AMENDMENT, MODIFICATION AND SETTLEMENT AGREEMENT
This Amendment, Modification and Settlement Agreement dated July __,
1996 (the "Amendment Agreement") by and between (i) Houbigant, Inc. ("Houbigant"
or "Grantor"), a Delaware corporation, duly incorporated and having an office
c/o X.X. Xxxxxxx & Associates, Inc., 000 Xxxx 00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, and herein represented by Xxxxxxx X. Xxxxxxx, an Executive Vice
President-Special Projects of Houbigant, duly authorized for the purposes of
these presents as he so declares, (ii) Xxxx Perfumes Corp., a Delaware
corporation (f/k/a New Xxxx Acquisition Corp.), as the successor-in-interest, by
operation of law, of Parfums Parquet, Inc., a Delaware corporation, a
successor-in-interest to New Fragrance License Corp., pursuant to a Plan and
Agreement of Merger, dated as of March 25, 1996 ("PPI"), having a principal
place of business c/o Xxxx Perfumes, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, and (iii) Houbigant (1995) Ltee ("Limitee"), a Canadian corporation, duly
incorporated, and successor-in-interest to 3088766 Canada Ltd., having a
principal place of business at 0000 Xxx Xxxxxx Xxxxx, (Xxxxxx) X0X 0X0 Xxxxxx,
and each herein represented by Xxxxxx XxXxxxxxx, a Group Vice President,
Fragrance of PPI and a Vice President of Limitee, duly authorized for the
purposes of these presents as he so declares:
WHEREAS, Grantor is the owner of numerous and various letters patent,
trade marks, trade names, registrations and/or applications therefor as well as
all rights therein and all technical knowledge with respect thereto as further
set forth in this Amendment Agreement, and is currently engaged in the business
of licensing such rights to third parties to manufacture, market, distribute and
sell products derived from Grantor's proprietary interests; and
WHEREAS, on November 18, 1993, Grantor and several affiliated
domestic corporations filed petitions for reorganization under chapter 11 of the
Bankruptcy Code with the
Clerk of the Bankruptcy Court, Southern District of New York (the "Bankruptcy
Court") which proceedings (the "Chapter 11 Case") remain pending as of the date
hereof; and
WHEREAS, pursuant to that certain License Agreement dated May, 1994,
as amended (the "Initial Agreement") heretofore approved by order of the
Bankruptcy Court dated June 2, 1994, Grantor, subject to the terms and
provisions of the Initial Agreement granted PPI a license of such letters
patent, trade marks, trade names and/or applications therefor and the technical
knowledge with respect thereto owned and controlled by Grantor (the "Initial
License") to enable PPI to manufacture and sell certain perfumes and fragrance
products of Grantor's "Parfums Parquet" division primarily in the Western
Hemisphere (excluding Canada) (the "Initial Territory"); and
WHEREAS, pursuant to that certain License Agreement dated August 10,
1994, as amended (the "Worldwide Agreement") heretofore approved by order of the
Bankruptcy Court dated September 21, 1994, Grantor, subject to the terms and
provisions of the Worldwide Agreement, granted PPI a license of such letters
patent, trade marks, trade names and/or applications therefor and the technical
knowledge with respect thereto owned and controlled by Grantor (the "Worldwide
License") to enable PPI to manufacture and sell certain perfumes and fragrance
products of Grantor's "Parfums Parquet" division throughout the world, excluding
the Initial Territory and Canada (the "Worldwide Territory"); and
WHEREAS, pursuant to that certain License Agreement dated April 1,
1993, as amended (the "Old Canadian Agreement") entered into prior to the
commencement of the Chapter 11 Case, Grantor, subject to the terms and
provisions of the Old Canadian Agreement, granted ACB Mercantile, Inc. ("ACB") a
license of such letters patent, trade marks, trade names and/or applications
therefor and the technical knowledge with respect thereto owned and controlled
by
2
Grantor (the "Old Canada License") to enable ACB to manufacture and sell certain
perfumes and fragrance products of Grantor's "Parfums Parquet" division
throughout Canada, which Old Canadian Agreement was sold and assigned by ACB to
Limitee, as assignee and successor licensee, on or about December 12, 1994; and
WHEREAS, the parties hereto desire to amend and modify certain terms
and provisions of the Initial Agreement and the Worldwide Agreement, to execute
and implement a license agreement for the manufacture and sale of certain
perfumes and fragrance products of Grantor's "Parfums Parquet" throughout Canada
consistent and in conformity with the form and substance of the Initial
Agreement, as amended, and Worldwide Agreement, as amended, and in lieu of and
in substitution for the Old Canadian Agreement, and to resolve and settle
various disputes which have arisen in connection with the past operation of the
Initial License, Worldwide License and Old Canada License;
NOW THEREFORE, in consideration of the mutual promises and covenants
hereinafter set forth in this Amendment Agreement and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto hereby agree as follows:
1. DEFINITIONS
For purposes of this Amendment Agreement,
(a) "Banks" means, collectively, The Chase Manhattan Bank, formerly known
as Chemical Bank, as successor-in-interest to Chemical Bank New
Jersey, N.A., individually and as Collateral Agent for Itself and
Fleet Bank, national association as successor-in-interest to NatWest
Bank, N.A. (f/k/a National Westminster Bank USA) and any of their
successors or assigns;
(b) "Canadian Agreement" means that certain License Agreement dated
________, 1996, as may be amended, a copy of which is annexed hereto,
incorporated herein and marked as Exhibit "A" hereof;
3
(c) "Canadian Court" means the Superior Court of Canada, Province of
Quebec, District of Montreal;
(d) "Canadian License" means the license proposed to be granted hereby by
Grantor to Licensee pursuant to the Canadian Agreement to use certain
letters patent, trade marks, trade names and/or applications therefor
and the technical knowledge with respect thereto owned and controlled
by Grantor as set forth in the Canadian Agreement to enable Licensee
to manufacture and sell certain perfumes and fragrance products of
Grantor's "Parfums Parquet" division throughout Canada;
(e) "District Court" means the United States District Court for the
Southern District of New York;
(f) "Effective Date" means the date on and by which
(i) the Bankruptcy Court shall have entered an order approving
and authorizing the execution and implementation of (A)
this Amendment Agreement, including the Canadian
Agreement, and (B) the Settlement Agreement, including the
dismissal and discontinuance, with prejudice, of the
litigation pending before it as described in the
Settlement Agreement,
(ii) the District Court shall have entered an order approving
and authorizing the execution and implementation of the
Settlement Agreement,
(iii) the Canadian Court shall have entered an order dismissing
or discontinuing, with prejudice, the litigation pending
before it as described in the Settlement Agreement, and
(iv) the Bankruptcy Court shall have entered an order
confirming the Plan, the effect of all of which orders
shall not have been stayed.
(g) "License Agreements" means, collectively, the Initial Agreement, the
Worldwide Agreement and the Canadian Agreement.
(h) "Minimum Royalty Adjustment Agreement" means that certain letter
agreement providing for the aggregating of the minimum royalties
contemplated to be paid under the respective License Agreements, a
copy of which is annexed hereto, incorporated herein and marked as
Exhibit "B" hereof.
(i) "Products" means the perfumes and fragrance products and related
promotional products as defined in each of the License Agreements as
applicable to each.
(j) "Settlement Agreement" means that certain "Stipulation of Settlement"
by and among Houbigant, et al. for the resolution of those three (3)
litigations currently pending between such parties in the Bankruptcy
Court, the District Court, and the Canadian Court.
4
2. GRANT OF CANADIAN LICENSE
(a) Upon the Effective Date, Grantor shall be deemed to have granted to
Limitee the Canadian License to (x) manufacture in Canada the
Products (as defined in the Canadian Agreement) covered by the Trade
Marks (as defined in the Canadian Agreement); (y) distribute, use and
sell throughout Canada the Products covered by the Trade Marks so
manufactured; and (z) use the Trade Marks in conjunction with and as
they relate to the Products in all advertising and letterheads and
collateral promotional material throughout Canada, all as more fully
set forth, and subject to the terms and provisions contained, in the
Canadian Agreement. (b) Upon the Effective Date, the Canadian
Agreement shall be deemed effective as at December 12, 1994, nunc pro
tunc, and the Old Canadian Agreement shall be deemed to have been
terminated and of no subsequent or further force and effect as of
that date. (c) Notwithstanding subparagraph "(b)" hereinabove,
Houbigant shall have the right to audit the books and records of PPI
with respect to all sales of Products covered by the Trademarks
occurring on and after December 12, 1994, and any and all requests or
demands previously issued pursuant to the Old Canadian Agreement by
Houbigant to PPI with respect to royalty reporting, audit rights
and/or royalty payments shall be deemed to have survived the
aforesaid termination of the Old Canadian Agreement and have been
made pursuant to the Canadian Agreement. 3. "WHITE CHANTILLY" FLANKER
(a) Effective as of , 1995, Grantor hereby consents to the
development, marketing, distribution and sale throughout the world by
Licensee of a new line of Products under the name "White Chantilly",
subject to and consistent with the terms and provisions set forth
5
in that certain agreement entitled "Amendment No. 1 to License
Agreements", a copy of which is annexed hereto, incorporated herein
and marked as Exhibit "C" hereof (the "White Chantilly Agreement").
(b) The White Chantilly Agreement is hereby amended solely and for the
limited purpose of clarifying and confirming that all references
therein to the "Canadian License Agreement" (as defined therein)
shall mean the Canadian Agreement as defined herein and annexed to
this Amendment Agreement.
4. FLANKERS
(a) In the event that Licensee shall seek to develop, market, distribute
and sell any and all other new lines of Products derivative of or
from the Products and the Trade Marks (i.e., a "Flanker"), such
"Flanker" introduction shall be and remain subject to the prior
written consent of Grantor thereto.
(b) Notwithstanding paragraph "7" of, and the formulae contained in each
of, the License Agreements for royalty payments, Houbigant agrees
that as to any pre-approved "flanker" Net Sales (as defined in the
License Agreements) (other than with respect to Net Sales of White
Chantilly which Net Sales shall be governed by Amendent No. 1 to
License Agreements), Licensee shall be obligated to pay to Grantor a
royalty amounting to fifty (50%) percent of the royalty rate that
would otherwise be applicable to the sales of such "flanker" Product
during any first two (2) years following the introduction of the
subject "flanker" Product and seventy-five (75%) percent of the
royalty rate that would otherwise be applicable to the sales of such
"flanker" Product during the immediately ensuing two (2) years;
thereafter, any and all sales of such "flanker" Product shall be at
the full, unadjusted royalty rate as set forth in the relevant
License Agreement, provided, however,
6
that the foregoing shall not affect, modify or amend Licensee's
minimum royalty payment obligations required in each of the License
Agreements, subject, however, to paragraph "5" hereinbelow.
5. MINIMUM ROYALTIES
Notwithstanding the minimum royalty payment amounts established in
each of the License Agreements, Grantor agrees that same shall be deemed amended
pursuant to and to the extent set forth in the Minimum Royalty Adjustment
Agreement.
6. CROSS-BORDER SHIPMENTS
(a) Notwithstanding any terms or provisions to the contrary and any
prohibitions contained in the License Agreements, Grantor hereby
agrees that Licensee, in furtherance of and in otherwise full
compliance with the terms and provisions of the License Agreements,
shall be permitted to manufacture and distribute, or cause to be
manufactured and distributed, Products intra-Territory (as the term
"Territory" is defined in each of the License Agreements), but only
to and between a licensee under the License Agreements.
7. USE OF THE NAME OF "HOUBIGANT"
Grantor hereby grants to Licensee, and any sub-licensee thereof
appointed in accordance with the License Agreements, during the term of the
applicable License Agreement and any renewals thereof, the non-exclusive right
to use and exhibit the name "Houbigant" as a trade xxxx or trade name in
connection with (i) the sale, packaging, distribution, advertising, marketing or
promotion of any of the Products throughout the world and (ii) the activities,
programs and efforts of Licensee, in connection with the foregoing.
8. RENEWALS
7
Paragraph "4", subparagraph "(2)" of each of the License Agreements
is hereby supplemented and amended to provide that upon the exercise of the
first, singular renewal of all of the License Agreements on or before June 1,
1997 and, assuming the aforesaid first, singular renewal being exercised on or
before June 1, 1997, a second (or more) further, additional renewal(s) on or
before December 31, 0000, xxxxxxxxx "0", xxxxxxxxxxxx "(1)" of each of the
License Agreements shall be deemed modified and amended for any and all Contract
Years (as defined in the License Agreements) following the year in which the
Banks' indebtedness, evidenced by the four (4) promissory notes to be issued by
Houbigant to the Banks, pursuant to Houbigant's plan of reorganization, has been
paid in full (including the non-stock portion of that certain "PIK Note" to be
issued to the Banks by Houbigant) to the extent that the three (3) royalty rates
set forth therein shall be adjusted, respectively, as follows: seven (7%)
percent shall be reduced to six (6%) percent; six (6%) percent shall be reduced
to five and a quarter (5.25%) percent and five (5%) percent shall be reduced to
four and a quarter (4.25%) percent.
9. FURTHER AMENDMENTS TO LICENSE AGREEMENTS
(a) Section 35 of the Initial Agreement should be amended by the addition
after the second sentence of the following sentence: "Notwithstanding
the foregoing, the Licensee may transfer all of its rights and
obligations under this Agreement to any other corporation within its
Affiliated Group (as defined in Section 1504(a) of the Internal
Revenue Code of 1986, as amended)."
(b) Section 35 of each of the Worldwide and Canadian Agreements shall,
upon the occurrence of the Effective Date, be deemed amended by the
deletion of the third sentence and the substitution of the following
sentences: "Notwithstanding the foregoing, the Licensee may transfer
all of its rights and obligations under this Agreement to any other
corporation within its Affiliated Group (as defined in Section
1504(a) of the Internal Revenue Code of 1986, as amended). Moreover,
Licensee shall not be entitled to, and hereby agrees that it shall
not sell, transfer or dispose or cause
8
the sale, transfer and disposition of the ownership and control
(other than as may result from an initial public offering) of
Licensee for a period of two (2) years following the Effective Date
of the Initial Agreement, provided, however, that any such
dispositions to the extent they do not include the sale or transfer
of this Agreement or the rights thereunder shall not be limited
hereby."
10. MISCELLANEOUS
(a) PPI shall pay, or cause to be paid, to Houbigant the sum of
$2,747,000, without interest, on or before the later of five (5)
business days following actual receipt by PPI of written notice of
the occurrence of the Effective Date or May 31, 1996.
(b) Upon the receipt by Houbigant of the aforesaid payment, all amounts
allegedly due from PPI to Houbigant and from Houbigant to PPI as and
to the extent identified and set forth in that certain schedule, a
copy of which is annexed hereto, incorporated herein and marked as
Exhibit "D" hereof shall be deemed resolved, compromised and settled,
subject only to the terms and provisions of this Amendment Agreement.
(c) Grantor agrees that any and all Products inventory, if any, currently
situated, in Canada, as is, where is, shall be deemed the property of
PPI, provided, however, that any Net Sales produced by the
distribution and sale thereof by PPI, shall be subject to the terms
and provisions of the License Agreements.
(d) (1) Houbigant hereby agrees that PPI has been and shall be permitted
to exercise an offset against royalty payments due to Houbigant in
the amount of $120,000 relative and applicable to the third (3rd)
quarter of 1995 and has been and shall be permitted to exercise an
offset against royalty payments due to Houbigant in the amount of
$120,000 relative and applicable to the fourth (4th) quarter of 1995
in connection with alleged brand and trade xxxx preservation and
maintenance and out-of-pocket defense costs.
9
(2) PPI hereby agrees and acknowledges that it has not taken any
other offsets or charges, nor shall PPI take any additional offsets
or charges in connection with the litigations and claims being
settled hereunder and under the Settlement Agreement and shall
provide Houbigant with all royalty reports required to date through
the quarter ended immediately prior to the Effective Date hereof.
(e) PPI hereby agrees to release and waive any and all claims it had or
has against Houbigant in accordance with and to the extent contained
and set forth in that certain "Release", a copy of which is annexed
hereto, incorporated herein, and marked as Exhibit "E" hereof.
(f) Houbigant hereby agrees to release PPI and Limitee, as successor to
ACB under the Old Canadian License, from any and all claims it had or
has under, arising from or related to the operation, implementation
and enforcement of the Old Canadian License prior to December 12,
1994.
(g) Nothing contained herein shall be deemed to affect the right to PPI
to fully implement and effectuate that certain settlement agreement
heretofore entered in the District Court with respect to diversions
of Product.
11. EXISTING LICENSE AGREEMENTS
Except to the extent and as set forth in this Amendment Agreement, in
all other respects the License Agreements are and shall be deemed and remain in
full force and effect in accordance with their terms and provisions.
10
12. NOTICES
Any notices or other communications required or permitted hereunder
shall be sufficiently given if in English and delivered personally or sent by
telecopy, Federal Express (or similar courier service), registered or certified
mail, postage prepaid, addressed as follows to the following addresses:
To Houbigant:
Houbigant, Inc.
c/o Xxxxxxx X. Xxxxxxx
000 Xxxx 00xx Xxxxxx, Xxxxx 00X
Xxx Xxxx, Xxx Xxxx 00000
with copies to:
Xxxx, Scholer, Fierman, Xxxx
& Handler, LLP
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxxx, Esq.
to PPI and Limitee:
c/o Renaissance Cosmetics
000 Xxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx Xxxxxxx, Esq.
with copies to:
Xxxxxx Xxxxxx Flattau & Klimpl LLP
0000 Xxxxxx xx xxx Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxxxxx, Esq.
to the Banks:
The Chase Manhattam Bank
000 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxxxx X. Xxxx
11
with copies to:
Stroock & Stroock & Xxxxx
Seven Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Xxxx X. Xxxxxxxxx, Esq.
Such notices or other communication shall be deemed received (a) on the date
delivered if delivered personally or by telecopy or (b) three (3) business days
after being sent if sent by registered or certified mail.
13. SUCCESSORS AND ASSIGNS
This Amendment Agreement shall be binding upon and enure to the
benefit of the parties hereto and their respective successors and assigns.
14. ENTIRE AGREEMENT: ATTACHMENTS
(a) This Amendment Agreement and all exhibits annexed hereto, as well as
any agreements to be delivered by the parties pursuant hereto,
represent the entire understanding and agreement between the parties
hereto with respect to the subject matter hereof, except as to the
License Agreements which are integral parts hereto, and supersede all
prior oral and written and all contemporaneous oral negotiations,
commitments and understandings between such parties.
(b) The Exhibits attached hereto are hereby incorporated as integral
parts, as well, of this Amendment Agreement.
15. EXPENSES
Except as otherwise expressly provided herein Houbigant and the
Licensee shall each pay their own expenses in connection with this Amendment
Agreement.
12
16. GOVERNING LAW
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
17. SECTION HEADINGS
The section headings are for the convenience of the parties hereto
and in no way alter, modify, amend, limit or restrict the contractual
obligations of the parties.
18. SEVERABILITY
The invalidity or unenforceability of any provision of this Agreement
shall not affect the validity or enforceability of any other provisions of this
Amendment Agreement.
19. COUNTERPARTS
This Amendment Agreement may be executed in counterparts, each of
which shall be deemed to be an original, but all of which taken together shall
be one and the same document.
IN WITNESS WHEREOF, this Amendment Agreement has been duly executed
by the parties hereto as of and on the date first above written.
HOUBIGANT, INC., ET AL.
By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------
Xxxxxxx X. Xxxxxxx
Chief Executive Officer
13
XXXX PERFUMES CORP.,
for itself and as successor to
New Xxxx Acquisition Corp.
and Parfums Parquet, Inc.,
for itself and as successor to
New Fragrance License Corp.
By: /s/ Xxxx X. Xxxxxxx
---------------------------
Xxxx X. Xxxxxxx
HOUBIGANT (1995) LIMITEE
By: /s/ Xxxx X. Xxxxxxx
---------------------------
Xxxx X. Xxxxxxx
THE FOREGOING IS HEREBY
AGREED AND CONSENTED TO:
THE CHASE MANHATTAN BANK, formerly known as Chemical Bank, as
successor-in-interest to Chemical Bank of New Jersey, N.A., individually and as
Collateral Agent for Itself and Fleet Bank,
national association
By: /s/ Xxxxxx X. Xxxx
------------------
Xxxxxx X. Xxxx
Vice President
Fleet Bank, national association as
successor-in-interest to NatWest Bank, N.A.
(f/k/a National Westminster Bank USA)
14
By: /s/ Xxxxxxx Xxxxx
---------------------
Xxxxxxx Xxxxx
Vice President
15
