UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-K
(Mark one)
x
Annual Report pursuant
to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the fiscal year ended
December 31, 2014
or
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Transition
Report pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
For the transition period from
to
.
Commission file no.
0-16469
Inter Parfums, Inc.
(Exact name of registrant as specified in its
charter)
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Delaware
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13-3275609
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(State or other jurisdiction of incorporation or
organization)
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(I.R.S. Employer Identification No.)
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551 Fifth Avenue, New York, New York
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10176
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(Address of Principal Executive Offices)
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(Zip Code)
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Registrant's telephone number, including area code:
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212.983.2640
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Securities registered pursuant to Section 12(b) of the Act:
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Title of each class
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Name of exchange on which registered
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Common Stock, $.001 par value per share
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The Nasdaq Stock Market
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Securities registered pursuant to Section 12(g) of the Act:
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Title of each class
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Name of exchange on which registered
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None
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None
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Indicate by check mark whether the registrant
is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
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No
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Indicate by check mark if the registrant is
not required to file reports pursuant to Section 13 or 15(d) of the Act. Yes
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No
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Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding
12 months (or such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days: Yes
x
No
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Indicate by check mark whether the registrant
has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted
and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such
shorter period that the registrant was required to submit and post such files). Yes
x
No
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Indicate by check mark if disclosure of delinquent
filers pursuant to Item 405 of Regulation SK is not contained herein and will not be contained, to the best of the registrant's
knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10K or any other amendment
to this Form 10K.
¨
Indicate by check mark whether the registrant
is a large accelerated filer, an accelerated filer or a non-accelerated filer. See definition of “accelerated filer”
and “large accelerated filer” in Rule 12b-2 of the Exchange Act).
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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Smaller Reporting Company
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Indicate by check mark whether the registrant
is a shell company (as defined in Rule 12b-2 of the Act).
Yes
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No
x
State the aggregate market value of the voting
and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold,
or the average bid and asked price of such common equity, as of the last business day of the registrant's most recently completed
second fiscal quarter. $497,203,804 of voting equity and $-0- of non-voting equity.
Indicate the number of shares outstanding of
the registrant's $.001 par value common stock as of the close of business on the latest practicable date March 9, 2015: 30,978,603
Documents Incorporated By Reference: None.
FORWARD LOOKING STATEMENTS
This report includes forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act of 1934, and if incorporated by reference into a registration
statement under the Securities Act of 1933, as amended, within the meaning of Section 27A of such act. When used in this report,
the words “anticipate,” “believe,” “estimate,” “will,” “should,” “could,”
“may,” “intend,” “expect,” “plan,” “predict,” “potential,”
or “continue” or similar expressions identify certain forward-looking statements. Although we believe that our plans,
intentions and expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such plans,
intentions or expectations will be achieved.
Actual results, performance or achievements
could differ materially from those contemplated, expressed or implied by the forward-looking statements contained in this report.
Important factors that could cause actual results to differ materially from our forward-looking statements are set forth in this
report, including under the heading “Risk Factors”. Such factors include: Our inability to successfully integrate or
manage any future acquisitions; continuation and renewal of existing license and similar agreements; potential inability to obtain
new licensing, arrangements or agreements for additional brands; potential reduction in sales of our fragrance and fragrance related
products due to reduced consumer confidence as the result of a prolonged economic downturn, recession or terrorist attack in the
United States, Europe or any of the other countries in which we do significant business; uncertainties and continued deterioration
in global credit markets could negatively impact suppliers, customers and consumers; inability to protect our intellectual property
rights; potential liability for infringement of third party brand names; product liability claims; effectiveness of our sales and
marketing efforts and product acceptance by consumers; dependence upon third party manufacturers and distributors; dependence upon
our management; competition; risks related to our foreign operations currency fluctuation and international tariff and trade barriers;
compliance with governmental regulation;
seasonal variability of our business;
our ability to operate our business
without infringing, misappropriating or otherwise violating the intellectual property rights of other parties; and possible liability
for improper comparative advertising or “Trade Dress”.
These factors are not intended to represent
a complete list of the general or specific factors that may affect us. It should be recognized that other factors, including general
economic factors and business strategies, may be significant, presently or in the future, and the factors set forth herein may
affect us to a greater extent than indicated. All forward-looking statements attributable to us or persons acting on our behalf
are expressly qualified in their entirety by the cautionary statements set forth in this report. Except as may be required by law,
we undertake no obligation to update any forward-looking statement, whether as a result of new information, future events or otherwise.
REGULATION S-K ITEM 10(e)
Regulation S-K, Item 10(e), “Use of Non-GAAP
Financial Measures in commission filings,” prescribes the conditions for use of non-GAAP financial information in filings
with the Securities and Exchange Commission.
In July 2012, Burberry exercised its option
to buy-out our license rights effective December 31, 2012. Due to the significance of this transaction as well as its non-recurring
nature, exclusion of such gain in the non-GAAP financial measures provides a more complete disclosure and facilitates a more accurate
comparison of current results to historic results. In addition, providing comparable sales information excluding sales relating
to a terminated license provides investors with a more accurate picture of current sales trends. Based upon the foregoing, we believe
that our presentation of the non-GAAP financial information included on pages 45, 49 and 51 of this Form 10-K is an important supplemental
measure of operating performance to investors.
PART I
Item 1. Business
Introduction
We are Inter Parfums, Inc. We operate in the
fragrance business, and manufacture, market and distribute a wide array of fragrances and fragrance related products. Organized
under the laws of the State of Delaware in May 1985 as Jean Philippe Fragrances, Inc., we changed our name to Inter Parfums, Inc.
in July 1999. We have also retained our brand name, Jean Philippe Fragrances, for some of our mass market products.
Our worldwide headquarters and the office of
our three (3) wholly-owned United States subsidiaries, Jean Philippe Fragrances, LLC and Inter Parfums USA, LLC, both New York
limited liability companies, and IP Beauty, Inc. (formerly Nickel USA, Inc.), a Delaware corporation, are located at 551 Fifth
Avenue, New York, New York 10176, and our telephone number is 212.983.2640. We also own 100% of Inter Parfums USA Hong Kong Limited
indirectly through our 100% owned subsidiary, Inter Parfums USA, LLC.
Our consolidated wholly-owned subsidiary, Inter
Parfums Holdings, S.A., and its majority-owned subsidiary, Interparfums SA, maintain executive offices at 4, Rond Point des Champs
Elysees, 75008 Paris, France. Our telephone number in Paris is 331.5377.0000. Interparfums SA is the majority owner of two (2)
distribution subsidiaries, Inter Parfums Gmbh and Inter Parfums srl, covering territories in Germany and Italy, respectively,
and is the sole owner of two (2) distribution subsidiaries, Inter España Parfums et Cosmetiques, SL, covering the territory
of Spain and Interparfums Luxury Brands, Inc., a Delaware corporation, for distribution of prestige brands in the United States.
Interparfums SA is also the sole owner of Interparfums (Suisse) SARL, a company formed to hold and manage certain brand names,
and Interparfums Singapore Pte., Ltd., an Asian sales and marketing office.
Our common stock is listed on The Nasdaq Global
Select Market under the trading symbol “IPAR”. The common shares of our subsidiary, Interparfums SA, are traded on
the Euronext Exchange.
We maintain our internet website at
www.interparfumsinc.com,
which is linked to the Securities and Exchange Commission Edgar database. You can obtain through our website, free of charge,
our annual reports on Form 10-K, quarterly reports on Form 10-Q, interactive data files, current reports on Form 8-K, beneficial
ownership reports (Forms 3, 4 and 5) and amendments to those reports filed or furnished pursuant to Section 13(a) of the Securities
Exchange Act of 1934 as soon as reasonably practicable after they have been electronically filed with or furnished to the SEC.
Summary
The following summary is qualified in its
entirety by and should be read together with the more detailed information and audited financial statements, including the related
notes, contained or incorporated by reference in this report.
General
We operate in the fragrance business and manufacture,
market and distribute a wide array of fragrances and fragrance related products. We manage our business in two segments, European
based operations and United States based operations. Prestige fragrance products are produced and marketed by our European operations
through our 73% owned subsidiary in Paris, Interparfums SA, which is also a publicly traded company, as 27% of Interparfums SA
shares trade on the Euronext.
Our business is not capital intensive, and it
is important to note that we do not own manufacturing facilities. We act as a general contractor and source our needed components
from our suppliers. These components are received at one of our distribution centers and then, based upon production needs, the
components are sent to one of several third party fillers which manufacture the finished product for us and deliver them to one
of our distribution centers.
Our prestige products focus on niche brands,
each with a devoted following. By concentrating in markets where the brands are best known, we have had many successful launches.
We typically launch new fragrance families for our brands every year or two, with some frequent “seasonal” fragrances
introduced as well.
The creation and marketing of each product family
is intimately linked with the brand’s name, its past and present positioning, customer base and, more generally, the prevailing
market atmosphere. Accordingly, we generally study the market for each proposed family of fragrance products for almost a full
year before we introduce any new product into the market. This study is intended to define the general position of the fragrance
family and more particularly its scent, bottle, packaging and appeal to the buyer. In our opinion, the unity of these four elements
of the marketing mix makes for a successful product.
As with any business, many aspects of our operations
are subject to influences outside our control. We discuss in greater detail risk factors relating to our business in Item 1A
of this Annual Report on Form 10-K for the fiscal year ended December 31, 2014, and the reports that we file from time to
time with the Securities and Exchange Commission.
European Operations
We produce and distribute prestige fragrance
products primarily under license agreements with brand owners, and prestige product sales through our European operations represented
approximately 79% of net sales for 2014. We have built a portfolio of prestige brands, which include
Balmain, Boucheron, Jimmy
Choo, Karl Lagerfeld, Lanvin, Montblanc, Paul Smith, S.T. Dupont, Repetto
and
Van Cleef & Arpels
, whose products
are distributed in over 100 countries around the world.
Burberry was our most significant license, and net sales of
Burberry products represented 0%, 23% and 46% of net sales for the years ended December 31, 2014, 2013 and 2012, respectively.
As discussed below, Burberry exercised its option to buy-out the license rights effective December 31, 2012 and we entered into
a transition agreement that provided for certain license rights and obligations to continue through March 31, 2013. In addition,
we own the Lanvin brand name for our class of trade, and license the Montblanc and Jimmy Choo brand names; for the year ended December
31, 2014, sales of product for these brands represented 18%, 22% and 16% of net sales, respectively.
United States Operations
Prestige brand and specialty retail fragrance
and fragrance related products are marketed through our United States operations and represented 21% of sales for the year ended
December 31, 2014. These fragrance products are sold under trademarks owned by us or pursuant to license or other agreements
with the owners of brands, which include
Abercrombie & Fitch, Agent Provocateur, Anna Sui, Banana Republic, bebe, Dunhill,
Gap, Hollister, Oscar de la Renta,
and
Shanghai Tang
brands.
Recent Developments
Abercrombie & Fitch and Hollister
In December 2014, the Company entered into a
7-year exclusive worldwide license to create, produce and distribute new perfumes and fragrance related products under the Abercrombie
& Fitch and Hollister brand names. The Company will distribute these fragrances internationally in specialty retailers, high-end
department stores and duty free shops, and in the U.S., in duty free shops and potentially in Abercrombie & Fitch and Hollister
retail stores. The agreement is subject to certain minimum sales, advertising expenditures and royalty payments as is customary
in our industry. New men’s and women’s scents are planned for both Abercrombie & Fitch and Hollister for 2016.
Burberry
Burberry exercised its option to buy-out the
license rights effective December 31, 2012. In October 2012, the Company and Burberry entered into a transition agreement
that provided for certain license rights and obligations to continue through March 31, 2013. The Company continued to operate certain
aspects of the business for the brand including product development, testing, and distribution. The transition agreement provided
for non-exclusivity for manufacturing, a cap on sales of Burberry products, a reduced advertising requirement and no minimum royalty
amounts.
Prestige Products
General
We produce and distribute our prestige fragrance
products primarily under license agreements with brand owners. Under license agreements, we obtain the right to use the brand name,
create new fragrances and packaging, determine positioning and distribution, and market and sell the licensed products, in exchange
for the payment of royalties. Our rights under license agreements are also generally subject to certain minimum sales requirements
and advertising expenditures.
We are the owner of the Lanvin brand name and
trademark for our class of trade and we have built a portfolio of licensed prestige brands. Our exclusive worldwide licenses for
these brands expire on the following dates:
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Brand Name
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Expiration Date
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Agent Provocateur
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December 31, 2023
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Anna Sui
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December 31, 2021, plus two five-year optional terms if certain conditions are met
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Balmain
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December 31, 2023
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Boucheron
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December 31, 2025, plus a 5-year optional term if certain sales targets are met
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Dunhill
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September 30, 2023, subject to earlier termination on September 30, 2019, if certain minimum sales are not met
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Jimmy Choo
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December 31, 2021
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Karl Lagerfeld
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October 31, 2032
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Montblanc
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December 31, 2020
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Oscar de la Renta
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December 31, 2025, plus a 5-year optional term if certain sales targets are met
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Paul Smith
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December 31, 2017
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Repetto
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December 31, 2024
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Shanghai Tang
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December 31, 2025, subject to earlier termination on December 31, 2019, if certain minimum sales are not met; subject to 2 year extensions unless 1 year advance notice not to renew is provided
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S.T. Dupont
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December 31, 2016
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Van Cleef & Arpels
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December 31, 2018, plus a 5-year optional term if certain sales targets are met
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In connection with the acquisition of the Lanvin
brand names and trademarks, we granted Lanvin the right to repurchase the brand names and trademarks in 2025 for the greater of
€70 million (approximately $85 million) or one times the average of the annual sales for the years ending December 31, 2023
and 2024.
Prestige Fragrances
Agent Provocateur—
In July 2013,
we entered into a 10.5-year exclusive worldwide license to create, produce and distribute perfumes and related products under London-based
luxury lingerie brand, Agent Provocateur. The agreement commenced on August 1, 2013 and is subject to certain minimum advertising
expenditures as is customary in our industry and we have taken over distribution of selected fragrances within the brand’s
current perfume portfolio. Agent Provocateur contributed to our sales in 2014 with the spring launches of
Fatale
and
Fatale
Pink
in international markets followed by an exclusive U.S. launch at Saks Fifth Avenue.
Founded in 1994 by Joseph Corré, and
Serena Rees and acquired by the private equity firm, 3i Group plc in 2007, Agent Provocateur is an iconic, globally-recognized
brand, breaking new ground with every collection and rightfully earning its place as a benchmark brand in the world of lingerie.
It is a brand that is confident, sensual and irreverent. Agent Provocateur celebrates and empowers women with a unique brand image
renowned for being provocative and yet always leaving something to the imagination.
In recent years, Agent Provocateur has been
opening doors at a steady growth and plans to continue to grow its door count, especially in Asia. Currently, its products which
extend into swimwear, bridal and accessories, are sold globally, at 96 of its own boutiques and shop-in-shops within the finest
department stores, as well as specialty retailers and on-line.
Anna Sui—
In June 2011, we entered
into a 10-year exclusive worldwide fragrance license agreement to produce and distribute perfumes and fragrance related products
under the Anna Sui brand. Our rights under the agreement commenced on January 1, 2012 when we took over production and distribution
of the existing Anna Sui fragrance collections.
We are working in partnership with American
designer, Anna Sui, and her creative team to build upon the brand’s growing customer appeal, and develop new fragrances that
capture the brand’s very sweet feminine girly aspect, combined with touch of nostalgia, hipness and rock-and-roll. Anna Sui’s
devoted customer base, which spans the world, is especially strong in Asia.
We have high expectations for growing the Anna
Sui fragrance franchise by developing new products and expanding the brand’s fragrance presence in North America, Europe
and the Middle East. With help from the Fall 2013 launch of
La Vie de Bohème
, sales of Anna Sui products were up
29% in 2013, reaching approximately $25.8 million. Without a major new product launch and a difficult Asian market, Anna Sui brand
sales declined 16% to approximately $21.5 million in 2014. A new Anna Sui fragrance family is in the works for 2015.
Balmain—
In July 2011, we entered
into a 12-year exclusive worldwide license agreement to create, produce and distribute perfumes and ancillary products under the
Balmain brand. Our rights under the agreement commenced on January 1, 2012 when we took over the production and distribution of
existing Balmain fragrances for men and women.
The Balmain couture house was founded in 1945
by Pierre Balmain. In recent years, Balmain has undergone a significant transformation. With the redefinition of its image in ready-to-wear,
the brand has become a reference for style, while retaining its distinctive design codes from the haute couture universe. In doing
so, the brand has become a major trendsetter. Our first new Balmain women’s fragrance,
Extatic
, made its debut in
2014 in selective distribution. We also have a men’s scent launching for Balmain in 2015.
Boucheron—
In December 2010, we
entered into an exclusive, worldwide license agreement for the creation, development and distribution of fragrance and related
bath and body products under the Boucheron brand.
Boucheron is the French jeweler "par excellence".
Founded by Frederic Boucheron in 1858, the House has produced some of the world’s most beautiful and precious creations.
Today Boucheron creates jewelry and timepieces and, under license from global brand leaders, fragrances and sunglasses. Currently
Boucheron operates through over 40 boutiques worldwide as well as an e-commerce site.
Our first new fragrance under the Boucheron
brand,
Jaïpur Bracelet,
debuted in 2012, and
Boucheron Place Vendôme
, which has a beautiful glasswork
bottle with a cabochon, the emblematic stone of House Boucheron, was released in Fall 2013. Boucheron fragrances sales increased
10% to $23.1 million in 2013, driven in particular by the launch of the Boucheron
Place Vendôme
line. With a difficult
comparison and no major product launch, brand sales declined 20% in 2014. For 2015, we are launching a new fragrance duo for the
Boucheron brand around its iconic
Quatre
ring.
Dunhill—
In December 2012, we entered
into a 10-year exclusive worldwide fragrance license to create, produce and distribute perfumes and fragrance related products
under the Dunhill brand, which commenced on April 3, 2013.
The house of Dunhill was established in 1893
and since that time has been dedicated to providing high quality men’s luxury products, with core collections offered in
menswear, leather goods and accessories. The brand has global reach through a premium mix of self-managed retail outlets, high-level
department stores and specialty retailers. Known for its commitment to elegance and innovation and being a leader of British men’s
style, the brand continues to blend innovation and creativity with traditional craftsmanship.
We took over production and distribution of
Dunhill legacy fragrances beginning in April 2013, and we introduced a legacy scent flanker,
Desire Black
, which launched
in the Spring of 2014. We have supported the new men’s scent with a distribution strategy that recognizes and utilizes Dunhill’s
luxury positioning, along with brand appropriate marketing materials and a media campaign. Dunhill legacy scents added $16.2 million
to 2014 sales, up 25% from $13.0 million in 2013. For 2015, we are rolling out the new Dunhill scent,
Icon
.
Jimmy Choo—
In October 2009, we
entered into an exclusive, worldwide license agreement for the creation, development and distribution of fragrances under the Jimmy
Choo brand.
With a heritage in luxury footwear, Jimmy Choo
today encompasses a complete luxury lifestyle accessory brand with women's shoes, handbags, small leather goods, sunglasses and
eyewear. Its products are available in the growing network of Jimmy Choo freestanding stores as well as in the most prestigious
department, specialty and duty free stores worldwide.
We believe that this relationship with Jimmy
Choo offers a perfect fit with our strategy of expanding our brand portfolio to include new universes and represents an important
milestone in our development. This brand possesses the quintessential qualities to ensure the ambitious development of fragrance
lines that will be supported by significant advertising commitments over the coming years.
Our first fragrance under the Jimmy Choo brand,
a signature scent, rolled out globally in 2011. Jimmy Choo product sales exceeded our expectations and sales topped $40 million
in that first year. Sales growth has continued, reaching $51.5 million in 2012 and $72.4 million in 2013, a year marked by the
launch by our second Jimmy Choo line,
Flash
, in February. The successful 2014 launch of Jimmy Choo
Man
enabled Jimmy
Choo brand sales to maintain its positive sales momentum resulting in 2014 brand sales of $78.5 million, up 8% as compared to 2013.
Karl Lagerfeld—
In October 2012,
we entered into a 20-year worldwide license agreement with Karl Lagerfeld B.V., the internationally renowned haute couture fashion
house, to create, produce and distribute perfumes under the Karl Lagerfeld brand.
Under the creative direction of Karl Lagerfeld,
one of the world’s most influential and iconic designers, the Lagerfeld Portfolio represents a modern approach to distribution,
an innovative digital strategy and a global 360 degree vision that reflects the designer’s own style and soul. Our first
new line, a premium namesake duo scent for both men and women, launched in the Spring of 2014 and yielded $24.2 million in sales
in 2014.
Lanvin—
In July 2007, we acquired
the worldwide rights to the Lanvin brand names and international trademarks listed in Class 3, our class of trade. A synonym of
luxury and elegance, the Lanvin fashion house, founded in 1889 by Jeanne Lanvin, expanded into fragrances in the 1920s.
With Lanvin brand sales of $90.3 million in
2014, Lanvin now is our second largest brand. Lanvin fragrances occupy an important position in the selective distribution market
in France, Europe and Asia. Current lines in distribution include:
Arpège
(1927),
Lanvin L’Homme
(1997),
Eclat d’Arpège
(2002),
Rumeur 2 Rose
(2007),
Jeanne Lanvin
(2008),
Marry Me!
(2010),
Jeanne
Lanvin Couture
(2012),
Lanvin Me
(2013), which was designed by Lanvin designer, Alber Elbaz, and
Me L’Eau
(2014). Our
Eclat d’Arpège
line accounts for approximately 50% of this brand’s sales.
Montblanc—
In January 2010, we
entered into an exclusive, worldwide license agreement for the creation, development and distribution of fragrances and fragrance
related products under the Montblanc brand.
Montblanc has achieved a world-renowned position
in the luxury segment and has become a purveyor of exclusive products, which reflect today’s exacting demands for timeless
design, tradition and master craftsmanship. Through its leadership positions in writing instruments, watches and leather goods,
promising growth outlook in women's jewelry, active presence in more than 70 countries, network of more than 350 boutiques worldwide
and high standards of product design and quality, Montblanc has quickly grown to be our largest and fastest growing fragrance brand.
In 2011, we launched our first new Montblanc
fragrance,
Legend,
which quickly became our best-selling men’s line. In 2012, we launched our first women’s
fragrance under the Montblanc brand, and our second men’s line,
Emblem
, was launched in 2014. Montblanc product sales
increased 40% in 2013 to $83.2 million and in 2014 sales of Montblanc fragrances topped $110 million, a 33% increase from 2013.
Montblanc has now become our top selling brand.
Oscar de la Renta—
In October 2013,
we entered into a 12-year exclusive worldwide license to create, produce and distribute perfumes and related products under the
Oscar de la Renta brand, which closed in December 2013. In 2014, we took over distribution of fragrances within the brand’s
current perfume portfolio generating $15.8 million in sales. Our first new women’s fragrance under the Oscar de la Renta
brand,
Extraordinary
, is planned for an early 2015 launch.
Oscar de la Renta is one of the world’s
leading luxury goods firms. The New York-based company was established in 1965, and encompasses a full line of women’s accessories,
bridal, childrenswear, fragrance, beauty and home goods, in addition to its internationally renowned signature women’s ready
to wear collection. Oscar de la Renta products are sold globally in fine department and specialty stores,
oscardelarenta.com
and through wholesale channels.
Paul Smith—
We signed an exclusive
worldwide license agreement with Paul Smith in December 1998 for the creation, development and distribution of Paul Smith perfumes.
In 2008, we extended this license for an additional seven years through December 31, 2017.
Paul Smith is an internationally renowned British
designer who creates fashion with a clear identity. Paul Smith has a modern style which combines elegance, inventiveness and a
sense of humor and enjoys a loyal following, especially in the UK and Japan. Fragrances include:
Paul Smith (2000)
,
Paul
Smith Extrême (2002), Paul Smith Rose (2007), Paul Smith Man 2 (2010) and Optimistic (2011).
A new men’s and women’s
line,
Portrait
, was released in Spring 2013 and
Extreme Sport
for men was introduced in 2014.
Repetto—
In December 2011, we entered
into a 13-year exclusive worldwide license agreement to create, produce and distribute perfumes and ancillary products under the
Repetto brand.
Created in 1947 by Rose Repetto at the request
of her son, dancer and choreographer Roland Petit, Repetto is today a legendary name in the world of dance. For a number of years
it has developed timeless and must-have collections with a fully modernized signature style ranging from dance shoes, ballet slippers,
flat shoes, and sandals to more recently handbags and high-end accessories.
With an ambitious plan of international expansion
focusing mainly on Europe, the brand is now branching out into Asia, notably South Korea and Japan where its mix of cross-generational
appeal and French chic has been met with unprecedented enthusiasm. Our first fragrance line was launched in 2013 generating first
year sales of $12 million. Sales reached $12.4 million in 2014 as our Repetto fragrances experienced gradual sales penetration
in France, and slower acceptance internationally.
Shanghai Tang—
In July 2013, we
created a wholly-owned Hong Kong subsidiary, Inter Parfums USA Hong Kong Limited, which entered into a 12-year exclusive worldwide
license to create, produce and distribute perfumes and related products under China’s leading luxury brand, Shanghai Tang.
The agreement commenced on July 1, 2013 and is subject to certain minimum sales, advertising expenditures and royalty payments
as are customary in our industry. Our first Shanghai Tang fragrance collection for men and women is set for a 2015 rollout.
Founded in 1994, Shanghai Tang is the leading
Chinese luxury brand with international recognition and distribution. As the global curator of modern Chinese chic, Shanghai Tang
champions the richness and beauty of the Chinese culture through its contemporary lifestyle offer of apparel and accessories for
men, women and children, as well as home collections. Shanghai Tang supports an international network of 45 boutiques, including
the world’s largest lifestyle flagship – The Shanghai Tang Mansion in Hong Kong, and its largest flagship Boutique,
The Cathay Mansion in Shanghai, China and on-line.
S.T. Dupont—
In June 1997, we signed
an exclusive worldwide license agreement with S.T. Dupont for the creation, manufacture and distribution of S.T. Dupont perfumes.
In 2011, the agreement was renewed and now runs through December 31, 2016. S.T. Dupont is a French luxury goods house founded in
1872, which is known for its fine writing instruments, lighters and leather goods.
S.T. Dupont fragrances include:
S.T. Dupont
(1998),
S.T. Dupont Essence Pure
(2002),
S.T. Dupont Noir
(2006),
S.T. Dupont Blanc
(2007),
S.T. Dupont
Passenger
(2008),
S.T. Dupont Intense
(2009),
S.T. Dupont
Passenger Cruise
(2011), and
58 avenue
Montaigne (2012)
. In 2014, we launched our
So Dupont
duo, as well as a new men’s line,
Paris Saint Germain
.
Van Cleef & Arpels—
In September
2006, we entered into an exclusive, worldwide license agreement for the creation, development and distribution of fragrance and
related bath and body products under the Van Cleef & Arpels brand and related trademarks.
Van Cleef & Arpels fragrances in current
distribution include:
First
(1976),
Van Cleef pour Homme
(1978),
Tsar
(1989),
Van Cleef
(1994),
First
1
er
Bouquet
(2008),
Féerie
(2008)
,
Collection Extraordinaire
(2009),
Oriens
(2010)
,
Midnight in Paris
(2010).
In 2013, sales increased 11% to $25.5 million
due to the launch of the new
Rêve
line and steady performances by the
First
and
Collection Extraordinaire
.
Although overall brand sales declined 7% in 2014, certain lines like
Collection Extraordinaire
, performed exceptionally
well. We have a new women’s scent for Van Cleef & Arpels prepared for a 2015 debut.
Specialty Retail Products
In connection with our specialty retail and
designer agreements in our United States operations, we design, produce and manufacture fragrance and fragrance related products
for brand name specialty retailers. These agreements are very similar to our prestige license agreements, as they include a licensing
component for worldwide sales to select third party retailers and distributors in return for royalty payments and required advertising
expenditures as are customary in our industry, in addition to the possibility of selling product we create to the specialty retailer
for sale in its retail stores. Our exclusive agreements for specialty retail brands and their expiration dates are as follows:
|
Brand Name
|
Expiration Date
|
|
|
|
|
Abercrombie & Fitch
|
|
|
and Hollister
|
December 31, 2021
|
|
The Gap
|
August 31, 2015 for 1969 Fragrances only
|
|
Banana Republic
|
December 31, 2016
|
|
|
bebe Stores
|
June 30, 2017
|
plus three, 3-year optional terms, if certain sales targets are met
|
Abercrombie & Fitch and Hollister
In December 2014, the Company entered into a
7-year exclusive worldwide license to create, produce and distribute new perfumes and fragrance related products under the Abercrombie
& Fitch and Hollister brand names. The Company will distribute these fragrances internationally in specialty retailers, high-end
department stores and duty free shops, and in the U.S., in duty free shops and potentially in Abercrombie & Fitch and Hollister
retail stores. New men’s and women’s scents are planned for both Abercrombie & Fitch and Hollister for 2016.
Gap and Banana Republic
In July 2005, we entered into an exclusive agreement
with The Gap, Inc. to develop, produce, manufacture and distribute fragrance and fragrance related products for Gap and Banana
Republic brand names to be sold in Gap and Banana Republic retail stores in the United States and Canada. In March 2006, the agreement
was amended to include fragrance and fragrance related products for Gap Outlet and Banana Republic Factory Stores in the United
States and Canada. In 2008, we expanded our relationship with Gap Inc. to include a licensing agreement for international distribution
of personal care products created for the Gap and Banana Republic brands.
After several renewals, our rights to develop,
produce, manufacture and distribute fragrances for Gap brand names to be sold in Gap retail stores in the United States and Canada
expired in December 2014, and we have a verbal agreement to retain the right to sell certain products internationally until August
31, 2015.
In 2015, we reached a verbal agreement to renew
our rights to develop, produce, manufacture and distribute fragrances for Banana Republic brand names to be sold in Banana Republic
retail stores in the United States and Canada and our license agreement for international distribution of fragrances of Banana
Republic stores as well as select specialty and department stores outside the United States, including duty-free and other travel
related retailers. Banana Republic products currently available include:
Classic
(1995),
W
(1995),
Alabaster
(2006),
Rosewood
(2006),
Slate
(2006),
Black Walnut
(2006),
Cordovan
(2007),
Malachite
(2007),
and
Wildbloom
(2011). To complement the women’s scent
Wildbloom
, we launched several brand extensions,
Wildbloom
Vert and Wildblue
in 2012 followed in 2013, with
Wildbloom Roug
e and
Wildblue Noir
. In 2014, we launched
Modern,
a new collection for men and women.
bebe Stores
In July 2008, we entered into an exclusive six-year
worldwide agreement with bebe Stores, Inc., under which we design, manufacture and supply fragrance, bath and body products and
color cosmetics for company-owned bebe stores in the United States and Canada, as well as select specialty and department stores
worldwide. We have incorporated bebe’s signature look into fragrance and cosmetics for the brand’s strong, hip, sexy,
and sophisticated clientele.
Our bebe signature fragrance was unveiled at
more than 200 bebe stores in the U.S. in August 2009, which was followed by worldwide distribution shortly thereafter. Scents currently
available for domestic and international markets include:
bebe
(2009),
bebe Sheer
(2010) and
bebe gold
(2011).
In 2012, we introduced a new bebe scent,
Wishes & Dreams
and we introduced two other scents,
bebe desire
and
bebe Nouveau
in 2013
.
In 2014, we introduced
bebe Nouveau Chic
and a new fragrance family is planned for later
in 2015.
Business Strategy
Focus on prestige beauty brands
. Prestige
beauty brands are expected to contribute significantly to our growth. We focus on developing and launching quality fragrances utilizing
internationally renowned brand names. By identifying and concentrating in the most receptive market segments and territories where
our brands are known, and executing highly targeted launches that capture the essence of the brand, we have had a history of successful
launches. Certain fashion designers and other licensors choose us as a partner because our Company’s size enables us to work
more closely with them in the product development process as well as our successful track record.
Grow portfolio brands through new product
development and marketing
. We grow through the creation of fragrance family extensions within the existing brands in our portfolio.
Every year or two, we create a new family of fragrances for each brand in our portfolio. We frequently introduce “seasonal”
fragrances as well. With new introductions, we leverage our ability and experience to gauge trends in the market and further leverage
the brand name into different product families in order to maximize sales and profit potential. We have had success in introducing
new fragrance families (sub-brands, or flanker brands) within our brand franchises. Furthermore, we promote the smooth and consistent
performance of our prestige perfume operations through knowledge of the market, detailed analysis of the image and potential of
each brand name, a “good dose” of creativity and a highly professional approach to international distribution channels.
Continue to add new brands to our portfolio,
through new licenses or acquisitions
. Prestige brands are the core of our business and we intend to add new prestige beauty
brands to our portfolio. Over the past twenty years, we have built our portfolio of well-known prestige brands through acquisitions
and new license agreements. We intend to further build on our success in prestige fragrances and pursue new licenses and acquire
new brands to strengthen our position in the prestige beauty market. To that end, as of December 31, 2014, we had cash, cash equivalents
and short-term investments of approximately $280 million, which we believe should assist us in entering new brand licenses or outright
acquisitions. However, we cannot assure you that we will be able to enter into any future agreements, or acquire brands or assets
on terms favorable to us, or if we do, that any such transaction will be successful. We identify prestige brands that can be developed
and marketed into a full and varied product families and, with our technical knowledge and practical experience gained over time,
take licensed brand names through all phases of concept, development, manufacturing, marketing and distribution.
Expand existing portfolio into new categories
.
We intend to continue to broaden our product offering beyond the fragrance category and offer other fragrance related products
and personal care products under some of our existing brands. We believe such product offerings meet customer needs and further
strengthen customer loyalty.
Continue to build global distribution footprint
.
Our business is a global business and we intend to continue to build our global distribution footprint. In order to adapt to changes
in the environment and our business, we have modified our distribution model and have formed and are operating joint ventures or
distribution subsidiaries in the major markets of the United States, Italy, Spain and Germany for distribution of prestige fragrances.
We may look into future joint ventures arrangements or acquire distribution companies within other key markets to distribute certain
of our prestige brands. While building a global distribution footprint is part of our long-term strategy, we may need to make certain
decisions based on the short-term needs of the business. We believe that in certain markets, vertical integration of our distribution
network may be one of the keys to future growth of our Company, and ownership of such distribution should enable us to better serve
our customers’ needs in local markets and adapt more quickly as situations may determine.
Build specialty retail business
. We believe
that certain specialty retailers are growing their beauty business by partnering with companies like Inter Parfums. This partnership
enables specialty retailers to have a continuous pipeline of new fragrance products developed for sale in their stores, while benefitting
from worldwide advertising and distribution of such products bearing their brand names primarily outside the United States.
Production and Supply
The stages of the development and production
process for all fragrances are as follows:
|
|
·
|
Simultaneous
discussions with perfume designers and creators (includes analysis of esthetic and olfactory trends, target clientele and market
communication approach);
|
|
|
·
|
Produce mock-ups for final acceptance of bottles and packaging;
|
|
|
·
|
Receive bids from component suppliers (glass makers, plastic
processors, printers, etc.) and packaging companies;
|
|
|
·
|
Schedule production and packaging;
|
|
|
·
|
Issue component purchase orders;
|
|
|
·
|
Follow quality control procedures for incoming components;
and
|
|
|
·
|
Follow packaging and inventory control procedures.
|
Suppliers who assist us with product development
include
:
|
|
·
|
Independent perfumery design companies (Aesthete, Carré
Basset, PI Design, Cent Degres);
|
|
|
·
|
Perfumers (IFF, Givaudan, Firmenich, Robertet, Takasago,
Mane) which create a fragrance consistent with our expectations and, that of the fragrance designers and creators;
|
|
|
·
|
Bottle manufacturers (Pochet du Courval, SGD , Verreries
Brosse, Bormioli Luigi, Stoelzle Masnières ), caps (Qualipac , ALBEA , RPC, Codiplas, Jackel , CMSI ) or boxes (Edelmann,
Autajon , Alliora, Nortier , Draeger);
|
|
|
·
|
Production specialists who carry out packaging (CCI, Edipar
, Jacomo, SDPP, MF Productions, Biopack) or logistics (SAGA for storage, order preparation and shipment).
|
For our prestige products, component and contract
filling needs are purchased from many different suppliers located around the world. The suppliers' accounts for our European operations
are primarily settled in euro and for our United States operations, suppliers' accounts are primarily settled in U.S. dollars.
The components for our specialty retail products are sourced and our specialty retail products are primarily produced and filled
in the United States, and our mass market products are primarily manufactured, produced or filled in the United States or China.
Marketing and Distribution
Prestige Products
Our prestige products are distributed in over
100 countries around the world through a selective distribution network. For the majority of our international distribution of
prestige products, we contract with independent distribution companies specializing in luxury goods. In each country, we designate
anywhere from one to three distributors on an exclusive basis for one or more of our name brands. We also distribute our prestige
products through a variety of duty-free operators, such as airports and airlines and select vacation destinations.
As our business is a global one, we intend to
continue to build our global distribution footprint. For distribution of prestige brands of our European operations we presently
operate through our distribution subsidiaries in the major markets of Italy, Spain and Germany for distribution of prestige fragrances.
In addition we formed Interparfums Luxury Brands, Inc., a Delaware corporation and subsidiary of our French subsidiary Interparfums
SA, for distribution of European based prestige brands in the United States. It has also entered into an agreement with Clarins
Fragrance Group US (a Division of Clarins Group) effective January 1, 2011 to share sales and distribution personnel and facilities.
Our third party distributors vary in size depending
on the number of competing brands they represent. This extensive and diverse network together with our own distribution subsidiaries
provides us with a significant presence in over 100 countries around the world.
Approximately 40% of our European based prestige
fragrance net sales are denominated in U.S. dollars. We address certain financial exposures through a controlled program of risk
management that includes the use of derivative financial instruments. We primarily enter into foreign currency forward exchange
contracts to reduce the effects of fluctuating foreign currency exchange rates.
The business of our European operations has
become increasingly seasonal due to the timing of shipments by our majority-owned distribution subsidiaries to their customers,
which are weighted to the second half of the year.
Specialty Retail Products
For products sold to specialty retailers for
sale in their stores in the United States, we do not typically incur any marketing and distribution expenses. Such expenses are
the responsibility of the specialty retailer. We do not presently market and distribute Banana Republic products to third parties
in the United States although we do market and distribute Banana Republic product internationally, including duty-free and other
travel-related retailers. With respect to the Abercrombie & Fitch, Hollister and bebe brands, we have the right to distribute
product to their stores as well as to approved retailers and distributors in the United States and internationally, including duty-free
and other travel-related retailers.
We utilize our in house sales team to reach
our third party distributors and customers outside the United States. In addition, the business of our United States operations
has become increasingly seasonal as shipments to our specialty retail customers are weighted toward the second half of the year.
Geographic Areas
United States export sales were approximately
$52.3 million, $50.4 million and $38.8 million in 2014, 2013 and 2012, respectively. Consolidated net sales to customers by region
are as follows:
|
|
|
Year ended December 31,
|
|
|
(in thousands)
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
North America
|
|
$
|
134,600
|
|
|
$
|
154,300
|
|
|
$
|
175,400
|
|
|
Europe
|
|
|
177,900
|
|
|
|
215,600
|
|
|
|
241,300
|
|
|
Central and South America
|
|
|
49,200
|
|
|
|
42,400
|
|
|
|
53,000
|
|
|
Middle East
|
|
|
40,300
|
|
|
|
43,300
|
|
|
|
62,100
|
|
|
Asia
|
|
|
85,500
|
|
|
|
98,600
|
|
|
|
115,300
|
|
|
Other
|
|
|
11,800
|
|
|
|
9,400
|
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
499,300
|
|
|
$
|
563,600
|
|
|
$
|
654,100
|
|
Consolidated net sales to customers in major countries are as follows:
|
|
|
Year ended December 31,
|
|
|
(in thousands)
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
United States
|
|
$
|
128,000
|
|
|
$
|
150,000
|
|
|
$
|
167,000
|
|
|
United Kingdom
|
|
$
|
37,000
|
|
|
$
|
46,000
|
|
|
$
|
48,000
|
|
|
France
|
|
$
|
50,000
|
|
|
$
|
47,000
|
|
|
$
|
46,000
|
|
Competition
The market for fragrances and fragrance related
products is highly competitive and sensitive to changing preferences and demands. The prestige fragrance industry is highly concentrated
around certain major players with resources far greater than ours. We compete with an original strategy, regular and methodical
development of quality fragrances for a growing portfolio of internationally renowned brand names including the brand names of
specialty retailers.
Inventory
We purchase raw materials and component parts
from suppliers based on internal estimates of anticipated need for finished goods, which enables us to meet production requirements
for finished goods. We generally deliver product to customers within 72 hours of the receipt of their orders. Our business is not
capital intensive, and it is important to note that we do not own manufacturing facilities. We act as a general contractor and
source our needed components from our suppliers. These components are received at one of our distribution centers and then, based
upon production needs, the components are sent to one of several third party fillers which manufacture the finished product for
us and then deliver them to one of our distribution centers.
Product Liability
Our United States operations maintain product
liability coverage in an amount of $5,000,000, and our European operations maintain product liability coverage in an amount of
€6,000,000 (approximately $7.3 million). Based upon our experience, we believe this coverage is adequate and covers substantially
all of the exposure we may have with respect to our products. We have never been the subject of any material product liability
claims.
Government Regulation
A fragrance is defined as a “cosmetic”
under the Federal Food, Drug and Cosmetics Act. A fragrance must comply with the labeling requirements of this FDC Act as well
as the Fair Packaging and Labeling Act and its regulations. Some of our color cosmetic products may contain menthol and are also
classified as a “drug”. Under U.S. law, a product may be classified as both a cosmetic and a drug. Additional regulatory
requirements for products which are “drugs” include additional labeling requirements, registration of the manufacturer
and the semi-annual update of a drug list. In addition, various jurisdictions prohibit the use of certain ingredients in fragrances
and cosmetics.
Our fragrances are subject to the approval of
the Bureau of Alcohol, Tobacco and Firearms as a result of the use of specially denatured alcohol. So far we have not experienced
any difficulties in obtaining the required approvals.
Our fragrance and fragrance related products
that are manufactured or sold in Europe are subject to certain regulatory requirements of the European Union, such as Cosmetic
Directive 76/768/CEE and Regulation number 1223/2009 on cosmetic products, but as of the date of this report, we have not experienced
any material difficulties in complying with such requirements.
Trademarks
The market for our products depends to a significant
extent upon the value associated with our trademarks and brand names. We own, or have licenses or other rights to use, the material
trademark and brand name rights used in connection with the packaging, marketing and distribution of our major products both in
the United States and in other countries where such products are principally sold. Therefore, trademark and brand name protection
is important to our business. Although most of the brand names we license, use or own are registered in the United States and in
certain foreign countries in which we operate, we may not be successful in asserting trademark or brand name protection. In addition,
the laws of certain foreign countries may not protect our intellectual property rights to the same extent as the laws of the United
States. The costs required to protect our trademarks and brand names may be substantial.
Under various license and other agreements we
have the right to use certain registered trademarks throughout the world (except as otherwise noted) for fragrances and fragrance
related products. These registered trademarks include:
|
|
·
|
Abercrombie & Fitch
|
|
|
·
|
Agent Provocateur
|
|
|
·
|
Anna Sui
|
|
|
·
|
Balmain
|
|
|
·
|
Banana Republic
|
|
|
·
|
Bebe
|
|
|
·
|
Boucheron
|
|
|
·
|
Dunhill
|
|
|
·
|
Gap
|
|
|
·
|
Hollister
|
|
|
·
|
Jimmy Choo
|
|
|
·
|
Jordache
|
|
|
·
|
Karl Lagerfeld
|
|
|
·
|
Montblanc
|
|
|
·
|
Oscar de la Renta
|
|
|
·
|
Paul Smith
|
|
|
·
|
Repetto
|
|
|
·
|
Shanghai Tang
|
|
|
·
|
S.T. Dupont
|
|
|
·
|
Van Cleef & Arpels
|
In addition, we are the registered trademark
owner of several trademarks for fragrances and fragrance related products, including:
|
|
·
|
Aziza
|
|
|
·
|
Intimate
|
|
|
·
|
Lanvin
|
|
|
·
|
Tristar, Regal Collections, Royal Selections and Apple
|
Employees
As of March 1, 2015, we had 298 full-time employees
worldwide. Of these, 210 are full-time employees of our European operations, with 32 employees engaged in sales activities and
178 in administrative, production and marketing activities. Our United States operations have 88 employees, and of these, 12 were
engaged in sales activities and 76 in administrative, production and marketing activities. We believe that our relationship with
our employees is good.
Item 1A. Risk Factors.
You should carefully consider these risk factors
before you decide to purchase or sell shares of our common stock. These factors could cause our future results to differ materially
from those expressed or implied in forward-looking statements made by us. The trading price of our common stock could decline due
to any of these risks, and you may lose all or part of your investment.
We are dependent upon the continuation and renewal of various
licenses and other agreements for a significant portion of our sales, and the loss of one or more licenses or agreements could
have a material adverse effect on us.
All of our rights relating to prestige fragrance
brands, other than Lanvin, as well as all of our designer and specialty retail brands, are derived from licenses or other agreements
from unaffiliated third parties, and our business is dependent upon the continuation and renewal of such licenses and other agreements
on terms favorable to us. Each license or agreement is for a specific term and may have additional optional terms. Generally, each
license is subject to us making required royalty payments (which are subject to certain minimums), minimum advertising and promotional
expenditures and meeting minimum sales requirements. Other agreements are generally subject to meeting minimum sales requirements.
Just as the loss of a license or other significant agreement may have a material adverse effect on us, a renewal on less favorable
terms may also negatively impact us.
Our business could be adversely affected by a prolonged downturn
or recession in the United States, Europe or other countries in which we conduct business.
A prolonged economic downturn or recession in
the United States, Europe or any of the other countries in which we do significant business could materially and adversely affect
our business, financial condition and results of operations. In particular, such a downturn or recession could adversely impact
(i) the level of spending by our ultimate consumers, (ii) our ability to collect accounts receivable on a timely basis
from certain customers, (iii) our ability of certain suppliers to fill our orders for raw materials, packaging or co-packed
finished goods on a timely basis, and (iv) the mix of our product sales.
Consumers may reduce discretionary purchases of our products
as a result of a general economic downturn.
We believe that the high degree of global economic
uncertainty could have a negative effect on consumer confidence, demand and spending. In addition, we believe that consumer
spending on beauty products is influenced by general economic conditions and the availability of discretionary income. Accordingly,
we may experience sustained periods of declines in sales during periods of economic downturn as it may affect consumer purchasing
patterns. In addition, a general economic downturn may result in reduced traffic in our customers’ stores which may, in turn,
result in reduced net sales to our retail store customers. Any resulting material reduction in our sales could have a material
adverse effect on our business, financial condition and operating results.
Uncertainties and continued deterioration in global credit markets,
as evidenced by previous reductions in sovereign credit ratings in the United States and Europe, could negatively impact suppliers,
customers and consumers, which could have an adverse impact on our business as a whole.
Uncertainties and continued deterioration in
the global credit markets as evidenced by previous reductions in sovereign credit ratings in the United States and Europe, could
negatively impact our suppliers, customers and consumers which, in turn, could have an adverse impact on our business. While thus
far, uncertainties in global credit markets have not significantly affected our access to credit due to our strong credit rating,
a further deterioration in global financial markets could make future financing difficult or more expensive. Such lack of credit
or lack of credit on favorable terms could have a material adverse effect on our business, financial condition and operating results.
Our Company is exposed to credit risk and fluctuations in the
market values of its investment portfolio.
Our Company has not recognized any significant
losses on its cash, cash equivalents and short-term investments, but could experience declines in the market value of its investment
portfolio. As we have received payment for the buy-out of the Burberry license, any financial turmoil affecting the banking system
and financial markets or any significant financial services institution failures could negatively impact our investments, as the
financial condition of such parties may deteriorate rapidly and without notice in times of market volatility and disruption. Given
the global nature of our business, our Company has both domestic and international investments. Credit ratings and pricing of these
investments can be negatively affected by liquidity, credit deterioration, financial results, economic risk, political risk, sovereign
risk or other factors. As a result, the value and liquidity of our Company’s cash, cash equivalents and short-term investments
could decline and result in a significant impairment.
If our intangible assets, such as trademarks and licenses, become
impaired we may be required to record a significant non-cash charge to earnings which would negatively impact our results of operations.
Under United States generally accepted accounting
principles we review our intangible assets, including our trademarks and licenses, for impairment annually in the fourth quarter
of each fiscal year, or more frequently if events or changes in circumstances indicate the carrying value of our intangible assets
may not be fully recoverable. The carrying value of our intangible assets may not be recoverable due to factors such as reduced
estimates of future cash flows, including those associated with the specific brands to which intangibles relate, or slower growth
rates in our industry. Estimates of future cash flows are based on a long-term financial outlook of our operations and the specific
brands to which the intangible assets relate. However, actual performance in the near-term or long-term could be materially different
from these forecasts, which could impact future estimates and the recorded value of the intangibles. Any significant impairment
to our intangible assets would result in a significant charge to earnings in our financial statements during the period in which
the impairment is determined to exist.
If we are unable to protect our intellectual property rights,
specifically trademarks and brand names, our ability to compete could be negatively impacted.
The market for our products depends to a significant
extent upon the value associated with trademarks and brand names that we license, use or own. We own, or have licenses or other
rights to use, the material trademark and brand name rights used in connection with the packaging, marketing and distribution of
our major products both in the United States and in other countries where such products are principally sold. Therefore, trademark
and brand name protection is important to our business. Although most of the brand names we license, use or own are registered
in the United States and in certain foreign countries in which we operate, we may not be successful in asserting trademark or brand
name protection. In addition, the laws of certain foreign countries may not protect our intellectual property rights to the same
extent as the laws of the United States. The costs required to protect our trademarks and brand names may be substantial.
Our success depends on our ability to operate our business without
infringing, misappropriating or otherwise violating the trademarks, patents, copyrights and proprietary rights of other parties.
Our commercial success depends at least in part
on our ability to operate without infringing, misappropriating or otherwise violating the trademarks, patents, copyrights and other
proprietary rights of others. However, we cannot be certain that the conduct of our business does not and will not infringe, misappropriate
or otherwise violate such rights. Many companies have employed intellectual property litigation as a way to gain a competitive
advantage, and to the extent we gain greater visibility and market exposure as a public company, we may also face a greater risk
of being the subject of such litigation. For these and other reasons, third parties may allege that our products, services or activities
infringe, misappropriate or otherwise violate their trademark, patent, copyright or other proprietary rights. Defending against
allegations and litigation could be expensive, take significant time, divert management’s attention from other business concerns,
and delay getting our products to market. In addition, if we are found to be infringing, misappropriating or otherwise violating
third party trademark, patent, copyright or other proprietary rights, we may need to obtain a license, which may not be available
on commercially reasonable terms or at all, or redesign or rebrand our products, which may not be possible. We may also be required
to pay substantial damages or be subject to a court order prohibiting us and our customers from selling certain products or engaging
in certain activities. Our inability to operate our business without infringing, misappropriating or otherwise violating the trademarks,
patents, copyrights and proprietary rights of others could therefore have a material adverse effect on our business, financial
condition and results of operations.
The success of our products is dependent on public taste.
Our revenues are substantially dependent on
the success of our products, which depends upon, among other matters, pronounced and rapidly changing public tastes, factors which
are difficult to predict and over which we have little, if any, control. In addition, we have to develop successful marketing,
promotional and sales programs in order to sell our fragrances and fragrance related products. If we are not able to develop successful
marketing, promotional and sales programs, then such failure will have a material adverse effect on our business, financial condition
and operating results.
We are subject to extreme competition in the fragrance industry.
The market for fragrances and fragrance related
products is highly competitive and sensitive to changing market preferences and demands. Many of our competitors in this market
are larger than we are and have greater financial resources than are available to us, potentially allowing them greater operational
flexibility. Our success in the prestige fragrance industry is dependent upon our ability to continue to generate original strategies
and develop quality products that are in accord with ongoing changes in the market.
If there is insufficient demand for our existing
fragrances and fragrance related products, or if we do not develop future strategies and products that withstand competition or
we are unsuccessful in competing on price terms, then we could experience a material adverse effect on our business, financial
condition and operating results.
If we are unable to acquire or license additional brands, or
obtain the required financing for these agreements and arrangements, then the growth of our business could be impaired.
Our future expansion through acquisitions or
new product license or distribution arrangements, if any, will depend upon the capital resources and working capital available
to us. Further, in view of the global banking crisis, we may be unable to obtain financing or credit that we may require for additional
licenses, acquisitions or other transactions. We may be unsuccessful in identifying, negotiating, financing and consummating such
acquisitions or arrangements on terms acceptable to us, or at all, which could hinder our ability to increase revenues and build
our business. Just as the loss of a license or other significant agreement may have a material adverse effect on us, our failure
to acquire rights to new brands may also negatively impact us.
We may engage in future acquisitions that we may not be able
to successfully integrate or manage. These acquisitions may dilute our stockholders and cause us to incur debt and assume contingent
liabilities.
We continuously review acquisition prospects
that would complement our current product offerings, increase our size and geographic scope of operations or otherwise offer growth
and operating efficiency opportunities. The financing, if available, for any of these acquisitions could significantly dilute our
stockholders and/or result in an increase in our indebtedness. We may acquire or make investments in businesses or products in
the future, and such acquisitions may entail numerous integration risks and impose costs on us, including:
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·
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difficulties in assimilating acquired operations or products, including the loss of key employees from acquired businesses;
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·
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diversion of management’s attention from our core business;
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·
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adverse effects on existing business relationships with suppliers and customers;
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·
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risks of entering markets in which we have no or limited prior experience;
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·
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dilutive issuances of equity securities;
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·
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incurrence of substantial debt;
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·
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assumption of contingent liabilities;
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·
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incurrence of significant amortization expenses related to intangible assets and the potential impairment of acquired assets; and
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·
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incurrence of significant immediate write-offs.
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Our failure to successfully complete the integration
of any acquired business could have a material adverse effect on our business, financial condition and operating results.
Joint ventures or strategic alliances in geographic markets in
which we have limited or no prior experience may expose us to additional risks.
We review, and from time to time may establish,
joint ventures and strategic alliances that we believe would complement our current product offerings, increase the size and geographic
scope of our operations or otherwise offer growth and operating efficiency opportunities. These business relationships may require
us to rely on the local expertise of our partners with respect to market development, sales, local regulatory compliance and other
matters. Further, there may be challenges with ensuring that such joint ventures and strategic alliances implement the appropriate
internal controls to ensure compliance with the various laws and regulations applicable to us as a U.S. public company. Accordingly,
in addition to commercial and operational risk, these joint ventures and strategic alliances may entail risks such as reputational
risk and regulatory compliance risk. In addition, there can be no assurance that we will be able to identify suitable alliance
or joint venture candidates, that we will be able to consummate any such alliances or joint ventures on favorable terms, or that
we will realize the anticipated benefits of entering into any such alliances or joint ventures.
We are dependent upon Messrs. Jean Madar and Philippe Benacin,
and the loss of their services could harm our business.
Jean Madar, our Chief Executive Officer, and
Philippe Benacin, our President and Chief Executive Officer of Interparfums SA, are responsible for day-to-day operations as well
as major decisions. Termination of their relationships with us, whether through death, incapacity or otherwise, could have a material
adverse effect on our operations, and we cannot assure you that qualified replacements can be found. We maintain key man insurance
on the life of Mr. Benacin ($17 million). However, we cannot assure you that we would be able to retain suitable replacements for
either Mr. Madar or Mr. Benacin.
Our reliance on third party manufacturers could have a material
adverse effect on us.
We rely on outside sources to manufacture our
fragrances and cosmetics. The failure of such third party manufacturers to deliver either components or finished goods on a timely
basis could have a material adverse effect on our business. Although we believe there are alternate manufacturers available to
supply our requirements, we cannot assure you that current or alternative sources will be able to supply all of our demands on
a timely basis. We do not intend to develop our own manufacturing capacity. As these are third parties over whom we have little
or no control, the failure of such third parties to provide components or finished goods on a timely basis could have a material
adverse effect on our business, financial condition and operating results.
Our reliance on third party distributors could have a material
adverse effect on us.
We sell a substantial percentage of our prestige
fragrances through independent distributors specializing in luxury goods. Given the growing importance of distribution, we have
modified our distribution model by owning a controlling interest in certain of our distributors within key markets. However, we
have little or no control over third party distributors and the failure of such third parties to provide services on a timely basis
could have a material adverse effect on our business, financial condition and operating results. In addition, if we replace existing
third party distributors with new third party distributors or with our own distribution arrangements, then transition issues could
have a material adverse effect on our business, financial condition and operating results.
Terrorist attacks, acts of war or military actions and/or other
civil unrest may adversely affect the territories in which we operate, and our business, financial condition and operating results.
Terrorist attacks such as those that have occurred,
most recently in Paris, France where we have our European headquarters, and previously in Libya, Spain, England and the United
States, and attempted terrorist attacks, military responses to terrorist attacks, other military actions, or governmental action
in response to or in anticipation of a terrorist attack, or civil unrest as occurring in the Ukraine, may adversely affect prevailing
economic conditions, resulting in work stoppages, reduced consumer spending or reduced demand for our products. These developments
subject our worldwide operations to increased risks and, depending on their magnitude, could reduce net sales and therefore could
have a material adverse effect on our business, financial condition and operating results.
The loss of or disruption in our distribution facilities could
have a material adverse effect on our business, financial condition and operating results.
We currently have one distribution facility
in Paris and one in New Jersey. The loss of one or both of those facilities, as well as the inventory stored in those facilities,
would require us to find replacement facilities and assets. In addition, acts of God, such as extreme weather conditions, natural
disasters and the like or terrorist attacks, could disrupt our distribution operations. If we cannot replace our distribution capacity
and inventory in a timely, cost-efficient manner, then such failure could have a material adverse effect on our business, financial
condition and operating results.
Changes in laws, regulations and policies that affect our business
could adversely affect our financial results.
Our business is subject to numerous laws, regulations
and policies. Changes in the laws, regulations and policies, including the interpretation or enforcement thereof, that affect,
or will affect, our business, including changes in accounting standards, tax laws and regulations, environmental or climate change
laws, regulations or accords, trade rules and customs regulations, and the outcome and expense of legal or regulatory proceedings,
and any action we may take as a result could adversely affect our financial results.
Our success depends, in part, on the quality and safety of our
products.
Our success depends, in part, on the quality
and safety of our products. If our products are found to be defective or unsafe, or if they otherwise fail to meet our consumers’
standards, our relationships with customers or consumers could suffer, the appeal of one or more of our brands could be diminished,
and we could lose sales and/or become subject to liability claims, any of which could result in a material adverse effect on our
business, results of operations and financial condition.
We are subject to risks related to our foreign operations.
We operate on a global basis, with a substantial
portion of our 2014 net sales and net income generated outside the United States. We intend to reinvest these earnings in our foreign
operations indefinitely, except where we are able to repatriate these earnings to the United States without incurring material
incremental tax obligations. A substantial portion of our cash and cash equivalents that result from these earnings remain outside
the United States. We maintain offices in 7 countries and have key operational facilities located outside the United States that
warehouse or distribute goods for sale throughout the world. Foreign operations are subject to many risks and uncertainties, including:
• changes in foreign laws, regulations and policies, including
restrictions on trade, import and export license requirements, and tariffs and taxes, as well as changes in United States laws
and regulations relating to foreign trade and investment; and
• adverse weather conditions, social, economic and geopolitical
conditions, such as terrorist attacks, war or other military action.
These risks could have a material adverse effect
on our business, prospects, results of operations and financial condition.
The international character of our business renders us subject
to fluctuation in foreign currency exchange rates and international trade tariffs, barriers and other restrictions.
A substantial portion of our European operations’
net sales (approximately 40%) are sold in U.S. dollars. In an effort to reduce our exposure to foreign currency exchange fluctuations,
we engage in a controlled program of risk management that includes the use of derivative financial instruments. Despite such actions,
fluctuations in foreign currency exchange rates for the U.S. dollar, particularly with respect to the euro, could have a material
adverse effect on our operating results. Possible import, export, tariff and other trade barriers, which could be imposed by the
United States, other countries or the European Union might also have a material adverse effect on our operating results.
Our business is subject to governmental regulation, which could
impact our operations.
Fragrances and fragrance related products must
comply with the labeling requirements of the Federal Food, Drug and Cosmetics Act as well as the Fair Packaging and Labeling Act
and their regulations. Some of our color cosmetic products may also be classified as a “drug”. Additional regulatory
requirements for products which are “drugs” include additional labeling requirements, registration of the manufacturer
and the semi-annual update of a drug list. In addition, various jurisdictions prohibit the use of certain ingredients in fragrances
and cosmetics.
Our fragrances are subject to the
approval of the Bureau of Alcohol, Tobacco and Firearms as a result of the use of specially denatured alcohol. So far we have not
experienced any difficulties in obtaining the required approvals.
Our fragrance and fragrance related
products that are manufactured or sold in Europe are subject to certain regulatory requirements of the European Union, such as
Cosmetic Directive 76/768/CEE and Regulation number 1223/2009 on cosmetic products, but as of the date of this report, we have
not experienced any material difficulties in complying with such requirements.
However, we cannot assure you that, should we
use proscribed ingredients in our fragrance or fragrance related products that we develop or market, or develop or market fragrances
and fragrance related products with different ingredients, or should existing regulations or requirements be revised, we would
not in the future experience difficulty in complying with such requirements, which could have a material adverse effect on our
results of operations.
Our information systems and websites may be susceptible to outages
and other risks.
We have information systems that support our
business processes, including product development, marketing, sales, order processing, production, distribution, finance and intra-company
communications. We have Internet websites in the United States and Europe. These systems may be susceptible to outages
due to fire, floods, power loss, telecommunications failures, break-ins and similar events. Despite the implementation of
network security measures, our systems may be vulnerable to computer viruses, break-ins and similar disruptions from unauthorized
tampering. The occurrence of these or other events could disrupt or damage our information systems and adversely affect our
business and results of operations.
Our failure to protect our reputation, or the failure of our
partners to protect their reputations, could have a material adverse effect on our brand images.
Our ability to maintain our reputation is critical
to our various brand images. Our reputation could be jeopardized if we fail to maintain high standards for merchandise quality
and integrity or if we, or the third parties with whom we do business, do not comply with regulations or accepted practices. Any
negative publicity about these types of concerns may reduce demand for our merchandise. Failure to comply with ethical, social,
product, labor and environmental standards, or related political considerations, such as animal testing, could also jeopardize
our reputation and potentially lead to various adverse consumer actions, including boycotts. Failure to comply with local laws
and regulations, including applicable U.S. trade sanctions, to maintain an effective system of internal controls or to provide
accurate and timely financial statement information could also hurt our reputation. We are also dependent on the reputations of
our brand partners and licensors, which can be affected by matters outside of our control. Damage to our reputation or the reputations
of our brand partners or licensors or loss of consumer confidence for any of these or other reasons could have a material adverse
effect on our results of operations, financial condition and cash flows, as well as require additional resources to rebuild our
reputation.
Our business is subject to seasonal variability.
The business of our European operations has
become increasingly seasonal due to the timing of shipments by our majority-owned distribution subsidiaries to their customers,
which are weighted to the second half of the year. Accordingly, our financial performance, sales, working capital requirements,
cash flow and borrowings generally experience variability during the third and fourth quarters. Any substantial decrease in net
revenues, in particular during periods of increased sales due to seasonality, could have a material adverse effect on our financial
condition, results of operations and cash flows.
The trading prices of our securities periodically may rise or
fall based on the accuracy of predictions of our earnings or other financial performance.
Our business planning process is designed to
maximize our long-term strength, growth and profitability, not to achieve an earnings target in any particular fiscal quarter. We
believe that this longer-term focus is in the best interests of our Company and our stockholders. At the same time, however,
we recognize that it may be helpful to provide investors with guidance as to our forecast of net sales and earnings per share. Accordingly,
we provide guidance as to our expected net sales, and earnings per share, which is updated as appropriate throughout the year. While
we generally provide updates to our guidance when we report our results each fiscal quarter if called for, we assume no responsibility
to update any of our forward-looking statements at such times or otherwise. In addition, the longer-term guidance we provide
is based on goals that we believe, at the time guidance is given, are reasonably attainable for growth and performance over a number
of years. Such targets are more difficult to predict than our current quarter and fiscal year expectations.
In all of our public statements when we make,
or update, a forward-looking statement about our sales and/or earnings expectations or expectations regarding other initiatives,
we accompany such statements directly, or by reference to a public document, with a list of factors that could cause our actual
results to differ materially from those we expect. Such a list is included, among other places, in our earnings press release
and in our periodic filings with the Securities and Exchange Commission (
e.g.,
in our reports on Form 10-K and Forms 10-Q).
These and other factors may make it difficult for outside observers, such as research analysts, to predict what our earnings will
be in any given fiscal quarter or year.
Outside analysts and investors have the right
to make their own predictions of our financial results for any future period. Outside analysts, however, have access to no
more material information about our results or plans than any other public investor, and we do not endorse or adopt their predictions
as to our future performance. Nor do we assume any responsibility to correct the predictions of outside analysts or others
when they differ from our own internal expectations. If and when we announce actual results that differ from those that outside
analysts or others have been predicting, the market price of our securities could be affected. Investors who rely on the predictions
of outside analysts or others when making investment decisions with respect to our securities do so at their own risk. We
take no responsibility for any losses suffered as a result of such changes in the prices of our securities.
We may become subject to possible liability for improper comparative
advertising or “Trade Dress”.
Brand name manufacturers and sellers of brand
name products may make claims of improper comparative advertising or trade dress (packaging) with respect to the likelihood of
confusion between some of our mass market products and those of brand name manufacturers and sellers. They may seek damages for
loss of business or injunctive relief to seek to have the use of the improper comparative advertising or trade dress halted. However,
we believe that our displays and packaging constitute fair competitive advertising and are not likely to cause confusion between
our products and others. Further, we have not experienced to any material degree, any of such problems to date.
Item 1B. Unresolved Staff Comments.
None.
Item 2. Properties
United States Operations
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Use
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Location
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Approximate
Size
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Term Expires
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Office Space-Corporate headquarters and United States operations
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551 Fifth Avenue,
15
th
Floor,
New York, NY.
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16,800 square feet
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April 30, 2024
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Distribution center
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60 Stults Road
Dayton, NJ
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140,000 square feet
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October 31, 2018
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European Operations
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Use
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Location
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Approximate
Size
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Term Expires
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Other Information
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Office Space-Paris corporate headquarters and European operations
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4 Rond Point Des
Champs Elysees
Ground and 1st Fl. Paris, France
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571 square meters
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March 2022
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Lessee has early termination right every 3 years on 6 months’ notice
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Office Space-Paris corporate headquarters and European operations
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4 Rond Point Des
Champs Elysees
4th Fl.
Paris, France
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540 square meters
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March 2023
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Lessee has early termination right every 3 years on 6 months’ notice
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Office Space-Paris corporate headquarters and European operations
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4 Rond Point Des
Champs Elysees
5th Fl- left
Paris, France
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155 square meters
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March 2022
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Lessee has early termination right on 3 months’ notice
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Office Space-Paris corporate headquarters and European operations
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4 Rond Point Des
Champs Elysees
6th Fl-Right
Paris, France
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157 square meters
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March 2022
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Lessee has early termination right every 3 years on 6 months’ notice
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Office Space-Paris corporate headquarters and European operations
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4 Rond Point Des
Champs Elysees
2nd Fl
Paris, France
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544 square meters
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September 2017
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Lessee has early termination right every 3 years on 6 months’ notice
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Office Space-Paris corporate headquarters and European operations
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4 Rond Point Des
Champs Elysees
6th Fl
Paris, France
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60 square meters
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September 2017
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Lessee has early termination right every 3 years on 6 months’ notice
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European Distribution Center
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Criquebeuf sur
Seine (27340), the
"Le Bosc Hetrel"
business park
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31,000 square meters
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May 2017 and May 2020
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Lease for portion of space expires May 2017
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Interparfums SA has had an agreement with Sagatrans,
S.A. for warehousing and distribution services for several years. The current agreement with Sagatrans for warehousing and distribution
services expires on December 31, 2017. Service fees payable to Sagatrans are calculated based upon a percentage of sales,
which is customary in the industry. Service fees actually paid in 2014, 2013 and 2012 were €3.2 million, €5.9 million
and €6.5 million, respectively.
We believe our office and warehouse facilities
are satisfactory for our present needs and those for the foreseeable future.
Item 3. Legal Proceedings
We are not a party to any material lawsuits.
Item 4. Mine Safety Disclosures
Not applicable.
PART II
Item 5. Market for Registrant's Common Equity, Related Stockholder
Matters
and Issuer Purchases of Equity Securities
The Market for Our Common Stock
Our Company's common stock, $.001 par value
per share, is traded on The Nasdaq Global Select Market under the symbol “IPAR”. The following table sets forth in
dollars, the range of high and low closing prices for the past two fiscal years for our common stock.
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Fiscal 2014
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High Closing Price
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Low Closing Price
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Fourth Quarter
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29.98
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24.81
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Third Quarter
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31.39
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25.62
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Second Quarter
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36.78
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27.59
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First Quarter
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37.74
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30.38
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Fiscal 2013
|
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High Closing Price
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Low Closing Price
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Fourth Quarter
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38.94
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28.94
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Third Quarter
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34.96
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26.02
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Second Quarter
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33.19
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24.43
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First Quarter
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25.71
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19.55
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As of February 20, 2015, the number of record
holders, which include brokers and broker's nominees,
etc
., of our common stock was 47. We believe there are approximately
6,500 beneficial owners of our common stock.
Corporate Performance Graph
The following graph compares the performance
for the periods indicated in the graph of our common stock with the performance of the Nasdaq Market Index and the average performance
of a group of the Company’s peer corporations consisting of: Avon Products Inc., Blyth Inc., CCA Industries, Inc., Colgate-Palmolive
Co., Elizabeth Arden, Inc., Estee Lauder Cosmetics, Inc., Inter Parfums, Inc., Kimberly Clark Corp., Natural Health Trends Corp.,
Revlon, Inc., Spectrum Brands, Inc., Stephan Company, Summer Infant, Inc., The Procter & Gamble Company and United Guardian,
Inc. The graph assumes that the value of the investment in our common stock and each index was $100 at the beginning of the period
indicated in the graph, and that all dividends were reinvested.
Below is the list of the data points for each
year that corresponds to the lines on the above graph.
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12-09
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12-10
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12-11
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12-12
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12-13
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12-14
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Inter Parfums, Inc.
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100.00
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157.33
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132.30
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168.51
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319.38
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248.79
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NASDAQ Composite
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100.00
|
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117.61
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118.70
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139.00
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196.83
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223.74
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Peer Group
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100.00
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107.99
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117.98
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127.68
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159.90
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180.24
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Dividends
In January 2013, our Board of Directors authorized
a 50% increase in the cash dividend to $0.48 per share on an annual basis. In November 2013, our Board of Directors declared a
special cash dividend of $0.48 per share, which was payable in one lump sum on December 16, 2013 to shareholders of record on December
2, 2013.
In January 2014, our Board of Directors determined
to maintain the quarterly dividend of $0.12 per share, or $0.48 on an annual basis and in January 2015, our Board of Directors
authorized an 8% increase in the annual dividend to $0.52 per share. The next quarterly cash dividend of $0.13 per share is payable
on April 15, 2015 to shareholders of record on March 31, 2015.
Sales of Unregistered Securities
The following sets forth certain information
as to the sales of securities, which were not registered under the Securities Act, including options granted to purchase our common
stock, during the fourth quarter of 2014 and through the date of this report.
On February 2, 2015, we granted options to purchase
an aggregate of 4,000 shares for a five-year period at the exercise price of $25.285 per share, the fair market value of our common
stock on the date of grant, to four non-employee directors, who are all deemed our affiliates, under our 2004 Non-Employee Director
Stock Option Plan. Such options vest 25% each year over a four-year period on a cumulative basis. This transaction was exempt from
the registration requirements of Section 5 of the Securities Act under Sections 4(2) and 4(6) of the Securities Act. Each option
holder agreed that, if the option is exercised, the option holder would purchase his common stock for investment and not for resale
to the public. Also, we provide all option holders with all reports we file with the SEC and press releases issued by us. In addition,
in December 2014 and January 2015, our non-employee directors exercised stock options to purchase an aggregate of 4,250 shares
of restricted common stock. Such transactions were also exempt from the registration requirements of Section 5 of the Securities
Act under Sections 4(2) and 4(6) of the Securities Act.
Repurchases of Our Common Stock
For each of the three (3) months during the
fourth quarter of 2014, we repurchased the following shares of our common stock:
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Month
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Number of Shares
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October 2014
|
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0
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November 2014
|
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0
|
|
|
|
|
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December 2014
|
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11,495
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|
As listed in the table
above, in December 2014, the Chief Executive Officer and the President each exercised 19,000 outstanding stock options of the Company’s
common stock. The aggregate exercise prices of $0.3 million was paid by each of them tendering to the Company an aggregate of 9,576
shares of the Company’s common stock, previously owned by them, valued at fair market value on the dates of exercise. All
shares issued pursuant to these option exercises were issued from treasury stock of the Company. In addition, the Chief Executive
Officer tendered an additional 1,919 shares for payment of certain withholding taxes resulting from his option exercises.
Item 6. Selected Financial Data
The following selected financial data have been
derived from our financial statements, and should be read in conjunction with those financial statements, including the related
footnotes.
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Years Ended December 31,
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(In thousands except per share data)
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2014
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2013
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2012
|
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2011
|
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2010
|
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Income statement data:
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|
|
Net sales
|
|
$
|
499,261
|
|
|
$
|
563,579
|
|
|
$
|
654,117
|
|
|
$
|
615,220
|
|
|
$
|
460,411
|
|
|
Cost of sales
|
|
|
212,224
|
|
|
|
234,800
|
|
|
|
246,931
|
|
|
|
231,746
|
|
|
|
187,501
|
|
|
Selling, general and administrative expenses
|
|
|
233,634
|
|
|
|
250,025
|
|
|
|
325,799
|
|
|
|
315,698
|
|
|
|
216,474
|
|
|
Operating income
|
|
|
53,403
|
|
|
|
78,754
|
|
|
|
278,414
|
|
|
|
66,939
|
|
|
|
56,436
|
|
|
Income before taxes
|
|
|
56,715
|
|
|
|
80,646
|
|
|
|
274,765
|
|
|
|
67,393
|
|
|
|
53,840
|
|
|
Net income attributable to the noncontrolling interest
|
|
|
7,909
|
|
|
|
11,755
|
|
|
|
45,754
|
|
|
|
10,646
|
|
|
|
9,082
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Inter Parfums, Inc.
|
|
|
29,436
|
|
|
|
39,211
|
|
|
|
131,136
|
|
|
|
32,303
|
|
|
|
26,593
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Inter Parfums, Inc. common shareholders per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.95
|
|
|
$
|
1.27
|
|
|
$
|
4.29
|
|
|
$
|
1.06
|
|
|
$
|
.88
|
|
|
Diluted
|
|
$
|
0.95
|
|
|
$
|
1.27
|
|
|
$
|
4.26
|
|
|
$
|
1.05
|
|
|
$
|
.87
|
|
|
Average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
30,931
|
|
|
|
30,764
|
|
|
|
30,575
|
|
|
|
30,515
|
|
|
|
30,361
|
|
|
Diluted
|
|
|
31,060
|
|
|
|
30,954
|
|
|
|
30,716
|
|
|
|
30,678
|
|
|
|
30,482
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
$
|
10,166
|
|
|
$
|
11,110
|
|
|
$
|
15,554
|
|
|
$
|
13,073
|
|
|
$
|
9,188
|
|
|
|
|
As at December 31,
|
|
|
(In thousands except per share data)
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
2011
|
|
|
2010
|
|
|
Balance sheet and other data:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
90,138
|
|
|
$
|
125,650
|
|
|
$
|
307,335
|
|
|
$
|
35,856
|
|
|
$
|
37,548
|
|
|
Short-term investments
|
|
|
190,152
|
|
|
|
181,677
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
Working capital
|
|
|
382,935
|
|
|
|
399,344
|
|
|
|
366,680
|
|
|
|
205,730
|
|
|
|
183,594
|
|
|
Total assets
|
|
|
604,506
|
|
|
|
664,058
|
|
|
|
759,920
|
|
|
|
516,034
|
|
|
|
438,105
|
|
|
Short-term bank debt
|
|
|
298
|
|
|
|
6,104
|
|
|
|
27,776
|
|
|
|
11,826
|
|
|
|
5,250
|
|
|
Long-term debt (including current portion)
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
4,480
|
|
|
|
16,129
|
|
|
Inter Parfums, Inc. shareholders’ equity
|
|
|
382,065
|
|
|
|
407,211
|
|
|
|
381,476
|
|
|
|
252,674
|
|
|
|
234,976
|
|
|
Dividends declared per share
|
|
$
|
0.48
|
|
|
$
|
0.96
|
|
|
$
|
0.32
|
|
|
$
|
0.32
|
|
|
$
|
0.26
|
|
|
|
Item 7.
|
Management's Discussion and Analysis of Financial Condition
and Results of Operations
|
Overview
We operate in the fragrance business, and manufacture,
market and distribute a wide array of fragrances and fragrance related products. We manage our business in two segments, European-based
operations and United States-based operations. Certain prestige fragrance products are produced and marketed by our European operations
through our 73% owned subsidiary in Paris, Interparfums SA, which is also a publicly traded company as 27% of Interparfums SA shares
trade on the NYSE Euronext.
We produce and distribute our European-based
prestige products primarily under license agreements with brand owners, and European-based prestige product sales represented approximately
79%, 82% and 87% of net sales for 2014, 2013 and 2012, respectively. We have built a portfolio of prestige brands, which include
Balmain, Boucheron, Jimmy Choo, Karl Lagerfeld, Lanvin, Montblanc, Paul Smith, S.T. Dupont, Repetto and Van Cleef & Arpels
,
whose products are distributed in over 100 countries around the world.
Burberry was our most significant license, and
net sales of Burberry products represented 0%, 23% and 46% of net sales for the years ended December 31, 2014, 2013 and 2012,
respectively. (See Note 2 “Termination of Burberry License” in notes to consolidated financial statements on page F-13
of this Form 10-K). In addition, we own the Lanvin brand name for our class of trade, and license the Montblanc and Jimmy Choo
brand names; for the year ended December 31, 2014, sales of product for these brands represented 18%, 22% and 16% of net sales,
respectively.
Through our United States operations we market
prestige brands as well as specialty retail fragrance and fragrance related products. United States operations represented 21%,
18% and 13% of net sales in 2014, 2013 and 2012, respectively. These fragrance products are sold or to be sold under trademarks
owned by us or pursuant to license or other agreements with the owners of the
Abercrombie & Fitch, Agent Provocateur, Anna
Sui, Banana Republic, bebe, Dunhill, Gap, Hollister, Oscar de la Renta, and Shanghai Tang
brands.
Quarterly sales fluctuations are influenced
by the timing of new product launches as well as the third and fourth quarter holiday season. In certain markets where we sell
directly to retailers, seasonality has been more evident in the past few years. We operate distribution subsidiaries in Italy,
Germany, Spain, and the United States. In addition, our specialty retail product lines sold to U.S. retailers are also concentrated
in the second half of the year.
We grow our business in two distinct ways. First,
we grow by adding new brands to our portfolio, either through new licenses or other arrangements or out-right acquisitions of brands.
Second, we grow through the introduction of new products and supporting new and established products through advertising, merchandising
and sampling as well as phasing out existing products that no longer meet the needs of our consumers. The economics of developing,
producing, launching and supporting products influence our sales and operating performance each year. Our introduction of
new products may have some cannibalizing effect on sales of existing products, which we take into account in our business planning.
Our business is not capital intensive, and it
is important to note that we do not own manufacturing facilities. We act as a general contractor and source our needed components
from our suppliers. These components are received at one of our distribution centers and then, based upon production needs, the
components are sent to one of several third party fillers, which manufacture the finished product for us and then deliver them
to one of our distribution centers.
As with any global business, many aspects of
our operations are subject to influences outside our control. We believe we have a strong brand portfolio with global reach and
potential. As part of our strategy, we plan to continue to make investments behind fast-growing markets and channels to grow market
share.
During 2014, the economic and political uncertainty
and financial market volatility taking place in certain European countries and the Middle East did not have a significant impact
on our business, and at this time we do not believe it will have a significant impact on our business for the foreseeable future.
However, if the degree of uncertainty or volatility worsens or is prolonged, then there will likely be a negative effect on ongoing
consumer confidence, demand and spending and as a result, our business. Currently, we believe general economic, political and other
uncertainties still exist in select markets in which we do business and we continue to monitor global economic and political uncertainties
and other risks that may affect our business.
Our reported net sales are impacted by changes
in foreign currency exchange rates. A strong U.S. dollar has a negative impact on our net sales. However, earnings are positively
affected by a strong dollar, because approximately 40% of net sales of our European operations are denominated in U.S. dollars,
while almost all costs of our European operations are incurred in euro. Our Company addresses certain financial exposures through
a controlled program of risk management that includes the use of derivative financial instruments. We primarily enter into
foreign currency forward exchange contracts to reduce the effects of fluctuating foreign currency exchange rates.
Recent Important Events
Burberry
Burberry exercised its option to buy-out the
license rights effective December 31, 2012. In October 2012, the Company and Burberry entered into a transition agreement
that provided for certain license rights and obligations to continue through March 31, 2013. The Company continued to operate certain
aspects of the business for the brand including product development, testing, and distribution. The transition agreement provided
for non-exclusivity for manufacturing, a cap on sales of Burberry products, a reduced advertising requirement and no minimum royalty
amounts.
Abercrombie & Fitch and Hollister
In December 2014, the Company
entered into a 7-year exclusive worldwide license to create, produce and distribute new perfumes and fragrance related products
under the Abercrombie & Fitch and Hollister brand names. The Company will distribute these fragrances internationally in specialty
retailers, high-end department stores and duty free shops, and in the U.S., in duty free shops and potentially in Abercrombie &
Fitch and Hollister retail stores. The agreement is subject to certain minimum sales, advertising expenditures and royalty payments
as are customary in our industry. New men’s and women’s scents are planned for both Abercrombie & Fitch and Hollister
for 2016.
Discussion of Critical Accounting Policies
We make estimates and assumptions in the preparation
of our financial statements in conformity with accounting principles generally accepted in the United States of America. Actual
results could differ significantly from those estimates under different assumptions and conditions. We believe the following discussion
addresses our most critical accounting policies, which are those that are most important to the portrayal of our financial condition
and results of operations. These accounting policies generally require our management’s most difficult and subjective judgments,
often as a result of the need to make estimates about the effect of matters that are inherently uncertain. Management of the Company
has discussed the selection of significant accounting policies and the effect of estimates with the Audit Committee of the Board
of Directors.
Revenue Recognition
We sell our products to department stores, perfumeries,
specialty retailers, mass market retailers, supermarkets and domestic and international wholesalers and distributors. Sales of
such products by our domestic subsidiaries are denominated in U.S. dollars and sales of such products by our foreign subsidiaries
are primarily denominated in either euro or U.S. dollars. We recognize revenues when merchandise is shipped and the risk of loss
passes to the customer. Net sales are comprised of gross revenues less returns, trade discounts and allowances.
Accounts Receivable
Accounts receivable represent payments due to
the Company for previously recognized net sales, reduced by allowances for sales returns and doubtful accounts. Accounts receivable
balances are written-off against the allowance for doubtful accounts when they become uncollectible. Recoveries of accounts receivable
previously recorded against the allowance are recorded in the consolidated statement of income when received. We generally grant
credit based upon our analysis of the customer’s financial position as well as previously established buying patterns.
Sales Returns
Generally, we do not permit customers to return
their unsold products. However, for U.S. distribution of our prestige products, we allow returns if properly requested, authorized
and approved. We regularly review and revise, as deemed necessary, our estimate of reserves for future sales returns based primarily
upon historic trends and relevant current data, including information provided by retailers regarding their inventory levels. In
addition, as necessary, specific accruals may be established for significant future known or anticipated events. The types of known
or anticipated events that we have considered, and will continue to consider, include, but are not limited to, the financial condition
of our customers, store closings by retailers, changes in the retail environment and our decision to continue to support new and
existing products. We record estimated reserves for sales returns as a reduction of sales, cost of sales and accounts receivable.
Returned products are recorded as inventories and are valued based upon estimated realizable value. The physical condition and
marketability of returned products are the major factors we consider in estimating realizable value. Actual returns, as well as
estimated realizable values of returned products, may differ significantly, either favorably or unfavorably, from our estimates,
if factors such as economic conditions, inventory levels or competitive conditions differ from our expectations.
Inventories
Inventories are stated at the lower of cost
or market value. Cost is principally determined by the first-in, first-out method. We record adjustments to the cost of inventories
based upon our sales forecast and the physical condition of the inventories. These adjustments are estimates, which could vary
significantly, either favorably or unfavorably, from actual requirements if future economic conditions or competitive conditions
differ from our expectations.
Equipment and Other Long-Lived Assets
Equipment, which includes tools and molds, is
recorded at cost and is depreciated on a straight-line basis over the estimated useful lives of such assets. Changes in circumstances
such as technological advances, changes to our business model or changes in our capital spending strategy can result in the actual
useful lives differing from our estimates. In those cases where we determine that the useful life of equipment should be shortened,
we would depreciate the net book value in excess of the salvage value, over its revised remaining useful life, thereby increasing
depreciation expense. Factors such as changes in the planned use of equipment, or market acceptance of products, could result in
shortened useful lives.
We evaluate indefinite-lived intangible assets
for impairment at least annually during the fourth quarter, or more frequently when events occur or circumstances change, such
as an unexpected decline in sales, that would more likely than not indicate that the carrying value of an indefinite-lived intangible
asset may not be recoverable. When testing indefinite-lived intangible assets for impairment, the evaluation requires a comparison
of the estimated fair value of the asset to the carrying value of the asset. The fair values used in our evaluations are estimated
based upon discounted future cash flow projections using a weighted average cost of capital of 6.7%. The cash flow projections
are based upon a number of assumptions, including, future sales levels and future cost of goods and operating expense levels, as
well as economic conditions, changes to our business model or changes in consumer acceptance of our products which are more subjective
in nature. If the carrying value of an indefinite-lived intangible asset exceeds its fair value, an impairment charge is recorded.
We believe that the assumptions we have made
in projecting future cash flows for the evaluations described above are reasonable and currently no impairment indicators exist
for our indefinite-lived intangible assets. However, if future actual results do not meet our expectations, we may be required
to record an impairment charge, the amount of which could be material to our results of operations. The following table presents
the impact a change in the following significant assumptions would have had on the calculated fair value in 2014 assuming all other
assumptions remained constant:
|
|
|
|
|
|
Increase (decrease)
|
|
|
In millions
|
|
Change
|
|
|
to fair value
|
|
|
|
|
|
|
|
|
|
|
Weighted average cost of capital
|
|
|
+10
|
%
|
|
$
|
(1.0
|
)
|
|
Weighted average cost of capital
|
|
|
-10
|
%
|
|
$
|
1.3
|
|
|
Future sales levels
|
|
|
+10
|
%
|
|
$
|
1.0
|
|
|
Future sales levels
|
|
|
-10
|
%
|
|
$
|
(1.0
|
)
|
Intangible assets subject to amortization are
evaluated for impairment testing whenever events or changes in circumstances indicate that the carrying amount of an amortizable
intangible asset may not be recoverable. If impairment indicators exist for an amortizable intangible asset, the undiscounted future
cash flows associated with the expected service potential of the asset are compared to the carrying value of the asset. If our
projection of undiscounted future cash flows is in excess of the carrying value of the intangible asset, no impairment charge is
recorded. If our projection of undiscounted future cash flows is less than the carrying value of the intangible asset, an impairment
charge would be recorded to reduce the intangible asset to its fair value. The cash flow projections are based upon a number of
assumptions, including future sales levels and future cost of goods and operating expense levels, as well as economic conditions,
changes to our business model or changes in consumer acceptance of our products which are more subjective in nature. We believe
that the assumptions we have made in projecting future cash flows for the evaluations described above are reasonable and currently
no impairment indicators exist for our intangible assets subject to amortization. In those cases where we determine that the useful
life of long-lived assets should be shortened, we would depreciate the net book value in excess of the salvage value (after testing
for impairment as described above), over the revised remaining useful life of such asset thereby increasing amortization expense.
In determining the useful life of our Lanvin
brand names and trademarks, we applied the provisions of ASC topic 350-30-35-3. The only factor that prevented us from determining
that the Lanvin brand names and trademarks were indefinite life intangible assets was Item c. “Any legal, regulatory, or
contractual provisions that may limit the useful life.” The existence of a repurchase option in 2025 may limit the useful
life of the Lanvin brand names and trademarks to the Company. However, this limitation would only take effect if the repurchase
option were to be exercised and the repurchase price was paid. If the repurchase option is not exercised, then the Lanvin brand
names and trademarks are expected to continue to contribute directly to the future cash flows of our Company and their useful life
would be considered to be indefinite.
With respect to the application of ASC topic
350-30-35-8, the Lanvin brand names and trademarks would only have a finite life to our Company if the repurchase option were exercised,
and in applying ASC topic 350-30-35-8, we assumed that the repurchase option is exercised. When exercised, Lanvin has an obligation
to pay the exercise price and the Company would be required to convey the Lanvin brand names and trademarks back to Lanvin. The
exercise price to be received (Residual Value) is well in excess of the carrying value of the Lanvin brand names and trademarks,
therefore no amortization is required.
Derivatives
We account for derivative financial instruments
in accordance with ASC topic 815, which establishes accounting and reporting standards for derivative instruments, including certain
derivative instruments embedded in other contracts, and for hedging activities. This topic also requires the recognition of
all derivative instruments as either assets or liabilities on the balance sheet and that they are measured at fair value.
We currently use derivative financial instruments
to hedge certain anticipated transactions and interest rates, as well as receivables denominated in foreign currencies. We
do not utilize derivatives for trading or speculative purposes. Hedge effectiveness is documented, assessed and monitored
by employees who are qualified to make such assessments and monitor the instruments. Variables that are external to us such
as social, political and economic risks may have an impact on our hedging program and the results thereof.
Income Taxes
The Company accounts for income taxes using
an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected future tax
consequences of events that have been recognized in its financial statements or tax returns. The net deferred tax assets assume
sufficient future earnings for their realization, as well as the continued application of currently anticipated tax rates. Included
in net deferred tax assets is a valuation allowance for deferred tax assets, where management believes it is more-likely-than-not
that the deferred tax assets will not be realized in the relevant jurisdiction. If the Company determines that a deferred
tax asset will not be realizable, an adjustment to the deferred tax asset will result in a reduction of net income at that time.
In addition, the Company follows the provisions of uncertain tax positions as addressed in ASC topic 740-10-65-1.
Quantitative Analysis
During the three-year period ended December
31, 2014, we have not made any material changes in our assumptions underlying these critical accounting policies or to the related
significant estimates. The results of our business underlying these assumptions have not differed significantly from our expectations.
While we believe the estimates we have made
are proper and the related results of operations for the period are presented fairly in all material respects, other assumptions
could reasonably be justified that would change the amount of reported net sales, cost of sales, and selling, general and administrative
expenses as they relate to the provisions for anticipated sales returns, allowance for doubtful accounts and inventory obsolescence
reserves. For 2014, had these estimates been changed simultaneously by 5% in either direction, our reported gross profit would
have increased or decreased by approximately $0.5 million and selling, general and administrative expenses would have changed by
approximately $0.02 million. The collective impact of these changes on operating income, net income attributable to Inter Parfums,
Inc., and net income attributable to Inter Parfums, Inc. per diluted common share would be an increase or decrease of approximately
$0.5 million, $0.26 million and $0.01 million, respectively.
Results of Operations
See information regarding
Regulation S-K Item 10(e), “Use of Non-GAAP Financial Measures in commission filings,” on page v of this Form 10-K.
As a result of the termination of the Burberry
license, after declining 14% in 2013, net sales in 2014 declined 11% to $499.3 million, as compared to $563.6 million in 2013.
However, with respect to the Company’s ongoing brands (excluding Burberry brand sales), after increasing 23% in 2013, net
sales in 2014 increased 15% to $499.3 million, as compared to $433.3 million in 2013.
|
Net Sales
|
|
Years ended December 31,
|
|
|
(in millions)
|
|
2014
|
|
|
% Change
|
|
|
2013
|
|
|
% Change
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
European based ongoing brand product sales
|
|
$
|
394.0
|
|
|
|
18
|
%
|
|
$
|
334.0
|
|
|
|
23
|
%
|
|
$
|
270.4
|
|
|
United States based product sales
|
|
|
105.3
|
|
|
|
6
|
%
|
|
|
99.3
|
|
|
|
21
|
%
|
|
|
82.3
|
|
|
Total ongoing brand net sales
|
|
|
499.3
|
|
|
|
15
|
%
|
|
|
433.3
|
|
|
|
23
|
%
|
|
|
352.7
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Burberry brand net sales
|
|
|
—0—
|
|
|
|
n/a
|
|
|
|
130.3
|
|
|
|
n/a
|
|
|
|
301.4
|
|
|
Total net sales
|
|
$
|
499.3
|
|
|
|
(11
|
)%
|
|
$
|
563.6
|
|
|
|
(14
|
)%
|
|
$
|
654.1
|
|
At comparable foreign currency exchange rates,
ongoing brand net sales increased 16% in 2014, as there was no discernible effect of currency rates on net sales in 2013. The average
U.S. dollar/euro exchange rates were 1.33 in both 2014 and 2013 and 1.28 in 2012.
Ongoing European-based prestige product sales
increased 18% in 2014 to $394.0 million, as compared to 2013. New product launches were the primary catalyst for sales growth in
2014. Karl Lagerfeld’s signature scents for both men and women yielded $24.2 million in incremental sales in 2014. Steady
gains from
Legend
fragrances along with the 2014 launch of
Emblem
, enabled Montblanc brand sales to continue to outperform
expectations with sales reaching $110.8 million in 2014, up 33% as compared to 2013. Montblanc has now become our top selling brand.
The successful summer launch of Jimmy Choo
Man
enabled Jimmy Choo brand sales to resume positive sales momentum resulting
in 2014 brand sales of $78.5 million, up 8% as compared to 2013. Lanvin brand sales faced a difficult comparison against the launch
of
Lanvin Me
in 2013; however, a strong performance by
Eclat d’Arpège
and the launch of Lanvin
Me
L’Eau
resulted in brand sales increasing 5% to $90.3 million in 2014 as compared to 2013.
These 2014 results for ongoing European-based
prestige product sales are even more gratifying as they come on the heels of a very strong 2013 where overall ongoing European-based
prestige product sales increased 23% as compared to 2012. Sales of Montblanc
Legend
fragrances performed exceptionally well
with brand sales increasing 40% in 2013. For Jimmy Choo, the introduction of its second fragrance line, Jimmy Choo
Flash
,
contributed to the 41% increase in brand sales for 2013. With the continued growth of
Eclat ď Arpège
along with
the launch of
Lanvin Me
and the steady performance of the
Jeanne Lanvin
line, Lanvin product sales increased 11%
in 2013, as compared to 2012. In addition, the launches of the Repetto signature scent, along with
Place Vendôme
from
Boucheron had exceeded our expectations and were meaningful contributors to the growth in sales of ongoing brands in 2013.
As expected, sales within our European operations
have been affected as a result of the termination of the Burberry license. In addition, 2015 is expected to be a very challenging
year from a currency perspective. As mentioned above, the average U.S. dollar/euro exchange rate for 2014 and 2013 was 1.33. However,
first quarter 2015 exchange rates have averaged approximately 1.15 or 14% below that of 2014. This is expected to have a significant
negative impact on 2015 reported sales. Despite the severe and anticipated continuing change in such currency exchange rates, we
maintain confidence in our future as we have strengthened advertising and promotional investments supporting all portfolio brands
and accelerated brand development. Our expectations reflect plans to continue to build upon the strength of our brands and our
worldwide distribution network. For 2015, we expect continued strong performances from the existing scents within our major European-based
prestige brands. In addition, our plans in 2015 call for a number of new product launches including new scents for Montblanc, Jimmy
Choo, Boucheron, Lanvin, Balmain and Van Cleef & Arpels. Lastly, the Company hopes to benefit from its substantial resources
to potentially acquire one or more brands, either on a proprietary basis or as a licensee.
United States prestige and specialty retail
product sales increased 6% in 2014 to $105.3 million as compared to $99.3 million in 2013. Recently licensed prestige brands within
our U.S.-based operations were the stars of 2014. Dunhill legacy scents added $16.2 million to 2014 sales, up 25% from $13.0 million
in 2013. Sales of Oscar de la Renta legacy products began in 2014 and aggregated $15.8 million for the year. In addition, the spring
launches,
Fatale
and
Fatale Pink
for Agent Provocateur, have been well received in international markets, generating
$5.3 million in 2014 sales. Declines in our specialty retail and mass market product lines mitigated some of these gains. In addition,
a difficult Asian market resulted in a 16% decline in Anna Sui brand sales aggregating $21.5 million in 2014, as compared to $25.8
million in 2013.
United States prestige brand and specialty retail
products, sales increased 21% in 2013 and benefited from strong consumer demand and expanded retail distribution for Anna Sui fragrances.
Initial sales of Anna Sui fragrances began in 2012 and gained further momentum following the launch of
La Vie de Bohème
in 2013. Anna Sui fragrance sales increased 29% to $25.8 million in 2013, as compared to $20.0 million in 2012. In April 2013,
our U.S.-based operations took over the manufacture and distribution of legacy Dunhill fragrances, and brand sales aggregated $13.0
million, providing an incremental contribution to 2013 growth for our U.S. business.
Future growth within our United States-based
operations is expected to come from our prestige fragrance licenses. We plan to grow our brands by launching new products and pursuing
expanded distribution. In that regard, we began shipping our first all new Dunhill fragrance,
Icon,
in January 2015, which
will be in selective distribution until spring 2015. We have also recently launched our inaugural fragrance collection for Shanghai
Tang in certain duty free markets, which will be followed by a select international roll-out throughout 2015. In addition, our
plans in 2015 call for a number of other product launches including new scents for Oscar de la Renta, Anna Sui and bebe. Finally,
we will continue the development process for the new Abercrombie & Fitch and Hollister fragrance lines planned for international
distribution in 2016.
Ongoing Brand Net
Sales to Customers by Region
|
|
|
Years ended December 31,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
|
|
(in millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
North America
|
|
$
|
134.6
|
|
|
$
|
118.4
|
|
|
$
|
96.0
|
|
|
Western Europe
|
|
|
130.9
|
|
|
|
114.4
|
|
|
|
90.6
|
|
|
Eastern Europe
|
|
|
47.0
|
|
|
|
46.3
|
|
|
|
38.0
|
|
|
Central and South America
|
|
|
49.2
|
|
|
|
33.2
|
|
|
|
29.4
|
|
|
Middle East
|
|
|
40.3
|
|
|
|
34.1
|
|
|
|
29.7
|
|
|
Asia
|
|
|
85.5
|
|
|
|
78.2
|
|
|
|
63.9
|
|
|
Other
|
|
|
11.8
|
|
|
|
8.7
|
|
|
|
5.1
|
|
|
|
|
$
|
499.3
|
|
|
$
|
433.3
|
|
|
$
|
352.7
|
|
In 2014, ongoing brand sales were ahead in all
regions. Our three largest markets Western Europe, North America and Asia had sales growth of 14.4%, 13.6% and 9.2%, respectively.
Eastern Europe, which has been a difficult market all year as a result of political and economic turmoil in the area, was up 1.4%
in 2014. In 2013, ongoing brand sales were also ahead in all regions, and our three largest markets Western Europe, North America
and Asia had sales growth of 26.3%, 23.3% and 22.5%, respectively.
Gross Margins
|
|
|
Years ended December 31,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
|
|
(in millions)
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
499.3
|
|
|
$
|
563.6
|
|
|
$
|
654.1
|
|
|
Cost of sales
|
|
|
212.3
|
|
|
|
234.8
|
|
|
|
246.9
|
|
|
Gross margin
|
|
$
|
287.0
|
|
|
$
|
328.8
|
|
|
$
|
407.2
|
|
|
Gross margin as a percent of net sales
|
|
|
57.5
|
%
|
|
|
58.3
|
%
|
|
|
62.2
|
%
|
As a percentage of net sales, gross profit margins
were 57.5%, 58.3%, and 62.2% in 2014, 2013 and 2012, respectively. For European operations, gross profit margin was 60%, 61% and
64% in 2014, 2013 and 2012, respectively. The gross margin decline in 2014 and 2013 was directly related to the resolution of the
Burberry inventory and the termination of the Burberry license. Although reserves were established in 2012 and used in 2013 to
cover losses on the disposition of inventory, the sale of certain inventory to Burberry at cost, resulted in a lower gross margin.
In addition, the discontinuance of Burberry product sales, which were sold at higher margins than ongoing brand sales, had a negative
effect on margins. For U.S. operations, gross profit margin was 48% in 2014 and 46% for both 2013 and 2012. Sales growth for our
U.S. operations has primarily come from higher margin prestige product licenses while sales of lower margin specialty retail and
mass market products have been in a decline.
We carefully watch movements in foreign currency
exchange rates as approximately 40% of our European-based operations net sales are denominated in dollars, while our costs are
incurred in euro. From a profit standpoint, a stronger U.S. dollar has a positive effect on our gross margin while a weak dollar
has a negative effect. The average dollar/euro exchange rate was 1.33 in both 2014 and 2013. As such, there was no discernable
effect on gross margin in 2014 from changes in currency exchange rates. However, first quarter 2015 dollar/euro exchange rates
have averaged approximately 1.15 or 14% below that of 2014. Although this is expected to have a significant negative impact on
2015 reported sales, we expect to see an increase in our gross margin as over 40% of net sales of our European operations are denominated
in U.S. dollars, while almost all costs of our European operations are incurred in euro.
Costs relating to purchase with purchase and
gift with purchase promotions are reflected in cost of sales and aggregated $24.4 million, $25.7 million and $46.5 million in 2014,
2013 and 2012, respectively, and represented 4.9%, 4.6% and 7.1% of net sales, respectively. The decline in 2014 and 2013 is the
result of the discontinuance of Burberry product sales.
Generally, we do not bill customers for shipping
and handling costs and such costs, which aggregated $5.2 million, $6.1 million and $8.4 million in 2014, 2013 and 2012, respectively,
are included in selling, general and administrative expenses in the consolidated statements of income. As such, our Company’s
gross margins may not be comparable to other companies, which may include these expenses as a component of cost of goods sold.
Selling, General & Administrative
Expenses
|
|
|
Years ended December 31,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
|
|
(in millions)
|
|
|
|
|
|
|
|
Selling, general & administrative expenses
|
|
$
|
233.6
|
|
|
$
|
250.0
|
|
|
$
|
325.8
|
|
|
Selling, general & administrative expenses as a percent of net sales
|
|
|
47
|
%
|
|
|
44
|
%
|
|
|
50
|
%
|
Selling, general and administrative expenses
decreased 7% in 2014 as compared to 2013 and decreased 23% in 2013 as compared to 2012. As a percentage of sales, selling, general
and administrative expenses were 47%, 44% and 50% in 2014, 2013 and 2012, respectively. For European operations, selling, general
and administrative expenses decreased 9% in 2014, as compared to 2013 and represented 50% of sales in 2014 as compared to 47% in
2013. A significant portion of the expenses associated with the Burberry brand were variable in nature. However, with only limited
reorganization measures employed, the Company is attempting to absorb its fixed costs through increased sales of other brands in
our prestige fragrance portfolio as well as with the sale of products of recently licensed new brands. For U.S. operations, selling,
general and administrative expenses increased 11% in 2014 and represented 36% of sales, as compared to 34% in 2013.
Promotion and advertising included in selling,
general and administrative expenses aggregated $86.7 million, $94.0 million and $132.7 million in 2014, 2013 and 2012, respectively.
Promotion and advertising as a percentage of sales represented 17.4%, 16.7% and 20.3% of net sales in 2014, 2013 and 2012, respectively.
In 2013, pursuant to the requirements of the transition agreement with Burberry, advertising requirements were reduced. Almost
all promotional spending in 2013 was for continuing brands and represented approximately 22% of continuing brand sales. As planned,
we invested heavily in promotional spending in the latter part of 2013 to support new product launches and continued worldwide
building of brand awareness of our brand portfolio.
Royalty expense included in selling, general and administrative expenses aggregated $35.6 million, $40.5
million and $58.8 million in 2014, 2013 and 2012, respectively. Royalty expense as a percentage of sales represented 7.1%, 7.2%
and 9.0% of net sales in 2014, 2013 and 2012, respectively. Royalty expense in 2014 includes a $2.3 million increase to the estimated
royalty liability due to Burberry. Without this adjustment, royalty expense would have represented 6.7% of net sales in 2014, with
the decline directly related to the termination of the Burberry license. In addition, service fees, which are fees paid to third
parties relating to the activities of our distribution subsidiaries, aggregated $11.1 million, $15.1 million and $26.3 million
in 2014, 2013 and 2012, respectively. The declines in both 2014 and 2013 are directly related to the termination of the Burberry
license and related discontinuation of our United Kingdom distribution subsidiary.
The impairment loss in
2012 related to our Nickel business. In December 2013, we sold our Nickel brand and trademarks for $3.5 million, which was approximately
equal to the then current book value of the goodwill and trademark; therefore, there was no material gain or loss as a result of
the sale.
See
information regarding Regulation
S-K Item 10(e), “Use of Non-GAAP Financial Measures”, on page v of this Form 10-K. As a result of the termination of
the Burberry license, the Company recognized a gain of $198.8 million as of December 31, 2012. On an after tax basis and after
allocation to the noncontrolling interests on an after tax basis, the net gain on termination of license attributable to Inter
Parfums, Inc. common shareholders’ aggregated $93.0 million.
The following analysis excludes the 2012 net
gain on termination of license.
Income from operations decreased 32% to $53.4
million in 2014 as compared to 2013, and decreased 1% to $78.8 million in 2013 as compared to $79.6 million in 2012. Operating
margins aggregated 10.7%, 14.0% and 12.2% for the years ended December 31, 2014, 2013 and 2012, respectively. Results for 2013
were influenced by an exceptional first quarter, whereby operating pursuant to the termination agreement with Burberry, profits
were extraordinarily strong due to a substantial increase in sales, coupled with low promotional expenses. The remainder of the
2013 year was influenced by lower sales and profitability relating to the termination of the Burberry license. Lower gross margins
were partially offset by lower promotional spending. In 2014, we experienced a slight decline in gross margin; however, and more
importantly, we still need higher sales levels to appropriately leverage our selling, general and administrative expenses.
With only limited reorganization measures employed,
the Company’s business model is expected to continue to demonstrate effectiveness. A significant portion of the expenses
associated with the Burberry brand were variable in nature. The Company plans to continue to absorb substantially all of its fixed
costs through increased sales of other brands in our prestige fragrance portfolio as well as with the sale of products of recently
licensed new brands. Our goal is to reach an operating margin of at least 14% in the next several years.
Other Income and
Expenses
Interest expense aggregated $1.5 million, $1.4
million and $1.7 million in 2014, 2013 and 2012, respectively. We use the credit lines available to us, as needed, to finance our
working capital needs as well as our financing needs for acquisitions. Loans payable – banks and long-term debt including
current maturities aggregated $0.3 million, $6.1 million and $27.8 million as of December 31, 2014, 2013 and 2012, respectively.
In October 2012, the Company entered into a one year, €20 million credit facility to finance payments required pursuant to
the Karl Lagerfeld license. This credit facility was repaid in full in 2013 and we had no long-term debt as of December 31, 2014
and 2013.
Foreign currency gains or (losses) aggregated
$0.9 million ($1.2) million and ($3.1) million in 2014, 2013 and 2012, respectively. We enter into foreign currency forward exchange
contracts to manage exposure related to receivables denominated in a foreign currency as over 40% of net sales of our European
operations are denominated in U.S. dollars. However, as coverage is never one hundred percent, gains and losses are incurred.
Interest income aggregated $3.9 million, $4.4
million and $1.1 million in 2014, 2013 and 2012, respectively. Cash and cash equivalents and short-term investments are primarily
invested in certificates of deposit.
Income Taxes
Our effective income tax rate was 34.2%, 36.8%
and 35.6% in 2014, 2013 and 2012, respectively. Our effective tax rates differ from statutory rates due to the effect of state
and local taxes and tax rates in foreign jurisdictions. In 2013, the Company incurred a new tax levied by the French Government
equal to 3% on any dividend paid by a French company to its shareholders. This tax aggregated approximately $0.8 million in 2014
and $1.6 million in 2013. Excluding this tax, our effective tax rate of European operations was 31.7%, 34.0% and 35.4% in 2014,
2013 and 2012, respectively. Profits in lower tax rate foreign jurisdictions are the primary factor in the continued decline in
the effective tax rate of our European operations. In addition, changes in allocation percentages related to state and local taxes
of our U.S. operations reduced our U.S. operations effective tax rate to 36.5% in 2014 as compared to 39.8% in 2013. We expect
our effective tax rate to continue to decline as a result of our business interests in lower tax rate jurisdictions. Other than
as discussed above, we did not experience any
significant changes in tax rates, and none were expected in jurisdictions
where we operate.
See information regarding Regulation S-K
Item 10(e), “Use of Non-GAAP Financial Measures”, on page v of this Form 10-K.
Net Income and Earnings per Share
(as reported)
|
|
|
Year ended
December 31,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
|
|
(In thousands except share and per share
data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to European operations
|
|
$
|
29,276
|
|
|
$
|
44,147
|
|
|
$
|
171,799
|
|
|
Net income attributable
to United States operations
|
|
|
8,069
|
|
|
|
6,819
|
|
|
|
5,091
|
|
|
Net income
|
|
|
37,345
|
|
|
|
50,966
|
|
|
|
176,890
|
|
|
Less: Net income attributable
to the noncontrolling interest
|
|
|
7,909
|
|
|
|
11,755
|
|
|
|
45,754
|
|
|
Net income attributable to Inter Parfums, Inc.
|
|
$
|
29,436
|
|
|
$
|
39,211
|
|
|
$
|
131,136
|
|
|
Net income attributable to Inter Parfums,
Inc. common shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.95
|
|
|
$
|
1.27
|
|
|
$
|
4.29
|
|
|
Diluted
|
|
|
0.95
|
|
|
|
1.27
|
|
|
|
4.26
|
|
|
Weighted average number of shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
30,931,308
|
|
|
|
30,763,955
|
|
|
|
30,574,772
|
|
|
Diluted
|
|
|
31,060,326
|
|
|
|
30,953,882
|
|
|
|
30,715,684
|
|
On an after tax basis (the tax rate of Interparfums SA
was 36.1% in 2012) and after allocation to the noncontrolling interest (26.8%)of the after tax gain, the 2012 net gain on termination
of license attributable to Inter Parfums, Inc. common shareholders aggregated $93.0 million. Therefore, had this transaction not
occurred, net income and earnings per share in 2012 would have been as follows:
|
|
|
Year ended
December 31,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
|
|
(In thousands except share and per share
data)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to European operations
|
|
$
|
29,276
|
|
|
$
|
44,147
|
|
|
$
|
44,742
|
|
|
Net income attributable
to United States operations
|
|
|
8,069
|
|
|
|
6,819
|
|
|
|
5,091
|
|
|
Net income
|
|
|
37,345
|
|
|
|
50,966
|
|
|
|
49,833
|
|
|
Less: Net income attributable
to the noncontrolling interest
|
|
|
7,909
|
|
|
|
11,755
|
|
|
|
11,741
|
|
|
Net income attributable to Inter Parfums, Inc.
|
|
$
|
29,436
|
|
|
$
|
39,211
|
|
|
$
|
38,092
|
|
|
Net income attributable to Inter Parfums,
Inc. common shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.95
|
|
|
$
|
1.27
|
|
|
$
|
1.25
|
|
|
Diluted
|
|
|
0.95
|
|
|
|
1.27
|
|
|
|
1.24
|
|
Excluding the 2012 net gain on termination
of license, on a consolidated basis, and after its allocation to the noncontrolling interests on an after tax basis, net income
was $37.3 million, $51.0 million and $49.8 million in 2014, 2013 and 2012, respectively. Net income attributable to European operations
was $29.3 million, $44.1 million and $44.7 million in 2014, 2013 and 2012, respectively, while net income attributable to United
States operations was $8.1 million, $6.8 million and $5.1 million in 2014, 2013 and 2012, respectively. The reasons for significant
fluctuations in net income for both European operations and United States operations are directly related to the previous discussions
relating to changes in sales, gross margin and selling, general and administrative expenses. In summary, for European operations
in 2014, the absence of Burberry brand sales and related decline in gross margin as a percentage of sales were partially mitigated
by the decline in Burberry related selling, general and administrative expenses. However, we need higher sales levels to appropriately
leverage our selling, general and administrative expenses. For United States operations in 2014, higher gross margins combined
with a lower effective tax rate mitigated an 11% increase in selling, general and administrative expenses resulting in net income
growth.
The noncontrolling interest arises from
our 73% owned subsidiary in Paris, Interparfums SA, which is also a publicly traded company as 27% of Interparfums SA shares trade
on the NYSE Euronext. Net income attributable to the noncontrolling interest is directly related to the profitability of our European
operations, and aggregated 27.0%, 26.6% and 26.4% of European operations net income in 2014, 2013 and 2012, respectively. Net
income attributable to Inter Parfums, Inc. aggregated $29.4 million, $39.2 million and $38.1 million in 2014, 2013 and 2012, respectively.
Net margins attributable to Inter Parfums, Inc. aggregated 5.9%, 7.0% and 5.8% in 2014, 2013 and 2012, respectively.
Liquidity and Capital Resources
The Company’s financial position
remains strong. At December 31, 2014, working capital aggregated $383 million and we had a working capital ratio of 4.7 to 1.
Cash and cash equivalents and short-term investments aggregated $280 million most of which is held in euro by our European operations
and is readily convertible into U.S. dollars. We have not had any liquidity issues to date, and do not expect any liquidity issues
relating to such cash and cash equivalents and short-term investments held by our European operations. Approximately 88% of the
Company’s total assets are held by European operations. In addition to the cash and cash equivalents and short-term investments
referred to above, approximately $87 million of trademarks, licenses and other intangible assets are held by European operations.
The Company hopes to benefit from its substantial
resources to potentially acquire one or more brands, either on a proprietary basis or as a licensee. Opportunities for external
growth continue to be examined, with the priority of maintaining the quality and homogeneous nature of our portfolio. However,
we cannot assure you that any new license or acquisition agreements will be consummated.
Cash provided by operating activities aggregated
$36.6 million, $49.2 million and $60.6 million in 2014, 2013 and 2012, respectively. In 2014, working capital items used $11 million
in cash from operating activities, as compared to $18 million in 2013 and $72 million being provided by working capital items
in 2012. The 2014 increase in accounts receivable is consistent with the 2014 increase in sales and the accounts receivable balances
in 2014, 2013 and 2012 reflect favorable collection activity as day’s sales outstanding declined to 66 days in 2014 as compared
to 73 days in 2013 and 90 days in 2012. Inventory day’s on hand has also shown improvement and aggregated 198 in 2014, down
from 199 in 2013 and 225 in 2012. As noted above, in 2013, working capital items used $18 million in cash from operating activities.
The primary factor contributing to this use is the payment of taxes relating to the gain on termination of license. The decline
in accounts receivable, inventories and payables reflect the wind down associated with the termination of the Burberry license.
Cash flows used in investing activities
reflect the purchase and sales of short-term investments by our European operations. These investments are primarily certificates
of deposit with maturities greater than three months. At December 31, 2014, approximately $79 million of such certificates of
deposit contain penalties where we would forfeit a portion of the interest earned in the event of early withdrawal.
Purchases of equipment and leasehold improvements
aggregated $3.3 million, $5.0 million and $9.5 million in 2014, 2013 and 2012, respectively. In 2012, the amounts include the purchase
of stands and counters for the Burberry cosmetic lines, some of which were sold for $2.8 million in 2013. Investing activities
in 2012 reflect the proceeds from the termination of the Burberry license received in December 2012. Our business is not capital
intensive as we do not own any manufacturing facilities. However, on a full year basis, we spend approximately $3 to $4 million
on tools and molds, depending on our new product development calendar. Capital expenditures also include amounts for office fixtures,
computer equipment and industrial equipment needed at our distribution centers.
Payments for intangible assets aggregated
$0.9 million, $7.8 million and $19.7 million in 2014, 2013 and 2012, respectively. When acquiring new licenses for brands that
have current distribution, we may pay an entry fee in connection with securing the license rights.
In December 2013,
the Company sold its Nickel brand and trademarks for $3.5 million, which was approximately equal to the then current book value
of the goodwill and trademark; therefore, there was no material gain or loss as a result of the sale.
Our short-term financing requirements are
expected to be met by available cash on hand at December 31, 2014, cash generated by operations and a short-term credit lines
provided by domestic and foreign banks. The principal credit facilities for 2015 consist of a $20.0 million unsecured revolving
line of credit provided by a domestic commercial bank and approximately $30.0 million in credit lines provided by a consortium
of international financial institutions. Short-term borrowings aggregated $0.3 million and $6.1 million as of December 31, 2014
and 2013, respectively. Proceeds from sale of stock of subsidiary reflect the proceeds from shares issued by our French subsidiary,
Interparfums SA, pursuant to options exercised.
In January 2013, the Board of Directors
authorized a 50% increase in the annual dividend to $0.48 per share. In November 2013, our Board of Directors authorized a special
cash dividend of $0.48 per share, payable in one lump sum on December 16, 2013 to shareholders of record on December 2, 2013.
In January 2014, the Board of Directors authorized the continuation of the $0.48 per share dividend for 2014 and in January 2015,
the Board of Directors authorized an 8% increase in the annual dividend to $0.52 per share. The next quarterly cash dividend of
$0.13 per share is payable on April 15, 2015 to shareholders of record on March 31, 2015. Dividends paid, including dividends
paid once per year to noncontrolling stockholders of Interparfums SA, aggregated $19.5 million, $36.7 million and $13.1 million
for the years ended December 31, 2014, 2013 and 2012, respectively. The cash dividends to be paid in 2015 are not expected to
have any significant impact on our financial position.
We believe that funds provided by or used
in operations can be supplemented by our present cash position and available credit facilities, so that they will provide us with
sufficient resources to meet all present and reasonably foreseeable future operating needs.
Inflation rates in the U.S. and foreign
countries in which we operate did not have a significant impact on operating results for the year ended December 31, 2014.
Contractual Obligations
The following table summarizes our contractual
obligations over the periods indicated, as well as our total contractual obligations ($ in thousands).
|
Contractual Obligations
|
|
Payments due by period
|
|
|
|
|
Total
|
|
|
Less than
1 year
|
|
|
Years
2-3
|
|
|
Years
4-5
|
|
|
More than
5 years
|
|
|
Long-Term Debt
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Capital Lease Obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating Leases
|
|
$
|
34,901
|
|
|
$
|
5,306
|
|
|
$
|
10,410
|
|
|
$
|
8,884
|
|
|
$
|
10,301
|
|
|
Purchase obligations
(1)
|
|
$
|
984,309
|
|
|
$
|
102,752
|
|
|
$
|
210,181
|
|
|
$
|
217,308
|
|
|
$
|
454,068
|
|
|
Other Long-Term Liabilities Reflected on the Registrant's Balance Sheet under GAAP
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
$
|
1,019,210
|
|
|
$
|
108,058
|
|
|
$
|
220,591
|
|
|
$
|
226,192
|
|
|
$
|
464,369
|
|
|
(1)
|
|
Consists of purchase commitments for advertising and promotional items,
minimum royalty guarantees, including fixed or minimum obligations, and estimates of such obligations subject to variable
price provisions. Future advertising commitments were estimated based on planned future sales for the license terms that were
in effect at December 31, 2014, without consideration for potential renewal periods and do not reflect the fact that our distributors
share our advertising obligations.
|
Item 7A. Quantitative and Qualitative Disclosures About
Market Risk.
General
We address certain financial exposures
through a controlled program of risk management that primarily consists of the use of derivative financial instruments. We primarily
enter into foreign currency forward exchange contracts in order to reduce the effects of fluctuating foreign currency exchange
rates. We do not engage in the trading of foreign currency forward exchange contracts or interest rate swaps.
Foreign Exchange Risk Management
We periodically enter into foreign currency
forward exchange contracts to hedge exposure related to receivables denominated in a foreign currency and to manage risks related
to future sales expected to be denominated in a currency other than our functional currency. We enter into these exchange contracts
for periods consistent with our identified exposures. The purpose of the hedging activities is to minimize the effect of foreign
exchange rate movements on the receivables and cash flows of Interparfums SA, our French subsidiary, whose functional currency
is the euro. All foreign currency contracts are denominated in currencies of major
industrial
countries
and
are with large
financial institutions, which are rated
as
strong
investment
grade
.
All derivative instruments are required
to be reflected as either assets or liabilities in the balance sheet measured at fair value. Generally, increases or decreases
in fair value of derivative instruments will be recognized as gains or losses in earnings in the period of change. If the derivative
is designated and qualifies as a cash flow hedge, then the changes in fair value of the derivative instrument will be recorded
in other comprehensive income.
Before entering into a derivative transaction
for hedging purposes, we determine that the change in the value of the derivative will effectively offset the change in the fair
value of the hedged item from a movement in foreign currency rates. Then, we measure the effectiveness of each hedge throughout
the hedged period. Any hedge ineffectiveness is recognized in the income statement.
At December 31, 2014, we had foreign
currency contracts in the form of forward exchange contracts in the amount of approximately U.S. $14.8 million, GB £2.6 million
and JPY ¥75.0 million which all have maturities of less than one year. We believe that our risk of loss as the result of
nonperformance by any of such financial institutions is remote.
Interest Rate Risk Management
We mitigate interest rate risk by monitoring
interest rates, and then determining whether fixed interest rates should be swapped for floating rate debt, or if floating rate
debt should be swapped for fixed rate debt.
Item 8. Financial Statements and Supplementary Data
The required financial statements commence
on page F-1.
Supplementary Data
Quarterly Data (Unaudited)
For the Year Ended
December 31, 2014
(In Thousands Except
Per Share Data)
|
|
|
1st
Quarter
|
|
|
2nd Quarter
|
|
|
3rd Quarter
|
|
|
4th Quarter
|
|
|
Full Year
|
|
|
Net sales
|
|
$
|
121,730
|
|
|
$
|
118,192
|
|
|
$
|
134,206
|
|
|
$
|
125,133
|
|
|
$
|
499,261
|
|
|
Gross margin
|
|
|
69,230
|
|
|
|
68,116
|
|
|
|
75,328
|
|
|
|
74,363
|
|
|
|
287,037
|
|
|
Net income
|
|
|
12,150
|
|
|
|
7,667
|
|
|
|
13,764
|
|
|
|
3,764
|
|
|
|
37,345
|
|
|
Net income attributable to Inter Parfums, Inc.
|
|
|
8,894
|
|
|
|
6,109
|
|
|
|
11,113
|
|
|
|
3,320
|
|
|
|
29,436
|
|
|
Net income attributable to Inter Parfums, Inc. per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.29
|
|
|
$
|
0.20
|
|
|
$
|
0.36
|
|
|
$
|
0.11
|
|
|
$
|
0.95
|
|
|
Diluted
|
|
$
|
0.29
|
|
|
$
|
0.20
|
|
|
$
|
0.36
|
|
|
$
|
0.11
|
|
|
$
|
0.95
|
|
|
Average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
30,900
|
|
|
|
30,938
|
|
|
|
30,941
|
|
|
|
30,945
|
|
|
|
30,931
|
|
|
Diluted
|
|
|
31,058
|
|
|
|
31,069
|
|
|
|
31,054
|
|
|
|
31,061
|
|
|
|
31,060
|
|
Quarterly Data (Unaudited)
For
the Year Ended December 31, 2013
(In Thousands Except
Per Share Data)
|
|
|
1st
Quarter
|
|
|
2nd Quarter
|
|
|
3rd Quarter
|
|
|
4th Quarter
|
|
|
Full Year
|
|
|
Net sales
|
|
$
|
213,810
|
|
|
$
|
117,485
|
|
|
$
|
126,753
|
|
|
$
|
105,531
|
|
|
$
|
563,579
|
|
|
Gross margin
|
|
|
134,643
|
|
|
|
63,607
|
|
|
|
70,007
|
|
|
|
60,522
|
|
|
|
328,779
|
|
|
Net income (loss)
|
|
|
42,942
|
|
|
|
4,521
|
|
|
|
9,903
|
|
|
|
(6,400
|
)
|
|
|
50,966
|
|
|
Net income (loss) attributable to Inter Parfums, Inc.
|
|
|
31,696
|
|
|
|
3,815
|
|
|
|
7,854
|
|
|
|
(4,154
|
)
|
|
|
39,211
|
|
|
Net income (loss) attributable to Inter Parfums, Inc. per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
1.03
|
|
|
$
|
0.12
|
|
|
$
|
0.26
|
|
|
$
|
(0.13
|
)
|
|
$
|
1.27
|
|
|
Diluted
|
|
$
|
1.03
|
|
|
$
|
0.12
|
|
|
$
|
0.25
|
|
|
$
|
(0.13
|
)
|
|
$
|
1.27
|
|
|
Average common shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
30,687
|
|
|
|
30,748
|
|
|
|
30,796
|
|
|
|
30,826
|
|
|
|
30,764
|
|
|
Diluted
|
|
|
30,847
|
|
|
|
30,953
|
|
|
|
30,986
|
|
|
|
30,826
|
|
|
|
30,954
|
|
Item 9. Changes In and Disagreements with Accountants on
Accounting and Financial Disclosure
None.
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Our Chief Executive Officer and Chief Financial
Officer have reviewed and evaluated the effectiveness of our disclosure controls and procedures (as defined in the Securities
Exchange Act of 1934 Rule 13a-15(e)) as of the end of the period covered by this annual report on Form 10-K (the “Evaluation
Date”). Based on their review and evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that
as of the Evaluation Date, our Company's disclosure controls and procedures were effective.
Management’s Annual Report on Internal Control
over Financial Reporting
The management of Inter Parfums,
Inc. is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule
13(a) - 15(f) under the Securities Exchange Act of 1934. With the participation of the Chief Executive Officer and the
Chief Financial Officer, our management conducted an evaluation of the effectiveness of our internal control over
financial reporting based on the framework and criteria established in
Internal Control – Integrated Framework (1992)
,
issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, our management has
concluded that our internal control over financial reporting was effective as of December 31, 2014.
Our independent auditor, WeiserMazars LLP,
a registered public accounting firm, has issued its report on its audit of our internal control over financial reporting. This
report appears below.
Report of Independent Registered
Public Accounting Firm on Internal Control Over Financial Reporting
To the Board of Directors and Stockholders of Inter Parfums,
Inc.
We have audited Inter Parfums, Inc.’s internal
control over financial reporting as of December 31, 2014, based on criteria established in
Internal Control –
Integrated Framework (1992)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (the COSO criteria).
Inter Parfums, Inc.’s management is responsible for maintaining effective internal control over financial reporting,
and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying
Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on
the company’s internal control over financial reporting based on our audit.
We conducted our audit in accordance with the standards of
the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial
reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness
of internal control based on the assessed risk. Our audit also included performing such other procedures as we considered necessary
in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
A company’s internal control over financial reporting
is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of
financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal
control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in
reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally
accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations
of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over
financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods
are subject to the risk that controls may become inadequate because of the changes in conditions, or that the degree of compliance
with the policies or procedures may deteriorate.
In our opinion, Inter Parfums, Inc. maintained, in all material
respects, effective internal control over financial reporting as of December 31, 2014, based on the COSO criteria.
We have also audited, in accordance with the standards
of the Public Company Accounting Oversight Board (United States), the consolidated balance sheet of Inter Parfums, Inc. as
of December 31, 2014 and the related consolidated statements of income, changes in shareholders’ equity,
comprehensive income, cash flows and Schedule II for the year ended December 31, 2014 and our report dated March 11, 2015
expressed an unqualified opinion thereon.
WeiserMazars LLP
New York, New York
March 11, 2015
Changes in Internal Control Over Financial Reporting
There has been no change in our internal
control over financial reporting (as defined in Rule 13a-15(f) of the Securities Exchange Act of 1934) that occurred during the
fourth quarter of 2014 that has materially affected, or is reasonably likely to materially affect, the Company's internal control
over financial reporting.
Item 9B. Other Information.
None.
PART III
Item 10. Directors, Executive Officers and Corporate Governance
Executive Officers and Directors
As of the date of this report, our executive
officers and directors were as follows:
|
Name
|
|
Position
|
|
Jean Madar
|
|
Chairman of the Board, Chief Executive Officer of Inter
Parfums, Inc. and Director General of Interparfums SA
|
|
Philippe Benacin
|
|
Vice Chairman of the Board, President of Inter Parfums,
Inc. and Chief Executive Officer of Interparfums SA
|
|
Russell Greenberg
|
|
Director, Executive Vice President and Chief Financial Officer
|
|
Philippe Santi
|
|
Director, Executive Vice President and Chief Financial Officer, Interparfums SA
|
|
Francois Heilbronn
|
|
Director
|
|
Jean Levy
|
|
Director
|
|
Robert Bensoussan
|
|
Director
|
|
Patrick Choël
|
|
Director
|
|
Michel Dyens
|
|
Director
|
|
Frederic Garcia-Pelayo
|
|
Director of the Luxury and Fashion division of
Interparfums SA
|
|
Axel Marot
|
|
Director of Production & Logistics, Interparfums SA
|
|
Henry B. (“Andy”) Clarke
|
|
President of Inter Parfums USA, LLC
|
Our directors will serve until the next
annual meeting of stockholders and thereafter until their successors shall have been elected and qualified. Messrs. Jean Madar
and Philippe Benacin have a verbal agreement or understanding to vote their shares and the shares of their respective holding
companies in a like manner.
With the exception of Mr. Benacin,
the officers are elected annually by the directors and serve at the discretion of the board of directors. There are no family
relationships between executive officers or directors of our Company.
Board of Directors
Our board of directors has the responsibility
for establishing broad corporate policies and for the overall performance of our Company. Although certain directors are not involved
in day-to-day operating details, members of the board of directors are kept informed of our business by various reports and documents
made available to them. Our board of directors held 16 meetings (or executed consents in lieu thereof), including meetings of
committees of the full board of directors during 2014 (including the last regular board meeting of 2014 held during January 2015),
and all of the directors attended at least 75% of the meetings (or executed consents in lieu thereof) of the full board of directors
and committees of which they were a member. Our board of directors presently consists of nine (9) directors.
On January 8, 2014, our company was advised
that one of our directors, Serge Rosinoer, passed away, and on the same day we notified Nasdaq OMX of such event. Prior to the
death of Mr. Rosinoer, we had nine (9) directors, with a majority of independent directors. In September 2015, Michel Dyens, an
independent director, was elected to our board of directors by our stockholders at our 2014 annual meeting. As the result of the
election of Mr. Dyens to the board, we again have a board with nine members and a majority of independent directors and are in
compliance with the requirement to have a majority of independent directors as set forth in Nasdaq Rule 5605(b)(1)(A).
We have adopted a Code of Business Conduct
that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, as well
as other persons performing similar functions, and we agree to provide to any person without charge, upon request, a copy of our
Code of Business Conduct. Any person who requests a copy of our Code of Business Conduct should provide their name and address
in writing to: Inter Parfums, Inc., 551 Fifth Avenue, New York, NY 10176, Att.: Shareholder Relations. In addition, our Code of
Conduct is also maintained on our website, at www.interparfumsinc.com.
During 2014, our board of directors had
the following standing committees:
|
|
·
|
Audit Committee
– The Audit Committee has the sole authority and is directly responsible for, the
appointment, compensation and oversight of the work of the independent accountants employed
by our company which prepare or issue audit reports for our company. During 2014, the
Audit Committee consisted of Messrs. Heilbronn, Levy and Choël.
|
The Company does not have an “audit
committee financial expert” within the definition of the applicable Securities and Exchange Commission rules. First, finding
qualified nominees to serve as a director of a public company without substantial financial resources has been challenging. Second,
despite the applicable Securities and Exchange Commission rule which states that being named as the audit committee financial
expert does not impose any greater duty, obligation or liability, our company has been met with resistance from both present and
former directors to being named as such, primarily due to potential additional personal liability. However, as the result of the
background, education and experience of the members of the Audit Committee, our board of directors believes that such committee
members are fully qualified to fulfill their obligations as members of the Audit Committee.
|
|
·
|
Executive Compensation
and Stock Option Committee – The Executive Compensation and Stock Option Committee
oversees the compensation of our company’s executives and administers our company’s
stock option plans. During 2014, the members of such committee consisted of Messrs. Heilbronn,
Levy and Choël. The charter of the Executive Compensation and Stock Option Committee
is posted on our company’s website.
|
|
|
·
|
Nominating Committee
– The members of such committee consist of Messrs. Heilbronn, Levy and Choël.
The purpose of the Nominating Committee is to determine and recommend qualified persons
to the Board of Directors who will be put forth as management's slate of directors for
vote of the Corporation's stockholders, as well as to fill vacancies in the Board of
Directors. The charter of the Nominating Committee is posted on our company’s website.
|
Business Experience
The following sets forth biographical information
as to the business experience of each executive officer and director of our company for at least the past five years.
Jean Madar
Jean Madar, age 54, a Director, has been
the Chairman of the Board since our company’s inception, and is a co-founder of our company with Mr. Philippe Benacin. From
inception until December 1993 he was the President of our company; in January 1994 he became Director General of Interparfums
SA, our company’s subsidiary; and in January 1997 he became Chief Executive Officer of our company. Mr. Madar was previously
the managing director of Interparfums SA, from September 1983 until June 1985. At such subsidiary, he had the responsibility of
overseeing the marketing operations of its foreign distribution, including market research analysis and actual marketing campaigns.
Mr. Madar graduated from The French University for Economic and Commercial Sciences (ESSEC) in 1983. We believe that Mr. Madar’s
skills in guiding, leading and determining the strategic direction of our company since its inception together with Mr. Benacin,
in addition to his contacts in the fragrance and cosmetic industry, render him qualified to serve as a member of our board of
directors.
Philippe Benacin
Mr. Benacin, age 56, a Director, is President
of our Company and the Chief Executive Officer of Interparfums SA, has been the Vice Chairman of the Board since September 1991,
and is a co-founder of our company with Mr. Madar. He was elected the Executive Vice President in September 1991, Senior Vice
President in April 1993, and President of the Company in January 1994. In addition, he has been the Chief Executive Officer of
Interparfums SA for more than the past five years. Mr. Benacin graduated from The French University for Economic and Commercial
Sciences (ESSEC) in 1983. We believe that Mr. Benacin’s skills in guiding, leading and determining the strategic direction
of our company since its inception together with Mr. Madar, in addition to his contacts in the fragrance and cosmetic industry,
render him qualified to serve as a member of our board of directors.
Russell Greenberg
Mr. Greenberg, age 58, the Chief Financial
Officer, was Vice-President, Finance when he joined the Company in June 1992; became Executive Vice President in April 1993; and
was appointed to our board of directors in February 1995. He is a certified public accountant licensed in the State of New York,
and is a member of the American Institute of Certified Public Accountants and the New York State Society of Certified Public Accountants.
After graduating from The Ohio State University in 1980, he was employed in public accounting until he joined our company in June
1992. We believe that Mr. Greenberg’s skills in accounting and tax, as well as his knowledge of the fragrance industry and
our Company’s operations, render him qualified to serve as a member of our board of directors.
Philippe Santi
Philippe Santi, age 53 and a Director since
December 1999, is the Executive Vice President and Chief Financial Officer of Interparfums SA. Mr. Santi, who is a Certified Accountant
and Statutory Auditor in France, has been the Chief Financial Officer of Interparfums SA since February 1995. Prior to February
1995, Mr. Santi was the Chief Financial Officer for Stryker France and an Audit Manager for Ernst and Young. We believe that Mr.
Santi’s skills in accounting and tax, as well as his knowledge of the fragrance industry and our Company’s European
operations, render him qualified to serve as a member of our board of directors.
Francois Heilbronn
Mr. Heilbronn, age 54, a Director since
1988, an independent director and a member of the Audit Committee, Nominating Committee and the Executive Compensation and Stock
Option Committee, is a graduate of Harvard Business School with a Master of Business Administration degree and is currently the
managing partner of the consulting firm of M.M. Friedrich, Heilbronn & Fiszer. He was formerly employed by The Boston Consulting
Group, Inc. from 1988 through 1992 as a manager. Mr. Heilbronn graduated from Institut d' Etudes Politiques de Paris in June 1983.
From 1984 to 1986, he worked as a financial analyst for Lazard Freres & Co.
In addition, during 2009, Mr. Heilbronn became an
Associate
Professor in Business Strategy at Sciences Po, Paris, France. As the result of his business and financial acumen, as well as his
experience as managing partner of a business consulting firm in the area of mergers and acquisitions of large international companies
in retail, consumer goods and consumer services throughout the world, we believe Mr. Heilbronn is qualified to serve as a member
of our board of directors.
Jean Levy
Jean Levy, age 82, a Director since August
1996, an independent director and a member of the Audit Committee, Nominating Committee and the Executive Compensation and Stock
Option Committee, worked for twenty-seven years at L'Oreal, and was the President and Chief Executive Officer of Cosmair, the
exclusive United States licensee of L'Oreal, from 1983 through June 1987. In addition, he is the former President and Chief Executive
Officer of Sanofi Beaute (France). For more than the past five years, Mr. Levy has been an independent advisor as well as a consultant
for economic development to local governments in France. A graduate of l'Institut d'Etudes Politiques de Paris, he also attended
Yale Graduate School and was a recipient of a Fulbright Scholarship. He was also a Professor at l'Institut d'Etudes Politiques
de Paris. He was formerly a director of Zannier Group and Escada Beaute Worldwide and Rallye, S.A. In addition, Mr. Levy was also
a director (Chairman of the Board until October 2001) of Financière d'Or, and its subsidiary, Histoire d'Or which is in
the retail jewelry business. Mr. Levy was formerly a consultant to Ernst & Young, Paris through 2004. Due to Mr. Levy having
over thirty years’ experience as an executive officer, including more than ten years as President and Chief Executive Officer
of well-known cosmetic companies such as Cosmair and Sanofi Beaute (France), we believe he is qualified to serve as a member of
our board of directors.
Robert Bensoussan
Robert Bensoussan, age 57, has been a Director
since March 1997, and also is an independent director. Mr. Bensoussan is the co-founder of Sirius Equity, a retail and branded
luxury goods investment company. Since 2008, Sirius has invested in UK shoe and clothing retailer LK Bennett, Italian sportswear
retailer and wholesaler Jeckerson Spa and feelunique.com, Europe's largest online beauty retailer. Mr. Bensoussan served previously
as Executive Chairman and CEO of LK Bennett and is now Non-Executive Chairman. He has also acted as the Non-Executive Chairman
of Jerkerson Spa since May 2008 and of feelunique.com since December 2012. Mr. Bensoussan is a board member of lululemon athletica
inc.
He is also a member of three private Boards, including Men's retailer Celio International (Belgium), Zen Cars (Belgium),
an electric car rental company, and Aurenis (France) a part-works publisher. Previously Mr. Bensoussan was as director of, and
had an indirect ownership interest J. Choo Limited until July 2011, and CEO (from 2001 to 2007) and a member of the Board of Jimmy
Choo Ltd (from 2001 to 2011), a privately held luxury shoe wholesaler and retailer. We believe Mr. Bensoussan is qualified to
serve as a member of our board of directors due to his business and financial acumen, as well as his experience in the retail
and branded luxury goods market.
Patrick Choël
Mr. Choël, age 71, was appointed to
the board of directors in June 2006 as an independent director, and is a member of the Audit Committee, Nominating Committee and
the Executive Compensation and Stock Option Committee. Mr. Choël is a director of our majority-owned subsidiary, Interparfums
SA, a publicly held company, and Christian Dior and Guerlain, both privately held companies. He is also the manager of Université
82, a business consultant and advisor. For approximately 10 years, through March 2004, Mr. Choël worked as the President
and CEO of two divisions of LVMH, first Parfums Christian Dior, a leading world-wide prestige beauty/fragrances business, and
later, the LVMH Perfumes and Cosmetics Division, which included such well-known brands as Parfums Christian Dior, Guerlain, and
Parfums Givenchy, among others. Prior to such time, for approximately 30 years, he worked at various executive positions at Unilever,
including President and CEO of Elida Fabergé France and President and CEO of Chesebrough Pond’s USA. We believe that
Mr. Choël, who has previously worked as President and Chief Executive Officer of two divisions of LVMH Moet Hennessy Louis
Vuitton S.A., which included such well-known brands as Parfums Christian Dior, Guerlain, and Parfums Givenchy, is qualified to
serve as a member of our board of directors.
Frederic Garcia-Pelayo
Frederic Garcia-Pelayo, age 55, became
the Director of the Luxury and Fashion division of Interparfums SA in March 2005. He was previously the Director of Marketing
and Distribution for Perfume and Cosmetics for Interparfums SA and was named Executive Vice President in 2004. Previously Mr.
Garcia-Pelayo was the Director of Export Sales of Interparfums SA from September 1994. Prior to September 1994, Mr. Garcia-Pelayo
was the Export Manager for Benetton Perfumes for seven (7) years.
Axel Marot
Axel Marot, age 42, was the Supply Chain
Manager when he joined Interparfums SA in 2003 and has been the Director of Operations for Interparfums SA since January 2005.
Prior to joining Interparfums SA, Mr. Marot was a Supply Chain Manager for Nestlé.
Andy Clarke
Henry B. “Andy” Clarke, age
54, was appointed as President of Inter Parfums USA, LLC in 2009, which presently encompasses fragrance and personal care products
for brands such as Abercrombie & Fitch, Agent Provocateur, Anna Sui, Banana Republic, bebe, Dunhill, Gap, Hollister, Oscar
de la Renta and Shanghai Tang. Mr. Clarke has been employed by our company since 2001.
Section 16(a) Beneficial Ownership Reporting Compliance
Based solely upon a review of Forms 3,
4 and 5 and any amendments to such forms furnished to us, and written representations from various reporting persons furnished
to us, except as set forth below, we are not aware of any reporting person who has failed to file the reports required to be filed
under Section 16(a) of the Securities Exchange Act of 1934 on a timely basis. Andy Clarke, the President of Inter Parfums USA,
LLC, filed one Form 4 one day late reporting an option exercise and sale of the underlying shares.
Item 11. Executive Compensation
Compensation Discussion and Analysis
General
The executive compensation and stock option
committee of our board of directors is comprised entirely of independent directors and oversees all elements of compensation (base
salary, annual bonus, long-term incentives and perquisites) of our company’s executive officers and administers our company’s
stock option plans, other than the non-employee directors stock option plan, which is self-executing.
The objectives of our compensation program
are designed to strike a balance between offering sufficient compensation to either retain existing or attract new executives
on the one hand, and maintaining compensation at reasonable levels on the other hand. We do not have the resources comparable
to the cosmetic giants in our industry, and, accordingly, cannot afford to pay excessive executive compensation. In furtherance
of these objectives, our executive compensation packages generally include a base salary, as well as annual incentives tied to
individual performance and long-term incentives tied to our operating performance.
Mr. Madar, the Chairman and Chief Executive
Officer, takes the initiative after discussions with Mr. Russell Greenberg, Executive Vice President, Chief Financial Officer
and a Director, and recommends executive compensation levels for executives for United States operations. Mr. Benacin, the Chief
Executive Officer of Interparfums SA, takes the initiative after discussions with Philippe Santi, the Chief Financial Officer
of Interparfums SA, and recommends executive compensation levels for executives in European operations. The recommendations are
presented to the compensation committee for its consideration, and the compensation committee makes a final determination regarding
salary adjustments and annual award amounts to executives, including Jean Madar and Philippe Benacin. Mr. Madar the Chief Executive
Officer is not present during deliberations or determination of his executive compensation by the compensation committee. Further,
Messrs. Madar and Benacin, in addition to being executive officers and directors, are our largest beneficial shareholders, and
therefore, their interests are aligned with our shareholder base in keeping executive compensation at a reasonable level.
The compensation committee was pleased
that the most recent shareholder advisory vote on executive compensation held at our last annual meeting of shareholders in September
2014 overwhelmingly approved the compensation policies and decisions of the compensation committee. As such vote validated the
compensation policies and decisions of the compensation committee. The compensation committee has determined to continue its present
compensation policies in order to determine similar future decisions.
Our compensation committee believes that
individual executive compensation is at a level comparable with executives in other companies of similar size and stage of development
that operate in the fragrance industry and takes into account our company’s performance as well as our own strategic goals.
Further, the compensation committee believes that its present policies to date, with its emphasis on rewarding performance, has
served to focus the efforts of our executives, which in turn has permitted our company to weather economic and political turmoil
in certain parts of the world and keep our company on track for continued growth in sales and profitability, which management
believes will result in a substantial increase in value to our shareholders.
Elements of Compensation
General
The compensation of our executive officers
is generally comprised of base salaries, including a fee paid to the holding companies of each of Messrs. Madar and Benacin for
services rendered outside the United States, annual cash bonuses and long-term equity incentive awards. In determining specific
components of compensation, the compensation committee considers individual performance, level of responsibility, skills and experience,
other compensation awards or arrangements and overall company performance. The compensation committee reviews and approves all
elements of compensation for all of our executive officers taking into consideration recommendations from the Chief Executive
Officer of our company and the Chief Executive Officer of Interparfums SA, as well as information regarding compensation levels
at competitors in our industry.
Our named executive officers have all been
with the company for more than the past ten (10) years, with Messrs. Madar and Benacin being founders of the company in 1985.
As Messrs. Madar and Greenberg for United States operations, and Benacin and Santi for European operations, are most familiar
with the individual performance, level of responsibility, skills and experience of each executive officer in their respective
operating segments, the compensation committee relies upon the information provided by such executive officers in determining
individual performance, level of responsibility, skills and experience of each executive officer.
The compensation committee views the competitive
market place very broadly, which would include executive officers from both public and privately held companies in general, including
fashion and beauty companies, but not limited to the “peer companies” contained in the corporate performance graph
contained in our annual report. Rather than tie the compensation committee’s determination of compensation proposals to
any specific peer companies, the members of our committee have used their business experience, judgment and knowledge to review
the executive compensation proposals recommended to them by Mr. Madar for United States operations and Benacin for European operations.
As such, compensation committee did not determine the need to “benchmark” of any material item of compensation or
overall compensation.
The members of the compensation committee
have extensive experience and business acumen and are well qualified in determining the appropriateness of executive compensation
levels. Mr. Heilbronn is a managing partner of a business consulting firm in the area of mergers and acquisitions of large international
companies in retail, consumer goods and consumer services throughout the world. Mr. Levy has over thirty years’ experience
as an executive officer, including more than ten years as President and Chief Executive Officer of well-known cosmetic companies
such as Cosmair and Sanofi Beaute (France). Mr. Choël, the final committee member, is presently a business consultant and
advisor, who previously worked as President and Chief Executive Officer of two divisions of LVMH Moet Hennessy Louis Vuitton S.A.,
which included such well-known brands as Parfums Christian Dior, Guerlain, and Parfums Givenchy. Mr. Choël has also been
President and CEO of both Elida Fabergé France and Chesebrough Pond’s USA.
Base Salary
Base salaries for executive officers are
initially determined by evaluating the responsibilities of the position held and the experience of the individual, and by reference
to the competitive market place for executive talent. Base salaries for executive officers are reviewed on an annual basis, and
adjustments are determined by evaluating our operating performance, the performance of each executive officer, as well as whether
the nature of the responsibilities of the executive has changed.
As stated above, as Messrs. Madar and Greenberg
for United States operations, and Benacin and Santi for European operations, are most familiar with the individual performance,
level of responsibility, skills and experience of each executive officer in their respective segments, the committee relies upon
the information provided by such executive officers in determining individual performance, level of responsibility, skills and
experience of each executive officer.
For executive officers of United States
operations, the bulk of their annual compensation is in base salary including a fee paid to the holding company for Mr. Madar
for services rendered outside the United States. However, for executive officers of European operations base salary comprises
a smaller percentage of overall compensation. We have paid a lower percentage of overall compensation in the form of base salary
to executive officers of European operations for several years, principally because European operations historically have had
higher profitability than United States operations, and European operations are run differently from United States operations
by the Chief Executive Officer of European operations, Mr. Benacin. As the result of this historically higher profitability, European
operations have had the ability to pay higher bonus compensation in addition to base salary. As bonus compensation is and has
historically been discretionary, no targets were set in order to maintain flexibility. Further, if results of operations for European
operations were not satisfactory (again, no target amounts were set to maintain flexibility), then bonus compensation, as well
as overall compensation could be lowered without otherwise affecting base salary. Finally, by keeping annual bonus compensation
at a higher percentage of overall compensation and base salary at a lower percentage, our company benefits because the base amount
for annual salary adjustments would be smaller.
For 2014, each of Mr. Philippe Santi, the
Chief Financial Officer of Interparfums SA, and Mr. Frederic Garcia-Pelayo, Director of the Luxury and Fashion division, had their
based salaries increased to €294,000, an increase of 2.9% from €285,600 in 2013. These increases in base salary for
2014 were in line with the base salary increases of 2.6% from €278,400 in 2012. The Compensation Committee considered the
recommendations of Mr. Benacin, as well as the services performed for European operations by Messrs. Santi and Garcia-Pelayo in
authorizing these salary levels.
With regard to Mr. Benacin, his base salary
remained constant for 2012 and 2013, at €391,200 per year in view of the uncertainty of the status of the Burberry license
at the end of 2011 and the beginning of 2012. Mr. Benacin believed it to be prudent to recommend only a limited base salary increase
for Messrs. Santi and Garcia-Pelayo and not to increase his base salary. The compensation committee agreed with Mr. Benacin’s
assessment of the uncertain business prospects of Interparfums SA and his proposed disposition relating to base salary for Interparfums
SA executive officers.
For 2014, in addition to his base salary
which was increased from €391,200 to €414,000, a 5.8% increase, Mr. Benacin’s personal holding company, received
$250,000 for services rendered outside of the United States by Mr. Benacin for the benefit of the Company’s United States
operations, in his capacity as President of our company. Payment is being made by the Company’s United States operations.
We have entered into a consulting agreement with Mr. Benacin’s holding company, which provides for review on an annual basis
of the amount of compensation payable to such company.
The compensation took into account the
following three salient factors in authorizing payment to Mr. Benacin’s holding company— services rendered to United
States operations for several years by Mr. Benacin in connection with licensing and distribution of international brands without
any cash compensation from United States operations, future international services to be performed by Mr. Benacin relating to
licensing and distribution of international brands for United States operations, as well as three years without any increase in
his base salary.
A different approach is taken for United
States operations as that segment is smaller and less profitable. A more significant base salary is paid in order to attract and
retain employees with the skills and talents needed to run the operation with a lesser emphasis placed on bonuses. None of the
executive officers for United States operations have employment agreements, as we believe that having flexibility in structuring
annual base salary is a benefit, which permits us to act quickly to meet a changing economic environment.
For 2014, Andy Clarke, the President of
Inter Parfums USA, LLC, the largest subsidiary of the United States operations, received a modest $10,000 increase (3.125%) in
base salary, after not having his base salary increased from the $320,000 he received in 2013 and 2012. Beginning in 2012, in
lieu of a base salary increase, Mr. Clarke was awarded a commission on certain new sales that he was instrumental in bringing
to our company. For 2014, 2013 and 2012, Mr. Clarke received commissions of $217,232, $306,200 and $248,224, respectively. For
a detailed discussion of Mr. Clarke’s commission structure for 2014, 2013 and 2012, please see
“Bonus Compensation/Annual
Incentives”.
The Compensation Committee considered Mr. Clarke’s contribution to sales growth as well as the integration
of several new licensed brands into our company’s United States operations as the basis for increasing his base salary.
Russell Greenberg, the Executive Vice President
and Chief Financial Officer, received a base salary of $540,000, $510,000 and $480,000 in 2014, 2013 and 2012, respectively. This
represents salary increases $30,000 in each of 2014 and 2013 and a $23,000 in 2012. In connection with these increases in salary,
the Compensation Committee considered the following material factors in granting Mr. Greenberg his salary increase: his individual
performance, level of responsibility, skill and experience, as well as the recommendation of the Chief Executive Officer.
Including $250,000 received by Mr. Madar’s
personal holding company in 2014 and 2013 for services rendered outside of the United States by Mr. Madar in his capacity as Chief
Executive Officer, Mr. Madar’s base salary aggregated $630,000 in 2014 and 2013 and aggregated $380,000 in 2012. Through
2012, Mr. Madar had not taken a salary increase since 2009 as profitability within the US operations was minimal and he shared
the view of Mr. Benacin of the uncertainty as to the status of the Burberry license at that time, Therefore, Mr. Madar determined
not to recommend any increase in his base salary to the compensation committee. In 2013, with the Burberry issue behind us and
growing profitability of US operations, Mr. Madar was granted a base salary increase of $250,000 paid to his personal holding
company for services rendered outside of the United States by Mr. Madar in his capacity as Chief Executive Officer. We have entered
into a consulting agreement with Mr. Madar’s holding company, which provides for review on an annual basis of the amount
of compensation payable to such company. For 2014, the base salary of Mr. Madar including the consulting fee paid to his personal
holding company did not increase from that of 2013. In determining Mr. Madar’s base salary including the consulting fee
for 2014, the Committee took into account Mr. Madar’s leadership of our company in general, the increasing profitability
of United States operations over the past several years, and his services in assisting United States operations in obtaining new
licensing opportunities.
Bonus Compensation/Annual Incentives
We have paid a higher percentage of overall
compensation in the form of bonus compensation to executive officers of European operations for several years, principally because
European operations historically have had higher profitability than United States operations. As the result of this historically
higher profitability, European operations have had the ability to pay higher bonus compensation in addition to base salary. As
bonus compensation is discretionary, no targets were set in order to maintain flexibility. Further, if results of operations for
European operations were not satisfactory (again, no target amounts were set to maintain flexibility), then bonus compensation,
as well as overall compensation could be lowered without otherwise affecting base salary.
For 2014, Mr. Benacin, the chief decision
maker for European operations, proposed and the compensation committee concurred in the payment of bonus compensation of €86,000
to Mr. Benacin (approximately 21% of base salary), and €273,000 (approximately 93% of base salary) to each of Messrs. Santi
and Garcia- Pelayo. In addition to individual performance, level of responsibility, skill and experience, another salient factor
considered by the Compensation Committee was the 19% increase in sales of continuing brands of European operations. This bonus
compensation was in line with 2013 bonus compensation to Mr. Benacin (approximately 20% of base salary) and to Messrs. Santi and
Garcia of €268,000 (approximately 96% of base salary).
It should be noted that Mr. Benacin had
recommended that his bonus compensation for 2013 be reduced to €78,000 (approximately 20% of base salary) from €254,500
which he received for 2012 (approximately 65% of base salary), in order to offset in large part the $250,000 in consulting fees
to his personal holding company for 2014, as discussed above. The difference in the bonus compensation from 2013 to 2012, €176,500,
approximated $240,000 at then current exchange rates. The Compensation Committee approved the bonus compensation in tandem with
the consulting agreement based upon services Mr. Benacin rendered to United States operations for several years in connection
with licensing and distribution of international brands without any cash compensation from United States operations, future international
services to be performed by Mr. Benacin relating to licensing and distribution of international brands for United States operations,
as well as three years without any increase in his base salary. The Compensation Committee also understands that both Mr. Benacin
and the Corporation will benefit from lower tax rates by having compensation taken in this form.
For 2012, Mr. Benacin, the chief decision
maker for European operations, proposed and the committee concurred in the payment of bonus compensation of €
254,500 to Mr. Benacin (approximately 65% of base salary), and €258,000 (approximately 93% of base salary) to each
of Messrs. Santi and Garcia- Pelayo. Such bonus compensation exceeded prior bonus compensation as a percentage of base salary,
and was given in recognition of the services performed in connection with the resolution of the disposition of the Burberry license
in late 2012, as well as the record year for sales and earnings of European operations.
A different approach is taken for United
States operations as that segment is smaller and less profitable. A more significant base salary is paid in order to attract and
retain employees with the skills and talents needed to run United States operations with a lesser emphasis placed on bonuses.
Based upon the recommendation of the Chief Executive Officer, for 2014, Mr. Greenberg received a discretionary cash bonus of $50,000,
which was the same amount he received in 2013 and 2012. The Compensation Committee considered the following material factors in
granting Mr. Greenberg his bonuses: his individual performance, level of responsibility, skill and experience, as well as the
recommendation of the Chief Executive Officer.
For 2012, in lieu of a base salary increase,
Mr. Clarke was awarded a commission on certain new sales that he was instrumental in bringing to our company. The commission rate
was determined based on internal estimates of sales targets for the new business. For 2012, in determining the projected amount
of the commission portion of Mr. Clarke’s estimated compensation, the initial assumption was based upon internal net sales
projections of $30 million, which included $20 million for Anna Sui brand sales and $10 million for new secondary market distribution.
The commission rate of 0.8% of net sales would yield $240,000 based upon internal projections. However, net sales exceeded the
internal projections and his commission rate of 0.8% was based upon actual sales of $31.0, which yielded a total commission of
$248,224. As Mr. Clarke was instrumental in obtaining the Anna Sui license for the Company and obtaining this new secondary market
distribution, it was determined that such additional compensation was fair in view of his contribution to the Company’s
increase in sales.
For 2013, no changes were made to the commission
structure for Mr. Clarke. Actual net sales for both the Anna Sui brand and secondary market product sales aggregated approximately
$38.3 million, and therefore, based upon the commission rate discussed above, Mr. Clarke received a commission of $306,200 for
2013. Due to decreased sales of the Anna Sui brand in 2014, Mr. Clarke received a commission of $217,232. In order to partially
offset the loss of commission income and in recognition of the services performed by Mr. Clarke in the development and integration
of newly licensed brands, Agent Provocateur, Shanghai Tang and Oscar de la Renta, as well as the acquisition of the new license
for the Abercrombie & Fitch and Hollister brands in December 2014, the Chief Executive Officer recommended and the compensation
committee approved a $50,000 discretionary bonus for Mr. Clarke. For 2013 and 2012, Mr. Clarke did not receive a discretionary
cash bonus.
Mr. Madar, the Chief Executive Officer
did not receive any cash bonus in 2014, 2013 and 2012.
As required by French law, Interparfums
SA maintains its own profit sharing plan for all French employees who have completed three months of service, including executive
officers of our European operations other than Mr. Benacin, the Chief Executive Officer of Interparfums SA. Benefits are calculated
based upon a percentage of taxable income of Interparfums SA and allocated to employees based upon salary. The maximum amount
payable per year per employee is €25,000, or approximately $28,750.
Calculation of the total annual benefits
contribution is made according to the following formula:
50% of (Interparfums SA net
income, less 5% of shareholders’ equity without net income for the year) times a fraction, the numerator of which is
wages, and the denominator of which is net income before tax + wages + taxes (other than income tax) + valuation allowances
+ amortization expenses + interest expenses.
Contribution to individual employees is
then made pro rata based upon their individual salaries for the year.
Long-Term Incentives
Stock Options
. We link long-term
incentives with corporate performance through the grant of stock options. All options are granted with an exercise price equal
to the fair market value of the underlying shares of our common stock on the date of grant, and terminate on or shortly after
severance of the executive’s relationship with us. Unless the market price of our common stock increases, corporate executives
will have no tangible benefit. Thus, they are provided with the additional incentive to increase individual performance with the
ultimate goal of increasing our overall performance. We believe that enhanced executive incentives which result in increased corporate
performance tend to build company loyalty. As a general rule, the number of options granted is determined by several factors,
but most importantly, both individual and company operating results for the past year, as well as past option grants to such executives.
For executive officers of United States
operations and European operations, we typically grant nonqualified stock options with a term of 6 years that vest ratably over
a 5-year period on a cumulative basis, so that the option will become fully exercisable at the beginning of the sixth year from
the date of grant. In addition, option grants to purchase shares of our majority-owned, French subsidiary, Interparfums SA have
a term of 6 years and vest 4 years after the date of grant. However, no options were granted by Interparfums SA to any executive
officers during 2014, 2013 or 2012.
We believe that the vesting period of these
options serve a dual purpose: 1. executives will not receive any benefit if they leave prior to such portion of the option vesting;
and 2. having a vesting period, matches the service period with the potential benefits of the option. Pursuant to our stock option
plan, non-qualified stock options granted to executives terminate immediately upon the executive’s termination of association
with our company. This termination provision coupled with a vesting period reduces benefits afforded to an executive when an executive
officer leaves our employ.
Over the past several years, as our company
has grown and the market price of our common stock has increased, Messrs. Madar and Benacin have realized substantial compensation
as the result of the exercise of their options. As the two executives most responsible for continued growth and success of our
company, the compensation committee believes the granting of options is an appropriate tool to tie a substantial portion of their
compensation to the success of our company and is completely warranted.
The actual compensation realized as the
result of the exercise of options in the past, as well as the future potential of such rewards, are powerful incentives for increased
individual performance and ultimately increased company performance. In view of the fact that the executive officers named above
contribute significantly to our profitable operations, the compensation committee believes the option grants are valid incentives
for these executive officers and are fair to our shareholders. Generally we grant options to executive officers in December of
each year.
In December for each of the years 2012-2014,
upon the recommendation of the company’s Chief Executive Officer, the compensation committee granted options to purchase
a total of 19,000 shares of our common stock to each of Jean Madar and Philippe Benacin at the fair market value on the date of
grant. Option grants to Messrs. Madar and Benacin were identical as each is the Chief Executive Officer of their respective operating
segments. Also in December for each of the years 2012-2014, the compensation committee granted options to purchase 25,000 shares
to Mr. Greenberg, the Chief Financial Officer, at the fair market value on the date of grant. The Compensation Committee determined
that the option grants for Messrs. Madar, Benacin and Greenberg, which have remained the same for years 2012-2014, were reasonable,
so based upon the recommendation of the Chief Executive Officer, it determined to keep the option grants for such executive officers
at the same level for 2014.
Upon recommendation of both Messrs. Madar
and Benacin, in December 2014 and January 2015, the compensation committee authorized the grants of options to purchase a total
of 6,000 shares to Messrs. Santi and Garcia-Pelayo, which was increased from the December 2013 option grants to purchase a total
of 5,000 shares. The December 2013 grants were the same amounts as the aggregate amount granted in December 2012 and January 2013
to Messrs. Santi and Garcia-Pelayo. The grants in December 2014 and January 2015 represented additional compensation for their
contribution to our company’s results in 2014.
Stock Appreciation Rights
Our 2004 stock option plan authorizes us
to grant stock appreciation rights, or SARs. An SAR represents a right to receive the appreciation in value, if any, of our common
stock over the base value of the SAR. To date, we have not granted any SARs under the 2004 plan. While the compensation committee
currently does not plan to grant any SARs under our 2004 plan, it may choose to do so in the future as part of a review of the
executive compensation strategy. The Interparfums SA stock option plan does not have stock appreciate rights.
Restricted Stock
We have not in the past, and we do not
have any future plans to grant restricted stock to our executive officers.
However, while the compensation committee currently
does not plan to authorize any restricted stock plans, the compensation committee may choose to do so in the future as part of
a review of the executive compensation strategy.
Other Compensation
Mr. Benacin is the
Chief Executive Officer of Interparfums SA (European operations), as well as a founder of our company, and we believe we should
recognize his responsibility, skills and experience, as well as the results of the company. For 2014, Mr. Benacin received an
automobile allowance of €10,800, which is the same amount paid in 2013-2010. Also, Mr. Garcia- Pelayo,
Director Export Sales of Interparfums SA, also receives an automobile allowance of €6,800 per year.
No Stock Ownership Guidelines
We do not require any minimum level of stock ownership
by any of our executive officers. As stated above, Messrs. Madar and Benacin, are our largest beneficial shareholders, which aligns
their interests with our shareholder base in keeping executive compensation at a reasonable level.
Retirement and Pension Plans
We maintain a 401(k) plan for United States
operations. However, we do not match any contributions to such plan, as we have determined that base compensation together with
annual bonuses and stock option awards, are sufficient incentives to retain talented employees. Our European operations maintain
a pension plan for its employees as required by French law.
Compensation Committee Report
We have reviewed and discussed with management
the Compensation Discussion and Analysis provisions to be included in this Annual Report on Form 10-K for fiscal year ended December 31,
2014 and the proxy statement for the upcoming annual meeting of shareholders. Based on this review and discussion, we recommend
to the board of directors that the Compensation Discussion and Analysis referred to above be included in this Annual Report on
Form 10-K as well as the proxy statement for the upcoming annual meeting of shareholders.
Francois Heilbronn, Jean Levy and Patrick
Choël
The following table sets forth a summary
of all compensation awarded to, earned by or paid to our “named executive officers,” who are our principal executive
officer, our principal financial officer, and each of the 3 most highly compensated executive officers of our company. This table
covers all such compensation during fiscal years ended December 31, 2014, December 31, 2013 and December 31, 2012. For all
compensation related matters disclosed in the summary compensation table, and elsewhere where applicable, all amounts paid in
euro have been converted to U.S. dollars at the average rate of exchange in each year.
SUMMARY COMPENSATION TABLE
|
Name and Principal Position
|
|
Year
|
|
Salary ($)
|
|
|
Bonus ($)
|
|
|
Stock
Awards ($)
|
|
|
Option
Awards
($)(1)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)(2)
|
|
|
Change in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings ($)
|
|
|
All Other
Compensation ($)(3)
|
|
|
Total ($)
|
|
|
Jean Madar,
|
|
2014
|
|
|
630,000
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
140,220
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
770,220
|
|
|
Chairman and
|
|
2013
|
|
|
630,000
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
178,790
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
808,790
|
|
|
Chief Executive Officer
|
|
2012
|
|
|
380,000
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
106,000
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
486,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Russell Greenberg,
|
|
2014
|
|
|
540,000
|
|
|
|
50,000
|
|
|
|
-0-
|
|
|
|
184,500
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
774,500
|
|
|
Chief Financial Officer and
|
|
2013
|
|
|
510,000
|
|
|
|
50,000
|
|
|
|
-0-
|
|
|
|
235,250
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
795,250
|
|
|
Executive Vice President
|
|
2012
|
|
|
480,000
|
|
|
|
50,000
|
|
|
|
-0-
|
|
|
|
139,000
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
669,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philippe Benacin, President Inter
|
|
2014
|
|
|
799,833
|
|
|
|
114,217
|
|
|
|
-0-
|
|
|
|
140,220
|
|
|
|
-0-
|
|
|
|
18,461
|
|
|
|
13,343
|
|
|
|
1,086,074
|
|
|
Parfums, Inc., Chief Executive
|
|
2013
|
|
|
518,966
|
|
|
|
103,475
|
|
|
|
-0-
|
|
|
|
178,790
|
|
|
|
-0-
|
|
|
|
12,000
|
|
|
|
14,327
|
|
|
|
827,558
|
|
|
Officer of Interparfums SA
|
|
2012
|
|
|
502,457
|
|
|
|
326,880
|
|
|
|
-0-
|
|
|
|
106,000
|
|
|
|
-0-
|
|
|
|
11,213
|
|
|
|
13,872
|
|
|
|
960,422
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philippe Santi, Executive Vice
|
|
2014
|
|
|
390,461
|
|
|
|
362,571
|
|
|
|
-0-
|
|
|
|
36,900
|
|
|
|
-0-
|
|
|
|
18,461
|
|
|
|
-0-
|
|
|
|
808,393
|
|
|
President and Chief Financial
|
|
2013
|
|
|
378,877
|
|
|
|
355,529
|
|
|
|
-0-
|
|
|
|
65,870
|
|
|
|
33,292
|
|
|
|
12,000
|
|
|
|
-0-
|
|
|
|
844,568
|
|
|
Officer, Interparfums SA
|
|
2012
|
|
|
357,577
|
|
|
|
331,375
|
|
|
|
-0-
|
|
|
|
17,000
|
|
|
|
32,233
|
|
|
|
11,213
|
|
|
|
-0-
|
|
|
|
749,398
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frédéric Garcia-Pelayo,
|
|
2014
|
|
|
390,461
|
|
|
|
362,571
|
|
|
|
-0-
|
|
|
|
36,900
|
|
|
|
-0-
|
|
|
|
18,461
|
|
|
|
9,031
|
|
|
|
817,424
|
|
|
Director Export Sales,
|
|
2013
|
|
|
378,877
|
|
|
|
355,529
|
|
|
|
-0-
|
|
|
|
65,870
|
|
|
|
33,292
|
|
|
|
12,000
|
|
|
|
9,021
|
|
|
|
854,589
|
|
|
Interparfums SA
|
|
2012
|
|
|
357,577
|
|
|
|
331,375
|
|
|
|
-0-
|
|
|
|
17,000
|
|
|
|
32,233
|
|
|
|
11,213
|
|
|
|
8,734
|
|
|
|
758,132
|
|
1 Amounts reflected under Option Awards represent the grant
date fair values in 2014, 2013 and 2012 based on the fair value of stock option awards using a Black-Scholes option pricing model.
The assumptions used in this model are detailed in Footnote 11 to the audited consolidated financial statements in our Annual
Report on Form 10-K for the year ended December 31, 2014 and filed with the SEC.
2 As required by French law, Interparfums SA maintains its
own profit sharing plan for all French employees who have completed three months of service, including executive officers of our
European operations other than Mr. Benacin, the Chief Executive Officer of Interparfums SA Benefits are calculated based upon
a percentage of taxable income of Interparfums SA and are allocated to employees based upon salary. The maximum amount payable
per year is 25,000 euro, or approximately $28,750.
Calculation of total annual benefits contribution is made according
to the following formula:
50% of (Interparfums SA net income, less 5% of shareholders’
equity without net income for the year) times a fraction, the numerator of which is wages, and the denominator of which is net
income before taxes, + wages + taxes (other than income tax) + valuation allowances + amortization expenses + interest expenses.
Contribution to individual employees is then made pro rata
based upon their individual salaries for the year.
3 The following table identifies (i) perquisites and other
personal benefits provided to our named executive officers in fiscal 2014, and quantifies those required by SEC rules to be quantified
and (ii) all other compensation that is required by SEC rules to be separately identified and quantified.
|
Name and Principal Position
|
|
Perquisites
and other
Personal
Benefits ($)
|
|
|
Personal
Automobile
Expense($)
|
|
|
Lodging
Expense($)
|
|
|
Total ($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jean Madar, Chairman
Chief Executive Officer
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Russell Greenberg, Chief Financial Officer and Executive Vice President
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philippe Benacin, President of Inter Parfums, Inc. and Chief Executive Officer of Interparfums
SA
|
|
|
-0-
|
|
|
|
14,343
|
|
|
|
-0-
|
|
|
|
14,343
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philippe Santi,
Executive Vice President and Director General Delegue, Interparfums SA
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frédéric Garcia-Pelayo,
Director Export Sales,
Interparfums SA
|
|
|
-0-
|
|
|
|
9,031
|
|
|
|
-0-
|
|
|
|
9,031
|
|
Ratio of CEO’s Compensation to Median Compensation
of All Employees (Excluding CEO Compensation)
We have determined that for 2014, the median
total compensation for all of our employees, but excluding the compensation of our Chief Executive Officer, was $117,347. The
total compensation for our Chief Executive Officer for 2014 as set forth in the Summary Compensation above was $770,220. Therefore,
for 2014 the ratio of the total compensation for our Chief Executive Officer as compared to the median total compensation to all
of our employees excluding the compensation of our Chief Executive Officer is 6.6:1.
Plan Based Awards
The following table sets certain information
relating to each grant of an award made by our company to the executive officers of our company listed in the Summary Compensation
Table during the past fiscal year (and grants made in January 2015).
|
|
|
|
|
Grants
of Plan-Based Awards
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Grant
Date
|
|
Estimated
Future Payouts Under
Non-Equity
Incentive Plan
Awards
|
|
|
Estimated
Future Payouts
Under Equity Incentive Plan
Awards
|
|
|
All Other
Stock
Awards:
Number of
Shares of
|
|
|
All Other
Option
Awards:
Number of
Securities
|
|
|
Exercise
or Base
Price of
Option
|
|
|
|
|
|
|
|
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
Stock
or
Units (#)
|
|
|
Underlying
Options (#)
|
|
|
Awards
($/Sh)
|
|
|
Closing
Price
|
|
|
Jean Madar
|
|
12/31/14
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
19,000
|
|
|
|
27.795
|
|
|
|
27.45
|
|
|
Russell Greenberg
|
|
12/31/14
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
25,000
|
|
|
|
27.795
|
|
|
|
27.45
|
|
|
Philippe Benacin
|
|
12/31/14
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
19,000
|
|
|
|
27.795
|
|
|
|
27.45
|
|
|
Philippe Santi
|
|
12/31/14
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
5,000
|
|
|
|
27.795
|
|
|
|
27.45
|
|
|
Philippe Santi
|
|
1/28/15
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
1,000
|
|
|
|
25.82
|
|
|
|
25.79
|
|
|
Frédéric Garcia-Pelayo
|
|
12/31/14
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
5,000
|
|
|
|
27.795
|
|
|
|
27.45
|
|
|
Frédéric Garcia-Pelayo
|
|
1/28/15
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
1,000
|
|
|
|
25.82
|
|
|
|
25.79
|
|
Options
As discussed above, we typically grant
nonqualified stock options with a term of 6 years that vest ratably of a 5-year period on a cumulative basis, so that the option
will become fully exercisable at the beginning of the sixth year from the date of grant.
We believe that the vesting
period of these options serves a dual purpose: 1. executives will not receive any benefit if they leave prior to such portion
of the option vesting; and 2. having a vesting period matches the service period with the potential benefits of the option.
Under our company’s
stock option plans, the exercise price is determined by the average of the high and low price on the date of grant, not the closing
price as reported by The Nasdaq Stock Market.
We also note that the
Summary Compensation Table does not include income realized by the named executive officers as the result of the exercise of stock
options, but rather reflects the dollar amount recognized for financial statement reporting purposes for options granted in accordance
with ASC topic 718-20. However, value realized as the result of stock option exercises is set forth in the table entitled “Option
Exercises and Stock Vested”.
Interparfums SA Profit
Sharing Plan
As required by French
law, Inter Parfums, SA maintains its own profit sharing plan for all French employees who have completed three months of service,
including executive officers of our European operations other than Mr. Benacin, the Chief Executive Officer of Inter Parfums,
SA. Benefits are calculated based upon a percentage of taxable income of Interparfums SA and allocated to employees based upon
salary. The maximum amount payable per year per employee is 25,000 euros, or approximately $28,750.
Calculation of total
annual benefits contribution is made according to the following formula:
50% of (Interparfums SA net income,
less 5% of shareholders’ equity without net income for the year) times a fraction, the numerator of which is wages, and
the denominator of which is net income before tax + wages + taxes (other than income tax) + valuation allowances + amortization
expenses + interest expenses.
Contribution to individual
employees is then made pro rata based upon their individual salaries for the year.
Outstanding Equity Awards at Fiscal
Year-End
The following table sets forth certain information
relating to outstanding equity awards of our company held by the executive officers listed in the Summary Compensation Table as
of January 31, 2015.
OUTSTANDING EQUITY AWARDS AT FISCAL
YEAR-END
|
|
|
Option Awards
|
|
Name
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable(1)
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
|
Equity Incentive Plan
Awards: Number
of
Securities
Underlying
Unexercised
Unearned Options
(#)
|
|
|
Option Exercise
Price ($)
|
|
|
Option
Expiration
Date
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jean Madar
|
|
|
19,000
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
12.14
|
|
|
12/30/15
|
|
|
|
|
15,200
|
|
|
|
3,800
|
|
|
|
-0-
|
|
|
|
19.025
|
|
|
12/30/16
|
|
|
|
|
11,400
|
|
|
|
7,600
|
|
|
|
-0-
|
|
|
|
15.59
|
|
|
12/29/17
|
|
|
|
|
7,600
|
|
|
|
11,400
|
|
|
|
-0-
|
|
|
|
19.325
|
|
|
12/30/18
|
|
|
|
|
3,800
|
|
|
|
15,200
|
|
|
|
-0-
|
|
|
|
35.75
|
|
|
12/30/19
|
|
|
|
|
-0-
|
|
|
|
19,000
|
|
|
|
-0-
|
|
|
|
27.795
|
|
|
12/30/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Russell Greenberg
|
|
|
5,000
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
12.14
|
|
|
12/30/15
|
|
|
|
|
20.000
|
|
|
|
5,000
|
|
|
|
-0-
|
|
|
|
19.025
|
|
|
12/30/16
|
|
|
|
|
15,000
|
|
|
|
10,000
|
|
|
|
-0-
|
|
|
|
15.59
|
|
|
12/29/17
|
|
|
|
|
10,000
|
|
|
|
15,000
|
|
|
|
-0-
|
|
|
|
19.325
|
|
|
12/30/18
|
|
|
|
|
5,000
|
|
|
|
20,000
|
|
|
|
-0-
|
|
|
|
35.75
|
|
|
12/30/19
|
|
|
|
|
-0-
|
|
|
|
25,000
|
|
|
|
-0-
|
|
|
|
27.795
|
|
|
12/30/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philippe Benacin
|
|
|
19,000
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
12.14
|
|
|
12/30/15
|
|
|
|
|
15,200
|
|
|
|
3,800
|
|
|
|
-0-
|
|
|
|
19.025
|
|
|
12/30/16
|
|
|
|
|
11,400
|
|
|
|
7,600
|
|
|
|
-0-
|
|
|
|
15.59
|
|
|
12/29/17
|
|
|
|
|
7,600
|
|
|
|
11,400
|
|
|
|
-0-
|
|
|
|
19.325
|
|
|
12/30/18
|
|
|
|
|
3,800
|
|
|
|
15,200
|
|
|
|
-0-
|
|
|
|
35.75
|
|
|
12/30/19
|
|
|
|
|
-0-
|
|
|
|
19,000
|
|
|
|
-0-
|
|
|
|
27.795
|
|
|
12/30/20
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philippe Santi
|
|
|
-0-
|
|
|
|
600
|
|
|
|
-0-
|
|
|
|
15.62
|
|
|
3/28/16
|
|
|
|
|
600
|
|
|
|
600
|
|
|
|
-0-
|
|
|
|
19.025
|
|
|
12/30/16
|
|
|
|
|
600
|
|
|
|
1,200
|
|
|
|
-0-
|
|
|
|
15.59
|
|
|
12/29/17
|
|
|
|
|
600
|
|
|
|
1,800
|
|
|
|
-0-
|
|
|
|
19.325
|
|
|
12/30/18
|
|
|
|
|
800
|
|
|
|
1,200
|
|
|
|
-0-
|
|
|
|
22.195
|
|
|
1/30/19
|
|
|
|
|
1,000
|
|
|
|
4,000
|
|
|
|
-0-
|
|
|
|
35.75
|
|
|
12/30/19
|
|
|
|
|
-0-
|
|
|
|
5,000
|
|
|
|
-0-
|
|
|
|
27.795
|
|
|
12/30/20
|
|
|
|
|
-0-
|
|
|
|
1,000
|
|
|
|
-0-
|
|
|
|
25.821
|
|
|
1/27/2021
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frédéric Garcia-Pelayo
|
|
|
-0-
|
|
|
|
600
|
|
|
|
-0-
|
|
|
|
15.62
|
|
|
3/28/16
|
|
|
|
|
600
|
|
|
|
600
|
|
|
|
-0-
|
|
|
|
19.025
|
|
|
12/30/16
|
|
|
|
|
600
|
|
|
|
1,200
|
|
|
|
-0-
|
|
|
|
15.59
|
|
|
12/29/17
|
|
|
|
|
600
|
|
|
|
1,800
|
|
|
|
-0-
|
|
|
|
19.325
|
|
|
12/30/18
|
|
|
|
|
800
|
|
|
|
1,200
|
|
|
|
-0-
|
|
|
|
22.195
|
|
|
1/30/19
|
|
|
|
|
1,000
|
|
|
|
4,000
|
|
|
|
-0-
|
|
|
|
35.75
|
|
|
12/30/19
|
|
|
|
|
-0-
|
|
|
|
5,000
|
|
|
|
-0-
|
|
|
|
27.795
|
|
|
12/30/20
|
|
|
|
|
-0-
|
|
|
|
1,000
|
|
|
|
-0-
|
|
|
|
25.821
|
|
|
1/27/2021
|
[Footnotes from table above]
1 Except as otherwise noted, all options expire 6 years from
the date of grant, and vest 20% each year commencing one year after the date of grant.
The following table sets certain information
relating to outstanding equity awards granted by Interparfums SA, our majority-owned French subsidiary which has its shares traded
on the NYSE Euronext, held by the executive officers of our company listed in the Summary Compensation Table as of the end of
the past fiscal year.
OUTSTANDING EQUITY
AWARDS AT FISCAL YEAR-END
OF INTERPARFUMS
SA
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
|
|
Name
|
|
Number of Securities
Underlying
Unexercised
Options
(#) Exercisable
|
|
|
Number of Securities
Underlying
Unexercised Options
(#) Unexercisable (1)
|
|
|
Option
Exercise Price
(euro)(2)
|
|
|
Option Expiration
Date
|
|
Jean Madar
|
|
|
7,542
|
|
|
|
-0-
|
|
|
|
10.00
|
|
|
12/16/15
|
|
|
|
|
11,181
|
|
|
|
-0-
|
|
|
|
14.30
|
|
|
10/07/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Russell Greenberg
|
|
|
2,397
|
|
|
|
-0-
|
|
|
|
14.30
|
|
|
10/07/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philippe Benacin
|
|
|
11,181
|
|
|
|
-0-
|
|
|
|
14.30
|
|
|
10/07/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philippe Santi
|
|
|
11,181
|
|
|
|
-0-
|
|
|
|
14.30
|
|
|
10/07/16
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frédéric Garcia-Pelayo
|
|
|
11,181
|
|
|
|
-0-
|
|
|
|
14.30
|
|
|
10/07/16
|
[
Footnotes
from table above]
1 All options fully vest 4 years after the
date of grant.
2 As of December 31, 2014, the closing price
of Interparfums SA as reported by Euronext was 22.45 euro, and the exchange rate was 1.2101 U.S. dollars to 1 euro.
Option Exercises and Stock Vested
The following table sets forth certain
information relating to each option exercise affected during the past fiscal year, and each vesting of stock, including restricted
stock, restricted stock units and similar instruments of our company during the past fiscal year, for the executive officers of
our company listed in the Summary Compensation Table.
|
OPTION EXERCISES AND
STOCK VESTED
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
Name
|
|
Number of Shares
Acquired on
Exercise (#)
|
|
|
Value
Realized on
Exercise
($)
1
|
|
|
Number of Shares
Acquired on Vesting
(#)
|
|
|
Value Realized
On Vesting
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jean Madar
|
|
|
32,875
|
|
|
|
665,353
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Russell Greenberg
|
|
|
18,000
|
|
|
|
429,087
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philippe Benacin
|
|
|
32,875
|
|
|
|
665,353
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philippe Santi
|
|
|
6,000
|
|
|
|
115,408
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frédéric Garcia-Pelayo
|
|
|
6,000
|
|
|
|
114,047
|
|
|
|
-0-
|
|
|
|
-0-
|
|
[Footnotes
from table above]
|
|
1
|
Total
value realized on exercise of options in dollars is based upon the difference between
the fair market value of the common stock on the date of exercise, and the exercise price
of the option.
|
The following table sets forth certain
information relating to each option exercise effected during the past fiscal year, and each vesting of stock, including restricted
stock, restricted stock units and similar instruments during the past fiscal year, of Interparfums SA, our majority-owned French
subsidiary which has its shares traded on the Euronext, for the executive officers of our company listed in the Summary Compensation
Table.
|
OPTION EXERCISES AND
STOCK VESTED
|
|
|
|
Option Awards
|
|
|
Stock Awards
|
|
|
Name
|
|
Number of Shares
Acquired on
Exercise (#)
|
|
|
Value
Realized on
Exercise
(euro)
1
|
|
|
Number of Shares
Acquired on Vesting
(#)
|
|
|
Value Realized
On Vesting
($)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jean Madar
|
|
|
3,000
|
|
|
|
36,000
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philippe Benacin
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Russell Greenberg
|
|
|
1,758
|
|
|
|
21,096
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Philippe Santi
|
|
|
8,785
|
|
|
|
105,420
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Frédéric Garcia-Pelayo
|
|
|
8,785
|
|
|
|
105,420
|
|
|
|
-0-
|
|
|
|
-0-
|
|
[Footnotes from table
above]
|
|
1
|
Total
value realized on exercise of options in dollars is based upon the difference between
the fair market value of the common stock on the date of exercise, and the exercise price
of the option.
|
Pension Benefits
The following table sets
forth certain information relating to payment of benefits in connection with retirement plans during the past fiscal year, for
the executive officers of our company listed in the Summary Compensation Table.
PENSION BENEFITS
|
Name
|
|
Plan Name
|
|
Number of Years
Credited Service
(#)
|
|
Present Value of
Accumulated Benefit
($)
|
|
|
Payments During
Last Fiscal Year
($)
|
|
|
Jean Madar
|
|
NA
|
|
NA
|
|
|
-0-
|
|
|
|
-0-
|
|
|
Russell Greenberg
|
|
NA
|
|
NA
|
|
|
-0-
|
|
|
|
-0-
|
|
|
Philippe Benacin
|
|
Inter Parfums SA Pension Plan
|
|
NA
|
|
|
221,100
|
|
|
|
21,900
|
|
|
Philippe Santi
|
|
Inter Parfums SA Pension Plan
|
|
NA
|
|
|
262,200
|
|
|
|
21,900
|
|
|
Frédéric Garcia-Pelayo
|
|
Inter Parfums SA Pension Plan
|
|
NA
|
|
|
215,100
|
|
|
|
21,900
|
|
Interparfums SA maintains
a pension plan for all of its employees, including all executive officers. The calculation of commitments for severance benefits
involves estimating the probable present value of projected benefit obligations. This projected benefit obligations is then prorated
to take into account seniority of the employees of Interparfums SA on the calculation date.
In calculating benefits,
the following assumptions were applied:
- voluntary retirement at age 65;
- a rate of 45% for employer payroll contributions
for all employees;
- a 4% average annual salary increase;
- an annual rate of turnover for all employees
under 55 years of age and nil above;
- the TH 00-02 mortality table for men and
the TF 00-02 mortality table for women;
- a discount rate of 2.0%.
The normal retirement
age is 65 years, but employees, including Messrs. Benacin, Santi and Garcia-Pelayo, can collect reduced benefits if they retire
at age 60.
Nonqualified Deferred Compensation
We do not maintain any
nonqualified deferred compensation plans.
Employment and Consulting Agreements
As part of our acquisition
in 1991 of the controlling interest in Interparfums SA, now a subsidiary, we entered into an employment agreement with Philippe
Benacin. The agreement provides that Mr. Benacin will be employed as Vice Chairman of the Board and President and Chief Executive
Officer of Inter Parfums Holdings and its subsidiary, Interparfums SA. The initial term expired on September 2, 1992, and has
subsequently been automatically renewed for additional annual periods. The agreement provides for automatic annual renewal terms,
unless either party terminates the agreement upon 120 days’ notice. For 2015, Mr. Benacin presently receives an annual salary
of €420,000 (approximately $483,000), and automobile expenses of €10,800 (approximately $12,420), which are subject
to increase in the discretion of the board of directors. The agreement also provides for indemnification and a covenant not to
compete for one year after termination of employment.
In 2014, we enter into
a consulting agreement with Mr. Benacin’s holding company, Philippe Benacin Holding SAS, which provides for review on an
annual basis of the amount of compensation payable to such company. The agreement also provides for indemnification for Mr. Benacin
and his holding company and a covenant not to compete for one year after termination of the agreement. The agreement was for one
year, with automatic one year renewals unless either party terminates on 120 days’ notice or Mr. Benacin ceases to be the
President of our company. For 2014, Mr. Benacin’s personal holding company received $250,000 for services rendered outside
of the United States by Mr. Benacin in his capacity as President. This consulting agreement has been renewed at $250,000 for 2015.
In 2013, we enter into
a consulting agreement with Mr. Madar’s holding company, Jean Madar Holding SAS, which provides for review on an annual
basis of the amount of compensation payable to such company. The agreement also provides for indemnification for Mr. Madar and
his holding company and a covenant not to compete for one year after termination of the agreement. The agreement was for one year,
with automatic one year renewals unless either party terminates on 120 days’ notice or Mr. Madar ceases to be the Chief
Executive Officer of our company. For 2014, Mr. Madar’s personal holding company received $250,000 for services rendered
outside of the United States by Mr. Madar in his capacity as Chief Executive Officer. This consulting agreement has been renewed
at $250,000 for 2015.
Compensation of
Directors
The following table sets
forth certain information relating to the compensation for each of our directors who is not an executive officer of our Company
named in the Summary Compensation Table for the past fiscal year.
|
|
|
|
|
|
|
|
|
DIRECTOR
COMPENSATION
|
|
|
|
|
|
|
|
|
Name
|
|
Fees
Earned
or Paid
in Cash
($)
|
|
|
Stock
Awards
($)
|
|
|
Option
Awards
($)
|
|
|
Non-Equity
Incentive Plan
Compensation
($)
|
|
|
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
|
|
|
All Other
Compensation
($)
|
|
|
Total ($)
|
|
|
Francois Heilbronn
1
|
|
|
16,000
|
|
|
|
-0-
|
|
|
|
8,370
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
14,135
|
|
|
|
38,505
|
|
|
Jean Levy
2
|
|
|
14,000
|
|
|
|
-0-
|
|
|
|
8,370
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
22,370
|
|
|
Robert Bensoussan
3
|
|
|
12,000
|
|
|
|
-0-
|
|
|
|
8,370
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
7,068
|
|
|
|
27,438
|
|
|
Patrick Choël
4
|
|
|
18,000
|
|
|
|
-0-
|
|
|
|
4,185
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
9,512
|
|
|
|
31,697
|
|
|
Michel Dyens
5
|
|
|
6,000
|
|
|
|
-0-
|
|
|
|
17,300
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
-0-
|
|
|
|
23,300
|
|
[Footnotes from table above]
|
|
1.
|
As of the end of
the last fiscal year, Mr. Heilbronn held options to purchase an aggregate of 3,500 shares
of our common stock.
|
|
|
2.
|
As of the end of
the last fiscal year, Mr. Levy held options to purchase an aggregate of 3,500 shares
of our common stock.
|
|
|
3.
|
As of the end of
the last fiscal year, Mr. Bensoussan-Torres held options to purchase an aggregate of
3,000 shares of our common stock.
|
|
|
4.
|
As of the end of
the last fiscal year, Mr. Choël held options to purchase an aggregate of 2,250 shares
of our common stock.
|
|
|
5.
|
As of the end of
the last fiscal year, Mr. Dyens held options to purchase an aggregate of 2,000 shares
of our common stock.
|
For 2014, all nonemployee directors received
$4,000 for each board meeting at which they participate in person, and $2,000 for each meeting held by conference telephone. In
addition, the annual fee for each member of the audit committee is $6,000.
We maintain stock option plans for our
nonemployee directors. The purpose of these plans is to assist us in attracting and retaining key directors who are responsible
for continuing the growth and success of our company. Under such plans, options to purchase 1,000 shares are granted on each February
1st to all nonemployee directors for as long as each is a nonemployee director on such date. However, if a nonemployee director
does not attend certain of the board meetings, then such option grants are reduced according to a schedule. In addition, options
to purchase 2,000 shares are granted to each nonemployee director upon his initial election or appointment to our board.
On September 8, 2014, an option to purchase
2,000 shares at the exercise price of $29.355 was granted to Michel Dyens upon his election to our board of directors in accordance
with the provisions of our 2004 plan. On February 1, 2015, options to purchase 1,000 shares were granted to each of Francois Heilbronn,
Jean Levy, Robert Bensoussan-Torres and Patrick Choël, all at the exercise price of $25.285 per share under the 2004 plan.
All of such options were granted at the fair market value and vest ratably over a 4 year period.
Item 12. Security Ownership of Certain Beneficial Owners
and Management and Related Stockholder Matters
The following table sets forth information
with respect to the beneficial ownership of our common stock by (a) each person we know to be the beneficial owner of more than
5% of our outstanding common stock, (b) our executive officers and directors and (c) all of our directors and officers as
a group. Each of Messrs. Madar and Benacin own 99.99% of their respective personal holding companies. As of March 9, 2015, we
had 30,978,603 shares of common stock outstanding.
Name and Address
of Beneficial Owner
|
|
Amount of
Beneficial Ownership
1
|
|
|
Approximate Percent of Class
|
|
Jean Madar
c/o Interparfums SA
4, Rond Point Des Champs
Elysees
75008 Paris, France
|
|
|
7,129,892
|
2
|
|
|
23.0
|
%
|
|
|
|
|
|
|
|
|
|
|
Philippe Benacin
c/o Interparfums SA
4, Rond Point Des Champs Elysees
75008 Paris, France
|
|
|
6,926,394
|
3
|
|
|
22.4
|
%
|
1
All
shares of common stock are directly held with sole voting power and sole power to dispose, unless otherwise stated. Options which
are exercisable within 60 days are included in beneficial ownership calculations. Jean Madar, the Chairman of the Board and Chief
Executive Officer of the Company and Philippe Benacin, the Vice Chairman of the Board and President of the Company, have a verbal
agreement or understanding to vote their shares in a like manner.
2
Consists
of 40,551 shares held directly, 7,032,341 shares held indirectly through Jean Madar Holding SAS, a personal holding company, and
options to purchase 57,000 shares.
3
Consists
of 37,542 shares held directly, 6,846,064 shares held indirectly through Philippe Benacin Holding SAS, a personal holding company,
and options to purchase 57,000 shares.
Name and Address
of Beneficial Owner
|
|
Amount of Beneficial Ownership
1
|
|
|
Approximate Percent of Class
|
|
Russell Greenberg
c/o Inter Parfums, Inc.
551 Fifth Avenue
New York, NY 10176
|
|
|
55,000
|
4
|
|
|
Less than 1%
|
|
|
|
|
|
|
|
|
|
|
|
Philippe Santi
Interparfums SA
4, Rond Point Des Champs Elysees
75008, Paris France
|
|
|
4,200
|
5
|
|
|
Less than 1%
|
|
|
|
|
|
|
|
|
|
|
|
Francois Heilbronn
60 Avenue de Breteuil
75007 Paris, France
|
|
|
30,688
|
6
|
|
Less than 1%
|
|
|
|
|
|
|
|
|
|
|
|
Jean Levy
17, rue Margueritte
75017 Paris, France
|
|
|
3,750
|
7
|
|
|
Less than 1%
|
|
|
|
|
|
|
|
|
|
|
|
Robert Bensoussan-Torres
c/o Sirius Equity LLP
52 Brook Street
W1K 5DS London
|
|
|
9,000
|
8
|
|
|
Less than 1%
|
|
|
|
|
|
|
|
|
|
|
|
Patrick Choël
140 Rue de Grenelle
75007, Paris, France
|
|
|
9,875
|
9
|
|
|
Less than 1%
|
|
|
|
|
|
|
|
|
|
|
|
Michel Dyens
Michel Dyens & Co.
17 Avenue Montaigne
75008 Paris, France
|
|
|
-0-
|
|
|
|
NA
|
|
|
|
|
|
|
|
|
|
|
|
Frederic Garcia-Pelayo
Interparfums SA
4, Rond Point Des Champs Elysees
75008, Paris France
|
|
|
3,600
|
10
|
|
|
Less than 1%
|
|
|
|
|
|
|
|
|
|
|
|
|
Axel Marot
Interparfums SA
4, Rond Point Des Champs Elysees
75008, Paris
France
|
|
|
-0-
|
|
|
|
NA
|
|
4
Consists
of shares of common stock underlying options.
5
Consists of shares of common stock underlying options.
6
Consists
of 28,563 shares held directly and options to purchase 2,125 shares.
7
Consists
of 2,000 shares held directly and options to purchase 1,750 shares.
8
Consists
of 7,500 shares held directly and options to purchase 1,500 shares.
9
Consists
of 8,875 shares held directly and options to purchase 1,000 shares.
10
Consists of shares of common stock underlying options.
Name and Address
of Beneficial Owner
|
|
Amount of Beneficial Ownership
1
|
|
|
Approximate Percent of Class
|
|
Henry B. (Andy) Clarke
c/o Inter Parfums, Inc.
551 Fifth Avenue
New York, NY 10176
|
|
|
24,125
|
11
|
|
Less than 1%
|
|
|
|
|
|
|
|
|
|
|
|
NWQ Investment Management Company, LLC
2049 Century Park East, 16th Floor
Los Angeles, CA 90067
12
|
|
|
1,597,146
|
|
|
5.2%
|
|
|
|
|
|
|
|
|
|
|
All Directors and Officers
(As a Group 12 Persons)
|
|
|
14,210,736
|
13
|
|
45.6%
|
|
The following table sets
forth certain information as of the end of our last fiscal year regarding all equity compensation plans that provide for the award
of equity securities or the grant of options, warrants or rights to purchase our equity securities.
Equity Compensation Plan Information
|
Plan category
|
|
Number of
securities to
be issued
upon
exercise
of
outstanding
options,
warrants and
rights
(a)
|
|
|
Weighted-average
exercise price of
outstanding
options,
warrants
and rights
(b)
|
|
|
Number of securities
remaining
available for
future
issuance
under equity
compensation
plans
(excluding
securities
reflected in
column (a))
(c)
|
|
|
Equity compensation plans approved by security holders
|
|
|
639,495
|
|
|
|
23.19
|
|
|
|
328,535
|
|
|
Equity compensation plans not app
roved
by security holders
|
|
|
-0-
|
|
|
|
N/A
|
|
|
|
-0-
|
|
|
Total
|
|
|
639,495
|
|
|
|
23.19
|
|
|
|
328,535
|
|
11
Consists of 1,625 shares held directly and options to purchase
22,500 shares.
12
Information based upon Schedule 1
3G of NWQ Investment
Management Company, LLC dated January 30, 2015 as filed with the Securities and Exchange Commission.
13
Consists of
14,005,061
shares
held directly or indirectly, and options to purchase 205,675shares.
Item 13. Certain Relationships and Related Transactions,
and Director Independence
Transactions with European Subsidiaries
We have guaranteed the obligations of our
majority-owned, French subsidiary, Interparfums SA under our former Burberry license and our Paul Smith license agreement. We
also provide (or had provided on our behalf) certain financial, accounting and legal services for Interparfums SA, and during
2014, 2013 and 2012 fees for such services were $138,438, $158,750 and $337,438, respectively. In January 2012, Inter Parfums
USA, LLC, a United States subsidiary, signed a five year license agreement with Interparfums Suisse (SARL), a Swiss subsidiary
of Interparfums SA, for the right to sell amenities under the Lanvin brand name to luxury hotels, cruise lines and airlines in
return for royalty payments as are customary in our industry. In 2014, 2013 and 2012, Inter Parfums USA, LLC, a United States
subsidiary, paid Interparfums Singapore Pte., Ltd., a subsidiary of Interparfums SA, approximately $78,952, $114,000 and $110,000,
respectively as reimbursement for expenses for employees and use of their offices by Inter Parfums USA, LLC, including a reasonable
allocation of overhead. We estimate that future payments under this arrangement will be approximately $150,000 per year.
Option Exercise with Tender of Previously Owned Shares
The Chief Executive Officer and the President
each exercised 32,875, 28,500 and 60,000 outstanding stock options of the Company’s common stock in 2014, 2013 and 2012,
respectively. The aggregate exercise prices of $0.6 million in 2014, $0.7 million in 2013 and $1.6 million in 2012 were paid by
them tendering to the Company in 2014, 2013 and 2012, an aggregate of 19,656, 18,880 and 82,322 shares, respectively, of the Company’s
common stock, previously owned by them, valued at fair market value on the dates of exercise. All shares issued pursuant to these
option exercises were issued from treasury stock of the Company. In addition, the Chief Executive Officer tendered in 2014, 2013
and 2012 an additional 3,112, 2,573 and 4,710 shares, respectively, for payment of certain withholding taxes resulting from his
option exercises.
Consulting Agreements
In 2014, we enter into a consulting agreement
with Mr. Benacin’s holding company, Philippe Benacin Holding SAS, which provides for review on an annual basis of the amount
of compensation payable to such company. The agreement also provides for indemnification for Mr. Benacin and his holding company
and a covenant not to compete for one year after termination of the agreement. The agreement was for one year, with automatic
one year renewals unless either party terminates on 120 days’ notice or Mr. Benacin ceases to be the President of our company.
For 2014, Mr. Benacin’s personal holding company received $250,000 for services rendered outside of the United States by
Mr. Benacin for the benefit of the Company’s United States operations, in his capacity as President. This consulting agreement
has been renewed at $250,000 for 2015.
In 2013, we enter into a consulting agreement
with Mr. Madar’s holding company, Jean Madar Holding SAS, which provides for review on an annual basis of the amount of
compensation payable to such company. The agreement also provides for indemnification for Mr. Madar and his holding company and
a covenant not to compete for one year after termination of the agreement. The agreement was for one year, with automatic one
year renewals unless either party terminates on 120 days’ notice or Mr. Madar ceases to be the Chief Executive Officer of
our company. In 2014 and 2013, Mr. Madar’s personal holding company received $250,000 for services rendered outside of the
United States by Mr. Madar in his capacity as Chief Executive Officer. This consulting agreement has been renewed at $250,000
for 2015.
Distribution and Support Arrangements
with Clarins
During 2010, we formed Interparfums Luxury Brands, Inc., a Delaware corporation and subsidiary of our
majority-owned French subsidiary Interparfums SA, for distribution of prestige brands in the United States. Interparfums Luxury
Brands has also entered into an agreement with Clarins Fragrance Group US (a Division of Clarins Group) effective January 1, 2011,
to share and manage an expanded sales force. Logistical and administrative support is provided by Clarins Group USA from its Park
Avenue offices in New York and its warehouse in Orangeburg, New York. In addition, in 2011, our Spanish distribution subsidiary
also entered into a similar service agreement with a Clarins subsidiary relating to distribution of prestige fragrances in Spain.
In November 2013, Interparfums Luxury Brands and Clarins U.S.A., Inc. entered into an Extension Agreement, which extended the terms
of the Clarins U.S. Services Agreement until June 30, 2015 on the same terms and conditions (the “Clarins Extension Agreement”).
Mr. Serge Rosinoer, a former director of our Company who passed away in January 2014, was the Vice Chairman of the Supervisory
Board of Clarins SA, the parent company of both the Clarins Fragrance Group US and the Clarins subsidiary.
Jimmy Choo
Interparfums SA and J Choo Limited entered
into an exclusive, worldwide license agreement commencing on January 1, 2010 and expiring on December 31, 2021, for the creation,
development and distribution of fragrances under the Jimmy Choo brand. Mr. Robert Bensoussan, a director of the Corporation, was
a director of J Choo Limited and had an indirect ownership interest in J Choo Limited until July 2011.
Procedures for Approval of Related Person Transactions
Transactions between related persons, such
as between an executive officer or director and our company, or any company or person controlled by such officer or director,
are required to be approved by our Audit Committee of our board of directors. Our Audit Committee Charter contains such explicit
authority, as required by the applicable rules of The Nasdaq Stock Market.
Director Independence
The following are our directors who are
“independent directors” within the applicable rules of The Nasdaq Stock Market:
Francois Heilbronn
Jean Levy
Robert Bensoussan-Torres
Patrick Choël
Michel Dyens
We follow and comply with the independent
director definitions as provided by The Nasdaq Stock Market rules in determining the independence of our directors, which are
posted on our company’s website. In addition, such rules are also available on The Nasdaq Stock Market’s website.
In addition, The Nasdaq Stock Market maintains more stringent rules relating to director independence for the members of our Audit
Committee, and the members of our Audit Committee, Messrs. Heilbronn, Levy and Choël, are independent within the meaning
of those rules.
On January 8, 2014 our company was advised
that one of our directors, Serge Rosinoer, passed away, and on the same day we notified Nasdaq OMX of such event. Prior to the
death of Mr. Rosinoer, we had nine (9) directors, with a majority of independent directors. In September 2015, Michel Dyens, an
independent director, was elected to our board of directors by our stockholders at our 2014 annual meeting. As the result of the
election of Mr. Dyens to the board, we again have a board with nine members and a majority of independent directors and are in
compliance with the requirement to have a majority of independent directors as set forth in Nasdaq Rule 5605(b)(1)(A).
Board Leadership Structure and Risk Management
For more than the past ten (10) years,
Jean Madar has held the positions of Chairman of the Board of Directors and Chief Executive Officer of our company. Almost since
inception, Mr. Madar has been allocated the responsibility of overseeing our United States operations and the operation of Inter
Parfums, Inc., as a public company. Philippe Benacin, as Chief Executive Officer of Interparfums SA, has been allocated the responsibility
of overseeing our European operations and its operation as a public company in France. In addition, Mr. Benacin is also the Vice
Chairman of the Board of Directors of our company. Our board of directors is comfortable with this approach, as the two largest
stockholders of our company are also directly responsible for the operations of our company’s two operating segments. Accordingly,
our board of directors does not have a “Lead Director,” a non-management director who controls the meetings of our
board of directors.
Our board of directors manages risk by
(i) review of period operating reports and discussions with management; (ii) approval of executive compensation incentive plans
through its committee, the Executive Compensation and Stock Option Committee; (iii) approval of related party transactions through
its committee, the Audit Committee; and (iv) approval of material transactions not in the ordinary course of business. Since our
inception, we have never been the subject of any material product liability claims, and we have had no recent material property
damage claims.
Further, we periodically enter into foreign
currency forward exchange contracts to hedge exposure related to receivables denominated in a foreign currency and to manage risks
related to future sales expected to be denominated in a foreign currency. We enter into these exchange contracts for periods consistent
with our identified exposures. The purpose of the hedging activities is to minimize the effect of foreign exchange rate movements
on the receivables and cash flows of Interparfums SA, our French subsidiary, whose functional currency is the Euro. All foreign
currency contracts are denominated in currencies of major
industrial
countries
and are with large
financial
institutions, which are rated
as
strong
investment
grade
.
In addition, we mitigate interest rate
risk by continually monitoring interest rates, and then determining whether fixed interest rates should be swapped for floating
rate debt, or if floating rate debt should be swapped for fixed rate debt.
Item 14. Principal Accountant Fees and Services
Fees
The following sets forth the fees billed
to us by WeiserMazars LLP, as well as discusses the services provided for the past two fiscal years, fiscal years ended December
31, 2014 and December 31, 2013.
Audit Fees
During 2014, the fees billed by WeiserMazars
LLP and its affiliate, Mazars S.A. for audit services and review of the financial statements contained in our Quarterly Reports
on Form 10-Q were $0.9 million. During 2013, the fees billed by WeiserMazars LLP and its affiliate, Mazars S.A. for audit services
and review of the financial statements contained in our Quarterly Reports on Form 10-Q were $1.0 million.
Audit-Related Fees
WeiserMazars LLP did not bill us for any
audit-related services during 2014 or 2013.
Tax Fees
WeiserMazars LLP did not bill us for tax
services during 2014 or 2013.
All Other Fees
WeiserMazars LLP did not bill us for any
other services during 2014 or 2013.
Audit Committee Pre Approval Policies
and Procedures
The Audit Committee has the sole authority
for the appointment, compensation and oversight of the work of our independent accountants, who prepare or issue an audit report
for us.
During the first quarter of 2014, the audit
committee authorized the following non-audit services to be performed by WeiserMazars LLP.
|
|
·
|
We
authorized the engagement of WeiserMazars LLP if deemed necessary to provide tax consultation
in the ordinary course of business for fiscal year ended December 31, 2014.
|
|
|
·
|
We
authorized the engagement of WeiserMazars LLP if deemed necessary to provide tax consultation
as may be required on a project by project basis that would not be considered in the
ordinary course of business, of up to a $5,000 fee limit per project, subject to an aggregate
fee limit of $25,000 for fiscal year ending December 31, 2014. If we require further
tax services from WeiserMazars LLP, then the approval of the audit committee must be
obtained.
|
|
|
·
|
If
we require other services by WeiserMazars LLP on an expedited basis such that obtaining
pre-approval of the audit committee is not practicable, then the Chairman of the Committee
has authority to grant the required pre-approvals for all such services.
|
|
|
·
|
We
imposed a cap of $100,000 on the fees that WeiserMazars LLP can charge for services on
an expedited basis that are approved by the Chairman without obtaining full audit committee
approval.
|
|
|
·
|
None
of the non-audit services of either of the Company’s auditors had the pre-approval
requirement waived in accordance with Rule 2-01(c)(7)(i)(C) of Regulation S-X.
|
In the first quarter of 2015, the audit
committee authorized the same non-audit services to be performed by WeiserMazars LLP during 2014 as disclosed above.
PART IV
Item 15. Exhibits, Financial Statement Schedules
INTER PARFUMS,
INC. AND SUBSIDIARIES
Consolidated Financial
Statements and Schedule
Index
Report of Independent Registered
Public Accounting Firm
Board of Directors and Shareholders
Inter Parfums, Inc.
New York, New York
We have audited the accompanying consolidated
balance sheets of Inter Parfums, Inc. and subsidiaries (the “Company”) as of December 31, 2014 and 2013, and the related
consolidated statements of income, comprehensive income (loss), changes in shareholders’ equity and cash flows for each of
the years in the three-year period ended December 31, 2014. These financial statements are the responsibility of the Company’s
management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audits in accordance with
the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform
the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial
statement presentation. We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial
statements referred to above present fairly, in all material respects, the financial position of Inter Parfums, Inc. and subsidiaries
as of December 31, 2014 and 2013, and the results of their operations and their cash flows for each of the years in the three-year
period ended December 31, 2014, in conformity with U.S. generally accepted accounting principles.
In connection with our audits of the consolidated
financial statements enumerated above, we audited Schedule II for each of the years in the three-year period ended December 31,
2014. In our opinion, Schedule II, when considered in relation to the financial statements taken as a whole, presents fairly, in
all material respects, the information stated therein.
We also have audited, in accordance with
the standards of the Public Company Accounting Oversight Board (United States), Inter Parfums, Inc.’s internal control over
financial reporting as of December 31, 2014, based on criteria established in Internal Control – Integrated Framework (1992)
issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), and our report dated March 11, 2015 expressed
an unqualified opinion thereon.
/s/ WeiserMazars LLP
New York, New York
March 11, 2015
INTER PARFUMS, INC. AND SUBSIDIARIES
Consolidated Balance Sheets
December 31, 2014 and 2013
(In thousands except share and per share
data)
|
|
|
2014
|
|
|
2013
|
|
|
Assets
|
|
|
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
90,138
|
|
|
$
|
125,650
|
|
|
Short-term investments
|
|
|
190,152
|
|
|
|
181,677
|
|
|
Accounts receivable, net
|
|
|
90,124
|
|
|
|
79,932
|
|
|
Inventories
|
|
|
102,326
|
|
|
|
117,347
|
|
|
Receivables, other
|
|
|
1,542
|
|
|
|
2,418
|
|
|
Other current assets
|
|
|
4,504
|
|
|
|
4,775
|
|
|
Income taxes receivable
|
|
|
929
|
|
|
|
6,435
|
|
|
Deferred tax assets
|
|
|
6,848
|
|
|
|
7,257
|
|
|
Total current assets
|
|
|
486,563
|
|
|
|
525,491
|
|
|
Equipment and leasehold improvements, net
|
|
|
9,187
|
|
|
|
10,444
|
|
|
Trademarks, licenses and other intangible assets, net
|
|
|
98,531
|
|
|
|
116,243
|
|
|
Other assets
|
|
|
10,225
|
|
|
|
11,880
|
|
|
Total assets
|
|
$
|
604,506
|
|
|
$
|
664,058
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity
|
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
|
Loans payable – banks
|
|
$
|
298
|
|
|
$
|
6,104
|
|
|
Accounts payable - trade
|
|
|
46,646
|
|
|
|
56,736
|
|
|
Accrued expenses
|
|
|
49,194
|
|
|
|
58,333
|
|
|
Income taxes payable
|
|
|
3,773
|
|
|
|
1,270
|
|
|
Dividends payable
|
|
|
3,717
|
|
|
|
3,704
|
|
|
Total current liabilities
|
|
|
103,628
|
|
|
|
126,147
|
|
|
Deferred tax liability
|
|
|
2,154
|
|
|
|
2,555
|
|
|
Commitments and contingencies
|
|
|
|
|
|
|
|
|
|
Equity:
|
|
|
|
|
|
|
|
|
|
Inter Parfums, Inc. shareholders’ equity:
|
|
|
|
|
|
|
|
|
|
Preferred stock, $0.001 par value. Authorized 1,000,000 shares; none issued
|
|
|
|
|
|
|
|
|
|
Common stock, $0.001 par value. Authorized 100,000,000 shares; outstanding, 30,977,293 and 30,863,421 shares at December 31, 2014 and 2013, respectively
|
|
|
31
|
|
|
|
31
|
|
|
Additional paid-in capital
|
|
|
60,200
|
|
|
|
57,877
|
|
|
Retained earnings
|
|
|
374,121
|
|
|
|
359,459
|
|
|
Accumulated other comprehensive income (loss)
|
|
|
(15,823
|
)
|
|
|
25,860
|
|
|
Treasury stock, at cost, 9,987,995 and 9,940,977 common shares at December 31, 2014 and 2013
|
|
|
(36,464
|
)
|
|
|
(36,016
|
)
|
|
Total Inter Parfums, Inc. shareholders’ equity
|
|
|
382,065
|
|
|
|
407,211
|
|
|
Noncontrolling interest
|
|
|
116,659
|
|
|
|
128,145
|
|
|
Total equity
|
|
|
498,724
|
|
|
|
535,356
|
|
|
Total liabilities and equity
|
|
$
|
604,506
|
|
|
$
|
664,058
|
|
See accompanying notes to consolidated financial statements.
|
INTER PARFUMS, INC. AND SUBSIDIARIES
Consolidated Statements of Income
Years ended December 31, 2014, 2013,
and 2012
(In thousands except share and per share
data)
|
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net sales
|
|
$
|
499,261
|
|
|
$
|
563,579
|
|
|
$
|
654,117
|
|
|
Cost of sales
|
|
|
212,224
|
|
|
|
234,800
|
|
|
|
246,931
|
|
|
Gross margin
|
|
|
287,037
|
|
|
|
328,779
|
|
|
|
407,186
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general, and administrative expenses
|
|
|
233,634
|
|
|
|
250,025
|
|
|
|
325,799
|
|
|
Gain on termination of license
|
|
|
—
|
|
|
|
—
|
|
|
|
(198,838
|
)
|
|
Impairment of goodwill
|
|
|
—
|
|
|
|
—
|
|
|
|
1,811
|
|
|
Total operating expenses
|
|
|
233,634
|
|
|
|
250,025
|
|
|
|
128,772
|
|
|
Income from operations
|
|
|
53,403
|
|
|
|
78,754
|
|
|
|
278,414
|
|
|
Other expenses (income):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
1,478
|
|
|
|
1,380
|
|
|
|
1,654
|
|
|
(Gain) loss on foreign currency
|
|
|
(902
|
)
|
|
|
1,168
|
|
|
|
3,128
|
|
|
Interest and dividend income
|
|
|
(3,888
|
)
|
|
|
(4,440
|
)
|
|
|
(1,133
|
)
|
|
|
|
|
(3,312
|
)
|
|
|
(1,892
|
)
|
|
|
3,649
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income before income taxes
|
|
|
56,715
|
|
|
|
80,646
|
|
|
|
274,765
|
|
|
Income taxes
|
|
|
19,370
|
|
|
|
29,680
|
|
|
|
97,875
|
|
|
Net income
|
|
|
37,345
|
|
|
|
50,966
|
|
|
|
176,890
|
|
|
Less: Net income attributable to the noncontrolling interest
|
|
|
7,909
|
|
|
|
11,755
|
|
|
|
45,754
|
|
|
Net income attributable to Inter Parfums, Inc.
|
|
$
|
29,436
|
|
|
$
|
39,211
|
|
|
$
|
131,136
|
|
|
Net income attributable to Inter Parfums, Inc. common shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.95
|
|
|
$
|
1.27
|
|
|
$
|
4.29
|
|
|
Diluted
|
|
|
0.95
|
|
|
|
1.27
|
|
|
|
4.26
|
|
|
Weighted average number of shares outstanding:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
30,931,308
|
|
|
|
30,763,955
|
|
|
|
30,574,772
|
|
|
Diluted
|
|
|
31,060,326
|
|
|
|
30,953,882
|
|
|
|
30,715,684
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dividends declared per share
|
|
$
|
0.48
|
|
|
$
|
0.96
|
|
|
$
|
0.32
|
|
See accompanying notes to consolidated financial statements
INTER PARFUMS, INC. AND SUBSIDIARIES
Consolidated Statements of Comprehensive
Income (Loss)
Years ended December 31, 2014, 2013,
and 2012
(In thousands except share and per share
data)
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
37,345
|
|
|
$
|
50,966
|
|
|
$
|
176,890
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net derivative instrument gain, net of tax
|
|
|
—
|
|
|
|
—
|
|
|
|
22
|
|
|
Transfer from OCI into earnings
|
|
|
—
|
|
|
|
(327
|
)
|
|
|
—
|
|
|
Translation adjustments, net of tax
|
|
|
(57,806
|
)
|
|
|
19,027
|
|
|
|
6,419
|
|
|
|
|
|
(57,806
|
)
|
|
|
18,700
|
|
|
|
6,441
|
|
|
Comprehensive income (loss)
|
|
|
(20,461
|
)
|
|
|
69,666
|
|
|
|
183,331
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive income (loss) attributable to noncontrolling interests:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
|
7,909
|
|
|
|
11,755
|
|
|
|
45,754
|
|
|
Net derivative instrument gain, net of tax
|
|
|
—
|
|
|
|
—
|
|
|
|
6
|
|
|
Transfer from OCI into earnings
|
|
|
—
|
|
|
|
(87
|
)
|
|
|
—
|
|
|
Translation adjustments, net of tax
|
|
|
(16,123
|
)
|
|
|
5,425
|
|
|
|
1,684
|
|
|
|
|
|
(8,214
|
)
|
|
|
17,093
|
|
|
|
47,444
|
|
|
Comprehensive income (loss) attributable to Inter Parfums Inc.:
|
|
$
|
(12,247
|
)
|
|
$
|
52,573
|
|
|
$
|
135,887
|
|
See accompanying notes to consolidated financial statements.
|
INTER PARFUMS, INC. AND SUBSIDIARIES
Consolidated Statements of Changes in Shareholders’
Equity
Years ended December 31, 2014, 2013,
and 2012
(In thousands except share and per share
data)
|
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common stock, beginning and end of period
|
|
$
|
31
|
|
|
$
|
31
|
|
|
$
|
31
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Additional paid-in capital, beginning of period
|
|
|
57,877
|
|
|
|
54,679
|
|
|
|
50,883
|
|
|
Shares issued upon exercise of stock options
|
|
|
1,981
|
|
|
|
2,882
|
|
|
|
2,568
|
|
|
Sale of subsidiary shares to noncontrolling interests
|
|
|
(335
|
)
|
|
|
(173
|
)
|
|
|
737
|
|
|
Stock compensation
|
|
|
677
|
|
|
|
489
|
|
|
|
491
|
|
|
Additional paid-in capital, end of period
|
|
|
60,200
|
|
|
|
57,877
|
|
|
|
54,679
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Retained earnings, beginning of period
|
|
|
359,459
|
|
|
|
349,672
|
|
|
|
228,164
|
|
|
Net income
|
|
|
29,436
|
|
|
|
39,211
|
|
|
|
131,136
|
|
|
Dividends
|
|
|
(14,855
|
)
|
|
|
(29,582
|
)
|
|
|
(9,789
|
)
|
|
Stock compensation
|
|
|
81
|
|
|
|
158
|
|
|
|
161
|
|
|
Retained earnings, end of period
|
|
|
374,121
|
|
|
|
359,459
|
|
|
|
349,672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income, beginning of period
|
|
|
25,860
|
|
|
|
12,498
|
|
|
|
7,747
|
|
|
Foreign currency translation adjustment
|
|
|
(41,683
|
)
|
|
|
13,602
|
|
|
|
4,735
|
|
|
Transfer from OCI into earnings
|
|
|
—
|
|
|
|
(240
|
)
|
|
|
—
|
|
|
Net derivative instrument gain, net of tax
|
|
|
—
|
|
|
|
—
|
|
|
|
16
|
|
|
Accumulated other comprehensive income (loss), end of period
|
|
|
(15,823
|
)
|
|
|
25,860
|
|
|
|
12,498
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Treasury stock, beginning of period
|
|
|
(36,016
|
)
|
|
|
(35,404
|
)
|
|
|
(34,151
|
)
|
|
Shares issued upon exercise of stock options
|
|
|
219
|
|
|
|
203
|
|
|
|
409
|
|
|
Shares received as proceeds of option exercises
|
|
|
(667
|
)
|
|
|
(815
|
)
|
|
|
(1,662
|
)
|
|
Treasury stock, end of period
|
|
|
(36,464
|
)
|
|
|
(36,016
|
)
|
|
|
(35,404
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Noncontrolling interest, beginning of period
|
|
|
128,145
|
|
|
|
118,505
|
|
|
|
71,676
|
|
|
Net income
|
|
|
7,909
|
|
|
|
11,755
|
|
|
|
45,754
|
|
|
Foreign currency translation adjustment
|
|
|
(16,123
|
)
|
|
|
5,425
|
|
|
|
1,684
|
|
|
Net derivative instrument gain, net of tax
|
|
|
—
|
|
|
|
—
|
|
|
|
6
|
|
|
Transfer from OCI into earnings
|
|
|
—
|
|
|
|
(87
|
)
|
|
|
—
|
|
|
Sale of subsidiary shares to noncontrolling interest
|
|
|
1,365
|
|
|
|
830
|
|
|
|
2,659
|
|
|
Dividends
|
|
|
(4,667
|
)
|
|
|
(8,341
|
)
|
|
|
(3,333
|
)
|
|
Stock-based compensation
|
|
|
30
|
|
|
|
58
|
|
|
|
59
|
|
|
Noncontrolling interest, end of period
|
|
|
116,659
|
|
|
|
128,145
|
|
|
|
118,505
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total equity
|
|
$
|
498,724
|
|
|
$
|
535,356
|
|
|
$
|
499,981
|
|
See accompanying notes to consolidated financial statements.
|
INTER PARFUMS, INC. AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended December 31, 2014, 2013,
and 2012
(In thousands)
|
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
Cash flows from operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
|
37,345
|
|
|
$
|
50,966
|
|
|
$
|
176,890
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization
|
|
|
10,166
|
|
|
|
11,110
|
|
|
|
15,554
|
|
|
Impairment of goodwill
|
|
|
—
|
|
|
|
—
|
|
|
|
1,811
|
|
|
Provision for doubtful accounts
|
|
|
412
|
|
|
|
574
|
|
|
|
914
|
|
|
Noncash stock compensation
|
|
|
856
|
|
|
|
838
|
|
|
|
832
|
|
|
Gain on termination of license
|
|
|
—
|
|
|
|
—
|
|
|
|
(198,838
|
)
|
|
Excess tax benefits from stock-based compensation arrangements
|
|
|
(670
|
)
|
|
|
(700
|
)
|
|
|
(100
|
)
|
|
Deferred tax expense (benefit)
|
|
|
(557
|
)
|
|
|
4,844
|
|
|
|
(7,903
|
)
|
|
Change in fair value of derivatives
|
|
|
—
|
|
|
|
—
|
|
|
|
(68
|
)
|
|
Changes in:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
|
(19,607
|
)
|
|
|
71,776
|
|
|
|
27,302
|
|
|
Inventories
|
|
|
4,344
|
|
|
|
29,240
|
|
|
|
13,568
|
|
|
Other assets
|
|
|
780
|
|
|
|
426
|
|
|
|
(9,611
|
)
|
|
Accounts payable and accrued expenses
|
|
|
(4,996
|
)
|
|
|
(33,156
|
)
|
|
|
(40,773
|
)
|
|
Income taxes, net
|
|
|
8,540
|
|
|
|
(86,724
|
)
|
|
|
81,063
|
|
|
Net cash provided by operating activities
|
|
|
36,613
|
|
|
|
49,194
|
|
|
|
60,641
|
|
|
Cash flows from investing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Purchases of short-term investments
|
|
|
(245,810
|
)
|
|
|
(381,843
|
)
|
|
|
—
|
|
|
Proceeds from sale of short-term investments
|
|
|
212,762
|
|
|
|
207,082
|
|
|
|
—
|
|
|
Proceeds from termination of license, net of transaction fees and other settlements
|
|
|
—
|
|
|
|
—
|
|
|
|
235,650
|
|
|
Purchase of equipment and leasehold improvements
|
|
|
(3,302
|
)
|
|
|
(5,015
|
)
|
|
|
(9,474
|
)
|
|
Payment for intangible assets acquired
|
|
|
(922
|
)
|
|
|
(7,769
|
)
|
|
|
(19,717
|
)
|
|
Proceeds from sale of equipment
|
|
|
—
|
|
|
|
2,801
|
|
|
|
—
|
|
|
Proceeds from sale of trademark
|
|
|
—
|
|
|
|
3,481
|
|
|
|
—
|
|
|
Net cash provided by (used in) investing activities
|
|
|
(37,272
|
)
|
|
|
(181,263
|
)
|
|
|
206,459
|
|
|
Cash flows from financing activities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from (repayments of) loans payable – banks
|
|
|
(5,765
|
)
|
|
|
(21,835
|
)
|
|
|
15,300
|
|
|
Repayment of long-term debt
|
|
|
—
|
|
|
|
—
|
|
|
|
(4,379
|
)
|
|
Purchase of treasury stock
|
|
|
(90
|
)
|
|
|
(98
|
)
|
|
|
(90
|
)
|
|
Proceeds from exercise of options
|
|
|
953
|
|
|
|
1,668
|
|
|
|
1,305
|
|
|
Excess tax benefits from stock-based compensation arrangements
|
|
|
670
|
|
|
|
700
|
|
|
|
100
|
|
|
Proceeds from sale of stock of subsidiary
|
|
|
1,030
|
|
|
|
657
|
|
|
|
3,396
|
|
|
Dividends paid
|
|
|
(14,841
|
)
|
|
|
(28,331
|
)
|
|
|
(9,780
|
)
|
|
Dividends paid to noncontrolling interests
|
|
|
(4,667
|
)
|
|
|
(8,341
|
)
|
|
|
(3,333
|
)
|
|
Net cash provided by (used in) financing activities
|
|
|
(22,710
|
)
|
|
|
(55,580
|
)
|
|
|
2,519
|
|
|
Effect of exchange rate changes on cash
|
|
|
(12,143
|
)
|
|
|
5,964
|
|
|
|
1,860
|
|
|
Net increase (decrease) in cash and cash equivalents
|
|
|
(35,512
|
)
|
|
|
(181,685
|
)
|
|
|
271,479
|
|
|
Cash and cash equivalents – beginning of year
|
|
|
125,650
|
|
|
|
307,335
|
|
|
|
35,856
|
|
|
Cash and cash equivalents – end of year
|
|
$
|
90,138
|
|
|
$
|
125,650
|
|
|
$
|
307,335
|
|
|
Supplemental disclosures of cash flow information:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash paid for:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
|
|
$
|
1,508
|
|
|
$
|
1,524
|
|
|
$
|
1,799
|
|
|
Income taxes
|
|
|
10,430
|
|
|
|
104,992
|
|
|
|
20,584
|
|
See accompanying notes to consolidated financial statements.
INTER PARFUMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014, 2013 and 2012
(In thousands except share and per share
data)
|
|
(1)
|
The Company and its Significant Accounting Policies
|
Business of the Company
Inter Parfums,
Inc. and its subsidiaries (the “Company”) are in the fragrance business, and manufacture and distribute a wide array
of fragrances and fragrance related products.
Substantially
all of our prestige fragrance brands are licensed from unaffiliated third parties, and our business is dependent upon the continuation
and renewal of such licenses. Burberry was our most significant license and net sales of Burberry products represented 0%, 23%
and 46% of net sales in 2014, 2013 and 2012, respectively (see Note (2) “Termination of Burberry License”). In addition,
the Company owns the Lanvin brand name for its class of trade, and licenses the Montblanc and Jimmy Choo brand names among others.
As a percentage of net sales, product sales for the Company’s largest brands were as follows:
|
|
|
Year Ended December 31,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
Montblanc
|
|
|
22
|
%
|
|
|
15
|
%
|
|
|
9
|
%
|
|
Lanvin
|
|
|
18
|
%
|
|
|
15
|
%
|
|
|
12
|
%
|
|
Jimmy Choo
|
|
|
16
|
%
|
|
|
13
|
%
|
|
|
8
|
%
|
No other brand
represented 10% or more of consolidated net sales.
Basis of Preparation
The consolidated
financial statements include the accounts of the Company, including 73% owned Interparfums SA (“IPSA”), a subsidiary
whose stock is publicly traded in France. All material intercompany balances and transactions have been eliminated.
Management Estimates
Management makes assumptions
and estimates to prepare financial statements in conformity with accounting principles generally accepted in the United States
of America. Those assumptions and estimates directly affect the amounts reported and disclosures included in the consolidated financial
statements. Actual results could differ from those assumptions and estimates. Significant estimates for which changes in the near
term are considered reasonably possible and that may have a material impact on the financial statements are disclosed in these
notes to the consolidated financial statements.
Foreign Currency Translation
For foreign
subsidiaries with operations denominated in a foreign currency, assets and liabilities are translated to U.S. dollars at year-end
exchange rates. Income and expense items are translated at average rates of exchange prevailing during the year. Gains and losses
from translation adjustments are accumulated in a separate component of shareholders’ equity.
Cash and Cash Equivalents
and Short-Term Investments
All highly
liquid investments purchased with a maturity of three months or less are considered to be cash equivalents. From time to time,
the Company has short-term investments which consist of certificates of deposit with maturities greater than three months. The
Company monitors concentrations of credit risk associated with financial institutions with which the Company conducts significant
business. The Company believes its credit risk is minimal, as the Company primarily conducts business with large, well-established
financial institutions. Substantially all cash and cash equivalents are held at financial institutions outside the United States
and are readily convertible into U.S. dollars.
INTER PARFUMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014, 2013 and 2012
(In thousands except share and per share
data)
Accounts Receivable
Accounts receivable
represent payments due to the Company for previously recognized net sales, reduced by allowances for sales returns and doubtful
accounts or balances which are estimated to be uncollectible, which aggregated $6.9 million and $6.4 million as of December 31,
2014 and 2013, respectively. Accounts receivable balances are written-off against the allowance for doubtful accounts when they
become uncollectible. Recoveries of accounts receivable previously recorded against the allowance are recorded in the consolidated
statement of income when received. We generally grant credit based upon our analysis of the customer’s financial position,
as well as previously established buying patterns.
Inventories
Inventories,
including promotional merchandise, only include inventory considered saleable or usable in future periods, and is stated at the
lower of cost or market, with cost being determined on the first-in, first-out method. Cost components include raw materials,
components, direct labor and overhead (e.g., indirect labor, utilities, depreciation, purchasing, receiving, inspection and warehousing)
as well as inbound freight. Promotional merchandise is charged to cost of sales at the time the merchandise is shipped to
the Company’s customers. Overhead included in inventory aggregated $3.3 million, $3.6 million and $4.0 million as of December
31, 2014, 2013 and 2012, respectively. Included in inventories is an inventory reserve, which represents the difference between
the cost of the inventory and its estimated realizable value, based upon sales forecasts and the physical condition of the inventories.
In addition, and as necessary, specific reserves for future known or anticipated events may be established. Inventory reserves
aggregated $6.0 million and $6.8 million as of December 31, 2014 and 2013, respectively.
Derivatives
All derivative instruments are
recorded as either assets or liabilities and measured at fair value. The Company uses derivative instruments to principally manage
a variety of market risks. For derivatives designated as hedges of the exposure to changes in fair value of the recognized asset
or liability or a firm commitment (referred to as fair value hedges), the gain or loss is recognized in earnings in the period
of change together with the offsetting loss or gain on the hedged item attributable to the risk being hedged. The effect of that
accounting is to include in earnings the extent to which the hedge is not effective in achieving offsetting changes in fair value.
For cash flow hedges, the effective portion of the derivative’s gain or loss is initially reported in equity (as a component
of accumulated other comprehensive income) and is subsequently reclassified into earnings in the same period or periods during
which the hedged forecasted transaction affects earnings. The ineffective portion of the gain or loss of a cash flow hedge is reported
in earnings immediately. The Company also holds certain instruments for economic purposes that are not designated for hedge accounting
treatment. For these derivative instruments, changes in their fair value are recorded in earnings immediately.
Equipment and Leasehold
Improvements
Equipment
and leasehold improvements are stated at cost less accumulated depreciation and amortization. Depreciation and amortization are
provided using the straight-line method over the estimated useful lives for equipment, which range between three and ten years
and the shorter of the lease term or estimated useful asset lives for leasehold improvements. Depreciation provided on equipment
used to produce inventory, such as tools and molds, is included in cost of sales.
INTER PARFUMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014, 2013 and 2012
(In thousands except share and per share
data)
Long-Lived Assets
Indefinite-lived intangible assets
principally consist of trademarks which are not amortized. The Company evaluates indefinite-lived intangible assets for impairment
at least annually during the fourth quarter, or more frequently when events occur or circumstances change, such as an unexpected
decline in sales, that would more likely than not indicate that the carrying value of an indefinite-lived intangible asset may
not be recoverable. When testing indefinite-lived intangible assets for impairment, the evaluation requires a comparison of the
estimated fair value of the asset to the carrying value of the asset. The fair values used in our evaluations are estimated based
upon discounted future cash flow projections using a weighted average cost of capital of 6.7%. The cash flow projections are based
upon a number of assumptions, including, future sales levels and future cost of goods and operating expense levels, as well as
economic conditions, changes to our business model or changes in consumer acceptance of our products which are more subjective
in nature. If the carrying value of an indefinite-lived intangible asset exceeds its fair value, an impairment charge is recorded.
Intangible
assets subject to amortization are evaluated for impairment testing whenever events or changes in circumstances indicate that
the carrying amount of an amortizable intangible asset may not be recoverable. If impairment indicators exist for an amortizable
intangible asset, the undiscounted future cash flows associated with the expected service potential of the asset are compared
to the carrying value of the asset. If our projection of undiscounted future cash flows is in excess of the carrying value of
the intangible asset, no impairment charge is recorded. If our projection of undiscounted future cash flows is less than the carrying
value of the intangible asset, an impairment charge would be recorded to reduce the intangible asset to its fair value.
Concentration of Credit
Risk
The Company is a worldwide manufacturer,
marketer and distributor of fragrance and fragrance related products, and sells its products to department stores, perfumeries,
specialty retailers, mass-market retailers, supermarkets and domestic and international wholesalers and distributors. The Company
grants credit to all qualified customers and does not believe it is exposed significantly to any undue concentration of credit
risk.
No one customer represented 10%
or more of net sales in 2014, 2013 or 2012.
Revenue Recognition
The Company sells its products
to department stores, perfumeries, specialty retailers, mass-market retailers, supermarkets and domestic and international wholesalers
and distributors. Sales of such products by our domestic subsidiaries are denominated in U.S. dollars and sales of such products
by our foreign subsidiaries are primarily denominated in either euro or U.S. dollars. The Company recognizes revenues when merchandise
is shipped and the risk of loss passes to the customer. Net sales are comprised of gross revenues less returns, trade discounts
and allowances. The Company does not bill its customers’ freight and handling charges. All shipping and handling costs, which
aggregated $5.2 million, $6.1 million and $8.4 million in 2014, 2013 and 2012, respectively, are included in selling, general and
administrative expenses in the consolidated statements of income.
INTER PARFUMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014, 2013 and 2012
(In thousands except share and per share
data)
Sales Returns
Generally, the Company does not
permit customers to return their unsold products. However, for U.S. based customers, we allow returns if properly requested, authorized
and approved. The Company regularly reviews and revises, as deemed necessary, its estimate of reserves for future sales returns
based primarily upon historic trends and relevant current data including information provided by retailers regarding their inventory
levels. In addition, as necessary, specific accruals may be established for significant future known or anticipated events. The
types of known or anticipated events that we consider include, but are not limited to, the financial condition of our customers,
store closings by retailers, changes in the retail environment and our decision to continue to support new and existing products.
The Company records estimated reserves for sales returns as a reduction of sales, cost of sales and accounts receivable. Returned
products are recorded as inventories and are valued based upon estimated realizable value. The physical condition and marketability
of returned products are the major factors we consider in estimating realizable value. Actual returns, as well as estimated realizable
values of returned products, may differ significantly, either favorably or unfavorably, from our estimates, if factors such as
economic conditions, inventory levels or competitive conditions differ from our expectations.
Payments to Customers
The Company records revenues
generated from purchase with purchase and gift with purchase promotions as sales and the costs of its purchase with purchase and
gift with purchase promotions as cost of sales. Certain other incentive arrangements require the payment of a fee to customers
based on their attainment of pre-established sales levels. These fees have been recorded as a reduction of net sales.
Advertising and Promotion
Advertising
and promotional costs are expensed as incurred and recorded as a component of cost of goods sold (in the case of free goods given
to customers) or selling, general and administrative expenses. Advertising and promotional costs included in selling, general
and administrative expenses were $86.7 million, $94.0 million and $132.7 million for 2014, 2013 and 2012, respectively. Costs
relating to purchase with purchase and gift with purchase promotions that are reflected in cost of sales aggregated $24.4 million,
$25.7 million and $46.5 million in 2014, 2013 and 2012, respectively. Accrued expenses include approximately $16.5 million and
$22.4 million in advertising liabilities as of December 31, 2014 and 2013, respectively.
Package Development
Costs
Package development
costs associated with new products and redesigns of existing product packaging are expensed as incurred.
Operating Leases
The Company recognizes rent expense
from operating leases with various step rent provisions, rent concessions and escalation clauses on a straight-line basis over
the applicable lease term. The Company considers lease renewals in the useful life of its leasehold improvements when such
renewals are reasonably assured. In the event the Company receives capital improvement funding from its landlord, these amounts
are recorded as deferred liabilities and amortized over the remaining lease term as a reduction of rent expense.
License Agreements
The Company’s license agreements
provide the Company with worldwide rights to manufacture, market and sell fragrance and fragrance related products using the licensors’
trademarks. The licenses typically have an initial term of approximately 5 years to 15 years, and are potentially renewable
subject to the Company’s compliance with the license agreement provisions. The remaining terms, including the potential
renewal periods, range from approximately 1 year to 14 years. Under each license, the Company is required to pay royalties
in the range of 5% to 10% to the licensor, at least annually, based on net sales to third parties.
INTER PARFUMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014, 2013 and 2012
(In thousands except share and per share
data)
In certain cases, the Company
may pay an entry fee to acquire, or enter into, a license where the licensor or another licensee was operating a pre-existing fragrance
business. In those cases, the entry fee is capitalized as an intangible asset and amortized over its useful life.
Most license agreements require
minimum royalty payments, incremental royalties based on net sales levels and minimum spending on advertising and promotional activities.
Royalty expenses are accrued in the period in which net sales are recognized while advertising and promotional expenses are accrued
at the time these costs are incurred.
In addition, the Company is exposed
to certain concentration risk. Substantially all of our prestige fragrance brands are licensed from unaffiliated third parties,
and our business is dependent upon the continuation and renewal of such licenses.
Loss Contingency
The Company has accrued
a loss contingency based on best estimates relating to a dispute with a former licensor. It is possible that, when the
loss contingency is resolved, actual costs could exceed amounts in reserve. However, the potential impact of such exposure,
if any, is deemed to be immaterial to the overall financial statements.
Income Taxes
The Company accounts for income
taxes using an asset and liability approach that requires the recognition of deferred tax assets and liabilities for the expected
future tax consequences of events that have been recognized in its financial statements or tax returns. The net deferred tax
assets assume sufficient future earnings for their realization, as well as the continued application of currently anticipated tax
rates. Included in net deferred tax assets is a valuation allowance for deferred tax assets, where management believes it
is more-likely-than-not that the deferred tax assets will not be realized in the relevant jurisdiction. If the Company determines
that a deferred tax asset will not be realizable, an adjustment to the deferred tax asset will result in a reduction of net earnings
at that time.
Issuance of Common Stock
by Consolidated Subsidiary
The difference
between the Company’s share of the proceeds received by the subsidiary and the carrying amount of the portion of the Company’s
investment deemed sold, is reflected as an equity adjustment in the consolidated balance sheets.
Treasury Stock
The Board
of Directors may authorize share repurchases of the Company’s common stock (Share Repurchase Authorizations). Share repurchases
under Share Repurchase Authorizations may be made through open market transactions, negotiated purchase or otherwise, at times
and in such amounts within the parameters authorized by the Board. Shares repurchased under Share Repurchase Authorizations are
held in treasury for general corporate purposes, including issuances under various employee stock option plans. Treasury shares
are accounted for under the cost method and reported as a reduction of equity. Share Repurchase Authorizations may be suspended,
limited or terminated at any time without notice.
Recent Accounting Pronouncements
In May 2014, the Financial Accounting
Standards Board (“FASB”) issued an Accounting Standards Update which supersedes the most current revenue recognition
requirements. The new revenue recognition standard requires entities to recognize revenue in a way that depicts the transfer of
goods or services to customers in an amount that reflects the consideration which the entity expects to be entitled to in exchange
for those goods or services. This guidance is effective for annual and interim reporting periods beginning after December 15, 2016,
with early adoption not permitted. We are currently evaluating the standard to determine the impact of its adoption on our consolidated
financial statements.
INTER PARFUMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014, 2013 and 2012
(In thousands except share and per share
data)
In July 2013, new accounting
guidance was issued regarding financial statement presentation of an unrecognized tax benefit when a net operating loss carry-forward,
a similar tax loss, or a tax credit exists. This guidance is effective for interim and annual periods beginning after December 15,
2014. The adoption of this new guidance did not have a material effect on the Company’s financial position, results of operations
or cash flows.
There are no other recent accounting
pronouncements issued but not yet adopted that would have a material effect on our consolidated financial statements.
|
|
(2)
|
Termination of Burberry License
|
Burberry exercised its option
to buy-out the license rights effective December 31, 2012. In October 2012, the Company and Burberry entered into a transition
agreement that provided for certain license rights and obligations to continue through March 31, 2013. The Company continued to
operate certain aspects of the business for the brand including product development, testing, and distribution. The transition
agreement provided for non-exclusivity for manufacturing, a cap on sales of Burberry products, a reduced advertising requirement
and no minimum royalty amounts.
The Company had determined that
the transaction was substantially completed as of December 31, 2012. The following table sets forth a summary of the gain
on termination of license which is included in income from operations on the accompanying statement of income for the year ended
December 31, 2012:
|
Exit payment (received December 21, 2012)
|
|
$
|
239,075
|
|
|
|
|
|
|
|
|
Expenses of termination:
|
|
|
|
|
|
Inventory reserves
|
|
|
10,037
|
|
|
Wages including $13.8 million in Interparfums SA profit sharing requirements
|
|
|
14,391
|
|
|
Write-off of intangible assets
|
|
|
7,675
|
|
|
Writedown of fixed assets
|
|
|
3,483
|
|
|
Write-off of unused modeling rights
|
|
|
1,226
|
|
|
Legal, professional and other agreed settlements
|
|
|
3,425
|
|
|
|
|
|
|
|
|
|
|
|
40,237
|
|
|
|
|
|
|
|
|
Gain on termination of license
|
|
$
|
198,838
|
|
Abercrombie & Fitch and Hollister
In December 2014, the Company
entered into a 7-year exclusive worldwide license to create, produce and distribute new perfumes and fragrance related products
under the Abercrombie & Fitch and Hollister brand names. The Company will distribute these fragrances internationally in specialty
retailers, high-end department stores and duty free shops, and in the U.S., in duty free shops and potentially in Abercrombie &
Fitch and Hollister retail stores. The agreement is subject to certain minimum sales, advertising expenditures and royalty payments
as are customary in our industry. New men’s and women’s scents are planned for both Abercrombie & Fitch and Hollister
for 2016.
INTER PARFUMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014, 2013 and 2012
(In thousands except share and per share
data)
Oscar de la Renta
In October 2013, the Company
entered into a 12-year exclusive worldwide license to create, produce and distribute perfumes and related products under the Oscar
de la Renta brand. The agreement closed on December 2, 2013 and is subject to certain minimum advertising expenditures as is customary
in our industry. The Company purchased certain inventories and paid an up-front entry fee of $5.0 million. Upon closing, the Company
took over distribution of fragrances within the brand’s existing perfume portfolio and is launching its first fragrance under
the Oscar de la Renta brand in 2015.
Agent Provocateur
In July 2013, the Company entered
into a 10.5-year exclusive worldwide license to create, produce and distribute perfumes and related products under London-based
luxury lingerie brand, Agent Provocateur. The agreement commenced on August 1, 2013 and is subject to certain minimum advertising
expenditures as is customary in our industry. The Company took over distribution of selected fragrances within the brand’s
existing perfume portfolio and launched its first fragrances under the Agent Provocateur brand in 2014.
Shanghai Tang
In July 2013, the Company created
a wholly-owned Hong Kong subsidiary, Inter Parfums USA Hong Kong Limited, which entered into a 12-year exclusive worldwide license
to create, produce and distribute perfumes and related products under China’s leading luxury brand, Shanghai Tang. The agreement
commenced on July 1, 2013 and is subject to certain minimum sales, advertising expenditures and royalty payments as are customary
in our industry. The Company is in the process of launching its initial fragrance collection under the Shanghai Tang brand.
Dunhill
In December 2012, we entered
into a 10-year exclusive worldwide license to create, produce and distribute perfumes and fragrance-related products under the
Alfred Dunhill Limited (“Dunhill”) brand. Our rights under the agreement commenced on April 3, 2013 when we took over
production and distribution of the existing Dunhill fragrance collections. The agreement is subject to certain minimum sales, advertising
expenditures and royalty payments as are customary in our industry. The Company paid an upfront entry fee of $0.9 million. The
Company is launching a new men’s scent for Dunhill in 2015.
Karl Lagerfeld
In October 2012, we entered into
a 20-year exclusive worldwide license agreement to create, produce and distribute perfumes under the Karl Lagerfeld brand. Our
rights under such license agreement are subject to certain minimum sales, advertising expenditures and royalty payments as are
customary in our industry. In connection with our entry into this license, the Company paid a license entry fee to the licensor
of €9.6 million, (approximately $12.5 million). In addition, the Company has made an advance royalty payment to the licensor
of €9.6 million, (approximately $12.5 million). This advance royalty payment is to be credited against future royalty payments
as follows: every year in which the royalties due are higher than €0.5 million, the amount of royalties exceeding €0.5
million will be credited up to €0.5 million in each such year. The advance royalty has been discounted to its net present
value which is included in other assets on the accompanying balance sheet and the resulting discount of approximately $4.4 million
has been added to intangible assets and will be amortized together with the license entry fee, over the initial term of the license.
INTER PARFUMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014, 2013 and 2012
(In thousands except share and per share
data)
|
|
|
December 31,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
Raw materials and component parts
|
|
$
|
36,383
|
|
|
$
|
47,800
|
|
|
Finished goods
|
|
|
65,943
|
|
|
|
69,547
|
|
|
|
|
$
|
102,326
|
|
|
$
|
117,347
|
|
|
|
(5)
|
Fair Value of Financial Instruments
|
The following
tables present our financial assets and liabilities that are measured at fair value on a recurring basis and are categorized using
the fair value hierarchy. The fair value hierarchy has three levels based on the reliability of the inputs used to determine fair
value.
|
|
|
|
|
|
Fair Value Measurements at December 31, 2014
|
|
|
|
|
|
|
|
Quoted Prices in
|
|
|
Significant Other
|
|
|
Significant
|
|
|
|
|
|
|
|
Active Markets for
|
|
|
Observable
|
|
|
Unobservable
|
|
|
|
|
|
|
|
Identical Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
|
|
Total
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term investments
|
|
$
|
190,152
|
|
|
$
|
—
|
|
|
$
|
190,152
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forward exchange contracts not accounted for using hedge accounting
|
|
$
|
355
|
|
|
$
|
—
|
|
|
$
|
355
|
|
|
$
|
—
|
|
|
|
|
|
|
|
Fair Value Measurements at December 31, 2013
|
|
|
|
|
|
|
|
Quoted Prices in
|
|
|
Significant Other
|
|
|
Significant
|
|
|
|
|
|
|
|
Active Markets for
|
|
|
Observable
|
|
|
Unobservable
|
|
|
|
|
|
|
|
Identical Assets
|
|
|
Inputs
|
|
|
Inputs
|
|
|
|
|
Total
|
|
|
(Level 1)
|
|
|
(Level 2)
|
|
|
(Level 3)
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Short-term investments
|
|
$
|
181,677
|
|
|
$
|
—
|
|
|
$
|
181,677
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency forward exchange contracts not accounted for using hedge accounting
|
|
|
157
|
|
|
|
—
|
|
|
|
157
|
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
181,834
|
|
|
$
|
—
|
|
|
$
|
181,834
|
|
|
$
|
—
|
|
The carrying
amount of cash and cash equivalents including money market funds, short-term investments, accounts receivable, other receivables,
accounts payable and accrued expenses approximates fair value due to the short terms to maturity of these instruments. The carrying
amount of loans payable approximates fair value as the interest rates on the Company’s indebtedness approximate current
market rates.
Foreign currency
forward exchange contracts are valued based on quotations from financial institutions.
INTER PARFUMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014, 2013 and 2012
(In thousands except share and per share
data)
|
|
(6)
|
Derivative Financial Instruments
|
The Company
enters into foreign currency forward exchange contracts to hedge exposure related to receivables denominated in a foreign currency
and occasionally to manage risks related to future sales expected to be denominated in a foreign currency. The Company did not
enter into any cash flow hedges during the three-year period ended December 31, 2014. Gains and losses in derivatives not designated
as hedges are included in (gain) loss on foreign currency on the accompanying income statement and were immaterial in each of
the years in the three-year period ended December 31, 2014.
All derivative
instruments are reported as either assets or liabilities on the balance sheet measured at fair value. The valuation of foreign
currency forward exchange contracts not accounted for using hedge accounting in 2014 resulted in a liability that is included
in accrued expenses and in 2013 resulted in an asset that is included in other current assets on the accompanying balance sheets.
Generally, increases or decreases in the fair value of derivative instruments will be recognized as gains or losses in earnings
in the period of change. If the derivative instrument is designated and qualifies as a cash flow hedge, the changes in fair value
of the derivative instrument will be recorded as a separate component of shareholders’ equity.
At December 31, 2014, the
Company had foreign currency contracts in the form of forward exchange contracts in the amount of approximately U.S. $14.8 million,
GB £2.6 million and JPY ¥75.0 million, which all have maturities of less than one year.
|
|
(7)
|
Equipment and Leasehold Improvements
|
|
|
|
December 31,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
Equipment
|
|
$
|
26,006
|
|
|
$
|
25,597
|
|
|
Leasehold improvements
|
|
|
1,581
|
|
|
|
2,952
|
|
|
|
|
|
27,587
|
|
|
|
28,549
|
|
|
Less accumulated depreciation and amortization
|
|
|
18,400
|
|
|
|
18,105
|
|
|
|
|
$
|
9,187
|
|
|
$
|
10,444
|
|
Depreciation and amortization
expense was $3.6 million, $4.9 million and $8.6 million for 2014, 2013 and 2012, respectively.
INTER PARFUMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014, 2013 and 2012
(In thousands except share and per share
data)
|
|
(8)
|
Trademarks, Licenses and Other Intangible Assets
|
|
2014
|
|
Gross
|
|
|
Accumulated
|
|
|
Net Book
|
|
|
|
|
Amount
|
|
|
Amortization
|
|
|
Value
|
|
|
Trademarks (indefinite lives)
|
|
$
|
4,252
|
|
|
$
|
—
|
|
|
$
|
4,252
|
|
|
Trademarks (finite lives)
|
|
|
46,889
|
|
|
|
53
|
|
|
|
46,836
|
|
|
Licenses (finite lives)
|
|
|
72,171
|
|
|
|
26,976
|
|
|
|
45,195
|
|
|
Other intangible assets (finite lives)
|
|
|
11,572
|
|
|
|
9,324
|
|
|
|
2,248
|
|
|
Subtotal
|
|
|
130,632
|
|
|
|
36,353
|
|
|
|
94,279
|
|
|
Total
|
|
$
|
134,884
|
|
|
$
|
36,353
|
|
|
$
|
98,531
|
|
|
2013
|
|
Gross
|
|
|
Accumulated
|
|
|
Net Book
|
|
|
|
|
Amount
|
|
|
Amortization
|
|
|
Value
|
|
|
Trademarks (indefinite lives)
|
|
$
|
4,257
|
|
|
$
|
—
|
|
|
$
|
4,257
|
|
|
Trademarks (finite lives)
|
|
|
53,319
|
|
|
|
102
|
|
|
|
53,217
|
|
|
Licenses (finite lives)
|
|
|
80,842
|
|
|
|
24,747
|
|
|
|
56,095
|
|
|
Other intangible assets (finite lives)
|
|
|
11,964
|
|
|
|
9,290
|
|
|
|
2,674
|
|
|
Subtotal
|
|
|
146,125
|
|
|
|
34,139
|
|
|
|
111,986
|
|
|
Total
|
|
$
|
150,382
|
|
|
$
|
34,139
|
|
|
$
|
116,243
|
|
Amortization expense was $6.6
million, $6.2 million and $7.0 million for 2014, 2013 and 2012, respectively. Amortization expense is expected to approximate $6.2
million in 2015 and 2016, and $5.4 million in 2017, 2018 and 2019. The weighted average amortization period for trademarks, licenses
and other intangible assets with finite lives are 18 years, 14 years and 2 years, respectively, and 15 years in the aggregate.
There were no impairment charges
for trademarks with indefinite useful lives in 2014, 2013 and 2012. The fair values used in our evaluations are estimated based
upon discounted future cash flow projections using a weighted average cost of capital of 6.7%. The cash flow projections are based
upon a number of assumptions, including, future sales levels and future cost of goods and operating expense levels, as well as
economic conditions, changes to our business model or changes in consumer acceptance of our products which are more subjective
in nature. The Company believes that the assumptions the Company has made in projecting future cash flows for the evaluations described
above are reasonable and currently no impairment indicators exist for our indefinite-lived assets. However, if future actual results
do not meet our expectations, the Company may be required to record an impairment charge, the amount of which could be material
to our results of operations.
The cost of
trademarks, licenses and other intangible assets with finite lives is being amortized by the straight-line method over the term
of the respective license or the intangible assets estimated useful life which range from three to twenty years. If the residual
value of a finite life intangible asset exceeds its carrying value, then the asset is not amortized. The Company reviews intangible
assets with finite lives for impairment whenever events or changes in circumstances indicate that the carrying amount may not
be recoverable.
INTER PARFUMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014, 2013 and 2012
(In thousands except share and per share
data)
Trademarks
(finite lives) primarily represent Lanvin brand names and trademarks and in connection with their purchase, Lanvin was granted
the right to repurchase the brand names and trademarks in 2025 for the greater of
€
70
million (approximately $85 million) or one times the average of the annual sales for the years ending December 31, 2023 and 2024
(residual value). Because the residual value of the intangible asset exceeds its carrying value, the asset is not amortized.
|
|
(9)
|
Loans Payable – Banks
|
Loans payable – banks consist
of the following:
The Company and its domestic
subsidiaries have available a $20 million unsecured revolving line of credit due on demand, which bears interest at the prime rate
minus 0.5% (the prime rate was 3.25% as of December 31, 2014). The line of credit which has a maturity date of May 1, 2015 is expected
to be renewed on an annual basis. Borrowings outstanding pursuant to this line of credit were zero as of December 31, 2014 and
$5.8 million as of December 31, 2013.
The Company’s foreign subsidiaries
have available credit lines, including several bank overdraft facilities totaling approximately $30 million. These credit lines
bear interest at EURIBOR plus between 0.5% and 0.8% (EURIBOR was 0.2% at December 31, 2014). Outstanding amounts were $0.3
million as of both December 31, 2014 and December 31, 2013.
The weighted average interest
rate on short-term borrowings was 0.8% and 2.8% as of December 31, 2014 and 2013, respectively.
Leases
The Company
leases its office and warehouse facilities under operating leases which are subject to various step rent provisions, rent concessions
and escalation clauses expiring at various dates through 2023. Escalation clauses are not material and have been excluded from
minimum future annual rental payments. Rental expense, which is calculated on a straight-line basis, amounted to $10.1 million,
$10.8 million and $11.8 million in 2014, 2013 and 2012, respectively. Minimum future annual rental payments are as follows:
|
2015
|
|
$
|
5,306
|
|
|
2016
|
|
|
5,343
|
|
|
2017
|
|
|
5,067
|
|
|
2018
|
|
|
4,663
|
|
|
2019
|
|
|
4,221
|
|
|
Thereafter
|
|
|
10,301
|
|
|
|
|
|
|
|
|
|
|
$
|
34,901
|
|
INTER PARFUMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014, 2013 and 2012
(In thousands except share and per share
data)
License Agreements
The Company
is party to a number of license and other agreements for the use of trademarks and rights in connection with the manufacture and
sale of its products expiring at various dates through 2032. In connection with certain of these license agreements, the Company
is subject to minimum annual advertising commitments, minimum annual royalties and other commitments as follows:
|
2015
|
|
$
|
102,752
|
|
|
2016
|
|
|
103,899
|
|
|
2017
|
|
|
106,282
|
|
|
2018
|
|
|
110,639
|
|
|
2019
|
|
|
106,669
|
|
|
Thereafter
|
|
|
454,068
|
|
|
|
|
|
|
|
|
|
|
$
|
984,309
|
|
Future
advertising commitments are estimated based on planned future sales for the license terms that were in effect at December 31, 2014,
without consideration for potential renewal periods. The above figures do not reflect the fact that our distributors share our
advertising obligations.
Royalty expense included in selling, general, and administrative
expenses, aggregated $35.6 million, $40.5 million and $58.8 million, in 2014, 2013 and 2012, respectively, and represented 7.1%,
7.2% and 9.0% of net sales for the years ended December 31, 2014, 2013 and 2012.
Share-Based Payments:
The Company
maintains a stock option program for key employees, executives and directors. The plans, all of which have been approved by shareholder
vote, provide for the granting of both nonqualified and incentive options. Options granted under the plans typically have a six-year
term and vest over a four to five-year period. The fair value of shares vested in 2014 and 2013 aggregated $0.7 million and $0.5
million, respectively.
Compensation cost is recognized on a straight-line
basis over the requisite service period for the entire award.
It is generally the Company’s policy to issue new shares
upon exercise of stock options.
The following
table sets forth information with respect to nonvested options for 2014:
|
|
|
Number of Shares
|
|
|
Weighted Average Grant
Date Fair Value
|
|
|
Nonvested options – beginning of year
|
|
|
367,470
|
|
|
$
|
6.68
|
|
|
Nonvested options granted
|
|
|
139,250
|
|
|
$
|
7.42
|
|
|
Nonvested options vested or forfeited
|
|
|
(121,215
|
)
|
|
$
|
6.06
|
|
|
Nonvested options – end of year
|
|
|
385,505
|
|
|
$
|
7.14
|
|
Share-based
payment expenses decreased income before income taxes by $0.9 million in 2014 and $0.8 million in 2013 and 2012, decreased net
income attributable to Inter Parfums, Inc. by $0.5 million in 2014, 2013 and 2012 and, reduced diluted earnings per share attributable
to Inter Parfums, Inc. by $0.01 in 2014, 2013 and 2012.
INTER PARFUMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014, 2013 and 2012
(In thousands except share and per share
data)
The following
table summarizes stock option activity and related information for the years ended December 31, 2014, 2013 and 2012:
|
|
|
Year ended December 31,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
|
|
Options
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Options
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Options
|
|
|
Weighted
Average
Exercise
Price
|
|
|
Shares under option - beginning of year
|
|
|
643,595
|
|
|
$
|
19.58
|
|
|
|
716,235
|
|
|
$
|
14.41
|
|
|
|
823,275
|
|
|
$
|
13.20
|
|
|
Options granted
|
|
|
139,250
|
|
|
|
27.93
|
|
|
|
136,350
|
|
|
|
34.84
|
|
|
|
128,850
|
|
|
|
19.25
|
|
|
Options exercised
|
|
|
(136,640
|
)
|
|
|
11.19
|
|
|
|
(204,240
|
)
|
|
|
11.68
|
|
|
|
(226,160
|
)
|
|
|
12.72
|
|
|
Options cancelled
|
|
|
(6,710
|
)
|
|
|
19.37
|
|
|
|
(4,750
|
)
|
|
|
17.47
|
|
|
|
(9,730
|
)
|
|
|
15.37
|
|
|
Shares under option - end of year
|
|
|
639,495
|
|
|
|
23.19
|
|
|
|
643,595
|
|
|
|
19.58
|
|
|
|
716,235
|
|
|
|
14.41
|
|
At December
31, 2014, options for 329,535 shares were available for future grant under the plans. The aggregate intrinsic value of options
outstanding is $3.8 million as of December 31, 2014 and unrecognized compensation cost related to stock options outstanding aggregated
$2.6 million, which will be recognized over the next five years.
The weighted
average fair values of options granted by Inter Parfums, Inc. during 2014, 2013 and 2012 were $7.42, $9.20 and $5.54 per share,
respectively, on the date of grant using the Black-Scholes option pricing model to calculate the fair value. The assumptions
used in the Black-Scholes pricing model are set forth in the following table:
|
|
|
Year Ended December 31,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
Weighted-average expected stock-price volatility
|
|
|
34
|
%
|
|
|
37
|
%
|
|
|
38
|
%
|
|
Weighted-average expected option life
|
|
|
5.0 years
|
|
|
|
5.0 years
|
|
|
|
5.0 years
|
|
|
Weighted-average risk-free interest rate
|
|
|
1.7
|
%
|
|
|
1.7
|
%
|
|
|
0.7
|
%
|
|
Weighted-average dividend yield
|
|
|
1.8
|
%
|
|
|
2.7
|
%
|
|
|
1.7
|
%
|
Expected volatility
is estimated based on historic volatility of the Company’s common stock. The expected term of the option is estimated based
on historic data. The risk-free rate is based on the U.S. Treasury yield curve in effect at the time of the grant of the option
and the dividend yield reflects the assumption that the dividend payout as authorized by the Board of Directors would maintain
its current payout ratio as a percentage of earnings.
Proceeds,
tax benefits and intrinsic value related to stock options exercised were as follows:
|
|
|
Year Ended December 31,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
Proceeds from stock options exercised
|
|
$
|
1,529
|
|
|
$
|
1,668
|
|
|
$
|
1,305
|
|
|
Tax benefits
|
|
$
|
670
|
|
|
$
|
700
|
|
|
$
|
100
|
|
|
Intrinsic value of stock options exercised
|
|
$
|
2,733
|
|
|
$
|
4,088
|
|
|
$
|
1,359
|
|
INTER PARFUMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014, 2013 and 2012
(In thousands except share and per share
data)
The following
table summarizes additional stock option information as of December 31, 2014:
|
|
|
|
|
|
Options outstanding
|
|
|
|
|
|
|
Number
|
|
|
weighted average remaining
|
|
Options
|
|
|
Exercise prices
|
|
outstanding
|
|
|
contractual life
|
|
exercisable
|
|
|
$12.14
|
|
|
57,440
|
|
|
1.00 years
|
|
|
57,440
|
|
|
$13.45
|
|
|
250
|
|
|
0.08 years
|
|
|
250
|
|
|
$15.59 - $15.62
|
|
|
100,370
|
|
|
2.98 years
|
|
|
55,810
|
|
|
$17.07 - $17.94
|
|
|
4,375
|
|
|
1.71 years
|
|
|
2,000
|
|
|
$19.03 - $19.33
|
|
|
203,410
|
|
|
3.13 years
|
|
|
111,410
|
|
|
$21.76
|
|
|
4,000
|
|
|
3.09 years
|
|
|
1,000
|
|
|
$22.20
|
|
|
4,000
|
|
|
4.09 years
|
|
|
800
|
|
|
$27.80
|
|
|
133,750
|
|
|
6.00 years
|
|
|
—
|
|
|
$29.36
|
|
|
2,000
|
|
|
4.69 years
|
|
|
—
|
|
|
$32.12
|
|
|
3,500
|
|
|
4.09 years
|
|
|
—
|
|
|
$35.75
|
|
|
126,400
|
|
|
5.00 years
|
|
|
25,280
|
|
|
Totals
|
|
|
639,495
|
|
|
3.89 years
|
|
|
253,990
|
|
As of December
31, 2014, the weighted average exercise price of options exercisable was $18.43 and the weighted average remaining contractual
life of options exercisable is 2.64 years. The aggregate intrinsic value of options exercisable at December 31, 2014 is $2.5 million.
The Chief
Executive Officer and the President each exercised 32,875, 28,500 and 60,000 outstanding stock options of the Company’s
common stock in 2014, 2013 and 2012, respectively. The aggregate exercise prices of $0.6 million in 2014, $0.7 million in 2013
and $1.6 million in 2012 were paid by them tendering to the Company in 2014, 2013 and 2012, an aggregate of 19,656, 18,880 and
82,322 shares, respectively, of the Company’s common stock, previously owned by them, valued at fair market value on the
dates of exercise. All shares issued pursuant to these option exercises were issued from treasury stock of the Company. In addition,
the Chief Executive Officer tendered in 2014, 2013 and 2012 an additional 3,112, 2,573 and 4,710 shares, respectively, for payment
of certain withholding taxes resulting from his option exercises.
Dividends
The quarterly
dividend of $3.7 million ($0.12 per share) declared in December 2013 was paid in January 2014. Furthermore, in January
2015, the Board of Directors of the Company authorized an 8% increase in the annual dividend to $0.52 per share. The next quarterly
dividend of $0.13 per share will be paid on April 15, 2015 to shareholders of record on March 31, 2015.
INTER PARFUMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014, 2013 and 2012
(In thousands except share and per share
data)
|
|
(12)
|
Net Income Attributable to Inter Parfums, Inc. Common Shareholders
|
Net income attributable to Inter
Parfums, Inc. per common share (“basic EPS”) is computed by dividing net income attributable to Inter Parfums, Inc.
by the weighted average number of shares outstanding. Net income attributable to Inter Parfums, Inc. per share assuming dilution
(“diluted EPS”), is computed using the weighted average number of shares outstanding, plus the incremental shares outstanding
assuming the exercise of dilutive stock options and warrants using the treasury stock method.
The reconciliation between the
numerators and denominators of the basic and diluted EPS computations is as follows:
|
|
|
Year ended December 31,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
Numerator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Inter Parfums, Inc.
|
|
$
|
29,436
|
|
|
$
|
39,211
|
|
|
$
|
131,136
|
|
|
Effect of dilutive securities of consolidated subsidiary
|
|
|
—
|
|
|
|
—
|
|
|
|
(168
|
)
|
|
Numerator for diluted earnings per share
|
|
$
|
29,436
|
|
|
$
|
39,211
|
|
|
$
|
130,968
|
|
|
Denominator:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares
|
|
|
30,931,308
|
|
|
|
30,763,955
|
|
|
|
30,574,772
|
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock options and warrants
|
|
|
129,018
|
|
|
|
189,927
|
|
|
|
140,912
|
|
|
Denominator for diluted earnings per share
|
|
|
31,060,326
|
|
|
|
30,953,882
|
|
|
|
30,715,684
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings per share:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Inter Parfums, Inc. common shareholders:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
0.95
|
|
|
$
|
1.27
|
|
|
$
|
4.29
|
|
|
Diluted
|
|
|
0.95
|
|
|
|
1.27
|
|
|
|
4.26
|
|
Not included
in the above computations is the effect of anti-dilutive potential common shares, which consist of outstanding options to purchase
130,000, 32,000, and 230,000 shares of common stock for 2014, 2013, and 2012, respectively.
|
|
(13)
|
Segments and Geographic Areas
|
The Company
manufactures and distributes one product line, fragrances and fragrance
related products. The Company
manages its business in two segments, European based operations and United States based operations.
The European assets are located, and operations are primarily conducted, in France. European operations primarily represent the
sale of the prestige brand name fragrances, and United States operations represent the sale of prestige brand name and specialty
retail fragrances. Information on the Company’s operations by segments is as follows:
INTER PARFUMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014, 2013 and 2012
(In thousands except share and per share
data)
|
|
|
Year ended December 31,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
Net sales:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
105,270
|
|
|
$
|
99,158
|
|
|
$
|
83,106
|
|
|
Europe
|
|
|
394,164
|
|
|
|
464,562
|
|
|
|
571,877
|
|
|
Eliminations of intercompany sales
|
|
|
(173
|
)
|
|
|
(141
|
)
|
|
|
(866
|
)
|
|
|
|
$
|
499,261
|
|
|
$
|
563,579
|
|
|
$
|
654,117
|
|
|
Net income attributable to Inter Parfums, Inc.:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
8,069
|
|
|
$
|
6,806
|
|
|
$
|
5,078
|
|
|
Europe
|
|
|
21,367
|
|
|
|
32,392
|
|
|
|
126,045
|
|
|
Eliminations
|
|
|
—
|
|
|
|
13
|
|
|
|
13
|
|
|
|
|
$
|
29,436
|
|
|
$
|
39,211
|
|
|
$
|
131,136
|
|
|
Depreciation and amortization expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
1,554
|
|
|
$
|
1,216
|
|
|
$
|
958
|
|
|
Europe
|
|
|
8,612
|
|
|
|
9,894
|
|
|
|
14,596
|
|
|
|
|
$
|
10,166
|
|
|
$
|
11,110
|
|
|
$
|
15,554
|
|
|
Interest and dividend income:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
3
|
|
|
$
|
16
|
|
|
$
|
7
|
|
|
Europe
|
|
|
3,885
|
|
|
|
4,424
|
|
|
|
1,126
|
|
|
|
|
$
|
3,888
|
|
|
$
|
4,440
|
|
|
$
|
1,133
|
|
|
Interest expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
73
|
|
|
$
|
13
|
|
|
$
|
38
|
|
|
Europe
|
|
|
1,405
|
|
|
|
1,367
|
|
|
|
1,616
|
|
|
|
|
$
|
1,478
|
|
|
$
|
1,380
|
|
|
$
|
1,654
|
|
|
Income tax expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
4,643
|
|
|
$
|
4,512
|
|
|
$
|
3,804
|
|
|
Europe
|
|
|
14,727
|
|
|
|
25,159
|
|
|
|
94,063
|
|
|
Eliminations
|
|
|
—
|
|
|
|
9
|
|
|
|
8
|
|
|
|
|
$
|
19,370
|
|
|
$
|
29,680
|
|
|
$
|
97,875
|
|
|
|
|
December 31,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
Total assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
78,740
|
|
|
$
|
76,980
|
|
|
$
|
64,278
|
|
|
Europe
|
|
|
535,049
|
|
|
|
596,153
|
|
|
|
704,464
|
|
|
Eliminations of investment in subsidiary
|
|
|
(9,283
|
)
|
|
|
(9,075
|
)
|
|
|
(8,822
|
)
|
|
|
|
$
|
604,506
|
|
|
$
|
664,058
|
|
|
$
|
759,920
|
|
|
Additions to long-lived assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
1,165
|
|
|
$
|
7,629
|
|
|
$
|
3,131
|
|
|
Europe
|
|
|
3,059
|
|
|
|
5,155
|
|
|
|
26,060
|
|
|
|
|
$
|
4,224
|
|
|
$
|
12,784
|
|
|
$
|
29,191
|
|
|
Total long-lived assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
13,433
|
|
|
$
|
13,823
|
|
|
$
|
7,572
|
|
|
Europe
|
|
|
94,285
|
|
|
|
112,864
|
|
|
|
118,712
|
|
|
|
|
$
|
107,718
|
|
|
$
|
126,687
|
|
|
$
|
126,284
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
United States
|
|
$
|
396
|
|
|
$
|
341
|
|
|
$
|
762
|
|
|
Europe
|
|
|
6,452
|
|
|
|
6,916
|
|
|
|
12,361
|
|
|
Eliminations
|
|
|
-
|
|
|
|
-
|
|
|
|
9
|
|
|
|
|
$
|
6,848
|
|
|
$
|
7,257
|
|
|
$
|
13,132
|
|
INTER PARFUMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014, 2013 and 2012
(In thousands except share and per share
data)
United States export sales were
approximately $52.3 million, $50.4 million and $38.8 million in 2014, 2013 and 2012, respectively. Consolidated net sales to customers
by region are as follows:
|
|
|
Year ended December 31,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
North America
|
|
$
|
134,600
|
|
|
$
|
154,300
|
|
|
$
|
175,400
|
|
|
Europe
|
|
|
177,900
|
|
|
|
215,600
|
|
|
|
241,300
|
|
|
Central and South America
|
|
|
49,200
|
|
|
|
42,400
|
|
|
|
53,000
|
|
|
Middle East
|
|
|
40,300
|
|
|
|
43,300
|
|
|
|
62,100
|
|
|
Asia
|
|
|
85,500
|
|
|
|
98,600
|
|
|
|
115,300
|
|
|
Other
|
|
|
11,800
|
|
|
|
9,400
|
|
|
|
7,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
499,300
|
|
|
$
|
563,600
|
|
|
$
|
654,100
|
|
Consolidated net sales to customers in major countries
are as follows:
|
|
|
Year Ended December 31,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
United States
|
|
$
|
128,000
|
|
|
$
|
150,000
|
|
|
$
|
167,000
|
|
|
United Kingdom
|
|
$
|
37,000
|
|
|
$
|
46,000
|
|
|
$
|
48,000
|
|
|
France
|
|
$
|
50,000
|
|
|
$
|
47,000
|
|
|
$
|
46,000
|
|
The Company or its subsidiaries
file income tax returns in the U.S. federal, and various states and foreign jurisdictions. The Company is no longer subject to
U.S. federal, state, and local or non-U.S. income tax examinations by tax authorities for years before 2011.
The Company follows the provisions
of uncertain tax positions as addressed in FASB Accounting Standards Codification 740-10-65-1. The Company did not recognize any
increase in the liability for unrecognized tax benefits and has no uncertain tax position at December 31, 2014. The Company recognizes
interest accrued related to unrecognized tax benefits in interest expense and penalties as a component of the provision for income
taxes. No interest or penalties were recognized during the periods presented and there is no accrual for interest and penalties
at December 31, 2014.
The components of income before
income taxes consist of the following:
|
|
|
Year ended December 31,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
U.S. operations
|
|
$
|
12,712
|
|
|
$
|
11,340
|
|
|
$
|
8,904
|
|
|
Foreign operations
|
|
|
44,003
|
|
|
|
69,306
|
|
|
|
265,861
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
56,715
|
|
|
$
|
80,646
|
|
|
$
|
274,765
|
|
INTER PARFUMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014, 2013 and 2012
(In thousands except share and per share
data)
The provision for current and
deferred income tax expense (benefit) consists of the following:
|
|
|
Year ended December 31,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
Current:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
$
|
4,374
|
|
|
$
|
3,638
|
|
|
$
|
2,511
|
|
|
State and local
|
|
|
323
|
|
|
|
454
|
|
|
|
558
|
|
|
Foreign
|
|
|
15,229
|
|
|
|
20,744
|
|
|
|
102,717
|
|
|
|
|
|
19,926
|
|
|
|
24,836
|
|
|
|
105,786
|
|
|
Deferred:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Federal
|
|
|
(84
|
)
|
|
|
370
|
|
|
|
703
|
|
|
State and local
|
|
|
30
|
|
|
|
59
|
|
|
|
40
|
|
|
Foreign
|
|
|
(502
|
)
|
|
|
4,415
|
|
|
|
(8,654
|
)
|
|
|
|
|
(556
|
)
|
|
|
4,844
|
|
|
|
(7,911
|
)
|
|
Total income tax expense
|
|
$
|
19,370
|
|
|
$
|
29,680
|
|
|
$
|
97,875
|
|
The tax effects of temporary
differences that give rise to significant portions of the deferred tax assets and deferred tax liabilities are as follows:
|
|
|
December 31,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
Deferred tax assets:
|
|
|
|
|
|
|
|
|
|
Foreign net operating loss carry-forwards
|
|
$
|
419
|
|
|
$
|
707
|
|
|
Inventory and accounts receivable
|
|
|
2,655
|
|
|
|
626
|
|
|
Profit sharing
|
|
|
2,570
|
|
|
|
4,805
|
|
|
Stock option compensation
|
|
|
545
|
|
|
|
526
|
|
|
Effect of inventory profit elimination
|
|
|
1,757
|
|
|
|
1,710
|
|
|
Other
|
|
|
(679
|
)
|
|
|
(410
|
)
|
|
Total gross deferred tax assets
|
|
|
7,267
|
|
|
|
7,964
|
|
|
Valuation allowance
|
|
|
(419
|
)
|
|
|
(707
|
)
|
|
Net deferred tax assets
|
|
|
6,848
|
|
|
|
7,257
|
|
|
Deferred tax liabilities (long-term):
|
|
|
|
|
|
|
|
|
|
Trademarks and licenses
|
|
|
(2,154
|
)
|
|
|
(2,555
|
)
|
|
Other
|
|
|
—
|
|
|
|
—
|
|
|
Total deferred tax liabilities
|
|
|
(2,154
|
)
|
|
|
(2,555
|
)
|
|
Net deferred tax assets
|
|
$
|
4,694
|
|
|
$
|
4,702
|
|
Valuation allowances are
provided for foreign net operating loss carry-forwards, as future profitable operations from certain foreign subsidiaries
might not be sufficient to realize the full amount of net operating loss carry-forwards. In 2014, as a result of a tax
examination in a foreign jurisdiction, foreign net operating loss carry-forwards were reduced.
No other valuation allowances
have been provided as management believes that it is more likely than not that the asset will be realized in the reduction of future
taxable income.
The Company has not provided
for U.S. deferred income taxes on $339 million of undistributed earnings of its non-U.S. subsidiaries as of December 31, 2014
since the Company intends to reinvest most of these earnings in its foreign operations indefinitely and the Company believes
it has sufficient foreign tax credits available to offset any potential tax on amounts that have been and are planned to be repatriated.
INTER PARFUMS, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
December 31, 2014, 2013 and 2012
(In thousands except share and per share
data)
Differences between the United
States Federal statutory income tax rate and the effective income tax rate were as follows:
|
|
|
Year ended December 31,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
Statutory rates
|
|
|
34.0
|
%
|
|
|
34.0
|
%
|
|
|
34.0
|
%
|
|
State and local taxes, net of Federal benefit
|
|
|
0.1
|
|
|
|
0.4
|
|
|
|
0.1
|
|
|
Effect of foreign taxes greater than
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S. statutory rates
|
|
|
0.4
|
|
|
|
2.0
|
|
|
|
1.4
|
|
|
Other
|
|
|
(0.3
|
)
|
|
|
0.4
|
|
|
|
0.1
|
|
|
Effective rates
|
|
|
34.2
|
%
|
|
|
36.8
|
%
|
|
|
35.6
|
%
|
|
|
(15)
|
Accumulated Other Comprehensive Income (Loss)
|
|
|
|
The components of accumulated other comprehensive income (loss) consists of the following:
|
|
|
|
Year ended December 31,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net derivative instruments, beginning of year
|
|
$
|
—
|
|
|
$
|
240
|
|
|
$
|
224
|
|
|
Transfer from OCI into earnings
|
|
|
—
|
|
|
|
(240
|
)
|
|
|
—
|
|
|
Gain on derivative instruments
|
|
|
—
|
|
|
|
—
|
|
|
|
16
|
|
|
Net derivative instruments, end of year
|
|
|
—
|
|
|
|
—
|
|
|
|
240
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cumulative translation adjustments, beginning of year
|
|
|
25,860
|
|
|
|
12,258
|
|
|
|
7,523
|
|
|
Translation adjustments
|
|
|
(41,683
|
)
|
|
|
13,602
|
|
|
|
4,735
|
|
|
Cumulative translation adjustments, end of year
|
|
|
(15,823
|
)
|
|
|
25,860
|
|
|
|
12,258
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Accumulated other comprehensive income (loss)
|
|
$
|
(15,823
|
)
|
|
$
|
25,860
|
|
|
$
|
12,498
|
|
|
|
(16)
|
Net Income Attributable to Inter Parfums, Inc. and Transfers from the Noncontrolling Interest
|
|
|
|
Year ended December 31,
|
|
|
|
|
2014
|
|
|
2013
|
|
|
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable to Inter Parfums, Inc.
|
|
$
|
29,436
|
|
|
$
|
39,211
|
|
|
$
|
131,136
|
|
|
Increase (decrease) in Inter Parfums, Inc.'s additional paid-in capital for subsidiary share transactions
|
|
|
(335
|
)
|
|
|
(173
|
)
|
|
|
737
|
|
|
Change from net income attributable to Inter Parfums, Inc. and transfers from noncontrolling interest
|
|
$
|
29,101
|
|
|
$
|
39,038
|
|
|
$
|
131,873
|
|
Schedule II
INTER PARFUMS, INC. AND SUBSIDIARIES
Valuation and Qualifying Accounts
(In thousands)
|
Column A
|
|
Column B
|
|
|
Column C
|
|
|
Column D
|
|
|
Column E
|
|
|
|
|
|
|
|
Additions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
|
|
(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Charged to
|
|
|
|
|
|
|
|
|
|
|
Balance at
|
|
|
Charged to
|
|
|
other
|
|
|
|
|
|
|
|
|
|
|
beginning of
|
|
|
costs and
|
|
|
accounts –
|
|
|
Deductions –
|
|
|
Balance at
|
|
|
Description
|
|
period
|
|
|
expenses
|
|
|
describe
|
|
|
describe
|
|
|
end of period
|
|
|
Allowance for doubtful accounts:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2014
|
|
$
|
2,533
|
|
|
|
412
|
|
|
|
(233
|
)(d)
|
|
|
1,103
|
(a)
|
|
|
1,609
|
|
|
Year ended December 31, 2013
|
|
$
|
6,074
|
|
|
|
574
|
|
|
|
123
|
(d)
|
|
|
4,238
|
(a)
|
|
|
2,533
|
|
|
Year ended December 31, 2012
|
|
$
|
5,320
|
|
|
|
914
|
|
|
|
120
|
(d)
|
|
|
280
|
(a)
|
|
|
6,074
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales return accrual:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2014
|
|
$
|
3,843
|
|
|
|
5,258
|
|
|
|
-
|
|
|
|
3,792
|
(b)
|
|
|
5,309
|
|
|
Year ended December 31, 2013
|
|
$
|
4,526
|
|
|
|
3,751
|
|
|
|
-
|
|
|
|
4,434
|
(b)
|
|
|
3,843
|
|
|
Year ended December 31, 2012
|
|
$
|
4,172
|
|
|
|
4,249
|
|
|
|
-
|
|
|
|
3,895
|
(b)
|
|
|
4,526
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Inventory Reserve:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Year ended December 31, 2014
|
|
$
|
6,791
|
|
|
|
5,077
|
|
|
|
(644
|
)(d)
|
|
|
5,254
|
(c)
|
|
|
5,970
|
|
|
Year ended December 31, 2013
|
|
$
|
19,923
|
|
|
|
6,794
|
|
|
|
323
|
(d)
|
|
|
20,249
|
(c)
|
|
|
6,791
|
|
|
Year ended December 31, 2012
|
|
$
|
7,460
|
|
|
|
17,957
|
|
|
|
449
|
(d)
|
|
|
5,943
|
(c)
|
|
|
19,923
|
|
|
|
(a)
|
Write-off of bad debts.
|
|
|
(b)
|
Write-off of sales returns.
|
|
|
(c)
|
Disposal of inventory
|
|
|
(d)
|
Foreign currency translation adjustment
|
See accompanying reports of independent registered public accounting
firm
SIGNATURES
Pursuant to the requirements of Section
13 or 15 (d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, thereunto duly authorized.
|
|
Inter Parfums, Inc.
|
|
|
|
|
|
By:
|
/s/ Jean Madar
|
|
|
|
Jean Madar, Chief Executive Officer
|
|
|
|
Date: March 11, 2015
|
Pursuant
to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf
of the Registrant and in the capacities and on the dates indicated:
|
Signature
|
|
Title
|
|
Date
|
|
|
|
|
|
|
|
/s/ Jean Madar
|
|
Chairman of the Board of Directors
|
|
March 11, 2015
|
|
Jean Madar
|
|
and Chief Executive Officer
|
|
|
|
|
|
|
|
|
|
/s/ Russell Greenberg
|
|
Chief Financial and Accounting
|
|
March 11, 2015
|
|
Russell Greenberg
|
|
Officer and Director
|
|
|
|
|
|
|
|
|
|
/s/ Philippe Benacin
|
|
Director
|
|
March 10, 2015
|
|
Philippe Benacin
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Philippe Santi
|
|
Director
|
|
March 10, 2015
|
|
Philippe Santi
|
|
|
|
|
|
|
|
|
|
|
|
/s/ François Heilbronn
|
|
Director
|
|
March 10, 2015
|
|
François Heilbronn
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Jean Levy
|
|
Director
|
|
March 10, 2015
|
|
Jean Levy
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Director
|
|
March __, 2015
|
|
Robert Bensoussan-Torres
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Patrick Choël
|
|
Director
|
|
March 10, 2015
|
|
Patrick Choël
|
|
|
|
|
|
|
|
|
|
|
|
/s/ Michel Dyens
|
|
Director
|
|
March 9, 2015
|
|
Michel Dyens
|
|
|
|
|
Exhibit Index
The following documents heretofore filed
with the Commission are incorporated by reference to the Company's Quarterly Report for the quarterly period ended June 30, 2010:
|
Exhibit No.
|
|
Description
|
|
|
|
|
|
3.1
|
|
Interparfums Singapore Pte. Ltd Memorandum and Articles of Association
|
|
|
|
|
|
3.2
|
|
Interparfums Luxury Brands, Inc. Certificate of Incorporation
|
The following documents heretofore filed
with the Commission are incorporated by reference to the Company's Quarterly Report for the quarterly period ended September 30,
2010:
|
Exhibit No.
|
|
Description
|
|
|
|
|
|
10.143
|
|
Collaboration Agreement between Clarins U.S.A., Inc., and Interparfums Luxury Brands Inc. (Certain confidential information
in this Exhibit 10.143 was omitted and filed separately with the Securities and Exchange Commission with a request for confidential
treatment by Inter Parfums, Inc.).
|
|
|
|
|
|
10.144
|
|
Contrat de Bail Commercial
et GEMFI and Interparfums SA - French original - (Certain confidential information in
this Exhibit 10.144 was omitted and filed separately with the Securities and Exchange Commission with a request for confidential
treatment by Inter Parfums, Inc.).
|
|
|
|
|
|
10.144.1
|
|
Commercial Lease Agreement between GEMFI and Interparfums SA - English translation- (Certain confidential information
in this Exhibit 10.144.1 was omitted and filed separately with the Securities and Exchange Commission with a request for confidential
treatment by Inter Parfums, Inc.).
|
The following documents heretofore filed
with the Commission are incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 2010:
|
Exhibit No.
|
|
Description
|
|
|
|
|
|
4.31
|
|
Form of Option Agreement for Options Granted to Executive Officers on December 31, 2010 with Schedule of Option Holders
and Options Granted
|
The following documents heretofore filed
with the Commission are incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 2011:
|
Exhibit No.
|
|
Description
|
|
|
|
|
|
3.6
|
|
Organizational Document of Inter Parfums (Suisse) Sarl (French original)
|
|
|
|
|
|
3.6.1
|
|
Organizational Document of Inter Parfums (Suisse) Sarl (English translation)
|
|
|
|
|
|
4.32
|
|
Form of Option Agreement for Options Granted to Executive Officers on December 30, 2011 with Schedule of Option Holders
and Options Granted
|
The following documents heretofore filed
with the Commission are incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 2012:
|
Exhibit No.
|
|
Description
|
|
|
|
|
|
4.26
|
|
Addendum [France] to 2004 Stock Option Plan
|
|
|
|
|
|
10.130
|
|
Agreement for Technical Assistance between Jeanne Lanvin, S.A and Interparfums SA dated 30 July 2007 - French Original
(Certain confidential information in this Exhibit 10.130 was omitted and filed separately with the Securities and Exchange
Commission with a request for confidential treatment by Inter Parfums, Inc.).
|
|
|
|
|
|
10.130.1
|
|
Agreement for Technical Assistance between Jeanne Lanvin, S.A and Interparfums SA dated 30 July 2007 - English Translation
(Certain confidential information in this Exhibit 10.130.1 was omitted and filed separately with the Securities and Exchange
Commission with a request for confidential treatment by Inter Parfums, Inc.).
|
|
|
|
|
|
10.131
|
|
Coexistence Agreement between Jeanne Lanvin, S.A and Interparfums SA dated 30 July 2007- French Original
|
|
|
|
|
|
10.131.1
|
|
Coexistence Agreement between Jeanne Lanvin, S.A and Interparfums SA dated 30 July 2007- English Translation
|
|
|
|
|
|
10.151
|
|
Form of Option Agreement for Options Granted to Executive Officers on December 31, 2012 with Schedule of Option Holders
and Options Granted
|
|
|
|
|
|
10.152
|
|
Form of Option Agreement for Options Granted to Executive Officers on January 31, 2013 with Schedule of Option Holders
and Options Granted
|
|
|
|
|
|
10.153
|
|
Seventh Modification of Lease dated February 7, 2013 for 15th Floor at 551 Fifth Avenue, New York, NY
|
|
|
|
|
|
23.1
|
|
Consent of WeiserMazars LLP
|
|
|
|
|
|
31.1
|
|
Certification Required by Rule 13a-14 of Chief Executive Officer
|
|
|
|
|
|
31.2
|
|
Certification Required by Rule 13a-14 of Chief Financial Officer
|
|
|
|
|
|
32.1
|
|
Certification Required by Section 906 of the Sarbanes-Oxley Act by Chief Executive Officer
|
|
|
|
|
|
32.2
|
|
Certification Required by Section 906 of the Sarbanes-Oxley Act by Chief Executive Officer
|
The following documents heretofore filed
with the Commission are also incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended June
30, 2013:
|
Exhibit No.
|
|
Description
|
|
|
|
|
|
4.21
|
|
2004 Nonemployee Director Stock Option Plan as amended
|
|
|
|
|
|
4.22
|
|
2004 Stock Option Plan as amended
|
The following documents heretofore filed
with the Commission are incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December
31, 2013:
|
Exhibit No.
|
|
Description
|
|
|
|
|
|
3.7
|
|
Memorandum and Articles of Association of Inter Parfums USA Hong Kong Limited
|
|
|
|
|
|
10.156
|
|
Consulting Agreement with Jean Madar Holding SAS
|
|
|
|
|
|
10.158
|
|
Form of Option Agreement for Options Granted to Executive Officers on December 31, 2013 with Schedule of Option Holders
and Options Granted
|
|
|
|
|
|
23.1
|
|
Consent of WeiserMazars LLP
|
|
|
|
|
|
31.1
|
|
Certification Required by Rule 13a-14 of Chief Executive Officer
|
|
|
|
|
|
31.2
|
|
Certification Required by Rule 13a-14 of Chief Financial Officer
|
|
|
|
|
|
32.1
|
|
Certification Required by Section 906 of the Sarbanes-Oxley Act by Chief Executive Officer
|
|
|
|
|
|
32.2
|
|
Certification Required by Section 906 of the Sarbanes-Oxley Act by Chief Executive Officer
|
|
|
|
|
|
101
|
|
Interactive data files
|
The following document heretofore filed
with the Commission is also incorporated by reference to the Company's Quarterly Report on Form 10-Q for the period ended March
31, 2014:
|
Exhibit No.
|
|
Description
|
|
|
|
|
|
10.160
|
|
Consulting Agreement with Philippe Benacin Holding SAS
|
The following document, which was filed
more than 5 years ago as an exhibit to Company's Quarterly Report for the quarterly period ended September 30, 2009, is filed
again with this report:
|
Exhibit
No.
|
|
Description
|
|
Page
Number
|
|
|
|
|
|
|
|
10.138
|
|
Licence Agreement between J Choo Limited and Interparfums SA signed on September 29, 2009 (Certain confidential information
in this Exhibit 10.138 was omitted and filed separately with the Securities and Exchange Commission with a request for confidential
treatment by Inter Parfums, Inc.).
|
|
299
|
The following documents, which were filed
more than 5 years ago as exhibits to Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2009, are filed
again with this report:
|
Exhibit
No.
|
|
Description
|
|
Page
Number
|
|
|
|
|
|
|
|
3.1.1
|
|
Restated Certificate of Incorporation dated September 3, 1987
|
|
130
|
|
|
|
|
|
|
|
3.1.2
|
|
Amendment to Restated Certificate of Incorporation dated July 31, 1992
|
|
134
|
|
|
|
|
|
|
|
3.1.3
|
|
Amendment to Restated Certificate of Incorporation dated July 9, 1993
|
|
139
|
|
|
|
|
|
|
|
3.1.4
|
|
Amendment to Restated Certificate of Incorporation, as amended, dated July 13, 1999
|
|
141
|
|
|
|
|
|
|
|
3.1.5
|
|
Amendment to Restated Certificate of Incorporation, as amended, dated July 12, 2000
|
|
142
|
|
|
|
|
|
|
|
3.1.6
|
|
Amendment to Restated Certificate of Incorporation dated August 6, 2004
|
|
146
|
|
|
|
|
|
|
|
3.2
|
|
Amended and Restated By-laws
|
|
147
|
|
|
|
|
|
|
|
3.3
|
|
Articles of Incorporation of Inter Parfums Holdings, S.A.
|
|
160
|
|
|
|
|
|
|
|
3.3.1
|
|
Articles of Incorporation of Inter Parfums Holdings, S.A. (English translation)
|
|
176
|
|
|
|
|
|
|
|
3.4
|
|
Articles of Incorporation of Interparfums SA
|
|
188
|
|
|
|
|
|
|
|
3.4.1
|
|
Articles of Incorporation of Interparfums SA (English translation)
|
|
204
|
|
|
|
|
|
|
|
4.30
|
|
Form of Option Agreement for Options Granted to Executive Officers on December 31, 2009 with Schedule of Option Holders and Options Granted
|
|
218
|
|
|
|
|
|
|
|
10.25
|
|
Employment Agreement between the Company and Philippe Benacin dated July 29, 1991
|
|
228
|
|
|
|
|
|
236
|
|
10.26
|
|
Lease for portion of 15th Floor, 551 Fifth Avenue, New York, New York
|
|
|
|
|
|
|
|
|
|
10.61
|
|
Lease for 60 Stults Road, South Brunswick, NJ between Forsgate Industrial Complex, a limited partnership, and Jean Philippe Fragrances, Inc. dated July 10, 1995
|
|
271
|
|
|
|
|
|
|
|
10.139
|
|
License Agreement between Montblanc-Simplo Gmbh and Interparfums SA (Certain confidential information in this Exhibit 10.139 was omitted and filed separately with the Securities and Exchange Commission with a request for confidential treatment by Inter Parfums, Inc.).
|
|
515
|
The following documents are filed with
this report:
|
Exhibit
No.
|
|
Description
|
|
Page
Number
|
|
|
|
|
|
|
|
10.61.1
|
|
Third Amendment to Lease for 60 Stults Road, South Brunswick, NJ
|
|
221
|
|
|
|
|
|
|
|
10.161
|
|
Form of Option Agreement for Options Granted to Executive Officers on December 31, 2014 with Schedule of Option Holders and Options Granted
|
|
567
|
|
|
|
|
|
|
|
10.162
|
|
Form of Option Agreement for Options Granted to Executive Officers on January 28, 2015 with Schedule of Option Holders and Options Granted
|
|
570
|
|
|
|
|
|
|
|
21
|
|
List of Subsidiaries
|
|
573
|
|
|
|
|
|
|
|
23
|
|
Consent of WeiserMazars LLP
|
|
574
|
|
|
|
|
|
|
|
31.1
|
|
Certification Required by Rule 13a-14 of Chief Executive Officer
|
|
575
|
|
|
|
|
|
|
|
31.2
|
|
Certification Required by Rule 13a-14 of Chief Financial Officer
|
|
577
|
|
|
|
|
|
|
|
32.1
|
|
Certification Required by Section 906 of the Sarbanes-Oxley Act by Chief Executive Officer
|
|
579
|
|
|
|
|
|
|
|
32.2
|
|
Certification Required by Section 906 of the Sarbanes-Oxley Act by Chief Executive Officer
|
|
580
|
|
|
|
|
|
|
|
101
|
|
Interactive data files
|
|
|
Exhibit 3.1.1
RESTATED CERTIFICATE OF INCORPORATION
-of-
JEAN PHILIPPE FRAGRANCES, INC.
Pursuant to the
General Corporation Law
of the State of Delaware
Jean Philippe Fragrances, Inc. (the "Corporation") hereby certifies
that:
A. The name of the Corporation is Jean Philippe Fragrances, Inc., and
its original Certificate of Incorporation was filed with the Secretary of State
of the State of Delaware on May 6, 1985.
B. The Certificate of Incorporation of the Corporation is hereby
amended by striking out Articles Second, Third, Fourth and Sixth thereof and by
substituting in lieu of said Articles new Articles Second, Third, Fourth and
Sixth and by adding the following new Articles Seventh and Eighth, which are set
forth in the Restated Certificate of Incorporation hereinafter provided for.
C. The amendments and the restatement of the Certificate of
Incorporation set forth herein were duly adopted in accordance with the
provisions of Sections 242 and 245 of the General Corporation Law of the State
of Delaware by a resolution of the Board of Directors setting forth the
amendments and the restatement and declaring their advisability, and by written
consents, given pursuant to Section 228 of the General Corporation Law of the
State of Delaware, by the holders of all outstanding stock entitled to vote.
D. The Certificate of Incorporation of the Corporation as now in full
force and effect is hereby amended and restated to read in full as follows:
FIRST: The name of the Corporation is Jean Philippe Fragrances, Inc.
SECOND: The registered office of the Corporation and place of business
in the State of Delaware is to be located at 229 South State Street, in the City
of Dover, County of Kent. The name of its registered agent at that address is
The Prentice-Hall Corporation System, Inc.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware as presently in effect or as it may hereafter be
amended.
FOURTH: The Corporation shall have the authority to issue the following
classes of shares in the following amounts with the respective powers,
preferences, rights, qualifications, limitations and restrictions set forth
below:
The Corporation shall have the authority to issue twenty
million (20,000,000) shares of Common Stock, $.001 par value per share,
each of which shall be equal in all respects to every other share of
Common Stock.
FIFTH: In furtherance and not in limitation of the powers conferred by
the laws of the State of Delaware, the following provisions are inserted in this
Restated Certificate of Incorporation for the regulation and conduct of the
business and affairs of the Corporation:
1. The election of directors of the Corporation need not be by written
ballot unless the By-Laws so require.
2. The business and affairs of the Corporation shall be managed by, or
under the direction of, a Board of Directors consisting of not less than three
(3) nor more than fifteen (15) persons. The exact number of directors within the
minimum and maximum limitations specified herein shall be fixed from time to
time by resolution of a majority of the whole Board of Directors.
3. The directors of the Corporation, by the affirmative vote of a
majority of the whole Board, at any regular or special meeting, shall have the
power to adopt, amend or repeal By-Laws of the Corporation, provided, however,
that such power of the Board shall not divest the stockholders of the
Corporation of their power to adopt, amend or repeal By-Laws of the Corporation.
4. In addition to the powers and authorities conferred upon the Board
of Directors of the Corporation by this Restated Certificate of Incorporation,
the Board of Directors of the Corporation may exercise all such powers and take
all such actions as may be exercised or taken by the Corporation, subject,
however, to the provisions of the laws of the State of Delaware, this Restated
Certificate of Incorporation and the By-Laws of the Corporation.
5. Any vote or votes authorizing liquidation of the Corporation or
proceedings for its dissolution may provide, subject to the rights of creditors
and preferred Stockholders, if any, for the distribution pro rata among the
Stockholders of the Corporation of the assets of the Corporation, wholly or in
part, in cash or in kind, whether such assets be in cash or other property, and
any such vote or votes may authorize the Board of Directors of the Corporation
to determine the valuation of the different assets of the Corporation for the
purpose of such liquidation and may divide or authorize the Board of Directors
to divide such assets or any part thereof among the Stockholders of the
Corporation, in such manner that every Stockholder will receive a proportionate
amount in value (determined as aforesaid) of cash and/or property of the
Corporation upon such liquidation or dissolution even though each Stockholder
may not receive a strictly proportionate part of each such asset.
6. A director may not be removed from office without cause, except by
the holders of a majority of the outstanding shares of the class that elected
such director.
SIXTH: No director shall be personally liable to the Corporation or any
stockholder for monetary damages for breach of fiduciary duty as a director,
except in respect of which such director shall be liable under Section 174 of
Title 8 of the Delaware Code (relating to the Delaware General Corporation Law)
or any amendment thereto or successor provision thereto or shall be liable by
reason that, in addition to any and all other requirements for such liability,
he (i) shall have breached his duty of loyalty to the Corporation or its
stockholders, (ii) shall not have acted in good faith or, in failing to act,
shall not have acted in good faith, (iii) shall have acted in a manner involving
misconduct or a knowing violation of law or, in failing to act, shall have acted
in a manner involving intentional misconduct or a knowing violation of law or
(iv) shall have derived an improper benefit. Neither the amendment nor repeal of
this Article Sixth, nor any existing or subsequently adopted provisions of the
Certificate of Incorporation inconsistent with this Article Sixth, shall
eliminate or reduce the effect of this Article Sixth in respect of any matter
occurring, or any cause of action, suit or claim that, but for this Article
Sixth would accrue or arise, prior to such amendment, repeal or adoption of an
inconsistent provision. Any and all future amendments to the General Corporation
Law of the State of Delaware, or any successor statute thereto, which broadens
the scope of limited liability for directors, shall automatically be deemed to
become incorporated into an amendment to this Restated Certificate of
Incorporation without any action on
the part of the stockholders, but shall be effective as if duly authorized by
the stockholders of the Corporation.
SEVENTH: The Corporation shall, to the fullest extent permitted by
Section 145 of the General Corporation Law of the State of Delaware, as the same
may be amended and supplemented, indemnify any and all persons whom it shall
have power to indemnify under said section from and against any and all of the
expenses, liabilities, or other matters referred to in or covered by said
section, and the indemnification provided for herein shall not be deemed
exclusive of any other rights to which those indemnified may be entitled under
any By-Law, agreement, vote of stockholders or disinterested directors or
otherwise, both as to action in his official capacity and as to action in
another capacity while holding such office, and shall continue as to a person
who has ceased to be a director, officer, employee, or agent and shall inure to
the benefit of the heirs, executors, and administrators of such a person.
EIGHTH: If any Article of this Certificate of Incorporation or any
portion thereof is found to be void or unenforceable by a court of competent
jurisdiction, the remaining Articles or portions of said Article, as the case
may be, shall nevertheless remain in full force and effect as though the
unenforceable part had been severed and deleted.
IN WITNESS WHEREOF, Jean Philippe Fragrances, Inc. has caused this
Restated Certificate of Incorporation to be executed by Jean Madar, its
President, and attested by its Assistant Secretary, this 3rd day of September,
1987.
JEAN PHILIPPE FRAGRANCES, INC.
By:/s/ Jean Madar
----------------------------
Jean Madar, President
Attest:
/s/ Felice Kadanoff
---------------------------------
Felice Kadanoff, Assist Secretary
|
Exhibit 3.1.2
CERTIFICATE OF AMENDMENT
to the
RESTATED CERTIFICATE OF INCORPORATION
of
JEAN PHILIPPE FRAGRANCES, INC.
PURSUANT TO THE DELAWARE GENERAL CORPORATION LAW
Jean Philippe Fragrances, Inc. hereby certifies that:
A. The name of the Corporation is Jean Philippe Fragrances, Inc. (the
"Corporation"), and its original Certificate of Incorporation was filed with the
Secretary of State of Delaware on May 6, 1985.
B. The Restated Certificate of Incorporation is hereby amended to
increase the number of actual shares from twenty million (20,000,000) to
twenty-one million (21,000,000), by striking out Article FOURTH in its entirety,
and substituting in lieu thereof the new Article FOURTH as follows:
"FOURTH: The aggregate number of shares which the Corporation
shall have authority to issue is twenty-one million (21,000,000) shares
consisting of twenty million (20,000,000) shares, designated as Common Stock, at
par value of $.001 per share, and one million (1,000,000) shares, designated as
Preferred Stock, at a par value of $.001 per share.
(1) COMMON STOCK.
(a) DIVIDENDS. The holders of shares of Common Stock shall be
entitled to receive, when and as declared by the Board of Directors, out of the
assets of the Corporation legally available therefor, such dividends as may be
declared from time to time by the Board of Directors.
(b) LIQUIDATION. Subject to the rights of any other
1
class or series of stock, the holders of shares of Common Stock shall be
entitled to receive all the assets of the Corporation available for distribution
to shareholders in the event of the voluntary or involuntary liquidation,
dissolution or winding up of the Corporation, ratably, in proportion to the
number of shares of Common Stock held by them. Neither the merger or
consolidation of the Corporation into or with any other corporation, nor the
merger or consolidation of any other corporation into or with the Corporation,
nor the sale, lease, exchange or other disposition (for cash, shares of stock,
securities or other consideration) of all or substantially all the assets of the
Corporation shall be deemed to be a dissolution, liquidation or winding up,
voluntary or involuntary, of the Corporation.
(c) REDEMPTION. Common Stock shall not be subject to redemption.
(d) Voting. Subject to the rights of any other class or series of
stock and the provisions of the laws of the State of Delaware governing business
corporations, voting rights shall be vested exclusively in the holders of Common
Stock. Each holder of Common Stock shall have one vote in respect of each share
of such stock held.
(2) PREFERRED STOCK.
The Preferred Stock may be issued, from time to time, in one or more
series, with such designations, preferences and relative, participating,
optional or other rights, qualifications, limitations or restrictions thereof as
shall be stated and expressed in the resolution or resolutions providing for the
issue of such series which shall be adopted by the Board of Directors from time
to time, pursuant to the authority herein given, a copy of which resolution or
resolutions shall have been set forth in a Certificate made, executed,
acknowledged, filed and recorded in the manner required by the laws of the State
of Delaware in order to make the same effective. Each series shall consist of
such number of shares as shall be stated and expressed in such resolution or
resolutions providing for the issuance of the stock of such series. All shares
of any one series of Preferred Stock shall be alike in every particular. The
authority of the Board of Directors with respect to each series shall include,
but not be limited to, determination of the following:
(a) the number of shares constituting that series and the
distinctive designation of that series;
(b) whether the holders of shares of that series
2
shall be entitled to receive dividends and, if so, the rates of such dividends,
conditions under which and times such dividends may be declared or paid, any
preference of any such dividends to, and the relation to, the dividends payable
on any other class or classes of stock or any other series of the same class and
whether dividends shall be cumulative or noncumulative and, if cumulative, from
which date or dates;
(c) whether the holders of shares of that series shall have voting
rights in addition to the voting rights provided by law and, if so, the terms of
such voting rights;
(d) whether shares of that series shall have conversion or exchange
privileges into or for, at the option of either the holder or the Corporation or
upon the happening of a specified event, shares of any other class or classes or
of any other series of the same or other class or classes of stock of the
Corporation and, if so, the terms and conditions of such conversion or exchange,
including provision for adjustment of the conversion or exchange rate in such
events as the Board of Directors shall determine;
(e) whether shares of that series shall be redeemable and, if so, the
terms and conditions of such redemption, including the date or dates upon or
after which they shall be redeemable and the amount per share payable in case of
redemption, which amount may vary under different conditions and at different
redemption dates;
(f) whether shares of that series shall be subject to the operation of
a retirement or sinking fund and, if so subject, the extent to and the manner in
which it shall be applied to the purchase or redemption of the shares of that
series, and the terms and provisions relative to the operation thereof;
(g) the rights of shares of that series in the event of voluntary or
involuntary liquidation, dissolution or winding up of the Corporation and any
preference of any such rights to, and the relation to, the rights in respect
thereto of any class or classes of stock or any other series of the same class;
and
(h) whether shares of that series shall be subject or entitled to any
other preferences, and the other relative, participating, optional or other
special rights and qualifications, limitations or restrictions of shares of that
series and, if so, the terms thereof."
C. The foregoing Amendment to the Restated Certificate of Incorporation
of the Corporation was authorized pursuant to Section
3
141(b) of the Delaware Corporation Law by the affirmative vote of a majority of
the Board of Directors of the Corporation present at a meeting at which a quorum
was present followed by the affirmative vote of a majority of all of the
outstanding shares Common Stock of the Corporation entitled to vote on the said
Amendment to the Restated Certificate of Incorporation at a meeting at which a
quorum was present pursuant to Section 242 of the Delaware General Corporation
Law.
D. This Certificate of Amendment to the Restated Certificate of
Incorporation shall be effective upon the filing of same with the Secretary of
State of Delaware.
4
IN WITNESS WHEREOF, we have subscribed this document on the date set
forth below and do hereby affirm, under the penalties of perjury, that the
statements contained therein have been examined by us and are true and correct.
Dated: July 31, 1992
/s/ Jean Madar
---------------------
Jean Madar, President
/s/ Neil Fogel
---------------------
Neil Fogel, Assistant Secretary
|
5
Exhibit 3.1.3
CERTIFICATE OF AMENDMENT
to the
RESTATED CERTIFICATE OF INCORPORATION
of
JEAN PHILIPPE FRAGRANCES, INC.
pursuant to the
DELAWARE GENERAL CORPORATION LAW
Jean Philippe Fragrances, Inc. hereby certifies that:
A. The name of the Corporation is Jean Philippe Fragrances, Inc. (the
"Corporation"), and its original Certificate of Incorporation was filed with the
Secretary of State of Delaware on May 6, 1985.
B. The Restated Certificate of Incorporation is hereby amended to
increase the number of actual shares from twenty-one million (21,000,000) to
thirty-one million (31,000,000), by striking out the first full paragraph of
Article FOURTH in its entirety, and substituting in lieu thereof the new first
full paragraph of Article FOURTH as follows:
"FOURTH: The aggregate number of shares which the Corporation
shall have authority to issue is thirty-one million (31,000,000) shares
consisting of thirty million (30,000,000) shares, designated as Common Stock, at
par value of $.001 per share, and one million (1,000,000) shares, designated as
Preferred Stock, at a par value of $.001 per share."
C. The foregoing Amendment to the Restated Certificate of Incorporation
of the Corporation was authorized pursuant to Section 141(b) of the Delaware
Corporation Law by the affirmative vote of a majority of the Board of Directors
of the Corporation present at a meeting at which a quorum was present followed
by the affirmative vote of a majority of all of the outstanding shares Common
Stock of the Corporation entitled to vote on the said Amendment to the Restated
Certificate of Incorporation at a meeting at which a quorum was present pursuant
to Section 242 of the Delaware General Corporation Law.
1
D. This Certificate of Amendment to the Restated Certificate of
Incorporation shall be effective upon the filing of same with the Secretary of
State of Delaware.
IN WITNESS WHEREOF, we have subscribed this document on the date set
forth below and do hereby affirm, under the penalties of perjury, that the
statements contained therein have been examined by us and are true and correct.
Dated: July 9, 1993
/s/ Jean Madar
---------------------
Jean Madar, President
/s/ Neil Fogel
---------------------
Neil Fogel, Secretary
|
-Seal-
2
Exhibit 3.1.4
CERTIFICATE OF AMENDMENT
to the
RESTATED CERTIFICATE OF INCORPORATION
of
JEAN PHILIPPE FRAGRANCES, INC.
Pursuant to the Delaware General Corporation Law
Jean Philippe Fragrances, Inc. hereby certifies that:
A. The name of the Corporation is Jean Philippe Fragrances, Inc. (the
"Corporation"), and its original Certificate of Incorporation was filed with the
Secretary of State of Delaware on May 6, 1985.
B. The Restated Certificate of Incorporation is hereby amended in order to
change the name of the Corporation. To accomplish the foregoing amendment,
Article FIRST is stricken out in its entirety, and the new Article FIRST is
substituted in lieu thereof as follows:
FIRST. The name of the Corporation is INTER PARFUMS, INC.
C. The foregoing Amendment to the Restated Certificate of Incorporation of
the Corporation was authorized pursuant to Section 141(b) of the Delaware
Corporation Law by the affirmative vote of a majority of the Board of Directors
of the Corporation present at a meeting at which a quorum was present followed
by the affirmative vote of a majority of all of the outstanding shares Common
Stock of the Corporation entitled to vote on the said Amendment to the Restated
Certificate of Incorporation at a meeting at which a quorum was present pursuant
to Section 242 of the Delaware General Corporation Law.
D. This Certificate of Amendment to the Restated Certificate of
Incorporation shall be effective upon the filing of same with the Secretary of
State of Delaware.
IN WITNESS WHEREOF, we have subscribed this document on the date set forth
below and do hereby affirm, under the penalties of perjury, that the statements
contained therein have been examined by us and are true and correct.
Dated: July 13, 1999
/c/ Jean Madar
Jean Madar, Chief Executive Officer
/s/ Annie Failler
-----------------
Annie Failler, Secretary
|
Exhibit 3.1.5
CERTIFICATE OF AMENDMENT
to the
RESTATED CERTIFICATE OF INCORPORATION
of
INTER PARFUMS, INC.
Pursuant to the Delaware General Corporation Law
Inter Parfums, Inc. hereby certifies that:
A. The name of the Corporation is Inter Parfums, Inc. (the
"Corporation"), and its original Certificate of Incorporation was filed with the
Secretary of State of Delaware on May 6, 1985.
B. The Restated Certificate of Incorporation is hereby amended in order
to add a new Article NINTH. To accomplish the foregoing amendment, the new
Article NINTH is added as follows:
"NINTH: Without in any way limiting the power and authority of
the Board of Directors as otherwise provided for herein, the following corporate
actions shall require the approval of the Board of Directors:
(a) any sale, transfer, pledge or other disposition of all or
any material portion of the assets of the Company (including, without
limitation, any shares of any subsidiary of the Company or any of its
subsidiaries);
(b) the acquisition by the Company or any of its subsidiaries
of shares, securities or assets of any company or entity, whether by merger,
consolidation or other business combination, share purchase, asset purchase,
contribution to capital or otherwise (other than short-term financial
investments in the ordinary course of business consistent with past practice);
(c) the entry, renewal or termination by the Company or any of
its subsidiaries into/of any trademark license agreement; or
(d) any material agreement or material transaction involving
the Company or any of its subsidiaries and not in the ordinary course of
business.
Notwithstanding anything in these Articles to the contrary, the
following corporate actions shall require the unanimous approval of the Board of
Directors (as constituted without any vacancies):
(a) any material change in the business of the Company and its
subsidiaries from Business of the Company and its subsidiaries;
(b) issuance by the Company or any of its subsidiaries of any
securities in return for consideration less than the Fair Market Value thereof
(except for stock splits, stock dividends and employee and nonemployee director
options to acquire Common Stock granted with an exercise price per share at the
Fair Market Value of the Common Stock on the date of grant);
(c) borrowing or issuing any evidence of indebtedness by the
Company or any of its subsidiaries unless, after giving effect thereto, the
aggregate amount of indebtedness of the Company and its subsidiaries on a
consolidated basis is not greater than the consolidated stockholder's equity as
shown in the audited Consolidated Balance Sheet of the Company for the then most
recently completed fiscal year;
(d) any transaction by the Company or any of its subsidiaries
with a Majority Shareholder or any Affiliate of a Majority Shareholder;
notwithstanding the foregoing, unanimous board consent shall not apply to
executive compensation issues or reimbursement of expenses incurred on behalf of
the Company, both in the ordinary course of business in accordance with its past
practices;
(e) declaration or payment of dividends if the aggregate
amount of dividends paid by the Company and its subsidiaries (excluding
wholly-owned subsidiaries) in respect of any fiscal year is more than thirty
percent (30%) of the annual net income of the Company for the then most recently
completed fiscal year, as indicated by the audited Consolidated Statements of
Income of the Company;
(f) direct or indirect sale or other disposition of all or any
substantial portion of the business of or a controlling interest in, or all or
substantially all of the assets of, Inter Parfums, S.A., the Company's indirect,
French subsidiary; notwithstanding the foregoing, unanimous board consent shall
not be deemed to apply to discontinuance of any product line, unless such
discontinuance involves a sale or other disposition, and the net sales
attributable to all such product lines exceeds in the aggregate five percent
(5%) of the net sales of the Company for the then most recently completed fiscal
year as indicated by the audited Consolidated Statements of Income of the
Company;
(g) merger or consolidation or other business combination
involving the Company or any of its subsidiaries (i) if not for fair value; or
(ii) with a person not engaged primarily in the Business of the Company and its
Subsidiaries (except for one or a series of mergers or consolidations, the value
of which does not singularly or in the aggregate exceed five percent (5%) of the
total assets of the Company as of the then most recently completed fiscal year
(valued at historical cost) as reflected on the audited Consolidated Balance
Sheets of the Company);
(h) any change in the number of the members of the Board
2
of Directors to less than six (6) or more than ten (10) members; and
(i) any amendment to the certificate of incorporation or
by-laws of the Company.
In addition, the Company shall cause its subsidiaries not to take any of the
foregoing actions except with the unanimous approval of the Board of Directors
of the Company (as constituted without any vacancies).
As used in this Article Ninth, the following terms shall have the
meanings as hereinafter set forth:
1. Affiliates. Solely for purposes of this Article Ninth, an
"Affiliate," in the case of LV Capital, shall mean a corporation, entity or
person which directly or indirectly controls or is controlled by or is under
common control with LV Capital, including but not limited to, those persons and
entities listed in the Schedule 13D dated August 5, 1999, filed by LVMH, but not
the Company; in the case of Corporation, shall mean a corporation, entity or
person which directly or indirectly controls or is controlled by or is under
common control with the Company, including but not limited to, the Majority
Shareholders, but not LV Capital; and in the case of the Majority Shareholders,
shall mean a corporation, entity or person which directly or indirectly controls
or is controlled by or is under common control with the Majority Shareholders
including but not limited to, each of the Majority Shareholders and the Company,
but not LV Capital.
2. Business of the Company and its Subsidiaries. The term "Business of
the Company and its Subsidiaries" shall be defined to mean the production,
manufacture, marketing, distribution and sale of fragrance products, perfumes,
eau de toilette, eau de cologne, deodorants, cosmetics, health and beauty and
personal care products, for men, women and children.
3. Fair Market Value. The term "Fair Market Value" of the Common Stock
or other security of the Company shall be determined by the Board of Directors
in the exercise of its good faith discretion. The determination of the Board of
Directors shall be conclusive in determining the Fair Market Value of the Common
Stock in good faith; provided that if LV Capital disagrees with such
determination, it shall be entitled, at its own cost and expense, to select
(with the consent of the Majority Shareholders, such consent not to be
unreasonably withheld) an investment banking or accounting firm of nationally
recognized standing to arbitrate such dispute, and the decision of such
arbitrator will be binding upon the parties.
4. Majority Shareholders. The "Majority Shareholders" means Jean Madar
and Philippe Benacin.
5. LV Capital and LVMH. The term "LV Capital" means
3
LV Capital USA, Inc., a Delaware corporation and an indirect subsidiary of LVMH,
and the term LVMH means LVMH Moet Hennessy Louis Vuitton, S.A., a French
corporation.
C. The foregoing Amendment to the Restated Certificate of Incorporation
of the Corporation was authorized pursuant to Section 141(b) of the Delaware
Corporation Law by the affirmative vote of a majority of the Board of Directors
of the Corporation present at a meeting at which a quorum was present followed
by the affirmative vote of a majority of all of the outstanding shares Common
Stock of the Corporation entitled to vote on the said Amendment to the Restated
Certificate of Incorporation at a meeting at which a quorum was present pursuant
to Section 242 of the Delaware General Corporation Law.
D. This Certificate of Amendment to the Restated Certificate of
Incorporation shall be effective upon the filing of same with the Secretary of
State of Delaware.
IN WITNESS WHEREOF, we have subscribed this document on the date set
forth below and do hereby affirm, under the penalties of perjury, that the
statements contained therein have been examined by us and are true and correct.
Dated: July 12, 2000
/s/ Jean Madar
-----------------------------------
Jean Madar, Chief Executive Officer
/s/ Annie Failler
-----------------------------------
Annie Failler, Secretary
|
4
Exhibit 3.1.6
CERTIFICATE OF AMENDMENT
to the
RESTATED CERTIFICATE OF INCORPORATION
of
INTER PARFUMS, INC.
Pursuant to the Delaware General Corporation Law
Inter Parfums, Inc. hereby certifies that:
A. The name of the
Corporation is Inter Parfums, Inc. (the "Corporation"), and its original
Certificate of Incorporation was filed with the Secretary of State of Delaware
on May 6, 1985.
B. The Restated
Certificate of Incorporation is hereby amended to increase the number of actual
shares that the Corporation has the authority to issue from thirty-one million
(31,000,000) to one hundred one million (101,000,000), by striking out the first
full paragraph of Article FOURTH in its entirety, and substituting in lieu
thereof the new first full paragraph of Article FOURTH as follows:
"FOURTH: The aggregate number of shares which the Corporation shall have
authority to issue is one hundred one million (101,000,000) shares, consisting
of one hundred million (100,000,000) shares, designated as Common Stock, at
par value of $.001 per share, and one million (1,000,000) shares, designated
as Preferred Stock, at a par value of $.001 per share."
C. The foregoing
Amendment to the Restated Certificate of Incorporation of the Corporation was
authorized pursuant to Section 141(b) of the Delaware Corporation Law by the
affirmative vote of a majority of the Board of Directors of the Corporation
present at a meeting at which a quorum was present followed by the affirmative
vote of a majority of all of the outstanding shares Common Stock of the
Corporation entitled to vote on the said Amendment to the Restated Certificate
of Incorporation at a meeting at which a quorum was present pursuant to Section
242 of the Delaware General Corporation Law.
D. This Certificate
of Amendment to the Restated Certificate of Incorporation shall be effective
upon the filing of same with the Secretary of State of Delaware.
IN WITNESS WHEREOF,
we have subscribed this document on the date set forth below and do hereby
affirm, under the penalties of perjury, that the statements contained therein
have been examined by us and are true and correct.
Dated:
August 6, 2004
/s/ Jean Madar
Jean Madar, Chief
Executive Officer
/s/ Michelle Habert
Michelle Habert,
Secretary
-Seal-
EXHIBIT 3.2
BY - LAWS
of
JEAN PHILIPPE FRAGRANCES, INC.
ARTICLE I - OFFICES
SECTION 1. REGISTERED OFFICE. The registered office of the Corporation
within the State of Delaware shall be located at the principal place of business
in said state of the Corporation or individual acting as the Corporation's
registered agent in Delaware.
SECTION 2. OTHER OFFICES. --The corporation may have other offices,
either within or without the State of Delaware, at such place or places as the
Board of Directors may from time to time appoint or the business of the
corporation may require.
ARTICLE II - MEETING OF STOCKHOLDERS
SECTION I. ANNUAL MEETINGS. --Annual meetings of stockholders for the
election of directors and for such other business as may be stated in the notice
of the meeting, shall be held at such place, either within or without the State
of Delaware, and at such time and date as the Board of Directors, by resolution,
shall determine and as set forth in the notice of the meeting.
SECTION 2. OTHER MEETINGS. -- Meetings of stockholders for any purpose
other than the election of directors may be held at such time and place, within
or without the State of Delaware, as shall be stated in the notice of the
meeting.
SECTION 3. VOTING. -- Each stockholder entitled to vote in accordance
with the terms and provisions of the Certificate of Incorporation and these
By-Laws shall be entitled to one vote, in person or by proxy, for each share of
stock entitled to vote held by such stockholder, but no proxy shall be voted
after three years from its date unless such proxy provides for a longer period.
Upon the demand of any stockholder, the vote for directors and upon any question
before the meeting shall be by
1
ballot. All elections for directors shall be decided by plurality vote; all
other questions shall be decided by majority vote except as otherwise
provided-by the Certificate of Incorporation or the laws of the State of
Delaware.
SECTION 4. STOCKHOLDER LIST. -- The officer who has charge of the stock
ledger of the corporation shall at least 10 days before each meeting of
stockholders prepare a complete alphabetical addressed list of the stockholders
entitled to vote at the ensuing election, with the number of shares held by
each. Said list shall be open to the examination of any stockholder, for any
purpose germane to the meeting, during ordinary business hours, for a period of
at least ten days prior to the meeting, either at a place within the city where
the meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall be available for inspection at the meeting.
SECTION 5. QUORUM. --Except as otherwise required by law, by the
Certificate of Incorporation or by these By-Laws, the presence, in person or by
proxy, of stockholders holding a majority of the stock of the corporation
entitled to vote shall constitute a quorum at all meetings of the stockholders.
In case a quorum shall not be present at any meeting, a majority in interest of
the stockholders entitled to vote thereat, present in person or by proxy, shall
have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until the requisite amount of stock entitled to
vote shall be present. At any such adjourned meeting at which the requisite
amount of stock entitled to vote shall be represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed; but only those stockholders entitled to vote at the meeting as
originally noticed shall be entitled to vote at any adjournment or adjournments
thereof.
SECTION 6. SPECIAL MEETINGS. --Special meetings of the stockholders,
for any purpose, unless otherwise prescribed by statute or by the Certificate of
Incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the directors
or stockholders entitled to vote. Such request shall state the purpose of the
proposed meeting.
SECTION 7. NOTICE OF MEETINGS. Written notice of each meeting of
shareholders stating the place, date and hour thereof, and, in the case of a
special meeting, specifying the purpose or
2
purposes thereof, shall be given to each shareholder entitled to vote thereat,
not less than ten (10) nor more than sixty (60) days prior to the meeting,
except that where the matter to be acted on is a merger or consolidation or the
Corporation or a sale, lease or exchange of all or substantially all of its
assets, such notice shall be given not less than twenty (20) nor more than sixty
(60) days prior to such meeting.
If at any meeting action is proposed to be taken which, if taken, would
entitle shareholders fulfilling the requirements of section 262 (d) of the
Delaware General Corporation Law to an appraisal of the fair value of their
shares, the notice of such meeting shall contain a statement of that purpose and
to that effect and shall be accompanied by a copy of that statutory section.
SECTION 8. NATURE OF BUSINESS AT MEETINGS OF SHAREHOLDERS. No business
may be transacted at an annual meeting of shareholders, other than business that
is either (a) specified in the notice of meeting (or any supplement thereto)
given by or at the direction of the Board of Directors (or any duly authorized
committee thereof), (b) otherwise properly brought before the annual meeting by
or at the direction of the Board of Directors (or any duly authorized committee
thereof) or (c) otherwise properly brought before the annual meeting by any
shareholder of the corporation (i) who is a shareholder of record on the date of
the giving of the notice provided for in this Section 8 and on the record date
for the determination of shareholders entitled to vote at such annual meeting
and (ii) who complies with the notice procedures set forth in this Section 8.
In addition to any other applicable requirement, for business to be
properly brought before an annual meeting by a shareholder, such shareholder
must have given timely notice thereof in proper written form to the Secretary of
the Corporation.
To be timely, a shareholder's notice to the Secretary must be delivered
to or mailed and received at the principal executive offices of the Corporation
not less than sixty (60) days nor more than ninety (90) days prior to the
anniversary date of the immediately preceding annual meeting of shareholders;
PROVIDED, HOWEVER, that in the event that the annual meeting is called for a
date that is not within thirty (30) days before or after such anniversary date,
notice by the shareholder in order to be timely must be so received-not later
than the close of business on the
3
tenth (10th) day following the day on which such notice of the date of the
annual meeting was mailed or such public disclosure of the date of the annual
meeting was made, whichever first OCCURS.
TO BE IN PROPER WRITTEN FORM, A SHAREHOLDER'S NOTICE TO THE Secretary
must set forth as to each matter such shareholder proposes to bring before the
annual meeting (a) a brief description of the business desired to be brought
before the annual meeting and the reasons for conducting such business at the
annual meeting, (b) the name and record address of such shareholder, (c) the
class or series and number of shares of capital stock of the Corporation which
are owned-beneficially or of record by such shareholder, (d) a description of
all arrangements or understandings between such shareholder and any other person
or persons (including their names) in connection with the proposal of such
business by such shareholder and any material interest of such shareholder in
such business and (e) a representation that such shareholder intends to appear
in person or by proxy at the annual meeting to bring such business before the
meeting.
No business shall be conducted at the annual meeting of shareholders
except business brought before the annual meeting in accordance with the
procedures set forth in this Section 8; PROVIDED, HOWEVER, that, once business
has been properly brought before the annual meeting in accordance with such
procedures, nothing in this Section 8 shall be deemed to preclude discussion by
any shareholder of any such business. If the Chairman of an annual meeting
determines that business was not properly, brought before the annual meeting in
accordance with the foregoing procedures, then the Chairman shall declare to the
meeting that the business was not properly brought before the meeting and such
business shall not be transacted.
SECTION 9. ACTION WITHOUT MEETING. --Except as otherwise provided by
the Certificate of Incorporation, whenever the vote of stockholders at a meeting
thereof is required or permitted to be taken in connection with any corporate
action by any provisions of the statutes or the Certificate of Incorporation or
of these By-Laws, the meeting and vote of stockholders may be dispensed with, if
all the stockholders who would have been entitled by vote upon the action if
such meeting were held, shall consent in writing to such corporate action being
taken.
SECTION 10. NOMINATION OF DIRECTORS. Only persons who are
4
nominated in accordance with the following procedures shall be eligible for
election as directors of the Corporation. Nominations of persons for election to
the Board of Directors may be made at any annual meeting of shareholders (a) by
or at the direction of the Board of Directors (or any duly authorized COMMITTEE
THEREOF) OR (B) BY ANY SHAREHOLDER OF THE CORPORATION (i) who is a shareholder
of record on the date of giving of the notice provided for in this Section 10
and on the record date for the determination of shareholders entitled to vote at
such annual meeting and (ii) who complies with the notice and other procedures
set forth in this Section 10.
In addition to any other applicable requirements, for a nomination to
be made by a shareholder, such shareholder must give timely notice thereof in
proper written form to the Secretary of the Corporation. To be timely, a
shareholder's notice to the Secretary must be delivered to or mailed and
received at the principal executive offices of the Corporation not less than
sixty (60) days nor more than ninety (90) days prior to the anniversary date of
the immediately preceding annual meeting of shareholders; PROVIDED, HOWEVER,
that in the event that the annual meeting is called for a date that is not
within thirty (30) days before or after such anniversary date, notice by the
shareholder in order to be timely must be received not later than the close of
business on the tenth (10th) day following the day on which notice of the date
of the annual meeting was mailed or such public disclosure of the date of the
annual meeting was made, whichever first occurs.
To be in proper written form, a shareholder's notice to the Secretary
must set forth (a) as to each person whom the shareholder proposes to nominate
for election as a director (i) the, name, age, business and residence address of
the person, (ii) the principal occupation or employment of the person, (iii) the
class or series and number of shares of capital stock of the Corporation which
are owned beneficially or of record by the person and (iv) any other information
relating to the person that would be required to be disclosed in a proxy
statement or other filings required to be made in connection with solicitations
of proxies for election of directors pursuant to Section 14 of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the rules and
regulations promulgated thereunder; and (b) as to the shareholder giving notice
(i) the name and record address of such shareholder, (ii) the class or series
and number of shares of capital stock-of the Corporation which are owned
beneficially or of record by such shareholder, (iii) a description of all
arrangements or understandings between such
5
shareholder and each proposed nominee and any other person or persons (including
their names) pursuant to which the nominations are to be made by such
shareholder, (iv) a representation that such shareholder intends to appear in
person or by proxy at the annual meeting to nominate the persons named in its
notice and (v) any other information relating to such shareholder that would be
required to be disclosed in a proxy statement or other filings required to be
made in connection with solicitations of proxies for election of directors
pursuant to Section 14 of the Exchange Act and the rules and regulations
promulgated thereunder. Such notice must be accompanied by a written consent of
each proposed nominee to being named as a nominee and to serve as a director if
elected.
No person shall be eligible for election as director of the Corporation
unless nominated in accordance with the procedures set forth in this Section 10.
If the Chairman of the meeting determines that a nomination was not made in
accordance with the foregoing procedures or that any representation made
pursuant to such procedures is materially incomplete or inaccurate, the Chairman
shall declare to the meeting that the nomination was defective and such
defective nomination may be disregarded.
ARTICLE III - DIRECTORS
SECTION 1. NUMBER AND TERM. -- The number of directors shall be set by
resolution of the board of directors, but shall not be less than three but not
more than fifteen.
SECTION 2. RESIGNATIONS. -- Any director, member of a committee or
other officer may resign at any time. Such resignation shall be made in writing,
and shall take effect at the time specified therein, and if no time be
specified, at the time of its receipt by the President or Secretary. The
acceptance of a resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES. -- If the office of any director, member of a
committee or other officer becomes vacant, the remaining directors in office,
though less than a quorum by a majority vote, may appoint any qualified person
to fill such vacancy, who shall hold office for the unexpired term and until his
successor shall be duly chosen.
SECTION 4. REMOVAL. --- Any director or directors may be removed either
for or without cause at any time by the
6
affirmative vote of the holders of a majority of all the shares of stock
outstanding and entitled to vote, at a special meeting of the stockholders
called for the purpose and the vacancies thus created may be filled, at the
meeting held for the purpose of removal, by the affirmative vote of a majority
in interest of the stockholders entitled to vote.
SECTION 5. INCREASE OF NUMBER. -- The exact number of directors within
the minimum and maximum limitations specified herein shall be fixed from time to
time by resolution of a majority of the whole Board of Directors.
SECTION 6. COMPENSATION. -- Directors shall not receive any stated
salary for their services as directors or as members of committees, but by
resolution of the board a fixed fee and expenses of attendance may be allowed
for attendance at each meeting. Nothing herein contained shall be construed to
preclude any director from serving the corporation in any other capacity as an
officer, agent or otherwise, and receiving compensation therefor.
SECTION 7. ACTION WITHOUT MEETING. --Any action required or permitted
to be taken at any meeting of the Board of Directors, or of any committee
thereof, may be taken with out a meeting, if prior to such action a written
consent thereto is signed by all members of the board, or of such committee as
the case may be, and such written consent is filed with the minutes of
proceedings of the board or committee.
SECTION 8.PARTICIPATION IN MEETINGS BY TELEPHONE. Any one or more
members of the Board of Directors or of any committee of the Board may
participate in a meeting of the Board of Directors or any committee of the Board
may be taken without a meeting if all members of the Board or of such committee
consent thereto in writing. The written consent or consents to each such action
shall be filed with the minutes of the proceedings of the Board or of the
committee taking such action.
SECTION 9.COMMITTEES OF THE BOARD. THE BOARD OF DIRECTORS, BY
resolution adopted by a majority of the whole Board, may designate one or more
committees, each consisting of one (1) or more directors and having such title
as the Board may consider to be properly descriptive of its function, (except
that only one committee, consisting of three (3) or more directors, shall be
designated as the Executive Committee, each of which, to the extent provided in
such resolution, shall have any may exercise all of the powers and authority of
the Board in the management of
7
the business and affairs of the Corporation). However, no such committee shall
have power or authority in reference to:
(a) amending the certificate of incorporation;
(b) adopting an agreement of merger or consolidation;
(c) recommending to the shareholders the sale, lease or exchange
of all or substantially all of the Corporation's property and assets;
(d) recommending to the shareholders a dissolution of the
Corporation or a revocation of a dissolution; or
(e) amending these By-Laws; and, unless expressly so provided by
resolution of the Board, no such committee shall have power or authority in
reference to;
(f) declaring a dividend; or
(g) authorizing the issuance of shares of the Corporation of any
class.
The Board of Directors may designate one or more directors as alternate
members of any committee, who may replace any absent or disqualified member at
any meeting of the committee. In the absence or disqualification of any member
of any committee, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to act at the
meeting in the place and stead of such absent or disqualified member.
Each such committee shall serve at the pleasure of the Board of
Directors. It shall keep minutes of its meetings and report the same to the
Board of Directors as and when requested by the Board, and it shall observe such
other procedures with respect to its meetings as are prescribed in these By-Laws
or, to the extent not prescribed herein, as may be prescribed by the Board in
the resolution appointing such committee.
SECTION 10. NOTICE OF BOARD AND COMMITTEE MEETINGS. Meetings of the
Board of Directors or any committee thereof, shall be called by any of the
following persons: The Chairman of the Board, Chief Executive Officer, the
President, Secretary or any two directors. Five (5) days' written notice shall
be given to each director, either by personal delivery; by postage prepaid mail
if mailed within the continental United States; any reputable overnight delivery
service (such as Federal Express or DHL or any successor thereto) if sent
outside the continental United States; or via telecopier, e-mail or other
electronic means, unless a Director objects in writing to receiving notice
8
via telecopier, e-mail or other electronic means. Notice of any meeting of the
Board of Directors need not be given to any director who signs a waiver of
notice either before or after the meeting. Attendance by a director at a meeting
shall constitute a waiver of notice of such special meeting, except where a
director attends a meeting for the express purpose of objecting to the
transaction of any business because such meeting is not lawfully convened.
ARTICLE IV - OFFICERS
SECTION 1. OFFICERS. -- The officers of the corporation shall consist
of a President, a Treasurer, and a Secretary, and shall be elected by the Board
of Directors and shall hold office until their successors are elected and
qualified. In addition, the Board of Directors may elect a Chairman, A VICE
CHAIRMAN, one or more Vice-Presidents and such Assistant Secretaries and
Assistant Treasurers as it may deem proper. None of the officers of the
corporation need be directors. The officers shall be elected at the first
meeting of the Board of Directors after each annual meeting. More than two
offices may be held by the same person.
SECTION 2. OTHER OFFICERS AND AGENTS. -- The Board of Directors may
appoint such officers and agents as it may deem advisable, who shall hold their
offices for such terms and shall exercise such power and perform such duties as
shall be determined from time to time by the Board of Directors.
SECTION 3. CHAIRMAN. -- The Chairman of the Board of Directors if one
be elected, shall preside at all meetings of the Board of Directors and he shall
have and perform such other duties as from time to time may be assigned to him
by the Board of Directors. In the absence or disability of the Chairman of the
Board, the Vice Chairman shall preside at all such meetings and he shall have
and perform such other duties as from time to time may be assigned to him by the
Board of Directors.
SECTION 4. PRESIDENT. -- Unless set forth otherwise in a resolution of
the Board of Directors, The President shall be the chief executive officer of
the corporation and shall have the general powers and duties of supervision and
management usually vested in the office of President of a corporation. He shall
have general supervision, direction and control of the business of the
corporation. Except as the Board of Directors shall authorize the execution
thereof in some other manner, he shall
9
execute bonds, mortgages, and other contracts in behalf of the corporation, and
shall cause the seal to be affixed to any instrument requiring it and when so
affixed the seal shall be attested by the signature of the Secretary or the
Treasurer or an Assistant Secretary or an Assistant Treasurer.
SECTION 5. VICE-PRESIDENT. --Each Vice-President shall have such powers
and shall perform such duties as shall be assigned to him by the directors. If
there be more than one Vice President, the Board of Directors may designate one
of them as Executive Vice President, in which case he shall be first in order of
seniority, and may also grant to theirs such titles as shall be descriptive of
their respective functions or indicative of their relative seniority. The Vice
President, or, if there be more than one, the Vice Presidents in the order of
their seniority as indicated by their titles or as otherwise determined by the
Board of Directors shall, in the absence or disability of the Chairman and
President, exercise the powers and perform the duties of those officers subject
to the direction of the Board of Directors; and he or they shall have such other
powers and duties as the Board of Directors or the Chairman may from time to
time prescribe.
SECTION 6. TREASURER. --The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate account of
receipts and disbursements in books belonging to the corporation. He shall
deposit all moneys and other valuables in the name and to the credit of the
corporation in such depositories as may be designated by the Board of Directors.
The Treasurer shall disburse the funds of the corporation as maybe ordered by
the Board of Directors, or the President, taking proper vouchers for such
disbursements. He shall render to the President and Board of Directors at the
regular meetings of the Board of Directors, or whenever they may request it, an
account of all his transactions as Treasurer and of the financial condition of
the corporation. If required by the Board of Directors, he shall give the
corporation a bond for the faithful discharge of his duties in such amount and
with such surety as the board shall prescribe.
SECTION 7. SECRETARY. --The Secretary shall give, or cause to be given,
notice of all meetings of stockholders and directors, and all other notices
required by law or by these By-Laws, and in case of his absence or refusal or
neglect so to do, any such notice may be given by any person thereunto directed
by the President, or by the directors, or stockholders, upon whose requisition
the meeting is called as provided in these By-Laws.
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He shall record all the proceedings of the meetings of the corporation and of
directors in a book to be kept for that purpose. He shall keep in safe custody
the seal of the corporation, and when authorized by the Board of Directors,
affix the same to any instrument requiring it, and when so affixed, it shalt be
attested by his signature or by the signature of any assistant secretary.
SECTION 8. ASSISTANT TREASURERS & ASSISTANT SECRETARIES Assistant
Treasurers and Assistant Secretaries, if any, shall be elected and shall have
such powers and shall perform such duties as shall be assigned to them,
respectively, by the directors.
ARTICLE V
SECTION 1. CERTIFICATES OF STOCK. --Every holder of stock in the
corporation shall be entitled to have a certificate, signed by, or in the name
of the corporation by, the chairman or vice-chairman of the board of directors,
or the president or a vice-president and the treasurer or an assistant
treasurer, or the secretary of the corporation, certifying the number of shares
owned by him in the corporation. If the corporation shall be authorized to issue
more than one class of stock or more than one series of any class, the
designations, preferences and relative participating, optional or other special
rights of each class of stock or, series thereof and the qualifications,
limitations, or restrictions of such preferences and/or rights shall be set
forth in full or summarized on the face or back of the certificate which the
corporation shall issue to represent such class of series of stock, provided
that, except as other wise provided in section 202 of the General Corporation
Law of Delaware, in lieu of the foregoing requirements, there may be set forth
on the face or back of the certificate which the corporation shall issue to
represent such class or series of stock, a statement that the corporation will
furnish without charge to each stockholder who so requests the powers,
designations, preferences and relative, participating, optional or other special
rights of each class of stock or series thereof and the qualifications,
limitations or restrictions of such preferences and/or rights. Where a
certificate is countersigned (1) by a transfer agent other than the corporation
or its employee, or (2) by a registrar other than the corporation or its
employee, the signatures of such officers may be facsimiles.
SECTION 2. LOST CERTIFICATES --New certificates of stock may be issued
in the place of any certificate therefore issued by the corporation, alleged to
have been lost or destroyed, and the
11
directors may, in their discretion, require the owner of the lost or destroyed
certificate or his legal representatives, to give the corporation a bond, in
such sum as they may direct, not exceeding double the value of the stock, to
indemnify the corporation against it on account of the alleged loss of any such
new certificate.
SECTION 3. TRANSFER OF SHARES. -- The shares of stock of the
corporation shall be transferable only upon its books by the holders thereof in
person or by their duly authorized attorneys or legal representatives, and upon
such transfer the old certificates shall be surrendered to the corporation by
the delivery thereof to the person in charge of the stock and transfer books and
ledgers, or to such other persons as the directors may designate, by who they
shall be cancelled, and new certificates shall thereupon be issued. A record
shall be made of each transfer and whenever a transfer shall be made for
collateral security, and not absolutely, it shall be so expressed in the entry
of the transfer.
SECTION 4. STOCKHOLDERS RECORD DATE. -- In order that the corporation
may determine the stockholders entitled to notice of or to vote at any meeting
of stockholders or any adjournment thereof, or to express consent to corporate
action in writing without a meeting, or entitled to receive payment of any
dividend or other distribution or allotment of any rights, or entitled to
exercise any rights in respect of any change, conversion or exchange of stock or
for the purpose of any other lawful action, the Board of Directors may fix, in
advance, a record date, which shall not be more than sixty nor less than ten
days before the day of such meeting, nor more than sixty days prior to any other
action. A determination of stockholders of record entitled to notice of or to
vote at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the Board of Directors may fix a new record date for the
adjourned meeting.
SECTION 5. DIVIDENDS. -- Subject to the provisions of the Certificate
of Incorporation the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the corporation as and when they deem expedient. Before declaring any
dividends there may be set apart out of any funds of the corporation available
for dividends, such sum or sums as the directors from time to time in their
discretion deem proper working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
directors shall deem conducive to the interests of the corporation.
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SECTION 6. SEAL. -- The corporate seal shall be circular in form and
shall contain the name of the corporation, the year of its creation and the
words "CORPORATE SEAL DELAWARE." Said seal may be used by causing it or a
facsimile thereof to be impressed or affixed or otherwise reproduced.
SECTION 7. FISCAL YEAR. -- The fiscal year of the corporation shall be
determined by resolution of the Board of Directors.
SECTION 8. CHECKS -- All checks, drafts, or other orders for the
payment of money, notes or other evidences of indebtedness issued in the name of
the corporation shall be signed by the officer or officers, agent or agents of
the corporation, and in such manner as shall be determined from time to time by
resolution of the Board of Directors.
SECTION 9. NOTICE AND WAIVER OF NOTICE -- Whenever any notice is
required by these By-Laws to be given, personal notice is not meant unless
expressly stated, and any notice so required shall be deemed to be sufficient if
given by depositing the same in the United States mail, postage prepaid,
addressed to the person entitled thereto at his address as it appears on the
records of the corporation, and such notice shall be deemed to have been given
on the day of such mailing. Stockholders not entitled to vote shall not be
entitled to receive notice of any meetings except as otherwise provided by
statute.
Whenever any notice whatever is required to be given under the
provisions of any law, or under the provisions of the Certificate of
Incorporation of the corporation or these By-Laws, a waiver thereof in writing
signed by the person or persons entitled to said notice, whether before or after
the time stated therein, shall be deemed proper notice.
ARTICLE VI- AMENDMENTS
These By-Laws may be altered and repealed and By-Laws may be made at
any annual meeting of the stockholders or at any special meeting thereof if
notice thereof is contained in the notice of such special meeting by the
affirmative vote of a majority of the stock issued and outstanding or entitled
to vote thereat, or by the regular meeting of the Board of Directors, at any
regular meeting of the Board of Directors, or at any special meeting of the
Board of Directors, if notice thereof is contained in the notice of such special
meeting.
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Exhibit 3.3
Exhibit 3.3.1
INTER
PARFUMS HOLDING
Business
Corporation - with capital of 7,109,430 Euros
Head
Office: 4 Rond-point des Champs Elysées - 75008 PARIS
325
951 937 RCS PARIS
In
coordination with the Law of August 1
st
,
2003
Updated
on 04/26/2004
ARTICLE
1 – FORM
The
company is a corporation. It is governed by the current laws and regulations and
these Bylaws.
ARTICLE
2 – PURPOSE
The
Company's purpose in France and abroad is:
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Any
equity participation, direct or indirect, in any commercial or industrial,
or real estate business deal, alone or with a third party, on its own
behalf or that of a third party, through purchases, contributions, sales
or exchanges of any stocks, corporate shares or securities of any kind,
and generally, by the holding of any corporate securities. To this end,
the company can participate in all such subscriptions, make any uses of
funds, manage and operate any interests in any real estate or other
companies,
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Any
provisions of services concerning group leadership, the creation,
organization, development, management, oversight, administration, and
business policy for any companies, whether subsidiaries or not, the
granting of any rights, patents, brands and more generally, any benefits
related directly or indirectly to this
purpose,
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All
transactions for financing, credit, cash management and advances on all
investments, and in general, all transactions related directly or
indirectly to this purpose. The import or export of products for mass
consumption, as well as the creation or acquisition and use of all other
funds or similar institution, and all transactions that can be linked
directly or indirectly to the company’s purpose or likely to facilitate
its expansion or development.
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ARTICLE 3 - NAME
The name
of the Company is:
INTER
PARFUMS HOLDING
ARTICLE 4 - HEAD OFFICE
The head
office is located at:
4 Rond-Point des Champs-Elysées,
75008 PARIS
.
It can be
transferred to any other place in the same Department or a neighboring
Department by a simple decision of the Board of Directors, subject to
ratification by the next ordinary general shareholders meeting, and anywhere
else pursuant to a resolution of the extraordinary general shareholders meeting,
subject to current legal provisions. The Board of Directors that transfers the
head office, as provided by law, is authorized to amend the Bylaws
accordingly.
ARTICLE 5 - TERM
The term
of the Company shall be NINETY NINE (99) years from the date of its registration
in the Trade and Companies Registry, except early dissolution or
extension.
ARTICLE 6 - SHARE CAPITAL
Share
capital is fixed at the amount of SEVEN MILLION ONE HUNDRED NINE THOUSAND FOUR
HUNDRED THIRTY Euros (7,109,430 Euros). It is divided into TWO MILLION THREE
HUNDRED SIXTY NINE THOUSAND EIGHT HUNDRED TEN (2,369,810) subscribed and fully
paid shares of 3 Euros par value each.
ARTICLE 7 - CHANGES IN SHARE
CAPITAL
Share
capital can be increased, reduced or amortized in accordance with current laws
and regulations.
ARTICLE 8 - RELEASE OF SHARES
Shares
subscribed in cash must be paid upon subscription, by at least half their face
value and, where applicable, the entire share premium.
The
release of the surplus must take place one or more times upon appeal to the
Board of Directors, within five years from the registration in the Trade and
Companies Registry, as regards the initial capital, and within five years from
the date when the transaction becomes final in the event of a capital
increase.
However,
the new shares for cash resulting from a mixed transaction providing for release
partly in cash and partly by incorporation of reserves, profits or premiums must
be paid in full upon subscription.
Calls for
capital shall be made known to shareholders one month before the date set for
each payment, either by registered letter with return receipt or by a notice in
a legal announcement newspaper in the county of the head office and in the BALO
[Required Legal Announcements Bulletin].
Payments
are made either at headquarters or at any other place indicated for that
purpose.
Shareholders
shall, at any time, have the right to be discharged in advance, but they cannot
claim any interest or first dividend, in respect of the payments made by them
before the date fixed for the calls for funds.
Any delay
in payment of amounts due on the unpaid amount of shares automatically carries
interest at the legal rate from the due date, without prejudice to the personal
action that the Company may take against the defaulting shareholder and the
enforcement measures provided by law.
ARTICLE
9 - FORM OF SHARES
The
shares are registered. The materiality of the shares results from their
inclusion in the name of the holder or holders on accounts held for that purpose
by the Company, under the conditions and terms provided by law.
ARTICLE 10 - TRANSMITTAL OF
SHARES
The
shares are negotiable only after the Company’s registration in the Trade and
Companies Registry. In case of a capital increase, shares are negotiable as of
when this is carried out.
The
shares remain negotiable after the dissolution of the Company until the
completion of the liquidation.
Ownership
of the shares results from their inclusion in the individual account in the name
of the holder(s) on the registries that the Company keeps to this effect at the
head office.
The
transfer of shares takes place with regards to the Company and third parties by
a transfer order signed by the assignor or his representative and the assignee
if the shares are not fully paid. The transfer order is recorded on the day of
its receipt in a numbered and initialed registry kept chronologically, called
the “transfer registry.”
Transfers
between shareholders, or for the benefit of spouses, ancestors and descendants
are free.
Shares
may not be sold to third parties outside the Company without the approval of the
Board of Directors under the conditions and according to the procedure
prescribed by law.
ARTICLE 11 - RIGHTS AND OBLIGATIONS
ATTACHED TO SHARES
Each
share provides entitlement to the profits, corporate assets and liquidation
dividend in proportion to the share capital it represents.
It also
gives the right to vote and to representation at the general shareholders
meetings, as well as the right to be informed of the Company’s course and to
obtain disclosure of certain corporate documents at such times and under the
conditions prescribed by law and the Bylaws.
The
shareholders are only responsible for corporate liabilities up to the extent of
their contributions.
The
rights and obligations follow the share regardless of the owner.
Ownership
of a share carries full adherence to the Bylaws of the Company and the decisions
of the general shareholders meeting.
Whenever
it is necessary to own a certain number of shares in order to exercise any
right, the owners who do not have this number shall make it their personal
business to group together, and possibly purchase or sell the number of shares
necessary.
ARTICLE 12 - BOARD OF
DIRECTORS
The
Company is administered by a Board of Directors composed of at least three
members and eighteen members at most, subject to the exemption provided by law
in case of merger.
During
the life of the corporation, the directors are appointed, renewed or revoked by
the ordinary general shareholders meeting. They can always be
re-elected.
The
tenure of directors is SIX (6) years; they expire at the end of the ordinary
general shareholders meeting called to approve the accounts for the last fiscal
year that are kept for the year during which their mandate expires.
The
number of directors over the age of EIGHTY (80) years shall not exceed one third
of the directors in office. If this statutory limitation comes to be exceeded,
the oldest director shall be deemed to have resigned on the date of the ordinary
general shareholders meeting that rules on the accounts for the fiscal year
during which this event shall have occurred.
Each
director must own one share. If on the day of his appointment, a director does
not own the required number of shares or if, during his tenure, he ceases to be
their owner, he is automatically deemed to have resigned if he has not resolved
his situation within three months.
ARTICLE 13 - ORGANIZATION AND
OPERATION OF THE BOARD OF DIRECTORS
The Board
of Directors elects a Chairman from among its individual members and determines
his compensation. It fixes the Chairman’s tenure, which cannot exceed his term
as director.
No person
shall be appointed Chairman of the Board of Directors if he is over EIGHTY years
(80 years) of age. If the incumbent Chairman has reached this age, he is deemed
to have resigned.
He is
eligible for reelection. The Board of Directors may remove him at any
time.
ARTICLE
14 - BOARD PROCEEDINGS
The Board
of Directors meets as often as the Company’s interests require, upon convocation
by its Chairman or by one third or more of its members if the Board has not met
for over two months. The Chairman is bound by the requests that are sent to him
in this regard.
In the
event that the Company’s management is assumed by a CEO, the latter may ask the
Chairman of the Board of Directors to convene the Board on a specific
agenda.
The
convocations are made by any means, even verbally. The meeting takes place
either at the head office or at any other location specified in the
convocation.
…/…
The
Board’s proceedings shall be valid only if at least half the directors are
present. Decisions are taken by a majority vote of members present or
represented. In case of a tie vote, the Chairman of the meeting casts the
deciding vote.
Directors
who attend the Board meeting by means of videoconferencing are deemed to be
present for calculating the quorum and the majority, in accordance with the laws
and regulations. This provision is not applicable to the adoption of decisions
concerning the appointment of the Chairman, the CEO, the dismissal of the CEO,
the closing of the annual and consolidated accounts, and the preparation of the
management report for the Company and/or the group.
ARTICLE 15 - POWERS OF THE BOARD OF
DIRECTORS
The Board
of Directors determines the direction of the business of the Company and
oversees the implementation, within the limits of the corporate purpose and the
powers expressly granted by law to shareholders' meetings. All questions
regarding the proper conduct of the Company are referred to it, and it rules
through its deliberations on the matters that concern it. The Board of Directors
shall conduct inspections and audits as it deems appropriate.
The
Chairman or CEO of the Company is bound to provide to each director all the
documents and information necessary to accomplish his mission.
In
dealings with third parties, the Company is bound even by actions of the Board
of Directors that are not within the corporate purpose, unless it proves that
the third party knew that the action exceeded that purpose or that he could not
ignore that given the circumstances, it being excluded that the mere publication
of the Bylaws is sufficient to constitute such evidence.
ARTICLE 16 - POWERS OF THE CHAIRMAN
OF THE BOARD OF DIRECTORS
The
Chairman organizes and directs the work of the Board of Directors, which reports
to the general shareholders meeting. He ensures the proper functioning of the
corporate bodies and ensures in particular that the directors are able to
fulfill their mission. In a report attached to the annual report, he reports in
particular on the conditions of operation of the Board of Directors and the
internal oversight procedures.
In case
of temporary incapacity or death of the Chairman, the Board of Directors may
delegate a director to carry out the duties of the Chairman.
In case
of temporary impediment, such delegation is given for a limited period and is
renewable. In case of death, it shall be valid until the election of the new
Chairman.
ARTICLE 17 - GENERAL MANAGEMENT -
DELEGATION OF POWERS
The
general management of the Company is assumed, under his responsibility, either
by the Chairman of the Board of Directors or by another physical person, whether
a director or not, appointed by the Board of Directors, for whom it sets the
tenure and who holds the title of CEO.
The CEO,
who must be a physical person, whether chosen from among the directors or not,
can be dismissed at any time by the Board of Directors. If he is dismissed
without just cause, he is entitled to damages, unless he also fulfills the
duties of Chairman of the Board of Directors.
The Board
of Directors chooses, in accordance with the legal and regulatory requirements
in force, between two methods of exercising the general management of the
Company, upon any appointment or renewal of the Chairman of the Board of
Directors, or the CEO if these duties are not assumed by the Chairman of the
Board of Directors. This choice remains valid until the expiration of any of
these terms or, if necessary, until the day the Chairman of the Board of
Directors decides to no longer serve as CEO or, upon decision by the Board of
Directors, for a shorter period, which may be one year.
Shareholders
and third parties shall be informed of this choice under the conditions
prescribed by current law and regulations.
If the
Board of Directors chooses not to separate the functions of Chairman of the
Board of Directors, the Chairman assumes, under his responsibility, the general
management of the Company. In this case, the provisions below relating to the
CEO apply to him with the exception of compensation for wrongful dismissal from
his duties as CEO.
If the
Board of Directors chooses to separate the duties of Chairman of the Board of
Directors and CEO, and subject to the powers that the law expressly attributes
to shareholder meetings and to the Board of Directors, and within the limits of
the corporate purpose, the CEO is then invested with the broadest powers to act
in all circumstances on behalf of the Company. He represents the Company in its
dealings with third parties. He can grant to any agent of his choice all
delegations of powers within the limits of those conferred upon him by law and
these Bylaws. Any limitation on his powers by a decision of the Board of
Directors is not effective against third parties.
When he
is a director, his term in office cannot exceed that of his
mandate.
Whatever
the term for which the duties of CEO were conferred on him, such duties shall
terminate, automatically, at the latest after the first ordinary general
shareholders meeting held after the date on which he has attained EIGHTY (80)
years of age.
The Board
of Directors determines the CEO’s compensation.
The Board
of Directors may, upon the CEO's suggestion, mandate a physical person, director
or otherwise, to assist the CEO, with the title of Deputy CEO, who may not be
older than EIGHTY (80) years of age on the day of their appointment. In
agreement with the CEO, or the Chairman of the Board of Directors if the latter
serves as the CEO, the Board of Directors determines the extent and duration of
the powers delegated to each Deputy CEO.
ARTICLE 18 – STATUTORY
AUDITORS
The
auditing of the Company is carried out by one or more statutory auditors,
appointed and performing their duties according to law.
One or
more substitute auditors called upon to replace the statutory auditor(s) in case
of refusal, incapacity, resignation or death, are appointed at the same time as
the statutory auditor(s) for the same period.
ARTICLE 19 – REGULATED
AGREEMENTS
Any
agreement shall be submitted for prior approval by the Board of Directors, other
than those that bear on current operations and are concluded under normal
conditions, directly with or through an intermediary, between the Company and
its CEO, one of its Deputy CEOs, one of its directors, one of its shareholders
who holds a fraction of the voting rights in excess of 10%, or, if it involves a
corporate shareholder, the company that controls it according to the meaning of
Article L. 233-3 of the new Commercial Code.
The same
holds for agreements in which one of these people is indirectly
involved.
Are also
subject to prior approval; any agreements between the Company and a business
that the CEO, a Deputy CEO, or a director of the Company owns, or is an
unlimited partner, manager, director, CEO or member of the board of directors or
supervisory board, or is in general, an officer of this business.
Persons
who hold an interest are required to inform the Board of Directors when they
become aware of an agreement subject to approval. They cannot claim to take part
in the voting on the authorization sought.
The
Chairman of the Board gives an opinion to the Statutory Auditors on all the
agreements authorized and submits them for approval by the general shareholders
meeting.
These
agreements are authorized under the applicable legal and regulatory
requirements.
The above
provisions do not apply to agreements relating to current operations that are
concluded under normal conditions. However, these agreements, except when they
are not significant for any of the parties because of their purpose or their
financial implications, shall be provided to the Chairman of the Board of
Directors by the party who holds an interest. The list and the purpose of such
agreements are communicated by the Chairman to the members of the Board of
Directors and to the Statutory Auditors.
ARTICLE 20 - PROHIBITED
AGREEMENTS
Directors,
other than legal entities, are prohibited from contracting loans from the
Company in any form whatsoever, from being granted an overdraft on current
account and otherwise by it, and to have their commitments towards third parties
be guaranteed or secured by it.
The same
prohibition applies to the CEO, the Deputy CEO and the permanent representatives
of corporate entity directors. It also applies to spouses, ancestors and
descendants of the persons referred to in this article, as well as to any
intermediary third party.
ARTICLE 21 - GENERAL MEETINGS
General
shareholders meetings are convened and deliberate under the conditions laid down
by law.
The
collective decisions of shareholders are made in ordinary, extraordinary or
special general shareholders meetings depending on the nature of the decisions
they are called upon to make.
General
meetings shall be convened either by the Board of Directors or by the Statutory
Auditors, or by a court-appointed trustee under the conditions provided by
law.
Meetings
are held at the head office or at any other location specified in the
convocation.
The
convening of general meetings shall be carried out fifteen days before the date
of the meeting, either by a notice in a newspaper authorized to receive legal
announcements in the Department of the head office, or by letter addressed to
each shareholder.
When a
meeting has been unable to deliberate for lack of the required quorum, the
second meeting and, where applicable, the extended second meeting is convened at
least six days in advance in the same form as the first. The notice and letters
of convocation to this second meeting shall repeat the date and agenda of the
first one.
Any
shareholder may attend meetings in person or by proxy, regardless of the number
of shares he owns, upon proof of his identity and ownership of his shares in the
Company accounts. He can only be represented by his spouse or by another
shareholder: to this end the proxy must show proof of his mandate.
Any
shareholder may, if the Board of Directors so decides upon convening the
meeting, also participate in that meeting by videoconference or by any means of
telecommunication and remote transmission including the Internet, under the
conditions provided by the regulations applicable at the time of its
use.
Are
deemed present, in calculating the quorum and the majority, the shareholders
attending the meeting by videoconference, Internet or by any means of
telecommunication that allows their identification, whose nature and conditions
are determined by Decree.
Any
shareholder may vote by mail using a form prepared and sent to the Company under
the conditions laid down by law and regulations. This form must reach the
Company FIVE (5) days before the date of the meeting in order to be taken into
account.
Any
shareholder has the right to obtain disclosure of the documents necessary to
enable him to act in full knowledge of cause concerning the management and
workings of the Company.
The
nature of these documents and the conditions of their sending or being made
available are determined by law and regulations.
An
attendance sheet, duly signed by the shareholders present and the proxies, to
which are annexed the powers given to each proxy and, where appropriate the
forms for voting by mail, is certified correct by the executive committee of the
meeting.
The
meetings are chaired by the Chairman of the Board of Directors or, in his
absence, by a Vice-Chairman or a director specifically designated for that
purpose by the Board. Otherwise, the assembly itself designates its
Chairman.
The
duties of the vote-counter are fulfilled by the two shareholders, present and
willing, who hold, on their own behalf as well as by proxy, the largest number
of votes.
The
executive committee thus comprised, appoints a secretary who may not be a
shareholder.
The
minutes are prepared and copies or excerpts from the deliberations are delivered
and certified according to law.
The
ordinary and extraordinary general shareholders meetings acting under the
conditions of quorum and majority required by the provisions that govern them
respectively, exercise the powers conferred on them by law.
ARTICLE 22 - FISCAL YEAR
Each
fiscal year has a period of one year, which begins
January 1
and ends
December
31
.
ARTICLE
23 - INVENTORY - ANNUAL FINANCIAL STATEMENTS
There
shall be a regular accounting of corporate operations, according to
law.
At the
close of each fiscal year, the Board of Directors draws up an inventory of the
various assets and liabilities that exist on that date.
It also
draws up the balance sheet describing the assets and liabilities, showing the
equity separately, the income statement summarizing revenues and expenses during
the fiscal year, as well as the appendix that supplements and comments on the
information given by the balance sheet and the income statement.
The Board
of Directors prepares the management report on the Company’s situation during
the past fiscal year, its foreseeable development, the significant events that
occurred between the closing date of the fiscal year and when it is prepared,
and its research and development activities.
ARTICLE 24 - ALLOCATION AND
DISTRIBUTION OF PROFITS
If the
fiscal year accounts approved by the general shareholders meeting show a
distributable profit as defined by law, the general shareholders meeting decides
to include it in one or more reserve items for which it shall decide on its
allocation or use, whether to carry it forward or distribute it.
The
general shareholders meeting may grant to the shareholders for all or part of
the dividend distributed or interim dividends, an option between payment of the
dividend in cash or in shares under the legal conditions.
Losses,
if any exist, are carried forward again, after approval of the financial
statements by the general shareholders meeting, to be offset against profits for
subsequent years until extinction.
ARTICLE 25 - SHAREHOLDER EQUITY LESS
THAN HALF OF SHARE CAPITAL
If, due
to losses recorded in the accounting records, the Company’s equity falls below
half of the share capital, the Board of Directors shall, within four months
following approval of the accounts that reflect these losses, convene an
extraordinary general meeting of shareholders for the purpose of deciding
whether premature dissolution of the Company is warranted.
If
dissolution is not decided on, the share capital must, subject to the legal
provisions relating to minimum share capital for a business corporations, and
within the deadline set by law, be reduced by an amount equal to the losses that
were not charged against reserves, if, within that period the equity does not
once again equal at least half the share capital.
If a
general shareholders meeting does not take place, as in the case that this
meeting was unable to validly deliberate, any interested party may request
court-ordered dissolution of the Company.
ARTICLE 26 - CONVERSION OF THE
COMPANY
The
Company can be converted into another form of corporation, if, at the time of
its conversion, it has been in existence for at least two years, and if the
balance sheets for its first two years have been drawn up and approved by the
shareholders.
The
decision to convert is made on the report of the Statutory Auditors for the
Company, who must certify that the equity is at least equal to the share
capital.
The
conversion into a partnership requires the agreement of all the partners. In
this case, the conditions above are not required.
The
conversion into a limited liability company or a joint stock company is decided
upon under the conditions provided for an amendment to the bylaws and with the
agreement of all the partners who agree to be active partners.
The
conversion into a limited liability company is decided upon under the conditions
provided for an amendment to the articles of incorporation for companies of that
form.
ARTICLE 27 - DISSOLUTION -
LIQUIDATION
At the
expiration of the term set by the Company or in case of early dissolution, the
general shareholders meeting sets the terms and conditions for the liquidation
and appoints one or more liquidators, whose powers they shall determine and who
shall perform their duties according to law.
ARTICLE 28 - DISPUTES
All
disputes that may arise during the term of the Company or upon its liquidation,
either between the Company and the shareholders or directors, or between the
shareholders themselves, which involve corporate business, shall be judged
according to law and
subject to the jurisdiction
of the courts.
*
* *
Exhibit 3.4
Exhibit 3.4.1
INTER
PARFUMS
Business
Corporation with capital of 40,181,742 Euros
Head
Office: 4 Rond-Point des Champs-Elysées - 75008 PARIS
350.219.382
RCS PARIS
ARTICLE
1 – FORM
The
company is a corporation. It is governed by the current laws and regulations and
these Bylaws.
ARTICLE
2 – PURPOSE
The Company's purpose in
France and abroad
is
:
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The purchase, sale,
manufacture, i
mport and
export of all products
connected
with perfumery and
cosmetics,
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The explo
itation of
licenses,
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The provision of all
services relating to
the
activities referred to
above,
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The participation of
the Company, by any means, directly or indirectly, in any
transactions
t
hat may be related to
its purpose
through
the
creation o
f new companies,
contribution, subscription or purchase
of securities or
corporate
rights, merger
s
or
otherwise, of creation, acquisition, lease, lease management of any
business assets or facilities; the holding, acquisition, exploitation or
disposition of all processes and patents concerning these
activities.
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And
generally, any
industrial, commercial, financial, civil, securities or
property
transactions,
which may be connected di
rectly
or indirectly
to
the corporate purpose
or
any similar or related
purpose
.
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ARTICLE 3 - NAME
The name
of the Company is:
INTER
PARFUMS
ARTICLE 4 - HEAD
OFFICE
The head
office is located at:
4 Rond-Point des Champs-Elysées,
75008 PARIS
It can be
transferred to any other place in the same Department or a neighboring
Department by a simple decision of the Board of Directors, subject to
ratification by the next Ordinary General Shareholders Meeting, and anywhere
else pursuant to a resolution of the Extraordinary General Shareholders Meeting,
subject to current legal provisions. The Board of Directors that transfers the
head office, as provided by law, is authorized to amend the Bylaws
accordingly.
ARTICLE 5 - TERM
The term
of the Company is set for NINETY NINE (99) years from the date of its
registration in the Trade and Companies Registry, except early dissolution or
extension.
ARTICLE 6 - SHARE
CAPITAL
Share
capital is fixed at the amount of forty million one hundred eighty-one thousand
seven hundred and forty two Euros (€ 40,181,742). It is divided into thirteen
million three hundred ninety three thousand nine hundred and fourteen
(13,393,914) subscribed and fully paid shares of 3 Euros par value
each.
ARTICLE 7 - CHANGES IN SHARE
CAPITAL
Share
capital can be increased, reduced or amortized in accordance with current laws
and regulations.
ARTICLE 8 - RELEASE OF
SHARES
Shares
subscribed in cash must be fully paid up upon subscription, by at least half
their face value and, where applicable, the entire share premium.
The
release of the surplus must take place one or more times upon appeal to the
Board of Directors, within five years from the registration in the Trade and
Companies Registry, as regards the initial capital, and within five years from
the date when the transaction becomes final in the event of a capital
increase.
However,
the new shares for cash resulting from a mixed transaction providing for release
partly in cash and partly by incorporation of reserves, profits or premiums must
be paid in full upon subscription.
Calls for
capital shall be made known to shareholders one month before the date set for
each payment, either by registered letter with return receipt or by a notice in
a legal announcement newspaper in the county of the head office and in the
B.A.L.O. [Required Legal Announcements Bulletin].
Payments
are made either at headquarters or at any other place indicated for that
purpose.
Shareholders
shall, at any time, have the right to be released in advance, but they cannot
claim any interest or first dividend, in respect of the payments made by them
before the date set for the calls for funds.
Any delay
in payment of amounts due on the unpaid amount of shares automatically bears
interest at the legal rate from the due date, without prejudice to the personal
action that the Company may take against the defaulting shareholder and the
enforcement measures provided by law.
ARTICLE 9 - FORM OF SHARES -
IDENTIFICATION OF SHAREHOLDERS
The
shares are, at the shareholder’s choice, registered or bearer.
Until
they are fully paid, the shares must be registered in the name of their holder
to an account held by the company.
Pursuant
to Article 94-II of Law No. 81-1160 of December 30, 1980 (Finance Act of 1982)
and Decree No. 83-359 of May 2, 1983 relating to securities regimes, holders’
rights shall be represented by an accounting entry in their name:
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With
the intermediary of their choice for bearer
securities,
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With
the Company, and, if they so desire, with the financial intermediary of
their choice for registered shares.
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The
Company may request at any time, in accordance with the laws and regulations,
and in return for payment at its expense, that the agency responsible for
securities compensation provide information relating to holders of securities
issued by it, which give immediate or future voting rights, as well as to the
securities. Upon seeing the list transmitted by that body, the company may, in
particular, pursuant to the legal and regulatory requirements, ask the people
shown on this list that it believes may have registered them on behalf of third
parties, for information concerning the owners of these securities.
With the
reservations and conditions provided by law and regulations, any intermediary
may be registered on behalf of owners of Company securities referred to in
Article L. 228-1 paragraph 7 of the Commercial Code (owners not having their
domicile on French territory, as defined in Article 102, Civil Code) subject, in
particular, to the agent having declared at the time of opening of its
account
with the company
or
with
the
financial
intermediary
that is
custodian
of
the
account in
accordance w
ith
the laws and regulations, in its capacity as
a third party holder of
securities on behalf of others.
The intermediary registered as holder of
securities is bound, without prejudice to the obligations of owners of
securities, to make the declarations regarding the crossing of ownership
thresholds, for all Company shares or securities for which it is recorded in the
account, under penalty of punishment by law.
ARTICLE 10 - TRANSMISSION OF
SHARES
The
shares are only negotiable after the Company’s registration in the Trade and
Companies Registry. In case of a capital increase, shares are negotiable as of
when this is carried out.
The
shares remain negotiable after the dissolution of the Company until the
completion of the liquidation.
Ownership
of the shares results from their registration in the individual account in the
name of the holder(s) on the registries that the Company keeps to this effect at
the head office.
The
transfer of shares takes place with regards to the Company and third parties by
a transfer order signed by the assignor or his representative and the assignee
if the shares are not fully paid. The transfer order is recorded on the day of
its receipt in a numbered and initialed registry kept chronologically, called
the “transfer registry.”
Shares
are freely transferable, unless there are laws or regulations to the
contrary.
ARTICLE 11 - RIGHTS AND OBLIGATIONS
ATTACHED TO SHARES
Each
share provides entitlement to the profits, the corporate assets and the
liquidation dividend in proportion to the share capital it
represents.
It also
gives the right to vote and to representation at general shareholders meetings,
as well as the right to be informed of the Company’s course and to obtain
disclosure of certain corporate documents at such times and under the conditions
prescribed by law and the Bylaws.
The
shareholders are only responsible for corporate liabilities up to the extent of
their contributions. The rights and obligations follow the share regardless of
the owner.
Ownership
of a share carries full adherence to the Bylaws of the Company and the decisions
of the General Shareholders Meeting.
Whenever
it is necessary to own a certain number of shares in order to exercise any
right, the owners who do not own this number shall make it their own personal
business to gather, and possibly to purchase or sell the number of shares
necessary.
The fully
paid and registered shares recorded for at least three years in the name of the
same shareholder confer double voting rights. In case of a capital increase by
incorporation of reserves, profits or share premiums, the double voting rights
may be conferred upon issuance, to shares allotted free of charge to a
shareholder in respect of existing shares which have this right.
ARTICLE 12 - BOARD OF
DIRECTORS
The
Company is administered by a Board of Directors comprised of at least three
members and at most eighteen members, subject to the exemption provided by law
in case of merger.
During
the life of the corporation, the directors are appointed, renewed or revoked by
the Ordinary General Shareholders Meeting. They can always be
re-elected.
The
tenure of directors is
SIX (6)
years; they expire at the end of the Ordinary General Shareholders Meeting
called to approve the accounts for the last fiscal year that are kept for the
year during which their mandate expires.
The
number of directors over the age of
EIGHTY
(80)
years shall not exceed one third of the directors in office. If this
statutory limitation comes to be exceeded, the oldest Director shall be deemed
to have resigned on the date of the Ordinary General Shareholders Meeting that
rules on the accounts for the fiscal year during which this event shall have
occurred.
Each
director must own one share.
ARTICLE 13 - ORGANIZATION OF THE
BOARD
The Board
of Directors elects a Chairman from among its physical entity members and
determines his compensation. It fixes the Chairman’s tenure, which cannot exceed
his term as a director.
No person
shall be appointed Chairman of the Board of Directors if he is over EIGHTY years
(80 years) of age. If the incumbent Chairman has reached this age, he is
automatically deemed to have resigned.
The
Chairman organizes and directs the work of the Board of Directors, which reports
to the general shareholders meeting. He ensures the proper functioning of the
corporate bodies and ensures in particular that the directors are able to
fulfill their mission. In a report attached to the annual report, he reports in
particular on the conditions of operation of the Board of Directors and the
internal oversight procedures.
He is
eligible for reelection. The Board of Directors may remove him at any time. In
case of temporary incapacity or death of the Chairman, the Board of Directors
may delegate an administrator in the office of Chairman.
ARTICLE
14 - BOARD PROCEEDINGS
The Board
of Directors meets as often as the Company’s interests require, upon convocation
by its Chairman or by at least one third of its members, if the Board has not
met for over two months. The Chairman is bound by the requests that are sent to
him in this regard.
In the
event that the Company’s management is assumed by a CEO, the latter may ask the
Chairman of the Board of Directors to convene the Board on a specific
agenda.
The
convocations are made by any means, even verbally. The meeting takes place
either at the head office or at any other location specified in the
convocation.
The
Board’s proceedings shall be valid only if at least half the directors are
present. Decisions are taken by a majority vote of members present or
represented. In case of a tie vote, the Chairman of the meeting casts the
deciding vote.
Directors
who attend the Board meeting by means of videoconferencing are deemed to be
present for calculating the quorum and the majority, in accordance with the laws
and regulations. This provision is not applicable to the adoption of decisions
concerning the appointment of the Chairman, the CEO, the dismissal of the CEO,
the closing of the annual and consolidated accounts, and the preparation of the
management report for the Company and/or the group.
ARTICLE 15 - POWERS OF THE BOARD OF
DIRECTORS
The Board
of Directors sets the guidelines for the Company’s business activity and
oversees the implementation, within the limits of the corporate purpose and the
powers expressly granted by law to shareholders' meetings. It is submitted all
questions regarding the proper conduct of the Company, and it rules through its
deliberations on the matters that concern it. The Board of Directors shall
conduct inspections and audits as it deems appropriate.
The
Chairman or the CEO of the Company is bound to provide to each director all the
documents and information necessary to accomplish his mission.
In
dealings with third parties, the Company is bound even by actions of the Board
of Directors that are not within the corporate purpose, unless it proves that
the third party knew that the action exceeded that purpose or that he could not
ignore that given the circumstances, it being excluded that the mere publication
of the Bylaws is sufficient to constitute such evidence.
ARTICLE 16 - GENERAL MANAGEMENT -
DELEGATION OF POWERS
The
general management of the Company is assumed, under its responsibility, either
by the Chairman of the Board of Directors or by another physical person, whether
a director or not, appointed by the Board of Directors, for whom it sets the
tenure and who holds the title of CEO.
The CEO,
who must be a physical person, whether chosen from among the directors or not,
can be dismissed at any time by the Board of Directors. If he is dismissed
without just cause, he is entitled to damages, unless he also fulfills the
duties of Chairman of the Board of Directors.
The Board
of Directors chooses, in accordance with the legal and regulatory requirements
in force, between two methods of exercising the general management of the
Company, upon any appointment or renewal of the Chairman of the Board of
Directors, or the CEO if these duties are not assumed by the Chairman of the
Board of Directors. This choice remains valid until the expiration of one of
these terms or, if necessary, until the day the Chairman of the Board of
Directors decides to no longer serve as CEO or, upon decision of the Board of
Directors, for a shorter period, which may not be one year.
Shareholders
and third parties shall be informed of this choice under the conditions
prescribed by current law and regulations.
If the
Board of Directors chooses not to separate the duties of Chairman of the Board
of Directors, the Chairman assumes, under his responsibility, the general
management of the Company. In this case, the provisions relative to
the CEO can be applied to him with the exception of the compensation in case of
unjustified dismissal.
If the
Board of Directors chooses to separate the duties of Chairman of the Board of
Directors and CEO, and subject to the powers that the law expressly attributes
to shareholder meetings and to the Board of Directors, and within the limits of
the corporate purpose, the CEO is then invested with the broadest powers to act
in all circumstances on behalf of the Company. He represents the Company in its
dealings with third parties. He can grant to any agent of his choice all
delegations of powers within the limits of those conferred upon him by law and
these Bylaws. Any limitation on his powers by a decision of the Board of
Directors is not effective against third parties.
When he
is a director, his term in office cannot exceed that of his
mandate.
Whatever
the term for which the duties of CEO were conferred on him, such duties shall
terminate, automatically, at the latest after the first Ordinary General
Shareholders Meeting held after the date on which he has attained EIGHTY (80)
years of age.
The Board
of Directors determines the CEO’s compensation.
The Board
of Directors may, upon the CEO's proposal, give a mandate to a physical person,
director or otherwise, to assist the CEO, with the title of Deputy CEO, who may
not be older than EIGHTY (80) years of age on the day of their appointment. In
agreement with the CEO, or the Chairman of the Board of Directors if the latter
serves as the CEO, the Board of Directors determines the extent and duration of
the powers delegated to each Deputy CEO.
ARTICLE 17 - STATUTORY
AUDITORS
The
auditing of the Company is carried out by one or more Statutory Auditors,
appointed and performing their duties according to law.
One or
more substitute Statutory Auditors called upon to replace the statutory
auditor(s) in case of refusal, incapacity, resignation or death, are appointed
at the same time as the statutory auditor(s) for the same period.
ARTICLE 18 - REGULATED
AGREEMENTS
Any
agreement shall be submitted for prior approval by the Board of Directors, other
than those that bear on current operations and are concluded under normal
conditions, which are directly with or through an intermediary, between the
Company and its CEO, one of its Deputy CEOs, one of its directors, one of its
shareholders who holds a fraction of the voting rights in excess of 10%, or, if
it involves a corporate shareholder, the company that controls it according to
the meaning of Article L. 233-3 of the new Commercial Code.
The same
holds for agreements in which one of these people has an indirect
interest.
Are also
subject to prior approval; any agreements between the Company and a business if
the CEO, one of the Deputy CEOs, or one of the directors of the Company is the
owner, or is an unlimited partner, manager, director, CEO or member of the board
of directors or supervisory board, or is in general, an officer of this
business.
Persons
who hold an interest are bound to inform the Board of Directors when they become
aware of an agreement subject to approval. They cannot claim to take part in the
voting on the authorization sought.
These
agreements are authorized under the applicable legal and regulatory
requirements.
The above
provisions do not apply to agreements relating to current operations that are
concluded under normal conditions. However, these agreements, except when they
are not significant for any of the parties because of their purpose or their
financial implications, shall be provided to the Chairman of the Board of
Directors by the party who holds an interest. The list and the purpose of such
agreements are communicated by the Chairman to the members of the Board of
Directors and to the Statutory Auditors.
ARTICLE 19 - GENERAL
MEETINGS
General
Shareholders Meetings are convened and deliberate under the conditions laid down
by law.
The
collective decisions of shareholders are made in Ordinary, Extraordinary or
Special General Shareholders Meetings depending on the nature of the decisions
they are called upon to make.
General
meetings are convened either by the Board of Directors or by the Statutory
Auditors, or by a court-appointed trustee under the conditions provided by
law.
Meetings
are held at the head office or at any other location specified in the
convocation.
In case
of a public offering, a notice of meeting containing the information required by
Article 130 of the Decree of March 23, 1967 is published in the B.A.L.O. at
least thirty five days before the Shareholders Meeting.
The
convening of general shareholders meetings shall be made by a notice printed in
a newspaper authorized to receive legal notices in the Department of the head
office and in the B.A.L.O., at least fifteen days before the date of the
Meeting.
If all
the shares are registered, the insertions under the preceding paragraph may be
replaced by a convocation given within the same time period, at the company’s
expense, by ordinary or registered letter sent to each shareholder.
Shareholders,
who hold shares for at least one month from the date of publication of the
notice of convocation, shall also be invited to any meeting by ordinary mail or,
upon request and at their expense, by registered letter.
When a
meeting has been unable to deliberate for lack of the required quorum, the
second meeting and, where applicable, the extended second meeting is convened at
least six days in advance in the same form as the first. The notice and letters
of convocation to this second meeting shall repeat the date and agenda of the
first one.
Any
shareholder may attend meetings in person or by proxy, regardless of the number
of shares he owns, upon proof of identity and ownership of his shares in the
form of a registration in his name, or by a certificate from the authorized
financial intermediary account keeper declaring that the shares registered in
the account are unavailable until the date of the meeting.
These
formalities must be completed at least three days before the meeting. The Board
of Directors has the option, for any meeting, to reduce the above time limit, or
even to not require any time limit.
Any
shareholder may be represented by their spouse or by another shareholder: to
this
purpose the proxy has to prove his mandate. If he has no domicile on French
territory, as defined in Article 102 of the Civil Code, he may be represented at
general shareholder meetings by a registered intermediary in accordance with the
current laws and regulations. He is then deemed to be present at such meeting
for the calculation of the quorum and majority.
Any
shareholder may, if the Board of Directors so decides upon convening the
meeting, also participate in that meeting by videoconference or by any means of
telecommunications and remote transmission including the Internet, under the
conditions provided by the regulations applicable at the time of its
use.
Are
deemed present, in calculating the quorum and the majority, the shareholders
attending the meeting by videoconference, Internet or by any means of
telecommunication that allows their identification, whose nature and conditions
are determined by Decree.
Any
shareholder may vote by mail using a form prepared and sent to the Company under
the conditions laid down by law and regulations. This form must reach the
Company THREE (3) days before the date of the meeting in order to be taken into
account.
Any
shareholder has the right to obtain disclosure of the documents necessary to
enable him to act in full knowledge of cause concerning the management and
workings of the Company.
The
nature of these documents and the conditions of their sending or being made
available are determined by law and regulations.
An
attendance sheet, duly signed by the shareholders present and the proxies, to
which is annexed the powers given to each proxy and, where appropriate the forms
for voting by mail, is certified correct by the executive committee of the
Meeting.
The
Meetings are chaired by the Chairman of the Board of Directors or, in his
absence, by a Vice-Chairman or a director specially appointed for this purpose
by the Board. Otherwise, the Meeting itself designates its
Chairman.
The
duties of the vote-counter are fulfilled by the two shareholders, present and
willing, who hold, on their own behalf as well as by proxy, the largest number
of votes.
The
executive committee thus comprised, appoints a secretary who may not be a
shareholder.
The
minutes are prepared and copies or excerpts from the deliberations are delivered
and certified according to law.
The
Ordinary and Extraordinary General Shareholders Meetings acting under the
conditions of quorum and majority required by the provisions that govern them
respectively, exercise the powers conferred on them by law.
ARTICLE
20 - PARTICIPATION
THRESHOLDS
Pursuant
to the provisions of Article L.233-7 of the Commercial Code, any person or
entity, acting alone or in concert, who owns a number of shares of the Company
representing more than one twentieth, one tenth, three twentieths, one fifth,
one fourth, one third, one half, two-thirds, eighteen twentieths or nineteen
twentieths of the capital or voting rights of the Company shall inform the
Company by registered letter with return receipt requested, within five trading
days, after crossing the threshold of participation, of the total number of
shares or voting rights he holds.
The
information mentioned in the preceding paragraph is also given within the same
time period when the equity stake or voting rights fall below the thresholds
mentioned in that paragraph.
The
person who is bound to provide the information referred to in the first
paragraph specifies the number of shares he owns that give future access to the
Company's share capital as well as the voting rights attaching
thereto.
Upon
crossing the threshold of one tenth or one fifth of the share capital or voting
rights, the person required to give information above also states the objectives
it intends to continue over the twelve months in accordance with the provisions
of Article L.233-7 VII of the Commercial Code.
ARTICLE 21 - PURCHASE BY THE COMPANY
OF ITS OWN SHARES
In the
case where the company shares are traded on a regulated market, the Ordinary
General Assembly may authorize the Board of Directors for a term not exceeding
eighteen months, to purchase its own shares in accordance with Articles
L.225-209 et seq. of the Commercial Code and under the conditions described in
those sections.
This
meeting must set the terms of the transaction, including the maximum purchase
price and minimum selling price, the maximum number of shares to be acquired,
and the period within which the acquisition must be made.
ARTICLE 22 - FISCAL
YEAR
Each
fiscal year has a period of one year, which begins
January 1
and ends
December
31
.
ARTICLE
23 - INVENTORY - ANNUAL FINANCIAL STATEMENTS
There
shall be a regular accounting of corporate operations, according to
law.
At the
close of each fiscal year, the Board of Directors draws up an inventory of the
various assets and liabilities that exist on that date.
It also
draws up the balance sheet describing the assets and liabilities, showing the
equity separately, the income statement summarizing revenues and expenses during
the fiscal year, as well as the appendix that supplements and comments on the
information given by the balance sheet and the income statement.
The Board
of Directors prepares the management report on the Company’s situation during
the past fiscal year, its foreseeable development, the significant events that
occurred between the closing date of the fiscal year and when it is prepared,
and its research and development activities.
ARTICLE 24 - ALLOCATION AND
DISTRIBUTION OF PROFITS
If the
fiscal year accounts approved by the General Shareholders Meeting show a
distributable profit as defined by law, the General Shareholders Meeting decides
to include it in one or more reserve items for which it shall decide on its
allocation or use, whether to carry it forward or distribute it.
The
General Shareholders Meeting may grant to the shareholders for all or part of
the dividend distributed or interim dividends, an option between payment of the
dividend in cash or in shares under the legal conditions.
Losses,
if any exist, are carried forward again, after approval of the financial
statements by the General Shareholders Meeting, to be offset against profits for
subsequent years until extinction.
ARTICLE 25 - SHAREHOLDER EQUITY LESS
THAN HALF OF SHARE CAPITAL
If, due
to losses recorded in the accounting records, the Company’s equity falls below
half of the share capital, the Board of Directors shall, within four months
following approval of the accounts that reflect these losses, convene an
extraordinary general meeting of shareholders for the purpose of deciding
whether premature dissolution of the Company is warranted.
If
dissolution is not decided on, the share capital must, subject to the legal
provisions relating to minimum share capital for a business corporation, and
within the deadline set by law, be reduced by an amount equal to the losses that
were not charged against reserves, if, within that period the equity does not
once again equal at least half the share capital.
ARTICLE 26 - CONVERSION OF THE
COMPANY
The
Company can be converted into another form of corporation, if, at the time of
its conversion, it has been in existence for at least two years, and if the
balance sheets for its first two years have been drawn up and approved by the
shareholders.
The
decision to convert is made on the report of the Statutory Auditors for the
Company, who must certify that the equity is at least equal to the share
capital.
The
conversion into a partnership requires the agreement of all the partners. In
this case, the conditions above are not required.
The
conversion into a limited liability company or a joint stock company is decided
upon under the conditions provided for an amendment to the bylaws and with the
agreement of all the partners who agree to be active partners.
The
conversion into a limited liability company is decided upon under the conditions
provided for an amendment to the articles of incorporation for companies of that
form.
ARTICLE 27 - DISSOLUTION -
LIQUIDATION
At the
expiration of the term set by the Company or in case of early dissolution, the
General Shareholders Meeting sets the terms and conditions for the liquidation
and appoints one or more liquidators, whose powers they shall determine and who
shall perform their duties according to law.
ARTICLE 28 -
DISPUTES
All
disputes that may arise during the term of the Company or upon its liquidation,
either between the Company and the shareholders or directors, or between the
shareholders themselves, which involve corporate business, shall be judged
according to law and
subject to the jurisdiction
of the courts
.
Exhibit
4.30
This
document constitutes part of a prospectus covering securities that have been
registered under the Securities Act of 1933.
Nonqualified
Stock Option Contract
THIS NONQUALIFIED STOCK OPTION
CONTRACT
is entered into effective as of the 31st day of December, 2009,
by and between
INTER PARFUMS,
INC.,
a Delaware corporation (the “Company”) and
___________
(“Option Holder”).
WITNESSETH:
1. The
Company, in accordance with the resolutions adopted by the Company’s Executive
Compensation and Stock Option Committee (the “Committee”), and the terms and
subject to the conditions of the Company’s 2004 Stock Option Plan (the “2004
Plan”), hereby grants to the Option Holder as of December 31, 2009, a
nonqualified stock option to purchase an aggregate of _______
shares (the “Shares”) of
the common stock, $.001 par value per share, of the Company (the “Common
Stock”), at the exercise price of $12.14 per share.
2. Subject
to earlier termination as provided in the 2004 Plan, the term of this option
shall be six (6) years from the date hereof;
provided that
, such option
shall vest and become exercisable to purchase shares of Common Stock as follows:
20% one year after the date of grant, and then 20% on each of the second, third,
fourth and fifth consecutive years from the date of grant on a cumulative basis,
so that each option shall become fully vested and exercisable on the fifth year
from the date of grant.
3. (a) Subject
to the provisions contained in Section 2 hereof, this option may be exercised
from time to time in whole or in part prior to the end of the term of the option
(but not with respect to less than 100 Shares (unless less than 100 Shares
remain to be purchased, then such amount remaining), or fractional Shares), by
giving written notice to the Company at its principal office, presently 551
Fifth Avenue, New York, New York 10176, stating that the Option Holder is
exercising this option, specifying the number of Shares purchased and
accompanied by payment in full of the aggregate purchase price therefor (i) in
cash or certified check or (ii) with previously acquired shares of Common Stock
or a combination of the foregoing if permitted in the sole discretion of the
Company’s Executive Compensation and Stock Option Committee (the
“Committee”).
(b) In
addition, upon the exercise of this option, the Company may withhold cash and/or
Shares to be issued with respect thereto, having an aggregate fair market value
equal to the amount which it determines is necessary to satisfy its obligation
to withhold federal, state and local income taxes or other taxes incurred by
reason of such exercise. Alternatively, the Company may require the holder to
pay to the Company such amount, in cash, promptly upon demand. The Company shall
not be required to issue any Shares pursuant to this option until all required
payments have been made.
4. This
option is not transferable otherwise than by will or the laws of descent and
distribution and may be exercised, during the lifetime of the Option Holder,
only by the Option Holder or his legal representatives.
5. Nothing
in the 2004 Plan or herein shall confer upon the Option Holder any right to
continue in the employ of, or be associated with, the Company, its Parent or any
of its Subsidiaries, or interfere in any way with the right to employment or
association of the Option Holder with the Company, its Parent or any of its
Subsidiaries.
6. The
Option Holder understands that the Shares have been registered for issuance to
the Option Holder in Registration Statement No. 333-136988 under the Securities
Act of 1933, as amended (the “Act”). Resale to the public by the Option Holder
is to be made under Rule 144 under the Act in accordance with the procedure for
resale of “affiliate shares” in the absence of a subsequent effective
registration statement for the resale of the Shares. Notwithstanding
registration under the Act, the Option Holder understands that in accordance
with the provisions of the Company’s Code of Business Conduct, (i) the Option
Holder must obtain permission from the Company’s Chief Financial Officer prior
to any sale of the Shares; and (ii) the use of material non-public information
in connection with the sale of the Company’s shares (“Insider Trading”) or the
communication of such information to others who use it in trading the Company’s
shares (“Tipping”) is strictly prohibited.
7. (a) The
Option Holder understands that the Company maintains its internet website at
www.interparfumsinc.com
which is linked to the SEC Edgar database. The Option Holder can obtain through
the Company’s website, free of charge, its annual reports on Form 10-K,
quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to
those reports filed or furnished pursuant to Section 13(a) or 15(d) of the
Exchange as soon as reasonably practicable after the Company has electronically
filed with or furnished them to the SEC.
(b) In
addition, the Company will cause to be delivered to the Option Holder, upon
request to the Company directed to either the Chief Financial Officer or the
Controller, without charge to the Option Holder, a copy of the documents
incorporated by reference into the Registration Statement, other than exhibits
(unless such exhibits are specifically incorporated by reference into the
Registration Statement).
8. Notwithstanding
anything to the contrary, if at any time the Chief Executive Officer, Board of
Directors of the Company or the Committee shall determine it its discretion that
the listing or qualification of the Shares on any securities exchange, with
national securities association or under any applicable law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the granting of an option, or the issue of
Shares thereunder, or the sale of the Shares, then this option may not be
exercised in whole or in part unless such listing, qualification, consent or
approval shall have been effected or obtained free of any conditions not
acceptable to the Chief Executive Officer, Board of Directors or the
Committee.
9. (a) The
Company and the Option Holder further agree that they will both be subject to
and bound by all of the terms and conditions of the 2004 Plan, which is
incorporated by reference herein and made a part hereof as if fully set forth
herein.
(b) In
the event the Option Holder's employment by, or association with, the Company,
its Parent or any of its Subsidiaries terminates, or in the event of the death
or disability of the Option Holder, the rights hereunder shall be governed by,
and made subject to, the provisions of the 2004 Plan.
(c) In
the event of a conflict between the terms of this Contract and the terms of the
2004 Plan, then in such event, the terms of 2004 Plan shall govern.
(d) Except
as otherwise provided herein, all capitalized terms used herein shall have the
same meaning ascribed to them in the 2004 Plan.
(e) The
Option Holder agrees that the Company may amend the 2004 Plan and the options
granted to the Option Holder under the 2004 Plan, subject to the limitations
contained in the 2004 Plan.
10. This
Contract shall be binding upon and inure to the benefit of any successor or
assign of the Company and to any executor, administrator or legal representative
entitled by law to the Option Holder's right hereunder.
11. This
Contract shall be governed by and construed in accordance with the laws of the
State of New York, without regard to the principles of conflicts of
laws.
IN WITNESS WHEREOF,
the
parties hereto have entered into this Contract effective as of the date first
above written.
|
INTER
PARFUMS, INC.
|
|
|
|
|
By:
|
|
|
|
[Name
and Title]
|
|
|
|
|
|
|
|
Schedule
of Executive Officers and Number of Shares Underlying Option
|
Executive Officer
|
Number of Shares
|
|
|
|
|
Jean
Madar
|
19,000
|
|
Philippe
Benacin
|
19,000
|
|
Russell
Greenberg
|
25,000
|
|
Henry
B. (“Andy”) Clarke
|
7,500
|
Exhibit
10.25
Exhibit
10.26
Exhibit 10.61
6/21/95
LEASE-1/SG7907
ROSNER AND FELTMAN
70 GRAND AVENUE
RIVER EDGE, NJ 07661
TABLE OF CONTENTS
LANDLORD: FORSGATE INDUSTRIAL COMPLEX
TENANT: JEAN PHILIPPE FRAGRANCES, INC.
PREMISES: 60 STULTS ROAD, SOUTH BRUNSWICK, NEW JERSEY
=========================================================
ARTICLE 1 DEMISED PREMISES - TITLE - TERM OF LEASE
ARTICLE 2 USE OF PREMISES
ARTICLE 3 RENT AND OTHER CHARGES
ARTICLE 4 TAXES
ARTICLE 5 COMMENCEMENT DATE OF LEASE
ARTICLE 6 INSURANCE TO BE PROVIDED BY TENANT
ARTICLE 7 RESTORATION OF DEMISED PREMISES IN THE EVENT
OF FIRE OR OTHER CASUALTY
ARTICLE 8 REPAIRS, MAINTENANCE, UTILITIES,
CHANGES AND ALTERATIONS, COMPLIANCE
WITH ORDERS, ETC., EASEMENTS
ARTICLE 9 LEASE PROVISION AGAINST ASSIGNMENT, MORTGAGE
OR SUBLET BY TENANT WITHOUT LANDLORD'S PERMISSION
- LANDLORD'S RIGHT OF RECAPTURE
ARTICLE 10 LANDLORD'S REMEDIES IN EVENT OF TENANT'S
DEFAULT OR BANKRUPTCY
ARTICLE 11 SUBORDINATION OF LEASE TO
MORTGAGE ON THE DEMISED PREMISES
ARTICLE 12 EXONERATION OF INDIVIDUALS
ARTICLE 13 COVENANT AGAINST LIENS
ARTICLE 14 EMINENT DOMAIN
ARTICLE 15 ACCESS TO PREMISES
ARTICLE 16 NOTICES
ARTICLE 17 ACCEPTANCE
ARTICLE 18 QUIET ENJOYMENT - CONVEYANCE BY LANDLORD
ARTICLE 19 ESTOPPEL CERTIFICATE
ARTICLE 20 FINANCIAL INFORMATION
ARTICLE 21 NO ABATEMENT OF RENT
ARTICLE 22 NONRECORDATION OF LEASE
ARTICLE 23 SURRENDER
ARTICLE 24 SECURITY
ARTICLE 25 MISCELLANEOUS
SCHEDULE A DEMISED PREMISES
SCHEDULE B RULES AND REGULATIONS
LEASE
|
THE INDENTURE OF LEASE (hereinafter called "LEASE") dated the 10th day of
July, 1995, by and between FORSGATE INDUSTRIAL COMPLEX, a Limited Partnership,
with offices at c/o Charles Klatskin Co., Inc., 400 Hollister Road, Teterboro,
New Jersey 07608, (hereinafter called "LANDLORD"), and JEAN PHILIPPE FRAGRANCES,
INC., a corporation of the State of Delaware having its principal office at 551
Fifth Avenue, New York, New York 10176 (hereinafter called "TENANT").
W I T N E S S E T H:
ARTICLE 1
DEMISED PREMISIS - TITLE - TERM OF LEASE
Section 1.01 Demised Premises. Landlord, for and in
consideration of the rents, covenants and agreements hereinafter
reserved, mentioned and contained on the part of the Tenant, its
successors and assigns, to be paid, kept and performed, has demised
and leased, and by these presents does demise and lease, unto the
Tenant, and the Tenant does hereby take and hire upon subject to
the conditions hereinafter expressed, the real property together
with the building thereon (the "Building"), commonly known as 60
Stults Road, in the Township of South Brunswick, County of
Middlesex and State of New Jersey, as more particularly described
on Schedule "A" (hereinafter sometimes referred to as "Demised Premises").
Section 1.02 Title. At the commencement of the term of the
Lease ("Term"), Landlord shall own the fee title to the Demised
Premises, subject to restrictions of record, if any, zoning
regulations affecting such Demised Premises and any state of facts
shown on an accurate survey or as a visual inspection of the
premises would disclose, provided the same does not prohibit or
unduly restrict the use of the premises for warehousing and
offices, as presently constructed.
Section 1.03 Term of Lease. To have and to hold unto the
Tenant, its permitted successors and permitted assigns, for a Term
of eight (8) years, commencing on the commencement date as defined
in ARTICLE 5 hereof and ending eight (8) years thereafter, unless
sooner terminated, plus the number of days required, if any, to
have such Term expire on the last day on the calendar month.
Section 1.04 Acknowledgment of Commencement. Upon the
commencement of the Term, the parties shall execute and exchange
a recordable Lease instrument, specifying the commencement and expiration
dates of the Term.
Section 1.05 Definitions. (i) As used herein, "Hazardous
Substance" includes any pollutant, dangerous substance, toxic
substances, any hazardous chemical, hazardous substance, hazardous
pollutant, hazardous waste or any similar term as defined in or
pursuant to the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, 42 U.S.C. Section 9601, et seq. ("CERCLA");
Industrial Site Recovery Act, N.J.S.A. 13:1K-6, et seq. ("ISRA");
the New Jersey Spill Compensation and Control Act, N.J.S.A. 58:10-
23.11, et seq. ("Spill Act"); the Solid Waste Management Act,
N.J.S.A. 13:1E-1, et seq. ("SWMA"); the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901, et seq. ("RCRA"); the New Jersey
Underground Storage of Hazardous Substances Act, N.J.S.A. 58:10A-
21, et seq. ("USTA"); Clean Air Act, 42 U.S.C. Section 7401, et seq.
("CAA"); Air Pollution Control Act, N.J.S.A. 26:2C-l, et seq.
("APCA"); New Jersey Water Pollution Control Act, N.J.S.A. 58:10A-
1, et seq. ("WPCA"); and any rules or regulations promulgated
thereunder or in any other applicable federal, state or local law,
rule or regulation dealing with environmental protection. It is
understood and agreed that the provisions contained in the Lease
shall be applicable notwithstanding whether any substance shall not
have been deemed to be a hazardous substance at the time of its use
or Release but shall thereafter be deemed to be a Hazardous Substance.
(ii) "Release" means spilling, leaking, disposing, pumping,
pouring, discharging, emitting, emptying, ejecting, depositing,
injecting, leaching, escaping or dumping, however defined, and whether
intentional or unintentional, of any Hazardous Substance.
(iii) "Notice" means any summons, citation, directive,
order, claim, litigation, investigation, proceeding, judgment, letter or
other communication, written or oral, actual or threatened, from the New
Jersey Department of Environmental Protection ("NJDEP"), the United
States Environmental Protection Agency ("USEPA"), the United States
Occupational Safety and Health Administration ("OSHA") or other federal,
state or local agency or authority, or any other entity or any
individual, concerning any act or omission relating or which may result
in the Releasing of Hazardous Substances into the waters or onto the
lands of the State of New Jersey, or into the waters outside the
jurisdiction of the State of New Jersey, or into the environment.
(iv) "Environmental Laws" mean any and all present or future
laws, statutes, ordinances, regulations and executive orders, federal
and state and local in any related to the protection of human health or
the environmental, including, but not limited to, (i) CERCLA; (ii) RCRA;
(iii) ISRA; (iv) Spill Act; (v) USTA; (vi) WPCA; (vii) APCA; (viii)
SWMA; (ix) CAA; and (x) USTA.
ARTICLE 2
USB OF PREMISES
Section 2.01 Use. The Tenant shall use and occupy the
Demised Premises for offices, warehousing and distribution of
cosmetics, fragrances and personal care items, and for repackaging
of cosmetics, fragrances and personal care items only, and for no
other purpose. If Tenant desires to expand or change the
aforementioned uses, Tenant shall not do so without first obtaining
Landlord's written consent. Landlord agrees not to unreasonably
withhold its consent, if the use is for warehousing only of
products which are consumer products, and are non-hazardous and are
not toxic pollutants. In all other events, Landlord may, for no
reason or for any reason, not consent to a change or expansion of
use. It being a consideration of this Lease, that the use of the
premises shall be limited, to those uses as otherwise hereinbefore
specified, and Tenant may not, use the premises for manufacturing
or the warehousing of any product which is a hazardous substance
as that term is more particularly hereinafter defined. Such use
does not permit the stacking of merchandise or materials against
the walls, so as to create a load or weight factor upon the walls,
or to tie in, Tenant's racking systems with such walls, nor the
hanging of equipment from (or otherwise loading) the roof or
structural members of the building without the express written
consent of the Landlord. The Tenant shall not use or occupy or
permit the Demised Premises to be used or occupied, nor do or
permit anything to be done in or on the Demised Property, in a
manner which will in any way violate any Certificate of Occupancy
affecting the Demised Premises, or make void or voidable any
insurance then in force with respect thereto, or which will make
it impossible to obtain fire or other insurance required to be
furnished by the Tenant hereunder, at regular rates, or which will
cause or be likely to cause structural damage to the Building or
any part thereto, or which will constitute a public or private
nuisance, or which would adversely affect the then value thereof,
and shall not use or occupy or permit the Demised Premises to be
used or occupied in any manner which will violate any present or
future laws or regulations of any governmental authority. Except
for the products contemplated by the permitted uses in this Section
2.01, Tenant shall not, during the term of this Lease store upon
the premises, hazardous substances as that term may be defined from
time to time by the New Jersey Department of Environmental
Protection or, by the Federal Environmental Protection Agency
pursuant to Section 311 of the "Federal Water Pollution Act,
amendments of 1972" (33 U.S.C. Section 1321) and the list of toxic
pollutants designated by Congress or the Environmental Protection
Agency pursuant to Section 307 of that Act (33 U.S.C. Section
1317). The storage of products contemplated by the permitted uses
in this Section 2.01 shall during the term of this Lease be in
compliance with all applicable laws and regulations, whether
federal, state or local, and whether environmental or otherwise.
Nothing herein contained shall be deemed or construed to constitute
a representation or guaranty by the Landlord that any specific
business may be conducted in the Demised Premises or is lawful
under the certificate of occupancy. In the event the Tenant
cannot obtain the continued certificate of occupancy for the uses
of the Demised Premises described in the first sentence of this
Section 2.01, then in such event, Tenant shall have the right,
prior to Tenant taking occupancy, to terminate this Lease; such
right of termination in all events to be exercised no later than
ten (10) days from the date Landlord advises Tenant, TIME BEING OF
THE ESSENCE, that the municipality will not issue the continued
Certificate of Occupancy.
Tenant acknowledges and recognizes that Tenant will have
to undertake ordinary and usual improvements required by the
municipality, such as, but not limited to, in rack sprinklers, exit
areas marked on the floor, exit signs, etc. If Tenant is required
to undertake other improvements in order to obtain the continued
certificate of occupancy, such improvements specifically required
by the municipality by reason of Tenant's peculiar use, and if the
collective cost thereof is more than FIVE THOUSAND and NO/100 Dollars
($5,000.00), then Tenant shall have the right to terminate this Lease,
such right to be exercised, in all events, within the ten (10) day time
period as heretofore provided, TIME BEING OF THE ESSENCE.
ARTICLE 3
RENT AND OTHER CHARGES
Section 3.01 Net Basic Rent. The Tenant shall pay to the
Landlord as net annual basic rent (the "Basic Rent") for the
Demised Premises during the Term the sum of SIX HUNDRED EIGHTY-
FOUR THOUSAND and NO/100 Dollars ($684,000.00) per annum, payable
in equal monthly installments of FIFTY-SEVEN THOUSAND and NO/100
Dollars ($57,000.00) due and payable the first day of each and
every month, in advance, except, the first month's rent which shall
be paid upon the execution hereof. Said rent and all payments due
hereunder shall be paid to the Landlord at its address hereinabove
first specified, or as the Landlord may otherwise direct in
writing. It is the intention of the parties that the Basic Rent
shall be net to the Landlord, so that this Lease shall yield to the
Landlord, the Basic Rent during the Term and that all costs,
expenses and obligations of every kind and nature whatsoever
relating to the Demised Premises shall be paid by the Tenant,
except as otherwise specifically provided in this Lease. Whenever
the rent as hereinabove set forth is stated as an annual rent, and
if there shall be less than twelve (12) months in any year, the
rate therein referred to shall be the "annualized rate".
Section 3.02 First Month Proration. If the Term shall begin
on a date other than the first day of a calendar month, the Basic
Rent for the initial month of the Term shall be prorated.
Section 3.03 Rent Credit to Tenant. Landlord, as an
accommodation to Tenant to reimburse Tenant for its initial
moving/rental expenses, will extend a credit to Tenant in an amount
equal to the lesser of FORTY-TWO THOUSAND and NO/100 Dollars
($42,000.00) or, if less, the net monthly rent paid by Tenant in
its present leased premises to be applied against the rent accruing
as of the second month of the Lease Term.
Section 3.04 Additional Rent. All payments other than Basic
Rent Tenant is required to make pursuant to this Lease shall
constitute additional rent ("Additional Rent") and, if Tenant
defaults in any such payment so as to create an Event of Default
(as hereinafter defined), Landlord shall have (in addition to any
rights and remedies granted hereby) all rights and remedies
provided by law for nonpayment of Basic Rent.
Section 3.05 Late Charge. If a payment of Basic Rent or
Additional Rent or any part thereof shall not be made on or prior
to a date which is five (5) days after the date on which it is due
and payable, a late charge of $500.00 per day shall become due and
payable to Landlord as liquidated damages for the administrative
costs and expenses incurred by Landlord by reason of Tenant's
failure to make prompt payment and said late charge shall be
payable by Tenant on the first day of the following month. No
failure by Landlord to insist upon the strict performance by Tenant
of Tenant's obligations to pay late charges shall constitute a
waiver by Landlord of its rights to enforce the provisions of this
Section in any instance thereafter occurring, nor shall acceptance
of late charges be deemed to extend the time of payment of Basic
Rent or Additional Rent or any part thereof. The provisions of
this Section 3.05 shall not be construed in any way to extend the
grace periods or notice periods as otherwise provided for in this
Lease. In the first three (3) instances in each calendar year when
Landlord is asserting a late charge, Landlord agrees that, prior
to asserting the late charge, Landlord shall give to Tenant five
(5) days' prior written notice and Tenant shall have five (5) days
after receipt of such notice to make payment. If Tenant fails to
make payment within five (5) days after receipt of written notice
by Landlord, then the late charge shall be effective. Landlord's
obligation to give notice shall only accrue in the first three (3)
instances that failure to pay occurs in each calendar year, and not
thereafter.
Section 3.06 Additional Security Deposit. In the event a
late charge is payable hereunder pursuant to Section 3.05, whether
or not collected, for three (3) installments of rent or other
monetary obligations of Tenant under the terms of this Lease during
any twelve-month period, Tenant shall pay to the Landlord, if
Landlord shall so request, in addition to any other payments
required under this Lease, an additional security deposit as
estimated by Landlord in an amount equal to rent and additional
rent for three (3) months. Such additional security shall be
established to insure payment when due before delinquency of all
rent and additional rent, and shall be held pursuant to the
security clause provisions as provided in Article 24 hereof. Such
additional security deposit shall be returned to the Tenant upon
termination of the Lease, less any amount of the security deposit
so expended by Landlord, to cure Tenant's defaults hereunder,
together with interest as otherwise provided in Article 24 hereof.
Section 3.07 No Abatement, Deduction, or Set-off etc. There
shall be no abatement, diminution or reduction of Basic Rent, or
Additional Rent or other charges or other compensation due to the
Landlord by Tenant or any person claiming under it under any
circumstances, including, but not limited to, any inconvenience,
discomfort, interruption of business or otherwise, except as
specifically provided herein.
Section 3.08 Common Area Charge. The Premises to be demised
are located within an office/industrial park known as Forsgate
Industrial Complex. Landlord, from time to time, will incur
various expenses to maintain the Park for the benefit of all
tenants. The Tenant shall pay three percent (3.0%) ("Tenant's
Share") of the total costs and expenses incurred by Landlord in
maintaining certain areas of the Park for items as follows: (i)
the cost of maintaining Park signs and tenant directories; (ii) the
cost of water, electricity and other utilities used in connection
with the operation and maintenance of the Park and not part of any
area demised to a tenant; (iii) the cost of insurance, including
general liability insurance, which is carried by Landlord and is
usual and customary under the circumstances; (iv) other costs
reasonably incurred by Landlord to maintain the Park or costs
incurred for services benefiting all tenants or occupants of the
Park which, in the reasonable opinion of Landlord, are a service
desirable to operate the Park. The cost of maintaining common
facilities used by all tenants, such as common grass areas,
boulevard dividers, curbing and lighting. Tenant shall pay to the
Landlord as an additional charge, annually, Tenant's Share of such
common Park expenses for each calendar year. At the end of each
calendar year, Landlord shall furnish Tenant with a statement
called "Landlord's Expense Statement" setting forth in reasonable
detail the common area Complex expenses for such calendar year.
Tenant's share of such charges shall not exceed, on an annual
basis, FIVE THOUSAND TWO HUNDRED FIFTY and NO/100 Dollars
($5,250.00), such sum adjusted to be increased per annum by the
percentage increase, if any, of the cost of living from January 1,
1996 to December 31 of the year for which the bill is rendered by
Landlord to Tenant. The cost of living increase shall be measured
by the Consumer Price Index for "All Items", the "Index" issued by
the U.S. Department of Labor. In the event the Index is no longer
issued or available or commonly used at the time a determination
is to be made, the Landlord shall designate another index or
criteria which will accurately reflect the increase in the cost of
living which has occurred for the time period so to be determined.
Tenant's Share of common area charges for Forsgate
Industrial Complex, which shall become payable by Tenant during the
calendar year in which this Lease commences or ends, shall be
apportioned between Landlord and Tenant in accordance with the
portion of such calendar year within the Term.
ARTICLE 4
TAXES
Section 4.01 Real Estate Taxes. Tenant shall, throughout the
Term, pay directly to the appropriate taxing authorities, at least
one (1) day before the same shall become due and payable, without
interest or penalty, all water and sewer rents, rates and charges,
licenses and permit fees, real estate taxes and assessments levied,
assessed, confirmed, imposed upon or against the Demised Premises
or any part thereof, including those presently in effect as well
as those which may be enacted in the future (collectively the
"Impositions"). Tenant shall forward copies of all receipted bills
or statements therefor to Landlord upon receipt thereof from said
taxing authorities.
Section 4.02 Other Taxes and Payment Thereof.
(a) Other Taxes Arising Out of Tenant's Use and
Occupancy. In addition to the Impositions, Tenant shall pay, at
least one (1) days prior to its due date, each and every item of
expense in the nature of a tax or charge or assessment for which
Landlord is or shall become liable by reason of its estate or
interest in the Demised Premises, or any part thereof, including,
without limiting the generality thereof, all personal property
taxes, gross receipts taxes, use and occupancy taxes, and excise
taxes levied or assessed against Landlord or Tenant by reason of
the use, occupancy or any other activity by the Tenant in connec-
tion with the Demised Premises or any part thereof, or which may
be levied or assessed or imposed upon any rents or rental income,
as such, payable to Landlord or payable to Tenant from any
sub-Tenant in connection with the Demised Premises or any part
thereof. Tenant shall forthwith forward copies of receipted bills
or cancelled checks therefor to Landlord evidencing the payment
thereof.
(b) Payment of Bills. In the event that the bills or
statements issued by the appropriate taxing authorities in respect
of any Imposition or tax required to be paid by Tenant pursuant to
paragraph (a) of this Section 4.02 shall be forwarded directly to
Landlord, Landlord shall promptly forward the same to Tenant, and
Tenant shall pay the same before expiration of the time period set
forth above or within ten (10) days after receipt of such bill or
statement, whichever is later.
Section 4.03 Certain Taxes Not Payable by Tenant. Tenant
shall not be required to pay any of the following taxes or
governmental impositions which shall be levied or imposed against
Landlord by any governmental authority:
(i) Any estate inheritance, devolution, succession,
transfer, legacy or gift tax which may be imposed upon or with respect
to any transfer of Landlord's interest in the demised premises.
(ii) Any income tax levied upon or against the
profits of the Landlord from all sources provided, however, that
if at any time during the Term the method of taxation prevailing
at the commencement of the Term shall be altered so that any new
tax, assessment, levy, imposition or charge, shall be measured by
or be based in whole or in part upon the Demised Premises or the
income thereof and shall be imposed upon Landlord then all such
taxes, assessments, levies, imposition or charges to the extent
that they are so measured or based, shall be deemed to be an
Imposition for the purpose hereof, to the extent that such
Imposition would be payable if the Demised Premises were the only
property of Landlord subject to such Imposition and Tenant shall
pay and discharge the same as herein provided in respect of the
payment of any Imposition.
Section 4.04 Apportionment During First and Last Year of
Term. All Impositions which shall become payable during the fiscal
tax year in which this Lease commences or ends shall be apportioned
between Landlord and Tenant in accordance with the portion of the
tax year within the Term.
Section 4.05 Tenant's Right to Contest. Tenant may contest
any Imposition by diligently conducting proceedings in which event,
upon Tenant's request and if permitted by law, Tenant may postpone
payment of such Imposition during such contest if:
(a) Such postponement would not constitute a default
under any Landlord's mortgage;
(b) Landlord's interest in the Demised Premises would
not be endangered thereby; and
(c) Tenant deposits with Landlord the amount so
contested and unpaid, and annually thereafter adds to such deposit
such accrued interest and penalties as Landlord reasonably
estimates might be assessed against the Demised Premises in such
proceeding.
Upon the termination of such proceeding, Tenant shall pay
the amount of such Imposition (as finally therein determined)
remaining unpaid and all interest and penalties relating thereto
or, upon Tenant's request, Landlord shall pay such amount to the
extent of the funds so deposited. Upon payment in full of such
amount, interest and penalties (whether by Landlord or Tenant),
Landlord shall return any then balance of the amount so deposited.
If, during such proceeding, Landlord in good faith deems the amount
so deposited insufficient, Tenant shall upon Landlord's demand,
deposit such additional funds as Landlord reasonably requests. If
Tenant fails to deposit such additional funds, the funds
theretofore deposited may be applied by Landlord to the payment of
such Imposition, interest and penalties and any balance shall be
returned to Tenant. Landlord shall, if required through such
proceedings and requested by Tenant, join in such proceedings,
cooperate with Tenant and execute requisite documents, provided
Tenant pays Landlord's resultant expenses.
Section 4.06 Assessments Payable in Installments. With
respect to any assessment levied by any governmental or municipal
agency or authority which is or may be payable, at the option of
the taxpayer, in installments, Tenant agrees to pay Landlord, in
lieu of paying the assessment directly to the appropriate
governmental or municipal agency, as additional rent, annually,
from the date of payment of the assessment, the installment due
therefor, at least five (5) days before the last day on which each
such installment may be paid without penalty or interest. Tenant
shall not be required to pay any installment which shall fall due
after the expiration of this Lease.
ARTICLE 5
COMMENCEMENT DATE OF THE LEASE - DELAYED COMMENCEMENT
Section 5.01 Commencement Date of the Lease - Delayed Commencement.
The Commencement Date of this Lease shall occur on the earlier of: (i)
the date Landlord substantially completes Landlord's work as otherwise
set forth in Section 5.02 and delivers possession of the Premises to
Tenant, or (ii) the earlier occupancy of the Tenant.
The premises are presently occupied pursuant to the terms
and conditions of a certain Lease between Forsgate Industrial
Complex, as Landlord, and Midlantic Distribution Inc., as Tenant,
as amended, which Lease provides that either Landlord or Tenant on
thirty (30) days' prior written notice may terminate the Lease.
Landlord agrees, within three (3) business days of the execution
of this Lease, to serve notice of termination upon Midlantic
Distribution, Inc. In the event Midlantic Distribution Inc. shall
fail to vacate the Premises and deliver possession to the Landlord
in accordance with the thirty (30) day notice of cancellation, then
the Commencement Date of this Lease shall be delayed until Landlord
can deliver possession to the Tenant. Landlord agrees to institute
summary dispossess proceedings or take such other action as is
reasonably necessary to secure possession for Tenant hereunder.
If the Landlord is unable to obtain possession of the Premises on
or before the seventy-fifth (75th) day from the date of this Lease,
then Tenant shall have the right prior to the date Landlord
notifies Tenant that the Premises are vacant to terminate this
Lease. Upon termination of this Lease, both parties shall be
releaaed thereafter from and after further liability to the other,
except the return to Tenant of prepaid rent and the security
deposit. If Landlord has failed to obtain possession from the
existing tenant by December 31, 1995, then, if Tenant has not
theretofore terminated this Lease, this Lease shall terminate as
of December 31, 1995. All such notices shall be in conformance
with Article 16 of this Lease.
Section 5.02 Landlord's Work. Landlord, at no cost to
Tenant, agrees, upon obtaining possession, to paint the second
floor offices, remove ground floor offices except for lobby and
tollets, and install two overhead doors between warehouse and
demolished office area, and clean and seal the warehouse floor,
repave the parking lot, clean and wash all windows and repair
landscaping where necessary. Landlord shall immediately and in a
diligent manner, undertake Landlord's work upon obtaining
possession of the Premises and obtaining, if required, governmental
building permits, and shall substantially complete such work not
later than sixty (60) days thereafter, which date shall be an
estimated completion date, provided, however, that such date shall
be extended by any delay occasioned by scarcity of materials, entry
or occupancy by Tenant which inhibits, delays or increases the cost
of construction, strikes, labor disputes, weather conditions which
inhibit construction, fires or other casualties, governmental
restrictions and regulations, delays in obtaining governmental
permits, delays in transportation and other delays beyond the
reasonable control of Landlord.
Section 5.03 Continued Certificate of Occupancy. Upon
Landlord completing Landlord's work as set forth in Section 5.02,
Tenant shall be responsible to obtain a Continued Certificate of
Occupancy. Tenant shall be required to undertake such work, such
as installation of in-rack sprinklers, exit lines and signs, and
other requirements as imposed by the municipality, as required for
the issuance of the Continued Certificate of Occupancy permitting
Tenant to use and occupy the Demised Premises for the uses
described in the first sentence of Section 2.01.
Section 5.04 Tenant's License to Install a Racking System
Prior to the Commencement Date. At such time as Landlord has
completed its work regarding cleaning and sealing of the warehouse
floor, Landlord shall grant a revocable license to Tenant, to
install in the Premises Tenant's racking system. Such license
shall be subject to revocation by Landlord at any time, upon
written notice, in the event Landlord reasonably determines that
Tenant's exercise of the license is delaying, interfering or
otherwise impeding Landlord's Work.
The installation of racking as contemplated by this
Section 5.04 shall not be deemed, for purposes of Section 5.01,
occupancy of the Premises by the Tenant. However, Tenant shall be
deemed to have accepted that portion of the Premises so used for
racking upon installation thereof by Tenant. Tenant, however,
prior to exercising the license, shall deliver an insurance
certificate to Landlord, in compliance with the provisions of
Paragraph (iv) of Section 6.01. Tenant acknowledges that neither
Landlord nor its agents or employees shall have any liability to
Tenant as to Tenant's property as may placed pursuant to the
license in the Demised Premises.
ARTICLE 6
INSURANCE TO BE PROVIDED BY TENANT
Section 6.01 Coverage and Amount. During the Term, Tenant
shall maintain policies of insurance at its sole cost and expense
as follows:
(i) Insurance against loss or damage to the
Demised Premises by fire and from such other hazards as may be
covered by the form of all risk coverage then in effect (including
specifically damage by water, flood or earthquake) all in an amount
sufficient to prevent any coinsurance provision from becoming
effective but in any event ln an amount not less than 100% of the
then replacement value of the Building without depreciation except
for flood and earthquake insurance which shall be in the amount of
One Million Dollars ($1,000,000.00). This insurance shall include
but not be limited to the following:
a. Boiler and other pressure vessels, plate
glass and elevator insurance, if appropriate (Tenant shall have the
right to be self-insured as to plate glass); and
b. Insurance against riot or civil commotion,
vandalism, aircraft, sprinkler leakage, all risk endorsement rider
(the SMP allrisk form) or the equivalent, and "Demolition" and
"Increased Cost of Construction". In addition to the foregoing,
such insurance shall include, but not be limited to windstorm,
hail, explosion, flood or earthquake, riot and civil commotion,
damage from aircraft and vehicles, smoke damage, and such coverage
as may be deemed necessary by the Landlord. These insurance
provisions shall in no way limit or modify any of the obligations
of the Tenant under any provision of this Lease to restore the
Demised Premises.
Anything contained herein to the contrary not-
withstanding, the insurance required by this paragraph shall in
all events be sufficient to comply with the requirements of any fee
mortgage and the replacement value shall in no event be less than
FIVE MILLION FIVE HUNDRED THOUSAND and NO/100 Dollars
($5,500,000.00) except for flood and earthquake insurance which
shall be in the amount of One Million Dollars ($1,000,000.00).
Landlord may demand that such replacement value be determined from
time to time by an appraiser, engineer, architect or contractor
designated and paid for by Tenant and approved in writing by
Landlord. No omission on the part of Landlord to request any such
determination shall relieve Tenant of any of its obligations under
this Article 6.
(ii) Rent insurance, with all risk coverage,
in an amount not less than one year's current Basic Rent and
Additional Rent and one year's taxes and premiums for the insurance
required by this Article 6.
(iii) If appropriate, boiler and machinery
insurance including coverage for pressure vessels with such limits
as from time to time may be reasonably required by Landlord, but
not less than $300,000.00 per occurrence with endorsement for
actual replacement cost without depreciation.
(iv) Commercial General Liability Insurance,
including property damage, insuring Landlord and Tenant (and any
Mortgagee or other person or persons whom Landlord may designate,
called "Additional Insured" in this Lease) from and against all
claims, demands, actions or liability for injury to, or death of
any persons and for damage to property arising from or related to
the use or occupancy of the Premises or the operation of Tenant's
business. This policy must contain, but not be limited to,
coverage for premises and operations, products and completed
operations, blanket contractual, personal injury, operations,
ownership, maintenance and use of owned, non-owned, or hired
automobiles, bodily injury, and property damage. The policy must
have limits in an amount not less than THREE MILLION and NO/100
Dollars ($3,000,000.00) per occurrence and THREE MILLION and
NO/100 Dollars ($3,000,000.00) in the aggregate. This insurance
will include a contractual coverage endorsement specifically
insuring the performance by Tenant of its indemnity agreements
contained in this Lease. To the extent Tenant carries commercial
general liability insurance in excess of THREE MILLION and NO/100
Dollars ($3,000,000.00), which protects Tenant as to the Demised
Premises, then Landlord shall have the advantage of the
availability of such insurance and shall be named as an additional
insured on such liability insurance in excess of THREE MILLION and
NO/100 Dollars ($3,000,000.00).
(v) If a sprinkler shall be located in any
part of the Demised Premises, sprinkler leakage insurance in
amounts reasonably satisfactory to Landlord.
(vi) Such other insurance and in such amounts
as may from time to time be reasonably required by any fee
mortgagee holding a first mortgage on the Demised Premises against
other insurable hazards, which at the time are commonly insured
against, in the case of premises similarly situated.
If by reason of changed economic conditions Landlord's
insurance advisor reasonably concludes that these amounts of
coverage or coverages are no longer adequate, then such amount or
coverage will be appropriately increased, or obtained as the case
may be.
All policies of insurance carried pursuant to this
Article 6 shall name as insured the Landlord, and if required, any
fee mortgagee, as may be specifically designated by Landlord, as
their respective interests may appear, provided however, that rent
insurance shall be carried solely in favor of Landlord. To the
extent Landlord receives and applies proceeds of rent insurance,
Tenant shall receive a credit against rent payable hereunder.
Subject to the rights of any fee mortgagee, all losses
paid under the policy or policies under Article 6 shall be adjusted
by Landlord and the proceeds thereof shall be payable to the
Landlord and all such policies shall so provide.
Section 6.02 Forms, Certificates, Blanket Policies, Renewals,
Cancellation. All premiums on policies referred to in this Lease
shall be paid by the Tenant. The originals of such policies or
certificates shall be delivered to Landlord except when such
originals are required to be held by any fee mortgagee, in which
case, certificates of insurance shall be delivered to Landlord.
Policies or certificates with respect to renewal policies shall be
delivered to Landlord by Tenant not Iess than thirty (30) days
prior to the expiration of the original policies or succeeding
renewals, as the case may be, together with receipts or other
evidence that the premiums thereon have been paid for at least one
year. In the event the Tenant is not able to deliver the insurance
policies or certificates prior to the renewal date as aforesaid,
the Tenant may deliver binders in lieu of such policies or
certificates to the Landlord, provided, however, that the insur-
ance policies or certificates shall be delivered within sixty (60)
days after the expiration of the original policies or succeeding
renewals but in no event later than fifteen (15) days prior to the
expiration date of the binder. Premiums on policies shall not be
financed in any manner whereby the lender, on default or otherwise,
shall have the right or privilege of surrendering or cancelling the
policies. Each policy of insurance required under this paragraph
shall have attached thereto an endorsement that such policy shall
not be cancelled or modified without at least thirty (30) days
prior written notice to the Landlord, and if required, to any fee
mortgagee, as specifically designated by Landlord. Each such
policy shall contain a provision that no act or omission of Tenant
shall affect or limit the obligation of the insurance company to
pay the amount of any loss sustained and a provision waiving any
right of the insured aga1nst the Landlord. Tenant's obligations to
carry insurance required by this Lease may be brought within the
coverage of a so-called blanket policy or policies of insurance
carried and maintained by Tenant, so long as (i) Landlord and such
other persons will be named as additional insureds under such
policies as their interests may appear; and (ii) the coverage
afforded to Landlord and such other persons will not be reduced or
diminished by reason of the use of such blanket policy of
insurance; and (iii) all other requirements set forth herein are
otherwise satisfied.
Section 6.03 Recognized Insurance Companies. All insurance
provided for in this Article 6 shall be effected under valid and
enforceable policies issued by insurers which are licensed to do
business in the State of New Jersey and shall be written on the
standard policies of such companies and provide for no deductibles.
Section 6.04 Landlord's Non-Liability, Tenant's Own
Insurance. Tenant hereby waives all right of recovery which it
might have against Landlord, Landlord's agents and employees, for
loss or damage to Tenant's furniture, furnishings, fixtures,
equipment, chattels and articles of personal property located on
the Demised Premises, nor shall Landlord be liable for any business
interruption, or injury to or death of persons occurring in the
Demised Premises, or in any manner growing out of or in connection
with Tenant's use and occupation of the leased premises or the
condition thereof, notwithstanding that such loss or damage may
result from the negligence or fault of Landlord. Tenant shall
obtain insurance policies covering its furnishings, fixtures,
equipment and articles of personal property (collectively,
"Personal Property") in the Demised Premises, and Tenant shall
either cause Landlord to be named as an insured party under such
policies (without entitling Landlord to receive any loss proceeds
thereof) or obtain the insurer's waiver of all rights of subrogation
against Landlord with respect to losses insured under such policies.
Tenant shall advise Landlord promptly of the applicable
provisions of such insurance policies and notify Landlord promptly
of any cancellation or change therein.
All insurance carried by Tenant as to the Demised
Premises or as to any property located thereon or therein, whether
or not such insurance is carried pursuant to this Lease, shall
provide that the insurer waives all rights of subrogation against
Landlord with respect to losses insured under such policies.
Section 6.05 Indemnity. Tenant is and shall be in exclusive
control and possession of the Demised Premises as provided herein,
and Landlord shall not in any event whatsoever be liable for any
injury or damage to any property or to any person happening on or
about the Demised Premises, nor for any injury or damage to the
Demised Premises, nor to any property of Tenant, or of any other
person contained therein.
Tenant shall indemnify and save Landlord harmless against
and from all liabilities, claims, suits, fines, penalties, damages,
losses, fees, costs and expenses (including reasonable attorneys'
fees) which may be imposed upon, incurred by or asserted against
Landlord by reason of:
(i) Any work or thing done in, on or about the
Demised Premises or any part thereof;
(ii) Any use, occupation, condition, operation
of the Demised Premises or any part thereof or of any street,
alley, sidewalk, curb, vault, passageway, or space adjacent thereto
or any occurrence on any of the same;
(iii) Any act or omission on the part of Tenant
or any subtenant or any employees, licensees or invitees;
(iv) Any accident injury (including death) or
damage to any person or property occurring in, on or about the
Demised Premises; or any part thereof or in, on or about any street,
alley, sidewalk, curb, vault, passageway or space adjacent thereto; and
(v) Any failure on the part of Tenant to
perform or comply with any of the covenants, agreements, terms or
conditions contained in this Lease, or recording of this Lease.
The provisions of this paragraph shall survive the expiration or
earlier termination hereof.
Section 6.06 Fire Insurance Rate and Requirements. Tenant
agrees, at its own cost and expense, to comply with all of the
rules and regulations of the Fire Insurance Rating Organization
having jurisdiction and any similar body, and the insurance company
insuring the building.
Section 6.07 Waiver of Subrogation. All insurance carried
by Tenant as to the Demised Premises or as to any property located
thereon or therein, whether or not such insurance is carried
pursuant to this Lease, shall provide that the insurer waives all
rights of subrogation against the Landlord with respect to losses
insured under such policies.
ARTICLE 7
RESTORATION OF DEMISED PREMISES IN THE EVENT
OF FIRE OR OTHER CASUALTY
Section 7.01 No Abatement. No damage to the Building by fire
or other casualty shall terminate the Lease or relieve Tenant
either from payment of Basic Rent, Impositions and Additional Rent,
or from the performance of Tenant's other obligations hereunder.
Such damage or destruction shall not affect the termination of this
Lease. Tenant expressly waives the provisions of N.J.S.A. 46:8-
6 and 46:8-7 and agrees that the foregoing provisions of this
Article shall govern and control in lieu thereof.
Section 7.02 Tenant's Restoration. During the Term, Tenant
shall promptly notify Landlord of any damage to the Demised
Premises and shall, at its own cost and regardless of the suf-
ficiency of insurance proceeds restore the Building subject to
Section 8.07 as nearly as possibIe to its condition immediately
prior to the damage. Restoration shall be commenced promptly after
the occurrence of any such damage and completed with due diligence.
As promptly as reasonably possible after damage, Tenant
shall notify Landlord of its estimate of the cost of restoration
certified correct by Tenant's architect, which architect to be
reasonably approved by Landlord, and provide Landlord with such
substantiation thereof as Landlord reasonably requests. If the
estimated cost of the restoration exceeds the insurance proceeds,
Tenant shall, prior to the commencement of the restoration, deposit
the deficiency in accordance with Section 7.03. If such determina-
tion has not been made when the restoration is to commence, Tenant
shall so deposit the difference between Landlord's estimate of the
cost of the restoration and the insurance proceeds (any deposit by
Tenant pursuant to this Section 7.03 being hereinafter referred to
as the "deficiency deposit") and, upon the determination of the
estimated cost of the restoration, any excess amount so deposited
shall promptly be refunded to Tenant. Before commencing with any
restoration which would cost more than $50,000.00, Tenant's
architect shall prepare plans and specifications therefor, for
Landlord's and any fee mortgagee's approval. There shall be no
material deviation from such plans and specifications without
Landlord's and the fee mortgagee's approval. The reasonable
expenses of Landlord and the fee mortgagee in reviewing such plans
and specifications and reviewing requests for disbursements shall
be paid by Tenant as Additional Rent.
Section 7.03 Disbursement of Insurance Funds. In the event
of such damage or destruction, which would cost more than FIFTY
THOUSAND and NO/100 Dollars ($50,000.00) to restore, any insurance
money recovered by the Landlord shall be paid over to a banking
company selected by the Landlord to act as an Insurance depository,
and such Insurance Depository shall pay out such money from time
to time to the Tenant as the repairing, restoration and rebuilding
(collectively called the "work") progresses. All amounts received
shall be applied by Tenant to the cost of repairing such damage and
restoring the Demised Premises, and the Tenant shall proceed with
reasonable diligence to repair such damage and to restore the
Demised Premises substantially to the condition thereof existing
immediately prior to the occurrence of such damage or destruction.
The insurance proceeds shall be paid out by the Insurance Depository
from time to time upon Tenant's written request, accompanied by:
(a) A certificate signed by the Tenant and the architect
or engineer in charge of the work, dated not more than thirty (30)
days prior to such request, setting forth the following:
(i) That the sum then requested either has
been paid by Tenant, or is justly due to contractors,
subcontracitors, materialmen, engineers, architects or other persons
who have rendered services or furnished materials for the
restoration therein specified, the names and addresses of such
persons, a brief description of such services and materials, the
several amounts so paid or due to each of said persons in respect
thereof, that no part of such expenditures has been or is being
made the basis, in any previous or then pending request, for the
withdrawal of insurance money or has been made out of the proceeds
of insurance received by Tenant, and that the sum then requested
does not exceed the value of the services and materials described
in the certificate.
(ii) That except for the amount, if any, stated
(pursuant to the foregoing subclause (a)(i) in such certificate to
be due for services or materials, there is no outstanding
indebtedness known to the persons signing such certificate, after
due inquiry, which is then due for labor, wages, materials,
supplies or services in connection with such restoration which, if
unpaid, might become the basis of a vendor's, mechanic's laborer's
or materialman's statutory or similar lien upon such restoration
or upon the demised premises, or any part thereof, or upon Tenant's
leasehold interest therein.
(iii) That the cost, as estimated by the persons
signing such certificate, of the restoration required to be done
subsequent to the date of such certificate in order to complete the
same, does not exceed the insurance money, plus any amount deposited by
Tenant to defray such cost and remaining in the hands of the Insurance
Depository after payment of the sum requested in such certificate.
(iv) The Tenant shall furnish the Insurance
Depository at the time of any such payment with an official search
or evidence satisfactory to the Insurance Depository that there has
not been filed with respect to the Demised Premises any mechanic's
or other liens which have not been discharged of record.
(b) An opinion of counsel or other evidence, reasonably
satisfactory to the Insurance Depository, to the effect that there
has not been filed with respect to the Demised Premises, or any
part thereof, or upon Tenant's leasehold interest therein any
vendor's, mechanic's, laborer's, materialman's or other lien which
has not been discharged of record, except such as will be dis-
charged by payment of the amount then requested.
(c) If the insurance money in the hands of the Insurance
Depository and such other sums, if any, deposited with the
Insurance Depository shall be insufficient to pay the entire cost
of such work, the Tenant agrees to pay the deficiency. Upon
completion of the work and payment in full thereof by the Tenant,
the Insurance Depository shall turn over to the Tenant, upon sub-
mission of proof satisfactory to the Landlord that the work has
been paid for in full, any insurance money then remaining and such
other sums, if any, deposited with the Insurance Depository then
remaining in the hands of the Insurance Depository.
(d) Tenant shall pay all charges and fees, including
attorneys' fees, of any bank, trust company or other entity that
performs the functions provided for in Section 7.03 hereof.
Section 7.04. Damage to or destruction of the Demised
Premises as aforesaid shall not reduce or abate to rent herein
reserved. Such damage or destruction shall not effect a termination of
this Lease. Tenant expressly waives the provisions of N.J.S.A. 46:8-6
and 46:8-7 and agrees that the foregoing provisions of this paragraph
shall govern and control in lieu thereof.
ARTICLE 8
REPAIRS, MAINTENANCE, UTILITIES, CHANGES
AND ALTERATIONS COMPLIANCE WITH ORDERS, ETC., EASEMENTS
Section 8.01 Tenant's Repairs and Maintenance. Tenant for
and during the Term, at Tenant's sole cost and expense, assumes all
responsibility and obligation for the physical condition of the
Demised Premises and its sidewalks, curbs, grounds, parking area
and utilities and shall keep the same in good order and first class
condition free of accumulation of dirt, rubbish, snow and ice, and
shall make all necessary repairs thereto, interior and exterior,
structural and non-structural, ordinary and extraordinary and
foreseen and unforeseen. When used in this Article, the term
"repairs" shall include all necessary replacements and renewals.
All repairs made by Tenant shall be equal in quality to the
original work. The lawns, shrubs and other vegetation will be
maintained and, when required, replaced or renewed. Tenant shall
obtain a roof maintenance contract and a maintenance contract for
the heating, ventilation and air conditioning systems in the
building. Such contract shall provide for semi-annual maintenance
of the roof and the HVAC systems, and copies of the maintenance
agreements shall be submitted to Landlord, together with an annual
report of the maintenance company as to the condition and repairs
made to the roof and the systems. In the event the Tenant shall
fail to maintain the premises as afoeesaid, the Landlord may serve
notice upon the Tenant to correct same and if the Tenant shall fail
to do so within 15 days after notice, the Landlord is authorized
to take whatever action the Landlord deems reasonably necessary to
maintain the Demised Premises, all at the expense of the Tenant.
The Tenant shall under no circumstances, paint either the inside
or the outside of the masonry walls or the concrete floors without
first obtaining Landlord's written consent. Upon surrender, if
Tenant shall violate this undertaking, then, Tenant shall cause
any such painting to be removed and the finish restored to its
original condition.
Section 8.02 Landlord's Responsibility. Provided Tenant
notifies Landlord of the necessity of the repair prior to the last
day of the twelfth (12th) month of the Term, Landlord, at its sole
cost and expense, shall at the request of Tenant remedy all
material defects in workmanship and materials used in the
construction of the building which results in an interference with
Tenant's reasonable use of the Premises, evidence of which shall
appear or be discovered on or before the last day of the twelfth
(12th) month of the Lease Term. Notwithstanding the foregoing, if
Tenant shall make any change or alteration, structural or
otherwise, to any portion of the building or lands, Landlord's
obligations as heretofore provided shall not thereafter extend to
the portion of the building or the Premises so changed or altered
by Tenant to the extent any portion thereof is adversely affected
by the change or alteration. If such change or alteration made by
Tenant affects any warranty which Landlord obtained, Landlord shall
be excused from Landlord's obligation to the extent such warranty
is abrogated, voided or diminished. Landlord's liability under
this section is limited to repair or correction of the defect or
condition to be rectified and Landlord shall not be liable for any
consequential loss or damage.
On the commencement date of the Lease, the roof will be free
of leaks.
Section 8.03 Utilities. Tenant shall make arrangements
directly with the appropriate utility companies for the supply of
gas, electricity, water, light, power, telephone and shall pay all
fees, expenses and charges therefore to such companies.
Section 8.04 Tenant's Responsibility. Landlord shall not be
required to furnish any services or facilities or to make any
repairs or alterations on or to the Building or the Demised
Premises and Tenant assumes the full responsibility for the
condition, operation, repair, replacement, maintenance and
management of the Demised Premises.
Section 8.05 Compliance. During the Term, Tenant, at its
cost, shall promptly comply with all present and future laws,
ordinances, or other governmental regulations (including, but not
limited to, the Americans with Disabilities Act of 1990-ADA) and
all present and future applicable requirements of the Fire
Insurance Rating Organization of New Jersey (or other body
exercising similar functions), whether or not the same requires
structural repairs or alterations, foreseen or unforeseen, ordinary
as well as extraordinary, which may be applicable to the Demised
Premises, the fixtures and equipment thereof, or the use or manner
of use of the Demised Premises. Tenant agrees to comply with all
zoning ordinances and the responsibility for specific use or uses
shall be that of the Tenant and the Landlord makes no representation
as to any permissive use.
Tenant may contest the validity of any such requirement
at its expense and defer compliance therewith pending such contest,
provided such deferral shall neither constitute a default under any
mortgage of the Landlord or cause the imposition of any lien
against the Demised Premises nor subject Landlord to any criminal
or civil liability.
Section 8.06 Environmental Compliance. Tenant agrees, that
under all circumstances, Tenant shall comply with all federal,
state and local laws, ordinances, rules and regulations which are
applicable, as to the conduct of Tenant's business as it relates,
to the environment, including but not limited to, spillage,
pollution, and storage. Tenant hereby represents that its Standard
Industrial Classification number ("S.I.C.") is 5190 and its
operations shall consist of only those activities otherwise set
forth in the first sentence of Section 2.01. Tenant will not
permit the operations at the Premises to so change so that the
S.I.C. designation heretofore enumerated will change.
Tenant shall, prior to July 30, 1995, obtain its own
environmental consultant to do such audit and investigation of the
Demised Premises as Tenant deems appropriate or necessary, to
satisfy Tenant as to the environmental condition of the Premises.
If, in the sole judgment of the Tenant, such environmental audit
and investigation is not satisfactory to Tenant, then Tenant shall
have the right to terminate this Lease, provided and subject,
however, that such right shall be exercised on or before July 30,
1995, TIME BEING OF THE ESSENCE, and such notice of termination is
served together with a copy of all of Tenant's environmental
reports so obtained. The right to terminate this Lease shall be
void and without further force and effect subsequent to July 30,
1995, if Tenant has not theretofore exercised its right of termination.
All such notices shall be in conformance with Article 16 of this Lease.
Notwithstanding any provision of the Industrial Site
Recovery Act, N.J.S.A. 13:lK-6, et seq., and the regulations
promulgated thereunder, and any successor or amended legislation
or regulations ("ISRA") to the contrary, if Tenant is operating an
"industrial establishment" as that term is defined in ISRA, Tenant
shall, at its own cost and expense, comply with ISRA whenever an
obligation to do so arises, including by reason of a closing,
terminating or transferring operations. Tenant shall, at its own
cost and expense, make all submissions to, provide all information
to, and comply with all requirements of the New Jersey Department
of Environmental Protection & Energy ("DEPE") pursuant to ISRA.
Should the DEPE determine that a Remediation Action Work Plan must
be prepared and that remediation must be undertaken because of any
spills or discharge of a hazardous substance or hazardous waste (as
those terms are defined in ISRA) at the premises, then Tenant
shall, at Tenant's own expense, prepare and submit the required
documents and remediation funding source, and carry out the
approved plans. Landlord covenants and agrees with Tenant that
Tenant shall not be responsible for any environmental cleanup costs
solely related to a spill or discharge of hazardous substance or
hazardous waste which occurred prior to the commencement date of
the Lease. At no expense to the Landlord, Tenant shall promptly
provide all information requested by Landlord regarding or in
furtherance of ISRA compliance. Tenant shall sign any affidavit
submitted to it by Landlord which is true, accurate and complete;
and if an affidavit is not true, accurate and complete, Tenant
shall supply the necessary information to make it true, accurate
or complete and shall then sign the same. Tenant shall promptly
supply Landlord with any notices, correspondence or submissions of
any nature made by Tenant to, or received by Tenant from, the DEPE,
United States Environmental Protection Agency, or any local, state
or federal authority concerning compliance with applicable
Environmental Law. In the event Tenant uses, stores or generates
hazardous substances, as that term is otherwise defined in this
Lease, Tenant will so advise Landlord. In such event, Tenant
shall, if requested by Landlord, but no more frequently than
annually, supply the Landlord a list of all such hazardous
substances used, generated or stored at the Demised Premises during
the preceding twelve (12) months. Information to be provided shall
be in a narrative report, including a description and
quantification of hazardous substances and wastes which were
generated, manufactured, stored or disposed of at the Premises
during the preceding twelve (12) months. In addition to the
foregoing, if Tenant uses, stores or generates hazardous
substances, as that term is otherwise herein defined in this Lease,
then Landlord shall have the right to require Tenant to hire a
consultant, reasonably satisfactory to the Landlord, to undertake
an Environmental Site Assessment and Site Investigation, as those
terms are defined in ISRA, and if that report indicates a spill or
discharge of hazardous substance at the Premises, an appropriate
report will be filed with the applicable governmental agencies and
Tenant shall Remediate the spill or discharge in accordance with
ISRA and other applicable Environmental Laws.
In the event a lien shall be filed (i) against the
Premises during the term of this Lease arising out of hazardous
substances or hazardous waste spilled or discharged after the
commencement date of this Lease, or (ii) after the commencement of
the term of this Lease arising from a violation of applicable
Environmental Law which occurred during the term of this Lease,
then Tenant shall, within thirty (30) days from the time Tenant is given
notice of the lien, pay the claim and remove the lien from the Premises.
Subject to the last paragraph of this Section 8.06,
Tenant shall indemnify, defend and hold harmless from all fines,
suits, procedures, claims, liabilities, costs and actions of any
kind, including counsel fees (including those to enforce this
indemnity), arising out of or in any way connected with any spills
or discharges of hazardous substances or hazardous waste at the
Premises, except those which occurred as otherwise provided in the
immediately succeeding paragraph of this section; and from all
fines, suits, procedures, claims, liabilities, costs and actions
of any kind, including counsel fees (including those to enforce
this indemnity), arising out of Tenant's failure to comply with the
provisions of this Section 8.06. Tenant's obligations and
liabilities under this Section 8.06 shall survive the expiration
or earlier termination of this Lease and shall continue so long as
Landlord remains responsible or liable for either any spills or
discharges of hazardous substances or hazardous waste at the
Premises or any violation of applicable Environmental Laws.
Tenant's failure to abide by the terms of this Section 8.06 shall
be enforceable by injunction. The undertaking of the Tenant
hereunder shall survive termination of this Lease, provided and
subject, however, that Tenant's responsibility shall only apply as
to violation of Environmental Laws which occurred during Tenant's
Lease term. If Tenant can prove in a reasonable manner that a
violation of Environmental Laws did not occur during Tenant's Lease
term, then, after such events, Tenant shall have no responsibility
or liability as to any such noncompliance.
Landlord covenants and agrees with Tenant that Tenant
shall not have any liability for either the storage of, a spill of
or discharge of a Hazardous Substance which occurred prior or
subsequent to this Lease Term, or occurred by reason of a spill or
discharge of a Hazardous Substance on lands other than the Demised
Premises and such storage of, spill of or discharge is not due to
any act or omission of Tenant or Tenant's officers, directors,
employees, agents or invitees.
If Landlord or Landlord's prior tenants at the Demised
Premises caused a spill or discharge of hazardous substance or
hazardous waste at the Premises, then as to either of such events,
Landlord will defend, indemnify and hold Tenant harmless from all
fines, suits, proceedings, claims, liabilities, costs and actions
of any kind, including counsel fees (including those to enforce
this indemnity), arising out of or in any way connected with a
spill or discharge of hazardous substance or hazardous waste at the
Premises directly caused by Landlord or by a prior tenant of Landlord.
Section 8.07 Alterations. During the Term, Tenant shall not
make structural alterations but may, at its cost, make
non-structural alterations to the Demised Premises necessary for
the conduct of its business, subject to the following:
(a) Tenant shall first obtain requisite permits and
authorizations from governmental authorities having jurisdiction;
(b) Obtain Landlord's, and if required, the fee
mortgagee's, prior written consent, (which Landlord's consent not
to be withheld if the change or alteration would not, in the
reasonable opinion of the Landlord, impair the value or usefulness
of the Building or any part of the Demised Premises).
(c) Any alterations shall be made promptly (unavoidable
delays excepted), in a workmanlike manner in accordance with any
alteration plans and in compliance with applicable laws and
governmental regulations;
(d) The cost of the alterations shall be paid by Tenant
so that the Demised Premises remains free of any liens;
(e) If requested by Landlord, post with Landlord adequate
security to assure restoration of the premises at the end of the Term;
(f) Tenant shall maintain Workmen's Compensation
Insurance covering all persons on whose behalf death or injury
claims could be asserted, until the alteration is completed;
(g) No change or alterations shall, when completed, tie
in or connect the Demised Premises with any other building on
adjoining property.
(h) During such time as Tenant shall be constructing any
improvements, Tenant, at its sole cost and expense, shall carry,
or cause to be carried, (i) Workmen's Compensation Insurance
covering all persons employed in connection with the improvements
in statutory limits, (ii) a completed operations endorsement to the
Commercial General Liability Insurance policy referred to in
Section 6.1(iv), (iii) Builder's Risk Insurance, completed value
form, covering all physical loss, in an amount reasonably
satisfactory to Landlord, and (iv) such other insurance, in such
amounts, as Landlord deems reasonably necessary to protect
Landlord's interest in the Demised Premises from any act or
omission of Tenant's contractors or subcontractors.
(i) No permitted alteration shall be undertaken until
detailed Plans and Specifications have first been submitted to and
approved in writing by Landlord, and, if required, by the fee
mortgagee. At the completion of the alteration or restoration
under Article 7, "as-built" plans shall be delivered to Landlord.
Section 8.08 Restoration. Any alteration made by Tenant
under Article 8 hereof shall, at Landlord's option, become
Landlord's property, or, at the election of Landlord, shall be
removed by the Tenant thirty (30) days prior to the termination of
the Term and the Demised Premises shall be restored to its condi-
tion prior to such alteration. The security deposited under
Section 8.06(e) hereof shall be returned to the Tenant at the end
of the Term if Landlord elects to have such improvement remain, or,
returned to Tenant after restoration by Tenant if Landlord directs
that said alteration be removed and the premises restored.
Section 8.09. Landlord hereby reserves to itself its
successors and assigns the right to construct, maintain and use
ingress and egress easements, railroad easements, utility ease-
ments, drainage easements, across, over and under the Demised
Premises, to or from other lands now owned or in the future ac-
quired by the Landlord, provided however, that the same be at the
cost of the Landlord and does not unreasonably interfere with the
use of the Demised Premises by the Tenant.
ARTICLE 9
LEASE PROVISION AGAINST ASSIGNMENT, MORTGAGE,
OR SUBLET BY TENANT WITHOUT LANDLORD'S PERMISSION,
LANDLORD'S RIGHT OF RECAPTURE
Section 9.01. Tenant covenants and agrees for Tenant and its
successors, assigns, and legal representatives, that neither this
Lease nor the term and estate hereby granted, nor any part hereof
or thereof, will be assigned, mortgaged, pledged, encumbered or
otherwise transferred (whether voluntarily, involuntarily, by
operation of law, or otherwise), and that neither the Demised
Premises, nor any part thereof, will be encumbered in any manner
by reason of any act or omission on the part of Tenant, or will be
used or occupied, or permitted to be used or occupied, or utilized
for desk space or for mailing privileges or as a concession, by
anyone other than Tenant, or for any purpose other than as
hereinbefore set forth, or will be sublet, without the prior
written consent of Landlord in every case; provided, however, that,
if Tenant is a corporation, the assignment or transfer of this
Lease, and the term and estate hereby granted, to any corporation
into which Tenant is merged or consolidated or to which its assets
are sold (such corporation being hereinafter in this Article called
"Assignee") without the prior written consent of Landlord shall not
be deemed to be prohibited hereby if, and upon the express condi-
tion that, Assignee shall promptly execute, acknowledge, and
deliver to Landlord an agreement in form and substance satis-
factory to Landlord whereby Assignee shall assume and agree to
perform and to be personally bound by and upon, all the covenants,
agreements, terms, provisions, and conditions set forth in this
Lease on the part of Tenant to be performed, and whereby Assignee
shall expressly agree that the provisions of this Article shall,
notwithstanding such assignment or transfer, continue to be binding
upon it with respect to all future assignments and transfers and
provided such Assignee shall prove to the satisfaction of Landlord
that its net worth is at least equal to that of Tenant as of the
date hereof.
Section 9.02. Subject to Section 9.01 hereof, which shall
take precedence over the provisions hereof, in the event Tenant
desires Landlord's consent to an assignment or subletting of all
or any part of the Demised Premises, Tenant, by notice in writing,
(a) shall notify Landlord of the name of the proposed assignee or
subtenant, such information as to the proposed assignee's or sub-
tenant's financial responsibility and standing as Landlord may
require, and a copy of the proposed assignment or sublease executed
by all parties; and (b) shall offer to vacate the space covered by
the proposed area to be subleased or the entire Demised Premises
in the event of an assignment (as the case may be) and to surrender
the same to Landlord as of a date (the "Surrender Date") specified
in said offer that shall be the last day of any calendar month
during the term hereof, provided, however, that the Surrender Date
shall not be earlier than the date occurring ninety (90) days after
the giving of such notice nor be later than the effective date of
the proposed assignment or the commencement date of the term of the
proposed sublease. Landlord may accept such offer in writing by
notice to Tenant given within thirty (30) days after the receipt
of such notice from Tenant. If Landlord accepts such offer, Tenant
shall surrender to Landlord, effective as of the Surrender Date,
all Tenant's right, title, and interest in and to the portion of
the Demised Premises covered by the proposed sublease, or, if
Tenant proposes to sublet the entire Demised Premises, or assign
this Lease, all Tenant's right, title and interest in and to the
entire Demised Premises. In the event of such surrender by Tenant
of a portion of the Demised Premises, then, effective as of the
date immediately following the Surrender Date, the Basic Rent shall
be reduced by an amount equal to that portion of the Basic Rent
that is allocable to the space so surrendered, and the Additional
Rent shall be equitably adjusted. If the entire premises be so
surrendered by Tenant, this Lease shall be cancelled and terminated
as of the Surrender Date with the same force and effect as if the
Surrender Date were the date hereinbefore specified for the
expiration of the full term of this Lease.
In the event of any such surrender by Tenant of the
Demised Premises or a portion thereof, Landlord and Tenant shall,
at the request of either party, execute and deliver an agreement
in recordable form to the effect(s) hereinbefore stated.
Section 9.03. In the event Landlord does not accept such
offer of Tenant referred to in Section 9.02 hereof, Landlord
covenants not to unreasonably withhold its consent to such proposed
assignment or subletting by Tenant of such space to the proposed
assignee or subtenant on said covenants, agreements, terms,
provisions, and conditions set forth in the notice to Landlord
referred to in clause (a) of the first sentence of Section 9.02
hereof; provided, however, that Landlord shall not in any event be
obligated to consent to any such proposed assignment or subletting
unless:
(a) The use of the proposed assignee or subtenant is (i)
for warehousing of products which are non-hazardous and are not
"toxic pollutants" (ii) does not violate any of the negative
covenants as to use as contained in this lease and (iii) is in
keeping with the then standards of Landlord as to the use of the
Building.
(b) The proposed assignee or subtenant shall be the
actual user of the premises and shall agree that it shall not have
the right to sublease the premises or subsequently assign the Lease;
(c) The proposed assignee or subtenant is not then a
tenant or occupant of any part of the industrial park in which the
Demised Premises are located;
(d) There shall be no default by Tenant under any of the
terms, covenants, and conditions of this Lease at the time that
Landlord's consent to any such assignment or subletting is
requested and on the effective date of the assignment or the
proposed sublease;
(e) Tenant shall reimburse Landlord for any reasonable
expenses that may be incurred by Landlord in connection with the
proposed assignment or sublease, including without limitation the
reasonable costs of making investigations as to the acceptability
of a proposed assignee or subtenant and reasonable legal expenses
incurred in connection with the granting of any requested consent
to the assignment or sublease;
(f) The proposed assignment shall be for a consideration
or the proposed subletting shall be at a rental rate not less than
the rental rates then being charged under leases being entered into
by landlord for comparable space in the Building and any other
similar buildings owned or operated by Landlord in a radius of five
(5) miles from the Demised Premises and for a comparable term.
(g) Such permitted assignment shall be conditioned upon
Tenant's delivery to Landlord of an executed instrument of
assignment (wherein the assignee assumes, jointly and severally
with Tenant, the performance of Tenant's obligations hereunder).
(h) Such permitted sublease shall be conditioned upon
Tenant's delivery to Landlord of an executed instrument of sublease
(wherein Tenant and such sublessee agree that such sublease is
subject to the Lease and such sublessee agrees that, if the Lease
is terminated because of Tenant's default, such sublessee shall,
at Landlord's option, attorn to Landlord).
(i) Tenant shall at Tenant's own expense first comply
with ISRA and fulfill all of Tenant's environmental obligations
under this Lease which also arise upon termination of Tenant's
Lease term. If this condition shall not be satisfied, then Landlord
shall have the right, to withhold consent to a sublease or assignment.
Section 9.04. Each subletting pursuant to this Article shall
be subject to all the covenants, agreements, terms, provisions, and
conditions contained in this Lease. Tenant covenants and agrees
that, notwithstanding such assignment or any such subletting to any
subtenant and/or acceptance of Basic Rent or Additional Rent by
Landlord from any subtenant, Tenant shall and will remain fully
liable for the payment of the Basic Rent and Additional Rent due
and to become due hereunder and for the performance of all the
covenants, agreements, terms, provisions, and conditions contained
in this Lease on the part of Tenant to be performed. Tenant
further covenants and agrees that, notwithstanding any such
assignment or subletting, no other and further assignment,
underletting, or subletting of the Demised Premises or any part
thereof shall or will be made except upon compliance with the
subject to the provisions of this Article. Tenant shall promptly
furnish to Landlord a copy of each such sublease.
Section 9.05. If this Lease be assigned, or if the Demised
Premises or any part thereof be sublet or occupied by anybody other
than Tenant, Landlord may, after default by Tenant, collect rent
from the assignee, subtenant, or occupant, and apply the net amount
collected to the rent herein reserved, but no such assignment,
subletting, occupancy, or collection shall be deemed a waiver by
Landlord of any of Tenant's covenants contained in this Article or
the acceptance of the assignee, subtenant, or occupant as Tenant,
or a release of Tenant from the further performance by Tenant of
covenants on the part of Tenant herein contained.
Section 9.06. If for any assignment or sublease, Tenant
receives rent or other consideration, either initially, or over the
term of the assignment or sublease, in excess of the rent called
for hereunder, or in the case of the sublease of a portion of the
demised premises, in excess of such rent fairly allocable to such
portion, after appropriate adjustment to assure that all other
payments called for hereunder are appropriately taken into account,
Tenant shall pay the Landlord, as additional rent hereunder, one
half (1/2) of the excess of each such payment of rent or other
consideration received by Tenant promptly after its receipt.
Section 9.07 In the event Tenant subleases a portion of the
premises to an entity which is a wholly owned subsidiary or
division of the Tenant, then in such event, the provisions of
Section 9.06 shall not be applicable as to any such sublease, and
the provisions of Section 9.02 shall not be applicable to any such
sublease. However, Tenant shall comply with the other provisions
of this Article 9. Tenant shall not be prohibited from permitting
wholly owned subsidiaries or a division thereof from occupancy of
the premises under Tenant's leasehold rights.
Section 9.08 As to Section 9.03, Landlord agrees within
fifteen (15) business days of receipt of Tenant's request for a
consent to an assignment of subletting, to respond to Tenant.
ARTICLE 10
LANDLORD'S REMEDIES IN EVENT OF THE TENANT'S DEFAULT OR BANKRUPTCY
Section 10.01 Events of Default. If any one or more of the
following events (hereinafter called "events of default") occurs:
(a) Tenant shall default in payment of any installments
of rent or other sums required to be paid by Tenant under this
Lease, which default shall continue for ten (10) days after written
notice thereof by Landlord to Tenant; or in the observance or
performance of any other covenant or provision of this Lease and
such default continues for thirty (30) days after notice of such
default from Landlord (unless such default cannot be cured within
(30) days) and Tenant commences to cure such default within such
30 days and diligently proceeds to cure such default; or
(b) If the Demised Premises shall be left vacant or
unoccupied or be deserted for a period of sixty (60) days; or
(c) Tenant shall make an assignment for the benefit of
creditors;
(d) Tenant shall attempt to transfer, assign or sublet
or hypothecate this Lease except as otherwise specifically
permitted in Article 9 hereof; or
(e) A voluntary petition is filed by Tenant under any
laws for the purpose of adjudication of Tenant as a bankrupt or the
extension of the time of payment, composition, arrangement,
adjustment, modification, settlement or satisfaction of the
liabilities of Tenant, or the reorganization of Tenant under the
Bankruptcy Act of the United States or any future laws of the
United States having the same general purpose, or receivers
appointed for Tenant by reason of insolvency or alleged insolvency
of Tenant; an involuntary petition shall be filed against Tenant
for such relief and shall not be dismissed within sixty (60) days;
Upon the happening of an event of default, and such event
of default is not cured within the time periods as otherwise
hereinbefore set forth, then Landlord, notwithstanding any other
right or remedy it may have under the Lease, at law or in equity,
may terminate the Lease, by notice to Tenant setting forth the
basis therefor and effective not less than seven (7) days
thereafter, whereupon, upon such effective date, the Lease shall
terminate (with the same effect as if such date were the date fixed
herein for the natural expiration of the Term), Tenant shall
surrender the demised premises to Landlord and Tenant shall have
no further rights hereunder, but Tenant shall remain liable as
hereinafter provided. In such event, Landlord may, without further
notice, enter the demised premises, repossess the same and
dispossess Tenant and all other persons and property therefrom.
Section 10.02 Landlord's Damages. If Landlord so terminates
the Lease, Tenant shall pay Landlord, as damages:
(a) A sum which represents any excess of (i) the
aggregate of the rent, impositions and additional rent for the
balance of the term if the Lease were not so terminated, over (ii)
the net rental value of the demised premises at the effective date
of such termination, both discounted at the rate of four (4)
percent per annum; or, at Landlord's option,
(b) Sums equal to the rent, impositions and additional
rent, when the same would have been payable if not for such
termination, less any net rents received by Landlord from any
reletting, after deducting all costs incurred in connection with
such termination and reletting (but Tenant shall not receive any
excess of such net rents over such sums).
Landlord may commence actions or proceedings to recover
such damages or installments thereof at any lawful time. No provision
hereof shall be construed to preclude Landlord's recovery from Tenant of
any other damages to which landlord is lawfully entitled.
Section 10.03 Nonexclusivity. No right or remedy herein con-
ferred upon Landlord is intended to be exclusive of any other right
or remedy herein or by law provided, but each shall be cumulative
and subject to the grace and notice provisions of Section 10.01
hereof, in addition to every other right or remedy given herein or
now or hereafter existing at law or in equity or by statute.
Landlord shall be entitled, to the extent permitted by law, to
injunctive relief in case of the violation, or attempted or
threatened violation, of any of the provisions of this Lease, or
to a decree compelling observance or performance of any provision
of this Lease, or to any other legal or equitable remedies.
Nothing herein contained shall limit or prejudice the right of the
Landlord in any bankruptcy or reorganization or insolvency
proceeding, to prove for and obtain as liquidated damages by reason
of such termination an amount equal to the maximum allowed by any
bankruptcy or reorganization or insolvency proceedings, or to prove
for and obtain as liquidated damages by reason of such termination,
an amount equal to the maximum allowed by any statute or rule of
law, whether such amount shall be greater or less than the excess
referred to in Section 10.02.
Section 10.04 Landlord's Right to Perform Tenant's Covenants.
If Tenant shall fail to pay any tax, pay for or maintain or deliver
any of the insurance policies or shall fail to make any other
payment or perform any other act which Tenant is obligated to make
or perform under this Lease, then, Landlord after notice to Tenant
may perform for the account of Tenant any covenant in the perfor-
mance of which Tenant is in default. Tenant shall pay to the
Landlord as additional rent, upon demand, any amount paid by
Landlord in the performance of such covenant in any amount which
Landlord shall have paid by reason of failure of Tenant to comply
with any covenant or provision of this Lease, including reasonable
attorneys fees incurred in connection with the prosecution or
defense of any proceedings instituted by reason of default of
Tenant, together with interest at the maximum lawful rate of in-
terest then allowed by the State of New Jersey, but not more than
two (2%) percent per month from the date of payment by Landlord
until paid by Tenant.
Section 10.05 No Waiver. No waiver by Landlord of any breach
by Tenant of any of Tenant's obligations hereunder shall be a
waiver of any subsequent breach or of any obligation, agreement or
covenant, nor shall any forbearance by Landlord to seek a remedy
for any breach by Tenant be a waiver by Landlord of Landlord's
rights and remedies with respect to such or by subsequent breach.
Section 10.06 Right of Re-Entry. In the event that the
termination of this Lease is the result of any election exercised
by Landlord pursuant to the terms of this Article, the Landlord
shall be entitled to the rights, remedies and damages set forth in
this Article and elsewhere in this Lease. Tenant waives the
service of notice of intention to re-enter as provided for in any
statute and also waives any and all right of redemption in case
Landlord obtains possession by reason of Tenant's default. Tenant
waives any and all right to a trial by a jury in the event that
summary proceedings shall be instituted by Landlord. The terms
"enter", "re-enter", "entry" or "reentry", as used in this Lease
are not restricted to their technical legal meaning.
Section 10.07 Payment of Landlord's Counsel Fees and Other
Costs. Tenant shall pay the Landlord as additional rent, upon
demand, Landlord's reasonable attorneys fees incurred by Landlord
in connection with the prosecution or defense of any proceeding
instituted by reason of default of Tenant, together with interest
on such sum at the rate of two (2%) percent per month from the date
of payment by Landlord until repaid by Tenant to Landlord, this
covenant to survive the expiration or sooner termination of this Lease.
Section 10.08 Noncurable Default. If Tenant fails, on four
(4) separate occasions in any twelve (12) month period during the
Term hereof, to make payment of the rent and or additional rent and
or late charges on or before the due date, then, whether or not
Tenant ultimately makes and Landlord accepts the required payment
after the due date, such failure shall entitle Landlord, upon or
at any time after such fourth separate occasion, to pursue the remedies
provided in this Article, said circumstances being hereby declared a
default no longer susceptible of being cured or removed by Tenant.
ARTICLE 11
SUBORDINATION OF LEASE TO MORTGAGE ON THE DEMISED PREMISES
Section 11.01 Subordination to Mortgages. At the option of
Landlord, this Lease shall either be:
(a) Subject and subordinate to all mortgages which may
now or hereafter affect the Demised Premises, and to all renewals,
modifications, consolidations, replacements or extensions thereof,
provided however, that the holder of any such mortgage shall
execute with Tenant a Non-Disturbance Agreement hereinafter
described; or
(b) This lease shall be paramount in priority as an
encumbrance against the Demised Premises with respect to the lien
of any mortgage which may now or hereafter affect the Demised
Premises and to all renewals, modifications, consolidations,
replacements and extensions thereof.
Section 11.02 Non-Disturbance Agreement. The non-
disturbance agreement referred in Section 11.01 shall be an
agreement in recordable form between Tenant and the holder of such
mortgage, binding on such holder and on future holders of such
mortgages, or an agreement by such holder expressed in such
mortgage, which shall provide in substance that, so long as Tenant
is not in default under any of the terms, covenants, provisions or
conditions of this Lease, neither such holder nor any other holder
of such mortgage shall name or join Tenant as a party-defendant or
otherwise in any suit, action or proceeding to enforce, nor will
this Lease or the term hereof be terminated (except as permitted
by the provisions of this Lease) or otherwise affected by
enforcement of, any rights given to any holder of such mortgage,
pursuant to the terms, covenants or conditions contained in such
mortgage or any other document held by any holder or any rights
given to any holder as a matter of law. Upon request of holder of
a mortgage to which this Lease becomes subordinate, Tenant shall
execute, acknowledge and deliver to such holder an agreement to
attorn to such holder as Landlord if such holder becomes Landlord
hereunder and/or execute, acknowledge and deliver to such holder
an agreement not to pay the Basic Rent for a period of more than
one (1) month in advance.
ARTICLE 12
EXONERATION OF INDIVIDUALS
Section 12.01 Exoneration. Neither Landlord, nor its successors
or assigns, shall have any personal liability in respect to
any of the covenants or conditions of this Lease. The Tenant shall
look solely to the equity of the Landlord in the Demised Premises
for satisfaction of the remedies of the Tenant in the event of a
breach by the Landlord of any of the covenants or conditions of
this Lease and no other property or assets of Landlord shall be
subject to levy, execution or other enforcement procedure for the
satisfaction of Tenant's remedies in the event of a breach or
violation by Landlord of any of the terms of this Lease or any
other liability which the Landlord might have to the Tenant.
Whenever Tenant claims that Landlord is liable to Tenant by reason
of any obligation of Landlord under this Lease, Tenant's remedies
shall be restricted to a declaratory judgement and injunction for
the relief sought, and shall exclude money damages in excess of in
total One Million ($1,000,000.00 Dollars.
Section 12.02 The provisions of this Section 12.01 shall not
be applicable to Landlord's obligations under Article 23 "Security."
ARTICLE 13
COVENANT AGAINST LIENS
Section 13.01 No Liens. Tenant shall neither create nor
permit to be created or exist any lien or encumbrance affecting the
Demised Premises and shall discharge, promptly upon notice, any
lien or encumbrance arising out of any act or omision of Tenant.
Notice its hereby given that Landlord shall not be liable for any
work performed or to be performed at the Demised Premises for
Tenant, or for any materials furnished or to be furnished at the
Demised Premises for Tenant, upon credit and that no mechanic's or
other lien for such work or materials shall attach to or affect the
estate or interest of Landlord in and to the Demised Premises.
ARTICLE 14
EMINENT DOMAIN
Section 14.01 Total Condemnation. If at any time during the
Term the whole of the Building shall be taken for any public or
quasi-public use under any statute, or by right of eminent domain,
or a part of the Building consisting of more than fifty (50%)
percent of the Building area shall be so taken, the Term and all
rights of the Tenant shall immediately cease and terminate as of
the date of such taking, and the Basic Rent and Additional Rent
shall be apportioned and paid to the time of such termination.
Section 14.02 Partial. In the event that only a part of the
Building area constituting fifty (50%) percent or less shall be so
taken, the Landlord or Tenant may elect to cancel this Lease
provided Landlord, within ninety (90) days after such taking, gives
notice to that effect and upon the giving of such notice, the Basic
Rent and Additional Rent shall be apportioned and paid to the date
of the expiration of the Term and this Lease and the Term shall
cease, expire and come to an end upon the expiration of said ninety
(90) days specified in said notice. If the Landlord shall not
elect to terminate as heretofore provided, this Lease shall remain
unaffected except the Tenant shall be entitled to a pro rata
reduction of Basic Rent, based on the proportion which the area of
the Building so taken bears to the area of the Building immediately
prior to such taking.
Section 14.03 Award. In case of any taking, whether
involving the whole or any part of the Demised Premises and
regardless of whether this Lease survives, the entire award shall
be paid to the Landlord and the Tenant hereby assigns such award
or awards to the Landlord. It is specifically understood and
agreed between Tenant and Landlord that Tenant shall have no right
to participate in any condemnation award for any claim whatsoever
for the unexpired leasehold, claims for fixtures, claims for
improvements, claims for value of options, if any, granted
hereunder, or options to extend the term of this Lease, or any
other claims whatsoever. Tenant hereby waives all rights to any
portion of the Award including, without limitation, any such rights
arising from any termination of Tenant's leasehold interest hereunder.
Section 14.04 Definition of "Taking". For purpose of this
Article 14, a "Taking" shall include any conveyance made in
response to a bona fide threat of condemnation.
Section 14.05 Tenant's Moving Expense. If the condemning
authority permits Tenant, in a proceeding separate from Landlord's
proceeding, to seek recovery of its moving expenses, and if such
recovery shall not diminish or affect the Award otherwise payable
to Landlord, then Tenant may, in such separate proceeding, seek
recovery for its moving expenses.
Section 14.06 Other Tenant's Rights. Tenant shall have the
right, in the event of any Taking which results in termination of
this Lease, to remove its trade fixtures and other personal
property from the Demised Premises.
ARTICLE 15
ACCESS TO PREMISES
Section 15.01 Access. The Tenant agrees to permit the
Landlord and the authorized representatives of the Landlord to
enter the Demised Premises at all times during usual business hours
upon reasonable notice, provided Landlord does not unreasonably
interfere with the normal business operations of Tenant, for the
purpose of inspecting the same and upon Tenant's failing to make
repairs or failing to comply with laws, ordinances, rules,
regulations or requirements, etc., making all necessary repairs to
the Demised Premises and performing any work therein that may be
necessary to comply with any laws, ordinances, rules, regulations
or requirements of any public authority or of the Board of Fire
Underwriters or any similar body or that the Landlord may deem
necessary to prevent waste or deterioration in connection with the
Demised Premises. Nothing herein shall imply any duty upon the
part of the Landlord to do any such work which, under any provision
of this Lease, the Tenant may be required to perform, and the
performance thereof by the Landlord shall not constitute a waiver
of the Tenant's default in failing to perform the same. The
landlord may during the progress of any work in the Demised
Premises keep and store upon the Demised Premises all necessary
materials, tools and equipment. The Landlord shall not in any
event be liable for inconvenience, annoyance, disturbance, loss of
business or other damage of the Tenant by reason of making repairs
or the performance of any work in the Demised Premises, or on
account of bringing materials, supplies and equipment into or
through the Demised Premises during the course thereof, and the
obligations of the Tenant under this Lease shall not thereby be
affected in any manner whatsoever.
The Landlord is hereby given the right during usual
business hours to enter the Demised Premises upon reasonable
notice, provided that Landlord does not unreasonably interfere with
the normal business operations of Tenant, and to exhibit the same
for the purposes of sale or hire during the final nine months of
the Term and the Landlord shall be entitled to display, on the
Demised Premises in such manner as not unreasonably to interfere
with the Tenant's business, the usual "For Sale" or "To Let" signs,
and the Tenant agrees that such signs may remain unmolested upon
the Demised Premises.
ARTICLE 16
NOTICES
Section 16.01 Notices. All notices, demands and requests
which may or are required to be given by either party to the other
shall be in writing. All notices, demands and requests by the
Landlord to the Tenant shall be sent by United States Certified
Mail, postage prepaid, addressed to the Tenant at the address
specified on the first page of this Lease or at such other place
as the Tenant may from time to time designate in a written notice
to the Landlord. All notices, demands and requests by the Tenant
to the Landlord shall be sent by United States Certified Mail,
postage prepaid, Return Receipt Requested, addressed to the
Landlord at the address shown on the first page of this Lease or
at such other place as the Landlord may from time to time designate
in a written notice to the Tenant. Notices, demands and requests
which shall be served upon the Landlord or the Tenant in the manner
aforesaid shall be deemed sufficiently served or given for all pur-
poses hereunder at the time such notice, demand or request shall
be mailed.
ARTICLE 17
ACCEPTANCE
Section 17.01 Acceptance. The Demised Premises includes a
building previously erected on the land which Tenant acknowledges
it has inspected and is fully familiar with and its conditions and
is leasing the land and building in a "as is" condition. The
Demised Premises constitutes a self-contained unit, and nothing in
this Lease shall impose any obligation upon Landlord to provide any
service for the benefit of Tenant, including, but not limited to,
water, gas, electricity, heat, air conditioning, janitorial, or any
other service or utility.
ARTICLE 18
QUIET ENJOYMENT - CONVEYANCE BY LANDLORD
Section 18.01 Ouiet Enjoyment. Tenant, upon paying the
Basic Rent and all Additional Rent and other charges herein
provided for and performing all covenants and conditions of this
Lease, on its part to be performed, shall quietly have and enjoy
the Demised Premises during the Term, without hindrance or
molestation by Landlord or any other person claiming through Landlord,
subject, however, to the terms of this Lease and to any Mortgage.
Section 18.02 Conveyance by Landlord. If Landlord shall
convey the Demised Premises, all liabilities and obligations on the
part of Landlord under this Lease shall terminate upon such
conveyance and thereafter all such liabilities and obligations
shall be the liabilities and obligations of such transferee and
shall be binding upon such transferee of the Demised Premises.
ARTICLE 19
ESTOPPEL CERTIFICATE
Section 19.01 Estoppel Certificate. Either party shall,
without charge, at any time from time to time hereafter, within ten
(10) days after written request to the other, certify by written
instrument duly executed and acknowledged to any mortgagee or
purchaser or proposed mortgagee or proposed purchaser, or any other
person specified in such request; (a) as to whether this Lease has
been supplemented or amended and if so, the substance and manner
of such supplement or amendment; (b) as to the validity and force
and effect of this Lease in accordance with its tenor as then
constituted; (c) as to the existence of any default or event of
default; (d) as to the existence of any offsets, counterclaims or
defenses thereto on the part of such other party; (e) as to the
term commencement date and stated expiration dates; and (f) as to
any other matters as may be reasonably so requested. Any such
certificate may be relied upon by the party requesting it and any
other person to whom the same may be exhibited or delivered and the
contents of such certificate shall be binding on the party
executing same. Tenant shall, in addition, within five business
days of the term commencement date, execute and deliver to Landlord
a Tenant Estoppel Letter certifying and stating to those matters
above referred to.
ARTICLE 20
FINANCIAL INFORMATION
Section 20.01 Financial Information. Tenant has furnished
the Landlord with Profit and Loss Statements and Balance Sheets for
the fiscal years ending December 31, 1994, prepared by a Certified
Public Accountant. Tenant further agrees that it will furnish to
the Landlord a Certified Profit and Loss statement and Certified
Balance Sheet prepared by a Certified Public Accountant for the
preceding fiscal year, when required by Landlord.
ARTICLE 21
NO ABATEMENT OF RENT
Section 21.01 No Abatement of Rent. Except as otherwise
specifically provided in this Lease, there shall be no abatement,
diminution or reduction of Basic Rent, Additional Rent, other
charges or other compensation due to the Landlord by the Tenant or
any person claiming under it, under any circumstances including but
not limited to the complete or partial destruction of the Building
or any inconveniences, discomfort, interruption of business or
otherwise caused by a taking or destruction of the premises or any
building thereon except as otherwise specifically provided herein.
ARTICLE 22
NONRECORDATION OF LEASE
Section 22.01 Nonrecordation of Lease. Tenant shall not
record the within Lease. Should Tenant record this Lease, Landlord
may at its option, cause the within Lease to be terminated,
cancelled and of no further force and effect or it may bring suit
against Tenant for damages arising therefrom, providing, however,
that Tenant or Landlord shall have the right to record a short form
of lease.
ARTICLE 23
SECURITY
Section 23.01 Security. Tenant has deposited with Landlord
ONE HUNDRED SEVENTY-ONE THOUSAND and NO/100 Dollars ($171,000.00)
as security for the performance of Tenant's obligations under the
Lease. Landlord may use, apply or retain the whole or any part of
the security to the extent required to cure any default of Tenant's
and to reimburse Landlord for any damages or expenses (including,
without limitation, counsel fees) incurred by reason of such
default, including, but not limited to, any damages, deficiency or
expenses in the reletting of the Demised Premises, whether accrued
before or after summary proceedings or other re-entry by Landlord.
If Landlord applies any part of said security deposit to remedy any
default of Tenant, Tenant shall, upon demand, deposit with Landlord
the amount so applied so that Landlord shall have the full deposit
on hand at all times during the term of this Lease. If Tenant
complies with all of its obligations hereunder, the security shall
be returned to it after the end of the Term and delivery of
possession of the Demised Premises to Landlord. In the event the
Landlord shall sell or assign the premises then, upon such
transfer, Landlord agrees to transfer the security deposit to such
transferee and Landlord shall thereupon be released from all
liability with respect to such security. Tenant shall not assign
or encumber the security and neither Landlord nor its successors
or assigns shall be bound by any such assignment or encumbrance.
Landlord agrees that, as of December 31 of each calendar
year, Landlord shall pay to Tenant an interest factor on the
security deposit equal to the interest paid by United Jersey Bank
on "Preferred Money Market Accounts" during that calendar year.
The foregoing shall not require Landlord to escrow or otherwise
deposit such sum or segregate same, and Tenant recognizes and
understands that Landlord shall have the right to use these funds
for Landlord's general purposes. The interest shall be calculated
at the rate in effect as of the opening of business of each day
during that year. Landlord, with the sum of ONE THOUSAND and
NO/100 Dollars ($l,000.00) on the Commencement Date of this Lease
will open such an account, and the interest rate so reflected on
such account during that calendar year shall be the interest rate
applied to the amount of the security deposit held by the Landlord
during that year.
Section 23.02 The provisions of Section 12.01 shall not be
applicable to this Article.
ARTICLE 24
SURRENDER
Section 24.01. On the last day or sooner termination of the
Lease, Tenant shall quit and surrender the Demised Premises
broom-clean, in good condition and repair, together with all
alterations, additions and improvements which may have been made
in, on, or to the Demised Premises, except movable furniture or
unattached movable trade fixtures put in at the sole expense of the
Tenant (provided Tenant has not been in default under this Lease)
provided, however, that Tenant shall ascertain from Landlord at
least thirty (30) days before the end of the Term whether Landlord
desires to have the Demised Premises, or any part thereof, restored
to the condition in which it was originally delivered to Tenant,
and if Landlord shall so desire, then Tenant, at its own cost and
expense, shall restore the same before the end of the Term.
Landlord shall, in response to Tenant's request, or otherwise,
advise Tenant as to the repairs and restoration to be undertaken
by Tenant prior to the expiration of the Lease Term. Tenant shall,
at least six (6) months before the end of the Term, advise the New
Jersey Department of Environmental Protection and Energy of the
termination of Tenant's use of the premises, and file, with said
Department, such information, affidavits, forms, remedial action
work plan and such other information as said Department may require
and undertake such action or work as required by the Department of
Environmental Protection and Energy pertaining to Tenant's use and
occupancy of the premises as it relates to remedial action or a
remedial action work plan for the removal of hazardous substances
and wastes that remain on the premises demised by reason thereof.
Tenant agrees upon termination of the lease, the air-conditioning,
cooling systems, heating equipment and plumbing and electrical
systems shall be in good, operable condition. All light fixtures
and bulbs shall be operable, cleaned and in good working order,
rugs cleaned, and the warehouse floor washed and sealed. Tenant
shall obtain from Landlord Landlord's approval as to the sealer
used by Tenant. The condition of the building and premises shall
be in such a condition upon surrender as though the premises were
used exclusively for warehousing and offices, and the Tenant made
all repairs and replacements as were necessary during the term of
the Lease so that after surrender, the building and premises are
in good condition and ready to be re-rented. Tenant and Landlord
understand that during the term of this Lease, the building and its
equipment may be subject to reasonable wear and tear. However,
Landlord and Tenant specifically agree that wear and tear shall not
excuse Tenant from undertaking its repair and maintenance
obligations, and the provisions as herein provided, by way of
example, that the various systems shall be in good operating
condition, are intended to be the standard by which the building
and its systems shall be returned to Landlord by Tenant. If the
Demised Premises is not surrendered as and when aforesaid, Tenant
shall indemnify Landlord against loss or liability resulting from
the delay by Tenant in so surrendering the premises including,
without limitation, any claims made by any succeeding occupant
founded on such delay. Tenant's obligations under this section
shall survive the expiration or sooner termination of the Term.
In the event Tenant, prior to termination of the Lease, fails to
comply with the Rules and Regulations of the Department of
Environmental Protection of the State of New Jersey or other
applicable Federal agencies having jurisdiction over the storage
or use of hazardous substances then, Tenant, at the option of the
Landlord, shall be deemed to be occupying the Demised Premises as
a tenant from month-to-month, at the monthly rental indicated
below. In the event Tenant remains in possession of the Demised
Premises after the expiration of the term and without execution of
a new Lease, or, Tenant fails to restore the premises, or fails to
comply with its other obligations which must be complied with prior
to the termination date of the Lease, then Tenant, at the option
of the Landlord, shall be deemed to be occupying the Demised
Premises as a tenant from month-to-month, at the monthly rental
equal to the higher of 150% of market rent plus one-twelfth
(1/12th) of all items of Additional Rent such as, but not limited
to, taxes, insurance payable or paid during the last lease year or,
four (4) times the sum of (i) the Basic Rent payable for the last
month of the Term under Article 3 hereof and, (ii) one twelfth
(l/12th) of all items of Additional Rent, such as, but not limited
to, taxes, insurance payable or paid during the last lease year.
Tenant shall on a date no later than six (6) months prior
to the termination date of this Lease obtain from the New Jersey
Department of Environmental Protection and Energy ("DEPE") a
non-applicability letter and/or a de minimis quantity exception
and/or a negative declaration approval and/or a written
determination by DEPE that there are no discharged hazardous
materials at the site that occurred during the Lease Term and, if
any had occurred, have been remedied in accordance with applicable
regulations, such determination presently referred to as a No
Further Action letter ("NFA"). If Tenant obtains a
non-applicability exemption or otherwise is not required to
undertake sampling then Tenant shall, at Landlord's option, hire
a consultant satisfactory to Landlord to undertake sampling in a
manner consistent with applicable environmental law sufficient to
determine whether or not Tenant's operations have resulted in any
spill or discharge of hazardous substances or waste at the
premises. Should the sampling reveal any spills or discharges of
a hazardous substance or waste which occurred during the Lease
Term, then Tenant shall, at Tenant's expense, promptly clean up the
premises to the satisfaction of the applicable governmental
agencies which have jurisdiction of the matter and to the
reasonable satisfaction of the Landlord. If Tenant shall fail to
comply with the preceding sentence of this subparagraph prior to
termination of the Lease, then Tenant's obligations to pay rent and
additional rent shall continue until the earlier of either Landlord
rerenting the Premises and a new tenant takes occupancy and
commences to pay rent, or such date as Tenant shall comply with the
foregoing, such rent to be computed as though the Tenant was
occupying the demised premises as a Tenant from month to month as
otherwise set forth in the preceding paragraph.
ARTICLE 25
MISCELLANEOUS
Section 25.01 Table of Contents. The Table of Contents and
headings of this Lease are for convenience of reference only and
in no way define, limit or describe the scope or intent of this
Lease nor in any way affect this Lease.
Section 25.02 No Reservations. Submission of this instrument
for examination or signature by Tenant does not constitute a reservation
of or option to lease, and it is not effective as a Lease or otherwise
until execution and delivery by both Landlord and Tenant.
Section 25.03 Laws. This Lease shall be governed by and
construed in accordance with the laws of the State of New Jersey.
Section 25.04 Brokers. Tenant represents that it has dealt
with no realtors, brokers or agents in connection with the
negotiation of this Lease and the renting of the Demised Premises
hereunder, other than Charles Klatskin Company, Inc. and Cushman
and Wakefield. Should any claims be made for brokerage
commissions, other than those payable to the brokers specified in
this Section, through or on account of dealings of Tenant or its
agents or representatives, Tenant shall indemnify and hold Landlord
harmless against any liability in connection therewith, including
without limitation reasonable claims, damages or counsel fees.
Section 25.05 Broker's Signs. The Tenant shall not permit,
at any time during the term of this Lease, any broker signs to be
attached to, exhibited or placed upon the Demised Premises, which
signs offer the premises for let or for sale unless such broker
has obtained Landlord's prior written consent and presents such
consent to the Tenant.
Section 25.06 Rules and Regulations. The rules and
regulations attached to this Lease are made a part of this Lease,
and Tenant shall comply with them. Landlord shall have the right,
from time to time, to promulgate amendments and additional rules
and regulations for the safety, care and cleanliness of the
premises, or for the preservation of good order. On delivery of
a copy of such amendments and additional rules and regulations to
Tenant, Tenant shall comply with the rules and regulations, and a
material violation of any of them shall constitute a default by
Tenant under this Lease, subject to Tenant's right to cure, as set
forth in Section 10.01 hereof. Irrespective of the foregoing,
Landlord will have the right to strictly enforce the provisions of
Rule 2 as set forth on the Rules and Regulations attached. As to
the enforcement of other Rules and Regulations, whether now
existing or amended, Landlord agrees to permit Tenant, after
notice, to comply in a reasonable manner with such Rules and
Regulations. If there is a conflict between the rules and
regulations and any other provisions of this Lease, the provisions
of this Lease shall prevail.
Section 25.07 Waste. The Tenant covenants not to do or
suffer any waste or damage, disfigurement or injury to any building
or improvement now or hereafter on the Demised Premises, or the
fixtures and equipment thereof, or permit or suffer any overloading
of the floors thereof.
Section 25.08 Compactor. If the municipality or other
governmental agency shall require Tenant to install a garbage
compactor or other storage or waste management facility at the
premises, Tenant shall, at Tenant's expense, install such equipment
and/or storage facility.
Section 25.09 Underground Tanks. Tenant warrants and
represents that it will, at no time, install any underground
storage tanks on the Demised Premises. A breach of this covenant
shall be deemed a default under the Lease and Landlord shall have
the right to terminate the Lease upon the happening of such event.
Section 25.10 Declaratory Judgment. Wherever in this Lease
Landlord's consent or approval is required, if Landlord shall
refuse such consent or approval, Tenant in no event shall be
entitled to make, nor shall Tenant make any claim, and Tenant
hereby waives any claim for money damages (nor shall Tenant claim
any money damages by way of setoff, counterclaim or defense), based
upon any claim or assertion by Tenant that Landlord unreasonably
withheld or unduly delayed its consent or approval. Tenant's sole
remedy in such event shall be an action or proceeding to enforce any
such provision, for specific performance injunction or declaratory
judgment.
Section 25.11 Corporate Authority. If Tenant is a
corporation, each individual executing this Lease on behalf of said
corporation represents and warrants that he is duly authorized to
execute and deliver this Lease on behalf of said corporation in
accordance with a duly adopted resolution of the Board of Directors
of said corporation or in accordance with the By-Laws of said
corporation, and that this Lease is binding upon said corporation
in accordance with its terms. If Tenant is a corporation, Tenant
shall, within thirty (30) days after execution of this Lease,
deliver to Landlord a certified copy of a resolution of the Board
of Directors of said corporation authorizing or ratifying the
execution of this Lease.
IN WITNESS WHEREOF, the parties have hereunto set their hands
and seals on the date first above written.
Witness: FORSGATE INDUSTRIAL COMPLEX, a
Limited Partnership, Landlord
/s/ ELAINE G. SCHADE By: /s/ STEPHEN P. SEIDEN
- ---------------------------- --------------------------
STEPHEN P. SEIDEN, GENERAL
PARTNER
By: /s/ CHARLES KLATSKIN
--------------------------
CHARLES KLATSKIN, GENERAL
PARTNER
Attest: JEAN PHILIPPE FRAGRANCES, INC.
Tenant
/s/ By: /s/ Russell Greenberg
- ---------------------------- ---------------------------
Name: Russell Greenberg
Title: Executive V.P.
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STATE OF NEW JERSEY )
) ss.:
COUNTY OF BERGEN )
BE IT REMEMBERED, that on this 10th day of July 1995
before me, the subscriber, personally appeared Charles Klatskin, Stephen
Seiden, who, I am satisfied, is the person named in and who executed the
within Instrument, and thereupon he/they acknowledged that he/they
signed, sealed and delivered the same as his/their act and deed, and the
act and deed of the said FORSGATE INDUSTRIAL COMPLEX, a partnership, for
the uses and purposes therein expressed.
/s/ ELAINE G. SCHADE
---------------------------
ELAINE G. SCHADE
NOTARY PUBLIC OF NEW JERSEY
My Commission Expires Sept. 17, 1995
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STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
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BE IT REMEMBERED, that on this 26th day of June, 1995
before me, the subscriber, personally appeared, Russell Greenberg,
who, I am satisfied, is the person who signed the within instrument
as Executive V.P. of JEAN PHILIPPE FRAGRANCES, INC., the
corporation named therein and he/she thereupon acknowledged that
the said instrument made by the corporation and sealed with its
corporate seal, was signed, sealed with the corporate seal and
delivered by him/her as such officer and is the voluntary act and
deed of the corporation, made by virtue of authority from its Board
of Directors.
/s/ ANNIE FAILLER
---------------------------
ANNIE FAILLER
Notary Public, State of New York
No. 01FA5023811
Qualified in Queens County
Commission Expires Feb. 14, 1996
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CORPORATE RESOLUTION
This is to certify that a meeting of the Board of Directors
of JEAN PHILIPPE FRAGRANCES, INC., a corporation of the State of
, held on the day of , 1995, at its
principal office at , Kearny, New Jersey, at
which time there was a quorum present, the following Resolution was
duly adopted and unanimously passed:
BE IT RESOLVED, that the Corporation entered into an Agreement
with FORSGATE INDUSTRIAL COMPLEX for premises commonly known as 60
Stults Road, South Brunswick, New Jersey, for a period of eight
(8) years in accordance with a certain draft of lease attached.
BE IT FURTHER RESOLVED, that the President and/or Vice
President and Secretary be and they are hereby authorized to
execute the Agreement (Lease) and to affix the corporate seal
thereto.
That the officers referred to in the foregoing Resolution are
as follows:
President: __________________
Vice President: __________________
Secretary: __________________
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I hereby certify that the foregoing Resolution was duly
adopted by the Board of Directors of JEAN PHILIPPE FRAGRANCES,
INC., a corporation of the State of , at a meeting held
on the day of , 1995, and that the above-
named officers are duly qualified and hold the offices stated
aforesaid.
Secretary
SCHEDULE A
DESCRIPTION OF TAX LOT 16, BLOCK 10,
STULTS ROAD, TOWNSHIP OF SOUTH BRUNSWICK,
MIDDLESEX COUNTY, NEW JERSEY.
Begining at a point in the southerly line of Stults Road (as
widened to thirty-three (33) feet from the center line ), where the
same is intersected by the division line between lot 15 and lot l6
in Tax Block 10, said point being one thousand one hundred forty-nine
and twenty-seven hundredths (1,149.27) feet northwesterly from the
point of intersection formed by the northeasterly prolongation of the
westerly line of Cranbury-South River Road (as widened) and the
southeasterly prolongatlon of the southerly line of Stults Road (as
widened); and running: -
Thence (l) northwesterly, along the southerly line of Stults Road (as
widened) north seventy-two degrees fifty-one minutes west (N 72 degrees-51'W),
six hundred forty-four and no hundredths (644.00) feet to a point;
Thence (2) southwesterly along the easterly line of Lot 18 in Tax
Block 10, south seventeen degrees nine minutes west (S 17 degrees--O9'W),
five hundred ninety and eighty-two hundredths (590.82) feet to a
point;
Thence (3) southeasterly, parallel to Stults Road, south seventy-two
degrees fifty-one minutes east (72 degrees-51' E ), six hundred forty-four
and no hundredths (644.00) feet to a point;
Thence (4) northeasterly, along the division line between Lot 15 and
Lot 16 in Tax Block 10; north seventeen degrees nine minutes east
(N 17 degrees-09' E), five hundred ninety and eighty-two hundredths (590.82)
feet to the point and place of beginning.
Containing an area of eight and seven hundred thirty-four thousandths
(8.734) Acres.
Being the premises known and designated as Lot 16 in Block 10 in the
Tax Records of the Township of South Brunswick.
Being Lot 16 and Lot 17 in Block 10 as shown on a certain map entitled
"Final Subdivision Plat, Section One, Forsgate Industrial Complex,
Township of South Brunswick, Middlesex County, New Jersey"., which map
was filed in the Middlesex County Clerk's Office as filed map No. 3992,
File No. 963 on September 30, 1977. The said Lot 16 and Lot 17 were
combined by Reverse Minor Subdivision No. 820 which was approved by the
Township of South Brunswick Plannlng Board on December 13, 1977. A deed
description was filed in the Middlesex County Clerk's office on April 7,
1975 in Deed Book 3024, Page 796.
Subject to a fifty (50) foot wide easement southerly to and
contiguous with the first course herein above described for the
purpose of installing and maintaining Detention Ponds and Storm
Drainage installations.
Subject to a ten (10) foot wide easement easterly to and contiguous
with the second course herein above described and a ten (10) foot
wide easement westerly to and contiguous with the fourth course
herein above described for the installation, replacement and
maintenance of above ground and below ground utlilties and channelized
surface drainage. In the event that Lot 16 and Lot 18 in Tax Block 10
shall be combined, any easement along a common property line shall be
null and vold.
Subject to a fifty (50) foot wide easement northerly to and contiguous
with the third course herein above described for the installation,
replacement and maintenance of Railroad facilities, above ground and below
ground utilities and channelized surface drainage.
[PROPERTY MAP]
LOT 18 LOT 16
SCHEDULE B
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RULES AND REGULATIONS
The Tenant covenants and agrees with the Landlord to obey
the following rules and regulations:
1. All garbage and refuse shall be kept in containers
inside the premises. If the Landlord shall provide or designate
a service for picking up refuse and garbage, Tenant shall use
same at its cost; the Tenant shall pay the cost to remove any of
its rubbish or refuse. The Tenant shall not burn any trash or
garbage of any kind in or about the building.
2. The Tenant shall maintain, at its expense, a
landscaping service and shall provide that the lawns shall be
watered, reseeded, fertilized and regularly mowed and maintained,
and debris shall be removed, if any, and all shrubery shall
likewise be fertilized, maintained, pruned and replaced when
necessary. The sidewalks or entrances shall not be obstructed or
encumbered by Tenant or used for any purposes other than ingress
and egress and the parking lot shall be used exclusively for the
parking of motor vehicles of Tenant's employees and invitees.
The parking lot shall be swept, maintained, retarred when
necessary and striped. Tenant shall not be required to retar in
the last three years of the Lease.
3. The Tenant shall not store any material, supplies,
semi-finished products or anything whatsoever outside of the
building. In the event Tenant requires temporary outside storage
for any reason whatsoever, Tenant must first obtain written
approval of the Landlord.
4. The Tenant shall, at its cost and expense, use a pest
extermination service so as to keep the premises free of same.
5. The Tenant will undertake a general maintenance
program, either through its own employees or outside contractors
which shall provide amongst other things for general and periodic
window cleaning, when necessary and painting of trim and the like.
6. Tenant shall not at any time, without first obtaining
Landlord's consent, change, by alteration or replacement,
rebuilding or otherwise, the exterior color or architectural
treatment of the leased bullding.
7. Tenant shall not use or permit to be used any loud
speaker or sound amplifier which may be heard outside of the
leased property.
8. Tenant shall not suffer, allow or permit any offensive
or obnoxious vibration, noise, odor, or other undesirable effect
to emanate from the leased property, or any machine or other
installation therein, or otherwise suffer, allow or permit the
same to constitute a nuisance or otherwise unreasonably interfere
with the safety, comfort or convenience of adjoining properties.
9. Tenant shall not erect a ground sign or building sign
without prior written consent of Landlord. Landlord will not
unreasonably withhold its consent or delay the same if the sign
does not damage the building, and any such sign is dignified.
10. Tenant shall maintain and keep lit any and all exterior
architectural lighting which may be installed by the Landlord.
11. Tenant shall have the right, provided same is done in
accordance with the zoning ordinance of the municipality, to park
trucks on the property along the area wherein are located the
loading docks. The Tenant shall not park trucks in any other
portion of the Demised Premises.
Upon notice by the Landlord to the Tenant of a breach of any
of the rules and regulations, Tenant shall, within thirty (30)
days thereafter, comply with such rule and regulation and in the
event Tenant shall not comply, then the Landlord may, at its
discretion, either: (1) cure such condition and add any cost and
expense incurred by the Landlord therefor to the next install-
ation of rental due under this Lease, and the Tenant shall then
pay such amount, as additional rent hereunder; or (2) treat such
failure on the part of the Tenant to remedy such condition as a
material default of this Lease on the part of the Tenant hereunder.
Landlord reserves the right, from time to time, to
promulgate additional rules and regulations as Landlord, provided
that Landlord gives notice to Tenant not less than sixty (60)
days prior to the effective date of new or revised rules; such
new or revised rule is applied uniformly to all tenants in the
industrial park in which the Demised Premises are located, and
such new or revised rule does not interfere with the normal
business operations of Tenant.
Exhibit 10.61.1
THIRD AMENDMENT OF LEASE
THIS THIRD AGREEMENT, made
this _______ day of May, 2010, by and among FORSGATE INDUSTRIAL COMPLEX, a limited partnership with offices at 400 Hollister Road,
Teterboro, New Jersey (hereinafter called “Landlord”) and JEAN PHILIPPE FRAGRANCES, LLC, a New York limited liability
company having its principal office at 551 Fifth Avenue, New York, New York 10176 (hereinafter called “Tenant”) and
Inter Parfums, Inc., (hereinafter called “Guarantor”), a Delaware corporation and parent of Tenant, its wholly-owned
subsidiary, with its principal office at 551 Fifth avenue, New York, New York 10176.
WITNESSETH:
WHEREAS, Guarantor, as
the original tenant and formerly known as Jean Philippe Fragrances, Inc., and Landlord, entered into a Lease dated July 10, 1995
for premises commonly known as 60 Stults Road in the Township of South Brunswick, County of Middlesex, State of New Jersey (the
“Original Lease”); and
WHEREAS, Tenant, Guarantor
and Landlord entered into a letter agreement dated June 30, 1999 (the “First Amendment”), whereby Guarantor assigned
the Original Lease to Tenant, Guarantor guaranteed the obligations of Tenant, and landlord consented to such assignment; and
WHEREAS, Tenant, Guarantor
and Landlord entered into a Second Amendment of Lease dated April 22, 2003 (the “Second Amendment”) to extend the term
of the Original Lease (the Original Lease and the First Amendment and Second Amendment are collectively referred to as the “Lease”);
Capitalized items used herein and not others defined shall have the meaning set forth in the Lease; and
WHEREAS, Tenant and Landlord
have agreed to amend the Lease to, among other things, extend the terms of the Lease to October 31, 2018.
NOW, THEREFORE, for good
and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties agree as follows:
1. The Term of the lease is hereby extended to October 31, 2018.
2. Basic
Rent from November 1, 2010 to October 31, 2018 shall be in the amounts set forth below, payable in equal monthly installments as
set forth below, due and payable the first day of each month in advance.
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Annual
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Monthly
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Basic Rent
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Basic Rent
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11/01/2010 - 10/31/2013
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$
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515,160.00
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$
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42,930.00
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11/01/2013 – 4/30/2016
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$
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592,434.00
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$
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49,369.50
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05/01/2016 – 10/31/2018
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$
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642,006.00
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$
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53,500.50
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Provided this
Lease is in full force and effect and no default has occurred, Basic Rent shall abate from November 1, 2010 to April 30, 2011.
3. (a) Landlord shall, at Landlord’s
sole cost, perform the work more particularly set forth on Schedule A attached hereto, including all labor, materials, equipment
and services necessary to fulfill the Landlord's obligation to complete such work. (”Landlord’s Work”). Landlord
shall perform Landlords' Work in a professional manner and in compliance with all applicable law, including but not limited to,
applicable building codes and permitting requirements, and shall not unduly interfere with the normal business operations of Tenant.
Landlord's Work shall be completed by no later than December 31, 2010.
(b) Tenant
acknowledges that Landlord’s Work will generate noise and dust and the Building will be open and unsecured at times during
the construction. Tenant further acknowledges that Landlord shall not supply any dust protection or security, and Landlord shall
have no liability with respect thereto. Tenant shall be solely responsible for protecting its personal property and providing security
during the performance of Landlord’s Work. Landlord agrees to provide Tenant with reasonable prior notice of the commencement
of Landlord’s Work so that Tenant may take adequate precautions to protect its property and provide security.
(c) Tenant
shall cooperate with Landlord and shall not interfere with Landlord during the performance of Landlord’s Work, including,
without limitation, Tenant shall at all times: (i) move its personal property as may be necessary so as not to interfere with Landlord’s
Work; (ii) make available a tailgate door for access and the drive-indoor for lift access; (iii) provide a clear route from such
doors to the work areas, and (iv) provide uninterrupted access to the Building no later than 7 a.m. until 4 p.m. during the performance
of Landlord’s Work. Landlord shall have the right to enter the Demised Premises at any time during business or other hours
to perform Landlord’s Work.
4. Guarantor
hereby consents to this Amendment, and hereby unconditionally guarantees to the Landlord, the due performance of any and all obligations
of Tenant under the Lease, including but not limited to, any and all payments due to the Landlord, past, present and future, under
the Lease as amended hereby, together with all future, assignments, renewals, extensions and amendments thereof, if any.
5. Except
as modified herein, all of the provisions of the Lease shall remain unchanged and in full fore and effect.
IN WITNESS WHEREOF the
parties have executed this Third Amendment as of the day and year first above written.
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FORSGATE INDUSTRIAL COMPLEX
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By:
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/s/ Charles Klatskin
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Charles Klatskin, General Partner
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By
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/s/ Stephen Seiden
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Stephen Seiden, General Partner
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JEAN PHILIPPE FRAGRANCES, LLC
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By: Inter Parfums, Inc., Sole Member
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By:
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/s/ Russell Greenberg
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Name:
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Russell Greenberg
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Title:
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Executive Vice President
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INTER PARFUMS, INC.
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By:
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/s/ Russell Greenberg
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Name:
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Russell Greenberg
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Title:
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Executive Vice President
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STATE OF NEW JERSEY
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)
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)
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SS:
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COUNTY OF
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)
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BE IT REMEMBERED, that
on this ______ day of _______________, 20__, before me, the subscriber, a Notary Public of New Jersey, personally appeared Charles
Klatskin who, I am satisfied, is the person named in and who executed the within Instrument, and thereupon he acknowledged that
he signed and delivered the same as his act and deed, for the uses and purposes therein expressed.
Sworn to and subscribed
before me the date aforesaid.
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STATE OF NEW JERSEY
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)
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)
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SS:
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COUNTY OF
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)
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BE IT REMEMBERED, that
on this ______ day of _______________, 20__, before me, the subscriber, a Notary Public of New Jersey, personally appeared Stephen
Seiden who, I am satisfied, is the person named in and who executed the within Instrument, and thereupon he acknowledged that he
signed and delivered the same as his act and deed, for the uses and purposes therein expressed.
Sworn to and subscribed
before me the date aforesaid.
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STATE OF
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)
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ss.:
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COUNTY OF
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)
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BE
IT REMEMBERED, that on this _____ day of __________, 20__, before me, the subscriber, personally appeared, Russell Greenberg, who,
I am satisfied, is the person who signed the within instrument as Executive Vice President of Inter Parfums, Inc., the Corporation
named therein and he thereupon acknowledged that the said instrument made by the Corporation and delivered by him is the voluntary
act and deed of the Corporation made by virtue of the authority from its Board of Directors.
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STATE OF
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)
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ss.:
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COUNTY OF
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)
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BE
IT REMEMBERED, that on this _____ day of __________, 20__, before me, the subscriber, personally appeared, Russell Greenberg, who,
I am satisfied, is the person who signed the within instrument as Executive Vice President of Inter Parfums, Inc., the Sole Member
of Jean Philippe Fragrances, LLC,
the limited liability company named therein and he thereupon acknowledged that the said
instrument made by the limited liability company and delivered by him is the voluntary act and deed of the limited liability company
for the uses and purposes therein expressed
.
Schedule A
1. Replace 10 HVAC units (Office area only)*
2. Replace all overhead doors (9)
3. Inspect and replace dock seals on the east side of the building
(up to 6 doors)
4. Repave parking lot:
A. Entrance way and front of building,
B. East side of building (1/2 lot)
5. Dolly pads to be installed for all six (6) doors on the east
side
6. Replace boiler*
*All replacements units for HVAC units and boiler shall (i) be new
and not used equipment, (ii) be free and clear of all purchase money security interests, liens and encumbrances, and (iii) meet
or exceed the performance specifications of the units being replaced. All such replacement units shall carry manufacturer's warranties
of the type and duration normally associated with such replacement units.
EXCISED VERSION of Exhibit
10.138
Exhibit
10.138: Certain confidential information in this Exhibit 10.138 was omitted and
filed separately with the Securities and Exchange Commission (“SEC”) with a
request for confidential treatment by Inter Parfums, Inc.
LICENCE
AGREEMENT
J
CHOO LIMITED
AND
INTER
PARFUMS SA
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CONTENTS
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PAGE
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1.
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DEFINITIONS
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- 2
-
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2.
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LICENCE
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- 3
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3.
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COMPENSATION
TO LICENSOR
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- 4
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4.
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PRODUCTS
AND QUALITY CONTROL
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- 7
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5.
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MARKETING
AND LAUNCH PLANS, ADVERTISING, MARKETING AND SALES
PROMOTION
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- 9
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6.
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DISTRIBUTION
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15 -
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7.
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TERM
AND TERMINATION
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16 -
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8.
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TRADEMARKS
AND OTHER INTELLECTUAL PROPERTY RIGHTS
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18 -
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9.
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EXCLUSIVITY
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21 -
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10.
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PRODUCT
LIABILITY
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21 -
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11.
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CONFIDENTIALITY
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22 -
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12.
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NOTICES
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23 -
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13.
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ASSIGNMENT
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23 -
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14.
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ENTIRE
AGREEMENT, MODIFICATION
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23 -
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15.
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APPLICABLE
LAW, JURISDICTION
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24 -
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16.
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REMEDIES,
NO WAIVER
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24 -
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17.
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SEVERABILITY
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25 -
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18.
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SECTION
HEADINGS
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-
25 -
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19.
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FORCE
MAJEURE
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25 -
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Annex
A
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Trademarks
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Annex
B
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Form
of Royalty Report
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Annex
C
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Projected
Net Sales and Royalties
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Annex
D
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Selective
Distribution Criteria
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Annex
E
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Annual
Marketing Plan
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LICENCE
AGREEMENT
between
J
CHOO LIMITED
a company
incorporated under the laws of United Kingdom with Co No: 03185783, having its
registered office at 4, Lancer Square, Kensington Church Street, London W8
4EH
hereinafter
referred to as “LICENSOR”
and
INTER
PARFUMS SA,
a company
incorporated under the laws of France RCS Paris B 350 219 382 , having
its registered office at 4 rond-point des Champs Elysée 75008 PARIS,
France
hereafter
referred to as “LICENSEE”
WHEREAS,
LICENSOR and/or its RELATED COMPANIES (as hereinafter defined) are the owners of
the TRADEMARKS (as hereinafter defined), the tradename “Jimmy Choo” (hereinafter
“TRADENAME”), and the goodwill and reputation associated with them and
manufactures or has manufactured for it and sells under the TRADEMARKS luxury
lifestyle accessories with women’s shoes and handbags.
WHEREAS,
LICENSOR has the right to grant the exclusive right to use the TRADEMARKS and
the TRADENAME in connection with the marketing of luxury fragrance and cosmetic
products throughout the world in accordance with the terms and conditions of
this AGREEMENT and to grant a licence for the use of the TRADEMARKS as provided
herein.
WHEREAS,
LICENSEE desires to obtain the right to use the TRADEMARKS and the TRADENAME on
and in connection with the development, manufacture and sale of the PRODUCTS (as
hereinafter defined) throughout the world in accordance with the terms and
conditions of this AGREEMENT.
WHEREAS,
LICENSOR is willing to grant LICENSEE the right to use the TRADEMARKS and the
TRADENAME on and/or in connection with the manufacture and sale of the PRODUCTS
(as hereinafter defined) throughout the TERRITORY on the terms and conditions
hereinafter provided.
THEREFORE,
in consideration of the said premises and the mutual promises and covenants
contained herein, the parties agree as follows:
Unless
the context otherwise requires, the following terms shall have the following
meanings:
|
1.1
|
“AGREEMENT”
shall mean this Licence Agreement including all Annexes and Exhibits
hereto, as the same may be amended, supplemented or modified in accordance
with
Section
14
hereof;
|
|
1.2
|
“TERM”,
shall mean, subject to the terms and conditions of article 7.1 below, a
term of a period of 12 ( twelve) years commencing on
1 January 2010 and expiring on 31 December
2021.
|
|
1.3
|
“CONTRACTUAL
YEAR” shall mean for the duration of the TERM any period of twelve months
commencing on January 1 and ending on the following December
31;
|
|
1.4
|
“TRADEMARKS”
shall mean the trademark “Jimmy Choo” and other trademarks as represented
and listed in
Annex A
hereto,
together with any further names, symbols or marks which the parties may
agree to introduce in accordance with the provisions of this AGREEMENT for
the purpose of applying to the PRODUCTS, and shall include (but not be
limited to) the various registrations thereof which have been obtained,
which are pending, or which may be obtained, as are relevant to the
PRODUCTS;
|
|
1.5
|
“BOTTLES”
shall mean the bottles or other containers (including, but without
limitation, tubes, vials, jars, etc.) for the PRODUCTS in which the
PRODUCTS are sold;
|
|
1.6
|
“PRESENTATION”
shall mean all trademarks, get-up, designs, advertising, merchandising,
point of sale (“POS”), promotional and packaging (including labelling)
material appearing upon or used in relation to the
PRODUCTS;
|
|
1.7
|
“PRODUCTS”
shall mean such luxury fragrance (women’s and men’s fragrance and home
fragrance) and cosmetic products limited to bath and body products, to the
exclusion of skin care and make up products as shall be launched in
accordance with the provisions of this AGREEMENT, that LICENSEE may
market, distribute and sell in connection with the TRADEMARKS and/or the
TRADENAME pursuant to the terms and conditions of this
AGREEMENT;
|
|
1.8
|
“QUALITY
CRITERIA” shall mean that PRODUCTS (including the BOTTLES and the
PRESENTATION) shall be manufactured to the best standards of quality,
utilising quality ingredients and materials, such that the standard of
quality of the finished PRODUCTS and PRESENTATION is commensurate with
that to be expected of luxury fragrance products of similar price and
luxury to the PRODUCTS and shall be consistent with the luxury image
associated with the Jimmy Choo
brand.
|
|
1.9
|
“LICENSOR’S
OUTLETS” shall mean those shop-in-shops, corners, concessions, outlets and
free standing boutiques which are owned, operated or managed by LICENSOR,
by any of its RELATED COMPANIES and/or by a third party under the
TRADENAME;
|
|
1.10
|
“TERRITORY”
shall mean all countries and territories throughout the world, including
duty free zones;
|
|
1.11
|
“NET
SALES” shall mean, to the exception of the United Kingdom and the United
States, the total prices invoiced by LICENSEE on Ex-Factory basis and by
any of its RELATED COMPANIES on net wholesale sales basis, on
the first sale of PRODUCTS in the ordinary course of business to a third
party, after deduction of any sales taxes , credits, product returns,
trade or cash discounts (including year-end discounts), provided that the
aggregate of such deductions shall not exceed such amount as would be
normal business practice in the Luxury fragrance sector for comparable
products. In respect of the United Kingdom and United States, NET SALES
shall refer to net wholesale sales whatever there is a RELATED COMPANY or
an independent distributor selling the PRODUCTS. For the avoidance of any
doubt, NET SALES shall not include sales of POS and/or promotional
materials, including but not limited to testers, minis, samples, show
cards and windows.
|
|
1.12
|
“RELATED
COMPANIES” shall mean any parent or subsidiary of any of the parties or
any company affiliated with or related to any of them in which they hold
more than 50% of the shares voting rights or otherwise has effective
control.
|
|
2.1
|
LICENSOR
hereby grants LICENSEE an exclusive licence to use the TRADEMARKS and/or
the TRADENAME in connection with the development, manufacture, sale,
distribution, advertising, merchandising, promotion and marketing of the
PRODUCTS in the TERRITORY for the TERM of the AGREEMENT in accordance with
the conditions set out below. LICENSEE shall be entitled to use the
TRADEMARKS set forth in
Annex A
hereto
and/or the TRADENAME in connection with other trademarks and/or other
distinctive or descriptive attributes (words, logos, devices, etc.) but
only as LICENSOR shall first approve in accordance with
Section 4.2
(in
particular
Section 4.2.2
)
and as set forth below.
|
|
2.2
|
During
the term of this AGREEMENT and subject to prior written approval by
LICENSOR, LICENSEE shall also be authorised to use the TRADENAME as a
branch or division name as “Parfums Jimmy Choo”, especially on stationery
, or, to incorporate the TRADENAME into the company name of a RELATED
COMPANY (as “Parfums Jimmy Choo”). The approval shall be deemed to have
been given if LICENSOR does not give written notice of disapproval within
one (1) month after LICENSOR has received LICENSEE’S written request for
approval together with details of the planned incorporation of the
TRADENAME.
|
|
2.3
|
LICENSEE
warrants that any use of the TRADENAME by a branch, division or RELATED
COMPANY in accordance with the provisions of
Section 2.2
above will only be permitted in order to enable LICENSEE to perform its
obligations in relation to the marketing, sale, development and
manufacturing of the PRODUCTS under this AGREEMENT, to the exclusion of
any other activities, and will be subject to that branch, division or
RELATED COMPANY complying in all other respects with the terms of this
AGREEMENT and all applicable local legal requirements relating to its
incorporation and the conduct of its
business.
|
|
2.4
|
LICENSEE
may only with LICENSOR’s prior written approval (which will be not be
unreasonably withheld or delayed) and subject to the warranties given in
Sections 10.2 to
10.4
, be entitled to sell other products which are not PRODUCTS
together with PRODUCTS, especially in combination packages, marketed under
the TRADEMARK, or to give away other products as “gift with purchase”
together with the PRODUCTS (hereinafter collectively called “OTHER
PRODUCTS”).
|
|
3.1
|
In
consideration of the rights granted and the services to be performed by
LICENSOR during each CONTRACTUAL YEAR or part thereof, LICENSEE shall pay
to LICENSOR a royalty which shall in any CONTRACTUAL YEAR be a minimum
amount as specified in Section 3.3 below and be calculated as
follows:
|
|
|
3.1.1-
|
in
respect of PRODUCTS sold in any countries of the TERRITORY, to the
exception of the United Kingdom and the United States as specified in
Section 3.1.2 below, the royalty shall be equal to [
—————]
1
of NET SALES of all
PRODUCTS sold in any CONTRACTUAL
YEAR
|
|
|
3.1.2-
|
in
respect of PRODUCTS sold in the United Kingdom and United States in any
CONTRACTUAL YEAR either by a RELATED COMPANY or by a distributor directly
to a retailer or retail outlet which sells PRODUCTS to
consumers for personal use, the royalty shall be equal to [
——————]
2
of the net
wholesale sales as specified in clause 1.11
above.
|
1
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No. 10.138.1.
2
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.2.
|
3.2
|
LICENSEE
agrees to pay the following guaranteed minimum royalties to LICENSOR to be
paid in (4) equal amounts in each CONTRACTUAL YEAR (“CY”) in accordance
with
Section
3.3
below:
|
MINIMUM
GUARANTEED ROYALTIES
|
Contractual Year
|
|
Minimum Guaranteed
Royalty
|
|
CY
1 Jan 1 to Dec 31 2010
|
|
EUR
[———-]
3
, pro-rated
depending on the month of the launch in 2010
|
|
CY
2 Jan 1 to Dec 31 2011
|
|
EUR
[———-]
4
|
|
CY
3 Jan 1 to Dec 31 2012
|
|
EUR
[
———-]
5
|
|
CY
4 Jan 1 to Dec 31 2013
|
|
EUR
[
———-]
6
|
|
CY
5 Jan 1 to Dec 31 2014
|
|
EUR
[
———-]
7
|
|
CY
6 Jan 1 to Dec 31 2015
|
|
EUR
[
———-]
8
|
|
CY
7 Jan 1 to Dec 31 2016
|
|
EUR
[
———-]
9
|
|
CY
8 Jan 1 to Dec 31 2017
|
|
EUR
[
———-]
10
|
|
CY
9 Jan 1 to Dec 31 2018
|
|
EUR
[
———-]
11
|
|
CY
10 Jan 1 to Dec 31 2019
|
|
EUR
[
———-]
12
|
|
CY
11 Jan 1 to Dec 31 2020
|
|
EUR
[
———-]
13
|
|
CY
12 Jan 1 to Dec 31 2021
|
|
EUR
[
———-]
14
|
3
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No. 10.138.3.
4
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No. 10.138.4.
5
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No. 10.138.5.
6
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No. 10.138.6.
7
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No. 10.138.7.
8
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No. 10.138.8.
9
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No. 10.138.9.
10
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.10.
11
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.11.
12
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.12.
13
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.13.
14
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.14.
For the
avoidance of doubt, the parties agree that the minimum guaranteed royalties of
the CY 1 shall be pro-rated depending on the month of the launch of the first
feminine fragrance. Launch month is defined as the month in which the first
commercial invoice for the sale of licensed PRODUCT is raised by LICENSEE. In
the event that such fragrance is not launched in 2010, the minimum guarantee for
CY1 shall not be applicable. However, it is agreed that it is in the parties’
best interest to launch in 2010 to take advantage of market conditions and
LICENSEE shall use its best efforts to launch within CY1. Additionally it is
agreed that the minimum guaranteed royalties shall be non-cumulative on a
year-to-year (CONTRACTUAL YEARS) basis. Projected net sales and projected
royalties appear at
Annex C
. For the
avoidance of doubt, it is agreed that the said figures are set out on an
indicative basis as far as there is no track record for a JIMMY CHOO business
fragrance. Therefore such projected net sales and related projected royalties
shall not be deemed to create any contractual obligations binding upon the
LICENSEE.
|
3.3
|
All
royalties shall be paid in Euro. LICENSEE shall, for each quarter of each
CONTRACTUAL YEAR, pay to LICENSOR the greater of the cumulative amount of
royalties payable under
Section 3.1
above or the cumulative minimum royalties due in that CONTRACTUAL YEAR up
to that date less any royalties, whether payable under
Section 3.1
or
guaranteed minimum royalty payments, already paid in that CONTRACTUAL
YEAR. In no event shall the royalties paid for each quarter be less than
[
———-]
15
of the annual
minimum guaranteed royalty after taking into account any excess over the
minimum royalty payment paid for the previous quarters in that CONTRACTUAL
YEAR. These payments will be made within [
———-]
16
calendar days
after the end of each calendar quarter, such quarters ending on 31 March,
30 June, 30 September and 31 December in each CONTRACTUAL YEAR. Each
payment shall be accompanied by a quarterly royalty report in the form as
attached as
Annex
B
.
|
|
3.4
|
In
addition to the quarterly royalty reports referred to in
Section 3.3
above, LICENSEE shall – if requested by LICENSOR promptly after the end of
a calendar year – provide to LICENSOR within
[———-]
17
months of the end
of each calendar year a global certificate from its internal auditors
certifying that the volume and value of sales of the PRODUCTS for that
calendar year and that the figures contained in the quarterly royalty
reports for the same calendar year correspond with the entries in the
books of LICENSEE and where appropriate, any RELATED COMPANY of LICENSEE
or any other entity under its control and certifying the global deductions
from gross sales made to calculate the NET SALES figure for the relevant
calendar year. The certificate shall also certify that the figures set out
in the year-end rebate referred to in
Section 6.5
are
true and accurate. Additionally, upon request by, LICENSEE shall provide a
certificate from its external auditors confirming that the volume and
value of sales of the PRODUCTS for that calendar year and that the figures
contained in the quarterly royalty reports correspond with the entries in
the books of LICENSEE and, where appropriate, any RELATED COMPANY of
LICENSEE or any other entity under its control and certifying the global
deductions from gross sales made to calculate the NET SALES figure for the
relevant calendar.
|
15
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.15.
16
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.16.
17
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.17.
|
3.5
|
Failure
by LICENSEE to make payment of any royalties within [
———-]
18
working days after
their due date shall thereafter incur accrued interest at the basic bank
interest rate of BNP, Banque Nationale de Paris, plus [
———-]
19
per annum. Payment
shall be applied first against any interest which may have been accrued to
the date of the payment and any balance against the amount of royalties
outstanding.
|
|
3.6
|
All
taxes required by law to be withheld or assessed on or with respect to the
remittance of royalties by LICENSEE or any RELATED COMPANY hereunder
shall, if paid by LICENSEE or any related party, be deducted from the
amount of royalties payable to LICENSOR. LICENSEE shall furnish LICENSOR
with documentation reflecting the amount and proof of such tax
payments.
|
|
3.7
|
LICENSEE
shall not be obliged to pay royalties on any compensation received from
its customers as participation in advertising and sales promotion, such as
payments for decoration, testers and samples which will not be charged to
end consumers.
|
|
3.8
|
LICENSEE
agrees to keep full and accurate books and records relating to the
marketing and the sale of the PRODUCTS. LICENSEE agrees that LICENSOR
shall have the right to inspect, audit or make copies of the books and
records of LICENSEE and/or any RELATED COMPANIES of LICENSEE relating to
the computation and the payment of the royalties due and owing to LICENSOR
within two years after the quarter in question up to [
———-]
20
times a year at
reasonable times and upon no less than [
———-]
21
month’s prior
notice. This right terminates [
———-]
22
years after the
expiration of this AGREEMENT.
|
|
3.9
|
If
a shortfall in the ROYALTIES paid is verified, LICENSEE shall promptly pay
to LICENSOR all additional ROYALTIES due. If the shortfall is greater than
[
———-]
23
of the cumulative
amount of ROYALTIES paid by LICENSEE for the relevant CONTRACT YEAR, then
the LICENSEE shall also pay to LICENSOR an amount equal to the reasonable
costs and expenses of LICENSOR’S examination together with interest
calculated in accordance with
Section 3.5
above.
|
|
4.
|
PRODUCTS
AND QUALITY CONTROL
|
|
4.1
|
The
parties shall collaborate in the development process of the PRODUCTS so
that the PRODUCTS brought to the market will be consistent with the image
of LICENSOR and the TRADEMARKS, and in conformity with the QUALITY
CRITERIA.
|
18
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.18.
19
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.19.
20
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.20.
21
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.21.
22
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.22.
23
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.23.
LICENSEE
expressly agrees to take LICENSOR’S image and reputation into consideration in
the development and the manufacturing of the PRODUCTS and ensure that the
PRODUCTS will be in accordance with LICENSOR’S image and reputation and will not
harm or diminish LICENSOR’S image and reputation and the goodwill LICENSOR has
built up with its other products.
|
4.2
|
The
parties agree that LICENSOR shall have approval rights with regard to the
PRODUCTS over:
|
|
|
·
|
the
inner and outer packaging (including but not limited to the bottles, the
folding boxes, any other packagings, tubes, vials and jars, decoration,
testers and samples)
|
|
|
·
|
advertising
creative and PR events
|
and any
changes made thereto. As far advertising and marketing, it is referred to
Section 5.5
below
.
|
|
4.2.1
|
If
LICENSOR does not give its approval of any of LICENSEE’S proposals with
regard to the concept, the scent or the packaging, it shall give its
reasons for such withholding and agrees to submit its ideas, input,
advice, and suggestions with regard thereto to LICENSEE within [
———-]
24
business days
after having received such
proposal.
|
|
|
4.2.2
|
Within
[
———-]
25
business days of
receipt of LICENSEE’S request for approval of any name in accordance with
this
Section
4.2
, or any trademark and/or any other attribute in accordance with
Section
2.1
as well as the submission of a completed availability search by
LICENSEE in accordance with
Section 8.16
below, LICENSOR shall notify LICENSEE which names, trademarks or
attributes it approves or disapproves and shall give its reason for any
disapproval.
|
|
|
4.2.3
|
In
the event of non-approval pursuant to
Sub-Sections 4.2.1
and/or 4.2.2
above, LICENSEE agrees to take LICENSOR’S comments,
ideas, input and advice into consideration and to amend or revise its
proposal and/or implement LICENSOR’S suggestions and submit the revised
proposal to LICENSOR for its approval, it being understood that LICENSOR
and LICENSEE shall use their best endeavours to closely cooperate in order
to have finally a satisfactory common
project.
|
|
|
4.2.4
|
Any
proposal submitted to LICENSOR for approval and not disapproved within
[
———-]
26
business days
after LICENSOR having received such proposal shall be deemed to have been
approved.
|
24
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.23.
25
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.23.
26
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.23.
|
4.3
|
LICENSEE
shall be responsible for ensuring that the PRODUCTS, the BOTTLES, the
PRESENTATION and the scent/fragrance comply with the agreed designs,
models and prototypes and with all relevant laws, regulations,
specifications and standards in force with respect thereto and with all
LICENSOR’S reasonable instructions relating to the PRODUCTS, in
particular, their quality and presentation. LICENSEE will withdraw from
the course of manufacture and/or storage and not place upon the market any
goods found not in accordance with the QUALITY CRITERIA, whether fully or
partly manufactured.
|
|
4.4
|
LICENSEE
agrees to use commercially reasonable efforts to develop the sales of the
PRODUCTS and to launch new PRODUCT lines at least in key markets, as
follows:
|
|
|
-
|
CONTRACTUAL
YEAR
[———-]
27
: launch of the
first fragrance for women
|
|
|
-
|
CONTRACTUAL
YEAR[
———-]
28
: launch of the
second new fragrance for women
|
|
|
-
|
CONTRACTUAL
YEAR
[———-]
29
: launch of the
third new fragrance for women
|
|
4.5
|
LICENSOR
agrees to use its best efforts to ensure that the reputation, image and
the goodwill of the TRADEMARKS and/or of the TRADENAME shall retain its
present standing (as of signing of this AGREEMENT), particularly in
connection with other products manufactured and/or distributed under the
TRADEMARKS and/or the TRADENAME by LICENSOR, RELATED COMPANIES of LICENSOR
or other licensees, sub-licensees and franchisees of
LICENSOR.
|
|
4.6
|
LICENSEE
will permit LICENSOR or its authorised representative at all reasonable
times to enter the LICENSEE’S premises where the PRODUCTS are made,
stored, distributed or sold, for the purpose of inspection thereof. In
order to enable LICENSOR to control the quality of the PRODUCTS, LICENSEE
agrees to submit to LICENSOR after reasonable request random samples (up
to 4 items per range of PRODUCTS) free of cost for
inspection.
|
|
4.7
|
If
LICENSEE uses sub-manufacturers or sub-licensees, in accordance with the
terms of this AGREEMENT for the manufacture of the PRODUCTS, LICENSEE
shall remain liable for ensuring that the quality of the PRODUCTS remains
in accordance with the QUALITY CRITERIA. LICENSEE shall permit or procure
that the sub-manufacturer or sub-licensee shall permit the LICENSOR or its
representative during normal business hours to enter any place of
manufacture or storage occupied by or used by the sub-manufacturer or the
sub-licensee for the purpose of inspection of the PRODUCTS and to ensure
that the QUALITY CRITERIA are being adhered
to.
|
|
5.
|
MARKETING
AND LAUNCH PLANS, ADVERTISING, MARKETING AND SALES
PROMOTION
|
|
5.1
|
LICENSEE
shall, on a
[———-]
30
months basis, and
in each calendar year, communicate in writing to LICENSOR the
following:
|
28
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.23.
29
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.29.
30
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.30.
|
|
(a)
|
its
marketing plan for the following
[———-]
31
months period to
include the information set out in
Annex E
hereto;
|
|
|
(b)
|
any
new PRODUCT launch plans, if relevant, in accordance with
Section 5.3
below.
|
|
5.2
|
At
the time LICENSEE presents its marketing plan in accordance with
Section 5.1 (a)
above, LICENSOR shall present its PRODUCT marketing plan for the following
[———-]
32
month
period.
|
|
5.3
|
The
launch plan for each new line of PRODUCTS shall be presented at the
relevant marketing proposal presentation referred to in
Section 5.1
above, or at a separate presentation if agreed by the
parties.
|
|
5.4
|
LICENSEE
shall be responsible for producing and circulating all advertising and
promotional materials in the TERRITORY at its cost. LICENSEE agrees to
take LICENSOR’S image into consideration in its advertising and promotion
for the PRODUCTS and to ensure that the advertising and promotion for the
PRODUCTS will be in accordance with LICENSOR’S image and reputation and
will not harm or diminish LICENSOR’S image and reputation and the goodwill
LICENSOR has built up with its other products. LICENSEE further agrees to
consult with LICENSOR with regard to advertising and sales promotion and
to take LICENSOR’S advice into due consideration in order to develop
advertising which is consistent with the image and reputation of LICENSOR.
Notwithstanding the foregoing, LICENSOR shall have final approval over the
advertising agency, model, stylist and photographer used in each key
campaign.
|
|
5.5
|
The
parties agree that LICENSOR shall have approval rights with regard to the
advertising and marketing for the PRODUCTS
over
|
the
“central” marketing materials
the
“central” PR releases
the
“central” advertising material
major
public relation events
(“central”
means the initial core materials that will be sent by LICENSEE to international
markets for translation and adaptation to local markets. It is thereby
understood, that there will be no “local” marketing, PR and advertising material
other than the translated or to the local needs adapted “central” marketing, PR
and advertising material).
31
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.31.
32
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.32.
If
LICENSOR does not consent to any of LICENSEE’S proposals with regard to the
advertising and marketing for the PRODUCTS, it shall give its reasons for such
withholding and agrees to submit its ideas, input and advice with regard thereto
to LICENSEE within [
———-]
33
business days after
having received such proposal. LICENSEE agrees to take LICENSOR’S comments,
ideas, input and advice into consideration and amend or revise its proposal
and/or implement LICENSOR’S suggestions and submit the revised proposal to
LICENSOR for approval-it being understood that LICENSOR and LICENSEE shall use
their best endeavours to closely cooperate in order to have finally an agreed
marketing plan.
|
5.6
|
LICENSEE
undertakes to spend jointly with its distributors the following amounts in
respect of advertising and marketing of the PRODUCTS (hereinafter called
“Advertising and Marketing
Expenditure”)
|
|
|
5.6.1
|
in
the event that the fragrance is launched in CONTRACTUAL YEAR 2010, in
CONTRACTUAL YEAR 2010, the minimum amount of the Advertising and Marketing
Expenditure shall be Euros
[———-]
34
|
|
|
5.6.2
|
in
the CONTRACTUAL YEAR 2011, the minimum amount of the Advertising and
Marketing Expenditure shall be Euros
[———-]
35
;
|
|
|
5.6.3
|
in
the CONTRACTUAL YEAR 2012, the minimum amount of the Advertising and
Marketing Expenditure shall be Euros
[———-]
36
;
|
|
|
5.6.4
|
during
the three following CONTRACTUAL YEARS, the minimum amount of the
Advertising and Marketing Expenditure shall be
[———-]
37
of the NET SALES
in the year 2013 and [
———-]
38
of the NET SALES
for the years 2014 and 2015;
|
|
|
5.6.5
|
Subject
to the provisions of article 7 below, the minimum amount of the
Advertising and Marketing Expenditure shall be
[———-]
39
of the NET SALES
for the remainder of the term of this agreement until 31
st
December 2021;
|
|
5.7
|
LICENSEE
shall spend jointly with its distributors the amount of the minimum
Advertising and Marketing Expenditure specified in clause 5.6.4 above
split between the following
percentages:
|
33
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.33.
34
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.34.
35
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.35.
36
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.36.
37
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.37.
38
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.38.
39
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.39.
- “Above
the line”
expenditures
[———-]
40
- “Below
the line”
expenditures
[———-]
41
For the
avoidance of doubt, an equivalent proportionate split shall be applied to the
Minimum Advertising and Marketing Expenditure specified in clauses 5.6.1 to
5.6.3 inclusive, which is represented as follows:-
Clause
5.6.1- EUROS
[———-]
42
- the
proportionate split is EUROS
[———-]
43
“Above the line” and
EUROS
[———-]
44
“Below the
line”
Clause
5.6.2- EUROS [
———-]
45
- the
proportionate split is EUROS
[———-]
46
“Above the line” and
EUROS
[———-]
47
“Below the
line”
Clause
5.6.3 –EUROS
[———-]
48
|
|
-
|
the
proportionate split is EUROS [
————]
49
“Above the line”
and EUROS
[———-]
50
“Below the
line”
|
Clause
5.6.4 –
[———-]
51
|
|
-
|
the
proportionate split is
[———-]
52
“Above the line”
and
[———-]
53
“Below the
line”
|
40
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.40.
41
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.41.
42
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.42.
43
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.43.
44
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.44.
45
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.45.
46
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.46.
47
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.47.
48
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.48.
49
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.49.
50
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.50.
51
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.51.
52
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.52.
53
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.53.
Clause
5.6.4 –
[———-]
54
-the
proportionate split is
[———-]
55
“Above the
line” and
[———-]
56
“Below the
line”
For the
purpose of this section 5.7, "
Above the line
" expenditures
shall include all advertising through mass media advertising (magazines, radio,
press/print, TV, billboards, web and internet banner ads, cinema) and
cooperative advertising (advertising related to the PRODUCTS in magazines and
store catalogues produced by or on behalf of retailers (such as Marionnaud,
Sephora, Saks), as well as direct production costs (agency costs, photographer,
buyouts, usage rights, modelling costs) and "
Below the Line
" expenditures
shall POS displays, testers, demonstration, gift with purchases, show cards,
windows, dummies, other sell-through (direct mail, consumer meetings (including
costs of independent beauty consultant incurred in respect of selling or
presenting the PRODUCTS in the point of sale), stand in department stores,
public relations (including trade shows).
Product
development costs (e.g. tooling) for new PRODUCTS launched and pre-launch costs
(e.g. PR, events and basic set up costs) in the first year of their launch,
shall NOT be included in the Advertising and Marketing
Expenditure.
|
5.8
|
Any
information about LICENSOR as well as any pictures and photos of LICENSOR
or LICENSOR’S OUTLETS shall be subject to LICENSOR’S prior written
approval.
|
LICENSOR
agrees to sell to LICENSEE a reasonable number of samples of other products of
LICENSOR at wholesale price and provide LICENSEE with a reasonable number of
photos, drawings, etc. of LICENSOR’S shops or products for LICENSEE’S use in
advertising, promotion or any other way. In the event that LICENSOR meets any
reasonable request of LICENSEE, for example, creating product for a photo shoot
or providing such other product and/or service which is specific to the
LICENSEE’s requirements, then LICENSEE shall fully reimburse LICENSOR for all
costs and expenses related thereto.
|
5.9
|
In
case LICENSOR and LICENSEE intend to arrange for public relation
statements referring to their co-operation they will beforehand consult
with each other and harmonise words, pictures and further details of the
public relation actions and each shall confirm in writing to the other its
approval of the final format of such statement prior to public
release.
|
|
5.10
|
If
requested by LICENSEE, LICENSOR agrees to inform LICENSEE about its actual
marketing strategies and communication concepts by providing LICENSOR with
relevant technical information, namely any and all retail information in
connection with, for example, creative and technical input with respect to
design, image, corporate identity, brand direction, advertising, marketing
and promotion (including LICENSOR’S global marketing policy) relating to
the PRODUCTS;
|
54
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.54.
55
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.55.
56
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.138.56.
|
5.11
|
LICENSEE
shall take these strategies into reasonable consideration for the
development of the advertising and promotion for the
PRODUCTS.
|
|
5.12
|
If
requested by either party, the parties shall consult with each other from
time to time on advertising and promotion activities to be implemented
jointly and/or together with other licensees, sub-licensees or franchisees
of LICENSOR.
|
|
5.13
|
LICENSEE
shall make available to LICENSOR:
|
|
|
-
|
a
[———-]
57
report on the
status of its expenditure for advertising, merchandising and promotions,
including Advertising and Marketing Expenditure;
and
|
|
|
-
|
regular
evidence of expenditure in relation to advertising, merchandising and
promotion for the PRODUCTS by providing representative samples of its
advertising, public relation releases,
etc.
|
|
5.14
|
LICENSOR
shall be free to use for LICENSOR’S OUTLETS LICENSEE’S advertising and
marketing materials for the PRODUCTS, subject to the limitations of rights
granted by third parties in relation to such advertising and marketing
materials for the PRODUCTS. To this end, LICENSEE will supply to LICENSOR
reasonable quantities of aforesaid material, upon request by LICENSOR at
local wholesale price.
|
|
5.15
|
LICENSEE
shall reimburse LICENSOR for any expenses incurred on LICENSEE’s behalf in
relation to marketing and advertising activities including but not limited
to personal appearances, launch events, advertising shoots and public
relations activities. Such expenses shall include but shall not be limited
to the payment of First Class travel and accommodation for LICENSOR’s
Senior Management (President and CEO) and Business Class travel and
accommodation for all other LICENSOR
employees.
|
|
5.16
|
On
a bi-annual basis LICENSEE shall submit to LICENSOR a list of requests for
LICENSOR’s participation in certain activities to promote the PRODUCTS
such as key media interviews, launch events, in store appearances and
other such public relations activities as may be requested. LICENSEE shall
reimburse LICENSOR’s costs and expenses for its participation in any of
the activities. LICENSEE acknowledges that LICENSOR has the absolute right
to refuse to participate in any given activity without giving any
reasons.
|
|
5.17
|
It
is acknowledged that from time to time Tamara Mellon or such similarly
situated Executive at the given time (“JC President”) shall be making
personal appearances to promote the PRODUCTS upon the mutual agreement of
the parties. In the event that the JC President participates in any
broadcast media, television show, red carpet event, or key editorial shoot
focused on the PRODUCTS then LICENSEE shall reimburse LICENSOR for make
up, stylist and First Class travel and accommodation (including specialist
driver services) costs and
expenses.
|
57
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.57.
|
6.1
|
LICENSEE
agrees to distribute the PRODUCTS or have them distributed by its RELATED
COMPANIES or third party distributors only through selected distribution
channels (speciality department stores, qualified independent perfumeries,
select perfumery chains and travel retail outlets) of a similar standing
luxury and prestige to the Jimmy Choo brand and subject that other brands
of same level of profile as Jimmy Choo are also represented. For the
avoidance of doubt, LICENSEE will inform LICENSOR of its proposed
arrangements with regard to US distribution for its prior written
approval.
|
|
6.2
|
LICENSEE
shall use its best efforts to ensure that such outlets conform with
LICENSOR’S selective distribution criteria as set out in
Annex D
hereto.
LICENSOR reserves the right for its representatives to visit all outlets
supplied by LICENSEE or its authorised distributors in order to ensure
that they do so conform and, in the event they do not and after being
requested by LICENSOR, LICENSEE shall, subject to compliance with local
laws, ensure that such outlets will no longer be supplied with the
PRODUCTS.
|
|
6.3
|
LICENSEE
agrees not to distribute or sell the PRODUCTS though correspondence
(including internet, mail order / catalogue sales) without first obtaining
LICENSOR’S written consent. LICENSEE further agrees that the marketing,
distribution or sale of the PRODUCTS through any electronic means such as
the Internet shall only be authorised for approved retailers provided they
have a physical outlet fulfilling the criteria as set out in Section
6.2/Annex D, and provided that the use of the Internet is consistent with
the high quality and high luxury image of the PRODUCTS and criteria as
LICENSOR may reasonably communicate from time to
time.
|
|
6.4
|
LICENSOR
shall be free, in its exclusive discretion, to market and sell the
PRODUCTS through LICENSOR’S OUTLETS in the TERRITORY. It is agreed that
LICENSOR, and any of its RELATED COMPANIES or franchisees, shall order the
PRODUCTS from LICENSEE, and LICENSEE shall accept, or procure the
acceptance of such orders, and shall deliver the PRODUCTS to LICENSOR at
local wholesale price minus
[———-]
58
. Royalties shall
be paid in accordance with the provisions of Section 3 above on sales to
LICENSOR, any of its RELATED COMPANIES or franchisees in accordance with
this Section.
|
|
6.5
|
LICENSEE
shall sell the PRODUCTS to employees of LICENSOR at LICENSEE’s wholesale
price less [
———-]
59
.
|
58
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.58.
59
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.59.
|
7.1
|
The
term of this AGREEMENT shall commence on January 1, 2010 and shall have a
duration of twelve (12) CONTRACTUAL YEARS expiring on December 31,
2021. This AGREEMENT may be terminated, with effect from 31
December 2016 subject to a six-month prior notice, if the
LICENSEE has not complied with the payment of the minimum royalties in
clause 3.2, the minimum Advertising and Marketing spend in clause 5.6 or
if the LICENSEE has not achieved during the CONTRACTUAL YEAR 2015 at least
EUROS [
————]
60
NET
SALES.
|
|
7.2
|
If
the aggregate of the NET SALES from 1 January 2015 to 31 December 2015 in
respect of the licensed PRODUCTS is less than EUROS [
———-]
61
NET SALES, either
party shall, with effect from 31 December 2016, be entitled to terminate
this Agreement, by giving at least [
———-]
62
month’s notice
expiring on or before 31 December
2016.
|
|
7.3
|
The
parties agree that they shall no later than 31 December 2018 (CONTRACTUAL
YEAR 9) consult together with a view to agreeing the terms and conditions
upon which they may further extend the AGREEMENT for a further [
————]
63
years until 31
December 2026, but in the absence of any such renewal agreement by 31
December 2020 this Agreement shall terminate on 31 December
2021.
|
|
7.4
|
If
LICENSEE fails to invoice third parties and/or retailers by April 2011 for
whatever reason, LICENSOR may terminate this AGREEEMENT by serving
[———-]
64
months notice on
LICENSEE.
|
|
7.5
|
Each
party shall be entitled to terminate the AGREEMENT upon written notice to
the other party upon the occurrence of any of the following
events:
|
|
|
7.5.1
|
the
other party shall default or fail to make when due any payment due
hereunder, and such default or failure shall continue for a period of
[
———-]
65
days after receipt
of notice thereof from the other
party;
|
|
|
7.5.2
|
a
material breach of any provision of this AGREEMENT which is not remedied
within [
———-]
66
days of written
notice thereof;
|
|
|
7.5.3
|
liquidation,
insolvency or bankruptcy, suspension of payments, heavy indebtedness or
discontinuance of business of the other
party;
|
|
|
7.5.4
|
any
of the circumstances referred to in
Section 19
below persist for a period of at least
[———-]
67
calendar
months.
|
60
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.60.
61
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.61.
62
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.62.
63
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.63.
64
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.64.
65
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.65.
66
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.66.
67
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.67.
|
7.6
|
Any
notice of termination must be given by means of a registered letter sent
to the relevant party’s address in accordance with the provisions of
Section 12
below.
|
|
7.7
|
Upon
the expiration or termination of the
AGREEMENT:
|
|
|
7.7.1
|
LICENSEE
shall cease to manufacture the PRODUCTS, the BOTTLES and the
PRESENTATION;
|
|
|
7.7.2
|
provided
the termination has not been a result of default of LICENSEE or of notice
having been given by either party under
Sections 7.4
above, LICENSEE shall be entitled to sell off the existing stock of
PRODUCTS for a period up to
[———-]
68
months following
the date of termination and to use up the existing materials for the
manufacture of the PRODUCTS and to sell off the so-produced PRODUCTS
within the sell-off period. During the sell-off period LICENSEE shall
continue to provide
[———-]
69
reports and pay
royalties on NET SALES, but shall not be obliged to pay any minimum
royalties. PRODUCTS will not be sold at a discount (other than ordinary
discounts in the normal course of business) unless LICENSOR’S prior
written approval has been obtained;
|
|
|
7.7.3
|
LICENSEE
shall either at the end of the sell-off period referred to in Section
7.7.2 above or, if there is no sell-off period, upon expiration or
termination of the AGREEMENT, promptly supply to LICENSOR an inventory of
the PRODUCTS, BOTTLES and PRESENTATION and all other materials relevant to
manufacture, marketing and distribution of the PRODUCTS, including but not
limited to bottles, folding-boxes or other containers then in stock, and
an inventory of all relevant tooling. LICENSOR shall have the right to
purchase the inventory at production cost or, in case of tooling, at its
depreciated value (based on depreciation over five years in accordance
with standard accounting principles) within [
———-]
70
months after
receipt of the inventory; If not otherwise agreed between the parties,
LICENSOR, if using its option, has to acquire any and all of the PRODUCTS,
bottles, packaging, semi-finished PRODUCTS and materials, unless obsolete,
damaged or otherwise un-saleable at the lower of cost or net realisable
value;
|
|
|
7.7.4
|
LICENSEE
will return all material relating to the PRODUCTS which is the property of
LICENSOR promptly following termination or, if relevant, at the end of the
sell-off period;
|
|
|
7.7.5
|
all
rights granted to LICENSEE to use the TRADEMARKS, the TRADENAME, the
BOTTLES and the PRESENTATION and the scent/fragrance of the PRODUCTS shall
cease.
|
68
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.68.
69
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.69.
70
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.70.
|
7.8
|
Stocks
of PRODUCTS, BOTTLES and PRESENTATION which display the TRADEMARKS and any
relevant tooling not purchased by LICENSOR and not disposed of during the
sell-off period may be disposed of in such manner as shall be mutually
agreed by the parties or, failing agreement shall be
destroyed.
|
|
8.
|
TRADEMARKS
AND OTHER INTELLECTUAL PROPERTY
RIGHTS
|
|
8.1
|
LICENSOR
guarantees and warrants that it is, respectively, will be, the owner of
the TRADEMARKS set forth
in Annex A
hereto and the TRADENAME for the PRODUCTS and to grant this exclusive
license to use the TRADEMARKS set forth
in Annex A
hereto and the TRADENAME for the PRODUCTS for the purpose of this
AGREEMENT.
|
|
8.2
|
Subject
to this Section 8.and in general information with respect to the
TRADEMARKS supplied to LICENSEE during the TERM of this AGREEMENT,
LICENSOR undertakes to (i) defend LICENSEE against any and all claims by
third parties based on the use by LICENSEE in accordance with this
AGREEMENT of the TRADEMARKS and/or the TRADENAME and (ii) to indemnify,
reimburse and hold LICENSEE harmless from any and all liability, damages,
cost and expenses, including reasonable attorneys’ fees incurred by
LICENSEE, arising from any such claims made by third parties against
LICENSEE with respect to LICENSEE’S use of the TRADEMARKS and/or the
TRADENAME in accordance with this
AGREEMENT.
|
|
8.3
|
LICENSEE
acknowledges that LICENSOR and/or its RELATED COMPANIES are the exclusive
owners of all rights, title and interests in the TRADEMARKS and/or the
TRADENAME and any part thereof and any other element, whether or not
capable of being registered as a trademark together with all rights in the
designs, copyright, including sketches and technical drawings or other
intellectual property or materials relating to the PRODUCTS, the
PRESENTATION and the BOTTLES, whether produced by LICENSOR or by LICENSEE
or by any sub-contractor or third party appointed by LICENSEE, and of all
goodwill attached thereto and agrees not to attack these rights or to
induce or support any such attacks. The parties agree that any rights in
the TRADEMARKS and the TRADENAME arising from the use of the TRADEMARKS
and/or the TRADENAME or any part thereof by LICENSEE shall inure solely to
the benefit of LICENSOR and/or its RELATED COMPANIES. LICENSEE irrevocably
agrees that any rights which it and/or any of its RELATED COMPANIES may
acquire by virtue of this AGREEMENT in respect of the TRADEMARKS, the
TRADENAME, the PRESENTATION and the BOTTLES shall vest in and promptly
upon request be assigned for the nominal consideration of £1 to the
LICENSOR and/or its RELATED COMPANIES
absolutely.
|
|
8.4
|
The
parties agree to inform each other about any and each substantial
violation or infringement of the TRADEMARKS in relation to the PRODUCTS,
the PRESENTATION, the BOTTLES and other trademarks to be used in
conjunction with the TRADEMARKS and/or the TRADENAME by third
parties which come to their
knowledge.
|
|
8.5
|
LICENSOR
agrees to use its best endeavours to keep at its own cost and expense the
registrations of the TRADEMARKS and other trademarks to be used in
conjunction with the TRADEMARKS (in accordance with this AGREEMENT) in
full force and effect for the TERM of this AGREEMENT and to keep LICENSEE
informed on the legal status of the applications and registrations of the
TRADEMARKS and the other trademarks to be used in conjunction with the
TRADEMARKS in international class of goods
3.
|
|
8.6
|
With
respect to PRODUCTS launched since the signing of this AGREEMENT LICENSOR
shall carry all costs in relation to the registration and administrative
procedures of new names that have been approved under Section 4.2
above.
|
|
8.7
|
LICENSOR
shall at its reasonable business discretion defend the TRADEMARKS, the
TRADENAME and the PRODUCTS as well as any other trademarks used in
relation to the PRODUCTS in accordance with the terms of this AGREEMENT,
at its own cost and in co-ordination with LICENSEE against any and all
violations or infringements which, according to LICENSOR’S reasonable
business discretion, may have a materially adverse impact on this
AGREEMENT, especially against confusingly similar trademarks, trademark
applications or use by third parties for any goods and/or services
identical with or similar to the PRODUCTS. If requested by LICENSOR,
LICENSEE undertakes to assist or support LICENSOR in its measures of
defence within its ability.
|
|
8.8
|
Any
cost and expenses reasonably and properly incurred arising from a
necessary or requested participation of LICENSEE in the measures of
defence of the TRADEMARKS will be refunded by
LICENSOR.
|
|
8.9
|
If
LICENSEE, in its reasonable business discretion, identifies a violation or
infringement of the TRADEMARKS and/or the TRADENAME which in its
reasonable opinion may have a materially adverse impact on this AGREEMENT,
it shall promptly inform LICENSOR and LICENSOR agrees to enter into
discussions with LICENSEE as to the best course of action to adopt to deal
with such violation. The LICENSOR shall not be obliged to bring or defend
any proceedings, whether from infringement or otherwise, in respect of the
TRADEMARKS if it decides in its sole discretion not to do so and LICENSEE
shall not be entitled to bring or defend any action unless it has received
the LICENSOR’s prior written consent. Any such action brought or defended
by the LICENSEE shall be at LICENSEE’s sole expense and it shall not be
entitled to settle such action without the LICENSOR’s prior written
consent. Any benefit arising will be for the sole benefit of the
LICENSOR.
|
|
8.10
|
LICENSEE
undertakes at the request of LICENSOR to sign any document necessary for
the registration and/or maintenance of the validity of the TRADEMARKS. In
addition, to the extent that LICENSOR should deem it advisable to protect
the TRADEMARKS, LICENSEE agrees to provide a statement to the effect that
LICENSEE is producing, selling and promoting the PRODUCTS under LICENSOR’S
control, together with such other assistance (at LICENSOR’S cost) as
LICENSOR reasonably deems necessary for this
purpose.
|
|
8.11
|
LICENSEE
agrees that it shall not, at any time, directly or indirectly contest the
validity of the registration of the TRADEMARKS or LICENSOR’S other
intellectual property rights (including those in the PRESENTATION and the
BOTTLES) to the extent that such rights relate to the subject matter of
this AGREEMENT, or their ownership by LICENSOR, its RELATED COMPANIES,
successors and/or assignees.
|
|
8.12
|
LICENSEE
agrees not to use the TRADEMARKS or LICENSOR’S other intellectual property
rights in respect of the PRESENTATION and the BOTTLES in connection with
the sale of any products other than the PRODUCTS, nor to use, other than
under the terms of this AGREEMENT, the TRADEMARKS and/or the TRADENAME as
a part of its trading name and shall not use in its business any other
trade or service mark, other than under the terms of this AGREEMENT, so
resembling the TRADEMARKS as to be likely to cause
confusion.
|
|
8.13
|
LICENSEE
shall use the TRADEMARKS and all designs, sketches, models, prototypes and
other material directly related to the PRODUCTS as well as the
PRESENTATION and the BOTTLES, solely in connection with the
production, marketing, merchandising, distribution, advertising,
promotion, and sale in the TERRITORY of the PRODUCTS and any OTHER
PRODUCTS which LICENSOR has agreed may be sold or given away with the
PRODUCTS.
|
|
8.14
|
LICENSEE
shall, upon LICENSOR’S reasonable request, mark all labels, cartons, price
lists, promotional and advertising, merchandising and promotional material
and other printed or duplicated material for or relating to the PRODUCTS
with a notice in a form as is normal practice in the industry to the
effect that the TRADEMARKS are registered trademarks and/or the property
of LICENSOR.
|
|
8.15
|
LICENSEE
agrees to use the TRADEMARKS set forth in
Annex A
only in
the form as represented in ANNEX A or as may be provided by LICENSOR from
time to time on the PRODUCTS and for the advertising and promotion for the
PRODUCTS. This obligation shall not apply where a TRADEMARK is used within
continuous, flowing text (e. g. in press releases and descriptive texts)
where it could be impracticable to use the TRADEMARKS in the form
represented in ANNEX A Part 1, provided that such representation of the
TRADEMARKS shall be as close to the form represented in ANNEX A as is
practicable in the circumstances.
|
|
8.16
|
LICENSEE
shall be responsible for identifying appropriate names for all new ranges
of the PRODUCTS, together with, if appropriate, new BOTTLES and
PRESENTATION for such new ranges and, to that end, LICENSEE agrees
that:
|
|
|
(i)
|
it
shall use reasonable endeavours to ensure the availability of all proposed
names, designs for new BOTTLES and PRESENTATION and shall carry out the
necessary worldwide trademark searches at its sole cost;
and
|
|
|
(ii)
|
it
shall assist LICENSOR, at LICENSOR’S reasonable request and cost, in
applying to register, registering or otherwise protecting in LICENSOR’S
name any new names, BOTTLE design and/or PRESENTATION approved by LICENSOR
in accordance with this
AGREEMENT.
|
|
|
(iii)
|
LICENSOR
shall have the right to file, to register and/or to use the name with
respect to any other category of products it (and/or its RELATED
COMPANIES) presently markets and distributes under the
TRADENAME.
|
|
9.1
|
LICENSOR
agrees, during the term of this
AGREEMENT:
|
|
|
9.1.1
|
not
to manufacture, advertise or promote, distribute or in any other way
market products, which are identical to the PRODUCTS except as may be
permitted in this AGREEMENT;
|
|
|
9.1.2
|
not
to consent to the use of the TRADEMARKS and/or the TRADENAME in connection
with the manufacture, distribution, marketing and/or advertising of
products which are identical to the PRODUCTS, alone or in conjunction with
any additions.
|
|
10.1
|
LICENSEE
shall manufacture or have manufactured the PRODUCTS at its own
responsibility and shall enter into or maintain sufficient product
liability insurance, such insurance to also cover the costs of undertaking
a product recall.
|
|
10.2
|
LICENSEE
agrees that the manufacture, marketing and distribution of the PRODUCTS,
and any OTHER PRODUCTS (
Section 2.7
above) distributed or sold with the PRODUCTS will be in compliance with
all applicable health and safety laws or regulations and with any relevant
national and international cosmetic labelling, packaging, recycling or
other relevant regulations in the countries of manufacture and
distribution.
|
|
10.3
|
LICENSEE
further agrees that it will organise and effect, at its own expense, all
registrations as are necessary for compliance with local product
registration and health or similar registration requirements. LICENSOR
agrees to assist LICENSEE with regard to such registrations within its
best abilities. LICENSEE agrees to reimburse LICENSOR any costs and
expenses reasonably and properly incurred by LICENSOR in connection with
such registrations.
|
|
10.4
|
LICENSEE
agrees to defend, indemnify and hold LICENSOR harmless from and against
any and all liability, damages, reasonable legal fees, reasonable cost and
expenses incurred by LICENSOR in connection with any claims or legal
actions made by third parties against LICENSOR arising out of a breach of
the provisions of
Section 10.2 and/or
10.3
above, or arising out of the use of the TRADENAME by LICENSEE
in accordance with
Sections 2.2 to
2.6
above or arising out of any damage or injury caused by any
OTHER PRODUCT
(Section 2.7
above)
sold with the PRODUCTS, the infringement of the intellectual
property rights or other similar rights of any third party or any
applicable national or international laws or regulations or any other acts
or omissions of LICENSEE or any of its agents, employees or
sub-contractors in connection with the performance of its obligations
hereunder. This indemnity shall not extend to claims for compensation
against LICENSOR which are due to LICENSOR’S own action or failure to
act.
|
|
11.1
|
The
parties agree to keep confidential and secret the provisions of this
AGREEMENT and all non-public information and knowledge each party may
acquire about the other including, without limitation, information
concerning the marketing of their products, even if such information and
knowledge have not expressly been referred to as secret or confidential.
Such information and knowledge may only be used for the purpose of this
AGREEMENT.
|
|
11.2
|
Notwithstanding
anything to the contrary, the information and knowledge as identified
hereinabove shall not be deemed confidential
if:
|
|
|
11.2.1
|
at
the time of disclosure such information is in the public
domain;
|
|
|
11.2.2
|
after
disclosure such information becomes a part of the public domain, except by
breach of this AGREEMENT;
|
|
|
11.2.3
|
such
information must be disclosed as required by applicable law;
or
|
|
|
11.2.4
|
such
information is known to the other party at the time of
disclosure.
|
|
11.3
|
The
confidentiality provision will remain in force after the termination of
the AGREEMENT, and upon termination, the parties agree to return to each
other, or to destroy, as the other may request, all materials containing
confidential and non-public information and
knowledge.
|
|
11.4
|
The
parties agree to impose this obligation of confidentiality upon all
persons acting on their behalf, including but not limited to their
employees, agents, consultants, sub-contractors, sub-licensees, managers
and representatives.
|
|
11.5
|
Notwithstanding
anything to the contrary contained in this
AGREEMENT,
|
LICENSOR
acknowledges that LICENSEE, has its ordinary shares traded on Euronext, and is
subject to various reporting obligations as a public company. LICENSOR further a
acknowledges that Inter Parfums, Inc., the parent company of LICENSEE (the
“PARENT COMPANY”), is a publicly held company with its Common Stock traded on
The Nasdaq Stock Market, National Market System and is subject to reporting
requirements of the United States federal securities laws. Nothing in the
AGREEMENT shall prohibit the disclosure as may be required of either PARENT
COMPANY or LICENSEE under such securities laws. LICENSEE agrees to discuss in
advance with LICENSOR any such public disclosure that may be required by of
either PARENT COMPANY or LICENSEE. LICENSOR on behalf of itself and its
affiliates shall not trade in the securities of Inter Parfums, Inc., on the
basis of non-public material information.
|
12.1
|
All
reports, communications, requests, approvals and notices required or
permitted by this AGREEMENT to be given to a party shall be in writing and
shall be deemed to be duly given when sent by certified or registered
mail, return receipt requested, addressed to the party concerned or by
facsimile where the sender is able to demonstrate successful transmission
by producing a properly addressed fax transmission report, as
follows:
|
To
LICENSOR:
J Choo
Limited
4, Lancer
Square
Kesington
Church Street
W8
4EH
Attn: Ms.
H Merritt, Legal Director
To
LICENSEE:
Inter-Parfums
SA
4
rond-point des Champs Elysées
75008
PARIS
Attn: M.
Philippe BENACIN
or any
other address a party may communicate to the other party in
writing.
|
13.1
|
Except
as otherwise provided for in accordance with the terms of this AGREEMENT,
neither party shall be entitled to assign its rights or obligations
hereunder without the prior written consent of the
other.
|
|
13.2
|
LICENSEE
shall have the right to assign the rights under the AGREEMENT to any
RELATED COMPANY without LICENSOR’S consent. LICENSEE further will be
entitled to grant sub-licenses to RELATED
COMPANIES.
|
|
13.3
|
Any
such assignment or sub-license under
Section 13.1 or
13.2
does in no way affect any of the assignor’s obligations under
the AGREEMENT. The assignor agrees to remain liable for and guaranty the
full performance of this AGREEMENT by the
assignee.
|
|
14.
|
ENTIRE
AGREEMENT, MODIFICATION AND CONCILIATION OF
DISPUTES
|
|
14.1
|
This
AGREEMENT and its Annexes contain a complete statement of all arrangements
between the parties with respect to the subject matter and supersede all
existing arrangements between them concerning this subject
matter.
|
|
14.2
|
Modifications
and/or supplements to this AGREEMENT are only valid if made in
writing.
|
|
14.3
|
CONCILIATION
OF DISPUTES
|
|
|
In
the event of a disagreement between LICENSOR and LICENSEE as to the
validity, construction, performance, or rescission of any provision
hereof, the parties agree to follow the following conciliation procedure
before filing any litigation:
|
|
|
-
|
First,
a meeting between operational managers shall be called by the promptest
party to resolve the disagreement as quickly as possible after the
disagreement arises. The purpose of this meeting shall be to find an
out-of-court solution to the disagreement in question. Minutes of said
meeting shall be drawn up.
|
|
|
-
|
Second,
if the meeting between operational managers does not result in an
out-of-court solution, the chief executive officers of each of the parties
shall meet and strive to resolve said disagreement amicably. Such meeting
must be held in a timely manner and no later than
[
———-]
71
days as of the
meeting between operational
managers.
|
Should
for a further period of
[
———-]
72
days a dispute subsist
as to the validity, construction, performance, and/or rescission hereof in spite
of the conciliation procedure or should one of the parties refuse to follow the
aforementioned procedure promptly, carefully and in good faith, the said dispute
shall be subject to the court procedure as set out below in article
15.
|
15.
|
APPLICABLE
LAW, JURISDICTION
|
This
Agreement shall be governed by, and construed in accordance with, English or Law
and each of the parties irrevocably submits to the exclusive jurisdiction of the
English courts.
The
specific remedies to which either party may resort under the terms hereof are
cumulative and are not intended to be exclusive of the remedies to which either
party is entitled. No waiver by either party, whether express or implied, of any
provision of this AGREEMENT or any breach or default of any one or more
instances, nor any delay by either party in exercising its rights hereunder,
except as provided for in this AGREEMENT, shall constitute or be deemed a
continuing waiver of such provision or of any other provision of this
AGREEMENT.
71
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.71.
72
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.72.
The
provisions of this AGREEMENT are independent of and severable from each other
and no provision shall be affected or rendered invalid or unenforceable by
virtue of the fact that for any reason any other provision or provisions may be
in whole or in part invalid or unenforceable. The parties hereby agree to
substitute any invalid provision by another valid provision in such a way that
the purpose of the invalid provision is reached as far as possible. The same
shall apply accordingly in case of an omission or an indefinite
provision.
Section
headings as used herein are for identification purposes only, and shall not
affect the meaning or construction of this AGREEMENT.
The
parties hereto shall not be responsible for any loss, damage, consequential or
otherwise, detention or delay caused by fire, law, regulation, civil or military
authority, insurrection or riot, national labour strike or wartime embargoes,
tempest, act of God, shortages or by any other cause whatsoever, which is
unavoidable or beyond the relevant party’s reasonable control; provided however,
that any such force majeure shall not release LICENSEE from its obligations to
make payment of amounts due and owing to LICENSOR in accordance with the terms
of this AGREEMENT. It is agreed that LICENSEE’S obligations to make payments of
amounts due and owing up to, and during, an event of such force majeure shall
not apply during the continuance of that force majeure in the event that the
force majeure itself renders LICENSEE unable to make such payments. In such
circumstances, LICENSEE undertakes to make payment of amounts owing to and
accrued to LICENSOR before and during such force majeure, promptly upon its
cessation.
|
IN
WITNESS whereof the parties have executed this
AGREEMENT
|
|
|
|
|
|
For
and on behalf of
|
|
For
and on behalf of
|
|
LICENSOR
|
|
LICENSEE
|
|
|
|
|
|
London 29/9/09
|
|
Paris 29/9/09
|
|
place
and date
|
|
place
and date
|
|
|
|
|
|
/s/ Joshua Schulman
|
|
/s/ Philippe BENACIN
|
|
Name:
Joshua Schulman
|
|
Name:
Philippe BENACIN
|
|
Title:
Chief Executive Officer
|
|
Title:
President
|
ANNEX
A
THE
TRADEMARKS
(Clause
1.4)
The
trademarks as set forth the attached document
|
For
and on behalf of
|
|
For
and on behalf of
|
|
LICENSOR
|
|
LICENSEE
|
|
|
|
|
|
/s/ Joshua Schulman
|
|
/s/ Philippe BENACIN
|
|
Name:
Joshua Schulman
|
|
Name:
Philippe BENACIN
|
|
Title:
Chief Executive Officer
|
|
Title:
President
|
ANNEX
B
FORM OF ROYALTY
REPORT
(Clause
3.3)
At the
end of each quarter LICENSEE will provide the following reports which have been
approved by LICENSOR:
|
|
-
|
[———-]
73
sales by zone,
country and client
|
|
|
-
|
[———-]
74
Statement
allowing to isolate any sales being excluded from the NET SALES definition
as per Clause 1.14
|
|
For
and on behalf of
|
|
For
and on behalf of
|
|
LICENSOR
|
|
LICENSEE
|
|
|
|
|
|
/s/ Joshua Schulman
|
|
/s/ Philippe BENACIN
|
|
Name:
Joshua Schulman
|
|
Name:
Philippe BENACIN
|
|
Title:
Chief Executive Officer
|
|
Title:
President
|
73
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.73.
74
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.74.
ANNEX
C
PROJECTED
NET SALES AND PROJECTED ROYALTIES (Clause 3.1)
|
PROJECTED NET SALES (€)
|
|
PROJECTED ROYALTIES (€)
|
|
|
|
|
|
CY1-0
(unless 2010 launch)
|
|
CY1-0
(unless 2010 launch)
|
|
CY2
–[
———-]
75
|
|
CY2
–[
———-
]
76
|
|
CY3-[
———-]
77
|
|
CY3-
[———-]
78
|
|
CY4-[
———-]
79
|
|
CY4-
[———-]
80
|
|
CY5-[
———-]
81
|
|
CY5-
[———-
]
82
|
|
CY6-[
———-]
83
|
|
CY6-
[———-
]
84
|
75
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.75.
76
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.76.
77
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.77.
78
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.78.
79
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.79.
80
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.80.
81
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.81.
82
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.82.
83
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.83.
84
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.84.
For the
avoidance of doubt, it is agreed that the above figures are set out on an
indicative basis as far as there is no track record for a JIMMY CHOO business
fragrance. Therefore such projected net sales and related projected royalties
shall not be deemed to create any contractual obligations binding upon the
Licensee.
|
For
and on behalf of
|
|
For
and on behalf of
|
|
LICENSOR
|
|
LICENSEE
|
|
|
|
|
|
/s/ Joshua Schulman
|
|
/s/ Philippe BENACIN
|
|
Name:
Joshua Schulman
|
|
Name:
Philippe BENACIN
|
|
Title:
Chief Executive Officer
|
|
Title:
President
|
ANNEX
D
SELECTIVE DISTRIBUTION
CRITERIA
(Clause
6.2)
Products
may only be sold in outlets which
exude an
aura of luxury and exclusivity
Such
outlets must, at a minimum have:
|
-
|
A
solid reputation for selling women luxury fragrances established over a
minimum of
[———-]
85
years trading.
These perfumes must include at least four of the following:
[
———-]
86
|
|
-
|
A
reputation and image compatible with the high quality and reputation of
the TRADEMARK Jimmy Choo
|
|
-
|
A
portfolio of brands of a similar luxury standing and prestige to the Jimmy
Choo brand
|
|
-
|
Clean,
well maintained shop fittings
|
|
-
|
Appropriate
space devoted to luxury fragrances
|
|
-
|
Staff
knowledgeable about luxury
fragrances.
|
|
For
and on behalf of
|
|
For
and on behalf of
|
|
LICENSOR
|
|
LICENSEE
|
|
|
|
|
|
/s/ Joshua Schulman
|
|
/s/ Philippe BENACIN
|
|
Name:
Joshua Schulman
|
|
Name:
Philippe BENACIN
|
|
Title:
Chief Executive Officer
|
|
Title:
President
|
85
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.85.
86
Confidential
information omitted and filed separately with the SEC with a request for
confidential treatment by Inter Parfums, Inc. No. 10.138.86.
ANNEX
E
ANNUAL MARKETING
PLAN
Information
to be included in each Annual Marketing Plan
(Clause
5.1 (a))
|
(a)
|
Calendar
of Main Activities
|
|
(b)
|
Conceptual
Approach – by Product and
Communication
|
|
(c)
|
Brand
Name (or code name)
|
|
(e)
|
Distribution:
sales and distribution plan by
countries.
|
- SKU
- GWP
- Promo
- Display
- Tester
- Samples
|
(g)
|
Projected
Net Sales Targets – by Product line and
countries
|
|
|
-
|
advertising
and marketing as detailed in section 5.6, presented in summary
form
|
|
(j)
|
New
Product Launch Plan
|
|
(i)
|
Financial
commitments planned by month reconciled to the commitments in the
AGREEMENT
|
|
For
and on behalf of
|
|
For
and on behalf of
|
|
LICENSOR
|
|
LICENSEE
|
|
|
|
|
|
/s/ Joshua Schulman
|
|
/s/ Philippe BENACIN
|
|
Name:
Joshua Schulman
|
|
Name:
Philippe BENACIN
|
|
Title:
Chief Executive Officer
|
|
Title:
President
|
EXCISED VERSION OF EXHIBIT
10.139
EXHIBIT
10.139: CERTAIN CONFIDENTIAL INFORMATION IN THIS EXHIBIT 10.139 WAS OMITTED AND
FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION (“SEC”) WITH A
REQUEST FOR CONFIDENTIAL TREATMENT BY INTER PARFUMS, INC.
LICENSE
AGREEMENT
BETWEEN
MONTBLANC-SIMPLO
GMBH
AND
INTER
PARFUMS SA
|
CONTENTS
|
|
PAGE
|
|
|
|
|
|
1.
|
|
DEFINITIONS
|
|
4
|
|
2.
|
|
LICENSE
|
|
6
|
|
3.
|
|
COMPENSATION
TO LICENSOR
|
|
7
|
|
4.
|
|
PRODUCTS
AND QUALITY CONTROL
|
|
10
|
|
5.
|
|
ADVERTISING,
MARKETING AND SALES PROMOTION
|
|
13
|
|
6.
|
|
DISTRIBUTION
|
|
16
|
|
7.
|
|
TERM
AND TERMINATION
|
|
18
|
|
8.
|
|
TRADEMARKS
AND OTHER INTELLECTUAL PROPERTY RIGHTS
|
|
21
|
|
9.
|
|
EXCLUSIVITY
|
|
25
|
|
10.
|
|
PRODUCT
LIABILITY
|
|
26
|
|
11.
|
|
CONFIDENTIALITY
|
|
26
|
|
12.
|
|
NOTICES
|
|
28
|
|
13.
|
|
ASSIGNMENT
|
|
29
|
|
14.
|
|
ENTIRE
AGREEMENT, MODIFICATION
|
|
29
|
|
15.
|
|
APPLICABLE
LAW, JURISDICTION
|
|
29
|
|
16.
|
|
REMEDIES,
NO WAIVER
|
|
30
|
|
17.
|
|
SEVERABILITY
|
|
30
|
|
18.
|
|
SECTION
HEADINGS
|
|
30
|
|
19.
|
|
FORCE
MAJEURE
|
|
30
|
|
Annex
A
|
|
Trademarks
|
|
Annex
B
|
|
Quality
Criteria
|
|
Annex
C
|
|
Form
of Royalty Report
|
|
Annex
D
|
|
Selective
Distribution Criteria
|
|
Annex
E
|
|
Annual
Marketing Plan
|
|
Annex
F
|
|
KEY
MARKETS
|
|
Annex
G
|
|
CSR
Code and Code of Ethics
|
|
Annex
H
|
|
A&P
expenses report
|
|
Annex
I
|
|
Draft
Termination
Agreement
|
LICENSE
AGREEMENT
BETWEEN
MONTBLANC-SIMPLO
GMBH
a company
incorporated under the laws of Germany, having its registered office at
Hellgrundweg 100, 22525 Hamburg, Germany
represented
by Mr. Lutz BETHGE, its Managing Director, and Mr. Roland A. HOEKZEMA, its EVP
Finance & Services - CFO, each duly empowered
hereinafter
referred to as “LICENSOR”
AND
INTER
PARFUMS SA
a company
incorporated under the laws of France, registered under RCS Paris B
350 219 382, having its registered offices at 4 Rond-point des
Champs-Elysées 75008 Paris, France,
Represented
by Mr. Philippe BENACIN, Président Directeur Général, duly
empowered.
hereafter
referred to as “LICENSEE”
PREAMBLE
|
A.
|
WHEREAS,
LICENSOR and/or its RELATED COMPANIES (as hereinafter defined) are the
owners of the TRADEMARKS (as hereinafter defined) and), the tradename
“Montblanc” (hereinafter “TRADENAME”), and the goodwill and reputation
associated with them and designs, manufactures, distributes and sells
under the TRADEMARKS luxury goods, in particular high quality watches,
jewellery, writing instruments leather goods and
accessories.
|
|
B.
|
WHEREAS,
LICENSOR has the right to grant the exclusive right to use the TRADEMARKS
and the TRADENAME in connection with the marketing of luxury fragrance and
cosmetic products throughout the world in accordance with the terms and
conditions of this AGREEMENT and to grant a license for the use of the
TRADEMARKS as provided herein.
|
|
C.
|
WHEREAS,
LICENSEE desires to obtain the right to use the TRADEMARKS and the
TRADENAME on and in connection with the development, manufacture and sale
of the PRODUCTS (as hereinafter defined) throughout the world in
accordance with the terms and conditions of this
AGREEMENT.
|
|
D.
|
WHEREAS,
LICENSOR is willing to grant LICENSEE the right to use the TRADEMARKS and
the TRADENAME on and/or in connection with the manufacture and sale of the
PRODUCTS (as hereinafter defined) throughout the TERRITORY on the terms
and conditions hereinafter
provided.
|
|
E.
|
LICENSEE
is informed of the current licence agreement for Products under the
Trademarks (both as hereinafter defined) with Cosmopolitan Cosmetics GmbH
and the parties agree that this Agreement shall only enter into force if
and when the current licence agreement with Cosmopolitan Cosmetics GmbH
will have been terminated.
It is further agreed by the
parties that this Agreement shall not enter into force and be null and
void if no Termination Agreement (based substantially on the template
attached as
Annex
I
) is reached with
the current licensee by [_________________
]
1
with effect as per June 30,
2010.
|
THEREFORE,
IN CONSIDERATION OF THE SAID PREMISES AND THE MUTUAL PROMISES AND COVENANTS
CONTAINED HEREIN, THE PARTIES AGREE AS FOLLOWS:
Unless
the context otherwise requires, the following terms shall have the following
meanings:
|
1.1
|
“AGREEMENT”
shall mean this License Agreement including all Annexes and Exhibits
hereto, as the same may be amended, supplemented or modified in accordance
with
Section
14
hereof;
|
|
1.2
|
“COMMENCEMENT
DATE” shall mean 1 July 2010;
|
|
1.3
|
“CONTRACTUAL
YEAR” shall mean the period commencing on the COMMENCEMENT DATE and ending
December 31, 2010 and thereafter any subsequent period of twelve months
commencing on January 1
st
,
and ending on the following December 31
st
;
|
|
1.4
|
“TRADEMARKS”
shall mean the trademarks “Montblanc” and/or other trademarks [including
logo / star device], as represented and listed in
Annex A Part 1 and
2
hereto, together with any further names, symbols or marks which
the parties may agree to introduce in accordance with the provisions of
this AGREEMENT for the purpose of applying to the PRODUCTS, and shall
include (but not be limited to) the various registrations thereof which
have been obtained, which are pending, or which may be obtained, as are
relevant to the PRODUCTS;
|
|
1.5
|
“BOTTLES”
shall mean the bottles or other containers (including, but without
limitation, tubes, vials, jars, caps, etc.) for the PRODUCTS in which the
PRODUCTS are sold;
|
|
1.6
|
“FORMULAE”
shall mean the formulae relevant to the PRODUCTS, including but not
limited the formula of the scent of the
PRODUCTS;
|
|
1.7
|
“PRESENTATION”
shall mean all trademarks, get-up, designs, advertising, merchandising,
point of sale, promotional and packaging (including labelling) material
appearing upon or used in relation to the
PRODUCTS;
|
1
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.1.
|
1.8
|
“PRODUCTS”
shall mean such luxury fragrance for men and women as well as shower gel,
body lotion and aftershave ancillaries, to the exclusion of any other
products, such as but not limited to home fragrances, make-up and/or any
other cosmetic products as shall be launched in accordance with the
provisions of this AGREEMENT, that LICENSEE may market, distribute and
sell in connection with the TRADEMARKS and/or the TRADENAME pursuant to
the terms and conditions of this
AGREEMENT;
|
"EXISTING
PRODUCTS" shall mean such fragrance products, which are manufactured and
distributed by LICENSOR's prior licensee (Cosmopolitan Cosmetics GmbH),
i.e.:
Women
Fragrances:
|
|
-
|
FEMME
INDIVIDUELLE SOUL AND SENSES
|
|
|
-
|
PRESENCE
D'UNE FEMME INTENSE
|
Men
Fragrances:
|
1.9
|
“TECHNICAL
INFORMATION” shall mean any and all know-how and retail information in
connection with, for example, creative and technical input with respect to
design, image, corporate identity, brand direction, advertising, marketing
and promotion (including LICENSOR’S global marketing policy) relating to
the PRODUCTS;
|
|
1.10
|
“QUALITY
CRITERIA” shall mean the quality criteria as outlined in
Annex B
attached hereto which may be amended with both parties’ written agreement
(Section 14.2 below) and shall be consistent with the prestige of the
TRADEMARKS, the TRADENAME and the goodwill and reputation associated with
them;
|
|
1.11
|
“BEST
LOCAL WHOLESALE PRICE” shall, for the purpose of
Section 6.5
below mean the lowest price of the first sale of the PRODUCTS from
LICENSEE or a RELATED COMPANY of LICENSEE to any third party which is not
a RELATED COMPANY of LICENSEE, may that be a distributor or a retailer, in
each relevant market;
|
|
1.12
|
“LICENSOR’S
OUTLETS” shall mean those shop-in-shops, corners, concessions and free
standing boutiques (including in duty free zones) which are owned,
operated or managed by LICENSOR, by any of its RELATED COMPANIES and/or by
a third party under the TRADENAME;
|
|
1.13
|
“TERRITORY”
shall mean all countries and territories throughout the world, including
duty free zones;
|
|
1.14
|
“NET
SALES” shall mean the prices invoiced by LICENSEE and any of its RELATED
COMPANIES on the first sale of PRODUCTS in the ordinary course of business
to a non-RELATED COMPANY, after deduction of any sales taxes imposed on
LICENSEE directly in respect of the PRODUCTS, credits, product returns,
trade or cash discounts (including year-end discounts), provided that the
aggregate of such deductions shall not exceed such amount as would be
normal business practice in relation to the sale of luxury fragrance and
grooming products of comparable prestige and price to the PRODUCTS. For
the avoidance of any doubt, NET SALES shall not include sales of point of
sale material and/or promotional materials, including but not limited to
testers, minis, samples, show cards and
windows.
|
|
1.15
|
“RELATED
COMPANIES” shall mean any parent or subsidiary of any of the parties or
any company affiliated with or related to any of them or a party or any
company under common control with any of
them;
|
|
1.16
|
“KEY
MARKETS” shall mean the territories listed in
Annex
F
.
|
|
1.17
|
“PROJECTED
NET SALES” shall mean the projected net sales figure for the PRODUCTS in
any calendar year as contained in the annual marketing plan relevant for
that calendar year (
Annex
E
);
|
|
1.18
|
“MATERIAL
CHANGE” shall mean any change which will be perceptible by the
consumer.
|
|
2.1
|
LICENSOR
hereby grants LICENSEE an exclusive license to use the TRADEMARKS and/or
the TRADENAME in connection with the development, manufacture, sale,
distribution, advertising, merchandising, promotion and marketing of the
PRODUCTS in the TERRITORY for the term of the AGREEMENT in accordance with
the conditions set out below. LICENSEE shall be entitled to use the
TRADEMARKS set forth in
Annex A Part 1
hereto and/or the TRADENAME in connection with other trademarks and/or
other distinctive or descriptive attributes (words, logos, devices, etc.)
but only as LICENSOR shall first approve in accordance with
Section 4.2
(in
particular
Section 4.2.2
)
and as set forth below. The goodwill generated through the sale of the
PRODUCTS shall vest exclusively in
LICENSOR.
|
|
2.2
|
During
the term of this AGREEMENT, LICENSEE shall not be authorised to use the
TRADENAME as a company, branch or division name, nor on stationery,
business cards etc., unless LICENSOR expressly authorized such use of the
TRADENAME in writing and in
advance.
|
|
2.3
|
Subject
to section 2.2 above, LICENSEE will inform LICENSOR about the planned
incorporation of the TRADENAME into the company name of a RELATED COMPANY
in good time at the latest four weeks before the respective entry in the
Commercial Register.
|
|
2.4
|
Subject
to section 2.2 above, LICENSOR will, at the request of LICENSEE,
co-operate as required in the incorporation of the TRADENAME into the
company name of a RELATED COMPANY of LICENSEE, and supply all necessary
declarations or take the necessary actions, the costs of such declarations
or actions to be reimbursed by
LICENSEE.
|
|
2.5
|
Promptly
after the expiration or termination of the AGREEMENT, or if there is a
sell-off period (
Section 7.5
below
) promptly after the end of such sell-off period, LICENSEE
agrees to procure the change of the name of a branch, division or RELATED
COMPANY referred to in
Sections 2.2 to 2.4
by deleting the TRADENAME and ceasing to use and destroying all
relevant headed stationary, correspondence or other printed material
bearing the TRADENAME.
|
|
2.6
|
LICENSEE
warrants that any use of the TRADENAME by a branch, division or RELATED
COMPANY in accordance with the provisions of
Section 2.2
above will only be permitted in order to enable LICENSEE to perform its
obligations in relation to the marketing, sale, development and
manufacturing of the PRODUCTS under this AGREEMENT, to the exclusion of
any other activities, and will be subject to that branch, division or
RELATED COMPANY complying in all other respects with the terms of this
AGREEMENT and all applicable local legal requirements relating to its
incorporation and the conduct of its
business.
|
|
2.7
|
Subject
to obtaining LICENSOR’S prior written approval and subject to the
warranties given in
Sections 10.2 to
10.4
, LICENSEE will be entitled to sell other products which are
not PRODUCTS together with PRODUCTS, especially in combination packages,
marketed under the TRADEMARK, or to give away other products as “gift with
purchase” together with the PRODUCTS (hereinafter collectively called
“OTHER PRODUCTS”). LICENSEE accepts that LICENSOR may withheld its
approval based on considerations in relation to the image and reputation
of the TRADEMARKS and/or the TRADENAME and/or based on limitations with
respect to the TRADEMARKS and/or the TRADENAME and/or should the OTHER
PRODUCT be of a company which is in competition with LICENSOR’S activity
(that is the product category writing instruments, leather goods, watches,
jewellery, eyewear products).
|
|
3.
|
COMPENSATION
TO LICENSOR
|
|
3.1
|
In
consideration of the rights granted and the services to be performed by
LICENSOR hereunder, LICENSEE shall pay to LICENSOR during each CONTRACTUAL
YEAR or part thereof in accordance with this
Section 3
a
royalty of
[————-]
2
of the NET SALES of
all PRODUCTS sold in such CONTRACTUAL YEAR. In any event, LICENSEE
undertakes to pay to LICENSOR the MINIMUM GUARANTEED ROYALTIES set forth
under section 3.2 hereunder. For the avoidance of doubt, it is expressly
accepted and confirmed by the LICENSEE that the aforesaid royalty shall
also be paid on the NET SALES of PRODUCTS sold to
LICENSOR.
|
2
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.2.
|
3.2
|
LICENSEE
agrees to pay the following guaranteed minimum royalties to LICENSOR to be
paid in (4) equal instalments in each CONTRACTUAL YEAR (“CY”) in
accordance with
Section 3.3
below:
|
MINIMUM
GUARANTEED ROYALTIES
|
Contractual Year
|
|
Minimum Guaranteed Royalty
|
|
CY
1 Commencement Date to Dec 31 2010
|
|
EUR
[———]
3
|
|
CY
2 Jan 1 to Dec 31 2011
|
|
EUR
[———]
4
|
|
CY
3 Jan 1 to Dec 31 2012
|
|
EUR
[—
——
]
5
|
|
CY
4 Jan 1 to Dec 31 2013
|
|
EUR
[———]
6
|
|
CY
5 Jan 1 to Dec 31 2014
|
|
EUR
[———]
7
|
|
CY
6 Jan 1 to Dec 31 2015
|
|
EUR
[———]
8
|
|
CY
7 Jan 1 to Dec 31 2016
|
|
EUR
[———]
9
|
|
CY
8 Jan 1 to Dec 31 2017
|
|
EUR
[———]
10
|
|
CY
9 Jan 1 to Dec 31 2018
|
|
EUR
[———
]
11
|
|
CY
10 Jan 1 to Dec 31 2019
|
|
EUR
[———]
12
|
|
CY
11 Jan 1 to Dec 31 2020
|
|
EUR
[———]
13
|
For the
avoidance of doubt, the parties confirm that the minimum guaranteed royalties
shall be non-cumulative on a year-to-year (CONTRACTUAL YEARS)
basis.
|
3.3
|
LICENSEE
shall, for each quarter of each CONTRACTUAL YEAR, pay to LICENSOR the
greater of the cumulative amount of royalties payable under
Section 3.1
above or the cumulative minimum royalties due in that CONTRACTUAL YEAR up
to that date less any royalties, whether payable under
Section 3.1
or
guaranteed minimum royalty payments, already paid in that CONTRACTUAL
YEAR. These payments will be made within
[———-]
14
after the end of
each calendar quarter, such quarters ending on 31 March, 30 June, 30
September and 31 December in each CONTRACTUAL YEAR. Each payment shall be
accompanied by a quarterly royalty report in the form as attached as
Annex
C
.
|
3
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.3.
4
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.4.
5
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.5.
6
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.6.
7
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.7.
8
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.8.
9
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.9.
10
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.10.
11
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.11.
12
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.12.
13
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.13.
14
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.14.
|
3.4
|
In
addition to the quarterly royalty reports referred to in
Section 3.3
above, LICENSEE shall – if requested by LICENSOR promptly after the end of
a calendar year – provide to LICENSOR within [
———-]
15
of the end of each
calendar year a global certificate from its internal auditors certifying
that the volume and value of sales of the PRODUCTS for that calendar year
and that the figures contained in the quarterly royalty reports for the
same calendar year correspond with the entries in the books of LICENSEE
and where appropriate, any RELATED COMPANY of LICENSEE or any other entity
under its control and certifying the global deductions from gross sales
made to calculate the NET SALES figure for the relevant calendar year. The
certificate shall also certify that the figures set out in the year-end
rebate referred to in
Section 6.5
are
true and accurate. Within
[———-]
16
from the end of
each calendar year, LICENSEE will nonetheless provide the LICENSOR with
non certified sales reports. Additionally, upon request from LICENSOR,
LICENSEE shall provide a certificate from its external auditors confirming
that the volume and value of sales of the PRODUCTS for that calendar year
and that the figures contained in the quarterly royalty reports reflect
the entries in the books of LICENSEE and, where appropriate, any RELATED
COMPANY of LICENSEE or any other entity under its control and certifying
the global deductions from gross sales made to calculate the NET SALES
figure for the relevant calendar.
|
|
3.5
|
Failure
by LICENSEE to make payment of any royalties within
[———-]
17
after
their due date shall thereafter incur accrued interest at the basic bank
interest rate of Deutsche Bank (Hamburg) plus [
———-]
18
per annum. Payment
shall be applied first against any interest which may have been accrued to
the date of the payment and any balance against the amount of royalties
outstanding.
|
|
3.6
|
All
taxes required by law to be withheld or assessed on or with respect to the
remittance of royalties by LICENSEE or any RELATED COMPANY hereunder
shall, if paid by LICENSEE or any related party, be deducted from the
amount of royalties payable to LICENSOR. LICENSEE shall furnish LICENSOR
with documentation reflecting the amount and proof of such tax
payments.
|
|
3.7
|
All
royalties shall be paid in Euro (EUR). The exchange rate of the royalties
from foreign currencies to Euro shall be calculated according to the
average rate of exchange during the last month of the quarter being
reported as published in the Financial Times under the heading “Exchange
Cross Rate” or, in the event that the relevant calculations cannot be made
as aforesaid, by such other exchange rate calculation formula as may be
agreed by the parties.
|
|
3.8
|
LICENSEE
shall not be obliged to pay royalties on any compensation received from
its customers as participation on advertising and sales promotion, such as
payments for decoration, testers and
samples.
|
15
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.15.
16
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.16.
17
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.17.
18
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.18.
|
3.9
|
LICENSEE
agrees to keep full and accurate books and records relating to the
marketing and the sale of the PRODUCTS. LICENSEE agrees that LICENSOR
shall have the right to inspect, audit or make copies of the books and
records of LICENSEE and/or any RELATED COMPANIES of LICENSEE relating to
the computation and the payment of the royalties due and owing to LICENSOR
within
[-[-[———-
19
after the quarter
in question up to
[———]
20
times a year at
reasonable times and upon no less than
[————]
21
prior notice. This
right terminates
[———-]
22
after the
expiration or termination
of this AGREEMENT for
whatever reason.
|
|
3.10
|
If
a shortfall in the ROYALTIES paid is verified, LICENSEE shall promptly pay
to LICENSOR all additional ROYALTIES due. If the shortfall is greater than
[
———-]
23
of
the cumulative amount of ROYALTIES paid by LICENSEE for the relevant
period, then the LICENSEE shall also pay to LICENSOR an amount equal to
the reasonable costs and expenses of LICENSOR’S examination together with
interest calculated in accordance with
Section 3.5
above.
|
|
4.
|
PRODUCTS
AND QUALITY CONTROL
|
|
4.1
|
The
parties shall collaborate in the development process of the PRODUCTS so
that the PRODUCTS brought to the market will be consistent with the image
of LICENSOR and the TRADEMARKS, and in conformity with the QUALITY
CRITERIA.
|
LICENSEE
expressly agrees to take LICENSOR’S image and reputation into consideration in
the development and the manufacturing of the PRODUCTS and ensure that the
PRODUCTS will be in accordance with LICENSOR’S image and reputation and will not
harm or diminish LICENSOR’S image and reputation and the goodwill LICENSOR has
built up with its other products.
|
4.2
|
The
parties agree that LICENSOR shall have approval rights with regard to the
PRODUCTS over:
|
the
concept
the
scent
the
name
the inner
and outer packaging (including but not limited to the bottles, the folding
boxes, any other packaging, tubes, vials and jars)
and any
changes made thereto.
19
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.19
20
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.20.
21
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.21.
22
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.22.
23
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.23.
|
|
4.2.1
|
If
LICENSOR does not give its approval of any of LICENSEE’S proposals with
regard to the concept, the scent or the packaging, it shall give its
reasons for such withholding and agrees to submit its ideas, input,
advice, and suggestions with regard thereto to LICENSEE within
[———-]
24
business days
after having received such
proposal.
|
|
|
4.2.2
|
Within
[———-]
25
business days of
receipt of LICENSEE’S request for approval of any name in accordance with
this
Section
4.2
, or any trademark and/or any other attribute in accordance with
Section
2.1
as well as the submission of a completed availability search by
LICENSEE in accordance with
Section 8.16
below, LICENSOR shall notify LICENSEE which names, trademarks or
attributes it approves or disapproves and shall give its reason for any
disapproval.
|
|
|
4.2.3
|
In
the event of non-approval pursuant to
Sub-Sections 4.2.1
and/or 4.2.2
above, LICENSEE agrees to take LICENSOR’S comments,
ideas, input and advice into consideration and to amend or revise its
proposal and/or implement LICENSOR’S suggestions and submit the revised
proposal to LICENSOR for its approval, it being understood that LICENSOR
and LICENSEE shall use their best endeavours to closely cooperate in order
to reach an agreement on the
PRODUCTS.
|
|
|
4.2.4
|
Any
proposal submitted to LICENSOR for approval and not disapproved within
[———-]
26
business days
after LICENSOR having received such proposal shall be deemed to have been
approved.
|
|
4.3
|
LICENSEE
shall be responsible for ensuring that the PRODUCTS, the BOTTLES, the
FORMULAE and the PRESENTATION comply with the agreed designs, models and
prototypes and with all relevant laws, regulations, specifications and
standards in force with respect thereto (in particular US and EU
import/product regulations) and with all LICENSOR’S reasonable
instructions relating to the PRODUCTS, in particular, their quality and
presentation. LICENSEE will withdraw from the course of manufacture and/or
storage and not place upon the market any PRODUCTS, which do not comply
with the QUALITY CRITERIA, whether fully or partly
manufactured.
|
|
|
LICENSEE
further agrees and undertakes to maintain the quality of the EXISTING
PRODUCTS at their current level.
|
|
4.4
|
LICENSEE
agrees to use commercially reasonable efforts to develop the sales of the
PRODUCTS and to launch new PRODUCT lines in the Territory at least in KEY
MARKETS, as follows:
|
|
|
·
|
[
———-
]
27
: new masculine
launch
|
|
|
·
|
[
———-
]
28
: New feminine
initiative
|
24
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.24.
25
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.25.
26
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.26.
27
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.27.
28
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.28.
|
|
·
|
Between the
[
———-
]
29
new
launch
|
|
4.5
|
LICENSOR
agrees to use its best efforts to ensure that the reputation, image and
the goodwill of the TRADEMARKS as represented in
Annex A
Part 1
and/or of the TRADENAME shall retain its present standing (as of signing
of this AGREEMENT), particularly in connection with other products
manufactured and/or distributed under the TRADEMARKS and/or the TRADENAME
by LICENSOR, RELATED COMPANIES of LICENSOR or other licensees,
sub-licensees and franchisees of
LICENSOR.
|
|
4.6
|
LICENSEE
will permit LICENSOR or its authorised representative at all reasonable
times to enter the LICENSEE’S premises where the PRODUCTS are made,
stored, distributed or sold, for the purpose of inspection thereof. In
order to enable LICENSOR to control the quality of the PRODUCTS, LICENSEE
agrees to submit to LICENSOR after reasonable request random samples (up
to
[———-]
30
items per range of
PRODUCTS) free of cost for
inspection.
|
|
4.7
|
If
LICENSEE uses sub-manufacturers or sub-licensees, in accordance with the
terms of this AGREEMENT for the manufacture of the PRODUCTS, LICENSEE
shall remain liable for ensuring that the quality of the PRODUCTS remains
in accordance with the QUALITY CRITERIA. LICENSEE shall permit or procure
that the sub-manufacturer or sub-licensee shall permit the LICENSOR or its
representative during normal business hours to enter any place of
manufacture or storage occupied by or used by the sub-manufacturer or the
sub-licensee for the purpose of inspection of the PRODUCTS and to ensure
that the QUALITY CRITERIA are being adhered to. Provisions for this
purpose shall be incorporated into any sub-manufacturing contract or
sub-license granted hereunder. LICENSEE undertakes to have executed by any
of such sub-manufacturer and sub-licensees a statement acknowledging
LICENSOR’s intellectual property rights as provided by
LICENSOR.
|
LICENSEE
will use its best efforts to ensure that such suppliers which are branding any
of the components of the PRODUCTS with any of the TRADEMARKS permit the LICENSOR
or its representative either alone or together with LICENSEE or its
representative within reasonable intervals and after reasonable notice during
normal business hours to enter any place of manufacture or storage occupied or
used by such suppliers for the purpose of inspection of the PRODUCTS and to
ensure that the QUALITY CRITERIA are being adhered to.
|
4.8
|
The
Parties agree that it is essential that the Products be able to be legally
marked with the country of origin “Made in France”. For that purpose,
LICENSEE undertakes that any and all Products shall be manufactured in
such a manner as to permit such marking in accordance with country of
origin markings and regulations and any other relevant regulation in force
during the term of this AGREEMENT in the
Territory.
|
|
4.9
|
LICENSEE
is informed that LICENSOR and the Richemont Group have committed to comply
with a Corporate Responsibility Code and an Ethics Code, which are
attached hereto as
Annex G
.
LICENSEE undertakes to perform its duties under this Agreement in
compliance with the aforesaid codes at all
times.
|
29
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.29.
30
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.30.
|
5.
|
ADVERTISING,
MARKETING AND SALES PROMOTION
|
|
5.1
|
LICENSEE
shall, by no later than
[———-]
31
in
each calendar year, communicate in writing to LICENSOR and follow such
communication within
[———-]
32
, or within such
other period as the parties may agree, with a presentation for discussion
purposes at LICENSOR’S premises, or at such other location as may be
agreed, the following:
|
|
|
(a)
|
its
marketing plan for the following calendar year to include the information
set out in
Annex
E
hereto, in particular the Projected Net
Sales;
|
|
|
(b)
|
its
indicative Strategic Plan for the following [
———-]
33
,
such Strategic Plan to include a market overview, the Projected Net Sales,
LICENSEE’S strategy and marketing objectives, a marketing calendar and
summary of planned advertising and promotional expenditure, brand
positioning and pricing; and
|
|
|
(c)
|
any
new PRODUCT launch plans, if relevant, in accordance with
Section 5.3
below.
|
LICENSEE
undertakes to grow the business (i.e. to increase Net Sales) on yearly basis by
at least
[———-]
34
.
|
5.2
|
At
the time LICENSEE presents its marketing plan in accordance with
Section 5.1 (a)
above, LICENSOR shall present its product marketing plan for the following
calendar year.
|
|
5.3
|
The
launch plan for each new line of PRODUCTS shall be presented at the
relevant marketing proposal presentation referred to in
Section 5.1
above, or at a separate presentation if agreed by the
parties.
|
The
parties agree that the launch of the first line of PRODUCTS is scheduled for
[———-]
35
and should not occur
later than
[———-]
36
.
Both parties will undertake their best efforts to ensure that aforesaid planned
launch dates may be met.
For any
new PRODUCT, LICENSEE agrees to provide LICENSOR upon launch time with
[———-]
37
PRODUCTS
free of charge. These PRODUCTS shall be delivered in accordance with LICENSOR's
instructions.
31
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.31.
32
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.32.
33
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.33.
34
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.34.
35
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.35.
36
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.36.
37
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.37.
|
|
Furthemore,
LICENSOR shall be entitled to receive
[———-]
38
free samples
(vials) for each of LICENSOR's OUTLETS. In the event that LICENSOR
requires additional samples, LICENSOR shall be entitled to purchase them
at cost price.
|
|
5.4
|
LICENSEE
shall be responsible for producing and circulating all advertising and
promotional materials in the TERRITORY at its costs. LICENSEE agrees to
take LICENSOR’S image into consideration in its advertising and promotion
for the PRODUCTS and to ensure that the advertising and promotion for the
PRODUCTS will be in accordance with LICENSOR’S image and reputation and
will not harm or diminish LICENSOR’S image and reputation and the goodwill
LICENSOR has built up with its other products. LICENSEE further agrees to
consult with LICENSOR with regard to advertising and sales promotion and
to take LICENSOR’S advice into due consideration in order to develop
advertising which is consistent with the image and reputation of
LICENSOR.
|
|
5.5
|
The
parties agree that LICENSOR shall have approval rights with regard to the
advertising and marketing for the PRODUCTS
over:
|
the
“central” marketing materials
the
“central” PR releases
the
“central” advertising material
major
public relation events
the
"central promotion material including Gift with purchase"
(“central”
means the initial core materials that will be sent by LICENSEE to international
markets for translation and adaptation to local markets. It is thereby
understood that there will be no “local” marketing, PR and advertising material
other than the translated or to the local needs adapted “central” marketing, PR
and advertising material).
If
LICENSOR does not consent to any of LICENSEE’S proposals with regard to the
advertising and marketing for the PRODUCTS, it shall give its reasons for such
withholding and agrees to submit its ideas, input and advice with regard thereto
to LICENSEE within
[———-]
39
after having received
such proposal. LICENSEE agrees to take LICENSOR’S comments, ideas, input and
advice into consideration and amend or revise its proposal and/or implement
LICENSOR’S suggestions and submit the revised proposal to LICENSOR for approval.
LICENSOR and LICENSEE shall use their best efforts to reach a final agreement on
any advertising and promotion materials in order to be able to efficiently
support the sales of the PRODUCTS.
|
5.6
|
LICENSEE
undertakes to spend jointly with its distributors in each calendar year a
minimum percentage of its PROJECTED NET SALES on advertising and marketing
of the PRODUCTS (hereinafter called “Advertising and Marketing
Expenditure”) as follows:
|
|
|
-
|
First
Contractual Year (or part thereof)
|
[———]
40
|
|
|
-
|
Second
Contractual Year
|
[———]
41
|
38
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.38.
39
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.39.
40
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.40.
41
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.41.
|
|
-
|
Third
and any subsequent Contractual Year
|
[__________]
42
|
LICENSEE
and LICENSOR already agree at the date of signature hereof that the PROJECTED
NET SALES for the First Contractual Year (July 1
st
2010 to
December 31
st
, 2010)
shall amount to
[EUR
———-]
43
. For
the Second Contractual Year, the PROJECTED NET SALES shall amount to
[EUR
———-]
44
.
LICENSOR and LICENSEE agree that the Advertising and Marketing Expenditure shall
increase by at least
[5%]
45
per
year.
It is
expressly agreed and acknowledged by the LICENSEE that "Above the Line"
expenditures as well as "Below the Line" expenditures shall count towards the
Advertising and Marketing Expenditure agreed upon by LICENSEE. "Above the line"
expenditures shall include all advertising through mass media (magazines, radio,
press/print, TV, billboards, web and internet banner ads, cinema) as well as
direct production costs (agency costs, photographer, buyouts, usage rights,
modelling costs); "Below the Line" expenditures shall include cooperative
advertising (advertising related to the PRODUCTS in magazines and store
catalogues produced by or on behalf of retailers (such as Marionnaud, Sephora,
Saks), show cards, windows, dummies, POS displays, testers, demonstration, gift
with purchases, other sell-through (direct mail, consumer meetings (including
costs of independent beauty consultant incurred in respect of selling or
presenting the PRODUCTS in the point of sale), stand in department stores,
public relations (including trade shows).
LICENSEE
and LICENSOR agree that the difference between the agreed upon Advertising and
Marketing Expenditure during any Contractual Year and the amounts effectively
spent by LICENSEE in such Contractual Year shall be refunded to LICENSOR within
30 calendar days of the end of the relevant Contractual Year, unless otherwise
agreed upon in writing between the Parties.
Subject
to compliance with the provisions of this AGREEMENT, LICENSEE shall be free to
decide whether and to what extent the advertising and marketing activities and
methods specified in this section are to be employed.
|
5.7
|
Any
use by LICENSEE of LICENSOR's name, trademarks, logos, OUTLETS in any
advertising and/or promotional material shall be subject to LICENSOR’S
prior written approval.
|
|
5.8
|
In
case LICENSOR and LICENSEE intend to arrange for public relation
statements referring to their co-operation they will beforehand consult
with each other and harmonise words, pictures and further details of the
public relation actions and each shall confirm in writing to the other its
approval of the final format of such statement prior to public
release.
|
42
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.42.
43
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.43.
44
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.44.
45
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.45.
|
5.9
|
LICENSOR
undertakes to provide LICENSEE with information about and reasonable
quantities of representative samples of advertising and promotional
material used by LICENSOR.
|
|
5.10
|
If
requested by LICENSEE, LICENSOR agrees to inform LICENSEE about its actual
marketing strategies and communication concepts by providing LICENSOR with
the relevant Information. LICENSEE shall take these strategies into
reasonable consideration for the development of the advertising and
promotion for the PRODUCTS.
|
|
5.11
|
If
requested by either party, the parties shall consult with each other from
time to time on advertising and promotion activities to be implemented
jointly and/or together with other licensees, sub-licensees or franchisees
of LICENSOR.
|
|
5.12
|
LICENSEE
shall make available to LICENSOR:
|
a
quarterly report on the status of its expenditure for advertising, merchandising
and promotions, including Advertising and Marketing Expenditure;
and
regular
evidence of expenditure in relation to advertising, merchandising and promotion
for the PRODUCTS by providing representative samples of its advertising, public
relation releases, etc.
in the format agreed upon which is
attached as
Annex
H
hereto.
|
5.13
|
LICENSOR
shall be free to use for LICENSOR’S OUTLETS LICENSEE’S advertising and
marketing materials for the PRODUCTS, subject to the limitations of rights
granted by third parties in relation to such advertising and marketing
materials for the PRODUCTS. To this end, LICENSEE will supply to LICENSOR
reasonable quantities of aforesaid material, upon request by LICENSOR at
BEST WHOLESALE PRICE.
|
|
6.1
|
LICENSEE
agrees to distribute the PRODUCTS or have them distributed by its RELATED
COMPANIES or third party distributors only through selected distribution
channels (speciality department stores, qualified independent perfumeries,
select perfumery chains and travel retail outlets) of high standing and
compatible with the high quality and high luxury image of the PRODUCTS and
the TRADEMARKS. Upon request of LICENSOR, LICENSEE will provide LICENSOR
with information about the names and addresses of its distributors and
authorised outlets, and in particular with confirmation (respectively,
information) in the case of individual outlets that they are
(respectively, whether they are) supplied by LICENSEE or its authorised
distributors.
|
|
6.2
|
LICENSEE
shall use its best efforts to ensure that such outlets conform with
LICENSOR’S selective distribution criteria as set out in
Annex D
hereto.
LICENSOR reserves the right for its representatives to visit all outlets
supplied by LICENSEE or its authorised distributors in order to ensure
that they do so conform and, in the event they do not and after being
requested by LICENSOR, LICENSEE shall, subject to compliance with local
laws, use its best efforts that such outlets will no longer be supplied
with the PRODUCTS.
|
|
6.3
|
LICENSEE
agrees to use its best endeavours that all material of whatever nature
relevant to the TRADENAME or the TRADEMARKS will be promptly removed from
any outlet which ceases to sell the PRODUCTS. Upon request of LICENSOR,
LICENSEE will use its best endeavours to identify the source of any
material which is still on display in an outlet which is no longer
authorized to distribute the
PRODUCTS.
|
Furthermore,
LICENSEE undertakes proactively and/or upon request from LICENSOR, to identify
the source of supplying an unauthorized outlet with PRODUCTS and/or promotional
material. In the event that such source is identified twice as supplying
PRODUCTS and/or promotional material to an unauthorized outlet, LICENSEE
undertakes not to supply such source any longer with PRODUCTS.
|
6.4
|
LICENSEE
agrees not to distribute or sell the PRODUCTS though mail order or
catalogue sales without first obtaining LICENSOR’S prior written consent.
LICENSEE further agrees that the marketing, distribution or sale of the
PRODUCTS through any electronic means such as the Internet shall only be
authorised for approved retailers which operate a brick-and-mortar outlet
fulfilling the criteria as set out in Section 6.2 and
Annex D
hereto,
and provided that the use of the Internet is consistent with the high
quality and high luxury image of the PRODUCTS and any other criteria as
LICENSOR may reasonably communicate to LICENSEE from time to
time.
|
|
6.5
|
LICENSOR
shall be free, in its exclusive discretion, to market and sell the
PRODUCTS through LICENSOR’S OUTLETS in the TERRITORY, including Franchised
Outlets.
|
|
6.6
|
It
is agreed that LICENSOR, and any of its RELATED COMPANIES or franchisees,
shall order the PRODUCTS from LICENSEE, and LICENSEE shall accept, or
procure the acceptance of such orders, and shall deliver the PRODUCTS to
LICENSOR at BEST LOCAL WHOLESALE PRICE minus
[———-]
46
. LICENSEE shall
deliver and invoice LICENSOR's OULETS on a local basis. Royalties shall be
paid in accordance with the provisions of
Section 3
above
on sales to LICENSOR, any of its RELATED COMPANIES or franchisees in
accordance with this Section.
|
LICENSOR
shall remain free in the TERRITORY to distribute the PRODUCTS in reasonable
quantities for sales of personnel of the Richemont Group, for business gift
purposes (free of charge), and/or for promotional purposes.
Further,
LICENSOR shall remain free in the Territory to distribute PRODUCTS in connection
with its Corporate Gift Business Activities. It is agreed that the term
"Corporate Gift Business Activities" shall mean sale of MONTBLANC products by
LICENSOR, any of its RELATED COMPANIES and/or LICENSOR's OUTLETS, whereby the
MONTBLANC products are sold to companies and/or legal entities which exclusively
wish to give the MONTBLANC products as corporate gift or business gift to its
employees and/or clients, and to the exclusion of any resale by such companies
and/or legal entities.
|
6.7
|
LICENSEE
undertakes to supply PRODUCTS to LICENSOR by such dates as LICENSOR shall
reasonably notify to LICENSEE in order to meet LICENSOR’S requirements in
terms of supply, time-table for preparation of brochures, promotional
activities, etc.
|
46
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.46.
|
7.1
|
Subject to recital E of the
Preamble above,
the initial term of this AGREEMENT shall commence
on the COMMENCEMENT DATE and shall expire on December 31, 2020 (Initial
Term), unless renewed or sooner terminated as provided
below.
|
|
7.2
|
Each
party shall be entitled to terminate the AGREEMENT upon written notice to
the other, such notice to be given on or before
[———-]
47
with termination
to take effect on
[———-]
48
in the event
LICENSEE’S NET SALES for the calendar year of
[———-]
49
were
not sufficient to generate royalties in excess of the MINIMUM GUARANTEED
ROYALTIES for that period as set out in
Section 3.2
above.
|
The
parties agree that they will consult with each other, in good faith, during the
period of
[———-]
50
, in order to decide
whether either or both of them wish to terminate the AGREEMENT as aforesaid. In
the event that either party should give notice of termination in accordance with
this
Section
7.2
, it is acknowledged that LICENSEE shall not be entitled to any
sell-out period in accordance with
Section 7.7.2
below
after
[———-]
51
. LICENSEE shall in all
other respects, comply with the terms of this AGREEMENT until
[———-]
52
. During this period,
LICENSOR shall be entitled to appoint a new licensee, such appointment to take
effect after
[———-]
53
, and that new licensee
shall, for transitional purposes only, be permitted to make itself known as
LICENSOR’S future licensee able to do business and to take customer orders for
the PRODUCTS for delivery after
[———-]
54
.
|
|
In
any event, the parties agree that after expiration of the Initial Term
(
Section
7.1
above), this AGREEMENT shall automatically be renewed for
successive periods of
[———-]
55
, unless terminated
by either party with
[———-]
56
prior notice to
the end of a CONTRACTUAL YEAR served to the other
party.
|
47
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.47.
48
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.48.
49
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.49.
50
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.50.
51
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.51.
52
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.52.
53
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.53.
54
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.54.
55
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.55.
56
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.56.
The
parties expressly agree and confirm that the effectiveness of this Agreement and
its entry into force shall be subject to the license agreement between LICENSOR
and Cosmopolitan Cosmetics GmbH being terminated by mutual understanding between
the parties thereto (with effect no later than the day prior to the COMMENCEMENT
DATE of this Agreement) and that an agreement between LICENSOR, LICENSEE and
Cosmopolitan Cosmetics GmbH regarding the termination of the current license,
the transition period and the assignment of the intellectual property rights
relating to the EXISTING PRODUCTS has been signed by all parties thereto no
later than
[———-]
57
, based substantially on
the draft attached hereto as
Annex I
.
|
7.3
|
Each
party shall be entitled to terminate the AGREEMENT upon written notice to
the other party upon the occurrence of any of the following
events:
|
|
|
7.3.1
|
the
other party shall default or fail to make when due any payment due
hereunder, and such default or failure shall continue for a period of
[———-]
58
after receipt of
notice thereof from the other
party;
|
|
|
7.3.2
|
a
material breach of any provision of this AGREEMENT which is not remedied
within [
———-]
59
of written notice
thereof;
|
|
|
7.3.3
|
liquidation,
insolvency or bankruptcy, suspension of payments, heavy indebtedness or
discontinuance of business of the other
party;
|
|
|
7.3.4
|
any
of the circumstances referred to in
Section 19
below persist for a period of at least
[———-]
60
.
|
|
7.4
|
Each
party shall be entitled to terminate the AGREEMENT with
[———-]
61
written
notice in the event of the other party coming under the direct or indirect
control (control means to control more than fifty per cent of the voting
rights which enables this party to exercise effective control) of a direct
competitor of the party becoming entitled to terminate. For the purpose of
the AGREEMENT, competitor of LICENSOR shall mean
[———-]
62
and/or any company
within one of the aforesaid group of companies from time to time. For the
avoidance of doubt, in the event of termination pursuant to this Section,
LICENSEE shall not be entitled to any sell-out period after the expiration
of the
[————]
63
notice
period.
|
This
right of termination has to be executed by a party within
[———-]
64
after that party having
been informed about any of the aforementioned events.
57
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.57.
58
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.58.
59
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.59.
60
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.60.
61
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.61.
62
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.62.
63
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.63.
64
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.64.
|
7.5
|
Any
notice of termination must be given by means of a registered letter sent
to the relevant party’s address in accordance with the provisions of
Section 12
below.
|
|
7.6
|
Upon
the expiration or termination of the
AGREEMENT:
|
|
|
7.6.1
|
LICENSEE
shall cease to manufacture the PRODUCTS, the BOTTLES and the
PRESENTATION;
|
|
|
7.7.2
|
provided
the termination has not been a result of default of LICENSEE or of notice
having been given by either party under
Sections 7.2 or
7.5
above, LICENSEE shall be entitled to sell off the existing
stock of PRODUCTS for a period up to
[———-]
65
following
the date of termination and to use up the existing materials for the
manufacture of the PRODUCTS and to sell off the so-produced PRODUCTS
within the sell-off period. During the sell-off period LICENSEE shall
continue to provide quarterly reports and pay royalties on NET SALES, but
shall not be obliged to pay any minimum royalties. PRODUCTS will not be
sold at a discount (other than ordinary discounts in the normal course of
business) unless LICENSOR’S prior written approval has been
obtained;
|
|
|
7.7.3
|
LICENSEE
shall either at the end of the sell-off period referred to in Section
7.7.2 above or, if there is no sell-off period, upon expiration or
termination of the AGREEMENT, promptly supply to LICENSOR an inventory of
the PRODUCTS, BOTTLES and PRESENTATION and all other materials relevant to
manufacture, marketing and distribution of the PRODUCTS, including but not
limited to bottles, folding-boxes or other containers then in stock, and
an inventory of all relevant tooling. LICENSOR shall have the right to
purchase the inventory at production cost or, in case of tooling, at its
depreciated value (based on depreciation over five years in accordance
with normal accounting principles) within
[———-]
66
after receipt of
the inventory; If not otherwise agreed between the parties, LICENSOR, if
using its option, has to acquire any and all of the PRODUCTS, bottles,
packaging, semi-finished PRODUCTS and materials, unless obsolete, damaged
or otherwise un-sellable;
|
|
|
7.7.4
|
LICENSEE
will return all material relating to the PRODUCTS which is the property of
LICENSOR promptly following termination or, if relevant, at the end of the
sell-off period;
|
|
|
7.7.5
|
all
rights granted to LICENSEE to use the TRADEMARKS, the TRADENAME, the
BOTTLES, the PRESENTATION and the FORMULAE shall
cease.
|
|
7.8
|
Stocks
of PRODUCTS, BOTTLES and PRESENTATION which display the TRADEMARKS and any
relevant tooling not purchased by LICENSOR and not disposed of during the
sell-off period may be disposed of in such manner as shall be mutually
agreed by the parties or, failing agreement shall be destroyed under the
supervision of LICENSOR.
|
65
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.65.
66
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.66.
|
7.9
|
Expiration
or termination of this AGREEMENT for any reason shall not affect the
rights and obligations of the parties accrued up to the date of expiration
or termination, but the LICENSEE shall have no right to any compensation
for the cessation of its rights on expiration or termination hereof in
accordance with the terms of this AGREEMENT and LICENSEE shall hold the
LICENSOR harmless from any such claims for compensation or damages which
may be made by any distributors or agents or persons, firms or companies
performing a similar function.
|
|
8.
|
TRADEMARKS
AND OTHER INTELLECTUAL PROPERTY
RIGHTS
|
|
8.1
|
LICENSOR
guarantees and warrants that it is authorised to use the TRADEMARKS
set forth in Annex A
Part 1 hereto
and the TRADENAME for the PRODUCTS and to grant this
exclusive license to use the TRADEMARKS
set forth in Annex A
Part 1 hereto
and the TRADENAME for the PRODUCTS for the purpose of
this AGREEMENT.
|
|
8.2
|
Subject
to this Section 8 and in general information with respect to the
TRADEMARKS supplied to LICENSEE during the term of this AGREEMENT,
LICENSOR undertakes to (i) defend LICENSEE against any and all claims by
third parties based on the use by LICENSEE in accordance with this
AGREEMENT of the TRADEMARKS and/or the TRADENAME and (ii) to indemnify,
reimburse and hold LICENSEE harmless from any and all liability, damages,
cost and expenses, including reasonable attorneys’ fees incurred by
LICENSEE, arising from any such claims made by third parties against
LICENSEE with respect to LICENSEE’S use of the TRADEMARKS and/or the
TRADENAME in accordance with this
AGREEMENT.
|
LICENSOR
represents and warrants that attached hereto as
Annex A Part 2
is a
true and accurate list updated as of May 1, 2010 which indicates with respect to
each of the TRADEMARKS set forth in
Part 1 of Annex A
the
existing and/or pending applications and/or registration for a specific country
or territory. LICENSEE acknowledges that it has received a copy of such
trademark list and that it is aware of the status of registration of the
TRADEMARKS as it appears on such trademark list (
Annex A Part
2
).
LICENSEE
acknowledges and accepts that
Part 3 of Annex A
lists those countries and/or territories in which, to LICENSOR’S best knowledge
at the date of signing of this Agreement, the marketing and distribution of the
PRODUCTS may only be commenced upon written authorisation by
LICENSOR.
|
8.3
|
LICENSEE
acknowledges that LICENSOR and/or its RELATED COMPANIES are the exclusive
owners of all rights, title and interests in the TRADEMARKS and/or the
TRADENAME and any part thereof and any other element, whether or not
capable of being registered as a trademark together with all rights in the
designs, copyright, including sketches and technical drawings or other
intellectual property or materials relating to the PRODUCTS, the
PRESENTATION, the BOTTLES, the FORMULAE, whether produced by LICENSOR or
by LICENSEE or by any sub-contractor or third party appointed by LICENSEE,
and of all goodwill attached thereto and agrees not to attack these rights
or to induce or support any such attacks. The parties agree that any
rights in the TRADEMARKS and the TRADENAME arising from the use of the
TRADEMARKS and/or the TRADENAME or any part thereof by LICENSEE shall
inure solely to the benefit of LICENSOR and/or its RELATED COMPANIES.
LICENSEE irrevocably agrees that any rights which it and/or any of its
RELATED COMPANIES may acquire by virtue of this AGREEMENT in respect of
the TRADEMARKS, the TRADENAME, the PRESENTATION, the BOTTLES and the
FORMULAE shall vest in and promptly upon request be assigned for nominal
consideration to the LICENSOR and/or its RELATED COMPANIES
absolutely.
|
|
8.4.1
|
If
reasonably requested by LICENSEE, LICENSOR agrees, in its reasonable
business discretion, to use commercially reasonable efforts at its own
cost and expenses to apply for the registration of the TRADEMARKS set
forth in
Part 1
of Annex A
in respect of the PRODUCTS in countries where aforesaid
TRADEMARKS are not already protected and in which LICENSEE markets the
PRODUCTS by reference to aforesaid TRADEMARKS. LICENSOR in any event
agrees to apply for the registration of aforesaid TRADEMARKS in those
countries listed in
Annex F
to this
AGREEMENT.
|
|
8.4.2
|
In
addition, LICENSOR agrees, according to its reasonable business
discretion, at its own cost and expenses, to use commercially reasonable
efforts to apply at the reasonable request of LICENSEE for the
registration of the TRADEMARKS in combination with other descriptive or
distinctive elements and/or for other trademarks to be used in conjunction
with the TRADEMARKS and/or the TRADENAME on the PRODUCTS by LICENSEE in
accordance with the terms of this Agreement. LICENSOR agrees to discuss in
good faith and to take LICENSEE’S recommendations into account in deciding
whether or not to apply to register in accordance with this
Sub-Section
8.4.2
.
|
|
8.4.3
|
If
after being requested by LICENSEE in accordance with
Section 8.4.2
above, LICENSOR fails to apply for the registrations of other trademarks
to be used in conjunction with the TRADEMARKS under the terms of this
AGREEMENT within
[———]
67
of such written
request, LICENSEE may apply to register those other trademarks anywhere in
the world, provided these are not colourable imitations of, or include any
element of the TRADEMARKS.
|
|
|
LICENSEE
agrees that in such a case of registration by it, LICENSOR will not have
to defend, indemnify, reimburse and hold harmless the LICENSEE as provided
in Section 8.2 above.
|
67
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.67.
|
8.4.4
|
LICENSOR
shall have the right, to be exercised within
[———]
68
after the
expiration or termination of the AGREEMENT, to purchase from LICENSEE all
right and title in any other trademarks to be used in conjunction with the
TRADEMARKS under the terms of this AGREEMENT that may have been registered
by LICENSEE during the term of this AGREEMENT, upon reimbursement of
LICENSEE’S out-of-pocket expenses incurred in registering or otherwise
acquiring and maintaining the said trademarks. Alternatively, LICENSOR may
elect not to purchase as aforesaid, but to get granted a license by
LICENSEE for the use of the other trademarks to be used in conjunction
with the TRADEMARKS on the PRODUCTS that may have been registered by
LICENSEE, for so long as LICENSOR will carry such PRODUCTS in its
collection. Such license will be without restriction and without
compensation to be paid by
LICENSOR.
|
|
8.5
|
The
parties agree to inform each other about any and each substantial
violation or infringement of the TRADEMARKS in relation to the PRODUCTS,
the PRESENTATION, the BOTTLES and other trademarks to be used in
conjunction with the TRADEMARKS and/or the TRADENAME by third
parties which come to their
knowledge.
|
|
8.6
|
LICENSOR
agrees to use its best endeavours to keep the registrations of the
TRADEMARKS and other trademarks to be used in conjunction with the
TRADEMARKS (in accordance with this AGREEMENT) in full force and effect
for the term of this AGREEMENT and to keep LICENSEE informed on the legal
status of the applications and registrations of the TRADEMARKS and the
other trademarks to be used in conjunction with the TRADEMARKS in
international class of goods 3. LICENSOR agrees to provide LICENSEE with a
report in January of each year, including all applications and
registrations of the TRADEMARKS relating to the PRODUCTS and the other
trademarks to be used in conjunction with the TRADEMARKS and containing at
least the application and/or registration number as well as the
application and/or registration dates and the goods these applications
and/or registrations have been applied or registered
for.
|
|
8.7
|
LICENSOR
shall at its reasonable business discretion defend the TRADEMARKS, the
TRADENAME and the PRODUCTS as well as any other trademarks used in
relation to the PRODUCTS in accordance with the terms of this AGREEMENT,
at its own cost and in co-ordination with LICENSEE against any and all
violations or infringements which, according to LICENSOR’S reasonable
business discretion, may have a materially adverse impact on this
AGREEMENT, especially against confusingly similar trademarks, trademark
applications or use by third parties for any goods and/or services
identical with or similar to the PRODUCTS. If requested by LICENSOR,
LICENSEE undertakes to assist or support LICENSOR in its measures of
defence within its ability.
|
|
8.8
|
Any
cost and expenses reasonably and properly incurred arising from a
necessary or requested participation of LICENSEE in the measures of
defence of the TRADEMARKS will be refunded by
LICENSOR.
|
|
8.9
|
If
LICENSEE, in its reasonable business discretion, identifies a violation or
infringement of the TRADEMARKS and/or the TRADENAME which in its
reasonable opinion may have a materially adverse impact on this AGREEMENT,
it shall promptly inform LICENSOR and LICENSOR agrees to enter into
discussions with LICENSEE as to the best course of action to adopt to deal
with such violation / infringement.
|
68
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.68.
LICENSOR
undertakes to take full account of LICENSEE’S recommendations but shall not be
bound to institute legal proceedings in respect of such violation /
infringement. LICENSEE acknowledges that it will not take any action on its own
account to defend the TRADEMARKS and/or the TRADENAME.
|
8.10
|
The
parties agree that if it is mandatory to register this AGREEMENT and/or
the LICENSEE as official licensee for the TRADEMARKS in the International
Class of Goods no 3, each Party will inform the other Party thereof in
writing and in advance. LICENSEE agrees to take at its own cost and
expenses all action necessary for the registration of the AGREEMENT or of
LICENSEE as Registered User in those countries. LICENSOR agrees to
reimburse LICENSEE the direct costs and expenses reasonably and properly
incurred by LICENSEE in connection with the registration of the AGREEMENT
or of LICENSEE as “Registered
User”.
|
|
8.11
|
LICENSEE
undertakes at the request of LICENSOR to sign any document necessary for
the registration and/or maintenance of the validity of the TRADEMARKS
including the recordal (and cancellation of such recordal upon
termination) of this AGREEMENT and of LICENSEE as a Registered User or
licensee. In addition, to the extend that LICENSOR should deem it
advisable to protect the TRADEMARKS, LICENSEE agrees to provide a
statement to the effect that LICENSEE is producing, selling and promoting
the PRODUCTS under LICENSOR’S control, together with such other assistance
(at LICENSOR’S cost) as LICENSOR reasonably deems necessary for this
purpose.
|
|
8.12
|
LICENSEE
agrees that it shall not, at any time, directly or indirectly contest the
validity of the registration of the TRADEMARKS or LICENSOR’S other
intellectual property rights (including those in the PRESENTATION, the
FORMULAE and the BOTTLES) to the extent that such rights relate to the
subject matter of this AGREEMENT, or their ownership by LICENSOR, its
RELATED COMPANIES, successors and/or
assignees.
|
|
8.13
|
LICENSEE
agrees not to use the TRADEMARKS or LICENSOR’S other intellectual property
rights in respect of the PRESENTATION, the FORMULAE and the BOTTLES in
connection with the sale of any products other than the PRODUCTS, nor to
use, other than under the terms of this AGREEMENT, the TRADEMARKS and/or
the TRADENAME as a part of its trading name and shall not use in its
business any other trade or service mark, other than under the terms of
this AGREEMENT, so resembling the TRADEMARKS as to be likely to cause
confusion.
|
|
8.14
|
LICENSEE
shall use the TRADEMARKS and all designs, sketches, models, prototypes,
maquettes and other material directly related to the PRODUCTS as well as
the PRESENTATION, the FORMULAE and the BOTTLES, solely in connection with
the production, marketing, merchandising, distribution, advertising,
promotion, and sale in the TERRITORY of the PRODUCTS and any OTHER
PRODUCTS which LICENSOR has agreed may be sold or given away with the
PRODUCTS.
|
|
8.15
|
LICENSEE
shall, upon LICENSOR’S reasonable request, mark all labels, cartons, price
lists, promotional and advertising, merchandising and promotional material
and other printed or duplicated material for or relating to the PRODUCTS
with a notice in a form as is normal practice in the industry to the
effect that the TRADEMARKS are registered trademarks and/or the property
of LICENSOR.
|
|
8.16
|
LICENSEE
agrees to use the TRADEMARKS set forth in
Annex A Part 1
only in the form as represented in
Annex A Part 1
or as may be provided by LICENSOR from time to time on the PRODUCTS and
for the advertising and promotion for the PRODUCTS. This obligation shall
not apply where a TRADEMARK is used within continuous, flowing text (e. g.
in press releases and descriptive texts) where it could be impracticable
to use the TRADEMARKS in the form represented in
Annex A Part 1
,
provided that such representation of the TRADEMARKS shall be as close to
the form represented in
Annex A Part 1
as is practicable in the
circumstances.
|
|
8.17
|
LICENSEE
shall be responsible for identifying appropriate names for all new ranges
of the PRODUCTS, together with, if appropriate, new BOTTLES and
PRESENTATION for such new ranges and, to that end, LICENSEE agrees
that:
|
|
|
(i)
|
it
shall use reasonable endeavours to ensure the availability of all proposed
names, designs for new BOTTLES and PRESENTATION;
and
|
|
|
(ii)
|
it
shall assist LICENSOR, at LICENSOR’S reasonable request and cost, in
applying to register, registering or otherwise protecting in LICENSOR’S
name any new names, BOTTLE design and/or PRESENTATION approved by LICENSOR
in accordance with this AGREEMENT.
|
|
|
(iii)
|
LICENSOR
shall have the right to file, to register and/or to use the name with
respect to any other category of products it (and/or its RELATED
COMPANIES) presently markets and distributes under the
TRADENAME.
|
|
9.1
|
LICENSEE
agrees, during the term of this
AGREEMENT:
|
|
|
9.1.1
|
not
to enter into a similar agreement to this Agreement with a diversified
luxury brand operating its business in the writing instruments market.
LICENSEE undertakes to obtain LICENSOR's prior written approval before
entering into a similar agreement with a diversified luxury brand
competing with LICENSOR;
|
|
|
9.1.2
|
not
to manufacture, advertise or promote, distribute or in any other way
market products, which are identical to the PRODUCTS except as may be
permitted in this AGREEMENT;
|
|
|
9.1.3
|
not
to use the TRADEMARKS and/or the TRADENAME in combination with the
services of a hairdresser or a beauty parlour and not to consent to such a
use by third parties;
|
|
|
9.1.4
|
not
to consent to the use of the TRADEMARKS and/or the TRADENAME in connection
with the manufacture, distribution, marketing and/or advertising of
products which are identical to the PRODUCTS, alone or in conjunction with
any additions;
|
|
|
9.1.5
|
to
maintain the reputation and image of the TRADEMARKS set forth in
Annex A
hereto
and/or the TRADENAME as well as the reputation and image of other products
under the TRADEMARKS set forth in
Annex A
hereto
and/or the TRADENAME and to desist from any measures which could harm or
diminish the reputation and the image and/or the prestige of the
TRADEMARKS set forth in
Annex A
hereto
and/or the TRADENAME and/or the
PRODUCTS.
|
|
10.1
|
LICENSEE
shall manufacture or have manufactured the PRODUCTS at its own
responsibility and shall enter into or maintain an adequate product
liability insurance, such insurance to cover the costs and damages related
to the undertaking a product recall on a worldwide
basis.
|
|
10.2
|
LICENSEE
agrees that the manufacture, marketing and distribution of the PRODUCTS,
and any OTHER PRODUCTS (
Section 2.7
above) distributed or sold with the PRODUCTS will be in compliance with
all applicable health and safety laws or regulations and with any relevant
national and international cosmetic labelling, packaging, recycling or
other relevant regulations in the countries of manufacture and
distribution.
|
|
10.3
|
LICENSEE
further agrees that it will organise and effect, at its own expense, all
tests and registrations as are necessary for compliance with local product
import/registration and health or similar registration requirements.
LICENSOR agrees to assist LICENSEE with regard to such registrations
within its best abilities. LICENSEE agrees to reimburse LICENSOR any costs
and expenses reasonably and properly incurred by LICENSOR in connection
with such registrations.
|
|
10.4
|
LICENSEE
agrees to defend, indemnify and hold LICENSOR harmless from and against
any and all liability, damages, reasonable legal fees, reasonable costs
and expenses incurred by LICENSOR in connection with any claims or legal
actions made by third parties against LICENSOR arising out of a breach of
the provisions of
Section 10.2 and/or
10.3
above, or arising out of the use of the TRADENAME by LICENSEE
in accordance with
Sections 2.2 to
2.6
above or arising out of any damage or injury caused by any
OTHER PRODUCT
(Section 2.7 above)
sold with the PRODUCTS, the infringement of the
intellectual property rights or other similar rights of any third party or
any applicable national or international laws or regulations or any other
acts or omissions of LICENSEE or any of its agents, employees or
sub-contractors in connection with the performance of its obligations
hereunder. This indemnity shall not extend to claims for compensation
against LICENSOR which are due to LICENSOR’S own action or failure to
act.
|
|
11.1
|
The
parties agree to keep confidential and secret the provisions of this
AGREEMENT and all non-public information and knowledge each party may
acquire about the other including, without limitation, information
concerning the marketing of their products, even if such information and
knowledge have not expressly been referred to as secret or confidential.
Such information and knowledge may only be used for the purpose of this
AGREEMENT.
|
|
11.2
|
Notwithstanding
anything to the contrary, the information and knowledge as identified
hereinabove shall not be deemed confidential
if:
|
|
|
11.2.1
|
at
the time of disclosure such information is in the public
domain;
|
|
|
11.2.2
|
after
disclosure such information becomes a part of the public domain, except by
breach of this AGREEMENT;
|
|
|
11.2.3
|
such
information must be disclosed as required by applicable law;
or
|
|
|
11.2.4
|
such
information is known to the other party at the time of
disclosure.
|
|
11.3
|
The
confidentiality provision will remain in force after the termination of
the AGREEMENT for whatever reason, and upon termination, the parties agree
to return to each other, or to destroy, as the other may request, all
materials containing confidential and non-public information and
knowledge.
|
|
11.4
|
The
parties agree to impose this obligation of confidentiality upon all
persons acting on their behalf, including but not limited to their
employees, agents, consultants, sub-contractors, sub-licensees, managers
and representatives.
|
|
11.5
|
Notwithstanding
anything to the contrary contained in this
AGREEMENT,
|
LICENSOR
acknowledges that LICENSEE, has its ordinary shares traded on Euronext, and is
subject to various reporting obligations as a public company. LICENSOR further
acknowledges that Inter Parfums, Inc., the parent company of LICENSEE (the
“PARENT COMPANY”), is a publicly held company with its Common Stock traded on
The Nasdaq Stock Market, National Market System and is subject to reporting
requirements of the United States federal securities laws. Nothing in the
AGREEMENT shall prohibit the disclosure as may be required of either PARENT
COMPANY or LICENSEE under such securities laws. LICENSEE agrees to discuss in
advance with LICENSOR any such public disclosure that may be required by of
either PARENT COMPANY or LICENSEE.
LICENSOR
acknowledges that, upon satisfaction of the condition precedent to set forth in
Section 7.1 of this AGREEMENT, PARENT COMPANY is required by the United States
securities laws to file
|
|
(a)
|
a
description of this AGREEMENT with the United States Securities and
Exchange Commission within four (4) business days of the satisfaction of
such condition; accordingly, PARENT COMPANY shall provide LICENSOR the
opportunity to review and comment on that description at least two (2)
business days prior to filing; and
|
|
|
(b)
|
a
copy of this AGREEMENT with the United States Securities and Exchange
Commission with the next periodic report due to be
filed.
|
In
connection with the filing of this AGREEMENT with the United States Securities
and Exchange Commission, PARENT COMPANY shall seek confidential treatment of
financial and commercial terms to the extent permitted by the applicable
securities laws. At least
[———-]
69
prior to filing this
AGREEMENT, PARENT COMPANY shall deliver to LICENSOR a copy of the filing that it
plans to submit to the Securities and Exchange Commission, together with any
requests for confidential treatment, for LICENSOR’s review.
69
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.69.
PARENT
COMPANY shall provide LICENSOR with a copy of the final filing within
[———-]
70
after filing. If the
United States Securities and Exchange Commission indicates it may not grant
confidential treatment as requested in the filing, PARENT COMPANY shall promptly
notify LICENSOR and shall consult with LICENSOR through the process of obtaining
whatever confidential treatment is available. PARENT COMPANY shall
notify LICENSOR promptly upon notification to PARENT COMPANY that anyone has
sought under the Freedom of Information Act to obtain Confidential Information
or the provisions of this AGREEMENT redacted in the confidential treatment
filing with the Securities and Exchange Commission and shall cooperate with
LICENSOR in any effort by LICENSOR to contest the disclosure.
|
12.1
|
All
reports, communications, requests, approvals and notices required or
permitted by this AGREEMENT to be given to a party shall be in writing and
shall be deemed to be duly given when sent by certified or registered
mail, return receipt requested, addressed to the party concerned or by
facsimile where the sender is able to demonstrate successful transmission
by producing a properly addressed fax transmission report, as
follows:
|
To
LICENSOR:
Montblanc-Simplo
GmbH
Hellgrundweg
100
22525
Hamburg
Attention
to Mr. Lutz BETHGE, CEO
Fax No.
+49 40 844 01 390
Copy
to:
Richemont
International SA
50 chemin
de la Chênaie
1293
Bellevue
Attn to
the Legal Department, Mr. Albert Kaufmann, General Counsel
Fax No.
+41 22 721 34 76
To
LICENSEE
Inter
Parfums SA
4
rond-point des Champs Elysées
75008
PARIS
Att to Mr
Philippe Benacin, CEO
Fax No. +
33 1.45.61.16.34
or any
other address a party may communicate to the other party in
writing.
70
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.70.
|
13.1
|
Except
as otherwise provided for in accordance with the terms of this AGREEMENT,
neither party shall be entitled to assign its rights or obligations
hereunder without the prior written consent of the other. Notwithstanding
the foregoing, LICENSOR may assign this Agreement and/or any right and
obligation hereunder to any (current and/or future) entity within the
Richemont Group without LICENSEE’s prior
consent.
|
|
13.2
|
LICENSEE
shall have the right to assign the rights under the AGREEMENT to any
RELATED COMPANY without LICENSOR’S consent. LICENSEE further will be
entitled to grant sub-licenses to RELATED COMPANIES, provided LICENSEE
inform LICENSOR thereof in writing 30 calendar days in
advance.
|
|
13.3
|
Any
such assignment or sub-license under
Section 13.1 or
13.2
does in no way affect any of the assignor’s obligations under
the AGREEMENT. The assignor agrees to remain liable for and guarantees the
full performance of this AGREEMENT by the
assignee.
|
|
14.
|
ENTIRE
AGREEMENT, MODIFICATION
|
|
14.1
|
This
AGREEMENT and its Annexes contain a complete statement of all arrangements
between the parties with respect to the subject matter and supersede all
existing arrangements between them concerning this subject
matter.
|
|
14.2
|
Modifications
and/or supplements to this AGREEMENT are only valid if made in writing.
This shall also apply to the modification or cancellation of this
in-writing cause.
|
|
15.
|
APPLICABLE
LAW, JURISDICTION
|
|
15.1
|
This
Agreement shall be governed and interpreted in accordance with the Laws of
Switzerland, to the exclusion of the United Nations Convention on
Contracts for the International Sale of Goods
(CISG).
|
|
15.2
|
Any
dispute, controversy or claim arising out of or in relation to this
Agreement, including the validity, invalidity, breach or termination
thereof, shall be resolved by arbitration in accordance with the Swiss
Rules of International Arbitration of the Swiss Chambers of Commerce (“the
Rules”) in force on the date when the notice of arbitration is submitted
in accordance with these Rules.
|
|
15.3
|
The
arbitration will take place in Geneva, Switzerland and the language of the
procedure shall be English. The arbitral tribunal will be composed of one
(1) arbitrator who will be designated in accordance with the
Rules.
|
|
15.4
|
The
expenses and fees of arbitration shall be determined in accordance with
the Rules.
|
|
15.5
|
The
arbitration award shall be final and binding upon the parties, the parties
renouncing to appeal against the arbitration award by any ordinary or
extraordinary means, whatever the subject of the arbitration award is. The
arbitration award may be enforced by action before any court of competent
jurisdiction.
|
|
15.6
|
In
accordance with Art. 26 of the Rules, each party is hereby expressly
authorized and entitled to initiate any judicial action seeking any kind
of interim relief before any competent jurisdiction. The initiation or
pursuit of any action to seek such interim relief shall not be deemed to
waive or preclude the right of such party to require arbitration as
contemplated by the section above nor to seek such interim relief before
the arbitral tribunal.
|
The
specific remedies to which either party may resort under the terms hereof are
cumulative and are not intended to be exclusive of the remedies to which either
party is entitled. No waiver by either party, whether express or implied, of any
provision of this AGREEMENT or any breach or default of any one or more
instances, nor any delay by either party in exercising its rights hereunder,
except as provided for in this AGREEMENT, shall constitute or be deemed a
continuing waiver of such provision or of any other provision of this
AGREEMENT.
The
provisions of this AGREEMENT are independent of and severable from each other
and no provision shall be affected or rendered invalid or unenforceable by
virtue of the fact that for any reason any other provision or provisions may be
in whole or in part invalid or unenforceable. The parties hereby agree to
substitute any invalid provision by another valid provision in such a way that
the purpose of the invalid provision is reached as far as possible. The same
shall apply accordingly in case of an omission or an indefinite
provision.
Section
headings as used herein are for identification purposes only, and shall not
affect the meaning or construction of this AGREEMENT.
The
parties hereto shall not be responsible for any loss, damage, consequential or
otherwise, detention or delay caused by fire, law, regulation, civil or military
authority, insurrection or riot, national labour strike or wartime embargoes,
tempest, act of God, shortages or by any other cause whatsoever, which is
unavoidable or beyond the relevant party’s reasonable control; provided however,
that any such force majeure shall not release LICENSEE from its obligations to
make payment of amounts due and owing to LICENSOR in accordance with the terms
of this AGREEMENT. It is agreed that LICENSEE’S obligations to make payments of
amounts due and owing up to, and during, an event of such force majeure shall
not apply during the continuance of that force majeure in the event that the
force majeure itself renders LICENSEE unable to make such payments. In such
circumstances, LICENSEE undertakes to make payment of amounts owing to and
accrued to LICENSOR before and during such force majeure, promptly upon its
cessation.
IN
WITNESS whereof the parties have executed this AGREEMENT on
24 July 2009.
|
For
and on behalf of
|
|
For
and on behalf of
|
|
MONTBLANC-SIMPLO
GMBH
|
|
INTER
PARFUMS SA
|
|
|
|
|
|
/s/ Lutz BETHGE
|
|
/s/ Philippe BENACIN
|
|
Lutz
BETHGE
|
|
Philippe
BENACIN
|
|
CEO
|
|
Président
Directeur Général
|
|
|
|
|
|
/s/ Roland A. HOEKZEMA
|
|
|
|
Roland
A. HOEKZEMA
|
|
|
|
EVP
Finance & Services - CFO
|
|
|
ANNEX
A
THE
TRADEMARKS
PART
1
The
trademarks in use:
|
·
|
Design
mark : Star logo
|
|
For
and on behalf of
|
|
For
and on behalf of
|
|
MONTBLANC-SIMPLO
GMBH
|
|
INTER
PARFUMS SA
|
|
|
|
|
|
/s/ Lutz BETHGE
|
|
/s/ Philippe BENACIN
|
|
Lutz
BETHGE
|
|
Philippe
BENACIN
|
|
CEO
|
|
Président
Directeur Général
|
|
|
|
|
|
/s/ Roland A. HOEKZEMA
|
|
|
|
Roland
A. HOEKZEMA
|
|
|
|
EVP
Finance & Services - CFO
|
|
|
ANNEX
A
THE
TRADEMARKS
PART
2 AND PART 3
Trademark
list
A list of
all current registrations and pending applications for registrations of the
TRADEMARKS pursuant to Part 1 above in the TERRITORY is attached.
Licensee
understands and acknowledges that the list attached hereto does not include the
trademarks registered by Cosmopolitan Cosmetics GmbH and/or its affiliates,
which the latter shall assign to LICENSOR upon termination of the license
agreement entered into with the latter. Furthermore, the list does not include
the trademarks with respect to which Cosmopolitan Cosmetics GmbH will provide
LICENSOR with a co-existence agreement.
PART
3
Countries
and/or territories in which, to LICENSOR’S best knowledge at the date of signing
of this Agreement, the marketing and distribution of the PRODUCTS may only be
commenced upon written authorisation by LICENSOR:
The
Parties agree that this Part 3 shall be completed by LICENSOR in due
course.
|
For
and on behalf of
|
|
For
and on behalf of
|
|
MONTBLANC-SIMPLO
GMBH
|
|
INTER
PARFUMS SA
|
|
|
|
|
|
/s/ Lutz BETHGE
|
|
/s/ Philippe BENACIN
|
|
Lutz
BETHGE
|
|
Philippe
BENACIN
|
|
CEO
|
|
Président
Directeur Général
|
|
|
|
|
|
/s/ Roland A. HOEKZEMA
|
|
|
|
Roland
A. HOEKZEMA
|
|
|
|
EVP
Finance & Services - CFO
|
|
|
ANNEX
B
|
1.
|
The
PRODUCTS (including the BOTTLES and the PRESENTATION) shall be
manufactured to the highest high standards of quality, using only high
quality ingredients and materials, in order to ensure that the standard of
quality of the finished PRODUCTS and PRESENTATION thereof meets the
prestige and reputation of LICENSOR. THE PRODUCTS shall in no event be of
an inferior quality than the EXISTING
PRODUCTS.
|
|
For
and on behalf of
|
|
For
and on behalf of
|
|
MONTBLANC-SIMPLO
GMBH
|
|
INTER
PARFUMS SA
|
|
|
|
|
|
/s/ Lutz BETHGE
|
|
/s/ Philippe BENACIN
|
|
Lutz
BETHGE
|
|
Philippe
BENACIN
|
|
CEO
|
|
Président
Directeur Général
|
|
|
|
|
|
/s/ Roland A. HOEKZEMA
|
|
|
|
Roland
A. HOEKZEMA
|
|
|
|
EVP
Finance & Services - CFO
|
|
|
ANNEX
C
FORM
OF ROYALTY REPORT
The
royalty form report agreed upon is attached hereto.
At the
end of each quarter LICENSEE will provide the following reports, which have been
approved by LICENSOR:
|
|
-
|
Quarterly
sales by zone, country and client
|
|
|
-
|
Quarterly
Statement allowing to isolate any sales being excluded from the NET SALES
definition as per Clause 1.14
|
|
For
and on behalf of
|
|
For
and on behalf of
|
|
MONTBLANC-SIMPLO
GMBH
|
|
INTER
PARFUMS SA
|
|
|
|
|
|
/s/ Lutz BETHGE
|
|
/s/ Philippe BENACIN
|
|
Lutz
BETHGE
|
|
Philippe
BENACIN
|
|
CEO
|
|
Président
Directeur Général
|
|
|
|
|
|
/s/ Roland A. HOEKZEMA
|
|
|
|
Roland
A. HOEKZEMA
|
|
|
|
EVP
Finance & Services - CFO
|
|
|
ANNEX
D
SELECTIVE
DISTRIBUTION CRITERIA
Products
may only be sold in outlets, which exude an aura of luxury and
exclusivity.
Such
outlets must, at a minimum have:
|
|
-
|
A
solid reputation for selling luxury
perfumes
|
|
|
-
|
A
reputation and image compatible with the high quality and reputation of
the Montblanc Trademarks
|
|
|
-
|
Clean,
well maintained shop fittings
|
|
|
-
|
Appropriate
space devoted to luxury perfumes
|
|
|
-
|
Staff
knowledgeable about luxury
fragrances.
|
The
Parties agree that LICENSEE shall aim at distributing the PRODUCTS in the
following indicative number of outlets per country::
|
For
and on behalf of
|
|
For
and on behalf of
|
|
MONTBLANC-SIMPLO
GMBH
|
|
INTER
PARFUMS SA
|
|
|
|
|
|
/s/ Lutz BETHGE
|
|
/s/ Philippe BENACIN
|
|
Lutz
BETHGE
|
|
Philippe
BENACIN
|
|
CEO
|
|
Président
Directeur Général
|
|
|
|
|
|
/s/ Roland A. HOEKZEMA
|
|
|
|
Roland
A. HOEKZEMA
|
|
|
|
EVP
Finance & Services - CFO
|
|
|
71
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.71.
ANNEX
E
ANNUAL
MARKETING PLAN
Information
to be included in each Annual Marketing Plan
|
(a)
|
Calendar
of Main Activities
|
|
(b)
|
Conceptual
Approach – by Product and
Communication
|
|
(d)
|
Brand
Name (or code name)
|
|
(f)
|
Distribution:
sales and distribution plan by countries, and authorised points of sale by
countries.
|
|
(h)
|
Projected
Net Sales Targets – by Product line and
countries
|
|
|
-
|
advertising
and marketing as detailed in
Annex
D,
presented in summary form
|
|
(j)
|
New
Product Launch Plan
|
|
For
and on behalf of
|
|
For
and on behalf of
|
|
MONTBLANC-SIMPLO
GMBH
|
|
INTER
PARFUMS SA
|
|
|
|
|
|
/s/ Lutz BETHGE
|
|
/s/ Philippe BENACIN
|
|
Lutz
BETHGE
|
|
Philippe
BENACIN
|
|
CEO
|
|
Président
Directeur Général
|
|
|
|
|
|
/s/ Roland A. HOEKZEMA
|
|
|
|
Roland
A. HOEKZEMA
|
|
|
|
EVP
Finance & Services - CFO
|
|
|
ANNEX
F
KEY
MARKETS
|
For
and on behalf of
|
|
For
and on behalf of
|
|
MONTBLANC-SIMPLO
GMBH
|
|
INTER
PARFUMS SA
|
|
|
|
|
|
/s/ Lutz BETHGE
|
|
/s/ Philippe BENACIN
|
|
Lutz
BETHGE
|
|
Philippe
BENACIN
|
|
CEO
|
|
Président
Directeur Général
|
|
|
|
|
|
/s/ Roland A. HOEKZEMA
|
|
|
|
Roland
A. HOEKZEMA
|
|
|
|
EVP
Finance & Services - CFO
|
|
|
72
Confidential information omitted and filed separately with the SEC with a
request for confidential treatment by Inter Parfums, Inc. No.
10.139.72.
ANNEX
G
CORPORATE
SOCIAL RESPONSIBILITY AND ETHICS
As
attached hereto.
|
For
and on behalf of
|
|
For
and on behalf of
|
|
MONTBLANC-SIMPLO
GMBH
|
|
INTER
PARFUMS SA
|
|
|
|
|
|
/s/ Lutz BETHGE
|
|
/s/ Philippe BENACIN
|
|
Lutz
BETHGE
|
|
Philippe
BENACIN
|
|
CEO
|
|
Président
Directeur Général
|
|
|
|
|
|
/s/ Roland A. HOEKZEMA
|
|
|
|
Roland
A. HOEKZEMA
|
|
|
|
EVP
Finance & Services - CFO
|
|
|
Montblanc
Company
of the Richemont Group
Supplier
Code of Conduct
Model
Supplier Code of
Conduct
Montblanc
and all companies of the Richemont Group relationships with all business
partners - suppliers, sub-contractors and business allies - are based on fair,
honest and mutually rewarding dealings contributing to high quality standards of
products and services.
Montblanc
and all companies of the Richemont Group therefore requires that all their
business partners adhere to basic ethical values and ensure the compliance of
their own operations with the principles and practices outlined below. Wherever
feasible, suppliers should seek to ensure that these principles are communicated
to sub-contractors and suppliers of suppliers.
Labo
ur
relationships and employment
practices
General
principle
Suppliers
should adopt and apply fair and ethical labour practices respecting
internationally recognised fundamental human rights standards, including the
Universal Declaration of Human Rights, all international covenants and
International Labour Organisation conventions.
Healthy
and safe working conditions
Suppliers
will provide a safe and healthy working environment for their employees in
accordance with applicable local laws and any specific regulations within
industries in which they operate. Appropriate procedures should be in place to
prevent accidents and injury to health arising from, linked to, or occurring
during work activities or as a result of the operations of manufacturing
facilities. Suppliers shall be encouraged to have a nominated health and safety
representative who monitors their facilities' compliance with these
requirements.
Wages and
Working Hours
Suppliers
should comply with local laws relative to minimum wages, standard working hours
and employee benefits. Overtime hours will be voluntary and fully compensated at
regular or premium rates, according to local legal requirements.
In
special circumstances employees may be expected to work longer than standard
hours for limited periods of time. Where this occurs, additional working hours
and consecutive working days will be in compliance with the local regulations
and planned in a way to ensure safe and humane working conditions.
Freedom
of Association
Suppliers
should not prevent employees from associating freely with any lawful and
peaceful workers' or collective bargaining association. In the case where the
local labour laws restrict these freedoms, the supplier is encouraged to
facilitate parallel means of independent and free association and bargaining for
the personnel.
No
Discrimination
Suppliers
should not subject any person to discrimination in employment; including hiring,
wages, benefits, advancement, discipline, termination or retirement, on the
basis of: race, colour, caste, origin, nationality, religion, disability,
gender, sexual orientation, union membership, political affiliation or
age.
No Child
Labour
Suppliers
will not employ persons younger than 15 years of age or younger than the age for
completing compulsory education where this is more than 15 in the relevant
country.
Suppliers
must comply with all their local legal requirements for young workers,
particularly those pertaining to hours of work, wages, health, safety and
general working conditions. A young worker is defined as any worker over the age
of 15 and under the age of 18.
No Forced
Employment
Suppliers
will not use any forced labour, whether in the form of prison labour, indentured
labour, bonded labour or otherwise. Forced labour should be considered to
include any work or service, which is imposed under the threat of penalty for
non-performance or for which overall terms of employment are not
voluntary.
No
Disciplinary treatment
Suppliers
should not subject any person to harassment, corporal punishment, and/or threat
of violence and will prohibit the use of monetary fines or any forms of mental
or physical abuse, coercion, or intimidation.
Responsible
environmental management
Suppliers
will fully comply with local legislation and industrial regulations and should
endeavour to comply with the principles outlined in the
Richemont Environmental Code of
Conduct
.
Industry
specific issues
Endangered
or protected species
Suppliers
should fully comply with special international and local regulations, for
example the
Convention on
International Trade of Endangered Species (CITES),
related to the
procurement, import, usage and export of raw materials sourced from endangered
or protected species.
Leather
finished products manufacturing
Suppliers
involved in the leather tanning and finishing sector should apply within their
operations the
European
Leather Association (COTANCE)
policies that relate to labour rights,
worker health and safety, environmental impacts and customer health and
safety.
Perfumes
and Cosmetic products
Suppliers
involved in the perfumes and cosmetics industry will comply with the
European Council Directive
76/768/EEC,
which seeks to ensure that no harmful substances are used in
such products.
Animal
testing
Suppliers
should adhere to the principles of
Corporate Standards of Compassion
for Animals
ensuring that no animal testing is conducted or commissioned
during any stage of product development or manufacture.
Product
information and labelling
Suppliers
will communicate honestly regarding the nature of the products they supply
including raw materials, handling and disposal. All product related matters,
especially regarding chemicals, GMOs or hazardous materials, will be accurately
disclosed as required by local and international laws and/or commonly used
standards in the industry in which they operate.
Country
of origin of product components
Suppliers
may be asked to provide Montblanc with information as to the country of origin
and the name of the sources of components and raw materials included in the
products being delivered.
There
will be no change to the source of components or raw materials or the location
of component production without Montblanc’s prior written
agreement.
Conflict
- free diamonds procurement
The
companies of the Richemont Group adheres to responsible diamond procurement
practices as a member of the diamond industry and requires all its Suppliers to
fully adhere to the principles of the
World Diamond Council Resolution on
Industry Self-Regulation
supporting the Kimberley Process.
The
World Federation of Diamond
Bourses
(WFDB)
and the
International
Diamond Manufacturers Association (IDMA)
, together with their constituent
and affiliated members, have created a voluntary system of diamond industry self
- regulation in order to comply and support government undertakings of the
Kimberley Process Certification
Scheme
(KPCS)
for rough diamonds.
The
principles of the diamond industry self-regulation initiatives are based on the
voluntary creation of a chain of written warranties from invoice to invoice of
all transactions involving the purchase and sale of diamonds and their cutting
and polishing. Montblanc requires all suppliers to comply the
Kimberley-Process.
Ethical
business principles
General
principles
Suppliers
should act according to a “spirit of trust” regarding ethical business
principles. They thus acknowledge that basic business principles related to
trade secrets, respect for intellectual property, sincerity, truthfulness,
transparency and maintaining promises contribute to credible, stable and
sustainable business relationships with Richemont and its
Maisons.
Gifts and
Gratuities
Suppliers
should not offer to their contacts within the Group any inducements, kickbacks,
bribes or other payments that may compromise the making of objective and fair
business decisions.
Special
regulations
Suppliers
will ensure that any production, delivery or other action subject to obtaining
specific governmental, legal or regulatory permissions may only be undertaken
when those permissions have been granted.
Application
and Compliance
General
principle
Montblanc
expects its suppliers to communicate the principles of the Model Supplier Code
of Conduct to their employees, sub-contractors and any other third parties with
whom they do business so as to ensure the principles are integrated into their
operations.
Operating
principles
Suppliers
should report all existing or potential discrepancies between their current
operations and the requirements set out in this Code and provide recovery and
remedial action plans for evaluation by Richemont.
Montblanc
purchasing staff will be trained to assess whether best practices are being
implemented in terms of the procurement of raw materials and semi-finished and
finished goods in accordance with this Code and may involve colleagues and third
parties to assist in determining whether this code is being complied
with.
Evaluation
Montblanc
shall be entitled to request information from its Suppliers as to their
compliance with the terms of this Model Supplier Code of Conduct.
Where
necessary, Montblanc may require a Supplier to provide evidence of its
compliance by way of independent certification.
Montblanc
shall have the right to have products and materials independently tested to
establish whether the Suppliers are in compliance with the terms of this Model
Supplier Code of Conduct.
Montblanc
shall be entitled to visit suppliers’ production facilities and the facilities
of their sub-contractors and suppliers to establish whether the terms of this
Model Supplier Code of Conduct are being complied with.
Non
compliance and penalties
With the
handoff this Model Supplier Code of Conduct will be part of the Manufacturing
Agreement (Framework Agreement) between the supplier and Montblanc.
Montblanc
reserves the right to terminate business relationships with any supplier who
violates this Code of Conduct or whose suppliers or subcontractors violate this
Code of Conduct. As well the terms of this Model Supplier Code of Conduct shall
be included in all standard supply agreements in order to enter into the
business relationships with Montblanc and the other companies of the Richemont
Group.
ACKNOWLEDGMENT
OF TERMS
|
Montblanc Model Supplier Code of
Conduct
|
|
|
|
|
|
|
|
Company
name
|
|
|
|
|
|
|
|
Address
|
|
|
|
|
|
|
|
Contact
name
|
|
|
|
|
|
|
|
Position
|
|
|
|
|
|
|
|
Phone
number, Fax number, E-mail
|
|
|
|
|
|
|
|
Name
of your contact at Montblanc
|
|
|
|
Does
your company have an individual responsible for implementation
of the Montblanc Supplier Code of Conduct ?
|
|
If
Yes, Please provide contact information
|
|
Does
your company have procedures in place to meet the requirements set out in
the Supplier Code of Conduct?
|
|
If
Yes, Please provide a copy
|
|
Did
your company identify any discrepancies between your current operations
and requirements set out in the Supplier Code of Conduct?
|
|
If
Yes, Please provide a copy
|
|
Does
your company have a code of conduct or similar standards to which your
suppliers adhere?
|
|
If
Yes, Please provide a copy
|
|
The
terms of the Montblanc Supplier Code of Conduct are hereby accepted and
agreed to on behalf of:
|
|
|
|
|
|
_________________________________,
|
|
Name
and function
|
|
|
|
|
|
|
|
Signature :
|
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|
Date :
|
|
|
Richemont
Environmental
Code of Conduct
Richemont
Environmental Code of Conduct
As a
member of the global community, Richemont strives to act as a responsible
corporate citizen carrying out its business activities in a manner that is
consistent with the protection of the environment and the sustainable
utilisation of natural resources.
Through
the nature of Richemont’s products and services, the Group is not directly
involved in sectors considered as having a highly significant impact on the
environment. Nevertheless, the various Maisons make extensive use of renewable
and non-renewable raw materials, such as precious and gem stones, gold, leather,
woods and natural resins and Richemont therefore seeks to address environment
related issues throughout its global supply chain and business
operations.
The
principles outlined in this Environmental Code of Conduct confirm Richemont’s
commitment to environmental stewardship in line with national and international
norms and standards for environmental management. Richemont therefore requires
all its employees, to contribute to its environmental performance by adopting
the principles and practices outlined below.
The
responsibility for the implementation of the Environmental Code of Conduct
within the Group worldwide will be assigned to the general manager of each
facility.
Awareness
and training
As part
of the implementation of the Environmental Code of Conduct, Richemont will
communicate its environmental policy to all employees, suppliers and other
stakeholders.
Facilities
and operations
Richemont
will develop, design and operate facilities and conduct activities taking into
consideration the environmental issues in order to minimise the adverse impacts
on the environment.
Facilities
Richemont
will ensure that construction, conversion, modernisation and other building work
at each facility will be performed in compliance with local environmental
legislation, norms and regulations and executed in harmony with the
environmental surroundings.
Energy
and water use
Richemont
will monitor the consumption of water, energy, oil, natural resources and other
materials used in its operations with a view to optimise their usage and
minimising waste. This includes heating, lighting, ventilation and
air-cooling.
Management
and employees responsible for the packing and transport of goods will adopt,
wherever possible, an “efficient energy use” strategy by careful planning,
organisation and grouping of the shipments.
Emissions,
effluents
Facilities
will ensure strict compliance with legal environmental norms and specific
industrial regulations relative to pollution control by installing appropriate
retention and filter systems
Facilities
will monitor and control greenhouse gas emissions, ozone-depleting substance
emissions, waste water discharges and any other relevant emissions resulting
from the manufacturing operations in accordance with local regulation and
industry best practice.
Waste
recycling
Richemont
will monitor waste collection and recycling by type with special attention being
paid to the treatment of hazardous materials. Wherever feasible, materials will
be recycled.
Endangered
or protected species
Richemont
will fully comply with special international and local regulations such as the
Convention on International
Trade in Endangered Species (CITES
) related to the procurement, import,
usage and export of raw materials issued from endangered or protected
species.
Leather
products manufacturing
Richemont
entities will adhere to the principles established by the European Leather
Association in terms of the production of leather goods
(COTANCE)
regarding employee
and customer health and safety and aim at minimising the adverse environmental
Impact of the production processes.
Perfumes
and cosmetic products
Group
companies will comply with EU legislation in terms of the production of perfumes
and cosmetics products.
(European Council Directive
76/768/EEC)
Animal
testing
The Group
will adhere to the principles of Corporate Standards of Compassion for Animals,
seeking to ensure that no materials used in its products have been tested or
caused harm to animals.
Conflict-free
diamonds
Richemont
adheres to the principles of the “World Diamond Council Resolution on
Industry self-regulation” by the introduction of written warranties throughout
the whole supply chain from the supplier until the final customer. Richemont
will explicitly state the “conflict-free diamond” warranty statement on its
internal invoices and will require it from all suppliers as soon as
possible.
No
“dirty gold”
Richemont
adheres to the principles of responsible gold procurement. To the extent
feasible under prevailing industry practices, Richemont will request that its
suppliers provide assurance as far as that gold being supplied has been mined in
a manner which respects human and labour rights and does not inflict
environmental damage, either directly or through the subsequent pollution
through seepage of chemicals.
With
respect to internal manufacturing operations involving gold and other precious
metals, Richemont facilities will operate in full compliance with local laws and
regulations and seek to apply industry-wide best practice in the handling of
such materials.
Product
stewardship
Richemont
Maisons aim to reach technically and economically viable objectives and apply,
wherever appropriate, a “design for environment” approach in order to optimise
the environmental performance of their products through the product
lifecycle.
The
nature of Richemont Maison’s products – watches, jewellery, leather goods,
writing instruments, apparel and other high range accessories - requires high
packaging quality standards. However, possible, recyclable and renewable raw
materials will be used for packaging.
Materials
used for storage and transportation will be made, wherever possible, of recycled
and recyclable materials and re-used wherever possible.
As part
of after-sales maintenance and repair services mainly related to watch products,
Richemont customer services worldwide will secure the replacement, storage and
appropriate disposal of any components, including for electronic circuits and
batteries, which may have an adverse impact on the environment.
Precautionary
approach
Richemont
Maisons will seek to make all necessary adjustments to design, manufacturing or
use of products or services, consistent with the latest scientific and technical
knowledge, to prevent any adverse impact on health, safety or the environment
arising from the production process or from products themselves.
Richemont
will develop and maintain, where significant hazard related risks exist,
emergency preparedness plans in conjunction with the relevant services and
authorities.
Suppliers
and other stakeholders
Richemont
will encourage its Suppliers to adhere to principles outlined in this Model
Environmental Code of Conduct and promote, where appropriate, necessary
improvements in their practices to make them consistent with those of the
Group.
As part
of open dialogue with the Stakeholders; any potential concern or proposal for
improvement with respect to the environmentally responsible practices should be
reported to directly to senior management.
Monitoring,
evaluation and compliance
The Group
will regularly monitor the performance of its manufacturing facilities in terms
of compliance with this Code.
All
existing or potential discrepancies between current operations and requirements
set out in Model Environmental Code of Conduct should be evaluated and reported
along with appropriate recovery action plans.
Any
material non-compliance with these guidelines may be reported on an anonymous
basis to the Head of Internal Audit at GroupAudit.Director@richemont.com.
Internal Audit will then assess the problem and review appropriate corrective
action in conjunction with the management of the facility
concerned.
Regular
updates
This
Model Environmental Code of Conduct will be revised and updated on an ad hoc
basis to address continuing requirements of responsible environmental management
as they arise.
ANNEX
H
A&P
EXPENSES REPORT
The
A&P Expenses Report form is attached hereto.
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For
and on behalf of
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For
and on behalf of
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MONTBLANC-SIMPLO
GMBH
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INTER
PARFUMS SA
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/s/ Lutz BETHGE
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/s/ Philippe BENACIN
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Lutz
BETHGE
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Philippe
BENACIN
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CEO
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Président
Directeur Général
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/s/ Roland A. HOEKZEMA
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Roland
A. HOEKZEMA
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EVP
Finance & Services - CFO
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ANNEX
I
TERMINATION
AGREEMENT
The
current draft of the termination agreement negotiated between LICENSOR, LICENSEE
and the current licensee is attached hereto. LICENSEE confirms being
substantially in agreement with the terms thereof and acknowledges the
restrictions existing with respect to the trademarks to be assigned by the
current licensee to LICENSOR or with respect to which a co-existence agreement
will be executed.
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For
and on behalf of
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For
and on behalf of
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MONTBLANC-SIMPLO
GMBH
|
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INTER
PARFUMS SA
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/s/ Lutz BETHGE
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/s/ Philippe BENACIN
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Lutz
BETHGE
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Philippe
BENACIN
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CEO
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Président
Directeur Général
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/s/ Roland A. HOEKZEMA
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Roland
A. HOEKZEMA
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EVP
Finance & Services - CFO
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Exhibit 10.161
This document constitutes part of a prospectus covering securities
that have been registered under the Securities Act of 1933.
Nonqualified
Stock Option Contract
THIS NONQUALIFIED STOCK
OPTION CONTRACT
is entered into effective as of the 31st day of December, 2014, by and between
INTER PARFUMS, INC.,
a Delaware corporation (the “Company”) and
___________
(“Option
Holder”).
WITNESSETH:
1. The
Company, in accordance with the resolutions adopted by the Company’s Executive Compensation and Stock Option Committee (the
“Committee”), and the terms and subject to the conditions of the Company’s 2004 Stock Option Plan, as amended
(the “2004 Plan”), hereby grants to the Option Holder as of December 31, 2014, a nonqualified stock option to purchase
an aggregate of ______
shares (the “Shares”) of the common stock, $.001 par value per share, of the Company
(the “Common Stock”), at the exercise price of $27.795
per share.
2. Subject
to earlier termination as provided in the 2004 Plan, the term of this option shall be six (6) years from the date hereof;
provided
that
, such option shall vest and become exercisable to purchase shares of Common Stock as follows: 20% one year after the date
of grant, and then 20% on each of the second, third, fourth and fifth consecutive years from the date of grant on a cumulative
basis, so that each option shall become fully vested and exercisable on the fifth year from the date of grant.
3. (a) Subject
to the provisions contained in Section 2 hereof, this option may be exercised from time to time in whole or in part prior to the
end of the term of the option (but not with respect to less than 100 Shares (unless less than 100 Shares remain to be purchased,
then such amount remaining), or fractional Shares), by giving written notice to the Company at its principal office, presently
551 Fifth Avenue, New York, New York 10176, stating that the Option Holder is exercising this option, specifying the number of
Shares purchased and accompanied by payment in full of the aggregate purchase price therefor (i) in cash or certified check or
(ii) with previously acquired shares of Common Stock or a combination of the foregoing if permitted in the sole discretion of the
Company’s Executive Compensation and Stock Option Committee (the “Committee”).
(b) In
addition, upon the exercise of this option, the Company may withhold cash and/or Shares to be issued with respect thereto, having
an aggregate fair market value equal to the amount which it determines is necessary to satisfy its obligation to withhold federal,
state and local income taxes or other taxes incurred by reason of such exercise. Alternatively, the Company may require the holder
to pay to the Company such amount, in cash, promptly upon demand. The Company shall not be required to issue any Shares pursuant
to this option until all required payments have been made.
4. This
option is not transferable otherwise than by will or the laws of descent and distribution and may be exercised, during the lifetime
of the Option Holder, only by the Option Holder or his legal representatives.
5. Nothing
in the 2004 Plan or herein shall confer upon the Option Holder any right to continue in the employ of, or be associated with, the
Company, its Parent or any of its Subsidiaries, or interfere in any way with the right to employment or association of the Option
Holder with the Company, its Parent or any of its Subsidiaries.
6. The
Option Holder understands that the Shares have been registered for issuance to the Option Holder in Registration Statement No.
333-136988 under the Securities Act of 1933, as amended (the “Act”). Resale to the public by the Option Holder is to
be made under Rule 144 under the Act in accordance with the procedure for resale of “affiliate shares” in the absence
of a subsequent effective registration statement for the resale of the Shares. Notwithstanding registration under the Act, the
Option Holder understands that in accordance with the provisions of the Company’s Code of Business Conduct, (i) the Option
Holder must obtain permission from the Company’s Chief Financial Officer prior to any sale of the Shares; and (ii)
the
use of material non-public information in connection with the sale of the Company’s shares (“Insider Trading”)
or the communication of such information to others who use it in trading the Company’s shares (“Tipping”) is
strictly prohibited.
7. (a) The
Option Holder understands that the Company maintains its internet website at
www.interparfumsinc.com
which is linked to
the SEC Edgar database. The Option Holder can obtain through the Company’s website, free of charge, its annual reports on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant
to Section 13(a) or 15(d) of the Exchange as soon as reasonably practicable after the Company has electronically filed with or
furnished them to the SEC.
(b) In
addition, the Company will cause to be delivered to the Option Holder, upon request to the Company directed to either the Chief
Financial Officer or the Controller, without charge to the Option Holder, a copy of the documents incorporated by reference into
the Registration Statement, other than exhibits (unless such exhibits are specifically incorporated by reference into the Registration
Statement).
8. Notwithstanding
anything to the contrary, if at any time the Chief Executive Officer, Board of Directors of the Company or the Committee shall
determine it its discretion that the listing or qualification of the Shares on any securities exchange, with national securities
association or under any applicable law, or the consent or approval of any governmental regulatory body, is necessary or desirable
as a condition of, or in connection with, the granting of an option, or the issue of Shares thereunder, or the sale of the Shares,
then this option may not be exercised in whole or in part unless such listing, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Chief Executive Officer, Board of Directors or the Committee.
9. (a) The
Company and the Option Holder further agree that they will both be subject to and bound by all of the terms and conditions of the
2004 Plan, which is incorporated by reference herein and made a part hereof as if fully set forth herein.
(b) In
the event the Option Holder's employment by, or association with, the Company, its Parent or any of its Subsidiaries terminates,
or in the event of the death or disability of the Option Holder, the rights hereunder shall be governed by, and made subject to,
the provisions of the 2004 Plan.
(c) In
the event of a conflict between the terms of this Contract and the terms of the 2004 Plan, then in such event, the terms of 2004
Plan shall govern.
(d) Except
as otherwise provided herein, all capitalized terms used herein shall have the same meaning ascribed to them in the 2004 Plan.
(e) The
Option Holder agrees that the Company may amend the 2004 Plan and the options granted to the Option Holder under the 2004 Plan,
subject to the limitations contained in the 2004 Plan.
10. This
Contract shall be binding upon and inure to the benefit of any successor or assign of the Company and to any executor, administrator
or legal representative entitled by law to the Option Holder's right hereunder.
11. This
Contract shall be governed by and construed in accordance with the laws of the State of New York, without regard to the principles
of conflicts of laws.
IN WITNESS WHEREOF,
the parties hereto have entered into this Contract effective as of the date first above written.
|
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INTER PARFUMS, INC.
|
|
|
|
|
|
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|
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By:
|
|
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[Name and Title]
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|
|
|
|
|
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|
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_________
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Schedule of Executive Officers and Number
of Shares Underlying Option
|
Executive Officer
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Number of Shares
|
|
|
|
|
|
|
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Jean Madar
|
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19,000
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Philippe Benacin
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19,000
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Russell Greenberg
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25,000
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Philippe Santi
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5,000
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Frederic Garcia-Pelayo
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5,000
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Henry B. “Andy” Clarke
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7,500
|
|
Exhibit 10.162
This document constitutes part of a prospectus covering securities
that have been registered under the Securities Act of 1933.
Nonqualified
Stock Option Contract
THIS NONQUALIFIED STOCK
OPTION CONTRACT
is entered into effective as of the 28th day of January, 2015, by and between
INTER PARFUMS, INC.,
a
Delaware corporation (the “Company”) and
___________
(“Option
Holder”).
WITNESSETH:
1. The
Company, in accordance with the resolutions adopted by the Company’s Executive Compensation and Stock Option Committee (the
“Committee”), and the terms and subject to the conditions of the Company’s 2004 Stock Option Plan, as amended
(the “2004 Plan”), hereby grants to the Option Holder as of January 28, 2015, a nonqualified stock option to purchase
an aggregate of ______
shares (the “Shares”) of the common stock, $.001 par value per share, of the Company
(the “Common Stock”), at the exercise price of $25.82
per share.
2. Subject
to earlier termination as provided in the 2004 Plan, the term of this option shall be six (6) years from the date hereof;
provided
that
, such option shall vest and become exercisable to purchase shares of Common Stock as follows: 20% one year after the date
of grant, and then 20% on each of the second, third, fourth and fifth consecutive years from the date of grant on a cumulative
basis, so that each option shall become fully vested and exercisable on the fifth year from the date of grant.
3. (a) Subject
to the provisions contained in Section 2 hereof, this option may be exercised from time to time in whole or in part prior to the
end of the term of the option (but not with respect to less than 100 Shares (unless less than 100 Shares remain to be purchased,
then such amount remaining), or fractional Shares), by giving written notice to the Company at its principal office, presently
551 Fifth Avenue, New York, New York 10176, stating that the Option Holder is exercising this option, specifying the number of
Shares purchased and accompanied by payment in full of the aggregate purchase price therefor (i) in cash or certified check or
(ii) with previously acquired shares of Common Stock or a combination of the foregoing if permitted in the sole discretion of the
Company’s Executive Compensation and Stock Option Committee (the “Committee”).
(b) In
addition, upon the exercise of this option, the Company may withhold cash and/or Shares to be issued with respect thereto, having
an aggregate fair market value equal to the amount which it determines is necessary to satisfy its obligation to withhold federal,
state and local income taxes or other taxes incurred by reason of such exercise. Alternatively, the Company may require the holder
to pay to the Company such amount, in cash, promptly upon demand. The Company shall not be required to issue any Shares pursuant
to this option until all required payments have been made.
4. This
option is not transferable otherwise than by will or the laws of descent and distribution and may be exercised, during the lifetime
of the Option Holder, only by the Option Holder or his legal representatives.
5. Nothing
in the 2004 Plan or herein shall confer upon the Option Holder any right to continue in the employ of, or be associated with, the
Company, its Parent or any of its Subsidiaries, or interfere in any way with the right to employment or association of the Option
Holder with the Company, its Parent or any of its Subsidiaries.
6. The
Option Holder understands that the Shares have been registered for issuance to the Option Holder in Registration Statement No.
333-136988 under the Securities Act of 1933, as amended (the “Act”). Resale to the public by the Option Holder is to
be made under Rule 144 under the Act in accordance with the procedure for resale of “affiliate shares” in the absence
of a subsequent effective registration statement for the resale of the Shares. Notwithstanding registration under the Act, the
Option Holder understands that in accordance with the provisions of the Company’s Code of Business Conduct, (i) the Option
Holder must obtain permission from the Company’s Chief Financial Officer prior to any sale of the Shares; and (ii)
the
use of material non-public information in connection with the sale of the Company’s shares (“Insider Trading”)
or the communication of such information to others who use it in trading the Company’s shares (“Tipping”) is
strictly prohibited.
7. (a) The
Option Holder understands that the Company maintains its internet website at
www.interparfumsinc.com
which is linked to
the SEC Edgar database. The Option Holder can obtain through the Company’s website, free of charge, its annual reports on
Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant
to Section 13(a) or 15(d) of the Exchange as soon as reasonably practicable after the Company has electronically filed with or
furnished them to the SEC.
(b) In
addition, the Company will cause to be delivered to the Option Holder, upon request to the Company directed to either the Chief
Financial Officer or the Controller, without charge to the Option Holder, a copy of the documents incorporated by reference into
the Registration Statement, other than exhibits (unless such exhibits are specifically incorporated by reference into the Registration
Statement).
8. Notwithstanding
anything to the contrary, if at any time the Chief Executive Officer, Board of Directors of the Company or the Committee shall
determine it its discretion that the listing or qualification of the Shares on any securities exchange, with national securities
association or under any applicable law, or the consent or approval of any governmental regulatory body, is necessary or desirable
as a condition of, or in connection with, the granting of an option, or the issue of Shares thereunder, or the sale of the Shares,
then this option may not be exercised in whole or in part unless such listing, qualification, consent or approval shall have been
effected or obtained free of any conditions not acceptable to the Chief Executive Officer, Board of Directors or the Committee.
9. (a) The
Company and the Option Holder further agree that they will both be subject to and bound by all of the terms and conditions of the
2004 Plan, which is incorporated by reference herein and made a part hereof as if fully set forth herein.
(b) In
the event the Option Holder's employment by, or association with, the Company, its Parent or any of its Subsidiaries terminates,
or in the event of the death or disability of the Option Holder, the rights hereunder shall be governed by, and made subject to,
the provisions of the 2004 Plan.
(c) In
the event of a conflict between the terms of this Contract and the terms of the 2004 Plan, then in such event, the terms of 2004
Plan shall govern.
(d) Except
as otherwise provided herein, all capitalized terms used herein shall have the same meaning ascribed to them in the 2004 Plan.
(e) The
Option Holder agrees that the Company may amend the 2004 Plan and the options granted to the Option Holder under the 2004 Plan,
subject to the limitations contained in the 2004 Plan.
10. This
Contract shall be binding upon and inure to the benefit of any successor or assign of the Company and to any executor, administrator
or legal representative entitled by law to the Option Holder's right hereunder.
11. This
Contract shall be governed by and construed in accordance with the laws of the State of New York, without regard to the principles
of conflicts of laws.
IN WITNESS WHEREOF,
the parties hereto have entered into this Contract effective as of the date first above written.
|
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INTER PARFUMS, INC.
|
|
|
|
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By:
|
|
|
|
[Name and Title]
|
Schedule of Executive Officers and Number
of Shares Underlying Option
|
Executive Officer
|
|
Number of Shares
|
|
|
|
|
|
|
|
Philippe Santi
|
|
|
1,000
|
|
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Frederic Garcia-Pelayo
|
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1,000
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|
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Axel Marot
|
|
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1,000
|
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Exhibit 21
LIST OF SUBSIDIARIES
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Name
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Jurisdiction
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Inter Parfums Holdings, S.A.
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France
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Interparfums SA
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France
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Jean Philippe Fragrances, LLC
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New York
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Inter Parfums USA, LLC
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New York
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IP Beauty, Inc.
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Delaware
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Inter Parfums Gmbh
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Germany
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Inter Parfums srl
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Italy
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Inter España Parfums et Cosmetiques, SL
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Spain
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Inter Parfums (Suisse) Sarl
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Switzerland
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Interparfums Luxury Brands, Inc.
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Delaware
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Interparfums Singapore Pte.
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Republic of Singapore
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Inter Parfums USA Hong Kong Limited
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Hong Kong
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Exhibit 23
CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING
FIRM
We consent to the incorporation by reference
in the Registration Statement on Form S-8 (No. 333-136988) under the Securities Act of 1933 of Inter Parfums, Inc. and subsidiaries
of (i) our report dated March 11, 2015 on the consolidated balance sheets of Inter Parfums, Inc. and subsidiaries as of December
31, 2014 and 2013, and the related consolidated statements of income, comprehensive income (loss), changes in shareholders’
equity, cash flows and Schedule II for each of the years in the three-year period ended December 31, 2014 and (ii) to our report
dated March 11, 2015 on the effectiveness of the Inter Parfums, Inc. maintenance of internal controls over financial reporting
as of December 31, 2014. Each report appears in the December 31, 2014 Annual Report on Form 10-K of Inter Parfums, Inc.
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/s/ WeiserMazars LLP
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WeiserMazars LLP
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|
|
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New York, New York
|
|
|
|
March 11, 2015
|
Exhibit 31.1
CERTIFICATIONS
I, Jean Madar, certify that:
1. I have reviewed this annual report on Form 10-K of Inter Parfums,
Inc.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible
for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
a) Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during
the period in which this report is being prepared;
b) Designed such internal control over financial reporting,
or caused such control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures
as of the end of the period covered by this report based upon such evaluation; and
d) Disclosed in this report any change in the registrant’s
internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s
fourth quarter in case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s
internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses
in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: March 11, 2015
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/s/ Jean Madar
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Jean Madar, Chief Executive Officer
|
Exhibit 31.2
I, Russell Greenberg, certify that:
1. I have reviewed this annual report on Form 10-K of Inter Parfums,
Inc.;
2. Based on my knowledge, this report does not contain any untrue
statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances
under which such statements were made, not misleading with respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial
information included in this annual report, fairly present in all material respects the financial condition, results of operations
and cash flows of the registrant as of, and for, the periods presented in this report;
4. The registrant's other certifying officer(s) and I are responsible
for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and
have:
a) Designed such disclosure controls and procedures, or
caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating
to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during
the period in which this report is being prepared;
b) Designed such internal control over financial reporting,
or caused such control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding
the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles;
c) Evaluated the effectiveness of the registrant's disclosure
controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures
as of the end of the period covered by this report based upon such evaluation; and
d) Disclosed in this report any change in the registrant’s
internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s
fourth quarter in case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s
internal control over financial reporting; and
5. The registrant's other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over financial reporting, to the registrant's auditors and the audit committee
of registrant's board of directors (or persons performing the equivalent functions):
a) all significant deficiencies and material weaknesses
in the design or operation of internal controls over financial reporting which are reasonably likely to adversely affect the registrant's
ability to record, process, summarize and report financial information; and
b) any fraud, whether or not material, that involves management
or other employees who have a significant role in the registrant's internal control over financial reporting.
Date: March 11, 2015
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/s/ Russell Greenberg
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|
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Russell Greenberg
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Chief Financial Officer and
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|
|
Principal Accounting Officer
|
|
Exhibit 32.1
CERTIFICATION
The undersigned hereby certifies, in accordance
with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his capacity as an officer of Inter
Parfums, Inc., that the Annual Report of Inter Parfums, Inc. on Form 10-K for the year ended December 31, 2014, fully complies
with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in such report
fairly presents, in all material respects, the financial condition and results of operation of Inter Parfums, Inc.
|
Date: March 11, 2015
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By:
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/s/ Jean Madar
|
|
|
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Jean Madar,
|
|
|
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Chief Executive Officer
|
A signed original of this written statement
required by Section 906 has been provided to Inter Parfums, Inc. and will be retained by Inter Parfums, Inc. and furnished to the
Securities and Exchange Commission or its staff upon request.
Exhibit 32.2
CERTIFICATION
The undersigned hereby certifies, in accordance
with 18 U.S.C. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, in his capacity as an officer of Inter
Parfums, Inc., that the Annual Report of Inter Parfums, Inc. on Form 10-K for the year ended December 31, 2014, fully complies
with the requirements of Section 13(a) of the Securities Exchange Act of 1934 and that the information contained in such report
fairly presents, in all material respects, the financial condition and results of operation of Inter Parfums, Inc.
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Date: March 11, 2015
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By:
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/s/ Russell Greenberg
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Russell Greenberg,
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Executive Vice President,
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Chief Financial Officer and
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Principal Accounting Officer
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A signed original of this written statement
required by Section 906 has been provided to Inter Parfums, Inc. and will be retained by Inter Parfums, Inc. and furnished to the
Securities and Exchange Commission or its staff upon request.
