-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, NxPwXvAAbLa69p+Yo0DVSpza1chbkrL5xD3rNopI2aCEBZkgsuiUtJPZOU5L2m21 B47lUdau44oZsFeE2lpn7w== 0000930413-01-500101.txt : 20010402 0000930413-01-500101.hdr.sgml : 20010402 ACCESSION NUMBER: 0000930413-01-500101 CONFORMED SUBMISSION TYPE: 10-K PUBLIC DOCUMENT COUNT: 21 CONFORMED PERIOD OF REPORT: 20001231 FILED AS OF DATE: 20010330 FILER: COMPANY DATA: COMPANY CONFORMED NAME: INTER PARFUMS INC CENTRAL INDEX KEY: 0000822663 STANDARD INDUSTRIAL CLASSIFICATION: PERFUMES, COSMETICS & OTHER TOILET PREPARATIONS [2844] IRS NUMBER: 133275609 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-K SEC ACT: SEC FILE NUMBER: 000-16469 FILM NUMBER: 1586638 BUSINESS ADDRESS: STREET 1: 551 FIFTH AVE STREET 2: STE 1500 CITY: NEW YORK STATE: NY ZIP: 10176 BUSINESS PHONE: 2129832640 MAIL ADDRESS: STREET 1: 551 FIFTH AVENUE STREET 2: STE 1500 CITY: NEW YORK STATE: NY ZIP: 10176 FORMER COMPANY: FORMER CONFORMED NAME: JEAN PHILIPPE FRAGRANCES INC DATE OF NAME CHANGE: 19920703 10-K 1 c20397_10k.txt ANNUAL REPORT UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 REPORT ON 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 31 December 2000 or / / 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) Delaware 13-3275609 -------- ---------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 551 Fifth Avenue, New York, New York 10176 - ------------------------------------ ----- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number, including area code: 212.983.2640. ------------ Securities registered pursuant to Section 12(b) of the Act: None. ---- Securities registered pursuant to Section 12(g) of the Act: Common Stock, $.001 par value per share. --------------------------------------- Indicate by checkmark 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 / / Indicate by checkmark 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. / / State the aggregate market value of the voting stock held by nonaffiliates of the registrant (based on the closing price of $10.75 on 26 March 2001: $24,013,393. 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 (26 March 2001): 11,630,777 Documents Incorporated By Reference: None. PART I ITEM 1. BUSINESS INTRODUCTION We are Inter Parfums, Inc., a world-wide provider of prestige perfumes and mass market perfumes and cosmetics. 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. on July 14, 1999, to better reflect our image as a provider of prestige perfumes. We have also retained the brand name, Jean Philippe Fragrances, for our mass market products. Our worldwide headquarters and the office of our wholly-owned New York limited liability company, Jean Philippe Fragrances, LLC, are located at 551 Fifth Avenue, New York, New York 10176 and our telephone number is 212.983.2640. Our consolidated wholly-owned subsidiary, Inter Parfums Holdings, S.A., its majority-owned subsidiary, Inter Parfums, S.A. and its two wholly-owned subsidiaries, Inter Parfums Grand Public, S.A., and Inter Parfums Trademark, S.A. maintain executive offices at 4, Rond Point des Champs Elysees, 75008 Paris, France. Our telephone number in Paris is 331.5377.0000. Our common stock is listed on The Nasdaq Stock Market (National Market System) and its trading symbol is "IPAR". The common shares of our subsidiary, Inter Parfums S.A., are traded on the Paris Stock Exchange. We operate in the fragrance and cosmetic industry, specializing in prestige perfumes and mass market perfumes and cosmetics: o Prestige products - For each prestige brand, owned or licensed by us, we develop an original concept for the perfume consistent with world market trends. o Mass market products - In our United States operations, we design, market and distribute inexpensive fragrances and personal care products, including alternative designer fragrances and mass market cosmetics. PRODUCTION AND SUPPLY The stages of the development and production process for all fragrances are as follows: o Simultaneous briefing with perfume designers and creators (includes analysis of esthetic and olfactory trends, target clientele and mass market communication approach); o Concept choice; o Production of mock-ups for final acceptance of bottles and packaging; 1 o Invitation of bids from component suppliers (glass makers, plastic processors, printers, etc.) and packaging companies; o Choice of vendor partners; o Supply and packaging schedules; o Issuance of component purchase orders; and o Packaging and inventory control; Suppliers/vendor-partners who assist the Company with product development include: o Independent perfumery design companies (Federico Restrepo, Fabien Barron, Aesthete, Ateliers Dinand); o Perfumers (IFF, Firmenich, Creations Aromatiques, Quest Wessel Fragrances) which create a fragrance consistent with our expectations and, that of the fragrance designers and creators; o Contract manufacturers of components such as glassware (Saint Gobain, Pochet, Nouvelles Verreries de Momignie), caps (MT Packaging, Codiplas, Risdon, Newburgh) or boxes (Printor Packaging, Draeger, Dannex Manufacturing); o Production specialists who carry out packaging (MF Production, CCI, CEI Bottling, IKI Manufacturing) or logistics (SAGA for storage, order preparation and shipment). For our prestige product lines, 80% of component and production needs are purchased from approximately 20 suppliers out of a total of over 120 active suppliers. The suppliers' accounts for our French operations are primarily settled in French francs and for our United States operations, suppliers' accounts are primarily settled in U.S. dollars. MARKETING AND DISTRIBUTION OF PRESTIGE PRODUCTS For our international distribution, we contract with independent distribution companies specializing in luxury goods. In each country, we designate anywhere from one to three distributors with the status of "exclusive representative" 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. In an effort to reduce our exposure to foreign currency exchange fluctuations, approximately 35% of our prestige fragrance net sales are sold in US dollars. We engage in a 2 program of cautious hedging of foreign currencies to minimize the risk arising from operations. As a result of our international operations, sales are not subject to material seasonal fluctuations. Distribution in France of our prestige products is carried out by a sales team who oversee some 1,200 points of sale including, retail perfumers (chain stores) such as o Sephora o Marionnaud o Nocibe o Galeries Lafayette or specialized independent points of sale. Approximately 60% of prestige product sales in France are made to approximately 40 customers out of a total of over 1,200 active accounts. Our distributors vary in size depending on the number of competing brands they represent. This extensive and diverse network provides us with a significant presence in over 100 countries around the world. Approximately 40 customers out of a total of over 250 active accounts represent 80% of prestige fragrance sales. No one customer represents more than 10% of sales. FUBU MARKETING AND DISTRIBUTION We intend to market our FUBU fragrance products to upscale catalog companies, specialty retail stores, retail stores which sell FUBU apparel and drug stores which sell comparable fragrance brands. We may use independent distributors in the United States and abroad to market and sell our FUBU fragrances. MARKETING AND DISTRIBUTION OF MASS MARKET PRODUCTS In the United States, mass merchandisers, drug store chains and supermarket chains, are the target customers for our mass market products. Our current customer list includes o Albertson's o Family Dollar o Dollar General o Dollar Tree Distributors o Drug Emporium o Consolidated Stores o Pathmark In addition, our mass market products are sold to wholesale distributors, such as Variety Wholesalers, specialty store chains, and to multiple locations of accessory, jewelry and clothing outlets, such as Rainbow Shoppes. 3 These products are sold through a highly efficient and dedicated in-house sales team and reach approximately 12,000 retail outlets throughout the United States. Our 140,000 square foot distribution center has provided us with the opportunity and resources to better meet our customers' delivery requirements. The entrepreneurial spirit of our management enables us, and challenges us, to seek out and master new technologies to better serve our customers. International distribution of our mass market product lines operate through the use of exclusive and nonexclusive distribution agreements in such major territories such as o Brazil o Mexico o Argentina o Chile o Columbia o Canada o Russia o Eastern Europe THE MARKET The perfumery market can be broken down into two types of distribution: o Selective distribution - perfumeries and specialty sections of department stores, who sell brand name products with a luxury image and o Mass distribution - moderately-priced mass market products for a broad customer base with limited purchasing power. SELECTIVE DISTRIBUTION During 2000, the French perfume industry, which accounts for about 30% of the world market, reported a 7% growth rate with sales of $12 billion, as compared to a 6% growth rate in 1999 and a 5% growth rate in 1998. (Source: Federation des Industries de la Parfumerie) The French domestic market for selective distribution had another good year with sales reaching almost $1.5 billion. The increase however, was 5.4% in 2000, as compared to 6% in 1999 and 8% in 1998. During 2000, the French export market, which grew at a 9% rate, was favorably impacted by the declining value of the Euro, as compared to other currencies: o Western Europe has seen its sales stabilize as a result of the size and maturity of this market. 4 o North America, which represents the second largest market of the perfume and cosmetic industry, reported a 27% increase. o Asia increased 26% in 2000, as compared to 15% in 1999. o Latin America, recovering from its financial crisis, increase 24% in 2000, as compared to a decrease of 12% in 1999. o Eastern Europe, also recovering from its fiscal crisis reported a 16% increase. (Source: Federation des Industries de la Parfumerie) While our market share is less than 1% in France, in other countries such as the United States, Italy, Portugal, Saudi Arabia and South Korea, the Company's market share is reportedly between 1% and 4% of French perfumery imports (internal source). MASS MARKET DISTRIBUTION Our mass market distribution consists of moderately-priced products, including our alternative designer fragrance lines, for a broad customer base with limited purchasing power. Our mass market products rely heavily on exports from the United States. We have now sustained five straight quarters in which we have been able to capitalize on the economic recoveries of certain Latin American countries. In addition, sales growth from our wide selection of mass market fragrances continues to exceed our expectations, as the United States domestic market is becoming stronger. Our new Aziza line of cosmetics has also achieved widespread acceptance and reorders with distribution in over 12,000 doors. We expect sales to continue to grow as our high volume, discount store customers open more stores, and we continue to develop new products for them. We are presently developing a line of health and beauty aids, including shampoos and conditioners. COMPETITION The market for fragrances and beauty related products is highly competitive and sensitive to changing mass market 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. Our closest competitors in the prestige market typically do not have mass market products departments. However, they may develop, market and sell prestige cosmetics. We do not presently sell prestige cosmetics. At the present time, we are aware of approximately five established companies which market similar alternative designer fragrances. This market is characterized by competition 5 primarily based upon price. We feel the quality of our fragrance products, competitive pricing, and our ability to quickly and efficiently develop and distribute new products, will enable us to continue to effectively compete with these companies. The market for name brand and mass market color cosmetics is highly competitive, with several major cosmetic companies marketing similar products. Many of these companies have substantial financial resources and national marketing campaigns. However, we believe that brand recognition of the Aziza name, together with the quality and competitive pricing of our products, enables us to compete with these companies in the mass market. FRAGRANCE AND COSMETIC PRODUCTS PRESTIGE PERFUMES Since 1988 we have sought to build a portfolio of luxury brand names through licensing agreements or through direct acquisition of existing brand names. 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. The creation and marketing of each product line are intimately linked with the brand's name, its past and present positioning, customer base and, more generally, the prevailing market atmosphere. Accordingly, we generally conduct a market study for each proposed product line for almost a full year before we introduce any new product into the market. This market study is intended to define the general position of the line and more particularly its fragrance, 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. Overall spending on marketing and point of sale support aggregated approximately $14.4 million in 2000 with approximately $4.2 million in point of sale support, which is included in cost of sales and $10.2 million in other marketing costs, included in selling expenses. Distributors of our product lines contribute a similar amount for additional marketing support. The cost of launching a new product (molds and tools, start-up costs and communication costs, media, etc.) generally varies from $0.2 million to $2.0 million. The smooth and consistent operation of our prestige perfume operations requires a thorough knowledge of the market, detailed analysis of the image and potential of each brand name, a "good dose" of creativity, as well as a highly professional approach to international distribution channels. Our prestige fragrances have an average life expectancy of five to ten years, and retail at prices of $30 to $50. 6 Our brand name portfolio, which has been steadily increasing since 1988, is now made up essentially of six brand names, each of which has a variety of product lines. In addition, we have planned several new product launches for 2001. BURBERRY (BURBERRY OF LONDON, WEEK END, BURBERRY TOUCH) Burberry is our leading selective brand name and we are operating under the terms of an exclusive worldwide license agreement entered into in 1993. In February 2000, we extended the license agreement until December 31, 2006. Burberry enjoys a very distinctive, upscale-market and classic image, with an undeniable international cachet. In August 2000, we launched two new Burberry perfume lines, Burberry Touch, for men and Burberry Touch for women. These lines are designed with a style intended to be consistent with the new, more modern and trend-setting Burberry brand image. In the second quarter of 2001, we intend to bring a new Burberry Touch bath line to the market. S.T. DUPONT (S.T. DUPONT PARIS, SIGNATURE) In June 1997 we signed an 11-year exclusive license agreement with S.T. Dupont for the creation, manufacture and worldwide distribution of S.T. Dupont perfumes. Based on a strong international luxury image, the two lines launched in September 1998 made a promising start with a strong sell through. A line of bath products introduced during the first half of 1999 further enhanced the image of the brand. In March 2000 we launched a new S.T. Dupont Signature line of two new highly selective perfumes, designed around the theme of writing for which S.T. Dupont is famous. PAUL SMITH We signed a 12-year exclusive license agreement with Paul Smith in December 1998 for the creation, manufacture and worldwide distribution of Paul Smith perfumes and cosmetics. This license represents a new avenue for growth, as it provides us with a unique opportunity in designer perfumes, a sector from which we have been absent until now. 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. These images, in conjunction with a growing audience, provide the justification for the creation of a perfume and cosmetics line. We launched our first line of Paul Smith perfumes internationally starting in July 2000. 7 CHRISTIAN LACROIX In March 1999, we entered into an exclusive license agreement with the Christian Lacroix Company, a division of LVMH Moet Hennessy Louis Vuitton S.A. ("LVMH"), for the worldwide development, manufacture and distribution of perfumes. For us, this association with a prestigious fashion label is another key area for growth which we expect will further strengthen our position in the prestige fragrance market. Our first Christian Lacroix line was launched in Europe during 1999. During 2000, we launched the line in the United States, with an exclusive distribution arrangement with Saks Fifth Avenue, and in South America. In the first quarter of 2001, we plan to launch a lighter eau de toilette fragrance. We also plan to develop a new line for Christian Lacroix fragrances for 2002. CELINE In May 2000 we entered into an exclusive worldwide license agreement for the development, manufacturing and distribution of fragrance lines under the Celine brand name with Celine, a division of LVMH Moet Hennessy Louis Vuitton S.A. We expect to launch two new fragrance lines by the third quarter of 2001. Celine, a French luxury fashion and accessory company, and part of LVMH, is known throughout the world for its luxury and quality products, as well as the unique designs of Michael Kors. This agreement is an important part of Celine's strategy to develop dynamic brand recognition and to offer a varied range of luxury items to an international clientele. Association with this prestigious fashion label is an important step in the development and expansion of our prestige business. This relationship is expected to add strength to all of our prestige brands and contribute to our continued growth. FUBU In June 2000 we signed an exclusive worldwide agreement with FUBU The Collection to produce and sell men's and women's fragrances. Our agreement with FUBU will allow us to offer a new, contemporary fragrance to consumers. Everything about the FUBU fragrance lines we are developing, from scent to packaging, advertising and marketing, will complement the lifestyle image of the FUBU collections. We anticipate that the first FUBU fragrance line for men and women will be launched either in the last quarter of 2001, or in the first quarter of 2002. Founded by four young men in 1992, FUBU exploded onto the young men's fashion scene. Music, movie, television and sport stars have worn the designs all recognizable by the FUBU logos. Today, FUBU product sales exceed $200 million, and encompass men's sportswear-formalwear, ladies, and children's apparel, as well as footwear and accessory items. The exposure FUBU has received has helped to create a loyal brand following from ages 5-55 in both the U.S. and abroad. Today's FUBU customers are both men and women, living in big cities and small towns, and encompass many diverse ethnic, racial and cultural backgrounds. 8 MOLYNEUX (QUARTZ, QUARTZ POUR HOMME, MODERN QUARTZ) The Molyneux brand name, which we purchased in March 1994, was originally created at the turn of the century by the fashion designer Edouard Molyneux, and ranks among the institutional brand names of French perfumery. Molyneux enjoys a very prominent market position in South America, especially through the "Quartz" line for women, which was launched in 1978. The Molyneux brand provides synergies with the Burberry brand name among duty-free operators (joint sales areas, use of the same demonstrators, and enhanced positioning for negotiating with duty-free operators and other customers). The Molyneux name is also well established in France and other Western European countries. In January 2000 we launched a totally new line, called Modern Quartz, by Molyneux, in a modernistic package. OTHER SELECTIVE BRAND NAMES We also create, develop and market the following products: o Jean Charles Brosseau's Ombre Rose lines, through February 2001, which was sold predominantly in the United States and Japan. o Parfums Weil, which includes "Fleur de Weil", "Secret de Venus" and "Bambou" and which are sold predominantly in France and Europe. o Regine's, who's "Regine's for men" line is primarily distributed in the Middle East. The following is a summary of the prestige brand names owned or licensed by us:
BRAND NAME LICENSED DATE PURCHASE OR OWNED ACQUIRED TERM PRICE (IN MILLIONS) Burberry Licensed July 93 13 years $0.0 S.T. Dupont Licensed July 97 11 years 1.0 Paul Smith Licensed Dec. 98 12 years 0.0 Celine Licensed May 00 11 years from January 2001, with an 0.0 additional 5-year option term Molyneux Owned Mar. 94 N/A 4.2 Weil Owned Mar. 94 N/A 1.8 Jean Charles Brosseau Licensed July 93 Through February 2001 1.7 Regines Licensed June 88 Year to year 0.0 Christian Lacroix Licensed Mar. 99 11 years 0.0 FUBU Licensed June 00 6 1/2 years with three additional 2-year option terms.
9 MASS MARKET PRODUCTS MASS MARKET FRAGRANCES We produce and market a complete line of alternative designer fragrances and personal care products which sell at a substantial discount from their high profile, high retail cost, brand name counterparts. Our alternative designer fragrances, which are produced in the United States, are similar in scent to highly advertised designer fragrances that are marketed at a high retail price. These products are intended to have an upscale image without a high retail price, and typically sell at a price below $5.00 at the mass market retail level, substantially discounted from the high cost of designer fragrances which typically range from $30.00 to $200.00 at prestige retail locations. Our alternative designer fragrances encompass a complete and increasing array of fragrances, body sprays, deodorants and perfumed creams. Product line extensions into additional personal care products is ongoing and development of new and innovative product lines is a continuous process. New designer fragrances are constantly being launched in the marketplace. Substantial expenditure of advertising dollars, selective distribution and a high retail price create a perfect candidate for an alternative designer fragrance. We react to demand by creating a similar scent which, when combined with an innovative packaging design, is ready for sale to mass market merchandisers, chain drug stores, wholesalers and international trading companies. To this end, our strategy is to be among the first to release these new introductions into the market. Under the terms of a license agreement signed in 1990 with Jordache Enterprises, we have capitalized on the strength and awareness of the Jordache trademark. Our rights under this license agreement, which terminate on 30 June 2005, are subject to certain minimum sales requirements and the payment of royalties. Recent new introductions in the fragrance category are directed at and focused on the younger, trendy mass market consumer who is the core of the Jordache franchise. New packaging, which utilizes the latest in graphic technology, is both innovative and attractive. We expect to continue this trend with additional line extensions under the Jordache brand name. MASS MARKET COSMETICS We purchased the trademark for our Aziza hypo allergenic eye cosmetics from Unilever N.V. in 1995. After extensive market research and product development, we launched an Aziza product line in February 1996. Aziza was the first mass market cosmetic brand to focus solely on the eyes. The recognition of the Aziza trade name provided us with the opportunity to introduce a new cosmetic line with an existing loyal customer base. During August 1999 we introduced our new Aziza II line of low priced eyeshadow kits, mascara, colorful lip gloss and pencils, which is geared towards the young teen market. This product line, with its low suggested retail prices, is being distributed to mass market retailers and discount chains, including the 99 Cent and Dollar Store markets. 10 Our Aziza cosmetic line is presently distributed in approximately 12,000 mass market outlets in the United States. MASS MARKET TOILETRIES We are developing a line of mass market toiletries consisting of shampoo, conditioner, hand lotion and baby oil, for distribution in mass market retailers and deep discount chains, including the 99 Cent and Dollar Store markets. We anticipate that this line will be available for distribution in the second quarter of 2001. 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. PRODUCT LIABILITY We maintain product liability coverage in an amount of $3,000,000. 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. 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. TRADEMARKS Under various license agreements we have the right to use certain registered trademarks throughout the world. These registered trademarks include: o Burberry 11 o S.T. Dupont o Paul Smith o Christian Lacroix o Celine o Regine's o Jordache o FUBU In addition, we are the registered trademark owner of: o Intimate o Aziza o Parfums Molyneux, Captain, Quartz and Lord o Parfums Weil, Bambou, Antilope and Kipling o Beverly o Fire o Fleur de Paris EMPLOYEES As of March 1, 2001 we had 89 full-time employees world-wide. Of these, 36 are engaged in sales activities and 53 in administrative and marketing activities. As of March 1, 2001 we had 34 full-time United States employees. Of these, 9 were engaged in sales activities and 25 in administrative and marketing activities. We believe that our relationship with our employees is good. FORWARD LOOKING INFORMATION AND RISK FACTORS Statements in this document which are not historical in nature are forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results to be materially different from projected results. Given these risks, uncertainties and other factors, persons are cautioned not to place undue reliance on the forward-looking statements. The following is a discussion of some of the material risk factors relating to our business: THE SUCCESS OF OUR PRODUCTS IS DEPENDENT ON PUBLIC TASTE. Although we believe we have the ability and experience to recognize valuable fragrances and cosmetic products and gauge trends in the cosmetic and fragrance market, 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 12 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 cosmetics. 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 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, 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 lives of both Mr. Madar ($1 million) and Mr. Benacin ($2.8 million), however, we cannot assure you that we would be able to retain suitable replacements for either Mr. Madar or Mr. Benacin. WE ARE SUBJECT TO EXTREME COMPETITION IN BOTH THE PRESTIGE AND MASS MARKETS. The market for fragrances and beauty related products is highly competitive and sensitive to changing market preferences and demands. Many of these companies have substantial financial resources and national marketing campaigns. 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. Mass market fragrances are characterized by competition primarily based upon price. We feel the quality of our fragrance products, competitive pricing, and our ability to quickly and efficiently develop and distribute new products, will enable us to continue to effectively compete with these companies. The market for name brand and mass market color cosmetics is highly competitive, with several major cosmetic companies marketing similar products. However, we believe that brand recognition of the Aziza name, together with the quality and competitive pricing of our products, enables us to compete with these companies in the mass market. We cannot assure you that sufficient demand for our existing fragrances and cosmetics will continue or that we will develop future fragrances and cosmetic products that will withstand competition. 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. Although we enter into agreements with these third party contractors in anticipation of requirements based 13 upon internal estimates, 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 or business. Although we believe there are alternate manufactures 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 which 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. THE INTERNATIONAL CHARACTER OF OUR BUSINESS RENDERS US SUBJECT TO FLUCTUATION IN FOREIGN CURRENCY EXCHANGE RATES AND INTERNATIONAL TRADE TARIFFS, BARRIERS AND OTHER RESTRICTIONS. In an effort to reduce our exposure to foreign currency exchange fluctuations, approximately 35% of our prestige fragrance net sales are sold in US dollars. We engage in a program of cautious hedging of foreign currencies to minimize the risk arising from operations. 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, France, Canada or other countries might also have a material adverse effect on our business. OUR BUSINESS IS SUBJECT TO GOVERNMENTAL REGULATION, WHICH COULD IMPACT OUR OPERATIONS. Fragrances and other cosmetics 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. 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. However, we cannot assure you that, should we develop or market fragrances and cosmetics with different ingredients, or should existing regulations be revised, we would not in the future experience difficulty in obtaining such approvals. WE MAY BE 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 fragrances, cosmetics and toiletries, 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 14 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 2. PROPERTIES Our corporate headquarters and United States operations are located in approximately 7,000 square feet of office space at 551 Fifth Avenue, New York, New York. These premises are leased for a five year term ending October 31, 2002. Our monthly rental is approximately $19,000, which is subject to escalations. Our prestige fragrance operations maintain offices located at 4 Rond Point Des Champs Elysees, Paris, France, in approximately 6,000 square feet of leased office space pursuant to two leases. The first lease is for approximately 4,000 square feet. The second lease is for approximately 2,000 square feet. Both of these leases expire in July 2005, unless terminated earlier by either party on six months written notice at three year specified intervals. The annual rentals are 833,000 French francs for the first lease and 467,000 French francs for the second lease. Rent is subject to escalations each July 1. In addition, we have a lease for approximately 2500 square feet of additional office space at 18 avenue Franklin Roosevelt, Paris, France, for a term ending April 2009, at an annual rental of approximately 588,000 French francs per year, which is subject to escalations. We have the right to terminate earlier at three year specified intervals. We believe our office facilities are satisfactory for our present needs and those for the foreseeable future. We also occupy a 140,000 square foot distribution center at 60 Stults Road in Dayton, New Jersey. We are leasing these premises for an eight year term which expires October 2003 and requires monthly rental payments of approximately $57,000. We believe that our distribution center is satisfactory for our present needs and those for the foreseeable future. ITEM 3. LEGAL PROCEEDINGS BROSSEAU LAWSUIT As previously reported, Inter Parfums, S.A., is a party to litigation with Jean Charles Brosseau, S.A. ("Brosseau"), the licensor of the Ombre Rose trademark. The licensor has claimed damages of approximately $7.0 million and is seeking termination of the license agreement. 15 In October 1999, Inter Parfums, S.A. received notice of a judgment in favor of Brosseau, which awarded damages of approximately $600,000 and which directed Inter Parfums, S.A. to turn over its license to Brosseau within six months. Inter Parfums, S.A. is appealing the judgment as it vigorously and categorically denies the claims of Brosseau. The payment of the judgment has been stayed, and Inter Parfums, S.A. was allowed to continue to operate under the license agreement during the appeal process. In June 2000, the president of the Court of Appeal granted a petition filed by Brosseau regarding ongoing payments for royalties due to Brosseau. In the same interlocutory judgment, the president of the Court of Appeal rejected Inter Parfums, S.A.'s request for the appointment of a new judicial expert. Such request was made to refute the findings of the judicial expert originally appointed by the Commercial Court, which resulted in the $600,000 judgment against Inter Parfums, S.A. As a result of these further developments, Inter Parfums, S.A. and its special litigation counsel then considered it likely that the judgment would be sustained and therefore, Inter Parfums, S.A. recorded a charge against earnings in the second quarter of 2000 for $600,000 ($260,000 after taxes and minority interest), the full amount of the judgment. In February 2001, the Court of Appeal confirmed the Brosseau claim with respect to turning over the license. In addition, the Court named an expert to proceed with additional investigations and required Inter Parfums, S.A. to pay $142,000 as an advance against the damages claimed by Brosseau. Inter Parfums, S.A. will continue its appeal as it still denies the claims of Brosseau. We do not believe that such litigation will have any further material adverse effect on our financial condition or operations. As of December 31, 2000, we have fully reserved the unamortized portion of the license agreement. ITEM 4. SUBMISSIONS OF MATTERS TO A VOTE OF SECURITY HOLDERS Not applicable. 16 PART II ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS Our company's common stock, $.001 par value per share, is traded on The Nasdaq Stock Market (National Market System) 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, which has been adjusted to reflect the 3:2 stock split distributed in June 2000. -------------------- --------------------- --------------------- Fiscal 2000 High Closing Price Low Closing Price -------------------- --------------------- --------------------- Fourth Quarter $ 9.50 $ 7.63 -------------------- --------------------- --------------------- Third Quarter $ 9.00 $ 6.88 -------------------- --------------------- --------------------- Second Quarter $ 9.44 $ 7.04 -------------------- --------------------- --------------------- First Quarter $ 9.00 $ 6.00 -------------------- --------------------- --------------------- Fiscal 1999 High Closing Price Low Closing Price -------------------- --------------------- ---------------------- Fourth Quarter $ 7.00 $ 5.92 -------------------- --------------------- ---------------------- Third Quarter $ 7.09 $ 5.00 -------------------- --------------------- ---------------------- Second Quarter $ 5.67 $ 4.00 -------------------- --------------------- ---------------------- First Quarter $ 4.67 $ 3.75 -------------------- --------------------- ---------------------- As of March 1, 2001, the number of record holders, which include brokers and broker's nominees, etc., of the company's common stock was 77. We believe there are approximately 500 beneficial owners of the company's common stock. DIVIDENDS We have not paid cash dividends since inception and we do not foresee paying cash dividends in the foreseeable future as earned surplus is to be retained for working capital for anticipated growth. In addition, our Certificate of Incorporation provides for the requirement of unanimous approval of the members of our board of directors for the declaration or payment of dividends, if the aggregate amount of dividends to be paid by us and our subsidiaries in any fiscal year is more than thirty percent (30%) of our annual net income for the last completed fiscal year, as indicated by our consolidated financial statements. 17 SALES OF UNREGISTERED SECURITIES The following sets forth certain information as to all equity securities, other than the grant of options, which we sold during the past year that were not registered under the Securities Act of 1933, as amended, except as previously reported. In each of the transactions, we sold common stock to accredited investors, affiliates and employees, upon the exercise of outstanding stock options which were exempt from the registration requirements of Section 5 of the Securities Act under Sections 4(2) and 4(6) of the Securities Act. Each shareholder agreed to purchase his common stock for investment and not for resale to the public. From 9 November 2000 through 5 December 2000, three (3) persons, consisting of two (2) executive officers and directors and one (1) employee exercised outstanding stock options to purchase an aggregate of 151,125 shares of Common Stock and we received approximately $867,000 in proceeds as a result of such exercises. The following sets forth certain information as to all options granted to purchase our equity securities during the past year, which were not registered under the Securities Act, except as previously reported. In each of the transactions, we granted options to affiliates (executive officers and directors), employees and two (2) consultants. The transactions were 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. On 3 January 2000, we granted options to purchase an aggregate of 32,775 shares for a five year period at the exercise price of $6.08 per share, the fair market value at the time of grant, to 30 employees under our 1999 Stock Option Plan. On 1 February 2000, we granted options to purchase an aggregate of 10,500 shares for a five year period at the exercise price of $6.792 per share, the fair market value at the time of grant, to four directors under our 1997 Non-Employee Director Stock Option Plan. On 27 October 2000, we granted options to purchase an aggregate of 68,600 shares for a five year period at the exercise price of $7.625 per share, the fair market value at the time of grant, to 35 persons (30 employees, three executive officers and two consultants) under our 1999 Stock Option Plan. 18 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. YEARS ENDED DECEMBER 31 (In Thousands Except Share and Per Share Data)
- ------------------------------------------------------------------------------------------------------------ 2000 1999 1998 1997 1996 - ------------------------------------------------------------------------------------------------------------ Income Statement Data: - ------------------------------------------------------------------------------------------------------------ Net Sales $101,582 $87,140 $89,388 $91,462 $93,281 - ------------------------------------------------------------------------------------------------------------ Cost of Sales 51,873 45,325 47,417 49,388 51,355 - ------------------------------------------------------------------------------------------------------------ Selling, General and Administrative 37,509 31,965 32,944 32,334 32,416 - ------------------------------------------------------------------------------------------------------------ Income Before Taxes and Minority Interest 13,539 9,868 9,164 8,172 9,081 - ------------------------------------------------------------------------------------------------------------ Net Income 6,589(2) 4,828 4,613 4,507(1) 5,658 - ------------------------------------------------------------------------------------------------------------ Net Income per Share(3): Basic $ 0.56 $ 0.43 $ 0.35 $ 0.32(1) $ 0.38 Diluted $ 0.51 $ 0.40 $ 0.35 $ 0.32(1) $ 0.38 - ------------------------------------------------------------------------------------------------------------ Average Common Shares Outstanding(3): Basic 11,726,737 11,387,885 13,060,935 13,949,102 14,807,547 Diluted 13,000,432 12,155,226 13,348,208 14,095,994 14,976,695 - ------------------------------------------------------------------------------------------------------------
(1) Includes a nonrecurring charge, after taxes and minority interest, of $0.8 million or $0.05 per diluted share, relating to the divestiture of the Cutex license in 1997. (2) Includes nonrecurring charges aggregating $0.6 million and a gain of $0.6 million, all after taxes and minority interest. The charges represent an accrual for exposure relating to pending litigation of $0.2 million and a potential tax assessment of $0.4 million. The gain represents a realized gain on the sale of marketable securities. (3) Adjusted for 3:2 stock split distributed in June 2000. AS AT DECEMBER 31 (In Thousands Except Share and Per Share Data) 2000 1999 1998 1997 1996 - -------------------------------------------------------------------------------- Balance Sheet Data: - -------------------------------------------------------------------------------- Working Capital $57,688 $52,402 $49,599 $44,842 $46,568 - -------------------------------------------------------------------------------- Total Assets 94,571 87,223 87,739 80,282 85,585 - -------------------------------------------------------------------------------- Long-Term Debt 1,417 1,531 200 424 485 - ------------------------------------------------------------------------------- Shareholders' Equity 55,061 52,361 53,680 50,194 53,366 - -------------------------------------------------------------------------------- 19 ITEM 7 . MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATION INTRODUCTION We are a leading manufacturer and distributor of fragrances, cosmetics and personal care products. Innovation and creativity are combined to produce quality products for our customers around the world. We operate in the fragrance and cosmetic industry, specializing in prestige perfumes and mass market perfumes and cosmetics: o Prestige products - for each prestige brand, owned or licensed by us, we develop an original concept for the perfume consistent with world market trends. o Mass market products - in our United States operations, we design, market and distribute inexpensive fragrances and personal care products, including alternative designer fragrances and mass market cosmetics. 2000 COMPARED TO 1999 In fiscal year 2000, we set a new sales record. Net sales for the year ended December 31, 2000 increased 17% to $101.6 million, as compared to $87.1 million in 1999. At comparable foreign currency exchange rates, net sales actually rose 30% in 2000 as compared to 1999. Our sales growth is attributable to across-the-board increases in both our prestige and mass market product lines. However, the precipitous rise of the US dollar in relation to the French franc has masked our true revenue growth. Growth in net sales of prestige products, which was up approximately 17% in 2000, was fueled in part by the tremendous success of the recent launches of our Paul Smith and "Burberry Touch" fragrance lines. Paul Smith premiered in the United Kingdom in July and is presently being sold in over 450 U.K. doors. Sales ran well ahead of expectations in the initial phase of the roll out. "Burberry Touch", our newest Burberry fragrance, was launched worldwide in late September 2000, and initial consumer reaction has been very favorable. Additional year 2000 launches included our S.T. Dupont "Signature" line, which continues to perform strongly in the Far East, and "Modern Quartz" by Molyneux, which is very successful in France and South America. In addition to expanding the geographic distribution of products we launched in 2000, we have a large new product and brand extension pipeline in the works. We are leveraging the popularity of "Burberry Touch" by bringing to market a new bath line for men and women, scheduled for introduction later this year. In March 2001, Paul Smith fragrances will be launched in Japan where this designer has a large and loyal fashion following and over 200 standing doors. In February 2001, we unveiled Christian Lacroix "Eau Florale" in the U.S. with 20 an exclusive at Saks Fifth Avenue's 63 stores, to be followed by European distribution later this spring. Development is going well with Celine, our second LVMH license, and we are on target for the initial launch of two new Celine fragrances in the fourth quarter of 2001. Net sales of our mass market products were up 17% for the year ended December 31, 2000, as compared to 1999. Sales growth from our wide selection of mass market fragrances continues to exceed our expectations. Our new Aziza line of cosmetics has also achieved widespread acceptance. We expect sales to continue to grow as our high volume, discount store customers open more stores, and we continue to develop new products for them. We are presently developing a line of health and beauty aids, including shampoos and conditioners. Growing sales within existing product lines, new product launches and an active new business development program are how we plan to continue to grow our business in the year 2001 and beyond. During the year ended December 31, 2000 we signed an exclusive worldwide license agreement with Celine, a division of LVMH Moet Hennessy Louis Vuitton S.A. Our first line of Celine fragrances is expected to debut in October 2001. Also during fiscal 2000, we signed an exclusive worldwide license agreement with FUBU The Collection to produce and sell men's and women's fragrances. We anticipate that the first FUBU fragrance line for men and women will be launched either in the last quarter of 2001, or in the first quarter of 2002. In addition, we are actively pursuing new business opportunities. However, we cannot assure you that any new license or acquisitions will be consummated. Gross profit margins increased to 49% of net sales for the year ended December 31, 2000, as compared to 48% in 1999. Gross profit margins have continued to increase over the past four years. Part of this improvement is the result of the strength of the US dollar in relation to the Euro, as certain European sales are denominated in US dollars. In addition, our prestige fragrance lines, which have been growing at a faster rate than our mass market lines, generate a higher gross profit margin than our mass market product lines. Selling, general and administrative expenses increased to $37.5 million for the year ended December 31, 2000, as compared to $32.0 million in 1999 and represented 37% of sales in both 2000 and 1999. In the United States, selling, general and administrative expenses increased to $9.8 million for the year ended December 31, 2000, as compared to $9.1 million in 1999, but declined to 31% of net sales in 2000, as compared to 34% of net sales in 1999. Our mass market sales do not require extensive advertising and therefore, more of our selling, general and administrative expenses are fixed rather than variable. As a result, the increase in sales has enabled us to spread our fixed costs over a larger net sales base. Selling, general and administrative expenses incurred by our French subsidiary, Inter Parfums, S.A., increased to $27.7 million for the year ended December 31, 2000, as compared to $22.8 million in 1999. As a percentage of sales, selling, general and administrative expenses represented 39% of sales in 2000, as compared to 38% in 1999. Promotion and advertising are prerequisites for sales of designer products. We develop a complete marketing and promotional 21 plan to support our growing portfolio of prestige fragrance brands and to build upon each brand's awareness. As previously reported, Inter Parfums, S.A., is a party to litigation with Jean Charles Brosseau, S.A. ("Brosseau"), the licensor of the Ombre Rose trademark. The licensor has claimed damages of approximately $7.0 million and is seeking termination of the license agreement. In October 1999, Inter Parfums, S.A. received notice of a judgment in favor of Brosseau, which awarded damages of approximately $600,000 and which directed Inter Parfums, S.A. to turn over its license to Brosseau within six months. Inter Parfums, S.A. is appealing the judgment as it vigorously and categorically denies the claims of Brosseau. The payment of the judgment has been stayed, and Inter Parfums, S.A. was allowed to continue to operate under the license agreement during the appeal process. In June 2000, the president of the Court of Appeal granted a petition filed by Brosseau regarding ongoing payments for royalties due to Brosseau. In the same interlocutory judgment, the president of the Court of Appeal rejected Inter Parfums, S.A.'s request for the appointment of a new judicial expert. Such request was made to refute the findings of the judicial expert originally appointed by the Commercial Court, which resulted in the $600,000 judgment against Inter Parfums, S.A. As a result of these further developments, Inter Parfums, S.A. and its special litigation counsel then considered it likely that the judgment would be sustained and therefore, Inter Parfums, S.A. recorded a charge against earnings in the second quarter of 2000 for $600,000 ($260,000 after taxes and minority interest), the full amount of the judgment. In February 2001, the Court of Appeal confirmed the Brosseau claim with respect to turning over the license. In addition, the Court named an expert to proceed with additional investigations and required Inter Parfums, S.A. to pay $142,000 as an advance for damages claimed by Brosseau. Inter Parfums, S.A. will continue its appeal as it still denies the claims of Brosseau. We do not believe that such litigation will have any further material adverse effect on our financial condition or operations. As of December 31, 2000, we have fully reserved the unamortized portion of the license agreement. During the year ended December 31, 2000 we sold marketable securities and realized a gain of $1.4 million ($645,000 after taxes and minority interest). On occasion, we invest excess cash in marketable securities, which are classified as available-for-sale. These funds are available to support current operations or to take advantage of other investment opportunities. At December 31, 2000, we had no remaining marketable security positions. Interest expense was $0.4 million for the year ended December 31, 2000, as compared to $0.3 million in 1999. We use the credit lines available to us, as needed, to finance our working capital needs. 22 We incurred a loss on foreign currency of $0.2 million for both of our last two fiscal years. Occasionally, we enter into foreign currency forward exchange contracts to manage exposure related to certain foreign currency commitments. Our effective income tax rate was 42% for the year ended December 31, 2000, as compared to 40% in 1999. The effective tax rate for the year ended December 31, 2000 includes a $480,000 ($370,000 after minority interest) accrual to cover the potential exposure related to tax audits of Inter Parfums, S.A. commenced by the French Tax Authorities. If not for these accruals, the declining tax rates in France would have caused a decline in our overall effective tax rate. Net income increased 36% to $6.6 million for the year ended December 31, 2000, as compared to $4.8 million in 1999. Net income for the year ended December 31, 2000 includes charges of $630,000 and a gain of $645,000, all after taxes and minority interest. The charges represent an accrual for exposure relating to the Brosseau litigation of $260,000 and a potential tax assessment of $370,000. The gain represents a realized gain on sale of marketable securities. After giving effect to our 3 for 2 stock split effected in June 2000, diluted earnings per share increased 27% to $0.51 for the year ended December 31, 2000, as compared to $0.40 in 1999. Weighted average shares outstanding aggregated 11.7 million for the year ended December 31, 2000, as compared to 11.4 million in 1999. On a diluted basis, average shares outstanding was 13.0 million for the year ended December 31, 2000, as compared to 12.2 million in 1999. Shares repurchased pursuant to our stock repurchase program, offset shares issued upon exercise of stock options. However, the increase in our stock price has increased the dilutive effect of outstanding stock options, thereby increasing diluted shares outstanding. 1999 COMPARED TO 1998 Net sales for the year ended December 31, 1999 were $87.1 million, as compared to $89.4 million in 1998. At comparable foreign currency exchange rates, net sales for the year ended December 31, 1999 were virtually unchanged from that of 1998. These results were in line with management's expectations as no new prestige fragrance launches were scheduled for 1999 and we entered the year during a downward trend in our mass market product lines, which resulted from the unsteady economic situation in Eastern Europe, Brazil and other Latin American countries. In March 1999, we entered into an exclusive license agreement with the Christian Lacroix Company, a division of LVMH Moet Hennessy Louis Vuitton S.A. ("LVMH") and a new Christian Lacroix product line was launched in October 1999. In addition, in the latter part of 1999, the downward trend in our mass market product lines began to reverse. As a result, at comparable foreign currency exchange rates, net sales increased 17% for the three months ended December 31, 1999, as compared to the corresponding period of the prior year. 23 We are also actively pursuing new license agreements to build upon the strength of our existing portfolio. Gross profit margins increased to 48% of net sales for the year ended December 31, 1999, as compared to 47% in 1998. Gross profit margins have continued to increase over the past three years. Part of the gross profit margin improvement is the result of the strength of the US dollar relative to the Euro, as certain European sales are denominated in US dollars. Our prestige fragrance lines also generate a higher gross profit margin than our mass market product lines and these gross profit margin benefits have offset the negative affect of lower margin mass market product sales and closeout sales. Selling, general and administrative expenses declined to $32.0 million for the year ended December 31, 1999, as compared to $32.9 million in 1998. Selling, general and administrative expenses represented 37% of sales in both 1999 and 1998. In the United States, selling, general and administrative expenses declined 20% to $9.1 million for the year ended December 31, 1999, as compared to $11.4 million in 1998, and declined to 34% of net sales in 1999, as compared to 37% of net sales in 1998. As a result of the weakness in domestic mass market product sales experienced in early 1999, we instituted extraordinarily tight controls in an effort to keep spending in line with sales. Selling, general and administrative expenses incurred by our French subsidiary, Inter Parfums, S.A., were $22.8 million for the year ended December 31, 1999, as compared to $21.5 million in 1998. Some savings has been achieved in distribution and freight costs. However, a reasonable level of advertising is necessary to support our growing portfolio of prestige fragrance brands and to build upon each brand's awareness. Interest expense was $0.3 million for the year ended December 31, 1999, as compared to $0.5 million in 1998. We use the credit lines available to us, as needed, to finance our working capital needs. We incurred a loss on foreign currency of $0.2 million for the year ended December 31, 1999, as compared to $0.1 million in 1998. Occasionally, we enter into foreign currency forward exchange contracts to manage exposure related to certain foreign currency commitments. Our effective income tax rate was 40% for the year ended December 31, 1999, as compared to 39% in 1998. The effective tax rate for 1998 reflects the positive effects of the tax benefit to be realized upon the closing of our Brazilian subsidiary. Net income increased 5% to $4.8 million for the year ended December 31, 1999, as compared to $4.6 million in 1998. Earnings per diluted share increased to $0.40 for the year ended December 31, 1999, as compared to $0.35 in 1998. Weighted average shares outstanding aggregated 11.4 million for the year ended December 31, 1999, as compared to 13.1 million in 1998. On a diluted basis, average shares 24 outstanding was 12.2 million for the year ended December 31, 1999, as compared to 13.3 million in 1998. The declines are the result of our common stock repurchase program. LIQUIDITY AND FINANCED RESOURCES Our financial position remains very strong as a result of continued profitable operating results. At December 31, 2000, working capital aggregated $57 million and we had a working capital ratio of almost 3 to 1. Cash and marketable securities on hand aggregated $28 million and our net book value was $4.72 per outstanding share as of December 31, 2000. Furthermore, we had only $1.4 million in long-term debt. On occasion we use a portion of our cash to make investments in marketable equity securities classified as available-for-sale. These funds are available to support current operations or to take advantage of other investment opportunities. These investments are made to maximize our return on cash. As of December 31, 2000 we had no marketable security positions. During the year ended December 31, 2000, we continued our stock repurchase program by acquiring 343,600 of our common shares at an average cost of $8.19 per share. We believe that our stock price does not reflect our growth rate, prospects for future growth, the value of our licenses and our worldwide distribution network. In addition, the market capitalization of our 78% ownership interest in Inter Parfums, S.A., our publicly traded Paris subsidiary, is in excess of $150 million, which is significantly higher than that of the company as a whole. Our short-term financing requirements are expected to be met by available cash at December 31, 2000, cash generated by operations and short-term credit lines provided by domestic and foreign banks. The principal credit facilities for 2001 are a $12.0 million unsecured revolving line of credit provided by a domestic commercial bank and approximately $12.0 million in credit lines provided by a consortium of international financial institutions. During the year ended December 31, 2000 we generated $0.2 million in cash from operating activities, as compared to $12.6 million in 1999. At December 31, 2000 accounts receivable increased 18%, as compared to December 31, 1999, which is in line with our 17% increase in net sales. In addition, inventories rose 30% as a result of a planned buildup to support all of the recent new product launches and to prepare for anticipated revenue growth. We believe that funds generated from operations, supplemented by our present cash position and available credit facilities, will provide us with sufficient resources to meet all present and reasonably foreseeable future operating needs. In January 1999, certain member countries of the European Union established permanent fixed rates between their existing currencies and the European Union's common currency, the Euro. The transition period for the introduction of the Euro is scheduled to be completed by January 1, 2002. However, we do not expect the introduction of the Euro and the phasing out of other currencies to have a material impact on our consolidated financial statements. 25 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, 2000. FORWARD LOOKING STATEMENTS Statements in this document, which are not historical in nature, are forward-looking statements. Forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the actual results to be materially different from projected results. Given these risks, uncertainties and other factors, persons are cautioned not to place undue reliance on the forward-looking statements. Such factors include effectiveness of sales and marketing efforts and product acceptance by consumers, dependence upon management, competition, currency fluctuation and international tariff and trade barriers, governmental regulation and possible liability for improper comparative advertising or "Trade Dress". 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 have entered into one (1) interest rate swap in an attempt to take advantage of low variable interest rates as compared to the fixed rate on our long term debt. We do not engage in the trading of foreign currency forward exchange contracts or interest rate swaps. FOREIGN EXCHANGE RISK MANAGEMENT We enter into forward exchange contracts to hedge receivables denominated in foreign currencies 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 Inter Parfums, S.A., our French subsidiary, whose functional currency is French francs. 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. Gains and losses related to qualifying hedges of these exposures are deferred and recognized in operating income when the underlying hedged transaction occurs. We believe that our risk of loss as the result of nonperformance by any of such financial institutions is remote and in any event would not be material. The contracts have varying maturities with none exceeding one year. Costs associated with entering into such contracts have not been material to our financial results. At December 31, 2000, we had foreign currency contracts in the form of forward exchange contracts in the amount of approximately $9 million. 26 The foreign currencies included in these contracts are principally the U.S. dollar and the British pound. INTEREST RATE RISK MANAGEMENT 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. We have entered into one (1) interest rate swap to take advantage of declining interest rates. At December 31, 2000 we had one (1) interest rate swap agreement outstanding to convert $1.4 million of principal fixed rate debt with an interest rate of 4.56% to floating interest rate debt, at the EUIBOR rate, over the life of our long term debt due in 2005. At December 31, 2000, the EUIBOR rate was 4.9%. If interest rates were to rise 1% per annum over the remaining term of the long term debt, then we would incur a loss of $50,000. 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 31 DECEMBER 2000 (In Thousands Except Share and Per Share Data)
- ---------------------------------------------------------------------------------------------------- 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Full Year - ---------------------------------------------------------------------------------------------------- Net Sales $22,169 $24,277 $25,940 $29,196 $101,582 - ---------------------------------------------------------------------------------------------------- Cost of Sales 12,245 12,541 13,923 13,164 51,873 - ---------------------------------------------------------------------------------------------------- Net Income 1,422 1,508 1,635 2,024 6,589 - ---------------------------------------------------------------------------------------------------- Net Income per Share(1): Basic $0.12 $0.13 $0.14 $0.17 $0.56 Diluted $0.11 $0.12 $0.13 $0.16 $0.51 - ---------------------------------------------------------------------------------------------------- Average Common Shares Outstanding(1): 11,767,250 11,754,490 11,726,616 11,658,756 11,726,737 Basic 12,925,178 13,026,453 13,013,615 13,036,570 13,000,432 Diluted - ----------------------------------------------------------------------------------------------------
(1) Adjusted for 3:2 stock split distributed in June 2000. QUARTERLY DATA (UNAUDITED) FOR THE YEAR ENDED 31 DECEMBER 1999 (In Thousands Except Share and Per Share Data)
- ---------------------------------------------------------------------------------------------------- 1st Quarter 2nd Quarter 3rd Quarter 4th Quarter Full Year - ---------------------------------------------------------------------------------------------------- Net Sales $19,584 $22,192 $21,652 $23,712 $87,140 - ---------------------------------------------------------------------------------------------------- Cost of Sales 10,099 11,741 11,649 11,836 45,325 - ----------------------------------------------------------------------------------------------------
27 - ---------------------------------------------------------------------------------------------------- Net Income 1,157 1,084 1,204 1,383 4,828 - ---------------------------------------------------------------------------------------------------- Net Income per Share(1): Basic $0.10 $0.10 $0.11 $0.12 $0.43 Diluted $0.10 $0.09 $0.10 $0.11 $0.40 - ---------------------------------------------------------------------------------------------------- Average Common Shares Outstanding(1): Basic Diluted 11,832,560 11,149,728 11,096,134 11,473,118 11,387,885 11,962,835 11,784,033 12,317,569 12,556,799 12,155,226 - ----------------------------------------------------------------------------------------------------
(1) Adjusted for 3:2 stock split distributed in June 2000. ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE Not applicable. 28 PART III ITEM 10. EXECUTIVE OFFICERS AND DIRECTORS OF REGISTRANt As of March 15, 2001, 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 Inter Parfums, S.A. - ---------------------------------------------------------------------------------------------------------- Philippe Benacin Vice Chairman of the Board, President of Inter Parfums, Inc. and President of Inter Parfums, S.A. - ---------------------------------------------------------------------------------------------------------- Russell Greenberg Director, Executive Vice President and Chief Financial Officer - ---------------------------------------------------------------------------------------------------------- Francois Heilbronn Director - ---------------------------------------------------------------------------------------------------------- Joseph A. Caccamo Director - ---------------------------------------------------------------------------------------------------------- Jean Levy Director - ---------------------------------------------------------------------------------------------------------- Robert Bensoussan-Torres Director - ---------------------------------------------------------------------------------------------------------- Daniel Piette Director - ---------------------------------------------------------------------------------------------------------- Jean Cailliau Director - ---------------------------------------------------------------------------------------------------------- Philippe Santi Director and Director of Finance, Inter Parfums, S.A. - ---------------------------------------------------------------------------------------------------------- Serge Rosinoer Director - ---------------------------------------------------------------------------------------------------------- Bruce Elbilia Executive Vice President - ---------------------------------------------------------------------------------------------------------- Wayne Hamerling Executive Vice President - ---------------------------------------------------------------------------------------------------------- Eric de Labouchere Director of Operations, Inter Parfums, S.A. - ---------------------------------------------------------------------------------------------------------- Frederic Garcia-Pelayo Director of Export Sales, Inter Parfums, S.A. - ----------------------------------------------------------------------------------------------------------
The directors will serve until the next annual meeting of stockholders and thereafter until their successors shall have been elected and qualified. LV Capital USA, Inc. and Messrs. Jean Madar and Philippe Benacin have entered into a Shareholders' Agreement relating to certain corporate governance issues, including increasing the number of Board members from seven to ten, granting two seats on the Board of directors to designees of LV Capital. LV Capital USA, Inc. and Messrs. Jean Madar and Philippe Benacin have each agreed to vote for each others nominees for directors. The number of members of our Board of Directors was increased to 11 by the addition of Serge Rosinoer in December 2000 by the unanimous vote of our board. 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. 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 40, a Director, has been the Chairman of the Board of Directors since the Company's inception, and is a co-founder of the Company with Mr. Benacin. From inception until December 1993 he was the President of the Company; in January 1994 he became Director General of Inter Parfums, S.A., the Company's subsidiary; and in January 1997 he became Chief 29 Executive Officer of the Company. Mr. Madar was previously the managing director of Inter Parfums, S.A., 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 Higher School of Economic and Commercial Sciences (ESSEC) in 1983. PHILIPPE BENACIN Mr. Benacin, age 42, a Director, has been the Vice Chairman of the Board since September 1991, and is a co-founder of the 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 President of Inter Parfums, S.A. for more than the past five years. Mr. Benacin graduated from The French Higher School of Economic and Commercial Sciences (ESSEC) in 1983. RUSSELL GREENBERG Mr. Greenberg, age 44, 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 the 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 the Company in June 1992. FRANCOIS HEILBRONN Mr. Heilbronn, age 40, a Director since 1988 and a member of the audit, stock option and executive compensation committees, 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. JOSEPH A. CACCAMO Mr. Caccamo, age 45, a Director since 1992, is an attorney with the law firm of Becker & Poliakoff, P.A., our general counsel. A member of both the New York and Florida bars, Mr. Caccamo has been a practicing attorney since 1981, concentrating in the areas of corporate and securities law, and in September 1991 he became counsel to us. From August 1992 through September 1997, he was a director of and general counsel to, Hydron Technologies, Inc., a company primarily engaged in the development of cosmetic and personal care products. 30 JEAN LEVY Jean Levy, age 68, a Director since August 1996 and a member of the audit, stock option and executive compensation committees, 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 the 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". Mr. Levy is also a director of the following foreign public companies: Escada Beaute Worldwide (a subsidiary of Escada Group), Rallye, S.A. and Zannier Group. In addition, Mr. Levy is also the Chairman of the Board of Financiere d'Or, and its subsidiary, Histoire d'Or which is in the retail jewelry business. ROBERT BENSOUSSAN-TORRES Robert Bensoussan-Torres, age 43, has been a Director since March 1997. He is currently the Managing Director of Gianfranco Ferre fashion group, based in Milano, Italy. Mr. Bensoussan-Torres was a Director of Towers Consulting Europe, Ltd. from May 1998 to September 1999. Towers Consulting Europe, Ltd. is a consulting company based in London, which specializes in strategic advise in connection with mergers and acquisitions in the luxury goods business. Mr. Bensoussan-Torres was the Chief Executive Officer of Christian Lacroix, Paris, a subsidiary of LVMH Group, from February 1993 until May 1998. Christian Lacroix is a French Houte Couture House and has activities in the field of apparel, accessories and fragrances. From December 1990 through January 1993 he was based in Munich, Germany, as the International Sales Director of The Escada Group. DANIEL PIETTE Mr. Piette, age 55 and a director since December 1999, is also a member of the executive compensation committee of the Board of Directors. Mr. Piette is the Chairman of LV Capital USA, Inc. ("LV Capital"), the US vehicle of LV Capital SA, which is the investment arm of LVMH Moet Hennessy Louis Vuitton S.A. ("LVMH") the world's largest luxury goods conglomerate. For the past ten (10) years, he has been a Group Executive Vice President of LVMH. Mr. Piette is also a director of Cryo Interactive Entertainment (Paris) and a non-executive director of Davis S. Smith Holdings PLC (London) as well as a member of the Board of Overseers of ESSEC (Paris) and Columbia Business School (New York). JEAN CAILLIAU Mr. Cailliau, age 38 and a director since December 1999, is also a member of the audit and the stock option committees of the Board of Directors. Mr. Cailliau is the Deputy General Manager of LV Capital SA, the investment arm of LVMH and the CEO of LV Capital USA Inc., its US vehicle. For the past eight (8) years, Mr. Cailliau has held executive positions at LVMH. 31 He is also a Director of various European companies. Mr. Cailliau is an Engineer in Agronomics and has an MBA (1988) from Insead. SERGE ROSINOER Mr. Rosinoer, age 68, was appointed to the Board of Directors in December 2000. Mr. Rosinoer has devoted most of his career to the personal care, cosmetics and fragrance industry. In 1978, Mr. Rosinoer joined the Clarins Group as Vice President and Chief Operating Officer where he was largely responsible for its rapid international expansion. As COO, then CEO since 1978, Mr. Rosinoer oversaw the transformation of Clarins into a major force in cosmetics, skin care and fragrance, with annual sales of 4 billion French francs and more than 4,000 employees. He retired from active duty in June of 2000, but continues to serve on the board of directors of Clarins. Earlier in his career he was President of Parfums Corday. He also held senior level executive positions at Max Factor, where he had full supervision of that cosmetics giant's European production and sales. Mr. Rosinoer has served several terms as President of the French Prestige Cosmetics Association and currently serves as Conseiller du Commerce Exterieur de la France. BRUCE ELBILIA Mr. Elbilia, age 42, Executive Vice President, joined the Company in June 1986 as the National Sales Director, and from that time until 1994, he was in charge of the Company's marketing efforts. In 1994 Mr. Elbilia became head of international sales and marketing for the Company, and had expanded the Company's export sales to South America, the Middle East and Eastern Europe. Mr. Elbilia received a Bachelor of Business Administration degree, with a major in International Business/Marketing from George Washington University in Washington, D.C. WAYNE C. HAMERLING Mr. Hamerling, age 44, was Vice President, Sales, from May 1987 through April 1993, when he became Executive Vice President. Mr. Hamerling has over twenty (20) years experience in the fragrance and cosmetic business. Mr. Hamerling, who attended Rutgers University, has also been actively involved in marketing of our United States mass market business for the past three (3) years, and helped develop our Aziza II line and our new health and beauty aid line. PHILIPPE SANTI Philippe Santi, age 39 and a Director since December 1999, has been the Director of Finance and the Chief Financial Officer of Inter Parfums, S.A. since February 1995. Mr. Santi is a Certified Accountant and Statutory Auditor in France. 32 ERIC DE LABOUCHERE Eric de Labouchere, age 46, is the Director of Operations of Inter Parfums, S.A. He has been employed by Inter Parfums, S.A. since October 1986 in product development, purchasing and marketing. FREDERIC GARCIA-PELAYO Frederic Garcia-Pelayo, age 42, has been the Director of Export Sales of Inter Parfums, S.A. since September 1994. Prior to September 1994, Mr. Garcia-Pelayo was the Export Manager for Benetton Perfumes for seven (7) years. 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, 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. ITEM 11. EXECUTIVE COMPENSATION The following table sets forth a summary of all compensation awarded to, earned by or paid to, our Chief Executive Officer and each of the four most highly compensated executive officers of our company whose compensation exceeded $100,000 per annum for services rendered in all capacities to our company and its subsidiaries during fiscal years ended 31 December 2000, 31 December 1999 and 31 December 1998: SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION LONG TERM AWARDS - ----------------------------------------------------------------------------------------------------------------- OTHER ANNUAL SECURITIES COMPENSATION UNDERLYING ALL OTHER NAME AND PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) ($) OPTIONS (#)(1) COMPENSATION - ----------------------------------------------------------------------------------------------------------------- Jean Madar, Chairman of the Board, 2000 280,000 100,000 273,000(3) -0-(3A) -0- Chief Executive Officer of Inter 1999 280,000 48,000 765,500(4) 412,500 -0- Parfums, Inc. and Director General 1998 280,000 -0- 53,000(5) 195,000 -0- of Inter Parfums, S.A - ----------------------------------------------------------------------------------------------------------------- Philippe Benacin(6), President of 2000 117,318 65,642 278,000(7) -0-(3A) -0- Inter Parfums, Inc. and President 1999 136,000 16,000 765,500(8) 412,500 of Inter Parfums, S.A 1998 139,000 10,000 53,000(9) 195,000 - ----------------------------------------------------------------------------------------------------------------- Russell Greenberg(10), Executive 2000 245,000 13,000 69,174(11) 12,000 -0- Vice President and Chief Financial 1999 230,000 5,000 225,819(12) 49,500 -0- Officer 1998 228,446 3,000 2,214 23,250 -0- - -----------------------------------------------------------------------------------------------------------------
33 - ----------------------------------------------------------------------------------------------------------------- Bruce Elbilia(13), Executive Vice 2000 178,000 10,000 24,752(14) 12,000 -0- President 1999 160,500 5,000 262,467(15) 49,500 -0- 1998 146,045 3,000 8,776(16) 23,250 -0- - ----------------------------------------------------------------------------------------------------------------- Wayne C. Hamerling(17), Executive 2000 176,120 10,000 111,438(18) 12,000 -0- Vice President 1999 166,120 13,000 326,682(19) 49,500 -0- 1998 166,120 7,000 52,590(20) 23,250 -0- - -----------------------------------------------------------------------------------------------------------------
[Footnotes to Table] - ------------------------------------ (1) Adjusted to reflect a 3:2 stock split distributed in June 2000. Includes options granted in 1998 as replacements for out-of-the-money or expired options. (2) As of 31 December 2000, Mr. Madar held 3,600,974 restricted shares of common stock, with an aggregate value of $32,183,705 based upon the closing price of our company's common stock as reported by the Nasdaq Stock Market, National Market system, of $8.9375. (3) Consists of lodging expenses of $48,000 and $225,000 realized upon exercise of options. (3A) Options to purchase 5,334 shares of Inter Parfums, S.A. were granted. (4) Consists of lodging expenses of $ 48,000 and $708,500 realized upon exercise of options. (5) Consists of lodging expenses. (6) Compensation figures for Mr. Benacin are approximate, as he is paid in French francs, and conversion into U.S. dollars was made at the average exchange rates prevailing during the respective periods. As of 31 December 2000, Mr. Benacin held 3,387,074 restricted shares of common stock, with an aggregate value of $30,271,973 based upon the closing price of our company's common stock as reported by the Nasdaq Stock Market, National Market system, of $8.9375. (7) Consists of lodging expenses of $38,000, $15,000 for automobile expenses and $225,000 realized upon exercise of options. (8) Consists of lodging expenses of $42,000, $15,000 for automobile expenses and $708,500 and realized upon exercise of options. (9) Consists of $48,000 for lodging expenses and $5,000 for automobile expenses. (10) As of 31 December 2000, Mr. Greenberg held 15,000 restricted shares of common stock, with an aggregate value of $134,063 based upon the closing price of our company's common stock as reported by the Nasdaq Stock Market, National Market system, of $8.9375. (11) Consists of $2,214 for automobile expenses and $67,500 realized upon exercise of options. (12) Consists of $2,214 for automobile expenses and $223,605 realized upon the exercise of options. (13) As of 31 December 2000, Mr. Elbilia held 15,000 restricted shares of common stock, with an aggregate value of $134,063 based upon the closing price of our company's common stock as reported by the Nasdaq Stock Market, National Market system, of $8.9375. (14) Consists of selling commissions. (15) Consists of $27,985 selling commissions and $234,482 realized upon the exercise of options. (16) Consists of selling commissions. (17) As of 31 December 2000, Mr. Hamerling held 15,000 restricted shares of common stock, with an aggregate value of $134,063 based upon the closing price of our company's common stock as reported by the Nasdaq Stock Market, National Market system, of $8.9375. (18) Consists of selling commissions of $54,438; non cash compensation of $4,500 equal to the value of personal use of a company leased automobile; and $52,500 realized upon the exercise of options. (19) Consists of selling commissions of $43,388; non cash compensation of $4,500 equal to the value of personal use of a company leased automobile; and $278,794 realized upon the exercise of options. (20) Consists of selling commissions of $48,090 and non cash compensation of $4,500 equal to the value of personal use of a company leased automobile. The following table sets forth certain information relating to stock option grants during Fiscal 2000 to our Chief Executive Officer and each of the four most highly compensated executive officers of the company whose compensation exceeded $100,000 per annum for services rendered in all capacities to our company and its subsidiaries during Fiscal 2000: 34 OPTION/SAR GRANTS IN LAST FISCAL YEAR
POTENTIAL REALIZED VALUE AT ASSUMED ANNUAL RATES OF INDIVIDUALIZED GRANTS PRICE APPRECIATION FOR OPTION TERM - ---------------------------------------------------------------------------------------------------------------------- NAME NUMBER OF % OF TOTAL EXERCISE EXPIRATION FIVE (5%) TEN (10%) SECURITIES OPTIONS/SARS OR BASE DATE PERCENT PERCENT UNDERLYING GRANTED TO PRICE ($) ($) OPTIONS EMPLOYEES IN ($/SH) GRANTED (#) FISCAL YEAR - ---------------------------------------------------------------------------------------------------------------------- Jean Madar -0- NA NA NA NA NA - ---------------------------------------------------------------------------------------------------------------------- Philippe Benacin -0- NA NA NA NA NA - ---------------------------------------------------------------------------------------------------------------------- Russell Greenberg 12,000 11.8 7.625 26 Oct 05 25,280 55,862 - ---------------------------------------------------------------------------------------------------------------------- Bruce Elbilia 12,000 11.8 7.625 26 Oct 05 25,280 55,862 - ---------------------------------------------------------------------------------------------------------------------- Wayne Hamerling 12,000 11.8 7.625 26 Oct 05 25,280 55,862 - ----------------------------------------------------------------------------------------------------------------------
The following table sets forth certain information relating to option exercises effected during Fiscal 2000, and the value of options held as of such date by each of our Chief Executive Officer and the four most highly compensated executive officers of our company whose compensation exceeded $100,000 per annum for services rendered in all capacities to our company and its subsidiaries during Fiscal 2000: AGGREGATE OPTION EXERCISES FOR FISCAL 2000 AND YEAR END OPTION VALUES
NUMBER OF UNEXERCISED VALUE(1) OF UNEXERCISED OPTIONS AT DECEMBER 31, IN-THE-MONEY OPTIONS AT 2000(#) DECEMBER 31, 2000($) - ---------------------------------------------------------------------------------------------------------------------- NAME SHARES ACQUIRED VALUE ($) EXERCISABLE/ EXERCISABLE/ ON EXERCISE REALIZED(2) UNEXERCISABLE UNEXERCISABLE - ---------------------------------------------------------------------------------------------------------------------- Jean Madar 75,000 225,000 1,145,250/-0- 5,705,897/-0- - ---------------------------------------------------------------------------------------------------------------------- Philippe Benacin 75,000 225,000 1,145,250/-0- 5,705,897/-0- - ---------------------------------------------------------------------------------------------------------------------- Russell Greenberg 15,000 67,500 69,750/-0- 287,641/-0- - ---------------------------------------------------------------------------------------------------------------------- Bruce Elbilia -0- -0- 12,000/-0- 15,750/-0- - ---------------------------------------------------------------------------------------------------------------------- Wayne C. Hamerling 15,000 52,500 60,000/-0- 242,750/-0- - ----------------------------------------------------------------------------------------------------------------------
(1) Total value of unexercised options is based upon the fair market value of the common stock as reported by the Nasdaq Stock Market of $8.9375 on 31 December 31 2000. (2) Value realized in dollars is based upon the difference between the fair market value of the common stock on the date of exercise, and the exercise price of the option. 35 EMPLOYMENT AGREEMENTS As part of our acquisition in 1991 of the controlling interest in Inter Parfums, S.A., now a subsidiary, we entered into an employment agreement with Philippe Benacin. The agreement provides that Mr. Benacin will be employed as Vice Chairman of the Board and President and Chief Executive Officer of Inter Parfums Holdings and its subsidiary, Inter Parfums. The initial term expired on September 2, 1992, and has subsequently been automatically renewed for additional annual periods. The agreement provides for automatic annual renewal terms, unless either party terminates the agreement upon 120 days notice. Mr. Benacin presently receives an annual salary of 864,000ff, which is approximately US$ 123,000, together with annual lodging expenses of approximately $38,000 and automobile expenses of approximately $15,000, 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. COMPENSATION OF DIRECTORS All nonemployee directors receive $1,000 for each board meeting at which they participate. Mr. Caccamo's board fees are paid to his law firm. In March 1997 our Board of Directors adopted our 1997 Nonemployee Stock Option Plan. This plan was approved by our stockholders at the annual meeting of shareholders held in July 1997. The purpose of this plan is to assist us in attracting and retaining key directors who are responsible for continuing the growth and success of our company Our 1997 Nonemployee Stock Option Plan provides for the grant of nonqualified stock options to nonemployee directors to purchase an aggregate of 25,000 shares of common stock. 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 except for Joseph A. Caccamo, who is granted options to purchase 4,000 shares. Options to purchase 2,000 shares are granted to each nonemployee director upon his initial election or appointment to our board. On 19 December 2000 we granted options to purchase 2,000 shares at $8.72 per share, the fair market value at the time of grant, to Mr. Serge Rosinoer, for a five year period, upon his initial appointment to the Board. We made these grants in accordance with the terms of our 1997 Nonemployee Stock Option Plan, and our 2000 Nonemployee Stock Option Plan. In December 2000 our Board of Directors adopted our 2000 Nonemployee Stock Option Plan, as substantially all of the shares reserved under our 1997 Nonemployee Stock Option Plan had been allocated to outstanding options. This plan is subject to the approval of our stockholders at the annual meeting of shareholders to be held in 2001. The purpose of this plan is to assist us in attracting and retaining key directors who are responsible for continuing the growth and success of our company. Our 2000 Nonemployee Stock Option Plan provides for the grant of nonqualified stock options to nonemployee directors to purchase an aggregate of 30,000 shares of common stock. 36 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 except for Joseph A. Caccamo, who is granted options to purchase 4,000 shares. Options to purchase 2,000 shares are granted to each nonemployee director upon his initial election or appointment to our board. On 1 February 2001, options to purchase 1,000 shares were granted to each of Francois Heilbronn, Jean Levy, Robert Bensoussan-Torres, Daniel Piette and Jean Cailliau, and an option to purchase 4,000 shares was granted to Joseph A. Caccamo at the exercise price of $9.75 per share under the 2000 plan. The options held by Mr. Caccamo are held as nominee for his past and present law firms. Joseph A. Caccamo, a director, was a partner of Nason, Yeager, Gerson, White & Lioce, P.A., our prior general counsel. In Fiscal 2000, we paid Mr. Caccamo's prior firm an aggregate of $109,121 in legal fees and for reimbursement of disbursements incurred on our behalf. Also during 2000, Mr. Caccamo received $28,487 as the result of the exercise and sale of shares underlying options granted in Inter Parfums, S.A. ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT The following table sets forth information, as of March 15, 2001 with respect to the beneficial ownership of our common stock by (a) each person we know to be the beneficial owner of more than five percent of our outstanding common stock, (b) our executive officers and directors and (c) all of our directors and officers as a group: NAME AND ADDRESS AMOUNT OF BENEFICIAL APPROXIMATE PERCENT OF OF BENEFICIAL OWNER OWNERSHIP(1) CLASS - ------------------------------------------------------------------------------- Jean Madar 4,706,974(2) 36.8% c/o Inter Parfums, S.A. 4, Rond Point Des Champs Elysees 75008 Paris, France - ------------------------------------------------------------------------------- Philippe Benacin 4,493,074(3) 35.2% c/o Inter Parfums, S.A. 4, Rond Point Des Champs Elysees 75008 Paris, France - ------------------------------------------------------------------------------- (1) All shares of common stock are directly held with sole voting power and sole power to dispose, unless otherwise stated. Jean Madar, the Chairman of the Board and Chief Executive Officer of Inter Parfums, Inc. (the "Company"), Philippe Benacin, the Vice Chairman of the Board and President of the Company, and LV Capital USA, Inc., an indirect subsidiary of LVMH Moet Hennessy Louis Vuitton, S.A., have entered into a Shareholders' Agreement dated 22 November 1999 relating to certain corporate governance issues, including the agreement to vote for Jean Madar, Philippe Benacin and six (6) nominees of Messrs. Madar and Benacin, and two (2) designees of LV Capital USA, INC., as directors of the Company. (2) Consists of 3,561,724shares held directly and options to purchase 1,145,250 shares. (3) Consists of 3,347,824shares held directly and options to purchase 1,145,250 shares. 37 NAME AND ADDRESS AMOUNT OF BENEFICIAL APPROXIMATE PERCENT OF OF BENEFICIAL OWNER OWNERSHIP(1) CLASS - ------------------------------------------------------------------------------- Russell Greenberg 84,750(4) Less than 1% c/o Inter Parfums, Inc. 551 Fifth Avenue New York, NY 10176 - ------------------------------------------------------------------------------- Francois Heilbronn 12,225(5) Less than 1% 60 Avenue de Breteuil 75007 Paris, France - ------------------------------------------------------------------------------- Joseph A. Caccamo, Esq. 10,000(6) Less than 1% Becker & Poliakoff, P.A. 3111 Stirling Road Ft. Lauderdale, FL 33312 - ------------------------------------------------------------------------------- Jean Levy 5,500(7) Less than 1% 29 rue du Colisee 75008 Paris, France - ------------------------------------------------------------------------------- Robert Bensoussan-Torres 5,500(8) Less than 1% 48, Boulevard Raspail 75006 Paris, France - ------------------------------------------------------------------------------- Bruce Elbilia 27,000(9) Less than 1% c/o Inter Parfums, Inc. 551 Fifth Avenue New York, NY 10176 - ------------------------------------------------------------------------------- Wayne C. Hamerling 75,000(10) Less than 1% c/o Inter Parfums, Inc. 551 Fifth Avenue New York, NY 10176 - ------------------------------------------------------------------------------- Daniel Piette 3,000(11) Less than 1% LV Capital 30 Avenue Hoche 75008, Paris, France - ------------------------------------------------------------------------------- Jean Cailliau 3,000(12) Less than 1% LV Capital 30 Avenue Hoche 75008, Paris, France - ------------------------------------------------------------------------------- - ---------------- (4) Consists of 15,000 shares held directly and 69,750 shares of common stock underlying options. (5) Consists of 6,725 shares held directly and 5,500 shares of common stock underlying options. (6) Consists of shares of common stock underlying options, which are held as nominee for his past and present employer. Beneficial ownership of such shares is disclaimed. (7) Consists of shares of common stock underlying options. (8) Consists of shares of common stock underlying options. (9) Consists of 15,000 shares held directly and 12,000 shares of common stock underlying options. (10) Consists of 15,000 shares held directly and 60,000 shares of common stock underlying options. (11) Consists of shares of common stock underlying options. Beneficial ownership of shares of common stock held by LV Capital USA, Inc. is disclaimed. 38 NAME AND ADDRESS AMOUNT OF BENEFICIAL APPROXIMATE PERCENT OF OF BENEFICIAL OWNER OWNERSHIP(1) CLASS - ------------------------------------------------------------------------------- Philippe Santi -0- NA Inter Parfums, S.A. 4, rond point des Champs Elysees 75008, Paris France - ------------------------------------------------------------------------------- Serge Rosinoer 2,000(13) Less than 1% 14 rue LeSueur 75116 Paris, France - ------------------------------------------------------------------------------- Eric de Labouchere -0- NA Inter Parfums, S.A. 4, rond point des Champs Elysees 75008, Paris France - ------------------------------------------------------------------------------- Frederic Garcia-Pelayo -0- NA Inter Parfums, S.A. 4, rond point des Champs Elysees 75008, Paris France - ------------------------------------------------------------------------------- LV Capital USA, Inc. 19 E. 57th Street 2,435,700 20.9% New York, NY 10022 - ------------------------------------------------------------------------------- Dimensional Fund Advisors, Inc. 823,800(14) 7.2% 1299 Ocean Avenue, 11th Fl. Santa Monica, CA 90401 - ------------------------------------------------------------------------------- All Directors and Officers 11,863,723(15) 84.2% as a Group (15 Persons) - ------------------------------------------------------------------------------- ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS TRANSACTIONS WITH FRENCH SUBSIDIARIES In connection with the acquisitions by our subsidiary, Inter Parfums, S.A., of the world-wide rights under the Burberry license agreement, the Paul Smith license agreement and the Brosseau license agreement, we guaranteed the obligations of Inter Parfums, S.A. under the - ------------------------------------------------------------------------------- (12) Consists of shares of common stock underlying options. Beneficial ownership of shares of common stock held by LV Capital USA, Inc. is disclaimed. (13) Consists of shares of common stock underlying options. (14) Information is derived forth in a Schedule 13G dated 2 February 2001 of Dimensional Fund Advisor Inc., which may be deemed to be the beneficial owner of the shares which are owned by its advisory clients. Dimensional Fund Advisor disclaims beneficial ownership of all of the shares. (15) Consists of 9,396,973 shares held directly, and options to purchase 2,466,750 shares. It also includes 2,435,700 shares held by LV Capital USA, Inc., an affiliate of LVMH Moet Hennessy Louis Vuitton, S.A. 39 Burberry license agreement and the Paul Smith license agreement and the distribution agreement for Ombre Rose fragrances. REMUNERATION OF COUNSEL Joseph A. Caccamo, a director of our company, was a partner of Nason, Yeager, Gerson, White & Lioce, P.A., our prior general counsel. In Fiscal 2000, we paid Mr. Caccamo's prior firm an aggregate of $109,121 in legal fees and for reimbursement of disbursements incurred on our behalf. Also during 2000, Mr. Caccamo received $28,487 as the result of the exercise and sale of shares underlying options granted in Inter Parfums, S.A. Commencing 1 February 2001, Mr. Caccamo's joined the law firm of Becker & Poliakoff, P.A., which receives a monthly retainer of $8,000 together with reimbursement for expenses. Mr. Caccamo's firm also receives $1,000 for each board meeting at which he participates. On 1 February 1, 2001 in accordance with the terms of our 2000 Nonemployee Stock Option Plan, Mr. Caccamo was granted an option with a term of five years to purchase 4,000 shares at $9.75 per share, the fair market value at the time of grant. He holds this option as nominee for his firm. TRANSACTIONS WITH LVMH MOET HENNESSY LOUIS VUITTON S.A. ACQUISITION OF COMMON STOCK AND SHAREHOLDERS' AGREEMENT In November 1999, LV Capital, USA Inc. ("LV Capital"), a wholly-owned subsidiary of LVMH Moet Hennessy Louis Vuitton S.A., purchased an aggregate of 1,273,800 shares of our common stock from management and employees, and increased its beneficial ownership of our common stock to approximately 20.5% of our outstanding shares. Further, in return for LV Capital becoming our strategic partner, LV Capital was granted the right to buy additional shares in order to maintain its percentage ownership upon issuance of shares to third parties, subject to certain exceptions, and was granted demand registrations rights for all of its shares. In addition, LV Capital has agreed to a standstill agreement, which limits the amount of shares of common stock that LV Capital can hold to twenty-five percent (25%) of our outstanding shares. CELINE In May 2000 we entered into an exclusive worldwide license agreement with Celine, S.A., a division of LVMH Moet Hennessy Louis Vuitton S.A., for the development, manufacturing and distribution of prestige fragrance lines under the Celine brand name. The term of the License Agreement is for eleven (11) years, beginning as of 1 January 2001, with an optional five (5) year renewal term, which is subject to certain minimum sales requirements, advertising expenditures and royalty payments. 40 In addition, Inter Parfums, S.A. began distributing Magic, Celine's existing fragrance line, on 1 January 2001. We expect to launch two new fragrance lines by the third quarter of this year. CHRISTIAN LACROIX In March 1999, we entered into an exclusive license agreement with the Christian Lacroix Company, a division of LVMH Moet Hennessy Louis Vuitton S.A., for the worldwide development, manufacture and distribution of perfumes. The license agreement has an 11 year term, and is subject to certain minimum sales requirements, advertising expenditures and royalty payments. 41 PART IV ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES, AND REPORTS ON FORM 8-K (a)(1) Financial Statements annexed hereto Page No. Independent Auditors' Reports F-1 Consolidated Balance Sheets as at December 31, 2000 and December 31, 1999 F-3 Consolidated Statements of Income for the Years ended December 31, 2000, December 31, 1999 and December 31, 1998 F-4 Consolidated Statements of Changes in Shareholders' Equity for the Years ended December 31, 2000, December 31, 1999 and December 1998 F-5 Consolidated Statements of Cash Flows for the Years ended December 31, 2000, December 31, 1999 and December 31, 1998 F-6 Notes to Financial Statements F-7 (a)(2) Financial Statement Schedules annexed hereto: Schedule II - Valuation and Qualifying Accounts and Reserves F-18 Schedules other than those referred to above have been omitted as the conditions requiring their filing are not present or the information has been presented elsewhere in the consolidated financial statements. 42 (a)(3) Exhibits The following documents heretofore filed with the Commission are incorporated herein by reference to the Company's Current Report on Form 8-K (date of event - January 18, 1990), as follows: EXHIBIT NO. AND DESCRIPTION 10.13 License Agreement between the Company and Jordache dated January 18, 1990 (as no. 10.1 therein). 10.15 Letter of Indemnification from Jordache to the Company dated January 18, 1990 (as no. 10.3 therein) 10.16 Letter Agreement from Jordache to the Company regarding foreign license rights dated January 18, 1990 (as no. 10.4 therein). The following document heretofore filed with the Commission is incorporated herein by reference to the Company's Current Report on Form 8-K (date of event - July 29, 1991), as follows: EXHIBIT NO. AND DESCRIPTION 10.24 Agreement and Plan of Reorganization dated July 29, 1991 among the Company, Jean Madar and Philippe Benacin (as No. 10.1 therein) The following document heretofore filed with the Commission is incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991: EXHIBIT NO. AND DESCRIPTION 10.25 Employment Agreement between the Company and Philippe Benacin dated July 29, 1991 The following documents heretofore filed with the Commission is incorporated by reference to the Company's Registration Statement on Form S-1 (No. 33-48811): EXHIBIT NO. AND DESCRIPTION 10.26 Lease for portion of 15th Floor, 551 Fifth Avenue, New York, New York 43 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, 1992: EXHIBIT NO. AND DESCRIPTION 4.10 Amendment to 1992 Stock Option Plan 4.11 1993 Stock Option Plan The following documents heretofore filed with the Commission are incorporated herein by reference to the Company's Current Report on Form 8-K (date of event - July 15, 1993), as follows: EXHIBIT NO. AND DESCRIPTION 10.30 License Agreement dated July 15, 1993, among Burberrys Limited, Inter Parfums, S.A. and Jean Philippe Fragrances, Inc.(1) 10.31 License Agreement dated May 7, 1993, between Jean-Charles Brosseau, S.A. and Inter Parfums, S.A. (original in French)(1) 10.32 License Agreement dated May 7, 1993, between Jean-Charles Brosseau, S.A. and Inter Parfums, S.A.(translation of French into English)(1) 10.33 Agreement dated July 14, 1993, between Alfin, Inc. and Inter Parfums, S.A.(1) 10.34 Agreement dated July 16, 1993 among Inter Parfums, S.A., Jean Philippe Fragrances, Inc., C&C Beauty Sales, Inc. and Parfico, Inc. 10.35 Distribution Agreement dated July 16, 1993 among Inter Parfums, S.A., Jean Philippe Fragrances, Inc. and Fragrance Marketing Group, Inc.(1) The following documents heretofore filed with the Commission are incorporated herein by reference to the Company's Current Report on Form 8-K (date of event - February 28, 1994), as follows: - --------------------- (1) Filed in excised form. 44 EXHIBIT NO. AND DESCRIPTION 10.36 Cession D'Elements Partiels de Fonds de Commerce between Inter Parfums, S.A. and Cosmetiques et Parfums de France-I.D., S.A. dated February 18, 1994 (re: Parfums Molyneux) 10.37 Cession D'Elements Partiels de Fonds de Commerce between Inter Parfums, S.A. and Cosmetiques et Parfums de France-I.D., S.A. dated February 18, 1994 (re: Parfums Weil) 10.38 Agreement (Acquisition) among Jean Philippe Fragrances, Inc., Inter Parfums, S.A. and Cosmetiques et Parfums de France, S.A. dated February 18, 1994 10.39 Noncompetition Agreement among Jean Philippe Fragrances, Inc., Inter Parfums, S.A. and Cosmetiques et Parfums de France-I.D., S.A. dated February 18, 1994 10.40 Commission Agreement among Jean Philippe Fragrances, Inc., Inter Parfums, S.A. and Sodipe S.A. dated February 18, 1994 10.41 Convention between Inter Parfums, S.A. and Cosmetiques et Parfums de France-I.D., S.A. dated February 18, 1994 (re inventory purchase) 10.42 Convention de Nantissement among Cosmetiques et Parfums de France, S.A., Cosmetiques et Parfums de France-I.D., S.A., Sodipe S.A., Jean Philippe Fragrances, Inc. and Inter Parfums, S.A. dated February 18, 1994 (re security agreement) 10.43 Convention among Cosmetiques et Parfums de France-I.D., S.A., Cosmetiques et Parfums de France, S.A., Jean Philippe Fragrances, Inc. and Inter Parfums, S.A. and Sodipe S.A. dated February 18, 1994 (re French regulatory requirements) 10.44 Acquisition Agreement among Jean Philippe Fragrances, Inc., Revlon Consumer Products Corporation and Revlon Suisse, S.A. dated March 2, 1994 The following documents heretofore filed with the Commission are incorporated herein by reference to the Company's Form 8 Amendment no. 1 (dated March 14, 1994) to the Current Report on Form 8-K (date of event - February 28, 1994), as follows: EXHIBIT NO. AND DESCRIPTION 10.46. English translation of exhibit no. 10.36, Cession D'Elements Partiels de Fonds de Commerce between Inter Parfums, S.A. and Cosmetiques et Parfums de France-I.D., S.A. dated February 18, 1994 (re: Parfums Molyneux) 10.47. English translation of exhibit no. 10.37, Cession D'Elements Partiels de Fonds de Commerce between Inter Parfums, S.A. and Cosmetiques et Parfums de France-I.D., S.A. dated February 18, 1994 (re: Parfums Weil) 45 10.48. English translation of exhibit no. 10.41, Convention between Inter Parfums, S.A. and Cosmetiques et Parfums de France-I.D., S.A. dated February 18, 1994 (re inventory purchase) 10.49. English translation of exhibit no. 10.42, Convention de Nantissement among Cosmetiques et Parfums de France, S.A., Cosmetiques et Parfums de France-I.D., S.A., Sodipe S.A., Jean Philippe Fragrances, Inc. and Inter Parfums, S.A. dated February 18, 1994 (re security agreement) The following document heretofore filed with the Commission is incorporated herein by reference to the Company's Form 8 Amendment no. 2 (dated March 21, 1994) to the Current Report on Form 8-K (date of event - February 28, 1994), as follows: EXHIBIT NO. AND DESCRIPTION 10.50. English translation of exhibit no. 10.43, Convention among Cosmetiques et Parfums de France-I.D., S.A., Cosmetiques et Parfums de France, S.A., Jean Philippe Fragrances, Inc. and Inter Parfums, S.A. and Sodipe S.A. dated February 18, 1994 (re French regulatory requirements) 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, 1993: EXHIBIT NO. AND DESCRIPTION 3.3 Articles of Incorporation of Inter Parfums Holding, S.A. 3.3.1 English Translation of Exhibit no. 3.3, Articles of Incorporation of Inter Parfums Holding, S.A. 3.4 Articles of Incorporation of Inter Parfums, S.A. 3.4.1 English Translation of Exhibit no. 3.4, Articles of Incorporation of Inter Parfums, S.A. 4.15 1994 Nonemployee Director Stock Option Plan 10.51 Traite D'Apport Partiel D'Actif dated July 30, 1993 (Reorganization Agreement between Inter Parfums, S.A. and Selective Industrie, S.A.) 10.51.1 English translation of Exhibit no. 10.51, Traite D'Apport Partiel D'Actif dated July 30, 1993 (Reorganization Agreement between Inter Parfums, S.A. and Selective Industrie, S.A.) 46 10.52 Lease for portion of 4, Rond Point Des Champs Des Elysees dated September 30, 1993 10.52.1 English translation of Exhibit no. 10.52, Lease for portion of 4, Rond Point Des Champs Des Elysees dated September 30, 1993 10.53 Lease for portion of 4, Rond Point Des Champs Des Elysees dated March 2, 1994 10.53.1 English translation of Exhibit no. 10.53, Lease for portion of 4, Rond Point Des Champs Des Elysees dated March 2, 1994 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, 1994: 4.16 1994 Nonemployee Director Supplemental Stock Option Plan (Listed as no. 4.15 therein) 10.59 Modification of Lease Agreement dated June 17, 1994 between Metropolitan Life Insurance Company and Jean Philippe Fragrances, 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, 1995: EXHIBIT NO. AND DESCRIPTION 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 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, 1996: EXHIBIT NO. AND DESCRIPTION 10.65 Asset Repurchase Agreement between Carson, Inc. and Jean Philippe Fragrances, Inc. dated March 27, 1997 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, 1997: 47 EXHIBIT NO. AND DESCRIPTION 10.67 Second Modification of Lease made as of the 30th day of April, 1997 between Metropolitan Life Insurance Company as landlord and Jean Philippe Fragrances, Inc. as tenant. 10.68 Amendment I to License Agreement dated September 3, 1997 between Jordache Enterprises, Inc. as Licensor and Jean Philippe Fragrances, Inc. as Licensee. 10.69 Exclusive Licence Agreement dated June 20, 1997 between S.T. Dupont, S.A. and Inter Parfums (English translation, excised version) 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, 1998: EXHIBIT NO. AND DESCRIPTION 3.2 Amended and Restated By-laws 4.17 1997 Nonemployee Director Stock Option Plan 4.18 1999 Stock Option Plan 10.70 Licence Agreement among Paul Smith Limited, Inter Parfums, S.A. and Jean-Philippe Fragrances, Inc. (excised version) 10.71 Licence Agreement between Christian LaCroix, a division of Group LVMH and Inter Parfums, S.A (English translation, excised version) The following documents heretofore filed with the Commission are incorporated by reference to the Company's current report on Form 8-K (date of event - November 22, 1999): EXHIBIT NO. AND DESCRIPTION 4.2 Shareholder's Agreement among LV Capital USA, Inc., Jean Mader and Philippe Benacin dated November 22, 1999. 99.1 Stock Purchase Agreement among LV Capital USA, Inc., Jean Madar and Philippe Benacin dated November 22, 1999. 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, 1999: 48 EXHIBIT NO. AND DESCRIPTION 3.1.4 Amendment to the Company's Restated Certificate of Incorporation, as amended, dated July 13, 1999 (listed therein as 3.1(d)) 10.73 Burberry Confidential Treatment Agreement dated 8 February, 2000 10.74 Burberry Licence Amendment dated February, 2000 (filed in excised form) The following documents heretofore filed with the Commission are incorporated by reference to the Company's current report on Form 8-K/A no. 1 (date of event - 18 May 2000): 10.76 Celine License Agreement [in French]- excised. 10.76.1 Celine License Agreement [English translation]- excised. The following document heretofore filed with the Commission is incorporated by reference to the Company's current report on Form 8-K/A no. 1 (date of event - 23 June 2000): 10.77 Sublicense Agreement for FUBU Fragrances, dated June 22, 2000 - excised. The following document heretofore filed with the Commission is incorporated by reference to the Company's quarterly report on Form 10-Q for the period ending 30 June 2000: 3.1.5 Amendment to the Company's Restated Certificate of Incorporation, as amended, dated 12 July 2000 (listed therein as 3.1(e)) 49 The following documents are filed herewith: EXHIBIT NO. AND DESCRIPTION 3.1.1 Restated Certificate of Incorporation dated September 3, 1987 3.1.2 Amendment to the Company's Restated Certificate of Incorporation dated July 31, 1992 3.1.3 Amendment to the Company's Restated Certificate of Incorporation dated July 9, 1993 4.19 2000 Nonemployee Director Stock Option Plan 10.78 Revolving Credit Agreement dated June 1, 2000 between HSBC Bank USA and Inter Parfums, Inc. 10.79 Bail [Lease] for 18 avenue Franklin Roosevelt, Paris France [French Original] 10.79.1 Bail [Lease] for 18 avenue Franklin Roosevelt, Paris France [English Translation] 10.80 Credit Lyonnais Letter Agreement dated 22 March 2001 - [French Original] 10.80.1 Credit Lyonnais Letter Agreement dated 22 March 2001 - [English Translation] 10.81 Barclays Bank Letter Agreement dated 4 June 1998 - [French Original] 10.81.1 Barclays Bank Letter Agreement dated 4 June 1998 - [English Translation] 10.82 Banque OBC Odier Bungener Courvoisier Letter Agreement one dated 31 July 1998 - [French Original] 10.82.1 Banque OBC Odier Bungener Courvoisier Letter Agreement one dated 31 July 1998 - [English Translation] 10.83 Banque OBC Odier Bungener Courvoisier Letter Agreement two dated 31 July 1998 - [French Original] 10.83.1 Banque OBC Odier Bungener Courvoisier Letter Agreement two dated 31 July 1998 - [English Translation] 10.84 Banque Worms Letter Agreement dated 22 December 1997 - [French Original] 10.84.1 Banque Worms Letter Agreement dated 22 December 1997 - [English Translation] 10.85 Credit Agricole D'Lile de France Letter Agreement dated 19 June 1996 - [French Original] 10.85.1 Credit Agricole D'Lile de France Letter Agreement dated 19 June 1996 - [English Translation] 21 List of Subsidiaries (b) Reports on Form 8-K: None. 50 INDEPENDENT AUDITORS' REPORT Board of Directors and Shareholders Inter Parfums, Inc. and Subsidiaries New York, New York We have audited the accompanying consolidated balance sheets of Inter Parfums, Inc. and subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of income, changes in shareholders' equity and cash flows for each of the years in the three-year period ended December 31, 2000. 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 did not audit the financial statements of Inter Parfums Holdings, S.A. and subsidiaries, consolidated subsidiaries of the Company, which statements reflect total assets and net sales constituting 68% and 69% for 2000 and 66% and 69% for 1999 and net sales constituting 66% for 1998. Those statements were audited by other auditors whose reports have been furnished to us, and our opinion, insofar as it relates to the amounts for Inter Parfums Holdings, S.A. and subsidiaries, is based solely on the reports of the other auditors. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. 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 and the reports of the other auditors provide a reasonable basis for our opinion. In our opinion, based on our audits and the reports of the other auditors, the financial statements enumerated above present fairly, in all material respects, the consolidated financial position of Inter Parfums, Inc. and subsidiaries as of December 31, 2000 and 1999, and the consolidated results of their operations and their consolidated cash flows for each of the years in the three-year period ended December 31, 2000 in conformity with accounting principles generally accepted in the United States of America. Our audits referred to above included Schedule II for each of the years in the three-year period ended December 31, 2000. In our opinion, such schedule presents fairly the information set forth therein in accordance with the applicable accounting regulations of the Securities and Exchange Commission. Richard A. Eisner & Company, LLP New York, New York February 28, 2001 With respect to accounts for foreign subsidiaries March 19, 2001 F-1 INTER PARFUMS HOLDING, S.A. AND SUBSIDIARIES -------------------------------------------- INDEPENDENT AUDITORS' REPORT ---------------------------- We have audited the accompanying consolidated balance sheets of Inter Parfums Holding S.A. and subsidiaries as of December 31, 2000 and 1999, and the related consolidated statements of income, shareholders' equity, and cash flows for the year ended December 31, 2000, 1999 and 1998. These consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with generally accepted auditing standards in the 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 audit provides a reasonable basis for our opinion. In our opinion, the consolidated financial statements enumerated above present fairly, in all material respects, the financial position of Inter Parfums Holding S.A. and subsidiaries as of December 31, 2000 and 1999, and the results of their operations and their cash flows for the years ended December 31, 2000, 1999 and 1998 in conformity with accounting principles generally accepted in the United States. Paris La DeFense, March 19, 2001 Cabinet Cauvin, Angleys, Saint-Pierre International Rene Amirkhanian F-2 INTER PARFUMS, INC. AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (in thousands except share and per share data) DECEMBER 31, -------------------- 2000 1999 -------- -------- ASSETS Current assets: Cash and cash equivalents $ 27,599 $ 24,936 Marketable securities (Note B) 4,424 Accounts receivable, net of allowances of $2,067 and $2,095 in 2000 and 1999, respectively 30,844 26,033 Inventories (Notes A and C) 25,340 19,450 Receivables, other 497 875 Other 1,808 1,169 Deferred tax benefit (Note K) 435 858 -------- -------- Total current assets 86,523 77,745 Equipment and leasehold improvements, net (Notes A and D) 3,162 3,126 Other assets 347 508 Trademarks and licenses, net (Notes A, E and L) 4,539 5,844 -------- -------- $ 94,571 $ 87,223 ======== ======== LIABILITIES Current liabilities: Loans payable - banks (Note F) $ 2,542 $ 787 Accounts payable 18,224 18,449 Accrued expenses 6,961 4,351 Income taxes payable 1,108 768 -------- -------- Total current liabilities 28,835 24,355 -------- -------- Deferred tax liability (Note K) 684 988 -------- -------- Long-term debt (Note G) 1,417 1,531 -------- -------- Minority interest 8,574 7,988 -------- -------- Commitments and contingencies (Notes H and L) SHAREHOLDERS' EQUITY (Notes I and L) Preferred stock, $.001 par value; authorized 1,000,000 shares; none issued Common stock, $.001 par value; authorized 30,000,000 shares; outstanding 11,676,277 and 11,832,721 shares in 2000 and 1999, respectively 12 12 Additional paid-in capital 27,728 26,518 Retained earnings 58,669 52,080 Accumulated other comprehensive income (6,574) (4,290) Treasury stock, at cost 5,736,405 and 5,392,805 shares in 2000 and 1999, respectively (24,774) (21,959) -------- -------- Total shareholders' equity 55,061 52,361 -------- -------- $ 94,571 $ 87,223 ======== ======== SEE NOTES TO FINANCIAL STATEMENTS F-3 INTER PARFUMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (in thousands except share and per share data)
YEAR ENDED DECEMBER 31, -------------------------------------------- 2000 1999 1998 ------------ ------------ ------------ Net sales $ 101,582 $ 87,140 $ 89,388 Cost of sales 51,873 45,325 47,417 ------------ ------------ ------------ Gross margin 49,709 41,815 41,971 Selling, general and administrative 37,509 31,965 32,944 Litigation expense 556 ------------ ------------ ------------ Income from operations 11,644 9,850 9,027 ------------ ------------ ------------ Other charges (income): Interest 363 344 471 Loss on foreign currency 185 190 139 Interest income (1,065) (687) (788) Realized (gain) on sale of marketable securities (1,396) Loss on sale of stock of subsidiary 18 135 41 ------------ ------------ ------------ (1,895) (18) (137) ------------ ------------ ------------ Income before income taxes 13,539 9,868 9,164 Income taxes 5,631 3,978 3,598 ------------ ------------ ------------ Income before minority interest 7,908 5,890 5,566 Minority interest in net income of consolidated subsidiary 1,319 1,062 953 ------------ ------------ ------------ NET INCOME $ 6,589 $ 4,828 $ 4,613 ============ ============ ============ NET INCOME PER SHARE: BASIC $ 0.56 $ 0.43 $ 0.35 DILUTED $ 0.51 $ 0.40 $ 0.35 WEIGHTED AVERAGE NUMBER OF SHARES OUTSTANDING: BASIC 11,726,737 11,387,885 13,060,935 DILUTED 13,000,432 12,155,226 13,348,208
SEE NOTES TO FINANCIAL STATEMENTS F-4 INTER PARFUMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (in thousands except share data)
COMMON STOCK ADDITIONAL --------------------- PAID-IN RETAINED COMPREHENSIVE SHARES AMOUNT CAPITAL EARNINGS INCOME ------------ ------ ------------ ------------ ------------ BALANCE - JANUARY 1, 1998 13,294,171 $ 13 $ 20,682 $ 42,730 Comprehensive income: Net income 4,613 $ 4,613 Foreign currency translation adjustments 1,557 ------------ Total comprehensive income $ 6,170 ============ Shares issued upon exercise of stock options 11,250 1 44 Purchased treasury shares (611,250) (1) ------------ ----- ------------ ------------ BALANCE - DECEMBER 31, 1998 12,694,171 13 20,726 47,343 Comprehensive income: Net income 4,828 $ 4,828 Foreign currency translation adjustments (3,870) Unrealized gain on marketable securities 392 ------------ Total comprehensive income $ 1,350 ============ Shares issued upon exercise of stock options (including income tax benefit) 956,550 1 5,792 Purchased treasury shares (1,818,000) (2) Dividends paid (91) ------------ ----- ------------ ------------ BALANCE - DECEMBER 31, 1999 11,832,721 12 26,518 52,080 Comprehensive income: Net income 6,589 $ 6,589 Foreign currency translation adjustments (1,892) Reclassification adjustment for gains realized in net income (392) ------------ Total comprehensive income $ 4,305 ============ Shares issued upon exercise of stock options (including income tax benefit) 187,156 1,210 Purchased treasury shares (343,600) ------------ ----- ------------ ------------ BALANCE - DECEMBER 31, 2000 11,676,277 $ 12 $ 27,728 $ 58,669 ============ ===== ============ ============ ACCUMULATED OTHER COMPREHENSIVE TREASURY INCOME STOCK TOTAL ------------ ------------ ------------ $ (2,369) $ (10,862) $ 50,194 4,613 1,557 1,557 45 (2,727) (2,728) ------------ ------------ ------------ (812) (13,589) 53,681 4,828 (3,870) (3,870) 392 392 5,793 (8,370) (8,372) (91) ------------ ------------ ------------ (4,290) (21,959) 52,361 6,589 (1,892) (1,892) (392) (392) 1,210 (2,815) (2,815) ------------ ------------ ------------ $ (6,574) $ (24,774) $ 55,061 ============ ============ ============
SEE NOTES TO FINANCIAL STATEMENTS F-5 INTER PARFUMS, INC. AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)
YEAR ENDED DECEMBER 31, -------------------------------- 2000 1999 1998 -------- -------- -------- CASH FLOWS FROM OPERATING ACTIVITIES: Net income $ 6,589 $ 4,828 $ 4,613 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 2,362 2,415 1,401 Realized (gain) on sale of marketable securities (1,396) Loss on sale of stock of subsidiary 18 135 41 Minority interest in net income of consolidated subsidiary 1,319 1,062 953 Deferred tax (benefit) provision 476 (438) 165 Changes in: Accounts receivable (6,173) (886) (272) Inventories (6,872) 354 632 Other assets (252) (66) (144) Accounts payable and accrued expenses 3,753 6,873 (449) Income taxes payable 412 (1,719) 419 -------- -------- -------- Net cash provided by operating activities 236 12,558 7,359 -------- -------- -------- CASH FLOWS FROM INVESTING ACTIVITIES: Purchase of equipment and leasehold improvements (1,580) (1,407) (1,604) Cash portion of trademark and license acquisitions (337) (27) Purchase of marketable securities (3,671) (3,792) Proceeds from sale of marketable securities 8,325 -------- -------- -------- Net cash provided by (used in) investing activities 3,074 (5,536) (1,631) -------- -------- -------- CASH FLOWS FROM FINANCING ACTIVITIES: Increase (decrease) in loans payable - banks 1,788 (2,997) 888 Proceeds from issuance of long-term debt 1,624 Proceeds from sale of stock of subsidiary 67 214 60 Purchase of treasury stock (2,815) (8,371) (2,728) Proceeds from exercise of options and warrants 1,210 5,793 44 Dividends paid (135) (91) -------- -------- -------- Net cash provided by (used in) financing activities 115 (3,828) (1,736) -------- -------- -------- Effect of exchange rate changes on cash (762) (1,614) 642 -------- -------- -------- NET INCREASE IN CASH AND CASH EQUIVALENTS 2,663 1,580 4,634 Cash and cash equivalents - beginning of year 24,936 23,356 18,722 -------- -------- -------- CASH AND CASH EQUIVALENTS - END OF YEAR $ 27,599 $ 24,936 $ 23,356 ======== ======== ======== SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION: Cash paid for: Interest $ 404 $ 330 $ 560 Income taxes $ 2,683 $ 4,331 $ 3,028
SEE NOTES TO FINANCIAL STATEMENTS F-6 INTER PARFUMS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000 AND 1999 (in thousands except share and per share data) NOTE A - THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES [1] BUSINESS OF THE COMPANY: The Company is a manufacturer and distributor of prestige brand name fragrances and mass market fragrances and cosmetics. [2] BASIS OF PREPARATION: The consolidated financial statements include the accounts of Inter Parfums, Inc. and its domestic and foreign subsidiaries (the "Company") including a subsidiary whose stock is publicly traded in France. All material intercompany balances and transactions have been eliminated. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. [3] FOREIGN CURRENCY TRANSLATION: For foreign subsidiaries that operate 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. In instances where the financial statements of foreign entities are remeasured into their functional currency (U.S. dollars), the remeasurement adjustment is recorded in operations. [4] CASH EQUIVALENTS: All highly liquid investments purchased with a maturity of three months or less are considered to be cash equivalents. [5] MARKETABLE SECURITIES: All marketable securities are classified as available-for-sale and are available to support current operations or to take advantage of other investment opportunities. These securities are stated at fair value based upon market quotes. Unrealized holding gains and losses, net of deferred taxes, are computed on the basis of specific identification and are reported as a separate component of shareholders' equity. Realized gains and losses, and decreases in value, judged to be other than temporary, are included in other charges (income). The cost of securities sold is based on the specific identification method and interest and dividend income is recognized when earned. [6] FINANCIAL INSTRUMENTS: The carrying amount of 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 and long-term debt approximates fair value as the interest rates on the Company's indebtedness approximate current market rates. F-7 INTER PARFUMS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000 AND 1999 (in thousands except share and per share data) NOTE A - THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) [6] FINANCIAL INSTRUMENTS: (CONTINUED) The Company occasionally enters into foreign currency forward exchange contracts to manage exposure related to certain foreign currency commitments. Gains and losses on foreign currency transaction hedges are recognized in income and offset the foreign exchange gains and losses on the underlying transactions. Gains and losses of foreign currency firm commitment hedges are deferred and included in the basis of the transactions underlying the commitment. At December 31, 2000, the Company had foreign currency contracts in the form of forward exchange contracts in the amount of approximately $9,000. The currencies included in these contracts are principally the United States dollar and the British pound. [7] EURO CONVERSION: In January 1999, certain member countries of the European Union established permanent fixed rates between their existing currencies and the European Union's common currency (the "Euro"). The transition period for the introduction of the Euro is scheduled to phase in over a period ending January 1, 2002. The introduction of the Euro and the phasing out of the other currencies should not have a material impact on the presentation of data in the Company's consolidated financial statements. [8] INVENTORIES: Inventories are stated at the lower of cost (first-in, first-out) or market. [9] 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 and the declining-balance method over the estimated useful asset 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. [10] TRADEMARKS AND LICENSES: Trademarks are stated at cost and are amortized by the straight-line method over 20 years. The cost of licenses acquired is being amortized by the straight-line method over the term of the respective licenses. The Company reviews trademarks and licenses for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable. [11] REVENUE RECOGNITION: Revenue is recognized upon shipment of merchandise as sales are final upon shipment to customers. The Company, at its discretion, permits limited returns of merchandise and establishes allowances for estimated returns based upon historic trends. [12] ISSUANCE OF COMMON STOCK OF 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 sold is reflected as a gain or loss in the consolidated statements of income. F-8 INTER PARFUMS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000 AND 1999 (in thousands except share and per share data) NOTE A - THE COMPANY AND ITS SIGNIFICANT ACCOUNTING POLICIES (CONTINUED) [13] STOCK-BASED COMPENSATION: The provisions of Statement of Financial Accounting Standards No. 123, "Accounting for Stock-Based Compensation" ("SFAS No. 123") allow companies to either expense the estimated fair value of employee stock options or to follow the intrinsic value method set forth in APB Opinion 25, "Accounting for Stock Issued to Employees" ("APB 25") but to disclose the pro forma effects on net income had the fair value of the option been expensed. The Company has elected to continue to apply APB 25 in accounting for its stock option incentive plans. [14] EARNINGS PER SHARE: Basic earnings per share are computed using the weighted average number of shares outstanding during each year. Diluted earnings per share are computed using the weighted average number of shares outstanding during each year, plus the incremental shares outstanding assuming the exercise of dilutive stock options. [15] RECENT ACCOUNTING PRONOUNCEMENTS: The Financial Accounting Standards Board has issued a new standard. Statement of Financial Accounting Standards No. 133 ("SFAS 133"), accounting for Derivative Instruments and Hedging Activities, which becomes effective for years beginning after June 15, 2000, requires that every derivative instrument be recorded in the balance sheet as either an asset or liability measured at its fair value. The statement requires that changes in the derivative's fair value be recognized in earnings unless specific hedge accounting criteria are met. The Company believes that the effect of adoption of SFAS 133 will not be material to the Company's financial statements. NOTE B - MARKETABLE SECURITIES Marketable securities represent equity securities classified as available-for-sale. At December 31, 1999, such securities had a cost of $3,792 and a gross unrealized gain of $850 ($392 net of taxes of $341 and minority interest of $117), respectively. During the year ended December 31, 2000 all marketable securities were sold and a gain of $1,396 was realized. For the year ended December 31, 1999, there were no sales of marketable securities and, therefore, no gains or losses were realized. NOTE C - INVENTORIES DECEMBER 31, ----------------- 2000 1999 ------- ------- Raw materials and component parts $ 8,775 $ 8,239 Finished goods 16,565 11,211 ------- ------- $25,340 $19,450 ======= ======= F-9 INTER PARFUMS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000 AND 1999 (in thousands except share and per share data) NOTE D - EQUIPMENT AND LEASEHOLD IMPROVEMENTS DECEMBER 31, --------------- 2000 1999 ------ ------ Equipment $7,998 $6,667 Leasehold improvements 382 383 ------ ------ 8,380 7,050 Less accumulated depreciation and amortization 5,218 3,924 ------ ------ $3,162 $3,126 ====== ====== NOTE E - TRADEMARKS AND LICENSES DECEMBER 31, --------------- 2000 1999 ------ ------ Trademarks $6,628 $7,013 Licenses 2,577 2,786 ------ ------ 9,205 9,799 Less accumulated amortization 4,666 3,955 ------ ------ $4,539 $5,844 ====== ====== NOTE F - LOANS PAYABLE - BANKS Loans payable-bank represent borrowings by the Company's foreign subsidiaries under several bank overdraft facilities bearing interest at 0.6% above the EURIBOR rate (4.9% and 3.3% at December 31, 2000 and 1999, respectively). Outstanding amounts totaled $2,542 and $787 at December 31, 2000 and 1999, respectively. NOTE G - LONG-TERM DEBT As of December 31, 2000 and 1999, long-term debt represents borrowings by a foreign subsidiary of $1,417 and $1,531, respectively, due in 2004. The debt agreement requires interest payable monthly at 4.56%, however, the Company entered into a Swap agreement with the bank effectively converting the interest to a variable rate equal to the EURIBOR rate (4.9% at December 31, 2000). F-10 INTER PARFUMS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000 AND 1999 (in thousands except share and per share data) NOTE H - COMMITMENTS [1] LEASES: The Company leases its office and warehouse facilities under operating leases expiring through 2004. Rental expense amounted to $1,263 in 2000, $1,159 in 1999 and $1,167 in 1998. Minimum future rental payments are as follows: 2001 $ 1,254 2002 1,133 2003 739 2004 181 ---------- $ 3,307 ========== [2] LICENSE AGREEMENTS: The Company is obligated under a number of license agreements for the use of trademarks and rights in connection with the manufacture and sale of its products. In connection therewith, the Company is subject to certain minimum annual royalties as follows: 2001 $ 1,991 2002 2,362 2003 2,843 2004 4,091 2005 4,366 Thereafter 13,454 ---------- $ 29,107 ========== NOTE I - SHAREHOLDERS' EQUITY [1] COMMON STOCK SPLIT: On April 27, 2000, the Company's Board of Directors authorized a three-for-two stock split effected in the form of a 50% stock dividend distributed on June 15, 2000 to shareholders of record as of June 1, 2000. As a result of the stock split, the accompanying consolidated financial statements reflect an increase in the number of outstanding shares of common stock and the transfer of the par value of these additional shares from paid-in capital. All share and per share amounts have been restated to reflect the retroactive effect of the stock split. [2] ISSUANCE OF COMMON STOCK OF SUBSIDIARY: During 1999, holders of the remaining $200 of convertible debt, originally issued in 1994 by Inter Parfums, S.A., a subsidiary of the Company, converted their investment into 18,309 shares of capital stock of Inter Parfums, S.A. and employees exercising stock options were issued 34,041 shares of capital stock of Inter Parfums, S.A. As a result of such issuances, the Company's percentage ownership of Inter Parfums, S.A. decreased from approximately 79% to 78% as of December 31, 1999. During 2000, an additional 5,918 shares of capital stock of Inter Parfums, S.A. were issued as a result of employees exercising stock options. At December 31, 2000, the Company's percentage ownership of Inter Parfums, S.A. was approximately 78%. F-11 INTER PARFUMS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000 AND 1999 (in thousands except share and per share data) NOTE I - SHAREHOLDERS' EQUITY (CONTINUED) [2] ISSUANCE OF COMMON STOCK OF SUBSIDIARY: (CONTINUED) The difference between the Company's share of the issuance or conversion proceeds and the carrying amount of the portion of the Company's investment sold is reflected as a gain or loss in the consolidated statements of income. Deferred taxes have not been provided because application of available tax savings strategies would eliminate taxes on this transaction. [3] STOCK OPTION PLANS: The Company maintains a stock option program for key employees, executives and directors. The plans provide for the granting of both nonqualified and incentive options. Options granted under the plans typically vest immediately and are exercisable for a period of five to six years. The Company applies APB 25 in accounting for its stock option incentive plans and accordingly recognizes compensation expense for the difference between the fair value of the underlying common stock and the grant price of the option at the date of grant. Pro forma information regarding net income and earnings per share is required by SFAS No. 123. Had compensation cost for the Company's stock option plans been determined based upon the fair value at the grant date, consistent with the methodology prescribed under SFAS No. 123, the Company's net income in 2000, 1999 and 1998 would have been approximately $6.5, $4.2 and $4.3 million, or $0.50, $0.34 and $0.32 per diluted share, respectively. The weighted average fair values of the options granted during 2000, 1999 and 1998 are estimated as $1.93, $1.52 and $1.64 per share, respectively, on the date of grant using the Black-Scholes option pricing model with the following assumptions: dividend yield 0%, volatility of 40%, risk-free interest rates at the date of grant, 5.88% in 2000, 5.18% in 1999 and 5.40% in 1998, and an expected life of the option of two years. A summary of the Company's stock option activity, and related information follows:
YEAR ENDED DECEMBER 31, ------------------------------------------------------------------------------ 2000 1999 1998 ---------------------- ---------------------- ---------------------- WEIGHTED WEIGHTED WEIGHTED AVERAGE AVERAGE AVERAGE EXERCISE EXERCISE EXERCISE OPTIONS PRICE OPTIONS PRICE OPTIONS PRICE --------- ----- --------- ----- --------- ----- Shares under option - beginning of year 2,651,325 $4.09 2,638,800 $4.37 2,513,700 $4.39 Options granted 113,875 7.12 1,099,500 3.85 562,575 4.53 Options exercised (187,125) 5.38 (956,550) 4.45 (11,250) 3.89 Options cancelled (11,125) 5.61 (130,425) 5.06 (426,225) 4.75 --------- --------- --------- Shares under options - end of year 2,566,950 4.12 2,651,325 4.09 2,638,800 4.37 ========= ========= =========
Exercise prices for options outstanding as of December 31, 2000 ranged from $3.79 to $8.69. The weighted average remaining contractual life of those options is three and a half years. At December 31, 2000 options for 627,336 shares were available for future grant under the plans. F-12 INTER PARFUMS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000 AND 1999 (in thousands except share and per share data) NOTE I - SHAREHOLDERS' EQUITY (CONTINUED) [4] TREASURY STOCK: The Board of Directors of the Company has authorized a stock repurchase program whereby the Company purchases shares of its stock to be held in treasury. As of December 31, 2000, the Company is authorized to purchase an additional 474,600 treasury shares. NOTE J - GEOGRAPHIC AREAS Information on the Company's operations by geographical areas is as follows: YEAR ENDED DECEMBER 31, ----------------------------------- 2000 1999 1998 --------- --------- --------- Net sales: United States $ 31,268 $ 26,826 $ 30,068 Europe 70,434 60,414 58,875 South America 811 Eliminations (120) (100) (366) --------- --------- --------- $ 101,582 $ 87,140 $ 89,388 ========= ========= ========= Net income: United States $ 1,977 $ 1,140 $ 1,503 Europe 4,616 3,788 3,609 South America (4) (100) (530) Eliminations 31 --------- --------- --------- $ 6,589 $ 4,828 $ 4,613 ========= ========= ========= Depreciation and amortization expense: United States $ 632 $ 595 $ 531 Europe 1,730 1,819 864 South America 1 6 --------- --------- --------- $ 2,362 $ 2,415 $ 1,401 ========= ========= ========= Interest income: United States $ 647 $ 408 $ 376 Europe 418 279 409 South America 3 --------- --------- --------- $ 1,065 $ 687 $ 788 ========= ========= ========= F-13 INTER PARFUMS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000 AND 1999 (in thousands except share and per share data) NOTE J - GEOGRAPHIC AREAS (CONTINUED) YEAR ENDED DECEMBER 31, -------------------------------- 2000 1999 1998 -------- -------- -------- Interest expense: United States $ 38 $ 59 $ 50 Europe 325 274 377 South America 11 44 -------- -------- -------- $ 363 $ 344 $ 471 ======== ======== ======== Total assets: United States $ 39,455 $ 39,417 $ 41,330 Europe 64,455 57,677 55,893 South America 16 619 Eliminations (9,028) (9,887) (10,103) -------- -------- -------- $ 94,882 $ 87,223 $ 87,739 ======== ======== ======== Additions to long-lived assets: United States $ 86 $ 101 $ 455 Europe 1,494 1,643 1,165 South America 11 -------- -------- -------- $ 1,580 $ 1,744 $ 1,631 ======== ======== ======== Total long-lived assets: United States $ 1,973 $ 2,519 $ 3,012 Europe 5,728 6,451 7,686 South America 1 -------- -------- -------- $ 7,701 $ 8,970 $ 10,699 ======== ======== ======== United States export sales were approximately $11,000, $9,200 and $10,000 for the years ended December 31, 2000, 1999 and 1998, respectively. Consolidated net sales for the year ended December 31, 2000 by region is as follows: North America 32% Western Europe 30% Central and South America 12% Middle East 9% Asia 9% Eastern Europe 7% Other 1% F-14 INTER PARFUMS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000 AND 1999 (in thousands except share and per share data) NOTE K - INCOME TAXES The components of income before income taxes consist of the following: YEAR ENDED DECEMBER 31, --------------------------------- 2000 1999 1998 ------- ------- ------- U.S. operations $ 3,096 $ 1,750 $ 2,304 Foreign operations 10,443 8,118 6,806 Eliminations 54 ------- ------- ------- $13,539 $ 9,868 $ 9,164 ======= ======= ======= The provision for current and deferred income tax expense (benefit) consists of the following: YEAR ENDED DECEMBER 31, --------------------------------- 2000 1999 1998 ------- ------- ------- Current: Federal $ 796 $ 311 $ 344 State and local 170 142 105 Foreign 4,189 3,963 2,984 ------- ------- ------- 5,155 4,416 3,433 ------- ------- ------- Deferred: Federal 172 142 283 State and local (19) 16 70 Foreign 323 (596) (188) ------- ------- ------- 476 (438) 165 ------- ------- ------- Total income tax expense $ 5,631 $ 3,978 $ 3,598 ======= ======= ======= Deferred taxes are provided principally for reserves, and certain other expenses that are recognized in different years for financial reporting and income tax purposes. At December 31, 2000, the deferred tax assets consist of approximately $564 relating to accounts receivable and inventory writedowns which are not currently deductible for tax purposes, foreign net operating loss carryforwards and the difference between the book basis and tax basis of fixed assets. At December 31, 2000, the deferred tax liability of $684 relates primarily to the difference between the book basis and tax basis of intangible assets and certain foreign production equipment. The Company has provided a valuation allowance of $129, representing the full amount of the deferred tax assets arising from foreign net operating loss carryforwards. No allowance has been provided on the balance of the Company's deferred tax assets, as management believes that it is more likely than not that the asset will be realized in reduction of future taxable income. F-15 INTER PARFUMS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000 AND 1999 (in thousands except share and per share data) NOTE K - INCOME TAXES (CONTINUED) Differences between the United States federal statutory income tax rate and the effective income tax rate were as follows: YEAR ENDED DECEMBER 31, ----------------------- 2000 1999 1998 ----- ----- ----- Statutory rates 34.0% 34.0% 34.0% State and local taxes, net of federal benefit 0.7 1.1 1.3 Effect of foreign taxes in excess of U.S. statutory rates 6.9 5.2 4.0 ----- ----- ----- Effective rates 41.6% 40.3% 39.3% ===== ===== ===== NOTE L - OTHER MATTERS [1] As previously reported, Inter Parfums, S.A., the Company's majority owned French subsidiary, is a party to litigation with Jean Charles Brosseau, S.A. ("Brosseau"), the licensor of the Ombre Rose trademark. The licensor has claimed damages of approximately $7,000 and is seeking termination of the license agreement. In October 1999, Inter Parfums S.A. received notice of a judgment in favor of Brosseau, which awarded damages of approximately $600 to Brosseau, and which directed Inter Parfums, S.A. to turn over its license to Brosseau within six months. Inter Parfums, S.A. is appealing the judgment as it vigorously and categorically denies the claims of Brosseau. The payment of the judgment has been stayed, and Inter Parfums, S.A. was allowed to operate under the license agreement during the appeal process. In June 2000, the president of the Court of Appeal granted a petition filed by Brosseau regarding ongoing payments for royalties due to Brousseau. In the same interlocutory judgment, the president of the Court of Appeal rejected Inter Parfums, S.A.'s request for the appointment of a new judicial expert. Such request was made to refute the findings of the judicial expert originally appointed by the Commercial Court, which resulted in the $600 judgment against Inter Parfums, S.A. As a result of these further developments, Inter Parfums, S.A. and its special litigation counsel consider it likely that the judgment will be sustained and therefore, in June 2000, has taken a charge against earnings for $600, the full amount of the judgment. In February 2001, the Court of Appeal confirmed the Brosseau claim with respect to turning over the license. In addition, the Court named an expert to proceed with additional investigations and required Inter Parfums, S.A. to pay $142 as an advance for damages claimed by Brosseau. Inter Parfums, S.A. is continuing its appeal as it still denies the claims of Brosseau. Management does not believe that such litigation will have any further material adverse effect on the financial condition or operations of the Company. As of December 31, 2000 the Company has fully reserved the unamortized portion of the license agreement. F-16 INTER PARFUMS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000 AND 1999 (in thousands except share and per share data) NOTE L - OTHER MATTERS (CONTINUED) [2] Inter Parfums, S.A. is the subject of tax audits commenced by the French Tax Authorities. Assessments have been issued aggregating $2,300. Inter Parfums, S.A. is contesting these assessments. Management and its tax consultants believe they have sound arguments to support their position and that the majority of these assessments will be reversed, and therefore, will not have a material adverse effect on the financial condition or operations of the Company. The Company has reserves of approximately $760, which it presently believes will be its ultimate exposure. [3] On November 22, 1999, the Chief Executive Officer and the President of the Company entered into and closed a Stock Purchase Agreement with LV Capital, USA Inc. ("LV Capital"), a wholly-owned subsidiary of LVMH Moet Hennessy Louis Vuitton, S.A. ("LVMH"). In accordance with the terms of the Stock Purchase Agreement, LV Capital purchased an aggregate of 1,273,800 shares of Common Stock of the Company at $8.00 per share, as follows: 390,000 shares (inclusive of 75,000 shares acquired upon exercise of an outstanding stock option) from each of the Chief Executive Officer and the President of the Company, and an aggregate of 493,800 shares (inclusive of 318,300 shares issued upon exercise of outstanding stock options) from management and employees. As the result of such transaction, the Company received proceeds of approximately $4,200 as the result of the exercise of the outstanding stock options. In addition, in return for LV Capital becoming a strategic partner of the Company, LV Capital is to be granted the right to maintain its percentage ownership of the outstanding shares of Common Stock, by receiving an option to purchase shares of the Company's common stock for cash upon issuance of shares to any party other than LV Capital at the price paid by the purchaser, subject to certain exceptions such as the exercise of stock options previously granted and the grant of new stock options up to a certain limit. LVMH was also granted demand registration rights for all shares of common stock it holds. Finally, LV Capital has agreed to a standstill agreement, which includes a limitation on the amount of shares that LV Capital can hold equal to 25% of the outstanding shares of common stock of the Company. In March 1999 and May 2000, the Company entered into two Eleven Year License Agreements with Christian Lacroix Company and Celine S.A., divisions of LVMH, respectively. Both agreements have minimum sales and advertising requirements and require the Company to pay royalties as are customary in the industry. F-17 INTER PARFUMS, INC. AND SUBSIDIARIES NOTES TO FINANCIAL STATEMENTS DECEMBER 31, 2000 AND 1999 (in thousands except share and per share data) SCHEDULE II VALUATION AND QUALIFYING ACCOUNTS AND RESERVES (in thousands)
- ------------------------------------------------------------------------------------------------------------------------------------ COLUMN A COLUMN B COLUMN C COLUMN D COLUMN E - ------------------------------------------------------------------------------------------------------------------------------------ ADDITIONS ----------------------------- BALANCE (1) (2) ----------------------------- AT CHARGED TO BALANCE BEGINNING CHARGED TO OTHER AT OF COSTS AND ACCOUNTS - DEDUCTIONS - END OF DESCRIPTION PERIOD EXPENSES DESCRIBE DESCRIBE PERIOD - ------------------------------------------------------------------------------------------------------------------------------------ Year ended December 31, 2000: Allowances for sales returns and doubtful accounts $ 2,095 $669 $(119) (b) $ 578 (a) $ 2,067 ======= ==== ========== ======= ======= Year ended December 31, 1999: Allowances for sales returns and doubtful accounts $ 2,432 $988 $(243) (b) $ 1,082 (a) $ 2,095 ======= ==== ===== ======= ======= Year ended December 31, 1998: Allowances for sales returns and doubtful accounts $ 2,995 $1,597 $ 2,160 (a) $ 2,432 ======= ====== ======= =======
(a) Write off of bad debts and sales returns. (b) Foreign currency translation adjustment. SEE NOTES TO FINANCIAL STATEMENTS F-19 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: 23 March 2001 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 - -------------------------------------------------------------------------------------------------------------------- Chairman of the Board of Directors 23 March 2001 /s/ Jean Madar and Chief Executive Officer - ------------------------- Jean Madar - -------------------------------------------------------------------------------------------------------------------- Chief Financial and Accounting 23 March 2001 /s/ Russell Greenberg Officer and Director - ------------------------- Russell Greenberg - -------------------------------------------------------------------------------------------------------------------- /s/ Philippe Benacin Director 27 March 2001 - ------------------------- Philippe Benacin - -------------------------------------------------------------------------------------------------------------------- Director 21 March 2001 /s/ Francois Heilbronn - ------------------------- Francois Heilbronn - -------------------------------------------------------------------------------------------------------------------- Director 26 March 2001 /s/ Joseph A. Caccamo - ------------------------- Joseph A. Caccamo - -------------------------------------------------------------------------------------------------------------------- Director 21 March 2001 /s/ Jean Levy - ------------------------- Jean Levy - -------------------------------------------------------------------------------------------------------------------- Director 21 March 2001 /s/ Robert Bensoussan-Torres - ------------------------- Robert Bensoussan-Torres - -------------------------------------------------------------------------------------------------------------------- /s/ Daniel Piette Director 27 March 2001 - ------------------------ Daniel Piette - -------------------------------------------------------------------------------------------------------------------- /s/ Jean Cailliau Director 27 March 2001 - ------------------------ Jean Cailliau - -------------------------------------------------------------------------------------------------------------------- /s/ Philippe Santi Director 27 March 2001 - ---------------------- Philippe Santi - -------------------------------------------------------------------------------------------------------------------- Director __ March 2001 - ---------------------- Serge Rosinoer - --------------------------------------------------------------------------------------------------------------------
UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 EXHIBIT INDEX TO REPORT ON 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 31 December 2000 or // 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) The following documents heretofore filed with the Commission are incorporated herein by reference to the Company's Current Report on Form 8-K (date of event - January 18, 1990), as follows: EXHIBIT NO. AND DESCRIPTION 10.13 License Agreement between the Company and Jordache dated January 18, 1990 (as no. 10.1 therein). 10.15 Letter of Indemnification from Jordache to the Company dated January 18, 1990 (as no. 10.3 therein) 10.16 Letter Agreement from Jordache to the Company regarding foreign license rights dated January 18, 1990 (as no. 10.4 therein). The following document heretofore filed with the Commission is incorporated herein by reference to the Company's Current Report on Form 8-K (date of event - July 29, 1991), as follows: EXHIBIT NO. AND DESCRIPTION 10.24 Agreement and Plan of Reorganization dated July 29, 1991 among the Company, Jean Madar and Philippe Benacin (as No. 10.1 therein) The following document heretofore filed with the Commission is incorporated by reference to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 1991: Exhibit No. and Description 10.25 Employment Agreement between the Company and Philippe Benacin dated July 29, 1991 The following documents heretofore filed with the Commission is incorporated by reference to the Company's Registration Statement on Form S-1 (No. 33-48811): EXHIBIT NO. AND DESCRIPTION 10.26 Lease for portion of 15th Floor, 551 Fifth Avenue, New York, New York 2 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, 1992: EXHIBIT NO. AND DESCRIPTION 4.10 Amendment to 1992 Stock Option Plan 4.11 1993 Stock Option Plan The following documents heretofore filed with the Commission are incorporated herein by reference to the Company's Current Report on Form 8-K (date of event - July 15, 1993), as follows: Exhibit No. and Description 10.30 License Agreement dated July 15, 1993, among Burberrys Limited, Inter Parfums, S.A. and Jean Philippe Fragrances, Inc.(1) 10.31 License Agreement dated May 7, 1993, between Jean-Charles Brosseau, S.A. and Inter Parfums, S.A. (original in French)(1) 10.32 License Agreement dated May 7, 1993, between Jean-Charles Brosseau, S.A. and Inter Parfums, S.A.(translation of French into English)(1) 10.33 Agreement dated July 14, 1993, between Alfin, Inc. and Inter Parfums, S.A.1 10.34 Agreement dated July 16, 1993 among Inter Parfums, S.A., Jean Philippe Fragrances, Inc., C&C Beauty Sales, Inc. and Parfico, Inc. 10.35 Distribution Agreement dated July 16, 1993 among Inter Parfums, S.A., Jean Philippe Fragrances, Inc. and Fragrance Marketing Group, Inc.(1) The following documents heretofore filed with the Commission are incorporated herein by reference to the Company's Current Report on Form 8-K (date of event - February 28, 1994), as follows: EXHIBIT NO. AND DESCRIPTION 10.36 Cession D'Elements Partiels de Fonds de Commerce between Inter Parfums, S.A. and - ----------------- (1) Filed in excised form. 3 Cosmetiques et Parfums de France-I.D., S.A. dated February 18, 1994 (re: Parfums Molyneux) 10.37 Cession D'Elements Partiels de Fonds de Commerce between Inter Parfums, S.A. and Cosmetiques et Parfums de France-I.D., S.A. dated February 18, 1994 (re: Parfums Weil) 10.38 Agreement (Acquisition) among Jean Philippe Fragrances, Inc., Inter Parfums, S.A. and Cosmetiques et Parfums de France, S.A. dated February 18, 1994 10.39 Noncompetition Agreement among Jean Philippe Fragrances, Inc., Inter Parfums, S.A. and Cosmetiques et Parfums de France-I.D., S.A. dated February 18, 1994 10.40 Commission Agreement among Jean Philippe Fragrances, Inc., Inter Parfums, S.A. and Sodipe S.A. dated February 18, 1994 10.41 Convention between Inter Parfums, S.A. and Cosmetiques et Parfums de France-I.D., S.A. dated February 18, 1994 (re inventory purchase) 10.42 Convention de Nantissement among Cosmetiques et Parfums de France, S.A., Cosmetiques et Parfums de France-I.D., S.A., Sodipe S.A., Jean Philippe Fragrances, Inc. and Inter Parfums, S.A. dated February 18, 1994 (re security agreement) 10.43 Convention among Cosmetiques et Parfums de France-I.D., S.A., Cosmetiques et Parfums de France, S.A., Jean Philippe Fragrances, Inc. and Inter Parfums, S.A. and Sodipe S.A. dated February 18, 1994 (re French regulatory requirements) 10.44 Acquisition Agreement among Jean Philippe Fragrances, Inc., Revlon Consumer Products Corporation and Revlon Suisse, S.A. dated March 2, 1994 The following documents heretofore filed with the Commission are incorporated herein by reference to the Company's Form 8 Amendment no. 1 (dated March 14, 1994) to the Current Report on Form 8-K (date of event - February 28, 1994), as follows: EXHIBIT NO. AND DESCRIPTION 10.46. English translation of exhibit no. 10.36, Cession D'Elements Partiels de Fonds de Commerce between Inter Parfums, S.A. and Cosmetiques et Parfums de France-I.D., S.A. dated February 18, 1994 (re: Parfums Molyneux) 10.47. English translation of exhibit no. 10.37, Cession D'Elements Partiels de Fonds de Commerce between Inter Parfums, S.A. and Cosmetiques et Parfums de France-I.D., S.A. dated February 18, 1994 (re: Parfums Weil) 10.48. English translation of exhibit no. 10.41, Convention between Inter Parfums, S.A. and 4 Cosmetiques et Parfums de France-I.D., S.A. dated February 18, 1994 (re inventory purchase) 10.49. English translation of exhibit no. 10.42, Convention de Nantissement among Cosmetiques et Parfums de France, S.A., Cosmetiques et Parfums de France-I.D., S.A., Sodipe S.A., Jean Philippe Fragrances, Inc. and Inter Parfums, S.A. dated February 18, 1994 (re security agreement) The following document heretofore filed with the Commission is incorporated herein by reference to the Company's Form 8 Amendment no. 2 (dated March 21, 1994) to the Current Report on Form 8-K (date of event - February 28, 1994), as follows: EXHIBIT NO. AND DESCRIPTION 10.50. English translation of exhibit no. 10.43, Convention among Cosmetiques et Parfums de France-I.D., S.A., Cosmetiques et Parfums de France, S.A., Jean Philippe Fragrances, Inc. and Inter Parfums, S.A. and Sodipe S.A. dated February 18, 1994 (re French regulatory requirements) 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, 1993: EXHIBIT NO. AND DESCRIPTION 3.3 Articles of Incorporation of Inter Parfums Holding, S.A. 3.3.1 English Translation of Exhibit no. 3.3, Articles of Incorporation of Inter Parfums Holding, S.A. 3.4 Articles of Incorporation of Inter Parfums, S.A. 3.4.1 English Translation of Exhibit no. 3.4, Articles of Incorporation of Inter Parfums, S.A. 4.15 1994 Nonemployee Director Stock Option Plan 10.51 Traite D'Apport Partiel D'Actif dated July 30, 1993 (Reorganization Agreement between Inter Parfums, S.A. and Selective Industrie, S.A.) 10.51.1 English translation of Exhibit no. 10.51, Traite D'Apport Partiel D'Actif dated July 30, 1993 (Reorganization Agreement between Inter Parfums, S.A. and Selective Industrie, S.A.) 10.52 Lease for portion of 4, Rond Point Des Champs Des Elysees dated September 30, 1993 5 10.52.1 English translation of Exhibit no. 10.52, Lease for portion of 4, Rond Point Des Champs Des Elysees dated September 30, 1993 10.53 Lease for portion of 4, Rond Point Des Champs Des Elysees dated March 2, 1994 10.53.1 English translation of Exhibit no. 10.53, Lease for portion of 4, Rond Point Des Champs Des Elysees dated March 2, 1994 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, 1994: 4.16 1994 Nonemployee Director Supplemental Stock Option Plan (Listed as no. 4.15 therein) 10.59 Modification of Lease Agreement dated June 17, 1994 between Metropolitan Life Insurance Company and Jean Philippe Fragrances, 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, 1995: EXHIBIT NO. AND DESCRIPTION 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 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, 1996: EXHIBIT NO. AND DESCRIPTION 10.65 Asset Repurchase Agreement between Carson, Inc. and Jean Philippe Fragrances, Inc. dated March 27, 1997 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, 1997: 6 EXHIBIT NO. AND DESCRIPTION 10.67 Second Modification of Lease made as of the 30th day of April, 1997 between Metropolitan Life Insurance Company as landlord and Jean Philippe Fragrances, Inc. as tenant. 10.68 Amendment I to License Agreement dated September 3, 1997 between Jordache Enterprises, Inc. as Licensor and Jean Philippe Fragrances, Inc. as Licensee. 10.69 Exclusive Licence Agreement dated June 20, 1997 between S.T. Dupont, S.A. and Inter Parfums (English translation, excised version) 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, 1998: EXHIBIT NO. AND DESCRIPTION 3.2 Amended and Restated By-laws 4.17 1997 Nonemployee Director Stock Option Plan 4.18 1999 Stock Option Plan 10.70 Licence Agreement among Paul Smith Limited, Inter Parfums, S.A. and Jean-Philippe Fragrances, Inc. (excised version) 10.71 Licence Agreement between Christian LaCroix, a division of Group LVMH and Inter Parfums, S.A (English translation, excised version) The following documents heretofore filed with the Commission are incorporated by reference to the Company's current report on Form 8-K (date of event - November 22, 1999): Exhibit No. and Description 4.2 Shareholder's Agreement among LV Capital USA, Inc., Jean Mader and Philippe Benacin dated November 22, 1999. 99.1 Stock Purchase Agreement among LV Capital USA, Inc., Jean Madar and Philippe Benacin dated November 22, 1999. 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, 1999: 7 EXHIBIT NO. AND DESCRIPTION 3.1.4 Amendment to the Company's Restated Certificate of Incorporation, as amended, dated July 13, 1999 (listed therein as 3.1(d)) 10.73 Burberry Confidential Treatment Agreement dated 8 February, 2000 10.74 Burberry Licence Amendment dated February, 2000 (filed in excised form) The following documents heretofore filed with the Commission are incorporated by reference to the Company's current report on Form 8-K/A no. 1 (date of event - 18 May 2000): 10.76 Celine License Agreement [in French]- excised. 10.76.1 Celine License Agreement [English translation]- excised. The following document heretofore filed with the Commission is incorporated by reference to the Company's current report on Form 8-K/A no. 1 (date of event - 23 June 2000): 10.77 Sublicense Agreement for FUBU Fragrances, dated June 22, 2000 - excised. The following document heretofore filed with the Commission is incorporated by reference to the Company's quarterly report on Form 10-Q for the period ending 30 June 2000: 3.1.5 Amendment to the Company's Restated Certificate of Incorporation, as amended, dated 12 July 2000 (listed therein as 3.1(e)) 8 The following documents are filed herewith: Exhibit No. and Description 3.1.1 Restated Certificate of Incorporation dated September 3, 1987 3.1.2 Amendment to the Company's Restated Certificate of Incorporation dated July 31, 1992 3.1.3 Amendment to the Company's Restated Certificate of Incorporation dated July 9, 1993 4.19 2000 Nonemployee Director Stock Option Plan 10.78 Revolving Credit Agreement dated June 1, 2000 between HSBC Bank USA and Inter Parfums, Inc. 10.79 Bail [Lease] for 18 avenue Franklin Roosevelt, Paris France [French Original] 10.79.1 Bail [Lease] for 18 avenue Franklin Roosevelt, Paris France [English Translation] 10.80 Credit Lyonnais Letter Agreement dated 22 March 2001 - [French Original] 10.80.1 Credit Lyonnais Letter Agreement dated 22 March 2001 - [English Translation] 10.81 Barclays Bank Letter Agreement dated 4 June 1998 - [French Original] 10.81.1 Barclays Bank Letter Agreement dated 4 June 1998 - [English Translation] 10.82 Banque OBC Odier Bungener Courvoisier Letter Agreement one dated 31 July 1998 - [French Original] 10.82.1 Banque OBC Odier Bungener Courvoisier Letter Agreement one dated 31 July 1998 - [English Translation] 10.83 Banque OBC Odier Bungener Courvoisier Letter Agreement two dated 31 July 1998 - [French Original] 10.83.1 Banque OBC Odier Bungener Courvoisier Letter Agreement two dated 31 July 1998 - [English Translation] 10.84 Banque Worms Letter Agreement dated 22 December 1997 - [French Original] 10.84.1 Banque Worms Letter Agreement dated 22 December 1997 - [English Translation] 10.85 Credit Agricole D'Lile de France Letter Agreement dated 19 June 1996 - [French Original] 10.85.1 Credit Agricole D'Lile de France Letter Agreement dated 19 June 1996 - [English Translation] 21 List of Subsidiaries 9 EX-3.1.1 2 c20397_ex419.txt RESTATED CERTIFICATE OF INCORPORATION 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 EX-3.1.2 3 c20397_ex313.txt RESTATED CERTIFICATE 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 EX-3.1.3 4 c20397_ex312.txt CERTIFICATE OF AMENDMENT 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 EX-4.19 5 c20397_ex311.txt STOCK OPTION PLAN Exhibit 4.19 INTER PARFUMS, INC. 2000 NONEMPLOYEE DIRECTOR STOCK OPTION PLAN ********** 1. PURPOSE OF THE PLAN. The purpose of this 2000 Nonemployee Director Stock Option Plan (the "Plan") of Inter Parfums, Inc., a Delaware corporation (the "Corporation"), is to make available shares of the Common Stock, par value $.001 per share, of the Corporation (the "Common Stock") for purchase by directors of the Corporation who are not employees of the Corporation, or any parent or subsidiary thereof ("Nonemployee Directors"). Thus, the Plan, in addition to the Company's existing 1997 Nonemployee Director Stock Option Plan ("1997 Plan"), permits the Corporation to attract and retain the services of experienced and knowledgeable Nonemployee Directors for the benefit of the Corporation and its shareholders and to provide additional incentive for such Nonemployee Directors to continue to work for the best interests of the Corporation and its shareholders through continuing ownership of its Common Stock. 2. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Article 10, the total number of shares of Common Stock which may be subject to options under the Plan shall not exceed 30,000, whether authorized but unissued shares, or shares which shall have been purchased or acquired by the Corporation for this or any other purpose. Such shares are from time to time to be allotted for option and sale to Nonemployee Directors in accordance with the Plan. In the event any option granted under the Plan shall expire or terminate for any reason without having been exercised in full or shall cease for any reason to be exercisable in whole or in part, the shares not so purchased thereby shall again be available for the purposes of the Plan. 3. ADMINISTRATION OF THE PLAN. The Plan shall be self-executing. However, to the extent permitted herein, the Plan shall be administered by either the Board of Directors of the Corporation (the "Board") or a committee of two (2) or more Nonemployee Directors (the "Committee") of the Board appointed by the Board. The Board or the Committee shall, subject to the express provisions of the Plan, have the power to interpret the Plan; correct any defect, supply any omission or reconcile any inconsistency in the Plan; prescribe, amend and rescind rules and regulations relating to the Plan; and make all other determinations necessary or advisable for the administration of the Plan. The determination of the Board or the Committee on the matters referred to in this Article 3 shall be conclusive. 4. ELIGIBILITY; GRANTS. (a) Nonemployee Directors shall not include directors who are also employees of the Corporation or any parent or subsidiary thereof, but shall include directors of the Corporation who are providing services such as business, financial, legal or investment banking services, to, for, or on 1 behalf of the Corporation or any parent or subsidiary thereof, in return for remuneration, directly or indirectly through one or more entities. (b) Each individual who subsequent to 19 December 2000 becomes a Nonemployee Director, shall on the date of his initial election or appointment to the Board be granted an option to purchase 2,000 shares of Common Stock, in lieu of the initial option grants of 1,000 shares which such person is entitled to receive under the 1997 Plan and 1,000 shares under the prior 1994 Nonemployee Director Stock Option Plan (the "1994 Plan"). (c) Each Nonemployee Director other than Joseph A. Caccamo, shall be granted an option to purchase 1,000 shares of Common Stock commencing on the next February 1st, and each succeeding February 1st throughout the term of this Plan for so long as he is a Nonemployee Director. In lieu of grants of options to purchase 1,000 shares, Joseph A. Caccamo shall be granted options to purchase 4,000 shares hereunder for as long has he is a Nonemployee Director. Notwithstanding the foregoing, no option shall be granted on such February 1st grant date to any Nonemployee Director who first becomes a Nonemployee Director within six (6) months prior to such February 1st grant date. The grants referred to herein shall be in lieu of grants under the 1997 Plan and 1994 Plan. (d) If a sufficient number of shares of Common Stock reserved for issuance upon proper exercise of options to be granted to Nonemployee Directors on the February 1st grant date does not exist, then the aggregate remaining number of shares shall be prorated equally among options to be granted to all Nonemployee Directors at such February 1st grant date, and options shall be granted to purchase such reduced number of shares. Notwithstanding the foregoing, if a sufficient number of shares of Common Stock reserved for issuance upon proper exercise of options to be granted to Nonemployee Directors on the February 1st grant date does not exist, then options shall be granted under the 1997 Plan or the 1994 Plan in order to satisfy such deficiency, to the extent available. 5. OPTION PRICE; FAIR MARKET VALUE. (a) The price at which shares of the Common Stock may be purchased pursuant to options granted under the Plan shall be equal to one hundred percent (100%) of the fair market value of the Common Stock on the date an option is granted. (b) The fair market value of the Common stock on any day shall be (a) if the principal market for the Common Stock is a national securities exchange, the average between the high and low sales prices of the Common Stock on such day as reported by such exchange or on a consolidated tape reflecting transactions on such exchange; (b) if the principal market for the Common Stock is not a national securities exchange and the Common Stock is quoted on The Nasdaq Stock Market ("NASDAQ") or The Over The Counter Bulletin Board (the "Bulletin Board"), and (i) if actual sales price information is available with respect to the Common Stock, then the average between the high and low sales prices of the Common Stock on such day on NASDAQ or the Bulletin Board, or (ii) if such information is not available, then the average between the highest bid and lowest asked prices 2 for the Common Stock on such day on NASDAQ or the Bulletin Board; or (c) if the principal market for the Common Stock is not a national securities exchange and the Common Stock is not quoted on NASDAQ or the Bulletin Board, then the average between the highest bid and lowest asked prices for the Common Stock on such day as reported by National Quotation Bureau, Incorporated or a comparable service; provided, that if clauses (a), (b) and (c) of this paragraph are all inapplicable, or if no trades have been made or no quotes are available for such day, then the fair market value of the Common Stock shall be determined by the Committee by any method consistent with applicable regulations adopted by the Treasury Department relating to stock options. The determination of the Board or the Committee shall be conclusive in determining the fair market value of the stock. 6. TERM OF EACH OPTION. The term of each option shall be five (5) years or such shorter period as is prescribed in Article 9 hereof. 7. EXERCISE OF OPTIONS. (a) Subject to the provisions of Articles 9 and 14, options granted hereunder shall be exercisable immediately; provided, that options shall not be exercisable at any time in an amount less than 100 shares (or the remaining shares then covered by and purchasable under the option if less than 100 shares), or for a fraction of a share. (b) The purchase price of the shares as to which an option shall be exercised shall be paid in full at the time of exercise in cash, by certified check or wire transfer of funds through the Federal Reserve System. 8. NON-TRANSFERABILITY OF OPTIONS. No option granted under the Plan shall be transferable otherwise than by will or by the laws of descent and distribution, or pursuant to a qualified domestic relations order as defined by the Internal Revenue Code, Title I of the Employee Retirement Income Security Act and the rules thereunder, and an option may be exercised, during the lifetime of the holder thereof, only by him. 9. TERMINATION OF SERVICES ON THE BOARD OF DIRECTORS. (a) If a Nonemployee Director to whom an option has been granted under the Plan shall cease to serve on the Board, otherwise than by reason of death or disability (as that term is defined in paragraph (d) of this Article 9), then such option may be exercised (to the extent that the Nonemployee Director was entitled to do so at the time of cessation of service) at any time within three (3) months after such cessation of service but not thereafter, and in no event after the date on which, except for such cessation of service, the option would otherwise expire. (b) If a Nonemployee Director to whom an option has been granted under the Plan shall cease to serve on the Board by reason of disability, then the remaining unexercised portion of the option may be exercised in whole or in part by the Nonemployee Director (notwithstanding that the 3 option had not yet become exercisable with respect to all or part of such shares at the date of disability) at any time within one (1) year after such disability but not thereafter, and in no event after the date on which, except for such disability, the option would otherwise expire. (c) If a Nonemployee Director to whom an option has been granted under the Plan shall die (i) while he is serving on the Board, or (ii) within three (3) months after cessation of service on the Board, then such option may be exercised by the legatee or legatees of such option under the Nonemployee Director's last will, or by his personal representatives or distributee, at any time within one (1) year after his death, but in no event after the date on which, except for such death, the option would otherwise expire. (d) For the purpose of this Article 9, "disability" shall mean permanent mental or physical disability as determined by the Committee. 10. ADJUSTMENT OF AND CHANGES IN COMMON STOCK. (a) If the outstanding shares of the Common Stock are increased, decreased, changed into, or exchanged for a different number or kind of Shares or securities of the Corporation through reorganization, recapitalization, reclassification, stock dividend, stock split, reverse stock split or the like, an appropriate and proportionate adjustment shall be made in the (i) aggregate number and kind of securities available under the Plan, and (ii) number and kind of securities receivable upon the exercise of all outstanding options granted under the Plan, without change in the total price applicable to the unexercised portion of such options, but with a corresponding adjustment in the price for each unit of any security covered by such options. (b) Upon the dissolution or liquidation of the Corporation, or upon a reorganization, merger or consolidation of the Corporation with one or more corporations as a result of which the Corporation is not the surviving corporation, or upon the sale of substantially all of the assets of the Corporation, the Committee shall provide in writing in connection with such transaction for one or more of the following alternatives, separately or in combination: (i) the assumption by the successor entity of the options theretofore granted or the substitution by such entity for such options of new options covering the stock of the successor entity, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices; or (ii) the continuance of such option agreements by such successor entity in which such options shall remain in full force and effect under the terms so provided. (c) Any adjustments under this Article 10 shall be made by the Committee, whose good faith determination as to what adjustments shall be made, and the extent thereof, shall be final, binding and conclusive. 11. COMPLIANCE WITH SECURITIES LAWS. As a condition to the exercise of any option, either (a) a Registration Statement under the Securities Act of 1933, as amended, or any succeeding act (collectively, the "Act"), with respect to its underlying shares shall be effective at the time of exercise 4 of the option or (b) in the opinion of counsel to the Corporation, there shall be an exemption from registration under the Act for the issuance of shares of Common Stock upon such exercise. Nothing herein shall be construed as requiring the Corporation to register shares subject to the Plan or any option under the Act. Each opinion shall be subject to the further requirement that if, in the opinion of counsel to the Corporation, the listing or qualification of the shares of Common Stocks subject to such option on any securities exchange, 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 exercise of such option or the issue of shares thereunder, such 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 requiring the Corporation to qualify as a foreign corporation or to execute a general consent to service of process in any jurisdiction wherein it has not already done so and free of any other conditions not customarily imposed by a securities exchange, law or governmental regulatory body in connection with such listing, qualification, consent or approval. 12. AMENDMENT AND TERMINATION. The Committee may amend, suspend or terminate the Plan or any portion thereof at any time but may not, without the approval of the Corporation's shareholders within twelve (12) months before or after the date of adoption of any such amendment or amendments, make any alteration or amendment thereof which (a) makes any change in the class of eligible participants as determined in accordance with Article 4 hereof; (b) increases the total number of shares of Common Stock for which options may be granted under the Plan except as provided in Article 10 hereof; (c) extends the term of the Plan or the maximum option period provided under the Plan; (d) decreases the option price provided in Article 5 hereof; or (e) materially increases the benefits accruing to participants under the Plan. Notwithstanding anything to the contrary contained herein, the Plan shall not be amended more than once every six (6) months, other than to comport with changes in the Internal Revenue Code, Employee Retirement Income Security Act or the rules thereunder. 13. DUTIES OF THE CORPORATION. The Corporation shall, at all times during the term of each option, reserve and keep available for issuance or delivery such number of shares of Common Stock as will be sufficient to satisfy the requirements of all options at the time outstanding, shall pay all original issue taxes with respect to the issuance or delivery of shares pursuant to the exercise of such options and all other fees and expenses necessarily incurred by the Corporation in connection therewith. 14. TERM; EFFECTIVE PERIOD. (a) The Plan shall become effective on 19 December 2000, the date of its adoption by the Board of Directors, subject to approval by the holders of a majority of shares of the Corporation's capital stock outstanding and entitled to vote thereon at the next meeting of its shareholders, or the written consent of the holders of a majority of shares that would have been entitled to vote thereon, and no options granted hereunder may be exercised prior to such approval, PROVIDED THAT, the date of 5 grant of any options granted hereunder shall be determined as if the Plan had not been subject to such approval. (b) No options may be granted under the Plan after 18 December 2010. Options outstanding on or prior to such date shall, however, in all respects continue subject to the Plan. EX-10.78 6 c20397_ex10-78.txt BANK AGREEMENT Exhibit 10.78 HSBC Bank USA HSBC Bank USA of New York 452 Fifth Avenue New York, NY 10018 Telephone 212 525 5000 June 1, 2000 Inter Parfums, Inc. 551 Fifth Avenue New York, N.Y. 10176 Attn: Mr. Russell Greenberg, CFO/EVP Ladies and Gentlemen: We are pleased to confirm that we are extending to you a line of credit of up to an aggregate amount of $12,000,000 outstanding at any one time, which line may be used by your company for direct borrowings and acceptance and sight letters of credit exposure for working capital purposes, provided, however, the outstanding amount as to which our Bank is liable, directly or contingently, on behalf of your company in respect of letter of credit and acceptance financings cannot in the aggregate at any one time exceed $2,000,000, and $1,000,000, respectively. This line is subject to the provisions set forth herein and in the other documents entered into in connection with this facility. Borrowings under this line of credit shall be evidenced by a Demand Grid Note, a copy of which is enclosed. Under this facility borrowings may be made from time to time and shall be repayable on demand, but may be prepaid in whole or in part with accrued interest to the date of prepayment. Any amounts outstanding shall bear interest, payable monthly in arrears, at a variable rate per annum equal to 0% above our Bank's Reference Rate established from time to time, all as more fully set forth in the Demand Grid Note. Or, at your option, you may borrow under a LIBOR Pricing Revolving Note up to the maximum amount of $12,000,000 in $100,000 increments, provided however, the amount outstanding under LIBOR Pricing Revolving Notes is no less than $500,000, with advances priced at your option of one month, two months, three months or six months LIBOR plus 1.75% for each LIBOR rate advance and subject to the terms of the LIBOR Pricing Revolving Note; a copy of the LIBOR Pricing Revolving Note is attached herewith. Please note that the advances under the LIBOR Pricing Revolving Note may be prepaid, but only subject to the terms and conditions set forth in that note. Each letter of credit issued for your account shall be issued only pursuant to our standard form of application for commercial letter of credit (the "Application"), as executed by you from time to time. You shall pay a fee of 1/8 of 1% when we issue any letter of credit for your account and each time we amend any such letter of credit. In addition, you shall pay a fee of 1/8 of 1% of the face amount of any sight draft presented to us in accordance with the terms of any letter of credit we issue for your account. Such fee shall be payable when such draft is presented to us and honored by us, all as more fully set forth in the Application. Any amounts due to us from you under the Application shall bear interest payable on demand at a variable rate per annum equal to the rate from time to time in effect under the Demand Grid Note. At our option such amounts may be deemed additional advances evidenced by and repayable in accordance with the Demand Grid Note. In place of the foregoing demand reimbursement obligation, we may from time to time accept your time drafts of up to 180 days presented to us by you. When such time draft is accepted by us it will be discounted from its date of maturity at a rate per annum equal to 2% plus our acceptance rate for commercial drafts or bills of exchange of comparable amounts and maturities. Your obligations under this line of credit shall be guaranteed by your subsidiary, Elite Parfums, Ltd. (for the obligations of Jean Philippe Fragrances, Inc.) and by your parent, Jean Philippe Fragrances, Inc., (for the obligations of Elite Parfums, Ltd.). This facility may be utilized by you for the period ending May 31, 2001; provided, however, THE CONTINUING AVAILABILITY OF THIS FACILITY IS AT ALL TIMES SUBJECT TO OUR CONTINUING SATISFACTION, AS DETERMINED BY OUR BANK IN ITS SOLE AND ABSOLUTE DISCRETION, WITH THE BUSINESS, AFFAIRS AND FINANCIAL CONDITION OF YOUR COMPANIES AND OF EACH GUARANTOR AND TO YOUR COMPLIANCE, AND THAT OF EACH OTHER PARTY EXECUTING AND DELIVERING DOCUMENTS TO US HEREUNDER OR OTHERWISE IN CONNECTION WITH THIS FACILITY, WITH THE TERMS AND PROVISIONS OF THIS LETTER AND EACH OF THE DOCUMENTS REFERRED TO HEREIN. In addition, the continuing availability of this facility is subject to your furnishing us, (i) within 120 days after the close of your fiscal year, with your audited financial statements certified by your independent certified public accountants as of the end of such period, including a balance sheet and related income statements; and (ii) such other information, including interim financial statements, concerning your business, affairs or financial condition as we may from time to time request. All payments of principal, interest and fees payable by you under this facility shall be made in immediately available funds at our office at 452 Fifth Avenue, New York, New York 10018 and may be charged to any account you maintain with us. Our agreement to extend to you this facility, on the terms set forth herein, is further subject to our receipt in form satisfactory to us of (a) a certified copy of resolutions of your Board of Directors authorizing your execution, delivery and performance of this agreement (and the documents hereinafter referred to); (b) signature cards for your authorized signatories; (c) an executed copy of our Demand Grid Note signed by your duly authorized officer on your behalf, (d) executed copies of our standard form of Guarantee signed by Elite Parfums, Ltd. (for the obligations of Jean Philippe Fragrances, Inc.) and Jean Philippe Fragrances, Inc., (for the obligations of Elite Parfums, Ltd. NO AMENDMENT, MODIFICATION OR WAIVER OF ANY PROVISION OF THIS AGREEMENT NOR CONSENT TO ANY DEPARTURE BY OUR BANK THEREFROM SHALL BE EFFECTIVE, IRRESPECTIVE OF ANY COURSE OF DEALING, UNLESS THE SAME SHALL BE IN WRITING AND SIGNED BY OUR BANK AND THEN SUCH WAIVER OR CONSENT SHALL BE EFFECTIVE ONLY IN THE SPECIFIC INSTANCE AND FOR THE SPECIFIC PURPOSE FOR WHICH GIVEN. This agreement shall be governed by and construed in accordance with the laws of the State of New York. Please note that to the extent any of the terms or provisions of this agreement conflict with those contained in the Demand Grid Note or any of the above-mentioned documents, the terms and provisions of such Note and of such other documents shall govern. YOU AND OUR BANK AGREE THAT ANY ACTION, SUIT OR PROCEEDING IN RESPECT OF OR ARISING OUT OF THIS AGREEMENT, THE NOTE OR ANY OTHER DOCUMENTS RELATING TO THIS FACILITY MAY BE INITIATED AND PROSECUTED IN THE STATE OR FEDERAL COURTS, AS THE CASE MAY BE, LOCATED IN NEW YORK COUNTY, NEW YORK. YOU FURTHER AGREE THAT ANY ACTION, DISPUTE, PROCEEDING, CLAIM OR CONTROVERSY BETWEEN OR AMONG YOU AND US WHETHER SOUNDING IN CONTRACT, TORT OR OTHERWISE ("DISPUTE" OR "DISPUTES") SHALL, AT OUR ELECTION, WHICH ELECTION MAY BE MADE AT ANY TIME PRIOR TO THE COMMENCEMENT OF A JUDICIAL PROCEEDING BY OUR BANK, OR IN THE EVENT OF A JUDICIAL PROCEEDING INSTITUTED BY YOU AT ANY TIME PRIOR TO THE LAST DAY TO ANSWER AND/OR RESPOND TO A SUMMONS AND/OR COMPLAINT MADE BY YOU, BE RESOLVED BY ARBITRATION IN NEW YORK, NEW YORK IN ACCORDANCE WITH THE PROVISIONS OF THIS PARAGRAPH AND SHALL, AT THE ELECTION OF OUR BANK, INCLUDE ALL DISPUTES ARISING OUT OF OR IN CONNECTION WITH (I) THIS AGREEMENT, THE DEMAND GRID NOTE, OR ANY OTHER RELATED AGREEMENTS OR INSTRUMENTS, (II) ALL PAST, PRESENT AND FUTURE AGREEMENTS INVOLVING THE PARTIES, (III) ANY TRANSACTION CONTEMPLATED HEREBY AND ALL PAST, PRESENT AND FUTURE TRANSACTIONS INVOLVING THE PARTIES AND (IV) ANY ASPECT OF THE PAST, PRESENT OR FUTURE RELATIONSHIP OF THE PARTIES. We may elect to require arbitration of any Dispute with us without thereby being required to arbitrate all Disputes between you and us. Any such Dispute shall be resolved by binding arbitration in accordance with Article 75 of the New York Civil Practice Law and Rules and the Commercial Arbitration Rules of the American Arbitration Association ("AAA"). In the event of any inconsistency between such Rules and these arbitration provisions, these provisions shall supersede such Rules. All statutes of limitations which would otherwise be applicable shall apply to any arbitration proceeding under this paragraph. In any arbitration proceeding subject to these provisions, the arbitration panel (the "arbitrator") is specifically empowered to decide (by documents only, or with a hearing, at the arbitrators sole discretion) pre-hearing motions which are substantially similar to pre-hearing motions to dismiss and motions for summary adjudication. In any such arbitration proceeding, the arbitrator shall not have the power or authority to award punitive damages to any party. Judgment upon the award rendered may be entered in any court having jurisdiction. Whenever an arbitration is required, the parties shall select an arbitrator in the manner provided in this paragraph. No provision of, nor the exercise of any rights under, this paragraph shall limit the right of any party (i) to foreclose against any real or personal property collateral through judicial foreclosure, by the exercise of a power of sale under a deed of trust, mortgage or other security agreement or instrument pursuant to applicable provisions of the Uniform Commercial Code, or otherwise pursuant to applicable law, (ii) to exercise self help remedies including but not limited to setoff and repossession, or (iii) to request and obtain from a court having jurisdiction before, during or after the pendency of any arbitration, provisional or ancillary remedies and relief including but not limited to injunctive or mandatory relief or the appointment of a receiver. The institution and maintenance of an action or judicial proceeding for, or pursuit of, provisional or ancillary remedies or exercise of self help remedies shall not constitute a waiver of our right, even if we are the plaintiff, to submit the Dispute to arbitration if we would otherwise have such right. We may require arbitration of any Dispute(s) concerning the lawfulness, unconscionableness, propriety, or reasonableness of any exercise by us of our right to take or dispose of any collateral or our exercise of any other right in connection with collateral including, without limitation, judicial foreclosure, exercising a power of sale under a deed of trust or mortgage, obtaining or executing a writ of attachment, taking or disposing of property with or without judicial process pursuant to Article 9 of the Uniform Commercial Code or otherwise as permitted by applicable law, notwithstanding any such exercise by us. Whenever an arbitration is required under this paragraph, the arbitrator shall be selected, except as otherwise herein provided, in accordance with the Commercial Arbitration Rules of the AAA. A single arbitrator shall decide any claim of $100,000 or less and he or she shall be an attorney with at least five years' experience. Where the claim of any party exceeds $100,000, the Dispute shall be decided by a majority vote of three arbitrators, at least two of whom shall be attorneys (at least one of whom shall have not less than five years' experience representing commercial banks). In the event of any Dispute governed by this paragraph, each of the parties shall, subject to the award of the arbitrator, pay an equal share of the arbitrator's fees. The arbitrator shall have the power to award recovery of all costs and fees (including attorneys' fees, administrative fees, arbitrator's fees, and court costs) to the prevailing party. ANYTHING IN THIS AGREEMENT, THE NOTE OR ANY OTHER DOCUMENTS RELATING TO THIS FACILITY TO THE CONTRARY NOTWITHSTANDING, THE ENUMERATION IN THIS AGREEMENT, THE NOTE OR IN SUCH OTHER DOCUMENTS OF SPECIFIC OBLIGATIONS TO OUR BANK AND/OR CONDITIONS TO THE AVAILABILITY OF THIS FACILITY AND THE NOTE SHALL NOT BE CONSTRUED TO QUALIFY, DEFINE OR OTHERWISE LIMIT OUR RIGHT, POWER OR ABILITY, AT ANY TIME, UNDER APPLICABLE LAW, TO MAKE DEMAND FOR PAYMENT OF THE ENTIRE OUTSTANDING PRINCIPAL OF AND INTEREST DUE UNDER THIS FACILITY AND THE NOTE OR OUR RIGHT NOT TO MAKE ANY EXTENSION OF CREDIT UNDER THIS FACILITY AND YOU AGREE THAT YOUR BREACH OF OR DEFAULT UNDER ANY SUCH ENUMERATED OBLIGATIONS OR CONDITIONS IS NOT THE ONLY BASIS FOR DEMAND TO BE MADE OR FOR A REQUEST FOR AN EXTENSION OF CREDIT TO BE DENIED, AS YOUR OBLIGATION TO MAKE PAYMENT SHALL AT ALL TIMES REMAIN A DEMAND OBLIGATION. NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, THIS AGREEMENT DOES NOT CREATE A COMMITMENT OR OBLIGATION TO LEND BY THE BANK AND YOU ACKNOWLEDGE THAT THE BANK HAS NO OBLIGATION TO LEND. EACH OF YOU AND WE HEREBY WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM BROUGHT BY OR AGAINST IT ON ANY MATTERS WHATSOEVER, IN CONTRACT OR IN TORT, ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE NOTE OR ANY OTHER DOCUMENTS RELATING TO THIS FACILITY. YOU ALSO HEREBY WAIVE THE RIGHT TO INTERPOSE ANY DEFENSE BASED UPON ANY CLAIM OF LACHES OR SET-OFF OR COUNTERCLAIM OF ANY NATURE OR DESCRIPTION, ANY OBJECTION BASED ON FORUM NON CONVENIENS OR VENUE, AND ANY CLAIM FOR CONSEQUENTIAL, PUNITIVE OR SPECIAL DAMAGES. If this agreement is acceptable to you, please sign and return to us one copy each of the enclosed copy of this letter and the other documents referred to above on or before July 15, 1999. Very truly yours, HSBC BANK USA /s/ Andrew Ross -------------------------- By: Andrew Ross Title: First Vice President Agreed to and accepted: INTER PARFUMS, INC. By: /s/ Russell Greenberg - ------------------------------- Title: Executive Vice President EX-10.79 7 c20397_ex10-79.txt BAIL FRENCH Exhibit 10.79 BAIL ENTRE LES SOUSSIGNES : La SOCIETE MAJ0RQUE, Societe a responsabilite Limitee, au capital de 1 000 000 de francs, ayant son siege social a Wissous (91320), 18 avenue Ampere, immatriculee au Registre du Commerce et des Societes d'Evry, sous le numero B 420 026 387, representee par son Gerant Mademoiselle Emily Benharrous. Ci-apres denommes [LE BAILLEUR>>,, D'UNE PART, ET: La SOCIETE INTER PARFUMS; Societe Anonyme, au capital de 45 515 720 francs, ayant son siege social au 4 Rond point des Champs-Elysees 75008 Paris, Immatriculee au Registre du Commerce et des Societes de Paris, sous le numero B 350 219 382, representee par Monsieur Benacin Philippe, President du Conseil de Surveillance, dument habilite aux presentes. Ci-apres denommee [ LE PRENEUR>>, D'AUTRE PART, IL A ETE ARRETE ET CONVENU CE QUI SUIT: Le bailleur fait bail et donne a loyer, conformement aux dispositions du decret n(degree) 53-960 du 30 septembre 1953 modifie, a la societe Inter Parfums ce qui est accepte par cette derniere, les locaux dont la designation suit, dependant d'un immeuble sis a Paris 8e, 18 avenue Franklin Roosevelt. Article 1er - DESIGNATION Dependant de l'immeuble sis a Paris 8e, 18 avenue Frankin Roosevelt, au 1er etage: - Un local comprenant dix bureaux, une cuisine, une piece a archives, deux WC dont un double, un hall d'entree. Chauffage individuel electrique. Tels que ces locaux resultent des plans d-apres annexes (annexe 1). 2 Ainsi que lesdits locaux existent, se poursuivent et comportent, sans aucune exception ni reserve, et sans qu'il soit besoin d'en faire une plus ample designation, le preneur declarant les connaitre pour les avoir vus et visite en vue des presentes. Les parties conviennent que les lieux loues forment un tout indivisible. ARTICLE 2 - DUREE Le present bail est conclu et accepte pour une duree de neuf annees, a compter du 7 avril 2000. Le preneur pourra y mettre fin a l'issue de chaque periode triennale, dans les conditions prevues par le decret du 30 septembre 1953. Compte tenu des renovations necessaires dans ces locaux, le bailleur consent une franchise de loyer et charges de deux mois, le premier reglement du loyer et charges interviendra donc le 7 juin 2000. ARTICLE 3 - ENTREE EN JOUISSANCE ET ETAT DES LIEUX Les locaux seront pris dans l'etat ou ils se trouveront le jour de l'entree en jouissance, sans que le preneur puisse exiger de reparations, ni de travaux, de quelque nature que ce soit, pendant tout le cours de la location. Le preneur restera tenu pendant tout le cours de la location de toutes les reparations locatives. Les lieux loues devront etre rendus, en fin de location, en parfait etat de reparations locatives. Le preneur ne pourra exiger aucune remise en etat, aucune reclamation ni aucun travail, et il ne pourra exercer aucun recours contre le bailleur pour cas de force majeure et toutes autres causes quelconques interessant l'etat des locaux. Le preneur prendra en charge tous les travaux d'amenagement, installations et constructions ordonnees par une legislation ou reglementation en matiere d'hygiene ou de securite, dans les locaux eux-memes. ARTICLE 4 - DESTINATION DES LIEUX Le preneur ne pourra donner aux dits lieux aucune autre destination que celle prevue au present bail, a savoir: VENTE DE PRODUITS COSMETIQUES Le preneur devra exercer dans le local de maniere permanente les activites mentionnees cidessus. 3 ARTICLE 5 - CHARGES ET CONDITIONS Le present bail est fait, en outre, sous les charges et conditions suivantes que le preneur s'oblige a executer et accomplir a peine de tous dommages interets, et meme de resiliation si bon semble au bailleur: 1(degree)) Le preneur devra garnir et tenir garnis les lieux presentement loues de materiel, marchandises, meubles et objets mobiliers, en qualite et valeur suffisante pour repondre du paiement des loyers et de l'execution des conditions du bail. 2(degree)) Le preneur ne pourra fermer les locaux presentement loues qui devront rester ouverts pour l'exploitation de l'activite commerciale sus designee, pendant tout le cours du bail et jusqu'a son expiration, sauf cas de force majeure ou necessite par le preneur d'effectuer des travaux necessitant la fermeture. 3(degree)) Il tiendra les locaux en bon etat de toutes reparations locatives, ceci pendant toute la duree du bail, et fera a cet egard a ses frais tous travaux ou reparations de toute nature qui sont ou pourront devenir necessaires y compris celles pouvant decouler d'une obligation reglementaire, de facon, a les rendre, a la fin du bail, en bon etat de reparations locatives. II est egalement convenu qu'au cas ou l'administration ou quelque autorite que ce soit viendrait a exiger, a un moment quelconque une modification et/ou affectation du local, meme si cette exigence etait consecutive a un cas de force majeure, toutes charges et consequences quelconques de cette modification et/ou affectation seraient integralement supportees par le preneur qui s'y oblige. Neanmoins, il ne pourra etre impose au preneur de realiser les travaux necessaires a cette modification et/ou affectation du local. 4(degree)) Le preneur s'engage a entretenir et remplacer a ses frais, quelle que soit l'importance des travaux et reparations (fut-ce par vetuste) toutes installations, canalisations, appareils, fermetures, et plus generalement tous les elements garnissant ou composant les lieux loues, sans exception. Le preneur accepte qu'a defaut d'avoir effectue lui-meme tous travaux d'entretien, de reparations et de remplacement mis a sa charge, le bailleur entreprenne, trente jours apres l'envoi d'une lettre recommandee avec demande d'avis de reception restee infructueuse, et sauf cas d'urgence, en ses lieu et place lesdits travaux et reparations, le preneur s'engageant a en rembourser le cout effectif, en ce compris tout frais et honoraires s'y rapportant, dans les quinze jours de l'etat qui lui sera adresse par le bailleur. 5(degree)) II jouira des lieux en bon pere de famille suivant leur destination telle qu'elle est indiquee ci-dessus, il ne pourra en aucun cas rien faire ou laisser faire qui puisse les deteriorer, et il devra prevenir immediatement le bailleur de tout atteinte qui sera portee a l'ensemble de la propriete, et de toutes degradations ou deteriorations qui viendraient a se produire dans les lieux loues. 6(degree)) II devra deposer sans delai tous coffrages et decoration ainsi que toutes installations qu'il aurait faites et dont l'enlevement serait necessaire pour la recherche et la reparation de fuites de toute nature, de fissure dans les conduits de fumee ou de ventilation, notamment apres incendie ou infiltrations et, en general, pour l'execution des travaux, des lors que cette recherche se sera revelee justifiee. 4 II ne pourra invoquer en quoi que ce soit la responsabilite du bailleur, dans le cas ou les services publics d'eau ou d'electricite seraient interrompus dans l'immeuble, par suite de reparations ou autres causes. 7(degree)) Le preneur ne pourra faire dans les lieux loues aucune construction, ni demolition, concernant le gros oeuvre de l'immeuble, aucun percement des murs, cloisons ou planchers, sans le consentement expres et par ecrit du bailleur, les travaux qui seraient autorises par celui-ci devront etre faits sous la surveillance de son architecte dont les honoraires seront a la charge du preneur. L'autorisation de travaux devra etre materialisee par trois actes : o un descriptif precis, o un plan modificatif faisant mention de l'etat existant, o les souscriptions d'assurances necessaires a la realisation des travaux. lesquels devront etre signes et approuves par le bailleur. Toutefois, a l'occasion de la demande d'autorisation, le bailleur pourra conditionner son accord par la remise en etat des lieux en leur etat primitif. 8(degree)) Tous embellissements, constructions, modifications, ameliorations, installations et decors quelconques qui seraient faits par le preneur dans les lieux loues, pendant le cours du bail, resteront a la fin de celui-ci, a quelque epoque et de quelque maniere qu'elle arrive, la propriete du bailleur, sans aucune indemnite pour le preneur, en ce compris les installations electriques, la climatisation dans son ensemble et tous autres elements d'equipement eventuellement installes dans les lieux loues sans limitation. Le preneur supportera sans recours contre le bailleur les travaux qui seront executes dans l'immeuble, sur la voie publique, ou dans les immeubles voisins alors meme qu'il en resulterait une gene pour son exploitation. 9(degree)) Le preneur devra supporter a ses frais toute modification d'arrivee de branchement, de remplacement de compteur ou d'installations interieures pouvant etre exigees par les compagnies distributrices des eaux, de l'electricite, du chauffage ou de conditionnement d'air. En particulier, en cas d'installation d'un systeme de climatisation a eau perdue, il s'oblige a installer a ses frais un compteur divisionnaire. 10(degree)) Le preneur devra se conformer a toutes les charges, reglements de ville, de police et de voirie, et ne rien faire qui puisse troubler la tranquillite ou apporter un trouble de jouissance aux voisins, et aux habitants de l'immeuble, notamment par le bruit, les odeurs, la fumee, etc.,... le proprietaire declinant toute responsabilite a cet egard. 11(degree)) II devra se conformer rigoureusement pour l'exploitation de son activite, aux lois, reglements et prescriptions administratives, et devra faire son affaire personnelle de l'execution, s'il y a lieu, de toutes modifications ou installations qui pourraient etre prescrites par l'administration ou les services d'hygiene, de maniere que le bailleur ne puisse jamais etre inquiete a ce sujet. 12(degree)) II devra prendre toutes precautions necessaires pour eviter tous bruits, odeurs, fumees et pour empecher l'existence de tout animaux ou insectes nuisibles. II devra exercer une surveillance continuelle sur son personnel et veiller a sa bonne tenue. 5 II souffrira l'installation et le passage de toutes canalisations d'eau, de gaz, d'electricite et de chauffage, de tous conduits, quel que soit leur emplacement, qu'ils soient apparents ou non, qu'ils puissent se trouver dans le local loue, dans ses accessoires ou dans ses dependances, et ceci dans toute la mesure exigee non seulement pour le service de ses propres locaux, mais pour les services de l'immeuble. 13(degree)) Toutes les reparations locatives, et meme les refections et remplacements qui seraient necessaires au cours du bail, aux glaces et vitres, volets, verrieres, descentes, chutes d'eau, etc ...., interessants les lieux loues, seront a la charge du preneur. Celui-ci sera tenu de maintenir le tout en bon etat de proprete, d'entretien et de fonctionnement. 14(degree)) Le preneur ne pourra reclamer au bailleur des indemnites de dommages interets, reduction de loyer, pour fuites, inondations, degats des eaux ou infiltrations quelconques, qui viendraient a se produire dans les lieux loues pour quelque cause que ce soit. 15(degree)) Le preneur devra laisser le bailleur, son mandataire et toute personne munie de l'autorisation du bailleur, visiter les lieux loues quand il le jugera utile, notamment en cas de travaux ou reparations et durant les six mois qui precederont la fin de la presente location, etant entendu que le bailleur devra prevenir le preneur suffisamment a l'avance et par ecrit, et prendre les dispositions necessaires pour perturber le moins possible son activite. De meme le preneur devra laisser le bailleur, son mandataire et toute personne munie de l'autorisation du bailleur, visiter les lieux loues quand il le jugera utile en cas de mise en vente de l'immeuble pendant les trois mois qui suivront la mise en vente. 16(degree)) Le preneur assurera et maintiendra assures pendant toute la duree du bail, contre les risques d'incendie et d'explosion, implosion, bris de glaces, ainsi que les risques locatifs, le recours des tiers et des voisins, les degats des eaux, la presente enumeration n'etant pas limitative, les meubles, objets mobiliers, materiel, marchandises garnissant les lieux loues. Les glaces et vitres du local ne sont pas assurees au titre de l'immeuble. II devra acquitter regulierement les primes et justifier du tout a premiere requisition du bailleur. En ce qui concerne plus particulierement l'exploitation des locaux, le preneur devra l'assurer, en conformite des prescriptions administratives et legales pouvant s'y rapporter. Le preneur assurera les locaux loues a leur valeur de reconstruction. 17(degree)) Responsabilite et recours: Le preneur et ses assureurs renoncent expressement a tous recours et actions contre le bailleur et ses assureurs, soit du fait de la destruction totale ou partielle de ses materiels, meubles, objets mobiliers et marchandises, et plus generalement tous objets lui appartenant ou dont il serait detenteur a quelque titre que ce soit, soit du fait de leur deterioration, soit encore du fait de la privation de jouissance des lieux, et meme au cas de perte totale ou partielle de son fonds de commerce, y compris les elements incorporels attaches audit fonds. Reciproquement, le bailleur et ses assureurs renoncent expressement a tout recours et actions qu'ils seraient en droit d'exercer contre le preneur et ses assureurs, en cas de dommages quels qu'ils soient, directs ou indirects, subis par les locaux loues, le materiel ou mobilier mis a sa disposition, ainsi que du fait des pertes de loyers, troubles de jouissance ou pertes d'exploitation causee a des tiers pouvant en resulter. 6 De meme, le preneur declare renoncer a tout recours contre le bailleur et son ou ses assureurs. - En cas de dommages, dincendie, de vol, de degat des eaux, d'humidite ou de toute autre circonstance atteignant ses biens propres ou les biens pouvant etre consideres comme immeubles par nature, par destination ou par incorporation installee a ses frais, le preneur devant s'assurer contre ces risques, - En cas de vol ou autre acte delictueux dont le preneur pourrait etre victime dans le local, - En cas de notification, d'interruption ou de suppression du gardiennage de l'immeuble, - En cas d'interruption ou de fonctionnement intempestif dans le service de l'eau, du gaz, de l'electricite, de la climatisation ou d'une maniere generale, en cas de mise hors service ou d'arret, meme prolonge, pour une cause independante de la volonte du bailleur, dans le service des fluides, du chauffage ou de l'un quelconque des elements d'equipement commun de I'immeuble, Le preneur renonce egalement a reclamer au bailleur, en cas de dommages materiels ou immateriels non causes intentionnellement par le bailleu, des indemnites pour privation de jouissance ou perte d'exploitation du fait de I'interruption, totale ou partielle, de son exploitation pour quelque cause que ce soit. 18(degree)) Le preneur acquittera exactement ses impots, la taxe professionnelle, et, d'une facon generale, tous les impots, contributions et taxes lui incombant et dont le bailleur pourrait etre responsable a un titre quelconque. II devra en justifier au bailleur a toute requisition. II supportera egalement l'impot foncier afferent aux lieux loues et tous impots nouveaux concernant les locaux qui viendraient a etre exiges par l'Administration Fiscale, quand bien meme ces impots incomberaient normalement au bailleur. II supportera egalement le droit au bail et la taxe additionnelle de droit au bail, si le bailleur ne maintient pas son option pour la TVA. 19(degree)) Le preneur sera tenu de regler, depuis la date d'effet du bail, au bailleur ou a son gerant, sa quote-part de toutes les charges, prestations ou depenses relatives a l'immeuble, y compris les impots et taxes afferents a l'immeuble, tels que taxe de balayage, taxe d'enlevement des ordures menageres et des dechets industriels. et commerciaux, taxes foncieres et assimilees, ainsi que toute taxe nouvelle ou ceux ou celles qui en seraient le remplacement. 20(degree)) Enfin, il reglera directement ses consommations d'electricite, d'eau, de chauffage et les frais de tous abonnements telephoniques, taxes et le cout de toutes communications. 21(degree)) Le preneur ne devra faire poser aucune enseigne, ni plaque publicitaire sur la facade des locaux loues, ni meme modifier l'aspect exterieur de l'immeuble par I installation de tente, marquise, store, enseigne, etc ..... sans autorisation du bailleur, de l'Administration concernee et de la copropriete. Si le preneur souhaite apposer une plaque commerciale, celle-ci devra etre en concordance avec l'aspect de l'immeuble, installee pres de celle deja existante, dans les memes dimensions et style de ces dernieres, au frais exclusif du preneur, et l'approbation devra etre prealablement obtenue. 7 II supportera le cout de toute taxe ou redevance relative a ces enseignes. 22(degree)) Le preneur ne pourra faire aucune demande de reduction de loyer, ni indemnite en cas de suppression, d'interruption ou de mauvais fonctionnement des divers services de l'immeuble (chauffage, eau, electricite, etc., ...) quelles qu'en soient la cause et la duree. 23(degree)) Le preneur s'engage a emmenager et demenager la plus grande partie de son mobilier par les fenetres du local donne en location. ARTICLE 6 - CESSION - SOUS-LOCATIONS Le preneur ne pourra conceder la jouissance des lieux loues, a qui que ce soit, sous quelque forme que ce soit, meme temporairement, et a titre gratuit et precaire, il ne pourra sous-louer en tout ou partie des locaux, ni mettre son fonds en location-gerance. Neanmoins, le preneur pourra sous-louer ou domicilier une ou des societes appartenant juridiquement au meme groupe que le preneur, dans les locaux loues. Pour ce faire, celui-ci devra presenter au bailleur, par courrier en lettre recommandee avec accuse de reception, pour approbation, la ou les societes. Cette approbation devra faire l'objet d'une confirmation et d'un accord ecrit entre les parties, a savoir: le preneur, le bailleur et le ou les sous-locataires. Quoiqu'il en soit, et a aucun moment, le ou les sous-locataires ne pourront se prevaloir de droits directs ou indirects a l'encontre du bailleur, le preneur restant l'unique garant, responsable et solidaire des charges et conditions du present bail objet des presentes. Etant precise que le ou les sous-locataires ne seraient titulaires a aucun moment d'aucun droit, ni d'aucun titre d'occupation opposable au bailleur a l'echeance du bail. Le preneur ne pourra ceder son droit au present bail si ce n'est en totalite a l'acquereur de la totalite de son fonds de commerce qui exercera la totalite des activites prevues au bail, et a charge pour lui d'appeler le bailleur a la cession, sous peine de nullite de la cession consentie au mepris de cette clause; et meme de resiliation des presentes, si bon semble au bailleur. Le preneur restera garant, conjointement et solidairement avec son cessionnaire, et tous cessionnaires successifs, du paiement des loyers, des charges echues et a echoir, et de l'execution des conditions du present bail. Pour etre valable, toute cession devra etre constatee en presence du bailleur ou lui dument appele. Un exemplaire enregistre de l'acte de cession devra etre remis au bailleur sans frais pour lui, dans le delai de 15 jours de la cession. Le preneur devra notifier au bailleur, par lettre recommandee avec accuse de reception, le projet d'acte de cession dans son integralite, en lui indiquant notamment, a peine de nullite de la notification, le nom et l'adresse de l'acquereur, le prix, les modalites de paiement et, d'une maniere generale, toutes les conditions de la cession projetee, ainsi que les lieux, jour et heure prevus pour la realisation de cette cession qui ne pourra intervenir moins d'un mois apres reception de cette notification. 8 Ce projet sera signe par le candidat acquereur, avec la mention que ce projet est signe a titre de simple declaration d'intention. Sil est survenu entre les parties des accords de force obligatoire, meme souscrits sous la condition suspensive de la purge du droit de preference et des formalites de concours, la notification qui precede devra obligatoirement comporter denonciation de l'integralite dudit acte. Le bailleur aura la faculte, dans le mois de la reception de cette notification, d'informer le preneur dans les memes formes, en conformite du droit de preference qui lui est reconnu, a egalite de conditions, de sa decision d'user de ce droit a son profit ou a celui de toute personne physique ou morale qu'il lui plaira de se substituer. En cas de mise en oeuvre du droit de preference, la cession devra alors etre regularisee sous quinzaine. Le droit de preference ainsi defini s'imposera dans les memes conditions aux acquereurs successifs, pendant toute la duree du bail, de ses prorogations ou renouvellements. La condition de forme ci-dessus et, notamment, les dispositions relatives au droit de preference s'appliqueront a toutes les cessions quelles qu'en soient la forme et les modalites: cession onereuse ou gratuite, cession ou apport du droit au bail et du fonds de commerce, cession amiable ou par adjudication. ARTICLE 7 - REGLEMENT INTERIEUR- REGLEMENT DE COPROPRIETE Dans l'interet de la securite, de l'hygiene, du bon ordre et de la proprete de l'immeuble, le preneur s'engage a faire en sorte que son comportement soit paisible et a respecter, outre les arretes municipaux et prefectoraux, toutes les consignes qui pourraient lui etre donnees par le bailleur. II ne pourra faire, dans les lieux loues, aucune vente publique de meubles ou autres objets. II ne devra faire emploi d'aucun appareil ou machine qui, par le bruit, l'odeur, l'humidite ou les trepidations qu'il occasionnerait, serait de nature a incommoder les autres locataires, les voisins ou nuire a l'immeuble. II devra satisfaire a toutes les charges de ville et de police prevues ou imprevues, dont les locataires sont ordinairement tenus, et se conformer aux reglements de police. Le preneur devra deposer ces ordures personnelles dans les containers prevus a cet effet dans l'enceinte du batiment. De meme, il est formellement convenu que, ni le bailleur, ni ses preposes ne seront tenus pour responsables des vols, detournements, cambriolages ou tentatives de ces delits au prejudice du locataire et des depredations meme immobilieres qui en resulteraient, et que le bailleur ne saurait encourir aucune responsabilite tant en raison des services personnels demandes par le preneur a ses preposes, tels que commission, communications, qu'a raison des cles, especes ou objets quelconques qu'ils detiendraient pour le compte de locataires ou de tiers. De convention expresse, le bailleur degage d'ores et deja sa responsabilite, conformement aux dispositions de l'article 1725 du Code Civil, pour tous dommages ou troubles de jouissance qui pourraient, du fait de tiers, etre causes au preneur, lequel renonce a tous recours contre elle et pourra exercer directement son recours, si bon lui semble, contre les auteurs du trouble, le bailleur le subrogeant en outre, par les presentes, dans ses droits et actions a cet effet. 9 II devra, en cas d'absence, laisser les cles des locaux a une personne qu'il designera au bailleur, afin qu'en cas d'accidents, incendie, fuite d'eau ou de gaz, ou des travaux ou toute autre cause, il soit possible d'acceder dans les lieux loues, qu'en cas de sinistre, toutes les precautions necessaires puissent etre prises immediatement. ARTICLE 8 - LOYER PRINCIPAL Le present bail est consenti et accepte moyennant un loyer annuel de 587 500 FRANCS (CINQ CENT QUATRE VINGT SEPT MILLE CINQ CENT FRANCS) hors charges et hors taxes, que le preneur s'oblige a payer avec la taxe a la valeur ajoutee y afferente, par trimestre et a termes echoir. Les trimestres commencent les premiers janvier, avril, juillet, et octobre. ARTICLE 9 - PASSAGE A LA MONNAIE UNIQUE EUROPEENNE En tant que de besoin et conformement aux principes generaux du droit monetaire, il est rappele que les creances de sommes d'argent libellees en/ou payables en francs francais en vertu des presentes seront considerees de plein droit, comme libellees et/ou payables en monnaie unique europeenne lorsque le franc cessera d'etre legal, ou plus generalement, sera remplace par la monnaie unique europeenne conformement a la reglementation communautaire et/ou nationale. Le taux et les conditions de conversion du franc francais seront ceux resultant de l'application des dispositions de l'article 109-L du Traite de l'Union Europeenne. Bien entendu, le remplacement du franc francais par la monnaie unique europeenne n'entrainera ni novation, ni rupture entre les parties et ce, meme si pour des raisons techniques, l'Indice National du Cout de la Construction publie par l'INSEE venait a etre remplace par un indice de substitution ou un indice similaire ou equivalent. Article 10 - CLAUSE D'ECHELLE MOBILE Le loyer ci-dessus fixe sera revise automatiquement chaque annee a la date du et pour la premiere fois le 1er avril 2001, en plus ou en moins et en proportion exacte de la variation de l'indice publie par l'INSEE du cout de la construction, l'indice de base contractuellement choisi etant celui du 3e trimestre de l'annee 1999 (1080), raison pour laquelle la premiere revision au 1er avril 2001 interviendra en fonction de la variation des indices des 3e trimestre 1999 et 3e trimestre 2000. Pour les annees suivantes, l'indice de comparaison servant de calcul a la revision sera l'indice, du 3e trimestre de l'annee qui precede la revision et l'indice de base, l'indice du 3e trimestre de l'annee qui precede l'indice de comparaison. Si pour une raison quelconque, l'indice publie par l'INSEE devenait inapplicable, les parties conviennent d'un commun accord de le remplacer par un nouvel indice equivalent, qui sera determine, a defaut d'accord, par voie d'ordonnance sur requete de Monsieur le President du Tribunal de Grande Instance de Paris. La clause d'indexation du prix du loyer constitue une clause essentielle et determinante sans laquelle le bailleur n'aurait pas contracte. 10 ARTICLE 11- PAIEMENT DU LOYER Le preneur s'oblige au paiement du loyer et de ses accessoires au bailleur, aux quatre termes de l'annee, les premiers janvier, avril, juillet et octobre. A cet effet, le preneur s'engage a verser au bailleur la somme fixee par lui, a titre d'acompte sur charges, prestations, fournitures, taxes et autres. En fin d'exercice, soit le 31 decembre de chaque annee, un compte definitif sera etabli sur l'avis d'echeance de juin et le trop-percu eventuel sera rembourse. Le bailleur s'engage a communiquer au preneur, a premiere demande de ce dernier, tout justificatif relatif au compte definitif de charges. En cas de cessation de la location, en cours d'annee, le compte definitif sera etabli en fonction des resultats de l'exercice precedent, et des previsions de l'exercice en cours. En cas de contentieux, l'imputation des paiements effectues par le preneur sera faite par le bailleur dans l'ordre suivant: - frais de recouvrement et de procedure - dommages et interets - interets - depot de garantie et reajustement du depot de garantie - creance de loyers ou indemnites d'occupation; concernant ces postes, l'imputation sera faite par le bailleur par priorite sur les sommes n'ayant pas fait l'objet de contentieux - ajustements du fond de roulement - provision sur charges communes A I interieur de chacun de ces postes, priorite sera donnee aux locaux accessoires ou annexes par preference au local principal. ARTICLE 12 - DEPOT DE GARANTIE Pour surete et garantie de l'execution des obligations de toute nature resultant du present bail a la charge du preneur, ce dernier verse ce jour la somme de 146 875 FRANCS correspondant a trois mois de loyer de la premiere annee. Cette somme sera conservee par le bailleur pendant toute la duree du bail jusqu'au reglement entier et definitif de toute indemnite, de quelques nature qu'elle soit, que le preneur pourrait devoir au bailleur a l'expiration du bail et a sa sortie des locaux. Cette somme ne sera pas productive d'interet. Dans le cas de resiliation de bail pour inexecution de ses conditions, ou pour une cause quelconque imputable a la preneuse, ce versement de garantie restera acquis au bailleur, a titre de premiers dommages interets, sans prejudice de tous autres. 11 II est expressement convenu qu'en cas de variation du loyer en vertu de la clause ci-dessus stipulee, la somme versee a titre de depot de garantie devra etre mise en harmonie avec le nouveau loyer de facon a ce que le depot de garantie soit toujours d'un montant egal a trois mois de loyer. Le preneur versera, lors du paiement du premier terme augmente, la somme necessaire pour completer le depot et, en cas de diminution de loyer, le bailleur restituera au preneur la somme en excedent. En outre, s'agissant d'une creance a l'encontre du bailleur, elle est necessairement connexe a toute creance nee des presentes, dont pourrait exciper le bailleur a l'encontre du preneur et des lors, dans l'hypothese d'un redressement ou d'une liquidation judiciaire, le bailleur est fonde a compenser le montant de ce depot de garantie avec toutes sommes susceptibles de faire, dans son interet, l'objet d'une declaration de creance, sans que la modification ne modifie la nature de la creance et les eventuels privileges attaches a cette creance. ARTICLE 13 - CHARGES COMMUNES DE L'IMMEUBLE Le reglement des charges par le preneur se fera par le versement d'une provision calculee trimestriellement par rapport aux charges anterieures. Ces provisions viendront en deduction des charges reelles calculees annuellement. Pour la premiere annee, la provision est de 52 875 FRANCS (CINQUANTE DEUX MILLE HUIT CENT SOIXANTE QUINZE FRANCS), la TVA etant facturee en sus. La contribution du preneur aux charges sera calculee conformement a la repartition en vigueur dans I'immeuble, soit 261 m2 pour le lot concerne des parties communes generales de I'immeuble, sur un total de 2061 m2. II est precise que les charges correspondent: - a tous les impots de I immeuble, y compris I'impot foncier, - aux prestations fournies par le bailleur et se rapportant a I'immeuble ainsi qu'aux charges de copropriete dans leur integralite, a l'exclusion des travaux de l'article 606 du Code Civil, - aux depenses d'equipement, d'entretien, de nettoyage, de maintenance, de refection, de reparations, de remplacements, de renouvellement, de reconstruction, de surveillance, de gardiennage, de securite, de mise en conformite, d'amelioration, meme si ces travaux sont occasionnes par la vetuste ou sauf s'ils concernent ceux vises par l'article 606 du Code civil, de gestion des parties communes, sans que cette enumeration soit limitative, - aux frais et honoraires de syndic, de maniere a ce que le loyer percu par le bailleur soit net et franc de tout frais quelconques. Les provisions seront payables trimestriellement dans les conditions et aux dates de paiement des loyers. Au cas ou en fin de trimestre, la provision versee se revelerait inferieure aux charges anterieures, le preneur s'engage a rembourser, sur premier appel du bailleur, toutes les sommes qui se reveleraient necessaires pour compenser le montant des charges reelles. Le bailleur effectuera un arrete annuel des comptes. En consequence, il s'engage a fournir au preneur un decompte exact des charges locatives pour l'annee ecoulee qui devra etre adresse dans un delai de six mois a l'expiration de ladite annee, chaque annee prise en consideration etant une annee civile. 12 Ce decompte, apres certification par le gerant de I'immeuble, aura un caractere definitif, tant vis-a-vis du bailleur que du preneur. Si en fin d'annee, les provisions versees se revelent inferieures aux charges reelles, le preneur s'engage a rembourser, sur premier appel du bailleur, toutes les sommes qui seront necessaires pour compenser le montant total des charges reelles. Les sommes trop versees viendraient en deduction des provisions de l'annee en cours. Au cas ou, pour une raison quelconque, le preneur serait amene a quitter les locaux, objet du present bail, le montant correspondant au decompte des provisions versees par le preneur jusqu'a son depart et les charges reellement payees par le bailleur jusqu'a cette epoque, se fera de plein droit par imputation sur le depot de garantie tel que prevu aux presentes. ARTICLE 14 - CLAUSE PENALE Toute somme due par le preneur au titre des charges, clauses et conditions du present bail sera automatiquement augmentee de 10 % si le paiement n'intervient pas dans le delai de 10 jours suivant la mise en demeure effectuee par le bailleur, soit par acte extrajudiciaire, soit par lettre recommandee avec demande d'avis de reception. ARTICLE 15 - INDEMNITE D'OCCUPATION Dans l'hypothese ou malgre une decision constatant les effets de la clause resolutoire, ou la resiliation du bail, le preneur refuserait de liberer les lieux, il serait alors redevable d'une indemnite d'occupation fixee sur la base du dernier loyer contractuel augmente de 50% et ce, jusqu'a liberation effective des lieux loues. Article 16 - CLAUSE RESOLUTOIRE A defaut par le preneur d'executer une seule des charges et conditions du bail ou encore de payer a son echeance un seul terme de loyer, partiellement ou en totalite, ou encore a defaut de payer 1es accessoires du loyer, le montant de la clause penale, le montant de l'indemnite d'occupation, tous arrieres resultant de la fixation judiciaire, notamment en revision ou en renouvellement, ce qui inclut les interets de droits fixes judiciairement sur ces complements d'arrieres de loyers, tous autres interets contractuels, les complements de depot de garantie, et d'une facon generale, a defaut de paiement de toutes sommes dues en application des presentes, le bail sera resilie de plein droit et sans aucune formalite judiciaire, un mois apres une mise en demeure d'executer ou une Sommation de payer demeuree sans effet pendant ce delai, et contenant declaration par le bailleur de son intention d'user du benefice de la presente clause. Dans tous les cas, si le preneur se refuse a quitter les lieux, bien que le bail soit resilie de plein droit, son expulsion pourra etre ordonnee par simple ordonnance de refere rendue par Monsieur le President du Tribunal de Grande Instance, qui sera executoire sur minute par provision. Article 18 - TOLERANCES - USAGES LOCAUX Aucun fait de tolerance de la part du bailleur ne pourra creer un droit au profit du preneur, ni creer une derogation aux presentes. 13 Pour tout ce qui n'est pas prevu, il est refere a la loi et aux usages locaux. ARTICLE 19 - ELECTION DE DOMICILE Pour l'execution des presentes, les parties font election de domicile, a savoir: - le bailleur a son domicile ou siege social, - le preneur dans les lieux loues. Le preneur s'oblige a informer le bailleur de tout changement de son siege social. Fait en deux exemplaires originaux, En 13 pages et une annexe A Paris, le 31/03/2000 LE PRENEUR LE BAILLEUR ANNEXES: Plans des locaux EX-10.79.1 8 c20397_ex10-791.txt LEASE Exhibit 10.79.1 1 LEASE BETWEEN THE UNDERSIGNED: MAJORQUE, a Limited Liability Company with capital of 1,000,000 Francs, headquartered in Wissous (91320), 18 avenue Ampere, recorded with the Register of Commerce and Companies of Evry under No. B 420 026 387, represented by its Manager, Ms. Emily Benharrous. Hereinafter "LESSOR," PARTY OF THE FIRST PART, AND: INTER PARFUMS, a corporation with capital of 45,515,720 Francs, with headquarters at 4 Rond-Point des Champs-Elysees, 75008 Paris, recorded with the Register of Commerce and Companies of Paris under No. B 350 219 382, represented by Mr. Philippe Benacin, Chairman of the Supervision Board, duly authorized for this instrument. Hereinafter "LESSEE," PARTY OF THE SECOND PART, THE FOLLOWING HAS BEEN ESTABLISHED: Lessor leases and rents, pursuant to the provisions of decree No. 53-960 of September 30, 1953, as amended, to Inter Parfums, which the latter accepts, the premises described below, in a building located in Paris 8th (arrondissement), 18 avenue Franklin Roosevelt. ARTICLE 1 - DESCRIPTION In the building located in Paris 8th (arrondissement), 18 avenue Franklin Roosevelt, on the 1st floor: - - A space including ten offices, a kitchen, a file room, two toilets (one of which double), an entrance. Individual electric heating. As these spaces arise from the enclosed plan (Addendum 1). 2 As said premises exist and are, without any exception or reservation, without need of more ample description since Lessee declares that it knows them, having seen and visited them for the purpose hereof. The parties agree that the leased premises form an indivisible whole. ARTICLE 2 - TERM This lease is granted and accepted for a term of nine years, from April 7, 2000. Lessee may cancel at the end of each three-year period, under the conditions set forth in the decree of September 30, 1953. Given the renovations necessary in these premises, Lessor grants a two-month grace period for the rent and charges, so that the first payment of rent and charges will take place on June 7, 2000. ARTICLE 3 - OBTAINING ENJOYMENT AND STATEMENT OF THE CONDITION OF THE PREMISES The premises will be taken as they are on the beginning date of enjoyment, whereby Lessee may not require repairs or work of any nature throughout the term of the lease. Throughout the term of the lease, Lessee must make all tenant repairs. At the end of the lease, the leased premises must be returned in perfect tenant repair condition. Lessee may not require any renovation, any claim or any work, and may not exercise any remedy against Lessor due to cases of force majeure and any other causes of any type in connection with the condition of the premises. Lessee will pay for all fitting out work, installations and construction ordered by a law or regulation in matters of hygiene or safety on the premises themselves. ARTICLE 4 - UTILIZATION OF THE PREMISES Lessee may not give the premises any utilization other than that set forth in this lease, to wit: SALE OF COSMETIC PRODUCTS Lessee must permanently engage in the aforementioned activities on the premises. [initials] 3 ARTICLE 5 - CHARGES AND CONDITIONS In addition, this lease is executed under the following charges and conditions which Lessee pledges to perform and accomplish under penalty of any damages and even cancellation if Lessor so chooses: 1) Lessee must furnish and keep furnished the leased premises with equipment, merchandise, furniture and movables, in sufficient quality and value to cover the payment of the rent and the performance of the conditions of the lease. 2) Lessee may not close the leased premises, which must remain open for the aforementioned commercial activity throughout the term of the lease and until its expiration, except in case of force majeure or Lessee's need to do work that requires closing. 3) It will keep the premises in good tenant repair conditions throughout the term of the lease and will do at its own expense all works or repairs of any nature which are or may become necessary, including those that may arise from a regulatory obligation, so that at the end of the lease, it may return them in good tenant repair condition. It is also agreed that, should the administration or any authority whatsoever require, at a certain time, a modification and/or utilization of the space, even if such requirement follows a case of force majeure, all charges and consequences of this modification and/or utilization will be fully paid by Lessee, which pledges to do so. However, Lessee may not be obligated to do the work necessary for such modification and/or utilization of the space. 4) Lessee pledges to maintain and replace, at its expense, any amount of work and repairs (including due to old age) all installations, pipes, devices, closures and, more generally, all elements furnishing or making up the leased premises, without exception. Lessee agrees that, should it fail to do all work related to maintenance, repair and replacement in its charge, Lessor may do such work and repairs in its place and stead, thirty days after sending a registered letter with return receipt requested, which remains without response, except in emergencies; Lessee pledges to reimburse the actual cost thereof, including all related expenses and fees within fifteen days from receipt of Lessor's statement. 5) It will enjoy the premises as a good head of family, in accordance with the utilization indicated above, and may not, in any case, do or cause anything to be done that may deteriorate them; it must immediately notify Lessor of any damage caused to the entire property and all damage or deterioration produced on the leased premises. 6) It must remove without delay all frames and decoration as well as all installations done by it and that need to be removed in order to seek and repair leaks of all types, cracks in smoke or 4 ventilation stacks, especially after a fire or leak, and in general, for the execution of work, provided such search is proven to be justified. [initials] It may not invoke in any manner the liability of Lessor if the public water or electricity services are interrupted in the building following repairs or other causes. 7) Lessee may not engage on the leased premises in any construction or demolition concerning the masonry of the building, nor piercing of walls, partitions or floors, without express written consent from Lessor, whereby the work authorized by the latter must be done under the supervision of its architect, whose fees will be paid by Lessee. The work authorization must be materialized in three acts: o a precise description o a modification plan mentioning the current condition o the insurance policies necessary for the realization of the work which must be signed and approved by Lessor. However, at the time of the request for authorization, Lessor may condition its agreement on the restoration of the premises to their original state. 8) All embellishments, constructions, modifications, improvements, installations and decorations of any type done by Lessee on the leased premises during the term of the lease, remain, at the end of the lease, at any time and under any status, property of Lessor, without any indemnity for Lessee, including electric installations, air conditioning units in their entirety, and all other elements of equipment possibly installed on the leased premises, without limitation. Lessee will allow, without remedy against Lessor, the work executed in the building, on the public road, or in neighboring buildings, even if they constitute a nuisance for its operation. 9) Lessee must pay for any modification of the incoming pipe, replacement of the meter or internal installations that may be required by the distributors of water, electricity, heating or air conditioning. In particular, in the event or installation of a lost water air conditioning system, it pledges to install a separate meter at its own expense. 10) Lessee must comply with all charges, city regulations, police and road regulations and do nothing that may trouble the tranquility or cause a trouble of enjoyment to the neighbors and to the inhabitants of the building, especially due to noise, odors, smoke, etc., whereby the owner declines any liability in this regard. 11) It must rigorously comply, in the operation of its activity, with laws, regulations and 5 administrative prescriptions, and must take upon itself, if applicable, any modifications or installations that may be required by the administration or health services so that Lessor may never be preoccupied in this regard. [initials] 12) It must take all necessary precautions to avoid all noises, odors, and smoke and to prevent the existence of any harmful animals or insects. It must continuously supervise its personnel and assure their correct behavior. 6 It will allow the installation and passage of all water, gas, electricity, and heating pipes, all ducts regardless of their location, apparent or not found on the leased premises and its accessories or appurtenances, to the entire extent required, not only for the service of its own premises, but for the service of the building. 13) All tenant repairs concerning the leased premises, including repairs and replacements that become necessary during the lease, in glass and mirrors, shutters, glass panes, chutes, water chutes, etc., will be paid by Lessee. It will have the obligation to maintain everything in good cleanliness, maintenance and operating condition. 14) Lessee may not claim from Lessor damages or rent reduction for leaks, floods, water damages or infiltrations of any type produced on the leased premises for any reason whatsoever. 15) Lessee must allow Lessor, its agent, and any person bearing the authorization of Lessor to visit the leased premises whenever they deem fit, especially in the event of work or repairs or during six months before the end of this lease; with the understanding that Lessor must notify Lessee sufficiently in advance and in writing, and take all necessary steps to interfere as little as possible with its activity. Furthermore, Lessee must allow Lessor, its agent, or any person bearing the authorization of Lessor to visit the leased premises whenever they deem fit in the event of sale of the building, during three months after the building is put on the market. 16) Lessee will insure and keep insured throughout the term of the lease against the risks of fire and explosion, implosion, glass breakage, as well as tenant risks, remedy of third parties and neighbors, water damages, without limitation to this list, the furniture, movables, equipment and merchandise found on the leased premises. The mirrors and glass in the space are not insured together with the building. It must regularly pay premiums and prove such payment at the first request of Lessor. Concerning more particularly the operation of the premises, Lessee must insure it pursuant to applicable administrative and legal regulations. Lessee will insure the leased premises at their reconstruction value. 17) Liability and remedy: Lessee and its insurers expressly waive any remedy and action against Lessor and its insurers, either due to the total or partial destruction of its equipment, furniture, movables and merchandise and, more generally, any objects belonging to it or in its possession for any reason whatsoever, or for their deterioration or for deprivation of enjoyment of the premises, and even in the event of total or partial loss of its business, including the intangible elements related to such business. Reciprocally, Lessor and its insurers expressly waive any remedy and actions to which they may be 7 entitled against Lessee and its insurers, in the event of damage of any type, direct or indirect, incurred by the leased premises, equipment or furniture made available to Lessee, as well as for loss of rent, trouble of enjoyment, or loss of operation caused to third parties that may arise therefrom. [initials] Furthermore, Lessee declares that it waives any remedy against Lessor and its insurer/s. - - In the event of damage, fire, theft, water damage, humidity or any other circumstance affecting its own assets and the assets that may be considered real estate by nature, by utilization or by incorporation, installed at its expense, whereby Lessee must take insurance against such risks, - - In the event of theft or other criminal act to which Lessee may be victim in the premises, - - In the event of notification, interruption, or elimination of the security guard of the building, - - In the event of interruption or untimely operation in water, gas, electricity, air conditioning service or, in general, in the event of interruption or stoppage, even prolonged, for a cause beyond the control of Lessor, in fluid service, heating, or any elements of the common equipment of the building, Lessee also waives claims against Lessor, in the event of material or intangible damage not intentionally caused by Lessor, indemnity for deprivation of enjoyment or loss of operation due to the total or partial interruption of its operation for any reason whatsoever. 18) Lessee will pay exactly the taxes, professional tax, and in general, all taxes, contributions, and dues payable by it, and for which Lessor may be responsible for any reason. It must prove such payment to Lessor at any request. It will also pay the land tax for the leased premises and any new taxes concerning the premises that may be required by the Tax Administration, even if normally such taxes are paid by Lessor. It will also pay the lease fee and the additional lease fee tax if Lessor does not maintain its VAT option. 19) Lessee will be obliged to pay, from the effective date of the lease, to Lessor or its manager, its share of all charges, services or expenses or the building, including the taxes and dues related to the building, such as sweeping tax, tax for removal of household garbage and industrial or commercial waste, land taxes and related taxes, as well as any new tax or those replacing them. [handwritten] land tax ~14,000 Francs ------------- 20) Finally, it will pay directly its consumption of electricity, water, heating, and the expenses of all telephone subscriptions, taxes, and cost of all communications. 8 21) Lessee must not cause the installation of any sign or advertising plaque on the facade of the leased premises, nor modify the exterior appearance of the building by installing awnings, canopies, blinds, signs, etc., without authorization from Lessor, the Administration concerned, and the condominium. Should Lessee wish to install a commercial plate, it must be in accordance with the appearance of the building, installed next to the existing one, in the same size and style as the latter, at Lessee's exclusive expenses and with prior approval. [initials] It will pay the cost of any tax or royalty related to these signs. 22) Lessee may not request a reduction of rent or indemnity in the event of suppression, interruption or poor operation of the various services of the building (heating, water, electricity, etc.), regardless of their cause and duration. 23) Lessee pledges to move in and move out most of its furniture through the windows of the leased space. ARTICLE 6 - TRANSFERS - SUBLEASES Lessee may not transfer the enjoyment of the leased premises to any party, in any form, even temporarily, be it free of charge and precarious, and may not sublease all or part of the premises or place its business under lease management. However, Lessee may sublease or domicile one or several companies legally belonging to the same group as Lessee on the leased premises. To do so, it must submit the company or companies to Lessor, by registered letter with acknowledgment of receipt, for approval. Such approval must be the object of a written confirmation and agreement between the parties, to wit: Lessee, Lessor, and the subLessee or subLessees. In any event and at any time, the subLessee or subLessees may not claim direct or indirect rights against Lessor, whereby Lessee remains the sole guarantor, jointly liable for the charges and conditions of this lease. It is specified that the subLessee or subLessees will not have at any time any right or any occupancy title enforceable against Lessor at the end of the lease. Lessee may not transfer its right in this lease other than in whole to the buyer of its entire business, which will perform all activities described in the lease, with obligation to call the Lessor to participate in the transfer, under penalty of nullity of the transfer granted in violation of this clause, and even cancellation of this lease, if Lessor so chooses. 9 Lessee will remain joint ly and severally guarantor with its transferee and all subsequent transferees for the payment of rent, charges accrued or yet to accrue, and for the performance of the conditions hereof. To be valid, any transfer must be instrumented in the presence of Lessor or after duly inviting Lessor to participate. A registered copy of the transfer document must be given to Lessor at no charge, within 15 days from the transfer. Lessee must send to Lessor, by registered letter with acknowledgment of receipt, the draft transfer instrument in its entirety, indicating in particular, under penalty of nullity of the notification, the name and address of the buyer, the price, payment terms and, in general, all the conditions of the planned transfer, as well as the places, day and time scheduled for the execution of this transfer, which may not take place less than one month after receipt of this notification. [initials] Said draft will be signed by the candidate buyer, with the mention that the draft is signed as a simple declaration of intent. If the parties executed binding agreements, even with the suspensive condition of settlement of the preferred rights and settlement of creditors' rights, the above notification must include the termination of the entire said instrument. Lessor will have the right, within one month from receipt of said notification, to inform Lessee in the same manner, in accordance with the preferred right recognized to it, under equal conditions of its decision to use this right for its own profit or for any individual or artificial person it wishes to substitute. In the event of exercise of the preferred right, the transfer must then be settled within fifteen days. The preferred right so defined will be imposed under the same conditions to the successive buyers during the entire term of the lease, its extension, or renewals. The formal condition above, and, in particular, the provisions concerning the preferred right, will apply to all transfers regardless of their form and method; transfers for payment or free of charge, transfer or contribution of the lease right and business, amicable or court-ordered transfer. ARTICLE 7 - INTERNAL REGULATION - CONDOMINIUM REGULATION In the interest of the security, hygiene, good order and cleanliness of the building, Lessee pledges that its behavior will be peaceful and to comply, in addition to municipal and prefectural decisions, with all orders that may be given to it by Lessor. It may not engage on the leased premises in any public sale of furniture or other objects. 10 It must not use any device or machine which, by noise, odor, humidity, or trepidations would be of a nature to bother the other tenants, the neighbors or to damage the building. It must pay all city and police charges, foreseen or unforeseeable, usually paid by tenants, and comply with police regulations. Lessee must deposit its personal garbage in the containers installed for this purpose in the building. Furthermore, it is formally agreed that neither Lessor nor its employees will be responsible for theft, embezzlement, robbery, or attempts of such crimes against the tenant and the resulting damage, including to the real estate assets, and that Lessor will not take any responsibility for the personal services requested by Lessee from its employees, such as commission, communications, other than in connection with the keys, cash, or objects held by them on behalf of the tenants or third parties. By express agreement, Lessor declines responsibility as of now, pursuant to article 1725 of the Civil Code for any damage or trouble of enjoyment that may be caused to Lessee because of third parties; Lessee waives any remedy against it and may exercise directly its remedy, if it so chooses, against the authors of the trouble, whereby, in addition, Lessor hereby subrogates it in its rights and actions in relation to this issue. [initials] In the event of absence, it must leave the keys of the premises with a person designated by it to Lessor, so that in the event of accident, fire, water or gas leak, work, or any other reason, it may be possible to access the leased premises and that, in the event of loss, all necessary precautions may be taken immediately. ARTICLE 8 - MAIN RENT This lease is granted and accepted for an annual rent of 587,500 FRANCS (FIVE HUNDRED EIGHTY-SEVEN THOUSAND FIVE HUNDRED FRANCS) not including charges and taxes, which Lessee pledges to pay with the related value added tax, by quarter and on maturity. The quarters begin on the first day of January, April, July and October. ARTICLE 9 - TRANSITION TO THE SINGLE EUROPEAN CURRENCY As needed and pursuant to the general principles of monetary law, receivables of amounts of money, expressed and/or payable in French Francs hereunder, will be ipso jure considered expressed and/or payable in the single European currency when the Franc stops being legal or, more generally, is replaced by the single European currency pursuant to community and/or national regulations. 11 The rate and conditions for the conversion of the French Francs will be those resulting from the application of the provisions of article 109-L of the Treaty of the European Union. Of course, the replacement of the French Franc by the single European currency will not cause an innovation or breach between the parties, even if, for technical reasons, the National Construction Cost Index published by INSEE is replaced by a substitution index or a similar or equivalent index. ARTICLE 10 - SLIDING SCALE CLAUSE The rent established above will be automatically revised each year on the due date and for the first time on April 1, 2001, upwards or downwards and in the exact proportion of the variation of the Construction Cost Index published by INSEE whereby the contractually chosen base index is that of the third quarter of 1999 (1080), so that the first revision on April 1, 2001 will be based on the variation of the indexes of the third quarter 1999 and third quarter 2000. For the following years, the comparison index used to calculate the revision will be the index of the third quarter of the year preceding the revision and the base index, the index of the third quarter of the year preceding the comparison index. If, for any reason, the index published by INSEE becomes inapplicable, the parties agree to replace it by a new equivalent index which will be determined, in the absence of agreement, by order upon request of the President of the Court of First Instance of Paris. The rent indexation clause constitutes an essential and decisive clause without which Lessor would not have contracted. [initials] ARTICLE 11 - PAYMENT OF THE RENT Lessee pledges to pay the rent and its incidentals to Lessor, on the four due dates during the year, on the first day of January, April, July and October. For this purpose, Lessee pledges to pay to Lessor the amount established by the latter as down payment on charges, services, supplies, taxes and others. At the end of the year, i.e., December 31 of each year, a final statement will be issued with the due date notice of June, and any possible excess paid will be reimbursed. Lessor pledges to communicate to Lessee, at the first request of the latter, any receipt related to the final statement of charges. In the event of assignment of the lease during the year, the final statement will be issued with the results of the prior year and projections for the current year. In the event of dispute, the payments made by Lessee will be applied by Lessor in the following order: 12 - - expenses for collection and proceedings - - damages - - interest - - security deposit and adjustment of the security deposit - - receivables for rent or occupancy indemnities; concerning these items, the application will be made by Lessor with priority from the amounts that are not contested - - adjustment in the working capital fund - - provision on common charges Within each of these items, priority will be given to accessories or appurtenances over the main space. ARTICLE 12 - SECURITY DEPOSIT As a surety and guarantee for the performance of the obligations of all types arising from this lease for Lessee, the latter pays today the amount of 146,875 Francs corresponding to three months of rent in the first year. This amount will be kept by Lessor during the entire term of the lease until full and final payment of any indemnity of any nature Lessee may owe to Lessor at the end of the lease and when it vacates the premises. This amount will not produce interest. In the event of cancellation of the lease for non-performance of these conditions or for any cause imputable to Lessee, such guarantee payment will remain in the hands of Lessor as first damages, without prejudice to all others. [initials] It is expressly agreed that, in the event of variation in rent under the above clause, the amount paid as security deposit must be matched to the new rent, so that the security deposit is always in an amount equal to three months of rent. Lessee will pay, when paying the first increased rent, the amount necessary to replenish the deposit, and in the event of reduction of the rent, Lessor will refund to Lessee the amount in excess. In addition, in the case of Lessor's debt, it must be offset against any receivables arising from this lease possibly held by Lessor against Lessee, and then, in the event of a settlement or court-ordered liquidation, Lessor has grounds to offset the amount of such security deposit against any amounts liable to be declared by it as receivables, whereby the modification does not change the nature of the receivables or the possible privileges attached thereto. 13 ARTICLE 13 - COMMON CHARGES OF THE BUILDING Lessee will pay charges by paying a provision calculated quarterly, based on the prior charges. These provisions will be deducted from the actual charges calculated annually. For the first year, the provision is of 52,875 FRANCS (FIFTY-TWO THOUSAND EIGHT HUNDRED SEVENTY-FIVE FRANCS), the VAT being billed separately. Lessee's contribution to charges will be calculated on the basis of the current distribution of the building, i.e., 261 square meters for the lot concerned of the general common parts of the building, out of a total of 2,061 square meters. 14 It is specified that the charges correspond: - - to all the taxes of the building, including land tax, - - to the services rendered by Lessor related to the building as well as condominium charges in full, not including the work referred to in article 606 of the Civil Code, - - to expenses for equipment, upkeep, cleaning, maintenance, repair, refurbishing, replacements, renewal, reconstruction, monitoring, security guards, security, bringing up to Code, improvement, even if such work is caused by the old age of the building or unless they concern the cases referred to in article 606 of the Civil Code, management of the common parts, without limitation thereto, - - to the expenses and fees of the building manager, so that the rent received by Lessor is net and free of any expenses. The provisions will be paid quarterly under the conditions and on the dates of payment of the rent. If, at the end of the quarter, the provision paid is lower than the previous charges, Lessee pledges to reimburse, at Lessor's first request, all amounts that become necessary to compensate the amount of the real charges. Lessor will issue an annual statement of accounts. Consequently, it pledges to give Lessee an exact statement of the tenant charges for the past year, sent to Lessee within six months from the end of said year, whereby each year taken into consideration is a calendar year. [initials] 15 This statement, after being certified by the manager of the building, will be final both for Lessor and for Lessee. If, at the end of the year, the provisions paid are lower than the actual charges, Lessee pledges to reimburse, at Lessor's first request, all amounts necessary to compensate the total amount of the actual charges. Excess amounts paid are deducted from the provisions of the current year. If, for any reason, Lessee must leave the premises hereunder, the amount corresponding to the statement of provisions paid by Lessee until its departure and the charges actually paid by Lessor until that time, will be issued ipso jure, with deduction from the security deposit, as set forth herein. ARTICLE 14 - PENALTY CLAUSE Any amount owed by Lessee for charges, under the clauses and conditions hereof, will be automatically increased by 10% if the payment is not made within 10 days after the notice sent by Lessor either by extrajudicial act or by registered letter, with return receipt requested. ARTICLE 15 - OCCUPANCY INDEMNITY In the event that, in spite of a decision establishing the application of the cancellation clause, or the cancellation of the lease, Lessee refused to vacate the premises, it will owe an occupancy indemnity established on the basis of the last contractual rent plus 50% until the actual release of the leased premises. ARTICLE 16 - RESOLUTORY CLAUSE Should Lessee fail to pay any of the charges and comply with the conditions of the lease or to pay on the due date even a single rent, partially or in full, or should it fail to pay rent incidentals, the amount of the penalty clause, the amount of the occupancy indemnity, all overdue amounts arising from a court decision, especially by revision or renewal, including court established interest on these additions to overdue rent, all other contractual interest, additions to the security deposit and, in general, should it fail to pay any amounts owed by application hereof, the lease will be cancelled ipso jure and without any judicial formality one month after a notice to pay or a summation to pay which remains without effect during this term, containing Lessor's declaration of intent to use the benefit of this clause. In all events, should Lessee refuse to leave the premises, although the lease is cancelled ipso jure, its eviction may be ordered by simple order or referral rendered by the President of the Court of First Instance which will be executory provisionally based on the original judgment. ARTICLE 18 - TOLERANCES - LOCAL USAGE No tolerance from Lessor may create a right for Lessee or a derogation hereto. 16 [initials] 17 For all aspects not set forth, reference is made to the law and local usages. ARTICLE 19 - ELECTION OF DOMICILE For the performance hereof, the parties elect domicile, to wit: - Lessor at its domicile or headquarters, - Lessee on the leased premises. Lessee pledges to inform Lessor of any change of its headquarters. Issued in two originals, On 13 pages and 1 addendum In Paris, 03/31/2000 LESSEE LESSOR [signature] [signature] ENCLOSURES: Plans of the premises EX-10.80 9 c20397_ex10-82.txt CORRESPONDENCE Exh. 10.80 CREDIT LYONNAIS DIRECTION DE MARCHE ENTREPRISES CHAMPS ELYSEES - PARIS OUEST INTER PARFUMS HOLDING 4 Rond Point des Champs Elysees 76008 PARIS A l'attention de Monsieur Philippe SANTI V/Reference N/Reference CC/MAD Paris, le 22 Mars 2001 [GRAPHIC OF PHONE] 01.49.53.14.04 Cher Monsieur, Je faie suite a notre entretien relatif aux demandes d'informations financieres et bancaires emanant de votre maison-mere americaine. Je vous prie de trouver ci-apres le detail des principaux concours dont beneficiaient les societes inter parfums Holding, inter parfums SA et inter parfums Grand Public aupres de notre Etablissement au 31/12/00 : o INTER PARFUMS HOLDING: --------------------- -Facilite de Caisse :neant. o INTER PARFUMS SA: ---------------- -Facilite de Caisse : 4 000 KF. -Credit de Tresorerie : 8 000 KF. -Escompte de Creances Commerciales : 12 000 KF. o INTER PARFUMS GRAND PUBLIC: -------------------------- -Facilite de Caisse : 2 000 KF. Ces differents concours ont ete consentis a duree indeterminee et sont regis par les dispositions de la Loi Bancaire du 24 Janvier 1984. Le renouveilement de ces concours fait l'objet d'un examen annuel par notre Etablissement, a reception des comptes auditee de vos societes. Esperant ainsi repondre a votre attente, je vous prie d'agreer, Cher Monsieur, l'expression de mes sentiments les mellieurs. /s/ Christian ------------- Directeur Commercial ADRESSE: 55, AVENUE DES CHAMPS ELYSEES - 75381 PARIS CEDEX 08 - TELEX: 642 008 CREDELYS PARIS - -------------------------------------------------------------------------------- Credit Lyonnais - S.A. su capital de 1767 470 939 - SIREN 954 509 741 - RCS Lyon EX-10.80.1 10 c20397_ex10-821.txt CORRESPONDENCE Exh. 10.80.1 [logo] CREDIT LYONNAIS DEPARTMENT OF CORPORATE CONTRACTS CHAMPS ELYSEES - PARIS WEST INTER PARFUMS HOLDING 4, Rond-Point des Champs Elysees 76008 PARIS Attn: Mr. Philippe SANTI Your reference Our reference CO/MAD Tel. 01.49.53.14.04 Paris, March 22, 2001 Dear Sir: I am following up on our conversation in regard to the request for financial and banking information issued by your American parent company. Please find below the details of the main facilities offered by our Establishment to the companies Inter parfums Holding, Inter parfums SA, and Inter parfums Grand Public as of 12/31/2000: o INTER PARFUMS HOLDING: --------------------- - Cash facility: none. o INTER PARFUMS SA: ---------------- - Cash Facility: 4,000 KF, - Cash Credit: 8,000 KF, - Commercial Credit Discount: 12,000 KF. o INTER PARFUMS GRAND PUBLIC: -------------------------- - Cash Facility: 2,000 KF. These various facilities were granted for an indefinite term and are governed by the provisions of the Banking Law of January 24, 1984. The renewal of these facilities is examined annually by our Establishment upon receipt of the audited accounts of your companies. Hoping that we have met your expectations, we remain, Very truly yours, /s/ Christian Carata --------------------- Commercial Director ADDRESS: 55, AVENUE DES CHAMPS ELYSEES - [illegible] PARIS CEDEX 06 - TELEX: 642 008 CREDELYS PARIS - -------------------------------------------------------------------------------- Credit Lyonnais - Corporation with capital of 1,757,470,939 [illegible] - SIREN 854 509 741 - RCS Lyon EX-10.81 11 c20397_ex10-81.txt CORRESPONDENCE Exh. 10.81 BARCLAYS 45, boulevard Haussmann - 75315 Paris Cedex 09 Telephone: 01 55 27 55 27 - Fax: 01 55 27 50 01 08 JUIN 1998 INTERPARFUMS 4, Rond Point des Champs Elysees 75008 PARIS Business Banking France A l'attention de M. Philippe SANTI ---------------------------------- French Multinational Team BD/EM - [GRAPHIC OF PHONE]: 01.55.27.58.27 [GRAPHIC OF NOTE]: 01.55.27.51.22 Paris, le 4 juin 1998 Messieurs, Conformement a nos accords lors de notre dernier entretien, nous avons le plaisir de vous confirmer le reamenagement des conditions liees aux facilites mises a votre disposition dans nos livres. Nous vous rappelons que nous vous avions accorde: FACILITE DE CAISSE Montant: FRF 6.000.000,- ------- Taux: T4M* + 0,80 % ---- ESCOMPTE COMMERCIAL Montant: FRF 9.000.000,- ------- Taux: PIBOR** + 0,60% ---- Nous vous informons que nous appliquerons les nouvelles conditions ci-dessous a compter du 1er juillet 1998: FACILITE DE CAISSE Montant: FRF 6.000.000,- ------- Taux: T4M* + 0.60% ---- ESCOMPTE COMMERCIAL Montant: FRF 9.000.000,- ------- Taux: PIBOR** + 0.40% ---- Il est precise que les conditions d'interets ci-dessus mentionnees sont susceptibles de revision a tout moment en fonction de l'evolution du marche de reference. BARCLAYS Toute modification de ce taux de reference sera applicable des sa publication par les services competents de la Banque de France, ou Association Francaise des Banques, ou toute autre autorite financiere notamment etrangere, selon le cas. Le calcul du taux effectif global etant subordonne aux utilisations effectives, il n'est possible de donner qu'un exemple de calcul a titre indicatif (exemple ci-joint pour les credits par caisse et les credits d'escompte). Ces facilites etant consenties pour une duree indeterminee, nous vous precisons que l'alinea 1 de l'article 60 de la loi n(degree) 84-46 du 24 janvier 1984 nous fait obligation de vous informer des delais de preavis que nous respecterions dans l'eventualite de leur reduction ou de leur suppression : - - Trente jours pour les operations d'escompte et de mobilisations de creances commerciales, - - Soixante jours pour les autres credits. Ce d'elai courra de la date d'envoi par notre banque d'une lettre notifiant notre decision d'interrompre ou de reduire les concours precites. Cette lettre annule et remplace celle en date du ler juillet 1996 et ne vient en aucun cas s'ajouter a celle-ci. Nous vous prions d'agreer, Messieurs, l'expression de nos sentiments distingues. /s/ Christine Laine /s/ Bertrand Duvivier - ------------------- ---------------------- Analyste Senior Fonde de Pouvoirs Principal * T4M : Taux Moyen Mensuel du Marche Monetaire ** PIBOR : Paris Interbanking Offered Rate EX-10.81.1 12 c20397_10-811.txt CORRESPONDENCE Exh. 10.81.1 [logo] BARCLAYS 45, boulevard Haussmann - 75315 Paris Cedex 09 Telephone: 01 55 27 55 27 Fax: 01 55 27 50 01 [stamp] JUNE 08, 1998 INTERPARFUMS 4, Rond-Point des Champs Elysees 75008 PARIS Business Banking France Attention: Mr. Philippe SANTI French Multinational Team BD/EM - Tel: 01 55 27 58 27 [handwritten] Copy: PB Fax: 01 55 27 51 22 JGL Bach PS Paris, June 4, 1998 Gentlemen: In accordance with our agreement during our last meeting, we are pleased to confirm the adjustment of the terms of the facilities available to you. Please note that you have been granted: LINE OF CREDIT Amount: 6,000,000.00 FRF ------ Rate: T4M* + 0.80% ---- TRADE DISCOUNT Amount: 9,000,000.00 FRF ------ Rate: PIBOR** + 0.60% ---- Please also note that the new terms, below, will be effective as of July 1st, 1998: LINE OF CREDIT Amount: 6,000,000.00 FRF ------ Rate: T4M* + 0.60% ---- TRADE DISCOUNT Amount: 9,000,000.00 FRF ------ Rate: PIBOR** + 0.40% ---- We would like to clarify that the interest terms specified above are subject to change at any time, in accordance with base market trends. Barclays Bank PLC, French Branch - Headquarters: 45, boulevard Haussmann, 75009 Paris - [illegible] [logo] BARCLAYS Any modification of this base rate is applicable upon its reporting by the relevant departments of the Banque de France, or the Association Francaise des Banques [French Association of Banks], or any other financial or foreign authority, if applicable. As calculation of the overall effective rate is subject to the effective applications, it is possible to provide Fonly one example of calculation, for informational purposes (example attached for cash credits and discount credits). As these facilities are granted for an unspecified length of time, we would like to clarify that paragraph 1 of article 60 of law no. 84-46 of January 24, 1984, requires that we inform you of the periods of notice that we will observe in the eventuality that these facilities are reduced or removed: - - Thirty days for discount operations and assignment of receivables, - - Sixty days for other credits. This time period begins from the date the letter notifying our decision to interrupt or to reduce the aforementioned assistance is sent. This letter nullifies and replaces the letter dated July 1, 1996, and may in no way be combined with it. Very truly yours, /s/ Christine Laine /s/ Bertrand Duvivier - ------------------- ---------------------- Senior Analyst Senior Banking Executive *T4M: Average Monthly Money Market Rate **PIBOR: Paris Interbanking Offered Rate EX-10.82 13 c20397_ex10-80.txt CORRESPONDENCE Exhibit-10.82 BANQUE OBC - ODIER BUNGENER COURVOISIER 5 AOUT 1998 INTER PARFUMS SA 4, rond-point des Champs-Elyseesuthier 75008 PARIS Le 31 Juillet 1998 Christine PENIN Service Engagements Tel : 01.45.02.44.12 Messieurs, Nous vous confirmons que notre Comite de Credit a accepte de maintenir la ligne d'escompte de vos creances professionnelles utilisable soit par escompte de papier commercial, soit par mobilisation de creances professionnelles, dans les conditions suivantes : Montant : F. 10.000.000, o (DIX MILLIONS DE FRANCS FRANCAIS) - -------- Conditions financieres : agios decomptes lors de l'escompte au taux du Pibor d'usance, majore de 0,40 point, cc taux variant cn fonction du taux de reference. Nous vous remercions de bien vouloir marquer votre accord sur les termes de la presente, en nous en retournant un exemplaire dument paraphe et revetu de la mention manuscrite [[ BON POUR ACCORD ]] suivie de la signature d'une personne accreditee. Nous vous prions d'agreer, Messieurs, l'expression de nos sentiments distingues. BANQUE OBC - ODIER BUNGENER COURVOISIER /s/ Cecile Sornin /s/ Catherine Hongnat ----------------- --------------------- EX-10.82.1 14 c20397_ex10-801.txt CORRESPONDENCE Exh. 10.82.1 [logo] BANQUE OBC - ODIER BUNGENER COURVOISIER [stamp] AUGUST 5, 1998 INTER PARFUMS SA 4, rond-point des Champs Elyseesuthier [sic] 75008 PARIS July 31, 1998 Christine PENIN Loan Department Tel: 01 45 02 44 12 Gentlemen: This is to confirm that our Credit Committee has agreed to keep the discount line for your business liabilities available either through discounted bills, or through assignment of business receivables, in accordance with the following terms: AMOUNT: 10,000,000.00 F (TEN MILLION FRENCH FRANCS) FINANCIAL TERMS: agios [charges] deducted at the Pibor usance rate discount, plus 0.40 percent; this rate varies depending on the base rate. Please indicate your agreement to the terms of this letter by sending us a copy, duly initialed and with the handwritten note "AGREEMENT GIVEN BY," followed by the signature of an authorized person. Very truly yours, BANQUE OBC - ODIER BUNGENER COURVOISIER /s/ Cecile Sornin /s/ Catherine Hongnat ----------------- --------------------- [illegible letterhead] EX-10.83 15 c20397_ex10-85.txt CORRESPONDENCE Exhibit 10.83 BANQUE OBC - ODIER BUNGENER COURVOISIER INTER PARFUMS SA 4, rond-point des Champs-Elyseesuthier 75008 PARIS Le 31 Juillet 1998 Christine PENIN Service Engagements Tel : 01.45.02.44.12 Messieurs, Nous vous confirmons que notre Comite de Credit a accepte de maintenir la ligne d'autorisation globale de decouvert et de spot financier, dans les conditions suivantes : Montant : F. 10.000.000,- (DIX MILLIONS DE FRANCS FRANCAIS) - -------- Conditions financieres : - ----------------------- - - pour le decouvert : agios decomptes par trimestre civil au taux moyen mensuel du marche monetaire (actuellement 3,3771% l'an) majore de 0,60 point, ce taux variant en fonction du taux de reference et payables a terme echu, - - pour le spot : agios decomptes lors de l'escompte au taux du Pibor d'usance, majore de 0.50 point, ce taux variant en fonction du taux de reference. Nous vous remercions de bien vouloir marquer votre accord sur les termes de la presente, en nous en retournant un exemplaire dument paraphe et revetu de la mention manuscrite [[BON POUR ACCORD]] suivie de la signature d'une personne accreditee. Nous vous prions d'agreer, Messieurs, l'expression de nos sentiments distingues. BANQUE OBC - ODIER BUNGENER COURVOISIER /s/ Cecile Sornin /s/ Catherine Hongnat ----------------- --------------------- EX-10.83.1 16 c20397_ex10-851.txt CORRESPONDENCE Exhibit 10.83.1 [logo] BANQUE OBC - ODIER BUNGENER COURVOISIER INTER PARFUMS SA 4, rond-point des Champs Elyseesuthier [sic] 75008 PARIS July 31, 1998 Christine PENIN Loan Department Tel: 01 45 02 44 12 Gentlemen: This is to confirm that out Credit Committee has agreed to keep the overall authorization line for overdraft and spot, in accordance with the following terms: Amount: 10,000,000.00 F (TEN MILLION FRENCH FRANCS) - ------ Financial Terms: - --------------- - - for overdraft: agios deducted by calendar quarter at the average monthly money market rate (currently 3.3771% per year) plus 0.60 percent; this rate varies depending on the base rate, payable when due, - - for spot: agios deducted at the Pibor usance rate discount, plus 0.50 percent; this rate varies depending on the base rate. Please indicate your agreement to the terms of this letter by sending us a copy, duly initialed and with the handwritten note "agreement given by," followed by the signature of an authorized person. Very truly yours, BANQUE OBC - ODIER BUNGENER COURVOISIER /s/ Cecile Sornin /s/ Catherine Hongnat ----------------- --------------------- [illegible letterhead] EX-10.84 17 c20397_ex10-84.txt CORRESPONDENCE Exhibit 10.84 BANQUE WORMS SUCCURSALE RIVE DROITE 370, RUE SAINT-HONORE - B.P. - 75027 PARIS CEDEX 01 TEL. 01 49 07 66 00 - FAX 01 49 07 66 60 - TELEX 216 019 F / 214 122 F Paris, le 22 decembre 1997 INTER PARFUMS 4, Rond Point des Champs Elysees 75008 PARIS A l'attention de MM. Santi Lecleroq ----------------------------------- Messieurs, Vous nous avez precise avec M. Benacin vos attentes en matiere de concours bancaires, au cours de notre entretien du 18 courant. Nous avons bien note que vous recherchiez une ligne de 10 MF utilisable en decouvert ou apot a T4M/PIBOR+0,625% et une ligne d'escompte commercial de 5 MF a PIBOR+0,60%. Comme convenu, et avant de vous etablir un cahier de conditions, je vous propose de reprendre contact avec vous au cours de la semaine du 12 janvier afin de savoir si notre proposition vous convient parfaitement. Nous souhaitons etre a vos cotes pour reussir votre projet dans le respect des valeurs qui animent votre groupe : transparence, reactivite et pragmatisme. Nous nous tenons a votre disposition pour repondre a vos questions et vous prions d'agreer, Messieurs, l'expression de nos salutations distinguees. /s/ L. Pages /s/ T. Clamon ------------ ------------- EX-10.84.1 18 c20397_ex10-841.txt CORRESPONDENCE Exhibit 10.84.1 [logo] BANQUE WORMS RIGHT BANK BRANCH 370, RUE SAINT-HONORE - B.P. 602 - 75027 PARIS CEDEX 01 TEL: 01 49 07 66 00 - FAX: 01 49 07 66 60 - TELEX: 216 019 F / 214 122 F Paris, December 22, 1997 INTER PARFUMS 4, Rond-Point des Champs Elysees 75008 PARIS Attention: Mr. Santi --------------------------- Gentlemen: During the course of our meeting on the 18th of this month, you explained to us, with Mr. Benacin, your expectations regarding bank support. We understand that you are looking for a line of 10 MF available in overdraft or spot at T4M/PIBOR + 0.625% and a trade discount line of 5 MF at PIBOR + 0.60%. As agreed, and before establishing terms and conditions with you, I propose that we speak again sometime during the week of January 12, so that we may know if our proposal is completely agreeable to you. We would like to be able to assist you in the success of your project, as we respect the values that motivate your group: openness, adaptability and pragmatism. Please do not hesitate to contact us should you have any questions. Very truly yours, /s/ L. Pages /s/ T. Clamon ------------ ------------- [illegible letterhead] EX-10.85 19 c20397_ex10-83.txt CORRESPONDENCE Exhibit 10.85 CREDIT AGRICOLE D'ILE-DE-FRANCE INTER PARFUMS 4, Rond-Point de Champs Elysees 75008 PARIS N/REF : PC/PS PARIS, le 19 juin 1996 A l'attention de Monsieur Jean-Guy LECLERO Messieurs, Suite a nos differents entretiens, vous trouverez, ci joint, les lignes et conditions que nous mettons a votre disposition. Nous vous assurons que nous apporterons le meilleur soin aux operations que vous voudrez bien nous confier. Nous restons a votre disposition pour tout renseignement ou precision complementaire. Nous vous prions d'agreer, Messieurs, l'expression de nos sentiments distingues. Le Responsable du Secteur I.A.A. & Distribution /s/ Philippe Simon ------------------ - - Page 1 of 2 - - Decouvert 5.000.000 F T4M + 1 - - Credit de tresorerie 5.000.000 F Pibor + 0,80 - - Excompte commercial 4.000.000 F Pibor + 0,60 - - M.C.N.E 6.000.000 F Pibor + 0,60 - - Change a terme 10.000.000 F Page 2 of 2 EX-10.85.1 20 c20397_ex10-831.txt CORRESPONDENCE Exh. 10.85.1 [logo] CREDIT AGRICOLE D'ILE-DE-FRANCE [illegible letterhead] INTER PARFUMS 4, Rond-Point de Champs Elysees 75008 PARIS Our Ref.: PC/PS PARIS, June 19, 1996 Attention: Mr. Jean-Guy LECLERQ Gentlemen: Following our various conversations, please find enclosed the lines and terms we are offering you. We assure you that the transactions you entrust to us will be handled with the utmost care. Please do not hesitate to contact us should you need any further details or information. Very truly yours, Manager of the I.A.A. & Distribution Sector /s/ Philippe Simon ------------------ REGIONAL OFFICE FOR CREDIT AGRICOLE MUTUEL DE PARIS ET D'ILE-DE-FRANCE [illegible] - - Overdraft 5,000,000 F T4M + 1 - - Cash credit 5,000,000 F Pibor + 0.80 - - Trade discount 4,000,000 F Pibor + 0.60 - - M.C.N.E 6,000,000 F Pibor + 0.60 - - Currency rate 10,000,000 F EX-21 21 c20397_exh-21.txt SUBSIDIARIES OF THE REGISTRANT LIST OF SUBSIDIARIES Exhibit 21 Name Jurisdiction Inter Parfums Holdings, S.A. France Inter Parfums, S.A. France Inter Parfums Grand Public, S.A France Inter Parfums Trademark, S.A France Jean Philippe Fragrances, LLC(1) New York Jean Philippe Fragrances do Brasil, Ltda.(1) Brazil - -------- (1) A limited liability company. -----END PRIVACY-ENHANCED MESSAGE-----