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EXHIBIT 10.9
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated as of August 23, 1996
(this "Agreement"), by and between HANOVER DIRECT, INC., a Delaware corporation
(the "Company"), having an address at 1500 Harbor Boulevard, Weehawken, New
Jersey 07087, and RAKESH K. KAUL (the "Executive"), President and Chief
Executive Officer of the Company, having an address at 7000 Boulevard East,
Tower 1, Apartment 32D, Guttenberg, N.J. 07093.
WHEREAS, the Company is concurrently entering into an
Executive Employment Agreement with the Executive that, among other things,
requires the Company to (i) sell certain shares of Common Stock to the Executive
and (ii) grant the Executive certain options to purchase shares of Common Stock.
NOW, THEREFORE, in consideration of the foregoing and for
other good and valuable consideration, the parties hereby agree as follows:
1. Registration.
(a) Registration Right. From and after the date
hereof, on one occasion, if the Company shall receive written
notice from the Executive (hereinafter referred to as a
"Notice") which:
(i) requests that the Company take action to
effect any registration with respect to any shares of
Common Stock now owned or hereafter acquired by the
Executive, pursuant to an option (granted by the
Company or NAR Group Limited ("NAR")) or otherwise
(the "Shares"); and
(ii) specifies the number of proposed Shares
intended to be offered and sold for the account of
the Executive, and describes the proposed nature or
method of the offer and sale of such Shares;
then, subject to the conditions, qualifications and
limitations set forth in this Registration Rights Agreement,
the Company shall cause to be prepared and filed, and use its
best efforts to cause to become effective under the Securities
Act of 1933, as amended (the "1933 Act"), and to be maintained
in effect for a period of not less than 180 days, a
Registration Statement (including a related prospectus) in
such applicable form under the 1933 Act (a "Registration
Statement") as the Company, in its sole discretion, determines
to be appropriate, covering the public offer and sale of the
number of Shares specified in the Notice. Notwithstanding
anything to the contrary herein, the foregoing rights shall
not apply to any Shares at any time two years or more after
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the date of the termination of the Executive's employment, for
any reason whatsoever (the "Expiration Date").
(b) Registration Steps. Whenever required to use
its best efforts to effect the registration of Shares, the
Company shall at its expense, as expeditiously as reasonably
possible:
(i) prepare and file with the Securities
and Exchange Commission (the "SEC") a Registration
Statement and such amendments and supplements to such
Registration Statement and the prospectus used in
connection therewith as may be necessary to comply
with the provisions of the 1933 Act with respect to
the disposition of all securities covered by such
Registration Statement and give the Executive and any
underwriter participating in any disposition pursuant
to a Registration Statement reasonable opportunities
to review the same before it becomes effective;
(ii) furnish to the Executive such numbers
of copies of a prospectus, including a preliminary
prospectus and all amendments and supplements
thereto, in conformity with the requirements of the
1933 Act, and such other documents as he may
reasonably request in order to facilitate the
disposition of Shares owned by him;
(iii) with respect to a Registration
Statement to be filed pursuant to Section 1 only, use
its best efforts to register or qualify the
securities covered by such Registration Statement
under the securities or blue sky laws of such
jurisdictions as shall be reasonably requested by the
Executive for the distribution of the securities
covered by the Registration Statement, provided that
the Company shall not be required in connection
therewith or as a condition thereof to qualify to do
business in any such states or jurisdictions or take
any other action which in the opinion of its counsel
may subject it to taxation in such jurisdiction, it
being understood that in connection with Registration
Statements filed pursuant to Section 5, the Company's
obligation is solely to include the Shares in such
blue sky filings as the Company is otherwise making;
(iv) notify the Executive, promptly after
it receives notice thereof, of the time when such
Registration Statement has become effective or an
amendment or supplement to any prospectus forming a
part of such Registration Statement has been filed;
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(v) notify the Executive, at any time
when a prospectus is required to be delivered under
the 1933 Act, of an event causing the prospectus to
contain an untrue statement of a material fact or to
omit to state any material fact required to be stated
therein or necessary to make the statements therein
not misleading, and the Company will prepare a
supplement or amendment to such prospectus so that,
as thereafter delivered to the purchasers of the
Shares under such prospectus, such prospectus will
not contain an untrue statement of a material fact or
omit to state any material fact required to be stated
therein or necessary to make the statements therein
not misleading;
(vi) cause the Shares to be listed on
each securities exchange on which similar securities
issued by the Company are then listed, provided that
the applicable listing requirements are satisfied or
could be satisfied by the Company's reasonable
efforts;
(vii) advise the Executive of the
issuance of any stop order by the SEC suspending the
effectiveness of such Registration Statement or the
initiation or threatening of any proceeding for that
purpose, and promptly use reasonable efforts to
prevent the issuance of any stop order or to obtain
its withdrawal; or
(viii) make available for inspection by
the Executive, any underwriter participating in any
disposition pursuant to a Registration Statement, and
any attorney, accountant or other agent retained by
the Executive or such underwriter (collectively, the
"Inspectors"), upon reasonable notice and during
normal business hours, all financial and other
records, pertinent corporate documents and properties
of the Company (collectively, the "Records") as shall
be reasonably necessary to enable them to exercise
their due diligence responsibility, and cause the
Company's and its subsidiaries, officers, directors
and employees to supply all information reasonably
requested by any such Inspector in connection with
the registration. Records which the Company
determines, in good faith, to be confidential and
which it notifies the Inspectors are confidential
shall not be disclosed by the Inspectors unless (i)
the disclosure of such Records is necessary to avoid
or correct a material misstatement or omission in the
Registration Statement, or (ii) the release of such
records is ordered pursuant to a subpoena or other
order from a court of competent jurisdiction. The
Executive agrees that he will, upon learning that
disclosure of such Records is
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sought in a court of competent jurisdiction, give
notice to the Company and allow the Company, at the
Company's expense, to undertake appropriate action to
prevent disclosure of the Records deemed
confidential.
2. Conditions on Registration Right. The provisions of
Section 1 of this Registration Rights Agreement shall be subject to the
following additional conditions, qualifications and limitations:
(a) Financial Statement Requirements. The
Company shall not be obligated to file a Registration
Statement which under the Act would be required to contain
audited financial statements other than the Company's fiscal
year-end financial statements for its three full fiscal years
(or such other number of fiscal years as may then be
ordinarily required under the SEC regulations for Registration
Statements on Form S-1 or its equivalent) immediately
preceding the date of such filing together with any schedules
with respect to such financial statements as may be required
to be included in the Registration Statement.
(b) Year End Filing. Subject to subsection
(2)(c) hereof, the Company shall file a Registration Statement
pursuant to Section 1 hereof within 120 days following its
receipt of a Notice, provided, that if such 120 day period
would otherwise expire within 60 days prior to the end or
within 120 days after the beginning of any fiscal year, then
the Company may, at its option, defer such filing to the
closest subsequent date which is not less than 120 days after
the beginning of a fiscal year.
(c) Conflicting Company Activity. If prior to
the filing or effectiveness of a Registration Statement filed
by the Company pursuant to Section 1 hereof:
(i) at the time of receiving the
Notice, the Company shall have become a party to an
agreement or filed materials with the SEC
contemplating a material business acquisition by the
Company, and, if in the good faith judgment of the
Company it is impracticable for the Company to file
and have become effective a Registration Statement
prior to the consummation of the acquisition and, if
such proposed acquisition were consummated, the
Company would be required to include in such
Registration Statement financial statements and/or
other information concerning the business of any
other party to such proposed acquisition, then the
Company shall not be deemed to have breached its
agreement to file such
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Registration Statement and to use its best efforts to
cause such Registration Statement to become effective
if it causes such Registration Statement to be filed
(or if such Registration Statement has been filed,
the use of its best efforts to cause such
Registration Statement to become effective) within
180 days from the date on which the Company was
required to file a Registration Statement or
recommence the use of its best efforts to cause such
Registration Statement to become effective, but in
any event as soon as practicable; or
(ii) at the time of receiving the Notice
the Company shall have become party to an agreement
contemplating a merger or consolidation of the
Company into or with, or a sale or transfer of all or
substantially all of the business and assets of the
Company to, any other corporation or entity, and if
in the good faith judgment of the Company it is
impracticable for the Company to file and have become
effective a Registration Statement prior to the
consummation of the merger or consolidation, then the
Company shall not be deemed to have breached its
agreement to file such Registration Statement and to
use its best efforts to cause such Registration
Statement to become effective if it causes the filing
of such Registration Statement (or, if filed, the
effective date of such Registration Statement) to be
deferred until the transaction contemplated by such
agreement or letter of intent becomes effective (in
which case the Company shall have no obligation to
file or cause such Registration Statement to become
effective) or is abandoned (in which case the Company
shall use its best efforts to make such filing, or to
recommence the use of its best efforts to cause such
filing to become effective, as promptly as
practicable after the abandonment thereof and in any
event not more than 60 days after such abandonment);
or
(iii) the Company shall have determined
in good faith based on written advice of counsel that
such Registration Statement is required to contain
information with respect to the Company or its
business and plans which has not been publicly
disclosed, and the disclosure of which, in the
Company's good faith judgment, would not be in the
best interest of the Company, then the Company shall
not be deemed to have breached its agreement to file
and to use its best efforts to cause such
Registration Statement to become effective if it
causes the filing of such Registration Statement to
be deferred (or, if such Registration Statement has
been filed, ceases its efforts to cause such
Registration Statement to become effective) for a
period of
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not more than 45 days from the date on which the
Company was required to file a Registration Statement
or recommence the use of its best efforts to cause
such Registration Statement to become effective
pursuant to this Agreement, but in any event as soon
as practicable; it being understood and agreed that,
the Company will promptly give written notice of such
deferral, specifying the basis therefor and the
anticipated duration thereof to the Executive;
provided, however, that any non-public underlying
information constituting the basis for a deferral
hereunder need not be specified.
The occurrence of any of the foregoing events shall not
relieve the Company from its obligations pursuant to Section
1.
(d) Sale Permitted Without Registration. The
Company shall have no obligation to effect registration under
Section 1 if all of the Executive's Shares requested to be
registered shall be in the unqualified written opinion of
counsel to the Company, which may be relied upon by the
Executive, eligible to be sold on a current basis to the
public without registration under they Act and without
restriction as to subsequent trading.
(e) Minimum Share Requirement. The Company shall
have no obligation to effect registration under Section 1 if
the Executive requests that less than 500,000 Shares be
registered.
3. Registration Exclusively for the Executive. The
Company shall not, without the written consent of the Executive,
include any shares for sale for its own account or for the account of
others in any Registration Statement filed pursuant to Section 1.
4. Prospectus Requirements. The Company shall be
obligated to cause any effective prospectus included in the
Registration Statement filed by the Company pursuant to Section 1 to
meet the requirements of Section 10 of the 1933 Act until the
expiration of a period of 180 days from the date on which the Executive
was first able to sell Shares pursuant to such Registration Statement;
provided, however, that if as a result of deferrals of the filing
and/or the effective date of such Registration Statement occurring
pursuant to subsection (2)(b) or (c), the aggregate period for which
the Executive was able to offer and sell his Shares pursuant to such
Registration Statement would be reduced to less than 180 days, then the
Company shall take such action as may be necessary to enable the
Executive to continue such offer and sale for an additional period or
periods sufficient to produce any aggregate offering period of 180 days
unless the expiration date should have occurred within such 180 day
period.
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5. Piggyback Registration Rights.
(a) The Company agrees with the Executive that if the
Company proposes at any time to file with the SEC a
registration statement under the 1933 Act on Form S-1, S-2 or
S-3 or other comparable form relating to the sale of Common
Stock by the Company or by NAR or any affiliate thereof (other
than through the distribution of rights to purchase Common
Stock to its stockholders generally) (a "Company Registration
Statement"), then the Company shall give written notice to the
Executive at least thirty (30) days prior to the filing of
such Company Registration Statement of its intention to do so.
(b) If the Executive delivers a written notice to the
Company, within 15 days after delivery of the foregoing
notice, of his desire to have any of the Shares included in a
Company Registration Statement, such Shares shall be included
in any Company Registration Statement so filed and shall not
constitute an occasion on which the Executive requests the
Company to take action to effect any registration with respect
to any Shares of Common Stock now owned or hereafter acquired
by the Executive, pursuant to an option or otherwise, as
provided by Section 1 hereof, but subject to the other
provisions of this Registration Rights Agreement.
(c) If an underwriter with respect to a Company
Registration Statement (the "Underwriter") advises the Company
that the number of shares proposed to be sold by the Company
and the Executive is greater than the number of shares of
Common Stock which the underwriter believes feasible to sell
at that time, at the price and upon the terms approved by the
Company, then the number of shares of Common Stock which the
Underwriter in its sole discretion believes may be sold shall
first be allocated to the Company and the remaining number of
such shares of Common Stock shall then be allocated on a pro
rata basis to all other holders of Common Stock being
registered, including the Executive.
(d) The Company shall not be obligated to include in
any Registration Statement pursuant to this Section 5 any
Shares which, at the time of filing such Registration
Statement, have been covered by or included in any other
Registration Statement theretofore filed by the Company under
the 1933 Act and declared effective by the SEC.
(e) At the request of the Underwriter, and as a
condition to inclusion in the Company Registration Statement
of any Shares owned by the Executive, the Executive shall
agree in writing not to offer or
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sell any Shares not included in a Company Registration
Statement filed pursuant to this Section 5 for a period
specified by the Underwriter, provided that such period shall
not exceed 120 days from the effective date of such Company
Registration Statement and that every other selling
shareholder subject to a provision identical or substantially
similar to this paragraph (e) of this Section 5 is similarly
restricted.
(f) Notwithstanding the inclusion of any Shares owned
by the Executive in any Company Registration Statement filed
pursuant to this Section 5, the Company shall have no
obligation to cause or permit such Company Registration
Statement to become effective under the 1933 Act at any time,
and in its sole discretion may withdraw such Company
Registration Statement at any time prior to the effectiveness
thereof for any reason whatsoever. The Company agrees in the
event of any such withdrawal of any Company Registration
Statement to give prompt notice of such withdrawal to the
Executive. In the event of such withdrawal the Executive will
not be deemed to have exercised his right to have Shares
included in a Company Registration Statement so withdrawn.
(g) The Company shall be obligated to cause any
effective prospectus included in the Company Registration
Statement to meet the requirements of Section 10 of the Act
for a period of 180 days from the date on which the Executive
was first able to sell Shares pursuant to such Company
Registration Statement provided, however, that if, as a result
of interruptions in the offer and sale of Shares covered
thereby, the aggregate period for which the Executive was able
to offer and sell his Shares pursuant to such Company
Registration Statement would be reduced to less than 180 days,
then the Company shall take such action as may be necessary to
enable the Executive to continue such offer and sale for an
additional period or periods sufficient to produce an
aggregate offering period of 180 days.
(h) The Company shall not, so long as this Agreement
is in effect, without the prior written consent of the
Executive, grant registration rights to any other person more
favorable than the registration rights granted to the
Executive hereunder.
6. Selling Expenses.
(a) Except as otherwise set forth in (b) below or as
required by the SEC or any other federal or state regulatory
authority or by any self regulatory agency, the costs and
expenses incurred in connection with the inclusion of the
Executive's Shares in a registration statement shall be borne
by the Company with respect to (i) any Registration
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Statement filed under Section 1 and (ii) all Company
Registration Statements filed under Section 5 which included
Shares of the Executive, including, without limitation, all
costs and expenses arising from or related to the preparation
and filing of such registration statements, the prosecution of
such filings to effectiveness and the maintenance of such
registration statements in effect for the period determined
pursuant to Sections 4 or 5 hereof, as the case may be.
(b) Notwithstanding anything to the contrary set
forth in subsection (a), the Executive shall bear the
following costs and expenses incurred in connection with all
registration statements filed pursuant to this Agreement in
which Shares owned by him are included:
(i) The fees and disbursements of any
separate counsel retained by the Executive;
(ii) Any underwriting discounts,
commissions and expenses relating to Shares sold by
the Executive; and
(iii) Any taxes payable with respect to
the transfer by the Executive.
(c) Notwithstanding anything to the contrary set
forth herein, the Company shall have the obligation to bear
any state securities law ("blue sky") filing and registration
fees relating to such Shares with respect to a Registration
Statement filed under Section l(a) only in up to twenty (20)
states designated by the Executive and shall have no
obligation to bear such fees in connection with the inclusion
of Shares in a Company Registration Statement under Section 5
hereof in any states where the Company was not otherwise
intending to register or file with respect to shares covered
by the Company Registration Statement.
7. Reports Under Securities Exchange Act of 1934. With a
view to making available to the Executive the benefits of Rule 144 promulgated
under the 1933 Act and any other rule or regulation of the SEC that may at any
time permit the Executive to sell securities of the Company to the public
without registration or pursuant to a registration on Form S-3 (or any successor
form to Form S-3 regardless of its designation), the Company agrees to use all
reasonable efforts to:
(a) make and keep public information available,
as those terms are understood and defined in SEC Rule 144, at
all times;
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(b) file with the SEC in a timely manner all reports
and other documents required of the Company under the Act and
the Securities Exchange Act of 1934, as amended (the "1934
Act"); and
(c) furnish to the Executive, so long as the
Executive owns any Shares, forthwith upon request, whenever
applicable (i) a written statement by the Company that it has
complied with the reporting requirements of SEC Rule 144, the
1933 Act, and the 1934 Act, or that it qualifies as a
registrant whose securities may be resold pursuant to Form S-3
(at any time after it so qualifies), (ii) a copy of the most
recent annual or quarterly report of the Company and such
other reports and documents so filed by the Company, and (iii)
such other information as may be reasonably requested in
availing the Executive of any rule or regulation of the SEC
which permits the selling of any such securities without
registration or pursuant to such form.
8. Indemnification. In the event any of the shares are
included in any registration statement:
(a) the Company shall indemnify and hold harmless the
Executive or any underwriter (within the meaning of the 1933
Act) for the Company or the Executive, against any losses,
claims, damages or liabilities, joint or several, to which
they may become subject under the 1933 Act, or the 1934 Act,
state securities laws, other federal or state law or
regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect
thereof) (i) arise out of or are based upon any untrue or
alleged untrue statement of any material fact contained in
such registration statement, including any preliminary
prospectus or final prospectus contained therein or any
amendments or supplements thereto or any documents prepared or
furnished by the Company incident thereto, or (ii) arise out
of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein, or
necessary to make the statements therein not misleading, or
(iii) arise out of or are based upon any violation by the
Company of any rule or regulation promulgated under the 1933
Act, the 1934 Act, or other federal or state law applicable to
the Company and relating to any action or inaction required of
the Company in connection with such registration. The Company
shall reimburse the Executive or such underwriter for any
reasonable and actual legal or other expenses, as incurred by
them in connection with investigating or defending any such
loss, claim, damage, liability or action. Notwithstanding the
foregoing, the Company shall not be liable in any such case
for any loss, claim, damage, liability or action to the extent
that it arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made
in
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connection with such registration statement, preliminary
prospectus, final prospectus or amendments or supplements
thereto or documents prepared or furnished by the Company
incident thereto in reliance upon and in conformity with
written information furnished expressly for use in connection
with such registration by the Executive or such underwriter.
(b) the Executive shall indemnify and hold harmless
the Company, each of its directors, each of its officers who
have signed such registration statement, each person, if any,
who controls the Company within the meaning of the 1933 Act or
the 1934 Act, any underwriter for the Company (within the
meaning of the 1933 Act) and each other holder and its
respective officers, directors, partners and controlling
persons to the same extent as the foregoing indemnity from the
Company to the Executive, in each case to the same extent, but
only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading was
made in such registration statement, preliminary prospectus,
final prospectus or amendments or supplements thereto or
document prepared or furnished by the Company incident thereto
in reliance upon and in conformity with written information
furnished by the Executive expressly for use in connection
with such registration. Notwithstanding the foregoing,
obligations of the Executive shall be limited to an amount
equal to the proceeds to the Executive of Shares sold pursuant
to the registration statement to which the loss, claim,
damage, liability or action relates.
(c) promptly after receipt by an indemnified party
under this section of notice of the commencement of any
action, such indemnified party shall, if a claim in respect
thereof is to be made against any indemnifying party under
this Section, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability
which it may have to any indemnified party unless such
liability is the proximate result of such failure. In case any
such action is brought against any indemnified party, and it
notifies the indemnifying party of the commencement thereof,
the indemnifying party will be entitled to appoint counsel
reasonably satisfactory to such indemnified party to represent
the indemnified party in such action; provided, however, that
if the defendants in any such action include both the
indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded based on the
written opinion of counsel addressed to the indemnifying party
that there may be a conflict of interest between it and/or
other indemnified parties, on the one hand, and the
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indemnifying party, on the other, the indemnified party or
parties shall have the right to select separate counsel to
defend such action on behalf of such indemnified party or
parties. Upon receipt of notice from the indemnifying party to
such indemnified party of its election so to appoint counsel
to defend such action and approval by the indemnified party of
such counsel, the indemnifying party will not be liable to
such indemnified party under this section for any legal or
other expenses subsequently incurred by such indemnified party
in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it
being understood, however, that the indemnifying party shall
not be liable for the expenses of more than one separate
counsel selected by the Executive), or (ii) the indemnifying
party shall not have employed counsel reasonably satisfactory
to the indemnified party to represent the indemnified party
within a reasonable time after notice of commencement of the
action.
(d) In order to provide for just and equitable
contribution in circumstances in which the indemnification
provided for in paragraph (a) or (b) of this Section 8 is due
in accordance with its terms but is for any reason held by a
court to be unavailable from the Company on grounds of policy
or otherwise, the Company and the Executive shall contribute
to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in
connection with investigating or defending same) to which the
Company and the Executive may be subject in such proportions
as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified
party on the other in connection with the statements or
omissions which resulted in such loss, liability, claim,
damage or expense as well as any other equitable
considerations. The relative fault of the indemnifying party
and of the indemnified party shall be determined by a court of
law by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission to
state a material fact relates to information supplied by the
indemnifying party or by the indemnified party and the
parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
Notwithstanding the foregoing, obligations of the Executive
shall be limited to an amount equal to the proceeds to the
Executive of Shares sold pursuant to the registration
statement to which the loss, claim, damage, liability or
action relates. Any party entitled to contribution will,
promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another
party or parties under this paragraph (d), notify such party
or parties from whom contribution may be sought, but the
omission to so
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notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any other
obligation it or they may have hereunder or otherwise than
under this paragraph (d).
IN WITNESS WHEREOF, the undersigned have executed this
Registration Rights Agreement as of the date first above written.
HANOVER DIRECT, INC.
By: /s/ Edward J. O'Brien
_________________________________
Name:
Title:
/s/ Rakesh K. Kaul
______________________________________
Rakesh K. Kaul
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