EXHIBIT 2.1
AGREEMENT
AGREEMENT dated this 21st day of May, 2002 by and between XXXX PHILIPPE
FRAGRANCES, LLC, a New York limited liability company with its principal office
at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Purchaser"); and TRISTAR
CORPORATION, DEBTOR-IN-POSSESSION in the Chapter 11 proceeding, Case no.
01-53706, U.S. Bankruptcy Court, Western District of Texas, San Antonio
Division, with its principal office at Xxx Xxxxxxxx Xxxxx, Xxxxxxxxxx, XX 00000
("Seller").
W I T N E S S E T H:
WHEREAS, Seller is prepared to sell certain of its assets to Purchaser
upon the terms and subject to the conditions set forth herein;
WHEREAS, Seller and New Co. are to enter into a Manufacturing Agreement
substantially in the form annexed hereto as EXHIBIT 6.1E, simultaneously with
the execution and delivery of this Agreement;
WHEREAS, Seller, Purchaser and Manufacturer are to enter into a
Non-Competition and Non-Solicitation Agreement substantially in the form annexed
hereto as EXHIBIT 6.1F simultaneously with the execution and delivery of this
Agreement; and
WHEREAS, Purchaser is prepared to acquire such assets from Seller upon
the terms and subject to the conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants, conditions and
promises contained herein, the parties hereby agree as follows:
ARTICLE
DEFINITIONS AND USAGE
1.1 DEFINITIONS. For purposes of this Agreement, the following terms
and variations thereof have the meanings specified or referred to in this
ARTICLE 1.1:
"Affiliate"--
With respect to a particular individual:
(a) each other member of such individual's Family;
(b) any Person that is directly or indirectly controlled by any one or
more members of such individual's Family;
(c) any Person in which members of such individual's Family hold
(individually or in the aggregate) a Material Interest; and
(d) any Person with respect to which one or more members of such
individual's Family serves as a director, officer, partner, executor or trustee
(or in a similar capacity).
With respect to a specified Person other than an individual:
(a) any Person that directly or indirectly controls, is directly or
indirectly controlled by or is directly or indirectly under common control with
such specified Person;
(b) any Person that holds a Material Interest in such specified
Person;
(c) each Person that serves as a director, officer, partner, executor
or trustee of such specified Person (or in a similar capacity);
(d) any Person in which such specified Person holds a Material
Interest; and
(e) any Person with respect to which such specified Person serves as a
general partner or a trustee (or in a similar capacity).
For purposes of this definition, (a) "control" (including "controlling,"
"controlled by," and "under common control with") means the possession, direct
or indirect, of the power to direct or cause the direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract or otherwise, and shall be construed as such term is used in the rules
promulgated under the Securities Act; (b) the "Family" of an individual includes
(i) the individual, (ii) the individual's spouse, (iii) any other natural person
who is related to the individual or the individual's spouse within the second
degree and (iv) any other natural person who resides with such individual; and
(c) "Material Interest" means direct or indirect beneficial ownership (as
defined in Rule 13d-3 under the Exchange Act) of voting securities or other
voting interests representing at least ten percent (10%) of the outstanding
voting power of a Person or equity securities or other equity interests
representing at least ten percent (10%) of the outstanding equity securities or
equity interests in a Person.
"Assets"--as defined in ARTICLE 2.1.
"Bankruptcy Court"- United States Bankruptcy Court, Western District of Texas,
San Antonio Division in the Chapter 11 proceeding, Case no. 01-53706.
"Bankruptcy Court Order"- An Order of the Bankruptcy Court which orders all of
the Assets of Seller to be sold to Purchaser free and clear of all Encumbrances.
"Bankruptcy Court Rejection Order"- as defined in ARTICLE 6.1(E).
"Brands"-- as defined in ARTICLE 2.1(A).
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"Business" -- the production, manufacture, marketing, distribution and sale by
Seller of mass market fragrance products, perfumes, eau de toilette, eau de
cologne, deodorants, cosmetics, health and beauty and personal care products,
for men, women and children.
"Closing"--as defined in ARTICLE 2.5.
"Closing Date"-- as defined in ARTICLE 2.5.
"Encumbrance"--any charge, claim, community or other marital property interest,
condition, equitable interest, lien, option, pledge, security interest,
mortgage, right of way, easement, encroachment, servitude, right of first
option, right of first refusal or similar restriction, including any restriction
on use, voting (in the case of any security or equity interest), transfer,
receipt of income or exercise of any other attribute of ownership.
"Environmental, Health and Safety Liabilities"--any cost, damages, expense,
liability, obligation or other responsibility arising from or under any
Environmental Law or Occupational Safety and Health Law, including those
consisting of or relating to:
(a) any environmental, health or safety matter or condition (including
on-site or off-site contamination, occupational safety and health and regulation
of any chemical substance or product);
(b) any fine, penalty, judgment, award, settlement, legal or
administrative proceeding, damages, loss, claim, demand or response, remedial or
inspection cost or expense arising under any Environmental Law or Occupational
Safety and Health Law;
(c) financial responsibility under any Environmental Law or
Occupational Safety and Health Law for cleanup costs or corrective action,
including any cleanup, removal, containment or other remediation or response
actions ("Cleanup") required by any Environmental Law or Occupational Safety and
Health Law (whether or not such Cleanup has been required or requested by any
Governmental Body or any other Person) and for any natural resource damages; or
(d) any other compliance, corrective or remedial measure required
under any Environmental Law or Occupational Safety and Health Law.
The terms "removal," "remedial" and "response action" include the types of
activities covered by the United States Comprehensive Environmental Response,
Compensation and Liability Act of 1980 (CERCLA).
"Environmental Law"--any Legal Requirement that requires or relates to:
(a) advising appropriate authorities, employees or the public of
intended or actual Releases of pollutants or hazardous substances or materials,
violations of discharge limits or
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other prohibitions and the commencement of activities, such as resource
extraction or construction, that could have significant impact on the
Environment;
(b) preventing or reducing to acceptable levels the Release of
pollutants or hazardous substances or materials into the Environment;
(c) reducing the quantities, preventing the Release or minimizing the
hazardous characteristics of wastes that are generated;
(d) assuring that products are designed, formulated, packaged and used
so that they do not present unreasonable risks to human health or the
Environment when used or disposed of;
(e) protecting resources, species or ecological amenities;
(f) reducing to acceptable levels the risks inherent in the
transportation of hazardous substances, pollutants, oil or other potentially
harmful substances;
(g) cleaning up pollutants that have been Released, preventing the
Threat of Release or paying the costs of such clean up or prevention; or
(h) making responsible parties pay private parties, or groups of them,
for damages done to their health or the Environment or permitting self-appointed
representatives of the public interest to recover for injuries done to public
assets.
"Intellectual Property "--as defined in ARTICLE 2.1(A).
"Inventories"-- Raw materials, component parts, work in progress and finished
goods relating exclusively to the Intellectual Property on Seller's current
order form or current forecast, and collateral or ancillary items (such as point
of sale merchandise, testers, samples and cartons), wherever located, as are in
the possession, custody or control of Seller.
"Legal Requirement"--any federal, state, local, municipal, foreign,
international, multinational or other constitution, law, ordinance, principle of
common law, code, regulation, statute or treaty.
"New Co." -- Fragrance Impressions Corporation, a Delaware corporation, to be
owned, in part, and controlled by the existing management of Seller.
"Ordinary Course of Business"--an action taken by a Person will be deemed to
have been taken in the Ordinary Course of Business only if that action:
(a) is consistent in nature, scope and magnitude with the past
practices of such Person and is taken in the ordinary course of the normal,
day-to-day operations of such Person;
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(b) does not require authorization by the board of directors or
shareholders of such Person (or by any Person or group of Persons exercising
similar authority) and does not require any other separate or special
authorization of any nature; and
(c) is similar in nature, scope and magnitude to actions customarily
taken, without any separate or special authorization, in the ordinary course of
the normal, day-to-day operations of other Persons that are in the same line of
business as such Person.
"Promissory Note"--as defined in ARTICLE 2.3(A)(I).
"Purchase Price"--as defined in ARTICLE 2.2.
"Purchaser"--as defined in the first paragraph of this Agreement.
"Seller"--as defined in the first paragraph of this Agreement.
"Tangible Personal Property"-- formulae, molds, models, dies, casts, forms,
packaging patterns, reproductions and displays relating exclusively to the
Intellectual Property; customer lists and sales histories for each of the past
three (3) years, and distributor list and sales histories for each of the past
three (3) years; and all other proprietary materials relating thereto in the
possession or control of Seller for Inventory together with any express or
implied warranty by the manufacturers or sellers or lessors of any item or
component part thereof and all maintenance records and other documents relating
thereto.
"Trade Credits"--as defined in ARTICLE 3.7.
"Trademarks"--as defined in ARTICLE 2.1(A).
1.2 USAGE.
(a) Interpretation. In this Agreement, unless a clear contrary
intention appears:
(i) the singular number includes the plural number and vice versa;
(ii) reference to any Person includes such Person's successors and
assigns but, if applicable, only if such successors and assigns are not
prohibited by this Agreement, and reference to a Person in a particular capacity
excludes such Person in any other capacity or individually;
(iii) reference to any gender includes each other gender;
(iv) reference to any agreement, document or instrument means such
agreement, document or instrument as amended or modified and in effect from time
to time in accordance with the terms thereof;
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(v) reference to any Legal Requirement means such Legal Requirement as
amended, modified, codified, replaced or reenacted, in whole or in part, and in
effect from time to time, including rules and regulations promulgated
thereunder, and reference to any Article or other provision of any Legal
Requirement means that provision of such Legal Requirement from time to time in
effect and constituting the substantive amendment, modification, codification,
replacement or reenactment of such Article or other provision;
(vi) "hereunder," "hereof," "hereto," and words of similar import shall
be deemed references to this Agreement as a whole and not to any particular
Article, Article or other provision hereof;
(vii) "including" (and with correlative meaning "include") means
including without limiting the generality of any description preceding such
term;
(viii) "or" is used in the inclusive sense of "and/or";
(ix) with respect to the determination of any period of time, "from"
means "from and including" and "to" means "to but excluding"; and
(x) references to documents, instruments or agreements shall be deemed
to refer as well to all addenda, exhibits, schedules or amendments thereto.
(b) As used herein, the term "this Agreement" means the body of this
Agreement and the Schedules and Exhibits hereto.
(c) Accounting Terms and Determinations. Unless otherwise specified
herein, all accounting terms used herein shall be interpreted and all accounting
determinations hereunder shall be made in accordance with generally accepted
accounting principles.
(d) Legal Representation of the Parties. This Agreement was negotiated
by the parties with the benefit of legal representation, and any rule of
construction or interpretation otherwise requiring this Agreement to be
construed or interpreted against any party shall not apply to any construction
or interpretation hereof.
ARTICLE II
SALE AND PURCHASE
2.1 SALE AND PURCHASE OF CERTAIN ASSETS. Upon the terms and subject to
the conditions of this Agreement, at the Closing, Seller agrees to irrevocably
sell, assign, transfer and convey to Purchaser, all of Seller's right, title,
and interest in and to any and all of the following (the "Assets"):
(a) world-wide trademarks, service marks, patents, copyrights,
trade secrets and applications therefor, and other proprietary
information, including all distribution
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rights and goodwill for the product brands listed on the annexed SCHEDULE
2.1(A) (the "Brands") and the name Tristar, (collectively the
"Intellectual Property"), but not including rights to the brand,
Fragrance Impressions;
(b) the Tangible Personal Property; and
(c) the Inventory, to which the formulas, as set forth in the
annexed SCHEDULE 2.1(C), and Trade Credits as set forth in the annexed
SCHEDULE 3.7, which exist as of the date of the Bankruptcy Court Order.
Seller's assets not consisting of the Intellectual Property, Tangible Personal
Property, Inventory or Trade Credits are not being conveyed to Purchaser.
2.2 CALCULATION OF PURCHASE PRICE. The Purchase Price shall be as
follows:
(a) for the Intellectual Property and the Tangible Personal
Property, $3,500,000; and
(b) $3,738,000
(i) for the Inventory, subject to adjustment in accordance with
the terms of ARTICLE 2.3(b) hereof, F.O.B. where the Inventory is
located; and
(ii) for the Trade Credits, subject to adjustment in accordance
with the terms of ARTICLE 2.3(C).
2.3 PAYMENT OF THE PURCHASE PRICE. Purchaser agrees to pay the
Purchase Price as follows:
(a) For the Intellectual Property and Tangible Personal Property,
(i) $500,000.00 by bank, cashier's or certified check, or by
wire transfer of immediately available funds through the Federal Reserve System
at Closing; and
(ii) $3,000,000.00 by delivery at Closing of a Promissory Note
in the form annexed hereto as EXHIBIT 2.3AII, payable $500,000 per annum on the
next six (6) anniversary dates of the Closing without interest. The Promissory
Note shall be prepaid to the extent of 3.0% of net sales of the Brands, payable
within 45 days after the end of each calendar quarter; and
(b) For the Inventory and the Trade Credits, $3,738,000 by bank,
cashier's or certified check, or by wire transfer of immediately available funds
through the Federal Reserve System at Closing;
(i) Attached hereto as SCHEDULE 2.3(B) is the physical count of
the Inventory in accordance with the provisions of ARTICLE 3.5 HEREOF, and
Seller agrees to release the Inventory to
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Purchaser at Closing.
(c) Notwithstanding the provisions of ARTICLE 2.3(A) AND (B), in the
event that the Purchase Price for the Inventory and the Trade Credits is less
than $6.5 million, then in such event, the principal balance of the Promissory
Note shall be reduced by such amount as is necessary to increase the amount of
cash portion of the Purchase Price paid at Closing, so that the aggregate amount
of the cash portion of the Purchase Price being paid at Closing shall equal
$7,000,000 (the "Note Prepayment Amount"). The remaining principal balance of
the Promissory Note shall be further reduced by the difference between the Note
Prepayment Amount and the calculated discounted Note Prepayment Amount to its
present value using the prime rate less one percent as may be in effect as of
the Closing Date, which shall be credited against the last payments that were
due on the Promissory Note. Notwithstanding anything to the contrary contained
in this Agreement, the Promissory Note, or the Bankruptcy Court Order, the
aggregate Purchase Price paid for the Assets shall not be more than the sum of
(i) $3,500,000 for the Intellectual Property and the Intangible Assets, subject
to the discount allowed for Promissory Note prepayments, and the (ii) actual
Purchase Price determined for the Inventory and Trade Credits.
2.4 NO ASSUMPTION OF SELLER'S LIABILITIES OR OBLIGATIONS.
(a) Except as set forth in ARTICLE 2.4(B) AND (C) hereof, Purchaser
does not and shall not assume any agreements, contracts, liabilities or
obligations of Seller, whether accrued, contingent, liquidated or unliquidated,
including but not limited to any Environmental, Health and Safety Liabilities.
Seller covenants and agrees with Purchaser, that Purchaser shall have no
liability or obligation whatsoever for any liabilities or obligations of Seller,
including but not limited to any Environmental, Health and Safety Liabilities.
(b) At Closing, Purchaser agrees to assume the obligations of Seller
solely to the extent set forth in the Agreement dated 16 October 2000 between
Seller and Xxxxxxxx Xxxxxxx Xxxxx.
(c) At Closing, Purchaser agrees to assume the obligations and accept
the rights of, Xxxxx Xxxxxxxxx Xxxxx, solely to the extent such obligations and
rights are set forth in the Agreement dated 18 October 2000 between Xxxxx
Xxxxxxxxx Xxxxx and Xxxxxxxx Xxxxxxx Xxxxx, to the extent such agreement
pertains to Seller.
2.5 CLOSING. Subject to the fulfillment of the conditions precedent as
hereinafter set forth, the closing under this Agreement, (the "Closing") shall
take place at the offices of Xxxx Philippe Fragrances, LLC, 000 Xxxxx Xxxxxx,
Xxx Xxxx, XX 00000 , at 11:00 A.M. on May 21, 2002 or at such other time and at
such other place as shall be fixed by mutual consent of the parties hereto (the
"Closing Date").
ARTICLE III
INVENTORY
3.1 INVENTORY.
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(a) The Inventory to be purchased by Seller is described in SCHEDULE
2.1C and is physically located as set forth in such schedule.
(b) Any portion of the Inventory which is being held pursuant to
lay-a-way or similar installment sale arrangement shall not be included as part
of the Inventory.
3.2 RISK OF LOSS. The risk of loss of any Inventory prior to release
of the Inventory to Purchaser because of loss, theft, fire or other casualty,
shall be borne by Seller..
3.3 RETURNS; RECEIVABLES.
(a) In the event that finished goods Inventory are returned to Seller,
its assignees or successors in interest by third parties subsequent to the
Closing Date ("Returns"), then in such event
(i) if the Returns are made during the first six months from
the first Closing Date in the Ordinary Course of Business, then such Returns
must be approved by Seller, its assignees or successors in interest and the
credit to the customer for the Returns shall be the responsibility of Seller,
its assignees or successors in interest, and
(I) if such Returns are on the current order forms and
in the current product lines being sold ("Current Returns"), then and Purchaser
shall buy such Current Returns at Seller's standard cost, less the cost of
refurbishing, including all costs as may be needed for refurbishing the Current
Returns, including, folding cartons, master carton and shrink-wrap, but
excluding the cost of labor, which shall be contributed by New Co., as
hereinafter defined; and
(II) if such Returns are not Current Returns, then
Purchaser shall buy such Returns at 50% off standard cost;
(ii) if the Returns are made in the Ordinary Course of Business
after the first six months but prior to the expiration of twelve months from the
first Closing Date, then
(I) for Current Returns, the credit to the customer
shall be the responsibility of Purchaser; and
(II) for Returns which are not Current Returns, such
Returns must be approved by the Seller, its assignees or successors in interest,
and Purchaser shall buy such Returns at a closeout selling price; and
(iii) if the Returns are made in the Ordinary Course of Business
after the expiration of twelve months from the first Closing Date, then
(I) for Current Returns, the credit to the customer
shall be the responsibility of Purchaser, and
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(II) for Returns which are not Current Returns, such
Returns must be approved by the Seller, its assignees or successors in interest,
and Purchaser shall buy such Returns at 50% off standard cost.
All approvals of Seller, its assignees or successors in interest under this
ARTICLE 3.3(A) shall not be unreasonably denied or delayed.
(b) Purchaser agrees to use commercially reasonable efforts in
assisting Seller, its assignees or successors in interest in connection with the
collection of its accounts receivable. Notwithstanding the foregoing,
Purchaser's obligations hereunder shall be of a ministerial nature only, and
shall not be construed as a guarantee of collection of Seller's receivables, if
any.
(c) Purchaser and Seller, or its assignees or successors in interest,
and New Co. shall meet at least quarterly to reconcile all misdirected customer
payments.
3.4 PURCHASE ORDERS.
From and after the date hereof Seller agrees to use reasonable commercial
efforts to cancel certain outstanding orders for Inventory as may be designated
by Purchaser, provided Seller will not incur any material penalty, and will
place no new orders for any Inventory unless Purchaser's representatives shall
have approved such order by initialing a copy of the original purchase order.
Such approval shall not be unreasonably withheld. Purchaser shall respond as
soon as reasonably possible to any request for approval of purchase orders and
shall have the right to contact vendors directly with respect to such orders. A
true and complete list of open orders of Seller for Inventory is annexed as
SCHEDULE 3.4.
3.5 PHYSICAL INVENTORY COUNT. Purchaser and Seller shall conduct a
physical count of the Inventory. If for any reason Purchaser and Seller are not
available to conduct the physical Inventory count, then such count shall be
conducted by such one or more other independent inventory companies as shall be
agreed to by Purchaser and Seller. Such counts shall be taken in accordance with
the inventory taking instructions of the independent inventory companies as
agreed to by Purchaser and Seller. Such physical counts shall be taken with the
participation and cooperation of both Purchaser and Seller, and both parties
shall make available sufficient numbers of their respective employees for such
purpose. The cost of employing such other independent inventory companies shall
be borne by Purchaser and Seller equally. Seller covenants and agrees with
Purchaser that all Inventory shall be located at Xxx Xxxxxxxx Xxxxx, Xxxxxxxxxx,
Xxxxx and no Inventory will be moved to any other location during the period
commencing one week before the first of the Closing Dates and ending on the last
of the Closing Dates. Both Purchaser and Seller agree to make available such
number of employees or third parties as may be necessary to conduct such
physical count at their own expense.
3.6 ADJUSTMENTS TO INVENTORY COUNT. The Purchase Price shall be
adjusted to conform to the actual physical inventory counted referred to in
ARTICLE 3.5 and shall be paid within the time frame set forth in ARTICLE 2.3.
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3.7 TRADE CREDITS. Annexed hereto as SCHEDULE 3.7 is a list of all the
trade credits of Seller with respect to manufacturers, suppliers or vendors
(collectively the "Trade Credits"). Seller shall as of the first Closing Date
irrevocably assign to the Purchase and Purchaser shall accept, all of Seller's
rights to any trade credits it may have with manufacturers, suppliers or vendors
relating exclusively to the Intellectual Property. Such assignments shall be in
form satisfactory to Purchaser and its counsel and shall specify the name of
each such manufacturer, supplier or vendor and the amount of the credit,
confirmed in writing by such manufacturers, supplier or vendor as of the Closing
Date.
ARTICLE IV
WARRANTIES AND REPRESENTATIONS
OF SELLER
WARRANTIES AND REPRESENTATIONS OF SELLER. Seller hereby warrants and
represents to Purchaser as follows:
4.1 ORGANIZATION AND GOOD STANDING OF SELLER. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has all requisite corporate power and authority to carry
on its businesses as currently conducted and to own or lease and to operate its
properties and assets as and where such properties and assets are now owned or
leased and operated.
4.2 LEGAL, VALID AND BINDING, ETC. This Agreement constitutes the
legal, valid and binding obligation of Seller, enforceable against it in
accordance with its terms, subject to the entry of the Bankruptcy Court Order.
4.3 CONSENTS. Any and all consents, approvals, authorizations, or
orders of or registrations or qualifications with any person, bank, corporation,
association, governmental body, or court having authority or power to regulate,
supervise or direct the business and affairs of Seller necessary for the
consummation of the transactions specified in this Agreement shall have been
obtained on or before the Closing Date.
4.4 NO LITIGATION. There are no actions, suits, legal or governmental
proceedings pending or to the knowledge of Seller threatened against Seller
relating to this Agreement or the transactions described herein.
4.5 INTELLECTUAL PROPERTY. To Seller's knowledge, SCHEDULE 2.1A
annexed hereto contains a complete and accurate list of all of the Intellectual
Property used in the Business, including all registrations and applications
therefor. To Seller's knowledge, except as set forth in the annexed SCHEDULE
4.5, no license, sublicense, distribution or other agreements relating to any of
the Intellectual Property shall be in effect at the Closing, and each trademark,
service xxxx, trade name, copyright and patent and each application therefor
comprising the Intellectual Property is not subject to any license or royalty
arrangement or dispute. Except as set forth in the annexed SCHEDULE 4.5, Seller
has not received any notification of infringement by Seller or any claims with
regard to any trademark, service xxxx, trade name, copyright or patent or
application
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therefor comprising the Intellectual Property from any person, and Seller is not
aware of a basis for any such claim. Seller has delivered to Purchaser prior to
the Closing copies of any and all documents in its possession, custody or
control relating to the Intellectual Property.
4.6 TANGIBLE PERSONAL PROPERTY. SCHEDULE 4.6 contains a list of all
Tangible Personal Property owned or leased by Seller in connection with the
Business as of the date of this Agreement. The Tangible Personal Property is in
substantially good operating condition and repair, excluding ordinary wear and
tear, taking into consideration the age and prior use of same, and is in
compliance with all applicable laws, regulations, orders and ordinances.
4.7 INVENTORY. The Inventory as at the date of this Agreement, is not
in excess of normal requirements, is adequate for continuation of Seller's
ongoing business, has been acquired in the Ordinary Course of Business, in
customary quantities and at not more than prevailing market prices at the times
of such purchases. The Inventory has been valued at the lower of cost or market,
on the financial statements of Seller delivered to Purchaser, in accordance with
generally accepted accounting principles consistently applied, and all
slow-moving, unmarketable, returned, rejected, damaged or obsolete inventory has
been written off or written down as the case may be. The Inventory is of a
quality and quantity good and usable and saleable as current inventory in the
normal course of business, at least equal to the values at which such items are
carried on Seller's books and records.
4.8 GOOD TITLE. The Bankruptcy Court Order shall transfer all of
Seller's right, title and interest in and to the Assets, free and clear of all
Encumbrances. The Assets and the present use thereof are in all material
respects, in accordance with all applicable laws, ordinances, regulations and
orders. No Assets are subject to any pending or, to the knowledge of Seller
threatened adverse change, judicial order, ordinance or zoning restriction which
materially affects the use of such properties in the business of Seller or would
affect the use thereof, except as set forth in any Schedule to this Agreement.
The value of fixed Assets used in the business of Seller has not been written
up.
ARTICLE V
WARRANTIES AND REPRESENTATIONS
OF PURCHASER
WARRANTIES AND REPRESENTATIONS. Purchaser hereby warrants and represents
as follows:
5.1 DUE ORGANIZATION, ETC. Purchaser is a limited liability company
duly organized and existing under the laws of the State of New York and has all
requisite power to carry on its business as currently conducted and to own or
lease and to operate its properties and assets as and where such properties and
assets are now owned or leased and operated.
5.2 LEGAL, VALID AND BINDING. This Agreement constitutes the legal,
valid and binding obligation of Purchaser, enforceable against it, in accordance
with its terms, subject to the effect of bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and other similar laws relating to or
affecting creditors rights generally or court decisions with respect thereto and
the
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availability of equitable remedies.
5.3 DUE AUTHORIZATION. The execution, delivery and performance of the
transactions contemplated by this Agreement have been duly authorized by its
sole member and will not conflict with or result in a breach of any of the terms
or provisions of its Articles of Organization, or any mortgage, lease, bond,
note, debenture, guaranty, deed of trust or other agreement, instrument or
arrangement to which Purchaser may be or is a party (including by operation of
law) or by which the property of Purchaser is bound, or any law, administrative
regulation, or any order of any court or governmental agency or authority
entered in any proceeding to which Purchaser was or is a party or by which its
property is bound.
5.4 CONSENTS. Any and all consents, approvals, authorizations, or
orders of or registrations or qualifications with any person, bank, corporation,
association, governmental body, or court having authority or power to regulate,
supervise or direct the business and affairs of Purchaser necessary for the
consummation of the transactions specified in this Agreement shall have been
obtained on or before the Closing Date.
5.5 NO LITIGATION. There are no actions, suits, legal or governmental
proceedings pending, or to the knowledge of Purchaser, threatened against
Purchaser relating to this Agreement or the transactions described herein.
5.6 FINANCIAL CONDITION OF PURCHASER. Purchaser has sufficient working
capital in order to fully fund the Purchase Price.
ARTICLE VI
CONDITIONS
6.1 CONDITIONS PRECEDENT TO PURCHASER'S OBLIGATION TO CLOSE. The
obligations of Purchaser under this Agreement are, at the option of Purchaser,
subject to the fulfillment of each of the conditions set forth below:
(a) On the Closing Date the warranties and representations of Seller
contained in this Agreement shall be true and correct in all material respects.
Seller shall have complied with and duly performed in all material respects any
and all covenants, agreements and conditions on its part to be complied with or
performed pursuant to or in connection with this Agreement. If Seller shall be
in default of this Agreement, then Purchase shall give notice of such defaults
to Seller, and Seller shall have prior to the Closing Date a reasonable
opportunity to cure such defaults under this Agreement.
(b) No action or proceeding shall have been instituted to restrain or
prohibit the conveyance of the Assets by Seller.
(c) Seller shall have obtained, and deliver to Purchaser prior to the
Closing, the Bankruptcy Court Order, approving the terms and conditions, and
execution and delivery by the signatory on
13
behalf of Seller, of this Agreement; the time for appeals from the Order shall
have expired; and no appeal from the Order shall have been timely filed.
(d) Seller shall deliver one or more Assignments to Purchaser relating
to the Intellectual Property, Bills of Sale to Purchaser to evidence the
conveyance of the Inventory and Tangible Personal Property from Seller to
Purchaser, in form reasonably satisfactory to counsel to Purchaser.
(e) Seller shall use reasonable efforts to obtain an order from the
Bankruptcy Court rejecting the following two (2) executory contracts
("Bankruptcy Court Rejection Order"): (i) Agreement dated on or about 15 March
1999 between Seller and Transvit Holding Corporation relating to certain
distribution rights in Mexico; and (ii) Agreement dated on or about 30 May 1998
between Seller and Transvit Holding Corporation relating to certain distribution
rights of Tristar de Brasil Cosmetics, Ltda. Purchaser agrees that submission
and argument of the motion seeking the Bankruptcy Court Rejection Order by
Seller shall constitute reasonable efforts, and receipt of the Bankruptcy Court
Rejection Order shall not be a condition precedent to Closing.
(f) Seller shall cease doing business under the name Tristar, and
shall have filed a fictitious name certificate or the like in each jurisdiction
in which it is qualified to transact business.
6.2 SELLER'S CONDITIONS PRECEDENT. The obligations of Seller under
this Agreement are, at the option of Seller, subject to the fulfillment of each
of the conditions set forth below:
(a) On the Closing Date the warranties and representations of
Purchaser contained in this Agreement shall be true and correct in all material
respects. Purchaser shall have complied with and duly performed any and all
covenants, agreements and conditions in all material respects, on its part to be
complied with or performed pursuant to or in connection with this Agreement.
(b) No action or proceeding shall have been instituted to restrain or
prohibit the conveyance of the Assets by Seller.
(c) Seller shall have obtained, and deliver to Purchaser prior to the
Closing, the Bankruptcy Court Order; the time for appeals from the Order shall
have expired; and no appeal from the Order shall have been timely filed.
ARTICLE VII
[INTENTIONALLY OMITTED]
ARTICLE VIII
CONDITIONS SUBSEQUENT
14
8.1 CHANGE OF NAME. Promptly after the Closing, Seller shall change
its name to that which is not similar to Tristar. Seller covenants and agrees
not to use the names "Tristar" or "star" or any derivative thereof in any
manner.
8.2 TERMINATION FEE. If after execution and delivery of this
Agreement, Seller determines not to proceed for any reason other than a material
breach of this Agreement by Purchaser, then, as long as Purchaser is in material
compliance with this Agreement, Seller shall pay, as liquidated damages, and as
Purchaser's sole and exclusive remedy, a non-refundable cash termination fee to
Purchaser equal to the lesser of $300,000 or 4.0% of the aggregate Purchase
Price, not later than five (5) business days after Seller has determined not to
close this Agreement.
ARTICLE IX
MISCELLANEOUS
9.1 ATTORNEY'S FEES. In the event that litigation or arbitration
should arise with respect to this Agreement or any portion thereof, then, in
such event, the party which prevails in such litigation or arbitration shall be
entitled to receive from the losing party, and such losing party agrees to pay
to the prevailing party, reasonable attorneys' fees together with all costs and
expenses incurred by the prevailing party in such litigation or arbitration.
9.2 [INTENTIONALLY OMITTED].
9.3 CUMULATIVE RIGHTS. The rights and remedies granted in this
Agreement are cumulative and not exclusive, and are in addition to any and all
other rights and remedies granted and permitted under and pursuant to law.
9.4 NO WAIVER. The failure of any of the parties hereto to enforce any
provision hereof on any occasion shall not be deemed to be a waiver of any
preceding or succeeding breach of such provision or any other provision.
9.5 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement
and understanding of the parties hereto and no amendment, modification or waiver
of any provision herein shall be effective unless in writing, executed by the
party charged therewith.
9.6 BINDING EFFECT. This Agreement shall bind and inure to the benefit
of the parties and their successors in interest.
9.7 NO ASSIGNMENT AND DELEGATION OF DUTIES. This Agreement may not be
assigned by the parties hereto, and any attempted assignment hereof shall be
void and of no effect.
9.8 ARTICLE HEADINGS. The paragraph headings herein have been inserted
for convenience of reference only, and shall in no way modify or restrict any of
the terms or provisions hereof.
15
9.9 GOVERNING LAW. This Agreement shall be construed, interpreted and
enforced in accordance with and shall be governed by the laws of the State of
New York without regard to the principles of conflicts of laws.
9.10 CONSENT TO SERVICE OF PROCESS. Each party hereto hereby
irrevocably consents to the exclusive jurisdiction and venue of the Bankruptcy
Court, with regard to any and all actions or proceedings arising out of, or
relating to, this Agreement, irrevocably waives, to the fullest extent permitted
by law, any objection that it may now or hereafter have to the laying of the
venue of any such suit, action or proceeding in such court or that any such
suit, action or proceeding which is brought in such court has been brought in an
inconvenient forum, and agrees that service of process may be made in the manner
for providing notice, as specified in paragraph 9.12 hereof.
9.12. NOTICES.
(a) Any notice or other communication under the provisions of this
Agreement shall be in writing, and shall be given by postage prepaid, registered
or certified mail, return receipt requested; by hand delivery with an
acknowledgment copy requested; or by the Express Mail service offered by the
United States Post Office or any reputable overnight delivery service, directed
to the addresses set forth above, or to any new address of which any party
hereto shall have informed the others by the giving of notice in the manner
provided herein. Such notice or communication shall be effective, if sent by
postage prepaid, registered or certified mail, return receipt requested, three
(3) days after it is mailed within the continental United States; if sent by
Express Mail or any reputable overnight delivery service, one (1) day after it
is forwarded; or by hand delivery, upon receipt. In addition, copies of all
notices shall be given to:
Xxxxxxx & Xxxxxx, Incorporated
000 X. Xxxxxxxx, 0xx Xx.
Xxx Xxxxxxx, Xxxxx 00000-0000
Att.: Xxxxx X. Xxxxx, Esq.
Xxxxxx & Xxxxxxxxx, P.A.
0000 Xxxxxxxx Xxxx
Xx. Xxxxxxxxxx, XX 00000-0000
Att.: Xxxxxx X. Xxxxxxx, Esq.
Xxxxx Xxxxxxxxxxx
Xxxxxx Xxxxxxxx & Xxxxxxxx, LLP
0000 Xxx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx 00000
Att.: Xxxxx Xxxxx, Esq.
(b) The parties hereto agree to send copies of all notices under this
Agreement promptly by telecopier to the other parties, but such notice by
telecopier shall not relieve the
16
sending party of the obligation to forward notice in accordance with the terms
of ARTICLE 9.12(A) hereof.
9.13 UNENFORCEABILITY; SEVERABILITY. The invalidity of any one or more
of the words, phrases, sentences, clauses, sections or subsections contained in
this Agreement shall not affect the enforceability of the remaining portions of
this Agreement or any part hereof, all of which are inserted conditionally on
their being valid in law, and, in the event that any one or more of the words,
phrases, sentences, clauses, sections or subsections contained in this Agreement
shall be declared invalid, this Agreement shall be construed as if such invalid
word or words, phrase or phrases, sentence or sentences, clause or clauses,
section or sections, or subsection or subsections had not been inserted. Upon
such a determination, the parties shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner so that the transactions contemplated hereby
shall be consummated as originally contemplated to the fullest extent possible.
9.14 BROKER'S FEES. No party has incurred nor will incur any liability
for brokerage fees or agents' commissions in connection with the transactions
contemplated hereby, and all parties warrant that no agent or broker was
instrumental in consummating this transaction so as to earn any such fee.
9.15 FURTHER ASSURANCES. After the Closing, Seller shall at any one
time and from time to time, at the request of Purchaser and without further
out-of pocket cost or expense to Seller, execute and deliver such other
instruments of conveyance or transfer and take such other actions as Purchaser
may request in order to vest in Purchaser good and marketable title to the
Assets.
9.16 NO THIRD PARTY RIGHTS. The representations, warranties and other
terms and provisions of this Agreement are for the exclusive benefit of the
parties hereto, and no other person shall have any right or claim against any
party by reason of any of those terms and provisions or be entitled to enforce
any of those terms and provisions against any party.
9.17 COUNTERPARTS; FACSIMILE SIGNATURES. This Agreement may be executed
in counterparts, all of which shall be deemed to be duplicate originals.
Delivery by facsimile transmission of an executed signature page to this
Agreement shall be effective as delivery of a manually executed counterpart
hereof.
[BALANCE OF THIS PAGE INTENTIONALLY LEFT BLANK]
17
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
XXXX PHILIPPE FRAGRANCES, LLC
By: /s/ XXXXXXX XXXXXXXXX
------------------------
Xxxxxxx Xxxxxxxxx, Executive Vice President
TRISTAR CORPORATION, DEBTOR-IN-POSSESSION
By: /s/ XXXXXXX X. XXXXXXXXX
-------------------------
Xxxxxxx X. XxXxxxxxx
Bankruptcy court-appointed Examiner
with limited powers
18
LIST OF EXHIBITS
EXHIBIT 2.3AII: Promissory Note
EXHIBIT 6.1E: Manufacturing, Warehousing and Shipping Agreement
EXHIBIT 6.1F: Non-Competition Agreement
LIST OF SCHEDULES
SCHEDULE 2.1(A): Intellectual Property
SCHEDULE 2.1(C): Inventory
SCHEDULE 2.3(B): Physical Inventory Count
SCHEDULE 3.4: Open Orders for Inventory
SCHEDULE 3.:7 Trade Credits of Seller with respect to Manufacturers, Suppliers
or Vendors
SCHEDULE 4.5: License, Sublicense, Distribution or other Agreements Relating to
Intellectual Property
SCHEDULE 4.6: Tangible Personal Property
19
EXHIBIT 2.3AII: Promissory Note
(Omitted - not used)
20
EXHIBIT 6.1E: Manufacturing, Warehousing and Shipping Agreement
Incorporated by reference to Exhibit no. 10.88 which is incorporated by
reference herein.
21
EXHIBIT 6.1F: Non-Competition Agreement
Incorporated by reference to Exhibit no. 10.89 which is incorporated by
reference herein.
22
SCHEDULE 2.1(A): Intellectual Property*
SCHEDULE 2.1(C): Inventory *
SCHEDULE 2.3(B): Physical Inventory Count*
SCHEDULE 3.4: Open Orders for Inventory *
SCHEDULE 3.:7 Trade Credits of Seller with respect to Manufacturers, Suppliers
or Vendors*
SCHEDULE 4.5: License, Sublicense, Distribution or other Agreements Relating to
Intellectual Property
SCHEDULE 4.6: Tangible Personal Property *
-----------
* Omitted, but will be furnished supplementally to the Commission upon request.
23
SCHEDULE 4.5
1. Distribution Agreement With Transvit Holding Corp. For Mexico.
2. Distribution Agreement With Transvit Distribution Corp. For Brazil.
3. License Agreement Dated 17 December 1997 With Starion. (Potentially void
in accordance with the provisions of Section 2.3 of the Agreement dated
18 October 2000. listed as no. 5 on this schedule).
4. License Agreement Dated 3 September 1998 With S & J Perfumes.
(Potentially void in accordance with the provisions of Section 2.3 of the
Agreement dated 18 October 2000. listed as no. 5 on this schedule).
5. Agreement Dated 18 October 2000 Between Xxxxx Xxxxxxxxx Xxxxx And
Xxxxxxxx Xxxxxxx Xxxxx.
6. Matters and claims outlined in X. Xxxxxxxxxx Letter of 8 March 2002 to X.
Xxxxx and the Agreement dated 16 October 2000 between Seller and Xxxxxxxx
Xxxxxxx Xxxxx.
7. Chanel Royal Selections Infringement
8. Chanel matter in Panama
9. (Potential) Tristar v. American Impression
10. Chanel agreement dated December 22, 1999, regarding Royal Selections No.
15
11. License from Tristar to The Deerskin Companies, Inc. regarding FOREVER
effective October 1, 1999- October 1, 2000. (extended?)
12. U.S. Trademark Regis. No. 2,160,697 for AIRBORNE - cease and desist
letter received in 1997, no result.
13. U.S. Trademark App. No. 76/031,189 for XXXXXXXX XXXXX - Petition to
Revive
14. U.S. Trademark Regis. No. 2,300,103 for EVERSCENT - Permanent injunction
re: use with deodorant, Procter & Xxxxxx case.
15. U.S. Trademark Regis. No. 1,894,768 for XXXX (drawing of lady) - Cannot
use in professional salons
16. U.S. Trademark App. No. 76/129,884 for GOOD VIBES - Opposition #91150099
24
17. U.S. Trademark Regis. No. 2,455,222 for L'OMBRE - Settlement Agreement in
1992 re: lettering
18. U.S. Trademark App. For SHOOTING STAR - Tristar filed extension of time
to file opposition v. 78/035,912; 11/20/01
19. U.S. Trademark Regis. No. 2,355,266 for XXXXXXX - xxxxx and desist letter
received from Venture Stores in 1997.
20. U.S. Trademark App. No. 76/000,473 for WHASSUP? (Dead) - Opposition No.
123,277
21. U.S. Trademark for CLEAR ICE (Dead) - Opposition No. 124,335
22. U.S. Trademark for EC SPIRIT (Dead) - Opposition No. 106,036
23. Australian Royal Selections Infringement
25
