EXHIBIT 10.11
INFOMERCIAL PRODUCTION
AND
PRODUCT MANAGEMENT AGREEMENT
This Production/Management Agreement ("Agreement") is dated as of March 5, 1996
and is made by and among VIDEONE MARKETING, INC., a Colorado corporation whose
principal place of business is located at 00 Xxxxxxxxx Xxxxx Xxxx, Xxxxx X,
Xxxxxxxxx, XX 00000 ("VIDEONE"), on the one hand and Osmotics Corp., a Colorado
corporation whose principal place of business is located at 0000 Xxxxx Xxxxxx,
Xxxxx 000, Xxxxxx, XX 00000 ("CLIENT"), on the other hand.
NOW, THEREFORE, in consideration of the mutual promises and undertakings set
forth herein and intending to be legally bound hereby, the parties agree as
follows:
Whereas, CLIENT is desirous of having a project, titled "WRINKLE PATCH
INFOMERCIAL" (1 (one) long form (28:30) and 3 (three) short form (120, 60, 30
second) direct response commercials) herein after referred to as ("PROJECT"),
created and produced, and is willing to make certain financial commitments to
see that such a project is produced, in as expedient a manner as possible, based
upon the attached estimated timetable in Addendum A to be superseded by
Addendum E upon its construction. Addendum E will present a formal budget which
will supersede Addendum C as it will qualify the actual costs involved with the
production of the PROJECT. Payment schedule for PART A will be adjusted
accordingly. This agreement and its addenda may be amended from time to time in
writing by mutual agreement of the parties.
The parties agree as follows:
For, and in consideration of the sum of $83,778.00, profit participation in the
amount of [ * ] "ADJUSTED GROSS PROFITS" from Direct Response as defined herein,
[ * ] of Gross Sales from the project including reorders from clients gained
from the project as management fees, and $15,120.00 Setup Fees; as described in
Addendum B, which will be due and payable as described therein, VIDEONE agrees
to immediately set forth producing the aforementioned PROJECT upon receipt of
the retainer described below.
PART A: INFOMERCIAL PRODUCTION
1. PRODUCTION
1.1 VIDEONE undertakes to produce the PROJECT and to perform the services
set out in this agreement, including without limitation the services and
responsibilities set out in Addendum E upon its construction. It is understood
that all the costs related to VIDEONE'S production of, the PROJECT including
management setup fees set out herein Addendum D and designated CLIENT costs
above are costs which CLIENT has agreed to pay pursuant to this Agreement.
1.2 VIDEONE warrants that the PROJECT shall be of the same high quality and
standards as the other video products produced by VIDEONE and are of a quality
and standard acceptable in the industry and suitable for broadcast, examples of
which have been reviewed by CLIENT and/or its agents. Both parties agree that
the PROJECT will be shot on Betacam SP tape.
1.3 VIDEONE further agrees that CLIENT shall have the opportunity, during the
production of the PROJECT, to be active in its production and to make
recommendations, suggestions, etc. to VIDEONE, including input into the
[ * ] CONFIDENTIAL TREATMENT REQUESTED
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script. CLIENT shall have the right to approve the final script. CLIENT will be
involved with the construction of Addendum E which will contain the final
schedule and budget. CLIENT understands that once Addendum E is approved,
changes to the script may cause changes to the budget and schedule. If such
changes occur due to CLIENT's request or fault, CLIENT shall be responsible for
the increased costs of production. If such changes occur due to any reason other
than CLIENT's fault, then CLIENT and VIDEONE shall negotiate in good faith as
expeditiously as possible regarding an allowance for such costs. VIDEONE agrees
to submit a sample of voice, talent, script and/or outline for CLIENT approval.
1.4 CLIENT is welcome to attend any editing sessions at their own expense. If
they elect not to attend, they will be provided with one (1) proof copy of the
rough and final edits at their request. CLIENT shall give written approval of
the final off-line (rough cut) before VIDEONE will proceed with on-line edit.
VIDEONE will not be held responsible for delays in the production schedule if
written response takes more than 48 hours from presentation of the rough cut.
Any CLIENT Requested changes to the final broadcast master (one-line edit) after
CLIENT's written approval of final off-line (rough cut) resulting in additional
costs shall be the responsibility of CLIENT over and above the production
contract. VIDEONE agrees to obtain and furnish copies upon request to CLIENT
all releases for music, artwork, stock footage, stock photography, on-camera
talent, models and any other copyrighted materials supplied by VIDEONE.
2. DELIVERY OF PROJECT
2.1 Completion shall be defined as the time at which VIDEONE presents
CLIENT the PROJECT in its final and finished form suitable for broadcast but
prior to price testing and insertion of 800 numbers.
3. PAYMENT PART A
3.1 CLIENT agrees to pay VIDEONE the total sum of $83,778.00 (See
Addendum C). It is expressly understood that the above budget includes only Part
A: Informercial Production. It is further understood that the budget for Part B:
Management will be per Addendum D. Actual budget and talent costs will be
itemized on Addendum E to be constructed after an approved script is delivered.
Monies shall be payable as follows:
(a) - $37,500 immediately upon the signing of this agreement.
(b) - $17,500 immediately upon approval of Addendum E as described above.
(c) - $17,500 immediately upon approval of Off-line Edit.
(d) - Balance upon delivery of project as described above.
3.2 VIDEONE agrees to utilize the funds hereunder to pay third party vendors on
a timely basis if the funds are designated for such purpose.
3.3 VIDEONE agrees to pay its share of the production costs on a timely basis
as set out in this Agreement including without limitation, its share of the
costs set out in Addendum E upon its construction. At no time shall VIDEONE
allow any liens or other claims to be placed on or against the PROJECT or CLIENT
as a result of VIDEONE's failure to make timely payments of its share of costs
and the PROJECT shall be delivered to CLIENT free and clear of any and all claim
and liens.
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4. OTHER CONSIDERATIONS
4.1 CLIENT agrees to provide assistance to VIDEONE in the production of
the program by designating a single agent or representative to work with the
company on the production of the product. This person shall be charged by the
CLIENT with using their best efforts to gain access for VIDEONE to written
materials, taped audio and/or video materials, computer-generated graphics,
models and animation, locations, personnel, etc., which may or may not be used
in the final PROJECT, which will enhance the quality of the PROJECT.
4.2 Release of this material may be subject to copyright agreements and may
require additional fees on the part of VIDEONE for their use. CLIENT agrees to
inform and provide funds for any material which is subject to additional fees at
the time of providing same.
4.3 CLIENT agrees to supply the Product(s) that are the subject of the Show in
such quantities and in accordance with such delivery schedules as VIDEONE may
require from time to time during the Term.
5. COPYRIGHT AND OWNERSHIP
5.1 The parties agree that the PROJECT is being undertaken by VIDEONE as a
Work For Hire project and that the PROJECT in its finished and final form,
together with the script, music, titles, graphics and interest in the copyrights
shall be the sole and exclusive property of CLIENT. To the extent that VIDEONE
may have any proprietary or intellectual interest in the PROJECT as a result of
the services contemplated in this Agreement, VIDEONE hereby assigns such right
to CLIENT. CLIENT expressly understands that a "VideOne Marketing, Inc." credit
will appear in all finished versions of the Show(s).
5.2 Any footage PROVIDED by CLIENT is the sole property of CLIENT and is only
made available to VIDEONE for use in the project, except for demonstration
purposes. This footage cannot be sold or reproduced in any other form without
the express consent of and compensation to CLIENT.
5.3 The field tapes will not leave the possession of VIDEONE, however, CLIENT
shall be permitted to request dubs of such tapes on 2 weeks notice for any use
that is not in conflict with the terms of this Agreement. In the event VIDEONE
has provided footage for use in the PROJECT (i.e. footage that has not been paid
for whether by CLIENT or VIDEONE as part of their Obligations pursuant to this
Agreement), VIDEONE hereby grants CLIENT the non-exclusive right to use any or
all of the video footage provided by VIDEONE and dubbed for CLIENT for any non-
commercial purpose CLIENT might deem desirable. Any Commercial, Private
Agencies or Companies that wish to use the VIDEONE footage for broadcast or
other than specified purposes will be able to at reasonable and standard rates
to cover additional releases from models, music or other copyrighted materials.
At the time of the request, VIDEONE will negotiate such fees. All contracts
will be made directly to VIDEONE from CLIENT or its agents.
5.4 VIDEONE shall not insert any footage into the PROJECT that is the subject
of Section 5.3 without CLIENT's prior written consent.
PART B: MANAGEMENT AGREEMENT
1. TERM
1.1 INITIAL TERM. This Agreement shall remain in full force and effect for a
term commencing on the date first herein above mentioned and ending one (1)
year(s) from such date (the "Initial Term").
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1.2 RENEWAL TERM. Upon expiration of the Initial Term or any Renewal Term, as
the case may be, this Agreement shall continue for four (4) successive annual
periods of one (1) year(s) except in regard to the exclusivity provisions in
PART B paragraph 6 hereof which shall be renewable for successive annual periods
provided the conditions set out therein are met (the "Renewal Term") unless
terminated pursuant to Section 2 below. Upon renewal, this Agreement shall
remain in full force and effect during each such Renewal Term.
1.3 TERM. The Initial Term and each Renewal Term(s) are referred to herein as
(the "Term").
2. TERMINATION
2.1 Without regard to the Term set forth in Section I hereof, either party
may terminate this Agreement in whole or in any portion hereof upon forty-five
(45) days written notice thereof to the other party upon the breach by the other
party of any of its representations, warranties, covenants or agreements
contained in this Agreement. Upon the expiration of such notice period, this
Agreement shall terminate (in whole or in part, as the case may be) without the
need for further action by either party; provided, however, that if the breach
upon which such notice of termination is based shall have been fully cured to
the reasonable satisfaction of the non-breaching party within such forty-five
(45) day period, then such notice of termination shall be deemed rescinded, and
this Agreement shall be deemed reinstated and in full force and effect.
2.2 In the event there is no breach, neither party may terminate the Agreement
except pursuant to the notice and conditions set out in this paragraph 2.
Either party upon sixty (60) days' prior written notice may terminate the
Agreement at the end of any Renewal Term as set out in paragraph 1.2 above, if
the Show does not have thirty (30) verified airings or does not generate in the
aggregate $20,000.00 in revenue in the first two (2) years of the Initial Term
and first Renewal Term. Upon such termination VIDEONE shall cease all further
activities regarding the project.
2.3 In the event CLIENT defaults under this Agreement in regard to payment of
its designated share of the costs of the PROJECT, VIDEONE shall have the right
to nevertheless air the Show, subject to the quality controls and other
obligations set out herein, at its expense, and to recoup its costs before any
such production costs are repaid to CLIENT. In such event CLIENT will use its
best efforts to supply VIDEONE with the Products that are the subject of the
Show on no less favorable terms in regard to cost and payment terms as
previously provided VIDEONE or as provided to any third party.
2.4 In the event the Show is prevented from being broadcast as a result of a
ruling by a regulatory body, the parties shall mutually determine as to whether
the Show can be modified at an acceptable additional cost so as to conform to
such regulations. In the event the parties agree to modify the Show, such
additional costs shall be borne in the same ratio as the production costs are
allocated in this Agreement. If one party wishes to pay for such modification
and the other does not, the party paying for such modification shall recover its
costs related to the modification on a preferred basis before recovery of
regular production costs by the non-paying party.
2.5 Upon termination of this Agreement, unless said termination is the result
of VIDEONE's breach, VIDEONE shall have and retain indefinitely the right to its
financial interest for Products that were placed prior to the effective date of
termination, together with the right to its financial interest for all reorders
and/or continuity programs from prior customers, subject to CLIENT's payment of
VIDEONE's share of proceeds as set forth in Addendum B hereof.
3. PRODUCT. The Product is titled "WRINKLE PATCH" (the "Product") and shall
be deemed to include all updates and revisions, but shall not include similar
products that have been distributed under a different name as
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of the effective date of this contract (i.e. Osmotics and/or Spa Sante). VIDEONE
shall have first right of refusal for Direct Response Marketing of all future
products related to the WRINKLE PATCH brand (i.e. full face patches, etc.).
4. RESPONSIBILITIES. Addendum F hereof details the mutual responsibilities of
the parties to this Agreement and their responsibilities for each item necessary
to prepare the Product and to prepare the approximately thirty (30) minute
commercial and all versions thereof, including all shortened spot or other
versions of same (the "Show"), to air the Show and thereafter, to receive,
process and fulfill orders for Product sales. The necessary outsourcing
(telemarketing, fulfillment, etc.) and the Costs associated with that
outsourcing, (minimums, set-up fees, and ongoing expense), will be solely the
responsibility of CLIENT.
5. AIRING OF THE SHOW. VIDEONE shall use its best efforts to acquire, at
CLIENT's expense, broadcast and cable time to air the Show in the most suitable
and desirable time slots. VIDEONE shall consult on a regular basis with CLIENT
regarding the slotting of the Show prior to acquiring such time and shall take
CLIENT's opinions under due consideration in the slotting of the show. In the
event the parties disagree regarding the placement of the Show, they shall
endeavor, in good faith to reach a mutually agreeable broadcast plan.
6. EXCLUSIVITY
6.1 VIDEONE shall the sole and exclusive worldwide (the "Territory") (except for
such territory and for such Term as defined below in section 6.5 as Excluded
Territory), right during the Term to manage the Direct Response marketing and
air the Show.
6.2 VIDEONE shall have the sole and exclusive right in the territory, upon the
terms set out below in paragraph 6.3, to distribute the Products in the
following Direct Response media (a) all forms of Direct Response Television
including 800/900/888 (and similar) telephone numbers; (b) Direct Response Print
media; (c) Outbound telemarketing; (d) Direct Response Package inserts; (e)
Catalogs (See Addendum H); (f) Direct Response Radio; (g) Televised shopping
(see Addendum H); (h) Credit card syndication; (i) Direct mail; (j) Seminars;
and (k) Internet websites.
6.3 (a) The parties shall begin to negotiate in good faith, as expeditiously
as possible but in any event within one hundred eighty (180) days hereafter,
regarding a mutual marketing plan for each of the Direct Response media
categories set out in paragraph 6.2 above which marketing plan shall include
among other things, target dates and schedules for each category; sales
objectives; performance standards that CLIENT and VIDEONE must meet for such
categories; cost allocations between the parties regarding marketing in such
categories and other terms and conditions standard in the industry for each such
category. In the event that the parties are not able to reach agreement on a
mutual marketing plan within sixty (60) days after commencing such good faith
negotiations, then at the request of either party, each party shall submit its
proposed mutual marketing plan to binding arbitration with the Judicial Arbiter
Group, Inc. or, if not available, a mutually acceptable private judicial service
in Denver, Colorado to select within thirty (30) days after commencing
arbitration one of the proposed plans from either CLIENT or VIDEONE on the basis
of commercial reasonableness and industry standards for such Direct Response
media categories. Notwithstanding the foregoing, CLIENT shall have the
exclusive right, in its sole discretion, to determine whether the Products may
be marketed in any of the categories set out above in paragraph 6.2. In the
event CLIENT decides not to market in a category it shall not be permitted
thereafter during the Term of this Agreement to market in such category except
pursuant to the terms of this Agreement.
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6.3 (b) Any such time as either party decides that it wishes to market the
Products in one of the categories set out in paragraph 6.2 pursuant to the
mutual marketing plan therefor, it shall so inform the other party in writing of
its desire to do so. The parties shall negotiate in good faith a separate
definitive mutual marketing agreement consistent with the mutual marketing plan
regarding the marketing of the Products in such category containing any
additional specific terms regarding allocation of costs and other terms standard
and common to the industry as may be required. In the event that the parties
are not able to reach agreement within sixty (60) days thereafter, after good
faith negotiations, either party then desiring to market the Products in such
Direct Response media category may submit its proposed mutual marketing
agreement to binding arbitration with the Judicial Arbiter Group, Inc. or, if
not available, a mutually acceptable private judicial service in Denver,
Colorado which shall enforce or reject such agreement within thirty (30) days
after commencing arbitration on the basis of whether it is within the mutual
marketing plan and commercially reasonable. CLIENT shall be free to seek an
agreement with another marketing partner in any Direct Response media category,
provided such agreement is consistent with the mutual marketing plan and further
provided, prior to execution of any such other marketing agreement by CLIENT,
CLIENT shall inform VIDEONE of the terms therein and VIDEONE shall have thirty
(30) days thereafter within which to exercise a right of first refusal to match
the terms therein. In the event VIDEONE indicates that it does not wish to
undertake the marketing of the Products in such category, CLIENT shall be free
to pursue such other marketing arrangement regarding that the Direct Response
media category and VIDEONE will be considered to have waived and relinquished
its exclusivity regarding such category.
6.4 Retail Sales. It is understood by VIDEONE that CLIENT currently sells and
will in the future sell the PRODUCT through retail and other marketing channels.
It is understood by CLIENT that the Infomercial and/or spots will drive retail
sales. CLIENT agrees to compensate VIDEONE for all retail sales inside the
United States not covered by the exclusivity provisions of this agreement
(below 6.5) in the following manner:
(a) The compensation referred to in this Section 6.4 shall begin after
the Show has 30 verified airings in the United States.
(b) The compensation shall cease at the point in time when the number
of PRODUCT units sold through retail channels equals [ * ] times
the aggregate number of such units sold through Direct Response
Broadcast of the SHOW.
(c) The compensation shall be [ * ] of the Gross Revenue received by
CLIENT from retail sales.
6.5 Excluded Territory.
(a) VIDEONE acknowledges that CLIENT is already in the process of
selling the WRINKLE PATCH, including without limitation in and all
of the following :
(i) Quality Value Channel/AKA QVC's-Q2 Network
(ii) Self-Care Catalogue
(b) CLIENT shall provide current historical data on sales of the
WRINKLE PATCH in these areas within thirty (30) days after the
first airing of the infomercial or spots. VIDEONE shall be paid
the following compensation for sales generated in those areas in
the following manner.
(i) The compensation shall be of the Gross revenue
received by CLIENT over and above the average monthly
historical revenue received in the twelve months preceding
the start date referred to in Section 6.4(a).
6.6 Notwithstanding the Term set out in Part B, paragraph 1, regarding this
Agreement generally, the term of Exclusivity provisions of the paragraph 6 shall
be as follows:
[ * ] CONFIDENTIAL TREATMENT REQUESTED
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(a) Initial Term. The Exclusivity provisions shall remain in full force and
effect for a term commencing on the date of execution of this Agreement
(except for the Retail Sales Start Date as set out on paragraph 6.4(a)
and shall continue for one (1) year from such date.
(b) Renewal Term. Upon expiration of the Initial Term, this Agreement shall
continue for two (2) successive annual periods (the "Renewal Term")
unless terminated earlier pursuant to the terms of this Agreement and
provided VIDEONE meets the performance standards that shall be mutually
agreed to by the parties.
(c) The non-renewal of the Exclusivity provisions herein, unless for breach,
shall not effect the compensation due on retail sales to VIDEONE set out
in paragraph 6.4(a) hereof.
7. PAYMENTS PART B. The compensation due the parties under PART B of this
Agreement shall be as set forth in Addendum B hereof.
8. CUSTOMER NAMES AND INFORMATION. CLIENT shall maintain sole and exclusive
ownership of all information related to customer names and associated data
hereinafter "Customer List." Customer List rental rights shall be the sole and
exclusive right of CLIENT.
9. REPRESENTATIONS/INDEMNITIES
9.1 CLIENT represents that it is the sole and exclusive owner of the Product and
that it has reviewed the Product with adequate legal counsel which counsel has
opinioned that the Product meets all governmental and NIMA standards, all
information respecting the Product is accurate in all material respects, it has
the right to use (including the right to grant VIDEONE the right to use) the
names, likenesses (including, without limitation, photographs, illustrations,
films and videotapes), endorsements, and testimonials of all endorsers and other
persons which may appear in the Show and Product, it has the right to use
(including the right to grant VIDEONE the right to use) any and all trade names,
trademarks, patents, and copyrights associated with the Product, and that it has
no knowledge of any fact or information (including, without limitation, any
agreement with any third party governing any subject matter whatsoever in
connection with the Show and/or Product) which if disclosed to VIDEONE, would
affect VIDEONE's decision to sign this Agreement. CLIENT agrees to indemnify
VIDEONE for any and all costs or liabilities VIDEONE incurs (including
reasonable legal fees) in connection with the Show and Product. CLIENT expressly
acknowledges that VIDEONE has entered into this Agreement in express reliance on
the representations, warranties and covenants made by CLIENT with respect to the
Products. CLIENT further expressly acknowledges that by executing this Agreement
and performing its services hereunder, VIDEONE makes no certification regarding
the effectiveness, quality, character or fitness of any of the Products.
9.2 CLIENT makes no certification regarding the effectiveness of the Product
and VIDEONE is relying solely upon CLIENT's legal review regarding all
representations in the SHOW. VIDEONE agrees to make no representations in the
show or orally or in writing to any party regarding the Product without prior
written approval from CLIENT regarding such representations.
9.3 VIDEONE represents and warrants to CLIENT that it has the authority to
enter into this Agreement and that there is not now any agreement to provide
services which would prevent it from fulfilling its obligations hereunder, and
that during the term of this Agreement, VIDEONE will not enter into an agreement
which would in any way restrict its ability to provide services under this
Agreement.
9.4 VIDEONE and CLIENT agree to mutually defend, indemnify and hold harmless
each other from and against and in respect of any and all losses, damages,
costs, expenses (including reasonable attorneys' fees), of
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deficiencies which are incurred or suffered by, asserted against, or imposed
upon CLIENT to the extent such losses, damages, costs, expenses of deficiencies
shall be attributable to and result from a material breach by VIDEONE or CLIENT
of this Agreement or as a result of its unauthorized representations regarding
the Product.
10. TAXES. Each party shall be responsible for all taxes which are based on
its own net income. All sales, value added, and use taxes arising out of
transactions occurring under this Agreement shall be the responsibility of the
party conducting such transaction and each party hereby indemnifies and holds
the other harmless from any and all claims relating to sales or use taxes
collected or due by the party conducting each of the transactions hereof.
11. REPORTING/AUDITING. At any time within one (1) year after a monthly
payment is made hereunder, each party shall have the right (but not more than
once a quarter) to examine the other party's books and records for the purpose
of determining the accuracy of such statement. Such examination shall be
conducted (i) after each party provides at least ten (10) days prior written
notice of its election to examine books and records, (ii) during the other
party's normal business hours at the place where the party maintains its books
and records, and (iii) at the examining party's sole cost and expense. If it is
mutually determined by CLIENT and VIDEONE that CLIENT has under-paid VIDEONE by
an amount exceeding seven and one-half percent (7-1/2%) of all royalties then
earned by VIDEONE, then CLIENT shall pay the reasonable costs of such
examination (which reasonable cost will not include travel, living and other
personal expenses of examiner). Any determination that CLIENT has under-paid
VIDEONE shall not be deemed a breach of this Agreement unless CLIENT fails to
pay the agreed-upon shortfall within the prescribed time period.
12. INDEPENDENT CONTRACTOR. Neither party nor any of its officers, employees,
agents or representatives is an employee or agent of the other party for any
purpose whatsoever. Rather, each party is and shall at all times remain an
independent contractor. Each party shall have sole control of the manner and
means of performing its obligations under this Agreement. Except as otherwise
specifically provided herein, each party shall be responsible for expenses and
disbursements which it incurs in connection with this Agreement. Neither party
has, nor shall it hold itself out as having, any right, power or authority to
create any contract or obligation either express or implied, on behalf of, in
the name of, or binding upon the other party, unless specifically provided
herein or the other party shall consent thereto in writing. Each party shall
have the right to appoint and shall be solely responsible for its own sales
people, employees, agents and representatives, who shall be at such party's own
risk expense and supervision and shall not have any claim against the other
party for compensation or reimbursement.
13. TRADEMARKS/COPYRIGHTS. The parties hereto acknowledge that Client has
secured and shall maintain sole ownership of the trademark, copyright, and
patent(s) now existing or hereafter acquired in and to the Product.
14. INSURANCE. Prior to any airing or Direct Response offer, Client shall be
required to maintain comprehensive and general liability insurance, including
products and professional liability insurance, customarily maintained by
manufacturers similarly situated with a policy limit of not less than one
million dollars ($1,000,000.00) per occurrence and one million dollars
($1,000,000.00) in the aggregate. The parties agree that (i) the deductible on
any insurance policy acquired hereunder shall not exceed ten thousand dollars
($10,000.00), (ii) both parties shall be named as an additional insured on the
applicable insurance policies, (iii) the insurance policies shall be endorsed to
provide no less than ten (10) days notice if any insurance benefit decreases,
(iv) the insurance policies shall be in effect no later than ten (10) days prior
to the initial Product test marketing date (as determined by VIDEONE) and (v)
all insurance shall have no less than an "A" rating (or equivalent thereof) in
the
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Best Guide.
15. MISCELLANEOUS.
A. Headings: Headings are used for convenience and are not to be
interpreted as part of this Agreement.
B. Governing Law: This Agreement shall be governed by and interpreted
in accordance with the laws of the State of Colorado. In the event of
any dispute under or relating to the terms of this Agreement or any
breach thereof, the same shall be settled by any court in the county of
Arapahoe having competent jurisdiction, and judgment upon any award
rendered may be entered in any court in the county of Denver having
jurisdiction thereof.
C. Severability: In the event any provision of this Agreement is held
to be unenforceable or contrary to law then the Agreement shall be
interpreted, to the extent possible, without such provision.
D. Notice: Any notice required by or provided pursuant to this
Agreement shall be given in writing by means of registered mail via the
U.S. Postal Service or any professional delivery service that requires
a signed, written receipt confirming delivery of the envelope or
package containing the notice. The notice shall be addressed to the
person signing this Agreement at the address, or such other address as
shall be provided by notice.
E. Further Action: The parties agree to execute such additional
documents and to perform all such other further acts as may be
necessary or desirable to carry out the purposes and intents of this
Agreement.
F. No Amendment: No amendment, modification, change or waiver of this
Agreement or any provision hereof shall be valid, unless in writing and
signed by all of the parties hereto.
G. No Waiver: No waiver by any party hereto of any breach of this
Agreement or any of its provisions shall be deemed to constitute a
waiver of any preceding or succeeding breach of the same or any other
provision hereof.
H. Entire Agreement: This Agreement constitutes the entire
understanding and agreements of the parties with respect to its subject
matter and any and all prior and contemporaneous agreements,
representations with respect to its subject matter are hereby
terminated and canceled in their entirety and are of no further force
and effect. This Agreement may be executed in one or more counter
parts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
I. Binding Terms: All of the terms and provisions contained herein
shall inure to the benefit of and shall be binding upon the parties
hereto and their respective heirs, legal representatives, successors,
and permitted assigns.
J. Approvals: Any request for approval required hereunder shall be
submitted to CLIENT. If CLIENT does not respond in writing or by
telephone with approval or disapproval within two (2) business days
from the date of CLIENT's receipt of VIDEONE's request therefore, then
CLIENT shall be deemed to have disapproved such request and VIDEONE
will be permitted
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to modify any previously agreed to schedules under this contract and
its addendum's to take into account the delay. Any approvals requested
hereunder shall not be unreasonably withheld by CLIENT.
K. Counterparts: This Agreement be executed in one or more
counterparts, each of which shall be deemed to be an original, and all
of which together shall constitute one and the same Agreement. This
Agreement may be executed and delivered via electronic facsimile
transmission with the same force and effect as if it were executed and
delivered by the parties simultaneously in the presence of one another.
L. Interpretation and Construction: This Agreement has been fully and
freely negotiated by all of the parties hereto, shall be considered as
having been drafted jointly by all of the parties hereto and shall not
be interpreted or construed against VIDEONE on account of its
participation in the drafting hereof or otherwise.
/s/ XXXXXXX X. XXXXXXXXX, XX.
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VideOne Marketing, Inc., a Colorado Corporation
00 Xxxxxxxxx Xxxxx Xxxx, Xxxxx X
Xxxxxxxxx, XX 00000
BY: Xxxxxxx X. Xxxxxxxxx, Xx.
President & CEO
/s/ XXXXXXX X. XXXXXX
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Osmotics Corp., a Colorado Corporation
0000 Xxxxx Xxxxxx, Xxxxx 000
Xxxxxx, XX 00000
BY: Xxxxxxx X. Xxxxxx
V.P. Operations
10
ADDENDUM A
WEEK #1 PRODUCTION
WRITER/RESEARCH
SET DESIGN FOR BEFORE PICTURES
CASTING MODELS
CONCEPT MEETINGS
STILL PHOTOGRAPHER
ADMINISTRATION
BANKING/CREDIT CARDS
FULFILLMENT
LEGAL
WEEK #2 PRODUCTION
SHOOT BEFORE PICTURES
WRITER/RESEARCH/SCRIPT OUTLINE
SET DESIGN FOR SHOOT
TRAVEL ARRANGEMENTS
HOST CASTING
BUDGETING
ADMINISTRATION
BANKING
FULFILLMENT
LEGAL
TELEMARKETING
WEEK #3 PRODUCTION
SCRIPT DRAFT
HOST CASTING
ANIMATION
LOGO DESIGN
SCHEDULING
SHOOT TESTIMONIALS
SET BUILDING
ADMINISTRATION
TELEMARKETING/SCRIPTS
OFFER/UP SELL/GIVE AWAY/CONTINUITY PLAN
ACCOUNTING SET UP
MEDIA PLANS
Page 1
ADDENDUM A
WEEK #4 PRODUCTION
SCRIPT FINAL
CREATE ADDENDUM E
SCHEDULING/FINAL
BUDGET/FINAL
ANIMATION
SHOOT FACTORY/INVENTOR
PROPS AND ARTWORK
SET BUILDING
ADMINISTRATION
MEDIA APPROVAL
WEEK #5 PRODUCTION
SHOOT AFTERS
SCRIPT REWRITE
SCHEDULING/DECISION
TITLE DESIGN
SHOOT PRODUCT
LOCATION FINAL
ADMINISTRATION
MEDIA APPROVAL
PRESS RELEASE
FINAL TELEMARKETING AND FULFILLMENT
SHIP INVENTORY
WEEK #6 PRODUCTION
SHOOT SHOW
RECORD SCRATCH VO
LOG TAPES
TITLE DESIGN
ADMINISTRATION
PROJECT ACCOUNTING
WEEK #7 PRODUCTION
EDIT 2 MINUTE SPOT
OFF LINE SHOW
EFFECTS DESIGN
800 NUMBERS FOR 2 MINUTE
SHIP BROADCAST DUBS
Page 2
ADDEMDUM A
ADMINISTRATION
MANAGE TWO MINUTE MEDIA
MANAGE TELEMARKETING
MARKET TEST SPOT
OUTBOUND TELE-RESEARCH FOR TWO MINUTE SPOT
WEEK #8 PRODUCTION
RE-EDIT 2 MINUTE SPOT
OFF LINE SHOW/FIRST DRAFT
MUSIC
800 NUMBERS FOR 2 MINUTE
SHIP BROADCAST DUBS
ADMINISTRATION
MANAGE TWO MINUTE MEDIA
MANAGE TELEMARKETING
MARKET TEST SPOT
OUTBOUND TELE-RESEARCH FOR TWO MINUTE SPOT
WEEK #9 PRODUCTION
RE-EDIT OFF LINE
FINAL VO RECORDING
MUSIC
800 NUMBERS FOR 2 MINUTE
SHIP BROADCAST DUBS
ADMINISTRATION
FINALIZE HALF HOUR MEDIA
MANAGE TWO MINUTE MEDIA
MANAGE TELEMARKETING
MARKET TEST OFF LINE
OUTBOUND TELE-RESEARCH FOR TWO MINUTE SPOT
WEEK #10 PRODUCTION
ON LINE
800 NUMBERS FOR 1/2 HOUR
SHIP BROADCAST DUBS
ADMINISTRATION
MANAGE 1/2 HOUR MEDIA
MANAGE TWO MINUTE MEDIA
MANAGE TELEMARKETING
MARKET TEST ON LINE
Page 3
ADDENDUM A
WEEK #11 PRODUCTION
RE-EDIT ON LINE/PRICE TEST
800 NUMBERS FOR 1/2 HOUR
SHIP BROADCAST DUBS
ADMINISTRATION
RE-EDIT TELEMARKETING SCREENS
MANAGE 1/2 HOUR MEDIA
MANAGE TWO MINUTE MEDIA
MANAGE TELEMARKETING
MARKET TEST ON LINE
OUTBOUND TELE-RESEARCH FOR 1/2 HOUR
WEEK #12 PRODUCTION
EDIT 60 & 30 SECOND
800 NUMBERS FOR 60 & 30 SECOND
800 NUMBERS FOR 1/2 HOUR
SHIP BROADCAST DUBS
ADMINISTRATION
MANAGE 1/2 HOUR MEDIA
MANAGE TWO MINUTE MEDIA
MANAGE TELEMARKETING
OUTBOUND TELE-RESEARCH FOR 1/2 HOUR
SET-UP ROLL OUT
Page 4
ADDENDUM B
1. CLIENT shall pay VIDEONE $15,120.00 (see Addendum D) for the first 12 weeks
of Administrative costs, thereafter CLIENT shall pay VIDEONE [ ] of gross
sales, as that term is defined hereunder, arising from all Product sales through
the media described in Section 6 hereof for the services of ongoing management
of the infomercial and future markets including all bookkeeping, but not tax
accounting.
The $15,120.00 shall be payable as follows:
$4,000.00 Due upon signing of this Agreement
$4,000.00 Due Four (4) Weeks after signing this Agreement
$4,000.00 Due Eight (8) Weeks after signing this Agreement
$3,120.00 Due Twelve (12) Weeks after signing this Agreement
[ * ] Of gross sales paid Monthly thereafter
2. CLIENT shall pay VIDEONE [ * ] of Adjusted Gross Sales, as that term is
defined hereunder, arising from all Product sales through the media as described
in Section 6 hereof, and reorders from same as described in Part B Section 6
hereof. This profit interest is in consideration for the contributed production
services as described in attached Addendum C due and payable quarterly.
3. In the event that CLIENT's merchant accounts are tied to an escrow account
the payments to VIDEONE shall be included in the instructions to the escrow
agent.
4. CLIENT shall collect, or cause to be collected, all proceeds of sales
of the Products. CLIENT shall transmit a statement, accompanied by payment of
VIDEONE's share of proceeds and management fees due to VIDEONE every thirty (30)
days.
5. DEFINITIONS.
(a) "Gross Sales" as that term is used herein, shall mean CLIENT's gross income
from Direct Response customers, including shipping and handling fees paid by the
customer less actual cost of Shipping & Handling.
(b) "Adjusted Gross Sales" shall be defined as the profit remaining after
"fixed costs".
(c) "Fixed Costs" are due upon CLIENT's receipt of invoice from VIDEONE and/or
outside Vendors the actual direct cost of:
1. Product purchasing/manufacturing costs including Insurance premiums
paid by CLIENT for public and general liability insurance and errors
and omissions insurance to the extent they are paid for coverage of
the Show and/or the Product.
2. Media/advertising, including a fifteen percent (15%) television
media buying commission.
3. Dubbing, trafficking and similar costs. (see Addendum D)
4. Credit card discount. (see Addendum D)
5. Inbound telemarketing/custom service. (see Addendum D)
6. Shipping, handling (fulfillment) and freight costs. (see
Addendum D)
7. Bad debt and returns.
8. Damaged goods.
9. Management Fees paid directly to VideOne Marketing, Inc.
(See #1 above)
10. Returns
[ * ] CONFIDENTIAL TREATMENT REQUESTED
(d) "Direct Response Customers" shall mean any purchaser of any CLIENT product
whose initial contact was made as a result of a VIDEONE managed Direct Response
Vehicle of any kind.
6. PROJECT ACCOUNTING. VIDEONE shall keep and maintain a separate and distinct
accounting record for all costs associated with VIDEONE's activities under this
Agreement. CLIENT shall maintain a checking account in a manner consistent with
the costs which VIDEONE incurs in connection with the marketing and distribution
of the Show and Product, and in no event shall CLIENT allow said checking
account to fall short of such liabilities. CLIENT expressly acknowledges that
VIDEONE shall be paid the management fee set out above (Addendum B) associated
with VIDEONE's activities under this Agreement prior of CLIENT's share of
proceeds.
ADDENDUM C
THE WRINKLE PATCH
ESTIMATE OF EXPENSES PRIOR TO FINAL SCRIPT & CASTING
PRODUCTION AMOUNT UNITS RATE TOTAL
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WRITER/RESEARCH 2 WKS 1500 3000
RE-WRITE 1 WKS 1500 1500
PRODUCER/PREP 2 WKS 1650 3300
PRODUCER/SHOOT 2 DAY 500 1000
PRODUCER/SHOOT 10 1/2 DAY 300 3000
DIRECTOR/PREP 2 WKS 1750 3500
DIRECTOR/SHOOT 2 DAY 750 1500
DIRECTOR/SHOOT 10 1/2 DAY 400 4000
STILL PHOTOGRAPHY 4 1/2 DAY 600 2400
CAMERA CREW 10 1/2 DAY 850 8500
STUDIO SHOOT 2 DAY 1900 3800
TEST/MODELS 10 ALLOW 500 5000
HOST (2) 4 DAY 1200 4800
SET & DESIGN 1 ALLOW 3500 3500
PROPS 1 ALLOW 750 750
FLOWERS 1 ALLOW 500 500
CATERING 1 ALLOW 750 750
PROD. ASSISTANT 2 WKS 850 1700
PROD. ASSISTANT 1 WKS 850 850
HAIR AND MAKE-UP 2 DAY 350 700
PROD. ASSISTANT/SHOOT 12 DAY 200 2400
TRAVEL EXPENSES 1 ALLOW 5000 5000
LOCATION EXPENSES 6 ALLOW 350 2100
TAPE STOCK 30 30M 30 900
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TOTAL PRODUCTION 64,450
Page 1
ADDENDUM C
POST-PRODUCTION AMOUNT UNITS RATE TOTAL
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POST PROD SUPERVISOR 3 WKS 1500 4500
EDIT - LOG 45 HRS 75 3375
EDIT - OFFLINE - EFFECTS 60 HRS 120 7200
EDIT - OFFLINE - ANIMATION 120 HRS 110 13200
DIRECTOR/EDIT OFFLINE 120 HRS 120 14400
EDIT - ONLINE 60 HRS 150 9000
ADDITIONAL ONLINE LABOR 60 HRS 35 2100
SCRATCH VO 1 ALLOW 300 300
ONLINE VO 1 ALLOW 700 700
RECORDING SESSIONS 1 ALLOW 350 350
TITLES AND GRAPHICS 1 ALLOW 3000 3000
ANIMATION 1 ALLOW 5500 5500
3-D LOGO AND TITLE 1 ALLOW 1750 1750
MUSIC BED 1 ALLOW 650 650
VHS DUBS AND SHIPPING 100 T-30 6 600
SHIPPING 12 WKS 100 1200
LEGAL 1 ALLOW 1500 1500
ACCOUNTING 12 WKS 000 0000
PHONE/OFFICE EXPENSES 12 WKS 250 3000
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TOTAL POST-PRODUCTION 77,125
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SUB-TOTAL ALL PRODUCTION 141,575
PRODUCTION FEE (10%) 14,158
INSURANCE (3%) 4,247
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TOTAL COST $159,980
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VIDEONE MARKETING, INC. CONSIDERATION 50% OF BUDGET $ 79,990
AMOUNT DUE VIDEONE MARKETING, INC. FROM SPA-SANTE $ 79,900
COMMERCIALS: 120, 60 & 30
AMOUNT UNITS RATE TOTAL
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WRITER 2 DAY 500 1000
ON-LINE 3 DAY 1500 4500
VO-TALENT 1 ALLOW 200 200
VO RECORD 1 ALLOW 180 180
TITLES AND GRAPHICS 1 ALLOW 750 750
TAPE STOCK 3 5M 25 75
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SUB-TOTAL 6705
PRODUCTION FEE (10%) 671
INSURANCE (3%) 201
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TOTAL COST $ 7,577
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VIDEONE MARKETING, INC. CONSIDERATION 50% OF BUDGET $ 3,788
AMOUNT DUE VIDEONE MARKETING, INC. FROM SPA-SANTE $ 3,788
TOTAL DUE VIDEONE MARKETING, INC. FOR PRODUCTION $ 83,778
Page 2
ADDENDUM D
INFOMERCIAL TRAFFICING (TEST-INFOMERCIAL)
AMOUNT UNITS RATE TOTAL
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800 NUMBERS 25 #'S 180 4500
PRICE CHANGE 1 ALLOW 240 240
BROADCAST 3/4" 50 ALLOW 78.5 3925
BROADCAST 1" 20 ALLOW 107.5 2150
BETA CAM 10 ALLOW 89.5 895
SHIPPING (FED/EX) 80 ALLOW 20 1600
SHIPPING (COUNTER) 5 ALLOW 65 325
VHS DUBS 120 TAPES 2 240
ADDITIONAL TRAFFICING 110 ALLOW 10 1100
MESSENGER 10 ALLOW 20 200
TOTAL 15,175
PRODUCTION FEE (10%) 1,518
INSURANCE (3%) 455
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TOTAL COST $ 17,148
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DISCOUNT 10% $ 1,715
TOTAL DUE $ 15,433
INFOMERCIAL TRAFFICING (COMMERCIAL)
AMOUNT UNITS RATE TOTAL
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800'S 15 #'S 60 900
BROADCAST 3/4" 30 ALLOW 48.5 1455
BROADCAST 1" 10 ALLOW 77.5 775
BETA CAM 5 ALLOW 69.5 347.5
SHIPPING (FED/EX) 45 ALLOW 20 900
SHIPPING (COUNTER) 3 ALLOW 65 195
VHS DUBS 80 TAPES 2 160
ADDITIONAL TRAFFICING 66 ALLOW 10 660
MESSENGER 6 ALLOW 20 120
TOTAL 5,512.5
PRODUCTION FEE (10%) 551
INSURANCE (3%) 165
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TOTAL COST $ 6,229
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DISCOUNT 10% $ 623
TOTAL DUE $ 5,606
Page 1
ADDENDUM D
FULFILLMENT, TELEMARKETING, BANKING, ACCOUNTING,
ADMINISTRATION SET-UP THROUGH TESTING (SEE LIST)
AMOUNT UNITS RATE TOTAL
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XXXXX LOVE 12 WKS 900 10800
ACCOUNTING/BANKING 12 WKS 500 6000
TOTAL $ 16,800
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DISCOUNT 10% $ 1,680
TOTAL DUE $ 15,120
OUTSIDE FEES - BEYOND THE CONTROL OF VIDEONE MARKETING, INC. FOR ILLUSTRATION
PURPOSES ONLY
TELEMARKETING
AMOUNT UNITS RATE TOTAL
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SET-UP 1 ALLOW 750 750
SECURITY DEPOSIT 1 ALLOW 750 750
PROGRAMMING 1 ALLOW 320 320
MONTHLY MINIMUMS 2 MTHS 500 1000
TOTAL $ 2,820
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FULFILLMENT
SET-UP (CONTINUITY) 1 ALLOW 2300 2300
POSTAGE DEPOSIT 1 ALLOW 10000 10000
PROGRAMMING 1 ALLOW 320 320
SHIPPING TO FULFILLMENT 1 ALLOW 2000 2000
MONTHLY MINIMUMS 2 MTHS 500 1000
TOTAL $ 15,620
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PER KIT EXPENSES BASED ON 9000 UNITS (SUBJECT TO QUOTE)
TELEMARKETING 9000 UNITS 2.84 25560
FULFILLMENT 9000 UNITS 2.10 18900
SHIPPING 9000 UNITS 3.00 27000
CREDIT CARD 9000 UNITS 1.50 13500
INVENTORY 9000 UNITS 5.00 45000
SHIPPING BOXES 9000 UNITS 0.50 4500
TOTAL $134,460
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Page 2
ADDENDUM F
1. RESPONSIBILITIES OF EACH PARTY
VIDEONE CLIENT ITEM
X Receive and process mail orders.
X Obtain direct response phone numbers.
X Sales tax collection and filings.
X Provide answering service scripts and
manage answering service(s).
X Write and produce the Show.
X Customize the show with direct response
phone numbers, addresses and, if
applicable, sales tax and shipping message
integrated into commercials.
X Perform as host or similar role, or
acquire services of host or similar role.
X Duplicate sub-masters for stations.
X Traffic tapes to stations.
X Provide order processing functions
including receipt of orders from answering
services, credit card authorization and
deposit, refund processing and the like.
X Provide order fulfillment for the Product
and the Upsell for all Product sales.
X Product development.
X Customer Service Function for the Product
and Upsell.
X Product usage.
X Shipping and/or manufacturing problems.
X Refund requests.
X Process returns.
X Answering service referrals.
X Inventory purchasing and maintenance of
all Product parts.
