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Exhibit 10.7
AGREEMENT
The Agreement is made this 10 day of June 1996, by and between Long Distance
Direct Marketing, Inc., having its principal place of business at 0 Xxxx Xxxx
Xxxxx, Xxxxx Xxxxx, XX 00000 (hereafter "Company") and Xxxxxxxxx MediaWorks
Inc., having its principal place of business at 00 Xxxxx Xxxxxx, Xxx Xxxxxxxxx,
XX 00000 (hereafter "Producer"), with respect to the following facts:
A. Producer has certain expertise and knowledge in the areas of
television production, especially in the creation of infomercials and related
promotions; and
B. Producer has developed potential promotions for Company under
separate agreement therefor, and Company has paid Producer a creative fee in
conjunction therewith; and
C. Company wishes to retain Producer to participate in the production
of specific infomercial and infomercial-related projects identified on Exhibit A
attached hereto (hereafter "the Program"), and Producer is willing to produce
the Program on Company's behalf.
NOW, THEREFORE, the parties agree as follows:
a. Company engages Producer and Producer accepts Company's engagement
to create, manage, produce and deliver in a timely manner the Program, on the
terms and conditions set forth herein.
b. Company shall execute this Agreement and provide Producer with
Budget and Timeline approvals not less than five (5) days prior to commencement
of any work on the Program.
c. Company shall own and hold all proprietary rights in all production
materials, including but not limited to the Program or portions thereof, and all
production masters. Company shall have the exclusive, unlimited right in
perpetuity throughout the world to broadcast and re-run the Program on free and
basic cable television and to otherwise exploit the Program and/or any portion
thereof, by any means, whether now known or hereafter devised. All sums payable
to Producer as set forth in paragraph 4(a.) of Exhibit A attached herein shall
constitute payment in full for the maximum exhibition of the Program.
(1) Intellectual Property Rights All scripts, raw video
footage and completed master video tapes created pursuant to
this Agreement and performances recorded thereon shall be and
remain the sole property of Company, with the exception of
music publishing rights (see section
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4.(d.)(5.)). Company shall own and control all rights, title
and interest in all such property (including, without
limitation, all rights arising under the United States
copyright act, 17 U.S.C. Section 101 et seq.), and Producer
hereby agrees to execute and deliver or cause to be executed
and delivered to Company all such further and other documents
as may be necessary to evidence or perfect such rights in
Company.
d. Any written changes by the Company to the content, material, or
specifications of production of or for the Program, from those contained in the
Budget, or delays in production due to any such changes or changes to the
production schedule or Budget made at the written request of Company, shall be
billed as additional time and service charges as specified on Producer's rate
card prices attached herein, and shall be accepted by Producer only after a work
order therefore has been issued to Producer, in writing; facsimile transmissions
to Producer will be sufficient to constitute binding work orders. Company shall
only be responsible for its written authorization of costs exceeding those set
out in the Budget.
e. Any request for approval required hereunder shall be submitted in
writing to Company, along with all applicable information and materials. If
Company does not respond in writing as to its approval or disapproval within
seven days from the date of Company's receipt of written request therefor, then
Company shall be deemed to have disapproved such request. If the Company fails
to approve, in writing, changes requested by it in a timely manner, and after
reasonable efforts to seek such approval, Producer may at its election, at any
time after notification to Company of its intent to do so, shut down production
pending resolution of the requested changes.
f. Each of the parties hereto shall make every reasonable effort in the
performance of their respective obligations hereunder to comply with all
applicable municipal, county, state, NIMA, and federal laws, ordinances and
regulations.
2. Production of Services
a. Producer shall write a script(s) for the Program, select a
studio(s) or location(s), create and design content, direction, production, and
set design, supervise production elements, obtain all equipment and below the
line services, including without limitation producers, writers, directors,
editors, testimonial participants, personnel and other individuals required to
work with Producer to complete the Program, and in general, manage all aspects
of the Production, including pre-production, production and post-production.
Producer shall select all vendors for creation and production of the Program.
The Program shall be edited on Producer's in-house IMMIX non-linear editing
system, and the final version shall be delivered on a D2 Master videotape.
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b. Producer shall make itself available at all reasonable
times at the request of Company for discussions regarding the Program, and shall
promptly perform editing, re-editing, recordings, shooting and all other
activities related to the Program.
c. Producer has submitted, and Company has approved, a
Preliminary Budget Estimate of the total production costs of the Program's
costs, not inclusive of talent fees and expenses, in the amount set forth in
Exhibit A. Producer will submit a definitive budget of the total production
costs ("Budget"), not to exceed $300,000, together with a production timeline
("Timeline"), for Company's approval prior to scheduling production of the
Program. In the event the initial Budget presented for approval exceeds
$300,000, not inclusive of talent fees and expenses such as travel and
accommodations, Company shall have the option to terminate the Program. The
Budget will be submitted by Producer to Company for approval no more than 5
business days following approval of Creative Treatment, a four-page outline of
Program structure and elements.
The Budget for the Program will include all fees,
costs and expenses necessary for the completion of the Program (excluding talent
fees and expenses such as travel and accommodations) including, but not limited
to, Producer's Fees, xxxx-up, and all Program costs, based upon the Program as
then written and as then planned for production. Producer shall be responsible
for any additional costs incurred in excess of those set forth in the Budget,
unless such costs are approved in writing by Company.
d. Company shall be allowed, and the Budget shall include, a
reasonable number of drafts of the script and rough cut revisions, all as
specified and approved in writing on the estimated Timeline for the Program. Any
additions or changes thereafter shall be billed as additional costs and will
necessarily delay the timetable for completion.
e. Producer shall provide a description of the online edit
effects for discussion with Company prior to the online session and after final
offline edit approval. Any additions or changes thereafter shall be billed as
additional costs and may delay the timetable for completion.
f. Approval by Company of the First Draft, the Final Shooting
Script, the Budget, the Rough Cut, the Fine Cut and the final master shall be
within 7 business days of receipt of each. Producer shall be given a reasonable
amount of time to prepare for any changes as specified by Company to any of the
items referred to.
3. Company's Obligations and Duties
a. Company shall make itself available at all reasonable times
to consult with the Producer on script writing, shooting, or editing of the
Program. Company is entitled and encouraged to have a representative authorized
to make
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decisions concerning the Program present at all stages of production of the
Program, including script development, pre-production planning, production and
post-production. Notwithstanding the foregoing, should Company elect to not have
an authorized representative present during any step of Program production, and
upon condition that Company has in a timely manner approved respectively, the
First Draft, the Final Shooting Script, the Rough Cut, the Fine Cut, and the
Final Master, Producer shall as to each such step be entitled to proceed without
Company's participation.
b. Company shall pay for any and all costs, including creative
services, studio time and additional production and post-production costs, at
Producer's standard rates, with respect to re-edits after the media test period,
provided that estimates of such costs are submitted and approved by Company in
advance of such re-edit or re-shoot.
c. Company shall provide celebrities, at Company's cost, for
the production of the Program, as Company deems appropriate. Company also agrees
to pay all costs for any talent appearing in the Program as either on-camera or
off-camera performers, and talent hair, makeup, wardrobe, transportation, hotel
and per diem expenses. Should Company request that Producer provide such
celebrities, Producer shall do so, but Company shall pay, in addition to all
costs therefor, Producer's standard charges for its services in conjunction
therewith.
d. Company shall provide testimonial contacts, to include
prescreened product users, their addresses, telephone numbers and sample
products, at Company's cost, sufficient for the needs of the production of the
Program. Should Company elect to have Producer provide such contacts Producer
shall do so, but Company shall pay, in addition to all costs therefor,
Producer's standard charges for its services in conjunction therewith.
e. Company shall copyright or cause to be registered for
copyright, the Program and all related Products including but not limited to
additional video products, original music and written products which are created
by the Producer, in the name of the Company.
f. Company shall offer Producer the first right of refusal
upon the terms described herein for production of any revisions to the Program
and/or to any sequel, remake, derivatives, or follow-up programs.
4. Compensation
a. In full and complete consideration for the production of
the Program, and for all services to be performed by Producer, Company shall pay
to
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Producer the total cost of the Program, as set forth in the Budget, and all
additional costs authorized by Company in writing.
b. Any and all post-production work requested by Company, in writing,
subsequent to the submission of the Final Master, such as broadcast dubs,
slides, audio tapes, shipping, etc., will be billed at net cost plus Producer's
standard markup of 20%, and shall be payable 15 days after billing therefor.
c. Notwithstanding the foregoing, if Company requests in writing
services in excess of those specified in this Agreement, Company shall pay to
Producer the actual costs for such agreed upon additional services upon
performance of such services, in addition to the compensation specified herein.
d. Company shall pay to Producer a royalty on all Products sold through
any utilization of the Program or any edited version or portion thereof ("Gross
Product Sales", or "GPS"), in the amount set forth in paragraph 5 of Exhibit A.
GPS shall be defined for the purposes of this paragraph as all gross product
sales resulting from any utilization of the Program, including direct response
television sales, upsells, continuity programs, and foreign sales, less any
returns, refunds, cancellations, credit card chargebacks and fees, sales taxes
and shipping and handling charges. Producer acknowledges it has no right to any
telecommunications xxxxxxxx generated as a result of Product sales. Payment
shall be rendered to Producer by Company as follows;
(1) Company shall submit to Producer by the last day of each
month, monthly statements detailing all Product sales activities for the
preceding month, and shall at that time pay all sums shown to be due thereon.
(2) Company shall pay Producer royalties based on total
Product sales during each month, regardless of any multiple payment program that
may be utilized by the customer. Company may elect to create an escrow account
as a reserve for returns. The reserve for returns and uncollectibles shall not
exceed eight percent of Gross Revenues during the month for which such amounts
are calculated, and shall be liquidated at the end of each calendar quarter
after adjustment to reflect actual returns and uncollectibles.
(3) Producer reserves the right to request and receive, at
Producer's expense, an audited accounting of all Product sales and royalty
payments on a semi-annual basis; Producer shall additionally be entitled to
inspect an audit of Company's records related to royalties due thereunder on
reasonable notice all at the Producer's expense. In the event that Producer's
audit shows an additional amount due in excess of 5% of the royalties claimed by
Company as due for the period subject to audit, Company shall additionally pay
all Producer's reasonable audit costs.
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(4) Producer will retain and receive fifty percent (50%) of any and all
music publishing rights and payments, and Company shall retain and receive fifty
percent (50%) of any and all music publishing rights and payments. Company shall
receive an unlimited, fully paid, non-exclusive license to use music from the
Program in all media, on the sole conditions that Producer be credited as
co-publisher and that Company provide Producer with specific identification of
each such use.
e. In the event that Company terminates the Program pursuant
to Paragraph 2.c. above, Company shall have no liability to Producer for any
costs, expenses, or royalties. In the event that Company terminates the Program
herein for any other reason, other than for breach of this agreement by
Producer, Producer shall be entitled to keep all actual costs incurred by
Producer up to the time of termination and Producer's standard markup on such
costs, and in the event Company subsequently completes the Program without
Producer, all royalties otherwise due to Producer pursuant to paragraph 5.d.
above. Payments received by Producer in excess of such actual costs shall be
promptly refunded to Company.
5. Credits In addition to Company credits, provided that Producer
shall satisfactorily perform all of its services as required herein, Producer
shall receive audio and video credit in the end titles of the Program,
substantially as follows: "Produced by Xxxxxxxxx MediaWorks Inc."
6. Miscellaneous Provisions
a. Notices All notices required or permitted under this
Agreement shall be effective when received at the addresses or facsimile numbers
as set forth on Exhibit A, or at such other addresses or facsimile numbers as
the parties may from time to time designate in writing and delivered to the
other party hereto in the manner provided for notice herein.
The designation for the person to be so notified may
be changed from time to time by notice thereunder. Any notice or other
communication required or permitted to be given under this Agreement shall be in
writing, and may be provided by facsimile transmission.
b. Entire Agreement. This Agreement contains the entire
understanding of the parties with respect to the subject matter thereof and
supersedes in its entirety all prior agreements and understandings between the
parties with respect to the subject matter hereof, whether oral or written,
which shall have no further force or effect.
c. Modification and Assignment This Agreement cannot be
modified except by a writing signed by all of the parties hereto. Company may
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at any time assign this Agreement, and/or any of its rights or obligations
hereunder, to any affiliated person, firm, or corporation, provided that Company
shall remain primarily liable for all obligations hereunder. Any such assignee
shall be bound by the terms and conditions of the Agreement. Producer shall not
assign any of its obligations to any third party without Company's prior written
approval.
d. Submission, Warranties and Indemnities Company agrees and
warrants that its approval of any material for use in the Program verifies that
to the best of its knowledge the content therein is truthful and that the sale
of Product promoted therein is not restricted or prohibited by any Federal,
state or local law. If any lawsuit or other proceeding, whether instituted by
any governmental body, or any other person or organization, is brought or
threatened against Producer, or any of its affiliates, executives, or employees,
Company will indemnify and hold harmless Xxxxxxxxx MediaWorks, Inc., and its
affiliates, executives and employees, as appropriate, from any and all damages
resulting thereof, including, but not limited to; actual damages, punitive
damages and fines, and all legal fees and other costs reasonably incurred in
defending against the said claim, lawsuit, or other proceeding.
e. California Law This Agreement shall be governed by and
interpreted in accordance with the laws of the State of California.
f. Attorneys Fees In the event of any legal action relative
to this Agreement, the prevailing party therein will be entitled to recover its
reasonable attorneys' fees therein in addition to any other relief rewarded.
g. Arbitration Producer reserves the right, in the event any
amounts due hereunder remain unpaid, to institute arbitration proceedings, at
its election, which proceedings shall be conducted in San Francisco under the
then current rules of the American Arbitration Association. Any award rendered
therein in favor of Producer may be enforced in any court of competent
jurisdiction. Nothing contained in this paragraph shall limit or deprive either
party of its rights to resort to judicial enforcement of any of the obligations
set forth hereunder, or to seek provisional remedies from any court of competent
jurisdiction pending the conclusion of any arbitration initiated hereunder.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
day and year first above written.
Dated: June 10, 1996 XXXXXXXXX MEDIAWORKS, INC., a
--------------------- California corporation,
By: /s/ ILLEGIBLE
---------------------------
Dated: 6-10-96 LONG DISTANCE DIRECT
--------------------- MARKETING, INC., a New York
corporation,
By: /s/ ILLEGIBLE
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EXHIBIT A
TO
AGREEMENT BETWEEN XXXXXXXXX MEDIAWORKS, INC. (PRODUCER) and
LONG DISTANCE DIRECT MARKETING, INC., (COMPANY)
1. RECITAL C, PROGRAM DESCRIPTION:
An infomercial promoting the marketing and sale of Long
Distance Direct Marketing, Inc. long distance telephone
services as a business opportunity for individual consumers.
2. Paragraph 2, Program Description:
Currently described by the parties as an original infomercial,
which will include multiple locations, customer testimonials,
direct-to-camera host segments, graphic treatments of
consumer savings, and expert testimonials.
3. Paragraph 2.c., Preliminary Budget Estimate:
$275,000
4. Paragraph 4.a., Payment Schedule:
(1) $91,666.66, heretofore paid upon commencement of
preproduction;
(2) Second payment of $91,666.66, due upon Company's
approval of Producer's production budget;
(3) Third payment of $45,833.33, due upon delivery of
Rough Cut;
(4) and final payment of $45,833.33, due upon delivery of
D2 Master of completed program.
5. Paragraph 4.d. Royalties:
(1) 1% percent of the Gross Product Sales ("GPS"), as
defined in paragraph 4(d.), through utilization of
the Program. Producer shall have no right to any
telecommunications xxxxxxxx generated as a result
of Product sales.
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6. Paragraph 6.a., Addresses for Notice:
To Producer: To Company:
Xxx Xxxxxxxxx Xxxxxx Xxxxxxx
President Chief Executive Officer
Xxxxxxxxx MediaWorks Inc. Long Distance Direct, Inc.
00 Xxxxx Xxxxxx, 0xx Xxxxx 0 Xxxx Xxxx Xxxxx
Xxx Xxxxxxxxx, XX 00000 Xxxxx Xxxxx, XX 00000
Fax (000) 000-0000 Fax (000) 000-0000
XXXXXXXXX MEDIAWORKS INC., LONG DISTANCE DIRECT
California corporation MARKETING, INC.
New York corporation
By: By: /s/ Illegible
--------------------- ------------------
Xxxxxxxxx MediaWorks Inc.
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------------------------------- ---------------------------------- ---------------------------------------
[XXXXXXXXX MEDIAWORKS LOGO]
00 XXXXX XXXXXX, 0XX XXXXX
BUSINESS TERMS XXX XXXXXXXXX, XX 00000
AND CONDITIONS TEL: (000) 000 0000 TAPE TRANSFERS
FAX: (000) 000 0000
PAYMENT NET 15 DAYS
D2
A SERVICE CHARGE OF 18% R A T E C A R D 15 MINUTE / $75 MINIMUM
PER ANNUM WILL BE CHARGED $3 / MINUTE THEREAFTER
FOR INVOICES NOT PAID PERSONNEL
WITHIN 15 DAYS 3/4" SP
DIRECTOR $2000 DAY 15 MINUTE / $45 MINIMUM
OVERNIGHT COURIER PRODUCER $ 600 DAY $1 / MINUTE THEREAFTER
BILLED AS USED. IMMIX EDITOR $ 400 DAY
COORDINATOR $ 200 DAY BETACAM SP
ANY TAPES NOT COLLECTED BY 15 MINUTE / $45 MINIMUM
CLIENT 30 DAYS AFTER COMPLETION PRE-PRODUCTION SERVICES $1.25 / MINUTE THEREAFTER
OF PRODUCTION WILL INCUR
STORAGE CHARGES, PRODUCT CONSULTATION $200 DAY
$1 PER TAPE QUARTERLY. CREATIVE DEVELOPMENT $200 DAY
TESTIMONIAL RECRUITMENT $ 20 HR VHS DUBS
HALF DAYS ARE BILLED AT TRANSCRIPTION $ 40 HR AMT. 15MIN 30 60 90 120
60% OF FULL DAY RATES. LOCATION SCOUTING $ 40 HR
1 $25 $30 $40 $50 $60
OVERTIME WILL BE BILLED AFTER POST-PRODUCTION SERVICES 2-9 $17 $20 $25 $30 $40
10 HOURS AS TIME AND A HALF. 10-49 $13 $17 $20 $25 $33
IMMIX SUITE $1000 DAY
LIABILITY: IT IS THE CLIENT'S MAC GRAPHICS
PHOTOSHOP 3.0 $ 125 HR WINDOW DUBS ADD $7/EACH
RESPONSIBILITY TO APPROVE OF ALL DIGITIZING $ 60 HR PRICES INCLUDE TAPE STOCK, BOX & LABELS
WORK AND MATERIALS BEFORE IT
LEAVES XXXXXXXXX MEDIAWORKS
IN TERMS OF ACCURACY AND
TECHNOLOGY.
------------------------------- ---------------------------------- ---------------------------------------
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[XXXXXXXXX MEDIAWORKS LOGO]
00 Xxxxx Xxxxxx
Xxx Xxxxxxxxx, XX 00000
Tel. 000.000.0000
Fx. 000.000.0000
LDDI/SMW Preliminary Timeline - May 29, 1996
Week 1
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- SMW meets/conferences with LDDI for a full creative session,
reiterating the goals of the infomercial, discussing positioning and developing
creative concepts.
- LDDI delivers all product information relevant to the show and we would
discuss further research that may be necessary.
- SMW develops a creative treatment for approval.
Weeks 2-5
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- SMW budget is presented for approval.
- Scripting begins. Scripts are delivered for review and revision during
this time period.
- Pre-production begins - this entails selection of locations, contacting
and seeding testimonials, hiring the production team, etc.
Weeks 6-7
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- Principal photography. On average, a "magazine-style" show will require
5-7 shooting days, including host days in an interview and/or direct-to-camera
environment, testimonial days, product shoots, and possible live events.
Weeks 8-11
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- Post-production. Approximately 10 days after completion of principal
photography a rough cut is delivered to you for approval. Production such as
music and graphics are then incorporated into the program.
Week 12
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- Delivery of final program.
- Initial test.
