Exhibit 4.1
THIS
WARRANT AND ANY SECURITIES ACQUIRED UPON EXERCISE OF THIS WARRANT
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR THE SECURITIES LAW OF ANY STATE AND MAY NOT BE SOLD,
TRANSFERRED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES LAWS OR PURSUANT TO AN APPLICABLE EXEMPTION TO THE
REGISTRATION REQUIREMENTS OF SUCH ACT AND SUCH LAWS. THIS WARRANT
AND SUCH SECURITIES MAY NOT BE SOLD, TRANSFERRED OR OTHERWISE
DISPOSED OF EXCEPT IN COMPLIANCE WITH THE TERMS AND CONDITIONS
SPECIFIED IN THIS WARRANT.
RETAIL VENTURES, INC.
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| COMMON STOCK PURCHASE WARRANT
No. W-10 |
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May 30, 2008 |
Warrant to Purchase
1,388,752 Shares of RVI Common Stock (plus up to 685,417
additional
Shares of RVI Common Stock under Section 3.1(b) hereof, if
applicable)
or 328,915 DSW Class A Shares
(subject to adjustment as set forth herein)
RETAIL
VENTURES, INC., an Ohio corporation (the “ Company
”), for value received, hereby certifies that SCHOTTENSTEIN
RVI, LLC, a Delaware limited liability company, or its registered
assigns (the “ Holder ”), is entitled to
purchase from the Company that number of duly authorized, validly
issued, fully paid and nonassessable shares of Common Shares, no
par value per share, of the Company (the “ Common
Stock ”) equal to the Common Stock Exercise Amount (as
defined below) or, in the alternative, after the consummation of a
Qualifying IPO (as defined below) but prior to the consummation of
a Spin-Off (as defined below) and the satisfaction of the
Company’s obligations pursuant to Section 3.3(b), and in
the Holder’s discretion, that number of shares of DSW Stock
(as defined below) equal to the DSW Stock Exercise Amount (as
defined below) owned by the Company, in each case, at a purchase
price equal to the applicable Purchase Price (as defined below), at
any time or from time to time but prior to 5:00 P.M., New York City
time, on June 11, 2012 (the “ Expiration Date
”), all subject to the terms, conditions and adjustments set
forth below in this Warrant (this “ Warrant ”);
provided , that the purchase price per share of Common Stock
or DSW Stock, as the case may be, hereunder shall not in any event
be less than the par value of such Common Stock or DSW Stock, as
applicable. For the avoidance of doubt, in the case of an exercise
for DSW Stock, this Warrant shall initially be exercisable only for
Class A Shares (as defined below).
1.
DEFINITIONS . As used herein, unless the context otherwise
requires, the following terms shall have the meanings
indicated:
“
Additional Shares of Common Stock ” shall mean all
shares (including treasury shares) of Common Stock issued or sold
(or, pursuant to Section 3.2(b) or 3.5(b), deemed to be
issued) by the Company after September 26, 2002, whether or
not subsequently reacquired or retired by the Company, other
than
(a) (i) shares
of Common Stock issued upon the exercise of the Term Loan Warrants
and (ii) such additional number of shares of Common Stock as may
become issuable upon the exercise of the Term Loan Warrants by
reason of adjustments required pursuant to the anti-dilution
provisions applicable to the Term Loan Warrants as in effect on the
date hereof or on the date of original issuance;
(b) up
to 5,000,000 shares of Common Stock (and following June 11,
2007, up to an additional 5,000,000 shares of Common Stock) that
are issued to Persons other than Affiliates of the Company,
including (i) shares of Common Stock or options exercisable
therefor, issued or to be issued under the Company’s 2000
Stock Option Plan as in effect on September 26, 2002 or under
any other employee stock option or purchase plan or plans, or
pursuant to compensatory or incentive agreements, for officers,
employees or consultants of the Company or any of its Subsidiaries,
in each case adopted or assumed after such date by the
Company’s Board of Directors; provided in each case
that the exercise or purchase price for any such share shall not be
less than 95% of the fair market value (determined in good faith by
the Company’s Board of Directors) of the Common Stock on the
date of the grant, and such additional number of shares as may
become issuable pursuant to the terms of any such plans by reason
of adjustments required pursuant to antidilution provisions
applicable to such securities in order to reflect any subdivision
or combination of Common Stock, by reclassification or otherwise,
or any dividend on Common Stock payable in Common Stock, (ii)
shares of restricted stock issued by the Company to executive
officers of the Company, and (iii) shares of Common Stock issued by
the Company as charitable gifts; and provided ,
however , that all options that are issued and expire
unexercised because the vesting requirements thereof are not
satisfied shall not be included in the issued shares pursuant to
this (b);
(c) up
to 2,153,000 shares of Common Stock issued pursuant to options that
are granted to executive officers of the Company or its
Subsidiaries under the Company’s 2000 Stock Option Plan as in
effect on September 26, 2002 at an exercise price of no less
than $4.50 per share and such additional number of shares as may
become issuable pursuant to the terms of any such options under the
terms of such plan by reason of adjustments required pursuant to
antidilution provisions applicable to such securities in order to
reflect any subdivision or combination of Common Stock, by
reclassification or otherwise, or any dividend on Common Stock
payable in Common Stock; provided , however , that
all options that are issued and expire unexercised because the
vesting requirements thereof are not satisfied shall not be
included in the issued shares pursuant to this (c); and
(d) (i) shares
of Common Stock issued upon exercise of the Conversion Warrants and
(ii) such additional number of shares of Common Stock as may
become issuable upon the exercise of the Conversion Warrants by
reason of adjustments required pursuant to anti-dilution provisions
applicable to the Conversion Warrants as in effect on the date
hereof or on the date of original issuance.
2
“
Additional Shares of DSW Stock ” shall mean all shares
(including treasury shares) of DSW Stock issued or sold (or,
pursuant to Section 3.2(b) or 3.5(b), deemed to be issued) by
DSW after the closing date of a Qualifying IPO (and for the
avoidance of doubt shall not include shares issued pursuant to the
over-allotment option in such Qualifying IPO after such closing
date), whether or not subsequently reacquired or retired by DSW,
other than
(a)
(i) shares of DSW Stock issued upon the exercise of the Term
Loan Warrants and (ii) such number of additional shares of DSW
Stock as may become issuable upon the exercise of the Term Loan
Warrants by reason of adjustments required pursuant to the
antidilution provisions applicable to the Term Loan Warrants as in
effect on the date hereof or on the date of original issuance;
or
(b)
(i) shares of DSW Stock issued upon exercise of the Conversion
Warrants and (ii) such additional number of shares as may become
issuable upon the exercise of the Conversion Warrants by reason of
adjustments required pursuant to antidilution provisions applicable
to the Conversion Warrants as in effect on September 26, 2002
or on the date hereof; or
(c)
shares of DSW Stock, shares of restricted stock, options
exercisable for DSW Stock, or any other securities or interests
(including shares of DSW Stock issued upon conversion, settlement
or exercise of any such options, securities or other interests),
issued or to be issued under the DSW Inc. Equity Incentive Plan or
any other employee stock option or purchase plan or plans, or
pursuant to compensatory or incentive agreements, for officers,
directors, employees or consultants of the Company, DSW or any of
its respective Subsidiaries, and such additional number of shares
as may become issuable pursuant to the terms of any such plans by
reason of adjustments required pursuant to antidilution provisions
applicable to such securities in order to reflect any subdivision
or combination of DSW Stock, by reclassification or otherwise, or
any dividend or distribution on DSW Stock payable in DSW Stock or
other equity securities or interests; or
(d)
shares of Class A Shares issued upon exchange of Class B
Shares.
“
Aggregate Purchase Price ” shall have the meaning set
forth in Section 2.1(a).
“
Business Day ” shall mean any day other than a
Saturday or a Sunday or any day on which national banks are
authorized or required by law to close. Any reference to
“days” (unless Business Days are specified) shall mean
calendar days.
“
Class A Shares ” means the shares of the
Class A common shares, no par value, of DSW.
“
Class B Shares ” means the shares of the
Class B common shares, no par value, of DSW.
“
Commission ” shall mean the Securities and Exchange
Commission or any successor agency having jurisdiction to enforce
the Securities Act.
3
“
Common Stock ” shall have the meaning assigned to it
in the introduction to this Warrant, such term to include any stock
into which such Common Stock shall have been changed or any stock
resulting from any reclassification of such Common Stock, and all
other stock of any class or classes (however designated) of the
Company the holders of which have the right, without limitation as
to amount, either to all or to a share of the balance of current
dividends and liquidating dividends after the payment of dividends
and distributions on any shares entitled to preference.
“
Common Stock Exercise Amount ” shall initially mean
the Initial Common Stock Exercise Amount, as the same may be
adjusted and readjusted pursuant to Section 3 hereof; and
shall be reduced upon each exercise of this Warrant (i) if
exercised for Common Stock, by such number of shares of Common
Stock for which this Warrant is then being exercised or
(ii) if exercised for DSW Stock, by the Corresponding Common
Stock Number applicable to the number of shares of DSW Stock for
which this Warrant is then being exercised.
“
Common Stock Purchase Price ” shall mean initially
$4.50 per share, subject to adjustment and readjustment from time
to time as provided in Section 3, and, as so adjusted or
readjusted, shall remain in effect until a further adjustment or
readjustment thereof is required by Section 3.
“
Company ” shall have the meaning assigned to it in the
introduction to this Warrant, such term to include any corporation
or other entity which shall succeed to or assume the obligations of
the Company hereunder in compliance with Section 4.
“
Conversion ” shall have the meaning assigned to it in
Section 3.1(b).
“
Conversion Warrants ” means those certain warrants
issued as of July 5, 2005, in connection with an amendment and
restatement of the Convertible Facility.
“
Convertible Facility ” shall mean that certain Amended
and Restated Senior Subordinated Convertible Loan Agreement, dated
as of June 11, 2002, among the Company, CPLP and SSC, as
amended by Amendment No. 1 to Amended and Restated Senior
Convertible Loan Agreement, dated as of June 11, 2002, and by
Amendment No. 2 to Amended and Restated Senior Convertible
Loan Agreement, dated as of October 7, 2003, and by Amendment
No. 3 to Amended and Restated Senior Convertible Loan
Agreement, dated as of December 29, 2004, and as amended and
restated by the Second Amended and Restated Senior Loan Agreement,
dated as of July 5, 2005 (as amended, supplemented, restated
or otherwise modified through the date hereof).
“
Convertible Securities ” shall mean any evidences of
indebtedness, shares of stock (other than Common Stock or DSW
Stock) or other securities directly or indirectly convertible into
or exchangeable for, in the case of the Company, Additional Shares
of Common Stock or, in the case of DSW, Additional Shares of DSW
Stock.
“
Corresponding Common Stock Number ” shall mean, with
respect to a specified number of shares of DSW Stock, the number of
shares of Common Stock obtained by dividing: (i) the product
of (A) the number of shares of DSW Stock with respect to which
such
4
determination is being made and (B) the DSW Stock Purchase
Price by (ii) the Common Stock Purchase Price; rounding up in
the case of any fractional share.
“
Corresponding DSW Stock Number ” shall mean, with
respect to a specified number of shares of Common Stock, the number
of shares of DSW Stock obtained by dividing (i) the product of
(A) the number of shares of Common Stock with respect to which
such determination is being made and (B) the Common Stock
Purchase Price by (ii) the DSW Stock Purchase Price; rounding
up in the case of any fractional share.
“
CPLP ” shall mean Cerberus Partners, L.P., or its
assignees.
“
Current Market Price ” shall mean, with respect to a
security, on any date specified herein, the average of the daily
Market Price of such security during the 10 consecutive trading
days before such date, except that, if on any such date the shares
of such security are not listed or admitted for trading on any
national securities exchange or quoted in the over-the-counter
market, the Current Market Price shall be the Market Price on such
date.
“
DSW ” shall mean DSW Inc., an Ohio corporation.
“
DSW Registration Rights Agreement ” shall mean the
registration rights agreement, dated as of July 5, 2005, among
DSW and the Initial Holders.
“
DSW Stock ” shall mean shares of Class A Shares,
such term to include any stock into which such DSW Stock shall have
been changed or any stock resulting from any reclassification of
such DSW Stock, and all other stock of any class or classes
(however designated) of DSW the holders of which have the right,
without limitation as to amount, either to all or to a share of the
balance of current dividends and liquidating dividends after the
payment of dividends and distributions on any shares entitled to
preference.
“
DSW Stock Exercise Amount ” shall initially mean the
Initial DSW Stock Exercise Amount, as the same may be adjusted and
readjusted pursuant to Section 3 hereof; and shall be reduced
upon each exercise of this Warrant (i) if exercised for DSW
Stock, by such number of shares of DSW Stock for which this Warrant
is then being exercised or (ii) if exercised for Common Stock,
by the Corresponding DSW Stock Number applicable to the number of
shares of Common Stock for which this Warrant is then being
exercised.
“
DSW Stock Purchase Price ” shall mean initially, the
IPO Price, subject to adjustment and readjustment from time to time
as provided in Section 3, and, as so adjusted or readjusted,
shall remain in effect until a further adjustment or readjustment
thereof is required by Section 3.
“
Exchange Act ” shall mean the Securities Exchange Act
of 1934, as amended from time to time, and the rules and
regulations thereunder, or any successor statute.
“
Expiration Date ” shall have the meaning assigned to
it in the introduction to this Warrant.
5
“
Fair Value ” shall mean, on any date specified herein
(i) in the case of cash, the dollar amount thereof,
(ii) in the case of a security, the Current Market Price, and
(iii) in all other cases, the fair value thereof (as of a date
which is within 20 days of the date as of which the
determination is to be made) determined in good faith by a
committee of the Company’s Board of Directors consisting of
directors who are not Affiliates of the Company, SSC or the Holder;
provided , however, that at the reasonable request of the
Holder, the Fair Value shall be determined in good faith by an
independent investment banking firm selected jointly by the Company
and the Holder or, if that selection cannot be made within
10 days, by an independent investment banking firm selected by
the American Arbitration Association in accordance with its rules,
and provided , further, that the Company shall pay all of
the reasonable fees and expenses of any third parties incurred in
connection with determining the Fair Value.
“
Financing Agreement ” shall mean that certain
Financing Agreement, dated as of June 11, 2002, among the Company,
certain Affiliates of the Company, CPLP and SSC, as subsequently
amended and modified through the date hereof.
“
Holder ” shall have the meaning assigned to it in the
introduction to this Warrant.
“
Initial Common Stock Exercise Amount ” means 1,388,752
shares.
“
Initial DSW Stock Exercise Amount ” shall mean the
number of shares of DSW Stock obtained by dividing (i) the
product of (A) 1,388,752 and $4.50 by (ii) the IPO
Pricerounding up for any fractional share, which such amount is
equal to 328,915 shares.
“
Initial Holders ” shall mean CPLP, SSC and Back Bay
Capital Funding LLC.
“
IPO Effective Date ” means the date on which a
Qualifying IPO is consummated in accordance with the terms set
forth in (i) Section 4.02 of the Convertible Facility and
(ii) the Form S-1 Registration Statement as filed with the SEC
on June 28, 2005 as amended from time to time.
“
IPO Price ” means the price at which a share of DSW
Stock is initially offered to the public in a Qualifying IPO as set
forth on the cover page to the prospectus in such IPO, or $19.00
per share.
“
Lien ” shall have the meaning set forth in the
Convertible Facility.
“
Market Price ” shall mean, on any date specified
herein, with respect to any security, the amount per share of such
security equal to (i) the last reported sale price of such
security, regular way, on such date or, in case no such sale takes
place on such date, the average of the closing bid and asked prices
thereof regular way on such date, in either case as officially
reported on the principal national securities exchange on which
such security is then listed or admitted for trading, (ii) if
such security is not then listed or admitted for trading on any
national securities exchange but is designated as a national market
system security by the NASD, the last reported trading price of
such security on such date, (iii) if there shall have been no
trading on such date or if such security is not so designated, the
average of the closing bid and asked prices of such security on
such date as shown by the NASD automated quotation system,
(iv) if trading
6
in such
security is quoted in the over-the-counter market, the average of
the closing bid and asked prices of the security on such date as
shown on the OTC Bulletin Board, or (v) if such security is
not then listed or admitted for trading on any national exchange or
quoted in the over-the-counter market, the fair value thereof (as
of a date which is within 20 days of the date as of which the
determination is to be made) determined in good faith by a
committee of the Company’s Board of Directors consisting of
directors who are not Affiliates of the Company, SSC or the Holder;
provided , however , that at the request of the
Holder, the Market Price shall be determined in good faith by an
independent investment banking firm selected jointly by the Company
and the Holder or, if that selection cannot be made within
10 days, by an independent investment banking firm selected by
the American Arbitration Association in accordance with its rules,
and provided , further, that the Company shall pay all of
the fees and expenses of any third parties incurred in connection
with determining the Market Price.
“
NASD ” shall mean the National Association of
Securities Dealers, Inc.
“
New Issuance Price ” shall have the meaning set forth
in Section 3.2.
“
Options ” shall mean any rights, options or warrants
to subscribe for, purchase or otherwise acquire, in the case of the
Company, Additional Shares of Common Stock or Convertible
Securities of the Company, and, in the case of DSW, Additional
Shares of DSW Stock or Convertible Securities of DSW.
“
Original Issuance Date ” means September 26,
2002.
“
Other Securities ” shall mean any stock (other than
Common Stock or DSW Stock) and other securities of the Company or
DSW, as applicable, or any other Person (corporate or otherwise)
which the holders of the Term Loan Warrants at any time shall be
entitled to receive, or shall have received, upon the exercise of
the Term Loan Warrants, in lieu of or in addition to Common Stock
or DSW Stock, or which at any time shall be issuable or shall have
been issued in exchange for or in replacement of Common Stock or
DSW Stock or Other Securities pursuant to Section 4 or
otherwise.
“
Permitted Lien ” shall have the meaning set forth in
the Convertible Facility.
“
Person ” shall mean any individual, firm, partnership,
corporation, trust, joint venture, association, joint stock
company, limited liability company, unincorporated organization or
any other entity or organization, including a government or agency
or political subdivision thereof, and shall include any successor
(by merger or otherwise) of such entity.
“
Purchase Price ” shall mean, with respect to the
Common Stock, the Common Stock Purchase Price, and with respect to
the DSW Stock, the DSW Stock Purchase Price, as applicable.
“
Qualifying IPO ” shall mean an initial public offering
of DSW (a) in which the sale price of the Class A Shares
sold in the initial public offering shall reflect the fair market
value of such shares at the time of the initial public offering as
determined by the Company’s Board of Directors; (b) from
which the net proceeds are sufficient to repay in full all
obligations
7
outstanding under the Financing Agreement and $25,000,000 of the
principal amount under the Convertible Facility; and (c) which
is consummated on or prior to December 31, 2005.
“
Registration Rights Agreement ” shall mean the Second
Amended and Restated Registration Rights Agreement, dated as of
July 5, 2005, among the Company and the Initial Holders.
“
Restricted Securities ” shall mean (i) any Term
Loan Warrants bearing the applicable legend set forth in
Section 10.1, (ii) any shares of Common Stock or DSW
Stock (or Other Securities) issued or issuable upon the exercise of
Term Loan Warrants which are (or, upon issuance, will be) evidenced
by a certificate or certificates bearing the applicable legend set
forth in Section 10.1, and (iii) any shares of Common
Stock or DSW Stock (or Other Securities) issued subsequent to the
exercise of any of the Term Loan Warrants as a dividend or other
distribution with respect to, or resulting from a subdivision of
the outstanding shares of Common Stock or DSW Stock (or Other
Securities) into a greater number of shares by reclassification,
stock splits or otherwise, or in exchange for or in replacement of
the Common Stock or DSW Stock (or Other Securities) issued upon
such exercise, which are evidenced by a certificate or certificates
bearing the applicable legend set forth in Section 10.1.
E
“
Securities Act ” shall mean the Securities Act of
1933, as amended from time to time, and the rules and regulations
thereunder, or any successor statute.
“
Spin-Off ” shall have the meaning assigned to it in
Section 3.3.
“
SSC ” shall mean Schottenstein Stores
Corporation.
“
Term Loan Warrants ” shall mean all warrants initially
issued pursuant to the Financing Agreement (as amended and
restated), including this Warrant.
“
Warrant ” shall have the meaning assigned to it in the
introduction to this Warrant.
“
Warrant Shares ” means (a) the shares of Common
Stock or DSW Stock issued or issuable upon exercise of this Warrant
in accordance with Section 2, (b) all other securities or
other property issued or issuable upon any such exercise or
exchange in accordance with this Warrant and (c) any
securities of the Company or DSW distributed with respect to the
securities referred to in the preceding clauses (a) and
(b).
2.
EXERCISE OF WARRANT .
2.1.
Manner of Exercise; Payment of the Purchase Price .
(a) This Warrant may be exercised by the Holder hereof, in
whole or in part, at any time or from time to time prior to the
Expiration Date, by surrendering to the Company at its principal
office this Warrant, with the form of Election to Purchase Shares
attached hereto as Exhibit A, or (provided that the Company
has not consummated a Spin-Off and satisfied its obligation
pursuant to Section 3.3(b)) if this Warrant is being exercised
for Shares of DSW Stock, Exhibit B (or a reasonable facsimile
thereof) duly executed by the Holder and accompanied by payment of
the applicable
8
Purchase
Price for the number of shares of Common Stock or, after the
consummation of a Qualifying IPO (provided that the Company has not
consummated a Spin-Off and satisfied its obligations pursuant to
Section 3.3(b), DSW Stock specified in such form (the “
Aggregate Purchase Price ”). Any partial exercise of
this Warrant shall be for a whole number of Warrant Shares
only.
(b) Payment
of the Aggregate Purchase Price may be made as follows (or by any
combination of the following): (i) in United States currency
by cash or delivery of a certified check or bank draft payable to
the order of the Company or by wire transfer to the Company,
(ii) by cancellation of such number of Warrant Shares
otherwise issuable to the Holder upon such exercise as shall be
specified for cancellation in such Election to Purchase Shares,
such that the excess of the aggregate Current Market Price of such
specified number and type of shares on the date of exercise over
the portion of the Aggregate Purchase Price attributable to such
shares shall equal the Aggregate Purchase Price attributable to the
shares of Common Stock or DSW Stock, as the case may be, to be
issued upon such exercise, in which case such excess amount shall
be deemed to have been paid to the Company and the number of shares
issuable upon such exercise shall be reduced by such number
specified for cancellation, or (iii) by surrender to the
Company for cancellation certificates representing shares of Common
Stock or transfer to the Company certificates representing shares
of DSW Stock owned by the Holder (properly endorsed for transfer in
blank) having a Current Market Price on the date of Warrant
exercise equal to the Aggregate Purchase Price.
(c) Upon
the consummation of a Spin-Off and the satisfaction of the
Company’s obligations to make the distribution to the Holder
required by Section 3.3(b), this Warrant shall no longer be
exercisable for shares of DSW Stock and the Holder shall not be
entitled to the pro rata share of the dividend or distribution
pursuant to Section 3.3(a) in respect of such Spin-Off and
distribution; provided, however, that this Warrant shall continue
to be exercisable for shares of Common Stock without any adjustment
to the Common Stock Purchase Price or Common Stock Exercise Amount
as a result of such Spin-Off and distribution to the holders of the
Term Loan Warrants and Conversion Warrants.
(d) Notwithstanding
anything herein to the contrary, the Holder agrees that this
Warrant shall not be exercisable for shares of DSW Stock from and
after the record date for a Spin-Off (as set forth in the notice
provided to the Holder pursuant to Section 8 hereof) until the
earliest to occur of (i) the abandonment of the Spin-Off,
(ii) the date that is 60 days after the record date for
such Spin-Off and (iii) two Business Days prior to the
Expiration Date of this Warrant.
2.2.
When Exercise Effective . Each exercise of this Warrant
shall be deemed to have been effected immediately prior to the
close of business on the Business Day in the case of Common Stock
and on the next succeeding Business Day in the case of DSW Stock on
which this Warrant shall have been surrendered to, and the Purchase
Price shall have been received by, the Company as provided in
Section 2.1, and, to the extent permitted by law, at such time
the Person or Persons in whose name or names any certificate or
certificates for shares of Common Stock (or Other Securities of the
Company) in the case of an exercise of this Warrant for Common
Stock shall be issuable upon such exercise as provided in
Section 2.3 shall be deemed to have become the holder or
holders of record thereof for all purposes.
9
2.3.
Delivery of Stock Certificates, etc.; Charges, Taxes and
Expenses . (a) As soon as practicable after each exercise
of this Warrant, in whole or in part, and in any event within two
Business Days thereafter in the case of Common Stock and within
three Business Days in the case of DSW Stock, the Company shall
cause to be issued, in the case of Common Stock, and shall use
reasonable best efforts to cause to be transferred, in the case of
DSW Stock, in the name of and delivered to the Holder hereof or,
subject to Section 10, as the Holder may direct,
(i) a certificate or certificates for
the number and type of Warrant Shares (or Other Securities) to
which the Holder shall be entitled upon such exercise, and any cash
payment in lieu of any fractional shares, as provided in
Section 12.5 hereof, and
(ii) in case such exercise is for
less than all of the Warrant Shares purchasable under this Warrant,
a new Warrant or Warrants of like tenor, for the balance of the
Warrant Shares purchasable hereunder.
(b) Issuance
of certificates for Warrant Shares upon the exercise of this
Warrant shall be made without charge to the Holder hereof for any
issue or transfer tax or other incidental expense, in respect of
the issuance or transfer of such certificates, all of which such
taxes and expenses shall be paid by the Company; provided ,
however , that the Company shall not be required to pay any
tax that may be payable in respect of any issuance of any Warrant
or any certificate for, or any other evidence of ownership of,
Warrant Shares in a name other than that of the Holder of this
Warrant being exercised or exchanged.
(c) Upon
delivery of notice of exercise of this Warrant for shares of DSW
Stock, the Company shall promptly effect the exchange of a
sufficient number of Class B Shares for Class A Shares so
as to permit the transfer of Class A Shares to the Holder in
the manner and time periods provided in paragraph (a) of this
Section 2.3.
2.4.
Tax Basis . The Company and the Holder shall mutually agree
as to the tax basis of this Warrant for purposes of the Internal
Revenue Code of 1986, as amended, and the treatment of this Warrant
under such Code by each of the Company and the Holder shall be
consistent with such agreement.
3.
ADJUSTMENT OF PURCHASE PRICE AND WARRANT SHARES ISSUABLE UPON
EXERCISE .
3.1.
Adjustment of Number of Shares .
(a) Upon
each adjustment of the Common Stock Purchase Price or the DSW Stock
Purchase Price as a result of the calculations made in this
Section 3, this Warrant shall thereafter evidence the right to
receive, at the adjusted Purchase Price, that number of shares of
Common Stock or DSW Stock, as the case may be, (calculated to the
nearest one-hundredth) obtained by dividing (i) the product of
the aggregate number of such shares covered by this Warrant
immediately prior to such adjustment and the applicable Purchase
Price in effect immediately prior to such adjustment of the
Purchase Price by (ii) the applicable Purchase Price in effect
immediately after such adjustment of the Purchase Price. For the
avoidance of doubt,
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adjustments to the Common Stock Purchase Price shall result in an
adjustment only in the number of shares of Common Stock issuable
hereunder and an adjustment to the DSW Stock Purchase Price shall
result in an adjustment only in the number of shares of DSW Stock
issuable hereunder.
(b) In
the event that, prior to the exercise in full of this Warrant, the
Company issues any shares of Common Stock upon the conversion of
Convertible Securities outstanding as of the Original Issuance Date
(including, without limitation, upon exercise of the Conversion
Warrants) (a “ Conversion ”), the number of
shares of Common Stock issuable upon the exercise of this Warrant
(whether or not this Warrant has been partially exercised) shall be
automatically increased by the number of shares equal to 4.1125% of
the shares of Common Stock issued upon such Conversion, and the
Purchase Price shall not be adjusted in connection with such
increase. Any adjustments made to the Purchase Price or the number
of shares of Common Stock issuable upon exercise of the Warrant
prior to such Conversion shall be made as if the Warrant were
initially exercisable for such increased number of shares. Upon
each such Conversion, the Company shall promptly deliver to the
Holder the report required by Section 7 hereof. For the
avoidance of doubt, this section 3.1(b) shall only apply to
exercise of this Warrant for Common Stock and a corresponding
increase shall not be made with respect to DSW Stock.
3.2.
Adjustment of Purchase Price for New Issuances .
(a)
Issuance of Additional Shares . If at any time or from time
to time after the date hereof, the Company shall issue or sell
Additional Shares of Common Stock or, DSW shall issue Additional
Shares of DSW Stock (including, in each case, Additional Shares of
Common Stock or Additional Shares of DSW Stock, as applicable,
deemed to be issued pursuant to Section 3.2(b) and excluding
shares issued pursuant to Section 3.3 and 3.4) without
consideration or for a consideration per share less than the
applicable Purchase Price in effect immediately prior to such issue
or sale (the “ New Issuance Price ”), then, and
in each such case, subject to Section 3.8, in the case of an
issuance of Additional Shares of Common Stock the Common Stock
Purchase Price or, in the case of an issuance of Additional Shares
of DSW Stock, the DSW Stock Purchase Price, shall be reduced
concurrently with such issue or sale, to the applicable New
Issuance Price. For the avoidance of doubt, issuances of Additional
Shares of Common Stock shall result in an adjustment only to the
Common Stock Purchase Price and issuances of Additional Shares of
DSW Stock shall result in an adjustment only to the DSW Stock
Purchase Price.
(b)
Treatment of Options and Convertible Securities . Shares of
Additional Shares of Common Stock or Additional Shares of DSW Stock
shall be deemed issued if the Company or DSW, as applicable, at any
time or from time to time after the date hereof shall issue, sell,
grant or assume, or shall fix a record date for the determination
of holders of any class of securities of the Company or DSW, as the
case may be, entitled to receive, any Options or Convertible
Securities (whether or not the rights thereunder are immediately
exercisable) for a consideration per share (determined pursuant to
Section 3.6) that is less than, in the case of Additional
Shares of Common Stock, the Common Stock Purchase Price or, in the
case of Additional Shares of DSW Stock, the DSW Stock Purchase
Price, in effect on the date of and immediately prior to such
issue, sale, grant or assumption or immediately prior to the close
of business on such record date (or, if the Common Stock or DSW
Stock, as applicable, trades on
11
an
ex-dividend basis, on the date prior to the commencement of
ex-dividend trading). Such issuance shall be deemed to occur
(i) as of the time of such issue, sale, grant or assumption of
the Convertible Securities or Options or (ii) in case such a
record date shall have been fixed, as of the close of business on
such record date (or, if the Common Stock or DSW Stock, as
applicable, trades on an ex-dividend basis, on the date prior to
the commencement of ex-dividend trading). No further adjustment of
the Purchase Price shall be made upon the subsequent issuance of
shares of Common Stock or DSW Stock, as the case may be, upon the
exercise of such Options or the conversion or exchange of such
Convertible Securities.
(c) In
addition, for the avoidance of doubt, after the consummation of a
Spin-Off and satisfaction of the Company’s obligations to
make the distribution to the Holder required by
Section 3.3(b), no adjustment shall be made pursuant to this
Section 3.2 as a result of an issuance by DSW of Additional
Shares of DSW Stock.
3.3.
Extraordinary Dividends and Distributions; Payment of Dividend
in Case of Spin-Off .
(a) Subject
to Section 3.3(b), if the Company or DSW at any time or from
time to time after the date hereof shall declare, order, pay or
make a dividend or other distribution (including, without
limitation, any distribution of other or additional stock or other
securities or property or Options by way of dividend or spin-off,
reclassification, recapitalization or similar corporate
rearrangement) on, in the case of the Company, the Common Stock or,
in the case of DSW, the DSW Stock, other than (a) a dividend
payable in shares of Common Stock or, in the case of DSW, DSW
Stock, subject to Section 3.4, or (b) a regularly
scheduled cash dividend payable out of consolidated earnings or
earned surplus, determined in accordance with generally accepted
accounting principles or (c) a deemed issuance of Additional
Shares of Common Stock or Additional Shares of DSW Stock pursuant
to Section 3.2(b), in each such case, subject to
Section 3.8, adequate provision shall be made so that the
Holder shall receive, upon Warrant exercise for such type of
Warrant Shares, a pro rata share of such dividend or other
distribution based upon the maximum number of shares of Common
Stock or DSW Stock, as applicable, at the time issuable to the
Holder (determined without regard to whether the Warrant is
exercisable at such time). For the avoidance of doubt, subject to
Section 3.3(b), divid
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