Exhibit No. 27
XxxxxxXxxxxx.xxx, Inc.
Form 10-KSB/ 2000
File No. 0-26917
AGREEMENT
THIS AGREEMENT is made and entered into, and shall be
effective as of, this 15th day of June, 2000, by and between
BUYERS XXXXXX.XXX, a Delaware corporation ("Buyers"), and XXXXX,
INC., a _____________ corporation ("MI"), relative to the
services of XXXXX XXXXXX ("Osmond") as a spokesperson for Buyers
in connection with its marketing, through direct response
television, print advertisements, retail and/or other marketing
means, of a consumer buying club.
NOW THEREFORE, in consideration of the mutual covenants and
conditions as set forth hereinbelow, the parties agree as
follows:
1. Production of Commercials and Testing:
1. Product Line: The Product Line shall be defined as a
consumer buying club providing an array of services in
communications and entertainment, as well as hard goods,
including (but not limited to) some or all of the following: (i)
telecommunications and Internet-related services, utilities,
insurance, financial services, groceries, fuel, and other
household-related services, and (ii) durable goods, including
electronics, appliances, home furnishings, lawn and garden,
automobile, travel, and books and tapes.
2. Production of Commercials: Osmond will be available for, and
appear in, one thirty (30) minute infomercial, a series of :30,
:60, and :120 second commercials (not to exceed six commercials),
and still photography, promoting the Product Line, the dates,
times and locations of which sessions shall be mutually agreed
upon in good faith by the parties and shall not exceed two days
in total for all of the foregoing services (with each day not to
exceed ten hours from call time to release). In connection with
the foregoing, Osmond shall have those rights of approval as are
set forth in Paragraph 17, below. The parties agree that
Osmond's services are unique in character and, therefore, may not
be delegated for any purposes under this Agreement.
3. Compensation: Buyers shall pay MI, in consideration for the
services of Osmond as set forth hereinabove, the sum of
$50,000.00 (the "Session Fee"), said sum to be credited against
all union minimum payments (calculated at twice the minimum
scale) due under this Agreement and to be paid upon commencement
of the infomercial/commercial shoot. The Session Fee shall be
non-refundable and it shall not be recoupable against the Royalty
due MI pursuant to Paragraph 2F(1), below. In addition, Buyers
shall make or cause to be made payment on behalf of MI of all
sums required to be paid to the applicable pension, health and
welfare funds arising out of Osmond's services referenced
hereinabove and shall provide MI with written verification that
such payments have been made. MI agrees to pay any required
income, employment or other taxes relating to the compensation
paid to MI by Buyers hereunder. In the event that the
infomercial or commercials are shot outside of the greater Los
Angeles area (or, in the event that Osmond is residing in a city
other than Los Angeles at the time of the shoot, outside of the
greater metropolitan area of such city), Buyers shall provide MI
with first class, round trip air fare, first class hotel
accommodations and first class ground transportation for two
people, and a per diem of $150.00 per person (including travel
days), all of the foregoing in connection with Osmond's travel to
and from the shoot.
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4. Usage During Test Phase: The infomercial and/or commercials
will test, at the discretion of Buyers, on cable stations,
network affiliates, and independent stations for a period not to
exceed ninety (90) days (the "Test Phase"), such test to commence
by not later than August 31, 2000. Buyers agrees that the
infomercial and commercials shall not air during the Test Phase
on the ABC, NBC, or CBS television networks during prime time.
Buyers shall pay MI the Royalty, as defined in Paragraph 2F, on
Product Line membership activations generated during the Test
Phase in direct response to the infomercial and/or commercials
(but not on such activations generated thereafter unless Buyers
proceeds with a Roll-Out as referenced in Xxxxxxxxx 0X, xxxxx).
MI and Osmond consent to the use of Osmond's name, image,
likeness, photograph, voice, signature and reputation
(collectively the "Endorsement") for such purpose, subject to
MI's approval rights as set forth in Paragraph 17, below. There
shall be no print use of Osmond's Endorsement during the Test
Phase, except in connection with collateral materials provided to
Product Line purchasers. MI and Osmond agree to provide Osmond's
on-camera services, if requested by Buyers, during the Test Phase
(at dates and times to be mutually agreed upon by the parties and
not to exceed eight hours in total) to reshoot footage for the
infomercial and/or commercials for purposes of enabling Buyers to
test or retest the material. In consideration for such services,
Buyers will pay MI an additional session fee in the amount of
$10,000 per day, said sum to be credited against all union
minimum payments (calculated at twice the minimum scale) due
under this Agreement and to be paid upon commencement of the
additional services. Such additional session fee shall be non-
refundable and it shall not be recoupable against the Royalty due
MI pursuant toe Paragraph 2F(1), below.
2. Marketing:
1. Option: Buyers will have the option (the "Option"),
exercisable in writing within one hundred eighty (180) days
following completion of the Test Phase (but in any event by not
later than December 31, 2000), to elect to proceed with a Roll-
Out of the infomercial, commercials and/or the still photography
containing Osmond's Endorsement in connection with the marketing
of the Product Line, with the Roll-Out (if any) to commence by
not later than January 1, 2001. The term "Roll-Out" shall be
defined as the exhibition of the commercials and/or still
photography following the Test Phase and shall be deemed to have
commenced (if at all) upon the first such exhibition. It is
specifically understood and agreed by the parties hereto that
Buyers shall have the right not to exercise such Option, for any
reason whatsoever or for no reason, and that neither party shall
have any liability whatsoever to the other arising solely out of
Buyers' election not to exercise the Option.
2. Term:
(1) The term ("Term") of this Agreement shall commence upon
execution hereof and shall, thereafter, continue in full force
and effect for a period of one year (the "Initial One Year Term")
beginning on the date of a Roll-Out, if any, subject to renewal
thereafter for successive one year terms ("Renewal Terms")
pursuant to Paragraph 3, below. The Roll-Out, if any, shall
commence by not later than January 1, 2001.
(2) Notwithstanding the foregoing, this Agreement will terminate
("Early Termination") in the event, and at such time as, Buyers
elects not to proceed with a Roll-Out. In the event of such
Early Termination, there shall be no further use by Buyers of
Osmond's Endorsement in any manner.
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(3) In addition, MI may terminate this Agreement immediately in
the event that Buyers: (a) attempts to make any assignment for
the benefit of creditors, (b) files any petition in bankruptcy
(Chapter 7 or 11), or (c) initiates any other action effecting a
voluntary or compulsory liquidation of Buyers. In the event of
any such termination, there shall be no further use by Buyers of
Osmond's Endorsement in any manner.
3. Area of Use: The area of use for the advertising materials
shall be the United States and its commonwealths, territories and
possessions (the "Territory"), and shall include all manner,
media, and methods of distribution.
4. Consent: In the event of a Roll-Out, MI and Osmond consent
to the use of Osmond's Endorsement in connection therewith for
the duration of the Initial One Year Term, all Renewal Terms, and
the Sell-Off Period. Such consent shall extend to all uses
incident to Buyers' marketing of the Product Line, inclusive of
the infomercial, commercials, print advertisements (e.g.:
advertisements in newspapers, magazines, catalogs, and other
periodicals; credit card inserts; and direct mail), product
packaging and inserts, sales literature and corporate promotional
materials, through any and all manner, media, and channels of
distribution throughout the Territory, including direct response,
electronic media, the Internet (but only Buyers' Web site and
such other Web sites as the parties may mutually agree upon), and
retail distribution. In connection with the foregoing, MI and
Osmond shall have those rights of approval as are set forth in
Paragraph 17, below. Notwithstanding the foregoing, Buyers
agrees that there shall be no use of Osmond's Endorsement on
billboards. In addition, Buyers agrees that Osmond's
Endorsement shall not be directed to specific endorsements of
individual products comprising the Product Line, but rather shall
be directed to the Product Line as a whole (although reference
will be made within the advertising materials to the variety of
products being offered by Buyers), and that Osmond shall not be
required to mention any such individual products by brand name in
any of the advertising materials. Notwithstanding this, in the
event that Buyers elects in the future to offer one or more
products not included in the Product Line membership and desires
to have Osmond endorse such individual products, Buyers will
negotiate with MI and Osmond regarding the possible terms for
Osmond's endorsement of the products, and MI and Osmond shall
have the right to agree or not agree to such additional
endorsement.
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5. Additional Services:
(1) In the event of a Roll-Out, and at the option
and upon the request of Buyers, MI will
provide Osmond's services during the Initial
One Year Term (following a Roll-Out) and each
Renewal Term thereafter, at specific dates,
times, and places to be mutually agreed upon
by the parties, not to exceed two days in
total, not necessarily consecutive (nor ten
hours from call time to release on each day),
during each one year term, for the purpose of
shooting additional footage to update the
infomercial, commercials, including still
photography, or for shooting footage for a
new infomercial or new commercials, including
still photography. Buyers agrees that any
unused shoot days shall expire at the end of
the then-current one year period and may not
be carried over into any successive one year
period during the Term. The updated or new
infomercial, commercials and still
photography may be tested on air either prior
to expiration of the then current one year
term or following renewal thereof, and may
then be aired on a Roll-Out basis as a
replacement for the originally-produced
advertising materials. MI and Osmond consent
to the use of such materials to the full
extent set forth in subparagraph D, above,
subject to the rights of approval as are set
forth in Paragraph 17, below. In
consideration for the foregoing services,
Buyers will pay MI an additional session fee
of $50,000.00 during each one year term in
which such services are utilized, such
session fee to be paid upon commencement of
the shoot and to be treated in the same
manner as the Session Fee referenced in
Paragraph 1C with respect to crediting, non-
refundability and recoupability.
(2) In addition, in the event of a Roll-Out, and
at the option and upon the request of Buyers
(and subject to MI's approval, which it may
grant or withhold in its sole discretion), MI
will provide Osmond's services as a
spokesperson for the Product Line on QVC, the
specific dates and times of which appearances
shall be agreed upon by the parties in good
faith. In connection with such appearances,
Buyers shall pay to MI a royalty (the "QVC
Royalty") equal to the following:
(1) $4.00 shall be earned for each Product Line membership
activated in response to a QVC appearance by Osmond;
(2) $2.00 shall be earned upon commencement of the second
successive year of membership of each Product Line membership
originally activated in response to a QVC appearance by Osmond
(regardless of whether such second year commences during or after
expiration of the Term);
(3) $1.00 shall be earned upon commencement of the third
successive year of membership of each Product Line membership
originally activated in response to a QVC appearance by Osmond
(regardless of whether such third year commences during or after
expiration of the Term).
Payment of the QVC Royalty shall be made in
the same manner as the Royalty as set forth
in Paragraph 2F(2), below. Buyers shall be
entitled to recoup its Guaranty payments due
under subparagraph 2F(3), below, against all
QVC Royalty payments otherwise due under this
subparagraph 2E(2). Buyers shall provide MI
with first class, round trip air fare, first
class hotel accommodations and first class
ground transportation for two people, and a
per diem of $150.00
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per person (including
travel days), all of the foregoing in
connection with Osmond's travel to and from
QVC. In addition to the Royalty, Buyers
shall pay MI an appearance fee in the amount
of $20,000.00 for each day (or part thereof)
Osmond appears on QVC in connection with this
Agreement, exclusive of any days used solely
for travel. The appearance fee shall not be
credited against either the Guaranty payments
or Royalty due MI as referenced below.
6. Compensation:
(1) Royalty Payable to MI: In the event of a Roll-Out, Buyers
shall pay to MI, for the duration of the Term (including the
Renewal Terms), a royalty (the "Royalty") equal to the following:
(1) $1.00 shall be earned for each Product Line membership
activated during the Term (including any Renewal Term and the
Sell-Off Period);
(2) $1.00 shall be earned upon commencement of the second
successive year of membership of each Product Line membership
originally activated during the Term, including any Renewal Term
(regardless of whether such second year commences during or after
expiration of the Term);
(3) $1.00 shall be earned upon commencement of the third
successive year of membership of each Product Line membership
originally activated during the Term, including any Renewal Term
(regardless of whether such third year commences during or after
expiration of the Term).
Notwithstanding the foregoing, no Royalty
shall be paid on membership activations
generated: (i) as a result of member
referrals, or (ii) through QVC marketing of
the Product Line (unless any of such
activations result from Osmond's appearance
on QVC, in which event MI shall be paid the
QVC Royalty provided in Paragraph 2E(2),
above). With respect to member referrals,
Buyers agrees to maintain in effect for the
duration of the Term a system for tracking
the source of all member activations in order
to accurately determine which activations are
the result of member referrals.
In addition, for purposes of clarification,
MI and Osmond acknowledge that Product Line
members may purchase over time a variety of
different products and services from Buyers,
but that no Royalty shall be paid in
connection with such purchases (the Royalty
being earned only in connection with original
membership activations occurring during the
Term and the second and third years of
sustained membership of each such
activation).
(2) Payment Schedule: The foregoing Royalty shall be due and
payable to MI on a quarterly basis within forty-five (45) days
following the close of each calendar year quarter. Each payment
shall be accompanied by a statement of accounting setting forth a
summary of Product Line activations occurring during such
calendar year quarter, and successive years of membership
commencing during such quarter (subject to audit by MI pursuant
to Paragraph 6, below). Buyers shall be entitled to recoup its
Guaranty payments due under subparagraph 2F(3), below, against
all Royalty payments otherwise due under this subparagraph 2F(2).
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(3) Guaranty: In the event of a Roll-Out, Buyers guarantees to
MI that the total compensation paid to MI in connection with the
Initial One Year Term (including any Royalty payments made in
connection with the Test Phase) and each Renewal Term shall not
be less than $1,500,000, payable as follows:
(a) For the Initial One Year Term:
$375,000 payable upon exercise of the
option to Roll-Out and $375,000 payable
ten (10) days prior to commencement of
the second, third, and fourth calendar
year quarters following the Roll-Out;
and
(b) For each Renewal Term: $375,000
payable ten (10) days prior to
commencement of the Renewal Term and
$375,000 payable ten (10) days prior to
commencement of the second, third, and
fourth calendar year quarters following
commencement of the Renewal Term.
Each Guaranty payment shall constitute a non-
refundable but recoupable advance against all
sums due MI under this Agreement. To the
extent that the amount paid to MI in
connection with any calendar year quarter
during the Initial One Year Term or any
Renewal Term exceeds the Guaranty installment
due for such quarter, the amount in excess of
the Guaranty installment shall be applied as
a credit against the Guaranty installment due
MI for the next succeeding calendar year
quarter. Further, at such time as the total
amount paid to MI in connection with the
Initial One Year Term (including any Test
Phase Royalty payments), or any Renewal Term,
equals $1,500,000, no further Guaranty
payments shall be due for the remainder of
such period. Any amounts paid to MI in
excess of the Guaranty during the Initial One
Year Term or any Renewal Term may not be
applied as a credit against the Guaranty due
for any subsequent Renewal Term.
(4) Crediting of Payments: All compensation as referenced above
shall be credited against any and all union minimum payments due
under this Agreement calculated at twice the minimum scale
(excluding pension, health and welfare fund contributions). MI
agrees to pay any required income, employment or other taxes
relating to the compensation paid to MI by Buyers hereunder.
(5) Option to Purchase Shares: In the event that
Buyers should make an initial public offering
("IPO") of its stock, MI shall have the right
to purchase 33,750 shares of such stock at
the IPO price, Xxxxxxx Xxxxxx Agency, Inc.
shall have the right to purchase 5,000 shares
of such stock at the IPO price, Xxxx X.
Xxxxxxxx shall have the right to purchase
7,500 shares of such stock at the IPO price,
and Xxxxx Finlonson shall have the right to
purchase 3,750 shares of such stock at the
IPO price.
3. Renewal: Buyers shall have the sole right, but not the
obligation, to renew this Agreement for a maximum of two (2)
successive one year terms (each being designated a "Renewal
Term") upon the same terms and conditions, exercisable in writing
not less than ten (10) days prior to the expiration of the then
current one year term.
4. Representations and Warranties:
1. MI and Osmond warrant and represent that:
(1) they have the right to enter into this Agreement and to
grant the rights as set forth hereinabove;
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(2) there are no contractual obligations preventing the
fulfillment of this Agreement;
(3) neither this Agreement nor the transactions contemplated
hereby will cause a violation of any other agreement to which MI
or Osmond is a party; and
(4) MI and Osmond have not, and will not, either themselves or
by granting authority to any other person or entity, exercise any
right or take any action which derogates or impairs the rights
granted to Buyers hereunder, or derogates the names or
reputations of Buyers, the Product Line, or any of the officers,
directors, or shareholders of Buyers.
2. Buyers warrants and represents that:
(1) it has the right to enter into this Agreement and to grant
the rights as set forth hereinabove;
(2) there are no contractual obligations preventing the
fulfillment of this Agreement;
(3) neither this Agreement nor the transactions contemplated
hereby will cause a violation of any other agreement to which
Buyers or any of its affiliated companies is a party.
5. Indemnity:
1. MI and Osmond shall indemnify and hold Buyers, and its
officers, directors and shareholders (collectively "Indemnitees")
harmless from and against any and all losses, costs, damages,
charges, claims, reasonable legal fees, recoveries, judgments,
penalties and/or reasonable expenses (collectively "Losses")
which may be obtained against, imposed upon, or suffered by
Indemnitees by reason of any breach of any representation or
warranty made by MI and/or Osmond under this Agreement, or by
reason of any breach of any other provision hereof. The
foregoing obligation of MI and Osmond to indemnify and hold
Indemnitees harmless shall survive termination or expiration of
this Agreement.
2. Buyers shall indemnify and hold MI and Osmond, and each of
them, harmless from and against any and all Losses which may be
obtained against, imposed upon, or suffered by MI and/or Osmond
by reason of the exhibition of the advertising materials produced
hereunder or the promotion, sale or use of the Product Line
advertised therein or any product or service offered thereby, or
by reason of any breach of any representation or warranty made by
Buyers under this Agreement or of any other provision hereof.
The foregoing obligation of Buyers to indemnify and hold MI and
Osmond harmless shall survive termination or expiration of this
Agreement. For the duration of the Term of this Agreement
(including the Sell-Off Period), and thereafter for so long as
the Product Line is marketed by Buyers (or by any Buyers
affiliate, subsidiary, successor, or assign) and the insurance
coverage described herein is reasonably available, Buyers shall
include MI and Osmond as additional named insureds on Buyers's
commercial general liability insurance policy (including coverage
for product liability) and advertising liability policy with
combined limits of not less than $3,000,000, and shall provide MI
and Osmond with certificates of insurance evidencing such
coverage prior to any use of the material produced hereunder.
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6. Right to Audit: Buyers shall maintain during the Term
(including all Renewal Terms) complete and accurate books of
account evidencing membership activations. At any time within
two (2) years after a statement is rendered hereunder, MI shall
have the right to examine Buyers' books and records evidencing
its Product Line membership activations and membership statuses
for the subject period solely for the purpose of determining the
accuracy of such statement. The examination (i) shall be
conducted by a CPA firm selected by MI which is a member in good
standing of the AICPA, after reasonable advance written notice
from MI to Buyers, (ii) shall be commenced and conducted during
Buyers' normal business hours at the offices of Buyers or its
accounting representative, and (iii) shall be conducted at MI's
sole cost and expense. There shall not be more than one
examination during each year of the Term. Notwithstanding clause
(iii), above, in the event it is mutually determined by Buyers
and MI, or by arbitration pursuant to Paragraph 10, below, that
MI has been underpaid in an amount in excess of three (3%)
percent of the contract rate of compensation, Buyers shall pay
the reasonable costs of such examination (including reasonable
travel, living and other personal expenses of the examiner). All
statements rendered by Buyers under this Agreement shall be final
and binding on MI, unless specific objections thereto are made
and delivered in writing within two (2) years from the date any
such statement is delivered to MI. Once the records for any
accounting period have been inspected by MI, such records shall
not be the subject of a later inspection. Further, with respect
to each inspection, MI must notify Buyers within ninety (90) days
following completion of the inspection of any claim it asserts
for money due and owing it as a result of a prior underpayment,
in the absence of which Buyers' accounting statements for the
examined period shall be deemed accurate and any claim of MI for
money due and owing in connection therewith shall be deemed
waived. Buyers shall have the right to condition disclosure of
information to MI and its agents, in connection with any
inspection under this paragraph, upon Buyers's receipt of a non-
disclosure agreement, acceptable in form and content to Buyers
and duly executed by MI and any agent of MI receiving such
information.
7. No Warranty Re Revenues: The parties understand and agree
that there is a substantial risk in any new venture; that neither
party is making any warranty or representation regarding the
total amount of revenues which will ultimately be generated
pursuant to this Agreement, other than the Guaranty set forth in
Paragraph 2F(3), above; that Buyers and/or its affiliated
companies currently do, and may in the future, manufacture,
market, distribute, and/or sell other, possibly competitive,
products under the same or other names, utilizing the same
distribution channels as will be utilized for the marketing of
the Product Line; and that no royalty or other form of
compensation shall be payable to MI or Osmond in connection
therewith.
8. Successors and Assigns: Subject to the restrictions on
delegation of duties contained elsewhere in this Agreement, this
Agreement shall be binding upon and inure to the benefit of the
parties hereto and their respective executors, administrators,
heirs, successors, and assigns, as the case may be.
9. Exclusivity: Commencing upon execution of this Agreement
and continuing thereafter through the Initial One Year Term and
each Renewal Term, neither MI nor Osmond shall in any way
develop, manufacture, endorse, or market, or appear in any form
of advertisement of any kind for the purpose of endorsing or
marketing, any other consumer buying service. In addition,
commencing upon execution of this Agreement and continuing
thereafter for the duration of the Initial One Year Term and each
Renewal Term, neither MI nor Osmond shall in any way participate
or appear in any other long form infomercial (i.e.: approximately
thirty minutes in length), regardless of the product or service
being advertised therein; and, in the event that MI or Osmond
elects during the Term to participate in a short form direct
response commercial for a non-competing product, they agree to
provide Buyers with advance written notice of such participation
(it being agreed, however, that an inadvertent failure by MI or
Osmond to so notify Buyers of such participation shall not
constitute a breach of this Agreement). This paragraph shall not
preclude Osmond from appearing in the entertainment, news or
information portion of any radio, television, live or other
entertainment program regardless of sponsorship, provided that
Osmond does not appear or otherwise participate in any "lead-ins"
or "lead-outs" for competitive products (other than in connection
with her hosting responsibilities on the "Xxxxx and Xxxxx"
television program). Buyers acknowledges that MI and Osmond have
entered into an agreement with XxxxXxxx.xxx providing for the use
of Osmond's Endorsement in connection with XxxxXxxx.xxx products
and her possible participation in infomercials and/or direct
response commercials (as well as other advertising materials)
promoting XxxxXxxx.xxx, and that such agreement and Osmond's
appearance in any such advertising materials shall not constitute
a breach of this Agreement.
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10. Attorney's Fees: In the event that any legal proceeding is
commenced to enforce any term of this Agreement or to seek
recovery for any breach thereof, the prevailing party in such
action shall be entitled to recovery of its reasonable attorney's
fees and actual costs incurred in such action. Any controversy
or claim arising out of or relating to this contract, or the
breach thereof, shall be settled by an expedited arbitration to
be conducted by the American Arbitration Association (utilizing
one arbitrator) in the City of Los Angeles, State of California,
and judgment on the award rendered by the arbitrator, which shall
be prompt and timely, may be entered in any Court having
jurisdiction thereof. In order to accomplish the foregoing, the
parties hereby consent to jurisdiction of this matter in the
County of Los Angeles, State of California. The parties shall
have the right to engage in reasonable discovery in connection
with any such arbitration. The arbitrator shall be entitled to
award expenses to the prevailing party, inclusive of reasonable
attorney's fees. The parties shall endeavor, to the extent
reasonably feasible, to keep any dispute arising hereunder
confidential, and the arbitrator shall have authority to enforce
and interpret this duty of reasonable confidentiality.
11. Controlling Law: This Agreement shall be governed by and
construed in accordance with the laws of the State of California.
12. Entire Agreement: This Agreement contains the entire
agreement of the parties and supersedes any prior agreements,
understandings and memoranda relating thereto. This Agreement
may not be changed, altered or modified in any way except by a
writing signed by the parties hereto.
13. Severability: If any clause or provision of this Agreement
shall be adjudged to be invalid or unenforceable, such
adjudication shall not affect the validity of any other clause or
provision of this Agreement, which shall remain in full force and
effect.
14. Consent in the Event of Death: The parties agree that, in
the event of Osmond's death during the Initial One Year Term or
any Renewal Term, Buyers shall have the option to continue
marketing the Product Line utilizing Osmond's Endorsement in
connection therewith for the duration of the Initial One Year
Term and all Renewal Terms (if any) under the same terms and
conditions as set forth in this Agreement. In the event that
Buyers shall instead elect to terminate such marketing, Buyers
shall pay to MI the Royalty as provided in Paragraph 2F(1),
above, on each Product Line origination or renewal generated
through the date of termination (and on each Product Line
origination or renewal generated thereafter in response to any
direct response advertisements which utilized Osmond's
Endorsement, but on no other Product Line sales), and the
Guaranty provided in Paragraph 2F(3) shall be prorated to date of
termination. Such proration shall be accomplished by multiplying
the Guaranty which otherwise would have been due for the then-
current one year period by a fraction, the numerator of which is
the number of days which have elapsed between the commencement
date of such one year term and the date of termination, and the
denominator of which is 365.
15. Ownership of Product Line and Advertising Materials: The
Product Line and all advertising materials produced hereunder
will be and remain the absolute property of Buyers forever,
including, but not limited to, all intellectual property
interests therein. MI and Osmond acknowledge that they have no
right, title, or interest in or to same and hereby assign all
rights to the Product Line and advertising materials to Buyers.
To the extent required under the applicable copyright laws
regarding ownership of any advertising materials produced
hereunder or the content or use thereof, the product of the
services of MI and Osmond hereunder will be considered works made
for hire or, if not legally capable of being considered as such,
then and in such event MI and Osmond hereby assign to Buyers any
and all right, title or interest they may have in or to such
advertising materials. Notwithstanding the foregoing, it is
agreed that, except as otherwise permitted herein, Buyers may not
use Osmond's Endorsement after the termination or expiration of
this Agreement; however, Buyers shall have a period of six months
(the "Sell-Off Period") following expiration of the Term (either
the Initial One Year Term or, in the event of renewal, the final
Renewal Term) to dispose of its then existing inventory of the
Product Line containing the Endorsement of Osmond, provided that
Buyers pays MI the Royalty due thereon in accordance with
Paragraph 2F(1), above, with no guaranty as to the total amount
thereof and, provided further, that Buyers does not air or
otherwise exploit the infomercial, commercials or any other
advertisements containing Osmond's Endorsement during or after
such time period without the prior written consent of MI.
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16. Independent Contractor: It is understood and agreed that
the relationship of MI and Osmond to Buyers is that of an
independent contractor, and nothing contained in this Agreement
shall be construed to create any partnership, joint venture,
principal/ agent relationship, or any other fiduciary
relationship between the parties hereto. The parties expressly
disclaim the existence of any third party beneficiaries to this
Agreement.
17. Approvals: MI and Osmond shall have the right of approval
over all images, signatures, photographs and likenesses of Osmond
utilized in the infomercial, commercials, print advertisements or
otherwise; the infomercial and commercial scripts; and any press
releases relating to the Test Phase or a Roll-Out. Once an item
has been approved by MI and/or Osmond under this Paragraph, it
need not again be submitted by Buyers for approval for subsequent
consistent uses, so long as no material changes are made with
respect to such item or the use thereof. All rights of approval
shall be exercised in a fair and reasonable manner, with no such
approval being unreasonably withheld. In all instances where the
right of approval is provided, same shall be given within five
(5) business days following receipt by MI and/or Osmond (as the
case may be) of a written request for approval. In order to
facilitate the processing of approvals, MI and Osmond agree to
endeavor to reasonably advise Buyers of their travel plans during
time periods when requests for approval are likely to be
forthcoming.
18. Confidentiality: The parties acknowledge that the terms and
provisions of this Agreement, and any disputes arising hereunder,
are confidential in nature and, therefore, agree not to disclose
the content or substance thereof to any third parties other than
their attorneys and other representatives (unless affiliated by
common ownership, employment, or other form of agency
relationship), other than as may be reasonably required in order
to comply with any obligations imposed by the Agreement, or to
comply with any statute, ordinance, rule, regulation, other law,
court order or civil proceeding.
19. Notices: All notices to be sent pursuant to this Agreement
shall be sent via Federal Express, Express Mail, or confirmed
facsimile transmission, to the persons identified below at the
designated addresses (or at such new addresses as the parties may
hereinafter notify each other in writing):
Buyers Xxxxxx.xxx Mr. Xxx Xxxxx
Buyers Xxxxxx.xxx
00 Xxxx Xxxxxxxxx Xxxx Xxxxx
Xxxxx 000
Xxxxxx, XX 00000
(000) 000-0000 - telephone
(000) 000-0000 - facsimile
D. Xxxx Xxxxxxxxxxx, Esq.
Hall Xxxxxxx Xxxx Xxxxxxxx & Xxxx
0000 Xxxxxxx Xxxx Xxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
(000) 000-0000 - telephone
(000) 000-0000 - facsimile
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Xxxxx, Inc.
and Xxxxx Xxxxxx: Ms. Xxxxx Xxxxxx
Xxxxx, Inc.
c/o Xx. Xxxxxxx X. Xxxxx
Xxxxxxx Xxxxxx Agency, Inc.
000 Xx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
(000) 000-0000 - telephone
(000) 000-0000 - facsimile
with a copy to: Xx. Xxxxx Xxxxxxxxx
United Management, Inc.
0000 Xxxxx Xxxxxxxxxx Xxxxxx
Xxxxx 000
Xxxxx, XX 00000
(000) 000-0000 - telephone
(000) 000-0000 - facsimile
20. Force Majeure: If, for any reason, such as strikes,
boycotts, war, weather, other acts of God, riots, delays of
commercial carriers, restraints of public authority, or for any
other reason beyond the control of Buyers and outside the normal
scope of commercial restraints (collectively "Force Majeure"),
Buyers is unable to air the infomercial and/or commercials at all
during any part of the Initial One Year Term or any Renewal Term
hereof, then Buyers shall have the right to extend the affected
Term for an equivalent period without payment of any additional
compensation to MI or Osmond (but with payment of the Royalty
pursuant to Paragraph 2F); however, upon commencement of a Roll-
Out of an infomercial produced hereunder, the period for
extension of the Term due to any inability to air commercials
(because same could not be produced during the pending SAG/AFTRA
strike) shall be limited to ninety (90) days commencing with the
Roll-Out. In the event such Force Majeure causes the
prevention, suspension or postponement of any production session
for the infomercial, commercials or still photography to be
produced under this Agreement, the time for completion of such
session(s) shall be extended, at the election of Buyers and with
no additional compensation being payable to MI or Osmond in
connection therewith, by the number of days equal to the number
of days for which the production session was prevented,
suspended, or postponed (but only to the extent not prohibited by
the applicable union contract having jurisdiction over the
production).
21. Applicable Union Agreements: This Agreement is subject to
all of the terms and conditions of the representative contracts
of the union(s) having jurisdiction over the services covered by
this Agreement, except as same may be, and are hereby,
superseded, amended, or supplemented.
22. Agency Fees: Each party hereby represents to the other that
no agent, broker or finder is entitled to any fee or commission
in connection with this Agreement or the transaction contemplated
hereby.
23. Representation by Counsel: Each party represents and
warrants that it has been represented by legal counsel of its own
choosing in the negotiation and drafting of this Agreement; that
it has read this Agreement; that it understands all of its terms;
that the contents of this Agreement have been explained to it by
its counsel; and that this Agreement is executed voluntarily and
with full knowledge of its significance.
24. Columbia TriStar: Buyers agrees to use it best efforts,
consistent with sound business judgment, to work with Columbia
TriStar Advertiser Sales to purchase time on the Game Show
Network for telecasts of the infomercial(s) featuring Osmond to
be produced hereunder. In addition, in the event that Buyers
produces one or more commercials hereunder featuring Osmond,
Buyers agrees to work with Columbia TriStar Advertiser Sales to
purchase a media schedule in the "Xxxxx & Xxxxx" talk show.
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25. SAG/AFTRA Strike: MI shall not be required to provide
Osmond's services under this Agreement in connection with the
production of any commercials which are three (3) minutes or less
in duration, and which are designed to "stand alone" outside of
the infomercial(s), until completion of the AFTRA and SAG strike
which is pending as of the date of execution hereof (except in
the instance that Buyers elects to sign the 2000 Television
Commercials Memorandum of Interim Agreement, in which case MI
shall provide Osmond's services in accordance therewith).
Buyers Xxxxxx.xxx Xxxxx, Inc.
By: By:
Mr. Xxx Xxxxx
I hereby represent and warrant that Xxxxx, Inc. is authorized to
grant and assign the rights, and furnish my services, as
hereinabove set forth in this Agreement, and I agree to be bound
by the terms and conditions of this Agreement.
Xxxxx Xxxxxx
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