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EXHIBIT 10.2
INTERCOMPANY SERVICES AGREEMENT
THIS INTERCOMPANY SERVICES AGREEMENT (this "Agreement") is effective as
of the 1st day of May, 1999 and is entered into by and between Perfumania, Inc.,
a Florida corporation ("Perfumania, Inc."), and xxxxxxxxxx.xxx, inc., a Florida
corporation ("xxxxxxxxxx.xxx").
RECITALS
A. xxxxxxxxxx.xxx is currently a wholly-owned subsidiary of
Perfumania, Inc. and obtains various corporate, administrative and other
services from Perfumania, Inc.;
B. xxxxxxxxxx.xxx is considering an initial public offering of
its common stock ("IPO");
C. After the IPO, xxxxxxxxxx.xxx desires to continue to obtain
various corporate, administrative and other services ("Services") from
Perfumania, Inc., and Perfumania, Inc. desires to continue to provide such
Services following the closing date of the IPO.
NOW THEREFORE, THE PARTIES HEREBY AGREE AS FOLLOWS:
SECTION 1. SERVICES.
Perfumania, Inc. or, at its option, its subsidiaries (other than
xxxxxxxxxx.xxx and its subsidiaries) shall render to xxxxxxxxxx.xxx the
following Services in accordance with the terms of this Agreement:
(a) CORPORATE SERVICES. Perfumania, Inc. shall provide, directly
or through its subsidiaries, the services described on Exhibit A hereto, at the
cost specified and on the other terms and conditions set forth on Exhibit A.
(b) FULFILLMENT SERVICES. Perfumania, Inc. shall provide, directly
or through its subsidiaries, the services described on Exhibit B hereto, at the
cost specified and on the other terms and conditions set forth on Exhibit B.
(c) INVENTORY SUPPLY SERVICES. xxxxxxxxxx.xxx shall have the right
to purchase from Perfumania, Inc., and Perfumania, Inc. shall sell goods to
xxxxxxxxxx.xxx for resale through xxxxxxxxxx.xxx's online store subject to the
terms of Exhibit C hereto.
(d) ADVERTISING SERVICES. Perfumania, Inc. shall provide, directly
or through its subsidiaries, the services described on Exhibit D hereto, at the
cost specified and on the other terms and conditions set forth on Exhibit D.
(e) SPACE SHARING. Perfumania, Inc. may make certain warehouse and
office space available to xxxxxxxxxx.xxx at the cost specified and the other
terms and conditions set forth on Exhibit E.
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(f) In the event that xxxxxxxxxx.xxx requires services that exceed
the scope or extent of the Services provided for herein, and if Perfumania, Inc.
agrees to provide such services, Perfumania, Inc. and xxxxxxxxxx.xxx shall
negotiate in good faith the terms and conditions, including price, under which
Perfumania, Inc. shall provide such Services; provided, however, that the fee
payable by xxxxxxxxxx.xxx for such Services shall be no less favorable to
xxxxxxxxxx.xxx than the charges for comparable services from unaffiliated third
parties.
SECTION 2. COMPENSATION.
xxxxxxxxxx.xxx shall pay to Perfumania, Inc. when due a fee for each of
the Services equal to the amount described in the appropriate Exhibit hereto
relating to such Service, provided that in the event xxxxxxxxxx.xxx terminates
any Service in accordance with Section 3 hereof, the fee for such Service shall
no longer be payable following the effective date of such termination. Late
payments shall accrue interest at a rate equal to the prime rate published in
the Wall Street Journal from time to time.
SECTION 3. TERMS.
(a) The term of this Agreement shall begin on the date of the
closing of the IPO (the "Effective Date") and shall continue for an indefinite
period in full force and effect until it is terminated in accordance with this
Section 3.
(b) Perfumania, Inc. shall have the right (but not the obligation)
to terminate immediately this Agreement:
(i) if xxxxxxxxxx.xxx is in material breach of any of its
obligations or representations hereunder, which breach is not cured
within twenty (20) days of receipt of written notice from Perfumania,
Inc. of such breach;
(ii) if xxxxxxxxxx.xxx files a voluntary petition in
bankruptcy or is the subject of any voluntary proceeding relating to
insolvency, receivership, liquidation, or composition for the benefit
of creditors, if such petition or proceeding is not dismissed within
sixty (60) days of filing, or becomes the subject of any involuntary
petition in bankruptcy or any involuntary proceeding relating to
insolvency, receivership, liquidation, or composition for the benefit
of creditors, if such petition or proceeding is not dismissed within
sixty (60) days of filing;
(iii) if the business of xxxxxxxxxx.xxx is liquidated or
otherwise terminated for insolvency or any other basis, or
(iv) if xxxxxxxxxx.xxx becomes insolvent or unable to pay its
debts as they mature or makes an assignment for the benefit of its
creditors.
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(c) xxxxxxxxxx.xxx shall have the right (but not the
obligation) to terminate immediately this Agreement:
(i) if Perfumania, Inc. is in material breach of
any of its obligations or representations hereunder, which breach is
not cured within twenty (20) days of receipt of written notice from
xxxxxxxxxx.xxx of such breach;
(ii) Perfumania, Inc. is the subject of a
voluntary petition in bankruptcy or any voluntary proceeding relating
to insolvency, receivership, liquidation, or composition for the
benefit of creditors, if such petition or proceeding is not dismissed
within sixty (60) days of filing, or becomes the subject of any
involuntary petition in bankruptcy or any involuntary proceeding
relating to insolvency, receivership, liquidation, or composition for
the benefit of creditors, if such petition or proceeding is not
dismissed within sixty (60) days of filing;
(iii) if the business of Perfumania, Inc. is
liquidated or otherwise terminated for insolvency or any other basis,
or
(iv) if Perfumania, Inc. becomes insolvent or
unable to pay its debts as they mature or makes an assignment for the
benefit of its creditors.
(d) Perfumania, Inc. shall have the right (but not the obligation)
to terminate this Agreement and the rights granted to xxxxxxxxxx.xxx hereunder,
upon one hundred twenty (120) days written notice to xxxxxxxxxx.xxx, following
the acquisition of the direct or beneficial ownership of 75% or more of the
voting power represented by the voting securities of xxxxxxxxxx.xxx by any
person other than Perfumania, Inc. or its affiliate. For purposes of this
Agreement, (i) the term "beneficial ownership" shall have the meaning set forth
in Section 13(d) of the Securities Act of 1933, as amended, and the rules and
regulations promulgated thereunder, and (ii) the term "voting securities" shall
mean the common stock of xxxxxxxxxx.xxx and any other securities issued by
xxxxxxxxxx.xxx having the power to vote in the election of directors of
xxxxxxxxxx.xxx, including without limitation any securities having such power
only upon the occurrence of a default or any other extraordinary contingency.
For purposes of this Section 3, an acquisition shall not include the acquisition
by a person of voting securities of xxxxxxxxxx.xxx pursuant to an involuntary
disposition by Perfumania, Inc. through foreclosure or similar event, but shall
include a subsequent acquisition of voting securities pursuant to a disposition
by the person that acquired the voting securities in such involuntary
disposition.
(e) A party may exercise its right to terminate pursuant to this
Section 3 by sending ninety (90) days prior written notice to the other party.
No exercise by a party of its rights under this Section 3 will limit its
remedies by reason of the other party's default, the party's rights to exercise
any other rights under this Section 3, or any of that party's other rights.
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SECTION 4. RECORDS AND ACCOUNTS.
Perfumania, Inc. shall maintain accurate books, records and accounts of
all transactions relating to the Services performed by it pursuant to this
Agreement. xxxxxxxxxx.xxx may, at its own expense, examine and copy those books
and records as provided in this Section 4. Such books, records and accounts
shall be maintained separately from Perfumania, Inc. own records and accounts
and shall reflect such information as would normally be examined by an
independent accountant in performing an audit pursuant to United States
generally accepted auditing standards for the purpose of certifying financial
statements, and to permit verification thereof by governmental agencies.
xxxxxxxxxx.xxx may make those examinations only during Perfumania, Inc. usual
business hours, and at the place where it keeps the books and records.
xxxxxxxxxx.xxx will be required to notify Perfumania, Inc. at least ten (10)
days before the date of planned examination. If xxxxxxxxxx.xxx examination is
not completed within two months from commencement, Perfumania, Inc. may require
xxxxxxxxxx.xxx to terminate it on seven (7) days prior written notice to
xxxxxxxxxx.xxx at any time, provided that Perfumania, Inc. has cooperated with
xxxxxxxxxx.xxx in the examination of such books and records.
SECTION 5. DIRECTORS AND OFFICERS OF PERFUMANIA, INC.
Nothing in this Agreement shall limit or restrict the right of any of
Perfumania, Inc. directors, officers or employees to engage in any other
business or devote their time and attention in part to the management or other
aspects of any other business, whether of a similar nature, or to limit or
restrict the right of Perfumania, Inc. to engage in any other business or to
render services of any kind to any corporation, firm, individual, trust or
association.
SECTION 6. INDEPENDENT CONTRACTOR.
Perfumania, Inc. is an independent contractor and when its employees
act under the terms of this Agreement, they shall be deemed at all times to be
under the supervision and responsibility of Perfumania, Inc.; and no person
employed by Perfumania, Inc. and acting under the terms of this Agreement shall
be deemed to be acting as agent or employee of xxxxxxxxxx.xxx or any customer of
xxxxxxxxxx.xxx for any purpose whatsoever.
SECTION 7. OTHER AGREEMENTS.
From time to time, xxxxxxxxxx.xxx may find it necessary or desirable
either to enter into agreements covering services of the type contemplated by
this Agreement to be provided by parties other than Perfumania, Inc. or to enter
into other agreements covering functions to be performed by Perfumania, Inc.
hereunder. Nothing in this Agreement shall be deemed to limit in any way the
right of xxxxxxxxxx.xxx to acquire such services from others or to enter into
such other agreements.
SECTION 8. CONFIDENTIALITY.
Perfumania, Inc. agrees to hold in strict confidence, and to use
reasonable efforts to cause its employees and representatives to hold in strict
confidence (a) all confidential information concerning xxxxxxxxxx.xxx furnished
to or obtained by Perfumania, Inc. in the course of
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providing the Services except to the extent that such information has been in
the public domain through no fault of Perfumania, Inc. (b) disclosure or release
is compelled by judicial or administrative process, or (c) in the opinion of
counsel to Perfumania, Inc., disclosure or release is necessary pursuant to
requirements of law or the requirements of any governmental entity including,
without limitation, disclosure requirements under the Securities Exchange Act of
1934, as amended.
SECTION 9. MISCELLANEOUS.
(a) Neither party may assign this Agreement, or their respective
rights and obligations hereunder, in whole or in part, without the other party's
prior written consent. Any attempt to assign this Agreement without such consent
shall be void and of no effect ab initio. Notwithstanding the foregoing, either
party may assign this Agreement or any of its rights and obligations hereunder
to any entity controlled by it or to any entity that acquires it by purchase of
stock or by merger or otherwise, or by obtaining substantially all of its assets
(a "Permitted Assignee"), provided that any such Permitted Assignee, or any
division thereof, thereafter succeeds to all of the rights and is subject to all
of the obligations of Perfumania, Inc. under this Agreement.
(b) This Agreement shall be governed by and construed in
accordance with the internal laws of the State of Florida applicable to
agreements made and to be performed entirely within such State, without regard
to the conflicts of law principles of such State.
(c) All legal proceedings brought in connection with this
Agreement shall be brought only in the state or federal court located within the
State of Florida
(d) If any provision of this Agreement (or any portion thereof) or
the application of any such provision (or any portion thereof) to any person or
circumstance shall be held invalid, illegal or unenforceable in any respect by a
court of competent jurisdiction, such invalidity, illegality or unenforceability
shall not affect any other provision hereof (or the remaining portion thereof)
or the application of such provision to any other persons or circumstances.
(e) All notices or other communications required or permitted to
be given hereunder shall be in writing and shall be delivered by hand or sent,
postage prepaid, by registered, certified or express mail or reputable overnight
courier service and shall be deemed given when so delivered by hand, or if
mailed, three days after mailing (one business day in the case of express mail
or overnight courier service), as follows:
(i) if to xxxxxxxxxx.xxx,
xxxxxxxxxx.xxx, inc.
00000 XX 000xx Xxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxxxxx Xxxxxx
President
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(ii) if to Perfumania, Inc.
Perfumania, Inc.
00000 XX 000xx Xxxx
Xxxxx, Xxxxxxx 00000
Attn: Xxxx Xxxxxx
Chief Executive Officer
(f) The provisions of Section 9 hereof shall survive any
termination of this Agreement.
(g) There is no relationship of partnership, joint venture,
employment, franchise, or agency between the parties. Neither party shall have
the power to bind the other or incur obligations on the other's behalf without
the other's prior written consent.
(h) No failure of either party to exercise or enforce any of its
rights under this Agreement shall act as a waiver of such right.
(i) This Agreement, along with the Exhibits hereto, contains the
entire agreement and understanding between the parties hereto with respect to
the subject matter hereof and supersedes all prior agreements and understandings
relating to such subject matter. Neither party shall be liable or bound to any
other party in any manner by any representations, warranties or covenants
relating to such subject matter except as specifically set forth herein.
(j) This Agreement may be executed in one or more counterparts,
all of which shall be considered one and the same agreement, and shall become
effective when one or more such counterparts have been signed by each of the
parties and delivered to each of the other parties.
(k) This Agreement may not be amended except by an instrument in
writing signed on behalf of each of the parties hereto; provided, however, that
as long as Perfumania, Inc. has direct or beneficial ownership of 25% or more of
the voting power represented by the voting securities of xxxxxxxxxx.xxx and no
other person directly or beneficially owns a greater percentage of such voting
power, no amendment of a material term or waiver of a material obligation of
this Agreement shall be valid unless it has been approved by a majority of the
members of the board of directors of xxxxxxxxxx.xxx, who are not directors or
officers of Perfumania, Inc. or the beneficial owners of five percent or more of
the outstanding voting securities of Perfumania, Inc.
(l) This Agreement is for the sole benefit of the parties hereto
and nothing herein expressed or implied shall give or be construed to give to
any person, other than the parties hereto any legal or equitable rights
hereunder.
(m) The headings contained in this Agreement or in any Exhibit
hereto are for reference purposes only and shall not affect in any way the
meaning or interpretation of this
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Agreement. All Exhibits annexed hereto or referred to herein are hereby
incorporated in and made a part of this Agreement as if set forth in full
herein. Any capitalized terms used in any Exhibit but not otherwise defined
therein, shall have the meaning as defined in this Agreement. When a reference
is made in this Agreement to a Section or an Exhibit, such reference shall be to
a Section of, or an Exhibit to, this Agreement unless otherwise indicated.
[SIGNATURE PAGE FOLLOWS]
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SIGNATURE PAGE TO INTERCOMPANY SERVICES AGREEMENT
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date set forth above.
Perfumania, Inc., a Florida corporation
By: /s/ Xxxx Xxxxxx
-----------------------------------------
Xxxx Xxxxxx
Chairman and Chief Executive Officer
xxxxxxxxxx.xxx, inc., a Florida corporation
By: /s/ Xxxxxxx Xxxxxx
-----------------------------------------
Xxxxxxx Xxxxxx
President
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EXHIBIT A
CORPORATE SERVICES
Perfumania, Inc. shall provide, by itself or through its subsidiaries,
the services described below.
(a) Scope of Services. All services currently provided by
Perfumania, Inc. and its subsidiaries to xxxxxxxxxx.xxx (other than the
Fulfillment Services described in Exhibit B), including, without limitation
merchandising, inventory management, creative, marketing, technical, human
resources, finance, accounting, administrative and legal services, as well as
services required by xxxxxxxxxx.xxx by virtue of its status as an issuer subject
to reporting requirements under the federal securities laws. Notwithstanding the
foregoing, the scope of services provided may not increase from one year to the
next.
(b) Quality of Services. At a level at least equal to the quality
of services being provided by Perfumania, Inc. to xxxxxxxxxx.xxx prior to the
effectiveness of the agreement.
(c) Price. xxxxxxxxxx.xxx shall pay a monthly fee as follows:
(i) if xxxxxxxxxx.xxx's gross sales for the
month are $50,000 or less, xxxxxxxxxx.xxx shall pay to Perfumania, Inc.
the sum of $10,000; and
(ii) if xxxxxxxxxx.xxx's gross sales for the
month exceed $50,000, xxxxxxxxxx.xxx shall pay to Perfumania, Inc. an
amount equal to $10,000 plus 2% of xxxxxxxxxx.xxx's gross sales.
(d) Payment and Accounting. Perfumania, Inc. shall invoice
xxxxxxxxxx.xxx within 30 days of the end of each month for services rendered in
such month. xxxxxxxxxx.xxx shall pay such invoice within 30 days of receipt.
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EXHIBIT B
FULFILLMENT SERVICES
Perfumania, Inc. shall provide, by itself or through its subsidiaries
the services described below.
(a) Scope of Services: Receiving, quality control, packing, and
shipping of inventory to customers.
(b) Consideration: xxxxxxxxxx.xxx shall pay Perfumania, Inc. a
fulfillment fee equal to 3% of all costs of goods sold by xxxxxxxxxx.xxx and
handled by Perfumania, Inc.
(c) Postage: xxxxxxxxxx.xxx shall be directly responsible for
third party shipping costs (e.g., USPS, FedEx, UPS).
(d) Quality of Services: At a level at least equal to the quality
of services being provided by Perfumania, Inc. to xxxxxxxxxx.xxx prior to the
effectiveness of the agreement.
(e) Payment and Accounting: Perfumania, Inc. shall invoice
xxxxxxxxxx.xxx within 30 days of the end of each month for services rendered in
such month. xxxxxxxxxx.xxx shall pay such invoice within 30 days of receipt.
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EXHIBIT C
INVENTORY SUPPLY SERVICES
xxxxxxxxxx.xxx may purchase inventory from Perfumania, Inc. and its
subsidiaries solely for resale on the following terms.
(a) Price: 105% multiplied by (the cost of goods + in-bound
freight + all other direct costs charged to Perfumania, Inc. by its supplier,
e.g., screening or labeling).
(b) Terms: Net thirty (30) days.
(c) Projections: xxxxxxxxxx.xxx will provide Perfumania, Inc.
twice-annually with its best projections of sales for the next six months,
broken down monthly by category. xxxxxxxxxx.xxx will update these projections
each month. Perfumania, Inc. will use best efforts to meet the anticipated
demand for Perfumania, Inc. inventory generated by xxxxxxxxxx.xxx in accordance
with the projections.
(d) Other: All vendor warranties with respect to inventory
purchased by xxxxxxxxxx.xxx hereunder are hereby assigned to xxxxxxxxxx.xxx.
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EXHIBIT D
ADVERTISING SERVICES
xxxxxxxxxx.xxx and Perfumania, Inc. agree as follows.
(a) Advertising: Upon xxxxxxxxxx.xxx's timely request, Perfumania,
Inc. shall permit xxxxxxxxxx.xxx to include any advertisement of, or reference
to, xxxxxxxxxx.xxx or its products, Web site or services in any print or media
advertisement purchased by or obtained by Perfumania, Inc. xxxxxxxxxx.xxx shall
have the right but not the obligation to jointly advertise with Perfumania, Inc.
(b) Price: xxxxxxxxxx.xxx shall pay Perfumania, Inc. as follows:
(i) If the joint advertisement or advertising
service only refers to or mentions xxxxxxxxxx.xxx or xxxxxxxxxx.xxx's
Web sites, xxxxxxxxxx.xxx shall pay to Perfumania, Inc. an amount equal
to 20% of the cost of the advertisement(s) or advertising services; and
(ii) If the content advertisement or advertising
services contain more than a mention of or reference to xxxxxxxxxx.xxx
or its Web sites, xxxxxxxxxx.xxx shall pay to Perfumania, Inc. an
amount equal to 50% of the cost of the advertisement(s) or advertising
services.
(c) Failure to Meet Minimum Performance Standards: In the event
Perfumania, Inc. delivers less than the Minimum Advertising Space,
xxxxxxxxxx.xxx shall be relieved of all obligations hereunder in that fiscal
year.
(d) Payment and Accounting: Perfumania, Inc. shall invoice
xxxxxxxxxx.xxx within 30 days of the end of each month for services rendered in
such month. xxxxxxxxxx.xxx shall pay such invoice within 30 days of receipt.
(e) Exclusivity: xxxxxxxxxx.xxx shall be the exclusive e-commerce
and Internet community advertiser in Perfumania, Inc. print and media
advertising.
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EXHIBIT E
SPACE SHARING
(a) License to Use Space. During the term of this Agreement,
Perfumania, Inc. shall permit xxxxxxxxxx.xxx to use a portion of Perfumania,
Inc. (or any of its subsidiaries') warehouse office ("Perfumania, Inc.
Premises") for the purposes permitted under the lease agreements pursuant to
which Perfumania, Inc. leases such space (to the extent such offices are
leased), subject to the terms and conditions set forth in this Agreement. The
space to be used by xxxxxxxxxx.xxx shall be as mutually agreed by the parties
from time to time. xxxxxxxxxx.xxx right to use a portion of Perfumania, Inc.
Premises shall terminate on the earlier of (i) 90 days after xxxxxxxxxx.xxx
notifies Perfumania, Inc. that xxxxxxxxxx.xxx no longer desires to use any
portion of Perfumania, Inc. Premises, or (ii) 90 days after Perfumania, Inc.
notifies xxxxxxxxxx.xxx that xxxxxxxxxx.xxx may no longer use any portion of
Perfumania, Inc. Premises.
(b) Consideration. So long as xxxxxxxxxx.xxx uses any portion of
Perfumania, Inc. Premises, xxxxxxxxxx.xxx shall pay to Perfumania, Inc. on the
first day of each calendar month an amount equal to 15% of all expenses related
to Perfumania, Inc. Premises (eg., Rent, CAM, Tax, Utilities). Payments for any
partial calendar month shall be prorated on a per diem basis.
(c) Compliance with Leases. xxxxxxxxxx.xxx hereby agrees not to
take any action or fail to take any action in connection with its use of any
portion of Perfumania, Inc. Premises, a result of which would be Perfumania,
Inc. violation of any of the terms and conditions of any lease or other
restriction on Perfumania, Inc. use of such Perfumania, Inc. Premises.
xxxxxxxxxx.xxx agrees to comply with the terms and provisions of any such leases
for Perfumania, Inc. Premises in which it uses.
