AMENDMENT TO ASSET PURCHASE AGREEMENT
This AMENDMENT TO ASSET PURCHASE AGREEMENT (the "Amendment") is
entered into as of this 30th day of March, 1998, by and among French
Fragrances, Inc., a Florida corporation (the "Buyer"), J.P. Fragrances,
Inc., a New York corporation (the "Seller"), and Xxxxxx X. Xxxxxxxxxx and
Xxxxxx Xxxxxxxxxx, the sole shareholders of the Seller (collectively, the
"Shareholders"), and amends that certain Asset Purchase Agreement among the
Seller, the Buyer and the Shareholders dated February 25, 1998 (the
"Purchase Agreement"). All capitalized terms not otherwise defined herein
shall have the meanings set forth in the Purchase Agreement.
WHEREAS, the parties entered into the Purchase Agreement, and,
pursuant to Section 15.2 thereof, desire to amend the Purchase Agreement;
NOW, THEREFORE, in consideration of the covenants and promises
contained herein and such other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree
as follows:
1. The Purchase Agreement is hereby amended as follows:
(a) The first sentence of Section 1.2 is deleted in its entirety and
replaced with the following:
The Buyer, effective upon completion of the Closing, assumes and
undertakes to perform, pay, satisfy or discharge in accordance
with their terms, only the following liabilities (the "Assumed
Liabilities"): (a) such liabilities, obligations and commitments
of the Seller relating to the period commencing after the Closing
Date under the Contracts to be assigned to it as listed on
Schedule 1.1(b), (b) the trade payables listed on Schedule 4.22
(and those hereafter incurred by the Seller in the ordinary
course of business and associated with the Subject Assets (and
not otherwise obligations or indebtedness of any affiliate of the
Seller) as to be reflected on an updated Schedule 4.22 through
the Closing and as the same may be listed on the Closing Date
Balance Sheet), and (c) such other liabilities, obligations and
commitments as may otherwise be expressly set forth on Schedule
1.2.
(b) Section 2.1(a)(iii)(C) is deleted in its entirety and replaced
with the following:
(C) Four Million Six Hundred Fifty Thousand Dollars
($4,650,000) plus
(c) The second sentence of Section 2.1(b) is hereby deleted in its
entirety and replaced with the following:
Notwithstanding the foregoing, the Cash Purchase Price shall be
subject to reduction at the Closing, and may be subject to
reduction based on the Closing Date Balance Sheet which is agreed
to by the Buyer and the Seller pursuant to Section 2.1(c) hereof,
on a $1.5625 of Cash Purchase Price for $1 of Book Deficiency (as
defined below) basis, to the extent a Book Deficiency exists.
The Closing Acquisition Balance Sheet is attached hereto and made a part of
the Purchase Agreement. The Closing Date Balance Sheet shall be attached
hereto and made a part of the Purchase Agreement in accordance with Section
2.1(c) hereof.
(d) Schedule 2.3 to the Purchase Agreement is hereby deleted in its
entirety and replaced with Schedule 2.3 attached hereto.
(e) The first sentence of Section 3.1 is hereby deleted in its
entirety and replaced with the following:
The closing (the "Closing" or "Closing Date") of the transactions
contemplated by this Agreement shall take place following the
satisfaction of the conditions precedent described in Articles IX and
X of this Agreement at the principal business offices of the Seller,
00 Xxxxxxx Xxxxxx, Xxxx Xxxxxxx, Xxx Xxxx, at 10:00 a.m.
(f) Section 3.2(g) is hereby deleted in its entirety.
(g) Section 6.9 is hereby deleted in its entirety and replaced with
the following:
Section 6.9 Confidentiality. The Seller and the Shareholders
agree, whether before or after Closing, that they will, and will cause
Seller's directors, officers, employees, agents and authorized
representatives, as applicable, to hold in strict confidence, and not
make use for personal benefit or for the benefit of any person other
than the Buyer and its affiliates, all information obtained from the
Buyer or which relates to this Agreement (other than information which
is a matter of public knowledge or which has heretofore been or is
hereafter published in any publication for public distribution or
filed as public information with any governmental authority other than
a result of a breach of this covenant) and will not, and will ensure
that such other persons do not, disclose such information to others
without the prior written consent of the Buyer, provided that the
Seller and the Shareholders may provide such data and information:
(a) in connection with obtaining any of the consents necessary to
consummate the transactions contemplated by this Agreement; (b) in any
filing required of the Seller by the Federal Trade Commission, the
Department of Justice or other regulatory authority; and (c) in
response to legal process or applicable government regulations, but
only that portion of the data and information which, in the written
opinion of the Seller's and the Shareholders' counsel, is legally
required to be furnished and further provided that the Seller and the
Shareholders notify the Buyer of its obligation to provide such
confidential information and fully cooperates with the Buyer to
protect the confidentiality of such data and information pursuant to
the applicable provisions of the Freedom of Information Act. All
records and documents that Xxxxxxxxxx shall prepare for or contribute
to the Buyer or its affiliates pursuant to Section 11.6 hereof or the
Seller shall prepare for the Buyer shall remain the sole and exclusive
property of the Buyer or its affiliates. If this Agreement is
terminated for any reason, the Seller, the Shareholders and such other
persons shall not use such information and shall promptly return to
the Buyer or destroy all tangible evidence thereof, including copies,
which have been furnished to the Seller, the Shareholders or such
other persons.
(h) Section 9.7 is hereby deleted in its entirety.
(i) The fourth sentence of Section 11.4 is deleted in its entirety
and replaced with the following:
At least seven days before the completion of the First Month and at
least seven days before the completion of every two week period
following the First Month (such two week period, the "Affected
Period"), the Buyer shall provide the Seller with its operating
expenses requirement for the Affected Period along with an advance to
cover such expenses less any excess advances from prior periods, and
the Buyer may also request at least fifteen days before the completion
of the First Month for the Buyer to maintain the warehouse facility at
10 and 00 Xxxxxxxx Xxxxxx, Xxxx Xxxxxxx, Xxx Xxxx for up to two
additional months, in which case the Buyer shall reimburse the Seller
for its operating expenses associated therewith in accordance
herewith.
(j) Section 11.5 is hereby deleted in its entirety and replaced with
the following:
Section 11.5 Returns. The Closing Acquisition Balance Sheet
and the Closing Date Balance Sheet shall set forth a reserve for the
Returns relating to the Business which, based on the Seller's
commitments and experience, represents the Seller's best estimate as
of the date thereof (the "Reserve"). The parties agree that for one
year following the Closing Date, any credits or monetary refunds for
Returns which do not exceed the Reserve shall be to the account of and
the sole responsibility of the Buyer and any credits or monetary
refunds for Returns which exceed the Reserve shall be to the account
of the Seller. To the extent that the aggregate of all credits and
monetary refunds for Returns do not exceed the Reserve, the Buyer
shall pay to the Seller, within 30 days after the anniversary of the
Closing Date, the amount represented by (a) the Reserve less (b) the
aggregate of all credits and monetary refunds for Returns issued by
the Buyer during the year following the Closing Date. To the extent
that the Buyer is charged with any credits or pays any refunds for
Returns which exceed the Reserve, the Buyer shall have the right to
set-off such amounts against payments due under the Debenture, and the
indemnification basket set forth in Section 12.1 shall not apply to
offset such obligations. The Seller shall have the right, at its sole
cost, to audit the Returns, including any associated credits and
refunds, during business hours upon receipt of reasonable notice
thereof. The Returns are part of the Subject Assets and shall be
delivered to the Buyer at no additional cost to the Buyer.
(k) The following Section 11.6 is added to the Purchase Agreement.
11.6 Services of Xxxxxxxxxx. From time to time, pursuant to the
request of the Buyer to Xxxxxxxxxx and until 12 months after the
Closing Date, Xxxxxxxxxx agrees to perform reasonably requested
services to assist the Buyer in the transition and growth of the
Business and of the Buyer's overall fragrance business, provided that
such services will not be required on a full-time basis and that
Xxxxxxxxxx shall not be required, other than in connection with
reasonable travel which is requested and reimbursed by the Buyer, to
move from his New York and Connecticut locations. In the performance
of any services hereunder, Xxxxxxxxxx shall act at all times as an
independent contractor and not as an agent, partner, joint venturer or
employee of the Buyer. All services provided by Xxxxxxxxxx shall be
in compliance, in all material respects, with all applicable material
federal, state and local laws and regulations.
(l) Section 12.1 is hereby deleted in its entirety and replaced with
the following:
Section 12.1 Indemnity by the Seller. The Seller and the
Shareholders, jointly and severally, agree to indemnify and hold the
Buyer and its affiliates and their respective officers, directors,
employees and agents (collectively, the "Buyer Indemnitee") harmless
from all Liabilities incurred or suffered by any of the Buyer
Indemnitee. For this purpose, "Liabilities" shall mean all suits,
proceedings, claims, expenses, losses, costs, liabilities, judgments,
deficiencies, assessments, actions, investigations, penalties,
interest and damages (including reasonable attorneys' fees and
expenses), whether suit is instituted or not and, if instituted,
whether at any trial or appellate level, and whether raised by the
parties hereto or a third party, incurred or suffered by the Buyer
Indemnitee or any of them arising from, in connection with or as a
result of (a) any false or inaccurate representation or warranty made
by or on behalf of the Seller in or pursuant to this Agreement; (b)
any default or breach in the performance of any of the covenants or
agreements made by the Seller or the Shareholders in or pursuant to
this Agreement; (c) the operation of the Business or the Subject
Assets by the Seller, including, without limitation, the provision of
any services or goods provided by the Seller or its employees or
consultants, on or prior to the Closing Time; (d) any obligation or
liability of the Seller which is not assumed by the Buyer; (e) the
Excluded Assets; and (f) any breach of the Distribution Agreements
prior to the Closing Time; provided, however, that the Seller and the
Shareholders shall not be required to pay for Liabilities except to
the extent that the aggregate amount of such Liabilities exceed
$75,000 (and then only to the extent of such excess), and provided
further that the foregoing shall not be applicable with respect to
fraud or pursuant to Sections 6.9, 11.5 and 13.1 hereof. The
obligation of the Seller and the Shareholders to indemnify the Buyer
for, and hold the Buyer harmless against, the Liabilities under this
Section shall not exceed $4,000,000 (except in the case of fraud or
Sections 6.9 and 13.1, in which case it shall not exceed the Purchase
Price) and, except as provided in Section 12.4, shall survive the
Closing for a period of two years.
(m) Section 12.4 is hereby deleted in its entirety and replaced with
the following:
Section 12.4 Limitations; Survival. The representations and
warranties of the parties shall survive the Closing for a period of
two years from the Closing Date, in each such case notwithstanding any
investigation made by or on behalf of the Buyer, provided that the
representations and warranties as to Tax Claims (as hereinafter
defined) and the covenants of the Seller and the Shareholders set
forth in Sections 6.9 and 13.1 shall survive for a period of five
years from the Closing Date. For purposes hereof, Tax Claims means
any claim based upon, arising out of, or otherwise in respect of, any
inaccuracy in or breach of any representation, warranty, covenant or
agreement of the Seller or the Shareholders contained in this
Agreement relating to taxes, including, without limitation, those
contained in Sections 4.6 and 4.13 hereof. Notwithstanding anything
to the contrary contained in this Agreement, these limited survival
periods shall not apply to fraudulent acts or omissions. No action or
proceeding may be brought with respect to any of the representations
and warranties unless written notice thereof shall have been delivered
to the Buyer or the Seller, as the case may be, prior to the
expiration of such applicable survival period.
(n) Section 13.1 is hereby deleted in its entirety and replaced with
the following:
Section 13.1 Noncompetition Agreement.
(a) During the period commencing on the Closing Date and ending
five years from the Closing Date, the Seller and the Shareholders will
not, directly or indirectly or through an affiliate:
(i) as an individual proprietor, owner, partner,
stockholder, officer, employee, director, consultant, agent, joint
venturer, investor, lender, or in any other capacity whatsoever (other
than as the holder of not more than five percent of the total
outstanding stock of any company the securities of which are traded on
a regular basis on recognized securities exchanges or any national
over-the-counter market), alone or in association with others, or in
any capacity, own, manage, operate, control, consult with, provide
financing to, be employed by, or invest in, any business competitive
with that of the Buyer, including, without limitation, the
manufacture, distribution and marketing of perfume and other fragrance
products or related services or business in the United States;
(ii) recruit or otherwise solicit or induce any person
(natural or otherwise) who is or becomes an employee or consultant of
the Buyer to terminate his or her employment with, or otherwise cease
his or her relationship with, the Buyer or any of its affiliates, or
hire any such employee or consultant who has left the employ of the
Buyer or its affiliates within one year after termination of such
employee's or consultant's employment with the Buyer or its
affiliates;
(iii) solicit or attempt to solicit any licensors,
licensees, suppliers, manufacturers, customers or clients of the
Buyer.
(b) The restrictions set forth in clause (a) above are
considered by the parties to be reasonable for the purposes of
protecting the business investment of the Buyer and its legitimate
business interests, it being acknowledged that the business of the
Seller and that of the Buyer are conducted throughout the United
States. In view of the substantial harm which would result from a
breach or threatened breach by any of the Seller, the Shareholders or
their affiliates of the covenants contained in clause (a) hereof and
in Section 6.9 hereof, the parties agree that such covenants shall be
enforced to the maximum extent permitted by law. If any such covenant
or portion thereof is found by any court of competent jurisdiction to
be illegal, void or unenforceable because it extends for too long a
period of time or over too broad a range of activities or in too large
a geographic area or for any other reason, however, such restriction
shall be interpreted to extend only over the maximum period of time,
range of activities or geographic area as to which it may be
enforceable or otherwise so as to render the covenant enforceable.
(c) The foregoing five-year period shall be tolled for any
period(s) of violation or period(s) of time required for litigation to
enforce the covenants herein in the event that no preliminary
injunction is issued against the Seller or the Shareholders and the
Buyer is the prevailing party.
(d) The Seller and the Shareholders acknowledge and agree that
the provisions hereof are necessary and desirable to ensure that the
Buyer obtains the benefit of its bargain under this Agreement and that
the covenants contained herein are a material and integral part of
this Agreement and necessary to protect the legitimate business
interests of the Buyer. The Seller and the Shareholders further
acknowledges and agrees that, due to their knowledge of the Business,
any subsequent competition would irreparably harm the Buyer and deny
the Buyer the benefit of the bargain of the parties as contained in
this Agreement and that the only effective way of protecting the Buyer
is to enter into a non-competition agreement on the terms and
conditions contained herein.
(o) Section 13.2 is hereby deleted in its entirety and replaced with
the following:
Section 13.2 Remedies. In the event of a breach or threatened
breach of the provisions of Sections 6.9 and 13.1, the parties
acknowledge and agree that the Buyer would suffer irreparable harm and
that monetary damages would be inadequate. Accordingly, in addition
to all other remedies to which the Buyer may be entitled, at law or in
equity, the Buyer shall be entitled to seek specific performance
and/or injunctive relief without the necessity of posting a bond in
the event of any such breach or threatened breach.
(p) Exhibit C of the Purchase Agreement is hereby deleted in its
entirety.
(q) The following Section 15.19 is added:
Section 15.19 Excluded Receivables. Schedule 1.1(f) is hereby
amended to include certain accounts receivable due to the Seller from
shipments to Walmart prior to the Closing Date in the amount of
$1,140,869.95 as set forth in Schedule 1.1(f) which is attached hereto
(the "Excluded Receivables"), for which no invoices have been
generated. The Buyer agrees to immediately purchase the Excluded
Receivables for the face amount of such receivables if the Seller is
able to support such receivables with a list or summary of invoices
from Sureway Logistics, a subsidiary of CDL, Inc., in reasonable
detail, followed by copies of all invoices and details of any
electronically transmitted invoices on or before May 1, 1998 (the
"Closing Adjustment Date"). The Cash Purchase Price paid at Closing
has not been adjusted to reflect any Book Deficiency associated with
the Excluded Receivables because the parties expect that the invoice
support will be available by the Closing Adjustment Date. If the
Seller is not able to support the Excluded Receivables by the Closing
Adjustment Date, the parties agree that the Cash Purchase Price shall
be reduced by $1.5625 of Cash Purchase Price for each $1.00 of Book
Deficiency based on the Closing Date Balance Sheet without inclusion
of any Excluded Receivables in the Accounts Receivable shown therein,
which are not so supported. Notwithstanding the foregoing, in the
event the above described process is completed prior to April 20,
1998, the Closing Adjustment Date shall be April 20, 1998.
2. (a) Except as amended hereby, the Purchase Agreement remains in
full force and effect in accordance with its terms and conditions and is
reaffirmed for all purposes.
(b) This Amendment may be executed in any number of
counterparts, each of which shall be deemed an original. Delivery of
executed signature pages hereof by facsimile transmission shall constitute
effective and binding execution and delivery hereof.
(c) This Amendment shall be shall be governed by and construed
in accordance with the laws of the State of Florida applicable to contracts
made and to be performed in Florida, without regard to conflicts of law
principles thereunder.
(d) This Amendment shall be binding upon, and inure to the
benefit of, the parties hereto and their respective successors, assigns,
heirs, beneficiaries, estates, executors and personal representatives.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed as of the day and year first above written.
FRENCH FRAGRANCES, INC.
By: /S/ Xxxxx X. Xxxxxx
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Xxxxx X. Marina
Vice President
J. P. FRAGRANCES, INC.
By: /S/ Xxxxxx X. Xxxxxxxxxx
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Xxxxxx X. Xxxxxxxxxx
Chairman and Chief Executive Officer
/S/ Xxxxxx X. Xxxxxxxxxx
------------------------
Xxxxxx X. Xxxxxxxxxx
/S/ Xxxxxx Xxxxxxxxxx
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Xxxxxx Xxxxxxxxxx
