Annex I
MANAGEMENT AGREEMENT
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This AGREEMENT is made as of the 15th day of August, 1996 by and between
KENWIN SHOPS, INC., a New York corporation (the "Company"), and D&A FUNDING
CORP., a New York corporation (the "Manager").
W I T N E S S E T H :
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WHEREAS, the Manager has expertise in the retail garment industry and in
the supply, warehousing, pricing and financing of inventory generally; and
WHEREAS, the Company has requested the Manager, and the Manager has agreed,
to provide services to the Company in connection with the management and
administration of all aspects of the business of the Company.
NOW, THEREFORE, the parties hereby agree as follows:
1. Services.
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1.1 During the term hereof (as provided in Section 2 of this Agreement),
the Manager shall manage the day to day business of the Company subject, always,
to the objectives and policies of the Company as established from time to time
by the Company's Board of Directors (the "Board"), including:
(a) the administration of the day- to-day business of the Company and the
performance of such other administrative functions in connection with the
management of the business of the Company as the Board shall request from time
to time;
(b) negotiating and preparing, or causing to be negotiated and prepared,
any and all agreements, documents and instruments with the Company's suppliers,
vendors, lenders, employees and landlords, including, without limitation, any
amendments to existing purchase agreements, loan agreements, security documents,
leases and other agreements and documents to which the Company is a party as
obligor;
(c) providing to the Company warehousing services in connection with the
Company's operations including, without limitation, the use of the Manager's own
warehouse facilities for the purposes of effecting direct shipment to the
Company's retail stores;
(d) administering the Company's retail business including purchasing,
owning, pricing and disposing of the Company's inventory;
(e) the provision of the services of ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇") as the
acting chief executive officer of the Company, to whom all officers and
employees of the Company shall report, and such other officers and other staff
of suitable skills and experience from among the members of the staff of the
Manager as may be necessary in order to properly perform the services referred
to herein;
(f) keeping all such books and records of things done and transactions
performed on behalf of the Company as the Board may require from time to time,
including liaising with the Company's accountants, financial advisors, lawyers
and other professionals;
(g) from time to time or at any time as requested by the Board, reporting
to the Board concerning the performance of the foregoing services and furnishing
advice and recommendations with respect to all aspects of the business affairs
of the Company;
(h) assisting the Company to comply with the requirements of all applicable
securities laws, including the Securities Act and the Exchange Act; and
(i) such other services as the Company may request and the Manager may
agree to provide from time to time.
1.2. During the term hereof, the Manager shall do all in its power to
maintain and promote the existing business of the Company and shall at all times
and in all respects conform to and comply with the lawful directions,
regulations and recommendations made by the Board and in the absence of any
specific directions, regulations and recommendations as aforesaid and subject to
the terms and conditions of this Agreement shall provide general administrative
and advisory services in connection with the management of the business of the
Company; provided, however, that the parties recognize that the Manager conducts
its own business and shall not be required to devote itself exclusively to the
affairs of the Company but only to such an extent as may be required in order to
perform its duties under this Agreement. The Manager shall be free to act for
and represent any other person, firm, corporation, company or other entity
throughout the world without the consent of the Company whether or not the said
person, firm, corporation, company or other entity is engaged in business in
competition with the Company.
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2. Term.
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The term of this Agreement shall commence on the date hereof and shall
terminate one year from the date hereof, unless earlier terminated pursuant to
Section 5 hereof.
3. Fees And Expenses:
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(a) In consideration for the Manager's providing the services to the
Company specified in this Agreement (other than with respect to the services
described in Section 1(c) hereof), the Company shall pay the Manager a fee (the
"Fee") at the annual rate of Fifty Thousand Dollar ($50,000.00) per annum,
commencing on the date hereof, payable weekly in arrears. In addition, in
consideration for the Manager's providing the services to the Company specified
in Section 1(c) hereof, the Company shall pay to the Manager, weekly in arrears,
an amount equal to two percent (2%) of the aggregate original cost of goods
shipped to the Company during the immediately preceding week.
In addition, in consideration for the Manager's providing services to the
Company specified in this Agreement, the Company shall issue to the Manager all
of the Company's authorized but unissued stock and treasury stock currently held
in treasury by the Company, aggregating 443,650 shares of the common stock, par
value $1.00 per share, of the Company, at a price of one cent per share all of
which shall be fully paid and nonassessable upon such issuance. In the event
that the manager terminates this agreement within one year from the date hereof,
all such shares shall be returned to the Company.
(b) The Manager shall not be liable to pay, and the Company shall pay from
its own funds, (i) all of the Company's expenses, whether in connection with the
services and activities set forth in Section 1 or otherwise, including the
Company's directors' fees and expenses, (ii) all expenses, including attorneys'
fees and expenses, incurred on behalf of the Company in connection with (A) any
litigation commenced by or against the Company, (B) any investigation by any
governmental, regulatory or self-regulatory authority, (iii) all premiums for
insurance of any nature, including, without limitation, any key man life
insurance, directors' and officers' liability insurance, general liability
insurance and business interruption insurance, (iv) all costs in connection with
the administration of the registration and listing of the Company's securities,
and (v) any and all other fees and expenses that may be payable by the Company
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at any time. The Company shall promptly reimburse the Manager for any and all
expenses incurred by the Manager from time to time, which shall include, without
limitation, all attorneys' fees and expenses in connection with the preparation,
negotiation, execution and delivery of this Agreement, the Stock Purchase
Agreement and other agreements referenced or contemplated herein (vi) directors
and officers liability insurances for a period of three years protecting not
only the present officers and directors but also all of the officers and
directors of the Company for the past three years, and (vii) all fees and
expenses of the attorneys for the Company.
4. Relationship Of The Parties.
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(a) The Company acknowledges that the Manager shall have no responsibility
hereunder, direct or indirect, with regard to the formulation or implementation
of the business plans, policies, management or strategies (financial, tax, legal
or otherwise) of the Company, all of which are solely the responsibility of the
Company. The Company shall set corporate policy independently through its own
Board and nothing contained herein shall be construed to relieve the directors
or officers of the Company from the performance of their respective duties or to
limit the exercise of their powers.
(b) Without limiting the foregoing, the Manager shall have no liability to
the Company for errors of judgment or for any act or omission, negligent,
tortious or otherwise, unless such act or omission on the part of the Manager
constitutes negligence or willful misconduct.
(c) The Company hereby agrees to defend, indemnify and save the Manager and
its affiliates (other than the Company, if the Company shall at any time be such
an affiliate) officers, directors, employees and agents harmless from and
against any and all loss, claim, damage, liability, cost or expense, including
reasonable attorneys' fees, incurred by the Manager or any such affiliates based
upon a claim by or liability to a third party arising out of the operation of
the Company's business. The Company shall have the right, upon notice to the
Manager, to undertake the defense of the Manager by counsel chosen by the
Company in connection with any such claim or liability and shall pay the fees
and disbursements of such counsel; provided, however, that such counsel is not
reasonably objected to by the Manager.
(d) In all activities under this Agreement the Manager shall be an
independent contractor. Nothing in this Agreement shall be deemed to make the
Manager, or any of its subsidiaries or employees, the agent, employee, joint
venturer or partner of the Company or create in the Manager the right or
authority to incur any
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obligation on behalf of the Company or to bind the Company in any way whatsoever
except as may be expressly provided in this Agreement.
(e) The provisions of Section 3(b) and this Section 4 shall survive any
termination of this Agreement.
5. Termination.
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5.1. The Company may terminate this Agreement as follows:
(a) At any time upon thirty (30) days' notice for any reason upon the
affirmative vote of the holders of two-thirds of the Company's outstanding
common shares;
(b) In the event:
(i) the Manager commits any material breach of or omits to observe
any of the material obligations or undertakings expressed to be
assumed by it under this Agreement and, such breach or omission,
if capable of remedy, is not remedied to the satisfaction of the
Company within thirty (30) days of notice by the Company of such
material breach or omission and requiring action to remedy the
same; or
(ii)any material consent, authorization, license or approval of, or
registration with or declaration to, governmental or public
bodies or authorities or courts required by the Manager to
authorize, or required by the Manager in connection with, the
execution, delivery, validity, enforceability of admissibility in
evidence of this Agreement or the performance by the Manager of
its obligations under this Agreement which the Company reasonably
considers to be necessary or desirable in order to ensure that
the interests of the Company are not prejudiced and the ability
of the Manager to perform its obligations under this Agreement is
not materially affected, is modified in a manner unacceptable to
the Company or is not granted or is revoked or terminated or
expires and is not renewed or otherwise ceases to be in full
force and effect (each of which is hereinafter referred to as a
"Breach") except as any such Breach shall be caused by Company or
its Board, officers or agents; or
(iii)the Manager takes any action or any legal proceedings are started
or other steps taken for (1) the Manager to be adjudicated or
found bankrupt or insolvent or a petition in bankruptcy to be
filed either by or against the Manager, (2) the winding-up or
dissolution of the Manager or (3) the appointment of a
liquidator, administrator, examiner, trustee, sequestrator,
receiver or similar officer of the Manager over the whole or any
part of its undertakings, assets, rights or revenues, or any
similar event occurs or similar proceeding is taken and not
dismissed within 90 days, with respect to the Manager in any
jurisdiction to which the Manager is subject, in which event this
Agreement shall be automatically terminated without need for
notice on the part of the Company; or
(iv) it becomes unlawful at any time for the Manager to perform all or
any of the material covenants or its obligations under this
Agreement, or for the Company to exercise the rights vested in it
under this Agreement.
(c) Upon the effective date of termination pursuant to this Section, the
Manager shall promptly wind up its service hereunder as may be required in order
to minimize any interruption to the Company's business.
(d) Upon termination the Manager shall, as promptly as possible, submit a
final accounting of funds received and disbursed under this Agreement and any
undisbursed funds of the Company in the Manager's possession or control will be
promptly paid by the Manager as directed by the Company.
5.2 The Manager may terminate this Agreement with or without cause at
any time upon at least 30 days' prior written notice to the Company.
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6. Rights Of The Manager And Restrictions On Its Authority.
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6.1 Notwithstanding the other provisions of this Agreement:
(a) the Manager may act upon any advise, resolutions, requests,
instructions, recommendations, direction or information obtained in writing from
the Company or any banker, accountant, broker, lawyer or other person acting as
agent of or adviser to the Company and the Manager shall incur no liability to
the Company for anything done or omitted or suffered in good faith in reliance
upon such advice, instruction, resolution, recommendation, direction or
information made or given by the Company or its agents and shall not be
responsible for any misconduct, mistake, oversight, error or judgment, neglect,
default, omission, forgetfulness or want of prudence on the part of any such
banker, accountant, broker, lawyer, agent or adviser or other person as
aforesaid;
(b) the Manager shall not be under any obligation to carry out any request,
resolution, instruction, direction or recommendation of the Company or its
agents if the performance thereof is or would be illegal or unlawful or the
Manager reasonably believes such action may subject it to liabilities not
expressly assumed hereby;
(c) the Manager shall incur no liability to the Company for doing or (as
the case may be) failing to do any act or thing which it shall be required to do
or perform or forbear from doing or performing by reason of any provision of any
present or future law or any regulation or resolution made pursuant thereto or
any decision, order or judgment of any court or any lawful request, announcement
or similar action of any person or body exercising or purporting to exercise the
legitimate authority of any government or of any central or local governmental
institution in each case where above entity has jurisdiction.
6.2. Nothing herein shall affect the exercise of central management and
control of the Company by the Board and in particular but without prejudice to
the generality of the foregoing, nothing herein shall derogate from the powers
and duties of the Board to manage and administer the Company and its business.
7. Notices.
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All notices, consents and other communications hereunder or necessary to
exercise any rights granted hereunder, shall be in writing, either by prepaid
registered mail or telecopy as follows:
If to the Company:
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Kenwin Shops, Inc.
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
Vice President & Secretary
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
c/o Jaffin, Conrad, ▇▇▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
If to the Manager:
D&A Funding Corp.
c/o Dresses For Le$$, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇, President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With copies to:
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
and:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
8. Entire Agreement, Etc.
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This Agreement embodies the entire agreement and understanding between
the parties hereto relating to the services to be provided by the Manager to the
Company and may not be amended, waived or discharged except by an instrument in
writing executed by the party against whom enforcement of such amendment, waiver
or discharge is
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sought.
9. Miscellaneous.
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of New York and the parties submit to the
jurisdiction of any federal or state courts located in the Borough of Manhattan,
City of New York, in connection with any claim arising out of this Agreement.
This Agreement constitutes the sole understanding and agreement of the parties
hereto with respect to the subject matter thereto. The headings of this
Agreement are for ease of reference and do not limit or otherwise affect the
meaning hereof. All the terms of this Agreement, whether so expressed or not,
shall be binding upon the parties hereto and their respective successor and
assigns. This Agreement may be signed in one or more counterparts, each of which
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
10. Effective Date
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This Agreement shall become effective upon the execution of all other
agreements (including but not limited to stock purchase agreements, consulting
agreements for ▇▇▇ ▇▇▇▇▇▇▇▇ and employment agreements for ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇)
between D&A Funding Corp. and Kenwin Shops, Inc. and the relevant officers and
directors of Kenwin Shops, Inc. which are contemplated to transfer control of
Kenwin Shops, Inc. Said other agreements shall be executed within seven (7) days
of the date hereof. If said other agreements are not executed within seven (7)
days of the date hereof, either party shall have the option to terminate this
Agreement. However, the Company may not terminate this Agreement if the stock
purchase agreement is not signed by any of the stockholders.
11. Proxies
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The Sellers shall deliver to the Manager irrevocable proxies for all of
their stock within 7 days of the date hereof, failing which the Manager shall
have the right to terminate this Agreement.
12. Counterparts.
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This Agreement may be executed in written counterparts which together shall
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constitute an instrument.
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the date first above written.
D&A FUNDING CORP.
By:________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇, President
KENWIN SHOPS, INC.
BY:________________________
▇▇▇ ▇▇▇▇▇▇▇▇, President
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MODIFICATION TO MANAGEMENT AGREEMENT
This modification is made to that certain Management Agreement dated as of
August 15, 1996 by and between Kenwin Shops, Inc. (the "Company") and D&A
Funding Corporation (the "Manager") (the "Management Agreement").
W I T N E S S E T H :
WHEREAS, the Company and the Manager have heretofore entered into the
Management Agreement which provides for, among other things, the sale and
issuance by the Company to the Manager of an aggregate of 443,650 shares of the
Common Stock of the Company at a price of $.01 per share, in consideration for
the Manager's providing services to the Company as therein set forth; and
WHEREAS, the parties wish to modify the Management Agreement as hereinafter
provided.
NOW, THEREFORE, it is agreed as follows:
1. The parties hereby agree to modify the provision set forth in the second
paragraph of Paragraph 3(a) of the Management Agreement, by reducing the number
of shares of Common Stock to be purchased by the Manager from the stated
aggregate of 443,650 shares to 350,000 shares, all of which shall be issued out
of the authorized but unissued Common Stock of the Company.
2. Except as modified by Paragraph 1 above, the Management Agreement is and
shall remain in full force and effect as of the date upon which the same was
executed.
D&A Funding Corporation
By________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇, President
KENWIN SHOPS, INC.
By________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, President