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SERIES E WARRANT AGREEMENT
This SERIES E WARRANT AGREEMENT, dated as of October 11, 1995 (this
"Agreement"), is made and entered into by and among Broadway Stores, Inc., a
Delaware corporation ("Broadway"), Federated Department Stores, Inc., a Delaware
corporation (the "Company"), and The Bank of New York, a New York banking
corporation (the "Warrant Agent").
RECITALS
A. Pursuant to an Agreement and Plan of Merger, dated as of August 14,
1995 (the "Merger Agreement"), a wholly owned subsidiary of the Company will
merge with and into Broadway (the "Merger") and Broadway thereby will become a
subsidiary of the Company;
B. The Merger Agreement provides for the issuance of shares of Series A
Preferred Stock, par value $0.01 per share, of Broadway (the "Broadway Preferred
Stock") to persons who, immediately prior to the effective time of the Merger,
held outstanding shares of the former Series A Preferred Stock of Broadway;
C. Shares of Broadway Preferred Stock will be exchangeable for warrants
of the Company on the terms and subject to the conditions set forth in
Broadway's Certificate of Incorporation, as amended and restated at the
effective time of the Merger (the "Broadway Certificate of Incorporation");
D. The parties hereto desire to set forth in this Agreement the terms
of such warrants and certain other matters relating thereto;
NOW, THEREFORE, in consideration of the mutual covenants herein set
forth, the parties hereto hereby agree as follows:
1. Issuance of Warrants; Basic Terms and Form of Warrants.
1.1 Issuance of Warrants. On the terms and subject to the conditions
set forth in the Broadway Certificate of Incorporation, Broadway will deliver to
holders of record of shares of Broadway Preferred Stock, upon the exchange of
such shares as provided in the Broadway Certificate of Incorporation, 1,000
warrants issued pursuant to this Agreement (the "Warrants") for each such share
so exchanged. The Company will, promptly upon the request of Broadway from time
to time, cause to be issued and delivered to the order of Broadway such number
of Warrants as may be required in order for Broadway to fulfill its obligations
as contemplated in the immediately preceding sentence.
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1.2 Basic Terms and Form of Warrants. (a) Each Warrant will initially
represent the right to purchase 0.27 shares of Common Stock, par value $0.01 per
share, of the Company (the "Common Stock") on the terms and subject to the
conditions set forth herein. The shares of Common Stock purchasable upon
exercise of the Warrants are hereinafter referred to as the "Warrant Shares."
The purchase price per whole Warrant Share payable upon the exercise of a
Warrant (the "Warrant Price") will initially be $62.96 (i.e., subject to the
provisions of Section 3.1, each Warrant will initially be exercisable to
purchase 0.27 shares of Common Stock for $17.00). The Warrant Price and the
number and kind of Warrant Shares purchasable upon exercise of the Warrants are
subject to adjustment pursuant to the provisions of Section 4.
(b) Each Warrant, including without limitation any Warrants that may be
issued upon partial exercise, replacement, or transfer of Warrants, will be
evidenced by, and subject to the terms of, a Warrant certificate (including the
Form of Exercise Notice and Form of Assignment to be printed on the reverse
thereof, a "Warrant Certificate") in substantially the form of Exhibit A, with
such changes, marks of identification or designation, and such legends,
summaries, or endorsements printed thereon as the Company may deem appropriate
and as are not inconsistent with the provisions of this Agreement, or as may be
required to comply with any applicable law or with any rule or regulation made
pursuant thereto.
1.3 Countersignature of Warrants. The Warrant Certificates will be
executed on behalf of the Company by the manual or facsimile signature of its
Chairman, President, or any Vice President, and attested by its Secretary or any
Assistant Secretary. The Warrant Certificates will be countersigned by the
Warrant Agent, either manually or by facsimile signature, and will not be valid
for any purpose unless so countersigned. In case any officer of the Company who
has signed any of the Warrant Certificates ceases to be such officer of the
Company before countersignature by the Warrant Agent and issuance and delivery
by the Company, such Warrant Certificates, nevertheless, may be countersigned by
the Warrant Agent, and issued and delivered by the Company 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; and any Warrant Certificate may be
signed on behalf of the Company by any person who, at the actual date of the
execution of such Warrant Certificate, is a proper officer of the Company to
sign such Warrant Certificate, although on any other date such person was not
such an officer.
1.4 Registration of Warrants. The Warrant Agent will keep or cause to
be kept, at the principal office of the Warrant Agent designated for such
purpose, books for registration and transfer of the Warrant Certificates issued
hereunder. Such books will show the names and addresses of the respective
holders of the Warrant Certificates, the number of Warrants evidenced on its
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face by each of the Warrant Certificates, and the date of each of the Warrant
Certificates. The Company and the Warrant Agent will be entitled to treat the
registered holder of any Warrant Certificate (the "Holder") as the sole owner of
the Warrants represented by such Warrant Certificate for all purposes and will
not be bound to recognize any equitable or other claim or interest in such
Warrants on the part of any other person. Neither the Company nor the Warrant
Agent will be liable for any registration of transfer of any Warrants that are
registered or to be registered in the name of a fiduciary or the nominee of a
fiduciary.
2. Transfer and Exchange of Warrants.
2.1 Transfer and Exchange. Any Warrant Certificate may be transferred,
split up, combined, or exchanged for another Warrant Certificate or Warrant
Certificates entitling the Holder thereof to purchase a like aggregate number of
Warrant Shares as the Warrant Certificate or Warrant Certificates surrendered
then entitled such Holder (or former Holder in the case of a transfer) to
purchase. Any Holder desiring to transfer, split up, combine, or exchange any
such Warrant Certificate will make such request in writing delivered to the
Warrant Agent, and will surrender the Warrant Certificate or Warrant
Certificates to be transferred, split up, combined, or exchanged, with the Form
of Assignment duly executed by the Holder thereof, at the principal office of
the Warrant Agent designated for such purpose. Thereupon or as promptly as
practicable thereafter, the Company will prepare, execute, and deliver to the
Warrant Agent, and the Warrant Agent will countersign and deliver, a Warrant
Certificate or Warrant Certificates, as the case may be, as so requested.
Neither the Company nor the Warrant Agent will be required to issue or deliver
any Warrant Certificates in connection with any transfer, split up, combination,
or exchange of Warrants or Warrant Certificates unless and until the person or
persons requesting the issuance or delivery thereof has paid to the Warrant
Agent the amount of any tax or governmental charge that may be payable in
connection with such transfer, split up, combination, or exchange or has
established to the satisfaction of the Warrant Agent that any tax or
governmental charge has been paid. Holders will not be required to pay any other
charge in connection with the transfer, split up, combination, or exchange of
Warrants.
2.2 Lost, Stolen, and Mutilated Warrant Certificates. Upon receipt by
the Company and the Warrant Agent of evidence reasonably satisfactory to them of
the loss, theft, destruction, or mutilation of a Warrant Certificate, and, in
case of loss, theft, or destruction, of indemnity or security reasonably
satisfactory to them, and reimbursement to the Company and the Warrant Agent of
all reasonable expenses incidental thereto, and upon surrender to the Warrant
Agent and cancellation of the Warrant Certificate if mutilated, the Company will
prepare, execute, and deliver a new Warrant Certificate of like tenor to the
Warrant Agent and the Warrant Agent will countersign and
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deliver such new Warrant Certificate to the Holder in lieu of the Warrant
Certificate so lost, stolen, destroyed, or mutilated.
2.3 Payment of Taxes. The Company will pay all documentary or stamp
taxes, if any, attributable to the initial issuance of the Warrants and the
initial issuance of the Warrant Shares upon the exercise of Warrants; provided,
however, that the Company's obligations in this regard will in all events be
conditioned upon the Holder cooperating with the Company and the Warrant Agent
in any reasonable arrangement designed to minimize or eliminate any such taxes.
Neither the Company nor the Warrant Agent will be required to pay any tax or
governmental charge that may be payable in connection with any transfer, split
up, combination, or exchange of Warrants or Warrant Certificates.
2.4 Cancellation and Destruction of Warrant Certificates. All Warrant
Certificates surrendered for the purpose of exercise, transfer, split up,
combination, or exchange will, if surrendered to the Company, be delivered to
the Warrant Agent for cancellation or in canceled form, or, if surrendered to
the Warrant Agent, will be canceled by it, and no Warrant Certificates will be
issued in lieu thereof except as expressly permitted by this Agreement. The
Company will deliver to the Warrant Agent for cancellation and retirement, and
the Warrant Agent will so cancel and retire, any other Warrant Certificate
purchased or acquired by the Company otherwise than upon the exercise thereof.
The Warrant Agent will deliver all canceled Warrant Certificates to the Company,
or will, at the written request of the Company, destroy such canceled Warrant
Certificates, and in such case will deliver a certificate of destruction thereof
to the Company.
3. Exercise of Warrants.
3.1. Exercise of Warrants. (a) Warrants may be exercised by the Holder
thereof, in whole or in part (provided, however, that no Holder may exercise a
number of Warrants that is not an integral multiple of 100 unless such Holder is
then exercising all of its Warrants), at any time and from time to time after
the date hereof and prior to 5:00 p.m., Cincinnati, Ohio time on the Expiration
Date. The "Expiration Date" is October 8, 1999; provided, however, that the
Company's Board of Directors may, on 75 calendar days' written notice to the
Holders of Warrants and to holders of record of Broadway Preferred Stock, fix an
earlier Expiration Date for all purposes of this Agreement and the Broadway
Certificate of Incorporation within 10 calendar days after any period of 30
consecutive Trading Days (as defined in Section 3.2(b)) in which the Current
Market Price (as defined in Section 4.1(e)) per share of Common Stock has
equalled or exceeded $94.44. Warrants may be exercised by delivering to the
Warrant Agent, at its principal office designated for such purpose, the
following:
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(i) the Warrant Certificate or Warrant Certificates
representing the Warrants to be exercised, with the Form of Exercise
Notice duly executed by the Holder thereof; and
(ii) cash, a certified or bank cashier's check payable to the
order of the Company, or a wire transfer to an account designated by
the Company, in each case in an amount equal to the product of (A) the
number of Warrant Shares purchasable upon the exercise of the Warrants
designated for exercise in the Form of Exercise Notice and (B) the
Warrant Price.
(b) As promptly as practicable after an exercise of Warrants in
accordance with Section 3.1(a), and in any event within 10 Business Days after
such exercise, the Warrant Agent will (i) requisition from any transfer agent
for the Common Stock (or make available, if the Warrant Agent is the transfer
agent) certificates representing the number of Warrant Shares to be purchased
(and the Company hereby irrevocably authorizes and directs its transfer agent to
comply with all such requests), (ii) after receipt of such certificates, cause
the same to be delivered to or upon the order of the Holder exercising such
Warrants, registered in such name or names as may be designated by such Holder,
(iii) when appropriate, requisition from the Company the amount of cash to be
paid in lieu of the issuance of fractional Warrant Shares in accordance with the
provisions of Section 5, and (iv) when appropriate, after receipt, deliver such
cash to or upon the order of the Holder exercising such Warrants.
(c) If the number of Warrants represented by a Warrant Certificate are
not exercised in full, the Company will prepare, execute, and deliver to the
Warrant Agent a new Warrant Certificate evidencing Warrants equivalent to such
Warrants remaining unexercised and the Warrant Agent will countersign and
deliver such new Warrant Certificate to or upon the order of the Holder
exercising such Warrants, registered in such name or names as may be designated
by such Holder.
(d) The Company will take all such action as may be necessary to ensure
that all Warrant Shares delivered upon exercise of Warrants, at the time of
delivery of the certificates for such Warrant Shares, will (subject to payment
of the Warrant Price) be duly and validly authorized and issued, fully paid, and
nonassessable and, if shares of Common Stock are then listed on any national
securities exchange (as defined in the Securities Exchange Act of 1934, as
amended) or qualified for quotation on the National Association of Securities
Dealers, Inc. Automated Quotation System, will be duly listed or qualified for
quotation thereon, as the case may be.
(e) In the event that the Company is obligated to pay cash in lieu of
fractional Warrant Shares pursuant to Section 5 in connection with any exercise
of Warrants, it will make all
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arrangements necessary so that such cash is available for distribution by the
Warrant Agent, if and when appropriate.
(f) The Company will pay all expenses, taxes, and other charges payable
in connection with the preparation, issuance, and delivery of certificates
representing Warrant Shares or Warrant Certificates representing unexercised
Warrants in connection with any exercise of Warrants in accordance with Section
3.1(a), except that, if any such certificates representing Warrant Shares or any
such Warrant Certificates are to be registered in a name or names other than
that of the Holder at the time of any such exercise of Warrants, funds
sufficient to pay all transfer or similar taxes payable as a result of such
transfer shall be paid by the Holder at the time of such exercise or promptly
upon receipt of a written request of the Company for payment thereof. In
connection with any exercise of Warrants in accordance with Section 3.1(a), the
Warrants will be deemed to have been exercised, any certificate representing
Warrant Shares or any Warrant Certificate issued on account thereof will be
deemed to have been issued, and the person in whose name any such certificate or
Warrant Certificate is issued will be deemed for all purposes to have become a
holder of record of the Warrant Shares or Warrants, as the case may be,
represented thereby as of the date of such exercise.
3.2. Certain Definitions. For purposes of this Agreement, (a) the term
"Business Day" means any day other than a Saturday, Sunday, or a day on which
banking institutions in the state of Ohio are authorized or obligated by law or
executive order to close and (b) the term "Trading Day" means any day on which
shares of Common Stock are traded on the principal national securities exchange
on which the shares of Common Stock are listed or admitted to trading or, if
shares of Common Stock are not so listed or admitted to trading, in the
over-the-counter market.
4. Adjustments of Warrant Price and Warrant Shares. The Warrant Price
and the number and kind of Warrant Shares purchasable upon exercise of the
Warrants will be subject to adjustment from time to time upon the occurrence of
certain events as provided in this Section 4.
4.1. Mechanical Adjustments. The Warrant Price and the number and kind
of Warrant Shares purchasable upon exercise of a Warrant will be subject to
adjustment as follows:
(a) Subject to Section 4.1(f), if the Company (i) pays a
dividend or otherwise distributes to holders of its Common Stock, as
such, shares of its capital stock (whether Common Stock or capital
stock of any other class), (ii) subdivides its outstanding shares of
Common Stock into a greater number of shares of Common Stock, (iii)
combines its outstanding shares of Common Stock into a smaller number
of shares of Common Stock, or (iv) issues any shares of its capital
stock
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in a reclassification of its outstanding shares of Common Stock
(including any such reclassification in connection with a
consolidation, merger, or other business combination transaction in
which the Company is the continuing or surviving corporation), then the
number and kind of Warrant Shares purchasable upon exercise of each
Warrant immediately prior thereto will be adjusted so that the Holder
of each Warrant will be entitled to receive (A) in the case of a
dividend or distribution, the sum of (1) the number of Warrant Shares
that, if such Warrant had been exercised immediately prior to such
adjustment, such Holder would have received upon such exercise and (2)
the number and kind of additional shares of capital stock that such
Holder would have been entitled to receive as a result of such dividend
or distribution by virtue of its ownership of such Warrant Shares, (B)
in the case of a subdivision or combination, the number of Warrant
Shares that, if such Warrant had been exercised immediately prior to
such adjustment, such Holder would have received upon such exercise,
adjusted to give effect to such subdivision or combination as if such
Warrant Shares had been subject thereto, or (C) in the case of an
issuance in a reclassification, the sum of (1) the number of Warrant
Shares that, if such Warrant had been exercised immediately prior to
such adjustment, such Holder would have received upon such exercise and
retained after giving effect to such reclassification as if such
Warrants Shares had been subject thereto and (2) the number and kind of
additional shares of capital stock that such Holder would have been
entitled to receive as a result of such reclassification as if such
Warrant Shares had been subject thereto. An adjustment made pursuant to
this paragraph (a) will become effective immediately after the record
date for the determination of stockholders entitled to receive such
dividend or distribution in the case of a dividend or distribution and
will become effective immediately after the effective date of such
subdivision, combination, or reclassification in the case of a
subdivision, combination, or reclassification.
(b) Subject to Section 4.1(f), if the Company distributes to
holders of its Common Stock, as such, (i) evidences of indebtedness or
assets (excluding regular cash dividends or cash distributions payable
out of consolidated retained earnings) of the Company or any
corporation or other legal entity a majority of the voting equity
securities or equity interests of which are owned, directly or
indirectly, by the Company (a "Subsidiary"), (ii) shares of capital
stock of any Subsidiary, (iii) securities convertible into or
exchangeable for capital stock of the Company (including Common Stock
or capital stock of any other class) or any Subsidiary, or (iv) any
rights, options, or warrants to purchase any of the foregoing
(excluding those described in Section 4.1(c)), then, the number of
Warrant Shares thereafter purchasable upon exercise of each
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Warrant will be adjusted to the number that results from multiplying
the number of Warrant Shares purchasable upon the exercise of each
Warrant immediately prior to such adjustment by a fraction, the
numerator of which will be the Current Market Price per share of Common
Stock on the record date for such distribution, and the denominator of
which will be such Current Market Price per share of Common Stock less
the fair value (as determined in good faith by the Board of Directors
of the Company, whose determination will be conclusive if based on the
financial advice of a nationally recognized investment banking firm) of
the portion of the evidences of indebtedness, assets, securities, or
rights, options, or warrants so distributed on account of one share of
Common Stock. Such adjustment will be made whenever any such
distribution is made, and will become effective immediately after the
record date for the determination of stockholders entitled to receive
such distribution. Except as provided in Section 4.1(i), no further
adjustments of the number of Warrant Shares will be made upon the
actual issue of shares of Common Stock upon conversion or exchange of
such securities convertible or exchangeable for shares of Common Stock
or upon exercise of such rights, warrants, or options for shares of
Common Stock.
(c) Subject to Section 4.1(f), if the Company issues rights,
options, or warrants to holders of the outstanding shares of Common
Stock, as such, entitling the holders of such rights, options, or
warrants (for a period expiring within 60 calendar days after the
record date mentioned below) to subscribe for or purchase shares of
Common Stock at a price per share that is lower on the record date
mentioned below than the Current Market Price per share of Common Stock
on such record date, then the number of Warrant Shares thereafter
purchasable upon the exercise of each Warrant will be adjusted to the
number that results from multiplying the number of Warrant Shares
purchasable upon exercise of each Warrant immediately prior to such
adjustment by a fraction (not to be less than one), the numerator of
which will be the number of shares of Common Stock outstanding on such
record date plus the number of additional shares of Common Stock
offered by such rights, options, or warrants for subscription or
purchase and the denominator of which will be the number of shares of
Common Stock outstanding on such record date plus the number of shares
of Common Stock which the aggregate subscription or purchase price of
the total number of shares of Common Stock so offered would purchase at
the Current Market Price per share of Common Stock on such record date.
Such adjustment will be made whenever such rights, options, or warrants
are issued, and will become effective immediately after the record date
for the determination of stockholders entitled to receive such rights,
options, or warrants. In case such subscription or purchase price may
be paid in a
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consideration part or all of which is in a form other than cash, the
fair value of such consideration will be as determined by the Board of
Directors of the Company, whose determination will be conclusive if
based on the financial advice of a nationally recognized investment
banking firm. Except as provided in Section 4.1(i), no further
adjustments of the number of Warrant Shares will be made upon the
actual issue of shares of Common Stock upon exercise of such rights,
options, or warrants.
(d) Subject to Section 4.1(f), if the Company issues shares of
Common Stock or securities convertible into or exchangeable for shares
of Common Stock (excluding shares of Common Stock or convertible or
exchangeable securities issued in any of the transactions described in
paragraph (a), (b), or (c) of this Section 4.1) for a purchase price
per share of such Common Stock, or for a conversion or exchange price
per share of Common Stock initially deliverable upon conversion or
exchange of such securities, that is less than the Current Market Price
per share of Common Stock on the date the purchase, conversion, or
exchange price of such additional shares of Common Stock are first
fixed, then the number of Warrant Shares thereafter purchasable upon
the exercise of each Warrant will be adjusted to the number that
results from multiplying the number of Warrant Shares purchasable upon
exercise of each Warrant immediately prior to such adjustment by a
fraction (not to be less than one), the numerator of which will be the
number of shares of Common Stock outstanding on such date plus the
number of additional shares of Common Stock so issued or issuable upon
such conversion or exchange, and the denominator of which will be the
number of shares of Common Stock outstanding on such date plus the
number of shares of Common Stock which the aggregate purchase,
conversion, or exchange price received or receivable by the Company for
such additional shares of Common Stock would purchase at the Current
Market Price per share of Common Stock on such date. Such adjustment
will be made whenever such shares of Common Stock or convertible or
exchangeable securities are issued, and will become effective
immediately after the effective date of such event. In case such
purchase, conversion, or exchange price may be paid in a consideration
part or all of which is in a form other than cash, the fair value of
such consideration will be as determined by the Board of Directors of
the Company, whose determination will be conclusive if based on the
financial advice of a nationally recognized investment banking firm.
Except as provided in 4.1(i), no further adjustment will be made upon
the actual issue of shares of Common Stock upon conversion or exchange
of such securities convertible into or exchangeable for shares of
Common Stock.
(e) For purposes of this Agreement, the "Current Market Price"
per share of Common Stock on any date will be
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the average of the daily closing prices for 20 consecutive Trading Days
commencing 30 Trading Days before the date of such computation. The
closing price for each day (the "Closing Price") will be the last
reported sales price regular way or, in case no such reported sale
takes place on such day, the average of the closing bid and asked
prices regular way for such day, in each case on the principal national
securities exchange on which the shares of Common Stock are listed or
admitted to trading or, if not so listed or admitted to trading, the
average of the closing bid and asked prices of the shares of Common
Stock in the over-the-counter market as reported by the National
Association of Securities Dealers, Inc. Automated Quotation System or
any comparable system. In the absence of one or more such quotations,
the Board of Directors of the Company will determine the Current Market
Price in good faith on the basis of such quotations or other relevant
information as it considers appropriate.
(f) No adjustment in the number of Warrant Shares purchasable
upon the exercise of a Warrant will be required unless such adjustment
would require an increase or decrease in the number of Warrant Shares
purchasable upon the hypothetical exercise of a Warrant of at least 1%;
provided, however, that any adjustments which by reason of this
paragraph (f) are not required to be made currently will be carried
forward and made at the time and together with the next subsequent
adjustment which, together with any adjustments so carried forward,
would require an increase or decrease in the number of Warrant Shares
purchasable upon the hypothetical exercise of a Warrant of 1% or more.
All calculations with respect to the number of Warrant Shares will be
made to the nearest one-thousandth of a share and all calculations with
respect to the Warrant Price will be to the nearest whole cent. No
adjustment in the number of Warrant Shares purchasable upon the
exercise of a Warrant will be made under paragraph (b), (c), or (d) of
this Section 4.1 if the Company issues or distributes to each Holder
the shares, rights, options, warrants, convertible or exchangeable
securities, evidences of indebtedness, assets, or other securities
referred to in the applicable paragraph that such Holder would have
been entitled to receive had the Warrants been exercised prior to the
happening of such event on the record date with respect thereto
(provided that, in any case in which such Holder would have been so
entitled to receive a fractional interest in any such securities or
assets, the Company may distribute to such Holder in lieu of such
fractional interest cash in an amount equal to the fair value of such
fractional interest as determined in good faith by the Board of
Directors of the Company). No adjustment in the number of Warrant
Shares purchasable upon the exercise of a Warrant will be made on
account of: (1) any issuance of shares of Common Stock or of options,
rights, or warrants to purchase, or securities convertible
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into or exchangeable for, shares of Common Stock, pursuant to or in
satisfaction of any obligation under any plan of reorganization of the
Company or Broadway or any of their respective predecessors which
became effective prior to the date hereof (each, a "Plan of
Reorganization"), (2) any issuance of shares of Common Stock upon the
exercise of options, rights or warrants or upon the conversion or
exchange of convertible or exchangeable securities, in either case
issued pursuant to or in satisfaction of any obligation under any Plan
of Reorganization or outstanding as of the date hereof, (3) any
issuance of shares of Common Stock, or of options, rights, or warrants
to purchase, or securities exchangeable for or convertible into, shares
of Common Stock, in accordance with any plan for the benefit of the
employees or Directors of the Company or any of its Subsidiaries
existing as of the date hereof or any other plan adopted by the
Directors of the Company for the benefit of the employees or Directors
of the Company or any of its Subsidiaries, (4) any issuance of shares
of Common Stock in connection with a Company-sponsored plan for
reinvestment of dividends or interest, (5) any issuance of share
purchase rights pursuant to the Rights Agreement, dated as of December
19, 1994, between the Company and The Bank of New York, as rights
agent, as from time to time amended, or any similar successor or
replacement share purchase rights plan, or (6) any issuance of shares
of Common Stock or securities convertible into or exchangeable for
shares of Common Stock pursuant to an underwritten public offering for
a price per share of Common Stock in the case of an issuance of shares
of Common Stock, or for a price per share of Common Stock initially
deliverable upon conversion or exchange of such securities, that is
equal to or greater than 95% of the Closing Price per share of Common
Stock on the date the offering, conversion, or exchange price of such
additional shares of Common Stock is first fixed. No adjustment in the
number of Warrant Shares will be made for a change in the par value of
the shares of Common Stock.
(g) Whenever the number of Warrant Shares purchasable upon the
exercise of each Warrant is adjusted as herein provided, the Warrant
Price will be adjusted by multiplying the Warrant Price in effect
immediately prior to such adjustment by a fraction, the numerator of
which will be the number of Warrant Shares purchasable upon the
exercise of each Warrant immediately prior to such adjustment, and the
denominator of which will be the number of Warrant Shares so
purchasable immediately thereafter.
(h) For the purpose of this Section 4, the term "Common Stock"
means (i) the class of shares designated as the Common Stock of the
Company as of the date of this Agreement, (ii) all shares of any class
or classes (however designated) of the Company, now or hereafter
authorized, the holders of which have the right, without limitation as
to
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amount, either to all or to a part of the balance of current dividends
and liquidating dividends after the payment of dividends and
distributions on any shares entitled to preference, and the holders of
which are ordinarily entitled to vote generally in the election of
directors of the Company, or (iii) any other class of shares resulting
from successive changes or reclassifications of such shares consisting
solely of changes in par value, or from par value to no par value, or
from no par value to par value. In the event that at any time, as a
result of an adjustment made pursuant to Section 4.1(a), the Warrants
become exercisable to purchase Warrant Shares other than shares of
Common Stock, thereafter the number of such other shares so purchasable
upon exercise of each Warrant and the Warrant Price payable in respect
of such other shares upon the exercise of each Warrant will be subject
to adjustment from time to time in a manner and on terms as nearly
equivalent as practicable to the provisions with respect to the Warrant
Shares and the Warrant Price contained in this Section 4.1.
(i) Upon the expiration of any rights, options, warrants, or
conversion or exchange privileges, if any thereof have not been
exercised, the Warrant Price and the number of Warrant Shares
purchasable upon the exercise of each Warrant will, upon such
expiration, be readjusted and will thereafter be such as it would have
been had it been originally adjusted (or had the original adjustment
not been required, as the case may be) as if (i) the only shares of
Common Stock so issued were the shares of Common Stock, if any,
actually issued or sold upon the exercise of such rights, options,
warrants, or conversion or exchange rights and (ii) such shares of
Common Stock, if any, were issued or sold for the consideration
actually received by the Company upon such exercise, conversion, or
exchange plus the aggregate consideration, if any, actually received by
the Company for the issuance, sale, or grant of all such rights,
options, warrants, or conversion or exchange rights whether or not
exercised; provided, however, that no such readjustment will have the
effect of increasing the Warrant Price or decreasing the number of
Warrant Shares purchasable upon the exercise of each Warrant by an
amount in excess of the amount of the adjustment initially made in
respect of the issuance, sale, or grant of such rights, options,
warrants, or conversion or exchange privileges.
4.2. Notice of Adjustment. Whenever the Warrant Price or the number or
kind of Warrant Shares purchasable upon exercise of the Warrants is adjusted
pursuant to any of the provisions of this Agreement, the Company will promptly
give notice to the Holders of such adjustment or adjustments, together with a
certificate of a firm of independent public accountants selected by the Company
(who may be the regular accountants employed by the Company) setting forth the
adjustments in the Warrant Price and the number or kind of Warrant Shares
purchasable upon
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exercise of each Warrant, and also setting forth a brief statement of the facts
requiring such adjustments and the computations upon which such adjustments are
based. Such certificate will be conclusive evidence of the correctness of such
adjustments.
4.3. No Adjustment for Dividends. Except as provided in Section 4.1, no
adjustment or payment in respect of any dividends will be made at any time.
4.4. Preservation of Purchase Rights Upon Merger, Consolidation, Etc.
In case of any consolidation of the Company with or merger of the Company into
another corporation or in case of any sale, transfer, or lease to another
corporation of all or substantially all the property of the Company, the Company
or such successor or purchasing corporation, as the case may be, will execute an
agreement providing that each Holder will have the right thereafter, upon
payment of an amount equal to the amount payable upon the exercise of a Warrant
immediately prior thereto, to purchase upon exercise of each Warrant the kind
and amount of securities or property that it would have owned or have been
entitled to receive after giving effect to such consolidation, merger, sale,
transfer, or lease on account of the Warrant Shares that would have been
purchasable upon the exercise of such Warrant had such Warrant been exercised
immediately prior thereto (provided that, to the extent that such Holder would
have been so entitled to receive cash on account of such Warrant Shares, such
Holder may elect in connection with the exercise of a Warrant in accordance with
Section 3.1 to reduce the amount of cash that it would be entitled to receive
upon such exercise in exchange for a corresponding reduction in the amount
payable upon such exercise); provided, however, that no adjustment in respect of
dividends, interest, or other income on or from such shares or other securities
or property will be made during the term of a Warrant or upon the exercise of a
Warrant. Such agreement will provide for adjustments that will be as nearly
equivalent as may be practicable to the adjustments provided for in this Section
4. The provisions of this Section 4.4 will similarly apply to successive
consolidations, mergers, sales, transfers, or leases.
4.5. Warrant Certificates. Whether or not any adjustments in the
Warrant Price or the number or kind of Warrant Shares purchasable upon the
exercise of the Warrants has been made, Warrant Certificates theretofore or
thereafter issued may continue to express the same Warrant Price and number and
kind of Warrant Shares as are stated in the Warrant Certificate initially
issued.
5. Fractional Interests. Neither the Company nor the Warrant Agent will
be required to issue fractional Warrant Shares or fractional interests in any
other securities on the exercise of the Warrants. If any fraction of a Warrant
Share or other security would, except for the provisions of this Section 5, be
issuable upon the exercise of the Warrants, the Company will pay
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an amount in cash (a) in lieu of a fractional Warrant Share, equal to the
Current Market Price for one share of Common Stock on the Trading Day
immediately preceding the date on which the Warrants are presented for exercise,
multiplied by such fraction of a Warrant Share, or (b) in lieu of a fractional
interest in any other security, equal to the fair value of such fractional
interest, determined in a manner as similar as possible, taking into account the
difference in the fractional interest being valued, to the calculation described
in clause (a) of this Section 5.
6. Warrant Agent Matters.
6.1. Appointment of Warrant Agent. The Company hereby appoints the
Warrant Agent to act as agent for the Company and the Holders in accordance with
the terms and conditions hereof, and the Warrant Agent hereby accepts such
appointment and hereby certifies that it complies with the requirements of the
New York Stock Exchange governing transfer agents and registrars.
6.2. Concerning the Warrant Agent. (a) The Company will pay to the
Warrant Agent reasonable compensation for all services rendered by it hereunder
and, from time to time, on demand of the Warrant Agent, its reasonable expenses
and counsel fees and other disbursements incurred in the administration and
execution of this Agreement and the exercise and performance of its duties
hereunder. The Company will indemnify the Warrant Agent for, and hold it
harmless against, any loss, liability, suit, action, proceeding, or expense,
incurred without negligence, bad faith, or willful misconduct on the part of the
Warrant Agent, for anything done or omitted by the Warrant Agent in connection
with the acceptance and administration of this Agreement, including the costs
and expenses of defending against any claim of liability arising therefrom,
directly or indirectly.
(b) The Warrant Agent will be protected and will incur no liability for
or in respect of any action taken, suffered, or omitted by it in connection with
its administration of this Agreement in reliance upon any Warrant Certificate or
certificate evidencing Common Stock or other securities of the Company,
instrument of assignment or transfer, power of attorney, endorsement, affidavit,
letter, notice, direction, consent, certificate, statement, or other paper or
document believed by it to be genuine and to be signed, executed, and, where
necessary, verified or acknowledged, by the proper person or persons.
6.3. Merger or Consolidation or Change of Name of Warrant Agent. Any
corporation into which the Warrant Agent or any successor 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 or any successor Warrant
Agent is a party, or any corporation succeeding to the corporate trust business
of the Warrant Agent or any successor Warrant Agent, will be the successor to
the Warrant Agent under this
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Agreement 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 would be
eligible for appointment as a successor Warrant Agent under the provisions of
Section 6.5.
6.4. Duties of Warrant Agent. The Warrant Agent undertakes the duties
and obligations imposed by this Agreement upon the following terms and
conditions, by all of which the Company and the Holders, by their acceptance of
Warrant Certificates, will be bound:
(a) The Warrant Agent may consult with legal counsel (who may be legal
counsel for the Company), and the opinion of such counsel will be full and
complete authorization and protection to the Warrant Agent as to any action
taken or omitted by it in good faith and in accordance with such opinion.
(b) Whenever in the performance of its duties under this Agreement the
Warrant Agent deems 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 to be conclusively proved and established
by a certificate signed by any one of the Chairman of the Board, the President,
or any Vice President of the Company and delivered to the Warrant Agent; and
such certificate will be full authorization to the Warrant Agent for any action
taken or suffered in good faith by it under the provisions of this Agreement in
reliance upon such certificate.
(c) The Warrant Agent will be liable hereunder only for its own
negligence, bad faith, or willful misconduct.
(d) The Warrant Agent will not be liable for or by reason of any of the
statements of fact or recitals contained in this Agreement or in the Warrant
Certificates or be required to verify the same, but all such statements and
recitals are and will be deemed to have been made by the Company only.
(e) The Warrant Agent will not be under any responsibility in respect
of the validity of this 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 Certificate (except the due
countersignature thereof by the Warrant Agent); nor will it be responsible for
any breach by the Company of any covenant or condition contained in this
Agreement or in any Warrant Certificate; nor will it be responsible for any
adjustment required under the provisions of Section 4 hereof or responsible for
the manner, method or amount of any such adjustment or the ascertaining of the
existence of facts that would require any such adjustment (except with respect
to the exercise of Warrants evidenced by Warrant Certificates after actual
notice of any such adjustment); nor will it by any act hereunder be deemed to
make any representation or warranty as
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to the authorization or reservation of any shares of stock or other securities
to be issued pursuant to this Agreement or any Warrant Certificate or as to
whether any shares of stock or other securities will, when issued, be validly
authorized and issued, fully paid, and nonassessable.
(f) The Company will perform, execute, acknowledge, and deliver or
cause to be performed, executed, acknowledged, and delivered all such further
and other acts, instruments, and assurances as may reasonably be required by the
Warrant Agent for the carrying out or performing by the Warrant Agent of the
provisions of this Agreement.
(g) The Warrant Agent is hereby authorized and directed to accept
instructions with respect to the performance of its duties hereunder from any
one of the Chairman of the Board, the President, or any Vice President of the
Company, and to apply to such officers for advice or instructions in connection
with its duties, and it will 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.
(h) 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 Agreement. Nothing herein will preclude the Warrant
Agent from acting in any other capacity for the Company or for any other legal
entity.
(i) 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, and the Warrant Agent will not be answerable or
accountable for any act, default, neglect, or misconduct of any such attorneys
or agents or for any loss to the Company resulting from any such act, default,
neglect, or misconduct, provided reasonable care was exercised in the selection
and continued employment thereof. The Warrant Agent will not be under any duty
or responsibility to insure compliance with any applicable federal or state
securities laws in connection with the issuance, transfer, or exchange of
Warrant Certificates.
6.5. Change of Warrant Agent. The Warrant Agent or any successor
Warrant Agent may resign and be discharged from its duties under this Agreement
upon 30 calendar days' notice in writing mailed to the Company and to each
transfer agent of the Common Stock by registered or certified mail, and to the
Holders by first-class mail. The Company may remove the Warrant Agent or any
successor Warrant Agent upon 30 calendar days' notice in writing, mailed to the
Warrant Agent or successor Warrant Agent, as the case may be, and to each
transfer agent of the Common
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Stock by registered or certified mail, and to the Holders by first-class mail.
If the Warrant Agent resigns or is removed or otherwise becomes incapable of
acting, the Company will appoint a successor to the Warrant Agent. If the
Company fails to make such appointment within a period of 30 calendar days after
giving notice of such removal or after it has been notified in writing of such
resignation or incapacity by the resigning or incapacitated Warrant Agent or by
any Holder (who will, with such notice, submit his Warrant Certificate for
inspection by the Company), then any Holder may apply to any court of competent
jurisdiction for the appointment of a successor Warrant Agent. Any successor
Warrant Agent, whether appointed by the Company or by such a court, will be a
corporation organized and doing business under the laws of the United States or
of the State of Ohio or New York (or of any other state of the United States so
long as such corporation is authorized to do business as a banking institution
in the State of Ohio or New York), in good standing, having a principal office
in the State of Ohio or New York, which is authorized under such laws to
exercise corporate trust powers and is subject to supervision or examination by
federal or state authority and which has at the time of its appointment as
Warrant Agent a combined capital and surplus of at least $50 million. After
appointment, the successor Warrant Agent will 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 predecessor Warrant Agent
will 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. Not later than the effective
date of any such appointment, the Company will file notice thereof in writing
with the predecessor Warrant Agent and each transfer agent of the Common Stock,
and mail by first class mail a notice thereof to each Holder. Failure to give
any notice provided for in this Section 6.5, however, or any defect therein,
will 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. Notwithstanding anything to the contrary contained herein, no resignation or
removal of the Warrant Agent or any successor Warrant Agent will become
effective prior to the effectiveness of the appointment of a successor Warrant
Agent therefor.
7. Holder Matters.
7.1 No Rights as a Stockholder; Notices to Holders. Nothing contained
in this Agreement or in the Warrant Certificate will be construed as conferring
upon the Holders or their transferees the right to vote, or to receive
dividends, or to consent or to receive notice as a stockholder in respect of any
meeting of stockholders for the election of directors of the Company or any
other matter, or any rights whatsoever as a stockholder of the Company;
provided, however, that if, at any
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time prior to the Expiration Date and prior to the exercise of all of the
Warrants, any of the following events occur:
(a) The Company declares any dividend payable in any
securities upon its shares of Common Stock or makes any distribution
(other than a regular cash dividend payable out of consolidated
retained earnings) to the holders of its shares of Common Stock;
(b) The Company offers to the holders of its Common Stock any
shares of capital stock of the Company or any Subsidiary or securities
convertible into or exchangeable for shares of capital stock of the
Company or any Subsidiary or any option, right, or warrant to subscribe
for or purchase any thereof;
(c) The Company distributes to the holders of its Common Stock
evidences of indebtedness or assets (including any cash dividend which
would result in an adjustment under Section 4.1) of the Company or any
Subsidiary;
(d) Any reclassification of the Common Stock, any
consolidation of the Company with or merger of the Company into another
corporation, any sale, transfer, or lease to another corporation of all
or substantially all the property of the Company, or any proposal of
the Company to effect any of the foregoing transactions that has been
publicly announced by the Company; or
(e) Any proposal by the Company to effect a dissolution,
liquidation, or winding up of the Company that has been publicly
announced by the Company;
then in any one or more of such events the Company will give notice of such
event to the Holders, as provided in Section 11 hereof, such giving of notice to
be completed at least ten days prior to the date fixed as a record date or the
date of closing the transfer books for the determination of the stockholders
entitled to such dividend, distribution, or subscription rights, or for the
determination of stockholders entitled to vote on such proposed
reclassification, consolidation, merger, sale, transfer or lease, dissolution,
liquidation, or winding up; provided, however, that no such notice will be
required in respect of any of the matters referred to in the penultimate
sentence of Section 4.1(f). Such notice will specify such record date or the
date of closing the transfer books, as the case may be, for such event. Failure
to mail or receive such notice or any defect therein or in the mailing thereof
will not affect the validity of any action taken in connection with such event.
7.2. Reports to Holders. To the extent such documents are required to be
sent by the Company to the holders of outstanding Common Stock, the Company will
file with the Warrant Agent and
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provide each Holder, within 15 calendar days after it files them with the
Securities and Exchange Commission (the "SEC"), copies of its annual report and
of the information, documents, and other reports (or copies of such portions of
any of the foregoing as the SEC may by rules and regulations prescribe) which
the Company is required to file with the SEC pursuant to Section 13 or 15(d) of
the Exchange Act.
7.3. Agreements Respecting Warrants. The Company will not enter into
any agreement or instrument which would preclude the exercise of the Warrants as
herein provided.
8. Agreement of Warrant Holders. Every Holder by accepting a Warrant
Certificate consents and agrees with the Company and the Warrant Agent and with
every other Holder that:
(a) The Warrant Certificates are transferable only in accordance with
the terms of this Agreement and only on the registry books of the Warrant Agent
if surrendered at the principal office of the Warrant Agent designated for such
purpose, duly endorsed or accompanied by a proper instrument of transfer, and
otherwise in compliance with Section 2;
(b) The Company and the Warrant Agent may deem and treat the person in
whose name the Warrant Certificate is registered as the absolute owner thereof
and of the Warrants evidenced thereby (notwithstanding any notations of
ownership or writing on the Warrant Certificate made by anyone other than the
Company or the Warrant Agent) for all purposes whatsoever, and neither the
Company nor the Warrant Agent will be affected by any notice to the contrary;
(c) Such Holder expressly waives any right to receive any fractional
Warrants and any fractional securities upon exercise or exchange of a Warrant;
and
(d) Notwithstanding anything in this Agreement to the contrary, neither
the Company nor the Warrant Agent will have any liability to any Holder or other
person as a result of its inability to perform any of its obligations under this
Agreement by reason of any preliminary or permanent injunction or other order,
decree, or ruling issued by a court of competent jurisdiction or by a
governmental, regulatory, or administrative agency or commission, or any
statute, rule, regulation, or executive order promulgated or enacted by any
governmental authority, prohibiting or otherwise restraining performance of such
obligation; provided, however, that the Company will use reasonable efforts to
have any such order, decree, or ruling lifted or otherwise overturned as soon as
possible.
9. Reservation of Common Stock. The Company will, for so long as
Warrants remain outstanding, reserve and keep available, solely for issuance and
delivery upon the exercise of Warrants, a number of shares of Common Stock (or,
if applicable, other
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securities) sufficient to provide for the exercise of all outstanding Warrants.
The transfer agent for the Common Stock (or, if applicable, other securities)
will be irrevocably authorized and directed at all times until the exercise or
expiration of the Warrants to reserve such number of authorized shares of Common
Stock (or, if applicable, other securities) as necessary for such purpose. The
Company will keep copies of this Agreement on file with the transfer agent and
will supply the transfer agent with duly executed stock certificates for such
purpose.
10. Representations and Warranties of the Company. The Company hereby
represents and warrants to the Warrant Agent that:
(a) The Company is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to execute,
deliver, and perform its obligations hereunder and to consummate the
transactions contemplated hereby;
(b) The execution, delivery, and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized by all
necessary corporate action on the part of the Company;
(c) The execution, delivery, and performance of this Agreement
by the Company and the consummation by the Company of the transactions
contemplated hereby in accordance with the terms hereof will not
conflict with, violate, or constitute a breach of any material
contract, agreement, or instrument by which the Company is bound or any
judgment, order, decree, law, statute, rule, regulation, or other
judicial or governmental restriction to which the Company is subject;
(d) This Agreement constitutes the legal, valid, and binding
obligation of the Company, enforceable against the Company in
accordance with its terms, except as the enforceability hereof may be
limited by bankruptcy, insolvency, reorganization, moratorium, or other
similar laws affecting creditors' rights generally; and
(e) The Warrants, when issued and delivered to the initial
Holders as provided in this Agreement, and the Warrant Shares issued
upon exercise of the Warrants, when issued, paid for, and delivered as
provided in this Agreement, will be duly and validly issued and
outstanding, fully paid, and nonassessable.
11. Notices. All notices, requests, waivers, releases, consents, and
other communications required or permitted by this Agreement (collectively,
"Notices") must be in writing. Except
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as expressly otherwise provided herein with respect to manner of
delivery, notices will be deemed sufficiently given for all purposes when
delivered in person, when dispatched by telegram or electronic facsimile
transmission, when sent by first-class mail, postage prepaid, or upon
confirmation of receipt when dispatched by a nationally recognized overnight
courier service to the appropriate party as follows: (a) if to a Holder, at the
address of such Holder as shown in the registry books maintained by the Warrant
Agent; (b) if to the Company, at 7 West Seventh Street, Cincinnati, Ohio 45202,
Telecopy No. (513) 579-7897 (marked for the attention of the Chief Financial
Officer and the General Counsel), or at such other address as the Company may
have furnished to the Holders and the Warrant Agent in writing; and (c) if to
the Warrant Agent, at 101 Barclay Street, New York, New York 10286, Telecopy No.
(212) 815-3201 (marked for the attention of William Skinner) or at such other
address as the Warrant Agent may have furnished to the Company and the Holders
in writing.
12. Amendment and Waiver. No failure or delay of the Holder in
exercising any power or right hereunder (other than a failure to exercise
Warrants in accordance with the provisions hereof) will operate as a waiver
thereof, nor will any single or partial exercise of any such right or power, or
any abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. No notice or demand on the Company in any case will entitle the
Company to any other or future notice or demand in similar or other
circumstances. Subject to the last sentence of this Section 12, (a) if the
Company so directs, the Company and the Warrant Agent will supplement or amend
this Agreement without the approval of any Holders in order to cure any
ambiguity or correct or supplement any provision contained herein which may be
defective or inconsistent with any other provisions herein and (b) the Company
and the Warrant Agent may from time to time supplement or amend this Agreement,
with the consent of Holders of at least 50% of the Warrants then outstanding,
for any other for purpose. Notwithstanding anything in this Agreement to the
contrary, no supplement or amendment which increases the Warrant Price,
decreases the period of time remaining during which the Warrants may be
exercised, or changes in a manner adverse to Holders the number of Warrant
Shares purchasable upon the exercise of Warrants will be made without the
consent of all Holders. Any such amendment, modification, or waiver effected
pursuant to and in accordance with the provisions of this Section 12 will be
binding upon all Holders and upon each future Holder, the Company, and the
Warrant Agent. In the event of any such amendment, modification, or waiver, the
Company will given prompt notice thereof to all Holders and, if appropriate,
notation thereof will be made on all Warrant Certificates thereafter surrendered
for registration of transfer or exchange.
13. Successors and Assigns. This Agreement will be binding upon and
inure to the benefit of the parties hereto, their respective successors and
permitted assigns, and, subject to
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Sections 1.4 and 8(d), all Holders, but will not be assignable or delegable by
any party without the prior written consent of the other party. In the absence
of such prior written consent, any purported assignment or delegation of any
right or obligation hereunder will be null and void.
14. Rights of the Parties. Except as provided in Section 13, nothing
expressed or implied in this Agreement is intended or will be construed to
confer upon or give any person or entity other than the parties hereto and the
Holders any rights or remedies under or by reason of this Agreement or any
transaction contemplated hereby. All rights of action in respect of this
Agreement are vested in the Holders, and any Holder without the consent of the
Warrant Agent or any other Holder may, on such Holder's own behalf and for such
Holder's own benefit, enforce such Holder's rights hereunder, including the
right to exercise, exchange, or surrender for transfer such Holder's Warrant
Certificates in accordance with the provisions hereof.
15. Titles and Headings. Titles and headings to Sections herein are
inserted for convenience of reference only, and are not intended to be a part of
or to affect the meaning or interpretation of this Agreement.
16. Certain Interpretive Matters and Definitions.
(a) Unless the context otherwise requires, (i) all references
to Sections or Exhibits are to Sections or Exhibits of or to this
Agreement, (ii) each term defined in this Agreement has the meaning
assigned to it, (iii) "or" is disjunctive but not necessarily
exclusive, and (iv) words in the singular include the plural and vice
versa. All references to "$" or dollar amounts are to lawful currency
of the United States of America.
(b) No provision of this Agreement will be interpreted in
favor of, or against, any party hereto by reason of the extent to which
such party or its counsel participated in the drafting thereof or by
reason of the extent to which any such provision is inconsistent with
any prior draft hereof or thereof.
17. Entire Agreement. This Agreement, together with its Exhibits,
constitutes the entire agreement among the parties hereto with respect to the
subject matter hereof, and there are no agreements among the parties hereto with
respect thereto except as expressly set forth herein.
18. Severability. In case any provision contained in this Agreement is
invalid, illegal, or unenforceable, the validity, legality, and enforceability
of the remaining provisions will not in any way be affected or impaired thereby.
The Company and the Warrant Agent will endeavor in good faith to replace the
invalid, illegal, or unenforceable provisions with valid, legal, and
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enforceable provisions the economic effect of which comes as close as
possible to that of the invalid, illegal, or unenforceable provisions.
19. Governing Law. This Agreement will be governed by and construed in
accordance with the laws of the State of Delaware, without giving effect to the
principles of conflict of laws thereof.
20. Counterparts. This Agreement may be executed in any number of
counterparts, each of which so executed will be deemed to be an original; such
counterparts will together constitute but one agreement.
IN WITNESS WHEREOF, the parties to this Agreement have executed this
Agreement as of the date first above written.
BROADWAY STORES, INC.
By: /s/ John C. Haeckel
---------------------------------
Name: John C. Haeckel
Title: Executive Vice President
FEDERATED DEPARTMENT STORES, INC.
By: /s/ Dennis J. Broderick
---------------------------------
Name: Dennis J. Broderick
Title: Senior Vice President
THE BANK OF NEW YORK
By: /s/ Patrick Falcigna
---------------------------------
Name: Patrick Falcigna
Title: Vice President
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EXHIBIT A
WARRANT CERTIFICATE
THE WARRANTS REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO THE TERMS AND
CONDITIONS SET FORTH IN THE WARRANT AGREEMENT (AS HEREINAFTER DEFINED), A COPY
OF WHICH WILL BE MADE AVAILABLE BY THE ISSUER UPON REQUEST. THE TRANSFER OR
EXCHANGE OF THESE WARRANTS MUST BE REGISTERED IN ACCORDANCE WITH THE WARRANT
AGREEMENT.
NO. WARRANTS
--------------- ---------------
VOID AFTER 5:00 P.M. CINCINNATI TIME
ON THE EXPIRATION DATE
Federated Department Stores, Inc. Series E Warrant Certificate
THIS CERTIFIES THAT for value received, __________, or its
registered assigns (the "Holder"), is the owner of the number of Warrants set
forth above that initially entitle it to purchase from Federated Department
Stores, Inc., a Delaware corporation (the "Company"), at any time and from time
to time on or prior to 5:00 p.m. Cincinnati time on the Expiration Date, 0.27
fully paid and nonassessable shares of the Common Stock, par value $.01 per
share, of the Company (the "Common Stock") for each such Warrant at an initial
purchase price of $62.96 per whole share of Common Stock (the "Warrant Price"),
subject to adjustment as provided in the Warrant Agreement (i.e., subject to the
provisions of the Warrant Agreement, including the requirement that Warrants be
exercised only in integral multiples of 100 Warrants except as described below,
each Warrant will initially be exercisable to purchase 0.27 shares of Common
Stock for $17.00). The shares of Common Stock purchasable upon exercise of the
Warrants are hereinafter referred to as the "Warrant Shares." The "Expiration
Date" is October 8, 1999; provided, however, that the Company's Board of
Directors may, on 75 calendar days' written notice, fix an earlier Expiration
Date within 10 calendar days after any period of 30 consecutive Trading Days (as
defined in the Warrant Agreement) in which the Current Market Price (as defined
in the Warrant Agreement) per share of Common Stock has equalled or exceeded
$94.44. Subject to the terms and conditions of the Warrant Agreement, the
Warrants may be exercised by surrendering to the Warrant Agent (as hereinafter
defined) this Warrant Certificate, with the Form of Exercise Notice on the
reverse side hereof duly executed, together with cash, a certified or bank
cashier's check payable to the order of the Company, or a wire transfer to an
account designated by the Company, in each case in an amount of lawful currency
of the United States of America equal to the product of (a) the number of
Warrant Shares
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purchasable upon the exercise of the Warrants designated for exercise in the
Form of Exercise Notice and (b) the Warrant Price.
The number and kind of Warrant Shares that may be purchased
upon exercise of the Warrants evidenced by this Warrant Certificate are the
number as of the date of the original issue of such Warrants, based on the
shares of Common Stock of the Company as constituted at such date. As provided
in the Warrant Agreement, the Warrant Price and the number and kind of Warrant
Shares purchasable upon exercise of the Warrants are subject to adjustment.
This Warrant Certificate and the Warrants it represents are
subject to, and entitled to the benefits of, all of the terms, provisions, and
conditions of the Warrant Agreement, dated as of , 1995 (the "Warrant
Agreement"), by and among Broadway Stores, Inc., the Company, and The Bank of
New York (the "Warrant Agent"), which Warrant Agreement is hereby incorporated
herein by reference and made a part hereof and to which Warrant Agreement
reference is hereby made for a full description of the rights, limitation of
rights, obligations, and duties hereunder of the Company and the Holder. A copy
of the Warrant Agreement will be made available to the Holders by the Company
upon request of the Holders.
Subject to the provisions set forth in the Warrant Agreement
or in this Certificate, this Warrant Certificate, with or without other Warrant
Certificates, may be transferred, split up, combined, or exchanged for another
Warrant Certificate or Warrant Certificates, entitling the Holder to purchase a
like aggregate number of Warrant Shares as the Warrant Certificate or Warrant
Certificates surrendered entitled such Holder (or former Holder in the case of a
transfer) to purchase, upon presentation and surrender hereof at the principal
office of the Warrant Agent designated for such purpose, with the Form of
Assignment (if appropriate) and the related Certificate duly executed.
The Company will not be required to issue fractional Warrant
Shares or other fractional interests in securities upon the exercise of any
Warrants evidenced by this Warrant Certificate, but in lieu thereof a cash
payment will be made, as provided in the Warrant Agreement. The Holder may not
exercise a number of Warrants that is not an integral multiple of 100 unless the
Holder is then exercising all of its Warrants.
Nothing contained in the Warrant Agreement or in this Warrant
Certificate will be construed as conferring upon the holder of this Warrant
Certificate the right to vote, or to receive dividends, or to consent or (except
as provided in the Warrant Agreement) to receive notice in respect of any
meeting of stockholders for the election of directors of the Company or any
other matter, or any rights whatsoever as a stockholder of the Company.
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This Warrant Certificate will not be valid or obligatory for
any purpose until it has been countersigned by the Warrant Agent.
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IN WITNESS WHEREOF, the Company has caused this Warrant
Certificate to be executed by its corporate officers duly authorized.
Attest: FEDERATED DEPARTMENT STORES, INC.
By:
- --------------------------------- -----------------------------------
[Name, title] [Name, title]
Dated: __________, ____
Countersigned:
THE BANK OF NEW YORK
By:
- -------------------------------
[Authorized Signature]
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Form of Reverse Side of Warrant Certificate
FORM OF ASSIGNMENT
(To be executed if the Holder desires to transfer Warrants)
FOR VALUE RECEIVED, __________________________________________
hereby sells, assigns, and transfers unto ______________________________________
________________________________________________________________________________
(Please print name and address of transferee)
this Warrant Certificate, together with all right, title, and interest therein,
and does hereby irrevocably constitute and appoint Attorney, to transfer the
within Warrant Certificate on the books of the within-named Company, with full
power of substitution.
Dated: ,
--------------------- -------- -------------------------------
Signature
Signature Guaranteed:
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FORM OF EXERCISE NOTICE
(To be executed if the Holder desires to exercise Warrants)
TO FEDERATED DEPARTMENT STORES, INC.:
The undersigned hereby irrevocably elects to exercise
__________ Warrants evidenced by this Warrant Certificate to purchase the
Warrant Shares issuable upon the exercise of such Warrants and requests that
certificates for such Warrant Shares be issued in the name of:
________________________________________________________________________________
(Please print name and address)
Please insert social security or other identifying number:______________________
If such number of Warrants is not all the Warrants evidenced by this Warrant
Certificate, a new Warrant Certificate for the balance remaining of such
Warrants will be registered in the name of and delivered to:
________________________________________________________________________________
(Please print name and address)
Please insert social security or other identifying number: _____________________
Dated: ,
------------------------ ----- --------------------------------
Signature
Signature Guaranteed:
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NOTICE
Signatures on the foregoing Form of Assignment and Form of
Exercise Notice and in the related Warrant Certificates must correspond to the
name as written upon the face of this Warrant Certificate in every particular,
without alternation or enlargement or any change whatsoever.
Signatures must be guaranteed by a member firm of a registered
national securities exchange, a member of the National Association of Securities
Dealers, Inc., or a commercial bank or trust company having an office or
correspondent in the United States.
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