MASTER AGREEMENT TO DEVELOP, PUBLISH AND SELL PRODUCT
This agreement made the ___ day of October 2000
Between Party A:
CRAZY ENGLISH, an imprint and division of RENZHEN ENGLISH GROUP, of Guanglu
Plaza, Building 2, 5th Floor, 38 Beigangbeilu, Guangzhou Airport, Guang
Zhou, China 510405 ("Crazy English")
-And Party B:
LINGO MEDIA INTERNATIONAL INC., a subsidiary of LINGO MEDIA INC, of
`Sunstead' 9 Farringdon Close Paradise Heights St. James, Barbados ("Lingo
Media")
Whereas:
(a) The parties have an interest in developing and producing product for
sale in the China market;
(b) The parties agree to co-operate to develop and produce products as
specified in the product agreements that may be entered into between
the parties from time to time.
The Parties agree as follows:
Article 1 Definitions
In this agreement and any Product Agreement the following terms shall have the
following meanings:
a "Agreement" means the present Agreement, as amended from time to time, as
well as all Schedules and Appendices attached hereto or which the Parties
may later agree to attach hereto and any product agreement(s) entered into
between the Parties;
b "Approval" means any approval, authorization, consent, waiver, or other
similar official act granted by any Government Authority and required for
any matter contemplated by this Agreement;
c "Confidential Information" means all information obtained by or disclosed
by one party to another that relates to that party's or its customers past,
present or future research, development and business activities including
the results from performance of this Agreement but not including
information previously known to the other party or within the public
domain.
d "Cost of Goods Sold" means actual development costs and hard manufacturing
costs.
e "Crazy English Territory" means, unless otherwise specified in the product
agreement the People's Republic of China not including Hong Kong and Macao;
f "Develop or Development" means the engagement of authors to write the
content of the product, and the giving of editorial direction to the
writing of the authors;
g "Developing Party" means that party which is responsible for the
Development of a product under a product agreement, being Lingo Media in
conjunction with Crazy English;
h "Educational Market" means primary or elementary, junior, middle school and
higher educational institutions, unless otherwise defined.
i "Finished Product" or "Product" means printed books, duplicated audio
cassettes, duplicated videos, pressed CD-ROMs, pressed SVCD's, pressed
DVD's and other manufactured published product;
j "Governmental Authority" means any ministry, department, bureau, office or
other legally constituted organ of any Government;
k "Gross Profit" means gross sales less Cost of Goods sold as defined above;
l "Gross Sales" means total number of units sold multiplied by the list price
of the Product;
m "Lingo Media Territory" means, unless otherwise specified in the product
agreement(s), the world market except the Crazy English Territory;
n "List Price" means price printed or marked on the Product;
o "Net Sales" means Gross Sales less any discounts as specified and agreed to
in product agreement;
p "Parties" means the parties to this Agreement as well as their permitted
successors and assigns;
q "Produce or Production" means carrying out all matters relating to the
publication of the Product and necessary to make the Product ready for
shipment to the customer in its final form including but not limited to the
formatting, printing, binding, cover design and supply of the paper or
duplicating and packaging of the Product;
r "Producing Party" means that party which is responsible for Production
under a product agreement;
s "Product Agreement" means an agreement entered into pursuant to Article 4
of this Agreement;
t "Publication" means publication or material in any medium as agreed in a
Product Agreement;
u "Trade Market" means bookstores, other retailers and direct-to-consumer
channels. In the Crazy English Territory, Trade Market includes 2nd
channels of distribution.
Article 2 Co-Appointment of Publishers
In addition to the rights and obligations here under, Lingo Media appoints and
authorizes Crazy English to co-operatively publish Product in the Crazy English
Territory only.
Article 3 Co-operative Projects
The parties agree to co-operate to Develop, Produce and sell Product in
accordance with this Agreement and any Product Agreement that may be entered
into between the parties from time to time.
Article 4 Product Agreements
(a) When the parties wish to Develop, Produce and sell a Product, the
parties shall enter into Product Agreements with respect to that
specific Product, the terms of which shall include, but not be limited
to, the following:
(i) the content quality standard of the Product;
(ii) the Production quality of the Product;
(iii) the responsibility and costs for distribution of the Product;
(iv) the promotion of the Product;
(v) the List Price of the Product;
(vi) the wholesale terms of sale of the Product to third parties; and,
(vii) the payment of money to each party.
(b) Any Product Agreement shall form an integral part of this Agreement
Article 5 Development of the Product
The Developing Party agrees to Develop Product in accordance with this Agreement
and the relevant Product Agreement.
Article 6 Costs in Developing the Product
(a) In the case of Product the content of which is primarily in the English
language, Lingo Media shall be responsible for all authorial costs but
not any payment of money to the authors appointed by Crazy English (if
applicable) incurred up to and including final version of the Product.
Any exception for a particular product will be agreed to by both
parties in writing.
(b) In the case of Product the content of which is (i) primarily in the
English language, Crazy English shall be responsible for all
illustration, design and layout costs and (ii) primarily in the Chinese
language, Crazy English shall be responsible for all developmental
costs (but not any payment of money to the authors appointed by Lingo
Media) incurred up to and including final version of the Product. Any
exception for a particular product will be agreed to by both parties in
writing.
Article 7 Consulting in Development of the Product
Lingo Media shall regularly consult with Crazy English during the Development of
the Product.
Article 8 Assistance with Development
Lingo Media may, in the course of Development, request Crazy English to assist
Lingo Media in the Development of the Product by engaging authors to assist in
the writing or editing of the Product. Crazy English agrees to engage authors at
its own cost to assist Lingo Media in the writing or editing of the Product.
Article 9 Illustrations
The cost of producing any illustrations shall be borne by Crazy English and
Crazy English shall obtain an assignment of copyright to Crazy English and Lingo
Media from the author of the illustrations.
Article 10 Recording
Crazy English shall produce the master tapes for audiocassettes subject to Lingo
Media's approval, at Crazy English's own cost and Crazy English shall be
responsible for the costs of manufacturing the copies in China for the Crazy
English Territory only.
Article 11 Production of the Product
Crazy English agrees to produce the Product in accordance with this Agreement
and the relevant Product Agreement. Crazy English shall produce the Product
within the number of days specified in each Product Agreement after supplied
with the Product as Developed by Lingo Media unless otherwise agreed between the
parties in writing.
Article 12 Naming Rights
Crazy English undertakes to set the name of the authors (if appropriate),
imprint names and logos of both parties in its customary form with equal
prominence including Lingo Media' or its subsidiary's or affiliate's URL/Website
address on the front and back cover, title page, copyright page, and jacket (if
applicable) on every copy of Product manufactured or licensed to third parties
by Crazy English.
Article 13 Cost of Producing the Product
Unless the parties agree otherwise in the relevant Product Agreement:
Crazy English shall be solely responsible for Producing and paying all
Production costs for distribution and sale of the Product in the Crazy English
Territory only.
Article 14 Consultation in Production
Crazy English shall, in Production of the Product, consult with Lingo Media on
all matters in accordance with this Agreement and the Product Agreement. Crazy
English agrees not to produce the Product without the written agreement and
sign-off from Lingo Media as to the final editing, illustrations and photography
(if applicable), formatting, paper, binding and cover design.
Article 15 Quality of the Content of the Product
The parties hereby appoint the Developing Party to determine the final quality
of the content of the Product.
Article 16 Other Costs
Except as otherwise provided in Articles 6, 13 and 18 hereof Crazy English shall
be responsible for all other costs incurred in the Crazy English Territory or in
connection with the Product warehoused or sold in the Crazy English Territory
including but not limited to inventory control, establishment and operation of
order departments, billing, credit and collections, warehousing and shipping to
the customer(s).
Article 17 Promotional Activities
In addition to any obligations relating to Promotion Activities in a Product
Agreement, Crazy English shall also be responsible for carrying out promotion of
the Product in any and all book stores, other retailers, primary and middle
schools, universities, other higher educational institutions, direct to consumer
channels and 2nd channels in the Crazy English Territory.
Article 18 Promotional Expenses
As specified in the Product Agreement(s).
Article 19 Taxes
Crazy English shall pay all taxes of any kind, applicable to the sale of the
Product imposed or assessed in the Crazy English Territory. Lingo Media shall be
responsible for any applicable taxes on its royalties received from Crazy
English in the Crazy English Territory unless otherwise specified in the Product
Agreement.
Article 20 Sale of the Product
(a) Both Parties shall have the rights to sell a Product in the Crazy
English Territory and Crazy English shall be obliged to sell a Product
in the Crazy English Territory;
(b) Any sale of a Product to a third party in the Crazy English Territory
shall only be carried out after written notice to the other party as to
the quantity of the Product proposed to be sold;
(c) Any sale of the Product to a third party in the Crazy English Territory
shall be at the sale price and in accordance of the terms of sale of
the Product as agreed between the parties in the relevant Product
Agreement.
Article 21 Receiving of Money
Lingo Media hereby authorizes and empowers Crazy English to sell Products and
receive all sums for the sale of the Product in the Crazy English Territory in
accordance with the terms of this Agreement unless otherwise specified in the
Product Agreement.
Article 22 Payment of Money
Crazy English agrees that any money received by Crazy English from the sale of a
Product in the Crazy English Territory shall be shared between the Parties in
the proportions as specified in the relevant Product Agreement.
Article 23 Statement of Sales
(a) Crazy English shall prepare quarterly statement of sales detailing all
sales of Finished Product and all sales of copyrights and/or film
rights (if applicable) in the Crazy English Territory and such
statements shall be delivered to Lingo Media within 30 business days
following the end of each calendar quarter unless otherwise specified
in the Product Agreement.
(b) Upon reasonable written notice and during Crazy English's normal
business hours, Lingo Media or its authorized representative or
appointed auditor shall have the right to examine Crazy English's
records at that place at which they are normally kept, in so far as the
such records relate to the sales and receipts in respect of the
Product. Such examination shall be at the cost of Lingo Media, but in
which case there is in excess of 2.5% of the amount due to Lingo Media,
the cost of such examination (including the cost of any domestic and
international travel and accommodation) shall be borne by Crazy
English. Any amount shown to be due shall be paid forthwith by Crazy
English to Lingo Media unless otherwise specified in the Product
Agreement.
Article 24 Engagement and Payment of Authors
(a) Each party shall, from time to time and within its own discretion, in
accordance with the terms hereof, engage its own authors to develop or
to assist in the development of a Product and shall obtain an
assignment of the copyright from the authors. Any exception for a
particular Product will be agreed to by both parties in writing.
(b) Each party shall pay the monies due to the authors it has engaged. No
party shall have financial responsibility to the authors engaged by the
other party. Any exception for a particular Product will be agreed to
by both parties in writing.
Article 25 Meetings Abroad
During the Development and sale of the Product it will be necessary, from time
to time, to hold meetings between personnel of Crazy English and Lingo Media,
authors and production consultants either in Canada or China. The parties will
share the expenses equally.
Article 26 Approvals
Crazy English agrees to obtain all Approvals from the Chinese Government
necessary for the Agreement and any Product Agreement to come into effect and to
allow the sale of Product in China.
Article 27 Foreign Exchange
Crazy English agrees that it shall obtain all Approvals necessary for the
payment to and shall pay to Lingo Media all sums due in US dollars. When Crazy
English receives sums of money in RMB it agrees that the portion of that sum of
money payable to Lingo Media shall, at Crazy English's expense, be converted to
US dollars at the rate for exchange of RMB cash to US dollars cash offered by
the Bank of China on the final day of the quarter in which Crazy English
received the sum of money.
Article 28 Ownership of Copyright in the Products
Lingo Media shall own the copyright in the works written by the authors engaged
by it in the Development of the Product except for the Crazy English Territory,
where Lingo Media and Crazy English will jointly own the copyright for the
edition published in the Crazy English Territory as further defined in the
Product Agreement.
Each party shall do all acts necessary so that the copyright is held jointly by
Crazy English and Lingo Media for the edition published in the Crazy English
Territory only. For all markets outside the Crazy English Territory, Lingo Media
shall own 100% of the copyright ownership and Crazy English agrees to provide a
duplicate set of film for books and masters for audio cassettes to Lingo Media
at actual cost, if requested in writing unless otherwise specified in the
Product Agreement.
Article 29 Disposal of Surplus Stock
The Parties may agree between them in writing that a Product has ceased to have
sufficient sales to justify stockage costs and to sell the remaining stock on
hand at a discount price or to divide the remaining stock equally between them.
Article 30 Termination
(a) A party may terminate this Agreement and the Product Agreement
if the other party breaches a material term of this Agreement
or a Product Agreement and the other party fails to remedy the
breach with 90 days of receiving notice by the Party to remedy
the breach.
(b) Lingo Media may, after Development and Production of a
Product, terminate the relevant Product Agreement if the Crazy
English is not able to sell a minimum number of copies per
title of Product per 12 month period as outlined in the
attached Product Agreement, unless otherwise specified in the
Product Agreement.
(c) Either party may terminate the Agreement if an event of force
majeure exists for more than 60 days.
Article 31 Notices
All Notices given under this Agreement shall be deemed sufficiently served if
sent by both facsimile and registered post to any address given herein or at any
other address which such Party shall designate for the receipt of such
correspondence.
Article 32 Term of this Agreement
(a) The Agreement shall commence on the signing hereof and shall
expire 50 years after the death of the authors of all Product
Developed and Produced hereunder unless earlier terminated
hereunder.
(b) Any Product Agreement entered between the parties pursuant to
this Agreement shall expire on the same day as provided in
(a).
(c) Upon termination or expiration of this Agreement, the party,
which is the Producing Party under a Product Agreement hereby,
assigns its copyright in the Product Developed and Produced
pursuant to that Product Agreement to the Developing Party
under that Product Agreement.
Article 33 Force Majeure
Neither party shall be liable for any delay or failure to perform arising from
any cause such as strikes, Acts of God, war and civil unrest or other unforeseen
event of a similar nature.
Article 34 Independent Contractor
Each Party hereto is an independent contractor and is not an agent of the other.
Neither Party shall have the power to bind the other without express written
consent of the other, had and obtained in each instance. Neither Party shall
misrepresent or misstate its status hereunder.
Article 35 Compliance with Laws
Each Party hereto shall comply with all applicable laws, ordinances, rules,
regulations, proclamations and decrees of duly constituted governmental
authority.
Article 36 Assignment of the Agreement and Project Agreements
This Agreement and any Product Agreement entered into pursuant hereto may not be
assigned without the prior written consent of the other Party and such consent
shall not be unreasonably withheld. The consent of Crazy English shall not be
required to the assignment by Lingo Media of its rights and obligations under
this Agreement and the Product Agreement to a subsidiary or affiliate of Lingo
Media or to the parent company, Lingo Media Inc.
Article 37 Confidential Information
Neither party shall disclose to any person the Confidential Information of the
other party.
Article 38 Proprietary Rights
Without limiting any other representations and warranties, each party represents
to the other that no copyright, trademark, trade name or other proprietary right
has been or will be infringed in the Development process, Production, sale,
delivery or use of the Product, and if such infringement is alleged or has or
does occur, the party at fault shall indemnify and hold the other party harmless
from all claims, judgements, penalties, damages and expenses arising from such
allegations or findings of infringement.
Article 39 Entire Agreement
This Agreement and the Product Agreement signed pursuant hereto constitute the
entire agreement between the parties and supersedes all previous Agreements and
understandings between the parties in respect of the subject matter hereof and
may not be changed except by an amendment in writing duly signed by the Parties.
Article 40 Choice of Laws
This Agreement shall be governed by and construed in accordance with the laws of
Singapore.
Article 41 Dispute Resolution
(a) The Parties shall strive to settle any dispute, controversy or
claim arising from the interpretation or performance of or in
connection with this agreement through friendly consultations.
In case no settlement can be reached within ninety (90) days
of the submission of the matter by one party to the other
party, then such a matter may be submitted to the Singapore
International Economic and Trade Arbitration Commission for
arbitration in accordance with its rules.
(b) The arbitrary panel should consist of three arbitrators, one
chosen by each of the parties with the third arbitrator to be
selected by the arbitrators but who shall be neither of
Chinese nor Canadian nationality. Arbitration shall be
conducted in English. The arbitral award shall be final and
binding on the parties and shall be enforceable within its
terms. Filing it as a judgement in any court having
jurisdiction may enforce the award and application may be made
to any court for assistance in enforcing the award. The losing
party shall pay arbitration expenses (including attorney
fees).
(c) The parties agree that if it should become necessary for a
party to enforce an arbitral award by legal action of any
kind, the party against which such legal action is taken shall
pay all reasonable costs and expenses and legal fees,
including but not limited to any cost of additional litigation
or arbitration incurred by the party in seeking to enforce the
award.
Article 42 Representations and Warranties
The parties represent and warrant to each other that:
(a) It is a duly established and existing legal entity;
(b) It has full capacity and authority to execute and deliver the Agreement,
to complete the transactions, contemplated hereby and to duly observe and
perform all of its obligations herein;
(c) Neither the execution and delivery of this Agreement or any Product
Agreement nor the completion of transactions hereunder will conflict
with our result in a breach of any of the provision of the charter
documents or any agreement to which it is bound, nor constitute a
default under any of the foregoing or violate any law, rule,
regulation, judgement or decree by which it is bound;
(d) This Agreement has been duly authorized, executed and delivered by it
and constitutes a legal, valid, and binding obligation enforceable
against it in accordance with its terms.
IN WITNESS WHEREOF, each of the Parties have duly executed this Agreement in
duplicate by their duly authorized representatives on the dates set forth below.
SIGNED, SEALED AND DELIVERED in the presence of:
CRAZY ENGLISH
___________________________ ) Per: _________________________
Witness )
) Name: _________________________
)
) Date: _________________________
___________________________ ) Per: _________________________
Witness )
) Name: _________________________
)
) Date: _________________________
LINGO MEDIA INTERNATIONAL INC.
___________________________ ) Per: _________________________
Witness )
) Name: _________________________
)
) Date: _________________________
___________________________ ) Per: _________________________
Witness )
) Name: _________________________
)
) Date: _________________________