EXHIBIT 3
STOCK PURCHASE AGREEMENT
AGREEMENT dated this 22nd day of November, 1999 by and among LV CAPITAL
USA, INC., a Delaware corporation and indirect subsidiary of LVMH Moet ▇▇▇▇▇▇▇▇
▇▇▇▇▇ Vuitton, S.A. ("Purchaser"), with its executive offices at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇; ▇▇▇▇ ▇▇▇▇▇ (sometimes "Madar"), an
individual residing at ▇ ▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇; ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ (sometimes "Benacin"), an individual residing at ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇. Each of Madar and Benacin are sometimes individually
referred to as "Seller" or sometimes collectively as "Sellers").
W I T N E S S E T H:
WHEREAS, Sellers are the controlling shareholders and owners of shares
of common stock and options to purchase shares of common stock of Inter Parfums,
Inc., a Delaware corporation ("Company");
WHEREAS, Sellers desire to sell and Purchaser desires to purchase
certain of the shares of common stock owned by the Sellers or shares to be
acquired by Sellers upon exercise of certain outstanding stock options, upon the
terms and subject to the conditions hereinafter set forth;
WHEREAS, Purchaser desires to purchase from certain option holders of
the Company, shares to be acquired by such option holders upon exercise of
certain outstanding stock options, upon the terms and subject to the conditions
set forth therein; and
WHEREAS, simultaneously with the execution and delivery of this
Agreement, Purchaser and Sellers are entering into a Shareholders' Agreement.
NOW, THEREFORE, in consideration of the mutual covenants, conditions
and promises contained herein, the parties hereto hereby agree as follows:
1. Sale and Purchase of the Shares. Upon the terms and subject to the
conditions of this Agreement, on the Closing Date (as hereinafter defined),
(a) each of Sellers hereby agrees to sell, transfer, assign and deliver
to Purchaser and Purchaser hereby agrees to purchase, the Sellers' respective
shares of common stock, $.001 par value per share, of Company ("Common Stock"),
as set forth in the annexed Schedule 1A, (collectively the "Shares"), free and
clear of all liens, encumbrances or restrictions of any kind whatsoever, except
with regard to restrictions upon transfer as imposed under the Securities Act of
1933, as amended (the "Securities Act"). Each of Sellers shall deliver to
Purchaser at the Closing certificates representing their respective Shares duly
endorsed in blank or accompanied by stock powers or other instruments of
transfer duly executed in blank, and
shall have annexed thereto all necessary stock transfer stamps or shall be
accompanied by funds sufficient for the purchase thereof by the Company;
(b) Purchaser hereby agrees to purchase from each of the several option
holders and other sellers ("Other Sellers") who have executed and delivered
letter agreements substantially in the form annexed hereto as Exhibit 1B (each,
a "Sales Agreement"), regarding the sale of their respective shares of Common
Stock, either outstanding or issuable upon exercise of the several options, as
set forth in the annexed Schedule 1B (collectively the "Other Shares"); and
(c) each of Sellers and Purchaser hereby agrees to execute and deliver
the Shareholders' Agreement, substantially in the form annexed hereto as Exhibit
1C.
2. Purchase Price. At Closing, Purchaser agrees to pay the purchase
price of $12.00 per share, $10,190,400 in the aggregate, payable in United
States dollars in cash, certified, bank or cashier's check or wire transfer of
immediately available funds to the Company as agent for each of the Sellers and
the Other Sellers. Sellers agree to use their best efforts to cause the Company
to promptly deliver to each Seller and each Other Seller such person's portion
of the purchase price. Notwithstanding anything herein to the contrary,
Purchaser's obligation to pay the purchase price for the Shares and the Other
Shares hereunder and under the Sales Agreements, as applicable, shall be
discharged and satisfied in full upon the payment of the purchase price for the
Shares and the Other Shares to the Company, and upon such payment Purchaser
shall have no further liability with respect to the purchase price and each
Seller and Other Seller shall look solely to the Company for the payment
thereof.
3. Closing. Subject to the fulfillment of the conditions precedent as
hereinafter set forth, the Closing under this Agreement shall take place at the
offices of the Company, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 3:00 P.M.
on November 22, 1999 or at such other time and at such other place as shall be
fixed by mutual consent of the parties hereto (the "Closing Date"), and the
effective date for all transactions contemplated by this Agreement shall be as
of the Closing Date.
4. Restricted Transferability. Purchaser acknowledges and understands
that it must bear the economic risk of an investment in the Shares and Other
Shares being acquired pursuant hereto for an indefinite period of time since
such securities have not been registered under the Securities Act and,
therefore, cannot be sold unless they are either subsequently registered under
the Securities Act or an exemption from such registration is available and
favorable opinions of counsel in form and substance reasonably satisfactory to
Company to that effect are obtained; are acquiring the Shares and Other Shares
for investment and not with a view towards distribution; (however, this shall
not preclude the resale of the Shares or the Other Shares to the public
subsequent to the Closing Date pursuant to an effective registration statement
as contemplated in the Shareholders Agreement; and the certificates representing
the Shares and Other Shares (unless such securities have been registered) shall
bear on their face a legend in substantially the following form:
"The shares represented by this Certificate have not been registered
under the Securities Act of 1933. They may not be transferred without an
effective registration
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statement for such shares under the Securities Act of 1933 or an opinion of
counsel reasonably satisfactory to the Corporation that registration is not
required under such Act."
5. Warranties and Representations of Sellers. Each Seller
represents and warrants to Purchaser as follows:
(a) Each Seller has, or will have at Closing, complete and unrestricted
power and authority and the unqualified right to sell, transfer, assign and
deliver to Purchaser valid and marketable title to the number of shares of
Common Stock set forth opposite each Seller's name on Schedule 1A hereto, free
and clear of all liens, encumbrances or restrictions of any kind whatsoever,
except with regard to restrictions upon transfer as imposed under the Securities
Act; and there are no outstanding options, warrants or rights to purchase or
acquire, or agreements relating to, any of the Shares of each such Seller.
(b) Each of this Agreement and the Shareholders Agreement constitutes a
valid and binding agreement of each Seller, enforceable against each in
accordance with its terms. With respect to the Shareholders Agreement, each of
Sellers covenant and agree with Purchaser that Sellers will use their best
efforts to cause the Corporation and its members of the Board of Directors to
act in a manner consistent with the provisions of the Shareholders Agreement.
Neither the execution of this Agreement and the Shareholders Agreement, nor the
consummation by Sellers of the transactions described herein and therein, will,
(i) contravene, conflict with, or result in any violation or breach of any
provision of the certificate of incorporation or bylaws of the Company, (ii)
assuming compliance with the matters referred to in Section 5(h), contravene,
conflict with, or result in a violation or breach of any provision of any
applicable law, statute, ordinance, rule, regulation, judgment, injunction,
order or decree, or (iii) constitute a violation of, or conflict with, or cause
a default or acceleration of any rights or obligations under, any contract,
commitment, agreement, understanding, arrangement, restriction, license, permit
or authorization of any kind whatsoever, to which such Seller or Company or its
subsidiaries is a party or by which any of their respective assets is bound.
(c) Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has the full corporate
power and authority to carry on its business as it is now being conducted and is
duly qualified to conduct business in each jurisdiction in which it conducts
business, except where the failure to be so qualified would not have a material
adverse effect on Company and its subsidiaries, taken as a whole. Sellers have
previously caused Company to deliver to Purchaser true and complete copies of
the certificate of incorporation and bylaws of Company as currently in effect.
(d) Each subsidiary of the Company is a corporation duly incorporated,
validly existing and in good standing under the laws of its jurisdiction of
incorporation, has all corporate powers and all governmental licenses,
authorizations, permits, consents and approvals required to carry on its
business as now conducted. Each such subsidiary is duly qualified to do business
as a foreign corporation and is in good standing in each jurisdiction where such
qualification is necessary, except for those jurisdictions where failure to be
so qualified would
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not have, individually or in the aggregate, have a material adverse effect on
Company. Except as set forth in Schedule 5D hereof, all material subsidiaries
of the Company and their respective jurisdictions of incorporation are
identified in the Company's Annual Report on Form 10-K filed with the
Securities and Exchange Commission ("SEC") under the Securities Exchange Act
of 1934 ("Exchange Act").
(e) The authorized capital stock of Company consists of 30,000,000
shares of Common Stock, and 1,000,000 shares of Preferred Stock, $.001 par value
per share. As of November 11, 1999, 7,572,781 shares of Common Stock are
outstanding, and no shares of Preferred Stock are outstanding. All issued and
outstanding shares of Common Stock are validly issued, fully paid and
nonassessable.
(f) Except as set forth on Schedule 5F hereof, there are no outstanding
securities convertible or exchangeable for securities of Company or options,
warrants or other rights to purchase or subscribe to any securities of Company
or any of its subsidiaries or securities convertible into or exchangeable for
securities of Company or any of its subsidiaries or contracts, commitments,
agreements, understandings or arrangements of any kind relating to the issuance
of any securities of Company or any of its subsidiaries.
(g) Except as set forth in Schedule 5F and Schedule 5G hereof, all of
the outstanding capital stock of, or other voting securities or ownership
interests in, each subsidiary of the Company, is owned by the Company, directly
or indirectly, free and clear of any lien, charge or encumbrance of any kind and
free of any other limitation or restrictions (including any restriction on the
right to vote, sell or otherwise dispose of such capital stock or other voting
securities or ownership interests). Except as set forth in Schedule 5G hereof,
there are no outstanding obligations of the Company or any of its Subsidiaries
to repurchase, redeem or otherwise acquire any capital stock, or securities or
other rights convertible into or exercisable for capital stock, of any
subsidiary of the Company.
(h) Except as set forth in Paragraph 9(a), no consent of any person or
governmental authority is necessary for the consummation of the transactions
described herein on behalf of Sellers or Company.
(i) Sellers have heretofore delivered to Purchaser Company's (i) Annual
Report on Form 10-K for the year ended December 31, 1998 ("1998 10-K"); (ii)
Quarterly Reports on Form 10-Q for the three (3) month period ended March 31,
1999, for the six (6) month period ending June 30, 1999 and for the nine (9)
month period ended September 30, 1999; (iii) Current Reports on Form 8-K (dates
of events, July 14, 1999 and August 5, 1999), (iv) the Notice of Annual Meeting
and Proxy Statement dated June 11, 1999, related to the sole meeting of the
shareholders of Company held during the present fiscal year; and (v) all of its
other reports, statements, schedules and registration statements filed with the
SEC since December 31, 1998 (the documents referred to in this Paragraph 5(i),
collectively, the "Company SEC Documents"). As of the filing date, each Company
SEC Document complied (or will comply) as to form in all material respects with
the applicable requirements of the Securities Act or the Exchange Act, as the
case may be. As of their respective dates, such reports or statements do not
contain, and any such document so filed subsequent to the date hereof will not
contain, any untrue statement of a material fact or omit to state any material
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fact required to be stated therein or necessary to make the statements therein,
in light of circumstances in which they were made, not misleading. The audited
financial statements and unaudited interim financial statements of Company
included in such reports have been prepared in accordance with U.S. generally
accepted accounting principles applied on a consistent basis by Company and
accurately present the financial position of Company and its subsidiaries as of
the dates thereof and the results of the operations and changes in cash flows
for the periods then ended.
(j) Except as set forth in Schedule 5J hereof, since September 30,
1999, the business of the Company and its subsidiaries has been conducted in the
ordinary course consistent with past practices and there has not been:
(1) any changes in the condition (financial or otherwise),
properties, assets, liabilities, business, operations or prospects of Company
which have been, in any case, singly or in the aggregate, materially adverse to
Company;
(2) any declaration, setting aside or payment of any dividend
or other distribution with respect to any shares of capital stock of Company, or
any repurchase, redemption or other acquisition by Company or any of its
subsidiaries of any outstanding shares of capital stock or other securities of,
or other ownership interests in, Company or any of its subsidiaries;
(3) any amendment of any material term of any outstanding
security of the Company or any of its subsidiaries;
(4) any incurrence, assumption or guarantee by Company or any
of its subsidiaries of any indebtedness for borrowed money other than in the
ordinary course of business and in amounts and on terms consistent with past
practices;
(5) any making of any loan, advance or capital contributions
to or investment in any person or entity other than loans, advances or capital
contributions to or investments in its wholly-owned subsidiaries made in the
ordinary course of business consistent with past practices;
(k) There are no material liabilities or obligations of Company or any
of its subsidiaries of any kind whatsoever, whether accrued, contingent,
absolute, determined, determinable or otherwise, and there is no existing
condition, situation or set of circumstances that could reasonably be expected
to result in any such liability, other than: (i) liabilities or obligations
disclosed and provided for in the September 30, 1999 balance sheet of Company or
in the notes thereto or in the Company SEC Documents filed prior to the date
hereof or (ii) incurred in the ordinary course of business after September 30,
1999 consistent with past practice of Company.
(l) The Company and each of its subsidiaries is and has been in
compliance in all material respects with, and to the knowledge of Company is not
under investigation with
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respect to and has not been threatened to be charged
with or given notice of any violation of, any applicable law, statute,
ordinance, rule, regulation, judgment, injunction, order or decree.
(m) Except as set forth in Schedule 5M or the Company SEC Documents
filed prior to the date hereof, there is no action, suit, investigation or
proceeding (or any basis therefor) pending against, or, to the knowledge of
Company, threatened against or affecting, Company, any of its subsidiaries, any
present or former officer, director or employee of the Company or any of its
subsidiaries or any other person or entity for whom the Company or any of such
subsidiary may be liable or any of their respective properties before any court
or arbitrator or before or by any governmental body, agency or official,
domestic or foreign, that, if determined or resolved adversely in accordance
with the plaintiff's demands, could reasonably be expected to have, individually
or in the aggregate, a material adverse effect on the Company or that in any
manner challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated hereby.
(n) Company and each of its subsidiaries, and each affiliated group
(within the meaning of Section 1504 of the Internal Revenue Code of 1986, as
amended) of which Company or any subsidiary is or has been a member, has timely
filed (or has had timely filed on its behalf) or will file or cause to be timely
filed all material tax returns required by applicable law to be filed by it, and
all such tax returns are true and complete in all material respects. Company and
each of its subsidiaries has paid or, where payment is not yet due, has
established in accordance with US generally accepted accounting principles an
adequate accrual for the payment of, all taxes due with respect to any period
ending prior to or as of the Closing Date. There are no material liens or
encumbrances for taxes on any of the assets of Company or any of its
subsidiaries.
(o) Except as set forth in either Schedule 5O or the Company SEC
Documents filed prior to the date hereof no notice, notification, demand,
request for information, citation, summons or order has been received, no
complaint has been filed, no penalty has been assessed, and no investigation,
action, claim, suit, proceeding or review (or any basis therefor) is pending or,
to the knowledge of Company, is threatened by any governmental entity or other
person relating to or arising out of any law or regulation relating to the
environment or to pollutants, contaminants, wastes or hazardous substances.
6. Warranties and Representations of Purchaser. Purchaser hereby
warrants and represents to each of the Sellers as follows:
(a) The execution, delivery and performance of the transactions
contemplated by this Agreement by Purchaser has been duly authorized by the
Board of Directors of Purchaser, and will not contravene any provisions of law,
or an order of any court or other agency of government or of its Certificate of
Incorporation or By-laws.
(b) This Agreement constitutes the legal, valid and binding obligation
of Purchaser enforceable against it, in accordance with its terms.
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(c) Except as set forth in Paragraph 9(a), no consent of any person or
governmental authority is necessary for the consummation of the transactions
described herein on behalf of Purchaser.
(d) (i) Purchaser, taking into account the personnel and resources it
can practically bring to bear on the purchase of the Shares and Other Shares
contemplated hereby, is knowledgeable, sophisticated and experienced in making,
and is qualified to make, decisions with respect to investments in Shares and
Other Shares presenting an investment decision like that involved in the
purchase of the Shares and Other Shares;
(ii) the Purchaser has had the opportunity to ask questions of
and receive answers from representatives of Company or persons acting on its
behalf concerning the terms and conditions of the proposed investment in
Company, has had the opportunity to obtain additional information necessary to
verify the accuracy of information previously furnished about Company, and has
requested, received, reviewed and considered all information it deems relevant
in making an informed decision to purchase the Shares and the Other Shares;
(iii) the Purchaser is an "accredited investor" as such term
is defined in Rule 501 of Regulation D promulgated under the Securities Act;
(iv) notwithstanding the provisions of Paragraph 4 above, the
Purchaser is acquiring the Shares and Other Shares for investment and with no
present intention of distributing or reselling any of such Shares (this
representation and warranty not limiting the Purchaser's right to sell pursuant
to a registration statement as contemplated pursuant to the Shareholders
Agreement); and
(v) Purchaser will not, directly or indirectly, voluntarily
offer, sell, pledge, transfer or otherwise dispose of (or solicit any offers to
buy, purchase or otherwise acquire or take a pledge of) any of the Shares or
Other Shares except in compliance with the Securities Act, and the rules and
regulations promulgated thereunder.
7. Conduct of Business Pending Closing. Pending the Closing, Sellers
covenant and agree with Purchaser that:
(a) Company shall carry on its business diligently and substantially in
the same manner as heretofore conducted. Company shall not institute any new
method of management, accounting or operation or engage in any transaction or
activity, enter into any agreement or make any commitment, except in the
ordinary course of business and consistent with past practice. Company shall
maintain its management structure substantially as in effect as of the date of
this Agreement including but not limited to maintaining the present Boards of
Directors, officers and management of Company.
(b) No change or amendment shall be made to the Articles of
Incorporation or By-Laws of Company.
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(c) Except as contemplated herein and in Schedule 5E, Company shall not
issue or sell any shares of its capital stock or other securities, acquire
directly or indirectly by redemption or otherwise, any such capital stock,
reclassify or split, any such capital stock, declare or pay dividends thereon or
make any other distribution with respect thereto or grant or enter into any
options, warrants, calls or commitments of any kind with respect thereto.
(d) Company will not, and will not permit any of its subsidiaries to,
merge or consolidate with any other person or acquire a material amount of stock
or assets of any other person.
(e) Company will not, and will not permit any of its subsidiaries to,
sell, lease, license or otherwise dispose of any material subsidiary or material
amount of assets, securities or property except pursuant to existing contracts
or commitments and in the ordinary course of business consistent with past
practice.
(f) Company will not, and will not permit any of its subsidiaries to,
take any action that would make any representation and warranty of Sellers
hereunder inaccurate in any respect at, or as of any time prior to, the Closing
Date or omit to take any action necessary to prevent any such representation or
warranty from being inaccurate in any respect at any such time.
(g) Company will not, and will not permit any of its subsidiaries to,
agree or commit to do any of the foregoing.
8. Obligations Pending Closing.
(a) Sellers shall afford to Purchaser and its authorized
representatives full access to the offices, properties, books and records and
employees, advisors and accountants of Company in order that Purchaser may have
full opportunity to make such investigations that it shall desire to make of the
affairs of Company.
(b) Purchaser shall hold, and shall cause all of its authorized
representatives to hold, in strict confidence, unless compelled to disclose by
judicial or administrative process or, in the opinion of its counsel, by other
requirements of law, all documents and information furnished to it or them in
connection with the transactions contemplated by this Agreement; provided that
the foregoing shall not apply to information that is (i) known to Purchaser
prior to its disclosure by Seller or Company hereunder (solely as evidenced by
the written records of Purchaser) or disclosed to Purchaser by a third party not
known by Purchaser to be under a legally binding obligation to keep such
information confidential, (ii) publicly disclosed other than by breach by
Purchaser of its obligations hereunder, or (iii) required by law, regulation or
the rules of any national securities exchange to be disclosed.
(c) Each of Purchaser and Sellers shall promptly prepare and file such
reports, forms, exhibits and documents with the Federal Trade Commission and the
Department of Justice, and Purchaser shall pay such fees, as may be required to
be paid by it in order to comply with the ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Antitrust
Improvements Act of 1976 (15 U.S.C. ss.18a, ▇▇▇▇▇▇▇ Act ss.7A) ("HSR Act") and
to supply as promptly as practicable any additional information and documentary
material that may be requested pursuant to the HSR Act and to take all other
8
actions necessary to cause the expiration or termination of the applicable
waiting periods under the HSR Act as soon as practicable.
(d) Subject to the terms and conditions of this Agreement, Sellers and
Purchaser will use their best efforts to take, or cause to be taken, all actions
and to do, or cause to be done, all things necessary, proper or advisable under
applicable laws and regulations to consummate the transactions contemplated by
this Agreement.
(e) Purchaser and Sellers will, and Sellers will cause Company to,
consult with each other before issuing any press release or making any public
statement with respect to this Agreement or the transactions contemplated hereby
and, except as may be required by applicable law or any listing agreement with
any national securities exchange, will not issue any such press release or make
any such public statement prior to such consultation.
9. Conditions of Closing. No party hereto shall be required to
consummate any of the transactions described herein unless at Closing,
(a) The waiting period under the HSR Act shall have expired or been
terminated.
(b) No suit, action, investigation, inquiry or other proceeding by any
governmental body or any other person or legal or administrative proceeding
shall have been instituted or threatened which may materially adversely affect
the financial conditions, assets, liabilities (absolute, accrued, contingent or
otherwise), reserves, business, operations or prospects of Company and its
subsidiaries taken as a whole or which questions the validity or legality of the
transactions described herein and no provision of any applicable law or
regulation and no judgment, injunction, order or decree shall prohibit the
consummation of the transactions, contemplated hereby.
(c) Purchaser shall have received an opinion from counsel to Company,
Nason, Yeager, Gerson, White and ▇▇▇▇▇, P.A., as to the matters referred to in
Paragraphs 5(b), 5(c) and 5(e); that the transfer of the Shares from Sellers and
Other Shares to Purchaser will be exempt from the registration provisions of the
Act and will not violate the registration provisions of Section 5 of the
Securities Act; when paid for in accordance with the terms of the respective
option agreements, the shares issuable upon exercise of options held by Sellers,
and the Other Shares will be duly issued, fully paid and non-assessable; the
issuance of the shares issuable upon exercise of options held by Sellers, and
the Other Shares will be exempt from the registration provisions of the Act and
will not violate the registration provisions of Section 5 of the Securities Act;
and, upon payment of the purchase price therefor, to the knowledge of counsel,
the Shares and Other Shares will be owned by Purchaser free and clear of all
liens, encumbrances or restrictions of any kind whatsoever, except with regard
to restrictions upon transfer as imposed under the Securities Act.
(d) The Shareholders' Agreement, substantially in the form annexed
hereto as Exhibit 1C, shall be executed and delivered by Purchaser and Sellers,
simultaneously with the closing of this Agreement and the purchase of the
several Other Shares by Purchaser.
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(e) The purchase of the several Other Shares by Purchaser, shall take
place simultaneously with the closing of this Agreement.
(f) In the case of Purchaser, Sellers shall have performed in all
material respects all of their obligations hereunder required to be performed by
them at or prior to the Closing Date, the representations and warranties of
Sellers contained in this Agreement and in any certificate or other writing
delivered by Sellers pursuant hereto shall be true in all material respects at
and as of the Closing Date as if made at and as of such time and Purchaser shall
have received a certificate signed by Sellers to the foregoing effect.
(g) In the case of Sellers, Purchase shall have performed in all
material respects all of its obligations hereunder required to be performed by
it at or prior to the Closing Date, the representations and warranties of
Purchaser contained in this Agreement and in any certificate or other writing
delivered by Purchaser pursuant hereto shall be true in all material respects at
and as of the Closing Date as if made at and as of such time and Sellers shall
have received a certificate signed by an officer of Purchaser to the foregoing
effect.
10. Termination. This Agreement may be terminated and the transactions
contemplated hereby may be abandoned at any time prior to the Closing Date (i)
by mutual written agreement of Sellers and Purchaser; (ii) the Closing Date
shall not have occurred on or before December 31, 1999; or (iii) there shall be
any law or regulation that makes consummation of the transactions contemplated
hereby illegal or otherwise prohibited or any judgment, injunction, order or
decree of any court or governmental body having competent jurisdiction shall
enjoin the transactions contemplated hereby and such enjoin the transactions
contemplated hereby and such judgment, injunction, order or decree shall have
become final and non-appealable.
11. Survival of Representations and Warranties. All representations and
warranties made by the parties in this Agreement shall survive the closing under
for a period of two (2) years from the Closing Date.
12. Indemnification; Limitation of Liability. Sellers hereby jointly
and severally indemnify Purchaser and its affiliates against and agree to hold
each of them harmless from any and all damage, loss, liability and expense
(including, without limitation, reasonable expenses of investigation and
reasonable attorneys' fees and expenses in connection with any action, suit or
proceeding) ("Damages") incurred or suffered by Purchaser or any of its
affiliates arising out of any misrepresentation or breach of warranty, covenant
or agreement made or to be performed by Seller or an Other Seller pursuant to
this Agreement or a Sales Agreement. Purchaser hereby indemnifies Sellers, its
affiliates and the Other Sellers against and agrees to hold each of them
harmless from any and all Damages incurred or suffered by Sellers, any of their
affiliates or Other Sellers arising out of any misrepresentations or breach of
warranty, covenant or agreement made or to be performed by Purchaser pursuant to
this Agreement. Notwithstanding anything to the contrary contained herein, the
liability of each Seller and Other Seller to Purchaser arising under this
Agreement (whether for breach of warranty, representation, failure to fulfill
covenants or agreements, indemnity or for any other reason) shall not exceed the
amount of the purchase price actually received by each such Seller and Other
Seller hereunder.
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13. No Waiver. The failure of any of the parties hereto to enforce any
provision hereof on any occasion shall not be deemed to be a waiver of any
preceding or succeeding breach of such provision or other provision.
14. Entire Agreement. This Agreement, together with the Shareholders'
Agreement and each of the several purchase agreements with the Option Sellers,
constitute the entire agreement and understanding of the parties hereto and no
amendment, modification or waiver of any provision herein shall be effective
unless in writing, executed by the party charged therewith.
15. Governing Law. This Agreement shall be construed, interpreted and
enforced in accordance with and shall be governed by the laws of the State of
New York, without reference to the principles of conflicts laws, except as to
the valid issuance of the Shares and Other Shares, which shall be governed by
the laws of the State of Delaware, without reference to the principles of
conflicts laws.
16. Assignment. No party may assign its rights under this Agreement and
such attempted assignment shall be void of no force and effect; except that
Purchaser shall have the right to assign its rights and obligations hereunder to
LVMH Moet ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Vuitton S.A. or any of its affiliates, subject to the
consent of the Sellers, which shall not be unreasonably withheld.
17. Paragraph Headings. The paragraph headings herein have been
inserted for convenience of reference only, and shall in no way modify or
restrict any of the terms or provisions hereof.
18. Notices. Any notice or other communication under the provisions of
this Agreement shall be in writing, and shall be given by registered or
certified mail (postage prepaid), return receipt requested, by hand delivery
with return receipt requested, or by the Express Mail service offered by the
United States Post Office, directed to the address set forth above for Purchaser
and with respect to each of Sellers, to the Sellers at c/o Inter Parfums, Inc.,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, or to any new address in the City of New
York, Borough of Manhattan of which any party hereto shall have informed the
others by the giving of notice in the manner provided herein. Such notice or
communication shall be effective, if sent by mail, three (3) days after it is
mailed within the continental United States; if sent by Express Mail service,
one day after it is mailed; or by hand delivery, upon receipt.
19. Consent to Service of Process. Each party hereto hereby irrevocably
consents to the exclusive jurisdiction and venue of the courts of the State of
New York and of any United States District Court located within the City of New
York with regard to any and all actions or proceedings arising out of, or
relating to, this Agreement, and irrevocably waives, to the fullest extent
permitted by law, any objection that it may now or hereafter have to the laying
of the venue of any such suit, action or proceeding in any such court or that
any such suit, action or proceeding which is brought in any such court has been
brought in an inconvenient forum,
11
and agrees that service of process may be made in the manner for providing
notice, as specified in Paragraph 18 hereof.
20. Unenforceability; Severability. If any provision of this Agreement
is found to be void or unenforceable by a court of competent jurisdiction, then
the remaining provisions of this Agreement shall, nevertheless, be binding upon
the parties with the same force and effect as though the unenforceable part had
been severed and deleted. Upon such determination, the parties shall negotiate
in good faith to modify this Agreement so as to effect the original intent of
the parties as closely as possible in an acceptable manner so that the
transactions contemplated hereby shall be consummated as originally contemplated
to the fullest extent possible.
21. Brokers' Fees. Purchaser warrants to Sellers and to Option Holders
that they shall have no liability and each of Sellers warrant to Purchaser
warrants that Purchaser shall have no liability, with respect to any brokerage
fees or agents' commissions incurred in connection with the transactions
contemplated hereby.
22. Execution of Documents. At any time and from time to time
hereafter, the parties hereto will execute and deliver such further conveyances,
assignments and other written assurances as the other parties shall reasonably
request in order to vest and confirm title to the securities intended to be
transferred, assigned and conveyed hereunder.
23. Counterparts. This Agreement may be executed in counterparts, all
of which shall be deemed to be duplicate originals. Delivery by facsimile
transmission of an executed signature page to this Agreement shall be effective
as delivery of a manually executed counterpart hereof.
12
IN WITNESS WHEREOF, the parties hereto have executed this instrument
the date first above written.
LV CAPITAL USA, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Director
/s/ ▇▇▇▇ ▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Exhibit 1B: Form of Letter Agreement regarding
Option Exercise and Sale of Shares
November __, 1999
Inter Parfums, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ -- ▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
LV Capital USA, Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Re: Option Exercise and Sale of Shares
Gentlemen:
I understand that LV Capital USA, Inc. ("Buyer"), a Delaware
corporation and indirect subsidiary of LVMH Moet ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Vuitton, S.A,.
advises me that it has or will shortly enter into an agreement with both ▇▇▇▇
▇▇▇▇▇ and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (the "LVMH Purchase Agreement") to purchase shares of
common stock, $.001 par value per share ("Common Stock") of Inter Parfums, Inc.
(the "Company"), from Messrs. Madar and Benacin, others and holders of options
to purchase shares of Common Stock. After the closing of such transaction, Buyer
will own approximately 20% of the outstanding shares of Common Stock. Further,
Buyer has agreed to purchase the number of shares of Common Stock from me which
are either owned by me or issuable upon exercise of my stock option agreement(s)
as described below (collectively the "Option(s)"), subject to certain conditions
as set forth in the LVMH Purchase Agreement.
Accordingly, please be advised that simultaneously with the closing of
the LVMH Purchase Agreement, I agree to exercise my Option(s), if any, and
purchase the number of shares of Common Stock of the Company, as described
below. I also understand that Buyer is making the payment to the Company on my
behalf for the exercise price of my Option(s) in the amount set forth below. I
agree to sell the Shares I own to Buyer, and if I hold Option(s), to sell the
shares to be acquired upon exercise of my Options immediately thereafter to
Buyer, at the sales price of $12.00 per share.
I understand that Buyer will deliver the purchase price for the Shares
to the Company, as provided in Section 2 of the LVMH Purchase Agreement, and
that the exercise price of my Option(s) in the amount set forth below will be
paid by applying a portion of such monies received from Buyer with the remainder
to be delivered by the Company to me after deduction for applicable withholding
taxes.
1
I understand that the closing of the exercise of my Option(s) and sale
to Buyer is to take place, if at all, on or before December 31, 1999. Further,
the closing is conditioned upon, and will not take place unless and until, the
LVMH Purchase Agreement closes, and that all agreements are to close
simultaneously.
In connection with my sale of the Shares to Buyer, I warrant and
represent to both the Company and Buyer as follows:
1. Upon exercise of my Option(s), I will have the complete and
unrestricted power and the unqualified right to sell, transfer, assign and
deliver to Buyer and, upon Buyer's payment of the purchase price therefor, Buyer
shall receive valid and marketable title to the Shares, free and clear of all
liens, encumbrances and restrictions whatsoever, except as to restrictions on
resale as may be imposed by the Federal Securities laws against Buyer.
2. I have made no public solicitation or advertisement in connection
with the sale of the Shares to Buyer.
3. This Agreement constitutes a valid and binding agreement of me,
enforceable against me in accordance with its terms.
4. I hereby appoint the Company as my agent to receive the proceeds
from Buyer of my sale of the Shares and to disburse such proceeds to me, subject
to any applicable withholding for income taxes.
5. I will indemnify LV Capital and its affiliates against and hold them
harmless from any and all loss, liability and expenses (including, without
limitation, reasonable attorneys' fees and expenses) incurred or suffered by LV
Capital or its affiliates arising out of any misrepresentation or breach of my
covenants, warranties and representations herein. However, in any event, I shall
not be liable to Buyer for more than the amount of the purchase price paid.
Very truly yours,
Signature: _____________________________
Print Name: ____________________________
2
Total
------------------------------ ------------ ------------- ------------ =========
Option Agreement Dated
--------------------------------------------------------------------------------
Number of Shares Sold from
Exercise of Option or
Shares held directly
--------------------------------------------------------------------------------
Exercise Price per Share
--------------------------------------------------------------------------------
Total Sales Price to Buyer
--------------------------------------------------------------------------------
Total Exercise Price Payable
to the Company
--------------------------------------------------------------------------------
Amount of Taxes Withheld by
Company
--------------------------------------------------------------------------------
Net Amount of Check to
Seller
--------------------------------------------------------------------------------
3
Exhibit 1C: Shareholders' Agreement
SHAREHOLDERS AGREEMENT
Agreement made this 22nd day of November, 1999 by and among ▇▇▇▇ ▇▇▇▇▇
(sometimes "Madar"), an individual residing at ▇ ▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇; ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ (sometimes "Benacin"), an individual residing at
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇; and LV CAPITAL USA, INC., a Delaware
corporation (sometimes "LV Capital") and an indirect subsidiary of LVMH Moet
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Vuitton, S.A. (sometimes "LVMH"), having an office at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇.
W I T N E S S E T H:
WHEREAS, Inter Parfums, Inc. a Delaware corporation (the
"Corporation"), is duly organized under the laws of the State of Delaware, and
has its shares of Common Stock listed for trading on The Nasdaq Stock Market,
National Market System;
WHEREAS, the Shareholders have entered into the Stock Purchase
Agreement, whereby shares of Common Stock owned and to be acquired by the
Majority Shareholders and others are to be sold to LV Capital, upon the terms
and subject to the conditions set forth in the Stock Purchase Agreement; and
WHEREAS, the Shareholders desire to promote their mutual interest and
the interest of the Corporation by imposing certain restrictions and obligations
upon themselves, the Corporation, IP France and their several shares of Common
Stock.
NOW, THEREFORE, in consideration of the mutual covenants, conditions
and promises contained herein, the parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Affiliates. Solely for purposes of this Agreement, an "Affiliate,"
in the case of LV Capital, shall mean a corporation, entity or person which
directly or indirectly controls or is controlled by or is under common control
with LV Capital, including but not limited to, those persons and entities listed
in the Schedule 13D dated August 5, 1999, filed by LVMH, but not the
Corporation; in the case of Corporation, shall mean a corporation, entity or
person which directly or indirectly controls or is controlled by or is under
common control with the Corporation, including but not limited to, the Majority
Shareholders, but not LV Capital; and in the case of the Majority Shareholders,
shall mean a corporation, entity or person which directly or indirectly controls
or is controlled by or is under common control with the Majority Shareholders,
including but not limited to, each of the Majority Shareholders and the
Corporation, but not LV Capital.
1.2 Associate. The term "Associate" shall mean any present or future
Associate within the meaning of Rule 12b-2 promulgated under the Exchange Act.
1.3 Beneficial Ownership. The term "Beneficial Ownership" shall have
the meaning set forth in Rule 13d-3 promulgated under the Exchange Act.
1.4 Business of the Corporation and its Subsidiaries. The term
"Business of the Corporation and its Subsidiaries" shall be defined to mean the
production, manufacture, marketing, distribution and sale of fragrance products,
perfumes, eau de toilette, eau de cologne, deodorants, cosmetics, health and
beauty and personal care products, for men, women and children.
1.5 Common Stock. The term "Common Stock" shall mean Corporation's
Common Stock, $.001 par value per share.
1.6 Commission. The term "Commission" shall mean the United States
Securities and Exchange Commission.
1.7 Exchange Act. The term "Exchange Act" shall mean the United States
Securities Exchange Act of 1934, as amended from time to time.
1.8 Fair Market Value of the Common Stock. The term "Fair Market Value
of the Common Stock" on any day shall mean (a) if the principal market for the
Common Stock is a national securities exchange, the average between the high and
low sales prices of the Common Stock on such day as reported by such exchange or
on a consolidated tape reflecting transactions on such exchange; (b) if the
principal market for the Common Stock is not a national securities exchange and
the Common Stock is quoted on The Nasdaq Stock Market ("NASDAQ"), and (i) if
actual sales price information is available with respect to the Common Stock,
then the average between the high and low sales prices of the Common Stock on
such day on NASDAQ, or (ii) if such information is not available, then the
average between the highest third party bid and lowest third party asked prices
for the Common Stock on such day on NASDAQ; or (c) if the principal market for
the Common Stock is not a national securities exchange and the Common Stock is
not quoted on NASDAQ, then the average between the highest third party bid and
lowest third party asked prices for the Common Stock on such day as reported by
The Nasdaq Bulletin Board, or a comparable service; provided that if clauses
(a), (b) and (c) of this Paragraph are all inapplicable, or if no trades have
been made or no quotes are available for such day, then the Fair Market Value of
the Common Stock shall be the average of the average of the high and low sales
prices of the Common Stock as reported on a national securities exchange or
NASDAQ, if the principal market for the Common Stock is a national securities
exchange or NASDAQ, as may be the case, for each of the last ten (10) days
within the immediately preceding thirty (30) day period; and if all of the
foregoing is inapplicable, then the Fair Market Value of the Common Stock shall
be determined by the Board of Directors by any method consistent with applicable
regulations adopted by the Treasury Department relating to stock options. The
determination of the Board of Directors shall be conclusive in determining the
Fair Market Value of the Common Stock in
2
good faith; provided that if LV Capital disagrees with such determination, it
shall be entitled, at its own cost and expense, to select (with the consent of
the Majority Shareholders, such consent not to be unreasonably withheld) an
investment banking or accounting firm of nationally recognized standing to
arbitrate such dispute, and the decision of such arbitrator will be binding upon
the parties.
1.9 Group. The term "Group" means a Group within the meaning of Section
13(d) of the Exchange Act.
1.10 IP France. The term "IP France" means Inter Parfums, S.A., an
indirect, majority-owned, French subsidiary of the Corporation.
1.11 LV Capital Designees. The term "LV Capital Designees" shall mean
the two (2) members of the Board of Directors listed in Article 2.2(a)(ii)
hereof, and their successors as appointed in the discretion of LV Capital.
1.12 Majority Shareholders. Madar and Benacin are sometimes
collectively referred to as the "Majority Shareholders".
1.13 Person. The term "person" means any natural person, corporation,
business trust, joint venture, association, company, partnership or government,
or any agency or political subdivision thereof.
1.14 Proxies. The term "Proxies" shall have the meanings used in the
proxy rules promulgated by the Commission pursuant to the Exchange Act.
1.15 Securities Act. The term "Securities Act" shall mean the United
States Securities Act of 1933, as amended from time to time.
1.16 Shareholders. Madar, Benacin and LV Capital are sometimes
collectively referred to as the "Shareholders".
1.17 Solicitation. The term "Solicitation" shall have the meanings used
in the proxy rules promulgated by the Commission pursuant to the Exchange Act.
1.18 Stock Purchase Agreement. The term "Stock Purchase Agreement"
shall mean the agreement among the Shareholders dated November 22, 1999.
1.19 Voting Securities. The term "Voting Securities" shall mean
Corporation's Common Stock, and any other securities of Corporation entitling
the holder to vote for the election of directors of the Corporation, and any
other securities (including rights, warrants and options) convertible into,
exchangeable for or exercisable for any Common Stock of the Corporation or any
other security of the Corporation referred to above (whether or not presently
convertible, exchangeable or exercisable).
3
ARTICLE II
VOTING OF STOCK,
ELECTION OF DIRECTORS AND EXECUTIVE OFFICERS
AND OTHER MATTERS OF CORPORATE GOVERNANCE
2.1 Number of Members of the Board of Directors. Upon the execution and
delivery of this Agreement, the Majority Shareholders shall use their best
efforts to cause the number of members of the Board of Directors of the
Corporation to be increased from seven (7) to ten (10) members and the parties
hereto hereby agree to take all necessary actions (including, without
limitation, voting all shares of Common Stock owned by them) to cause the Bylaws
of the Corporation to be so amended and remain in effect.
2.2 Election or Appointment of Individual Board Members.
(a) Upon the execution and delivery of this Agreement,
(i) ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, the Chief Financial Officer of IP France,
shall be added as a member of the Board of Directors; and
(ii) ▇▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇▇▇ shall be added as new
directors of the Corporation.
(b) Each of the Shareholders agree to vote their respective
shares of Common Stock for the election of, and to continue to vote and to take
such other actions as may be necessary to elect and keep in office, Madar,
Benacin and six (6) nominees of the Majority Shareholders, and two (2) LV
Capital Designees as directors of the Corporation.
(c) The Majority Shareholders shall use their best efforts to
cause one LV Capital Designee to be elected (and to serve at all times this
Agreement shall remain in effect) as a member of the Compensation Committee of
the Board of Directors.
2.3 Election of Officers. The Shareholders agree to use their best
efforts to cause the directors of the Corporation, to vote and to continue to
vote for, and to cause the following persons to be elected as the following
officers of the Corporation:
▇▇▇▇ ▇▇▇▇▇ Chairman of the Board and Chief Executive Officer
of the Corporation; and Director General of Inter
Parfums, S.A.
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Vice Chairman of the Board, President of the
Corporation and President of Inter Parfums, S.A.
4
2.4 Voting.
(a) The Majority Shareholders covenant and agree with LV
Capital that the Majority Shareholders will use their best efforts to cause the
Corporation and its members of the Board of Directors and the Corporation's
subsidiaries to act in a manner consistent with the provisions of this
Agreement.
(b) The Majority Shareholders covenant and agree with LV
Capital that they shall use their best efforts, including without limitation
voting all shares of Common Stock owned or controlled by them at any annual or
special meeting of the Corporation, to cause the Amended and Restated
Certificate of Incorporation of the Corporation to be amended as set forth in
Exhibit A hereto (the "Charter Amendment") at the next annual meeting of
shareholders of the Corporation, which meeting shall be held no later than July
2000.
(c) If any of the Majority Shareholders fails or refuses to
vote its Shares as required by this Article II, LV Capital shall have an
irrevocable proxy coupled with an interest to vote those securities on behalf of
the Majority Shareholders in accordance with this Article II, and each Majority
Shareholder hereby grants to LV Capital such irrevocable proxy coupled with an
interest.
(d) Until such time as the Charter Amendment becomes
effective, the Majority Shareholders covenant and agree with LV Capital that the
Corporation and its subsidiaries shall obtain approval of the Board of Directors
for corporate actions as if such amendment were in effect.
2.5 Board Meetings. The Majority Shareholders covenant and agree with
LV Capital that the Majority Shareholders will use their best efforts to cause
the Corporation and its members of the Board of Directors to hold meetings of
the Board of Directors of the Corporation at least once per calendar quarter
during each year, and to hold such meetings during each year as follows: at
least one (1) in New York City, one (1) in Paris, and two (2) by conference
telephone.
2.6 Management Reports. The Majority Shareholders covenant and agree
with LV Capital to cause the Corporation to distribute to LV Capital all reports
and materials prepared for the Board of Directors, including without limitation:
(a) monthly management reports, which are to include net sales, operating income
and disclosure of any significant highlights for the preceding month; and (b)
full quarterly management reports within forty-five (45) days subsequent to the
end of each of the first three (3) quarters, and within ninety (90) days
subsequent to the last quarter, of each fiscal year of the Corporation. LV
Capital covenants and agrees with the Majority Shareholders that LV Capital and
its Affiliates shall hold all information provided to them pursuant to this
Section 2.6 confidential, unless compelled to disclose by judicial or
administrative process or, in the opinion of their counsel, by other
requirements of law (and, to the extent permitted by law, LV Capital agrees to
give prior notice of such opinion to the Corporation); provided that the
5
foregoing confidentiality obligation shall not apply to information that is (i)
known to LV Capital or its Affiliates prior to its disclosure by the Corporation
hereunder, solely as evidenced by the written records of LV Capital or its
Affiliates, (ii) disclosed to LV Capital by a third party not known by LV
Capital to be under a legally binding obligation to keep such information
confidential,(iii) publicly disclosed other than by breach by LV Capital of its
obligations hereunder, or (iv) required by law, regulation or the rules of any
national securities exchange to be disclosed. LV Capital acknowledges its
obligations under law not to buy or sell securities of the Corporation or IP
France on the basis of material non-public information.
ARTICLE III
GRANTS OF OPTIONS AND SHARE PURCHASE OPTION
3.1 Stock Options.
(a) The Majority Shareholders covenant and agree to cause the
Corporation not to, and to cause IP France not to, in any calendar year for each
of the Corporation and IP France, grant options exercisable for in excess of one
and one half percent (1.5%) of the total number of outstanding shares of Common
Stock of each of the Corporation and IP France, respectively, as reflected in
the audited financial statements of the Corporation and IP France, respectively
for the immediately preceding fiscal year. The allocation of the grant of such
options shall be within the discretion of the stock option committee of the
Board of Directors of the Corporation (which shall consist solely of outside
directors and which shall include at least one LV Capital Designee as a member)
and the Board of Directors or stock option committee or similar body of IP
France, which shall be composed entirely of outside directors.
(b) Notwithstanding the foregoing, (i) options granted in
accordance with past practice pursuant to the 1997 Nonemployee Director Stock
Option Plan for nonemployee directors of the Corporation, wherein grants are
automatically made on 1 February each year with an exercise price per share of
Common Stock equal to the Fair Market Value of the Common Stock at the time of
grant (options to purchase 1,000 shares of Common Stock are granted to all
nonemployee directors except ▇▇. ▇▇▇▇▇▇▇, who receives an option to purchase
4,000 shares of Common Stock), and (ii) options to purchase 2,000 shares of
Common Stock are granted to nonemployee directors when first elected or
appointed to Board, as well as any successor plan on substantially the same
terms, shall not be subject to the limitation set forth in Article 3.1(a)
hereof.
3.2 Share Purchase Option. The Majority Shareholders covenant and agree
to cause the Corporation to grant, prior to December 31, 1999, to LV Capital,
the right and option to purchase shares of Common Stock of the Corporation, or
other securities of the Corporation convertible into, exchangeable for or
carrying any rights to purchase shares of Common Stock, with respect to all
shares of Common Stock or any kind of security convertible into, exchangeable
for or carrying any rights to purchase shares of Common Stock of the Corporation
to be issued after the date of closing of the Stock Purchase Agreement
6
(including without limitation the reissuance of treasury shares) (the
"Subsequently Issued Equity Securities"), as follows (the "Purchase Rights"):
(a) LV Capital shall have the right to acquire, in return for
payment in cash in an amount equal to the fair market value per share of the
consideration to be paid by the purchaser of the Subsequently Issued Equity
Securities which triggers the Purchase Rights, a sufficient number of the
Subsequently Issued Equity Securities so that, when combined with the Common
Stock held prior to such purchase, the aggregate number of shares of Common
Stock held by LV Capital and its Affiliates after giving effect to such issuance
(and assuming for this purpose the issuance of the maximum number of shares of
Common Stock issuable upon conversion or otherwise with respect to the
Subsequently Issued Equity Securities) would equal the same percentage of the
number of outstanding shares of Common Stock held before the proposed issuance
of Subsequently Issued Equity Securities (and assuming, for this purpose, the
issuance of the maximum number of shares of Common Stock issuable upon
conversion or otherwise with respect to any previously issued Subsequently
Issued Equity Security). Upon the second and each subsequent application of this
provision, the waiver of, or failure to exercise, the Purchase Rights shall not
result in a cumulative right, but rather the aforementioned percentage in the
preceding sentence shall be appropriately adjusted to take into account each
such earlier waiver or failure to exercise the Purchase Rights.
(b) The Majority Shareholders covenant and agree with LV
Capital that the Majority Shareholders will cause the Corporation and its
members of the Board of Directors to provide LV Capital at least ten (10) days
prior notice in accordance with Article 9.9 (a "Purchase Rights Notice") of any
proposed issuance of Subsequently Issued Equity Securities. The exercise of
Purchase Rights hereunder shall be evidenced by notice to the Corporation, Attn:
President, within ten (10) days of the effective date of the Purchase Rights
Notice.
(c) Notwithstanding the foregoing, LV Capital shall have no
Purchase Rights in the following instances, if Common Stock is to be issued :
(1) as the result of a stock split or stock dividend;
(2) upon exercise of options outstanding on 28 September,
1999;
(3) upon exercise of options described in Articles 3.1(a)
and (b) hereof; and
(4) in excess of the limitation with respect to the number
of shares of Common Stock to be owned by LV Capital and its Affiliates set forth
in Article 5.1(a) of this Agreement (Standstill Provisions), subject to the
provisions of Article 5.2 of this Agreement.
7
ARTICLE IV
RESTRICTIONS ON SALE OF COMMON STOCK
4.1 Restrictions on Transfer. No Shareholder shall sell his or its
shares of Common Stock, or any part thereof, that is now owned or that may
hereafter be acquired, held or owned, directly or beneficially by him or it,
except upon the terms and subject to the conditions set forth in this Agreement.
Any purported sale in violation of any provision of this Agreement shall be void
and of no force and effect, shall not operate to transfer any interest in, or
title to, the purported purchaser, and shall give the other Shareholders an
option to purchase such shares in the manner and upon the terms and conditions
provided for herein.
4.2 Offer. If either of the Majority Shareholders or LV Capital (the
"Offeror") desires to sell his or its shares of Common Stock (the "Offered
Shares") or any part of the Offered Shares, then the Offeror shall give notice
("Notice") of the proposed sale (the "Offer") to the non-selling Shareholders
(the "Non-Selling Shareholder"). Such Notice shall specify the number of shares
intended to be transferred (the "Offered Shares").
4.3 Right of First Offer. Each Non-Selling Shareholder shall have the
exclusive and irrevocable right and option, exercisable at any time before the
expiration of ten (10) business days from the latest effective date of the
Notice, to provide notice to the Offeror of its bid to purchase all but not less
than all of the Offered Shares solely in cash (the "Bid"). No Non-Selling
Shareholder shall have the right to bid for less than all of the Offered Shares,
and any Bid once made shall be deemed a continuing irrevocable offer to purchase
until accepted or rejected by the Non-Selling Shareholder.
4.4 Acceptance of Bid. If any Bids are timely submitted, the Offeror
shall, within fifteen (15) business days of the effective date of the Notice,
either accept or reject the highest Bid. If two or more Non-Selling Shareholders
submit equal Bids and no higher Bid is submitted, such equal Bids shall be
deemed to be the highest Bid submitted and such Non-Selling Shareholders shall
be deemed to have bid for their pro rata portion (based on ownership of Common
Stock) of the Offered Shares. If the highest Bid is accepted by the Offeror,
then the sale of the Offered Shares to the Non-Selling Shareholder that
submitted such Bid shall close within five (5) business days of the effective
date of notice of acceptance of the Bid to the Non-Selling Shareholder by the
Offeror.
4.5 Sale to Third Party. If, after compliance with the foregoing
provisions, either no Bid is submitted or is not timely submitted by a
Non-Selling Shareholder, or the highest Bid has not been accepted by the
Offeror, then the Offeror shall have the right to sell the Offered Shares to a
third party not later than sixty (60) days from the expiration of the time
period set forth in Article 4.3 hereof, provided that, such sale shall not be
for a price lower than the highest validly submitted Bid.
4.6 Failure to Sell to Third Party. If sale of the Offered Shares does
not close within the time period set forth in Article 4.5 hereof, then any
attempted subsequent sale of shares of Common Stock shall again be subject to
all of the provisions of this Article IV.
4.7 Permitted Transfers. Notwithstanding anything to the contrary
contained in this Agreement, the provisions of Article IV shall not be
applicable to
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(a) sales of Common Stock by any Shareholder, which do not
exceed in the aggregate for any such Shareholder for any year, one percent (1%)
of the total number of outstanding shares of Common Stock of the Corporation as
of the end of the immediately preceding fiscal year, as reflected in the audited
financial statements of the Corporation.
(b) any disposition of shares of Common Stock by a Majority
Shareholder to the spouse or children of a Majority Shareholder, provided that
such transferee agrees to be bound by all terms and conditions of this
Agreement.
(c) any transfer of shares of Common Stock by LV Capital to
LVMH or any of its affiliates, provided that such transferee agrees to be bound
by all terms and conditions of this agreement.
4.8 Sale on Change in Control. In the event either or both of the
Majority Shareholders sell, assign, transfer, pledge or otherwise dispose of all
or any portion of their respective shares of Common Stock, or enter into any
agreement to sell, assign, transfer, pledge or otherwise dispose of all or any
portion of their respective shares of Common Stock to a third party which
results or would result in a Change in Control of the Corporation, then in any
such event and as a condition precedent to the consummation of such transaction,
each Majority Shareholder covenants and agrees that LV Capital shall have the
right to join in such sale for all of the shares of Common Stock beneficially
owned by LV Capital and its Affiliates on the same terms and subject to the
conditions as agreed by the Majority Shareholders. For the purposes of this
Article 4.8, a "Change in Control" shall be considered to have resulted if (i)
any person or Group other than the Majority Shareholders or a Group consisting
solely of the Majority Shareholders and LV Capital shall have or, upon the
occurrence of any event, the lapse of time or both, shall have the right to
acquire the power to direct or cause the direction of the management or policies
of the Corporation, whether through ownership of voting securities, by contract
or otherwise or (ii) any person or Group shall at any time Beneficially Own more
shares of Common Stock than the Majority Shareholders, inclusive of all
securities convertible into, or exchangeable or exercisable for any Voting
Securities of the Corporation.
ARTICLE V
STANDSTILL PROVISIONS
5.1 Negative Covenants. LV Capital hereby covenants and agrees with
each of the Majority Shareholders that each of LV Capital and its Affiliates
shall not directly or indirectly, except as otherwise provided herein,
(a) acquire, offer to acquire, or agree to acquire, directly
or indirectly, by purchase, conversion, exercise or otherwise, Beneficial
Ownership of any Voting Securities under any or all of the following
circumstances:
(i) if the Voting Securities are shares of Common Stock,
and when such Voting Securities are added to the number of shares of Common
Stock Beneficially Owned by LV Capital and its Affiliates (excluding any shares
of Common Stock to which LV Capital and its affiliates have a right to acquire
by exercise, conversion, exchange or otherwise), such Beneficial Ownership would
exceed twenty-five percent (25%) (the "Maximum LV Percentage") of the total
number of outstanding shares of Common Stock of the Corporation or
9
(ii) if the Voting Securities are securities other
than Common Stock, and when such Voting Securities are added to the number of
shares of such class of Voting Securities Beneficially Owned by LV Capital and
its Affiliates, such Beneficial Ownership would exceed the Maximum LV Percentage
of the total number of outstanding shares of such class of Voting Securities of
the Corporation;
(b) make, or in any way participate, directly or indirectly,
in any Solicitation of Proxies to vote, or seek to advise or influence any
person, entity or Group with respect to the voting of, any Voting Securities of
the Corporation, or initiate or propose any stockholder proposal with respect to
the Corporation described in Rule 14a-8 promulgated under the Exchange Act; or
(c) form, join or in any way participate in, or in any manner
provide any form of assistance to, a Group with respect to any Voting Securities
of the Corporation, including but not limited to, the sale of shares of Common
Stock to a third party, which would transfer control of the Corporation from the
Majority Shareholders (except for a joint sale with the Majority Shareholders as
described in Article 4.8 hereof); or
(d) otherwise act, alone or in concert with others, to seek
to, or assist or encourage any other person, entity or Group in seeking to,
control or influence the management, board of directors or policies of the
Corporation or propose or effect any form of business combination with the
Corporation or any of its Affiliates or any restructuring, recapitalization or
similar transaction with respect to the Corporation or any of its Affiliates.
5.2 Limited Increase in Cap on Share Holdings. Notwithstanding the
provisions of Article 5.1(a) hereof, the Maximum LV Percentage shall be
automatically increased if any third party or Group becomes the beneficial owner
of more shares of Common Stock than LV Capital, by the amount necessary to
permit LV Capital to own an amount of Common Stock in excess of any third party
or Group equal to one-half of one percent (0.5%) of the total number of
outstanding shares of Common Stock of the Corporation, as reflected in the most
recent audited consolidated financial statements of the Corporation. In the
event the Maximum LV Percentage is increased in accordance with the terms of
this Article 5.2, then in each such event, such amount, once increased, shall
not be reduced if the third party or Group subsequently reduces its ownership.
Notwithstanding the foregoing, such amount, increased in accordance with the
terms of this Article 5.2, shall be reduced to such level reached as the result
of the sale or other disposition of shares of Common Stock if LV Capital and its
Affiliates sell or otherwise dispose of shares of Common Stock, but in no event
to less than twenty-five percent (25%).
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5.3 Breach of Standstill Provisions. In the event that LV Capital or
any of its Affiliates breach the provisions of Articles 5.1 and 5.2 of this
Agreement, then upon the happening of any such event,
(a) the Purchase Rights shall immediately lapse and be of no
further force and effect without any other action being taken by or on behalf of
any party hereto; and
(b) the two (2) LV Capital Designees as directors of the
Corporation shall immediately resign from the Board of Directors of the
Corporation and LV Capital covenants and agrees with the Majority Shareholders
that LV Capital shall immediately cause the resignation from the Board of
Directors of the two (2) LV Capital Designees, and the right of LV Capital to
designate two (2) members of the Board of Directors shall immediately lapse and
be of no further force and effect without any other action being taken by or on
behalf of any party hereto.
ARTICLE VI
NONCOMPETITION
6.1 Negative Covenant. Each of the Majority Shareholders covenants and
agrees with LV Capital, that each shall not directly or indirectly, compete with
or be engaged in the Business of the Corporation and its Subsidiaries or act as
consultant or lender to or owner of any interest in, or agent, representative,
employee, officer, director or partner of, any business or organization which,
directly or indirectly competes with or is engaged in the Business of the
Corporation and its Subsidiaries.
6.2 Exceptions. The provisions of Article 6.1 shall not be deemed
breached solely because a Majority Shareholder Beneficially Owns as a passive
investment no more than one percent (1%) of the outstanding equity securities of
any business, organization or corporation, if, such security is listed on a
recognized securities exchange (whether domestic or foreign) or The Nasdaq Stock
Market, or is regularly traded in the over-the-counter market.
6.3 Duration of Negative Covenant. The provisions of Article 6.1 shall
be effective until either (a) the termination of this Agreement, or (b) with
respect to a Majority Shareholder, until the date on which such Majority
Shareholder is no longer the Beneficial Owner of any shares of Common Stock.
Without limiting the foregoing, it is understood and agreed that if in
connection with a sale or other disposition of all or any portion of the Common
Stock owned by a Majority Shareholder, such Majority Shareholder enters into a
non-competition or similar agreement, LV Capital shall be an express third party
beneficiary of such non-competition or similar agreement, entitled to the
benefits of such agreement and to enforce the provisions thereof.
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ARTICLE VII
REGISTRATION RIGHTS
7.1 Registration Rights.
(a) Subject to Articles 7.1(b) and (c), for so long as LV
Capital and its Affiliates shall Beneficially Own at least ten percent (10%) of
the outstanding Common Stock of the Corporation, LV Capital shall have the
right, exercisable upon written request to the Corporation (a "Demand"), to
cause the Corporation to cause all or a part of the Common Stock owned by LV
Capital and its Affiliates to be registered as soon as reasonably practicable so
as to permit the sale thereof under the Securities Act and, if necessary, the
Exchange Act, and the Corporation shall use its best efforts to effect such a
registration within a reasonable time thereafter.
(b) At any time that the Corporation has an effective shelf
registration that permits the resale of Common Stock held by LV Capital and its
Affiliates in accordance with the Securities Act and the Exchange Act, the
Corporation shall not be required to effect any registration requested by LV
Capital pursuant to paragraph (a) above. The Corporation shall take all actions
reasonably requested by LV Capital to assist LV Capital in any such resale,
including without limitation providing copies of a current prospectus that
complies with the requirements of the Securities Act with respect thereto.
(c) The Corporation shall not be required pursuant to this
Article 7.1 to prepare and file a registration statement that would become
effective within ninety (90) days following the effective date of a registration
statement filed by the Corporation pertaining to an underwritten public offering
of Common Stock for cash for the account of the Corporation if the Demand for
registration is received by the Corporation more than thirty (30) days after the
Corporation gives written notice (which the Corporation hereby agrees to
provide) to LV Capital that the Corporation is commencing to prepare a
Corporation-initiated registration statement and the Corporation is employing
all reasonable efforts to cause such registration statement to become effective.
(d) The Corporation may delay the filing of any registration
statement pursuant to this Article 7.1 if, in the good faith judgment of the
Board of Directors, the Corporation would be required to include in such
registration statement business information which at that time cannot be
publicly disclosed without disruption of a corporate development or transaction
then pending or in progress and without other adverse consequence to the
Corporation and the background and reasons for such judgment are communicated to
LV Capital in writing in reasonable detail; provided that the duration of such
delay shall not exceed sixty (60) days from the date the Corporation became
aware of such business information; provided, further that the Corporation
promptly shall make such filing as soon as the conditions which permit it to
delay such filing no longer exist and that in the event of such deferral, LV
Capital shall have the right to withdraw its request for registration and such
withdrawn request shall not constitute a Demand.
(e) For so long as LV Capital or its Affiliates own any shares
of Common Stock, if the Corporation desires to effect an offering of the Common
Stock registered with the Commission, then the following shall apply:
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(i) it shall give LV Capital written notice of any proposed
offering at least thirty (30) days prior to the filing of a registration
statement relating to such proposed offering; and
(ii) within twenty-five (25) days after the receipt of such
notice from the Corporation, LV Capital shall have the right to request in
writing that the Corporation register for public sale under the Securities Act
all or a part of the Common Stock Beneficially Owned by LV Capital or its
Affiliates and shall also have the right to request that the Corporation
publicly offer and sell on their behalf all or a part of such stock. If the
registration is an underwritten registration and the managing underwriters
thereof advise the Corporation in writing that the number of shares requested by
LV Capital to be included in the registration exceeds the number which can be
sold in the offering without adversely affecting such offering, then such shares
shall only be included in such offering on a pro rata basis to the extent
considered appropriate by such managing underwriters.
(f) The Corporation shall pay all the expenses in connection
with this Article VII, including all registration, filing and NASD fees, all
fees and expenses of complying with securities or blue sky laws, the fees and
disbursements of counsel for the Corporation and its independent public
accountants and any fees and disbursements of underwriters customarily paid by
issuers or sellers of securities, but excluding any underwriting discounts and
commissions and transfer taxes, if any. In any registration, LV Capital shall
pay for its own underwriting discounts and commissions and transfer taxes.
(g) In connection with any underwritten public offering
pursuant to this Article VII, the Corporation and LV Capital agree to enter into
an underwriting agreement with the managing underwriter of such offering
containing customary terms and conditions, including with respect to
indemnification and contribution.
7.2 Compliance. The Majority Shareholders covenant and agree with LV
Capital that the Majority Shareholders will cause the Corporation and its
members of the Board of Directors to fully comply with the terms and provisions
of Article 7.1
ARTICLE VIII
TERM OF AGREEMENT
8.1 General. This Agreement shall commence on the date first set forth
above and continue indefinitely unless sooner terminated, as hereinafter
provided.
8.2 Termination. This Agreement shall terminate upon LV Capital and its
Affiliates ceasing to beneficially own more than five percent (5%) of the total
number of outstanding shares of Common Stock of the Corporation as reflected in
the most recent audited financial statements of the Corporation.
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ARTICLE IX
MISCELLANEOUS
9.1 Specific Performance. The parties hereto agree that irreparable
damage would occur if any provision of this Agreement were not performed in
accordance with the terms hereof and that the parties shall be entitled to an
injunction or injunctions to prevent breaches of this Agreement or to enforce
specifically the performance of the terms and provisions hereof in any federal
court located in the State of Delaware or any Delaware state court, in addition
to any other remedy to which they are entitled at law or in equity.
9.2 Indemnification. Each of the Majority Shareholders hereby jointly
and severally indemnifies LV Capital and its Affiliates against and agrees to
hold each of them harmless from any and all damage, loss, liability and expense
(including, without limitation, reasonable expenses of investigation and
reasonable attorneys' fees and expenses in connection with any action, suit or
proceeding) ("Damages") incurred or suffered by LV Capital or any of its
Affiliates arising out of any misrepresentation or breach of warranty, covenant
or agreement made or to be performed by the Corporation or a Majority
Shareholder pursuant to this Agreement. LV Capital hereby indemnifies the
Corporation and each of the Majority Shareholders and each of their respective
Affiliates against and agrees to hold each of them harmless from any and all
Damages incurred or suffered by them arising out of any misrepresentation or
breach of warranty, covenant or agreement made or to be performed by LV Capital
pursuant to this Agreement.
9.3 No Waiver. The failure of any of the parties hereto to enforce any
provision hereof on any occasion shall not be deemed to be a waiver of any
preceding or succeeding breach of such provision or any other provision.
9.4 Entire Agreement. This Agreement constitutes the entire agreement
and understanding of the parties hereto and no amendment, modification or waiver
of any provision herein shall be effective unless in writing, executed by the
party charged therewith.
9.5 Governing Law. This Agreement shall be construed, interpreted and
enforced in accordance with and shall be governed by the laws of the State of
Delaware without regard to the principles of conflicts of laws.
9.6 Binding Effect. This Agreement shall bind and inure to the benefit
of the parties and their successors in interest.
9.7 No Assignment. This Agreement may not be assigned or transferred by
the parties hereto, and any attempted assignment hereof shall be void and of no
effect; except that LV Capital shall have the right to assign its rights and
obligations hereunder to LVMH or any of its affiliates, provided such assignee
or transferee agrees to be bound by the provisions of this Agreement.
9.8 Article Headings. The article headings herein have been inserted
for convenience of reference only, and shall in no way modify or restrict any of
the terms or provisions hereof.
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9.9 Notices. Any notice or other communication under the provisions of
this Agreement shall be in writing, and shall be given by registered or
certified mail (postage prepaid), return receipt requested; by hand delivery
with an acknowledgment copy requested; or by the Express Mail service offered by
the United States Post Office or by telecopy or any reputable overnight delivery
service, directed to the addresses set forth above for LV Capital and with
respect to each of the Majority Shareholders, to the Majority Shareholders c/o
Inter Parfums, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, or to any new address
in the City of New York, Borough of Manhattan, of which any party hereto shall
have informed the others by the giving of notice in the manner provided herein.
Such notice or communication shall be effective, if sent by registered or
certified mail, return receipt requested, three (3) days after it is mailed
within the continental United States; if sent by Express Mail or any reputable
overnight delivery service, one (1) day after it is forwarded; or by hand
delivery or by telecopy, upon receipt.
9.10 Consent to Service of Process. Each party hereto hereby
irrevocably consents to the exclusive jurisdiction and venue of the courts of
the State of Delaware with regard to any and all actions or proceedings arising
out of, or relating to, this Agreement, and irrevocably waives, to the fullest
extent permitted by law, any objection that it may now or hereafter have to the
laying of the venue of any such suit, action or proceeding in any such court or
that any such suit, action or proceeding which is brought in any such court has
been brought in an inconvenient forum and agrees that service of process may be
made in the manner for providing notice, as specified in Article 9.9 hereof.
9.11 Cumulative Rights. The rights and remedies granted in this
Agreement are cumulative and not exclusive, and are in addition to any and all
other rights and remedies granted and permitted under and pursuant to law.
9.12 Unenforceability; Severability. If any provision of this Agreement
is found to be void or unenforceable by a court of competent jurisdiction, then
the remaining provisions of this Agreement, shall, nevertheless, be binding upon
the parties and remain in full force and effect. Upon such a determination, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in an acceptable
manner so that the transactions contemplated hereby shall be consummated as
originally contemplated to the fullest extent possible.
Without limitation of the foregoing, the parties expressly agree and
declare that the limitations contained in Article VI are reasonable in scope and
duration, are properly required for the adequate protection of the other parties
hereto and that, in the event either the scope or the duration of such
limitations, or both, is or are deemed to be unreasonable by the final decision
of a court of competent jurisdiction, then in any such event, LV Capital, the
Corporation and the Majority Shareholders agree and submit to such revision or
modification thereof as such court shall deem to be reasonable.
9.13 No Third Party Rights. The representations, warranties and other
terms and provisions of this Agreement are for the exclusive benefit of the
parties hereto, and no other person shall have any right or claim against any
party by reason of any of those terms and provisions or be entitled to enforce
any of those terms and provisions against any party.
15
9.14 Attorneys. The parties acknowledge that the law firm of ▇▇▇▇▇,
▇▇▇▇▇▇ ▇▇▇▇▇▇, White & ▇▇▇▇▇, P.A. has represented the Corporation and the
Majority Shareholders in connection with the negotiation of this Agreement. Each
of the parties to this Agreement have been advised to obtain separate,
independent counsel to represent them in connection with this Agreement, and all
negotiations leading up to this Agreement.
9.15 Language. The English language version of the Agreement shall
govern and prevail over any and all translations of this Agreement into any
other language.
9.16 Counterparts. This Agreement may be executed in counterparts, all
of which shall be deemed to be duplicate originals. Delivery by facsimile
transmission of an executed signature page to this Agreement shall be effective
as delivery of a manually executed counterpart hereof.
IN WITNESS WHEREOF, the parties hereto have executed this instrument
the date first above written.
/s/ ▇▇▇▇ ▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
LV CAPITAL USA, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
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▇▇▇▇ ▇▇▇▇▇▇▇▇
Director
Exhibit A
CERTIFICATE OF AMENDMENT
The following is the text of the new Article Ninth of the Restated
Certificate of Incorporation, as amended:
NINTH: Without in any way limiting the power and authority of the Board
of Directors as otherwise provided for herein, the following corporate actions
shall require the approval of the Board of Directors:
(a) any sale, transfer, pledge or other disposition of all or
any material portion of the assets of the Corporation (including, without
limitation, any shares of any subsidiary of the Corporation or any of its
subsidiaries);
(b) the acquisition by the Corporation or any of its
subsidiaries of shares, securities or assets of any company or entity, whether
by merger, consolidation or other business combination, share purchase, asset
purchase, contribution to capital or otherwise (other than short-term financial
investments in the ordinary course of business consistent with past practice);
(c) the entry, renewal or termination by the Corporation or
any of its subsidiaries into/of any trademark license agreement; or
(d) any material agreement or material transaction involving
the Company or any of its subsidiaries and not in the ordinary course of
business.
Notwithstanding anything in these Articles to the contrary, the
following corporate actions shall require the unanimous approval of the Board of
Directors (as constituted without any vacancies):
(a) any material change in the business of the Corporation and
its subsidiaries from Business of the Corporation and its subsidiaries;
(b) issuance by the Corporation or any of its subsidiaries of
any securities in return for consideration less than the Fair Market Value
thereof (except for stock splits, stock dividends and employee and nonemployee
director options to acquire Common Stock granted with an exercise price per
share at the Fair Market Value of the Common Stock on the date of grant);
(c) borrowing or issuing any evidence of indebtedness by the
Corporation or any of its subsidiaries unless, after giving effect thereto, the
aggregate amount of indebtedness of the Corporation and its subsidiaries on a
consolidated basis is not greater than the consolidated stockholder's equity as
shown in the audited Consolidated Balance Sheet of the Corporation for the then
most recently completed fiscal year;
1
(d) any transaction by the Corporation or any of its
subsidiaries with a Majority Shareholder or any Affiliate of a Majority
Shareholder; notwithstanding the foregoing, unanimous board consent shall not
apply to executive compensation issues or reimbursement of expenses incurred on
behalf of the Corporation, both in the ordinary course of business in accordance
with its past practices;
(e) declaration or payment of dividends if the aggregate
amount of dividends paid by the Corporation and its subsidiaries (excluding
wholly-owned subsidiaries) in respect of any fiscal year is more than thirty
percent (30%) of the annual net income of the Corporation for the then most
recently completed fiscal year, as indicated by the audited Consolidated
Statements of Income of the Corporation;
(f) direct or indirect sale or other disposition of all or any
substantial portion of the business of or a controlling interest in, or all or
substantially all of the assets of; IP France; notwithstanding the foregoing,
unanimous board consent shall not be deemed to apply to discontinuance of any
product line, unless such discontinuance involves a sale or other disposition,
and the net sales attributable to all such product lines exceeds in the
aggregate five percent (5%) of the net sales of the Corporation for the then
most recently completed fiscal year as indicated by the audited Consolidated
Statements of Income of the Corporation;
(g) merger or consolidation or other business combination
involving the Corporation or any of its subsidiaries (i) if not for fair value;
or (ii) with a person not engaged primarily in the Business of the Corporation
and its Subsidiaries (except for one or a series of mergers or consolidations,
the value of which does not singularly or in the aggregate exceed five percent
(5%) of the total assets of the Corporation as of the then most recently
completed fiscal year (valued at historical cost) as reflected on the audited
Consolidated Balance Sheets of the Corporation);
(h) any change in the number of the members of the Board of
Directors to less than six (6) or more than ten (10) members; and
(i) any amendment to the certificate of incorporation or
by-laws of the Corporation.
In addition, the Corporation shall cause its subsidiaries not to take any of the
foregoing actions except with the unanimous approval of the Board of Directors
of the Corporation (as constituted without any vacancies).
As used in this Article Ninth, the following terms shall have the
meanings as hereinafter set forth:
1. Affiliates. Solely for purposes of this Article Ninth, an
"Affiliate," in the case of LV Capital, shall mean a corporation, entity or
person which directly or indirectly controls or is controlled by or is under
common control with LV Capital, including but not limited to, those persons and
entities listed in the Schedule 13D dated August 5, 1999, filed by LVMH, but not
2
the Corporation; in the case of Corporation, shall mean a corporation, entity or
person which directly or indirectly controls or is controlled by or is under
common control with the Corporation, including but not limited to, the Majority
Shareholders, but not LV Capital; and in the case of the Majority Shareholders,
shall mean a corporation, entity or person which directly or indirectly controls
or is controlled by or is under common control with the Majority Shareholders
including but not limited to, each of the Majority Shareholders and the
Corporation, but not LV Capital.
2. Business of the Corporation and its Subsidiaries. The term "Business
of the Corporation and its Subsidiaries" shall be defined to mean the
production, manufacture, marketing, distribution and sale of fragrance products,
perfumes, eau de toilette, eau de cologne, deodorants, cosmetics, health and
beauty and personal care products, for men, women and children.
3. Fair Market Value. The term "Fair Market Value" of the Common Stock
or other security of the Corporation shall be determined by the Board of
Directors in the exercise of its good faith discretion. The determination of the
Board of Directors shall be conclusive in determining the Fair Market Value of
the Common Stock in good faith; provided that if LV Capital disagrees with such
determination, it shall be entitled, at its own cost and expense, to select
(with the consent of the Majority Shareholders, such consent not to be
unreasonably withheld) an investment banking or accounting firm of nationally
recognized standing to arbitrate such dispute, and the decision of such
arbitrator will be binding upon the parties.
4. Majority Shareholders. The "Majority Shareholders" means ▇▇▇▇ ▇▇▇▇▇
and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇.
5. LV Capital and LVMH. The term "LV Capital" means LV Capital USA,
Inc., a Delaware corporation and an indirect subsidiary of LVMH, and the term
LVMH means LVMH Moet ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ Vuitton, S.A., a French corporation.