EXHIBIT 10.6
INFOMERCIAL/SEMINAR MARKETING AGREEMENT
THIS AGREEMENT, dated this 24th day of June, 1997, is by and between the
Xxxxx-Xxxxxx Corporation, a Delaware corporation (hereinafter "GRC") and The
XxXxxxx Group, Inc., a Florida corporation (hereinafter "Company") for, among
other things, the services of Xxx XxXxxxx (hereinafter "Artist").
RECITALS
A. Whereas GRC is in the business of, among other things, marketing various
products and services by way of television commercials and related methods;
B. Whereas Company operates successful workshop/seminar which promotes methods
of real estate related business opportunities and further, owns and controls all
rights to the marketing services of Artist;
C. Whereas GRC desires to engage Company to furnish the services of Artist, and
Company desires to accept such engagement, in the production of certain direct
response television commercials (collectively, "Infomericals") to sell the
"Products" (defined in Paragraph D below); and
D. Whereas GRC and Company collectively desire to market and distribute those
products described on EXHIBIT "A" (collectively, the "Products") attached
hereto and incorporated herein by this reference through all global channels of
distribution except the fields of seminars/workshops.
NOW THEREFORE in consideration of the mutual covenants and promises herein
contained, and intending to be legally bound hereby, the parties hereto hereby
agree as follows:
1. Process.
a) GRC and Company presently intend to create and sell Product via
Infomercials, inbound and outbound telemarketing methods and such other
channels of distribution, excluding seminars, as GRC shall determine:
b) GRC and Company shall mutually agree upon the Product configuration
to be sold.
2. GRC's Functions.
a) GRC shall fund the Infomercials.
b) GRC shall purchase media for the Infomericals.
c) GRC shall source and fund the manufacturing of Products.
d) GRC shall cause the initial inbound and outbound telemarketing to cause
product sales.
3. COMPANY'S FUNCTIONS.
a) Company shall fund and complete all Product development so that the
Product is final, turn-key and can be sold directly to the consumer by
GRC without further revision or expense.
b) Company shall make the Artist available for the Infomercial.
4. COMPENSATION
a) ROLL-OUT. If GRC deems the Test Marketing of the Infomercial successful
(I.E., Roll-Out), then it shall pay Company a fifty thousand dollar
($50,000) non-returnable advance, which advance shall be applied against
the royalties earned by Company from GRC's distribution of the Product.
b) ROYALTY. During the Term, as defined in Paragraph 8 of this
Agreement, GRC shall pay Company a royalty of five percent (5%) of
the "Gross Receipts" collected by GRC (or on its behalf). "Gross
Receipts" shall mean the revenue GRC collects from the sale of the
Product less returns, refunds, credit card chargebacks and fees,
declines, cancels and taxes incurred by GRC and shall not include
costs or revenues associated with shipping and handling of the
Product.
c) TRAVEL REIMBURSEMENTS. If Artist is required to travel, at
GRC's request, more than one hundred (100) miles from Artist's
then principal place of residence to participate in the
Infomercial production or to attend the shopping channels, then
Artist shall be entitled to receive the following from GRC, in
addition to the amounts described above, during such travel
period: (a) a pro ratable
weekly allowance (at 1/7 thereof per day) of $1,400 per week;
(b) one (1) first class round-trip air transportation; and (c)
reasonable lodging (room & taxes only) and ground
transportation.
5. GRANT OF RIGHTS.
a) GRANT. Artist hereby agrees to (i) participate in the production of the
Infomercial, the voice-overs, pickups and similar post-production requirements,
as well as a brief rehearsal, (ii) attend the shopping channels to make Product
sales up to six (6) times per year if and when GRC is able to secure such
opportunities, (iii) use best efforts to help GRC complete a saleable Product
(including all associated packaging materials, etc.), subject to GRC's
reasonable approval, and (iv) grant GRC the exclusive global right to
manufacture, market and distribute the Product. If "Corrective Action" (as
defined in Paragraph 9(b) below) is required, Artist agrees to provide
additional on-camera services at no additional cost. Artist also grants GRC the
worldwide right to use Artist's name, photograph, voice and likeness in the
Infomercial, and the Product, as GRC deems commercially reasonable during the
Term.
b) CHANNELS OF DISTRIBUTION. GRC shall have the exclusive right to market
and distribute the Product in all worldwide channels of distribution if it
believes it can successfully distribute them including without limitation in:
(a) All forms of direct response television which include 800/900 (and similar)
telephone numbers; (b) Print media; (c) Outbound telemarketing; (d) Package
inserts; (e) Catalogs; (f) Direct Sales; (g) Radio; (h) Televised shopping; (i)
Credit card syndication; (j) Direct mail; (k) Internet; and (l) Retail. Unless
otherwise agreed to, neither party may distribute the Product via
workshop/seminars.
6. STATEMENTS. Company shall be paid its royalties on a Calendar quarterly
basis within thirty (30) days after the completion of each quarter. GRC
shall provide Company monthly statements describing Product sales and media
expenditures.
7. AUDIT RIGHTS. At any time within one (1) year after a payment is made
hereunder, Company may review GRC's books and records to determine the
accuracy of the statements prepared by it. This examination shall be
conducted during normal business hours at the place where the applicable
books and records are maintained, and at the Company's sole cost and
expense. Any determination that GRC has underpaid shall not be deemed a
breach of this Agreement unless GRC fails to pay the agreed upon shortfall
within ten (10) business days. If both parties agree that the examination
revealed more than a five percent (5%) discrepancy between what was paid and
what was actually owed, then GRC shall reimburse Company for its reasonable
audit costs and expenses (not including travel costs).
8. TERM. The "Term" of this Agreement shall be three (3) years following the
full execution of this Agreement. If GRC has paid Company at least one
million dollars ($1,000,000) during the initial term or any term thereafter,
then GRC shall thereafter have the right, but not the obligation, to renew
the Agreement for successive three (3) year terms.
9. TEST PERIOD.
a) TEST. GRC shall conduct test marketing of the Product by airing the
Infomercial, at its own expense, during a period of not less than three
(3) days and not more than one [unreadable text] the Infomercial on such
cable and broadcast television networks and stations and at such times
as GRC, in its sole judgment, determines are likely to draw favorable
response rates ("Test Marketing"). GRC shall evaluate the results of
Test Marketing and determine, in its sole judgment, how much media to
spend (i.e., if the Infomercial results are poor, GRC shall not be
required to spend additional money after the initial media buying test
if it believes success cannot be achieved), whether the Product return
rate is sufficiently low and whether Test Marketing has been successful.
A determination that Test Marketing has been successful shall be deemed
"Roll-out." Such determination shall be based on volume of Product
sold, ratio of advertising costs to sales revenues and such other
factors as GRC shall deem relevant.
b) TEST DETERMINATION. If GRC determines that Test Marketing has been
unsuccessful, then GRC shall, within thirty (30) days following the
conclusion of such Test Marketing, either (i) terminate this
Agreement, or (ii) take appropriate corrective action. For purposes
of this Agreement, "Corrective Action" shall mean such steps GRC
may propose to alter the Infomercial or the pricing of the Products
or otherwise stimulate sales of the Products.
10. PRODUCT.
a) GRC. GRC shall fund and either exclusively license or own the Product
including, but not limited to, its copyrights, trademarks, patents and
other related intellectual property rights. GRC shall also fund and own
the (i) Infomercial, (ii) any customer list generated by the
Infomercial, and (iii) all packaging, print material and other material
related to the Infomercial including but not limited to the copyrights,
trademarks, patents and other related intellectual property rights.
Notwithstanding the foregoing, Company shall have the right without
royalty to GRC to sell or give away at Company's expense any element of
the Product as long as such element is not packaged to resemble its
presence as part of the Product.
b) ARTIST. Artist agrees to use best efforts to assist GRC in
connection with the creation and development of the Product.
11. GRC OPTION. Within twelve (12) months of the full execution of this
Agreement, GRC shall have the right to extend the rights in the Product and
Artist's service in a seminar/workshop program on the terms to be
negotiated in good faith between the parties.
12. INSURANCE. GRC shall obtain customary (i) commercial general liability and
media liability insurance for the Infomercial (and shall name Company and
Artist as an additional insured on such policies), and (ii) author's
liability insurance for the Product. During the Term, the parties agree to
maintain at least one million dollars ($1,000,000) per occurrence and two
million dollars ($2,000,000) in the aggregate for such insurance policies.
13. AFTRA. GRC represents and warrants that it is a signatory in good standing
to the current AFTRA Agreement. GRC shall pay the required union pension
and health fund payments directly to the pension and health fund of AFTRA,
which payments shall be in addition to any other payments provided for
herein.
14. APPROVALS. Unless otherwise set forth herein, GRC shall have all final
approval rights and controls with respect to the Product and the
Infomercial; however, Artist shall have final approval rights over the
portion of the script read by Artist and the use of Artist's name, likeness
and appearance in connection with the Infomercial. To the extent GRC makes
a written approval request from Artist, Artist agrees to respond, in
writing, within five (5) business days. Artist's election not to respond in
such manner shall be deemed an approval of such request; the parties
acknowledge that catalogs will, typically, not give final copy approval to
its merchant-clients.
15. NOTICE. Any notice, approval, consent, or other written communication to be
given hereunder shall be given in writing and delivered personally,
transmitted by confirmed facsimile, or sent by overnight express service to
the recipient at the address set forth below. Any notice so transmitted,
delivered or mailed shall be deemed to be given on the date it is received
or delivered personally.
If to Company: The XxXxxxx Group, Inc.
Attn: Xx. Xxxx Xxxxxxx
0000 Xxx Xx. Xxxxxxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Fax: (000) 000-0000
If to GRC: Xxxxx-Xxxxxx Corporation
Attn: Ben Van xx Xxxx
00-000 Xxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxxx, XX 00000 XXX
Fax: (000) 000-0000
16. TAXES. GRC and Company agree that each shall be responsible, without
liability to the other, for the timely payment of all taxes and other
withholdings, deductions and payments required by law with respect to its
own operations and employees.
17. EXCLUSIVITY.
a) Subject to 17(b) below, during the Term, Artist will not market any
other similar product which is competitive with Product via television;
however, nothing shall preclude Company and/or Artist from advertising
promoting and marketing its workshop/seminars in all other venues.
b) Notwithstanding the foregoing, GRC shall not have the right to use
Artist's services in the field of seminars. GRC acknowledges that
during the Term, Artist shall be free to speak at or participate in
one or more seminar/workshop programs which market one or more
products in the field of real estate business opportunities
provided that the product(s) being marketed at such seminar
workshop programs will be in different form, under a different
title, and in different packaging from the materials being offering
by GRC as the Product hereunder.
c) GRC shall have the exclusive right to product a sequel with
Artist upon the same terms as this Agreement.
d) Regardless of the length of the Term hereunder, the
exclusivity shall be for a period of six (6) months from
the date the initial Infomercial is first broadcast and
shall continue thereafter until GRC has failed to expend at
least on average One Hundred Thousand Dollars ($100,000)
per month for consecutive three month periods.
e) The foregoing exclusivity provisions of this Paragraph
17 shall not apply to any test involving seminars in
which the parties hereto are involved.
18. ASSIGNMENT. GRC shall have the right to assign its rights in this
Agreement upon receipt of Company's prior written approval which shall not
be unreasonably withheld.
19. LAW TO GOVERN. This Agreement shall be governed by and construed in
accordance with the laws of the State of California.
20. REPRESENTATIONS AND WARRANTIES.
a) Artist and Company, respectively, represent and warrant that they (i)
have not entered into any oral or written contract which would impair
the rights granted to GRC or limit the effectiveness of this Agreement,
(ii) have no knowledge of any claims or actions which may limit or
impair any of the rights granted to GRC or any other right of any third
party, and (iii) have no knowledge of any adverse fact (or negative
information) which, if disclosed to GRC, may reasonable cause GRC to
not enter into this Agreement. Company further represents it has the
right to cause Artist to honor his obligations described herein.
b) Each party represents and warrants that (i) it has no knowledge of
any pending or threatened claims which would impair or diminish any
of the rights it has granted to the other herein, (ii) it has the
right and power to enter into this Agreement, and (iii) the
execution and delivery of this Agreement will not result in a
breach of, or default under, any other agreement, law or
regulation.
21. FIDUCIARY. No fiduciary duty obligations shall be created as a result of
this Agreement.
22. INDEMNITY. GRC shall defend, indemnify and hold Company and Artist
harmless from and against any and all damages, liabilities, costs, losses,
expenses, claims and/or judgments, including legal costs and reasonable
attorneys' fees which may result in connection with the Infomercial, the
Product and/or the marketing and distribution of the Product, unless
resulting directly from Company's or Artist's material breach of this
Agreement or Company's or Artist's gross negligence or willful misconduct.
23. TERMINATION. If after execution of this Agreement, GRC determines in the
course of production of the Infomercials that the marketing and/or
distribution of the Product may not be profitable or may yield only a
marginal profit, then GRC shall have the right to terminate this Agreement
by providing Company with written notice of termination and shall
thereafter have no further obligation to Company except provided the
production is completed, to make the payment recited in Paragraph 2(a). In
the event GRC shall terminate under this provision, Company may elect on
its own or with third parties to continue to produce direct response
advertisements to promote and distribute the Product. Upon request, GRC
will share all of its work product up to the point of termination and
provide its actual out of pocket costs on the project. If Company elects to
continue production and further elects to use GRC's work product, then
Company will pay GRC seven and one-half percent (7.5%) of Gross Receipts
until GRC has recouped its costs.
24. PROMOTIONS. Artist agrees to participate in a video-promotion (I.E., not
for broadcast) of GRC, subject to Artist's professional availability.
25. ENTIRE AGREEMENT. The terms of this Agreement as set forth in the numbered
Paragraphs hereof are contractual and not mere recitals. Each party has
executed this Agreement without reliance upon any promise, representation
or warranty other than those expressly set forth herein. Each party
acknowledges that (i) it has carefully read this Agreement; (ii) it has had
the assistance of legal counsel of its choosing (and such other
professionals and advisors as it has deemed necessary) in the review and
execution hereof; (iii) the meaning and effect of the various terms and
provisions hereof have been fully explained to it by such counsel; (iv) it
has conducted such investigation, review and analysis as it has been
necessary to understand the provisions of this Agreement and the
transactions contemplated hereby; and (v) it has executed this Agreement of
its own free will.
Please signify Company's approval of the foregoing terms and conditions by
signing in the space provided below so that when countersigned by GRC, this
document shall constitute a binding agreement with respect to the matters herein
contained.
XXXXX-XXXXXX CORPORATION, THE XXXXXXX GROUP, INC.
a Delaware Corporation a Florida corporation
By: BEN VAN XX XXXX By: XXXXX X. XXXXX
Xxx Van xx Xxxx, its President
Executive Vice President
I have read the foregoing terms of Agreement dated as of June 24, 1997, and to
the extent such terms apply to me as an individual, I agree to be bound as if I
had personally signed such Agreement. Further, I agree that for the
services to be provided by me pursuant to said Agreement, I am an employee
of and The XxXxxxx Group, Inc. and shall look to that entity for
compensation for said services and not to Xxxxx-Xxxxxx Corporation.
XXX XXXXXXX
Xxx XxXxxxx
EXHIBIT "A"
THE PRODUCT
The Product shall consist of such books (2-4), pamphlets (1-2), audiotapes
(2-4) and other materials (?) as the parties shall mutually agree to hereafter.
The Product will be sold for $79 or such other price to which the parties
may hereafter agree.
ADDENDUM
This Addendum is made this 24th day of June, 1997 by and the Xxxxx-Xxxxxx
Corporation, The XxXxxxx Group, Inc., and Xxx XxXxxxx.
WHEREAS, the parties hereto have entered into a certain Infomercial/Seminar
Marketing Agreement (hereinafter "Agreement") dated June 24, 1997; and
WHEREAS, the parties hereto wish to clarify certain provisions in the
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and promises
herein contained, and intending to be legally bound hereby, the parties agree as
follows:
1. Notwithstanding anything in the Agreement, the Agreement is not
intended to include any rights in favor of Xxxxx-Xxxxxx Corporation with regard
to the courses, boot camps and other products and services currently sold by The
XxXxxxx Group, Inc. and Xxx Xxxxxxx.
IN WITNESS WHEREOF, we have set our hands on the day and date first set
forth above.
XXXXX-XXXXXX CORPORATION, THE XXXXXXX GROUP, INC.
a Delaware Corporation a Florida Corporation
By: /s/ BEN VAN XX XXXX By: /s/ XXXXX X. XXXXX
Xxx Van xx Xxxx, its Xxxxx X. Xxxxx,
Executive Vice President its President
XXX XXXXXXX
Xxx XxXxxxx
EXHIBIT B
RESTRICTED SHARES
Xxx Xxxx 900,000
Xxxxx Xxxxx 750,000
Xxxxxxx Xxxxxxxx 215,000
Xxxx Xxxxx 90,000
Xxxxx Xxxxxxxx 125,000
Xxx Xxxx 250,000
Xxxxxx Xxxxxx 25,000
Xxxxxxxx Xxxxx 25,000
Xxxxxxx XxXxxxx 25,000
Xxx Xxxxxx 25,000
Xxxxx Xxxxxxxxxx 25,000
Xxxxx Xxxx 25,000
Xxxxx Xxxxxxx 25,000
Xxxxxx Xxxxxxxx 25,000
Xxxxxx Xxxxxx 25,000
Xxxxx Xxxxxxx 25,000
Xxxxx Xxxxxxxx 25,000
Xxxx Xxxx 25,000
Xxxx XxXxxxxxx 25,000
