Securities and Exchange Commission
Washington D.C. 20549
Form 8-K/A
(AMENDMENT NO. 1)
Current Report
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of the earliest event reported)
June 28, 1996
____________________
The Stephan Co.
Florida 1-4436 59-0676812
(State or other (Commission File (I.R.S. Employer
jurisdiction of Number) Identification
incorporation) Number)
1850 W. McNab Road
Fort Lauderdale, Florida 33309
(Address of principal executive offices) (Zip Code)
(954) 971-0600
(Registrant's telephone number, including area code)
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND
EXHIBITS
(a) Financial Statements of Businesses Acquired.
As of the date of filing this Current Report on Form 8-K, it
is impracticable for the Registrant to provide the financial statements
required by this Item 7(a). In accordance with Item 7(a)(4) of Form 8-K,
such financial statements will be filed by amendment to this Form 8-K no
later than 60 days after July 15, 1996.
(b) Pro Forma Financial Information.
As of the date of filing this Current Report on Form 8-K, it is
impracticable for the Registrant to provide the pro forma financial
information required by this Item 7(b). In accordance with Item 7(b) of
Form 8-K, such pro forma financial statements will be filed by amendment
to this Form 8-K no later than 60 days after July 15, 1996.
(c) Exhibits.
10.1 - Stock Purchase Agreement dated as of June 26, 1996, between The
Stephan Co., Sorbie Acquisition Co., Charles V. Hall, the Preferred
Stockholders and others, et. al.
10.2 - The Amended and Restated Sorbie Products Agreement dated
June 27, 1996, between Sorbie Acquisition Co. and Sorbie Trading Limited,
Trevor Sorbie International, PLC and Trevor Sorbie, the individual.
10.3 - Letter Agreement dated as of June 28, 1996, between The Stephan Co.
and Redken Laboratories, Inc.
10.4 - Letter Agreement dated June 27, 1996, between The Stephan Co.
and Samson Arms, Inc.
10.5 - Agreement dated as of June 26, 1996, between The Stephan Co.
and Charles V. Hall.
10.6 - Employment agreement dated as of June 27, 1996 between
Charles V. Hall and The Stephan Co.
10.7 - Assumption of Obligations and Indemnity dated June 28, 1996
between The Stephan Co. and Redken Laboratories, Inc.
10.8 - Secured Promissory note dated June 28, 1996 by The Stephan Co.
in favor of Redken Laboratories, Inc.
Pursuant to the requirements of the Securities Exchange
Act of 1934, the Registrant has duly caused this report to
be signed on its behalf by the undersigned, thereunto duly
authorized, in the State of Florida on August 22, 1996.
The Stephan Co.
By:
/s/ David Spiegel
David Spiegel
Chief Financial Officer
Exhibit 10.1
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of
June 26, 1996, by and between THE STEPHAN CO., a Florida
corporation ("Stephan"), SORBIE ACQUISITION CO., a
Pennsylvania corporation (the "Corporation"), CHARLES V.
HALL (the "Majority Stockholder") and the individuals and
entity listed in Schedule 1 hereto (the "Preferred
Stockholders", and together with the Majority Stockholder,
the "Stockholders"), and with respect to Section 9 hereof
only, Donald S. Chadwick, Apollo Trust Company, as trustee
for John C. Bryan, II, IRA, and John C. Bryan, II.
WITNESSETH:
WHEREAS, the Stockholders are the owners of all of the
issued and outstanding capital stock of the Corporation, which is
principally engaged in the distribution of professional hair care
products sold in premium beauty salons;
WHEREAS, the Stockholders desire to sell to Stephan and Stephan
desires to purchase from the Stockholders all of the capital
stock owned by the Stockholders in the Corporation (the
"Stock"), all in the manner and subject to the terms and
conditions hereinafter set forth; and
WHEREAS, the parties hereto desire to make certain representations,
warranties, covenants and agreements in connection with the transactions
contemplated hereby, to prescribe the terms thereof and to
impose various conditions precedent thereto.
NOW, THEREFORE, in consideration of the premises and the
representations, warranties, covenants and agreements herein contained,
the parties hereby agree as follows:
1. Exchange of Stock.
1. 1. Exchange of Stock.
On the terms and subject to the conditions of this Agreement, on the
Closing Date (as hereinafter defined),
each Stockholder shall sell, convey, transfer, assign and deliver to
Stephan, and Stephan shall purchase and acquire from each such Stockholder,
all right, title and interest of such Stockholders, legal or equitable,
in and to the number of shares of Stock set forth opposite such
Stockholder's name on Schedule 1 hereto under the caption "Shares of Stock
to be Sold." The certificates evidencing the Stock shall be delivered at
the Closing (as hereinafter defined) to Stephan, free and clear of all
liens, claims, security interests and encumbrances, accompanied by duly
executed stock powers. The purchase price to be paid to each Stockholder
listed on Schedule 1 in consideration of the Stock of such Stockholder
shall be paid by (i) the issuance to the Majority Stockholder of one (1)
share of non-registered restricted Stephan common stock, par value $.Ol
per share (the "Restricted Stephan Stock"), and (ii) the issuance to the
Preferred Stockholders of 13,732 shares of restricted Stephan common
stock, par value $.Ol per share, as such shares may be adjusted for
any stock splits, stock dividends or similar adjustments by Stephan
from the date hereof until the Closing Date, which Stephan agrees to
use its reasonable best efforts to register on Form S-3 under the Securities
Act of 1933, as amended (the "Securities Act"), as soon as practicable
after the Closing (the "Registered Stephan Stock" and, together with the
Restricted Stephan Stock, the "Stephan Stock"). The Restricted Stephan
Stock and the Registered Stephan Stock shall be delivered to the Majority
Stockholder and the Preferred Stockholders, respectively, at the Closing.
The Registered Stephan Stock shall be allocated to the Preferred
Stockholders in the amounts set forth on Schedule 1.
1.2. (a) Assumption of and Cancellation of Debt
and Certain Liabilities.
In addition to payment in the form of the Stephan Stock provided for
in Section 1.1 hereof, Stephan shall (i) contribute to its capital that
certain Secured Subordinated Debenture, dated July 20, 1994, made by the
Corporation in favor of Stephan in the principal amount of $500,000,
(ii) replace that certain Secured Promissory Note, dated July 22, 1994,
made by the Corporation in favor of Redken Laboratories, Inc. ("Redken")
(the "Redken Note") in the principal amount of $3,250,000 with a
cash payment of $500,000 and the execution and delivery of a promissory note
made by Stephan to Redken in the principal amount of $2,000,000,
(iii) assume that certain promissory note in the principal amount
of $52,000 payable to John C. Bryan II and (iv) assume the
Corporation's outstanding debt under that certain Business Loan Agreement,
dated July 13, 1994, between Northside Bank, Trevor Sorbie of
America, Inc. and the Corporation in an amount equal to $200,000.
(b) Existing Employment Agreement.
In addition, Stephan shall assume all the liabilities of Trevor Sorbie
of America, Inc., a wholly-owned subsidiary of the Corporation ("TSA"),
owing to the Majority Stockholder under the Existing
Employment Agreement (as defined in Section 2.25 hereof)
which exist as of the Closing (but not any liabilities or
obligations thereafter under such Agreement). On or prior
to the Closing, the Majority Stockholder and Stephan
shall enter into an agreement reflecting Stephan's
assumption of the aforesaid liabilities and the method of
payment of such liabilities. Upon the execution of such
agreement, the Existing Employment Agreement shall
terminate, without any further liability to Stephan, TSA or
the Corporation.
1.3. Closing Date.
The closing of the transactions contemplated by this Agreement
(the "Closing") shall take place at the offices of Stephan,
1850 W. McNab Road, Ft. Lauderdale, FL 33309 at 10:00 A.M., on
June 27, 1996, or at such other place and/or on such other date and
time as shall be agreed upon by Stephan and the Majority Stockholder (the
"Closing Date").
2. Representations and Warranties of the Corporation and the
Stockholders.
The Corporation and the Majority Stockholder hereby, jointly and severally,
and, where specifically indicated herein, the Preferred Stockholders hereby
severally, represent and warrant to, and covenant and agree
with, Stephan as follows:
2.1. Organization, Standing and Power.
The Corporation is a corporation duly organized, validly
existing and in good standing and authorized to exercise
its corporate powers, rights and privileges under the laws
of the Commonwealth of Pennsylvania with full corporate power
and authority to own, lease and operate its properties and to
carry on its business as presently conducted by it. Schedule 2.1 hereto
sets forth all states and other jurisdictions in which the
Corporation is duly qualified and in good standing to do
business as a foreign corporation. There are no other
states or jurisdictions in which the character and location
of the properties owned or leased by it, or the conduct of
its business, make such qualification necessary. Copies of
the Corporation's Articles of Incorporation and all amendments
thereto, and of the Corporation's By-Laws as amended to date,
have heretofore been furnished to Stephan and are complete and
correct. The Corporation's minute books contain complete and accurate
records of all meetings and other corporate actions,
including, without limitation, actions by unanimous written
consent of the stockholders and Board of Directors of the
Corporation (including committees of its Board of Directors).
2.2. Capitalization.
The authorized capital stock of the Corporation consists solely of
10,000 shares of common stock, of which 6,400 shares are issued and
outstanding, and nine (9) shares of preferred stock, $25,000 par value, of
which nine (9) shares are issued and outstanding. All
issued shares of Stock have been duly and validly issued and
are fully paid and nonassessable. All prior offerings and
sales of the capital stock of the Corporation have been made
in accordance with all Federal and state securities laws.
There are no options, warrants, rights, calls, commitments, conversion
rights, plans or other agreements of any character to which
the Corporation is a party or otherwise bound which provide
for the purchase or issuance by the Corporation of any
authorized but not outstanding, or authorized and
outstanding, shares of capital stock of the Corporation.
There is no personal liability attached to the Stock. Each
Stockholder hereby irrevocably waives any preemptive or
similar rights which he/it may have in respect of the
securities of the Corporation. The Corporation and the
Majority Stockholder hereby represent and warrant that no
person, other than the Stockholders, has any preemptive or
similar rights in respect of any securities of the Corporation.
2.3. Interests in Other Entities.
Except as set forth in Schedule 2.3 hereto, the Corporation does not (i) own,
directly or indirectly, of record or beneficially, any
shares of voting stock or other equity securities of any
other corporation, (ii) have any ownership interest direct
or indirect, of record or beneficially, in any
unincorporated entity, or (iii) have any obligation, direct
or indirect present or contingent to purchase or subscribe for
any interest in, advance or loan monies to, or in any way
make investments in, any person or entity, or to share any
profits or capital investments in other persons or entities,
or both.
2.4. Authority.
The Corporation and each of the Stockholders hereby represent
and warrant that the execution and delivery by the Corporation
and the Stockholders of this Agreement and all of the agreements,
Schedules, Exhibits, documents and instruments specifically provided
hereunder to be executed and/or delivered by any or all of them (all of the
foregoing, including this Agreement, being hereinafter sometimes
collectively referred to as the "Executed Agreements"), the performance
by the Corporation and any or all of the Stockholders (to the extent that
they are parties thereto) of their respective obligations under the Executed
Agreements, and the consummation of the transactions
contemplated by the Executed Agreements, have been duly and
validly authorized by all necessary corporate action on the
part of the Corporation and by the Stockholders, and the
Corporation has all necessary corporate power with respect
thereto. The Executed Agreements are, or when executed and
delivered by the delivering parties shall be, the valid and
binding obligations of the delivering parties, enforceable
in accordance with their respective terms, except to the
extent that enforceability may be limited by the operation
of bankruptcy, insolvency or similar laws. Neither the
execution and delivery by the Corporation and any or all of
the Stockholders (to the extent that they are parties
thereto) of the Executed Agreements, nor the consummation of
the transactions contemplated thereby, nor the performance
by the Corporation and any or all of the Stockholders (to
the extent that they are parties thereto) of their
respective obligations under the Executed Agreements, shall
(nor with the giving of notice or the lapse of time or both
would) (i) conflict with or result in a breach of any
provision of the Certificate of Incorporation or By-Laws of
the Corporation, (ii) give rise to a default or any right of
termination, cancellation or acceleration, or otherwise
result in a loss of contractual benefits to the Corporation,
under any of the terms, conditions or provisions of any
note, bond, mortgage, indenture, license, agreement or other
instrument or obligation to which the Corporation or any
Stockholder is a party or by which it or any of its
properties or assets may be bound, (iii) violate any order,
writ injunction, decree, law, statute, rule or
regulation applicable to the Corporation or any of the
Stockholders or any of their respective properties or
assets, (iv) result in the creation or imposition of any
lien, claim, restriction, charge or encumbrance upon any of
the properties or assets of the Corporation, or (v)
interfere with or otherwise materially and adversely affect
the ability of the Corporation to carry on its business as
now conducted.
2.5. Financial Statements.
The Corporation has delivered to Stephan true and complete copies
of its consolidated unaudited balance sheet as of May 31, 1996
(the "Balance Sheet"), and the related unaudited statements of income,
retained earnings and cash flows for the period ending May
31, 1996 (collectively, with the Balance Sheet, the "Interim
Financial Statements"), and true and complete copies of its
audited balance sheets and the related audited statements of
income, retained earnings and cash flows for the periods
ended December 31, 1995 and 1994 will be delivered within 45
days of the Closing Date. All of such financial statements,
including any notes thereto, were prepared in
accordance with GAAP applied on a consistent basis
throughout the periods involved subject in respect to the
Interim Financial Statements, to normal year-end audit
adjustments, none of which are material (except as may be
otherwise expressly stated in said financial statements and
notes thereto or in Schedule 2.5 hereto) and such financial
statements fairly present the financial position of the
Corporation at the dates thereof and the results of its
operations for the periods as indicated. The books and
records of the Corporation are in all material respects
complete and correct have been maintained in accordance with
good business practices, and accurately reflect the basis for the
financial condition and results of operations of the
Corporation as set forth in the financial statements
referred to herein. The audited financial statements agreed
to be prepared by the Corporation pursuant to Section 4.5
hereto, are being prepared in accordance with GAAP, and,
when completed, will fairly present the financial position
of the Corporation on the dates thereof and the results of
operations for the periods indicated.
2.6. Absence of Undisclosed Liabilities.
The Corporation does not have any liabilities, commitments or obligations,
whether accrued, absolute, contingent or otherwise which
have not been (i) in the case of liabilities, commitments
and obligations of a type customarily reflected on the
corporate balance sheet of the Corporation, reflected on the
Balance Sheet in accordance with GAAP, (ii) in the case of
all other types of liabilities and obligations, described in
Schedule 2.6 hereto, or (iii) incurred, consistent with past
practice, in the ordinary course of business since the date
of the Balance Sheet and which are not material either
individually or in the aggregate.
2.7. Properties.
Except as set forth in Schedule 2.7 hereto, the Corporation has
good title to all of the properties and assets (real, personal and mixed,
tangible and intangible) reflected on the Balance Sheet or thereafter
acquired or which it purports to own (except properties or assets sold
or otherwise disposed of in the ordinary course of business
subsequent to the date of the Balance Sheet), free and clear
of all mortgages, liens, pledges, charges or encumbrances of
or any nature whatsoever, except those referred to in the
Balance Sheet. Schedule 2.7 also contains an accurate list
setting forth all (i) real property owned, leased (whether as
lessor or lessee) or subject to contract or commitment of purchase
or sale or lease (whether as lessor or lessee) by the Corporation and
(ii) significant personal property leased by or to the Corporation
or subject to a title retention or conditional sales agreement
or other security device. All leases listed in Schedule 2.7 are
valid, binding and enforceable in accordance with their terms,
and are in full force and effect, except to the extent
that enforceability may be limited by the operation of
bankruptcy, insolvency or similar laws; there are no
existing defaults by the Corporation thereunder; no event of
default has occurred which (whether with or without notice,
lapse of time or both) would constitute a default by the
Corporation thereunder; and all lessors under such leases
have consented (where such consent is necessary) to the
consummation of the transactions contemplated by this
Agreement without requiring modification of the rights and
obligations of the Corporation under such leases.
2.8. Accounts Receivable.
The accounts receivable reflected on the Balance Sheet are good and
collectible in the ordinary course of business at the aggregate recorded
amounts thereof, less the amount of the reserve for bad
accounts reflected therein, and are not subject to any
offsets. The accounts receivable of the Corporation which
were thereafter added are good and collectible in the
ordinary course of business at the aggregate amounts
recorded on the books of account, less the amount of the
reserve for bad accounts reflected therein (which reserve has
been established on a basis consistent with prior practice
and in accordance with GAAP) and are not subject to any offsets.
2.9. Absence of Certain Changes.
Except as and to the extent set forth in Schedule 2.9 hereto,
since the date of the Balance Sheet, the Corporation has not:
(i) suffered any material adverse change in its
working capital, condition (financial or otherwise), assets,
liabilities, business, operations or prospects;
(ii) incurred any material liabilities or obligations
except items incurred in the ordinary course of business and
consistent with past practice, none of which exceeds $5,000
(counting obligations or liabilities arising from one
transaction or a series or similar transactions, and all
periodic installments or payments under any lease or other
agreement providing for periodic installments or payments,
as a single obligation or liability), or experienced any
increase in, or change in any assumption underlying or
methods of calculating, any bad debt, contingency or other
reserves;
(iii) paid, discharged or satisfied any claim,
liabilities or obligations (absolute, accrued, contingent or
otherwise) other than the payment, discharge or satisfaction
in the ordinary course of business and consistent with past
practice of liabilities and obligations reflected or
reserved against in the Balance Sheet or incurred in the
ordinary course of business and consistent with past
practice since the date of the Balance Sheet;
(iv) permitted or allowed any of its property or
assets (real, personal or mixed, tangible or intangible) to
be subjected to any mortgage, pledge, lien, security
interest, encumbrance, restriction or charge of any kind,
except those disclosed pursuant to Section 2.7 hereof;
(v) written down the value of any inventory or
written off as uncollectible any notes or accounts
receivable, except for write-downs and write-offs in the
ordinary course of business and consistent with past
practice, none of which are material;
(vi) canceled any debts or waived any claims or
rights of substantial value, or sold, transferred, or
otherwise disposed of any of its properties or assets (real,
personal or mixed, tangible or intangible), except in the
ordinary course of business and consistent with past
practice;
(vii) disposed of or permitted to lapse any rights to
use any patent trademark, trade name or copyright or
disposed of or disclosed (except as necessary in the conduct
of its business) to any person any trade secret formula,
process or know-how;
(viii) granted any general increase in the
compensation of officers or employees (including any such
increase pursuant to any bonus, pension, profit-sharing or
other plan or commitment) or any increase in the
compensation payable or to become payable to any officer or
employee, and, unless otherwise set forth in Schedule 2.9,
no such increase is customary on a periodic basis or is
required by agreement or understanding;
(ix) made any single capital expenditure or
commitment in excess of $5,000 for additions to property,
plant, equipment or intangible assets or made aggregate
capital expenditures and commitments in excess of $5,000 (on
a consolidated basis) for additions to property, plant,
equipment or intangible assets;
(x) declared, paid or set aside for payment
any dividend or other distribution in respect of its capital
stock;
(xi) made any change in any method of accounting
or accounting practice.;
(xii) paid, loaned or advanced any amount to, or
sold, transferred or leased any properties or assets (real,
personal or mixed, tangible or intangible) to, or entered
into any agreement or arrangement with, any of its officers,
directors, debtholders, stockholders or employees or any
"affiliate" or "associate" of any of its officers,
directors, noteholders, stockholders or employees (as such
terms are defined in Rules 405 promulgated under the
Securities Act), except for compensation to officers and
employees at rates not materially exceeding the rates of
compensation paid during the year ended December 31, 1995; and
(xiii) agreed, whether in writing or
otherwise, to take any action described in this Section unless
such action is specifically excepted from this Section or described in
Schedule 2.9.
2.10. Tax Matters.
Except as set forth in Schedule 2.10 hereto, the Corporation
has filed with the appropriate governmental agencies all federal,
state, local or foreign tax returns and reports required to be filed by it
("Returns"), and has paid in full or made adequate provision
for the payment of, all taxes of every nature, including,
but not limited to, income, sales, franchise and
withholding taxes ("Taxes"), together with interest,
penalties, assessments and deficiencies shown to be due or
claimed to be due on such Returns. The provisions for
income and other taxes reflected on the Balance Sheet are
adequate for all accrued and unpaid taxes of the Corporation
as of the date of the Balance Sheet, whether (i) incurred in
respect of or measured by income of the Corporation for any
periods prior to the close of business on that date, or (ii)
arising out of transactions entered into, or any state of
facts existing, on or prior to that date. The provision for
Taxes reflected on the books of account of the Corporation is
adequate for all Taxes of said entity which accrued since the
date of the Balance Sheet. There are no filed or other known tax liens
upon any property or assets of the Corporation. The
Corporation has not executed or filed with any governmental
authority any agreement extending the period for the
assessment or collection of any Taxes, and it is not a party
to any pending or, to the Corporation's or Majority Stockholder's
best knowledge, threatened action or proceeding by any governmental
authority for the assessment or collection of Taxes. To the
best knowledge of the Corporation and the Majority Stockholder,
no issue has arisen in any examination of the Corporation by any
governmental authority that if raised with respect to any other
period not so examined would, if upheld, result in a material deficiency
for any other period not so examined. There is no unresolved written
claim by a governmental authority in any jurisdiction where the
Corporation does not file Returns that it is or may be
subject to taxation by such jurisdiction. There has been no
examination or audit with respect to Taxes with respect to
any year. The Corporation is not required to make any adjustment
pursuant to Section 481 of the Internal Revenue Code of 1986, as
amended (the "Code"), by reason of a change in accounting
method or otherwise and, to the best knowledge of the
Corporation and the Majority Stockholder, neither the
Internal Revenue Service nor any other governmental
authority has proposed any such adjustment or change in
accounting method in respect of the Corporation, which
proposal is currently pending and the Corporation does not
have an application pending with any governmental authority
requesting permission for any change in accounting method
that relates to its business and/or operations. There shall
be no unpaid corporate surcharges at the Closing Date for
which the Corporation shall be liable.
2.11. Litigation.
Except as set forth in Schedule 2.11
hereto, there are no suits or actions, or administrative,
arbitration or other proceedings or governmental
investigations, pending, or to the best knowledge of the
Corporation and the Majority Stockholder, threatened against
or affecting, or which may affect, the Corporation or any of
its properties, assets or businesses or the transactions
contemplated hereby. The claims described in Schedule 2.11
do not materially and adversely affect, or will not
materially and adversely affect the Corporation or any of
its properties, assets or businesses. There are no outstanding
judgments, orders, stipulations, injunctions,
decrees or awards against the Corporation which are not satisfied.
2.12. No Violation of Law.
The Corporation is neither engaged in any activity nor omitting
to take any action as a result of which it is or would be in
violation of any law, rule, regulation, statute, order, injunction or decree, or
any other requirement of any court or governmental or
administrative body or agency, applicable to the Corporation
or any of its properties, products, operations, businesses,
pension or other employee benefit plans, labor practices,
or employees, including, without limitation, the rules and
regulations of the United States Food and Drug
Administration and any similar governmental authority of any
state, any laws, rules and regulations relating to air,
water, solid or liquid waste disposal practices, health or
safety practices, advertising practices or hiring, promotion
or retirement practices, the violation of which may result
in a material and adverse effect on the business or
condition (financial or otherwise) of the Corporation.
2.13. Intellectual Property.
Schedule 2.13 hereto lists all licenses, patents, copyrights,
or trademarks owned or used by the Corporation in the conduct of
its business and all applications therefor (the "Intellectual
Property"). Each trademark registration and/or application listed
in Schedule 2.13 has been to the extent indicated on such Schedule duly
registered with or filed in or issued by the United States
Patent and Trademark Office or such other government entity
as indicated in such Schedule and such registrations and
filings remain in full force and effect. No officer or
director, stockholder or employee of the Corporation nor any
of their affiliates or associates (each as defined in the
Securities Act) has any ownership or other interest in any
of the Intellectual Property. To the best knowledge of the
Corporation and the Majority Stockholder, none of the
Intellectual Property is being infringed upon by, or
infringes, any licenses, patents, copyrights, trademarks or
other intellectual property rights of any other person or
entity. Except as set forth in Schedule 2.13, the validity
of the Intellectual Property and the title thereto of the
Corporation have not been questioned in any litigation or
governmental inquiry proceeding to which the Corporation, or
to the best knowledge of the Corporation and the Majority
Stockholder, any predecessor, is or was a party, and, to the
best knowledge of the Corporation and the Majority
Stockholder, no such litigation, governmental inquiry or
proceeding is threatened. The conduct of the business of
the Corporation as presently conducted does not conflict
with valid licenses, trademarks, trademark rights, trade
names, trade name rights, service marks or patents of others
in any way likely to affect adversely, in any material
respect the Intellectual Property.
2.14. Insurance.
Schedule 2.14 hereto contains a complete
and correct list and summary description of all policies of
insurance in which the Corporation or its officers or
directors (in such capacity) is an insured party,
beneficiary or loss payable payee. Such policies are in
full force and effect and provide the type and amount of
coverage reasonably required for the business of the Corporation.
2.15. Bank Accounts and Powers of Attorney.
Schedule 2.15 hereto contains a complete and correct list showing
(i) the name of each bank in which the Corporation has an account or safe
deposit box and the names of all persons authorized to draw
thereon or have access thereto, and (ii) the names of all
persons, if any, holding powers of attorney from the Corporation.
2.16. Employee Arrangements; ERISA.
The Corporation has (i) no union, collective bargaining,
employment, management, severance or consulting agreements to which
the Corporation is a party or is otherwise bound, and (ii) no
compensation plans, bonus plans, deferred compensation agreements,
pension and retirement plans, profit-sharing plans, stock purchase and
stock option plans. Schedule 2.16 hereto contains a
complete and correct list and summary description of the
Corporation's hospitalization, insurance plans or
arrangements providing for benefits for employees of the
Corporation. Such Schedule also lists the names and
compensation of all persons whose total annual
compensation (direct and indirect) from the Corporation
(whether salary, bonus or otherwise) during the last fiscal
year was $30,000 or more, or who are presently scheduled to
receive compensation of at least $30,000 during the current
fiscal year or whose employment is not terminable at will by
the Corporation. The Corporation has no employee benefits
plans established or maintained by the Corporation which are
qualified for federal income tax exemption under Sections
401 and 501 of the Code.
2.17. Certain Business Matters.
Except as set forth in Schedule 2.17 hereto, and other than any
agreements with Stephan, (i) the Corporation is not a party to or bound by
any distributorship, dealership, sales agency, franchise or
similar agreement which relates to the sale or distribution
of its products and services, (ii) the Corporation does not
have any sole-source supplier of significant goods or
services (other than utilities) with respect to which
practical alternative sources are not available on
comparable terms and conditions, (iii) there are not pending and, to the
Corporation's and Majority Stockholder's best knowledge
there are not threatened, any labor negotiations involving
or affecting the Corporation and, to the Corporation's and
Majority Stockholder's best knowledge, no organizing
activities involving union representation exist in respect
of any of its employees, (iv) the Corporation neither gives
nor is bound by any express warranties relating to its
products or services and, to the best knowledge of the
Corporation and the Majority Stockholder, there has been no
assertion of any breach of product warranties which could
have a material adverse effect on the business or condition
(financial or otherwise) of the Corporation and, to the best knowledge of
the Corporation and the Majority Stockholder, there are no
problems or potential problems with respect to any product
sold by the Corporation whether relating to its safety,
efficacy, shelf life or otherwise, (v) the Corporation is
not a party to or bound by any agreement which limits its
freedom to compete in any line of business or with any
person, and (vi) the Corporation is not a party to or bound
by any agreement or involved in any transaction in which any
officer, director, debtholder or Stockholder, or any
Affiliate or Associate (as defined below) of any such person
has, or had when made, a direct or indirect material interest.
2.18. Certain Contracts.
Schedule 2.18 hereto contains a complete and correct list of all
contracts, commitments,obligations and undertakings, written or
oral, to which the Corporation is a party or otherwise bound, except
for each of those which (i) was made in the ordinary course of business,
(ii) either is terminable by the Corporation without liability, expense or
other obligation on 30 days' notice or less, or may be
anticipated to involve aggregate payments to or by the
Corporation of $5,000 or less, provided that such agreements
are not extraordinary (based upon past operating practice)
as to price, quantity, terms or conditions (or the equivalent) calculated
over the full term thereof and (iii) is not otherwise
material to the business, condition (financial or
otherwise), properties, or assets of the Corporation.
Complete and correct copies of all contracts, commitments,
obligations and undertakings set forth in Schedule 2.18
hereto have been furnished to Stephan, and except as
expressly stated in Schedule 2.18, each of them is in full
force and effect no person or entity which is a party
thereto or otherwise bound thereby is, to the best knowledge
of the Corporation and the Majority Stockholder, in default
thereunder, and no event, occurrence, condition or act
exists which, with the giving of notice or the lapse of time
or both, would give rise to a default or right of
cancellation thereunder, and the Corporation is not in
default thereunder and no event, occurrence, condition or
act exists by or on behalf of the Corporation which, with
the giving of notice or the lapse of time or both would give
rise to a default by the Corporation thereunder, and to the
Corporation's and Majority Stockholder's best knowledge, there
have been no threatened cancellations thereof and there are no
outstanding disputes thereunder.
2.19. Customers.
Except as set forth in Schedule 2.19
hereto, the Corporation has received no oral or written
complaints involving an amount of $25,000 or more with
respect to its supply, purchase, sale, distribution, sales
representative or similar agreements necessary for the
normal operation of the business or any notice from any
customer that it intends to return any inventory of the
Corporation other than in customary amounts in the ordinary
course of business. Schedule 2.19 hereto contains a true
and complete list of all of the Corporation's major
customers. Except as set forth in Schedule 2.19
hereto, since the date of the Balance Sheet, there has been
no material reduction or termination of any business between
the Corporation and any of its customers and the Corporation
has received no notice stating that any customer expects to
materially reduce or terminate its business with the
Corporation by reason of the transactions contemplated by
this Agreement or for any other reason whatsoever. The
Corporation has no agreement or understanding with any
customer that upon return of any products to the Corporation
that such customer will be entitled to a credit for any amount
other than the invoice price of the products so returned.
2.20. Approvals.
The Corporation has obtained and there
remain in effect all governmental and administrative consents, permits,
appointments, approvals, licenses, certificates and
franchises necessary for the operation of its business as
presently conducted by it, and the continued operation
thereof on substantially the same basis immediately following the Closing.
2.21. Brokers.
The Corporation and the Majority Stockholder hereby represent and
warrant that no agent, broker, person or firm acting on behalf of
the Corporation or the Stockholders or under the authority of any of the
foregoing, is or shall be entitled to a brokerage commission,
finder's fee, or other like payment in connection with any of
the transactions contemplated hereby, from the Corporation or
any of the Stockholders.
2.22. Stockholders.
The Stockholders and the Corporation hereby represent and warrant
that Schedule 2.22 hereto accurately sets forth the names of each of
the Stockholders, their respective addresses, including the state in which
each is a resident and the number of shares of Stock owned
by each. All such shares of Stock are, and at the Closing
Date will be, free and clear of any and all liens, claims,
charges, security interests or other encumbrances,
including, without limitation, voting or stockholder
agreements and trusts, first refusal rights, options or
similar rights. Each Stockholder is an "accredited
investor", as such term is defined in Rule 501 in Regulation
D under the Securities Act. Each Stockholder has such
knowledge and experience in financial and business matters
and is capable of evaluating the merits and risks of an
investment in the respective Stephan Stock to be received by
such Stockholder. Each Stockholder acknowledges that
Stephan has made available to such Stockholder the
opportunity to ask questions of and receive satisfactory
answers from Stephan concerning Stephan and the Stephan
Stock. All such questions have been answered to the
satisfaction of each of the Stockholders. Shares of Stephan
Stock issued are being acquired by each Stockholder for such
Stockholder's own account, for investment and not with a view to, or for
resale in connection with, any distribution of such shares
within the meaning of the Securities Act except in
accordance with all applicable Federal and state laws.
2.23. Disclosure.
No representation or warranty made by the Corporation or the Majority
Stockholder in any of the Executed Agreements contains any untrue
statement of a material fact or omits or will omit to state a material
fact necessary in order to make the statements therein not misleading.
2.24. Stockholders' Deficiency.
The stockholders' deficiency of the Corporation as of the Closing Date
shall not exceed $1,750,000.
2.25. Affiliated Transactions.
Except for that certain Employment Agreement dated as of June 1, 1994,
between the Majority Stockholder and TSA (the "Existing Employment Agreement"),
the Majority Stockholder is not a party to any agreement, transaction or
arrangement (oral or written) with or involving the Corporation or any
"associate" or "affiliate" (each as defined in Rule 405 promulgated
under the Securities Act, and as used herein "Associate" and "Affiliate",
respectively) of the Corporation or any of the Stockholders
or any Affiliate or Associate of any Stockholder. In addition, other
than in respect of the Existing Employment Agreement, and subject to Section
1.2(b) hereof, the Majority Stockholder has no claims,
monetary or otherwise, of any sort against the Corporation.
Notwithstanding anything to the contrary contained herein,
other than in respect of the Existing Employment Agreement,
and subject to Section 1.2(b) hereof, the Majority
Stockholder hereby releases and discharges the Corporation
from all claims, actions or suits that he now has or may
hereafter have against the Corporation.
2.26. Claims Against Corporation.
Except as set forth in Schedule 2.26 hereto, the Corporation has no debts,
obligations or liabilities owing to the Majority Stockholder
and, to the best knowledge of the Corporation, nothing
exists that could give rise to a claim by the Majority
Stockholder of any such debts, obligation or liability of
the Corporation to the Majority Stockholder.
2.27. Bankruptcy.
Neither the Corporation nor the Majority Stockholder have any present
intention to immediately commence any case, proceeding or other action
under any existing or future law of any jurisdiction, domestic or
foreign, relating to bankruptcy, insolvency, reorganization or relief
of debtors, seeking to have an order for relief entered with respect to
either of them, or seeking to adjudicate either of them a
bankrupt or insolvent, or seeking reorganization,
arrangement, adjustment, winding-up, liquidation,
dissolution, composition or other relief with respect to it
or its debts, or seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for either
of them or for all or any substantial part of their assets.
To the best knowledge of the Corporation and the Majority
Stockholder no third party is seeking to institute any of
the foregoing proceedings against the Corporation or the
Majority Stockholder.
2.28. Governmental Authorizations, Third Party Consents.
Except as set forth in Schedule 2.28 hereto, no approval,
consent, compliance, exemption, authorization or other
action by, or notice to or filing with, any governmental
authority or any other entity, and no lapse of a waiting
period, is necessary or required to be obtained by the
Corporation or any Stockholder in connection with the
execution, delivery or performance by any of them, of this
Agreement or the transactions contemplated hereby.
2.29. No Dividends or Payments.
Since January 1, 1995, except as set forth in Schedule 2.29 hereto,
the Corporation has not paid any dividends on any Stock or made any other
payments or distributions of any sort to any Stockholder or
any Affiliate or Associate of any Stockholder.
3. Representations and Warranties of Stephan.
Stephan hereby represents and warrants to, and covenants and agrees with,
the Stockholders as follows:
3.1. Organization, Standing and Power.
Stephan is a corporation duly organized, validly existing and in good
standing under the laws of the State of Florida, with full
corporate power and authority to own, lease and operate its
properties and to carry on its business as presently
conducted by it.
3.2. Capitalization.
The authorized capital stock of Stephan consists of 25 million shares of
common stock, par value $.Ol per share, of which, as of May 31, 1996,
approximately 4,122,484 shares were issued and outstanding,
and one million shares of preferred stock, none of which are
issued and outstanding. The shares of Stephan Stock for
which the outstanding shares of Stock shall be exchanged on
the Closing Date shall be, upon receipt of the exchanged
Stock in payment therefor, duly and validly issued and fully
paid and nonassessable. There is no personal liability, and
there are no preemptive or similar rights, attached to the Stephan Stock.
3.3. Authority.
The execution and delivery by Stephan of this Agreement and of each of the
other Executed Agreements to which it shall be a party, the performance
by Stephan of its obligations under this Agreement or such Executed
Agreements and the consummation of the transactions
contemplated hereby and thereby, have been duly and validly
authorized by all necessary corporate action on the part of
Stephan, and Stephan has all necessary corporate power with
respect thereto. This Agreement and the Executed Agreements
are, or when executed and delivered by Stephan shall be, the
valid and binding obligations of Stephan, enforceable in
accordance with their respective terms, except to the extent
that enforceability may be limited by the operation of
bankruptcy, insolvency or similar laws. Neither the
execution and delivery by Stephan of such of the Executed
Agreements, nor the consummation of the transactions
contemplated thereby, nor the performance by Stephan of its
respective obligations thereunder, shall (nor with the
giving of notice or the lapse of time or both would) (i)
conflict with or result in a breach of any provision of the
Articles of Incorporation or By-Laws of Stephan, (ii) give
rise to a default, or any right of termination, cancellation or
acceleration, or otherwise result in a loss of contractual benefit to
Stephan, under any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, license, agreement or
other instrument or obligation to which Stephan is a party
or by which it or any of its properties or assets may be
bound and which is material to it, (iii) result in the
creation or imposition of any lien, claim, restriction,
charge or encumbrance upon any of the material properties or assets
of Stephan, or (iv) violate any order, writ, injunction, decree,
law, statute, rule or regulation applicable to Stephan or any of
its properties or assets.
3.4. Filings.
Since January 1, 1995, Stephan has filed all
reports with the Securities and Exchange Commission required
to be filed pursuant to the Securities Exchange Act of 1934, as amended.
Such reports did not (as of their respective filing dates)
contain any untrue statements of a material fact or omit to
state a material fact required to be stated therein or
necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not
misleading.
3.5. Brokers.
No agent broker, person or firm acting on behalf of Stephan
or under its authority is or shall be entitled to a brokerage
commission, finder's fee, or other like payment in connection with any
of the transactions contemplated hereby.
4. Covenants of the Majority Stockholder and the Corporation.
The Majority Stockholder and the Corporation jointly and
severally covenant and agree to perform or take any and all
such actions to effectuate the following from the date
hereof until the Closing Date.
4.1. Investigation by Stephan.
Stephan may, prior to the Closing Date, through its representatives
(including its counsel, accountants and consultants) make such
investigations of the properties, offices and operations of
the Corporation and such audit of the financial condition of
the Corporation as it deems necessary or advisable in
connection with the transactions contemplated hereby,
including, without limitation, any investigation enabling it
to familiarize itself with such properties, offices,
operations and financial condition; such investigation shall
not however, affect the Corporation's or the Stockholders'
representations, warranties and agreements hereunder. The
Corporation and the Stockholders shall permit Stephan and
its authorized representatives to have, after the date
hereof, full access to the premises and to all books and
records and tax returns of the Corporation and Stephan shall
have the right to make copies thereof and excerpts therefrom. The
Corporation and the Stockholders shall furnish Stephan with
such financial and operating data and other information with
respect to the Corporation as Stephan may from time to time
reasonably request.
4.2. Carry on in Ordinary Course.
Except with Stephan's prior written consent, the Corporation shall
carry on its business diligently and substantially in the same manner as
heretofore conducted, and shall not (i) institute any
unusual or novel methods of lease, management, accounting or
operation, (ii) make any material change in the character of
the business of the Corporation, (iii) amend any contract,
lease or agreement utilized in the business of the
Corporation, (iv) enter into any material contract or
commitment or (v) agree, or incur any obligation, to do any of the
foregoing.
4.3. Other Transactions.
The Corporation and the Majority Stockholder shall not, and shall cause the
Corporation's directors, officers, employees, agents and affiliates or
associates not to, directly or indirectly, solicit or initiate the
submission of proposals from, or solicit, encourage,
entertain or enter into any arrangement, agreement or
understanding with, or engage in any negotiations with, or
furnish any information to, any person, other than Stephan
or a representative thereof, with respect to the acquisition
of all or any part of the business or assets of the
Corporation or any of its securities. Should the
Corporation or any of its affiliates or associates, during
such period, receive any offer or inquiry relating to such
acquisition, or obtain information that such an offer is
likely to be made, they will provide Stephan with immediate
written notice thereof, which notice will include the identity of the
prospective offeror and the price and terms of any offer.
4.4. Consents.
The Majority Stockholder shall cause the Corporation to, and the
Corporation shall, use its best efforts to obtain in writing, prior
to the Closing Date, all consents, approvals, waivers, authorizations
and orders necessary or reasonably required in order to permit it to
effectuate this Agreement and to consummate the transactions
contemplated here-by (collectively, "Consents"). All such
Consents will be in writing and copies thereof will be
delivered to Stephan promptly after the Corporation's
receipt thereof but no later than immediately prior to Closing.
4.5. Audit.
The Majority Stockholder shall cause the Corporation to, and the
Corporation shall, promptly commence, conduct and, to the extent
possible prior to the Closing, complete an audit of the books, records and
financial statements of the Corporation. Such audit shall be prepared
in accordance with GAAP by independent public accountants mutually
acceptable to Stephan and the Corporation for the fiscal years ending
December 31, 1994 and December 31, 1995.
4.6. Supplemental Disclosure.
The Majority Stockholder and the Corporation agree that with respect to their
representations and warranties made in this Agreement they will have a
continuing obligation to supplement or amend the Schedules hereto with
respect to any matter hereafter arising or discovered which, if existing
or known at the date of this Agreement, would have been required to be
set forth or described in the Schedules hereto.
5. Covenants of Stephan.
Stephan covenants and agrees to perform or take any and all such actions
to effectuate the following:
5.1. Registration of Stephan Stock.
As soon as reasonably practicable after the date hereof, Stephan shall,
subject to applicable legal requirements, prepare and file a registration
statement on Form S-3 (the "Registration Statement") under the Securities
Act and shall enter into customary agreements (including indemnity
agreements) in connection with such Registration Statement covering the
resale by the Preferred Stockholders of the shares of Registered Stephan
Stock to be issued to the Preferred Stockholders pursuant to this Agreement.
Stephan shall use its reasonable best efforts to cause the Registration
Statement to become effective under the Securities Act as soon as reasonably
practicable after the filing thereof. Registration of the Registered Stephan
Stock pursuant to the Registration Statement shall not be underwritten by
any broker/dealer. Costs of the Registration Statement other than brokerage
and related commission costs, shall be borne by Stephan.
5.2. Employment Agreement.
On the Closing Date, Stephan shall enter into the Employment
Agreement with the Majority Stockholder substantially in the form
set forth as Exhibit A hereto (the"Employment Agreement").
6. Conditions of Stephan's Obligation to Close.
The obligation of Stephan to close under this Agreement is subject
to the following conditions any of which may be waived by Stephan
in writing at or prior to Closing:
6.1. Agreements and Conditions.
On or before the Closing Date, the Majority Stockholder and the Corporation
shall have complied with and daily performed all agreements and conditions on
their part to be complied with and performed pursuant to or in connection
with this Agreement on or before the Closing Date.
6.2. Representations and Warranties.
The representations and warranties of the Stockholders and the Corporation
contained in this Agreement, or otherwise made in connection with the
transactions contemplated hereby, shall be true and correct
in all material respects on and as of the Closing Date with
the same force and effect as though such representations and
warranties had been made on and as of the Closing Date.
6.3. Loss, Damage or Destruction.
Between the date hereof and the Closing Date there shall not have been
any loss, damage or destruction to or of any of the assets, property
or business of the Corporation in excess of $25,000 in the aggregate,
whether or not covered by insurance, nor shall the assets, properties,
business or prospects of the Corporation have been adversely affected
in any way as a result of any fire, accident, or other casualty, war,
civil strife, riot or act of God or the public enemy or otherwise.
6.4. No Legal Proceedings.
No court or governmental action or proceeding shall have been instituted or
threatened to restrain or prohibit the transactions contemplated hereby,
and on the Closing Date there will be no court or governmental actions or
proceedings pending or threatened against or affecting the Corporation
which involve a demand for any judgment or liability, whether or not covered
by insurance, and which may result in any adverse change in the business,
operations, properties or assets or in the condition, financial or otherwise,
of the Corporation.
6.5. Certificate.
Stephan shall have received a certificate dated the Closing Date and executed
by the Majority Stockholder and an authorized officer of the Corporation to
the effect that the conditions expressed in Sections 6.1, 6.2, 6.3 and 6.4
have been fulfilled.
6.6. Consents.
Stephan shall have received all Consents necessary to effectuate this
Agreement and to consummate the transactions contemplated hereby.
6.7. Termination of any Affiliated Agreements.
Stephan shall have received evidence satisfactory to it that all agreements,
written or oral, between any Stockholder and the Corporation or any
Affiliate or Associate of such Stockholder and the Corporation, including,
without limitation, the agreement to repay that certain loan by the
Majority Stockholder to the Corporation in the amount of $100,000 and that
certain Employment Agreement, dated as of July 22, 1994, by and between
TSA and the Majority Stockholder, but, subject to Section 1.2(b) hereof,
specifically excluding the Existing Employment Agreement, shall have been
terminated, without any payment by or further liability to the Corporation.
6.8. Employment Agreement.
Stephan and the Majority Stockholder shall have entered into an Employment
Agreement substantially in the form set forth as Exhibit A hereto.
6.9. Exemption From Securities Act.
The issuance to the Stockholders by Stephan of the Stephan Stock shall, based
upon information provided to Stephan by the Corporation and the Stockholders,
qualify as an offering and sale exempt from registration under the Securities
Act pursuant to Section 4(2) and Regulation D of said Securities Act and
shall comply with the requirements of all states, and other
regulations currently in effect relating to "privateofferings" of the type
to be made by Stephan hereunder.
6.10. Cosmair Agreement.
Stephan and Cosmair, Inc. shall have consummated their transaction regarding
the Redken Note substantially on the terms set forth in Exhibit B hereto.
6.11. Amendment of Sorbie Products Agreement.
Stephan shall have received evidence satisfactory to it that an amendment
and restatement of the Sorbie Products Agreement between the Corporation,
Sorbie Trading Limited, Trevor Sorbie International, PLC, and
Trevor Sorbie substantially as set forth as Exhibit C hereto shall have
been executed by all parties thereto.
6.12. Termination of Sampson Arms Royalty Agreement.
Stephan shall have received evidence satisfactory to it that the Royalty
Agreement, dated August 1, 1994, between the Corporation and Charles J.
Walsh, as assigned to Sampson Arms Inc. as of April 1, 1995, has been
terminated.
7. Conditions of the Stockholders' and the Corporation's
Obligations to Close.
The obligations of the Stockholders and the Corporation to close under
this Agreement are subject to the following conditions any of which may be
waived by the Corporation in writing at or prior to Closing:
7.1. Agreements and Conditions.
On or before the Closing Date, Stephan shall have complied with and duly
performed all agreements and conditions on its part to be complied with
and performed pursuant to or in connection with this Agreement on or
before the Closing Date.
7.2. Representations and Warranties.
The representations and warranties of Stephan contained in this Agreement,
shall be true and correct in all material respects on and as of
the Closing Date with the same force and effect as though such
representations and warranties had been made on and as of the Closing Date.
7.3. No Legal Proceedings.
No court or governmental action or proceeding shall have been instituted
or threatened to restrain or prohibit the transactions contemplated hereby.
7.4. Employment Agreement.
Stephan and the Majority Stockholder shall have entered into an Employment
Agreement substantially in the form set forth as Exhibit A hereto.
8. Indemnification.
8.1. (a) Indemnity of the Corporation and the Stockholders.
The Majority Stockholder and, with respect to covenants to
be performed, and representations and warranties made, prior
to the Closing Date, the Corporation, hereby jointly and
severally agree, and, with respect to the representations
and warranties relating specifically to them in Sections
2.2, 2.4 and 2.22 hereof only, the Preferred Stockholders
hereby severally agree, to indemnify, hold harmless, pay and
reimburse Stephan, from and against (i) any and all losses,
obligations, liabilities, damages, claims, deficiencies, costs
and expenses (including, but not limited to, the amount of any
settlement entered into pursuant hereto and all reasonable
legal and other expenses incurred in connection with the
investigation, prosecution, or defense of the matter), which
may be asserted against or sustained or incurred by any or
all of the indemnified parties, whether or not in connection
with any third party claim, in connection with, arising out
of or relating to any breach or alleged breach of any of
the representations, warranties, agreements and covenants
made by any or all of the indemnifying parties in this
Agreement (including the Schedules attached hereto and any
certificates delivered hereunder), and (ii) any and all
costs and expenses (including, but not limited to,
reasonable legal fees and expenses) incurred by any or all
of the indemnified parties in connection with the
enforcement of their rights under this Section 8,
whether incurred by an indemnified party in an action with
an indemnifying party or with a third party, (all amounts
described in preceding clauses (i) and (ii) above to be
hereafter collectively referred to as "Losses"). In addition
to the foregoing, the Preferred Stockholders agree to
indemnify, hold harmless, pay and reimburse Stephan for all
Losses incurred by Stephan in connection with the
Registration Statement to the extent such Losses were caused
by information (or omissions in such information) provided
by the Preferred Stockholders for inclusion in the
Registration Statement.
(b) Indemnity of Stephan. Stephan agrees to
indemnify, hold harmless, pay and reimburse the Stockholders
from and against any Losses, in connection with, arising out
of or relating to any breach or alleged breach of any of the
representations, warranties, agreements or covenants made
by Stephan in this Agreement. In addition to the foregoing,
Stephan agrees to indemnify, hold harmless, pay and
reimburse the Preferred Stockholders for all Losses incurred
by them in connection with the Registration Statement to the
extent that such Losses were caused by information or
omissions contained in the Registration Statement, other
than information or omissions for which any of the
Preferred Stockholders shall have been responsible.
(c) Notwithstanding anything to the contrary set forth
herein, if any claim is made against Stephan or the Corporation or
any of their respective affiliates or subsidiaries alleging sexual
harassment or similar actions against Eugene Strong while he was an
employee of the Corporation (the "Strong Claim"), then Stephan shall
indemnify, hold harmless, pay and reimburse the Majority
Stockholder only for the first $25,000 of Losses related to
any and all Strong Claims. Any Losses arising from the
Strong Claims beyond $25,000 shall be paid by the Majority Stockholder.
8.2. Procedures for Indemnification.
In the event that any claim is asserted against any party hereto, or any party
hereto is made a party defendant in any action or proceeding, and such
claim, action or proceeding involves a matter which is the subject of this
indemnification, then such party (an "Indemnified Party") shall give written
notice prior to the expiration of 90 days after the end of the applicable
Survival Period, as defined in Section 10.9 below, to the other party hereto
(the "Indemnifying Party") of such claim, action or proceeding, and such
Indemnifying Party shall have the right to join in the defense of said
claim, action or proceeding at such Indemnifying Party's own cost and
expense and, if the Indemnifying Party agrees in writing to be bound by and
to promptly pay the full amount of any final judgment from which no further
appeal may be taken and if the Indemnified Party is reasonably assured of
the indemnifying Party's ability to satisfy such agreement, then at the
option of the Indemnifying Party, such Indemnifying Party may take over
the defense of such claim, action or proceeding, except that, in such case,
the Indemnified Party shall have the right to join in the defense of said
claim, action or proceeding at its own cost and expense; provided, however,
that the Indemnifying Party shall not settle or compromise any claim, action
or proceeding without the prior written consent of the Indemnified Party.
9. Termination of Shareholders Agreement.
The parties to that certain Shareholders Agreement ("Shareholders Agreement"),
dated as of July 22, 1994, between the Corporation, the Majority Stockholder,
Donald S. Chadwick, David Chadwick, Apollo Trust Company, as trustee for
John C. Bryan, II, IRA, and John C. Bryan, II hereby agree that the
Shareholders Agreement is hereby forthwith terminated and the parties to
the Shareholders Agreement further acknowledge and agree that there is no
obligation or liability owed by the Corporation to any party to such
Shareholders Agreement pursuant to such Shareholders Agreement.
10. Miscellaneous Provisions.
10.1. Public Announcements.
The Corporation, the Stockholders and Stephan agree that they will
consult with each other before issuing any press releases or otherwise
making any public statements with respect to this Agreement
or the transactions contemplated hereby and any press release or
any public statement shall be subject to mutual agreement of the
parties, except as may be required by the disclosure obligations of
Stephan under applicable securities law.
10.2. Confidentiality.
The Corporation, the Stockholders and Stephan agree not to, directly
or indirectly, without the prior written consent of the other,
use or disclose to any person, firm or corporation, any of the terms of this
Agreement except as may be required by the disclosure obligations of
Stephan under applicable securities laws or as may be required to be
disclosed to the attorneys and/or accountants of the parties hereto
in connection with the transactions contemplated hereby.
10.3. Notification.
Each party hereto shall give the other party or parties hereto prompt
written notice of (i) the existence of any fact or the occurrence of
any event which constitutes, or with the giving of notice or the passage of
time or both would constitute, a breach of any representation or warranty
of the party giving such notice made herein or pursuant hereto and
(ii) the taking of any action by the party giving such notice that would
breach or violate, or constitute a default under, any agreement or
covenant of such party made herein or pursuant hereto. The
giving of any such notice shall not affect, modify or limit in any way
any representation, warranty, agreement or covenant of the parties made
herein or pursuant hereto.
10.4. Execution in Counterparts.
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which together shall constitute one and
the same document.
10.5. Notices.
All notices, requests, demands and other communications which are required
or may be given pursuanto the terms of this Agreement shall be in writing
and shall be deemed duly given when delivered by hand or posted in the
United States mail by registered or certified mail with postage pre-paid,
return receipt requested, (i) if to Stephan, to 1850 W. McNab Road, Ft.
Lauderdale, FL 33309, Attention: President, with a copy to Stephen R.
Connoni, Esq., at Hertzog, Calamari & Gleason, 100 Park Avenue, New
York, NY 10017; and (ii) if to the Stockholders or the Corporation, to
Charles V. Hall c/o Stephan, 1850 W. McNab Road, Ft. Lauderdale, FL
33309, or to such other address(es) as shall be specified by like
notice to the other parties.
10.6. Amendments.
This Agreement may be amended or modified at any time prior to the
Closing Date, but only bya written instrument executed by all of the
parties hereto.
10.7. Entire Agreement.
This Agreement (together with the other agreements, instruments and
documents delivered pursuant hereto) constitutes the entire agreement
among the parties hereto with respect to the subject matter hereof,
and supersedes all prior agreements and understandings, oral and written,
among the parties hereto with respect to the subject matter hereof.
10.8. Applicable Law.
This Agreement and the legal relations among the parties hereto shall be
governed by and construed in accordance with the laws of the State of
Florida applicable to contracts made and to be wholly performed therein.
10.9. Survival of Representations.
The parties hereto agree that the representations and warranties
contained herein or in any instrument or other document delivered pursuant to
this Agreement or in connection with the transactions contemplated hereby
shall survive the execution and delivery of this Agreement, the consummation
of the transactions contemplated hereby and any investigation or audit
made by any party hereto until the date occurring ten (10) days
after Stephan's Form 10-K is filed with the Securities and Exchange
Commission in respect of fiscal year 1996, except that (i) any
representations and warranties by the Majority Stockholder relating to tax
matters made pursuant to Section 2.10 of this Agreement or
employee arrangements made pursuant to Section 2.16 of this
Agreement shall survive for the applicable statute of
limitations with respect to any year subject to review by
any governmental authority and (ii) the representations and
warranties regarding the Stockholders' ownership of the
Stock made in Section 2.22 of this Agreement shall survive
indefinitely (each, a "Survival Period").
10.10. Termination.
This Agreement may be terminated at any time prior to the Closing
Date by any of the following:
(i) By mutual written agreement of Stephan and
the Majority Stockholder and the Corporation;
(ii) By either Stephan or the Majority Stockholder,
if the Closing has not occurred by June 30, 1996, upon written notice
by such terminating party, provided that at the time such notice is given
a material breach of this Agreement by such terminating party shall not be
the principal reason for the Closing's failure to occur;
(iii) Subject to the provisions of Section 10.11
hereof, by Stephan, by written notice to the Majorit Stockholder and the
Corporation, if there has been a material violation or breach of any of
the Majority Stockholder's or the Corporation's covenants or agreements
made herein or in connection herewith or if any representation or warranty
of the Stockholders or the Corporation made herein or in connection
herewith proves to be materially inaccurate or misleading; or
(iv) Subject to the provisions of Section 10.11
hereof, by the Majority Stockholder, by written notice to Stephan, if there
has been a material violation or breach of any of Stephan's covenants or
agreements made herein or in connection herewith or if any representation
or warranty of Stephan made herein or in connection herewith proves to be
materially inaccurate or misleading.
10.11. Effects of Termination.
If this Agreement is terminated as provided in Section 10.10 hereof, then this
Agreement shall forthwith become void and there shall be no liability or
obligation on the part of any party hereto (or any of their respective
stockholders, officers, directors or employees), except based upon the
agreements contained in Sections 10.1, 10.2 and 10.13 hereof; provided,
however, that if Stephan terminates this Agreement pursuant to
Section 10.10(iii) hereof, or the Majority Stockholder
terminates this Agreement pursuant to Section 10.10(iv) hereof, the non-
terminating party shall remain liable for any breach hereof.
10.12. Headings.
The headings contained herein are for the sole purpose of convenience of
reference, and shall not in any way limit or affect the meaning or
interpretation of any of the terms or provisions of this Agreement.
10.13. Fees and Disbursements.
Each of the Majority Stockholder and the Preferred Stockholders (and not the
Corporation) and Stephan shall pay his/its own expenses, and the fees and
disbursements of the counsel, accountants or auditors
retained by it in connection with the preparation, execution
and delivery of this Agreement; provided, however, that the
costs of the audit to be undertaken by the Corporation
pursuant to Section 4.5 hereof shall be borne by Stephan.
10.14. Transfer Taxes.
Any Taxes in the nature of a sales or transfer tax (including any
realty transfer tax or realty gains transfer tax), and any stock transfer
tax, payable on the sale or transfer of all or any portion of the Stock or
the consummation of any other transaction contemplated hereby shall be paid
by Stephan.
10.15. Assignment.
This Agreement may not be assigned by the Corporation or any Stockholder
without the prior written consent of Stephan. This Agreement may not be
assigned by Stephan, except for an assignment by Stephan to any
subsidiary, without the prior written consent of the Majority Stockholder.
10.16. Binding Effect; Benefits.
This Agreement shall inure to the benefit of, and be binding upon, the
parties hereto and their respective heirs, legal representatives, successors
and permitted assigns. Nothing in this Agreement, express or implied,
is intended to confer upon any person other than the parties hereto and
their respective heirs, legal representatives, successors and permitted
assigns, any rights, remedies, obligations or liabilities under or by
reason of this Agreement.
10.17. Severability.
Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to
the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement the day and year first above written.
THE STEPHAN CO.
By:
Frank F. Ferola
President
SORBIE ACQUISITION CO.
By:
Charles V. Hall
President
MAJORITY STOCKHOLDER:
Charles V. Hall
PREFERRED STOCKHOLDERS:
Edward A. Kelly
Charles Asher-Walsh
ESTATE OF BELLE D. BALDWIN
By:
Title:
David Chadwick
Lawrence Walsh
The following signatories hereby execute this Agreement
with respect to Section 9 only.
Donald S. Chadwick
John C. Bryan, II
APOLLO TRUST COMPANY, Trustee
For John C. Bryan, II, IRA
By:
Exhibit 10.2
AMENDED AND RESTATED
SORBIE PRODUCTS AGREEMENT
THIS AGREEMENT is entered into as of this day of
March, 1996 by and between Sorbie Acquisition Co., a
Pennsylvania corporation having its place of business at 504
Allegheny River Boulevard, Oakmont, PA (hereinafter, "SAC"),
Sorbie Trading Limited whose registered office is located at
(hereinafter, "Trading"), Trevor Sorbie International, PLC,
whose registered office is located at (hereinafter, "International")
(International and Trading are hereinafter collectively referred to as
the "TSI Parties") and Trevor Sorbie, in his personal capacity
("Sorbie") (the TSI Parties and Sorbie personally are collectively referred
to as the "Sorbie Parties"').
WITNESSETH:
WHEREAS, the parties hereto entered into the Sorbie
Products Agreement as of July 22, 1994 (the "Original Agreement"); and
WHEREAS, the parties wish to amend and restate the Original Agreement
in its entirety; and
WHEREAS, Trading is an affiliate of International,
which developed the trademarks SORBIE and TREVOR SORBIE
based on the fame, and reputation of Sorbie, a citizen of
Great Britain, as a hair designer.
WHEREAS, International and Sorbie entered into a
Trademark and Intellectual Property Purchase Agreement with
Redken Laboratories, Inc. (hereinafter, "Redken") on
December 1, 1989 (hereinafter, the "Purchase Agreement")
under which, inter alia, Redken acquired the rights to the
trademarks SORBIE and TREVOR SORBIE in North America.
WHEREAS, International and Sorbie entered into a
Service, Distribution and License Agreement with Redken on
December 1, 1989 (hereinafter, the "SD&LA") under which,
inter alia, Redken agreed to supply products bearing such
trademarks to International and International agreed to
provide Sorbie's personal services to Redken.
WHEREAS, Redken assigned its rights under the Purchase
Agreement and the SD&LA to SAC.
WHEREAS, International, Sorbie and SAC entered into the
Original Agreement to terminate and the Purchase Agreement
and the SD&LA to provide for the continued exploitation of
the SORBIE and TREVOR SORBIE trademarks.
NOW, THEREFORE, in consideration of the mutual
covenants and agreements contained herein and other good and
valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties, intending to be
legally bound, hereby agree as follows:
ARTICLE I. DEFINITIONS
1.1 Definitions. Defined terms which are used
throughout this Agreement shall have the meanings set forth
in Appendix A which is attached hereto and incorporated
herein by reference.
ARTICLE II. TERMINATION OF PRIOR AGREEMENTS; RELEASES; GRANTS
2.1 Termination of Existing Agreement. International,
Sorbie and SAC confirm that the Purchase Agreement, and the
SD&LA were terminated by the Original Agreement in their
entireties effective July 22, 1994. International, Sorbie
and SAC on behalf of themselves, their successors and assigns
hereby completely release, acquit and forever discharge each other
and each of their agents, attorneys, affiliates and persons employed
or engaged by each of them, as well as their respective successors and
assigns of and from any and all actions and causes of action, suits,
covenants, claims, contracts, controversies, agreements, promises,
liabilities, obligations, guarantees, indemnities, damages, debts,
sums of money, accounts, executions, judgments and demands whatsoever,
whether the same be liquidated or unliquidated, contingent
or fixed, matured or unmatured, determined or undetermined,
known or unknown, foreseen or unforeseen, whether past,
present or future, whether the same be at law or in equity,
and whether or not founded in fact or in law, arising out of
or related to or attributable to the Purchase Agreement or the SD&LA.
2.2 Rights of SAC. The parties hereto acknowledge and
agree that SAC owns the exclusive right, title and interest
to the Intellectual Property Rights and Sorbie Trademarks in
SAC's Territory and that SAC has the exclusive right to
design, package, market, manufacture, advertise, promote, distribute
and sell the Sorbie Products in SAC's Territory.
2.3 Certain Intellectual Property Rights. SAC hereby
assigns to International all Intellectual Property Rights
and the Sorbie Trademarks outside North America and South
America the goodwill related thereto outside North America
and South America.
2.4 Virgin Airways. Upon International's request, SAC
will grant to Virgin Airways, or another air carrier or
airport services provider reasonably acceptable to SAC, a
license to use the Sorbie Trademarks in connection with
hairstyling salon services in or proximate to airports
in North America.
2.5 Molds and Formula. During the term of this
Agreement, the Sorbie Parties and SAC shall exchange molds
and formulae for Sorbie Products, and the Sorbie Parties
authorize SAC to use such molds and formulae in the SAC
Territory and SAC authorizes the Sorbie Parties to use such
molds and formulae in International's Territory.
2.6 Product Literature. The Sorbie Parties and SAC
shall supply each other with samples of literature which
they develop with respect to Sorbie Products for their
respective Territories. Each party shall be responsible at
its sole cost and expense for the cost of translating,
modifying and printing of the literature which such party
requires for its Territory.
2.7 Infringement. (a) The Sorbie Parties shall
promptly notify SAC of any apparent infringing use of which
any of them may have knowledge. At SAC's request, the
Sorbie Parties shall cooperate with SAC in any enforcement
proceeding against third party infringement including
providing documents, giving testimony and, if necessary,
joining in any suit. SAC shall reimburse the Sorbie
Parties for any out-of-pocket expenses reasonably incurred
by any Sorbie Party in connection with such action.
(b) SAC shall promptly notify the Sorbie Parties
of any apparent infringing use of which it may have
knowledge. Upon the request of the Sorbie Parties, SAC
shall cooperate with the Sorbie Parties in any enforcement
proceeding against third party infringement, including
providing documents, giving testimony and, if necessary,
joining in any suit. The TSI Parties shall reimburse SAC
for any out-of-pocket expenses reasonably incurred by SAC in
connection with such action.
2.8 No Detrimental Actions. Neither the Sorbie
Parties nor SAC shall take any action that would be
detrimental or prejudicial to or otherwise would impair any
Sorbie Trademark or Intellectual Property or the image or
reputation of Sorbie.
2.9 Further Assurances. The Sorbie Parties covenant
that they will, at SAC's expense, render all reasonable
assistance to SAC and execute all documents, papers, forms
and authorizations and depose to or swear all declarations
or oaths which are necessary for securing,
completing and absolutely vesting full right, title and
interest to the Sorbie Trademarks and the Intellectual
Property, and the goodwill related thereto in favor of SAC,
including with respect to new products in Section 6.4
hereof, in SAC's Territory.
SAC covenants that it will, at the expense of the
TSI Parties, render all reasonable assistance to the TSI
Parties and execute all documents, papers, forms and
authorizations and depose to or swear all declarations or
oaths which are necessary for securing, completing and
absolutely vesting full right, title and interest to the
Sorbie Trademarks and the Intellectual Property and the
goodwill related thereto in favor of the TSI Parties,
including with respect to new products in Section 6.4
hereof, in International's Territory.
ARTICLE III. SOUTH AMERICA
3.1 South America. In consideration of the Royalties
to be paid in accordance with Article IV hereof and other
goodwill and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, International,
as assignor, does hereby assign unto SAC, as assignee, all
of International's right, title and interest in and to the
Intellectual Property and Sorbie Trademarks in South
America, together with the goodwill of the business
symbolized by the Intellectual Property and Sorbie
Trademarks in South America, along with all claims for
damages it may have by reason of past infringement of all
Intellectual Property and Sorbie Trademarks in South America
by any party or parties, with the right to sue for and
collect the same for SAC's own use and behalf.
Sorbie consents to the use and registration of his
name in South America by SAC, and the Sorbie Parties agree
to execute all documents required by SAC to register and
enforce said Sorbie Trademarks in any country in South
America.
3.2 Representations. Each Sorbie Party represents and
warrants solely with respect to (x) itself or himself and
(y) South America that:
(a) Such Sorbie Party has not sold, conveyed or
otherwise authorized the use of the Sorbie Trademarks by any
third party;
(b) Such Sorbie Party has not granted any lien,
pledge, security interest or similar encumbrance or charge
against the Sorbie Trademarks; and
(c) To the actual knowledge of such Sorbie Party
without having conducted any investigation:
(i) the Sorbie Trademarks are not being used
by any other party; and
(ii) the Sorbie Trademarks neither infringe
upon nor are claimed by any party to infringe upon any other
party's rights.
ARTICLE IV. ROYALTIES
4.1 After deduction of the Allowed Offsets set forth
in Section 4.3, SAC shall pay to International, as provided
in Section 4.4 hereof, royalties as follows (the "Royalties"):
(a) Between July 22, 1994 and the execution date
of this Amended and Restated Sorbie Products Agreement, in
amount equal to six percent (6%) of Net Sales of Sorbie
Products in SAC's Territory;
(b) After the execution date of this Amended and
Restated Sorbie Products Agreement, the sum of the following:
(i) three percent (3%) of Net Sales of Sorbie
Products in SAC's Territory from and after the execution
date of this Amended and Restated Sorbie Products Agreement, plus
(ii) one percent (1%) of Net Sales of Sorbie
Products in SAC's Territory in excess of $12,000,000 on a
cumulative basis from and after the execution date of this
Amended and Restated Sorbie Products Agreement, plus
(iii) two percent (2%) of Net Sales of Sorbie
Products in SAC's Territory in excess of $15,000,000 on a
cumulative basis from and after the execution date of this
Amended and Restated Sorbie Products Agreement, plus
(iv) a lump sum payment of $120,000 when Net
Sales of Sorbie Products in SAC's Territory from and after
the execution date of this Amended and Restated Sorbie
Products Agreement shall have exceeded $12,000,000, plus
(v) a lump sum payment of $300,000 when Net
Sales of Sorbie Products in SAC's Territory from and after
the execution date of this Amended and Restated Sorbie
Products Agreement shall have exceeded $15,000,000.
For purposes of illustrating the calculation of Royalties
under this clause (b), the amount of Royalties that will be
payable on the Net Sales indicated below is as follows:
Net Sales of Sorbie
Products in SAC's
Territory Royalty
$10,000,000 $ 300,000
$14,000,000 $ 560,000
$20,000,000 $1,200,000
4.2 No Royalties on International or Trading Sales.
Notwithstanding anything to the contrary set forth in
Section 4. 1, no Royalties shall be due on any sales to
International or Trading or to any entity to which
International or Trading requests, or on any sales of Sorbie
Products to SAC or on resales of products purchased by SAC
or its Affiliates from International or Trading.
4.3 Allowed Offsets. SAC's obligation to pay
Royalties hereunder is unconditional and absolute, without
defense, counterclaim or setoff, and is not dependent on
adequacy of consideration, the accuracy of any
representation or warranty herein contained, the performance
by International, Trading, or Sorbie of any other obligation
hereunder or any other agreement between any of them and SAC
or any other reason, except that SAC, in its sole discretion
may offset against royalties becoming due hereunder the
following amounts, and no others:
(a) SAC may offset the Royalty Credit against the Royalties.
(b) If International or Trading fails to make
timely payment to SAC for any products ordered by
International or Trading from SAC, then SAC may offset the
amount of such payment due (plus late charges as set forth
in Section 11.7) against the Royalties.
(c) If there is a final determination by an
Arbitrator that Sorbie, International or Trading has
breached the terms of this Agreement or that Sorbie has
breached its obligations to SAC under the Sorbie Employment
Agreement or the Deed of Assignment referred to in Section
8. 1, then SAC shall offset the amount of resulting damages
the Arbitrator determines were suffered by SAC, against the
Royalties.
(d) If Sorbie Products sold to third parties are
returned for reasons other than product defects, or if trade
allowances are granted retroactively with respect to sales
to third parties after the royalty thereon shall have been
paid, SAC shall be entitled to take appropriate
credit for such overpayment against any royalties thereafter
accruing.
(e) If SAC repurchases Sorbie Products from
distributors who have been terminated by SAC in full, or if
SAC repurchases Sorbie Products that have been improperly
diverted, then SAC may offset against the Royalties the
amount of any Royalties previously credited to International
with respect to the Sorbie Products so repurchased.
(f) If SAC does not receive payment for Sorbie
Products shipped to distributors within 180 days of the
invoice date, SAC may offset against the Royalty the amount
of the Royalty on such Products previously delivered to
International.
4.4 Royalty Payments. Within thirty (30) days
following the end of each calendar quarter, SAC shall submit
to International a report specifying (i) the Net Sales of
Sorbie Products in SAC's Territory during the preceding
calendar quarter, and (ii) the Royalty payable
thereon pursuant to Section 4.1. Each report shall be
accompanied by a wire transfer to or for International's
account in U.K. funds in an amount equal to the Royalty
payable for such quarter. If there have been no Net Sales
for or Royalties due in a given quarter, SAC's report
shall so state. Net Sales shall be deemed to have occurred
for purposes of this Section 4.4 when invoiced, or if not
invoiced, then when product is shipped, or when paid for, if
paid for before delivery or shipment.
ARTICLE V. TRADING'S AND INTERNATIONAL'S PURCHASE OF PRODUCTS
5.1 Purchases. Trading and International may purchase
from SAC, and SAC shall sell to Trading and International,
their requirements for Sorbie Products in such quantities of
Sorbie Products as Trading or International may order from
time to time at a price equal to SAC's Cost
for such Products plus five percent (5%). The TSI Parties
shall reimburse SAC for the premium cost paid by SAC for any
products liability insurance carried by SAC for the benefit
of the TSI Parties, but only if such premium cost is separately
itemized by SAC's insurance carrier. Neither International
nor Trading shall be obligated to purchase all or any of
their Sorbie Products from SAC or its affiliates, it being
acknowledge by SAC that International and Trading leave the
right to manufacture and the right to authorize the manufacture
of Sorbie Products in International's Territory for sale anywhere in
International's Territory.
5.2 Projections. Within five (5) business days after
the beginning of each calendar quarter beginning after the
Effective Date, Trading and International shall give SAC
projections of their estimated purchases of Sorbie Products
from SAC for next quarter beyond the date of their
previously placed orders. Such projections shall be
nonbinding and only for planning purposes, and not for
purposes of creating a commitment to a given level of
purchases.
5.3 Terms. All Sorbie Products sold under this Article
V shall be shipped F.O.B. SAC's plant or, if applicable, the
plant of SAC's contract manufacturer. SAC shall use its
best efforts to ship the Sorbie Products within thirty (30)
days of the date of Trading's or International's written order.
All costs of insurance, freight, export packing, expedited handling,
customs and duty, and taxes shall be paid by Trading or International.
Title and risk of loss shall pass to Trading or International, as the
case may be, upon transfer by SAC or its contract manufacturer of the
product to a common carrier. The other terms and conditions of SAC's sale of
Sorbie Products to Trading and International shall be
reasonably established by the parties from time to time.
5.4 Allowance for Defective Sorbie Products. SAC
shall grant International and Trading an allowance of one
half of one percent (0.5%) of the net invoice price of Sorbie Products
sold by SAC to International or Trading. In exchange, SAC shall not
be obligated to replace or give the TSI Parties credit for
any defective Sorbie Products sold by SAC to International
or Trading unless more than one half of one percent (0.5%)
of the value of any single shipment (based upon the net
invoice price of the product) is found to be defective, in
which event, SAC at its option shall either replace the
defective Sorbie Products with an aggregate value in excess
of one half of one percent (0.5%) of the shipment or refund
International's or Trading's purchase price for
all defective products above the one half of one percent
(0.5%) level. SAC shall pay the cost of shipping
replacement products in excess of the one half of one
percent (0.5%) level.
5.5 Payments. Trading or International, as the case
may be, shall pay for Sorbie Products it purchases by wire
transfer to or for SAC's account in immediately available
U.S. funds no later than forty-five (45) days after the
invoice date. SAC may offer early payment discounts to
Trading or International if it deems appropriate.
5.6 Orders from Other Territories. All orders and
inquiries received by SAC from International's Territory
shall be referred to International. All orders received by
International or Trading from SAC's Territory shall be
referred to SAC.
5.7 Exclusive Rights. SAC shall have the exclusive
right within the SAC Territory, for the term of this
Agreement, to the services of International and Trading to
assist SAC in the design, packaging, marketing, advertising,
promotion, distribution and sale of Sorbie Products. The
TSI Parties shall have the exclusive right within the
International Territory, for the term of this Agreement, to
the services of SAC to assist the TSI parties in the design,
packaging, marketing, advertising, promotion, distribution
and sale of Sorbie Products.
ARTICLE VI. PRODUCT DEVELOPMENT AND PROMOTION
6.1 Development of Hair Stylists. International and
Trading shall use their best efforts to develop and maintain
a group of progressive hair stylists to enhance the image
and reputation of International and Trading, by among other
things (at the discretion of International and
Trading and provided that it is commercially reasonable to
do so) continuing to own, supervise, manage and publicize
the Sorbie salon in London, England.
6.2 Image and Reputation of Sorbie. International and
Trading shall use their best efforts to develop and enhance
the image and reputation of Sorbie, and the stylists
associated with International and Trading, as being
progressive hair stylists from the perspective of the 18
through 45 age group who are in the upper 25% of the
population socioeconomically. This shall include, among
other things, releasing contemporary commercial hair styles
popular with men and women in the target market, and through
other forms of publicity and promotional efforts.
6.3 Photographs. SAC may request International and
Trading to produce photographs featuring contemporary
hairstyling each calendar year targeted toward the North
American market. SAC shall reimburse International or
Trading, as the case may be, for the costs incurred by
International or Trading for the photo sessions required to
produce such photographs.
International, Trading and SAC shall use their
respective best reasonable efforts to consult with each
other sufficiently prior to any photography session they
schedule in order to allow SAC or International and Trading,
as the case may be, to determine whether they would like to
use the photographs to be taken at that session and to allow
the other party to negotiate with the models and
photographer(s) any special rights they may desire to
purchase in connection with the photography session.
Additionally, if the TSI Parties or SAC produce photographs
for use in their respective Territories that the other party
would like to use the TSI Parties or SAC, as the case may
be, shall use their best reasonable efforts to provide the
necessary documents assigning the rights to the photographs
to the other party for use in their Territory and to assure
that such use will not violate the use of any third party.
The assignee shall pay the incremental fees and costs
related to the above. SAC's right to obtain such
photographs on the foregoing terms shall expire as of that
date which is 25 years after the date of this Agreement.
6.4 Potential Products. The Sorbie Parties and SAC
shall disclose to each other all ideas for potential Sorbie
Products, as soon as such party has decided that the product
is a potential Sorbie Product. The party making disclosure
shall also provide sufficient supporting information to
enable the other party to determine whether or not to
produce and/or sell the product. SAC shall have the
exclusive right in SAC's Territory and the Sorbie Parties
shall have the exclusive right in International's Territory
to design, package, market, advertise, promote, distribute
and sell such new products and to register any trademarks
related thereto. The Sorbie Parties shall own the right,
title and interest in such products in International's
Territory, and SAC shall own the right, title and interest
in such products in SAC's Territory.
ARTICLE VII. VIDEOTAPES
7.1 Videotaping of Shows, Seminars and Workshops. (a)
SAC shall have the right to videotape all or any part of any
show, seminar or workshop presented by Sorbie or other
representatives of International or Trading in the SAC
Territory, at the expense of SAC and without additional
compensation to International or Trading.
(b) All Copyrights worldwide for any such
videotape shall be owned by SAC, and SAC may duplicate, sell
or otherwise use such videotapes for any purpose in the SAC
Territory, including without limitations, selling or showing
copies of the videotapes to distributors and/or their
clients. Sorbie and International agree to assign and shall
provide the documents necessary to assign all copyrights to
SAC.
(c) International shall have the exclusive right
to distribute such videotapes in International's Territory.
International shall pay SAC's reproduction costs for each
tape which SAC supplies to Inter- national. If
International orders a master tape, then International shall
share in the production costs of such tape on an equitable
basis.
7.2 Instructional Videotapes. In the event that SAC or
the TSI Parties create any instructional videotapes, SAC
hereby assigns to the TSI Parties all of its right, title
and interest in such videotapes in International's Territory
and the TSI Parties hereby assign to SAC all of their right,
title and interest in such videotapes in SAC's Territory.
SAC or the TSI Parties, as the case may be, shall pay for
the cost for each tape for their respective Territory and
any incremental costs associated with the assignment contemplated herein.
7.3 Showing of Videotapes/Other Recordings. SAC shall
have the right to show in the SAC Territory the videotapes
and other recordings any of the seminars, workshops or
shows, on a simultaneous and/or delayed basis, by satellite
or other medium of transmission, at the cost of SAC and without
payment of any additional consideration to International.
All income from any such supplemental sales or showing of the seminars,
workshops or shops, within the SAC Territory, shall be for the account of SAC.
ARTICLE VIII. MUTUAL COVENANTS
8.1 Contracts with Sorbie. International warrants
that the contracts between International and Sorbie attached
as Exhibits 10.1 (the "Sorbie Employment Agreement") and
10.2 (the "Deed of Assignment") to the Original Agreement
and the contract between International and Grant Peet
("Peet") attached as Exhibit 10.3 (the "Peet Employment
Agreement") to the Original Agreement are, on the date
hereof, valid, binding and in full force and effect and have
not been modified or amended except as hereinafter provided.
International shall not agree or consent to any termination
of, or any amendment, modification or revision to, any of
the contracts attached as Exhibits 10.1, 10.2 and 10.3
without SAC's prior written consent, which consent shall not
be unreasonably withheld provided SAC's consent shall not be
required in the event Peet retires on terms not inconsistent
with his Agreement for Services with International set forth
as Exhibit 10.3. International shall give SAC at least 45
days' prior written notice of any proposed termination of,
or any proposed amendment, modification or revision to, said
contracts. Sorbie confirms the Deed of Assignment. Sorbie
further agrees that SAC shall be a third party beneficiary
of Section 7 of the Deed of Assignment and Sections 4 and 12
of the Sorbie Employment Agreement provided that in the
event of any conflict between such sections and this
Agreement, this Agreement shall govern and, provided that
Sorbie shall have no personal liability to SAC for monetary
damages caused by any breach of his obligations to SAC as
third party beneficiary under the Deed of Assignment or the
Sorbie Employment Agreement, but any damages to SAC caused by Sorbie as a
result of his failure to satisfy his obligations to SAC
under the Deed of Assignment and Sorbie Employment
Agreement, as finally determined under Section 11. 11, may
be offset by SAC against the Royalties as provided in
Section 4.3(d) hereof.
8.2 Compliance. Each party shall be responsible on a
continuing basis for all governmental and regulatory
compliance matters within its Territory; including
compliance with any testing, registration, labeling,
packaging and environmental and employee protection
requirements. The parties will cooperate with each other in
fulfilling these responsibilities.
8.3 Cooperation. The Sorbie Parties and SAC shall
cooperate in good faith with each other and will take
appropriate action and execute any documents, instruments or
conveyances of any kind which may be reasonably necessary or
advisable to evidence, confirm or carry out
any of the transactions contemplated hereunder.
8.4 RTPA. No provision by virtue of which this
Agreement or any agreement or arrangement is subject to
registration under the Restrictive Trade Practices of 1976
and 1977 of the United Kingdom ("RTPA") shall take effect
until the day after particulars thereof have been furnished
to the Director General of Fair Trading in accordance with
the requirements of the RTPA.
ARTICLE IX. NEGATIVE COVENANTS
9.1 Non-Compete by Sorbie Parties. Until December 31,
1999, neither International, Trading nor Sorbie shall
directly or indirectly endorse, feature, produce,
manufacture, authorize the use of, or, without the consent
of SAC, voluntarily be associated in any way with, any
product which is competitive with a Sorbie Product or any
other product which is of the same general product class as
any Sorbie Product. The parties hereto acknowledge that the
Stephan Company, which is acquiring all of the outstanding
common stock of SAC on the execution date of this Amended
and Restated Sorbie Products Agreement, was, is and will
continue to be engaged in the business of manufacturing and
producing hair care products which may be in the same
general product class as Sorbie Products. Neither the
manufacture nor sale of hair care
products by the Stephan Company or any of its affiliates
(other than SAC and its subsidiaries) shall constitute a
breach of this Section 9. 1. Notwithstanding the foregoing,
nothing herein contained shall prohibit International,
Trading or Sorbie from selling products not in the general
product class as any Sorbie Product such as cutting tools or
wigs without the consent of SAC.
9.2 Non-Compete by SAC. Until December 31, 1999, SAC
shall not directly or indirectly endorse, feature, produce,
manufacture, authorize the use of, or, without the consent
of International, voluntarily be associated in any way with,
any product which is competitive with a Sorbie Product or
any other product which is in the same general product class
as any Sorbie Product. Notwithstanding the foregoing,
nothing herein contained shall prohibit SAC from selling
products not in the general product class as any Sorbie
Product such as cutting tools or wigs without the consent of
International.
9.3 Diversion by SAC. SAC shall not, nor shall it
permit any of its affiliates, assigns or licensees to, sell
or permit the sale of Sorbie Products to any person outside
SAC's Territory, or to any person within SAC's Territory who
at any time in the past has sold Sorbie Products to any
person outside SAC's Territory, except only (a) sales to
International or Trading or (b) sales with the consent of
International or Trading.
9.4 Diversion by International or Trading. Neither
International or Trading shall, nor shall either of them
permit any of their affiliates, assigns or licenses to, sell
or permit the sale of Sorbie Products to any person outside
International's Territory, or to any person within
International's Territory, who at any time in the past has
sold Sorbie Products to any person outside International's
Territory except only sales with the consent of SAC.
ARTICLE X. NO PERSONAL LIABILITY
10.1 Sorbie's Personal Obligations. Sorbie is a party
to this Agreement for the sole purpose of consenting to
Section 3.1, making his representations and warranties in
Section 3.2, and Article X and to consent and agree to the
provisions of Section 2.1, 2.2, 2.5, 2.6, 2.7, 2.8, 2.9,
6.4, 9.1, 11.3, 11.4, 11.9, 11.11, 11.12, 11.13, 11.18,
11.19, 11.20. Sorbie shall have no other obligations under
this Agreement except for those expressly provided in the
provisions referred to above in this Section 10.1. Sorbie
shall have no liability for any breach of this Agreement by
International or Trading and he shall have no personal
liability for monetary damages caused by any breach of his
obligations under this Agreement; provided, however, that
any damages caused by Sorbie as a result of his failure to
satisfy his obligations under this
Agreement, may be offset by SAC against the Royalties as
provided in Section 4.3(d) hereof.
ARTICLE XI. GENERAL TERMS
11.1 Terms of Agreement. This Products Agreement
shall expire December 31, 2044. Thereafter, any party shall
have the option to renew this Agreement for successive ten
(10) year periods, by giving written notice of its intention
to renew at least one year prior to the end of
the initial term or any renewal thereof but in no event
shall the Agreement extend beyond December 31, 2093.
11.2 Indemnification.
(a) SAC, on the one hand, and International and
Trading on the other hand, each shall indemnify and hold the
other harmless from and against any loss, liability or
expense (including costs and attorneys' fees) arising from
the indemnifying party's (the "Indemnitor") breach of any of
its covenants or agreements in this Agreement. In case any
action or proceeding is brought against the indemnified
party (the "Indemnitee") by reason of any such claim,
Indemnitor shall defend the same at Indemnitor's expense by
counsel chosen by Indemnitee and reasonably acceptable to
Indemnitor.
(b) If an Indemnified Party receives a claim or
demand made by any person, entity, firm, governmental
authority or corporation (a "Third Party Claim") against the
Indemnified Party, then the Indemnified Party shall promptly
notify Indemnitor in writing of the Third Party Claim, and
in any case within 10 business days after receipt by
Indemnified Party of written notice of the Third Party
Claim. Thereafter, Indemnified Party shall promptly deliver
to Indemnitor copies of all notices and documents (including
court papers) received by
Indemnified Party relating to the Third Party Claim;
provided, however, that failure to give such notification or
to deliver any such notice or document shall not affect the
indemnification provided for hereunder except to the extent
Indemnitor shall have been prejudiced as a result
of such failure.
11.3 Insurance on Sorbie. SAC may at any time or
times, in its own or in Sorbie's name, but at SAC's own
expense, apply for life, health, accident or other insurance
covering Sorbie, in any amount which SAC may deem necessary
to protect its interests hereunder, provided, however, that
Sorbie does not represent that such insurance is obtainable.
SAC may be the beneficiary of and shall own all rights in
such policies and the cash values and proceeds thereof, and
neither Sorbie nor International shall have any right, title
or interest therein or with respect thereto. Sorbie shall
assist in procuring such insurance by submitting to the
customary medical examinations and by correctly
preparing, signing and delivering such applications and
other documents as may reasonably be required.
11.4 Confidentiality. Each party will take all
reasonable steps (including, without limitation entering
into appropriate confidentiality and nondisclosure
agreements with all of its officers, directors and employees
with access to or knowledge of the Sorbie Trademarks or
Intellectual Property) to safeguard and maintain the secrecy
and confidentiality of the Confidential Information. Except
as expressly permitted by the terms of this Agreement, none
of the parties will use or disclose any of the Confidential
Information without the prior written consent of the other.
11.5 Conversion Rate. The conversion rate between the
English pound and the U.S. dollar where required for payment
of a particular invoice shall be the exchange rate in effect
as of the date of the invoice at the principal office of
Mellon Bank, N.A. for transactions of
comparable size. Unless specified to the contrary, all
payments shall be made in United States Dollars. References
to dollars ("$") means United States Dollars, and references
to pounds ("L") means Pounds Sterling.
11.6 Audit. SAC through its subsidiaries that
manufacture and sell the Sorbie Products shall maintain
records sufficient to allow Trading's and International's
independent certified public accountants (the "Accountants")
to audit or otherwise review the calculation of Cost and Net
Sales and shall allow the Accountants access to such records
upon two days advance written notice to SAC. Trading and
International shall bear all costs of the audit or review
unless Costs were actually overstated or Net Sales were
under reported for the period reviewed by more than five
percent (5 %). If Costs were actually overstated or Net
Sales understated for the period reviewed, Trading or
International shall be reimbursed for any overcharges in the
price of Sorbie Products sold to Trading or International or
royalty payments, and if Costs were actually overstated or
Net Sales understated for the period under review by more
than five percent (5 %), then Trading or International shall
be reimbursed for all reasonable costs of the audit or
review.
11.7 Late Payment. If any party is late in making a
payment owed pursuant to this Agreement, then such late
payment shall bear interest at the rate of one percent (1%)
per month, based on actual number of days elapsed and a 30-
day month, until such payment is made. At no time, however,
shall the rate of interest provided for in this Section 11.7
exceed the maximum legal limit (if any) under any law that
now or hereafter governs the payment of interest under this
Agreement. If such legal limit is exceeded, such interest
rate shall be deemed to have been reduced to such legal
limit without further action by the parties until such time
as the legal limit increases.
11.8 Taxes. International and Trading and their
employees shall be solely responsible for any income tax
liability which they may incur as a result of their
appearances within the SAC Territory. Each party
acknowledges that the other party may be required by law or
regulation to withhold certain taxes from the amounts to be
paid to the other party or to any individual. International
and Trading also shall be solely responsible for obtaining
at their sole cost and expense any and all necessary work
and other permits and licenses required to fulfill its
obligations hereunder.
11.9 Assignment.
(a) None of the parties hereto may assign or
otherwise transfer this Agreement without the consent of the
others, except that any party hereto, other than Sorbie may
transfer or assign this Agreement to any company which it
owns or Controls or which Controls it, or to any company
with which it may be merged or consolidated or which may
acquire all or substantially all of its stock and/or assets,
or to any other corporate successor provided that the
assignee shall execute and deliver to the other party an
assumption of all of the assignor's
obligations hereunder and the assignor shall execute and
deliver a guarantee of such assumption in the form attached
to the Original Agreement as Exhibit 13.9. The Agreement
shall inure to the benefit of and be binding upon each party
and its successors and assigns. If this Agreement is
assigned in accordance with the foregoing provisions, all
references herein to a party shall likewise be deemed to be
references to the assignee.
(b) If SAC desires to sell its rights to the
Sorbie Trademarks in SAC's Territory, other than by the
transfers described above, or the TSI Parties desire to sell
their rights to the Sorbie Trademarks in International's
Territory, then SAC or the TSI Parties, as the case may
be (the "Offering Party") shall offer the other party (the
"Receiving Party") the right to buy the Sorbie Trademarks at
a specified price. The Receiving Party shall have thirty
(30) days from the day on which it receives written notice
from the Offering Party of the price at which the Sorbie
Trademarks are offered (the "Determination Date") to
determine whether to accept the Offering Party's offer. If
the Receiving Party elects to accept the offer, then the
Receiving Party shall pay a nonrefundable deposit equal to
10% of the offer price on the Determination Date and the
remainder of the offer price by wire transfer of immediately
available funds within 30 days of the Determination Date or
the date on which final sale documents are signed, whichever
is later, but in no event more than 60 days after the date
of the Receiving Party's election. If the Receiving Party
elects not to accept the offer or does not respond within
the 30 day period, then the Offering Party may sell the
Sorbie Trademarks to any third party; provided, such sale is
consummated at a price equal to or greater than the offer
price and the sale is consummated, including signing of
final sales documents, within 180 days after the date on
which the Receiving Party received the offer. If the sale
is not consummated as set forth in the preceding sentence,
then the Receiving Party's rights pursuant to this Section
11.9(b) shall be reinstated.
11.10 Right to Injunctive Relief. The services to be
rendered by Trading, International and SAC under the terms
hereof, and the rights and privileges granted to one another
under the terms hereof, are of a special, unique, unusual,
extraordinary and intellectual character which
gives them a value, the loss of which cannot be reasonably
or adequately compensated in damages in an action at law.
As a result, a breach by any party of any of the nonmonetary
obligations contained in this Agreement will cause the
others irreparable injury and damage. It is expressly
agreed that any party shall be entitled to injunctive and
other equitable relief to prevent such a breach. Resort to
injunctive and other equitable relief, however, shall not be
construed as a waiver of any other rights or remedies which
a party may have for damages or
otherwise, nor shall the initiation of arbitration
proceedings for damages or other legal relief be construed
to be a waiver of any other rights or remedies which such
party may have.
11.11 Arbitration. All disputes under this Agreement
involving SAC shall be settled by arbitration in Pittsburgh,
Pennsylvania, before an arbitration panel of three
arbitrators pursuant to the Commercial Arbitration Rules of
the American Arbitration Association with said rules being
modified to allow the parties to engage in discovery in
accordance with the Federal Rules of Civil Procedure.
Arbitration may be commenced at any time by any party hereto
by giving written demand to each other party to a dispute
that such dispute has been referred to arbitration under the
Section.
The arbitration panel shall consist of three
arbitrators. SAC shall appoint one arbitrator and the
Sorbie Parties shall appoint one arbitrator. The party
initiating arbitration (the "Claimant") shall appoint its
arbitrator in its demand (the "Demand"). The other party
(the "Respondent") shall appoint its arbitrator within 20
days of receipt of the Demand (whether the Demand is
received from the Claimant or from the American Arbitration
Association) and shall notify the Claimant of such
appointment in writing. If the Respondents fail to appoint
an arbitrator within such 20-day period, the arbitrator
named in the Demand shall decide the controversy or claim as
a sole arbitrator. Otherwise, the two arbitrators appointed
by the parties shall appoint a third arbitrator within 30
days after the Respondent has notified Claimant of the
appointment of the Respondent's arbitrator. When the
arbitrators appointed by the Claimant and Respondent have
appointed a third arbitrator and the third arbitrator has
accepted the appointment, the two arbitrators shall promptly
notify the parties. If the parties cannot agree on a third
arbitrator, or if either party so requests, then the
President of the American Arbitration Association shall
appoint the third arbitrator, the President of the American
Arbitration Association shall appoint the third arbitrator
within 20 days after such request and
shall notify the parties of the appointment. The third
arbitrator shall act as Chairman of the panel.
This provision for arbitration shall be
specifically enforceable by the parties and the decision of
the arbitrators in accordance herewith shall be final and
binding and there shall be no right of appeal therefrom.
Each party shall pay its own expenses of arbitration and the
expenses of the arbitrators shall be equally shared;
provided, however, that if in the opinion of the arbitrator
any claim for indemnification or any defense or objection
thereto was unreasonable, the arbitrators may assess, as
part of their award, all or any part of the arbitration
expenses of the other party (including reasonable attorneys'
fees) and of the arbitrators against the party raising such
unreasonable claim, defense or objection.
11.12 Choice of Law: Jurisdiction.
(a) This Agreement shall be construed in
accordance with and all disputes shall be governed by the
laws of the Commonwealth of Pennsylvania, U.S.A., except for
questions dealing with the choice of law, which are governed
by this Section 11.12. Notwithstanding the
foregoing sentence, the provisions of the Uniform Commercial
Code as adopted in the Commonwealth of Pennsylvania, and not
the Convention for the International Sale of Goods, shall
govern this Agreement.
(b) Any suit filed for an award of injunctive or
other equitable relief shall be filed in the United States
District Court for the Western District of Pennsylvania, and
the award may be enforced in accordance with its terms in
any court of competent jurisdiction in the United States,
the United Kingdom or elsewhere. Service of process upon
Trading, International, Sorbie or SAC may be made by mailing
a copy of a complaint by mail or courier with proof of
delivery (to the attention of the president in the case of
International, Trading and SAC) at the then current address
identified in this Agreement. Such service shall not be
effective until the complaint is actually received.
11.13 Nonwaiver. No waiver by a party of any of the
terms and conditions or provisions of this Agreement shall
be deemed to have been made unless expressed in writing and
signed by the parties. No waiver by a party of any breach
of any of the terms or conditions of this Agreement shall
constitute a waiver of any succeeding or preceding breach of
the same, or any other terms or conditions herein contained.
11.14 Notices. All notices hereunder shall be in
writing and sent by mail or courier, with proof of delivery,
addressed as follows:
To: Sorbie Acquisition Co.
504 Allegheny River Boulevard
Oakmont, PA 15139
Attention: President
To: Sorbie Trading Limited
10 Russell Street
Covent Garden
London WC28 5HZ
England
Attention: Managing Director
To: Trevor Sorbie International, PLC
10 Russell Street
Covent Garden
London WC28 5HZ
England
To: Trevor Sorbie
10 Russell Street
Covent Garden
London WC28 5HZ
England
The above addresses may be changed from time to time by
serving notice as hereinabove provided.
11.15 Independent Contractor. The parties shall have
the relationship of independent contractors and not
principal-agent, employer-employee, or joint venturer.
Neither party shall have the right to bind the other party
or make any representations or commitments on their behalf.
11.16 Severability. Nothing in this Agreement shall
be construed to require the commission of any act contrary
to law. If there is any conflict between any provision of
this Agreement and any material present or future law,
ordinance or administrative, executive or
judicial regulation, order or decree, which the parties have
no legal right to overcome by contract, the latter shall
prevail. In such event the affected provision or provisions
of this Agreement shall be modified only to the extent
necessary to bring them within the legal require-ments, and
only during the time such conflict exists. If any provision
of this Agreement shall be determined to be invalid or
unenforceable, then such determination shall not affect any
other provision of this Agreement, all of which other
provisions shall remain in full force and
effect, and it is the intention of the parties that if any
provision of this Agreement is susceptible of two or more
constructions, one of which would render the provision
unenforceable, then the provision shall have the meaning
which renders it enforceable.
11.17 Signatures The undersigned warrant that they
are duly authorized representatives of the parties, that all
corporate action necessary to approve this Agreement has
been taken and that they have the authority to sign this
Agreement on behalf of the parties hereto.
11.18 Entire Agreement. This Agreement constitutes
the complete, final and exclusive agreement among the
parties in respect of the subject matter hereof and thereof,
and supersedes all prior and contemporaneous agreements
between them in connection with the subject matter of this
Agreement. No officer, employee or other servant or agent
of SAC, Trading or International is authorized to make any
representation, warranty or other promise which is not
contained in this Agreement.
11.19 Force Majeure. Neither party to this Agreement
shall be liable for any breach hereof occasioned by any
cause or circumstance beyond its reasonable control ("Force
Majeure"); provided, however, that the party invoking this
provision shall notify the other party promptly in writing
of the occurrence of any such cause, and promptly exert due
diligence to remove such cause. Such causes shall include,
by way of example only, acts of God, fire, explosion,
mechanical breakdown, plant shutdowns, unavailability of or
interference with usual means of acquiring, manufacturing or
transporting products or inability to obtain raw materials
or energy for the manufacture of products. The obligations
of the party who is unable to perform due to Force Majeure
shall be suspended to the extent prevented by and for the
duration of any Force Majeure. Upon removal of the Force
Majeure, all obligations shall resume. Notwithstanding
anything in this Agreement to the contrary, in the event SAC
is only able to partially resume its ability to produce
Sorbie Products, SAC shall be free to allocate the Sorbie
Products generally in proportion with the amount of Products
SAC previously provided to the TSI Parties and its other
distributors.
11.20 Special Release. International, Trading and
Sorbie on behalf of themselves, their successors and assigns
hereby completely release, acquit and forever discharge SAC,
its subsidiaries, successors and assigns and each of their
agents, attorneys, affiliates and persons
employed or engaged by each of them, as well as their
respective successors and assigns of and from any and all
actions and causes of action, suits, covenants, claims,
contracts, controversies, agreements, promises, liabilities,
obligations, guarantees, indemnities, damages, debts, sums
of money, accounts, executions, judgments and demands
whatsoever, whether the same be liquidated or unliquidated,
contingent or fixed, matured or unmatured, determined or
undetermined, known or unknown, foreseen or unforeseen,
whether past, present or future,
whether the same be at law or in equity, and whether or not
founded in fact or in law, arising out of or related to the
delivery by SAC of the orders set forth on Exhibit 13.20 to
the Original Agreement after
July 17, 1994 except with respect to England Boots. With
respect to the England Boots order, the release provided
above shall apply until August 5, 1994.
IN WITNESS WHEREOF, the parties hereto have duly
executed this Agreement effective on the Effective Date.
TREVOR SORBIE INTERNATIONAL
Public Limited Company
By:
SORBIE TRADING, LIMITED
By:
TREVOR SORBIE
SORBIE ACQUISITION CO.
By:
APPENDIX A
"Affiliate" of any person or entity means any
individual or corporation, partnership, joint venture,
association, joint-stock company, trust, unincorporated
organization or other entity directly or indirectly
controlling or controlled by or under direct or indirect
common control with such other person or entity and any
predecessor to such person.
"Confidential Information" means "trade secrets" as
defined by the Uniform Trade Secret Act, and any other
information in any form which is treated as confidential by
the parties and which is not generally known, including
without limitation, know how, designs, plans, processes,
methods, manufacturing procedures, formulae, specifications
and labeling, container and product ideas.
"Control" means the power to direct or cause the
direction of management and policies, whether through
ownership or voting securities, by contract or otherwise,
and shall, without limiting the foregoing, be deemed to
exist in case of ownership of share comprising 66% or more
of the voting power of a corporation.
"Copyrights" means all copyrights and copyrightable
subject matter, as may be recognized by the laws of any
countries in the world.
"Cost" means in the case of Sorbie Products produced by
or for SAC, SAC's then current cost of materials, labor and
factory overhead, using such cost accounting methods as SAC
consistently applies in its operations. Cost shall include
charges related to placing bar codes on products bearing any
Sorbie Trademark. In the case of Sorbie Products purchased
in whole or part from nonaffiliated third parties, it means
the purchase price plus shipping, duty, insurance, taxes,
transportation, handling and any other similar costs, and
the cost of any additional formulation, processing and/or
packaging. Any handling charge shall be determined using
such methods as the parties may establish from time to time.
"Effective Date" means that date on which all parties
have executed this Agreement, which date shall be inserted
by the last party executing this Agreement on the first page
hereof.
"Inflation Factor" shall mean a percentage amount equal
to the percentage increase or decrease in the Consumer Price
Index for All Urban Customers published by the United States
Bureau of Labor Statistics, for the Pittsburgh, Pennsylvania
area (the "CPI") for the most recent complete calendar year
for which the CPI has been reported over the CPI for the
calendar year immediately preceding such most recent
complete calendar year.
"Intellectual Property" means all trade dress,
"Copyrights", "Patent Rights" and "Confidential Information"
created by or used on or in connection with the manufacture,
distribution, promotion or sale of products bearing any
Sorbie Trademark.
"International's Territory" means the world except
North America and South America.
"Net Sales" means the consolidated gross invoice price
for Sorbie Products (excluding sales to TSI and/or its
affiliates), less: (i) returns for which the sales price was
refunded for any reason, (ii) freight, and (iii) trade
discounts or allowances (on terms of two percent (2%) for 15
days), Sterling Salon Club expense, Sterling Salon Club free
goods, chain account expense (discounts granted to
distributors who have acquired multi-unit business at less
than full margin), cooperative advertising credits (for
Sterling Salons only up to $600 per Sterling Salon per
calendar year), Educational Funds Expense (off invoice
allowance to distributors to support local market salon
education), Minimum Purchase Performance Standard (5%
quarterly allowance paid to distributors who achieve certain
specified sales levels), promotions (off invoice promotion
allowances to distributors), and regional promotions
(promotional payments goods and services administered by
regional managers and paid to distributors and their sales
consultants), provided, however that the aggregate amount of
the items listed in subsection (iii) for any quarter shall
not exceed eight percent (8%) of the consolidated gross
invoice price for Sorbie Products (excluding sales to TSI
and/or its affiliates) for such quarter. Sales to SAC's
Affiliates shall be included in Net Sales in an amount equal
to the greater of (x) the gross invoice price to such
Affiliate or (y) the lowest gross invoice price paid by any
non-Affiliate of SAC during the preceding six month period,
in each case net of the items referred to above. "Net
Sales" does not include any resale of any product by any
person or entity if a royalty payment obligation hereunder
arose in connection with a prior sale of the same product.
"North America" means the United States of America,
Canada, Mexico, Antigua and Barbuda, Bahamas, Barbados,
Belize, Costa Rica, Cuba, Dominica, Dominican Republic, El
Salvador, Grenada, Guatemala, Haiti, Honduras, Jamaica,
Nicaragua, Panama, St. Christopher and Nevis, St. Lucia, St.
Vincent and the Grenadines, Trinidad and Tobago and the
following political units: Anguilla, Bermuda, Cayman
Islands, Greenland, Guadeloupe, Netherlands Antilles, Puerto
Rico, St. Pierre, Turks and Caicos Islands, Virgin Islands
(U.S.) and any other
Caribbean islands.
"Patent Rights" means all patents, patent applications,
and inventions, whether or not patented. The term "patent"
includes all protectable designs, inventor's certificates
and any extensions, continuations, continuations-in-part and
reissues thereof.
"Rights of Publicity" means any and all interest in the
goodwill and/or publicity value of the Sorbie name, voice,
style, autograph, likeness, endorsement, image (whether
still, moving or otherwise recorded in any manner) and
reputation in connection with any Sorbie Trademark or
otherwise.
"Royalty Credit" means that amount indicated on
Schedule I attached hereto and made a part hereof which
states the total amount of the Purchase Price (as defined in
the Purchase Agreement) which has not been offset against
royalties due International under the Purchase Agreement as
of the Effective Date.
"SAC's Territory" means North America and South
America.
"Sorbie Products" shall mean any product bearing any
Sorbie Trademark.
"Sorbie Trademarks" means all trademarks, service marks
and names throughout the world, pertaining to any
classification of goods or services, which use or include
the words "Sorbie" or "Trevor Sorbie" and all registered and
unregistered designs, symbols, names, words and devices,
including but not limited to the "squiggly", related thereto
or developed by or for Sorbie, International or any of their
respective Affiliates and all names and descriptions similar
thereto in any language, and all rights related thereto,
including, without limitation, all of the business goodwill
associated therewith, all registrations and pending
applications for registrations therefor, all Rights of
Publicity and all other rights associated with the Sorbie
and Trevor Sorbie names and marks.
"South America" shall mean the countries of Argentina,
Bolivia, Chile, Columbia, Ecuador, French Guiana, Guyana,
Paraguay, Peru, Surinam, Uruguay, and Venezuela.
Exhibit 10.3
REDKEN LABORATORIES, INC.
575 FIFTH AVENUE
NEW YORK, NY 10017-2450
June 28, 1996
Mr. Frank Ferola
President
The Stephan Co.
1850 West McNab Road
Fort Lauderdale, FL 33309
Dear Frank,
You have informed us The Stephan Co. ("Stephan") has
reached an agreement in principle with Charley Hall to acquire the
capital stock of the Sorbie Acquisition Co. ('SAC").
Stephan has requested Redken to enter into an agreement
to compromise the balance due under the Secured Promissory Note of SAC
dated July 22, 1994 ( the "Secured Promissory Note") and to
delay taking any action under the terms of the Trademark Security
Agreement dated July 22, 1994.
This letter confirms the obligations, covenants and
conditions to be performed by Stephan and Redken's agreement
to extend the payment deadline under the Secured Promissory Note and forbear,
without waiver, asserting rights and remedies under the Trademark Security
Agreement until June 28, 1996 upon the terms and subject to the
conditions set forth herein below:
1. On or before June 28, 1996 Stephan shall pay Redken
the non-refundable sum of $500,000 (plus, in the event payment
for any reason is made after May 10, 1996, interest thereon from
April 19, 1996 until the date of receipt by Redken at the prime rate of
Morgan Guaranty Trust Company of New York plus two percent (2%) by wire
transfer ofimmediately available funds to an account designated by
Redken.
2. Execution and delivery by Stephan of a Secured
Promissory Note in the principal amount of $2,000,000 (the "Stephan
Note"), the form of which is attached hereto as Exhibit A, due and
payable in full July 19, 1996. No interest shall be payable on the Stephan
Note if it is paid in full when due. If the Stephan Note is
not paid in full when due, interest shall accrue on the
unpaid principal at the rate of 25% per annum.
3. Execution by SAC of a trademark assignment of the
Sorbie Trademarks (as defined in the Trademark Security Agreement
dated July 22, 1994) to Stephan substantially in the form attached
hereto as Exhibit B.
4. Execution and delivery by Stephan of an Assumption
and Indemnity instrument, substantially in the form attached
hereto as Exhibit C, evidencing Stephan's assumption of all royalty
payment obligations to Frank Fuhrer International, Inc. ("FFI")
arising under the Asset Purchase Agreement by and among FFI
and Redken dated December 4, 1989 (the FFI Royalty Payment Obligations"),
evidencing Stephan shall indemnify and hold Redken harmless with
respect to the FFI Royalty Payment Obligations and evidencing that Stephan
shall, with the consent of Redken, take an assignment of and assume the
duties, obligations, covenants and conditions of Sorbie Acquisition
Co. described and set forth in the Trademark Security
Agreement dated July 22, 1994.
5. Redken will maintain a first priority security
interest in the Sorbie Trademarks identified in the Trademark Security
Agreement and in accordance with its terms to secure payments pursuant to
the Stephan Note and satisfaction of the FFI Royalty Obligations.
Redken hereby acknowledges and agrees that, as of the date hereof,
the Trademark Security Agreement is the only security agreement
for the obligations set forth in the Secured Promissory Note and the
Stephan Note. The trademark security interest will be released
completely without delay when the Stephan Note has been paid and the
FFI Royalty Obligations either have been paid or have been colateralized
in a manner satisfactory to Redken.
6. Stephan hereby represents and warrants to Redken, which
representations and warranties are, as of the date hereof,
and will be, as of the execution and delivery of the
Promissory Note and Assumption and Indemnification
Agreement, true and correct as follows:
6.1. Organization. Stephan is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Florida.
6.2. Authorization. Stephan has all requisite corporate power and
authority, and has taken all corporate action necessary, to
execute and deliver this Agreement, to consummate the transactions
contemplated hereby and to perform its obligations hereunder. The
execution and delivery of this Agreement by Stephan and the consummation
by Stephan of the transactions contemplated hereby have been
duly approved by the board of directors of Stephan. No
other corporate proceedings on the part of Stephan are
necessary to authorize this Agreement and the transactions
contemplated hereby. This Agreement has been duly executed
and delivered by Stephan and is a legal, valid and binding
obligation of Stephan, enforceable against Stephan in
accordance with its terms.
7. In the event each of the forgoing covenants to be performed
by Stephan are performed on or before June 28, 1996 and each
of the conditions set forth above to be satisfied by Stephan is
satisfied on or before June 28, 1996, then Redken shall accept the Stephan
Note, the Assumption of Obligations and Indemnity Agreement and
Stephan's assumption of the Trademark Security Agreement in compromise
and substitution for the Secured Promissory Note, and the
Secured Promissory Note shall be, at Stephan's option, canceled or
transferred to Stephan.
8. Effective upon Redken's acceptance of the Stephan
Note, the Assumption of Obligations and Indemnity Agreement and
Stephan's assumption of the Trademark Security Agreement, Redken
acknowledges that it has no claims, actions or demands against SAC or any
of its subsidiaries and affiliates except The Stephan Co. pursuant
to the aforesaid agreements. Redken, on the one hand, and SAC
(including its subsidiaries and affiliates except The Stephan Co.), on the
other hand, each releases and discharges the others from any and all
claims, actions, liabilities, demands, and costs whatsoever in law
or equity which either ever had or now have against the others upon or by
reason of any matter up through the date of this Agreement.
Please confirm your agreement with the foregoing by signing in the
space provided below and returning one copy for our files.
Very truly yours,
Roger Dolden
Chief Financial Officer
Accepted and Agreed:
The Stephan Co.
Title:
Date: June 28, 1996
Exhibit 10.4
The Stephan Co.
1850 West McNab Road
Fort Lauderdale, FL 33309
June 27, 1996
Dear Mr. Walsh:
Reference is made to that certain Royalty Agreement,
dated August 1, 1994, between Sorbie Acquisition Co. ("SAC") and
Charles J. Walsh as such agreement has been assigned to
Sampson Arms, Inc. (the "Royalty Agreement"). By executing
this letter you hereby agree to terminate the Royalty
Agreement and release us and SAC and any of our affiliates
or subsidiaries from any and all claims under such Royalty
Agreement. In exchange for such termination, you will
receive 18,898 shares of restricted Stephan Co. common stock, par
value $.Ol per share, which we agree to use our best efforts
to register on Form S-3 under the Securities Act of 1933, as
amended.
Very truly yours,
The Stephan Co.
By:
AGREED TO AND ACCEPTED:
SAMPSON ARMS, INC.
By:
Exhibit 10.5
AGREEMENT
AGREEMENT, dated as of June 26, 1996, by and between
The Stephan Co. ("Stephan") and Charles V. Hall ("Hall")
WITNESSETH:
WHEREAS, Stephan and Hall are parties to a Stock
Purchase Agreement, dated as of June 26, 1996 (the "Stock
Purchase Agreement"), pursuant to which Stephan has agreed
to purchase, subject to the terms and conditions contained
therein, all of the capital stock of Sorbie Acquisition
Company ("SAC");
WHEREAS, pursuant to the terms of the Stock Purchase
Agreement, Stephan has agreed to assume certain liabilities
of Trevor Sorbie of America, Inc. ("TSA"), a wholly-owned
subsidiary of, SAC, owing to Hall under that certain
Employment Agreement, dated as of June 1, 1994, between Hall
and TSA (the "Existing Employment Agreement"); and
WHEREAS, Hall and Stephan desire to set forth the
method of payment of the liabilities owing to Hall pursuant
to the Existing Employment Agreement.
NOW, THEREFORE, the parties hereto hereby agree as
follows:
1. Method of Payment. Reference is hereby made to
Section 1.2(b) of the Stock Purchase Agreement. Pursuant to
said Section, Stephan agrees, subject to the Closing (as
defined in the Stock Purchase Agreement), to assume all of
TSA's liabilities owing to Hall and existing as of the
Closing (the "Accrued Liabilities"). Hall and Stephan
hereby agree that the amount of the Accrued Liabilities is
$500,208.33. Following the Closing, Stephan shall provide
for the payment of such liabilities by the payment of cash,
the issuance to Hall of shares of the common stock of Stephan registered
under the Securities Act of 1933, as amended (the "Registered
Stock"), or a combination of the foregoing. The aggregate
of the cash and the Registered Stock paid to Hall shall
equal the Accrued Liabilities. The type and relative
amounts of the consideration to be paid to Hall shall be
determined by Stephan in its sole discretion.
2. Assignment; Binding Effect. This Agreement may not
be assigned by Stephan or Hall without the prior written
consent of the other party. This Agreement shall inure to
the benefit of, and be binding upon, the parties hereto and
their respective heirs, legal representatives, successors
and permitted assigns. Nothing in this Agreement is
intended to confer upon any other person any rights,
remedies or legal benefits.
3. Governing Law. This Agreement and the legal
relations between the parties hereto shall be governed by
and construed in accordance with the internal laws of the
State of Florida.
IN WITNESS WHEREOF, the parties hereto have executed
this Agreement the day and year first above written.
THE STEPHAN CO.
By
President
Charles V. Hall
Exhibit 10.6
EMPLOYMENT AGREEMENT
EMPLOYMENT AGREEMENT, dated as of
June 27, 1996, between CHARLES V. HALL (the"Employee") and
THE STEPHAN CO., a Florida corporation (the "Company").
WHEREAS, the Company desires to
assure itself of the benefit of the Employee's services and
experience for a period of time;
WHEREAS, the Employee is willing to
enter into an agreement to that end with the Company upon
the terms and conditions herein set forth;
WHEREAS, the Company is simultaneously
entering into a Stock Purchase Agreement with the Enrollee,
pursuant to which the Company is purchasing all of the capital
stock of Sorbie Acquisition Co. ("SAC"); and
WHEREAS, the Employee is the sole
record and beneficial owner of all of the outstanding common
stock of SAC.
NOW, THEREFORE, in consideration of
the promises and covenants herein contained, the parties
hereto agree as follows:
1. Term of Agreement
Subject to the terms and
conditions hereof, the term of this Employment Agreement
(the "Term") shall be for the period commencing on the date
hereof and terminating at midnight on June 27, 2001.
2. Services to be Rendered
The Company hereby agrees to
employ the Employee as President of SAC, which is
contemplated to be a wholly-owned subsidiary of the Company,
subject to the terms, conditions and provisions of this
Employment Agreement. In his capacity as President of SAC,
the Employee shall be responsible principally for
developing, implementing and supervising the sales and
marketing activities and efforts of SAC, as requested by the
Company, helping to develop and conduct the sales and
marketing activities and efforts of the Company and its
subsidiaries. The Employee hereby accepts such employment
and agrees to devote his full time and attention to
rendering services to SAC under this Employment Agreement;
provided, however, the Employee shall, at the Company's
request, devote such amount of his time and attention to
other Company-related activities and projects as the Company
directs. The Employee may devote nominal time and attention
to his personal investments. In connection with the
rendition of such services to the Company, the Employee
shall report to and be subject to the direction of the
President of the Company or a designee of the President, and
he shall perform such services as shall be designated by
him. The Employee shall diligently perform his duties
hereunder. The Employee shall have such duties and
responsibilities commensurate with his position.
The Employee shall subsequently
perform his duties hereunder at the principal executive
offices of the Company in Fort Lauderdale, Florida.
Employer agrees to pay up to a maximum of $5,000 of
Employee's actual moving expenses, upon presentation of
appropriate receipts.
3. Compensation
(a) In full payment for
services rendered to the Company under this Employment
Agreement, the Company shall pay the Employee for each of
the initial two years of the Term, a Base Salary (the "base
Salary") of Two Hundred Thousand Dollars ($200,000). For
each of the following three years of the Term, the Company
shall pay the Employee a Base Salary of Two Hundred and
Fifty Thousand Dollars ($250,000).
(b) In addition to the
compensation otherwise provided for in this Paragraph 3, the
Employee shall, during the Term of this Employment Agreement
and subject to the terms and conditions herein contained,
also be entitled to a bonus (the "Bonus") each year of the
Term. The Bonus calculation is as follows:
If, and to the extent that, pre-
tax earnings, after depreciation and amortization expense
and before interest expense of SAC (the "Adjusted Earnings")
shall be between $1,000,000 and $1,499,999 the Employee
shall receive a bonus equal to seven percent (7%) of such
Adjusted Earnings. If said Adjusted Earnings shall exceed
$1,500,000 the bonus will increase to nine percent (9%) of
all Adjusted Earnings up to $3,500,000. No bonus shall be
payable in respect to Adjusted Earnings in excess of
$3,500,000.
The determination of Adjusted
Earnings and any Bonus payable shall be made annually by the
Company at approximately the time that the Company completes
its' annual audit. The amounts to the Adjusted Earnings and
the bonus shall be certified by the Chief Financial Officer
of the Company. The aforesaid certificate shall be
delivered to the Employee, along with any Bonus payable,
within ten (10) days after the completion of the Company's
annual audit.
(c) The Employee shall, during the
Term, be entitled to two weeks of annual vacation and fringe
benefits consistent with the fringe benefits, if any,
generally available to all salaried employees of the
Company, including group medical and life insurance and
group long-term disability insurance, if any.
(d) During the Term, the Company
shall reimburse the Employee for all reasonable out-of-
pocket expenses for entertainment, travel, meals and the
like incurred by Employee in connection with his duties
hereunder subject to Company policies then in effect and
subject to the prior approval of such expenses by the
President of The Company when such would cause the monthly
budget for such times to be exceeded. The Company shall not
be required to reimburse the Employee unless the Employee
submits vouchers and appropriate receipts for all such
expenses.
(e) Payments of Base Salary due
hereunder shall be paid in accordance with the regular
payroll practices of the Company. Payments of Base Salary
and Bonus hereunder shall be reduced by any deductions
required to be withheld by applicable law and regulations.
4. Disability, Death and Termination
(a) In the event of the
Employee's physical or mental disability (so that the
Employee is not reasonably able to render his full services
hereunder) for any consecutive period exceeding six months,
the Employee's salary during such period beyond said six
months shall be reduced and paid only to the extent provided
in the Company's Long Term Disability Plan, if any, then in
effect until the Employee shall report ready, willing and
able to resume rendering full services hereunder. Any
obligation of the Company will not extend beyond the Term.
In the event any such disability shall continue for a
consecutive period of more than six months, or should the
Employee at any time become permanently disabled and as a
result thereof be unable to render his full services
hereunder, then the Company may, at its' election, terminate
this Employment Agreement. In the event of any such
termination, the Company shall only be obligated for
compensation earned by the Employee prior to such
termination.
(b) The obligations of the Company
under this Employment Agreement shall terminate upon the
death of the Employee.
(c) If any of the following events should occur:
(1) the Employee voluntarily
resigns or retires as an employee of the company without
prior written consent of the Company;
(2) the Company terminates
the Employee's employment for Cause; or
(3) the Employee materially
breaches this Employment Agreement fails to cure such breach
within thirty calendar days after receiving notice of such
breach from the Company;
then the Company's obligations hereunder shall immediately
cease and desist and no further payments of any kind shall
thereafter be made by the Company to the Employee hereunder.
(d) Definition of "Cause":
The term "Cause" as used herein shall mean the termination
by the Company of the Employee due to: (i ) the willful or
gross neglect of his duties and other obligations under this
Employment Agreement, (ii) willful misconduct in the
performance of his duties, (iii) the commission of any
dishonest act (including without limitation) any act of
fraud, misappropriation or embezzlement, in the performance
of his duties, (iv) the commission by the Employee of any
act which constitutes cause for dismissal of
a corporate officer or employee under applicable law, (v)
the Employee shall not comply with the established business
and other policies of the Company or the directions of the
Board of Directors or the President of the Company in any
material way, or (vi) the commission of a felony resulting
in the Employee's conviction, by trial or plea, and which,
as determined in good faith by the Board of Directors,
constitutes a crime involving moral turpitude.
(e) Termination Without Cause:
In the event that the Company terminates the Employee's
employment hereunder without Cause prior to the expiration
of the Term, then the Company shall continue to pay the
Employee his Base Salary, in accordance with the regular
payroll practices of the Company, up through the later of
the third anniversary of the date of this Agreement or the
first anniversary of such termination without Cause,
but in no event to continue beyond the termination date
in Section I hereof. In addition, the Employee shall be
entitled to a pro-rated portion of the Bonus payable in respect
of the year of his termination, determined by multiplying the amount of the
Bonus otherwise payable by the quotient of (x) the number of calendar days
that the Employee was employed in such year up through the
date of termination by (y) 365.
If the Company terminates the
Employee's employment hereunder without Cause prior to the
expiration of the Term, the non-compete provisions set forth
in Section 9 (a) hereof shall terminate upon such
termination: provided, however, that the restrictions set
forth in Section 9 (b) hereof shall apply and remain in
effect in accordance with the terms thereof.
(5) Return of Materials: The
Employee will, at any time upon request by the Company's
Board of Directors or the President of the Company and, in
any event, at the expiration of the Term for any reason
whatsoever, immediately return to the Company (without
retaining any copies or extracts thereof) all records,
books, notes, memoranda, customer lists, supplier lists,
tools, molds, designs, tapes, videotapes, equipment,
advertising and promotional material and any and all other
documents, tools, equipment or other materials belonging to
the Company which belong to the Company or contain
information related in any way to the Company's business.
Employee acknowledges that all such materials are now, and
will always remain, the exclusive property of the Company.
(6) Ownership of Products and Inventions;
Confidentiality:
(a) The Employee acknowledges
and agrees that, unless he is specifically and in writing
granted by the Company rights in any products purchased,
produced, licensed or sold by the Company (the "Products"),
he shall have no rights of any kind in the Products. The
Employee hereby irrevocably assigns to the Company any
rights in the Products that may be granted the Employee by
law (including, without limitation, patent, copyright and
trademark laws) or by any other person or entity, and agrees
to execute any documents necessary to transfer any such
rights to the Company.
(b) As one of the conditions to
the Employee's employment with the Company and in partial
consideration of the payment by the Company to the Employee
of such compensation as set out in this Agreement and of the
confidential position which the Employee shall occupy and
which will bring the Employee into close contact with the
efforts of the Company in engineering, production, research
and development work, the Employee agrees that any
inventions, product developments and enhancements, formulas,
sales plans or improvements which the Employee may take,
invent, acquire or suggest during the Employee's employment
by the Company (whether or not at the request or upon the
suggestion of the Company and whether or not during regular
hours of work or otherwise during the term of the Employee's
employment by the Company) shall become and shall be the
absolute and exclusive property of Company. The Employee
further agrees to disclose forthwith in writing such
discovery or invention to the Company but to no other
person. The Employee also agrees forthwith to irrevocably
assign to the Company full and exclusive rights to any
discovery or invention, and to any patent to the full end of
the term of such patent. This Agreement shall apply to all
discoveries or inventions, whether similar to anything used
in connection with the present business of the Company or
radically different in principal or result therefrom.
Furthermore, upon the request of the Company, the Employee
shall forthwith execute all documents necessary or
advisable in the opinion of the Company to direct the
issuance of patents to the Company or to vest title in the
Company to such inventions or discoveries. However, the
expense of securing any such patent shall be borne by the
Company. Finally, the Employee agrees to hold any secret
process, formula, methods, or appliances for which no patent
is issued as trustee for the benefit of the
Company.
(c) Nondisclosure of Confidential
Information. The Employee will not, at any time (other than
as may be required or appropriate in connection with the
performance by him of his duties hereunder) directly or
indirectly, use, exploit, communicate, disclose or
disseminate any Confidential Information (as defined below)
in any manner whatsoever (except as may be required under
legal process by subpoena or other court order; provided,
that, the Employee will take reasonable steps to give the
Company sufficient prior written notice in order to contest
such requirement or order).
For purposes hereof, the term
"Confidential Information" means any and all information
(oral or written) relating to the Company or any person
controlling, controlled by, or under common control with the
Company or any of their respective activities, including,
but not limited to, information relating to: discoveries,
inventions, innovations, software, patents, patent
applications, know how, secret processes, research, test
procedures and results, machinery and equipment;
manufacturing processes; financial information; products;
identity and description of materials and services used;
purchasing; costs; pricing; customer lists; customers and
prospects- advertising, promotion and marketing: trademarks
and trademark registrations; copyrights and copyright
registrations; corporate strategies; acquisition plans and
proposals; and information pertaining to any governmental
investigation, except such information which can be shown by
the Employee to be generally known in the industry or in the
public domain (such information not being deemed to be in
the public domain merely because it is embraced by more
general information which is in the public domain).
(7) Removal of Documents or Objects:
The Employee agrees not to remove
from the premises of the Company, except as an employee of
the Company in pursuit of the business of the Company or any
of its subsidiaries, or except as specifically permitted in
writing by the Company, any document or object containing or
reflecting any proprietary information of the Company. The
Employee recognizes that all such documents and objects,
whether developed by him or by someone else, are the
exclusive property of the
Company.
(8) Corporate Opportunities:
The Employee agrees that during
his employment hereunder he will not take any action which
might divert from the Company or any subsidiary of the
Company any opportunity which would be within the scope of
any of the present or business thereof.
(9) Non-Compete:
(a) The Employee agrees that prior
to this Agreement he concentrated solely in the professional
hair care segment and that during his employment with the
Company (The Stephan Co.) he may be exposed to the retail
hair care market. Accordingly, during the Term and for a
period of six (6) months thereafter, the Employee shall not
in the United States of America, directly or indirectly, (i)
engage in any business relating to the development,
manufacture, sale or marketing of professional hair care
products (the "Hair Care Business"); (ii) enter into the
employ of any person engaged in the Hair Care Business or
render any services to any person for use in the Hair Care
Business; or (iii) have an interest in any person engaged in
the Hair Care Business, directly or indirectly, in any
capacity, including, without limitation, as an individual,
partner, shareholder, officer, director, principal,
agent, employee, trustee or consultant or any other
relationship or capacity.
Additionally, during the Term and
for a period of one (1) year thereafter, the Employee shall
not, in the United States of America, directly or
indirectly, (i) engage in any business or activity that
competes with any business (other than the Hair Care
Business) that the Company is then engaging (the "General
Business"); (ii) enter into the employ of any person engaged
in any business that competes with the General Business or render
any services to any person for use in competing with the General Business;
or (iii) have an interest in any person engaged in any
business that competes with the General Business, directly
or indirectly, in any capacity, including, without
limitation, as an individual, partner, shareholder, officer,
director, principal, agent, employee, trustee or consultant
or any other relationship or capacity.
(b) In addition, during the Term and
for a period of six (6) months thereafter (in respect of the
Hair Care Business), and for a period of two (2) years
thereafter (in respect of the General Business), the
Employee shall not interfere with business relationships
(whether formed heretofore or thereafter) between the
Company and any of its customers, suppliers, distributors or
employees. Without limiting the foregoing sentence,
the Employee shall not, directly or indirectly, for the
periods set forth in the foregoing sentence, solicit, raid,
entice or induce any person that is at any such time (or
within the prior twelve (12) months) a customer of the
Company to become a customer of any other person or employ
or otherwise engage, or cause to be employed or engaged, any
employee of the Company or solicit, raid, entice or induce any person
who is at any such time (or was within the prior twelve (12) months
an employee, director, distributor or sales representative of
the Company to be employed or otherwise engaged by any person.
As used in this Agreement, including
Section 9, the term the "Company" shall mean The Stephan Co.
and all of its Subsidiaries and divisions, whether now or
hereafter organized.
(10) Injunctive Relief:
It is understood and agreed by and
between the parties hereto that the services to be rendered
by the Employee hereunder, and the rights and privileges
granted to the Employee by the Company hereunder, are of a
special, unique, extraordinary and intellectual character,
which gives them a peculiar value, the loss of which cannot
be reasonably or adequately compensated in damages in any action
at law, and that a breach or threatened breach by the Employee of
any of the provisions contained in this Employment Agreement will
cause the Company great and irreparable injury and damage. The
Employee hereby expressly agrees that the Company shall be
entitled to the remedies of injunction, specific performance
and other equitable relief to prevent a breach of this
Employment Agreement by the Employee in each case without
the necessity of posting bond. This provision shall not,
however, be construed as a waiver of any of other rights and
remedies which the Company may have for damages or
otherwise.
(11) Warranty:
The Employee hereby warrants
that he is free to enter into this Employment Agreement and
to render his services pursuant hereto.
The Employee hereby
represents and warrants that his execution, delivery and
performance of this Agreement will not conflict with or
violate any agreement or understanding to which he is a
party or is otherwise bound. As of the date of the
execution of this Agreement, the Employee hereby agrees that
that certain Employment Agreement, dated as of June 1, 1994,
by and between the Employee and SAC shall automatically
terminate and be of no force and effect, and that SAC shall
have no further obligation or liability to the Employee
thereunder.
(12) Non-Assignability:
This Employment Agreement may
not be assigned or delegated by the Employee or by the
Company except by the Company to any of its active ongoing
subsidiaries or to any of its assigns with the prior written
consent of the Employee which consent shall not be
unreasonably withheld. This Employment Agreement shall
inure to the benefit of and be enforceable by the parties
hereto and any and all successors or assigns of the Company.
(13) Merger or Consolidation:
Without limitation of the
foregoing, in the event of the merger or consolidation of
the Company with any other corporation or corporations, or
of the sale by the Company of a major portion of its assets
or of its business and goodwill, this Employment Agreement
may be assigned and transferred to such successor in interest
as an asset of the Company upon such assignee assuming the
Company's obligations hereunder, in which event the Employee
agrees to continue to perform his duties and obligations according
to the terms and conditions hereof for such assignee or
transferee of this Employment Agreement.
(14) Notices:
All notices and other
communications which are required or may be given under this
Employment Agreement shall be in writing and shall be deemed
to have been given if delivered personally or sent by
registered or certified mail, return receipt requested,
postage prepaid:
(a) If to the Company, to it at
the following address:
1850 W. McNab Road
Ft. Lauderdale, FL 33309
Attention: President
(b) If to the Employee, to him
at the following address:
420 Woodhaven Drive
Wexford, PA 15090
or to such place as either party shall have specified by
notice in writing to the other.
(15) Reasonableness of Covenants: The
parties hereto believe that the covenants contained in this
Agreement are reasonable. If, however, it shall be
determined at any time by any court of competent
jurisdiction that any provision of this Agreement, as
written, is unenforceable because the restrictions set forth
herein are unreasonable, either in terms of
the duration or geographic scope of such restriction or the
type of conduct prohibited therein, the parties hereto agree
that such restrictions as shall have been determined to be
unreasonable shall thereupon be deemed so amended as to make
such restrictions reasonable in the determination of such
court, and this Agreement, as so modified, shall be
enforceable between the parties to the same extents if such
amendments had been made prior to the date of any alleged
breach hereunder. In addition, it is the intention of the
parties that any such determination shall not bar or in any
way affect the Company's right to the relief provided for
herein in the courts of any other jurisdictions as to
breaches or threatened breaches of such provision in such
other jurisdictions, the above provisions as they
relate to each jurisdiction being, for this purpose,
severable into diverse and independent covenants.
(16) Governing Law:
This Employment Agreement shall be
governed by and construed in accordance with the internal
laws of the State of Florida.
(17) Entire Agreement: Amendment:
This Employment Agreement sets
forth the entire understanding of the parties in respect to
the subject matter contained herein and supersedes all prior
agreements and understandings relating to the subject matter
and may only by a written agreement signed by both parties
hereto or their duly authorized representatives.
IN WITNESS WHEREOF, the
parties hereto have executed this Employment Agreement as of
the date first above written.
Charles V. Hall
THE STEPHAN CO.
By: Frank F. Ferola
Exhibit 10.7
ASSUMPTION OF OBLIGATIONS AND INDEMNITY
Pursuant to that certain letter agreement dated June
28, 1996 by and among Redken Laboratories Inc., a Delaware corporation,
and The Stephan Co., a Florida corporation, for good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged:
1. The Stephan Co. hereby assumes all royalty payment
obligations to Frank Fuhrer International, Inc. arising
under the Asset Purchase Agreement by and among Frank Fuhrer
International, Inc. and Redken Laboratories, Inc. dated
December 4, 1989 (the "FFI - Redken Agreement") on the same
terms and conditions as the assumption of the same
obligations by Sorbie Acquisition Co. pursuant to the Asset
Purchase Agreement by and among Sorbie Acquisition Co. and
Redken Laboratories, Inc. dated June 1, 1994 (the "Redken -
SAC Agreement"). Payments by The Stephan Co. shall be made
in the manner described in paragraph 2.2(a) of the Redken -
SAC Agreement.
2. The Stephan Co. hereby undertakes to indemnify,
save and hold harmless Redken Laboratories, Inc., its
affiliates and subsidiaries, and its and their respective
representatives, from and against any and all costs, losses,
liabilities, obligations, damages, lawsuits, deficiencies, claims,
demands, and expenses (herein "indemnity claims") incurred by the
indemnified parties in connection with, arising out of or
resulting from or incident to the obligations to make
royalty payments to Frank Fuhrer International, Inc.
Payment by an indemnified party of amounts for which the
indemnified party is indemnified hereunder shall not be a
condition precedent to recovery. The Stephan Co.'s
obligation to indemnify Redken Laboratories, Inc. shall not
limit any other rights, including without limitation rights
of contribution which either party may have under statute or
common law in connection with the royalty payment
obligations identified in paragraph I hereof.
The indemnified party shall cooperate in all reasonable
respects with the indemnifying party and their attorneys in the
investigation, trial and defense of any lawsuit or action or
any appeal arising therefrom.
3. The Stephan Co. as successor of Sorbie Acquisition
Co. hereby warrants that Sorbie Acquisition Co. has assigned or sold to
The Stephan Co. and The Stephan Co. has assumed (by contract or
operation of law) all the rights, duties, obligations, covenants and
conditions, and has been assigned (by contract or operation of law) all
rights and privileges, as the "Grantor" under the Trademark
Security Agreement dated July 22, 1994 by and among Sorbie
Acquisition Co., a Pennsylvania corporation, as "Grantor",
in favor of Redken Laboratories, Inc., a Delaware
corporation, as "Secured Party", and acknowledges that the
Stephan Note, a compromise and substitute for the Secured
Promissory Note, is an obligation secured by the Trademarks
under the Trademark Security Agreement. The Stephan Co.
covenants that it shall neither assert nor claim that Redken
Laboratories, Inc. has waived any right or remedy that is
provided in the Trademark Security Agreement dated July 22,
1994 in respect of the period up to the date of execution
hereof. The Stephan Co. further covenants that it shall not
be released from the duties, obligations, covenants and
conditions of the Trademark Security Agreement dated July 22, 1994,
pursuant to Section 13 thereof, unless and until The Stephan Co.
has paid all amounts due under the Stephan Note and paid all royalty
payment obligations to Frank Fuhrer International, Inc.
Executed at this 28th day of June, 1996.
THE STEPHAN CO.
By:
Title:
CONSENT TO ASSIGNMENT
Pursuant to that certain letter agreement dated June
28, 1996 by and among Redken Laboratories Inc., a Delaware
corporation, and The Stephan Co., a Florida corporation, and
pursuant to Section 9 Benefits of the Trademark Security Agreement
dated July 22, 1994 by and among Sorbie Acquisition Co., a Pennsylvania
corporation, as "Grantor", in favor of Redken Laboratories, Inc., a
Delaware corporation, as "Secured Party", the undersigned does hereby
consent to the assignment by Sorbie Acquisition Co. to The Stephan Co.
of its rights, duties, obligations, covenants and conditions in and under
the Trademark Security Agreement and the Trademarks identified therein.
Executed at this 28th day of June, 1996.
REDKEN LABORATORIES INC.
By:
Title:
Exhibit 10.8
SECURED PROMISSORY NOTE
$2,000,000 New York, New York
June 28, 1996
FOR VALUE RECEIVED, the undersigned, The Stephan Co. ("Stephan"),
promises to pay to the order of Redken Laboratories, Inc.
("Redken")at 575 Fifth Avenue, New York, New York 10017, or
at such other place as the holder of this Note may from time
to time designate, the principal sum of Two million Dollars
($2,000,000) which shall be due and payable July 19, 1996.
In the event the principal sum is not paid in full on or
before July 19, 1996 then interest shall accrue on the unpaid balance
computed on the basis of three hundred sixty (360) day year
at 25% per annum, which interest shall be due and payable
in arrears quarter annually on the nineteenth (19th) day of
the months of October, January, April and July commencing on
October 19, 1996, and continuing quarter annually thereafter
until the total unpaid principal balance of this Note and
all accrued interest thereon shall be paid.
All payments of principal and interest shall be made to
the holder of this Note not later than 12:00 o'clock noon,
local time, on the date and at the place of payment
designated by the holder hereof as aforesaid, and any
payment received on such date but after such hour shall be
deemed to have been paid to and received by the holder
thereof on the holder's next succeeding business day.
This Note may be prepaid from time to time in whole or
in part without penalty; provided the minimum payment shall
be Fifty thousand Dollars ($50,000).
The undersigned agrees that time is of the essence.
All agreements between the undersigned and the holder
of this Note are expressly limited so that in no event,
whether by reason of advancement of the proceeds hereof,
acceleration of maturity of the unpaid principal balance, or
otherwise, shall the amount paid or agreed to be paid to the
holder hereof for the use, forbearance or detention of money
advanced hereunder exceed the highest rate permissible under
applicable law. If any provision hereof or any instrument
securing this Note or any other agreement referred to
herein, at the time performance of such provision shall be
due, shall involve transcending the highest rate prescribed
by law, then the obligation shall be reduced to the highest
lawful rate, and if the holder hereof shall ever receive as
interest an amount which would exceed the highest lawful
rate, such amount which would be excessive interest shall be
applied to the reduction of the unpaid principal balance due
hereunder and not to the payment of interest. This
provision shall control every other provision of all agreements
between the undersigned and the holder thereof.
At the opinion of the holder hereof exercised by
written notice to the undersigned, this Note shall become
immediately due and payable upon the occurrence at any time
of any of the following events of default: (a) Failure to
pay when due any payment of principal, interest or expenses
due hereunder, which non-payment continues for a period of
five (5) days thereafter; or (b) failure in the performance
or observance of any of the material terms or conditions of that certain
Trademark Security Agreement dated as of July 22, 1994 by
and between Sorbie Acquisition Co. and Redken Laboratories
Inc., or any security agreement or other agreement securing,
guaranteeing or otherwise pertaining to this Note which may
be created hereafter and which specifically refers to this
note, after giving effect to any applicable curative period
which may be contained therein. This Note shall
automatically become due and payable, without notice or
demand and without the need for any action or election by
the holder hereof, upon the occurrence at any time of any of
the following events:
(1) Inability To Pay Debts. The admission by any
party liable hereon, whether as maker, endorser, guarantor,
surety or otherwise, of its inability to pay its debts as
they mature, or any assignment for the benefit of the
creditors of any of the foregoing parties; or
(2) Certain Transfers. Any transfer of property
by any party liable hereon, whether as maker, endorser,
guarantor, surety or otherwise, under circumstances which
would entitle a trustee in bankruptcy or similar fiduciary
to avoid such transfer under the Federal Bankruptcy Code, as
amended, or under any other laws, whether state or federal,
for the relief of debtors, now or hereafter existing; or
(3) Involuntary Case. A court having
jurisdiction shall enter a decree or order for relief in
respect of Stephan in an involuntary case under any
applicable bankruptcy, insolvency or other similar law now
or hereafter in effect; or shall enter a decree or order
appointing a receiver, liquidator, assignee, custodian,
trustee or sequestrator (or similar official) of Stephan or
for any substantial part of its properties, or ordering the
winding up or liquidation of the affairs of Stephan, and
such decree or order shall remain unstayed and in effect for
a period of sixty (60) days; or
(4) Voluntary Case. Stephan shall have an order
for relief entered with respect to it or shall commence a
voluntary case under any applicable bankruptcy, insolvency
or other similar law now or hereafter in effect, or shall
consent to the entry of an order for relief in an
involuntary case under any such law, or shall apply for or
consent to the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee or
sequestrator (or similar official) of Stephan or any
substantial part of its properties, or shall take any
corporate action in contemplation of any of the foregoing; or
(5) Appointment of Receiver. The appointment of
a receiver, trustee or custodian for any party liable
hereon, whether as maker, endorser, guarantor, surety or
otherwise, or for any substantial part of the assets of any
of the foregoing parties, or the institution of proceedings
for the dissolution of the full or partial liquidation of
any of the foregoing parties, and such receiver or trustee
shall not be discharged within thirty (30) days of his or
its appointment, or such proceedings shall not be discharged
within thirty (30) days of their commencement, or the discontinuance
of the business or the material change in the nature of the business of any
foregoing parties;
(6) Dissolution. The liquidation, termination or
dissolution of the undersigned.
If this Note or any installment of principal or
interest is not paid when due, whether at maturity or by
acceleration, the undersigned promises to pay all costs of
collection, including without limitation, actual attorneys'
fees , and all reasonable expenses in connection with the
protection or realization of the collateral securing this
Note or the enforcement of any guaranty hereof incurred by
the holder hereof on account of such collection, whether or
not suit is filed and attorneys' fees actually incurred by the
holder hereof in connection with any insolvency, bankruptcy, arrangement or
other similar proceedings involving the undersigned, or
involving any endorser or guarantor hereof, which in any way
adversely affects the exercise by the holder hereof of its
rights and remedies under this Note or under any mortgage,
deed of trust, security agreement, guaranty or other
agreement securing or pertaining to this Note. As used
herein, "actual attorneys' fees" or "attorneys' fees
actually incurred" means the full and actual cost of any
legal services actually performed in connection with the
matter for which such fees are sought calculated on the
basis of the usual fees charged by the attorneys performing
such services, and shall not be limited to "reasonable attorneys'
fees" as that term may be defined in statutory or decisional authority.
No single or partial exercise of any power hereunder or
under any security agreement or other agreement securing
this Note shall preclude other or further exercise thereof
or the exercise of any other power. The holder hereof shall
at all times have the right to proceed against any portion
of the security held herefor in any such order and in any
such manner as the holder may deem fit, without waiving any
rights with respect to any other security. No delay or omission on
the part of the holder hereof in exercising any right
hereunder shall operate as a waiver of such right or of any
other right under this Note. The release of any party
liable on this Note shall not operate to release any other
party liable hereon. The acceptance of any amount due and
payable hereunder shall not operate as a waiver with respect to any
other amount then owing and unpaid.
Presentment, demand, protest, notices of protest,
dishonor and nonpayment of this Note and all notices of
every kind are hereby waived by all parties to this Note,
whether the undersigned, principal, surety, guarantor or
endorser, except as provided herein. To the extent
permitted by applicable law, the defense of the statute of
limitations is hereby waived by the undersigned.
Principal and interest evidenced hereby are payable
only in lawful money of the United States. The receipt of a
check shall not, in itself, constitute payment hereunder
unless and until paid in good funds.
Whenever any payment on this Note shall be stated to be
due on a day which is not a business day, such payment shall
be made on the next scheduling business day and such
extension of time shall be included in the computation of
the payment of interest of this Note.
This Note is to be governed by and construed in
accordance with the laws of the State of New York except to
the extent United States federal law permits the holder to
contract for, charge or receive a greater amount of
interest. In any action brought under or arising out of
this Note, the undersigned hereby consents to the in
personam jurisdiction of any state or federal court sitting
in New York and waives any claim or defense that such forum
is not convenient or improper, and consents to service of
process by any means authorized by New York law.
This Note is secured under a Trademark Security
Agreement dated as of July 22, 1994, and the holder is
entitled to the benefits of the security described therein.
Under certain conditions stated in the security agreement
the entire principal of this Note may become payable to the
maturity date hereof.
THE UNDERSIGNED HEREBY WAIVES, AND COVENANTS THAT THE
UNDERSIGNED WILL NOT ASSERT (WHETHER AS PLAINTIFF, DEFENDANT
OR OTHERWISE), ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN
RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF
ACTION ARISING OUT OF OR BASED UPON THIS NOTE, THE SUBJECT
MATTER HEREOF OR ANY DOCUMENT RELATING HERETO, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING OR WHETHER IN
CONTRACT OR IN TORT OR OTHERWISE.
THE STEPHAN CO.
By:
Title:
