Exhibit 10.4
EXCLUSIVE
MANUFACTURE
AND
MARKETING
AGREEMENT
The “ Parties ,”
DYNAMIC RESPONSE GROUP, INC., a Florida corporation
(“DRG”) or a subsidiary company that it forms (the
“Subsidiary”), and SYNERGY LP. Group, LLC (“
Owner ”), with offices located in Ventura, California,
entered into this “Agreement” effective as of
May 27, 2008 (“ Effective Date ”), with
reference to the following facts.
RECITALS
Owner is the exclusive licensee of a
patented (U.S. Patent No. 5,993,872) (the “
Patent ”) Deep Fat Fryer with Ultrasonic Rotational
Basket, currently known as “SPIN FRYER” (“
Product ”) and desires to produce direct response
advertisements of any length (“ Infomercials ”)
in cooperation with DRG to promote the Product and desires to have
DRG broadcast the Infomercial and exclusively market the Product
worldwide (the “ Territory ”) under the current
name or a name of DRG’s choosing;
DRG, a leading international
marketing firm, successful in manufacturing, product development,
production and distribution, desires to cooperate in producing an
Infomercial and exclusively market the Product in the
Territory;
DRG and Owner have established and
set forth their obligations and expectations with respect to the
manufacturing and marketing of the Product as set forth
herein.
AGREEMENT
I. Warranties and Covenants
.
1.1. DRG . DRG warrants,
promises and covenants that it has the complete right, power, and
authority to enter into this Agreement.
1.2. Owner . Owner 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 DRG as set
forth in this Agreement; (iii) will use commercially
reasonable efforts to maintain and defend all such rights in full
force, including all intellectual property rights and governmental
approvals that currently exist or may exist for the Product and the
Product name during the Term of this Agreement until such time as
DRG becomes co-owner as set forth in Section 5.2 below;
(iv) is not aware of any violation of and will not knowingly
violate any third party’s intellectual property rights, and
(v) has made all reasonable efforts to disclose to DRG all
agreements, arrangements, and encumbrances affecting the Product
and/or the Product’s financial viability. To the extent
necessary to protect the marketing rights in the Territory, DRG
shall have the right, but not the obligation to enforce
Owner’s intellectual property rights to the extent not
otherwise enforced by Owner.
1.3. Confidentiality . Each
of the Parties agrees not to disclose (i) confidential
information regarding the Product’s construction, technical
information, designs, drawings, concepts, ideas, sketches,
wordings, media or marketing strategies, or composition,
(ii) confidential information regarding the Infomercial
production, and (iii) confidential information regarding the
other party, or such party’s companies, products, operations,
or any other information which may be deemed a trade secret, or is
sensitive in nature and not otherwise known to the public,
including the contents of this Agreement (“
Information ”), without the prior written consent of
the other party. Notwithstanding the foregoing, disclosure may be
made to persons on a need to know basis to effectuate the purposes
herein, such as third-party auditors and distributors, buyers and
sales representatives, or by court order, or as otherwise provided
herein so long as the recipient of such Information agrees in
writing to hold all such Information in strict
confidence.
2. The Product and
Manufacture .
2.1. The Product . A “
Basic Unit ” of the Product consists of a consumer
food frying appliance that uses a sonic transducer to excite
(vibrate) the food immediately upon completion of the cooking
cycle. This helps to move the oil away from the food while it is at
its highest temperature and lowest viscosity. The basket then spins
at high speed to completely remove and drain away excess oil from
the food surfaces. This patented process may reduce fat in
deep-fried foods by more than 50 percent.
2.2. Additional Products .
Owner has or may develop additional related products, which DRG may
elect to market in varying product configurations along with the
Product pursuant to the terms herein (“ Additional
Products ”). The Parties hereby acknowledge that Owner is
in the process of developing a commercial version of the Product
(“ Commercial Unit ”). DRG shall have the first
right of refusal to manufacture and market the Commercial Unit
either after establishing the success of the Product or
simultaneously with the marketing of the Product, provided, however
that the terms of the agreement between the parties with respect
the Commercial shall unit shall be separately negotiated, such
negotiation to be held in good faith.
2.3. Manufacture of Product .
DRG shall have the sole responsibility to arrange for the
manufacture of the Product and for determining and maintaining
standards of product quality. Notwithstanding this assignment of
rights and responsibilities, DRG shall collaborate and consult with
Owner on the design and quality of the final production
sample.
2.4. Insurance . DRG shall
have the sole responsibility to acquire and maintain product
liability insurance for the Product, in full force for the Term of
this Agreement, with Owner named as an additional
insured.
2.5. Product Consumer List .
DRG and Owner agree that all consumer names, addresses, and phone
numbers generated by DRG from the marketing of the Product (“
Consumer List ”) shall be jointly owned by DRG and
Owner, provided, however, that neither party may utilize the
Consumer List for any purpose other than for marketing the Product,
Additional Products, or the Commercial Product, without the consent
of the other party, which shall not be unreasonably
withheld.
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3. Feasibility
Study/Production .
3.1. Feasibility Study . Upon
execution of this Agreement, Owner will supply DRG with five sample
Basic Units, a list of all Owner proposed claims for the Product
and all existing claim substantiation, all drawings, picture,
artwork, copies of trademarks, patents or applications for same for
the Product, so that DRG can investigate and evaluate the Product,
design and develop the Product, source a manufacturer, produce a
prototype for use in Infomercial production, test the Product and
determine if DRG will elect to proceed with the project
(collectively, “ Feasibility Study ”). Unless
otherwise agreed in writing, the Feasibility Study shall be
completed within one hundred eighty (180) days from
(i) the date on which DRG shall have received the above
materials or (ii) the Effective Date, whichever is later (the
“ Feasibility Study Period ”). Should DRG
determine that the project is feasible with respect to these
issues, the project will proceed with production of the Infomercial
as provided below. Should DRG determine, in its sole and absolute
discretion that the project is not feasible, then DRG shall notify
Owner in writing, and this Agreement will be terminated and all
rights granted to DRG by Owner hereunder shall revert to
Owner.
3.2. Infomercial Production .
Following the expiration of the Feasibility Study Period, should
DRG determine that the project is feasible, Owner, at DRG’s
expense, shall engage Red Rock Pictures, Inc. to produce, at its
actual cost of production plus 15%, an Infomercial for use by DRG
in marketing the Product. DRG shall have approval rights on all
aspects of the Infomercial production, including without
limitation, creative, vendors, personalities, and budgets. The
production of the Infomercial shall be completed within ninety
(90) days following the expiration of the Feasibility Study
Period.
3.3. DRG Materials . DRG
shall produce print advertisements, collateral materials, and
Product packaging (collectively, “ DRG Material
”) DRG shall collaborate with Owner on creative aspects of
the DRG Material. Owner shall provide collaboration in the
production of DRG Materials by providing all existing print, art
work and studies that Owner may own or control for the collateral
support materials for the Product.
3.4. Owner Approval
Responsibility . Before finalizing any of the DRG Material,
Owner will have the right, ability and responsibility to give
approval to the extent that DRG Materials express the benefits,
elements, and claims of the Product accurately and place Owner in
an accurate light (“ Owner Approval ”). Owner
agrees that it will not unreasonably withhold its approval, nor
delay its approval for an unreasonable period of time.
3.5. Awards Submission .
During the Term of this Agreement, DRG has the sole right to
determine to submit the Infomercial for an Electronic Retailing
Association award. With respect to any other award submission,
whether or not in the industry, Owner shall first obtain
DRG’s written approval of any such submission, which shall
not be unreasonably withheld.
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4. Marketing Plan
.
4.1. The Marketing Plan . DRG
will have the sole discretion to determine the marketing plan for
the Territory. DRG will be responsible during the Term of this
Agreement for paying for, and managing directly, or through use of
agents or sub-contractors, all aspects associated with the
implementation of the television, print, radio, internet 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) customer list
database; (x) after-market sales; and (xi) foreign
distribution. DRG may contract with a current or future
subsidiary/parent/affiliate company to provide any of the above
services, including distribution of the Product, provided that such
services are of like quality, at or below market price.
4.2. Project Set-up, Market Test,
and Media Costs . Upon completion of the Infomercial, DRG shall
proceed with project set-up and purchase the media for test
marketing for a period of two (2) months or such longer
period, as DRG shall continue to refine the Infomercial and re-test
( “Market Test” ). Unless otherwise mutually
agreed, the Market Test shall conclude within one hundred twenty
(120) days of the first airing date of the Infomercial. DRG
will provide all capital for the project set-up and the purchase of
the media for the Market Test.
4.3. Failure/Success of Market
Tests . Should DRG cease refining or re-testing of the
Infomercial or determine that the results of the Market Test do not
warrant further efforts, DRG shall notify Owner in writing and this
Agreement shall terminate and all rights granted herein shall
revert to Owner, including any and all intellectual property rights
in the Product acquired by DRG through the date of termination of
this Agreement. Should DRG determine in its sole discretion to
continue marketing the Product, DRG shall use commercially
reasonable efforts to escalate the media spending and to maximize
sales and the overall financial success of the marketing campaign
for the Product (the “Roll Out”). Roll-Out for purposes
of this Agreement shall mean the airing of the Infomercial after
the Market Test period on national cable and/or broadcast
television stations with gross media expenditures exceeding $15,000
weekly.
5. Grant of Rights
.
5.1. Ownership of Property,
Copyrights and Patents . DRG acknowledges and agrees that Owner
is the sole owner/holder of all rights to the Product, its current
name, and the proprietary technology incorporated into the Product,
including all copyrights, trademarks, and the Patent pertaining
thereto. Owner acknowledges and agrees that DRG is the sole owner
of all rights, including copyrights and trademarks, for any and all
DRG Materials. If DRG elects to mark
