EXHIBIT 10.3
MEMORANDUM OF AGREEMENT
THE 2M GROUP
with
PROLONG SUPER LUBRICANTS, INC.
regarding
THE PROLONG CHALLENGE INFOMERCIAL
AGREEMENT made this 24th day of April 1995, between the Prolong Super
Lubricants, Inc., a Nevada corporation of 0000 Xxxxx Xxxxxxx Xxx, Xxxxxxx,
Xxxxxxxxxx 00000, hereinafter called CLIENT, and The 2M Group, a Sole
Proprietorship of 0000 Xxxxxxxx Xxxx. Xxxx, Xxxxx 000, Xxx Xxxxxxx, Xxxxxxxxxx
00000, hereinafter called 2M.
IT IS AGREED that:
1. CLIENT will retain the services of 2M to produce an infomercial
hereinafter called the Program, to be completed before October 24, 1995.
2. The Program will be 28 minutes and 30 seconds in length.
3. 2M agrees to provide the elements stated in the proposal which is an
integral part of this agreement. See attachment A.
4. CLIENT agrees to provide the elements stated in the proposal which is
an integral part of this agreement. See attachment A.
5. CLIENT has the right to change the off-line cut of the show. After
approval of the off-line cut and the on-line cut has been started, should the
PROGRAM require revision based on CLIENT's evaluation, the costs of any such
modifications will be underwritten by CLIENT as a payment to 2M separate from
and in addition to the PROGRAM budget.
6. Any and all expenditures in any way incurred by CLIENT on 2M's behalf
must have prior written authorization from an authorized officer representing
2M. In any case where CLIENT has incurred any expense on 2M's behalf without
prior written authorization from an authorized 2M officer the CLIENT will be
fully responsible for payment of that expense.
7. In consideration of the above services, CLIENT agrees to compensate 2M
in the following manner:
A. 2M shall receive the amount of $78,000.00 dollars with payments
scheduled: a) upon starting pre-production or any part thereof in the amount of
$10,000.00 dollars, b) on the first day of shooting or any part thereof in the
amount of $17,000.00 dollars, c) when the off-line cut is commenced in the
amount of $17,000.00 dollars, d) when the off-line cut is approved in the amount
of $17,000.00 dollars and e) upon completion and prior to release of the first
edited master in the amount of $17,000.00 dollars for the Program.
1.
B. 2M shall receive 1.5% of the gross sales (not including shipping and
handling) minus returned product generated from any and all direct response
television sales made via an 800 telephone number and which utilize the Program
footage.
C. 2M shall receive the equivalent of $20,000 in stock at 25 cents per
share. This will be divided at 40,000 shares of 144 stock and 40,000 shares of
free trading stock. A bonus of 10,000 shares of stock will be paid if 5,000
units are sold within 60 days from the first airing of the infomercial and
another 10,000 shares if 45,000 units are sold within 180 days of the first
airing of the infomercial. The bonus shares will be 50% 144 stock and 50% free
trading stock, unless free trading stock is unavailable to the company other
than by buying stock on the market. If free trading stock is unavailable then 2M
shall receive 144 stock in its place.
8. The Program will contain a visual copyright notice on behalf of CLIENT.
This will allow the CLIENT rights to the show only as an integral synchronized
specific program.
9. CLIENT shall at all times indemnify and hold 2M, its officers,
employees, associates, assigns or any affiliated persons, harmless from and
against any and all liabilities or damages of any kind, including but not
limited to any attorney's fees, costs, and expenses, arising out of or connected
to in any way any infomercial, video, film or motion picture produced by 2M for
CLIENT or any of its affiliated companies. 2M promises to add Prolong Super
Lubricants, Inc. as an additional insured under its liability insurance policy,
with coverage in amount not less than $1MM, for the duration of the production.
Prolong Super Lubricants, Inc. as an additional insured under its liability
insurance policy, with coverage in amount not less than $1MM, for the duration
of the production. Prolong Super Lubricants, Inc. shall approve the content of
the Program, for legal compliance purposes, prior to on-line editing.
10. 2M is the agency or record and when the campaign proves successful 2M
shall supervise, oversee and decide on the media buys in conjunction with CLIENT
for a minimum of one year from the first date of the media run. A successful
campaign would be determined by the fact that it remains on the air. It is
understood that The 2M Group will receive a commission of 15% on media buys, in
conformance with industry standards. The 2M Group will provide Client with full
disclosure in writing of all media buys.
11. In the event that any provision of this contract is suspended or
canceled by mutual agreement of the contracting parties, all sections of this
document which remain unaffected by that suspension or cancellation shall
continue in full force and effect, unless modified by mutual agreement of the
contracting parties.
2.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as of
the dates written below:
PROLONG SUPER LUBRICANTS, INC.
/s/ XXXXX XXXXXXXX
----------------------------------------
XXXXX XXXXXXXX, PRESIDENT
Date: 4-24-95
---------------------------------
THE 2M GROUP
/s/ XXXXXXX X. XXXXXXX
----------------------------------------
Xxxxxxx X. XxXxxxx, Sole Proprietor
Date: 4-24-95
---------------------------------
3.
ATTACHMENT A
THE PROLONG CHALLENGE INFOMERCIAL
DIRECT RESPONSE PROGRAM
The 2M Group proposes to produce a direct response program for the Prolong
Challenge Infomercial that is twenty-eight and one half minutes long. The
objective of the campaign is to sell product in high volume over a short period
of time with a high profit margin.
SERVICES PROVIDED BY THE 2M GROUP
*Marketing consultation
*Creative
*Market Research
*Pre-production
*Complete production supervision and consultation
*Up to four day shoot on location with 2 cameras for shooting the open, close
and segues with host, testing and race sequence in Phoenix.
*Up to four day single camera shoot on location to video professionals,
testimonials and product shots.
*Audio package
*Camera package (Betacam quality or higher)
*Writing of the script
*Script breakdown to a shooting script
*Producer
*Director
*Technical Director\Engineer
*Make up -- Hair for host
*Lighting Director
*Gaffer
*Audio mixer
*A - 2
*All grips and electrician for the video
*Lighting package for the video
*Production assistants and personnel
*Video tape
*A "rough cut" of the video to view before the final copy is made so that any
necessary changes can be made
*Post production on-line cut (to include Betacam to D2 quality editing)
*Audio sweetening as needed
*Complete assembly of program
*One-inch or D2 safety-master tape
*Music
*Negotiation of celebrity talent
*Casting for an on-camera spokesperson
*Casting for celebrity persons and negotiation as needed in coordination with
Client
4.
2M shall provide all Media planning and buying. This includes tape trafficking
as well as tracking the results of each infomercial for media efficiency ratios
and geographical sourcing.
2M will consult in the setting up of the inbound 800 service, fulfillment house,
and merchant account for Visa\MC, if needed.
2M will provide a quantitative survey on the target demographic to locate any
"emotional buyer buttons" that may shed some light on where the emphasis for
the creative should be skewed. This typically determines some of the major
impulse points for the product and increased sales.
In short, The 2M Group will assist as much as possible to make this a turnkey
operations.
WHAT PROLONG SUPER LUBRICANTS WILL SUPPLY
* Any special or celebrity talent requested (2M will handle acquisition of
talent if needed)
* Any perks for said talent including but not limited to special make up person,
limo, hotel room, airline flight, wardrobe, Winnebago, special dressing room
etc. (2M will organize arrangements of these elements if needed)
* Any copyrighted music (example: theme music from a movie or a top 40 song)
* Products
* Any payments for testimonial persons, authorities (2M will handle acquisition,
scheduling and organization of persons and authorities if needed)
* The cost of locations
* Any props such as engines, race cars, etc.
SCHEDULE
The 2M Group will begin work on the project immediately. Usual production
schedules take approximately three to four weeks for preparation
(pre-production), one to two weeks for production and three to four weeks for
post production.
DISTRIBUTION AND COPIES
Included in the production cost, The 2M Group will deliver one safety master
plus one half inch copy, to view the show on a home/office video player. All
editing and dubs needed for broadcast and 800 number insertion as well as VHS
copies for standards and practices for TV stations and shipping and handling
cost are additional.
5.
AMENDMENT TO
MEMORANDUM OF AGREEMENT
THE 2M GROUP
With
PROLONG SUPER LUBRICANTS, INC.
Regarding
THE PROLONG WORLD CHALLENGE INFOMERCIAL
This is an amendment to the agreement dated April 24, 1995 entered into between
The 2M Group, Xxxxxxx XxXxxxx, sole proprietor, and Prolong Super Lubricants,
Inc., a Nevada corporation. The agreement is amended effective March 4, 1996 as
follows:
(1) The address of The 2M Group has been changed to 00000 XX Xxxxxxx 00
Xxxxx, Xxxxx 000, Xxxxxxxxxx, Xxxxxxx 00000, Tel 000-000-0000, Fax 000-000-0000.
(2) Since the inception of this agreement Xxxxxxx XxXxxxx of The 2M Group
has formed a corporation named The 2M Group, Inc. It is agreed that both The 2M
Group as a sole proprietor and The 2M Group, Inc. are jointly agreeing to be
bound by the terms of the original agreement and this amendment hereto.
(3) Xxxxxxxxx 0X, page 2 -- In lieu of receiving 40,000 shares of free
trading stock and 40,000 shares of stock subject to Rule 144, The 2M Group shall
receive 100,000 shares of stock subject to rule 144 and no shares of free
trading stock. A bonus of 10,000 shares of stock has been earned as a result of
the Program selling 5,000 units within the first 60 days of the first airing.
(4) Paragraph 10, page 2 -- The 2M Group will receive a commission 10% on
media buys (a reduction from 15%) in exchange for 100,000 shares of common stock
of Prolong International Corporation (which shares are subject to Rule 144). The
shares of stock shall be valued at $0.25 per share, and distributed in
increments of 25,000 shares every 90 days, with the first shares delivered June
4, 1996. The shares shall be issued to Xxxxxxx XxXxxxx and Xxxxxx XxXxxxx.
Agreed to among the parties effective March 4, 1996.
PROLONG SUPER LUBRICANTS, INC.
/s/ XXXXX XXXXXXXX
______________________________
Xxxxx Xxxxxxxx, President
THE 2M GROUP,
A Sole Proprietorship
/s/ XXXXXXX XXXXXXX
-------------------------
XXXXXXX XXXXXXX
THE 2M GROUP, INC.
A Corporation
/s/ XXXXXXX XXXXXXX
-------------------------
XXXXXXX XXXXXXX
President
