Exhibit 2(b)
REGISTRATION RIGHTS AGREEMENT
Registration Rights Agreement dated as of September 24, 1998, by and
between Candie's, Inc., a Delaware corporation (the "Company"), and the persons
whose names and addresses appear on the signature page attached hereto (each a
"Holder" and collectively, the "Holders").
WHEREAS, the Company issued to the Holders, pursuant to the purchase of all
of the capital stock of Michael Caruso & Co., Inc. ("Caruso & Co.") by a
wholly-owned subsidiary of the Company, an aggregate of 1,967,742 shares (the
"Shares") of the Company's common stock, par value $.001 per share (the "Common
Stock"), as described in the stock purchase agreement, of even date herewith, by
and among the Company and its subsidiary, Caruso & Co. and each of the Holders
(the "Purchase Agreement"); and
WHEREAS, pursuant to the Purchase Agreement, the Company has agreed to
grant to the Holder registration rights set forth herein with respect to the
Shares.
NOW, THEREFORE, the parties do hereby agree as follows:
As used herein the term "Registrable Security" means each of the Shares,
and any shares of Common Stock issued upon any stock split or stock dividend in
respect of such Shares; provided, however, that with respect to any particular
Registrable Security, such security shall cease to be a Registrable Security
when, as of the date of determination, (i) it has been effectively registered
under the Securities Act of 1933, as amended (the "Securities Act") and disposed
of pursuant thereto, (ii) it may be sold pursuant to Rule 144(k) or (iii) it has
ceased to be outstanding. In the event of any merger, reorganization,
consolidation, recapitalization or other change in corporate structure affecting
the Common Stock, such adjustment shall be made in the definition of
"Registrable Security" as is appropriate in order to prevent any dilution or
enlargement of the rights granted pursuant to this Agreement.
The term "Majority Holder" as used in this Agreement shall mean any holder
or any combination of holders of Registrable Securities, if included in such
holders' Registrable Securities are that aggregate number of Shares as would
constitute a majority of the aggregate number of Shares included in all of the
Registrable Securities.
1. Demand Registration. (a) Subject to receipt by the Company of the
audited financial statements of Michael Caruso & Co., Inc. for the periods set
forth in Section 4.2 of the Stock Purchase Agreement, together with the
unqualified opinion of Stonefield Josephson, Inc. (the "Audited Financial
Statements"), at any time during the two (2) year period after the first year
anniversary of the date of this Agreement, the Majority Holder shall have the
right, on one (1) occasion only, exercisable by written notice to the Company (a
"Demand Registration Request"), to have the Company promptly prepare and file
with the Securities and Exchange Commission, in respect of the Registrable
Securities held by the Holders, a registration statement (the "Demand
Registration Statement") so as to permit a public offering and sale of the
Registrable Securities; provided however, that the Company is then eligible to
register the Registrable Securities.
(b) The Company and other stockholders may, at the Company's discretion,
have other shares of Common Stock included in the Demand Registration Statement,
provided that in the event that an underwriter for the Registrable Securities
determines that the inclusion of the additional shares of Common Stock in the
Demand Registration Statement would adversely affect its ability to sell the
Registrable Securities, then the shares of Common Stock proposed to be offered
by the Company and such other stockholders shall be cut-back as requested in
writing by such underwriter.
(c) The Company will use reasonable efforts to file the Demand Registration
Statement as expeditiously as reasonably possible, provided that nothing herein
shall require the Company to undergo an audit, other than in the ordinary course
of business.
(d) Notwithstanding any provision of this Section 1 to the contrary, if, at
the time a Demand Registration Request is given to the Company under this
Section 1, the Company is negotiating a merger, consolidation, acquisition or
sale of all or substantially all of its assets or a similar transaction and if
in the opinion of counsel to the Company, the Demand Registration Statement
would be required to include information concerning such transactions or the
parties thereto which is not reasonably available at the time, the Company shall
promptly inform the Holder by written notice of such circumstances (a
"Postponement Notice") and, at the Company's election to be set forth in the
Postponement Notice, the filing of the Demand Registration Statement may be
postponed for one (and not more than one) period not to exceed 90 days from the
date on which the Demand Registration Request is given to the Company under this
Section 1 (notwithstanding any provisions herein to the contrary).
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2. Piggyback Registration.
(a) Subject to receipt by the Company of the Audited Financial Statements,
if at any time during the three (3) year period after the date of this
Agreement, the Company proposes to prepare and file with the Securities and
Exchange Commission a registration statement covering equity or debt securities
of the Company, or any such securities of the Company held by its stockholders,
other than in connection with a merger, acquisition or pursuant to a
registration statement on Form S-4 or Form S-8 or any successor form (for
purposes of this Section 2, collectively, a "Piggyback Registration Statement")
and the Holders are required pursuant to the terms of Section 4.2 of the
Purchase Agreement to pay for the costs of such Piggyback Registration
Statement, the Company will give written notice of its intention to do so by
registered or certified mail to Holders. If the Company elects to file a
Piggyback Registration Statement prior to the first anniversary of the date
hereof, those Shares registered on behalf of the Holders shall remain subject to
the Lock-Up Agreement dated the date hereof between the parties. Upon the
written request of Holders, made within 5 days after receipt of such notice,
that the Company include the Registrable Securities in the Piggyback
Registration Statement, the Company shall, as to Holders, use its reasonable
efforts to effect the registration under the Securities Act of the Registrable
Securities which it has been so requested to register ("Piggyback
Registration"), at the Holder's sole cost and expense and at no cost or expense
to the Company; provided, however, that if, the Piggyback Registration is in
connection with an underwritten public offering and in the written opinion of
the Company's underwriter or managing underwriter of the underwriting group, if
any, for such offering, the inclusion of all or a portion of the Registrable
Securities requested to be registered, when added to the securities being
registered by the Company or the selling stockholder(s), if any, will exceed the
maximum amount of the Company's securities which can be marketed (i) at a price
reasonably related to their then current market value, or (ii) without otherwise
having a material adverse effect on the entire offering, then the Company may,
subject to the allocation priority set forth in the next paragraph, exclude from
such offering all or a portion of the Registrable Securities which it has been
requested to register. Without limiting the generality of the foregoing, such
underwriter or managing underwriter may condition its consent to the inclusion
of all or a portion of the Registrable Securities requested to be registered
upon the participation by Holders in the underwritten public offering on the
terms and conditions thereof.
(b) If securities are proposed to be offered for sale pursuant to such
Piggyback Registration Statement by other security holders of the Company and
the total number of the Registrable Securities to be offered by Holder and such
other selling security holders is required to be reduced pursuant to a
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request from the underwriter or managing underwriter (which request shall be
made only for the reasons and in the manner set forth above), the aggregate
number of Registrable Securities to be offered by Holders pursuant to such
Piggyback Registration Statement shall equal the number which bears the same
ratio to the maximum number of securities that the underwriter or managing
underwriter believes may be included for all the selling security holders
(including Holders) as the original number of securities proposed to be sold by
Holders bears to the total original number of securities proposed to be offered
by Holders and the other selling security holders.
(c) Notwithstanding the preceding provisions of this Section 2, the Company
shall have the right at any time after it shall have given written notice
pursuant to this Section 2 (irrespective of whether any written request for
inclusion of such securities shall have already been made) to elect not to file
any proposed Piggyback Registration Statement filed pursuant to this Section 2,
or to withdraw the same after the filing but prior to the effective date
thereof. In the event that the Company elects to withdraw, the Company shall pay
for the cost of such withdrawn Piggyback Registration Statement; provided,
however, that the Company shall not be liable for the costs (including but not
limited to legal fees and expenses) of the Holders in connection with the
Piggyback Registration Statement, and, furthermore, such withdrawal shall not
affect Holders' obligation to pay for any subsequent Piggyback Registration
Statement filed by the Company.
(d) In the event Holders exercise the rights granted under this paragraph
2, such Holder shall no longer be entitled to the Demand Registration rights set
forth in paragraph 1 of this Agreement.
3. Covenants of the Company With Respect to Registration. The Company
hereby covenants and agrees as follows:
(a) Following the effective date of the Demand Registration Statement,
the Company shall, upon the request of the Majority Holder, forthwith
supply such reasonable number of copies of the Demand Registration
Statement and prospectus as shall be reasonably requested by the Holders to
permit the Holders to make a public distribution of the Registrable
Securities. The obligations of the Company hereunder with respect to the
registrable Securities are expressly conditioned on the Holders' furnishing
to the Company such appropriate information concerning the Holders, the
Registrable Securities and the terms of the Holders' offering of such
Registrable Securities as the Company may request.
(b) Subject to the provisions of the Purchase Agreement, the Company
will pay all costs, fees and expenses in
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connection with any Demand Registration Statement filed, provided however,
that the Holders shall be solely responsible for the fees of any counsel or
advisor or underwriter retained by the Holders in connection with such
registration and any transfer taxes, selling commissions or selling fees
applicable to the Registrable Securities sold by the Holders pursuant
thereto.
(c) The Company will use reasonable efforts to qualify or register the
Registrable Securities included in the Demand Registration Statement for
offering and sale under the securities or blue sky laws of such states as
are reasonably requested by the Holders, provided that the Company shall
not be obligated to execute or file any general consent to service of
process (unless the Company is already then subject to service in such
jurisdiction) or to qualify as a foreign corporation to do business under
the laws of any such jurisdiction, except as may be required by the
Securities Act and its rules and regulations.
(d) The Company shall cause any successor corporation to assume the
obligations set forth under this Agreement in connection with any merger,
consolidation or acquisition in which the Company is not the surviving
entity.
4. Covenant of the Holders. The Holders, upon receipt of notice from the
Company that an event has occurred which requires a post-effective amendment to
a registration statement or a supplement to the prospectus included therein,
shall promptly discontinue the sale of Registrable Securities until the Holders
receive a copy of a supplemented or amended prospectus from the Company, which
the Company shall provide as soon as reasonably practicable after such notice.
5. Indemnification. The Company agrees to indemnify, defend and hold
harmless the Holders from and against any and all losses, claims, damages and
liabilities caused by or arising out of any untrue statement of a material fact
contained in the Demand Registration Statement, the Piggyback Registration
Statement or any prospectus included therein or caused by or arising out of any
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of circumstances which they
are made, not misleading, except insofar as such losses, claims, damages or
liabilities are caused by any such untrue statement or omission based upon
information furnished or required to be furnished in writing to the Company by
the Holders expressly for use therein; provided, however, that the
indemnification in this Section shall not inure to the benefit of the Holders on
account of any such loss, claim, damage or liability arising from the sale of
Registrable Securities by the Holders, if a copy of a subsequent prospectus
correcting the untrue statement or omission in such earlier prospectus was
provided to the Holders by the Company prior to the sale and the subsequent
prospectus was not delivered or sent by the Holders to the purchaser prior to
such sale. The
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Holders agree to indemnify the Company, its directors, each officer signing a
registration statement, each person who controls the Company within the meaning
of the Securities Act, any underwriter and any person who controls any
underwriter within the meaning of the Securities Act from and against any and
all losses, claims, damages and liabilities caused by or arising out of any
untrue statement of a material fact contained in the Demand Registration
Statement, Piggyback Registration Statement, or any prospectus included therein,
or caused by or arising out of any omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case, only insofar as such losses, claims, damages or
liabilities are caused by any untrue statement or omissions based upon
information furnished in writing to the Company by the Holders expressly for use
therein.
6. Governing Law.
(a) This Agreement shall be governed as to validity, interpretation,
construction, effect and in all other respects by the internal substantive
laws of the State of New York, without giving effect to the choice of law
rules thereof.
(b) Each of the Company and each of the Holders hereby irrevocably and
unconditionally consents to submit to the exclusive jurisdiction of the
courts of the State of New York and of the United States located in the
County of New York, State of New York (the "New York Courts") for any
litigation arising out of or relating to this Agreement and the
transactions contemplated hereby (and agrees not to commence any litigation
relating thereto except in such courts), waives any objection to the laying
of venue of any such litigation in the New York Courts and agrees not to
plead or claim that such litigation brought in any New York Courts has been
brought in an inconvenient forum.
7. Notices. All notices, requests, demands and other communications
hereunder shall be in writing and shall be deemed duly given when delivered by
hand or mailed by express, registered or certified mail, postage prepaid, return
receipt requested, as follows:
If to the Company, at:
Candie's, Inc.
2975 Westchester Avenue
Purchase, New York 10577
Attn: Neil Cole
with a copy of the same to:
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Tenzer Greenblatt LLP
405 Lexington Avenue
23rd Floor
New York, New York 10174
Attn: Michael S. Mullman, Esq.
If to the Holder(s), at that address set forth under their
name on the signature page.
with a copy of the same to:
Jeffer, Mangels, Butler & Marmaro, LLP
2121 Avenue of the Stars
Los Angeles, CA 90067
Attn: Joel Berman, Esq.
Or such other address as has been indicated by either party in accordance
with a notice duly given in accordance with the provisions of this Section.
8. Amendment. This Agreement may only be amended by a written instrument
executed by the Company and the Holders.
9. Entire Agreement. This Agreement constitutes the entire agreement of the
parties hereto with respect to the subject matter hereof, and supersedes all
prior agreements and understandings of the parties, oral and written, with
respect to the subject matter hereof.
10. Assignment; Benefits. This Agreement and the rights granted hereunder
may not be assigned by any Holder and any purported assignment shall be void ab
initio. Nothing herein contained, express or implied, is intended to confer upon
any person other than the parties hereto any rights or remedies under or by
reason of this Agreement. This Agreement shall inure to the benefit of and bind
the respective parties' successors or permitted assigns.
11. The prevailing party to any action brought under this Agreement shall
be entitled to recover reasonable attorneys' fees and expenses in connection
therewith from the non-prevailing party.
12. Headings. The headings contained herein are for the sole purpose of
convenience of reference, and shall not in any way limit or affect the meaning
or interpretation of any of the terms or provisions of this Agreement.
13. Severability. Any provision of this Agreement which is held by a court
of competent jurisdiction to be prohibited or unenforceable in any
jurisdiction(s) shall be, as to such jurisdiction(s), ineffective to the extent
of such prohibition or unenforceability without invalidating the
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remaining provisions of this Agreement or affecting the validity or
enforceability of such provision in any other jurisdiction.
14. Execution in Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same document.
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IN WITNESS WHEREOF, this Agreement has been executed and delivered by the
parties hereto as of the date first above written.
Company: CANDIE'S, INC.
By: /s/ Neil Cole
-----------------------------------
Name: Neil Cole
Title: Chairman of the Board
Holders:
/s/ Michael Caruso
-----------------------------------
Michael Caruso, Trustee of
the Claudio Trust dated
February 2, 1990
Address: 2975 Mountain Maple Lane
Jackson, Wyoming 83001
Number of Shares: 1,475,806
/s/ Gene Montesano
-----------------------------------
Gene Montesano
Address: 2501 Sycamore Drive
Montecito, CA 93108
Number of Shares: 491,936
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