VOTING AGREEMENT
AGREEMENT, dated as of March 31, 2001 among Xxxxx Karan International
Inc., a Delaware corporation (the "COMPANY"), LVMH Moet Xxxxxxxx Xxxxx
Vuitton Inc., a Delaware corporation ("LVMH"), DKI Acquisition, Inc., a
Delaware corporation ("ACQUISITION SUB"), Xxxxx Karan ("DK"), Xxxxxxx Xxxxx
("SW"), Trust FBO Xxxx Xxxxx Xxxxx, Xxxxx Xxxxx and Xxxxxxxxx Xxxxx U/A/D
2/2/96 (the "CHILDREN'S TRUST"), 2000 Xxxxxxx Xxxxx Revocable Trust (the
"XXXXX TRUST") and The Xxxxxxx Xxxxx and Xxxxx Karan Alaska Community
Property Trust (the "ALASKA TRUST", and together with the Children's Trust
and the Xxxxx Trust, the "TRUSTS") (DK, SW and the Trusts collectively, the
"STOCKHOLDERS").
WHEREAS, concurrently with the execution and delivery of this
Agreement, LVMH, Acquisition Sub and the Company are entering into an
Agreement and Plan of Merger (as the same may be amended from time to time,
the "MERGER AGREEMENT"), providing for, among other things, the merger of
Acquisition Sub with and into the Company;
WHEREAS, the Board of Directors of the Company has approved this
Agreement, the Merger Agreement and the Merger;
WHEREAS, as of the date of this Agreement, each Stockholder is the
owner (either beneficially or of record) of the number of shares of (i)
Common Stock of the Company, par value $0.01 per share ("COMMON STOCK"),
and (ii) Class A Common Stock of the Company, par value $0.01 per share
("CLASS A SHARES" and collectively with the Common Stock and the Class B
Common Stock of the Company, par value $0.01 per share, of which the
Stockholders do not hold any shares, "COMPANY COMMON STOCK"), as is set
forth opposite such Stockholder's name on Schedule A to this Agreement (all
such shares and any shares of Company Common Stock hereafter acquired or
received by such Stockholder by any means whatsoever prior to the
termination of this Agreement, "SHARES"); and
WHEREAS, in order to induce the Company, LVMH and Acquisition Sub to
enter into the Merger Agreement, the Stockholders have agreed to enter into
this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements set forth herein and for other good and valuable consideration,
the receipt and adequacy of which is hereby acknowledged, the parties
hereto agree as follows:
ARTICLE 1
GRANT OF PROXY; VOTING AGREEMENT
SECTION 1.1 VOTING AGREEMENT. Provided that the Merger Agreement has
not previously been terminated, each Stockholder hereby agrees to vote all
Shares that such Stockholder is entitled to vote at the time of any meeting
of the stockholders of the Company at which the approval and adoption of
the Merger Agreement (or any amended version thereof) and the approval of
the Merger and all other transactions specifically contemplated by the
Merger Agreement are submitted for the consideration and vote of the
stockholders of the Company, and at any adjournment thereof, in favor of
the approval and adoption of the Merger Agreement (or any amended version
thereof) and the approval of the Merger, and in favor of each of the other
actions specifically contemplated by the Merger Agreement. Each Stockholder
hereby agrees that it will vote all Shares against the approval of any (i)
Acquisition Proposal, (ii) reorganization, recapitalization, liquidation or
winding up of the Company or any other extraordinary transaction involving
the Company, (iii) corporate action the consummation of which would
frustrate the purposes, or prevent or delay the consummation, of the
transactions contemplated by the Merger Agreement or (iv) other matter
relating to, or in connection with, any of the foregoing matters.
SECTION 1.2 IRREVOCABLE PROXY. Each Stockholder hereby revokes any
and all previous proxies granted with respect to the Shares. By entering
into this Agreement, each Stockholder hereby grants a proxy appointing
Xxxxx Xxxxxx, the Senior Vice President, Finance of LVMH, and Xxxxxx
Xxxxxxxxx, the Vice President, Legal Affairs and General Counsel of LVMH,
each individually, as the Stockholder's attorney-in-fact and proxy, with
full power of substitution, for and in the Stockholder's name, to vote,
express, consent or dissent, or otherwise to utilize such voting power in
the manner contemplated by Section 1.01 above as LVMH or its proxy or
substitute shall, in LVMH's sole discretion, deem proper with respect to
the Shares. The proxy granted by each Stockholder pursuant to this Article
1 is irrevocable and is granted in consideration of LVMH entering into this
Agreement and the Merger Agreement and incurring certain related fees and
expenses. The proxy granted by each Stockholder shall be revoked upon
termination of this Agreement in accordance with its terms.
ARTICLE 2
REPRESENTATIONS AND WARRANTIES OF STOCKHOLDERS
Each Stockholder, jointly and severally, represents and warrants to
the Company, LVMH and Acquisition Sub that:
SECTION 2.1 AUTHORIZATION. Each Trust is duly created, validly
existing and in good standing under the laws of the jurisdiction of its
formation.
SECTION 2.2 AUTHORITY OF STOCKHOLDERS. Each of the Stockholders has
full legal capacity, and, in the case of the Trusts, full trust power, to
enter into, execute and perform the Stockholder's obligations under this
Agreement. The execution and delivery by the Trusts of this Agreement and
the performance by the Trusts of their obligations hereunder have been duly
authorized and approved by all requisite trust action. This Agreement has
been duly executed and delivered by a duly authorized trustee of each of
the Trusts. This Agreement constitutes a valid and legally binding
obligation of each of the Stockholders, enforceable against each of the
Stockholders in accordance with its terms (except to the extent that
enforcement may be affected by laws relating to bankruptcy, reorganization,
insolvency and creditors' rights and by the availability of injunctive
relief, specific performance and other equitable remedies).
SECTION 2.3 CONSENTS. No consent, waiver, authorization, order or
approval of, or filing or registration with any Governmental Authority or
other Person, or under or with respect to any permit, license, contract,
agreement or other instrument to which any of the Stockholders is a party
or by which any of the Stockholders is, or their respective assets are,
bound or affected, is required for or in connection with the execution and
delivery by any of the Stockholders of this Agreement and the consummation
by any of the Stockholders of the transactions contemplated hereby.
SECTION 2.4 NON-CONTRAVENTION. Neither the execution and delivery of
this Agreement by any of the Stockholders, nor the consummation by any of
the Stockholders of the transactions contemplated hereby, will (i) violate,
conflict with or result in a breach of any federal, state, local or foreign
statute, law, ordinance, rule, code, order or regulation of any
Governmental Authority or any order, ruling, writ, injunction, judgment,
award, determination or decree of any court, arbitral body or Governmental
Authority to which any of the Stockholders is a party or by which any of
the Stockholders is bound, (ii) with respect to the Trusts, violate,
conflict with or result in a breach of any of the terms, conditions or
provisions of any such Stockholder's trust agreement or other constituent
documents or (iii) violate, conflict with or result in a breach of or
constitute a default (or event which with the giving of notice or the
passage of time, or both, would become a default) under, require a consent
under, or give to others any rights of termination, amendment,
acceleration, suspension, revocation or cancellation of, or result in the
creation of any Claims or Permitted Encumbrances on any of the assets or
properties of any of the Stockholders pursuant to or result in any payment
or charge under, any permit, license, contract or agreement to which any
Stockholder is a party or by which any Stockholder, or any of such
Stockholder's assets or properties, is bound or affected, and no such
permit, license, contract or agreement shall prohibit or delay the timely
performance by the Stockholders of any of their obligations under this
Agreement.
SECTION 2.5 OWNERSHIP OF SHARES. As of the date of this Agreement,
each Stockholder owns its Shares beneficially and of record, and except for
such Shares, such Stockholder does not beneficially or of record own any
(i) shares of capital stock or voting securities of the Company, (ii)
securities of the Company convertible into or exchangeable for shares of
capital stock or voting securities of the Company or (iii) options or other
rights to acquire from the Company any capital stock, voting securities or
securities convertible into or exchangeable for capital stock or voting
securities of the Company. Other than as set forth in the Shareholders
Agreement dated as of June 10, 1996 among the Company, certain of the
Stockholders, and certain other parties thereto (which agreement has not
been amended or modified as of the date hereof) (the "Shareholders
Agreement"), each Stockholder has sole voting power, sole power of
disposition, sole power to demand appraisal rights and all other
stockholder rights with respect to all of its Shares, with no restrictions
on such Stockholder's rights of voting or disposition pertaining thereto,
other than restrictions on disposition pursuant to applicable securities
laws. Other than the Shareholders Agreement, there are no outstanding
subscriptions, options, warrants, rights (including preemptive rights),
calls, or other agreements or commitments of any character relating to the
Shares or to any corporate governance matters. Each Stockholder has good,
valid and marketable title to its Shares, free and clear of all Claims and
Permitted Encumbrances. Each Trust has full trust power and authority to
own the Shares owned by it.
SECTION 2.6 FINDER'S FEES. No investment banker, broker, finder or
other intermediary is entitled to a fee or commission from the Company,
LVMH or Acquisition Sub in respect of this Agreement based upon any
arrangement or agreement made by or on behalf of such Stockholder.
ARTICLE 3
COVENANTS OF STOCKHOLDERS
Each Stockholder hereby covenants and agrees that:
SECTION 3.1 NO PROXIES FOR OR ENCUMBRANCES ON SHARES. Except pursuant
to the terms of this Agreement and the Exchange and Option Agreement dated
as of the date hereof among the Stockholders, LVMH and Acquisition Sub,
such Stockholder shall not, without the prior written consent of LVMH,
directly or indirectly, (i) grant any proxies or enter into any voting
trust or other agreement or arrangement with respect to the voting of any
Shares or (ii) sell, assign, transfer, encumber or otherwise dispose of, or
enter into any contract, option or other arrangement or understanding with
respect to the direct or indirect sale, assignment, transfer, encumbrance
or other disposition of, any Shares or any interest therein during the term
of this Agreement, provided that nothing herein shall prohibit the
Stockholders from transferring shares to the Xxxxx-Xxxxx Foundation, to
other Stockholders or to trusts for the benefit of the Stockholders or any
present or former spouse, ancestor or descendent or sibling of any
Stockholder or any trust or other similar entity established for the
benefit of such individuals or their descendants ("RELATED PARTIES"),
provided that each of the Xxxxx-Xxxxx Foundation and/or the Related
Parties, as applicable, enters into an agreement substantively similar to
this Agreement. Each Stockholder shall not seek or solicit any such sale,
assignment, transfer, encumbrance or other disposition or any such
contract, option or other arrangement or understanding and agrees to notify
LVMH promptly, and to provide all details requested by LVMH, if such
Stockholder shall be approached or solicited, directly or indirectly, by
any Person with respect to any of the foregoing; provided that the
foregoing shall not obligate DK or SW to take any such action nor prevent
DK or SW from taking any such actions if DK or SW, as the case may be,
determines in good faith after consultation with independent legal counsel
that taking such action or failing to so act would reasonably be expected
to constitute a breach of his or her fiduciary duty as a director or
officer of the Company.
SECTION 3.2 OTHER OFFERS.
(a) Each Stockholder shall not, and will use his, her or its
reasonable best efforts to cause their Representatives not to, directly or
indirectly, (i) take any action to initiate, solicit, encourage, negotiate
or take any action to facilitate, any inquiries or the making of any
proposal or offer with respect to, or a transaction to effect, any
Acquisition Proposal, (ii) engage in discussions with, or disclose any
nonpublic information relating to the Company or any of its Subsidiaries,
afford access to the properties, books or records of the Company or any of
its Subsidiaries to, or cooperate in any way with, any Person that may be
considering making, or has made, an Acquisition Proposal or has agreed to
endorse an Acquisition Proposal or (iii) approve or recommend, or propose
publicly to approve or recommend, or execute or enter into, or propose
publicly to approve or enter into, any letter of intent or other agreement
related to any Acquisition Proposal; provided that the foregoing shall not
limit or prohibit DK or SW from participating in discussions with the
members of the Board of Directors of the Company if DK or SW, as the case
may be, determines in good faith after consultation with independent legal
counsel that the failure to so act would reasonably be expected to
constitute a breach of his or her fiduciary duty as a director of the
Company.
(b) Each Stockholder will promptly notify LVMH after receipt of
an Acquisition Proposal or any indication that any Person is considering
making an Acquisition Proposal or any request for nonpublic information
relating to the Company or any of its Subsidiaries or for access to the
properties, books or records of the Company or any of its Subsidiaries by
any Person that may be considering making, or has made, an Acquisition
Proposal indicating, in connection with such notice, the name of such
Person and the material terms and conditions of any such Acquisition
Proposal, indication or request and will keep LVMH fully informed of the
status and details of any such Acquisition Proposal, indication or request;
provided, however, that no such disclosure or delivery of such notice shall
be required if it would reasonably be expected to constitute a breach of
their fiduciary duty as directors or officers of the Company (as reasonably
determined by such Stockholders after taking into account the advice of
their independent legal counsel).
SECTION 3.3 APPRAISAL RIGHTS. Each Stockholder shall not exercise any
rights (including, without limitation, under Section 262 of the General
Corporation Law of the State of Delaware) to demand appraisal of any of
his, her or its Shares which may arise with respect to the Merger.
ARTICLE 4
MISCELLANEOUS
SECTION 4.1 FURTHER ASSURANCES. Each of the Company, LVMH,
Acquisition Sub and the Stockholders will execute and deliver, or cause to
be executed and delivered, all further documents and instruments reasonably
necessary, proper or advisable under applicable laws and regulations, to
carry out the purpose and intent of this Agreement.
SECTION 4.2 AMENDMENTS; WAIVER; TERMINATION. Any provision of this
Agreement may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed, in the case of an amendment, by each
party to this Agreement or in the case of a waiver, by the party against
whom the waiver is to be effective. The failure of any party hereto to
exercise any right, power or remedy provided under this Agreement or
otherwise available in respect hereof at law or in equity, or to insist
upon compliance by any other party hereto with its obligations hereunder,
and any custom or practice of the parties at variance with the terms
hereof, will not constitute a waiver by such party of its right to exercise
any such or other right, power or remedy or to demand such compliance. This
Agreement shall terminate on the earlier of (i) the date of consummation of
the Merger and (ii) the date of termination of the Merger Agreement in
accordance with its terms. Upon any termination of this Agreement, this
Agreement shall thereupon become void and of no further force and effect,
and there shall be no liability in respect of this Agreement or of any
transactions contemplated hereby or by the Merger Agreement on the part of
any party hereto or any of such party's Representatives; provided, however,
that nothing herein shall relieve any party from any liability for such
party's willful breach of this Agreement; and provided further that nothing
herein shall limit, restrict, impair, amend or otherwise modify the rights,
remedies, obligations or liabilities of any person under any other contract
or agreement, including, without limitation, the Agreement dated as of
December 15, 2000, by and among LVMH, DK, SW and the Children's Trust,
which provided for the sale of all of the capital stock of Gabrielle
Studio, Inc. to Karma Acquisition, Inc.(as assignee of LVMH).
SECTION 4.3 EXPENSES; ATTORNEY'S FEES. All costs and expenses
incurred in connection with this Agreement shall be paid by the party
incurring such cost or expense. Notwithstanding the foregoing, if any legal
action or other legal proceeding relating to this Agreement or the
enforcement of any provision of this Agreement is brought against any of
the Stockholders, and the party bringing such action or proceeding does not
fully prevail, the Stockholders against whom such action or proceeding was
brought shall be entitled to recover reasonable attorneys' fees, costs and
disbursements (in addition to any other relief to which such Stockholders
may be entitled).
SECTION 4.4 SUCCESSORS AND ASSIGNS. The provisions of this Agreement
shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and assigns; provided that no party may assign,
delegate or otherwise transfer any of its rights or obligations under this
Agreement without the consent of the other parties hereto, except that LVMH
and Acquisition Sub may transfer or assign their rights and obligations to
any of their respective direct wholly-owned subsidiaries, to the extent and
for so long as such entities remain direct wholly-owned subsidiaries.
SECTION 4.5 GOVERNING LAW; JURISDICTION AND VENUE. This Agreement
shall be construed in accordance with and governed by the laws of the State
of Delaware regardless of the laws that might otherwise govern under
applicable principles of conflicts of law. The parties hereto hereby
irrevocably and unconditionally consent to and submit to the exclusive
jurisdiction of the courts of the State of Delaware for any actions, suits
or proceedings arising out of or relating to this Agreement and the
transactions contemplated hereby (and the parties agree not to commence any
action, suit or proceeding related thereto, except in such courts), and
further agree that service of any process, summons, notice or document by
U.S. registered mail to the respective addresses set forth on the signature
pages hereto shall be effective service of process for any such action,
suit or proceeding brought against any party in any such court. The parties
irrevocably and unconditionally waive any objection to the laying of venue
of any action, suit or proceeding arising out of this Agreement or the
transactions contemplated hereby, in the courts of the State of Delaware or
the United States of America located in the State of Delaware, and hereby
further irrevocably and unconditionally waive and agree not to plead or
claim in any such court that any such action, suit or proceeding brought in
any such court has been brought in any inconvenient forum.
SECTION 4.6 COUNTERPARTS; EFFECTIVENESS. This Agreement may be signed
in any number of counterparts, each of which shall be an original, with the
same effect as if the signatures thereto and hereto were upon the same
instrument. This Agreement shall become effective when each party hereto
shall have received counterparts hereof signed by all of the other parties
hereto.
SECTION 4.7 SEVERABILITY. If any term, provision or covenant of this
Agreement is held by a court of competent jurisdiction or other authority
to be invalid, void or unenforceable, the remainder of the terms,
provisions and covenants of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
SECTION 4.8 SPECIFIC PERFORMANCE. The parties hereto agree that
irreparable damage would occur in the event any provision of this Agreement
is not performed in accordance with the terms hereof and that the parties
shall be entitled to specific performance of the terms hereof in addition
to any other remedy to which they are entitled at law or in equity.
SECTION 4.9 REMEDIES CUMULATIVE. All rights, powers and remedies
provided under this Agreement or otherwise available in respect hereof at
law or in equity shall be cumulative and not alternative, and the exercise
of any thereof by any party shall not preclude the simultaneous or later
exercise of any other right, power or remedy by such party.
SECTION 4.10 OFFICERS AND DIRECTORS. Notwithstanding anything to the
contrary in this Agreement, in the event a Stockholder is a director or
officer of the Company, nothing in this Agreement is intended or shall be
construed to require such Stockholder, in his or her capacity as a director
or officer of the Company, to act or fail to act in accordance with his or
her fiduciary duties in such capacity. Furthermore, no Stockholder who is
or becomes (during the term hereof) a director or officer of the Company
makes any agreement or understanding herein in his or her capacity as a
director or officer, and nothing herein will limit or affect, or give rise
to any liability to any Stockholder in such Stockholder's capacity as a
director or officer of the Company. For the avoidance of doubt, nothing in
this SECTION 4.10 shall in any way limit, modify or abrogate any of the
obligations of the Stockholders hereunder to vote the Shares in accordance
with the terms of this Agreement and to not transfer any Shares except as
permitted under Section 3.1 above.
SECTION 4.11 CONSTRUCTION. Whenever used in this Agreement, the
singular shall include the plural and vice versa (where applicable), the
use of the masculine, feminine or neuter gender shall include the other
genders (unless the context otherwise requires), the words "hereof,"
"herein," "hereto," "hereby," "hereunder" and other words of similar import
refer to this Agreement as a whole (including all schedules and exhibits),
the words "include," "includes" and "including" shall mean "include,
without limitation," "includes, without limitation" and "including, without
limitation," respectively. Each party has been represented by its own
counsel in connection with the negotiation and preparation of this
Agreement and, consequently, each party hereby waives the application of
any rule of law to the effect that any provision of this Agreement shall be
interpreted or construed against the party whose counsel drafted that
provision.
SECTION 4.12 CAPITALIZED TERMS. Capitalized terms used but not
defined herein shall have the respective meanings set forth in the Merger
Agreement.
SECTION 4.13. ENTIRE AGREEMENT. This Agreement constitutes the entire
agreement between the parties relating to the subject matter hereof;
provided, that nothing herein shall limit, restrict, impair, amend or
otherwise modify the rights, remedies, obligations or liabilities of any
person under any other contract or agreement, including, without
limitation, the Agreement dated as of December 15, 2000, by and among LVMH,
DK, SW and the Children's Trust, which provided for the sale of all of the
capital stock of Gabrielle Studio, Inc. to Karma Acquisition, Inc. (as
assignee of LVMH).
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
XXXXX KARAN INTERNATIONAL INC.
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxxxx
Title: Chief Financial and Operations
Officer
LVMH MOET XXXXXXXX XXXXX VUITTON INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President
DKI ACQUISITION, INC.
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
Title: President
/s/ Xxxxx Karan
-----------------------------------------
Xxxxx Karan
/s/ Xxxxxxx Xxxxx
-----------------------------------------
Xxxxxxx Xxxxx
TRUST FBO XXXX XXXXX XXXXX, XXXXX XXXXX
AND XXXXXXXXX XXXXX U/A/D 2/2/96
By: /s/ Xxxxxxx Xxxxx
-------------------------------------
Name: Xxxxxxx Xxxxx
Title: Trustee
2000 XXXXXXX XXXXX REVOCABLE TRUST
By: /s/ Xxxxxxx Xxxxx
-------------------------------------
Name: Xxxxxxx Xxxxx
Title: Trustee
THE XXXXXXX XXXXX AND XXXXX KARAN ALASKA
COMMUNITY PROPERTY TRUST
By: /s/ Xxxxxxx Xxxxx
-------------------------------------
Name: Xxxxxxx Xxxxx
Title: Investment Trustee
By: /s/ Xxxxx Karan
-------------------------------------
Name: Xxxxx Karan
Title: Investment Trustee
SCHEDULE A
OWNERSHIP OF COMPANY COMMON STOCK
STOCKHOLDER SHARES OF DKI % SHARES OF CLASS %
COMMON STOCK A COMMON STOCK
Xxxxx Xxxxx 0 - 0 00%
Xxxxxx Xxxxx 0 - 9 50%
Trust FBO Xxxx 291,688 1.31% - -
Xxxxx Xxxxx,
Xxxxx Xxxxx and
Xxxxxxxxx Xxxxx
The Xxxxxx Xxxxx 3,968,540 17.83% - -
and Xxxxx Karan
Alaska Community
Property Trust
The Xxxxxx Xxxxx 982,800 4.42% - -
2000 Revocable
Trust
TOTAL 5,243,028 23.56% 18 100%
