Initial Public Offering (IPO): Pre-Effective Amendment to Registration Statement (General Form) — Form S-1
Filing Table of Contents
Document/Exhibit Description Pages Size
1: S-1/A Amendment No. 2 to Form S-1 124 804K
2: EX-1.1 Underwriting Agreement 54 165K
3: EX-2.1 Agreement and Plan of Contribution 54 159K
4: EX-3.2 Amended and Restated Cert. of Incorporation 19 66K
5: EX-3.3 Bylaws of Donna Karan International Inc. 20 42K
6: EX-5.1 Opinion of Proskauer Rose Goetz & Mendelsohn LLP 2 10K
15: EX-10.10 Stockholders Agreement 9 29K
16: EX-10.11 Donna Karen Incentive Compensation Plan 8 33K
7: EX-10.2 1996 Stock Incentive Plan 20 96K
8: EX-10.3 1996 Non-Employee Director Stock Option Plan 17 76K
9: EX-10.4 Registration Rights Agreement 33 106K
10: EX-10.5 Form License Agree. Bet Gab Studio & Donna Karan 55 109K
Co.
11: EX-10.6 Guaranty of Donna Karan International Inc. 3 11K
12: EX-10.7 Form of License Agree Bet Donna Karan & Stephen W 12 35K
13: EX-10.8 Employment Agreement/Donna Karan 20 51K
14: EX-10.9 Employment Agreement/Stephan Weiss 18 46K
17: EX-23.1 Consent of Ernst & Young LLP 1 8K
18: EX-24 Power of Attorney 1 10K
EXHIBIT 1.1
_______________ Shares
DONNA KARAN INTERNATIONAL INC.
COMMON STOCK, $.01 PAR VALUE
UNDERWRITING AGREEMENT
__________, 1996
_____________, 1996
Morgan Stanley & Co.
Incorporated
Bear, Stearns & Co. Inc.
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
Smith Barney Inc.
c/o Morgan Stanley & Co.
Incorporated
1585 Broadway
New York, New York 10036
Morgan Stanley & Co.
International Limited
Bear, Stearns International Limited
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
Smith Barney Inc.
c/o Morgan Stanley & Co.
International Limited
25 Cabot Square
Canary Wharf
London E14 4QA
England
Dear Sirs:
Donna Karan International Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to the several Underwriters (as defined below)
_______________ shares of the Common Stock (as defined below) (par value $.01
per share) of the Company (the "Firm Shares").
It is understood that, subject to the conditions hereinafter stated,
_________ Firm Shares (the "U.S. Firm Shares") will be sold to the several U.S.
Underwriters named in Schedule I hereto (the "U.S. Underwriters") in connection
with the offering and sale of such U.S. Firm Shares in the United States and
Canada to United States and Canadian Persons (as such terms are defined in the
Agreement Between U.S. and International Underwriters of even date herewith),
and _________ Firm Shares (the "International Shares") will be sold to the
several International Underwriters named in
Schedule II hereto (the "International Underwriters") in connection with the
offering and sale of such International Shares outside the United States and
Canada to persons other than United States and Canadian Persons. Morgan Stanley
& Co. Incorporated, Bear, Stearns & Co. Inc., Merrill Lynch, Pierce, Fenner &
Smith Incorporated and Smith Barney Inc. shall act as representatives (the "U.S.
Representatives") of the several U.S. Underwriters, and Morgan Stanley & Co.
International Limited, Bear, Stearns International Limited, Merrill Lynch,
Pierce, Fenner & Smith Incorporated and Smith Barney Inc. shall act as
representatives (the "International Representatives") of the several
International Underwriters. The U.S. Underwriters and the International
Underwriters are hereinafter collectively referred to as the "Underwriters".
The Company proposes to sell to the several U.S. Underwriters, not more
than _________ additional shares of the Common Stock (par value $.01 per share)
of the Company (the "Additional Shares"), if and to the extent that the U.S.
Representatives shall have determined to exercise, on behalf of the U.S.
Underwriters, the right to purchase such shares of Common Stock granted to the
U.S. Underwriters in Section 3 hereof. The Firm Shares and the Additional
Shares are hereinafter collectively referred to as the "Shares". The shares of
Common Stock (par value $.01 per share) of the Company to be outstanding after
giving effect to the sales contemplated hereby are hereinafter referred to as
the "Common Stock".
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement relating to the Shares. The registration
statement contains two prospectuses to be used in connection with the offering
and sale of the Shares: the U.S. prospectus, to be used in connection with the
offering and sale of Shares in the United States and Canada to United States and
Canadian Persons, and the international prospectus, to be used in connection
with the offering and sale of Shares outside the United States and Canada to
persons other than United States and Canadian Persons. The international
prospectus is identical to the U.S. prospectus except for the outside front
cover page. The registration statement as amended at the time it becomes
effective, including the information (if any) deemed to be part of the
registration statement at the time of effectiveness pursuant to Rule 430A under
the Securities Act of 1933, as amended (the "Securities Act"), is hereinafter
referred to as the "Registration Statement"; the U.S. prospectus and the
international prospectus in the respective forms first used to confirm sales of
Shares are hereinafter collectively referred to as the "Prospectus". If the
Company has filed
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an abbreviated registration statement to register additional shares of Common
Stock pursuant to Rule 462(b) under the Securities Act (the "Rule 462
Registration Statement"), then any reference herein to the term Registration
Statement shall be deemed to include such Rule 462 Registration Statement.
The Company is a recently organized Delaware corporation which will acquire
the businesses conducted by The Donna Karan Company, The Donna Karan Company
Store, G.P., DK Footwear Partners, Donna Karan Studio and DSTF Japan Company,
all general partnerships, Donna Karan (H.K.) Limited, a Hong Kong corporation
and Donna Karan Italy S.R.L., an Italian corporation (collectively, the "DK
Companies") upon consummation of all of the transactions contemplated by the
Reorganization Documents (as defined below) as described under the heading
"Reorganization" in the Prospectus (the "Reorganization"). The DK Companies are
owned by various partnerships and corporations, the principal stockholders of
which are Donna Karan, Stephan Weiss, Gabrielle Studio, Inc., a New York
corporation ("Gabrielle Studio"), the trust under trust agreement for the
benefit of Lisa Weiss Keyes, Corey Weiss and Gabrielle Karan (the "Karan/Weiss
Trust"), the trust under trust agreement for the benefit of Donna Karan (the
"Karan Trust"; and together with the Karan/Weiss Trust, the "KW Trusts"), Tomio
Taki, Frank R. Mori, Christopher Mori, Heather Mori and Takihyo Inc., a Delaware
corporation (collectively, the "Principal Stockholders"). The term "Karan/Weiss
Group" means Donna Karan, Stephan Weiss, the KW Trusts and Gabrielle Studio.
The term "Takihyo Group" means Tomio Taki, Frank R. Mori, Christopher Mori,
Heather Mori and Takihyo Inc. The term "Reorganization Documents" means (a) the
Agreement and Plan of Contribution dated as of ________, 1996 (the "Contribution
Agreement") among the Company and the Principal Stockholders, (b) the Escrow
Agreement dated as of ________, 1996 (the "Escrow Agreement") among the Company,
the Principal Stockholders and Proskauer Rose Goetz & Mendelsohn LLP, as escrow
agent (in such capacity, the "Escrow Agent"), and (c) any other agreement,
opinion, certificate or other document required to be delivered pursuant to
either of the foregoing. It is understood that the Reorganization will be
consummated prior to or simultaneously with the closing of the sale of the Firm
Shares to the Underwriters.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE DK COMPANIES.
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The Company and the DK Companies jointly and severally represent and warrant to
and agree with each of the Underwriters that:
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(a) The Registration Statement has become effective under the
Securities Act; no stop order suspending the effectiveness of the
Registration Statement is in effect, and no proceedings for such purpose
are pending before or, to the knowledge of the Company and the DK
Companies, threatened by the Commission.
(b) (i) The Registration Statement, when it became effective, did
not contain and, as amended or supplemented, if applicable, will not
contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) the Registration Statement and the Prospectus
comply and, as amended or supplemented, if applicable, will comply in all
material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder and (iii) the Prospectus does not
contain and, as amended or supplemented, if applicable, will not contain
any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the representations
and warranties set forth in this Section 1(b) do not apply to statements or
omissions in the Registration Statement or the Prospectus based upon
information relating to any (i) Underwriter furnished to the Company or the
DK Companies in writing by such Underwriter through you expressly for use
therein or (ii) Principal Stockholder furnished to the Company or the DK
Companies in writing by such Principal Stockholder for use therein.
(c) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the State of Delaware, has,
and as of the Closing Date (as defined in Section 5 below) after giving
effect to the Reorganization, will have, the corporate power and authority
to own its property and to conduct its business as described in the
Prospectus and is, and as of the Closing Date after giving effect to the
Reorganization, will be, duly qualified to transact business and is, and as
of the Closing Date after giving effect to the Reorganization, will be, in
good standing in each jurisdiction in which the conduct of its business or
its ownership or leasing of property requires such qualification, except to
the extent that the failure to be so qualified or be in good standing would
not have a material adverse effect on the Company
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and its subsidiaries, taken as a whole, after giving effect to the
Reorganization.
(d) Each of the DK Companies that is a corporation has been, and as
of the Closing Date after giving effect to the Reorganization, will be,
duly incorporated, is, and as of the Closing Date after giving effect to
the Reorganization, will be, validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has, and
as of the Closing Date after giving effect to the Reorganization, will
have, the corporate power and authority to own its property and to conduct
its business as described in the Prospectus and is, and as of the Closing
Date after giving effect to the Reorganization, will be, duly qualified to
transact business and is, and as of the Closing Date after giving effect to
the Reorganization, will be in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be so
qualified or be in good standing would not have a material adverse effect
on the Company and its subsidiaries, taken as a whole, after giving effect
to the Reorganization.
(e) Each of the DK Companies that is a partnership has been, and as
of the Closing Date after giving effect to the Reorganization, will be,
duly formed and is, and as of the Closing Date after giving effect to the
Reorganization, will be, validly existing as a general partnership under
the laws of its jurisdiction of formation, with partnership power and
authority to carry on its business as it is currently being conducted and
to own, lease and operate its properties, and each of the DK Companies that
is a partnership is, and as of the Closing Date after giving effect to the
Reorganization, will be, duly qualified and is, and as of the Closing Date
after giving effect to the Reorganization, will be, in good standing as a
foreign partnership authorized to do business in each jurisdiction in which
the nature of its business or its ownership or leasing of property requires
such qualification, except where the failure to be so qualified would not
have a material adverse effect on the Company and its subsidiaries, taken
as a whole, after giving effect to the Reorganization.
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(f) This Agreement has been duly authorized, executed and delivered
by the Company and each of the DK Companies and the Reorganization
Documents have been duly authorized, executed and delivered by the Company.
(g) The authorized capital stock of the Company conforms as to legal
matters in all material respects to the description thereof contained in
the Prospectus.
(h) All of the outstanding shares of capital stock of each of the
corporate subsidiaries of the DK Companies and, after giving effect to the
Reorganization, the Company, have been duly authorized and validly issued
and are fully paid and non-assessable, and are owned by the DK Companies
and, as of the Closing Date after giving effect to the Reorganization,
will be owned, directly or indirectly, by the Company, free and clear of
any security interest, claim, lien, encumbrance or adverse interest of any
nature.
(i) The Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable, and the issuance of such Shares will
not be subject to any preemptive or similar rights.
(j) The execution and delivery by the Company and the DK Companies
of, and the performance by the Company and the DK Companies of their
respective obligations under, this Agreement and the Reorganization
Documents will not contravene any provision of applicable law, the
certificate of incorporation or by-laws of the Company or of the DK
Companies which are corporations or the partnership agreements of the DK
Companies which are partnerships or any agreement or other instrument
binding upon the Company, the DK Companies or any of their respective
subsidiaries that is material to the Company, the DK Companies and any of
their respective subsidiaries, taken as a whole, or any judgment, order or
decree of any governmental body, agency or court having jurisdiction over
the Company, the DK Companies or any of their respective subsidiaries, and
no consent, approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the Company
or the DK Companies of their respective obligations under this Agreement
and the Reorganization Documents, except such as have been obtained or as
may be required by the securities or Blue Sky laws of the various
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jurisdictions in connection with the offer and sale of the Shares and
except where such contravention or failure to obtain consents, approvals or
authorizations would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole, after giving effect to the
Reorganization.
(k) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company, the DK Companies and their respective
subsidiaries, taken as a whole, from that set forth in the Prospectus
(exclusive of any amendments or supplements thereto subsequent to the date
of this Agreement).
(l) There are no legal or governmental proceedings pending or, to the
knowledge of the Company and the DK Companies, threatened to which the
Company, the DK Companies or any of their respective subsidiaries is or
will be, as of the Closing Date after giving effect to the Reorganization,
a party or to which any of the properties of the Company, the DK Companies
or their respective subsidiaries is or will be, as of the Closing Date
after giving effect to the Reorganization, subject that are required to be
described in the Registration Statement or the Prospectus and are not so
described or any statutes, regulations, contracts or other documents that
are required to be described in the Registration Statement or the
Prospectus or to be filed as exhibits to the Registration Statement that
are not described or filed as required.
(m) Except as described in the Prospectus, the DK Companies and their
subsidiaries possess, and, as of the Closing Date after giving effect to
the Reorganization, the Company and its subsidiaries, will possess, all
certificates, authorizations and permits issued by the appropriate federal,
state, local or foreign regulatory authorities, necessary to conduct their
respective businesses as described in the Prospectus, except where failure
to possess such certificates, authorizations or permits would not have a
material adverse effect on the DK Companies and their subsidiaries, taken
as a whole, or the Company and its subsidiaries, taken as a whole, after
giving effect to the Reorganization, and none of the DK Companies, the
Company or any of their respective subsidiaries has received any notice of
proceedings relating to the
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revocation or any other modification of any such certificate, authorization
or permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a material adverse
change in the condition, financial or otherwise, or in the earnings,
business or operations of the DK Companies and their subsidiaries, taken as
a whole, or the Company and its subsidiaries, taken as a whole, after
giving effect to the Reorganization.
(n) Except as described in the Prospectus, all patents, patent
applications, trademarks, trademark applications, trade names, service
marks, copyrights, franchises and other intangible properties and assets
which are material to the Company and its subsidiaries, taken as a whole,
after giving effect to the Reorganization (all of the foregoing being
herein called "Intangibles") that the DK Companies and their subsidiaries
and Donna Karan, prior to giving effect to the Reorganization, and the
Company and its subsidiaries after giving effect to the Reorganization,
owns or has pending, or under which they are licensed, are in good standing
and uncontested and not subject to any liens or encumbrances or rights
thereto or therein by third parties, except where such failure to be so
licensed or in good standing as to such Intangible would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole, after giving effect to the Reorganization and other than the lien
granted pursuant to the Amended and Restated Credit Agreement dated as of
December 15, 1995, among The Donna Karan Company, The Donna Karan Company
Store, G.P., Donna Karan Studio, DK Footwear Partners, Citibank N.A.
("Citibank") and the other lenders party thereto, as amended (the "Credit
Agreement"), which shall be released at or prior to the Closing Date; and
the license agreement to be entered into by Donna Karan Studio and
Gabrielle Studio is properly described in the Prospectus in all material
respects. The trademarks and tradenames referred to in the Prospectus
under the heading "Business -- Trademarks" which are material to the
Company and its subsidiaries, taken as a whole, after giving effect to the
Reorganization (the "Licensed Marks"), are trademarks and tradenames used
by the DK Companies, their subsidiaries and their respective licensees and,
subsequent to the Reorganization, will be used by the Company, its
subsidiaries and their respective licensees to identify their products and
services and each such trademark and tradename, and any other material
trademark or tradename of the DK Companies, the Company or any of
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their respective subsidiaries, is the subject of application or
registrations in the name of Donna Karan or Gabrielle Studio on the
principal register in the United States Patent and Trademark Office or
protected by rights in the United States accorded Donna Karan or Gabrielle
Studio by virtue of common or civil law, as well as by validly issued and
existing registrations in the name of Donna Karan, The Donna Karan Company
(as nominee for Donna Karan) or Gabrielle Studio and rights accorded Donna
Karan, the DK Companies, the Company, The Donna Karan Company (as nominee
for Donna Karan) or Gabrielle Studio by virtue of common or civil law, in
all foreign jurisdictions in which the DK Companies, the Company or their
respective subsidiaries currently conduct their business, except such as
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole, after giving effect to the Reorganization.
The DK Companies, their subsidiaries and their respective licensees have
and as of the Closing Date after giving effect to the Reorganization, Donna
Karan Studio, its subsidiaries and their respective licensees will have,
the sole and exclusive right to use the Licensed Marks (except with regard
to certain rights retained by Donna Karan and as otherwise described in the
Prospectus) and any other material trademark or tradename of Donna Karan,
Gabrielle Studio, the DK Companies, the Company or their respective
subsidiaries, except such as would not have a material adverse effect on
the Company and its subsidiaries, taken as a whole, after giving effect to
the Reorganization, and there are no oppositions, cancellations or other
proceedings challenging such right of use, except such as would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole, after giving effect to the Reorganization. The Company has no
knowledge of any right under any Intangible necessary to the business of
the DK Companies, the Company or of any of their respective subsidiaries as
presently conducted or as the Prospectus indicates any of them contemplates
conducting that the DK Companies, the Company or such subsidiary do not own
or otherwise have the right to use, except such as would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole, after giving effect to the Reorganization. None of the DK
Companies, the Company or any of their respective subsidiaries has
infringed, is infringing, or has received notice of infringement with
respect to asserted Intangibles of others, except such as would not have a
material adverse effect on the Company and
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its subsidiaries, taken as a whole, after giving effect to
the Reorganization.
(o) Each preliminary prospectus filed as part of the registration
statement as originally filed or as part of any amendment thereto, or filed
pursuant to Rule 424 under the Securities Act, complied when so filed in all
material respects with the Securities Act and the applicable rules and
regulations of the Commission thereunder.
(p) None of the DK Companies or the Company is or, after giving effect
to the Reorganization and to the offering and sale of the Shares and the
application of the proceeds thereof as described in the Prospectus, will be an
"investment company" as such term is defined in the Investment Company Act of
1940, as amended.
(q) The DK Companies and their subsidiaries and, as of the Closing Date
after giving effect to Reorganization, the Company and its subsidiaries, (i)
are, or will be as of the Closing Date, in compliance with any and all
applicable foreign, federal, state and local laws and regulations relating to
the protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("Environmental Laws"),
(ii) have, or will have as of the Closing Date, received all permits, licenses
or other approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (iii) are, or will be as of the
Closing Date, in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or approvals
would not, singly or in the aggregate, have a material adverse effect on the
Company and its subsidiaries, taken as a whole, after giving effect to the
Reorganization.
(r) The predecessor combined financial statements and schedules of the
DK Companies and the Company (including the related notes) included in the
Registration Statement and the Prospectus fairly present with respect to the
Company the combined financial position, the combined results of operations
and the other information purported to be shown therein at the respective
dates and for the respective periods to which they apply. Such financial
statements and schedules (including the related notes) have been prepared in
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accordance with generally accepted accounting principles consistently applied
throughout the periods involved, and are in accordance with the books and
records of the Company and the DK Companies. The accountants, Ernst & Young
LLP, whose report(s) on the audited financial statements are filed with the
Commission as a part of the Registration Statement are, and during the periods
covered by their report(s) included in the Registration Statement and the
Prospectus were, independent certified public accountants with respect to the
Company and the DK Companies within the meaning of the Securities Act. No
other financial statements are required by the Securities Act to be included
in the Registration Statement or the Prospectus.
(s) The pro forma financial data of the Company included in the
Prospectus are based upon good faith estimates and assumptions believed by the
DK Companies and the Company to be reasonable and have been prepared in
accordance with the Securities Act (including Article 11 of Regulation S-X).
No other pro forma financial information is required by the Securities Act to
be included in the Registration Statement or the Prospectus.
(t) Except as described in the Prospectus, there are no contracts,
agreements or understandings between the DK Companies and any person or
between the Company and any person granting such person the right to require
the DK Companies or the Company to file a registration statement under the
Securities Act with respect to any securities of the DK Companies or the
Company or to require the DK Companies or the Company to include such
securities with the Shares registered pursuant to the Registration Statement.
(u) The DK Companies and the Company have complied with all provisions of
Section 517.075, Florida Statutes relating to doing business with the
Government of Cuba or with any person or affiliate located in Cuba.
(v) The DK Companies and each other person or entity that, together with
the DK Companies, is treated as a single employer under Section 414 of the
Internal Revenue Code of 1986, as amended (the "Code") (each such person or
entity being an "ERISA Affiliate"), complies, in all material respects with
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
and, to the extent applicable, the Code with respect to each pension plan (as
defined in Section 3(2) of ERISA) maintained by the DK Companies or such ERISA
Affiliate, and none of the DK Companies or any of their respective
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ERISA Affiliates has incurred any material liability to any pension plan or to
the Pension Benefit Guaranty Corporation that has not been fully paid as of
the date hereof.
(w) The representations and warranties of the Company and the DK
Companies set forth in Article II of the Contribution Agreement are true and
correct in all material respects. Except for consents required under the
Credit Agreement and as set forth in the Reorganization Documents, no other
action needs to be taken in order to effect the Reorganization. All
Reorganization Documents to be executed by the Company or the DK Companies
have been so executed and deposited with the Escrow Agent. The Reorganization
shall become effective prior to or simultaneously with the closing of the sale
of the Firm Shares to the Underwriters. The consummation of the
Reorganization complies in all material respects with the Securities Act and
the applicable rules and regulations of the Commission thereunder.
(x) The Company has all requisite power and authority to execute,
deliver and perform the trademark license agreement to be entered into between
such parties (the "License Agreement"). The License Agreement has been duly
authorized and, when executed and delivered by each of the parties thereto,
will be the legal, valid and binding obligation of the Company, enforceable as
to the Company in accordance with its terms, except as such enforcement may be
limited by bankruptcy, insolvency moratorium or similar laws affecting
creditors' rights and remedies generally. No consent of any party to any
contract, license, agreement, lease arrangement or understanding is required
for the execution, delivery or performance of the License Agreement by the
Company except such consents which have been obtained and are in full force
and effect; and the execution, delivery and performance of the License
Agreement by the Company will not violate, result in a breach of, conflict
with or entitle any party to terminate or call a default under any such
contract, license, agreement, lease arrangement or understanding.
2. REPRESENTATIONS AND WARRANTIES OF THE PRINCIPAL STOCKHOLDERS. (A)
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Each of the Principal Stockholders, severally as to herself, himself or itself,
represents and warrants to and agrees with each of the Underwriters that:
(a) Each Principal Stockholder hereby make the same representations and
warranties to the Underwriters as
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she, he or it makes in Article II of the Contribution Agreement, which section
is incorporated herein by reference.
(b) Except as set forth in the Reorganization Documents, no other action
needs to be taken by any of the Principal Stockholders in order to effect the
Reorganization.
(c) All Reorganization Documents to be executed by the Principal
Stockholders or any of their affiliated entities have been so executed and
deposited with the Escrow Agent. The Reorganization shall become effective
prior to or simultaneously with the closing of the sale of the Firm Shares to
the Underwriters.
(d) Each Principal Stockholder is familiar with the statements under the
captions "Reorganization," "Capitalization - Distributions" and "Certain
Relationships and Related Transactions - License Agreement for Principal
Trademarks" in the Prospectus and the statements relating to such Principal
Stockholder in the other parts of the Registration Statement. Such statements
do not contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make such
statements not misleading.
(e) Each Principal Stockholder is familiar with the Prospectus and has
(A) no reason to believe that the representations and warranties of the
Company and the DK Companies in Section 1 above are not accurate in all
material respects, (B) no knowledge of any material fact, condition or
information not disclosed in the Prospectus that has adversely affected or
should reasonably be expected to materially and adversely affect the business
of the DK Companies and their subsidiaries, taken as a whole, or of the
Company and its subsidiaries, taken as a whole, after giving effect to the
Reorganization, or (C) no reason to believe that the Prospectus contains any
untrue statement of a material fact or omits to state any material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(B) Each of Donna Karan, Stephan Weiss and Gabrielle Studio, in addition
to paragraph (A) above, represents and warrants to and agrees with each of the
Underwriters that:
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(a) Gabrielle Studio has all requisite power and authority to execute,
deliver and perform the License Agreement. The License Agreement has been
duly authorized, executed and delivered by and is the legal, valid and binding
obligation of Gabrielle Studio enforceable as to Gabrielle Studio in
accordance with its terms, except as enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or
other similar laws relating to or affecting enforcement of creditors' rights
generally, and except as enforcement thereof is subject to general principles
of equity (regardless of whether enforcement is considered in a proceeding in
equity or at law). No consent of any party to any material contract, license,
agreement, lease, arrangement or understanding to which Gabrielle Studio is a
party is required for the execution, delivery or performance by Gabrielle
Studio except such consents which have been obtained and are in full force and
effect; and the execution, delivery and performance of the License Agreement
by Gabrielle Studio will not violate, result in a breach of, conflict with or
entitle any party to terminate or call a default under any such material
contract, license, agreement, lease arrangement or understanding.
(b) The Licensed Marks are in good standing and uncontested and not
subject to any liens or encumbrances or rights thereto or therein by third
parties, except where such failure to be in good standing as to such Licensed
Marks would not have a material adverse effect on the Company or its
subsidiaries, taken as a whole, after giving effect to the Reorganization and
other than the lien granted pursuant to the Credit Agreement, which shall be
released at or prior to the Closing Date; and the license agreement to be
entered into by Donna Karan Studio and Gabrielle Studio is properly described
in the Prospectus in all material respects. The Licensed Marks are used by
the DK Companies, their subsidiaries and their respective licensees and,
subsequent to the Reorganization, will be used by the Company, its
subsidiaries and their respective licensees to identify their products and
services and each such trademark and tradename, and any other material
trademark or tradename of the DK Companies, the Company or any of their
respective subsidiaries, is the subject of application or registrations in the
name of Donna Karan or Gabrielle Studio on the principal register in the
United States Patent and Trademark Office or protected by rights in the United
States accorded Donna Karan or Gabrielle Studio by virtue of common or civil
law, as well as by validly issued and existing registrations in the name of
Donna
14
Karan, The Donna Karan Company (as nominee for Donna Karan) or Gabrielle
Studio and rights accorded Donna Karan, The Donna Karan Company (as nominee
for Donna Karan) or Gabrielle Studio by virtue of common or civil law, in all
foreign jurisdictions in which the DK Companies, the Company or their
respective subsidiaries currently conduct their business, except such as would
not have a material adverse effect on the Company and its subsidiaries, taken
as a whole, after giving effect to the Reorganization. The DK Companies,
their subsidiaries and their respective licensees have and as of the Closing
Date after giving effect to the Reorganization, Donna Karan Studio, its
subsidiaries and their respective licensees will have, the sole and exclusive
right to use the Licensed Marks (except with regard to certain rights retained
by Donna Karan and as otherwise described in the Prospectus) and any other
material trademark or tradename of Donna Karan, Gabrielle Studio, the DK
Companies, the Company or their respective subsidiaries, except such as would
not have a material adverse effect on the Company and its subsidiaries, taken
as a whole, after giving effect to the Reorganization, and there are no
oppositions, cancellations or other proceedings challenging such right of use
except such as would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole, after giving effect to the Reorganization
3. AGREEMENTS TO SELL AND PURCHASE. The Company hereby agrees to sell
-------------------------------
to the several Underwriters, and each Underwriter, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company the respective numbers of Firm Shares set forth in Schedule I or II
hereto opposite its name at $______ a share (the "Purchase Price").
On the basis of the representations and warranties contained in this
Agreement, and subject to its terms and conditions, the Company agrees to sell
to the U.S. Underwriters, and the U.S. Underwriters shall have a one-time right
to purchase, severally and not jointly, up to _______________ Additional Shares
at the Purchase Price. If you, on behalf of the U.S. Underwriters, elect to
exercise such option, you shall so notify the Company in writing not later than
30 days after the date of this Agreement, which notice shall specify the number
of Additional Shares to be purchased by the U.S. Underwriters and the date on
which such shares are to be purchased. Such date may be the same as the Closing
Date but not earlier than the Closing Date nor later than ten business days
after the date of such
15
notice. Additional Shares may be purchased as provided in Section 6 hereof
solely for the purpose of covering over-allotments made in connection with the
offering of the Firm Shares. If any Additional Shares are to be purchased, each
U.S. Underwriter agrees, severally and not jointly, to purchase from the Company
the number of Additional Shares (subject to such adjustments to eliminate
fractional shares as you may determine) that bears the same proportion to the
total number of Additional Shares to be sold as the number of U.S. Firm Shares
set forth in Schedule I hereto opposite the name of such U.S. Underwriter bears
to the total number of U.S. Firm Shares.
The Company and each Principal Stockholder hereby agrees that, without
the prior written consent of Morgan Stanley & Co. Incorporated on behalf of the
Underwriters, it will not, during the period ending 180 days after the date of
the Prospectus, (i) offer, pledge, sell, contract to sell, sell any option or
contract to purchase, purchase any option or contract to sell, grant any option,
right or warrant to purchase or otherwise transfer or dispose of, directly or
indirectly, any shares of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock (whether such shares or any such
securities are now owned by the undersigned or are hereafter acquired) or (ii)
enter into any swap or other arrangement that transfers to another, in whole or
in part, any of the economic consequences of ownership of the Common Stock,
whether any such transaction described in clause (i) or (ii) above is to be
settled by delivery of Common Stock or such other securities, in cash or
otherwise. The foregoing sentence shall not apply to (a) the sale of any Shares
to the Underwriters to be sold hereunder, (b) the transactions contemplated by
the Contribution Agreement and the Escrow Agreement, (c) the granting of options
under the Company's stock option plans in effect on the Closing Date or the
issuance of shares of Common Stock pursuant to the exercise of such options or
(d) bona fide gifts to persons or transfers to members of a Principal
Stockholder's family, (including spouse, parents, children and siblings) or
trusts for the benefit of any of such persons who agree in writing with the
Underwriters to be bound by the provisions of this paragraph.
4. TERMS OF PUBLIC OFFERING. The Company is advised by you that the
------------------------
Underwriters propose to make a public offering of the Shares as soon after the
Registration Statement and this Agreement have become effective as in your
judgment is advisable. The Company is further advised by you that the Shares
are to be offered to the public initially at $________ a share (the "Public
Offering Price")
16
and to certain dealers selected by you at a price that represents a concession
not in excess of $___ a share under the Public Offering Price, and that any
Underwriter may allow, and such dealers may reallow, a concession, not in excess
of $___ a share, to any Underwriter or to certain other dealers.
Each U.S. Underwriter hereby makes to and with the Company the
representations and agreements of such U.S. Underwriter contained in the fifth
and sixth paragraphs of Article III of the Agreement Between U.S. and
International Underwriters of even date herewith. Each International
Underwriter hereby makes to and with the Company the representations and
agreements of such International Underwriter contained in the seventh, eighth,
ninth and tenth paragraphs of Article III of such Agreement.
5. PAYMENT AND DELIVERY. Payment for the Firm Shares shall be made in
--------------------
federal or other funds immediately available in New York City against delivery
of such Firm Shares for the respective accounts of the several Underwriters at
the office of Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York
10017 at 9:30 A.M., local time, on ____________, 1996, or at such other time on
the same or such other date, not later than _________, 1996, as shall be
designated in writing by you. The time and date of such payment are hereinafter
referred to as the "Closing Date."
Payment for any Additional Shares to be sold by the Company shall be made
in federal or other funds immediately available in New York City against
delivery of such Additional Shares for the respective accounts of the several
U.S. Underwriters at the office of Davis Polk & Wardwell, 450 Lexington Avenue,
New York, New York at 9:30 A.M., local time, on the date specified in the notice
described in Section 3 or on such other date, in any event not later than
_________ 1996, as shall be designated in writing by you. The time and date of
such payment are hereinafter referred to as the "Option Closing Date."
Certificates for the Firm Shares and Additional Shares shall be in
definitive form and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date or the Option Closing Date, as the case may be. The certificates
evidencing the Firm Shares and Additional Shares shall be delivered to you on
the Closing Date or the Option Closing Date, as the case may be, for the
respective accounts of the several Underwriters, with any transfer taxes payable
in connection with the transfer of the Shares
17
to the Underwriters duly paid, against payment of the Purchase Price therefor.
6. CONDITIONS TO THE UNDERWRITERS' OBLIGATIONS. The obligations of the
-------------------------------------------
Company to sell the Shares to the Underwriters and the several obligations of
the Underwriters to purchase and pay for the Shares on the Closing Date are
subject to the condition that the Registration Statement shall have become
effective not later than 4:00 P.M. (New York City time) on the date hereof.
The several obligations of the Underwriters are subject to the following
further conditions:
(a) Subsequent to the execution and delivery of this Agreement and prior
to the Closing Date, there shall not have occurred any change, or any
development involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the DK Companies and
their subsidiaries, taken as a whole, or the Company and its subsidiaries,
taken as a whole, after giving effect to the Reorganization, from that set
forth in the Prospectus (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement) that, in your judgment, is material
and adverse and that makes it, in your judgment, impracticable to market the
Shares on the terms and in the manner contemplated in the Prospectus.
(b) The Underwriters shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of the
Company, to the effect set forth in clause (a) above and to the effect that
the representations and warranties of the Company and the DK Companies
contained in this Agreement are true and correct as of the Closing Date, and
that the Company and the DK Companies have complied with all of the agreements
and satisfied all of the conditions on their part to be performed or satisfied
hereunder on or before the Closing Date.
The officer signing and delivering such certificate may rely upon the best
of his or her knowledge as to proceedings threatened.
(c) The Underwriters shall have received on the Closing Date an opinion
of Proskauer Rose Goetz & Mendelsohn LLP, outside counsel for the Company and
the DK Companies, dated the Closing Date, in substantially the form of Exhibit
A hereto.
18
(d) The Underwriters shall have received on the Closing Date an opinion
of Phillips Nizer Benjamin Krim & Ballon LLP, special tax counsel for the
Company and the DK Companies, dated the Closing Date, in substantially the
form of Exhibit B hereto.
(e) The Underwriters shall have received on the Closing Date an opinion
of Cowan Leibowitz & Latman, special Intellectual Property counsel for the
Company, dated the Closing Date, in substantially the form of Exhibit C
hereto.
(f) The Underwriters shall have received on the Closing Date an opinion
of David Bressman, Esq., Vice President and General Counsel of the Company,
dated the Closing Date, in substantially the form of Exhibit D hereto.
(g) The Underwriters shall have received on the Closing Date, an opinion
of Werbel, McMillin & Carnelutti, a professional corporation, counsel for
Donna Karan, Stephan Weiss and Gabrielle Studio, dated the Closing Date, in
substantially the form of Exhibit E hereto.
(h) The Underwriters shall have received on the Closing Date, an opinion
of Paul, Hastings, Janofsky & Walker, counsel for Tomio Taki, Frank R. Mori,
Christopher Mori, Heather Mori and Takihyo Inc., dated the Closing Date, in
substantially the form of Exhibit F hereto.
(i) The Underwriters shall have received on the Closing Date an opinion
of Davis Polk & Wardwell, counsel for the Underwriters, dated the Closing
Date, covering the matters referred to in subparagraphs (ii) (but only as to
this Agreement), (v), (vii) (but only as to the statements in the Prospectus
under "Underwriters") and (xiv) of Exhibit A.
With respect to subparagraph (xiv) of Exhibit A, Proskauer Rose Goetz &
Mendelsohn LLP may state that their opinion and belief are based upon their
participation in the preparation of the Registration Statement and Prospectus
and any amendments or supplements thereto and review and discussion of the
contents thereof, but are without independent check or verification, except as
specified.
The opinion of Proskauer Rose Goetz & Mendelsohn LLP described in
paragraph (c), the opinion of Phillips Nizer
19
Benjamin Krim & Ballon LLP described in paragraph (d), the opinion of Cowen
Leibowitz & Latman described in paragraph (e), the opinion of David Bressman
described in paragraph (f), the opinion of Werbel, McMillin & Carnelutti
described in paragraph (g) and the opinion of Paul, Hastings, Janofsky &
Walker described in paragraph (h) above shall be rendered to the Underwriters
at the request of the Company and the DK Companies or the relevant Principal
Stockholders, as the case may be, and shall so state therein.
(j) The Underwriters shall have received, on each of the date hereof and
the Closing Date, a letter dated the date hereof or the Closing Date, as the
case may be, in form and substance satisfactory to the Underwriters, from
Ernst & Young LLP, independent public accountants, containing statements and
information of the type ordinarily included in accountants' "comfort letters"
to underwriters with respect to the financial statements and certain financial
information contained in the Registration Statement and the Prospectus;
provided that the letter delivered on the Closing Date shall use a "cut-off
--------
date" not earlier than the date hereof.
(k) The "lock-up" agreements, each substantially in the form of Exhibit
G hereto, between you and certain stockholders of the Company relating to
sales and certain other dispositions of shares of Common Stock or certain
other securities, delivered to you on or before the date hereof, shall be in
full force and effect on the Closing Date.
(l) The Shares shall have been approved for inclusion on the New York
Stock Exchange, subject to official notice of issuance.
(m) All documents, opinions or certificates required to be delivered on
or prior to the Closing Date pursuant to the Reorganization Documents shall
have been delivered and shall be in form and substance reasonably satisfactory
to the Underwriters, and all transactions contemplated pursuant to the
Reorganization Documents as described under the caption "Reorganization" in
the Prospectus shall have been consummated, including the distribution of all
Reorganization Documents pursuant to the Escrow Agreement, other than those
actions which are described in Article IV and Sections 1.2, 1.3(b) and 1.5 of
the Contribution Agreement which are to be consummated after the Closing Date.
20
(n) The License Agreement and the Employment Agreements (as defined in
the Glossary section of the Prospectus) shall have been executed by the
parties thereto prior to the Closing Date.
(o) Amendment No. 4 to the Credit Agreement shall have become effective.
The several obligations of the U.S. Underwriters to purchase Additional
Shares hereunder are subject to the delivery to the U.S. Representatives, on the
Option Closing Date of such documents as the U.S. Representatives may reasonably
request with respect to the good standing of the Company, the due authorization
and issuance of the Additional Shares and other matters related to the issuance
of the Additional Shares.
7. COVENANTS OF THE COMPANY AND THE PRINCIPAL STOCKHOLDERS. (A) In
-------------------------------------------------------
further consideration of the agreements of the Underwriters herein contained,
the Company covenants with each Underwriter as follows:
(a) To furnish to you, without charge, five
signed copies of the Registration Statement (including exhibits thereto) and
for delivery to each other Underwriter a conformed copy of the Registration
Statement (without exhibits thereto) and to furnish to you in New York City,
without charge, prior to 5:00 P.M. New York City time on the business day
following the date of this Agreement and during the period mentioned in
paragraph (c) below, as many copies of the Prospectus and any supplements and
amendments thereto or to the Registration Statement as you may reasonably
request.
(b) Before amending or supplementing the Registration Statement or the
Prospectus, to furnish to you a copy of each such proposed amendment or
supplement and not to file any such proposed amendment or supplement to which
you reasonably object, and to file with the Commission within the applicable
period specified in Rule 424(b) under the Securities Act any prospectus
required to be filed pursuant to such Rule.
(c) If, during such period after the first date of the public offering
of the Shares as in the opinion of counsel for the Underwriters the Prospectus
is required by law to be delivered in connection with sales by an Underwriter
or dealer, any event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Prospectus in order to make the
statements therein, in the light of the circumstances when the
21
Prospectus is delivered to a purchaser, not misleading, or if, in the opinion
of counsel for the Underwriters, it is necessary to amend or supplement the
Prospectus to comply with applicable law, forthwith to prepare, file with the
Commission and furnish, at its own expense, to the Underwriters and to the
dealers (whose names and addresses you will furnish to the Company) to which
Shares may have been sold by you on behalf of the Underwriters and to any
other dealers upon request, either amendments or supplements to the Prospectus
so that the statements in the Prospectus as so amended or supplemented will
not, in the light of the circumstances when the Prospectus is delivered to a
purchaser, be misleading or so that the Prospectus, as amended or
supplemented, will comply with law.
(d) To endeavor to qualify the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request; provided, however, that no such qualification shall be required in
-------- -------
any jurisdiction where, as a result thereof, the Company would be subject to
service of general process or to taxation as a foreign corporation doing
business in such jurisdiction.
(e) To make generally available to the Company's security holders and to
you as soon as practicable an earning statement covering the twelve-month
period ending ____________, 1997 that satisfies the provisions of Section
11(a) of the Securities Act and the rules and regulations of the Commission
thereunder.
(f) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of its obligations under this Agreement,
including: (i) the fees, disbursements and expenses of the Company's counsel,
the Company's accountants and the reasonable fees, disbursements and expenses
of the Principal Stockholders' counsel in connection with the registration and
delivery of the Shares under the Securities Act and all other fees or expenses
in connection with the preparation and filing of the Registration Statement,
any preliminary prospectus, the Prospectus and amendments and supplements to
any of the foregoing, including all printing costs associated therewith, and
the mailing and delivering of copies thereof to the Underwriters and dealers,
in the quantities hereinabove specified, (ii) all costs and expenses related
to the transfer and delivery of the Shares to the Underwriters, including any
transfer or
22
other taxes payable thereon, (iii) the cost of printing or producing any Blue
Sky or Legal Investment memorandum in connection with the offer and sale of
the Shares under securities laws of various states and other jurisdictions and
all expenses in connection with the qualification of the Shares for offer and
sale under state securities laws as provided in Section 7(d) hereof, including
filing fees and the reasonable fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with the
Blue Sky or Legal Investment memorandum not to exceed $20,000, (iv) all filing
fees and disbursements of counsel to the Underwriters incurred in connection
with the review and qualification of the offering of the Shares by the
National Association of Securities Dealers, Inc., (v) all fees and expenses in
connection with the preparation and filing of the registration statement on
Form 8-A relating to the Common Stock and all costs and expenses incident to
listing the Shares on the New York Stock Exchange, (vi) the cost of printing
certificates representing the Shares, (vii) the costs and charges of any
transfer agent, registrar or depositary, (viii) the costs and expenses of the
Company relating to investor presentations on any "road show" undertaken in
connection with the marketing of the offering of the Shares, including,
without limitation, expenses associated with the production of road show
slides and graphics, fees and expenses of any consultants engaged in
connection with the road show presentations with the prior written approval of
the Company, travel and lodging expenses of the representatives and officers
of the Company and any such consultants, and, with the prior written approval
of the Company, the cost of any aircraft chartered in connection with the road
show, (ix) all costs and expenses related to the Directed Share Program
incurred in connection with sales to individuals or entities located outside
the United States, and (x) all other costs and expenses incident to the
performance of the obligations of the Company hereunder for which provision is
not otherwise made in this Section. It is understood, however, that except as
provided in this Section 7(f), Section 8 and the last paragraph of Section 10
below, the Underwriters will pay all of their costs and expenses, including
fees and disbursements of their counsel, stock transfer taxes payable on
resale of any of the Shares by them and any advertising expenses connected
with any offers they may make.
(g) As soon as reasonably practicable following the Closing Date, make
all filings which are necessary or proper to validly record the transfer of
ownership of the Licensed Marks from Donna Karan to Gabrielle Studio in
23
each jurisdiction where any products bearing a Licensed Mark is marketed or
sold, except where the failure to file or record would not have a material
adverse effect on the Company or its subsidiaries, taken as a whole.
(B) In further consideration of the agreements of the Underwriters herein
contained, each Principal Stockholder covenants with each Underwriter to
cooperate with the other Principal Stockholders, the Company and the DK
Companies, to execute and deliver or cause to be delivered, all instruments,
including instruments of conveyance, assignment and transfer, and take all
actions consistent with the terms of the Reorganization Documents in order to
effectuate the Reorganization.
8. INDEMNITY AND CONTRIBUTION. (a) The Company and the DK Companies
--------------------------
jointly and severally agree to indemnify and hold harmless each Principal
Stockholder, each Underwriter and each person, if any, who controls any
Principal Stockholder or any Underwriter within the meaning of either Section 15
of the Securities Act or Section 20 of the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company or the DK Companies shall have furnished any
amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, except insofar as such
losses, claims, damages or liabilities are caused by any such untrue statement
or omission or alleged untrue statement or omission based upon information
relating to any Underwriter furnished to the Company or the DK Companies in
writing by such Underwriter expressly for use in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendments or supplements thereto;
provided, however, that the foregoing indemnity agreement with respect to any
-------- -------
preliminary prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting such losses, claims, damages or liabilities purchased
Shares, or any person controlling such Underwriter, if a copy of the Prospectus
(as then amended or supplemented if the Company or the DK Companies shall have
furnished any amendments or supplements thereto) was not sent or given by or on
behalf of such Underwriter to such
24
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the Prospectus (as
so amended or supplemented) would have cured the defect giving rise to such
losses, claims, damages or liabilities.
(b) Each of the Principal Stockholders (other than any member of the
Takihyo Group with respect to clause (y)(ii) below) severally agrees, as to
herself, himself or itself, to indemnify and hold harmless the directors of the
Company and the DK Companies (other than directors who are Principal
Stockholders), the officers of the Company and the DK Companies who sign the
Registration Statement, each Underwriter, and each person, if any, who controls
any Underwriter within the meaning of either Section 15 of the Securities Act or
Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, any legal or other
expenses reasonably incurred in connection with defending or investigating any
such action or claim) caused by any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement or any amendment
thereof, any preliminary prospectus or the Prospectus (as amended or
supplemented if the Company or the DK Companies shall have furnished any
amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, but only with reference
to (x) information relating to such Principal Stockholder furnished to the
Company or the DK Companies in writing by such Principal Stockholder expressly
for use in the Registration Statement, any preliminary prospectus, the
Prospectus or any amendments or supplements thereto, (y) information relating to
the statements set forth under the headings (i) "Reorganization,"
"Capitalization -- Distributions" and (ii) "Certain Relationships and Related
Transactions -- License Agreement for Principal Trademarks" in the Registration
Statement, or (z) any material breach of any representation, warranty, covenant
or agreement of such Principal Stockholder contained in this Agreement or the
Reorganization Documents. Notwithstanding the foregoing, the liability of each
Principal Stockholder under this Section 8(b) shall be limited to the aggregate
amount of the undistributed earnings previously allocated, represented by
subordinated promissory notes previously distributed, and subsequently paid out
of the proceeds of the offering to such Principal Stockholder plus all
consideration received directly or indirectly by such Principal Stockholder for
his, her or its interests in the DK Companies; provided, that in no event shall
--------
any member of the Takihyo Group be liable hereunder for an amount greater than
the maximum
25
amount for which any member of the Karan/Weiss Group may be liable hereunder;
provided, however, that the foregoing indemnity agreement with respect to any
-------- -------
preliminary prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting such losses, claims, damages or liabilities purchased
Shares, or any person controlling such Underwriter, if a copy of the Prospectus
(as then amended or supplemented if the Company or the DK Companies shall have
furnished any amendments or supplements thereto) was not sent or given by or on
behalf of such Underwriter to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the Shares to
such person, and if the Prospectus (as so amended or supplemented) would have
cured the defect giving rise to such losses, claims, damages or liabilities.
(c) Each Underwriter agrees, severally and not jointly, to indemnify and
hold harmless the Company, the DK Companies, their directors, their officers who
sign the Registration Statement, the Principal Stockholders and each person, if
any, who controls the Company or the DK Companies, within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange Act, to the same
extent as the indemnity from the Company, the DK Companies and the Principal
Stockholders to such Underwriter, but only with reference to information
relating to such Underwriter furnished to the Company or the DK Companies in
writing by such Underwriter expressly for use in the Registration Statement, any
preliminary prospectus, the Prospectus or any amendments or supplements thereto.
(d) In case any proceeding (including any governmental investigation)
shall be instituted involving any person in respect of which indemnity may be
sought pursuant to Section 8(a), (b) or (c), such person (the "indemnified
party") shall promptly notify the person against whom such indemnity may be
sought (the "indemnifying party") in writing, and the indemnifying party, upon
request of the indemnified party, shall retain counsel reasonably satisfactory
to the indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and
26
representation of both parties by the same counsel would be inappropriate due to
actual or potential differing interests between them. It is understood that the
indemnifying party shall not, in respect of the legal expenses of any
indemnified party in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the fees and expenses of more than one
separate firm (in addition to any local counsel) for all such indemnified
parties and that all such fees and expenses shall be reimbursed as they are
incurred. In the case of any such separate firm for the Underwriters and such
control persons of Underwriters, such firm shall be designated in writing by
Morgan Stanley & Co. Incorporated. In the case of any such separate firm for
the Company, the DK Companies, and such directors, officers and control persons
of the Company and the DK Companies, such firm shall be designated in writing by
the Company. In the case of any such separate firm for the Takihyo Group and
such control persons of the Takihyo Group, such firm shall be designated in
writing by Tomio Taki and Frank R. Mori. In the case of any such separate firm
for the Karan/Weiss Group and such control persons of the Karan/Weiss Group,
such firm shall be designated by Stephan Weiss. The indemnifying party shall
not be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened proceeding
in respect of which any indemnified party is or could have been a party and
indemnity could have been sought hereunder by such indemnified party, unless
such settlement includes an unconditional release of such indemnified party from
all liability on claims that are the subject matter of such proceeding.
(e) To the extent the indemnification provided for in Section 8 (a), (b)
or (c) is unavailable to an indemnified party or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then each
indemnifying party under such Section 8(a), (b) or (c), in lieu of indemnifying
such indemnified party thereunder, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages or
liabilities (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, the DK Companies, the Principal Stockholders
and the Underwriters from the offering of the Shares (including benefits to the
Principal Stockholders pursuant to the
27
Reorganization Documents) or (ii) if the allocation provided by clause (i) above
is not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above but also
the relative fault of the Company, the DK Companies, each of the Principal
Stockholders and of the Underwriters in connection with the statements or
omissions that resulted in such losses, claims, damages or liabilities, as well
as any other relevant equitable considerations. The relative benefits received
by the Company, the DK Companies, the Principal Stockholders and the
Underwriters in connection with the offering of the Shares shall be deemed to be
in the same respective proportions as the net proceeds from the offering of the
Shares (before deducting expenses, but after deducting underwriting discounts
and commissions received by the Underwriters) received by the Company, the DK
Companies, the Principal Stockholders (including benefits to the Principal
Stockholders pursuant to the Reorganization Documents) and the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover of the Prospectus, bear to the
aggregate Public Offering Price of the Shares; provided, that in no event shall
--------
the relative benefits received by the Takihyo Group be deemed to exceed the
relative benefits received by the Karan/Weiss Group. The relative fault of the
Company, the DK Companies, the Principal Stockholders and the Underwriters shall
be determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company, the DK
Companies, any of the Principal Stockholders or by the Underwriters and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Underwriters' respective
obligations to contribute pursuant to this Section 8(e) are several in
proportion to the respective number of Shares they have purchased hereunder, and
not joint. The Principal Stockholders' respective obligations to contribute
pursuant to this Section 8(e) are several and not joint.
(f) The Company, the DK Companies, the Principal Stockholders and the
Underwriters agree that it would not be just or equitable if contribution
pursuant to Section 8(e) were determined by pro rata allocation (even if the
--- ----
Underwriters were treated as one entity for such purpose) or by any other method
of allocation that does not take account of the equitable considerations
referred to in Section 8(e). The amount paid or payable by an indemnified party
as a result of the losses, claims, damages and liabilities referred to in the
immediately preceding paragraph shall be
28
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of Section 8(e), no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the Shares
underwritten by it and distributed to the public were offered to the public
exceeds the amount of any damages that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 8 are not
exclusive and shall not limit any rights or remedies which may otherwise be
available to any indemnified party at law or in equity.
(g) The indemnity and contribution provisions contained in this Section
8 and the representations, warranties and other statements of the Company, the
DK Companies and the Principal Stockholders contained in this Agreement shall
remain operative and in full force and effect regardless of (i) any termination
of this Agreement, (ii) any investigation made by or on behalf of any
Underwriter or any person controlling any Underwriter or by or on behalf of the
Company, the DK Companies, their officers or directors, the Principal
Stockholders or any person controlling the Company, the DK Companies, or any
Principal Stockholder and (iii) acceptance of and payment for any of the Shares.
9. TERMINATION. This Agreement shall be subject to termination by
-----------
notice given by you to the Company, if (a) after the execution and delivery of
this Agreement and prior to the Closing Date (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock Exchange, the American Stock Exchange, the National Association
of Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses (a)(i) through (iv), such
29
event, singly or together with any other such event, makes it, in your judgment,
impracticable to market the Shares on the terms and in the manner contemplated
in the Prospectus.
10. EFFECTIVENESS; DEFAULTING UNDERWRITERS. This Agreement shall become
--------------------------------------
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date or the Option Closing Date, as the case may be,
any one or more of the Underwriters shall fail or refuse to purchase Shares that
it has or they have agreed to purchase hereunder on such date, and the aggregate
number of Shares which such defaulting Underwriter or Underwriters agreed but
failed or refused to purchase is not more than one-tenth of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be
obligated severally in the proportions that the number of Firm Shares set forth
opposite their respective names in Schedules I and II bears to the aggregate
number of Firm Shares set forth opposite the names of all such non-defaulting
Underwriters, or in such other proportions as you may specify, to purchase the
Shares which such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date; provided that in no event shall the number of
--------
Shares that any Underwriter has agreed to purchase pursuant to this Agreement be
increased pursuant to this Section 10 by an amount in excess of one-ninth of
such number of Shares without the written consent of such Underwriter. If, on
the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased, and arrangements satisfactory to you and the Company for
the purchase of such Firm Shares are not made within 36 hours after such
default, this Agreement shall terminate without liability on the part of any
non-defaulting Underwriter or the Company. In any such case either you or the
Company shall have the right to postpone the Closing Date, but in no event for
longer than seven days, in order that the required changes, if any, in the
Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. If, on the Option Closing Date, any U.S.
Underwriter or U.S. Underwriters shall fail or refuse to purchase Additional
Shares and the aggregate number of Additional Shares with respect to which such
default occurs is more than one-tenth of the aggregate number of Additional
Shares to be purchased, the non-defaulting U.S. Underwriters shall have the
option to (i) terminate their obligation hereunder to purchase Additional Shares
or (ii) purchase not less than the number of Additional Shares that such non-
30
defaulting U.S. Underwriters would have been obligated to purchase in the
absence of such default. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
If this Agreement shall be terminated by the Underwriters, or any of
them, because of any failure or refusal on the part of the Company, the DK
Companies or the Principal Stockholders to comply with the terms or to fulfill
any of the conditions of this Agreement, or if for any reason the Company, the
DK Companies or the Principal Stockholders shall be unable to perform their
respective obligations under this Agreement, the Company or the DK Companies or
the Principal Stockholders who fail or refuse to comply with the terms and
conditions hereof will reimburse the Underwriters or such Underwriters as have
so terminated this Agreement with respect to themselves, severally, for all out-
of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Underwriters in connection with this Agreement or
the offering contemplated hereunder.
11. COUNTERPARTS. This Agreement may be signed in two or more
------------
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
12. APPLICABLE LAW. This Agreement shall be governed by and construed
--------------
in accordance with the internal laws of the State of New York.
13. HEADINGS. The headings of the sections of this Agreement have been
--------
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
31
Very truly yours,
DONNA KARAN INTERNATIONAL INC.
By_____________________________
Name:
Title:
THE DONNA KARAN COMPANY
By
its General Partner
By
its General Partner
By_____________________________
Name:
Title:
THE DONNA KARAN COMPANY STORE, G.P.
By
its General Partner
By
its General Partner
By_____________________________
Name:
Title:
32
DK FOOTWEAR PARTNERS
By
its General Partner
By
its General Partner
By_____________________________
Name:
Title:
DONNA KARAN STUDIO
By
its General Partner
By
its General Partner
By_____________________________
Name:
Title:
DSTF JAPAN COMPANY
By
its General Partner
By
its General Partner
By_____________________________
Name:
Title:
33
DONNA KARAN (H.K.) LIMITED
By_____________________________
Name:
Title:
GABRIELLE STUDIO, INC.
By
its General Partner
By
its General Partner
By_____________________________
Name:
Title:
TAKIHYO INC.
By_____________________________
Name: Frank R. Mori
Title: President
_______________________________
Donna Karan
________________________________
Stephan Weiss
34
THE TRUST UNDER TRUST AGREEMENT FOR
THE BENEFIT OF DONNA KARAN
By:_____________________________
Trustee: Stephan Weiss
THE TRUST UNDER TRUST AGREEMENT FOR
THE BENEFIT OF LISA WEISS KEYES,
COREY WEISS AND GABRIELLE KARAN
By:_____________________________
Trustee: Stephan Weiss
________________________________
Tomio Taki
_______________________________
Frank R. Mori
________________________________
Christopher Mori
________________________________
Heather Mori
35
Accepted as of the date hereof:
MORGAN STANLEY & CO. INCORPORATED
BEAR, STEARNS & CO. INC.
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
SMITH BARNEY INC.
Acting severally on behalf
of themselves and the
several U.S. Underwriters named
in Schedule I hereto.
By MORGAN STANLEY & CO.
INCORPORATED
By__________________________
Name:
Title:
MORGAN STANLEY & CO. INTERNATIONAL
LIMITED
BEAR, STEARNS INTERNATIONAL LIMITED
MERRILL LYNCH INTERNATIONAL
SMITH BARNEY INC.
Acting severally on behalf
of themselves and the
several International Underwriters
named in Schedule II hereto.
By MORGAN STANLEY & CO.
INTERNATIONAL LIMITED
By___________________________
Name:
Title:
36
SCHEDULE I
U.S. Underwriters
-----------------
Number of
Firm Shares
Underwriter To Be Purchased
----------- ---------------
Morgan Stanley & Co. Incorporated
Bear, Stearns & Co. Inc.
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
Smith Barney Inc.
[NAMES OF OTHER U.S. UNDERWRITERS]
Total U.S. Firm Shares ........ _______________
SCHEDULE II
International Underwriters
--------------------------
[Download Table]
Number of
---------------
Firm Shares
---------------
Underwriter To be Purchased
----------- ---------------
Morgan Stanley & Co. International Limited
Bear, Stearns International Limited
Merrill Lynch International
Smith Barney Inc.
[NAMES OF OTHER INTERNATIONAL UNDERWRITERS]
Total International Firm Shares..............
----------------
Exhibit A
[LETTERHEAD OF PROSKAUER ROSE]
------------------------------
(i) the Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in the jurisdictions
listed on Annex I hereto;
(ii) this Agreement has been duly authorized, executed and
delivered by the Company and the DK Companies and the Reorganization
Documents have been duly authorized, executed and delivered by the Company;
(iii) the authorized capital stock of the Company conforms as to legal
matters to the description thereof contained in the Prospectus;
(iv) all of the outstanding shares of capital stock of each of the
corporate subsidiaries of the Company have been duly authorized and validly
issued and are fully paid and non-assessable, and are owned, directly or
indirectly, by the Company, free and clear of any security interest, claim,
lien, encumbrance or adverse interest of any nature;
(v) the Shares have been duly authorized and, when issued and
delivered in accordance with the terms of this Agreement, will be validly
issued, fully paid and non-assessable, and the issuance of such Shares will
not be subject to any preemptive or similar rights;
(vi) the execution and delivery by the Company and the DK Companies
of, and the performance by the Company and the DK Companies of their
respective obligations under, this Agreement and the Reorganization
Documents will not contravene any provision of applicable law or the
certificate of incorporation or by-laws of the Company or the DK Companies
that are corporations or the partnership agreements of the DK Companies
that are partnerships or, to the best of such counsel's knowledge, any
agreement or other instrument binding upon the Company or any of its
subsidiaries that is filed as an
exhibit to the Registration Statement and that is material to the Company
and its subsidiaries, taken as a whole, or, to the best of such counsel's
knowledge, any judgment, order or decree of any governmental body, agency
or court having jurisdiction over the Company or any subsidiary, and no
consent, approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the Company
or the DK Companies of their respective obligations under this Agreement
and the Reorganization Documents, except such as have been obtained or as
may be required by the securities or Blue Sky laws of the various
jurisdictions in connection with the offer and sale of the Shares;
(vii) the statements (A) in the Prospectus under the captions "Risk
Factors -- Dependence on Key Personnel," "Risk Factors -- Dependence on
Licensed Trademarks," "Risk Factors -- Shares Eligible for Future Sale,"
"Management -- Compensation Arrangements," "Management -- Summary of 1996
Stock Option Plan," "Certain Relationships and Related Transactions,"
"Description of Capital Stock," "Shares Eligible for Future Sale" and
"Underwriters" and (B) in the Registration Statement in Items 14, in each
case insofar as such statements constitute summaries of the legal matters,
documents or proceedings referred to therein, fairly present the
information called for with respect to such legal matters, documents and
proceedings and fairly summarize the matters referred to therein;
(viii) after due inquiry, such counsel does not have actual knowledge of
any legal or governmental proceedings pending or threatened to which the
Company or any of its subsidiaries is a party or to which any of the
properties of the Company or any of its subsidiaries is subject that are
required to be described in the Registration Statement or the Prospectus
and are not so described or of any [statutes, regulations,]/1/ contracts or
other documents that are required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement that are not described or filed as required;
(ix) none of the DK Companies or the Company is or, after giving
effect to the offering and sale of the Shares and the application of the
proceeds thereof as described in the Prospectus, will be, an "investment
----------
/1/ We can delete this from the PRG&M opinion if we get the opinion from David
Bressman.
company" as such term is defined in the Investment Company Act of 1940, as
amended;
(x) except as described in the Prospectus, such counsel has no actual
knowledge, after due inquiry, of any contracts, agreements or
understandings between the Company and any person or between the DK
Companies and any person granting such person the right to require the
Company or the DK Companies to file a registration statement under the
Securities Act with respect to any securities of the Company or the DK
Companies or to require the Company or the DK Companies to include such
securities with the Shares registered pursuant to the Registration
Statement;
(xi) the Company has all requisite power and authority to execute,
deliver and perform the License Agreement. The License Agreement has been
duly authorized, executed and delivered by the Company and is the legal,
valid and binding obligation of the Company, enforceable as to the Company
in accordance with its terms except (i) as such enforcement may be limited
by bankruptcy, insolvency, reorganization, moratorium, fraudulent
conveyance or similar laws affecting creditors' rights and remedies
generally and (ii) as such enforcement may be limited by general principles
of equity, regardless of whether enforcement is sought in a proceeding at
law or in equity. No consent of any party to any contract, license,
agreement, lease arrangement or understanding known to such counsel and
filed as an exhibit to the Registration Statement is required for the
execution, delivery or performance of the License Agreement by the Company
except such consents which have been obtained and are in full force and
effect; and the execution, delivery and performance of the License
Agreement by the Company will not violate, result in a breach of, conflict
with or entitle any party to terminate or call a default under any such
contract, license, agreement, lease arrangement or understanding;
(xii) except as set forth in the Reorganization Documents, no other
action needs to be taken by the Company or the DK Companies in order to
effect the Reorganization in all material respects;
(xiii) the consummation of the Reorganization and the transactions
contemplated by the Reorganization Documents does not require registration
under the Securities Act and the applicable rules and regulations of the
Commission thereunder; and
(xiv) the Registration Statement and Prospectus (except for the
financial statements and schedules and other financial and statistical data
included therein as to which such counsel need not express any opinion)
comply as to form in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder.
Such counsel shall further state that it has participated in the
preparation of the Registration Statement and Prospectus and meetings with
members of management of the Company and its independent certified public
accountants, the DK Companies and the Principal Stockholders relating to
the Registration Statement and the Prospectus. Although such counsel need
not pass upon or assume any responsibility for the accuracy, completeness
or fullness of the information contained in the Registration Statement or
Prospectus (except as set forth in clause (vii) above), such counsel shall
state that nothing has come to its attention which has caused it to believe
that (except for the financial statements and schedules and other financial
and statistical data included therein or omitted therefrom as to which such
counsel need not express any belief) (A) the Registration Statement and the
prospectus included therein at the time the Registration Statement became
effective contained any untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make
the statements therein not misleading and (B) the Prospectus contains any
untrue statement of a material fact or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
Exhibit B
[LETTERHEAD OF PHILLIPS NIZER]
------------------------------
(i) the statements in the Prospectus under the captions
"Reorganization," "Capitalization -- Distributions" and "Certain
United States Federal Tax Consequences to Non-United States Holders of
Common Stock," in each case insofar as such statements constitute
summaries of the tax aspects of the legal matters or documents
referred to therein, fairly present the tax aspects of such legal
matters and documents.
Such counsel shall further state that it has participated in
conferences with officers and other representatives of the Company and
the DK Companies, Proskauer Rose Goetz & Mendelsohn LLP (counsel for
the Company and the DK Companies), Werbel, McMillin & Carnelutti, P.C.
(counsel for Donna Karan and Stephan Weiss), Paul, Hastings, Janofsky
& Walker (counsel for the Takihyo Group) and the Underwriters, at
which portions of the Registration Statement and the Prospectus and
related matters were discussed and although such counsel is not
passing upon, and does not assume responsibility for, the accuracy,
completeness or fairness of any portion of the Registration Statement
or the Prospectus, as amended or supplemented (except to the extent
specified in paragraph (i) above), nothing has come to its attention
that causes it to believe that, with respect to tax matters, the
Registration Statement and the Prospectus included therein at the time
the Registration Statement became effective contained an untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading, or that, with respect to tax matters, the
Prospectus contains an untrue statement of a material fact or omits to
state a material fact necessary to make the statements therein, in
light of the circumstances under which they were made, not misleading.
Exhibit C
LETTERHEAD OF COWAN LEIBOWITZ & LATMAN
--------------------------------------
(i) except as described in the Prospectus, all Intangibles which are
material to the Company and its subsidiaries, taken as a whole, that the
Company and its subsidiaries owns or has pending, or under which they are
licensed, are in good standing and uncontested and not subject to any liens
or encumbrances or rights thereto or therein by third parties, except where
failure to be so licensed or in good standing would not have a material
adverse effect on the Company and its subsidiaries, taken as a whole; and
the license agreement to be entered into by Donna Karan Studio and
Gabrielle Studio is properly described in the Prospectus in all material
respects. The Licensed Marks are trademarks and tradenames used by the
Company, its subsidiaries and their respective licensees to identify their
products and services and each such trademark and tradename, and any other
material trademark or tradename of the Company or any of its subsidiaries,
is the subject of application or registrations in the name of Donna Karan
or Gabrielle Studio on the principal register in the United States Patent
and Trademark Office or protected by rights in the United States accorded
Donna Karan or Gabrielle Studio by virtue of common or civil law, as well
as by validly issued and existing registrations in the name of Donna Karan,
The Donna Karan Company (as nominee for Donna Karan) or Gabrielle Studio
and rights accorded Donna Karan, The Donna Karan Company (as nominee for
Donna Karan) or Gabrielle Studio by virtue of common or civil law, in all
foreign jurisdictions in which the Company or its subsidiaries currently
conduct their business, except such as would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole. Donna Karan
Studio, its subsidiaries and their respective licensees have the sole and
exclusive right to use the Licensed Marks (except with regard to certain
rights retained by Donna Karan and as otherwise described in the
Prospectus) and any other material trademark or tradename of Donna Karan,
Gabrielle Studio, the Company or its subsidiaries, except such as would not
have a material adverse effect on the Company and its subsidiaries, taken
as a whole, and there are no oppositions, cancellations or other
proceedings challenging such right of use, except such as would not have a
material adverse effect on the Company and its subsidiaries, taken as a
whole. There is no right under any trademark or servicemark
necessary to the business of the Company or of any of its subsidiaries as
presently conducted or as the Prospectus indicates any of them contemplates
conducting that the Company or such subsidiary do not own or otherwise have
the right to use, except such as would not have a material adverse effect
on the Company and its subsidiaries, taken as a whole. Neither the Company
nor any of its subsidiaries has infringed, is infringing, or has received
notice of infringement with respect to asserted trademarks or servicemarks
of others, except such as would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
Such counsel shall further state that it has participated in conferences
with officers and other representatives of the Company and the DK Companies,
Proskauer Rose Goetz & Mendelsohn LLP (counsel for the Company and the DK
Companies) and Werbel, McMillin & Carnelutti, P.C. (counsel for Donna Karan
and Stephan Weiss), at which portions of the Registration Statement and the
Prospectus and related matters were discussed and although such counsel is not
passing upon, and does not assume responsibility for, the accuracy,
completeness or fairness of any portion of the Registration Statement or the
Prospectus, as amended or supplemented (except to the extent specified in
paragraph (i) above), nothing has come to its attention that causes it to
believe that, with respect to intellectual property matters, the Registration
Statement and the Prospectus included therein at the time the Registration
Statement became effective contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or that, with respect to
intellectual property matters, the Prospectus contains an untrue statement of
a material fact or omits to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.
Exhibit D
[LETTERHEAD OF THE COMPANY]
---------------------------
(i) each of the subsidiaries of the Company that is a corporation is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, has the corporate power and authority
to own its property and to conduct its business as described in the
Prospectus and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to
the extent that the failure to be so qualified or be in good standing
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole;
(ii) each of the subsidiaries of the Company that is a partnership
has been duly formed and is validly existing as a general partnership
under the laws of its jurisdiction of formation, with partnership power
and authority to carry on its business as described in the Prospectus,
and each of the subsidiaries of the Company that is a partnership is in
good standing as a foreign partnership authorized to do business in each
jurisdiction in which the nature of its business or its ownership or
leasing of property requires such qualification, except where the failure
to be so qualified would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole;
(iii) except as described in the Prospectus, the Company and its
subsidiaries possess all certificates, authorizations and permits issued
by the appropriate federal, state, local or foreign regulatory
authorities, necessary to conduct their respective businesses as
described in the Prospectus, except where failure to possess such
certificates, authorizations or permits would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole, and neither
the Company nor any of its subsidiaries has received any notice of
proceedings relating to the revocation or any other modification of any
such certificate, authorization or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in a material adverse change in the condition, financial or
otherwise, or in the earnings, business or operations of the Company and
its subsidiaries, taken as a whole;
(iv) the Company and its subsidiaries (A) are in compliance with any
and all applicable Environmental Laws, (B) have received all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses, and (C) are in
compliance with all terms and conditions of any such permit, license or
approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits, licenses
or approvals would not, singly or in the aggregate, have a material
adverse effect on the Company and its subsidiaries, taken as a whole; and
(v) the Company and each other person or entity that, together with
the Company, is treated as a single employer under Section 414 of the
Internal Revenue Code of 1986, as amended (the "Code") (each such person
or entity being an "ERISA Affiliate"), complies, in all material respects
with the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), and, to the extent applicable, the Code with respect to each
pension plan (as defined in Section 3(2) of ERISA) maintained by the
Company or such ERISA Affiliate, and none of the Company or any of their
respective ERISA Affiliates has incurred any material liability to any
pension plan or to the Pension Benefit Guaranty Corporation that has not
been fully paid as of the date hereof.
Exhibit E
[LETTERHEAD OF WERBEL, MCMILLIN & CARNELUTTI]
---------------------------------------------
(i) each of Donna Karan, Stephan Weiss and Gabrielle Studio, has all
requisite power and authority to execute, deliver and perform this
Agreement and the Reorganization Documents to which such person or entity
is a party. All necessary corporate proceedings of Gabrielle Studio have
been taken to authorize the execution, delivery and performance of this
Agreement and the Reorganization Documents to which it is a party. This
Agreement and the Reorganization Documents have been duly executed and
delivered by each of Donna Karan, Stephan Weiss and Gabrielle Studio, are
the legal, valid and binding obligations of each of Donna Karan, Stephan
Weiss and Gabrielle Studio, and are enforceable as to each of Donna
Karan, Stephan Weiss and Gabrielle Studio in accordance with their
respective terms (subject to applicable bankruptcy, insolvency and other
laws affecting the enforceability of creditors' rights generally and
general principles of equity). No consent, authorization, approval,
order, license, certificate or permit of or from or declaration or filing
with, any federal, state, local or other governmental authority or to the
knowledge of such counsel, after due inquiry, any court or other tribunal
is required by Donna Karan, Stephan Weiss or Gabrielle Studio for the
execution, delivery or performance of this Agreement or the
Reorganization Documents by Donna Karan, Stephan Weiss or Gabrielle
Studio, except such as have been obtained or as may be required by
securities or Blue Sky laws of the various jurisdictions in connection
with the offer and sale of the Shares. To our knowledge, after due
inquiry, no consent of any party to any material contract, agreement,
instrument, lease, license, arrangement or understanding known to such
counsel to which Donna Karan, Stephan Weiss or Gabrielle Studio is a
party, or to which any of her, his, or its properties or assets are
subject, is required for the execution, delivery or performance by Donna
Karan, Stephan Weiss or Gabrielle Studio of this Agreement or the
Reorganization Documents, except such consents which have been obtained
and are in full force and effect; and the execution, delivery, and
performance by Donna Karan, Stephan Weiss and Gabrielle Studio of this
Agreement and the Reorganization Documents will not violate,
result in a breach of, conflict with or (with or without the giving of
notice or the passage of time or both) entitle any party to terminate or
call a default under any such material contract, agreement, instrument,
lease, license, arrangement or understanding known to such counsel to
which Donna Karan, Stephan Weiss or Gabrielle Studio is a party, or
violate or result in a breach of any term of the partnership agreement of
Gabrielle Studio or violate, result in a breach of or conflict with any
law, rule, regulation, order, judgment or decree binding on Donna Karan,
Stephan Weiss or Gabrielle Studio or to which any of her, his or its
operations, businesses, properties or assets are subject, or result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of Donna Karan, Stephan Weiss or Gabrielle Studio;
(ii) each of Donna Karan, Stephan Weiss and Gabrielle Studio have
conveyed good and marketable title to the shares of the corporations and
the interests in the partnerships being transferred by them to the
Company in connection with the Reorganization, free and clear of all
liens, security interests, pledges, charges, encumbrances, stockholders'
agreements and voting trusts;
(iii) except as set forth in the Reorganization Documents, no other
action needs to be taken by Donna Karan, Stephan Weiss or Gabrielle
Studio in order to effect the Reorganization; and
(iv) to the knowledge of such counsel, there is no litigation,
arbitration, claim, governmental or other proceeding (formal or
informal), or investigation pending or threatened (or any basis therefor)
with respect to Donna Karan, Stephan Weiss or Gabrielle Studio which
would prohibit or delay the offering or the consummation of the
Reorganization.
Exhibit F
[LETTERHEAD OF PAUL, HASTINGS, JANOFSKY & WALKER]
-------------------------------------------------
(i) each of Tomio Taki, Frank R. Mori, Christopher Mori, Heather
Mori and Takihyo Inc. has all requisite power and authority to execute,
deliver and perform this Agreement and the Reorganization Documents to
which such person is a party. All necessary corporate proceedings of
Takihyo Inc. have been taken to authorize the execution, delivery and
performance of this Agreement and the Reorganization Documents to which
it is a party. This Agreement and the Reorganization Documents have been
duly authorized, executed and delivered by Tomio Taki, Frank R. Mori,
Christopher Mori, Heather Mori and Takihyo Inc., are the legal, valid and
binding obligations of Tomio Taki, Frank R. Mori, Christopher Mori,
Heather Mori and Takihyo Inc., and are enforceable as to Tomio Taki,
Frank R. Mori, Christopher Mori, Heather Mori and Takihyo Inc. in
accordance with their respective terms (subject to applicable bankruptcy,
insolvency and other laws affecting the enforceability of creditors'
rights generally and general principles of equity). No consent,
authorization, approval, order, license, certificate or permit of or from
or declaration or filing with, any federal, state, local or other
governmental authority or to our knowledge, after due inquiry, any court
or other tribunal is required by Tomio Taki, Frank R. Mori, Christopher
Mori, Heather Mori or Takihyo Inc. for the execution, delivery or
performance of this Agreement or the Reorganization Documents by Tomio
Taki, Frank R. Mori, Christopher Mori, Heather Mori or Takihyo Inc.,
except such as have been obtained or as may be required by securities or
Blue Sky laws of the various jurisdictions in connection with the offer
and sale of the Shares. To our knowledge, after due inquiry, no consent
of any party to any material contract, agreement, instrument, lease,
license, arrangement or understanding known to such counsel to which
Tomio Taki, Frank R. Mori, Christopher Mori, Heather Mori or Takihyo Inc.
is a party, or to which any of his, her or its properties or assets are
subject, is required for the execution, delivery or performance by Tomio
Taki, Frank R. Mori, Christopher Mori, Heather Mori and Takihyo Inc. of
this Agreement or the Reorganization Documents, except such consents
which have been obtained and are in full force
and effect; and the execution, delivery, and performance by Tomio Taki,
Frank R. Mori, Christopher Mori, Heather Mori and Takihyo Inc. of this
Agreement and the Reorganization Documents will not violate, result in a
breach of, conflict with or (with or without the giving of notice or the
passage of time or both) entitle any party to terminate or call a default
under any such material contract, agreement, instrument, lease, license,
arrangement or understanding known to such counsel, or to our knowledge
violate or result in a breach of the certificate of incorporation or by-
laws of Takihyo Inc., or to our knowledge violate, result in a breach of
or conflict with any law, rule, regulation, order, judgment or decree
binding on Tomio Taki, Frank R. Mori, Christopher Mori, Heather Mori or
Takihyo Inc., or to which any of his, her or its operations, businesses,
properties or assets are subject, or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of Tomio
Taki, Frank R. Mori, Christopher Mori, Heather Mori or Takihyo Inc.;
(ii) each of Tomio Taki, Frank R. Mori, Christopher Mori, Heather
Mori and Takihyo Inc. have conveyed good and marketable title to the
shares of the corporations and the interests in the partnerships being
transferred by them to the Company in connection with the Reorganization,
free and clear of all liens, security interests, pledges, charges,
encumbrances, stockholders' agreements and voting trusts;
(iii) except as set forth in the Reorganization Documents, no other
action needs to be taken by Tomio Taki, Frank R. Mori, Christopher Mori,
Heather Mori or Takihyo Inc. in order to effect the Reorganization; and
(iv) to our knowledge, there is no litigation, arbitration, claim,
governmental or other proceeding (formal or informal), or investigation
pending or threatened (or any basis therefor) with respect to Tomio Taki,
Frank R. Mori, Christopher Mori, Heather Mori or Takihyo Inc. which would
prohibit or delay the offering or the consummation of the Reorganization.
Exhibit G
[FORM OF LOCK-UP LETTER]
------------------------
____________, 1996
Morgan Stanley & Co. Incorporated
Bear, Stearns & Co. Inc.
Merrill Lynch, Pierce, Fenner
& Smith Incorporated
Smith Barney Inc.
As Representatives of the
Several U.S. Underwriters
Morgan Stanley & Co. International Limited
Bear, Stearns International Limited
Merrill Lynch International
Smith Barney Inc.
As Representatives of the
Several International Underwriters
c/o Morgan Stanley & Co. Incorporated
1585 Broadway
New York, NY 10036
Dear Sirs:
The undersigned understands that Morgan Stanley & Co. Incorporated
("Morgan Stanley"), as Representative of the several underwriters, proposes to
enter into an Underwriting Agreement (the "Underwriting Agreement") with Donna
Karan International Inc., a Delaware corporation (the "Company") providing for
the public offering (the "Public Offering") by the several underwriters,
including Morgan Stanley (the "Underwriters") of ___________ shares (the
"Shares") of the Common Stock ($.01 par value per share) of the Company (the
"Common Stock").
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned
hereby agrees that, without the prior written consent of Morgan Stanley on
behalf of the Underwriters, it will not, during the period commencing on the
date hereof and ending 180 days after the date of the final Prospectus relating
to the Public Offering (the "Prospectus"), (1) offer, pledge, sell, contract to
sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock (whether such shares or any such securities are now owned by the
undersigned or are hereafter acquired), or (2) enter into any swap or other
arrangement that transfers to another, in whole or in part, any of the economic
consequences of ownership of the Common Stock, whether any such transaction
described in clause (1) or (2) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise. The foregoing sentence
shall not apply to (i) the sale of any Shares to the Underwriters pursuant to
the Underwriting Agreement, (ii) the transactions contemplated by the
Contribution Agreement and the Escrow Agreement (as defined in the Underwriting
Agreement) or (iii) bona fide gifts to persons or transfers to members of the
undersigned's family, (including spouse, parents, children and siblings) or
trusts for the benefit of any of such persons who agree in writing with the
Underwriters to be bound by the provisions of this letter. In addition, the
undersigned agrees that, without the prior written consent of Morgan Stanley on
behalf of the Underwriters, it will not, during the period ending 180 days after
the date of the Prospectus, make any demand for or exercise any right with
respect to, the registration of any shares of Common Stock or any security
convertible into or exercisable or exchangeable for Common Stock.
Whether or not the Public Offering actually occurs depends on a number of
factors, including market conditions. Any Public Offering will only be made
pursuant to the Underwriting Agreement, the terms of which are subject to
Agreement between the Company and Underwriters.
Very truly yours,
_________________________
(Name)
_________________________
(Address)
Dates Referenced Herein and Documents Incorporated by Reference
| Referenced-On Page |
|---|
| This ‘S-1/A’ Filing | | Date | | First | | Last | | | Other Filings |
|---|
| |  |
| Filed on: | | 6/10/96 | | | | | | | None on these Dates |
| | 12/15/95 | | 9 |
| List all Filings |
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