EXHIBIT 10
MANUFACTURING & SALE AGREEMENT, dated as of August 20, 2002
BY AND BETWEEN: MAYOR'S JEWELERS, INC., a company
incorporated under the laws of Delaware and
having its head office at 00000 Xxxxxxxxx
00xx Xxxxxx Xxxxxxx, XX 00000 (hereinafter
referred to as "Mayor's")
AND: XXXXX XXXXX & SONS INC., a company
incorporated under the laws of Canada and
having its head office at 1240 Xxxxxxxx
Square, Montreal, (Quebec) (hereinafter
referred to as "Birks")
THIS AGREEMENT WITNESSETH THAT,
WHEREAS, Mayor's is engaged in the retail jewelry business at various locations
in the United States; and
WHEREAS, Birks possesses certain expertise and authority in manufacturing and
purchasing jewelry and related goods;
WHEREAS, Mayor's wishes to purchase certain jewelry and related goods from
Birks; and
WHEREAS, Mayor's and Birks wish to benefit from their combined buying power;
NOW THEREFORE, in consideration of the mutual covenants and premises herein
contained, it is agreed by and between the Parties as follows:
ARTICLE ONE
INTERPRETATION
1.1. DEFINITIONS. For the purposes hereof, the following words and phrases
shall have the following meanings, respectively, unless otherwise
specified by the context:
(a) "Agreement" shall mean this Manufacturing and Sale Agreement
and all instruments supplemental hereto or any amendment or
confirmation hereof; "herein", "hereof", "hereto" and
"hereunder" and similar expressions mean and refer to this
Agreement and not to any particular Article, Section,
Subsection or other subdivision.
(b) "Independent Committee" shall mean a committee composed of two
or more independent members of the Board of Directors of
Mayor's.
(c) "COO" shall mean the person then designated by the Board of
Directors of Mayor's as the Chief Operating Officer of
Mayor's.
(d) "Event of Default" shall have the meaning ascribed thereto in
Section 4.2.
(e) "fiscal year" shall mean a fiscal year of Mayor's.
(f) "Parties" shall mean Mayor's and Birks and "Party" shall mean
any one of them.
1.2 HEADINGS. The division of this Agreement into Articles, Sections,
Subsections and other subdivisions and the insertion of headings are
for convenience or reference only and shall not affect or be utilized
in the construction or interpretation hereof.
1.3 SEVERABILITY. Any Article, Section, Subsection or other subdivision of
this Agreement or any other provision of this Agreement which is, or
becomes, illegal, invalid or unenforceable shall be severed herefrom
and shall be ineffective to the extent of such illegality, invalidity
or unenforceability and shall not affect or impair the remaining
provisions hereof, which provisions shall be severed from any illegal,
invalid or unenforceable Article, Section, Subsection or other
subdivision of this Agreement or any other provisions of this
Agreement.
1.4 ENTIRE AGREEMENT. This Agreement, together with any documents to be
delivered pursuant hereto or thereto, constitute the entire agreement
between the Parties pertaining to the subject matter hereof and
supersede all prior agreements, understandings, negotiations and
discussions, whether oral or written, of the Parties.
1.5 WAIVER. No waiver of any of the provisions of this Agreement shall be
deemed to constitute a waiver of any other provisions (whether similar
or not) nor shall such waiver constitute a continuing waiver unless
otherwise expressly provided in writing and duly executed by the Party
to be bound thereby.
1.6 GOVERNING LAW. This Agreement shall be governed, interpreted and
construed in accordance with the Laws of the State of Delaware
applicable therein.
1.7 CURRENCY. Unless otherwise indicated, all dollar amounts in this
Agreement are expressed in United States dollars.
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ARTICLE TWO
MANUFACTURING
2.1 MANUFACTURED PRODUCTS. From time to time and upon Mayor's request,
Birks shall agree to manufacture and Mayor's shall agree to purchase
from Birks, diamond, precious, semi-precious, gold and silver jewelry
("Manufactured Products"), the quantity, specification and delivery of
which shall be mutually agreed upon between the two Parties.
2.2 PRICE. The price of Manufactured Products shall be calculated in
accordance with industry practices generally prevailing at the time and
consideration shall be given to the following, without limitation: (a)
the cost associated with production and transportation of the
Manufactured Products, including but not limited to, the cost of (i)
precious metals, stones and other materials, (ii) labor, (iii) overhead
(iv) shipping, (v) duties, (vi) taxes, (vii) brokerage fees and (b) a
reasonable factory margin. Birks hereby represents and warrants that
the price of Manufactured Products shall be competitive with the market
generally prevailing at the time of the transaction.
ARTICLE THREE
SALES OF THIRD-PARTY PRODUCTS
3.1 PRODUCTS. From time to time and upon Mayor's request, Birks shall agree
to sell to Mayor's and Mayor's shall agree to purchase from Birks,
diamond, precious, semi-precious, gold and silver jewelry, loose
gemstone and other products, which Birks has purchased from a
third-party vendor ("Third-Party Products"), the quantity,
specification and delivery of which shall be mutually agreed upon
between the two Parties. In addition to the foregoing, as long as
Birks' prices remain competitive relative to market and Birks is able
fulfill Mayor's requirements in terms of quality, standards, cut and
specifications, as applicable, Mayor's hereby agrees that during the
pendency of this Agreement, Birks shall have the first right to supply
Mayor's with all of its Third-Party Product requirements.
3.2 PRICE. Birks hereby represents and warrants that the price of the
Third-Party Products shall be competitive with the market generally
prevailing at the time of the transaction given the quantity and
quality of the merchandise sold, shall be fair and in any event no
greater than the price Birks paid to a third party vendor.
ARTICLE FOUR
TERM; PAYMENT; REMEDIES
4.1 TERM. This Agreement will become effective on the date first mentioned
above and will remain in effect for an initial period of one year from
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that date. The Agreement shall automatically renew for additional
one-year terms unless otherwise terminated.
4.2 TERMINATION. Birks or the Independent Committee shall have the right to
terminate this Agreement upon the occurrence of an Event of Default if
such default is not cured in 10 business days. Birks or the Independent
Committee may terminate this Agreement upon 90 days notice to the other
Party prior to the end of a term.
4.3 PAYMENT. Birks will invoice Mayor's for amounts payable for goods sold
to Mayor's pursuant to Sections 2 and Section 3. Payment shall be due
and payable by Mayor's within 60 days of receipt of each invoice.
4.4 EVENT OF DEFAULT. An "Event of Default" will mean any of the following:
(a) The failure by any Party to perform or fulfill any obligation
pursuant to the Agreement;
(b) The bankruptcy of any Party or the making by such Party of an
assignment for the benefit of creditors, or the appointment of
a trustee or receiver and manager or liquidator to such Party
for all or a substantial part of its property, or the
commencement of bankruptcy, reorganization, arrangement,
insolvency or similar proceedings by or against such Party
under the laws of any jurisdiction, except where such
proceedings are defended in good faith by such Party.
4.5 REMEDIES. If any Event of Default shall have occurred to any Party,
then the other Party may exercise the remedies permitted by the law and
the Agreement may immediately terminate and all amounts shall become
due and payable.
4.6 DEFAULT INTEREST. If any Party fails to pay as and when due and payable
any amount hereunder, then such Party shall pay interest on such amount
from the due date up to and including the date when such amount and all
interests thereon are paid in full at the rate per annum equal to 18%
(1.5% per month). Such interest shall be payable on demand.
ARTICLE FIVE
GENERAL
5.1 REVIEW. For each fiscal year under this Agreement, the COO shall
present a proposed purchase plan to the Independent Committee setting
forth (i) a schedule of the goods to be purchased from Birks for that
fiscal year and (ii) the cost of such goods (a "Purchase Plan"). For
the current fiscal year, the COO shall present a Purchase Plan to the
Independent Committee within 60 days following execution of this
Agreement. For each subsequent fiscal year under this Agreement, the
COO shall present a Purchase Plan to the Independent Committee by the
end of the first quarter of the fiscal year to which such Project
Schedule applies. In each fiscal year, the Independent Committee shall
review the Purchase Plan and approve the Purchase Plan either (i) as
proposed by the COO or (ii) as modified by the Independent Committee in
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consultation with the COO. Once approved by the Independent Committee,
a Purchase Plan may be amended by the COO, in his discretion, to
reflect changes in events, circumstances or the requirements of
Mayor's; provided that, any material amendment shall be approved by the
Independent Committee. By the end of the first quarter of each fiscal
year under this Agreement, the COO shall present a report to the
Independent Committee, detailing (i) the goods by product category
purchased from Birks in the preceding fiscal year (ii) the cost of such
goods (iii) the year end inventory of such goods and (iv) the standard
xxxx-up on sales of such goods. Notwithstanding anything to the
contrary herein contained, at any time during the pendency of this
Agreement the Independent Committee shall have authority to
investigate, audit, review or otherwise examine any goods purchased or
to be purchased hereunder from Birks, including without limitation, the
cost of such goods, the quality of such goods, the rate of return,
comparable goods, third-party vendors of Birks and other matters deemed
important by the Independent Committee. The Independent Committee shall
consult with and advise the COO of Mayor's as the Independent Committee
deems appropriate.
5.2 CONTROL PROCEDURES. The Parties hereby agree that the procedures under
this Agreement with respect to quality control, customer returned
goods, damaged goods, delivery and seasonality will be consistent with
customary industry practices then prevailing.
5.3 NOTIFICATION. Each Party shall forthwith notify the other Party of any
circumstances or facts that materially and adversely affect or could
reasonably be expected to materially and adversely affect such Party's
performance of its obligations hereunder.
5.4 NOTICES. Any notice, consent, approval, direction or other instrument
required or permitted to be given hereunder shall be in writing and
given by delivery or sent by telex, telecopier or similar
telecommunication device and addressed:
(a) in the case of Mayor's:
Mayor's Jewelers, Inc.
00000 Xxxxxxxxx 00xx
Xxxxxx Xxxxxxx, XX 00000
Attention: Chief Operating Officer
(b) in the case of Birks:
Xxxxx Xxxxx & Sons Inc.
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxx
X0X 0X0, Xxxxxx
Attention: Chief Financial Officer
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Any notice, consent, approval, direction or other instrument given as
aforesaid shall be deemed to have been effectively given and received,
if sent by telex, telecopier or similar telecommunications device on
the next business day following such transmission or, if delivered, to
have been given and received on the date of such delivery. Any Party
may change its address for service by written notice given as
aforesaid.
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IN WITNESS WHEREOF, the Parties have executed this Agreement on the date and at
the place first above mentioned.
MAYOR'S JEWELERS, INC.
By: /s/ Xxxx Xxxxxxxxx
-----------------------------------------
Name: Xxxx Xxxxxxxxx
Title: Chief Operating Officer and
Senior Vice President
XXXXX XXXXX & SONS INC.
By: /s/ Xxxxxx X. Xxxxxxxxxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxxxxxxxxx
Title: President and
Chief Executive Officer
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