EXHIBIT 10.07
LICENSE AGREEMENT
THIS LICENSE AGREEMENT, made and entered into this 10th day of October
1997 by and between Spalding Sports Worldwide, a division of Spalding & Evenflo
Companies Inc., a corporation organized and existing under the laws of the State
of Delaware, and having its principal place of business at 601 South Harbour
Island, Blvd., Suite 200, Tampa, Florida 33602-3141 (hereinafter refer-red to as
"Spalding") and Dynamic International Ltd., a corporation organized and existing
under the laws of Nevada, and having its principal place of business at 58
Second Avenue, Brooklyn, New York 11215 (hereinafter referred to as "Company").
Section 1. 1: Articles
The term "Articles" shall mean the following items bearing or used in
conjunction with the Trademark: Conventional hand held exercise products. The
Spalding product line must adhere to the product principles in Exhibit A.
Section 1.2: Territory
The term "Territory" shall mean: United States and all its possessions
and all U.S. military posts worldwide.
Section 1.3: Trademark
The term "Trademark" shall mean the trademark Spalding as represented
in the attached Exhibit B: Use: of Trademark shall be only as permitted in the
most current Spalding Identity Manual.
Section 1.4: Net Sales Price
As used herein, the term "Net Sales Price" shall mean the invoice price
charged for Articles sold and shipped by Company to the retail trade, less
allowances, co-op advertising, freight out to customers not billed back by
Company, returns, quantity discounts, trade and cash discounts, and taxes;
provided, however, that in the case of Articles sold by Company to any other
individual, corporation, partnership or association which in the opinion of
Spalding is so closely allied to Company as to prevent arms length bargaining,
the Net Sales Price shall be deemed to be the Net Sales Price charged by Company
for similar articles sold in the same period to similar customers not so closely
allied, If there are no such other sales, then the Net Sales Price shall be the
Net Sales Price of such related customers of Company to its customers. In
computing Net Sales, no direct or indirect expenses or costs incurred in
manufacturing, selling, distributing, or advertising Articles shall be deducted
except as noted above, nor shall any deduction be made for uncollected accounts.
Section 1.5: Effective Date
The term "Effective Date" of this Agreement shall be October 1, 1997.
Section 2. 1: Grant
Spalding hereby grants to Company the exclusive right and license to
utilize the Trademark solely upon and in conjunction with the sale and
distribution of Articles in the Territory, subject however to the restrictions
and conditions hereinafter set forth. Spalding maintains the right to separately
market a unique sport specific hand held exercise product in authentic sports
channels. Spalding hereby gives Company the Right of First Refusal (the "Right")
in the event Spalding anticipates entering into a third party agreement for the
license of such goods. Upon receipt of such third party offer or proposal,
Spalding shall promptly notify Company and provide Company with a copy of any
written proposal or memoranda regarding the proposed offer. To exercise the
I;Light, Company must then reply within ten (10) days of its receipt of such
notice and agree to compensate Spalding for the license of the goods in an
amount at least equal to the terms proposed by the third party. Failure to
exercise the Right within ten (10) days of receipt of the notification, shall
release Spalding from any further duty to Company under this Section. Nothing
contained in this Section shall result in the imposition or creation of any
liability or constitute a breach hereunder in the event Spalding inadvertently
fails to provide Company with such notification. Company acknowledges Spalding's
exclusive rights in the Trademark and agrees that it will use the same only so
long as and only in the manner authorized by this Agreement. The license granted
herein does not include the right to sublicense the use of the trademark.
Company shall be permitted to have the Articles manufactured solely for
it by a third party upon the prior written approval of Spalding, provided and
upon the express condition that prior to the commencement of such manufacture,
said third party shall duly execute and deliver to Spalding a letter in form and
content as attached hereto as Exhibit C. Company agrees that the utilization of
such a manufacturer shall not in any way reduce its obligations to Spalding
under this Agreement, including but not limited to the quality control and
trademark notice provisions of this Agreement. Any default by said manufacturer
of said letter or the obligations referenced therein shall constitute of this
Agreement by Company.
Section 3. 1: Term
The Term of this Agreement shall be from the Effective Date to September
30, 1999. Company shall have the option of renewing this Agreement for an
additional two year period upon Spalding earning and receiving on Company's
actual net sales the minimum royalties as set forth in Exhibit D for the year
ended September 30, 1999 and further provided that as of July 31, 1999, Spalding
has earned and received on Company's actual net sales seventy-five percent (75%)
of the above referenced minimum to royalties for the year ended September 30,
1999, provided this' agreement has not been terminated in accordance with its
provisions.
In the event Company exercises its right to renew this Agreement
pursuant to the above, Company must so notify Spalding in writing at least
ninety (90) days prior to the date of expiration of this Agreement.
Section 4. 1: Royalties Payable by Company
For the rights granted to Company hereunder, Company shall pay Spalding
a royalty upon all shipments of all Articles. The rate of royalty shall be in
accordance with Exhibit D and levied on the Net Sales Price of said Articles.
Royalty payments due from Company shall be determined on a quarterly
basis, commencing on the Effective Date. Such royalties will be paid by Company
within twenty-five (25) days following the end of each quarter on all Articles
sold and shipped by Company during said quarter, in accordance with Exhibit E,
accompanied by a complete written report in form and content as shall be
specified by Spalding from time to time.
On September 15 of each contractual year, Company shall pre-pay to
Spalding an estimate of the' royalties that Company reasonably expects to be due
for July/September shipments. The following October 25 Company will report to
Spalding its actual earned royalties during the July/September period and if
actual royalties due Spalding are greater than the estimated amount paid to
Spalding on September 15, then Company will pay the difference to Spalding with
its October 25 statement. If the estimate. was greater than actual royalties,
Spalding will credit the difference to the following quarterly royalties due it.
All royalty payments to be made hereunder by Company shall be paid to
Spalding in United States dollars into an account as and where designated by
Spalding from time to time.
All royalty payments shall be paid without any deduction, set-off or
counterclaim whatsoever. The termination of this Agreement shall not discharge
or release Company from liabilities and responsibility accruing prior to such
termination, including, but not limited to, the payment of royalties in
accordance with this Agreement. Nothing in this Section shall prejudice the
rights of action or remedies which Spalding might otherwise have in connection
with the enforcement or breach of this Agreement.
Section 4.2: Minimum Royalty
Company agrees to pay Spalding a nonrefundable minimum royalty in accordance
with the schedule of Exhibit D.
Commencing on the effective date of this Agreement, and on or before the
25th day of the first month of each quarter of each year (October 25, January
25, April 25, July 25) Company shall pay Spalding twenty five percent (25%) of
the total annual minimum royalty. However if during the course of a particular
year Company's total royalty payments to Spalding (earned and minimum royalties)
exceed the total minimum royalty for that year, then only earned royalties shall
be paid to Spalding by Company during the balance of that year (see Exhibit E).
If the shipments in any specified one-year period are not sufficient to
provide royalties equal to the minimum royalty, credit for the excess of the
minimum royalty over the actual earned royalty shall not be carried forward into
the next period.
Section 4.3: Royalty-Records And Audits
Company shall keep full and accurate records showing the number, Net Sales
Price, and date of
shipment or other transfer of all Articles shipped or otherwise transferred by
Company.
With each royalty payment, Company shall furnish Spalding a report signed by
a responsible official of Company showing the number and Net Sales of Articles
first shipped during the period covered by the report, and such other
information and detail as shall be requested by Spalding from time to time.
Company shall make its records available for inspection, at reasonable
intervals, upon written request, at Company's place of business during normal
business hours, and on a confidential basis, by Delaitte & Touche, or other
certified public accountant appointed by Spalding or a Spalding financial
employee and at Spaiding's sole expense except as qualified below, who shall
certify to Spalding their opinion of the amount of royalties due for the period
examined, gross and net sales (including itemized deductions), promotional
spending (measured media, point-of-sale, free goods, promotions), reduced margin
goods and current inventory levels.
The findings and ' opinion of said certified public accountant shall be
conclusively binding upon the Company., If the audit shows an underreporting or
under-payment of more than five (50%) percent of royalties for any year, then
the Company shall reimburse Spalding for the cost of the audit.- Such remedy
shall be in addition to Spalding's other remedies under this Agreement,
including termination.
Any adjustments requiring additional payments to Spalding as a result of the
audits will accrue interest from the date originally due at one and one-half
percent (1-1/2%) per month or the highest lawful rate, whichever is lower.
Section 5. 1: Company Relationships
Company represents and warrants that it will not enter into any other
license or distribution arrangement with the major sports brands listed below in
the Territory competitive with the Articles.
Company also represents and warrants that it will not enter or establish a
business directly competitive with Spalding's core businesses (golf, team
sports, or court sports) without prior written consent of Spalding during the
term of this Agreement or during the one-year period subsequent to any
termination of this Agreement.
- Wilson - Prince - Nike
- Rawlings - Dunlop - Reebok
- MacGregor - Titleist
Section 5.2: Diligence
If in any one-year period during the original term of this Agreement, or in
any renewal period, Spalding does not earn and receive royalties on Company's
sale of Articles equal to the minimum royalties as set forth in Exhibit D, then
Spalding, at its sole discretion, may terminate this Agreement upon notice given
to Company, notwithstanding anything contained in this Agreement to the
contrary.
Company will exercise all possible efforts to exploit and to promote, at its
own expense, the sale and the use of all Articles in the Territory, and to sell
the same as widely as possible and at the best price obtainable. Company will
continuously offer for sale all Articles and distribute to promptly meet orders
for all Articles.
Section 5.3: Marketing Plan
No later than ninety (90) days after the Effective Date of this Agreement,
and no later than ninety (90) days prior to each annual anniversary of this
Agreement, the Company will provide Spalding in accordance with Section 8-3 a
written marketing plan and program for Company's activities with respect to each
category of Articles in the Territory for the coming year in form, content,
detail and substance acceptable to Spalding's sole discretion per the attached
Exhibit "F". Spalding shall notify Company in writing of its approval or
disapproval of said marketing plan within 14 days of its receipt and such
approval shall not be unreasonably withheld. But in the event of said
disapproval, Spalding shall have the right to terminate this Agreement for any
or all Articles and for any or all countries in the Territory upon the giving of
written notice to Company, notwithstanding anything contained in this Agreement
to the contrary unless the plan is modified by Company to cure the reason(s) for
disapproval within 30 days of receipt of Spalding's disapproval. Spalding may,
in its sole discretion, require as a part of said marketing plan and program
that Company, at its sole cost, appoint and continuously maintain one or more of
its executives acceptable to Spalding for the sole or primary purpose of
assuring Company's establishment of, and compliance with, said marketing plan
and program. Company shall diligently use its best efforts to comply with the
provisions of said approved marketing plan and program. Company agrees to attend
Spalding licensing meetings which will be held no more than four times a year.
Section 5.4.- Customer Service
Company acknowledges that the reputation and success of Spalding and the
Trademark are dependent on the excellence in levels of customer service.
Therefore, Company agrees to use best efforts to continuously provide customer
service on Spalding branded business at a high level of quality commensurate
with the excellence normally expected from a well-known, national brand company:
including, but not limited to, the following:
1. Adequate levels of inventory to satisfy customer needs by consistently
shipping orders at a minimum of eighty percent (80%) complete;
2. Timely schedules of shipment against customer requests by consistently
shipping ninety percent
(901/o) of customer orders within twenty (20) days of the due date; if the
order was placed within lead times.
3. A customer service representative whose principal function is to handle
Spalding customer inquiries and who will consistently answer a minimum of
ninety percent (90%) of customer/consumer inquiries within five (5)
working days of receipt-,
4. An 800 number for customer use.
Section 6. 1 - Licensed Articles Approval
Company shall promptly submit to Spalding's representative first run
specimens of each Article on which the Trademark is used, together with written
specifications for each article in a form satisfactory to Spalding, and a
written request for approval of the specimen and specifications. Thereafter, at
Spalding's request, Company shall submit to Spalding for quality examination two
(2) samples of each of the Articles which are currently being marketed under the
Trademark. Company shall at the same time provide Spalding with results of
quality control testing against specifications in a form satisfactory to
Spalding. Further, at all times, Company's inventory shall be available to
Spalding for random quality control sampling with twenty-four (24) hours'
notice. Within fifteen (15) days after the receipt of the specimens and
specifications or samples, as the case may be, Spalding shall notify Company of
its approval or disapproval thereof, which approval shall not be unreasonably
withheld. The production runs of each of such approved Articles shall be in
accordance with agreed-upon production specifications. Any substantial or
continuing unrectified breach of the quality control provision of this Section
shall be grounds for termination.
Section 6.2: Advertising. Packaging and Labeling
The Company shall submit in writing to Spalding or its authorized
representative for its approval all advertising and packaging and other material
prepared by or for it, during conceptual stages before the same is used,
circulated or displayed. In the event that Spalding does not notify Company in
writing of its disapproval within fifteen (15) days of said submission, such
material shall be deemed to have been approved by Spalding. The foregoing
procedure shall also govern th@ approval of advertising, packaging, promotional
and other graphic material to be utilized in customer cooperative advertising.
Upon approval by Spalding, Company shall be free to utilize such material in its
approved form for the lesser of one (I ) year, or the termination of this
Agreement for any reason. Company shah be solely responsible for monitoring and
maintaining its customers' compliance with the approved material. In this
regard, Company shall submit to Spalding upon request suitable proof (i.e.,
"tear sheets") that said cooperative advertising material is being properly
utilized.
Should the Company grant to a third party permission to publish or air the
Trademark, Company shall be responsible for ensuring compliance with the
aforementioned conditions.
Company further agrees to furnish upon a reasonable request by Spalding,
samples of the Articles for use in any Spalding advertising or any other
Spalding, distributor or licensee advertising, promotion, and presentation at no
cost to Spalding for such purpose.
Company shall annually expend to unrelated third par-ties two percent (2%)
of the Net Sales
Price upon which royalties are based for advertising displays, promotional
material, and other advertising and co-op advertising of the Articles approved
by Spalding from time to time in writing. Company shall submit proof of such
expenditures as requested by Spalding.
In addition, Company shall pay to Spalding one-half (1/2%) percent on the
net sales of Articles for the promotion of the Spalding brand. Funds are to be
used for a Spalding Corporate Campaign developed and executed solely by
Spalding, however, input for the Campaign will be gathered from licensees and
reasonable attempts will be made to include licensee's products. Payments will
be made as per Exhibit "E".
Section 6.3: Registration and Protection of Trademark
Except as other-wise agreed in writing, in no event shall Company deviate
in any manner in its use of the Trademark from the form of the Trademark set
forth in the attached Exhibit B.
Company agrees to cooperate fully and in good faith with Spalding for the
purpose of securing and preserving Spalding's right(s) in and to the Trademark.
If Spalding requests, Company shall, at Spalding's expense, file and prosecute
one or more applications for trademark registrations in the appropriate
office(s) or class(es) in the name of Spalding, or, if Spalding so requests in
writing, any other name designated by Spalding. It is agreed that nothing
contained in this Agreement shall be construed as an assignment or grant to
Company of any right, title or interest in or to the Trademark, it ' being
understood that all rights relating thereto are reserved by Spalding, except for
the license granted hereunder to Company. Company hereby agrees that upon
expiration or termination of this Agreement for any reason, Company will be
deemed automatically to have assigned, transferred and conveyed to Spalding any
and all copyrights, trademark or service mark rights, equities, goodwill, or
other fight, title or interest in and to the Trademark and any variation thereof
which may have been obtained by Company or which may have vested in Company in
pursuance of any endeavors covered hereby. Company will execute, and, hereby
irrevocably appoints Spalding its attorney-in-fact to execute, if Company
refuses to do so, any documents requested by Spalding to accomplish or confirm
the foregoing. All artwork and designs involving the Trademark, or any
reproduction thereof shall, notwithstanding their invention or use by Company,
be and remain the sole property of Spalding and Spalding shall be entitled to
use the same and to license the use of the same by others. Spalding shall have
the sole right to determine whether or not legal or other action shall be taken
to protect the Trademark, and Spalding shall have sole control over the form of
such action and any settlement of such disputes with third parties with respect
to such action. Company shall cooperate fully in the prosecution of any action
to protect the Trademark at Spalding's expense.
Company agrees that it will not in any way register or use the Trademark
or any similar name alone or in conjunction with any other words as a tradename
or trademark, nor will the Trademark be used by Company in the name of any
corporation, partnership or other business entity.
Section 6.4: Trademark Notice
Company agrees that its name and address must appear on the Articles or
packaging. Whenever the Trademark is used, there shall also be a notice of the
fact that the Trademark is owned
as follows: "The Trademark is owned by Lisco Inc. a Spalding Company and is sold
under license from Spalding" or such other. notice as specified by Spalding from
time to time in form, size and location approved by Spalding in writing.
Company agrees that as an essential condition hereof, it will cause the
foregoing appropriate notice or any other notice specified by Spalding to so
appear on each and every Article (either tag, label, imprint, or packaging) and
in all advertising prepared by or for Company. All shall be submitted by Company
to Spalding for its written approval prior to use by Company. Approval by
Spalding shall not constitute waiver of Spalding's rights or Company's duties
under any provision under this Agreement.
Section 6.5: Other Trademarks
Company shall not place or use other trademarks, tradenames, designs,
logos or endorsements in conjunction with the Articles, except as specifically
authorized by Spalding in writing before the commencement of such use. In the
event of such authorized use, Company shall, at Spalding's option, assign said
other trademarks, designs, logos, or endorsements to Spalding upon termination
of this Agreement, and in the event of such assignment Company will execute and
deliver to Spalding any documents requested by Spalding necessary to effect such
assignment; except, however, nothing in paragraphs 6.3, 6.4 or elsewhere in the
agreement shall prevent or limit Company's use of the "Dynamic Classic", "Flex
Shop" or "Shape Shop" trademarks related logo or any variation thereof in
conjunction with the sales efforts for the Article hereunder, nor shall any
provision of this Agreement be construed to be a grant or obligation to grant by
Company of any right, title or interest in or to the "Dynamic Classic" "Flex
Shop" or "Shape Shop" trademarks related logo or any variation thereof to
Spalding by virtue of Company's performance under this Agreement.
Section 6.6: Goodwill
Company recognizes the goodwill inherent in the Trademark and
acknowledges that the goodwill attached thereto belongs to Spalding and that
such Trademark has secondary meaning in the minds of the public. Company agrees
that it will not during the term of this Agreement or thereafter attack or
contest property rights of Spalding in and to the Trademark or attack or contest
the validity of the Trademark.
In order to maintain said goodwill, Company will promptly and to the
satisfaction of Spalding resolve any consumer complaints that may arise from
time to time with regard to Articles or any promotion thereof.
Section 6.7: Premium
Company may not use Articles as prizes or in connection with contests
without prior written approval of Spalding. Company may not use the Trademark on
any Articles involved in any sweepstakes, lotteries, games of chance, or as a
premium except that Articles may be used in the promotion of or as a premium in
the sale of Articles.
Section 7. 1: Default and termination
This Agreement may be terminated by either party upon default or breach of
warranties of the other party, by giving said other party written notice of
intention to so terminate, which notice shall specify the default or breach upon
which the notifying party intends to rely, and such termination shall become
effective thirty (30) days from the receipt of such notice provided such default
or breach is not rectified by the notified party within that time or a time
agreed upon by the par-ties in writing. Additionally, three (3) or more
rectified defaults and/or breaches of the warranties of this Agreement by
Company during any twelve (12) month period shall be grounds for immediate
termination of this Agreement by Spalding. Termination shall be without
prejudice to any rights, remedies or claims Spalding may otherwise have against
Company.
The license herein granted shall terminate immediately if Company ceases
to do business, makes an assignment for the benefit of creditors, enters into a
composition, becomes insolvent, or if a petition in bankruptcy is filed and said
petition is not dismissed within thirty (30) days. Spalding shall have the right
to terminate this Agreement in the event of any substantial change in the
ownership, control, officership or management of Company. Company shall
immediately notify Spalding in writing of any of the events referenced in this
Section.
Notwithstanding anything in this agreement or otherwise to the contrary,
in the event of Company's default, all unpaid royalties due on Company's actual
sales of articles shall become immediately due and payable, and all of the
minimum royalties specified in Section 4.2 and any exhibit hereto shall all
become immediately due and payable as liquidated damages, notwithstanding the
contract year otherwise specified for payment on such exhibit.
Upon termination of this Agreement, all rights of Company to manufacture,
sell and dis tribute Articles shall cease, and all royalties on shipments
theretofore made shall become immediately due to Spalding, notwithstanding
anything herein to the contrary.
Company understands that, in granting this license Spalding has relied u
on the information p provided in the Prospective Licensee Information Form
submitted by Company. if such form contains any material misstatements, Spalding
reserves the right to terminate this Agreement immediately.
Section 7.2: Inventory at Expiration or Termination
Upon termination of this Agreement for any reason, Company shall
immediately discontinue manufacture, advertising, sale and distribution of
Articles or any use of the Trademark (including but not limited to advertising,
signs, letterheads, and packaging materials), except that if because of the
expiration of the term of this Agreement, and not because of Company's default
due to quality problems or non payment of royalties, then in such event Company
shall be permitted to sell or
otherwise distribute its finished inventory of all Articles at the time of such
termination and such inventory as may be in the process of production, for a
period not to exceed two hundred seventy (270) days after termination of this
Agreement on a non exclusive basis, provided that Company pays all royalties and
submits all reports in connection with such sales as required under the terms of
this Agreement. Within thirty (30) days of receipt of notice of termination,
Company shall furnish Spalding with a written statement of the Articles in
inventory and in the process of production at that point in time and a marketing
plan for the disposal of said inventory.
Section 8.1: Indemnification
Company shall be solely responsible for and agrees to indemnify Spalding,
its officers, directors, agents and employees, and to hold each of them harmless
from any claims, demands, causes of action or damages, including reasonable
attorneys fees, arising out of or in connection with the manufacture, sale,
distribution, advertising, promotion, labeling or use of Articles
notwithstanding any approval which may have been given by Spalding. Each party
will promptly notify the other of any such claim and shall keep the other fully
advised.
Section 8.2: -Insurance
Company agrees that, throughout the term of this Agreement and for not
less than five (5) years following the termination of this Agreement, it will
maintain comprehensive general liability insurance, including blanket
contractual liability and personal injury liability, and insurance against
claims based upon products liability for the Articles and against other claims
covered by the indemnification provision of Section 8. 1, in an amount of not
less than Two Million Dollars ($2,000,000.00) combined single limit. Such
insurance shall be written on an occurrence policy form with an insurance
company with a current Best rating of A, XII or better. Company shall cause its
insurance policies to be in force from the Effective Date of this Agreement and
endorsed to include Spalding, its officers, directors, employees and agents as
additional insureds thereunder. Such endorsement shall stipulate that the
required coverages will not be reduced or cancelled without thirty (30) days
prior written notice to Spalding. Such endorsement shall also stipulate that it
is the primary coverage and any other insurance in force for the additional
insureds shall act as excess coverage only and shall not be required to
contribute in the payment of any claim made hereunder to the extent of the
limits of liability afforded by Company's insurance hereunder.
Evidence of said coverage shall be supplied to Spalding within thirty (30)
days of the Effective Date of this Agreement. If Company faults to comply with
any insurance requirement, Spalding at its election may terminate this Agreement
without further notice. In the event Spalding at any time believes Company's
existing insurance coverage does not provide adequate protection, Spalding may,
in its sole but reasonable discretion, require Company to increase the amount of
coverage required hereunder to a level deemed adequate by Spalding.
Section 8.3: Notice
All royalty reports and marketing plans and programs to Spalding provided for
herein shall be in writing and mailed to:
SPALDING SPORTS WORLDWIDE a
division of Spalding & Evenflo Companies, Inc.
425 Meadow Street
P.O. Box 901
Chicopee, MA 01021-0901
Attn: Vice President Licensing
or to such other address as shall be designated by Spalding from time to time.
All other notices, statements, and reports required or permitted to be
given under this Agreement shall be in writing and shall be by registered or
certified mail, return receipt requested, addressed to the party to whom such
notice is required to be given. All such notices shall be deemed to have been
given when mailed as evidenced by the postmark at the point of mailing.
All notices to Spalding shall be addressed as follows:
SPALDING SPORTS WORLDWIDE a
division of Spalding & Evenflo Companies, Inc.
425 Meadow Street
P.O. Box 901
Chicopee, MA. 01021-0901
Attn: Vice President Licensing
All notices to Company shall be addressed as follows:
DYNAMIC INTERNATIONAL LTD.
58 Second Avenue
Brooklyn, New York 11215
Attn: President
or to such other address as shall be designated by Company from time to time.
Section 8.4:- Assignment
This Agreement shall be binding upon successors and assigns of the parties
hereto; provided, however, that Company shall not delegate its duty of
performance or assign or other-wise alienate its rights or obligations under
this Agreement without first obtaining the written consent of Spalding,
which granting or withholding of consent shall be in Spalding's sole discretion,
and any attempted delegation, assignment or alienation without such written
consent shall be a default of this Agreement.
Section 8.5: Confidential Information
The parties agree to keep all confidential information so marked received in
accordance with this Agreement in confidence for the term of this Agreement.
Section 8.6: Governing Law
This Agreement shall be interpreted in accordance with, and governed by the
laws of the State of Florida, United States of America.
Section 8.7 Captions
The captions of the Articles and Sections of this Agreement are for
general information and reference only, and this Agreement shall not be
construed by reference to such captions.
Section 8.8: Independent Parties
Nothing contained in this Agreement shall be construed to place the
parties in the relationship of legal representatives, partners or joint
ventures. Neither Spalding nor Company shall have any power to obligate or bind
the other in any manner whatsoever, other than as per this Agreement.
Section 8.9: Other
Company hereby waives and releases Spalding from any liability or claim
resulting from or in any way relating to either Company's dealings or
relationships with its suppliers of, or customers for Articles, or relating to
the Articles themselves, including but not limited to delays or failure of
delivery, defective or incorrect merchandise, and payment or collection matters.
Company's obligations to Spalding under this Agreement are unconditional,
notwithstanding any claim or controversy which may arise.
Company hereby waives and releases Spalding from any liability or claim
resulting from the termination of or expiration of this Agreement in accordance
with the provisions of the Agreement.
Time shall be of the essence with respect to all of Company's
obligations and duties, all of which shall be performed and honored strictly in
accordance with the terms of this Agreement notwithstanding any prior,
continuing or subsequent course of dealing, custom, or usage in trade. Company
acknowledges and irrevocably agrees that its failure to utilize the Trademark
strictly in accordance with the terms of this Agreement, and to cease the
manufacture, sale and distribution of Articles, advertising material or the
Trademark at the termination or expiration of this Agreement, will result in
immediate and irreparable damages to Spalding and to the rights of any
subsequent
licensee- Company acknowledges and admits that there is no adequate remedy at
law for such failure or breach; and that in the event of such failure or breach,
Spalding shall be entitled to seek equitable relief by way of temporary and
permanent injunctions, and such other further relief as any court with
jurisdiction may deem just and proper.
Unless otherwise mutually agreed in writing, no departure from, waiver
of, omission to require compliance with any of the terms hereof, approval or
non-approval shall be deemed to authorize any other prior or subsequent
departure, waiver, omission, approval or non-approval, as the case may be.
This Agreement may not be modified orally, and no modifications or any
claimed waiver of any of the provisions hereof shall be binding unless in
writing and signed by the party against whom such modification or waiver is
sought., With respect to any modification specifically requested by Company, the
Company shall pay Spalding an administrative charge as determined by Spalding
and which shall reflect the internal costs necessary to complete any such
modification, but which, in no event, shall be less than $3,000, or more than
$6,000.
This Agreement constitutes the entire agreement between the parties and
supersedes all prior contracts, agreements, and understandings between the
parties relating to the subject matter hereof.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the date first hereinabove written.
SPALDING & EVENFLO COMPANIES, INC.
By______________________________________
Title_____________________________________
DYNAMIC INTERNATIONAL LTD.
By_________________________________
Authorized Official
Title________________________________
EXHIBIT "A"
SPALDING
PRODUCT PRINCIPLES
1. HERITAGE
The Spalding brand has meant sport and an active lifestyle to five
generations of active sports participants and enthusiasts. It is not an exotic
name; but rather an authentic one that means performance, quality, durability,
value, etc. Spalding products perform at high levels for their intended purpose
and generally have a reason-for-being related to consumer needs, features, and
benefits. They a-re mainstream products with good utility -- but typically have
that "something extra" to differentiate from the competition and promote
consumer interest. Spalding products appeal to all demographic groups. The
consumer is attracted to the product by features, cosmetics, etc. and buys it
knowing that the firm foundation of Spalding quality and service are present.
2. THE CUSTOMER
The sports participant and enthusiast is educated, reasonably affluent,
and worldly with an active approach to all endeavors. He and she are serious
about their active lifestyle and seek authentic sports products that compliment
their involvement- They view their sports products as necessities and seek
quality, style, and value at high levels. The potential buyer is not fooled by
imitations or cosmetics. He recognizes value, and will reject any brand which
violates his trust.
3. PRODUCT LINE POSITIONING
The natural link between the Spalding sports heritage and the category
is sports participation and an active lifestyle. Whereas the casual purchaser
who is interested in status or value may consider a Spalding product; the
primary impetus for purchase is expected to come from:
A. The 9l% of active sports participants who know Spalding from
their participation in traditional team or individual sports.
B. The casual participant who pursues sport as a lifestyle.
The product line theme should therefore relate to sport and an active lifestyle,
including product styling and collateral elements.
4. QUALITY LEVEL
The Spalding line will contain sufficient quality and features to
compare favorably with the best competitive entries in the distribution channel.
The line will be sold on the basis of features, quality, and value. Although
models may be offered at different price levels, each entry will have meaningful
features that differentiate it from low priced unbranded products.
EXHIBIT "B"
SPALDING
EXHIBIT "C"
Gentlemen:
This letter will serve as notice to you that pursuant to the License
Agreement dated _________,19__, between Spalding & Evenflo Companies, Inc. and
(Company), we have been engaged as the manufacturer for the Company in
connection with the manufacture of the Articles as defined in the aforesaid
License Agreement. We hereby acknowledge that we have received a copy of the
quality, trademark notice, and other relevant terms and conditions set forth in
said License Agreement which are applicable to our function as manufacturer of
the Licensed Article(s), and we agree to dispose of the Articles only to the
above Company. It is understood that this engagement is on a royalty free basis.
EXHIBIT "D"
Annual Royalty Rates (Section 4.-I)
5% of Net Sales
Annual Minimum Royalty Payments (Section 4.2)
United States Dollars
October 1, 1997 - September 30, 1998 25,000
October 1, 1998 - September 30, 1999 $125,000
Option Years
October l, 1999 - September 30, 2000 $150,000
October 1, 2000 - September 30, 2001 $175,000
Payment outside the U.S. are to be made by wire transfer
EXHIBIT "E"
ROYALTY PAYMENT SCHEDULE
AND
CORPORATE PROMOTION PAYMENT SCHEDULE
(USE SEPARATE CHECKS)
Shipment Due
Month Date
October/December January 25
January/March April 25
April/June July 25
July/September September 15 Pre-Pay Estimate; Adjust To Actual On
October 25
MINIMUM ROYALTY GUARANTEE PAYMENT SCHEDULE
Fiscal Period Due Date
lst Quarter (10/1-12/3 1) October 25 (25% of Annual Minimum Guarantee)
2nd Quarter (1/1- 3/31) January 25 (25% of Annual Minimum Guarantee)
3rd Quarter (4/1- 6/30) April 25 (25% of Annual Minimum Guarantee)
4th Quarter (7/1- 9/30) July 25 (25% of Annual Minimum Guarantee)
EXHIBIT "F"
SPALDING LICENSED PRODUCTS
MARKETING PLAN OUTLINE
Total document can be from 2 to 10 pages; whatever you feel is required.
I. MARKET SIZE AND TRENDS
A wholesale sales estimate by major product class and any relevant
notes on growth, product, distribution, or other trends. Also a recap
of major market opportunities.
II. MAJOR COMPETITORS
A description of the top three competitors and their market shares.
III. SPALDING POSITION
Recap of sales history, market share, competitive advantages,
strengths, weaknesses, etc.
IV. SPALDING STRATEGY
Major strategies to continue growth, attack competition, or exploit
market opportunities.
V. PRODUCT ARRAY
Recap of major products offered plus a brief description.
VI. TRADE CHANNEL DEFINITION
Where will the product be sold.
VII. SALES STRUCTURE
Who will sell it.
VIII. RETAIL PRICE TARGETS
By product type
IX. MARKETING ELEMENT DESCRIPTION AND EXPENSE BUDGET
------------------------------------------------
- - Catalogs/Price Lists
- - Shows
- - Advertising
- - Promotions
- - Display Materials
- - Research
- - Public Relations
- - Endorsements/Athletes Using Products
X. SALES GOALS BY PRODUCT CLASS AND BY DISTRIBUTION CHANNEL
EXHIBIT 10.08
LICENSE AGREEMENT
This Agreement made this 17th day of December, 1997, by and among Connelly
Synergy Systems, LLC, a limited liability company organized in the State of AZ ,
and having its principal place of business at 5603 East Hop Toad Road, Kingman,
Arizona 86402 (the "LLC") and William L. Connelly III, an individual residing at
5603 East Hop Toad Road, Kingman, Arizona 86402 ("Connelly") (both the LLC and
Connelly also sometimes hereinafter collectively referred to as the "Licensor")
and Dynamic International, Ltd., a New York corporation, having its principal
place of business at 58 Second Avenue, Brooklyn, New York 11215 (hereinafter
referred to as the "Licensee").
W I T N E S S E T H:
WHEREAS, Licensor has developed, invented, registered and is
the owner of U.S. patent No. Des. 350,997 dated September 27, 1994 (the
"Patent") with the United States Patent and Trademark Office (the "Office"),
true copies of which are annexed hereto and marked Exhibit "A" and the trademark
known as "RotaFlex" (the "Trademark") which was registered under No.
, on with the Office, true copies of which are annexed
hereto and marked Exhibit "B", both of which "marks" relate to the
invention and naming of a certain device for a hand held exercise apparatus as
shown on Exhibit "A" (the "RotaFlex" or the "Device"). The
Patent and the Trademark are both sometimes hereinafter also referred to as
the "Marks"; and
WHEREAS, Licensee acknowledges the uniqueness of the Marks as well as the
potential benefits to be derived from the manufacture and sale of the RotaFlex
device and further acknowledges that Licensor has warranted the validity and
enforceability of the Patent and Trademark and Licensee desires to obtain from
Licensor the worldwide exclusive right to manufacture, distribute and sell
products designed and sold pursuant to the "Marks" (hereinafter referred to as
the "Licensed Products"); and
WHEREAS, Licensor, by this Agreement, grants to Licensee the exclusive
right during the Term to manufacture and to distribute and sell the Licensed
Product using the Marks in the Territory subject to and in accordance with
the terms and conditions of this Agreement.
NOW, THEREFORE in consideration of the mutual covenants herein
set forth the parties do hereby agree as follows:
1. Defined Terms. The following terms utilized and
capitalized in this Agreement shall have, at all times, the meanings as
hereinafter set forth:
A. TRADEMARK-"ROTA FLEX" is a registered trademark owned by
Licensor. Licensor grants permission to Licensee to print and utilize the
Trademark on the Licensed Products or their
-2-
packaging or sales literature in any manner in Licensee's sole discretion.
Copies of the Trademark are annexed as Exhibit "B".
B. Licensed Product. A uniquely designed hand held exercise
apparatus, sometimes also hereinafter referred to as a "Device."
C. Patent. Patent No. DES 350,997 dated September 27, 1994
filed in the United States Patent and Trademark Office for the RotaFlex
exercise apparatus, copies of which are annexed as Exhibit "A."
D. Territory. Worldwide. Licensor acknowledges that except
as otherwise hereinafter set forth, it may not manufacture or sell in, to or
from the Territory.
E. Distribution Channels. Sales, shipment and distribution to
retail stores and merchants for direct sale and/or to jobbers, wholesalers and
distributors for sale at wholesale or retail, mail order catalogs, shipment
and distribution to the public and the sale, distribution and shipment of
Licensed Product by any and all other means in, to or from the Territory.
F. (i) Term. The period commencing as of the date of this
Agreement and expiring on December 31, 2007; provided, however, that the Term
may be thereafter extended by the Licensee for an additional five (5) year
period (the "Renewal Term") by the Licensee forwarding a written notice in
the manner as hereinafter provided to the Licensor which notice states the
-3-
Licensee's intention to renew the Term. The Term and the Renewal Term are
sometimes hereinafter referred to as the "Term".
(ii) The Renewal Term as above set forth shall be in
Licensee's discretion. Licensee shall, at least 180 days prior to the end of
the initial ten year Term, notify Licensor in writing if it elects to renew
this Agreement. If such notice is given, then the Agreement shall be deemed
automatically renewed for the next five (5) years (the "Renewal Term").
G. (a) Royalties. A sum to be paid in the manner provided
for payment in Section 9 of this Agreement by Licensee to Licensor throughout
the Term as follows:
(i) One ($1) Dollar of the Net Invoice Amount for each Device
sold (and for which sale Licensee has received full payment) bearing the
Marks for the first one million (1,000,000) Devices sold hereunder;
(ii) Seventy-five (75(cent)) cents of the Net Invoice Amount
for each Device sold (and for which sale Licensee has received full payment)
bearing the Marks for the second million Devices sold hereunder; and
(iii) Fifty (50(cents)) cents of the Net Invoice Amount
for each Device sold (and for which sale Licensee has received full payment)
bearing the Marks over three million (3,000,000) Devices.
(iv) Additional Royalties: 4% on all sales of any ancillary
products or accessories developed for the Rotaflex
-4-
Exercise system, using the Rotafelx or Dynaflex technologies, as well as
licensed products and sportswear.
(b) Notwithstanding the foregoing however, provided that this
agreement is in full force and effect and that Licensor is not in default of
any of the terms hereof, minimum royalty payments shall be due each year
hereunder by Licensee to Licensor in the sum of $50,000 payable in equal
quarterly installments of $12,500 within thirty (30) days after the end of
each calendar quarter during the term hereof with such payments being
credited against actual royalties due pursuant to G(a) above).
H. Net Invoice Amount. The sales price of Licensed Product
charged by Licensee to wholesalers, retailers or any other third party, as
reflected on an invoice evidencing such Sales, less however: actual returns,
credits, advertising or promotional allowances or rebates; provided,
however, that Royalties shall be due and payable hereunder only for and with
respect to Devices sold for which payment has been received by Licensee.
2. Artwork and Packaging. Licensee shall, in its discretion,
develop such Packaging, informative booklets, sales catalogues and/or sales
sheets or material as it deems necessary in order to promote and sell the
Licensed Product. Licensor shall provide Licensee with ArtWork and Packaging
already developed and prepared by Licensor, if any.
-5-
3. Product Development. Licensor has already incurred the
expenses necessary, in its opinion, for the development and manufacture of the
Licensed Product. All future modifications or further developments, if any, are
desired by Licensee, Licensee shall be deemed the responsibility of the
Licensee.
4. Licensee Warranties. Licensee warrants and represents that
the Licensed Product will be distributed, advertised, promoted and sold in
accordance with all applicable laws, rules and regulations. Licensee is
entitled during the Term or any renewals to use the Marks as it sees fit
in advertising material or otherwise to promote the sale and distribution of
the Licensed Product.
5. Sublicense. Licensee may sublicense, assign or encumber
the rights granted to it hereunder or delegate its obligations hereunder,
in whole or in part without Licensor's prior approval, but upon notice to
Licensor.
6. Governing Law. This Agreement shall be governed by the
laws of New York, applicable to agreements made and to be wholly performed
therein.
7. (i) Expiration. Upon expiration of the Term and
Licensee's right to sell Licensed Product, or upon earlier termination for
any reason, Licensee agrees that Licensor shall have the right (but not the
obligation) to purchase from Licensee all or part of Licensee's then
existing inventory of Licensed Product at Licensee's actual manufacturing
cost therefor plus
-6-
20%. If Licensor elects not to so purchase all or part of such inventory
within ten (10) days following expiration or termination, Licensee shall
thereupon be free to sell said Licensed Product in any manner and at any
price. No Royalties shall be due Licensor on such sales.
(ii) Upon the expiration or termination of this Agreement,
the rights granted to Licensee hereunder shall revert to Licensor, except as
provided in Paragraph 7(i) and Licensee shall return all other materials
which may have been used or created by Licensee in connection with this
Agreement. Upon expiration of this Agreement, Licensee agrees that Licensor
shall also have the right (but not the obligation) within ten (10) days after
the end of the Term, to purchase the following items from Licensee if same
are owned by Licensee: Licensed Product molds, clips, plates, tools,
silkscreens and/or other technical materials relating to and/or embodying
any of the Licensed Marks at their actual cost.
8. Obligation of Performance. Licensee shall manufacture and
distribute the Licensed Product in accordance with customary business practice
and shall always maintain adequate inventory of the Licensed Product as
necessary in its sole discretion.
-7-
9. Accounting and Payment.
(i) All payments of Royalties shall be deemed earned and
shall be due quarterly within (30) days after the end of each calendar quarter
hereunder and shall apply only to the sale of Devices for which Licensee has
received payment for a Net Invoiced Amount during the prior quarter.
All amounts payable hereunder shall be paid by check or wire transfer to:
Connelly Synergy Sytems. LLC
5603 E. Hop Toad Rd., Kingman, AZ 86401.
Payment shall be due for Devices for which Licensee receives payment, within
thirty (30) days after the quarter, with respect to for the shipments made
during the prior calendar quarter.
(ii) Payment and Records. For the purpose of computing
the royalties referred to in paragraph G of this Agreement, payment will be
dispensed to licensor monthly beginning Feb 1st until June 1st, at which
point thereafter quarterly (Oct. 1st, Jan. 1st, April 1st, July 1st). Within
thirty (30) days after the end of each quarter, reports shall be made by
Licensee to Licensor setting forth the number of RotaFlex units which have
been sold and for which payment has been received during the preceding
quarter. Licensee's remittance for the full amount of royalties due for such
period shall accompany such reports commencing in the second calendar quarter
and thereafter, if payment is received for units shipped in a prior period,
Licensee shall account for such payments received on a
-8-
cash basis of accounting and pay those funds received over to the Licensor
within thirty (30) days following the close of the calendar quarter in which
such funds are received. Licensee's remittance for the full amount of
royalties due for such quarter shall accompany such reports. Licensee agrees
to keep complete and correct books and records of the number, sales price and
amounts received for RotaFlex unites sold under the license herein
granted. Licensor or its representative shall have the right to examine
Licensee's books and records at all reasonable times on at least ten (10)
days prior written notice, during business hours at Licensee's place of
business, to the extent and in so far as is necessary to verify the accuracy
of the above-referenced reports.
(iii) The statements of account shall be reasonably
detailed and contain information relevant to the computation of payments to
Licensor. Licensee shall keep and preserve for at least two (2) years after the
expiration of this Agreement accurate records of all transactions
relating to this Agreement. Licensor, or a representative as Licensor shall
designate, shall at any time during business hours, at Licensee's office, on
at least ten (10) days' prior written notice to Licensee, be entitled to
inspect Licensee's books and records pertaining to the Licensed Product and
the manufacture and distribution thereof and the computation of Royalties
hereunder.
-9-
(iv) If Licensee is in default with the payment of any
Royalties, then without limiting any of Licensor's rights or remedies,
Licensee shall pay Licensor interest on such unpaid amount at the lesser rate
of two percent (2%) above the then current "prime" rate quoted by the Chase
Manhattan Bank, in New York, or the highest interest rate allowed by law.
10. Licensor Warranties. Licensor represents and warrants
that it has the right to enter into this Agreement and to grant the rights
herein granted to Licensee in connection with the Marks, subject to the terms
hereof. Licensor also represents that: it owns the Marks free and clear of any
liens or encumbrances; it has full right to enter into and comply with this
Agreement in all respects and it is not a party to any agreement which might
impair or effect such right or the terms hereof; no actions are pending or
threatened against it which in any manner affect its rights hereunder or which
in any way adversely impair same; it will and hereby does indemnify
Licensee against all claims of any kind relating to ownership of the
rights which are the subject of this License Agreement.
11. Infringements. Licensee shall promptly notify Licensor,
in writing, of any imitations or infringements of the Marks or the rights
licensed hereunder which may come to Licensee's attention. Licensee and
Licensor shall endeavor to jointly determine whether or not any demand, suit
or other action shall be taken on account of or with reference to any such
-10-
infringements or limitations. Licensee however shall have the right (but not
the obligation) to commence or prosecute any suits or make any such demands
in its own name or in the name of Licensor or join Licensor as a party
thereto. Licensor shall cooperate with Licensee as a party thereto and/or
in any manner that Licensee may request in connection with any such
demand, suits, claims or other actions. Any infringement or imitation
action, claim or suit brought by Licensee against a third party shall be at
Licensee's cost and any recoveries therefrom shall belong to Licensee. No
Royalty fees shall be due with respect to any recoveries which result from such
an action or claim. With respect to all claims and suits, including suits in
which Licensee is joined as a party, Licensee shall have the sole right to
employ counsel of its choosing, at Licensee's exclusive cost, and to direct
the handling of the litigation and any settlement thereof. In the event
Licensee decides not to take action hereunder, then Licensor shall be free to
do so at its expense and any recovery in that case shall belong to Licensor.
12. Rights in the Marks Retained by Licensor.
Except as otherwise set forth herein, Licensee shall not
be entitled to have design patents, trademarks, or any other rights in
connection with the Devices registered nor to claim any such rights
without the prior written consent of Licensor.
-11-
(i) Without limiting the other provisions hereof, Licensor
hereby reserves for itself, the right to manufacture, advertise, promote,
distribute and otherwise exploit the Licensed Product for sale solely in and
to the Archery Industry and to physical therapists directly (as opposed to
sales by Licensor to the Physical Therapy Industry which are not permitted
hereunder); provided, however, that (i) such sales and promotion is limited
strictly to retail or wholesale outlets which deal exclusively in and to the
Archery Industry and to individual physical therapists and which are not
engaged, alone or with affiliates, in sales to any other industries,
outlets, sources of distribution or for any other purposes; and (ii) all of
such sales and promotions by Licensor are subject to prior notice to
Licensee identifying the Purchaser and details of such sale; and (iii) all
records of Licensor relating to such sales are open to the inspection of
Licensee or its representatives during business hours at Licensor's
regular place of business on at least ten (10) days prior written notice.
(ii) Licensee acknowledges that Licensor has represented that
it is the owner of all right, title and interest in and to the Marks and
all other rights associated therewith, and the goodwill pertaining
thereto. Licensee hereby acknowledges that based upon such representation,
Licensor is the owner of all right, title and interest in all patents,
trademarks and renewals and extensions thereof, and warrants that Licensor
-12-
will have the right to use and exploit and authorize the exploitation of such
materials in any manner as Licensor elects without obligation to Licensee
or any other entity whatsoever except as otherwise provided in this
Agreement. Licensee will not during or after the Term attack the validity of
the license granted hereunder, or do or cause to be done any act which
impairs or tends to impair Licensor's right and title to the Marks.
13. Termination of this Agreement.
(i) In the event of a material default by either party
hereunder, the aggrieved party may forward written notice specifying such
default to the defaulting party. The defaulting party shall thereupon have
ninety (90) days within which to cure such default or, if the default is not
capable of a cure within such time, to commence such cure and continue such
cure diligently until completion. If not cured or if such cure is not
thereafter commenced and diligently pursued, the aggrieved party may
thereafter terminate this agreement by sending a further ten (10) day
notice, in writing sent by certified mail,return receipt requested to the
defaulting party at its address first above mentioned.
(ii) In the event of termination, without limiting
any of Licensor's rights or remedies including, without limitation, Licensor's
right to injunctive or other equitable relief, any and all Royalty payments
shall become immediately due
-13-
and payable to Licensor upon such termination, and the rights granted
hereunder shall automatically terminate and revert immediately to
Licensor.
14. Notice. Any notice hereunder, if mailed by certified
mail, return receipt requested, shall be deemed given and received two (2)
business days after mailing, and if sent by professional express service,
notice shall be deemed given and received at the time of actual delivery.
Notices shall be sent to the following addresses, or such other addresses as
the parties shall designate in writing from time to time:
Connelly Synergy Systems LLC
P.O. Box 3542
Kingman, Arizona 86402
Attn: William L. Connelly III
Dynamic International, Ltd.
58 Second Avenue
Brooklyn, New York 11215
Attn: Marton B. Grossman
15. Entire Agreement. This Agreement constitutes the entire
understanding and agreement between the parties. Any amendments to this
Agreement must be in writing and signed by a duly authorized officer of each
party hereto.
16. Severability. In case any one or more of the provisions
contained in this Agreement shall for any reason be held to be invalid,
illegal, or unenforceable in any respect, such invalidity, illegality, or
unenforceability shall not affect any other provision hereof, and this
Agreement shall be construed
-14-
as if such invalid, illegal, or unenforceable provision had never been contained
herein.
17. Existing Devices - Sales Exception. The parties
acknowledge that the Licensor currently has on hand Devices not exceeding 350
in number. The Licensor hereby grants Licensee the first option to
purchase these Devices for the sum of $ 21.00 per Device. Notwithstanding
anything contained herein to the contrary, in the event the Licensor does not
exercise its option to purchase said Devices within thirty (30) days from the
date hereof then Licensor shall be permitted to sell said Devices (and only
said Devices) to such third parties as it deems appropriate. Licensee also
agrees to purchase all inventory items videos, manuals, lube samples and
boxes at cost within 30 days.
18. Future Improvements. Licensor agrees that in the event he
should make any improvements in the RotaFlex unit, he shall communicate the
same to Licensee and Licensee shall have the right to use such improvements
and provided that in the event Licensor should secure the grant of any
future patent on any such improvement, he will notify Licensee, who shall
have the right at its option to include the same within the terms of the
present Agreement.
IN WITNESS WHEREOF the parties have hereto set their hand on
the date first above written.
By: Dynamic International, Ltd.
-15-
By: -------------------------------
By: CONNELLY SYNERGY SYSTEMS, LLC
------------------------------
William L. Connelly, III
-16-
EXHIBIT 10.09
CAMPAIGN MANAGEMENT AGREEMENT
THIS AGREEMENT is entered into as of the Thirteenth day of April, 1998
("Effective Date") by and between SCRIPT TO SCREEN, INC., 200 North Tustin
Avenue, Suite 200, Santa Ana, California 92705, a California Corporation,
(herein after referred to as Campaign Manager) and, DYNAMIC INTERNATIONAL, LTD.,
a New York Corporation, 58 Second Avenue, Brooklyn, New York, 11215 (hereinafter
referred to as Client).
RECITALS
WHEREAS, Campaign Manager is in the Direct Response Television ("DRTV")
production management business.
WHEREAS, Client desires to utilize the services of Campaign Manager to manage
the DRTV Campaigns for an Infomercial produced for Client.
NOW THEREFORE, in consideration of the mutual promises, and upon the terms and
subject to the conditions set forth herein, the parties hereto agree as follows:
AGREEMENT
1. Definitions.
(a) "Infomercial" shall mean the infomercial produced by
Campaign Manager for the Spalding Rotaflex, manufactured
or distributed by Client.
(b) "Vendors" shall mean vendors in the following businesses:
* Telemarketing (inbound) and/or outbound
* Media Buying
* All Home Shopping Opportunities
* Fulfillment
(c) "Term" of this agreement shall mean the period commencing on
the Effective Date, and continuing until either party notifies
the other party of its intent to terminate this Agreement
pursuant to Section 4 herein.
(d) "DRTV Campaigns" shall mean Direct Response Television
Campaigns to be utilized in connection with the Infomercial.
(e) "Territory" shall mean the U.S.A.
2. Project.
Client hereby retains Campaign Manager and Campaign Manager agrees,
subject to Client's right of approval, that it is responsible in good
faith, to the best of its ability, to manage Client's DRTV Campaign
utilizing the Infomercial and to identify and select Vendors, negotiate
fees in the best interest of the Client, manage Vendors, and report
progress and results to Client promptly.
3. Testing of Infomercial.
Client retains the right to determine the final media agency selection,
including the right to select a media agency other than those
recommended by Campaign Manager herein. Client is under no obligation
to roll-out (the mass-market airing following the conclusion of the
initial testing) the Infomercial if it is not satisfied with the
results of the test broadcast of the Infomercial or for other reasons.
Client shall have exclusive control over the broadcast, performance and
transmission of the Infomercial after completion of the initial testing
thereof.
4. Project Fees.
Client agrees to pay Campaign Manager the fee of $5,000 per month,
payable on or before the first business day of each month, during each
month of the Term of this Agreement, commencing with the month that
Campaign Manager initiates its performance in connection with the
project. The month this Agreement is executed, the $5,000 fee shall be
prorated for that month based on the number of days remaining in the
first month.
In addition to monthly management fee, Client shall pay all reasonable
and actual hard costs that Campaign Manager must pay to outside vendors
in association with the project. Campaign Manager shall not incur such
costs without prior consent of Client.
Campaign Manager acknowledges that Client retains the right to select
Vendors hereunder and to approve the terms and conditions of any
agreements or proposals with such Vendors. Campaign Manager shall not
be constituted the agent or legal representative of Client for any
purpose whatsoever. Campaign Manager is not granted any express or
implied right or authority to assume or create any obligation or
responsibility on behalf of or in the name of Client or to bind Client
in any manner. All persons employed or otherwise engaged by Campaign
Manager shall be deemed to be the agents, employees or representatives
of Campaign
Manager and Campaign Manager shall be solely responsible for the acts or
omissions of such persons.
5. Termination and Damages.
This Agreement is non-cancelable within the first sixty (60) days.
After the first sixty (60) days, either party may cancel by providing a
fifteen (15) day written notice to the other party consistent with the
method as described in Paragraph 9, "Notices" which notice may be sent
with or without cause. It shall be a breach of this Agreement if Client
unreasonably prevents completion of the Project. If such a breach
occurs, Client shall pay Campaign Manager's actual damages, including,
but not limited to, compensation for time and effort expended, and the
actual amount of any expenses incurred.
6. Further Documentation.
The parties hereto agree to take all actions and execute all documents
reasonably necessary to effectuate the terms and intent of this
Agreement.
7. Binding Effect/Assignment.
This Agreement shall be binding upon and inure to the benefit of the
parties and their successors and assigns. This Agreement is not
assignable without the prior written consent of the parties.
8. Invalidity of Provisions and Jurisdiction.
If any provision of this Agreement shall be adjudged by a court to be
void and unenforceable, the same shall in no way affect any other
provision of this Agreement, or the validity or enforceability of the
Agreement as a whole. This Agreement shall be enforced in accordance
with the laws of the State of California.
9. Notices.
All notices permitted or required under this Agreement shall be sent
and deemed given upon (i) personal delivery (ii) 48 hours after having
been dispatched by telegram, or (iii) five (5) days after having been
deposited in the United States mail, certified, postage prepaid, return
receipt requested, and addressed to the respective parties as follows
(or at such other address as may hereafter be given by one party to the
other party as provided by this Paragraph 9):
If to Client: DYNAMIC INTERNATIONAL, LTD.
58 Second Avenue
Brooklyn, New York, 11215
If to Campaign Manager: SCRIPT TO SCREEN, INC.
200 North Tustin Avenue, Suite 200
Santa Ana, California 92705
10. Modification.
All modifications to this Agreement must be in writing and signed by
each of the parties.
11. Counterparts.
This Agreement may be executed in multiple counterparts, each of which
shall be deemed an original Agreement, and all of which shall
constitute one Agreement to be effective as of the Effective Date.
12. Attorneys' Fees.
Should any dispute arise as a result of this Agreement, each party
hereby agrees to have the matter settled by the "under the rules" of
the American Arbitration Association, without the necessity of a court
order. All rights of discovery allowed by law may be utilized and the
prevailing party shall be entitled to an award of reasonable attorneys'
fees and costs in addition to any other relief. Any decision by
arbitration shall be final and binding upon the parties hereto.
13. Miscellaneous.
All negotiations are merged into this Agreement. This Agreement
constitutes the entire understanding of the parties. There are no oral
or other written agreements between the parties concerning the subject
of this Agreement. This Agreement shall constitute a binding obligation
between the parties and shall be applicable beyond the term of this
Agreement. The agreement is established upon execution.
14. Direct Response Industry.
Client acknowledges and agrees that it is well-informed about the
financial risks associated with the Direct Response television
advertising industry and that Campaign Manager makes no warranty,
expressed or implied, as to the degree of success to be achieved by
reason of the televising of the Infomercial, nor shall Client seek to
hold Campaign Manager liable with the respect thereto. Campaign Manager
has not made, and does not hereby
make, any representation or warranty with respect to the level of sales
and revenue to be derived as a result of the televising of the
Infomercial. Client recognizes and acknowledges that the level of
revenues from sales of the Products of any kind contemplated by this
Agreement is speculative. Client agrees that it shall not make any
claim, nor shall it seek to impose any liability upon Campaign Manager
based upon any claim that more sales, revenues, media exposure, or
customers could have been obtained or better business could have been
done than was actually made or done by Campaign Manager or its
successors, licensees and assigns, or that better business terms,
prices or opportunities could have been obtained. Notwithstanding the
foregoing; however, Campaign Manager represents and warrants that it
has the knowledge, experience, staff and financial capability to
effectively carry out its obligations hereunder.
15. Representation by Counsel.
Each party hereby represents that it has consulted, or has knowingly
waived consulting, its own legal and tax counsel, accountants, or
advisors concerning the tax and legal consequences of this transaction
contemplated by this Agreement. Each party represents that it has
relied solely upon the advice of its own advisors and not on any
representations or warranties of the other party in connection with
such consequences.
16. Confidentiality.
Campaign Manager agrees that all financial, marketing, sales, operation
and other commercially sensitive information, materials and knowledge
acquired or learned from Client in connection with this Agreement will
be held as confidential, not disclosed and preserved by Campaign
Manager in strictest confidence. Campaign Manager further agrees that
such information will be imparted to its employees, agents, or third
parties only on a "need to know" basis and that Campaign Manager will
inform each such employee, agents, or third parties of his or her
confidentiality obligations hereunder. Campaign Manager will return all
information provided by Client upon Completion/Termination of this
Agreement.
The obligations of this paragraph do not apply to information which:
(a) At the time of disclosure was previously known or in the
public domain;
(b) Subsequent to the time of disclosure became part of the
public domain through no fault of Campaign Manager, its
agents, third parties, or employee;
(c) Is obtained by Campaign Manager from a third party not under
obligation to Client; or
(d) Client, in writing, authorized Campaign Manager to release it.
Each party represents and warrants the authority of the undersigned to enter
into this Agreement and bind the respective parties hereto.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the Effective
Date.
SCRIPT TO SCREEN, INC. By:
A California Corporation Title: COO
Date: 4/17/98
DYNAMIC INTERNATIONAL, LTD. By: Marton B. Grossman
A New York Corporation Title: Chairman President
Date: 4/16/98
EXHIBIT 10.10
INFOMERCIAL PRODUCTION AGREEMENT
AGREEMENT made this twelfth day of February, 1998 (the "Effective Date"), by and
between SCRIPT TO SCREEN, INC., a California Corporation, 200 North Tustin
Avenue, Suite 200, Santa Ana, California 92705 (hereinafter referred to as
"Producer") DYNAMIC INTERNATIONAL, LTD., a New York Corporation, 58 Second
Avenue, Brooklyn, New York 11215 (hereinafter referred to as "Client").
W I T N E S S E T H:
WHEREAS, Client has the right to cause to be produced an Infomercial, as defined
herein, designed to advertise the Product, as defined herein;
WHEREAS, Producer is in the business of producing television Infomercials,
including scripting, pre-production, production and post-production thereof, and
has the ability, experience and relationships needed to produce Infomercials
specially created to advertise and sell the Product; and
WHEREAS, Client desires to utilize the services of Producer to produce an
Infomercial designed to advertise and sell the Product;
NOW, THEREFORE, in consideration of the mutual covenants and conditions
contained herein, the parties agree as follows:
1. Definitions.
The following terms as used herein shall have the following
meanings:
(a) "Infomercial" shall mean one (1) 28 minute, 30 second
(28:30), broadcast quality, videotape, fully-edited,
generic (i.e., without product ordering information)
television Infomercial designed to sell the Product
by means of direct response by the customer, and any
parts thereof. Producer will provide up to two
different bluescreen price point or premium offers as
required by Client, as per Client request.
(b) "Product" shall mean that certain fitness product
currently entitled Spalding Rotaflex, and all
components thereof (collectively and/or individually)
and such other goods and services (collectively
and/or individually) as are advertised and offered
for sale in the Infomercial produced hereunder.
(c) "Upsell" shall mean any products, other than the
Product, that are offered for sale following the
televising of the Infomercial.
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(d) "Term" of this Agreement shall mean the period
commencing on the Effective Date and continuing for
as long as the infomercial/commercial airs.
(e) "Territory" shall mean the universe.
2. The Infomercial.
Subject to the provisions hereof, and commencing upon
Producer's receipt of the first payment due to Producer
hereunder, Producer shall write the script for, produce and
direct the Infomercial and generally do all things necessary
and desirable to produce and deliver a first class,
professional Infomercial in all respects.
(a) The production schedule shall be determined by the
mutual agreement of the parties, such agreement not
to be unreasonably withheld or delayed and such
schedule not to exceed one hundred and fifty (150)
days in total starting from date of first payment
subject to delays beyond Producer's control. Producer
shall not be liable to Client for expenses incurred
or losses suffered by Client by reason of delays
resulting from causes not fully within Producer's
control. Client shall reimburse Producer for expenses
incurred or losses suffered by Producer as a result
of delays caused by Client. Notwithstanding anything
contained herein to the contrary, however, Producer
shall deliver a script within twenty one (21) days
after receipt of first payment.
(b) The Budget for the Infomercial is set forth in
Exhibit "A," annexed hereto and made a part hereof,
and shall be paid as set forth in Paragraph 3 below.
(c) Client shall provide all samples of Product to be
used in the Infomercial, including mockups, product
photos, and TV-ready comps of the Product, if
necessary, to be used for shooting purposes.
(d) With respect to persons appearing in the
Infomercial on-screen:
(i) As provided for in the Budget, Producer
shall furnish and pay from the Budget any
noncelebrity, nonexpert, and nonunion talent
appearing in the Infomercial, furnish and
reimburse the expenses of any persons giving
testimonials in the Infomercial, and obtain
from all the aforesaid persons all necessary
or desirable agreements, permissions and
releases including, without limitation, duly
sworn affidavits attesting to the truth and
accuracy of the individual's testimony, in
substantially the form annexed hereto as
Exhibit "B" and made a part hereof; and
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(ii) Client shall, if approved prior thereto,
furnish and pay all compensation due to any
celebrities, experts, and union talent
appearing in the Infomercial, and shall
obtain from all the aforesaid celebrities,
experts, and union talent all necessary or
desirable agreements, permissions and
releases including, without limitation, duly
sworn affidavits attesting to the truth and
accuracy of the celebrity's, expert's, and
union talent's testimonies, in substantially
the form annexed hereto as Exhibit "B."
(e) Upon payment to Producer of the final payment
required pursuant to Paragraph 3 hereof, the
Infomercial, all videotapes thereof, the script
thereof (collectively, the "Production"), and all
rights in connection therewith, and all other matters
or things relating thereto, with the exception of
music composer and publishing rights, shall be the
exclusive property of Client, provided, however, that
Producer may retain copies of the Production for
archival purposes and for the purposes set forth in
subparagraph 2(f) below. Client shall have the sole
and exclusive right to copyright protection of the
Production, with the exception of Composer's rights,
and Producer shall have no duty with respect to
securing copyright protection therefor. Provided that
Client has paid Producer all sums due to Producer
required pursuant to Paragraph 3 hereof, Client shall
at all times have absolute control over the media
placement and strategy of use of the Infomercial.
(f) Producer shall have the right to use the Infomercial
in Producer's promotional reel and to enter the
Infomercial in industry competitions, festivals and
shows for Producer's publicity and promotional
purposes.
(g) Client acknowledges and agrees that it is
well-informed about the financial risks associated
with the television advertising industry and that
except as otherwise set forth herein Producer makes
no warranty, express or implied, as to the degree of
success to be achieved by reason of the televising of
the Infomercial, nor shall Client seek to hold
Producer liable with respect thereto. Producer has
not made, and does not hereby make, any
representation or warranty with respect to the level
of sales and revenue to be derived as a result of the
televising of the Infomercial. Client recognizes and
acknowledges that the level of revenues from sales of
the Products of any kind contemplated by this
Agreement is speculative. Client agrees that it shall
not make any claim, nor shall it seek to impose any
liability upon Producer based upon any claim that
more sales, revenues, media exposure or customers
could have been obtained or better business could
have been done than was actually made or done by
Client or its successors, licensees and
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assigns, or that better business terms, prices or
opportunities could have been obtained. Producer,
however, does hereby warrant and represent: (i)
that it has the knowledge, experience, staff, and
financial capability to effectively carry out its
obligations hereunder, and (ii) that it shall
promptly, and in good faith, utilizing its best
commercial efforts, seek to produce promptly and
professionally the Infomercial.
(h) Client shall cause Producer to be afforded on-screen
credit in all versions of the final Infomercial on a
separate card in the end credits as follows:
Produced by Script to Screen
Direct Thinking for Direct Response
3. Budget.
(a) Client agrees to pay to Producer a Production
Budget for the Infomercial ("Budget") in the sum of
Two Hundred Eighty Four Thousand Three Hundred
Twenty Four Dollars ($284,324.00) as set forth in
Exhibit "A" hereof.
Payment of the Budget shall be made as follows:
Twenty-five percent (25%) due upon execution
of this Agreement, less the paid deposit of
Twenty-Five Thousand Dollars ($25,000) per
the Letter of Agreement - $46,081.00
Twenty-five percent (25%) due not less
than three (3) days prior to commencement
of principal videotaping - $71,081.00
Thirty percent (30%) due upon Client's
approval of final off-line and prior to
initiating on-line - $85,297.20
Ten percent (10%) due upon Client's approval
of a "view tape," which means a half-inch
(1/2") videocassette copy of the Infomercial
- $28,432.40
Ten percent (10%) due upon Client's ordering
of a final master to be sent to a
duplication house of Client's choice
- $28,432.40
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Producer represents that, in its opinion, the aforesaid Budget
is adequate to produce a professional, first class Infomercial
in all respects. It is expressly agreed that no edited or
camera masters will be delivered to Client until after
Producer's receipt in good funds of the final payment due to
Producer pursuant to this Paragraph 3.
(b) Additional production work requested by Client
involving changes to previously approved or
agreed-upon work or Budget items, including, but not
limited to, changes in the Product, final script,
locations, talent, experts, and testimonials, shall
be mutually agreed upon and set forth on Producer's
"Overage Sheet," and appropriate adjustments in the
Budget shall be made with respect thereto. In the
event such adjustments require additional payment to
Producer, Client shall pay agreed upon sums due
promptly upon receipt of Producer's invoice therefor.
(c) In addition to items set forth in the Budget, Client
shall reimburse Producer for all agreed upon bona
fide expenditures incurred by Producer directly in
connection with the Infomercial or in the performance
of Producer's services hereunder which are
substantiated by receipted vouchers or paid bills.
Client understands that it is not always possible or
practical to obtain receipts for expenses and,
therefore, a reasonable amount of unreceipted but
substantiable expenditures by Producer, each of less
than One Hundred Dollars ($100.00) may, nevertheless,
be made by Producer and shall be reimbursed by Client
not to exceed, in total, the sum of $1,000.
(d) Unless other provisions have been made in the Budget,
Client shall reimburse Producer's travel and lodging
expenses away from Santa Ana, California, provided
that Producer will not incur such expenses without
Client's prior consent. Such travel-related expenses
may include meetings requested by Client, and travel
for testimonial shooting beyond that which is
provided for in the current budget estimate.
4. Approvals.
a) Client will have the right and the obligation to
approve in writing the shooting script before the
commencement of principal videotaping or filming, as
the case may be, of the Infomercial. Client's
approval of the shooting script, and any changes made
thereto, shall constitute Client's verification and
representation to Producer of the truth and accuracy
of the statements and claims concerning the Product
made in the script.
5
(b) Client will have the right and the obligation to
approve in writing the rough cut of the Infomercial
(that is, prior to commencement of on-line editing).
Once the off-line is approved, any further changes
desired by Client in on-line will be billed as an
Overage. Client's approval of the rough cut of the
Infomercial shall constitute Client's verification
and representation to Producer of the truth and
accuracy of the statements and claims concerning the
Product made in the rough cut of the Infomercial.
(c) Client will have the right and the obligation to
approve in writing the final "view tape" of the
Infomercial. Once the on-line is approved, any
further changes desired by Client will be billed as
an Overage. Client's approval of the final "view
tape" of the Infomercial, and any changes made
thereto, shall constitute Client's verification and
representation to Producer of the truth and accuracy
of the statements and claims concerning the Product
made in the Infomercial.
(d) Client will respond to written requests for approval
of changes within five (5) business days of
submission by Producer. In the event a request is
rejected, the reasons therefor shall be stated. In
the event Client fails to respond to such requests
within such five (5) business day period, Client's
approval shall be deemed to be given and, if
pertaining to the script or Infomercial, shall
constitute Client's verification and representation
to Producer of the truth and accuracy of the
statements and claims made in the script or
Infomercial as changed, as the case may be.
(e) Client acknowledges and agrees that any legal
opinions regarding the Product and the content of the
Infomercial shall be the sole responsibility of
Client.
5. Additional Warranties and Representations.
(a) Each party, for itself, hereby warrants and
represents to the other party that:
(i) it has been duly incorporated and is validly
existing as a corporation in good standing
under the laws of its respective state of
incorporation and is duly qualified to do
business as a foreign corporation in good
standing in all jurisdictions in which the
nature of its business or the character or
location of its properties or assets
requires such qualifications;
6
(ii) this Agreement has been duly and validly
authorized, executed and delivered by such
party and constitutes a valid, binding and
enforceable agreement of such party;
(iii) such party is not (A) in violation of its
corporate charter of bylaws, or (B) in
default in the performance or observance of
any obligation, agreement, covenant or
condition contained in any instrument to
which it is a party or by which it or any of
its material properties is bound, or in
violation of any law, order, rule,
regulation, writ, injunction or decree of
any governmental authority or court;
(iv) the execution, delivery and performance of
this Agreement by such party will not (A)
conflict with or result in a breach of any
of the terms, conditions or provisions of or
constitute a default under, or result in the
imposition of any lien, charge or
encumbrances upon any of the material
properties or assets of such party pursuant
to any bond, debenture, note or other
evidence of indebtedness or in any material
contract, indenture, mortgage, loan
agreement, lease, joint venture, partnership
or other agreement or instrument to which it
is a party or by which it or any of its
material properties is bound, or (B) result
in the violation by such party of its
corporate charter or bylaws, or any
violation of any law, order, rule,
regulation, writ, injunction or decree of
any governmental instrumentality or court.
No consent, approval, authorization or order
of any governmental agency or court or of
any other person is required for the
execution, delivery or performance of this
Agreement by such party, except for those
which have been heretofore obtained;
(v) there is not now pending or, to the best
knowledge of such party, threatened any
action, suit or proceeding to which such
party is a party before or by any court or
governmental agency or body, which might
result in any material adverse change in the
condition (financial or other), business or
prospects of such party or performance of
this Agreement, or might materially and
adversely affect the properties or assets of
such party or performance of this Agreement;
(vi) such party has the full and complete
authority to enter into this Agreement and
to perform in all respects the obligations
required to be performed by it pursuant to
this Agreement; and
7
(vii) such party is not bound by, nor will it
during the Term enter into any agreement
that would prevent or materially interfere
with the performance by such party of the
material terms and conditions of this
Agreement.
(b) In addition, Client hereby represents and warrants
to Producer that:
(i) it has the full, unrestricted and exclusive
right to acquire, publish, distribute,
license, sell and exploit the Product, and
will continue to possess such rights during
the Term;
(ii) it has not granted any rights that would
conflict with or derogate from the rights
granted to Producer hereunder;
(iii) the Product is safe and efficacious and
Client possesses competent and reliable
evidence to such effect;
(iv) all statements and claims made in the
Infomercial concerning the Product will be
supported by appropriate testing, case
histories and laboratory documentation, if
applicable, all of which are in the
possession of Client;
(v) the Product is currently, and, as advertised
in the Infomercial and sold to customers,
will during the Term comply with all
applicable federal, state and local laws,
rules and regulations;
(vi) it owns or possesses all requisite rights to
use all material patents, patent rights,
inventions, trade secrets, know-how,
processes, technology, trademarks, trade
names, service marks, service names,
copyrights and other intellectual property
rights related to the Product necessary or
desirable for the performance of this
Agreement;
(vii) it has not received any notice of
infringement of or conflict with, and to the
best of its knowledge Client is not
infringing or in conflict with, any
intellectual property or other rights of
others including, but not limited to, rights
in patents, trade secrets, know-how,
trademarks, trade names, service marks,
service names, copyrights, or rights of
privacy or publicity;
(viii) it will do everything reasonably necessary
to ensure that it will at all times be in
full compliance with the agreements
governing its right to manufacture and
distribute the Product; and
8
(ix) it is in full compliance with all the terms
and conditions of such agreements, is not
aware of any defaults thereunder (or of any
facts or events which, with notice or the
passage of time, or both, could constitute
defaults) nor any basis therefor.
(c) Those representations and warranties made by the
parties herein that by their terms are capable shall
survive the expiration or other termination of the
Term of this Agreement.
(d) Producer hereby further warrants and represents to
Client that:
(i) it will promptly, and in good faith, carry
out its obligations hereunder, and will
cause to be completed and delivered to
Client the final completed, edited camera
masters, and all other versions of the
Infomercial within One Hundred (100) days
following the first payment hereunder,
subject only to delays caused by Client;
(ii) all monies paid hereunder shall be first
utilized in connection with costs
relating to the production of the
Infomercial; and
(iii) Producer will exercise its best good faith
efforts to produce the Infomercial in a
professional, first class and timely manner
within Budget and in accordance with the
Production Schedule.
(e) No substantive noncustomary changes to the
Infomercial content will be made by Producer to the
final, approved by Client, off-line version without
Client's approval other than music, graphics, and
addition of CTAs.
6. Indemnification.
(a) Client agrees to indemnify, defend and hold harmless
Producer, its principals, officers, directors,
employees, independent contractors, agents,
successors, assigns and licensees from all suits,
claims, demands, damages, debt, liability, account
reckoning, obligation, cost, expense, lien, action or
cause of action (including, but not limited to,
actual damages, punitive damages, fines and
attorneys' fees, whether or not litigation is
commenced) arising out of (i) the Product, (ii) the
information, data and material provided by Client to
Producer and all claims made by Client with respect
to the Product, and (iii) any act or omission by
Client in breach by Client of its warranties,
representations, obligations and/or duties hereunder
including, but not limited to, those related to the
Product including, but not limited to, the safety and
efficacy of the Product, compliance with
9
the rules, regulations and guidelines of the Federal
Trade Commission regarding false and deceptive
advertising practices.
(b) Producer agrees to indemnify and hold Client harmless
from all suits, claims, demands and other liabilities
and expenses (including, but not limited to, actual
damages, punitive damages, fines and attorneys' fees)
arising out of the breach by Producer of, or any
inconsistency with, any warranty, representation,
term or condition made or agreed to herein by
Producer.
(c) Each party shall notify the other of any demand, suit
or claim promptly after the first party has been
formally advised thereof. Producer and Client shall
each have the right to participate in the defense
thereof with an attorney of their choice at their
sole expense.
(d) The provisions of this Paragraph 6 shall survive the
expiration or other termination of the Term of this
Agreement.
7. Termination.
In addition to all other rights of either party, at law or in
equity, resulting from non-compliance by the other party with
this Agreement, (the "Defaulting Party"), the non-Defaulting
Party may terminate the Term of this Agreement upon five (5)
days written notice to the other in the event of any of the
following:
(a) A party defaults in any material respect in the
performance or observance of any term, covenant or
agreement contained in this Agreement (except for
default with respect to Paragraph 6(a)(iii), for
which no notice by Producer shall be required), and
the same continues for a period of five (5) days
following the receipt of said Defaulting Party of
notice from the non-Defaulting Party of such
non-compliance;
(b) Any representation or warranty made by either party
herein or in connection with the execution and
delivery of this Agreement shall prove to have been
incorrect, when made, in any material respect; or
(c) (i) The institution of any proceedings by or against
either party seeking relief, reorganization of such
party or arrangement with its creditors under any
laws relating to insolvency or bankruptcy, (ii) any
general assignment for the benefit of, either party
entering into a composition with, either party's
creditors, (iii) the appointment, or the consenting
to the appointment of, a receiver, liquidator,
trustee or other custodian for all or
10
substantially all of its assets, (iv) the
liquidation, dissolution or winding up of either
party's business, or (v) the entry of an order by a
court of competent jurisdiction (A) finding either
party to be bankrupt or insolvent, (B) ordering or
approving either party's liquidation, reorganization
or any alteration or modification of the rights of
either party's creditors, or (C) assuming custody of,
or appointing a receiver or other custodian for, all
or a substantial part of either party's property.
(d) Force Majeure events cause a delay in production of
more than 60 days.
In the event of termination hereunder as a result of
Producer's default, in addition to any other damages
at law or equity, Producer shall promptly reimburse
Client for all payments received for which
corresponding Production work plus pro rata
Producer's fee earned had not been completed and all
work product shall be delivered to Client.
8. Confidentiality.
(a) The parties recognize that during the course of
performing their duties hereunder they may become
aware of proprietary, confidential information
concerning the other party, its products, methods,
processes, billing practices, financial condition,
etc., or information the other party designates as
confidential (collectively "Confidential
Information"). Each party agrees that it will
maintain in confidence and not disclose to any third
party at any time any such Confidential Information
and shall not use any such information to the
detriment of the other party or for any purpose not
contemplated by this Agreement.
(b) The obligation of confidentiality set forth above
shall survive the expiration or other termination of
this Agreement, provided, however, that a party (the
"Disclosing Party") may during the Term hereof or
thereafter disclose Confidential Information to the
extent required by applicable law or the order of a
court of competent jurisdiction. In the event the
Disclosing Party is required by applicable law or the
order of a court of competent jurisdiction to
disclose any Confidential Information, such party
agrees to provide the other party with prompt notice
of any such requirement so that the other party may
seek an appropriate protective order. Failing the
entry of a protective order or the receipt of a
waiver hereunder, the Disclosing Party will disclose
only that portion of the Confidential Information
which has been required.
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(c) The term "Confidential Information" and the
provisions of this Agreement relating thereto shall
not apply to any information which:
(i) becomes generally available to the public,
other than as a result of a disclosure in
violation of this Agreement;
(ii) was available, or becomes available, on a
non-confidential basis from a source other
than either of the parties hereto, their
clients, or their representatives;
(iii) is developed independently and is not based
upon or derived from Confidential
Information.
9. Force Majeure.
Producer may suspend the performance of its obligations
hereunder in the event of any of the following contingencies,
if by reason of any such contingency, Producer is materially
hampered in the performance of its obligations under this
Agreement or such performance becomes impossible or
commercially impracticable: acts of God, fire, catastrophe,
labor disagreement, acts of government, its agencies or
officers, any order, regulation, ruling or action of any labor
union or association affecting Producer or the industry in
which it is engaged, delays in the delivery of materials and
supplies, delays caused by non-celebrity retained by Client,
persons giving testimonials arranged by Client, or celebrities
(including, but not limited to, failure to timely appear and
failure to perform satisfactorily), or any other cause not
fully within Producer's control; provided however, if such
delay is more than sixty (60) days Client may terminate per
terms in paragraph 7d.
10. Insurance.
Client will obtain and maintain at its sole expense during the
Term hereof and for a period of one (1) year thereafter a
comprehensive general liability and product liability
insurance policy with minimum limits of One Million Dollars
($1,000,000.00) per incident and Two Million Dollars
($2,000,000.00) in the aggregate, with no deductible, naming
Producer and its respective officers, directors, and employees
as additional insured. Such insurance policy shall provide
that it cannot be canceled or modified without the insured
first giving Producer thirty (30) days prior written notice.
Client will furnish Producer with a true and legible copy of
the insurance certificate upon demand. Producer acknowledges
that it will maintain insurance during the term equivalent to
that indicated in Exhibit C.
11. Assignment.
12
Neither party may assign any right or delegate any duty
hereunder without the express prior written consent of the
other, which consent shall not be unreasonably withheld. The
prohibition shall not prevent any party from contracting with
third parties for services to be provided in furtherance of
the performance required of each under this Agreement. No
assignment shall be valid unless the assignee assumes in
writing all the obligations of the assignor hereunder.
12. Disputes.
All disputes between the parties to this Agreement shall be
settled in the City of Los Angeles, State of California, by a
panel of three (3) arbitrators (one selected by each party and
the third selected by the two selected arbitrators) under the
then-current Commercial Arbitration Rules established by the
American Arbitration Association. Any arbitration award may be
entered as a judgment or order in any court of competent
jurisdiction.
13. Notices.
Any notice required by or provided pursuant to this Agreement
shall be given in writing by Certified Mail, Return Receipt
Requested, or any professional delivery service that requires
a signed, written receipt confirming delivery of the envelope
or package containing the notice. Such notice shall be
addressed to the person signing this Agreement at the address
indicated on the first page of this Agreement, or at such
other address as shall be provided by notice.
14. General Provisions.
(a) This Agreement constitutes the entire understanding
and agreement of the parties with respect to its
subject matter and supersedes any and all prior
understandings and agreements.
(b) This Agreement shall be governed by and interpreted
in accordance with the laws of the State of
California applicable to contracts made in and wholly
to be performed therein.
(c) This Agreement may not be amended or modified except
in a written instrument signed by the party against
whom enforcement is sought.
(d) Subject to any restrictions on transferability
contained in this Agreement, this Agreement shall be
binding upon and inure to the benefit of the parties
and their respective successors-in-
13
interest and permitted assigns. Nothing contained in
this subparagraph 14(d) shall create any rights
enforceable by any person not a party to this
Agreement, except for the rights of
successors-in-interest and permitted assigns of each
party hereto, unless such rights are expressly
granted in this Agreement to other specifically
identified persons.
(e) Paragraph headings are used for convenience and
are not to be interpreted as part of this Agreement.
(f) The parties to this Agreement are acting as
independent contractors and nothing herein shall be
construed as creating a partnership or other joint
business venture. Neither party has the authority to
act on behalf of or bind the other except as
expressly set forth herein.
(g) In the event that 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.
(h) Each party shall execute and deliver all instruments
and documents and take all actions as may be
reasonably required to effectuate this Agreement.
(i) In the event of any dispute between the parties to
enforce or interpret the provisions of this
Agreement, the prevailing party in such action shall
be entitled to recover from the other party all
reasonable costs, expenses and attorney's fees, and
costs actually incurred relating to or arising from
such action.
(j) No waiver by a party of any provision of this
Agreement shall operate as, or be deemed to be, a
continuing waiver of such provision or a waiver of
any similar or dissimilar provision, unless such
waiver is contained in a written instrument signed by
the party against whom enforcement is sought.
(k) Time and strict punctual performance are of the
essence with respect to provisions herein concerning
payment and approvals and the Production Schedule and
Producer's efforts.
(l) Each party shall be responsible for the reporting and
payment of its own federal, state, and local taxes
and licenses.
(m) Each of the parties hereto represents and agrees with
the other that (i) it has been represented by
independent counsel of its own choosing, (ii) it has
had the full right and opportunity to consult with
its respective attorneys and other advisers and has
availed itself of this right and opportunity, (iii)
its authorized officers have carefully read and fully
understand this Agreement in its
14
entirety and have had it fully explained to them by
such party's counsel, (iv) each is fully aware of the
contents hereof and its meaning, intent and legal
effect, and (v) its authorized officer is competent
to execute this Agreement and has executed this
Agreement free from coercion, duress and undue
influence. Each party and its counsel cooperated in
the drafting and preparation of this Agreement, and
the documents referred to herein. Accordingly, any
rule of law, including, but not limited to,
California Civil Code Section 1654, or any legal
decision that would require interpretation of any
ambiguities in this Agreement against the party that
drafted it, is of no application and is hereby
expressly waived. The provisions of this Agreement
shall be interpreted in a reasonable manner to
effectuate the intentions of the parties hereto.
(n) This Agreement shall become effective as of the
Effective Date, provided it has been executed by all
the parties hereto.
15
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
Effective Date.
SCRIPT TO SCREEN, INC. DYNAMIC INTERNATIONAL, LTD.
a California Corporation a New York Corporation
"Producer" "Client"
By: By: Marton B. Grossman
Title: Chief Operating Officer Title: President
Date: 5/7/98 Date: 5/7/98
Exhibit "A"
Budget and Production Schedule
Rotaflex Production Estimate #1E N/V
March 20, 1998
Script to Screen Host Talent Fees Removed.
200 N. Tustin Avenue Model & Voiceover Talent Fees
Suite #200 Included. Travel to Tucson
Santa Ana, CA 92705 is Included.
Tel: (714) 558-3971 Variance is Removed.
Fax: (714) 558-1759
Acct# Category Title Page Total
5020-00 Script Development 1 $7,200
5030-00 Producer & Staff 1 $45,700
5040-00 Director & Staff 1 $15,000
5050-00 Talent & Casting 1 $7,293
TOTAL ABOVE-THE-LINE $75,193
5061-00 Testimonial Segments 2 $6,424
5062-00 Expert/Celebrity Testimonials 3 $8,515
5063-00 Sculptor/Product Shoot 3 $12,524
5064-00 B-Roll Segments 4 $8,053
5065-00 Health Club Shoot 5 $5,492
5066-00 Host Shoot 5 $47,054
TOTAL PRODUCTION $88,062
5068-00 Transcriptions & Window Dubs 7 $1,400
5070-00 Show Offline Editing 7 $14,200
5080-00 Show Online Editing 7 $11,130
5081-00 Music 7 $6,000
5082-00 Sound ( Post Production) 7 $2,380
5083-00 Duplication 8 $350
5084-00 Art Direction & Graphics 8 $10,000
TOTAL POST PRODUCTION $45,460
5090-00 Administrative Expenses 8 $1,180
5091-00 Shipping & Customs 8 $675
5092-00 Unit Publicity 8 $40
TOTAL OTHER $1,895
5095 Insurance $6,318
5096 Production Variance $0
4000 Production Fee $67,395
TOTAL ABOVE-THE-LINE $75,193
TOTAL BELOW-THE-LINE $135,417
TOTAL ABOVE & BELOW-THE-LINE $210,610
GRAND TOTAL S284,324
Rotaflex Production Estimate #lE N/V
March 20, 1998
Script to Screen Host Talent Fees Removed.
200 N. Tustin Avenue Model & Voiceover Talent Fees
Suite #200 Included. Travel to Tucson
Santa Ana, CA 92705 is Included.
Tel: (714) 558-3971 Variance is Removed.
Fax: (714) 558-1759
Acct# Description Amount Units X Rate Subtotal Total
5020-00 Script Development
5020-02 Script Fees
Script Fee (30 Minute show) 1 Flat 7,000 7,000
Script Fee (Spots) 0 Flat 0 2,500 0 $7,000
5020-03 Supplies & Xeroxing
Script copies, disks, etc. Allow 200 200 $200
Total For 5020-00 $7,200
5030-00 Producer & Staff
5030-02 Producer
Producers 4 Weeks 2,500 10,000 $10,000
5030-03 Associate Producer
Associate Producer 1 Total 10,000 10,000 $10,000
5030-05 Line Producer
Line Producer 4 Weeks 1,500 6,000 $6,000
5030-06 Prod. Coordinator
Production Coordinator 6 Weeks 1,000 6,000 $6,000
5030-07 Assist. to Producer/Client Serv.
A.P./Client Services 4 Weeks 750 3,000 $3,000
5030-08 Prod. Assistants
Key Office PA 4 Weeks 750 3,000
Production Assistants 4 Weeks 500 2,000 $5,000
503- Total Fringes
STS PayTx 19.0% 30,000 5,700 $5,700
Total For 5030-00 $45,700
5040-00 Director & Staff
5040-01 Director
Prep/Production Time Allow 15,000 15,000 $15,000
Total For 5040-00 $15,000
5050-00 Talent & Castlng
5050-04 Talent- Models
Model, AFTRA 0 . Days 420 0
Model, Non-Union 1 Day 5 500 2,500
Model, Non-Union 1 Day 5 350 1,750 $4,250
5050-10 Voice Over Artists
Voice Over, AFTRA 1 Session 0 448 0
Voice Over, Non-Union 1 Session 700 700 $700
Acct# Description Amount Units X Rate Subtotal Total
5050-00 Talent & Casting (CONT'D)
5050-50 Casting
Casting Director 4 Days 275 1,100
Casting Facilities 1 Day 500 500 $1,600
5050-70 Agents Fee - Commissions
Hosts - Non-union 15 % 0 8,000 0
Guests - Non-union 15 % 0 0 0
Actors - Non-union 15 % 0 0 0
Models - Non-union 15 % 5 500 375
Models- Non-union 15 % 5 350 263
Featured Extras - Non-union 15 % 0 O 0
Extras - Non-union 15 % 0 0 O
Minors - Non-union 15 % 0 O 0
Stunt Players - Non-union 15 % 0 0 0
Stand-ins - Non-union 15 % 0 0 0
V.O. Artist- Non-union 15 % 700 105
Hosts - Union 10 % 0 O 0
Guests - Union 10 % 0 0 0
Actors - Union 10 % 0 896 0
Models - Union 10 % 0 0 0
Featured Extras - Union 10 % 0 0 0
Extras - Union 10 % 0 100 0
Minors - Union 10 % 0 O 0
Stunt Players - Union 10 % 0 0 0
Stand-ins - Union 10 % 0 0 0
V.O. Artist - Union 10 % 0 448 0 $743
Total For 5050-00 $7,293
TOTAL ABOVE-THE-LINE $75,193
5061-00 Testlmonlal Segments
5061-02 Crew
DP/ Camera Operator 1 Day 2 500 1,000
Grip 1 Day 2 350 700
Local Audio 1 Day 400 400
Local Make-up Artist . 1 Day 400 400
Production Assistants 1 Day 2 150 300 $2,800
5061-03 Equipment
Betacam Package 1 Day 600 600
DV Cam Package 1 Day 250 250
Lighting/Grip Equipment 1 Day 400 400
Audio Package for Video 1 Day 200 200 $1,450
5061-04 Locations/Permits
Local Location Fee 1 Flat 1,000 1,000 $1,000
5061-05 Raw Stock, Processing
Betacam-SP 30 Min. Cassettes 10 Rolls 32 320
DV Cam. Cassettes 3 Rolls 25 75 $395
5061-10 Crew Lunch
Acct# Description Amount Units X Rate Subtotal Total
5061-00 Testimonial Segments (CONT'D)
5061-10 Crew Lunch (CONT'D)
Local Crew Lunches 12 Each 12 144 $144
5061-15 Craft Services
Craft Services 12 Each 6 72 $72
506- Total Fringes
STS PayTx 19.0% 2,800 532
O.C. SalesTax 7.75% 395 31 $563
Total For 5061-00 $6,424
5062-00 Expert/Celebrity Testimonials
5062-02 Crew
DPI/ Camera Operator 1 Day 400 400
DP/ Camera Operator 1 Day 400 400
Grip 1 Day 2 350 700
Local Audio 1 Day 400 400
Local Make-up Artist 1 Day 400 400
Production Assistants 2 Days 2 150 600 $2,900
5062-03 Equipment
Betacam Package 1 Day 600 600
DV Cam Package 1 Day 250 250
Lighting/Grip Equipment 1 Day 500 500
Audio Package for Video 1 Day 200 200 $1,550
5062-05 Raw Stock, Processing
Betacam-SP 30 Min. Cassettes 10 Rolls 32 320
DV Cam Cassettes 5 Rolls 25 125 $445
5062-08 Travel & Lodging
Airfares (multi-stop) 3 FT 350 1,050
Hotels 3 Nights 3 100 900
Tips 0 Days 25 0
Per Diem 3 Days 3 35 315 $2,265
5062-09 Ground Transportation
Airport Trans. 0 Allow 100 0
Rental Cars 3 Days 70 210
Mileage Allow 200 200 $410
5062-10 Crew Lunch
Local Crew Lunches 10 Each 2 12 240 $240
5062-10 Craft Services
Craft Services 10 Each 2 6 120 $120
506- Total Fringes
STS PayTx 19.0% 2,900 551
O.C. Sales Tax 7.75% 445 34 $585
Total For 5062-00 $6,515
5063-00 Sculptor/Product Shoot
5063-02 Crew
DP/Camera Operator 1 Day 750 750
Gaffer 1 Day 450 450
Acct# Description Amount Units X Rate Subtotal Total
5063-00 Sculptor/Product Shoot (CONT'D)
5063-02 Crew (CONT'D)
Gnp 1 Day 2 350 700
Make-up Artist 1 Day 400 400
Wardrobe 1.5 Days 400 600
Prop Master 3 Days 500 1,500
Production Assistants 1 Day 3 150 450 $4,850
5063-03 Equipment
Betacam Package 1 Day 850 850
Jib 1 Day 850 850
Generator 1 Day 750 750
Lighting/Grip Equipment 1 Day 700 700 $3,150
5063-04 Locations/Permits
Local Location Fee 1 Flat 1,500 1,500
Permit 1 Flat 400 400 $1,900
5063-05 Raw Stock, Processing
Betacam-SP 30 Min. Cassettes 4 Rolls 32 128 $128
5063-06 Art/Props Materials
Allowance Each Location 1 Flat 1,000 1,000 $1,000
5063-07 Wardrobe
Wardrobe Allowance Allow 250 250 $250
5063-10 Crew Lunch
Local Crew Lunches 15 Each 15 225 $225
5063-15 Craft Service
Craft Services 15 Each 6 90 $90
506- Total Fringes
STS PayTx 19.0% 4,850 922
O.C. Sales Tax 7.75% 128 10 $931
Total For 5063-00 $12,524
5064-00 B-Roll Scgments
5064-02 Crew
DP/ Camera Operator 1 Day 750 750
Grip 1 Day 2 350 700
Local Make-up Artist 1 Day 400 400
Wardrobe 2 Days 400 800
Production Assistants 1 Day 2 150 300
Art PA 2 Days 200 400 $3,350
5064-03 Equipment
Betacam 1 Day 600 600
Dolly 1 Day 350 350
Lighting/Grip Equipment 1 Day 500 500 $1,450
5064-04 Locations/Permits
Local Location Fee 1 Flat 1,000 1,000 $1,000
5064-05 Raw Sock, Processing
Beta Tapes 10 Rolls 32 320 $320
5064-06 Art/Props Materials
Allowance Each Location 1 Flat 500 500 $500
Acct# Dcscription Amount Units X Rate Subtotal Total
5064-00 B-Roll Segments (CONT'D)
5064-07 Wardrobe
Wardrobe Allowance Allow 300 300 $300
5064-09 Ground Transportation
Airport Trans. 0 Allow 100 0
Renlal Cars 0 Cities 70 0
Mileage Allow 200 200 $200
5064-10 Crew Lunch
Local Crew Lunches 15 Each 12 180 $180
5064-15 Craft Services
Craft Services 15 Each 6 90 $90
506- Total Fringes
STS PayTx 19.0% 3,350 637
LA SalesTax 8.25% 320 26 $663
Total For 5064-00 $8,053
5065-00 Health Club Shoot
5065-02 Crew
DP/ Camera Operator 1 Day 500 500
Grip 1 Day 2 350 700
Local Audio 1 Day 400 400
Local Make-up Artist 1 Day 400 400
Production Assistants 1 Day 2 150 300 $2,300
5065-03 Equipment
Betacam Package 1 Day 600 600
Lighting/Grip Equipment 1 Day 400 400
Audio Package for Video 1 Day 200 200 $1,200
5065-04 LocationslPermits
Local Location Fee 1 Flat 1 000 1,000 $1,000
5065-05 Raw Stock Processing
Betacam-SP 30 Min. Cassettes 10 Rolls 32 320 $320
5065-10 Crew Lunch
Local Crew Lunches 10 Each 15 150 $150
5065-15 Craft Services
Cralt Services 10 Each 6 60 $60
506- Total Fringes
STS PayTx 19.0% 2 300 437
O.C. Sales Tax 7.75% 320 25 $462
Total For 5065-00 $5,492
5065-00 Health Club Shoot
5066-02 Crew
A.D. 1.5 Days 450 675
Script Supervisor 1.5 Days 450 675
DP 3 Days 750 2,250
Camera Operator Video 1 Day 2 400 800
VC 1 Day 400 400
Gaffer 2 Days 450 900
Acct# Description Amount Units X Rate Subtotal Total
5065-00 Health Club Shoot
5066-00 Host Shoot (CONT'D)
5066-02 Crew (CONT'D)
Best Boy Electric 2 Days 425 850
Electrician 2 Days 375 750
Key Grip 2 Days 450 900
Best Boy Grip 2 Days 425 850
Grip 2 Days 375 750
Swing Grip 2 Days 350 700
Audio Recordist 2 Days 400 800
A-2 1 Day 300 300
Make-up 1 Day 400 400
Wardrobe 3 Days 400 1,200
Production Assistants 2 Days 4 150 1,200
Prop Master 2 Days 500 1,000 $15,400
5066-03 Equipment
BetaCams 1 Day 2 1,000 2,000
Video Equip 1 Day 500 500
Lighting/Grip Equipment 2 Days 2,500 5,000
Grip Truck 2 Days 450 900
Generator 2 Days 750 1,500
Audio Package for Video 2 Days 200 400
Wireless Mics 4 Each 2 60 480
Jib Rental 1 Day 500 500
Media Logger 1 Day 50 50
Radios 2 Days 8 20 320
Teleprompter 1 Day 500 500
Comtex 2 Each 15 30
Lighting Expendables 1 Total 500 500
Audio Expendables 1 Total 50 50 $12,730
5066-05 Raw Stock, Processing
Betacam-SP 30 Min. Cassettes 12 Rolls 2 32 768 $768
5066-06 Art/Props Materials
Prop Rental Allow 5,000 5,000 $5,000
5066-07 Wardrobe
Wardrobe Allowance Allow 1,000 1,000 $1,000
5066-08 Travel Lodging
Airfares (multi-stop) 0 R/T 1,400 0
Hotels 1 Nights 6 150 900
Tips 0 Days 25 0
Traveling Crew Members 0 Days 0 50 0 $900
5066-10 Locations/Permits
Location Scouting 0 Days 450 0
Location Fees 2 Days 2,500 5,000
Permits 1 Day 450 450
Location Expenses 1 Day 500 500
Security 2 Days 200 400 $6,350
5066-80 Crew Lunch
Crew Lunch 2 Days 40 18 1,440 $1,440
Acct# Description Amount Unlts X Rate Subtotal Total
5065-00 Health Club Shoot
5066-00 Host Shoot (CONT D)
5066-80 Crew Meals
Craft Services 2 Days 40 6 480 $480
506- Total Fringes
STS PayTx 19.0% 15,400 2,926
O.C. Sales Tax 7.75% 768 60 $2,986
Total For 5066-00 $47,054
TOTAL PRODUCTION $88,062
5065-00 Health Club Shoot
5068-00 Transcriptions & Window Dubs
5068-10 Transcriptions
Transcriber 40 Hours 25 1,000 $1,000
5068-50 VHS Dubs & Viewing Copies
VHS Window Dubbing costs Allow 400 400 $400
Total For 5068-00 $l,400
5065-00 Health Club Shoot
5070-00 Show Offline Editing
5070-01 Off-Line Editing
AVID Digitzing/Editing 14 Days 1,000 14,000 $14,000
5070-02 Off-Line Tape Stock
Off-line Tape Stock Allow 200 200 $200
Total For 5070-00 $14,200
5065-00 Health Club Shoot
5080-00 Show Online Editing
5080-11 On-Line Editing
On-line to D-2 Master 7 Days 1,560 10,920 $10,920
5080-12 On-Line Tape Stock
D-2 Blacked & Coded Stock 30 Minutes 4 120
1" Blacked & Coded Stock 30 Minutes 3 90
Beta-SP Blacked & Coded Stock 0 Minutes 2 0 $210
Total For 5080-00 $11,130
5065-00 Health Club Shoot
5081-00 Music
5081-10 Original Music Score
Estimate Allow 6,000 6,000 $6,000
Total For 5081-00 $6,000
5065-00 Health Club Shoot
5082-00 Sound ( Post Productlon)
5082-01 Lay Over/Lay Back
D-2 to One-inch 21 Passes 140 280 $280
50B2-10 Sweetening/Mix.
Sweetening/Mix-down 21 Hours 150 1,800 $1,800
5082-60 V.O. Recording Time
Recording Session time 21 Hours 150 300 $300
Total For 5082-00 $2,380
Acct# Description Amount Units X Rate Subtotal Total
5065-00 Health Club Shoot
5083-00 Duplication
5083-01 Misc. Duplication
1" Dubs 1 Each 170 170
3/4" Dubs 1 Each 80 80
VHS Dubs 4 Each 25 100 $350
Total For 5083-00 $350
5065-00 Health Club Shoot
5084-00 Art Direction & Graphics
5084-01 Art Direction Personnel
Art Direction Supervision Allow 5,000 5,000 $5,000
5084-02 Animation
Animation Allow 5,000 5,000 $5,000
Total For 5084-00 $10,000
5065-00 Health Club Shoot
5090-00 Administrative Expenses
5090-01 Messengers/Couriers
Allowance 6 Runs 30 180 $180
5090-08 Telephone/Fax/Cellular
Telephone / Fax 6 Weeks 100 600
Cellular time 2 Weeks 150 300 $900
5090-50 Office Supplies/Postage
Allowance Total For 5090-0O $1,180
5065-00 Health Club Shoot
5091-00 Shipping & Customs
5091-01 Fed Ex
Allowance 30 Packs 22.5 675 $675
Total For 5091-00 $675
5065-00 Health Club Shoot
5092-00 Unit Publicity
5092-20 NIMA Copies
NIMA Dubs 1 Each 401 401 $40
Total For 5092-00 $40
5065-00 Health Club Shoot
TOTAL OTHER $1,895
5095 Insurance $6,318
5096 Production Variance $0
4000 Production Fee $67,395
Acct# Description Amount Units X Rate Subtotal Total
TOTAL ABOVE-THE-LINE $75,193
TOTAL BELOW-THE-LINE $135,417
TOTAL ABOVE & BELOW-THE-LINE $210,610
GRAND TOTAL $284,324
Exhibit "B"
Affidavit
(Testimonial)
For valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound, I hereby give Dynamic
International, LTD. and Script to Screen, Inc. their representatives, assigns,
employees, and any person, corporation, or entity acting under their permission
or authority or for whom they might hereafter referenced (collectively the
foregoing are referred to as "Affiliates"), the right and permission to publish,
reproduce, distribute, and /or otherwise use my name, any still or moving
photographic image or sound recording of me or my minor child, in whole or in
part (the "Performance"), and any statement or endorsement (including any letter
or photograph), or any portions thereof (the "Testimonial"), made by me or my
minor child regarding or related to the product known as "Spalding Rotaflex"
(the "Product") in such manner, for such purposes and with such frequency as
they shall determine in their sole discretion without further compensation or
consideration to me and without further authorization by me. I further
acknowledge that the Performance and/or Testimonial shall constitute the sole
property of Dynamic International, LTD.
I also affirm (1) that any statements or endorsement made by me in the
Performance and/or Testimonial are factually accurate and represent my honest
opinions, findings, beliefs, or experiences, (2) that I was not compensated in
exchange for my endorsement but I have received a nominal, if any, reimbursement
for my time and expenses, and (3) that there exists no material connection
between myself and Dynamic International, LTD.
I hereby waive all rights of inspection or approval with regard to any
recording, taping, reproduction, proposed printed, audio or video publication
and/or other use of my name, the Performance and Testimonial. I also hereby
release, discharge and agree to hold harmless Dynamic International, LTD.,
Script to Screen, Inc. and their Affiliates from and against any and all
liability resulting from their use of my name, the Performance, and Testimonial
or related to my use of the Product.
I hereby warrant that I am over eighteen years of age, and competent to contract
in my own name. I have read this release and affidavit before affixing my
signature below, and warrant that I fully understand the contents thereof.
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Address Telephone
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Social Security Number
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