FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of
1934.
Date of Report (Date of earliest event reported): April 15,
1998
(Exact name of registrant as specified in its charter): CCA
Industries, Inc.
(State of other jurisdiction (Commission (IRS
Employer
or incorporation) File Number) Identification
No.)
Delaware 2-85538-B 04-2795439
Item 2. Acquisition or Disposition of Assets. The
registrant has acquired all of the right, title and interest in the
usable inventory, raw material, work in process, supplies, plates,
dies, molds, printing film (collectively "the inventory") from Bank
One Illinois N.A. pursuant to section 9-504 of the Uniform
Commercial Code of Illinois for $1,141,711.24. The aforesaid
inventory was previously owned by Shiara Inc. A copy of the
Assignment for the Benefit of Creditors Sale of Collateral is
annexed hereto as Exhibit A.
The registrant entered into a License Agreement with Shiara
Holdings Inc., an Illinois corporation in connection with the
license to distribute the following trademark products: Cherry
Vanilla, Mandarin Vanilla, Vision, Sunset Cafe and Amber Musk.
A copy of the aforesaid License Agreement is annexed hereto as
Exhibit B.
Registrant entered into a Shareholders Agreement with Barry Shipp,
Joseph Armandara and Joseph Toronto with regard to the operation of
the new subsidiary to be formed to market and distribute the above
fragrances. The registrant will retain an 80% interest in the new
corporation (Fragrance Corporation of America, Ltd.). A copy of
the aforesaid Shareholders Agreement is annexed hereto as Exhibit
C.
Item 7. Financial Statements and Exhibits:
EXHIBIT A - ASSIGNMENT FOR THE BENEFIT OF CREDITORS SALE OF
COLLATERAL
EXHIBIT B - LICENSE AGREEMENT
EXHIBIT C - SHAREHOLDERS AGREEMENT
Pursuant to the requirements of the Securities Exchange Act of
1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned hereunto duly authorized.
DATE: 4/14/98 CCA Industries, Inc.
.
(Registrant)
Ira W. Berman
Chairman, Board of Directors
IWB/ev
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SHAREHOLDERS AGREEMENT
Agreement made this ___ day of March 1998 by and between CCA
Industries, Inc., hereinafter referred to as "CCA" and Barry Shipp,
Joseph A. Aramanda and Joseph Toronto, hereinafter referred to as
"Shareholders".
WHEREAS, CCA and the Stockholders desire to promote their
mutual interests in the newly incorporated Fragrance Corporation of
America, hereinafter referred to as the "Corporation", which
corporation was duly incorporated in the State of New Jersey on
March ___, 1998; and
WHEREAS, it is intended that CCA and each of the Shareholders
shall own the following shares of the Corporation's authorized
1,000 shares of common stock par value $ .01 per share as follows:
CCA 80% (800 shares) of the issued stock
Aramanda 10% (100 shares)
Shipp 9% ( 90 shares)
Toronto 1% ( 10 shares) and,
WHEREAS, to promote the mutual interest of parties hereto and
in the interest of the Corporation, the parties desire to impose
certain terms, conditions, restrictions and obligations in
connection with the interests of the Corporation and the parties
hereto, now, therefore,
IT IS AGREED AS FOLLOWS:
FIRST: Each of the parties hereto agree to purchase their shares
for $1.00 per share.
BOARD OF DIRECTORS
SECOND: The Corporation shall have five (5) directors, three to
be appointed by CCA, two to be appointed by the Shareholders. A
majority vote of directors shall constitute the final decision of
the Board of Directors. CCA and the Shareholders shall vote all
shares owned by them toward the election of
David Edell, Ira W. Berman, Drew Edell, Barry Shipp, and Joseph A.
Aramanda as directors. Each shall be elected and serve so long as
CCA is a Shareholder and so long as Barry Shipp or Joseph A.
Aramanda are Shareholders respectively.
OFFICERS
THIRD: The Officers of the Corporation shall serve one (1) year
terms. At the annual meeting of shareholders the appointed Board
Of Directors shall appoint officers for the next year.
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The Board of Directors will appoint Joseph A. Aramanda -
President,
Barry Shipp - Vice President, David Edell - Treasurer, Ira W.
Berman - Secretary for the initial year of operations.
EMPLOYMENT
FOURTH: A) Shipp, Aramanda, and Joseph Toronto, hereinafter
referred to as
"Shareholders" and/or "Employees", shall be employed by the
Corporation at an annual compensation as follows:
Shipp $ 180,000.00
Aramanda $ 220,000.00
Toronto $ 104,000.00
B) The Employees shall have the responsibility of managing
the
Corporations affairs subject to the approval and direction of the
Board of Directors.
C) The Employees agree to work exclusively for the
Corporation in their
designated capacities. They will not have any financial interest
in any other entity engaged in the business of the sale of
fragrances or any other product that the Corporation may be engaged
in marketing.
D) The terms of employment shall be for a three (3) year
period,
commencing on _________ 1998 subject to the right of the Board of
Directors to review as hereinafter specifically provided.
During the period of employment thereunder, the Stockholder
(Employee) shall devote such time as required by the Corporation to
the best efforts the business and affairs of the Corporation,
allowing a reasonable time for vacations, and shall serve in such
capacity as shall be from time to time designated by the Board of
Directors.
E) Should a Shareholder relinquish his shares in the Corporation
his employment may be terminated by the Board of Directors, and the
negative covenants hereafter provided shall become applicable.
F) SPECIAL RIGHTS OF BOARD OF DIRECTORS
The Board of Directors shall have the right to call a special
meeting of the Board to review the financial condition of the
Company in the event that CCA in its sole discretion exercising its
rights as the owner of 80% of the outstanding common stock of the
Company is concerned about substantial losses in the Corporation's
operations. At the meeting, the Board shall have the additional
power to terminate the employment of any of the Corporation's
officers. In such event, the Corporation will not be liable for
the remainder of the compensation due to the employee, and the
employee will be
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released from the restrictions contained in Article Fifth (5)(D).
Substantial losses shall be defined as any loss for any quarter in
excess of $200,000.00 or $350,000.00 cumulative for any two (2)
successive quarters (utilizing general accepted accounting
practices applied substantially consistent with those practices
adopted by CCA in its own financial reporting to the S.E.C.
This special provision will become effective for all
quarterly reports
commencing with the quarter ending March 31, 1999.
Any time the Board of Directors shall have the right to terminate
any employment for "just cause".
G) JUST CAUSE
"Just cause" shall mean (a) the willful failure by the Shareholder
to perform such duties as may be assigned to the Shareholder by the
Managing Director, the Directors, or any officer of the Corporation
who is responsible for assigning duties to the Shareholder, (b)
gross misconduct injurious to the Corporation, (c) engaging in any
activity competitive with the business of the Corporation, or (d)
the Disability of the Shareholder by reason of health that prevents
the Shareholder from performing his/her duties on a full time basis
for one hundred twenty (120) consecutive calendar days.
NEGATIVE COVENANTS AND CONFIDENTIAL INFORMATION
FIFTH: A) The Employees agree that should they leave the
employ of the
Company prior to the end of the term of their employment as
provided above, they will not become associated in any way with any
entity that is engaged in a business similar to the Corporation for
a period of one (1) year.
B) This restriction shall apply if the Employee is discharged for
cause as above provided, or if CCA exercises its right to purchase
his shares as hereinafter provided
C) Should the Employee request the Corporation to purchase his
shares, as hereinafter provided and a sale is consummated, the one
(1) year restriction provided above shall be applicable.
D) If for any reason the Employee shall leave the employ of the
Corporation, Employee agrees that he will not disclose any of the
marketing plans of the Corporation, new product development or
other confidential information.
E) Employee further agrees that all documents, materials,
projects, products or plans that he worked on during his term of
employment will be returned to the Corporation, and be deemed the
proprietary
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product of the Corporation. All of the aforesaid shall remain
confidential unless and to the extent that (i) it is currently
being utilized by a competitor of the Corporation, (ii) becomes
publicly available, and (iii) is subsequently given to a third
party by the Corporation.
OBLIGATIONS OF CCA
SIXTH: A) CCA shall be responsible for the financing of the
Corporation's
activities as the Company may require. It agrees to use its best
efforts to provide the funds for the Company's operations at prime
rate of interest as per the proposed budget prepared by management
and approved by the Corporation's Board of Directors. The Board of
Directors will be presented with a budget containing cash flow
projections and requirements at least forty-five (45) days before
each quarter. Although the directors David Edell, Ira W. Berman
and Drew Edell may be deemed to have a conflict of interest, the
Shareholder's agree that their conflicting interests, as they may
appear are hereby waived, and however they vote as a director of
the Corporation they will held harmless personally and CCA shall
not be held responsible for any decision nor be held accountable
for any decision which may be made by the Board of Directors of the
Corporation.
B) CCA agrees that so long as Aramanda and Shipp are shareholders
of the Corporation, that any purchase of a fragrance company, or
acquisition of a fragrance brand will be assigned to the
Corporation for its marketing and sale. The Corporation shall have
the obligation to compensate CCA for its cost of acquisition.
RESTRICTION ON TRANSFER OF SHARES
SEVENTH: The Shareholders shall not transfer their shares without
permission of the Board of Directors, for three (3) years from the
date of this Agreement. The stock certificates shall bear a
restrictive legend restricting the transfer - other then by
operation of law in the event of the death of the Shareholder, in
which case his interest shall pass to his legal representative. Any
assignee of a Shareholder's interest shall agree to be bound by the
terms and conditions of this Agreement.
MUTUAL PUTS AND CALLS
EIGHTH A) SHAREHOLDER PUT TO CCA
At the end of the third fiscal year of the Corporation and
each fiscal year thereafter, if the net sales of the Corporation
shall be not less than $8,000,000.00 for the fiscal year just
ended, any and all of the
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Shareholders shall have the right to offer his shares for purchase
to CCA at the price as provided in the Certificate of Agreed Value,
annexed hereto. The purchase price shall be paid in 1/2 upon
confirmation of value set forth in the Certificate of Agreed Value,
and the balance six (6) months thereafter.
B) CCA RIGHT TO PURCHASE
At any time after the third (3) fiscal year of the
Corporation, CCA shall have the right to purchase all or any part
of the shares of the Shareholders at the price provided in the
Certificate of Agreed Value. Payment shall be made simultaneously
with the confirmation of value as set forth in the certificate.
C) The option to cause shares to be purchased under this section
shall
be exercised by the delivery of a written notice by registered or
certified mail to the parties as the case may be, at the address
set forth in this Agreement, setting forth the desire to either
sell or purchase the shares as the case may be.
NINTH: The fiscal year of the Corporation for the purposes of
determining the information to be applied in computing the values
provided in the Certificate of Agreed Value shall end on March
31st.
TENTH: This Agreement contains the entire agreement of the
parties. It may not be changed orally, but only by an agreement in
writing signed by the party against whom enforcement of any waiver,
or change. Modification, extension or discharge is sought.
ELEVENTH: The waiver by any party hereto shall not operate or be
construed as a waiver of any subsequent breach.
TWELFTH: APPLICABLE LAW
The laws of the State of New Jersey (other then those which
pertain to conflicts of law) shall govern the interpretation of
this Agreement, irrespective of the fact that any of the parties
now is, or may become a resident of a different state. The
parties shall submit all disputes which arise under this Agreement
to state or federal courts in the city of Newark, New Jersey for
resolution. The parties acknowledge that the aforesaid courts
shall have exclusive jurisdiction or venue, including but not
limited to forum non conveniens. Service of process for any
claim which arise under this Agreement shall be valid if made in
accordance with the notice provisions set forth in Section
Fifteenth. If service of process is made as aforesaid, the party
served agrees that such service shall constitute valid service, and
specifically waives any objections that the party served may have
under any state or federal law or rule concerning service of
process. Service of process in accordance with this Section shall
be in addition to and not to the exclusion of any other service of
process method legally available
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SPECIFIC ENFORCEMENT
THIRTEENTH: Because of the unique relationship of all of the
Shareholders and the unique value of their interests in the
Corporation, in addition to any other remedies the Corporation may
have, the obligations and rights contained in this Agreement shall
be specifically enforceable.
FOURTEENTH: As of the date hereof, the undersigned are the
owners of all of the outstanding shares of the Corporation and each
of them consents and agrees to the terms and conditions as set
forth herein.
NOTICES
FIFTEENTH: All notices which concern this Agreement shall be
given in writing as follows: (i) by actual delivery of the notice
into the hands of the party entitled to receive it or by facsimile
to such party, in which case the notice shall be deemed given on
the date it is sent; (ii) by Federal Express or any other
overnight carrier, in which case the notice shall be deemed given
on the day following the date it is deposited with such carrier;
or (iii) by mailing such notice by registered or certified mail,
return receipt requested, in which case the notice shall be deemed
given four (4) days following the date it is deposited in the mail.
All notices provided under this Agreement shall be to the last
known address of the party entitled to receive it. Any party to
this Agreement may change its address for notice purposes, by
providing written notice of the change of address to each of the
other parties. All notices which concern this Agreement shall be
addressed as follows:
If to CCA to:
CCA INDUSTRIES, INC.
200 Murray Hill Parkway
East Rutherford, NJ 07073
Attn: Mr. David Edell
If to Barry Shipp
___________________
___________________
___________________
If to Joseph A. Aramanda
___________________
___________________
___________________
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If to Joseph Toronto
___________________
___________________
___________________
CCA INDUSTRIES, INC.
BY:________________________
Ira W. Berman
BY:________________________
Barry Shipp
BY:________________________
Joseph A Aramanda
BY:________________________
Joseph Toronto
IWB/ev
<PAGE>
CERTIFICATE OF AGREED VALUE
In computing the value of the Shareholders stock in the
Corporation, the following criteria shall be utilized:
The "net sales" defined as the gross sales, less all
deductions and allowances and returns shall be computed. In
determining the profit of the Corporation using generally accepted
practices applied on a consistent basis, the following "actual"
expenses shall be applied:
a) cost of goods (material and labor)
b) salary expenses
c) advertising expenditures
d) co-op expenditures (paid and/or accrued) and outstanding
e) royalty expense
f) freight
g) all other direct actual expenses of the Corporation including
interest expense
h) indirect general and administrative expenses calculated at 10%
of net sales at $8,000,000.00, and 8% of net sales at $
16,000,000.00.
The net income prior to taxes utilizing the criteria set forth
above, will be multiplied by ten (10) to arrive at the stipulated
agreed value of the Corporation for the purpose of this
certificate. If all of the Shareholders offer their shares for
sale, or if CCA exercised its option to purchase all of the
Shareholders shares, the cost of the purchase would be twenty
percent (20%) of the value of the Corporation inasmuch as the
Shareholders own twenty percent (20%) of the shares of the
Corporation. If only one Shareholder wished to avail himself of
the option, then his value would be his percentage of ownership in
the common stock of the Corporation in proportion to the over-all
value of the Corporation as provided herein.
CCA INDUSTRIES, INC.
BY:________________________
Ira W. Berman
BY:________________________
Barry Shipp
BY:________________________
Joseph A Aramanda
BY:________________________
Joseph Toronto
IWB/ev
<PAGE>
RIDER TO SHAREHOLDERS AGREEMENT
WHEREAS, CCA Industries, Inc., has purchased inventory from
Banc One in connection with the liquidation of Shiara, Inc. and
assigned the inventory to Fragrance Corporation of America, Ltd,
and
WHEREAS, included in the inventory was inventory of the
following brands:
Amber $__________
Vision $__________
Sunset Cafe $__________ , and
WHEREAS it is estimated that to dispose of the aforesaid
inventory, it will be necessary to purchase $___________ in
additional componentry to create the finished goods of the above
product lines.
NOW THEREFORE, in consideration of mutual covenants herein
contained, Aramanda and Shipp agree that until such time as the
corporation recoups its out-of-pocket investment of $_________ into
the products referred to above, the corporation shall set aside 50%
of their salary to be held in a special account and released when
the corporation's investment is recouped. The corporations cost
shall be its out of pocket expenditure in the amount of $__________
as provided above plus all direct expenses involved in the
liquidation of the aforesaid products.
It is contemplated that the corporation will have a short
fiscal year which will expire on November 30, 1998 and then will be
on a fiscal period in line with CCA Industries fiscal year, at
which time this Agreement will be reviewed by all parties hereto.
WITNESS WHEREOF WE HAVE EXECUTED THIS RIDER WHERE EXECUTED.
CCA INDUSTRIES, INC.
BY:________________________
Ira W Berman
BY:________________________
Barry Shipp
BY:________________________
Joseph A Aramanda
IWB/ev
<PAGE>
TRADEMARK LICENSE AGREEMENT
THIS TRADEMARK LICENSE AGREEMENT (this "Agreement") is made as
of March __, 1998 (the "Effective Date"), between Shiara Holdings
Inc., an Illinois corporation ("Company") and CCA Industries, Inc.
("Licensee").
A. Company owns the registered trademarks that are
specifically identified on attached and incorporated Exhibit "A"
and any associated names, marks, logos and commercial symbols,
which have gained public acceptance. A substantial amount of
goodwill has attached to these names, marks and symbols.
B. Licensee desires to obtain a license to use the Company's
aforesaid proprietary names, marks and/or symbols for the
"Permitted Use" (as defined in Section 1.1 below) on the terms of
this Agreement.
In consideration of the foregoing and the obligations, duties
and rights set forth below, the parties agree as follows:
ARTICLE 1
LICENSE
1.1 Trademark License Grant. Subject to the terms and
conditions set forth in this Agreement, and only upon the closing
of that certain Offer of Purchase Agreement dated March 9, 1998
("Purchase Agreement"), by Licensee to Renaissance Financial
Restructuring, Inc. ("Assignee") and Bank One Illinois, N.A.
("Bank") relating to certain assets of Shiara, Inc. ("Shiara"), and
only upon Licensee first entering into agreements with each of
Barry Shipp and Joseph Aramanda in form acceptable to the parties
("Shareholder Agreeements"), Company grants to Licensee an
exclusive, revocable license (the "License") to use those
trademarks, and solely those additional proprietary trademarks,
trade names, copyrights, logos, commercial symbols, service marks
and service names related thereto (whether or not registered) that
are specifically identified on attached and incorporated Exhibit
"A" (collectively, the "Commercial Marks"), solely in conjunction
with Licensee's performance of the following activities (the
"Permitted Use"): (i) to market and sell those "Products" as set
forth on attached and incorporated Exhibit "A" to retailers,
distributors or brokers in the "Territory" as set forth on attached
and incorporated Exhibit "B"; and (ii) to advertise said Products,
by faithfully reproducing the Commercial Marks solely in brochures,
flyers, print or broadcast media. If the Licensee does not close
under the Purchase Agreement or enter into the Shareholder
Agreements by March 31, 1998, this Agreement shall automatically
terminate on such date or such earlier date if the conditions above
cannot be fulfilled.
1.2 Certain License Requirements. Licensee, at its sole cost,
shall: (i) keep all the Commercial Marks free of any liens, claims
or encumbrances of any type; (ii) use solely faithful reproductions
of the Commercial Marks as identified on Exhibit "A", and not use
any prefix, suffix or other modifying words, terms, designs or
symbols with any Commercial Marks nor in any way modify any
Commercial Mark; (iii) not use any Commercial Mark for any purpose
other than a Permitted Use; (iv) not incorporate any of the
Commercial Marks, any derivative of the Commercial Marks or any
other mark which is similar to any Commercial Mark into Licensee's
corporate or other business name or any other name which Licensee
utilizes to identify itself, any other individual or entity with
which Licensee does business, or any other store, product or
services Licensee represents, sells, markets or creates; (v)
display the Commercial Marks prominently in connection with all
packaging, forms, labels and advertising materials, subject to
Section 1.3 below; (vi) except as necessary to perform the
Permitted Use, not reproduce, copy, duplicate or distribute the
Commercial Marks; and (vii) obtain Company's prior, written
permission before using any Commercial Marks for any purpose not
specifically authorized as a Permitted Use.
<PAGE>
1.3 Promotional Material. Licensee, at its sole cost, shall
feature the Commercial Marks prominently in all advertising
campaigns promoting the Products in the Territory. All advertising,
promotional, sales or other materials which use the Commercial
Marks shall: (i) include solely faithful reproductions of the
Commercial Marks as appearing on attached Exhibit "A"; (ii) be
suitable for the fragrance business; (iii) not place the Commercial
Marks in a derogatory light nor impugn the reputation of nor damage
the goodwill associated with the Commercial Marks; and (iv) not
include the trade name, trademark, service mark, service name, logo
or commercial symbol of any competitor of Company. Licensee shall
submit samples of such materials to Company periodically for
Company's review. If, in Company's reasonable judgment, Company
deems that any such materials may jeopardize in any way Company's
rights, titles, or interests in any portion or all of any
Commercial Marks, injure the goodwill associated with, impugn the
reputation of or otherwise be derogatory of the Commercial Marks,
or may violate any copyrights, trade names, trademarks, service
marks or related items, Company will notify Licensee of the same,
and Licensee immediately shall refrain from using such
objectionable materials and shall modify such materials.
1.4 Goodwill and Limited Nature of License Rights. This
Agreement and the License do not confer any goodwill or other
interest in the Commercial Marks upon the Licensee, except and
solely to the extent that Licensee is permitted to utilize the
Commercial Marks in the Territory to conduct the Permitted Use.
Licensee agrees that all goodwill developed through Licensee's use
of the Commercial Marks shall inure solely to Company's benefit.
Licensee agrees that Company has not made any guaranty or
representation concerning the potential sales or profits which may
be generated through the License, and that Company has not assumed
any obligations other than to License the Commercial Marks to
Licensee for Licensee's conduct of the Permitted Use in the
Territory.
ARTICLE 2
INSPECTION, AUDIT RIGHTS AND FEES
2.1 Books, Records and Inspections. Licensee shall maintain
accurate and complete books of account and records concerning its
use of the Commercial Marks, its conduct of the Permitted Use and
its advertising and marketing programs. Licensee shall provide
copies of such records to Company within five (5) business days of
Company's request for the same. Company shall have the right, at
its sole expense, to examine those books and records of Licensee
which pertain to the Permitted Use and the Commercial Marks.
Company shall exercise its foregoing inspection rights by providing
Licensee with at least five (5) days advance, written notice and
shall conduct such inspections in a manner which does not
unreasonably interfere with Licensee's business. In the event that
upon its audit, Company is correct in its review that there is a
material difference between Licensee's records and its own
auditor's review, Licensee shall be required to reimburse Company
its expense of the audit.
2.2 Quality Standards. During the term of this Agreement,
Company shall have the right to establish such quality standards
concerning the Permitted Use which Company deems necessary to
protect the Commercial Marks, the reputation associated therewith
and the goodwill attached thereto.
2.3 Royalties and Taxes.
(a) Product Royalties. Subject to Section 2.3(b) below, Licensee
shall pay Company a "Sales Royalties" of five percent (5%) ("Sales
Percentage") of all "Net Factory Sales" on the Products which are
sold in connection with the Commercial Marks, appearing on attached
Exhibit "A-1" only, payable forty-five (45) business days after
each quarter annual period for Net Factory Sales for the preceding
quarter. For purposes of this Agreement, the term Net Factory Sales
shall mean those sales less any discounts, allowances and returns.
Once the amount of Royalties (as defined below) paid by Licensee to
Company reaches Two Million Dollars ($2,000,000.00), the Sales
Percentage for the purpose of computing the Sales Royalties will
<PAGE>
reduce to one-half percent (1/2%). Licensee shall, during the Term
of this Agreement, use its best efforts to effectively market and
promote the Products in the Territory.
(b) Minimum and Annual Royalties. In consideration of
Company granting an exclusive License to Licensee, Licensee shall
pay Company a minimum royalty of One Hundred Thousand Dollars
$100,000.00 ("Minimum Royalty") for the first fifteen (15) months
of the Agreement. Thereafter, Licensee shall pay Company an annual
minimum royalty ("Annual Royalty") of not less than One Hundred and
Fifty Thousand Dollars ($150,000.00) for each subsequent
consecutive twelve (12) month period. The Minimum Royalty and
Annual Royalty, less the Sales Royalty previously paid for said
period, is payable forty-five (45) days after the end of each "Term
Year" occurring during the "Term" (as those terms are defined in
Section 2.4 below), or if this Agreement terminates prior to the
final day of any Term Year in accordance with Sections 2.4 or 5.1
below, then forty-five (45) days after the date of such
termination. The Minimum Royalty and the Annual Royalty are non
refundable.
For purposes of this Agreement, Sales Royalties, Minimum
Royalty and Annual Royalty will collectively be referred to as
"Royalties". In addition to the Royalties, Licensee shall pay all
taxes (service, sales, use or otherwise) that are associated with
the License of the Commercial Marks identified on attached "Exhibit
A-1" or the Permitted Use (except for income taxes of Company on
the Royalties), when and as such taxes become due.
(c) Contingent Additional Consideration.
Notwithstanding the above Sections 2.3(a) and 2.3(b) herein, and in
recognition of the value of the goodwill and customer lists sold
under the Purchase Agreement to Licensee, the first $800,000 of
Royalties due herein shall be paid directly to the Bank under the
Purchase Agreement, in satisfaction of the Contingent Additional
Consideration (as defined therein) due under the Purchase
Agreement. All payments made in satisfaction of the Contingent
Additional Consideration shall be a dollar-for-dollar credit
against the Royalties due under this Agreement. The payments due
herein in this Section 2.3(c) are subject to the provisions of
Section 6.4 herein.
2.4 Term. The "Term" of this Agreement shall commence on the
Effective Date and shall continue until this Agreement terminates
as provided in this Section or in Section 5.1 below. Each full
twelve (12) month period occurring during the Term which commences
on either the Effective Date or an anniversary of the Effective
Date shall be referred to as a "Term Year". The initial Term Year
of this Agreement shall commence on the Effective Date and continue
for a period of fifteen (15) months. Upon the expiration of the
initial Term Year or any subsequent Term Year thereafter, the Term
of this Agreement shall immediately renew for an additional one (1)
year period, subject only to termination as provided in Article 5
herein. Licensee may, after fourteen (14) months from the Effective
Date, terminate this Agreement for any reason upon at least ninety
(90) days prior notice of termination.
ARTICLE 3
OWNERSHIP RIGHTS
3.1 Exclusive Proprietary Rights in Company. Company
exclusively owns all proprietary, ownership and use rights, titles
and interests of any and all types (whether legal, equitable, use
or otherwise) to all the Commercial Marks, whether statutory or
common law, including but not limited to all rights under foreign,
national, international, state or federal copyright, trademark,
trade name, service mark, intellectual property or other laws,
whether now existing or subsequently recognized, (including but not
limited to the sole right to obtain any registration under the
same), throughout the world, in and for all languages (including
but not limited to computer languages whether now existing or
subsequently developed), and the exclusive right (legal, equitable
and otherwise), throughout the world, in any and all languages
(whether now existing or subsequently arising) to prepare and
exploit commercially derivative works based upon any Commercial
Marks (collectively, "Derivative Works"). Licensee shall not have
any right to make, nor any right, title or interest in or to any
Derivative Work nor shall Licensee have any right to use any
<PAGE>
Derivative Work under the License granted in this Agreement, unless
Company executes a written document which specifically extends the
License to cover such Derivative Work.
3.2 Commercial Marks Protection. Company shall, during the
Term of this Agreement and at its sole cost and expense, use its
best efforts in the United States of America to (i) keep in full
force and effect the Commercial Marks; and (ii) protect the
Commercial Marks from infringement from any other person, firm or
corporation in the United States of America and to prosecute
promptly and diligently all actions and proceedings which may be
necessary or appropriate. In the event that Company chooses not to
defend its trademarks, Licensee shall have the option to defend and
shall have the right to offset its reasonable costs against future
royalty payments. Company agrees, at its sole and reasonable
expense, to use its best efforts to obtain final registration on
the Commercial Marks and to protect them throughout the Term of
this Agreement, provided in no event shall Company be required to
expend more than $10,000 in additional expenses to perfect the
Commercial Marks or defend them. Company shall have the right, but
not the obligation, at its own costs and expense, to participate in
such actions and proceedings and seek compensatory damages from the
infringing party for any of its losses as a result of the aforesaid
infringement.
3.3 Licensee Assistance. Licensee shall execute, acknowledge
and deliver to Company, any instrument or document which Company
deems necessary from time-to-time to facilitate registration of any
filings or to record or evidence Company's exclusive ownership
rights in the Commercial Marks and Derivative Works.
3.4 Company Indemnity. Company shall indemnify and hold
harmless Licensee from and against any and all claims, actions,
suits and proceedings (including costs and expenses and reasonable
attorney fees) for which Licensor may be liable or incur or be
compelled to pay by reason of the breach of any representation,
warranty or agreements of Company contained in this Agreement or
any related agreement.
3.5 Licensee Indemnity. Licensee shall further indemnify,
defend and hold harmless Company from and against all claims,
actions, suits and proceedings, all loss, liability, damages, cost
and expenses incurred in connection with any claim (including
reasonable attorneys fees) for which Company may become liable or
incur or arising out of breach of any of Licensee's
representations, warranties or agreements herein.
ARTICLE 4
LICENSE PROTECTIONS
4.1 Duty to Disclose and Mitigate. Licensee immediately shall
notify Company of any information which comes to Licensee's
attention which does or might indicate that there has been any loss
of proprietary rights of any kind in or to any Commercial Marks
arising through any action of Licensee, any of its employees,
agents, contractors or owners, or any individual or entity in
privity with Licensee. In such event, Licensee shall take all steps
within its power to limit the damage to Company which could result
from such loss of proprietary rights, including but not limited to
taking whatever legal action necessary to mitigate such damage.
Company, in its sole discretion, shall have the right to take over
and assume control of any such litigation, by providing Licensee
with written notice of its decision to do so.
4.2 Title Protection. Licensee warrants that it shall not
attack, compromise, file suit against or in any manner attempt to
vitiate or commit or fail to take any action which could vitiate
any of Company's rights, titles or interests in the Commercial
Marks. Licensee shall not attempt to develop, develop or retain
others to develop any material similar to any Commercial Marks.
Licensee shall not obtain any copyright, trademark, service mark or
other proprietary or registered rights in or to any Commercial Mark
or Derivative Work, or any copy, logo, design or symbol which is
similar to the preceding.
<PAGE>
4.3 Injunctive and Other Relief. Licensee acknowledges that
if it breaches any of its obligations under this Agreement, it will
cause damage of an irreparable and continuing nature to Company,
for which money damages will not provide adequate relief.
Therefore, in addition to any money damages to which Company is
entitled, Company also is entitled to obtain an injunction
(including but not limited to a temporary restraining order) to
prohibit Licensee's continuing breach of the applicable covenant,
and/or to force Licensee to take affirmative actions to comply with
its obligations under this Agreement. Company shall have the right
to obtain such relief without having to prove any damages or post
any bond.
4.4 Commerical Marks Indemnity Obligation. Company defends,
indemnifies and holds harmless Licensee from all liabilities and
reasonable expenses, judgments, fines or penalties which Licensee
may incur that result from any claim, action, suit or proceeding,
the material allegation of which avers that the Commercial Marks
constitutes an infringement of a United States registered trademark
or service mark, whether such actions are civil, criminal,
administrative or investigative, including any associated appeals,
subject to a maximum indemnification of an amount not more than the
Royalties previously received by Company. In lieu of
indemnification, Company, at its sole option, may: (i) obtain for
Licensee the right to utilize any such allegedly infringing
Commercial Marks; or (ii) make such Commercial Marks
non-infringing, if possible.
4.5 Survival of Covenants. Licensee's obligations under
Articles 2 and 4 of this Agreement shall survive the termination of
this Agreement or any of this Agreement's provisions.
4.6 Formulas. Licensee shall keep all formulas confidential.
ARTICLE 5
TERMINATION
5.1 Causes. This Agreement may be terminated solely as
provided below in this Section and Section 2.4. This Agreement may
terminate prior to the expiration of any then current Term Year
identified in Section 2.4 above upon thirty (30) days prior notice
by Company or upon the occurrence of any of the following: (i)
Licensee commits a default under this Agreement (including but not
limited to its failure to make a payment of any amounts owing to
Company when and as the same become due or its violation of any
terms of Article 1 above); (ii) Licensee attempts to use,
reproduce, sell, mortgage, lease, assign (subject to Section 7.4
herein), convey, transfer or sublicense any Commercial Marks in
contravention of the terms of this Agreement; (iii) Licensee
voluntarily or involuntarily becomes subject to a bankruptcy
proceeding, makes an assignment for the benefit of creditors,
marshals its assets, becomes insolvent, otherwise becomes subject
to any proceeding for relief from or protection of creditors; or
(iv) Licensee dissolves or liquidates, merges or consolidates with
or into any other entity or sells substantially all its assets or
twenty-five percent (25%) or more of either its voting or total
equity securities to any individual or entity who is not an owner
of such securities as of the Effective Date.
5.2 Effect of Termination. Immediately upon the termination
of this Agreement, all rights of Licensee under this Agreement to
use the Commercial Marks shall terminate in their entirety, and
Licensee immediately shall (i) cease the sale of all Products
utilizing any Commercial Marks; and (ii) shall cease using any of
the know-how, formula or customer lists relating to the Products
purchased by Licensee from Assignee and Bank and shall convey all
right, title and interest in said know-how, formula or customer
lists to Company for the sale price of $100.00. Notwithstanding
anything herein to the contrary, failure to pay the Minimum Royalty
or Annual Royalty shall not subject Licensee to any responsibility
other than the termination of its license rights herein and the
continued payment obligation of the Sales Percentage on Net Factory
Sales on Products sold using the Commercial Marks.
<PAGE>
Irrespective of the reason for termination:
(a) Licensee shall be responsible for all royalties that
may be due Company from sales of the Products made prior to the
termination of this Agreement and from the sale of its remaining
inventory.
(b) Licensee shall furnish Company with a list of the
quantity, cost and location of all Products and a list showing all
customers to whom Licensee has sold Products for the two (2) year
period preceding such termination and return all molds, plans and
other data to Company.
(c) Licensee agrees, if so required, to sell its
inventory of Products to Company at its out-of-pocket costs upon
payment thereof.
(d) Licensee shall not be required to make any further
payments to Company, except to the extent of the payment of
Royalties for Products sold prior to the date of termination and in
closing out is inventory. No Royalty will be required in the event
of sale by Licensee to Company of remaining inventory after
termination. Should the parties agree that Licensee shall continue
to sell the Products on a non-exclusive basis, Licensee will be
required to pay the Sales Percentage on all Net Factory Sales of
the Products.
(e) The termination of this Agreement shall not affect
or impair any obligations or rights which arose prior to the date
of such termination or out of the facts or occurrences which cause
such termination.
ARTICLE 6
REPRESENTATIONS, WARRANTIES AND COVENANTS
6.1 Company Warranties. Company represents and warrants that
to the best of its knowledge: (i) it is the owner of the Commercial
Marks; (ii) the Commercial Marks do not violate or infringe any
United States registered trademarks, trade names, service marks,
service names, or other intellectual property rights; (iii) it has
not granted a license to any third party to use the Commercial
Marks as authorized by the Permitted Use; and (iv) it has the right
to enter into this Agreement with and grant the License to
Licensee, such Agreement being duly authorized by Company's Board
of Directors.
6.2 Representations and Covenants of Licensee. Licensee
makes the following warranties and covenants to Company, all of
which shall survive the termination of this Agreement:
(a) Licensee is a corporation duly incorporated, validly
existing and in good standing under the laws of the State of
Delaware; and
(b) Licensee has all necessary corporate power and
authority to enter into and perform the obligations to be performed
by it under and to consummate the transactions and other acts
contemplated by this Agreement and any related agreements. The
execution, delivery and performance by Licensee of this Agreement
and any related agreements have been duly authorized by all
necessary corporate action of Licensee. The execution and delivery
of this Agreement and related agreements, the consummation of the
transactions contemplated hereby and compliance with and
fulfillment of the terms and provisions hereof by Licensee will not
(i) conflict with or result in a breach of the terms, conditions or
provisions of, or constitute a default under, the certificate of
incorporation or by-laws of Licensee, or any agreement, mortgage,
judgment, order, award, decree or other restriction to which
Licensee is a party or by which any of its properties is bound,
(ii) require any affirmative approval, consent, authorization or
other order or action of any court, governmental authority or
regulatory body or of any creditor of Licensee, except such as have
been obtained, (iii) conflict with or result in a breach of the
<PAGE>
terms, conditions or provisions or, or constitute a default under,
any contract, indenture, trust agreement, trust instrument, note,
bond, mortgage, agreement or other instrument or obligation to
which Licensee is a party or by which it or any of its properties
or assets may be bound (collectively, "Licensee Obligations"), or
give any party with rights thereunder the right to terminate,
accelerate, modify or otherwise change the rights or obligations of
Licensee under any of the Licensee Obligations or (iv) violate any
judgment, order, writ, injunction, decree, law, statute, rule or
regulation applicable to Licensee or any of its assets or
properties. This Agreement and all related agreements constitute
the valid and binding obligation of Licensee enforceable against
Licensee in accordance with its terms.
6.3 Representations and Covenants of Company. Company makes
the following warranties and covenants to Licensee, all of which
shall survive the execution of this Agreement:
(a) Company is duly organized to do business in the
State of Illinois and is validly existing and in good standing
under the laws of the State of Illinois; and
(b) Company has all necessary power and authority to
enter into, to perform, the obligations to be performed by it under
and to consummate the transactions and other acts contemplated by
this Agreement and any related agreements. The execution, delivery
and performance of this Agreement and any related agreements have
been duly authorized by all necessary action of Company. The
execution and delivery of this Agreement and related agreements,
the consummation of the transactions contemplated hereby and
compliance with and fulfillment of the terms and provisions hereof
will not (i) conflict with or result in a breach of the terms,
conditions or provisions or, or constitute a default under any
agreement, mortgage, judgment, order, aware, decree or other
restriction to which Company is a party or by which any of its
properties is bound, (ii) require any affirmative approval,
consents, authorization or other order or action of any court,
governmental authority or regulatory body or of any creditor,
except such as have been obtained, (iii) conflict with or result in
a breach of the terms, conditions or provisions or, or constitute
a default under, any contract, indenture, trust agreement, trust
instrument, note, bond, mortgage, agreement or other instrument or
obligation to which Company is a party or by which it or any of its
properties or assets may be bound (collectively, "Company
Obligations"), or give any party with rights thereunder the right
to terminate, accelerate, modify or otherwise change the rights or
obligations under any of the Company Obligations, or (iv) violate
any judgment, order, writ, injunction, decree, law, statute, rule
or regulation applicable to any of their assets or properties.
This Agreement and all related agreements constitute valid and
binding obligations enforceable against Company in accordance with
its terms.
6.4 Set-off. As a material inducement for Licensee to enter
into this Agreement, Licensee shall have the right to offset, upon
thirty (30) days prior written notice to Company, of any bona fide
claim against Shiara existing after six (6) months from the
Effective Date relating to previously authorized allowances by
Shiara and chargebacks, returns of merchandise or co-op balances
from Customers of Shiara for the period prior to the Effective Date
which have not previously been set-off by Licensee against Assignee
or Bank under the Purchase Agreement.
ARTICLE 7
GENERAL
7.1 No Agency or Partnership. The parties agree that this
Agreement does not constitute Licensee as the agent, legal
representative, partner or joint venturer of Company for any
purpose whatsoever. Licensee has no right to create any obligation
or responsibility, express or implied, on behalf of or in the name
of Company, or to bind Company in any manner or concerning any
matter.
7.2 Notices. All notices which concern this Agreement shall
be given in writing, as follows: (i) by actual delivery of the
notice into the hands of the party entitled to receive it or by
facsimile to such party, in which case the notice shall be deemed
given on the date it is sent; (ii) by Federal Express or any other
<PAGE>
overnight carrier, in which case the notice shall be deemed given
on the day following the date it is deposited with such carrier; or
(iii) by mailing such notice by registered or certified mail,
return receipt requested, in which case the notice shall be deemed
given four days following the date it is deposited in the mail. All
notices provided under this Agreement shall be to the last known
address of the party entitled to receive it. Any party to this
Agreement may change its address for notice purposes, by providing
written notice of the change of address to each of the other
parties. All notices under this Agreement shall be addressed as set
forth on attached and incorporated Exhibit "C".
7.3 Applicable Law. The laws of the State of Illinois (other
than those which pertain to conflicts of law) shall govern the
interpretation of this Agreement, irrespective of the fact that the
one of the parties now is or may become a resident of a different
state. The parties shall submit all disputes which arise under this
Agreement to state or federal courts located in the City of
Chicago, Illinois for resolution. The parties acknowledge that the
aforesaid courts shall have exclusive jurisdiction over this
Agreement, and specifically waive any claims they may have which
involve jurisdiction or venue, including but not limited to forum
non conveniens. Service of process for any claim which arises under
this Agreement shall be valid if made in accordance with the notice
provisions set forth in Section 7.2 above. If service of process is
made as aforesaid, the party served agrees that such service shall
constitute valid service, and specifically waives any objections
the party served may have under any state or federal law or rule
concerning service of process. Service of process in accordance
with this Section shall be in addition to and not to the exclusion
of any other service of process method legally available.
7.4 Assignment. Licensee shall have the right to assign this
Agreement to any entity upon notice to Company of said assignment
and assignee's acceptance of this Agreement. The assignee, by
acceptance of the assignment, agrees to be bound by all the terms,
conditions and obligations of this Agreement.
7.5 Binding Effect. This Agreement shall be binding upon and
inure to the benefit of Company and Licensee as well as their
respective successors and assigns, to the extent permitted.
7.6 Complete Understanding. This Agreement constitutes the
complete understanding between the parties. No alteration or
modification of any of this Agreement's provisions shall be valid
unless made in a written instrument which both parties sign. This
Agreement supersedes any prior understandings, written agreements,
or oral arrangements between the parties respecting the subject
matter which this Agreement addresses. The terms of this Agreement
shall govern if there is any conflict between this Agreement and:
(i) any purchase order of Licensee; and (ii) any other written
instrument which concerns or affects the subject matter of this
Agreement.
7.7 Waiver; Discharge. This Agreement may not be released,
discharged, abandoned, changed or modified in any manner, except by
an instrument in writing, signed on behalf of each of the parties
hereto by their duly authorized representatives. The failure of
any party hereto to enforce at any time any of the provisions of
this Agreement shall in no way be construed to be a waiver of any
such provision or to affect the validity of this Agreement or any
part thereof or the right of any party thereafter to enforce each
and every such provision. No waiver of any breach of this
Agreement shall be held to be a waiver of any other or subsequent
breach. Neither Company nor Licensee shall be relieved of any
liability which may arise from any breach of warranty, covenant,
representation or agreement contained in this Agreement as a result
of any investigation by the other party or its representatives.
7.8 Insurance. Licensee shall, during the Term and for a two
(2) year period thereafter, maintain Company as an additional
insured under its "claims made" Product Liability Insurance Policy.
7.9 Expenses. Each party hereto shall pay its own expenses
incident to this Agreement and the preparations to consummate the
transactions provided for herein.
<PAGE>
7.10 Execution in Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be deemed
to be an original, but all of which shall constitute one and the
same Agreement.
7.11 Titles and Headings. Titles and headings to Articles
herein are inserted for convenience of reference only and are not
intended to be as part of or to affect the meaning or
interpretation of this Agreement.
7.12 No Brokers. All parties hereto represent and warrant
that all negotiations relative to this Agreement and the
transactions contemplated hereby have been brought about without
the intervention of any other person or firm in such manner as to
give rise to any valid claim against any of the parties hereto for
a brokerage commission, finder's fee or other like payment to any
person or entity.
7.13 Prevailing Party. In the event of any litigation, the
prevailing party shall receive counsel fees and costs.
7.14 Severability. If a court of competent jurisdiction rules
that any one or more of this Agreement's provisions are invalid,
illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any of this
Agreement's other provisions, and this Agreement shall be construed
as if it had never contained such invalid, illegal or unenforceable
provision.
7.15 Incorporation of Recitals and Exhibits. The Recitals and
Exhibits to this Agreement are fully incorporated into and
constitute a part of the substantive provisions of this Agreement.
LICENSEE: COMPANY:
CCA INDUSTRIES, INC. a Delaware SHIARA HOLDINGS, INC.,an Illinois
corporation corporation
By: By:
Its: Its:
<PAGE>
EXHIBIT "A-1"
COMMERCIAL MARKS/PRODUCTS
Cherry Vanilla
Mandarin Vanilla
Cloud Dance
<PAGE>
EXHIBIT "B"
TERRITORY
Worldwide, subject to rights under Commercial Marks
<PAGE>
EXHIBIT "C"
NOTICES
1. All notices which concern this Agreement shall be
addressed as follows:
If to Licensee: If to Company:
CCA Industries, Inc. Shiara Holdings, Inc.
200 Murray Hill Parkway 61 East Elm Street
East Rutherford, N.J. 07073 Chicago, Illinois 60611
Attn.: Mr. David Edell Attn.: Mr. Barry Shipp
<PAGE>
March 18, 1998
Mr. Alexander Knopfler Marc Fenton, Esq.
Renaissance Financial Restructuring, Inc. Bank One Illinois,N.A.
10 South Wacker Drive Legal Department
35th Floor 208 South LaSalle Street, Suite 10
Chicago, Illinois 60606 Chicago, Illinois 60604
Telecopy: 312-715-4158 Telecopy: 312-357-1051
RE: Shiara, Inc., Assignment for the Benefit of Creditors to
Alexander Knopfler/ 9-504 Sale of Collateral
Dear Mr. Knopfler and Mr. Fenton:
Please be advised that CCA Industries, Inc., 200 Murray Hill
Parkway, East Rutherford, New Jersey 07073 ("Bidder") hereby
submits this Offer of Purchase to Alexander Knopfler, not
individually, but in your capacity as president of Renaissance
Financial Restructuring, Inc., Assignee ("Assignee") for the
Benefit of Creditors of Shiara, Inc. (the "Company"), and to Bank
One, Illinois, N.A. (the "Bank") , secured creditor with a first
priority security interest in and lien against the Assets
(hereinafter defined), and offeror pursuant to 810 ILCS 5/9-504
("9-504"). The Company has developed a group of fragrance
products (the "Products") which are currently being sold under the
trademarks and other intellectual property owned by Shiara
Holdings, Inc. ("Holdings").
Bidder hereby offers to purchase the assets identified in Schedule
1 hereto (collectively, the "Assets"), for the consideration set
forth in Paragraph 4 hereto, and on the other terms and conditions
set forth herein, provided that each of the following terms and
conditions are met. Bidder shall assume absolutely no liabilities
of Assignee or the Company (accrued, liquidated, contingent or
otherwise).
1. Acceptance. Subject to the public sale of the Assets pursuant
to 9-504 (the "Auction"), you shall accept this offer by signing
the enclosed duplicate original hereof and returning it to the
undersigned on or before 5:00 p.m., Chicago time on March 19, 1998.
2. Return of Bid Sale. Mr. Knopfler shall conduct the Auction
of the Assets through a return of bid sale of the Assets based upon
the terms of this offer to purchase, as prescribed herein on or
before March 31, 1998, and the proceedings of the Auction shall be
recorded and transcribed by a certified court reporter.
3. The Notice. The advertisements or other form of notice
<PAGE>
pertaining to the Auction of the Assets shall, among other things:
(a) be sent to all creditors of the Company, applicable municipal,
state and federal authorities and other parties in interest as are
disclosed to Assignee by the Company;
(b) be published, on at least two separate dates, in the Sunday
Edition of the Chicago Tribune, in each case in such sections as
one would normally place similar types of sale publications;
(c) include, among other items, provisions specifying that:
(i) the Auction of the Assets will occur at a date, time and place
certain, consistent with the terms hereof but in no event later
than the close of business on March 31, 1998;
(ii) the Assets to be sold shall be conveyed, pursuant to 9-504,
free and clear of all known and publicly recorded claims, liens,
security interests and encumbrances encumbering such Assets
("Liens"), including the Liens of the Bank, with all Liens
attaching to the proceeds of sale;
(iii) the Assets are being sold "as is" and "where is" with no
representations or warranties of any type or kind, except as to
delivery of all right, title and interest of the Assignee and the
Bank;
(iv) You have received this Offer to Purchase the Assets from
Bidder and that for an offer other than Bidder's initial offer to
be accepted, it must x) otherwise contain substantially identical
terms and conditions as this Offer to Purchase (other than the
conditions regarding the shareholder agreements and the License
Agreement with Shiara Holdings, Inc. described immediately below);
and y) exceed the Consideration (as hereinafter defined) by at
least $140,000 (the "Higher Bid");
(v) Bidder has requested that Joseph Aramanda and Barry Shipp,
respectively the President and Chairman of the Board of the Company
<PAGE>
(jointly, the "Principals") enter into shareholder agreements with
Bidder, conditioned upon Bidder being the successful purchaser of
the Assets;
(vi) Bidder has requested that Shiara Holdings, Inc. enter into a
License Agreement with Bidder (the "License Agreement"),
conditioned upon Bidder being the successful purchaser of the
Assets; and
(vii) Such other information as is usual and customary in such
notices of public sales so as to ensure a commercially reasonable
sale.
4.1 Consideration. As the consideration for the purchase of the
usable Inventory portion of the Assets (the "Consideration"), and
subject to paragraph 5 hereof, Bidder shall pay one million four
hundred thousand dollars ($1.4 million) as reflected in Schedule 1
hereto, and subject to adjustment based upon a physical count. The
Consideration shall be paid in six (6) equal monthly installments,
commencing on the Closing Date. As collateral for Bidder's
obligation to pay the Consideration, Bidder shall post a letter of
credit in favor of the Bank in the amount of the unpaid
installments. Such letter of credit shall be reduced periodically
by the amount of each installment of Consideration paid. In
addition, Bidder shall pay to you Contingent Additional
Consideration in an amount equal to 5% of the Net Factory Sales on
the Products which are sold in connection with the Customer Marks
as such terms are defined in the License Agreement. Such
Contingent Additional Consideration shall be consideration for the
purchase of the Company's goodwill, customer lists and "know how".
Payment of the Contingent Additional Consideration shall be made as
and when are due the Royalties as provided in 2.3 of the License
Agreement. To the extent that payments are made for the Contingent
Additional Consideration, as herein provided, such amounts shall be
credited, on a dollar-for-dollar basis, toward Royalties due under
the License Agreement.
4.2 Set-Off. For a period ending six (6) months after the Closing
Date, Bidder shall have the right to offset against the Contingent
Additional Consideration, upon thirty (30) days prior written
notice to the Bank and the Assignee, any bona fide claim relating
to previously authorized allowances and chargebacks, returns of
merchandise or co-op balances from customers of the Company.
5. Taxes and Removal Costs. Bidder shall not be liable for any
sales or other taxes incurred or due and owing to any state,
municipal, county or federal entity in connection with, or as a
<PAGE>
result of, the sale of the Assets. If it is successful in its
acquisition of the Assets, Bidder shall bear the costs of storage
or removal of the Assets purchased hereunder from the Company's
facility, provided, however, that Assignee shall provide Bidder
access (which shall include access on weekend days) to the
Company's facilities as reasonably necessary to allow Bidder to
carry out the removal and loading of the Assets onto Bidder
vehicles to effect the transfer of the Assets to Bidder. Bidder
shall be fully responsible, and hereby agrees to indemnify Assignee
and/or the Bank, for all costs incurred in operating the Company's
business and storing the Assets from and after the Closing Date and
for any and all losses and damages incurred by Assignee and claims
made against Assignee and/or the Bank as a result of Bidder's
operation of the Company's business or removal of the Assets.
6. Acceptance of Other Bids. By accepting this Offer to
Purchase, Assignee and Bank agree that they will not accept any
other offer for the Assets unless such offer contains
substantially identical terms and conditions as this Offer to
Purchase (and identical terms with respect to the Assets being
purchased, and methods of calculation and determination of the
Consideration, other than with respect to the Deposit (as
hereinafter defined) and the Contingent Additional Consideration.
Notwithstanding the foregoing, Assignee agrees that the receipt of
any other offer with respect to the Assets shall not prejudice the
ability of Bidder to make further offers with respect to the
Assets.
7. Earnest Money. Upon acceptance of this Offer to Purchase
pursuant to paragraph 1 above, Bidder will tender a non-refundable
earnest money deposit (the "Deposit") to the Assignee in the sum of
seventy five thousand dollars ($75,000.00). The deposit will be
held and used by the Assignee (subject to the secured claim of the
Bank) to pay operating expenses from the date of acceptance of this
Offer to Purchase through the Closing Date. Notwithstanding
anything herein to the contrary, a) in the event that Bidder is the
successful purchaser, any portion of the Deposit which is not used
by the Assignee for operating expenses through the Closing Date
will be credited against the Consideration; and b) in the event a
Higher Bid is received, and a sale to the bidder making such Higher
Bid is consummated, the Deposit shall be returned to Bidder.
8. Bankruptcy. Bidder acknowledges and agrees that if a petition
in bankruptcy is filed by or against the Company prior to the
Auction or Closing Date, as the case may be, the Assignee shall
<PAGE>
seek, if Bidder requests, bankruptcy court approval to sell the
Assets to Bidder pursuant to 11 U.S.C. 363. Provided that
Assignee takes such action, Assignee shall not be liable to Bidder
for any delay or extension of the Auction or Closing Date.
9. Agreements Between the Date of Acceptance and Closing.
Assignee agrees that, between the date of the acceptance of this
offer pursuant to paragraph 1 above and the Closing Date:
(a) Assignee shall give to Bidder's employees, and representatives
reasonable access during normal business hours to all of the
properties, books, contracts, documents, records and personnel of
Assignee and the Company relating to the Assets, and shall furnish
to Bidder such information as Bidder may at any time and from time
to time reasonably request related to the Assets.
(b) Subject to paragraph 5 hereof, Assignee shall use his best
efforts to preserve the Company's business and the goodwill of its
customers, suppliers and others having business relations with the
Company from and after the date of this offer to purchase, to the
Auction date.
10. Conditions to Closing. In the event Bidder is the successful
bidder at the Auction then:
(a) Assignee shall deliver to Bidder, at the Closing, the
following items:
(i) physical possession of the Assets at the Company's facilities;
(ii) a quitclaim bill of sale and assignment, executed by the Bank
and consented to by the Assignee, in favor of Bidder, transferring
all of the Bank's right, title and interest in and to the Assets
"as is, where is" to Bidder;
(iii) original Uniform Commercial Code Termination Statements
executed by the Bank and such other documents that may be necessary
to deliver title to the Assets to Bidder, free and clear of all
Liens;
(iv) evidence of the prior assignment of all of the Company's
assets from the Company to Assignee;
<PAGE>
(v) to the extent he has been provided information by the Company:
A) a list of customer accounts who have purchased the Products or
who have pending orders ("Accounts"); B) a schedule of all
outstanding cooperative advertising commitments, credits and/or
allowances with respect to the Products; C) a list of all supplies
utilized in the manufacture of the Products and all component
sources; D) copies of any and all contractual arrangements with
suppliers for the formulation of the Products and copies of all
open purchase orders for the manufacture of the Products; and E) a
list of entities from whom the Company has solicited the sale of
the Products.
(b) Bidder shall, at the Closing, deliver cash or certified funds
or a bank wire transfer to an account designated by the Bank and
Assignee in the amount of the Consideration, pursuant to paragraph
4 hereof.
11. Post Closing Agreements. In the event Bidder is the successful
bidder for the Assets, the parties shall execute such further
documents, and perform such further acts, as may be reasonably
necessary to transfer and convey the Assets to Bidder, on the terms
herein contained, and to otherwise reasonably comply with the terms
of this Agreement and consummate the transaction contemplated
hereby.
12. Time and Place of Closing. The transaction contemplated by
this offer to purchase shall be consummated (the "Closing") no
later than March 31, 1998 at 6:00 p.m. (Central Standard Time) at
the offices of Altheimer & Gray, 10 South Wacker Drive, Suite 4000,
Chicago, Illinois. The date on which the Closing occurs is
referred to in this offer to purchase as the "Closing Date".
13. Representations and Warranties of Bidder. Bidder makes the
following warranties and covenants to you, all of which shall
survive the termination of the Agreement:
(a) Organization and Good Standing. Bidder is a corporation duly
incorporated, validly existing and in good standing under the laws
of the State of Delaware.
(b) Corporate Authority. Bidder has all necessary corporate power
<PAGE>
and authority to enter into to perform the obligations to be
performed by it under and to consummate the transactions and other
acts contemplated by this Offer to Purchase and any related
agreements. The execution, delivery and performance by Bidder of
this Offer to Purchase and any related agreements have been duly
authorized by all necessary corporate action of Bidder. The
execution and delivery of this Offer to Purchase and related
agreements, the consummation of the transactions contemplated
hereby and compliance with and fulfillment of the terms and
provisions hereof by Bidder will not (a) conflict with or result in
a breach of the terms, conditions or provisions of, or constitute
a default under, the certificate of incorporation or by-laws of
Bidder, or any agreement, mortgage, judgment, order, award, decree
or other restriction to which Bidder is a party or by which any of
its properties is bound; (b) require any affirmative approval,
consent, authorization or other order or action of any court,
governmental authority or regulatory body or of any creditor of
Bidder except such as have been obtained; (c) conflict with or
result in a breach of the terms, conditions or provisions of, or
constitute a default under, any contract, indenture, trust
agreement, trust instrument, note, bond, mortgage, agreement or
other instrument or obligation to which Bidder is a party or by
which it or any of its properties or assets may be bound
(collectively, "Bidder Obligations"), or give any party with rights
thereunder the right to terminate, accelerate, modify or otherwise
change the rights or obligations of Bidder under any of the Bidder
Obligations; or (d) violate any judgment, order, writ, injunction,
decree, law, statute, rule or regulation applicable to Bidder or
any of its assets or properties. This Offer to Purchase and all
related agreements constitute the valid and binding obligation of
Bidder enforceable against Bidder in accordance with its terms.
14. Indemnification. Bidder shall indemnify and hold the Bank and
Assignee harmless from and against any and all claims, actions,
suits and proceedings (including costs and expenses and reasonable
attorneys' fees) for which they may be liable or incur or be
compelled to pay by reason of the breach of any representation or
warranty of Bidder contained in this Offer to Purchase or any
related agreement.
15. Prohibitive Injunction or Law. Neither party shall be
<PAGE>
obligated to consummate this Offer to Purchase for the duration of
any prohibitive injunction or if prohibited by law.
16. Miscellaneous. This Offer to Purchase may be signed in
counterparts. The word "including," shall mean, "including, without
limitation." Reference to "the Company" or "Assignee" shall be
deemed to refer to the Company and Assignee, except where the
context would otherwise require.
17. Complete Agreement. This Offer to Purchase, including the
schedules and exhibits attached hereto and the documents referred
to herein, shall constitute the entire agreement among the parties
hereto with respect to the subject matter hereof and shall
supersede all previous negotiations, commitments and writings with
respect to such subject matter.
18. Survival of Representations and Warranties. All
representations and warranties contained in this Offer to Purchase
shall survive the termination and the consummation of the
transactions called for by this Offer to Purchase.
19. Waiver; Discharge. This Offer to Purchase may not be
released, discharged, abandoned, changed or modified in any manner,
except by an instrument in writing, signed on behalf of each of the
parties hereto by their duly authorized representatives. The
failure of any party hereto to enforce at any time any of the
provisions of this Offer to Purchase shall in no way be construed
to be a waiver of any such provision or to affect the validity of
this Offer to Purchase or any part thereof or the right of any
party thereafter to enforce each and every such provision. No
waiver of any breach of this Offer to Purchase shall be held to be
a waiver of any other or subsequent breach.
If you have any questions, please do not hesitate to contact the
undersigned.
Very truly yours,
CCA Industries, Inc.
By:
Its:
<PAGE>
<PAGE>
Accepted this _______ day
of March, 1998.
By
Alexander Knopfler, President of
Renaissance Financial Restructuring, Inc.,
Assignee for the Benefit of Creditors
of Shiara, Inc.
By
Marc I. Fenton
Counsel for Bank One, Illinois, N.A.
<PAGE>
Schedule 1
The Assets
The Assets shall consist of all usable inventory, including raw
materials, work in process, inventory in transit to the Company or
Assignee, private labeled goods, finished goods and supplies
(collectively, the "Inventory"), as further described herein and
goodwill, customer lists and know-how. Title to all Inventory
voluntarily left at the premises more than two (2) business days
after the Closing Date shall revert to the Bank which will then
have the right to dispose of or sell same.
