Exhibit 10.2
UCC FUNDING CORPORATION
October 29, 2004
Mr. Xxxx Xxxx, CEO
Candie's, Inc.
000 Xxxx 00xx Xxxxxx 0xx Xxxxx
Xxx Xxxx, XX 00000
Re: Xxxxxxx Xxxxxxx Acquisition
Dear Xxxx:
This letter agreement sets forth certain financial arrangements to which UCC
Funding Corporation, a Delaware Corporation, ("UCC") its affiliates, successors
and/or assigns, with offices located at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxx Xxxx,
XX 00000, is entitled to receive, for services rendered as merchant banker to
Candie's, Inc. ("Candie's"), a Delaware corporation with offices located at 000
Xxxx 00xx Xxxxxx, Xxx Xxxx, XX 00000 in connection with the consummation of the
purchase by Candies, through a newly formed entity, ("Buyer") of certain assets
(the "Assets") of B.E.M. Enterprise, Ltd., ("BEM") pursuant to a letter of
intent dated September 24, 2004 attached hereto as Appendix A (the "Proposed
Acquisition").
For purposes of this letter agreement, UCC shall assign all of its rights to its
affiliate, Content Holdings, its affiliates, successors and or assigns
("Content") a New York Corporation with offices at 0000 Xxxxxx xx xxx Xxxxxxxx,
Xxx Xxxx, XX 00000 Attn: Xxxx Xxxxxxx, or such other entity it may designate.
Fees:
Upon consummation of the Proposed Acquisition, UCC shall be entitled to the
following:
A. From the period commencing upon the consummation of the Proposed
Acquisition until such time, if ever, as all of the stock or assets of
Buyer are sold (the "Term"), Content shall be entitled to receive a fee
(the "Fee") equal to 5% of the gross revenues of Buyer, which shall
include, but not be limited to, any royalties (other than advertising
royalties, so long as such advertising royalties are actually spent), fees,
advances or any other payments of cash or PIK payments derived by Buyer
from the Xxxxxxx Xxxxxxx trademark and all derivative trademarks (the
"Royalty"). Royalty amounts, if any, shall be due and payable to Content
within thirty (30) days after the end of each calendar quarter during the
Term accompanied by a certified statement of the calculation and
determination of the Fee; and
B. During the Term, Content shall have customary audit and inspection rights
of the business of Buyer for the sole purpose of calculating the amount of
the Royalty due Content pursuant to paragraph A above; and
C. During the Term, Buyer and Candie's agree not to place or cause to be
placed a lien, charge, encumbrance, pledge or security interest which is
equal to or superior to the lien granted to Content in paragraph G below on
the Royalty or the cash flows relating to the Royalty, without the prior
written approval of Content, and Content agrees to cooperate and execute
such documents (provided they are in a form reasonably acceptable to
Content) when requested by Buyer in connection with any such subordinated
lien, charge, encumbrance pledge or security interest; and
D. Content will be entitled to receive a cash payment from the sale of all or
substantially all of the stock or assets of Buyer based upon the following
formula: An amount equal to the greater of (i) 5% of the (sales price less
$2,150,000) or (ii) the product of (x) the sales price less $2,150,000 and
(y) a fraction, the numerator of which is the gross royalties received by
Content during the trailing 12 month period and the denominator of which is
the Buyer's EBITDA during the trailing 12 month period (calculated in
accordance with GAAP); and
E. In connection with any sale by Candie's, whether by sale of stock, assets
or change of control, Candie's shall require the purchaser thereof to be
bound by the terms and conditions of this Agreement; and
F. Xxxxxx X. X'Xxxxx, as designee of UCC and Content will receive stock
options to acquire 50,000 shares of Candie's common stock, the price per
share shall be established on the day immediately prior to closing of the
Proposed Acquisition. The options will vest upon grant option grant and
shall be approved by the appropriate outside directors with full knowledge
of this letter agreement; and
G. Buyer shall grant Content a first lien position on its assets, including
the Xxxxxxx Xxxxxxx trademark, to secure only those obligations of Buyer to
Content under paragraph A above, and shall permit Content to file a UCC-1
financing statement or other appropriate and necessary documentation to
evidence its first lien position.
Announcement:
All press releases, internal announcements and any other communication relating
to this transaction shall be subject to prior written approval of the parties.
Confidentiality:
The terms, conditions and existence of this letter and all further discussions
and information shared between the parties will be treated by the parties as
confidential and shall not be used by any of them except in connection with this
transaction, subject to appropriate disclosure to regulatory authorities and as
otherwise required by law or the rules of any securities exchange which may be
applicable.
Governing Law:
This transaction shall be governed by the laws of the State of New York.
Binding Effect:
Subject to the conditions set forth herein, the obligations of each of the
parties under this letter shall be binding at the time this letter is executed.
Please sign and date this letter in the spaces provided below to confirm our
understandings and agreements as set forth in this letter and return a signed
cop undersigned. By its execution of this letter, each party is representing
that it has the consent of a majority of its Board of Directors (and in the case
of Candie's, by the vote of the majority of its independent directors) and such
other parties necessary to the extent such approval is required, to consummate
the transactions contemplated herein.
Acknowledged and Agreed to:
UCC FUNDING CORPORATION CONTENT HOLDINGS INC
/s/ Xxxxxx X. X'Xxxxx /s/ Xxxxxx X. X'Xxxxx
----------------------------------------- -----------------------------
Name: Xxxxxx X. X'Xxxxx Name: Xxxxxx X. X'Xxxxx
Title: President, CEO Title: President, CEO
CANDIE'S, INC. XXXXXXX XXXXXXX LICENSING LLC
/s/ Xxxx Xxxx /s/ Xxxx Xxxx
----------------------------------------- -----------------------------
Name: Xxxx Xxxx Name: Xxxx Xxxx
Title: President, CEO Title: President, CEO
