EXHIBIT 2.1
AGREEMENT AND PLAN OF MERGER
This Agreement and Plan of Merger dated April 6, 1998, by and between
CANDIE'S, INC., a Delaware corporation ("Candie's"), and NEW RETAIL CONCEPTS,
INC., a Delaware corporation ("NRC"). (Candie's and NRC are sometimes
collectively referred to as the "Constituent Corporations").
WHEREAS, as of the date hereof, the authorized capital stock of Candie's
consists of 30,000,000 shares of common stock, $.001 par value, (the "Candie's
Common Stock") of which 14,146,990 shares are issued and outstanding, of which
4,723,800 shares are reserved for issuance of outstanding options and warrants;
and 5,000,000 shares of Preferred Stock, $.01 par value, (the "Candie's
Preferred Stock") none of which are issued and outstanding;
WHEREAS, as of the date hereof, the authorized capital stock of NRC
consists of 25,000,000 shares of common stock, $.01 par value (the "NRC Common
Stock") of which 5,693,639 shares are issued and outstanding, and 1,635,000
shares are reserved for issuance upon the exercise of outstanding options; and
1,000,000 shares of Preferred Stock, $.01 par value, none of which are issued
and outstanding;
WHEREAS, the respective Boards of Directors of Candie's, and NRC deem it
advisable and in the best interests of Candie's and NRC and their respective
shareholders that NRC merge with and into Candie's (the "Merger") pursuant to
this Agreement and the
applicable provisions of the Delaware General Corporation Law ("Delaware
Corporate Law");
WHEREAS, the respective Boards of Directors of Candie's, and NRC have
approved and adopted this Agreement and have directed that the plan of merger
and reorganization set forth in Article I of this Agreement (the "Plan of
Merger") be submitted to the shareholders of Candie's and NRC for their
approval; and
WHEREAS, the Merger is intended to constitute a "reorganization" within the
meaning of Section 368(a) of the Internal Revenue Code of 1986, as amended;
NOW THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, and for other good and valuable consideration
the receipt and sufficiency of which are hereby acknowledged, the parties hereto
represent, warrant, covenant and agree as follows:
ARTICLE I
PLAN OF MERGER
1.1 Surviving Corporation. At the Effective Time (as defined in Section
1.8), NRC shall be merged with and into Candie's pursuant to this Agreement and
a plan of merger and reorganization in substantially the form annexed hereto as
Exhibit 1.1 (the "Plan of Merger"). Candie's shall be the surviving corporation
(the "Surviving Corporation") and shall continue its corporate existence under
the laws of the State of Delaware and the separate existence of NRC shall cease.
1.2 Effect of the Merger. At the Effective Time, the Surviving Corporation
shall possess all of the rights, privileges,
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immunities and franchises, of a public as well as of a private nature, of each
of the Constituent Corporations and all property, real, personal and mixed, and
all debts due on whatever account, including subscriptions to shares, and all
other choses in action, and all and every other interest of or belonging to or
due to each of the Constituent Corporations, shall be taken and deemed to be
transferred and vested in the Surviving Corporation without further act or deed;
and the title to any real estate, or any interest therein, vested in either of
the Constituent Corporations shall not revert or be in any way impaired by
reason of the Merger. From and after the Effective Time, the Surviving
Corporation shall be responsible and liable for all of the liabilities, debts,
duties and obligations of each of the Constituent Corporations; and any claims
existing or action or proceeding, whether civil or criminal, pending, by or
against either of the Constituent Corporations shall be preserved unimpaired and
all debts, liabilities and duties of each of the Constituent Corporations shall
attach to the Surviving Corporation and may be enforced against it to the same
extent as if those debts, liabilities and duties had been incurred or contracted
by it. Neither the rights of creditors nor any liens upon the property of either
of the Constituent Corporations shall be impaired by the Merger.
1.3 Additional Actions. If, at any time after the Effective Time, the
Surviving Corporation shall consider or be advised that any further assignments
or assurances in law or any other acts are necessary or desirable to (a) vest,
perfect or confirm, of record or otherwise, in the Surviving Corporation any
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rights, title or interest in, to or under any of the rights, properties or
assets of Candie's or NRC acquired or to be acquired by the Surviving
Corporation as a result of, or in connection with, the Merger, or (b) otherwise
carry out the purposes of this Agreement, then NRC and its appropriate officers
and/or directors shall be deemed to have granted to the Surviving Corporation an
irrevocable power of attorney to execute and deliver all such proper deeds,
assignments and assurances in law and to do all acts necessary or proper, to
vest, perfect or confirm title to and possession of such rights, properties or
assets in the Surviving Corporation and otherwise to carry out the purposes of
this Agreement, and the appropriate officers and/or directors of the Surviving
Corporation are hereby fully authorized in the names of NRC or otherwise to take
any and all such actions.
1.4 Name of Surviving Corporation. The name of the Surviving Corporation
shall remain Candie's, Inc.
1.5 Certificate of Incorporation. The Certificate of Incorporation of
Candie's as in effect immediately prior to the Effective Time shall be the
Certificate of Incorporation of the Surviving Corporation until and unless
thereafter amended as provided by law and such Certificate of Incorporation.
1.6 Bylaws. The Bylaws of Candie's as in effect immediately prior to the
Effective Time shall be the Bylaws of the Surviving Corporation until thereafter
amended as provided by law, the Certificate of Incorporation and such Bylaws.
1.7 Officers and Directors. The officers and directors of Candie's shall
remain the directors and officers of the
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Surviving Corporation and shall hold office until their resignations or until
their respective successors have been appointed or duly elected.
1.8 Closing Effective Time.
(a) The closing of the Merger shall take place at 10:00 a.m., local time,
on a date specified by Candie's and NRC, which shall be no later than the second
business day after satisfaction or waiver of the conditions set forth in Article
VII at the offices of Xxxxxx Xxxxxxxxxx LLP, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, or such other place as agreed to by the parties (the "Closing"). The
Merger shall become effective at the time of filing of a Certificate of Merger
in the form attached as Exhibit 1.8, with the Secretary of State of the State of
Delaware in accordance with the relevant provisions of the Delaware Corporate
Law, which Certificate of Merger shall be so filed immediately following the
satisfaction of each of the conditions set forth in Article VII below, or as
soon as practicable thereafter.
(b) The date and time when the Merger shall become effective is referred to
as the "Effective Time."
1.9 Conversion of Shares.
(a) By virtue of the Merger, automatically and without any action on the
part of the holder thereof, at the Effective Time:
(i) Each issued and outstanding share of NRC Common Stock shall cease
to exist and shall be converted into and
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represent the right to receive 0.405 shares of Candie's Common Stock (the
"Exchange Ratio");
(ii) Any shares of NRC Common stock issued and held in the treasury of
NRC shall be cancelled;
(iii) Any shares of NRC Common Stock issued and owned by Candie's
immediately preceding the Effective Time shall be cancelled and retired and
no payment made with respect thereto;
(iv) Any shares of Candie's Common Stock issued and owned by NRC
immediately preceding the Effective Time shall be returned to the status of
authorized but unissued shares of Candie's Common Stock, and no payment
made with respect thereto;
(v) Any warrants or options to the purchase shares of Candie's Common
Stock issued and owned by NRC immediately preceeding the Effective Time
shall be cancelled, and no payment made with respect thereto; and
(vi) Each issued and outstanding option to acquire one (1) share of
NRC Common Stock outstanding at the Effective Time shall be converted into
an option to acquire 0.405 shares of Candie's Common Stock, which option
shall be on substantially the same terms and conditions as the option being
converted, and shall be exercisable at an exercise price equal to the
quotient of (a) the exercise price of the option being converted divided by
(b) the Exchange Ratio, which quotient shall then be rounded down to the
nearest cent. Between the date hereof and the Effective Date if necessary,
Candie's shall amend its stock option plan and reserve sufficient shares so
as to permit the
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issuance of the options to acquire shares of Candie's Common Stock
described in this Section 1.9(a)(vi).
(b) No rights to receive fractional shares of Candie's Common Stock shall
arise under this Agreement.
(c) No fractional shares of Candie's Common stock shall be issued, but in
lieu thereof, each holder of Candie's Common Stock who would otherwise be
entitled to receive a fraction of a share of Candie's Common Stock shall receive
from Candie's an amount of cash equal to the price of one share of Candie's
Common Stock as of the date of the Merger (which price shall be calculated as
the average of the last sales price for Candie's Common Stock during the twenty
(20) day period immediately prior to the Effective Date) multiplied by a
fraction of a share of Candie's Common Stock for which such holder would be
entitled. No shareholder of NRC shall receive cash from Candie's in lieu of
fractional shares in an amount greater than the value of one paid share of
Candie's Common Stock.
1.10 NRC Dissenting Shareholders. Shares of NRC Common Stock which are
issued and outstanding immediately prior to the Effective Time and which are
held by NRC shareholders who have not voted such shares in favor of the Merger
and who shall have properly exercised their rights of appraisal for such shares
in the manner provided by the Delaware Corporate Law ("Dissenting Shares") shall
not be converted into or be exchangeable for the right to receive shares of
Candie's Common Stock unless and until such holders shall have failed to perfect
or shall have effectively withdrawn or lost their dissenters' rights under the
Delaware
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Corporate Law. With respect to any holders who have failed to perfect and have
effectively withdrawn or lost their dissenters' rights, such holders' shares
shall thereupon be deemed to have been converted into and to have become
exchangeable for, at the Effective Time, shares of Candie's Common Stock. NRC
shall give Candie's prompt notice of any (i) Dissenting Shares, (ii) attempted
withdrawals of such demands for appraisal rights, and (iii) any other
communications received by NRC with respect to dissenters' rights. Candie's
shall have the right to direct all negotiations and proceedings with respect to
any demands for appraisal rights. NRC shall not, except with the prior consent
of Candie's, voluntarily make any payment with respect to, or settle or offer to
settle, any such demand for appraisal rights.
1.11 Exchange of Certificates.
(a) Candie's shall cause Continental Stock Transfer and Trust Company (or
such successor as Candie's may designate) as exchange agent (the "Exchange
Agent"), to send to each holder of shares of NRC's Common Stock which shall have
been converted into Candie's Common Stock an appropriate letter of transmittal
for purposes of surrendering such holder's certificates for such shares for
exchange pursuant hereto.
(b) As soon as practicable after the Effective Time and after surrender to
the Exchange Agent of any certificate which prior to the Effective Time shall
have represented any shares of NRC's Common Stock (a "Certificate"), subject to
the provisions of paragraph (d) of this Section 1.11, Candie's shall cause to be
distributed to the person in whose name such Certificate shall have
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been registered, or in accordance with the written instructions transmitted to
the Exchange Agent, certificates registered in the name of such person
representing the Candie's Common Stock to which such person shall be entitled as
described in paragraph (a) of Section 1.9 and cash payable to such person
representing payment in lieu of a fractional share of Candie's Common Stock as
determined in accordance with paragraph (c) of Section 1.9 (such cash to be
provided in the form of a check). Until surrendered as contemplated by the
preceding sentence, each Certificate shall be deemed at and after the Effective
Time to represent only the right to receive the certificates and payment
contemplated by the preceding sentence.
(c) No dividends declared after the Effective Time with respect to Candie's
Common Stock and payable to the holders of record thereof after the Effective
Time shall be paid to the holder of an unsurrendered Certificate until such
Certificate shall be surrendered as provided herein, but (i) upon such surrender
there shall be paid to the person in whose name the certificates representing
Candie's Common Stock shall be issued the amount of dividends theretofore paid
with respect to Candie's Common Stock as of any date subsequent to the Effective
Time based on the number of shares of Candie's Common Stock received by such
person and the amount of cash payable to such person in lieu of a fractional
share of Candie's Common Stock pursuant to paragraph (c) of Section 1.9 and (ii)
at the appropriate payment date or as soon as practicable thereafter, there
shall be paid to such person the amount of dividends payable with respect to
Candie's Common Stock; provided,
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however, that no dividends with a record date subsequent to the Effective Time
shall be payable with respect to fractional shares of Candie's Common Stock,
and, subject in any case to any applicable escheat laws and unclaimed property
laws. On surrender of a Certificate, no interest shall be payable with respect
to the payment of such dividends, and no interest shall be payable with respect
to the amount of any cash payable in lieu of a fractional share of Candie's
Common Stock.
(d) If any cash is to be paid to, or certificates representing Candie's
Common Stock are to be issued to, a person other than the person in whose name
the Certificate surrendered in exchange therefor is registered, it shall be a
condition of the payment or issuance thereof that the Certificate so surrendered
shall be properly endorsed and otherwise in proper form for transfer and that
the person requesting such exchange shall pay to the Exchange Agent any transfer
or other taxes required by reason of the payment of cash to a person other than,
or of the issuance of certificates representing Candie's Common Stock in any
name other than that of, the registered holder of the Certificate surrendered,
or otherwise required, or shall establish to the satisfaction of the Exchange
Agent that such tax has been paid or is not payable.
(e) After the Effective Time, there shall be no further registration of
transfers on the stock transfer books of the Surviving Corporation of the shares
of NRC's Common Stock which were outstanding immediately prior to the Effective
Time. If, after the Effective Time, Certificates are presented to the
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Surviving Corporation, they shall be cancelled and exchanged for the cash, if
any, and certificates representing the Candie's Common Stock into which they
were converted as provided in this Article I.
ARTICLE II
SHAREHOLDER APPROVAL
2.1 Shareholder Approvals.
(a) A meeting of the holders of NRC's Common Stock shall be called in
accordance with Delaware Corporate Law to be held on such date as may be
mutually agreed by the Boards of Directors of NRC and Candie's, and approved by
the Board of Directors of NRC, to consider and vote upon the approval of the
Plan of Merger. NRC shall use its best efforts to seek all required approvals of
its shareholders in connection with the Plan of Merger.
(b) A meeting of the holders of Candie's Common Stock shall be called in
accordance with Delaware Corporate Law to be held on such date as may be
mutually agreed upon by the Boards of Directors of Candie's and NRC, and
approved by the Board of Directors of Candie's, to consider and vote upon the
approval of the Plan of Merger and the issuance by Candie's of the Candies
securities in connection with the Merger. Candie's shall use its best efforts to
seek all required approvals of its shareholders in connection with the Plan of
Merger and the issuance of such Candie's securities.
(c) If the Plan of Merger is approved as provided in this Article II, and
if the Merger is not thereafter terminated as permitted by ss. 251(d) of the
Delaware Corporate Law and Article
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IX of this Agreement, and if each of the conditions to the obligations of NRC
and Candie's as provided hereunder have in accordance herewith been either
satisfied or waived, then NRC and Candie's shall cause the Certificate of Merger
to be promptly executed, acknowledged, delivered and properly and duly filed
with the Secretary of State of the State of Delaware on behalf of each of NRC
and Candie's.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF NRC
NRC represents and warrants to Candie's as follows:
3.1 Organization and Related Matters. NRC is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware.
NRC has the requisite corporate power and authority to own, lease, license and
operate its properties and assets and carry on its business as now being
conducted.
3.2 Subsidiaries. NRC has no direct or indirect subsidiaries.
3.3 Capitalization of NRC. The authorized capital stock of NRC consists of
25,000,000 shares of NRC's Common Stock, $.01 par value, of which 5,693,639
shares are issued and outstanding and 1,635,000 shares are reserved (the "NRC
Reserved Shares") for issuance upon the exercise of stock options granted to
certain of its directors, employees and consultants (the "NRC Options"), and
1,000,000 shares of NRC Preferred Stock, .01 par value, none of which are issued
and outstanding. There are no other outstanding options, warrants or other
rights to subscribe for or purchase or
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acquire from NRC, or any plans, contracts or commitments providing for the
issuance of or the granting of rights to acquire, any capital stock of NRC or
securities convertible into or exchangeable for capital stock of NRC. All issued
shares of NRC capital stock are duly authorized, validly issued and outstanding
and are fully paid, nonassessable and free from preemptive rights.
3.4 Authority Relative to Agreement. Except for shareholder approval
required by ss. 251(c) of the Delaware Corporate Law, NRC has full corporate
power and authority to enter into and perform this Agreement and to carry out
the transactions contemplated hereby. The Board of Directors of NRC has duly
authorized the execution, delivery and performance of this Agreement and the
transactions contemplated hereby, and, except for the shareholder meeting
contemplated in Article II hereof, no other corporate proceedings on the part of
NRC are necessary to authorize this Agreement or the transactions contemplated
hereby. This Agreement constitutes the valid and binding agreement of NRC
enforceable against it in accordance with its terms, except (a) such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, conservatorship, moratorium, or similar laws
affecting the enforcement of creditors rights generally and (b) the availability
of the equitable remedy of specific performance or injunctive relief is subject
to the discretion of the court before which any proceeding may be brought.
3.5 Compliance. Except as disclosed in Section 3.5 of the Disclosure
Statement of NRC attached hereto and made a part hereof (the "NRC Disclosure
Statement"), neither the execution and
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delivery of this Agreement by NRC, nor the consummation by NRC of the
transactions contemplated hereby, nor compliance by NRC with the terms and
provisions of this Agreement, will (nor with the giving of notice or the lapse
of time or both would):
(a) conflict with or result in a breach of any provision of the
Certificate of Incorporation or Bylaws of NRC;
(b) in any manner which would adversely affect the ability of NRC to
consummate the transactions provided for in this Agreement in accordance
with the terms of this Agreement, (i) violate, result in breach of, give
rise to a default, or any right of termination, cancellation or
acceleration, or otherwise be in conflict with or result in a loss of
material contractual benefits to NRC under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, agreement or
other instrument or obligation to which NRC is a party or by which it or
its operations, business, property or assets may be bound, or of which it
or its operations, business, properties or assets is a beneficiary, or (ii)
require any consent, approval or notice under the terms of any such note,
bond, mortgage, indenture, license, agreement or other instrument;
(c) violate, result in a breach of or conflict with any order, writ,
injunction, decree, law, statute, rule or regulation of any court or
governmental authority applicable to NRC, or to which NRC's operations,
businesses, properties or assets, including but not limited to the NRC
Intellectual Property Rights (as defined in Section 3.11), are subject in
any manner which would adversely affect the ability of NRC to consummate
the
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transactions provided for in this Agreement in accordance with the terms of
this Agreement;
(d) result in the creation or imposition of any lien, claim,
restriction, charge or encumbrance upon any of the NRC Common Stock; or
(e) to the best of the knowledge of NRC, materially and adversely
interfere with or otherwise materially and adversely affect the ability of
the Surviving Corporation to carry on NRC's business on substantially the
same basis as it is now conducted by NRC, including (in any manner that
will materially and adversely affect the Surviving Corporation) violate,
result in a breach of, give rise to a default, or otherwise be in conflict
with or result in a loss of material contractual benefits to the Surviving
Corporation under any of the terms, conditions or provisions of any note,
bond, mortgage, indenture, license, agreement or other instrument or
obligation to which NRC is currently a party or by which NRC, or any of its
operations, business, properties or assets currently may be bound or is a
beneficiary.
3.6 SEC Filings; Financial Statements. (a) Since April 1, 1995, NRC has
filed, and will continue to file, all forms, reports and documents required to
be filed by NRC with Securities and Exchange Commission (the "SEC")
(collectively, the "NRC SEC Reports"). Except as disclosed in Section 3.6 of the
NRC Disclosure Statement, the NRC SEC Reports (i) at the time filed, complied in
all material respects with the applicable requirements of the Securities Act of
1933, as amended (the "Securities Act") and the Securities Exchange Act of 1934,
as amended (the "Exchange
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Act"), as the case may be, and (ii) did not at the time they were filed (or if
amended or superseded by a subsequent filing, then on the date of such filing)
contain any untrue statement of a material fact or omit to state a material fact
required to be stated in such NRC SEC Reports or necessary in order to make the
statements in such NRC SEC Reports, in the light of the circumstances under
which they were made, not misleading.
(b) Each of the financial statements (including, in each case, any related
notes) contained in the NRC SEC Reports, including any NRC SEC Reports filed
after the date of this Agreement until the Closing (the "NRC Financial
Statements"), complied or will comply as to form in all material respects with
the applicable published rules and regulations of the SEC with respect thereto,
was or will be prepared in accordance with U.S. generally accepted accounting
principles applied on a consistent basis throughout the periods involved (except
as may be indicated in the notes to such financial statements or, in the case of
unaudited statements, as permitted by Form 10-QSB or 8-K promulgated by the
SEC), and fairly presented or will fairly present the financial position of NRC
as and at the respective dates and the results of its operations and cash flows
for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal and recurring year-end adjustments
which were not or are not expected to be material in amount. The unaudited
balance sheet of NRC as of December 31, 1997 is referred to herein as the "NRC
Balance Sheet."
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3.7 Absence of Undisclosed Liabilities. Except as disclosed in Section 3.7
of the NRC Disclosure Statement or as otherwise disclosed in the NRC SEC
Reports, NRC does not have any liabilities, either accrued or contingent
(whether or not required to be reflected in financial statements in accordance
with U.S. generally accepted accounting principles), and whether due or to
become due, which individually or in the aggregate could reasonably be expected
to have a material adverse effect, other than (i) liabilities reflected in the
NRC Balance Sheet, (ii) liabilities specifically described in this Agreement or
in the NRC Disclosure Statement, (iii) normal or recurring liabilities incurred
since December 31, 1997 in the ordinary course of business consistent with past
practices, and (iv) liabilities permitted by Section 5.2 hereof.
3.8 Absence of Certain Changes or Events. Except as set forth in Section
4.7 of the NRC Disclosure Statement, since the date of the NRC Balance Sheet,
NRC has conducted its business only in the ordinary course in a manner
consistent with past practice (except as disclosed in the NRC SEC Reports), and
since such date there has not been: (a) any NRC material adverse effect or any
facts or circumstances that could reasonably be expected to result in a material
adverse effect: (b) any damage, destruction or loss (whether or not covered by
insurance) with respect to NRC having a material adverse effect; (c) any
material change by NRC in its accounting methods, principles or practices to
which Candie's has not previously consented in writing; (d) any revaluation by
NRC of any of its assets having a material adverse effect, unless Candie's
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has previously consented in writing; or (e) except as disclosed in the NRC
Disclosure Statement, any other action or event that would have required the
consent of Candie's pursuant to Section 5.2 of this Agreement had such action or
event occurred after the date of this Agreement and that could reasonably be
expected to result in a material adverse effect.
3.9 Taxes.
(a) For purposes of this Agreement, a "Tax" or, collectively, "Taxes" means
any and all material federal, state, local and foreign taxes, assessments and
other governmental charges, duties, impositions and liabilities, including taxes
based upon or measured by gross receipts, income, profits, sales, use and
occupation, and value added, ad valorem, transfer, franchise, withholding,
payroll, recapture, employment, excise and property taxes, together with all
interest, penalties and additions imposed with respect to such amounts and any
obligations under any agreements or arrangements with any other person with
respect to such amounts and including any liability for taxes of a predecessor
entity.
(b) NRC has accurately prepared and timely filed (or will so file) all
material federal, state, local and foreign returns, estimates, information
statements and reports ("Returns") required to be filed at or before the
Effective Time relating to any and all Taxes concerning or attributable to NRC
or to its operations, and such Returns are true and correct in all material
respects and have been completed in all material respects in accordance with
applicable law.
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(c) NRC as of the Effective Time: (i) will have paid all Taxes it is
required to pay prior to the Effective Time and (ii) will have withheld with
respect to its employees all federal and state income taxes, FICA, FUTA and
other Taxes required to be withheld, except in each case for Taxes contested in
good faith by appropriate proceedings for which adequate reserves have been
taken and except where the failure (if any) to pay or withhold such Taxes could
not reasonably be expected to have a material adverse effect.
(d) There is no Tax deficiency outstanding, proposed or assessed against
NRC that is not reflected as a liability on the NRC Balance Sheet nor has NRC
executed any waiver of any statute of limitations on or extending the period for
the assessment or collection of any Tax.
(e) NRC has no material liability for unpaid federal, state, local or
foreign Taxes that has not been accrued for or reserved on the NRC Balance
Sheet, whether asserted or unasserted, contingent or otherwise.
3.10 Properties. Except as set forth in Section 3.10 of the NRC Disclosure
Statement, NRC owns or has valid leasehold interests in all real property
necessary for the conduct of its business as presently conducted. All material
leases to which NRC is a party are in good standing, valid and effective in
accordance with their respective terms, and NRC is not in default under any of
such leases, except where the lack of such good standing, validity and
effectiveness or the existence of such default could not reasonably be expected
to have a material adverse effect.
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3.11 Intellectual Property.
(a) Except as disclosed in Section 3.11 of the NRC Disclosure Statement,
NRC owns, or licenses or otherwise possess, legally enforceable rights to use,
all patents, trademarks, trade names, service marks and copyrights, any
applications for and registrations of such patent, trademarks, trade names,
service marks and copyrights, and all processes, formulae, methods, schematics,
technology, know how, and tangible or intangible proprietary information or
material that are necessary to conduct the business of NRC as currently
conducted or planned to be conducted by NRC, the absence of which would be
reasonably likely to have a material adverse effect (the "NRC Intellectual
Property Rights").
(b) Except as disclosed in Schedule 3.11 of the NRC Disclosure Statement,
(i) the NRC Intellectual Property Rights which are material to the business of
NRC are valid and subsisting; (ii) NRC has not been sued in any suit, action or
proceeding which involves a claim of infringement of any of the NRC Intellectual
Property Rights or any other proprietary right of any third party; and (iii) to
the knowledge of NRC, the manufacturing, marketing, licensing or sale of NRC's
products does not infringe any patent, trademark, service xxxx, copyright, trade
secret or other proprietary right of any third party, which infringement, either
individually or in the aggregate, could reasonably be expected to have a
material adverse effect.
3.12 Litigation. Except as disclosed in Section 3.12 of the NRC Disclosure
Statement, there is no action, suit or
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proceeding, claim, arbitration or, to the knowledge of NRC, investigation
against NRC, pending or, to the knowledge of NRC, threatened, or as to which NRC
has received any written notice of assertion, which, if decided adversely to
NRC, could reasonably be expected to have a material adverse effect or a
material adverse effect on the ability of NRC to consummate the transactions
contemplated by this Agreement.
3.13 Employee Benefit Plans.
(a) Except for the NRC stock option plan, a copy of which has been made
available to Candie's, NRC has no employee benefit plans (as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) and no bonus, other stock option, stock purchase, incentive, deferred
compensation, supplemental retirement, severance or other similar employee
benefit plans, and no unexpired severance agreements, written or otherwise, for
the benefit of, or relating to, any current or former employee of NRC or any
trade or business (whether or not incorporated) which is a member or which is
under common control with NRC within the meaning of Section 414 of the Code. NRC
does not maintain and has never maintained or contributed to any employee
benefit plan subject to Title IV of ERISA (including a multiemployer plan as
defined in Section 3(37) of ERISA).
(b) Except as set forth in Schedule 3.13 of the NRC Disclosure Statement,
and except as provided for in this Agreement, NRC is not a party to any oral or
written (i) union or collective bargaining agreement, (ii) agreement with any
officer or other key employee of NRC, the benefits of which are contingent, or
the terms
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of which are materially altered, upon the occurrence of a transaction involving
NRC of the nature contemplated by this Agreement, (iii) agreement with any
officer of NRC providing any term of employment or compensation guarantee
extending for a period longer than one year from the date hereof or for the
payment of compensation in excess of $10,000 per annum, or (iv) agreement or
plan, including the NRC stock option plan, any of the benefits of which will be
increased, or the vesting of the benefits of which will be accelerated, by the
occurrence of any of the transactions contemplated by this Agreement or the
value of any of the benefits of which will be calculated on the basis of any of
the transactions contemplated by this Agreement.
3.14 Accounts Receivable; Inventory. Subject to any reserves set forth in
the NRC Balance Sheet, the accounts receivable shown in the NRC Balance Sheet
arose in the ordinary course of business; were not, as of the date of the NRC
Balance Sheet, subject to any material discount, contingency, claim of offset or
recoupment or counter claim; and represented, as of the date of the NRC Balance
Sheet, bona fide claims against debtors for sales, leases, licenses and other
charges. Other than those accounts receivable due from Candie's set forth on the
NRC Balance Sheet, all accounts receivable of NRC arising after the date of the
NRC Balance Sheet through the date of this Agreement arose in the ordinary
course of business and, as of the date of this Agreement, are not subject to any
material discount, contingency, claim of off-set or recoupment or counterclaim,
except for normal reserves consistent with past practice. The amount carried for
doubtful
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accounts and allowances disclosed in the NRC Balance Sheet is believed by NRC as
of the date of this Agreement to be sufficient to provide for any losses which
may be sustained on realization of the accounts receivable shown in the NRC
Balance Sheet. NRC has no inventory.
3.15 Board Recommendation. The Board of Directors of NRC has unanimously
approved and adopted this Agreement, which vote included the affirmative vote of
a majority of the disinterested directors and has recommended that the
stockholders of NRC approve and adopt the Plan of Merger.
3.16 Statements True and Correct. No statement, certificate, instrument or
other writing furnished or to be furnished by NRC pursuant to this Agreement or
any other document, agreement or instrument referred to herein contains or will
contain any untrue statement of fact of material fact or omits or will omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
3.17 Financial Advisor Opinion. The financial advisor to NRC, CoView
Capital, Inc., has delivered to NRC an opinion, as of, or immediately prior to
the date of this Agreement to the effect that the Exchange Ratio is fair from a
financial point of view to the holders of NRC Common Stock (the "NRC Fairness
Opinion").
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF CANDIE'S Candie's represents and warrants
to NRC as follows:
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4.1 Organization and Related Matters. Candie's is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware. Candie's has all requisite corporate power and authority to own, lease
and operate its properties and to carry on its business as now being conducted.
4.2 Authority Relative to this Agreement. Candie's has full corporate power
and authority to enter into this Agreement and to carry out the transactions
contemplated hereby. The Board of Directors of Candie's, has duly authorized the
execution, delivery and performance of this Agreement and the transactions
contemplated hereby, and, except for the Shareholder meeting contemplated in
Article II hereof, no other corporate proceedings on the part of Candie's are
necessary to authorize this Agreement or the transactions contemplated hereby.
This Agreement constitutes the valid and binding agreement of Candie's
enforceable against it in accordance with its terms, except (a) such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, receivership, conservatorship, moratorium, or similar laws
affecting the enforcement of creditors rights generally and (b) the availability
of the equitable remedy of specific performance or injunctive relief is subject
to the discretion of the court before which any proceeding may be brought.
4.3 Capitalization of Candie's. The authorized capital stock of Candie's
consists of (i) 30,000,000 shares of Candie's Common Stock of which 14,146,990
shares are issued and outstanding, and (ii) 5,000,000 shares of Candie's
Preferred Stock, none of which are issued and outstanding. Candie's has reserved
for
-24-
issuance (i) 4,723,800 shares of Candie's Common Stock upon the exercise of
outstanding stock options pursuant to the Candie's employee 1989 and 1997 stock
option plans and other options and outstanding warrants (the "Prior Reserved
Shares") and (ii) up to approximately 2,306,000 shares of Candie's Common Stock
to be issued to the NRC Stockholders at the Effective Time of the Merger as
contemplated by this Agreement (the "Reserved Shares") and 662,175 shares of
Candie's Common stock to be issued upon exercise of the NRC options to be issued
to the holders of NRC stock options as contemplated by this Agreement (the
"Reserved Option Shares" and together with the Reserved Shares the "Reserved
Securities"). All issued and outstanding shares of Candie's Common Stock are
duly authorized, validly issued and are fully paid, nonassessable and free from
preemptive rights. All of the Prior Reserved Shares, the Reserved Shares and the
Reserved Option Shares when issued, will be duly authorized, validly issued and
outstanding fully paid, nonassessable and free from preemptive rights.
There are no shares held in the treasury and except for the Prior Reserved
Shares and the Reserved Shares there are no outstanding options, warrants or
other rights to subscribe for or purchase or acquire from Candie's or any plans,
contracts or commitments providing for the issuance of or the granting of rights
to acquire any capital stock of Candie's or securities convertible into or
exchangeable for Candie's Common Stock.
4.4 Compliance. Neither the execution and delivery by Candie's of this
Agreement or of any agreement to be executed and delivered by it pursuant
hereto, nor the consummation of any of the
-25-
transactions contemplated hereby or thereby, nor the performance by it of any of
its obligations hereunder or thereunder, will (nor with the giving of notice or
the lapse of time or both would):
(a) conflict with or result in a breach of any provision of the
Certificate of Incorporation or Bylaws of Candie's;
(b) in any manner which would adversely affect the ability of Candie's
to consummate the transactions provided for in this Agreement in accordance
with the terms of this Agreement; (i) violate, result in a breach of, give
rise to a default, or any right of termination, cancellation or
acceleration, or otherwise be in conflict with or result in a loss of
contractual benefits to Candie's under any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, agreement or
other instrument or obligation to which it is a party or by which it, or
any of its operations, businesses, properties or assets may be bound, or of
which it, any of its securities, or its operations, business, property or
assets is a beneficiary, or (ii) require any consent, approval or notice
under the terms of any such note, bond, mortgage, indenture' license,
agreement or other instrument;
(c) violate, result in a breach of or conflict with any order, writ,
injunction, decree, law, statute, rule or regulation of any court or
governmental authority applicable to Candie's or to which its operations,
businesses, properties or assets, including but not limited, to the
Candie's Intellectual Property (as defined in Section 4.10), are subject in
any manner which would adversely affect the ability of Candie's to
consummate
-26-
the transactions provided for in this Agreement in accordance with the
terms of this Agreement;
(d) result in the creation or imposition of any lien, claim,
restriction, charge or encumbrance upon any of the Candie's Common Stock,
options or warrants issued or reserved for issuance pursuant to this
Agreement; or
(e) the best of the knowledge of Candie's, interfere with or otherwise
materially and adversely affect the ability of Candie's, after the
Effective Time, to carry on its business on substantially the same basis as
it is now conducted by it.
4.5 SEC Filings; Financial Statements.
(a) Since February 1, 1995, Candie's has filed, and will continue to file,
all forms, reports and documents required to be filed by Candie's with the SEC
(collectively, the "Candie's SEC Reports"). Except as disclosed in section 4.5
of the Candie's disclosure statement attached hereto and made a part hereof (the
"Candie's Disclosure Statement"), the Candie's SEC Reports (i) at the time
filed, complied in all material respects with the applicable requirements of the
Securities Act and the Exchange Act, as the case may be, and (ii) did not at the
time they were filed (or if amended or superseded by a subsequent filing, then
on the date of such filing) contain any untrue statement of a material fact or
omit to state a material fact required to be stated in such Candie's SEC Reports
or necessary in order to make the statements in such Candie's SEC Reports, in
the light of the circumstances under which they were made, not misleading. None
of Candie's
-27-
subsidiaries is required to file any forms, reports or other documents with the
SEC. For purposes of this Agreement, all references to "Candie's" shall include
all of Candie's subsidiaries unless the context otherwise indicates.
(b) Each of the consolidated financial statements (including, in each case,
any related notes) contained in the Candie's SEC Reports, including any Candie's
SEC Reports filed after the date of this Agreement until the Closing (the
"Candie's Financial Statements"), complied or will comply as to form in all
material respects with the applicable published rules and regulations of the SEC
with respect thereto, was or will be prepared in accordance with U.S. generally
accepted accounting principles applied on a consistent basis throughout the
periods involved (except as may be indicated in the notes to such financial
statements or, in the case of unaudited statements, as permitted by Form 10-Q or
8-K promulgated by the SEC), and fairly presented or will fairly present the
consolidated financial position of Candie's as at the respective dates and the
consolidated results of its operations and cash flows for the periods indicated,
except that the unaudited interim financial statements were or are subject to
normal and recurring year-end adjustments which were not or are not expected to
be material in amount. The audited consolidated balance sheet of Candie's as of
January 31, 1997 is referred to herein as the "Candie's Balance Sheet."
4.6 Absence of Undisclosed Liabilities. Except as disclosed in the Candie's
SEC Reports, Candie's does not have any liabilities, either accrued or
contingent (whether or not required
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to be reflected in financial statements in accordance with U.S. generally
accepted accounting principles), and whether due or to become due, which
individually or in the aggregate could reasonably be expected to have an
material adverse effect, other than (i) liabilities reflected in the Candie's
Balance Sheet, (ii) liabilities specifically described in this Agreement or in
the Candie's Disclosure Statement, (iii) normal or recurring liabilities
incurred since January 31, 1997 in the ordinary course of business consistent
with past practices, and (iv) any liabilities permitted by Section 6.2 hereof.
4.7 Absence of Certain Changes or Events. Except as set forth in Section
4.7 of the Candie's Disclosure Statement, since the date of the Candie's Balance
Sheet, Candie's has conducted its businesses only in the ordinary course in a
manner consistent with past practice (except as disclosed in the Candie's SEC
Reports), and since such date there has not been: (a) any material adverse
effect or any facts or circumstances that could reasonably be expected to result
in an material adverse effect; (b) any damage, destruction or loss (whether or
not covered by insurance) with respect to Candie's having an material adverse
effect; (c) any material change by Candie's in its accounting methods,
principles or practices to which NRC has not previously consented in writing;
(d) any revaluation by Candie's of any of its assets having an material adverse
effect, unless NRC has previously consented in writing; or (e) except as
disclosed in the Candie's Disclosure Statement, any other action or event that
would have required the consent of NRC pursuant to Section 6.2 of this Agreement
had such
-29-
action or event occurred after the date of this Agreement and that could
reasonably be expected to result in an material adverse effect.
4.8 Taxes.
(a) Candie's has accurately prepared and timely filed (or will so file) all
Returns required to be filed at or before the Effective Time relating to any and
all Taxes concerning or attributable to Candie's or to its operations, and such
Returns are true and correct in all material respects and have been completed in
all material respects in accordance with applicable law.
(b) As of the Effective Time Candie's: (i) will have paid all Taxes it is
required to pay prior to the Effective Time and (ii) will have withheld with
respect to its employees all federal and state income taxes, FICA, FUTA and
other Taxes required to be withheld, except in each case for Taxes contested in
good faith by appropriate proceedings for which adequate reserves have been
taken and except where the failure (if any) to pay or withhold such Taxes could
not reasonably be expected to have an material adverse effect.
(c) There is no Tax deficiency outstanding, proposed or assessed against
Candie's that is not reflected as a liability on the Candie's Balance Sheet nor
has Candies executed any waiver of any statute of limitations on or extending
the period for the assessment or collection of any Tax.
(d) Candie's does not have any material liability for unpaid federal,
state, local or foreign Taxes that has not been
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accrued for or reserved on the Candie's Balance Sheet, whether asserted or
unasserted, contingent or otherwise.
4.9 Properties. Candie's owns or has valid leasehold interests in all real
property necessary for the conduct of its business as presently conducted. All
material leases to which Candie's is a party are in good standing, valid and
effective in accordance with their respective terms, and Candie's is not in
default under any of such leases, except where the lack of such good standing,
validity and effectiveness or the existence of such default could not reasonably
be expected to have a material adverse effect.
4.10 Intellectual Property.
(a) Candies owns, or is licensed or otherwise possesses, legally
enforceable rights to use, all patents, trademarks, trade names, service marks
and copyrights, any applications for and registrations of such patents,
trademarks, trade names, service marks and copyrights, and all processes,
formulae, methods, schematics, technology, know how, and tangible or intangible
proprietary information or material that are necessary to conduct the business
of Candie's as currently conducted or planned to be conducted by Candie's, the
absence of which would be reasonably likely to have a material adverse effect
(the "Candie's Intellectual Property Rights").
(b) The Candie's Intellectual Property Rights which are material to the
business of Candie's, are valid and subsisting; (ii) Candie's has not been sued
in any suit, action or proceeding which involves a claim of infringement of any
of the Candie's
-31-
Intellectual Property Rights or other proprietary right of any third party; and
(iii) the manufacturing, marketing, licensing or sale of Candie's products does
not infringe any patent, trademark, service xxxx, copyright, trade secret or
other proprietary right of any third party, which infringement could, either
individually or in the aggregate, be reasonably likely to have an material
adverse effect.
4.11 Litigation. Except as set forth in Section 4.11 of the Candie's
Disclosure Schedule, there is no action, suit or proceeding, claim, arbitration
or, to the knowledge of Candie's, investigation against Candie's pending or, to
the knowledge of Candie's, threatened, or as to which Candie's has received any
written notice of assertion, which, if decided adversely to Candie's, could
reasonably be expected to have an material adverse effect or a material adverse
effect on the ability of Candie's to consummate the transactions contemplated by
this Agreement.
4.12 Employee Benefit Plans.
(a) Candie's has made available to NRC all employee benefit plans (as
defined in Section 3(3) of ERISA) and all bonus, stock option, stock purchase,
incentive, deferred compensation, supplemental retirement, severance and other
similar employee benefit plans, and all unexpired severance agreements, written
or otherwise, for the benefit of, or relating to, any current or former employee
of Candie's or any trade or business (whether or not incorporated) which is a
member or which is under common control with Candie's within the meaning of
Section 414 of the Code (together, the "Candie's Employee Plans"). Candie's does
not
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maintain and has never maintained or contributed to an employee benefit plan
subject to Title IV of ERISA (including a multiemployer plan as defined in
Section 3(37) of ERISA).
(b) With respect to each Candie's Employee Plan, Candie's has made
available to NRC, a true and correct copy of (i) the most recent annual report
(Form 5500) filed with the IRS with respect to a Candie's Employee Plan subject
to such filing requirement, (ii) such Candie's Employee Plan, (iii) each trust
agreement and group annuity contract, if any, relating to such Candie's Employee
Plan, and (iv) the most recent determination letter issued with respect to any
plan which is intended to be qualified under section 401(a) of the Internal
Revenue Code.
(c) With respect to the Candie's Employee Plans, individually and in the
aggregate, no event has occurred, and to the knowledge of Candie's there exists
no condition or set of circumstances, in connection with which Candie's could be
subject to any material liability under ERISA, the Code or any other applicable
law.
(d) With respect to the Candie's Employee Plans, individually and in the
aggregate, there are no material funded benefit obligations for which
contributions have not been made or properly accrued and there are no material
unfunded benefit obligations which have not been accounted for by reserves, or
otherwise properly footnoted in accordance with U.S. generally accepted
accounting principles, on the Candie's Financial Statements.
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(e) Except as set forth in Section 4.12 of the Candie's Disclosure
Statement, and except as provided for in this Agreement, Candie's is not a party
to any oral or written (i) union or collective bargaining agreement, (ii)
agreement with any officer or other key employee of Candie's the benefits of
which are contingent, or the terms of which are materially altered, upon the
occurrence of a transaction involving Candie's of the nature contemplated by
this Agreement, (iii) agreement with any corporate officer of Candie's providing
any term of employment or compensation guarantee extending for a period longer
than one year from the date hereof or for the payment of compensation in excess
of $50,000 per annum, or (iv) agreement or plan, including any stock option
plan, stock appreciation rights plan, restricted stock plan or stock purchase
plan, any of the benefits of which will be increased, or the vesting of the
benefits to which will be accelerate, by the occurrence of any of the
transactions contemplated by this Agreement or the value of any of the benefits
of which will be calculated on the basis of any of the transactions contemplated
by this Agreement.
4.13 Accounts Receivable; Inventory. Subject to any reserves set forth in
the Candie's Balance Sheet, the accounts receivable shown in the Candie's
Balance Sheet arose in the ordinary course of business; were not, as of the date
of Candie's Balance Sheet, subject to any material discount, contingency, claim
of offset or recoupment or counterclaim: and represented, as of the date of the
Candie's Balance Sheet, bona fide claims against debtors or sales, leases,
licenses and other charges. All accounts
-34-
receivable of Candie's arising after the date of the Candie's Balance Sheet
through the date of this Agreement arose in the ordinary course of business and,
as of the date of this Agreement, are not subject to any material discount,
contingency, claim of offset or recoupment or counterclaim, except for normal
reserves consistent with past practice. The amount carried for doubtful accounts
and allowances disclosed in the Candie's Balance Sheet is believed by Candie's
as of the date of this Agreement to be sufficient to provide for any losses
which may be sustained on realization of the accounts receivable shown in the
Candie's Balance Sheet. As of the date of the Candie's Balance Sheet, the
inventories shown on the Candie's Balance Sheet consisted in all material
respects of items of a quantity and quality usable or saleable in the ordinary
course of business. All of such inventories were acquired in the ordinary course
of business and, as of the date of this Agreement, have been replenished in all
material respects in the ordinary course of business consistent with past
practices. All such inventories are valued on the Candie's Balance Sheet in
accordance with U.S. generally accepted accounting principles applied on a basis
consistent with Candie's past practices, and provision has been made or reserves
have been established on the Candie's Balance Sheet, in each case in an amount
believed by Candie's as of the date of the Candie's Balance Sheet to be
adequate, for all slow-moving, obsolete or unusable inventories.
4.14 Board Recommendations. The Board of Directors of Candie's has
unanimously approved and adopted this Agreement, which
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vote included the affirmative vote of a majority of the disinterested directors
and has recommended that the stockholders of Candie's approve and adopt the Plan
of Merger.
4.15 Financial Advisor Opinion. The financial advisor of Candie's,
Ladenburg Xxxxxxxx & Co. Inc., has delivered to Candie's an opinion, as of, or
immediately prior to the date of this Agreement to the effect that the Exchange
Ratio is fair from a financial point of view to the holders of the Candie's
Common Stock (the "Candie's Fairness Opinion").
4.16 Statements True and Correct. No statement, certificate, instrument or
other writing furnished or to be furnished by NRC pursuant to this Agreement or
any other document, agreement or instrument referred to herein contains or will
contain any untrue statement of fact of material fact or omits or will omit to
state a material fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
ARTICLE V
COVENANTS OF NRC
5.1 Shareholder Meeting. The Board of Directors of NRC shall take all
actions necessary to convene and cause the shareholders of NRC to hold a special
shareholders meeting to consider and vote upon the approval of the Plan of
Merger by July 31, 1998.
5.2 Conduct of the Business; Prohibited Activities. During the period from
the date of this Agreement and continuing until the earlier of the termination
of this Agreement or the
-36-
Effective Time, and except as otherwise contemplated by or set forth in this
Agreement, NRC (except to the extent that Candie's shall otherwise consent in
writing, which consent shall not be unreasonably withheld), shall carry on its
business in the usual, regular and ordinary course in substantially the same
manner as previously conducted, pay its debts and taxes when due subject to good
faith disputes over such debts or taxes, pay or perform its other obligations
when due, and, to the extent consistent with such business, use reasonable
efforts consistent with past practices and policies to (i) preserve intact its
present business organization, (ii) keep available the services of its present
officers and key employees, and (iii) preserve its relationships with customers,
suppliers, distributors, licensors, licensees and others having business
dealings with it, except where the failure to do so could not reasonably be
expected to have a material adverse effect. NRC shall notify Candie's promptly
after becoming aware of any event or occurrence not in the ordinary course of
business of NRC that would result in a breach of any covenant or agreement of
NRC set forth in this Agreement or cause any representation or warranty of NRC
set forth in this Agreement to be untrue as of the date of such event or
occurrence. Except as expressly contemplated by this Agreement, or as set forth
in Section 5.2 of the NRC Disclosure Statement, NRC shall not, without the prior
written consent of Candie's, which shall not be unreasonably withheld:
(a) accelerate, amend or change the period of exerciseability of
options or restricted stock granted under any of the NRC stock option plans
or authorize cash payments
-37-
in exchange for any options granted under any of such plans except as
required by the terms of such plans or any related agreements in effect as
of the date of this Agreement;
(b) transfer or license to any person or entity or otherwise extend,
amend or modify any rights to the NRC Intellectual Property Rights other
than in the ordinary course of business consistent with past practices or
on a non-exclusive basis not materially different from past practices;
(c) declare or pay any dividends on or make any other distributions
(whether in cash, stock or property) in respect of any of its capital
stock, or split, combine or reclassify any of its capital stock or issue or
authorize the issuance of any other securities in respect of, in lieu of or
in substitution for shares of its capital stock, or purchase or otherwise
acquire, directly or indirectly, any shares of its capital stock except
from former employees, directors and consultants in accordance with
agreements providing for the repurchase of shares in connection with any
termination of service by such party;
(d) issue, deliver or sell, or authorize or propose the issuance,
delivery or sale of, any shares of its capital stock or securities
convertible into shares of its capital stock, or subscriptions, rights,
warrants or options to acquire, or other agreements or commitments of any
character obligating it to issue any such shares or other convertible
securities, other than (i) the issuance of NRC Common Stock or
-38-
the grant of options or rights to acquire NRC Common Stock pursuant to the
NRC stock option plans in the ordinary course of business substantially
consistent as to amount, exercise price, vesting and other terms with past
practice, and (ii) the issuance of shares of NRC Common Stock as and to the
extent required under the NRC stock option plans;
(e) acquire or agree to acquire, by merging or consolidating with, by
purchasing a substantial equity interest in or substantial portion of the
assets of, or by any other means, any business or any corporation,
partnership or other business organization or division, or otherwise
acquire or agree to acquire any material amount of assets;
(f) sell, lease, license or otherwise dispose of any of its properties
or assets which are material, individually or in the aggregate, to the
business of NRC, except for sales, leases or licenses of products, services
and software in the ordinary course of business;
(g) take any action to: (i) increase or agree to increase the
compensation payable or to become payable to its officers or employees,
except for increases in salary or wages of officers or employees in
accordance with past practices, (ii) grant any additional severance or
termination pay to, or enter into any employment or severance agreements
with, directors or officers, (iii) grant any severance or termination pay
to, or enter into any employment or severance agreement with, any employee,
except in accordance with past practices or in settlement of disputes with
present or former
-39-
employees, not material in amount, either individually or in the aggregate,
(iv) enter into any collective bargaining agreement, or (v) establish,
adopt, enter into or amend in any material respect any bonus, profit
sharing, thrift, compensation, stock option, restricted stock, pension,
retirement, deferred compensation, employment, termination, severance or
other plan, trust, fund, policy or arrangement for the benefit of any
directors, officers or employees;
(h) revalue any of its assets, including writing down the value of
inventory or writing off notes or accounts receivable, other than in the
ordinary course of business or pursuant to arm's length transactions on
commercially reasonable terms or where such action will not have a material
adverse effect;
(i) incur or maintain any indebtedness for borrowed money or guarantee
any such indebtedness or issue or sell any debt securities or warrants or
rights to acquire any debt securities or guarantee any debt securities of
others in excess of a maximum aggregate amount outstanding at any time of
$25,000 inclusive of indebtedness outstanding as of the date of this
Agreement;
(j) amend or propose to amend its Certificate of Incorporation or
Bylaws;
(k) incur or commit to incur capital expenditures in excess of $25,000
in the aggregate;
(l) enter into or amend any agreements pursuant to which any third
party is granted exclusive marketing,
-40-
manufacturing or other rights with respect to any NRC product, process or
technology;
(m) amend or terminate any material contract, agreement or license to
which it is a party except in the ordinary course of business;
(n) waive or release any material right claim, except in the ordinary
course to business;
(o) initiate any litigation or arbitration proceeding; or
(p) take, or agree in writing or otherwise to take, any of the actions
described in the foregoing clauses (a) through (o), or any action which (i)
would make any of NRC's representations or warranties in this Agreement, if
made on and as of the date of such action or agreement, untrue or incorrect
in any material respect, or (ii) could prevent it from performing, or cause
it not to perform, its obligations under this Agreement.
5.3 Commission Filings. NRC shall cooperate fully with Candie's in
providing the information required for the Joint Proxy Statement and the
Registration Statement (each as defined in Section 6.3). The information
supplied by NRC for inclusion in the Joint Proxy Statement and Registration
Statement shall not contain, any untrue statement of a material fact or omit to
state any material fact required to be stated in the Registration Statement or
necessary in order to make the statements in the Registration Statement in light
of the circumstances under which they were made not misleading, (i) at the time
the Registration Statement is
-41-
declared effective by the SEC, (ii) on the date the Joint Proxy Statement is
first mailed to NRC shareholders and the Candie's shareholders and (iii) on the
dates of the meetings of NRC shareholders and the Candie's shareholders referred
to in Article II hereof, insofar as they relate to NRC. NRC shall correct any
information provided by it for use in the Joint Proxy Statement or Registration
Statement which shall have become untrue or misleading.
ARTICLE VI
COVENANTS OF CANDIE'S
6.1 Shareholder Meeting. The Board of Directors of Candie's shall take all
actions necessary to convene and cause the shareholders of Candie's to hold a
special or annual shareholders meeting to consider and vote upon the approval of
the Plan of Merger and the issuance of the Candie's securities in connection
with the Merger.
6.2 Conduct of Business Pending Merger. During the period from the date of
this Agreement and continuing until the earlier of the termination of the
Agreement or the Effective Time, and except as otherwise set forth in Section
6.2 of the Candie's Disclosure Statement, Candie's (except to the extent that
NRC shall otherwise consent in writing), shall carry on its business in the
usual, regular and ordinary course in substantially the same manner as
previously conducted, to pay its debts and taxes when due subject to good faith
disputes over such debts or taxes, to pay or perform its other obligations when
due, and, to the extent consistent with such business, to use all reasonable
efforts
-42-
consistent with past practices and policies to (i) preserve intact its present
business organization, (ii) keep available the services of its present officers
and key employees, and (iii) preserve its relationships with customers,
suppliers, distributors, licensors, licensees and others having business
dealings with it, except where the failure to do so could not reasonably be
expected to have an material adverse effect.
6.3 Commission Filings. Promptly after the date hereof, Candie's shall file
with the SEC a registration statement on Form S-4 or other appropriate form
under the Securities Act, and the rules and regulations thereunder, relating to
the shares of Candie's Common Stock and to the extent the form is available for
such purpose the Reserved Securities to be issued with respect to the Merger
(the "Registration Statement"). The Registration Statement shall contain a proxy
statement, together with a form of proxy with respect to each of the meeting of
NRC's shareholders, at which the shareholders of NRC will vote upon the Plan of
Merger and the meeting of the Candie's shareholders, at which the shareholders
will vote upon the Plan of Merger and the issuance of the Candie's securities
(the "Joint Proxy Statement"). Candie's shall use all reasonable efforts to have
the Registration Statement declared effective under the Securities Act and the
Joint Proxy Statement cleared by the Commission as promptly as practicable, and
shall cooperate with NRC to promptly thereafter mail the Joint Proxy Statement
to the respective shareholders of NRC and Candie's. Candie's shall take any
action required to be taken under state blue sky or securities laws.
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6.4 The term "Registration Statement" shall mean such Registration
Statement at the time it becomes effective and all amendments thereto duly filed
and similarly mailed. The term "Joint Proxy Statement" shall mean such proxy or
information statement at the time it is initially mailed to Candie's
shareholders and NRC's shareholders and all amendments or supplements thereto,
if any, similarly filed and mailed. The information set forth in the
Registration Statement and the Joint Proxy Statement shall be true and correct
in all material respects and shall not omit to state any material fact necessary
in order to make such information not misleading, (i) at the time the
Registration Statement is declared effective by the SEC, (ii) at the time the
Joint Proxy Statement is first mailed to the shareholders of Candie's and NRC
and (iii) on the dates of the meetings of the NRC shareholders and Candie's
shareholders referred to in Article II. Candie's shall correct any information
provided by it for use in the Registration Statement or the Joint Proxy
Statement which shall have become untrue or misleading.
ARTICLE VII
CONDITIONS TO OBLIGATIONS
7.1 Conditions to Obligations of NRC to Effect the Merger. The obligations
of NRC to effect the Merger are subject to the satisfaction or waiver at or
prior to the Effective Time of the following conditions, of which, subsections
(g) and (h) of this Section 7.1 may be waived in writing by NRC:
(a) This Agreement and the Merger shall have been approved and adopted
by the requisite vote or consent of the
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shareholders of NRC and Candie's required by the Delaware Corporate Law;
(b) The Registration Statement shall have become effective and no stop
order suspending such effectiveness or qualification shall have been issued
or proceedings for such purpose shall have been instituted or threatened;
(c) No preliminary or permanent injunction or other order, decree,
action or proceeding shall have been instituted, issued or threatened
against any of the parties hereto or their directors or officers, before
any court or governmental department, regulatory or administrative agency
or commission to restrain or prohibit, or to obtain substantial damages in
respect of, this Agreement or the consummation of the transactions
contemplated hereby and which in the opinion of NRC or Candie's would make
it inadvisable to consummate such transactions; provided, however, that NRC
and Candie's shall have used all best efforts to prevent such event;
(d) the waiting period, if any, applicable to the consummation of the
Merger under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx
"XXX" Xxx) shall have expired or have been terminated;
(e) NRC shall have received a letter, dated as of a date not more than
five (5) days prior to the Effective Date, from CoView Capital, Inc.
stating that the NRC Fairness Opinion is still in full force and effect as
of such date;
(f) The shares of Candie's Common Stock to be issued in the Merger
shall have been approved for listing on the
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Nasdaq National Market, or if not available, on the Nasdaq Small Cap
Market;
(g) The representations and warranties of Candie's set forth in this
Agreement shall be true and correct in all material respects as of the date
this Agreement and as of the Effective Date (except that representations
and warranties which are confined to a specific date shall be true and
correct as of such date);
(h) NRC shall have received an opinion of Xxxxxx Xxxxxxxxxx LLP,
counsel to Candie's, in form reasonably acceptable to NRC and its counsel.
7.2 Conditions to Obligations of Candie's to Effect the Merger. The
obligations of Candie's to effect the Merger shall be subject to the
satisfaction or waiver at or prior to the Effective Time of the following
conditions, of which subsections (g), (h), (i), and (j) of this section 7.2 may
be waived in writing by Candie's:
(a) This Agreement and the Merger shall have been approved and adopted
by the requisite vote or consent of the shareholders of Candie's and NRC
required by the Delaware Corporate Law;
(b) The Registration Statement shall have become effective and no stop
order suspending such effectiveness or qualification shall have been issued
or proceedings for such purpose shall have been instituted or threatened;
(c) No preliminary or permanent injunction or other order, decree,
action or proceeding shall have been instituted,
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issued or threatened against any of the parties hereto or their directors
or officers, before any court or governmental department, regulatory or
administrative agency or commission to restrain or prohibit, or to obtain
substantial damages in respect of, this Agreement or the consummation of
the transactions contemplated hereby and which in the opinion of Candie's
or NRC would make it inadvisable to consummate such transactions; provided,
however, that Candie's shall have used all best efforts to prevent such
event;
(d) the waiting period, if any, applicable to the consummation of the
Merger under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 0000 (xxx
"XXX" Xxx) shall have expired or have been terminated;
(e) Candie's shall have received a letter, dated as of a date not more
than five (5) days prior to the Effective Date, from Ladenburg & Xxxxxxxx &
Co. Inc. stating that the Candie's Fairness Opinion is still in full force
and effect as of such date;
(f) The shares of Candie's Common Stock to be issued in the Merger
shall have been approved for listing on the Nasdaq National Market, or if
not available, on the Nasdaq Small Cap Market;
(g) The representations and warranties of NRC set forth in this
Agreement shall be true and correct in all material respects as of the date
of this Agreement and as of the Effective Date (except that representations
and warranties which are confined to a specific date shall be true and
correct as of such date);
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(h) NRC shall have terminated any and all employment agreements with
any of its officers, directors and employees and shall have executed and
delivered all documentation in connection with such termination to
Candie's;
(i) Candies shall have received an opinion of Xxxxxxx Krooks Xxxx &
Ball P.C., counsel to NRC, in form reasonably acceptable to Candie's and
its counsel; and
(j) NRC shall have obtained and delivered to Candie's copies of all
consents or approvals of all persons needed for the consummation of the
transactions contemplated hereby and all such consents and approvals shall
be in full force and effect, unless the failure to obtain such consent or
approval is not reasonably likely to have a material adverse effect on
Candie's taken as a whole giving effect to the transactions contemplated
hereby.
ARTICLE VIII
INDEMNIFICATION
8.1 Indemnification by NRC of Candie's. NRC shall indemnify and hold
Candie's harmless from any and all damages or deficiencies resulting from any
misrepresentation, breach of any representation or warranty, or nonfulfillment
of any covenant or agreement on the part of NRC, whether contained in the
Agreement, the NRC Disclosure Statement or in any Exhibit hereto or in any
statement, or certificate furnished by NRC in connection with the consummation
of the transactions contemplated by this Agreement; and any and all actions,
suits, proceedings, demands, assessments, judgments, costs and expenses incident
to any of the foregoing,
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including but not limited to reasonable attorneys' fees and expenses.
8.2 Indemnification by Candie's of the Shareholders, Directors and Officers
of NRC. (a) Candie's shall indemnify and hold the shareholders of NRC harmless
from any and all damages or deficiencies resulting from any misrepresentation,
breach of any representation or warranty, or nonfulfillment of any covenant or
agreement on the part of Candie's whether contained in this Agreement or any
Exhibit hereto or in the Candie's Disclosure Statement or any certificate
furnished by Candie's in connection with the consummation of the transactions
contemplated by the Agreement; and any and all actions, suits, proceedings,
demands, assessments, judgments, costs, and expenses incident to any of the
foregoing, including but not limited to reasonable attorneys' fees and expenses.
(b) For a period of three (3) years after the Effective Time, Candie's
shall indemnify and hold harmless the current officers and directors of NRC to
the fullest extent permitted by Section 145 of the Delaware Corporate Law, as
the same may be amended and supplemented, for damages arising out of or
resulting from actions in their capacity as an officer or director of NRC.
8.3 Termination of Indemnification Obligations Upon Closing. Except for the
indemnification obligations set forth in Section 8.2(b), the respective
indemnification obligations of NRC and Candies set forth in this Article VIII
shall expire with, and be terminated and extinguished upon, consummation of the
Merger,
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and thereafter neither NRC nor Candie's shall have any liability whatsoever with
respect to any such indemnification obligation.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
9.1 Termination. This Agreement may be terminated at any time prior to the
Effective Time, whether prior to or after approval by the shareholders of NRC:
(a) By mutual written consent of the Boards of Directors of Candie's
and NRC; or
(b) By NRC:
(i) If the Effective Time shall not have occurred on or before
July 31, 1998 after the date hereof; or
(ii) If Candie's fails to perform in any material respect any of
its material obligations under this Agreement; or
(c) By Candie's:
(i) If the Effective Time shall not have occurred on or before
July 31, 1998 after the date hereof;
(ii) If NRC fails to perform in any material respect any of its
material obligations under the Agreement.
9.2 Effect of Termination. In the event of the termination of this
Agreement as provided in Section 9.1, this Agreement shall forthwith become
void, and there shall be no liability on the part of Candie's or NRC.
9.3 Amendment. This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties
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hereto; provided, however, after approval by the shareholders of NRC, such
amendment shall not:
(i) alter or change the amount or kind of shares, securities, cash,
property and/or rights to be received in exchange for or on conversion of
all or any of the shares of any class or series thereof of such Constituent
Corporation; and
(ii) Alter or change any of the terms or conditions of this Agreement
if such alteration or change would adversely affect the holder of any class
or series thereof of any Constituent Corporation.
9.4 Waiver. At any time prior to the Effective Time, whether before or
after the meetings of the NRC shareholders or the Candie's shareholders referred
to in Article II, any party hereto, by action taken by its Board of Directors,
may (i) extend the time for the performance of any of the obligations or other
acts of any other party hereto or, (ii) excepting the provisions contained in
Section 9.3, waive compliance with any of the agreements of any other party or
with any conditions to its own obligations. Any agreement on the part of a party
hereto to any such extension or waiver shall be valid only if set forth in an
instrument in writing signed on behalf of such party by a duly authorized
officer.
ARTICLE X
NO SOLICITATION
From and after the date of this Agreement until the earlier of the
Effective Time or the termination of this Agreement in accordance with Section
9.1, neither Candie's nor NRC shall, nor shall its stockholders directly or
indirectly, through any officer,
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director, employee, representative, agent or affiliate, (i) solicit, initiate,
or encourage any inquiries or proposals that constitute, or could reasonably be
expected to lead to, a proposal or offer for a merger, consolidation, sale or
purchase of substantial assets or stock, tender or exchange offer, or other
business combination or change in control or similar transaction involving such
party, other than the transactions contemplated or permitted by this Agreement
(any of the foregoing inquiries or proposals being referred to in this Agreement
as a "Competing Offer"), (ii) engage in negotiations or discussions concerning,
or provide any non-public information to any person or entity relating to, any
Competing Offer, or (iii) agree to, approve or recommend any Competing Offer.
ARTICLE XI
MISCELLANEOUS
11.1 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
11.2 Interpretation. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement. Inclusion of information in any Disclosure
Statement does not constitute an admission or acknowledgment of the materiality
of such information.
11.3 Representations and Warranties. The respective representations and
warranties of NRC and Candie's contained herein, and the covenants, obligations,
agreements and liabilities of each of them shall expire with, and be terminated
and extinguished upon, consummation of the Merger, and thereafter
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neither NRC nor Candie's nor any officer, director or principal thereof shall be
under any liability whatsoever with respect to any such representation or
warranty. This Section shall have no effect upon any other obligation of the
parties hereto, whether to be performed before or after the consummation of the
Merger.
11.4 Brokers and Agents. Candie's and NRC each represents and warrants to
the other that it has not employed any broker or agent in connection with the
transactions contemplated by this Agreement.
11.5 Expenses. Except as otherwise specifically provided in this Agreement,
all costs and expenses incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the party incurring such costs
or expenses, whether or not the transactions contemplated hereby are
consummated.
11.6 Mutual Drafting. This Agreement is the mutual product of the parties
hereto, and each provision hereof has been subject to mutual consultation,
negotiation and agreement of each of the parties, and shall not be construed for
or against any party hereto.
11.7 Entire Agreement. This Agreement (together with the other agreements,
instruments and documents delivered pursuant hereto) including the
Non-Disclosure Agreement dated February 19, 1998 executed by the parties hereto,
constitutes the entire agreement of the parties hereto with respect to the
subject matter hereof and supersedes all prior agreements and understandings
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between the parties hereto, oral and written with respect to the subject matter
hereof.
11.8 Public Statements. NRC and Candie's shall consult with each other
prior to issuing any press release or otherwise making any public statement with
respect to the contents of this document or the transactions contemplated
hereby, and none of the parties hereto shall issue any press release or make any
such public statement prior to such consultation, except as may be required by
law or NASDAQ regulations.
11.9 Due Diligence Investigation. Upon reasonable notice and subject to
applicable law and other legal obligation, Candie's and NRC shall each afford to
the officers, employees, accountants, financial advisors, counsel and other
representatives of the other, access during normal business hours during the
period prior to the Effective Time, to all its properties, books, contracts,
commitments and records, concerning its business, properties and personal as
such other party may reasonably request. Unless otherwise required by law, the
parties shall hold all such information confidential and treat such information
as "Evaluation Material" in accordance with the Non-Disclosure Agreement dated
February 19, 1998 between the parties hereto.
11.10 Cooperation. Each of the parties hereto shall cooperate and take any
and all actions, and execute and acknowledge, deliver, file and/or record any
and all documents and instruments as the other party hereto reasonably requests
from time to time in order to have fully protect and perfect the rights intended
to be granted hereunder.
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11.11 Notices. All notices or other communications required or permitted
hereunder shall be sufficiently given: (i) on the date of delivery, if delivered
by hand or by courier; (ii) upon receipt of confirmation of transmission if
transmitted by telecopier, and (iii) on the third business day after mailing if
mailed by registered or certified mail, postage prepaid, return receipt
requested, as set forth below:
If to Candie's to:
Candie's Inc.
0000 Xxxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxx, President
Fax: (000) 000-0000
Copy to:
Xxxxxx Xxxxxxxxxx LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
Fax: (000) 000-0000
If to NRC:
New Retail Concepts, Inc.
0000 Xxxxxxxxxxx Xxxxxx
Xxxxxxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxx, Vice President-Finance
Fax: (000) 000-0000
Copy to:
Xxxxxxx Krooks Xxxx & Ball P.C.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxxxx Xxxxxxx, Esq.
Fax: (000) 000-0000
or such other address that shall be furnished in writing by either
party.
11.12 No Assignment. This Agreement and the rights, interests and
obligations hereunder may not be assigned by any
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party hereto, by operation of law or otherwise without the prior written consent
of the other party hereto, and any such purported assignment without such
consent shall be null and void.
11.13 Counterparts. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties hereto and delivered to each of the other parties hereto and each of
which shall be deemed an original.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
hereof.
CANDIE'S INC.
a Delaware corporation
By: /s/ Xxxxx Xxxxxx
-----------------------------
Name: Xxxxx Xxxxxx
Title: Senior Vice President-
Chief Financial Officer
NEW RETAIL CONCEPTS, INC.
a Delaware corporation
By:/s/ Xxxx Xxxx
-----------------------------
Name: Xxxx Xxxx
Title: President - Chief
Executive Officer
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XXXXXXXXXX XXXXXXXXX
TO
AGREEMENT AND PLAN OF MERGER
BY AND BETWEEN
CANDIES, INC.
AND
NEW RETAIL CONCEPTS, INC.
DATED APRIL 6, 1998
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Section 3.5
Compliance
Consummation of the transactions will violate the following agreements
without the prior consent of the other party thereto:
1. Purchase and Sale Agreement dated as of December 31, 1992 between
NRC and Stantrob Associates, Ltd.
2. Settlement Agreement dated as of November 3, 1995 between NRC and
Stantrob Associates, Ltd.
3. License Agreement as of April 1, 1997 between NRC and Xxxxxxxxxx
Xxxx & Co., Incorporated.
4. Agreement dated as of April 1, 1992, as extended, between NRC and
Wal-Mart Stores, Inc.
5. Affiliate Transactions Agreement between NRC and Candie's dated
March 3, 1993, as amended January 30, 1995.
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Section 3.6
SEC Filings, Financial Statements
Certain Form 5 filings with respect to deferred reporting of options grants
and gift transactions have not been timely filed.
The Company failed to timely file its Quarterly Report on Form 10-QSB for
the quarter ended June 30, 1997.
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Section 3.7
Absence of Undisclosed Liabilities
As an inducement to join Candie's and in consideration of foregoing certain
future bonus opportunities pursuant to their respective employment agreements
with NRC, each of Messrs Xxxx Xxxx, Xxxxxxxx X'Xxxxxxxxxxx and Xxxx Xxxxx
received the following option grants and upon termination will receive the
following bonuses:
Options Bonus
------- -----
Xxxx Xxxx 626,543 @ $1.75 $525,000
Xxxxxxxx X'Xxxxxxxxxxx 74,074 @ $1.75 $ 50,000
Xxxx Xxxxx 49,383 @ $1.75 $ 25,000
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Section 3.10
Properties
NRC has a use of premises agreement with Candie's with respect to its executive
offices pursuant to a Services Allocation Agreement dated as of March 3, 1993.
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Section 3.11
Intellectual Property
NRC rights to the No ExcusesR name are subject to its license agreements with
Stantrob Associates, Ltd.
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Section 3.12
Litigation
Xxxxxx Cu, et al v. Xx Xxxxx, et al, Index No. 22716/91, Queens Supreme Court.
Xxxx Xxxxx and Eyk International v. New Retail Concepts, Inc. and Xxxx Xxxx,
individually. Los Angeles Supreme Court, Case Number
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Section 3.13
Employee Benefit Plans
Employment Agreement dated January 1, 1989 between NRC and Xxxx Xxxx, as
amended:
Employment Agreement dated November 15, 1994 between NRC and Xxxx Xxxxx.
Letter dated May 18, 1995 from NRC to Xxxxxxxx X'Xxxxxxxxxxx with respect
to the retention of Xx. X'Xxxxxxxxxxx by NRC as business advisor until
March 31, 1997.
See items listed in Section 3.7 of this NRC Disclosure Statement.
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Section 4.5
SEC Filings
Certain Form 5 Filings with respect to deferred reporting of option grants
and gift transactions have not been timely filed.
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Section 4.7
Certain Changes
Candie's has served written notice of termination of its factoring arrangements
to Congress Xxxxxxx Corporation, effective April 27, 1998, and is in the process
of obtaining new financing arrangements with Nations Bank pursuant to the
commitment letter attached hereto.
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Section 4.11
Litigation
Petition for Order Compelling Arbitration by Lucky Brand Dungarees of
America; Inc. v. Candies, Inc., U.S. District Court, Central District of
California.
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Section 4.12
Employee Benefit Plans
1. Employment Agreement dated February 23, 1993 between Xxxx Xxxx and
Candie's, as amended March 6, 1995 and February 28, 1997.
2. Employment Agreement dated April 1, 1995 between Xxxxxxxx
X'Xxxxxxxxxxx and Candie's as amended on March 17, 1997.
3. Employment Agreement dated November 15, 1994 between Xxxx Xxxxx and
Candie's.
4. Employment Agreement dated March 1, 1998 between Xxxxx Xxxxxx and
Candie's.
5. Employment Agreement dated November 30, 1994 between Xxxx Xxxxxx and
Candie's, as amended on July 8, 1997.
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