EXHIBIT 10.89
NONCOMPETITION AND
NONSOLICITATION AGREEMENT
AGREEMENT dated this 21st day of May, 2002 by and between XXXX PHILIPPE
FRAGRANCES, LLC, a New York limited liability company with its principal office
at 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 ("Purchaser"); TRISTAR
CORPORATION, DEBTOR-IN-POSSESSION in the Chapter 11 proceeding, Case no.
01-53706, U.S. Bankruptcy Court, Western District of Texas, San Antonio
Division, with its principal office at 000 X. Xx. Xxxxx, Xxxxx 0000, Xxx
Xxxxxxx, Xxxxx 00000 ("Seller"); and FRAGRANCE IMPRESSIONS CORPORATION, a
Delaware corporation, with principal offices at Xxx Xxxxxxxx Xxxxx, Xxxxxxxxxx,
XX 00000 ("Manufacturer").
W I T N E S S E T H :
WHEREAS, Purchaser is in the business of producing, manufacturing,
marketing, distributing and selling mass market alcohol based fragrances,
including Alternative Designer Fragrances, eau de toilette sprays, cologne, body
sprays, deodorants, and cosmetics, including lipstick, nail polish, mascara and
eye and lip products and health and beauty aids in the United States and
throughout the world ("the Business as Purchaser");
WHEREAS, Seller and Purchaser have entered into an agreement to purchase
certain assets of Seller dated 18 April , 2002 (the "Asset Purchase Agreement");
WHEREAS, Seller and Manufacturer are entering into a Manufacturing
Agreement, dated the date hereof (the "Manufacturing Agreement"); and
WHEREAS, as an inducement to Purchaser and a condition precedent to the
closing of the Asset Purchase Agreement, each of Seller and Manufacturer has
agreed not to compete with Purchaser, upon the terms and subject to the
conditions contained herein.
NOW, THEREFORE, in consideration of the foregoing, the parties hereby
agree as follows:
1. RECITALS. The above recitals are true and correct and are
incorporated by reference herein and made a part of this Agreement, with the
same force and effect as if fully set forth herein.
2. COVENANT NOT TO COMPETE; NONSOLICITATION.
(a) Each of Seller and Manufacturer severally covenants and agrees
with Purchaser that Seller and Manufacturer shall not directly or indirectly,
for a period equal to the longer of (i) five (5) years from the closing of the
Purchase Agreement or (ii) as for so long the Manufacturing Agreement is in
effect,
(i) compete with or be engaged in the same Business as
Purchaser, as heretofore defined, or act as consultant or lender to or owner, or
partner of, any business or organization which, directly or indirectly competes
with or is engaged in the same Business as
Purchaser, except that, in each case, the provisions of this paragraph will not
be deemed breached solely because Seller or Manufacturer owns no more than one
percent (1%) of any outstanding class of equity security of a corporation, if,
at the time of its acquisition by Seller, such equity security is listed on a
United States national securities exchange or The Nasdaq Stock Market, or is
regularly traded in the over-the-counter market; or
(ii) solicit in connection with the Same Business as Purchaser,
any employee, customer or filler of Purchaser who was at any time during the
term of this Agreement, an employee, customer or filler of Purchaser.
(b) Notwithstanding the provisions of PARAGRAPH 2(A) above,
Manufacturer, but not Seller, shall have the right to market and sell the mass
market fragrance brands, Fragrance Impressions and Cosmetic Impressions, and any
such other brands sold at similar price points or higher and to the same
distribution channel as Fragrances Impressions, solely to the following:
(i) U.S. drug store chains: Such as Walgreens, Eckerd, Rite
Aid, CVS;
(ii) mass merchandisers: Such as Walmart, K-Mart, Target and
Kohls;
(iii) convenience and specialty store chains, gas stations,
door-to-door and through the Internet; and
(iv) supermarkets, including but not limited to, Pathmark,
Albertsons and Xxxx Xxxxx.
(c) Notwithstanding the provisions of PARAGRAPH 2(A) above,
Manufacturer, but not Seller or its affiliates, shall have the right to
(i) provide manufacturing or filling services to
non-affiliates; PROVIDED, THAT, in no event shall Manufacturer provide
manufacturing or filling services relating to (I) alternative designer
fragrances, or (II) lip pencils or eye pencils similar in price point to the
Apple Pencil cosmetic line, to other than Purchaser; and
(ii) sell close-out products in any market, PROVIDED THAT, (I)
sales of close-outs do not exceed five (5%) percent of net sales of such product
line for the immediately preceding twelve (12) month period; and (II) no
products are manufactured or produced for sale as close-outs.
(d) Nothing herein shall be construed to permit the sale of fragrances
or cosmetics to the wholesale fragrance market, whether within or outside the
United States; or the "dollar store market", including but not limited to:
Family Dollar, Dollar General, Dollar Tree Distributors, Consolidated Stores
(Big Lot Stores) and 99 Cent Only stores.
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(e) For the purposes of this Paragraph 2 the term "affiliate" shall be
defined to mean each and every person, entity or individual which directly or
indirectly controls or is controlled by or is under common control with the
person to who or which it relates.
(f) If any term of this PARAGRAPH 2 is found by any court having
jurisdiction to be too broad, then such term shall nevertheless remain
effective, but shall be considered amended (as to the time or area or otherwise
as the case may be) to a point considered by said court as reasonable, and as so
amended, shall be fully enforceable.
(g) In the event of a merger of Seller and Manufacturer pursuant to a
plan of reorganization in Seller's Chapter 11 proceeding in which Manufacturer
is the surviving or successor entity, then only the restrictions herein
applicable to Manufacturer shall apply to the surviving entity.
3. POTENTIAL DAMAGE TO PURCHASER. Each of Seller and Manufacturer
recognizes and acknowledges the damage to Purchaser which might result if any of
the foregoing provisions are breached by Seller or Manufacturer.
4. EQUITABLE RELIEF. In the event Seller or Manufacturer shall commit
or cause to commit a breach of any provision of this Agreement, then in such
event, each of Seller or Manufacturer as the case may be, hereby consents to the
granting of a temporary or permanent injunction against it by any court of
competent jurisdiction prohibiting such violations of any provision of this
Agreement. In any proceeding for an injunction and upon any motion for a
temporary or permanent injunction, Seller or Manufacturer as the case may be,
agrees that its ability to answer in damages shall not be a bar or interposed as
a defense to the granting of such temporary or permanent injunction against it,
and further agrees that Purchaser will not have an adequate remedy at law in the
event of any breach hereunder and Purchaser will suffer irreparable damage and
injury if any of such provisions of this Agreement are breached.
5. GOVERNING LAW; PROCESS. This Agreement shall be governed by, and
construed and enforced in accordance with, the laws of the State of Texas
without giving effect to the principles of conflicts of laws thereof. Seller
hereby irrevocably consents to the jurisdiction and venue of the courts of the
State of Texas and of any United States District Court located within the State
of Texas County of Bexar, in connection with any action or proceeding arising
out of or relating to this Agreement. In any such action or proceeding, each of
Seller and Manufacturer waives personal service of any summons and complaint or
other process and agrees that the service thereof may be made by first class
mail directed to such person at the address set forth above, or to any other
address given by any of Seller, or Manufacturer to Purchaser by first class mail
directed to Purchaser at its principal offices. Notwithstanding the foregoing,
for so long as Seller is a debtor in the aforementioned Bankruptcy proceeding,
any action involving Seller must be brought, if at all, in such Bankruptcy
Court.
6. 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.
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7. 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.
8. 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. 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.
10. 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.
11. COUNTERPARTS. This Agreement may be executed in counterparts, all
of which shall be deemed to be duplicate originals.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first above written.
XXXX PHILIPPE FRAGRANCES, LLC
By: /s/ XXXXXXX XXXXXXXXX
---------------------
Xxxxxxx Xxxxxxxxx, Executive Vice President
TRISTAR CORPORATION, DEBTOR-IN-POSSESSION
By: /s/ XXXXXXX X. XxXXXXXXX
------------------------
Name: Xxxxxxx X. XxXxxxxxx
Title: Bankruptcy court-appointed Examiner
with limited powers
FRAGRANCE IMPRESSIONS CORPORATION
By: /s/ X. X. XXXXX
---------------
Name: X. X. Xxxxx
Title: Chief Executive Officer
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