U.S. Securities and Exchange Commission
Washington, D.C 20549
Form 10-QSB
(Mark One)
|X| QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1997
|_| TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
EXCHANGE ACT
For the transition period from ...............to .................
Commission file number 1-13856
Sel-Leb Marketing, Inc.
(Exact name of small business issuer as
specified in its charter)
New York 11-3180295
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
495 River Street, Paterson, NJ 07524
(Address of principal executive offices)
201-225-9880
(Issuer's telephone number)
1435 51st Street, North Bergen, NJ 07047
(Former Name, former address and former fiscal year,
if changed since last report)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such
shorter period that the registrant was required to file such report(s)), and (2)
has been subject to such filing requirements for the past 90 days.
Yes |X| No |_|
State the number of shares outstanding of each of the issuer's classes of
common equity, as of the latest practicable date: 8,705,727 shares of common
stock as of May 10, 1997.
Transitional Small Business Disclosure Format (check one):
Yes | | No |X|
<PAGE>
SEL-LEB MARKETING, INC.
TABLE OF CONTENTS
Page No.
Part I Financial Information
Item 1. Financial Statements
Balance sheet at December 31, 1996 1
Balance sheet at March 31, 1997. 2
Statement of Income for the three months
ending March 31, 1997 and 1996. 3
Statement of Cash Flows for the three months
ending March 31, 1997 and 1996. 4
Statement of Shareholder's Equity at March 31,
1997. 5
Notes to Financial Statements 6 - 8
Item 2. Management's Discussion and Analysis or Plan
Of Operation 9- 10
Part II Other Information
Item 6. Exhibits and Reports on Form 8-K 11
Signatures 11
<PAGE>
SEL-LEB MARKETING, INC.
AUDITED BALANCE SHEET
DECEMBER 31, 1996
ASSETS
Current Assets:
Cash and cash equivalents $ 129,538
Accounts receivable - net 3,247,812
Inventory 3,746,124
Due from officer 23,274
Prepaid expenses and other
current assets 304,797
Deferred income tax asset,
net of valuation allowance 95,000
-----------
Total current assets 7,546 545
Property and equipment - at cost, net of accumulated depreciation 356,251
Goodwill (Note 3) 252,063
Other assets 60,125
-----------
Total Assets $ 8,214,984
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 1,420,609
Loan payable - bank 300,000
Due to affiliate 64,398
Income taxes payable 186,522
-----------
Total current liabilities 1,971,529
-----------
Shareholders' Equity:
Common Stock - $.01 par value;
authorized 40,000,000 shares, issued
and outstanding 8,268,477 shares 82,685
Additional paid-in capital 5,632,512
Retained earnings 588,258
Less: receivable in connection with equity transactions (60,000)
-----------
Total Shareholders' equity 6,243,455
===========
Total Liabilities and Shareholders' Equity $ 8,214,984
===========
See Notes to Financial Statements
1
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SEL-LEB MARKETING, INC.
UNAUDITED BALANCE SHEET
MARCH 31, 1997
ASSETS
Current Assets:
Cash and cash equivalents $ 538,916
Accounts receivable - net 4,005,072
Inventory 4,221,264
Due from officer 23,739
Prepaid expenses and other
current assets 395,870
Deferred income tax asset,
net of valuation allowance 95,000
------------
Total current assets 9,279,861
Property and equipment - net 397,179
Goodwill (Note 3) 244,548
Other assets 89,126
------------
Total assets $ 10,010,714
============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Accounts payable and accrued expenses $ 1,856,328
Loan payable - bank 950,000
Due to affiliate 64,398
Income taxes payable 105,000
------------
Total current liabilities 2,975,726
------------
Shareholders' Equity
Common Stock - $.01 par value;
authorized 40,000,000 shares, issued
and outstanding 8,657,325 shares 86,573
Additional paid-in capital 6,261,859
Retained earnings 746,056
Less: receivable in connection with equity transactions (59,500)
------------
Total shareholders' equity 7,034,988
============
Total Liabilities and Shareholders' Equity $ 10,010,714
============
See Notes to Financial Statements
2
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SEL-LEB MARKETING, INC.
UNAUDITED STATEMENTS OF INCOME
THREE MONTHS ENDED
------------------
(Note 1)
MARCH 31, MARCH 31,
1997 1996
----------- -----------
Revenue:
Net Sales $ 4,198,790 $ 3,070,765
----------- -----------
Operating Expenses:
Cost of sales 2,917,837 2,283,866
Selling, general and administrative expenses 1,005,751 645,511
----------- -----------
Total operating expenses 3,923,588 2,929,377
----------- -----------
Operating income 275,202 141,388
Interest income 727 9,902
Interest expense (13,440) (12,242)
Other income 1,259
----------- -----------
Income before provision for
income taxes 263,748 139,048
Provision for income taxes (Note 4) 105,950 48,505
----------- -----------
Net income $ 157,798 $ 90,543
=========== ===========
Primary earnings per share (Note 2) $ 0.01 $ 0.01
=========== ===========
Fully diluted earnings per share (Note 2) $ 0.01 $ 0.01
=========== ===========
See Notes to Financial Statements
3
<PAGE>
SEL-LEB MARKETING, INC.
UNAUDITED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED
MARCH 31,
1997 1996
Cash flow from operating activities:
Net income $ 157,798 $ 90,543
Adjustments to reconcile net income to cash
provided by (used in) operating activities:
Depreciation 46,045 25,126
Changes in operating assets and liabilities:
(Increase) in accounts receivable (757,260) (85,010)
(Increase) in inventories (475,140) (819,212)
(Increase) in due from officer (465) 0
(Increase) decrease in prepaid expenses and
other current assets (91,073) 177,691
(Increase) in other assets (29,001) 0
Increase in accounts payable and accrued expenses 435,719 354,593
(Decrease) in income taxes payable (81,522) 0
(Decrease) in due to affiliates 0 (18,000)
----------- ---------
Net cash used in operating
activities ($ 794,899) ($274,269)
----------- ---------
Cash flow from investing activities:
Net (advances to) repayments from affiliates 0 (64,214)
Purchase of property and equipment (79,458) 0
----------- ---------
Net cash used in investing activities (79,458) (64,214)
----------- ---------
Cash flow from financing activities:
Net proceeds from notes to bank 650,000 0
Net repayment of long term debt
to related parties 0 (422,099)
Net proceeds from exercise of stock warrants 338,674 0
Proceeds from exercise of stock options 294,561 0
Payment on receivable in connection with
equity transaction 500 0
----------- ---------
Net cash provided by (used in) financing
activities 1,283,735 (422,099)
----------- ---------
Net increase (decrease) in cash $ 409,378 $(760,582)
=========== =========
Cash at beginning of period $ 129,538 $ 832,970
=========== =========
Cash at end of period $ 538,916 $ 72,388
=========== =========
See Notes to Financial Statements
4
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SEL-LEB MARKETING, INC.
STATEMENT OF SHAREHOLDERS' EQUITY
<TABLE>
<CAPTION>
Receivable In
Common Shares Additional Connection With
Paid In Retained Equity Shareholders'
Shares Amount Capital Earnings Transactions Equity
------ ------ ------- -------- ------------ ------
<S> <C> <C> <C> <C> <C> <C>
Balance at December 31, 8,268,477 $82,685 $5,632,512 $588,258 ($60,000) $6,243,455
1996
Net proceeds from exercise of
stock warrants 243,348 $ 2,433 $ 336,241 -- -- $ 338,674
Net proceeds from exercise of
stock options 145,500 $ 1,455 $ 293,106 -- -- $ 294,561
Payment of receivable in
connection with equity
transaction -- -- -- -- 500 $ 500
Net income -- -- -- 157,798 -- 157,798
--------- ------- ---------- -------- -------- ----------
Balance at March 31, 1997 8,657,325 $86,573 $6,261,859 $746,056 ($59,500) $7,034,988
========= ======= ========== ======== ======== ==========
</TABLE>
See Notes to Financial Statements
5
<PAGE>
SEL-LEB MARKETING, INC
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(The information pertaining to the three month periods ending March 31, 1997 and
1996 are unaudited)
1. Basis of Presentation, Events, and Initial Public Offering
The financial statements of Sel-Leb Marketing, Inc., (the "Company")
included herein have been prepared pursuant to generally accepted
accounting principles and have not been examined by independent public
accountants. In the opinion of management all adjustments which are of a
normal recurring nature necessary to present fairly the results of
operation have been made. Pursuant to Securities and Exchange Commission
("SEC") rules and regulations, certain information and footnote
disclosures normally included in financial statements prepared in
accordance with generally accepted accounting principles have been
condensed or omitted from these statements unless significant changes have
taken place since the end of the most recent fiscal year. The disclosures
contained herein should be read in conjunction with the financial
statements and notes included in the Company's Form 10-KSB filed with the
SEC on April 15, 1997. The results of operations for the three month
period ended March 31, 1997 are not necessarily indicative of the results
to be expected for the full year.
The Company completed in July 1995 its initial public offering ("IPO") of
920,000 units, each unit (after giving effect to the February 1996
three-for-one stock split described below) consisting of three shares of
common stock and three warrants, each warrant entitling the holder to
purchase one share of common stock at an exercise price of $2.00 per
share. The warrants are exercisable for a three year period commencing
July 13, 1996. The Company used a portion of the net proceeds of the IPO
to repay bank and bridge loans outstanding as of the date of the IPO.
On January 4, 1995, the Company increased its authorized number of shares
to 10,000,000 shares of common stock, effected a 17,760.8 for 1 stock
split and changed the par value of its common stock from no par to $.01
par. On May 18, 1995, the Company effected a .810706 reverse stock split.
In February 1996, the Company increased its authorized number of shares to
40,000,000 shares of common stock and consummated a 3 for 1 stock split,
which was effected as a share distribution pursuant to which each holder
of a share of common stock received two additional shares for each share
held. The increase in authorized shares and the stock splits have been
given retroactive effect in the accompanying financial statements.
On May 18, 1995, the Company and Linette Cosmetics, Inc. ("Linette"), two
companies with the same ownership interests, merged, with the Company as
the surviving corporation. In addition, certain shareholders of the
Company contributed their 60% interest in Lea Cosmetics, Inc. ("Lea") to
the Company in connection with the IPO. The Company purchased the
remaining 40% interest in Lea immediately prior to consummation of its IPO
and Lea was subsequently merged into the Company in August 1995. The
purchase price for the 40% interest in Lea consisted of 180,000 shares of
6
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SEL-LEB MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
common stock, 90,000 of which were issued at the time of the purchase and
90,000 of which were issued in January 1996 upon Lea's achieving certain
sales volume for 1995.
The merger of Linette with and into the Company and the contribution of
the 60% interest in Lea to the Company have been reported at historical
cost in a manner similar to a pooling of interests. The purchase of the
40% interest in Lea by the Company has been accounted for as a purchase.
2. Earnings Per Share
Earnings per share amounts are computed based on the weighted average
number of shares actually outstanding plus the shares that would be
outstanding assuming exercise of dilutive stock options and warrants, all
of which are considered to be common stock equivalents. The number of
shares that would be issued from the exercise of stock options and
warrants has been reduced by the number of shares that could have been
purchased from the proceeds of such exercise at the average market price
of the Company's stock.
Pursuant to the modified treasury stock method, the number of shares
purchased has been limited to 20% of the outstanding shares and the
balance of funds has been hypothetically invested in U.S. government
securities or commercial paper with appropriate recognition of any income
tax effect.
For the three months ended March 31, 1997, the number of shares used in
the computation of primary earnings per share and fully diluted earnings
per share was 13,881,863 for both calculations. For the comparable period
in 1996 the number of shares used for both calculations amounted to
13,977,189 and 14,154,955 respectively.
3 Acquisition
In July 1995, the Company purchased the 40% interest in Lea in a business
combination accounted for as a purchase. The purchase price was 180,000
shares of newly issued, unregistered shares of the Company's common stock,
90,000 of which were issued at the time of the purchase and 90,000 of
which were issued in January 1996 upon Lea's achieving certain sales
volume for 1995. The fair value of the assets acquired, including
approximately $281,000 allocated to goodwill, which is being amortized
over 10 years, amounted to approximately $384,000 and liabilities assumed
amounted to approximately $101,000. Amortization expense related to
goodwill and charged to operations amounted to $7,515 and $7,082 for the
three months ended March 31, 1997 and 1996, respectively.
The Company reviews the carrying value of goodwill for impairment
periodically and whenever events or changes in circumstances indicate that
the amount may not be recoverable. The review for recoverability includes
an estimate by the Company of the future undiscounted cash flows expected
to result from the use of the assets acquired and their eventual
disposition. An impairment will be recognized if the carrying value of the
7
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SEL-LEB MARKETING, INC.
NOTES TO FINANCIAL STATEMENTS
assets exceed the estimated future undiscounted cash flows of those
assets.
4. Provision for Income Tax
The provision for income tax for the three month period ended March 31,
1997 and the provision for the three month period ended March 31, 1996
respectively reflects the Company's earnings taxed for federal and certain
state income tax purposes at statutory rates.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION
The following discussion and analysis of the Company's results of
operations, liquidity and financial condition should be read in conjunction with
the Financial Statements of the Company and related notes thereto. This
Quarterly Report on Form 10-QSB contains certain forward-looking statements.
Actual results could differ materially from those projected in the
forward-looking statements due to a number of factors, including but not limited
to general trends in the retail industry, the ability of the Company to
successfully implement its expansion plans, consumer acceptance of any products
developed and sold by the Company, the ability of the Company to develop its
"celebrity" product business and other factors set forth herein or in reports
and other documents filed by the Company with the SEC.
Results of Operations: Three Month Period Ended March 31, 1997 Compared to the
Corresponding Period Ended March 31, 1996
Net sales for the three months ended March 31, 1997 were $4,198,790
compared to $3,070,765 for the three months ended March 31, 1996, representing
an increase of 37%. This increase in net sales resulted primarily from the
increase in the sales of the Company's own proprietary brand name line of beauty
aids and cosmetics.
Cost of sales increased from $2,283,866 for the three month period in 1996
to $2,917,837 for the same period in 1997. However, the cost of goods sold
decreased as a percentage of sales from 74.4% in 1996 to 70.2% in 1997,
reflecting increased sales of the Company's proprietary brand name line of
beauty aids and cosmetics, which generally have a higher profit margin than
other merchandise sold by the Company.
Selling, general and administrative ("SG&A") expenses increased from
$645,511 in 1996 to $1,005,751 in 1997. The principal components of SG&A are
payroll, rent, commissions, insurance, legal, accounting, and other fees paid to
third parties and travel and promotional expenses. The increase in SG&A expenses
in 1997 resulted primarily from an increase in developmental costs associated
with new proprietary brand name lines, which the Company has introduced in the
current period and plans to introduce in future periods. Additionally,
commission expense increased as a result of these product lines being introduced
to the market. The Company also incurred expenses in the period ended March 31,
1997 in connection with its move to new facilities in Paterson, New Jersey.
As a result of the increase in the cost of sales and the increase in SG&A
expenses, total operating expenses increased from $2,929,377 in the three month
period ended March 31, 1996 to $3,923,588 in the three month period ended March
31, 1997.
Liquidity and Capital Resources
During the first quarter of 1997, an aggregate of 388,848 shares of common
stock were issued by the Company upon the exercise of warrants, options and
warrants held by an affiliate of the Company, resulting in net proceeds to the
Company of $633,235. In addition, during the first quarter of 1997, the Company
borrowed an additional $650,000 under its revolving line of credit described
below. The proceeds resulting from the option and warrant exercises and the
additional borrowings were used by the Company primarily for the purchase of
additional inventory, consisting primarily
9
<PAGE>
of the Company's brand name lines of beauty aids and cosmetics.
At March 31, 1997, the Company had working capital of $6,304,135 and cash
and cash equivalents of $538,916.
On November 6, 1995, the Company entered into a Loan and Security
Agreement (the "Loan Agreement") with United Jersey Bank (the "Lender") pursuant
to which it obtained a revolving line of credit for general working capital
purposes in an aggregate principal amount up to $2,000,000, subject to a
borrowing base limitation. The line of credit bears interest at fluctuating
rates per annum based on the "Prevailing Base Rate" (as defined in the Loan
Agreement) of the Lender. As of March 31, 1997, the outstanding balance under
this line of credit was $950,000, and as of May 14, 1997, the outstanding
balance under this line of credit was $875,000. Any funds borrowed by the
Company under the Loan Agreement are secured primarily by the inventory and
receivables of the Company. The Loan Agreement terminates on May 31, 1997.
Although the Company anticipates that it will renew the Loan Agreement upon its
termination, there can be no assurance that the Loan Agreement will be renewed
at such time.
The Company believes that, based upon the Company's existing cash
balances, including cash generated from the exercise of outstanding options and
warrants, anticipated cash flow from the Company's operations, anticipated
growth and the expected availability of funds under the Loan Agreement, the
Company will be able to satisfy the Company's cash requirements for at least
twelve months. In the event the Company's plans change (due to unanticipated
expenses or difficulties or otherwise), or if the Loan Agreement is not renewed
or the Company's existing cash balances and projected cash flow otherwise prove
insufficient to fund operations, the Company could be required to seek
additional financing sooner than currently anticipated. Except for the Loan
Agreement, which expires May 31,1997, the Company has no current arrangements
with respect to, or sources of, additional financing. Accordingly, there can be
no assurance that additional financing will be available to the Company when
needed, on commercially reasonable terms, or at all. The Company's inability to
obtain such additional financing could have a material adverse effect on the
Company's long-term liquidity and on the proposed business expansion plans of
the Company.
10
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Part II Other Information
Item 6 Exhibits and Reports on Form 8-K
A. Exhibits
10.1 Shareholders Agreement dated June 26, 1996 among Sel-Leb
Marketing, Inc., B.B. Associates, LLC, Seth Markowitz and Beau
Brummel Sel-Leb Marketing, Inc.
10.2 Agreement dated as of January 2, 1997 between QVC, Inc. And
Beau Brummel Sel-Leb Marketing, Inc.
10.3 Product Promotion Agreement dated as of April 1997 between
Philbin Enterprises and Beau Brummel Sel-Leb Marketing, Inc.
11. Statement re computation of earnings (not required because the
relevant computation can be clearly determined from material
contained in the financial statements).
27. Financial Data Schedule
B. Reports on Form 8-K
No reports on Form 8-K were filed by the Registrant during the
three-month period ended March 31, 1997.
Signatures
In accordance with the requirements of the Exchange Act, the registrant caused
this report to be signed on its behalf by the undersigned, thereunto duly
authorized .
SEL-LEB MARKETING, INC.
/s/ Jan S. Mirsky
-------------------------------------------------
Jan S. Mirsky
Executive Vice President - Finance and
Chief Operating Officer
Dated: May 15, 1997 as both duly authorized officer of the registrant
and as principal financial officer of registrant.
11
SHAREHOLDERS AGREEMENT
THIS AGREEMENT made this 26 day of June, 1996, among SEL-LEB MARKETING,
INC., a New York corporation with an office at 1435 51st Street, North Bergen,
New Jersey ("Sel-Leb"), B.B. ASSOCIATES, LLC, a New York Limited Liability
Company with an office at 421 West Broadway, New York, New York 10012 ("Beau
Brummel"), and SETH MARKOWITZ residing at 363 East 76th Street, Apartment 5L,
New York New York 11021 ("Markowitz") (Sel-Leb, Beau Brummel and Markowitz are
sometimes hereinafter collectively referred to as the "Shareholders"), and BEAU
BRUMMEL SEL-LEB MARKETING, INC., a New York corporation, with its office at 1435
51st Street, North Bergen, New Jersey, (the "Corporation").
WITNESSETH:
WHEREAS, The Corporation is authorized to issue 200 shares of common stock
(the "Shares"), of which 100 Shares are currently issued and outstanding and
owned both of record and beneficially by the Shareholders as follows:
SEL-LEB MARKETING, INC. - 47.5 SHARES
B.B. ASSOCIATES, LLC - 47.5 SHARES
SETH MARKOWITZ - 5 SHARES
WHEREAS, Sel-Leb is in the business of celebrity marketing and
merchandising and has relationships with the major electronic retailers and mass
merchandisers; and
WHEREAS, Beau Brummel is in the business of designing and retailing fine
men's clothing, is the owner of the "Beau Brummel" trademark, and has
relationships with clothing manufacturers as well as with the television
personality Regis Philben ("Philben"); and
WHEREAS, Markowitz is an attorney who has relationships with both Sel-Leb
and Beau Brummel and initiated the discussions which led to the forming of the
Corporation; and
WHEREAS, the Shareholders have incorporated and organized the Corporation
for the purpose of creating a line of men's clothing and accessories designed
exclusively for Philben by Beau Brummel to be sold initially via the electronic
retailer The Home Shopping Network ("HSN") and eventually through a mass
merchandiser or bridge retailers; and
1
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WHEREAS, the Shareholders and the Corporation deem it expedient for their
mutual best interests and the welfare of the Corporation to provide for the
consistent and uniform management of the Corporation and to provide for certain
mutual rights and obligations of the Shareholders;
NOW THEREFORE, in consideration of the foregoing and of the mutual
covenants and agreements herein contained, the parties hereto do hereby agree as
follows:
1. MANAGEMENT and OPERATION:
During the term of this Agreement, the parties hereto jointly and
severally agree that, as Shareholders and Directors, they will irrevocably vote
at all times so as to provide for the following;
A. Directors - A four (4) member Board of Directors consisting of
the following persons as long as each is ready, willing and able to serve
[subject to subparagraph "C" below]:
HAL MARKOWITZ
STEPHEN GUTTMAN
AVRAM GOLDMAN
SETH MARKOWITZ
B. Officers - The officers of the Corporation shall be the following
persons so long as each is ready, willing and able to serve [subject to
subparagraph "C" below]:
President -
Treasurer -
Secretary -
and such Assistant Secretaries as the Board of Directors may appoint.
C. Should any of the above named directors and officers be unable to
serve by reason of death, physical disability or legal incapacity, or be
unwilling to serve, or should any Shareholder make a disposition of all of the
Shares owned by him to any person or persons (unless such disposition be exempt
from the provisions of Paragraph "6"), or should all of his Shares be purchased
pursuant to Paragraph "6," he shall cease to be a director and officer and,
simultaneously with such inability or disposition, he shall be deemed to have
submitted his resignation as officer and director of the Corporation to become
effective immediately and the Board of Director shall fill any vacant
directorship and office with a person selected by the Board in its sole
discretion.
2
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D. So long as this Agreement is in effect and for a period of three
years following its termination, no Shareholder or Director shall engage in the
manufacture, distribution, marketing or sale of any product bearing a label or
mark which includes the words "Regis" or "Philben" or is endorsed, promoted or
sold by the television personality Regis Philben, or become affiliated with any
business, entity or enterprise, be an employee or consultant for any business or
enterprise, or have an ownership interest in any business or enterprise, whose
business includes the manufacture, distribution, marketing or sale of any
product bearing a label or mark which includes the words "Regis" or "Philben" or
is endorsed, promoted or sold by the television personality Regis Philben.
Notwithstanding Paragraph "10" of this Agreement, the parties hereto agree that,
in the event of a violation of any provision of this subparagraph "D", the
Corporation and/or the non-breaching Shareholders and Directors shall have the
right to obtain immediate appropriate legal relief from any Court of competent
jurisdiction, including, but not limited to any form of injunctive relief.
E. Except as otherwise specifically required by the New York
Business Corporation Law or by this Agreement, all actions of the Corporation
shall require the unanimous vote of the Board of Directors and, where a vote of
Shareholders is required, the vote or written consent of the holders of all of
the Shares present in person or by proxy at a meeting of Shareholders and
entitled to vote thereat.
2. CAPITAL CONTRIBUTIONS by SHAREHOLDERS:
Sel Leb and Beau Brummel shall each make fifty (50%) per cent of the
capital contribution necessary to form, organize and commence the activities of
the Corporation.
3. EXPENSES of the CORPORATION:
Sel-Leb and Beau Brummel shall bear equal responsibility and
liability for all direct expenses associated with the activities of the
Corporation. The Corporation shall, within fifteen days of its receipt of an
expense receipt or voucher, reimburse any Shareholder, Director or Officer for
any direct expense made by said Shareholder, Director or Officer.
Indirect expenses such as office overhead shall be borne exclusively
by Sel-Leb.
All legal work for the Corporation shall be performed by Markowitz
without compensation. Notwithstanding the foregoing, Markowitz shall be
reimbursed by the Corporation for all disbursements made by him on behalf of the
Corporation in furtherance of his legal duties.
3
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4. COMPENSATION:
A. No salary or other compensation shall be payable to any party
hereto unless the Board of Directors shall so direct.
B. Upon the direction of the Board of Directors that a salary or
other compensation be paid to the parties hereto, each Shareholder shall be
compensated proportionately according to their percentage ownership of the
Corporation. Each time a Shareholder receives a salary, wage, bonus,
distribution of profit, dividend, payment in kind or any other method of
compensation, the other Shareholder shall receive his pro rata share of said
salary, wage, bonus, distribution of profit, dividend, payment in kind or any
other method of compensation.
5. ROLES OF SHAREHOLDERS:
It is understood, agreed and accepted by the Shareholders that
Sel-Leb shall be responsible for the day-to-day operations of the Corporation,
specifically, record keeping and custodian of the books and records of the
Corporation. Additionally, Sel-Leb shall be responsible for soliciting orders
for the products manufactured by the Corporation and invoicing therefore. Beau
Brummel shall be responsible for designing the products to be sold by the
Corporation and acquiring inventory sufficient to satisfy orders received by the
Corporation at the necessary price points. Markowitz shall be responsible for
the legal work necessary to form and organize the Corporation as well as for all
ongoing legal work of the Corporation.
6. SALE OF SHARES:
A. Sale to Corporation or Shareholders.
(i) If any Shareholder shall desire to sell, encumber or
dispose of any or all of his Shares (the "Selling Shareholder"), then he shall
promptly give notice to the Corporation and the other Shareholders, offering to
sell to the Corporation and/or the other Shareholders, as the case may be, said
Shares ("Notice to Sell").
(ii) Once given, or where deemed to have been given as
provided for in this Agreement, a Notice to Sell shall constitute an offer to
sell and shall subject the Shares of the Selling Shareholder as the case may be,
as herein contained.
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(iii) Within thirty (30) days after the giving of such Notice
to Sell, or within thirty (30) days after such Notice to Sell shall be deemed to
have been given, the remaining Shareholders and Directors shall cause a joint
meeting of Shareholders and Directors to be called and held. The Selling
Shareholder must be deemed in attendance at such meeting, whether in person or
by proxy, but must abstain from all votes taken thereat. At such meeting the
Shares of the Selling Shareholder shall be offered for sale and shall be subject
to an option to purchase on the part of the Corporation. In the event the
Corporation desires to exercise said option, it shall do so by resolution
adopted at the joint meeting of Shareholders and Directors, and within ten (10)
days the joint meeting, cause a written notice of acceptance to be given in the
manner hereinafter provided for (the "Notice of Acceptance").
(iv) If the Corporation shall be prohibited by law from
acquiring all or any portion of the Shares, or for any reason shall fail or
refuse to exercise its option or purchase all or any portion of the Shares, then
the Shares offered and not purchased by the Corporation shall be subject to an
option on the part of each of the non-selling Shareholders ("Non-Selling
Shareholders") to purchase a proportionate number thereof not purchased by the
Corporation. Any Non-Selling Shareholder may exercise his option to purchase the
Shares offered to him, by causing a "Notice of Acceptance," to be served within
ten (10) days after the aforesaid joint meeting of the Shareholders and
Directors in the manner herein provided. The exercise of such option by any
Non-Selling Shareholder shall be conditioned upon his agreeing to hold any
Shares so acquired in accordance with and subject to the terms and conditions of
this Agreement. As utilized herein, the term "proportionate number of Shares"
shall mean the number arrived at by (x) multiplying the total number of Shares
being offered for sale by (y) the percentage that the number of Shares held by
each Non-Selling Shareholder bears to the number of Shares owned by all
Non-Selling Shareholders. The Corporation shall have the right to allot Shares
so as to avoid fractional Share interests.
(v) The death or disability of a Shareholder shall constitute
a Notice to Sell by that Shareholder. Disability means unable to engage in
employment for a period of six (6) months.
B. Sale to Third Parties.
If the Corporation and Non-Selling Shareholders shall fail to
exercise their respective options to purchase all or any portion of the Shares
of the Selling Shareholder, the Selling Shareholder may, in accordance with an
exemption from securities registration, sell or dispose of any of his Shares to
any other person, firm, or Corporation, provided only that the Shares so
transferred shall thereafter be subject to all of the restrictions and
provisions of this Agreement.
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<PAGE>
C. Price to the Corporation or Shareholders.
(i) The price per share shall be the net book value as
determined by the Corporation's accountant utilizing generally accepted
accounting principles, except that the Corporation shall be valued as a going
concern. The remaining Shareholders and the Corporation shall have the exclusive
right to continue to use the name of the Corporation or any assumed name,
without the payment of any additional consideration therefor.
(ii) The price for the Share shall be the price under
Subparagraph "C(i)" above, in effect on the day a Notice to Sell is given.
Notwithstanding the foregoing, in the case of the death of any person owning
Shares in the Corporation, the price paid to his executor or administrator for
each Share shall be the price in effect on the date of the death of such person.
(iii) In the event that at the time of purchase, the Selling
Shareholder shall be indebted to the Corporation for any sum whatsoever, the
amount of such indebtedness shall be paid to the Corporation by the Selling
Shareholder at closing, or in the event that the purchaser of the Shares of the
Selling Shareholder by the Corporation, then the amount of such indebtedness
shall be deducted from the purchase price to be paid by the Corporation. In the
event that the Corporation shall be indebted to the Selling Shareholder at the
time of purchase, then the amount of such indebtedness shall be paid by the
Corporation, in addition to the purchase price to be paid for the Shares the
Selling Shareholder.
D. Manner of Payment for Shares.
The payment of the total purchase price due to each Selling
Shareholder or deceased or disabled Shareholder shall be made as follows: To be
determined by the parties at time of offer to sell.
E. Closing Matters.
(i) All credit cards and corporate property of the Seller
shall be delivered to the Corporation. The Selling Shareholder agrees to
indemnify the Corporation against any unknown and/or unauthorized charges on
such cards or property.
(ii) The Selling Shareholder shall submit to the Escrow Agent
his resignation of all corporate offices and directorships then held by him.
(iii) The legal representative of a deceased Shareholder shall
be required to deliver an appropriate tax waiver and a certificate of Letters
Testamentary or Letters of Administration to the attorney for the purchase upon
receipt of the purchase price in full.
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7. ACTIONS IN VIOLATION OF THIS AGREEMENT:
A. In the event the Shares of any Shareholder are pledged,
hypothecated, transferred or disposed of, in any manner, without complying with
the provisions of this Agreement, or if such Shares are taken in execution or
sold in any voluntary or involuntary legal proceeding, sale, bankruptcy,
insolvency or in any other manner, the Corporation and the other Shareholders
shall, upon actual notice thereof, in addition to their rights and remedies
under this Agreement, be entitled to purchase such Shares from the transferee
thereof, under the same terms and conditions, and at the same price as set forth
in the provisions of this Agreement dealing with the sale of the Shares held by
such transferee, as if the transferee had offered to sell such Shares, but in no
event shall the purchase price exceed the amount paid for said Shares by the
transferee. The Corporation may, at its option, refuse to transfer on its books
and its records any Shares transferred in violation of this Agreement.
B. A Shareholder who shall petition any Court for the dissolution of
the Corporation shall be deemed to have given a Notice to Sell under the same
terms and conditions set forth in Paragraph "6" of this Agreement.
8. TERMINATION of AGREEMENT:
This Agreement shall terminate on the occurrence of any of the
following:
(i) the merger or consolidation of the Corporation into or
with any other corporation which shall be the survivor of such merger or
consolidation; or
(ii) the sale of all or substantially all of the assets of the
Corporation; or
(iii) the dissolution of the Corporation, or the adjudication
of its bankruptcy, or the appointment of receiver for all or substantially all
of its assets, or the delivery by it of an assignment for benefit or creditors;
or
(iv) the determination by the Corporation by the holders of at
least 80% of the aggregate number of Shares then outstanding to terminate this
Agreement; or
(v) the acquisition of all Shares in Corporation by any
individual, firm, corporation or other entity; or
(vi) at such time as there is only one Shareholder of
Corporation.
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9. EFFECT OF NOTICE TO SELL:
Anything in Paragraph "8" to the contrary notwithstanding, this
Agreement and its terms shall continue in full force and effect so long as any
Notice to Sell Shares by a retiring Shareholder, or the representative of a
deceased or disabled Shareholder, is outstanding and/or until any pending sale
and purchase of Shares provided for in this Agreement is consummated by payment
in full therefor.
10. ARBITRATION:
Any dispute or controversy of any kind or nature, relating to this
Agreement or the breach of performance thereof, that shall arise among the
parties hereto or their legal representative, shall be settled and determined by
arbitration in the City of New York, in accordance with the rules then obtaining
of the American Arbitration Association, before an arbitrator or arbitrators
selected by said Association pursuant to its rules. All costs of arbitration
shall be borne as directed by the arbitrators. Judgment upon the award rendered
by the arbitrator or arbitrators may be entered in any court having
jurisdiction. The arbitrator or arbitrators shall be entitled to compel specific
performance and/or injunctive relief by the parties of their duties and
obligations under this Agreement in order to more effectively accomplish the
intentions and desires set forth in the preamble to this Agreement.
11. LEGEND:
Each certificate evidencing any Shares of the Corporation in
existence or hereafter issued shall have stamped upon the face thereof the
following legend:
"This certificate of stock is subject to and is transferable only in
accordance with the provisions of a certain Agreement dated as of
June 18, 1996, on file with the corporation."
12. CONFIDENTIALITY:
In addition to, and not in limitation or in lieu of, any
non-disclosure or confidentiality agreement signed by any Shareholder, each
Shareholder agrees that without the prior written consent of the Corporation
neither they nor any of their officers, directors, or employees shall use for
their own benefit or purposes or for the benefit or purposes of any other
person, or disclose in any manner to any person, any confidential information,
belonging to or relating to the assets or the business of the Corporation.
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<PAGE>
13. FURTHER ASSURANCES:
Each Shareholder shall execute and deliver such consents, proxies,
certificates, instruments, and documents as shall be necessary to carry out and
make effective the provisions set forth in this Agreement and, if and so long as
any Shareholder shall be a director of the Corporation, he shall vote in such
manner and otherwise use his best efforts to ensure that all actions taken by
the Board of Directors are in conformity with such provisions.
14. TERM:
This Agreement shall become effective upon its execution and, unless
sooner terminated as provided in Paragraph "8" above.
15. REMEDIES:
The parties hereto agree that any breach of Paragraphs "1D", "6" and
"12" of this Agreement will cause irreparably harm to the non-breaching parties
and thereafter do consent to the issuance of a temporary restraining order or
injunction restraining any such disposition pending the determination of such
controversy pursuant to any court having competent jurisdiction.
16. INVALIDITY OF PARTICULAR PROVISIONS:
If any term or provision of this Agreement or the application
thereof to any person or circumstances shall, to any extent, be invalid, or
unenforceable, the remainder of this Agreement, or the application or such term
or provision to persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby, and each term and
provision of this Agreement shall be valid and be enforced to the fullest extent
permitted by law.
17. NOTICES AND ADDRESSES:
All notices under this Agreement shall be in writing and shall be
sufficiently given if delivered to the addresses in person or if mailed by
express mail or certified or registered mail, return receipt requested, postage
prepaid to the person at the address set forth in the preamble to this
Agreement, or to such other addresses as any of them, by notice to all the
others, may designate from time to time.
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18. BINDING EFFECT:
This Agreement (a) shall be binding upon (i) the legal
representatives, beneficiaries, heirs and distributees of any person who is a
party hereto or otherwise bound hereby as a Shareholder, (ii) the successors and
assigns of the Corporation, and (iii) transferees by operation of law of any
person party hereto or otherwise bound hereby, and all other holders of Shares
(including a bona fide purchaser who acquires Shares pursuant to Paragraph "6"
hereof), whether or not any such person shall have executed this Agreement or a
counterpart hereof or otherwise agreed in writing to become a party hereto and
bound hereby, and (b) shall inure to the benefit of (i) the legal
representatives of any person who is a party hereto, and any person who by
reason of the provisions of Paragraph "6" is entitled to the benefits of a
Shareholder, and (ii) the successors and assigns of the Corporation.
19. MERGER AND MODIFICATIONS:
This Agreement contains the entire agreement of the parties hereto
with respect to the Subject matter hereof, and no modification or waiver of any
provisions hereof shall be valid unless in writing and signed, by all of the
parties hereto.
20. CHOICE OF LAW:
This Agreement will be executed and delivered in the State of New
York and will be governed by, and constructed and enforced in accordance with,
the laws thereof.
21. OTHER DEFINITIONS:
The term "person" as used herein shall be deemed to refer to
individuals, and corporations, partnerships, trusts or other entitles. Any
pronouns and any variation thereof, as used herein shall be deemed to refer to
the masculine, feminine, neuter, singular or plural, as the identity of the
undersigned may require.
22. COUNTERPARTS; EFFECTIVENESS:
This Agreement may be executed in one or more counterparts each of
which shall be deemed an original and all of which together shall constitute one
and the same instrument. This Agreement shall become effective when counterparts
executed by all parties have been delivered to the Corporation.
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23. PARAGRAPH HEADINGS:
The paragraph headings of this Agreement are for convenience and
reference only and in no way define, limit or describe the scope or intent of
this Agreement, nor in any way affect this Agreement.
IN WITNESS WHEREOF, the parties hereto have signed and acknowledged this
Agreement the day and year first above written.
BEAU BRUMMEL SEL-LEB MARKETING, INC.
Sel-Leb Marketing, Inc. - Shareholder
By: /s/ Jan S. Mirsky
-------------------------------------
Jan S. Mirsky
Exec. Vice President
B. B. Associates, LLC - Shareholder
By: /s/ Stephen Guttman
-------------------------------------
Stephen Guttman, Managing Director
Seth Markowitz - Shareholder
By: /s/ Seth Markowitz
-------------------------------------
11
Exhibit 10.2
AGREEMENT
THIS AGREEMENT ("Agreement") is entered into as of January 2, 1997 by and
between QVC, Inc. ("QVC"), a Delaware corporation with its principal place of
business at 1365 Enterprise Drive, West Chester, PA 19380, and Beau Brummel
Sel-Leb Marketing, Inc. ("Brummel"), a New York corporation with its principal
place of business at 421 West Broadway, New York, NY 10012.
BACKGROUND
A. QVC and its affiliates promote, market, sell and distribute (collectively,
"Promote") products through various means and media, including without
limitation, their televised shopping programs (the "Programs").
B. Brummel distributes and sells women's and men's apparel and accessories
(whether now in existence or developed hereinafter, collectively, the
"Products").
C. Brummel and QVC desire that QVC Promote the Products through various means
and media, including without limitation, the Programs, and that Regis Philbin,
an entertainer and consultant to Brummel ("Philbin"), appear on the Programs to
assist QVC in promoting the Products.
NOW, THEREFORE, incorporating the foregoing background, and for good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, and intending to be legally bound hereby, the parties hereto agree
as follows:
1. Grant of License and Other Rights.
(a) Brummel grants to QVC and its affiliates throughout the term of
this Agreement the following rights worldwide: (i) the exclusive right to
Promote the Products through Direct Response Television (as defined below) and
through the retail stores of QVC and its affiliates; (iii) the right to use,
publish, reproduce and transmit the trademarks, trade names and/or logos used
and/or developed by Brummel in connection with the Products, including without
limitation, the term "Beau Brummel" (collectively, whether now in existence or
created hereinafter, the "Trademarks") to Promote the Products in accordance
with the terms and conditions of this Agreement. For purposes of this Agreement,
"Direct Response Television" shall mean any electronic transmission (whether now
in existence or developed hereafter) through which a consumer is requested to
purchase any product by mail, telephone or other electronic means, including
without limitation, televised electronic retailing programs, infomercials, and
direct response commercial spots and computerized shopping services, whether
on-line services or otherwise. Notwithstanding the foregoing, nothing in this
Agreement shall prohibit Brummel from promoting its Products through its retail
stores or through "Beau Brummel" departments in first-class retail stores
(defined as department stores of the first class, specialty stores and
boutiques).
<PAGE>
(b) Philbin grants to QVC the following rights worldwide: (i) the
exclusive right in the to use his name, likeness, image, voice and performance
(the "Endorsement") to Promote the Products, and all other apparel products,
through all means and media, including without limitation, Direct Response
Television, in accordance with the terms and conditions of this Agreement.
(Hereinafter, the rights granted to QVC pursuant to subparagraph (a) of this
paragraph 1 and this subparagraph (b) are collectively referred to as the
"License").
2. Products.
(a) From time to time, QVC may issue to Brummel a Purchase Order,
the current form of which is attached hereto as Exhibit "A" and incorporated
herein by reference (each, a "Purchase Order"). This paragraph 2, together with
all other terms of each Purchase Order, shall survive the expiration or
termination of this Agreement. In the event that there exist any inconsistencies
between this Agreement and the terms and conditions of any Purchase Order, the
terms and conditions of this Agreement shall govern. Notwithstanding anything to
the contrary contained in this Agreement or otherwise, QVC makes no
representations or warranties with respect to the amount of Products that may be
sold through the Programs, if any, the number of times, if any, the Products may
be offered for sale on the Programs or the amount of revenue, if any, that may
be generated through any sales of Products on the Programs.
(b) During the term, Brummel shall provide to QVC or its designee,
upon the request of QVC, (i) consulting and advisory services with respect to
QVC's efforts to Promote the Products and (ii) such other creative input as QVC
may reasonably request from time to time, at the sole expense of Brummel.
(c) QVC shall not liquidate the Products through any channel of
distribution other than the Programs or the retail stores of QVC and its
affiliates without the consent of Brummel. In the event that QVC requests such
consent with respect to any such Products (which request must be made in
writing) (each, a "Liquidation Request") and Brummel refuses to provide such
consent with respect to any Products, Brummel shall purchase from QVC the
Products subject to such Liquidation Request with respect to which Brummel
refused to provide consent, no later than sixty (60) days following the date of
the applicable Liquidation Request. In the event that Brummel fails to purchase
such Products within such specified time period, then QVC shall have the right
to liquidate such Products as QVC deems appropriate, in its sole and absolute
discretion.
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3. Term.
(a) The initial term (the "Initial Term") of this Agreement shall
commence on the date hereof and shall terminate three (3) years following the
date of Philbin's first Appearance after that date. Upon the expiration of the
Initial Term, this Agreement shall automatically, continually renew for
additional three (3) year terms, in perpetuity (each, a "Renewal Term"), unless
(i) Brummel notifies QVC in writing, at least thirty days (30) prior to the end
of the Initial Term or any Renewal Term, of its intent to terminate the
Agreement, and (ii) during the Initial Term or any Renewal Term, as the case may
be, Net Purchases (as defined below) during that term are less than the Minimum
Amount. For purposes of this Agreement, "Minimum Amount" shall mean Seven
Million Dollars ($7,000,000) with respect to the Initial Term and each Renewal
Term and "Net Purchases" shall mean the aggregate cost to QVC of all Products
purchased by QVC pursuant to all Purchase Orders issued for Products during the
applicable period less returns, chargebacks and allowances. Following the
expiration or termination of this Agreement, QVC shall have the right for as
long as necessary to Promote the Products, and to use the License in connection
with such Promotion, to sell off any of its remaining inventory of Products and
to place additional orders for Products to fulfill any remaining unfilled
customer orders for Products (the "Sell-Off Period").
(b) Brummel shall have the right, but not the obligation, to
terminate this Agreement, in the event that Net Purchases are less than (i) Two
Million Dollars ($2,000,000), with respect to the period commencing upon the
date of this Agreement and ending one (1) year following the date of Philbin's
first Appearance after that date (the "First Interim") or (ii) Two Million Five
Hundred Thousand Dollars ($2,500,000), with respect to the period commencing
upon the day following the last day of the First Interim and ending one (1) year
thereafter (the "Second Interim"), by notifying QVC in writing, at least thirty
days (30) prior to the end of The First Interim or the Second Interim, as the
case may be, of its intention to terminate this Agreement.
4. Appearances. If requested by QVC, Brummel shall cause Philbin to make,
and Philbin agrees to make, at least eight (8) Appearances on the Programs
during each one (1) year period in which this Agreement remains in effect. For
purposes of this Agreement, an "Appearance" shall mean a one (1) to three (3)
day period during which the Products may be offered for sale on the Programs,
from time to time. [QVC shall provide Brummel and Philbin with written notice of
any scheduled Appearance at least ninety (90) days in advance of such scheduled
Appearance (each, a "Notice of Scheduled Appearance"). In the event that Philbin
is unable to make any scheduled Appearance, Brummel shall notify QVC of the same
and shall identify at least two (2) alternate date(s) for such Appearance (which
date(s) shall be no later than ___ days following the date for which such
Appearance was originally scheduled), no later than ___ days following the date
the applicable Notice of Scheduled Appearance was sent to Brummel and Philbin.]
Philbin agrees to appear in promotional announcements featuring the Programs, at
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dates and times determined by QVC, which dates and times shall coincide with the
Appearances, subject to his reasonable availability. Unless otherwise determined
by QVC, all Appearances and promotional announcements shall take place at QVC's
studios in West Chester, Pennsylvania. Brummel shall bear any costs and expenses
of Philbin that may arise in connection with all Appearances and promotional
announcements, including without limitation, travel, lodging and food. QVC makes
no representations or warranties with respect to the number of Appearances, if
any, that it may request Philbin to make.
5. Non-Compete. Without the prior written consent of QVC, neither Brummel
nor Philbin shall, during the term of this Agreement or the one (1) year period
following the expiration or termination of this Agreement, promote, advertise,
endorse or sell any products or items by means of Direct Response Television.
6. Representations, Warranties and Covenants.
(a) Brummel represents, warrants and covenants, which
representations, warranties and covenants shall continue during the term of this
Agreement and shall survive the expiration or termination of this Agreement,
that: (i) it possesses the full power and exclusive right to grant the License
to QVC; (ii) the execution, delivery and performance of this Agreement by
Brummel does not violate any agreement, instrument, judgment, order or award of
any court or arbitrator or any law, rule or regulation; and (iii) there exist no
agreements, or other arrangements, for Brummel to endorse, promote, advertise,
or sell any products through Direct Response Television. Brummel shall provide
QVC with any and all documents reasonably required or requested by QVC at any
time and from time to time to support the representations and warranties herein
contained.
(b) Philbin represents, warrants and covenants, which
representations, warranties and covenants shall continue during the term of this
Agreement and shall survive the expiration or termination of this Agreement,
that: (i) he possesses the full power and exclusive right to grant the
Endorsement to QVC; (ii) the execution, delivery and performance of this
Agreement by Philbin does not violate any agreement, instrument, judgment, order
or award of any court or arbitrator or any law, rule or regulation; (iii) there
exist no agreements, or other arrangements, for Philbin to endorse, promote,
advertise, or sell any Products through Direct Response Television, except other
agreements to which QVC is a party; and (iv) any testimonials made by Philbin
will be based upon the personal experiences of Philbin. Philbin acknowledges
that the compensation provided to him by Brummel is adequate consideration for
the obligations of Philbin under this Agreement and the rights granted to QVC
pursuant to paragraph 1(b) of this Agreement. Philbin shall provide QVC with any
and all documents reasonably required or requested by QVC at any time and from
time to time to support the representations and warranties herein contained.
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(c) QVC represents, warrants and covenants, that it is duly
authorized to enter into this Agreement and that its execution of this Agreement
does not violate any agreement, judgment, instrument, order or award of any
court or arbitrator or any law, rule or regulation. QVC acknowledges that the
trademark "Beau Brummel" is the exclusive property of Brummel and that all
goodwill in such trademark is the property of Brummel.
7. Confidentiality. Brummel and Philbin each acknowledge and agree that
any and all information regarding QVC or its operations disclosed to them in
conjunction with this Agreement, and any information regarding the sale and
promotion of Products and/or products by QVC, will be treated as confidential
information and will not be disclosed to any third party at any time during the
term of this Agreement, including any Renewal Term(s), and thereafter. Brummel
and Philbin further agree that any such information will not be used for any
purposes by Brummel or Philbin other than for purposes contemplated by this
Agreement. Confidential information shall not be deemed to include information
which (a) is public knowledge or becomes generally available to the public other
than as a result of disclosure by Brummel or Philbin; (b) becomes available to
Brummel or Philbin, on a non-confidential basis, from a source (other than QVC
or its agents) who is not bound by a confidentiality agreement with QVC; or (c)
is in the possession of Brummel or Philbin prior to disclosure by QVC, provided
that the source was not bound by a confidentiality agreement with QVC.
Notwithstanding the foregoing, Brummel and Philbin may disclose Confidential
Information (i) to their respective attorneys, accountants, bankers and
financial advisors, provided that the same agree to the terms of this
confidentiality provision in writing and in advance; (ii) to comply with any
court order or applicable law, provided that Brummel or Philbin notify QVC in
writing and in advance of any intention to disclose such information; or (iii)
in any action to enforce this Agreement.. Brummel and Philbin each agree that in
the event of a breach or threatened breach of the terms of this paragraph 7
and/or the provisions of paragraph 5, QVC shall be entitled to seek from any
court of competent jurisdiction, preliminary and permanent injunctive relief
which remedy shall be cumulative and in addition to any other rights and
remedies to which QVC may be entitled. Brummel and Philbin each acknowledge and
agree that the confidential information and other information referred to in
this paragraph 7 and the prohibitions provided in paragraph 5 above, are
valuable and unique and that such breach of such provisions will result in
immediate irreparable injury to QVC. The rights and obligations of the parties
set forth in this paragraph 7 shall survive and continue after the termination
or expiration of this Agreement.
8. Publicity. Except for incidental non-derogatory remarks necessitated by
the services provided hereunder, neither Brummel nor Philbin shall issue any
publicity or press release regarding their contractual relations with QVC or
otherwise make any oral or written reference to the other regarding their
activities hereunder, without obtaining QVC's prior written consent, and
approval of the contents thereof. Neither Brummel nor Philbin shall utilize any
trade name, service mark, trademark, or copyright belonging to QVC without the
prior written consent of QVC, which consent shall not be unreasonably withheld.
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<PAGE>
9. Miscellaneous.
(a) Amendment. This Agreement may not be varied, amended, or
modified unless in writing signed by the parties hereto.
(b) No Assignment. This Agreement and the rights and obligations
hereunder are not assignable, except to wholly-controlled entities of the
parties hereto, respectively, and any such assignment shall be null and void.
(c) Governing Law. This Agreement shall be construed according to
the internal laws of the Commonwealth of Pennsylvania without regard to conflict
of laws principles. QVC, Brummel and Philbin each hereby consent to the
exclusive jurisdiction of the state courts of the Commonwealth of Pennsylvania,
Chester County, and the United States District Court for the Eastern District of
Pennsylvania, in all matters arising out of this Agreement. QVC, Brummel and
Philbin each consent to service of process by certified mail, return receipt
requested, at the address indicated in the opening paragraph hereof.
(d) Notices. All notices provided for hereunder shall be sent via
certified mail, return receipt requested, or by reputable overnight carrier, to
the addresses indicated below:
If to QVC: QVC, Inc.
1365 Enterprise Drive
West Chester, Pennsylvania 19380
Attn: Executive Vice President
Electronic Retailing
With a copy to: QVC, Inc.
1365 Enterprise Drive
West Chester, Pennsylvania 19380
Attn: General Counsel
If to Brummel: Beau Brummel Sel-Leb
Marketing, Inc.
421 West Broadway
New York, New York 10012
Attn: President
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With a copy to: Markowitz, Roshco & Adelman
666 Third Avenue, 18th Floor
New York, New York 10017
Attn: Seth P. Markowitz, Esquire
and
William Morris Agency, Inc.
1325 Avenue of the Americas
New York, New York 10021
Attn: Mr. James M. Griffin
Executive Vice President
and Director
(e) Entire Agreement. This Agreement supersedes all prior
communications between the parties regarding the subject matter hereof, whether
oral or written, and constitutes the entire understanding of the parties.
(f) Waiver. No delay or failure on the part of any party hereto in
exercising any right or remedy under this Agreement, and no partial or single
exercise thereof, shall constitute a waiver of such right or remedy or of any
other right or remedy.
(g) Severability. If any term or condition of this Agreement or the
application thereof shall be illegal, invalid or unenforceable, all other
provisions hereof shall continue in full force and effect as if the illegal,
invalid or unenforceable provision were not a part hereof. The headings used in
this Agreement are for the convenience of the parties only and shall not be
construed in the interpretation of any provisions of this Agreement.
[THIS SPACE INTENTIONALLY LEFT BLANK]
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(h) No Joint Venture. Nothing herein contained shall be construed to
place the parties in the relationship of partners or joint venturers, and
neither QVC nor Brummel shall have the power to obligate or bind the other in
any manner whatsoever. QVC and Brummel agree that in performing their duties
under this Agreement they shall be in the position of independent contractors.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties hereto
have executed this Agreement on the date first above written.
Beau Brummel Sel-Leb Marketing, Inc. QVC, Inc.
By: /s/ Harold Markowitz By: /s/ G. Robert Ayd
------------------------- ------------------------
G. Robert Ayd
Its: Chairman of the Board Vice President
I, Regis Philbin, hereby acknowledge and agree to the terms and conditions set
forth in the above Agreement, and, for good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, and intending to be
legally bound hereby, agree to be personally bound by the provisions set forth
in paragraphs 1(b), 4, 5, 6(b), 7, 8 and 9 of the above Agreement.
- -----------------------------
Regis Philbin
Date:
-----------------------
8
PRODUCT PROMOTION AGREEMENT
This Agreement is made and entered into this day of April, 1997, and
between PHILBIN ENTERPRISES (hereinafter, "ENTERPRISES") f/s/o REGIS PHILBIN
(hereinafter, "PHILBIN"), an individual residing at, c/o James Griffin, William
Morris Agency, Inc. 1325 Avenue of the Americas, New York, New York 10019 and
BEAU BRUMMEL SEL-LEB MARKETING, INC. (hereinafter, "BEAU") a New York
corporation.
RECITALS
WHEREAS, PHILBIN is a well known television personality who is the
sole proprietor of ENTERPRISES; and,
WHEREAS, ENTERPRISES has the right to provide for the services of
PHILBIN as provided for hereunder; and
WHEREAS, BEAU and ENTERPRISES wish to enter into an agreement
pursuant to which ENTERPRISES shall provide the services of PHILBIN who will
endorse and promote products within the product categories of mens apparel and
accessories (the "Product" or "Products") in accordance with the terms and
conditions hereof.
NOW, THEREFORE, in consideration of the foregoing and the covenants
and agreements hereinafter set forth, the parties agree as follows:
1. Promotional Services.
(a) Live Appearances on Electronic Retailer's Programming
Services.
During the term of this Agreement, ENTERPRISES agrees to make
PHILBIN available to travel to an Electronic Retailer's ("QVC") facilities, in
West Chester, Pennsylvania, and from time to time, subject to his approval to
other locations, wherever they are located subject to PHILBIN's availability
(the "Visits") to appear live on QVC's Programming Services to promote and
otherwise assist in the marketing of the Products. ENTERPRISES agrees to make
PHILBIN available for a minimum of five (5) annual Visits, which dates are set
forth in Exhibit A. ENTERPRISES agrees to make PHILBIN available to make
additional Visits if ENTERPRISES, PHILBIN and BEAU mutually agree that they are
necessary or desirable to promote and/or otherwise market the Products, subject
to PHILBIN's availability and additional compensation to be negotiated in good
faith between the parties. In all cases the specific days for such Visits shall
be selected by mutual agreement of the parties. The number of live appearances
made by Philbin on the Programming Services during each Visit shall be
determined and scheduled throughout such days at the sole discretion of QVC, all
within the minimum number of Visits. For the purpose of clarification, each
Visit shall consist of one (1) to two (2) consecutive days, including travel
days, more specifically, Friday and Saturday.
<PAGE>
(b) Print and Video Promotional Spots.
In addition to the Visits described and Section 1(a),
ENTERPRISES agrees to make PHILBIN available from time to time to render
services to produce television commercials or promotional spots and print
photography to be used in connection with promotion of the Visits and marketing
of the Products on QVC. The specific days for production shall by determined by
mutual agreement of the parties, subject to Philbin's reasonable availability,
and whenever possible, will be scheduled to coincide with the schedule for
Visits under Section 1(a).
(c) Use of Promotional Segments.
As to each of the Visits described in Section 1(a) and the
promotional spots produced pursuant to Section 1(b), BEAU shall have, subject to
Section 1(f), the right to make or cause to have made such number of excerpts
and modifications as BEAU may elect by editing, dubbing, adding to, subtracting
from and integrating any or all of PHILBIN's performances hereunder
(collectively referred to herein as the "Promotional Segments") for use only
with regard to the promotion of the Visits and sale of the Products on QVC,
provided that PHILBIN will not be required to render any services in connection
with the production of such modifications or variations. During the term of this
Agreement, BEAU shall have the right to the unlimited use and reuse of any and
all of the Promotional Segments, as BEAU may elect, in connection with the
promotion and advertising of the Visits and distribution of the Products via
QVC, including but not limited to, use as spot announcements on QVC's
Programming Services, in connection with the general promotion of the Visits and
Philbin's appearances on QVC.
(d) Use of Name and Likeness.
Subject to Section 1(f), ENTERPRISES hereby grants permission
to BEAU and its subsidiaries and affiliates to use, during the term of this
Agreement, PHILBIN's name, autograph and likeness in connection with the
packaging, promotion, advertising and distribution of the Products.
(e) Right of Approval.
PHILBIN shall have all rights of approval, which shall not be
unreasonably withheld, on the Products endorsed and/or promoted by him and the
use of any Promotional Segment or PHILBIN's name, autograph or likeness or other
results of PHILBIN's services. Such approval shall be deemed to have been given
if PHILBIN or PHILBIN's representative designated herein does not disapprove in
writing within fourteen (14) days of receiving a request therefore. BEAU
acknowledges that a withholding of approval by PHILBIN shall not be deemed
unreasonable if PHILBIN applies aesthetic standards in making such decision,
consistent with PHILBIN's application of such standards in his other business
relationships.
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<PAGE>
2. BEAU's Marketing Rights.
PHILBIN agrees that, during the term of this Agreement, BEAU
and its subsidiaries and affiliates shall have the right to market and sell the
Products only on QVC's Programming Services.
3. Term.
The term of this Agreement shall commence on the date hereof
and shall continue, unless sooner terminated as provided herein, up to and
including one (1) year from the date PHILBIN's first Visit hereunder is
completed, now scheduled for May 16-17, 1997 (the "Initial Term").
4. Termination.
(a) Either party may terminate this Agreement in the event of
a default by the other party in the performance of any of its material
obligations hereunder by giving the defaulting party written notice setting out
the nature of such event of default and provided such event of default is not
cured within thirty (30) days following such notice.
(b) BEAU may terminate this Agreement at any time following
the time that BEAU becomes aware that PHILBIN has committed any act or become
involved in any situation or occurrence which brings PHILBIN into public
disrepute, scandal or ridicule, or shocks or offends the community, or derogates
from the public image or reflects unfavorably upon PHILBIN or the Products by
giving written notice to PHILBIN of such termination.
(b) ENTERPRISES may terminate this Agreement at any time
following the time that ENTERPRISES becomes aware that BEAU has committed any
act or become involved in any situation or occurrence which brings BEAU into
public disrepute, scandal or ridicule, or shocks or offends the community, or
derogates from the public image or reflects unfavorably upon BEAU or the
Products by giving written notice to BEAU of such termination.
5. Compensation.
(a) Royalty.
As compensation for the services provided herein, BEAU shall
pay to ENTERPRISES ten percent (10%) of the gross revenues derived from the
sales of Products promoted by him. For the purposes of this Agreement, gross
sales are defined as actual monies paid to BEAU by QVC or any other authorized
customers for the Products less approved credits. Notwithstanding the foregoing,
BEAU guarantees to pay ENTERPRISES no less than Fifty Thousand Dollars
($50,000.00) in royalties within fifteen (15) business days following each Visit
made by Philbin during the term of this Agreement, for a total guarantee of Two
Hundred and Fifty Thousand Dollars (the "Guarantee").
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<PAGE>
(i) Termination. In the event QVC submits a purchase
order to BEAU for any particular Visit which is not sufficient enough to
generate royalties to ENTERPRISES greater than or equal to Fifty Thousand
Dollars ($50,000.00), BEAU may at its option terminate this Agreement effective
immediately by giving ENTERPRISES written notice of such termination. In the
event BEAU terminates this Agreement as provided for in this Section 5(a)(i),
the Guarantee shall be reduced proportionately by the number of Visits made by
Philbin prior to said termination.
(b) Payment.
All sums due and payable to ENTERPRISES hereunder shall be
paid by BEAU within fifteen (15) business days following each Visit. Payment
shall be accompanied by a detailed statement setting forth sales of Products by
BEAU.
(c) Further Consideration.
(i) ENTERPRISES shall receive a two and one-half percent
(2.5%) override on the Gross Sales of any other celebrity signed by BEAU to
promote products (other than Joy Philbin), which celebrity was introduced to
BEAU by ENTERPRISES and/or PHILBIN or anyone connected with them.
6. Travel and Other Expenses.
BEAU shall be responsible for the following reasonable costs
and expenses relating to PHILBIN's travel to the QVC's studios, wherever they
are located in connection with the Visits and other promotional services: first
class airfare or other transportation for PHILBIN and anyone accompanying
PHILBIN, first class transport for PHILBIN to and from the airports, hotel and
QVC's studios, and first-class lodging (including a one (1) bedroom suite and
one (1) regular room).
7. Best Efforts.
(a) PHILBIN.
PHILBIN warrants that PHILBIN is free to enter into this
Agreement and render services pursuant hereto and that PHILBIN does not have and
will not have any agreements or commitments which would prevent or interfere in
any way with the full performance of the services or the rights granted to BEAU
hereunder. PHILBIN agrees to use PHILBIN's best efforts in rendering services
hereunder by coordinating his schedule and other business commitments so as not
to conflict with his performance hereunder. PHILBIN further agrees that PHILBIN
will attend and participate in pre-production conferences and meetings, make-up
and other activities necessary or appropriate for the proper performance of
services to be rendered hereunder.
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<PAGE>
(b) BEAU.
BEAU will use its best efforts to promote and market the
Products to QVC so as to maximize the compensation to PHILBIN.
8. Ownership of Certain Rights.
(a) It is understood and agreed that BEAU is the sole and
exclusive owner of all right, title and interest in and to the trade names,
trade marks, service marks and other property interests relating to the Products
(the "Property Rights"). Nothing contained in this Agreement shall be construed
as an assignment to PHILBIN of any right, title or interest in and to the
Property Rights. PHILBIN recognizes the value of the goodwill which exists or
will be developed in connection with the Products. It is understood that the
Property Rights attach only to those Products actually promoted or endorsed
hereunder, and not to any products or property rights otherwise owned or
exploited by PHILBIN. PHILBIN acknowledges that all rights therein and the
goodwill pertaining thereto belong exclusively to BEAU.
(b) BEAU shall own and PHILBIN hereby grants all rights of
every kind and nature to all results and proceeds of PHILBIN's services
hereunder, worldwide, in perpetuity, subject to the limitations on BEAU provided
in Section 2 hereof. In connection therewith, PHILBIN acknowledges that
PHILBIN's services hereunder are specially ordered and commissioned by BEAU as a
"work made for hire" for the sole and exclusive benefit of BEAU. Not
withstanding the foregoing, there shall be no use by BEAU of the results and
proceeds of Philbin's services hereunder following the termination or expiration
of the term hereof.
9. Restrictive Covenant.
(a) During the term of this Agreement ENTERPRISES and PHILBIN
agree that PHILBIN will not promote, market, authorize or permit PHILBIN's name
and/or likeness to be used to promote, market or otherwise endorse, directly or
indirectly, in North America any menswear, men's apparel or men's accessories
via direct response television marketing including, but not limited to, any
electronic or video retailing programming services.
(b) In addition, ENTERPRISES and PHILBIN agree that PHILBIN
will not, during the term of this Agreement render services to, furnish
materials to or authorize or permit the use of PHILBIN's name, likeness, voice,
or endorsements by any other entity for or on or behalf of or in connection with
any product which is competitive with the Products.
(c) In the event BEAU desires to continue its relationship
with ENTERPRISES following the expiration of the term hereof, it will so notify
ENTERPRISES, no less than ninety (90) days prior to the expiration of the term
hereof of its intent to negotiate for an additional term. Upon receipt by
ENTERPRISES of such notice, it and PHILBIN agree to negotiate exclusively and in
good faith with BEAU for a period of thirty (30) days. If an agreement between
the parties is not reached during the aforementioned thirty (30) day negotiation
period,
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<PAGE>
ENTERPRISES and PHILBIN agree that they (i) shall not enter into an agreement
with any entity for PHILBIN to promote and/or endorse menswear and accessories,
for the remaining Sixty (60) days of the term hereof and for the first thirty
(30) day period following expiration of the term hereof without first affording
BEAU the opportunity to match the terms of any bona fide offer received by them;
and (ii) shall not enter into an agreement with any other entity for PHILBIN to
promote and/or endorse any products to be sold via electronic retailing,
infomercials, or direct response television advertising for the remaining Sixty
(60) days of the term hereof and for the first sixty (60) day period following
expiration of the term hereof without first affording BEAU the opportunity to
match the terms of any bona fide offer received by them.
(d) ENTERPRISES and PHILBIN acknowledge that the services and
rights which are granted BEAU hereunder are extraordinary and unique and cannot
be replaced or adequately compensated in monetary damages, and any breach by
ENTERPRISES or PHILBIN of this Agreement will cause irreparable injury to BEAU.
Therefore, ENTERPRISES and PHILBIN agree that in the event of a breach of this
Section 9, BEAU, in addition to any other remedies that might be available to
it, shall be entitled, in addition to bringing suit at law or equity for
monetary or other damages, to seek injunctive or other equitable relief and,
where appropriate, prevent the violation of any of the provisions of this
Section 9, prevent PHILBIN from performing similar services for, furnishing
material to or granting conflicting rights to others. In any action to enforce
the provisions of this Agreement, ENTERPRISES and PHILBIN shall waive the
defense that there is an adequate remedy at law and agrees that BEAU shall have
the right to obtain injunctive or other equitable relief without being required
to prove actual damages.
10. Indemnification.
(a) PHILBIN agrees to indemnify, defend and hold harmless BEAU
and its subsidiaries and affiliates, and the directors, officers, employees and
agents of each of them, from all demands, claims, actions, or causes of action,
assessments losses, damages, liabilities, costs and expenses, including, without
limitation, interest, penalties, court costs and reasonable attorneys' fees and
expenses, asserted against, resulting to or incurred, directly or indirectly,
with respect to any failure by PHILBIN to perform any of PHILBIN's obligations
under this Agreement.
(b) BEAU agrees to indemnify, defend and hold harmless PHILBIN
from all demands, claims, actions or causes of action, assessments, losses,
damages, liabilities, costs and expenses, including without limitation,
interest, penalties, court costs and reasonable attorneys' fees and expenses,
asserted against, resulting to or incurred by PHILBIN, directly or indirectly,
with respect to: (i) any failure by BEAU to perform any of its obligations under
this Agreement; and, (ii) any claims in connection with the advertising, sale
and/or use of the Products.
(c) A party seeking indemnification (the "Indemnified Party")
shall give prompt written notice to the other party (the "Indemnifying Party")
of any claim, suit or action to which said indemnification may relate. The
Indemnifying Party may not settle, or appeal, any claim, suite or action or
otherwise compromise the approval, which shall not be unreasonably withheld.
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<PAGE>
The Indemnified Party at its own expense, shall have the right to participate in
the defense of any claims, suits, or actions. The above indemnities are and will
be deemed and construed to be continuing indemnities and will survive for a
period of five (5) years following the termination of expiration of this
Agreement.
11. Confidentiality.
(a) As of the date of this Agreement, a confidential
relationship shall arise and exist between the parties. During and for three (3)
years following the expiration or termination of the this Agreement, ENTERPRISES
shall hold (and shall require its agents, employees and representatives to hold)
in confidence any Confidential Information (as hereinafter defined) disclosed to
them by BEAU or any of its subsidiaries or affiliates. Without limiting the
generality of the foregoing, ENTERPRISES shall be under a continuing,
nondelegable, duty not to disclose, directly or indirectly, or permit the
disclosure, directly or indirectly, of such Confidential Information to any
third party, and not to knowingly use or permit the use of such Confidential
Information for a purpose not covered by this Agreement.
(b) For purposes of this Agreement, "Confidential Information"
means all information relating to BEAU (and its affiliates) existing and
proposed business(es) which they deem to be proprietary and confidential,
including without limitation, the terms of this Agreement, all know-how,
technology, trade secrets, product formulas or design specifications, packaging
designs, procedures, formats, data, customer lists, market research, market
strategies and the like whether disclosed orally, in writing or by inspection.
Notwithstanding anything to the contrary hereinabove stated, the provisions of
the Uniform Trade Secrets Act ("UTSA") shall govern.
(c) In the event ENTERPRISES (or any of ENTERPRISES'
employees, agents or representatives, to whom Confidential Information is
disclosed) breaches this Agreement, BEAU shall be entitled to bring suit to
recover any and all damages, both direct and consequential, that may be
sustained and, in addition, shall be entitled to seek specific performance
and/or a temporary or permanent injunction prohibiting and enjoining the further
violation of this Agreement. The enumeration of any remedy or remedies herein
shall not prevent BEAU from obtaining other damages or remedies allowable or
available to it under the law.
12. Commissions or Other Fees.
ENTERPRISES represents that it (a) has not used the services
of or incurred any obligations to an agent, broker, or finder in connection with
the transactions contemplated by this Agreement; or, (b) if ENTERPRISES has used
the services of or incurred any obligations to an agent broker or finder, that
ENTERPRISES shall be liable to such person and BEAU shall be under no obligation
for payment to such person on account of this Agreement, unless so stated in
writing signed by an officer of BEAU.
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<PAGE>
13. Independent Contractor Status.
ENTERPRISES agrees that ENTERPRISES is an independent
contractor; that any and all contracts of employment made by ENTERPRISES and any
and all other contracts which may be made by ENTERPRISES, for and in connection
with its performance under this Agreement, shall be made by ENTERPRISES as
principal and not as an agent of BEAU; and that ENTERPRISES will make full
payment of compensation and other amounts payable in connection with any matter
on PHILBIN's part to be performed under any such arrangement.
14. Insurance.
(a) ENTERPRISES hereby grants BEAU the right to purchase
Non-Appearance Insurance ("Insurance") which shall serve to insure BEAU in the
event PHILBIN is unable to perform his obligations hereunder due to illness,
accident, or death.
(b) BEAU shall name ENTERPRISES and PHILBIN as additional
insured parties under its existing product liability insurance, shall keep such
policy in existence for the term of this Agreement, and shall provide
ENTERPRISES with a certificate evidencing same.
15. Attorneys' Fees.
If any litigation or other proceeding is commenced to enforce
any provision of this Agreement or to seek a declaration of the rights of the
parties hereunder, the prevailing party shall be entitled to recover from the
non-prevailing party all of its costs and expenses incurred in connection with
such litigation or proceeding, including without limitation reasonable
attorneys' fees.
16. Waiver.
No waiver, delay, omission or forbearance in exercising any
right, option, duty or power under this Agreement shall affect or impair any
party's rights in respect of any default or breach of any of the provisions of
this Agreement or any subsequent default or breach of the same or a different
kind.
17. Binding Effect; Non-Assignability.
This Agreement is binding on the parties and their respective
executors, administrators, legal representatives and successors. This Agreement
and the respective duties and responsibilities of the parties hereunder are not
assignable, in whole or in part, without the prior written consent of the other
party.
18. Captions.
The captions for the various provisions of this Agreement are
provided for
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convenience of reference only and shall not be used in interpreting any such
provision.
19. Notices.
All notices or other communications required or permitted
under this Agreement shall be in writing and shall be deemed to have been given
on the date five (5) business days after having been mailed postage prepaid to
the recipient party by United States registered or certified mail and addressed
as follows:
If to BEAU: If to ENTERPRISES:
Beau Brummel Sel-Leb Marketing, Inc. Philbin Enterprises
421 West Broadway c/o James M. Griffin
New York, New York 10012 Executive Vice President and Director
William Morris Agency, Inc.
1325 Avenue of the Americas
New York, New York 10019
With a copy to:
Markowitz Roshco & Adelman
666 Third Avenue - 18th Floor
New York, New York 10017
Attn: Seth P. Markowitz, Esq.
or to such address for a party set forth in a notice given to the other party in
accordance with this Section 18; provided, however, that notice given in any
other manner shall be deemed effective upon receipt by the recipient. Delivery
of the copies shall not be necessary for effective notice.
20. Governing Law; Jurisdiction.
This Agreement and the legal relationship among the parties
shall be governed by and construed in accordance with the internal laws of the
State of New York, without regard to conflicts of law principles. Any legal
action or proceeding with respect to this Agreement may be brought in the Courts
of the State of New York, County of New York, or of the United States of America
for the Southern District of New York, and by execution and delivery of this
Agreement, PHILBIN hereby accepts the jurisdiction of the aforesaid courts.
PHILBIN hereby irrevocably waives, in connection with any such action or
proceeding, any objection including without limitation any objection to the
laying of venue or based on the grounds of forum non conveniens, which it may
now or hereafter have to be bringing of any such action or proceeding in such
respective jurisdictions.
21. Severability.
If any provision of this Agreement is declared invalid or
otherwise determined to be unenforceable for any reason, such provision shall be
deemed to be severable from the
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<PAGE>
remaining provisions, which shall otherwise remain in full force and effect.
22. Entire Agreement; Amendment & Modification.
This Agreement sets forth the entire understanding and
agreement of the parties with respect to the subject matter covered herein,
superseding all prior and contemporaneous understandings and agreements, whether
oral or written. This Agreement may not be modified or amended except by a
written instrument executed by both parties.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as
of the date and year first written above.
BEAU BRUMMEL SEL-LEB MARKETING, INC.
/s/ Stephen Gutman
- ------------------------------------
By: Stephen Gutman
Its: President
PHILBIN ENTERPRISES
/s/ Regis Philbin
- ------------------------------------
By: Regis Philbin
UNDERTAKING BY REGIS PHILBIN:
To induce Beau Brummel Sel-Leb Marketing, Inc. to enter into the
foregoing Agreement with Philbin Enterprises I acknowledge that I have read the
foregoing Agreement and I hereby approve its terms. Further, I agree to perform
the obligations and abide by the restrictions contained therein which are
applicable to me. I confirm that Philbin Enterprises is authorized and empowered
to act on my behalf in connection with the foregoing Agreement and that any
compensation due me for my services to be performed hereunder are solely the
responsibility of Philbin Enterprises and not of Beau Brummel Sel-Leb Marketing,
Inc.
/s/ Regis Philbin
- ------------------------------------
REGIS PHILBIN
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<PAGE>
EXHIBIT A
PHILBIN agrees to travel to QVC's facilities in West Chester,
Pennsylvania, or wherever they may be located, to make the annual Visits
referred to in Section 1 on the following days:
1. Father's Day: May 16-17, 1997
2. Winter: October 24-25, 1997
3. Christmas: December 5-6, 1997
4. Valentine's Day: To be determined: mid to late January,
1998
5. Spring 1998: To be determined: mid
March, 1998
In the event PHILBIN is unable to make any of the aforementioned
scheduled Visits, PHILBIN shall notify BEAU of such no less than sixty (60) days
prior to that Visit and shall identify two (2) alternate dates for such Visit
(such alternate dates shall be within two (2) calendar weeks of such Visit).
Notwithstanding the foregoing, if the scheduling of "Live With Regis and Kathy
Lee" prevents Philbin from appearing for any particular Visit, ENTERPRISES shall
notify BEAU of PHILBIN's unavailability no less than one (1) day following the
date it becomes aware of said unavailability, but under no circumstances less
than three (3) business days prior to that Visit.
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<FISCAL-YEAR-END> DEC-31-1997
<PERIOD-START> JAN-01-1997
<PERIOD-END> MAR-31-1997
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<ALLOWANCES> 220,000
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<CURRENT-LIABILITIES> 2,975,726
<BONDS> 0
0
0
<COMMON> 86,573
<OTHER-SE> 6,948,415
<TOTAL-LIABILITY-AND-EQUITY> 10,010,714
<SALES> 4,198,790
<TOTAL-REVENUES> 4,200,776
<CGS> 2,917,837
<TOTAL-COSTS> 2,917,837
<OTHER-EXPENSES> 1,019,191
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