Exhibit 99.3
AGREEMENT
THIS AGREEMENT ("Agreement") is entered into as of the 6th day of
September, 2001, by and between QVC, Inc. ("QVC"), a Delaware corporation with
its principal place of business at Studio Park, 1200 Wilson Drive, West Chester,
PA 19380, and Nutri/System, Inc. ("Company"), a Delaware corporation, with its
principal place of business at 202 Welsh Road, Horsham, PA 19044.
BACKGROUND
A. QVC and its affiliates promote, market, sell and distribute
(collectively, "Promote") products through various means and media, including
without limitation, their televised shopping programs (the "Programs").
B. Company manufactures, develops and/or sells meal programs for weight
loss (all such meal programs for weight loss manufactured, developed or sold by
Company, whether now in existence or developed hereafter, collectively, the
"Products").
C. Company and QVC desire that QVC Promote the Products through certain
means and media.
NOW, THEREFORE, incorporating the foregoing background, in consideration of
the Drop Ship Order(s) (as defined below) issued or to be issued by QVC to
Company, for other good and valuable consideration, the receipt and sufficiency
of which hereby acknowledged, and intending to be legally bound hereby, the
parties hereto agree as follows:
1. Grant of License and Other Rights.
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(a) Company grants to QVC and its affiliates throughout the Term (as
defined in paragraph 3 below) of this Agreement: (i) the exclusive right in the
United States to Promote the Products through Direct Response Television
Programs (as defined below); (ii) the nonexclusive worldwide right to promote
the products through all means and media other than Direct Response Television
Programs; and (iii) the right to use, publish, reproduce and transmit the
trademarks, trade names and/or logos used and/or developed by Company in
connection with the Products, including without limitation the words
"Nutri/System" (whether now in existence or created hereafter, collectively, the
"Trademarks") to Promote the Products in accordance with the terms and
conditions of this Agreement. In addition, Company grants to QVC and its
affiliates the nonexclusive right (subject to provisions of paragraph 4 below)
to use the rights granted in (i), (ii) and (iii) above during the Sell-Off
Period (as defined in paragraph 3 below). For purposes of this Agreement,
"Direct Response Television Program" shall mean any television program which
requests a consumer to respond to any promotion of any product
or service by mail, telephone or other electronic means, which program: (A)
contains an intermittent or continuous call to action, and devotes at least
twenty percent (20%) of its programming time to the promotion of products or
services; or (B) is otherwise in the style of a televised retailing program.
Nothing contained in the previous sentence shall be construed to include the
Internet and/or direct response commercial spots that are less than 2 minutes.
(b) In addition to the rights granted by Company to QVC hereunder
regarding the Products, Company agrees that QVC and its affiliates shall,
throughout the Term of this Agreement, have the right of first negotiation to
acquire the exclusive right to produce, market and/or distribute Infomercials
(as defined below) developed or being developed by Company, or licensed,
authorized or otherwise caused to be developed by Company. Such right of first
negotiation shall extend for an initial period of thirty (30) business days
after QVC has received written notice from Company that it intends to, or it
intends to cause a third party to, develop an Infomercial; during such thirty
(30) business day period, Company shall not engage in negotiations with any
other potential third party. If QVC notifies Company within, or at the
conclusion of, such thirty (30) business day period that QVC intends to
negotiate, then QVC's right of negotiation shall extend for an additional thirty
(30) business day period following the expiration of the initial thirty (30)
business day period; during such additional thirty (30) business day period,
Company shall not engage in negotiations with any other potential third party.
Unless an agreement has been reached between Company and QVC at the conclusion
of such period, or if Company receives written notice from QVC that during or at
the conclusion of the initial thirty (30) business day period that QVC does not
intend to negotiate during such additional thirty (30) business day period,
Company shall be free to negotiate with any other party concerning the
production, marketing or distribution of the Infomercial, subject in all cases
to provisions of paragraph 5 hereof. Notwithstanding the foregoing, if QVC and
Company are still engaged in negotiations at the conclusion of such additional
thirty (30) business day period, such thirty (30) business day period shall be
extended as mutually agreed upon by the parties. For purposes of this
subparagraph 1(d), "Infomercial" shall mean long and short form infomercials
featuring and/or offering for sale one or more Products. For purposes
hereinafter, the rights granted to QVC pursuant to subparagraphs 1(a) through
1(b) hereof are collectively referred to as the "License".
2. Products.
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(a) From time to time, QVC may issue to Company a drop ship order, the
current form of which is attached hereto as Exhibit "A" and incorporated herein
by reference (any such drop ship order, as may be issued from time to time, is
hereinafter referred to as a "Drop Ship Order"). Unless otherwise indicated in
the "Sale or Return designation, each Drop Ship Order shall be accepted by
Company as an order for the purchase of Products on a "100% Sale or Return"
basis. Hereafter, any purchases of Products by QVC shall be made according to
the terms set forth in this Agreement and on any such Drop Ship Order(s). This
paragraph 2, together with all other terms of each
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Drop Ship Order, shall survive the expiration or termination of this Agreement.
Notwithstanding anything to the contrary contained in this Agreement or
otherwise, QVC makes no representations or warranties with respect to (i) the
amount of Products that may be sold through the Programs, if any, (ii) the
number of times, if any, the Products may be offered for sale on the Programs or
(iii) the amount of revenue, if any, that may be generated through any sales of
Products on the Programs. This Agreement does not obligate QVC to purchase any
Products from Company or to Promote or sell any Products.
(b) During the Term of this Agreement, Company, at its sole expense,
shall provide to QVC or its designee, upon any commercially reasonable request
of QVC, (i) all existing research and development for the Products sufficient to
substantiate all claims with respect to the Products, and subject the Products
to all reasonably necessary or appropriate quality control procedures,
independent consumer and market research, and other testing to ensure that the
Products fully comply with all claims made or to be made about the Products and
any applicable state and federal laws, rules and regulations, (ii) the Company's
employees for reasonable and necessary consulting and advisory services with
respect to QVC's efforts to Promote the Products, and (iii) such other creative
input as QVC and the Company may deem appropriate from time to time.
3 Term.
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(a) Generally. The initial term of this Agreement (the "Initial Term")
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shall commence on the date hereof, shall expire two (2) years after January 1,
2002, and shall consist of "Year One" and "Year Two" (as defined below). Upon
the expiration of the Initial Term, this Agreement shall automatically and
continually renew for additional two-year terms (each, a "Renewal Term,"and the
Initial Term and all Renewal Terms being collectively referred to herein as the
"Term") in perpetuity, unless (i) either party notifies the other party in
writing, at least 30 days prior to the end of the Initial Term or any Renewal
Term, as the case may be, of its intent to terminate the Agreement, and (ii) Net
Retail Sales of Products during the Initial Term or such Renewal Term are less
than the Minimum Amount (as such terms are defined in paragraphs 3(d) and (e)
hereof). For purposes of this Agreement, "Year One" shall commence on January
1, 2002, and shall expire on December 31, 2002, "Year Two" shall commence on
January 1, 2003 and shall expire on December 31, 2003.
(b) Right to Cure. Notwithstanding anything to the contrary contained in
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paragraph 3(a) hereof, if Company gives QVC timely notice of its intent to
terminate the Agreement due to insufficient Net Retail Sales for the Initial
Term or the then-current Renewal Term, as the case may be, then QVC may cure
such shortfall by issuing drop Ship Order(s) for Products in quantities which,
if added to existing Net Retail Sales for such period, would yield Net Retail
Sales equaling or exceeding the Minimum Amount for such period. In such case,
(i) such notice of termination shall be deemed rescinded, and the Agreement
shall renew for another Renewal Term; (ii) orders that QVC issues to Company for
Products pursuant to this paragraph 3(b) that are for the purpose of
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fulfilling bona fide customer orders shall be accepted by Company as an order
for the purchase of Products on a "100% Sale or Return" basis; and (iii) all
other orders that QVC issues to Company pursuant to this paragraph 3(b), shall
be on a "0% Sale or Return" basis, unless the same are defective, imperfect or
otherwise nonconforming as described further in paragraph 10 of the Drop Ship
Order, and QVC shall issue shipping instructions to Company for Drop Ship Order,
and QVC shall issue shipping instructions to Company for Drop Ship Orders issued
pursuant to this paragraph 3(b)(iii) within sixty (60) days of the end of the
Initial Term and/or the then-current Renewal Term, as the case may be. Net
Retail Sales derived from Products ordered pursuant to such right to cure shall
not be counted toward the Minimum Amount applicable to the next succeeding
Renewal Term.
(c) Failure to Achieve Minimum Amount. If Company gives QVC timely notice
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of its intent to terminate the Agreement due to insufficient Net Retail Sales
for the Initial Term or the then-current Renewal Term, as the case may be, and
QVC fails to exercise its right to cure under paragraph 3(b) hereof, then the
Agreement shall terminate at the conclusion of such Term, whereupon QVC may
continue to exercise the License rights on a nonexclusive basis (subject to the
provisions of paragraph 4 below) for as long as necessary to Promote the
Products through any means or media (i) to sell off any of its remaining
inventory of Products, (ii) to place additional orders for Products to fulfill
any remaining unfilled customer orders for Products, and (iii) to have such
additional orders fulfilled by Company (the "Sell-Off Period"). In addition to
the foregoing, following the expiration and/or termination of the Agreement, QVC
shall have the right to continue to take orders for the Products (so long as the
customers placing such orders have ordered the Products at least one time prior
to the date of termination and/or expiration of the Agreement) and to have such
orders fulfilled by Company at the then-existing Company prices for such
Products, such right to continue in perpetuity. Failure of QVC to achieve the
Minimum Amount in the Initial Term or any Renewal Term shall not constitute a
breach of the Agreement.
(d) Minimum Amount. For purposes of this Agreement, "Minimum Amount"
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shall mean Thirty One Million Dollars ($31,000,000) in the Initial Term, and for
each succeeding term, one hundred ten percent (110%) of the Minimum Amount
applicable to the immediately preceding Term. QVC anticipates the following
during the Initial Term: the "Net Retail Sales" (as defined below) during Year
One will meet or exceed Fifteen Million Dollars ($15,000,000); and the Net
Retail Sales during Year Two will meet or exceed Sixteen Million Dollars
($16,000,000). Failure of QVC to achieve the foregoing anticipated Net Retail
Sales during the Initial Term shall not constitute a breach of this Agreement.
The foregoing anticipated Net Retail Sales during the Initial Term are merely
illustrative, and such anticipated net Retail Sales are not terms and conditions
of this Agreement.
(e) Net Retail Sales. For purposes of this Agreement, "Net Retail Sales"
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shall mean the aggregate amount of all revenue generated through the sale of
Products by QVC and its affiliates during the applicable term excluding freight,
shipping and handling charges, customer returns, and sales, use and other taxes.
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4. Non-Compete. Except as contemplated hereunder and without the prior
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written consent of QVC, Company shall not, during the Term of this Agreement,
and during the six (6) month period following the expiration or termination of
this Agreement (i) promote, advertise, endorse or sell (or otherwise cause a
third party to promote, advertise, endorse or sell) any goods, services, or
products, including without limitation the Products, anywhere in the world by
means of Direct Response Television Programs; and (ii) promote, advertise,
endorse or sell (or otherwise cause a third party to promote, advertise, endorse
or sell) any goods, services, or products, including without limitation the
Products, anywhere in the world by means of "Competitors" of QVC (as defined
below). For purposes of this Agreement, Competitors of QVC shall mean any entity
whose primary means of deriving revenue is the sale of products or services
through the transmission of any televised program which requests a consumer to
respond to any promotion of any product or service by mail, telephone or other
electronic means, which program: (A) contains an intermittent or continuous call
to action; devotes at least twenty percent (20%) of its programming time to the
promotion of products or services; or (B) is otherwise in the style of a
televised retailing program. This provision shall survive the expiration or
termination of this Agreement.
5. Representations, Warranties and Covenants. Company represents,
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warrants and covenants, which representations, warranties and covenants shall
continue during the Term of this Agreement and shall survive the expiration or
termination of this Agreement, that: (a) it possesses the full power and
exclusive right to grant the License to QVC; (b) the execution, delivery and
performance of this Agreement by Company does not violate any agreement,
instrument, judgment, order or award of any court or arbitrator or any law, rule
or regulation; (c) each Product shall comply with all federal, state, county,
municipal or other statutes, laws, orders and regulations of any governmental or
quasi-governmental entity; (d) QVC's use of the License, and QVC's Promotion of
the Products as permitted hereunder, will not infringe or otherwise violate the
copyrights, trademarks, or other proprietary rights of third parties or
constitute unfair competition; (e) all claims concerning the Products made by
Company are, and will be, true and correct at the time such claims are made, and
supported by data which complies with applicable law; and (f) except as
contemplated hereunder, there exist no agreements, or other arrangements, for
Company to endorse, promote, advertise, or sell any Products through Direct
Response Television Programs. Company shall provide QVC with any and all
documents reasonably required or requested by QVC at any time and from time to
time to support the representations and warranties herein contained.
6. Confidentiality. Company acknowledges and agrees that any and all
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information regarding QVC or its operations disclosed to them in conjunction
with this Agreement, and any information regarding the sale and promotion of
Products and/or products by QVC, will be treated as confidential information
and will not be disclosed to any third party at any time during the term of this
Agreement, including any Renewal Term(s), and thereafter, Company further agrees
that any such information will not be used for any purposes by Company other
than for purposes contemplated by this
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Agreement. Confidential information shall not be deemed to include information
which (a) is public knowledge or becomes generally available to the public other
than as a result of disclosure by Company; (b) becomes available to Company, on
a non-confidential basis, from a source (other than QVC or its agents) who is
not bound by a confidentiality agreement with QVC; or (c) is in the possession
of Company prior to disclosure by QVC, provided that the source was not bound by
a confidentiality agreement with QVC. Notwithstanding the foregoing, Company may
disclose confidential information that is lawfully required to be disclosed to
any governmental agency or is otherwise required to be disclosed by law,
provided that before making such disclosure Company shall give QVC an adequate
opportunity to interpose an objection or take action to assure confidential
handling of such information. Company agrees that in the event of a breach or
threatened breach of the terms of this paragraph 6 and/or the provisions of
paragraph 4, QVC shall be entitled to seek from any court of competent
jurisdiction, preliminary and permanent injunctive relief which remedy shall be
cumulative and in addition to any other rights and remedies to which QVC may be
entitled. Company acknowledges and agrees that the confidential information and
other information referred to in this paragraph 6 and the prohibitions provided
in paragraph 4 above, are valuable and unique and that such breach of such
provisions will result in immediate irreparable injury to QVC. The rights and
obligations of the parties set forth in this paragraph 6 shall survive and
continue after the termination or expiration of this Agreement.
7. Publicity. Except for incidental non-derogatory remarks necessitated
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by the services provided hereunder, Company shall not issue any publicity or
press release regarding its contractual relations with QVC or otherwise make any
oral or written reference to QVC regarding its activities hereunder, without
obtaining QVC's prior written consent, and approval of the contents thereof.
Company shall not utilize any trade name, service mark, trademark, or copyright
belonging to QVC without the prior written consent of QVC. Notwithstanding the
foregoing, QVC recognizes that the Company is publicly traded and is not
prohibited from referring to this Agreement with QVC, or sales resulting
therefrom to the extent required by law and regulations, in the Company's
legally required public disclosure documents.
8. Miscellaneous.
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(a) Amendment. This Agreement may not be varied, amended, or modified
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unless in writing signed by the parties hereto.
(b) No Assignment. This Agreement and the rights and obligations hereunder
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are not assignable and any such assignment shall be null and void.
(c) Governing Law. This Agreement shall be construed according to the
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internal laws of the Commonwealth of Pennsylvania, without regard to conflict of
laws principles. Each of QVC and Company hereby consents to the exclusive
jurisdiction of the state courts of the Commonwealth of Pennsylvania, Chester
County, and the United States District Court for the Eastern District of
Pennsylvania, in all matters arising out of
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this Agreement. Company consents to service of process by certified mail, return
receipt requested, at the address indicated in the opening paragraph hereof.
(d) Notices. All notices provided for hereunder shall be sent via
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certified mail, return receipt requested, or by reputable overnight carrier, to
the addresses indicated in the opening paragraph hereof. All notices sent to QVC
shall be sent to the attention of Executive Vice President, Merchandising, and
Senior Vice President, General Counsel.
(e) Entire Agreement. This Agreement supersedes all prior communications
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between the parties regarding the subject matter hereof, whether oral or
written, and constitutes the entire understanding of the parties.
(f) Remedies and Waiver. No delay or failure on the part of any party
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hereto in exercising any right or remedy under this Agreement, and no partial or
single exercise thereof, shall constitute a waiver of such right or remedy or of
any other right or remedy. The rights and remedies provided in this Agreement
shall be in addition to, and not in lieu of, any rights and remedies provided in
any Drop Ship Order(s) or under applicable law. The rights and remedies provided
in this Agreement and the Drop Ship Order are intended to be consistent and
cumulative. However, to the extent needed to resolve any conflict between this
agreement and the terms and conditions of any Drop Ship Order, the terms and
conditions of this Agreement shall Govern.
(g) Severability. If any term or condition of this Agreement or the
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application thereof shall be illegal, invalid or unenforceable, all other
provisions hereof shall continue in full force and effect as if the illegal,
invalid or unenforceable provision were not a part hereof. The headings used in
this Agreement are for the convenience of the parties only and shall not be
construed in the interpretation of any provisions of this Agreement.
(h) No Joint Venture. Nothing herein contained shall be construed to place
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the parties in the relationship of partners or joint venturers, and none of
the parties hereto shall have the power to obligate or bind the others in any
manner whatsoever. Each of the parties hereto agrees that performing its duties
under this Agreement it shall be in the position of an independent contractor.
IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have executed this Agreement as of the date first above written.
NUTRI/SYSTEM, INC QVC, INC.
By: ILLEGIBLE By: ILLEGIBLE
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Title: CEO/President Title: SVP
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Exhibit "A"
(See Attached)
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THIS DROP SHIP ORDER ("Order") IS EXPRESSLY CONDITIONED ON ACCEPTANCE OF THE
TERMS AND CONDITIONS HEREOF. Oral or written notice of acceptance by Vendor,
preparation to perform by Vendor and/or shipment of all or any part of the
merchandise specified in this Order ("Merchandise") shall constitute acceptance
by Vendor of the terms and conditions contained herein. BY ACCEPTANCE OF THIS
ORDER, VENDOR REPRESENTS AND AGREES AS FOLLOWS:
1. Merchandise shall be shipped by Vendor, directly to the purchasers, in
accordance with (i) this Order, (ii) QVC, Inc. ("QVC")'s drop ship manual
("Manual"), which is fully incorporated herein by reference, and (iii) QVC's
written instructions to Vendor ("Delivery Instructions"). To the extent required
for individual shipments directly to the purchasers, partial shipments under
this Order are hereby authorized. Partial shipments shall not cause Vendor's
obligations to become severable. Vendor shall bear the risk of loss to the
Merchandise until delivered to and received by the purchasers, at which time
title shall pass directly from Vendor to the purchasers. At no time will QVC
take title to the Merchandise. Subject to Section 19 hereof and except to the
extent Delivery Instructions from QVC are then outstanding, this Order shall
terminate upon the earlier of (i) one year from the date of this Order, or such
other period as may be specified on the face hereof, or (ii) such time as
Vendor's inventory of Merchandise in the quantity set forth on the face hereof
shall be shipped by Vendor to the purchasers.
2. Time is of the essence. Tender of conforming Merchandise to the carrier shall
be made by Vendor within twenty-four (24) hours of Vendor's receipt of Delivery
Instructions from QVC or by such later delivery date as may be specified in
QVC's Delivery Instructions or on the face hereof. The first ship or delivery
date as set forth on the face hereof, shall mean the date by which the
Merchandise shall be available for shipment by Vendor to the purchasers. Vendor
shall forward shipment confirmation to QVC's Vendor Drop Ship Coordinator within
twenty-four (24) hours of shipment to the purchasers. QVC reserves the right to
cancel this Order or any part hereof, with no liability or obligation to Vendor,
in the event: (a) QVC is notified that any Merchandise or Mark infringes or is
alleged to infringe upon any third party rights; (b) Vendor breaches or is
anticipated to breach this Order; (c) fire, flood, windstorm, earthquake, war,
strike, or any other casualty or occurrence of a similar nature substantially
and adversely affects QVC's premises or business; or (d) any substantial change
to QVC's business (for whatever reason) occurs.
3. Merchandise shall be shipped in such manner, by such method, and at such
times as QVC shall determine, as set forth in this Order, the Manual and the
Delivery Instructions. Shipping charges (including insurance) with respect to
shipments hereunder shall be prepaid by Vendor, unless QVC, in its sole
discretion, requires Vendor to utilize the shipper identification number of any
courier designated by QVC, in which event QVC shall be billed directly by such
courier. QVC shall reimburse Vendor for prepaid shipping charges only in
accordance with Section 4.C. below.
4. A. QVC shall remit to Vendor an amount equal to Net Sales of Merchandise as
provided herein, "Net Sales" shall mean Vendor's gross sales (calculated by
multiplying the quantity of units of Merchandise sold and shipped to the
purchasers, by the unit price set forth on the face hereof) less the Reserve (as
defined in Section 4B below) and adjusted for any credits, debits, purchaser
returns, refunds, allowances and amounts previously remitted by QVC for
Merchandise shipped to purchasers, but not received by such purchasers, and
shall exclude shipping and handling charges and sales and use taxes. Remittances
hereunder shall be due fifteen (15) business days after the end of the calendar
month in which QVC shall have received shipping confirmation from Vendor,
provided, however, that such shipping confirmation shall be received by QVC on
or before the twenty-fifth (25th) calendar day of such month, and, if not so
received, such payment shall be due fifteen (15) business days after the end of
the next succeeding month. Vendor's failure to comply with the terms and
conditions set forth herein or in the Manual or the Delivery Instructions, or in
QVC's regulations ("Regulations") or any applicable standards provided by QVC to
Vendor ("Standards"), in effect as of the date of this Order, which are
incorporated herein by reference, may, at QVC's option, result in the imposition
of a charge as set forth in such documents. In addition, any breach by Vendor of
the provisions of Section 8(d) hereof shall result in the imposition of charges
upon Vendor for all costs incurred by QVC as a result of such breach (including,
but not limited to, the cost of customer refunds and all administrative costs).
Any charges assessed as set forth herein may be taken by QVC as a credit against
all amounts due or which may become due to Vendor, Copies of the Manual, the
Regulations and the Standards are available upon written request. QVC's
obligation to remit amounts to Vendor for Vendor's Net Sales hereunder shall be
conditioned upon the sale and shipment of Merchandise to the purchasers in
accordance with this Order and upon the receipt by QVC of written confirmation
of such sale and shipment.
B. If a percentage greater than zero is indicated in the "Payment Reserve"
designation on the face hereof, then QVC will withhold an amount equal to such
percentage of the gross monthly sales (the "Reserve") from each such monthly
payment to Vendor. The amount so withheld shall be applied toward actual QVC
customer returns occurring during the succeeding month. If actual returns during
such period exceed the Reserve withheld in the prior month, then such excess
amount shall, at QVC's option, be immediately debited against Vendor's account
or paid by Vendor to QVC within fifteen (15) days of receipt of QVC's request
for such payment. If actual returns during such period are less than the Reserve
withheld in the prior month, then the balance of the Reserve remaining at the
conclusion of such period shall, at QVC's option, be credited to Vendor's
account or paid to Vendor. Payment hereunder shall not constitute acceptance of
the Merchandise and is without prejudice to any and all claims of QVC against
Vendor.
C. At such time as remittance to Vendor are made under Section 4.A., above, QVC
agrees to remit as sole reimbursement for shipping and handling charges incurred
by Vendor in shipping Merchandise to the purchasers, those amounts, if any, set
forth on the face hereof. Notwithstanding the foregoing, in the event QVC's
Delivery Instructions shall provide for courior shipment, since QVC will be
billed directly by such courier. QVC shall have no obligation to pay any monies
to Vendor on account of the shipment of Merchandise covered by such Delivery
Instructions.
5. Vendor, at its sole expense, shall maintain for the life of the Merchandise,
with carriers acceptable to QVC, a comprehensive general liability policy,
including full product liability, infringement and advertising injury coverage,
in amounts no less than One Million Dollars per occurrence, unless otherwise
specified on the face hereof, including broad form Vendor's coverage in favor of
QVC, and naming QVC as an additional insured. Within seven (7) days of issuance
of this Order, Vendor shall provide QVC with a certificate of insurance
evidencing that such insurance coverage is in place. If Vendor shall not provide
such certificate(s) of insurance within the aforementioned time period, QVC may
cancel this Order with no further liability. If, for any reason, any such
policies are changed, modified or canceled, Vendor shall immediately notify QVC
in writing.
6. For purposes of this Order, "Confidential Information" shall mean any
agreement between QVC and Vendor, all information in whatever form transmitted
relating to the past, present, or future business affairs, including without
limitation, the sale of merchandise, actual and prospective purchaser lists and
other purchaser information, research, development, operations, security,
broadcasting, merchandising, marketing, distribution, financial, programming and
data processing information of QVC or another party whose information QVC has in
its possession under obligations of confidentiality, which is disclosed by QVC,
its subsidiaries, affiliates, employees, agents, officers or directors to Vendor
or which is produced or developed during the working relationship between the
parties. Confidential Information shall not include any information of QVC that
is lawfully required to be disclosed by Vendor to any governmental agency or is
otherwise required to be disclosed by law, provided that, before making such
disclosure Vendor shall give QVC an adequate opportunity to interpose an
objection or take action to assure confidential handling of such information.
Vendor shall not disclose any Confidential Information to any person or entity
except employees of Vendor and the applicable carrier for delivery purposes as
required in the performance of their employment-related duties in connection
with this Order, nor will Vendor use or permit any other person or entity to use
the Confidential Information for any purpose other than those purposes expressly
contemplated herein. Vendor shall not use any information obtained from QVC's
customers (e.g., through warranty cards or otherwise) to offer for sale to such
customers any goods or services, Vendor shall not include with any Merchandise,
any information that would enable QVC's customers to acquire, either directly or
indirectly, any additional merchandise from persons other than QVC without first
obtaining QVC's written consent. In the event of a breach or threatened breach
of this Section by Vendor, QVC shall be entitled to obtain from any court of
competent jurisdiction, preliminary and permanent injunctive relief, including,
but not limited to, temporary restraining orders, which remedy shall be
cumulative and in addition to any other rights and remedies to which QVC may be
entitled. Vendor agrees that the Confidential Information referred to in this
Section is valuable and unique and that disclosure or use thereof in breach of
this Section will result in immediate irreparable injury to QVC. Vendor shall
inform those persons or entities having access or exposure to Confidential
Information hereunder, of Vendor's obligations under this section.
7. Vendor hereby grants to QVC the irrevocable right, by all means now or
hereafter existing, to: (a) market, promote the sale of and sell the
Merchandise; (b) use the trademarks, trade names, trade dress, service marks,
patents and copyrights (collectively, the "Marks") registered, owned, licensed
to or used by vendor in connection with the Merchandise; (c) use, perform, play,
synchronize and/or demonstrate, as applicable, the
Merchandise, its contents, and/or any promotional, advertising or similar
material supplied by Vendor for use in connection with such Merchandise
("Promotional Material"); and (d) use the names, photographs, likenesses, voices
and/or biographies of any individuals performing in or otherwise associated with
the production of the Merchandise as contained in the Merchandise, its contents
and/or any promotional Material. QVC makes no representations with regard to the
number of times, if any, that Merchandise will be marketed or promoted by QVC or
the amount of Merchandise which will be purchased by consumers.
8. In addition to and without prejudice to any and all other warranties,
express or implied by law, Vendor represents, warrants and covenants to QVC
that: (a) Vendor possesses all licenses, permits, rights, powers and consents
required to enter into and perform this Order, to sell the Merchandise and to
grant to QVC the rights granted herein; (b) Vendor's performance hereunder does
not violate any agreement, instrument, judgment, order or award of any court or
arbritrator; (c) all Merchandise furnished hereunder, including the production,
sale, packaging, labeling, safety, testing, importation and transportation
thereof, and all representations, advertising, prices, and allowances,
discounts or other benefits made, offered or authorized by Vendor in connection
therewith, shall at all times comply with all applicable federal, state, local,
industry and foreign statutes, laws, rules, regulations and orders, standards
and guidelines (collectively, "Laws"); (d) all claims concerning the Merchandise
made by Vendor and its agents are, and will be, true and correct at the time
such claims are made and supported by data which complies with applicable Laws;
(e) where applicable, reasonable and representative tests as prescribed by Laws
or governmental authorities have been performed or will be performed before
shipment from Vendor to the purchasers; (f) all Merchandise furnished hereunder
shall be new, first quality merchandise and conform to all representations by
Vendor, instructions, specifications, and samples, shall be free from all
defects (including latent defects) in workmanship, material and design, and
shall not be reworked, rebuilt or refurbished merchandise; (g) all
manufacturers' warranties are effective and enforceable by both QVC and the
purchasers; (h) all Marks which are part of or appear in connection with the
Merchandise and/or Promotional Material, and/or any component thereof, are valid
and genuine, and the sale, promotion of the sale and performance of the
Merchandise and/or Promotional Material, and/or any component thereof, will not
infringe upon any domestic or foreign Marks, rights of privacy or publicity
and/or any other third party rights, or cause QVC to be liable to Vendor or any
third party for any additional fees, costs or expenses; (i) the title of Vendor
to the Merchandise is good and free and clear of all encumbrances and liens, and
its transfer hereunder rightful; (j) neither the Merchandise nor any component
part thereof is subject to any import quota restriction, rule or regulation
preventing or forbidding the importation, use, promotion for sale or sale of the
Merchandise or any component part thereof, or any duty, tariff, or penalty in
connection therewith, except as previously disclosed in writing by Vendor to
QVC; (k) the Merchandise and similar goods are not and have not been subject to
product liability claims, except as disclosed on the face hereof; and (l) the
same or similar Merchandise is not being and will not be offered to any other
customer of Vendor at a lessor cost or under more favorable terms than appear
herein. Vendor agrees to provide QVC with any and all documents requested or
required by QVC at any time and from time to time to support the
representations, warranties and covenants herein contained.
9. Vendor hereby agrees to protect, defend, hold harmless and indemnify QVC,
its subsidiaries and affiliates, and each of their respective programming and
other distributors, employees, agents, officers, directors, successors and
assigns, and purchasers of Merchandise furnished hereunder, from and against any
and all claims, actions, suits, costs, liabilities, damages and expenses
(including, but not limited to, all direct, special, incidental, exemplary and
consequential damages and losses of any kind (including, without limitation,
present and prospective lost profits and lost business) and reasonable
attorneys' fees) based upon or resulting from: (a) any alleged or actual
infringement of the Marks, rights of publicity or privacy and/or any other third
party rights arising from the sale, promotion of the sale and/or performance of
the Merchandise, its contents and/or the Promotional Material; (b) any alleged
or actual defect in any of the Merchandise; (c) any alleged or actual injury or
death to person or damage to property arising out of the furnishing, use or
performance of the Merchandise; (d) breach by Vendor of any representations,
warranties or covenants; and (e) any alleged or actual violation by Vendor
and/or the Merchandise of any applicable Laws. In the event QVC notifies Vendor
in writing of a claim, demand, action, suit or other matter ("Claim") to which
the foregoing indemnity applies, Vendor shall provide prompt assurance of its
ability to so indemnify QVC, to QVC's reasonable satisfaction, and Vendor shall
commence to defend such Claim, at its sole cost and expense, within five (5)
days after receiving QVC's written notice. If Vendor fails to provide such
assurance or fails to commence such defense within such five (5)-day period, QVC
may, at its option, assume the defense or settlement of
such Claim in its own name and all recoveries from such Claim shall belong to
QVC. In the latter event, which shall be in addition to any and all other rights
QVC may have at law or in equity. QVC may elect counsel to represent it, and
Vendor shall be solely responsible for the payment or reimbursement, at QVC's
option, of counsel fees and all other fees and costs incurred in defending such
Claim, for any and all damages arising thereunder, and for any and all amounts
paid by QVC in settlement thereof. In addition, Vendor shall be responsible for
all costs of any kind incurred by QVC in responding to any discovery or legal
process served upon Qvc, its subsidiaries and/or affiliates in connection with
litigation between a third party and Vendor for any person or entity affiliated
with Vendor), which costs shall be charged to Vendor or deducted from amounts
due to Vendor, at QVC's option.
10. Merchandise furnished hereunder which is not in compliance with this Order,
the Regulations or the Standards, which is returned by any of the purchasers for
any reason, which fails to meet QVC's quality control tests, which fails to meet
QVC's carrier's quality, drop or other tests, or which is, or, may be used in
conjunction with merchandise furnished and rejected (or acceptance thereof
revoked) under another order, may be rejected (or acceptance thereof revoked)
and returned to Vendor. All expense of unpacking, examining, repacking, storing
and reshipping any Merchandise rejected (or acceptance of which has been
revoked) as aforesaid shall be at Vendor's expense and risk. With respect to
such returned Merchandise, QVC shall, at its option, receive a credit or refund
of amounts remitted to Vendor hereunder for such Merchandise. In the event that
QVC shall opt to receive a refund. Vendor shall pay QVC in immediately available
funds within fifteen (15) days of QVC's request. In the event that QVC shall opt
to receive a credit, QVC may apply such credit toward any amounts due or which
may become due to Vendor. Merchandise returned or rejected is not to be replaced
by Vendor without the prior written approval of QVC. Vendor acknowledges and
understands that defects, imperfections or nonconformity with any
representations, warranties or covenants set forth herein may not be discovered
until Merchandise shall have been received by purchasers and returned to QVC
after such purchasers examine their purchases. Vendor agrees that Merchandise
rejected or returned for any reason pursuant to the terms of this Order, whether
or not such rejection is disputed by Vendor, will not be resold or otherwise
distributed by Vendor unless all labels and other characteristics identifying
QVC and/or displaying any trade name or trademark or QVC have been first
removed. Authorization is expressly granted to QVC to return Merchandise to
Vendor without additional authorization and Vendor hereby agrees to accept such
returns even without QVC's request for return authorization labels, QVC's
inspection, discovery of a breech of warranty, failure to make an inspection or
failure to discover a breach of warranty shall not constitute a waiver of any of
QVC's rights or remedies whatsoever.
11. Vendor shall not assign this Order, or any part thereof, without the prior
written consent of QVC, and any such attempted assignment shall be void at the
election of QVC. All claims for money due or to become due from QVC shall be
subject to deduction by QVC for any set-off, recoupment or counterclaim arising
out of this Order or any other of QVC's orders with Vendor, whether such set-
off, recoupment or counterclaim arose before or after any assignment by Vendor.
12. Until date of shipment to purchaser(s), Vendor shall meet its lower prices
and the lower prices of legitimate competition, or accept cancellation at QVC's
option, QVC, in its sole discretion, shall determine the price at which
Merchandise shall be offered for sale to prospective purchasers and shall retain
all handling and shipping charges collected from actual purchasers.
13. This Order shall be governed by the laws of the Commonwealth of Pennsylvania
applicable to contracts to be performed wholly therein, regardless of place of
acceptance, Vendor and QVC expressly exclude the application of the United
Nations Convention on Contracts for the International Sale of Goods, if
applicable. Vendor hereby consents to the exclusive jurisdiction of the state
courts of the Commonwealth of Pennsylvania for the Country of Chester and the
federal courts for the Eastern District of Pennsylvania in all matters arising
hereunder. Vendor hereby irrevocably agrees to service of process by certified
mail, return receipt requested, to its address as set forth on the face of this
Order or to such other address as Vendor may deliver to QVC in writing.
14. No waiver by QVC of any term, provision or condition hereof shall be deemed
to constitute a waiver of any other term, provision or condition of this Order,
or a waiver of the same or of any other term, provision or condition with regard
to subsequent transactions or subsequent parts of the same transaction,
including without limitation subsequent shipments under this Order.
15. If any provision contained in this Order shall be determined to be
unenforceable or prohibited by law, then such provision shall be void, and the
remaining provisions herein shall not in any way be affected or impaired
thereby.
16. Vendor shall not issue any publicity or press release regarding QVC or
QVC's activities hereunder without first obtaining QVC's prior written approval
and consent to such release.
17. This Order and any other written warranties and specifications, the Manual,
the Delivery Instructions, the Regulations and the Standards, and the terms,
conditions and agreements herein and therein, constitute the full understanding
of the parties hereto and a complete and exclusive statement of the terms of the
parties' agreement concerning the Merchandise furnished hereunder.
18. No condition, understanding or agreement purporting to modify or vary the
terms of this Order shall be binding unless hereafter made in writing and duly
executed by the party to be bound, and no modification shall be effected by the
acknowledgement or acceptance of this Order or of invoices, shipping documents
or other documents containing terms or conditions at variance with or in
addition to those set forth herein.
19. Notwithstanding any legal presumption to the contrary, the covenants,
conditions, representations, indemnities, and warranties contained in this
Agreement, including, but not limited to Sections 6, 8, 9 and 10 hereof, shall
survive inspection, delivery, acceptance, payment and termination, shall be
binding upon Vendor and its successor and permitted assigns, and shall run in
favor of QVC and its successors and assigns.