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Exhibit 10.13
CO-MARKETING AGREEMENT
This CO-MARKETING AGREEMENT (this "Agreement") dated as of July 1, 1999
by and between ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC., a Delaware corporation
("▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇"), and VITAMIN SHOPPE INDUSTRIES INC., a New York
corporation ("VSI"),
W I T N E S S E T H:
WHEREAS, ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and VSI desire to engage in co-marketing and
cross-promotion of their businesses, on the terms and subject to the conditions
set forth herein;
NOW, THEREFORE, the parties agree as follows:
1. CATALOG REFERENCES. Unless VSI has received written notice at least
90 days prior to the printing of a particular print catalog that
▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ elects not to have the advertising and references described in
this paragraph 1 appear therein, VSI shall include the following promotional
references to ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ in each print catalog that it distributes during
the term of this Agreement:
(a) The cover of each VSI print catalog containing a reference to the
VSI toll-free number (the "Toll-Free Number") shall contain a reference to a
website URL designated by ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ (the "▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ Website
URL") of comparable size and leading to the Toll-Free Number;
(b) Each order form within each VSI print catalog containing a
reference to the Toll-Free Number shall also contain a reference to the
▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ website URL of comparable size and leading to the Toll-Free
Number;
(c) Each page within each VSI print catalog containing a reference to
the Toll-Free Number shall also contain a reference to the ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
website URL of comparable size and leading to the Toll-Free Number;
(d) If the Toll-Free Number appears on the spine of any VSI print
catalog, a reference to the ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ website URL shall appear of
comparable size and leading to the Toll-Free Number; and
(e) One full-page advertisement of ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ shall be included
within the first six pages of each VSI print catalog; provided that
▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ may purchase additional advertising from VSI on mutually
agreeable terms; and provided further that the content of any such advertisement
shall be determined by ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ in its sole discretion, except that VSI
may reject the content of any such advertisement if it determines in its
reasonable discretion that such content would be detrimental to its reputation
or overall business.
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Within five business days after the first distribution of each print catalog by
VSI during the term of this Agreement, VSI shall provide ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ with
a copy of such catalog that demonstrates compliance with this paragraph 1.
2. RETAIL STORE REFERENCES. VSI shall provide the following promotional
references to ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ in each retail store that it owns or operates
during the term of this Agreement:
(a) All shopping bags, printed cash register receipts and other
in-store signage and displays containing a reference to the Toll-Free Number
shall also contain a reference to the ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ website URL of
comparable size and leading to the Toll-Free Number; and
(b) Subject to landlord approval, the display windows of each VSI
retail store shall include a reference to one or more of the ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
website URLs which is approximately 2 1/2 inches in height.
3. OTHER REFERENCES. VSI shall provide the following promotional
references to ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ during the term of this Agreement:
(a) All product labels for The Vitamin Shoppe(R) brand products
containing a reference to the Toll-Free Number shall also contain a reference to
the ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ website URL of comparable size and leading to the
Toll-Free Number;
(b) All packaging and shipping materials, packing slips/invoices and
transmittal advices used by VSI in fulfilling orders for its own or
▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ customers which contain a reference to the Toll-Free Number
shall also contain a reference to the ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ website URL of
comparable size and leading to the Toll-Free Number;
(c) Each vehicle owned by VSI that is marked with the VSI logo or
tradename shall include a reference to the ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ website URL which
is comparable to the reference made by VSI as of the date hereof;
(d) Each print advertisement and print promotional piece purchased by
VSI from third parties that contains a reference to the Toll-Free Number shall
also contain a reference to the ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ website URL of comparable size
and leading to the Toll-Free Number;
(e) Radio and television advertisements purchased by VSI from third
parties that contain a reference to the Toll-Free Number may contain a reference
to the ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ website URL, if ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ reimburses VSI for a
portion of the cost of such advertisements as mutually agreed by
▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and VSI; and
(f) Radio and television advertisements purchased by ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
from third parties that contain a reference to the ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ website URL
may contain a reference to the Toll-Free Number, if VSI reimburses
▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ for a portion of the cost of such advertisements as mutually
agreed by ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and VSI.
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4. CATALOG MAILINGS. Upon the written request of ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, VSI
shall mail its print catalog to Internet Customers (as defined below) and to
prospects of ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇. ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ shall provide VSI with an
estimate of the quantity of such mailing 60 days prior to the proposed date for
printing of such catalog. ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ shall provide a list of the names
and addresses of the Internet Customers and prospects to whom each such catalog
shall be mailed within 60 days of the printing. For purposes of this paragraph
4, "Internet Customer" shall mean any customer who has purchased exclusively
from ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ and not from VSI through its retail stores or catalog
during the 12-month period ending immediately prior to the date of the request.
5. WEBSITE REFERENCES. During the term of this Agreement,
▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇'s website (i) shall contain functionality to enable customers
to request a VSI print catalog from one or more of its pages, including the
▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ home page, and (ii) shall contain on one or more of its pages
a store locator for VSI's retail locations, which locator shall be directly
accessible from the ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ home page. ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ shall update
such store locator from time to time at the request of VSI.
6. COMPENSATION. (a) In consideration of the catalog references to be
provided pursuant to paragraph 1, ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ shall pay to VSI $40 per
1,000 copies of each VSI print catalog distributed in which ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
promotional references appear. The cost per 1,000 copies distributed hereunder
shall be adjusted for inflation on each July 1 commencing on July 1, 2000 to
reflect any change in the Consumer Price Index since the date of the last
adjustment. Payment hereunder shall be made by ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ within ten
business days after VSI provides ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ with a statement that
indicates the number of copies of such catalog that it has distributed. Payment
by ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ of any statement shall not preclude ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ from
challenging the accuracy thereof.
(b) In consideration of the retail store and other references to be
provided pursuant to paragraphs 2 and 3, ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ shall pay to VSI a
monthly fee of $833 for each VSI retail store in an urban area and $417 for each
VSI retail store in a suburban area, in each case limited as provided below.
This fee shall be payable commencing on July 1, 1999 and on the first day of
each calendar month thereafter during the term of this Agreement. The fee shall
be adjusted for inflation on each July 1 commencing on July 1, 2000 to reflect
any change in the Consumer Price Index since the date of the last adjustment.
For purposes of this Agreement, a VSI retail store shall be located in a
suburban location if its customer traffic generally arrives by automobile. Any
other VSI retail store shall be deemed to be located in an urban area. VSI shall
promptly notify ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ of the opening or closing of retail stores and
shall designate in its reasonable discretion whether such stores are urban or
suburban. The fee for a VSI retail store that opens or closes during a
particular calendar month shall commence or terminate, as the case may be, on
the first day of the calendar month following the first day on which the store
opens or closes.
(c) In consideration of the catalog mailings to be provided pursuant to
paragraph 4, ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ shall reimburse VSI for its marginal costs of
printing and postage for the number of catalogs that ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ requests
thereunder. Payment hereunder shall be
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made within ten business days after VSI provides ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ with a
statement of the number of copies of such catalog that it mailed at the request
of ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ pursuant to paragraph 4.
(d) In consideration of the website references to be provided pursuant
to paragraph 5, VSI shall pay to ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ an annual fee of $20,000 in
12 equal monthly installments commencing on July 1, 1999 and on the first day of
each calendar month thereafter during the term of this Agreement. The fee shall
be adjusted for inflation on each July 1 commencing on July 1, 2000 to reflect
any change in the Consumer Price Index since the date of the last adjustment.
(e) Each party shall maintain accurate books and records which reflect
the services provided to the other hereunder. At its own expense, each party or
its representatives may examine and copy such books and records as provided in
this paragraph 6(e). Each party and its representatives may make examinations
only during usual business hours and at the place at which the other party
usually keeps its books and records. Each party shall be required to notify the
other party at least ten days before the date of planned examination. If an
examination has not been completed within two months from commencement, each
party may require the other party to terminate the examination on seven days
notice to the other party, so long as the other party has cooperated in full
with it in the examination of such books and records.
7. NEGATIVE COVENANTS. During the term of this Agreement, VSI shall not
publish an advertisement in any VSI print catalog or in any retail store that
promotes any other online seller of vitamins, nutritional supplements and
minerals. During the term of this Agreement, ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ shall not publish
an advertisement on any page of any website that it owns or controls for any
other retail seller of vitamins, nutritional supplements and minerals other than
(a) VSI, (b) manufacturers whose products are carried by VSI and that do not
sell products directly to consumers and (c) manufacturers of Requested Products
that are not Objectionable Products (as such terms are defined in the Supply and
Fulfillment Agreement dated of even date herewith between VSI and
▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, the terms of which agreement are incorporated herein by
reference).
8. PARTICIPATION IN PROGRAMS. (a) During the term of this Agreement,
▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ shall participate with VSI in the Vitamin Shoppe Frequent
Buyer Program (the "Frequent Buyer Program"), and each party shall permit its
customers to redeem points attributable to sales by the other party against
purchases of merchandise from it.
(b) During each calendar year (each such year, a "Point Year"), each
party shall maintain accurate books and records of the points awarded to its
customers for the Frequent Buyer Program based on customer purchases within such
Point Year. Each party shall also keep records of the merchandise credits issued
in redemption of points awarded in each Point Year; provided that merchandise
credits issued in redemption of points may only be issued within the 90-day
period commencing immediately after the Point Year in which such points were
awarded. Each party shall deliver the records compiled by it in accordance with
this paragraph 8 to the other party within 150 days after the end of the Point
Year to which such records relate. Promptly thereafter, VSI shall reconcile the
points awarded by each party during the Point Year
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against the merchandise credits issued by each party during the 90-day period
following such Point Year. Such reconciliation shall determine the difference
between the actual merchandise credits issued by each party and each party's pro
rata share (based on points awarded) of the total merchandise credits issued by
the parties. VSI shall then determine the amount, if any, that one party shall
pay the other in the accordance with such reconciliation. Upon receipt of such
reconciliation, ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ or VSI, as the case may be, shall pay any
amounts owed to the other within ten business days.
9. TERM. (a) This Agreement shall commence on the date hereof and
continue for an indefinite period in full force and effect until it is
terminated in accordance with this paragraph 9.
(b) Either party shall have the right but not the obligation to
terminate this Agreement immediately if at any time:
(i) the other party shall be in material breach of any of its
obligations here under, and such breach shall not be cured within 20
days after receipt of written notice thereof;
(ii) the other party shall be the subject of a voluntary
petition in bankruptcy or any voluntary proceeding relating to
insolvency, receivership, liquidation or assignment for the benefit of
creditors;
(iii) the other party shall become the subject of any
involuntary petition in bankruptcy or any involuntary proceeding
relating to insolvency, receivership, liquidation or assignment for the
benefit of creditors, and such petition or proceeding shall not be
dismissed within 60 days of filing;
(iv) the business of the other party shall be liquidated or
otherwise terminated on any basis; or
(v) the other party shall become insolvent or unable to pay
its debts as they become due.
(c) ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ shall have the right but not the obligation to
terminate this Agreement at any time after June 30, 2001 upon 90 days prior
written notice to VSI.
(d) A party may exercise its right to terminate pursuant to this
paragraph 9 by written notice to the other party. No exercise by a party of its
rights under this paragraph 9 shall limit its remedies by reason of the other
party's default, the party's rights to exercise any other rights under this
paragraph 9 or any other rights of that party.
10. INDEPENDENT CONTRACTOR. The parties to this Agreement are
independent contractors. Neither party shall have the power to bind the other or
to incur obligations on behalf of the other without the other's prior written
consent. When VSI or its employees act under the terms of this Agreement, they
shall at all times be under the supervision and responsibility of
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VSI. No employee of VSI acting under the terms of this Agreement shall be deemed
to be an agent or employee of ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ or any customer of
▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇.
11. MISCELLANEOUS. (a) Neither party may assign this Agreement or its
rights and obligations hereunder in whole or in part without the other party's
prior written consent. Any attempt to assign this Agreement without such consent
shall be void and of no effect. Notwithstanding the foregoing, either party may
assign this Agreement or its rights and obligations hereunder to any entity
controlled by it or to any entity by which it is acquired by merger, purchase of
capital stock, transfer of substantially all assets or otherwise; provided that
such entity shall thereafter succeed to all obligations of such party under this
Agreement.
(b) This Agreement shall be governed by and construed in accordance
with the internal laws of the State of New York applicable to agreements made
and to be performed entirely within such state, without regard to the principles
of conflicts of law of such state.
(c) Each party hereto irrevocably and unconditionally consents to the
exclusive jurisdiction of the Supreme Court of the State of New York, New York
County, or the United States District Court for the Southern District of New
York for the purposes of any suit, action or proceeding arising out of this
Agreement or any transaction contemplated hereby. Each party agrees to commence
any such action, suit or proceeding either in the United States District Court
for the Southern District of New York, or if such suit, action or other
proceeding may not be brought in such court for jurisdictional reasons, in the
Supreme Court of the State of New York, New York County. Each party further
agrees that service of any process, summons, notice or documents by United
States registered mail to such party's address set forth pursuant to paragraph
11(e) shall be effective service of process for any action, suit or proceeding
in respect to any matters to which such party has submitted to jurisdiction in
this paragraph 11(c). Each party irrevocably and unconditionally waives any
objection to the laying of venue of any action, suit or proceeding arising out
of this Agreement or any transaction contemplated hereby in the Supreme Court of
the State of New York, New York County, or the United States District Court for
the Southern District of New York. Each party irrevocably and unconditionally
waives and agrees not to plead or claim in any such court that any such action,
suit or proceeding brought in either such court has been brought in an
inconvenient forum.
(d) If any provision of this Agreement or any portion thereof, or the
application of any such provision or portion thereof, to any person or
circumstance shall be held invalid, illegal or unenforceable in any respect by a
court of competent jurisdiction, such invalidity, illegality or unenforceability
shall not affect any other provision hereof or the remaining portion thereof or
the application of such provision to any other persons or circumstances.
(e) All notices or other communications required or permitted to be
given hereunder shall be in writing and shall be delivered by hand or sent,
postage prepaid, by registered, certified or express mail or reputable overnight
courier service and shall be deemed given when so delivered by hand, or if
mailed, three days after mailing (or one business day in the case of express
mail or overnight courier service), as follows:
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If to ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, to:
▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President and Chief Executive Officer
If to VSI, to:
Vitamin Shoppe Industries Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: President and Chief Executive Officer
(f) No failure of either party to exercise or enforce any of its rights
under this Agreement shall act as a waiver of such right.
(g) This Agreement constitutes the entire agreement and understanding
between the parties hereto with respect to the subject matter hereof and
supersedes all prior agreements and understandings relating to such subject
matter. Neither party shall be liable or bound to any other party in any manner
by any representations, warranties or covenants relating to the subject matter
except as specifically set forth herein. This Agreement may be executed in one
or more counterparts, all of which shall be considered one and the same
agreement, and shall become effective when one or more such counterparts have
been executed and delivered by both parties.
(h) This Agreement may be amended only by an instrument in writing
signed on behalf of each party. As long as VSI owns at least 30% of the voting
power of the capital stock of ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, no material term of this
Agreement may be amended or waived without the approval of a majority of the
directors of ▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇ who are not directors, officers or more than 5%
stockholders of VSI (or the designee of a more than 5% stockholder).
(i) This Agreement is for the sole benefit of the parties hereto.
Nothing herein expressed or implied shall give or be construed to give to any
other person or entity any legal or equitable rights hereunder.
(j) The headings contained in this Agreement are for reference purposes
only and shall not affect the meaning or interpretation of this Agreement. When
reference is made in this Agreement to a paragraph, such reference shall be to a
paragraph of this Agreement unless otherwise indicated.
(k) The provisions of this paragraph 11 shall survive any termination
of this Agreement.
[Remainder of Page Intentionally Blank]
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
▇▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇, INC.
By: ______________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: President and Chief Executive
Officer
VITAMIN SHOPPE INDUSTRIES INC.
By: ______________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President and Chief Executive
Officer