Exhibit 99.5
July 13, 2001
Xxxxx Karan Studio
Xxxxx Karan International Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Ladies and Gentlemen:
Reference is made to the License Agreement dated as of July 3, 1996 (as
amended, the "License Agreement") among Gabrielle Studio, Inc. ("GS") and Xxxxx
Karan Studio ("DKS"). Reference is also made to the Assignment made as of March
31, 2001 between GS and Karma Acquisition, Inc. ("Karma"), pursuant to which GS
assigned to Karma the right to receive certain Sales Royalty payments under the
License Agreement (the "First Assignment"), and the Assignment made as of March
31, 2001 between Karma and LVMH Moet Xxxxxxxx Xxxxx Vuitton Inc. ("LVMH"),
pursuant to which Karma assigned to LVMH the right to receive such Sales Royalty
payments (the "Second Assignment"). Capitalized terms used but not defined in
this letter shall have the meaning given to them in the License Agreement.
In connection with the termination of Xxxx Idol's employment with Xxxxx
Karan International Inc. (the "Company") as Chief Executive Officer and Director
and his continued employment with the Company as an advisor to the Company's
Board of Directors in connection with certain transition matters, all as
effective as of July 13, 2001, and the payment obligations of the Company
pursuant to the letter of even date herewith between Mr. Idol and the Company,
in the event the merger contemplated by the Agreement and Plan of Merger dated
as of March 31, 2001 among LVMH, the Company and DKI Acquisition, Inc. is not
consummated by November 15, 2001, LVMH hereby agrees to defer payment of that
portion of the Sales Royalty, payable to LVMH pursuant to the First Assignment
and the Second Assignment, with respect to the third quarter of 2001 equal to
$6,251,712 (the "Deferred Portion"); provided that the full amount of such Sales
Royalty for such third quarter over and above the Deferred Portion shall be due
and payable to LVMH on November 15, 2001; and provided, further, that the
Deferred Portion shall be due and payable in full pursuant to the License
Agreement no later than January 15, 2002, together with interest from November
15, 2001 to the date of payment equal to the borrowing rate then paid by DKS to
its principal lending institution. The obligation of DKS to pay the Deferred
Portion shall be guaranteed by the Company pursuant to the form of Guaranty
attached
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to this letter agreement as EXHIBIT A.
All of the terms and conditions set forth in the License Agreement, the
First Assignment and the Second Assignment shall remain in full force and
effect, except to the extent otherwise expressly set forth herein. This letter
agreement may be executed in any number of identical counterparts, any of which
may contain the signatures of less than all parties, and all of which together
shall constitute a single agreement.
LVMH Moet Xxxxxxxx Xxxxx Vuitton Inc.
By: /s/ Xxxxx X. Xxxxxx
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Title: Senior Vice President
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Gabrielle Studio, Inc.
By: /s/ Xxxxxx Xxxxxxxxx
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Title: Vice President
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Karma Acquisition, Inc.
By: /s/ Xxxxx X. Xxxxxx
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Title: President
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Agreed to as of the date first
above written by:
Xxxxx Karan Studio
By: /s/ M. Xxxxxxx Xxxxxxxxx
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Title: Authorized Signatory
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Xxxxx Karan International Inc.
By: /s/ M. Xxxxxxx Xxxxxxxxx
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Title: Director
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cc: Xxxxxx X. Xxxxxx, Esq.
Xxxxx X. Barack, Esq.
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EXHIBIT A
GUARANTY
Reference is hereby made to the letter agreement among LVMH Moet
Xxxxxxxx Xxxxx Vuitton Inc. ("LVMH"), Gabrielle Studio, Inc. and Karma
Acquisition, Inc. and Xxxxx Karan Studio ("DKS") and Xxxxx Karan International
Inc. ("DKI"), the corporate parent of a general partner of DKS, dated as of July
13, 2001, regarding the deferral of a portion of Sales Royalty (the "Deferral
Letter"). Capitalized terms used but not defined in this Guaranty shall have the
meaning given to them in the Deferral Letter. For good and valuable
considerations received, DKI hereby unconditionally and absolutely guaranties
the payment of the Deferred Portion by DKS to LVMH. In order to hold DKI liable
under this Guaranty, there shall be no obligation on the part of LVMH, at any
time, to resort for payment to DKS or to anyone else, or to any collateral,
security, property, liens or other rights or remedies whatsoever, all of which
is hereby expressly waived by DKI. DKI further expressly waives diligence in
collection or protection, presentment, demand or protest or in giving notice to
any one of protest, dishonor, default, or nonpayment or of any other matters or
things whatsoever relating hereto.
Dated: July 13, 2001 XXXXX KARAN INTERNATIONAL INC., a
Delaware corporation
By: /s/ M. Xxxxxxx Xxxxxxxxx
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Title: Director
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