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EXHIBIT 10.7
INTERNATIONAL MARKETING AND DISTRIBUTION AGREEMENT
This agreement ("Agreement") is made as of June __, 1998 between
International Trading & Manufacturing, a company incorporated in Nevada, whose
principal place of business is at 0000 X. Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxx
Xxxx, Xxxxxx 00000 ("Licensor"), and HSN Direct International Limited, a
company incorporated in England and Wales with registered number 3156797 whose
principal place of business is at 0 XXX Xxxxx, Xxxxxxxx X, Xx. Xxxxxxxxxx,
Xxxxxxx 00000 ("HSND").
1. GRANT OF RIGHTS. Licensor grant(s) to HSND:
1.1 MARKETING AND DISTRIBUTION RIGHTS. The exclusive worldwide right to
advertise, promote, market, sell and otherwise distribute The Astrology Network
(the "Product") more particularly described in the Schedule attached hereto and
incorporated herein ("Schedule") and such ancillary products (the "Ancillary
Products" as described in the Schedule and subject to Section 3.2 of this
Agreement) by means of direct response television programming however
distributed and by all other means, media and channels of distribution, now
existing or hereafter developed (the "Marketing and Distribution Rights").
Notwithstanding the foregoing, Licensor shall retain the right to market and
distribute the Product and the Ancillary Products (provided Licensor utilizes
only the Indra software and no part of the Product contains components of
Product from HSND's Third Party Supplier) through an outbound telemarketing
program in the U.S. conducted by an outsourced telemarketing firm and a single
catalog currently under development by Licensor for distribution in the U.S.
which shall be owned and controlled by Licensor.
1.2 USE OF TRADEMARKS. The right to use all trademarks, trade dress
and/or trade names which Licensor may own, control or have the right to use
with respect to the Product and Ancillary Products (the "Licensor's
Trademarks"), including the trademarks and/or trade names listed in the
Schedule, and the right to advertise, promote, market, sell and otherwise
distribute the Product and Ancillary Products using such other trademarks,
trade names, and identifying designations and such other advertisements and
promotional materials as HSND may determine.
1.3 USE OF ARTWORK. The right to use any and all artwork and promotional
materials which Licensor may own, control or have the right to use with respect
to the Product and Ancillary Products ("Licensor's Artwork"), copies all of
which Licensor shall provide to HSND as soon as practicable after the execution
of this Agreement, and the right to use Licensor's trademark, including but not
limited to that of "The Astrology Network" and the names, likenesses (including
photographs, illustrations, films and videotapes), endorsements and
testimonials of any endorsers and other persons which Licensor may own, control
or have the right to use. HSND shall have no obligation to make any payment to
any person or entity as a result of selling the Product or Ancillary Products
using Licensor's Artwork except as expressly set forth in this Agreement or as
required by contract expressly entered into by HSND and such third parties.
1.4 MODIFICATIONS. The right to duplicate and modify Licensor's Artwork
in any manner whatsoever, including the right to make insertions and deletions,
dub foreign languages or voice-overs, or to use time compression or expansion
techniques. HSND shall also have the right to use and reuse Licensor's Artwork
and any modified versions thereof in any manner which HSND may determine. HSND
shall have the right to translate, modify and otherwise revise and edit any
product packaging and any printed, video or audio materials included with the
Product or Ancillary Products and to include such modified versions with the
Product and Ancillary Products. Licensor shall provide HSND with a copy of any
such packaging and printed, video or audio materials, together with a
transcript, promptly following execution and delivery of this Agreement.
1.5 PRODUCT PACKAGING. The right to develop such groupings, ensembles,
configurations and packaging of the Product and the Ancillary Products or
upsells, including any backend or continuity products, as HSND may determine,
including but not limited to HSND's use of it's own upsell or continuity
products.
1.6 SUBDISTRIBUTORS. The right to sub-license any of the rights granted
to HSND hereunder to any third party and to exercise any of the rights granted
to HSND hereunder through any affiliates, distributors
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or licensees selected by HSND including the right to assign the rights
hereunder in whole or in part to such affiliates, distributors or licensees.
1.7 UPSELL, BACKEND AND CONTINUITY ITEMS. HSND shall be entitled to sell
upsell, backend and continuity items in conjunction with the Product if it
feels appropriate, whether part of the Product or otherwise, and nothing in
this in this Agreement or otherwise shall prevent HSND from so doing.
1.8 INFOMERCIAL. The right to write, produce and edit a direct response
television advertisement, approximately 30 minutes in length and/or such
additional direct response television advertisement or spots of the same or
shorter lengths as HSND may, in its sole judgment, determine (each or
collectively, the "Infomercial") which will describe, display and promote the
benefits to be derived from the use of the Product and Ancillary Products (based
upon attributes of and claims made about the Product and Ancillary Products
documented and substantiated by Licensor to HSND's satisfaction) and offer the
Product and Ancillary Products for sale to the general public. Notwithstanding
anything to the contrary in this Agreement of otherwise, HSND shall have the
unlimited right to air or cause to be aired the jointly owned Infomercial
worldwide through any and all licensees, sublicensees, or subdistributors at
HSND's sole election for the term of this Agreement. Licensor hereby appoints
HSND with full power of attorney to transact all business in the copyrights to
the Infomercial referenced herein. Licensor shall provide (or cause to be
provided) to HSND at Licensor's expense (i) all documentation and substantiation
necessary to ensure or facilitate compliance with all applicable laws and
regulations in the United States and to satisfy HSND; (ii) the names and
addresses of a reasonable number of good quality testimonials as users or owners
of the Product, and Licensor shall assist HSND in coordinating the attendance of
and otherwise make such persons available for purposes of filming, taping and/or
photography on a royalty/commission free basis; and (iii) all existing footage,
if any is available, relevant to the promotion of the Ancillary Products,
including but not limited to footage from Licensor's existing appearances on
live shop-at-home programming (if any) or any testimonials and B-roll. Ultimate
decisions about all production work and the final content of the Infomercial
shall be determined by HSND. If HSND uses any testimonials provided by Licensor
in the Infomercial, Licensor will supply to HSND copies of releases from all
such providers of testimonials and assist HSND in obtaining from such
individuals testimonials documenting their current use of the Product, if
applicable.
2. JOINT INFOMERCIAL FUNDING. HSND and Licensor shall both contribute equally
to the funding of the Infomercial. It is anticipated that the total budget for
the Infomercial shall not exceed $200,000 inclusive of talent fees and the
direct non-labor costs of HSND and Licensor for their involvement in
supervising the production of the Infomercial. Upon HSND's submitting a budget
to Licensor for Licensors review, Licensor shall approve the budget within 5
days or otherwise inform HSND of such discrepancies. Upon Licensors final
approval, Licensor shall promptly make payment to HSND for one half the total
budget, no later than 10 days after final approval, such final approval shall
not be unreasonably withheld.
3. NON-COMPETITION AND RIGHT OF FIRST REFUSAL
3.1 NON-COMPETITION. Throughout the term(s) of this Agreement and for one
hundred and eighty days thereafter, Licensor shall not either alone or in
participation with another person or entity, market, distribute, manufacture,
license or promote the Product or Ancillary Products (subject to Licensor
authorized means of distribution in Section 1.1 or Section 3.2) or any product
so similar in design, composition, content or function to the Product or
Ancillary Products as to be likely to compete with the Product or Ancillary
Products ("Competing Product"), or use any of the Trademarks or Licensor's
Artwork, by any means or medium, with HSND's prior written consent.
3.2 ANCILLARY PRODUCTS DEVELOPMENT. During the term(s) of this Agreement,
Licensor shall use Licensor's best efforts to provide HSND with no less than
three astrology related products every month for inclusion in the Astrology
Network offering as an Ancillary Product. HSND shall have final approval over
which Ancillary Products are incorporated into the offering. HSND and Licensor
agree that Licensor shall be permitted to sell, market and distribute products
that are not astrology related to third parties, provided always that the
products marketed by Licensor are in no way confusingly similar to those
Ancillary Products sold
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through the Astrology Network. For purposes of clarity, it is understood by the
parties that because of the difficult nature of determining whether products
are in fact astrology related or not, it may be the case that a product is
simply re-packaged to an astrology related theme to constitute a product which
is not confusingly similar.
4. TEST MARKETING. HSND shall have the right to conduct test marketing of the
Product and Ancillary Products by such means as HSND may determine, including
but not limited to Infomercial, short-form direct response and live
shop-at-home television ("Test Marketing"). Test Marketing may commence either
before or after commencement of production of any Infomercial created or to be
created under this Agreement. HSND shall bear the expense of performing the
Test Marketing, which expense shall include and be limited to the cost of media
for strategic geographic regions throughout the United States to obtain a cross
sampling of consumer response, and to be determined solely by HSND.
(a) If HSND determines, in its sole judgment, that Test Marketing is
successful, the parties may commence wide-scale airings ("Rollout") of
the Infomercial. If HSND determines that Test Marketing is unsuccessful
HSND shall have the right to terminate this Agreement in accordance
with Section 16.3. Prior to commencement of Rollout, Licensor shall
provide one half of the initial Rollout media cost for the Infomercial,
which total cost for Rollout media is not expected to exceed $400,000,
unless otherwise mutually agreed to by both HSND and Licensor. The
initial Rollout media costs shall be those funds expended for airing
the Infomercial until such time that the Infomercial generates a
positive cash flow and becomes self funding. All decisions thereafter
for media placement shall be made by HSND at their sole discretion,
including the decision to cease airing the Infomercial entirely.
5. SUPPLY OF PRODUCT. Unless otherwise agreed by the parties, all orders for
the Product and Ancillary Products purchased from Licensor will be subject to
the following terms and conditions:
5.1 DESCRIPTION OF GOODS. The goods shipped by Licensor will conform in
every manner to the samples, models, drawings, plans, specifications and other
descriptions provided to HSND and will be: new and not used, free from all
defects in materials and workmanship, of good and merchantable quality, fit for
the purpose for which they are supplied and will comply with all legislation
and regulations of any government, governmental department or other regulatory
body which may be applicable to them. HSND shall have the right to perform
periodic unannounced inspections of the Product during normal business hours
before shipment to the end use consumer either at Licensors facility or through
random checks of the Product received by the end use consumer and any
additional costs incurred by HSND as a result of reinspection due to
noncompliance of the goods or unavailability of some or all of the goods when
inspections are scheduled shall be borne by Licensor. Licensor shall use best
efforts to assist HSND to accomplish the above inspections including, but not
limited to, making Licensors facility available to HSND.
5.2 DEFECTIVE OR DAMAGED PRODUCT. Without limiting any other rights or
remedies, HSND has the right to return to Licensor any defective or damaged
Product and Ancillary Product, at Licensor's expense, for a full and immediate
refund, credit or replacement, at HSND's option.
5.3 SHIPMENT OF GOODS. Licensor shall periodically receive from HSND an
Electronic Data Transmission ("EDI") of valid authorized transactions setting
forth the customer order information containing the consumers name, address,
and item order number(s). Upon Licensor's receipt of such EDI transmission,
Licensor shall initiate fulfillment of each customer order within three days of
such receipt and provide to HSND via return EDI transmission notice and
confirmation that such customer order has been fulfilled. Licensor shall be
obligated to promptly create the components of the Product and package the
necessary Ancillary Products in a mail order box and to ship directly to the
consumer. Without prejudicing any other rights or remedies of HSND, Licensor
will notify HSND immediately if Licensor is unable to ship or cause shipment of
all or any portion of the Product or Ancillary Products by an EDI transmission
to HSND. If Licensor is unable to ship or cause shipment of all or any portion
of the goods covered by an EDI transmission, Licensor shall provide HSND with a
detailed packing list indicating the exact times and quantities that are
available for shipment. Licensor shall not ship or cause shipment of incomplete
or partial shipments or the balance of any previous
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incomplete or partial shipment without the prior written approval of HSND.
5.4 PRICES. The price for the Product and Ancillary Products purchased by
HSND from Licensor will be at a maximum as set forth on Schedule attached
hereto and as modified for Ancillary Product. Licensor agrees and acknowledges
that all Products and Ancillary Products subject to this Agreement shall be
provided to HSND at Licensor's true cost of goods with no additional profit or
markup for the benefit of Licensor.
5.5 PAYMENT TERMS. Payment for all goods purchased from Licensor by HSND
will be provided by HSND within 30 days net after the goods have been shipped
by Licensor to the end use consumer. All claims of Licensor for moneys due or
to become due from HSND shall be subject to deduction or set off by HSND for
any claim or counterclaim of HSND arising out of this Agreement or any purchase
order or any other agreement between HSND and Licensor and/or Performer.
5.6 FOREIGN LANGUAGE VERSIONS OF PRODUCT. Where required by HSND, its
affiliates, licensees or distributors the Licensor will supply the Product and
Ancillary Products with foreign language labeling, packaging and instructional
materials satisfactory to HSND, provided that HSND shall either have such items
translated or meet the costs of translation.
5.7 PRODUCT LIABILITY INSURANCE. For as long as HSND, its affiliates,
licensees or distributors continue to sell the Product and Ancillary Products
(including any upsell, backend or continuity products supplied or licensed by
Licensor) and thereafter for the life of such Product or Ancillary Products,
Licensor shall have and continue to maintain and keep in force product
liability and general liability insurance with a broad
form vendor endorsement in amounts of not less than $2,000,000 per occurrence
and $10,000,000 in the aggregate covering all Product and Ancillary Products
purchased by HSND, its affiliates, licensees or distributors from the Licensor
for as long as HSND, its affiliates, licensees or distributors continue to sell
the Product or Ancillary Products (including any upsell products supplied or
licensed by Licensor) and thereafter for the life of such Product or Ancillary
Products. Licensor shall name HSND, its affiliates, licensees, distributors,
and, if required by HSND any designee involved in marketing the Product or
Ancillary Products, as additional insureds on all such liability insurance
policies, each of which shall be endorsed so as to provide at least 30 days
notice to HSND of its cancellation, termination or non-renewal. All such
insurance shall be placed with one or more carriers reasonably acceptable to
HSND. Within 28 days of the date of this Agreement Licensor shall deliver to
HSND written evidence of such insurance in a form acceptable to HSND.
5.8 NO CUSTOMER SOLICITATION. Licensor will not include with the Product
or Ancillary Products or the packaging of any information that would enable or
induce any customer to acquire, directly or indirectly, any additional
merchandise (including but not limited to re-orders) from persons other than
HSND unless expressly required to do so by HSND. However, HSND shall consult
Licensor prior to any packaging insert being placed in the Product or Ancillary
Products. Licensor agrees not to use any information obtained from the customers
(e.g., through warranty cards) to offer for sale to such customers any goods or
services at any time, unless mutually agreed by the parties.
6. THIRD PARTY SUPPLIERS. Without prejudice to and without implying any
restriction on HSND which is not expressly set out in the Agreement. In the
event that HSND can obtain the Product or any component of the Product or
Ancillary Products at a lower price or superior quality, or otherwise on terms
which it deems are more favorable than those offered by Licensor or that HSND
is unable to obtain such quantities of the Product as it requires from Licensor
in a timely manner, HSND shall have the right to select one or more third
parties ("Third Party Suppliers") to manufacture the Product or any component
of the Product as HSND may elect or Ancillary Products. HSND may then purchase
the Product or Ancillary Products and components from such Third Party Suppliers
at any price that may be negotiated between HSND and such Third Party
Suppliers. Upon request, Licensor (if applicable) shall promptly supply HSND,
at no cost to HSND, with all materials, information and licenses which HSND may
reasonably require to exercise its rights under this Section.
7. COMPENSATION DUE LICENSOR. Licensor shall be entitled to 50% of the
Net Revenues ("Net
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Revenues" as defined below) generated from the worldwide sales of the Product
or Ancillary Products by HSND during the Term of the Agreement, including the
Test Marketing. For any bimonthly period (60 days) in which sales of the Product
or Ancillary Products results in royalties payable to Licensor (or Licensor's
nominee) hereunder, HSND shall render to Licensor on or before the 45th day
after each such bimonthly a true and correct statement setting forth HSND's
calculations determining any royalties on such sales, accompanied by a check in
US dollars for royalties payable to Licensor (or Licensor's nominee). HSND shall
maintain complete and accurate sales records of the Product and Ancillary
Products, and all other information necessary to calculate royalties and shall
retain such records for a period of two years. Licensor shall have the right to
inspect and audit such records during normal business hours upon five business
days prior notice. Audits shall be conducted by a mutually agreed upon certified
public accounting firm and be conducted no more frequently than two times during
any twelve month period.
7.1 REVERSE ROYALTY DUE HSND. At such time that media expenditures exceeds
$2,000,000 for airing the infomercial, Licensor shall pay royalties to HSND for
any sales of the Product or Ancillary Products or for any product using the "The
Astrology Network" trademark if sold by outbound telemarketing or catalog sales
as provided for in Section 1, in all instances during the term of this Agreement
and for one year thereafter, at the rate of fifty percent (50%) of Licensors Net
Revenues (as more specifically defined below for HSND's collections). For any
bimonthly period (60 days) in which sales of the Product or Ancillary Products
occur which result in royalties payable to HSND hereunder, Licensor shall render
to HSND on or before the 45th day after each such month a true and correct
statement setting forth Licensor's calculations determining royalties,
accompanied by a check in U.S. dollars for royalties payable to HSND. Licensor
shall maintain complete and accurate records of all sales of the Product or
Ancillary Products, and all other information necessary to calculate royalties,
and shall retain such records for a period of two years after such sales. HSND
shall have the right to inspect and audit such records of Licensor at HSND's
expense during normal business hours upon five business days prior notice.
Audits shall be conducted by a mutually agreed upon certified public accounting
firm and be conducted no more frequently than two times during any 12-month
period.
8. DEFINITION OF NET REVENUES. For the purposes of this Agreement,"Net Revenues"
shall mean the gross collections by HSND from all sales of Product and Ancillary
Products, less the following costs which shall be made available in a report.
(a) customer refunds, credits and other allowances on account of return or
rejection of goods or otherwise granted in the ordinary course of
business, as actually incurred ("Returns"); uncollectible accounts due
to credit card chargebacks, bad checks, check cancellations, credit
declines or other reasons of uncollectibility ("Uncollectibles"); and
other events resulting in the selling party not receiving revenues from
sales of the Product;
(b) the true cost of the Product or Ancillary Products whether purchased
from Licensor or a Third Party Supplier, including packaging and
shipping to the consumer;
(c) media and advertising costs paid for television, print and other media,
outbound telemarketing and other direct marketing activities designed
to sell the Product or Ancillary Products;
(d) credit card discounts and merchant fees payable to credit card
processors in connection with sales of the Product or Ancillary
Products;
(e) inbound telemarketing (including customer service calls) costs in
connection with the sales of the Product or Ancillary Products;
(f) order fulfillment, trafficking costs and other expenses associated with
EDI transmissions between the parties;
(g) Royalties that become due or owing to any third party for the sale of
the Product or Ancillary
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Products such as royalties owed to the producer or talent.
(h) any other cost associated with the direct marketing and distribution
of the Product or Ancillary Products.
9. ADDITIONAL CONSULTING SERVICES. The parties agree that Xxxxx Xxxxxxxxxx
Enterprises, Inc. and TPH Marketing, Inc. have provided and will continue to
provide significant consulting services to Licensor in connection with the
production of the Infomercial. In exchange for such consulting services,
Licensor shall issue warrants to acquire four hundred thousand (400,000) shares
of common stock of Licensor (the "Warrants") which Licensor represents
constitutes approximately five percent (5%) of the currently issued and
outstanding common stock of Licensor as follows:
XXXXX XXXXXXXXXX ENTERPRISES, INC. 240,000
TPH MARKETING, INC. 160,000
The Warrants shall provide for an exercise price of $1.25 per share, shall be
exercisable at any time within five (5) years after the date of this Agreement,
and shall be in the form of the attached Exhibit "A", which is incorporated
herein by this reference.
In addition and in further consideration of consulting services to be rendered,
Licensor further agrees to grant to Xxxxx Xxxxxxxxxx Enterprises, Inc. and TPH
Marketing, Inc. options to purchase shares of the common stock of Licensor
which, in the aggregate, combined with the Warrants described above, shall not
exceed fifteen percent (15%) of the then currently issued and outstanding stock
of Licensor (the "Options"). Options to purchase four hundred thousand
(400,000) shares of common stock of Licensor shall be granted for each three
million dollars ($3,000,000.00) paid for items described in Section 8(c) (the
"Media Threshold"), which includes media and advertising costs paid for
television, print and other media, outbound telemarketing and other direct
marketing activities designed to sell the Product or ancillary Products, as
follows:
XXXXX XXXXXXXXXX ENTERPRISES, INC. 60% of Option
TPH MARKETING, INC. 40% of Option
Licensor shall issue the Option within fifteen (15) days after the earlier to
occur of (i) Licensor's receipt of cumulative bimonthly statements pursuant to
Section 7 which reflect expenditures equal to the applicable Media Threshold,
or (ii) Licensor's receipt from Xxxxx Xxxxxxxxxx Enterprises, Inc. and/or TPH
Marketing, Inc. of written notice, with a supporting statement, that the Media
Threshold has been satisfied. The Options shall provide for an exercise price
equal to the fair market value of the Option shares as of the date of grant,
shall be fully vested, shall be exercisable at any time within five (5) years
after the date of grant, and shall be in the form of the attached Exhibit "B",
which is incorporated herein by this reference. Licensor warrants that the
Licensor shares covered by the Warrants and the Options are eligible to be
registered on Form S-8. Licensor represents and agrees that it will use its
best efforts to cause the Licensor shares to remain eligible for such
registration during the term of the Warrants and the Options. HSND makes no
representations or warranties regarding the issuance of the Warrants or the
Options or the stock of Licensor to be issued pursuant to the Warrants or the
Options.
10. PRESS RELEASES. HSND and Licensor shall jointly have the right to approve
the other parties press release or public disclosure of the parties
relationship for accuracy and veracity, such approval must be provided in
writing by the approving party prior to any press release being issued.
11. RETAIL PRICES. HSND shall have the right to sell and distribute the
Product and Ancillary Products at such prices, and on such terms and conditions
(including shipping and handling charges) as HSND may establish. HSND may seek
the advice of Licensor with respect to such pricing, but final approval shall
rest with HSND.
12. REGULATORY APPROVALS. Licensor shall cooperate with HSND in securing all
regulatory and other
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approvals. Any expenses that HSND may incur in obtaining any approvals, or
participating in any regulatory investigation or prosecution against HSND
regarding the Product and Ancillary Products or the claims made by HSND for
either that are based on information provided to HSND by Licensor may be used
by HSND as a deduction or set-off of any payments that Licensor might otherwise
be due under this Agreement.
13. INTELLECTUAL PROPERTY RIGHTS.
13.1 LICENSOR'S INTELLECTUAL PROPERTY. Subject to the rights granted to
HSND under this Agreement, HSND shall acquire fifty percent (50%) right, title
and interest in Licensor's Trademarks and Licensor's Artwork. Upon execution of
this Agreement, Licensor shall complete all necessary assignments to properly
and fully transfer 50% ownership in Licensor's Trademarks and Licensor's
Artwork (exclusive of those Ancillary Products HSND declines to market pursuant
to Section 3.2). Licensor's assignment shall occur simultaneously with the
execution of this Agreement, or in no event less than three (3) days from
execution hereof. In the event the Test Marketing is deemed to be unsuccessful,
HSND shall assign back to Licensor all of Licensor's Trademarks and Licensor's
Artwork within thirty (30) days of termination of this Agreement.
13.2 ENFORCEMENT OF RIGHTS. Either party shall have the right, but shall
not be required, to enforce its interest in the jointly owned intellectual
property against infringement thereof. The parties may mutually agree to
enforce such rights, paying half of the expense associated therewith and
sharing one half each of any judgement or proceeds therefrom. In the event that
one party does not wish to enforcement such rights the other may do so at their
sole expense, taking all benefit that may result from such enforcement.
13.3 TRADEMARK REGISTRATIONS. Either party shall have the option to seek
to register Licensor's Trademarks in any or all jurisdictions where they are
not currently registered. If HSND decides to register a trademark or the
parties mutually agree to register a trademark then the cost shall be deducted
from the Net Revenues pursuant to Section 8(h). If it is so determined to
register Licensors trademark, such trademark must be registered in the name of
both parties jointly.
13.4 HSND'S INTELLECTUAL PROPERTY. Licensor acknowledges and agrees that
it shall acquire no right, title or interest in or to any trademarks, trade
names or other intellectual property owned wholly by HSND and used by the
parties in connection with the marketing and distribution of the Product or
Ancillary Products.
13.5 JOINTLY OWNED INFOMERCIAL. The parties agree and acknowledge that all
right, title and interest in and to the copyrights of the Infomercial including
any derivative copyrights, such as any modified or translated Infomercial
footage, shall vest fifty percent each in HSND and Licensor jointly and all
goodwill engendered by the use thereof shall inure for the benefit of HSND and
Licensor jointly.
13.6 CUSTOMER LIST. Any customer list(s) shall be the joint property of
HSND and Licensor during the term of this Agreement. Neither party shall
utilize the customer list for its own purpose without prior written consent
from the other party. Notwithstanding, HSND shall have the right to utilize the
customer list for any purpose provided such purpose is for furtherance of sales
of the Product or Ancillary Products.
14. LICENSOR'S REPRESENTATIONS, WARRANTIES AND COVENANTS.
14.1 THE PRODUCT. Licensor represents, warrants and covenants to HSND:
(a) that all information provided in writing to HSND or any affiliate,
licensee, distributor or other designee of HSND by Licensor relating
to the Product and Ancillary Products is and will be true and correct,
including without limitation all written information regarding the
effectiveness, quality, characteristics or fitness of the Product and
Ancillary Products;
(b) at the time of transfer to HSND or any of its affiliates, licensees or
distributors of title to any Product or Ancillary Products purchased
by HSND or any of its affiliates, licensees or distributors from
Licensor, Licensor shall have good title to such Product or Ancillary
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\ Products and the transfer and delivery of such Product or Ancillary
Products to HSND, or its affiliates, licensees or distributors where
appropriate, shall be rightful, and transfer to HSND, of its
affiliates licensees or distributors where appropriate, of title to
such Product or Ancillary Products shall effectively convey title to
such Product or Ancillary Products to HSND, or its affiliates,
licensees or distributors where appropriate, free and clear of all
liens, claims, encumbrances and rights of third parties of any nature
whatsoever;
(c) all Product or Ancillary Products sold by Licensor to HSND or its
affiliates, licensees or distributors will be new and not used,
remanufactured, reconditioned or refurbished, and will be of
consistent kind and quality, and will be merchantable; and
(d) all Product or Ancillary Products sold by Licensor to HSND or any of
its affiliates, licensees or distributors will be safe and appropriate
for the purpose for which goods of that kind are normally used; and
(e) Licensor has paid or shall pay all fees, royalties and other
compensation payable to any person or entity in connection with the
development, manufacture, sale or use of the Product or Ancillary
Products and HSND shall have no obligation to make any such payment.
In addition, Licensor shall provide copies of all copyright registrations,
copyright applications, patents, patent applications, trademark applications,
licenses and other agreements and instruments relating to the Product or
Ancillary Products and Licensor's Intellectual Property (and all amendments
supplements and modifications thereof) which are now in existence or which
Licensor shall obtain, file, or enter into during the term of the Agreement, to
HSND within ten days after the execution of this Agreement or subsequently
within ten days after any of the listed documents herein come into existence or
into Licensor's possession.
14.2 THE INFOMERCIAL.
(a) Licensor represents, warrants, and covenants to HSND that the
Informercial, to the extent that it is based on information provided
by Licensor to HSND or is otherwise approved by Licensor, will comply
with all applicable laws and regulations within the United States
relating to the advertising and sale of the Product or Ancillary
Products;
(b) HSND represents, warrants, and covenants to Licensor that HSND shall
as part of Section 8(g) pay all fees, royalties and other compensation
payable to any person or entity in connection with the production, use
or transmission of the Infomercial, if any, that become due as a
result of sales of the Product or Ancillary Products. For avoidance of
confusion this does not refer to up front talent fees or the
production budget which shall be jointly funded, but royalties and
fees which become due or owing for the sale of the Product or
Ancillary Products.
14.3 DOCUMENTATION. Licensor shall provide to HSND, at Licensor's expense,
all such documentation and substantiation of claims made about the Product and
Ancillary Products as HSND reasonably requests.
14.4 PAYMENT OF FEES. Licensor has paid or shall pay all fees, royalties
and other compensation payable to any person or entity in connection (i) the use
of the trademarks and Licensor's Artwork, or (ii) any other contractual
obligation for the manufacture of the Product or Ancillary Products in
connection with any of the rights granted to HSND hereunder.
14.5 PROPRIETARY RIGHTS. Licensor represents, warrants and covenants that;
(a) It has all necessary power and authority to grant to HSND the rights
in this Agreement and neither the granting of the rights nor the
exercise of them by HSND will infringe or violate the intellectual
property or other proprietary or intangible rights of any other person
or entity;
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(b) It has not been and is not, as of the date of this Agreement, a
party to any litigation enforcing or defending Licensor's rights in,
or with respect to the Product or Ancillary Products, Licensed
Intellectual Property or any other intangible property rights relating
to the Product or Ancillary Products.
(c) It is not aware of any such claims made or threatened involving the
validity of Licensor's rights in, to or with respect to the Product or
Ancillary Products Licensed Intellectual Property.
15. INDEMNIFICATION.
15.1 BY LICENSOR. Licensor shall defend, indemnify and hold harmless HSND
and its subsidiaries, affiliates, distributors and licensees and their
respective officers, directors, shareholders, employees, licensees, agents,
successors and assigns from and against any and all liabilities and expenses
whatsoever, including without limitation, claims, damages, judgments, awards,
settlements, investigations, costs and reasonable legal fees ("Claims"), which
any of them may incur or become obligated to pay as a result of (i) the sale or
use of the Product or Ancillary Products, including product liability claims,
(ii) the use of Licensor's Trademarks or Licensor's Artwork, or (iii) the
breach by Licensor of any of the representations, warranties, covenants or
obligations of either of them under this Agreement.
15.2 BY HSND. HSND shall defend, indemnify and hold harmless Licensor and
Licensor's officers, directors, shareholders, employees, licensees, agents,
successors and assigns from and against any and all Claims which any of them
may incur or become obligated to pay arising out of or resulting from the
breach by HSND of any of its representations, warranties, covenants or
obligations under this Agreement.
15.3 PROCEDURE. Promptly after learning of the occurrence of any event
which may give rise to its rights under the provisions of this Section, any
party seeking to enforce such right (a "Claiming Person") shall give written
notice of such matter to the party against whom enforcement of such rights is
sought (the "Indemnifying Party"). The Claiming Person shall cooperate with the
Indemnifying Party in the negotiation, compromise and defense of any such
matter. The Indemnifying Party shall be in charge of and control such
negotiations, compromise and defense and shall have the right to select counsel
with respect thereto, provided that the Indemnifying Party shall promptly notify
the Claiming Person of all material developments in the matter. In no event
shall the Indemnifying Party compromise or settle any such matter without the
prior consent of the Claiming Person, which shall not be bound by any such
compromise or settlement absent its prior consent.
16. TERM. Unless sooner terminated in accordance with the provisions of
Section 18, this Agreement shall remain in full force and effect for an
"Initial Term" commencing as of the date hereof and expiring ten (10) years.
This Agreement may be renewed for additional and successive terms of two (2)
years each provided the required sales minimums are achieved on a yearly basis,
the parties mutually agree and written notice of such is exchanged between the
parties (the "Additional Term(s)") unless and until terminated in accordance
with the provisions of Section 18.
17. TERMINATION.
17.1 UPON BREACH. Any party may terminate this Agreement upon 30 days
notice to the other parties upon the material breach by another party of any of
its material representations, warranties, covenants or obligations under this
Agreement. Upon the expiration of such notice period, this Agreement shall
terminate without the need for further action by any party, provided, however,
that if the breach upon which such notice of termination is based shall have
been fully cured to the reasonable satisfaction of the non-breaching party
within such 30-day notice period, then such notice of termination shall be
deemed rescinded. Such right of termination shall be in addition to such other
rights and remedies as the terminating party may have under applicable law.
17.2 FAILURE TO ACHIEVE SALES MINIMUM. In the event that Licensor does not
receive Net
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Revenues totaling $400,000 for the period commencing upon Rollout and ending
one year thereafter, Licensor and HSND shall both have the right to terminate
this Agreement upon 30 days prior written notice to the other, provided such
notice is given to the other party within 60 days after the end of the one year
period. Failure to give notice of such termination will constitute both parties
acknowledgment that the Agreement will remain in full force for an additional
year, subject to other causes of termination. Thereafter, this Agreement shall
be subject to termination by either party if Licensor does not receive Net
Revenues totaling at least $400,000 for each successive year, provided the
terminating party gives 30 days prior written notice to the other party.
17.3 BY HSND. HSND shall have the sole right to terminate this Agreement
upon written notice to Licensor if Test Marketing is unsuccessful.
18. RIGHTS AND DUTIES UPON TERMINATION. HSND shall notify Licensor of any
Inventory of the Product or Ancillary Products remaining in HSND's possession,
and if Licensor does not elect to promptly purchase such inventory from HSND at
HSND's cost, then HSND and its affiliates, licensees and distributors shall
have the right to dispose of such inventory in such manner as they may
determine. Notwithstanding any termination of this Agreement, HSND and Licensor
shall perform as though this Agreement were still in effect until all existing
and pending orders for the Product placed through HSND or its affiliates,
licensees or distributors are filled and all requests for refunds and
replacements have been satisfactorily honored.
19. INTELLECTUAL PROPERTY RIGHTS UPON TERMINATION. In the event of
termination, both HSND and Licensor agree to negotiate in good faith for the
division of jointly owned intellectual property based on commercially
reasonable prices for like assets. If HSND and Licensor are unable to reach a
mutually agreeable division of intellectual property with in 30 days after
termination, then the following procedures will apply. If one party desires to
purchase the entirety of the intellectual property (the trademarks, trade
dress, Infomercial and customer list) that party shall provide a reasonable
offer to the other party and the receiving party shall then have the option of
either accepting such offer or purchasing the entirety of the intellectual
property for that offer price. In the event that neither party makes an offer
for the intellectual property within 120 days after termination of the
Agreement then neither party shall have the right to utilize the intellectual
property or any part thereof without the others prior written consent.
20. CONFIDENTIALITY. All customer lists, price lists, written and unwritten
marketing plans, techniques, methods and data, sales and transaction data, and
other information designated or deemed by either party as being confidential or
a trade secret, shall constitute confidential information of both parties
("Confidential Information"). HSND and Licensor shall hold all Confidential
Information in the strictest confidence and shall protect all Confidential
Information with the same degree of care that party, as applicable, exercises
with respect to its own proprietary information. Without the prior written
consent of the other party, neither shall use, disclose, divulge or otherwise
disseminate any Confidential Information to any person or entity, except for
that party's attorneys and such other professionals as that party may retain in
order for either of them to enforce the provisions of this Agreement.
Notwithstanding the foregoing, neither party shall have an obligation with
respect to any Confidential Information which:
(i) is or becomes within the public domain through no act of its own in
breach of this Agreement;
(ii) was lawfully in the possession of without any restriction on use or
disclosure prior to its disclosure hereunder;
(iii) is lawfully received from another source subsequent to the date of this
Agreement without any restriction on use or disclosure; or
(iv) is required to be disclosed by order of any court of competent
jurisdiction or other governmental authority.
21. MISCELLANEOUS.
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21.1 NOTICES. All notices, requests, instructions, consents, and other
communications to be given pursuant to this Agreement shall be in writing and
shall be deemed received (i) on the same day if delivered in person, by
same-day courier or by telegraph, telex or facsimile transmission, (ii) on the
next day if delivered by overnight mail or courier, or (iii) on the date
indicated on the return receipt, or if there is no such receipt, on the third
calendar day (excluding Sundays) after being sent by certified or registered
mail, postage prepaid, to the party for whom intended to the following
addresses:
IF TO LICENSOR: IF TO HSND:
International Trading & Manufacturing HSN Direct International Limited
000 Xxx xx xx Xxxxx #000 0 XXX Xxxxx, Xxxx. X
Xxxxxx Xxxxx, XX 00000 Xx. Xxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx Attn: Xxx Xxxxxxxxxx
Fax: (000) 000-0000 Fax: (000) 000-0000
Phone: (000) 000-0000 Phone: (000) 000-0000
WITH A COPY TO HSND'S SOLICITORS:
Xxxxxx & Co.
0 Xxxxxx Xxxxx Xxxx
Xxxxxxxxxx
Xxxxxx Xxxxxxx X0X 0XX
Attn: Xxxxxxx Xxxx
Fax: 000 00 000 000 0000
Phone: 000 00 000 000 0000
21.2 ENTIRE AGREEMENT; AMENDMENT. This Agreement (including the Schedule)
contains the entire understanding of the parties with respect to the subject
matter hereof and supersedes all prior agreements and understandings between
them. Each party has executed this Agreement without reliance upon any promise,
representation or warranty other than those expressly set forth herein. No
amendment of this Agreement shall be effective unless written and signed by all
parties.
21.3 WAIVER OF BREACH. The failure of any party hereto at any time to
enforce any of the provisions of this Agreement shall not be deemed or
construed to be a waiver of any such provisions, or in any way affect the
validity of this Agreement or the right of any party to thereafter enforce its
provisions.
21.4 ASSIGNABILITY. No party may assign this Agreement or any rights under
it to any person or entity without the prior written consent of the other
party, which consent shall not be unreasonably withheld. Any attempted
assignment without such consent shall be void. However, it is understood and
agreed that HSND may exercise its rights and obligations by itself or through
any one or more of its affiliates, licensees or distributors and may assign all
or part of its rights under this Agreement to any such affiliates, licensees,
distributors or successor-in-interest.
21.5 FORCE MAJEURE. In the event of war, fire, flood, labor troubles,
strike, riot, act of governmental authority, acts of God, or other similar
contingencies beyond the reasonable control of any of the parties interfering
with the performance of the obligations of such party, the obligations so
affected shall be deferred or eliminated to the extent necessitated by such
event or contingency without liability, but this Agreement shall otherwise
remain unaffected. Notice with full details of any circumstances referenced
herein shall be given by the affected party to the other party within ten days
after its occurrence. The affected party shall use due diligence, where
practicable, to minimize the effects of or end any such event.
21.6 FURTHER ACTIONS. The parties agree to execute such additional
documents and to perform such further acts as may be necessary or desirable to
carry out the purposes and intents of this Agreement.
21.7 SEVERABILITY. All of the provisions of this Agreement are intended to
be distinct and severable. If any provision of this Agreement is, or is
declared, invalid or unenforceable in any jurisdiction, it shall be
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ineffective in such jurisdiction only to the extent of such invalidity or
unenforceability. Such invalidity or unenforceability shall not affect either
the balance of such provision, to the extent it is not invalid or
unenforceable, or the remaining provisions hereof, or render invalid or
unenforceable such provision in any other jurisdiction.
21.8 COUNTERPARTS. This Agreement may be executed in one or more counter
parts each of which shall be deemed to be an original, and all of which
together shall constitute one and the same Agreement. HSND and Licensor agree
and consent that a facsimile transmission shall constitute a valid execution
of this Agreement.
21.9 INDEPENDENT CONTRACTOR. No party is an employee or agent of the other
party. Each party is and shall at all times remain an independent contractor.
21.10 CONFLICT WITH SCHEDULE. In the event of a conflict between this
Agreement and the Schedule, the terms and conditions of the Schedule shall
prevail.
21.11 CURRENCY. All dollar amounts set forth in this Agreement and the
Schedule shall refer to U.S. Dollars.
21.12 GOVERNING LAW. Licensor and HSND each hereby submits itself to the
exclusive personal and subject matter jurisdiction of the Florida courts, and
it agrees that such courts shall provide the sole forum for determining all
matters and disputes arising out of this Agreement. Under no circumstance may
Licensor initiate or maintain, directly or indirectly, an action against HSND
in a state other than Florida. This Agreement shall be deemed to constitute a
contract made and entered into under the laws of the State of Florida and shall
be construed in accordance with Florida Law, without regard to conflict of
laws, principles.
21.13 ASSISTANCE OF COUNSEL. Each party acknowledges that (i) it has
carefully read this Agreement, (ii) it has had the assistance of legal counsel
of its choosing (and such other professionals and advisors as it has deemed
necessary) in the review and execution hereof, (iii) the meaning and effect of
the various terms and provisions hereof have been fully explained to it by such
counsel, (iv) it has conducted such investigation, review and analysis as it
has deemed necessary to understand the provisions of this Agreement and the
transactions contemplated hereby, and (v) it has executed this Agreement of its
own free will.
21.14 SURVIVAL OF TERMINATION. Sections 3.1, 7-15 and 18-21 of this
Agreement shall be deemed to survive its termination.
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IN WITNESS WHEREOF, the parties have caused this Agreement and Schedule to
be duly executed on the date first written above.
HSN DIRECT INTERNATIONAL LIMITED INTERNATIONAL TRADING &
MANUFACTURING
By: /s/ XXXXXXX X. XXXXXXXX By: /s/ XXXXX XXXXXXX
------------------------------ -------------------------
Name: XXXXXXX X. XXXXXXXX Name: XXXXX XXXXXXX
------------------------------ -------------------------
Title: CHIEF OPERATING OFFICER Title: DIRECTOR
------------------------------ -------------------------
Date: 6-18-98 Date: 6/22/98
------------------------------ -------------------------
The below named parties are only signatories to this contract
with respect to Section 9 of this Agreement.
XXXXX XXXXXXXXXX ENTERPRISES, INC.
By: /s/ XXXXX XXXXXXXXXX
-------------------------
Name: XXXXX XXXXXXXXXX
-------------------------
Title: CHIEF EXECUTIVE OFFICER
-------------------------
Date:
-------------------------
TPH MARKETING, INC.
By: /s/ XXXXXXX XXXXXXXXXX
-------------------------
Name: XXXXXXX XXXXXXXXXX
-------------------------
Title: PRESIDENT
-------------------------
Date: 6/18/98
-------------------------
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SCHEDULE
1. PRODUCT: The Product consists of the following items:
(1) Personalized Astrological Chart, 30 day subscription of horoscopes,
and (1) personalized financial report.
ANCILLARY PRODUCTS: including, but not limited to, continued monthly
astrological charts, jewelry, CD's, and audio tapes. HSND reserves the
right to add Ancillary Products to this list as they are developed by
Licensor.
2. COST:
Pocket Folder (White) $1.17
Birthchart Cover $0.21
90 Day Forecast Cover $0.21
Astrology Pendant $1.90
Pouch or Box for Pendant $0.10
Paper Cost $0.45
Printer & Binder Lease $1.20
Fulfillment Cost $2.82
Total Cost $8.08
Priority Postage $3.00 additional
3. TRADEMARKS, COPYRIGHTS, AND PENDING APPLICATIONS: "The Astrology Network"
[To be confirmed]
4. LICENSOR'S THIRD PARTY SUPPLIER: [IF APPLICABLE]
5. OTHER PROVISIONS:
N/A
6. DISTRIBUTORS TO WHOM LICENSOR CURRENTLY SUPPLIES THE PRODUCT:
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ADDENDUM
Let this document serve as an addendum to the original Astrology Network
Agreement. ITM and HSND will re-cut from existing and new footage, a one hundred
twenty (120) second spot. The spot will be produced at Satellite Video
Productions in San Diego. The cost of the spot will not exceed twelve thousand
five hundred dollars ($12,500.00) and will be split equally between HSND and
ITM. All other terms in the original contract will remain the same.
/s/ XXXXX XXXXXXX /s/ XXXX XXXXXXXX
--------------------------- ------------------------------
Xxxxx Xxxxxxx Xxxx Xxxxxxxx
May 11, 1999 May 12, 1999
--------------------------- ------------------------------
Date Date
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AMENDMENT TO INTERNATIONAL MARKETING AND DISTRIBUTION AGREEMENT
This amendment ("Amendment") is made as of June 15, 1999 to the June 22, 1998
Agreement (as previously modified by the Addendum dated May 11, 1999) between
International Trading & Manufacturing ("Licensor") and HSN Direct International
Limited ("HSND").
1. MODIFICATION OF SECTION 9 OF THE AGREEMENT. The parties had agreed that
Xxxxx Xxxxxxxxxx Enterprises, Inc. ("KHE") and TPH Marketing, Inc. ("TPH") would
provide consulting services to Licensor in connection with the production of the
Infomercial, and accordingly specified a number of warrants and options that KHE
and TPH would be entitled to receive under certain conditions for common stock
of Licensor. That Section is hereby deleted in its entirety (except for the
first sentence and the introductory phrase of the second sentence: "In exchange
for such consulting services,"), and the following consideration to KHE and TPH
substituted therefor: upon execution of this Amendment by all parties hereto,
KHE and TPH will receive a total of 75,000 shares of common stock of Licensor at
no cost, and will be jointly provided options to acquire an additional 150,000
shares of common stock, at an exercise price of $3.40 per share. The options
shall be fully vested, shall be exercisable at any time within five (5) years
after the date of grant, and shall be in the form of the attached Exhibit "A"
which is incorporated herein by reference. In each case, sixty percent of the
total (or 45,000 of the shares of stock and 90,000 of the options) will be
issued to KHE, and the remainder to TPH). These rights shall be non-assignable
and non-transferable, and none of the stock acquired hereunder may be sold to
any person or entity prior to one year after the execution of this Amendment.
HSND makes no representations or warranties regarding the issuance of the stock
or the options.
2. RELEASE BY LICENSOR, HSND, KHE, AND TPH. Licensor, HSND, KHE, and TPH,
jointly and severally release and absolutely and forever discharge each of the
others of them, along with their heirs, successors, predecessors, assigns,
parent and subsidiary corporations and representatives, from any and all claims,
rights, demands, covenants, agreements, obligations, representations,
warranties, promises, liens, accounts, debts, liabilities, damages, expenses,
attorneys fees, costs and causes of action of any kind and nature, whether known
or unknown, anticipated or unanticipated, whether at law or in equity, which any
of them may have, or claim to have, against each other based on, arising out of,
or by reason of the Agreement or the performance of any services or obligations
in connection with therewith that have occurred, or could or should have
occurred, by this date. The parties agree and acknowledge that the long-form
infomercial for the Product described in the Agreement did not result in any Net
Revenues to be split, and agree that the lack of success does not, and will not,
give rise to any cause of action by any of the parties hereto against each
other. This release does not apply to any cause of action which any of the
parties may have against each other for any performance (or non-performance) of
any service or obligation under the Agreement which may arise in the future, nor
for any claim with respect to any other action unrelated to the subject matter
of the Agreement.
3. MODIFICATION OF SECTION 21.1 OF THE AGREEMENT. Section 21.1 of the
Agreement is hereby revised to delete the requirement that a copy of notice be
served on HSND's solicitors, and to modify the information for both parties, as
follows:
If to Licensor: If to HSND:
International Trading & Manufacturing HSN Direct International Limited
00000 Xx Xxxxxx Xxxx, Xxxxx 000 0 XXX Xxxxx, Xxxx. X
Xxx Xxxxx, XX 00000 Xx. Xxxxxxxxxx, XX 00000
Attn: Xxxxx Xxxxxxx Attn: Xxxxxxx X. Xxxxxxxx
Fax: (000) 000-0000 Fax: (000) 000-0000
Phone: (000) 000-0000 Phone: (000) 000-0000
4. CONTINUING EFFECT OF THE AGREEMENT. Except as expressly modified above, the
Agreement remains in full force and effect.
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IN WITNESS WHEREOF, the parties have caused this Agreement and referenced
Exhibit to be duly executed on the date first written above.
HSN DIRECT INTERNATIONAL LIMITED INTERNATIONAL TRADING &
MANUFACTURING
By: /s/ XXXXXXX X. XXXXXXXX By: /s/ XXXXX XXXXXXX
-------------------------- ------------------------------
Name: Xxxxxxx X. Xxxxxxxx Name: Xxxxx Xxxxxxx
------------------------ ----------------------------
Title: Chief Operating Officer Title: Director
----------------------- ---------------------------
Date: 6/15/99 Date: 6/17/99
------------------------ ----------------------------
XXXXX XXXXXXXXXX ENTERPRISES, INC.
By: /s/ XXXXX XXXXXXXXXX
------------------------------
Name: Xxxxx Xxxxxxxxxx
----------------------------
Title: CEO
---------------------------
Date: 6/24/99
----------------------------
TPH MARKETING, INC.
By: /s/ XXX XXXXXXXXXX
------------------------------
Name: Xxx Xxxxxxxxxx
----------------------------
Title: President
---------------------------
Date: 6/28/99
----------------------------
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