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THIS AGREEMENT (“Agreement”) is entered into as of the 21 st day of December, 2004, 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.
A. QVC and its subsidiaries 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 is hereby acknowledged, and intending to be legally bound hereby, the parties hereto agree as follows:
1. Grant of License and Other Rights . Company grants to QVC and its subsidiaries throughout the Term (as defined in paragraph 3 below) of this Agreement: (i) the exclusive irrevocable right in the United States, its territories and possessions, the United Kingdom, and Germany (the ‘Territory”) to Promote the Products through Direct Response Television Programs (as defined below); (ii) the nonexclusive irrevocable right in the Territory to Promote the Products through QVC’s Internet Site (as defined below) and video streaming on QVC’s Internet Site(s); through QVC’s Insider magazine; and (iii) the nonexclusive irrevocable right in the Territory to use, publish, reproduce and transmit the trademarks, trade names, logos, and/or patents and copyrights 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 subsidiaries the nonexclusive irrevocable right (subject to the 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 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, 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, The foregoing definition of Direct Response Television Programs shall not be construed to include Infomercials or Direct Response Commercial Spots (as such terms are defined, below). For purposes of this Agreement, “Infomercial” shall mean pre-recorded television program intended or designed to be aired multiple times on one or more than one channel, through which a consumer is requested to purchase any product or service by mail, telephone or other electronic means. Televised electronic retailing programs of the kind customarily aired by QVC on its television shopping channel shall not constitute Infomercials. “Direct Response Commercial Spots” shall mean a pre-recorded television advertisement of 2 minutes or less in length, intended or designed to be aired multiple times and on more than one channel, through which a consumer is requested to purchase any product or service by mail, telephone or other electronic means. Televised electronic retailing programs of the kind customarily aired by QVC on its television shopping channel shall not constitute Direct Response Commercial Spots. “QVC’s Internet Site” shall mean the Internet Site located at www.OVC.com and any successor or mirror site to such Internet site. Company acknowledges that signals from QVC’s Direct Response Television Programs and other means and media cannot be limited to the Territory and such signals will spillover into areas outside of the Territory (the “Spillover Effect”). Company also acknowledges that although Company has limited QVC’s right to Promote the Products via Direct Response Television Programs and other means and media to the Territory, QVC will not be in breach of this Agreement for the Spillover Effect. For purposes hereinafter, the rights granted to QVC pursuant to this Paragraph 1 hereof are collectively referred to as the ‘License”.
2. Products .
(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), subject to Section 8(f) below. This paragraph 2, together with all other terms of each 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 resp