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Exhibit 10.2
CONFIDENTIAL DRAFT
JOINT VENTURE AND SHAREHOLDERS AGREEMENT
JOINT VENTURE AND SHAREHOLDERS AGREEMENT, (this "Agreement") dated
August __, 1995, by and among DAVIDS BRIDAL CORPORATION, a Pennsylvania
corporation ("Bridal") with its principal place of business at ▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇., ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ of America, ADDWOOD LIMITED, a
Hong Kong corporation ("Addwood") with its principal place of business at Room
▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ Tau Wai Road, Hunghom,
Kowloon, Hong Kong, FILLBERG LIMITED, a Hong Kong corporation (the "Company")
with its principal place of business at Room ▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇ Tau Wai Road, Hunghom, Kowloon, Hong Kong, and ▇▇▇▇▇▇▇▇▇ (MOTY)
KAFRY (a.k.a. "Big ▇▇▇▇▇▇▇"), the 55% indirect shareholder of Addwood ("Kafry").
W I T N E S S E T H:
WHEREAS, Addwood is experienced in providing specialized support
services to importers of wearing apparel;
WHEREAS, Bridal and Addwood desire to enter into a joint venture
through the investment by Bridal and Addwood in the Company, in which Bridal and
Addwood shall be the only member shareholders;
WHEREAS, the parties hereto desire to manage the Company for the
purpose of acting as Bridal's exclusive agent for the purchase of ready-made
bridal garments, including, but not limited to, men's, women's and children's
bridal-related clothing, excluding so-called "807" products and products
purchased by Bridal in North America regardless of the product's country of
origin where the purchase is made by domestic letter of credit (the
"Merchandise"), to be imported into the United States of America from any
country outside North America (the "Agency Territory"), and for which Bridal
shall be the exclusive client in all countries located in continental North
America and South America and any country in which Bridal has or will have a
wholesale or retail location (the "Retail Territory"); and
WHEREAS, the parties hereto desire to enter into this Agreement in
order to set forth the manner in which they will cause the Company to be managed
and to define their
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respective rights and obligations concerning the conduct of this business and
their shareholdings therein.
NOW THEREFORE, in consideration of the premises and the respective
mutual covenants and agreements set forth herein, the parties hereto agree as
follows:
ARTICLE
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DEFINITIONS
SECTION 1.1 Certain Terms. The following terms when used herein shall
have the meanings set forth herein:
Term Section Defined
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Addwood Introduction
Addwood Directors 4.1
Addwood Group 5.3
Addwood Initial Ownership 3.1
Addwood Shares 3.1
Agency Agreement 2.2
Agency Territory Background
Agreement Introduction
Articles 2.1
Bridal Introduction
Bridal Directors 4.1
Bridal Initial Ownership 3.1
Bridal Shares 3.1
Common Stock 3.1
Company Background
Confidential Information 7.1
Damages 12.1
Default Notice 8.3
Default Party 8.3
Effective Date 8.1
Effective Time 3.1
Fillberg Limited 2.1
Merchandise Background
Non-Default Party 8.3
Permitted Sale Territory 5.3
Retail Territory Background
share 15.1
ARTICLE 2
AGREEMENTS WITH THE COMPANY
SECTION 2.1 Amendment of Articles of Association. Addwood has
previously organized the Company as a limited liability corporation under the
laws of Hong Kong. As soon as practicable after execution and delivery of this
Agreement by the parties hereto, the Company and the parties hereto shall take
all appropriate actions to adopt any amendments to the Articles of Association
that are necessary or appropriate to make them conform to the terms of this
Agreement. The Articles of Association are attached as Exhibit A hereto (the
"Articles").
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SECTION 2.2 Buying Agency Agreement. Except as expressly qualified or
limited hereby, the buying agency relationship between Bridal and the Company
shall be governed by that certain Buying Agency Agreement, dated July __, 1995,
by and between Bridal and the Company, as amended, attached as Exhibit B hereto
(the "Agency Agreement").
ARTICLE 3
CAPITALIZATION OF THE COMPANY
SECTION 3.1 Capitalization. Under the Articles, the authorized capital
of the Company is HK$10,000, represented by 10,000 shares of Company common
stock, par value HK$1.00 per share (the "Common Stock"). Under the Articles the
Company has two members, Addwood and ▇▇▇▇▇▇▇ ▇▇ (holding for the benefit of
Bridal), each of which own one share of Common Stock. Immediately upon execution
and delivery of this Agreement, and in accordance with Hong Kong law, the share
of Common Stock held by ▇▇▇▇▇▇▇ ▇▇ shall be transferred to Bridal, and Bridal
and Addwood shall be the only members of the Company, registered in accordance
with Hong Kong law. Bridal and Addwood have each previously contributed
US$170,000 to the Company. Of the US$170,000 previously contributed by each of
Bridal and Addwood, HK$1.00 shall represent payment of the par value of the
Bridal Share and the Addwood Share, respectively, and US$169,999.87 (or such
amount that would represent the value of US$170,000 less HK$1.00, as measured in
U.S. Dollars on the date of this Agreement) shall represent a shareholder loan
to the Company by each of Bridal and Addwood, respectively.
SECTION 3.2 Issuance of Additional Shares. The Company shall not issue
any shares other than the Bridal Shares or the Addwood Shares without the
unanimous consent of the Board of Directors of the Company.
ARTICLE 4
BOARD OF DIRECTORS AND MANAGEMENT
SECTION 4.1 Initial Directors. All powers vested by law in the Company
shall be exercised by, and the Company's affairs shall be managed under the
direction of, the Board of Directors. After the Effective Time, the Board of
Directors shall consist of four directors, two of which shall be appointed by
Bridal (the "Bridal Directors") and two of which shall be appointed by Addwood
(the "Addwood Directors"). In the event that a vacancy shall develop in the
Board of Directors by virtue of death, resignation or other removal of a
director prior to the end of his term, if such director is a Bridal Director,
Bridal shall have the right to appoint a new director and the remaining Bridal
Director shall be deemed to have the proxy of such deceased, resigned or removed
director on all matters on which the Board of Directors votes until the time of
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appointment of such new director, and if such director is an Addwood Director,
Addwood shall have the right to appoint a new director and the remaining Addwood
Director shall be deemed to have the proxy of such deceased, resigned or removed
director on all matters on which the Board of Directors votes until the time of
appointment of such new director.
SECTION 4.2 Management. The day to day operation of the business of the
Company shall be undertaken by officers designated by Addwood, acceptable to
Bridal and appointed by the Board of Directors. Such officers shall be subject
to the terms of this Agreement and such guidelines as the Board of Directors may
establish from time to time. The initial General Manager of the Company shall be
▇▇▇▇▇ ▇▇▇.
SECTION 4.3 Financial Statements. The Company shall prepare and send by
the 15th day of each month a business report in a prescribed form containing
monthly financial statements, including an income statement, balance sheet and
statement of cash flows, and by the 30th day after each quarter, a quarterly
summation of business operations and financial condition. In addition, the
Company shall prepare and send annual audited financial statements within 60
days after the end of its fiscal year. Management shall also prepare and send to
each of Bridal and Addwood within 90 days prior to the beginning of each fiscal
year, financial projections and a business plan for the subsequent year. All
financial statements relating to the Company shall be prepared in accordance
with Hong Kong generally accepted accounting principles; provided, that if
requested by Bridal, from time to time, the Company shall prepare in a timely
manner financial statements in accordance with United States generally accepted
accounting principles for Bridal's review.
SECTION 4.4 Board Meetings. Except as otherwise required by law, the
Board of Directors shall meet quarterly by conference telephone with one
in-person annual Board of Directors meeting to take place at such location,
within or outside Hong Kong, as the Board of Directors shall determine.
ARTICLE 5
BUSINESS ACTIVITIES
SECTION 5.1 Exclusive Relationship; Agency Agreement. As previously
described in the recitals hereto, the essential business purpose of the Company
will be to act as the exclusive agent of Bridal for the purchase of Merchandise
to be imported into the United States of America from the Agency Territory. In
addition, Bridal shall be the exclusive client of the Company in the Retail
Territory. The duties and responsibilities of Bridal and the Company shall be as
set forth in the Agency Agreement except as expressly modified by this
Agreement.
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In addition to the duties and obligations set forth in the Agency Agreement, the
following shall apply to the relationship between Bridal and the Company:
5.1.1 Bridal will advise the Company from time to time of
its requirements for Merchandise, including quantities, types, delivery dates,
specifications, terms of purchase and general price parameters. The Company will
negotiate the purchase of Merchandise with suppliers in the Agency Territory
only within the requirements specified by Bridal. The Company shall not place
any final order on behalf of Bridal, it being understood that all actual
purchase orders for Merchandise will be entered into in writing directly by
Bridal and the manufacturer or supplier.
5.1.2 The Company shall inspect the Merchandise prior to
shipment in accordance with a mutually agreed A.Q.L. system conforming to
general industry practice. The amount of Merchandise to be inspected shall be
such amount as may be specified from time to time by Bridal with respect to any
particular manufacturer or supplier. The Company shall complete in all material
respects an inspection report in respect of each shipment of Merchandise. If the
inspection of the Company discloses errors in excess of Bridal's standards, the
Company shall not issue any Certificate of Inspection nor otherwise authorize
release of the shipment. The Company shall promptly advise Bridal of such event
and will assist Bridal, at Bridal's direction, in the handling of such defective
Merchandise claims with the manufacturer or supplier.
5.1.3 With respect to any shipment of Merchandise
determined by the Company to meet the quality and error standards established by
Bridal and which otherwise conform to the terms and specifications of Bridal's
purchase order, the Company shall issue a Certificate of Inspection to the
manufacturer or supplier, on behalf of Bridal, and shall promptly transmit a
copy thereof to Bridal upon Bridal's request. It is understood and agreed that,
in respect of defective Merchandise delivered to Bridal in violation of the
terms of Section 5.1.2 hereof, Bridal shall have the right to set-off against
commissions otherwise due to the Company under the Agency Agreement any damages
suffered by Bridal for which it remains uncompensated by the manufacturer or
supplier. It is further understood that any letter of credit opened by Bridal in
favor of a manufacturer or supplier shall require the supplier to submit the
Certificate of Inspection of Agent for any drawdown of funds under such letter
of credit.
5.1.4 The Company shall track all purchase orders, make
sure that deliveries meet the quality and delivery time standards set forth on
the purchase orders and coordinate the logistics relating to delivery of
Merchandise to Bridal in accordance with Bridal's directives.
SECTION 5.2 Commissions. The remuneration of the Company shall be as
set forth in the Agency Agreement except as follows:
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5.2.1 Commissions payable to the Company shall be adjusted
for any returns, refunds, adjustments or credits which Bridal arranges with the
manufacturer or supplier; provided, that Bridal receives prior approval for such
arrangements from the Company. If such adjustments occur after the payment of
the related commission to the Company, adjustments shall be made to the
commission next due to the Company, or if no further commissions will be due to
the Company, the differential shall be paid by the Company to Bridal within 15
days after notice by Bridal of such adjustment.
5.2.2 All commissions payable to the Company shall be paid
in U.S. Dollars.
SECTION 5.3 Retail Sales; Competition with Bridal. The Company shall
not, nor shall Addwood, any of its members, shareholders, partners,
subsidiaries, parents, affiliates, directors, officers or employees
(collectively, the "Addwood Group"), directly or indirectly, engage in the
retail sale of Merchandise without the express written consent of Bridal. The
foregoing notwithstanding, Bridal hereby consents to the retail or wholesale
sale or rental of Merchandise by the Company, Addwood or an affiliate of either
in Asia, Africa or the Middle East (the "Permitted Sale Territory"); provided,
that (i) Bridal is provided with a business plan prior to commencing operations,
(ii) Bridal is given the opportunity to invest pari passu with Addwood and
members of the Addwood Group, (iii) the Company is the exclusive buying agent
for such venture and (iv) the Company maintains quality and operating standards
no less than those used by Bridal. In the event the Company is currently
selling, wholesale or retail, Merchandise in any territory other than in the
Permitted Sale Territory and Bridal opens a retail location in such territory,
the Company shall promptly wind up its business operations (which shall in no
event take more than 90 days) in such territory and, at Bridal's option,
exclusively supply Bridal in such territory.
SECTION 5.4 Financial Restrictions. The Company shall not (i) engage in
any risky financial investments, (ii) use hedging, derivative or other risky
financial techniques or (iii) borrow money for operations or capital
requirements, unless unanimously approved by the Board of Directors.
ARTICLE 6
RECORDS AND ACCOUNTING
SECTION 6.1 True and Accurate Records. The Company shall maintain true
and accurate business and accounting records of all of its operations in
accordance with Hong Kong generally accepted accounting principles and
practices. Bridal and Addwood, or their respective representatives, shall have
the right, at any time, to inspect, copy or audit all the business records and
accounts of the Company, and Bridal shall have the right to request financial
statements
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prepared in accordance with United States generally accepted accounting
principles as set forth in Section 4.3 hereof.
SECTION 6.2 Fiscal Year. The fiscal year of the Company shall be the
calendar year. The Company shall timely perform an annual audit to be certified
by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co. or other accounting firm selected by David's Bridal.
The audit, including an audited annual balance sheet, income statement and
statement of cash flows along with the notes thereto shall be furnished to each
of its shareholders within 60 days of the close of each fiscal year or sooner if
required by applicable law. Expense for such annual audit shall be borne by the
Company.
ARTICLE 7
CONFIDENTIALITY
SECTION 7.1 Confidential Information. The parties hereto shall keep
confidential (i) the terms and existence of this Agreement and the Agency
Agreement, (ii) the transactions contemplated by and Merchandise covered in this
Agreement and the Agency Agreement and (iii) any confidential and proprietary
information related to each others businesses and affairs (the "Confidential
Information"), so long as such Confidential Information is not otherwise
publicly known; provided that nothing contained herein shall prevent the
disclosure by any party hereto of information which is known to the recipient at
the time of disclosure and which was lawfully obtained by the recipient from a
third-party without breach of any obligation of non-disclosure or for which
disclosure by such party is required or appropriate under applicable securities
or other laws. Each of the parties hereto shall obtain, and shall cause the
Company to obtain, from its respective directors, officers, employees and
agents, such non-disclosure agreements as are necessary and proper to implement
the provisions of this Section 7.1.
SECTION 7.2 Styles and Models. Without limiting the generality of the
foregoing, the parties hereto acknowledge that all styles and models originally
designed by Bridal are confidential and proprietary to Bridal, and, without
Bridal's prior consent, they may not be displayed, offered or copied for any
clients whatsoever of the Company or Addwood or the Addwood Group who sell or
distribute into, either directly or indirectly, or who have any interest in any
entity who sells or distributes into, either directly or indirectly, any
territory in which Bridal is then selling or has operations.
SECTION 7.3 Survival. The provisions of Section 7.1 shall survive the
termination of this Agreement.
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ARTICLE 8
TERM AND TERMINATION
SECTION 8.1 Effective Date. This Agreement shall come into force on the
date first written above (the "Effective Date") and shall continue in effect
until terminated in accordance with the provisions hereof. Notwithstanding the
foregoing, this Agreement shall automatically terminate on the date when there
is only one party continuing to hold shares in the Company.
SECTION 8.2 Bankruptcy. This Agreement shall automatically terminate
upon the voluntary or involuntary bankruptcy, reorganization, debt arrangement
or other collective proceeding for the protection of creditors under any
bankruptcy or insolvency law, or the commencement of any dissolution or
liquidation proceeding of Bridal or Addwood.
SECTION 8.3 Termination Due to Change of Law. Upon any material change
in the applicable laws of Hong Kong, Bridal and Addwood shall negotiate in good
faith to find a new domicile for the Company.
SECTION 8.4 Termination by Bridal. Bridal shall have the right to
terminate this Agreement as follows:
8.4.1 Upon a default by any of Addwood, Restal or Kafry
(collectively, the "Addwood Default Group") in the performance of any material
obligation to be performed by such party under this Agreement or the Agency
Agreement (an "Addwood Default"), Bridal shall give written notice to the
Addwood Default Group specifying the thing or matter in default. The Addwood
Default Group shall have 30 days in which to either cure such Addwood Default or
dispute the existence of such default. Failure to cure or respond in such 30 day
period shall constitute admission of an Addwood Default. If the Addwood Default
Group disputes the existence of an Addwood Default in accordance with this
Section 8.4, such dispute shall be resolved in accordance with Section 13.1
hereof.
8.4.2 Bridal may at any time give six months written notice
to Addwood of its desire to terminate this Agreement; provided that,
notwithstanding anything contained herein to the contrary, during such six month
period Bridal and Addwood shall be permitted to enter into nonbinding
negotiations with third-parties for the supply and/or distribution of
Merchandise without such actions constituting a default under this Agreement or
the Agency Agreement.
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SECTION 8.5 Termination by Addwood. Addwood shall have the right to
terminate this Agreement upon default by Bridal in the performance of any
material obligation to be performed by Bridal under this Agreement or the Agency
Agreement (a "Bridal Default"), by giving written notice to Bridal specifying
the thing or matter in default. Bridal shall have 30 days in which to either
cure such Bridal Default or dispute the existence of such default. Failure to
cure or respond in such 30 day period shall constitute admission of a Bridal
Default. If Bridal disputes the existence of a Bridal Default in accordance with
this Section 8.5, such dispute shall be resolved in accordance with Section 13.1
hereof. Addwood may not voluntarily withdraw from the Company or terminate this
Agreement or the Agency Agreement.
SECTION 8.6 Termination by Fillberg. This Agreement may be terminated
at any time by the unanimous consent of the Board of Directors.
SECTION 8.7 Request for Information. At any time during the term of
this Agreement or upon termination hereof, the Company shall furnish Bridal with
all books and records relating to the business between the Company and Bridal as
well as all information reasonably requested by Bridal that relates to
manufacturers and suppliers of Merchandise currently or previously engaged by
the Company under the terms of this Agreement.
SECTION 8.8 Effect of Termination. A termination of this Agreement
pursuant to this Article 8 (a "Termination") shall, unless otherwise agreed by
Bridal and Addwood, cause a termination of the Agency Agreement and upon such
Termination, the parties hereto shall use their best efforts to dissolve or
terminate the existence of the Company in accordance with applicable law and the
procedures therefor established by the Board of Directors in a prompt and timely
manner.
ARTICLE 9
LOYALTY TO COMPANY AND NONCOMPETE
SECTION 9.1 Duty of Loyalty. The parties hereto agree that the Company
shall at all times be conducted as an independent enterprise for the profit of
all shareholders. Each Principal Shareholder represents and warrants to Bridal
that he has no relationship with any manufacturer or distributor of Merchandise.
Neither Addwood nor any person in the Addwood Group shall invest in any activity
related in any way to the activities of the Company as described herein without
first offering such investment opportunity to the Company or offering Bridal a
fifty percent participation in such investment opportunity. Bridal shall not
invest in any activity in the Permitted Sale Territory related in any way to the
activities of the Company as described herein without first offering such
investment opportunity to the Company or offering Addwood a fifty percent
participation in such investment opportunity.
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SECTION 9.2 Non-Competition.
9.2.1 Bridal hereby covenants that during the term of this
Agreement and for a three-year period thereafter (unless this Agreement is
terminated pursuant to Section 8.2 because of the bankruptcy of Addwood,
pursuant to Section 8.4, or because of the withdrawal of Addwood in violation of
Section 8.5), that it will not, directly or indirectly, own, manage, operate,
join, control, finance or participate in the ownership, management, operation,
control or financing of, or be connected as a partner, principal, agent,
representative, consultant or otherwise with or use or permit its name to be
used in connection with, any business or enterprise engaged, directly or
indirectly, within any part of the world in any business or enterprise,
wholesale or retail, competitive with the Company, except as permitted by this
Agreement.
9.2.2 Addwood hereby covenants that during the term of this
Agreement and for a three-year period thereafter (unless this Agreement is
terminated pursuant to Section 8.2 because of the bankruptcy of Bridal, pursuant
to Section 8.5 if such termination is not caused by the withdrawal of Addwood,
or because of a termination by Bridal pursuant to Section 8.4.2), that it will
not, directly or indirectly, own, manage, operate, join, control, finance or
participate in the ownership, management, operation, control or financing of, or
be connected as a partner, principal, agent, representative, consultant or
otherwise with or use or permit its name to be used in connection with, any
business or enterprise, wholesale or retail, competitive with the Company.
9.2.3 Each of Restal and Kafry individually covenants that
for so long as such party is a shareholder, directly or indirectly, in Addwood
and Addwood is a party to this Agreement, and for a three-year period after
either of the foregoing ceases to be true (unless this Agreement is terminated
pursuant to Section 8.2 because of the bankruptcy of Bridal, pursuant to Section
8.5, or because of a termination by Bridal pursuant to Section 8.4.2), it will
not, directly or indirectly, own, manage, operate, join, control, finance or
participate in the ownership, management, operation, control or financing of, or
be connected as an officer, director, employee, partner, principal, agent,
representative, or consultant with, any business or enterprise, wholesale or
retail, competitive with the Company, other than its interests in Addwood.
9.2.4 Each party hereto further covenants that during the
term of this Agreement and for a one-year period thereafter, such party shall
not, either directly or indirectly, solicit the employment of any person who is
employed by the Company on a full or part-time basis.
9.2.5 It is recognized by the parties that the business is
expected to be conducted throughout the world and that more narrow geographical
limitations of any nature
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on the non-competition covenant set forth in this Section 9.2 are therefore not
appropriate. Each party hereto acknowledges that the restrictions contained in
this Section 9.2 are reasonable and necessary to protect the legitimate
interests of the Company and its shareholders, and that any violation of any
provision of those sections will result in irreparable injury to the Company
and/or one or more of its shareholders. In the event that any of the provisions
of this Section 9.2 should ever be adjudicated to exceed the time, geographic,
product or service, or other limitations permitted by applicable law in any
jurisdiction, then such provisions shall be deemed reformed in such jurisdiction
to the maximum time, geographic, product or service, or other limitations
permitted by applicable law.
ARTICLE 10
REPRESENTATION AND WARRANTIES
SECTION 10.1 Representations and Warranties of the Company, Addwood,
Restal and Kafry. The Company, Addwood, Restal and Kafry hereby, jointly and
severally, represent and warrant to the Company as follows:
10.1.1 The Company, Addwood and Restal are duly organized,
validly existing and in good standing under the laws of their respective
jurisdictions, each has all requisite corporate power and authority to execute
and deliver this Agreement and to consummate the transactions contemplated
hereby, and all necessary action, corporate or otherwise, required to have been
taken by or on behalf of them by applicable law, their respective charters (the
"Charters") or otherwise to authorize (i) the approval, execution and delivery
of this Agreement and (ii) the performance of their respective obligations under
this Agreement and the consummation of the transactions contemplated hereby has
been taken. This Agreement constitutes the valid and binding agreement of the
Company, Addwood, Restal and Kafry, enforceable against them in accordance with
its terms.
10.1.2 The execution and delivery of this Agreement do not,
and the consummation of the transactions contemplated hereby will not, (i)
violate or conflict with the Charters (ii) constitute a breach or default (or an
event that with notice or lapse of time or both would become a breach or
default) or give rise to any lien, third party right of termination,
cancellation, material modification or acceleration under any material
agreement, understanding or undertaking to which the Company, Addwood, Restal or
Kafry is a party or by which it or he is bound, except where such breach,
default, lien, third party right, cancellation, modification or acceleration
would not have a material adverse effect on him or it and its subsidiaries
ability to perform under this Agreement, or (iii) constitute a violation of any
law, rule or regulation to which the Company, Addwood, Restal or Kafry is
subject.
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10.1.3 Kafry has the sole economic and voting interest in
Restal Corporation, and Restal Corporation has a 55% economic and voting
interest in Addwood.
SECTION 10.2 Representation and Warranties of Bridal. Bridal hereby
represents and warrants to the Company as follows:
10.2.1 It is a corporation duly organized, validly existing
and in good standing under the laws of the Commonwealth of Pennsylvania. It has
all requisite corporate power and authority to execute and deliver this
Agreement and to consummate the transactions contemplated hereby. All necessary
action, corporate or otherwise, required to have been taken by or on behalf of
it by applicable law, its Articles of Incorporation, Bylaws or otherwise to
authorize (i) the approval, execution and delivery on its behalf of this
Agreement and (ii) its performance of its obligations under this Agreement and
the consummation of the transactions contemplated hereby has been taken. This
Agreement constitutes its valid and binding agreement, enforceable against it in
accordance with its terms.
10.2.2 The execution and delivery of this Agreement do not,
and the consummation of the transactions contemplated hereby will not, (i)
violate or conflict with its Articles of Incorporation or Bylaws (ii) constitute
a breach or default (or an event that with notice or lapse of time or both would
become a breach or default) or give rise to any lien, third party right of
termination, cancellation, material modification or acceleration under any
material agreement, understanding or undertaking to which it is a party or by
which it is bound, except where such breach, default, lien, third party right,
cancellation, modification or acceleration would not have a material adverse
effect on it and its subsidiaries ability to perform under this Agreement, or
(iii) constitute a violation of any law, rule or regulation to which it is
subject.
ARTICLE 11
TRANSFER OF SHARES
SECTION 11.1 No Transfer Except as Provided. No shareholder of the
Company shall sell, transfer, assign, pledge or otherwise, in any other manner,
dispose of or encumber its shares in the Company, except as specifically
provided in this Article 11; and any transfer, sale, assignment, pledge or other
disposition or encumbrance of shares by a party hereto not made pursuant to this
Article 11 shall be null and void and of no effect whatsoever, and shall not be
recorded upon the books of the Company, except as may be required by Hong Kong
law.
SECTION 11.2 Transfer Upon Consent. A shareholder of the Company may
sell or otherwise transfer its shares in the Company with the unanimous consent
of the Board of Directors.
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SECTION 11.3 Restrictions on Issuance of Addwood Shares.
Addwood agrees not to issue any additional shares of its capital stock without
the consent of Bridal.
SECTION 11.4 Ownership of Addwood. Kafry shall at all times
directly or indirectly hold at least a 55% equity and voting interest in
Addwood. Kafry shall promptly upon written request of any party hereto, provide
evidence, reasonably satisfactory to the requesting party, of the continued
verity of this Section 11.4.
ARTICLE 12
INDEMNITY
SECTION 12.1 Indemnity. Each party agrees to indemnify and
hold harmless the others from, against and in respect of all damages, losses or
expenses suffered or paid, directly or indirectly, as a result of any and all
claims, demands, suits, causes of action, proceedings, judgments and
liabilities, including reasonable counsel fees and expenses incurred in
litigation or otherwise, assessed, incurred or sustained by or against the other
("Damages") with respect to or arising out of the failure of any representation
or warranty made by the indemnifying party in this Agreement to be true and
correct in all material respects as of the Effective Date of this Agreement.
ARTICLE 13
DISPUTE RESOLUTION
SECTION 13.1 Arbitration. In the case of any difficulties
or differences or disputes between the parties concerning the interpretation or
performance of this Agreement or of any related agreement (including those to
which the Company is a party) or otherwise arising in connection therewith, the
parties shall meet and shall seek to resolve any such difficulties, differences
or disputes in a mutually acceptable and equitable manner, taking into account
the objectives of this venture. Any dispute arising out of or in connection with
this Agreement which is not resolved through good faith discussions between the
parties shall be resolved by arbitration. Any arbitration hereunder shall take
place in Philadelphia, Pennsylvania, United States of America in accordance with
the commercial rules of the American Arbitration Association. The award in any
such arbitration shall be final and binding upon the parties to the exclusion of
other legal remedies and may be enforced by judgment of any court having
jurisdiction over the party against whom the award is rendered. Each party shall
pay the fees of its own attorneys and the expenses of its witnesses. All other
costs and expenses of the arbitration, including the costs of recording the
transcripts thereof, if any, administration fees,
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and all other fees and costs, shall be paid by the party against whom the
arbitrators have awarded same. If the arbitrator shall have made no assessment
of other fees, costs and expenses, then, in that event, such other fees, costs
and expenses shall be borne equally by the parties.
SECTION 13.2 Exceptions to Arbitration. Nothing provided herein shall
prevent any party from instituting any action before any competent court for the
purpose of seeking to prevent the disclosure or improper use of any Confidential
Information as defined in Article 7 hereof or violation of the restrictive
covenants set forth in Section 9 pending a determination of the rights and
obligations of the parties in accordance with the provisions of this Article 13.
ARTICLE 14
NOTICES
SECTION 14.1 Manner of Giving Notice. Each notice required or permitted
to be given or sent under this Agreement shall be given by telecopy transmission
or by registered air mail or recorded delivery courier to Bridal or Bridal
Default Company at:
▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇.
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇
Attention: ▇▇▇▇ Erlbaum
Facsimile No.: ▇▇▇-▇▇▇-▇▇▇▇
and to Addwood or to Addwood Default Group at:
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
37-41 Ma Tau Wai Road
Hunghom, Kowloon, Hong Kong
Attention: ▇▇▇▇ ▇▇▇▇▇
Facsimile No.: 011-852-2363-7557
Any party hereto may change its address or its telecopy number for
purposes of this Agreement by giving the other parties written notice of its new
address or telecopy number. Any such notice, if given or made by registered or
recorded delivery airmail letter, shall be deemed to have been received on the
earlier of the date actually received and the date two (2) days after the same
was posted, and if given or made by telecopy transmission shall be deemed to
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have been received at the time of dispatch. Each party irrevocably and
unconditionally consents to the service of any process, pleadings, notices or
other papers in a manner permitted by the notice provisions of this Section
14.1.
ARTICLE 15
SHARES AND LEGEND
SECTION 15.1 Definitions. The term "share" as used herein shall be
deemed to refer to all the shares of the Company initially owned by the parties
hereto, any shares hereafter issued in exchange therefor by way of
reclassification of shares, merger, consolidation, reorganization,
recapitalization, or otherwise, and any additional shares issued to said parties
by reason of dividends paid by shares distributions or increase in the
outstanding shares or otherwise.
SECTION 15.2 Legend. The parties agree that the certificates for their
shares shall have the following legend imprinted or typed thereon:
"This certificate and the share or shares it represents is
held subject to the provisions of a Joint Venture and
Shareholders Agreement dated the ___ day of August, 1995, a
copy of which Agreement is on file and may be examined at the
office of the Company."
ARTICLE 16
RATIFICATION
SECTION 16.1 Ratification of Agreement. At the first meeting of the
Board of Directors, to be held upon the incorporation of the Company, this
Agreement shall be submitted to the meeting and a resolution shall be adopted
whereby the Company shall accept, ratify, and confirm this Agreement and agree
to be bound thereby. To the extent deemed appropriate by the parties, the
Articles of Association of the Company shall conform to the provisions of this
Agreement and shall not be in conflict therewith; if any conflict exists or
arises hereunder, the provisions of this Agreement shall control to the extent
permissible under Hong Kong law; it being understood, however, that the parties
shall act in accordance with the terms hereof vis-a-vis their relations with
each other as same applies to the Company.
SECTION 16.2 Filing of Agreement. A copy of this Agreement, as amended
from time to time, shall be filed with the Secretary of the Company for
inspection by a prospective
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purchaser of shares of the Company or other interested and proper party as may
be approved by the Board of Directors in accordance with the provisions of this
Agreement.
ARTICLE 17
MISCELLANEOUS PROVISIONS
SECTION 17.1 Binding Effect; Assignment. This Agreement and each
provision hereof shall be binding upon and shall benefit the parties hereto and
their respective successors, but neither this Agreement nor any rights hereunder
shall be assignable directly or indirectly by any party without prior written
consent of the other parties hereto, which consent shall not unreasonably be
refused.
SECTION 17.2 Authority of Parties. No party hereto nor any of its
employees, customers or agents shall be deemed to be the representative, agent
or employee of any other party for any purpose whatsoever, nor shall any of them
have any right or authority to assume or create an obligation of any kind or
nature, express or implied, on behalf of any other party, nor to accept service
of any legal process addressed to or intended for any other party. The rights of
Bridal under this Agreement shall inure to the benefit of any entity
controlling, controlled by or under common control with the Company.
SECTION 17.3 Severability. Any provision hereof prohibited by or deemed
unlawful or unenforceable under any applicable law of any jurisdiction shall, as
to such jurisdiction, be ineffective without affecting any other provision of
this Agreement. To the full extent, however, that the provisions of such
applicable law may be waived, they are hereby waived to the end that this
Agreement be deemed to be a valid and binding agreement enforceable in
accordance with its terms. In the event that any term or provision of this
Agreement shall be held invalid by a competent court or government agency, the
remainder of this shall continue to be bound by the remaining terms hereof. In
such event, the relevant term or provision (or should such term(s) or
provision(s) be such a crucial element of this Agreement, then the entire
Agreement) shall be renegotiated by the parties in a good faith effort to
achieve mutual agreement consistent with such holding and shall continue to
perform under this Agreement in a manner consistent with its intent and
objective.
SECTION 17.4 Delivery of Documents. At any time or from time to time,
during the existence of this Agreement, each of the parties shall, at the
reasonable request of any or all of the other parties, (i) deliver such
documents consistent with the provisions of this Agreement, (ii) execute and
deliver, or cause to be executed and delivered, all such assignments, consents,
documents or further instruments of transfer, and (iii) take or cause to be
taken all such other
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actions as are reasonable and appropriate in order for the parties to obtain the
full benefits of this Agreement and the transactions contemplated hereby.
SECTION 17.5 Counterparts. This Agreement may be executed
simultaneously in any number of counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
SECTION 17.6 Headings. Article and other headings are intended for ease
of reference only and in no way define, limit or describe the scope or intent of
these terms and conditions.
SECTION 17.7 Entire Agreement. This Agreement and the agreements
referred to herein constitute the entire agreement between the parties relating
to the subject matter hereof. There are no terms, obligations, covenants,
representations, statements or conditions other than those contained herein or
therein. No variations or modifications of this Agreement, nor waiver of any of
the terms or provisions hereof, shall be deemed valid unless in writing and
signed by the party against whom the same is sought to be enforced.
SECTION 17.8 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of Hong Kong.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective duly authorized officers as of the day and year
first written above.
DAVIDS BRIDAL CORPORATION
By: /s/ ▇▇▇▇▇▇ Erlbaum
_____________________________
Name: ▇▇▇▇▇▇ Erlbaum
Title: Chairman
ADDWOOD LIMITED
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
_____________________________
Name: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Title:
FILLBERG LIMITED
By: Illegible
_____________________________
Name:
Title:
RESTAL CORPORATION
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
_____________________________
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
_____________________________
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