MARKETING AND SALES AGREEMENT
THIS MARKETING AND SALES AGREEMENT (this "Agreement") is entered into on
January , 1997, to have effect from and as of November 18, 1996 (the
"Effective Date"), by and between INTERNATIONAL MEDIA SERVICES LTD., a
limited liability company organized under the laws of Bermuda ("IMS"),
and LIMITED LIABILITY COMPANY "PRIORITET", a limited liability company
organized under the laws of Ukraine ("Prioritet").
WHEREAS:
A. Pursuant to license no. 00280 dated November 11, 1996 (the "UT-2
License"), the Ukrainian National Council for Television and Radio has
granted to Broadcasting Company "Studio 1+1" in the Form of a Limited
Liability Company, a limited liability company organized under the laws
of Ukraine ("Studio 1+1"), the right to broadcast on the Second National
Television Channel of Ukraine (the "Television Channel").
B. The grant of the UT-2 License was conditioned on the termination of
Innova's broadcast rights under that certain Agreement on International
Cooperation for the Organization of Television Broadcasting on the First
National Television Channel of Ukraine, dated July 26, 1995, as amended,
between Innova and the National Television Company of Ukraine (the
"Innova-NTCU Agreement").
C. Pursuant to that certain Contract for International Cooperation
between Tele Radiogesellschaft Studio 1+1 and Innova Film GmbH to
Produce Programmes for Ukrainian Television, entered into in November,
1996 (the"Innova-Studio 1+1 Agreement"; and, together with the UT-2
License, the "UT-2 Documents"), Studio 1+1 has granted to Innova, inter
alia, the exclusive right for the broadcasting of advertising within the
television programming produced by Studio 1+1 and transmitted via the
Television Channel.
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
Article 1
1.1 IMS hereby assigns to Prioritet the exclusive right to carry out the
marketing and sales of advertising time within the territory of Ukraine
(the "Territory") in any form (including, subject to the terms hereof,
sponsorship and barter transactions) within the time allotments made
available to Innova pursuant to the UT-2 Documents.
1.2 Prioritet shall be fully responsible for (i) the acceptance and
execution of advertising orders of domestic and foreign advertisers,
(ii) the issuance of invoices and (iii) the production of documents
evidencing payments made by all agencies and customers. Prioritet shall
bear all costs related to the marketing and sales of advertising time
and all salaries, costs and expenses of individuals who carry out the
Prioritet activities contemplated in this Agreement, including any
activities intended to expand and increase contacts in the international
market.
1.3 Prioritet may assign, delegate or otherwise transfer any of its
rights and obligations hereunder only with the prior written consent of
IMS (which consent may be granted or withheld in IMS' sole discretion).
In the event of such assignment, delegation or other transfer, Prioritet
shall continue to be liable for the obligations which have been
assigned, delegated or transferred and for the actions of its assignee,
delegate or transferee.
1.4 In the event the UT-2 License shall be declared invalid or otherwise
become unenforceable and the Innova-NTCU Agreement shall be reinstated,
the parties shall amend this Agreement promptly in a manner reflecting
the economic and legal arrangements contemplated by the Marketing and
Sales Agreement, dated as of September 30, 1996, to which the parties
hereto were signatory, adjusted as reasonably necessary to reflect the
particular facts and circumstances of such reinstatement.
Article 2
2.1 Prioritet shall provide the following services to IMS:
2.1.1 Commercial services consisting of:
(a) development of business and pricing proposals which will result in
the maximum cooperation possible between the Television Channel and
advertisers in the Territory through the marketing and sale of
advertising time on the Television Channel;
(b) carrying out of activities designed to maximize turnover from the
sale of advertising time on the Television Channel; and
(c) development of proposals regarding the marketing policy of the
Television Channel (subject to the requirements of the professional
advertising market in the Territory);
2.1.2 Marketing services consisting of:
(a) application of Prioritet's marketing experience in the sales of
advertising time in the mass-media;
(b) carrying out of short- and long-term marketing research with respect
to the Television Channel, its programs and their potential audience,
including selection of appropriate methods for the performance of
qualitative and quantitative research; and
(c) the introduction of the Television Channel to potential
professional partners who are active in advertising markets within and
without the Territory;
2.1.3 Organizational and technical services consisting of:
(a) entering into contracts with advertisers as a commission agent of
IMS (that is, in Prioritet's own name but on behalf of IMS) and the
carrying out of all preliminary and ancillary activities related to such
contracts, including acceptance, distribution and confirmation of
orders, correspondence with customers, placement of advertisements on
the air and the issuance of invoices (including payment orders).
2.2 Prioritet shall:
2.2.1 prepare advertisements to be broadcast on the Television
Channel, taking into account their specific features and the customers'
wishes;
2.2.2 conduct contingency planning for the
placement of customer's advertisements;
2.3 ensure that all advertisements which it prepares for broadcast on
the Television Channel comply with all applicable Ukrainian laws; and
2.4 be responsible for the receipt, confirmation and final review of
advertising notices, and for ensuring that the advertisements are broadcast as
agreed.
Article 3
3.1 Prioritet shall ensure that all amounts payable by customers under
contracts entered into by Prioritet as provided hereunder are paid, and
shall be liable to IMS for the amount of any payment due and not
remitted to IMS (either directly or by Prioritet, in accordance with the
terms of this Article 3.1) by the payment due date provided in such
contract. Subject to the following sentence, all such contracts shall
provide that all payments thereunder are to be made directly to IMS in
U.S. dollars (or other freely convertible currency acceptable to IMS)
and shall not, without the prior consent of IMS, contain payment terms
more lenient than those customary to the industry for similar contracts
within the Territory. In the event that such payments cannot reasonably
be made by customers directly to IMS, they shall be made directly to
Prioritet; provided, however, that Prioritet shall forward any payments
so received to IMS in U.S. dollars (or other freely convertible currency
acceptable to IMS) no later than 7 calendar days after such payments are
received by Prioritet.
3.2 Prioritet shall provide IMS with monthly written reports accounting
in reasonable detail for (i) all contracts entered into by Prioritet as
provided hereunder, (ii) all advertisements placed by Prioritet on the
Television Channel, (iii) all monies received by Prioritet and (iv) any
other information which IMS may
from time to time reasonably request.
Article 4
4.1 Price-lists and rules for the broadcast of advertising which are
provided to customers shall be established jointly by Prioritet and IMS
with a view to obtaining the most favourable business results for IMS.
Article 5
5.1 Remuneration paid to Prioritet for carrying out the services
contemplated in this Agreement shall equal (i) five percent (5%) of the
foreign currency revenues actually received directly by IMS from the
sale of broadcast advertising time on the Television Channel through
Prioritet, plus (ii) five percent (5%) of the foreign currency revenues
actually received by Prioritet on behalf of IMS from the sale of
broadcast advertising time on the Television Channel through Prioritet,
plus (iii) five percent (5%) of the local currency revenues actually
received by Prioritet on behalf of IMS from the sale of broadcast
advertising time on the Television Channel through Prioritet. Such
remuneration may be modified by IMS and Prioritet from time to time by
means of separate written agreements.
5.2 All local currency revenues received by Prioritet (other than the
portion of any local currency corresponding to Prioritet's remuneration
under Article 5.1) shall be converted by Prioritet into U.S. dollars (at
a rate no less favorable to IMS than the best rate commercially
available to Prioritet on the date of Prioritet's receipt of such
revenues) and transferred to IMS as provided in Article 3.1 above. The
cost of such conversion (including, without limitation, any fees,
commissions or other costs imposed by any financial institution in
connection with the purchase of units of one currency in exchange for
units of another currency and the transfer or credit of such converted
amounts to an account of IMS) shall be borne by Prioritet.
5.3 IMS shall forward to Prioritet the amount owed to Prioritet as set
out in 5.1 above on a quarterly basis and no later than 30 days after
receiving the report required under Article 3.2 for the last month of
such business quarter.
Article 6
6.1 Prioritet may enter into advertising contracts hereunder that
include provisions for the barter of goods and services only upon the
prior agreement of IMS. Any such barter transactions shall be carried
out on a case-by-case and exceptional basis only.
Article 7
7.1 This Agreement shall terminate upon the earlier of (i) the mutual
agreement of the parties and (ii) the expiry of the UT-2 License or the
Innova-Studio 1+1 Agreement.
7.2 IMS may terminate this Agreement upon two months' written notice to
Prioritet. Prioritet may not terminate this Agreement prior to the
completion of the term specified in Article 7.1 above.
Article 8
8.1 This Agreement shall be governed by and construed in accordance with
the laws of Bermuda.
8.2 Subject to Section 8.3, the parties shall make a good faith effort
to resolve by negotiation among themselves any dispute, controversy or
claim arising out of, relating to, or in connection with, this
Agreement, or the breach, termination or validity hereof (a "Dispute").
8.3 Any Dispute which the parties shall not have been able to resolve in
accordance with Section 8.2 within thirty (30) days after such Dispute
has arisen shall be finally settled by arbitration in accordance with
such arbitration agreement as shall be currently in effect binding the
parties hereto.
8.4 The provisions of this Article 8 shall survive the termination of
this Agreement.
Article 9
9.1 Any notice required or permitted by this Agreement shall be in
writing. Such notices shall be written in English when given to IMS and
in English or Ukrainian when given to Prioritet. Notices shall be deemed
to have been given (i) when delivered personally, (ii) twenty-four hours
after being transmitted by telecopy (facsimile) or (iii) seven days
after being sent by air courier, subject to confirmation of receipt.
Notices sent to the parties shall be to the addresses or numbers
specified in Article 10.
9.2 If any provision of this Agreement is invalid, ineffective,
unenforceable or illegal for any reason, such decision shall not affect
the validity or enforceability of any or all of the remaining
provisions. The parties agree that should any provision of this
Agreement be invalid or unenforceable, they shall promptly enter into
good faith negotiations to amend such provision in such a way that, as
amended, it is valid and legal and to the maximum extent possible
carries out the original intent of the parties as to the issue or issues
in question.
9.3 The failure of a party to exercise any right or power given to it
under this Agreement, or to insist upon strict compliance with the terms
of this Agreement by the other party, shall not constitute a waiver of
the terms and conditions of this Agreement with respect to any
subsequent breach thereof, nor a waiver by either of the parties of its
rights at any time thereafter to require strict compliance with all the
terms of this Agreement.
9.4 This Agreement may be executed in several counterparts, each of
which shall be deemed an original and all of which together shall
constitute one and the same instrument.
9.5 This Agreement contains the entire agreement between the parties
with respect to the subject matter hereof and cancels and invalidates
all prior commitments or representations which may have been made by the
parties either orally or in writing with respect to the subject matter
hereof.
9.6 This Agreement may be amended, modified or supplemented only by a
written instrument authorized and executed on behalf of each party
hereto. IMS may assign, delegate or transfer any of its rights or
obligations
under this Agreement without the prior consent of Prioritet.
9.7 The terms and provisions of this Agreement shall be binding on the
legal successors and permitted assigns, transferees and delegatees of
each party hereto.
9.8 Each party hereto shall execute and deliver such other documents and
take such other actions as may reasonably be requested by the other
party hereto in order to consummate or implement the transactions
contemplated hereby.
Article 10
10.1 The addresses of the parties are as follows:
IMS: International Media Services
Ltd.
Clarendon House
Church Street
Xxxxxxxx XX CX
Bermuda
Attn: President
Tel: 0 000 000 0000
Fax: 0 000 000 0000
Prioritet: Limited Liability Company
"Prioritet"
0 Xxxxxxx Xxxxxx
Xxxx, Xxxxxxx
Attn: General Director
Tel:
Fax:
IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
representatives to execute this Marketing and Sales Agreement on the
date first above written.
LIMITED LIABILITY COMPANY INTERNATIONAL MEDIA
"PRIORITET" SERVICES LTD.
By: By:
Name: Name:
Title: Title:
By:
Name:
Title:
