HOUBIGANT, INC.
c/o X.X. Xxxxxxx & Assoc., Inc.
000 Xxxx 00xx Xxxxxx, Xxxxx 00X
Xxx Xxxx, Xxx Xxxx 00000
July __, 1996
Xxxx Perfumes Corp.
Houbigant (1995) Limitee
c/o Xxxx Perfumes Corp.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Houbigant, Inc., et al.
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Gentlemen:
Reference is made to those license agreements between Houbigant,
Inc., as grantor and (a) Xxxx Perfumes Corp. (f/k/a New Xxxx Acquisition Corp.)
as the successor-in-interest, by operation of law, of Parfums Parquet, Inc.
(together with its permitted successors or assigns and the permitted successors
or assigns thereof, "PPI"), as licensee under license agreement, (i) dated as of
May 2, 1994, as amended, (the "Initial License Agreement") and (ii) dated August
10, 1994, as amended, (the "Worldwide License Agreement") and (b) (1) Houbigant
(1995) Limitee ("Limitee", and together with PPI, the "Licensee"), as
successor-licensee under a license agreement dated as of April 1, 1993 by and
between Houbigant, Inc., as grantor and ACB Mercantile, Inc., as licensee,
assigned to Limitee on or about December 12, 1994 with the subsequent consent of
Houbigant, Inc., and as amended by that letter agreement dated October __, 1995
(the "Old License Agreement") or with (2) Limitee, as licensee under license
agreement dated _____________, 1996, as amended, with respect to the Canadian
territory, which agreement will replace the Old License Agreement (together with
the Old License Agreement hereinafter referred to as the "Canadian License" and
together with the Initial License Agreement and the Worldwide License Agreement
hereinafter referred to as the "License Agreements"). Capitalized terms used
herein and not otherwise defined herein shall have the respective meanings
ascribed to them in the License Agreements.
Each of the License Agreements provides for the payment by the
licensee thereunder of a minimum royalty as therein set forth. This will confirm
our agreement that notwithstanding the minimum royalty payment amounts
established in each of the License Agreements, we hereby agree as follows:
1. Commencing with the second (2nd) Contract Year (i.e., the twelve
(12)month period commenced July 1, 1995), the minimum royalty required to be
paid on account of all three (3) License Agreements shall be the sum of
US$2,650,000 in the aggregate (subject to
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adjustment on and after the commencement of the first (1st) and each successive
renewal period, whereby the minimal annual royalty in the upcoming period shall
be equal to the minimum annual royalty during the prior period increased by the
increase in the consumer price index (the "CPI") in the New York metropolitan
area during the immediately preceding five (5) year period (except as to the
first (1st) renewal which shall be based upon the CPI for the immediately
preceding six (6) years) (but none of the renewals to exceed three (3%) percent
per annum compounded) (the "Aggregate Minimum Royalty"). Accordingly, the
definition of "Minimum Royalty" in the Initial License Agreement shall be deemed
to read and be as follows: US$2,650,000, less the aggregate of any amount of
royalty or "Minimum Royalty" calculated under the Worldwide License Agreement
and the Canadian License; the definition of "Minimum Royalty" in the Worldwide
License Agreement shall be deemed to read and be as follows: US$2,650,000 less
the aggregate of any amounts of royalty or "Minimum Royalty" calculated under
the Initial License Agreement and the Canadian License; and the definition of
"Minimum Royalty" in the Canadian License shall be deemed to read and be as
follows: US$2,650,000, less the aggregate of any amounts of royalty or "Minimum
Royalty" calculated under the Initial License Agreement and the Worldwide
License Agreement. Notwithstanding the foregoing, in determining the Aggregate
Minimum Royalty payable hereunder in each contract year, the parties shall (i)
determine annually the amount by which all prior years' royalties on Net Sales
under the Initial License Agreement have exceeded the aggregate minimum
royalties due to date under the Initial License Agreement assuming, for purposes
of this determination, that the definition of Minimum Annual Royalty in the
Initial License Agreement had not been changed as provided above and (ii) allow
as a credit against the Aggregate Minimum Royalty payable in that contract year
the amount of any such excess.
2. To the extent that the sum of the Royalties calculated for any
Contract Year under any or all of the License Agreements exceeds the Aggregate
Minimum Royalty, the Licensee shall have no obligation to pay a Minimum Royalty
under any of the License Agreements for that year. For example, if Royalties
under the Initial License Agreement during the second (2nd) Contract Year amount
to $3,000,000, the Aggregate Minimum Royalty will be deemed to have been met and
no Minimum Royalty would be payable under any of the License Agreements.
Notwithstanding the foregoing, nothing contained herein shall be deemed to amend
or modify or otherwise affect (a) the independent obligations of the Licensee
under each of the License Agreements to timely pay all of the requisite
Royalties based upon percentages of Net Sales within the respective Territories
in accordance with the relevant terms and provisions of each of the License
Agreements or (b) any credits, offsets, or other entitlement to which the
Licensee or Limitee may be entitled.
3. In the event that any one (1) of the deferred License Agreements
are terminated or assigned to an unrelated third party other than the Licensee,
then this Agreement providing for the establishment and payment of the Aggregate
Minimum Royalty shall immediately terminate, and such of the License Agreements
as may be continuing in force and effect with the Licensee as licensee
thereunder shall automatically have restored and be subject to their original
and individual "Minimum Royalty" obligations as first stated in the respective
applicable License Agreements.
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4. The Aggregate Minimum Royalty, if due, shall be paid to
Houbigant, Inc. in the form and manner as required by the License Agreements for
the payment of Minimum Royalties.
5. The parties further agree that all royalty amounts payable under
all three of the License Agreements shall be included in determining when the
$7.6 million in royalties referred to in Section 9(1)(b) of the Initial License
Agreement has been paid. In addition when such $7.6 million in royalty payments
have been made under all three of the License Agreements, then the credit
provided to the Licensee under Section 9(1)(b) of the Initial License Agreement
in the sum of $5,000,000 representing a prepayment of royalties shall be applied
as a credit to all of the annual royalty payments in excess of $500,000 per year
otherwise becoming thereafter due under all three License Agreements (whether
based on net sales or minimum royalties); it being understood that in no event
will the Licensee pay to Houbigant less than $500,000 in each contract year when
such credit is being applied and to the extent the credit is not fully applied
as a result of the foregoing in any contract year, such credit shall be carried
forward for as long as may be necessary until the full $5,000,000 credit is
utilized by the Licensee.
6. The parties agree that so long as the Agreements are in effect,
any sale, shipment or transfer of Products (A) among or between the Licensee and
any affiliated company shall (i) be permitted under the above License Agreements
without regard to any limitations or the rights of the company making the
transfer, provided, however, that the foregoing shall not be deemed to grant any
additional rights to sell to unaffiliated companies (ii) not constitute a sale
or transfer under any of the License Agreements for royalty or any other purpose
and (B) by any Licensee under any of the License Agreements to any territory or
customer shall be permitted so long as sales to the territory or customer is
permitted to any Licensee under any of the License Agreements then in effect.
If the foregoing correctly sets forth our agreement, please so
indicate below.
Sincerely,
Houbigant, Inc.
By:/s/ Xxxxxxx Xxxxxxx
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Xxxxxxx Xxxxxxx
Chief Executive Officer
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Agreed:
Xxxx Perfumes Corp., for itself and as successor to Parfums Parquet, Inc. for
itself and as successor to New Fragrance License Corp.
By:/s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
Vice President
Houbigant (1995) Limitee
By: /s/ Xxxx X. Xxxxxxx
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Xxxx X. Xxxxxxx
Vice President
Consented to:
THE CHASE MANHATTAN BANK, formerly known as Chemical Bank, as
successor-in-interest to Chemical Bank of New Jersey, N.A., individually and as
Collateral Agent for Itself and Fleet Bank, national association
By: /s/ Xxxxxx Xxxx
---------------
Xxxxxx Xxxx
Vice President
Fleet Bank, national association as
successor-in-interest to NatWest Bank, N.A.
(f/k/a National Westminster Bank USA)
By: /s/ Xxxxxxx Xxxxx
Xxxxxxx Xxxxx
Vice President
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