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SCHEDULE 13D
(RULE 13d-101)
Information to be Included in Statements Filed Pursuant to Rule 13d-1(a) and
Amendments Thereto Filed Pursuant to Rule 13d-2(a)
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
DONNA KARAN INTERNATIONAL INC.
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(Name of Issuer)
Common Stock, $0.01 Par Value
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(Title of Class of Securities)
257826107
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(CUSIP Number)
Louise Firestone, Esq.
LVMH Moet Hennessy Louis Vuitton Inc.
19 East 57th Street - Fifth Floor
New York, NY 10022
(212) 931-2707
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
Copies to:
Brack Ferrazzano Kirschbaum Perlman & Negelberg
333 West Wacker Drive - Suite 2700
Chicago, Illinois 60606
Attention: Peter J. Barack, Esq.
(312) 984-3101
and
Davis Polk & Wardwell
450 Lexington Avenue
New York, NY 10017
Attention: Paul Kingsley, Esq.
(212) 450-4000
July 13, 2001
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition which is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box / /.
Note: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Rule
13d-7(b) for other parties to whom copies are to be sent.
*The remainder of this cover page shall be filled out for a reporting
person's initial filing on this form with respect to the subject class of
securities, and for any subsequent amendment containing information which
would alter disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
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CUSIP NO. 257826107 13D PAGE 2 OF 6 PAGES
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1 NAMES OF REPORTING PERSONS/I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS
(ENTITIES ONLY)
LVMH Moet Hennessy Louis Vuitton S.A.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(See Instructions)
(a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS (See Instructions)
WC
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5 CHECK IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) OR 2(e) [ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
FRANCE
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7 SOLE VOTING POWER
NUMBER OF
215,000
SHARES -----------------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
10,952,272*
OWNED BY EACH -----------------------------------------------------------------
9 SOLE DISPOSITIVE POWER
REPORTING
215,000
PERSON -----------------------------------------------------------------
10 SHARED DISPOSITIVE POWER
WITH 10,952,272*
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
11,167,272
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES (See Instructions) [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
50.2%**
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14 TYPE OF REPORTING PERSON (See Instructions)
CO
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* INCLUDES 548,503 SHARES OF COMMON STOCK, $.01 PAR VALUE, OF DONNA
KARAN INTERNATIONAL INC. THAT LVMH MOET HENNESSY LOUIS VUITTON INC., A
DELAWARE CORPORATION AND THE MAJORITY-OWNED INDIRECT SUBSIDIARY OF THE
REPORTING PERSON, HAS CONDITIONALLY AGREED TO PURCHASE PURSUANT TO THE
LETTER AGREEMENT DATED JULY 13, 2001 ATTACHED AS EXHIBIT A TO THIS
AMENDMENT NO. 1 TO SCHEDULE 13D OF THE REPORTING PERSON. ALSO INCLUDES
10,403,769 SHARES OF COMMON STOCK THAT ARE SUBJECT TO VOTING AGREEMENTS
ATTACHED AS EXHIBITS TO THE SCHEDULE 13D FILED BY THE REPORTING PERSON ON
APRIL 10, 2001. THE REPORTING PERSON MAY BE DEEMED TO BENEFICIALLY OWN
SUCH SHARES. NEITHER THE FILING OF THIS AMENDMENT NO. 1 TO SCHEDULE 13D
NOR THE FILING OF THE SCHEDULE 13D ON APRIL 10, 2001 SHALL BE DEEMED AN
ADMISSION THAT THE REPORTING PERSON IS THE BENEFICIAL OWNER OF THE SHARES
SUBJECT TO THE VOTING AGREEMENTS.
** BASED UPON 22,266,483 SHARES OUTSTANDING AT MAY 1, 2001, AS REPRESENTED
BY DONNA KARAN INTERNATIONAL INC. IN ITS FORM 10-Q FOR THE QUARTERLY PERIOD
ENDED APRIL 1, 2001.
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ITEM 2. IDENTITY AND BACKGROUND.
The person filing this Amendment No. 1 to Schedule 13D of LVMH Moet Hennessy
Louis Vuitton S.A., a French societe anonyme ("LVMH"), filed April 10, 2001 (the
"Schedule 13D") is LVMH, whose principal business office is located at 30,
avenue Hoche, 75008 Paris, France. The business of LVMH is the ownership of
interests in companies in the luxury products and retail business, the auction
business and wines and spirits sectors. The names, addresses, occupations and
citizenship of the executive officers and directors of LVMH are set forth on
Annex A hereto.
LVMH owns 99.99% of Sofidiv S.A., a French societe anonyme ("Sofidiv SA"), whose
principal business office is located at 30, avenue Hoche, 75008 Paris, France.
The business of Sofidiv SA is the ownership of interests in, or the ownership of
interests in funds that invest in, companies principally active in the
distribution of luxury goods and other products. LVMH Moet Hennessy Louis
Vuitton Inc., a Delaware corporation ("LVMH Inc."), is a majority-owned
subsidiary of Sofidiv SA. The business of LVMH Inc. is the ownership of
interests in companies principally active in the luxury goods business and the
distribution of luxury products, outside of France. The names, addresses,
occupations and citizenship of the executive officers and directors of each of
Sofidiv SA and LVMH Inc. are set forth on Annex A hereto.
Montaigne Participations et Gestion, a French societe anonyme ("MPG"), whose
principal business office is located at 30, avenue Hoche, 75008 Paris, France,
indirectly controls LVMH. The principal business of MPG is the ownership of
interests in companies active in the luxury products and wine and spirits
sectors. MPG is itself indirectly controlled by M. Bernard Arnault (together
with certain members of his family). Mr. Arnault is Chairman of the Board of
Directors and Chief Executive Officer of each of LVMH and MPG. The names,
addresses, occupations and citizenship of the executive officers and directors
of MPG are set forth on Annex A hereto.
LVMH holds 215,000 shares of common stock, $.01 par value ("Common Stock"), of
Donna Karan International Inc., a Delaware corporation (the "Company"), through
Sofidiv SA.
LVMH acquired beneficial ownership of 548,503 shares of Common Stock owned
beneficially and of record by Mr. John Idol, former Chief Executive Officer of
the Company, through LVMH Inc. on July 13, 2001 when LVMH Inc. entered into a
letter agreement attached hereto as Exhibit A (the "Letter Agreement") with Mr.
Idol to purchase those shares on conditions described in Item 3 hereof. Because
LMVH's interest in the shares obtained through the Letter Agreement is
conditional, LVMH has no power to presently vote or dispose of the shares held
of record by Mr. Idol notwithstanding its beneficial ownership of such shares.
As a result of the Voting Agreements described in the Schedule 13D, LVMH may be
deemed to be a "group" with the Stockholders (as defined in the Schedule 13D)
within the meaning of Rule 13d-3 under the Act.
During the last five years, neither LVMH, nor, to the best of its knowledge, any
of Sofidiv SA, LVMH Inc. or MPG, or any of LVMH's, Sofidiv SA's, LVMH Inc.'s or
MPG's respective executive officers and directors listed on Annex A hereto (a)
has been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors), or (b) has been party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of such
proceeding was or is subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities law or a finding of any violation with respect to such laws.
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ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Pursuant to the Letter Agreement, LVMH Inc. has agreed to purchase at a price of
$4.875 per share the 548,503 shares of Common Stock owned by Mr. Idol on
November 15, 2001 in the event the merger (the "Merger") of the Company with and
into DKI Acquisition, Inc., a Delaware corporation and a direct subsidiary of
LVMH Inc. ("Acquisition Sub"), contemplated by the Merger Agreement filed as
Exhibit A to the Schedule 13D (the "Merger Agreement"), is not consummated by
such date. This purchase price per share was the closing price for the Common
Stock on December 15, 2000, the last full trading day before the public
announcement of LVMH Inc.'s initial offer to acquire the Company. In addition,
in the event the Merger is consummated pursuant to the Merger Agreement after
November 15, 2001, then LVMH Inc. or one of its affiliates is obligated to pay
to Mr. Idol an amount per share of Common Stock purchased by LVMH Inc. equal to
the difference between (i) the Merger Consideration (as defined in the Merger
Agreement) paid per share in connection with the Merger less (ii) $4.875. If
LVMH Inc. purchases Mr. Idol's shares pursuant to the Letter Agreement on
November 15, 2001, it expects to fund such purchase price out of its general
working capital. In addition, if LVMH Inc. or one or more of its affiliates is
required to pay the additional consideration to Mr. Idol as described in this
paragraph, it is expected that such amounts would be funded out of the general
working capital of LVMH Inc. or its affiliate paying such consideration.
ITEM 4. PURPOSE OF TRANSACTION.
LVMH Inc. entered into the Letter Agreement in connection with Mr. Idol's
resignation of his employment as Chief Executive Officer and a Director of the
Company effective as of July 13, 2001. (Mr. Idol is not resigning as an employee
of the Company and will continue to advise the Board of Directors of the Company
on transition matters until the earlier of November 15, 2001 and the
consummation of the Merger.) In connection with Mr. Idol's resignation, LVMH
Inc., the Company and Acquisition Sub have entered into an Amendment to
Agreement and Plan of Merger dated July 13, 2001 attached hereto as Exhibit B
(the "Merger Agreement Amendment"). Pursuant to the Merger Agreement Amendment,
LVMH Inc. and Acquisition Sub have consented to Mr. Idol's resignation and to
the appointment of Giuseppe Brusone, currently the Senior Vice President,
Acquisitions and Brand Development of the LVMH Fashion Group, as President and
Chief Executive Officer of the Company effective July 13, 2001. LVMH Inc. and
Acquisition Sub also have agreed to waive (i) any breaches of any representation
and warranty made by the Company and contained in the Merger Agreement of which
LVMH and/or Acquisition Sub has actual knowledge on July 13, 2001, (ii) any
breaches of any covenant or agreement made by the Company and contained in the
Merger Agreement of which LVMH or Acquisition Sub has actual knowledge on July
13, 2001, (iii) all rights and remedies that LVMH and Acquisition Sub may have
pursuant to the Merger Agreement as a result of any Material Adverse Effect (as
defined in the Merger Agreement) with respect to the Company, the facts with
respect thereto LVMH and/or Acquisition Sub has actual knowledge of on July 13,
2001, and (iv) any breaches by the Company of any covenant or agreement made by
the Company and contained in the Merger Agreement, occurring after July 13,
2001, other than breaches resulting from, giving effect to, arising out of or in
connection with resolutions, actions or decisions of the Company's Board of
Directors or Special Committee of the Board of Directors agreed to or undertaken
at any meeting (or by written consent) of the Company's Board of Directors or
Special Committee of the Board of Directors.
LVMH Inc. executed an additional letter agreement dated July 13, 2001 (the
"Royalties Deferral Letter Agreement") with the Company, Donna Karan Studio, a
wholly-owned subsidiary of the Company ("DKS"), Karma Acquisition, Inc., a
Delaware corporation and a wholly-owned subsidiary of LVMH Inc. ("Karma"), and
Gabrielle Studio, Inc., a New York corporation and a wholly-owned subsidiary of
Karma ("Gabrielle"), which is attached hereto as Exhibit C. Gabrielle licenses
the Donna Karan trademarks and sublicenses the Donna Karan name to DKS pursuant
to a certain Agreement dated as of July 3, 1996
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between Gabrielle and DKS ("License Agreement"). In the Royalties Deferral
Letter Agreement, LVMH agrees to defer payment of $6,251,712 of the sales
royalties payable to it for the Company's fiscal third quarter 2001 pursuant to
the License Agreement in the event the Merger is not consummated by November 15,
2001. This deferred portion of the sales royalties is due and payable in full
pursuant to the License Agreement no later than January 15, 2002, together with
interest from November 15, 2001 to the date of payment equal to the borrowing
rate then paid by DKS to its principal lending institution. The obligation of
DKS to pay the deferred portion of the sales royalties is guaranteed by the
Company.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
The aggregate number of shares of Common Stock owned beneficially by each person
listed in Item 2 hereof is as follows:
Name Number of Shares Percentage (1)
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LVMH Moet Hennessy Louis Vuitton S.A. 11,167,272 (2) 50.2%
LVMH Moet Hennessy Louis Vuitton Inc. 10,952,272 (3) 49.2%
Sofidiv S.A. 11,167,272 (4) 50.2%
Montaigne Participations et Gestion 11,167,272 (5) 50.2%
Bernard Arnault 11,167,272 (6) 50.2%
(1) Based upon 22,266,483 shares outstanding at May 1, 2001, as represented by
Donna Karan International Inc. in its Form 10-Q for the quarterly period
ended April 1, 2001.
(2) Includes (i) 215,000 shares of Common Stock held by Sofidiv SA, (ii)
548,503 shares of Common Stock that LVMH Inc. has conditionally agreed to
purchase pursuant to the Letter Agreement, and (iii) 10,403,769 shares of
Common Stock that are subject to Voting Agreements attached as exhibits to
the Schedule 13D. LVMH may be deemed to beneficially own the shares that
are subject to such Voting Agreements. Neither the filing of this Amendment
No. 1 to Schedule 13D nor the filing of the Schedule 13D shall be deemed an
admission that LVMH is the beneficial owner of such shares.
(3) Includes (i) 548,503 shares of Common Stock that LVMH Inc. has
conditionally agreed to purchase pursuant to the Letter Agreement, and (ii)
10,403,769 shares of Common Stock that are subject to Voting Agreements
attached as exhibits to the Schedule 13D. LVMH Inc. may be deemed to
beneficially own the shares that are subject to such Voting Agreements.
Neither the filing of this Amendment No. 1 to Schedule 13D nor the filing
of the Schedule 13D shall be deemed an admission that LVMH Inc. is the
beneficial owner of such shares.
(4) Includes (i) 215,000 shares of Common Stock held by Sofidiv SA, (ii)
548,503 shares of Common Stock that LVMH Inc. has conditionally agreed to
purchase pursuant to the Letter Agreement, and (iii) 10,403,769 shares of
Common Stock that are subject to Voting Agreements attached as exhibits to
the Schedule 13D. Sofidiv SA may be deemed to beneficially own the shares
that are subject to such Voting Agreements. Neither the filing of this
Amendment No. 1 to Schedule 13D nor the filing of the Schedule 13D shall be
deemed an admission that Sofidiv SA is the beneficial owner of such shares.
(5) Includes (i) 215,000 shares of Common Stock held by Sofidiv SA, (ii)
548,503 shares of Common Stock that LVMH Inc. has conditionally agreed to
purchase pursuant to the Letter Agreement, and (iii) 10,403,769 shares of
Common Stock that are subject to Voting Agreements attached as exhibits to
the Schedule 13D. MPG may be deemed to beneficially own the shares that are
subject to such Voting Agreements.
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Neither the filing of this Amendment No. 1 to Schedule 13D nor the filing
of the Schedule 13D shall be deemed an admission that MPG is the beneficial
owner of such shares.
(6) Includes (i) 215,000 shares of Common Stock held by Sofidiv SA, (ii)
548,503 shares of Common Stock that LVMH Inc. has conditionally agreed to
purchase pursuant to the Letter Agreement, and (iii) 10,403,769 shares of
Common Stock that are subject to Voting Agreements attached as exhibits to
the Schedule 13D. Mr. Arnault may be deemed to beneficially own the shares
that are subject to such Voting Agreements. Neither the filing of this
Amendment No. 1 to Schedule 13D nor the filing of the Schedule 13D shall be
deemed an admission that Mr. Arnault is the beneficial owner of such
shares.
Except as otherwise described in this Amendment No. 1 to Schedule 13D, the
Reporting Person has not effected any transaction in the shares of Common Stock
during the past 60 days.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO SECURITIES OF ISSUER.
Except for the agreements described in the Schedule 13D or this Amendment No. 1
to Schedule 13D, to the best knowledge of LVMH, there are no contracts,
arrangements, understandings or relationships (legal or otherwise) between LVMH
(or any of its affiliates) and any other person with respect to any securities
of the Company, including, but not limited to, the transfer or voting of any of
the securities, finder's fees, joint ventures, loans or option arrangements,
puts or calls, guarantees of profits, division of profits or loss, or the giving
or withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit A. Letter agreement dated July 13, 2001 between LVMH Moet Hennessy Louis
Vuitton Inc. and John Idol.
Exhibit B. Amendment to Agreement and Plan of Merger dated July 13, 2001 among
LVMH Moet Louis Vuitton Inc., DKI Acquisition, Inc. and Donna Karan
International Inc.
Exhibit C. Letter agreement dated July 13, 2001 among LVMH Moet Hennessy Louis
Vuitton Inc., Gabrielle Studio, Inc., Karma Acquisition, Inc., Donna Karan
International Inc. and Donna Karan Studio.
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SIGNATURES
After reasonable inquiry and to the best knowledge and belief of the
undersigned, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: July 16, 2001
LVMH MOET HENNESSY LOUIS VUITTON S.A.
By: /s/ Bernard Rolley
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Bernard Rolley
Operations EVP
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EXHIBIT A
July 13, 2001
John D. Idol
225 Elderfields Road
Manhasset, New York 11030
Dear John:
This letter will confirm certain agreements between you and LVMH Moet
Hennessy Louis Vuitton Inc. ("LVMH") regarding the anticipated termination of
your employment with Donna Karan International Inc. (the "Company") as Chief
Executive Office and Director and your continuing employment with the Company in
your capacity as an advisor to the Company's Board of Directors in connection
with certain transition matters, all effective as of July 13, 2001 (the
"Resignation").
In connection with the Resignation, in the event the merger (the
"Merger") contemplated under the Agreement and Plan of Merger dated as of March
31, 2001, among the Company, LVMH, and DKI Acquisition, Inc. (the "Merger
Agreement") is not consummated by November 15, 2001, LVMH hereby agrees to
purchase for cash, on November 15, 2001, 548,503 shares of common stock of DKI
owned by you (the "Shares"), free and clear of any and all claims, liens and
charges for a purchase price of $4.875 per Share. In the event the Merger is
consummated pursuant to the Merger Agreement after November 15, 2001, you shall
be entitled to receive from LVMH or one or more of its affiliates, within five
days of such consummation, an amount per Share equal to the difference between
(i) the Merger Consideration (as defined in the Merger Agreement) paid per share
in connection with the Merger, less (ii) $4.875. The obligation of LVMH to
purchase the Shares pursuant to this letter agreement shall be unconditional and
not dependent to any extent on the successful consummation of the Merger before
November 15, 2001.
This letter agreement may be executed in any number of identical
counterparts, any of which may contain the signatures of less than all parties,
and all of which together shall constitute a single agreement.
LVMH Moet Hennessy Louis Vuitton Inc.
By: /s/ Bruce G. Ingram
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Title: Senior Vice President
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Consented to as of the date first above
written by:
/s/ John D. Idol
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John D. Idol
cc: Arthur F. Woodard, Esq.
Peter J. Barack, Esq.
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EXHIBIT B
AMENDMENT TO AGREEMENT AND PLAN OF MERGER
THIS AMENDMENT TO AGREEMENT AND PLAN OF MERGER ("AMENDMENT") made this
July 13, 2001, by and among Donna Karan International Inc., a Delaware
corporation (the "COMPANY"), LVMH Moet Hennessy Louis Vuitton Inc., a Delaware
corporation ("LVMH"), and DKI Acquisition, Inc., a Delaware corporation and a
direct wholly-owned subsidiary of LVMH ("ACQUISITION SUB"),
W I T N E S S E T H: T H A T
WHEREAS, the Company, LVMH and Acquisition Sub have entered into that
certain Agreement and Plan of Merger dated as of March 31, 2001 (the "MERGER
AGREEMENT"), pursuant to which the Company will be merged with and into
Acquisition Sub (the "MERGER"), and
WHEREAS, the parties hereto desire to amend the Merger Agreement in
accordance with the terms and provisions set forth herein,
NOW THEREFORE, in consideration of the foregoing premises and the
mutual covenants hereinafter set forth, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:
1. RESIGNATION AND APPOINTMENT. Subject to the conditions set forth in
this Amendment, the Board of Directors of the Company has resolved to accept the
resignation of John Idol from all offices that he holds in the Company and its
subsidiaries (the "RESIGNATION"), including (without limitation) as Chief
Executive Officer and Director (except as provided by the letter agreement
between Mr. Idol and the Company of even date herewith with respect to such
resignation and his continued employment with the Company as an advisor to the
Company's Board of Directors in connection with certain transition matters). The
Company's Board of Directors has further resolved to appoint Giuseppe Brusone to
assume the role of President and Chief Executive Officer of the Company (the
"APPOINTMENT"), all effective as of July 13, 2001. LVMH and Acquisition Sub
hereby consent to the Resignation and the Appointment.
2. WAIVER. LVMH and Acquisition Sub hereby agree to waive (i) any
breaches of any representation and warranty made by the Company and contained in
the Merger Agreement of which LVMH and/or Acquisition Sub has actual knowledge
on the date hereof, which waiver is effective as of the date of execution of the
Merger Agreement and the Closing Date and all times in between, but all only to
the extent of the facts relating to such breach actually known at the date
hereof, (ii) any breaches of any covenant or agreement made by the Company and
contained in the Merger Agreement of which LVMH or Acquisition Sub has actual
knowledge on the date hereof, but all only to the extent of the facts relating
to such breach actually known at the date hereof, (iii) all rights and remedies
that LVMH and Acquisition Sub may have pursuant to the Merger Agreement as a
result of any Material Adverse Effect with respect to the Company, the facts
with respect thereto LVMH and/or Acquisition Sub has actual knowledge of on the
date hereof, but only to the extent of the facts relating to such Material
Adverse Effect actually known at the date hereof and (iv) any breaches by the
Company of any covenant or agreement made by the Company and contained in the
Merger Agreement, occurring after the date hereof, other than breaches resulting
from, giving effect to, arising out of or in connection with resolutions,
actions or decisions of the Company's Board of Directors or the Special
Committee agreed to or undertaken at any meeting (or by written consent) of the
Company's Board of Directors or the Special Committee. As used in this Section 2
of the Amendment, the words "actual knowledge" shall, with respect to LVMH and
Acquisition Sub, mean the actual knowledge of any of the following individuals:
Yves Carcelle, Giuseppe Brusone, Gary Parker and Bertrand Stalla-Bourdillon.
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3. PAYMENTS. LVMH acknowledges and agrees that the Company will pay,
and LVMH will not object to the payment by the Company of, (i) when due (after
the Closing), fees owed to John H. Eyler, Ann McLaughlin Korologos and Frank R.
Mori for their services as members of the Special Committee, totaling $150,000
in the aggregate, (ii) when due (after the Closing), $250,000 to William
Benedetto, representing the remainder of his fee for serving as chairman of the
Special Committee and (iii) upon consummation of the Merger, a success fee of
$275,000 to Mayer Brown & Platt (in addition to its customary hourly fees) and a
success fee of $400,000 to Proskauer Rose LLP (in addition to its customary
hourly fees), all provided, however, that (x) the total fees (including, without
limitation, the above success fees and all customary hourly fees) paid or
payable to the Company's and the Special Committee's outside legal counsel,
including, without limitation, the firms named herein, in connection with the
negotiation and consummation of the Merger (including, without limitation, all
fees paid in connection with any litigation relating to the Merger, any New York
Stock Exchange, Securities and Exchange Commission or other investigation
regarding trading in the Company's stock, and certain arrangements regarding the
terms of and benefits for certain of the Company's employees) for the period
commencing December 16, 2000 shall not exceed $2,500,000 in total, including
(without limitation) all such payments that have been made prior to the date
hereof to the Company's outside legal counsel, and (y) in this regard all such
fees (except for the above referenced success fees) shall be at the customary
hourly rates of such outside legal counsel.
4. TERMS OF EMPLOYMENT. Upon the Appointment, Mr. Brusone shall be
entitled to receive from the Company the salary and benefits summarized on
SCHEDULE 1 attached hereto. The Company and the Surviving Corporation in the
Merger shall indemnify and hold harmless, and provide advancement of expenses
to, Mr. Brusone at least to the same extent that the Company's other executive
officers are indemnified or have the right of advancement of expenses or to
conduct the defense of any claims, and to the fullest extent permitted by
applicable law.
5. EFFECT. All of the terms and conditions set forth in the Merger
Agreement shall remain in full force and effect, except to the extent otherwise
expressly set forth in this Amendment. This Amendment shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this Amendment,
express or implied, is intended to or shall confer upon any other Person any
other right, benefit or remedy of any nature whatsoever under or by reason of
this Amendment, other than SECTIONS 3 and 4, which are intended to be for the
benefit of the Persons covered thereby and may be enforced by such Persons.
6. MISCELLANEOUS. This Amendment shall be governed by and construed in
accordance with the laws of the State of New York, without reference to its
conflict of laws rules. This Amendment may be executed in any number of
identical counterparts, any of which may contain the signatures of less than all
parties, and all of which together shall constitute a single agreement. Except
as otherwise expressly defined herein, all capitalized terms used herein shall
have those meanings as set forth in the Merger Agreement.
7. OBLIGATIONS OF LVMH. LVMH S.A. shall cause each of LVMH, Acquisition
Sub and the Surviving Corporation to comply with all of its respective
obligations under this Amendment.
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IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
DONNA KARAN INTERNATIONAL INC.
By: /s/ M. William Benedetto
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Name: M. William Benedetto
Title: Director
LVMH MOET HENNESSY LOUIS VUITTON INC.
By: /s/ Bruce G. Ingram
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Name: Bruce G. Ingram
Title: Senior Vice President
DKI ACQUISITION, INC.
By: /s/ Bruce G. Ingram
----------------------------
Name: Bruce G. Ingram
Title: President
LVMH S.A. hereby accepts and agrees to SECTION 7 of this Amendment and
acknowledges that the Company (and, if any breach of SECTION 7 relates to
SECTION 3 or SECTION 4 of this Amendment, any Person who may enforce SECTION 3
or SECTION 4, as the case may be, pursuant to SECTION 5 of this Amendment) may
proceed directly against LVMH S.A. in the event of any breach of SECTION 7.
LVMH MOET HENNESSY LOUIS VUITTON S.A.
By: /s/ Bernard Rolley
---------------------------
Name: Bernard Rolley
Title: Operations EVP
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EXHIBIT C
July 13, 2001
Donna Karan Studio
Donna Karan International Inc.
550 Seventh Avenue
New York, New York 10018
Dear Ladies and Gentlemen:
Reference is made to the License Agreement dated as of July 3, 1996 (as
amended, the "License Agreement") among Gabrielle Studio, Inc. ("GS") and Donna
Karan Studio ("DKS"). Reference is also made to the Assignment made as of March
31, 2001 between GS and Karma Acquisition, Inc. ("Karma"), pursuant to which GS
assigned to Karma the right to receive certain Sales Royalty payments under the
License Agreement (the "First Assignment"), and the Assignment made as of March
31, 2001 between Karma and LVMH Moet Hennessy Louis Vuitton Inc. ("LVMH"),
pursuant to which Karma assigned to LVMH the right to receive such Sales Royalty
payments (the "Second Assignment"). Capitalized terms used but not defined in
this letter shall have the meaning given to them in the License Agreement.
In connection with the termination of John Idol's employment with Donna
Karan International Inc. (the "Company") as Chief Executive Officer and Director
and his continued employment with the Company as an advisor to the Company's
Board of Directors in connection with certain transition matters, all as
effective as of July 13, 2001, and the payment obligations of the Company
pursuant to the letter of even date herewith between Mr. Idol and the Company,
in the event the merger contemplated by the Agreement and Plan of Merger dated
as of March 31, 2001 among LVMH, the Company and DKI Acquisition, Inc. is not
consummated by November 15, 2001, LVMH hereby agrees to defer payment of that
portion of the Sales Royalty, payable to LVMH pursuant to the First Assignment
and the Second Assignment, with respect to the third quarter of 2001 equal to
$6,251,712 (the "Deferred Portion"); provided that the full amount of such Sales
Royalty for such third quarter over and above the Deferred Portion shall be due
and payable to LVMH on November 15, 2001; and provided, further, that the
Deferred Portion shall be due and payable in full pursuant to the License
Agreement no later than January 15, 2002, together with interest from November
15, 2001 to the date of payment equal to the borrowing rate then paid by DKS to
its principal lending institution. The obligation of DKS to pay the Deferred
Portion shall be guaranteed by the Company pursuant to the form of Guaranty
attached to this letter agreement as Exhibit A.
All of the terms and conditions set forth in the License Agreement, the
First Assignment and the Second Assignment shall remain in full force and
effect, except to the extent otherwise expressly set
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forth herein. This letter agreement may be executed in any number of identical
counterparts, any of which may contain the signatures of less than all parties,
and all of which together shall constitute a single agreement.
LVMH Moet Hennessy Louis Vuitton Inc.
By: /s/ Bruce G. Ingram
-------------------------------
Title: Senior Vice President
-------------------------------
Gabrielle Studio, Inc.
By: /s/ Louise Firestone
-------------------------------
Title: Vice President
-------------------------------
Karma Acquisition, Inc.
By: /s/ Bruce G. Ingram
-------------------------------
Title: Senior Vice President
-------------------------------
Agreed to as of the date first
above written by:
Donna Karan Studio
By: /s/ M. William Benedetto
-----------------------------------
Title: Authorized Signatory
-----------------------------------
Donna Karan International Inc.
By: /s/ M. William Benedetto
-----------------------------------
Title: Director
-----------------------------------
cc: Arnold S. Jacobs, Esq.
Peter J. Barack, Esq.
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ANNEX A
DIRECTORS AND EXECUTIVE OFFICERS
The names of the members of the boards of directors and Executive Officers of
LVMH, MPG, LVMH Inc. and Sofidiv SA and their present principal occupations
are set forth below. Unless otherwise indicated, each individual is a citizen of
the French Republic and the business address of each person is the address of
the respective company with which such person is associated.
1. LVMH MOET HENNESSY LOUIS VUITTON S.A.
30, avenue Hoche
75008 Paris France
NAME AND POSITION HELD PRINCIPAL OCCUPATIONS
Bernard Arnault Chairman and CEO of LVMH,
- Director; Chairman and CEO Chairman and CEO of Christian Dior S.A.
- Executive Committee member
Antoine Bernheim Partner of Lazard, LLC, Wilmington
- Director; Vice-Chairman
Jean Arnault Director of Financiere Agache
- Director
Nicolas Bazire Managing Director, Groupe Arnault S.A.
- Director
- Executive Committee member, Development
and Acquisitions
Nicholas Clive Worms Chairman of the Supervisory Board of
- Director Worms & Cie, Paris
Michael Francois-Poncet Vice-Chairman of BNP-Paribas, Paris
- Director
Albert Frere Chairman and CEO of Frere-Bourgeois
- Director Loverval (Belgique)
Belgian Citizen
Pierre Gode Chairman and CEO of Financiere Agache, Paris
- Director Member of the Executive Board of LVMH
- Executive Committee member, Advisor to Fashion Group, Paris
the Chairman and CEO
Cornelius van Der Hoeven Chairman and CEO of Royal Ahold
- Director Netherlands
Dutch citizen
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Gilles Hennessy Member of the Executive Board of JA
- Director Hennessy & Co., Cognac
(France)
Jean Peyrelevade Chairman and CEO of Credit Lyonnais
- Director
Jean-Marie Messier Chairman and CEO of Vivendi
- Director Universal, Paris
Lord Powell of Bayswater Director of Matheson & Co. Ltd.
- Director London
British citizen
Antonio Belloni COO of LVMH
- Executive Committee Member, Operations
Italian citizen
Edward Brennan CEO of DFS
- Executive Committee member, DFS
Yves Carcelle Chairman of the Executive Board of
- Executive Committee member, Fashion LVMH Fashion Group, Paris
and Leather Goods
Patrick Choel Senior Vice-President of LVMH
- Executive Committee member, Fragrances
and Cosmetics
Patrick Houel CFO of LVMH
- Executive Committee member, Finance
Concetta Lanciaux Senior Vice President of LVMH, Human Resources
- Executive Committee member, Human Resources
Pierre Letzelter Senior Vice President of LVMH
- Executive Committee member, Selective
Distribution Group
Christophe Navarre Senior Vice President of LVMH
- Executive Committee member, Wines and Spirits
Philippe Pascal Senior Vice President of LVMH
- Executive Committee member, Watches and Jewelry
Daniel Piette Senior Vice President of LVMH
- Executive Committee member, LV Capital
Bernard Rolley Senior Vice President of LVMH
- Executive Committee member, Operations
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Myron Ullman Group Managing Director of LVMH
- Executive Committee member, Group Managing President of LVMH Inc.
Director
- U.S. citizen
2. MONTAIGNE PARTICIPATIONS ET GESTION
30, avenue Hoche
75008 Paris France
NAME AND POSITION HELD PRINCIPAL OCCUPATIONS
Bernard Arnault Chairman and CEO of LVMH
- Chairman and CEO Chairman and CEO of Christian Dior S.A.
Jean Arnault Director of Financiere Agache
- Director
Nicolas Bazire Managing Director, Groupe Arnault S.A.
Jean-Paul Amiel
Pierre Gode Chairman and CEO of Financiere Agache,
Paris
Member of the Executive Board of LVMH
Fashion Group, Paris
Lord Powell of Bayswater Director of Matheson & Co. Ltd., London
3. LVMH MOET HENNESSY LOUIS VUITTON INC.
19 East 57th Street, Fifth Floor
New York, New York 10022
NAME AND POSITION HELD PRINCIPAL OCCUPATIONS
Pierre Gode Member of the Executive Board of LVMH
- Director Fashion Group, Paris
- President Chairman and CEO of Financiere Agache, Paris
Patrick Houel CFO of LVMH
- Director
Bernard Rolley Senior Vice President of LVMH Inc.
- Director
Myron Ullman President of LVMH Inc.
- Executive Officer Group Managing Director of LVMH
- U.S. citizen
Bruce G. Ingram Senior Vice President and CFO of LVMH Inc.
- Executive Officer
- U.S. citizen
Louise Firestone Vice President, Legal Affairs, of LVMH Inc.
- Executive Officer
- U.S. citizen
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Michael T. Folkman Vice President, Taxes, of LVMH Inc.
- Executive Officer
- U.S. citizen
Felix Rohatyn Vice President of LVMH Inc.
- Executive Officer
- U.S. citizen
Marion Vidalenche Vice President, Finance, of LVMH Inc.
- Executive Officer
- U.S. citizen
4. SOFIDIV S.A.
30, avenue Hoche
75008 Paris France
NAME AND POSITION HELD PRINCIPAL OCCUPATIONS
Patrick Houel CFO of LVMH
- Director; Chairman and CEO
Pierre Gode Chairman and CEO of Financiere Agache, Paris
- Director Member of the Executive Board of LVMH
Fashion Group, Paris
Daniel Piette Senior Vice President of LVMH
- Director
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