Exhibit 10.25
EXCLUSIVE ORDER FULFILLMENT AGREEMENT
This Exclusive Order Fulfillment Agreement (the "Agreement") is
entered into by and between THANE INTERNATIONAL, INC., a Delaware corporation
("THANE"), and UDS., a Nevada corporation ("UDS"), effective as of the 9th day
of June, 1999 (the "EFFECTIVE DATE"), and is made with respect to the following
facts:
RECITALS
A. Thane is a high volume direct response, wholesale and
international marketing company that acquires and develops products
("PRODUCTS") for mass sale.
B. UDS is a product distribution service center for direct to
consumer marketers and provides, among other things, warehouse, distribution,
and shipping following the sale of Products.
C. Thane and UDS have enjoyed a mutually beneficial business
relationship for the past four years, pursuant to which UDS has warehoused,
distributed and shipped Product for Thane.
D. UDS and Thane wish to enter into an exclusive dealing
arrangement with each other according to the terms and conditions of this
Agreement.
NOW, THEREFORE, in consideration of the foregoing Recitals, which are
an integral part of this Agreement, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
the parties agree as follows:
1 EXCLUSIVE SALES ORDER FULFILLMENT AGENCY APPOINTMENT.
1.1. Thane grants to UDS the exclusive right (excepting Thane's
in-house fulfillment and drop ship orders directly from the
manufacturer) to act as Thane's exclusive sales order
fulfillment representative for Thane that are to be delivered
worldwide ("Exclusive Territory") for all of Thane's customers
and accounts worldwide ("Customer").
1.2. UDS's exclusive right to act as Thane's representative under
this Agreement shall extend to and include any and all new or
additional Product ("Thane Products") developed or offered for
sale by Thane and which are accepted by UDS. UDS reserves the
right, however, exercisable in UDS's sole and absolute
discretion, to refuse to accept any Thane Products where
acceptance of any such Thane Products would impose an undue
burden on UDS's resources or otherwise be impracticable for
UDS to accept. Promptly upon Thane's acquisition of an
additional Thane Product, Thane shall give UDS written notice
of Thane's intent to promote such Thane Product. UDS may
exercise its refusal rights with respect to the Thane Product
(if desired) by giving written notice thereof to Thane within
three (3) days after Thane's notice of UDS, whereupon Thane
will be free to use any other fulfillment representative for
the sale of such Thane Product.
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1.3. Excepting those transactions contemplated in Section
10 herein, entitled "Option to Purchase", unless
specifically authorized by UDS in writing, Thane
agrees that it will not solicit or employ or contract
with or engage in any manner, any current or former
officer, director, employee, or agent of UDS while
this Agreement is in effect and for a period of two
(2) years immediately following the termination of
this Agreement.
2. SERVICES TO BE PROVIDED.
2.1 Thane employs a number of telemarketing firms (the
"TELEMARKETERS") to receive consumer credit card
orders for Thane Products. The Telemarketers then
make available for downloading by UDS, the consumer's
credit card order information. With respect to these
orders, UDS shall perform the following services for
Thane:
a. Download at least once per day the consumer
credit card order information from the
Telemarketers that has been properly
identified in writing by Thane.
b. Submit the consumer credit card order
information that has been downloaded at
least once per day to the credit card
processor that has been properly identified
in writing by Thane.
c. UDS shall promptly ship any Thane Products
ordered by each Customer within the
Territory for whom UDS has received
authorization in writing to ship from
Thane's credit card processor.
2.2 In addition, UDS shall provide the following
services: (i) reporting; (ii) check entry, (iii)
customer service and technical support; (iv) web site
hosting; (v) e-commerce; and (vi) wholesale and
international distribution.
2.3 Full responsibility for all collections and bad
debts rest with Thane. Thane shall have no right to
debit or charge UDS for the loss of any sum involved
in any sale by Thane to the Customer. Furthermore,
UDS shall make no allowances or adjustments in
accounts, or authorize the return of any Direct
Sales Products, unless given specific advance
authorization by Thane.
3 MATERIAL, SUPPLIES AND DELIVERIES BY THANE.
3.1 Thane, at its sole cost and expense, shall maintain
at UDS's place of business, or such other place or
places as UDS shall from time to time designate,
sufficient inventory and supplies to enable UDS to
fill and stand ready to deliver promptly all consumer
orders solicited by Thane. Thane shall furnish to UDS
such information relating to the delivery of Products
to UDS, as UDS may reasonably require hereunder in
the interest of the customers and the parties hereto.
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3.2 UDS shall not be deemed to be in default under any of the
terms and conditions of this Agreement where the delays or
inability of UDS to perform is occasioned by any of the
following:
a. Thane's failure to timely provide the requisite level
of inventory of Products;
b. Strikes, boycotts, lockouts, shortages, acts of God,
governmental regulations, or any other occurrences
beyond the control of UDS;
c. Thane's failure to provide true, correct, and
complete written data and instructions sufficient for
UDS to download the consumer orders from the
Telemarketers;
d. The failure of Thane's credit card processor to
provide UDS with authorization for shipment to the
Customer;
e. The loss or destruction of Thane's Products at UDS's
place of business excepting by or through UDS' own
act, omission or negligence; Loss or destruction due
to fire, flood or other acts of God do not constitute
omission or negligence on the part of UDS.
f. Any other event or circumstance that prevents or
materially hampers UDS from fulfilling its
obligations under this Agreement that is outside of
UDS's control; and
g. UDS shall not be responsible and Thane shall bear all
risk of loss with respect to any Product, for any
loss or damage occurring to any Product during the
shipping process, excepting by or through UDS' own
act, omission or negligence.
4 INDEPENDENT CONTRACTOR RELATIONSHIP.
4.1 It is specifically understood and agreed that UDS is acting as
an independent contractor and that it is not a general agent,
employee, partner or coventurer of Thane. Thane is interested
only in the results obtained by UDS who shall have sole
control of the manner and means of performing its obligations
under this Agreement and Thane shall not have the right to
require anything of UDS, which would jeopardize this
independent contractor relationship under any applicable law.
In this connection and consistent with an independent
contractor relationship, it is specifically understood and
agreed that:
4.2 UDS shall not have, nor shall it hold itself out as having the
power to make contracts, or verbal or written commitments, for
or on behalf of Thane or to pledge or extend credit in Thane's
name;
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4.3 All of UDS's expenses for office, clerical, employee wages,
income and other tax, insurance, telephone, and all other
operating expenses incurred by UDS and not otherwise
specified in this Agreement, shall be borne wholly and
completely by UDS and Thane shall not in any way be
responsible or liable therefor; and
4.4 UDS shall provide, manage, and control, as its own expense,
adequate personnel, equipment, office, and communication
facilities to perform its obligations hereunder.
5 COMPENSATION. For each Product, UDS shall be entitled to the fees set
forth in the schedule in the form of EXHIBIT "A" attached hereto and
incorporated herein by this reference, as the same may be amended and
modified from time to time as the parties may mutually agree. UDS shall
invoice Thane semi-monthly for UDS's services, which invoices shall be
paid by Thane within ten (10) days following the date thereof.
6 TERM. The term of this Agreement shall be for a period of five (5) years
following the Effective Date of this Agreement ("Termination Date").
Alternatively, this Agreement may be terminated at any time by the mutual
written agreement of the parties, "for cause" or for any "uncured default"
under the terms of Section 7 below.
7 CEASE AND DESIST ORDERS. Notwithstanding any other provision in this
Agreement to the contrary, should Thane or UDS receive a "cease and desist
order" or other similar orders from any governmental agency with respect
to any Thane Product, UDS shall not be required to provide any service
contained in this Agreement that is in violation of the order issued. Such
order will not cause termination of the Agreement and all other terms and
conditions of the Agreement will remain in full force for the term of the
Agreement.
8 TERMINATION AND TERMINATION FOR CAUSE.
8.1 Either party shall have the right to terminate this Agreement
prior to the expiration of the term (or any renewal term) hereof, upon the
occurrence of any of the following events:
a. Breach or default by the other of any material term
or obligation under this Agreement which is not
waived in writing by the nondefaulting party. In
such case, the nondefaulting party shall notify the
other of such alleged breach or default and the
defaulting party shall have a period of thirty (30)
days to cure the same in the case of a nonmonetary
breach or for a period of ten (10) days to cure the
failure to pay any sum when due.
b. The other party is declared insolvent or bankrupt,
or makes an assignment for the benefit of
creditors, or a receiver is appointed or any
proceeding is demanded by, for or against the other
under any provision of the Federal Bankruptcy Act
or any amendment thereof which is not removed
within sixty (60) days after notice from the
nonbankrupt party of its election to terminate.
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c. Promptly upon the expiration of the Term or other effective
date of termination (for any reason) of this Agreement, UDS
shall immediately and forever thereafter cease to fill and/or
ship orders for Thane or to represent in any manner that it is
associated with Thane, and Thane shall remove or cause to be
removed from UDS's premises, at Thane's expense, all Product
and other materials not previously removed by Thane or
previously shipped. UDS shall have the complete and absolute
right to dispose of, without liability, any such Product and
other materials that is not so removed by Thane within thirty
(30) days following any termination.
d. Either party may immediately terminate this agreement for
"Cause." When used in referenced to the termination of this
Agreement, "Cause" means (i) the willful and continued failure
of the other party to substantially perform that party's
customary duties (other than due to such party's death or
incapacity due to physical or mental illness) or reckless
disregard of the performance of such party's duties; or (ii)
the willful engaging by the breaching party in gross
misconduct which is materially injurious to the other party,
monetarily or otherwise.
9 HOLD HARMLESS.
9.1 Each party shall hold the other harmless from and against and
shall indemnify the other from any liability, loss, costs,
expenses or damages, however caused, by reason of any injury
(whether to body, property or personal or business character
or reputation) sustained by any person or to any person or to
property by reason of any act, neglect, default or omission of
such party or any of its agents, employees, or other
representatives, and it shall pay all sums to be paid or
discharged in case of an action, demand, claim, or any such
damages or injuries. If either party is sued in any court for
damages by reason of any of the acts of the other party
referred to herein, such other party shall defend said action
(or cause same to be defended) at its own expense and shall
pay and discharge any judgment that may be rendered in any
such action; if such other party fails or neglects to so
defend in said action, the party sued may defend the same and
any expenses, including reasonable attorney's fees, which it
may pay or incur in defending said action and the amount of
any judgment which it may be required to pay shall be promptly
reimbursed upon demand. Nothing herein is intended to nor
shall it relieve either party from liability for its own act,
omission or negligence.
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9.2 Thane shall hold UDS harmless from and against and indemnify
UDS for all liability, loss, costs expenses or damages
howsoever caused by reason of any Products (whether or not
defective, or any act of omission of Thane, including but not
limited to any injury (whether to body, property, personal, or
business character or reputation) sustained by any person or
to any person or to property, and for infringement of any
patent rights or other rights of third parties, and for any
violation of municipal, state or federal laws or regulations
governing the Products or their sale, which may result from
the distribution of the Products by UDS hereunder. Thane
hereby appoints the Secretary of State of the State of Nevada
as its agent for service for process in connection with any
action brought by UDS against Thane under this Agreement.
10 OPTION TO PURCHASE. If during the term of this Agreement, unless
sooner terminated in accordance herewith, any third person offers to
purchase either singly, or in a series of related written offers, a
majority of the stock in UDS that is issued and outstanding at the time
of the offer(s), and such offer is acceptable to the holders of a
majority of the issued and outstanding stock in UDS, then subject to
the provisions of this Section, Thane shall have a right of first
refusal with respect to such offer(s). The purchase price per share, in
addition to cash, shall include the cash value of any property to be
received and the value attributable to any employment contract,
consulting contract, or any other side agreement between the third
person making the offer(s) and the selling shareholders.
a. Upon receipt of any acceptable offer(s) as set forth above,
UDS, within thirty (30) days following its receipt of such
offer(s), shall provide Thane with a copy of said offer(s).
Thane shall have the right, at its election, to purchase all,
but not less than all, of the issued and outstanding stock in
UDS at the purchase price per share as determined herein, and
upon the other terms and conditions contained in the third
person offer(s). If written notice of Thane's exercise of its
right of first refusal granted hereunder is not received by
UDS within thirty (30) days following the date the offer(s)
were received by Thane, then this right of first refusal shall
lapse, and the shareholders may transfer their shares in UDS
free of any rights created by this Section.
b. The foregoing notwithstanding, Thane's right of first refusal
hereunder shall not extend to proposed transfers of stock in
UDS to: UDS; to any other shareholder; any trust created by a
shareholder; any member of the family of the shareholder or
the shareholder's spouse, if within the second degree of
consanguinity; any guardian, executor, or administrator of
the shareholder's estate; and any trustee or receiver of the
shareholder's estate; any creditor as a pledge of collateral.
11 CONTROLLING AGREEMENT. In the event of any conflict between the
provisions of this Agreement and the provisions contained in any
contract or sales order form used by Thane or UDS, the provisions of
this Agreement shall control.
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12 TIME. Time is of the essence of this Agreement and in the performance and
enforcement of each of the promises, covenants, representations and
warranties of the parties contained herein. For the purpose of computing
any period of time prescribed herein or relating hereto, the first day
shall be excluded. If the period of time is six (6) days or more, weekends
and public holidays shall be included. An act required to be performed on a
day shall be performed at or before the close of business on such day. If
an act is required to be performed on a certain day and such day is not a
regular business day, the time of performance or measurement shall be
extended to and including the next regular business day.
13 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement of the
parties and all prior rights, negotiations and representations are merged
herein.
14 APPLICABLE LAW. This Agreement shall be construed in accordance with the
laws of the State of Nevada, and each of the parties to this Agreement
stipulates and agrees that the state and federal courts located in Washoe
County, Nevada, shall have exclusive jurisdiction and be the proper venue
for any proceedings with respect to the interpretation or enforcement of
this Agreement.
15 NOTICES. Notices to or for the respective parties shall be given in
writing and delivered in person or mailed by certified or registered mail,
return receipt requested, addressed to the respective party at the address
set out below, or at such other address as either party may elect to
provide in advance in writing to the other party:
UDS: UDS
ATTN: Xxxxxxx Xxxx
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
With a copy to: Xxxxx X. Xxxxx, Esq.
Hale, Lane, Peek, Xxxxxxxx, Xxxxxx,
Xxxxxxxx and Pearl
000 X. Xxxxxxx Xxxxxx, Xxxxx Xxxxx
Xxxx, XX 00000
THANE: 00-000 Xxxxx Xxxxxxx
Xx Xxxxxx, XX 00000
ATTN: Xxxx Xxxxxx
With a copy to: Xxxxx Xxxxx, Esq.
00-000 Xxxxx Xxxxxxx
Xx Xxxxxx, XX 00000
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17 AMENDMENTS. This Agreement may be amended at any time by mutual
consent of the parties hereto, with any such amendment to be invalid
unless in writing, signed by the parties hereto.
18 HEADINGS. The various headings in this Agreement are inserted for
convenience only and are not part of the Agreement.
19 ATTORNEYS' FEES AND COSTS. If any legal action or any arbitration or
other proceeding is brought for the enforcement of this Agreement or
because of an alleged dispute, breach, default or misrepresentation in
connection with any of the provisions of this Agreement, the
successful or prevailing party shall be entitled to recover reasonable
attorneys' fees and other costs incurred in that action or proceeding,
in addition to any other relief to which he may be entitled.
20 COUNTERPARTS. This Agreement may be executed in any number of
counterparts with the same effect as if all the Members had signed the
same document. All counterparts shall be construed together and shall
constitute one Agreement.
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be
signed on its behalf by a duly authorized individual, or officer, as of the
Effective Date.
THANE
By: /s/ Xxxx Xxxxxx
------------------------------------
Xxxx Xxxxxx, Senior Vice President
UDS
By: /s/ Xxxxxxx Xxxx
------------------------------------
Xxxxxxx Xxxx, President
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AMENDMENT NO. 1 TO
EXCLUSIVE ORDER FULFILLMENT AGREEMENT
THIS AMENDMENT NO. 1 (this "AMENDMENT") to Exclusive Order Fulfillment
Agreement is made and entered into this 8th day of December, 2000 by and between
THANE INTERNATIONAL, INC., a Delaware corporation ("THANE"), and INNOTRAC
CORPORATION, a Georgia corporation ("INNOTRAC").
BACKGROUND:
Thane and UDS, a Nevada corporation ("UDS") are parties to that certain
Exclusive Order Fulfillment Agreement, dated as of June 9, 1999 (the
"AGREEMENT"), which provides for UDS to serve as Thane's exclusive sales order
fulfillment representative. UDS has been merged with and into Innotrac, and
Innotrac is the successor to UDS under the Agreement. The parties hereto have
concurrently entered into a Waiver Agreement pursuant to which Thane has waived
certain rights in consideration of certain payments and deliveries provided for
thereunder. Innotrac and Thane desire to amend the Agreement for the purposes
described below.
AGREEMENT:
In consideration of the premises and the mutual covenants and
agreements contained herein and in the Agreement and the Waiver Agreement, the
parties hereto agree as follows:
1. The title to the Agreement shall be changed to "Order
Fulfillment Agreement."
2. All references in the Agreement to UDS shall be deemed to be
references to Innotrac, and Innotrac shall be deemed to be the successor to UDS
under the Agreement.
3. All capitalized terms used in this Amendment and not otherwise
defined shall have the meanings assigned to them in the Agreement.
4. The word "exclusive" is deleted from Recital D.
5. The defined terms "Thane Products" and "Thane Product" shall
be replaced with the defined terms "Products" and "Product," respectively.
6. Section 1 is deleted in its entirety and the following
inserted in lieu thereof:
"1. Sales Order Fulfillment Agency Appointment.
1.1 Thane grants to Innotrac the nonexclusive
right to act as Thane's sales order
fulfillment representative for its
Products. Innotrac reserves the right,
exercisable in Innotrac's sole and absolute
discretion, to refuse to accept any Products
where acceptance of any such Products would
impose an undue burden on Innotrac's
resources or otherwise be impracticable for
Innotrac to accept.
1.2 During any rolling 12-month period
commencing December 2000, Thane shall refer
to Innotrac at least the lesser of (i) 80%
of all of Thane's sales order fulfillment
business for all its Products and for all of
Thane's customers and accounts worldwide; or
(ii) the revenues, excluding freight costs,
received by Innotrac's predecessor, UDS,
from Thane during the 12-month period ended
October 31, 2000. Within 45 days after the
end of each fiscal quarter Thane will
provide a written certification from its
Chief Financial Officer that Thane is in
compliance with this provision for the
preceding 12-month period during the term of
this Agreement.
1.3 Unless specifically authorized by Innotrac
in writing, Thane agrees that it will not
solicit or employ or contract with or engage
in any manner any current or former officer,
director, employee, or agent of Innotrac
while this Agreement is in effect and for a
period of two (2) years immediately
following the termination of this
Agreement."
7. The following language is added to the end of the sentence in
Section 2.2: ",in all cases consistent with the provision of such services as
of the closing of the transactions contemplated by the Agreement and Plan of
Merger between UDS and Innotrac Corporation, except as otherwise agreed by
Innotrac in writing."
8. Section 6 is deleted in its entirety and the following
inserted in lieu thereof:
"6 TERM. This Agreement shall terminate on December 8,
2005. Alternatively, this Agreement may be terminated
at any time by mutual written agreement of the parties
or as specified in Section 8."
9. The following Section 8.2 is added to the end of Section 8:
"8.2. If Thane breaches or defaults on its
obligations under Section 1.2 hereof with
respect to any rolling 12-month period, and
fails to cure such default within 3 months
immediately after the end of such 12-month
period, then Innotrac shall have the option
of ceasing performance under that certain
Contract for Consulting Services between
Thane and Innotrac's predecessor, UDS, made
on October 1, 1996 (the "CONSULTING
CONTRACT") until such breach or default is
cured by Thane; provided, that Thane will be
obligated to return any consulting fees paid
or credited by UDS or Innotrac with respect
to any period for which Thane is in default
or has breached Section 1.2 hereof, or
Innotrac may offset such amount against any
future consulting fees that may become due
under the Consulting Contract after the
3-month cure period."
10. Section 10 is deleted in its entirety and the following
inserted in lieu thereof:
"10. LIMITATION OF LIABILITY. THE AGGREGATE LIABILITY OF
EACH OF THE PARTIES IN CONNECTION WITH THIS AGREEMENT
FOR ANY AND
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ALL LOSSES, CLAIMS, DAMAGES OR LIABILITIES, WHETHER
IN CONTRACT OR IN TORT, OR UNDER ANY OTHER THEORY
(INCLUDING, WITHOUT LIMITATION, NEGLIGENCE AND STRICT
LIABILITY), SHALL NOT EXCEED THE AGGREGATE AMOUNTS
PAID TO INNOTRAC BY THANE PURSUANT TO THIS AGREEMENT,
AND NEITHER PARTY SHALL BE LIABLE FOR ANY INDIRECT,
INCIDENTAL, PUNITIVE, SPECIAL OR CONSEQUENTIAL
DAMAGES SUFFERED BY THE OTHER PARTY OR ANY OTHER
PERSON IN CONNECTION WITH THIS AGREEMENT OR THE
PERFORMANCE OR NON-PERFORMANCE OF ITS OBLIGATIONS
HEREUNDER, REGARDLESS OF WHETHER OR NOT SUCH PARTY
HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES."
11. The first two of the four notice addresses in Section 15 are
deleted in their entirety and the following inserted in lieu thereof:
"Innotrac: Innotrac Corporation
Att'n: Chief Financial Officer
0000 Xxxxxxxxx Xxxxxxx
Xxxxxx, Xxxxxxx 00000
With a copy to: Xxxxxxxxxx Xxxxxxxx LLP
Att'n: Xxxxx X. Xxxxxxxx
0000 Xxxxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000"
12. This Amendment may be executed in one or more counterparts and
each such counterpart shall constitute an original and all such counterparts
together shall constitute one and the same instrument.
13. Except as expressly amended herein, the Agreement shall
continue to be and shall remain in full force and effect in accordance with its
terms.
14. In consideration of Thane's covenants and agreements contained
herein, Innotrac shall pay to Thane the sum of $500,000 in cash in immediately
available funds to the U.S. account designated in writing by Thane
contemporaneously with the execution hereof.
IN WITNESS WHEREOF, the parties hereto have executed this Amendment as
of the day and year first above written.
THANE INTERNATIONAL, INC.
By: /s/ Xxxx Xxxxxx
----------------------------------------
Name: XXXX XXXXXX
-----------------------------------
Title: COO
----------------------------------
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INNOTRAC CORPORATION
By: /s/ Xxxxx X. Xxxxxx
----------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Senior Vice President, Chief
Financial Officer and Secretary
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