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Exhibit 10.20
EXCLUSIVE MANUFACTURING & MARKETING AGREEMENT
The Parties, Thane International, Inc. ("THANE"), a Delaware
corporation with offices located in La Quinta, California, and Inventors
Xxxxxxxx.xxx, Inc. ("IUC"), a Georgia Corporation with offices located in
Atlanta, Georgia, enter into this Agreement effective as of March 24, 2000
("Effective Date"), with reference to the following facts.
RECITALS
IUC is the owner of an exercise apparatus, known as "AB-DOER"(TM)
("PRODUCT") and is producing an infomercial to promote the Product and desires
to have THANE broadcast the Infomercial and THANE exclusively market the
Product, worldwide;
THANE is a leading international marketing firm, successful in product
development and acquisition, and infomercial and instructional video production,
and distribution and desires to exclusively market the Product worldwide;
THANE and IUC have established and set forth their obligations and
expectations with respect to the manufacturing and marketing of the Product as
set forth herein.
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 IUC. IUC 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 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; and (iv) has not and will not knowingly violate any
third parties' intellectual property rights. THANE shall have the right to
enforce IUC's intellectual property rights, in IUC's name, provided however,
that THANE shall not take any action to enforce such rights without the prior
written consent of IUC.
1.3 CONFIDENTIALITY. The Parties agree not to disclose confidential
information
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regarding the other Party, their companies, their products, their operations, or
the mechanical construction, technical information, design drawings, concept,
ideas, sketches, wordings, media and marketing strategies, chemical composition
of the Product or any other company information which may be deemed a trade
secret, or is sensitive in nature and not otherwise known to the public
including the terms and conditions of this Agreement ("Information"), or use
Information for commercial purpose, unless such Information is readily available
to the public, without the prior written consent of the other Party and shall
treat all such Information in strict confidence, and not disclose it to any one
outside of the relevant Party's organization.
2. THE PRODUCT AND MANUFACTURE OF THE PRODUCT.
2.1 THE PRODUCT. The "PRODUCT" is a semi-assembled apparatus
consisting of: a C-shaped bar with handles affixed to a flexible back support,
connected to a padded seat which is supported by front and back T-shaped legs;
printed exercise instructions for beginner, intermediate and advanced work outs;
and an assembly guide, along with the Product packaging ("BASIC UNIT"). The
Product also consists of an infomercial produced by Xxxx Productions promoting
the Product ("INFOMERCIAL") and may also consist of "Additional Product" as
defined below.
2.2 ADDITIONAL PRODUCTS. IUC has also produced an instructional video
which THANE may market along with the Basic Unit. Either Party may develop
related products, and upon mutual agreement, THANE may market these Additional
Product(s), individually or in varying product configurations along with the
Basic Unit.
2.3 MANUFACTURE AND PRODUCT QUALITY. IUC will have the sole
responsibility to control all manufacturing aspects of the Product and shall be
responsible for establishing and maintaining high and appropriate standards of
quality for the manufacture of the Product. IUC will pay all manufacturing and
packaging costs. IUC warrants that the Product will be free from defects in
materials, workmanship or parts for a period of one (1) year from the date of
delivery to THANE, and will indemnify THANE against any third party claim with
respect to product defects in accordance with this Agreement.
2.4 PRODUCT LIABILITY INSURANCE. THANE shall have the sole
responsibility to acquire and maintain adequate product liability insurance for
the Product.
2.5 PURCHASE TERMS. The Purchase Price for the Basic Unit is $[******]
US for the first [*****] units ordered and $[*****] US for any units over the
first [*****] payable by L/C (at a 2% discount for the first [*****] units
ordered) or other terms as the parties may negotiate, FOB Asia. The Purchase
Price includes all manufacturing costs, any and all talent and Xxxxxxx & Xxxxxxx
producer royalties. THANE shall pay Producer Royalties to Xxxx Productions equal
to [*****]% of the Purchase Price for all Products sold by THANE.
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IUC warrants that THANE shall have no obligation to pay any monies other
than the Purchase Price in order to market the Product as contemplated herein.
2.6 PRODUCT CUSTOMER LIST. THANE and IUC 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. THANE MATERIALS. THANE may determine in its sole discretion to tweak the
Infomercial, or produce a spot commercial, print ads, re-design of Product
packaging, or other collateral materials (collectively "THANE MATERIALS"). THANE
shall be responsible for all production costs and shall be the sole owner of all
rights, including copyrights, to Thane Materials.
4. MARKETING PLAN.
4.1 PROJECT SET-UP, MARKET TESTS AND MEDIA COSTS. Upon receipt of the
Infomercial beta master, THANE shall proceed with project set-up and conduct a
Market Test to be started within 30 days. THANE will provide all capital
contribution for the project set-up and the purchase of the media for the market
testing of the Infomercial.
4.2 FAILURE/SUCCESS OF MARKET TESTS. Should THANE determine in its
sole discretion that the results of the Market Test do not warrant the marketing
of the Product, it shall notify IUC within 7 days of the end of the Market Test
period and this Agreement shall terminate. THANE and IUC will have thirty (30)
days to wind up their affairs before this termination is final. Upon the final
termination of this Agreement all rights to the Product shall revert to IUC.
Should Thane determine in its sole discretion that the market tests warrant the
marketing of the Product, it shall "Roll-out" the Product. "Roll-out" shall be
defined as media expenditures that equal or exceed [******] dollars ($[*****])
per week.
4.3 THE MARKETING PLAN. THANE shall inform and discuss marketing
strategy with IUC but shall have the sole discretion to determine the marketing
plan. 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
aspects associated with the implementation of the television and after-market
marketing plan. These duties shall include the management of: (i) in-bound
fulfillment; (ii) out-bound fulfillment; (iii) credit card processing; (iv)
accounting; (v) inventory control; (vi) customer service; (vii) media planning
and buying; (viii) out-bound telemarketing; (ix) database; and (x) after-market
sales. 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
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future subsidiary or affiliate company to provide any of the above services
provided that such services are of like quality and at or below market price.
5. GRANT OF RIGHTS.
5.1 OWNERSHIP OF PROPERTY AND COPYRIGHTS. THANE acknowledges and
agrees that IUC is the sole owner of all rights to the Product, and trademarks,
and patents pertaining thereto and any and all existing marketing materials.
THANE is the sole and exclusive owner of all property rights for any and all
Thane Materials, and the Customer List.
5.2 EXCLUSIVE MARKETING RIGHTS. Subject to IUC's "Reserved Use", IUC
hereby grants to THANE the exclusive right to market the Product worldwide for
the Term herein. IUC agrees not to manufacture nor market the Product or a same
type product, for itself or for third parties, in competition with THANE during
the Term of this Agreement. The exclusive worldwide marketing rights shall
include all possible market areas available today, including but not limited to:
print; retail, radio; television; cable; satellite cable and television;
catalog; Internet; direct mail; telemarketing and home shopping channels. IUC
hereby reserves for its own use its website ( xxx.Xxxxxx.xxx ), Xxxxxx Gifts,
and Comtrad Industries ("RESERVED USE").
5.3 EXCLUSIVITY. The exclusive marketing rights granted to THANE shall
remain exclusive for the first year (1) from Roll-out ("Initial Term of
Exclusivity"). The exclusivity of the rights granted shall extend automatically
for an additional year, and each and every year thereafter, if THANE sells the
following minimum number of units:
Year 1 [******]
Year 2 [******]
Year 3 [******]
Year 4 [******]
If THANE fails to sell the minimum number of units to automatically extend the
exclusivity period, then upon written notice to THANE from IUC, THANE's rights
hereunder shall become non-exclusive for the duration of the Term, excepting
that THANE shall retain the right to exclusively market to existing customers.
6. IUC USE OF THANE MATERIALS/REVERSE ROYALTY. Upon termination of this
Agreement, THANE grants to IUC a license to use any and all Thane Materials
provided that IUC shall account and disburse to THANE a Reverse Royalty equal to
[*****] percent ([*****]%) of Adjusted Gross Revenue, payable on a monthly
basis, each such accounting and payment to be made within 30 days after the end
of the month in which the relevant Adjusted Gross Revenues are received.
"Adjusted Gross Revenue" shall mean all gross revenues received by IUC from the
sale of Product, less: (i) shipping and handling charges received from
customers; (ii) bad debts, returns and credits to customers; and (iii) payment
of all sales taxes collected from customers.
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7. TERM. The Term of this Agreement shall be five (5) years from the effective
date herein.
8. INDEMNIFICATION. IUC 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 arises from, or may arise out of, any representation, claim,
statement, promise, warranty, and presentation that IUC makes in this Agreement
and about the Product, from any infringement by IUC of a third party's
intellectual property rights, and from any product liability or manufacturing
defect claim. THANE agrees to hold IUC, its successors, assigns, licensees,
agents, associates, directors, members, and employees harmless from any and all
claims, damages, costs and expenses, attorney's fees, damages, and recoveries,
and settlements which arises from, or may arise out of, any representation,
claim, statement, promise, warranty, and presentation that THANE makes in this
Agreement, or about the Product, or in the Infomercial or in any Thane
Materials, or by any of THANE's representatives, sales people, public relations
people and marketing people which IUC has not approved, or ratified their use.
9. INDEPENDENT AND SEPARATE COMPANIES. THANE and IUC enter into this Agreement
as separate and independent corporations, and companies. THANE and IUC will each
be responsible for the payment of their respective 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 IUC and THANE. THANE and IUC 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.
10. ENTIRE AGREEMENT. This Agreement contains the entire understanding between
THANE and IUC that supersedes any prior agreements, written or oral, respecting
the subject matter of this Agreement.
11. 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. 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.
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12. COST OF ENFORCEMENT. If any party to this Agreement retains the services of
an attorney, or files a lawsuit, to enforce the terms and conditions of this
Agreement, a court may award the prevailing party costs and expenses, including
attorney's fees.
13. ASSIGNMENT OF RIGHTS. THANE shall have the complete power, right and
authority to assign any and all rights granted under this Agreement to any
existing or future, subsidiary or parent person, entity or company. If THANE
assigns this Agreement in its entirety, it shall notify IUC of any such
assignment. THANE agrees to remain liable for its obligations to IUC as set
forth in this Agreement, unless the assignee assumes such obligations and IUC
accepts such assumption. Except as otherwise set forth in this paragraph, this
Agreement is neither assignable nor delegable by either Party.
14. 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) IUC: Inventors Xxxxxxxx.xxx, Inc.
000 Xxxxxxxxx #000
Xxxxxxx, XX 00000
Attn: Xxxxxxx Xxxxx. President
Tel: 000 000-0000
Fax: 000 000-0000
E-mail: xxxxxxxxxxxx@xxx.xxx
b) THANE: Thane International, Inc.
00-000 Xxxxx Xxxxxxx, Xxxxx 000
Xx Xxxxxx, XX 00000
Attention: Xxxx Xxx, President
Tel: 000 000-0000
Fax: 000 000-0000
E-mail: xxxxxx@xxxxxxxx.xxx
IN WITNESS HEREOF, the parties hereto have executed this Agreement as
of the Effective Date herein.
PRODUCT OWNERS & DEVELOPERS: THANE INTERNATIONAL, INC.:
/s/ Xxxxxxx Xxxxx /s/ Xxxxxx XxXxxxx Hay
----------------------------------- -----------------------------------
Xxxxxxx Xxxxx, President Xxxxxx XxXxxxx Hay, Exec VP.
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July 25, 2000
Sent via Facsimile and Regular Mail
Fax: 000-000-0000
Xxxxxxx Xxxxx, President
Inventors Xxxxxxxx.xxx, Inc.
000 Xxxxxxxxx #000
Xxxxxxx, XX 00000
Re: Amendment to AB-DOER(TM)"Exclusive Manufacturing and Marketing
Agreement", dated March 24, 2000 ("Agreement")
Dear Xxxxxxx:
As you have discussed with Xxxxxxxxx Xxxxxxxx, effective as of March 24, 2000,
you have agreed to lower the Purchase Price of the Basic Unit for all Product
sold internationally, as follows: (i) $[******] per Basic Unit for orders less
than [*****]; and (ii) $[*****] per Basic Unit for orders of [*****] or more.
This letter, when executed by both parties, shall serve as an amendment
("Amendment") to Section 2.5 of our Agreement. We further agree that this
Amendment will not modify or change any other terms of the Agreement.
Please sign below and return an original for our records.
Thane International, Inc.: Inventors Xxxxxxxx.xxx, Inc.:
/s/ Xxxxx Xxx Xxxxx /s/ Xxxxxxx Xxxxx
----------------------------------- -----------------------------------
By: Xxxxx Xxx Xxxxx By: Xxxxxxx Xxxxx
Corporate Counsel President
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August 11, 2000
Sent via Facsimile and Regular Mail
Fax: 000-000-0000
Xxxxxxx Xxxxx, President
Inventors Xxxxxxxx.xxx, Inc.
000 Xxxxxxxxx #000
Xxxxxxx, XX 00000
Re: Second Amendment to AB-DOER(TM)"Exclusive Manufacturing and
Marketing Agreement", dated March 24, 2000 and as amended
("Agreement")
Dear Xxxxxxx:
As discussed with Xxxxxx Xxxxx, you have agreed to grant to Thane the right to
sell the Product to any and all catalogs. In accordance, this Second Amendment
deletes all reference to your "Reserved Use" as described in Section 5.2 of our
Agreement.
Further, we have determined that we both shall decide, on a case by case basis,
who shall be responsible for the costs associated with any and all future
foreign trademark and patent registration costs associated with AB-DOER (TM),
said agreement to be evidenced by a writing.
This letter, when executed by both parties, shall serve as the Second Amendment
to our Agreement ("Second Amendment") and shall be effective as of the first
date written above. We further agree that this Second Amendment will not modify
or change any other terms of the Agreement.
Please sign below and return an original for our records.
Thane International, Inc.: Inventors Xxxxxxxx.xxx, Inc.:
/s/ Xxxxx Xxx Xxxxx /s/ Xxxxxxx Xxxxx
----------------------------------- -----------------------------------
By: Xxxxx Xxx Xxxxx By: Xxxxxxx Xxxxx
Corporate Counsel President
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November 22, 2000
Sent via Facsimile and Regular Mail
Fax: 000-000-0000
Xxxxxxx Xxxxx, President
Inventors Xxxxxxxx.xxx, Inc.
000 Xxxxxxxxx #000
Xxxxxxx, XX 00000
Re: Third Amendment to AB-DOER(TM)"Exclusive Manufacturing and
Marketing Agreement", dated March 24, 2000 and as twice amended
("Agreement")
Dear Xxxxxxx:
As discussed with Xxxxxx and Xxxx, you have agreed to grant to Thane a five
year, worldwide and exclusive right to sell as an Additional Product (defined in
Section 2.2 of the Agreement), which product is currently known as "Hip & Thigh
Doer", under the same terms and conditions set forth in the Agreement and
subsequent Amendments. The Parties shall mutually agree in writing, when such
can be determined, the purchase terms and pricing, which price shall include
production royalties based on sales.
This letter, when executed by both parties, shall serve as the Third Amendment
to our Agreement ("Third Amendment") and shall be effective as of the first date
written above. We further agree that this Third Amendment will not modify or
change any other terms of the Agreement.
Please sign below and return an original for our records.
Thane International, Inc.: Inventors Xxxxxxxx.xxx, Inc.:
/s/ Xxxxx Xxx Xxxxx /s/ Xxxxxxx Xxxxx
----------------------------------- -----------------------------------
By: Xxxxx Xxx Xxxxx By: Xxxxxxx Xxxxx
Corporate Counsel President
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October 2, 2001
Sent via Facsimile and Regular Mail
Fax: 000-000-0000
Xxxxxx X. Best III, President
Xxxxxxx Xxxxx
Inventors Universe, Inc.
000 Xxxxx Xxxxxx, Xxxx. X
Xxxxxxx, XX 00000
Re: Fourth Amendment to AB-DOER(TM)"Exclusive Manufacturing and
Marketing Agreement", dated March 24, 2000 relating to the
marketing of the ABDOer product ("PRODUCT") and its amendments
(collectively "AGREEMENT")
Dear Xxx and Xxxxxxx:
Thane International ("THANE") and Inventors Universe ("IU") entered into a Third
Amendment to the Agreement, dated November 22, 2000, whereby IU would produce an
infomercial utilizing the name and likeness of Xxxx Xxxx for Thane to market an
additional IU leg press exercise product under the name of "Hip & Thigh DOer",
under the same terms and conditions as set forth in the Agreement for the
Product, except as otherwise agreed in writing. The Parties have now determined
to change the name of the Hip & Thigh DOer to "Bun & Thigh DOer", and agreed
that IU shall produce an infomercial to better market the Bun & Thigh DOer
("BODY INFOMERCIAL").
The Parties hereby agree that the Purchase Price of the Bun & Thigh DOer shall
be $[******] for the first [*****] units purchased and $[*****] thereafter, with
a [*****]% deposit with purchase order, balance due upon shipment. The royalties
associated with the Bun & Thigh DOer shall be as set forth on Attachment "A"
hereto.
Pursuant to the Agreement, the Parties have further determined to market an
upgraded version of the ABDOer Product to be called the "ABDOer Xtreme" under
the same terms and conditions set forth in the Agreement, with a Purchase Price
of $[******] for the first [*****] units purchased and $[*****] thereafter, with
a [*****]% deposit with purchase order, balance due upon shipment. The royalties
associated with the ABDOer Xtreme are set forth in Attachment "B" herein. IU
shall produce an infomercial to better market the ABDOer Xtreme ("XTREME
INFOMERCIAL").
This letter, when executed below by both IU and Thane, shall serve as the Fourth
Amendment to the Agreement ("Fourth Amendment") and shall be effective as of the
first date written above. The Parties further agree that this Fourth Amendment
will not modify or change any other terms of the Agreement not inconsistent with
the terms herein. Please sign below to indicate acceptance of these terms and
return an executed original for our records.
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Thane International, Inc.: Inventors Universe, Inc.:
/s/ Xxxxx Xxx Xxxxx /s/ Xxxxxx X. Best III
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By: Xxxxx Xxx Xxxxx By: Xxxxxx X. Best III
Corporate Secretary President
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ATTACHMENT "A"
Bun & Thigh DOer
1. "PRODUCER ROYALTY" equal to [*****]% of Adjusted Gross Revenue ("AGR") up
to $[*****], [*****]% of AGR between $[*****] and $[*****], and [*****]%
of AGR of $[*****] or more;
2. "VIDEO ROYALTY" equal to $[*****] per video set sold through any
marketing channel; and
3. "HOST ROYALTY" equal to $[*****] per unit sold through each appearance by
Xxxx Xxxx or by Xxxxxxx Xxxxxxxx on a live shopping channel ("Host") (or
the equivalent percentage for QVC sales).
"ADJUSTED GROSS REVENUE" for purposes of this Agreement shall mean all gross
revenues received by THANE from the sale of Lower Body DOer through airing the
Body Infomercial, excepting live shopping, as adjusted for returns, less: (i)
shipping and handling charges received from customers; (ii) bad debts, returns
and credits to customers; (iii) payment of all sales taxes collected from
customers; (iv) ad allowances and retail commissions; and (v) a rolling reserve
fund, initially at [*****]% of gross revenue but to be adjusted to reflect
actual return rate when such becomes known. The "Adjusted Gross Revenue" for
Product sold through live shopping channels shall be defined as all gross
revenues received by THANE from the sale of the Lower Body DOer generated from
live shopping channels, including buy anytimes, sell throughs, and IQVC as
adjusted for returns, minus refunds, actual returns, and a [*****]% rolling
return reserve.
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ATTACHMENT "B"
ABDOer Xtreme
1. "PRODUCER ROYALTY" equal to [*****]% of Adjusted Gross Revenue ("AGR") up
to $[*****], [*****]% of AGR between $[*****] and $[*****], and [*****]%
of AGR of $[*****] or more;
2. "PRODUCT ROYALTY" for the following products sold through any marketing
channel equal to: $[*****] for each Tri-Roller unit sold, $[*****] for
each Neck Massager sold, $[*****] for each Mercury Counter sold, and
$[*****] for each Video Tape Set sold; and
3. "HOST ROYALTY" equal to $[*****] per unit sold through each appearance by
Xxxx Xxxx or by Xxxxxxx Xxxxxxxx on a live shopping channel (or the
equivalent percentage for QVC sales).
"ADJUSTED GROSS REVENUE" for purposes of this Agreement shall mean all gross
revenues received by THANE from the sale of ABDOer Xtreme through airing the
Xtreme Infomercial, excepting live shopping, as adjusted for returns, less: (i)
shipping and handling charges received from customers; (ii) bad debts, returns
and credits to customers; (iii) payment of all sales taxes collected from
customers; (iv) ad allowances and retail commissions; and (v) a rolling reserve
fund, initially at [*****]% of gross revenue but to be adjusted to reflect
actual return rate when such becomes known. The "Adjusted Gross Revenue" for
ABDOer Xtreme sold through live shopping channels shall be defined as all gross
revenues received by THANE from the sale of the ABDOer Xtreme generated from
live shopping channels, including buy anytimes, sell throughs, and IQVC as
adjusted for returns, minus refunds, actual returns, and a [*****]% rolling
return reserve.
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