EXHIBIT 99.1
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REGISTRATION RIGHTS AGREEMENT
BY AND BETWEEN
HANOVER DIRECT, INC.,
XXXXXXX DIRECT, LLC
AND
XXXXXX XXXXXXX
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DATED AS OF NOVEMBER 30, 2003
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TABLE OF CONTENTS
Page
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1. Certain Definitions 2
2. Demand Registrations. 3
(a) Right to Request Registration 3
(b) Number of Demand Registrations 3
(c) Priority on Demand Registrations 4
(d) Restrictions on Demand Registrations 4
(e) Selection of Underwriters 5
(f) Registration Statement Form 5
(g) Other Registration Rights 5
3. Piggyback Registrations 5
(a) Right to Piggyback 5
(b) Priority on Primary Registrations 6
(c) Priority on Secondary Registrations 6
(d) Selection of Underwriters 6
(e) Other Registrations 6
4. Holdback Agreements 6
5. Registration Procedures 7
6. Registration Expenses. 11
7. Indemnification 11
8. Rule 144 14
9. Miscellaneous 14
(a) Notices 14
(b) No Waivers 16
(c) Successors and Assigns 16
(d) Governing Law 16
(e) Jurisdiction 16
(f) Waiver of Jury Trial 16
(g) Counterparts; Effectiveness 16
(h) Entire Agreement 17
(i) Captions 17
(j) Severability 17
(k) Amendments 17
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REGISTRATION RIGHTS AGREEMENT, dated as of November 30, 2003, between
HANOVER DIRECT, INC., a Delaware corporation (the "Company"), XXXXXXX DIRECT,
LLC, a Delaware limited liability company ("Xxxxxxx"), and Xxxxxx Xxxxxxx
(together with Xxxxxxx, the "Stockholders").
In consideration of the mutual covenants and agreements herein
contained and other good and valid consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties to this Agreement hereby agree as
follows:
1. Certain Definitions. In addition to the terms defined
elsewhere in this Agreement, the following terms shall have the following
meanings:
"Affiliate" means, with respect to the Company, a Person (a) directly
or indirectly controlling, controlled by or under common control with the
Company or (b) directly or indirectly owning or holding ten percent (10%) or
more of any Common Stock. For purposes of this definition, "control" (including
correlative meanings, the terms "controlling," "controlled by" and "under common
control with") means the possession, directly or indirectly, of the power to
direct or cause the direction of the management and policies of the Company,
whether through the ownership of voting securities, by contract or otherwise.
Notwithstanding the purposes of the foregoing, none of the Stockholders shall be
deemed to be an Affiliate of the Company.
"Agreement" means this Registration Rights Agreement, including all
amendments, modifications and supplements and any exhibits or schedules to any
of the foregoing, and shall refer to this Registration Rights Agreement as the
same may be in effect at the time such reference becomes operative.
"Business Day" means any day on which commercial banks are open for
business in New York, New York.
"Common Stock" means common stock, par value $0.66-2/3 per share, of
the Company or any other capital stock of the Company into which such stock is
reclassified or reconstituted.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Holder" means the Stockholders, and any successors or assigns of the
Stockholders pursuant to Section 9(c) hereof who acquires Registrable
Securities, directly or indirectly, from the Stockholders, or such transferee or
assignee. For purposes of this Agreement, the Company may deem and treat the
registered holder of Registrable Securities as the Holder and absolute owner
thereof, and the Company shall not be affected by any notice to the contrary.
"Person" means an individual, partnership, corporation, trust, limited
liability company, or unincorporated organization, or a government or agency or
political subdivision thereof.
"Prospectus" means the prospectus or prospectuses included in any
Registration Statement, as amended or supplemented by any prospectus supplement
with respect to the terms of the offering of any portion of the Registrable
Securities covered by such Registration
Statement and by all other amendments and supplements to the prospectus,
including post-effective amendments and all material incorporated by reference
in such prospectus or prospectuses.
"Registrable Securities" means any of the Common Stock held by the
Holders from time to time. As to any particular Registrable Securities, such
securities will cease to be Registrable Securities when (a) a Registration
Statement covering the offer and sale of such securities has been declared
effective by the SEC and such securities have been disposed of in accordance
with such Registration Statement or (b) they are sold pursuant to Rule 144 of
the Securities Act (or any similar provisions then in force).
"Registration Statement" means any registration statement of the
Company which covers any of the Registrable Securities pursuant to the
provisions of this Agreement, including the Prospectus, amendments and
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all materials incorporated by reference in such Registration
Statement.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended.
"underwritten registration or underwritten offering" means a
registration in which securities of the Company are sold to underwriters for
reoffering to the public.
2. Demand Registrations.
(a) Right to Request Registration. Any time
after the date hereof, any Holder or Holders of more than fifty percent (50%) of
the Registrable Securities in the aggregate (the "Initiating Holders") may,
subject to the provisions of Section 2(b) hereof, request registration under the
Securities Act of all or part of the Registrable Securities ("Demand
Registration"); provided, that each Demand Registration shall be for not less
than $5 million of Registrable Securities unless such Demand Registration is the
second permitted Demand Registration pursuant to Section 2(b) hereof.
Within 10 days after receipt of any such request for Demand
Registration, the Company shall give written notice of such request to all other
Holders of Registrable Securities and shall, subject to the provisions of
Section 2(d) hereof, include in such registration all such Registrable
Securities with respect to which the Company has received written requests for
inclusion therein within 15 days after the receipt of the Company's notice.
(b) Number of Demand Registrations. The Holders
of Registrable Securities shall be entitled to request an aggregate of two (2)
Demand Registrations. A registration shall not count as one of the permitted
Demand Registrations (i) until it has become effective, (ii) in the case of the
first permitted Demand Registration requested hereunder, if the Initiating
Holder requesting such registration is not able to register and sell (other than
as a result
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of market conditions or any other events not within the Company's control) at
least 50% of the Registrable Securities requested by such Initiating Holder to
be included in such registration, (iii) in the case of the second permitted
Demand Registration requested hereunder, if the Initiating Holder requesting
such registration is not able to register and sell all of the Registrable
Securities requested to be included by such Initiating Holder in such
registration or (iv) if, after the registration becomes effective, such
registration is interfered with by any stop order, injunction or other order or
requirement of the SEC or other governmental agency or court for any reason.
(c) Priority on Demand Registrations. The
Company shall not include in any Demand Registration any securities which are
not Registrable Securities without the written consent of the Holders of a
majority of the Registrable Securities to be included in such registration, or,
if such Demand Registration is an underwritten offering, without the written
consent of the managing underwriters. If the managing underwriters of the
requested Demand Registration advise the Company in writing that in their
opinion the number of Registrable Securities proposed to be included in any such
registration exceeds the number of securities which can be sold in such
offering, the Company shall include in such registration only the number of
Registrable Securities which in the opinion of such managing underwriters can be
sold; provided, however, that no shares of Registrable Securities shall be
excluded in any registration if any shares of Common Stock of holders who have
registration rights pursuant to other agreements with the Company are included
in such registration pursuant to the exercise of such registration rights. If
the number of shares which can be sold is less than the number of Registrable
Securities proposed to be registered, the amount of Registrable Securities to be
so sold shall be allocated pro rata among the Holders of Registrable Securities
desiring to participate in such registration on the basis of the amount of such
Registrable Securities proposed to be registered by such Holders. If the number
of shares which can be sold exceeds the number of Registrable Securities
proposed to be sold, such excess shall be allocated pro rata among the other
holders of Common Stock, if any, desiring to participate in such registration
based on the amount of such Common Stock initially requested to be registered by
such holders or as such holders may otherwise agree.
(d) Restrictions on Demand Registrations. The
Company shall not be obligated to effect any Demand Registration within three
months after the effective date of a previous Demand Registration, a
registration statement under the Securities Act on Form S-3, or any successor
form thereto, or a previous registration under which the Initiating Holders had
piggyback rights pursuant to Section 3 hereof wherein the Initiating Holders
were permitted to register, all of the Registrable Securities requested to be
included therein. The Company may (i) postpone for up to ninety (90) days the
filing or the effectiveness of a Registration Statement for a Demand
Registration if, based on the good faith judgment of the Company's board of
directors, such postponement is necessary in order to avoid premature disclosure
of a matter the board has determined would not be in the best interest of the
Company to be disclosed at such time; provided, however, that the Company may
not utilize this right more than once in any twelve (12)-month period, or (ii)
postpone the filing of a Demand Registration in the event the Company shall be
required to prepare audited financial statements as of a date other than its
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fiscal year end (unless the stockholders requesting such registration agree to
pay the expenses of such an audit); provided, however, that in any of the events
described in clause (i) or (ii) above, the Initiating Holders requesting such
Demand Registration shall be entitled to withdraw such request and, if such
request is withdrawn, such Demand Registration shall not count as one of the
permitted Demand Registrations. The Company shall provide written notice to the
Initiating Holders requesting such Demand Registration of (x) any postponement
or withdrawal of the filing or effectiveness of a Registration Statement
pursuant to this subparagraph (d), (y) the Company's decision to file or seek
effectiveness of such Registration Statement following such withdrawal or
postponement and (z) the effectiveness of such Registration Statement.
(e) Selection of Underwriters. If any of the
Registrable Securities covered by a Demand Registration is to be sold in an
underwritten offering, the Initiating Holders shall have the right to select the
managing underwriter(s) to administer the offering subject to the approval of
the Company, which will not be unreasonably withheld.
(f) Registration Statement Form. Registrations
under this Section 2 shall be on such appropriate registration form of the SEC
as shall permit the disposition of such Registrable Securities in accordance
with the intended method or methods of disposition specified by the Initiating
Holders in their request for such registration.
(g) Other Registration Rights. The Company shall
not grant to any Person the right, other than as set forth herein and except to
employees or directors of the Company with respect to registrations on Form S-8
(or any successor form thereto), to request the Company to register any
securities of the Company (including, without limitation, demand and piggyback
registration rights) except such rights as are not more favorable than or
inconsistent with the rights granted to the Holders herein and which would not
cause any securities to such Person to be included in a Demand Registration to
the exclusion of Registrable Securities.
3. Piggyback Registrations.
(a) Right to Piggyback. Whenever the Company
proposes to register any of its Common Stock (other than Registrable Securities)
under the Securities Act (other than a registration statement on Form S-8 or on
Form S-4 or any similar successor forms thereto), whether for its own account or
for the account of one or more shareholders of the Company, and the registration
form to be used may be used for any registration of Registrable Securities (a
"Piggyback Registration"), the Company shall give prompt written notice (in any
event within 10 business days after its receipt of notice of any exercise of
other demand registration rights) to all Holders of its intention to effect such
a registration at least thirty (30) days before the initial filing of such
registration and, subject to Sections 3(b) and 3(c), shall include in such
registration all Registrable Securities with respect to which the Company has
received written requests for inclusion therein within 15 days after the receipt
of the Company's notice. The Company may postpone or withdraw the filing of a
Piggyback Registration at any time in its sole discretion prior to the time it
becomes effective. Except as may otherwise be provided in this Agreement,
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Registrable Securities with respect to which such a request for registration has
been received will be registered by the Company and offered to the public in a
Piggyback Registration pursuant to this Section 3 on the terms and conditions at
least as favorable as those applicable to the registration of shares of Common
Stock to be sold by the Company and by any other Person under such Registration
Statement.
(b) Priority on Primary Registrations. If a
Piggyback Registration is an underwritten primary registration on behalf of the
Company, and the managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering and/or that
the number of securities requested to be included in such registration would
adversely affect the price per share of the Company's securities to be sold in
such offering, the Company shall include in such registration (i) first, the
securities the Company proposes to sell, (ii) second, the Registrable Securities
requested to be included therein by the Holders, pro rata among the Holders of
such Registrable Securities on the basis of the number of shares requested to be
registered by such Holders and (iii) third, the Common Stock of any other
holders of Common Stock who have requested to be included in such registration.
(c) Priority on Secondary Registrations. If a
Piggyback Registration is an underwritten secondary registration on behalf of a
holder of the Common Stock other than Registrable Securities (an "Other
Holder"), and the managing underwriters advise the Company in writing that in
their opinion the number of securities requested to be included in such
registration exceeds the number which can be sold in such offering and/or that
the number of securities requested to be included in such registration would
adversely affect the price per share of the Company's securities to be sold in
such offering, the Company shall include in such registration the securities
requested to be included therein by the Other Holders requesting such
registration and the Registrable Securities requested to be included in such
registration by the Holders, pro rata among the Other Holders and the Holders on
the basis of the number of shares requested to be registered by such holders or
as such holders may otherwise agree.
(d) Selection of Underwriters. If any Piggyback
Registration is an underwritten primary offering, the Company shall have the
right to select the managing underwriter or underwriters to administer any such
offering.
(e) Other Registrations. If the Company has
previously filed a Registration Statement with respect to Registrable Securities
pursuant to Section 2 hereof or pursuant to this Section 3, and if such previous
registration has not been withdrawn or abandoned, the Company shall not be
obligated to cause to become effective any other registration of any of its
securities under the Securities Act, until a period of at least three (3) months
has elapsed from the effective date of such previous registration.
4. Holdback Agreements. Each of the Company and Holders
owning, directly or beneficially, at least five percent (5%) of the Common Stock
agrees not to effect any sale or distribution of any of its equity securities
during the 10 days prior to and during the ninety
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(90) days beginning on the effective date of any underwritten Demand
Registration or any underwritten Piggyback Registration (except as part of such
underwritten registration or pursuant to registrations on Form S-8 or S-4 or any
successor forms thereto or pursuant to the exercise of options by employees)
unless the underwriters managing the offering otherwise agree; provided,
however, that no Holders shall be so obligated unless each of the Affiliates of
the Company who are either parties to registration rights agreements with the
Company or members of management enter into the same or comparable lock-up
agreements for the same period.
5. Registration Procedures. Whenever the Holders request
that any Registrable Securities be registered pursuant to this Agreement, the
Company shall use its best efforts to effect the registration and the sale of
such Registrable Securities in accordance with the intended methods of
disposition thereof, and pursuant thereto the Company shall as expeditiously as
possible:
(a) prepare and file with the SEC a Registration
Statement with respect to such Registrable Securities and use its best efforts
to cause such Registration Statement to become effective as soon as practicable
thereafter; and before filing a Registration Statement or Prospectus or any
amendments or supplements thereto, furnish to the Holders of Registrable
Securities covered by such Registration Statement and the underwriter or
underwriters, if any, copies of all such documents proposed to be filed,
including documents incorporated by reference in the Prospectus and, if
requested by such Holders, the exhibits incorporated by reference, and such
Holders shall have the opportunity to object to any information pertaining to
such Holders that is contained therein and the Company will make the corrections
reasonably requested by such Holders with respect to such information prior to
filing any Registration Statement or amendment thereto or any Prospectus or any
supplement thereto;
(b) use best efforts to cause such Registration
Statement to remain effective, including, without limitation, by preparing and
filing with the SEC such amendments and supplements to such Registration
Statement and the Prospectus used in connection therewith, until the completion
of the distribution contemplated thereby; provided, however, that the Company
shall not be required to keep such Registration Statement effective for more
than, if such Registration Statement is on Form S-1, a period of more than 180
consecutive days, and if such Registration Statement is on Form S-3, two (2)
years (or, in each case, such shorter period as is necessary to complete the
distribution of the securities covered by such Registration Statement and comply
with the provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during such period in
accordance with the intended methods of disposition by the sellers thereof set
forth in such Registration Statement, but not prior to the expiration of the
applicable period referred to in Section 4(3) of the Securities Act and Rule 174
thereunder, if applicable);
(c) use best efforts to comply with the
provisions of the Securities Act with respect to the disposition of all
securities covered by such Registration Statement during such period as the
Registration Statement is effective in accordance with the intended methods of
disposition by the Holders set forth in such Registration Statement;
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(d) furnish to each seller of Registrable
Securities such number of copies of such Registration Statement, each amendment
and supplement thereto, the Prospectus included in such Registration Statement
(including each preliminary Prospectus) and such other documents as such seller
may reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such seller;
(e) use its best efforts to register or qualify
such Registrable Securities under such other securities or blue sky laws of such
U.S. jurisdictions as any seller reasonably requests, keep such registrations or
qualifications in effect for so long as such Registration Statement remains in
effect and do any and all other acts and things which may be reasonably
necessary or advisable to enable such seller to consummate the disposition in
such U.S. jurisdictions of the Registrable Securities owned by such seller
(provided, that the Company will not be required to (i) qualify generally to do
business in any jurisdiction where it would not otherwise be required to qualify
but for this subparagraph (d), (ii) subject itself to taxation in any such
jurisdiction or (iii) consent to general service of process in any such
jurisdiction);
(f) notify each seller of such Registrable
Securities, at any time when a Prospectus relating thereto is required to be
delivered under the Securities Act, of the occurrence of any event as a result
of which the Prospectus included in such Registration Statement contains an
untrue statement of a material fact or omits any fact necessary to make the
statements therein not misleading, and at the Company's option, the Company
shall either (i) prepare a supplement or amendment to such Prospectus (and if an
amendment to the Registration Statement is required, promptly file and cause
such amendment to become effective), or (ii) suspend the disposition of
Registrable Securities pursuant to such Prospectus, until such time as each
seller of Registrable Securities is advised by the Company that the use of the
Prospectus may be resumed, and thereafter use its best efforts to promptly
prepare a supplement or amendment to such Prospectus (and if an amendment to the
Registration Statement is required, promptly file and cause such amendment to
become effective), so that, as thereafter delivered to the purchasers of such
Registrable Securities, such Prospectus and Registration Statement shall not
contain an untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading;
(g) in the case of an underwritten offering,
enter into such customary agreements (including underwriting agreements in
customary form) and take all such other actions as the Holders of a majority of
number of the Registrable Securities being sold or the underwriters, if any,
reasonably request in order to expedite or facilitate the disposition of such
Registrable Securities (including, without limitation, using its good faith
commercially reasonable efforts to cause members of management of the Company to
participate in customary "road-show" activities to the extent required by the
underwriters) and cause to be delivered to the underwriters and the sellers, if
any, opinions of counsel to the Company in customary form, covering such matters
as are customarily covered by opinions for an underwritten public offering as
the underwriters may reasonably request and addressed to the underwriters and
the sellers;
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(h) make available, for inspection by any seller
of Registrable Securities, any underwriter participating in any disposition
pursuant to such Registration Statement, and any attorney, accountant or other
agent retained by any such seller or underwriter, all financial and other
records, pertinent corporate documents and properties of the Company, and cause
the Company's officers, directors, employees and independent accountants to
supply all information reasonably requested by any such seller, underwriter,
attorney, accountant or agent in connection with such Registration Statement,
subject to the execution of customary confidentiality agreements;
(i) use its best efforts to cause all such
Registrable Securities to be (A) listed on each securities exchange on which
securities of the same class issued by the Company are then listed or, if the
Common Stock is not then listed, on Nasdaq or a national securities exchange
selected by the Company and (B) registered with or approved by such other
governmental agencies or authorities or self-regulatory organizations as may be
necessary to enable the Stockholders to consummate the disposition of such
Registrable Securities;
(j) provide a transfer agent and registrar
selected by the Company for all such Registrable Securities not later than the
effective date of such Registration Statement;
(k) if requested, cause to be delivered,
immediately prior to the effectiveness of the Registration Statement (and, in
the case of an underwritten offering, at the time of delivery of any Registrable
Securities sold pursuant thereto), letters from the Company's independent
certified public accountants addressed to each selling Holder (unless such
selling Holder does not provide to such accountants the appropriate
representation letter required by rules governing the accounting profession) and
each underwriter, if any, stating that such accountants are independent public
accountants within the meaning of the Securities Act and the applicable rules
and regulations adopted by the SEC thereunder, and otherwise in customary form
and covering such financial and accounting matters as are customarily covered by
letters of the independent certified public accountants delivered in connection
with primary or secondary underwritten public offerings, as the case may be;
(l) make generally available to its shareholders
a consolidated earnings statement (which need not be audited) for the 12 months
beginning after the effective date of a registration statement as soon as
reasonably practicable after the end of such period, which earnings statement
shall satisfy the requirements of an earning statement under Section 11(a) of
the Securities Act;
(m) promptly notify each seller of Registrable
Securities and the underwriter or underwriters, if any:
(i) when the Registration Statement,
any pre-effective amendment, the Prospectus or any Prospectus supplement or
post-effective amendment to the Registration Statement has been filed and, with
respect to the Registration Statement or any post-effective amendment, when the
same has become effective;
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(ii) of any written request by the SEC
for amendments or supplements to the Registration Statement or Prospectus;
(iii) of the notification to the Company
by the SEC threatening to initiate or the initiation of any proceeding with
respect to the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement; and
(iv) of the receipt by the Company of
any notification with respect to the threatened suspension or suspension of the
qualification of any Registrable Securities for sale under the applicable
securities or blue sky laws of any U.S. jurisdiction;
(n) use its best efforts to prevent the entry of
any threatened stop order or suspension of qualification referred to in Sections
5(m)(iii) and (iv) and to obtain the lifting at the earliest possible time of
any stop order suspending the effectiveness of any Registration Statement or of
any order preventing or suspending the use of any preliminary Prospectus; and
(o) take all actions necessary to facilitate the
timely preparation and delivery of certificates (not bearing any legend
restricting the sale or transfer of such securities) representing the
Registrable Securities to be sold pursuant to the Registration Statement and to
enable such certificates to be in such denominations and registered in such
names as the Holders or any underwriter may request.
The Company may require each seller of Registrable Securities as to
which any registration is being effected to furnish to the Company any other
information regarding such seller and the distribution of such securities as the
Company may from time to time reasonably request in writing. The Holders
covenant and agree to timely and truthfully provide such information upon
request.
Each seller of Registrable Securities agrees by having its stock
treated as Registrable Securities hereunder that, upon notice of the happening
of any event as a result of which the Prospectus included in such Registration
Statement contains an untrue statement of a material fact or omits any material
fact necessary to make the statements therein not misleading, such seller will
forthwith discontinue disposition of Registrable Securities until such seller is
advised in writing by the Company that the use of the Prospectus may be resumed
and, if applicable, is furnished with a supplemented or amended Prospectus as
contemplated by Section 5(f) hereof, and, if so directed by the Company, such
seller will deliver to the Company (at the Company's expense) all copies, other
than permanent file copies then in such seller's possession, of the Prospectus
covering such Registrable Securities current at the time of receipt of such
notice. If the Company shall give any notice to suspend the disposition of
Registrable Securities pursuant to a Prospectus, the Company shall extend the
period of time during which the Company is required to maintain the Registration
Statement effective pursuant to this Agreement by the number of days during the
period from and including the date of the giving of such notice to and including
the date such seller either is advised by the Company that the use of the
Prospectus
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may be resumed or receives the copies of the supplemented or amended Prospectus
contemplated by Section 5(f).
6. Registration Expenses.
(a) All expenses incident to the Company's
performance of or compliance with this Agreement, including, without limitation,
all registration and filing fees, fees and expenses of compliance with
securities or blue sky laws, listing application fees, printing expenses,
transfer agent's and registrar's fees, cost of distributing prospectuses in
preliminary and final form as well as any supplements thereto, and fees and
disbursements of counsel for the Company and all independent certified public
accountants and other Persons retained by the Company (all such expenses being
herein called "Registration Expenses") (but not including any underwriting
discounts or commissions attributable to the sale of Registrable Securities),
shall be borne by the Company. In addition, the Company shall pay (i) the fees
and expenses of a single firm of counsel to the Holders (designated by the
holders of a majority of the Registrable Securities requested to be registered
in such registration) and (ii) its internal expenses (including, without
limitation, all salaries and expenses of its officers and employees performing
legal or accounting duties), the expense of any annual audit or quarterly
review, the expense of any liability insurance and the expenses and fees for
listing the securities to be registered on each securities exchange on which
they are to be listed.
(b) The obligation of the Company to bear the
expenses described in Section 6(a) shall apply irrespective of whether a
registration, once properly demanded, if applicable, becomes effective, is
withdrawn or suspended, is converted to another form of registration and
irrespective of when any of the foregoing shall occur.
7. Indemnification. In the event any Registrable
Securities are included in a Registration Statement under this Agreement:
(a) To the fullest extent permitted by law, the
Company will, and hereby does, indemnify, hold harmless and defend each Holder,
the directors, officers, partners, employees, agents, advisors, representatives
of, and each Person, if any, who controls any Holder within the meaning of the
Securities Act or the Exchange Act (each, an "Indemnified Person"), against any
losses, claims, damages, liabilities, judgments, fines, penalties, charges,
costs, reasonable attorneys' fees, amounts paid in settlement or expenses, joint
or several, (collectively, "Claims") incurred in investigating, preparing or
defending any action, claim, suit, inquiry, proceeding, investigation or appeal
taken from the foregoing by or before any court or governmental, administrative
or other regulatory agency, body or the SEC, whether pending or threatened,
whether or not an Indemnified Person is or may be a party thereto ("Indemnified
Damages"), to which any of them may become subject insofar as such Claims (or
actions or proceedings, whether commenced or threatened, in respect thereof)
arise out of or are based upon: (i) any untrue statement or alleged untrue
statement of a material fact in a Registration Statement or any post-effective
amendment thereto or in any filing made in connection with the qualification of
the offering under the securities or other "blue sky" laws of any jurisdiction
in
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which Registrable Securities are offered ("Blue Sky Filing"), or the omission or
alleged omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary Prospectus if used prior to the effective date of such Registration
Statement (unless superceded by a final Prospectus), or contained in the final
Prospectus (as amended or supplemented, if the Company files any amendment
thereof or supplement thereto with the SEC), or the omission or alleged omission
to state therein any material fact necessary to make the statements made
therein, in light of the circumstances under which the statements therein were
made, not misleading or (iii) any violation or alleged violation by the Company
of the Securities Act or the Exchange Act or any rule or regulation promulgated
thereunder relating to the offer or sale of the Registrable Securities pursuant
to a Registration Statement (the matters in the foregoing clauses (i) through
(iii) being, collectively, "Violations"); provided, however, that the foregoing
indemnity agreement shall not apply to any Claim to the extent that such Claim
arises out of or is based upon a Violation which occurs in reliance upon and in
conformity with information relating to such Indemnified Person furnished in
writing to the Company by such Indemnified Person expressly for inclusion in the
Registration Statement or any such amendment thereof or supplement thereto.
Subject to Section 7(c), the Company shall reimburse the Indemnified Persons,
for any reasonable legal fees or other reasonable expenses reasonably incurred
by them in connection with investigating or defending any such Claim; provided,
however, that the indemnity agreement contained in this Section 7(a) and the
agreement with respect to contribution contained in Section 7(f) shall not apply
to amounts paid in settlement of any Claim if such settlement is effected
without the prior written consent of the Company, which consent shall not be
unreasonably withheld, delayed or conditioned. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Indemnified Person and shall survive any transfer of the Registrable
Securities by the Holders.
(b) In connection with any Registration
Statement in which a Holder is participating, each such Holder agrees to
severally and not jointly indemnify, hold harmless and defend, to the same
extent and in the same manner as is set forth in Section 7(a), the Company, each
of its directors, each of its officers who signs the Registration Statement,
each Person, if any, who controls the Company within the meaning of the
Securities Act or the Exchange Act (each an "Indemnified Party"), against any
Claim or Indemnified Damages to which any of them may become subject, under the
Securities Act, the Exchange Act or otherwise, insofar as such Claim or
Indemnified Damages arise out of or are based upon any Violation, in each case
to the extent, and only to the extent, that such Violation occurs in reliance
upon and in conformity with written information relating to such Holder
furnished to the Company by such Holder expressly for inclusion in such
Registration Statement; and, subject to Section 7(c), such Holder will reimburse
any reasonable legal fees or other reasonable expenses reasonably incurred by an
Indemnified Party in connection with investigating or defending any such Claim;
provided, however, that the indemnity agreement contained in this Section 7(b)
and the agreement with respect to contribution contained in Section 7(f) shall
not apply to amounts paid in settlement of any Claim if such settlement is
effected without the prior written consent of such Holder, which consent shall
not be unreasonably withheld, delayed or conditioned; provided, further,
however, that the Holders shall be liable under this Section 7(b) for only that
amount of a Claim or
11
Indemnified Damages as does not exceed the net proceeds to such Holder as a
result of the sale of Registrable Securities pursuant to such Registration
Statement. Such indemnity shall remain in full force and effect regardless of
any investigation made by or on behalf of such Indemnified Party and shall
survive any transfer of the Registrable Securities by the Holders.
(c) Promptly after receipt by an Indemnified
Person or Indemnified Party under this Section 7 of notice of the commencement
of any action or proceeding (including any governmental action or proceeding)
involving a Claim, such Indemnified Person or Indemnified Party, as the case may
be, shall, if a Claim in respect thereof is to be made against any indemnifying
party under this Section 7, deliver to the indemnifying party a written notice
of the commencement thereof, and the indemnifying party shall have the right to
participate in, and, to the extent the indemnifying party so desires, jointly
with any other indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the indemnifying party and
the Indemnified Person or the Indemnified Party, as the case may be; provided,
however, that an Indemnified Person or Indemnified Party shall have the right to
retain its own counsel with the fees and expenses of not more than one counsel
(plus additional local counsel, as required) for such Indemnified Person or
Indemnified Party to be paid by the indemnifying party, if, in the reasonable
opinion of counsel retained by the indemnifying party, the representation by
such counsel of the Indemnified Person or Indemnified Party and the indemnifying
party would be inappropriate due to actual or potential differing interests
between such Indemnified Person or Indemnified Party and any other party
represented by such counsel in such proceeding. In the case of an Indemnified
Person, legal counsel referred to in the immediately preceding sentence shall be
selected by the Holders holding at least two-thirds (2/3) in interest of the
Registrable Securities included in the Registration Statement to which the Claim
relates. The Indemnified Party or Indemnified Person, as the case may be, shall
cooperate fully with the indemnifying party in connection with any negotiation
or defense of any such action or Claim by the indemnifying party and shall
furnish to the indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such action or Claim.
The indemnifying party shall keep the Indemnified Party or Indemnified Person
fully apprised as to the status of the defense or any settlement negotiations
with respect thereto. No indemnifying party shall be liable for any settlement
of any action, claim or proceeding effected without its prior written consent;
provided, however, that the indemnifying party shall not unreasonably withhold,
delay or condition its consent. No indemnifying party shall, without the prior
written consent of the Indemnified Party or Indemnified Person, as the case may
be, consent to entry of any judgment or enter into any settlement or other
compromise which does not include as an unconditional term thereof the giving by
the claimant or plaintiff to such Indemnified Party or Indemnified Person, as
the case may be, of a release from all liability in respect to such Claim or
litigation. Following indemnification as provided for hereunder, the
indemnifying party shall be subrogated to all rights of the Indemnified Party or
Indemnified Person, as the case may be, with respect to all third parties, firms
or corporations relating to the matter for which indemnification has been made.
The failure to deliver written notice to the indemnifying party within a
reasonable time of the commencement of any such action shall not relieve such
indemnifying party of any liability to the Indemnified Person or Indemnified
Party
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under this Section 7, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action.
(d) The indemnification required by this Section
7 shall be made by periodic payments of the amount thereof during the course of
the investigation or defense, as and when bills are received or Indemnified
Damages are incurred.
(e) The indemnity agreements contained herein
shall be in addition to (i) any cause of action or similar right of the
Indemnified Party or Indemnified Person, as the case may be, against the
indemnifying party or others, and (ii) any liabilities the indemnifying party
may be subject to pursuant to the law.
(f) To the extent any indemnification by an
indemnifying party is prohibited or limited by law, the indemnifying party
agrees to make the maximum contribution with respect to any amounts for which it
would otherwise be liable under Section 7 to the fullest extent permitted by
law; provided, however, that: (i) no person involved in the sale of Registrable
Securities which person is guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) in connection with such sale,
shall be entitled to contribution from any person involved in such sale of
Registrable Securities who was not guilty of fraudulent misrepresentation; and
(ii) contribution by any seller of Registrable Securities shall be limited in
amount to the net amount of proceeds received by such seller from the sale of
such Registrable Securities pursuant to such Registration Statement.
8. Rule 144. The Company covenants that it will file the
reports required to be filed by it under the Securities Act and the Exchange Act
and the rules and regulations adopted by the SEC thereunder, and it will take
such further action as any Holder may reasonably request to make available
adequate current public information with respect to the Company meeting the
current public information requirements of Rule 144(c) under the Securities Act,
to the extent required to enable such Holder to sell Registrable Securities
without registration under the Securities Act within the limitation of the
exemptions provided by (i) Rule 144 under the Securities Act, as such Rule may
be amended from time to time, or (ii) any similar Rule or regulation hereafter
adopted by the SEC. Upon the request of any Holder, the Company will deliver to
such Holder such information as may be necessary to enable such Holder to effect
sales of Common Stock pursuant to Rule 144 of the Securities Act and a written
statement as to whether it has complied with such information and requirements.
9. Miscellaneous.
(a) Notices. All notices, requests and other
communications to any party hereunder shall be in writing (including facsimile
or similar writing) and shall be given:
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If to the Company:
Hanover Direct, Inc.
000 Xxxxx Xxxx, Xxxxxxxx 00
Xxxxxxxxx, Xxx Xxxxxx 00000
Attention: Secretary
Facsimile No.: (000) 000-0000
with a copy to:
Xxxxx Raysman Xxxxxxxxx Xxxxxx & Xxxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
If to the Stockholders:
Xxxxxxx Direct, LLC
000 Xxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
If to a transferee Holder, to the address of such Holder set forth in
the transfer documentation provided to the Company;
in each case with copies to:
Xxxxxxx Berlin Shereff Xxxxxxxx, LLP
The Chrysler Building
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx Xxxxxxxx, Esq.
Facsimile No.: (000) 000-0000
or such other address or facsimile number as such party (or transferee) may
hereafter specify for such purpose by notice to the other parties in the manner
specified herein. Each such notice, request or other communication shall be
effective (i) if given by facsimile, when such facsimile is transmitted to the
facsimile number specified in this Section and the appropriate facsimile
confirmation is received or (ii) if given by mail, at the earliest of its
receipt or five days after the same has been deposited in a regularly maintained
receptacle for the deposit of U.S. mail, addressed and postage paid as aforesaid
or (iii) if given by any other means, when delivered at the address specified in
this Section.
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(b) No Waivers. No failure or delay by any party
in exercising any right, power or privilege hereunder or seeking any remedy with
respect to a breach hereof shall operate as a waiver thereof or of any other
right, power or privilege nor shall any single or partial exercise thereof
preclude any other or further exercise thereof or the exercise of any other
right, power or privilege. The rights and remedies herein provided shall be
cumulative and not exclusive of any rights or remedies provided by law.
(c) Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, successors and assigns, it being
understood that subsequent Holders of the Registrable Securities are intended
third party beneficiaries hereof. The Stockholders shall provide written notice
to the Company pursuant to Section 9(a) hereof, of any transfers or assignments
of Registrable Securities, promptly after such transfer or assignment. Such
notice shall include the name and other contact information relating to such
transferee or assignee.
(d) Governing Law. This Agreement shall be
construed in accordance with and governed by the law of the State of New York,
without regard to principles of conflicts of law (other than Section 5-1401 of
the General Obligations Law of the State of New York).
(e) Jurisdiction. Any suit, action or proceeding
seeking to enforce any provision of, or based on any matter arising out of or in
connection with, this Agreement or the transactions contemplated hereby may be
brought in any federal or state court located in the Southern District of New
York, and each of the parties hereby consents to the jurisdiction of such courts
(and of the appropriate appellate courts therefrom) in any such suit, action or
proceeding and irrevocably waives, to the fullest extent permitted by law, any
objection which it may now or hereafter have to the laying of the venue of any
such suit, action or proceeding in any such court or that any such suit, action
or proceeding which is brought in any such court has been brought in an
inconvenient forum. Process in any such suit, action or proceeding may be served
on any party anywhere in the world, whether within or without the jurisdiction
of any such court. Without limiting the foregoing, each party agrees that
service of process on such party as provided in Section 9(a) shall be deemed
effective service of process on such party.
(f) Waiver of Jury Trial. EACH OF THE PARTIES
HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATED TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
(g) Counterparts; Effectiveness. This Agreement
may be signed in any number of counterparts, each of which shall be an original,
with the same effect as if the signatures thereto and hereto were upon the same
instrument provided no party shall be bound unless and until the Stockholders
and the Company have each signed a counterpart hereof. Facsimile transmissions
of any executed original documents and/or retransmission of any executed
facsimile transmission shall be deemed to be the same as the delivery of an
executed original. At the written request of any party hereto, the other parties
hereto shall confirm
15
facsimile transmissions by executing duplicate original documents and delivering
the same to the requesting party or parties.
(h) Entire Agreement. This Agreement constitutes
the entire agreement between the parties with respect to the subject matter of
this Agreement and supercedes all prior agreements and understandings, both oral
and written, between the parties with respect to the transactions contemplated
herein. No provision of this Agreement or any other agreement contemplated
hereby is intended to confer on any Person other than the parties hereto any
rights or remedies.
(i) Captions. The captions herein are included
for convenience of reference only and shall be ignored in the construction or
interpretation hereof.
(j) Severability. If any term, provision,
covenant or restriction of this Agreement is held by a court of competent
jurisdiction or other authority to be invalid, void or unenforceable (a
"Determination"), the remainder of the terms, provisions, covenants and
restrictions of this Agreement shall remain in full force and effect and shall
in no way be affected, impaired or invalidated so long as the economic or legal
substance of the transactions contemplated hereby is not affected in any manner
materially adverse to any party. Upon such a Determination, the parties shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner in order
that the transactions contemplated hereby be consummated as originally
contemplated to the fullest extent possible.
(k) Amendments. The provisions of this
Agreement, including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given without the prior written consent of the
holders of a majority of the Registrable Securities outstanding at the time;
provided, however, that the consent or agreement of the Company shall be
required with regard to any termination, amendment, modification or supplement
of, or waivers or consents to departures from, the terms hereof, which affect
the Company's obligations hereunder.
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IN WITNESS WHEREOF, this Registration Rights Agreement has been duly
executed by each of the parties hereto as of the date first written above.
XXXXXXX DIRECT, LLC
By: /s/ Xxxxxxx X. Xxxxxxx
______________________________
Name:
Title:
HANOVER DIRECT, INC.
By: /s/ Xxxxxx X. Xxxxx
______________________________
Name: Xxxxxx X. Xxxxx
Title: President
/s/ Xxxxxx Xxxxxxx
___________________________________
Xxxxxx Xxxxxxx
17
