EXHIBIT 10.22
EXCLUSIVE MARKETING AGREEMENT
The Parties, Thane International, Inc. ("THANE"), a Delaware
corporation with offices located in La Quinta, California, and WHJ, Inc.,
("WHJ"), a Nevada Corporation, with offices located in Woodland Hills, CA, enter
into this Agreement effective as of December 10, 1999 ("EFFECTIVE DATE"), with
reference to the following facts.
RECITALS
WHJ is the developer and owner of the design, concept, and
intellectual property rights for a portable, kitchen food preparation appliance,
currently identified by the product name "LE PRESSE" ("PRODUCT"). WHJ desires
that the Product be manufactured, marketed and distributed to the public via
infomercial format, and all subsequent and pertinent modes of distribution
("INFOMERCIAL"). WHJ desires that THANE effect the necessary production and
manufacturing of the Product, and act as the worldwide exclusive marketing,
distribution and sales entity for the Product. In connection with their role,
THANE shall produce and arrange for the broadcast of the Infomercial.
THANE is a leading international marketing firm, successful in product
development and acquisition, production and production distribution and desires
to facilitate the production and manufacturing of the Product, produce and
broadcast the infomercial, and exclusively market and distribute the Product
worldwide.
THANE and WHJ agree to the following terms and conditions in exchange
for the mutual promises and covenants set forth in this Agreement.
AGREEMENT
1. WARRANTIES & COVENANTS.
1.1 THANE. THANE warrants, promises, and covenants that it has the
complete right, power and authority to enter into this Agreement.
1.2 WHJ. WHJ warrants, promises, and covenants that it: (i) has the
present right, power and authority to enter into this Agreement; (ii) has the
ability, power and authority to grant the rights to THANE as set forth in this
Agreement; (iii) will maintain and have the sole and exclusive right during the
Term to defend all such rights in full force, including, but not limited to,
copyrights, patents, trademarks, and any and all required governmental approvals
that currently exist or may exist for the Product for the Term of this
Agreement; (iv) has not and will not knowingly violate any third parties'
intellectual property rights; and
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(v) has disclosed to THANE all agreements, arrangements and encumbrances
affecting the Product and/or the Product's financial viability.
1.3 CONFIDENTIALITY AND NON-COMPETITION. The Parties agree not to
disclose confidential information regarding the other Parties, their companies,
their products, their operations, or the mechanical construction, technical
information, design drawings, concept, ideas, sketches, wordings, media and
marketing strategies, and chemical composition related to the Product
("INFORMATION") or use such Information for commercial purpose unless such
Information is readily available to the public, without the prior written
consent of the relevant Party(s) and shall treat all such Information in strict
confidence or any other company information which may be deemed a trade secret,
or is sensitive in nature and not otherwise known to the public, to any one
outside of the relevant Party(s') organization. WHJ agrees not to manufacture or
market the same type product, for itself or for third parties, within the
territory assigned to THANE, in competition with THANE during the Term of this
Agreement.
2. THE MANUFACTURE AND COST OF THE PRODUCT
2.1 THE PRODUCT. The "Product" consists of a lightweight portable
appliance with an adjustable power handle, a cutting board with built-in grater,
an upper and lower pasta, pastry and sausage accessory with six adapters, an
upper and lower juicer accessory, an upper and lower corer/slicer, an upper and
lower french fry accessory, and an instruction booklet, along with packaging
("BASIC UNIT"). The Product also consists of "Additional Products" as defined
below. Upon execution, THANE shall take all actions necessary to obtain a
trademark for the name of the Product, and a patent for the Product, both
applications to be jointly designated, and the patent(s) and trademark(s) to be
jointly and equally owned by both Parties.
2.2 ADDITIONAL PRODUCTS. WHJ or THANE may develop future related
products, and THANE may market those products as Additional Products,
individually or in varying product configurations, along with the Product in
THANE's sole discretion ("ADDITIONAL PRODUCTS"), and royalties shall be due WHJ
in accordance with the criteria as so stated in Section 4.3, herein.
2.3 MANUFACTURE AND PRODUCT QUALITY. THANE will have the sole
responsibility to exclusively control all manufacturing aspects of the Product
and shall be responsible for obtaining redesign, prototype, and tooling, and
establishing and maintaining high and appropriate standards of quality for the
manufacture of the Product. THANE will pay all manufacturing and packaging
costs.
2.4 PRODUCT LIABILITY INSURANCE. THANE shall obtain and maintain, in
full force
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for the Term of this Agreement, comprehensive and general liability insurance
including product liability insurance customarily maintained by manufacturers
with a policy limit of not less than one million dollars per occurrence and two
million dollars in the aggregate, and WHJ to be named as an additional insured.
3. INFOMERCIAL, THANE MATERIALS, CUSTOMER LIST AND MARKETING PLAN.
3.1 PRODUCTION. The Parties have determined that THANE shall produce
an infomercial to better market the Product ("INFOMERCIAL"). THANE will pay all
production and any other costs related to the production of the Infomercial. WHJ
will have the right and responsibility to view the Infomercial and any Thane
Materials, and comment to the extent that they express the elements of the
Product accurately and place WHJ in an accurate light.
3.2 THANE MATERIALS. THANE will have the sole discretion to determine
if it will produce, at its own expense, print ads, and collateral materials
("THANE MATERIALS"). WHJ shall provide upon request all existing print, art work
and collateral support materials as may be required by domestic and
international governments in order to obtain approvals, that WHJ may own or
control to assist in producing Thane Materials for the Product.
3.3 CUSTOMER LIST. THANE and WHJ agree that all customer names,
addresses and phone numbers generated by THANE from the marketing of the Product
shall be solely owned by THANE ("CUSTOMER LIST").
3.4 THE MARKETING PLAN. Upon completion of the Infomercial, THANE
shall conduct a marketing test to be completed within 60 days. Should THANE in
its sole discretion determine that it is not feasible to market the Product,
then it shall notify WHJ in writing, within 5 days of the conclusion of the
Market Test, and this Agreement will be terminated, excepting THANE may have a
reasonable time to liquidate inventory. If THANE in its sole discretion
determines the results of this study are favorable, then THANE shall roll-out
the Product and proceed in its sole discretion to determine the marketing plan,
wherein THANE will be responsible during the Term of this Agreement for paying
for, and managing directly, or through the use of agents or sub-contractors, all
functions necessary for the marketing and distribution of the Product and
Infomercial, including without limitation, the management of: (i) in-bound
fulfilment; (ii) out-bound fulfilment; (iii) credit card processing; (iv)
accounting; (v) inventory control; (vi) customer service; (vii) media planning
and buying; (viii) out-bound telemarketing; (ix) after-market sales; and, (x)
foreign distribution, if any. THANE shall put forth its best efforts to maximize
the financial success of the marketing campaign for the sale of the Product.
Thane may contract with a current or future subsidiary companies to provide any
of the above services provided that such services are of like quality and at or
below market price.
4. GRANT OF RIGHTS, WHJ ROYALTY.
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4.1 OWNERSHIP OF PROPERTY AND COPYRIGHTS. THANE and WHJ acknowledge
and agree that both Parties shall own the trademark, the patent for the Product,
and rights related to the use of the tooling for the Product. Thane is the sole
owner of all rights, including copyrights and trademarks, for any and all Thane
Materials, the Infomercial, and the Customer List. WHJ shall take all actions
required to perfect THANE's ownership rights.
4.2 EXCLUSIVE MARKETING RIGHTS. WHJ hereby grants to THANE the
exclusive right, worldwide, to broadcast the Infomercial and to market and sell
the Product in all possible market areas available today, and those that will be
available in the future, including, but not limited to: print; radio; retail;
television, cable; satellite cable and television; the Internet; telemarketing;
and home shopping networks.
4.3 WHJ ROYALTY. Providing WHJ fulfills the terms and conditions of
this Agreement, THANE will disburse to WHJ Royalty compensation as follows: (i)
[*****] percent ([*****]%) of Adjusted Gross Revenue received by THANE from the
sale of all Product through US retail, wholesale, catalog, Internet and
distribution sales; plus (ii) [*****] percent ([*****]%) of the cost of goods,
for all Product sold internationally, and, (iii) for sales of all Product
through US television marketing, THANE shall pay to WHJ the following Royalty
based on the amount of such sales, as follows:
PRODUCT SALES ROYALTY PERCENTAGE
[*****] [*****]%
[*****] [*****]%
[*****] [*****]%
[*****] [*****]%
The Royalty shall be accounted and paid on a quarterly basis, each such
accounting and payment to be made within 30 days after the end of the quarter in
which the relevant Adjusted Gross Revenues are received. THANE shall create and
maintain a rolling reserve return fund, initially at [*****]% of gross revenue
but to be adjusted to reflect actual return rate when such becomes known. This
reserve account shall roll over every 90 days, the balance paid upon termination
and in accordance herein. "ADJUSTED GROSS REVENUE" shall mean all gross revenues
received by THANE from the sale of Product, less: (i) shipping and handling
charges received from customers; (ii) returns and credits paid to customers;
(iii) payment of all sales taxes collected from customers; and (iv) standard
retail commissions to third parties and ad allowances, if any.
4.4 ACCOUNTING AND DISBURSEMENT OF WHJ ROYALTY. THANE will keep
accurate books and records pertaining to all sales of the Product. THANE shall
prepare, or delegate a competent accountant to prepare, accurate accounting
statements setting forth all sales, returns and rolling reserve for returns,
taxes, and Royalty for each quarterly period. Accounting statements shall
accompany Royalty payments. WHJ shall have the ability and right to inspect and
audit all books and records concerning the Product, including unit sales,
returns, taxes, and Royalty from the sale of all Product. WHJ, or its duly
appointed representative, will conduct the inspection only during normal
business hours upon a written request submitted to THANE at least ten (10)
business days prior to the day of the inspection.
.. WHJ shall have the ability and
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right to inspect and audit all books and records concerning the Product,
including unit sales, returns, taxes, and Royalty from the sale of all Product.
WHJ, or its duly appointed representative, will conduct the inspection only
during normal business hours upon a written request submitted to THANE at least
ten (10) business days prior to the day of the inspection.
5. ASSIGNMENT OF RIGHTS. THANE shall have the complete power, right and
authority to assign any and all rights granted under this Agreement to any
parent or subsidiary company. THANE agrees to notify WHJ of any such assignment
and THANE agrees to remain liable for its obligations to WHJ as set forth in
this Agreement.
6. INDEMNIFICATION. WHJ agrees to hold THANE, its successors, assigns,
licensees, agents, associates, directors and employees harmless from any and all
claims, damages, costs and expenses, attorney's fees, damages, recoveries, and
settlements which arise from, or may arise out of, any representation, claim,
statement, promise, warranty, and presentation that WHJ makes about the Product,
from any infringement of WHJ on the intellectual property rights of another, and
the breach by WHJ of any of its representations, warranties, covenants,
obligations, agreements or duties under this Agreement. THANE agrees to hold
WHJ, its successors, assigns, licensees, agents, associates, directors and
employees harmless from any and all claims, damages, costs and expenses,
attorney's fees, damages, recoveries, and settlements which arise from, or may
arise out of, any representation, claim, statement, promise, warranty, and
presentation that THANE makes about the Product in any Thane Materials, or by
any of THANE's representatives, sales people, public relations people, agents,
and marketing people which WHJ has not approved, or ratified their use, from any
manufacturing defect of the Product, and the breach by THANE of any of its
representations, warranties, covenants, obligations, agreements or duties under
this Agreement.
7. INDEPENDENT AND SEPARATE COMPANIES. THANE and WHJ enter into this Agreement
as separate and independent corporations, and companies. THANE and WHJ will be
responsible for the payment of all compensation, wages, taxes, dues, employment
benefits and operating expenses in connection with the separate operations of
their respective businesses, corporations and companies. This Agreement does not
create a partnership, agency or joint venture relationship between WHJ and
THANE. THANE and WHJ agree that neither will, nor permit any person or entity
acting for or on its behalf to, bind or obligate the other Party, or represent
to have such authority, without the express prior written approval of the other
Party.
8. TERM. Subject to the terms and conditions of this Agreement, the Term of
this Agreement shall be for three (3) years from the effective date of this
Agreement. The Term of this Agreement may be extended or terminated only by
mutual written agreement.
9. ENTIRE AGREEMENT. This Agreement contains the entire understanding between
THANE
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and WHJ that supersedes any prior agreements, written or oral, respecting
the subject matter of this Agreement.
10. CONTROLLING LAW. The laws of the State of California will govern the
interpretation of this Agreement, and the rights and obligations of the parties
to it, without regard to a conflict of laws principle. A court will consider the
terms and conditions of this Agreement to be severable so that any of its terms,
conditions, or clauses shall not invalidate, or render unenforceable the entire
agreement.
11. COST OF ENFORCEMENT. If any party to this Agreement retains the services of
an attorney, or files a law suit, to enforce the terms and conditions of this
Agreement, a court may award the prevailing party costs and expenses, including
attorney's fees.
12. NOTICES. Any notice given under this Agreement shall be in writing and
shall only be deemed proper notice if served personally, or by registered or
certified first class mail with return receipt requested, and addressed to the
party to whom the notice is intended at the following addresses. Any change of
address must be in writing and properly delivered to the other Party pursuant to
the requirements of notice set forth in this paragraph.
a) WHJ: WHJ, Inc.
0000 Xxxxxx Xxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx, President
b) THANE: Thane International, Inc.
00-000 Xxxxx Xxxxxxx
Xx Xxxxxx, XX 00000
Attention: Xxxxx Xxx Xxxxx, Corporate Counsel
IN WITNESS HEREOF, the parties hereto have executed this Agreement as
of the Effective Date herein.
WHJ, Inc.: Thane International, Inc.
/s/ Xxxxxxx Xxxxxx /s/ Xxxxxx XxXxxxx
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Xxxxxxx Xxxxxx, Xxxxxx XxXxxxx,
President Executive Vice President
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