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Product Development Terms & Conditions

AVROKO DESIGN, LLC (“AVROKO AMENITIES”, "AvroKO" or “Consultant”) is in the business of scent branding, developing, sourcing, and manufacturing specialty fragranced, functional, and flavored products, including air care and personal fragrances, personal care products, candles, scented stationeries, teas, and specialty products for amenities; and you, the "Client", seeks to develop a new product for commercial use for their brand;

• The Consultant has extensive expertise in developing and manufacturing new formulas to private label specifications;

and
Whereas

• the client wishes to engage AVROKO AMENITIES to help develop and produce one or more of the Client’s products.

Therefore,

the parties intend to be legally bound for, and in consideration of the mutual promises hereinafter set forth, it is agreed by and between the parties as follows:

Experiment: AVROKO AMENITIES’ Formula, developed for and to be approved by the Client.

Product: The final expression of a Formula, as approved by the Client, not including packaging, outer carton, decoration, or labels.

Satisfied: The Client is Satisfied and shall be deemed to have approved a Formula if the Client:

• So states in writing.
• Does not request more experiments without explicitly stating that it is unsatisfied with the latest experiment, or
• Uses the Formula, or a significantly similar substitute, to produce any product.

ARTICLE 2 – DEVELOPMENT OF A FORMULA

The client will pay a design and development fee of $10,000 to engage AvroKO as its technical consultant and manufacturer for at least one (1) custom fragrance that the Client wishes to develop as its olfactive signature to use in a suite of products. A completed project brief shall be completed as a form by the client or written as a project outline and emailed to the client to reflect the scope.

For this formula, AvroKO will conceptualize how it expects its Formula to be unique as a brand mark in the marketplace.

AvroKO will endeavor to develop budget-compliant formulas for approval by the Client. Collaboratively, the parties shall contemplate an iterative process, including one or more sets of Experiments.

• Experiments (aroma formula development) will be conducted at one of AvroKO’s labs or a partner factory.

• Experiments will produce production samples or working prototypes that share the characteristics of the desired final Products as closely as possible.

• Each set of Experiments will consist of up to three different Formulas working toward the Product.

• Sets of Experiments can be done concurrently or sequentially. This guarantees we will have multiple versions and three rounds of reviews, including sampling scents and preproduction prototypes.

• During experimentation, AvroKo will provide its own stocked ingredients.

• Each Experiment will create two identical samples for each party to this Agreement.

• Outside of extraordinary circumstances, Experiment samples of liquid products will be sent to the Client approximately six to eight weeks after AvroKo receives the request.

• Experiment samples of solid products will be sent approximately eight weeks after receiving the request.

• Approval of a Formula and the resulting Product is the exclusive right of the Client.

• Packaging Compliance: Unless AvroKO is responsible for packaging design, the Client or its Packaging Design Consultant must appropriately label all samples and products with the ingredient list as furnished by the Consultant.

• AvroKO will provide Safety Data Sheets (SDS) for formulas whenever the government requires it.

• AvroKO warrants and represents that the Formula will be tested and deemed fit and safe for the purposes for which it is proposed to be used.

• Suppose the Client is unsatisfied with a Formula for a proposed Product, the Client is under no obligation to continue experimenting. While the consulting retainer is nonrefundable, it can end its engagement with AvroKO concerning that proposed Product at any time.

ARTICLE 3 – RIGHTS OF THE PARTIES
WITH RESPECT TO APPROVED FORMULAS AND PRODUCTS

• The Client shall enjoy exclusive marketing rights for the Product but shall not share the Formula with or attempt to authorize the manufacturing Product by any third person, nor shall it manufacture the Product itself.

• AvroKO shall enjoy exclusive manufacturing rights for the Product but shall not share the Formula with any third party, manufacture the Product for any third party or use the Formula for any other product without the Client's written approval.

• The exclusive aspect of the Client’s marketing rights for any Product shall terminate if:

a. With respect to a given Product, the Client does not stay current on invoices and falls into arrears for more than 180 days. With respect to all Products, the Client becomes insolvent, or a bankruptcy petition is filed by or against it.

b. AvroKO’s license to use the applicable Product(s) shall become irrevocable and unlimited if the exclusive aspect of the Client's marketing rights shall terminate as provided above.

• AvroKO shall be entitled to license the Formula further and/or manufacture and market the Product(s) for its own account and/or third persons.

• AvroKO’s exclusive manufacturing rights and license shall terminate if:

a. With respect to all Product(s), AvroKO becomes insolvent, or

b. A bankruptcy petition is filed by or against it.

ARTICLE 4 – PRODUCTION STIPULATIONS

The Product must have a container that complies with applicable regulatory requirements.

• AvroKO will use its experience to work with the Client to select an appropriate vessel for the Product(s).

• The Client can provide its own vessel, subject to AvroKO’s approval after testing the container to ensure it will be usable under factory conditions.

• AvroKO will offer its advice and experience in this process and assist upon request, but the client shall assume responsibility for compliance.

• AvroKO can assist with compliance and design where required for a supplemental fee.

• If the Client is responsible for purchasing its vessels, decorating, and labels. The Consultant, to protect itself, may decline to approve any label design it knows violates any regulatory requirements.

ARTICLE 5 - COMPENSATION, SCHEDULE, AND BILLING TERMS

• The total Basic Compensation shall be paid to the Consultant and distributed over the course of the Project after completing a successful experiment.

• Design Fee: A non-refundable fixed fee portion listed above ($5,000.00) is required in order to mobilize a team to commence the Consultant’s design services.

• Invoicing: The Client shall be invoiced monthly. The billings will be based on a percentage complete basis, or, for any Hourly or Additional Services, according to the Consultant’s hourly rates listed in Exhibit A Standard Rates, “Hourly Bill Rates" (Rates subject to change annually, not to exceed 2.5%) Payments are due and payable within 30 days from the date of the Consultant’s invoice. Amounts unpaid 30 days after the invoice date will carry a late payment penalty of one and one-half percent (1.5%) per month.

• Fees are subject to an escalation of 2% per annum if any portion of the services are required to be provided four months or more after originally scheduled unless the negligent acts or omissions of the Consultant cause a such delay in the schedule.

• Any invoices the Client disputes in good faith must be noticed in writing and received by the Consultant within seven (7) days of the Client’s receipt of said invoice. 

• The Consultant reserves the right to suspend all Services on any delinquent accounts over 30 days past due.

• Sales Tax: Sales tax for the provision of design services, deliverables, or purchasing of samples and goods, where applicable, shall be invoiced in addition to the fee. Such taxes shall be paid directly by the Client or, where required to be paid by the Consultant, shall be reimbursed by the Client.

• Payment Information: To contact the Consultant's finance/accounting department: email: accounting@Avroko.com.

• Foreign Exchange: The Consultant’s fees are calculated in US Dollars. The Client shall be responsible for any and all currency exchange fees when applicable. If fees are required to be provided in another currency, they will be calculated on a mutually agreed benchmark rate of exchange, in effect on the date of this Agreement. The parties agree the maximum range of exchange rate fluctuation included in the fee is plus or minus one and one-half percent (+/- 1.5%) of the benchmark rate, beyond which the parties mutually agree to adjust the compensation to maintain the fee at the exchange rate included herein.

• Duration: The Consultant’s durations herein exclude the Client’s review and approval time and the Client Consultant’s production time. It is predicated on timely Client approval of all Deliverables for the Consultant to continue to the next phase.

• Collections: Should the Consultant need to engage an attorney in the collection of outstanding bills, the Client’s liability will include the outstanding monies owed, the attorney’s fees, and any court costs.

• Hourly Bill Rates: The Consultant’s standard hourly Bill Rates are as listed in Standard Rates (Rates subject to change annually, not to exceed 2.5%) 

• Reimbursable Expenses: Reimbursable Expenses are additional to the fees stated in Exhibit A Standard Rates and may include:

a. Project expenses shall be reimbursed on a monthly basis.

b. Expenses shall be marked up two and a half percent (2.5%) to cover the Consultant’s administrative costs related to processing said expenses. The Client may request the Consultant use the Client’s designated providers under the Client’s account as an alternative. At the Client’s request, backup invoices will be provided.

c. Typical Reimbursable Costs are listed in Exhibit A Standard Rates, “Table 4 Typical Reimbursable Costs.”

• Consultant’s Travel and Meeting Policy: Meetings shall be at the Consultant’s office unless expressly stated otherwise in this Agreement or specifically requested by the Client and mutually agreed to in writing by the Consultant and the Client.

• Design presentations will be attended by at least one (1) Consultant.

• Travel expenses will include roundtrip business-class airfare for all Principals and Directors, and economy class for all other team members, except for trips six (6) hours or greater in duration, in which case all air travel shall include business-class airfare.

• Travel expenses include local transportation, local accommodations of at least 4-star quality, and per diem for all traveling parties.

• Neither the Client nor the Consultant has control over global travel restrictions that may occur due to unforeseeable events. Therefore, failure to execute site visits or in-person meetings shall not constitute nonperformance and cause a fee reduction.

ARTICLE 5 – GENERAL AND MISCELLANEOUS

• This Agreement supersedes all previous written or oral agreements. In case of any conflict between the provisions of this Agreement and the signed Contract for Consultant Services, the Contract for Consultant Services shall control and govern.

• Failure to exercise a right created by this Agreement in any one instance shall not waive that right.

• If any provision of this Agreement is unenforceable, the balance of this Agreement shall not be affected and shall remain enforceable to the greatest extent possible.

• Each party warrants that they have the full legal authority to execute this Agreement. Notwithstanding any law of any jurisdiction on conflict of laws, this Agreement shall be governed by and interpreted in accordance with the laws of the State of New York.

• Nothing herein precludes the resolution of any dispute informally, by mediation, or by binding arbitration, provided that the parties agree on the circumstances. However, in the event of an inability to agree or if any such effort proves fruitless, this Agreement may be enforced by any remedy available at law or in equity, and the prevailing party shall be entitled to recover its costs and expenses reasonably incurred therein including, without limitation, reasonable attorney fees.  

 EXHIBIT A: STANDARD RATES