
September 26, 1997, or after 5:00 p.m., New York City time, on September
26, 2005 or, if such date is not a Business Day, the next succeeding
Business Day, and to the extent not exercised by such time such Warrants
shall become void.
Reference is hereby made to the further provisions of this Warrant
Certificate set forth on the reverse side hereof and such further
provisions shall for all purposes have the same effect as though fully set
forth at this place.
This Warrant Certificate shall not be valid unless countersigned by
the Warrant Agent.
THIS WARRANT CERTIFICATE SHALL BE GOVERNED BY THE LAWS OF THE STATE OF
DELAWARE, WITHOUT REGARD TO THE PROVISIONS THEREOF RELATING TO CONFLICT OF
LAWS.
IN WITNESS WHEREOF, the Company has caused this Warrant Certificate to
be signed by its President and has caused its corporate seal to be affixed
hereunto or imprinted hereon.
Dated:
(Seal)
Attest: EDISON BROTHERS STORES, INC.
By: /S/
Name: Name:
Title: Secretary Title: President
COUNTERSIGNED:
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C, as Warrant Agent
By: /S/
Name:
Title:
[Authorized Signature]
[FORM OF REVERSE OF WARRANT CERTIFICATE]
The Warrants evidenced by this Warrant Certificate are part of a duly
authorized issue of up to 1,008,791 Warrants expiring at 5:00 p.m., New
York City time, on September 26, 2005 or, if such date is not a Business
Day, the next succeeding Business Day, entitling the holder on exercise to
purchase shares of Common Stock, par value $0.01 per share, of the Company,
and are issued or to be issued pursuant to the Warrant Agreement, which
Warrant Agreement is hereby incorporated by reference in and made a part of
this instrument and is hereby referred to for a description of the rights,
limitation of rights, obligations, duties and immunities thereunder of the
Warrant Agent, the Company and the Holders (the words Holders or Holder
meaning the registered holders or registered holder of the Warrants). A
copy of the Warrant Agreement may be obtained by the Holder hereof upon
written request to the Company.
Warrants may be exercised at any time on and after 1:00 p.m., New York
City time, on September 26, 1997 and on or before 5:00 p.m., New York City
time, on September 26, 2005 or, if such date is not a Business Day, the
next succeeding Business Day. The Holder of Warrants evidenced by this
Warrant Certificate may exercise them by surrendering this Warrant
Certificate, with the form of election to purchase set forth hereon
properly completed and executed, together with payment of the purchase
price by certified or official bank check or any combination thereof to the
order of the Warrant Agent for the account of the Company and the other
required documentation. In the event that upon any exercise of Warrants
evidenced hereby the number of Warrants exercised shall be less than the
total number of Warrants evidenced hereby, there shall be issued to the
Holder hereof or his assignee a new Warrant Certificate evidencing the
number of Warrants not exercised.
The Warrant Agreement provides that the number of shares of Common
Stock for which each Warrant is exercisable, and the price at which such
shares may be purchased upon exercise of each Warrant, are subject to
adjustment upon the occurrence of certain events as set forth in the
Warrant Agreement. The Company shall not be required to issue any
fractional share of Common Stock upon the exercise of any Warrant, but the
Company shall pay the cash value thereof determined as provided in the
Warrant Agreement.
Warrant Certificates, when surrendered at the office of the Warrant
Agent by the registered Holder thereof in person or by legal representative
or attorney duly authorized in writing, may be exchanged, in the manner and
subject to the limitations provided in the Warrant Agreement, but without
payment of any service charge, for another Warrant Certificate or Warrant
Certificates of like tenor evidencing in the aggregate a like number of
Warrants.
Upon due presentation for registration of transfer of this Warrant
Certificate at the office of the Warrant Agent a new Warrant Certificate or
Warrant Certificates of like tenor and evidencing in the aggregate a like
number of Warrants shall be issued to the transferee in exchange for this
Warrant Certificate, subject to the limitations provided in the Warrant
Agreement without charge except for any tax imposed in connection
therewith.
[ELECTION TO PURCHASE FORM]
[To be executed only upon exercise of Warrant]
The undersigned registered owner of this Warrant irrevocably
exercises this Warrant for the purchase of ______ Shares of Common Stock of
EDISON BROTHERS STORES, INC. and herewith makes payment therefor, all at
the price and on the terms and conditions specified in this Warrant and the
Warrant Agreement and requests that certificates for the shares of Common
Stock hereby purchased (and any securities or other property issuable upon
such exercise) be issued in the name of and delivered to _____________
whose address is _________________ and, if such shares of Common Stock
shall not include all of the shares of Common Stock issuable as provided in
this Warrant, that a new Warrant of like tenor and date for the balance of
the shares of Common Stock issuable hereunder be delivered to the
undersigned.
_______________________________
(Name of Registered Owner)
_/S/______________________________
(Signature of Registered Owner)
_______________________________
(Street Address)
_______________________________
(City) (State) (Zip Code)
NOTICE: The signature on this election to purchase must correspond with
the name as written upon the face of the within Warrant in every
particular, without alteration or enlargement or any change
whatsoever.
[ASSIGNMENT FORM]
FOR VALUE RECEIVED the undersigned registered owner of this
Warrant hereby sells, assigns and transfers unto the Assignee named below
all of the rights of the undersigned under this Warrant, with respect to
the number of shares of Common Stock set forth below:
Name and Address of Assignee No. of Shares of Common Stock
and does hereby irrevocably constitute and appoint _______ ________________
attorney-in-fact to register such transfer on the books of EDISON BROTHERS
STORES, INC. maintained for the purpose, with full power of substitution in
the premises.
Dated:____________________ Print Name:
Signature:/S/
Witness:
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular,
without alteration or enlargement or any change whatsoever.
EXHIBIT B
Schedule of Fees
