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Exhibit 4.5
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WARRANT AGREEMENT
BETWEEN
HANOVER DIRECT, INC.
AND
SEARS SHOP AT HOME SERVICES, INC.
_______________________
Dated as of January 1, 1994
For Up To 7,000,000 Shares
of Common Stock
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WARRANT AGREEMENT, dated as of January 1, 1994 (this
"Agreement"), between HANOVER DIRECT, INC., a Delaware corporation (the
"Company"), and SEARS SHOP AT HOME SERVICES, INC., a Delaware corporation
("Sears").
WHEREAS, the Company, through its wholly-owned subsidiary,
Hanover Ventures, Inc. ("Hanover Ventures"), is desirous of obtaining certain
rights to marketing lists owned by Sears in order to sell various products to
certain customers identified thereon, which rights, and the terms and
conditions of the exercise thereof, are set forth in a certain License
Agreement, dated as of the date hereof (the "License Agreement"), between
Hanover Ventures, as licensee, and Sears, as licensor; and
WHEREAS, as an inducement to Sears to enter into the License
Agreement and grant the rights thereunder, the Company proposes to issue to
Sears a warrant (the "Warrant") to purchase up to an aggregate of 7,000,000
shares (the "Warrant Shares") of the Company's Common Stock, par value $0.66
2/3 per share (the "Common Stock"), for an exercise price as set forth herein,
all upon the terms and subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and mutual
agreements herein contained and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
1. Issuance of Warrant; Form of Warrant Certificate.
Concurrently with the execution of this Agreement, the Company will issue and
deliver the Warrant to Sears. The text of the Warrant Certificate (the
"Warrant Certificate") and the form of election to purchase Warrant Shares to
be printed on the reverse thereof shall be as set forth in Annex A attached
hereto. The Warrant Certificate shall be dated the date hereof and shall be
executed on behalf of the Company by the manual or facsimile signature of the
Chairman of the Board, President or Vice President of the Company, under its
corporate seal, affixed or in facsimile, attested to by the manual or facsimile
signature of the Secretary or an Assistant Secretary of the Company and shall
bind the Company notwithstanding that such individuals or any one of them shall
have ceased to hold such offices prior to the delivery of the Warrant Shares.
2. Issuance. The Warrant Certificate shall be issued in
the name of "Sears Shop At Home Services, Inc." and the Company shall be
entitled to treat Sears as the owner in fact thereof for all purposes and shall
not be bound to recognize any equitable or other claim to or interest in the
Warrant Certificate on the part of any other
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person, and shall not be liable for any transfer of the Warrant Certificate or
the Warrant, in whole or in part, except as provided in Section 3(a) hereof.
3. Transfer of Warrant and Warrant Shares.
(a) Transferability. The Warrant is not and shall not be
transferable except to an "affiliate" (as such term is defined for purposes of
Rule 144 promulgated under the Securities Act of 1933, as amended (the
"Securities Act")) of Sears. The Warrant shall be transferable only upon the
surrender thereof, duly endorsed by the holder thereof or by its duly
authorized attorney or representative, or accompanied by proper evidence of
succession, assignment or authority to transfer, in each case accompanied by
any necessary transfer tax or other governmental charge imposed upon transfer,
or evidence of the payment thereof. In all cases of transfer by an attorney,
the original power of attorney, duly approved, or an official copy thereof,
duly certified, shall be deposited with the Company. Upon any transfer, the
Company shall promptly deliver a new Warrant Certificate to the person entitled
thereto, which Warrant Certificate shall be identical in all respects to the
Warrant Certificate surrendered except for the name of the holder thereof.
Notwithstanding the foregoing, the Company shall have no obligation to cause
the Warrant to be transferred to any person, unless the holder of the Warrant
shall furnish to the Company evidence of compliance with the Securities Act, in
accordance with the provisions of this Section 3.
(b) Disposal. Sears covenants to the Company that Sears
will not dispose of the Warrant or any Warrant Shares except pursuant to (i) an
effective Registration Statement or (ii) an opinion of counsel, reasonably
satisfactory to counsel for the Company, that an exemption from such
registration is available.
(c) Warrant Legend. The Warrant shall be subject to a
stop-transfer order and the Warrant Certificate shall bear the following legend
by which each holder of the Warrant shall be bound:
"THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF
COMMON STOCK ISSUABLE UPON EXERCISE HEREOF MAY NOT BE OFFERED OR SOLD
EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT FILED
PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR (ii) AN OPINION
OF COUNSEL, WHICH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL
FOR THIS CORPORATION, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH
ACT IS AVAILABLE."
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(d) Warrant Shares Legend. The Warrant Shares shall be
subject to a stop-transfer order and any certificates evidencing any such
shares ("Share Certificates") shall bear the following legend:
"THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED
OR SOLD EXCEPT PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT
FILED PURSUANT TO THE SECURITIES ACT OF 1933, AS AMENDED, OR (ii) AN
OPINION OF COUNSEL, WHICH OPINION SHALL BE REASONABLY SATISFACTORY TO
COUNSEL FOR THIS CORPORATION, THAT AN EXEMPTION FROM REGISTRATION
UNDER SUCH ACT IS AVAILABLE."
4. Term of Warrant; Number of Warrant Shares; Exercise
of Warrant.
(a) Term of Warrant; Exercise Price. The Warrant
entitles the holder thereof to purchase, at any time during the period
commencing on January 1, 1999 and ending at or before 5:00 p.m., New York City
time, on April 1, 1999 (the "Expiration Date"), up to that certain number of
whole shares of Common Stock as is specified in subparagraph (b) or
subparagraph (c) of this Section 4, as the case may be, subject to the
fulfillment of the respective conditions specified therein, in each case, at an
exercise price per share equal to Ten Dollars and Fifty-Seven Cents ($10.57)
(such price, as it may from time to time be adjusted pursuant to Section 4(e),
being hereinafter referred to as, the "Exercise Price").
(b) Number of Warrant Shares. Subject to the provisions
of this Agreement, and provided that (i) Hanover Ventures shall have achieved
both (A) at least Two Hundred Fifty Million Dollars ($250,000,000) in Licensed
Sales Revenues (as hereinafter defined) and (B) at least Thirty Million Dollars
($30,000,000) of Licensed EBIT (as hereinafter defined), in each case, during
the one (1) year period commencing on January 1, 1998 and ending on December
31, 1998, and (ii) Sears shall not at the time be in default in its obligations
under the License Agreement, the holder of the Warrant shall have the right,
which may be exercised in whole or in part, to purchase from the Company (and
the Company shall issue and sell to such holder) up to Three Million Five
Hundred Thousand (3,500,000) fully paid and non-assessable whole shares of
Common Stock upon surrender to the Company, or its duly authorized agent, of
the Warrant Certificate, with the form of election to purchase on the reverse
thereof duly filled in to indicate the number of Warrant Shares to be purchased
and otherwise duly completed and signed, and upon payment to the Company of an
amount equal to the product of the Exercise Price multiplied by the number of
shares being purchased as indicated in such form
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of election (the "Warrant Price"). Payment of the applicable Warrant Price
shall be made in cash or by certified or official bank check or wire transfer
payable to the order of the Company.
(c) Number of Warrant Shares. Subject to the provisions
of this Agreement, and provided that (i) Hanover Ventures shall have achieved
both (A) at least Five Hundred Million Dollars ($500,000,000) in Licensed Sales
Revenues and (B) at least Sixty Million Dollars ($60,000,000) of Licensed EBIT,
in each case, during the one (1) year period commencing on January 1, 1998 and
ending on December 31, 1998, and (ii) Sears shall not at the time be in default
in its obligations under the License Agreement, the holder of the Warrant shall
have the right, which may be exercised in whole or in part, to purchase from
the Company (and the Company shall issue and sell to such holder) up to Seven
Million (7,000,000) fully paid and non-assessable whole shares of Common Stock
upon surrender to the Company, or its duly authorized agent, of the Warrant
Certificate, with the form of election to purchase on the reverse thereof duly
filled in to indicate the number of Warrant Shares to be purchased and
otherwise duly completed and signed, and upon payment to the Company of the
applicable Warrant Price. Payment of the applicable Warrant Price shall be
made in cash or by certified or official bank check or wire transfer payable to
the order of the Company.
(d) Definitions. For purposes of this Section 4, the
following terms shall have the meanings set forth below:
(i) "Licensed EBIT" shall mean earnings (as computed in
accordance with generally accepted accounting principles), before
deduction for interest expense and taxes (as computed in accordance
with generally accepted accounting principles), of Hanover Ventures
that were generated under any Program (as defined in the License
Agreement); and
(ii) "Licensed Sales Revenues" shall mean gross revenues (as
computed in accordance with generally accepted accounting principles)
of Hanover Ventures generated by sales of Products (as defined in the
License Agreement) pursuant to any Program (as defined in the License
Agreement) reduced by the aggregate amount of such revenues
attributable to Products returned to Hanover Ventures following the
sale thereof.
(e) Adjustments. (i) The number and type of Warrant Shares
purchasable by the holder of the Warrant Certificate is subject to adjustment,
from time to time, in the following events and manners. In the event of
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(A) a stock split or other subdivision or a combination of
outstanding shares of Common Stock, the number of Warrant Shares shall
be increased or decreased in the same proportion as the increase or
decrease in the outstanding shares of Common Stock.
(B) a dividend or other distribution to holders of Common
Stock payable in the form of Common Stock (or in the form of options,
warrants, rights to acquire or other securities convertible into or
exchangeable for Common Stock ("Convertible Securities") without
payment of further consideration other than relinquishment of all or a
portion of the rights under such Convertible Securities), the number
of Warrant Shares shall be increased in proportion to the increase in
the number of outstanding shares of Common Stock as a result of such
dividend. For purposes of this clause (B), in the case of a dividend
or distribution payable in the form of such Convertible Securities,
the maximum number of shares of Common Stock issuable upon exercise,
exchange or conversion thereof shall be deemed to be distributed by
the Company at the time of issuance of such Convertible Securities but
the additional number of Warrant Shares resulting therefrom shall not
in fact be distributed to the holders of the Warrant or the Warrant
Shares, as the case may be, until the later of (x) exercise of the
Warrant or (y) such time as the holders of the Convertible Securities
convert such securities to Common Stock. No adjustment of the number
of Warrant Shares shall be made under this clause (B) upon issuance of
any shares of Common Stock pursuant to the exercise, conversion or
exchange of such Convertible Securities if any adjustment shall
previously have been made upon the issuance of such Convertible
Securities.
(C) the reclassification of the Company's capital stock or
any other similar event with respect to the Company's capital stock
(other than a change in par value or as a result of a stock split or
other subdivision or combination of the outstanding shares of Common
Stock) or the consummation by the Company of a business combination in
which the Company is not the surviving party (each an "Extraordinary
Corporate Transaction"), upon exercise of any Warrant, the holder
thereof shall be entitled to receive the same kind and number of
shares of stock and other securities, cash or other property as would
have been distributed to the holder in connection with such
Extraordinary Corporate Transaction had such holder exercised such
Warrant prior to such Extraordinary Corporate Transaction and prior to
the record date for any distribution in connection therewith to
holders of Common Stock. As a
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condition precedent to any Extraordinary Corporate Transaction, the
Company shall make adequate provision to assure the rights of the
holder of the Warrant as provided for herein, including, without
limitation, the express written assumption by the surviving party, if
any, of the Company's obligations pursuant to this Agreement.
(D) the sale or issuance by the Company of Common Stock at a
price per share less than the fair market value thereof (determined in
the sole discretion of the Company's Board of Directors), the number
of Warrant Shares shall be adjusted by multiplying the number of
Warrant Shares by a fraction, the numerator of which shall be the
number of shares of Common Stock outstanding on the date of such sale
or issuance plus the number of shares of Common Stock so sold or
issued, and the denominator of which shall be the number of shares of
Common Stock outstanding immediately prior to such sale or issuance
plus the number of shares of Common Stock which the aggregate sale
price of the shares sold or issued would have purchased at the fair
market value thereof. For purposes of this clause (D), (x) if the
Company sells or issues Convertible Securities (other than pursuant to
dividends or distributions for which an adjustment is made pursuant to
clause (B) above and other than rights to subscribe for and purchase
shares of Common Stock for a price which represents a discount from
the then market value of the Common Stock of 20% or less), then the
maximum number of shares of Common Stock issuable upon exercise,
exchange or conversion of such Convertible Securities will be deemed
to be issued and sold by the Company at the time of issuance or sale
of such Convertible Securities, and (y) the sale price of such shares
of Common Stock shall be deemed to be the total amount received by the
Company for such issuance or sale plus the minimum amount of
additional consideration, if any, payable to the Company upon
exercise, exchange or conversion of such Convertible Securities. No
adjustment of the number of Warrant Shares shall be made under this
clause (D) upon issuance of any shares of Common Stock pursuant to the
exercise, conversion or exchange of such Convertible Securities if any
adjustment shall previously have been made upon the issuance of such
Convertible Securities. Sears agrees that neither the Company nor any
person associated with the Company shall have any liability to Sears
which is based upon, related to or flows from the fair value
determination made by the Company's Board of Directors and referred to
above.
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The adjustments provided for in clauses (A) through (D) of this Section 4(e)
shall be effective upon the record date for determining the holders of Common
Stock for any dividend or other distribution referred to in such clauses or, if
earlier, upon the occurrence of the events specified in such clauses.
(ii) Whenever the number of Warrant Shares is adjusted as
provided in subparagraph (e)(i) of this Section 4, the Exercise Price shall be
adjusted such that the aggregate Exercise Price in respect of the maximum
number of Warrant Shares that may be purchased hereunder (i.e., 7,000,000
shares as of the date hereof, as adjusted from time to time pursuant to
subparagraph (e)(i)) shall be equal to $73,990,000.
(iii) Upon the occurrence of any event referred to in
subparagraph (e)(i) of this Section 4 which requires an adjustment in the
number of Warrant Shares, the Company shall give prompt written notice thereof
to the holder of the Warrant, which notice shall state the maximum number of
Warrant Shares that may be purchased under the Warrant and the Exercise Price,
in each case, both before and after any adjustment thereto as a result of such
event, and set forth in reasonable detail the calculation of such number of
Warrant Shares, as adjusted, and such Exercise Price, as adjusted, and the
facts upon which such adjustment and calculation are based.
(f) Issuance of Share Certificates. Subject to Section 5
hereof, upon such surrender of the Warrant Certificate, and payment of the
applicable Warrant Price as aforesaid, the Company shall issue and cause to be
delivered to the holder of the Warrant or upon the written order of such holder
and (subject to receipt of evidence of compliance with the Securities Act in
accordance with the provisions of Section 3 of this Agreement) in such name or
names as the holder of the Warrant may designate, one or more Share
Certificates for the number of whole Warrant Shares so purchased.
(g) Exercise of Warrant. If permitted by applicable law,
such Share Certificate or Share Certificates shall be deemed to have been
issued and any person so designated to be named therein shall be deemed to have
become a holder of record of the Warrant Shares evidenced thereby as of the
date of the surrender of the Warrant Certificate and payment of the applicable
Warrant Price. The Warrant shall be exercisable on or before the Expiration
Date during the period specified in Section 4(a), at the election of the holder
thereof, either as an entirety or for part of the Warrant Shares specified
therein. If the total number of Warrant Shares represented by the Warrant
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Certificate shall not be purchased in full upon the exercise of the Warrant,
the holder of the Warrant (for itself and any prior holder of the Warrant,
including, without limitation, Sears) shall be deemed to have relinquished any
and all rights to purchase the balance of the Warrant Shares previously
represented by the Warrant Certificate and the Warrant Certificate shall be
deemed to be canceled.
5. Payment of Taxes. The Company will pay all
documentary stamp taxes, if any, attributable to the initial issuance of
Warrant Shares upon the exercise of the Warrant; provided, however, that the
Company shall not be required to pay any tax or taxes which may be payable in
respect of any transfer involved in the issue or delivery of the Warrant or the
Warrant Certificate (either upon the initial delivery of the Warrant pursuant
to this Agreement or in connection with any permitted transfer of the Warrant
Certificate) or of any Share Certificate for Warrant Shares in a name other
than that of the holder of the Warrant.
6. Mutilated or Missing Certificate. In case the
Warrant Certificate shall be mutilated, lost, stolen or destroyed, the Company
shall issue and deliver in exchange and in substitution for and upon
cancellation of the mutilated Warrant Certificate, or in lieu of and in
substitution for the Warrant Certificate lost, stolen or destroyed, a new
Warrant Certificate identical in all respects to the Warrant Certificate so
mutilated, lost, stolen or destroyed; but only upon receipt of evidence
satisfactory to the Company of such loss, theft or destruction of such Warrant
Certificate and of indemnity or bond, if requested, also satisfactory to the
Company. An applicant for such substitute Warrant Certificate shall also
comply with such other reasonable regulations and pay such other reasonable
charges as the Company may prescribe.
7. Certain Representations, Warranties and
Covenants of the Company.
(a) Reservation of Warrant Shares. For the benefit of
Sears and any permitted transferee of the Warrant Certificate, the Company
hereby represents and warrants that the Company has made available, and
covenants and agrees that at all times until the earlier of exercise or
expiration of the Warrant that the Company will continue to make available, out
of the authorized and unissued shares of Common Stock or the authorized and
issued shares of Common Stock held in the Company's treasury, the full number
of shares of Common Stock as may be sufficient, at such time, to provide for
the exercise of the rights of purchase represented by the Warrant. The Company
will keep a copy of this Agreement on file with the transfer agent for the
Common Stock (the "Transfer Agent") and every subsequent
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Transfer Agent for any shares of the Company's capital stock issuable upon the
exercise of any of the rights of purchase represented by the Warrant.
Furthermore, the Company agrees timely to supply such Transfer Agent with duly
executed Share Certificates for the Warrant Shares.
(b) Due Organization, Etc. The Company is a corporation duly
organized and validly existing under the laws of the State of Delaware. The
Company has all requisite corporate power and authority to enter into this
Agreement and to issue the Warrant Certificate, to perform its obligations
hereunder and thereunder and to consummate the transactions contemplated hereby
and thereby.
(c) Authorization, Enforceability, Etc. Each of this
Agreement and the Warrant has been duly and validly executed and delivered by
the Company and each constitutes a valid and binding agreement of the Company
enforceable in accordance with its respective terms (except in each such case
as enforceability may be limited by bankruptcy, insolvency, moratorium,
reorganization and other similar laws now or hereafter in effect relating to or
affecting creditors' rights generally and except that the remedy of specific
performance and injunctive and other forms of equitable relief are subject to
certain equitable defenses and to the discretion of the court before which any
proceeding therefor may be brought and except as rights to indemnity and
contribution hereunder and thereunder may be limited by federal or state
securities laws). The execution, delivery and performance of this Agreement
and the Warrant by the Company and compliance by the Company with the terms and
provisions hereof and thereof do not and will not violate any provision of any
law, rule or regulation, order, writ, judgment, injunction, statute, decree,
determination or award having applicability to the Company, or any of its
properties or assets. The execution, delivery and performance of this
Agreement and the Warrant by the Company and compliance by the Company with the
terms and provisions hereof and thereof do not and will not (i) conflict with
or result in a breach of or constitute a default under any provision of the
charter or by-laws of the Company; or (ii) give rise to an event of default
which may result in the acceleration of any material amount of indebtedness for
borrowed money of the Company or an event of default under any other material
contractual obligation of the Company. The Company covenants that upon
issuance and delivery against payment of the applicable Warrant Price pursuant
to the terms of this Agreement, all Warrant Shares will be validly issued,
fully paid and non-assessable outstanding shares of Common Stock of the
Company. The Company represents and warrants that the number of outstanding
shares of Common Stock of the Company, as of December 31, 1993, is 63,724,756.
Except as set forth on Schedule 1
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attached hereto, there are no outstanding options, subscriptions, convertible
securities, warrants or other rights, agreements or commitments to subscribe
for or purchase or acquire from the Company, or any contracts providing for the
issuance of, or the granting of rights to acquire, any capital stock of the
Company or any securities convertible or exchangeable for any such capital
stock. There are no preemptive rights with respect to and there are no
outstanding contractual obligations of the Company to repurchase, redeem or
otherwise acquire any shares of the Company.
(d) SEC Reports. The Common Stock is registered pursuant
to Section 12(b) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the Company has been subject to the filing requirements of
Section 13 of the Exchange Act for at least the last 12 months and has filed
all reports required to be filed by it pursuant to such section and the rules
and regulations promulgated by the Securities and Exchange Commission (the
"Commission") thereunder (the "SEC Reports") during such period. Such SEC
Reports, when filed, complied with all applicable requirements under the
Exchange Act and the rules and regulations promulgated by the Commission
thereunder and did not contain an untrue statement of a material fact or omit
to state a material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading. Prior
to exercise of the Warrant, the Company will file all SEC Reports required to
be filed by it during the twelve months prior to such exercise of the Warrant
and, within a reasonable period after the filing thereof with the Commission or
the delivery thereof to holders of Common Stock, as the case may be, will
furnish to the holders of the Warrant copies of such SEC Reports and of all
annual, quarterly or other reports, financial statements and other financial
information and any proxy or information statements made available by the
Company during such period to the holders of the Common Stock. The SEC Reports
referred to in the previous sentence, when filed with the Commission or
initially made available to the holders of the Common Stock, will comply with
all applicable requirements under the Exchange Act and the rules and
regulations promulgated by the Commission thereunder and will not contain an
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading.
(e) Litigation. There is no pending or, to the best
knowledge of the Company, threatened action, suit or proceeding to which the
Company is or, to the best knowledge of the Company, may be a party that
purports to draw into question the legality, validity or enforceability of this
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Agreement, the Warrant or any of the transactions contemplated hereby or
thereby.
(f) Opinion of Counsel. Within a reasonable period after
the execution and delivery hereof, counsel to the Company shall deliver to
Sears its written opinion, which opinion, in form and substance, and counsel
shall both be reasonably acceptable to Sears, to the effect that:
(i) The Company has been duly incorporated and is
validly existing and in good standing under the laws of the State of
Delaware;
(ii) The Company has all requisite corporate power
and authority to enter into this Agreement and to issue the Warrant
Certificate, to perform its obligations hereunder and thereunder and
to consummate the transactions contemplated hereby and thereby;
(iii) This Agreement and the Warrant have been duly
and validly executed and delivered by the Company and constitute valid
and binding agreements of the Company enforceable in accordance with
their terms (except in each such case as enforceability may be limited
by bankruptcy, insolvency, moratorium, reorganization and other
similar laws now or hereafter in effect relating to or affecting
creditors' rights generally and except that the remedy of specific
performance and injunctive and other forms of equitable relief are
subject to certain equitable defenses and to the discretion of the
court before which any proceeding therefor may be brought and except
as rights to indemnity and contribution hereunder and thereunder may
be limited by federal or state securities laws); and
(iv) Upon issuance and delivery against payment of
the applicable Warrant Price pursuant to the terms of this Agreement,
all Warrant Shares will be validly issued, fully paid and
non-assessable.
(g) Counsel Opinion. Upon exercise of the Warrant by any
holder and payment of the applicable Warrant Price as provided in this
Agreement, counsel to the Company shall deliver to such holder its written
opinion, which opinion, in form and substance, and counsel shall both be
reasonably acceptable to such holder, to the effect that:
(i) The Company has been duly incorporated and is
validly existing and in good standing under the laws of the State of
Delaware; and
(ii) Such holder's Warrant Shares are validly
issued, fully paid and non-assessable.
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(h) Officer's Certificate. Upon exercise of the Warrant
by any holder and payment of the applicable Warrant Price as provided in this
Agreement, the Company shall deliver to such holder a certificate executed by
an authorized officer of the Company to the effect that each of the
representations and warranties of the Company contained in subparagraphs (a)
through (e) of this Section 7 are true and correct in all material respects on
and as of such exercise date as though such representations and warranties were
made on and as of such date.
8. Registration Rights.
(a) Right to Request Registration. From and after the
date upon which the Warrant shall become exercisable in accordance with Section
4 of this Agreement (but not before), the holder of the Warrant Certificate or
the holder or holders of the Warrant Shares shall have the right to request,
from time to time, that the Company register the Warrant Shares as provided in
this Section 8.
(b) Incidental Registration. If the Company at any time
proposes to file on its behalf a Registration Statement under the Securities
Act on any form (other than a Registration Statement on Form S-4 or S-8 or any
successor form for securities to be offered in a transaction of the type
referred to in Rule 145 under the Securities Act or to employees of the Company
pursuant to any employee benefit plan, respectively) for the general
registration of securities to be sold for cash with respect to its Common Stock
or any other class of equity security (as defined in Section 3(a)(11) of the
Exchange Act) of the Company, it will give written notice to the holder of the
Warrant Certificate or the holder or holders of the Warrant Shares at least
forty-five (45) days before the initial filing with the Commission of such
Registration Statement, which notice shall set forth the intended method of
disposition of the securities proposed to be registered by the Company. The
notice shall offer to include in such filing the aggregate number of Warrant
Shares as such holder or holders may request; provided, however, that the
Company shall not be required to effect more than two such registrations
pursuant to this Section 8(b) in which Warrant Shares are registered (subject
to the proviso of the penultimate sentence of this Section 8(b)). Nothing in
this Section 8 shall preclude the Company from discontinuing the registration
of its securities being effected on its behalf under this Section 8 at any time
prior to the effective date of the registration relating thereto for any
reason; provided that, in such case, such registration shall not be deemed to
be one of the two incidental registrations available to holders of Warrant
Shares pursuant to this Section 8(b).
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The holder of the Warrant Certificate or the holder or holders of any
Warrant Shares desiring to have Warrant Shares registered under this Section
8(b) shall advise the Company in writing within thirty (30) days after the date
of receipt of such offer from the Company, setting forth the amount of such
Warrant Shares for which registration is requested. The Company shall
thereupon include in such filing the number of Warrant Shares for which
registration is so requested, subject to the next sentence, and shall use its
best efforts to effect registration under the Securities Act of such Warrant
Shares. If the managing underwriter of a proposed public offering shall advise
the Company that, in its opinion, the distribution of the Warrant Shares
requested to be included in the registration concurrently with the securities
being registered by the Company would adversely affect the distribution of such
securities by the Company, at the price and upon the terms approved by the
Company, then the number of shares of Common Stock which such underwriter
believes, in its sole discretion, may be sold at such price and upon such terms
shall be allocated first to the Company, then to any selling security holder
exercising a contractual demand registration right and finally, on a pro rata
basis, among all other selling security holders of shares then being registered
(including, without limitation, the holder of the Warrant or the holder or
holders of any Warrant Shares); provided that, in such case, such registration
shall not be deemed to be one of the two incidental registrations available to
holders of Warrant Shares pursuant to this Section 8(b). Except as otherwise
provided in Section 8(d), all expenses of such registration shall be borne by
the Company.
(c) Registration Procedures. If the Company is registering
any of its securities under the Securities Act pursuant to the provisions of
this Section 8, the Company will, as expeditiously as possible:
(i) prepare and file with the Commission a Registration
Statement with respect to such securities and use its best efforts to
cause such Registration Statement to become and remain effective for a
period of time required for the disposition of such securities by the
holders thereof, which period shall not exceed nine (9) months;
(ii) prepare and file with the Commission such amendments and
supplements to such Registration Statement and the prospectus used in
connection therewith as may be necessary to keep such Registration
Statement effective and to comply with the provisions of the
Securities Act with respect to the sale or other disposition of all
securities covered by such Registration Statement until the earlier of
such time
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as all of such securities have been disposed of in a public offering
or the expiration of nine (9) months;
(iii) furnish to such selling security holders such number of
copies of a summary prospectus or other prospectus, including a
preliminary prospectus, in conformity with the requirements of the
Securities Act, and such other documents, as such selling security
holders may reasonably request;
(iv) use its best efforts to register or qualify the
securities covered by such Registration Statement under such other
securities or blue sky laws of such jurisdictions within the United
States and Puerto Rico as each holder of such securities shall
reasonably request (provided, however, that (A) if such registration
and qualification is in a jurisdiction at the request of any holder of
the Warrant Certificate or Warrant Shares and the Company would not
have otherwise registered or qualified in such jurisdiction, the
expenses for such registration and qualification shall be borne by
such requesting holder, and (B) the Company shall not be obligated to
qualify as a foreign corporation to do business under the laws of any
jurisdiction in which it is not then qualified or to file any general
consent to service of process as a result of such registration and
qualification in such jurisdiction), and do such other reasonable acts
and things as may be required of it to enable such holder to
consummate the disposition in such jurisdiction of the securities
covered by such Registration Statement; and
(v) otherwise use its best efforts to comply with all
applicable rules and regulations of the Commission, and make available
to its security holders, as soon as reasonably practicable, but not
later than 18 months after the effective date of the Registration
Statement, an earnings statement covering the period of at least 12
months beginning with the first full month after the effective date of
such Registration Statement, which earnings statements shall satisfy
the provisions of Section 11(a) of the Securities Act.
It shall be a condition precedent to the obligation of the
Company to take any action pursuant to this Section 8 in respect of the
securities which are to be registered at the request of any holder of the
Warrant Certificate or Warrant Shares that such holder shall furnish to the
Company such information regarding such holder and the securities held by such
holder and the intended method of disposition thereof as the Company shall
reasonably
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request and as shall be required in connection with the action taken by the
Company.
(d) Expenses. All expenses incurred in complying with this
Section 8, including, without limitation, all registration and filing fees
(including all expenses incident to filing with the National Association of
Securities Dealers, Inc.), printing expenses, and fees and disbursements of
counsel for the Company, shall be paid by the Company, except that any holder
requesting registration pursuant hereto shall pay all of its own expenses and
any incremental costs to the Company of including such holder's Warrant Shares
in such registration, including, without limitation: fees, discounts and
commissions to any underwriter for underwriting such holder's Warrant Shares;
the additional fees, if any, of counsel to any such underwriter attributable to
inclusion of such holder's Warrant Shares in such registration; and all
transfer taxes in respect of the securities sold by such holder.
(e) Indemnification and Contribution.
(i) In the event of any registration of any of the Warrant
Shares under the Securities Act pursuant to this Section 8, the
Company shall indemnify and hold harmless each holder of the Warrant
Shares, such holder's directors and officers and each other person
(including each underwriter) who participated in the offering of the
Warrant Shares and each other person, if any, who controls such holder
or such participating person within the meaning of the Securities Act,
against any losses, claims, damages or liabilities, joint or several,
to which such holder or any such director or officer or any
participating person or controlling person may become subject under
the Securities Act or any other statute or at common law, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon (i) any actual or alleged
untrue statement of a material fact contained, on the effective date
thereof, in any Registration Statement under which Warrant Shares were
registered under the Securities Act, any preliminary prospectus or
final prospectus contained therein, or any amendment or supplement
thereto, or (ii) any actual or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and shall reimburse such holder or
such director, officer or participating person or controlling person
for any legal or any other expenses reasonably incurred by such holder
or such director, officer or participating person or controlling
person in connection with investigating or defending any such
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loss, claim, damage, liability or action; provided, however, that the
Company shall not be liable in any such case to the extent that any
such loss, claim, damage or liability arises out of or is based upon
any untrue statement or omission made in such Registration Statement,
preliminary prospectus, final prospectus or amendment or supplement in
reliance upon and in conformity with written information furnished to
the Company by such holder specifically for use therein. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of such holder or such director,
officer or participating person or controlling person, and shall
survive the transfer of such securities by such holder. The
indemnification of each holder of the Warrant Shares with respect to a
preliminary prospectus shall not apply to the extent that such losses,
claims, damages or liabilities (or actions in respect thereof) result
from the fact that the holder claiming indemnification failed to
deliver a final prospectus, if the Company has complied with its
obligation under Section 8(c)(iii) to furnish copies of such final
prospectus to such holder claiming indemnification.
(ii) Each holder of any Warrant Shares, by acceptance
thereof, agrees to indemnify and hold harmless the Company, its
directors and officers and each other person, if any, who controls the
Company within the meaning of the Securities Act against any losses,
claims, damages or liabilities, joint or several, to which the Company
or any such director or officer or controlling person may become
subject under the Securities Act or any other statute or at common
law, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based solely upon (i)
any actual or alleged untrue statement of a material fact contained,
on the effective date thereof, in any Registration Statement under
which Warrant Shares were registered under the Securities Act at the
request of such holder, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereto, or (ii) any
actual or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, but only to the extent that such statements or omissions
were made in reliance upon and in conformity with written information
furnished to the Company by such holder specifically for use therein.
(iii) If the indemnification provided for in this Section 8
from the indemnifying party is unavailable to an indemnified party
hereunder in respect of any
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losses, claims, damages, liabilities or expenses referred to therein,
then the indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages,
liabilities or expenses in such proportion as is appropriate to
reflect the relative fault of the indemnifying party and indemnified
parties in connection with the actions which resulted in such losses,
claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative fault of such
indemnifying party and indemnified parties shall be determined by
reference to, among other things, whether any action in question,
including any untrue or alleged untrue statement of a material fact or
omission or alleged omission to state a material fact, has been made
by, or related to information supplied by, such indemnifying party or
indemnified parties, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such
action. The amount paid or payable by a party under this Section 8 as
a result of the losses, claims, damages, liabilities and expenses
referred to above shall be deemed to include any legal or other fees
or expenses reasonably incurred by such party in connection with any
investigation or proceeding.
The parties hereto agree that it would not be just and
equitable if contribution pursuant to this subparagraph (iii) of this Section
8(e) were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to in the immediately preceding paragraph. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(f) Termination of Restrictions. Notwithstanding the
foregoing provisions of this Section 8, the restrictions imposed by Section 3
of this Agreement upon the transferability of the Warrant, the Warrant
Certificate and the Warrant Shares and the legend requirements of Section 3(c)
and (d) shall terminate as to the Warrant or any particular Warrant Share (i)
when and so long as such security shall have been effectively registered under
the Securities Act and disposed of pursuant thereto, or (ii) when the Company
shall have delivered to the holder or holders thereof the written opinion of
counsel to the Company, which opinion and counsel shall each be reasonably
satisfactory to such holder or holders, stating that the transferability
portion of such legend is not required in
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order to ensure compliance with the Securities Act, or (iii) when the holder
thereof shall have delivered to the Company the written opinion of counsel to
the holder, which opinion and counsel shall each be reasonably satisfactory to
the Company, stating that the transferability portion of such legend is not
required in order to ensure compliance with the Securities Act. Whenever the
restrictions imposed by Section 3 of this Agreement shall terminate as to the
Warrant, as hereinabove provided, the holder thereof shall be entitled to
receive from the Company, at the expense of the Company, upon the surrender of
the Warrant Certificate, a new Warrant Certificate not bearing the restrictive
legend required by Section 3(c) but otherwise identical in all respects to the
Warrant Certificate surrendered. Wherever the restrictions imposed by such
Section 3 shall terminate as to any Warrant Share, as hereinabove provided, the
holder thereof shall be entitled to receive from the Company, at the Company's
expense, upon the surrender of the Share Certificate representing such Warrant
Share, a new Share Certificate representing such Warrant Share not bearing the
restrictive legend set forth in Section 3(d) but otherwise identical in all
respects to the Share Certificate surrendered.
(g) Listing on Securities Exchange. From and after the date
upon which the Warrant shall become exercisable in accordance with Section 4 of
this Agreement (but not before), if the Company shall have any shares of Common
Stock listed on any securities exchange, it will, at its expense, list thereon,
maintain and, when necessary, increase such listing of, all shares of Common
Stock issued or, to the extent permissible under the applicable securities
exchange rules, issuable upon the exercise of the Warrant so long as any shares
of Common Stock shall be so listed.
(h) Certain Limitations on Registration Rights.
Notwithstanding the other provisions of this Section 8, the Company shall not
be obligated to register any Warrant Shares if (x) the Company delivers to the
holder thereof the written opinion of counsel to the Company, which opinion and
counsel shall each be reasonably satisfactory to such holder, stating that the
sale or other disposition of such holder's Warrant Shares, in the manner
proposed by such holder (or, if such holder has engaged an investment banking
firm at its expense, in the manner proposed by such investment banking firm),
may be effected without registering such Warrant Shares under the Securities
Act, and (y) the failure of the Company to register such Warrant Shares will
not result in a five percent (5%) reduction in the net proceeds to be received
by such holder in connection with such sale or other disposition.
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9. Rights as Stockholders; Notices to Holders.
Nothing contained in this Agreement or in the Warrant shall be construed as
conferring upon the holder of the Warrant or its permitted transferees the
right to vote or to receive dividends or to consent to or receive notice as
stockholders in respect of any meeting of stockholders for the election of
directors of the Company or any other matter, or any rights whatsoever as
stockholders of the Company.
10. Miscellaneous.
(a) Notices. Any notice, demand or other communication
authorized or required pursuant to this Agreement to be given or made shall be
sufficiently given or made if sent by first-class mail, postage prepaid,
addressed as follows:
(i) if to the Company, to:
Hanover Direct, Inc.
1500 Harbor Boulevard
Weehawken, New Jersey 07087
Attention: Executive Vice President,
General Counsel and Secretary
and (ii) if to the holder of the Warrant
Certificate, to:
Sears Shop At Home Services, Inc.
3333 Beverly Road
E,4 259B
Hoffman Estates, Illinois 60179
Attention: E. Vachel Pennebaker
President and Chief Executive Officer
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with a copy to:
The Corporation Trust Company
Corporation Trust Center
1209 Orange Street
Wilmington, Delaware 19901
or, in either case, to such other address as may be designated by notice as
provided in this Section 10(a).
(b) Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, without
giving effect to principles of conflict of laws.
(c) Amendments and Waivers. This Agreement may be
amended, modified or superseded only by written instrument signed by each of
the parties hereto, and any of the terms, provisions and conditions hereof may
be waived, only by a written instrument signed by the party waiving such term,
provision or condition.
(d) Successors. All the covenants and provisions of
this Agreement by or for the benefit of the Company or Sears, as the case may
be, shall bind and inure to the benefit of their respective successors, assigns
and permitted transferees hereunder.
(e) Benefits of this Agreement. Nothing in this
Agreement shall be construed to give to any person or corporation other than
the Company and Sears, and their respective successors, assigns and permitted
transferees hereunder, any legal or equitable right, remedy or claim under this
Agreement, but this Agreement shall be for the sole and exclusive benefit of
the Company and Sears and their respective successors, assigns and permitted
transferees hereunder.
(f) Captions, Etc. The captions of the sections and
subsections of this Agreement have been inserted for convenience only and shall
have no substantive effect. Unless the context otherwise requires, terms used
herein shall be equally applicable to the singular and plural forms thereof.
(g) Counterparts. This Agreement may be executed in
any number of counterparts, each of which so executed shall be deemed to be an
original; but such counterparts together shall constitute but one and the same
instrument.
(h) Termination. This Agreement shall terminate at the
close of business on the Expiration Date or
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any earlier date when the Warrant shall have been exercised, whether in full or
in part, provided that the registration and other rights provided for in
Section 8 of this Agreement shall remain in full force and effect to the extent
provided for therein.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day, month and year first above
written.
HANOVER DIRECT, INC.
By:
-----------------------------
Name:
Title:
SEARS SHOP AT HOME SERVICES, INC.
By:
-----------------------------
Name:
Title:
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SCHEDULE 1
HANOVER DIRECT, INC.
SCHEDULE OF OUTSTANDING
OPTIONS, SUBSCRIPTIONS, CONVERTIBLE SECURITIES,
WARRANTS AND OTHER SIMILAR RIGHTS
RELATING TO THE CAPITAL STOCK OF THE COMPANY
24
THE WARRANT REPRESENTED BY THIS CERTIFICATE AND THE SHARES OF COMMON
STOCK ISSUABLE UPON EXERCISE HEREOF MAY NOT BE OFFERED OR SOLD EXCEPT
PURSUANT TO (i) AN EFFECTIVE REGISTRATION STATEMENT FILED PURSUANT TO
THE SECURITIES ACT OF 1933, AS AMENDED, OR (ii) AN OPINION OF COUNSEL,
WHICH OPINION SHALL BE REASONABLY SATISFACTORY TO COUNSEL FOR THIS
CORPORATION, THAT AN EXEMPTION FROM REGISTRATION UNDER SUCH ACT IS
AVAILABLE.
THE TRANSFER OR EXCHANGE OF THE WARRANT REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED IN ACCORDANCE WITH THE WARRANT AGREEMENT
REFERRED TO HEREIN.
No. 1 Up To 7,000,000 Warrant Shares
Dated: January 1, 1994
VOID AFTER 5:00 P.M., NEW YORK CITY
TIME, ON APRIL 1, 1999
HANOVER DIRECT, INC.
WARRANT CERTIFICATE
THIS CERTIFIES THAT for value received Sears Shop At Home
Services, Inc., a Delaware corporation ("Sears"), or its successor, assign or
permitted transferee (the "Holder"), is the owner of this Warrant and entitled
to purchase, at any time during the period commencing on January 1, 1999 and
ending at or before 5:00 p.m., New York City time, on April 1, 1999 (the
"Expiration Date"), up to that certain number of fully paid and nonassessable
whole shares of Common Stock, $0.66 2/3 par value (the "Common Stock"), of
Hanover Direct, Inc., a Delaware corporation (the "Company"), as is set forth
below, subject to the fulfillment of the conditions specified hereinbelow, at
an exercise price per share equal to Ten Dollars and Fifty-Seven Cents ($10.57)
(such price, as it may from time to time be adjusted pursuant to the provisions
of the Warrant Agreement (as hereinafter defined), being hereinafter referred
to as, the "Exercise Price").
Subject to the provisions of the Warrant Agreement, and
provided that (i) Hanover Ventures, Inc. ("Hanover Ventures") shall have
achieved both (A) at least Two Hundred Fifty Million Dollars ($250,000,000) in
Licensed Sales Revenues (as hereinafter defined) and (B) at least
25
Thirty Million Dollars ($30,000,000) of Licensed EBIT (as hereinafter defined),
in each case, during the one (1) year period commencing on January 1, 1998 and
ending on December 31, 1998, and (ii) Sears shall not at the time be in default
in its obligations under the License Agreement dated as of January 1, 1994,
between Hanover Ventures and Sears (the "License Agreement"), the Holder hereof
shall have the right, which may be exercised in whole or in part, to purchase
from the Company (and the Company shall issue and sell to such Holder) up to
Three Million Five Hundred Thousand (3,500,000) fully paid and non-assessable
whole shares of Common Stock upon surrender to the Company, or its duly
authorized agent, of this Warrant Certificate, with the form of election to
purchase on the reverse hereof duly filled in to indicate the number of Warrant
Shares to be purchased and otherwise duly completed and signed, and upon
payment to the Company of an amount equal to the product of the Exercise Price
multiplied by the number of shares being purchased as indicated in such form of
election (the "Warrant Price"). Payment of the applicable Warrant Price shall
be made in cash or by certified or official bank check or wire transfer payable
to the order of the Company.
Subject to the provisions of the Warrant Agreement, and
provided that (i) Hanover Ventures shall have achieved both (A) at least Five
Hundred Million Dollars ($500,000,000) in Licensed Sales Revenues and (B) at
least Sixty Million Dollars ($60,000,000) of Licensed EBIT, in each case,
during the one (1) year period commencing on January 1, 1998 and ending on
December 31, 1998, and (ii) Sears shall not at the time be in default in its
obligations under the License Agreement, the Holder hereof shall have the
right, which may be exercised in whole or in part, to purchase from the Company
(and the Company shall issue and sell to such Holder) up to Seven Million
(7,000,000) fully paid and non-assessable whole shares of Common Stock upon
surrender to the Company, or its duly authorized agent, of this Warrant
Certificate, with the form of election to purchase on the reverse hereof duly
filled in to indicate the number of Warrant Shares to be purchased and
otherwise duly completed and signed, and upon payment to the Company of the
applicable Warrant Price. Payment of the applicable Warrant Price shall be
made in cash or by certified or official bank check or wire transfer payable to
the order of the Company.
For purposes of this Warrant, the following terms shall have
the meanings set forth below:
(i) "Licensed EBIT" shall mean earnings (as computed in
accordance with generally accepted accounting principles), before
deduction for interest expense and taxes (as computed in accordance
with
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generally accepted accounting principles), of Hanover Ventures that
were generated under any Program (as defined in the License
Agreement); and
(ii) "Licensed Sales Revenues" shall mean gross revenues (as
computed in accordance with generally accepted accounting principles)
of Hanover Ventures generated by sales of Products (as defined in the
License Agreement) pursuant to any Program (as defined in the License
Agreement) reduced by the aggregate amount of such revenues
attributable to Products returned to Hanover Ventures following the
sale thereof.
The number and type of Warrant Shares purchasable by the
Holder of this Warrant Certificate and the Exercise Price are subject to
appropriate adjustment, from time to time, in accordance with the provisions of
the Warrant Agreement. If the total number of Warrant Shares represented by
this Warrant Certificate shall not be purchased in full upon the exercise of
the Warrant, the Holder hereof (for itself and any prior Holder hereof,
including, without limitation, Sears) shall be deemed to have relinquished any
and all rights to purchase the balance of the Warrant Shares previously
represented by this Warrant Certificate and this Warrant Certificate shall be
deemed to be canceled.
This Warrant Certificate is subject to and entitled to the
benefits of all of the terms, provisions and conditions of that certain Warrant
Agreement, dated as of January 1, 1994 (the "Warrant Agreement"), between the
Company and Sears Shop At Home Services, Inc., which Warrant Agreement is
hereby incorporated herein by reference and made a part hereof and to which
Warrant Agreement reference is hereby made for a full description of the
rights, limitations of rights, obligations, duties and immunities hereunder of
the Company and the Holder of this Warrant Certificate. Copies of the Warrant
Agreement are on file at the principal office of the Company.
Sears may be treated by the Company and all other persons
dealing with this Warrant Certificate as the absolute owner hereof for any
purpose and as the person entitled to exercise the rights represented hereby,
any notice to the contrary notwithstanding, and until transfer hereof in
accordance with the terms of the Warrant Agreement, the Company may treat Sears
as the owner for all purposes.
The Holder hereof shall not be entitled to vote or to receive
dividends or be deemed the holder of Common Stock or any other securities of
the Company which may at any time
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be issuable on the exercise hereof for any purpose, nor shall anything
contained in the Warrant Agreement or herein be construed to confer upon such
Holder, 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 matter 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 notice of
meetings, or to receive dividends or subscription rights or otherwise, until
the Warrant evidenced by this Warrant Certificate shall have been exercised and
the Common Stock purchasable upon the exercise hereof shall have become
deliverable as provided in the Warrant Agreement.
IN WITNESS WHEREOF, Hanover Direct, Inc. has caused the
signature (or facsimile signature) of its President to be printed hereon and
its corporate seal (or facsimile) to be printed hereon, attested by the
signature (or facsimile signature) of its Secretary.
HANOVER DIRECT, INC.
By:
--------------------------
Jack E. Rosenfeld
President
[corporate seal]
Attest:
-----------------------
Michael P. Sherman
Secretary
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(Form of Reverse Side
of Warrant Certificate)
FORM OF ELECTION TO PURCHASE WARRANT SHARES
(To be executed upon exercise of Warrant)
To Hanover Direct, Inc.:
The undersigned hereby irrevocably elects to exercise the
right of purchase represented by the Warrant Certificate on the reverse side
hereof for, and to purchase thereunder, ________ shares of Common Stock, as
provided for therein, and tenders herewith payment of the applicable Warrant
Price in full in the form of cash or a certified or official bank check or wire
transfer in the amount of $__________.
Please issue a certificate or certificates for such shares of
Common Stock in the name of(1):
PLEASE INSERT Name: _________________________
SOCIAL SECURITY OR (Please Print Name and Address)
OTHER IDENTIFYING
NUMBER: Address: _____________________
__________
Signature:
By
-------------------------------
Name:
Title:
NOTE: Please provide proof of authority to sign in
the form of an incumbency certificate or
other evidence satisfactory to the Company.
The above signature, name and title should
correspond exactly with such proof of
authority.
Dated: ________ __, 19__
____________________
(1) If more than one entity is to receive shares, please
indicate the required information for, and the desired
number of shares to be held by, each such entity.
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