-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: keymaster@town.hall.org Originator-Key-Asymmetric: MFkwCgYEVQgBAQICAgADSwAwSAJBALeWW4xDV4i7+b6+UyPn5RtObb1cJ7VkACDq pKb9/DClgTKIm08lCfoilvi9Wl4SODbR1+1waHhiGmeZO8OdgLUCAwEAAQ== MIC-Info: RSA-MD5,RSA, OdIg6JsawyJZQWK4dTxVMtMowDu9yFycUVTFdWX/W5sQT49Tvs6nGtxMd7jJfj3a njXU+Zqpt/1V56QBbXq6vQ== 0000950116-95-000258.txt : 19950627 0000950116-95-000258.hdr.sgml : 19950627 ACCESSION NUMBER: 0000950116-95-000258 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 7 FILED AS OF DATE: 19950626 SROS: NASD SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: CANDIES INC CENTRAL INDEX KEY: 0000857737 STANDARD INDUSTRIAL CLASSIFICATION: FOOTWEAR, (NO RUBBER) [3140] IRS NUMBER: 112481903 STATE OF INCORPORATION: DE FISCAL YEAR END: 0131 FILING VALUES: FORM TYPE: SC 13D SEC ACT: 1934 Act SEC FILE NUMBER: 005-41257 FILM NUMBER: 95549233 BUSINESS ADDRESS: STREET 1: 2975 WESTCHESTER AVE CITY: PURCHASE STATE: NY ZIP: 10577 BUSINESS PHONE: 9146948600 MAIL ADDRESS: STREET 1: 2975 WESTCHESTER AVE CITY: PURCHASE STATE: NY ZIP: 10577 FORMER COMPANY: FORMER CONFORMED NAME: MILLFELD TRADING CO INC DATE OF NAME CHANGE: 19920703 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: COLE NEIL CENTRAL INDEX KEY: 0000944791 STANDARD INDUSTRIAL CLASSIFICATION: [] FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 2975 WESTCHESTER AVENUE 3RD FLOOR CITY: PURCHASE STATE: NY ZIP: 10577 BUSINESS PHONE: 9146948600 MAIL ADDRESS: STREET 1: 2975 WESTCHESTER AVE 3RD FLOOR CITY: PURCHASE STATE: NY ZIP: 10577 SC 13D 1 ---------------------------- OMB APPROVAL ---------------------------- OMB Number: 3235-0145 Expires: October 31, 1994 Estimated average burden hours per form........ 14.90 ---------------------------- UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D Under the Securities Exchange Act of 1934 (Amendment No. _________)* Candie's, Inc. - ------------------------------------------------------------------------------ (Name of Issuer) Common Stock, par value $.001 - ------------------------------------------------------------------------------ (Title of Class of Securities) 137409--10--8 ............. (CUSIP Number) Ethan Seer Tenzer Greenblatt LLP 405 Lexington Avenue, New York, New York 10174 (212) 573-4300 - ------------------------------------------------------------------------------ (Name, Address and Telephone Number of Person Authorized to Receive Notice and Communications) March 3, 1993 - ------------------------------------------------------------------------------ (Date of Event which Requires Filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(b)(3) or (4), check the following box | |. Check the following box if a fee is being paid with the statement|X|. (A fee is not required only if the reporting person: (1) has a previous statement on file reporting beneficial ownership of more than five percent of the class of securities described in Item 1; and (2) has filed no amendment subsequent thereto reporting beneficial ownership of five percent or less of such class.) (See Rule 13d-7). Note: Six copies of this statement, including all exhibits, should be filed with the Commission. See Rule 13d-1(a) for other parties to whom copies are to be sent. * The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 ("Act") or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act (however, see the Notes). SCHEDULE 13D
- ------------------------------------------- CUSIP NO. 137409-10-8 - ------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON Neil Cole - ----------------------------------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X] - ----------------------------------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ----------------------------------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* PF, OO - ----------------------------------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ----------------------------------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION United States - ----------------------------------------------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 1,471,250 (includes options and warrants to acquire an aggregate of 1,440,000 SHARES shares of Common Stock) BENEFICIALLY ----------------------------------------------------------------------------------------------------------------- OWNED BY 8 SHARED VOTING POWER EACH REPORTING 2,027,696 (includes options and warrants to acquire an aggregate of 800,000 shares of PERSON Common Stock) WITH ----------------------------------------------------------------------------------------------------------------- 9 SOLE DISPOSITIVE POWER 1,471,250 (includes options and warrants to acquire an aggregate of 1,440,000 shares of Common Stock) ----------------------------------------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 2,027,696 (includes options and warrants to acquire an aggregate of 800,000 shares of Common Stock) - ----------------------------------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 3,498,946 (includes options and warrants to acquire an aggregate of 2,240,000 shares of Common Stock) - ----------------------------------------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ----------------------------------------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 33.4% - ----------------------------------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* IN - -----------------------------------------------------------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEM 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. SCHEDULE 13D
- ------------------------------------------- CUSIP NO. 137409-10-8 - ------------------------------------------- - ----------------------------------------------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON New Retail Concepts, Inc. - ----------------------------------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X] - ----------------------------------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - ----------------------------------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS* OO - ----------------------------------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e) [ ] - ----------------------------------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION Delaware - ----------------------------------------------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF 2,027,696 (includes 800,000 shares currently exercisable pursuant to a warrant and option) SHARES BENEFICIALLY ----------------------------------------------------------------------------------------------------------------- OWNED BY 8 SHARED VOTING POWER EACH REPORTING 0 PERSON ----------------------------------------------------------------------------------------------------------------- WITH 9 SOLE DISPOSITIVE POWER 2,027,696 (includes 800,000 shares currently exercisable pursuant to a warrant and option) ----------------------------------------------------------------------------------------------------------------- 10 SHARED DISPOSITIVE POWER 0 - ----------------------------------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 2,027,696 - ----------------------------------------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES* [ ] - ----------------------------------------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 22.4% - ----------------------------------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON* CO - -----------------------------------------------------------------------------------------------------------------------------------
*SEE INSTRUCTIONS BEFORE FILLING OUT! INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEM 1-7 (INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION. Item 1. Security and Issuer. This statement relates to the Common Stock, par value $.001 per share ("Common Stock") issued by Candie's, Inc., a Delaware corporation (the "Company"), whose principal executive offices are located at 2975 Westchester Avenue, Purchase, New York 10577. Item 2. Identity and Background. This statement is filed by (i) New Retail Concepts, Inc., a Delaware corporation ("NRC") and (ii) Neil Cole, President and a principal stockholder of the Company and President and a principal stockholder of NRC (Mr. Cole and NRC are referred to herein collectively as the "Reporting Persons"). The address of the Reporting Persons is 2975 Westchester Avenue, Purchase, New York 10577. Mr. Cole is a United States citizen. Neither Reporting Person has, during the last five years (i) been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors), or (ii) been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgment, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violations with respect to such laws. Item 3. Source and Amount of Funds or other Consideration. A total of 900,000 shares of Common Stock owned by NRC were issued originally on March 3, 1993 to El Greco, Inc., a Delaware corporation ("El Greco"), which subsequently merged into NRC, in partial consideration for the purchase of certain assets by the Company from El Greco, including the trademark Candie's(R), related assets, and additional trademarks (the "Asset Acquisition"). The Asset Acquisition was consummated on March 3, 1993. Concurrently with the Asset Acquisition, Mr. Cole entered into an employment agreement with the Company pursuant to which Mr. Cole was granted five-year options to purchase, at any time until February 25, 1998, 400,000 shares of Common Stock at a price of $5.00 per share. None of such options have been exercised to date. Mr. Cole also converted $65,000 of accrued salary into 16,250 shares of Common Stock at the time of the Asset Acquisition. In addition, on October 22, 1993, Mr. Cole purchased 15,000 units, each consisting of one share of Common Stock, one Class B Warrant and one Class C Warrant (each warrant being exercisable to purchase one share of Common Stock until February 23, 1998), at a price of $2 5/8 per unit. On November 10, 1993, Mr. Cole was granted an Employee Stock Option to purchase, at any time until November 10, 1998, 200,000 shares of Common Stock of the Company for $2.56 per share. On August 3, 1994, Mr. Cole was granted an Non-Qualified Stock Option to purchase, at any time until August 3, 1999, 400,000 shares of Common Stock of the Company for $1.50 per share. On December 20, 1994 Mr. Cole was granted an Non-Qualified Stock Option to purchase, at any time until December 20, 1999, 10,000 shares of Common Stock of the Company for $1.25 per share. On March 6, 1995, Mr. Cole was granted an Non-Qualified Stock Option to purchase, at any time until March 6, 2000, 400,000 shares of Common Stock of the Company for $1.16 per share. None of such options has been exercised. Mr. Cole paid for all of such securities purchased by him with personal funds. As of May 16, 1994, NRC converted $325,000 in principal under a note due from the Company into 240,740 shares of Common Stock. The note was originally issued by the Company in March 1993. On October 6, 1994, the Company granted NRC an option to purchase 100,000 shares of the Company's Common Stock at $1.15 per share, at any time from April 6, 1995 to October 6, 1999, in consideration of NRC entering into an Exchange Agreement with certain investors in the Company. On November 29, 1994 the principal of a convertible promissory note in the principal amount of $100,000, which was issued by the Company to NRC in November 1994, was automatically converted into 86,956 shares of the Common Stock of the Company pursuant to the terms of the note. On February 1, 1995 the Company and NRC entered into a Securities Purchase Agreement (the "Purchase Agreement") pursuant to which NRC loaned the Company an aggregate of $600,000 and has agreed to make available, under certain conditions, an additional $200,000. In consideration therefor, the Company issued to NRC a warrant (the "Warrant") to purchase up to 700,000 shares of the Common Stock of the Company of which 700,000 shares are currently exercisable. The Warrant is exercisable at $1.2375 per share. The Warrant expires on February 1, 2000. Repayment by Candie's to NRC of such loan has been personally guaranteed by Mr. Cole. Item 4. Purpose of Transaction. The purpose of the acquisition of shares of Common Stock by each of the Reporting Persons is for investment. The Reporting Persons may make purchases of Common Stock from time to time and may dispose of any or all of the shares of Common Stock held by them at any time. The Reporting Persons have no plans or proposals which relate to, or could result in any of the matters referred to in Paragraphs (b) through (j) of Item 4 of Schedule 13D. The Reporting Persons may review or reconsider their position with respect to the Company or to formulate plans or proposals with respect to any such matter, but have no present intention of doing so. Item 5. Interest in Securities of the Issuer. As of the date hereof, NRC beneficially owns an aggregate of 2,027,696 shares of Common Stock, constituting approximately 22.4% of the outstanding Common Stock. Neil Cole beneficially owns an aggregate of 3,498,946 shares of Common Stock (attributing all of NRC's ownership to Mr. Cole), constituting approximately 33.4% of the outstanding Common Stock. The percentage used herein is calculated based upon the shares of Common Stock issued and outstanding at June 21, 1995 as provided by the Company. Except for the shares owned of record by NRC as to which Mr. Cole share's voting and dispositive power and 10,000 shares which are held by a charitable foundation of which Mr. Cole and his wife are co-trustees, the Reporting Persons have sole voting and dispositive power with respect to all the shares of Common Stock to which this statement relates. The Reporting Persons have not effected any transactions in shares of the Common Stock in the past 60 days other than as indicated above. No person other than the Reporting Persons has the right to receive or the power to direct receipt of dividends from, or the proceeds of, the sale of the shares of Common Stock. Item 6. Contracts, Arrangements, Understandings or Relationships with Respect to Securities of the Issuer. Other than as set forth above, there are no contracts, arrangements, understandings or relationships with the Reporting Persons or any other person with respect to the securities of the Company, including but not limited to transfer or voting of any other securities, finders' fees, joint ventures, loan or option arrangements, puts or calls, guaranties of profits, divisions of profits or loss or the giving or withholding of proxies. NRC and Neil Cole have received certain registration rights with respect to certain of their shares of Common Stock beneficially owned by them. Item 7. Materials to be filed as Exhibits. Exhibit 1 Asset Acquisition Agreement among Millfeld Trading Co., Inc. (now the Company), New Retail Concepts, Inc., ("NRC") and El Greco. Inc., dated as of February 23, 1993. Exhibit 2 Letter Agreement between the Company and NRC dated as of May 16, 1994 (incorporated by reference to Exhibit 10.20 of the Company's Form 10-KSB for the fiscal year ended January 31, 1995). Exhibit 3 Registration Rights Agreement between the Company and NRC, dated May 16, 1994. Exhibit 4 Securities Purchase Agreement dated as of February 1, 1995 between the Company and NRC (incorporated by reference to Exhibit 10.13 to the Company's Form 10-KSB for the fiscal year ended January 31, 1995). Exhibit 5 Warrant dated February 1, 1995 to purchase up to 700,000 shares of Common Stock issued by the Company to NRC. Exhibit 6 Convertible Note of the Company dated November 21, 1994 issued in favor of NRC. Exhibit 7 Option dated October 6, 1994 to purchase up to 100,000 shares of Coomon Stock issued by the Company to NRC. Exhibit 8 Joint Filing Agreement between Neil Cole and NRC dated as of June 21, 1995. SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. DATE: June 21, 1995 /s/ Neil Cole ------------------------------------- Neil Cole NEW RETAIL CONCEPTS, INC. By: /s/ Neil Cole ---------------------------------- Neil Cole, President EX-1 2 EXHIBIT 1 AGREEMENT THIS AGREEMENT, made as of the 23rd day of February, 1993, among Millfeld Trading Co., Inc., a Delaware corporation ("Purchaser"), with its principal offices at 60 West 40th Street, New York, New York 10018, New Retail Concepts, Inc., a Delaware corporation ("NRC"), with its principal offices at 60 West 40th Street, New York, New York 10018, and El Greco, Inc., a Delaware corporation ("Seller"), with its principal offices at 60 West 40th Street, New York, New York 10018 (the "Agreement"). W I T N E S S E T H WHEREAS, Seller is the owner of certain trademarks, including the trademark CANDIE'S(R) (the "Trademarks"); and WHEREAS, Seller is the licensor of certain preexisting license agreements relating to the Trademarks (the "License Agreements"); and WHEREAS, Seller wishes to sell and Purchaser wishes to acquire, all of Seller's right, title and interest to the Trademarks, the License Agreements and all of the business of Seller related thereto (the "Business Operations") relating to the Trademarks, Rights (as hereinafter defined) and the License Agreements (collectively, the "Acquisition"); and WHEREAS, Seller is a wholly-owned subsidiary of NRC. NOW THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties hereto agree as follows: ARTICLE I PURCHASE AND SALE OF ASSETS 1.1. Purchase and Sale of Assets. Subject to the terms and conditions of this Agreement, simultaneously with the closing of the public offering registered pursuant to the Purchaser's Registration Statement on Form S-1 (No. 33-53878), filed under the Securities Act of 1933 (the "Registration Statement") with the Securities and Exchange Commission (the "Commission") (the "Closing"), Seller will sell, assign, transfer, convey and deliver to Purchaser and Purchaser will purchase, acquire and accept from Seller all right, title and interest to the Trademark, Rights, the License Agreements, goodwill associated with the foregoing, books and records maintained in connection with the foregoing, all such other business assets of Seller, if any, associated with the foregoing, necessary or desirable to conduct Seller's operations respecting such Trademarks, Rights and License Agreements, as of the closing date, all as set forth on Schedule 1.1 annexed hereto (the "Assets"), providing the Closing shall have occurred prior to March 31, 1993, and subject to the provisions of Section 5.6 hereof. The Assets shall be acquired by Purchaser free and clear of all liens, charges, encumbrances, liabilities and restrictions of every kind, nature or description and shall not include any debts or obligation related thereto, except with respect to the obligations set forth in the License Agreements. Unless set forth in writing, Purchaser shall not assume and will not be liable for or responsible to pay any debts, liabilities, obligations or commitments by Seller. Purchaser assumes the obligations of Seller arising in connection with the License Agreements incurred in the ordinary course of business of Seller prior to Closing. 1.2. Consideration. 1.2.1 Purchase Price. Subject to the terms and conditions of this Agreement, at the Closing, Purchaser will deliver to Seller: (i) by certified check, bank check or wire transfer, up to the sum of $75,000 for the payment of Seller's legal fees and expenses incurred in connection with the transaction contemplated by this Agreement, as Seller shall direct; (ii) a subordinated promissory note in the principal amount of $325,000, bearing interest at the "prime interest rate" (as defined in the note), in the form of Exhibit 1.2.1 attached hereto; and (iii) 900,000 shares of Purchaser's common stock, $.01 par value per share (the "Common Stock"). 1.2.2 Additional Consideration. As additional consideration for entering into this Agreement, Purchaser on the one hand, and Seller and NRC on the other hand, hereby agree that except as set forth in this Agreement or the Services Allocation Agreement (as hereinafter defined), the parties hereto agree that all debts between such parties existing as of the Closing shall be extinguished and forgiven, as such obligations are set forth on Schedule 1.2.2. attached hereto. 1.2.3 Cancellation of NRC Option. Upon the Closing, the option granted to Purchaser to purchase 200,000 shares of NRC common stock, $.01 par value per share, will be cancelled and will be of no further force or effect. 1.3. Limited Right to Use Candie's Name Prior to Closing. In further consideration of this Agreement, upon the date the Commission shall declare effective the Registration Statement (the "Effective Date"), Seller shall have the right to use the name "Candie's" as its corporate name until the Closing; provided however, that in the event the Closing shall not have occurred prior to March 31, 1993, or such earlier date as Purchaser shall advise Seller the public offering will be abandoned, such right shall terminate upon such date and Purchaser shall cease all use of the "Candie's" name as its corporate name, or as a trade name, or in any other manner and shall file all such documents as may be necessary to cease the use of the "Candie's" name. Notwithstanding anything contained herein to the contrary, there shall be no transfer of ownership of the CANDIE'S(R) trademark prior to the Closing. ARTICLE II REPRESENTATIONS AND WARRANTIES OF SELLER Seller hereby represents and warrants, upon which representations and warranties Purchaser relies, as follows: 2.1. Corporate Organization. Seller is a corporation duly organized, validly existing, and in good standing under the laws of its state of incorporation, and has all requisite power and authority (corporate and otherwise) to own, lease and operate its properties and carry on its business as it is now being conducted and to enter into this Agreement and to consummate the transactions contemplated hereunder. Except as set forth on Schedule 2.1 hereto, Seller is not qualified, licensed or registered to do business in any states or countries other than New York, nor by the location and nature of its business and activities and the character of the properties owned by it, is it required to be so qualified, licensed or registered, the failure of which would materially adversely affect the business operations of Seller. NRC is the sole stockholder of Seller. 2.2. Power and Authority. Seller has, and will at Closing have, the full, absolute and unrestricted right, power, legal capacity and authority to enter into this Agreement and the services allocation agreement, the form of which is attached hereto as Schedule 2.2 (the "Services Allocation Agreement"), and to carry out the transaction contemplated hereby and thereby; the execution of this Agreement will not violate any court or administrative judgment, order or decree, or to the knowledge of Seller or NRC, violate any statute, law, regulation, rule, which is applicable to Seller or any of the Assets, or to which Seller is subject or by which it is bound. All actions of Seller and NRC necessary to authorize them and each of them respectively to execute, deliver and consummate this Agreement and the Services Allocation Agreement have been duly and validly authorized and taken, and no further actions or authorizations are required. This Agreement and the Services Allocation Agreement constitute the valid, legally binding obligations of Seller and NRC, respectively, and are enforceable in accordance with their terms. 2.3. No Violations. The execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement will not: (i) Result in any breach of, or constitute a default under, the Certificate or Articles of Incorporation or Bylaws of Seller or NRC, or any agreement, instrument or obligation to which Seller or NRC is a party or by which it or they are bound; or (ii) Violate any existing statute, order, writ, injunction or decree of any court, administrative agency or governmental body, or; (iii) Require any authorization, consent, approval, or other action by, or filing with, any third party except the appropriate filings to transfer the Trademarks. 2.4. Title to Properties. Seller owns and has good and marketable title to all of the Assets. Notwithstanding the foregoing, Seller makes no representations with regard to the Trademarks outside the United States and Canada, except that with respect to registrations in Seller's name in such countries, Seller is the owner of such registrations and Seller has not granted any rights therein to any third parties, except pursuant to the License Agreements. The Assets are not subject to any security interest, mortgage, deed of trust, pledge, lien, encumbrance, claim, option, restriction or limitation on their transferability, charge or adverse interest. None of the Assets is subject to any commitment or other arrangement for their sale or use by any third party, except for the rights of any licensees under the License Agreements. 2.5. Litigation. Neither Seller nor NRC is a party to, or the subject of, any action, suit, litigation, claim, administrative proceeding or, to the best of its or their knowledge, any governmental or quasi-governmental investigation relating to the Assets, this Agreement or the consummation or the transactions contemplated hereby, or material to such transactions; nor to the knowledge of Seller or NRC, is any such action, suit, litigation, proceeding or investigation threatened or contemplated, nor does there exist any basis for any of the same. 2.6. Contracts. Except for the License Agreements and as set forth on Schedule 2.6 hereto, Seller is not a party to any presently existing leases, contracts, agreements, franchises or commitments, or agreements to enter into any of the same, written or oral, relating to the Assets (the "Contracts"). Seller has complied in all respects with all of the provisions of all such Contracts and of all other material contracts to which it is a party, and is not in breach, violation or default under any of them, and no event has occurred, which constitutes, or with the lapse of time or the giving of notice, or both, would constitute such a breach, violation or default thereunder. 2.7. Taxes. Except as set forth on Schedule 2.7, Seller has paid (and, as to any of the following which are payable after the Closing, Seller has properly and adequately reserved against and will pay when due) all income taxes, sales and use taxes, unemployment taxes, ad valorem taxes, property taxes, excise taxes, duties and imports, and all other taxes of every kind, character or description imposed by any federal, state or local governmental or quasi-governmental authority (collectively, the "Taxes") required to be paid with respect to the assets or operations of Seller for all periods prior to the Closing. All federal, state and local tax returns and reports (collectively, the "Returns") to be filed by Seller with respect thereto, have been accurately prepared, duly executed and filed or will be so prepared, executed and filed before their respective due dates, and all Taxes due with respect to such returns as filed have been paid (or will be so paid) by Seller in full. Except as set forth on Schedule 2.7, Seller has not received, and there are not outstanding, any notices of any deficiencies, adjustments, assessments or changes in assessments or increases in Taxes or tax rates with respect to any Taxes, or other charges which are due or required to be filed at or prior to the date hereof, and which have not been paid in full or otherwise fully settled and satisfied. No extension of time is in effect for the assessment of deficiencies against Seller nor is any waiver of any statute of limitations in effect with respect to any taxable year. 2.8. Compliance with Laws. Seller has complied with, and is currently in compliance with all statutes, laws, ordinances, rules, regulations, judgments, decrees and orders, of any government, court or governmental or quasi-governmental authority, to which it is subject or by which it is bound. Seller has all permits, licenses and authorizations required for the operation of its business as it is presently conducted ("Seller Permits"), and all of such Permits are in full force and effect. 2.9. Trademarks and Tradenames. Schedule 1.1 attached hereto correctly sets forth a true and complete list of all trademarks, service marks and tradenames (collectively, the "Rights"), and any applications in respect thereof, including recording information, which are included in the Assets, all of which are owned by Seller free and clear of any and all liens, claims, security interests, charges or encumbrances whatsoever, except as set forth on Schedule 2.9; and no licenses for the use of any of such Rights have been granted by Seller to any third parties, except as set forth on Schedule 1.1. There is no claim or action by any person pertaining to, nor is there any proceeding pending or threatened pertaining to, Seller has not received any notice of conflict with, the asserted rights of others which challenges the exclusive rights of the Seller with regard to the Trademarks or Rights. All Rights are valid and in good standing, and do not infringe upon, and have not in the past infringed upon, the rights of any other person, firm or corporation. The operation of the business of Seller relating to the Assets does not infringe upon any registered or unregistered Rights of any person. To the best knowledge of Seller, there is no infringement of the Rights by any third party. With respect to trademarks registered in any country other than the United States or Canada, the representations contained in this Section 2.9 are made to Seller's knowledge and belief. 2.10. License Agreements. Each of the License Agreements set forth on Schedule 1.1 (true, accurate and complete copies of which have previously been furnished to Purchaser) are in full force and effect as of the date hereof, and have not been modified, amended or superseded. All consents, if any, necessary in connection with the transfer of said licenses to Purchaser have been obtained and upon closing, Purchaser shall have all rights of the licensor under such agreements, without any obligation to make any payments to any party other than as expressly set forth in said License Agreements or as provided in this Agreement. 2.11. Accuracy of Representations and Warranties. None of the representations and warranties made by Seller or NRC contained in this Agreement, including all Schedules, nor in any statement, document, certificate, schedule, list, memorandum or other writing (collectively, the "Statements") furnished or to be furnished by Seller or NRC pursuant hereto, or in connection with the transactions contemplated hereby, is or will be incorrect or incomplete, in any material respect or contains or will contain any untrue statement of material fact, and none of such representations, warranties and Statements omits or will omit to state a material fact necessary in order to make the statements contained herein or therein not misleading. There is no fact known to Seller or NRC which Seller or NRC have not disclosed in this Agreement, or in an Schedule hereto, or in a Statement, which materially adversely affects or may reasonably be expected to materially adversely affect the business or Assets of Seller. ARTICLE III REPRESENTATIONS AND WARRANTIES OF PURCHASER Purchaser represents and warrants to Seller and NRC, upon which representations and warranties Seller and NRC rely, as follows: 3.1. Corporate Organization. Purchaser is a corporation duly organized, validly existing and in good standing under the laws of the state of its incorporation, and all requisite power and authority (corporate and otherwise) to own, lease and operate its properties and carry on its business as it is now being conducted and enter into this Agreement and to consummate the transactions contemplated hereunder. Except as set forth on Schedule 3.1 hereto, Purchaser is not qualified, licensed or registered to do business in any states or countries other than New York, nor by the location and nature of its business and activities and the character of the properties owned by it, is it required to be so qualified, licensed or registered. 3.2. Power and Authority. Purchaser has, and will at Closing have, the full, absolute and unrestricted right, power, legal capacity and authority to enter into this Agreement and the Services Allocation Agreement and to carry out the transaction contemplated hereby and thereby; the execution of this Agreement will not violate any court or administrative judgment, order or decree, or to the knowledge of Purchaser, violate any statute, law, regulation, rule, which is applicable to Purchaser or any of its properties, or to which Purchaser is subject or by which it is bound. All actions of Purchaser necessary to authorize the execution, delivery and consummation of this Agreement and the Services Allocation Agreement have been duly and validly authorized and taken, and no further actions or authorizations are required. This Agreement and the Services Allocation Agreement constitute the valid, legally binding obligations of Purchaser and are enforceable in accordance with their terms. 3.3. No Violations. The execution and delivery of this Agreement and the consummation of the transactions contemplated by this Agreement will not: (i) result in any breach of, or constitute a default under, the Certificate or Articles of Incorporation or Bylaws of Purchaser, or any agreement, instrument or obligation to which Purchaser is a party or by which it is bound; or (ii) violate any existing statute, order, writ, injunction or decree of any court, administrative agency or governmental body, or; (iii) require any authorization, consent, approval, or other action by, or filing with, any third party, except the appropriate filings to transfer the Trademarks. 3.4. Litigation. Purchaser is not a party to, or the subject of, any action, suit, litigation, claim, administrative proceeding or, to the best of its knowledge, any governmental or quasi-governmental investigation relating to this Agreement or the consummation of the transactions contemplated hereby, or material to such transactions; nor to the best of the knowledge of Purchaser, is any such action, suit, litigation, proceeding or investigation threatened or contemplated, nor does there exist any basis for any of the same. Purchaser is not subject to any material legal proceedings except as set forth in its Preliminary Prospects dated January 19, 1993, which forms a part of its Registration Statement No. 33-53878 filed with the Securities and Exchange Commission. 3.5. Taxes. Except as set forth on Schedule 3.5, Purchaser has paid (and, as to any of the following which are payable after the Closing, Purchaser has properly and adequately reserved against and will pay when due) all income taxes, sales and use taxes, unemployment taxes, ad valorem taxes, property taxes, excise taxes, duties and imports, and all other taxes of every kind, character or description imposed by any federal, state or local governmental or quasi-governmental authority (collectively, the "Taxes") required to be paid with respect to the assets or operations of Purchaser for all periods prior to the Closing. All federal, state and local tax returns and reports (collectively, the "Returns") to be filed by Purchaser with respect thereto, have been accurately prepared, duly executed and filed or will be so prepared, executed and filed before their respective due dates, and all Taxes due with respect to such returns as filed have been paid (or will be so paid) by Purchaser in full. Except as set forth on Schedule 3.5, Purchaser has not received, and there are not outstanding, any notices of any deficiencies, adjustments, assessments or changes in assessments or increases in Taxes or tax rates with respect to any Taxes, or other charges which are due or required to be filed at or prior to the date hereof, and which have not been paid in full or otherwise fully settled and satisfied. No extension of time is in effect for the assessment of deficiencies against Seller nor is any waiver of any statute of limitations in effect with respect to any taxable year. 3.6. Compliance with Laws. Purchaser has complied with, and is currently in compliance with all statutes, laws, ordinances, rules, regulations, judgments, decrees and orders, of any government, court or governmental or quasi-governmental authority, to which it is subject or by which it is bound. Purchaser has all permits, licenses and authorizations required for the operation of its business as it is presently conducted ("Purchaser Permits"), and all of such Purchaser Permits are in full force and effect. 3.7. Capitalization. As of the Effective Date (and giving effect to a 1-for-4.5 reverse stock split effected on that date), the Purchasers will have 1,473,690 shares of Common Stock issued and outstanding. As of the Closing, the Purchaser will have 3,938,799 shares of Common Stock issued and outstanding, including 900,000 shares issuable to the Seller hereunder. All of such Common Stock is, or will be when issued, duly and validly authorized and issued, fully paid and nonassessable. 3.8. Material Contracts. Purchaser is not a party to any material contracts not described in Purchaser's Preliminary Prospectus dated January 19, 1993, which forms a part of its Registration Statement No. 33-53878 filed with the Securities and Exchange Commission (the "Prospectus"). Purchaser has complied in all respects with all of the provisions of all material contracts to which it is a party, and is not in breach, violation or default under any of them, and no event has occurred which constitutes, or with the lapse of time or the giving of notice, or both, would constitute, such a breach, violation or default thereunder, except as disclosed in the Prospectus. 3.9. Accuracy of Representations and Warranties. None of the representations and warranties made by Purchaser contained in this Agreement, including all Schedules, nor in any Statement furnished or to be furnished by Purchaser pursuant hereto, or in connection with the transactions contemplated hereby, is or will be incorrect or incomplete in any material respect, or contains or will contain any untrue statement of fact of material fact, and none of such representations, warranties and Statements omits or will omit to state a material fact necessary in order to make the statements contained herein or therein not misleading. There is no fact know to Purchaser which Purchaser has not disclosed in this Agreement, in a Schedule hereto, in a Statement or in the Prospectus, which materially adversely affects or may reasonably be expected to materially affect adversely the business or assets of Purchaser. 3.10. Except as set forth in the Prospectus, Purchaser has incurred no liabilities other than in the ordinary course of business. ARTICLE IV COVENANTS OF SELLER AND NRC Seller and NRC and each of them covenant and agree: 4.1. Continuance of Operations. From the date hereof to Closing, to conduct diligently the operations of Seller in the ordinary course of its business, and substantially in accordance with past practice and in full compliance with applicable law and not to change any of Seller's operational, marketing, pricing or purchasing policies; 4.2. Maintenance of Business Relationships. From the date hereof to Closing, to use its and their best efforts, in consultation with Purchaser, to preserve the business activities and operations of Seller intact, and to maintain good business relationships with its clients, customers, suppliers, vendors and others having business or professional dealings with Seller, and to keep available to Seller its present officers and employees in the ordinary course; 4.3. Conduct of Business. From the date hereof to Closing: (i) not to enter into any contracts, commitments, or transactions, other than those in the ordinary course of Seller's business and consistent with Seller's past practices; (ii) not to take any other action which would cause any of the representations and warranties made in this Agreement by Seller and/or NRC not to be true and correct in all respects on and as of the Closing, with the same force and effect as if such representations and warranties had been made on and as of the Closing; 4.4. Full Access. To give Purchaser, its counsel, accountants, agents, employees and other representatives ("Purchaser's Representatives"), reasonable access to the offices, plants, records, files and books of account of Seller for the purpose of becoming familiar with all matters relating to the Assets; provided, however, that such process shall be conducted in a manner that does not unreasonably interfere with the normal operations, and customer and employee relationships of Seller. Seller shall cause the personnel of Seller to assist Purchaser in such process and shall cause the counsel, accountants, agents, employees and other representatives of Seller ("Seller's Representatives") to be available to Purchaser for such purposes, at no cost to Purchaser. During such process, Purchaser shall have the right to make copies of such records, files and other materials as it may deem advisable for its own use and that of Purchaser's Representatives, and shall endeavor to maintain the confidentiality thereof prior to Closing and subsequent thereto with respect to matters unrelated to the Assets. If this Agreement is not consummated, Purchaser and Purchaser's Representatives shall, upon request of Seller, return to Seller all copies made by Purchaser and its Representatives of material belonging to Seller, and shall keep confidential all information discovered upon review of Seller's documents and information. Seller hereby authorizes Purchaser to contact suppliers and customers of Seller in cooperation with Seller, and to discuss with them any matters reasonably related to the Assets; 4.5. Full Cooperation. To use their and each of their best efforts in good faith to take or cause to be taken all action necessary or desirable under this Agreement on their part as promptly as practicable, so as to permit the consummation of the transactions contemplated hereby at the earliest possible date, and to cooperate fully with the other party hereto to that end. In cooperation with Purchaser as required, to commence all reasonable action required hereunder (i) to obtain all applicable permits, licenses, certificates and other governmental authorizations or approvals necessary, and (ii) to obtain all applicable consents, approvals and agreements of, and to give all notices and make all filings with any third parties as may be necessary to consummate the transactions contemplated hereby. Furthermore, Seller and NRC, and each of them, shall cooperate fully with Purchaser following the Closing, and use their best efforts to assist Purchaser in the operation of the Assets being purchased hereunder; 4.6. Maintenance of Assets. Not to dispose of any Assets; 4.7. Execution and Delivery Services Allocation Agreement. At the Closing, NRC shall execute and deliver to Purchaser the Services Allocation Agreement. 4.8. Payment of License Fees Subsequent to Closing. Any and all monies delivered to Seller or NRC with respect to payments due pursuant to the License Agreements for periods subsequent to the Closing shall be held by Seller or NRC in trust for Purchaser and shall be immediately delivered to Purchaser, without charge or deduction. ARTICLE V COVENANTS OF PURCHASER Purchaser hereby covenants and agrees with Seller and NRC: 5.1. Continuance of Operations. From the date hereof to Closing, to conduct diligently the operations of Purchaser in the ordinary course of its business, and substantially in accordance with past practice and in full compliance with applicable law and not to change any of Purchaser's operational, marketing, pricing or purchasing policies; 5.2. Maintenance of Business Relationships. From the date hereof to Closing, to use its best efforts to preserve the business activities and operations of Purchaser intact, and to maintain good business relationships with its clients, customers, suppliers, vendors and others having business or professional dealings with Purchaser, and to keep available to Purchaser its present officers and employees in the ordinary course; 5.3. Conduct of Business. From the date hereof to Closing: (i) not to enter into any contracts, commitments, or transactions, other than those in the ordinary course of Purchaser's business and consistent with Purchaser's past practices; and (ii) not to take any other action which would cause any of the representations and warranties made in this Agreement by Purchaser not to be true and correct in all respects on and as of the Closing, with the same force and effect as if such representations and warranties had been made on and as of the Closing; 5.4. Full Cooperation. To use its best efforts in good faith to take or cause to be taken all action necessary or desirable under this Agreement on their part as promptly as practicable, so as to permit the consummation of the transactions contemplated hereby at the earliest possible date, and to cooperate fully with the other parties hereto to that end. In cooperation with Seller and NRC as required, to commence all reasonable action required hereunder (i) to obtain all applicable permits, licenses, certificates and other governmental authorizations or approvals necessary, and (ii) to obtain all applicable consents, approvals and agreements of, and to give all notices and make all filings with any third parties as may be necessary to consummate the transactions contemplated hereby, by a date early enough to allow the transactions to be consummated by the Closing; and 5.5. Execution and Delivery Services Allocation Agreement. At the Closing, Purchaser shall execute and deliver to Seller the Services Allocation Agreement. 5.6. Payment of License Fees Subsequent to Closing. Any and all monies delivered to Purchaser with respect to payments due pursuant to the License Agreements for periods prior to the Closing shall be held by Purchaser in trust for Seller and shall be immediately delivered to Seller, without charge or deduction. ARTICLE VI CONDITIONS TO OBLIGATIONS OF PURCHASER Purchaser's obligations hereunder are subject to the fulfillment, on or prior to Closing, of each of the following conditions, performance of any or all of which may be waived in writing by Purchaser; together with the delivery by NRC of the Services Allocation Agreement: 6.1. Representations, Warranties and Covenants. The representations, warranties and covenants of Seller and NRC and each of them contained in this Agreement shall be true and correct in all respects at Closing as though such representations, warranties and covenants were made at such time. Seller and NRC and each of them shall have performed and complied with all agreements, covenants and conditions required by this Agreement to be performed and complied with by them prior to or at Closing. Seller and NRC shall have delivered a Certificate of their respective Presidents, in each case certifying to the truth of such representations and warranties and such performance or compliance. 6.2. Proceedings. All proceedings to be taken and all documents to be executed and delivered by Seller and NRC or any of them in connection with the consummation of the transactions contemplated hereby shall be reasonably satisfactory as to form and substance to Purchaser and its counsel. 6.3. Board and Stockholder Approval. The Board of Directors and stockholders of Seller and the Board of Directors of NRC shall have ratified and approved the execution and performance of this Agreement, and Seller and NRC shall have delivered to Purchaser a true and correct copy of such resolutions, certified by Seller's and NRC's respective Secretaries. 6.4. Opinion of Counsel. Seller shall deliver an opinion of its counsel to Purchaser in the form of Exhibit 6.4 attached hereto. 6.5. Employment of Neil Cole. Neil Cole shall have entered into an employment agreement with Purchaser in the form of Exhibit 6.5 attached hereto. ARTICLE VII CONDITIONS TO OBLIGATIONS OF SELLER AND NRC The obligations of Seller and NRC hereunder are subject to the fulfillment, on or prior to Closing, of each of the following conditions, performance of any or all of which may be waived in writing by Seller and NRC; together with the delivery by Purchaser of the Services Allocation Agreement: 7.1. Representations, Warranties and Covenants. The representations, warranties and covenants of Purchaser contained in this Agreement shall be true and correct in all respects at Closing as though such representations, warranties and covenants were made at such time. Purchaser shall have performed and complied with all agreements, covenants and conditions required by this Agreement to be performed and complied with by Purchaser prior to or at Closing. Purchaser shall have delivered a Certificate of its President certifying to the truth of such representations and warranties and such performance or compliance. 7.2. Proceedings. All proceedings to be taken and all documents to be executed and delivered by Purchaser in connection with the consummation of the transactions contemplated hereby shall be reasonably satisfactory as to form and substance to Seller and NRC and their counsel. 7.3. Board and Stockholder Approval. The Board of Directors and stockholders of Purchaser shall have ratified and approved the execution and performance of this Agreement, and Purchaser shall have delivered to Seller a true and correct copy of such resolutions, certified by Purchaser's Secretary. 7.4. Closing of Public Offering. Except for obligations of Seller which arise prior to the Closing pursuant to Section 1.3 of this Agreement, all of Seller's obligations hereunder are conditioned upon the closing of Purchaser's secondary public offering of securities (the "Public Offering"), not later than March 31, 1993. 7.5. Opinion of Counsel. Purchaser shall deliver an opinion of its counsel to Purchaser in the form of Exhibit 7.5 attached hereto. 7.6. Employment of Neil Cole. Purchaser shall have entered into an employment agreement with Neil Cole in the form of Exhibit 6.5 attached hereto. ARTICLE VIII PROVISIONS FOR INDEMNIFICATION 8.1. Indemnification by Seller and NRC. Seller and NRC, jointly and severally, hereby agree to indemnify Purchaser and save and hold Purchaser harmless from, against, for and in respect of any and all damages, losses, obligations, liabilities, claims, lawsuits, deficiencies, costs and expenses incident to any suit, action, investigation, claim or proceeding, including, without limitation, interest, penalties, reasonable attorneys' fees and reasonable amounts paid in the investigation, defense and/or settlement of any of the foregoing (collectively, "Purchaser's Damages"), suffered, sustained, incurred or required to be paid by Purchaser by reason of, or in connection with, or arising out of: (i) Any misrepresentation or breach of warranty or covenant made by Seller or NRC or either of them, in or pursuant to this Agreement or any Schedule hereto or in any certificate or document delivered pursuant to this Agreement; or (ii) any out-of-pocket loss or damage resulting to Purchaser by reason of any claim, debt, liability or obligation or any alleged claim, debt, liability or obligation which arose out of the operation of Seller's business prior to the Closing, except for any claim or liability for which Purchaser would otherwise be liable. Notwithstanding anything herein contained to the contrary, the aggregate liability of Seller and NRC under this Article VIII shall not exceed one million five hundred thousand dollars, except this limitation shall not be applied to reduce aggregate liability relating to any claim of misrepresentation or breach of warranty made with regard to the Rights or License Agreements that are asserted against Purchaser within the twenty-four month period commencing with Closing. 8.2. Indemnification by Purchaser. Purchaser hereby agrees to indemnify Seller and NRC and save and hold Seller and NRC harmless from, against, for and in respect of any and all damages, losses, obligations, liabilities, claims, lawsuits, deficiencies, costs and expenses incident to any suit, action, investigation, claim or proceeding, including, without limitation, interest, penalties, reasonable attorneys' fees and reasonable amounts paid in investigation, defense and/or settlement of any of the foregoing (collectively, "Seller's Damages"), suffered, sustained, incurred or required to be paid by Seller or NRC by reason of, or in connection with, or arising out of: (i) any misrepresentation or breach of warranty or covenant made by Purchaser in or pursuant to this Agreement or any Schedule hereto or in any certificate or document delivered pursuant to this Agreement; or (ii) any action loss or damage resulting to Seller or NRC by reason of any claim, debt, liability, or obligation which arises out of the operation of Purchaser's business from and after the Effective Date, except for any claim or liability for which Seller or NRC would otherwise be liable under this Agreement. Notwithstanding anything to the contrary, in addition, Purchaser acknowledges and agrees that the indemnification provisions of the License Agreement between Seller and Purchaser shall survive of the assignment of such License Agreement to Purchaser hereunder. Notwithstanding anything herein to the contrary, the aggregate liability of Purchaser under Section 8.2(i) shall not exceed one million five hundred thousand dollars. 8.3. Indemnification Procedures. The party seeking indemnification (the "Indemnitee"), shall give written notice as promptly as practicable (and in any event, within five days after receipt of notice or service of any citation, summons, complaint or lawsuit) to the party or parties against whom such indemnity is sought to be recovered (the "Indemnitor"), of each claim for indemnification hereunder, specifying the amount and nature of the claim, and of any matter which, in the opinion of the Indemnitor, is likely to give rise to an indemnification claim. Notwithstanding the foregoing, the failure to give timely notice shall not affect rights to indemnification hereunder, except to the extent that the Indemnitor shall demonstrate damage caused by such failure. The Indemnitor shall be solely responsible for the defense of any such matter. The Indemnitee, at its or his option and at its or his sole cost and expense, shall have the right to participate in any defense undertaken by the Indemnitor, with legal counsel of its own selection. However, the Indemnitor shall have the final determination with respect to all defense matters. 8.4. Payment for Indemnification. Indemnitor shall pay to Indemnitee the amount of established claims for indemnification within fifteen days after the establishment thereof in cash or by certified check. Notwithstanding, no claim for indemnification under this Article VIII shall be made by any party unless Purchaser's Damages or Seller's Damages, as the case may be, exceed $25,000. 8.5. Survival of Indemnification. The indemnification provided in this Article VIII shall survive Closing. The indemnification provided in Section 8.2(ii) shall survive even in the event that this Agreement does not close. ARTICLE IX CLOSING 9.1. Closing. Closing shall take place at the offices of Tenzer Greenblatt Fallon & Kaplan, 405 Lexington Avenue, New York, New York, simultaneously with the closing of the Public Offering, or such other date and at such other place as shall be agreed upon by the parties hereto. All proceedings to be taken and all documents to be executed and delivered by all parties at the Closing shall be deemed to have taken and executed simultaneously, and no proceedings shall be deemed taken nor any documents executed or delivered, until all have been taken, executed and delivered. At Closing: 9.1.1 Seller and NRC shall deliver to Purchaser: (i) All of the Assets, including executed assignments of all Trademarks and License Agreements set forth on Schedule l.l, in form satisfactory to counsel for Purchaser; (ii) A duly executed Bill of Sale; (iii) the Services Allocation Agreement; and (iv) All other documents, certificate and opinions required to delivered pursuant to this Agreement. 9.1.2 Purchaser shall deliver to the Seller: (i) The Purchase Price by certified check, bank check or wire transfer in the amount of $75,000 and by delivery of a promissory note in the principal amount of $325,000; (ii) Certificates representing 900,000 shares of Common Stock; and (iii) All other documents, certificate and opinions required to delivered pursuant to this Agreement. 9.1.3 Purchaser shall deliver the Services Allocation Agreement to NRC. 9.2. Further Assurances. At the Closing, and from time to time thereafter: (i) Seller and NRC shall, at the request of Purchaser, take all action necessary, and shall execute and deliver to Purchaser such further instruments and take such other actions, as counsel for Purchaser may reasonably request, in order most effectively to carry out the transactions contemplated by this Agreement, and to most effectively transfer the Assets to Purchaser as a going concern; and (ii) Purchaser shall, at the request of Seller and NRC, take all action necessary, and shall execute and deliver to Seller and NRC such further instruments and take such other actions, as counsel for Seller and NRC may reasonably request, in order more effectively to carry out the transactions contemplated by this Agreement. ARTICLE X CONFIDENTIALITY 10.1. Confidentiality. Each of the parties hereto recognizes and acknowledges that during the course of negotiations in connection with this Agreement, and in preparation for Closing hereunder, each has disclosed and will disclose to the others, and grant access to, certain plans, systems, methods, designs, procedures, books and records relating to its operations, personnel and practices, as well as records, documents and information concerning its business activities, practices, procedures and other confidential information (all of the foregoing, collectively, the "Confidential Information"), all of which constitute and will constitute valuable, special and unique assets of such party's business. Each party shall treat such Confidential Information as confidential, make all reasonable efforts to preserve the confidentiality thereof, and not duplicate or disclose such Confidential Information except in connection with the transactions contemplated hereby and except to advisors, attorneys, accountants, bankers, investment bankers, consultants and affiliates who also agree to treat such information as confidential. The parties hereto recognize that Neil Cole will act in an executive capacity for all parties to this Agreement. Any business conducted in the ordinary course by any party hereto, shall not be deemed to be a breach of this Section 10.1. ARTICLE XI TERMINATION 11.1. Termination by Purchaser. This Agreement may be terminated by Purchaser in its sole discretion, upon the occurrence of any of the following before the Closing: (i) Purchaser shall learn of any fact or condition with respect to the business, properties or assets of Seller, which is at material variance with one or more of the representations of warranties of Seller or NRC set forth in this Agreement, and which in Purchaser's reasonable opinion, adversely affects such business, properties or assets; (ii) Seller or NRC shall fail to meet any of their obligations pursuant to this Agreement; or (iii) Any condition precedent to Purchaser's obligations hereunder shall not be satisfied and such condition is not waived by Purchaser at or prior to the Closing. 11.2. Termination by Seller. This Agreement may be terminated by Seller in its sole discretion, upon the occurrence of any of the following before the Closing: (i) Seller shall learn of any fact or condition with respect to the business, properties or assets of Purchaser, which is at material variance with one or more of the representations of warranties of Purchaser set forth in this Agreement, and which in Seller's reasonable opinion, adversely affects such business, properties or assets; (ii) Purchaser shall fail to meet any of its obligations pursuant to this Agreement; or (iii) Any condition precedent to Seller's or NRC's obligations hereunder shall not be satisfied and such condition is not waived by Seller or NRC, respectively, at or prior to the Closing. 11.3. Termination by Mutual Agreement. This Agreement may be terminated by the mutual agreement of the parties hereto evidenced in writing. 11.4. Liability Upon Termination. In the event of the termination of this Agreement as above provided, no party shall have any liability hereunder of any nature whatsoever to the other party, including any liability for damages, unless such party is in default under its obligations hereunder, in which event the party in default shall be liable to the other party for such default. ARTICLE XII MISCELLANEOUS PROVISIONS 12.1. Notices. Each notice, demand, request, consent, report, approval or communication ("Notice") which is or may be required to be given by any party to any other party in connection with this Agreement and the transactions contemplated hereby, shall be in writing, and given by personal delivery, certified mail, return receipt requested, prepaid, or by overnight express mail delivery and properly addressed to the party to be served as shown in Section 12.1.2 below. 12.1.2 Delivery. Notices shall be effective on the date delivered personally, the next day if delivered by overnight express mail or three days after the date mailed by certified mail: If to Purchaser: Millfeld Trading Co., Inc. 60 W. 40th Street New York, New York 10018 Attn: Michael Callahan with a copy to counsel for the Purchaser: Schneck Weltman Hashmall & Mischel 1285 Avenue of the Americas New York, New York 10019 Attn: Felice F. Mischel, Esq. If to Seller and/or NRC: El Greco, Inc. New Retail Concepts, Inc. 60 W. 40th Street New York, New York 10018 Attn: Neil Cole with a copy to counsel for Seller and NRC: Phillips, Nizer, Benjamin, Krim & Ballon 31 West 52nd Street New York, New York 10019 Attn: Jonathan Tillem, Esq. 12.1.3 Change of Address. Each party may designate by Notice to the others in writing, given in the foregoing manner, a new address to which any Notice may thereafter be so given, served or sent. 12.2. Entire Agreement. This Agreement, together with the Schedules hereto, constitutes and sets forth the entire agreement and understanding of the parties pertaining to the subject matter hereof, and there are no other prior or contemporaneous written or oral agreements, understandings, undertakings, negotiations, promises, discussions, warranties or covenants not specifically referred to or contained herein or attached hereto. No supplement, modification, termination in whole or in part, or waiver of this Agreement shall be binding unless executed in writing by the party to be bound thereby. No waiver of any of the provisions of this Agreement shall be deemed, or shall constitute, a waiver of any other provision hereof (whether or not similar), nor shall any such waiver constitute a continuing waiver unless otherwise expressly provided. 12.3. Assignment. Neither this Agreement nor any of the rights or obligations hereunder may be assigned by either party without the prior written consent of the other party. 12.4. Headings. The headings or titles of the various paragraphs of this Agreement are inserted merely for the purpose of convenience and do not expressly or by implication or intention, limit, define, extend or affect the meaning or interpretation of this Agreement or the specific terms or text of the section so designated. 12.5. Law Governing, This Agreement shall be governed in all respects, whether as to validity, construction, interpretation, capacity performance or otherwise, by the laws of the State of New York. If any one or more of the provisions contained in this Agreement or in any other instrument referred to herein shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, then and in that event, to the maximum extent permitted by law, such invalidity, illegality or unenforceability shall not affect any other provisions of this Agreement or any other such instrument. 12.6. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which taken together shall constitute one and the same instrument. IN WITNESS WHEREOF, the corporate parties hereto have caused this Agreement to be executed by their respective duly authorized officers and the individual parties have executed this Agreement as of the day and year first above written. MILLFELD TRADING CO., INC By: /s/ Michael Callahan ---------------------------- Michael Callahan, President EL GRECO INC. By: /s/ Neil Cole ---------------------------- Neil Cole, President NEW RETAIL CONCEPTS, INC. By: /s/ Neil Cole ----------------------------- Neil Cole, President EX-3 3 EXHIBIT 3 REGISTRATION RIGHTS AGREEMENT AGREEMENT, dated as of the 16th day of May, 1994, between New Retail Concepts, Inc. a Delaware Corporation having its principal place of business at 60 West 40th Street, New York, New York 10018 (the "Holder") and Candie's, Inc., a Delaware corporation having its principal place of business at 60 West 40th Street, New York, New York 10018 (the "Company"). WHEREAS, simultaneously with the execution and delivery of this Agreement, the Holder is acquiring from the Company an aggregate of 240,740 shares (the "Shares") of Common Stock, par value $.001 per share (the "Common Stock"), upon the terms set forth in the Letter Agreement dated as of May 16, 1994 (the "Letter Agreement"); and NOW, THEREFORE, the parties hereto mutually agree as follows: 1. Registrable Securities. As used herein the term "Registrable Security" means each of the Shares and any shares of Common Stock issued upon any stock split or stock dividend in respect of such Shares; provided, however, that with respect to any particular Registrable Security, such security shall cease to be a Registrable Security when, as of the date of determination, (i) it has been effectively registered under the Securities Act of 1933, as amended (the "Securities Act") and disposed of pursuant thereto, (ii) registration under the Securities Act is no longer required for the immediate public distribution of such security or (iii) it has ceased to be outstanding. The term "Registrable Securities" means any and/or all of the securities falling within the foregoing definition of a "Registrable Security." In the event of any merger, reorganization, consolidation, recapitalization or other change in corporate structure affecting the Common Stock, such adjustment shall be made in the definition of "Registrable Security" as is appropriate in order to prevent any dilution or enlargement of the rights granted pursuant to this Agreement. 2. Registration. The Company has agreed with certain investors who have purchased up to 1,200,000 shares of Common Stock pursuant to a Confidential Private Offering Memorandum dated March 22, 1994, in a private offering of Common Stock (the "Offering"), to prepare and file with the Securities and Exchange Commission (the "SEC"), on one occasion, within thirty (30) days of the final closing of the Offering at the sole expense of the Company, a registration statement (the "Registration Statement") and such other documents, including a prospectus, as may be necessary, in order to comply with the provisions of the Securities Act, so as to permit a public offering and sale of Shares by the holders thereof, for six (6) consecutive months. The Company agrees hereby to include the Shares owned by the Holder in such Registration Statement. Nothing herein contained shall require the Company to undergo an audit, other than in the ordinary course of business. 3. Additional Terms. The following provisions shall be applicable to any Registration Statement filed pursuant to this Agreement: (a) The Company will use its best efforts to cause the Registration Statement to become effective as promptly as practicable and, if any stop order shall be issued by the SEC in connection therewith, to use its reasonable efforts to obtain the removal of such order. Following the effective date of the Registration Statement, the Company shall, upon the request of the Holder, forthwith supply such reasonable number of copies of the Registration Statement, preliminary prospectus and prospectus meeting the requirements of the Securities Act as shall be reasonably requested by the Holder to permit the Holder to make a public distribution of his or her Registrable Securities. The Company will use its reasonable efforts to qualify the Registrable Securities for sale in such states as the Holder of Registrable Securities shall reasonably request, provided that no such qualification will be required in any jurisdiction where, solely as a result thereof, the Company would be subject to service of general process or to taxation or qualification as a foreign corporation doing business in such jurisdiction. The obligations of the Company hereunder with respect to the Holder's Registrable Securities are expressly conditioned on the Holder's furnishing to the Company such appropriate information concerning the Holder, the Holder's Registrable Securities and the terms of the Holder's offering of such Registrable Securities as the Company may reasonably request. (b) The Company shall bear the entire cost and expense of any registration of the Registrable Securities; provided, however, that the Holder shall be solely responsible for the fees of any counsel retained by him or her in connection with such registration and any transfer taxes or underwriting discounts or commissions applicable to the Registrable Securities sold by him or her pursuant thereto. (c) The Company shall indemnify and hold harmless the Holder and each underwriter, within the meaning of the Securities Act, who may purchase from or sell for the Holder, any Registrable Securities, from and against any and all losses, claims, damages and liabilities caused by any untrue statement of a material fact contained in the Registration Statement, any other registration statement filed by the Company under the Securities Act, any post-effective amendment to such registration statements, or any prospectus included therein required to be filed or furnished by reason of this Agreement or caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages or liabilities are caused by any such untrue statement or alleged untrue statement or omission or alleged omission based upon information furnished or required to be furnished in writing to the Company by the Holder or underwriter expressly for use therein; which indemnification shall include each person, if any, who controls any such underwriter within the meaning of the Securities Act and each officer, director, employee and agent of such underwriter; provided, however, that the Company shall not be obligated to so indemnify the Holder or any such underwriter or other person referred to above unless the Holder or underwriter or other person, as the case may be, shall at the same time indemnify the Company, its directors, each officer signing the Registration Statement and each person, if any, who controls the Company within the meaning of the Securities Act, from and against any and all losses, claims, damages and liabilities caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement, any registration statement or any prospectus required to be filed or furnished by reason of this Agreement or caused by any omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, insofar as such losses, claims, damages or liabilities are caused by any untrue statement or alleged untrue statement or omission based upon information furnished in writing to the Company by the Holder or underwriter expressly for use therein. (d) If for any reason the indemnification provided for in the preceding subparagraph is held by a court of competent jurisdiction to be unavailable to an indemnified party with respect to any loss, claim, damage, liability or expense referred to therein, then the indemnifying party, in lieu of indemnifying such indemnified party thereunder, shall contribute to the amount paid or payable by the indemnified party as a result of such loss, claim, damage or liability in such proportion as is appropriate to reflect not only the relative benefits received by the indemnified party and the indemnifying party, but also the relative fault of the indemnified party and the indemnifying party, as well as any other relevant equitable considerations. (e) Neither the filing of a Registration Statement by the Company pursuant to this Agreement nor the making of any request for prospectuses by the Holder shall impose upon the Holder any obligation to sell his or her Registrable Securities. (f) The Holder, upon receipt of notice from the Company that an event has occurred which requires a post-effective amendment to the Registration Statement or a supplement to the prospectus included therein, shall promptly discontinue the sale of his or her Registrable Securities until the Holder receives a copy of a supplemented or amended prospectus from the Company, which the Company shall provide as soon as practicable after such notice. 4. Governing Law. (a) The Registrable Securities are being delivered in New York. This Agreement shall be deemed to have been made and delivered in the State of New York and shall be governed as to validity, interpretation, construction, effect and in all other respects by the internal laws of the State of New York. (b) The Company and the Holder each (a) agrees that any legal suit, action or proceeding arising out of or relating to this Agreement, or any other agreement entered into between the Company and the Holder pursuant to the Offering shall be instituted exclusively in New York State Supreme Court, County of New York, or in the United States District Court for the Southern District of New York, (b) waives any objection which the Company or such Holder may have now or hereafter to the venue of any such suit, action or proceeding, and (c) irrevocably consents to the jurisdiction of the New York State Supreme Court, County of New York and the United States District Court for the Southern District of New York in any such suit, action or proceeding. The Company and the Holder each further agrees to accept and acknowledge service of any and all process which may be served in any such suit, action or proceeding in the New York State Supreme Court, County of New York or in the United States District Court for the Southern District of New York and agrees that service of process upon the Company or the Holder mailed by certified mail to the Company's or, as the case may be, the Holder's address shall be deemed in every respect effective service of process upon the Company or the Holder, as the case may be, in any suit, action or proceeding. 5. Amendment. This Agreement may only be amended by a written instrument executed by the Company and the Holder. 6. Entire Agreement. This Agreement constitutes the entire agreement of the parties hereto with respect to the subject matter hereof, and supersedes all prior agreements and understandings of the parties, oral and written, with respect to the subject matter hereof. 7. Execution in Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same document. 8. Notices. All notices, requests, demands and other communications hereunder shall be in writing and shall be deemed duly given when delivered by hand or mailed by registered or certified mail, postage prepaid, return receipt requested, as follows: If to the Holder, to his or her address set forth on the signature page of this Agreement. If to the Company, to the address set forth on the first page of this Agreement. 9. Binding Effect; Benefits. The Holder may not assign his or her rights hereunder. This Agreement shall inure to the benefit of, and be binding upon, the parties hereto and their respective heirs, legal representatives, successors and permitted assigns, including, without limitation, the permitted transferees of the Registrable Securities. Nothing herein contained, express or implied, is intended to confer upon any person other than the parties hereto and their respective heirs, legal representatives, successors and such permitted assigns, any rights or remedies under or by reason of this Agreement. 10. Headings. The headings contained herein are for the sole purpose of convenience of reference, and shall not in any way limit or affect the meaning or interpretation of any of the terms or provisions of this Agreement. 11. Severability. Any provision of this Agreement which is held by a court of competent jurisdiction to be prohibited or unenforceable in any jurisdiction(s) shall be, as to such jurisdiction(s), ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions of this Agreement or affecting the validity or enforceability of such provision in any other jurisdiction. IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto as of the date first above written. NEW RETAIL CONCEPTS, INC. By: /s/ Neil Cole -------------------------------- Neil Cole President CANDIE'S, INC. By: /s/ Lawrence O'Shaughnessy ---------------------------------- Lawrence O'Shaughnessy Chief Operating Officer EX-5 4 EXHIBIT 5 THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING SUCH SECURITIES UNLESS THE ISSUER RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE ISSUER STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR THAT THE SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT. CANDIE'S, INC. February 1, 1995 Up to 700,000 shares Warrant for the Purchase of Shares of Common Stock FOR VALUE RECEIVED, CANDIE'S, INC. (the "Company"), a Delaware corporation, hereby certifies that New Retail Concepts, Inc., a Delaware corporation (the "Holder"), is entitled, subject to the provisions of this warrant (the "Warrant"), to purchase from, the Company at any time, or from time to time, subject to the vesting schedule set forth below, during the period commencing at 9:00 a.m., New York local time on February 1, 1995 and expiring at 5:00 p.m., New York local time, on February 1, 2000, up to 700,000 fully paid and non-assessable shares (the "Warrant Shares") of Common Stock, $.001 par value ("Common Stock"), of the Company vesting (A) 300,000 Warrant Shares vesting upon the date hereof; (B) 200,000 Warrant Shares vesting upon the occurrence of a Loan Extension (as such term is defined in that certain securities purchase agreement between the Company and the Holder of even date herewith (the "Purchase Agreement"); and (C) 200,000 Warrant Shares vesting upon the making of the first Bongo Advance (as defined in the Purchase Agreement) at an initial price of $ 1.2375 per share of Common Stock, which price equals 110% of the closing bid price of the Common Stock on the NASDAQ National Market System on January 31, 1995 (the "Exercise Price"). The term "Common Stock" means the shares of Common Stock, $.001 par value, of the Company as constituted on the date of issuance of the Warrant (the "Base Date"). The number of shares of Common Stock to be received upon the exercise of this Warrant may be adjusted from time to time as hereinafter set forth. The shares of Common Stock deliverable upon such exercise, and as adjusted from time to time, are hereinafter sometimes referred to as "Warrant Stock." The term the "Company" means and includes the corporation named above as well as (i) any immediate or more remote successor corporation resulting from the merger or consolidation of such corporation (or any immediate or more remote successor corporation of such corporation) with another corporation, and/or (ii) any corporation to which such corporation (or any immediate or remote successor corporation of such corporation) has transferred all or substantially all of its property or assets as an entirety or substantially as an entirety. Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and (in the case of loss, theft or destruction) of reasonably satisfactory indemnification, and upon surrender and cancellation of this Warrant, if mutilated, the Company shall execute and deliver a new Warrant of like tenor and date. The Holder agrees with the Company that this Warrant is issued, and all the rights hereunder shall be held, subject to all of the conditions, limitations and provisions set forth herein. This Warrant is issued in connection with the purchase and sale of the Warrant and issuance of a senior subordinated promissory note of the Company (the "Note") to the Holder, and is the Warrant referred to and is entitled to the benefits contained in the Purchase Agreement, including, without limitation, the registration rights contained therein. 1. Exercise of Warrant. The vested portion of this Warrant may be exercised in whole or in part at any time, or from time to time, during the period commencing at 9:00 a.m., New York local time on February 1, 1995 and expiring at 5:00 p.m., New York local time, on February 1, 2000 (the "Warrant Exercise Term"), or, if such day is a day on which banking institutions in the City of New York are authorized by law to close, then on the next succeeding day that shall not be such a day, by presentation and surrender hereof to the Company at its principal office, or at the office of its stock transfer agent, if any, with the Warrant Exercise Form attached hereto duly executed and accompanied by payment (either in cash or by certified or official bank check, payable to the order of the Company) of the Exercise Price for the number of shares of Common Stock specified in such Form and instruments of transfer, if appropriate, duly executed by the Holder or his or her duly authorized attorney. If this Warrant should be exercised in part only, the Company shall, upon surrender of this Warrant for cancellation, execute and deliver a new Warrant evidencing the rights of the Holder thereof to purchase the balance of the shares purchasable hereunder. Upon receipt by the Company of this Warrant, together with the Exercise Price, at its office, or by the stock transfer agency of the Company at its office, in proper form for exercise, the Holder shall be deemed to be the holder of record of the shares of Common Stock issuable upon such exercise, notwithstanding that the stock transfer books of the Company shall then be closed or that certificates representing such shares of Common Stock shall not then be actually delivered to the Holder. The Company shall pay any and all documentary stamp or similar issue payable in respect of the issue or delivery of shares of Common Stock on exercise of this Warrant. 2. Reservation of Shares. The Company will at all times reserve for issuance and delivery upon exercise of this Warrant all shares of Common Stock or other shares of capital stock of the Company (and other securities and property) from time to time receivable upon exercise of this Warrant. All such shares (and other securities and property) shall be duly authorized and, when issued upon such exercise, shall be validly issued, fully paid and non-assessable and free of all preemptive rights. 3. Restrictions upon Transferability of Warrant. By acceptance of this Warrant, the Holder (i) represents and warrants to the Company that the Holder is acquiring the Warrant, and unless such Warrant Shares have been registered under the Act, shall acquire the Warrant Shares for investment, for Holder's own account and not with a view towards the resale or distribution thereof and (ii) agrees (a) that the Holder shall not transfer by any means or otherwise dispose of the Warrant or the Warrant Shares without registration under the Act, unless an exemption from registration under the Act is available thereunder, and the Holder has furnished the Company with an opinion of the Holder's legal counsel, which opinion is satisfactory to the Company, that such proposed sale or transfer is so exempt. The certificate(s) evidencing the Warrant Shares shall bear a legend to this effect substantially in the form provided in Section 7 hereof. The Company shall place stop transfer orders with its transfer agent against the transfer of the Warrant and the Warrant Shares in the absence of registration under the Act or an exemption therefrom thereunder as provided herein. 4. Fractional Shares. No fractional shares or scrip representing fractional shares shall be issued upon the exercise of this Warrant, but the Company shall issue one additional share of Common Stock in lieu of each fraction of a share otherwise called for upon any exercise of this Warrant. 5. No Redemption. This Warrant is not redeemable by the Company. 6. Anti-Dilution Provisions. 6.1 Adjustment for Dividends in Other Securities, Property, Etc.; Reclassification, Etc. In case at any time or from time to time after the Base Date, the holders of Common Stock (or any other securities at the time receivable upon the exercise of this Warrant) shall have received, or on or after the record date fixed for the determination of eligible stockholders, shall have become entitled to receive without payment thereof: (a) other or additional securities (other than shares of Common Stock), or property (other than cash) by way of dividend, (b) any cash paid or payable except out of earned surplus of the Company at the Base Date as increased (decreased) by subsequent credits (charges) thereto (other than credits in respect of any capital or paid-in surplus or surplus created as a result of a revaluation of property) or (c) other or additional (or fewer) securities or property (including cash) by way of stock-split, spin-off, split-up, reclassification, combination of shares or similar corporate rearrangement, then, and in each such case, the Holder of this Warrant, upon the exercise thereof as provided in Section 1, shall be entitled to receive the amount of securities and property (including cash in the cases referred to in clauses (b) and (c) above) which such Holder would hold on the date of such exercise if on the Base Date it had been the holder of record of the number of shares of Common Stock (as constituted on the Base Date) subscribed for upon such exercise as provided in Section 1 and had thereafter, during the period from the Base Date to and including the date of such exercise, retained such shares and/or all other additional (or fewer) securities and property (including cash in the cases referred to in clauses (b) and (c) above) receivable by it as aforesaid during such period, giving effect to all adjustments called for during such period by Section 6.2. 6.2 Adjustment for Reorganization, Consolidation, Merger, Etc. In case of any reorganization of the Company (or any other corporation, the securities of which are at the time receivable on the exercise of this Warrant) after the Base Date or in case after such date the Company (or any such other corporation) shall consolidate with or merge into another corporation (other than a consolidation or merger in which the Company is the surviving corporation and which does not result in any reclassification or change of the outstanding shares of Common Stock, except a change as a result of a subdivision or combination of such shares or a change in par value) or convey all or substantially all of its assets to another corporation, then, and in each such case, the Holder of this Warrant upon the exercise thereof as provided in Section 1 at any time after the consummation of such reorganization, consolidation, merger or conveyance, shall be entitled to receive, in lieu of the securities and property receivable upon the exercise of this Warrant prior to such consummation, the securities and property to which such Holder would have been entitled upon such consummation if such Holder had exercised this Warrant immediately prior thereto, all subject to further adjustment as provided in Section 6.1; in each such case, the terms of this Warrant shall be applicable to the securities or property receivable upon the exercise of this Warrant after such consummation. 6.3 Notices of Record Date, Etc. In case: (a) the Company shall take a record of the holders of its Common Stock (or other securities at the time receivable upon the exercise of the Warrant) for the purpose of entitling them to receive any dividend (other than a cash dividend payable out of earned surplus) or other distribution, or any right to subscribe for, purchase or otherwise acquire any shares of stock of any class or any other securities, or to receive any other right; or (b) of any capital reorganization of the Company (other than a stock split or reverse stock split), any reclassification of the capital stock of the Company (other than a change in par value to no par value, or from no par value to par value, or as a result of a subdivision or combination), any consolidation or merger of the Company with or into another corporation (other than a merger for purposes of change of domicile or a consolidation or merger in which the Company is the surviving corporation and which does not result in any reclassification or change of the outstanding shares of Common Stock, except a change as a result of a subdivision or combination of such shares or a change in par value) or any conveyance of all or substantially all of the assets of the Company to another corporation; or (c) of any voluntary or involuntary dissolution, liquidation or winding-up of the Company; then, and in each such case, the Company shall mail or cause to be mailed to each Holder of the Warrant at the time outstanding a notice specifying, as the case may be, (i) the date on which a record is to be taken for the purpose of such dividend, distribution or right, and stating the amount and character of such dividend, distribution or right, or (ii) the date on which such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding-up is to take place, and the time, if any, is to be fixed, as to which the holders of record of Common Stock (or such other securities at the time receivable upon the exercise of the Warrant) shall be entitled to exchange their shares of Common Stock (or such other securities) for securities or other property deliverable upon such reorganization, reclassification, consolidation, merger, conveyance, dissolution, liquidation or winding-up. Such notice shall be mailed at least fifteen (15) days prior to the date therein specified and this Warrant may be exercised prior to said date during the term of the Warrant no later than five days prior to said date. 7. Legend. Upon exercise of any of the Warrants and the issuance of any of the shares thereunder, all certificates representing shares shall bear on the face thereof substantially the following legends, insofar as is consistent with applicable law: "THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY STATE SECURITIES LAW AND MAY NOT BE SOLD, TRANSFERRED, ASSIGNED OR HYPOTHECATED IN THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT COVERING SUCH SECURITIES UNLESS THE ISSUER RECEIVES AN OPINION OF COUNSEL FOR THE HOLDER OF THESE SECURITIES REASONABLY SATISFACTORY TO THE ISSUER STATING THAT SUCH SALE, TRANSFER, ASSIGNMENT OR HYPOTHECATION IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR THAT THE SALE IS MADE IN ACCORDANCE WITH RULE 144 UNDER THE ACT." 8. Applicable Law. The Warrant shall be governed by and construed in accordance with the laws of the State of New York with respect to contracts made and to be fully performed therein and without regard to principles of conflicts of laws, and shall be enforceable solely in the Federal or state courts located in the City, County and State of New York. 9. Notices. Notices and other communications to be given to the Holder of the Warrant evidenced by this certificate shall be deemed to have been sufficiently given, if delivered or mailed, addressed to the Holder at 2975 Westchester Avenue, Purchase, New York 10577 or at such other address as the Holder or any successor holder shall have designated by written notice to the Corporation as herein provided and if mailed, sent registered or certified mail, postage prepaid. Notices or other communications to the Company shall be deemed to have been sufficiently given if delivered by hand or mailed, by registered or certified mail, postage prepaid, to Candie's, Inc., 2975 Westchester Avenue, Purchase, New York 10577, or at such other address as the Company shall have designated by written notice to such registered owner as herein provided. Notice by mail shall be deemed to have been given upon delivery, if delivered personally, three business days after mailing, if mailed, or one business day after delivery to the courier, if delivered by overnight courier service. 10. Amendments. This Warrant may not be modified or amended without the written consent of the party to be charged by such modification. IN WITNESS WHEREOF, Candie's, Inc. has caused this Warrant to be signed on its behalf, in its corporate name, by its duly authorized officer, all as of the day and year first above written. CANDIE'S, INC. By: /s/ Gary Klein ------------------------------------ Authorized Officer WARRANT EXERCISE FORM The undersigned hereby irrevocably elects to exercise the within Warrant to the extent of purchasing ____________ shares of Common Stock of Candie's, Inc. and hereby makes payment at the rate of $ ___ per share, or an aggregate of $ ________________ in payment therefor. _________________________ ____________________________ Name of Registered Holder Signature, if held jointly _________________________ ____________________________ Signature Date INSTRUCTIONS FOR ISSUANCE OF STOCK (if other than to the registered Holder of the within Warrant) Name___________________________________________________________ (Please typewrite or print in block letters) Address _______________________________________________________ _______________________________________________________ Social Security or Taxpayer Identification Number ________________________________________ ASSIGNMENT FORM The Holder hereby assigns and transfers unto Name __________________________________________________________ (Please typewrite or print in block letters) Address _______________________________________________________ _______________________________________________________ the right to purchase Common Stock of Candie's, Inc. represented by this Warrant to the extent of ______________ shares of Common Stock as to which such right is exercisable and does hereby irrevocably constitute and appoint ________________ ____________________ Attorney, to transfer the same on the books of Candie's, Inc. with full power of substitution in the premises. Date: ___________________, 199_ __________________________ Name of Registered Holder __________________________ Signature __________________________ Signature, if held jointly EX-6 5 EXHIBIT 6 THE SECURITIES REPRESENTED BY THIS NOTE HAVE BEEN ACQUIRED FOR INVESTMENT IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED, PURSUANT TO SECTION 4(2) OF SAID ACT AND NOT WITH A VIEW TO OR IN CONNECTION WITH THE DISTRIBUTION THEREOF. NEITHER THIS NOTE NOR THE SECURITIES ISSUED UPON CONVERSION HEREOF MAY BE OFFERED FOR SALE OR SOLD OR OTHERWISE DISPOSED OF EXCEPT UPON COMPLIANCE WITH SAID ACT AND AS PERMITTED BY THE SUBSCRIPTION AGREEMENT SIGNED BY THE HOLDER, A COPY OF WHICH IS ON FILE AND MAY BE INSPECTED AT THE PRINCIPAL OFFICE OF THE COMPANY. CANDIE'S, INC. 8% CONVERTIBLE NOTE November 21, 1994 FOR VALUE RECEIVED, the undersigned, Candie's, Inc., a Delaware corporation (the "Company"), hereby promises to pay to New Retail Concepts, Inc. (the "Holder") or order, the principal amount of One-Hundred Thousand Dollars ($100,000.00) such amount to be due and payable on February 28, 1995 (the "Maturity Date"). Interest on the unpaid principal balance from the date hereof shall be payable on the Maturity Date at the rate of 8% per annum. Payments of principal and interest shall be made in lawful money of the United States of America, at the principal office of the Holder or at such other place as the Holder hereof shall have designated to the Company in writing. This Note is issued subject to the following additional terms and conditions: 1. Conversion. (a) The Company does not currently have a sufficient number of shares of its common stock, $.001 par value (the "Common Stock") authorized under its Certificate of Incorporation to provide for the issuance of any additional shares of its Common Stock upon the conversion of this Note. However, the Company has called a Special Meeting of Stockholders to seek the approval of the stockholders of the Company of an amendment to the Company's Certificate of Incorporation providing for an increase in the number of shares of Common Stock authorized for issuance from 10,000,000 to 30,000,000 (the "Amendment"). (b) This Note shall convert automatically, without any action taken by the Holder, on the Effective Date of the Amendment, into such number of shares of Common Stock of the Company as equals the outstanding principal and unpaid interest under this Note on the Effective Date divided by $1.15. No fractional shares shall be issued upon conversion of this Note. In lieu of fractional shares the Company will pay the Holder cash in an amount equal to the fair market value of the fractional share on the date of conversion as determined by the Board of Directors of the Company. The shares of Common Stock issuable upon conversion of this Note shall have the same registration rights as was granted to the holders of the Company's 8% Series A Convertible Preferred Stock with respect to the Common Stock issuable upon conversion of such preferred stock. (c) Upon the Effective Date of the Amendment, the Holder hereof shall surrender this Note to the Company. (d) As promptly as practical after the surrender as herein provided, the Company shall deliver or cause to be delivered at its office or agency maintained for that purpose, to the Holder of the Note, certificates representing the number of fully paid and nonassessable shares of Common Stock of the Company into which this Note is to be converted. (e) From and after the Effective Date, the Company shall not be equired to pay any interest on this Note. If the Holder fails to surrender this Note on the Effective Date, the Company shall nevertheless have no obligation whatsoever with respect to this Note other than to issue or cause the issuance of shares of Common Stock in accordance with this Section 1. (f) The Holder understands and agrees that the the shares of Common Stock issuable upon conversion of this Note (sometimes hereinafter referred to as the "Conversion Shares") have not been registered under the Securities Act of 1933, as amended (the "Act"), or the securities laws of any state, based upon applicable exemptions from such registration requirements; (B) the Conversion Shares may be "restricted securities," as said term is defined in Rule 144 of the Rules and Regulations promulgated under the Act; (C) the Conversion Shares may not be sold or otherwise transferred unless they have been first registered under the Act and all applicable state securities laws, or unless exemptions from such registration provisions are available with respect to said resale or transfer; (D) a legend to the foregoing effect may be placed on the certificate or certificates representing the Conversion Shares; (E) stop transfer instructions with respect to the Conversion Shares will be placed with the transfer agent, if any, for the Conversion Shares and (F) except as set forth in the Note the Company has not granted the Holder any registration rights with respect to the Conversion Shares. If requested by the Company upon conversion of this Note, the registered holder of this Note may be required to execute and deliver to the Company an additional instrument, in form satisfactory to the Company, representing that the Conversion Shares are being acquired for investment and not with a view to distribution within the meaning of the Act. 2. Reserved Shares. (a) The Holder recognizes that the approval for the Amendment has not yet been obtained, and if it is not obtained, the Note will not be convertible into Common Stock of the Company. The Company covenants and agrees that the shares of its Common Stock delivered upon conversion of this Note shall, at the time of delivery of the certificates for such shares of Common Stock, be validly issued and outstanding and fully paid and nonassessable shares of Common Stock. The Company further covenants and agrees that it will pay when due and payable any and all Federal and state original issue taxes which may be payable in respect of the issue of this Note or any shares of Common Stock upon the conversion of this Note. The Company shall not, however, be required to pay any tax which may be payable in respect of any transfer involved in the transfer and delivery of this Note or the issuance or delivery of certificates for Common Stock upon the conversion of this Note, all such tax being payable by the Holder of this Note at the time of surrender. (b) Each person in whose name any securities are issuable upon the conversion of this Note shall for all purposes be deemed to have become the holder of record of the Common Stock represented thereby on, and such certificate shall be dated, the date upon which the Note was duly surrendered and notice of conversion was given; provided, however, that if the date of such surrender and notice is a date upon which the stock transfer books of the Company are closed, such person shall be deemed to have become the record holder of such shares of Common Stock, and such certificates shall be dated, the next prior business day on which the stock transfer books of the Company are open. 3. Default. "Event of Default" whenever used herein means any one of the following events: (a) Default in payment under this Note of: (i) any installment of interest when it becomes due and the continuance of such default for a period of ten (10) days after receipt of written notice to the Company of such default, or (ii) the principal when it becomes due. (b) The entry of a decree or an order by any court having jurisdiction in the premises adjudging the Company bankrupt or insolvent, or approving as properly filed a petition seeking reorganization, arrangement, adjustment or composition of or in respect of the Company under the Federal Bankruptcy Code or any other applicable federal or state law, or appointing a receiver, liquidator, assignee, trustee (or similar official) of the Company or any substantial part of its property, and the continuance of such decree or order in effect for a period of ten (10) consecutive days; or (c) The institution by the Company of proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to the institution of bankruptcy or insolvency proceedings against it, or the filing by it of a petition or answer to consent seeking reorganization or relief under the Federal Bankruptcy Code or any other applicable federal or state law, or the consent by it to the filing of any such petition or to the appointment of any receiver, liquidator, assignee, trustee (or similar official) for the Company or any substantial part of its property, or the making by it of any assignment for the benefit of creditors. In case of the occurrence of an Event of Default the entire unpaid principal amount of any Note together with any interest then unpaid may immediately be declared due and payable at the option of the Holder thereof without presentment, demand, protest, or other notice of any kind, all of which are hereby expressly waived. In such case, any such Holder may proceed to protect and enforce its rights by a suit in equity, action at law, or other appropriate proceedings. In the event that an Event of Default, as defined above, necessitates legal action, the Company agrees to pay all costs and expenses thereof, including reasonable attorneys' fees and costs of suit. 4. Limitations. No Holder of this Note shall be entitled to vote or receive dividends or be deemed the holder of Common Stock or any other securities of the Company which may at any time be issuable on the conversion hereof for any purpose, nor shall anything contained herein be construed to confer upon the Holder of this Note, as such, any of the rights of a stockholder of the Company or any right to vote for the election of directors or upon any matters submitted to stockholders at any meeting thereof, or to give or withhold consent to any corporate action (whether upon any recapitalization, issue of stock, reclassification of stock, change of par value or change of stock to no par value, consolidation, merger, conveyance, or otherwise) or to receive dividends or subscriptions rights or otherwise until the Note shall have been converted and the Common Stock issuable upon the conversion hereof shall have become deliverable as provided herein. 5. General. 5.1 Successors and Assigns. This Note, and the obligations and rights of the Company hereunder, shall be binding upon and inure to the benefit of the Company, the holder of this Note, and their respective heirs, successors and assigns. 5.2 Changes. Changes in or additions to this Note may be made, or compliance with any term, covenant, agreement, condition or provision set forth herein may be omitted or waived (either generally or in a particular instance and either retroactively or prospectively), upon written consent of the Company and the Holder. 5.3 Notices. All notices, requests, consents and demands shall be made in writing and shall be mailed postage prepaid, or delivered by hand, to the Company or to the Holder at their respective addresses: If to the Holder: as set forth in the records of the Company. If to the Company: 2975 Westchester Avenue Purchase, New York 10577 Attention: Neil Cole 5.4 Saturdays, Sundays, Holidays. If any date that may at any time be specified in this Note as a date for the making of any payment of principal or interest under this Note shall fall on Saturday, Sunday or on a day which in New York, New York shall be a legal holiday, then the date for the making of that payment shall be the next subsequent day which is not a Saturday, Sunday or legal holiday. 5.5 Governing Law. This Note shall be construed and enforced in accordance with, and the rights of the parties shall be governed by, the laws of the State of New York. IN WITNESS WHEREOF, this Note has been executed and delivered as a sealed instrument on the date first above written by the duly authorized representative of the Company. CANDIE'S, INC. By: /s/ Neil Cole -------------------------------- Name: Title: EX-7 6 EXHIBIT 7 THE OPTIONS AND COMMON STOCK ISSUABLE UPON EXERCISE OF OPTIONS HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND THE OPTIONS AND COMMON STOCK ISSUABLE ON EXERCISE OF OPTIONS MAY NOT BE SOLD UNLESS THERE IS A REGISTRATION STATEMENT IN EFFECT COVERING THE OPTIONS OR COMMON STOCK OR THERE IS AVAILABLE AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED. CANDIE'S, INC. OPTION CERTIFICATE Options to Purchase 100,000 Shares of Common stock $.001 Par Value Dated: As of October 6, 1994 Void after 5:00 P.M., New York Local Time October 6, 1999 or, if not a business day, at 5:00 P.M., New York Local Time, on the next following business day Candie's, Inc., a Delaware corporation (hereinafter referred to as the "Company"), hereby certifies that New Retail Concepts, Inc. (hereinafter referred to as "Holder"), his successors and assigns, for value received, is entitled to purchase from the Company at any time after April 6, 1995 and before 5:00 P.M. New York local time on October 6, 1999, or, if such is not a business day (the "Exercise Period") 100,000 shares of common stock, $.001 par value (hereinafter referred to as the "Option Shares") of the Company in accordance with the number of Options indicated on the face hereof at the purchase price of $1.15 per share (hereinafter referred to as the "Exercise Price"). The Exercise Price is subject to adjustment as provided herein. (a) Exercise of Options. Upon presentation and surrender of this Option Certificate, with the attached Purchase Form duly executed, at the principal office of the Company at 2975 Westchester Avenue, Purchase, New York 10577 together with a certified or bank cashier's check payable to the Company in the amount of the Exercise Price times the number of Option Shares of the Company being purchase, the Company shall deliver to the Holder hereof, as promptly as practicable, certificates representing the Option Shares being purchased. This Option may be exercised per the option period below in whole or in part; and, in case of exercise hereof in part only, the company, upon surrender hereof, will deliver to the Holder a new Option Certificate or Option certificates of like tenor entitling said Holder to purchase the number of Option Shares as to which the Option Certificate has not been exercised. (b) Option Period. The Options granted hereby shall be exercisable in the following amounts commencing of the following date: Shares Exercise of Option ------ ------------------ 100,00 April 6, 1995 The Options shall expire on October 6, 1999 subject to earlier termination as provided in the Plan. (c) Rights and Obligations of Holder. The Holder of this Option Certificate shall not, by virtue hereof, be entitled to any rights of a stockholder in the Company, either at law or in equity; provided, however, that in the event that any certificate representing shares of the Company's common stock is issued to the Holder hereof upon exercise of some or all of the Options represented hereby such Holder shall, for all purposes, be deemed to have become the Holder of record of such stock on the date on which this Option Certificate, together with a duly executed Purchase form, was surrendered and payment of the purchase price was made, irrespective of the date of delivery of such share certificate. The rights of the Holder of this Option Certificate are limited to those expressed herein and the Holder of this Option Certificate, by his acceptance hereof, consents and agrees to be bound by you and to comply with all the provisions of this Option Certificate, including without limitation all the obligations imposed upon the Holder by Section 3 hereof. In addition, the Holder of this Option Certificate, by accepting the same, agrees that the company and its transfer agent may deem and treat the person in whose name this Option Certificate is registered as the absolute, true and lawful owner for all purposes whatsoever, and neither the Company nor the transfer agent shall be affected by any notice to the contrary. (d) Option Shares. The Company covenants and agrees that all Option Shares delivered upon exercise of this Option Certificate will, upon delivery and payment of the Purchase Price in accordance with the terms hereof, be duly and validly authorized and issued, fully-paid and non-assessable and free from all stamp taxes, liens, and charges with respect to the purchase hereof. In addition, the Company agrees at all times to reserve for issuance an authorized number of shares of its authorized but unissued common stock sufficient to permit the exercise in full of outstanding Options. (e) Disposition of Options or Option Shares. The Holder of this Option Certificate and any transferee hereof or of the Option Shares, by their acceptance hereof, hereby agrees that (a) no transfer of the Options or the Option Shares will be made in violation of the provisions of the Securities Act of 1933, as amended, or the Rules and Regulations promulgated thereunder (such Act and Rules and Regulations being hereinafter referred to as the "Act") and (b) during such period as delivery of a prospectus with respect to the Options or the Option Shares may be required by the Act, no public distribution of the Options or Option Shares will be made in a manner or on terms different from those set forth in, or without delivery of, a prospectus then meeting the requirements of Section 10 of the Act and in compliance with all applicable state laws. (f) Purchase for Investment. Unless the offering and sale of the Shares to be issued upon the particular exercise of the Option shall have been effectively registered under the Act, the Company shall be under no obligation to issue the Shares covered by such exercise unless and until the following conditions have been fulfilled: (a) The person(s) who exercise the Option shall warrant to the Company, at the time of such exercise, that such persons(s) are acquiring such Shares for this or her own account, for investment and not with a view to, or for sale in connection with, the distribution of any such Shares, in which event the person(s) acquiring such Shares shall be bound by the provisions of the following legend which shall be endorsed upon the certificate(s) evidencing their option Shares issued pursuant to such exercise: "The shares represented by this certificate have not been registered under the Securities Act of 1933, as amended (the "Act Such shares may not be sold, transferred or otherwise disposed of unless they have first been registered under the Act or, unless, in the opinion of counsel satisfactory to the Company's counsel such registration is not required." (b) The Company shall have received an opinion of its counsel that the Shares may be issued upon such particular exercise in compliance with the Act without registration thereunder. Without limiting the generality of the foregoing, the Company may delay issuance of the Shares until completion of any action or obtaining of any consent, which the Company deems necessary under any applicable law (including without limitation state securities or "blue sky" laws). (g) Piggyback Registration. If, at any time during the Exercise Period, the Company proposes to prepare and file any new registration statement or amendments thereto covering equity or debt securities of the Company, or any such securities of the Company held by its shareholders (in any such case, other than in connection with a merger, acquisition or pursuant to Form S-8 or successor form) (for purposes of this Section 7, collectively, the "Registration Statement"), it will give written notice of its intention to do so by registered mail ("Notice"), at least twenty (20) days prior to the filing of each such Registration Statement, to the Holder. Upon the written request of the Holder, made within ten (10) days after receipt of the Notice, that the Company include any of the Holder's Option Shares in the proposed Registration Statement, the Company shall use its best efforts to effect the registration under the Securities Act of the Option 333 Shares which it has been so requested to register, at the Company's sole cost and expense and at no cost or expense to the Holder; provided, however, that if, in the written opinion of the Company's managing underwriter, if any, for such offering, the inclusion of all or a portion of the Option Shares requested to be registered, when added to the securities being registered by the Company or the selling shareholder(s), will exceed the maximum amount of the Company's securities which can be marketed (i) at a price reasonably related to their then current market value, or (ii) without otherwise materially adversely affecting the entire offering, then the Company may exclude from such offering all or a portion of the Option Shares which it has been requested to register. Notwithstanding the provisions of this Section 7 (irrespective of whether any written request for inclusion of such securities shall have already been made) to elect not to file any such proposed Registration Statement, or to withdraw the same after the filing but prior to the effective date thereof. If securities are proposed to be offered for sale pursuant to such Registration Statement by other security holders of the Company and the total number of securities to be offered by the Holder and such other selling security holders is required to be reduced pursuant to a request from the managing underwriter (which request shall be made only for the reasons and in the manner set forth above) the aggregate number of Option Shares to be offered by the Holder pursuant to such Registration Statement shall equal the number which bears the same ratio to the maximum number of securities that the underwriter believes may be included for all the selling security holders (including the Holder) as to the original number of Option Shares proposed to be sold by the Holder bears to the total original number of securities proposed to be offered by the Holder and the other selling security holders. Notwithstanding the provisions of this Section 7, the Company shall not be required to register Option Shares owned by the Holder under the Act if, in the opinion of counsel to the Company, such registration is not necessary for sale under the provisions of Rule 144. (h) Adjustments Upon Changes in Capitalization. If at any time after the date of grant of this Option, the Company shall, by stock dividend, split-up, combination, reclassification or exchange, or through merger or consolidation, or otherwise, change its Shares into a different number of kind or class of Shares or other securities or property, then the number of Shares covered by this Option and the price of each Share shall be proportionately adjusted for any such change by the Board of Directors or the Committee whose determination shall be conclusive. Any fraction of a Share resulting from any adjustment shall be eliminated and the price per Share of the remaining Shares subject to this Option adjusted accordingly. (i) Governing Law. The parties hereto hereby acknowledge and agree that the Option granted hereby is granted in the State of New York and any Shares issued upon exercise of the Option will be issued in the State of New York. This Agreement, as well as the grant of such Option and issuance of such Shares, is and shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed entirely within such State. (j) Miscellaneous. This Option Agreement shall be binding upon and inure to the benefit of the Company and its successors and upon the Optionee and his successors, assigns, including without limitation the estate of the Optionee and the executors, administrators and/or trustees of such estate, and any creditor, receiver, trustee in bankruptcy or representative of any such Optionee. This Option Agreement shall become effective as of the date hereof and, unless sooner terminated, shall remain in effect for a period of five years from the date hereof. This Option Agreement may be terminated at any time by mutual consent of the parties hereto, but no ramification or amendment of this Option Agreement shall become effective until such modification or amendment shall have been approved by the Committee or the Board. CANDIE'S, INC. By: /s/ Neil Cole ----------------------------- Neil Cole, President PURCHASE FORM _______________, 199_ TO: Candie's, Inc. The undersigned hereby irrevocably elects to exercise the attached Option Certificate to the extent of __________ shares of Common Stock of Candie's, Inc. and herewith makes payments of $__________ in payment of the purchase price therefore. INSTRUCTIONS FOR REGISTRATION OF STOCK Name:_______________________________________ (Please typewrite or print in block letters) Address:____________________________________ ____________________________________ _____________________ By:_____________________ ASSIGNMENT FORM FOR VALUE RECEIVED,_________________________________________ hereby sells, assigns and transfers unto: Name:________________________________________________________________________ (Please typewrite or print in block letters) Address:_____________________________________________________________________ _____________________________________________________________________ the right to purchase common stock of Candie's, Inc. represented by this Option to the extent of_______________ shares as to which such right is exercisable and does hereby irrevocably constitute and appoint _________________________, attorney, to transfer the same on the books of the Company will full power of substitution in the premises. ___________________________ By:___________________________ EX-8 7 EXHIBIT 8 JOINT FILING AGREEMENT In accordance with Rule 13d-1(f) under the Securities Exchange Act of 1934, the persons named below agree to the joint filing on behalf of each of them of a Statement on Schedule 13D (including amendments thereto) with respect to the common stock of Candie's, Inc., and further agree that this Joint Filing Agreement be included as an exhibit to such joint filing. In evidence thereof, the undersigned, being duly authorized, hereby execute this Agreement the 21st day of June, 1995. NEW RETAIL CONCEPTS, INC. By: /s/ Neil Cole ------------------------------ Neil Cole, President /s/ Neil Cole ---------------------------------- Neil Cole -----END PRIVACY-ENHANCED MESSAGE-----