REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement dated as of September 24, 1998, by
and between Candie's, Inc., a Delaware corporation (the "Company"), and the
persons whose names and addresses appear on the signature page attached
hereto (each a "Holder" and collectively, the "Holders").
WHEREAS, the Company issued to the Holders, pursuant to the
purchase of all of the capital stock of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co., Inc. ("▇▇▇▇▇▇ &
Co.") by a wholly-owned subsidiary of the Company, an aggregate of 1,967,742
shares (the "Shares") of the Company's common stock, par value $.001 per
share (the "Common Stock"), as described in the stock purchase agreement, of
even date herewith, by and among the Company and its subsidiary, ▇▇▇▇▇▇ & Co.
and each of the Holders (the "Purchase Agreement"); and
WHEREAS, pursuant to the Purchase Agreement, the Company has agreed
to grant to the Holder registration rights set forth herein with respect to
the Shares.
NOW, THEREFORE, the parties do hereby agree as follows:
As used herein the term "Registrable Security" means each of the
Shares, and any shares of Common Stock issued upon any stock split or stock
dividend in respect of such Shares; PROVIDED, HOWEVER, that with respect to
any particular Registrable Security, such security shall cease to be a
Registrable Security when, as of the date of determination, (i) it has been
effectively registered under the Securities Act of 1933, as amended (the
"Securities Act") and disposed of pursuant thereto, (ii) it may be sold
pursuant to Rule 144(k) or (iii) it has ceased to be outstanding. In the
event of any merger, reorganization, consolidation, recapitalization or other
change in corporate structure affecting the Common Stock, such adjustment
shall be made in the definition of "Registrable Security" as is appropriate
in order to prevent any dilution or enlargement of the rights granted
pursuant to this Agreement.
The term "Majority Holder" as used in this Agreement shall mean any
holder or any combination of holders of Registrable Securities, if included
in such holders' Registrable Securities are that aggregate number of Shares
as would constitute a majority of the aggregate number of Shares included in
all of the Registrable Securities.
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1. DEMAND REGISTRATION. (a) Subject to receipt by the Company of
the audited financial statements of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & Co., Inc. for the
periods set forth in Section 4.2 of the Stock Purchase Agreement, together
with the unqualified opinion of Stonefield ▇▇▇▇▇▇▇▇▇, Inc. (the "Audited
Financial Statements"), at any time during the two (2) year period after the
first year anniversary of the date of this Agreement, the Majority Holder
shall have the right, on one (1) occasion only, exercisable by written notice
to the Company (a "Demand Registration Request"), to have the Company
promptly prepare and file with the Securities and Exchange Commission, in
respect of the Registrable Securities held by the Holders, a registration
statement (the "Demand Registration Statement") so as to permit a public
offering and sale of the Registrable Securities; provided however, that the
Company is then eligible to register the Registrable Securities.
(b) The Company and other stockholders may, at the Company's
discretion, have other shares of Common Stock included in the Demand
Registration Statement, provided that in the event that an underwriter for
the Registrable Securities determines that the inclusion of the additional
shares of Common Stock in the Demand Registration Statement would adversely
affect its ability to sell the Registrable Securities, then the shares of
Common Stock proposed to be offered by the Company and such other
stockholders shall be cut-back as requested in writing by such underwriter.
(c) The Company will use reasonable efforts to file the
Demand Registration Statement as expeditiously as reasonably possible,
provided that nothing herein shall require the Company to undergo an audit,
other than in the ordinary course of business.
(d) Notwithstanding any provision of this Section 1 to the
contrary, if, at the time a Demand Registration Request is given to the
Company under this Section 1, the Company is negotiating a merger,
consolidation, acquisition or sale of all or substantially all of its assets
or a similar transaction and if in the opinion of counsel to the Company, the
Demand Registration Statement would be required to include information
concerning such transactions or the parties thereto which is not reasonably
available at the time, the Company shall promptly inform the Holder by
written notice of such circumstances (a "Postponement Notice") and, at the
Company's election to be set forth in the Postponement Notice, the filing of
the Demand Registration Statement may be postponed for one (and not more than
one) period not to exceed 90 days from the date on which the Demand
Registration Request is given to the Company under this Section 1
(notwithstanding any provisions herein to the contrary).
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2. PIGGYBACK REGISTRATION.
(a) Subject to receipt by the Company of the Audited Financial
Statements, if at any time during the three (3) year period after the date of
this Agreement, the Company proposes to prepare and file with the Securities
and Exchange Commission a registration statement covering equity or debt
securities of the Company, or any such securities of the Company held by its
stockholders, other than in connection with a merger, acquisition or pursuant
to a registration statement on Form S-4 or Form S-8 or any successor form
(for purposes of this Section 2, collectively, a "Piggyback Registration
Statement") and the Holders are required pursuant to the terms of Section 4.2
of the Purchase Agreement to pay for the costs of such Piggyback Registration
Statement, the Company will give written notice of its intention to do so by
registered or certified mail to Holders. If the Company elects to file a
Piggyback Registration Statement prior to the first anniversary of the date
hereof, those Shares registered on behalf of the Holders shall remain subject
to the Lock-Up Agreement dated the date hereof between the parties. Upon the
written request of Holders, made within 5 days after receipt of such notice,
that the Company include the Registrable Securities in the Piggyback
Registration Statement, the Company shall, as to Holders, use its reasonable
efforts to effect the registration under the Securities Act of the
Registrable Securities which it has been so requested to register ("Piggyback
Registration"), at the Holder's sole cost and expense and at no cost or
expense to the Company; PROVIDED, HOWEVER, that if, the Piggyback
Registration is in connection with an underwritten public offering and in the
written opinion of the Company's underwriter or managing underwriter of the
underwriting group, if any, for such offering, the inclusion of all or a
portion of the Registrable Securities requested to be registered, when added
to the securities being registered by the Company or the selling
stockholder(s), if any, will exceed the maximum amount of the Company's
securities which can be marketed (i) at a price reasonably related to their
then current market value, or (ii) without otherwise having a material
adverse effect on the entire offering, then the Company may, subject to the
allocation priority set forth in the next paragraph, exclude from such
offering all or a portion of the Registrable Securities which it has been
requested to register. Without limiting the generality of the foregoing,
such underwriter or managing underwriter may condition its consent to the
inclusion of all or a portion of the Registrable Securities requested to be
registered upon the participation by Holders in the underwritten public
offering on the terms and conditions thereof.
(b) If securities are proposed to be offered for sale pursuant to
such Piggyback Registration Statement by other security holders of the
Company and the total number of the Registrable Securities to be offered by
Holder and such other selling security holders is required to be reduced
pursuant to a
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request from the underwriter or managing underwriter (which request shall be
made only for the reasons and in the manner set forth above), the aggregate
number of Registrable Securities to be offered by Holders pursuant to such
Piggyback Registration Statement shall equal the number which bears the same
ratio to the maximum number of securities that the underwriter or managing
underwriter believes may be included for all the selling security holders
(including Holders) as the original number of securities proposed to be sold
by Holders bears to the total original number of securities proposed to be
offered by Holders and the other selling security holders.
(c) Notwithstanding the preceding provisions of this Section 2,
the Company shall have the right at any time after it shall have given
written notice pursuant to this Section 2 (irrespective of whether any
written request for inclusion of such securities shall have already been
made) to elect not to file any proposed Piggyback Registration Statement
filed pursuant to this Section 2, or to withdraw the same after the filing
but prior to the effective date thereof. In the event that the Company
elects to withdraw, the Company shall pay for the cost of such withdrawn
Piggyback Registration Statement; provided, however, that the Company shall
not be liable for the costs (including but not limited to legal fees and
expenses) of the Holders in connection with the Piggyback Registration
Statement, and, furthermore, such withdrawal shall not affect
Holders'obligation to pay for any subsequent Piggyback Registration Statement
filed by the Company.
(d) In the event Holders exercise the rights granted under this
paragraph 2, such Holder shall no longer be entitled to the Demand
Registration rights set forth in paragraph 1 of this Agreement.
3. COVENANTS OF THE COMPANY WITH RESPECT TO REGISTRATION. The
Company hereby covenants and agrees as follows:
(a) Following the effective date of the Demand Registration
Statement, the Company shall, upon the request of the Majority Holder,
forthwith supply such reasonable number of copies of the Demand Registration
Statement and prospectus as shall be reasonably requested by the Holders to
permit the Holders to make a public distribution of the Registrable
Securities. The obligations of the Company hereunder with respect to the
registrable Securities are expressly conditioned on the Holders' furnishing
to the Company such appropriate information concerning the Holders, the
Registrable Securities and the terms of the Holders' offering of such
Registrable Securities as the Company may request.
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(b) Subject to the provisions of the Purchase Agreement, the
Company will pay all costs, fees and expenses in connection with any Demand
Registration Statement filed, provided however, that the Holders shall be
solely responsible for the fees of any counsel or advisor or underwriter
retained by the Holders in connection with such registration and any transfer
taxes, selling commissions or selling fees applicable to the Registrable
Securities sold by the Holders pursuant thereto.
(c) The Company will use reasonable efforts to qualify or
register the Registrable Securities included in the Demand Registration
Statement for offering and sale under the securities or blue sky laws of such
states as are reasonably requested by the Holders, provided that the Company
shall not be obligated to execute or file any general consent to service of
process (unless the Company is already then subject to service in such
jurisdiction) or to qualify as a foreign corporation to do business under the
laws of any such jurisdiction, except as may be required by the Securities
Act and its rules and regulations.
(d) The Company shall cause any successor corporation to
assume the obligations set forth under this Agreement in connection with any
merger, consolidation or acquisition in which the Company is not the
surviving entity.
4. COVENANT OF THE HOLDERS. The Holders, upon receipt of notice
from the Company that an event has occurred which requires a post-effective
amendment to a registration statement or a supplement to the prospectus
included therein, shall promptly discontinue the sale of Registrable
Securities until the Holders receive a copy of a supplemented or amended
prospectus from the Company, which the Company shall provide as soon as
reasonably practicable after such notice.
5. INDEMNIFICATION. The Company agrees to indemnify, defend and
hold harmless the Holders from and against any and all losses, claims,
damages and liabilities caused by or arising out of any untrue statement of a
material fact contained in the Demand Registration Statement, the Piggyback
Registration Statement or any prospectus included therein or caused by or
arising out of any omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in light of
circumstances which they are made, not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue
statement or omission based upon information furnished or required to be
furnished in writing to the Company by the Holders expressly for use therein;
provided, however, that the indemnification in this Section shall not inure
to the benefit of the Holders on account of any such loss, claim, damage or
liability arising from the sale of Registrable Securities by the Holders, if
a copy of a subsequent prospectus correcting the untrue statement or omission
in such
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earlier prospectus was provided to the Holders by the Company prior to the
sale and the subsequent prospectus was not delivered or sent by the Holders
to the purchaser prior to such sale. The Holders agree to indemnify the
Company, its directors, each officer signing a registration statement, each
person who controls the Company within the meaning of the Securities Act, any
underwriter and any person who controls any underwriter within the meaning of
the Securities Act from and against any and all losses, claims, damages and
liabilities caused by or arising out of any untrue statement of a material
fact contained in the Demand Registration Statement, Piggyback Registration
Statement, or any prospectus included therein, or caused by or arising out of
any omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, in each case,
only insofar as such losses, claims, damages or liabilities are caused by any
untrue statement or omissions based upon information furnished in writing to
the Company by the Holders expressly for use therein.
6. GOVERNING LAW.
(a) This Agreement shall be governed as to validity,
interpretation, construction, effect and in all other respects by the
internal substantive laws of the State of New York, without giving effect to
the choice of law rules thereof.
(b) Each of the Company and each of the Holders hereby
irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of the State of New York and of the United States
located in the County of New York, State of New York (the "New York Courts")
for any litigation arising out of or relating to this Agreement and the
transactions contemplated hereby (and agrees not to commence any litigation
relating thereto except in such courts), waives any objection to the laying
of venue of any such litigation in the New York Courts and agrees not to
plead or claim that such litigation brought in any New York Courts has been
brought in an inconvenient forum.
7. NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed duly given
when delivered by hand or mailed by express, registered or certified mail,
postage prepaid, return receipt requested, as follows:
If to the Company, at:
Candie's, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇
with a copy of the same to:
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▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
If to the Holder(s), at that address set forth under their name on
the signature page.
with a copy of the same to:
Jeffer, Mangels, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, LLP
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇▇▇▇▇▇, Esq.
Or such other address as has been indicated by either party in
accordance with a notice duly given in accordance with the provisions of this
Section.
8. AMENDMENT. This Agreement may only be amended by a written
instrument executed by the Company and the Holders.
9. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement of the parties hereto with respect to the subject matter hereof,
and supersedes all prior agreements and understandings of the parties, oral
and written, with respect to the subject matter hereof.
10. ASSIGNMENT; BENEFITS. This Agreement and the rights granted
hereunder may not be assigned by any Holder and any purported assignment
shall be void ab initio. Nothing herein contained, express or implied, is
intended to confer upon any person other than the parties hereto any rights
or remedies under or by reason of this Agreement. This Agreement shall inure
to the benefit of and bind the respective parties' successors or permitted
assigns.
11. The prevailing party to any action brought under this
Agreement shall be entitled to recover reasonable attorneys' fees and
expenses in connection therewith from the non-prevailing party.
12. HEADINGS. The headings contained herein are for the sole
purpose of convenience of reference, and shall not in any way limit or affect
the meaning or interpretation of any of the terms or provisions of this
Agreement.
13. SEVERABILITY. Any provision of this Agreement which is held by
a court of competent jurisdiction to be prohibited or unenforceable in any
jurisdiction(s) shall be, as to such jurisdiction(s), ineffective to the
extent of such
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prohibition or unenforceability without invalidating the remaining provisions
of this Agreement or affecting the validity or enforceability of such
provision in any other jurisdiction.
14. EXECUTION IN COUNTERPARTS. This Agreement may be executed in
one or more counterparts, each of which shall be deemed an original, but all
of which together shall constitute one and the same document.
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IN WITNESS WHEREOF, this Agreement has been executed and delivered
by the parties hereto as of the date first above written.
Company: CANDIE'S, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇
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Name: ▇▇▇▇ ▇▇▇▇
Title: Chairman of the Board
Holders:
/s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Trustee of
the Claudio Trust dated
February 2, 1990
Address:
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Number of Shares:
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/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Address:
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Number of Shares:
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