Exhibit 10.20
AGREEMENT # EM-22/0205
NK-008/030/05
MOSCOW FEBRUARY 24, 2005
CJSC "NEW CHANNEL" (BASIC STATE REGISTRATION NUMBER [OGRN] 1047796750880)
(hereinafter referred to as "NEW CHANNEL") in the person of the 1st deputy
General Director V.S. Khanumyan, acting on the basis of the Power of attorney #
1 dated January 11, 2005, on the one hand, and CJSC "AD MEDIA" (OGRN
1027739121134) (hereinafter referred to as the "AGENCY") in the person of
General Director X.X. Vshivkin, acting on the basis of the Charter, on the other
hand, hereinafter jointly referred to as the "Parties", have concluded the
present Agreement on the following:
1. DEFINITIONS
For the purpose of interpreting the terms and conditions of this Agreement, the
definitions and expressions below have the following meanings:
"NETWORK PROGRAM BLOCK" means a combined audiovisual work (the result of
intellectual activity) created by CJSC "New channel" for transmission by
"Domashny" Electronic mass media tele-network members - broadcasters through
on-air broadcasting (Article 40 of the RF Law "On Copyright and Neighboring
Rights") and cable broadcasting (Article 41 of the RF Law "On Copyright and
Neighboring Rights") and having the same content for all "Domashny" Electronic
mass media tele-network members throughout the territory of the Russian
Federation.
"REGIONAL WINDOW" means a time interval scheduled within the Network Program
Block that allows for the substitution of audiovisual works in the Network
Program Block for any other programming at the discretion of the "Domashny"
Electronic mass media network member.
"NEW CHANNEL ADVERTISING SERVICE" means the placing of advertising, including
sponsorship advertising, within the Network Program Blocks pursuant to the
contracts entered into by the Agency in its own name, but on the account of New
channel, as well as by contracts entered into by New channel directly with
clients for advertising, including Sponsorship advertising, within Network
Program Blocks.
"SPONSORSHIP" means a contribution by either a legal entity or an individual
(Sponsor) in the form of property, results of intellectual activity, services,
work, etc., to the production of a TV program or the broadcasting of an
entertainment event (concert, festival, etc.) with the aim to promote its own or
another person's brand or trade xxxx or its own activities, products or any
other direct or indirect commercial interests, etc. under the condition of
advertising the Sponsor (Sponsorship Advertising).
"COMMERCIAL" means an audiovisual work containing advertising.
"SOCIAL ADVERTISING" means advertising representing public and state interests
and serving charity purposes.
Social Advertising shall promote neither business entities nor individual
entrepreneurs, nor their specific brands (models, articles) or the brands
(models, articles) of products resulting from the business activity of
non-profit organizations.
"CLIENTS" means advertisers or any other third parties representing the
advertisers pursuant to respective contracts.
"REPORTING PERIOD" means one calendar month.
"NEW CHANNEL ACTUAL GROSS BROADCAST REVENUE FOR THE REPORTED PERIOD" means:
- Sales revenues on advertising transactions entered into by the
Agency;
- Sales revenues on advertising transactions entered into by New
channel directly with the Clients
- Penalties, fines, compensation and other non-sale income due to New
channel and actually collected by the Agency under contracts with Clients
concluded by the Agency with the aims of executing the present Agreement.
2. SUBJECT OF THE AGREEMENT
2.1. The present Agreement shall be deemed a mixed-type agreement as defined
by Article 421 of the Civil Code of the Russian Federation. In the present
Agreement, the Parties set forth arrangements regarding commission services
(section 2.1.1 of the present Agreement), as well as contract and reimbursable
services (section 2.1.2 of the present Agreement). The names used for reference
to the Parties shall in no way be used to interpret the nature of their
relationship and are identified exclusively for convenience.
2.1.1. In accordance with this Agreement, New channel shall engage the
Agency, and the Agency shall be obliged for a commission fee to conclude
in the Agency's name, but for the account of New channel, contracts with
Clients for advertising services under the procedure stipulated herein.
2.1.2. In accordance with this Agreement, the Agency shall render to
New channel on a compensated basis certain services according to the
list as defined in Appendix 1 to the present Agreement.
2.2. New channel shall pay commission fees to the Agency for the execution of
advertising service contracts (section 2.1.1. of the present Agreement), as well
as compensate it for services rendered (section 2.1.2 of the present Agreement)
in such amounts and in such manner as provided for herein.
2.3. New channel shall place, throughout the entire territory covered by the
"Domashny" Electronic mass media network, advertising provided by the Agency
under contracts entered into with Clients pursuant to the present Agreement.
2.4. The amount of advertising placed within Network Program Blocks in
accordance with the present Agreement shall be agreed upon by the Parties
additionally.
New channel will provide the Agency with the following amount of time during the
Network Program Blocks between 7:00 am of each day and 1:00 am on the following
day (excluding Regional Windows, which total 2 hours) for the placement of
Commercials:
- for the first through the third quarter of each calendar year
- up to 15% (fifteen percent) of the duration of the Network
Program Block excluding the Regional Window;
- During the fourth quarter of each calendar year - up to 15.84%
(fifteen point eighty-four percent) of the duration of the
Network Program Block excluding the Regional Window.
In addition, in the period between 19:00 and 24:00 of each day, New channel
shall provide the Agency with time in Network Program Blocks for the placement
of Commercials that shall be no less than the following:
- for the first through the third quarter of each calendar year
- 15% (fifteen percent) of the aforementioned time-slot in the
Network Program Block;
- During fourth quarter - 15.84% (fifteen point eighty-four
percent) of the aforementioned time-slot in the Network
Program Block.
The amount of time provided to the Agency for the placement of Commercials
within the Network Program Blocks between 1:00 am and 7:00 am shall be at the
discretion of New channel.
2.5. The Agency's performance under sections 4.5-4.8, 6.2 and 9.2 thereof, as
well as of the terms and conditions set forth in Appendix 2 of the present
Agreement, shall be guaranteed by a surety provided by ZAO "Gruppa Kompaniy
"Video International" (Group of Companies "Video International") which shall
provide for the joint and several liability of the surety. A surety agreement
shall be made with the above surety.
2.6. The transactions between the Parties, Clients and any other third
parties relating to social or political advertising shall be outside the scope
of the present Agreement.
3. OBLIGATIONS OF THE PARTIES
3.1. New channel shall:
3.1.1. Provide the Agency with the information necessary for entering
into transactions with third party clients.
3.1.2. Refrain from granting third parties the right to conclude on
behalf of and at the expense of New channel transactions for which the
Agency has retained hereunder without the Agency's consent excluding
transactions concluded by the New channel's agent ZAO "Set
televisionnikh stanziy" (Network of television stations). New channel's
right to enter into transactions for rendering of advertising services
on its own account shall be in no way limited hereby.
3.1.3. Position throughout the "Domashny" Electronic mass media network
members broadcasting territory the advertising provided by the Agency
under contracts entered into with Clients in accordance with the terms
and conditions of the present Agreement.
3.1.4. Provide the Agency not later than 3 days from the date of the
present Agreement a projected schedule of the Network Program Block
programming (hereafter the "Schedule") for March and the second quarter
of 2005 and thereafter submit to the Agency the projected Schedule as
soon as the same has been developed.
Submit to the Agency a tentative draft of the Schedule for the
corresponding month at least two months prior to its entering into
effect.
The approved Schedule for each calendar week shall be submitted by New
channel to the Agency at least 10 (ten) calendar days before the
beginning of the corresponding calendar week.
3.1.5. Have the right to modify the Schedule with respect to the
tentative line-up of the Network Program Blocks for the current month
upon two days prior notice to the Agency; notify the Agency of
modifications to the Schedule for a particular calendar week seven days
be fore such modifications take effect.
Such notice shall not be required only if the modifications are due to
an event of national significance or due to the cancellation or change
in the timing of sporting events scheduled to be broadcast live within
the Network Program Blocks, etc., where it is impossible to notify the
Agency in advance with regard to modifications for objective reasons;
provided that the Agency must be notified of such modifications on the
day when such modifications are made.
3.1.6. Insert commercials into ad blocks and ensure the same are placed
in strict compliance with the procedures for logging and scheduling
advertising within the Network Program Blocks and in accordance with the
Agency-provided advertising schedules.
3.1.7. Issue a confirmation of ad placement within the Network Program
Blocks to the Agency within five days after receiving its request.
3.1.8. Review the Agency's requests (concerning placement of
corresponding Commercials, the granting by New channel of consent for
specific actions by the Agency, etc.) and respond to the same in writing
(by personal delivery or by fax) within three days of receiving the
request from the Agency. The absence of a response from New channel
within the designated time period shall be deemed an affirmative
response.
The procedure set forth in the first paragraph of section 3.1.8. shall
be applicable solely to those requests that may be answered with a
simple YES or NO.
The Agency requests and New channel responses shall be executed in
writing and signed by the authorized representatives.
3.2. The Agency shall:
3.2.1. Enter into transactions with clients for the sale of New channel
Advertising Services (sub-section 2.1.1. hereof), acting primarily for
the benefit of New channel and in accordance with the terms and
conditions of the present Agreement.
A) When entering into contracts with Clients, the Agency shall
enter into contracts on those terms that are the most favorable
for New channel.
B) The cost of advertising services when entering into contracts
with certain clients shall be determined based on the contract
price calculation method (Appendix 2).
C) The Agency shall have all rights and bear all obligations
under contracts with Clients made on a commission basis even
where New channel is specifically named in any such contract and
enters into a direct relationship with Clients.
D) for the purposes of the present Agreement, the Agency shall
have the right to enter into sub-commission contracts with other
legal entities and/or individuals as long as it remains fully
liable to New channel for performance by such sub-commission
agent.
E) If any unforeseen circumstances arise that prevent
performance under any advertising services contract, the Agency
shall immediately notify New channel of the same.
F) The following provision shall be included into contracts with
Clients:
"The Client shall be fully liable for the content and design of
any advertising delivered hereunder and for the breach of
copyrights or allied rights with respect to the artistic work
and objects of allied rights included in the advertising. All
pecuniary claims for damages, including those asserted by
authors and holders of allied rights, with respect to
advertising shall be settled by the Client using its own
resources and at its own expense."
G) In the event any claims are brought by any third parties
against New channel on the basis that the commercials placed by
New channel under a contract between the Agency and Client
violate applicable Russian law (including, but not limited to,
legislation on advertising, competition, consumer rights
protection, copyright and allied rights), the Agency shall use
all necessary efforts to cause Clients to defend such claim and
indemnify New channel against all losses incurred in connection
with the settlement of such claims.
H) The Agency shall not be liable to New channel for the failure
of any client to execute a transaction entered into by the
Agency pursuant to the provisions of section 2.1.1. hereof. If
the client fails to execute a transaction entered into by the
Agency, the latter shall immediately notify New channel of the
same, collect the necessary evidence and, upon the request of
New channel, transfer to it all rights in that transaction
subject to compliance with all legal provisions applicable to
the assignment of a claim.
I) Review all commercials offered for placement for compliance
with applicable Russian legislation, including legislation on
advertising, competition and consumer rights protection.
3.2.2. Provide services set forth in section 2.1.2. of the present
Agreement and/or duly retain third parties to provide the said services,
while remaining responsible to New channel for their performance.
3.2.3. The Agency shall provide commercials recorded in the PAL system
with a synchronized audio track and time code on Betacam SP or Digital
Betacam tapes (hereinafter referred to as "Tapes") at least four
business days before the scheduled day of the first broadcast of the
said Commercial.
3.2.4. Provide to New channel information on the works of Russian and
foreign authors used in the Commercials.
3.2.5. Have the right to submit to New channel requests regarding the
possibility of placing Commercials and requesting New channel's consent
to certain activities to be conducted by the Agency pursuant to the form
for such requests as provided in sub-section 3.1.8. hereof.
3.2.6. Deliver to New channel reports on the performance by the Agency
of its tasks in the manner as set forth herein.
3.2.7. Ensure that Commercials are in compliance with Russian law and
New channel Technical requirements for similar video products.
4. COMPENSATION TO THE AGENCY AND THE COST OF ITS SERVICES.
SETTELEMENT PROCEDURE
4.1. Agency's compensation with respect to executing transactions
(section 2.1.1 of the present Agreement) shall be equal to 0.7% (seven tenths of
a percent) of the New channel Actual Gross Broadcast Revenues (excluding VAT and
transactions entered into directly by New channel) for the Reporting Period.
The Agency shall become entitled to its commission as soon as Advertising
Services have been actually rendered during the Reporting Period.
4.2. The fees for services/works of the Agency as described in Appendix 1
hereto shall be:
a) 11.3% (eleven point three percent) of the New channel Actual Gross
Broadcast Revenues from Advertising Services (excluding VAT and
transactions entered into directly by New channel) rendered during the
Reporting Period;
b) 12% (twelve percent) of the New channel Actual Gross Broadcast
Revenues from Advertising Services (excluding VAT and New channel direct
contracts) rendered during the Reporting Period.
4.3. Commission and service fees calculated in such manner (sections 4.1 and
4.2 hereof) shall be subject to VAT in accordance with applicable Russian
legislation.
Commission and service fees for all services/works of the Agency shall be
determined in rubles in the Statement for the relevant Reported period (in case
of setting the cost of placement of advertising and/or calculation of non-sale
incomes (penalties, fines, compensation, etc.) in US dollars - calculation is
made at the rate of the Central Bank of the Russian Federation effective as per
the last date of the reported month.
Payment of a commission and cost of services of Agency is made in the order
established, accordingly, in items 4.5. - 4.14. of the present Contract.
4.4. The cost of services on placement of advertising in contracts of Agency
with Clients shall be established:
under contracts with clients-residents - in an equivalent of US dollars or in RF
rubles. In case the sum of the contract is established in an equivalent of US
dollars, the latter is subject to payment by the Client in rubles at the rate of
the Central Bank of the Russian Federation effective as per the date of
presenting the payment order to the bank of the Client.
under contracts with clients-non-residents - in US dollars, or in the equivalent
of the US Dollars, or in rubles of the RF. In case the sum of the contract is
established in an equivalent of US dollars, and the payment is made in rubles of
the RF, the latter is subject to payment by the Client in rubles at the rate of
the Central Bank of the Russian Federation effective as per the date of
presenting the payment order to the bank of the Client. New channel services on
placement of advertising under transactions with clients both residents, and
non-residents shall be subject to VAT.
4.5. Payment under contracts of Agency with clients in RF rubles shall be
made to the current accounts of the Agency.
The Agency shall, within three banking days, transfer to New channel the
monetary funds received under the contracts taking into account sections 4.7,
4.10-4.12 hereof. The aforesaid three-days period shall commence upon receipt of
the payment on the Agency's current account.
4.6. The Agency shall be entitled (having directed the notice to New channel
address) on the basis of the financial assignment addressed to a corresponding
client to instruct the latter to make payment in the RF rubles under the
contract of the Agency with the client, directly to New channel current
accounts.
4.7. The Agency shall be entitled to transfer to the clients the monetary
funds in RF rubles subject to return to the latter pursuant to the to contracts
concluded with them, including by means of funds received from other clients to
the benefit of New channel to the accounts of the Agency, but not yet
transferred to New channel accounts. In case of return of the whole sum of the
contract or payment, monetary funds shall be returned to the client in rubles in
the same amount that was received. At the partial return the sum in rubles shall
be determined in proportion to the reduction of the sum of the contract or
payment.
4.8. Payment under contracts with clients-non-residents in US dollars shall
be made to the currency transit account of the Agency.
The Agency shall, within three banking days, transfer to New channel currency
transit account the monetary funds in the whole sum in the foreign currency. The
aforesaid three-days period shall commence upon entering of the monetary funds
to the currency transit account of the Agency.
4.9. Payments under contracts with Clients entered into directly by New
channel shall be transferred to the respective New channel accounts. Amounts
shall be paid inclusive of VAT as provided by applicable Russian legislation.
New channel shall transfer to the Agency not later than the first banking day of
the week following the week when the transfer was effected to the respective
account of New channel:
4.9.1. at the receipt of payment under contracts with clients-residents
and/or client - non-residents - the sum at the rate of 12 % (twelve
percent) of the sum of the monetary funds received to New channel
current account as the payment for services stipulated by section 2.1.2.
hereof;
4.9.2. at the receipt of payment under contracts with
clients-non-residents - the sum at the rate of 12 % (twelve percent) of
the amount of the monetary funds received to New channel currency
transit account as the payment for services stipulated by section 2.1.2.
hereof in rubles at the rate of the Central Bank of the Russian
Federation for the date of receipt of monetary funds to New channel
transit currency account.
When transferring monetary funds, New channel shall pass to the Agency a
cpoy of the payment order.
Should New channel fail to effect payments to the Agency pursuant to the
present Agreement within the agreed time period, the Agency shall be
entitled to withhold the sums due thereto from future receipts of
monetary funds from the Clients to the Agency's account belonging to New
channel.
4.10. In the event that it becomes difficult to clearly identify the above
receipts as payments made pursuant to the performance by the Parties of
obligations hereunder, the terms stipulated by sections 4.5, 4.8 and 4.9 may be
extended.
4.11. In cases if the monetary funds received earlier in a foreign currency
should be returned to the Client according to the contract with the latter,
than:
- if the monetary funds are transferred by the Agency to New channel,
the latter should in ten-day term transfer to the transit currency
account of the Agency the sum subject to return to the Client
-non-resident in the corresponding foreign currency, and the Agency in
its turn carries out the return of the received monetary funds to the
corresponding Client. The ten-day term shall commence on the moment of
receipt by New channel of the letter from the Agency with the
requirement on returning confirmed by the corresponding documents with
the client-non-resident;
- if the monetary funds are not transferred to New channel and are still
on the transit currency account of the Agency, the latter should
transfer to to the corresponding client the sum due to him in the
corresponding foreign currency.
4.12. From the sum of the money transferred in rubles to the current accounts
of the Agency for the benefit of New channel under contracts with clients, the
Agency shall be entitled to withhold the following sums:
- 12 % (twelve percent) of the difference between the money received in
RF rubles to the current accounts of the Agency for the benefit of New
channel and the monetary funds that were returned by the Agency and/or
New channel to the Clients' accounts pursuant to the contracts with the
latters, and
- 12 % (twelve percent) of the difference between the xxxxx equivalent
of the foreign currency that was received to the transit currency
account of the Agency for the benefit of
New channel pursuant to the contracts with clients-non-residents, and
the xxxxx equivalent of the foreign currency that New channel and/or the
Agency returned in currency to the clients-non-residents according to
the contracts with the letters. The xxxxx equivalent of a foreign
currency shall be determined at the rate of the Central Bank of the
Russian Federation effective as per the date of transfer of monetary
funds to the transit currency account of the Agency from the
client-non-resident.
The above mentioned deductions shall be aimed at payment of the
commission and services/works fee of the Agency set forth in sections 4.1. and
4.2. hereof.
4.13. Settelements between the Parties shall be carried out daily provided
presence of receipts from Clients. The Agency shall be entitled to exercise
daily deduction of funds in payment of the commission and services/works fee of
the Agency.
When transferring monetary funds, the Agency shall direct to the
address of New channel a copy of the payment order. The day of the payment
carried out between the Parties hereunder shall be considered the day of
writing-off the monetary funds from the account of the payer that is confirmed
by a bank extract.
4.14. In case if the sum withheld on the current account of the Agency, shall
exceed the sum of commission and services/works fee due to the Agency for the
reporting period, the exceeding sum shall be taken into account as advance
payment of commission or payment of services/works fees when exercising the
mutual settlement during the following periods.
5. REPORTING PROCEDURES
5.1. Upon transferring funds, the Agency shall deliver to New channel a copy
of the payment order (section 4.13 hereof) and an accompanying letter with a
detailed breakdown of the payment.
5.2. After the end of each month, not later than 10 (ten) days the Agency
shall deliver its report (sub-section 2.1.1. hereof) to New channel. If New
channel has any objections with regard to the submitted report, it shall deliver
such objections in writing to the Agency within ten (10) calendar days of
receiving the same. In the event, no objections are raised within the said
period, the report shall be deemed accepted and the assignment completed.
The Agency's report shall contain:
- The amount of payments received on the Agency's account under the
contract concluded with a client, including Value Added Tax in
accordance with the effective Russian legislation;
- The amount retained by the Agency on its account under section 4.12
hereof as the Agency's compensation, including Value Added Tax in
accordance with the effective Russian legislation;
5.3. Not later than 15th day of the month after the end of the Reporting
Period, the Parties shall execute a bilateral reconciliation statement
detailing:
1) New channel Actual Gross Broadcasting Revenue for the Reported
Period:
o Advertising revenue generated by transactions entered into
by the Agency;
o Advertising revenue generated by transactions entered into
by New channel directly with Clients;
o The amount of fines and penalties paid in respect to
advertising services in transactions entered into by the Agency
only.
2) Receipts for the Reporting Period in respect to the contracts entered
into by the Agency, including payment both for advertising services, and
liquidated damages, fines and penalties;
3) Receipts on the New channel account under all contracts made by New
channel directly as payment both for advertising services, and of fines
and penalties;
4) Commissions accrued by the Agency during the Reporting Period;
5) Service fees received by the Agency in respect to the services
provided to and work completed by New channel during the Reporting
Period (section 4.2 hereof);
6) Amounts received by the Agency as commissions;
7) Amounts received by the Agency as service fees.
The statement may also contain any other information the Parties may
deem relevant.
5.4. The Agency shall provide together with the statement its invoices for
payment of commissions and service fees.
5.5. New channel will have ten business days to either approve the submitted
statement or respond with objections stating the reasons for the same. If New
channel raises reasonable objections, the Parties shall execute a statement
detailing remedial actions with respect to such objections.
If New channel does not respond within the designated time period to the
statement delivered, the statement shall be deemed accepted.
6. LIABILITY OF PARTIES AND CASES WHEN PARTIES ARE RELIEVED FROM LIABILITY
6.1. In the event of non-performance or the improper performance by a Party
of its obligations hereunder, such Party shall be liable for damages to the
other Party resulting from such non-performance or improper performance.
6.2. If either Party delays any payments hereunder, it shall be liable for a
penalty of 0.05 % (five-hundredths of a percent) on the outstanding amount for
each day of delay, provided the other Party has delivered a claim for payment by
registered mail. No penalty shall be due as long as the other Party fails to
demand the payment of such a penalty.
6.3. In the event of a breach by New channel of its obligations with regard
to broadcasting ads (by failing to place ads within the Network Program Blocks,
changing time spots and/or sequencing of Commercials within the Network Program
Blocks, broadcasting Commercials with deviations in terms of quality or
technical parameters - no audio track, interference, or with timing, content or
version irregularities, etc.), New channel shall unconditionally indemnify the
Agency against any third party claims under existing contracts. In the event
that the Agency incurs expenses relating to the clients' claims due to New
channel failure to perform its obligations, New channel shall reimburse the
Agency for any such expenses.
6.4. New channel shall not be liable for the failure to broadcast advertising
within the Network Program Blocks through the Agency's fault, and the Agency
shall be solely responsible for resolving any such claims of Clients.
6.5. All payments in respect to the penalties or damages hereunder shall be
made in rubles at the exchange rate of the Central Bank of Russia on the date
the payment was made as long as the creditor has demanded in writing that such
payments be made; such written demands shall be delivered by registered mail
with an acknowledgement of receipt.
6.6. The Parties shall be relieved from liability for non-performance or
improper performance of their obligations hereunder if the proper performance
was not possible due to force-majeure events, i.e., events of extraordinary
nature and unavoidable under the circumstances, such as acts of God, fires,
hostilities, legislative changes, adoption of mandatory regulations, unscheduled
public addresses by government officials (President of the Russian Federation,
Prime Minister of the Russian Federation, Chairman of the Federation Council and
Chairman of the State Duma) and other events beyond the control of the Parties.
6.7. The Party that is unable to perform its obligations hereunder shall be
required to immediately give notice to the other Party on the occurrence and
termination of the above events, but in any event not later than within five
business days. In such case, the Parties shall consult with each other as soon
as possible and agree on the actions that should be taken by the Parties.
The existence and duration of force majeure events shall be supported
by documents issued by the appropriate competent authority or agency.
6.8. The failure to give such notice of the occurrence of such events or the
failure to give such notice in a timely manner shall prevent the said Party from
referring to any such events as grounds for relieving it from liability for
non-performance.
6.9. In the event advertising was not broadcast due to the above events, New
channel, upon the Agency's consent, shall provide spots equivalent in terms of
time and programs for the unaired advertising, or, if such spots are not
available, shall return to the Agency any pre-payments received with respect to
the unaired advertising.
7. DISPUTE RESOLUTION
7.1 All disputes and controversies arising out of or relating to the present
Agreement shall be resolved through negotiations between the Parties.
7.2 If the Parties fail to come to a settlement, the dispute shall be
submitted for resolution to the Moscow Arbitration Court.
8. MISCELLANEOUS
8.1 All statements, amendments and supplements to the present Agreement
shall be valid only provided that the same shall be in writing and signed by the
authorized representatives of the Parties.
8.2 All the Supplements and Appendices to this Agreement shall constitute an
integral part hereof.
8.3 The unilateral refusal to perform the obligations or unilateral
modification of the terms of this Agreement shall not be permitted, except as
set forth herein.
8.4 The terms of this Agreement, in respect to which the Parties have
executed the Supplementary Confidentiality Agreement, shall be confidential.
Each Party shall make every effort to prevent the access of any third
party to the confidential provisions of the present Agreement other than upon
the consent of the other Party.
Upon the demand of any authorized governmental agency (law-enforcement
agencies, tax authorities, etc), one of the Parties may disclose to them the
provisions of the present Agreement without the prior consent of the other
Party.
In case of a breach of the provisions of this Section by a Party, such
Party shall be liable for the damages incurred by the other Party.
8.5 The headings of the Articles of the present Agreement have been inserted
for convenience and shall in no way restrict or expand the meaning of any of the
provisions thereof.
8.6 The Parties shall immediately give to each other a written notice in
case of any change in their corporate Forms, addresses, bank or other essential
details.
8.7 The Parties shall deliver to each other all and any notices and requests
regarding the performance of provisions of the present Agreement to the
addresses, fax numbers and telephone numbers agreed upon herein by courier
service with a follow-up fax transmission. Notices and requests shall be deemed
sufficiently given:
- In the case of courier delivery - upon the date of delivery;
- In the case of fax transmission -upon the date of dispatch if it is
sent during usual business hours.
9. TERM OF AGREEMENT AND TERMINATION
9.1. The present Agreement shall enter into effect from the moment of its
signing taking into account the follwoing conditions:
9.1.1. Advertising of the Clients is placed on air of "Domashny"
Electronic mass media tele-network from the data of broadcast beginning,
9.1.2. The Agency renders to New channel services provided in section
2.1.2. of the present Agreement starting from the date of broadcast on
air of "Domashny" Electronic mass media tele-network, and is in effect
till December 31, 2009, including all New Year's Eve programs (through 6
a.m. January 1, 2010).
9.2. The present Agreement may be terminated before the expiry of its term:
9.2.1. within the period from the date of signing of the present
Agreement till December 31, 2009 - by either Party subject to a 180-day
prior notice of the proposed termination. Such notice shall be delivered
by registered mail with acknowledgement of receipt.
The Party initiating early termination shall make a termination payment
to the other Party equal to 12 % of the New channel Actual Gross
Broadcasting Revenue generated by advertising in the Network Program
Blocks for six full calendar months preceding the termination date. The
calculation of such termination payment shall be made in rubles.
9.2.2. Upon mutual agreement of the Parties in any time.
9.3. In the event that as of the termination date (section 9.2.
hereof) certain advertising under a contract entered into by the Agency
hereunder has not been broadcast and/or the provision of services has
commenced but has not been completed, the obligation of the parties
shall be deemed terminated from the date such advertising has been
broadcast or service has been provided and all settlements, including
with respect to penalty payments hereunder, have been completed.
The present Agreement is executed in two equally binding counterparts with one
for each Party.
ADDRESSES AND BANK DETAILS OF PARTIES:
AGENCY: CTC:
CJSC "AD MEDIA" ZAO "NEW CHANNEL"
Legal and mailing Addresses: 121359, Legal and mailing Addresses: 123298,
Xxxxxx, 00 Xxxxxxxxx Xxxxxxx Xxxxxx Moscow, 00 0xx Xxxxxxxxxxxxxx Xxxxxx
ITN 0000000000, KPP 773101001 ITN 0000000000, KPP 773401001
OGRN 1027739243399 current account OGRN 1047796750880 current account
40702810800020105593 with "Sberbank of 4070281031600000353 with OAO ALFA-Bank,
Russia" (C/o) correspondent account correspondent account No 30101810200000000593
30101810400000000225 BIC 044525225 in OPERU of Moscow GTU Bank of Russia
BIC 044525593
Current account 40702810201600000385
With OAO "Alfa-Bank" Addtional office "leningradsky DETAILS FOR HARD CURRENCY PAYMENTS:
prospect", correspondent account 30101810200000000593 Beneficiary: Closed Joint Stock Company "New Channel"
BIC 044525593 Beneficiary account: 40702840101603000083
Beneficiary bank: "XXXX-Xxxx", Xxxxxx, Xxxxxx (000000,
DETAILS FOR HARD CURRENCY PAYMENTS: Xxxxxxxxxxxxxx xxxxxx, 00).
Current (USD) 40702840001600000089
Transit 40702840601603000088
XX Xxxxxx Xxxxx Bank, New York
0, Xxx Xxxx Xxxxx, Xxx Xxxx, X.X. 00000, XXX
Acc. 400927098
XXXX-XXXX
XXXXXX, XXXXXX
Xxxxxxxxxxxxxx xxxxxx, 00
XXXXX XXXX US 33
Account 40702840601603000088
Corr account 30101810200000000593
[SIGNATURE] [SIGNATURE]
By: ________________________ By: ___________________________
(X.X. Vshivkin) (V.S. Khanumyan)
[SEAL] [SEAL]
APPENDIX 1
TO AGREEMENT NO. ___________ DATED _______________, 20---
MOSCOW ___________, 200__
CJSC "NEW CHANNEL" (BASIC STATE REGISTRATION NUMBER [OGRN] 1047796750880)
(hereinafter referred to as "NEW CHANNEL") in the person of the 1st deputy
General Director V.S. Khanumyan, acting on the basis of the Power of attorney #
1 dated January 11, 2005, on the one hand, and CJSC "AD MEDIA" (OGRN
1027739121134) (hereinafter referred to as the "AGENCY") in the person of
General Director X.X. Vshivkin, acting on the basis of the Charter, on the other
hand, hereinafter jointly referred to as the "Parties", have concluded the
present Appendix 1 to the Agreement dated _________, 200__ # ____________
(hereinafter Agreement) as follows:
1. In accordance with the provisions of sub-section 2.1.2. of the
Agreement, the Agency shall perform the following information and other
services/work for New Channel in exchange for compensation:
1.1. Provide to New Channel and maintain certain software (computerized
placement system) in the appropriate condition.
1.2. Adapt commercials accepted for broadcasting pursuant to the contracts
entered into by the Agency.
1.3. Perform pre-airing editing of advertising blocks:
a) Review ads within the same block for compatibility.
b) Determine the advisability of allotting spots not occupied by commercial
advertising to social advertising.
1.4. Structure advertising blocks placed directly by the Agency.
1.5. Deliver videotapes with recorded advertising to the address of New
Channel.
1.6. Develop forecasts of program ratings, advertising blocks, broadcast
hours, etc. The ratings for the purposes of Appendix No 1 are understood as the
audience of a program (advertising blocks, broadcast hours, etc.) expressed as
percentage of the total potential audience. The ratings shall be calculated
using ZAO TNS GALLUP MEDIA software and the data collected by ZAO TNS GALLUP
MEDIA for a particular target audience.
1.7. Calculate actual ratings.
1.8. Perform media planning.
1.9. Advise on the planning of the New Channel line-up:
a) Monitor deadlines for airing advertising orders.
b) Coordinate advertising volumes, including by product categories advertised.
1.10. Provide services for the automatic scheduling of floating advertising
orders under all adverting transactions, including those entered into directly
by New Channel.
1.11. Analyze the actual impact of advertising campaigns; compare forecast
ratings against actual ratings.
1.12. Generate play lists for all advertising campaigns broadcast through
"Domashny" Electronic mass media tele-network, including comparing of placing
data with monitoring.
1.13. Organize and conduct pretension and claim work on contracts with clients
having failed to perform the transaction (having failed to pay for New Channel
advertising services) including rendering methodic assistance in such work
should it be conducted by New Channel departments.
1.14. Receive from clients, register, systematize and provide (on a monthly
basis) on electronic and paper sources in the Form adapted for new Channel
further use the information on the authors of music, text and video-line used in
the commercials broadcasted on air of Network Program Blocks.
2. Works/services stipulated in section 1 hereof shall be paid by New
Channel pursuant to the terms of Chapter 4 of the Agreement.
3. The present Appendix 1 is executed in two equally binding counterparts
with one copy for each Party.
4. SIGNATURES OF PARTIES:
AGENCY: NEW CHANNEL:
CJSC "AD MEDIA" CJSC "NEW CHANNEL"
[SIGNATURE] [SIGNATURE]
By: ________________________ By: ___________________________
(X.X. Vshivkin) (V.S. Khanumyan)
[SEAL] [SEAL]
APPENDIX 2
TO AGREEMENT NO. ___________ DATED _______________, 20---
MOSCOW ___________, 200__
CJSC "NEW CHANNEL" (BASIC STATE REGISTRATION NUMBER [OGRN] 1047796750880)
(hereinafter referred to as "NEW CHANNEL") in the person of the 1st deputy
General Director V.S. Khanumyan, acting on the basis of the Power of attorney #
1 dated January 11, 2005, on the one hand, and CLOSED JOINT STOCK COMPANY "AD
MEDIA" (OGRN 1027739121134) (hereinafter referred to as the "AGENCY") in the
person of General Director X.X. Vshivkin, acting on the basis of the Charter, on
the other hand, hereinafter jointly referred to as the "Parties", have concluded
the present Appendix on principles of determining the price on placing
Advertising in Network Program Blocks upon the Agency's conclusion of contracts
with any third persons (hereinafter referred to as "Clients") as follows:
1. The Parties shall agree on the principal factors to be considered in
determining the price in connection with the placement of Advertising within the
Network Program Blocks under the contracts entered into by the Agency with
Clients.
2. The basis for Advertising order for realizing the Advertising services
shall be the combination of technical, sociological and economic factors that
define the conditions required in connection with the provision of advertising
services under a particular transaction.
The input data used for determining the price of services to be provided under a
particular Advertising Order shall be determined by the Agency in consultations
with the Client at the time of developing the media strategy and shall comprise
the data on:
timing and geographical region of a particular advertising campaign,
Client's total advertising budget,
target audience of advertising or promotion materials,
information on the Client competitors' market;
any other details required for structuring a particular advertising campaign.
The composing of the contractual cost of services rendered upon a
definite transaction bears multi-factor, multi-functional character, taking into
account the lack of unit measures for determining the quantitative volumes of
services.
3. When entering into a contract with a Client and determining the price of
services, the Agency shall take into consideration the following factors:
3.1 Projected effectiveness of the advertising campaign.
The projected effectiveness of the advertising campaign represents a minimum
planned increase in rating points to be achieved by the Client's advertising and
promotion materials during the advertising campaign, as agreed between the
Agency and the Client.
Ratings are the target audience that viewed the given advertising or promotion
as a percentage of the total target audience.
The gross rating of advertising/promotion materials (placed under a particular
Advertising Order within the Network Program Blocks), determined on the same
basis (geographical area, demographics, income range, etc.) for a particular
selected audience is designated by the abbreviation GRP.
The data for GRP calculations shall be provided by the independent media
monitoring service ZAO "TNS GALLUP MEDIA."
Upon acceptance of the Advertising Order for products with apparent consumer
properties, the projected effectiveness may be determined for key target
audiences.
Target audience - potential viewers with similar sociographic and psychographic
attributes:
o Age (obligatory factor for the target group)
o Sex
o Region or inhabitation territory
o Income level
o Education
o Occupation
o Children's amount, etc.
The primary target groups are the typical target groups most commonly targeted
by Clients on which the projected effectiveness is assessed:
o 11-25 All
o 11-34 All
o 11-34 All Moscow
o 14-24 All
o 18-35 Females
o 18-35 All
o 18-54 Females
o 18-54 Males
o 18+ All
o 18+ All Moscow
o 18-44 Females
o 18-44 All
o 20-39 All
o 25+ Females
o 6+ All
The numbers define age ranges.
When determining the effectiveness of the Advertising Order, the average
perception frequency - Frequency, conditionally determined as the ratio of GRP
to Reach.
Reach - coverage - the number of people in the target group who saw a particular
broadcast at least for one minute (in thousands of people).
Projected (forecast) effectiveness is to be assessed on the basis of the data
available from the independent monitoring company ZAO "TNS GALLUP MEDIA" for the
entire territory of Russia for past periods. This data is to be extrapolated for
the period during which certain advertising and promotion materials are to be
broadcast according to the New Channel schedule and adjusted for seasonal
variations and other factors.
3.2. New Channel current pricing policy - the average price for a thirty
second spot charged by New Channel for airing an advertising or promotional
material with a projected effectiveness of 1 (One) GRP, as established in the
quarterly Pricing Policy Agreements.
3.3. The projected scope of the advertising campaign.
3.4. New Channel programming (repertoire) policy.
3.5. Number of business days to the first airing of ads in the Network
Program Blocks.
3.6. New Channel airing environment - taking into account of programs
broadcast by other TV broadcasters and TV networks at the same time.
3.7. Changes in New CHannel technical capabilities:
o Increased reach through better quality of signal distribution.
o Increased reach through transmitters' increased output capacity.
o Potential addition of regional stations to the Channel network.
o Licenses obtained for new frequencies.
3.8. Positioning - placement of certain advertising and promotional materials
in the opening, closing or other particular position within an advertising
block.
3.9. Fixed placement - placement of advertising and promotional materials in
particular programs or advertising blocks or on dates designated by the Client.
3.10. Floating placement - placement of advertising and promotional materials
by selecting programs and dates independent of the Client based on the general
requirements related to the Advertising Order (projected effectiveness,
distribution of ads within the Channel schedule by time of the day, etc.).
3.11. Seasonality of advertising campaign - seasonal variations in the demand
for placement of advertising and promotional materials within the Network
Program Blocks from Clients.
3.12. Competition requirements of an advertising campaign:
o The requirement of the Client to place certain advertising and promotional
materials so that they are detached from the advertising of competing products
or producers.
o The requirement of the Client to place certain advertising and promotional
materials in particular programs or advertising blocks so that they are attached
to the advertising of competing products or services.
3.13. Advertising the products and/or services of several advertisers or
several advertised items in the same advertising and promotional material.
3.14. The placement of advertising and promotional materials in commercial
breaks within and in between programs.
3.15. Placement of advertising and promotional materials within particular
time intervals (including prime time).
Prime time - continuous intervals of time attracting the largest audiences.
3.16. Macroeconomic factors.
o Consumer purchasing power;
o Per capita income growth rate;
o Change in the cost of the consumer basket and consumer prices for a
particular target group.
4. New Channel directs the Agency to determine the price under each
Advertising Order for placement of advertising and promotional materials within
the Network Program Blocks pursuant to the Pricing Policy Agreement made between
the Parties and based on the abovementioned factors.
5. The present appendix Appendix shall come into effect from the date of
its execution and shall be an integral part of the Agreement.
6. The present Appendix is made and signed in two equally binding
counterparts with one copy for each Party.
SIGNATURES OF PARTIES:
AGENCY: NEW CHANNEL:
CJSC "AD MEDIA" CJSC "NEW CHANNEL"
[SIGNATURE] [SIGNATURE]
By: ________________________ By: ___________________________
(X.X. Vshivkin) (V.S. Khanumyan)
[SEAL] [SEAL]
