SERVICES AGREEMENT
THIS SERVICES AGREEMENT (this "Agreement") is made as of May 14, 2001 and
is deemed effective as of March 20, 2001 (the "Effective Date"), between USA
ELECTRONIC COMMERCE SOLUTIONS LLC, a Delaware limited liability company ("ECS"),
and STYLECLICK, INC., a Delaware corporation ("Styleclick").
WHEREAS, both Styleclick and ECS are indirect subsidiaries of USA Networks,
Inc. ("USAi");
WHEREAS, Styleclick has determined that it would be more efficient to
outsource the provision of certain types of corporate services, rather than
using Styleclick employees to provide such services;
WHEREAS, Styleclick and ECS have similar business operations and ECS is
capable of providing such services to Styleclick; and
WHEREAS, ECS desires to provide to Styleclick, and Styleclick desires to
procure from ECS, the services described herein on the terms and conditions set
forth herein.
NOW THEREFORE, in consideration of the premises, terms and conditions set
forth herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I SERVICES
1.1 Standard Services. Beginning on the dates specified below and
terminating upon termination of this Agreement, ECS shall, to the extent
requested by Styleclick, either directly or through one or more of its
affiliates, provide the following services to Styleclick (collectively, the
"Standard Services"):
(a) Finance. Beginning no later than July 1, 2001, ECS shall provide
Styleclick and its subsidiaries with substantially the same services that
are currently provided to ECS by its finance department, including, without
limitation, (i) budgeting and forecasting; (ii) new business analysis;
(iii) financial analysis of operations; (iv) preparation of financial
statements; (v) maintenance of accounts payable and accounts receivable;
(vi) cash management in accordance with the guidelines adopted by the
Styleclick Board of Directors; (vii) preparation of monthly, quarterly and
annual financial statements and related information in such formats as may
be reasonably requested by Styleclick; and (viii) other general financial
services; provided that Styleclick shall be responsible for providing the
services of a Chief Financial Officer and one public accounting employee
and ECS shall provide personnel as reasonably necessary to support
Styleclick's Chief Financial Officer with respect to his or her reporting
obligations to the Board of Directors of Styleclick and the Audit Committee
thereof; and provided, further, that ECS shall not be required to prepare
any reports or filings that Styleclick is required to file with the
Securities and Exchange Commission, to prepare Styleclick's state or
federal tax returns, to prepare or maintain Styleclick's payroll or to
provide Styleclick with investor relations services.
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(b) Merchandising. Beginning no later than July 1, 2001, ECS shall
provide Styleclick and its subsidiaries with substantially the same
services that are currently provided to ECS by its merchandising
department, including, without limitation, (i) developing and implementing
merchandising strategies; (ii) creating and implementing open to buy plans;
(iii) creating and executing assortment plans; and (iv) other general
merchandising services.
(c) Operations. Beginning no later than July 1, 2001, ECS shall
provide Styleclick and its subsidiaries with the following services: (i)
customer service coordination and management; and (ii) fulfillment
coordination.
(d) Miscellaneous. From time to time, ECS shall provide Styleclick and
its subsidiaries such other services as the parties hereto may mutually
agree.
1.2 Designated Senior Officers.
(a) Designation of Senior Officers. The parties acknowledge that (i)
on the Effective Date, Styleclick's Board of Directors appointed ▇▇▇▇ ▇▇▇▇▇
("▇▇▇▇▇") and ▇▇▇▇▇▇ ▇▇▇▇▇▇ ("▇▇▇▇▇▇" and, collectively with ▇▇▇▇▇, the
"Designated Senior Officers") to serve, respectively, as Chief Executive
Officer of Styleclick and as President and Chief Operating Officer of
Styleclick; (ii) the Designated Senior Officers are currently employed by
ECS, respectively, as President and Chief Executive Officer of ECS and
Executive Vice President, Operations and Finance of ECS; and (iii) the
Designated Senior Officers are expected to continue to be employed by ECS
while concurrently providing services to Styleclick.
(b) Arrangements with Respect to Designated Senior Officers. For so
long as the Designated Senior Officers are employees of ECS, ECS hereby
agrees to make available, or cause to be made available, the services of
the Designated Senior Officers (the "Designated Senior Officer Services")
until the Styleclick Board of Directors terminates such Designated Senior
Officers. Styleclick hereby agrees to compensate ECS for providing the
Designated Senior Officer Services in the manner set forth in Section 2.2.
1.3 Terms of Standard Services. Except as specifically set forth herein,
the Standard Services shall be provided upon the same terms and conditions,
including the same duty of care, as such services are provided to ECS and its
employees and ECS shall use its commercially reasonable efforts not to provide
its employees or itself with any priority or preference with respect to such
services and to provide such services in a timely manner. In particular, ECS
acknowledges that Styleclick is a reporting issuer with securities registered
under Section 12(g) of the Securities Exchange Act of 1934, as amended, and
agrees to use its reasonable efforts to provide the Standard Services on a
timely basis in order to enable Styleclick to comply with its financial
reporting obligations under such Act.
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ARTICLE II COMPENSATION
2.1 Payment for Standard Services. In full consideration for the Standard
Services, ECS shall charge Styleclick, for each Standard Service provided by
ECS, an amount equal to Incremental Expense (as defined below), plus Direct Cost
for Standard Services (as defined below). "Incremental Expense" means, with
respect to each Standard Service provided by ECS, all expenses paid or incurred
by ECS or its affiliates in excess of the cost that would have been incurred in
the absence of the performance of such service. "Direct Cost for Standard
Services" means, with respect to each Standard Service provided by ECS, the
direct out-of-pocket expenses paid or incurred by ECS or its affiliates to third
parties in connection with providing such services, appropriately documented,
including, without limitation, shipping, handling, travel expenses, payments to
third parties (including, without limitation, all professional fees), printing
and postage.
2.2 Payment for Designated Senior Officer Services.
(a) Base Salary and Expenses Component. In full consideration for the
Designated Senior Officer Services, ECS shall charge Styleclick an amount
equal to the Designated Percentage (as defined below) of the base salary
that each Designated Senior Officer receives from ECS, plus Direct Cost for
Officer Services (as defined below). "Direct Cost for Officer Services"
means, with respect to each Designated Senior Officer, the direct
out-of-pocket expenses paid or incurred by such Designated Senior Officer
in connection with providing such services, appropriately documented,
including, without limitation, travel expenses.
(b) Bonus Component. The Styleclick Board of Directors, in its sole
discretion, acting directly or through its Compensation Committee, shall
determine whether any bonus shall be paid to a Designated Senior Officer in
respect of the services provided by such Designated Senior Officer to
Styleclick and the amount and terms of any such bonus. Any bonus awarded by
the Styleclick Board of Directors pursuant to this clause (b) shall be paid
directly to the appropriate Designated Senior Officer and may be awarded in
cash, options to purchase Styleclick Class A common stock or any other form
of compensation reasonably determined by the Styleclick Board of Directors,
acting directly or through its Compensation Committee.
(c) Definition of Designated Percentage. "Designated Percentage" with
respect to each Designated Senior Officer means a fraction, the numerator
of which is the amount of time that such Designated Senior Officer is
expected to spend providing services to Styleclick pursuant to Section 1.2
and the denominator of which is the amount of time that such Designated
Senior Officer is expected to spend providing services to Styleclick and
ECS, in the aggregate. An adjustment to such Designated Percentage shall be
negotiated by the parties in good faith at the end of each fiscal quarter
during which Designated Senior Officer Services are provided based on the
experiences of the parties during the prior fiscal quarter. The parties
hereby agree that the Designated Percentage for ▇▇▇▇▇ shall initially be
equal to 40% and the Designated Percentage for ▇▇▇▇▇▇ shall initially be
equal to 80%.
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(d) Compensation Paid by ECS. ECS hereby agrees to inform the
Styleclick Board of Directors in writing of the amount of base salary paid
by ECS to each Designated Senior Officer and to promptly notify the
Styleclick Board of Directors in writing of the amount of any bonus awarded
by ECS to a Designated Senior Officer in respect of services provided by
such Designated Senior Officer to Styleclick and any change to the amount
of base salary paid by ECS to a Designated Senior Officer.
2.3 Method of Payments. ECS shall deliver invoices for services rendered to
Styleclick on a monthly basis. Charges for Direct Cost for Standard Services
pursuant to Section 2.1 and Direct Cost for Officer Services pursuant to Section
2.2(a) shall be paid by Styleclick via wire transfer of immediately available
funds to an account designated by ECS within [five] business days of
Styleclick's receipt of such invoice, to the extent that such invoice is not
disputed. Charges for Incremental Expenses pursuant to Section 2.1 and charges
for the Designated Senior Officer Services pursuant to Section 2.2(a) shall be
treated as a contribution to Styleclick's capital by USAi and shall be reflected
as such on the books and records of Styleclick. All invoices rendered to
Styleclick hereunder shall allocate the amount payable among the different
categories of cost and shall set forth the calculations used by ECS to determine
the amount payable by Styleclick, together with reasonably detailed supporting
materials for such calculations.
ARTICLE III ECS OPERATIONS
3.1 ECS Operations. ECS hereby agrees to use its reasonable efforts, as
determined by ECS, to engage Styleclick to provide to ECS's non-affiliated
customers technological services of the type provided by Styleclick to third
parties to the extent that Styleclick has the capacity to provide such services
itself in a timely manner. Compensation to be paid to Styleclick in respect of
such services shall be negotiated by the parties hereto in good faith prior to
Styleclick's engagement.
ARTICLE IV INSPECTION
4.1 Inspection Rights. ECS hereby agrees that it shall maintain appropriate
books and records with respect to the services provided by ECS under this
Agreement, including the costs and expenses of providing such services, and that
Styleclick and its agents and representatives, at Styleclick's expense, shall
have the right to examine such books and records; provided, however, that such
examination may only be conducted during regular business hours and upon
reasonable notice to ECS.
4.2 Provision of Information. ECS hereby agrees that it shall provide
Styleclick with any and all information within ECS's possession that is
reasonably necessary for Styleclick to comply with its reporting obligations
under applicable state and federal securities laws and regulations, including,
without limitation, information related to the compensation paid to each
Designated Senior Officer in respect of services provided by such Designated
Senior Officer to Styleclick.
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ARTICLE V TERMINATION
5.1 Term and Termination. This Agreement shall be deemed to have become
effective as of the Effective Date and shall terminate on the second anniversary
of the Effective Date; provided that Styleclick may terminate this Agreement (or
any portion thereof) at any time upon 90 days' prior written notice to ECS or at
any time without prior notice if it reasonably believes that ECS has engaged in
gross negligence or willful misconduct in the performance of its obligations
under this Agreement; and provided, further, that this Agreement shall
automatically terminate upon termination by Styleclick of Section 1.1 and 1.2.
5.2 Post-Termination Obligations. Following termination of this Agreement,
(a) Styleclick will remain liable to ECS, and ECS will remain liable to
Styleclick, for any amounts and obligations owing to or accrued in favor of ECS
or Styleclick, as the case may be, prior to the effective date of such
termination and (b) upon Styleclick's written request, ECS shall promptly return
to Styleclick copies of any documentation related to the services provided by
ECS under this Agreement, including, without limitation, any correspondence made
by ECS on behalf of Styleclick and any books or records maintained by ECS on
behalf of Styleclick.
ARTICLE VI INDEMNIFICATION
6.1 Limitations on Liability. Notwithstanding anything to the contrary in
this Agreement, ECS will not be liable to Styleclick for any loss or damage of
any nature incurred or suffered by Styleclick in any way relating to or arising
out of the act or default of ECS or any of its employees or agents in the
performance or the non-performance of this Agreement or any part hereof, except
loss or damage to Styleclick caused by ECS's gross negligence or willful
misconduct, to the extent to which the same is not covered by insurance. In no
event will ECS be liable for Styleclick's loss of profits and/or other
consequential loss or damage nor will ECS be in any way liable for any act,
default or negligence, willful or otherwise, of any independent contractor
retained by ECS to provide Standard Services that would otherwise be provided
directly by ECS under this Agreement; provided that Styleclick consented to the
engagement of any such independent contractor.
6.2 Indemnification by Styleclick. Except as otherwise set forth in Section
6.1, ECS will not be liable for, and Styleclick will indemnify and save and hold
ECS harmless from and against, any and all damages, liabilities, losses, claims,
actions, suits, proceedings, fees, costs or expenses (including, without
limitation, reasonable attorneys' fees and other costs and expenses incident to
any suit, proceeding or investigation of any claim) of whatsoever kind and
nature (all of the foregoing hereinafter collectively referred to as "Expenses")
imposed on, incurred by or asserted against ECS at any time during or after the
term of this Agreement (whether because of an act or omission by ECS or
otherwise) in any way relating to or arising out of the performance by ECS of
its duties hereunder, unless such Expenses are determined to have resulted
primarily from ECS's gross negligence or willful misconduct in the performance
of its duties under this Agreement.
6.3 Indemnification by ECS. Styleclick will not be liable for, and ECS will
indemnify and save and hold Styleclick harmless from and against, any and all
Expenses imposed on, incurred by or asserted against Styleclick at any time
during or after the term of this Agreement that result primarily from ECS's
gross negligence or willful misconduct in the performance of its duties under
this Agreement.
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ARTICLE VII MISCELLANEOUS
7.1 Confidentiality. To the extent permissible by law, ECS hereby agrees to
keep confidential any information concerning Styleclick that is provided to ECS
under this Agreement ("Confidential Information") and to use such Confidential
Information solely for the purpose of providing services to Styleclick under
this Areement; provided that Confidential Information shall not include
information that (i) was or becomes available to the public other than as a
result of disclosure by ECS in breach of this Agreement, (ii) was or becomes
available to ECS on a non-confidential basis from a source other than Styleclick
to the extent that such source is not known to ECS to be prohibited from
transmitting the information to ECS by a contractual, legal or fiduciary
obligation or (iii) was within ECS's possession prior to its being furnished to
ECS by or on behalf of Styleclick. Notwithstanding the foregoing, ECS may
disclose Confidential Information to its employees, agents and representatives
who need to know such information for the purpose of providing services under
this Agreement. All Confidential Information shall be and shall remain the
property of Styleclick. If ECS is requested or required (by oral questions,
interrogatories, requests for information or documents, subpoena, civil
investigative demand or other process) to disclose any Confidential Information,
ECS agrees that, to the extent reasonably practicable, it will provide
Styleclick with prompt notice of any such request or requirement and, if ECS is
legally compelled to disclose any Confidential Information, it will only
disclose that portion of the Confidential Information which it is legally
compelled to disclose and will exercise reasonable efforts to obtain assurance
that confidential treatment will be accorded to such Confidential Information.
7.2 No Property Transferred. This Agreement relates solely to the provision
of services. No tangible personal property of any party hereto shall be under
the control or possession of, or transferred to, the other party as a result of
this Agreement; provided that ECS may hold certain books and records of
Styleclick in connection with providing services under this Agreement but such
books and records shall remain the sole property of Styleclick.
7.3 No Agency. Except as specifically set forth under Section 7.9, the
parties hereto are independent contractors and nothing in this Agreement is
intended to, nor shall it, create any agency, partnership or joint venture
relationship between the parties. The parties acknowledge that, except as
specifically set forth herein, this Agreement shall not impose any restrictions
on the ability of the parties to conduct their businesses, including, without
limitation, the ability of the parties to market and sell services to
competitors of the other party.
7.4 Notices. Any notice, request, demand, waiver or consent required or
permitted hereunder will be deemed to have been given or made only if in writing
and either delivered or sent by prepaid telegram or prepaid registered or
certified mail, return receipt requested or by courier service or by facsimile
transmission with confirmation of receipt, addressed as follows:
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If to Styleclick:
Styleclick, Inc.
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
If to ECS, to:
USA Electronic Commerce Solutions LLC
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: General Counsel
FAX: (▇▇▇) ▇▇▇-▇▇▇▇
The date of personal delivery, or the date of receipt of any such notice,
request, demand, waiver or consent, will be deemed to be three (3) business days
following the date of deposit with the U.S. Postal Service or one (1) business
day following the date of personal delivery or deposit with a courier or
facsimile transmission. Any party may change its address for the purpose of
notice by giving like notice in accordance with the provisions of this Section
7.4.
7.5 Assignment. This Agreement shall be binding upon and inure to the
benefit of each of the parties hereto and their respective successors and
assigns; provided that neither party may assign this Agreement without the other
party's prior written consent.
7.6 Survival. The rights and obligations of the parties pursuant to
Sections 4, 5, 6 and 7.1 of this Agreement shall survive termination of this
Agreement.
7.7 Separability. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction will, as to such jurisdiction, be ineffective
to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction will not invalidate or render unenforceable such provision in any
other jurisdiction.
7.8 Further Assurances. From time to time after the signing hereof, each of
the parties will, at the request of the other party, and without further
consideration, execute, acknowledge and deliver to the other party any and all
instruments and other writings and do all other acts or things reasonably
requested by the other party in order to evidence and effectuate the
consummation of any of the transactions contemplated by this Agreement.
7.9 Power of Attorney. Styleclick hereby appoints ECS as its
attorney-in-fact for Styleclick during the term of this Agreement and authorizes
ECS, in the name or on behalf of Styleclick, to make, execute, deliver,
acknowledge, swear to, file and record all documents as may be reasonably
necessary in the discretion of ECS, in the performance by ECS of its duties and
services hereunder; provided that ECS shall provide Styleclick with copies of
any documents executed by ECS on behalf of Styleclick promptly following ECS's
execution of such documents; and provided, further, that ECS shall not be
authorized to make any filings with governmental authorities on behalf of
Styleclick without Styleclick's prior written consent.
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7.10 Entire Agreement, etc. This Agreement and the documents and
instruments delivered pursuant hereto contain the entire agreement between the
parties with respect to the subject hereof and supersede any and all prior
agreements, arrangements or understandings relating to the subject matter
hereof. No provision of this Agreement is intended to, or shall, confer any
third-party beneficiary or other rights or remedies upon any party other than
the parties hereto. No representations, warranties, covenants or conditions,
express or implied, other than as set forth herein, have been made by any party.
No waiver or extension of time for performance of any term, provision or
condition of this Agreement, whether by conduct or otherwise, in any one or more
instances will be deemed to be construed as a further or continuing waiver or
extension of any such term, provision or condition of this Agreement. This
Agreement cannot be changed or terminated orally, and no waiver, extension or
consent will be effective unless evidenced by an instrument in writing duly
executed by the party who is sought to be charged with having granted the same.
7.11 Governing Law. This Agreement will be governed by and construed and
enforced in accordance with, and subject to, the laws of the State of New York
applicable to agreements made and to be performed entirely within the State of
New York.
7.12 Counterparts. This Agreement may be executed by the parties hereto in
separate counterparts, each of which when so executed and delivered shall be an
original, but all such counterparts shall together constitute one and the same
instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date and year first written
above.
USA ELECTRONIC COMMERCE SOLUTIONS LLC
By: /S/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇
Executive Vice President
and
STYLECLICK, INC.
By: /S/ ▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇▇ ▇▇▇▇▇▇
President and COO