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ASSIGNMENT AND EXCLUSIVE SERVICES AGREEMENT
THIS ASSIGNMENT AND EXCLUSIVE SERVICES AGREEMENT is made and entered
into this 26th day of May, 2006 to be effective as of April 1, 2006 (the
"Effective Date") by and between DIVERSE TALENT GROUP, INC., a California
corporation ("DTGroup"), Christopher Nassif ("Nassif" or collectively with
DTGroup, "DT") and DIVERSE MEDIA GROUP CORP. ("DMG") a Utah corporation and a
wholly-owned subsidiary of Cirtran Corporation, a Nevada corporation.
RECITALS
A. DT operates as a licensed talent agency in Los Angeles,
California. DT has developed extensive industry contacts among both talent and
producers.
B. DMG is commencing a diversified media business of product
marketing, infomercial production, media financing and product merchandising
services to the Direct Response and Entertainment Industries. As part of such
business, DMG intends to establish an exclusive operations relationship with DT
whereby DMG will outsource its talent agency operations to DT and provide
financing to DT to assist in its growth.
C. The parties intend to create a exclusive relationship between
themselves whereby DT operate solely under the DMG infrastructure, as described
herein.
D. The Term of this agreement shall be for 60 months beginning on
April 1st, 2006 and expiring on March 31, 2011.
NOW THEREFORE, in consideration of the mutual covenants and conditions
contained herein and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, the parties, intending to be
legally bound, agree as follows:
1. DT Services. During the term of this Agreement, DT will
provide the following services to DMG:
(a) DT will provide, on an outsource or subcontract
basis, all creative and operational needs of the "Talent Division" of DMG (the
"Agency Services") by maintaining and, as necessary, growing its present
operations. Except for client contracts which DMG expressly allows DT to retain
as provided herein, DT will supply the Agency Services exclusively to DMG and
will provide all of DMG's reasonable requirements for Agency Services. All
services to be provided by DT hereunder shall be performed in a prompt and
professional manner consistent with DTGroup's past practices.
(b) As provided in paragraph 3, all gross revenues
generated from DT's operations shall be directed and made payable to DMG from
and after the Effective Date.
(c) DMG will be responsible to make payments to the
talent on Talent Contracts assigned to it hereunder.
2. Initial Payment. Upon mutual execution of this Agreement, DMG
will pay to DT an initial non-recoupable payment of Fifty Thousand Dollars
($50,000.00) in full consideration of the following: (i) the right to use the
name "Diverse" and be associated with the existing goodwill and reputation of DT
(which rights survive termination of this agreement as outlined in this
agreement), (ii) the right to obtain DT's Agency Services on an exclusive basis
as described in paragraph 1, (iii) all accounts receivable and contracts
receivable of DTGroup as of the Effective Date, and (iv) assignments of the
Talent Contracts described in paragraph 3.
3. Assignment of Talent Contracts, First Right of Refusal. DT has
attached hereto as Schedule "A" a list of all talent DT has under contract as of
the Effective Date (whether exclusively, non-exclusively or for specific
projects) with a description of the terms of such contracts. Within 5 business
days, DMG will notify DT of any such contracts which DMG declines to assume.
With the exception of the contracts which DMG has expressly declined to assume,
all of such contracts (the "Talent Contracts") shall be assigned to DMG as of
the Effective Date. If any of the Talent Contracts cannot be formally assigned
as of the Effective Date due to provisions in the Talent Contract itself or the
need for DMG to register as a talent agency, then pending formal assignment DT
shall deliver 100% of the gross revenue received under such Talent Contract to
DMG. If any of the Talent Contracts requires the consent of the talent for
assignment, DT will use its best efforts to obtain such consent in a timely
manner. The consideration for assignment of the Talent Contracts is the initial
payment described in paragraph 2 and the payments described in paragraph 4.
After the Effective Date, DT will present to DMG, in writing, potential new
contracts with talent. DMG will have at least five business days to determine
whether to sign the talent itself and treat such contract as a Talent Contract.
If, but only if, DMG acting through its CEO declines to sign the talent, DT may
sign the talent directly.
4. Ongoing Compensation. The compensation for the services
rendered hereunder shall be as follows:
(a) As used herein, the "Gross Profit" shall mean (i) for
Talent Contracts on a standard form such as those used by DT prior to the
Effective Date, the entire agent's commission, which has typically been 10% of
the gross amount payable to the talent, and (ii) for Talent Contracts where DMG
will contract directly with the employer/producer to provide the talent, the
difference between the gross revenue received by DMG and the earned amount that
DMG must pay to the talent. Gross Profit is recognized for purposes of this
Agreement only when payment is actually received by DMG.
(b) DT will be responsible to pay for all its direct
overhead, labor and expenses to operate its business from its share of Gross
Profit paid by DMG in accordance with this paragraph 4.
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(c) Gross Profit from Talent Contracts in existence as of
the Effective Date shall be divided 85% to DTGroup and 15% to DMG (e.g. from the
standard 10% agent's commission, DTGroup will receive 8.5% and DMG 1.5%).
(d) Marginal Gross Profit from Talent Contracts entered
into after the Effective Date shall be divided between DTGroup and DMG based on
the cumulative Gross Profit received pursuant to such Talent Contract as set
forth in the following schedule:
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Cumulative Gross Profit DTGroup share DMG balance
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$500,000 or less 62.5% 37.5%
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$500,001 to $1,000,000 65.0% 35.0%
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$1,000,001 to $1,500,000 67.5% 32.5%
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$1,500,001 to $2,000,000 70.0% 30.0%
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$2,000,001 to $2,500,000 72.5% 27.5%
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Over $2,500,000 75.0% 25.0%
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DTGroup's compensation with respect to a payment received
under a Talent Contract will be paid within ten (10) days after DMG's receipt of
the payment. As an example, if over the term of Talent Contract DMG has received
total Gross Profit of $750,000, the total payments to DTGroup with respect to
such Talent Contract would be $475,000 (62.5% of $500,000 plus 65% of $250,000)
and DTGroup would be paid $0.65 of the next dollar of Gross Profit received
under such Talent Contract.
5. Nassif. Unless waived in writing by DMG, it is a condition to this
Agreement that Nassif remain employed by DTGroup and active in and responsible
for its business. Nassif shall also be employed by DMG as Talent Division
President of DMG directly responsible for the Talent and Production divisions of
DMG pursuant to an employment agreement on terms mutually acceptable to the
parties. In addition, Nassif will be recognized as a co-founder of DMG's Talent
Division. The employment agreement will provide that Nassif shall be compensated
for new business generated by him for DMG's other divisions in an amount equal
to 5.0% of the gross margin actually received by DMG from such business, net of
discounts and returns. The employment agreement may provide that up to 50%, (at
Nassif's sole discretion provided he notify DMG and its parent company in
writing prior to the commencement of said new business operations) of such
compensation is payable in the form of stock of DMG's parent corporation,. In
addition, Nassif shall be issued 2,500,000 stock options pursuant to the parent
corporation's option plan exercisable at $.06 per share with a five year term.
The options will vest 20% upon grant and an additional 20% per year, subject to
continued employment by DMG, beginning on the first anniversary of the date of
the execution of this agreement until fully vested. Nassif shall have mutual
approval on all public relations and similar communications relating to the
Talent and Production Division Operations. Nassif's employment agreement will
provide that he is entitled to reimbursement of all pre-approved business
expenses incurred on behalf of DMG or its parent.
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6. Capital Financing. DTGroup and Nassif agree that DTGroup will
maintain sufficient staff and equipment to fully and professionally perform the
services required of it hereunder. Upon the request of DT, DMG will make working
capital loans to DTGroup to enable it to provide services hereunder. The working
capital loans will be on such terms as the parties may mutually agree upon but
will not bear interest. As an initial working capital loan, DMG will provide
DTGroup with a non-interest bearing working capital line of credit in the amount
of $200,000 with weekly draws not to exceed $20,000 on terms to be negotiated by
the parties. All outstanding working capital loans will become due and payable
upon termination of this Agreement.
(a) Capital Investment: It is understood by both parties
that it is DMG's intention to commit such capital as is determined by the Boards
of Directors of DMG and its parent corporation as they deem reasonably necessary
to grow the business operations and revenue of DMG's Talent Division, including
but not limited to marketing, public relations, office expansion, attraction of
key executives, advertising etc. DMG will consult with Nassif regarding the
timing and amount of such capital commitments.
7. Term, Renewal, Termination.
(a) This Agreement shall be for an initial term of five
years commencing on the Effective Date (the "Initial Term").
(b) This Agreement shall renew for successive terms of
five years each unless at least 30 days prior to the end of the Initial term or
then-current renewal term either party notifies the others of its intent to not
renew.
(c) This Agreement may be terminated by either party:
(i) if the other party defaults in any payment
to the terminating party and such default continues without a cure for a period
of 20 days after the delivery of written notice thereof by the terminating party
to the other party;
(ii) if the other party defaults in the
performance of any material term or condition of this Agreement other than the
payment of money and such default continues unremedied for a period of 30 days
after the delivery of written notice thereof by the terminating party to the
other party.
(d) To fully vest in DMG the rights to the Diverse name
it has purchased hereunder, upon any termination of this Agreement, DTGroup
shall promptly change its corporate and business name to remove the word
"Diverse". Furthermore, in such event DTGroup agrees that for a period of two
years following termination it will not, without DMG's express written consent,
(i) represent the talent who were under contract with DMG at the time of
termination, or (ii) operate, directly or through an affiliate, a talent agency
located within Los Angeles County.
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8. Buy-Sell Agreement.
(a) In the event that this Agreement terminates due to a
non-renewal by either party pursuant to paragraph 7(a), then upon termination
(i) DTGroup shall have the option to purchase the Talent Division Assets (as
defined below) not already owned by it (the "DTGroup Option"), and (ii) DMG will
have the option to purchase the Talent Division Assets as defined below (the
"DMG Option" or collectively with the DTGroup Option, the "Options") not already
owned by it on the terms outlined herein. Each of the parties will have 45 days
after the effective date of termination to notify the other party whether or not
it desires to exercise its Option.
(b) The exercise price of the Options will be equal to
50% of the average annual Gross Profit used in calculating DTGroup's ongoing
compensation for the three years preceding termination.
(c) If only one of parties desires to exercise its
Option, then a closing will occur as soon as practicable after the end of the 45
day period referred to above at which the exercising party pays the exercise
price and the non-exercising party transfers to the exercising party the Talent
Division Assets owned by the non-exercising party. The exercise price shall be
paid in full at closing, and the Talent Division Assets shall be transferred
free and clear of all liens, claims and encumbrances, unless the parties
mutually agree upon other terms. If DTGroup is the purchasing party, it shall be
relieved of the name and non-competition obligations of paragraph 7(d). Both
parties agree that in the event DTGroup purchases the Talent Division Assets,
DMG will be allowed to operate its remaining business under the Diverse Media
Group name.
(d) If both parties, or neither party, state a desire to
exercise its Option in the 45 day period, and if the parties cannot agree on a
sale between themselves on mutually agreeable terms, then the parties shall use
their best efforts to sell the Talent Division Assets to a third party on
mutually agreeable terms, in which event the sales price (including cash and the
value of any assumed debt), net of commissions and other customary costs of
sale, shall be divided 50% to DTGroup and 50% to DMG. The parties shall
cooperate with each other in good faith throughout the sale process.
(e) As used herein, the "Talent Division Assets" shall
mean (i) all tangible and intangible assets and rights used by DTGroup in
connection with its talent agency business, including any agreements with talent
retained or obtained by DTGroup, plus (ii) all intangible asset and rights used
by DMG in connection with its Talent Division, including the Talent Contracts
and rights to the Diverse name, but excluding any assets used principally for
other operating divisions of DMG.
9. Authority. DMG's discretion to accept or approve Talent
Contracts under paragraph 3 and to approve the terms of working capital loans
under paragraph 6 may only be exercised by writings executed by its Chief
Executive Officer.
10. Assignment. This Agreement shall be binding upon the parties
and their respective successors and assigns, provided that neither party may
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assign this agreement without the written consent of the other party. Consent to
assignment shall not be unreasonably withheld, provided that the consenting
party may require evidence to its reasonable satisfaction that the proposed
assignee will be able to perform the obligations of the proposed assignor.
11. Notices. All notices hereunder shall be sufficiently given for
all purposes hereunder if in writing and delivered personally, sent by document,
overnight delivery service or, to the extent receipt is confirmed, telecopied to
the appropriate address or number set forth below.
Notice to DT or Nassif shall be addressed to:
Diverse Talent Group
1875 Century Park East, Suite 2250
Los Angeles, CA 90067
Attention: Christopher Nassif
Fax: __________
Notices to DMG shall be addressed to:
Diverse Media Group Corp.
1875 Century Park East, Suite 1790
Los Angeles, CA
Fax 310-492-0404
Att: Trevor Saliba
With a required copy to:
CirTran Corporation
4125 South 6000 West
West Valley City, Utah 84128
Attention: Iehab Hawatmeh
Fax: 801-963-5180
or at such other address and to the attention of such other person as either
party may designate by written notice to the other.
12. Governing Law, Dispute Resolution. This agreement shall be
governed by and construed by the laws of the State of Utah, disregarding the
conflicts of laws provisions thereof. Any claim, dispute or controversy arising
out of, or relating to any section of this Agreement or the making, performance,
or interpretation of the rights and obligations explicitly set forth in this
Agreement shall, upon the election by written notice of either party, be settled
on an expedited basis by binding arbitration in Salt Lake City, Utah before a
single arbitrator mutually agreeable to the parties, or if no agreement is
reached, before a single arbitrator from the American Arbitration Association
selected in accordance with its rules then in effect, which arbitration shall be
conducted in accordance with such rules, and judgment on the arbitration award
may be entered in any court having jurisdiction over the subject matter of
controversy.
13. Attorneys' Fees. In the event of any litigation concerning any
controversy, claim or dispute among the parties hereto, arising out of or
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relating to this Agreement or the breach hereof, or the interpretation hereof,
the prevailing party shall be entitled to recover from the losing party
reasonable expenses, attorneys' fees, and costs incurred therein or in the
enforcement or collection of any judgment or award rendered therein.
14. Amendment and Waiver. Except as otherwise expressly provided
herein, any provision of this Agreement may be amended only with the written
consent of the parties. No term or provision of this Agreement shall be deemed
waived unless such waiver shall be in writing and signed by the party making
such waiver. Any waiver of a particular breach of this Agreement shall not
constitute a waiver of any other breach, nor shall any waiver be deemed a
continuing waiver unless it so states expressly.
15. Entire Agreement; Severability. This Agreement supersedes all
proposals, oral or written, all negotiations, conversations or discussions
between or among parties relating to the subject matter of this Agreement and
all past dealing or industry custom. If any provision of this Agreement is held
to be illegal or unenforceable, that provision shall be limited or eliminated to
the minimum necessary so that this Agreement shall otherwise remain in full
force and effect and enforceable.
16. Survival of Obligations. The obligations of confidentiality
and exclusivity arising under this Agreement are intended to survive any
termination of this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first set forth above.
DIVERSE TALENT GROUP, INC.
By: /s/
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Name:
Title:
/s/
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Christopher Nassif
DIVERSE MEDIA GROUP CORP.
By: /s/
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Name: Iehab Hawatmeh
Title: Chairman and CEO
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