Site Development And Hosting Agreement

EXHIBIT 10.2


SITE DEVELOPMENT AND HOSTING AGREEMENT


This SITE DEVELOPMENT AND HOSTING AGREEMENT (the "Agreement") dated as of August 9, 1999 is made between Hanover Direct, Inc. ("HDI"), a New Jersey Corporation, located at 1500 Harbor Boulevard, Weehawken, NJ 07087, and The Deerskin Companies, Inc. (the "Company"), a Nevada corporation, located at 2500 Arrowhead Drive, Carson City, NV 89706. Each of the parties hereto shall be referred to as a "Party".


In consideration of the mutual promises and covenants set forth below, HDI and the Company agree as follows:


1. HDI's Responsibilities.


1.1 HDI shall design, develop, implement, operate, maintain and manage, and enable the Company to establish a presence on the World Wide Web ("Site") to make available to Internet users on demand, men's and women's apparel and accessories from the Deerskin Catalog ("Deerskin Products"). As used in this Agreement, "Deerskin Products" shall not include (i) closeout merchandise which the Company may identify as "Deerskin" branded items, if such is the case, nor (ii) products from the Company's Joan Cook Catalog.


1.2 HDI shall bear all costs associated with the design, development, implementation, operation, maintenance and management of the Site, including, without limitation, technology and labor.


1.3 HDI shall host and maintain the Site on a server provided by HDI.


1.4 HDI shall provide the Company with access to, and


the right to use, a computer system on which the Site will be stored and operated, with a direct Internet connection of shared but greater than T-1 bandwidth, plus capacity to process continuously during burst periods. HDI shall also provide the Company with access to HDI's software and Content administration tools for purposes of allowing the Company to monitor current catalog information.


1.5 For the purposes of collecting orders for Deerskin Products from the Site and to communicate to the Site the unavailability of certain Deerskin Products, HDI shall provide export files in the format provided by the Company. HDI shall bear the programming and software costs relating to efforts required to create order export files and receive and process import files of the Company's inventory information.


1.6 HDI shall have the Site fully operational and accessible on demand by users of the Internet no later than sixty (60) days from the date this Agreement has been executed by both Parties. In the event that HDI fails to have the Site fully operational within seventy (70) days from the date of this Agreement, the Company shall have the right to terminate this Agreement without penalty.


1.7 HDI shall distribute the Site through the world wide protocol of the Internet using distribution channels used by HDI sites and other similar distribution channels.


1.8 HDI agrees that it shall promote the Site and Deerskin Products no less favorably than it promotes HDI's


-2-


catalog titles. HDI's promotion of the Site and Deerskin Products shall include, but not be limited to, the incorporation of the Site and Deerskin Products into HDI's promotion calendars with Xoom.com and Excite for the term of this Agreement. HDI agrees that the costs of any such promotions shall be borne by HDI.


2. Company's Responsibilities.


2.1 The Company shall provide all Content to HDI to be included in the Site no later than ten (10) days from the date this Agreement has been executed by both Parties.


2.2 The Company shall bear all costs associated with the processing of customer orders.


3. Fees; Payment.


3.1 The Company shall pay HDI thirty percent (3016) of the Net Sales in excess of Eleven Thousand Dollars ($11,000) per calendar month. "Net Sales" shall mean all revenues from the sale of Deerskin Products on the Site including shipping and handling charges, minus refunds and exchanges.


3.2 Payments to HDI shall be due monthly within thirty (30) days of the end of each calendar month and shall be accompanied by documentation reasonably detailing the calculation of the payment.


3.3 Quarterly reconciliation of payments shall be conducted within thirty (30) days of the end of each calendar quarter to adjust for refunds and exchanges not taken into account in payments made to HDI.


-3-


3.4 HDI's General Manager (as hereinafter defined), may upon no less than thirty (30) days prior written notice to the Company, have the right to inspect the records of the Company's General Manager reasonably related to the calculation of such payments during the Company's normal business hours. The fees incurred by HDI in connection with the inspection shall be borne by HDI.


4. Term; Termination; Termination Payment.


4.1 Term; Termination. This Agreement shall be effective as of that date (the "Effective Date") the Site becomes fully operational as set forth in writing and executed by both Parties and shall continue for a period of one (1) year from the Effective Date. This Agreement shall be automatically renewed for an additional one year period on each anniversary of the Effective Date, unless terminated by either Party hereto upon ninety (90) days written notice to the other. Such notice shall specify the date on which this Agreement is to be terminated (the "Termination Date").


4.2 Termination Payment.


(a) In the event the Company terminates this Agreement, the Company shall pay to HDI a termination payment, (the "Termination Payment") the amount of which shall be an amount equal to the aggregate Net Sales for the twelve (12) months preceding the Termination Date less $800,000, the balance of which shall be divided by two.


(b) In the event that the amount of the Termination


-4-


Payment is determined pursuant to this Section 4.2 to be less than or equal to zero, then no Termination Payment shall be due to HDI nor shall HDI be required to make any termination payment to the Company if the amount is determined t ...