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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
DONNA KARAN INTERNATIONAL INC.
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(Name of Issuer)
COMMON STOCK, par value $0.01 per share
---------------------------------------
(Title of Class of Securities)
257826 10 7
(CUSIP Number)
TOMIO TAKI
Takihyo Inc.
205 West 39th St., 8th Floor
New York, New York 10018
(212) 626-6300
with a copy to:
Leigh P. Ryan, Esq.
Paul, Hastings, Janofsky & Walker
399 Park Avenue
New York, New York 10022
(212) 318-6000
(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)
Page 1 of 13 Pages
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Page 2 of 13 pages
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 13d-1(b)(3) or (4), check the following box /____/.
Check the following box if a fee is being paid with this 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.)
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).
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Page 3 of 13 pages
SCHEDULE 13D
CUSIP No. 257826 10 7
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1) NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Tomio Taki
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2) CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(a) [_]
(b) [X]/1/
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3) SEC USE ONLY
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4) SOURCE OF FUNDS*
OO
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5) CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) OR 2(e)
[_]
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6) CITIZENSHIP OR PLACE OF ORGANIZATION
Japan
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7) SOLE VOTING POWER
1,061,293 shares of Common Stock (See Item 5)
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- ---------------
/1/ Notwithstanding the agreements described in Item 6, the Reporting Person
disclaims membership in, and does not affirm the existence of, a group.
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Page 4 of 13 pages
8) SHARED VOTING POWER
3,183,881 shares of Common Stock/2/ (See Item 5)
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9) SOLE DISPOSITIVE POWER
1,061,293 shares of Common Stock (See Item 5)
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10) SHARED DISPOSITIVE POWER
3,183,881 shares of Common Stock/2/ (See Item 5)
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11) AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,245,174 shares of Common Stock (See Item 5)
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12) CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
[X]/3/
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/2/ Reflects all shares of Common Stock held by Takihyo Inc., a Delaware
corporation ("Takihyo") of which the Reporting Person is an officer,
director and stockholder. The Reporting Person disclaims beneficial
ownership of such shares.
/3/ Includes shares of Common Stock held by Takihyo with respect to which the
Reporting Person disclaims beneficial ownership, and excludes (i) shares
of Class A Common Stock held by the Karan/Weiss Group (as defined herein)
and one share of Class B Common Stock, par value $.01 per share, held by
each of the Reporting Person and Frank R. Mori, all of which are subject
to the Voting Agreement summarized in Item 6 and included as Exhibit 9
hereto and (ii) shares of Common Stock held by the Karan/Weiss Group (as
defined herein) and by other members of the Takihyo Group (as defined
herein) which are subject to the Stockholders' Agreement summarized in
Item 6 and included as Exhibit 10.10 hereto.
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Page 5 of 13 pages
13) PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
19.8% of the Common Stock (See Item 5)
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14) TYPE OF REPORTING PERSON*
IN
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* SEE INSTRUCTIONS BEFORE FILLING OUT!
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Page 6 of 13 pages
SCHEDULE 13D
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ITEM 1. SECURITY AND ISSUER.
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The class of equity securities to which this Statement on Schedule 13D (the
"Statement") relates is the Common Stock, par value $0.01 per share (the "Common
Stock") of Donna Karan International Inc., a Delaware corporation (the
"Issuer"). The principal executive offices of the Issuer are located at 550
Seventh Avenue, New York, New York 10018.
ITEM 2. IDENTITY AND BACKGROUND.
-----------------------
(a) - (f) This Statement is being filed by Tomio Taki (the "Reporting
Person"), a citizen of Japan. The Reporting Person is Chairman of Takihyo Inc.,
a Delaware corporation.
The business address of the Reporting Person is c/o Takihyo Inc., 205 West
39th St., New York, New York 10018.
During the last five years, the Reporting Person has not been convicted in
a criminal proceeding (excluding traffic violations and similar misdemeanors) or
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction resulting in the Reporting Person being subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
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In connection with the initial public offering of Common Stock by the
Issuer, (i) the Reporting Person acquired upon the incorporation of the Issuer
one share of Class B Common Stock of the Issuer and (ii) entered into an
Agreement and Plan of Contribution (the "Contribution Agreement") whereby the
Reporting Person, on the closing date of the initial public offering,
contributed to the Issuer all his shares in each of Tolara Tetragon Inc., Tomio
Tangents, Inc., Tangents Two, Inc., and TT DK Japan, Inc.,
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Page 7 of 13 pages
(which were, in addition to Takihyo Inc.)/4/, the corporations through which the
Reporting Person held his interests in the DK Companies,/5/ in exchange for
1,061,293 shares of Common Stock.
ITEM 4. PURPOSE OF TRANSACTION.
----------------------
The Reporting Person acquired shares of Common Stock pursuant to the
Contribution Agreement and the share of Class B Common Stock in connection with
the initial public offering of Common Stock by the Issuer. Subject to
applicable securities laws, the terms of the Registration Rights Agreement which
is summarized in Item 6 hereof and included as Exhibit 10.4 hereto, and certain
other contractual restrictions, the Reporting Person may sell some or all the
shares of Common Stock he owns either in the open market or in private
transactions. Certain changes in the composition of the Issuer's Board of
Directors are expected in connection with the initial public offering. See
summary description in Item 6 of Stockholders' Agreement, included as Exhibit
10.10 hereto.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
------------------------------------
(a) As of the close of business on July 3, 1996, the Reporting Person may
be deemed to beneficially own 4,245,174 shares of Common Stock of the Issuer,
constituting 19.8% of the outstanding Common Stock of the Issuer, and one share
of Class B Common Stock, constituting 50% of the total outstanding shares of
Class B Common Stock (based upon the number of shares of Common Stock and Class
B Common Stock, respectively,
- ---------------
/4/ Takihyo is a Delaware corporation owned by the Reporting Person and Frank
R. Mori.
/5/ The DK Companies include New York general partnerships formed in 1984 by
Donna Karan, Stephan Weiss, the Reporting Person, Frank R. Mori, Takihyo
and certain affiliates of the Reporting Person and Frank R. Mori 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 Donna Karan, Stephan Weiss, the Reporting
Person, Frank R. Mori, Takihyo and certain of their affiliates to engage in
various aspects of the Issuer's business.
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Page 8 of 13 pages
that were reported to be outstanding in the Issuer's prospectus dated June 27,
1996).
Pursuant to Rule 13d-4 promulgated under the Act, the Reporting Person
disclaims beneficial ownership of the shares of Common Stock held by Takihyo.
Notwithstanding the agreements described in Item 6, the Reporting Person
disclaims membership in, and does not affirm the existence of, a group.
(b) As of July 3, 1996, the Reporting Person has the sole power to vote and
to dispose of the 1,061,293 shares of Common Stock and the one share of Class B
Common Stock currently held by him. In addition, as of July 3, 1996, the
Reporting Person has shared power to vote or direct the vote and shared power to
dispose or direct the disposition of 3,183,881 shares of Common Stock held by
Takihyo with (y) Takihyo Inc., a Delaware corporation, whose principal business
is the production and distribution of clothing and accessories and whose
principal business address is 205 West 39th Street, New York, New York 10018,
and (z) Frank R. Mori, the President, a director and stockholder of Takihyo,
whose business address is c/o Takihyo Inc., 205 West 39th Street, New York, New
York 10018. Mr. Mori is a citizen of the United States of America. Neither
Takihyo nor Mr. Mori has been convicted in a criminal proceeding (excluding
traffic violations and similar misdemeanors) or been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction
resulting in such corporation of person being subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any violation
with respect to such laws.
(c) Except for the transactions described in this Statement, the Reporting
Person did not effect any transactions in shares of Common Stock or shares of
Class B Common Stock.
(d) To the best of the Reporting Person's knowledge, except as set forth
herein, no other person is known to have the right to receive or the power to
direct the receipt of dividends from, or the proceeds from the sale of, the
shares of Common Stock covered by this Statement.
(e) Not applicable.
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Page 9 of 13 pages
Item 6. CONTRACTS ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
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TO SECURITIES OF THE ISSUER.
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(a) Summary of Registration Rights Agreement (See Exhibit 10.4)
The Reporting Person, Christopher Mori, Heather Mori, Frank R. Mori and
Takihyo (the "Takihyo Group"), Donna Karan, Stephan 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"), Gabrielle Studio Inc.
("Gabrielle Studio", and, together with Donna Karan, Stephan Weiss and the KW
Trusts, the "Karan/Weiss Group") and the Issuer 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 expense, register
all or a portion of the shares which they owned 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
the Issuer's 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 also grants 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 Company, 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 Company 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,
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Page 10 of 13 pages
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 for the registration of its shares on or
after the first anniversary of June 26, 1996, the Company 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 Company 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
Karan/Weiss Group to proceed with an offering of certain of their shares, in
which event the members of the Takihyo Group may elect 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 9)
The Voting Agreement is among the Issuer, Donna Karan, Stephan Weiss, Frank
R. Mori and the Reporting Person. Pursuant to the Voting Agreement, each of
Donna Karan, Stephan Weiss, Frank R. Mori and the Reporting Person have agreed
that, if a matter is presented to the holders of Class A Common Stock, Class B
Common Stock and Common Stock, and the holders of Class A Common Stock or Class
B Common Stock are 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 holders of
a majority of the shares of Common Stock. The Voting Agreement also prohibits
the pledge, hypothecation, sale,
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Page 11 of 13 pages
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 10.10)
The Stockholders' Agreement is among the Reporting Person, Christopher
Mori, Heather Mori, Frank R. Mori and Takihyo (collectively, the "Takihyo
Group"), Donna Karan, Stephan Weiss, Gabrielle Studio, Inc., the Trust Under
Trust Agreement for 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") and the Issuer. The parties to the Stockholders' Agreement
indicated their intention that the Issuer appoint two additional directors to
the Board of Directors. The parties also agreed that the Takihyo Group has 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). Thereafter, the Takihyo Group has the right to designate one member of
the Board of Directors. The Karan/Weiss Group also has the right to designate 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 Frank R. Mori or the Reporting Person 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 Takihyo Group is not less than
5% of the outstanding stock of the Issuer. The parties to the Stockholders'
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
Company. 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.
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Page 12 of 13 pages
The Karan/Weiss Group has the right to designate Karan and 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 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 other's 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.
The foregoing summaries of certain provisions of the Registration Rights
Agreement, the Voting Agreement and the Stockholders' Agreement are not intended
to be complete and are qualified in their entirety by reference to such
agreements, which are annexed hereto as Exhibits 9, 10.4 and 10.10 and which are
incorporated herein by reference.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
--------------------------------
Exhibit 9 Voting Agreement relating to Class A Common Stock and Class B
Common Stock
Exhibit 10.4 Registration Rights Agreement and Side Letter related thereto
Exhibit 10.10 Stockholders' Agreement
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Page 13 of 13 pages
SIGNATURE
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After reasonable inquiry and to the best of his knowledge and belief, the
undersigned certifies that the information set forth in this statement is true,
complete and correct.
Dated: July 12, 1996
By: /s/ Tomio Taki
---------------------
Name: Tomio Taki
<PAGE>
EXHIBIT 9
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:
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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 Maori of their
<PAGE>
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.
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
<PAGE>
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
<PAGE>
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.
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
<PAGE>
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. Counter-parts. 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>
IN WITNESS WHEREOF, the undersigned have set their names as of the date
first set forth above.
______________________________ _____________________________
DONNA KARAN TOMIO TAKE
______________________________ _____________________________
STEPHAN WEISS FRANK R. MAORI
DONNA KARAN INTERNATIONAL INC.
By ______________________________
Name:
Title:
<PAGE>
EXHIBIT 10.4
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
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Mori, Tomio Taki and Takihyo Inc., a Delaware corporation (each, an "Investor"
--------
and, collectively, the "Investors"), and each of Donna Karan, Stephan Weiss, the
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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
--------- ----------
<PAGE>
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 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
-2-
<PAGE>
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 registration
statements which are declared effective under the Act by the Commission, the
written request for the first
-3-
<PAGE>
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
-4-
<PAGE>
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:
(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.
-5-
<PAGE>
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
-6-
<PAGE>
(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
-7-
<PAGE>
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 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 registration 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
-8-
<PAGE>
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 statement under the
-9-
<PAGE>
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
-10-
<PAGE>
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 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
-11-
<PAGE>
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.
-12-
<PAGE>
(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 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
statement 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
-13-
<PAGE>
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 "piggyback" 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 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
-14-
<PAGE>
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
-15-
<PAGE>
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 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
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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 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
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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;
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(n) make available for inspection upon request by any Investor Holder of
Registrable Securities or DK Holder of Shareholders' Shares covered 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, 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, 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
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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 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
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<PAGE>
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
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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.
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
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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.
(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
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<PAGE>
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 indemnifying 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 respect 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
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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 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
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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 possibility 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 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
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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
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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 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.
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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.
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.
-29-
<PAGE>
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
-30-
<PAGE>
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.
-31-
<PAGE>
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>
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>
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>
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
[Signature Page to Registration Rights Agreement Side Letter]
<PAGE>
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>
EXHIBIT A
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>
THIS PAGE MUST BE KEPT AS THE LAST PAGE OF THE DOCUMENT.
SoftSolution Network ID: NY-166472.1 Type: MISC
<PAGE>
EXHIBIT 10.10
WM&C DRAFT 6/6/96
STOCKHOLDERS' AGREEMENT
THIS AGREEMENT AMONG STOCKHOLDERS (the "Agreement") is made and
entered into as of the ____ day of June, 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
<PAGE>
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:
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
- 2 -
<PAGE>
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 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
- 3 -
<PAGE>
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 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.
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.
- 4 -
<PAGE>
(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.
(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
- 5 -
<PAGE>
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.
- 6 -
<PAGE>
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: Frank R. Mori
Title: President
___________________________________
Donna Karan
___________________________________
Stephan Weiss
[Stockholders' Agreement Signatures continued on the next page]
- 7 -
<PAGE>
[Stockholders' Agreement Signatures continued from previous page]
GABRIELLE STUDIO, INC.
By:_______________________________
Name:
Title:
THE TRUST UNDER TRUST AGREEMENT FOR
THE BENEFIT OF DONNA KARAN
By:_______________________________
Stephan Weiss, Trustee
THE TRUST UNDER TRUST AGREEMENT FOR
THE BENEFIT OF LISA WEISS KEYES,
COREY WEISS AND GABRIELLE KARAN
By:______________________________
Stephan Weiss, Trustee
- 8 -
<PAGE>
EXHIBIT I
Company By-Laws
- 9 -
