MANUFACTURING AGREEMENT
(CD/CS/VINYWIDEO/DVD)
JANUARY 18, 2001
Dear Bodyguard Xxxxxxx.xxx, Inc.:
We have developed a manufacturing service for the labels and publishers that
we distribute exclusively on a national basis. We have contracted with
manufacturers that can duplicate recordings on cassettes, compact discs,
CD-ROM and DVD. If you choose to participate in this service the only cost to
you, in addition to the final cost of duplication and production, is a seven
percent administration fee applied to manufacturers final invoice. Our policy
is to manufacture only sku's which we distribute through our National
Distribution and Warehousing Agreement. However, we reserve the right to
review special projects on a case by case basis. In the event we agree to
manufacture any sku not being distributed by us an additional 15% fee will be
added to the manufacturing invoice. NAVARRE RESERVES THE RIGHT TO SUSPEND ALL
MANUFACTURING FOR ANY LABEL/PUBLISHER WHOSE PAVABLES ARE IN DEBIT BALANCE PAST
THE 60 DAY DUE DATE. Our manufacturing coordinator will act as a liaison among
you, us and the duplicating manufacturer.
1. YOUR UNDERTAKING.
(a) You will produce and provide the selected manufacturer with:
(i) duplication masters; (ii) film for CD IMPRINTING; (III)
film or copy for cassette imprinting; (iv) all artwork
design; (v) and all printed materials included in the
finished recorded products.
(b) You agree that you will issue orders to us for the
duplication of the master recordings. You understand that
our current MANUFACTURING CONTRACT requires new orders of
compact discs to be at least 1,000 units, with reorders of
at least 500 units. Minimum order quantities under our
current cassette manufacturing agreement are 300 units for
new orders, and 200 units for reorders. These orders will be
shipped to us for inclusion in your inventory and held in
our warehouse.
(c) You will pay us net 75 days, from the date of the shipment
to us from the manufacturer.
(d) You agree that 100 percent of your overall production
requirements will be covered by this agreement.
(e) You understand that we may, at our reasonable and in good faith
discretion, establish credit limits for your orders.
2. OUR UNDERTAKING. We will contract with competent and ethical manufacturers
that will promptly duplicate your master recordings. Our manufacturers, in
accordance with industry standards, may do up to 10% in overruns. Your
current pricing, excluding administration cost (7(degree),%), is found on
Exhibits A. B and C to this agreement. We will include the substance of
the following provisions in our contracts with the manufacturers to
protect your interests.
(a) The work of the manufacturer shall be of first-class quality and
shall be performed promptly and in compliance with the instructions
contained in our purchase orders.
(b) We shall have the right to be present at the manufacturing facility
during the manufacturing process in order to determine that quality
standards are being maintained.
(c) Defective product (exceeding 1 % of production) shall be replaced or
credited to your account at your option. Significant quality
problems, identified by you or us, or by customers may result in the
recall of an entire production run. The manufacturer agrees to treat
the whole run as defective because of the adverse impact for you,
us, the artists, and retail outlets should defective merchandise
FIND ITS WAY INTO THE HANDS OF CONSUMERS.
(d) Navarre, its labels or their representatives may audit the records
of the manufacturer, upon reasonable notice, to ensure compliance
with the manufacturing contract. You shall have the right, upon
reasonable prior notice, to inspect and copy our books and records
at our usual place of business insofar as they relate to this
agreement. In addition, we agree to provide you with this right of
inspection and audit, as aforesaid, with respect to the books and
records of the manufacturers) with which we contract for the purpose
of this agreement. Information supplied for review and audit will be
relative only to manufacturing and duplication for your product.
(e) Title to all the master recordings shall at all times reside with its
owners.
(f) You have the right, at any time, to require the manufacturer to
immediately return any or all master recordings.
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(g) The manufacturer shall take all necessary precautions to avoid damage
or loss of the master recordings. The manufacturer will insure the
master recordings, for our and your benefit.
(h) The manufacturer will acknowledge and agree that the master
recordings contain protectable works, and it will protect these works
from bootlegging, unauthorized use and copying, to the best of its
ability. This representation is given for your and our benefit as
well as for the benefit of the artists and any others having
interests in the works.
(i) In the case of bootlegging or unauthorized duplication of master
recordings the manufacturer, to the extent it is responsible for the
problem, will indemnify you and all other parties having protectable
interests in the works. In any such case, you shall have the right to
direct the prosecution of any claim, action or suit at the
manufacturer's expense.
(j) Manufactured inventory will be insured by the manufacturer at it's
sole cost and expense until such time as it arrives at Navarre's
designated location at which time the insurance will be carried by
Navarre at its sole expense.
YOUR REPRESENTATIONS.
(a) The master recordings that you will provide us will not infringe upon
any statutory or common law right, or infringe the right of privacy
of any person, or contain any slanderous or libelous material or any
material otherwise unlawful or in contravention of the rights of any
person. You make this for our benefit and for the benefit of the
manufacturers we have or will contract with.
4. INSOLVENCY OR BANKRUPTCY.
(a) In case of our insolvency or that of manufacturer, we will contract
to ensure you have the right to receive the master recordings upon
request.
5. TERM AND TERMINATION.
(a) This agreement shall take effect as of January 18, 2001 and shall
continue in force until March 31, 2001 unless sooner terminated.
(b) You understand that our agreement with the manufacturers may be
subject to termination or change without notice. However, they are
typically two year agreements with typical termination provisions.
(c) We have the absolute right to amend this agreement, to reflect changes
in the terms of existing or future contracts we have with the
manufacturers, by giving you written notice of the changes. Orders
placed prior to our giving you notice of a price change will be
produced at the existing prices, or you will have the right to cancel
the order. If you don't agree with these changes you can terminate
this agreement by giving us written notice. Notwithstanding the
foregoing, we shall not charge you any price which is less favorable
than the price received by us from the manufacturer.
(d) If either of us has breached an obligation herein, and having received
14 days written notice of same and a demand to rectify the b:z!ach,
having failed to rectify same to the satisfaction of the party giving
the notice, the non-breaching party may terminate this agreement.
6. Your Understanding. You understand that the transactions covered by
this agreement are meant to facilitate the sale of recorded optical
media products by us for our mutual benefit. Accordingly, you agree
that we will not be held responsible for delays or defective
performance by the manufacturer. In no event will we be liable for
damages for such delays or defective performance, including any
special, incidental or consequential damages, even if we have
knowledge of the possibility of such potential loss or damage.
7. Entire Agreement This letter sets forth our entire understanding. If
the foregoing correctly sets forth our agreement, please so indicate
below.
NAVARRE CORPORATION
/s/ Xxxxx X. Xxxxxx
-------------------
Xxxxx X. Xxxxxx
Vice President/General Manager
Independent Music Distribution Division
Confirmed and Accepted
Bodyguard Xxxxxxx.xxx, Inc.
/s/ Xxxx Xxxxx
----------------
By
President
----------------
Title
1-23-01
----------------
Date
EXHIBIT A
[GTS Clear Shell, Chrome high bias tape (or equivalent), Imprinted, Artwork
Inserted, Clear Norelco, Cellophane Overwrap]
CASSETTE TYPE UNIT PRICE
------------- ----------
C-10 $0.39
C-20 $0.41
C-30 $0.45
C-45 $0.50
C-60 $0.54
C-70 $0.58
C-90 $0.65
Freight to Navarre is paid by manufacturer on all orders of 5,000 units or more
* These prices include: (i) Clear or Black Clear Norelco Box; (ii)
Cassette Shell Imprinting; (iii) Card Insertion; and (iv) Shrink Wrap.
Stickering is an additional $0.05 per unit. (Pricing for other tape lengths
will be determined by extrapolation from these prices.) Freight charges are
waived.
PROJECTED PRODUCTION LEAD TIMES
Quoted lead times are dependent upon your providing the manufacturer with
production components (film and copy for imprinting, artwork design and
printed materials). ADD APPROXIMATELY FIVE DAYS FOR TRANSIT TIME.
Production periods (including peak production season) are as follows: new
orders are ready in 5-6 days; reorders are ready in 3-4 days. "FOR ORDERS
REQUIRING HAND PACKAGING, HAND INSERTION, HAND STICKERING, ETC. PLEASE ADD
AN ADDITIONAL 1-2 DAYS DEPENDING ON SIZE OF ORDER.
CURRENT PRICES FOR OPTICAL DISC DUPLICATION
[Price listed includes Raw Disc, 3 color imprinting, packaged with
insertion of printed materials in a shrink wrapped standard jewel box with
tear strip, and top spining. Freight to Navarre is paid by manufacturer -
an additional savings to you of approx. 6 cents per unit]
BASIC DUPLICATION CHARGE:
$0.71 per Disc** (Includes cost of raw CD, jewel box,
artwork insertion, top spine)
**On-site glass mastering from DAT, EXABYTE, or 9 track tape master is
included in this unit price.
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EXHIBIT B
Pricing
*Raw Disc: $.47
**Jewel Box: $.21
Top Spine Label: $.03
Stickers: $.O1 automated, $.02 hand applied
Hand Packing: $.OS per move
Clear Tray $.005
Mastering: Waived on Compact Discs
Mastering: Waived on CD-ROM orders over 1,000 units
Shipping: Waived for regular ground shipments to Navarre*.
You will be charged
the difference
between regular
ground and expedited
freight if you
request overnight
shipments to Navarre.
(THIS REPRESENTS A
SAVINGS TO YOU OF
APPROXIMATELY $0.06
PER UNIT)
You will be charged the difference between regular ground and expedited
freight if you request overnight shipments to Navarre *(This represents a
savings to you of approximately $0.05 per unit)
* Includes up to 3 PMS color printing.
* Includes poly-overwrap with integral "zip strip" and artwork
insertion.
ADDITIONAL SERVICES
Additional CD Imprint Colors( 4th & 5th) Stickering (roll-stock that you will
provide) Hologram Security Seal (roll-stock that you will provide) Hole punch
artwork for promo Insert Response Card EAS Source Tagging Application
UNIT PRICE
$0.03 each $0.01 automated; $0.02 hand appl.
$0.02
0.02
$0.02
N/C to label (a savings to you of
3 cents per unit)
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ADDITIONAL PACKAGE OPTIONS UNIT PRICE***
Disc in Tyvec $0.15
Slimline Jewelbox w/o graphics $0.27
Slimline Jewelbox w/insert $0.32
Viewpak $0.25
Viewpak w/insert $0.30
Brilliant Double Jewel Box $0.50
Standard Quad Jewel Box $0.66
Additional External Packaging and Assembly By Quotation
PROJECTED PRODUCTION LEAD TIMES
Quoted lead times are dependent upon your providing the manufacturer with
production components (film for imprinting, artwork design and printed
materials). ADD APPROXIMATELY FOUR - FIVE DAYS FOR TRANSIT TIME. New orders in
non-peak production times are ready : CD 5 days, Cassette 5 days. In peak
production periods new orders are ready : CD 5-7 days, Cassettes 3-4 days.
"FOR ORDERS REQUIRING HAND PACKAGING, HAND INSERTION, HAND STICKERING, ETC.
PLEASE ADD 1-Z DAYS DEPENDING ON SIZE OF ORDER.
THESE PRICES ARE EFFECTIVE APRIL 1ST THROUGH MARCH 31st OF THE ONE-YEAR
PERIOD. IT MAY THEREFORE BE NECESSARY FOR YOU TO SIGN A NEW MANUFACTURING
CONTRACT REFLECTING NEW PRICING BEFORE YOUR FIRST CONTRACT EXPIRES.
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EXHIBIT C
Navarre Corporation
DVD PRICING: PRE MASTERING - MASTERING - REPLICATION - PACKAGING
PREMASTERING: $10,000. CREDIT / NO CHARGE WITH REPLICATION ORDER OF 50,000 OR
MORE.
Additional charges will apply for premastering service that exceeds this
agreed amount. Variable Bit Rate (VBR) MPEG 2 Encoding: $60.00 per minute AC-3
Audio Encoding (six-channel): $20.00 per minute MPEG/AC-3 Audio Encoding
(two-channel): $8.00 per minute Authoring: $250.00 per hour Graphic/Menu Design:
$125.00 per hour QC Emulation: $6.00 per minute Output To DLT (including stock):
$150.00 each NOTE: One AC-3 (two channel) or one MPEG stereo audio track is
included in the video encoding cost at no additional charge if the audio is
provided on the source videomaster.
CHECK DISC PACKAGE: NO CHARGE WITH REPLICATION ORDER OF 2500 UNITS OR MORE.
CHECK DISC PACKAGE INCLUDES MASTERING AND 20 DVD SAMPLE REPLICAS IN JEWEL CASE
NO/PRINT.
MASTERING CHARGES: DVD-5 $1500.00 / DVD-9 $2500. / DVD-10 $2500. MASTERING
CHARGES APPLY TO NAVARRE/CUSTOMER CHANGES OR NEW ORDERS UNDER 2500 UNITS.
REPLICATION CHARGES:
ORDER QTY. REPLICATION DVD-5 REPLICATION DVD-9 REPLICATION DVD-10
1000 - 24999 $1.10 EACH $1.60 EACH $1.30 EACH
25000 - 49999 $1.05 EACH $1.50 each $1.20 EACH
50000 - 99999 $1.00 each $1.40 each $1.15 EACH
100000 OR MORE $0.95 EACH $1.30 EACH $1.10 EACH
Replication includes I to 3 color disc printing. Add $0.03 each for additional colors to six.
DVD Label film supplied to specifications or $15.00 per film output from electronic file (CDR-Zip
Floppy)
Output Label film color key (if required): $35.00
New Order / Turnaround: to ship no later than the 10t' day.
Re Order / Turnaround: to ship no later than the 9' day.
Minimum Re Order Quantity: 500 units
Sticker Applications: Automated $0.01 each / Manual $0.02 each
Top Spine: Print and apply $0.03 each
Packaging: Disc, insert customer supplied sleeve, In amaray style DVD case, wrap $0.39 each
Sensormatic Security Tag: Tag and apply $0.09 each
Shipping: Pricing includes ground freight to Navarre Corporation.
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