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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. _________)*
Candie's, Inc.
- ------------------------------------------------------------------------------
(Name of Issuer)
Common Stock, par value $.001
- ------------------------------------------------------------------------------
(Title of Class of Securities)
137409--10--8
.............
(CUSIP Number)
Ethan Seer
Tenzer Greenblatt LLP
405 Lexington Avenue, New York, New York 10174 (212) 573-4300
- ------------------------------------------------------------------------------
(Name, Address and Telephone Number of Person
Authorized to Receive Notice and Communications)
March 3, 1993
- ------------------------------------------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box | |.
Check the following box if a fee is being paid with the statement|X|. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7).
Note: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
<PAGE>
SCHEDULE 13D
<TABLE>
<CAPTION>
- -------------------------------------------
CUSIP NO. 137409-10-8
- -------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Neil Cole
- -----------------------------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
- -----------------------------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- -----------------------------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
PF, OO
- -----------------------------------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- -----------------------------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- -----------------------------------------------------------------------------------------------------------------------------------
7 SOLE VOTING POWER
NUMBER OF 1,471,250 (includes options and warrants to acquire an aggregate of 1,440,000
SHARES shares of Common Stock)
BENEFICIALLY -----------------------------------------------------------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 2,027,696 (includes options and warrants to acquire an aggregate of 800,000 shares of
PERSON Common Stock)
WITH -----------------------------------------------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,471,250 (includes options and warrants to acquire an aggregate of 1,440,000
shares of Common Stock)
-----------------------------------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
2,027,696 (includes options and warrants to acquire an aggregate of 800,000 shares of
Common Stock)
- -----------------------------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
3,498,946 (includes options and warrants to acquire an aggregate of 2,240,000
shares of Common Stock)
- -----------------------------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- -----------------------------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
33.4%
- -----------------------------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEM 1-7 (INCLUDING
EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
SCHEDULE 13D
<TABLE>
<CAPTION>
- -------------------------------------------
CUSIP NO. 137409-10-8
- -------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
New Retail Concepts, Inc.
- -----------------------------------------------------------------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
- -----------------------------------------------------------------------------------------------------------------------------------
3 SEC USE ONLY
- -----------------------------------------------------------------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- -----------------------------------------------------------------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ]
- -----------------------------------------------------------------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
NUMBER OF 2,027,696 (includes 800,000 shares currently exercisable pursuant to a warrant and option)
SHARES
BENEFICIALLY -----------------------------------------------------------------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH
REPORTING 0
PERSON -----------------------------------------------------------------------------------------------------------------
WITH 9 SOLE DISPOSITIVE POWER
2,027,696 (includes 800,000 shares currently exercisable pursuant to a warrant and option)
-----------------------------------------------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
0
- -----------------------------------------------------------------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
2,027,696
- -----------------------------------------------------------------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ]
- -----------------------------------------------------------------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
22.4%
- -----------------------------------------------------------------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
CO
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEM 1-7 (INCLUDING
EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
<PAGE>
Item 1. Security and Issuer.
This statement relates to the Common Stock, par value $.001
per share ("Common Stock") issued by Candie's, Inc., a Delaware corporation (the
"Company"), whose principal executive offices are located at 2975 Westchester
Avenue, Purchase, New York 10577.
Item 2. Identity and Background.
This statement is filed by (i) New Retail Concepts, Inc., a
Delaware corporation ("NRC") and (ii) Neil Cole, President and a principal
stockholder of the Company and President and a principal stockholder of NRC (Mr.
Cole and NRC are referred to herein collectively as the "Reporting Persons").
The address of the Reporting Persons is 2975 Westchester Avenue, Purchase, New
York 10577. Mr. Cole is a United States citizen.
Neither Reporting Person has, during the last five years (i)
been convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors), or (ii) been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and as a result of such proceeding
was or is subject to a judgment, decree or final order enjoining future
violations of, or prohibiting or mandating activities subject to, federal or
state securities laws or finding any violations with respect to such laws.
Item 3. Source and Amount of Funds or other Consideration.
A total of 900,000 shares of Common Stock owned by NRC were
issued originally on March 3, 1993 to El Greco, Inc., a Delaware corporation
("El Greco"), which subsequently merged into NRC, in partial consideration for
the purchase of certain assets by the Company from El Greco, including the
trademark Candie's(R), related assets, and additional trademarks (the "Asset
Acquisition"). The Asset Acquisition was consummated on March 3, 1993.
Concurrently with the Asset Acquisition, Mr. Cole entered into an employment
agreement with the Company pursuant to which Mr. Cole was granted five-year
options to purchase, at any time until February 25, 1998, 400,000 shares of
Common Stock at a price of $5.00 per share. None of such options have been
exercised to date. Mr. Cole also converted $65,000 of accrued salary into 16,250
shares of Common Stock at the time of the Asset Acquisition. In addition, on
October 22, 1993, Mr. Cole purchased 15,000 units, each consisting of one share
of Common Stock, one Class B Warrant and one Class C Warrant (each warrant being
exercisable to purchase one share of Common Stock until February 23, 1998), at a
price of $2 5/8 per unit. On November 10, 1993, Mr. Cole was granted an Employee
Stock Option to purchase, at any time until November 10, 1998, 200,000 shares of
Common Stock of the Company for $2.56 per share. On August 3, 1994, Mr. Cole was
granted an Non-Qualified Stock Option to purchase, at any time until August 3,
1999, 400,000 shares of Common Stock of the Company for $1.50 per share. On
December 20, 1994 Mr. Cole was granted an Non-Qualified Stock Option to
purchase, at any time until December 20, 1999, 10,000 shares of Common Stock of
the Company for $1.25 per share. On March 6, 1995, Mr. Cole was granted an
Non-Qualified Stock Option to purchase, at any time until March 6, 2000, 400,000
shares of Common Stock of the Company for $1.16 per share. None of such options
has been exercised. Mr. Cole paid for all of such securities purchased by him
with personal funds.
<PAGE>
As of May 16, 1994, NRC converted $325,000 in principal under
a note due from the Company into 240,740 shares of Common Stock. The note was
originally issued by the Company in March 1993. On October 6, 1994, the Company
granted NRC an option to purchase 100,000 shares of the Company's Common Stock
at $1.15 per share, at any time from April 6, 1995 to October 6, 1999, in
consideration of NRC entering into an Exchange Agreement with certain investors
in the Company. On November 29, 1994 the principal of a convertible promissory
note in the principal amount of $100,000, which was issued by the Company to NRC
in November 1994, was automatically converted into 86,956 shares of the Common
Stock of the Company pursuant to the terms of the note.
On February 1, 1995 the Company and NRC entered into a
Securities Purchase Agreement (the "Purchase Agreement") pursuant to which NRC
loaned the Company an aggregate of $600,000 and has agreed to make available,
under certain conditions, an additional $200,000. In consideration therefor, the
Company issued to NRC a warrant (the "Warrant") to purchase up to 700,000 shares
of the Common Stock of the Company of which 700,000 shares are currently
exercisable. The Warrant is exercisable at $1.2375 per share. The Warrant
expires on February 1, 2000. Repayment by Candie's to NRC of such loan has been
personally guaranteed by Mr. Cole.
Item 4. Purpose of Transaction.
The purpose of the acquisition of shares of Common Stock by
each of the Reporting Persons is for investment. The Reporting Persons may make
purchases of Common Stock from time to time and may dispose of any or all of the
shares of Common Stock held by them at any time. The Reporting Persons have no
plans or proposals which relate to, or could result in any of the matters
referred to in Paragraphs (b) through (j) of Item 4 of Schedule 13D. The
Reporting Persons may review or reconsider their position with respect to the
Company or to formulate plans or proposals with respect to any such matter, but
have no present intention of doing so.
Item 5. Interest in Securities of the Issuer.
As of the date hereof, NRC beneficially owns an aggregate of
2,027,696 shares of Common Stock, constituting approximately 22.4% of the
outstanding Common Stock. Neil Cole beneficially owns an aggregate of 3,498,946
shares of Common Stock (attributing all of NRC's ownership to Mr. Cole),
constituting approximately 33.4% of the outstanding Common Stock. The percentage
used herein is calculated based upon the shares of Common Stock issued and
outstanding at June 21, 1995 as provided by the Company. Except for the shares
owned of record by NRC as to which Mr. Cole share's voting and dispositive power
and 10,000 shares which are held by a charitable foundation of which Mr. Cole
and his wife are co-trustees, the Reporting Persons have sole voting and
dispositive power with respect to all the shares of Common Stock to which this
statement relates. The Reporting Persons have not effected any transactions in
shares of the Common Stock in the past 60 days other than as indicated above.
No person other than the Reporting Persons has the right to
receive or the power to direct receipt of dividends from, or the proceeds of,
the sale of the shares of Common Stock.
Item 6. Contracts, Arrangements, Understandings or
Relationships with Respect to Securities of the Issuer.
<PAGE>
Other than as set forth above, there are no contracts,
arrangements, understandings or relationships with the Reporting Persons or any
other person with respect to the securities of the Company, including but not
limited to transfer or voting of any other securities, finders' fees, joint
ventures, loan or option arrangements, puts or calls, guaranties of profits,
divisions of profits or loss or the giving or withholding of proxies.
NRC and Neil Cole have received certain registration rights
with respect to certain of their shares of Common Stock beneficially owned by
them.
Item 7. Materials to be filed as Exhibits.
Exhibit 1 Asset Acquisition Agreement among
Millfeld Trading Co., Inc. (now the
Company), New Retail Concepts,
Inc., ("NRC") and El Greco. Inc.,
dated as of February 23, 1993.
Exhibit 2 Letter Agreement between the
Company and NRC dated as of May 16,
1994 (incorporated by reference to
Exhibit 10.20 of the Company's Form
10-KSB for the fiscal year ended
January 31, 1995).
Exhibit 3 Registration Rights Agreement between the Company
and NRC, dated May 16, 1994.
Exhibit 4 Securities Purchase Agreement dated as of February
1, 1995 between the Company and NRC (incorporated
by reference to Exhibit 10.13 to the Company's
Form 10-KSB for the fiscal year ended January 31,
1995).
Exhibit 5 Warrant dated February 1, 1995 to purchase up to
700,000 shares of Common Stock issued by the
Company to NRC.
Exhibit 6 Convertible Note of the Company dated November 21,
1994 issued in favor of NRC.
Exhibit 7 Option dated October 6, 1994 to purchase up to
100,000 shares of Coomon Stock issued by the
Company to NRC.
Exhibit 8 Joint Filing Agreement between Neil Cole and NRC
dated as of June 21, 1995.
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and
belief, I certify that the information set forth in this statement is true,
complete and correct.
DATE: June 21, 1995
/s/ Neil Cole
-------------------------------------
Neil Cole
NEW RETAIL CONCEPTS, INC.
By: /s/ Neil Cole
----------------------------------
Neil Cole, President
<PAGE>
AGREEMENT
THIS AGREEMENT, made as of the 23rd day of February, 1993,
among Millfeld Trading Co., Inc., a Delaware corporation ("Purchaser"), with its
principal offices at 60 West 40th Street, New York, New York 10018, New Retail
Concepts, Inc., a Delaware corporation ("NRC"), with its principal offices at 60
West 40th Street, New York, New York 10018, and El Greco, Inc., a Delaware
corporation ("Seller"), with its principal offices at 60 West 40th Street, New
York, New York 10018 (the "Agreement").
W I T N E S S E T H
WHEREAS, Seller is the owner of certain trademarks, including
the trademark CANDIE'S(R) (the "Trademarks"); and
WHEREAS, Seller is the licensor of certain preexisting license
agreements relating to the Trademarks (the "License Agreements"); and
WHEREAS, Seller wishes to sell and Purchaser wishes to
acquire, all of Seller's right, title and interest to the Trademarks, the
License Agreements and all of the business of Seller related thereto (the
"Business Operations") relating to the Trademarks, Rights (as hereinafter
defined) and the License Agreements (collectively, the "Acquisition"); and
WHEREAS, Seller is a wholly-owned subsidiary of NRC.
NOW THEREFORE, in consideration of the mutual covenants
herein contained and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties hereto agree as
follows:
<PAGE>
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1. Purchase and Sale of Assets. Subject to the terms and
conditions of this Agreement, simultaneously with the closing of the public
offering registered pursuant to the Purchaser's Registration Statement on Form
S-1 (No. 33-53878), filed under the Securities Act of 1933 (the "Registration
Statement") with the Securities and Exchange Commission (the "Commission") (the
"Closing"), Seller will sell, assign, transfer, convey and deliver to Purchaser
and Purchaser will purchase, acquire and accept from Seller all right, title and
interest to the Trademark, Rights, the License Agreements, goodwill associated
with the foregoing, books and records maintained in connection with the
foregoing, all such other business assets of Seller, if any, associated with the
foregoing, necessary or desirable to conduct Seller's operations respecting such
Trademarks, Rights and License Agreements, as of the closing date, all as set
forth on Schedule 1.1 annexed hereto (the "Assets"), providing the Closing shall
have occurred prior to March 31, 1993, and subject to the provisions of Section
5.6 hereof. The Assets shall be acquired by Purchaser free and clear of all
liens, charges, encumbrances, liabilities and restrictions of every kind, nature
or description and shall not include any debts or obligation related thereto,
except with respect to the obligations set forth in the License Agreements.
Unless set forth in writing, Purchaser shall not assume and will not be liable
for or responsible to pay any debts, liabilities, obligations or commitments by
Seller. Purchaser assumes the obligations of Seller arising in connection with
the License Agreements incurred in the ordinary course of business of Seller
prior to Closing.
1.2. Consideration.
<PAGE>
1.2.1 Purchase Price. Subject to the terms and conditions of
this Agreement, at the Closing, Purchaser will deliver to Seller:
(i) by certified check, bank check or wire
transfer, up to the sum of $75,000 for the payment of Seller's
legal fees and expenses incurred in connection with the
transaction contemplated by this Agreement, as Seller shall
direct;
(ii) a subordinated promissory note in the
principal amount of $325,000, bearing interest at the "prime
interest rate" (as defined in the note), in the form of
Exhibit 1.2.1 attached hereto; and
(iii) 900,000 shares of Purchaser's common
stock, $.01 par value per share (the "Common Stock").
1.2.2 Additional Consideration. As additional consideration
for entering into this Agreement, Purchaser on the one hand, and Seller and NRC
on the other hand, hereby agree that except as set forth in this Agreement or
the Services Allocation Agreement (as hereinafter defined), the parties hereto
agree that all debts between such parties existing as of the Closing shall be
extinguished and forgiven, as such obligations are set forth on Schedule 1.2.2.
attached hereto.
1.2.3 Cancellation of NRC Option. Upon the Closing, the
option granted to Purchaser to purchase 200,000 shares of NRC common stock, $.01
par value per share, will be cancelled and will be of no further force or
effect.
1.3. Limited Right to Use Candie's Name Prior to Closing. In
further consideration of this Agreement, upon the date the Commission shall
declare effective the Registration Statement (the "Effective Date"), Seller
shall have the right to use the name "Candie's" as its corporate name until the
<PAGE>
Closing; provided however, that in the event the Closing shall not have occurred
prior to March 31, 1993, or such earlier date as Purchaser shall advise Seller
the public offering will be abandoned, such right shall terminate upon such date
and Purchaser shall cease all use of the "Candie's" name as its corporate name,
or as a trade name, or in any other manner and shall file all such documents as
may be necessary to cease the use of the "Candie's" name. Notwithstanding
anything contained herein to the contrary, there shall be no transfer of
ownership of the CANDIE'S(R) trademark prior to the Closing.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller hereby represents and warrants, upon which
representations and warranties Purchaser relies, as follows:
2.1. Corporate Organization. Seller is a corporation duly
organized, validly existing, and in good standing under the laws of its state of
incorporation, and has all requisite power and authority (corporate and
otherwise) to own, lease and operate its properties and carry on its business as
it is now being conducted and to enter into this Agreement and to consummate the
transactions contemplated hereunder. Except as set forth on Schedule 2.1 hereto,
Seller is not qualified, licensed or registered to do business in any states or
countries other than New York, nor by the location and nature of its business
and activities and the character of the properties owned by it, is it required
to be so qualified, licensed or registered, the failure of which would
materially adversely affect the business operations of Seller. NRC is the sole
stockholder of Seller.
2.2. Power and Authority. Seller has, and will at Closing
have, the full, absolute and unrestricted right, power, legal capacity and
authority to enter into this Agreement and the services allocation agreement,
<PAGE>
the form of which is attached hereto as Schedule 2.2 (the "Services Allocation
Agreement"), and to carry out the transaction contemplated hereby and thereby;
the execution of this Agreement will not violate any court or administrative
judgment, order or decree, or to the knowledge of Seller or NRC, violate any
statute, law, regulation, rule, which is applicable to Seller or any of the
Assets, or to which Seller is subject or by which it is bound. All actions of
Seller and NRC necessary to authorize them and each of them respectively to
execute, deliver and consummate this Agreement and the Services Allocation
Agreement have been duly and validly authorized and taken, and no further
actions or authorizations are required. This Agreement and the Services
Allocation Agreement constitute the valid, legally binding obligations of Seller
and NRC, respectively, and are enforceable in accordance with their terms.
2.3. No Violations. The execution and delivery of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not:
(i) Result in any breach of, or constitute a
default under, the Certificate or Articles of Incorporation or
Bylaws of Seller or NRC, or any agreement, instrument or
obligation to which Seller or NRC is a party or by which it or
they are bound; or
(ii) Violate any existing statute, order,
writ, injunction or decree of any court, administrative
agency or governmental body, or;
(iii) Require any authorization, consent,
approval, or other action by, or filing with, any third party
except the appropriate filings to transfer the Trademarks.
<PAGE>
2.4. Title to Properties. Seller owns and has good and
marketable title to all of the Assets. Notwithstanding the foregoing, Seller
makes no representations with regard to the Trademarks outside the United States
and Canada, except that with respect to registrations in Seller's name in such
countries, Seller is the owner of such registrations and Seller has not granted
any rights therein to any third parties, except pursuant to the License
Agreements. The Assets are not subject to any security interest, mortgage, deed
of trust, pledge, lien, encumbrance, claim, option, restriction or limitation on
their transferability, charge or adverse interest. None of the Assets is subject
to any commitment or other arrangement for their sale or use by any third party,
except for the rights of any licensees under the License Agreements.
2.5. Litigation. Neither Seller nor NRC is a party to, or the
subject of, any action, suit, litigation, claim, administrative proceeding or,
to the best of its or their knowledge, any governmental or quasi-governmental
investigation relating to the Assets, this Agreement or the consummation or the
transactions contemplated hereby, or material to such transactions; nor to the
knowledge of Seller or NRC, is any such action, suit, litigation, proceeding or
investigation threatened or contemplated, nor does there exist any basis for any
of the same.
2.6. Contracts. Except for the License Agreements and as set
forth on Schedule 2.6 hereto, Seller is not a party to any presently existing
leases, contracts, agreements, franchises or commitments, or agreements to enter
into any of the same, written or oral, relating to the Assets (the "Contracts").
Seller has complied in all respects with all of the provisions of all such
Contracts and of all other material contracts to which it is a party, and is not
in breach, violation or default under any of them, and no event has occurred,
which constitutes, or with the lapse of time or the giving of notice, or both,
would constitute such a breach, violation or default thereunder.
<PAGE>
2.7. Taxes. Except as set forth on Schedule 2.7, Seller has
paid (and, as to any of the following which are payable after the Closing,
Seller has properly and adequately reserved against and will pay when due) all
income taxes, sales and use taxes, unemployment taxes, ad valorem taxes,
property taxes, excise taxes, duties and imports, and all other taxes of every
kind, character or description imposed by any federal, state or local
governmental or quasi-governmental authority (collectively, the "Taxes")
required to be paid with respect to the assets or operations of Seller for all
periods prior to the Closing. All federal, state and local tax returns and
reports (collectively, the "Returns") to be filed by Seller with respect
thereto, have been accurately prepared, duly executed and filed or will be so
prepared, executed and filed before their respective due dates, and all Taxes
due with respect to such returns as filed have been paid (or will be so paid) by
Seller in full. Except as set forth on Schedule 2.7, Seller has not received,
and there are not outstanding, any notices of any deficiencies, adjustments,
assessments or changes in assessments or increases in Taxes or tax rates with
respect to any Taxes, or other charges which are due or required to be filed at
or prior to the date hereof, and which have not been paid in full or otherwise
fully settled and satisfied. No extension of time is in effect for the
assessment of deficiencies against Seller nor is any waiver of any statute of
limitations in effect with respect to any taxable year.
2.8. Compliance with Laws. Seller has complied with, and is
currently in compliance with all statutes, laws, ordinances, rules, regulations,
judgments, decrees and orders, of any government, court or governmental or
quasi-governmental authority, to which it is subject or by which it is bound.
Seller has all permits, licenses and authorizations required for the operation
of its business as it is presently conducted ("Seller Permits"), and all of such
Permits are in full force and effect.
<PAGE>
2.9. Trademarks and Tradenames. Schedule 1.1 attached hereto
correctly sets forth a true and complete list of all trademarks, service marks
and tradenames (collectively, the "Rights"), and any applications in respect
thereof, including recording information, which are included in the Assets, all
of which are owned by Seller free and clear of any and all liens, claims,
security interests, charges or encumbrances whatsoever, except as set forth on
Schedule 2.9; and no licenses for the use of any of such Rights have been
granted by Seller to any third parties, except as set forth on Schedule 1.1.
There is no claim or action by any person pertaining to, nor is there any
proceeding pending or threatened pertaining to, Seller has not received any
notice of conflict with, the asserted rights of others which challenges the
exclusive rights of the Seller with regard to the Trademarks or Rights. All
Rights are valid and in good standing, and do not infringe upon, and have not in
the past infringed upon, the rights of any other person, firm or corporation.
The operation of the business of Seller relating to the Assets does not infringe
upon any registered or unregistered Rights of any person. To the best knowledge
of Seller, there is no infringement of the Rights by any third party. With
respect to trademarks registered in any country other than the United States or
Canada, the representations contained in this Section 2.9 are made to Seller's
knowledge and belief.
2.10. License Agreements. Each of the License Agreements set
forth on Schedule 1.1 (true, accurate and complete copies of which have
previously been furnished to Purchaser) are in full force and effect as of the
date hereof, and have not been modified, amended or superseded. All consents, if
any, necessary in connection with the transfer of said licenses to Purchaser
have been obtained and upon closing, Purchaser shall have all rights of the
licensor under such agreements, without any obligation to make any payments to
any party other than as expressly set forth in said License Agreements or as
provided in this Agreement.
<PAGE>
2.11. Accuracy of Representations and Warranties. None of the
representations and warranties made by Seller or NRC contained in this
Agreement, including all Schedules, nor in any statement, document, certificate,
schedule, list, memorandum or other writing (collectively, the "Statements")
furnished or to be furnished by Seller or NRC pursuant hereto, or in connection
with the transactions contemplated hereby, is or will be incorrect or
incomplete, in any material respect or contains or will contain any untrue
statement of material fact, and none of such representations, warranties and
Statements omits or will omit to state a material fact necessary in order to
make the statements contained herein or therein not misleading. There is no fact
known to Seller or NRC which Seller or NRC have not disclosed in this Agreement,
or in an Schedule hereto, or in a Statement, which materially adversely affects
or may reasonably be expected to materially adversely affect the business or
Assets of Seller.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller and NRC, upon
which representations and warranties Seller and NRC rely, as follows:
3.1. Corporate Organization. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation, and all requisite power and authority (corporate and
otherwise) to own, lease and operate its properties and carry on its business as
it is now being conducted and enter into this Agreement and to consummate the
transactions contemplated hereunder. Except as set forth on Schedule 3.1 hereto,
Purchaser is not qualified, licensed or registered to do business in any states
or countries other than New York, nor by the location and nature of its business
and activities and the character of the properties owned by it, is it required
to be so qualified, licensed or registered.
<PAGE>
3.2. Power and Authority. Purchaser has, and will at Closing
have, the full, absolute and unrestricted right, power, legal capacity and
authority to enter into this Agreement and the Services Allocation Agreement and
to carry out the transaction contemplated hereby and thereby; the execution of
this Agreement will not violate any court or administrative judgment, order or
decree, or to the knowledge of Purchaser, violate any statute, law, regulation,
rule, which is applicable to Purchaser or any of its properties, or to which
Purchaser is subject or by which it is bound. All actions of Purchaser necessary
to authorize the execution, delivery and consummation of this Agreement and the
Services Allocation Agreement have been duly and validly authorized and taken,
and no further actions or authorizations are required. This Agreement and the
Services Allocation Agreement constitute the valid, legally binding obligations
of Purchaser and are enforceable in accordance with their terms.
3.3. No Violations. The execution and delivery of this
Agreement and the consummation of the transactions contemplated by this
Agreement will not:
(i) result in any breach of, or constitute a
default under, the Certificate or Articles of Incorporation or
Bylaws of Purchaser, or any agreement, instrument or
obligation to which Purchaser is a party or by which it is
bound; or
(ii) violate any existing statute, order,
writ, injunction or decree of any court, administrative
agency or governmental body, or;
(iii) require any authorization, consent,
approval, or other action by, or filing with, any third party,
except the appropriate filings to transfer the Trademarks.
<PAGE>
3.4. Litigation. Purchaser is not a party to, or the subject
of, any action, suit, litigation, claim, administrative proceeding or, to the
best of its knowledge, any governmental or quasi-governmental investigation
relating to this Agreement or the consummation of the transactions contemplated
hereby, or material to such transactions; nor to the best of the knowledge of
Purchaser, is any such action, suit, litigation, proceeding or investigation
threatened or contemplated, nor does there exist any basis for any of the same.
Purchaser is not subject to any material legal proceedings except as set forth
in its Preliminary Prospects dated January 19, 1993, which forms a part of its
Registration Statement No. 33-53878 filed with the Securities and Exchange
Commission.
3.5. Taxes. Except as set forth on Schedule 3.5, Purchaser has
paid (and, as to any of the following which are payable after the Closing,
Purchaser has properly and adequately reserved against and will pay when due)
all income taxes, sales and use taxes, unemployment taxes, ad valorem taxes,
property taxes, excise taxes, duties and imports, and all other taxes of every
kind, character or description imposed by any federal, state or local
governmental or quasi-governmental authority (collectively, the "Taxes")
required to be paid with respect to the assets or operations of Purchaser for
all periods prior to the Closing. All federal, state and local tax returns and
reports (collectively, the "Returns") to be filed by Purchaser with respect
thereto, have been accurately prepared, duly executed and filed or will be so
prepared, executed and filed before their respective due dates, and all Taxes
due with respect to such returns as filed have been paid (or will be so paid) by
Purchaser in full. Except as set forth on Schedule 3.5, Purchaser has not
received, and there are not outstanding, any notices of any deficiencies,
adjustments, assessments or changes in assessments or increases in Taxes or tax
rates with respect to any Taxes, or other charges which are due or required to
be filed at or prior to the date hereof, and which have not been paid in full
<PAGE>
or otherwise fully settled and satisfied. No extension of time is in effect for
the assessment of deficiencies against Seller nor is any waiver of any statute
of limitations in effect with respect to any taxable year.
3.6. Compliance with Laws. Purchaser has complied with, and is
currently in compliance with all statutes, laws, ordinances, rules, regulations,
judgments, decrees and orders, of any government, court or governmental or
quasi-governmental authority, to which it is subject or by which it is bound.
Purchaser has all permits, licenses and authorizations required for the
operation of its business as it is presently conducted ("Purchaser Permits"),
and all of such Purchaser Permits are in full force and effect.
3.7. Capitalization. As of the Effective Date (and giving
effect to a 1-for-4.5 reverse stock split effected on that date), the Purchasers
will have 1,473,690 shares of Common Stock issued and outstanding. As of the
Closing, the Purchaser will have 3,938,799 shares of Common Stock issued and
outstanding, including 900,000 shares issuable to the Seller hereunder. All of
such Common Stock is, or will be when issued, duly and validly authorized and
issued, fully paid and nonassessable.
3.8. Material Contracts. Purchaser is not a party to any
material contracts not described in Purchaser's Preliminary Prospectus dated
January 19, 1993, which forms a part of its Registration Statement No. 33-53878
filed with the Securities and Exchange Commission (the "Prospectus"). Purchaser
has complied in all respects with all of the provisions of all material
contracts to which it is a party, and is not in breach, violation or default
under any of them, and no event has occurred which constitutes, or with the
lapse of time or the giving of notice, or both, would constitute, such a breach,
violation or default thereunder, except as disclosed in the Prospectus.
<PAGE>
3.9. Accuracy of Representations and Warranties. None of the
representations and warranties made by Purchaser contained in this Agreement,
including all Schedules, nor in any Statement furnished or to be furnished by
Purchaser pursuant hereto, or in connection with the transactions contemplated
hereby, is or will be incorrect or incomplete in any material respect, or
contains or will contain any untrue statement of fact of material fact, and none
of such representations, warranties and Statements omits or will omit to state a
material fact necessary in order to make the statements contained herein or
therein not misleading. There is no fact know to Purchaser which Purchaser has
not disclosed in this Agreement, in a Schedule hereto, in a Statement or in the
Prospectus, which materially adversely affects or may reasonably be expected to
materially affect adversely the business or assets of Purchaser.
3.10. Except as set forth in the Prospectus, Purchaser has
incurred no liabilities other than in the ordinary course of business.
ARTICLE IV
COVENANTS OF SELLER AND NRC
Seller and NRC and each of them covenant and agree:
4.1. Continuance of Operations. From the date hereof to
Closing, to conduct diligently the operations of Seller in the ordinary course
of its business, and substantially in accordance with past practice and in full
compliance with applicable law and not to change any of Seller's operational,
marketing, pricing or purchasing policies;
4.2. Maintenance of Business Relationships. From the date
hereof to Closing, to use its and their best efforts, in consultation with
Purchaser, to preserve the business activities and operations of Seller intact,
and to maintain good business relationships with its clients, customers,
<PAGE>
suppliers, vendors and others having business or professional dealings with
Seller, and to keep available to Seller its present officers and employees in
the ordinary course;
4.3. Conduct of Business. From the date hereof to Closing: (i)
not to enter into any contracts, commitments, or transactions, other than those
in the ordinary course of Seller's business and consistent with Seller's past
practices; (ii) not to take any other action which would cause any of the
representations and warranties made in this Agreement by Seller and/or NRC not
to be true and correct in all respects on and as of the Closing, with the same
force and effect as if such representations and warranties had been made on and
as of the Closing;
4.4. Full Access. To give Purchaser, its counsel, accountants,
agents, employees and other representatives ("Purchaser's Representatives"),
reasonable access to the offices, plants, records, files and books of account of
Seller for the purpose of becoming familiar with all matters relating to the
Assets; provided, however, that such process shall be conducted in a manner that
does not unreasonably interfere with the normal operations, and customer and
employee relationships of Seller. Seller shall cause the personnel of Seller to
assist Purchaser in such process and shall cause the counsel, accountants,
agents, employees and other representatives of Seller ("Seller's
Representatives") to be available to Purchaser for such purposes, at no cost to
Purchaser. During such process, Purchaser shall have the right to make copies of
such records, files and other materials as it may deem advisable for its own use
and that of Purchaser's Representatives, and shall endeavor to maintain the
confidentiality thereof prior to Closing and subsequent thereto with respect to
matters unrelated to the Assets. If this Agreement is not consummated, Purchaser
and Purchaser's Representatives shall, upon request of Seller, return to Seller
all copies made by Purchaser and its Representatives of material belonging to
Seller, and shall keep confidential all information discovered upon review of
<PAGE>
Seller's documents and information. Seller hereby authorizes Purchaser to
contact suppliers and customers of Seller in cooperation with Seller, and to
discuss with them any matters reasonably related to the Assets;
4.5. Full Cooperation. To use their and each of their best
efforts in good faith to take or cause to be taken all action necessary or
desirable under this Agreement on their part as promptly as practicable, so as
to permit the consummation of the transactions contemplated hereby at the
earliest possible date, and to cooperate fully with the other party hereto to
that end. In cooperation with Purchaser as required, to commence all reasonable
action required hereunder (i) to obtain all applicable permits, licenses,
certificates and other governmental authorizations or approvals necessary, and
(ii) to obtain all applicable consents, approvals and agreements of, and to give
all notices and make all filings with any third parties as may be necessary to
consummate the transactions contemplated hereby. Furthermore, Seller and NRC,
and each of them, shall cooperate fully with Purchaser following the Closing,
and use their best efforts to assist Purchaser in the operation of the Assets
being purchased hereunder;
4.6. Maintenance of Assets. Not to dispose of any Assets;
4.7. Execution and Delivery Services Allocation Agreement. At
the Closing, NRC shall execute and deliver to Purchaser the Services Allocation
Agreement.
4.8. Payment of License Fees Subsequent to Closing. Any and
all monies delivered to Seller or NRC with respect to payments due pursuant to
the License Agreements for periods subsequent to the Closing shall be held by
Seller or NRC in trust for Purchaser and shall be immediately delivered to
Purchaser, without charge or deduction.
<PAGE>
ARTICLE V
COVENANTS OF PURCHASER
Purchaser hereby covenants and agrees with Seller and NRC:
5.1. Continuance of Operations. From the date hereof to
Closing, to conduct diligently the operations of Purchaser in the ordinary
course of its business, and substantially in accordance with past practice and
in full compliance with applicable law and not to change any of Purchaser's
operational, marketing, pricing or purchasing policies;
5.2. Maintenance of Business Relationships. From the date
hereof to Closing, to use its best efforts to preserve the business activities
and operations of Purchaser intact, and to maintain good business relationships
with its clients, customers, suppliers, vendors and others having business or
professional dealings with Purchaser, and to keep available to Purchaser its
present officers and employees in the ordinary course;
5.3. Conduct of Business. From the date hereof to Closing: (i)
not to enter into any contracts, commitments, or transactions, other than those
in the ordinary course of Purchaser's business and consistent with Purchaser's
past practices; and (ii) not to take any other action which would cause any of
the representations and warranties made in this Agreement by Purchaser not to be
true and correct in all respects on and as of the Closing, with the same force
and effect as if such representations and warranties had been made on and as of
the Closing;
5.4. Full Cooperation. To use its best efforts in good faith
to take or cause to be taken all action necessary or desirable under this
Agreement on their part as promptly as practicable, so as to permit the
consummation of the transactions contemplated hereby at the earliest possible
date, and to cooperate fully with the other parties hereto to that end. In
cooperation with Seller and NRC as required, to commence all reasonable action
required hereunder (i) to obtain all applicable permits, licenses, certificates
<PAGE>
and other governmental authorizations or approvals necessary, and (ii) to obtain
all applicable consents, approvals and agreements of, and to give all notices
and make all filings with any third parties as may be necessary to consummate
the transactions contemplated hereby, by a date early enough to allow the
transactions to be consummated by the Closing; and
5.5. Execution and Delivery Services Allocation Agreement. At
the Closing, Purchaser shall execute and deliver to Seller the Services
Allocation Agreement.
5.6. Payment of License Fees Subsequent to Closing. Any and
all monies delivered to Purchaser with respect to payments due pursuant to the
License Agreements for periods prior to the Closing shall be held by Purchaser
in trust for Seller and shall be immediately delivered to Seller, without charge
or deduction.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PURCHASER
Purchaser's obligations hereunder are subject to the
fulfillment, on or prior to Closing, of each of the following conditions,
performance of any or all of which may be waived in writing by Purchaser;
together with the delivery by NRC of the Services Allocation Agreement:
6.1. Representations, Warranties and Covenants. The
representations, warranties and covenants of Seller and NRC and each of them
contained in this Agreement shall be true and correct in all respects at Closing
as though such representations, warranties and covenants were made at such time.
Seller and NRC and each of them shall have performed and complied with all
agreements, covenants and conditions required by this Agreement to be performed
and complied with by them prior to or at Closing. Seller and NRC shall have
delivered a Certificate of their respective Presidents, in each case certifying
to the truth of such representations and warranties and such performance or
compliance.
<PAGE>
6.2. Proceedings. All proceedings to be taken and all
documents to be executed and delivered by Seller and NRC or any of them in
connection with the consummation of the transactions contemplated hereby shall
be reasonably satisfactory as to form and substance to Purchaser and its
counsel.
6.3. Board and Stockholder Approval. The Board of Directors
and stockholders of Seller and the Board of Directors of NRC shall have ratified
and approved the execution and performance of this Agreement, and Seller and NRC
shall have delivered to Purchaser a true and correct copy of such resolutions,
certified by Seller's and NRC's respective Secretaries.
6.4. Opinion of Counsel. Seller shall deliver an opinion of
its counsel to Purchaser in the form of Exhibit 6.4 attached hereto.
6.5. Employment of Neil Cole. Neil Cole shall have entered
into an employment agreement with Purchaser in the form of Exhibit 6.5 attached
hereto.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SELLER AND NRC
The obligations of Seller and NRC hereunder are subject to
the fulfillment, on or prior to Closing, of each of the following conditions,
performance of any or all of which may be waived in writing by Seller and NRC;
together with the delivery by Purchaser of the Services Allocation Agreement:
7.1. Representations, Warranties and Covenants. The
representations, warranties and covenants of Purchaser contained in this
Agreement shall be true and correct in all respects at Closing as though such
representations, warranties and covenants were made at such time.
<PAGE>
Purchaser shall have performed and complied with all agreements, covenants and
conditions required by this Agreement to be performed and complied with by
Purchaser prior to or at Closing. Purchaser shall have delivered a Certificate
of its President certifying to the truth of such representations and warranties
and such performance or compliance.
7.2. Proceedings. All proceedings to be taken and all
documents to be executed and delivered by Purchaser in connection with the
consummation of the transactions contemplated hereby shall be reasonably
satisfactory as to form and substance to Seller and NRC and their counsel.
7.3. Board and Stockholder Approval. The Board of Directors
and stockholders of Purchaser shall have ratified and approved the execution and
performance of this Agreement, and Purchaser shall have delivered to Seller a
true and correct copy of such resolutions, certified by Purchaser's Secretary.
7.4. Closing of Public Offering. Except for obligations of
Seller which arise prior to the Closing pursuant to Section 1.3 of this
Agreement, all of Seller's obligations hereunder are conditioned upon the
closing of Purchaser's secondary public offering of securities (the "Public
Offering"), not later than March 31, 1993.
7.5. Opinion of Counsel. Purchaser shall deliver an opinion
of its counsel to Purchaser in the form of Exhibit 7.5 attached hereto.
7.6. Employment of Neil Cole. Purchaser shall have entered
into an employment agreement with Neil Cole in the form of Exhibit 6.5 attached
hereto.
<PAGE>
ARTICLE VIII
PROVISIONS FOR INDEMNIFICATION
8.1. Indemnification by Seller and NRC. Seller and NRC,
jointly and severally, hereby agree to indemnify Purchaser and save and hold
Purchaser harmless from, against, for and in respect of any and all damages,
losses, obligations, liabilities, claims, lawsuits, deficiencies, costs and
expenses incident to any suit, action, investigation, claim or proceeding,
including, without limitation, interest, penalties, reasonable attorneys' fees
and reasonable amounts paid in the investigation, defense and/or settlement of
any of the foregoing (collectively, "Purchaser's Damages"), suffered, sustained,
incurred or required to be paid by Purchaser by reason of, or in connection
with, or arising out of:
(i) Any misrepresentation or breach of
warranty or covenant made by Seller or NRC or either of them,
in or pursuant to this Agreement or any Schedule hereto or in
any certificate or document delivered pursuant to this
Agreement; or
(ii) any out-of-pocket loss or damage
resulting to Purchaser by reason of any claim, debt, liability
or obligation or any alleged claim, debt, liability or
obligation which arose out of the operation of Seller's
business prior to the Closing, except for any claim or
liability for which Purchaser would otherwise be liable.
Notwithstanding anything herein contained to the contrary, the aggregate
liability of Seller and NRC under this Article VIII shall not exceed one million
five hundred thousand dollars, except this limitation shall not be applied to
reduce aggregate liability relating to any claim of misrepresentation or breach
of warranty made with regard to the Rights or License Agreements that are
asserted against Purchaser within the twenty-four month period commencing with
Closing.
<PAGE>
8.2. Indemnification by Purchaser. Purchaser hereby agrees to
indemnify Seller and NRC and save and hold Seller and NRC harmless from,
against, for and in respect of any and all damages, losses, obligations,
liabilities, claims, lawsuits, deficiencies, costs and expenses incident to any
suit, action, investigation, claim or proceeding, including, without limitation,
interest, penalties, reasonable attorneys' fees and reasonable amounts paid in
investigation, defense and/or settlement of any of the foregoing (collectively,
"Seller's Damages"), suffered, sustained, incurred or required to be paid by
Seller or NRC by reason of, or in connection with, or arising out of: (i) any
misrepresentation or breach of warranty or covenant made by Purchaser in or
pursuant to this Agreement or any Schedule hereto or in any certificate or
document delivered pursuant to this Agreement; or (ii) any action loss or damage
resulting to Seller or NRC by reason of any claim, debt, liability, or
obligation which arises out of the operation of Purchaser's business from and
after the Effective Date, except for any claim or liability for which Seller or
NRC would otherwise be liable under this Agreement. Notwithstanding anything to
the contrary, in addition, Purchaser acknowledges and agrees that the
indemnification provisions of the License Agreement between Seller and Purchaser
shall survive of the assignment of such License Agreement to Purchaser
hereunder. Notwithstanding anything herein to the contrary, the aggregate
liability of Purchaser under Section 8.2(i) shall not exceed one million five
hundred thousand dollars.
8.3. Indemnification Procedures. The party seeking
indemnification (the "Indemnitee"), shall give written notice as promptly as
practicable (and in any event, within five days after receipt of notice or
service of any citation, summons, complaint or lawsuit) to the party or parties
against whom such indemnity is sought to be recovered (the "Indemnitor"), of
each claim for indemnification hereunder, specifying the amount and nature of
the claim, and of any matter which, in the opinion of the Indemnitor, is
<PAGE>
likely to give rise to an indemnification claim. Notwithstanding the foregoing,
the failure to give timely notice shall not affect rights to indemnification
hereunder, except to the extent that the Indemnitor shall demonstrate damage
caused by such failure. The Indemnitor shall be solely responsible for the
defense of any such matter. The Indemnitee, at its or his option and at its or
his sole cost and expense, shall have the right to participate in any defense
undertaken by the Indemnitor, with legal counsel of its own selection. However,
the Indemnitor shall have the final determination with respect to all defense
matters.
8.4. Payment for Indemnification. Indemnitor shall pay to
Indemnitee the amount of established claims for indemnification within fifteen
days after the establishment thereof in cash or by certified check.
Notwithstanding, no claim for indemnification under this Article VIII shall be
made by any party unless Purchaser's Damages or Seller's Damages, as the case
may be, exceed $25,000.
8.5. Survival of Indemnification. The indemnification
provided in this Article VIII shall survive Closing. The indemnification
provided in Section 8.2(ii) shall survive even in the event that this Agreement
does not close.
ARTICLE IX
CLOSING
9.1. Closing. Closing shall take place at the offices of
Tenzer Greenblatt Fallon & Kaplan, 405 Lexington Avenue, New York, New York,
simultaneously with the closing of the Public Offering, or such other date and
at such other place as shall be agreed upon by the parties hereto. All
proceedings to be taken and all documents to be executed and delivered by all
parties at the Closing shall be deemed to have taken and executed
simultaneously, and no proceedings shall be deemed taken nor any documents
executed or delivered, until all have been taken, executed and delivered.
<PAGE>
At Closing:
9.1.1 Seller and NRC shall deliver to Purchaser:
(i) All of the Assets, including executed
assignments of all Trademarks and License Agreements set forth
on Schedule l.l, in form satisfactory to counsel for
Purchaser;
(ii) A duly executed Bill of Sale;
(iii) the Services Allocation Agreement;
and
(iv) All other documents, certificate and
opinions required to delivered pursuant to this Agreement.
9.1.2 Purchaser shall deliver to the Seller:
(i) The Purchase Price by certified check,
bank check or wire transfer in the amount of $75,000 and by
delivery of a promissory note in the principal amount of
$325,000;
(ii) Certificates representing 900,000
shares of Common Stock; and
(iii) All other documents, certificate and
opinions required to delivered pursuant to this Agreement.
9.1.3 Purchaser shall deliver the Services Allocation
Agreement to NRC.
9.2. Further Assurances. At the Closing,
and from time to time thereafter:
(i) Seller and NRC shall, at the request of
Purchaser, take all action necessary, and shall execute and
deliver to Purchaser such further instruments and take such
<PAGE>
other actions, as counsel for Purchaser may reasonably
request, in order most effectively to carry out the
transactions contemplated by this Agreement, and to most
effectively transfer the Assets to Purchaser as a going
concern; and
(ii) Purchaser shall, at the request of
Seller and NRC, take all action necessary, and shall execute
and deliver to Seller and NRC such further instruments and
take such other actions, as counsel for Seller and NRC may
reasonably request, in order more effectively to carry out the
transactions contemplated by this Agreement.
ARTICLE X
CONFIDENTIALITY
10.1. Confidentiality. Each of the parties hereto recognizes
and acknowledges that during the course of negotiations in connection with this
Agreement, and in preparation for Closing hereunder, each has disclosed and will
disclose to the others, and grant access to, certain plans, systems, methods,
designs, procedures, books and records relating to its operations, personnel and
practices, as well as records, documents and information concerning its business
activities, practices, procedures and other confidential information (all of the
foregoing, collectively, the "Confidential Information"), all of which
constitute and will constitute valuable, special and unique assets of such
party's business. Each party shall treat such Confidential Information as
confidential, make all reasonable efforts to preserve the confidentiality
thereof, and not duplicate or disclose such Confidential Information except in
connection with the transactions contemplated hereby and except to advisors,
attorneys, accountants, bankers, investment bankers, consultants and affiliates
who also agree to treat such information as confidential. The parties hereto
<PAGE>
recognize that Neil Cole will act in an executive capacity for all parties to
this Agreement. Any business conducted in the ordinary course by any party
hereto, shall not be deemed to be a breach of this Section 10.1.
ARTICLE XI
TERMINATION
11.1. Termination by Purchaser. This Agreement may be
terminated by Purchaser in its sole discretion, upon the occurrence of any of
the following before the Closing:
(i) Purchaser shall learn of any fact or
condition with respect to the business, properties or assets
of Seller, which is at material variance with one or more of
the representations of warranties of Seller or NRC set forth
in this Agreement, and which in Purchaser's reasonable
opinion, adversely affects such business, properties or
assets;
(ii) Seller or NRC shall fail to meet any
of their obligations pursuant to this Agreement; or
(iii) Any condition precedent to
Purchaser's obligations hereunder shall not be satisfied and
such condition is not waived by Purchaser at or prior to the
Closing.
11.2. Termination by Seller. This Agreement may be terminated
by Seller in its sole discretion, upon the occurrence of any of the following
before the Closing:
(i) Seller shall learn of any fact or
condition with respect to the business, properties or assets
of Purchaser, which is at material variance with one or more
of the representations of warranties of Purchaser set forth
in this Agreement, and which in Seller's reasonable opinion,
adversely affects such business, properties or assets;
<PAGE>
(ii) Purchaser shall fail to meet any of
its obligations pursuant to this Agreement; or
(iii) Any condition precedent to Seller's
or NRC's obligations hereunder shall not be satisfied and
such condition is not waived by Seller or NRC, respectively,
at or prior to the Closing.
11.3. Termination by Mutual Agreement. This Agreement may be
terminated by the mutual agreement of the parties hereto evidenced in writing.
11.4. Liability Upon Termination. In the event of the
termination of this Agreement as above provided, no party shall have any
liability hereunder of any nature whatsoever to the other party, including any
liability for damages, unless such party is in default under its obligations
hereunder, in which event the party in default shall be liable to the other
party for such default.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1. Notices. Each notice, demand, request, consent, report,
approval or communication ("Notice") which is or may be required to be given by
any party to any other party in connection with this Agreement and the
transactions contemplated hereby, shall be in writing, and given by personal
delivery, certified mail, return receipt requested, prepaid, or by overnight
express mail delivery and properly addressed to the party to be served as shown
in Section 12.1.2 below.
<PAGE>
12.1.2 Delivery. Notices shall be effective on the date
delivered personally, the next day if delivered by overnight express mail or
three days after the date mailed by certified mail:
If to Purchaser:
Millfeld Trading Co., Inc.
60 W. 40th Street
New York, New York 10018
Attn: Michael Callahan
with a copy to counsel for the Purchaser:
Schneck Weltman Hashmall & Mischel
1285 Avenue of the Americas
New York, New York 10019
Attn: Felice F. Mischel, Esq.
If to Seller and/or NRC:
El Greco, Inc.
New Retail Concepts, Inc.
60 W. 40th Street
New York, New York 10018
Attn: Neil Cole
with a copy to counsel for Seller and NRC:
Phillips, Nizer, Benjamin, Krim & Ballon
31 West 52nd Street
New York, New York 10019
Attn: Jonathan Tillem, Esq.
12.1.3 Change of Address. Each party may designate by Notice
to the others in writing, given in the foregoing manner, a new address to which
any Notice may thereafter be so given, served or sent.
12.2. Entire Agreement. This Agreement, together with the
Schedules hereto, constitutes and sets forth the entire agreement and
understanding of the parties pertaining to the subject matter hereof, and there
<PAGE>
are no other prior or contemporaneous written or oral agreements,
understandings, undertakings, negotiations, promises, discussions, warranties or
covenants not specifically referred to or contained herein or attached hereto.
No supplement, modification, termination in whole or in part, or waiver of this
Agreement shall be binding unless executed in writing by the party to be bound
thereby. No waiver of any of the provisions of this Agreement shall be deemed,
or shall constitute, a waiver of any other provision hereof (whether or not
similar), nor shall any such waiver constitute a continuing waiver unless
otherwise expressly provided.
12.3. Assignment. Neither this Agreement nor any of the
rights or obligations hereunder may be assigned by either party without the
prior written consent of the other party.
12.4. Headings. The headings or titles of the various
paragraphs of this Agreement are inserted merely for the purpose of convenience
and do not expressly or by implication or intention, limit, define, extend or
affect the meaning or interpretation of this Agreement or the specific terms or
text of the section so designated.
12.5. Law Governing, This Agreement shall be governed in all
respects, whether as to validity, construction, interpretation, capacity
performance or otherwise, by the laws of the State of New York. If any one or
more of the provisions contained in this Agreement or in any other instrument
referred to herein shall, for any reason, be held to be invalid, illegal or
unenforceable in any respect, then and in that event, to the maximum extent
permitted by law, such invalidity, illegality or unenforceability shall not
affect any other provisions of this Agreement or any other such instrument.
<PAGE>
12.6. Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
taken together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the corporate parties hereto have caused
this Agreement to be executed by their respective duly authorized officers and
the individual parties have executed this Agreement as of the day and year first
above written.
MILLFELD TRADING CO., INC
By: /s/ Michael Callahan
----------------------------
Michael Callahan, President
EL GRECO INC.
By: /s/ Neil Cole
----------------------------
Neil Cole, President
NEW RETAIL CONCEPTS, INC.
By: /s/ Neil Cole
-----------------------------
Neil Cole, President
<PAGE>
REGISTRATION RIGHTS AGREEMENT
AGREEMENT, dated as of the 16th day of May, 1994, between New
Retail Concepts, Inc. a Delaware Corporation having its principal place of
business at 60 West 40th Street, New York, New York 10018 (the "Holder") and
Candie's, Inc., a Delaware corporation having its principal place of business at
60 West 40th Street, New York, New York 10018 (the "Company").
WHEREAS, simultaneously with the execution and delivery of
this Agreement, the Holder is acquiring from the Company an aggregate of 240,740
shares (the "Shares") of Common Stock, par value $.001 per share (the "Common
Stock"), upon the terms set forth in the Letter Agreement dated as of May 16,
1994 (the "Letter Agreement"); and
NOW, THEREFORE, the parties hereto mutually agree as follows:
1. Registrable Securities. 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) registration under the Securities Act is no longer required for the
immediate public distribution of such security or (iii) it has ceased to be
outstanding. The term "Registrable Securities" means any and/or all of the
securities falling within the foregoing definition of a "Registrable Security."
In the event of any merger, reorganization, consolidation, recapitalization or
other change in corporate structure affecting the Common Stock, such adjustment
<PAGE>
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.
2. Registration.
The Company has agreed with certain investors who have
purchased up to 1,200,000 shares of Common Stock pursuant to a Confidential
Private Offering Memorandum dated March 22, 1994, in a private offering of
Common Stock (the "Offering"), to prepare and file with the Securities and
Exchange Commission (the "SEC"), on one occasion, within thirty (30) days of the
final closing of the Offering at the sole expense of the Company, a registration
statement (the "Registration Statement") and such other documents, including a
prospectus, as may be necessary, in order to comply with the provisions of the
Securities Act, so as to permit a public offering and sale of Shares by the
holders thereof, for six (6) consecutive months. The Company agrees hereby to
include the Shares owned by the Holder in such Registration Statement. Nothing
herein contained shall require the Company to undergo an audit, other than in
the ordinary course of business.
3. Additional Terms. The following provisions shall be
applicable to any Registration Statement filed pursuant to this Agreement:
(a) The Company will use its best efforts to cause the
Registration Statement to become effective as promptly as practicable and, if
any stop order shall be issued by the SEC in connection therewith, to use its
reasonable efforts to obtain the removal of such order. Following the effective
date of the Registration Statement, the Company shall, upon the request of the
Holder, forthwith supply such reasonable number of copies of the Registration
Statement, preliminary prospectus and prospectus meeting the requirements
<PAGE>
of the Securities Act as shall be reasonably requested by the Holder to permit
the Holder to make a public distribution of his or her Registrable Securities.
The Company will use its reasonable efforts to qualify the Registrable
Securities for sale in such states as the Holder of Registrable Securities shall
reasonably request, provided that no such qualification will be required in any
jurisdiction where, solely as a result thereof, the Company would be subject to
service of general process or to taxation or qualification as a foreign
corporation doing business in such jurisdiction. The obligations of the Company
hereunder with respect to the Holder's Registrable Securities are expressly
conditioned on the Holder's furnishing to the Company such appropriate
information concerning the Holder, the Holder's Registrable Securities and the
terms of the Holder's offering of such Registrable Securities as the Company may
reasonably request.
(b) The Company shall bear the entire cost and expense of any
registration of the Registrable Securities; provided, however, that the Holder
shall be solely responsible for the fees of any counsel retained by him or her
in connection with such registration and any transfer taxes or underwriting
discounts or commissions applicable to the Registrable Securities sold by him or
her pursuant thereto.
(c) The Company shall indemnify and hold harmless the Holder
and each underwriter, within the meaning of the Securities Act, who may purchase
from or sell for the Holder, any Registrable Securities, from and against any
and all losses, claims, damages and liabilities caused by any untrue statement
of a material fact contained in the Registration Statement, any other
registration statement filed by the Company under the Securities Act, any
post-effective amendment to such registration statements, or any prospectus
included therein required to be filed or furnished by reason of this Agreement
or caused by any omission or alleged omission to state therein a material fact
<PAGE>
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages or liabilities are
caused by any such untrue statement or alleged untrue statement or omission or
alleged omission based upon information furnished or required to be furnished in
writing to the Company by the Holder or underwriter expressly for use therein;
which indemnification shall include each person, if any, who controls any such
underwriter within the meaning of the Securities Act and each officer, director,
employee and agent of such underwriter; provided, however, that the Company
shall not be obligated to so indemnify the Holder or any such underwriter or
other person referred to above unless the Holder or underwriter or other person,
as the case may be, shall at the same time indemnify the Company, its directors,
each officer signing the Registration Statement and each person, if any, who
controls the Company within the meaning of the Securities Act, from and against
any and all losses, claims, damages and liabilities caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement, any registration statement or any prospectus required to
be filed or furnished by reason of this Agreement or caused by any omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, insofar as such losses, claims, damages
or liabilities are caused by any untrue statement or alleged untrue statement or
omission based upon information furnished in writing to the Company by the
Holder or underwriter expressly for use therein.
(d) If for any reason the indemnification provided for in the
preceding subparagraph is held by a court of competent jurisdiction to be
unavailable to an indemnified party with respect to any loss, claim, damage,
liability or expense referred to therein, then the indemnifying party, in lieu
<PAGE>
of indemnifying such indemnified party thereunder, shall contribute to the
amount paid or payable by the indemnified party as a result of such loss, claim,
damage or liability in such proportion as is appropriate to reflect not only the
relative benefits received by the indemnified party and the indemnifying party,
but also the relative fault of the indemnified party and the indemnifying party,
as well as any other relevant equitable considerations.
(e) Neither the filing of a Registration Statement by the
Company pursuant to this Agreement nor the making of any request for
prospectuses by the Holder shall impose upon the Holder any obligation to sell
his or her Registrable Securities.
(f) The Holder, upon receipt of notice from the Company that
an event has occurred which requires a post-effective amendment to the
Registration Statement or a supplement to the prospectus included therein, shall
promptly discontinue the sale of his or her Registrable Securities until the
Holder receives a copy of a supplemented or amended prospectus from the Company,
which the Company shall provide as soon as practicable after such notice.
4. Governing Law.
(a) The Registrable Securities are being delivered in New
York. This Agreement shall be deemed to have been made and delivered in the
State of New York and shall be governed as to validity, interpretation,
construction, effect and in all other respects by the internal laws of the State
of New York.
(b) The Company and the Holder each (a) agrees that any legal
suit, action or proceeding arising out of or relating to this Agreement, or any
other agreement entered into between the Company and the Holder pursuant to the
Offering shall be instituted exclusively in New York State Supreme Court,
<PAGE>
County of New York, or in the United States District Court for the Southern
District of New York, (b) waives any objection which the Company or such Holder
may have now or hereafter to the venue of any such suit, action or proceeding,
and (c) irrevocably consents to the jurisdiction of the New York State Supreme
Court, County of New York and the United States District Court for the Southern
District of New York in any such suit, action or proceeding. The Company and the
Holder each further agrees to accept and acknowledge service of any and all
process which may be served in any such suit, action or proceeding in the New
York State Supreme Court, County of New York or in the United States District
Court for the Southern District of New York and agrees that service of process
upon the Company or the Holder mailed by certified mail to the Company's or, as
the case may be, the Holder's address shall be deemed in every respect effective
service of process upon the Company or the Holder, as the case may be, in any
suit, action or proceeding.
5. Amendment. This Agreement may only be amended by a
written instrument executed by the Company and the Holder.
6. 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.
<PAGE>
7. 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.
8. 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 registered or certified mail, postage prepaid,
return receipt requested, as follows:
If to the Holder, to his or her address set forth on the
signature page of this Agreement.
If to the Company, to the address set forth on the first page
of this Agreement.
9. Binding Effect; Benefits. The Holder may not assign his
or her rights hereunder. This Agreement shall inure to the benefit of, and be
binding upon, the parties hereto and their respective heirs, legal
representatives, successors and permitted assigns, including, without
limitation, the permitted transferees of the Registrable Securities. Nothing
herein contained, express or implied, is intended to confer upon any person
other than the parties hereto and their respective heirs, legal representatives,
successors and such permitted assigns, any rights or remedies under or by reason
of this Agreement.
10. 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.
11. 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 prohibition or unenforceability without invalidating the
remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
<PAGE>
IN WITNESS WHEREOF, this Agreement has been executed and delivered by
the parties hereto as of the date first above written.
NEW RETAIL CONCEPTS, INC.
By: /s/ Neil Cole
--------------------------------
Neil Cole
President
CANDIE'S, INC.
By: /s/ Lawrence O'Shaughnessy
----------------------------------
Lawrence O'Shaughnessy
Chief Operating Officer
<PAGE>
THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW AND
MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING SUCH SECURITIES UNLESS
THE ISSUER RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES
REASONABLY SATISFACTORY TO THE ISSUER STATING THAT SUCH SALE, TRANSFER,
ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR THAT
THE SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT.
CANDIE'S, INC.
February 1, 1995 Up to 700,000 shares
Warrant for the Purchase of Shares of Common Stock
FOR VALUE RECEIVED, CANDIE'S, INC. (the "Company"), a Delaware
corporation, hereby certifies that New Retail Concepts, Inc., a Delaware
corporation (the "Holder"), is entitled, subject to the provisions of this
warrant (the "Warrant"), to purchase from, the Company at any time, or from time
to time, subject to the vesting schedule set forth below, during the period
commencing at 9:00 a.m., New York local time on February 1, 1995 and expiring at
5:00 p.m., New York local time, on February 1, 2000, up to 700,000 fully paid
and non-assessable shares (the "Warrant Shares") of Common Stock, $.001 par
value ("Common Stock"), of the Company vesting (A) 300,000 Warrant Shares
vesting upon the date hereof; (B) 200,000 Warrant Shares vesting upon the
occurrence of a Loan Extension (as such term is defined in that certain
securities purchase agreement between the Company and the Holder of even date
herewith (the "Purchase Agreement"); and (C) 200,000 Warrant Shares vesting upon
the making of the first Bongo Advance (as defined in the Purchase Agreement) at
an initial price of $ 1.2375 per share of Common Stock, which price equals 110%
of the closing bid price of the Common Stock on the NASDAQ National Market
System on January 31, 1995 (the "Exercise Price").
The term "Common Stock" means the shares of Common Stock, $.001 par
value, of the Company as constituted on the date of issuance of the Warrant (the
"Base Date"). The number of shares of Common Stock to be received upon the
exercise of this Warrant may be adjusted from time to time as hereinafter set
forth. The shares of Common Stock deliverable upon such exercise, and as
adjusted from time to time, are hereinafter sometimes referred to as "Warrant
Stock." The term the "Company" means and includes the corporation named above as
well as (i) any immediate or more remote successor corporation resulting from
the merger or consolidation of such corporation (or any immediate or more remote
successor corporation of such corporation) with another corporation, and/or (ii)
any corporation to which such corporation (or any immediate or remote
<PAGE>
successor corporation of such corporation) has transferred all or substantially
all of its property or assets as an entirety or substantially as an entirety.
Upon receipt by the Company of evidence reasonably satisfactory to it
of the loss, theft, destruction or mutilation of this Warrant, and (in the case
of loss, theft or destruction) of reasonably satisfactory indemnification, and
upon surrender and cancellation of this Warrant, if mutilated, the Company shall
execute and deliver a new Warrant of like tenor and date.
The Holder agrees with the Company that this Warrant is issued, and all
the rights hereunder shall be held, subject to all of the conditions,
limitations and provisions set forth herein.
This Warrant is issued in connection with the purchase and sale of the
Warrant and issuance of a senior subordinated promissory note of the Company
(the "Note") to the Holder, and is the Warrant referred to and is entitled to
the benefits contained in the Purchase Agreement, including, without limitation,
the registration rights contained therein.
1. Exercise of Warrant. The vested portion of this Warrant may be
exercised in whole or in part at any time, or from time to time, during the
period commencing at 9:00 a.m., New York local time on February 1, 1995 and
expiring at 5:00 p.m., New York local time, on February 1, 2000 (the "Warrant
Exercise Term"), or, if such day is a day on which banking institutions in the
City of New York are authorized by law to close, then on the next succeeding day
that shall not be such a day, by presentation and surrender hereof to the
Company at its principal office, or at the office of its stock transfer agent,
if any, with the Warrant Exercise Form attached hereto duly executed and
accompanied by payment (either in cash or by certified or official bank check,
payable to the order of the Company) of the Exercise Price for the number of
shares of Common Stock specified in such Form and instruments of transfer, if
appropriate, duly executed by the Holder or his or her duly authorized attorney.
If this Warrant should be exercised in part only, the Company shall, upon
surrender of this Warrant for cancellation, execute and deliver a new Warrant
evidencing the rights of the Holder thereof to purchase the balance of the
shares purchasable hereunder. Upon receipt by the Company of this Warrant,
together with the Exercise Price, at its office, or by the stock transfer agency
of the Company at its office, in proper form for exercise, the Holder shall be
deemed to be the holder of record of the shares of Common Stock issuable upon
such exercise, notwithstanding that the stock transfer books of the Company
shall then be closed or that certificates representing such shares of Common
Stock shall not then be actually delivered to the Holder. The Company shall pay
any and all documentary stamp or similar issue payable in respect of the issue
or delivery of shares of Common Stock on exercise of this Warrant.
2. Reservation of Shares. The Company will at all times reserve for
issuance and delivery upon exercise of this Warrant all shares of Common Stock
or other shares of capital stock of the Company (and other securities and
property) from time to time receivable upon exercise of this Warrant. All such
<PAGE>
shares (and other securities and property) shall be duly authorized and, when
issued upon such exercise, shall be validly issued, fully paid and
non-assessable and free of all preemptive rights.
3. Restrictions upon Transferability of Warrant. By acceptance of this
Warrant, the Holder (i) represents and warrants to the Company that the Holder
is acquiring the Warrant, and unless such Warrant Shares have been registered
under the Act, shall acquire the Warrant Shares for investment, for Holder's own
account and not with a view towards the resale or distribution thereof and (ii)
agrees (a) that the Holder shall not transfer by any means or otherwise dispose
of the Warrant or the Warrant Shares without registration under the Act, unless
an exemption from registration under the Act is available thereunder, and the
Holder has furnished the Company with an opinion of the Holder's legal counsel,
which opinion is satisfactory to the Company, that such proposed sale or
transfer is so exempt. The certificate(s) evidencing the Warrant Shares shall
bear a legend to this effect substantially in the form provided in Section 7
hereof. The Company shall place stop transfer orders with its transfer agent
against the transfer of the Warrant and the Warrant Shares in the absence of
registration under the Act or an exemption therefrom thereunder as provided
herein.
4. Fractional Shares. No fractional shares or scrip representing
fractional shares shall be issued upon the exercise of this Warrant, but the
Company shall issue one additional share of Common Stock in lieu of each
fraction of a share otherwise called for upon any exercise of this Warrant.
5. No Redemption. This Warrant is not redeemable by the Company.
6. Anti-Dilution Provisions.
6.1 Adjustment for Dividends in Other Securities, Property,
Etc.; Reclassification, Etc. In case at any time or from time to time after the
Base Date, the holders of Common Stock (or any other securities at the time
receivable upon the exercise of this Warrant) shall have received, or on or
after the record date fixed for the determination of eligible stockholders,
shall have become entitled to receive without payment thereof: (a) other or
additional securities (other than shares of Common Stock), or property (other
than cash) by way of dividend, (b) any cash paid or payable except out of earned
surplus of the Company at the Base Date as increased (decreased) by subsequent
credits (charges) thereto (other than credits in respect of any capital or
paid-in surplus or surplus created as a result of a revaluation of property) or
(c) other or additional (or fewer) securities or property (including cash) by
way of stock-split, spin-off, split-up, reclassification, combination of shares
or similar corporate rearrangement, then, and in each such case, the Holder of
this Warrant, upon the exercise thereof as provided in Section 1, shall be
entitled to receive the amount of securities and property (including cash in the
cases referred to in clauses (b) and (c) above) which such Holder would hold on
the date of such exercise if on the Base Date it had been the holder of record
of the number of shares of Common Stock (as constituted on the Base Date)
subscribed for upon such exercise as provided in Section 1 and had thereafter,
<PAGE>
during the period from the Base Date to and including the date of such exercise,
retained such shares and/or all other additional (or fewer) securities and
property (including cash in the cases referred to in clauses (b) and (c) above)
receivable by it as aforesaid during such period, giving effect to all
adjustments called for during such period by Section 6.2.
6.2 Adjustment for Reorganization, Consolidation, Merger, Etc.
In case of any reorganization of the Company (or any other corporation, the
securities of which are at the time receivable on the exercise of this Warrant)
after the Base Date or in case after such date the Company (or any such other
corporation) shall consolidate with or merge into another corporation (other
than a consolidation or merger in which the Company is the surviving corporation
and which does not result in any reclassification or change of the outstanding
shares of Common Stock, except a change as a result of a subdivision or
combination of such shares or a change in par value) or convey all or
substantially all of its assets to another corporation, then, and in each such
case, the Holder of this Warrant upon the exercise thereof as provided in
Section 1 at any time after the consummation of such reorganization,
consolidation, merger or conveyance, shall be entitled to receive, in lieu of
the securities and property receivable upon the exercise of this Warrant prior
to such consummation, the securities and property to which such Holder would
have been entitled upon such consummation if such Holder had exercised this
Warrant immediately prior thereto, all subject to further adjustment as provided
in Section 6.1; in each such case, the terms of this Warrant shall be applicable
to the securities or property receivable upon the exercise of this Warrant after
such consummation.
6.3 Notices of Record Date, Etc. In case:
(a) the Company shall take a record of the holders
of its Common Stock (or other securities at the time receivable upon the
exercise of the Warrant) for the purpose of entitling them to receive any
dividend (other than a cash dividend payable out of earned surplus) or other
distribution, or any right to subscribe for, purchase or otherwise acquire any
shares of stock of any class or any other securities, or to receive any other
right; or
(b) of any capital reorganization of the Company
(other than a stock split or reverse stock split), any reclassification of the
capital stock of the Company (other than a change in par value to no par value,
or from no par value to par value, or as a result of a subdivision or
combination), any consolidation or merger of the Company with or into another
corporation (other than a merger for purposes of change of domicile or a
consolidation or merger in which the Company is the surviving corporation and
which does not result in any reclassification or change of the outstanding
shares of Common Stock, except a change as a result of a subdivision or
combination of such shares or a change in par value) or any conveyance of all or
substantially all of the assets of the Company to another corporation; or
(c) of any voluntary or involuntary dissolution,
liquidation or winding-up of the Company; then, and in each such case, the
<PAGE>
Company shall mail or cause to be mailed to each Holder of the Warrant at the
time outstanding a notice specifying, as the case may be, (i) the date on which
a record is to be taken for the purpose of such dividend, distribution or right,
and stating the amount and character of such dividend, distribution or right, or
(ii) the date on which such reorganization, reclassification, consolidation,
merger, conveyance, dissolution, liquidation or winding-up is to take place, and
the time, if any, is to be fixed, as to which the holders of record of Common
Stock (or such other securities at the time receivable upon the exercise of the
Warrant) shall be entitled to exchange their shares of Common Stock (or such
other securities) for securities or other property deliverable upon such
reorganization, reclassification, consolidation, merger, conveyance,
dissolution, liquidation or winding-up. Such notice shall be mailed at least
fifteen (15) days prior to the date therein specified and this Warrant may be
exercised prior to said date during the term of the Warrant no later than five
days prior to said date.
7. Legend. Upon exercise of any of the Warrants and the issuance of
any of the shares thereunder, all certificates representing shares shall bear on
the face thereof substantially the following legends, insofar as is consistent
with applicable law:
"THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"ACT"), OR ANY STATE SECURITIES LAW AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING SUCH
SECURITIES UNLESS THE ISSUER RECEIVES AN OPINION OF COUNSEL
FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO
THE ISSUER STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR
HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS
DELIVERY REQUIREMENTS OF SUCH ACT AND APPLICABLE STATE
SECURITIES LAWS OR THAT THE SALE IS MADE IN ACCORDANCE WITH
RULE 144 UNDER THE ACT."
8. Applicable Law. The Warrant shall be governed by and construed in
accordance with the laws of the State of New York with respect to contracts made
and to be fully performed therein and without regard to principles of conflicts
of laws, and shall be enforceable solely in the Federal or state courts located
in the City, County and State of New York.
9. Notices. Notices and other communications to be given to the Holder
of the Warrant evidenced by this certificate shall be deemed to have been
sufficiently given, if delivered or mailed, addressed to the Holder at 2975
Westchester Avenue, Purchase, New York 10577 or at such other address as the
Holder or any successor holder shall have designated by written notice to the
Corporation as herein provided and if mailed, sent registered or certified mail,
postage prepaid. Notices or other communications to the Company shall be
<PAGE>
deemed to have been sufficiently given if delivered by hand or mailed, by
registered or certified mail, postage prepaid, to Candie's, Inc., 2975
Westchester Avenue, Purchase, New York 10577, or at such other address as the
Company shall have designated by written notice to such registered owner as
herein provided. Notice by mail shall be deemed to have been given upon
delivery, if delivered personally, three business days after mailing, if mailed,
or one business day after delivery to the courier, if delivered by overnight
courier service.
10. Amendments. This Warrant may not be modified or amended without
the written consent of the party to be charged by such modification.
<PAGE>
IN WITNESS WHEREOF, Candie's, Inc. has caused this Warrant to be
signed on its behalf, in its corporate name, by its duly authorized officer, all
as of the day and year first above written.
CANDIE'S, INC.
By: /s/ Gary Klein
------------------------------------
Authorized Officer
<PAGE>
WARRANT EXERCISE FORM
The undersigned hereby irrevocably elects to exercise the within
Warrant to the extent of purchasing ____________ shares of Common Stock of
Candie's, Inc. and hereby makes payment at the rate of $ ___ per share, or an
aggregate of $ ________________ in payment therefor.
_________________________ ____________________________
Name of Registered Holder Signature, if held jointly
_________________________ ____________________________
Signature Date
INSTRUCTIONS FOR ISSUANCE OF STOCK
(if other than to the registered Holder of the within Warrant)
Name___________________________________________________________
(Please typewrite or print in block letters)
Address _______________________________________________________
_______________________________________________________
Social Security or Taxpayer
Identification Number ________________________________________
<PAGE>
ASSIGNMENT FORM
The Holder hereby assigns and transfers unto
Name __________________________________________________________
(Please typewrite or print in block letters)
Address _______________________________________________________
_______________________________________________________
the right to purchase Common Stock of Candie's, Inc. represented by this Warrant
to the extent of ______________ shares of Common Stock as to which such right is
exercisable and does hereby irrevocably constitute and appoint ________________
____________________ Attorney, to transfer the same on the books of Candie's,
Inc. with full power of substitution in the premises.
Date: ___________________, 199_
__________________________
Name of Registered Holder
__________________________
Signature
__________________________
Signature, if held jointly
<PAGE>
THE SECURITIES REPRESENTED BY THIS NOTE HAVE BEEN ACQUIRED FOR INVESTMENT IN A
TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, PURSUANT TO SECTION 4(2) OF SAID ACT AND NOT WITH A VIEW TO OR IN
CONNECTION WITH THE DISTRIBUTION THEREOF. NEITHER THIS NOTE NOR THE SECURITIES
ISSUED UPON CONVERSION HEREOF MAY BE OFFERED FOR SALE OR SOLD OR OTHERWISE
DISPOSED OF EXCEPT UPON COMPLIANCE WITH SAID ACT AND AS PERMITTED BY THE
SUBSCRIPTION AGREEMENT SIGNED BY THE HOLDER, A COPY OF WHICH IS ON FILE AND MAY
BE INSPECTED AT THE PRINCIPAL OFFICE OF THE COMPANY.
CANDIE'S, INC.
8% CONVERTIBLE NOTE
November 21, 1994
FOR VALUE RECEIVED, the undersigned, Candie's, Inc., a Delaware
corporation (the "Company"), hereby promises to pay to New Retail Concepts, Inc.
(the "Holder") or order, the principal amount of One-Hundred Thousand Dollars
($100,000.00) such amount to be due and payable on February 28, 1995 (the
"Maturity Date"). Interest on the unpaid principal balance from the date hereof
shall be payable on the Maturity Date at the rate of 8% per annum.
Payments of principal and interest shall be made in lawful money of the
United States of America, at the principal office of the Holder or at such other
place as the Holder hereof shall have designated to the Company in writing.
This Note is issued subject to the following additional terms and
conditions:
1. Conversion.
(a) The Company does not currently have a sufficient
number of shares of its common stock, $.001 par value (the "Common Stock")
authorized under its Certificate of Incorporation to provide for the issuance of
any additional shares of its Common Stock upon the conversion of this Note.
<PAGE>
However, the Company has called a Special Meeting of Stockholders to seek the
approval of the stockholders of the Company of an amendment to the Company's
Certificate of Incorporation providing for an increase in the number of shares
of Common Stock authorized for issuance from 10,000,000 to 30,000,000 (the
"Amendment").
(b) This Note shall convert automatically, without
any action taken by the Holder, on the Effective Date of the Amendment, into
such number of shares of Common Stock of the Company as equals the outstanding
principal and unpaid interest under this Note on the Effective Date divided by
$1.15. No fractional shares shall be issued upon conversion of this Note. In
lieu of fractional shares the Company will pay the Holder cash in an amount
equal to the fair market value of the fractional share on the date of conversion
as determined by the Board of Directors of the Company. The shares of Common
Stock issuable upon conversion of this Note shall have the same registration
rights as was granted to the holders of the Company's 8% Series A Convertible
Preferred Stock with respect to the Common Stock issuable upon conversion of
such preferred stock.
(c) Upon the Effective Date of the Amendment, the
Holder hereof shall surrender this Note to the Company.
(d) As promptly as practical after the surrender as
herein provided, the Company shall deliver or cause to be delivered at its
office or agency maintained for that purpose, to the Holder of the Note,
certificates representing the number of fully paid and nonassessable shares of
Common Stock of the Company into which this Note is to be converted.
(e) From and after the Effective Date, the Company
shall not be equired to pay any interest on this Note. If the Holder fails to
surrender this Note on the Effective Date, the Company shall nevertheless have
no obligation whatsoever with respect to this Note other than to issue or cause
the issuance of shares of Common Stock in accordance with this Section 1.
(f) The Holder understands and agrees that the the
shares of Common Stock issuable upon conversion of this Note (sometimes
hereinafter referred to as the "Conversion Shares") have not been registered
under the Securities Act of 1933, as amended (the "Act"), or the securities laws
of any state, based upon applicable exemptions from such registration
requirements; (B) the Conversion Shares may be "restricted securities," as said
term is defined in Rule 144 of the Rules and Regulations promulgated under the
Act; (C) the Conversion Shares may not be sold or otherwise transferred unless
they have been first registered under the Act and all applicable state
securities laws, or unless exemptions from such registration provisions are
available with respect to said resale or transfer; (D) a legend to the foregoing
effect may be placed on the certificate or certificates representing the
Conversion Shares; (E) stop transfer instructions with respect to the Conversion
Shares will be placed with the transfer agent, if any, for the Conversion Shares
and (F) except as set forth in the Note the Company has not granted the Holder
any registration rights with respect to the Conversion Shares. If requested
<PAGE>
by the Company upon conversion of this Note, the registered holder of this Note
may be required to execute and deliver to the Company an additional instrument,
in form satisfactory to the Company, representing that the Conversion Shares are
being acquired for investment and not with a view to distribution within the
meaning of the Act.
2. Reserved Shares.
(a) The Holder recognizes that the approval for the
Amendment has not yet been obtained, and if it is not obtained, the Note will
not be convertible into Common Stock of the Company. The Company covenants and
agrees that the shares of its Common Stock delivered upon conversion of this
Note shall, at the time of delivery of the certificates for such shares of
Common Stock, be validly issued and outstanding and fully paid and nonassessable
shares of Common Stock. The Company further covenants and agrees that it will
pay when due and payable any and all Federal and state original issue taxes
which may be payable in respect of the issue of this Note or any shares of
Common Stock upon the conversion of this Note. The Company shall not, however,
be required to pay any tax which may be payable in respect of any transfer
involved in the transfer and delivery of this Note or the issuance or delivery
of certificates for Common Stock upon the conversion of this Note, all such tax
being payable by the Holder of this Note at the time of surrender.
(b) Each person in whose name any securities are
issuable upon the conversion of this Note shall for all purposes be deemed to
have become the holder of record of the Common Stock represented thereby on, and
such certificate shall be dated, the date upon which the Note was duly
surrendered and notice of conversion was given; provided, however, that if the
date of such surrender and notice is a date upon which the stock transfer books
of the Company are closed, such person shall be deemed to have become the record
holder of such shares of Common Stock, and such certificates shall be dated, the
next prior business day on which the stock transfer books of the Company are
open.
3. Default.
"Event of Default" whenever used herein means any
one of the following events:
(a) Default in payment under this Note of: (i) any
installment of interest when it becomes due and the continuance of such default
for a period of ten (10) days after receipt of written notice to the Company of
such default, or (ii) the principal when it becomes due.
(b) The entry of a decree or an order by any court
having jurisdiction in the premises adjudging the Company bankrupt or insolvent,
or approving as properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company under the Federal
Bankruptcy Code or any other applicable federal or state law, or appointing a
<PAGE>
receiver, liquidator, assignee, trustee (or similar official) of the Company or
any substantial part of its property, and the continuance of such decree or
order in effect for a period of ten (10) consecutive days; or
(c) The institution by the Company of proceedings to
be adjudicated a bankrupt or insolvent, or the consent by it to the institution
of bankruptcy or insolvency proceedings against it, or the filing by it of a
petition or answer to consent seeking reorganization or relief under the Federal
Bankruptcy Code or any other applicable federal or state law, or the consent by
it to the filing of any such petition or to the appointment of any receiver,
liquidator, assignee, trustee (or similar official) for the Company or any
substantial part of its property, or the making by it of any assignment for the
benefit of creditors.
In case of the occurrence of an Event of Default the entire
unpaid principal amount of any Note together with any interest then unpaid may
immediately be declared due and payable at the option of the Holder thereof
without presentment, demand, protest, or other notice of any kind, all of which
are hereby expressly waived. In such case, any such Holder may proceed to
protect and enforce its rights by a suit in equity, action at law, or other
appropriate proceedings.
In the event that an Event of Default, as defined above,
necessitates legal action, the Company agrees to pay all costs and expenses
thereof, including reasonable attorneys' fees and costs of suit.
4. Limitations.
No Holder of this Note shall be entitled to vote or
receive dividends or be deemed the holder of Common Stock or any other
securities of the Company which may at any time be issuable on the conversion
hereof for any purpose, nor shall anything contained herein be construed to
confer upon the Holder of this Note, as such, any of the rights of a stockholder
of the Company or any right to vote for the election of directors or upon any
matters submitted to stockholders at any meeting thereof, or to give or withhold
consent to any corporate action (whether upon any recapitalization, issue of
stock, reclassification of stock, change of par value or change of stock to no
par value, consolidation, merger, conveyance, or otherwise) or to receive
dividends or subscriptions rights or otherwise until the Note shall have been
converted and the Common Stock issuable upon the conversion hereof shall have
become deliverable as provided herein.
5. General.
5.1 Successors and Assigns. This Note, and the
obligations and rights of the Company hereunder, shall be binding upon and inure
to the benefit of the Company, the holder of this Note, and their respective
heirs, successors and assigns.
5.2 Changes. Changes in or additions to this Note
may be made, or compliance with any term, covenant, agreement, condition or
provision set forth herein may be omitted or waived (either generally or in a
<PAGE>
particular instance and either retroactively or prospectively), upon written
consent of the Company and the Holder.
5.3 Notices. All notices, requests, consents and
demands shall be made in writing and shall be mailed postage prepaid, or
delivered by hand, to the Company or to the Holder at their respective
addresses:
If to the Holder:
as set forth in the records of the Company.
If to the Company:
2975 Westchester Avenue
Purchase, New York 10577
Attention: Neil Cole
5.4 Saturdays, Sundays, Holidays. If any date that
may at any time be specified in this Note as a date for the making of any
payment of principal or interest under this Note shall fall on Saturday, Sunday
or on a day which in New York, New York shall be a legal holiday, then the date
for the making of that payment shall be the next subsequent day which is not a
Saturday, Sunday or legal holiday.
5.5 Governing Law. This Note shall be construed and
enforced in accordance with, and the rights of the parties shall be governed by,
the laws of the State of New York.
<PAGE>
IN WITNESS WHEREOF, this Note has been executed and delivered
as a sealed instrument on the date first above written by the duly authorized
representative of the Company.
CANDIE'S, INC.
By: /s/ Neil Cole
--------------------------------
Name:
Title:
<PAGE>
THE OPTIONS AND COMMON STOCK ISSUABLE UPON EXERCISE OF OPTIONS HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE OPTIONS AND
COMMON STOCK ISSUABLE ON EXERCISE OF OPTIONS MAY NOT BE SOLD UNLESS THERE IS A
REGISTRATION STATEMENT IN EFFECT COVERING THE OPTIONS OR COMMON STOCK OR THERE
IS AVAILABLE AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES
ACT OF 1933, AS AMENDED.
CANDIE'S, INC.
OPTION CERTIFICATE
Options to Purchase 100,000 Shares of Common stock
$.001 Par Value
Dated: As of October 6, 1994
Void after 5:00 P.M., New York Local Time
October 6, 1999 or, if not a business
day, at 5:00 P.M., New York Local Time,
on the next following business day
Candie's, Inc., a Delaware corporation (hereinafter referred to as the
"Company"), hereby certifies that New Retail Concepts, Inc. (hereinafter
referred to as "Holder"), his successors and assigns, for value received, is
entitled to purchase from the Company at any time after April 6, 1995 and before
5:00 P.M. New York local time on October 6, 1999, or, if such is not a business
day (the "Exercise Period") 100,000 shares of common stock, $.001 par value
(hereinafter referred to as the "Option Shares") of the Company in accordance
with the number of Options indicated on the face hereof at the purchase price of
$1.15 per share (hereinafter referred to as the "Exercise Price"). The Exercise
Price is subject to adjustment as provided herein.
(a) Exercise of Options. Upon presentation and surrender of this
Option Certificate, with the attached Purchase Form duly executed, at the
principal office of the Company at 2975 Westchester Avenue, Purchase, New York
10577 together with a certified or bank cashier's check payable to the Company
in the amount of the Exercise Price times the number of Option Shares of the
Company being purchase, the Company shall deliver to the Holder hereof, as
promptly as practicable, certificates representing the Option Shares being
purchased. This Option may be exercised per the option period below in whole or
in part; and, in case of exercise hereof in part only, the company, upon
surrender hereof, will deliver to the Holder a new Option Certificate or Option
certificates of like tenor entitling said Holder to purchase the number of
Option Shares as to which the Option Certificate has not been exercised.
<PAGE>
(b) Option Period. The Options granted hereby shall be exercisable in
the following amounts commencing of the following date:
Shares Exercise of Option
------ ------------------
100,00 April 6, 1995
The Options shall expire on October 6, 1999 subject to earlier
termination as provided in the Plan.
(c) Rights and Obligations of Holder. The Holder of this Option
Certificate shall not, by virtue hereof, be entitled to any rights of a
stockholder in the Company, either at law or in equity; provided, however, that
in the event that any certificate representing shares of the Company's common
stock is issued to the Holder hereof upon exercise of some or all of the Options
represented hereby such Holder shall, for all purposes, be deemed to have become
the Holder of record of such stock on the date on which this Option Certificate,
together with a duly executed Purchase form, was surrendered and payment of the
purchase price was made, irrespective of the date of delivery of such share
certificate. The rights of the Holder of this Option Certificate are limited to
those expressed herein and the Holder of this Option Certificate, by his
acceptance hereof, consents and agrees to be bound by you and to comply with all
the provisions of this Option Certificate, including without limitation all the
obligations imposed upon the Holder by Section 3 hereof. In addition, the Holder
of this Option Certificate, by accepting the same, agrees that the company and
its transfer agent may deem and treat the person in whose name this Option
Certificate is registered as the absolute, true and lawful owner for all
purposes whatsoever, and neither the Company nor the transfer agent shall be
affected by any notice to the contrary.
(d) Option Shares. The Company covenants and agrees that all Option
Shares delivered upon exercise of this Option Certificate will, upon delivery
and payment of the Purchase Price in accordance with the terms hereof, be duly
and validly authorized and issued, fully-paid and non-assessable and free from
all stamp taxes, liens, and charges with respect to the purchase hereof. In
addition, the Company agrees at all times to reserve for issuance an authorized
number of shares of its authorized but unissued common stock sufficient to
permit the exercise in full of outstanding Options.
(e) Disposition of Options or Option Shares. The Holder of this Option
Certificate and any transferee hereof or of the Option Shares, by their
acceptance hereof, hereby agrees that (a) no transfer of the Options or the
Option Shares will be made in violation of the provisions of the Securities Act
of 1933, as amended, or the Rules and Regulations promulgated thereunder (such
Act and Rules and Regulations being hereinafter referred to as the "Act") and
(b) during such period as delivery of a prospectus with respect to the Options
or the Option Shares may be required by the Act, no public distribution of the
<PAGE>
Options or Option Shares will be made in a manner or on terms different from
those set forth in, or without delivery of, a prospectus then meeting the
requirements of Section 10 of the Act and in compliance with all applicable
state laws.
(f) Purchase for Investment. Unless the offering and sale of the Shares
to be issued upon the particular exercise of the Option shall have been
effectively registered under the Act, the Company shall be under no obligation
to issue the Shares covered by such exercise unless and until the following
conditions have been fulfilled:
(a) The person(s) who exercise the Option shall warrant to the
Company, at the time of such exercise, that such persons(s) are acquiring such
Shares for this or her own account, for investment and not with a view to, or
for sale in connection with, the distribution of any such Shares, in which event
the person(s) acquiring such Shares shall be bound by the provisions of the
following legend which shall be endorsed upon the certificate(s) evidencing
their option Shares issued pursuant to such exercise:
"The shares represented by this certificate have not been
registered under the Securities Act of 1933, as amended (the
"Act Such shares may not be sold, transferred or otherwise
disposed of unless they have first been registered under the
Act or, unless, in the opinion of counsel satisfactory to the
Company's counsel such registration is not required."
(b) The Company shall have received an opinion of its counsel
that the Shares may be issued upon such particular exercise in compliance with
the Act without registration thereunder. Without limiting the generality of the
foregoing, the Company may delay issuance of the Shares until completion of any
action or obtaining of any consent, which the Company deems necessary under any
applicable law (including without limitation state securities or "blue sky"
laws).
(g) Piggyback Registration. If, at any time during the Exercise Period,
the Company proposes to prepare and file any new registration statement or
amendments thereto covering equity or debt securities of the Company, or any
such securities of the Company held by its shareholders (in any such case, other
than in connection with a merger, acquisition or pursuant to Form S-8 or
successor form) (for purposes of this Section 7, collectively, the "Registration
Statement"), it will give written notice of its intention to do so by registered
mail ("Notice"), at least twenty (20) days prior to the filing of each such
Registration Statement, to the Holder. Upon the written request of the Holder,
made within ten (10) days after receipt of the Notice, that the Company include
any of the Holder's Option Shares in the proposed Registration Statement, the
Company shall use its best efforts to effect the registration under the
Securities Act of the Option 333 Shares which it has been so requested to
register, at the Company's sole cost and expense and at no cost or expense to
the Holder; provided, however, that if, in the written opinion of the Company's
managing underwriter, if any, for such offering, the inclusion of all or a
portion of the Option Shares requested to be registered, when added to the
securities being registered by the Company or the selling shareholder(s), will
exceed the maximum amount of the Company's securities which can be marketed
<PAGE>
(i) at a price reasonably related to their then current market value, or (ii)
without otherwise materially adversely affecting the entire offering, then the
Company may exclude from such offering all or a portion of the Option Shares
which it has been requested to register. Notwithstanding the provisions of this
Section 7 (irrespective of whether any written request for inclusion of such
securities shall have already been made) to elect not to file any such proposed
Registration Statement, or to withdraw the same after the filing but prior to
the effective date thereof.
If securities are proposed to be offered for sale pursuant to such
Registration Statement by other security holders of the Company and the total
number of securities to be offered by the Holder and such other selling security
holders is required to be reduced pursuant to a request from the managing
underwriter (which request shall be made only for the reasons and in the manner
set forth above) the aggregate number of Option Shares to be offered by the
Holder pursuant to such Registration Statement shall equal the number which
bears the same ratio to the maximum number of securities that the underwriter
believes may be included for all the selling security holders (including the
Holder) as to the original number of Option Shares proposed to be sold by the
Holder bears to the total original number of securities proposed to be offered
by the Holder and the other selling security holders.
Notwithstanding the provisions of this Section 7, the Company shall not
be required to register Option Shares owned by the Holder under the Act if, in
the opinion of counsel to the Company, such registration is not necessary for
sale under the provisions of Rule 144.
(h) Adjustments Upon Changes in Capitalization. If at any time after
the date of grant of this Option, the Company shall, by stock dividend,
split-up, combination, reclassification or exchange, or through merger or
consolidation, or otherwise, change its Shares into a different number of kind
or class of Shares or other securities or property, then the number of Shares
covered by this Option and the price of each Share shall be proportionately
adjusted for any such change by the Board of Directors or the Committee whose
determination shall be conclusive. Any fraction of a Share resulting from any
adjustment shall be eliminated and the price per Share of the remaining Shares
subject to this Option adjusted accordingly.
(i) Governing Law. The parties hereto hereby acknowledge and agree that
the Option granted hereby is granted in the State of New York and any Shares
issued upon exercise of the Option will be issued in the State of New York. This
Agreement, as well as the grant of such Option and issuance of such Shares, is
and shall be governed by and construed in accordance with the laws of the State
of New York applicable to agreements made and to be performed entirely within
such State.
(j) Miscellaneous. This Option Agreement shall be binding upon and
inure to the benefit of the Company and its successors and upon the Optionee and
his successors, assigns, including without limitation the estate of the Optionee
and the executors, administrators and/or trustees of such estate, and any
creditor, receiver, trustee in bankruptcy or representative of any such
Optionee.
<PAGE>
This Option Agreement shall become effective as of the date hereof and,
unless sooner terminated, shall remain in effect for a period of five years from
the date hereof. This Option Agreement may be terminated at any time by mutual
consent of the parties hereto, but no ramification or amendment of this Option
Agreement shall become effective until such modification or amendment shall have
been approved by the Committee or the Board.
CANDIE'S, INC.
By: /s/ Neil Cole
-----------------------------
Neil Cole, President
<PAGE>
PURCHASE FORM
_______________, 199_
TO: Candie's, Inc.
The undersigned hereby irrevocably elects to exercise the attached Option
Certificate to the extent of __________ shares of Common Stock of Candie's, Inc.
and herewith makes payments of $__________ in payment of the purchase price
therefore.
INSTRUCTIONS FOR REGISTRATION OF STOCK
Name:_______________________________________ (Please typewrite or print in
block letters)
Address:____________________________________
____________________________________
_____________________
By:_____________________
ASSIGNMENT FORM
FOR VALUE RECEIVED,_________________________________________
hereby sells, assigns and transfers unto:
Name:________________________________________________________________________
(Please typewrite or print in block letters)
Address:_____________________________________________________________________
_____________________________________________________________________
the right to purchase common stock of Candie's, Inc. represented by this Option
to the extent of_______________ shares as to which such right is exercisable
and does hereby irrevocably constitute and appoint _________________________,
attorney, to transfer the same on the books of the Company will full power of
substitution in the premises.
___________________________
By:___________________________
<PAGE>
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f) under the Securities Exchange
Act of 1934, the persons named below agree to the joint filing on behalf of each
of them of a Statement on Schedule 13D (including amendments thereto) with
respect to the common stock of Candie's, Inc., and further agree that this Joint
Filing Agreement be included as an exhibit to such joint filing. In evidence
thereof, the undersigned, being duly authorized, hereby execute this Agreement
the 21st day of June, 1995.
NEW RETAIL CONCEPTS, INC.
By: /s/ Neil Cole
------------------------------
Neil Cole, President
/s/ Neil Cole
----------------------------------
Neil Cole
