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EXHIBIT 10.17
PRODUCT DEVELOPMENT AND CO-BRANDING AGREEMENT
"SONGS 4 WORSHIP SERIES"
EXCLUDING CONFIDENTIAL PORTIONS
/1/ Indicates information which has been redacted pursuant to a request for
confidential treatment.
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INDEX TO THE CONFIDENTIAL PORTIONS
PAGE SECTION LINE(S)
---- ------- -------
1 1(c) 3, 4, and 5
3 3(a) 4, 5, 10, 11, 12 and 13
4 4(c) 2, 4 and 5
4 4(d) 2, 3, 4 and 5
5 5 2
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PRODUCT DEVELOPMENT AND CO-BRANDING AGREEMENT
"SONGS 4 WORSHIP SERIES"
This Agreement, entered into this the 10th day of January 2000, by and
between INTEGRITY INCORPORATED, a Delaware corporation with principal offices at
0000 Xxxx Xxxx, Xxxxxx, Xxxxxxx ("Integrity") and TIME LIFE, INC., a Delaware
corporation d/b/a Time Life Music, with principal offices located at 0000 Xxxx
Xxxxxx, Xxxxxxxxxx, Xxxxxxxx 00000 ("TL"). The parties wish to produce a series
of recorded compilations and companion song books featuring praise and worship
repertoires, which will be co-branded and co-marketed throughout the world. Now,
therefore, the parties agree as follows:
1. Product Concept and Creation.
a. Product description. The product to be created under the
series trade name "Songs 4 Worship" will be a praise and
worship continuity series, with each volume in the series
containing approximately 22 songs. Each volume will be
manufactured in Double CD, Double Cassette, and song book
formats, with standard double jewel boxes, inlays, booklets
and j-cards (the "Product"). TL and Integrity will jointly
develop the repertoire, and all repertoire selections are
subject to master, mechanical and print rights clearance in
accordance with the financial terms established below. The
exact songbook format, song selection and number of songbook
volumes has not yet been determined, and TL has no obligation
to sell any songbooks produced pursuant to this Agreement.
b. Branding. The Product will prominently display the "Songs 4
Worship" logo and trademark (or other logo as mutually
approved) and will also bear the labels of "Time Life Music"
and "Integrity Music" in equal proportion on the exterior of
Product packaging. The "Integrity Music" and "Time Life Music"
logos will be used on advertising whenever possible, and it is
understood that neither logo will be used without the other
with reference to the Product.
c. Integrity's responsibilities. Integrity will obtain master
lease and print agreements with all third party owners of
masters embodied in the Product at its own expense. Mechanical
rates will not exceed [**]/1/ percent ([**]/1/%) of the
then-current statutory rate, and Print licenses will not
exceed a prorated portion of [**]/1/ percent ([**]/1/%) of the
retail selling price, Integrity will also manufacture the
Product and sell to TL its requirements for resale.
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/1/ Indicates information which has been redacted pursuant to a request for
confidential treatment.
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d. TL's responsibilities. At its sole expense, TL will create all
artwork for Product covers and packaging, and furnish
Integrity with the same for manufacturing of the Products. All
such artwork will be subject to Integrity's reasonable
approval. (Integrity agrees to respond to any request for
approval within five (5) business days after Integrity's
receipt of request and samples.) In addition, TL will pay all
mastering expense required in preparation for manufacturing.
e. Shared expenses. The parties agree to share equally in costs
of additional products created (excluding the Product, and
song books, which such song books shall be created at
Integrity's sole discretion and expense), by mutual agreement
under the "Songs 4 Worship" branding.
2. Marketing and Distribution.
a. Time Life Distribution. TL will hold exclusive worldwide
rights to promote and sell the product through the following
distribution channels: Outgoing telemarketing, General Market
retail, and General Market catalogs, and exclusive rights
within the United States for Television Direct response. TL
will have Internet and e-commerce rights with respect to its
own web site and other General Market e-commerce. In addition,
TL may cross-sell the products to its internal list by inserts
placed in mailings for other TL products and services (but
excluding direct mail campaigns for the Product.) TL may
obtain television and/or direct response rights in certain
international territories upon Integrity's agreement.
b. Integrity Distribution. Integrity will hold exclusive
worldwide rights to promote and sell the product to/through
the following distribution channels: Christian retail (CBA or
Christian Booksellers Association markets), direct mail
(including continuity sales, church sales, digital and
e-commerce sales.) Integrity will have Internet and e-commerce
rights with respect to its own web site and other Christian
e-commerce. Integrity shall have the right to license
distribution of the Product through all channels of
distribution throughout the remainder of the world.
c. Selling Price. The parties agree that the initial suggested
retail selling price for the products will be $19.95 for CD's,
$17.95 for Cassettes, and $19.95 for song books. Any change in
the suggested retail selling price will be mutually agreed by
the parties. The parties acknowledge that they cannot control
the prices set by independent retailers and resellers, but
agree that sales by the parties hereto via e-commerce will be
the same, and such will be mutually agreed.
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d. Mailing Lists. The parties hereby agree that they will
mutually share mailing list data of purchasers of the products
created hereunder in exchange for names of equal value, (i.e.,
an expired name for an expired name, active buyer for active
buyer.) TL specifically agrees to supply Integrity with data
on former subscribers to its "Songs 4 Life" series, who have
subsequently canceled for the express purpose of soliciting
Product continuity subscriptions.
e. Retail release. The, parties will mutually agree upon the date
the products shall be released to retail (General Market and
CBA); and it is hereby agreed that such release shall be
simultaneous (i.e., television and direct response will have a
period of exclusivity before the products are available at
retail).
3. Product sales to TL.
a. Integrity will, upon receipt of approved purchase orders from
TL, sell to TL in non-returnable box lot quantities, TL's
requirements products rates calculated on the following basis
(plus freight). The copyright royalty on recorded products is
based on [**]/1/% of the then current statutory mechanical
rate, and on song books, [**]/1/ percent ([**]/1/%) of the
retail selling price (prorated to each copyright holder).
Integrity may adjust the prices charged to TL on each volume
to accurately reflect the then-current royalty obligation to
all parties, including Integrity.
CD Cassette Song book
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Manufacturing $ [**]/1/ $ [**]/1/ $ [**]/1/
(May be adjusted if actual costs exceed above amounts)
Master Lease royalty [**]/1/ [**]/1/ -None-
Copyright royalty [**]/1/ [**]/1/ [**]/1/
(Based on 75% of $.075 statutory rate X 22) ----- ----- -----
Approximate Total $ [**]/1/ $ [**]/1/ $ [**]/1/
b. In consideration of the above pricing, TL guarantees to
purchase from Integrity a minimum of ten thousand (10,000)
units of each recorded Product during the first thirty-two
(32) months of release. TL's initial order for each recorded
Product shall be a minimum of five thousand (5,000) units.
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/1/ Indicates information which has been redacted pursuant to a request for
confidential treatment.
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c. TL may purchase from Integrity limited quantities of the
Product for its promotional use, at the Manufacturing cost set
forth in paragraph 3(a) above, provided the quantity of such
purchases does not exceed seven percent (7%) of the total
royalty bearing units of such Product title purchased by TL,
TL warrants that any units so purchased, whether or not
labeled "promotional only" or cut-out, will be given away for
purposes of promotion of the Products, and will not be sold.
If for any reason, Integrity and TL are subject to lower "free
goods" limits by any third party license, the foregoing shall
be adjusted to comply with any such license(s).
4. Royalties payable by Integrity.
a. Integrity will pay and be responsible for all royalties due to
owners of the recorded masters, which such royalties will be
inclusive of all performer, artist, producer and other fees.
b. Integrity will pay and be responsible for all royalties to the
copyright owners of the compositions embodied in the recorded
masters (or song books), such royalties commonly known as
mechanical royalties or print royalties.
c. On sales of recorded products pursuant to this Agreement (less
any returns) Integrity will pay to TL royalties in the amount
of [**]/1/ ($[**]/1/) for each and every unit of the product
sold by Integrity in the United States pursuant to this
Agreement, and [**]/1/ the foregoing rate or [**]/1/ percent
([**]/1/%) of Integrity's net receipts, whichever is less, on
subject products outside the United States. For purposes of
this Agreement, "net receipts" shall be the amount received by
a party in the United States, after deduction of any exchange
fees, commissions, or expenses to collect.
d. On sales of printed products (song books) pursuant to this
Agreement (less any returns) Integrity will pay to TL
royalties in the amount of [**]/1/ ($[**]/1/) for each and
every unit of the product sold by Integrity in the United
States pursuant to this Agreement, and [**]/1/ the foregoing
rate or [**]/1/ percent ([**]/1/%) of Integrity's net
receipts, whichever is less, on subject products outside the
United States. No royalties will be paid to TL on printed
products, until Integrity shall have recouped its
out-of-pocket production costs from such royalties payable to
TL pursuant to this subparagraph.
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/1/ Indicates information which has been redacted pursuant to a request for
confidential treatment.
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5. Royalties payable by TL. On sales of products pursuant to this
Agreement (less any returns) TL will pay to Integrity royalties in the
amount of [**]/1/ ($[**]/1/) for each and every unit of the product
sold by it pursuant to this Agreement.
6. Accountings. Accounting statements and, if applicable, royalty payments
for products sold will be rendered by each party quarterly within sixty
(60) days after the expiration of each calendar quarter. Only products
which have been paid or credited to the account of the seller shall be
deemed sold. No royalties will be payable on the sales of any products
by any third-party distributors or licensees until such time as
accountings and payment or final credit therefor has been received by
the paying party. Either party, at its sole expense, upon at least
thirty (30) days written notice (and not more than once in respect of
any accounting period) will have the right to inspect the other party's
books regarding the obligations hereunder for a period of two (2) years
from the date on which any statement is rendered. Such auditing party
must make specific written objection within such two (2) year period.
Thereafter, it will be deemed to have consented to any such statements
or accountings which will then be considered an account stated as
between the parties, not subject to any objection for any reason
whatsoever. Provided the objecting party has made timely written
objection, as aforesaid, such party may file an action regarding same
within two (2) years and six (6) months after the applicable statement
is rendered, after which time any such action will be deemed barred.
7. Sound Recording Copyright and Trademark License.
a. Integrity Trademarks. Integrity hereby grants to TL the right
to use its "Integrity Music" name and logo ("the Integrity
Trademarks') in connection with the products produced during
the Term of this Agreement for as long as the parties continue
to sell and distribute such products at no additional cost to
TL, and in accordance with the terms and conditions contained
herein. TL will honor the notice requirement relating to the
Integrity Trademarks and will place such trademarks on all
products and advertising produced hereunder in accordance with
the applicable regulations and Integrity guidelines. Integrity
warrants that it has all rights to xxxxx XX the right to use
the Integrity Trademarks and will indemnify and hold TL
harmless with respect thereto. TL recognizes Integrity's title
to the Integrity Trademarks and will not at any time do or
suffer to be done any act or thing which will in any way
impair Integrity's rights in and to the Integrity Trademarks.
It is understood that TL will not acquire and will not claim
any title to the Integrity Trademarks adverse to Integrity by
virtue of this license, or through TL's use of the Integrity
Trademarks.
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/1/ Indicates information which has been redacted pursuant to a request for
confidential treatment.
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b. TL Trademarks. TL hereby grants to Integrity the right to use
its "TL Music" name and logo ("the TL Trademarks") in
connection with the products produced during the Term of this
Agreement for as long as the parties continue to sell and
distribute such products at no additional cost to Integrity,
and in accordance with the terms and conditions contained
herein. Integrity will honor the notice requirement relating
to the Integrity Trademarks and will place such trademarks on
all products and advertising produced hereunder in accordance
with the applicable regulations and TL guidelines. TL warrants
that it has all rights to grant Integrity the right to use the
TL Trademarks and will indemnify and hold Integrity harmless
with respect thereto. Integrity recognizes TL's title to the
TL Trademarks and will not at any time do or suffer to be done
any act or thing which will in any way impair TL's rights in
and to the TL Trademarks. It is understood that Integrity will
not acquire and will not claim any title to the TL Trademarks
adverse to TL by virtue of this license, or through
Integrity's use of the TL Trademarks.
c. Sound Recording Copyright. The parties hereby agree that the
copyright in the Product sound recording compilation will be
jointly registered by Integrity in the names of Integrity
and TL.
d. Series Trademark. TL will trademark the series name in joint
names of TL and Integrity.
8. Term. This agreement shall commence as of date first above written, and
shall Continue through December 31, 2004 ("the Term"). Thereafter, the
parties must mutually agree in writing to extend the term for
additional periods of time.
9. Warranties; Suspension, Termination
a. Each party hereto warrants, represents, covenants and agrees
that it has the right and power to enter into this Agreement,
to grant the rights herein granted by it, and to perform the
services agreed to be performed by it hereunder, and that no
materials, ideas or other properties furnished or designated
by it is subject to any restriction whatsoever, or is
violative of the rights of any person, firm or corporation,
including, without limitation, contract rights, copyrights and
rights of privacy.
b. If, because of an act of God, inevitable accident, fire,
lockout, strike or other labor dispute, riot or civil
commotion, act of public enemy, enactment, rule, order or act
of any government or governmental instrumentality (whether
federal, state, local or foreign), failure of technical
facilities, failure or delay of transportation facilities,
illness or incapacity of any performer or producer, or other
cause of a similar or
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different nature not reasonably within either party's control,
such party is materially hampered in the recording,
manufacture, distribution or sale of phonograph records, or
its normal business operations become commercially
impractical, then without limiting its rights, it will have
the option upon notice to suspend the Term of this Agreement
for the duration of any such contingency. In the event of a
suspension owing to a "force majeure," which suspension
exceeds six (6) consecutive months, the non-suspending party
may terminate this Agreement upon ten (10) days written notice
to other, but only if such "force majeure" does not affect a
substantial portion of the United States recording industry or
the suspension is not lifted by the suspending party within
ten (10) days of the receipt of the written notice from the
other party.
10. Indemnification. Each party hereto agrees to indemnify the other party
and save and hold the other harmless from any and all claims, causes of
action, damages, liabilities, costs, losses, and expenses (including
legal costs and attorneys' fees) arising out of or connected with any
claim, demand or action which is inconsistent with any of the
warranties, representations, covenants or agreements which the
indemnifying party has made in this Agreement. Pending the
determination and settlement of any such claim, demand or action, the
non-indemnifying party will have the right, at its election, to
withhold payment to you of any monies otherwise payable hereunder, in
an amount reasonably related to that claim, demand or action, and its
estimated costs and expenses (including legal costs and attorneys'
fees) in connection therewith.
11. Notices. The respective addresses for each party for all purposes
hereunder are set forth on page 1 hereof, unless and until notice of a
different address is received by the party being notified of a change
of address. All notices will be in writing and will either be served by
personal delivery (to an officer of each company), by mail or by
telegraph, in each case with all charges prepaid. Notices will be
deemed effective when personally delivered, mailed certified mail or
similar delivery requiring a signature upon delivery, all charges
prepaid, except for notice of change of address, which will be
effective only when received by the party notified. A copy of each
notice to Integrity will be simultaneously sent to Business & Legal
Affairs, Integrity Incorporated, 0000 Xxxx Xxxx, Xxxxxx, XX 00000, and
a copy of each notice to TL will be simultaneously sent to Law and
Business Affairs, Time Life Music, 0000 Xxxx Xxxxxx, Xxxxxxxxxx, XX
00000. The failure to send courtesy copies of notices will not be
deemed a breach of this Agreement nor will it diminish the
effectiveness of such notice.
12. Assignment. Either party may, at its election, assign this Agreement or
any of its rights or delegate any of its obligations hereunder, in
whole or in part, to any person, firm or corporation owning or
acquiring all or a substantial portion of its assets, to any person,
firm or corporation that is related to it as an affiliate,
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subsidiary or otherwise, or to any person, firm or corporation into
which or with it might merge or consolidate. In the event of such an
assignment by either party of its rights to an unrelated third party,
the other party shall be given written notice, then in such event the
other party may upon six-months (6-months) written notice terminate
this Agreement.
13. Miscellaneous
a. This Agreement contains the entire understanding of the
parties hereto relating to the subject matter hereof and
cannot be changed or terminated except by an instrument signed
by the party to be bound. A waiver by either party of any term
or condition of this Agreement in any instance will not be
deemed or construed as a waiver of such term or condition for
the future, or of any subsequent breach thereof. All remedies,
rights, undertakings, obligations, and agreements contained in
this Agreement will be cumulative and none of them will be in
limitation of any other remedy, right, undertaking, obligation
or agreement of either party. The headings of the paragraphs
hereof are for convenience only and will not be deemed to
limit or in any way affect the scope, meaning or intent of
this Agreement or any portion thereof.
b. This Agreement has been entered into in the State of
Tennessee, and the validity, interpretation and legal effect
of this Agreement will be governed by the laws of the State of
Tennessee applicable to contracts entered into and performed
entirely within the State of Tennessee. The venue for any
controversy or claim arising out of or relating to this
Agreement or breach thereof, shall be the appropriate state
and federal courts located in Nashville, Tennessee.
Accordingly, each party hereto consents and submits to the
jurisdiction of such courts. The prevailing party in any such
dispute arising hereunder will be entitled to recover from the
other party its reasonable attorneys' fees in connection
therewith in addition to the costs thereof.
c. If any part of this Agreement will be determined to be invalid
or unenforceable by a court of competent jurisdiction or by
any other legally constituted body having jurisdiction to make
such determination, the remainder of this Agreement will
remain in full force and effect.
d. EACH PARTY HAS BEEN REPRESENTED BY INDEPENDENT LEGAL COUNSEL
OR HAS HAD THE UNRESTRICTED OPPORTUNITY TO BE REPRESENTED BY
INDEPENDENT LEGAL COUNSEL OF ITS CHOICE FOR PURPOSES OF
ADVISING IT IN CONNECTION WITH THE NEGOTIATION AND EXECUTION
OF THIS AGREEMENT. IF EITHER PARTY HAS NOT BEEN
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REPRESENTED BY INDEPENDENT LEGAL COUNSEL OF ITS CHOICE IN
CONNECTION WITH THIS AGREEMENT, SUCH PARTY ACKNOWLEDGES AND
AGREES THAT ITS FAILURE TO BE REPRESENTED BY INDEPENDENT LEGAL
COUNSEL IN CONNECTION WITH THIS AGREEMENT WAS DETERMINED
SOLELY BY IT.
IN WITNESS WHEREOF, the parties have signed below.
INTEGRITY INCORPORATED TIME LIFE, INC.
Tax ID#00-0000000 Tax ID#
-----------------------------
By: /s/ Xxxxx X. Xxxxxx By: /s/ Xxxx Xxxxxxx
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Xxxxx X. Xxxxxx, Ex. Vice President Xxxx Xxxxxxx, President
Chief Operating Officer
By: /s/ Xxx Xxxxx
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Xxx Xxxxx, Director
Business and Legal Affairs
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