UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
REPORT ON FORM 10-K
(Mark one)
/X/ Annual Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended December 31, 1995 or
/ / Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from ___________ to ___________.
Commission File No. 0-16469
JEAN PHILIPPE FRAGRANCES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3275609
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
551 Fifth Avenue, New York, New York 10176
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (212) 983-2640.
Securities registered pursuant to Section 12(b) of the Act: None.
Securities registered pursuant to Section 12(g) of the Act: Common
Stock, $.001 par value per share.
Indicate by checkmark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or such shorter period that the registrant
was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days: Yes /X/ No / /
Indicate by checkmark if disclosure of delinquent filers pursuant to
Item 405 of Regulation SK is not contained herein and will not be contained, to
the best of the registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10K or any other
amendment to this Form 10K. / /
State the aggregate market value of the voting stock held by
nonaffiliates of the registrant (based on the closing price on March 25, 1996 of
$7.375): $35,916,611.
Indicate the number of shares outstanding of the registrant's $.001 par
value common stock as of the close of business on the latest practicable date
(March 25, 1996): 10,009,981.
Documents Incorporated By Reference: None.
PART I
Item 1. Business
Introduction
Jean Philippe Fragrances, Inc. was organized under the laws of the
State of Delaware in May 1985, maintains it executive offices at 551 Fifth
Avenue, New York, New York 10176 and its telephone number is 212-983-2640.
Unless the context otherwise indicates, the term "Jean Philippe" refers to the
parent company, Jean Philippe Fragrances, Inc., and the term the "Company"
refers to Jean Philippe Fragrances, Inc. and its consolidated majority-owned
direct and indirect subsidiaries, Inter Parfums Holdings, S.A. ("IP Holdings"),
Inter Parfums, S.A. ("Inter Parfums"), Inter Parfums Trademarks, S.A. (formerly
Jean Desprez, S.A.) and Inter Parfums Cosmetiques (formerly Jean Desprez,
S.A.); and the Company's wholly-owned subsidiaries, Elite Parfums, Ltd.
("Elite") and Jean Philippe Fragrances do Brasil, Ltda. ("Jean Philippe
Brasil"), a limited liability company.
The Company is a manufacturer and distributor of fragrances and
cosmetics in the following niche markets: domestic and international brand name
and licensed fragrances, alternative designer fragrances and mass market
cosmetics.
The Company is the owner of the Intimate(Registered), Parfums
Molyneux(Registered) and Parfums Weil(Registered) fragrance lines, and
Aziza(Registered), a hypo-allergenic line of eye cosmetics; is the exclusive
licensee in the United States and Puerto Rico for Cutex(Registered) nail care
(excluding nail polish remover) and lip products; and is world-wide licensee,
manufacturer and distributor of the Burberrys(Registered), Ombre
Rose(Registered) and Regine's(Registered) fragrance lines, the
Jordache(Registered) line of fragrances and cosmetics and Chaz(Registered)
fragrances for men.
Inter Parfums markets its own line of moderately priced fragrances and
certain licensed or brand name fragrances in approximately sixty (60) countries
worldwide.
The Company has in the past acquired, and may in the future seek to
acquire, one (1) or more companies or divisions of companies in the fragrance or
related business, or fragrance product lines or related products. Any and all
discussions had by management to date have been at the inquiry, pre-negotiation
level only, and no assurances can be given that: (i) management will pursue any
transaction should a company, business, division, or product line become
available; (ii) or if pursued, that any transaction will be consummated; or
(iii) if consummated, that such transaction will increase the Company's
earnings.
Products and Selection
-Alternative Designer Fragrances
The Company produces and markets several lines of fragrances which it
sells at a substantial discount from the high image, high retail cost brand name
counterparts. Prior to producing and marketing a new alternative designer
product, management of the Company looks for the existence of certain factors
with respect to a particular designer fragrance: (i) high retail cost, (ii)
substantial expenditure of advertising dollars and (iii) selective distribution.
Management is of the opinion that the presence of all three (3) factors gives a
reasonable degree of market presence for such designer fragrance. Management
then seeks to create a similar scent which, together with creative packaging and
steeply discounted prices, will create what the Company intends will be an
appealing fragrance to be sold to mass market merchandisers and drug store
chains at substantial discounts from the higher cost brand name fragrance.
The Company's alternative designer fragrances are similar in scent to
highly advertised designer fragrances that have been established in the retail
market at a high retail price. These products are produced in the United States,
and are intended to have an upscale image without a high retail price. The
Company's alternative designer fragrances, which typically sell for under $5.00
at the retail level, are substantially discounted from the high cost of designer
fragrances, which range from $30.00 to $200.00.
Some of the alternative designer fragrances currently produced and
marketed by the Company include: Fleur de Paris(Trademark),
Radiance(Trademark), Elite 2(Trademark), Flight(Trademark), Dakota(Trademark),
Memphis(Registered), Snow Silk(Registered), Duo(Trademark),
Sexation(Trademark) and Gold by Jean Philippe(Registered).
Additionally, the Company markets complementary alternative designer
fragrance products such as deodorant sticks, roll on deodorants and body sprays.
New products are intended to be developed in accordance with market feasibility
and demand. Management of the Company believes that demand for new alternative
designer fragrances may be created when participants in the designer fragrance
industry launch promotional campaigns for new products.
-Brand Name and Licensed Fragrances
The Parfums Weil and Parfums Molyneux world-wide family of trademarks
were acquired in February 1994 by Inter Parfums, and cover a variety of
moderately priced fragrance lines for distribution to perfumeries, and the
fragrance lines are distributed in over thirty (30) countries world-wide.
Parfums Molyneux, formed in 1927, has established a classic line of fragrances
including Captain and Quartz, with representation in all major markets
world-wide. Parfums Weil has enjoyed a similar history dating back to the early
1900's with its first production of a range of original perfumes presented in
exquisite Baccarat bottles. Through the years the fragrance lines were
modernized and expanded, and today include the trademarks Bambou, Antilope and
Kipling, among others. Quartz by Molyneux has achieved wide acceptance in
Central and South America. As a result, Inter Parfums will introduce a new
fragrance, Quartz for men, in 1996. During 1995, Inter Parfums launched Fluer de
Weil, a new fragrance developed by Inter Parfums following the trend of light
floral notes associated with the Weil brand. Initial results for this new
fragrance have been promising.
In March 1994 the Company acquired from Revlon Consumer Products
Corporation ("Revlon") the world-wide trademarks for the Intimate fragrance
line, and entered into a 99 year royalty free license agreement with Revlon for
the use of the trademark Chaz in connection with men's fragrances, deodorants
and body sprays.
The Intimate and Chaz brands cover a variety of moderately priced
fragrances for mass market distribution, and are currently distributed in a
number of countries throughout the world. The Intimate product line has been
available for over forty (40) years and has gained a reputation for quality and
value with women over forty (40) years of age.
In July 1993 Inter Parfums acquired the exclusive world-wide license for
Burberrys fragrances in accordance with the terms of a License Agreement entered
into among Burberrys Limited as licensor, Inter Parfums as licensee and Jean
Philippe as the guarantor of Inter Parfums obligations thereunder (the
"Burberrys License Agreement"). The Burberrys License Agreement expires on
December 31, 2003, subject to certain minimum sales requirements and royalty
payments. In 1995 Inter Parfums completely redesigned all products under the
Burberry's brand name, which achieved successful distribution in more than
twenty (20) countries around the world.
In July 1993 Inter Parfums acquired the exclusive world-wide license for
Ombre Rose fragrances as well as other fragrances to be developed by Inter
Parfums in accordance with the terms of a License Agreement entered into between
Jean-Charles Brosseau S.A. as licensor and Inter Parfums as licensee (the
"Brosseau License Agreement"). The Brosseau License Agreement is for a term of
ten (10) years, subject to certain minimum sales requirements and royalty
payments. The Ombre Rose line, with its classically designed bottle, continues
to enjoy wide acceptance in the Far East and the United States.
In addition, Inter Parfums acquired all of the then existing world-wide
distribution rights for Ombre Rose fragrances, which had previously been granted
to two (2) affiliated companies based in Miami, Florida, subject to continuing
in effect certain sub-distribution agreements outside of the United States in
accordance with their respective terms. As part of such transaction, Inter
Parfums granted exclusive distribution rights in the United States, Canada and
Puerto Rico to Fragrance Marketing Group, Inc., an affiliate of the former
distributors of Ombre Rose, for the same term of the Brosseau License Agreement,
subject to certain minimum purchase requirements. Jean Philippe has guaranteed
the obligations of Inter Parfums under such agreements.
In January 1990 the Company obtained the exclusive right to use the
trademark Jordache(Registered) from Jordache Enterprises, Inc. ("Jordache") in
connection with the manufacturing, marketing and distribution of fragrances
and cosmetics in the United States. The Company also received the license to
manufacture, market and distribute fragrances and cosmetics in various
territories abroad, which territories are to become exclusive in nature upon
the commencement of substantial bona fide sales in each such territory. The
initial term of the license was for five and a half (5-1/2) years and ended on
June 30, 1995. In addition the license agreement provides the Company with the
right to renew the license for ten (10) annual renewal terms, subject to
certain minimum sales and royalty payment requirements. In the first quarter
of both fiscal 1995 and 1996, the Company elected to renew the Jordache
license for the next annual period. Since obtaining the right to use the
Jordache trademark, the Company has created and produced, and presently
markets, a Jordache(Registered) product line, which consists of a collection
of moderately priced fragrances and cosmetics (lipstick and nail polish)
geared to the youth market.
In February 1989 the Company became the exclusive world wide distributor
for a new fragrance called Regine's, which is sold internationally in
approximately sixty (60) countries. The Regine's fragrance was developed by
Inter Parfums, the first original fragrance to be created and marketed by the
Company. Inter Parfums markets Regine's, Zoa(Trademark) and Jimmy'z (the
Regine's men's fragrance) outside the United States and Canada.
In March 1996, the Company, through its indirect, majority-held
subsidiary, Parfums Jean Desprez, S.A. and its wholly-owned subsidiary, Jean
Desprez, S.A., sold to Parlux Fragrances, Inc. all of the trademarks and related
intellectual property rights, equipment, ancillary assets and inventory of the
Bal`a Versailles and Revolution `a Versailles lines, among others. In addition,
Parfums Jean Desprez and Jean Desprez on behalf of themselves and their parent
and affiliated corporations, agreed not to create alternative designer
fragrances with similar packaging to the Bal`a Versailles and Revolution `a
Versailles, lines. The aggregate consideration paid by the purchaser was $4.95
million (which included $1.8 million of inventory at cost), payable $1.575
million in cash at closing and $3.375 million in installments over a nine (9)
month period without interest. Inter Parfums, the parent of Parfums Jean
Desprez, paid approximately $3.1 million in excess of the tangible assets of the
companies acquired, for the outstanding capital stock of Parfums Jean Desprez in
July 1994.
-International Fragrances
Inter Parfums creates, produces and markets its proprietary line of
fragrances designed to appear expensive, with attractive bottling and packaging,
but sold in the middle market. Typical proprietary fragrances sold by Inter
Parfums retail between U.S.$10.00 to $15.00.
Mass Market Cosmetics
On August 1, 1994 Jean Philippe entered into a license agreement with
Chesebrough-Pond's, Inc. for the exclusive rights to manufacture and market
Cutex(Registered) nail care (excluding nail polish remover) and lip color
products in the United States and Puerto Rico (the "Cutex License"). The Cutex
License provides for an initial term of seven (7) years together with three
(3) annual renewal periods, and either party may cancel the agreement if
certain minimum annual sales levels are not achieved. The Cutex License also
provides for the payment of royalties based upon net sales and minimum annual
royalty payments.
The Cutex License contemplates certain minimum sales levels over the
life of the agreement, which would constitute a material increase over the
Company's recent level of net sales. However, sales of Cutex products have been
substantially below that set forth in the Cutex License, and product returns
have been substantially higher than anticipated. As a result of disappointing
sales in the Cutex lip color line, the Company decided to discontinue production
of the line in October 1995. As a result, the Company has taken a nonrecurring
charge aggregating $2.2 million, before taxes, in the fourth quarter of 1995.
(See Item 7. "Management's Discussion and Analysis of Financial Condition and
Results of Operation"). This charge represents a writedown of current lip
product inventory and the effect of potential customer returns or markdowns
which may be required on lip products in 1996. The discontinued lip color line
did not contribute to net sales in 1995 as customer returns exceeded new product
shipments.
Further, the Company and the licensor of Cutex have agreed to a
reduction in the minimum annual royalties payable under the Cutex License. The
Company believes that such relief along with the discontinuance of the lip color
line will enable the Company to direct all Cutex marketing efforts and resources
to building upon the core nail care business for which Cutex is famous.
In February 1996 the Company relaunched the Aziza(Registered) brand
hypo-allergenic line of eye cosmetics through mass market distribution. The new
Aziza line was completely modernized and includes thirty-six (36) of the
historically most popular and best selling mascaras, eyeliners and eyeshadows.
The Company acquired the world-wide rights to the brand name Aziza in June 1994
from Chesebrough-Pond's USA, Unilever N.V. and various affiliates of Unilever
N.V. for nominal consideration.
Also in the mass market cosmetics category, the Company has created,
produced and markets a Jordache(Registered) line of cosmetics (lipstick and
nail polish), which is geared to the youth segment of such market.
The Company's Cutex nail care, Jordache cosmetic and Aziza lines are
presently distributed in approximately 20,000 mass market outlets.
Production and Supply
A substantial portion of the Company's products are produced by the
Company either in the United States or France. Although the Company does not own
a factory or production plant, it acts as a general contractor, and supervises
each stage of production from the creation of the fragrance, design and creation
of the bottle, dispenser or container, filling of same, packing and shipping,
all as performed by various subcontractors. Management believes that its
relationships with such subcontractors are good, and that there are sufficient
alternatives should one or more subcontractors become unavailable.
Inventory
The Company purchases its raw materials and component parts from
suppliers based upon internal estimates of anticipated need for finished goods,
which enables the Company to meet its production requirements for finished
goods. The Company generally delivers customer orders within seventy-two (72)
hours of their receipt.
Sales and Marketing
The broad array of Company product lines permits the Company to market
fragrances and cosmetics to all levels of distribution -- the alternative
designer fragrances, Cutex and Jordache cosmetics at mass market, the Inter
Parfums proprietary line at the moderately priced level and the Company's brand
name and licensed designer fragrances at the high end.
The Company markets its alternative designer fragrances and personal
care products and its Cutex and Jordache product lines through in-house sales
executives to mass merchandisers, major drugstore chains, supermarket chains,
"specialty store chains" (multiple outlets of accessories, jewelry and
clothing), and wholesalers. The Company's alternative designer products are
presently being sold in approximately 18,000 retail outlets, and the Cutex,
Aziza and Jordache product lines are presently being sold in approximately
20,000 retail outlets.
In addition, the Company has established an electronic ordering system,
or Electronic Data Interface ("EDI"), which permits the Company to receive
orders for products via computer modem, as opposed to hard copy purchase orders,
from certain major retailers. Management believes that EDI facilitates the
receipt and processing of customer orders.
Mass market merchandisers and major drug chains are the most
established markets for all of Jean Philippe's product lines, and are the
traditional points of distribution for them. The ultimate market for this
business segment is the general public. Some of the mass market merchandisers,
major drug store chains and supermarket chains which are presently carrying the
Company's products include: Walmart, KMart, Walgreen's, Revco, Rite Aid, Winn
Dixie, CVS, Publix, and Thrifty Drugs.
Another market for the Company's products consists of distributors and
wholesalers, which service independent stores. Often, the trends in this
business segment mirror those of major drug store chains and mass market
retailers. The Company uses the same marketing strategy of providing quality
products coupled with flexible programs (i.e., discounts, extended payment
terms) in order to compete with other alternative fragrance companies.
During fiscal years ended December 31, 1995, 1994 and 1993, no customer
accounted for ten percent (10%) or more of sales on a consolidated basis.
Foreign Sales and Marketing
Marketing and sales of the Company's brand name and licensed designer
fragrance line are conducted through independent distributors, in-house
executives and international agents and importing companies and such products
are sold in approximately sixty (60) countries world-wide. Generally, marketing
and advertising are subject to approval of the respective licensors. Advertising
for the Company's designer fragrance lines appear in high fashion magazines and
to a lesser extent on television in France and the Middle East.
Inter Parfums maintains its own in-house sales force with executives who
are generally responsible for marketing the Inter Parfums designer fragrance
lines in specific territories. In France, the Inter Parfums designer fragrance
lines are sold in approximately 1000 perfumeries.
Inter Parfums markets its middle market proprietary fragrances to
wholesalers in France, and to distributors and importers predominantly in the
Middle East, Far East, Central America and South America through in-house sales
executives.
In October 1995 the Company commenced marketing its alternative designer
fragrance and Jordache lines through a newly formed limited liability company
organized in Brazil, Jean Philippe Brasil.
See Note "J" to the Consolidated Financial Statements for information
regarding the Company's operations by geographic areas.
Product Liability
The Company maintains product liability coverage in an amount of
$3,000,000, which it believes is adequate to cover substantially all of the
exposure it may have with respect to its products. The Company has never been
the subject of any material product liability claims.
Competition
The market for fragrances and beauty related products is highly
competitive and sensitive to changing consumer preferences and demands. At the
present time, management is aware of approximately five (5) established
companies which market similar alternative designer fragrances. The Company
believes that the quality of its fragrance products, as well as its ability to
quickly and efficiently develop and distribute new products, will enable it to
continue to effectively compete with these companies.
The market for name brand and budget color cosmetics is highly
competitive, with several major cosmetic companies marketing similar products,
many with substantial financial resources and national marketing campaigns. The
Company has experienced competitive pressures in this market, and it may be
difficult for the Company to significantly increase the market share of its
brands against this competition. However, management believes that brand
recognition of its Cutex, Aziza and Jordache lines, together with the quality
and competitive pricing of its products, should enable it to compete with these
companies.
However, especially in the area of high priced, original designer
fragrances, there are products which are better known than the products produced
for or distributed by the Company. There are also many companies which are
substantially larger and more diversified, and which have substantially greater
financial and marketing resources than the Company, as well as greater name
recognition, and the ability to develop and market products competitive with
those distributed by the Company. For these reasons, it may be particularly
difficult for the Company to successfully increase market share in the high
priced, original designer fragrance market.
Government Regulation
A fragrance is a "cosmetic" as that term is defined under the Federal
Food, Drug and Cosmetics Act ("FDC Act"), and must comply with the labeling
requirements of the FDC Act, the Fair Packaging and Labeling Act, and the
regulations thereunder. Certain of the Company's Cutex brand color cosmetic
products contain menthol, and are also classified as a "drug," as the categories
of cosmetic and drug are not mutually exclusive. Additional regulatory
requirements for such products include additional labeling requirements,
registration of manufacturer and semi-annual update of drug list.
The Company's fragrances are subject to approval of the Bureau of
Alcohol, Tobacco and Firearms as the result of the use of specially denatured
alcohol. To date the Company has not experienced any difficulties in obtaining
such approval.
Trademarks
In the United States the Company's registered trademarks include
Intimate, Aziza, Beverly, Fire by Jean Philippe(Registered), Fashion
Mood(Registered), Snow Silk(Registered) and Memphis(Registered). In addition,
the Company has various trademark applications pending. In addition, under
various license agreements the Company has the right to use the registered
trademark Cutex in the United States and Puerto Rico, and the registered
trademarks, Burberrys, Ombre Rose, Chaz, Regine's and Jordache both in the
United States and abroad.
Outside of the United States and Canada, the Company owns the following
registered trademarks: Intimate, Aziza, the Parfums Molyneux family of
trademarks, including Captain, Quartz and Lord, and the Parfums Weil family of
trademarks, including Bambou, Antilope and Kipling. See "Business-Products and
Selection".
Employees
As of March 15, 1996 Jean Philippe had eighty-three (83) full-time
domestic employees. Of these, seventeen (17) were engaged in sales activities,
and sixty-six (66) in administrative and marketing activities.
As of March 15, 1996 Inter Parfums and its foreign subsidiaries had
forty-five (45) full-time employees. Of these, fourteen (14) were engaged in
sales activities, and thirty-one (31) in administrative and marketing
activities.
The Company believes that its relationships with its employees are
satisfactory.
Item 2. Properties
The Company's domestic offices are located in approximately 12,000
square feet of office space at 551 Fifth Avenue, New York, New York. These
premises are leased for a five (5) year term ending in April 1997, at a monthly
rental of approximately $17,000, which is subject to escalations.
The offices of Inter Parfums and the Company's other French subsidiaries
are located at 4 Rond Point Des Champs Elysees, Paris, France, in approximately
6,000 square feet of leased office space pursuant to two (2) leases. The first
lease, for approximately 4,000 square feet, expires in September 1996, with an
annual rental of 775,000 French francs (or approximately $155,000) for such
period. Inter Parfums has options to renew for two (2) additional three (3) year
periods, with annual rental commencing at 800,000 French francs (approximately
$160,000). Rent is subject to escalations. The second lease, for approximately
2,000 square feet, is for a term which expires in March 1997, with annual
rentals of 410,650, 439,300 and 458,400 French francs (approximately $83,300,
$87,900 and $91,000 for the three (3) year period. Inter Parfums has options to
renew for two (2) additional three (3) year periods, with annual rental
commencing at 477,500 French francs (or approximately $95,500). Rent is subject
to escalations.
Management of the Company is of the belief that the Company's executive
office facilities are satisfactory for its present needs and those for the
foreseeable future.
On October 25, 1995, the Company took occupancy of its new 145,000
square foot distribution center at 60 Stults Road in Dayton, New Jersey. The
premises have been leased by the Company for an eight (8) year term and require
monthly rental payments of $57,000, aggregating $684,000 per annum. In
connection therewith, the Company has expended approximately $1.0 million in
equipment and improvements and incurred moving expenses of approximately $50,000
in the fourth quarter of 1995. Management of the Company is of the belief that
the Company's distribution center is satisfactory for its present needs and
those for the foreseeable future.
Item 3. Legal Proceedings
There is no material litigation pending or, to the knowledge of the
Company, threatened to which the property of the Company is subject or to which
the Company may be a party.
Item 4. Submissions Of Matters To A Vote Of Security Holders
Not applicable.
PART II
Item 5. Market For Registrant's Common Equity
And Related Stockholder Matters
The Company's Common Stock, $.001 par value per share ("Common Stock")
is traded on The Nasdaq Stock Market under the symbols "JEAN". The following
table sets forth in dollars, the range of high and low closing prices for the
past two (2) fiscal years for the Company's Common Stock.
Fiscal 1995 High Closing Price Low Closing Price
Fourth Quarter $10.50 $ 8.13
Third Quarter $11.75 $10.63
Second Quarter $10.88 $ 8.75
First Quarter $ 9.00 $ 7.31
Fiscal 1994 High Closing Price Low Closing Price
Fourth Quarter $ 9.00 $ 6.88
Third Quarter $11.00 $ 8.63
Second Quarter $11.88 $ 9.88
First Quarter $12.75 $ 9.75
As of March 1, 1996, the number of record holders (brokers and broker's
nominees, etc.) of the Company's Common Stock was 133. Management believes that
there are approximately 2400 beneficial owners of the Company's Common Stock.
Dividends
Jean Philippe has not paid cash dividends since inception and management
of the Company does not foresee Jean Philippe paying cash dividends in the
foreseeable future as earned surplus is to be retained as working capital for
anticipated growth. The revolving credit agreement with the Company's primary
institutional lender generally prohibits the payment of cash dividends in excess
of fifty (50%) percent of the Company's net income.
Item 6. Selected Financial Data
The following selected financial data have been derived from the
Company's financial statements, and should be read in conjunction with such
financial statements, including the footnotes relating thereto, referred to in
Item 8 of this Form 10-K.
<TABLE>
<CAPTION>
Years Ended December 31
(In Thousands Except Share and Per Share Data)
--------------------------------------------------------------------
1995 1994 1993 1992 1991
------- ------- -------- ------- -------
Income Statement Data:
<S> <C> <C> <C> <C> <C>
Net sales $93,669 $75,079 $59,546 $43,688 $25,465
Cost of Sales 48,703 39,036 32,964 24,536 14,042
Selling, General and Administrative 32,990 23,773 15,814 12,479 8,229
Income before taxes and minority
interest 12,380 11,679 11,240 6,669 2,911
Net income 9,038 7,275 7,099 4,278 1,862
Net income per common and common
equivalent share $.87(1,2) $.70(1) $.70(1) $.50 $.27
Weighted average number of
common and common equivalent
shares outstanding 10,438,896 10,454,555 10,132,628 8,641,393 7,020,099
</TABLE>
<TABLE>
<CAPTION>
As at December 31
(In Thousands Except Share and Per Share Data)
-----------------------------------------------------------------------
1995 1994 1993 1992 1991
------- ------- -------- ------- -------
Balance Sheet Data:
<S> <C> <C> <C> <C> <C>
Working Capital $41,363 $31,226 $31,967 $17,250 $ 7,349
Total Assets 84,001 69,451 49,909 31,807 19,684
Long Term Debt 596 862 424 -0- 313
Shareholders' equity 51,976 44,513 33,774 18,488 8,181
</TABLE>
- -----------------------
1 Includes a net gain of $3.3 million or $.32 per share, $221,000 or $.02
per share, $645,000 or $.06 per share for the years ended December 31, 1995,
1994 and 1993, respectively, resulting from the sale of common stock of a
subsidiary.
2 Includes a nonrecurring charge, net of taxes, of $1.3 million or $.13 per
share, relating to the discontinuance of a product line.
Item 7. Management's Discussion And Analysis Of
Financial Condition And Results Of Operation
The Company's long-term business strategy of building core volume and
profitability, developing products in new categories, exploring strategic
acquisition opportunities, and pursuing expansion in international markets, has
enabled the Company to report another record year for growth in sales. However,
current year earnings excluding the gain on sale of stock of subsidiary, reflect
the obstacles encountered in bringing the newly acquired Cutex nail care and lip
color lines to the profitability levels originally anticipated. As discussed in
more detail below, current earnings reflect a nonrecurring charge of $2.2
million, before taxes, relating to the discontinuance of the Cutex lip color
line in October 1995.
1995 as Compared to 1994
Net sales increased 25% to $93.7 million, as compared to $75.1 million
in 1994. This increase reflects the Company's ability to integrate new product
lines with existing product offerings. Sales generated by the Company's domestic
operations increased 19%. Such growth is the result of the August 1994
acquisition of the Cutex nail care and lip color line, and the continued growth
in the core Alternative Designer Fragrance lines.
Net sales generated by Cutex product lines increased $5.3 million over
1994 net sales. This increase was well below original expectations as the result
of excessive product returns caused in part from the required change in the
Uniform Product Code from that of Chesebrough-Ponds and disappointing sales of
the lip color line.
In October 1995 the Company decided to discontinue production of the lip
color line and as a result, has taken a nonrecurring charge aggregating $2.2
million, before taxes, in the fourth quarter of 1995. This charge represents a
writedown of current lip product inventory and the effect of potential customer
returns or markdowns which may be required on lip products in 1996. The
discontinued lip color line did not contribute to net sales in 1995 as customer
returns exceeded new product shipments.
As a result of the issues relating to the Cutex product lines, the
Company and the licensor have agreed to a reduction of the minimum royalties
payable under the Cutex license. The Company believes that such relief along
with the discontinuance of the lip color line will enable the Company to direct
all Cutex marketing efforts and resources to building upon the core nail care
business for which Cutex is famous.
Sales by the Company's foreign subsidiaries increased 36%; at comparable
foreign currency exchange rates, sales by the Company's foreign subsidiaries
increased 22%. Such increase reflects new product introductions under the Ombre
Rose and Burberrys labels and initial sales by Jean Philippe Brasil, the
Company's recently organized Brazilian subsidiary, which commenced operations in
October 1995.
The Company continues to focus its sales efforts on development of new
product categories for sale to our expanding customer base. The February 1996
relaunch of the Aziza(Registered) hypo allergenic eye cosmetic line is well
under way.
Gross profit margin was 48% in both 1995 and 1994. Ordinarily, increased
sales of Cutex products would have enabled the Company to improve overall gross
margin. However, with the excessive customer returns experienced in 1995,
markdowns and inventory writedowns of returned products were necessary. In
addition, gross margin has been negatively impacted from incremental closeout
sales of discontinued or returned product at reduced prices. While in the
ordinary course of business the Company closes out such inventory, management
had taken an increased initiative to reduce excess inventory to improve the
Company's cash flow and in preparation of moving to our new distribution center
in Dayton NJ. The Company's business lines, excluding Cutex, generated a 46%
gross margin in both 1995 and 1994.
Selling, general and administrative expenses represented 35% of net
sales in 1995 as compared to 32% in 1994. The increase is primarily the result
of promotion and advertising expenses required for the Cutex product lines and
reflect the fact that sales of the Cutex color lines have been below original
expectations. Management is taking the steps it deems necessary to bring these
product lines to an acceptable profitability level. In addition, most licensed
product lines call for royalties to be paid based on sales volume and some
require minimum advertising expenditures.
Interest expense increased to $1.1 million in 1995 from $0.8 million in
1994. The Company uses its available credit lines, as needed, to finance its
working capital needs.
The Company realized a gain on foreign currency aggregating $197,000 in
1995 as compared to a loss of $161,000 in 1994. The Company, on occasion enters
into foreign currency forward exchange contracts as a hedge for short-term
intercompany borrowings.
The Company recognized a net gain on sale of stock of a subsidiary
aggregating $3.3 million in 1995 and $0.2 million in 1994. The 1995 gain
resulted primarily from the public offering by Inter Parfums, in France, of
308,000 shares of its common stock. The 1994 gain also resulted from the sale of
common stock by Inter Parfums. Such sales of shares has been accounted for as a
gain on sale of stock of a subsidiary and is not part of a broader corporate
reorganization contemplated by the Company. Although additional shares may be
issued in the future, the Company has no plans to spin-off its subsidiary nor to
repurchase the shares previously issued. (See Liquidity and Financial
Resources).
The Company's effective income tax rate was 26% in 1995 and 37% in 1994.
Both the 1995 and 1994 tax rates were favorably impacted as deferred taxes were
not required to be provided on the gain on sale of stock by Inter Parfums.
Excluding such gain the Company's effective tax rate was 35% in 1995 and 37% in
1994.
Net income for the year ended December 31, 1995 increased 24% to $9.0
million compared to $7.3 million for the year ended December 31, 1994. Results
for 1995 include a nonrecurring charge of $1.3 million, on an after tax basis,
relating to the discontinuance of the lip color line. Results also include a net
gain from the sale of common stock of a subsidiary of $3.3 million in 1995 and
$0.2 million in 1994. Excluding the nonrecurring charge and such gains, net
income was $7.1 million or $0.68 per share in 1995 and in 1994.
The weighted average number of shares outstanding was 10,438,896 in
1995 and 10,454,555 in 1994.
1994 as Compared to 1993
Net sales increased 26% to $75.1 million, as compared to $59.5 million
in 1993. The results for 1994 reflect the Company's success in integrating new
product lines with pre existing product offerings, and creating greater
opportunities to serve the needs of its customers. Sales generated by the
Company's domestic operations increased 12%. Such growth reflects the positive
impact of the recently acquired Cutex lip and nail product line and the negative
impact of store closings of one of the Company's larger customers.
Sales by the Company's foreign subsidiaries increased 62%; at comparable
foreign currency exchange rates, sales by the Company's foreign subsidiaries
increased 59%. Such increase reflects contributions from the Ombre Rose and
Burberrys license agreements as well as the Parfums Molyneux and Parfums Weil
fragrance lines.
In connection with the Company's recent acquisitions and license
agreements, the Company has restructured its retail sales force and has added
additional experienced salespeople. The Company's primary efforts are now
focused on capitalizing on its expanding list of customer relationships. With
efficient product development and a strong national sales force, the Company can
now offer to all of its customers, its growing collection of fragrance, personal
care and color cosmetic products.
Gross profit margin for 1994 increased to 48% of sales from 45% in 1993.
The Company's decision to purchase certain raw materials and component parts for
its domestic operations at lower domestic prices continued to benefit the
Company's gross margin throughout 1994. In addition, initial sales of Cutex
products have enabled the Company to further improve its gross margin; without
such sales gross profit margin would have been 46%.
Selling, general and administrative expenses represented 32% of net
sales in 1994 as compared to 27% and 1993. The increase is primarily the result
of expenses incurred in connection with the restructuring of the Company's sales
force and the transition of all of the Company's new product lines into its
existing domestic and international business operations. In addition, most
licensed product lines call for royalties to be paid based on sales volume and
some require minimum advertising expenditures.
Interest expense increased to $803,000 in 1994 from $619,000 in 1993.The
Company uses its available credit lines, as needed, to finance its working
capital needs.
In 1994, as a result of the decline of the U.S. dollar relative to the
French franc, the Company incurred a loss on foreign currency of $161,000 as
compared to a gain of $179,000 in 1993. The Company, on occasion enters into
foreign currency forward exchange contracts as a hedge for short-term
intercompany borrowings. No material hedge transactions were entered into during
1994.
Gain on sale of stock of subsidiary aggregated $221,000 in 1994 as
compared to a gain of $645,000 1993. The 1993 gain resulted from the issuance by
Inter Parfums of 7.65% of its common stock. In 1994, an additional 10,000 shares
were sold to enable the stock of Inter Parfums to commence trading in the
over-the-counter stock market in Paris, and 11,536 shares were issued pursuant
to the conversion terms of Inter Parfum's long-term debt. These issuances of
shares by Inter Parfums have been accounted for as a gain on sale of stock of
subsidiary; the issuances are not part of a broader corporate reorganization
contemplated by the Company. Although additional shares may be issued in the
future the Company has no plans to spin-off its subsidiary nor repurchase the
shares previously issued.
The Company's effective income tax rate increased to 37.1% in 1994 from
36.8% in 1993. Both 1994 and 1993 were favorably impacted as deferred taxes were
not required to be provided on the gain from issuance of common stock by Inter
Parfums.
Net income for the year ended December 31, 1994 was $7.3 million
compared to $7.1 million for the year ended December 31, 1993. Results for the
year include a net gain from the sale of common stock of a subsidiary of
$221,000 or $0.02 per share in 1994 and $645,000 or $0.06 per share in 1993.
Excluding such gain, net income increased 9.3% to $7.1 million or $0.68 per
share compared to $6.5 million or $0.64 per share for the year ended December
31, 1993.
The weighted average number of shares outstanding increased 3% to
10,454,555 in 1994 from 10,132,628 in 1993. This increase is primarily the
result of the issuance of common stock in connection with the February 1994
acquisition of Parfums Molyneux and Parfums Weil.
Liquidity and Financial Resources
The Company's financial position continues to show solid strength as a
result of profitable operating results. At December 31, 1995, working capital
aggregated $41.4 million and the Company had cash and cash equivalents
aggregating $14.2 million. The Company's Board of Directors has authorized the
repurchase of up to 1,000,000 shares of the Company's common stock and as of
December 31, 1995, 324,305 shares had been purchased at an average price per
share of $8.91. Through February 1996 an additional 138,000 shares were
purchased at an average price per share of $7.85.
In November 1995, the Company's majority owned subsidiary, Inter Parfums
sold to the public in France 308,000 shares of its capital stock at 130 French
francs per share. Net proceeds of such offering aggregated 36.5 million French
francs ($7.6 million U.S.). In connection with such offering, Inter Parfums
Holding ("Holding"), a wholly-owned subsidiary of the Company and direct parent
of Inter Parfums, exercised its right to convert a portion of its convertible
debt into 250,000 shares of capital stock of Inter Parfums at 80 French francs
per share.
As a result of such offering and related debt to equity conversions, the
interest of the Company in Inter Parfums, as held by Holding, was reduced from
90.64% to 76.72%.
The Company's short-term financing requirements are expected to be met
by available cash at December 31, 1995, cash generated by operations and
short-term credit lines provided by domestic and foreign banks. The principal
credit facility for 1996 is a $12.0 million unsecured revolving line of credit
provided by a domestic commercial bank. Borrowings under the domestic revolving
line of credit are due on demand and bear interest at the bank's prime lending
rate.
Management of the Company believes that funds generated from operations,
supplemented by its available credit facilities, will provide it with sufficient
resources to meet all present and reasonably foreseeable future operating needs.
Operating activities provided $2.8 million of net cash in 1995 as
compared to $2.1 million in 1994. As the Company continues to monitor and
improve its procedures with respect to collection of outstanding receivables and
closely monitor inventory levels, the Company anticipates continued improvement
in cash flow. Current inventory levels reflect the necessary quantities to
support the upcoming selling season and new product introductions.
On October 25, 1995, the Company took occupancy of its new 145,000
square foot distribution center at 60 Stults Road in Dayton NJ. The premises
have been leased by the Company for an eight year term and require monthly
rental payments of $57,000, aggregating $684,000 per annum. In connection
therewith, the Company has invested approximately $0.7 million in equipment and
improvements and expects to invest an additional $0.3 million in 1996.
Inflation rates in the U.S. and foreign countries in which the Company
operates have not had a significant impact on operating results for the year
ended December 31, 1995.
Item 8. Financial Statements and Supplementary Data
The required financial statements commence on page F-1.
Supplementary Data
<TABLE>
<CAPTION>
Quarterly Data (Unaudited)
For the year ended December 31, 1995
(In Thousands Except Share and Per Share Data)
--------------------------------------------------------------------
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Full Year
------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
Net sales $21,612 $22,152 $25,480 $24,425 $93,669
Cost of Sales 10,660 11,187 13,514 13,342 48,703
Net income 1,621 1,628 2,072 3,717 9,038
Net income per common and
common equivalent share $.16 $.16 $.20 $.361,2 $.871,2
Number of shares outstanding 10,429,287 10,458,483 10,561,214 10,306,599 10,438,896
</TABLE>
<TABLE>
<CAPTION>
Quarterly Data (Unaudited)
For the year ended December 31, 1994
(In Thousands Except Share and Per Share Data)
-----------------------------------------------------------------------
1st 2nd 3rd 4th
Quarter Quarter Quarter Quarter Full Year
------- ------- ------- ------- ---------
<S> <C> <C> <C> <C> <C>
Net sales $14,126 $15,230 $22,109 $23,014 $75,079
Cost of Sales 7,999 8,168 11,282 11,587 39,036
Net income 1,221 1,323 2,258 2,473 7,275
Net income per common and
common equivalent share $.12(3) $.13 $.22 $.24(4) $.70(5)
Number of shares outstanding 10,373,760 10,538,411 10,470,431 10,426,054 10,454,555
</TABLE>
Item 9. Changes In And Disagreements With Accountants On
Accounting And Financial Disclosure
Not applicable.
- -------------------------------
1 Includes a net gain of $3.3 million or $.32 per share resulting from the
sale of common stock of a subsidiary.
2 Includes a nonrecurring charge, net of taxes, of $1.3 million or $.13 per
share, relating to the discontinuance of a product line.
3 Includes a net gain of $113,000 or $.01 per share resulting from the sale
of common stock of a subsidiary.
4 Includes a net gain of $108,000 or $.01 per share from the sale of common
stock of a subsidiary.
5 Includes a net gain of $221,000 or $.01 per share from the sale of common
stock of a subsidiary
PART III
Item 10. Executive Officers And Directors Of Registrant
As of March 1, 1996, the executive officers and directors of the
Company were as follows:
Name Position
Jean Madar Chairman of the Board
and Director General of Inter
Parfums
Philippe Benacin Vice Chairman of the Board,
President and President of Inter
Parfums
Russell Greenberg Director, Executive Vice
President and Chief Financial
Officer
Francois Heilbronn Director
Joseph A. Caccamo Director
Bruce Elbilia Executive Vice President
Wayne C. Hamerling Executive Vice President
Terrence H. Augenbraun Executive Vice President
Jaime Resnik Executive Vice President
The directors will serve until the next annual meeting of stockholders
and thereafter until their successors shall have been elected and qualified.
With the exception of Mr. Benacin, the officers are elected annually by the
directors and serve at the discretion of the board of directors. See "Item 11.
Executive Compensation- Employment Agreement". There are no family
relationships between executive officers or directors of the Company.
The following sets forth biographical information as to the business
experience of each executive officer and director of the Company for at least
the past five (5) years.
Jean Madar
Jean Madar, age 35, a Director, has been the Chairman of the Board of
Directors (since inception), and a co-founder of the Company with Mr. Benacin.
From inception until December 1993 he was the President of the Company; in
January 1994 he became Director General of Inter Parfums; and was previously the
managing director of Inter Parfums, from September 1983 until June 1985. At
Inter Parfums, he had the responsibility of overseeing the marketing operations
of its foreign distribution, including market research analysis and actual
marketing campaigns. Mr. Madar graduated from The French Higher School of
Economic and Commercial Sciences (ESSEC) in 1983.
Philippe Benacin
Mr. Benacin, age 37, a Director, has been the Vice Chairman of the Board
since September 1991, and is a co-founder of the Company with Mr. Madar. He was
elected the Executive Vice President in September 1991, Senior Vice President in
April 1993, and President of the Company in January 1994. In addition, has been
the President of Inter Parfums for more than the past five (5) years. Mr.
Benacin graduated from The French Higher School of Economic and Commercial
Sciences (ESSEC) in 1983. Mr. Benacin filed a Form 5 in which he indicates that
he neglected to file a Form 4 disclosing the exercise of an option and the
repurchase of such shares by the Company pursuant to its stock repurchase
program.
Russell Greenberg
Mr. Greenberg, age 39, the Chief Financial Officer, was Vice-President,
Finance when he joined the Company in June 1992; became Executive Vice President
in April 1993; and was appointed to the Board of Directors in February 1995. He
is a certified public accountant licensed in the State of New York, and is a
member of the American Institute of Certified Public Accountants and the New
York State Society of Certified Public Accountants. Since graduating from The
Ohio State University in 1980, he has been employed in public accounting. From
July 1987 through June 1992, he was employed as a manager with Richard A. Eisner
& Company, the independent accountants of the Company.
Francois Heilbronn
Mr. Heilbronn, age 35, a Director, is a graduate of Harvard Business
School with a Master of Business Administration degree and is currently working
as a consultant for the firm of M.M. Friedrich, Heilbronn & Fiszer, of which he
is a partner. He was formerly employed by The Boston Consulting Group, Inc. from
1986 through 1991 as a management consultant. He graduated from Institut
D'Etudes Politiques De Paris in June 1983. From 1984 to 1986, he worked as a
financial analyst for Lazard Freres & Co.
Joseph A. Caccamo
Mr. Caccamo, age 40, a Director, has been a practicing attorney since
1981. From May 1987 through February 1991, he was an associate of Parker Chapin
Flattau & Klimpl, New York City, and from February 1991 through August 1991, he
was of counsel to Brandeis, Bernstein & Wasserman, New York City. In September
1991 he founded Joseph A. Caccamo Attorney at Law, P.C., which is counsel to the
Company. He is also a director of Hydron Technologies, Inc., a company primarily
engaged in the development of cosmetic/personal care products, which has its
common stock listed on The Nasdaq Stock Market.
Bruce Elbilia
Mr. Elbilia, age 36, Executive Vice President joined the Company in June
1986 as the National Sales Director, and from that time until 1994, he was in
charge of the Company's marketing efforts. In 1994 Mr. Elbilia became head of
international sales and marketing for Jean Philippe, and has expanded Jean
Philippe's export sales to South America, the Middle East and Eastern Europe.
Mr. Elbilia received a Bachelor of Business Administration degree, with a major
in International Business/Marketing from George Washington University in
Washington, D.C., which he attended from 1977-1981.
Wayne C. Hamerling
Mr. Hamerling, age 39, was Vice-President, Sales, from May 1987 through
April 1993, when he became Executive Vice President. Mr. Hamerling has over
fifteen (15) years experience in the fragrance and cosmetic business. From 1980
through 1983 he was employed by Rite Aid Drug Stores; from 1983 through 1985, he
was the Senior Buyer for Valley Fair Stores, and from 1985 through May 1987, he
was the National Sales Manager for Happy Valley Fragrances.
Terrence H. Augenbraun
Mr. Augenbraun, age 51, who became an Executive Vice President of the
Company in June 1994, is in charge of the Company's Premier Fragrances division,
which markets name brand fragrances and cosmetics, domestically. Mr. Augenbraun
has been in the fragrances and cosmetics business for more than the past five
(5) years, and from 1992 through June 1994, he was the manager of the Prince
Matchabelli Division of Chesebrough-Ponds. From 1991 to 1992 he was an Executive
Vice President of Del Labs, a cosmetics concern in charge of new product
marketing. He was formerly the Chief Operating Officer of Lasale 10, a fragrance
and cosmetic concern, from 1989 through 1991, and from 1982 through 1989, he was
the Vice President of Marketing for the cosmetics group of Chesebrough-Pond's
with $160,000,000 in sales.
Jaime Resnik
Mr. Resnik, age 35, became an Executive Vice President in July 1994, and
is in charge of operations. He joined the Company in April 1992 as Operations
Manager in charge of production and planing. From October 1988 through April
1991, Mr. Resnik was the Licensing Audit Manager for Jordache Enterprises, with
responsibility for auditing approximately thirty (30) licensees with sales in
excess of $250,000,000. From April 1991 through April 1992, Mr. Resnik was the
Director of International Licensing for Jordache Enterprises, with
responsibility for overseeing the licensing activities of approximately fifty
(50) licensees world wide. Mr. Resnik graduated with honors from the University
of Miami in 1983 with a B.A. in management.
Item 11. Executive Compensation
The following table sets forth a summary of all compensation awarded to,
earned by or paid to, the Company's Chief Executive Officer and each of the four
(4) most highly compensated executive officers of the Company whose compensation
exceeded $100,000 per annum for services rendered in all capacities to the
Company and its subsidiaries during fiscal years ended December 31, 1995,
December 31, 1994 and December 31, 1993:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long Term Awards
Name and Year Salary ($) Bonus ($) Other Annual Securities All Other
Principal Position Compensation($) Underlying Compensation
Options (#)
<S> <C> <C> <C> <C> <C> <C>
Jean Madar,(1) 1995 175,800 -0- 20,800(2) 100,000 -0-
Chairman of the Board
and Director General of 1994 133,250 -0- 905,225(3) 100,000 -0-
Inter Parfums
1993 230,800 -0- -0- 100,000 -0-
Philippe Benacin,(4) 1995 96,000 -0- 681,200(5) 100,000 -0-
Chief Executive Officer,
President and President of 1994 81,360 -0- 28,205(6) 100,000 -0-
Inter Parfums
1993 78,000 -0- 34,100(7) 100,000 -0-
Bruce Elbilia,(8) 1995 168,000 18,500 56,510(9) 9,000 -0-
Executive Vice President
1994 158,500 3,500 31,124(10) 4,000 -0-
1993 138,000 3,000 740,254(11) 6,500 -0-
</TABLE>
- --------
(1) As of December 31, 1995, Mr. Madar held 2,768,049 restricted shares
of Common Stock, with an aggregate value of $22,490,398 based upon the closing
price of the Company's Common Stock as reported by the Nasdaq Stock Market,
National Market system, of $8.125 on December 29, 1995.
(2) Consists of lodging expenses.
(3) Consists of noncash compensation attributable to the difference
between the exercise price and the value of certain restricted shares of
Common Stock acquired upon the exercise of stock options.
(4) Mr. Benacin was elected President of the Company in
January 1994. Compensation figures for Mr. Benacin are approximate, as
he is paid in French francs, and conversion into U.S. dollars was made at the
average exchange rates prevailing during the respective periods. As of
December 31, 1995, Mr. Benacin held 2,318,049 restricted shares of Common
Stock, with an aggregate value of $18,834,148 based upon the closing price of
the Company's Common Stock as reported by the Nasdaq Stock Market, National
Market system, of $8.125 on December 29, 1995.
(5) Consists of noncash compensation of $650,000 attributable to the
difference between the exercise price and the value of certain restricted
shares of Common Stock acquired upon the exercise of stock options;
approximately $2,400 for automobile expenses and $28,800 for lodging expenses.
(6) Consists of approximately $2,170 for automobile expenses and
$26,035 for lodging expenses.
(7) Consists of approximately $8,300 for automobile expenses and
$25,800 in lodging expenses.
(8) As of December 31, 1995, Mr. Elbilia held 20,000 restricted shares
of Common Stock, with an aggregate value of $162,500 based upon the closing
price of the Company's Common Stock as reported by the Nasdaq Stock Market,
National Market system, of $8.125 on December 29, 1995.
(9) Consists of selling commissions.
(10) Consists of selling commissions.
(11) Consists of selling commissions equal to $22,159; and noncash
compensation of $718,095 attributable to the difference between the exercise
price and the value of certain restricted shares of Common Stock acquired upon
the exercise of stock options.
(SUMMARY COMPENSATION TABLE CONTINUED)
<TABLE>
<CAPTION>
Annual Compensation Long Term Awards
Name and Year Salary ($) Bonus ($) Other Annual Securities All Other
Principal Position Compensation Underlying Compensation
($) Options (#)
<S> <C> <C> <C> <C> <C> <C>
Terrence H. Augenbraun,(1) 1995 165,804 28,500 100,000(2) 9,000 -0-
Executive Vice President
1994 93,876 25,000 58,333(3) 11,334 -0-
1993 NA NA NA NA NA
Wayne C. Hamerling,(4) 1995 157,004 3,500 86,974(5) 9,000 -0-
Executive Vice President
1994 155,949 3,500 66,106(6) 4,000 -0-
1993 140,639 3,000 52,784(7) 6,500 -0-
</TABLE>
- ----------
(1) As of December 31, 1995, Mr. Augenbraun held 1,334 restricted
shares of Common Stock, with an aggregate value of $10,839 based upon the
closing price of the Company's Common Stock as reported by the Nasdaq Stock
Market, National Market system, of $8.125 on December 29, 1995.
(2) Consists of selling commissions.
(3) Consists of selling commissions.
(4) As of December 31, 1995, Mr. Hamerling held 30,000 restricted
shares of Common Stock, with an aggregate value of $243,750 based upon the
closing price of the Company's Common Stock as reported by the Nasdaq Stock
Market, National Market system, of $8.125 on December 29, 1995.
(5) Consists of selling commissions equal to $82,160 and
noncash compensation of $4,814 equal to the value of personal use of a
Company leased automobile.
(6) Consists of selling commissions equal to $62,749 and
noncash compensation of $3,357 equal to the value of personal use of a
Company leased automobile.
(7) Consists of selling commissions equal to $41,784; and
noncash compensation of $11,000 equal to the value of personal use of a
Company leased automobile.
The following table sets forth certain information relating to stock
option grants during Fiscal 1995 to the Company's Chief Executive Officer and
each of the four (4) most highly compensated executive officers of the Company
whose compensation exceeded $100,000 per annum for services rendered in all
capacities to the Company and its subsidiaries during fiscal year ended December
31, 1995:
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Potential Realized Value at
Assumed Annual Rates of Stock
Individualized Grants Price Appreciation for Option Term
- ----------------------------------------------------------------------- -----------------------------------------
Name Number of % of Total Exercise Expiration Five (5%) Ten (10%)
Securities Options/SARs or Base Date Percent Percent
Underlying Granted to Price ($) ($)
Options Employees in ($/Sh)
Granted (#) Fiscal Year
<S> <C> <C> <C> <C> <C> <C>
Jean Madar 50,000 15.97 $7.25 1/2/2000 100,152 221,310
Jean Madar 50,000 15.97 $8.625 12/6/2000 119,146 263,282
Philippe Benacin 50,000 15.97 $7.25 1/2/2000 100,152 221,310
Philippe Benacin 50,000 15.97 $8.625 12/6/2000 119,146 263,282
Bruce Elbilia 4,500 1.44 $7.25 1/2/2000 9,014 19,918
Bruce Elbilia 4,500 1.44 $8.625 12/6/2000 10,723 23,695
Wayne Hamerling 4,500 1.44 $7.25 1/2/2000 9,014 19,918
Wayne Hamerling 4,500 1.44 $8.625 12/6/2000 10,723 23,695
Terrence H. Augenbraun 4,500 1.44 $7.25 1/2/2000 9,014 19,918
Terrence H. Augenbraun 4,500 1.44 $8.625 12/6/2000 10,723 23,695
</TABLE>
The following table sets forth certain information relating to option
exercises effected during Fiscal 1994, and the value of options held as of such
date by each of the four (4) most highly compensated executive officers of the
Company whose compensation exceeded $100,000 per annum for services rendered in
all capacities to the Company and its subsidiaries during fiscal year ended
December 31, 1995:
AGGREGATE OPTION EXERCISES FOR FISCAL 1995
AND YEAR END OPTION VALUES
<TABLE>
<CAPTION>
Number of Value(1) of Unexercised
Unexercised Options In-the-Money Options
at December 31, 1995 at December 31, 1995
(#) ($)
Shares Acquired Value ($) Exercisable/ Exercisable/
on Exercise Realized(2) Unexercisable Unexercisable
<S> <C> <C> <C> <C>
Jean Madar -0- NA 595,687/-0- $629,528/$-0-
Philippe Benacin 75,000 $650,000 613,687/-0- $699,878/$-0-
Bruce Elbilia -0- NA 36,000/-0- $ 37,310/$-0-
Wayne C. Hamerling 6,000 $ 44,460 36,000/-0- $ 37,310/$-0-
Terrence H. Augenbraun -0- NA 23,000/-0- $ 19,688/$-0-
</TABLE>
- ----------
(1) Total value of unexercised options is based upon the fair market
value of the Common Stock as reported by the Nasdaq Stock Market of $8.125 on
December 29, 1995.
(2) Value realized in dollars is based upon the difference between the
fair market value of the Common Stock on the date of exercise, and the
exercise price of the option.
Employment Agreements
As part of the acquisition by the Company of the controlling interest
in Inter Parfums in 1991, the Company entered into an employment agreement
with Philippe Benacin. The agreement provides that Mr. Benacin will be
employed as Vice Chairman of the Board and President and Chief Executive
Officer of IP Holdings and its subsidiary, Inter Parfums. The initial term
expired on September 2, 1992, and has subsequently been automatically renewed
for additional annual periods. The agreement provides for automatic annual
renewal terms, unless either party terminates the agreement upon 120 days
notice. Mr. Benacin is entitled to receive an annual salary is 600,000ff
(approximately US$ 120,000) together with 5,000ff per month (approximately
US$1,000) for lodging expenses, both of which are subject to increases in the
discretion of the Board of Directors. In addition he is to receive a
nonaccountable expense allowance of 1,200ff (approximately US$ 240) per week
and reimbursement for all out-of-pocket expenses associated with the
acquisition, operation and maintenance of an automobile. The agreement also
provides for indemnification and a covenant not to compete for one (1) year
after termination of employment.
Compensation of Directors
Mr. Caccamo receives $500 for each board meeting at which he
participates.
On January 14, 1994, the Board of Directors of the Company adopted,
subject to the approval of its stockholders, the 1994 Nonemployee Stock Option
Plan (the "1994 Plan"). The purpose of the 1994 Plan is to assist the Company
in attracting and retaining key directors who are responsible for continuing
growth and success of the Company. The 1994 Plan was approved by the
stockholders of the Company on July 8, 1994.
The 1994 Plan provides for the grant of nonqualified stock options to
nonemployee directors to purchase an aggregate of 25,000 shares of Common
Stock.
Options to purchase 1,000 shares are granted on each February 1st to
all nonemployee directors for as long as each is a nonemployee director on
such date, except for Joseph A. Caccamo, who is granted options to purchase
4,000 shares. Further, options to purchase 1,000 shares are to be granted to
persons who become nonemployee directors at the time they become nonemployee
directors. The exercise price of all options granted or to be granted under
the 1994 Plan is to be equal to the fair market value of the Company's Common
Stock on the date of grant, and the term of each option shall be for a five
(5) year period, subject to earlier termination as set forth in the 1994 Plan.
On February 1, 1996, in accordance with the terms of the 1994 Plan,
options to purchase 1,000 shares were granted on such date to Francois
Heilbronn, and 4,000 shares to nonemployee director, Joseph A. Caccamo, all at
the exercise price of $8.0625 per share, the fair market value on the date of
grant.
Item 12. Security Ownership Of Certain
Beneficial Owners And Management
The following table sets forth information, as of March 25, 1996 with
respect to the beneficial ownership of the Company's Common Stock by (a) each
person known by the Company to be the beneficial owner of more than five
percent (5%) of the Company's outstanding Common Stock, (b) the executive
officers and directors of the Company and (c) the directors and officers of
the Company as a group:
Name and Address Amount of Approximate
of Beneficial Owner Beneficial Percent of Class
Ownership(1)
Jean Madar 3,363,736(2) 31.7%
c/o Inter Parfums, S.A.
4, Rond Point Des Champs Elysees
75008 Paris, France
Philippe Benacin 2,931,736(3) 27.6%
c/o Inter Parfums, S.A.
4, Rond Point Des Champs Elysees
75008 Paris, France
Russell Greenberg 33,000(4) Less than 1%
c/o Jean Philippe Fragrances, Inc.
551 Fifth Avenue
New York, NY 10176
Francois Heilbronn 8,500(5) Less than 1%
12 Rue Pierre Leroux
75007 Paris, France
- ----------
(1) All shares of Common Stock are directly held unless otherwise
stated.
(2) Consists of 2,768,049 shares held directly and options to purchase
595,687 shares of Common Stock.
(3) Consists of 2,318,049 shares held directly and options to purchase
613,687 shares of Common Stock.
(4) Consists of options to purchase shares of Common Stock.
(5) Consists of 4,500 shares held directly and options to purchase
4,000 shares of Common Stock.
(Beneficial Ownership Table Continued)
Name and Address Amount of Approximate Percent
of Beneficial Owner Beneficial of Class
Ownership
Bruce Elbilia 54,000(1) Less than 1%
c/o Jean Philippe Fragrances, Inc.
551 Fifth Avenue
New York, NY 10176
Wayne C. Hamerling 66,000(2) Less than 1%
c/o Jean Philippe Fragrances, Inc.
551 Fifth Avenue
New York, NY 10176
Joseph A. Caccamo 18,500(3) Less than 1%
666 Third Avenue--18th Fl.
New York, NY 10017
Terrence H. Augenbraun 24,334(4) Less than 1%
c/o Jean Philippe Fragrances, Inc.
551 Fifth Avenue
New York, NY 10176
Jaime Resnik 20,500(5) Less than 1%
c/o Jean Philippe Fragrances, Inc.
551 Fifth Avenue
New York, NY 10176
FMR Corp., Fidelity Management 605,000(6) 6.0%
& Research Company and Fidelity
Low-Priced Stock Fund
82 Devonshire Street, Boston, MA 02109
All Directors and Officers 6,520,306(7) 57.2%
as a Group (9 Persons)
- ----------
(1) Consists of 18,000 shares held directly and options to purchase
36,000 shares of Common Stock.
(2) Consists of 30,000 shares held directly and options to purchase
36,000 shares of Common Stock.
(3) Consists of options to purchase shares of Common Stock.
(4) Consists of 1,334 shares held directly and options to purchase
23,000 shares of Common Stock
(5) Consists of options to purchase shares of Common Stock.
(6) Information is derived forth in a Schedule 13G dated February 14,
1996 of Fidelity Management & Research Company ("Fidelity"), a wholly-owned
subsidiary of FMR Corp., FMR Corp. and Fidelity Low-Price Stock Fund
("Fidelity Fund"). Fidelity is a registered investment advisor to various
investment companies, including Fidelity Fund, which is listed as a beneficial
owner. Edward C. Johnson, 3rd, and members of his family are control persons
of FMR and therefore also listed as beneficial owners of the 605,000 shares of
common stock or the Company.
(7) Consists of 5,139,932 shares held directly and options to purchase
1,380,374 shares of Common Stock.
Item 13. Certain Relationships And Related Party Transactions
Transactions with French Subsidiaries
In July 1994 the Company, through its subsidiary, Inter Parfums,
acquired the outstanding capital stock of Parfums Jean Desprez, and its
wholly-owned subsidiary, Jean Desprez, S.A. for approximately $3.1
million in excess of the tangible assets of the companies acquired.
The acquisition was funded by Jean Philippe, and is being carried as
an advance to its direct French subsidiary, IP Holding, and is due and payable
on July 12, 1999, together with interest at seven percent (7%) per annum on
the unpaid principal balance, payable quarterly in arrears, to the date of
payment of the principal balance. IP Holding has in turn advanced such funds
to Inter Parfums, which are repayable to IP Holding in ten (10) years together
with interest at seven percent (7%) per annum. In addition, subject to
compliance with applicable French regulatory requirements, the advance is
convertible at the option of IP Holding into additional shares of common stock
of Inter Parfums at the rate of 86 French francs per share.
Subsequent to the closing of the sale of the Bal`a Versailles and
Revolution `a Versailles assets in March 1996 (see Item 1, "Business-Products
and Selection-Brand Name and Licensed Products"), IP Holdings intends to repay
the sum of $1.575 million to Jean Philippe Fragrances in partial satisfaction
of the aforementioned loan.
In connection with the acquisitions by Inter Parfums of the world-wide
rights under the Burberrys License Agreement and the Brosseau License
Agreement, Jean Philippe guaranteed the obligations of Inter Parfums under the
Burberrys License Agreement and the distribution agreement for Ombre Rose
fragrances.
Jean Philippe and Elite have guaranteed the obligations of IP Holdings
and Inter Parfums to Republic National Bank of New York (France).
Loans to Directors
In February 1996 the Company made a short term loan in the sum of
$400,000 to Jean Madar, the Chairman of the Board, together with interest at
the rate of five (5%) percent per annum, and the principal amount of such loan
was repaid in two (2) weeks. Interest of $770 is paid in April 1996.
On August 20, 1996 the Company made a bridge loan in the amount of
$175,000 to Russell Greenberg, the Chief Financial Officer and a Director, in
connection with the sale of his residence and purchase of a new residence,
with interest at the rate of four (4%) percent per annum. The sum of $145,000
was repaid four (4) days later. The balance of the loan is repayable $400 per
month and prepayable out of the proceeds of any sale of shares of Common Stock
of the Company by Mr. Greenberg.
Repurchase of Shares from Officers and Directors
In August 1995 Philippe Benacin, the President and a Director,
exercised a nonqualified stock option to purchase 75,000 shares at $1.33 per
share. In connection with the Company's stock repurchase program, the Company
purchased such shares at $10.00 per share, which was below the market value at
the time of the sale.
In April 1995 the Company, in connection with the Company's stock
repurchase program, purchased from Joseph A. Caccamo, the principal of the
general counsel to the Company and a Director, 1,005 shares at $8.625 per
share, the fair market value at the time of such sale.
In September 1995 Mr. Caccamo exercised nonqualified stock options to
purchase 5,000 shares at $7.75 per share and 4,000 shares at $7.6875. In
connection with the Company's stock repurchase program, the Company purchased
such shares at $10.25 per share and $10.1875 per share, respectively, which
was below the fair market value at the time of such sales.
Remuneration of Counsel
Joseph A. Caccamo, a director of the Company, is the principal of
Joseph A. Caccamo Attorney at Law, P.C., general counsel to the Company. Mr.
Caccamo's firm was paid $107,223 in legal fees and for reimbursement of
disbursements incurred on behalf of the Company during Fiscal 1995, and
presently receives a monthly retainer of $7,250 together with reimbursement
for expenses. In addition, his firm is of counsel to the law firm of Robson &
Miller, LLP, which received an aggregate of fees and disbursements equal to
$34,570 during Fiscal 1995.
On February 1, 1996 in accordance with the terms of the 1994 Plan, Mr.
Caccamo was granted an option with a term of five (5) years to purchase 4,000
shares at $8.0625 per share, the fair market value at the time of grant. In
addition, Mr. Caccamo receives $500 for each board meeting at which he
participates.
PART IV
Item 14. Exhibits, Financial Statement Schedules,
And Reports On Form 8-K
(a)(1) Financial Statements annexed hereto Page No.
Reports of Independent Auditors- F-1
Consolidated Balance Sheets as at December 31, 1995
and December 31, 1994 F-3
Consolidated Statements of Income for the Years ended
December 31, 1995, December 31, 1994 and December 31, 1993 F-4
Consolidated Statements of Changes in Shareholders' Equity
for the Years ended December 31, 1995, December 31, 1994
and December 31, 1993 F-5
Consolidated Statements of Cash Flows for the Years ended
December 31, 1995, December 31, 1994 and December 31, 1993 F-6
Notes to Financial Statements F-7
(a)(2) Financial Statement Schedules annexed hereto:
Schedule II - Valuation and Qualifying Accounts
and Reserves S-1
Schedules other than those referred to above have been
omitted as the conditions requiring their filing are not
present or the information has been presented elsewhere
in the consolidated financial statements.
(a)(3) Exhibits
The following documents heretofore filed by the Company with the
Securities and Exchange Commission (the "Commission") are hereby incorporated by
reference from the Company's Registration Statement on Form S-18, file no.
33-17139-NY:
Exhibit No. and Description
3.1 Restated Certificate of Incorporation
4.2 Common Stock Certificate Specimen
4.4 1987 Stock Option Plan
The following document heretofore filed with the Commission is
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1987:
Exhibit No. and Description
3.2 By-laws, as amended
The following documents heretofore filed with the Commission are
incorporated herein by reference to the Company's Current Report on Form 8-K
(date of event - January 18, 1990), as follows:
Exhibit No. and Description
10.13 License Agreement between the Company and Jordache dated
January 18, 1990 (as no. 10.1 therein).
10.15 Letter of Indemnification from Jordache to the Company dated
January 18, 1990 (as no. 10.3 therein)
10.16 Letter Agreement from Jordache to the Company regarding foreign
license rights dated January 18, 1990 (as no. 10.4 therein).
The following documents heretofore filed with the Commission is
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1990:
Exhibit No. and Description
3.1(a) Certificate of Amendment of the Restated Certificate of Incorporation
10.20 Stock Option Agreement between the Company and Philippe Benacin dated
August 31, 1990.
The following document heretofore filed with the Commission is
incorporated herein by reference to the Company's Current Report on Form 8-K
(date of event - July 29, 1991), as follows:
Exhibit No. and Description
10.24 Agreement and Plan or Reorganization dated July 29, 1991
among the Company, Jean Madar and Philippe Benacin (as No. 10.1 therein)
The following document heretofore filed with the Commission is
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1991:
Exhibit No. and Description
10.25 Employment Agreement between the Company and Philippe Benacin
dated July 29, 1991
The following documents heretofore filed with the Commission is
incorporated by reference to the Company's Registration Statement on Form S-1
(No. 33-48811):
Exhibit No. and Description
10.26 Lease for portion of 15th Floor, 551 Fifth Avenue, New York, New York
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992:
Exhibit No. and Description
3.1(b) Amendment to the Company's Restated Certificate of Incorporation,
as amended, dated July 31, 1992
4.9 1992 Stock Option Plan
4.10 Amendment to 1992 Stock Option Plan
4.11 1993 Stock Option Plan
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Registration Statement on Form S-3
(No. 33-63330):
Exhibit No. and Description
4.12 Form of Warrant Agreement between Bear, Stearns & Co. Inc.
and Jean Philippe Fragrances, Inc.
10.29 Form of Purchase Agreement
The following documents heretofore filed with the Commission are
incorporated herein by reference to the Company's Current Report on Form 8-K
(date of event - July 15, 1993), as follows:
Exhibit No. and Description
10.30 License Agreement dated July 15, 1993, among Burberrys Limited,
Inter Parfums, S.A. and Jean Philippe Fragrances, Inc.1
10.31 License Agreement dated May 7, 1993, between Jean-Charles Brosseau,
S.A. and Inter Parfums, S.A. (original in French)1
10.32 License Agreement dated May 7, 1993, between Jean-Charles Brosseau,
S.A. and Inter Parfums, S.A.(translation of French into English)1
10.33 Agreement dated July 14, 1993, between Alfin, Inc. and
Inter Parfums, S.A.1
10.34 Agreement dated July 16, 1993 among Inter Parfums, S.A., Jean Philippe
Fragrances, Inc., C&C Beauty Sales, Inc. and Parfico, Inc.
10.35 Distribution Agreement dated July 16, 1993 among Inter Parfums, S.A.,
Jean Philippe Fragrances, Inc. and Fragrance Marketing Group, Inc.1
- ------------------
1Filed in excised form, as confidentiality is being sought for
certain portions thereof.
The following documents heretofore filed with the Commission are
incorporated herein by reference to the Company's Current Report on Form 8-K
(date of event - February 28, 1994), as follows:
Exhibit No. and Description
10.36 Cession D'Elements Partiels de Fonds de Commerce between Inter Parfums,
S.A. and Cosmetiques et Parfums de France-I.D., S.A. dated February 18, 1994
(re: Parfums Molyneux)
10.37 Cession D'Elements Partiels de Fonds de Commerce between Inter Parfums,
S.A. and Cosmetiques et Parfums de France-I.D., S.A. dated February 18, 1994
(re: Parfums Weil)
10.38 Agreement (Acquisition) among Jean Philippe Fragrances, Inc.,
Inter Parfums, S.A. and Cosmetiques et Parfums de France, S.A.
dated February 18, 1994
10.39 Noncompetition Agreement among Jean Philippe Fragrances, Inc.,
Inter Parfums, S.A. and Cosmetiques et Parfums de France-I.D., S.A.
dated February 18, 1994
10.40 Commission Agreement among Jean Philippe Fragrances, Inc.,
Inter Parfums, S.A. and Sodipe S.A. dated February 18, 1994
10.41 Convention between Inter Parfums, S.A. and Cosmetiques et Parfums
de France-I.D., S.A. dated February 18, 1994 (re inventory purchase)
10.42 Convention de Nantissement among Cosmetiques et Parfums de France,
S.A., Cosmetiques et Parfums de France-I.D., S.A., Sodipe S.A.,
Jean Philippe Fragrances, Inc. and Inter Parfums, S.A.
dated February 18, 1994 (re security agreement)
10.43 Convention among Cosmetiques et Parfums de France-I.D., S.A.,
Cosmetiques et Parfums de France,S.A., Jean Philippe Fragrances, Inc.
and Inter Parfums, S.A. and Sodipe S.A. dated February 18, 1994
(re French regulatory requirements)
10.44 Acquisition Agreement among Jean Philippe Fragrances, Inc., Revlon
Consumer Products Corporation and Revlon Suisse, S.A. dated March 2, 1994
10.45 License Agreement among Jean Philippe Fragrances, Inc., Revlon
Consumer Products Corporation and Revlon Suisse, S.A. dated March 2, 1994
The following documents heretofore filed with the Commission are
incorporated herein by reference to the Company's Form 8 Amendment no. 1
(dated March 14, 1994) to the Current Report on Form 8-K
(date of event - February 28, 1994), as follows:
Exhibit No. and Description
10.46. English translation of exhibit no. 10.36, Cession D'Elements Partiels
de Fonds de Commerce between Inter Parfums, S.A. and Cosmetiques et Parfums
de France-I.D., S.A. dated February 18, 1994 (re: Parfums Molyneux)
10.47. English translation of exhibit no. 10.37, Cession D'Elements Partiels
de Fonds de Commerce between Inter Parfums, S.A. and Cosmetiques et Parfums
de France-I.D., S.A. dated February 18, 1994 (re: Parfums Weil)
10.48. English translation of exhibit no. 10.41, Convention between
Inter Parfums, S.A. and Cosmetiques et Parfums de France-I.D., S.A.
dated February 18, 1994 (re inventory purchase)
10.49. English translation of exhibit no. 10.42, Convention de Nantissement
among Cosmetiques et Parfums de France, S.A., Cosmetiques et Parfums
de France-I.D., S.A., Sodipe S.A., Jean Philippe Fragrances, Inc. and
Inter Parfums, S.A. dated February 18, 1994 (re security agreement)
The following document heretofore filed with the Commission is
incorporated herein by reference to the Company's Form 8 Amendment no. 2 (dated
March 21, 1994) to the Current Report on Form 8-K (date of event - February 28,
1994), as follows:
Exhibit No. and Description
10.50. English translation of exhibit no. 10.43, Convention among Cosmetiques
et Parfums de France-I.D., S.A., Cosmetiques et Parfums de France, S.A.,
Jean Philippe Fragrances, Inc. and Inter Parfums, S.A. and Sodipe S.A.
dated February 18, 1994 (re French regulatory requirements)
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993:
Exhibit No. and Description
3.1(c) Amendment to the Company's Restated Certificate of Incorporation,
as amended, dated July 9, 1993
3.3 Articles of Incorporation of Inter Parfums Holding, S.A.
3.3.1 English Translation of Exhibit no. 3.3, Articles of Incorporation of
Inter Parfums Holding, S.A.
3.4 Articles of Incorporation of Inter Parfums, S.A.
3.4.1 English Translation of Exhibit no. 3.4, Articles of Incorporation
of Inter Parfums, S.A.
4.14 Warrant no. 108 registered in the name of Ladenburg, Thalmann & Co., Inc.
dated February 2, 1994
4.15 1994 Nonemployee Director Stock Option Plan
10.51 Traite D'Apport Partiel D'Actif dated July 30, 1993 (Reorganization
Agreement between Inter Parfums, S.A. and Selective Industrie, S.A.)
10.51.1 English translation of Exhibit no. 10.51, Traite D'Apport
Partiel D'Actif dated July 30, 1993 (Reorganization Agreement between
Inter Parfums, S.A. and Selective Industrie, S.A.)
10.52 Lease for portion of 4, Rond Point Des Champs Des Elysees
dated September 30, 1993
10.52.1 English translation of Exhibit no. 10.52, Lease for portion of 4,
Rond Point Des Champs Des Elysees dated September 30, 1993
10.53 Lease for portion of 4, Rond Point Des Champs Des Elysees
dated March 2, 1994
10.53.1 English translation of Exhibit no. 10.53, Lease for portion of 4,
Rond Point Des Champs Des Elysees dated March 2, 1994
The following document heretofore filed with the Commission is
incorporated herein by reference to the Company's Current Report on Form 8-K
(date of event - May 31, 1994), as follows:
Exhibit No. and Description
10.55 License Agreement between Chesebrough-Pond's, Inc. and Jean Philippe
Fragrances, Inc. dated May 31, 1994 2, listed as no. 10.51 therein.
10.56 Asset Purchase Agreement between Conopco, Inc. and Jean Philippe
Fragrances, Inc. dated May 31, 1994, listed as no. 10.52 therein.
The following document heretofore filed with the Commission is
incorporated herein by reference to the Company's Current Report on Form 8-K
(date of event - July 15, 1994), as follows:
Exhibit No. and Description
10.57 Revolving Credit Agreement dated July 15, 1994 among Republic National
Bank of New York, Jean Philippe Fragrances, Inc. and Elite Parfums, Ltd.,
listed as no. 10.54 therein.
The following documents heretofore filed with the Commission are
incorporated herein by reference to the Company's Form 8 Amendment no. 1 (dated
August 8, 1994) to the Current Report on Form 8-K (date of event - July 13,
1994), as follows:
Exhibit No. and Description
10.58. Engagements de Garanties among Zanimob Enterprise Limited, Jacomo
France and Inter Parfums, S.A. dated July 12, 1994, listed as no. 10.53 therein.
10.58.1 English translation of exhibit no. 10.53, Engagements de Garanties
among Zanimob Enterprise Limited, Jacomo France and Inter Parfums, S.A.
dated July 12, 1994, listed as no. 10.53.1 therein.
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994:
4.15 1994 Nonemployee Director Supplemental Stock Option Plan
10.59 Modification of Lease Agreement dated June 17, 1994 between Metropolitan
Life Insurance Company and Jean Philippe Fragrances, Inc.
_______________________
2Filed in excised form as confidential treatment has been
granted for certain provisions thereof.
The following exhibits are filed herewith:
Exhibit No. and Description
10.60 Guaranty and Security Agreement of Jean Philippe Fragrances, Inc.
and Elite Parfums, Ltd. to Republic National Bank of New York (France)
dated July 19, 1995
10.61 Lease for 60 Stults Road, South Brunswick, NJ between Forsgate
Industrial Complex, a limited partnership, and Jean Philippe Fragrances,
Inc. dated July 10, 1995
10.62 Intellectual Property Purchase Agreement between Parlux Fragrances,
Inc. and Parfums Jean Desprez, S.A. dated March 12, 1996
10.63 Inventory Purchase Agreement between Parlux Fragrances, Inc. and
Jean Desprez, S.A. dated March 12, 1996
11 Statement re: Computation of Earnings Per Share
21 List of Subsidiaries
(b) Reports on Form 8-K:
No Current Reports on Form 8-K were filed during the fourth quarter
of Fiscal 1995.
Richard A. Eisner & Company, LLP
Accountants and Consultants
REPORT OF INDEPENDENT AUDITORS
Board of Directors and Shareholders
Jean Philippe Fragrances, Inc.
New York, New York
We have audited the accompanying consolidated balance sheets of Jean
Philippe Fragrances, Inc. and subsidiaries as at December 31, 1995 and December
31, 1994, and the related consolidated statements of income, changes in
shareholders' equity and cash flows for each of the years in the three-year
period ended December 31, 1995. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits. We did not audit the
financial statements of Inter Parfums Holdings, S.A. and subsidiaries,
consolidated subsidiaries of the Company, which statements include total assets,
net sales and net income constituting 53%, 38% and 51% of the related
consolidated totals for 1995 and 47%, 36% and 13% for 1994 and 30%, 28% and 28%
for 1993. Those statements were audited by other auditors whose reports have
been furnished to us, and our opinion, insofar as it relates to the amounts for
Inter Parfums Holdings, S.A. and subsidiaries, is based solely on the report of
the other auditors.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, based on our audits and the report of the other auditors,
the consolidated financial statements enumerated above present fairly, in all
material respects, the consolidated financial position of Jean Philippe
Fragrances, Inc. and subsidiaries at December 31, 1995 and December 31, 1994,
and the results of their operations and their cash flows for each of the years
in the three-year period ended December 31, 1995 in conformity with generally
accepted accounting principles.
Our audits referred to above included Schedule II for each of the years in
the three-year period ended December 31, 1995. In our opinion, such schedule
presents fairly the information set forth therein in accordance with the
applicable accounting regulation of the Securities and Exchange Commission.
Richard A. Eisner & Company, LLP
New York, New York
March 19, 1996
With respect to accounts
for foreign subsidiaries
March 27, 1996
INDEPENDENT AUDITOR'S REPORT
INTER PARFUMS HOLDING AND SUBSIDIARIES
We have audited the consolidated balance sheets of Inter Parfums Holding and
subsidiaries as of December 31, 1995 and 1994 and the related consolidated
statements of income, retained earnings and cash flows for the years ended
December 31, 1995, 1994 and 1993. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of Inter Parmfums Holding and
subsidiaries as of December 31, 1995 and 1994 and the results of its operations
and its cash flows for the years ended December 31, 1995, 1994 and 1993, in
conformity with generally accepted accounting principles.
CABINET CAUVIN, ANGLEYS, SAINT-PIERRE INTERNATIONAL
Paris, France
March 27, 1996
JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands except share and per share data)
December 31,
-------------------
A S S E T S 1995 1994
----------- ------- -------
Current assets:
Cash and cash equivalents. . . . . . . . . . . . . $14,204 $ 5,275
Accounts receivable, net of allowances of $4,208
and $2,823 in 1995 and 1994, respectively
(Note F) . . . . . . . . . . . . . . . . . . . . 22,884 19,876
Inventories (Notes A and C). . . . . . . . . . . . 26,093 24,641
Receivables, other . . . . . . . . . . . . . . . . 970 1,936
Other. . . . . . . . . . . . . . . . . . . . . . . 987 1,786
Deferred tax benefit (Note K). . . . . . . . . . . 2,401 992
-------- -------
Total current assets. . . . . . . . . . . . 67,539 54,506
Equipment and leasehold improvements, net
(Notes A and D). . . . . . . . . . . . . . . . . . 1,970 1,202
Other assets. . . . . . . . . . . . . . . . . . . . . 1,314 584
Deferred tax benefit (Note K) . . . . . . . . . . . . 582 732
Trademarks and licenses, net (Notes A and E). . . . . 12,596 12,427
-------- -------
T O T A L . . . . . . . . . . . . . . . . . $84,001 $69,451
======== =======
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
Current liabilities:
Loans payable, banks (Note F). . . . . . . . . . . $ 9,922 $ 6,681
Current portion of long-term debt. . . . . . . . . 187
Accounts payable . . . . . . . . . . . . . . . . . 15,012 14,647
Income taxes payable . . . . . . . . . . . . . . . 1,242 1,765
-------- -------
Total current liabilities . . . . . . . . . 26,176 23,280
-------- -------
Long-term debt, less current portion (Note G) . . . . 596 862
-------- -------
Minority interest . . . . . . . . . . . . . . . . . . 5,253 796
-------- -------
Commitments (Note H)
Shareholders' equity (Note I):
Preferred stock, $.001 par value; authorized
1,000,000 shares; none issued
Common stock, $.001 par value; authorized
30,000,000 shares; outstanding 10,009,981
and 10,242,786 shares in 1995 and 1994,
respectively . . . . . . . . . . . . . . . . . . 10 10
Additional paid-in capital . . . . . . . . . . . . 20,610 20,408
Retained earnings. . . . . . . . . . . . . . . . . 32,565 23,527
Foreign currency translation adjustment. . . . . . 1,681 568
Treasury stock, at cost 810,503 and 486,198
shares in 1995 and 1994, respectively. . . . . . (2,890)
-------- -------
Total shareholders' equity. . . . . . . . . 51,976 44,513
-------- -------
T O T A L . . . . . . . . . . . . . . . . . $84,001 $69,451
======== =======
The accompanying notes are an integral part of
these financial statements.
JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands except share and per share data)
Year Ended December 31,
---------------------------------------
1995 1994 1993
-------- ------- -------
Net sales . . . . . . . . . . . . $93,669 $75,079 $59,546
Cost of sales . . . . . . . . . . 48,703 39,036 32,964
-------- -------- -------
Gross margin. . . . . . . . . . . 44,966 36,043 26,582
Selling, general and
administrative . . . . . . . . 32,990 23,773 15,814
Loss on product discontinuance. . 2,229
-------- -------- -------
Income from operations. . . . . . 9,747 12,270 10,768
-------- -------- -------
Other charges (income):
Interest . . . . . . . . . . . 1,148 803 619
(Gain) loss on foreign
currency . . . . . . . . . . (197) 161 (178)
Interest (income). . . . . . . (274) (152) (269)
(Gain) on sale of stock of
subsidiary . . . . . . . . . (3,310) (221) (644)
-------- -------- --------
(2,633) 591 (472)
-------- -------- --------
Income before income taxes. . . . 12,380 11,679 11,240
Income taxes. . . . . . . . . . . 3,188 4,330 4,137
-------- -------- -------
Income before minority interest . 9,192 7,349 7,103
Minority interest in net income
of consolidated subsidiary . . 154 74 4
-------- -------- -------
NET INCOME. . . . . . . . . . . . $ 9,038 $ 7,275 $ 7,099
======== ======== =======
Net income per share. . . . . . . $0.87 $0.70 $0.70
====== ====== =====
Weighted average number of common
and common equivalent shares
outstanding. . . . . . . . . . 10,438,896 10,454,555 10,132,628
=========== =========== ==========
The accompanying notes are an integral part of
these financial statements.
JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(in thousands except share and per share data)
<TABLE>
<CAPTION>
Common Stock Additional
-------------------- Paid-in Retained Translation Treasury
Shares Amount Capital Earnings Adjustments Stock Total
---------- -------- --------- -------- ----------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C>
Balance - January 1, 1993. . . . . . . . . . . . . . . 9,206,201 $ 9 $ 9,365 $ 9,154 $ (40) $18,488
Issuance of common stock . . . . . . . . . . . . . . . 550,000 1 7,630 7,631
Shares issued upon exercise of stock options and
warrants. . . . . . . . . 165,750 649 649
Tax benefit from exercise of stock options . . . . . . 285 285
Net income . . . . . . . . . . . . . . . . . . . . . . 7,099 7,099
Translation adjustments. . . . . . . . . . . . . . . . (378) (378)
---------- -------- --------- -------- ----------- ------- -------
Balance - December 31, 1993. . . . . . . . . . . . . . 9,921,951 10 17,929 16,253 (418) 33,774
Issuance of common stock for acquisition . . . . . . . 200,000 2,200 2,200
Shares issued upon exercise of stock options and
warrants. . . . . . . . . 121,835 279 279
Net income . . . . . . . . . . . . . . . . . . . . . . 7,274 7,274
Translation adjustments. . . . . . . . . . . . . . . . 986 986
---------- -------- --------- -------- ----------- ------- -------
Balance - December 31, 1994. . . . . . . . . . . . . . 10,243,786 10 20,408 23,527 568 44,513
Shares issued upon exercise of stock options . . . . . 91,500 202 202
Net income . . . . . . . . . . . . . . . . . . . . . . 9,038 9,038
Translation adjustments. . . . . . . . . . . . . . . . 1,113 1,113
Purchased treasury shares. . . . . . . . . . . . . . . (324,305) $(2,890) (2,890)
---------- -------- --------- -------- ----------- ------- -------
BALANCE - DECEMBER 31, 1995. . . . . . . . . . . . . . 10,010,981 $10 $20,610 $32,565 $1,681 $(2,890) $51,976
========== ======== ========= ======== =========== ======= =======
</TABLE>
The accompanying notes are an integral part of
these financial statements.
JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands except share and per share data)
<TABLE>
<CAPTION>
Year Ended December 31,
------------------------------
1995 1994 1993
-------- -------- --------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . $ 9,038 $ 7,275 $ 7,099
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Depreciation and amortization. . . . . . . . . . 1,322 879 412
Gain on sale of stock of subsidiary. . . . . . . (3,311) (221) (644)
Minority interest in net income. . . . . . . . . 158 74 4
Increase (decrease) in cash from changes in:
Accounts receivable. . . . . . . . . . . . . . (2,609) (1,493) (6,500)
Inventories. . . . . . . . . . . . . . . . . . (1,043) (6,118) (5,569)
Other assets . . . . . . . . . . . . . . . . . 1,102 (3,085) 131
Deferred tax benefit . . . . . . . . . . . . . (1,223) (216)
Accounts payable . . . . . . . . . . . . . . . (75) 4,824 436
Income taxes payable . . . . . . . . . . . . . (523) 141 1,568
-------- -------- --------
Net cash provided by (used in)
operating activities . . . . . . . . . . . 2,836 2,060 (3,063)
-------- -------- --------
Cash flows from investing activities:
Purchase of equipment and leasehold improvements . . (1,244) (714) (453)
Cash portion of trademark and license acquisitions . (135) (9,144) (1,759)
Loan to officer. . . . . . . . . . . . . . . . . . . (99)
Repayment of officer loans . . . . . . . . . . . . . 315
-------- -------- --------
Net cash (used in) investing activities. . . (1,379) (9,858) (1,996)
-------- -------- --------
Cash flows from financing activities:
Increase in loan payable - bank. . . . . . . . . . . 3,085 2,173 165
Proceeds from issuance of long-term debt . . . . . . 722 708
Repayment of long-term debt. . . . . . . . . . . . . (499) (181) (111)
Proceeds from issuance of common stock . . . . . . . 7,631
Proceeds from sale of stock of subsidiary. . . . . . 7,579 194 1,157
Purchase of treasury stock . . . . . . . . . . . . . (2,890)
Proceeds from exercise of options and warrants . . . 202 279 649
-------- -------- --------
Net cash provided by financing activities. . 7,477 3,187 10,199
-------- -------- --------
Effect of exchange rate changes in cash . . . . . . . . (5) (34) (15)
-------- -------- --------
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS. . 8,929 (4,645) 5,125
Cash and cash equivalents - beginning of year . . . . . 5,275 9,920 4,795
-------- -------- --------
CASH AND CASH EQUIVALENTS - END OF YEAR . . . . . . . . $14,204 $ 5,275 $ 9,920
======== ======== ========
Supplemental disclosures of cash flow information:
Cash paid for:
Interest . . . . . . . . . . . . . . . . . . . . . $ 1,146 $ 791 $ 635
Income taxes . . . . . . . . . . . . . . . . . . . 4,968 4,781 2,720
</TABLE>
The accompanying notes are an integral part
of these financial statements.
JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(in thousands except share and per share data)
(NOTE A) - The Company and its Significant Accounting Policies:
[1] Business of the Company:
The Company is a manufacturer and distributor of domestic and
international brand name and licensed fragrances, alternative designer
fragrances and mass market cosmetics.
[2] Basis of preparation:
The consolidated financial statements include the accounts of Jean
Philippe Fragrances, Inc. ("JPF") and its domestic and foreign subsidiaries (the
"Company"). All material intercompany balances and transactions have been
eliminated.
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of revenues and
expenses during the reporting period. Actual results could differ from those
estimates.
[3] Foreign currency translation:
For foreign subsidiaries that operate in a foreign currency, assets
and liabilities are translated to U.S. dollars at year-end exchange rates.
Income and expense items are translated at average rates of exchange prevailing
during the year. Gains and losses from translation adjustments are accumulated
in a separate component of shareholders' equity. In instances where the
financial statements of foreign entities are remeasured into their functional
currency (U.S. dollars), the remeasurement adjustment is recorded in operations.
[4] Cash equivalents:
All highly liquid investments purchased with a maturity of three
months or less are considered to be cash equivalents.
[5] Inventories:
Inventories are stated at the lower of cost (first-in, first-out) or
market.
[6] Equipment and leasehold improvements:
Equipment and leasehold improvements are stated at cost. Depreciation
and amortization are provided using the straight-line method and the declining
balance method over the estimated useful asset lives for equipment and the
shorter of the lease term or estimated useful asset lives for leasehold
improvements.
(continued)
JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(in thousands except share and per share data)
(NOTE A) - The Company and its Significant Accounting Policies:
(continued)
[7] Trademarks and licenses:
Trademarks are stated at cost and are amortized by the straight-line
method over twenty years. The cost of licenses acquired is being amortized by
the straight-line method over the term of the license, approximately seven to
ten years.
The Company reviews trademarks and licenses for impairment whenever
events or changes in circumstances indicate that the carrying amount may not be
recoverable.
[8] Revenue recognition:
Revenue is recognized upon shipment of merchandise. Allowances are
established for estimated returns.
[9] Issuance of common stock of subsidiary:
The Company's share of the proceeds in excess of the carrying amount
of the portion of the Company's investment sold is reflected as a gain in the
consolidated income statement.
[10] Per share data:
Net income per share is based on the weighted average number of
common and common equivalent shares outstanding during each year. Common
equivalent shares, which consist of unissued shares under options and warrants,
are included in the computation when the results are dilutive.
(NOTE B) - Loss on Product Discontinuance:
As a result of disppointing sales of the Cutex lip color line, the Company
decided to discontinue prodcution of the line in October 1995. As a result, the
Company has taken a nonrecurring charge aggregating $2.2 million, before taxes,
in the fourth quarter of 1995. This charge represents a writedown of current lip
product inventory and the effect of potential customer returns or markdowns of
lip products expected in 1996. The discontinued lip color line did not
contribute to net sales in 1995 as customer returns exceeded new product
shipments.
JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(in thousands except share and per share data)
(NOTE B) - Loss on Product Discontinuance: (continued)
As a result of this issue, among others, relating to the Cutex product
lines, the Company and the licensor have agreed to a reduction of the minimum
royalties payable under the Cutex license. The Company believes that such
relief, along with the discontinuance of the lip color line, will enable the
Company to direct all Cutex marketing efforts and resources to building upon the
core nail care business for which Cutex is famous.
(NOTE C) - Inventories:
December 31,
-------------------
1995 1994
------- -------
Raw materials and component
parts. . . . . . . . . . . . . $10,982 $10,537
Finished goods. . . . . . . . . . 15,111 14,104
------- -------
T o t a l . . . . . . . $26,093 $24,641
(NOTE D) - Equipment and Leasehold Improvements:
December 31,
-------------------
1995 1994
------- -------
Equipment . . . . . . . . . . . . $3,308 $ 2,275
Leasehold improvements. . . . . . 727 405
------- -------
4,035 2,680
Less accumulated depreciation
and amortization . . . . . . . 2,065 1,478
------- -------
T o t a l . . . . . . . $1,970 $ 1,202
======= =======
(NOTE E) - Trademarks and Licenses:
December 31,
-------------------
1995 1994
------- -------
Trademarks. . . . . . . . . . . . $11,015 $10,032
Licenses. . . . . . . . . . . . . 3,246 3,008
------- -------
14,261 13,040
Less accumulated amortization . . 1,665 613
------- -------
T o t a l . . . . . . . $12,596 $12,427
======= =======
(continued)
JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(in thousands except share and per share data)
(NOTE F) - Loans Payable - Banks:
December 31,
-------------------
1995 1994
------- -------
Borrowings under a $12,000 unsecured
revolving line of credit. Principal is
due on demand bearing interest at the
bank's prime rate or 1.75% above the
LIBOR rate. . . . . . . . . . . . . . . . $ 2,600 $ 3,000
Borrowings by the Company's foreign
subsidiaries under a $4,000 credit
facility whereby accounts receivable are
sold with recourse and accounted for as
a loan and bearing interest at 0.8%
above the PIBOR rate (5.5% at
December 31, 1995). . . . . . . . . . . . 2,530 996
Borrowings by the Company's foreign
subsidiaries under several bank
overdraft facilities bearing interest
at 1.0% above the PIBOR rate. . . . . . . 4,792 1,374
Other borrowings by the Company's
foreign subsidiaries. . . . . . . . . . . 1,311
------- -------
T o t a l. . . . . . . . . . . . . $ 9,922 $ 6,681
======= =======
(NOTE G) - Long-Term Debt:
Borrowings by the Company's foreign subsidiary of $596 is due in 2004, or
the loan may be converted into shares of the Company's foreign subsidiary at
approximately $15 per share. Interest is payable quarterly at 7% per annum.
(continued)
JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(in thousands except share and per share data)
(NOTE H) - Commitments:
[1] Leases:
The Company leases its office and warehouse facilities under operating
leases expiring through 2003. Rental expense amounted to $730 in 1995, $442 in
1994 and $362 in 1993. Minimum future rental payments are as follows:
1996. . . . . . . . . . . . $1,307
1997. . . . . . . . . . . . 1,180
1998. . . . . . . . . . . . 1,127
1999. . . . . . . . . . . . 684
2000. . . . . . . . . . . . 684
Thereafter. . . . . . . . . 1,926
------
T o t a l . . . . $6,908
======
[2] License agreements:
In January 1990, the Company entered into a license agreement with
Jordache Enterprises, Inc. ("Jordache"). In connection therewith, the Company
acquired the exclusive license to use the Jordache trademark in connection with
fragrances and cosmetics in the United States and various territories abroad.
The license, which expired June 30, 1995, permits ten annual renewals at the
Company's option, subject to certain minimum sales requirements and royalty
payments. The Company has exercised its option to renew for the year ended June
30, 1996.
On July 15, 1993, the Company entered into a license agreement with
Burberrys Limited. In connection therewith, the Company obtained the exclusive
world-wide rights for the manufacturing and distribution of Burberrys'
fragrances. The license agreement expires December 31, 2003, subject to certain
minimum sales requirements and royalty payments.
On July 16, 1993, the Company entered into an exclusive, ten-year,
world-wide license with Jean Charles Brosseau S.A. for Ombre Rose fragrances,
subject to certain minimum sales requirements and royalty payments.
On May 31, 1994 the Company entered into a license agreement with
Chesebrough-Pond's USA for the United States and Puerto Rican rights to
manufacture and market Cutex nail care and lip color products, excluding nail
polish remover. The license is for a term of ten years, including renewal
periods, and is subject to certain minimum sales and royalty payments.
(continued)
JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(in thousands except share and per share data)
(NOTE H) - Commitments:
[2] License agreements: (continued)
Minimum future royalty payments due pursuant to license agreements
are as follows:
1996. . . . . . . . . . . . $ 2,166
1997. . . . . . . . . . . . 2,156
1998. . . . . . . . . . . . 2,077
1999. . . . . . . . . . . . 2,122
2000. . . . . . . . . . . . 2,192
Thereafter. . . . . . . . . 3,590
-------
T o t a l . . . . $14,303
=======
(NOTE I) - Shareholders' Equity:
[1] Issuance of common stock of subsidiary:
In December 1993, Inter Parfums, S.A., a consolidated subsidiary of the
Company, sold 100,000 shares of its common stock at 70 French francs per share
aggregating 7 million French francs or approximately $1.2 million. The shares
were sold in a private placement transaction to unaffiliated French
institutional investors.
In 1994, 10,000 shares were sold to enable the stock of Inter Parfums,
S.A. to commence trading on the over-the-counter Paris Stock Exchange, and
11,536 shares were issued pursuant to the conversion terms of the Company's
long-term debt.
In November 1995, Inter Parfums, S.A. completed a public offering of
308,000 shares of its common stock at 130 French francs per share. Net proceeds
of such offering aggregated 36.5 million French francs or approximately $7.6
million. In connection with such offering, Inter Parfums Holdings, S.A.
("Holdings"), a wholly-owned subsidiary of the Company and direct parent of
Inter Parfums, S.A. exercised its right to convert a portion of its convertible
debt into 250,000 shares of capital stock of Inter Parfums, S.A. at 80 French
francs per share. As a result of such issuances in 1995, the percentage
ownership of Inter Parfums, S.A. was reduced from 90.64% to 76.72%.
The Company's share of the offering, sale or conversion proceeds in
excess of the carrying amount of the portion of the Company's investment sold is
reflected as a gain in the consolidated income statement. Deferred taxes have
not been provided because application of available tax savings strategies would
eliminate taxes on this transaction.
(continued)
JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(in thousands except share and per share data)
(NOTE I) - Shareholders' Equity: (continued)
[2] Stock option plans:
The Company maintains a stock option program for key employees and
executives and a separate program for nonemployee directors. The plans provide
for the granting of both nonqualified and incentive options. Options granted
under the plans are exercisable for a period of up to ten years from the date of
grant.
A summary of option transactions during the year ended December 31,
1995 is presented below:
Incentive Nonqualified
Stock Options Stock Options
Shares under option - beginning ------------- -------------
of year. . . . . . . . . . . 31,500 1,248,974
Options granted . . . . . . . . 313,150
Options exercised at prices
ranging from $3.83 to $7.75. (6,000) (10,500)
Options cancelled . . . . . . . (35,250)
------ ---------
Shares under option - end of
year (1) . . . . . . . . . . 25,500 1,516,374
====== =========
Exercise price. . . . . . . . . $3.83 to $4.22 $6.67 to $12.00
============== ===============
Options available for grant . . 162,600 177,100
======= =======
(1) All of which are exercisable.
In addition, the Company has outstanding options not pursuant to any
plan. Options for 75,000 shares were exercised during 1995 at $1.33 per share
and 1,000 remain outstanding at an exercise price of $12.00.
(continued)
JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(in thousands except share and per share data)
(NOTE J) - Geographic Areas:
Information on the Company's operations by geographical areas is as
follows:
Year Ended December 31,
------------------------------------
1995 1994 1993
-------- -------- --------
Net sales:
United States. . $ 57,382 $ 48,377 $ 43,103
Europe . . . . . 38,451 30,672 20,661
South America. . 693
Eliminations . . (2,857) (3,970) (4,218)
-------- -------- --------
T o t a l. . . $ 93,669 $ 75,079 $ 59,546
======== ======== ========
Net income:
United States. . $ 4,256 $ 6,297 $ 5,139
Europe . . . . . 4,619 1,295 1,960
South America. . 107
Eliminations . . 56 (317)
-------- -------- --------
T o t a l. . . $ 9,038 $ 7,275 $ 7,099
======== ======== ========
Total assets:
United States. . $ 50,767 $ 49,625 $ 37,362
Europe . . . . . 44,522 32,518 15,134
South America. . 900
Eliminations . . (12,188) (12,692) (2,587)
-------- -------- --------
T o t a l. . . $ 84,001 $ 69,451 $ 49,909
======== ======== ========
United States export sales were approximately $6,400, $5,700 and $5,100 for
the years ended December 31, 1995, 1994 and 1993, respectively.
(NOTE K) - Income Taxes:
The components of income before income taxes consist of the following:
Year Ended December 31,
------------------------------------
1995 1994 1993
-------- -------- --------
U.S. operations . . $ 6,802 $ 10,244 $ 8,480
Foreign operations. 5,483 1,951 2,760
Eliminations. . . . 95 (516)
-------- -------- --------
T o t a l. . . $ 12,380 $ 11,679 $ 11,240
======== ======== ========
(continued)
JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(in thousands except share and per share data)
(NOTE K) - Income Taxes: (continued)
The provision for current and deferred income tax expense consists of the
following:
Year Ended December 31,
------------------------------------
1995 1994 1993
-------- -------- --------
Current:
Federal . . . . . $2,627 $3,434 $2,762
State and local . 618 919 746
Foreign . . . . . 316 180 915
------ ------ ------
T o t a l . . . $3,561 $4,533 $4,423
====== ====== ======
Deferred:
Federal . . . . . $ (555) $ (338) $ (175)
State and local . (143) (69) 8
Foreign . . . . . 325 204 (119)
------ ------ ------
T o t a l . . . . $ (373) $ (203) $ (286)
====== ====== ======
Deferred taxes are provided principally for valuation reserves, and certain
other expenses that are recognized in different years for financial reporting
and income tax purposes. At December 31, 1995, the deferred tax assets consists
of approximately $2,400 relating to reserves and other expenses which are not
currently deductible for tax purposes and approximately $581 relating to
available foreign net operating loss carryforwards.
Differences between the United States federal statutory income tax rate and
the effective income tax rate were as follows:
Year Ended
December 31,
---------------------
1995 1994 1993
----- ----- -----
Statutory rates. . . . . . . . 34.0% 34.0% 34.0%
State and local taxes, net of
federal benefit . . . . . . 2.5 4.8 4.4
Nontaxable gain on sale of
stock of subsidiary . . . . (9.2)
Other. . . . . . . . . . . . . (1.6) (1.7) (1.6)
----- ----- -----
Effective rates. . . . . . . . 25.7% 37.1% 36.8%
===== ===== =====
(continued)
JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES
NOTES TO FINANCIAL STATEMENTS
(in thousands except share and per share data)
(NOTE L) - Subsequent Event:
On March 19, 1996, the Company sold the trademarks of the Bal `a Versailles
and Revolution' a Versailles lines. The aggregate sales price was $4.95 million
which includes $1.8 million of inventory at cost.
(continued)
SCHEDULE II
JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES
VALUATION AND QUALIFYING ACCOUNTS AND RESERVES
(in thousands)
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Additions
--------------------------
(1) (2)
Balance --------------------------
at Charged to Balance
beginning Charged to other at
of costs and accounts - Deductions - end of
Description period expenses describe (A) describe (B) period
----------- ------ -------- ------------ ------------ ------
<S> <C> <C> <C> <C> <C>
Year ended December 31, 1995:
Allowances for sales returns and doubtful
accounts . . . . . . . . . . . . . . . $2,823 $1,546 $160 (a) $4,208
====== ====== ===== ======
Year ended December 31, 1994:
Allowances for sales returns and doubtful
accounts . . . . . . . . . . . . . . . $1,202 $2,150 $529 (a) $2,823
====== ====== ===== ======
Year ended December 31, 1993:
Allowances for sales returns and doubtful
accounts . . . . . . . . . . . . . . . $1,086 $ 716 $600 (a) $1,201
====== ====== ===== ======
</TABLE>
(a) Write off of bad debts and sales returns.
The accompanying notes are an integral part of these financial statements.
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
JEAN PHILIPPE FRAGRANCES, INC.
By: /s/ Philippe Benacin
--------------------
Philippe Benacin, President
Date: March 27, 1996
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
Registrant and in the capacities and on the dates indicated:
Signature Title Date
/s/ Jean Madar
- --------------
Jean Madar Chairman of the March 26, 1996
Board of Directors
/s/ Philippe Benacin
- --------------------
Philippe Benacin Chief Executive Officer March 27, 1996
and Director
/s/ Russell Greenberg
- --------------------- Chief Financial and March 26, 1996
Russell Greenberg Accounting Officer and
Director
/s/ Francois Heilbronn
- ---------------------- Director March 27, 1996
Francois Heilbronn
/s/ Joseph A. Caccamo
- --------------------- Director March 26, 1996
Joseph A. Caccamo
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
EXHIBIT INDEX TO
REPORT ON FORM 10-K
(Mark one)
/X/ Annual Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the fiscal year ended December 31, 1995 or
/ / Transition Report pursuant to Section 13 or 15(d) of the Securities
Exchange Act of 1934 for the transition period from _______ to ______.
Commission File No. 0-16469
JEAN PHILIPPE FRAGRANCES, INC.
(Exact name of registrant as specified in its charter)
Delaware 13-3275609
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
551 Fifth Avenue, New York, New York 10176
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code: (212) 983-2640.
------------------------------------------------------------
The following documents heretofore filed by the Company with the Securities
and Exchange Commission (the "Commission") are hereby incorporated by reference
from the Company's Registration Statement on Form S-18, file no. 33-17139-NY:
Exhibit No. and Description
3.1 Restated Certificate of Incorporation
4.2 Common Stock Certificate Specimen
4.4 1987 Stock Option Plan
The following document heretofore filed with the Commission is incorporated
by reference to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1987:
Exhibit No. and Description
3.2 By-laws, as amended
The following documents heretofore filed with the Commission are
incorporated herein by reference to the Company's Current Report on Form 8-K
(date of event - January 18, 1990), as follows:
Exhibit No. and Description
10.13 License Agreement between the Company and Jordache dated
January 18, 1990 (as no. 10.1 therein).
10.15 Letter of Indemnification from Jordache to the Company
dated January 18, 1990 (as no. 10.3 therein)
10.16 Letter Agreement from Jordache to the Company regarding
foreign license rights dated January 18, 1990 (as no. 10.4
therein).
The following documents heretofore filed with the Commission is
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1990:
Exhibit No. and Description
3.1(a) Certificate of Amendment of the Restated Certificate of Incorporation
10.20 Stock Option Agreement between the Company and Philippe Benacin dated
August 31, 1990.
The following document heretofore filed with the Commission is incorporated
herein by reference to the Company's Current Report on Form 8-K (date of
event - July 29, 1991), as follows:
Exhibit No. and Description
10.24 Agreement and Plan or Reorganization dated July 29, 1991 among the
Company, Jean Madar and Philippe Benacin (as No. 10.1 therein)
The following document heretofore filed with the Commission is incorporated
by reference to the Company's Annual Report on Form 10-K for the fiscal year
ended December 31, 1991:
Exhibit No. and Description
10.25 Employment Agreement between the Company and Philippe Benacin dated
July 29, 1991
The following documents heretofore filed with the Commission is
incorporated by reference to the Company's Registration Statement on Form S-1
(No. 33-48811):
Exhibit No. and Description
10.26 Lease for portion of 15th Floor, 551 Fifth Avenue, New York, New York
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1992:
Exhibit No. and Description
3.1(b) Amendment to the Company's Restated Certificate of Incorporation, as
amended, dated July 31, 1992
4.9 1992 Stock Option Plan
4.10 Amendment to 1992 Stock Option Plan
4.11 1993 Stock Option Plan
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Registration Statement on Form S-3
(No. 33-63330):
Exhibit No. and Description
4.12 Form of Warrant Agreement between Bear, Stearns & Co. Inc. and
Jean Philippe Fragrances, Inc.
10.29 Form of Purchase Agreement
The following documents heretofore filed with the Commission are
incorporated herein by reference to the Company's Current Report on Form 8-K
(date of event - July 15, 1993), as follows:
Exhibit No. and Description
10.30 License Agreement dated July 15, 1993, among Burberrys Limited, Inter
Parfums, S.A. and Jean Philippe Fragrances, Inc.1
10.31 License Agreement dated May 7, 1993, between Jean-Charles Brosseau,
S.A. and Inter Parfums, S.A. (original in French)1
10.32 License Agreement dated May 7, 1993, between Jean-Charles Brosseau,
S.A. and Inter Parfums, S.A.(translation of French into English)1
10.33 Agreement dated July 14, 1993, between Alfin, Inc. and Inter Parfums,
S.A.1
10.34 Agreement dated July 16, 1993 among Inter Parfums, S.A., Jean Philippe
Fragrances, Inc., C&C Beauty Sales, Inc. and Parfico, Inc.
10.35 Distribution Agreement dated July 16, 1993 among Inter Parfums, S.A.,
Jean Philippe Fragrances, Inc. and Fragrance Marketing Group, Inc.(1)
The following documents heretofore filed with the Commission are
incorporated herein by reference to the Company's Current Report on Form 8-K
(date of event - February 28, 1994), as follows:
- --------
1 Filed in excised form, as confidentiality is being sought for certain portions
thereof.
Exhibit No. and Description
10.36 Cession D'Elements Partiels de Fonds de Commerce between Inter Parfums,
S.A. and Cosmetiques et Parfums de France-I.D., S.A. dated February 18, 1994
(re: Parfums Molyneux)
10.37 Cession D'Elements Partiels de Fonds de Commerce between Inter Parfums,
S.A. and Cosmetiques et Parfums de France-I.D., S.A. dated February 18, 1994
(re: Parfums Weil)
10.38 Agreement (Acquisition) among Jean Philippe Fragrances, Inc., Inter
Parfums, S.A. and Cosmetiques et Parfums de France, S.A. dated February 18, 1994
10.39 Noncompetition Agreement among Jean Philippe Fragrances, Inc., Inter
Parfums, S.A. and Cosmetiques et Parfums de France-I.D., S.A. dated
February 18, 1994
10.40 Commission Agreement among Jean Philippe Fragrances, Inc., Inter
Parfums, S.A. and Sodipe S.A. dated February 18, 1994
10.41 Convention between Inter Parfums, S.A. and Cosmetiques et Parfums de
France-I.D., S.A. dated February 18, 1994 (re inventory purchase)
10.42 Convention de Nantissement among Cosmetiques et Parfums de France,
S.A., Cosmetiques et Parfums de France-I.D., S.A., Sodipe S.A., Jean Philippe
Fragrances, Inc. and Inter Parfums, S.A. dated February 18, 1994 (re security
agreement)
10.43 Convention among Cosmetiques et Parfums de France-I.D., S.A.,
Cosmetiques et Parfums de France, S.A., Jean Philippe Fragrances, Inc. and
Inter Parfums, S.A. and Sodipe S.A. dated February 18, 1994 (re French
regulatory requirements)
10.44 Acquisition Agreement among Jean Philippe Fragrances, Inc., Revlon
Consumer Products Corporation and Revlon Suisse, S.A. dated March 2, 1994
10.45 License Agreement among Jean Philippe Fragrances, Inc., Revlon Consumer
Products Corporation and Revlon Suisse, S.A. dated March 2, 1994
The following documents heretofore filed with the Commission are
incorporated herein by reference to the Company's Form 8 Amendment no. 1 (dated
March 14, 1994) to the Current Report on Form 8-K (date of event - February 28,
1994), as follows:
Exhibit No. and Description
10.46. English translation of exhibit no. 10.36, Cession D'Elements Partiels
de Fonds de Commerce between Inter Parfums, S.A. and Cosmetiques et Parfums de
France-I.D., S.A. dated February 18, 1994 (re: Parfums Molyneux)
10.47. English translation of exhibit no. 10.37, Cession D'Elements Partiels
de Fonds de Commerce between Inter Parfums, S.A. and Cosmetiques et Parfums
de France-I.D., S.A. dated February 18, 1994 (re: Parfums Weil)
10.48. English translation of exhibit no. 10.41, Convention between Inter
Parfums, S.A. and Cosmetiques et Parfums de France-I.D., S.A. dated
February 18, 1994 (re inventory purchase)
10.49. English translation of exhibit no. 10.42, Convention de Nantissement
among Cosmetiques et Parfums de France, S.A., Cosmetiques et Parfums de
France-I.D., S.A., Sodipe S.A., Jean Philippe Fragrances, Inc. and Inter
Parfums, S.A. dated February 18, 1994 (re security agreement)
The following document heretofore filed with the Commission is incorporated
herein by reference to the Company's Form 8 Amendment no. 2 (dated March 21,
1994) to the Current Report on Form 8-K (date of event - February 28, 1994), as
follows:
Exhibit No. and Description
10.50. English translation of exhibit no. 10.43, Convention among Cosmetiques
et Parfums de France-I.D., S.A., Cosmetiques et Parfums de France, S.A.,
Jean Philippe Fragrances, Inc. and Inter Parfums, S.A. and Sodipe S.A. dated
February 18, 1994 (re French regulatory requirements)
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1993:
Exhibit No. and Description
3.1(c) Amendment to the Company's Restated Certificate of Incorporation, as
amended, dated July 9, 1993
3.3 Articles of Incorporation of Inter Parfums Holding, S.A.
3.3.1 English Translation of Exhibit no. 3.3, Articles of Incorporation of
Inter Parfums Holding, S.A.
3.4 Articles of Incorporation of Inter Parfums, S.A.
3.4.1 English Translation of Exhibit no. 3.4, Articles of Incorporation of
Inter Parfums, S.A.
4.14 Warrant no. 108 registered in the name of Ladenburg, Thalmann & Co., Inc.
dated February 2, 1994
4.15 1994 Nonemployee Director Stock Option Plan
10.51 Traite D'Apport Partiel D'Actif dated July 30, 1993 (Reorganization
Agreement between Inter Parfums, S.A. and Selective Industrie, S.A.)
10.51.1 English translation of Exhibit no. 10.51, Traite D'Apport Partiel
D'Actif dated July 30, 1993 (Reorganization Agreement between Inter Parfums,
S.A. and Selective Industrie, S.A.)
10.52 Lease for portion of 4, Rond Point Des Champs Des Elysees dated
September 30, 1993
10.52.1 English translation of Exhibit no. 10.52, Lease for portion of 4,
Rond Point Des Champs Des Elysees dated September 30, 1993
10.53 Lease for portion of 4, Rond Point Des Champs Des Elysees dated
March 2, 1994
10.53.1 English translation of Exhibit no. 10.53, Lease for portion of 4,
Rond Point Des Champs Des Elysees dated March 2, 1994
The following document heretofore filed with the Commission is incorporated
herein by reference to the Company's Current Report on Form 8-K (date of
event - May 31, 1994), as follows:
Exhibit No. and Description
10.55 License Agreement between Chesebrough-Pond's, Inc. and Jean Philippe
Fragrances, Inc. dated May 31, 1994(2), listed as no. 10.51 therein.
10.56 Asset Purchase Agreement between Conopco, Inc. and Jean Philippe
Fragrances, Inc. dated May 31, 1994, listed as no. 10.52 therein.
- ------------------
(2) Filed in excised form as confidential treatment has been granted for
certain provisions thereof.
The following document heretofore filed with the Commission is incorporated
herein by reference to the Company's Current Report on Form 8-K (date of
event - July 15, 1994), as follows:
Exhibit No. and Description
10.57 Revolving Credit Agreement dated July 15, 1994 among Republic National
Bank of New York, Jean Philippe Fragrances, Inc. and Elite Parfums, Ltd.,
listed as no. 10.54 therein.
The following documents heretofore filed with the Commission are
incorporated herein by reference to the Company's Form 8 Amendment no. 1 (dated
August 8, 1994) to the Current Report on Form 8-K (date of event - July 13,
1994), as follows:
Exhibit No. and Description
10.58. Engagements de Garanties among Zanimob Enterprise Limited, Jacomo
France and Inter Parfums, S.A. dated July 12, 1994, listed as no. 10.53
therein.
10.58.1 English translation of exhibit no. 10.53, Engagements de Garanties
among Zanimob Enterprise Limited, Jacomo France and Inter Parfums, S.A.
dated July 12, 1994, listed as no. 10.53.1 therein.
The following documents heretofore filed with the Commission are
incorporated by reference to the Company's Annual Report on Form 10-K for the
fiscal year ended December 31, 1994:
4.15 1994 Nonemployee Director Supplemental Stock Option Plan
10.59 Modification of Lease Agreement dated June 17, 1994 between
Metropolitan Life Insurance Company and Jean Philippe Fragrances, Inc.
The following exhibits are filed herewith:
Exhibit No. and Description
10.60 Guaranty and Security Agreement of Jean Philippe
Fragrances, Inc. and Elite Parfums, Ltd. to Republic
National Bank of New York (France) dated July 19, 1995
10.61 Lease for 60 Stults Road, South Brunswick, NJ between
Forsgate Industrial Complex, a limited partnership, and
Jean Philippe Fragrances, Inc. dated July 10, 1995
10.62 Intellectual Property Purchase Agreement between
Parlux Fragrances, Inc. and Parfums Jean Desprez, S.A. dated
March 12, 1996
10.63 Inventory Purchase Agreement between Parlux
Fragrances, Inc. and Jean Desprez, S.A. dated March 12, 1996
11 Statement re: Computation of Earnings Per Share
21 List of Subsidiaries
Exhibit 10.60
GUARANTY
AND SECURITY AGREEMENT
Date: July 19, 1995
SECTION 1. Definitions. The following terms have the following meanings unless
otherwise specified herein:
"Bank" means Republic National Bank of New York (France), a bank formed under
the laws of France, and its successors and assigns, and any Person acting as
agent or nominee for Republic National Bank of New York (France), and any
corporation the stock of which is owned or controlled directly or indirectly by,
or is under common control with, Republic National Bank of New York (France),
and/or Republic New York Corporation, and/or Safra Republic Holdings S.A.
"Bankruptcy Code" shall mean the United States Bankruptcy Code, and any
amendments thereto (Title 11, United States Code).
+----------------------------------------------------------------------------+
|"Borrower" shall mean Inter Parfums, S.A. and Inter Parfums Holding, S.A. |
|(if more than one, "Borrower" shall mean each, any or all of them). |
+----------------------------------------------------------------------------+
"Claims" shall mean each "claim" as that term is defined under Section 101(4) of
the Bankruptcy Code.
"Collateral" shall mean all property that secures the payment of the
Obligations, and any Proceeds thereof.
"Guaranty" shall mean this Guaranty and Security Agreement.
"Guarantor" shall mean the undersigned (and if more than one, "Guarantor" shall
mean each, any and all of them, jointly and severally).
"Liabilities" shall mean any and all indebtedness, obligations (whether monetary
or non-monetary) and liabilities of Guarantor to the Bank under this Guaranty,
and all Claims thereon, including without limitations all Obligations.
"Lien" means any lien, security interest, pledge, hypothecation, or other claim
in or with respect to any Security.
"Obligations" shall mean any and all indebtedness, obligations and liabilities
of the Borrower to the Bank, and all Claims of the Bank against the Borrower,
now existing or hereafter arising, direct or indirect (including participations
or any interest of the Bank in indebtedness of the Borrower to others), acquired
outright, conditionally, or as collateral security from another, absolute or
contingent, joint or several, secured or unsecured, matured or not matured,
monetary or non-monetary, arising out of contract or tort, liquidated or
unliquidated, arising by operation of law or otherwise and all extensions,
renewals, refunding, replacements and modifications of any of the foregoing.
"Person" shall mean any natural person, corporation, partnership, trust,
government or other association or legal entity.
"Proceeds" shall have the meaning assigned to that term by the New York Uniform
Commercial Code, as amended, and also means all "proceeds," "products,"
"offspring," "rents" or "profits" of any property, as such quoted terms are used
in the Bankruptcy Code.
"Security" shall mean any property which secures payment or performance of any
of the Liabilities, and all Proceeds thereof.
SECTION 2. Scope of Guaranty. In consideration of any extension of credit or
other financial accommodation heretofore, now or hereafter made by the Bank to
or for the account of the Borrower, whether voluntary or obligatory, Guarantor
hereby absolutely and unconditionally guarantees to the Bank the prompt and
complete payment and performance when due (whether at stated maturity, by
required prepayment, acceleration, or otherwise) of all Obligations and the
performance of each of Borrower's covenants and obligations under all loan
agreements, documents and instruments evidencing or relating to any Obligations
or under which any Obligations may have been issued, created, assumed, suffered
involuntarily, or guaranteed, and all expenses incurred in collecting or
enforcing the same, as more fully set below, all of which conclusively shall be
deemed to have been incurred in reliance upon this Guaranty, as if each of the
foregoing were the direct and primary legal responsibility of Guarantor and not
the Borrower.
SECTION 3. Security. As Security for the Liabilities of Guarantor, Guarantor
hereby grants to the Bank a continuing lien upon and security interest in, and
hereby pledges, assigns and transfers to the Bank, all right, title and interest
of Guarantor in and to all deposits (general or special) of Guarantor at any
time maintained with the Bank or any branch, subsidiary or affiliate of the
Bank, wherever located, and any substitutions and all products and Proceeds
thereof, and any other property described below, whether now or hereafter
existing or acquired, and wherever located, and any substitutions and all
products and Proceeds (including but not limited to insurance proceeds) thereof:
The Bank or its nominee may exercise any right of Guarantor with respect to
any Security whether or not any Obligation or Liability is then due and payable
or any default has occurred. In any statutory or non-statutory proceeding,
affecting the Borrower, Guarantor or any Security or any Obligation or
Liability, the Bank or its nominee may, whether or not any Obligation or
Liability is then due and payable or any default shall have occurred, and
regardless of the amount of Obligations or Liabilities, assert, or file a proof
of claim for, the full amount of any such Obligation, Liability or the Security
and vote such claim, for the full amount thereof: (a) for or against any
proposal or resolution; (b) for a trustee or trustees or for a committee of
creditors; or (c) for the acceptance or rejection of any proposed arrangement,
plan of reorganization, wage earners plan, composition or extension, and the
Bank or its nominee may receive any payment or distribution and give acquittance
therefor and may exchange or release any Security. Guarantor agrees that at any
time, whether or not any Obligation or Liability is then due and payable or any
default shall have occurred, the Bank shall have the right to notify any account
debtor (with respect to any Security consisting of Accounts), or the obligor on
any Instrument or other right or claim of Guarantor to any payment which is
Security, to make payment directly to the Bank, whether or not any default shall
have occurred and whether or not Guarantor was theretofore making collections on
such Security, and also to take control of any Proceeds the Bank is entitled to
under Section 9-306 of the New York Uniform Commercial Code. If any Security
consists of Accounts, Instruments or other rights or claims of Guarantor to any
payment, then at the Bank's request Guarantor shall promptly notify (in manner,
form and substance satisfactory to the Bank) all Persons obligated to Guarantor
under any such Accounts, Instruments or other rights or claims of Guarantor to
any payment that the Bank possesses a security interest in such Accounts,
Instruments or other rights or claims of Guarantor to any payment and that all
payments in respect of such Accounts, Instruments or other rights or claims of
Owner to any payment are to be made directly to the Bank. Guarantor shall not
settle, compromise or adjust any disputed amount, or allow any credit, rebate or
discount with respect to any Account, Instrument or other right or claim of
Guarantor to any payment which constitutes Security under this Guaranty. After
the Bank shall have given any notice to an account debtor of the type specified
above, any and all accounts recovered by Guarantor from the account debtor or
other obligor so notified shall be promptly remitted to the Bank, and until so
remitted shall be segregated by Guarantor and held in trust for the Bank.
To the extent permitted by applicable law, the Bank or its nominee is
hereby given a right of setoff for the amount of the Liabilities upon any of
and all said deposits and any credits of Guarantor with, and any and all claims
of Guarantor against, the Bank at any time existing and the Bank is hereby
authorized to setoff and apply such deposits, credits and claims, without prior
notice or demand, to the Liabilities in such order and amounts as the Bank may
elect, although such Liabilities may be contingent or unmatured.
Guarantor shall, upon request of the Bank, assemble the Security and make
it available to the Bank at a place to be designated by the Bank which is
reasonably convenient to the Bank and Guarantor. The Bank will give Guarantor
notice of the time and place of any public sale of the Security or of the time
after which any private sale or any other intended disposition thereof is to be
made by sending notice, as provided below, at least five days before the time
of the sale or disposition, which provisions for notice Guarantor agrees are
reasonable. No such notice need be given by the Bank with respect to Security
which is perishable or threatens to decline speedily in value or is of a type
customarily sold on a recognized market. Guarantor shall remain liable to the
Bank for the payment of any deficiency with interest thereon at the highest rate
applicable to the Obligations, or if no rate is specified with respect to such
Obligations, at the then legal rate of interest.
Guarantor will do all such other acts and things and will execute and
deliver all such other instruments and documents, including further security
agreements, pledges, endorsements, assignments, and notices as the Bank may
reasonably deem necessary or advisable from time to time in order to perfect and
preserve the Liens created by this Guaranty and will, at its own cost and
expense, cause such Lien to be perfected and continue to be perfected and to be
and remain prior to all other Liens. The Bank, acting through its officers,
employees and authorized agents, is hereby irrevocably appointed the
attorney-in-fact of Guarantor to do, at Guarantor's expense, all acts and things
which the Bank may reasonably deem necessary or advisable to preserve, perfect,
continue to perfect and/or maintain the priority of such Liens, including the
signing of financing, continuation or other similar statements and notices on
behalf of Guarantor, and which Guarantor is required to do by the terms of this
Guaranty. Guarantor hereby authorizes the Bank to sign and file financing
statements with respect to the Security without the signature of Guarantor.
Guarantor shall pay all filing fees for financing statements with respect to the
Security.
SECTION 4. Reinstatement. If after receipt of any payment of, or proceeds of
Security applied (or intended to be applied) to the payment of, all or any part
of the Obligations, the Bank is for any reason compelled to surrender or
voluntarily surrenders, such payment or proceeds to any person, (a) because such
payment or application of proceeds is or may be avoided, invalidated, declared
fraudulent, set aside, determined to be void or voidable as a preference,
fraudulent conveyance, impermissible setoff or a diversion of trust funds; or
(b) for any other reason, including without limitation (i) any judgment, decree
or order of any Court or administrative body having jurisdiction over the Bank
or any of its property, or (ii) any settlement or compromise of any such claim
effected by the Bank with any such claimant (including the Borrower), then the
Obligations or part thereof intended to be satisfied shall be reinstated and
continue and this Guaranty shall continue in full force as if such payment or
proceeds had not been received by the Bank, notwithstanding any revocation
thereof or the cancellation of any note or other instrument evidencing any
Obligation or otherwise; and Guarantor shall be liable to pay to the Bank, and
hereby does indemnify the Bank and hold the Bank harmless for, the amount of
such payment or proceeds so surrendered and all expenses (including all
attorneys' fees, court costs and expenses attributable thereto) incurred by the
Bank in the defense of any claim made against the Bank that any payment or
proceeds received by the Bank in respect of all or any part of the Obligations
must be surrendered. The provisions of this Section 4 shall survive the
termination of this Guaranty, and any satisfaction and discharge of the Borrower
by virtue of any payment, court order or any federal or state law.
SECTION 5. Waiver. Guarantor hereby waives (a) notice of acceptance of this
Guaranty and all notice of the creation, extension or accrual of any of the
Obligations; (b) presentment, demand for payment, notice of dishonor, and
protest; (c) notice of any other nature whatsoever, except for notices
specifically provided for in this Guaranty or which may not be waived under
applicable law; (d) any requirement that the Bank take any action whatsoever
against the Borrower or any other party or file any claim in the event of the
bankruptcy of the Borrower; or (e) failure to protect, preserve or resort to any
Collateral or to exercise or enforce the Bank's rights under any other
guaranties of or security for the Obligations; and Guarantor further agrees that
this Guaranty will not be discharged (subject to the provisions contained in
Section 11) except by complete performance of all Obligations of the Borrower
and the Liabilities of Guarantor hereunder.
SECTION 6. Consent. Guarantor hereby consents that from time to time, and
without further notice to or consent of Guarantor, the Bank may take any or all
of the following actions without diminishing, releasing or otherwise affecting
the liability of Guarantor to pay and perform under this Guaranty: (a) extend,
renew, modify, compromise, settle or release the Obligations (including without
limitation any increase or decrease in the interest rate); (b) release or
compromise any liability of any party or parties with respect to Obligations;
(c) release its security interest in any or all of the Collateral or exchange,
surrender, or otherwise deal with the Collateral as the Bank may determine; or
(d) exercise or refrain from exercising any right or remedy of the Bank against
any person or property.
SECTION 7. Guaranty Absolute. The liability of Guarantor under this Guaranty
shall be absolute and unconditional irrespective of any lack of validity,
regularity or enforceability of the Obligations or any note, instrument or
agreement evidencing the same or relating thereto, the acceptance of additional
guarantees or collateral or the termination, by operation of law or otherwise,
of the liability of anyone with respect to the Obligations, or any other
circumstance which might otherwise constitute a defense available to, or a
discharge of, the Borrower.
SECTION 8. WAIVER OF SUBROGATION. NOTWITHSTANDING ANY PAYMENT OR PAYMENTS MADE
BY GUARANTOR HEREUNDER, OR ANY SETOFF OR APPLICATION BY THE BANK OF THE SECURITY
OR OF ANY CREDITS OR CLAIMS, GUARANTOR WILL NOT ASSERT OR EXERCISE ANY RIGHTS OF
THE BANK OR GUARANTOR AGAINST THE BORROWER TO RECOVER THE AMOUNT OF ANY PAYMENT
MADE BY GUARANTOR TO THE BANK HEREUNDER OR UNDER ANY OTHER GUARANTEE BY WAY OF
SUBROGATION, REIMBURSEMENT, CONTRIBUTION, INDEMNITY, OR OTHERWISE ARISING BY
CONTRACT OR OPERATION OF LAW, AND GUARANTOR SHALL HAVE NO RIGHT OF RECOURSE TO
OR ANY CLAIM AGAINST ANY ASSETS OR PROPERTY OF THE BORROWER, UNLESS AND UNTIL
THE OBLIGATIONS OF THE BORROWER HAVE BEEN SATISFIED IN FULL. If there is more
than one Guarantor, each Guarantor agrees not to seek contribution from any
other Guarantor until all the Obligations shall have been paid in full. If any
amount shall nevertheless be paid to a Guarantor by Borrower or another
Guarantor such amount shall be held in trust for the benefit of the Bank and
shall forthwith be paid to the Bank to be credited and applied to the
Obligations, whether matured or unmatured. The provisions of this Section 8
shall survive the terminaton of this Guaranty, and any satisfaction and
discharge of the Borrower by virtue of any payment, court order or any federal
or state law.
SECTION 9. Expenses. Guarantor hereby agrees to pay any and all expenses
incurred by the Bank in enforcing any rights under this Guaranty or in defending
any of its rights or any amounts received hereunder. Without limiting the
foregoing, Guarantor agrees that whenever any attorney is used by the Bank to
obtain payment hereunder, to advise it as to its rights, to adjudicate the
rights of the parties hereunder or for the defense of any of its rights or
amounts received hereunder, the Bank shall be entitled to recover all attorneys'
fees, court costs, and expenses attributable thereto.
SECTION 10. Binding Effect. Except to the extent it may be terminated in
accordance with Section 11, this Guaranty shall remain in full force and effect
and shall be binding upon Guarantor, its successors and assigns, in accordance
with its terms, notwithstanding any increase, decrease or change in the partners
of Guarantor, if it should be a partnership, or the merger, consolidation, or
reorganization of Guarantor, if it be a corporation, or any other change
concerning the form, structure or substance of any such entity.
SECTION 11. CONTINUING GUARANTY; TERMINATION. THIS GUARANTY IS A CONTINUING
GUARANTY, WHICH SHALL REMAIN IN EFFECT UNTIL THE DATE SIX (6) MONTHS AFTER
NOTICE OF TERMINATION IN WRITING FROM GUARANTOR IS ACTUALLY RECEIVED BY THE BANK
AT THE BANK'S ADDRESS SET FORTH BELOW ("TERMINATION DATE"). SUCH TERMINATION
WILL BE EFFECTIVE ONLY WITH RESPECT TO ALL OBLIGATIONS INCURRED OR CONTRACTED BY
THE BORROWER OR ACQUIRED BY THE BANK AFTER THE TERMINATION DATE, BUT THIS
GUARANTY SHALL REMAIN IN FULL FORCE AND EFFECT AS TO ALL OBLIGATIONS EXISTING ON
AND AS OF THE TERMINATION DATE, INCLUDING ALL RENEWALS, COMPROMISES,
MODIFICATIONS, EXTENSIONS AND OTHER AMENDMENTS RELATING THERETO, ALL INTEREST
THEREON AND COLLECTION EXPENSES THEREFOR, UNTIL FULL PAYMENT OF SUCH OBLIGATIONS
TO THE BANK.
SECTION 12. Obligations Deemed to Become Due. If the Borrower or Guarantor makes
an assignment for the benefit of creditors or a trustee or receiver is appointed
for the Borrower or Guarantor or for any of its property; or any proceeding by
or against the Borrower or Guarantor (or any other guarantor), under any
bankruptcy, reorganization, arrangement of debt, insolvency, readjustment of
debt, receivership, liquidation or dissolution law or statute is commenced; or
Guarantor fails to furnish to the Bank such financial information concerning
Guarantor as the Bank may from time to time request; or any representation or
warranty made by Guarantor herein proves to be incorrect or untrue in any
material respect; or Bank shall in good faith determine that there has been a
material adverse change in Guarantor's or the Borrower's net worth or in good
faith deem itself insecure with respect to Guarantor's or the Borrower's
financial condition or ability to pay the Liabilities or Obligations, as the
case may be, then all Obligations, regardless of their terms, for the purposes
of this Guaranty, together with all Liabilities, shall be immediately due and
payable, notwithstanding the absence of any default by the Borrower under any of
the Obligations.
SECTION 13. Assignment. The Bank may, without notice, assign the Obligations, in
whole or in part, and each successive assignee of the Obligations so assigned
may enforce this Guaranty for its own benefit with respect to the Obligations so
assigned.
SECTION 14. Notices. Each notice or other communication hereunder shall be in
writing, shall be sent by messenger, by first class mail or by facsimile
transmitter or tested telex, and shall be effective when received, and shall be
sent as follows:
If to the Guarantor, to the address set forth below its signature or such
other address as it may designate, by written notice to the Bank as herein
provided or such other address as may appear in the records of the Bank.
If to the Bank, to the following address:
Republic National Bank of New York (France)
20 Place Vendome
75001 Paris
France
Attention: Loan Department
or such other address as it may designate, by written notice to the Guarantor as
herein provided.
SECTION 15. Other Guarantees; Amendments. The execution and delivery hereafter
to the Bank by Guarantor of a new instrument of guarantee shall not terminate,
supersede or cancel this instrument, unless expressly provided therein, and this
instrument shall not terminate, supersede or cancel any instrument of guarantee
previously delivered to the Bank by Guarantor, and all rights and remedies of
the Bank hereunder or under any instrument of guarantee hereafter or heretofore
executed and delivered to the Bank by Guarantor shall be cumulative and may be
exercised singly or concurrently. This Guaranty may be amended only by a writing
executed by Guarantor and a duly authorized officer of the Bank.
SECTION 16. No Waiver; Cumulative Remedies. No delay on the part of the Bank in
exercising any of its options, powers or rights, or partial or single exercise
thereof, shall constitute a waiver thereof. NO WAIVER OF ANY PROVISION OF THIS
GUARANTY IS EFFECTIVE UNLESS MADE IN WRITING AND EXECUTED BY A DULY AUTHORIZED
OFFICER OF THE BANK. All rights and remedies hereunder are cumulative and may be
exercised singly or concurrently.
SECTION 17. Statute of Limitations. Any acknowledgment, new promise, payment of
principal or interest or other act by the Borrower or others with respect to the
Obligations shall be deemed to be made as agent of Guarantor, and shall, if the
statute of limitations in favor of Guarantor against the Bank shall have
commenced to run, toll the running of such statute of limitations, and if such
statute of limitations shall have expired, prevent the operation of such
statute.
SECTION 18. Governing Law; Consent to Jurisdiction; Service of Process. This
Guaranty shall be governed by and construed in accordance with the laws of the
State of New York applicable to instruments made and to be performed wholly
within that State. Guarantor hereby consents to the jurisdiction of the courts
of the State of New York and the courts of the United States of America for the
Southern District of New York and consents that any action or proceeding
hereunder may be brought in such courts, and waives any objection that it may
now or hereafter have to the venue of any such action or proceeding in any such
court or that such action or proceeding was brought in an inconvenient court and
agrees not to plead or claim the same; and authorizes the service of process on
Guarantor by registered or certified mail sent to its address as set forth in
Section 14.
SECTION 19. RIGHT OF BANK TO ARBITRATE DISPUTES.
(a) GUARANTOR AGREES THAT ANY ACTION, DISPUTE, PROCEEDING, CLAIM OR
CONTROVERSY BETWEEN OR AMONG GUARANTOR AND THE BANK WHETHER SOUNDING IN
CONTRACT, TORT OR OTHERWISE ("DISPUTE" OR "DISPUTES") SHALL, AT THE BANK'S
ELECTION, WHICH ELECTION MAY BE MADE AT ANY TIME PRIOR TO THE COMMENCEMENT OF A
JUDICIAL PROCEEDING BY THE BANK, OR IN THE EVENT OF A JUDICIAL PROCEEDING
INSTITUTED BY GUARANTOR AT ANY TIME PRIOR TO THE LAST DAY TO ANSWER AND/OR
RESPOND TO A SUMMONS AND/OR COMPLAINT MADE BY GUARANTOR, BE RESOLVED BY
ARBITRATION IN NEW YORK, NEW YORK IN ACCORDANCE WITH THE PROVISIONS OF THIS
SECTION 19 AND SHALL, AT THE ELECTION OF THE BANK, INCLUDE ALL DISPUTES ARISING
OUT OF OR IN CONNECTION WITH (I) THIS GUARANTY OR ANY RELATED AGREEMENTS OR
INSTRUMENTS, (II) ALL PAST, PRESENT AND FUTURE AGREEMENTS INVOLVING GUARANTOR
AND THE BANK, (III) ANY TRANSACTION CONTEMPLATED HEREBY AND ALL PAST, PRESENT
AND FUTURE TRANSACTIONS INVOLVING GUARANTOR AND THE BANK, AND (IV) ANY ASPECT OF
THE PAST, PRESENT OR FUTURE RELATIONSHIP OF GUARANTOR AND THE BANK. Bank may
elect to require arbitration of any such Dispute with Guarantor without thereby
being required to arbitrate all Disputes between the Bank and Guarantor. Any
such dispute shall be resolved by binding arbitration in accordance with Article
75 of the New York Civil Practice Law and Rules and the commercial arbitration
rules of the American Arbitration Association ("AAA"). In the event of any
inconsistency between such Rules and these arbitration provisions, these
provisions shall supersede such Rules. All statutes of limitations which would
otherwise be applicable shall apply to any arbitration proceeding under this
subsection 19(a). In any arbitration proceeding subject to these provisions, the
arbitration panel (the "arbitrator") is specifically empowered to decide (by
documents only, or with a hearing, at the arbitrator's sole discretion)
pre-hearing motions which are substantially similar to pre-hearing motions to
dismiss and motions for summary adjudication. In any such arbitration
proceeding, the arbitrator shall not have the power or authority to award
punitive damages to any party. Judgment upon the award rendered may be entered
in any court having jurisdiction. Whenever an arbitration is required, the
parties shall select an arbitrator in the manner provided in subsection 19(d).
(b) No provision of, nor the exercise of any rights under, subsection 19(a)
shall limit the right of any party (i) to foreclose against any real or personal
property collateral through judicial foreclosure, by the exercise of a power of
sale under a deed of trust, mortgage or other security agreement or instrument,
pursuant to applicable provisions of the Uniform Commercial Code, or otherwise
pursuant to applicable law, (ii) to exercise self help remedies including but
not limited to setoff and repossession, or (iii) to request and obtain from a
court having jurisdiction before, during or after the pendency of any
arbitration, provisional or ancillary remedies and relief including but not
limited to injunctive or mandatory relief or the appointment of a receiver. The
institution and maintenance of an action or judicial proceeding for, or pursuit
of, provisional or ancillary remedies or exercise of self help remedies shall
not constitute a waiver of the right of the Bank, even if the Bank is the
plaintiff, to submit the Dispute to arbitration if the Bank would otherwise
have such right.
(c) The Bank may require arbitration of any Dispute(s) concerning the
lawfulness, unconscionableness, propriety, or reasonableness of any exercise by
the Bank of its right to take or dispose of any Collateral or its exercise of
any other right in connection with Collateral including, without limitation,
judicial foreclosure, exercising a power of sale under a deed of trust or
mortgage, obtaining or executing a writ of attachment, taking or disposing of
property with or without judicial process pursuant to Article 9 of the Uniform
Commercial Code or otherwise as permitted by applicable law, notwithstanding any
such exercise by the Bank.
(d) Whenever an arbitration is required under subsection 19(a), the
arbitrator shall be selected, except as otherwise herein provided, in accordance
with the Commercial Arbitration Rules of the AAA. A single arbitrator shall
decide any claim of $100,000 or less and he or she shall be an attorney with at
least five years' experience. Where the claim of any party exceeds $100,000, the
Dispute shall be decided by a majority vote of three arbitrators, at least two
of whom shall be attorneys (at least one of whom shall have not less than five
years' experience representing commercial banks).
(e) In the event of any Dispute governed by this Section 19, each of the
parties shall, subject to the award of the arbitrator, pay an equal share of the
arbitrator's fees. The arbitrator shall have the power to award recovery of all
costs and fees (including attorneys' fees, administrative fees, arbitrator's
fees, and court costs) to the prevailing party.
SECTION 20. Severability. If any one or more of the provisions contained in this
Guaranty or any document executed in connection herewith shall be invalid,
illegal or unenforceable in any respect under any applicable law, the validity,
legality and enforceability of the remaining provisions contained herein shall
not (to the full extent permitted by law) in any way be affected or impaired.
SECTION 21. Headings. The descriptive headings used in this Guaranty are for
convenience only and shall not be deemed to affect the meaning or construction
of any provision hereof.
SECTION 22. Representations and Warranties. To induce Bank to extend credit or
other financial accommodation to Borrower, Borrower represents and warrants to
Bank that (i) Borrower is duly incorporated and validly existing in good
standing under the laws of the jurisdiction of its incorporation, with full
power and authority to make, deliver and perform this Guaranty; (ii) the
execution, delivery and performance by Borrower of this Guaranty have been duly
authorized by all necessary corporate action, and does not and will not violate
or conflict with, its charter or by-laws, or any law, rule, regulation or order
binding on Borrower or any agreement or instrument to which Borrower is a party
or which may be binding on Borrower; (iii) this Guaranty has been fully executed
by an authorized officer of, and, constitutes a legal, valid, binding and
enforceable obligation of Borrower; (iv) no authorization, consent, approval,
license, exemption of or filing or registration with, any court or government
or governmental agency is or will be necessary to the valid execution, delivery
or performance by Borrower of this Guaranty; (v) there are no pending or
threatened actions, suits or proceedings against or affecting Borrower by or
before any court, commission, bureau or other governmental agency or
instrumentality, which, individually or in the aggregate, if determined
adversely to Borrower, would have a material adverse effect on the business,
properties, operations, or condition, financial or otherwise, of Borrower; and
(vi) the most recent financial statements of Borrower heretofore delivered to
Bank are complete and correct and since the date thereof there has not occurred
any material adverse change in the financial condition or operations of Borrower
from that shown on said financial statements.
SECTION 23. Payments Free and Clear of All Taxes. Each payment to be made
hereunder shall be free and clear of, and without deductions for or on account
of any present or future taxes, imposts, charges, levies, compulsory loans or
other withholdings or deductions whatsoever. If Guarantor shall be required by
applicable law to make any such deduction from any payment hereunder, (i) the
sum payable shall be increased as may be necessary so that after making all
required deductions (including deductions applicable to additional sums payable
under this paragraph) Bank receives an amount equal to the sum it would have
received had no deductions been made, (ii) Guarantor shall make such deductions,
and (iii) Guarantor shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law. In addition,
Guarantor agrees to pay, if necessary, all stamp, documentary, or similar taxes
or any other excise or property taxes, charges or similar levies which arise
from any payment made hereunder or from the execution, delivery or registration
of, or otherwise with respect to, this instrument.
SECTION 24. Judgment Currency. Any and all Liabilities payable hereunder shall
be paid in the currency(ies) which such Liability (including without limitation
any Obligation) is by the terms expressed to be payable, whether in French
Francs, U.S. Dollars or any other currency(ies) (the "Payment Currency"). If by
reason of any applicable law or arbitral award, judicial or administrative
decision or judgment, all or part of said amounts are payable in a currency
other than such applicable Payment Currency (the "Other Currency(ies)"), the
Guarantor shall indemnify the Bank from and against any loss resulting from the
difference between the rate of exchange of the Other Currency for the Payment
Currency(ies) as of the date of such award, decision or applicable judgment and
the rate at which the Bank actually is able to purchase the Payment Currency
with the Other Currency(ies) upon the Bank's actual receipt of payment in the
Other Currency.
SECTION 25. WAIVER OF TRIAL BY JURY. EACH OF THE BANK AND GUARANTOR HEREBY
WAIVES TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY OR
AGAINST IT ON ANY MATTERS WHATSOEVER, IN CONTRACT OR IN TORT, ARISING OUT OF OR
IN ANY WAY CONNECTED WITH THIS GUARANTY OR THE OBLIGATIONS.
SECTION 26. WAIVER OF CERTAIN OTHER RIGHTS. GUARANTOR HEREBY WAIVES THE RIGHT TO
INTERPOSE ANY DEFENSE BASED UPON ANY CLAIMS OF LACHES OR SET-OFF OR COUNTERCLAIM
OF ANY NATURE OR DESCRIPTION, ANY OBJECTION BASED ON FORUM NON CONVENIENS OR
VENUE, AND ANY CLAIM FOR CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES.
IN WITNESS WHEREOF, the Guarantor(s) has/have executed this Guaranty and
Security Agreement.
[SEAL]
Jean Philippe Fragrances, Inc.
----------------------------------
By: /s/ RUSSELL GREENBERG
------------------------------
Russell Greenberg, Executive Vice President
551 5th Avenue, NY NY 10176
Elite Parfums, Ltd.
----------------------------------
By: /s/ RUSSELL GREENBERG
------------------------------
Russell Greenberg, Executive Vice President
551 5th Avenue, NY NY 10176
[Corporate Acknowledgment]
STATE OF NEW YORK
COUNTY OF NEW YORK
On this 19th day of July, 1995, before me personally came Russell
Greenberg, and Joseph A. Caccamo, to me known who, being duly sworn, deposes and
says that (t)(s)he(y) is/are the Executive Vice President and the Secretary of
Jean Philippe Fragrances, Inc., the corporation described in and which executed
the above instrument; that (t)(s)he(y) know(s) the seal of the corporation; that
the seal affixed to said instrument is such corporate seal; that it was so
affixed by order of the Board of Directors of said corporation and (t)(s)he(y)
signed his (her) (their) name(s) by like order.
/s/ ANNIE FAILLER
----------------------------------
Notary Public
ANNIE FAILLER
Notary Public, State of New York
No. 01FA5023811
Qualified in Queens County
Commission Expires Feb. 14, 1996
[Corporate Acknowledgment]
STATE OF NEW YORK
COUNTY OF NEW YORK
On this 19th day of July, 1995, before me personally came Russell
Greenberg, and Joseph A. Caccamo, to me known who, being duly sworn, deposes and
says that (t)(s)he(y) is/are the Executive Vice President and the Secretary of
Elite Parfums, Ltd., the corporation described in and which executed the above
instrument; that (t)(s)he(y) know(s) the seal of the corporation; that the seal
affixed to said instrument is such corporate seal; that it was so affixed by
order of the Board of Directors of said corporation and (t)(s)he(y) signed his
(her) (their) name(s) by like order.
/s/ ANNIE FAILLER
----------------------------------
Notary Public
ANNIE FAILLER
Notary Public, State of New York
No. 01FA5023811
Qualified in Queens County
Commission Expires Feb. 14, 1996
Exhibit 10.61
6/21/95
LEASE-1/SG7907
ROSNER AND FELTMAN
70 GRAND AVENUE
RIVER EDGE, NJ 07661
TABLE OF CONTENTS
LANDLORD: FORSGATE INDUSTRIAL COMPLEX
TENANT: JEAN PHILIPPE FRAGRANCES, INC.
PREMISES: 60 STULTS ROAD, SOUTH BRUNSWICK, NEW JERSEY
=========================================================
ARTICLE 1 DEMISED PREMISES - TITLE - TERM OF LEASE
ARTICLE 2 USE OF PREMISES
ARTICLE 3 RENT AND OTHER CHARGES
ARTICLE 4 TAXES
ARTICLE 5 COMMENCEMENT DATE OF LEASE
ARTICLE 6 INSURANCE TO BE PROVIDED BY TENANT
ARTICLE 7 RESTORATION OF DEMISED PREMISES IN THE EVENT
OF FIRE OR OTHER CASUALTY
ARTICLE 8 REPAIRS, MAINTENANCE, UTILITIES,
CHANGES AND ALTERATIONS, COMPLIANCE
WITH ORDERS, ETC., EASEMENTS
ARTICLE 9 LEASE PROVISION AGAINST ASSIGNMENT, MORTGAGE
OR SUBLET BY TENANT WITHOUT LANDLORD'S PERMISSION
- LANDLORD'S RIGHT OF RECAPTURE
ARTICLE 10 LANDLORD'S REMEDIES IN EVENT OF TENANT'S
DEFAULT OR BANKRUPTCY
ARTICLE 11 SUBORDINATION OF LEASE TO
MORTGAGE ON THE DEMISED PREMISES
ARTICLE 12 EXONERATION OF INDIVIDUALS
ARTICLE 13 COVENANT AGAINST LIENS
ARTICLE 14 EMINENT DOMAIN
ARTICLE 15 ACCESS TO PREMISES
ARTICLE 16 NOTICES
ARTICLE 17 ACCEPTANCE
ARTICLE 18 QUIET ENJOYMENT - CONVEYANCE BY LANDLORD
ARTICLE 19 ESTOPPEL CERTIFICATE
ARTICLE 20 FINANCIAL INFORMATION
ARTICLE 21 NO ABATEMENT OF RENT
ARTICLE 22 NONRECORDATION OF LEASE
ARTICLE 23 SURRENDER
ARTICLE 24 SECURITY
ARTICLE 25 MISCELLANEOUS
SCHEDULE A DEMISED PREMISES
SCHEDULE B RULES AND REGULATIONS
LEASE
THE INDENTURE OF LEASE (hereinafter called "LEASE") dated the 10th day of
July, 1995, by and between FORSGATE INDUSTRIAL COMPLEX, a Limited Partnership,
with offices at c/o Charles Klatskin Co., Inc., 400 Hollister Road, Teterboro,
New Jersey 07608, (hereinafter called "LANDLORD"), and JEAN PHILIPPE FRAGRANCES,
INC., a corporation of the State of Delaware having its principal office at 551
Fifth Avenue, New York, New York 10176 (hereinafter called "TENANT").
W I T N E S S E T H:
ARTICLE 1
DEMISED PREMISIS - TITLE - TERM OF LEASE
Section 1.01 Demised Premises. Landlord, for and in
consideration of the rents, covenants and agreements hereinafter
reserved, mentioned and contained on the part of the Tenant, its
successors and assigns, to be paid, kept and performed, has demised
and leased, and by these presents does demise and lease, unto the
Tenant, and the Tenant does hereby take and hire upon subject to
the conditions hereinafter expressed, the real property together
with the building thereon (the "Building"), commonly known as 60
Stults Road, in the Township of South Brunswick, County of
Middlesex and State of New Jersey, as more particularly described
on Schedule "A" (hereinafter sometimes referred to as "Demised Premises").
Section 1.02 Title. At the commencement of the term of the
Lease ("Term"), Landlord shall own the fee title to the Demised
Premises, subject to restrictions of record, if any, zoning
regulations affecting such Demised Premises and any state of facts
shown on an accurate survey or as a visual inspection of the
premises would disclose, provided the same does not prohibit or
unduly restrict the use of the premises for warehousing and
offices, as presently constructed.
Section 1.03 Term of Lease. To have and to hold unto the
Tenant, its permitted successors and permitted assigns, for a Term
of eight (8) years, commencing on the commencement date as defined
in ARTICLE 5 hereof and ending eight (8) years thereafter, unless
sooner terminated, plus the number of days required, if any, to
have such Term expire on the last day on the calendar month.
Section 1.04 Acknowledgment of Commencement. Upon the
commencement of the Term, the parties shall execute and exchange
a recordable Lease instrument, specifying the commencement and expiration
dates of the Term.
Section 1.05 Definitions. (i) As used herein, "Hazardous
Substance" includes any pollutant, dangerous substance, toxic
substances, any hazardous chemical, hazardous substance, hazardous
pollutant, hazardous waste or any similar term as defined in or
pursuant to the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, 42 U.S.C. Section 9601, et seq. ("CERCLA");
Industrial Site Recovery Act, N.J.S.A. 13:1K-6, et seq. ("ISRA");
the New Jersey Spill Compensation and Control Act, N.J.S.A. 58:10-
23.11, et seq. ("Spill Act"); the Solid Waste Management Act,
N.J.S.A. 13:1E-1, et seq. ("SWMA"); the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901, et seq. ("RCRA"); the New Jersey
Underground Storage of Hazardous Substances Act, N.J.S.A. 58:10A-
21, et seq. ("USTA"); Clean Air Act, 42 U.S.C. Section 7401, et seq.
("CAA"); Air Pollution Control Act, N.J.S.A. 26:2C-l, et seq.
("APCA"); New Jersey Water Pollution Control Act, N.J.S.A. 58:10A-
1, et seq. ("WPCA"); and any rules or regulations promulgated
thereunder or in any other applicable federal, state or local law,
rule or regulation dealing with environmental protection. It is
understood and agreed that the provisions contained in the Lease
shall be applicable notwithstanding whether any substance shall not
have been deemed to be a hazardous substance at the time of its use
or Release but shall thereafter be deemed to be a Hazardous Substance.
(ii) "Release" means spilling, leaking, disposing, pumping,
pouring, discharging, emitting, emptying, ejecting, depositing,
injecting, leaching, escaping or dumping, however defined, and whether
intentional or unintentional, of any Hazardous Substance.
(iii) "Notice" means any summons, citation, directive,
order, claim, litigation, investigation, proceeding, judgment, letter or
other communication, written or oral, actual or threatened, from the New
Jersey Department of Environmental Protection ("NJDEP"), the United
States Environmental Protection Agency ("USEPA"), the United States
Occupational Safety and Health Administration ("OSHA") or other federal,
state or local agency or authority, or any other entity or any
individual, concerning any act or omission relating or which may result
in the Releasing of Hazardous Substances into the waters or onto the
lands of the State of New Jersey, or into the waters outside the
jurisdiction of the State of New Jersey, or into the environment.
(iv) "Environmental Laws" mean any and all present or future
laws, statutes, ordinances, regulations and executive orders, federal
and state and local in any related to the protection of human health or
the environmental, including, but not limited to, (i) CERCLA; (ii) RCRA;
(iii) ISRA; (iv) Spill Act; (v) USTA; (vi) WPCA; (vii) APCA; (viii)
SWMA; (ix) CAA; and (x) USTA.
ARTICLE 2
USB OF PREMISES
Section 2.01 Use. The Tenant shall use and occupy the
Demised Premises for offices, warehousing and distribution of
cosmetics, fragrances and personal care items, and for repackaging
of cosmetics, fragrances and personal care items only, and for no
other purpose. If Tenant desires to expand or change the
aforementioned uses, Tenant shall not do so without first obtaining
Landlord's written consent. Landlord agrees not to unreasonably
withhold its consent, if the use is for warehousing only of
products which are consumer products, and are non-hazardous and are
not toxic pollutants. In all other events, Landlord may, for no
reason or for any reason, not consent to a change or expansion of
use. It being a consideration of this Lease, that the use of the
premises shall be limited, to those uses as otherwise hereinbefore
specified, and Tenant may not, use the premises for manufacturing
or the warehousing of any product which is a hazardous substance
as that term is more particularly hereinafter defined. Such use
does not permit the stacking of merchandise or materials against
the walls, so as to create a load or weight factor upon the walls,
or to tie in, Tenant's racking systems with such walls, nor the
hanging of equipment from (or otherwise loading) the roof or
structural members of the building without the express written
consent of the Landlord. The Tenant shall not use or occupy or
permit the Demised Premises to be used or occupied, nor do or
permit anything to be done in or on the Demised Property, in a
manner which will in any way violate any Certificate of Occupancy
affecting the Demised Premises, or make void or voidable any
insurance then in force with respect thereto, or which will make
it impossible to obtain fire or other insurance required to be
furnished by the Tenant hereunder, at regular rates, or which will
cause or be likely to cause structural damage to the Building or
any part thereto, or which will constitute a public or private
nuisance, or which would adversely affect the then value thereof,
and shall not use or occupy or permit the Demised Premises to be
used or occupied in any manner which will violate any present or
future laws or regulations of any governmental authority. Except
for the products contemplated by the permitted uses in this Section
2.01, Tenant shall not, during the term of this Lease store upon
the premises, hazardous substances as that term may be defined from
time to time by the New Jersey Department of Environmental
Protection or, by the Federal Environmental Protection Agency
pursuant to Section 311 of the "Federal Water Pollution Act,
amendments of 1972" (33 U.S.C. Section 1321) and the list of toxic
pollutants designated by Congress or the Environmental Protection
Agency pursuant to Section 307 of that Act (33 U.S.C. Section
1317). The storage of products contemplated by the permitted uses
in this Section 2.01 shall during the term of this Lease be in
compliance with all applicable laws and regulations, whether
federal, state or local, and whether environmental or otherwise.
Nothing herein contained shall be deemed or construed to constitute
a representation or guaranty by the Landlord that any specific
business may be conducted in the Demised Premises or is lawful
under the certificate of occupancy. In the event the Tenant
cannot obtain the continued certificate of occupancy for the uses
of the Demised Premises described in the first sentence of this
Section 2.01, then in such event, Tenant shall have the right,
prior to Tenant taking occupancy, to terminate this Lease; such
right of termination in all events to be exercised no later than
ten (10) days from the date Landlord advises Tenant, TIME BEING OF
THE ESSENCE, that the municipality will not issue the continued
Certificate of Occupancy.
Tenant acknowledges and recognizes that Tenant will have
to undertake ordinary and usual improvements required by the
municipality, such as, but not limited to, in rack sprinklers, exit
areas marked on the floor, exit signs, etc. If Tenant is required
to undertake other improvements in order to obtain the continued
certificate of occupancy, such improvements specifically required
by the municipality by reason of Tenant's peculiar use, and if the
collective cost thereof is more than FIVE THOUSAND and NO/100 Dollars
($5,000.00), then Tenant shall have the right to terminate this Lease,
such right to be exercised, in all events, within the ten (10) day time
period as heretofore provided, TIME BEING OF THE ESSENCE.
ARTICLE 3
RENT AND OTHER CHARGES
Section 3.01 Net Basic Rent. The Tenant shall pay to the
Landlord as net annual basic rent (the "Basic Rent") for the
Demised Premises during the Term the sum of SIX HUNDRED EIGHTY-
FOUR THOUSAND and NO/100 Dollars ($684,000.00) per annum, payable
in equal monthly installments of FIFTY-SEVEN THOUSAND and NO/100
Dollars ($57,000.00) due and payable the first day of each and
every month, in advance, except, the first month's rent which shall
be paid upon the execution hereof. Said rent and all payments due
hereunder shall be paid to the Landlord at its address hereinabove
first specified, or as the Landlord may otherwise direct in
writing. It is the intention of the parties that the Basic Rent
shall be net to the Landlord, so that this Lease shall yield to the
Landlord, the Basic Rent during the Term and that all costs,
expenses and obligations of every kind and nature whatsoever
relating to the Demised Premises shall be paid by the Tenant,
except as otherwise specifically provided in this Lease. Whenever
the rent as hereinabove set forth is stated as an annual rent, and
if there shall be less than twelve (12) months in any year, the
rate therein referred to shall be the "annualized rate".
Section 3.02 First Month Proration. If the Term shall begin
on a date other than the first day of a calendar month, the Basic
Rent for the initial month of the Term shall be prorated.
Section 3.03 Rent Credit to Tenant. Landlord, as an
accommodation to Tenant to reimburse Tenant for its initial
moving/rental expenses, will extend a credit to Tenant in an amount
equal to the lesser of FORTY-TWO THOUSAND and NO/100 Dollars
($42,000.00) or, if less, the net monthly rent paid by Tenant in
its present leased premises to be applied against the rent accruing
as of the second month of the Lease Term.
Section 3.04 Additional Rent. All payments other than Basic
Rent Tenant is required to make pursuant to this Lease shall
constitute additional rent ("Additional Rent") and, if Tenant
defaults in any such payment so as to create an Event of Default
(as hereinafter defined), Landlord shall have (in addition to any
rights and remedies granted hereby) all rights and remedies
provided by law for nonpayment of Basic Rent.
Section 3.05 Late Charge. If a payment of Basic Rent or
Additional Rent or any part thereof shall not be made on or prior
to a date which is five (5) days after the date on which it is due
and payable, a late charge of $500.00 per day shall become due and
payable to Landlord as liquidated damages for the administrative
costs and expenses incurred by Landlord by reason of Tenant's
failure to make prompt payment and said late charge shall be
payable by Tenant on the first day of the following month. No
failure by Landlord to insist upon the strict performance by Tenant
of Tenant's obligations to pay late charges shall constitute a
waiver by Landlord of its rights to enforce the provisions of this
Section in any instance thereafter occurring, nor shall acceptance
of late charges be deemed to extend the time of payment of Basic
Rent or Additional Rent or any part thereof. The provisions of
this Section 3.05 shall not be construed in any way to extend the
grace periods or notice periods as otherwise provided for in this
Lease. In the first three (3) instances in each calendar year when
Landlord is asserting a late charge, Landlord agrees that, prior
to asserting the late charge, Landlord shall give to Tenant five
(5) days' prior written notice and Tenant shall have five (5) days
after receipt of such notice to make payment. If Tenant fails to
make payment within five (5) days after receipt of written notice
by Landlord, then the late charge shall be effective. Landlord's
obligation to give notice shall only accrue in the first three (3)
instances that failure to pay occurs in each calendar year, and not
thereafter.
Section 3.06 Additional Security Deposit. In the event a
late charge is payable hereunder pursuant to Section 3.05, whether
or not collected, for three (3) installments of rent or other
monetary obligations of Tenant under the terms of this Lease during
any twelve-month period, Tenant shall pay to the Landlord, if
Landlord shall so request, in addition to any other payments
required under this Lease, an additional security deposit as
estimated by Landlord in an amount equal to rent and additional
rent for three (3) months. Such additional security shall be
established to insure payment when due before delinquency of all
rent and additional rent, and shall be held pursuant to the
security clause provisions as provided in Article 24 hereof. Such
additional security deposit shall be returned to the Tenant upon
termination of the Lease, less any amount of the security deposit
so expended by Landlord, to cure Tenant's defaults hereunder,
together with interest as otherwise provided in Article 24 hereof.
Section 3.07 No Abatement, Deduction, or Set-off etc. There
shall be no abatement, diminution or reduction of Basic Rent, or
Additional Rent or other charges or other compensation due to the
Landlord by Tenant or any person claiming under it under any
circumstances, including, but not limited to, any inconvenience,
discomfort, interruption of business or otherwise, except as
specifically provided herein.
Section 3.08 Common Area Charge. The Premises to be demised
are located within an office/industrial park known as Forsgate
Industrial Complex. Landlord, from time to time, will incur
various expenses to maintain the Park for the benefit of all
tenants. The Tenant shall pay three percent (3.0%) ("Tenant's
Share") of the total costs and expenses incurred by Landlord in
maintaining certain areas of the Park for items as follows: (i)
the cost of maintaining Park signs and tenant directories; (ii) the
cost of water, electricity and other utilities used in connection
with the operation and maintenance of the Park and not part of any
area demised to a tenant; (iii) the cost of insurance, including
general liability insurance, which is carried by Landlord and is
usual and customary under the circumstances; (iv) other costs
reasonably incurred by Landlord to maintain the Park or costs
incurred for services benefiting all tenants or occupants of the
Park which, in the reasonable opinion of Landlord, are a service
desirable to operate the Park. The cost of maintaining common
facilities used by all tenants, such as common grass areas,
boulevard dividers, curbing and lighting. Tenant shall pay to the
Landlord as an additional charge, annually, Tenant's Share of such
common Park expenses for each calendar year. At the end of each
calendar year, Landlord shall furnish Tenant with a statement
called "Landlord's Expense Statement" setting forth in reasonable
detail the common area Complex expenses for such calendar year.
Tenant's share of such charges shall not exceed, on an annual
basis, FIVE THOUSAND TWO HUNDRED FIFTY and NO/100 Dollars
($5,250.00), such sum adjusted to be increased per annum by the
percentage increase, if any, of the cost of living from January 1,
1996 to December 31 of the year for which the bill is rendered by
Landlord to Tenant. The cost of living increase shall be measured
by the Consumer Price Index for "All Items", the "Index" issued by
the U.S. Department of Labor. In the event the Index is no longer
issued or available or commonly used at the time a determination
is to be made, the Landlord shall designate another index or
criteria which will accurately reflect the increase in the cost of
living which has occurred for the time period so to be determined.
Tenant's Share of common area charges for Forsgate
Industrial Complex, which shall become payable by Tenant during the
calendar year in which this Lease commences or ends, shall be
apportioned between Landlord and Tenant in accordance with the
portion of such calendar year within the Term.
ARTICLE 4
TAXES
Section 4.01 Real Estate Taxes. Tenant shall, throughout the
Term, pay directly to the appropriate taxing authorities, at least
one (1) day before the same shall become due and payable, without
interest or penalty, all water and sewer rents, rates and charges,
licenses and permit fees, real estate taxes and assessments levied,
assessed, confirmed, imposed upon or against the Demised Premises
or any part thereof, including those presently in effect as well
as those which may be enacted in the future (collectively the
"Impositions"). Tenant shall forward copies of all receipted bills
or statements therefor to Landlord upon receipt thereof from said
taxing authorities.
Section 4.02 Other Taxes and Payment Thereof.
(a) Other Taxes Arising Out of Tenant's Use and
Occupancy. In addition to the Impositions, Tenant shall pay, at
least one (1) days prior to its due date, each and every item of
expense in the nature of a tax or charge or assessment for which
Landlord is or shall become liable by reason of its estate or
interest in the Demised Premises, or any part thereof, including,
without limiting the generality thereof, all personal property
taxes, gross receipts taxes, use and occupancy taxes, and excise
taxes levied or assessed against Landlord or Tenant by reason of
the use, occupancy or any other activity by the Tenant in connec-
tion with the Demised Premises or any part thereof, or which may
be levied or assessed or imposed upon any rents or rental income,
as such, payable to Landlord or payable to Tenant from any
sub-Tenant in connection with the Demised Premises or any part
thereof. Tenant shall forthwith forward copies of receipted bills
or cancelled checks therefor to Landlord evidencing the payment
thereof.
(b) Payment of Bills. In the event that the bills or
statements issued by the appropriate taxing authorities in respect
of any Imposition or tax required to be paid by Tenant pursuant to
paragraph (a) of this Section 4.02 shall be forwarded directly to
Landlord, Landlord shall promptly forward the same to Tenant, and
Tenant shall pay the same before expiration of the time period set
forth above or within ten (10) days after receipt of such bill or
statement, whichever is later.
Section 4.03 Certain Taxes Not Payable by Tenant. Tenant
shall not be required to pay any of the following taxes or
governmental impositions which shall be levied or imposed against
Landlord by any governmental authority:
(i) Any estate inheritance, devolution, succession,
transfer, legacy or gift tax which may be imposed upon or with respect
to any transfer of Landlord's interest in the demised premises.
(ii) Any income tax levied upon or against the
profits of the Landlord from all sources provided, however, that
if at any time during the Term the method of taxation prevailing
at the commencement of the Term shall be altered so that any new
tax, assessment, levy, imposition or charge, shall be measured by
or be based in whole or in part upon the Demised Premises or the
income thereof and shall be imposed upon Landlord then all such
taxes, assessments, levies, imposition or charges to the extent
that they are so measured or based, shall be deemed to be an
Imposition for the purpose hereof, to the extent that such
Imposition would be payable if the Demised Premises were the only
property of Landlord subject to such Imposition and Tenant shall
pay and discharge the same as herein provided in respect of the
payment of any Imposition.
Section 4.04 Apportionment During First and Last Year of
Term. All Impositions which shall become payable during the fiscal
tax year in which this Lease commences or ends shall be apportioned
between Landlord and Tenant in accordance with the portion of the
tax year within the Term.
Section 4.05 Tenant's Right to Contest. Tenant may contest
any Imposition by diligently conducting proceedings in which event,
upon Tenant's request and if permitted by law, Tenant may postpone
payment of such Imposition during such contest if:
(a) Such postponement would not constitute a default
under any Landlord's mortgage;
(b) Landlord's interest in the Demised Premises would
not be endangered thereby; and
(c) Tenant deposits with Landlord the amount so
contested and unpaid, and annually thereafter adds to such deposit
such accrued interest and penalties as Landlord reasonably
estimates might be assessed against the Demised Premises in such
proceeding.
Upon the termination of such proceeding, Tenant shall pay
the amount of such Imposition (as finally therein determined)
remaining unpaid and all interest and penalties relating thereto
or, upon Tenant's request, Landlord shall pay such amount to the
extent of the funds so deposited. Upon payment in full of such
amount, interest and penalties (whether by Landlord or Tenant),
Landlord shall return any then balance of the amount so deposited.
If, during such proceeding, Landlord in good faith deems the amount
so deposited insufficient, Tenant shall upon Landlord's demand,
deposit such additional funds as Landlord reasonably requests. If
Tenant fails to deposit such additional funds, the funds
theretofore deposited may be applied by Landlord to the payment of
such Imposition, interest and penalties and any balance shall be
returned to Tenant. Landlord shall, if required through such
proceedings and requested by Tenant, join in such proceedings,
cooperate with Tenant and execute requisite documents, provided
Tenant pays Landlord's resultant expenses.
Section 4.06 Assessments Payable in Installments. With
respect to any assessment levied by any governmental or municipal
agency or authority which is or may be payable, at the option of
the taxpayer, in installments, Tenant agrees to pay Landlord, in
lieu of paying the assessment directly to the appropriate
governmental or municipal agency, as additional rent, annually,
from the date of payment of the assessment, the installment due
therefor, at least five (5) days before the last day on which each
such installment may be paid without penalty or interest. Tenant
shall not be required to pay any installment which shall fall due
after the expiration of this Lease.
ARTICLE 5
COMMENCEMENT DATE OF THE LEASE - DELAYED COMMENCEMENT
Section 5.01 Commencement Date of the Lease - Delayed Commencement.
The Commencement Date of this Lease shall occur on the earlier of: (i)
the date Landlord substantially completes Landlord's work as otherwise
set forth in Section 5.02 and delivers possession of the Premises to
Tenant, or (ii) the earlier occupancy of the Tenant.
The premises are presently occupied pursuant to the terms
and conditions of a certain Lease between Forsgate Industrial
Complex, as Landlord, and Midlantic Distribution Inc., as Tenant,
as amended, which Lease provides that either Landlord or Tenant on
thirty (30) days' prior written notice may terminate the Lease.
Landlord agrees, within three (3) business days of the execution
of this Lease, to serve notice of termination upon Midlantic
Distribution, Inc. In the event Midlantic Distribution Inc. shall
fail to vacate the Premises and deliver possession to the Landlord
in accordance with the thirty (30) day notice of cancellation, then
the Commencement Date of this Lease shall be delayed until Landlord
can deliver possession to the Tenant. Landlord agrees to institute
summary dispossess proceedings or take such other action as is
reasonably necessary to secure possession for Tenant hereunder.
If the Landlord is unable to obtain possession of the Premises on
or before the seventy-fifth (75th) day from the date of this Lease,
then Tenant shall have the right prior to the date Landlord
notifies Tenant that the Premises are vacant to terminate this
Lease. Upon termination of this Lease, both parties shall be
releaaed thereafter from and after further liability to the other,
except the return to Tenant of prepaid rent and the security
deposit. If Landlord has failed to obtain possession from the
existing tenant by December 31, 1995, then, if Tenant has not
theretofore terminated this Lease, this Lease shall terminate as
of December 31, 1995. All such notices shall be in conformance
with Article 16 of this Lease.
Section 5.02 Landlord's Work. Landlord, at no cost to
Tenant, agrees, upon obtaining possession, to paint the second
floor offices, remove ground floor offices except for lobby and
tollets, and install two overhead doors between warehouse and
demolished office area, and clean and seal the warehouse floor,
repave the parking lot, clean and wash all windows and repair
landscaping where necessary. Landlord shall immediately and in a
diligent manner, undertake Landlord's work upon obtaining
possession of the Premises and obtaining, if required, governmental
building permits, and shall substantially complete such work not
later than sixty (60) days thereafter, which date shall be an
estimated completion date, provided, however, that such date shall
be extended by any delay occasioned by scarcity of materials, entry
or occupancy by Tenant which inhibits, delays or increases the cost
of construction, strikes, labor disputes, weather conditions which
inhibit construction, fires or other casualties, governmental
restrictions and regulations, delays in obtaining governmental
permits, delays in transportation and other delays beyond the
reasonable control of Landlord.
Section 5.03 Continued Certificate of Occupancy. Upon
Landlord completing Landlord's work as set forth in Section 5.02,
Tenant shall be responsible to obtain a Continued Certificate of
Occupancy. Tenant shall be required to undertake such work, such
as installation of in-rack sprinklers, exit lines and signs, and
other requirements as imposed by the municipality, as required for
the issuance of the Continued Certificate of Occupancy permitting
Tenant to use and occupy the Demised Premises for the uses
described in the first sentence of Section 2.01.
Section 5.04 Tenant's License to Install a Racking System
Prior to the Commencement Date. At such time as Landlord has
completed its work regarding cleaning and sealing of the warehouse
floor, Landlord shall grant a revocable license to Tenant, to
install in the Premises Tenant's racking system. Such license
shall be subject to revocation by Landlord at any time, upon
written notice, in the event Landlord reasonably determines that
Tenant's exercise of the license is delaying, interfering or
otherwise impeding Landlord's Work.
The installation of racking as contemplated by this
Section 5.04 shall not be deemed, for purposes of Section 5.01,
occupancy of the Premises by the Tenant. However, Tenant shall be
deemed to have accepted that portion of the Premises so used for
racking upon installation thereof by Tenant. Tenant, however,
prior to exercising the license, shall deliver an insurance
certificate to Landlord, in compliance with the provisions of
Paragraph (iv) of Section 6.01. Tenant acknowledges that neither
Landlord nor its agents or employees shall have any liability to
Tenant as to Tenant's property as may placed pursuant to the
license in the Demised Premises.
ARTICLE 6
INSURANCE TO BE PROVIDED BY TENANT
Section 6.01 Coverage and Amount. During the Term, Tenant
shall maintain policies of insurance at its sole cost and expense
as follows:
(i) Insurance against loss or damage to the
Demised Premises by fire and from such other hazards as may be
covered by the form of all risk coverage then in effect (including
specifically damage by water, flood or earthquake) all in an amount
sufficient to prevent any coinsurance provision from becoming
effective but in any event ln an amount not less than 100% of the
then replacement value of the Building without depreciation except
for flood and earthquake insurance which shall be in the amount of
One Million Dollars ($1,000,000.00). This insurance shall include
but not be limited to the following:
a. Boiler and other pressure vessels, plate
glass and elevator insurance, if appropriate (Tenant shall have the
right to be self-insured as to plate glass); and
b. Insurance against riot or civil commotion,
vandalism, aircraft, sprinkler leakage, all risk endorsement rider
(the SMP allrisk form) or the equivalent, and "Demolition" and
"Increased Cost of Construction". In addition to the foregoing,
such insurance shall include, but not be limited to windstorm,
hail, explosion, flood or earthquake, riot and civil commotion,
damage from aircraft and vehicles, smoke damage, and such coverage
as may be deemed necessary by the Landlord. These insurance
provisions shall in no way limit or modify any of the obligations
of the Tenant under any provision of this Lease to restore the
Demised Premises.
Anything contained herein to the contrary not-
withstanding, the insurance required by this paragraph shall in
all events be sufficient to comply with the requirements of any fee
mortgage and the replacement value shall in no event be less than
FIVE MILLION FIVE HUNDRED THOUSAND and NO/100 Dollars
($5,500,000.00) except for flood and earthquake insurance which
shall be in the amount of One Million Dollars ($1,000,000.00).
Landlord may demand that such replacement value be determined from
time to time by an appraiser, engineer, architect or contractor
designated and paid for by Tenant and approved in writing by
Landlord. No omission on the part of Landlord to request any such
determination shall relieve Tenant of any of its obligations under
this Article 6.
(ii) Rent insurance, with all risk coverage,
in an amount not less than one year's current Basic Rent and
Additional Rent and one year's taxes and premiums for the insurance
required by this Article 6.
(iii) If appropriate, boiler and machinery
insurance including coverage for pressure vessels with such limits
as from time to time may be reasonably required by Landlord, but
not less than $300,000.00 per occurrence with endorsement for
actual replacement cost without depreciation.
(iv) Commercial General Liability Insurance,
including property damage, insuring Landlord and Tenant (and any
Mortgagee or other person or persons whom Landlord may designate,
called "Additional Insured" in this Lease) from and against all
claims, demands, actions or liability for injury to, or death of
any persons and for damage to property arising from or related to
the use or occupancy of the Premises or the operation of Tenant's
business. This policy must contain, but not be limited to,
coverage for premises and operations, products and completed
operations, blanket contractual, personal injury, operations,
ownership, maintenance and use of owned, non-owned, or hired
automobiles, bodily injury, and property damage. The policy must
have limits in an amount not less than THREE MILLION and NO/100
Dollars ($3,000,000.00) per occurrence and THREE MILLION and
NO/100 Dollars ($3,000,000.00) in the aggregate. This insurance
will include a contractual coverage endorsement specifically
insuring the performance by Tenant of its indemnity agreements
contained in this Lease. To the extent Tenant carries commercial
general liability insurance in excess of THREE MILLION and NO/100
Dollars ($3,000,000.00), which protects Tenant as to the Demised
Premises, then Landlord shall have the advantage of the
availability of such insurance and shall be named as an additional
insured on such liability insurance in excess of THREE MILLION and
NO/100 Dollars ($3,000,000.00).
(v) If a sprinkler shall be located in any
part of the Demised Premises, sprinkler leakage insurance in
amounts reasonably satisfactory to Landlord.
(vi) Such other insurance and in such amounts
as may from time to time be reasonably required by any fee
mortgagee holding a first mortgage on the Demised Premises against
other insurable hazards, which at the time are commonly insured
against, in the case of premises similarly situated.
If by reason of changed economic conditions Landlord's
insurance advisor reasonably concludes that these amounts of
coverage or coverages are no longer adequate, then such amount or
coverage will be appropriately increased, or obtained as the case
may be.
All policies of insurance carried pursuant to this
Article 6 shall name as insured the Landlord, and if required, any
fee mortgagee, as may be specifically designated by Landlord, as
their respective interests may appear, provided however, that rent
insurance shall be carried solely in favor of Landlord. To the
extent Landlord receives and applies proceeds of rent insurance,
Tenant shall receive a credit against rent payable hereunder.
Subject to the rights of any fee mortgagee, all losses
paid under the policy or policies under Article 6 shall be adjusted
by Landlord and the proceeds thereof shall be payable to the
Landlord and all such policies shall so provide.
Section 6.02 Forms, Certificates, Blanket Policies, Renewals,
Cancellation. All premiums on policies referred to in this Lease
shall be paid by the Tenant. The originals of such policies or
certificates shall be delivered to Landlord except when such
originals are required to be held by any fee mortgagee, in which
case, certificates of insurance shall be delivered to Landlord.
Policies or certificates with respect to renewal policies shall be
delivered to Landlord by Tenant not Iess than thirty (30) days
prior to the expiration of the original policies or succeeding
renewals, as the case may be, together with receipts or other
evidence that the premiums thereon have been paid for at least one
year. In the event the Tenant is not able to deliver the insurance
policies or certificates prior to the renewal date as aforesaid,
the Tenant may deliver binders in lieu of such policies or
certificates to the Landlord, provided, however, that the insur-
ance policies or certificates shall be delivered within sixty (60)
days after the expiration of the original policies or succeeding
renewals but in no event later than fifteen (15) days prior to the
expiration date of the binder. Premiums on policies shall not be
financed in any manner whereby the lender, on default or otherwise,
shall have the right or privilege of surrendering or cancelling the
policies. Each policy of insurance required under this paragraph
shall have attached thereto an endorsement that such policy shall
not be cancelled or modified without at least thirty (30) days
prior written notice to the Landlord, and if required, to any fee
mortgagee, as specifically designated by Landlord. Each such
policy shall contain a provision that no act or omission of Tenant
shall affect or limit the obligation of the insurance company to
pay the amount of any loss sustained and a provision waiving any
right of the insured aga1nst the Landlord. Tenant's obligations to
carry insurance required by this Lease may be brought within the
coverage of a so-called blanket policy or policies of insurance
carried and maintained by Tenant, so long as (i) Landlord and such
other persons will be named as additional insureds under such
policies as their interests may appear; and (ii) the coverage
afforded to Landlord and such other persons will not be reduced or
diminished by reason of the use of such blanket policy of
insurance; and (iii) all other requirements set forth herein are
otherwise satisfied.
Section 6.03 Recognized Insurance Companies. All insurance
provided for in this Article 6 shall be effected under valid and
enforceable policies issued by insurers which are licensed to do
business in the State of New Jersey and shall be written on the
standard policies of such companies and provide for no deductibles.
Section 6.04 Landlord's Non-Liability, Tenant's Own
Insurance. Tenant hereby waives all right of recovery which it
might have against Landlord, Landlord's agents and employees, for
loss or damage to Tenant's furniture, furnishings, fixtures,
equipment, chattels and articles of personal property located on
the Demised Premises, nor shall Landlord be liable for any business
interruption, or injury to or death of persons occurring in the
Demised Premises, or in any manner growing out of or in connection
with Tenant's use and occupation of the leased premises or the
condition thereof, notwithstanding that such loss or damage may
result from the negligence or fault of Landlord. Tenant shall
obtain insurance policies covering its furnishings, fixtures,
equipment and articles of personal property (collectively,
"Personal Property") in the Demised Premises, and Tenant shall
either cause Landlord to be named as an insured party under such
policies (without entitling Landlord to receive any loss proceeds
thereof) or obtain the insurer's waiver of all rights of subrogation
against Landlord with respect to losses insured under such policies.
Tenant shall advise Landlord promptly of the applicable
provisions of such insurance policies and notify Landlord promptly
of any cancellation or change therein.
All insurance carried by Tenant as to the Demised
Premises or as to any property located thereon or therein, whether
or not such insurance is carried pursuant to this Lease, shall
provide that the insurer waives all rights of subrogation against
Landlord with respect to losses insured under such policies.
Section 6.05 Indemnity. Tenant is and shall be in exclusive
control and possession of the Demised Premises as provided herein,
and Landlord shall not in any event whatsoever be liable for any
injury or damage to any property or to any person happening on or
about the Demised Premises, nor for any injury or damage to the
Demised Premises, nor to any property of Tenant, or of any other
person contained therein.
Tenant shall indemnify and save Landlord harmless against
and from all liabilities, claims, suits, fines, penalties, damages,
losses, fees, costs and expenses (including reasonable attorneys'
fees) which may be imposed upon, incurred by or asserted against
Landlord by reason of:
(i) Any work or thing done in, on or about the
Demised Premises or any part thereof;
(ii) Any use, occupation, condition, operation
of the Demised Premises or any part thereof or of any street,
alley, sidewalk, curb, vault, passageway, or space adjacent thereto
or any occurrence on any of the same;
(iii) Any act or omission on the part of Tenant
or any subtenant or any employees, licensees or invitees;
(iv) Any accident injury (including death) or
damage to any person or property occurring in, on or about the
Demised Premises; or any part thereof or in, on or about any street,
alley, sidewalk, curb, vault, passageway or space adjacent thereto; and
(v) Any failure on the part of Tenant to
perform or comply with any of the covenants, agreements, terms or
conditions contained in this Lease, or recording of this Lease.
The provisions of this paragraph shall survive the expiration or
earlier termination hereof.
Section 6.06 Fire Insurance Rate and Requirements. Tenant
agrees, at its own cost and expense, to comply with all of the
rules and regulations of the Fire Insurance Rating Organization
having jurisdiction and any similar body, and the insurance company
insuring the building.
Section 6.07 Waiver of Subrogation. All insurance carried
by Tenant as to the Demised Premises or as to any property located
thereon or therein, whether or not such insurance is carried
pursuant to this Lease, shall provide that the insurer waives all
rights of subrogation against the Landlord with respect to losses
insured under such policies.
ARTICLE 7
RESTORATION OF DEMISED PREMISES IN THE EVENT
OF FIRE OR OTHER CASUALTY
Section 7.01 No Abatement. No damage to the Building by fire
or other casualty shall terminate the Lease or relieve Tenant
either from payment of Basic Rent, Impositions and Additional Rent,
or from the performance of Tenant's other obligations hereunder.
Such damage or destruction shall not affect the termination of this
Lease. Tenant expressly waives the provisions of N.J.S.A. 46:8-
6 and 46:8-7 and agrees that the foregoing provisions of this
Article shall govern and control in lieu thereof.
Section 7.02 Tenant's Restoration. During the Term, Tenant
shall promptly notify Landlord of any damage to the Demised
Premises and shall, at its own cost and regardless of the suf-
ficiency of insurance proceeds restore the Building subject to
Section 8.07 as nearly as possibIe to its condition immediately
prior to the damage. Restoration shall be commenced promptly after
the occurrence of any such damage and completed with due diligence.
As promptly as reasonably possible after damage, Tenant
shall notify Landlord of its estimate of the cost of restoration
certified correct by Tenant's architect, which architect to be
reasonably approved by Landlord, and provide Landlord with such
substantiation thereof as Landlord reasonably requests. If the
estimated cost of the restoration exceeds the insurance proceeds,
Tenant shall, prior to the commencement of the restoration, deposit
the deficiency in accordance with Section 7.03. If such determina-
tion has not been made when the restoration is to commence, Tenant
shall so deposit the difference between Landlord's estimate of the
cost of the restoration and the insurance proceeds (any deposit by
Tenant pursuant to this Section 7.03 being hereinafter referred to
as the "deficiency deposit") and, upon the determination of the
estimated cost of the restoration, any excess amount so deposited
shall promptly be refunded to Tenant. Before commencing with any
restoration which would cost more than $50,000.00, Tenant's
architect shall prepare plans and specifications therefor, for
Landlord's and any fee mortgagee's approval. There shall be no
material deviation from such plans and specifications without
Landlord's and the fee mortgagee's approval. The reasonable
expenses of Landlord and the fee mortgagee in reviewing such plans
and specifications and reviewing requests for disbursements shall
be paid by Tenant as Additional Rent.
Section 7.03 Disbursement of Insurance Funds. In the event
of such damage or destruction, which would cost more than FIFTY
THOUSAND and NO/100 Dollars ($50,000.00) to restore, any insurance
money recovered by the Landlord shall be paid over to a banking
company selected by the Landlord to act as an Insurance depository,
and such Insurance Depository shall pay out such money from time
to time to the Tenant as the repairing, restoration and rebuilding
(collectively called the "work") progresses. All amounts received
shall be applied by Tenant to the cost of repairing such damage and
restoring the Demised Premises, and the Tenant shall proceed with
reasonable diligence to repair such damage and to restore the
Demised Premises substantially to the condition thereof existing
immediately prior to the occurrence of such damage or destruction.
The insurance proceeds shall be paid out by the Insurance Depository
from time to time upon Tenant's written request, accompanied by:
(a) A certificate signed by the Tenant and the architect
or engineer in charge of the work, dated not more than thirty (30)
days prior to such request, setting forth the following:
(i) That the sum then requested either has
been paid by Tenant, or is justly due to contractors,
subcontracitors, materialmen, engineers, architects or other persons
who have rendered services or furnished materials for the
restoration therein specified, the names and addresses of such
persons, a brief description of such services and materials, the
several amounts so paid or due to each of said persons in respect
thereof, that no part of such expenditures has been or is being
made the basis, in any previous or then pending request, for the
withdrawal of insurance money or has been made out of the proceeds
of insurance received by Tenant, and that the sum then requested
does not exceed the value of the services and materials described
in the certificate.
(ii) That except for the amount, if any, stated
(pursuant to the foregoing subclause (a)(i) in such certificate to
be due for services or materials, there is no outstanding
indebtedness known to the persons signing such certificate, after
due inquiry, which is then due for labor, wages, materials,
supplies or services in connection with such restoration which, if
unpaid, might become the basis of a vendor's, mechanic's laborer's
or materialman's statutory or similar lien upon such restoration
or upon the demised premises, or any part thereof, or upon Tenant's
leasehold interest therein.
(iii) That the cost, as estimated by the persons
signing such certificate, of the restoration required to be done
subsequent to the date of such certificate in order to complete the
same, does not exceed the insurance money, plus any amount deposited by
Tenant to defray such cost and remaining in the hands of the Insurance
Depository after payment of the sum requested in such certificate.
(iv) The Tenant shall furnish the Insurance
Depository at the time of any such payment with an official search
or evidence satisfactory to the Insurance Depository that there has
not been filed with respect to the Demised Premises any mechanic's
or other liens which have not been discharged of record.
(b) An opinion of counsel or other evidence, reasonably
satisfactory to the Insurance Depository, to the effect that there
has not been filed with respect to the Demised Premises, or any
part thereof, or upon Tenant's leasehold interest therein any
vendor's, mechanic's, laborer's, materialman's or other lien which
has not been discharged of record, except such as will be dis-
charged by payment of the amount then requested.
(c) If the insurance money in the hands of the Insurance
Depository and such other sums, if any, deposited with the
Insurance Depository shall be insufficient to pay the entire cost
of such work, the Tenant agrees to pay the deficiency. Upon
completion of the work and payment in full thereof by the Tenant,
the Insurance Depository shall turn over to the Tenant, upon sub-
mission of proof satisfactory to the Landlord that the work has
been paid for in full, any insurance money then remaining and such
other sums, if any, deposited with the Insurance Depository then
remaining in the hands of the Insurance Depository.
(d) Tenant shall pay all charges and fees, including
attorneys' fees, of any bank, trust company or other entity that
performs the functions provided for in Section 7.03 hereof.
Section 7.04. Damage to or destruction of the Demised
Premises as aforesaid shall not reduce or abate to rent herein
reserved. Such damage or destruction shall not effect a termination of
this Lease. Tenant expressly waives the provisions of N.J.S.A. 46:8-6
and 46:8-7 and agrees that the foregoing provisions of this paragraph
shall govern and control in lieu thereof.
ARTICLE 8
REPAIRS, MAINTENANCE, UTILITIES, CHANGES
AND ALTERATIONS COMPLIANCE WITH ORDERS, ETC., EASEMENTS
Section 8.01 Tenant's Repairs and Maintenance. Tenant for
and during the Term, at Tenant's sole cost and expense, assumes all
responsibility and obligation for the physical condition of the
Demised Premises and its sidewalks, curbs, grounds, parking area
and utilities and shall keep the same in good order and first class
condition free of accumulation of dirt, rubbish, snow and ice, and
shall make all necessary repairs thereto, interior and exterior,
structural and non-structural, ordinary and extraordinary and
foreseen and unforeseen. When used in this Article, the term
"repairs" shall include all necessary replacements and renewals.
All repairs made by Tenant shall be equal in quality to the
original work. The lawns, shrubs and other vegetation will be
maintained and, when required, replaced or renewed. Tenant shall
obtain a roof maintenance contract and a maintenance contract for
the heating, ventilation and air conditioning systems in the
building. Such contract shall provide for semi-annual maintenance
of the roof and the HVAC systems, and copies of the maintenance
agreements shall be submitted to Landlord, together with an annual
report of the maintenance company as to the condition and repairs
made to the roof and the systems. In the event the Tenant shall
fail to maintain the premises as afoeesaid, the Landlord may serve
notice upon the Tenant to correct same and if the Tenant shall fail
to do so within 15 days after notice, the Landlord is authorized
to take whatever action the Landlord deems reasonably necessary to
maintain the Demised Premises, all at the expense of the Tenant.
The Tenant shall under no circumstances, paint either the inside
or the outside of the masonry walls or the concrete floors without
first obtaining Landlord's written consent. Upon surrender, if
Tenant shall violate this undertaking, then, Tenant shall cause
any such painting to be removed and the finish restored to its
original condition.
Section 8.02 Landlord's Responsibility. Provided Tenant
notifies Landlord of the necessity of the repair prior to the last
day of the twelfth (12th) month of the Term, Landlord, at its sole
cost and expense, shall at the request of Tenant remedy all
material defects in workmanship and materials used in the
construction of the building which results in an interference with
Tenant's reasonable use of the Premises, evidence of which shall
appear or be discovered on or before the last day of the twelfth
(12th) month of the Lease Term. Notwithstanding the foregoing, if
Tenant shall make any change or alteration, structural or
otherwise, to any portion of the building or lands, Landlord's
obligations as heretofore provided shall not thereafter extend to
the portion of the building or the Premises so changed or altered
by Tenant to the extent any portion thereof is adversely affected
by the change or alteration. If such change or alteration made by
Tenant affects any warranty which Landlord obtained, Landlord shall
be excused from Landlord's obligation to the extent such warranty
is abrogated, voided or diminished. Landlord's liability under
this section is limited to repair or correction of the defect or
condition to be rectified and Landlord shall not be liable for any
consequential loss or damage.
On the commencement date of the Lease, the roof will be free
of leaks.
Section 8.03 Utilities. Tenant shall make arrangements
directly with the appropriate utility companies for the supply of
gas, electricity, water, light, power, telephone and shall pay all
fees, expenses and charges therefore to such companies.
Section 8.04 Tenant's Responsibility. Landlord shall not be
required to furnish any services or facilities or to make any
repairs or alterations on or to the Building or the Demised
Premises and Tenant assumes the full responsibility for the
condition, operation, repair, replacement, maintenance and
management of the Demised Premises.
Section 8.05 Compliance. During the Term, Tenant, at its
cost, shall promptly comply with all present and future laws,
ordinances, or other governmental regulations (including, but not
limited to, the Americans with Disabilities Act of 1990-ADA) and
all present and future applicable requirements of the Fire
Insurance Rating Organization of New Jersey (or other body
exercising similar functions), whether or not the same requires
structural repairs or alterations, foreseen or unforeseen, ordinary
as well as extraordinary, which may be applicable to the Demised
Premises, the fixtures and equipment thereof, or the use or manner
of use of the Demised Premises. Tenant agrees to comply with all
zoning ordinances and the responsibility for specific use or uses
shall be that of the Tenant and the Landlord makes no representation
as to any permissive use.
Tenant may contest the validity of any such requirement
at its expense and defer compliance therewith pending such contest,
provided such deferral shall neither constitute a default under any
mortgage of the Landlord or cause the imposition of any lien
against the Demised Premises nor subject Landlord to any criminal
or civil liability.
Section 8.06 Environmental Compliance. Tenant agrees, that
under all circumstances, Tenant shall comply with all federal,
state and local laws, ordinances, rules and regulations which are
applicable, as to the conduct of Tenant's business as it relates,
to the environment, including but not limited to, spillage,
pollution, and storage. Tenant hereby represents that its Standard
Industrial Classification number ("S.I.C.") is 5190 and its
operations shall consist of only those activities otherwise set
forth in the first sentence of Section 2.01. Tenant will not
permit the operations at the Premises to so change so that the
S.I.C. designation heretofore enumerated will change.
Tenant shall, prior to July 30, 1995, obtain its own
environmental consultant to do such audit and investigation of the
Demised Premises as Tenant deems appropriate or necessary, to
satisfy Tenant as to the environmental condition of the Premises.
If, in the sole judgment of the Tenant, such environmental audit
and investigation is not satisfactory to Tenant, then Tenant shall
have the right to terminate this Lease, provided and subject,
however, that such right shall be exercised on or before July 30,
1995, TIME BEING OF THE ESSENCE, and such notice of termination is
served together with a copy of all of Tenant's environmental
reports so obtained. The right to terminate this Lease shall be
void and without further force and effect subsequent to July 30,
1995, if Tenant has not theretofore exercised its right of termination.
All such notices shall be in conformance with Article 16 of this Lease.
Notwithstanding any provision of the Industrial Site
Recovery Act, N.J.S.A. 13:lK-6, et seq., and the regulations
promulgated thereunder, and any successor or amended legislation
or regulations ("ISRA") to the contrary, if Tenant is operating an
"industrial establishment" as that term is defined in ISRA, Tenant
shall, at its own cost and expense, comply with ISRA whenever an
obligation to do so arises, including by reason of a closing,
terminating or transferring operations. Tenant shall, at its own
cost and expense, make all submissions to, provide all information
to, and comply with all requirements of the New Jersey Department
of Environmental Protection & Energy ("DEPE") pursuant to ISRA.
Should the DEPE determine that a Remediation Action Work Plan must
be prepared and that remediation must be undertaken because of any
spills or discharge of a hazardous substance or hazardous waste (as
those terms are defined in ISRA) at the premises, then Tenant
shall, at Tenant's own expense, prepare and submit the required
documents and remediation funding source, and carry out the
approved plans. Landlord covenants and agrees with Tenant that
Tenant shall not be responsible for any environmental cleanup costs
solely related to a spill or discharge of hazardous substance or
hazardous waste which occurred prior to the commencement date of
the Lease. At no expense to the Landlord, Tenant shall promptly
provide all information requested by Landlord regarding or in
furtherance of ISRA compliance. Tenant shall sign any affidavit
submitted to it by Landlord which is true, accurate and complete;
and if an affidavit is not true, accurate and complete, Tenant
shall supply the necessary information to make it true, accurate
or complete and shall then sign the same. Tenant shall promptly
supply Landlord with any notices, correspondence or submissions of
any nature made by Tenant to, or received by Tenant from, the DEPE,
United States Environmental Protection Agency, or any local, state
or federal authority concerning compliance with applicable
Environmental Law. In the event Tenant uses, stores or generates
hazardous substances, as that term is otherwise defined in this
Lease, Tenant will so advise Landlord. In such event, Tenant
shall, if requested by Landlord, but no more frequently than
annually, supply the Landlord a list of all such hazardous
substances used, generated or stored at the Demised Premises during
the preceding twelve (12) months. Information to be provided shall
be in a narrative report, including a description and
quantification of hazardous substances and wastes which were
generated, manufactured, stored or disposed of at the Premises
during the preceding twelve (12) months. In addition to the
foregoing, if Tenant uses, stores or generates hazardous
substances, as that term is otherwise herein defined in this Lease,
then Landlord shall have the right to require Tenant to hire a
consultant, reasonably satisfactory to the Landlord, to undertake
an Environmental Site Assessment and Site Investigation, as those
terms are defined in ISRA, and if that report indicates a spill or
discharge of hazardous substance at the Premises, an appropriate
report will be filed with the applicable governmental agencies and
Tenant shall Remediate the spill or discharge in accordance with
ISRA and other applicable Environmental Laws.
In the event a lien shall be filed (i) against the
Premises during the term of this Lease arising out of hazardous
substances or hazardous waste spilled or discharged after the
commencement date of this Lease, or (ii) after the commencement of
the term of this Lease arising from a violation of applicable
Environmental Law which occurred during the term of this Lease,
then Tenant shall, within thirty (30) days from the time Tenant is given
notice of the lien, pay the claim and remove the lien from the Premises.
Subject to the last paragraph of this Section 8.06,
Tenant shall indemnify, defend and hold harmless from all fines,
suits, procedures, claims, liabilities, costs and actions of any
kind, including counsel fees (including those to enforce this
indemnity), arising out of or in any way connected with any spills
or discharges of hazardous substances or hazardous waste at the
Premises, except those which occurred as otherwise provided in the
immediately succeeding paragraph of this section; and from all
fines, suits, procedures, claims, liabilities, costs and actions
of any kind, including counsel fees (including those to enforce
this indemnity), arising out of Tenant's failure to comply with the
provisions of this Section 8.06. Tenant's obligations and
liabilities under this Section 8.06 shall survive the expiration
or earlier termination of this Lease and shall continue so long as
Landlord remains responsible or liable for either any spills or
discharges of hazardous substances or hazardous waste at the
Premises or any violation of applicable Environmental Laws.
Tenant's failure to abide by the terms of this Section 8.06 shall
be enforceable by injunction. The undertaking of the Tenant
hereunder shall survive termination of this Lease, provided and
subject, however, that Tenant's responsibility shall only apply as
to violation of Environmental Laws which occurred during Tenant's
Lease term. If Tenant can prove in a reasonable manner that a
violation of Environmental Laws did not occur during Tenant's Lease
term, then, after such events, Tenant shall have no responsibility
or liability as to any such noncompliance.
Landlord covenants and agrees with Tenant that Tenant
shall not have any liability for either the storage of, a spill of
or discharge of a Hazardous Substance which occurred prior or
subsequent to this Lease Term, or occurred by reason of a spill or
discharge of a Hazardous Substance on lands other than the Demised
Premises and such storage of, spill of or discharge is not due to
any act or omission of Tenant or Tenant's officers, directors,
employees, agents or invitees.
If Landlord or Landlord's prior tenants at the Demised
Premises caused a spill or discharge of hazardous substance or
hazardous waste at the Premises, then as to either of such events,
Landlord will defend, indemnify and hold Tenant harmless from all
fines, suits, proceedings, claims, liabilities, costs and actions
of any kind, including counsel fees (including those to enforce
this indemnity), arising out of or in any way connected with a
spill or discharge of hazardous substance or hazardous waste at the
Premises directly caused by Landlord or by a prior tenant of Landlord.
Section 8.07 Alterations. During the Term, Tenant shall not
make structural alterations but may, at its cost, make
non-structural alterations to the Demised Premises necessary for
the conduct of its business, subject to the following:
(a) Tenant shall first obtain requisite permits and
authorizations from governmental authorities having jurisdiction;
(b) Obtain Landlord's, and if required, the fee
mortgagee's, prior written consent, (which Landlord's consent not
to be withheld if the change or alteration would not, in the
reasonable opinion of the Landlord, impair the value or usefulness
of the Building or any part of the Demised Premises).
(c) Any alterations shall be made promptly (unavoidable
delays excepted), in a workmanlike manner in accordance with any
alteration plans and in compliance with applicable laws and
governmental regulations;
(d) The cost of the alterations shall be paid by Tenant
so that the Demised Premises remains free of any liens;
(e) If requested by Landlord, post with Landlord adequate
security to assure restoration of the premises at the end of the Term;
(f) Tenant shall maintain Workmen's Compensation
Insurance covering all persons on whose behalf death or injury
claims could be asserted, until the alteration is completed;
(g) No change or alterations shall, when completed, tie
in or connect the Demised Premises with any other building on
adjoining property.
(h) During such time as Tenant shall be constructing any
improvements, Tenant, at its sole cost and expense, shall carry,
or cause to be carried, (i) Workmen's Compensation Insurance
covering all persons employed in connection with the improvements
in statutory limits, (ii) a completed operations endorsement to the
Commercial General Liability Insurance policy referred to in
Section 6.1(iv), (iii) Builder's Risk Insurance, completed value
form, covering all physical loss, in an amount reasonably
satisfactory to Landlord, and (iv) such other insurance, in such
amounts, as Landlord deems reasonably necessary to protect
Landlord's interest in the Demised Premises from any act or
omission of Tenant's contractors or subcontractors.
(i) No permitted alteration shall be undertaken until
detailed Plans and Specifications have first been submitted to and
approved in writing by Landlord, and, if required, by the fee
mortgagee. At the completion of the alteration or restoration
under Article 7, "as-built" plans shall be delivered to Landlord.
Section 8.08 Restoration. Any alteration made by Tenant
under Article 8 hereof shall, at Landlord's option, become
Landlord's property, or, at the election of Landlord, shall be
removed by the Tenant thirty (30) days prior to the termination of
the Term and the Demised Premises shall be restored to its condi-
tion prior to such alteration. The security deposited under
Section 8.06(e) hereof shall be returned to the Tenant at the end
of the Term if Landlord elects to have such improvement remain, or,
returned to Tenant after restoration by Tenant if Landlord directs
that said alteration be removed and the premises restored.
Section 8.09. Landlord hereby reserves to itself its
successors and assigns the right to construct, maintain and use
ingress and egress easements, railroad easements, utility ease-
ments, drainage easements, across, over and under the Demised
Premises, to or from other lands now owned or in the future ac-
quired by the Landlord, provided however, that the same be at the
cost of the Landlord and does not unreasonably interfere with the
use of the Demised Premises by the Tenant.
ARTICLE 9
LEASE PROVISION AGAINST ASSIGNMENT, MORTGAGE,
OR SUBLET BY TENANT WITHOUT LANDLORD'S PERMISSION,
LANDLORD'S RIGHT OF RECAPTURE
Section 9.01. Tenant covenants and agrees for Tenant and its
successors, assigns, and legal representatives, that neither this
Lease nor the term and estate hereby granted, nor any part hereof
or thereof, will be assigned, mortgaged, pledged, encumbered or
otherwise transferred (whether voluntarily, involuntarily, by
operation of law, or otherwise), and that neither the Demised
Premises, nor any part thereof, will be encumbered in any manner
by reason of any act or omission on the part of Tenant, or will be
used or occupied, or permitted to be used or occupied, or utilized
for desk space or for mailing privileges or as a concession, by
anyone other than Tenant, or for any purpose other than as
hereinbefore set forth, or will be sublet, without the prior
written consent of Landlord in every case; provided, however, that,
if Tenant is a corporation, the assignment or transfer of this
Lease, and the term and estate hereby granted, to any corporation
into which Tenant is merged or consolidated or to which its assets
are sold (such corporation being hereinafter in this Article called
"Assignee") without the prior written consent of Landlord shall not
be deemed to be prohibited hereby if, and upon the express condi-
tion that, Assignee shall promptly execute, acknowledge, and
deliver to Landlord an agreement in form and substance satis-
factory to Landlord whereby Assignee shall assume and agree to
perform and to be personally bound by and upon, all the covenants,
agreements, terms, provisions, and conditions set forth in this
Lease on the part of Tenant to be performed, and whereby Assignee
shall expressly agree that the provisions of this Article shall,
notwithstanding such assignment or transfer, continue to be binding
upon it with respect to all future assignments and transfers and
provided such Assignee shall prove to the satisfaction of Landlord
that its net worth is at least equal to that of Tenant as of the
date hereof.
Section 9.02. Subject to Section 9.01 hereof, which shall
take precedence over the provisions hereof, in the event Tenant
desires Landlord's consent to an assignment or subletting of all
or any part of the Demised Premises, Tenant, by notice in writing,
(a) shall notify Landlord of the name of the proposed assignee or
subtenant, such information as to the proposed assignee's or sub-
tenant's financial responsibility and standing as Landlord may
require, and a copy of the proposed assignment or sublease executed
by all parties; and (b) shall offer to vacate the space covered by
the proposed area to be subleased or the entire Demised Premises
in the event of an assignment (as the case may be) and to surrender
the same to Landlord as of a date (the "Surrender Date") specified
in said offer that shall be the last day of any calendar month
during the term hereof, provided, however, that the Surrender Date
shall not be earlier than the date occurring ninety (90) days after
the giving of such notice nor be later than the effective date of
the proposed assignment or the commencement date of the term of the
proposed sublease. Landlord may accept such offer in writing by
notice to Tenant given within thirty (30) days after the receipt
of such notice from Tenant. If Landlord accepts such offer, Tenant
shall surrender to Landlord, effective as of the Surrender Date,
all Tenant's right, title, and interest in and to the portion of
the Demised Premises covered by the proposed sublease, or, if
Tenant proposes to sublet the entire Demised Premises, or assign
this Lease, all Tenant's right, title and interest in and to the
entire Demised Premises. In the event of such surrender by Tenant
of a portion of the Demised Premises, then, effective as of the
date immediately following the Surrender Date, the Basic Rent shall
be reduced by an amount equal to that portion of the Basic Rent
that is allocable to the space so surrendered, and the Additional
Rent shall be equitably adjusted. If the entire premises be so
surrendered by Tenant, this Lease shall be cancelled and terminated
as of the Surrender Date with the same force and effect as if the
Surrender Date were the date hereinbefore specified for the
expiration of the full term of this Lease.
In the event of any such surrender by Tenant of the
Demised Premises or a portion thereof, Landlord and Tenant shall,
at the request of either party, execute and deliver an agreement
in recordable form to the effect(s) hereinbefore stated.
Section 9.03. In the event Landlord does not accept such
offer of Tenant referred to in Section 9.02 hereof, Landlord
covenants not to unreasonably withhold its consent to such proposed
assignment or subletting by Tenant of such space to the proposed
assignee or subtenant on said covenants, agreements, terms,
provisions, and conditions set forth in the notice to Landlord
referred to in clause (a) of the first sentence of Section 9.02
hereof; provided, however, that Landlord shall not in any event be
obligated to consent to any such proposed assignment or subletting
unless:
(a) The use of the proposed assignee or subtenant is (i)
for warehousing of products which are non-hazardous and are not
"toxic pollutants" (ii) does not violate any of the negative
covenants as to use as contained in this lease and (iii) is in
keeping with the then standards of Landlord as to the use of the
Building.
(b) The proposed assignee or subtenant shall be the
actual user of the premises and shall agree that it shall not have
the right to sublease the premises or subsequently assign the Lease;
(c) The proposed assignee or subtenant is not then a
tenant or occupant of any part of the industrial park in which the
Demised Premises are located;
(d) There shall be no default by Tenant under any of the
terms, covenants, and conditions of this Lease at the time that
Landlord's consent to any such assignment or subletting is
requested and on the effective date of the assignment or the
proposed sublease;
(e) Tenant shall reimburse Landlord for any reasonable
expenses that may be incurred by Landlord in connection with the
proposed assignment or sublease, including without limitation the
reasonable costs of making investigations as to the acceptability
of a proposed assignee or subtenant and reasonable legal expenses
incurred in connection with the granting of any requested consent
to the assignment or sublease;
(f) The proposed assignment shall be for a consideration
or the proposed subletting shall be at a rental rate not less than
the rental rates then being charged under leases being entered into
by landlord for comparable space in the Building and any other
similar buildings owned or operated by Landlord in a radius of five
(5) miles from the Demised Premises and for a comparable term.
(g) Such permitted assignment shall be conditioned upon
Tenant's delivery to Landlord of an executed instrument of
assignment (wherein the assignee assumes, jointly and severally
with Tenant, the performance of Tenant's obligations hereunder).
(h) Such permitted sublease shall be conditioned upon
Tenant's delivery to Landlord of an executed instrument of sublease
(wherein Tenant and such sublessee agree that such sublease is
subject to the Lease and such sublessee agrees that, if the Lease
is terminated because of Tenant's default, such sublessee shall,
at Landlord's option, attorn to Landlord).
(i) Tenant shall at Tenant's own expense first comply
with ISRA and fulfill all of Tenant's environmental obligations
under this Lease which also arise upon termination of Tenant's
Lease term. If this condition shall not be satisfied, then Landlord
shall have the right, to withhold consent to a sublease or assignment.
Section 9.04. Each subletting pursuant to this Article shall
be subject to all the covenants, agreements, terms, provisions, and
conditions contained in this Lease. Tenant covenants and agrees
that, notwithstanding such assignment or any such subletting to any
subtenant and/or acceptance of Basic Rent or Additional Rent by
Landlord from any subtenant, Tenant shall and will remain fully
liable for the payment of the Basic Rent and Additional Rent due
and to become due hereunder and for the performance of all the
covenants, agreements, terms, provisions, and conditions contained
in this Lease on the part of Tenant to be performed. Tenant
further covenants and agrees that, notwithstanding any such
assignment or subletting, no other and further assignment,
underletting, or subletting of the Demised Premises or any part
thereof shall or will be made except upon compliance with the
subject to the provisions of this Article. Tenant shall promptly
furnish to Landlord a copy of each such sublease.
Section 9.05. If this Lease be assigned, or if the Demised
Premises or any part thereof be sublet or occupied by anybody other
than Tenant, Landlord may, after default by Tenant, collect rent
from the assignee, subtenant, or occupant, and apply the net amount
collected to the rent herein reserved, but no such assignment,
subletting, occupancy, or collection shall be deemed a waiver by
Landlord of any of Tenant's covenants contained in this Article or
the acceptance of the assignee, subtenant, or occupant as Tenant,
or a release of Tenant from the further performance by Tenant of
covenants on the part of Tenant herein contained.
Section 9.06. If for any assignment or sublease, Tenant
receives rent or other consideration, either initially, or over the
term of the assignment or sublease, in excess of the rent called
for hereunder, or in the case of the sublease of a portion of the
demised premises, in excess of such rent fairly allocable to such
portion, after appropriate adjustment to assure that all other
payments called for hereunder are appropriately taken into account,
Tenant shall pay the Landlord, as additional rent hereunder, one
half (1/2) of the excess of each such payment of rent or other
consideration received by Tenant promptly after its receipt.
Section 9.07 In the event Tenant subleases a portion of the
premises to an entity which is a wholly owned subsidiary or
division of the Tenant, then in such event, the provisions of
Section 9.06 shall not be applicable as to any such sublease, and
the provisions of Section 9.02 shall not be applicable to any such
sublease. However, Tenant shall comply with the other provisions
of this Article 9. Tenant shall not be prohibited from permitting
wholly owned subsidiaries or a division thereof from occupancy of
the premises under Tenant's leasehold rights.
Section 9.08 As to Section 9.03, Landlord agrees within
fifteen (15) business days of receipt of Tenant's request for a
consent to an assignment of subletting, to respond to Tenant.
ARTICLE 10
LANDLORD'S REMEDIES IN EVENT OF THE TENANT'S DEFAULT OR BANKRUPTCY
Section 10.01 Events of Default. If any one or more of the
following events (hereinafter called "events of default") occurs:
(a) Tenant shall default in payment of any installments
of rent or other sums required to be paid by Tenant under this
Lease, which default shall continue for ten (10) days after written
notice thereof by Landlord to Tenant; or in the observance or
performance of any other covenant or provision of this Lease and
such default continues for thirty (30) days after notice of such
default from Landlord (unless such default cannot be cured within
(30) days) and Tenant commences to cure such default within such
30 days and diligently proceeds to cure such default; or
(b) If the Demised Premises shall be left vacant or
unoccupied or be deserted for a period of sixty (60) days; or
(c) Tenant shall make an assignment for the benefit of
creditors;
(d) Tenant shall attempt to transfer, assign or sublet
or hypothecate this Lease except as otherwise specifically
permitted in Article 9 hereof; or
(e) A voluntary petition is filed by Tenant under any
laws for the purpose of adjudication of Tenant as a bankrupt or the
extension of the time of payment, composition, arrangement,
adjustment, modification, settlement or satisfaction of the
liabilities of Tenant, or the reorganization of Tenant under the
Bankruptcy Act of the United States or any future laws of the
United States having the same general purpose, or receivers
appointed for Tenant by reason of insolvency or alleged insolvency
of Tenant; an involuntary petition shall be filed against Tenant
for such relief and shall not be dismissed within sixty (60) days;
Upon the happening of an event of default, and such event
of default is not cured within the time periods as otherwise
hereinbefore set forth, then Landlord, notwithstanding any other
right or remedy it may have under the Lease, at law or in equity,
may terminate the Lease, by notice to Tenant setting forth the
basis therefor and effective not less than seven (7) days
thereafter, whereupon, upon such effective date, the Lease shall
terminate (with the same effect as if such date were the date fixed
herein for the natural expiration of the Term), Tenant shall
surrender the demised premises to Landlord and Tenant shall have
no further rights hereunder, but Tenant shall remain liable as
hereinafter provided. In such event, Landlord may, without further
notice, enter the demised premises, repossess the same and
dispossess Tenant and all other persons and property therefrom.
Section 10.02 Landlord's Damages. If Landlord so terminates
the Lease, Tenant shall pay Landlord, as damages:
(a) A sum which represents any excess of (i) the
aggregate of the rent, impositions and additional rent for the
balance of the term if the Lease were not so terminated, over (ii)
the net rental value of the demised premises at the effective date
of such termination, both discounted at the rate of four (4)
percent per annum; or, at Landlord's option,
(b) Sums equal to the rent, impositions and additional
rent, when the same would have been payable if not for such
termination, less any net rents received by Landlord from any
reletting, after deducting all costs incurred in connection with
such termination and reletting (but Tenant shall not receive any
excess of such net rents over such sums).
Landlord may commence actions or proceedings to recover
such damages or installments thereof at any lawful time. No provision
hereof shall be construed to preclude Landlord's recovery from Tenant of
any other damages to which landlord is lawfully entitled.
Section 10.03 Nonexclusivity. No right or remedy herein con-
ferred upon Landlord is intended to be exclusive of any other right
or remedy herein or by law provided, but each shall be cumulative
and subject to the grace and notice provisions of Section 10.01
hereof, in addition to every other right or remedy given herein or
now or hereafter existing at law or in equity or by statute.
Landlord shall be entitled, to the extent permitted by law, to
injunctive relief in case of the violation, or attempted or
threatened violation, of any of the provisions of this Lease, or
to a decree compelling observance or performance of any provision
of this Lease, or to any other legal or equitable remedies.
Nothing herein contained shall limit or prejudice the right of the
Landlord in any bankruptcy or reorganization or insolvency
proceeding, to prove for and obtain as liquidated damages by reason
of such termination an amount equal to the maximum allowed by any
bankruptcy or reorganization or insolvency proceedings, or to prove
for and obtain as liquidated damages by reason of such termination,
an amount equal to the maximum allowed by any statute or rule of
law, whether such amount shall be greater or less than the excess
referred to in Section 10.02.
Section 10.04 Landlord's Right to Perform Tenant's Covenants.
If Tenant shall fail to pay any tax, pay for or maintain or deliver
any of the insurance policies or shall fail to make any other
payment or perform any other act which Tenant is obligated to make
or perform under this Lease, then, Landlord after notice to Tenant
may perform for the account of Tenant any covenant in the perfor-
mance of which Tenant is in default. Tenant shall pay to the
Landlord as additional rent, upon demand, any amount paid by
Landlord in the performance of such covenant in any amount which
Landlord shall have paid by reason of failure of Tenant to comply
with any covenant or provision of this Lease, including reasonable
attorneys fees incurred in connection with the prosecution or
defense of any proceedings instituted by reason of default of
Tenant, together with interest at the maximum lawful rate of in-
terest then allowed by the State of New Jersey, but not more than
two (2%) percent per month from the date of payment by Landlord
until paid by Tenant.
Section 10.05 No Waiver. No waiver by Landlord of any breach
by Tenant of any of Tenant's obligations hereunder shall be a
waiver of any subsequent breach or of any obligation, agreement or
covenant, nor shall any forbearance by Landlord to seek a remedy
for any breach by Tenant be a waiver by Landlord of Landlord's
rights and remedies with respect to such or by subsequent breach.
Section 10.06 Right of Re-Entry. In the event that the
termination of this Lease is the result of any election exercised
by Landlord pursuant to the terms of this Article, the Landlord
shall be entitled to the rights, remedies and damages set forth in
this Article and elsewhere in this Lease. Tenant waives the
service of notice of intention to re-enter as provided for in any
statute and also waives any and all right of redemption in case
Landlord obtains possession by reason of Tenant's default. Tenant
waives any and all right to a trial by a jury in the event that
summary proceedings shall be instituted by Landlord. The terms
"enter", "re-enter", "entry" or "reentry", as used in this Lease
are not restricted to their technical legal meaning.
Section 10.07 Payment of Landlord's Counsel Fees and Other
Costs. Tenant shall pay the Landlord as additional rent, upon
demand, Landlord's reasonable attorneys fees incurred by Landlord
in connection with the prosecution or defense of any proceeding
instituted by reason of default of Tenant, together with interest
on such sum at the rate of two (2%) percent per month from the date
of payment by Landlord until repaid by Tenant to Landlord, this
covenant to survive the expiration or sooner termination of this Lease.
Section 10.08 Noncurable Default. If Tenant fails, on four
(4) separate occasions in any twelve (12) month period during the
Term hereof, to make payment of the rent and or additional rent and
or late charges on or before the due date, then, whether or not
Tenant ultimately makes and Landlord accepts the required payment
after the due date, such failure shall entitle Landlord, upon or
at any time after such fourth separate occasion, to pursue the remedies
provided in this Article, said circumstances being hereby declared a
default no longer susceptible of being cured or removed by Tenant.
ARTICLE 11
SUBORDINATION OF LEASE TO MORTGAGE ON THE DEMISED PREMISES
Section 11.01 Subordination to Mortgages. At the option of
Landlord, this Lease shall either be:
(a) Subject and subordinate to all mortgages which may
now or hereafter affect the Demised Premises, and to all renewals,
modifications, consolidations, replacements or extensions thereof,
provided however, that the holder of any such mortgage shall
execute with Tenant a Non-Disturbance Agreement hereinafter
described; or
(b) This lease shall be paramount in priority as an
encumbrance against the Demised Premises with respect to the lien
of any mortgage which may now or hereafter affect the Demised
Premises and to all renewals, modifications, consolidations,
replacements and extensions thereof.
Section 11.02 Non-Disturbance Agreement. The non-
disturbance agreement referred in Section 11.01 shall be an
agreement in recordable form between Tenant and the holder of such
mortgage, binding on such holder and on future holders of such
mortgages, or an agreement by such holder expressed in such
mortgage, which shall provide in substance that, so long as Tenant
is not in default under any of the terms, covenants, provisions or
conditions of this Lease, neither such holder nor any other holder
of such mortgage shall name or join Tenant as a party-defendant or
otherwise in any suit, action or proceeding to enforce, nor will
this Lease or the term hereof be terminated (except as permitted
by the provisions of this Lease) or otherwise affected by
enforcement of, any rights given to any holder of such mortgage,
pursuant to the terms, covenants or conditions contained in such
mortgage or any other document held by any holder or any rights
given to any holder as a matter of law. Upon request of holder of
a mortgage to which this Lease becomes subordinate, Tenant shall
execute, acknowledge and deliver to such holder an agreement to
attorn to such holder as Landlord if such holder becomes Landlord
hereunder and/or execute, acknowledge and deliver to such holder
an agreement not to pay the Basic Rent for a period of more than
one (1) month in advance.
ARTICLE 12
EXONERATION OF INDIVIDUALS
Section 12.01 Exoneration. Neither Landlord, nor its successors
or assigns, shall have any personal liability in respect to
any of the covenants or conditions of this Lease. The Tenant shall
look solely to the equity of the Landlord in the Demised Premises
for satisfaction of the remedies of the Tenant in the event of a
breach by the Landlord of any of the covenants or conditions of
this Lease and no other property or assets of Landlord shall be
subject to levy, execution or other enforcement procedure for the
satisfaction of Tenant's remedies in the event of a breach or
violation by Landlord of any of the terms of this Lease or any
other liability which the Landlord might have to the Tenant.
Whenever Tenant claims that Landlord is liable to Tenant by reason
of any obligation of Landlord under this Lease, Tenant's remedies
shall be restricted to a declaratory judgement and injunction for
the relief sought, and shall exclude money damages in excess of in
total One Million ($1,000,000.00 Dollars.
Section 12.02 The provisions of this Section 12.01 shall not
be applicable to Landlord's obligations under Article 23 "Security."
ARTICLE 13
COVENANT AGAINST LIENS
Section 13.01 No Liens. Tenant shall neither create nor
permit to be created or exist any lien or encumbrance affecting the
Demised Premises and shall discharge, promptly upon notice, any
lien or encumbrance arising out of any act or omision of Tenant.
Notice its hereby given that Landlord shall not be liable for any
work performed or to be performed at the Demised Premises for
Tenant, or for any materials furnished or to be furnished at the
Demised Premises for Tenant, upon credit and that no mechanic's or
other lien for such work or materials shall attach to or affect the
estate or interest of Landlord in and to the Demised Premises.
ARTICLE 14
EMINENT DOMAIN
Section 14.01 Total Condemnation. If at any time during the
Term the whole of the Building shall be taken for any public or
quasi-public use under any statute, or by right of eminent domain,
or a part of the Building consisting of more than fifty (50%)
percent of the Building area shall be so taken, the Term and all
rights of the Tenant shall immediately cease and terminate as of
the date of such taking, and the Basic Rent and Additional Rent
shall be apportioned and paid to the time of such termination.
Section 14.02 Partial. In the event that only a part of the
Building area constituting fifty (50%) percent or less shall be so
taken, the Landlord or Tenant may elect to cancel this Lease
provided Landlord, within ninety (90) days after such taking, gives
notice to that effect and upon the giving of such notice, the Basic
Rent and Additional Rent shall be apportioned and paid to the date
of the expiration of the Term and this Lease and the Term shall
cease, expire and come to an end upon the expiration of said ninety
(90) days specified in said notice. If the Landlord shall not
elect to terminate as heretofore provided, this Lease shall remain
unaffected except the Tenant shall be entitled to a pro rata
reduction of Basic Rent, based on the proportion which the area of
the Building so taken bears to the area of the Building immediately
prior to such taking.
Section 14.03 Award. In case of any taking, whether
involving the whole or any part of the Demised Premises and
regardless of whether this Lease survives, the entire award shall
be paid to the Landlord and the Tenant hereby assigns such award
or awards to the Landlord. It is specifically understood and
agreed between Tenant and Landlord that Tenant shall have no right
to participate in any condemnation award for any claim whatsoever
for the unexpired leasehold, claims for fixtures, claims for
improvements, claims for value of options, if any, granted
hereunder, or options to extend the term of this Lease, or any
other claims whatsoever. Tenant hereby waives all rights to any
portion of the Award including, without limitation, any such rights
arising from any termination of Tenant's leasehold interest hereunder.
Section 14.04 Definition of "Taking". For purpose of this
Article 14, a "Taking" shall include any conveyance made in
response to a bona fide threat of condemnation.
Section 14.05 Tenant's Moving Expense. If the condemning
authority permits Tenant, in a proceeding separate from Landlord's
proceeding, to seek recovery of its moving expenses, and if such
recovery shall not diminish or affect the Award otherwise payable
to Landlord, then Tenant may, in such separate proceeding, seek
recovery for its moving expenses.
Section 14.06 Other Tenant's Rights. Tenant shall have the
right, in the event of any Taking which results in termination of
this Lease, to remove its trade fixtures and other personal
property from the Demised Premises.
ARTICLE 15
ACCESS TO PREMISES
Section 15.01 Access. The Tenant agrees to permit the
Landlord and the authorized representatives of the Landlord to
enter the Demised Premises at all times during usual business hours
upon reasonable notice, provided Landlord does not unreasonably
interfere with the normal business operations of Tenant, for the
purpose of inspecting the same and upon Tenant's failing to make
repairs or failing to comply with laws, ordinances, rules,
regulations or requirements, etc., making all necessary repairs to
the Demised Premises and performing any work therein that may be
necessary to comply with any laws, ordinances, rules, regulations
or requirements of any public authority or of the Board of Fire
Underwriters or any similar body or that the Landlord may deem
necessary to prevent waste or deterioration in connection with the
Demised Premises. Nothing herein shall imply any duty upon the
part of the Landlord to do any such work which, under any provision
of this Lease, the Tenant may be required to perform, and the
performance thereof by the Landlord shall not constitute a waiver
of the Tenant's default in failing to perform the same. The
landlord may during the progress of any work in the Demised
Premises keep and store upon the Demised Premises all necessary
materials, tools and equipment. The Landlord shall not in any
event be liable for inconvenience, annoyance, disturbance, loss of
business or other damage of the Tenant by reason of making repairs
or the performance of any work in the Demised Premises, or on
account of bringing materials, supplies and equipment into or
through the Demised Premises during the course thereof, and the
obligations of the Tenant under this Lease shall not thereby be
affected in any manner whatsoever.
The Landlord is hereby given the right during usual
business hours to enter the Demised Premises upon reasonable
notice, provided that Landlord does not unreasonably interfere with
the normal business operations of Tenant, and to exhibit the same
for the purposes of sale or hire during the final nine months of
the Term and the Landlord shall be entitled to display, on the
Demised Premises in such manner as not unreasonably to interfere
with the Tenant's business, the usual "For Sale" or "To Let" signs,
and the Tenant agrees that such signs may remain unmolested upon
the Demised Premises.
ARTICLE 16
NOTICES
Section 16.01 Notices. All notices, demands and requests
which may or are required to be given by either party to the other
shall be in writing. All notices, demands and requests by the
Landlord to the Tenant shall be sent by United States Certified
Mail, postage prepaid, addressed to the Tenant at the address
specified on the first page of this Lease or at such other place
as the Tenant may from time to time designate in a written notice
to the Landlord. All notices, demands and requests by the Tenant
to the Landlord shall be sent by United States Certified Mail,
postage prepaid, Return Receipt Requested, addressed to the
Landlord at the address shown on the first page of this Lease or
at such other place as the Landlord may from time to time designate
in a written notice to the Tenant. Notices, demands and requests
which shall be served upon the Landlord or the Tenant in the manner
aforesaid shall be deemed sufficiently served or given for all pur-
poses hereunder at the time such notice, demand or request shall
be mailed.
ARTICLE 17
ACCEPTANCE
Section 17.01 Acceptance. The Demised Premises includes a
building previously erected on the land which Tenant acknowledges
it has inspected and is fully familiar with and its conditions and
is leasing the land and building in a "as is" condition. The
Demised Premises constitutes a self-contained unit, and nothing in
this Lease shall impose any obligation upon Landlord to provide any
service for the benefit of Tenant, including, but not limited to,
water, gas, electricity, heat, air conditioning, janitorial, or any
other service or utility.
ARTICLE 18
QUIET ENJOYMENT - CONVEYANCE BY LANDLORD
Section 18.01 Ouiet Enjoyment. Tenant, upon paying the
Basic Rent and all Additional Rent and other charges herein
provided for and performing all covenants and conditions of this
Lease, on its part to be performed, shall quietly have and enjoy
the Demised Premises during the Term, without hindrance or
molestation by Landlord or any other person claiming through Landlord,
subject, however, to the terms of this Lease and to any Mortgage.
Section 18.02 Conveyance by Landlord. If Landlord shall
convey the Demised Premises, all liabilities and obligations on the
part of Landlord under this Lease shall terminate upon such
conveyance and thereafter all such liabilities and obligations
shall be the liabilities and obligations of such transferee and
shall be binding upon such transferee of the Demised Premises.
ARTICLE 19
ESTOPPEL CERTIFICATE
Section 19.01 Estoppel Certificate. Either party shall,
without charge, at any time from time to time hereafter, within ten
(10) days after written request to the other, certify by written
instrument duly executed and acknowledged to any mortgagee or
purchaser or proposed mortgagee or proposed purchaser, or any other
person specified in such request; (a) as to whether this Lease has
been supplemented or amended and if so, the substance and manner
of such supplement or amendment; (b) as to the validity and force
and effect of this Lease in accordance with its tenor as then
constituted; (c) as to the existence of any default or event of
default; (d) as to the existence of any offsets, counterclaims or
defenses thereto on the part of such other party; (e) as to the
term commencement date and stated expiration dates; and (f) as to
any other matters as may be reasonably so requested. Any such
certificate may be relied upon by the party requesting it and any
other person to whom the same may be exhibited or delivered and the
contents of such certificate shall be binding on the party
executing same. Tenant shall, in addition, within five business
days of the term commencement date, execute and deliver to Landlord
a Tenant Estoppel Letter certifying and stating to those matters
above referred to.
ARTICLE 20
FINANCIAL INFORMATION
Section 20.01 Financial Information. Tenant has furnished
the Landlord with Profit and Loss Statements and Balance Sheets for
the fiscal years ending December 31, 1994, prepared by a Certified
Public Accountant. Tenant further agrees that it will furnish to
the Landlord a Certified Profit and Loss statement and Certified
Balance Sheet prepared by a Certified Public Accountant for the
preceding fiscal year, when required by Landlord.
ARTICLE 21
NO ABATEMENT OF RENT
Section 21.01 No Abatement of Rent. Except as otherwise
specifically provided in this Lease, there shall be no abatement,
diminution or reduction of Basic Rent, Additional Rent, other
charges or other compensation due to the Landlord by the Tenant or
any person claiming under it, under any circumstances including but
not limited to the complete or partial destruction of the Building
or any inconveniences, discomfort, interruption of business or
otherwise caused by a taking or destruction of the premises or any
building thereon except as otherwise specifically provided herein.
ARTICLE 22
NONRECORDATION OF LEASE
Section 22.01 Nonrecordation of Lease. Tenant shall not
record the within Lease. Should Tenant record this Lease, Landlord
may at its option, cause the within Lease to be terminated,
cancelled and of no further force and effect or it may bring suit
against Tenant for damages arising therefrom, providing, however,
that Tenant or Landlord shall have the right to record a short form
of lease.
ARTICLE 23
SECURITY
Section 23.01 Security. Tenant has deposited with Landlord
ONE HUNDRED SEVENTY-ONE THOUSAND and NO/100 Dollars ($171,000.00)
as security for the performance of Tenant's obligations under the
Lease. Landlord may use, apply or retain the whole or any part of
the security to the extent required to cure any default of Tenant's
and to reimburse Landlord for any damages or expenses (including,
without limitation, counsel fees) incurred by reason of such
default, including, but not limited to, any damages, deficiency or
expenses in the reletting of the Demised Premises, whether accrued
before or after summary proceedings or other re-entry by Landlord.
If Landlord applies any part of said security deposit to remedy any
default of Tenant, Tenant shall, upon demand, deposit with Landlord
the amount so applied so that Landlord shall have the full deposit
on hand at all times during the term of this Lease. If Tenant
complies with all of its obligations hereunder, the security shall
be returned to it after the end of the Term and delivery of
possession of the Demised Premises to Landlord. In the event the
Landlord shall sell or assign the premises then, upon such
transfer, Landlord agrees to transfer the security deposit to such
transferee and Landlord shall thereupon be released from all
liability with respect to such security. Tenant shall not assign
or encumber the security and neither Landlord nor its successors
or assigns shall be bound by any such assignment or encumbrance.
Landlord agrees that, as of December 31 of each calendar
year, Landlord shall pay to Tenant an interest factor on the
security deposit equal to the interest paid by United Jersey Bank
on "Preferred Money Market Accounts" during that calendar year.
The foregoing shall not require Landlord to escrow or otherwise
deposit such sum or segregate same, and Tenant recognizes and
understands that Landlord shall have the right to use these funds
for Landlord's general purposes. The interest shall be calculated
at the rate in effect as of the opening of business of each day
during that year. Landlord, with the sum of ONE THOUSAND and
NO/100 Dollars ($l,000.00) on the Commencement Date of this Lease
will open such an account, and the interest rate so reflected on
such account during that calendar year shall be the interest rate
applied to the amount of the security deposit held by the Landlord
during that year.
Section 23.02 The provisions of Section 12.01 shall not be
applicable to this Article.
ARTICLE 24
SURRENDER
Section 24.01. On the last day or sooner termination of the
Lease, Tenant shall quit and surrender the Demised Premises
broom-clean, in good condition and repair, together with all
alterations, additions and improvements which may have been made
in, on, or to the Demised Premises, except movable furniture or
unattached movable trade fixtures put in at the sole expense of the
Tenant (provided Tenant has not been in default under this Lease)
provided, however, that Tenant shall ascertain from Landlord at
least thirty (30) days before the end of the Term whether Landlord
desires to have the Demised Premises, or any part thereof, restored
to the condition in which it was originally delivered to Tenant,
and if Landlord shall so desire, then Tenant, at its own cost and
expense, shall restore the same before the end of the Term.
Landlord shall, in response to Tenant's request, or otherwise,
advise Tenant as to the repairs and restoration to be undertaken
by Tenant prior to the expiration of the Lease Term. Tenant shall,
at least six (6) months before the end of the Term, advise the New
Jersey Department of Environmental Protection and Energy of the
termination of Tenant's use of the premises, and file, with said
Department, such information, affidavits, forms, remedial action
work plan and such other information as said Department may require
and undertake such action or work as required by the Department of
Environmental Protection and Energy pertaining to Tenant's use and
occupancy of the premises as it relates to remedial action or a
remedial action work plan for the removal of hazardous substances
and wastes that remain on the premises demised by reason thereof.
Tenant agrees upon termination of the lease, the air-conditioning,
cooling systems, heating equipment and plumbing and electrical
systems shall be in good, operable condition. All light fixtures
and bulbs shall be operable, cleaned and in good working order,
rugs cleaned, and the warehouse floor washed and sealed. Tenant
shall obtain from Landlord Landlord's approval as to the sealer
used by Tenant. The condition of the building and premises shall
be in such a condition upon surrender as though the premises were
used exclusively for warehousing and offices, and the Tenant made
all repairs and replacements as were necessary during the term of
the Lease so that after surrender, the building and premises are
in good condition and ready to be re-rented. Tenant and Landlord
understand that during the term of this Lease, the building and its
equipment may be subject to reasonable wear and tear. However,
Landlord and Tenant specifically agree that wear and tear shall not
excuse Tenant from undertaking its repair and maintenance
obligations, and the provisions as herein provided, by way of
example, that the various systems shall be in good operating
condition, are intended to be the standard by which the building
and its systems shall be returned to Landlord by Tenant. If the
Demised Premises is not surrendered as and when aforesaid, Tenant
shall indemnify Landlord against loss or liability resulting from
the delay by Tenant in so surrendering the premises including,
without limitation, any claims made by any succeeding occupant
founded on such delay. Tenant's obligations under this section
shall survive the expiration or sooner termination of the Term.
In the event Tenant, prior to termination of the Lease, fails to
comply with the Rules and Regulations of the Department of
Environmental Protection of the State of New Jersey or other
applicable Federal agencies having jurisdiction over the storage
or use of hazardous substances then, Tenant, at the option of the
Landlord, shall be deemed to be occupying the Demised Premises as
a tenant from month-to-month, at the monthly rental indicated
below. In the event Tenant remains in possession of the Demised
Premises after the expiration of the term and without execution of
a new Lease, or, Tenant fails to restore the premises, or fails to
comply with its other obligations which must be complied with prior
to the termination date of the Lease, then Tenant, at the option
of the Landlord, shall be deemed to be occupying the Demised
Premises as a tenant from month-to-month, at the monthly rental
equal to the higher of 150% of market rent plus one-twelfth
(1/12th) of all items of Additional Rent such as, but not limited
to, taxes, insurance payable or paid during the last lease year or,
four (4) times the sum of (i) the Basic Rent payable for the last
month of the Term under Article 3 hereof and, (ii) one twelfth
(l/12th) of all items of Additional Rent, such as, but not limited
to, taxes, insurance payable or paid during the last lease year.
Tenant shall on a date no later than six (6) months prior
to the termination date of this Lease obtain from the New Jersey
Department of Environmental Protection and Energy ("DEPE") a
non-applicability letter and/or a de minimis quantity exception
and/or a negative declaration approval and/or a written
determination by DEPE that there are no discharged hazardous
materials at the site that occurred during the Lease Term and, if
any had occurred, have been remedied in accordance with applicable
regulations, such determination presently referred to as a No
Further Action letter ("NFA"). If Tenant obtains a
non-applicability exemption or otherwise is not required to
undertake sampling then Tenant shall, at Landlord's option, hire
a consultant satisfactory to Landlord to undertake sampling in a
manner consistent with applicable environmental law sufficient to
determine whether or not Tenant's operations have resulted in any
spill or discharge of hazardous substances or waste at the
premises. Should the sampling reveal any spills or discharges of
a hazardous substance or waste which occurred during the Lease
Term, then Tenant shall, at Tenant's expense, promptly clean up the
premises to the satisfaction of the applicable governmental
agencies which have jurisdiction of the matter and to the
reasonable satisfaction of the Landlord. If Tenant shall fail to
comply with the preceding sentence of this subparagraph prior to
termination of the Lease, then Tenant's obligations to pay rent and
additional rent shall continue until the earlier of either Landlord
rerenting the Premises and a new tenant takes occupancy and
commences to pay rent, or such date as Tenant shall comply with the
foregoing, such rent to be computed as though the Tenant was
occupying the demised premises as a Tenant from month to month as
otherwise set forth in the preceding paragraph.
ARTICLE 25
MISCELLANEOUS
Section 25.01 Table of Contents. The Table of Contents and
headings of this Lease are for convenience of reference only and
in no way define, limit or describe the scope or intent of this
Lease nor in any way affect this Lease.
Section 25.02 No Reservations. Submission of this instrument
for examination or signature by Tenant does not constitute a reservation
of or option to lease, and it is not effective as a Lease or otherwise
until execution and delivery by both Landlord and Tenant.
Section 25.03 Laws. This Lease shall be governed by and
construed in accordance with the laws of the State of New Jersey.
Section 25.04 Brokers. Tenant represents that it has dealt
with no realtors, brokers or agents in connection with the
negotiation of this Lease and the renting of the Demised Premises
hereunder, other than Charles Klatskin Company, Inc. and Cushman
and Wakefield. Should any claims be made for brokerage
commissions, other than those payable to the brokers specified in
this Section, through or on account of dealings of Tenant or its
agents or representatives, Tenant shall indemnify and hold Landlord
harmless against any liability in connection therewith, including
without limitation reasonable claims, damages or counsel fees.
Section 25.05 Broker's Signs. The Tenant shall not permit,
at any time during the term of this Lease, any broker signs to be
attached to, exhibited or placed upon the Demised Premises, which
signs offer the premises for let or for sale unless such broker
has obtained Landlord's prior written consent and presents such
consent to the Tenant.
Section 25.06 Rules and Regulations. The rules and
regulations attached to this Lease are made a part of this Lease,
and Tenant shall comply with them. Landlord shall have the right,
from time to time, to promulgate amendments and additional rules
and regulations for the safety, care and cleanliness of the
premises, or for the preservation of good order. On delivery of
a copy of such amendments and additional rules and regulations to
Tenant, Tenant shall comply with the rules and regulations, and a
material violation of any of them shall constitute a default by
Tenant under this Lease, subject to Tenant's right to cure, as set
forth in Section 10.01 hereof. Irrespective of the foregoing,
Landlord will have the right to strictly enforce the provisions of
Rule 2 as set forth on the Rules and Regulations attached. As to
the enforcement of other Rules and Regulations, whether now
existing or amended, Landlord agrees to permit Tenant, after
notice, to comply in a reasonable manner with such Rules and
Regulations. If there is a conflict between the rules and
regulations and any other provisions of this Lease, the provisions
of this Lease shall prevail.
Section 25.07 Waste. The Tenant covenants not to do or
suffer any waste or damage, disfigurement or injury to any building
or improvement now or hereafter on the Demised Premises, or the
fixtures and equipment thereof, or permit or suffer any overloading
of the floors thereof.
Section 25.08 Compactor. If the municipality or other
governmental agency shall require Tenant to install a garbage
compactor or other storage or waste management facility at the
premises, Tenant shall, at Tenant's expense, install such equipment
and/or storage facility.
Section 25.09 Underground Tanks. Tenant warrants and
represents that it will, at no time, install any underground
storage tanks on the Demised Premises. A breach of this covenant
shall be deemed a default under the Lease and Landlord shall have
the right to terminate the Lease upon the happening of such event.
Section 25.10 Declaratory Judgment. Wherever in this Lease
Landlord's consent or approval is required, if Landlord shall
refuse such consent or approval, Tenant in no event shall be
entitled to make, nor shall Tenant make any claim, and Tenant
hereby waives any claim for money damages (nor shall Tenant claim
any money damages by way of setoff, counterclaim or defense), based
upon any claim or assertion by Tenant that Landlord unreasonably
withheld or unduly delayed its consent or approval. Tenant's sole
remedy in such event shall be an action or proceeding to enforce any
such provision, for specific performance injunction or declaratory
judgment.
Section 25.11 Corporate Authority. If Tenant is a
corporation, each individual executing this Lease on behalf of said
corporation represents and warrants that he is duly authorized to
execute and deliver this Lease on behalf of said corporation in
accordance with a duly adopted resolution of the Board of Directors
of said corporation or in accordance with the By-Laws of said
corporation, and that this Lease is binding upon said corporation
in accordance with its terms. If Tenant is a corporation, Tenant
shall, within thirty (30) days after execution of this Lease,
deliver to Landlord a certified copy of a resolution of the Board
of Directors of said corporation authorizing or ratifying the
execution of this Lease.
IN WITNESS WHEREOF, the parties have hereunto set their hands
and seals on the date first above written.
Witness: FORSGATE INDUSTRIAL COMPLEX, a
Limited Partnership, Landlord
/s/ ELAINE G. SCHADE By: /s/ STEPHEN P. SEIDEN
- ---------------------------- --------------------------
STEPHEN P. SEIDEN, GENERAL
PARTNER
By: /s/ CHARLES KLATSKIN
--------------------------
CHARLES KLATSKIN, GENERAL
PARTNER
Attest: JEAN PHILIPPE FRAGRANCES, INC.
Tenant
/s/ By: /s/ Russell Greenberg
- ---------------------------- ---------------------------
Name: Russell Greenberg
Title: Executive V.P.
STATE OF NEW JERSEY )
) ss.:
COUNTY OF BERGEN )
BE IT REMEMBERED, that on this 10th day of July 1995
before me, the subscriber, personally appeared Charles Klatskin, Stephen
Seiden, who, I am satisfied, is the person named in and who executed the
within Instrument, and thereupon he/they acknowledged that he/they
signed, sealed and delivered the same as his/their act and deed, and the
act and deed of the said FORSGATE INDUSTRIAL COMPLEX, a partnership, for
the uses and purposes therein expressed.
/s/ ELAINE G. SCHADE
---------------------------
ELAINE G. SCHADE
NOTARY PUBLIC OF NEW JERSEY
My Commission Expires Sept. 17, 1995
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on this 26th day of June, 1995
before me, the subscriber, personally appeared, Russell Greenberg,
who, I am satisfied, is the person who signed the within instrument
as Executive V.P. of JEAN PHILIPPE FRAGRANCES, INC., the
corporation named therein and he/she thereupon acknowledged that
the said instrument made by the corporation and sealed with its
corporate seal, was signed, sealed with the corporate seal and
delivered by him/her as such officer and is the voluntary act and
deed of the corporation, made by virtue of authority from its Board
of Directors.
/s/ ANNIE FAILLER
---------------------------
ANNIE FAILLER
Notary Public, State of New York
No. 01FA5023811
Qualified in Queens County
Commission Expires Feb. 14, 1996
CORPORATE RESOLUTION
This is to certify that a meeting of the Board of Directors
of JEAN PHILIPPE FRAGRANCES, INC., a corporation of the State of
, held on the day of , 1995, at its
principal office at , Kearny, New Jersey, at
which time there was a quorum present, the following Resolution was
duly adopted and unanimously passed:
BE IT RESOLVED, that the Corporation entered into an Agreement
with FORSGATE INDUSTRIAL COMPLEX for premises commonly known as 60
Stults Road, South Brunswick, New Jersey, for a period of eight
(8) years in accordance with a certain draft of lease attached.
BE IT FURTHER RESOLVED, that the President and/or Vice
President and Secretary be and they are hereby authorized to
execute the Agreement (Lease) and to affix the corporate seal
thereto.
That the officers referred to in the foregoing Resolution are
as follows:
President: __________________
Vice President: __________________
Secretary: __________________
I hereby certify that the foregoing Resolution was duly
adopted by the Board of Directors of JEAN PHILIPPE FRAGRANCES,
INC., a corporation of the State of , at a meeting held
on the day of , 1995, and that the above-
named officers are duly qualified and hold the offices stated
aforesaid.
_________________________________
Secretary
SCHEDULE A
DESCRIPTION OF TAX LOT 16, BLOCK 10,
STULTS ROAD, TOWNSHIP OF SOUTH BRUNSWICK,
MIDDLESEX COUNTY, NEW JERSEY.
Begining at a point in the southerly line of Stults Road (as
widened to thirty-three (33) feet from the center line ), where the
same is intersected by the division line between lot 15 and lot l6
in Tax Block 10, said point being one thousand one hundred forty-nine
and twenty-seven hundredths (1,149.27) feet northwesterly from the
point of intersection formed by the northeasterly prolongation of the
westerly line of Cranbury-South River Road (as widened) and the
southeasterly prolongatlon of the southerly line of Stults Road (as
widened); and running: -
Thence (l) northwesterly, along the southerly line of Stults Road (as
widened) north seventy-two degrees fifty-one minutes west (N 72 degrees-51'W),
six hundred forty-four and no hundredths (644.00) feet to a point;
Thence (2) southwesterly along the easterly line of Lot 18 in Tax
Block 10, south seventeen degrees nine minutes west (S 17 degrees--O9'W),
five hundred ninety and eighty-two hundredths (590.82) feet to a
point;
Thence (3) southeasterly, parallel to Stults Road, south seventy-two
degrees fifty-one minutes east (72 degrees-51' E ), six hundred forty-four
and no hundredths (644.00) feet to a point;
Thence (4) northeasterly, along the division line between Lot 15 and
Lot 16 in Tax Block 10; north seventeen degrees nine minutes east
(N 17 degrees-09' E), five hundred ninety and eighty-two hundredths (590.82)
feet to the point and place of beginning.
Containing an area of eight and seven hundred thirty-four thousandths
(8.734) Acres.
Being the premises known and designated as Lot 16 in Block 10 in the
Tax Records of the Township of South Brunswick.
Being Lot 16 and Lot 17 in Block 10 as shown on a certain map entitled
"Final Subdivision Plat, Section One, Forsgate Industrial Complex,
Township of South Brunswick, Middlesex County, New Jersey"., which map
was filed in the Middlesex County Clerk's Office as filed map No. 3992,
File No. 963 on September 30, 1977. The said Lot 16 and Lot 17 were
combined by Reverse Minor Subdivision No. 820 which was approved by the
Township of South Brunswick Plannlng Board on December 13, 1977. A deed
description was filed in the Middlesex County Clerk's office on April 7,
1975 in Deed Book 3024, Page 796.
Subject to a fifty (50) foot wide easement southerly to and
contiguous with the first course herein above described for the
purpose of installing and maintaining Detention Ponds and Storm
Drainage installations.
Subject to a ten (10) foot wide easement easterly to and contiguous
with the second course herein above described and a ten (10) foot
wide easement westerly to and contiguous with the fourth course
herein above described for the installation, replacement and
maintenance of above ground and below ground utlilties and channelized
surface drainage. In the event that Lot 16 and Lot 18 in Tax Block 10
shall be combined, any easement along a common property line shall be
null and vold.
Subject to a fifty (50) foot wide easement northerly to and contiguous
with the third course herein above described for the installation,
replacement and maintenance of Railroad facilities, above ground and below
ground utilities and channelized surface drainage.
[PROPERTY MAP]
LOT 18 LOT 16
SCHEDULE B
RULES AND REGULATIONS
The Tenant covenants and agrees with the Landlord to obey
the following rules and regulations:
1. All garbage and refuse shall be kept in containers
inside the premises. If the Landlord shall provide or designate
a service for picking up refuse and garbage, Tenant shall use
same at its cost; the Tenant shall pay the cost to remove any of
its rubbish or refuse. The Tenant shall not burn any trash or
garbage of any kind in or about the building.
2. The Tenant shall maintain, at its expense, a
landscaping service and shall provide that the lawns shall be
watered, reseeded, fertilized and regularly mowed and maintained,
and debris shall be removed, if any, and all shrubery shall
likewise be fertilized, maintained, pruned and replaced when
necessary. The sidewalks or entrances shall not be obstructed or
encumbered by Tenant or used for any purposes other than ingress
and egress and the parking lot shall be used exclusively for the
parking of motor vehicles of Tenant's employees and invitees.
The parking lot shall be swept, maintained, retarred when
necessary and striped. Tenant shall not be required to retar in
the last three years of the Lease.
3. The Tenant shall not store any material, supplies,
semi-finished products or anything whatsoever outside of the
building. In the event Tenant requires temporary outside storage
for any reason whatsoever, Tenant must first obtain written
approval of the Landlord.
4. The Tenant shall, at its cost and expense, use a pest
extermination service so as to keep the premises free of same.
5. The Tenant will undertake a general maintenance
program, either through its own employees or outside contractors
which shall provide amongst other things for general and periodic
window cleaning, when necessary and painting of trim and the like.
6. Tenant shall not at any time, without first obtaining
Landlord's consent, change, by alteration or replacement,
rebuilding or otherwise, the exterior color or architectural
treatment of the leased bullding.
7. Tenant shall not use or permit to be used any loud
speaker or sound amplifier which may be heard outside of the
leased property.
8. Tenant shall not suffer, allow or permit any offensive
or obnoxious vibration, noise, odor, or other undesirable effect
to emanate from the leased property, or any machine or other
installation therein, or otherwise suffer, allow or permit the
same to constitute a nuisance or otherwise unreasonably interfere
with the safety, comfort or convenience of adjoining properties.
9. Tenant shall not erect a ground sign or building sign
without prior written consent of Landlord. Landlord will not
unreasonably withhold its consent or delay the same if the sign
does not damage the building, and any such sign is dignified.
10. Tenant shall maintain and keep lit any and all exterior
architectural lighting which may be installed by the Landlord.
11. Tenant shall have the right, provided same is done in
accordance with the zoning ordinance of the municipality, to park
trucks on the property along the area wherein are located the
loading docks. The Tenant shall not park trucks in any other
portion of the Demised Premises.
Upon notice by the Landlord to the Tenant of a breach of any
of the rules and regulations, Tenant shall, within thirty (30)
days thereafter, comply with such rule and regulation and in the
event Tenant shall not comply, then the Landlord may, at its
discretion, either: (1) cure such condition and add any cost and
expense incurred by the Landlord therefor to the next install-
ation of rental due under this Lease, and the Tenant shall then
pay such amount, as additional rent hereunder; or (2) treat such
failure on the part of the Tenant to remedy such condition as a
material default of this Lease on the part of the Tenant hereunder.
Landlord reserves the right, from time to time, to
promulgate additional rules and regulations as Landlord, provided
that Landlord gives notice to Tenant not less than sixty (60)
days prior to the effective date of new or revised rules; such
new or revised rule is applied uniformly to all tenants in the
industrial park in which the Demised Premises are located, and
such new or revised rule does not interfere with the normal
business operations of Tenant.
EXHIBIT 10.62
INTELLECTUAL PROPERTY
PURCHASE AGREEMENT
Agreement dated this 12th day of March 1996 by and between PARLUX
FRAGRANCES, INC., a Delaware corporation ("Purchaser"), with its principal
office at 3725 S.W. 30th Avenue, Ft. Lauderdale, Florida 33312 represented by
Zalman Lekach in his capacity as Chief Operating Officer and invested with full
powers to execute this Agreement, and PARFUMS JEAN DESPREZ, S.A., a French
corporation ("Seller"), with its principal offices at 4 rond point des Champs
Elysees, 75008 Paris, France, registered on the Paris Trade and Companies
Registry under the number B 652040847, represented by Philippe Benacin in his
capacity as President and invested with full powers to execute this Agreement.
W I T N E S S E T H:
WHEREAS, Seller desires to sell and Purchaser desires to acquire all of
the rights to certain assets of Seller upon the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants, conditions and
promises contained herein, the parties hereto hereby agree as follows:
ARTICLE I
ASSIGNMENT, CONVEYANCE
AND OTHER TERMS OF TRANSACTION
1.1 Assignment and Sale. Upon the terms and subject to the
conditions of this Agreement, at the Closing, as hereinafter defined, Seller
agrees to
(a) irrevocably assign all of its right, title and interest in and to
the world-wide trademarks, service marks, trade names, patents and copyrights
and applications therefor, as set forth on the annexed Schedule 1.1(a), together
with trade secrets and other proprietary information related thereto
(collectively the "Intellectual Property"), and
(b) convey, transfer and irrevocably assign to Purchaser
(i) any and all formulae, molds, models, tools, dies, casts,
packaging patterns, displays and forms, and materials relating to national
advertising and line slots as set forth on the annexed Schedule 1.1(b)
(collectively the "Equipment");
(ii) current customer list for International, French and United
States sales; item masters and bill of materials, including costs thereof; sales
for each customer for calendar year 1995; current list of vendors; price list
and list of advertising materials for International, French and United States
customers, to the extent available; sales for the period January 1, 1996 through
February 29, 1996; forecast of sales for calendar year 1996; and suggested
retail price list for the products produced, marketed and sold in respect of the
Intellectual Property (the "Products") for the United States and France
(collectively the "Ancillary Assets") (provided, that Seller shall deliver
copies of the Ancillary Assets to Purchaser not less than five (5) days prior to
the closing),
free and clear of all liens, pledges, charges, security interests,
encumbrances, title retention agreements or adverse claims of any kind
whatsoever ("Claims"), except as provided in Article 1.4 below. The Intellectual
Property, the Equipment and the Ancillary Assets are sometimes hereinafter
referred to as the "Acquired Assets".
1.2 Assets Not Conveyed; No Liabilities Assumed. Seller shall retain any
and all rights to each and every asset not expressly referred to in Articles
1.1(a) and (b) above. Purchaser does not hereby assume, and shall not be liable
for, any debt, obligation, responsibility or liability of Seller or arising out
of or relating to the Acquired Assets through the Closing Date (as hereinafter
defined), whether known or unknown, contingent or absolute, or otherwise
(collectively, "Seller Liabilities"), and Seller agrees to indemnify and hold
harmless Purchaser from and against any Seller Liability in accordance with
Article VI hereof.
1.3 Purchase Price and Payment. Upon the closing of this Agreement
Purchaser agrees to pay the purchase price to the Seller as follows:
(a) For the Intellectual Property, US$2.150 million, payable US$1.075
million in cash, certified, bank or cashier's check or wire transfer of
immediately available funds to an account as instructed by the Seller, and
US$1.075 by delivery of a promissory note (the "Note") payable in ninety (90)
days in the form annexed hereto as Exhibit 1.3; and
(b) US$200,000 for the Equipment and Ancillary Assets, payable in cash,
certified, bank or cashier's check or wire transfer of immediately available
funds to an account as instructed by the Seller.
1.4 Security for Payment of Purchase Price. Upon the closing of this
Agreement, Purchaser, Seller, Subsidiary (as hereinafter defined) and the law
firm of Purchaser, Mayer Brown & Platt, shall enter into an escrow agreement in
the form annexed hereto as Exhibit 1.4 (the "Escrow Agreement"), whereby all
documents evidencing the assignment of the Intellectual Property shall be held
in escrow by such law firm, pending payment by Purchaser of the Note as well as
a series of three (3) promissory notes (sometimes collectively the "Inventory
Notes") issued pursuant to an Inventory Purchase Agreement between Jean Desprez,
S.A., a wholly-owned subsidiary of the Seller ("Subsidiary") and Purchaser,
relating to the sale of goods produced under the Intellectual Property rights
(the "Inventory Purchase Agreement"). The date on which such payment in full of
the Note and the Inventory Notes occurs is hereinafter referred to as the "Final
Payment Date".
1.5 Covenants of Seller. Seller covenants and agrees with Purchaser
that prior to the Closing, Seller shall
(a) terminate or cause the termination of, any and all license,
sublicense and distribution agreements relating to the Intellectual Property,
without any obligation of or liability to Purchaser;
(b) provide reasonable access to all financial information relating to
the Intellectual Property, the Equipment and the Ancillary Assets (sometimes
collectively the "Business") for the last three (3) years, including financial
statements, operations, inventory costs, distribution agreements and any other
supporting records, and Seller covenants and agrees to maintain such books and
records for three (3) years from the Closing (as hereinafter defined) and to
make them available for inspection by Purchaser or its designee upon reasonable
notice; and
(c) forward or cause to be forwarded all sales orders received by Seller
or any Affiliate (as hereinafter defined) subsequent to the execution of the
letter of intent among Seller, Subsidiary and Purchaser dated January 11, 1996
for any and all Products, via telecopier to Purchaser for its approval, and
Seller acknowledges that Purchaser may prohibit shipment of any or all of such
orders at its sole discretion. For purposes hereof, the term "Affiliate" of
Seller shall mean Groupe Inter Parfums, Jean Philippe Fragrances, Inc. and any
other company, entity or individual which directly or indirectly controls or is
controlled by or is under common control with Seller. After the Closing, if
Seller receives any such sales orders, Seller shall promptly telecopy said
orders to Purchaser.
1.6 Transfer Taxes; Expenses of Transfer. Seller and Purchaser shall
equally share the cost of all taxes and other similar fees such as registration
and stamp duties ("Transfer Taxes") arising out of or in connection with the
assignment of the Intellectual Property and conveyance of Equipment and the
Ancillary Assets to be effected pursuant to this Agreement. Notwithstanding the
foregoing, Seller shall be solely responsible for, and shall indemnify and hold
harmless the Purchaser from the imposition of any and all Transfer Taxes in
excess of Purchaser's proportionate share of $122,500. Expenses of the transfer
of the Intellectual Property such as filing fees and the like shall be borne by
the Purchaser.
1.8 Closing. Subject to the fulfillment of the conditions precedent as
hereinafter set forth, the closing under this Agreement ("Closing"), shall take
place at the offices of Mayer, Platt & Brown, 1675 Broadway, New York, New York
at 10:00 A.M. on March 19, 1996 or at such other time and at such other place as
shall be fixed by mutual consent of the parties hereto, but in no event
subsequent to March 29, 1996 (the "Closing Date").
ARTICLE II
WARRANTIES AND REPRESENTATIONS
OF SELLER
Warranties and Representations of Seller. Seller hereby warrants
and represents to Purchaser as follows:
2.1 Due Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of France and has all requisite
corporate power and authority to carry on its businesses as currently conducted
and to own or lease and to operate its properties and assets as and where such
properties and assets are now owned or leased and operated.
2.2 Legal, Valid and Binding. Each of this Agreement and the other
documents contemplated hereby constitutes the legal, valid and binding
obligation of Seller, enforceable against it in accordance with its terms,
subject to the effect of bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other similar laws relating to or affecting creditors'
rights generally and court decisions with respect thereto, and the availability
of equitable remedies.
2.3 Other Consents and Approvals. Except for the consent or
non-objection of the French Treasury Department to the transactions contemplated
hereby, any and all consents, approvals, authorizations, or orders of or
registrations or qualifications with any person, bank, corporation, association,
governmental body, or court having authority or power to regulate, supervise or
direct the business and affairs of Seller necessary for the consummation of the
transactions specified in this Agreement shall have been obtained on or before
the Closing by Seller.
2.4 Due Authorization; Compliance with Law. The execution and delivery
of this Agreement and the other documents contemplated hereby and performance of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action and will not conflict with or result in a breach
of any of the terms or provisions of its Certificate of Incorporation or
By-laws, lease, bond, note, debenture, guaranty, deed of trust or other
agreement, instrument (or French equivalent thereof) or arrangement to which
Seller may be or is a party (including by operation of law) or by which the
property of Seller is bound, or any law, administrative regulation, or any order
of any court or governmental agency or authority entered in any proceeding to
which Seller was or is a party or by which its property is bound. The Business
is being conducted in compliance with all applicable law, statutes, ordinances,
regulations, decrees and orders, except for violations which have not had and
would not reasonably be expect to have a material adverse effect on the Business
or any of the Acquired Assets.
2.5 No Litigation. There are no actions, suits, legal or governmental
proceedings pending or threatened against Seller relating to this Agreement, the
Intellectual Property, the Equipment or the Ancillary Assets being acquired
hereunder, or the transactions described herein.
2.6 Intellectual Property. Schedule 1.1(a) annexed hereto contains a
complete and accurate list of all of the Intellectual Property used in the
Business. Except as set forth in the annexed Schedule 2.6, no license,
sublicense, distribution or other agreements relating to any of the Intellectual
Property shall be in effect at the Closing, and each trademark, service mark,
trade name, copyright and patent and each application therefor comprising the
Intellectual Property is owned solely and exclusively by Seller, and is not
subject to any license or royalty arrangement or dispute. Except as set forth in
the annexed Schedule 2.6, Seller has not received any notification of
infringement by Seller or any claims with regard to any trademark, service mark,
trade name, copyright or patent or application therefor comprising the
Intellectual Property from any person, and Seller is not aware of a basis for
any such claim. No trademark, service mark, trade name, copyright or patent or
application therefor comprising the Intellectual Property infringes any
trademark, service mark, trade name, copyright or patent of others in any
country in which such trademark, service mark, trade name, copyright or patent
is used in connection with the manufacture or sale of any product or otherwise.
No Affiliate of Seller owns or has any interest in the Intellectual Property.
Seller has delivered to Purchaser prior to the Closing copies of any and all
documents in its possession, custody or control relating to the Intellectual
Property.
2.7 Origin of Seller's Business. Seller has good title to the business
consisting of the Intellectual Property, Equipment and Ancillary Assets
(sometimes collectively the "Business"), by virtue of having purchased the
Business from Jacomo S.A. at the purchase price of FRF 15,000,000 at the closing
of such acquisition held in Paris, France on July 12, 1994. None of the Acquired
Assets is subject to (i) any contract of sale, or (ii) any Claim. At the
Closing, Seller shall convey to Purchaser good, marketable and indefeasible
title to all of the Intellectual Property, free and clear of all Claims, except
for the escrow arrangement described by the terms of Article 1.4 hereof. All of
the Equipment and the Ancillary Assets are in good condition, operable and
useful for their intended purposes (ordinary wear and tear excepted), and none
of such assets has been damaged by any fire, accident, act of God or any other
casualty that materially and adversely impairs any such assets or the Business.
2.8 Net Sales and Profits of Business. The net sales and gross profits
of the Business for the fiscal years as set forth below are as follows:
Net Sales in FRF Gross Profit in FRF
1992 10,703,253 (2,267,271)
1993 10,323,914 489,400
1994 16,096,572 6,601,513
1995 7,565,150 2,967,082
2.9 Absence of Adverse Change. Since January 11, 1996, there has been no
material adverse change in the Business or any of the Acquired Assets, and there
is no condition, development or contingency of any kind of which the Seller has
actual knowledge which may result in any such material adverse change.
2.10 Survival of Warranties, Representations, etc. All statements
contained in any certificate or other instruments delivered by or on behalf of
Seller pursuant hereto or in connection with the transactions contemplated
hereby shall be deemed a warranty and representation of Seller hereunder. All
warranties and representations made hereunder shall be effective as of the
Closing with the same force and effect as if made at such time, and shall
survive the Closing.
ARTICLE III
WARRANTIES AND REPRESENTATIONS OF PURCHASER
Warranties and Representations. Purchaser hereby warrants and
represents as follows:
3.1 Legal, Valid and Binding. Each of this Agreement and the other
documents contemplated hereby constitutes the legal, valid and binding
obligation of Purchaser, enforceable against it in accordance with its terms,
subject to the effect of bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other similar laws relating to or affecting creditors
rights generally or court decisions with respect thereto and the availability of
equitable remedies.
3.2 No Litigation. There are no actions, suits, legal or governmental
proceedings pending or threatened against Purchaser relating to this Agreement
or the transactions described herein.
ARTICLE IV
CONDITIONS TO PARTIES' OBLIGATIONS
4.1 Purchaser's Conditions. The obligations of Purchaser under this
Agreement are subject to the fulfillment of each of the conditions set forth
below:
(a) At the Closing the warranties and representations of Seller
contained in this Agreement shall be true and correct in all material respects;
Seller shall have complied with and duly performed any and all covenants,
agreements and conditions in all material respects, on its part to be complied
with or performed pursuant to or in connection with this Agreement; and Seller
shall have delivered to Purchaser at the Closing a certificate from a duly
authorized officer of Seller to such effect.
(b) No action or proceeding shall have been instituted to restrain or
prohibit the Closing of the transactions contemplated by this Agreement or the
Inventory Purchase Agreement.
(c) Seller shall have obtained, and delivered evidence thereof to
Purchaser at the Closing, a termination of each existing license, sublicense
and/or distribution agreement in respect of the Intellectual Property(except as
set forth on Schedule 2.6), in form reasonably satisfactory to counsel to
Purchaser.
(d) Seller shall execute and deliver the Assignment of United States
Trademarks and the Omnibus Assignment of Foreign Trademarks in the forms set
forth as Exhibit 4.1(d) to Purchaser at Closing.
(e) Seller shall execute and deliver one or more Bills of Sale
evidencing the conveyance of the Equipment and Ancillary Assets substantially in
the forms set forth as Exhibit 4.1(e) to Purchaser at Closing.
(f) Seller shall execute and deliver to Purchaser a Noncompetition
Agreement, a Guarantee in the form set forth in Exhibit 4.1(f) and the Escrow
Agreement.
(g) Subsidiary shall execute and deliver to Purchaser the Inventory
Purchase Agreement and each of the documents contemplated thereby to be executed
and delivered by Subsidiary.
(h) Purchaser shall have completed its due diligence investigation of
the Acquired Assets and the Business.
(i) Seller shall not have engaged in any transaction out of the
ordinary course of business.
4.2 Sellers' Conditions. The obligations of Seller under this Agreement
are subject to the fulfillment of each of the conditions set forth below:
(a) At the Closing the warranties and representations of Purchaser
contained in this Agreement shall be true and correct in all material respects;
Purchaser shall have complied with and duly performed any and all covenants,
agreements and conditions in all material respects, on its part to be complied
with or performed pursuant to or in connection with this Agreement; and
Purchaser shall have delivered to Seller at the Closing a certificate from a
duly authorized officer of Purchaser to such effect.
(b) No action or proceeding shall have been instituted to restrain or
prohibit the Closing of the transactions contemplated by this Agreement or the
Inventory Purchase Agreement.
(c) Purchaser shall execute and deliver to Seller the Noncompetition
Agreement and the Escrow Agreement.
(d) Purchaser shall have executed and delivered the Inventory Purchase
Agreement to Subsidiary.
ARTICLE V
OTHER CONDITION PRECEDENT
5.1 Consent or Non-Objection of French Treasury. The closing of this
Agreement and the transactions contemplated hereby are expressly made subject to
the receipt by Seller of either consent or non-objection of the French Treasury
Department to the sale contemplated by this Agreement that may be required in
respect of foreign investment in France.
5.2 Non-receipt of Consent. In the event that the consent or
non-objection of the French Treasury Department is not obtained prior to the
close of business on March 29, 1996, then in either such event, this Agreement
shall be deemed null and void without any other action by or on behalf of the
parties hereto, unless both parties specifically agree in writing signed by both
parties to extend the Closing.
ARTICLE VI
INDEMNIFICATION
6.1 By Seller. Seller agrees to indemnify and hold harmless Purchaser
from and against any and all losses, claims, damages or liabilities to which
Purchaser may become subject, and to reimburse Purchaser for any and all legal
expenses (including the cost of any investigation and preparation) reasonably
incurred by Purchaser in connection with any claim or litigation, whether or not
resulting in any liability, insofar as such losses, claims, damages,
liabilities, or litigation arise out of or are based upon (i) any breach of
warranty or representation or failure to fulfill any covenant, agreement or
condition contained herein by Seller; (ii) any claims arising out of license,
sublicense and distributor agreements terminated by Seller in accordance with
Article 1.5 hereof; (iii) any Seller Liabilities; or (iv) any claims of
creditors objecting to the transactions contemplated hereby as described in
Article 8.5 hereof (collectively the "Purchaser Claims").
6.2 Threshold. Notwithstanding Article 6.1 hereof, Seller shall not be
obligated to indemnify Purchaser except to the extent that the aggregate amount
of Purchaser Claims has exceeded the sum of $10,000.
6.3 Limit of Indemnification. Notwithstanding Article 6.1 hereof, the
maximum liability of Seller under Article 6.1 hereof for Purchaser Claims is
$4,950,000, inclusive of any liability of Subsidiary for indemnification of
Purchaser under the Inventory Purchase Agreement.
ARTICLE VII
CONDITIONS SUBSEQUENT
7.1 Change of Name. Promptly after the Closing, Seller shall change its
name to that which is not similar to Jean Desprez.
7.2 Conversion of Unfinished Inventory. Within ninety (90) days
subsequent to the Closing, Seller will convert the raw materials, component
parts and work-in-progress to be sold using the Intellectual Property into
finished goods inventory exclusively for sale to Purchaser, which will be
payable in French francs in six (6) consecutive monthly installments commencing
from the date of the bill of lading. The cost of the finished goods will be as
indicated on the attached Schedule 7.2. Seller covenants and agrees with
Purchaser that none of the finished goods or remaining components or raw
materials, if any, will be sold to any parties other than Purchaser; and all
remaining components not converted into finished goods, if any, will be
destroyed by Seller at its own expense.
7.3 No "Knock-offs". Neither Seller nor any Affiliate will produce or
distribute any products bearing any confusingly similar names to any of the
trademarks constituting a portion of the Intellectual Property.
ARTICLE VIII
MISCELLANEOUS
8.1 No Waiver. The failure of any of the parties hereto to enforce any
provision hereof on any occasion shall not be deemed to be a waiver of any
preceding or succeeding breach of such provision or any other provision.
8.2 Entire Agreement. This Agreement constitutes the entire agreement
and understanding of the parties hereto and no amendment, modification or waiver
of any provision herein shall be effective unless in writing executed by the
party charged therewith.
8.3 Agreement, Exhibits and Schedules. As used herein, the term "this
Agreement," means the body of this Agreement and the Schedules and Exhibits
hereto, and the terms "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement and such Schedules and Exhibits as a
whole and not to any particular part of subdivision thereof.
8.4 Governing Law; Arbitration.
(a) This Agreement shall be construed, interpreted and enforced in
accordance with and shall be governed by the laws of France without regard to
the principles of conflicts of laws.
(b) Any and all disputes between the parties arising out of or in
connection with this Agreement which the parties are unable to resolve amicably,
shall be finally determined by arbitration. The arbitration shall be held in
Brussels, Belgium, in accordance with the Rules of Conciliation and Arbitration
of the International Chamber of Commerce by one or more arbitrators appointed in
accordance with said rules. Any and all such arbitration proceedings shall be
conducted in the English language.
8.5 Objection of Creditors. The parties hereto designate the following
person at following address to receive any and all objections to the sale
contemplated by this Agreement that may be raised by creditors of Seller: Ms.
Catherine Benard-Lotz, Parfums Jean Desprez, S.A., 4, Rond Point des Champs
Elysees, 75008, Paris, France. Seller agrees to promptly to notify Purchaser of
any of such objections.
8.6 Binding Effect. This Agreement shall bind and inure to the benefit of
the parties, their successors and assigns.
8.7 Assignment. No party may assign its rights or delegate its obligations
under this Agreement and any such attempted assignment or delegation shall be
void and of no force and effect; provided, that Purchaser may assign its rights
hereunder (but not is obligations) to its affiliate, Parlux, S.A.
8.8 Article Headings. The article headings herein have been
inserted for convenience of reference only, and shall in no way modify or
restrict any of the terms or provisions hereof.
8.9 Notices.
(a) Any notice or other communication under the provisions of this
Agreement shall be in writing, and shall be given by postage prepaid, registered
or air mail, or by hand delivery with an acknowledgement copy requested, or by a
reputable overnight delivery or courier service; all to be directed to the
addresses set forth above, or to any new address of which either party hereto
shall have informed the other by the giving of notice in the manner provided
herein. Such notice or communication shall be effective, if sent by postage
prepaid, registered or air mail, five (5) days after it is mailed; if sent by a
reputable overnight delivery or courier service, two (2) days after properly
forwarded; or by hand delivery, upon receipt.
(b) The parties hereto agree to promptly send copies of all notices
under this Agreement by telecopier to the other party, but such notice by
telecopier shall not relieve the sending party of the obligation to forward
notice in accordance with the terms of Article 8.9(a) hereof.
8.10 Unenforceability; Severability. If any provision of this Agreement
is found to be void or unenforceable by a court of competent jurisdiction, then
the remaining provisions of this Agreement, shall, nevertheless, be binding upon
the parties with the same force and effect as though the unenforceable part had
been severed and deleted.
8.11 Brokers' Fees. Seller covenants and agrees to Purchaser that
Purchaser shall have no liability with respect to any brokerage fees or agents'
commissions in connection with the transactions contemplated hereby by reason of
any of their acts or conduct. Purchaser covenants and agrees to Seller that
Seller shall have no liability with respect to any brokerage fees or agents'
commissions in connection with the transactions contemplated hereby by reason of
any of their acts or conduct.
8.12 Further Assurances. After the Final Payment Date, Seller shall at
any time and from time to time, at the request of Purchaser and without further
cost or expense to Purchaser, execute and deliver such other instruments of
conveyance or transfer and take such other actions as Purchaser may request in
order to vest in Purchaser clear and unencumbered title to the Intellectual
Property, Equipment and Ancillary Assets and to comply with applicable law.
8.13 Declaration of Good Faith. The undersigned parties declare, under
the pain of penalties laid down in Article 1837 of the General Tax Code (Code
general des impois), that this Agreement states the whole amount of the purchase
price.
8.14 No Third Party Rights. The warranties, representations and other
terms and provisions of this Agreement are for the exclusive benefit of the
parties hereto, and no other person shall have any right or claim against any
party by reason of any of those terms and provisions or be entitled to enforce
any of those terms and provisions against any party.
8.15 Counterparts. This Agreement may be executed in counterparts, all
of which shall be deemed to be duplicate originals.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
date first above written.
PARLUX FRAGRANCES, INC.
By: /s/ Zalman Lekach
------------------
Zalman Lekach, Chief Operating Officer
PARFUMS JEAN DESPREZ, S.A.
By: /s/ Philippe Benacin
---------------------
Philippe Benacin, President
List of Schedules and Exhibits
Schedule 1.1(a): Intellectual Property
Schedule 1.1(b): Equipment
Exhibit 1.3: Promissory Note
Exhibit 1.4: Escrow Agreement
Schedule 2.6: Trademarks
Exhibit 4.1(d): Assignment of United States Trademarks and the Omnibus
Assignment of Foreign Trademarks
Exhibit 4.1(e): Bills of Sale
Exhibit 4.1(f): Guarantee
Schedule 7.2: Cost of Finished Goods
EXHIBIT 10.63
INVENTORY PURCHASE AGREEMENT
Agreement dated this 12th day of March 1996 by and between PARLUX
FRAGRANCES, INC., a Delaware corporation ("Purchaser"), with its principal
office at 3725 S.W. 30th Avenue, Ft. Lauderdale, Florida 33312 represented by
Zalman Lekach in his capacity as Chief Operating Officer and invested with full
powers to execute this Agreement,, and JEAN DESPREZ, S.A., a French corporation
("Seller"), with its principal offices at 4 rond point des Champs Elysees, 75008
Paris, France, registered on the Paris Trade and Companies Registry under the
number B 327 630 042, represented by Philippe Benacin in his capacity as
President and invested with full powers to execute this Agreement.
W I T N E S S E T H:
WHEREAS, Seller desires to sell and Purchaser desires to acquire all of
the rights to certain assets of Seller upon the terms and subject to the
conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual covenants, conditions
and promises contained herein, the parties hereto hereby agree as follows:
ARTICLE I
SALE OF INVENTORY AND
RELATED MATTERS
1.1 Sale and Purchase of Inventory. Upon the terms and subject to the
conditions of this Agreement, at the Closing, as hereinafter defined, Seller
agrees to sell, transfer, convey and deliver to Purchaser, and Purchaser agrees
to purchase, all of Seller's right, title and interest in and to the all of the
items of Seller's Inventory, as hereinafter defined and as set forth in the
annexed Schedule 1.1, free and clear of all liens, pledges, charges, security
interests, encumbrances, title retention agreements, adverse claims, options,
equities or restrictions of any kind whatsoever ("Claims").
1.2 Purchase Price and Payment. Upon the closing of this
Agreement Purchaser agrees to pay the purchase price to the Seller as
follows:
The price for the Inventory determined two (2) business days prior to
the Closing by reference to the Seller's cost of the Inventory in French francs,
as set forth in the Schedule 1.1 calculated in United States Dollars at the then
current exchange rate as set forth in the Wall Street Journal on the immediately
preceding business day, together with the sum of U.S. $500,000 (the "Purchase
Price"). The Purchase Price shall be payable in United States dollars, as
follows:
(a) the first US$500,000 ninety (90) days from the date of closing of
this Agreement, evidenced by a promissory note in the form annexed hereto as
Exhibit 1.2(a);
(b) $1,020,000 in six (6) consecutive equal monthly installments
commencing from the date of the bill of lading for the Inventory, evidenced by a
promissory note in the form annexed hereto as Exhibit 1.2(b); and
(c) $780,000, payable in six (6) equal consecutive monthly installments
commencing three (3) months from the date of the bill of lading for the
Inventory, evidenced by a promissory note in the form annexed hereto as Exhibit
1.2(c). All of the notes annexed hereto are sometimes collectively referred to
as the "Notes".
1.3 Security for Payment of Purchase Price. Upon the closing of this
Agreement, Purchaser, Seller, Parent (as hereinafter defined) and the law firm
of Purchaser, Mayer Brown & Platt, shall enter into an escrow agreement in the
form annexed hereto as Exhibit 1.4 (the "Escrow Agreement"), whereby all
documents evidencing certain intellectual property being conveyed pursuant to
the terms of the Intellectual Property Purchase Agreement between Parfums Jean
Desprez, S.A., the parent of Seller (the "Parent"), and Purchaser (the
"Intellectual Property Agreement"), shall be held in escrow by such law firm,
pending payment by Purchaser of the Notes and a promissory note issued pursuant
to the terms of the Intellectual Property Agreement (the "Intellectual Property
Note"). The date on which such payment in full of the Notes and the Intellectual
Property Note occurs is hereinafter referred to as the "Final Payment Date".
1.4 Covenants of Seller.
(a) Seller covenants and agrees with Purchaser that prior to the
Closing, Seller shall provide reasonable access to all financial information
relating to the Inventory, including financial statements, operations, inventory
costs, distribution agreements and any other supporting records, and Seller
covenants and agrees to maintain such books and records for three (3) years from
the Closing and to make them available for inspection by Purchaser or its
designee upon reasonable notice.
(b) All sales orders received by Seller or any Affiliate subsequent to
the execution of the letter of intent among Seller, Parfums Jean Desprez, S.A.
and Purchaser dated January 11, 1996 for any and all Products, shall have been,
and up to the Closing will be, forwarded via telecopier to Purchaser for its
approval, and Seller acknowledges that Purchaser may prohibit shipment of any or
all of such orders at its sole discretion. For purposes hereof, the term
"Affiliate" of Seller shall mean Groupe Inter Parfums, Jean Philippe Fragrances,
Inc. and any other company, entity or individual which directly or indirectly
controls or is controlled by or is under common control with Seller. After the
Closing, if Seller or any Affiliate receives any such sales orders, Seller shall
promptly telecopy said orders to Purchaser.
1.5 No Liabilities Assumed. Purchaser does not hereby assume, and shall
not be liable for, any debt, obligation, responsibility or liability of Seller
or arising out of or relating to the Inventory through the Closing Date (as
hereinafter defined), whether known or unknown, contingent or absolute, or
otherwise (collectively, "Seller Liabilities"), and Seller agrees to indemnify
and hold harmless Purchaser from and against any Seller Liability in accordance
with Article VII hereof.
1.6 Closing. Subject to the fulfillment of the conditions precedent as
hereinafter set forth, the closing under this Agreement ("Closing"), shall take
place at the offices of Mayer, Platt & Brown, 1675 Broadway, New York, New York
at 10:00 A.M. on March 19, 1996 or at such other time and at such other place as
shall be fixed by mutual consent of the parties hereto, but in no event
subsequent to March 29, 1996 (the "Closing Date").
ARTICLE II
INVENTORY
2.1 Invoice, Shipment and Possible Adjustment to Purchase Price.
(a) Seller agrees to release the Inventory to Purchaser for shipment,
and to deliver the Inventory and the bills of lading to Purchaser's transport
agent's warehouse located in Paris, France, as follows: (i) Inventory equal to
the principal amount of the Note set forth in Exhibit 1.2(b) on or before March
29, 1996 and (ii) Inventory equal to the principal amount of the Note set forth
in Exhibit 1.2(c) commencing approximately April 1, 1996 but in all respects
completed on or before May 31, 1996.
(b) Within five (5) business days of receipt of a shipment of Inventory
and bill of lading to Purchaser's warehouse in Florida, Purchaser shall verify
the receipt of the Inventory as stated on the bill of lading.
(c) The purchase price for the Inventory shall be appropriately
adjusted to conform any actual discrepancy found by the Purchaser in good faith,
and notice of any such discrepancy shall be promptly given to Seller. If the
purchase price is determined to be in excess of the actual price paid on the
Closing Date, then Purchaser shall pay such difference to Seller and the
principal amount of the promissory note described in Article 1.2(c) shall be
correspondingly increased. If the purchase price is determined to be less than
the actual price paid at Closing, then the purchase price shall be reduced by
the cost of any missing Inventory, and the principal amount of the promissory
note described in Article 1.2(c) shall be correspondingly decreased.
2.2 Risk of Loss. The risk of loss of any Inventory prior to shipment
of the Inventory to Purchaser because of loss, theft, fire or other casualty,
shall be borne by Seller. Risk of loss shall pass to Purchaser on shipment
ex-factory.
2.3 Returns. In the event that items of Inventory are returned to
Seller by third parties subsequent to the Closing Date, then in such event,
Purchaser covenants and agrees with Seller to purchase for cash at a price equal
to the cost thereof determined in accordance with Schedule 7.2 annexed hereto,
on a monthly basis for the one hundred eighty (180) day period immediately
following the Closing Date, such returned finished goods Inventory, provided,
that such items of returned finished goods Inventory appear on the 1996 Price
List annexed hereto as Schedule 2.3, and are in saleable condition, except for
exterior packaging which may not be in saleable condition. Any Inventory
returned to Seller that, in Purchaser's opinion, is not in saleable condition,
must be destroyed by Seller at Seller's sole cost.
ARTICLE III
WARRANTIES AND REPRESENTATIONS
OF SELLER
Warranties and Representations of Seller. Seller hereby warrants and
represents to Purchaser as follows:
3.1 Due Organization. Seller is a corporation duly organized, validly
existing and in good standing under the laws of France and has all requisite
corporate power and authority to carry on its businesses as currently conducted
and to own or lease and to operate its properties and assets as and where such
properties and assets are now owned or leased and operated.
3.2 Legal, Valid and Binding. Each of this Agreement and the other
documents contemplated hereby constitutes the legal, valid and binding
obligation of Seller, enforceable against it in accordance with its terms,
subject to the effect of bankruptcy, insolvency, reorganization, moratorium,
fraudulent conveyance and other similar laws relating to or affecting creditors'
rights generally and court decisions with respect thereto, and the availability
of equitable remedies.
3.3 Other Consents and Approvals. Except for the consent or
non-objection of the French Treasury Department to the transactions contemplated
hereby, any and all consents, approvals, authorizations, or orders of or
registrations or qualifications with any person, bank, corporation, association,
governmental body, or court having authority or power to regulate, supervise or
direct the business and affairs of Seller necessary for the consummation of the
transactions specified in this Agreement shall have been obtained on or before
the Closing by Seller.
3.4 Due Authorization; Compliance with Law. The execution and delivery
of this Agreement and the other documents contemplated hereby and performance of
the transactions contemplated hereby and thereby have been duly authorized by
all necessary corporate action and will not conflict with or result in a breach
of any of the terms or provisions of its Certificate of Incorporation or
By-laws, lease, bond, note, debenture, guaranty, deed of trust or other
agreement, instrument (or French equivalent thereof) or arrangement to which
Seller may be or is a party (including by operation of law) or by which the
property of Seller is bound, or any law, administrative regulation, or any order
of any court or governmental agency or authority entered in any proceeding to
which Seller was or is a party or by which its property is bound. The Business
is being conducted in compliance with all applicable law, statutes, ordinances,
regulations, decrees and orders, except for violations which have not had and
would not reasonably be expect to have a material adverse effect on the Business
or any of the Inventory.
3.5 No Litigation. There are no actions, suits, legal or governmental
proceedings pending or threatened against Seller relating to this Agreement, the
Inventory, or the transactions described herein.
3.6 Inventory. The Inventory has been acquired in the ordinary course
of business, in customary quantities and at prevailing prices, and has been
valued at the lower of cost or market on the financial statements of the Seller
in accordance with generally accepted accounting principles in France
consistently applied. The Inventory is located in France and consists solely of
finished goods (perfumes, fragrances, cosmetics, oils, creams, containers and
packaging), samples, testers and displays marketed and sold under the trademarks
Bal a Versailles and Revolution a Versailles, for which the Parent is the owner.
The Inventory is not subject to (i) any contract of sale or (ii) any Claims. At
the Closing, Seller shall convey to Purchaser good, marketable and indefeasible
title to all of the Inventory, free and clear of all Claims, except for the
escrow arrangement described by the terms of Article 1.4 hereof. All of the
Inventory is in good condition, operable and useful for its intended purpose
(ordinary wear and tear excepted), and none of the Inventory has been damaged by
any fire, accident, act of God or any other casualty that materially and
adversely impairs any such assets or the Business.
3.7 Absence of Adverse Change. Since January 11, 1996, there has been
no material adverse change in the Business or the Inventory, and there is no
condition, development or contingency of any kind of which the Seller has actual
knowledge which may result in any such material adverse change.
3.8 Survival of Warranties, Representations, etc. All statements
contained in any certificate or other instruments delivered by or on behalf of
Seller pursuant hereto or in connection with the transactions contemplated
hereby shall be deemed a warranty and representation of Seller hereunder. All
warranties and representations made hereunder shall be effective as of the
Closing with the same force and effect as if made at such time, and shall
survive the Closing.
ARTICLE IV
WARRANTIES AND REPRESENTATIONS
OF PURCHASER
Warranties and Representations. Purchaser hereby warrants and
represents as follows:
4.1 Legal, Valid and Binding. This Agreement constitutes the legal,
valid and binding obligation of Purchaser, enforceable against it in accordance
with its terms, subject to the effect of bankruptcy, insolvency, reorganization,
moratorium, fraudulent conveyance and other similar laws relating to or
affecting creditors rights generally or court decisions with respect thereto and
the availability of equitable remedies.
4.2 No Litigation. There are no actions, suits, legal or governmental
proceedings pending or threatened against Purchaser relating to this Agreement
or the transactions described herein.
ARTICLE V
CONDITIONS TO PARTIES' OBLIGATIONS
5.1 Purchaser's Conditions. The obligations of Purchaser
under this Agreement are subject to the fulfillment of each of the conditions
set forth below:
(a) At the Closing the warranties and representations of Seller
contained in this Agreement shall be true and correct in all material respects;
Seller shall have complied with and duly performed any and all covenants,
agreements and conditions in all material respects, on its part to be complied
with or performed pursuant to or in connection with this Agreement; and Seller
shall have delivered to Purchaser at the Closing a certificate from a duly
authorized officer of Seller to such effect.
(b) No action or proceeding shall have been instituted to restrain or
prohibit the Closing of the transactions contemplated by this Agreement or the
Intellectual Property Purchase Agreement.
(c) Seller or Parent shall have obtained, and deliver evidence thereof
to Purchaser at the Closing, a termination of each existing license, sublicense
and/or distribution agreement in respect of the Intellectual Property, in form
reasonably satisfactory to counsel to Purchaser.
(d) Seller shall execute and deliver a Bill of Sale to Purchaser to
evidence the conveyance of the Inventory from Seller to Purchaser in the form
set forth as Exhibit 4.1(d).
(e) Seller shall execute and deliver to Purchaser a Noncompetition
Agreement, the Escrow Agreement.
(g) Parent shall execute and deliver to Purchaser the Intellectual
Property Purchase Agreement and each of the documents contemplated thereby to be
executed and delivered by Parent.
(h) Purchaser shall have completed its due diligence investigation
of the Inventory and the Business.
(i) Seller shall not have engaged in any transaction out of the
ordinary course of business.
5.2 Sellers' Conditions. The obligations of Seller under this Agreement
are subject to the fulfillment of each of the conditions set forth below:
(a) At the Closing the warranties and representations of Purchaser
contained in this Agreement shall be true and correct in all material respects;
Purchaser shall have complied with and duly performed any and all covenants,
agreements and conditions in all material respects, on its part to be complied
with or performed pursuant to or in connection with this Agreement; and
Purchaser shall have delivered to Seller at the Closing a certificate from a
duly authorized officer of Purchaser to such effect.
(b) No action or proceeding shall have been instituted to restrain or
prohibit the Closing of the transactions contemplated by this Agreement or the
Intellectual Property Purchase Agreement.
(c) Purchaser shall execute and deliver to Seller the Noncompetition
Agreement and the Escrow Agreement.
(d) Seller shall execute and deliver the Intellectual Property
Agreement to the Parent.
ARTICLE VI
OTHER CONDITION PRECEDENT
6.1 Consent or Non-Objection of French Treasury. The closing of this
Agreement and the transactions contemplated hereby are expressly made subject to
the receipt by Parent of either consent or non-objection of the French Treasury
Department to the sale contemplated by the Intellectual Property Agreement, that
may be required in respect of foreign investment in France.
6.2 Non-receipt of Consent. In the event that the consent or
non-objection of the French Treasury Department is not obtained prior to the
close of business on March 29, 1996, then in either such event, this Agreement
shall be deemed null and void without any other action by or on behalf of the
parties hereto, unless both parties specifically agree in writing signed by both
parties to extend the Closing Date.
ARTICLE VII
INDEMNIFICATION
7.1 By Seller. Seller agrees to indemnify and hold harmless Purchaser
from and against any and all losses, claims, damages or liabilities to which
Purchaser may become subject, and to reimburse Purchaser for any and all legal
expenses (including the cost of any investigation and preparation) reasonably
incurred by Purchaser in connection with any claim or litigation, whether or not
resulting in any liability, insofar as such losses, claims, damages,
liabilities, or litigation arise out of or are based upon (i) any breach of
warranty or representation or failure to fulfill any covenant, agreement or
condition contained herein by Seller; (ii) any Seller Liabilities; or (iii) any
claims of creditors objecting to the transactions contemplated hereby as
described in Article 9.5 hereof (collectively the "Purchaser Claims").
7.2 By Purchaser. Purchaser agrees to indemnify and hold harmless each
of Seller and Parent from and against any and all losses, claims, damages, or
liabilities to Seller or Parent may become subject, and to reimburse each of
Seller and Parent for any legal or other expenses (including the cost of any
investigation and preparation) reasonably incurred by Seller or Parent in
connection with any claim or litigation, whether resulting in any liability,
insofar as such losses, claims, damages, liabilities or litigation arise out of
or are based upon any breach of warranty or representation or the failure to
fulfill any covenant, agreement or condition contained herein by Purchaser
(collectively "Seller Claims").
7.2 Threshold. Notwithstanding Articles 7.1 and 7.2 hereof, Purchaser
and Seller shall not be obligated to indemnify the other party except to the
extent that the aggregate amount of Seller Claims or Purchaser Claims (as the
case may be) has exceeded the sum of $10,000.
7.3 Limit of Indemnification. Notwithstanding Article 7.1 hereof, the
maximum liability of Seller under Article 7.1 hereof for Purchaser Claims is
$4,950,000, inclusive of any liability of Parent for indemnification of
Purchaser under the Intellectual Property Agreement.
ARTICLE VIII
CONDITIONS SUBSEQUENT
8.1 Change of Name. Promptly after the Closing, Seller shall
change its name to that which is not similar to Jean Desprez.
8.2 No "Knock-offs". Neither Seller nor any Affiliate will produce or
distribute any products bearing any confusingly similar names to any of the
trademarks constituting a portion of the Intellectual Property.
ARTICLE IX
MISCELLANEOUS
9.1 No Waiver. The failure of any of the parties hereto to enforce any
provision hereof on any occasion shall not be deemed to be a waiver of any
preceding or succeeding breach of such provision or any other provision.
9.2 Entire Agreement. This Agreement constitutes the entire agreement
and understanding of the parties hereto and no amendment, modification or waiver
of any provision herein shall be effective unless in writing executed by the
party charged therewith.
9.3 Agreement, Exhibits and Schedules. As used herein, the term "this
Agreement," means the body of this Agreement and the Schedules and Exhibits
hereto, and the terms "herein", "hereof" and "hereunder" and other words of
similar import refer to this Agreement and such Schedules and Exhibits as a
whole and not to any particular part of subdivision thereof.
9.4 Governing Law; Arbitration.
(a) This Agreement shall be construed, interpreted and enforced in
accordance with and shall be governed by the laws of France without regard to
the principles of conflicts of laws.
(b) (b) Any and all disputes between the parties arising out of or in
connection with this Agreement which the parties are unable to resolve amicably,
shall be finally determined by arbitration. The arbitration shall be held in
Brussels, Belgium, in accordance with the Rules of Conciliation and Arbitration
of the International Chamber of Commerce by one or more arbitrator appointed in
accordance with said rules. Any and all such arbitration proceedings shall be
conducted in the English language.
9.5 Objection Creditors. The parties hereto designate the following
person at following address to receive any and all objections to the sale
contemplated by this Agreement that may be raised by creditors of Seller: Ms.
Catherine Benard-Lotz, Parfums Jean Desprez, S.A., 4, Rond Point des Champs
Elysees, 75008, Paris, France. Seller agrees to promptly to notify Purchaser
of any of such objections.
9.6 Binding Effect. This Agreement shall bind and inure to the
benefit of the parties, their successors and assigns.
9.7 Assignment. No party may assign its rights or delegate its
obligations under this Agreement and any such attempted assignment or delegation
shall be void and of no force and effect.
9.8 Article Headings. The article headings herein have been inserted
for convenience of reference only, and shall in no way modify or restrict any
of the terms or provisions hereof.
9.9 Notices.
(a) Any notice or other communication under the provisions of this
Agreement shall be in writing, and shall be given by postage prepaid, registered
or air mail, or by hand delivery with an acknowledgement copy requested, or by a
reputable overnight delivery or courier service; all to be directed to the
addresses set forth above, or to any new address of which any party hereto shall
have informed the others by the giving of notice in the manner provided herein.
Such notice or communication shall be effective, if sent by postage prepaid,
registered or air mail, five (5) days after it is mailed; if sent by a reputable
overnight delivery or courier service, two (2) days after properly forwarded; or
by hand delivery, upon receipt.
(b) The parties hereto agree to send copies of all notices under this
Agreement by telecopier to the other party, but such notice by telecopier shall
not relieve the sending party of the obligation to forward notice in accordance
with the terms of Article 9.9(a) hereof.
9.10 Unenforceability; Severability. If any provision of this Agreement
is found to be void or unenforceable by a court of competent jurisdiction, then
the remaining provisions of this Agreement, shall, nevertheless, be binding upon
the parties with the same force and effect as though the unenforceable part had
been severed and deleted.
9.11 Brokers' Fees. Seller covenants and agrees to Purchaser that
Purchaser shall have no liability with respect to any brokerage fees or agents'
commissions in connection with the transactions contemplated hereby by reason of
any of their acts or conduct. Purchaser covenants and agrees to Seller that
Seller shall have no liability with respect to any brokerage fees or agents'
commissions in connection with the transactions contemplated hereby by reason of
any of their acts or conduct.
9.12 Further Assurances. After the Final Payment Date, Seller shall at
any time and from time to time, at the request of Purchaser and without further
cost or expense to Purchaser, execute and deliver such other instruments of
conveyance or transfer and take such other actions as Purchaser may request in
order to vest in Purchaser clear and unencumbered title to the Inventory and to
comply with applicable law.
9.13 Declaration of Good Faith. The undersigned parties declare, under
the pain of penalties laid down in Article 1837 of the General Tax Code (Code
general des impois), that this Agreement states the whole amount of the purchase
price.
9.14 No Third Party Rights. The warranties, representations and other
terms and provisions of this Agreement are for the exclusive benefit of the
parties hereto, and no other person shall have any right or claim against any
party by reason of any of those terms and provisions or be entitled to enforce
any of those terms and provisions against any party.
9.15 Counterparts. This Agreement may be executed in counterparts,
all of which shall be deemed to be duplicate originals.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
date first above written.
PARLUX FRAGRANCES, INC.
By: /s/ Zalman Lekach
-----------------
Zalman Lekach, Chief Operating Officer
JEAN DESPREZ, S.A.
By: /s/ Philippe Benacin
--------------------
Philippe Benacin, President
List of Schedules and Exhibits
Schedule 1.1: Inventory
Exhibit 1.2(a): Promissory Note
Exhibit 1.2(b): Promissory Note
Exhibit 1.2(c): Promissory Note
Exhibit 1.3: Escrow Agreement
Schedule 2.3: 1996 Price List
Exhibit 4.1(d): Bill of Sale
Schedule 7.2: Cost of Finished Goods
Exhibit 11
JEAN PHILIPPE FRAGRANCES, INC. AND SUBSIDIARIES
STATEMENT RE: COMPUTATION OF EARNINGS PER SHARE
Years ended December 31,
----------------------------
1993 1994 1995
---- ---- ----
Computation of earnings per share:
Earnings:
Net income $ 7,099,123 $ 7,274,686 $ 9,037,527
----------- ----------- -----------
Net Income $ 7,099,123 $ 7,274,686 $ 9,037,527
=========== =========== ===========
Number of shares:
Weighted average number of common shares
outstanding (exclusive of 1,500,000
shares held in escrow through
June 30, 1993) 8,799,248 10,180,412 10,044,653
Dilutive effect of exercise of outstanding
options and warrants and issuance of
shares held in escrow 1,333,380 274,143 394,243
----------- ----------- -----------
Weighted average number of common
and common equivalent shares
outstanding 10,132,628 10,454,555 10,438,896
=========== =========== ===========
Earnings per share $.70 $.70 $.87
=========== =========== ===========
Exhibit 21
LIST OF SUBSIDIARIES
Name Jurisdiction
Elite Parfums, Ltd. Delaware
Inter Parfums Holdings, S.A. France
Inter Parfums, S.A. France
Jean Philippe Fragrances do Brasil, Ltda.1 Brazil
Inter Parfums Trademarks, S.A. France
Inter Parfums Cosmetiques, S.A France
- --------
1A limited liability company.
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<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
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<COMMON> 17,730
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