Exhibit 2.1
AGREEMENT
THIS AGREEMENT (this "Agreement") is made as of the 30th day of
September, 1997, by and between THE XXXXX KARAN COMPANY, a New York general
partnership having its principal office at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000 ("Seller"), and XXXXX XXXXXX INC., a Delaware corporation having
its principal office at 000 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000 ("Buyer").
WHEREAS, Seller, through its Beauty Division (the "Division"), is
presently engaged in the development, package design, production, marketing,
distribution and sale of certain men's and women's fragrance, bath and body
and treatment products under the "Xxxxx Karan New York" and "DK Men" brand
names in the United States (the "Domestic Business") and certain foreign
countries (the "International Business," and together with the Domestic
Business, the "Business"); and
WHEREAS, Seller desires to sell to Buyer, and Buyer desires to
purchase from Seller, certain of the Inventory (as hereinafter defined),
Seller and Buyer intend to enter into the License Agreement and the Services
Agreement (each as hereinafter defined), Seller intends to wind down the
Business, subject to the terms and conditions set forth in this Agreement,
and Buyer proposes to conduct business pursuant to the License Agreement
("Buyer's Proposed Business").
NOW, THEREFORE, in consideration of the premises, the mutual
covenants contained herein and other valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, Seller and Buyer agree as
follows:
ARTICLE I
PURCHASE AND SALE OF INVENTORY
1.1 Purchase and Sale of Inventory. Subject to the terms and
conditions of this Agreement, from time to time after the Closing Date (as
hereinafter defined), Seller shall sell, transfer and
convey to Buyer, and Buyer shall purchase from Seller, at Cost (as defined on
Schedule 1.1 attached hereto), the Division's Useable Inventory (as such
terms are hereinafter defined) having an aggregate purchase price (as
determined in accordance with Section 1.2) of $5,000,000, or a lesser amount
equal to the Cost of such lesser amount of Useable Inventory, if Seller is
unable to provide Buyer with Useable Inventory having a Cost equal to at
least $5,000,000 (the "Inventory Purchase Price"). As used herein,
"Inventory" shall mean the inventory of the Xxxxx Karan New York Women's
Signature Collection represented by the SKU items set forth on Schedule 1.2
attached hereto (the "Signature Collection") and the raw materials,
componentry, work-in-process, finished goods and supplies relating thereto on
hand at the Division or in warehouses or as may be returned by distributors
or customers of the Division as contemplated by Sections 7.1 and 7.2; and
"Useable" shall mean: (a) with respect to raw materials, work-in-process and
finished goods, those items having a shelf life of at least one year from the
date of purchase hereunder; (b) with respect to bottles, containers and
components thereof, such bottles, containers and components thereof equal to
24 months forward cover based, in part, on sales of Signature Collection
products for Seller's 1997 fiscal year; and (c) with respect to labels,
packaging, supplies and other items of Inventory, such labels, packaging,
supplies and other items equal to 24 months forward cover based, in part, on
sales of Signature Collection products for Seller's 1997 fiscal year; and in
each instance shall be first quality goods, and shall not include any
seconds, damaged or defective goods. In addition to the foregoing, subject
to the terms and conditions of this Agreement, Buyer shall purchase from
Seller, at Cost (for purposes of this Agreement, when used with respect to
Other Inventory, Cost shall mean 80% of Cost as defined above), the
Division's Useable non-Signature Collection finished goods inventory ("Other
Inventory") having an aggregate purchase price (as determined in accordance
with Section 1.2) of $1,000,000, or a lesser amount equal to the Cost of such
lesser amount of Other Inventory, if Seller is unable to provide Buyer with
Useable Other Inventory having a Cost equal to at least $1,000,000 (the
"Other Inventory Purchase Price," and together with the Inventory Purchase
Price, the "Purchase Price"). Except as set forth in Section 3.4 herein
Seller makes no representations or warranties with respect to the Inventory
and the Other Inventory. Buyer shall have the
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right, but not the obligation, to purchase from Seller, at Cost or such lower
price as is mutually agreed upon by the parties, any point of sale display,
promotional, marketing, publicity, public relations and other collateral
items, used in connection with the Business (the "Exploitation Materials");
provided, however, that no such sale or transfer of any of the Exploitation
Materials shall be deemed to grant or transfer to Buyer any intellectual
property rights of any kind or nature therein and such Exploitation Materials
shall be used in accordance with the License Agreement (as hereinafter
defined). To the extent Buyer has paid the Inventory Purchase Price of at
least $5,000,000 and the Other Inventory Purchase Price of at least
$1,000,000 (in each case, after deduction for Rejected Goods (as hereinafter
defined)), Buyer shall have the right, but not the obligation, to purchase
additional Inventory and Other Inventory, whether Useable or not (the "Excess
Purchased Inventory"), at Cost, provided that Buyer shall have no right to
return to Seller any Excess Purchased Inventory.
1.2 Inventory Statements. Seller shall prepare and deliver to Buyer
a statement (an "Inventory Statement") as of each of the Closing Date, December
28, 1997 and March 31, 1998. With respect to the Inventory Statements as of
December 28, 1997 and March 31, 1998, such Inventory Statements shall describe
in reasonable detail the items of Inventory and the Other Inventory which Seller
desires to sell to Buyer hereunder and stating (a) by applicable SKU number, the
description of such items, the Cost of such items, the location of such items,
and, if currently in a form Seller can deliver without unreasonable effort or
expense, usage or sales of such items for the year ending December 28, 1997, (b)
with respect to raw materials, work-in-process and finished goods, the
approximate shelf life of such items, and (c) such other information relating to
the Inventory or the Other Inventory reasonably requested by Buyer. With
respect to the Inventory Statement as of the Closing Date, such Inventory
Statement shall describe such items of Inventory and Other Inventory containing
as much detail in accordance with the
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format set forth in the previous sentence as is reasonably practicable
without undue effort or expense on the part of Seller. Each such Inventory
Statement shall be delivered to Buyer within 15 days after the aforementioned
date to which such Inventory Statement relates. Within 20 days after Buyer's
receipt of the Inventory Statement, Buyer shall have the right to inspect
such Inventory and Other Inventory (and Seller shall grant reasonable access
to Buyer for the purpose of such inspection) and Buyer shall notify Seller in
writing ("Buyer's Notice") whether the Inventory and the Other Inventory
described on the Inventory Statement (other than the Closing Date Inventory
Statement) is Useable and whether or not Buyer concurs with the Cost thereof
as set forth in the Inventory Statement, specifying in each case in
reasonable detail the items which Buyer deems, in its good faith judgment,
are not Useable and the reasons therefor or as to which a disagreement exists
relating to the Cost thereof and setting forth Buyer's calculation as to the
Cost thereof. Buyer's failure to deliver to Seller a Buyer's Notice within
10 days following Seller's notice in writing to Buyer that such 20-day
inspection period has expired shall be deemed conclusively to constitute
Buyer's concurrence with the Inventory Statement (other than the Closing Date
Inventory Statement) and Buyer's agreement to purchase all items of Inventory
(up to an aggregate Inventory Purchase Price of $5,000,000) and all items of
Other Inventory (up to an aggregate Other Inventory Purchase Price of
$1,000,000) set forth therein. If a Buyer's Notice disputes the Useability
or Cost of any Inventory or Other Inventory (or any portion or item thereof)
described in a particular Inventory Statement (other than the Closing Date
Inventory Statement) Buyer and Seller shall, during the 15-day period
following the date of the delivery of such Buyer's Notice, use commercially
reasonable efforts in good faith to reach agreement with respect to such
disputes. If, during such 15-day period following the date of delivery of
the Buyer's Notice, Buyer and Seller fail to reach agreement as to whether or
not any disputed Inventory or Other Inventory is Useable, such Inventory or
Other Inventory will be deemed not to be Useable and Buyer will have no
obligation to purchase such Inventory or Other Inventory. If Buyer and
Seller fail to reach agreement as to the Cost of Inventory or Other Inventory
(or portion or item thereof) during such 15-day period following the date of
delivery of the Buyer's Notice, then Seller and Buyer shall, as soon as
practicable thereafter, jointly engage
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the accounting firm of KPMG Peat Marwick or such other nationally recognized
independent public accounting firm as shall be mutually agreed upon by Buyer
and Seller (the "Accountants") to determine the disputed Cost of the
Inventory and Other Inventory listed in the Inventory Statement, consistent
with the terms of this Agreement. In making such determination, the
Accountants shall consider only those specific items or amounts with respect
to which the parties disagree. The Accountants shall deliver to Buyer and
Seller, as promptly as practicable, but in any event within 30 days after
their retention, a report setting forth such determination and such report
shall be final, conclusive and binding on the parties. The cost of such
determination and report shall be borne equally by Buyer and Seller. Within
five days after the earliest to occur of (i) receipt by Seller of Buyer's
concurrence, or Buyer's deemed concurrence, with an Inventory Statement
delivered by Seller to Buyer, (ii) final resolution by the parties of any
disagreement within the aforesaid 15-day period or (iii) delivery by the
Accountants of their report setting forth the Cost of the Inventory and Other
Inventory (or any portion or item thereof), then Buyer shall pay Seller by
wire transfer of immediately available funds an amount equal to the Cost of
the Inventory and Other Inventory purchased hereunder. Sales of Inventory
and Other Inventory hereunder will be evidenced by a xxxx of sale executed by
Seller, substantially in the form of Exhibit A hereto (a "Xxxx of Sale"), to
be delivered to Buyer upon each purchase of Inventory and Other Inventory
hereunder, the delivery of which shall transfer risk of loss from Seller to
Buyer.
1.3 Consideration. As consideration for the transactions
contemplated herein, in addition to any other consideration or benefit to be
received by Seller in connection with this Agreement and the agreements
related hereto, Buyer shall pay Seller $15,000,000 at the Closing.
1.4 Effect on License Agreement. Notwithstanding anything else
contained in this Agreement, nothing herein shall modify, amend or alter, in
any way, the License Agreement (as hereinafter
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defined). In the event of any conflict or discrepancy between this Agreement
and the License Agreement, the License Agreement shall control. All actions
taken with respect to, and performance under, this Agreement shall be taken
or performed in compliance with, and not in contravention of, the License
Agreement.
1.5 Assets and Liabilities Not Purchased. Seller shall retain all
assets and liabilities of Seller not purchased by or transferred to Buyer
under this Agreement or the License Agreement.
ARTICLE II
CLOSING
2.1 Closing. A closing (the "Closing") shall be held at the
offices of Seller or its counsel in New York City, or at such other place as
the parties may agree upon, at 9:00 a.m., on the second business day
following the date the conditions to Closing are satisfied or as may be
mutually agreed upon by the parties (such date and time of Closing being
herein referred to as the "Closing Date").
2.2 Seller at Closing. At the Closing, Seller shall deliver to
Buyer:
(a) the License Agreement, duly executed by Xxxxx Karan
Studio, Seller, Gabrielle Studio, Inc. and Xxxxxxx Xxxxx, substantially in
the form agreed upon by the parties thereto (the "License Agreement");
(b) the Services Agreement, duly executed by Seller,
substantially in the form agreed upon by the parties thereto (the "Services
Agreement");
(c) the Guaranty, duly executed by Xxxxx Karan International
Inc. ("DKI"), in substantially the form of Exhibit B hereto (the "DKI
Guaranty"); and
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(d) an opinion of Seller's counsel relating to the due
authorization by Seller and its affiliates with respect to the execution and
delivery of this Agreement, the DKI Guaranty, the License Agreement and the
Services Agreement.
2.3 Buyer at Closing. At the Closing, Buyer shall deliver to
Seller:
(a) the License Agreement, duly executed by Buyer;
(b) the Services Agreement, duly executed by Buyer;
(c) the Guaranty, duly executed by The Xxxxx Xxxxxx Companies
Inc. ("ELC"), in substantially the form of Exhibit C hereto (the "ELC
Guaranty");
(d) $15,000,000 by wire transfer of immediately available
funds to the account designated in writing by Seller to Buyer not less than
two business days prior to the Closing Date; and
(e) an opinion of Buyer's counsel relating to the due
authorization by Buyer and its affiliates with respect to the execution and
delivery of this Agreement, the ELC Guaranty the License Agreement and the
Services Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to the Buyer as follows:
3.1 Organization. Seller is a general partnership validly existing
and in good standing under the laws of the State of New York and has all
requisite partnership power and authority to enter into
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this Agreement, the Services Agreement and the License Agreement and to carry
out the transactions contemplated hereby and thereby.
3.2 Execution, Delivery and Performance. The authorization,
execution, delivery and performance of this Agreement, the Services Agreement
and the License Agreement and the consummation by Seller of the transactions
contemplated hereby and thereby will not (i) conflict with or result in a
breach of the partnership agreement of Seller, (ii) violate any U.S. or
foreign laws, statutes or regulations to which Seller is subject or by which
Seller or its assets may be bound, (iii) violate any order, writ, injunction,
judgment or decree of any court or governmental or administrative agency to
which Seller or its assets is subject, or (iv) violate, conflict with, result
in or constitute (with the giving of notice, the lapse of time, or both) a
material breach or default under, or result in the termination or
acceleration of, or the creation or imposition of a lien pursuant to, any
material agreement, mortgage, indenture, note, lease, license, insurance
policy, or other commitment, obligation or instrument to which Seller or any
of its affiliates is a party or by which Seller, any of its affiliates or any
of their respective properties or assets is bound (collectively, the "Seller
Contracts"). Except for the FTC Approval (as hereinafter defined), no
consent, approval or authorization of, notice to, or filing or registration
with, any governmental, administrative or regulatory authority, or any other
person or entity, is required, pursuant to the terms of any of the Seller
Contracts, applicable law or otherwise, to be made or obtained by Seller in
connection with the execution, delivery and performance by Seller of this
Agreement, the Services Agreement and the License Agreement and the
consummation of the transactions contemplated hereby and thereby. For
purposes of clause (iv), materiality shall be measured on a consolidated
basis with respect to DKI and its controlled entities.
3.3 Authority. Seller has full partnership power and authority to
enter into this Agreement, the Services Agreement and the License Agreement
and has full power and authority to carry
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out the transactions contemplated hereby and thereby, and all partnership and
other proceedings required to be taken by Seller to authorize the execution,
delivery and performance of this Agreement, the Services Agreement and the
License Agreement have been properly taken. This Agreement constitutes, and
the Services Agreement and the License Agreement, when duly executed and
delivered by the parties thereto, will constitute, the valid and binding
obligations of Seller, enforceable in accordance with their respective terms,
except as such enforcement may be limited by bankruptcy and other laws
affecting the enforceability of creditors' rights generally or laws governing
the availability of specific performance or other equitable remedies.
3.4 Inventory and Other Inventory. As of the date when Seller
sells any Inventory or Other Inventory to Buyer, Seller will have, good title
to such Inventory and Other Inventory, free and clear of any and all security
interests, rights of first refusal, first offer or similar rights, claims,
liens, charges or encumbrances of any kind (collectively, "Encumbrances"),
and Seller's sale of the Inventory and the Other Inventory to Buyer against
payment therefor in accordance with this Agreement and pursuant to the
applicable Xxxx of Sale will transfer, assign and convey to, and vest in,
Buyer good title to the Inventory and the Other Inventory, free and clear of
any such Encumbrances created by Seller or its affiliates. All of the
Inventory and the Other Inventory sold to Buyer pursuant to this Agreement
will be Useable (as defined in Section 1.1) as of the date of the applicable
Xxxx of Sale therefor. If Buyer determines in good faith that any Inventory
or Other Inventory sold to Buyer hereunder is not Useable ("Rejected Goods"),
Buyer may return the Rejected Goods to Seller and Seller shall promptly
refund to Buyer the Purchase Price paid for such Rejected Goods; provided,
however, that Buyer shall not be entitled to return Rejected Goods and
receive a refund with respect thereto: (i) if Seller in good faith disputes
that the Rejected Goods are not Useable, in which case such dispute shall be
arbitrated in accordance with Section 9.5(h); (ii) if Seller promptly
substitutes Useable Inventory selected by Buyer (in the case of Rejected
Goods constituting
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Inventory) or Useable Other Inventory (in the case of Rejected Goods
constituting Other Inventory); (iii) unless, and to the extent that, the
Purchase Price paid by Buyer in respect of such Rejected Goods and goods not
in conformity with the covenant set forth in the last sentence of this
Section 3.4 exceeds $50,000 in the aggregate (it being agreed that Seller
shall have no refund obligation with respect to such amount up to $50,000) or
(iv) if Buyer gives Seller written notice of and tenders such Rejected Goods
to Seller after July 31, 1998. Seller covenants to Buyer that as of the
date of the applicable Xxxx of Sale, none of the raw materials or finished
goods comprising Inventory and Other Inventory to be purchased by Buyer will
be contaminated, and all finished goods comprising Inventory and Other
Inventory will be formulated, processed, manufactured, stored, packaged and
labeled in accordance with the applicable product specifications and
applicable law (including, without limitation, applicable rules, regulations
and pronouncements of the United States Food and Drug Administration) and the
laws and regulations of the countries as to which such finished goods were
manufactured for sale under the International Relationships (as hereinafter
defined) with the exception of those laws and regulations which are the
responsibility of the distributor pursuant to such International
Relationships.
3.5 International Relationships. Set forth on Schedule 3.5 is a
list of all written foreign distributorship agreements (the "Distributorship
Agreements") and arrangements under consideration (the "Proposed
Arrangements," and together with the Distributorship Agreements, the
"International Relationships"), in each case relating to the International
Business. Seller previously has delivered to Buyer true and complete copies
of each written Distributorship Agreement (together with all exhibits thereto
and amendments or modifications thereof) and an accurate and complete summary
of any other Proposed Arrangements, in each case relating to the
International Business. Other than in connection with, or as a result of, the
International Relationships, Seller has no commitments, arrangements,
contracts
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or obligations (excluding purchase orders in the ordinary course of business)
to sell any products currently sold in the Business to third parties.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer represents and warrants to Seller as follows:
4.1 Organization. Buyer is a corporation duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
incorporation and has all requisite corporate power and authority to enter
into this Agreement, the Services Agreement and the License Agreement and to
carry out the transactions contemplated hereby and thereby.
4.2 Execution, Delivery and Performance. The authorization,
execution, delivery and performance of this Agreement, the Services Agreement
and the License Agreement and the consummation by Buyer of the transactions
contemplated hereby and thereby will not (i) conflict with or result in a
breach of Buyer's certificate of incorporation or by-laws, (ii) violate any
U.S. or foreign laws, statutes or regulations to which Buyer is subject or by
which Buyer or its assets may be bound, (iii) violate any order, writ,
injunction, judgment, award or decree of any court or governmental or
administrative agency to which Buyer or its assets is subject, or (iv)
violate, conflict with, result in or constitute (with the giving of notice,
the lapse of time, or both) a material breach or default under, or result in
the termination or acceleration of, or the creation or imposition of a lien
pursuant to, any material agreement, mortgage, indenture, note, lease,
license, insurance policy, or other commitment, obligation or instrument to
which Buyer or any of its affiliates is a party or by which Buyer, any of its
affiliates or any of their respective properties or assets is bound
(collectively, the "Buyer Contracts"). Except for the FTC Approval, no
consent, approval or authorization of, notice to, or filing or registration
with, any governmental, administrative or regulatory authority, or any other
person or entity, is required, pursuant to the terms of any of the Buyer
Contracts, applicable law or otherwise, to be made or obtained by Buyer in
connection with the execution, delivery and
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performance by Buyer of this Agreement, the Services Agreement and the
License Agreement and the consummation of the transactions contemplated
hereby and thereby. For purposes of clause (iv), materiality shall be
measured on a consolidated basis with respect to ELC and its consolidated
entities.
4.3 Authority. Buyer has full corporate power and authority to
enter into this Agreement, the Services Agreement and the License Agreement
and has full power and authority to carry out the transactions contemplated
hereby and thereby, and all corporate and other proceedings required to be
taken by Buyer to authorize the execution, delivery and performance of this
Agreement, the Services Agreement and the License Agreement have been
properly taken. This Agreement constitutes, and the Services Agreement and
the License Agreement, when duly executed and delivered by the parties
thereto, will constitute, the valid and binding obligations of Buyer,
enforceable in accordance with their respective terms, except as such
enforcement may be limited by bankruptcy and other laws affecting the
enforceability of creditors' rights generally or laws governing the
availability of specific performance or other equitable remedies.
ARTICLE V
COVENANTS
5.1 Access to Personnel; Inspection of Information and Documents;
and Cooperation. Prior to the Closing and through the wind down of the
Business as contemplated by Article VII, Seller shall give Buyer and its
representatives reasonable access during normal business hours to those of
Seller's personnel who are familiar with the Business and the books, records,
documents and other information of Seller relating exclusively thereto (or
the relevant portion of any books, records and documents which are not
separately maintained for the Division) and shall furnish Buyer with access
to all such information as Buyer may from time to time reasonably request.
Buyer shall use its good faith reasonable efforts to interview all employees
of the Division having the title of Vice President, Director or Regional
Sales Manager as previously identified in writing to Buyer and such other
employees as may be mutually agreed
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upon, and Seller shall permit Buyer reasonable access to the employees of the
Division in order to permit Buyer to interview such employees, in each case
with a view toward the possible employment by Buyer, in its sole and absolute
discretion, of such employees in the Buyer's Proposed Business or Buyer's
other businesses; it being understood and agreed that (i) Buyer shall have no
obligation whatsoever to offer employment to any such individual (with the
exception of Seller's National Sales Manager) or to offer any particular
terms in connection with any offer of employment that Buyer elects to make,
and (ii) all severance, benefit and pension plan arrangements, and all
liabilities (whether or not accrued, liquidated, contingent or otherwise)
with respect thereto, relating to employees of the Division are and shall
remain Seller's responsibility. The parties hereto will use commercially
reasonable efforts to assist and cooperate with each other in connection with
the transactions contemplated hereby, including, but not limited to, Seller
providing Buyer with reasonable access and information to enable Buyer to
perform its obligations with respect to the Signature Collection as
contemplated under this Agreement; the Services Agreement and the License
Agreement.
5.2 Confidentiality. Notwithstanding that the License Agreement
has not been executed by the parties thereto on the date hereof, Buyer and
Seller agree that Article 15 of the License Agreement shall be binding upon
and inure to the benefit of Buyer (as if Buyer were the Licensee (as defined
in the License Agreement) and its affiliates) and Seller (as if Seller were
the Licensor (as defined in the License Agreement) and its affiliates,)
effective upon the date hereof; and that such Article 15 shall survive the
termination of this Agreement.
5.3 FTC Approval. Each of Seller and Buyer shall promptly after
the execution hereof prepare and file such applications as are necessary to
obtain notification from the U.S. Federal Trade Commission or the U.S.
Department of Justice that all applicable waiting periods under the
Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended, have
expired or terminated with respect to the transactions contemplated by this
Agreement and the License Agreement ("FTC Approval"). Each of Seller
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and Buyer shall use its best efforts to prosecute all such applications in a
diligent manner, provided, however, that neither Seller nor Buyer shall be
obligated to divest itself of any assets or reorganize its existing corporate
structures or those of its respective affiliated entities. The parties shall
cooperate to take all steps reasonably necessary, proper or desirable to
expedite the prosecution of such applications.
5.4 No Solicitation. During the two-year period commencing on the
date hereof, the parties hereto will not, and will cause their respective
affiliates not to, directly or indirectly (other than by means of
non-directed generalized advertisements), without the express written
approval of the other party hereto, recruit, solicit or otherwise induce any
person (other than current employees of the Division) who is then employed
by, or retained as a consultant of, the other party or its affiliates, to
terminate any such employment or consulting relationship with such party or
its affiliates.
5.5 Tooling and Molds. On the Closing Date, Seller shall transfer
and convey to Buyer, at no cost to Buyer (other than any packaging and
shipping costs, which will be paid by Buyer, if applicable), all of Seller's
right, title and interest in and to the tooling and molds used in connection
with the Signature Collection (the "Tools and Molds"). Buyer acknowledges
that the Tools and Molds are currently located at, and in possession of,
those vendors (the "Vendors") previously identified to Buyer by Seller. On
the Closing Date, or as soon thereafter as is reasonably practicable, Seller
shall notify the Vendors in writing of such transfer of Seller's right, title
and interest in and to the Tools and Molds. Buyer agrees that, subsequent to
the Closing Date, Seller shall have the right to use such Tools and Molds
through December 31, 1997 in connection with the Business, and, if reasonably
necessary for Seller's Business in accordance with this Agreement, such
longer period as shall be mutually agreed upon.
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ARTICLE VI
CONDITIONS PRECEDENT TO CLOSING
6.1 Conditions Precedent to Buyer's Obligations. All obligations
of Buyer to consummate the Closing shall be subject, at the option of Buyer
(except with respect to FTC Approval), to fulfillment of each of the
following conditions at or prior to the Closing:
(a) Representations and Warranties. All representations and
warranties of Seller contained herein or in any document
delivered pursuant hereto shall be true and correct in all
material respects when made and as of the Closing, except those
representations and warranties made as of a specific date.
(b) Covenants. All covenants, agreements and obligations required by
the terms of this Agreement or any document delivered pursuant
hereto, to be executed or performed by Seller at or before the
Closing, shall have been duly and properly executed and performed
in all material respects.
(c) Officer's Certificate. There shall have been delivered to Buyer
a certificate executed by the Chief Executive Officer or a Vice
President and the Secretary or an Assistant Secretary of Seller,
or other duly authorized representatives of Seller acceptable to
Buyer, dated as of the Closing Date, certifying that the
conditions set forth in Sections 6.1(a) and (b) have been
fulfilled.
(d) Documentation. All documents, agreements, instruments and
certificates required to be delivered hereunder to Buyer at or
prior to the Closing shall have been so delivered including,
without limitation, the License Agreement, the Services Agreement
and the DKI Guaranty.
(e) FTC Approval. FTC Approval shall have been obtained.
(f) No Orders. There shall not be in effect any injunction or order
restraining, enjoining, prohibiting or invalidating this
Agreement, the License Agreement, the Services Agreement or the
DKI Guaranty or the consummation of the transactions contemplated
hereby or thereby.
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(g) Continuing Role of Xxxxx Karan. As of the Closing Date, Xx.
Xxxxx Xxxxx shall have creative control over products bearing the
"Xxxxx Karan New York" and "DKNY" trademarks.
(h) Miscellaneous. Neither DKI nor any of its subsidiaries shall
have: (i) generally not paid its debts as such debts become due;
(ii) admitted in writing its inability to pay its debts
generally; (iii) made a general assignment for the benefit of
creditors; (iv) any proceeding instituted by or against it
seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any
law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or
the appointment of a custodian, receiver, trustee or other
similar official for it or for any substantial part of its
property; or (v) taken any corporate action to authorize any of
the actions set forth in clauses (I) through (iv) above.
6.2 Conditions Precedent to Seller's Obligations. All obligations of
Seller to consummate the Closing shall be subject, at the option of Seller
(except with respect to FTC Approval), to fulfillment of each of the following
conditions at or prior to the Closing:
(a) Representations and Warranties. All representations and
warranties of Buyer contained herein or in any document delivered
pursuant hereto shall be true and correct in all material
respects when made and as of the Closing, except those
representations and warranties made as of a specific date.
(b) Covenants. All covenants, agreements and obligations required by
the terms of this Agreement, or any document delivered pursuant
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hereto to be executed or performed by Buyer at or before the
Closing shall have been duly and properly executed and performed
in all material respects.
(c) Officer's Certificate. There shall have been delivered to Seller
a certificate executed by the President or a Vice President and
the Secretary or an Assistant Secretary of Buyer, or other duly
authorized representatives of Buyer acceptable to Seller, dated
as of the Closing Date, certifying that the conditions set forth
in Sections 6.2(a) and (b) have been fulfilled.
(d) Documentation. All documents, agreements, instruments and
certificates required to be delivered hereunder to Seller at or
prior to the Closing shall have been so delivered, including,
without limitation, the License Agreement, the Services Agreement
and the ELC Guaranty.
(e) FTC Approval. FTC Approval shall have been obtained.
(f) No Orders. There shall not be in effect any injunction or order
restraining, enjoining, prohibiting or invalidating this
Agreement, the License Agreement, the Services Agreement or the
ELC Guaranty or the consummation of the transactions contemplated
hereby or thereby.
(g) Miscellaneous. Neither ELC nor any of its subsidiaries shall
have: (i) generally not paid its debts as such debts become due;
(ii) admitted in writing its inability to pay its debts
generally; (iii) made a general assignment for the benefit of
creditors; (iv) any proceeding instituted by or against it
seeking to adjudicate it a bankrupt or insolvent, or seeking
liquidation, winding up, reorganization, arrangement, adjustment,
protection, relief or composition of it or its debts under any
law relating to bankruptcy, insolvency or reorganization or
relief of debtors, or seeking the entry of an order for relief or
the appointment of a custodian, receiver, trustee or other
similar official for it or for any substantial part of its
property; or (v) taken any corporate action to authorize any of
the actions set forth in clauses (I) through (iv) above.
17
ARTICLE II
AGREEMENTS REGARDING THE WIND DOWN AND TRANSITION OF THE BUSINESS
7.1 Domestic Transition Strategy.
(a) Seller and Buyer will cooperate in the wind down and
transition of the Domestic Business (for purposes of this Section 7.1
Domestic Business shall mean the Business conducted in the United States and
Canada) in an orderly manner in accordance with the terms of this Section
7.1. On or prior to December 22, 1997, Seller will cease accepting orders
for all products of the Division in connection with the Domestic Business.
On or prior to December 31, 1997, except as provided below in Section 7.1(b),
Seller will cease shipping all products of the Division in connection with
the Domestic Business. Seller has previously provided Buyer with a list of
the retail outlets in the United States and Canada ("Doors") currently
selling the Signature Collection Products. On February 1, 1998, Buyer shall
commence marketing and taking orders with respect to Signature Collection
products to be sold by Buyer in the United States and Canada pursuant to the
License Agreement, and Buyer shall offer for sale Signature Collection
products to (x) not less than 400 Doors pursuant to Section 3.1(a)(ii) of the
License Agreement and (y) the Outlet Stores (as defined in the License
Agreement) pursuant to Section 4.8(c) of the License Agreement. With respect
to each Door, Seller will be responsible for (i) all returns of inventory for
the Signature Collection products in excess of three months of forward cover
based, in part, on sales levels of such Doors from February 1, 1997 through
April 30, 1997 and (ii) all returns of inventory for non-Signature Collection
products of the Division.
(b) All returns and other inventory of the Division not
purchased by Buyer pursuant to Section 1.1 hereof may be (i) sold by Seller
only through Outlet Stores and Retail Stores (as defined in the License
Agreement); (ii) sold by Buyer only through Buyer's or Buyer's affiliates'
outlet stores or through military exchanges, (iii) sold by Seller or Buyer in
such other manner as shall be mutually agreed
18
upon by Seller and Buyer, or (iv) given away by Seller or Buyer as a charitable
contribution or destroyed. Any inventory Buyer elects to sell through clause
(ii) or (iii) of this Section 7.1(b) shall be purchased by Buyer from Seller at
prices to be mutually agreed upon.
(c) Seller shall own (and Buyer shall cooperate with respect
to collections of) all accounts receivables resulting from sales by Seller
prior to February 1, 1998 and all accounts receivables resulting from sales
by Seller subsequent thereto in accordance with Section 7.1(b) ("Seller's
Accounts Receivables"), including any adjustments, deductions, chargebacks
and other charges from the customer (the "Adjustments"). All accounts
receivables resulting from sales by Buyer, including Adjustments thereto,
subsequent to January 31, 1998 relating to the Domestic Business shall be
referred to herein as "Buyer's Accounts Receivables". Buyer shall promptly
remit to Seller any payments received by Buyer relating to Seller's Accounts
Receivables. Seller shall promptly remit to Buyer any payments received by
Seller relating to Buyer's Accounts Receivables. Buyer shall promptly remit
to Seller amounts equal to Adjustments improperly charged against Seller's
Accounts Receivables for which Buyer is responsible hereunder. Seller shall
promptly remit to Buyer amounts equal to Adjustments improperly charged
against Buyer's Accounts Receivables for which Seller is responsible
hereunder. Nothing herein shall entitle Buyer to compromise or settle any of
Seller's Accounts Receivables without Seller's prior written consent.
Nothing herein shall entitle Seller to compromise or settle any of Buyer's
Accounts Receivables without Buyer's prior written consent. If a customer
remits payment and designates an invoice or receivable being paid, such
designation shall be binding on the parties hereto. If a customer remits
payment without designating an invoice or receivable being paid, such payment
shall be credited against the oldest outstanding receivable of such customer.
//
//
19
7.2 International Transition Strategy.
(a) Seller and Buyer will cooperate in the wind down of the
International Business in an orderly manner. Seller will reduce the number
and type of products manufactured and distributed by or on behalf of the
Division for the International Business consistent with Section 7.1(a). To
the extent permitted by applicable law and the International Relationships,
Seller will use commercially reasonable efforts to cease shipping products
pursuant to such International Relationships. Subject to applicable law and
the International Relationships, Seller shall terminate or permit to expire
all agreements relating to the International Relationships by no later than
the respective expiration dates (including any required renewal periods) of
its existing International Relationships. As of such expiration date (or
earlier date in the event of termination prior to the expiration date),
subject to applicable law, Buyer will have the exclusive license, to the
extent provided in the License Agreement, to distribute the Licensed Products
(as defined in the License Agreement) in the countries covered by such
International Relationships. Seller will not enter into any new distributor
agreements and will not amend or renew (other than as required by such
20
agreement) any existing arrangements with respect to products subject to the
License Agreement without the prior written approval of Buyer. Seller will
be responsible for all inventory returns of the Division's products arising
from the International Relationships.
(b) All returns and other inventory relating to the
International Business not purchased by Buyer pursuant to Section 1.1 may be
(i) sold by Seller only through Outlet Stores and Retail Stores, (ii) sold by
Buyer only through Buyer's or Buyer's affiliates' outlet stores or military
exchanges (iii) sold by Seller or Buyer in such other manner as shall be
mutually agreed upon by Seller and Buyer, or (iv) given away by Seller or
Buyer as a charitable contribution or destroyed. Any inventory Buyer elects
to sell through clause (ii) or (iii) of this Section 7.2(b) shall be
purchased by Buyer from Seller at prices to be mutually agreed upon.
(c) In connection with the wind down of the International
Business, Buyer will provide certain services to Seller in accordance with
the terms of the Services Agreement.
ARTICLE VIII
INDEMNIFICATION; FINDERS
8.1 Indemnification by Seller. Seller agrees to indemnify, defend
and hold the Buyer, its affiliates and their respective officers, directors,
employees, agents and counsel (the "Buyer Indemnified Parties") harmless from
and against any and all losses, liabilities, claims, demands, investigations,
damages, costs and expenses (including, without limitation, reasonable
attorneys' fees and disbursements) of every kind, nature and description
(collectively, "Claims") to which any of the Buyer Indemnified Parties
becomes subject based upon, arising out of or otherwise in respect of (a) the
Business of the Division up to January 31, 1998 including, without
limitation, Claims related to (i) arrangements with suppliers, vendors,
contractors, warehousemen, shippers, distributors and customers of the
Business, and the actual or alleged breach or termination of any such
arrangements, and any Claims with respect to
21
credits, refunds or charge backs for products or other financial terms of
such arrangements, (ii) products manufactured, distributed or sold by Seller
(whether before or after January 31, 1998) including, but not limited to,
product liability, false advertising and improper labeling Claims, (iii)
employee compensation, employee benefit and pension plans, and severance
arrangements, in each case, of any persons employed by Seller in the
Business or (iv) violations of law by Seller or its affiliates, (b) Claims
arising out of or in connection with the expiration or termination of
Seller's agreements with its foreign distributors as set forth on Schedule
3.5 hereto, and Seller's current contracts and relationships with suppliers
and contract manufacturers relating to the Business, (c) Claims instituted by
a distributor of the Business in respect of distribution and sales outside of
the United States of Licensed Products in accordance with Section 7.2, (d)
Claims related to products manufactured in accordance with Seller's
specifications and sold under the Services Agreement or the License Agreement
including, but not limited to, product liability, false advertising and
improper labeling Claims, provided however that Buyer's actions were in
compliance with its obligations under the Services Agreement or the License
Agreement, as the case may be, (e) Seller's non-compliance with any bulk
sales law as contemplated by Section 9.1 hereof, (f) any breach of any
representation, warranty, covenant or agreement of Seller contained in this
Agreement or the Services Agreement or (g) Buyer's inability to comply with
the terms of the Services Agreement if such inability is attributable to
Seller's failure to comply with Section 3.2 of the Services Agreement or
other inability of Seller to provide Buyer with the access or information
referred to in Section 3.2 of the Services Agreement. Seller shall have no
obligation to indemnify any Buyer Indemnified Party for any Claims (i)
suffered solely as a result of any legislation which has not been enacted on
or prior to the Closing Date or any change in existing legislation which is
thereafter enacted or (ii) which arise out of the willful or reckless
conduct or bad faith of Buyer or any Buyer Indemnified Party.
22
8.2 Indemnification by Buyer. Buyer agrees to indemnify, defend
and hold Seller, its affiliates and their respective officers, directors,
employees, agents, partners and counsel (the "Seller Indemnified Parties")
harmless from and against any and all Claims based upon, arising out of or
otherwise in respect of Buyer's Proposed Business, to the extent such Claims
are not subject to indemnification by Seller pursuant to Section 8.1, or any
breach of any representation, warranty, covenant or agreement of Buyer
contained in this Agreement or the Services Agreement.
8.3 Notice and Opportunity to Defend. Promptly after receipt by
either party hereto of notice of the assertion of any Claim or discovery
of any facts upon which such party expects to make a claim for
indemnification hereunder, such party (the "Indemnified Party") shall give
the other party who may become obligated to provide indemnification hereunder
(the "Indemnifying Party") written notice describing such Claim or facts in
reasonable detail ; provided, however, that any delay or failure by an
Indemnified Party to provide such notice shall not impair or affect its
rights hereunder or the obligation of the Indemnifying Party with respect to
such Claim, except to the extent the Indemnifying Party can demonstrate that
it was materially prejudiced by the Indemnified Party's delay in giving or
failure to give such notice. Such Indemnifying Party shall have the right,
at its option, to compromise or defend, at its own expense and by its own
counsel, any such matter involving the asserted liability of the Indemnified
Party; provided, however, that no Indemnifying Party shall compromise or
settle any asserted liability (except a liability settled or compromised for
monetary consideration or damages only payable solely by other than the
Indemnified Party and such compromise or settlement provides for a full and
unconditional release of the claims asserted against the Indemnified Party
and its affiliates) without the prior written consent of the Indemnified
Party. If any Indemnifying Party shall undertake to compromise or defend any
such asserted liability, it shall promptly notify the Indemnified Party of
its intention to do so, and shall diligently defend against such claims with
counsel reasonably acceptable to the Indemnified Party. The
23
Indemnified Party agrees to cooperate fully with the Indemnifying Party and
its counsel in the compromise of, or defense against, any such asserted
liability. No Indemnified Party shall compromise or settle any asserted
liability (except a liability settled or compromised for monetary
consideration or damages only payable solely by other than the Indemnifying
Party and such compromise or settlement provides for a full and unconditional
release of the claims asserted against the Indemnifying Party and its
affiliates) without the prior written consent of the other Indemnifying
Party. All costs and expenses incurred in connection with such cooperation
shall be borne by the Indemnifying Party up until the date that the
Indemnifying Party actually assumes the defense with respect thereto
pursuant to this Section. In any event, the Indemnified Party shall have the
right at its own expense and by its own counsel to participate in the
defense of such asserted liability; provided, however, that if (i) the claim
or action shall relate solely to injunctive or equitable relief brought by a
party to a Distributorship Agreement and which seeks to limit the business
of the Indemnified Party beyond that contemplated by this Agreement, the
License Agreement and the Services Agreement, the Indemnified Party shall
have the right, at its own expense, to retain its own counsel (in addition to
counsel retained by the Indemnifying Party) and, if it does so, the
Indemnified Party and the Indemnifying Party shall jointly control the
defense of such claim or action, and (ii) after having notified the
Indemnified Party of its intention to assume the defense of a claim or
asserted liability as aforesaid, the Indemnifying Party fails to do so in a
reasonably prompt and diligent manner or the Indemnified Party is advised in
writing by counsel reasonably satisfactory to the Indemnifying Party that
there probably is a conflict between the interests of the Indemnified Party
and the Indemnifying Party with respect to such defense under the applicable
Code of Professional Responsibility, then in either such case the
Indemnifying Party shall be responsible for the reasonable fees and expenses
of one firm of separate counsel for the Indemnified Party. For all purposes
of this Agreement, "reasonable fees of counsel" shall mean fees at standard
hourly rates.
24
8.4 Sole Remedy. The parties hereto agree that the sole remedy
available to either party with respect to breaches and violations of, and
defaults with respect to, any representation, warranty, covenant, agreement
or other obligation contained in this Agreement or the Services Agreement
shall be limited to the indemnity provided under this Article VIII.
8.5 Finders. Each of the parties hereto represents to the other
that no finder, broker, agent or other intermediary has acted on behalf of
such party in connection with the introduction or bringing together of the
parties hereto, or the negotiation or consummation of the transactions
contemplated by this Agreement (except for the financial advisors of each
party identified on Schedule 8.5 hereto), and each party shall indemnify the
other and hold it harmless against all fees, losses, costs, expenses
(including reasonable attorneys' fees and expenses), liabilities and damages,
if any, arising from the employment or other engagement by such party or
services rendered to such party (or any allegation having a reasonable basis
of any such employment or other engagement or services) of any finder,
broker, agent or other intermediary (and the financial advisors of each party
identified on Schedule 8.5 hereto) in such connection.
ARTICLE IX
MISCELLANEOUS COVENANTS AND AGREEMENTS
9.1 Bulk Sales Compliance. Buyer hereby waives compliance by
Seller with the provisions of any applicable bulk sales law of any state
(including Article 6 of the New York Uniform Commercial Code).
9.2 Release of Information. The parties hereto agree to cooperate
in any release of information concerning this Agreement and the transactions
contemplated herein. Each of the parties shall furnish to the other drafts
of all such releases prior to any publication thereof. Subject to the
provisions of
25
Section 5.2, nothing contained herein shall prevent either party at any time
from furnishing any information required to be furnished to any governmental
agency or as otherwise required by law.
9.3 Termination. This Agreement may be terminated at any time
prior to the Closing Date: (i) by mutual written agreement of the parties;
(ii) by either Buyer or Seller upon written notice if there has been a
material breach of any material covenant or agreement contained in this
Agreement on the part of the other party; or (iii) by either Buyer or Seller
upon written notice if the Closing has not occurred or FTC Approval has not
been obtained within 90 days after the date of execution of this Agreement.
In the event of termination of this Agreement pursuant to this Section 9.3,
this Agreement shall be void and of no further effect and there shall be no
liability or obligation on the part of either party hereto except (x) as
provided in Section 5.2 and 5.4 and this Section 9.3, (y) nothing herein
shall relieve a party from liability for any breach of any covenant or
agreement contained in this Agreement, and (z) the provisions of Article VIII
shall survive termination of this Agreement.
9.4 Notices. Any and all notices or other communications required
or permitted to be given under this Agreement shall be in writing and shall
be deemed to have been duly given when personally delivered or mailed postage
prepaid by first class registered mail, return receipt requested, by
overnight courier or by facsimile transmission (with the original sent
postage prepaid by first class mail) addressed to the parties at the
addresses set forth below or at such other address or to such other addressee
as any party may from time to time specify by notice to the other party given
as aforesaid.
If to Seller:
The Xxxxx Karan Company
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Chief Executive Officer
and:
The Xxxxx Karan Company
26
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
With a copy to:
Proskauer Rose LLP
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxx X. Xxxxxx
If to Buyer:
Xxxxx Xxxxxx Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: President
and:
Xxxxx Xxxxxx Inc.
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
With a copy to:
Weil, Gotshal & Xxxxxx LLP
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxxxxx
27
9.5 Miscellaneous.
(a) Entire Agreement. This Agreement and the Exhibits hereto,
together with the agreements, certificates and other documents referred to
herein, constitute the entire agreement and set forth the entire
understanding of the parties with respect to the subject matter hereof,
supersede all prior agreements, covenants, arrangements, letters,
communications, representations or warranties, whether oral or written, by
any officer, employee or representative of either party, relating to the
subject matter hereof, and may not be modified or amended, except by a
written agreement specifically referring to this Agreement signed by the
parties hereto and any other party to be charged.
(b) No Waiver. No waiver of any breach or default hereunder
shall be considered valid unless in writing and signed by the party giving
such waiver, and no such waiver shall be deemed a waiver of any subsequent
breach or default of the same or similar nature. No failure on the part of
any party to exercise, and no delay in exercising any right, remedy, power or
privilege hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege.
(c) Assignment. Neither party may transfer or assign this
Agreement or its rights hereunder or delegate its performance hereunder
without the prior written consent of the other party, and any purported
assignment without such consent shall be void and of no effect, except that
either party may, without such consent, assign this Agreement or any of its
rights hereunder, or delegate its performance hereunder to any of its
wholly-owned subsidiaries or wholly-owned subsidiaries of the entity which
owns all of the equity securities of a party hereto; provided, however, that
notwithstanding such assignment or delegation, the assignor will nonetheless
remain liable for any breaches hereof by its
28
assignee. This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective permitted successors and assigns.
(d) Headings. The Section and paragraph headings contained
herein are for the purposes of convenience only and are not intended to
define or limit the contents of any Section or paragraph.
(e) Transaction Expenses. Whether or not the transactions
contemplated hereby are consummated, all legal and other costs and expenses
incurred in connection with this Agreement and the License Agreement and
the transactions contemplated hereby or thereby shall be paid by the party
incurring such expenses, except as otherwise specifically provided herein or
therein.
. (f) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of
which taken together shall constitute one and the same instrument.
(g) Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of the State of New York
applicable to contracts made and to be performed therein. If any restriction
contained in Section 5.2 or Section 5.4. shall be deemed to be invalid,
illegal or unenforceable by reason of the extent, duration or geographical
scope thereof, or otherwise, then the arbitrators or court making such
determination shall have the right to reduce such extent, duration,
geographical scope, or other provisions hereof, and in its reduced form such
restriction shall then be enforceable in the manner contemplated hereby.
(h) Arbitration. Except as specifically set forth in this
Agreement, all disputes, controversies and claims arising out of or
relating to this Agreement will be settled and
29
determined by arbitration in New York City before a Commercial Panel of three
arbitrators in accordance with and pursuant to the then existing Commercial
Arbitration Rules of the American Arbitration Association. The arbitrators,
in their discretion, may award specific performance or injunctive relief and
reasonable attorneys' fees and expenses to any party in any arbitration.
However, in any arbitration proceeding, the arbitrators may not change,
modify or alter any express condition, term or provision hereof, and to
that extent the scope of their authority is expressly limited. The
arbitration award will be final and binding upon the parties and judgment
may be entered thereon in any court having jurisdiction. The service of any
notice, process, motion or other document in connection with an arbitration
or for the enforcement of any arbitration award may be made in the same
manner that notices may be given under Section 9.4.
(i) No Third Party Beneficiaries. Nothing herein, express or
implied, is intended to or shall confer upon any person or entity (including,
without limitation, any employee, contractor, vendor or distributor of the
Division or the Business), other than the parties hereto and any indemnified
party pursuant to Article VIII hereof, any legal or equitable right, benefit
or remedy of any nature whatsoever under or by reason of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
THE XXXXX KARAN COMPANY
By: Xxxxx Karan International Inc.,
General Partner
By:
----------------------------------
Name:
Title:
30
XXXXX XXXXXX INC.
By:
-----------------------------------
Name:
Title:
31
Exhibit A
XXXX OF SALE
------------
WHEREAS, The Xxxxx Karan Company ("Seller") and Xxxxx Xxxxxx Inc.
("Buyer") have entered into that certain Agreement, dated as of September 30,
1997 (the "Agreement"), pursuant to which Seller has agreed to sell to Buyer,
and Buyer has agreed to purchase from Seller, certain Inventory, Other
Inventory and other assets used in the Business (capitalized terms used
herein and not otherwise defined herein shall have their meanings defined in
the Agreement);
NOW, THEREFORE, in consideration of good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Seller is executing this Xxxx of Sale in order to evidence the vesting in and
assignment to Buyer of such assets.
1. Seller by this instrument does hereby convey, grant,
bargain, sell, transfer, set over, assign, remise, release, deliver and
confirm unto Buyer, its successors and assigns forever those assets listed in
Schedule I attached hereto (the "Assets") in accordance with the Agreement.
2. EXCEPT AS SET FORTH IN THE AGREEMENT, SELLER EXCLUDES ALL
WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO THE ASSETS, INCLUDING ANY
WARRANTY OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
3. This Xxxx of Sale shall be binding upon and inure to the
benefit of Seller and Buyer and their respective successors and assigns.
4. The Xxxx of Sale shall be governed by and construed in
accordance with the laws of the State of New York without giving effect to
rules governing the conflict of laws.
IN WITNESS WHEREOF, the undersigned has executed this Xxxx of
Sale this ____ day of ___________, 199_.
THE XXXXX KARAN COMPANY
By: Xxxxx Karan International Inc.,
general partner
By:
---------------------------------
Name:
Title:
Acknowledged:
XXXXX XXXXXX INC.
By:
-------------------------------
Name:
Title:
EXHIBIT B
GUARANTY
GUARANTY, dated November 10, 1997, made by Xxxxx Karan International Inc.,
a Delaware corporation ("DKI"), in favor of Xxxxx Xxxxxx Inc., a Delaware
corporation ("XXX").
W I T N E S S E T H:
WHEREAS, The Xxxxx Karan Company, a New York general partnership, Xxxxx
Karan Studio and certain other subsidiaries and affiliates of DKI
(collectively, "DK"), have entered into an Agreement, dated September 30,
1997, and a License Agreement and a Services Agreement, each dated the date
hereof (collectively, the "Agreements"), with XXX, relating to the
operations, trademarks and other intellectual property rights, inventory and
other assets of DK's domestic and international fragrance, cosmetics, beauty,
skin care and toiletry business; and
WHEREAS, DKI desires to guaranty to XXX the full and punctual performance
by DK of all of DK's obligations under the Agreements.
NOW, THEREFORE, in consideration of the premises, and to induce XXX to
enter into and perform the Agreements, DKI hereby agrees as follows:
SECTION 1. Guaranty. DKI hereby unconditionally and irrevocably
guarantees the full and punctual performance, as and when due, by DK of all
of DK's agreements, commitments, covenants and obligations (including,
without limitation, with respect to the assumption of liabilities and
agreements to indemnify) under and pursuant to the Agreements (collectively,
the "Obligations"). This Guaranty is an absolute guaranty of payment and
performance and not a guaranty of collection.
SECTION 2. Guaranty Absolute; Limitation of Liability.
(a) Subject to Section 2(b), DKI guarantees that the Obligations will be
paid and performed strictly in accordance with the terms of the Agreements.
The liability of DKI under this Guaranty shall be absolute and unconditional
irrespective of: (a) any change in the time, manner or place of performance
of, or in any other term of, or any increase in the amount of, all or any of
the Obligations, or any other amendment or waiver of any term of, or any
consent to departure from any requirement of, the Agreements; (b) any action
or omission to enforce the Obligations or the election of any remedy by XXX;
(c) any waiver, consent, extension, forbearance or granting of any indulgence
by XXX with respect to any provision of the Agreements; (d) events of
bankruptcy or
insolvency with respect to DK; or (e) any other circumstance which might
otherwise constitute a legal or equitable discharge or defense of an obligor
or a guarantor.
(b) Notwithstanding anything else contained herein, DKI's obligation to
make payments hereunder will in no event exceed the amount for which DK is
liable under the indemnification provisions of the Agreements, plus
$21,000,000.
SECTION 3. Waiver. DKI hereby (a) waives (i) promptness, diligence,
notice of acceptance and any and all other notices with respect to any of the
Obligations or this Guaranty, (ii) the filing of any claim with a court in
the event of receivership or bankruptcy of DK, and (iii) protest or notice
with respect to nonperformance of all or any of the Obligations; and (b)
covenants and agrees that this Guaranty will not be discharged except by
complete performance of the Obligations.
SECTION 4. Representations and Warranties. DKI hereby represents and
warrants to XXX as follows:
(a) DKI (i) is a corporation duly organized, validly existing and in
good standing under the laws of Delaware; and (ii) has all requisite
corporate power and authority to execute, deliver and perform this Guaranty.
(b) The execution, delivery and performance by DKI of this Guaranty (i)
have been duly authorized by all necessary corporate action; and (ii) do not
and will not (A) contravene its charter or by-laws, (B) violate any
applicable law, (C) conflict with or result in a material breach of, or
constitute a default under, or result in or permit the termination or
acceleration of, any material contractual obligation to which it is a party
or by which it or its assets are bound.
(c) This Guaranty has been duly executed and delivered by DKI and
constitutes the legal, valid and binding obligation of DKI, enforceable
against DKI in accordance with its terms.
SECTION 5. Amendments, Etc. No amendment or waiver of any provision of
this Guaranty nor consent to any departure by DKI herefrom shall in any event
be effective unless the same shall be specified in a writing executed by XXX,
and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 6. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing and mailed, sent by reputable
next-day delivery service, telecopied, cabled or delivered by hand, if to
2
DKI, addressed to it at the address of specified on the signature page
hereof, and if to XXX, addressed to it at the address specified in the
Agreements, or, as to each party, at such other address as shall be
designated by such party in a written notice to each other party complying as
to delivery with the terms of this Section. All such notices and other
communications shall, when mailed, telecopied, cabled or delivered, be
effective three days after deposit in the mails, one day after delivery to a
nationally recognized overnight delivery service, and when confirmed by
telecopy answerback confirmation of receipt or delivered to the cable company
or delivered by hand to the addressee.
SECTION 7. No Waiver; Remedies.
(a) No failure on the part of XXX to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law or any of the Agreements.
(b) Failure by XXX at any time or times hereafter to require strict
performance by DK, DKI or any other entity or person of any of the
provisions, warranties, terms or conditions contained in any of the
Agreements shall not waive, affect or diminish any right of XXX to demand
strict performance thereof, and such right shall not be deemed to have been
modified or waived by any course of conduct or knowledge of any of XXX or any
agent, officer, employee of XXX.
(c) No waiver by XXX of any default shall operate as a waiver of any
other default or the same default on a future occasion, and no action by XXX
permitted hereunder shall in way affect or impair any of the rights of XXX or
the obligations of DK and DKI under this Guaranty or under any of the
Agreements.
SECTION 8. Assignment; Successor and Assigns. DKI may not assign or
delegate performance of this Guaranty without the prior written consent of
XXX and any purported assignment or delegation without such consent shall be
void and of no effect. This Guaranty is a continuing guaranty and shall be
(i) binding upon DKI, its successors and permitted assigns, and (ii) inure to
the benefit of and be enforceable by XXX and its successors, transferees, and
assigns. Without limiting the generality of the foregoing clause (ii), XXX
may assign or otherwise transfer this Guaranty or any Obligation owing to it
to any other person or entity, and such other person or entity shall
thereupon become vested with all the rights in respect thereof.
SECTION 9. Governing Law. This Guaranty shall be governed by, and
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construed and interpreted in accordance with, the law of the State of New
York without giving effect to rules governing the conflict of laws. Wherever
possible, each provision of this Guaranty shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of
this Guaranty shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity and without invalidating the remaining provisions of this Guaranty.
SECTION 10. Submission to Jurisdiction; Jury Trial.
(a) Any legal action or proceeding with respect to this Guaranty or any
document related thereto may be brought in the courts of the State of New
York or the United States of America for the Southern District of New York,
and, by execution and delivery of this Guaranty, DKI hereby accepts for
itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts.
(b) DKI hereby irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
forum non conveniens, which it may now or hereafter have to the bringing of
any such action or proceeding in such respective jurisdictions and consents
to the granting of such legal or equitable relief as is deemed appropriate by
the court. DKI hereby irrevocably consents to the service of process of any
of the aforesaid courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to DKI at
its address provided herein, such service to become effective 30 days after
such mailing. Nothing contained in this Section 10 shall affect the right of
XXX to serve process in any other manner permitted by law or commence legal
proceedings or otherwise proceed against DKI or any of DKI's property in any
other jurisdiction.
(c) DKI hereby waives any right it may have to trial by jury in respect
of any litigation based on, arising out of, under or in connection with this
Guaranty.
IN WITNESS WHEREOF, DKI has caused this Guaranty to be duly executed and
delivered by its undersigned duly authorized officer on the date first above
written.
XXXXX KARAN INTERNATIONAL INC.
By:
----------------------------------
Name:
Title:
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Address: 000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
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EXHIBIT C
GUARANTY
GUARANTY, dated November 10, 1997, made by The Xxxxx Xxxxxx Companies
Inc., a Delaware corporation ("ELC"), in favor of The Xxxxx Karan Company, a
New York general partnership ("Company"), and Xxxxx Karan Studio, a New York
general partnership ("Studio" and, collectively with Company, "DK").
W I T N E S S E T H:
WHEREAS, Xxxxx Xxxxxx Inc., a Delaware corporation ("XXX"), has entered
into an Agreement, dated September 30, 1997, with Company, and a License
Agreement with Studio and a Services Agreement with Company, each dated the
date hereof (collectively, the "Agreements"), relating to the operations,
trademarks and other intellectual property rights, inventory and other assets
of DK's domestic and international fragrance, cosmetics, beauty, skin care
and toiletry business; and
WHEREAS, ELC desires to guaranty to DK the full and punctual performance
by XXX of all of ELI's obligations under the Agreements.
NOW, THEREFORE, in consideration of the premises, and to induce DK to
enter into and perform the Agreements, ELC hereby agrees as follows:
SECTION 1. Guaranty. ELC hereby unconditionally and irrevocably
guarantees the full and punctual performance, as and when due, by XXX of all
of ELI's agreements, commitments, covenants and obligations (including,
without limitation, agreements to indemnify) under and pursuant to the
Agreements (collectively, the "Obligations"). This Guaranty is an absolute
guaranty of payment and performance and not a guaranty of collection.
SECTION 2. Guaranty Absolute. ELC guarantees that the Obligations will
be paid and performed strictly in accordance with the terms of the
Agreements. The liability of ELC under this Guaranty shall be absolute and
unconditional irrespective of: (a) any change in the time, manner or place of
performance of, or in any other term of, or any increase in the amount of,
all or any of the Obligations, or any other amendment or waiver of any term
of, or any consent to departure from any requirement of, the Agreements; (b)
any action or omission to enforce the Obligations or the election of any
remedy by DK; (c) any waiver, consent, extension, forbearance or granting of
any indulgence by DK with respect to any provision of the Agreements; (d)
events of bankruptcy or insolvency with respect to XXX; or (e) any other
circumstance which might otherwise constitute a legal or equitable discharge
or defense of an obligor or a guarantor.
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SECTION 3. Waiver. ELC hereby (a) waives (i) promptness, diligence,
notice of acceptance and any and all other notices with respect to any of the
Obligations or this Guaranty, (ii) the filing of any claim with a court in
the event of receivership or bankruptcy of XXX, and (iii) protest or notice
with respect to nonperformance of all or any of the Obligations; and (b)
covenants and agrees that this Guaranty will not be discharged except by
complete performance of the Obligations.
SECTION 4. Representations and Warranties. ELC hereby represents and
warrants to DK as follows:
(a) ELC (i) is a corporation duly organized, validly existing and in
good standing under the laws of Delaware; and (ii) has all requisite
corporate power and authority to execute, deliver and perform this Guaranty.
(b) The execution, delivery and performance by ELC of this Guaranty (i)
have been duly authorized by all necessary corporate action; and (ii) do not
and will not (A) contravene its charter or by-laws, (B) violate any
applicable law, (C) conflict with or result in a material breach of, or
constitute a default under, or result in or permit the termination or
acceleration of, any material contractual obligation to which it is a party
or by which it or its assets are bound.
(c) This Guaranty has been duly executed and delivered by ELC and
constitutes the legal, valid and binding obligation of ELC, enforceable
against ELC in accordance with its terms.
SECTION 5. Amendments, Etc. No amendment or waiver of any provision of
this Guaranty nor consent to any departure by ELC herefrom shall in any event
be effective unless the same shall be specified in a writing executed by DK,
and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 6. Addresses for Notices. All notices and other communications
provided for hereunder shall be in writing and mailed, sent by reputable
next-day delivery service, telecopied, cabled or delivered by hand, if to
ELC, addressed to it at the address of specified on the signature page
hereof, and if to DK, addressed to it at the address specified in the
Agreements, or, as to each party, at such other address as shall be
designated by such party in a written notice to each other party complying as
to delivery with the terms of this Section. All such notices and other
communications shall, when mailed, telecopied, cabled or delivered, be
effective three days after deposit in the mails, one day after delivery to a
nationally recognized overnight delivery service, and when confirmed by
telecopy answerback confirmation of receipt or delivered to the cable company
or delivered by hand to the addressee.
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SECTION 7. No Waiver; Remedies.
(a) No failure on the part of DK to exercise, and no delay in
exercising, any right hereunder shall operate as a waiver thereof; nor shall
any single or partial exercise of any right hereunder preclude any other or
further exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies provided by
law or any of the Agreements.
(b) Failure by DK at any time or times hereafter to require strict
performance by ELC, XXX or any other entity or person of any of the
provisions, warranties, terms or conditions contained in any of the
Agreements shall not waive, affect or diminish any right of DK to demand
strict performance thereof, and such right shall not be deemed to have been
modified or waived by any course of conduct or knowledge of any of DK or any
agent, officer, employee of DK.
(c) No waiver by DK of any default shall operate as a waiver of any
other default or the same default on a future occasion, and no action by DK
permitted hereunder shall in way affect or impair any of the rights of DK or
the obligations of ELC and XXX under this Guaranty or under any of the
Agreements.
SECTION 8. Assignment; Successor and Assigns. ELC may not assign or
delegate performance of this Guaranty without the prior written consent of DK
and any purported assignment or delegation without such consent shall be void
and of no effect. This Guaranty is a continuing guaranty and shall be (i)
binding upon ELC, its successors and permitted assigns, and (ii) inure to the
benefit of and be enforceable by DK and its successors, transferees, and
assigns. Without limiting the generality of the foregoing clause (ii), DK
may assign or otherwise transfer this Guaranty or any Obligation owing to it
to any other person or entity, and such other person or entity shall
thereupon become vested with all the rights in respect thereof.
SECTION 9. Governing Law. This Guaranty shall be governed by, and
construed and interpreted in accordance with, the law of the State of New
York without giving effect to rules governing the conflict of laws. Wherever
possible, each provision of this Guaranty shall be interpreted in such manner
as to be effective and valid under applicable law, but if any provision of
this Guaranty shall be prohibited by or invalid under applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity and without invalidating the remaining provisions of this Guaranty.
SECTION 10. Submission to Jurisdiction; Jury Trial.
(a) Any legal action or proceeding with respect to this Guaranty or any
document related thereto may be brought in the courts of the State of New York
or the
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Xxxxxx Xxxxxx xx Xxxxxxx for the Southern District of New York, and, by
execution and delivery of this Guaranty, ELC hereby accepts for itself and in
respect of its property, generally and unconditionally, the jurisdiction of
the aforesaid courts.
(b) ELC hereby irrevocably waives any objection, including, without
limitation, any objection to the laying of venue or based on the grounds of
forum non conveniens, which it may now or hereafter have to the bringing of
any such action or proceeding in such respective jurisdictions and consents
to the granting of such legal or equitable relief as is deemed appropriate by
the court. ELC hereby irrevocably consents to the service of process of any
of the aforesaid courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to ELC at
its address provided herein, such service to become effective 30 days after
such mailing. Nothing contained in this Section 10 shall affect the right of
DK to serve process in any other manner permitted by law or commence legal
proceedings or otherwise proceed against ELC or any of ELC's property in any
other jurisdiction.
(c) ELC hereby waives any right it may have to trial by jury in respect
of any litigation based on, arising out of, under or in connection with this
Guaranty.
IN WITNESS WHEREOF, ELC has caused this Guaranty to be duly executed and
delivered by its undersigned duly authorized officer on the date first above
written.
THE XXXXX XXXXXX COMPANIES INC.
By:
----------------------------------
Name: Xxxx X. Xxxxxxxxxx
Title: President and Chief Operating
Officer
Address: 000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: General Counsel
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