PRODUCT AGREEMENT #2
Pursuant to the MASTER AGREEMENT TO DEVELOP, PUBLISH AND SELL PRODUCT entered
into between CRAZY ENGLISH, ("Crazy English") and LINGO MEDIA INTERNATIONAL INC.
("Lingo Media") dated the _____, day of October 2000, the parties agree to enter
into this Product Agreement with respect to the Product and agree as follows:
Article 1 The Product
The parties agree that Lingo Media is developing a Product, being six (6)
student books and twelve (12) audio cassettes in a series provisionally
entitled:"BEGINNING ENGLISH FOR YOUNG LEARNERS" written by David Booth, Jack
Booth, Linda Booth & Larry Swartz, and Meng Yanjun, Zhang Lingdi and Lin Li. The
six single illustrated student books and accompanying twelve audio cassettes
have been licensed to Foreign Language Press for the Beijing educational market
only. This agreement is for a substantially revised, colour edition.
Article 2 The Rights, The Market and Term
Crazy English will have exclusive rights and agrees that it will publish and
sell a consolidated and revised Product (student books, audiocassettes and any
other related Product in the Trade Market only in the Crazy English Territory.
The Trade Market is defined as retail bookstores, other retailers, direct to
consumer channels and 2nd channels. Crazy English agrees that it will publish
and sell the Product for the market defined above. The term of this Product
Agreement will be for five (5) years commencing October ___, 2000 and expiring
October ____, 2005.
Article 3 Development of the Product
The party responsible for the Development of the product to date has been Lingo
Media. The series currently consists of 3 student books illustrated in black and
white. The parties to be responsible for the revised edition shall be Lingo
Media and Crazy English. Samples of each of the first two (2) books have been
delivered to Crazy English. The third book will be delivered in October 2000,
together with the first 6 master audio tapes. The party responsible for
commissioning and producing new 4 colour illustrations and new book and
audiocassette covers will be Crazy English. If, in the opinion of both parties,
additional master audio tapes are required to be recorded for this edition of
the Product, this additional expense will be the responsibility of Crazy English
Article 4 Production of the Product
The party responsible for Production shall be Crazy English. Crazy English shall
produce the Product within sixty (60) days after being supplied with the Product
as Developed by Lingo Media unless otherwise agreed between the parties.
Article 5 Joint Ownership of Copyright in the Product
The copyright in the works of the Project shall be owned jointly by the parties
for the Crazy English Territory in accordance with the terms hereof and the
terms of the above-mentioned agreement. In the event of copyright infringement
in the Crazy English Territory, each party will notify the other party in
writing. The parties agree to jointly pursue appropriate action, which may or
may not include legal recourse.
Article 6 The Quality of Content of the Product
The parties agree that the quality of the content of the Product shall conform
to
Printed Product: The revised edition of the Product shall:
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a) contain new illustrations in a style approved by both parties, b) be produced
in four (4) colour c) contain text and/or captions on each page coinciding with
the new illustrations d) contain newly designed covers.
Audio Cassettes: The revised edition of the Product shall:
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a) contain original recordings which may be edited and/or condensed
b) be packaged with newly designed j-cards.
The party responsible for final approval of the quality of the content shall be
Lingo Media.
Article 7 The Quality of Production of the Product
The parties agree that the quality of Production of the printed Product shall
conform to that of other first class children's educational books currently
available, including cover designs, text and cover paper stock, printing quality
and binding quality. The recorded Product shall be professionally reproduced on
quality audio tape, be wound into quality audiocassette shells and be
appropriately labeled.
The party responsible for final approval of the quality of production shall be
Lingo Media.
Article 8 The List Price of the Product
The parties agree that the sales price of each component shall not be less than
the following
_____ RMB per unit for each book.
_____ RMB per unit for each audiocassette
_____ RMB per unit for each ________________
Article 9 The Quantity of the Product
The parties agree that Crazy English shall, during each twelve (12) month period
hereafter for five (5) years, sell not less than the following quantities:
________ units of each book
________ units of each audiocassette
________ units of each _______________
Article 10 Distribution of the Product
The parties agree that Crazy English shall be responsible for distribution of
the Product in the Crazy English Territory.
Article 11 Places for Promotion of the Product
The parties agree that the Product shall be promoted primarily in the following
cities and/or provinces in the Crazy English Territory:
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Article 12 Authors & Co-Publisher Copies
The authors shall be furnished free of charge, six (6) copies of the series as
originally published and any additional copies desired by the Authors for their
personal use shall be supplied at a discount of thirty-five (35%) percent from
List Price. The Co-Publisher, Lingo Media, shall be furnished free of charge 100
(one hundred) copies of the series as originally published and any additional
copies desired by Lingo Media for marketing and promotional use shall be
supplied at a discount of sixty-five (65%) percent from List Price
Article 13 Remuneration of the Parties
The revenues received by the parties from the sales of Finished Product shall be
divided between the parties as follows:
Lingo Media shall receive twelve percent (12%) for quantities up to and
including 20,000 copies, eleven percent (11%) for quantities greater than 20,001
copies up to and including 30,000 copies, and ten percent (10%) for quantities
greater than 30,0001 copies based on the Gross Sales and Crazy English shall
retain the balance for each 12 month period.
Each party will be responsible for the remuneration of their authors.
Article 14 Subsidiary Rights
In accordance with the terms of the above-mentioned Agreement, the parties have
the joint right to exercise and dispose of all subsidiary terrestrial rights in
the Works for the Crazy English edition, now or hereafter known, in all
languages, forms and media throughout the world, including the following: rights
for translations, quotations, excerpts (including illustrations), reprint
editions, and sales of sheets; microfilm, microfiche, recording, filmstrip,
motion picture, and broadcasting rights. Any net gain received from the
disposition of such subsidiary rights in the Crazy English Territory shall be
divided equally between Crazy English and Lingo Media after deducting the costs
applicable thereto. Non-terrestrial rights (Internet, wireless, over-the-air
rights for use in information storage, processing, transmission and retrieval
systems) are specifically excluded and shall be owned by Lingo Media.
Article 15 Statement of Sales
In accordance with the MASTER AGREEMENT TO DEVELOP, PUBLISH AND SELL PRODUCT,
Crazy English shall provide to Lingo Media party a Statement of Sales. Crazy
English shall pay to Lingo Media all money due to Lingo Media in US dollars
within 30 days of the last day in each of March, June, September and December of
each year from the sales revenue for the Product in that preceding period of
three (3) months.
Article 16 Termination
In accordance with the terms of MASTER AGREEMENT TO DEVELOP, PUBLISH AND SELL
PRODUCT, a Developing Party may, after Development and Production of a Product,
terminate the relevant Product Agreement if Crazy English is not able to sell a
minimum number of units per title as indicated in Article 9.
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: ____________________________________
s___________________________ ) Per: ____________________________________
Witness )
) Name: ____________________________________
)
) Date: ____________________________________