<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )
DONNA KARAN INTERNATIONAL INC.
(Name of Issuer)
Common Stock, Par Value, $0.01 Per Share
(Title of Class of Securities)
257826107
---------------------
(CUSIP Number)
Robert H. Werbel, Esq.
Werbel McMillin & Carnelutti
A Professional Corporation
711 Fifth Avenue, New York, New York 10022, (212) 832-8300
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
July 3, 1996
--------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13-d-1(b)(3) or (4), check the following box [ ].
Check the following box if a fee is being paid with the statement [X]. (A fee
is not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
* The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which would
alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purposes of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
Page 1 of 51<PAGE>
<PAGE>
SCHEDULE 13D
- ------------------- -----------------
CUSIP No. 257826107 Page 2 of 51
- ------------------- ------------------
==============================================================================
1 NAME OF REPORTING PERSON - S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE
PERSON
Donna Karan - S.S. Number: ###-##-####
- -----------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(See Item 2) (1) (b) [X]
- -----------------------------------------------------------------------------
3 SEC USE ONLY
- -----------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- -----------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(E) [ ]
- -----------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- -----------------------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
- -----------------------------------------------------------------------------
7 SOLE VOTING POWER
3,605,744 (See Item 5)
- -----------------------------------------------------------------------------
8 SHARED VOTING POWER
498,808 (See Item 5)
- -----------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
3,605,744 (See Item 5)
- -----------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
498,808 (See Item 5)
- -----------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,306,467(2)
- -----------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* (3) [X]
- -----------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
24.7%
- -----------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
==============================================================================
*SEE INSTRUCTIONS BELOW BEFORE FILLING OUT!
SEC 1746 (9-88)
<PAGE>
<PAGE> Page 3 of 51
(1) Notwithstanding the agreements described in Item 6, the Reporting Person
disclaims membership in, and does not affirm the existence of, a group with
regard to such agreements.
(2) Includes 961,532 shares of Common Stock held by Stephan Weiss, who is
married to the Reporting Person, 48,077 shares of Common Stock held by The
Trust Under Trust Agreement For The Benefit of Lisa Weiss Keyes, Corey Weiss
and Gabrielle Karan, 192,306 shares of Common Stock held by The Trust Under
Trust Agreement For The Benefit of Donna Karan and 498,808 shares of Common
Stock held by Gabrielle Studio, Inc. However, The Reporting Person disclaims
beneficial ownership of such shares.
(3) Does not include shares of Common Stock held by members of the Takihyo
Group (as hereinafter defined) which shares are the subject of the
Stockholders' Agreement to which the Reporting Person is a party, described in
Item 6 and filed pursuant to Item 7. Also does not include shares of Class B
Common Stock held by members of the Takihyo Group which shares are the subject
of the Voting Agreement, to which the Reporting Person is a party, described
in Item 6 and filed pursuant to Item 7. Also excludes nine shares of Class A
Common Stock held by each of Ms. Karan and Mr. Weiss, which shares are also
the subject of the Stockholders' Agreement. The Reporting Person disclaims
beneficial ownership of such shares.
<PAGE>
<PAGE>
SCHEDULE 13D
- ------------------- -----------------
CUSIP No. 257826107 Page 4 of 51
- ------------------- -----------------
==============================================================================
1 NAME OF REPORTING PERSON - S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE
PERSON
Stephan Weiss - S.S. Number: ###-##-####
- -----------------------------------------------------------------------------
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(See Item 2) (1) (b) [X]
- -----------------------------------------------------------------------------
3 SEC USE ONLY
- -----------------------------------------------------------------------------
4 SOURCE OF FUNDS*
OO
- -----------------------------------------------------------------------------
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(E) [ ]
- -----------------------------------------------------------------------------
6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
- -----------------------------------------------------------------------------
NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH
- -----------------------------------------------------------------------------
7 SOLE VOTING POWER
1,201,915 (See Item 5)
- -----------------------------------------------------------------------------
8 SHARED VOTING POWER
498,808 (See Item 5)
- -----------------------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
1,201,915 (See Item 5)
- -----------------------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
498,808 (See Item 5)
- -----------------------------------------------------------------------------
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,306,467(2)
- -----------------------------------------------------------------------------
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES* (3) [X]
- -----------------------------------------------------------------------------
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
24.7%
- -----------------------------------------------------------------------------
14 TYPE OF REPORTING PERSON*
IN
==============================================================================
*SEE INSTRUCTIONS BELOW BEFORE FILLING OUT!
SEC 1746 (9-88)
<PAGE>
<PAGE> Page 5 of 51
(1) Notwithstanding the agreements described in Item 6, the Reporting Person
disclaims membership in, and does not affirm the existence of, a group with
regard to such agreements.
(2) Includes 3,605,744 shares of Common Stock held by Donna Karan, who is
married to the Reporting Person, 48,077 shares of Common Stock held by The
Trust Under Trust Agreement For The Benefit of Lisa Weiss Keyes, Corey Weiss
and Gabrielle Karan, for which the Reporting Person acts as Trustee, 192,306
shares of Common Stock held by The Trust Under Trust Agreement For The Benefit
of Donna Karan, for which the Reporting Person acts as Trustee, and 498,808
shares of Common Stock held by Gabrielle Studio, Inc. However, The Reporting
Person disclaims beneficial ownership of such shares and disclaims that he is
a 10% owner.
(3) Does not include shares of Common Stock held by members of the Takihyo
Group (as hereinafter defined) which shares are the subject of the
Stockholders' Agreement to which the Reporting Person is a party, described in
Item 6 and filed pursuant to Item 7. Also does not include shares of Class B
Common Stock held by members of the Takihyo Group (as hereinafter defined)
which are the subject of the Voting Agreement to which the Reporting Person is
a party, described in Item 6 and filed pursuant to Item 7. Also excludes nine
shares of Class A Common Stock held by each of Ms. Karan and Mr. Weiss which
are the subject of the Stockholders' Agreement. The Reporting Person
disclaims beneficial ownership of such shares.
<PAGE>
<PAGE> Page 6 of 51
SCHEDULE 13D
Item 1. Security and Issuer
(a) Class of Securities: Common Stock, par value,
$0.01 per share ("Common Stock").
(b) Issuer: Donna Karan International Inc. (the "Issuer")
550 Seventh Avenue
New York, NY 10018
Item 2. Identity and Background
(a-c), (f). The persons (the "Reporting Persons") filing this
statement are Donna Karan ("Karan") a citizen of the United States and Stephen
Weiss ("Weiss") a citizen of the United States. Karan and Weiss are married
to each other. The principal business address for each of the Reporting
Persons is 550 Seventh Avenue, New York, NY 10018.
Karan is primarily engaged as Chairman of the Board, Chief Executive
Officer and Chief Designer of the Issuer. Weiss is the Vice Chairman of the
Board of the Issuer.
The Reporting Persons may be deemed to be a "group" within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934 (the "Act").
(d,e). During the last five years, neither of the Reporting
Persons, has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors) or have been a party to a civil proceeding
of a judicial or administrative body of competent jurisdiction resulting in
its or his being subject to a judgment, decree or final order enjoining future
violation of, or prohibiting or mandating activities subject to, federal or
state securities laws or a finding of any violation with respect to such laws.
<PAGE>
<PAGE> Page 7 of 51
Item 3. Source and Amount of Funds or Other Consideration
In connection with the initial public offering of Common Stock,
Karan and Weiss (i) each acquired upon the incorporation of the Issuer nine
shares of Class A Common Stock of the Issuer and (ii) entered into an
Agreement and Plan of Contribution (the "Contribution Agreement") whereby they
contributed to the Issuer all their shares in each of Gabby Apparel, Inc., The
Donna Karan Store Corporation, DK Shoe Corp. and Gabrielle Japan, Inc. the
various corporations through which Karan and Weiss held their interests in the
DK Companies, (1), except for their shares in Gabrielle Studio, Inc.
("Gabrielle")(2), in exchange for 3,605,744 and 961,532 shares of Common
Stock, respectively.
Item 4. Purpose of Transaction
(b) The Reporting Persons have acquired the shares of Common Stock
owned by each of them pursuant to the Contribution Agreement in connection
with the concurrent initial public offering of Common Stock by the Issuer.
Certain changes in the composition in the Issuer's Board of Directors is
expected in connection with such acquisition. See summary description in Item
6 of the Shareholders' Agreement filed herewith pursuant to Item 7 for
explanation thereof.
- ------------------------------------------
(1) The DK Companies include New York general partnerships formed in 1984 by
Karan, Weiss and members of the Takihyo Group (as hereinafter defined) and
certain affiliates of the Takihyo Group to design, contract for the production
of, and distribute the Donna Karan New York Collection for women, together
with additional partnerships and corporations since established by Karan,
Weiss and the Takihyo Group to engage in various aspects of the Issuer's
business.
(2) a Corporation owned by Karan, Weiss, the Trust Under Trust Agreement for
the Benefit of Lisa Weiss Keyes, Corey Weiss and Gabrielle Karan and the Trust
Under Trust Agreement for the Benefit of Donna Karan.
<PAGE>
<PAGE> Page 8 of 51
Item 5. Interest in Securities of the Issuer
(a) As of the close of business on July 3, 1996, the Reporting
Persons, by virtue of Rule 13d-3(d)(1)(i), may be deemed to own beneficially
in the aggregate the number and percentage of the Issuer's Common Stock set
forth opposite their names (based upon the number of Shares that were reported
to be outstanding in the Issuer's prospectus dated June 27, 1996).
<TABLE>
<CAPTION>
==============================================================================
Name Shares of Common Stock Percentage
- -----------------------------------------------------------------------------
<S> <C> <C>
Donna Karan 5,306,467(1)(2) 24.7%
- -----------------------------------------------------------------------------
Stephan Weiss 5,306,467(2)(3) 24.7%
- -----------------------------------------------------------------------------
==============================================================================
</TABLE>
(1)Includes 961,532 shares of Common Stock held by Weiss, 48,077
shares of Common Stock held by the Trust Under Trust Agreement
for the Benefit of Lisa Weiss Keyes, Corey Weiss and Gabrielle
Karan, 192,306 shares of Common Stock held by the Trust Under
Trust Agreement for the Benefit of Donna Karan, and 498,808
shares of Common Stock held by Gabrielle Studio, Inc. However,
the Reporting Person disclaims beneficial ownership of such shares.
Does not include nine shares of Class A Common Stock held
by Karan.
(2)Does not include shares of Common Stock held by members of the
Takihyo Group which shares are the subject of the Stockholders'
Agreement to which the Reporting Person is a party, described
in Item 6 and filed pursuant to Item 7. Does not include
shares of Class B Common Stock held by members of the Takihyo
Group which are the subject of the Voting Agreement to which
the Reporting Person is a party, described in Item 6 and filed
pursuant to Item 7. The Reporting Person disclaims beneficial
ownership of such shares.
(3)Includes 3,605,744 shares of Common Stock held by Karan, 48,077
shares of Common Stock held by the Trust Under Trust Agreement
for the Benefit of Lisa Weiss Keyes, Corey Weiss and Gabrielle
Karan for which Weiss serves as trustee, 192,306 shares of Common
Stock held by the Trust Under Trust Agreement for the Benefit of
Donna Karan, for which Weiss also serves as trustee, and 498,808
shares of Common Stock held by Gabrielle Studio, Inc. However, the
Reporting Person disclaims beneficial ownership of such shares
and disclaims that he is a 10% owner. Does not include nine shares
of Class A Common Stock held by Weiss.
(b) Karan has sole voting power over 3,605,744 shares of Common Stock
and has shared voting power and power of disposition with Weiss over 498,808
shares of Common Stock held by Gabrielle Studio, Inc. Weiss has sole voting
<PAGE>
<PAGE> Page 9 of 51
power over 961,532 shares of Common Stock and 192,306 shares of Common Stock
held by the Trust Under Trust Agreement for the Benefit of Donna Karan for
which he is trustee and 48,077 shares of Common Stock held by The Trust Under
Trust Agreement for The Benefit of Lisa Weiss Keyes, Corey Weiss and Gabrielle
Karan for which he is trustee, and has shared voting power and power of
disposition with Karan over 498,808 shares of Common Stock of Gabrielle
Studio, Inc. Each of Karan and Weiss however, disclaim beneficial ownership
of the shares held by each other, by the Trust Under Trust Agreement for The
Benefit of Lisa Weiss Keyes, Corey Weiss and Gabrielle Karan, the Trust Under
Trust Agreement for the Benefit of Donna Karan and by Gabrielle Studio, Inc.
(d) To the best of Reporting Persons' knowledge, except as set forth
herein, no other person has the right to receive or the power to direct the
receipt of dividends from, or the proceeds from the sale of, any shares of
Common Stock which Reporting Persons may be deemed to own beneficially.
(e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of Issuer
(a) Summary of Registration Rights Agreement-(See Exhibit B)
The Issuer, Frank Mori, Christopher Mori, Heather Mori, Tomio Taki and
Takihyo, Inc. (the "Takihyo Group"), Ms. Karan, Mr. Weiss, the Trust Under
Trust Agreement for Donna Karan, the Trust Under Trust Agreement for Lisa
Weiss Keyes, Corey Weiss and Gabrielle Karan (the "KW Trusts"), and Gabrielle
Studio, Inc. ("Gabrielle Studio", along with the KW Trusts, Ms. Karan and Mr.
Weiss, the "Karan/Weiss Group") have entered into a Registration Rights
Agreement. The Registration Rights Agreement grants to members of the Takihyo
Group the right to demand on an aggregate of two occasions (the first of which
shall not be earlier than six months after June 26, 1996 and the second of
which shall not be earlier than 12 months after the effective date of the
registration statement pertaining to any other offering of the Issuer's
securities under the Securities Act) that the Issuer, at its expenses,
register all or a portion of the shares which they own on July 3, 1996,
subject to a minimum demand of 5% of the then outstanding shares of Common
Stock. Upon receipt of a demand from a member of the Takihyo Group for the
registration of Issuer shares, the Issuer (or its designee) shall have the
option of purchasing the shares at the average of the closing market price
during the 10 trading days before and the 10 trading days after the demand.
The Registration Rights Agreement will also grant to the Karan/Weiss Group the
right to request on one occasion (which cannot be earlier than the first
anniversary of June 26, 1996) that the Issuer, at its expense, register all or
a portion of the shares which the members of the Karan/Weiss Group own. In
addition, the Takihyo Group and, in certain circumstances the Karan/Weiss
Group, will have the right to join ("piggyback") in any registration statement
filed by the Issuer with respect to an offering of any of its securities by it
or on behalf of any of its securityholders.
Pursuant to the Registration Rights Agreement, if the Takihyo Group makes
a demand for the registration of any of the Issuer's shares at any time prior
to the first anniversary of June 26, 1996, the Issuer may not include in such
offering any of the Issuer's shares or any shares owned by any other
securityholder of the Issuer if, in the good faith judgment of the managing
underwriter of such offering, the inclusion of such shares would adversely
affect the success of such offering or interfere with the successful marketing
of, or require the exclusion of any portion of, the shares to be registered
pursuant to the Takihyo Group's demand. If the Takihyo Group makes a demand
<PAGE>
<PAGE> Page 10 of 51
for the registration of its shares on or after the first anniversary of June
26, 1996, the Issuer may elect to proceed with an offering of the Issuer's own
shares. In such event, the demand of the Takihyo Group shall be deemed to be
a request to exercise their "piggyback" rights and they together with the
members of the Karan/Weiss Group, will be permitted to register and sell such
number of shares (to be apportioned between the Takihyo Group and the
Karan/Weiss Group pursuant to certain agreed upon allocations) as the
underwriter of the Issuer's offering determines can be sold without adversely
affecting the Issuer's offering. If the Issuer does not so elect, the members
of the Karan/Weiss Group may elect to include certain of their shares in the
Takihyo Group's offering, subject to certain limitations. If, more than one
year after June 26, 1996, a member of the Karan/Weiss Group requests that the
Issuer register shares owned by the Karan/Weiss Group, the Issuer may (but is
not obligated to) elect to distribute its own shares to the public, in which
event the members of the Karan/Weiss Group, together with the members of the
Takihyo Group, may elect to include certain of their shares in the Issuer's
offering, subject to certain limitations. If the Issuer does not so elect,
the Issuer may (but is not obligated to) permit the members of the Takihyo
Group to include certain of their shares in the offering of the Karan/Weiss
Group, subject to certain limitations.
(b) Summary of Voting Agreement - (See Exhibit C).
The Voting Agreement is among the Issuer, Donna Karan, Stephan Weiss,
Frank Mori and Tomio Taki. Pursuant to the Agreement, each of Donna Karan,
Stephan Weiss, Frank Mori and Tomio Taki have agreed that, if a matter is
presented to the holder of Class A Common Stock, Class B Common Stock, and
Common Stock and the Class A Common Stock or Class B Common Stock is entitled
to vote separately as a class with respect to such matter, each will vote
his/her respective shares of Class A Common Stock or Class B Common Stock as
nearly as possible in the same manner as the holder of a majority of the
shares of Common Stock. The Voting Agreement also prohibits the pledge,
hypothecation, sale, grant, grant of an option or other transfer of the shares
of Class A Common Stock or Class B Common Stock or the assignment of any
rights or delegation of any duties under the Voting Agreement unless the
transferee or assignee or potential transferee or assignee agrees in writing
to be bound by the terms of the Voting Agreement.
(c) Summary of Stockholders' Agreement - (See Exhibit D).
The Stockholders' Agreement is made among Issuer, members of the Takihyo
Group and members of the Karan/Weiss Group. The parties to the Agreement have
indicated their intention that the Issuer appoint two additional directors to
the Board of Directors and that the Takihyo Group have the right to designate
two members of the Board of Directors of the Issuer until such time after July
3, 1996 as the Takihyo Group sells any shares owned by it, whether by a
registration statement, in a private sale or otherwise (other than the
distribution of any shares of Common Stock of any member of the Takihyo Group
to a person who as of the date of the Agreement is a shareholder of Takihyo
Inc.). Thereafter, the Takihyo Group shall have the right to designate one
member of the Board of Directors as long as the combined ownership of shares
of Common Stock held by the Takihyo Group is not less than 10% of the then
total outstanding Common Stock of the Issuer, except if either Tomio Taki or
Frank Mori is eligible to serve and is serving as the designee of the Takihyo
Group, then such person shall be entitled to continue to serve as a director
as long as the combined ownership of shares of Common Stock held by the
<PAGE>
<PAGE> Page 11 of 51
Takihyo Group is not less than 5% of the outstanding stock of the Issuer. The
parties to the Agreement have further agreed that the Takihyo Group designees
shall not be Messrs. Taki or Mori, or any other person affiliated with the
Takihyo Group, as long as the Takihyo Group has an ownership interest in, or
such person is an officer or director of, Anne Klein & Company or any other
competitor of the Issuer. The members of the Board of Directors first
designated by the Takihyo Group shall become directors concurrent with the
appointment of the fifth member of the Board of Directors. The Karan/Weiss
Group has the right to designate Ms. Karan and Mr. Weiss as members of the
Board of Directors. The Karan/Weiss Group also has the right to designate one
additional member of the Board of Directors as long as the combined ownership
of the shares of Common Stock held by the Karan/Weiss group is not less than
20% of the then total outstanding shares of Common Stock. The Karan/Weiss
Group and the Takihyo Group agree to vote the shares of the Issuer owned by
them for each others designees (and, in the case of the Takihyo Group, for Ms.
Karan and Mr. Weiss) as directors. At such time as the Karan/Weiss Group or
the Takihyo Group lose their rights to designate a director, the Karan/Weiss
Group or the Takihyo Group, as applicable, shall direct one or more of its
designees, as applicable, to promptly submit his resignation from the Board of
Directors.
Item 7. Material to be filed as Exhibits
Exhibit A -- Joint Filing Agreement dated July 3, 1996.
Exhibit B -- Side Letter to Registration Rights Agreement and
Registration Rights Agreement
Exhibit C -- Stockholders' Agreement
Exhibit D -- Voting Agreement relating to Class A & Class B Common
Stock
<PAGE>
<PAGE> Page 12 of 51
After reasonable inquiry and to the best of our knowledge and
belief, we certify that the information set forth in this statement is true,
complete and correct.
Dated: July 12, 1996
/s/ Donna Karan
- ----------------------------------
Donna Karan
/s/ Stephan Weiss
- ----------------------------------
Stephan Weiss
<PAGE>
<PAGE> Page 13 of 51
EXHIBIT A
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(f) under the Securities Exchange Act
of 1934, as amended, the persons named below agree to the joint filing on
behalf of each of them of a Statement on Schedule 13D (including amendments
thereto) with respect to the Common Stock, par value $.01 per Share, of Donna
Karan International Inc. and further agree that this Joint Filing Agreement be
included as an Exhibit to such joint filings. In evidence thereof, the
undersigned, being duly authorized, have executed this Joint Filing Agreement
this 12th day of July, 1996.
/s/ Donna Karan
- ---------------------------------
Donna Karan
/s/ Stephen Weiss
- ---------------------------------
Stephan Weiss
<PAGE>
<PAGE> Page 14 of 51
<Ex-4>
EXHIBIT B
SIDE LETTER
to
REGISTRATION RIGHTS AGREEMENT
Reference is made to that certain Registration Rights Agreement (the
"Registration Rights Agreement") by and among Donna Karan International Inc.,
a Delaware corporation (the "Company"), each of Frank R. Mori, Christopher
Mori, Heather Mori, Tomio Taki and Takihyo Inc., a Delaware corporation (each,
an "Investor" and, collectively, the "Investors"), and each of Donna Karan,
Stephan Weiss, the trust under trust agreement for the benefit of Lisa Weiss
Keyes, Corey Weiss and Gabrielle Karan (the "Karan/Weiss Trust"), the trust
under trust agreement for the benefit of Donna Karan (the "Karan Trust", and,
together with the Karan/Weiss Trust, the "KW Trusts"), and Gabrielle Studio,
Inc., a New York corporation. Capitalized terms used but not otherwise
defined herein shall have the meanings ascribed to such terms in the
Registration Rights Agreement.
Pursuant to the terms of the Registration Rights Agreement, each of
the undersigned hereby acknowledges and agrees that Exhibit A hereto, which
sets forth the shares of Common Stock received by each of the Investors and
the Shareholders pursuant to the Contribution Agreement, shall be attached to
the Registration Rights Agreement on the Effective Date, and, as of the
Effective Date, incorporated therein and made a part thereof for all purposes.
The parties further acknowledge and agree that (i) upon the exercise of the
Underwriters' Over-allotment Option (as defined in the Contribution
Agreement), they shall not be required to amend and restate Exhibit A hereto,
notwithstanding Section 2.12 of the Registration Rights Agreement, and
(ii) the reference in the second "whereas" clause in the recitals to the
Registration Rights Agreement shall be deemed to refer to Exhibit A hereto.
This Side Letter shall be governed by and construed in accordance
with the laws of the State of New York without giving effect to its conflict
of laws principles, and may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
<PAGE>
<PAGE> Page 15 of 51
IN WITNESS WHEREOF, the parties hereto have executed this instrument
Agreement as of the day of , 1996.
DONNA KARAN INTERNATIONAL INC.
By:-------------------------
Name:
Title:
----------------------------
Donna Karan
----------------------------
Stephan Weiss
----------------------------
Frank R. Mori
----------------------------
Christopher Mori
----------------------------
Heather Mori
----------------------------
Tomio Taki
TAKIHYO INC.
By:-------------------------
Frank R. Mori
President
<PAGE>
<PAGE> Page 16 of 51
GABRIELLE STUDIO, INC.
By:-------------------------
Donna Karan
President
THE TRUST FOR THE BENEFIT OF LISA WEISS KEYES,
COREY WEISS AND GABRIELLE KARAN
By:-------------------------
Stephan Weiss
Trustee
THE TRUST FOR THE BENEFIT OF DONNA KARAN
By:-------------------------
Stephan Weiss
Trustee
<PAGE>
<PAGE> Page 17 of 51
(Exhibit A to Side Letter)
Investor Registrable Securities
Takihyo Inc. 3,183,881
Tomio Taki 1,061,293
Frank R. Mori 875,567
Christopher Mori 92,863
Heather Mori 92,863
Shareholder Shareholders' Shares
Donna Karan 3,605,744
Stephan Weiss 961,532
Karan/Weiss Trust 48,077
Karan Trust 192,306
Gabrielle Studio, Inc. 498,808
<PAGE>
<PAGE> Page 18 of 51
<Ex-4>
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made as of
this day of 1996 among Donna Karan International Inc., a Delaware
corporation (the "Company"), each of Frank R. Mori, Christopher Mori, Heather
Mori, Tomio Taki and Takihyo Inc., a Delaware corporation (each, an "Investor"
and, collectively, the "Investors"), and each of Donna Karan, Stephan Weiss,
the trust under trust agreement for the benefit of Lisa Weiss Keyes, Corey
Weiss and Gabrielle Karan (the "Karan/Weiss Trust"), the trust under trust
agreement for the benefit of Donna Karan (the "Karan Trust", and, together
with the Karan/Weiss Trust, the "KW Trusts"), and Gabrielle Studio, Inc., a
New York corporation (each, a "Shareholder" and, collectively, the
"Shareholders").
W I T N E S S E T H:
WHEREAS, the Investors are the legal and beneficial owners of the
shares (together, the "Registrable Securities") of common stock, par value
$.01 per share, of the Company (the "Common Stock") as set forth in Exhibit A
hereto; and
WHEREAS, the Shareholders are the legal and beneficial owners of the
shares of Common Stock (together, the "Shareholders' Shares") as set forth in
Exhibit B hereto; and
WHEREAS, the Company has agreed to provide to the Investors and (i)
each person controlling, controlled by or under common control with such
Investor and (ii) their respective spouses, children (or trusts for any of
their benefit) and estates (the Investors and any person or entity identified
in (i) or (ii) above individually, an "Investor Holder", and, collectively,
the "Investor Holders") the registration rights with respect to the
Registrable Securities as set forth in this Agreement; and
WHEREAS, the Company has agreed to provide to the Shareholders and
(i) each person controlling, controlled by or under common control with such
Shareholder and (ii) their respective spouses, children (or trusts for any of
their benefit) and estates (the Shareholders and any person or entity
identified in (i) or (ii) above individually, a "DK Holder", and,
collectively, the "DK Holders") the registration rights with respect to the
Shareholders' Shares as set forth in this Agreement;
NOW, THEREFORE, for and in consideration of the premises and the
mutual representations and covenants hereinafter set forth, the parties hereto
do hereby agree as follows:
1. REGISTRATION RIGHTS
1.1 Demand Registration.
(a) If at any time, but not before the date that is six months
after the effective date of an initial public offering of the Common Stock
(the "IPO"), the Company shall receive a written request from any record
Investor Holder or Investor Holders of Registrable Securities representing an
aggregate of more than 5% of the then outstanding shares of Common Stock
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<PAGE> Page 19 of 51
requesting registration of such Registrable Securities under the Securities
Act of 1933, as amended (the "Act"), the Company, at its option, either (i) on
or prior to the 30th day following receipt of such written request, shall
purchase or cause its designee to purchase such Registrable Securities from
the Investor Holder or Investor Holders thereof at a price per Registrable
Security equal to the average closing price of the Common Stock on the New
York Stock Exchange during the 10 trading days immediately preceding the date
of such written request and the 10 trading days immediately following the date
of such written request, or (ii) promptly shall prepare and file with the
Securities and Exchange Commission (the "Commission") a registration statement
under the Act covering such Registrable Securities which are the subject of
such request and shall use its best efforts to cause such registration
statement to become effective under the Act as expeditiously as possible.
Upon the receipt of such request, the Company, if it elects to
prepare and file with the Commission a registration statement under the Act
covering such Registrable Securities, promptly shall give written notice to
all other record Investor Holders of the Registrable Securities and to all
other record DK Holders of the Shareholders' Shares that such registration is
to be effected. (As used in this Agreement, the term "record Investor
Holders" shall mean the Investors and those persons or entities as to whom or
which the Investors shall have notified the Company (prior to the receipt of
such request and in writing pursuant to Section 2.1) are Investor Holders, and
the term "record DK Holders" shall mean the Shareholders and those persons or
entities as to whom or which the Shareholders shall have notified the Company
(prior to the receipt of such request and in writing pursuant to Section 2.1)
are DK Holders.) The Company shall include in such registration statement
such Registrable Securities for which it has received written requests to
register from such other record Investor Holders and such Shareholders' Shares
for which it has received written requests to register from such other record
DK Holders within 30 days after the delivery of the Company's written notice
to such other record Investor Holders and to such other record DK Holders. In
the event that the Investor Holders of a majority of the Registrable
Securities for which registration has been requested pursuant to this Section
1.1 determine for any reason not to proceed with such registration at any time
before the registration statement has been declared effective by the
Commission, and such registration statement, if theretofore filed with the
Commission, is withdrawn with respect to the Registrable Securities covered
thereby, and the Investor Holders of such Registrable Securities agree to bear
their own expenses incurred in connection therewith and to reimburse the
Company for the reasonable expenses incurred by it in connection with such
registration of such Registrable Securities, then the Investor Holders of such
Registrable Securities shall not be deemed to have exercised their rights to
require the Company to register such Registrable Securities pursuant to this
Section 1.1. If a registration statement covering Registrable Securities for
which the Investor Holders thereof have requested registration pursuant to
this Section 1.1 is not declared effective under the Act for any other reason,
including, without limitation, withdrawal of such registration statement by
the Company other than at the request of the Investor Holders as set forth
above, then the Investor Holders of such Registrable Securities shall not be
deemed to have exercised their rights to require the Company to register such
Registrable Securities pursuant to this Section 1.1, and all expenses incurred
in connection with the preparation and filing of such registration statement
shall be borne by the Company.
(b) The obligations of the Company under this Section 1.1 with
respect to the written request by the Investor Holders for registration of
their Registrable Securities under the Act shall be limited to two
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<PAGE> Page 20 of 51
registration statements which are declared effective under the Act by the Com-
mission, the written request for the first of which shall not be given by the
Investor Holders earlier than the date which is six months following the
effective date of the IPO (the "First Demand"), and the written request for
the second of which shall not be given by the Investor Holders earlier than
the date which is 12 months after the effective date of any other offering of
the Company's securities under the Act (the "Second Demand"). The Company
shall pay the expenses described in Section 1.6 hereof for each registration
statement filed on behalf of the Investor Holders pursuant to this Section
1.1, except for underwriting discounts and commissions payable with respect to
the Registrable Securities sold on behalf of the Investor Holders thereof and
any Shareholders' Shares sold on behalf of the DK Holders.
(c) Subject to the provisions of paragraphs (e) and (f) below,
if, at any time after any written request from the Investor Holders for
registration of the Registrable Securities is received by the Company pursuant
to this Section 1.1, the Company determines to proceed with the preparation
and filing of a registration statement under the Act in connection with the
proposed offer and sale of any of its securities by it or any of its security
holders, including, without limitation, the DK Holders, such written request
shall be deemed to have been given pursuant to Section 1.2 hereof rather than
this Section 1.1, and the rights of the Investor Holders of Registrable
Securities covered by such written request shall be governed by Section 1.2
hereof and shall not constitute an exercise by such Investor Holders of their
rights to require registration under this Section 1.1.
(d) If the registration of the Registrable Securities pursuant
to this Section 1.1 is an underwritten offering of Registrable Securities, the
managing underwriter of such offering shall be selected by the Investor
Holders of a majority of the Registrable Securities for which registration has
been requested and shall be reasonably acceptable to the Company. With
respect to any such registration of the Registrable Securities pursuant to
this Section 1.1 requested within the 12-month period following the IPO,
neither the Company nor any other holder of securities of the Company may
include securities in such registration if, in the good faith judgment of the
managing underwriter of such offering, the inclusion of such securities would
adversely affect the success of such offering or interfere with the successful
marketing of the Registrable Securities, or require the exclusion of any
portion of the Registrable Securities to be registered. Securities to be
excluded from an underwritten public offering shall be selected in the manner
provided in Section 1.2 below.
(e) (i) If, at any time after the first anniversary of the
effective date of the IPO, the Company shall receive a written request for the
First Demand from the Investor Holders for registration of the Registrable
Securities pursuant to this Section 1.1, the Company, at its option, may
either (A) elect to proceed with the preparation and filing of a registration
statement under the Act in connection with the proposed offer and sale of any
of its securities by it, or (B) promptly prepare and file with the Commission
a registration statement under the Act covering such Registrable Securities
which are the subject of the First Demand and, in either event, shall use its
best efforts to cause such registration statement to become effective under
the Act as expeditiously as possible.
(ii) In the event the Company elects to proceed with the
preparation and filing of a registration statement under the Act in connection
with the proposed offer and sale of any of its securities by it in accordance
with clause (A) of paragraph (e)(i), then:
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<PAGE> Page 21 of 51
(A) such written request covering the First Demand shall be deemed
to have been given pursuant to Section 1.2 hereof rather than this Section
1.1, and the rights of the Investor Holders
of Registrable Securities covered by such written request shall be governed by
Section 1.2 hereof and shall not constitute an exercise by such Investor
Holders of their rights to require registration under this Section 1.1; and
(B) the Company shall give written notice of such election to all
record Investor Holders and to all record DK Holders, which notice shall offer
to the Investor Holders and the DK Holders the opportunity to register the
number of Registrable Securities and Shareholders' Shares, as the case may be,
as each Investor Holder and DK Holder, as the case may be, may request in
writing within 30 days after receipt of such written notice from the Company.
In connection therewith, the Company shall, upon receipt of such written
request, cause the requested number of Registrable Securities and
Shareholders' Shares to be included in such registration statement.
If, in the good faith judgment of the managing underwriter or
underwriters of such offering, the inclusion of all the Registrable Securities
and Shareholders' Shares requested for inclusion pursuant to this paragraph
(e)(ii) would adversely affect the success of such offering, reduce the number
of securities of the Company (the "Company Securities") to be offered or
interfere with the successful marketing of the Company Securities, then (1)
the managing underwriter or underwriters will determine the aggregate number
of Registrable Securities and Shareholders' Shares which, in its or their
judgment, can be included without having such an effect (collectively, the
"Balance") and (2) the number of Registrable Securities and Shareholders'
Shares requested for inclusion in the offering will be reduced such that (a)
the number of Registrable Securities included in such registration statement
represents 75% of the Balance and (b) the number of Shareholders' Shares
included in such registration statement represents 25% of the Balance. In the
event of any such reduction, among the Investor Holders or DK Holders
requesting shares to be included in such offering, as the case may be, the
number of Registrable Securities or Shareholders' Shares shall be reduced on a
pro rata basis based upon the number of such Investor Holder's Registrable
Securities or such DK Holder's Shareholders' Shares with respect to which
registration has been requested. In the event that the Investor Holders elect
to include in such offering a number of Registrable Securities representing
less than 75% of the Balance, then the DK Holders shall have the opportunity
to include in such offering a number of Shareholders' Shares representing such
number of Registrable Securities not elected to be included in such offering
by the Investor Holders. In the event that the DK Holders elect to include in
such offering a number of Shareholders' Shares representing less than 25% of
the Balance, then the Investor Holders shall have the opportunity to include
in such offering a number of Registrable Securities representing such number
of Shareholders' Shares not elected to be included in such offering by the DK
Holders.
(iii) In the event the Company elects to prepare and file
with the Commission a registration statement under the Act covering such
Registrable Securities which are the subject of the First Demand in accordance
with clause (B) of paragraph (e)(i), then:
(A) the rights of the Investor Holders of Registrable Securities
covered by such written request shall be governed by this Section 1.1; and
<PAGE>
<PAGE> Page 22 of 51
(B) the Company shall give written notice of such election to all
record Investor Holders and to all record DK Holders, which notice shall offer
to the Investor Holders and the DK Holders the opportunity to register the
number of Registrable Securities and Shareholders' Shares, as the case may be,
as each Investor Holder and DK Holder, as the case may be, may request in
writing within 30 days after receipt of such written notice from the Company.
In connection therewith, the Company shall, upon receipt of such written
request, cause the requested number of Registrable Securities and
Shareholders' Shares to be included in such registration statement.
The aggregate number of shares of Common Stock included in such
registration statement (the "Shares Offered") shall be apportioned among
Registrable Securities and Shareholders' Shares such that (1) the number of
Registrable Securities included in such registration statement represents 75%
of the Shares Offered and (2) the number of Shareholders' Shares included in
such registration statement represents 25% of the Shares Offered.
(f) (i) If, at any time after the first anniversary of the
effective date of the IPO, the Company receives a written request for the
Second Demand from the Investor Holders for registration of the Registrable
Securities pursuant to this Section 1.1, the Company, at its option, may
either (A) elect to proceed with the preparation and filing of a registration
statement under the Act in connection with the proposed offer and sale of any
of its securities by it, or (B) promptly prepare and file with the Commission
a registration statement under the Act covering such Registrable Securities
which are the subject of the Second Demand and, in either event, shall use its
best efforts to cause such registration statement to become effective under
the Act as expeditiously as possible.
(ii) In the event the Company elects to proceed with the
preparation and filing of a registration statement under the Act in connection
with the proposed offer and sale of any of its securities by it in accordance
with clause (A) of paragraph (f)(i), then:
(A) such written request for the Second Demand shall be deemed to
have been given pursuant to Section 1.2 hereof rather than this Section 1.1,
and the rights of the Investor Holders of Registrable Securities covered by
such written request shall be governed by Section 1.2 hereof and shall not
constitute an exercise by such Investor Holders of their rights to require
registration under this Section 1.1; and
(B) the Company shall give written notice of such election to all
record Investor Holders and to all record DK Holders, which notice shall offer
to the Investor Holders and the DK Holders the opportunity to register the
number of Registrable Securities and Shareholders' Shares, as the case may be,
as each Investor Holder and DK Holder, as the case may be, may request in
writing within 30 days after receipt of such written notice from the Company.
In connection therewith, the Company shall, upon receipt of such written
request, cause the requested number of Registrable Securities and
Shareholders' Shares, to be included in such registration statement.
If, in the good faith judgment of the managing underwriter or
underwriters of such offering, the inclusion of all of the Registrable
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<PAGE> Page 23 of 51
Securities and the Shareholders' Shares requested for inclusion pursuant to
this paragraph (f)(ii) would adversely affect the success of such offering,
reduce the number of Company Securities to be offered or interfere with the
successful marketing of the Company Securities, then (1) the managing
underwriter or underwriters will determine the Balance and (2) the number of
Registrable Securities and Shareholders' Shares requested for inclusion
in the offering will be reduced such that (a) the number of Registrable
Securities included in such registration statement represents two-thirds of
the Balance and (b) the number of Shareholders' Shares included in such regis-
tration statement represents one-third of the Balance. In the event of any
such reduction, among the Investor Holders or DK Holders requesting shares to
be included in such offering, as the case may be, the number of Registrable
Securities or Shareholders' Shares shall be reduced on a pro rata basis based
upon the number of such Investor Holder's Registrable Securities or such DK
Holder's Shareholders' Shares with respect to which registration had been
requested. In the event that the Investor Holders elect to include in such
offering a number of Registrable Securities representing less than two-thirds
of the Balance, then the DK Holders shall have the opportunity to include in
such offering a number of Shareholders' Shares representing such number of
Registrable Securities not elected to be included in such offering by the
Investor Holders. In the event that the DK Holders elect to include in such
offering a number of Shareholders' Shares representing less than one-third of
the Balance, then the Investor Holders shall have the opportunity to include
in such offering a number of Registrable Securities representing such number
of Shareholders' Shares not elected to be included in such offering by the DK
Holders.
(iii) In the event the Company elects to prepare and file
a registration statement under the Act covering such Registrable Securities
which are the subject of the Second Demand in accordance with clause (B) of
paragraph (f)(i), then:
(A) the rights of the Investor Holders of Registrable Securities
covered by such written request shall be governed by this Section 1.1; and
(B) the Company shall give written notice of such election to all
record Investor Holders and to all record DK Holders, which notice shall offer
to the Investor Holders and the DK Holders the opportunity to register the
number of Registrable Securities and Shareholders' Shares, as the case may be,
as each Investor Holder and DK Holder, as the case may be, may request in
writing within 30 days after receipt of such written notice from the Company.
In connection therewith, the Company shall, upon receipt of such written
request, cause the requested number of Registrable Securities and
Shareholders' Shares to be included in such registration statement.
The aggregate number of Shares Offered shall be apportioned among
Registrable Securities and Shareholders' Shares such that (1) the number of
Registrable Securities included in such registration statement represents 75%
of the Shares Offered, and (2) the number of Shareholders' Shares included in
such registration statement represents 25% of the Shares Offered.
(g) (i) If, at any time after the first anniversary of the
effective date of the IPO, the Company shall receive a written request from
the DK Holders requesting registration under the Act of the Shareholders'
Shares, the Company, at its option, may (but shall not be obligated to) either
(A) elect to proceed with the preparation and filing of a registration
<PAGE>
<PAGE> Page 24 of 51
statement under the Act in connection with the proposed offer and sale of any
of its securities by it, or (B) promptly prepare and file with the Commission
a registration statement under the Act covering such Shareholders' Shares,
and, in either event, shall use its best efforts to cause such registration
statement to become effective under the Act as expeditiously as possible.
Upon the receipt of such request, the Company, if it elects to
prepare and file with the Commission a registration statement under the Act
covering such Shareholders' Shares, promptly shall give written notice to all
other record DK Holders of the Shareholders' Shares and all other record
Investor Holders of the Registrable Securities that such registration is to be
effected. The Company shall include in such registration statement such
Shareholders' Shares for which it has received written requests to register
from such other record DK Holders and such Registrable Securities for which it
has received written requests to register from such other record Investor
Holders within 30 days after the delivery of the Company's written notice to
such other record DK Holders and such other record Investor Holders. In the
event that the DK Holders of a majority of the Shareholders' Shares for which
registration has been requested pursuant to this Section 1.1(g) determine for
any reason not to proceed with such registration at any time before the
registration statement has been declared effective by the Commission, and such
registration statement, if theretofore filed with the Commission, is withdrawn
with respect to the Shareholders' Shares covered thereby, and the DK Holders
of such Shareholders' Shares agree to bear their own expenses incurred in
connection therewith and to reimburse the Company for the reasonable expenses
incurred by it in connection with such registration of such Shareholders'
Shares, then the DK Holders of such Shareholders' Shares shall not be deemed
to have exercised their rights to request the Company to register such
Shareholders' Shares pursuant to this Section 1.1(g). If a registration
statement covering Shareholders' Shares for which the DK Holders thereof have
requested registration pursuant to this Section 1.1(g) is not declared
effective under the Act for any other reason, including, without limitation,
withdrawal of such registration statement by the Company other than at the
request of the DK Holders as set forth above, then the DK Holders of such
Shareholders' Shares shall not be deemed to have exercised their right to
request the Company to register such Shareholders' Shares pursuant to this
Section 1.1(g), and all expenses incurred in connection with the preparation
and filing of such registration statement shall be borne by the Company.
(ii) In the event the Company elects to proceed with the
preparation and filing of a registration statement under the Act in connection
with the proposed offer and sale of any of its securities by it in accordance
with clause (A) of paragraph (g)(i), the Company shall give written notice of
such election to all record Investor Holders and to all record DK Holders,
which notice shall offer to the Investor Holders and the DK Holders the
opportunity to register the number of Registrable Securities and Shareholders'
Shares, as the case may be, as each Investor Holder and DK Holder, as the case
may be, may request in writing within 30 days after receipt of such written
notice from the Company. In connection therewith, the Company shall, upon
receipt of such written request, cause the requested number of Registrable
Securities and Shareholders' Shares to be included in such registration
statement. If, in the good faith judgment of the managing underwriter or
underwriters of such offering, the inclusion of all the Registrable Securities
and Shareholders' Shares requested for inclusion pursuant to this paragraph
(g)(ii) would adversely affect the success of such offering, reduce the number
of Company Securities to be offered or interfere with the successful marketing
of the Company Securities, then (1) the managing underwriter or underwriters
will determine the Balance and (2) the number of Registrable Securities and
Shareholders' Shares requested for inclusion in the offering will be reduced
<PAGE>
<PAGE> Page 25 of 51
such that (a) the number of Registrable Securities included in such
registration statement represents one-third of the Balance and (b) the number
of Shareholders' Shares included in such registration statement represents
two-thirds of the Balance. In the event of any such reduction, among the
Investor Holders or DK Holders requesting shares to be included in such
offering, as the case may be, the number of Registrable Securities or
Shareholders' Shares shall be reduced on a pro rata basis based upon the
number of such Investor Holder's Registrable Securities or such DK Holder's
Shareholders' Shares with respect to which registration has been requested.
In the event that the Investor Holders elect to include in such offering a
number of Registrable Securities representing less than one-third of the
Balance, then the DK Holders shall have the opportunity to include in such
offering a number of Shareholders' Shares representing such number of
Registrable Securities not elected to be included in such offering by the
Investor Holders. In the event that the DK Holders elect to include in such
offering a number of Shareholders' Shares representing less than two-thirds of
the Balance, then the Investor Holders shall have the opportunity to include
in such offering a number of Registrable Securities representing such number
of Shareholders' Shares not elected to be included in such offering by the DK
Holders.
(iii) In the event the Company elects to prepare and file
with the Commission a registration statement under the Act covering such
Shareholders' Shares in accordance with clause (B) of paragraph (g)(i), the
Company shall give written notice of such election to all record Investor
Holders and to all record DK Holders, which notice shall offer to the Investor
Holders and the DK Holders the opportunity to register the number of
Registrable Securities and Shareholders' Shares, as the case may be, as each
Investor Holder and DK Holder, as the case may be, may request in writing
within 30 days after receipt of such written notice from the Company. In
connection therewith, the Company shall cause the requested number of
Shareholders' Shares and, upon receipt of such written request from any
Investor Holder, the requested number of Registrable Securities, to be
included in such registration statement. The aggregate number of Shares
Offered shall be apportioned among Registrable Securities and Shareholders'
Shares such that (A) the number of Registrable Securities included in such
registration statement represents one-third of the Shares Offered and (B) the
number of Shareholders' Shares included in such registration statement
represents two-thirds of the Shares Offered.
(iv) If the registration of Shareholders' Shares pursuant
to this Section 1.1(g) is an underwritten offering of Shareholders' Shares,
the managing underwriter of such offering shall be selected by the DK Holders
of a majority of the Shareholders' Shares for which registration has been
requested and shall be reasonably acceptable to the Company.
(v) In the event of any inclusion by the Investor Holders
of their Registrable Securities in connection with a registration statement
filed by the Company in accordance with this Section 1.1(g), the rights of the
Investor Holders of Registrable Securities included in such offering shall be
governed by Section 1.2 hereof and shall not constitute an exercise by such
Investor Holders of their rights to require registration under this Section
1.1.
(vi) The DK Holders shall be entitled to one request for
registration of their Shareholders' Shares under the Act pursuant to this
paragraph (g), and the obligations, if any, of the Company and the rights of
the Investor Holders under this paragraph (g) with respect to the written
<PAGE>
<PAGE> Page 26 of 51
request by the DK Holders for registration of their Shareholders' Shares under
the Act shall be limited to one registration statement which is declared
effective under the Act by the Commission. The Company shall pay the expenses
described in Section 1.6 hereof for any registration statement filed on behalf
of the DK Holders pursuant to this Section 1.1, except for underwriting
discounts and commissions payable with respect to the Shareholders' Shares
sold on behalf of the DK Holders.
1.2 "Piggyback" Registration Rights.
(a) If at any time the Company shall determine to proceed with the
preparation and filing of a registration statement under the Act with respect
to any of its securities by it or on behalf of any of its security holders,
including the Investor Holders or DK Holders (other than a registration state-
ment on Form S-4 or S-8, or any form substituting therefor, or filed in
connection with an exchange offer or an offering of securities solely to the
Company's existing stockholders or other limited purpose form), the Company
will give written notice of such determination to all record Investor Holders
of the Registrable Securities and all record DK Holders of the Shareholders'
Shares, which notice shall offer to such Investor Holders and DK Holders the
opportunity to register the number of Registrable Securities and Shareholders'
Shares as each Investor Holder or DK Holder, as the case may be, may request.
Upon the written request of a record Investor Holder of any of the Registrable
Securities or a record DK Holder of any of the Shareholders' Shares given
within 30 days after receipt of any such notice from the Company, the Company,
except as otherwise provided in this Section 1.2, will use its best efforts to
cause all such Registrable Securities and Shareholders' Shares, as the case
may be, to be included in such registration statement, all to the extent
requisite to permit the sale or other disposition by the prospective seller or
sellers of Registrable Securities or Shareholders' Shares to be so registered;
provided, however, that nothing herein shall prevent the Company from
abandoning or delaying any such registration at any time. If any public
offering pursuant to this Section 1.2 shall be underwritten in whole or in
part, the Company will use its reasonable efforts to cause the managing
underwriter or underwriters of such offering to permit such Registrable
Securities or Shareholders' Shares requested for inclusion pursuant to this
Section 1.2 to be included in the offering on the same terms and conditions as
any similar securities of the Company included therein. If such underwritten
offering includes securities of the Company similar to the Registrable
Securities or the Shareholders' Shares, then upon request by the Company and
the managing underwriter or underwriters of such offering given to the
Investor Holders of Registrable Securities and the DK Holders of Shareholders'
Shares requested to be included in such offering prior to the effective date
thereof, such Investor Holders and DK Holders shall enter into underwriting
agreements with such underwriter or underwriters providing for the inclusion
of such Registrable Securities and Shareholders' Shares in such offering on
the terms and conditions reasonably agreed to by the Company, such
underwriters, such Investor Holders and such DK Holders.
(b) Notwithstanding the foregoing:
(i) if, in the good faith judgment of the managing
underwriter or underwriters of such public offering, the inclusion of the
Shareholders' Shares requested for inclusion pursuant to this Section 1.2,
together with any other securities of the Company which have similar "piggy-
back" registration rights, would adversely affect the success of such
offering, reduce the number of securities to be offered by the Company,
Investor Holders or such offering security holders, as the case may be, or
interfere with the successful marketing of the securities offered by the
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<PAGE> Page 27 of 51
Company, Investor Holders or such offering security holders, as the case may
be, then no Shareholders' Shares shall be included in such underwritten public
offering; and
(ii) if, in the good faith judgment of the managing
underwriter or underwriters of such public offering, the inclusion of the
Registrable Securities requested for inclusion pursuant to this Section 1.2,
together with any other securities of the Company which have similar
"piggyback" registration rights (collectively, the "Requested Securities"),
would adversely affect the success of such offering, reduce the number of
securities to be offered by the Company or such offering security holders, as
the case may be, or interfere with the successful marketing of the securities
offered by the Company or such offering security holders, as the case may be,
the number of shares of Requested Securities otherwise to be included in the
underwritten public offering may be reduced pro rata among the holders thereof
or excluded in their entirety if so required by the managing underwriter or
underwriters.
(iii) To the extent only a portion of the Requested Securities
is included in the underwritten public offering, those Requested Securities
and Shareholders' Shares which are excluded from, and Registrable Securities
and Shareholders' Shares the holders of which have not requested inclusion in,
the underwritten public offering, shall be withheld from the market by the
holders thereof for a period, not to exceed 180 days, which the managing
underwriter reasonably determines is necessary in order to effect the
underwritten public offering.
(c) The holders of Requested Securities shall not be
responsible for any expenses for any registration statement filed pursuant to
this Section 1.2, including the expenses described in Section 1.6 hereof,
except for underwriting discounts and commissions payable with respect to the
Requested Securities sold on behalf of the holders thereof.
1.3 Lock Up Provision. In connection with any underwritten public
offering of the Company's securities subsequent to the IPO, each Investor
Holder and each DK Holder hereby agrees to be subject to a lock-up for such
period, not to exceed 180 days, following such public offering as may be
required by the underwriter or underwriters of such underwritten public
offering and to give such customary representations, opinions and indemnities
in form and substance reasonably satisfactory to the managing underwriter or
underwriters of the public offering. During such periods, each Investor
Holder and each DK Holder agrees not to sell or otherwise transfer any shares
of Common Stock (other than transfers to another Investor Holder or DK Holder,
as applicable) without the prior written consent of such underwriter or
underwriters.
1.4 Registration Procedures. If and whenever the Company is
required by the provisions of Section 1.1 or 1.2 to effect the registration of
Registrable Securities or Shareholders' Shares under the Act, the Company
will:
(a) prepare and promptly file with the Commission a
registration statement which includes such Registrable Securities or
Shareholders' Shares and use its best efforts to cause such registration
statement to become and remain effective until such Registrable Securities or
Shareholders' Shares have been sold;
(b) prepare and promptly file with the Commission such
amendments and post-effective amendments to such registration statement and
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supplements to the prospectus contained therein as may be necessary to keep
such registration statement effective and such registration statement and
prospectus accurate and complete until the Registrable Securities or
Shareholders' Shares have been sold, but in no event more than three months
from the effective date of such registration statement;
(c) if the offering is to be underwritten in whole or in part,
enter into a written underwriting agreement, including customary
representations, opinions and indemnities, in form and substance reasonably
satisfactory to the managing underwriter or underwriters of the public
offering, the Investor Holders of a majority of the Registrable Securities
participating in such offering, and the DK Holders of a majority of the
Shareholders' Shares participating in such offering;
(d) furnish to the Investor Holders of Registrable Securities
and the DK Holders of Shareholders' Shares included in such registration
statement and to the underwriter or underwriters, if any, such number of
copies of the registration statement, preliminary prospectus, final prospectus
and such other documents as such Investor Holders of Registrable Securities,
underwriter or underwriters and DK Holders of Shareholders' Shares may
reasonably request in order to facilitate the public offering of such
securities;
(e) furnish to the Investor Holders of Registrable Securities
and DK Holders of Shareholders' Shares included in such registration statement
copies of all correspondence between the Company and the Commission with
respect to such registration statement;
(f) use its reasonable efforts to register or qualify the
Registrable Securities and, if applicable, Shareholders' Shares included in
such registration statement under such state securities or "blue sky" laws of
such jurisdictions as such Investor Holders of Registrable Securities and DK
Holders of Shareholders' Shares may reasonably request in writing within 10
days following the original filing of such registration statement, except that
(i) the Company shall not for any purpose be required to qualify to do
business as a foreign corporation in any jurisdiction where it is not so
qualified and (ii) the Company shall not have any obligation, in connection
with a registration of Registrable Securities or Shareholders' Shares pursuant
to Section 1.2 hereof, to register or qualify such Registrable Securities or
Shareholders' Shares in any jurisdictions other than those in which it is
registering or qualifying other securities of the Company being offered
pursuant to such registration;
(g) notify the Investor Holders of Registrable Securities and
the DK Holders of Shareholders' Shares included in such registration
statement, promptly after it shall receive notice thereof, of the date and
time when such registration statement and each post-effective amendment
thereto has become effective or a supplement to any prospectus forming a part
of such registration statement has been filed;
(h) notify such Investor Holders of Registrable Securities and
DK Holders of Shareholders' Shares promptly of any request by the Commission
for the amending or supplementing of such registration statement or prospectus
or for additional information;
(i) prepare and file with the Commission, promptly upon the
request of any such Investor Holders of Registrable Securities or DK Holders
of Shareholders' Shares, any amendments or supplements to such registration
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<PAGE> Page 29 of 51
statement or prospectus which, due to a change in the information contained in
such registration statement pertaining to the Investor Holders or the DK
Holders or the manner in which the Investor Holders or the DK Holders intend
to distribute their Registrable Securities or Shareholders' Shares in the
opinion of counsel for such Investor Holders of Registrable Securities or DK
Holders of Shareholders' Shares, is required under the Act or the rules and
regulations thereunder in connection with the distribution of Registrable
Securities by such Investor Holders or Shareholders' Shares by such DK
Holders;
(j) prepare and promptly file with the Commission and promptly
notify such Investor Holders of Registrable Securities and DK Holders of
Shareholders' Shares of the filing of an amendment or supplement to such
registration statement or prospectus as may be necessary to correct any
statements or omissions if, at the time when a prospectus relating to the
Registrable Securities or Shareholders' Shares is required to be delivered
under the Act, any event shall have occurred as the result of which any such
prospectus or any other prospectus as then in effect would include an untrue
statement of a material fact or omit to state any material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading;
(k) in case any of such Investor Holders of Registrable
Securities or DK Holders of Shareholders' Shares or any underwriter for any of
such Investor Holders or DK Holders is required to deliver a prospectus at a
time when the prospectus then in circulation is not in compliance with the Act
or the rules and regulations of the Commission, prepare promptly upon request
such amendments or supplements to such registration statement and such
prospectus as may be necessary in order for such prospectus to comply with the
requirements of the Act and such rules and regulations;
(l) notify such Investor Holders of Registrable Securities or
DK Holders of Shareholders' Shares, promptly after it shall receive notice or
obtain knowledge thereof, of the issuance of any stop order by the Commission
suspending the effectiveness of such registration statement or the initiation
or threatening of any proceeding for that purpose and promptly use its best
efforts to prevent the issuance of any stop order or to obtain its withdrawal
if such stop order should be issued;
(m) not file any registration statement or prospectus or any
amendment or supplement to such registration statement or prospectus to which
the Investor Holders of a majority of the Registrable Securities or the DK
Holders of a majority of the Shareholders' Shares included or to be included
in a registration have reasonably objected on the grounds that such
registration statement or prospectus or amendment or supplement thereto does
not comply in all material respects with the requirements of the Act or the
rules and regulations thereunder, after having been furnished with a copy
thereof at least five business days prior to the filing thereof; provided,
however, that the failure of such Investor Holders, DK Holders or their
respective counsel to review or object to any registration statement or
prospectus or any amendment or supplement to such registration statement or
prospectus shall not affect the rights of such Investor Holders, DK Holders or
their respective officers, directors, representatives, agents, partners, legal
counsel, accountants or controlling persons or any underwriter or any
controlling person of such underwriter under Section 1.7 hereof;
(n) make available for inspection upon request by any Investor
Holder of Registrable Securities or DK Holder of Shareholders' Shares covered
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<PAGE> Page 30 of 51
by any such registration statement, by any managing underwriter of any
distribution to be effected pursuant to such registration statement
and by any attorney, accountant or other agent retained by any such Investor
Holder, DK Holder or any such underwriter, all financial and other records,
pertinent corporate documents and properties of the Company, and cause all of
the Company's officers, directors and employees to supply all information
reasonably required by any such Investor Holder, DK Holder, underwriter,
attorney, accountant or agent in connection with such registration statement;
provided, however, that as a condition to making such information available,
the Company may require any such Investor Holder, DK Holder and its respective
representatives to enter into an appropriate confidentiality agreement;
(o) at the request of any such Investor Holder of Registrable
Securities or DK Holder of Shareholders' Shares, furnish on the effective date
of the registration statement, and, if such registration includes an
underwritten public offering, at the closing provided for in the underwriting
agreement relating thereto: (i) opinions, dated such respective dates, of the
counsel representing the Company for the purposes of such registration, ad-
dressed to the underwriter or underwriters, if any, and to the Investor Holder
or Investor Holders of Registrable Securities and the DK Holder or DK Holders
of Shareholders' Shares making such request, covering such matters with
respect to the registration statement, the prospectus and each amendment or
supplement thereto, proceedings under state and federal securities laws, other
matters relating to the Company, the securities being registered and the offer
and sale of such securities as are customarily the subject of opinions of
issuer's counsel provided to underwriters in underwritten public offerings,
and such opinions of counsel shall additionally cover such legal and factual
matters with respect to the registration as such requesting Investor Holder or
Investor Holders or DK Holder or DK Holders may reasonably request; and (ii)
"cold comfort" letters, dated such respective dates, from the independent
certified public accountants of the Company, addressed to the underwriter or
underwriters, if any, and to the Investor Holder or Investor Holders of
Registrable Securities and the DK Holder or DK Holders of Shareholders' Shares
making such request, stating that they are independent certified public
accountants within the meaning of the Act and dealing with such matters as the
underwriters may request, or if the offering is not underwritten, that in the
opinion of such accountants the financial statements and other financial data
of the Company included in the registration statement or the prospectus or any
amendment or supplement thereto comply in all material respects with the
applicable accounting requirements of the Act, and additionally covering such
other accounting and financial matters, including information as to the period
ending not more than five business days prior to the date of such letter with
respect to the registration statement and prospectus, as such requesting
Investor Holder or Investor Holders or DK Holder or DK Holders may reasonably
request; and
(p) use its reasonable efforts to take all other steps
necessary to effect the registration of the Registrable Securities and
Shareholders' Shares contemplated hereby.
1.5 Certain Obligations of the Investor Holders and the DK Holders.
(a) The Company may require each Investor Holder of
Registrable Securities and, if applicable, DK Holder of Shareholders' Shares
as to which any registration is being effected to furnish to the Company such
information regarding such Investor Holder, DK Holder or the distribution by
such Investor Holder or DK Holder of such Registrable Securities or such
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<PAGE> Page 31 of 51
Shareholders' Shares, as applicable, as the Company may from time to time
reasonably request, in each case, only as required by the Act.
(b) Each Investor Holder of Registrable Securities and DK
Holder of Shareholders' Shares agrees that, upon receipt of any notice from
the Company of the happening of any event of the kind described in Sections
1.4(h), (j) and (l) hereof, such Investor Holder or, if applicable, DK Holder
shall forthwith discontinue disposition of Registrable Securities or
Shareholders' Shares, as applicable, pursuant to the registration statement
including such Registrable Securities or Shareholders' Shares until such
Investor Holder or, if applicable, DK Holder receives the copies of the
supplemented or amended prospectus contemplated by Sections 1.4(h), (j) and
(l) hereof, and, if so directed by the Company, such Investor Holder or, if
applicable, DK Holder will deliver to the Company (at the expense of the
Company) all copies, other than permanent file copies then in such Investor
Holder's or DK Holder's possession, of the prospectus covering such
Registrable Securities or Shareholders' Shares, as applicable, current at the
time of receipt of such notice. In the event the Company shall give any such
notice in connection with such a registration statement, the Company shall
keep such registration statement effective for the period commencing on the
date when each Investor Holder of Registrable Securities and, if applicable,
DK Holder of Shareholders' Shares included in such registration statement
shall have received the copies of the supplemented or amended prospectus
contemplated by Sections 1.4(h), (j) and (l) hereof and continuing thereafter
for a number of days equal to the number of days which were remaining in the
period during which the Company was otherwise required to keep such
registration statement effective pursuant to Section 1.4(b) hereof on the date
when the Company gave such notice pursuant to Sections 1.4(h), (j) or (l)
hereof.
1.6 Expenses.
(a) With respect to the registrations requested by the
Investor Holders or DK Holders pursuant to Section 1.1 hereof and the
inclusion of Registrable Securities and Shareholders' Shares in a registration
statement pursuant to Section 1.1 or Section 1.2 hereof, all fees, costs and
expenses of and incidental to such registration, inclusion and public offering
(as specified in paragraph (b) below) in connection therewith shall be borne
by the Company; provided, however, that each Investor Holder and each DK
Holder shall bear its pro rata share of the underwriting discounts and
commissions with respect to the Registrable Securities or Shareholders'
Shares, respectively, sold on its behalf.
(b) The fees, costs and expenses of registration to be borne
by the Company as provided in paragraph (a) above shall include, without
limitation, all registration and filing fees, all fees and expenses associated
with filings required to be made with the National Association of Securities
Dealers, Inc. (the "NASD"), as may be required by the rules and regulations of
the NASD, printing expenses, transfer taxes, fees and disbursements of counsel
and accountants for the Company, and all legal fees and disbursements and
other expenses of complying with state securities or "blue sky" laws of any
jurisdictions in which the Registrable Securities and Shareholders' Shares, to
be offered are to be registered and qualified. Fees and disbursements of
counsel and accountants for the selling Investor Holders of Registrable
Securities and for the selling DK Holders of Shareholders' Shares and any
other expenses incurred by such selling Investor Holders or selling DK Holders
not expressly included above shall be borne by the selling Investor Holders of
Registrable Securities and the selling DK Holders of Shareholders' Shares,
respectively.
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<PAGE> Page 32 of 51
1.7 Indemnification.
(a) The Company hereby agrees to indemnify and hold harmless
each Investor Holder of Registrable Securities and each DK Holder of
Shareholders' Shares which are included in a registration statement pursuant
to the provisions of Section 1.1 or 1.2 hereof, its officers, directors,
representatives, agents, partners, legal counsel and accountants, and any
underwriter (as defined in the Act) for such Investor Holder or DK Holder and
each person, if any, who controls such Investor Holder, DK Holder or such
underwriter within the meaning of the Act (each, an "Indemnified Person"),
from and against, and hereby agrees to reimburse such Indemnified Person with
respect to, any and all claims, actions (actual or threatened), demands, loss,
damage, liability, cost and expense to which such Indemnified Person may
become subject under the Act or otherwise, insofar as such claims, actions
(actual or threatened), demands, losses, damages, liabilities, costs or
expenses are caused by any untrue statement or alleged untrue statement of any
material fact contained in such registration statement, any prospectus
contained therein or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not
misleading; provided, however, that the Company shall not be liable in any
such case to the extent that, and shall not be required to indemnify any
Investor Holder or DK Holder to the extent that, any such claim, action,
demand, loss, damage, liability, cost or expense arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission so made in conformity with information furnished by or on behalf of
such Investor Holder or DK Holder in writing specifically for use in the
preparation thereof.
(b) Each Investor Holder of Registrable Securities and each DK
Holder of Shareholders' Shares included in a registration pursuant to the
provisions of Section 1.1 or 1.2 hereof hereby agrees, severally and not
jointly, to indemnify and hold harmless the Company, its officers, directors,
representatives, agents, any controlling person and any underwriter from and
against, and hereby agrees to reimburse the Company, its officers, directors,
representatives, agents, partners, legal counsel, accountants, any controlling
person and any underwriter with respect to, any and all claims, actions,
demands, loss, damage, liability, cost or expense to which the Company, its
officers, directors, representatives, agents, partners, legal counsel,
accountants, or any controlling person and/or any underwriter may become
subject under the Act or otherwise, insofar as such claims, actions, demands,
loss, damages, liabilities, costs or expenses are caused by any untrue
statement or alleged untrue statement of any material fact contained in such
registration statement, any prospectus contained therein or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in
which they were made, not misleading; provided, however, that such Investor
Holder or DK Holder will be liable in any such case only to the extent that
any such claim, action, demand, loss, damage, liability, cost or expense
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission so made in conformity with information
furnished by or on behalf of such Investor Holder or DK Holder, any
underwriter for such Investor Holder or DK Holder, and any controlling person
of such Investor Holder or DK Holder in writing specifically for use in the
preparation thereof.
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<PAGE> Page 33 of 51
(c) Promptly after receipt by an indemnified party pursuant to
the provisions of paragraph (a) or (b) of this Section 1.7 of notice of the
commencement of any action involving the subject matter of the foregoing
indemnity provisions such indemnified party will, if a claim thereof is to be
made against the indemnifying party pursuant to the provisions of said
paragraph (a) or (b), promptly notify the indemnifying party of the
commencement thereof; provided, however, the omission to so notify the
indemnifying party will not relieve it from any liability which it may have to
any indemnified party otherwise than hereunder, except to the extent that the
defense of such action is materially prejudiced by such omission to so notify
the indemnifying party. In case such action is brought against any
indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party shall have the right to participate in, and,
to the extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party (such approval of the choice of counsel
not to be unreasonably withheld); provided, however, if the defendants in any
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are different
from or in addition to those available to the indemnifying party, or if there
is a conflict of interest which would prevent counsel for the indemnifying
party from also representing the indemnified party, the indemnified party or
parties have the right to select separate counsel to participate in the
defense of such action on behalf of such indemnified party or parties. After
notice from the indemnifying party to such indemnified party of its election
so to assume the defense thereof, the indemnifying party will not be liable to
such indemnified party pursuant to the provisions of said paragraph (a) or (b)
for any legal or other expense subsequently incurred by such indemnified party
in connection with the defense thereof other than reasonable costs of
investigation, unless (i) the indemnified party shall have employed counsel in
accordance with the provisions of the preceding sentence, (ii) the indem-
nifying party shall not have employed counsel reasonably satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after the notice of the commencement of the action or (iii) the indemnifying
party has authorized the employment of counsel for the indemnified party at
the expense of the indemnifying party. No indemnifying party shall be liable
to an indemnified party for any settlement of any action or claim without the
consent of the indemnifying party and no indemnifying party may unreasonably
withhold its consent to any such settlement. No indemnifying party will
consent to entry of any judgment or enter into any settlement which does not
include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability with re-
spect to such claim or litigation.
(d) If the indemnification provided for in subsection (a) or
(b) of this Section 1.7 is held by a court of competent jurisdiction to be
unavailable to a party to be indemnified with respect to any claims, actions,
demands, losses, damages, liabilities, costs or expenses referred to therein,
then each indemnifying party under any such subsection, in lieu of
indemnifying such indemnified party thereunder, hereby agrees to contribute to
the amount paid or payable by such indemnified party as a result of such
claims, actions, demands, losses, damages, liabilities, costs or expenses in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand and of the indemnified party on the other
in connection with the statements or omissions which resulted in such claims,
actions, demands, losses, damages, liabilities, costs or expenses, as well as
any other relevant equitable considerations. The relative fault of the
indemnifying party and of the indemnified party shall be determined by
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<PAGE> Page 34 of 51
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the indemnifying party or by
the indemnified party and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
Notwithstanding the foregoing, the amount any Investor Holder of Registrable
Securities or DK Holder of Shareholders' Shares shall be obligated to
contribute pursuant to this subsection (d) shall be limited to an amount equal
to the per share public offering price (less any underwriting discount and
commissions) multiplied by the number of shares of Registrable Securities sold
by such Investor Holder or the number of shares of Shareholders' Shares sold
by such DK Holder, as applicable, pursuant to the registration statement which
gives rise to such obligation to contribute (less the aggregate amount of any
damages which such Investor Holder or DK Holder has otherwise been required to
pay in respect of such claim, action, demand, loss, damage, liability, cost or
expense or any substantially similar claim, action, demand, loss, damage,
liability, cost or expense arising from the sale of such Registrable
Securities or Shareholders' Shares).
No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution hereunder from
any person who was not guilty of such fraudulent misrepresentation.
(e) In addition to its other obligations under this
Section 1.7, the Company further agrees to reimburse each Investor Holder of
Registrable Securities and each DK Holder of Shareholders' Shares included in
a registration statement pursuant to this Agreement (and each of such Investor
Holder's or DK Holder's controlling persons, officers, directors, partners,
legal counsel, accountants and underwriters (and controlling persons of such
underwriters)) on a monthly basis for all reasonable legal fees and other
expenses incurred in connection with investigating or defending any claim,
action, investigation, inquiry or other proceeding arising out of or based
upon any statement or omission, or any alleged statement or admission,
described in subsection (a) of this Section 1.7, notwithstanding the possi-
bility that such payments might later be held to be improper. To the extent
that any payment is ultimately held to be improper, each person receiving such
payment shall promptly refund such payment.
1.8 Reporting Requirements Under the Exchange Act. When it is
first legally required to do so, the Company agrees to register its Common
Stock under Section 12 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and agrees to keep effective such registration and to file
timely such information, documents and reports as the Commission may require
or prescribe under Section 13 of the Exchange Act. From and after the
effective date of the first registration statement filed by the Company under
the Act, the Company agrees to file timely (whether or not it shall then be
required to do so) such information, documents and reports as the Commission
may require or prescribe under Section 13 or 15(d) (whichever is applicable)
of the Exchange Act. Upon becoming subject to the reporting requirements of
either Section 13 or 15(d) of the Exchange Act, the Company forthwith upon
request agrees to furnish to any Investor Holder of Registrable Securities and
any DK Holder of Shareholders' Shares (a) a written statement by the Company
that it has complied with such reporting requirements, (b) a copy of the most
recent annual or quarterly report of the Company and (c) such other reports
and documents filed by the Company with the Commission as such Investor Holder
or DK Holder may reasonably request in availing itself of an exemption for the
sale of Registrable Securities or Shareholders' Shares without registration
under the Act. The Company acknowledges and agrees that the purposes of the
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<PAGE> Page 35 of 51
requirements contained in this Section 1.8 are (a) to enable any such Investor
Holder or DK Holder to comply with the current public information requirement
contained in paragraph (c) of Rule 144 under the Act should such Investor
Holder or DK Holder ever wish to dispose of any of the securities of the
Company acquired by it without registration under the Act in reliance upon
Rule 144 (or any other similar exemptive provision) and (b) to qualify the
Company for the use of registration statements on Form S-3. In addition, the
Company agrees to take such other measures and file such other information,
documents and reports, as shall be required of it hereafter by the Commission
as a condition to the availability of Rule 144 under the Act (or any similar
exemptive provision hereafter in effect) and the use of Form S-3. The Company
also covenants to use its best efforts, to the extent that it is reasonably
within its power to do so, to qualify for the use of Form S-3.
1.9 Future Registration Rights. For so long as any rights of any
Investor Holder or any DK Holder remain outstanding under this Agreement and
except (i) as expressly permitted by this Agreement or (ii) an underwriting
agreement between the Company and one or more underwriters of securities in
connection with an underwritten offering of the Company's securities, the
Company shall not enter into any agreement to register any capital stock or
similar security of the Company or any security (whether capital stock or
indebtedness for borrowed money) convertible into or exchangeable for, with or
without consideration, any capital stock or similar security of the Company,
or any security (whether capital stock or indebtedness for borrowed money)
carrying any warrant or right to subscribe to or purchase any capital stock or
similar security of the Company, or any such warrant or right (collectively,
"Equity Securities") under the Act unless such agreement specifically provides
that (a) the holder of such Equity Securities may not participate in any
registration requested pursuant to Section 1.1 hereof without the written
consent of the Investor Holders who hold a majority of the Registrable
Securities and the DK Holders who hold a majority of the Shareholders' Shares
included in such registration unless (i) the sale of the Registrable
Securities is to be underwritten on a firm commitment basis and the managing
underwriter in its good faith judgment concludes that the public offering or
sale of such Equity Securities would not cause the number of Registrable
Securities, Shareholders' Shares and such Equity Securities to exceed the
number which can be sold in such offering, and (ii) the Investor Holders of
Registrable Securities and the DK Holders of the Shareholders' Shares shall
have the right to participate, to the extent that they may request, in any
registration statement initiated under a demand registration right exercised
by the holder of such Equity Securities, except that if the managing
underwriter of a public offering made pursuant to such a demand registration
limits the number of shares of Common Stock to be sold in such offering, the
participation of the Investor Holders of Registrable Securities, the DK
Holders of the Shareholders' Shares and the holders of all other Common Stock
(other than the Equity Securities held by such holder of Equity Securities)
shall be pro rata based upon the number of shares of Registrable Securities,
Shareholders' Shares and Common Stock held at the time of filing the
registration statement, (b) the holder of such Equity Securities may not
participate in any registration requested pursuant to Section 1.2 hereof if
the sale of Registrable Securities or Shareholders' Shares is to be
underwritten unless, if the managing underwriter limits the total number of
securities to be sold in such offering, the holders of such Equity Securities
and the Investor Holders and the DK Holders are entitled to participate in
such underwritten distribution pro rata based upon the number of Equity
Securities, Registrable Securities and Shareholders' Shares held at the time
of filing the registration statement, and (c) all Equity Securities excluded
from any registration as a result of the foregoing limitations shall not be
included in such registration and may not be sold or otherwise transferred for
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such period as the managing underwriter of such registered distribution may
request.
1.10 Rights of Investor Holders and DK Holders. Each Investor
Holder and each DK Holder shall have the absolute right to exercise or refrain
from exercising any right or rights which such Investor Holder or DK Holder,
as applicable, may have by reason of this Agreement, any Registrable Security
or Shareholders' Share, including, without limitation, the right to consent to
the waiver of any obligation of the Company under this Agreement and to enter
into an agreement with the Company for the purpose of modifying this Agreement
or any agreement effecting any such modification, and such Investor Holder or
DK Holder shall not incur any liability to any other Investor Holder or DK
Holder, as applicable, with respect to exercising or refraining from
exercising any such right or rights.
2. GENERAL
2.1 Notices. Any notice or other communication given hereunder
shall be deemed sufficient if in writing and sent by registered or certified
mail, return receipt requested, or delivered by hand against written receipt
therefor, addressed to the Company or any of the DK Holders at 550 Seventh
Avenue, New York, New York 10018, Attention: Stephan A. Weiss or to any of the
Investor Holders c/o Takihyo Inc., 205 West 39th Street, New York, New York
10018, Attention: Tomio Taki and Frank R. Mori. Notices shall be deemed to
have been given three days after the date of mailing, except notices of change
of address, which shall be deemed to have been given when received.
2.2 Amendments. This Agreement shall not be changed, modified or
amended except by a writing signed by all parties hereto, and this Agreement
may not be discharged except by performance in accordance with its terms or by
a writing signed by all parties hereto.
2.3 Successors, Etc. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and to their respective heirs,
legal representatives, successors and assigns. This Agreement sets forth the
entire agreement and understanding between the parties as to the subject
matter thereof and merges and supersedes all prior discussions, agreements and
understandings of any and every nature among them.
2.4 Governing Law. Notwithstanding the place where this Agreement
may be executed by any of the parties hereto, the parties expressly agree that
all the terms and provisions hereof shall be construed in accordance with and
governed by the laws of the State of New York, without regard to principles of
conflicts of law. The parties hereby agree that any dispute which may arise
between them arising out of or in connection with this Agreement shall be
adjudicated before a court located in New York City, and they hereby submit to
the exclusive jurisdiction of the courts of the State of New York located in
New York, New York and of the federal courts in the Southern District of New
York with respect to any action or legal proceeding commenced by any party,
and irrevocably waive any objection they now or hereafter may have respecting
the venue of any such action or proceeding brought in such a court or
respecting the fact that such court is an inconvenient forum, relating to or
arising out of this Agreement or any acts or omissions relating to the
transactions contemplated hereby, and consent to the service of process in any
such action or legal proceeding by means of registered or certified mail,
return receipt requested, in care of the address set forth in Section 2.1
hereof or such other address as any party hereto shall furnish in writing to
the other parties hereto.
<PAGE>
<PAGE> Page 37 of 51
2.5 Waiver of Jury Trial. The parties hereto hereby waive trial by
jury in any action or proceeding involving, directly or indirectly, any matter
(whether sounding in tort, contract, fraud or otherwise) in any way arising
out of or in connection with this Agreement or the transactions contemplated
hereby.
2.6 Legal Fees. In order to discourage frivolous claims the
parties hereto agree that unless a claimant in any proceeding succeeds in
establishing its claim and recovering a judgment against another party
(regardless of whether such claimant succeeds against one of the other parties
to the action), then the other party shall be entitled to recover from such
claimant all of its legal costs and expenses relating to such proceeding and
incurred in preparation therefor.
2.7 Severability. The holding of any provision of this Agreement
to be invalid or unenforceable by a court of competent jurisdiction shall not
affect any other provision of this Agreement, which shall remain in full force
and effect.
2.8 Waiver. It is agreed that a waiver by any party of a breach of
any provision of this Agreement shall not operate, or be construed, as a
waiver of any subsequent breach by that same party.
2.9 Further Assurances. The parties agree to execute and deliver
all such further documents, agreements and instruments and take such other and
further action as may be necessary or appropriate to carry out the purposes
and intent of this Agreement.
2.10 Counterparts. This Agreement may be executed in one or more
counterparts each of which shall be deemed an original, but all of which shall
together constitute one and the same instrument.
2.11 Reliance on Notices. The Company shall be entitled to rely
upon any notice, instruction or instrument by any Investor Holder or any DK
Holder, as applicable, reasonably believed by the Company to be genuine and
may assume that any person purporting to give any notice, instruction or
instrument in connection with this Agreement on behalf of any Investor Holder
or any DK Holder, as applicable, is authorized to do so.
2.12 Effectiveness. This Agreement shall become effective (the
"Effective Date") upon the consummation of the Offering, as defined in that
certain Agreement and Plan of Contribution (the "Contribution Agreement"),
dated as of the date hereof, among the Company, the Investor Holders and the
DK Holders. On the Effective Date, the parties agree to execute and attach
Exhibit A, which shall set forth the shares of Common Stock received by each
of the Investor Holders and DK Holders pursuant to the Contribution Agreement.
The parties further agree that upon the exercise of the Underwriters' Over-
allotment Option (as defined in the Contribution Agreement), they shall
execute and attach to this Agreement an amended and restated Exhibit A to
reflect the receipt by the Investor Holders of any additional shares of Common
Stock pursuant to the Contribution Agreement.
<PAGE>
<PAGE> Page 38 of 51
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first set forth above.
DONNA KARAN INTERNATIONAL INC.
By:------------------------
Name:
Title:
---------------------------
Donna Karan
---------------------------
Stephan Weiss
---------------------------
Frank R. Mori
---------------------------
Christopher Mori
---------------------------
Heather Mori
---------------------------
Tomio Taki
TAKIHYO INC.
By:------------------------
Frank R. Mori
President
Signature Page to Registration Rights Agreement
<PAGE>
<PAGE> Page 39 of 51
GABRIELLE STUDIO, INC.
By:------------------------
Donna Karan
President
THE TRUST FOR THE BENEFIT OF LISA WEISS KEYES,
COREY WEISS AND GABRIELLE KARAN
By:------------------------
Stephan Weiss
Trustee
THE TRUST FOR THE BENEFIT OF DONNA KARAN
By:------------------------
Stephan Weiss
Trustee
Signature Page to Registration Rights Agreement
<PAGE>
<PAGE> Page 40 of 51
<Ex-4>
GABRIELLE STUDIO, INC.
By:------------------------
Donna Karan
President
THE TRUST FOR THE BENEFIT OF LISA WEISS KEYES,
COREY WEISS AND GABRIELLE KARAN
By:-------------------------
Stephan Weiss
Trustee
THE TRUST FOR THE BENEFIT OF DONNA KARAN
By:-------------------------
Stephan Weiss
Trustee
Signature Page to Registration Rights Agreement Side Letter
<PAGE>
<PAGE> Page 41 of 51
EXHIBIT C
STOCKHOLDERS' AGREEMENT
THIS AGREEMENT AMONG STOCKHOLDERS (the "Agreement") is made and
entered into as of the day of , 1996, by and among Donna Karan
International Inc., a Delaware corporation (the "Company"), each of Frank R.
Mori ("Mori"), Christopher Mori, Heather Mori, Tomio Taki ("Taki") and Takihyo
Inc., a Delaware corporation ("Takihyo") (collectively, the "Takihyo Group"),
Donna Karan ("Karan"), Stephan Weiss ("Weiss"), Gabrielle Studio, Inc., a New
York corporation, the trust under trust agreement for the benefit of Lisa
Weiss Keyes, Corey Weiss and Gabrielle Karan and the trust under trust
agreement for the benefit of Donna Karan (collectively the "Karan/Weiss
Group") (each member of the Takihyo Group and the Karan/Weiss Group, a
"Stockholder" and collectively the "Stockholders").
W I T N E S S E T H:
WHEREAS, the Company was incorporated under the laws of the State of
Delaware on April 10, 1996 and, upon consummation of the Offering (as defined
below) will have authorized capital consisting of 35,000,000 shares of common
stock, par value $.01 per share (the "Common Stock");
WHEREAS, the Company and the Stockholders have entered into an
Agreement and Plan of Contribution (the "Contribution Agreement") dated the
date hereof in order to accomplish a restructuring (the "Restructuring") of
the businesses conducted by The Donna Karan Company, The Donna Karan Company
Store, G.P., DK Footwear Partners, Donna Karan Studio and DSTF Japan Company,
all general partnerships, Donna Karan (H.K.) Limited, a Hong Kong corporation
and Donna Karan Italy, S.r.l. (collectively the "Donna Karan Companies"), in
conjunction with the initial public offering (the "Offering") of the Company's
Common Stock as an integrated plan pursuant to Section 351 of the Internal
Revenue Code of 1986, as amended;
WHEREAS, as part of the Restructuring and pursuant to the
Contribution Agreement, upon the effectiveness of the Contribution Agreement,
the Stockholders will contribute their respective equity interests in each of
the Donna Karan Companies to the Company;
WHEREAS upon consummation of the Offering, Taki and Mori will resign
from the Board of Directors of the Company, which will result in such Board of
Directors consisting of three members; and
WHEREAS, as provided in that Section of the Company By-laws attached
hereto as Exhibit I, the Company intends that a full Board of Directors of the
Company (the "Board of Directors") consist of nine persons; and
WHEREAS, the Company and the Stockholders desire to enter into this
Agreement for the purpose of setting forth their respective rights and
obligations in connection with the appointment and election of members of the
Board of Directors.
NOW, THEREFORE, for and in consideration of the premises and the
mutual representations and covenants hereinafter set forth, the parties hereto
do agree as follows:
<PAGE>
<PAGE> Page 42 of 51
1. Board of Directors Appointment Rights
(a) The parties intend that:
(i) within three months following the completion of the
Offering, the Company will appoint to the Board of Directors two additional
directors (neither of whom will be an officer or employee of the Company or
any of its Affiliates) (as defined below) (each, a "Company Designated
Director"); and
(ii) thereafter, within six months following the consummation
of the Offering, (1) the director designated by the Karan/Weiss Group pursuant
to paragraph 1(e) of this Agreement shall become a member of the Board of
Directors and (2) the Board of Directors shall appoint a third director who
shall not be a designee or an officer or employee of an Affiliate of either
the Takihyo Group or the Karan/Weiss Group (also a "Company Designated
Director"). For purposes of this Agreement, the term "Affiliate" shall mean a
person that directly, or indirectly through one or more intermediaries,
controls or is controlled by, or is under common control with, the person
specified.
(b) The parties agree that the individuals designated as
members of the Board of Directors by the Takihyo Group pursuant to paragraph
1(c) of this Agreement shall become members of the Board of Directors
concurrently with the appointment of the second such Company Designated
Director designated pursuant to paragraph 1(a)(i) hereof.
(c) The Takihyo Group shall have the right hereunder to
designate two members of the Board of Directors. The two members of the Board
of Directors designated by the Takihyo Group shall serve until such time after
the consummation of the Offering as any member of the Takihyo Group sells any
shares of Common Stock owned by it, whether by a registration statement, in a
private sale or otherwise (other than the distribution of any shares of Common
Stock to a person who as of the date hereof is a shareholder of Takihyo).
Thereafter, the Takihyo Group shall have the right hereunder to designate one
member of the Board of Directors, as long as the combined ownership of shares
of Common Stock held by the members of the Takihyo Group is not less than ten
(10%) percent of the then total outstanding shares of Common Stock; provided,
that if either Taki or Mori is eligible to serve, and is serving, as the
designee of the Takihyo Group to the Board of Directors, then such person
shall be entitled to continue to serve as a member of the Board of Directors
for so long as the combined ownership of shares of Common Stock held by the
members of the Takihyo Group is not less than five (5%) percent of the then
total outstanding shares of Common Stock. Any person who is appointed a
member of the Board of Directors as a designee of the Takihyo Group and who is
not otherwise a signatory to this Agreement shall, as a condition of assuming
such directorship, agree to observe the provisions of this paragraph 1(c).
(d) Notwithstanding anything herein to the contrary, the
Takihyo Group designees referred to in paragraph 1(c) of this Agreement shall
not be Taki or Mori, or any other Affiliate of the Takihyo Group, as long as
<PAGE> Page 43 of 51
the Takihyo Group has an ownership interest in, or such person is an officer
or director of, Anne Klein & Company or any other competitor of the Company.
Absent such ownership interest or relationship, Taki or Mori shall be
satisfactory designees of the Takihyo Group.
(e) The Karan/Weiss Group shall have the right hereunder to
designate Karan and Weiss as members of the Board of Directors. The
Karan/Weiss Group shall also have the right hereunder to designate one
additional member of the Board of Directors, as long as the combined ownership
of the shares of Common Stock held by the members of the Karan/Weiss Group is
not less than twenty (20%) percent of the then total outstanding shares of
Common Stock. Any person who is appointed a member of the Board of Directors
as an additional designee of the Karan/Weiss Group (other than Karan and
Weiss) and who is not otherwise a signatory to this Agreement shall, as a
condition of assuming such directorship, agree to observe the provisions of
this paragraph 1(e).
(f) As long as the Takihyo Group shall have the right hereunder
to designate one or more members of the Board of Directors, each member of the
Karan/Weiss Group agrees to vote the shares of Common Stock owned by it in
favor of the election to the Board of Directors of the designee(s) of the
Takihyo Group.
(g) Each member of the Takihyo Group agrees to vote the shares
of Common Stock owned by it in favor of the election to the Board of Directors
of (i) each of Karan and (ii) Weiss and, for so long as the Karan/Weiss Group
shall have the right hereunder to designate one or more members of the Board
of Directors, the additional designee of the Karan/Weiss Group.
(h) At such time as either the Karan/Weiss Group or the Takihyo
Group shall lose its rights to designate one or more members of the Board of
Directors (i.e., by virtue of a decrease in the ownership of Common Stock of
such group) the Karan/Weiss Group or the Takihyo Group, as applicable, shall
promptly direct one or more of its designees, as applicable, to promptly
resign from the Board of Directors pursuant to paragraph 1(c) or paragraph
1(e) hereof, as applicable, notwithstanding the fact that such designee's term
may not have expired.
(i) Notwithstanding the foregoing provisions set forth in
paragraphs 1(b) - 1(h) of this Agreement, any member of the Board of Directors
designated by either the Karan/Weiss Group or the Takihyo Group (other than
Karan, Weiss, Taki or Mori), must be reasonably satisfactory to a majority of
the members of the then current Board of Directors.
(j) The parties hereto hereby consent under Section 2.1 of the
Bylaws of the Company to the increases and decreases in the number of
directors of the Company expressly provided for herein.
2. Effectiveness. This Agreement shall become effective upon
or simultaneous with the consummation of the Offering.
<PAGE> Page 44 of 51
3. Miscellaneous Provisions
(a) Entire Agreement. This Agreement embodies the entire
agreement and understanding of the parties hereto with respect to the subject
matter hereof and supersedes all prior agreements and understandings, whether
written or oral, relating to such subject matter.
(b) Notices. Any notice hereunder shall be in writing and
shall become effective if delivered or tendered either in person or by
facsimile, when received (and, in the case of a facsimile, receipt of such
facsimile is confirmed to the sender) or, if sent by mail, five business days
after being deposited in the United States mail, in a sealed envelope,
registered or certified, with first class postage prepaid, in each case,
addressed to the person to whom such notice is being given at such person's
address appearing on the records of the Company or such other address as may
have been given by such person to the Company for the purposes of notice in
accordance with this subsection.
(c) Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard
to the conflicts of law provisions thereof.
(d) Jurisdiction; Convenience of Forum. Each party to this
Agreement, acting for itself and for its respective successors and assigns,
without regard to domicile, citizenship or residence, hereby expressly and
irrevocably elects as the sole judicial forum for the adjudication of any
matters arising under or in connection with this Agreement, and consents and
subjects itself to the jurisdiction of, the courts of the State of New York
located in New York City, and/or the United States District Court for the
Southern District of New York, in respect of any matter arising under this
Agreement. Service of process, notices and demands of such courts may be made
upon any party to this Agreement by personal service at any place where it may
be found or giving notice to such party as provided in Section 3(b) hereof.
(e) Successors. Any transferee, successor, or assignee,
whether voluntary, by operation of law, or otherwise, of the Common Stock
(other than a transferee who has purchased Common Stock in a registered public
offering or pursuant to Rule 144 under the Securities Act of 1933, as amended)
of the Company from a party to this Agreement (other than the Company) shall
be subject to and bound by the terms and conditions of this Agreement as fully
as though such person were a signatory hereto. The certificates representing
the Common Stock held by the parties to this Agreement (other than the
Company) shall bear a legend referring to this Agreement and the obligations
hereunder.
(f) Further Assurances. The Company and each of the
Stockholders agree that during the term of this Agreement each such party
shall take such actions as shall be reasonably necessary to effect the
purposes of this Agreement.
<PAGE> Page 45 of 51
(g) Severability. Any provision hereof prohibited by or
unlawful or unenforceable under any applicable law of any jurisdiction shall
as to such jurisdiction be ineffective without affecting any other provision
of this Agreement. To the full extent, however, that the provisions of such
applicable law may be waived, they are hereby waived to the end that this
Agreement be deemed to be a valid and binding agreement enforceable in
accordance with its terms.
(h) Remedies. The parties hereto shall have all remedies for
breach of this Agreement available to them provided by law or equity. Without
limiting the generality of the foregoing, the parties agree that in addition
to all other rights and remedies available at law or in equity, the parties
shall be entitled to obtain specific performance of the obligations of each
party to this Agreement and immediate injunctive relief and that in the event
any action or proceeding is brought in equity to enforce the same, no
Stockholder will urge, as a defense, that there is an adequate remedy at law.
(i) Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original and all of which
together shall be considered one and the same agreement.
(j) Headings. The headings contained in this Agreement are
solely for convenience of reference and shall not affect the meaning or
interpretation of this Agreement or of any term or provision hereof.
(k) Waiver. No waiver, whether express or implied, of any
provision hereof, or of any breach or default thereof, shall constitute a
continuing waiver of any such provision or of any other provision hereof.
(l.) Amendments. This Agreement shall not be changed, modified
or amended except by a writing signed by all parties hereto.
<PAGE>
<PAGE> Page 46 of 51
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the day and year first above written.
COMPANY:
DONNA KARAN INTERNATIONAL INC.
By:
----------------------------
Name:
Title:
STOCKHOLDERS:
-----------------------------------
Tomio Taki
------------------------------------
Frank Mori
------------------------------------
Christopher Mori
------------------------------------
Heather Mori
TAKIHYO INC.
By:--------------------------------
Name:
Title:
-----------------------------------
Donna Karan
-----------------------------------
Stephan Weiss
(Signatures continued on the next page)
(Signature Page of Stockholders' Agreement
re: Board of Directors)
<PAGE>
<PAGE> Page 47 of 51
(Stockholders' Agreement Signatures continued from previous page)
GABRIELLE STUDIO, INC.
By:-------------------------------
Name: Stephan Weiss
Title: Vice President
THE TRUST UNDER TRUST AGREEMENT
FOR THE BENEFIT OF DONNA KARAN
By:--------------------------------
Stephan Weiss, as trustee
THE TRUST UNDER TRUST AGREEMENT FOR THE
BENEFIT OF LISA WEISS KEYES,
COREY WEISS AND GABRIELLE KARAN
By:--------------------------------
Stephan Weiss, as trustee
(Signature Page of Stockholders' Agreement
re: Board of Directors)
EXHIBIT I
Company By-Laws
<PAGE>
<PAGE> Page 48 of 51
<Ex-9>
EXHIBIT D
VOTING AGREEMENT
AGREEMENT
AGREEMENT, dated as of July 3, 1996 (this "Agreement"), among Donna
Karan, whose address is 550 Seventh Avenue, New York, New York 10018
("Karan"), Stephan Weiss, whose address is 550 Seventh Avenue, New York, New
York 10018 ("Weiss"), Tomio Taki, whose address is 205 West 39th Street, New
York, New York 10018 ("Taki"), Frank R. Mori, whose address is 205 West 39th
Street, New York, New York 10018 ("Mori" and, together with Karan, Weiss, and
Taki, the "Stockholders"), and Donna Karan International Inc., a Delaware
corporation (the "Company), whose address is 550 Seventh Avenue, New York, New
York 10018.
W I T N E S S E T H:
WHEREAS, each of Karan and Weiss owns nine shares of Class A Common
Stock, par value $.01 per share (the "Class A Common Stock"), of the Company,
and each of Taki and Mori owns one share of Class B Common Stock, par value
$.01 per share ("Class B Common Stock"), of the Company; and
WHEREAS, the Company proposes to offer publicly shares of its common
stock, par value $.01 per share ("Common Stock"); and
WHEREAS, the parties hereto wish to provide for an agreement
relating to the voting by Karan and Weiss of their shares of Class A Common
Stock and by Taki and Mori of their shares of Class B Common Stock following
the issuance of the Common Stock;
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. Voting Agreement. If a matter is presented to the
holders of Class A Common Stock, Class B Common Stock, and Common Stock, and
the Class A Common Stock or the Class B Common Stock is entitled to vote
separately as a class with respect to such matter, then each of the
Stockholders agrees to vote his or her shares of Class A Common Stock or Class
B Common Stock (as the case may be) as nearly as possible in the same manner
as the holders of a majority of the shares of Common Stock vote their shares
with respect to such matter.
Section 2. Restrictions on Transfer. None of the Stockholders
shall pledge, hypothecate, give, sell, grant an option on, or otherwise
transfer (other than pursuant to a merger or consolidation of the Company with
another entity) any shares of Class A Common Stock or Class B Common Stock or
assign any of his or her rights or delegate any of his or her duties hereunder
unless, at or prior to the effective time thereof, the transferee or assignee
or potential transferee or assignee shall agree in writing to be bound by the
terms hereof.
<PAGE> Page 49 of 51
Section 3. Legend on Certificates. The following legend shall be
noted conspicuously on all certificates representing the shares of Class A
Common Stock or Class B Common Stock now outstanding or hereafter issued which
are subject to the terms of this Agreement:
"The shares of stock represented by this certificate are
subject to restrictions on transfers and voting, as provided in
an agreement, dated July 3, 1996, among the Company and certain
of its stockholders, a copy of which is on file with the
Secretary of the Company."
The Stockholders hereby agree to return their certificates evidencing shares
of Class A Common Stock or Class B Common Stock (as the case may be), so that
such legend may be placed thereon.
Section 4. Further Action. At any time and from time to time, each
of the Stockholders and the Company agrees to take such actions and to execute
and deliver such documents as may be reasonably necessary to effectuate the
purposes of this Agreement.
Section 5. Modification. This Agreement sets forth the entire
understanding of the parties hereto with respect to the subject matter hereof,
supersedes all existing agreements among them concerning such subject matter,
and may be modified only by a written instrument duly executed by each party.
Section 6. Notices. All notices and other communications given or
made pursuant hereto shall be deemed to have been given or made if in writing
and delivered personally,
sent by registered or certified mail (postage prepaid, return receipt
requested) to the parties at the addresses set forth in the preamble hereof or
to such other persons or at such other addresses as shall be furnished by any
party by like notice to the other, and such notice or communication shall be
deemed to have been given or made as of the date so delivered or mailed.
Section 7. Waiver. Any waiver by any party of a breach of any
provision of this Agreement shall not operate as or be construed to be a
waiver of any other breach of such provision or of any breach of any other
provision of this Agreement. The failure of a party to insist upon strict
adherence to any term of this Agreement on one or more occasions shall not be
considered a waiver or deprive that party of the right thereafter to insist
upon strict adherence to that term or any other term of this Agreement. Any
waiver must be in writing.
Section 8. Binding Effect. The provisions of this Agreement shall
be binding upon and inure to the benefit of the Company and its successors and
assigns. No Stockholder may sell, assign, transfer, or otherwise convey any
of his or her rights or duties under this Agreement, except pursuant to
Section 2 hereof. The provisions of this Agreement shall be binding upon and
inure to the benefit of the Stockholders and their respective permitted
transferees, assigns, heirs, and personal representatives.
<PAGE> Page 50 of 51
Section 9. Jurisdiction. Each party hereto irrevocably consents to
the jurisdiction of the courts of the State of New York located in New York
City and the United States District Court for the Southern District of New
York in connection with any action or proceeding arising out of or relating to
this Agreement.
Section 10. Headings. The headings in this Agreement are solely
for convenience of reference and shall be given no effect in the construction
or interpretation of this Agreement.
Section 11. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 12. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without giving
effect to its conflict of laws principles.
<PAGE>
<PAGE> Page 51 of 51
IN WITNESS WHEREOF, the undersigned have set their names as of the
date first set forth above.
- ------------------------------ -------------------------------
DONNA KARAN TOMIO TAKI
- ----------------------------- --------------------------------
STEPHAN WEISS FRANK R. MORI
DONNA KARAN INTERNATIONAL INC.
By --------------------------------
Name:
Title:
77825
