================================================================================
Exhibit 10.88
TALENT AGREEMENT
----------------
Talent Agreement ("Agreement") dated as of March 8, 2006 by and between
CirTran Corporation, a Nevada corporation ("CTC"), and Xxxxxxxxx Management,
Inc., a Georgia corporation ("HM"), for the services of Xxxxxxx Xxxxxxxxx.
Whereas, CTC has obtained the manufacturing, marketing and distribution
rights from Euro-G.E.M. Gmbh, a German corporation ("EG") in Japan, North
America and South America (the "Territory") for the Perfect Grill No. PG-388
(the "Basic Grill"), an electric indoor grill as described on Schedule 1; and
Whereas, CTC has granted to Xxxxxxxxxx Business Development, Inc., a
Florida corporation ("HBD"), the exclusive right to advertise, promote, market,
sell and otherwise distribute the Basic Grill in the Territory by direct
response television programming and other means;
Whereas, EG has granted CTC the exclusive right to manufacture the
basic Grill for sale through EG or its licensees in areas outside of the
Territory (the "Extended Territory"); and
Whereas, CTC desires to have Xxxxxxx Xxxxxxxxx (the "Performer")
endorse and promote the Basic Grill and to use the name and likeness of Xxxxxxx
Xxxxxxxxx (the "Performer") on the Basic Grill and/or its packaging. Basic
Grills bearing the name or likeness of the Performer on the product itself or
its packaging are referred to herein as the "Endorsed Product".
Whereas, CTC will cause HBD to produce a television infomercial program
approximately 30 minutes in length (the "Infomercial") demonstrating and
promoting the Endorsed Products; and
Whereas, HM controls the rights for the Performer to appear in the
Infomercial and promote the Endorsed Product; and
Whereas, the parties wish to set forth in this Agreement the terms upon
which HM shall cause Performer to provide his services in connection with
production of the Infomercial and promoting the Endorsed Product.
Now, therefore, in consideration of the mutual promises and
undertakings set forth herein, and intending to be legally bound hereby, the
parties agree as follows:
1. Services.
(a) Appearances in Programs. Performer shall appear in an Infomercial
and unlimited shorter "spot" advertisements made from the Infomercial
or from other footage shot in the course of producing the Infomercial,
that will demonstrate and promote the Endorsed Product (the Infomercial
and spot advertisements, collectively, are the "Programs"). Performer
will be available to appear for rehearsals and taping of Performer's
1
segments of the Programs at mutually agreed upon times and locations,
taking into account illness and injury. It is anticipated that
rehearsal and taping of Performer's segments of the Programs will take
no more than two working days, from 10:00 a.m. to 5:00 p.m. local time
with customary breaks.
(b) Performer's Endorsement in the Territory. HM shall make available
Performer's name, likeness (including, without limitation, Performer's
taped appearance in the Programs, photographs, illustrations, films and
videotapes), endorsements, testimonials, voice and autograph
("Performer's Endorsement") for use by CTC and its licensee(s) in the
Territory in connection with the promotion, marketing and distribution
of the Endorsed Product. HM grants CTC the right to use Performer's
name as part of the product name of the Endorsed Product and to use
Performer's name and likeness on the Endorsed Product and its
packaging. The foregoing includes the right to incidental use of
Performer's name in connection with the sale of optional or replacement
parts for the Endorsed Product, such as optional grill plates (the
"Accessories").
(c) Review rights. HM will have the right to review the initial cut
and, if materially changed, the proposed final cut of the Programs
before they are aired, and CTC or its licensee(s) will revise any
Program to which HM has reasonably objected within three (3) business
days after its first delivery to HM due to its erroneous or
unflattering portrayal of the Performer. HM will also have three (3)
business days to review the manner in which Performer's name is used on
the Endorsed Product and its packaging. Notwithstanding the above, CTC
will not be obligated to allow HM to review translations of the
Programs or Endorsed Product packaging into languages other than
English or changes to the Programs or Endorsed Product packaging which
do not, in CTC's reasonable judgment, substantially alter the portrayal
of Performer.
(d) Permitted Uses.
(i) The Programs. CTC or any of its affiliates or any of its
licensees or assignees shall have the exclusive sub-licensable
right in the Territory to the unlimited use and reuse of the
Programs, in connection with the promotion, marketing and
distribution of the Endorsed Product and any component of the
Endorsed Product, including the Accessories by CTC or any of its
affiliates or any of its licensees or assignees, and may, without
limitation, air the Programs or cause them to be aired throughout
the Territory on cable, broadcast and satellite television and all
other forms of television or radio transmission or other
electronic or computer retailing media now existing or hereafter
developed. Subject to the terms of Sub-section 1(c), CTC shall
have the right to duplicate and modify the Infomercial, including
the right to make insertions and deletions, dub foreign languages
or voiceovers, or to use time compression or expansion techniques.
(ii) Performer's Endorsement. CTC shall have the exclusive
sub-licensable right throughout the Territory to the unlimited use
and reuse of Performer's Endorsement in connection with the
promotion, marketing and distribution of the Endorsed Product and
its related packaging by CTC, its affiliates or any of its
2
licensees or assignees, through all means and media, including,
without limitation, television, radio, and other electronic and
computer retailing media, print media, direct mail solicitation,
direct sales, credit card syndications, inbound and outbound
telemarketing, CD-ROM and catalog, wholesale and retail sales.
(e) Best Efforts. HM shall use its best efforts and shall cause
Performer to use his best efforts in rendering all of the services
contemplated by this Agreement. Neither HM nor Performer shall
enter into any agreement or commitment that would prevent or
otherwise substantially interfere with the rendering of such
services.
(f) Extension of Territory. Upon the written request of CTC, the
parties agree to enter into an addendum to this Agreement
extending the rights granted to CTC herein to allow their use by
CTC's licensees (including EG) in the Extended Territory and
extending the calculation of compensation described in Paragraph 2
to include Endorsed Product and Accessories for sale in countries
in the Extended Territory in which the Programs are used or the
Endorsed Products are sold.
2. Compensation. In consideration of the services to be rendered and the
other rights granted hereunder and the observance and performance of
all of HM's covenants, agreements, representations and warranties under
this Agreement, CTC shall pay to HM the consideration provided in this
Section during the term of this Agreement.
(a) Expenses. For travel to the taping of the Infomercial and for any
other travel Performer is required to undertake to render the
services described in Sub-section 1(a), CTC shall pay the
reasonable expenses that HM and Performer incur. Unless otherwise
agreed, CTC shall pay such expenses on Performer's behalf.
Reasonable travel expenses include two (2) first class tickets for
air travel, and accommodations for two in five star (or their
nearest equivalent in the local area) hotel suites, and a per diem
of two hundred dollars ($200) per day for every overnight stay.
(b) Royalty Rates. Beginning on the date any Program first airs on any
medium CTC will pay HM the following royalty (the "Royalty") on
items sold by CTC, net of returns: (i) 5% of the Wholesale Price
(as defined below) of Endorsed Product (but not less than $1.25
per unit of Endorsed Product) plus (ii) 5% of the Wholesale Price
of Accessories and extended warranties sold separately from the
Endorsed Product sold by CTC. The Royalty is payable on all sales
of Endorsed Product, regardless of whether the Endorsed Product is
sold through the direct response television / infomercial channel,
normal retail channels or otherwise. All Basic Grill sold into the
Territory shall be considered Endorsed Products for purposes of
calculating the Royalty. If CTC is selling Endorsed Product into a
country in the Extended Territory, any Basic Grill sold by CTC
into such country will be considered an Endorsed Product, except
as provided in paragraph 3(b). For purposes of this Section 2, a
unit of Endorsed Product consists of the basic Endorsed Product
itself, including any Accessories that are bundled as a
single-price SKU with the basic Endorsed Product but not any
Accessories or options that are priced and sold separately.
3
Royalty is payable on Accessories and any extended warranty only
if they are sold separately from the Endorsed Product SKU and
either bear Performer's Endorsement or are sold into countries in
which the Endorsed Product is being sold. For purposes of
computing the Royalty, the "Wholesale Price" of Accessories is the
actual price charged by CTC to its licensee, distributor or other
direct customer for the Accessories, net of returns, discounts,
and any separately charged shipping, insurance, taxes or duties.
If CTC offers extended warranties, the "Wholesale Price" of the
extended warranty will be the is the actual price charged by CTC
to its licensee, distributor or other direct customer for the
extended warranty, net of returns, discounts, cancellations, taxes
or duties and the cost of any third party re-insurance or warranty
management. For purposes of computing the Royalty, sales will be
deemed to have occurred, and Royalty therefore accrued, on the
earlier of shipment from CTC's factory or warehouse or the time
when risk of loss transfers to the purchaser. No Royalty is
payable with respect to sales of the Basic Grill not bearing
Performer's Endorsement, as permitted by paragraph 3(b).
(c) Royalty will be computed monthly and payable within thirty (30)
days after the end of each calendar quarter. All Royalties are
payable in U.S. Dollars. If CTC fails to make any payment on the
date such payment is due hereunder and such payment is not made
within ten (10) days after notice from HM, then, without prejudice
to any other rights or remedies that HM may have against CTC, CTC
shall pay interest on the deficiency at the rate equal to two (2)
percentage points above the prime rate per annum set forth in the
Wall Street Journal, Western Edition as of the close of business
on the date such payment was otherwise due. Such interest shall
accrue beginning on the date the payment was due and continuing
until the date such amount is paid in full.
(d) Advance. Upon confirmation from the producer of the Programs that
Performer has made a firm appointment to tape Performer's portion
of the Programs, CTC will make a non-refundable advance (the
"Advance") to HM in the amount of Fifty Thousand Dollars
($50,000.00). CTC may recoup the Advance from Royalties otherwise
payable to HM pursuant to Section 2(b) until the balance of the
Advance is reduced to zero. Unless Performer fails to tape the
Programs, HM will not be required to return the Advance to CTC,
even if the Endorsed Product is never sold or Royalties are less
than the Advance.
(e) Minimum Royalty. Once the Programs are produced, CTC and its
licensees anticipate promptly testing the Infomercial in a limited
number of markets for a period of up to 60 days followed by wide
spread roll-out of the Programs. Roll-out will begin when media
expenses for the Infomercial exceed $150,000 per week. CTC will
notify HM when roll-out has occurred. If roll-out occurs, CTC
guarantees that the Royalties payable pursuant to Section 2(b) for
the period ending twelve (12) months after roll-out (the "Roll-Out
Period") shall total at least One Hundred Thousand Dollars
($100,000.00). Within thirty (30) days after the end of the
Roll-Out Period, CTC will calculate the royalties payable during
the Roll-Out Period, and if less than $100,000.00 CTC will pay the
difference to HM (the "Shortfall Payment"). For purposes of this
4
Section 2(d), Royalties applied against the Advance pursuant to
section 2(c) and any un-recouped balance of the Advance remaining
at the end of the Roll-Out Period shall be treated as Royalties
payable during the Roll-Out Period. CTC may recoup the Shortfall
Payment from Royalties otherwise payable to HM pursuant to Section
2(b) after the Roll-Out Period until the balance of the Shortfall
Payment is reduced to zero, but HM will not be required to return
the Shortfall Payment to CTC regardless of the quantity of
Endorsed Product sold after the Roll-Out Period.
3. Exclusivity.
(a) HM will not cause or allow Performer to appear in any television
infomercial, advertisement or promotion, or render services, or
furnish materials to, or authorize or permit the use of
Performer's Endorsement by others in connection with any product
competing with or substantially similar to the Endorsed Product
except with the prior written approval of CTC, which may be
granted or withheld by CTC in its sole discretion. For purposes of
this paragraph, any portable cooking appliance that includes an
electric heating element shall be considered to be competing with
the Endorsed Product.
(b) As stated in Section 2, Royalties are payable on Basic Grills and
Accessories sold into a country in the Extended Territory in which
the Endorsed Product is being sold or the Programs are being used.
However, Royalties shall no longer be payable with respect to
Basic Grills and Accessories not bearing Performer's Endorsement
sold into a country in the Extended Territory if at least six (6)
months have elapsed since the latest of (i) CTC's last sale of
Endorsed Product to the country, or (ii) the last use of any
Programs on media in or directed to the country.
4. CTC's Intellectual Property. Subject only to such limitations on CTC's
use of the Programs and Performer's Endorsement as are expressly set
forth in this Agreement, all right, title, and interest in and to the
Basic Grill and Accessories and the entire editorial, visual, audio and
graphic content of all advertisements and promotional materials
developed by CTC and/or HBD in connection with the promotion, marketing
and distribution of the Endorsed Product, including without limitation,
(i) the Programs and the performances recorded therein, the Promotional
Segments, and any other marketing materials prepared in connection with
the Endorsed Product, (ii) all raw footage shot in the course of
producing the Programs, (iii) all trademarks for the Endorsed Product
developed or controlled by CTC or its affiliates, licensors, licensees
or assigns, (iv) all musical compositions included in the Programs, and
(v) all packaging designs developed by CTC or its affiliates,
licensors, licensees or assigns for the Endorsed Product ("Intellectual
Property") shall be and remain the sole property of CTC, its
affiliates, licensors, licensees or assigns, as the case may be. HM and
Performer acknowledge that the services to be rendered by Performer
hereunder have been specially ordered and commissioned by CTC as a work
for hire for the sole and exclusive benefit of CTC. Neither HM not
Performer shall acquire any right, title or interest in the
Intellectual Property by virtue of this Agreement or otherwise. HM and
Performer hereby assign and agree to assign to CTC all of HM's and
5
Performer's right, title and interest in the Intellectual Property.
Neither HM not Performer shall in any way or at any time dispute or
attack the validity or harm or contest the rights of CTC, its
affiliates, licensors, licensees or assigns, as the case may be, in or
to any of the Intellectual Property. Any unauthorized use of any of the
Intellectual Property by HM or Performer shall be deemed an
infringement of the rights of CTC, its affiliates, licensors, licensees
or assigns, as the case may be therein. By way of clarification, CTC
acknowledges that neither it nor its licensees have obtained any rights
hereunder to use Performer's Endorsement other than with respect to the
Endorsed Product and related Accessories and extended warranties.
5. Representations and Warranties.
(a) By CTC. CTC represents and warrants to HM as follows:
(i) Power and Authority. CTC has all necessary power and
authority to enter into this Agreement, and has duly
authorized by all necessary action the execution and
delivery of this Agreement by the officer or person whose
name is signed on its behalf below.
(ii) No Conflict. The execution and delivery of this Agreement
by CTC and the performance of its obligations hereunder, do
not and will not conflict with or result in a breach of or
a default under its organizational instruments or any other
agreement, instruments, order, law or regulation applicable
to it or by which it may be bound.
(iii) Binding Effect. This Agreement has been duly and validly
executed and delivered by CTC and constitutes its valid and
legally binding obligation, enforceable in accordance with
its terms.
(b) By HM. HM represents and warrants to CTC as follows:
(i) No Conflict. HM and Performer are free to render services
pursuant to this Agreement and do not have and will not
have any other agreements or commitments that would prevent
or substantially interfere with the full performance of the
services to be performed by HM and Performer hereunder or
the rights granted to CTC hereunder.
(ii) Binding Obligation. This Agreement has been duly and
validly executed and delivered by HM and constitutes HM's
valid and legally binding obligation, enforceable in
accordance with its terms.
(iii) Authority. HM represents and warrants that it has exclusive
control of the intellectual property rights of Performer,
including publicity and performance rights. HM has full
power and authority to grant to CTC rights for Performer to
appear in the Infomercial and promote the Endorsed Product
without the consent or approval of any other person.
6
6. Idemnification.
(a) By CTC. CTC shall defend, indemnify and hold harmless HM, its
parent or affiliated companies and their respective officers,
directors, shareholders, employees, agents, successors, assigns
and independent contractors from and against any and all
liabilities and expenses whatsoever, including, without
limitation, claims, damages, judgements, awards, settlements,
costs and reasonable attorneys fees and disbursements
(collectively "Losses") which HM may incur or become obligated to
pay to the extent they arise out of or result from allegations or
claims regarding (i) the use, content, publication or broadcast of
the Program or any promotional materials bearing Performer's
Endorsement, (ii) alleged defects in any Endorsed Product or in
the materials or workmanship thereof, (iii) any alleged inaccurate
or deceptive labeling on or in connection with, the Endorsed
Product (iv) mandatory or voluntary recalls of the Endorsed
Product, (v) the truthfulness and substantiation of any claims
regarding the Endorsed Product made by CTC or its licensees, (vi)
any alleged non-conformity or non-compliance with any laws
pertaining to the design, manufacture, quality, safety,
advertising, promotion or marketing of the Endorsed Product, and
(vii) the breach by CTC of any of its representations, warranties,
covenants, obligations, agreements or duties under this Agreement.
(b) By HM. HM shall defend, indemnify and hold harmless CTC, its
parent or affiliated companies and their respective officers,
directors, shareholders, employees, agents, successors, assigns
and independent contractors from and against any and all Losses
which any of them may incur or become obligated to pay to the
extent they arise out of or result from allegations or claims that
(i) use of Performer's name or Performer's Endorsement permitted
by this Agreement infringes the infringement or alleged
infringement or the proprietary rights of any third party in any
intangible property to which HM has, by this Agreement, granted
CTC rights, (ii) any code, agreement or requirements of any union,
guild or other labor organization which may be deemed applicable
to the transactions and services contemplated by this Agreement,
or (iii) the breach of any of HM's representations, warranties,
covenants, obligations, agreements or duties under this Agreement.
(c) Procedure. Promptly after learning of the occurrence of any event
which may give rise to its rights under the provisions of this
Section 6, any party seeking to enforce such rights (a "Claiming
Person") shall give written notice of such matter to a party
against whom enforcement of such rights is sought (the
"Indemnifying Party"). The Claiming Person shall cooperate with
the Indemnifying Party in the negotiation, compromise, and defense
or any such matter. The Indemnifying Party shall be in charge of
and control such negotiations, compromise and defense and shall
have the right to select counsel with respect thereto, provided
that the Indemnifying Party shall promptly notify the Claiming
Person of all developments in the matter. In no event shall the
Indemnifying Party compromise or settle any such matter without
the prior consent of the Claiming Person, which consent shall not
be unreasonably withheld or delayed. A Claiming Person shall not
7
be bound by an Indemnifying Party's compromise or settlement
absent the Claiming Person's prior consent.
(d) The provisions of this Section 6 shall survive the termination or
expiration of this Agreement.
7. Confidentiality.
(a) Generally. All customer lists, price lists, written and unwritten
marketing plans, techniques, product information and
specifications, customer and supplier information, and sales and
transaction data, and other information relating to CTC's business
that CTC informs HM is proprietary by marking such information as
confidential shall constitute confidential information of CTC
("Confidential Information"). HM shall hold and shall require
Performer and its agents, employees and representatives to hold
all Confidential Information in the strictest confidence. Without
the prior written consent of CTC, HM will not (and will not permit
Performer or its agents, employees and representatives to) use,
disclose, divulge or otherwise disseminate any Confidential
Information to any person or entity, except for HM's attorney,
accountant, agent or manager, and such other person as may be
required in order for HM to perform its obligations or enforce the
provisions of this Agreement.
(b) Exceptions. Notwithstanding Section 7(a), HM shall have no
obligation with respect to any Confidential Information that (i)
is or becomes within the public domain through no act by HM in
breach of this Agreement, (ii) was lawfully in the possession of
HM without any restriction on use or disclosure prior to its
disclosure hereunder, (iii) is lawfully received from another
source subsequent to the date of this Agreement without any
restriction on use of disclosure, or (iv) is required to be
disclosed by order of any court of competent jurisdiction or other
governmental authority (provided in such latter case, however,
that HM shall timely inform CTC of all such legal or governmental
proceedings so that CTC may attempt by appropriate legal means to
limit such disclosure, and HM shall further use its best efforts
to limit the disclosure and maintain confidentiality to the
maximum extent possible).
8. Specific Performance; Injunction.
(a) Services. HM acknowledges that the services and rights which HM is
granting to CTC hereunder are extraordinary and unique and cannot
be replaced or adequately compensated in money damages, and any
breach by HM of this Agreement will cause irreparable injury to
CTC. Therefore, HM agrees that in the event of a breach of this
Agreement, CTC, in addition to any other remedies that might be
available to it, shall be entitled to bring suit at law or equity
for money or other damages, and to seek specific performance of
the terms of this Agreement or other equitable relief. The
inability of HM/Performer to perform the obligations of this
Agreement requiring the personal appearance of Performer (namely
8
the taping of the Programs) due to the disability, prolonged
illness, or death of Performer shall not constitute grounds for
specific performance.
(b) Exclusivity and Confidentiality. HM acknowledges that a breach of
the obligations of exclusivity under Section 3 or confidentiality
under Section 7 will result in irreparable and continuing damages
to CTC for which there will be no adequate remedy at law.
Accordingly, in the event of any such breach, CTC shall be
entitled to injunctive relief and/or an order for specific
performance, without bond, with respect to such breach. HM shall
not oppose such relief on the grounds that there is an adequate
remedy at law, and such right shall be cumulative and in addition
to any other remedies at law or in equity (including monetary
damages) which CTC may have upon the breach of the obligations of
confidentiality hereunder.
9. Brokers. HM authorizes and directs CTC to pay a total amount (the
"Brokers Fees") equal to 10% of all net Royalties on Endorsed Products
and Accessories, excluding the Advance, the Minimum Guaranteed Royalty
and Royalties recouping such amounts as described in Sub-sections 2(d)
and 2(e), otherwise payable to HM hereunder directly to the following
in equal shares of 5% each: (i) Diverse Talent Group, Attention Xxxxx
Xxxxxx, 0000 Xxxxxxx Xxxx Xxxx, Xxxxx 0000, Xxx Xxxxxxx, Xxxxxxxxxx
00000, and (ii) Xxxxxxxxx Xxxxx, X.X. Xxx 00000, Xxxxxxxxx, XX 00000.
It is HM's intent that the Brokers Fees are payable only with respect
to the Endorsed Product and Accessories as initially described herein,
and if this Agreement is amended or supplemented to allow use of
Performer's Endorsement on other products (including subsequent
generations of the Basic Grill) no such Broker's Fee will be payable
except as HM may explicitly agree in writing. HM represents and
warrants that (a) except for the Brokers Fees listed above, CTC shall
have no obligation to make any payment to any agent, broker or finder
in connection with the transaction contemplated by the Agreement, and
(b) if HM or Performer has used the services of or incurred any
obligations to any other agent, broker or finder, HM shall be solely
liable to such person and CTC shall have no obligation to such person
whatsoever on account of the execution, delivery or performance of this
Agreement.
10. Independent Contractor. Neither party nor any of its officers,
employees, agents or representatives is a partner, employee or agent of
any other party for any purpose whatsoever. Rather, each party is and
shall at all times remain an independent contractor. Neither party has,
nor shall it hold itself out at as having, any right, power or
authority to create any contract or obligation, either express or
implied, on behalf of, in the name of, or binding upon the other party,
unless such other party shall consent thereto in writing. Each party
shall have the right to appoint and shall be solely responsible for its
own employees, agents and representatives, who shall be at such party's
own risk, expense and supervision and shall not have any claim against
any other party for compensation or reimbursement. HM will make full
payment of compensation and other amounts payable in connection with
any matter on HM's part to be performed hereunder. HM agrees that HM
shall make all payments required by any union, guild, federation or
other labor organization on account of the services to be rendered
hereunder, including union health and retirement payments.
9
11. Further Actions. The parties agree to execute such additional documents
and to perform all such other and further acts as may be necessary or
desirable to carry out the purposes and intents of this Agreement.
12. Termination.
(a) Unless sooner terminated as provided herein, this Agreement shall
continue for an initial term of three (3) years. The terms shall
automatically renew for successive one (1) year terms unless
either party notifies the other party at least thirty (30) days
prior to the expiration of the then-current term of its intent to
not renew.
(b) Either party may terminate this Agreement due to a material breach
by the other party; provided that the non-breaching party gives
the other party written notice of the alleged breach and at least
sixty (60) days to cure the breach.
(b) CTC may terminate this Agreement on ten (10) days written notice
to HM if, in CTC's reasonable judgment, continued use of
Performer's Endorsement would damage the reputation of CTC or its
licensees or the marketability of the Endorsed Product. Events
which would damage the reputation of CTC include, but are not
limited to, Performer being publicly accused of having committed a
felony or crime involving moral turpitude, or Performer making
public statements which are offensive to a significant segment of
the public in any material market due to their racial, ethnic or
sexual nature.
(c) HM may terminate this Agreement on ten (10) days written notice to
CTC if, in HM's reasonable judgment, continuing to allow the use
of Performer's Endorsement would damage Performer's reputation or
the marketability of Performer or his name or likeness. Events
which would damage the reputation of Performer include CTC or its
licensees party being charged with financial mismanagement, fraud,
or false advertising or the use of Performer's Endorsement by CTC
or its Licensee in a manner that is offensive to a significant
segment of the public. Notwithstanding the above, if the grounds
for termination are based on the actions or status of a CTC's
licensee, this Agreement will not be terminated if CTC, within the
ten (10) day notice period, terminates the right of the licensee
in question to use Performer's Endorsement. If the agreement
between CTC and its licensee requires prior written notice of
termination, the rights of a licensee will be deemed terminated
when CTC gives the required notice notwithstanding that the actual
effective date of termination may extend beyond the ten (10) day
period from HM's notice.
(d) Notwithstanding termination of this Agreement, CTC or its
licensees may continue to use the Infomercial containing
Performer's Endorsement to fulfill media purchases in place at the
time of termination, and CTC and its licensees may continue to use
Performer's Endorsement to sell the Endorsed Product (i) to
dispose of existing inventory, and (ii) to fulfill orders from
post-termination permitted uses of the Infomercial. Royalties
shall continue to be payable with respect to post-termination
sales of Endorsed Product pursuant to this paragraph.
10
13. Covenants of CTC.
(a) Manufacture and Marketing of Endorsed Product: CTC shall
manufacture, market, sell and distribute the Endorsed Product in
accordance with all applicable laws, regulations and safety codes of
the countries in which they will be distributed and in compliance with
the rules of all regulatory or governmental agencies that have
jurisdiction over such matters. CTC is solely responsible for the
establishment of quality control processes and compliance with laws
applicable to the manufacture, advertising, marketing, promotion,
distribution, sale, and use of the Endorsed Product.
(b) Reports and Statements. No later than thirty (30) days following
the close of each month during the initial three year term and any
renewal terms, and concurrently with the remittance of the payments
required pursuant to this Agreement, CTC shall submit to HM a written
report (with copies to HM's agent, if any), in a form acceptable to HM,
showing the number of units of the Endorsed Product sold (including a
breakdown of sales by account or customer and the individual SKU sold),
and a calculation of the Royalty due. In addition, CTC shall promptly
provide HM with any additional documentation HM reasonably requests in
connection with any report, including without limitation, copies of all
invoices, purchase orders, and other sales and shipping documents.
(c) Review Rights. HM has the right to inspect the production sample
and random samples from the production line of the Endorsed Product.
CTC shall, at its own expense, submit to HM at least twenty (20) days
prior to final production, for HM's written approval, two production
samples.
(d) Proper Books and Records. CTC shall maintain, in accordance with
generally accepted accounting principles, separate and appropriate
books of account and records (including, without limitation, documents,
tax returns, financial statements, invoices, purchase orders, sales
records, a sales journal, sales return journal, cash receipt book,
general ledger, purchase orders, and inventory records) relating to the
manufacture and sale of the Endorsed Product and the use by CTC of the
Performer's Endorsement (collectively referred to as "CTC Records").
(e) Right To Examine and Audit CTC's Books and Records. Throughout the
term and for three (3) years thereafter, HM and its designee shall have
the right, on at least three (3) business days notice to CTC, and
during regular business hours, to examine, photocopy, and make extracts
from CTC Records. HM shall have the right to audit CTC Records once
during each year during the Term. If any examination or audit discloses
that CTC did not pay, during the time period being audited, the Royalty
CTC is required to pay under this Agreement, then CTC shall pay all
amounts due. If any examination or audit discloses that the payments
required to be made by CTC under this Agreement during the time period
being audited is less than the payments actually made by more than five
percent (5%) for any year during the Term, CTC shall pay the cost of
such examination or audit in addition to any amount that such
examination or audit discloses is owed to HM together with interest on
the unreported amount at a rate equivalent to two (2) percentage points
above the prime rate per annum set forth in the Wall Street Journal on
the date the audit was concluded. All payments due pursuant to this
11
Section must be made within fifteen (15) days after CTC receives notice
thereof unless CTC reasonably objects to the conclusions of the audit.
If CTC does so object, the parties shall attempt to resolve their
differences in good faith. If they are unable to do so within forty
five (45) days after CTC's objection, then upon the request of either
party, each party will designate an independent accountant. The two
accountants shall select an independent auditor to re-audit the records
and the conclusion of such independent auditor shall be binding on the
parties.
14. Miscellaneous Provisions.
(a) Notices. All notices, requests, instructions, consents and other
communications to be given pursuant to this Agreement shall be in
writing and shall be deemed received (I) on the same day if delivered
in person, by same-day courier or by telegraph, telex or facsimile
transmission, (ii) on the next day if delivered by overnight mail or
courier, or (iii) on the date indicated on the return receipt, or if
there is no such receipt, on the third calendar day (excluding Sundays)
after being sent by certified or registered mail, postage prepaid, to
the party for whom intended to the following addresses:
IF TO HM: XXXXXXXXX MANAGEMENT, INC.
000 Xxxxxxx Xxxxxxxxx Xxxxxxx
Xxxxxxxx, Xxxxxxx 00000
Attn: Xxxxxxx Xxxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
IF TO CTC: CIRTRAN CORPORATION
0000 Xxxxx 0000 Xxxx
Xxxx Xxxxxx Xxxx, Xxxx 00000
Attn: Xxxxx Xxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
Any party may by written notice given to the other in accordance with
this Agreement change the address to which notices to such party are to
be delivered.
(b) Entire Agreement. This Agreement contains the entire understanding
of the parties with respect to the subject matter hereof and supersedes
all prior agreements and understandings, whether written or oral,
between them with respect to the subject matter hereof. Each party has
executed this agreement without reliance upon any promise,
representation or warranty other than those expressly set forth herein.
(c) Amendment. No amendment of this Agreement shall be effective
unless embodied in a written instrument executed by both of the
parties.
12
(d) Waiver of Breach. The failure of any party hereto at any time to
enforce any of the provisions of this Agreement shall not be deemed or
construed to be a waiver of any such provision, or in any way to affect
the validity of this Agreement or any provisions hereof or the right of
any party hereto to thereafter enforce each and every provision of this
Agreement. No waiver of any breach of any of the provisions of this
Agreement shall be effective unless set forth in a written instrument
executed by the party against which enforcement of such waiver is
sought; and no waiver of any such breach shall be construed or deemed
to be a waiver of any other or subsequent breach.
(e) Binding Effect; Assignability. This Agreement shall be binding on
and inure to the benefit of the parties hereto and their respective
heirs, representatives, successors and assigns; provided, however, that
Performer may not assign this Agreement or any rights hereunder other
than the right to receive payment of the Royalties to any person or
entity without the prior written consent of CTC which may be granted or
withheld in CTC's sole discretion, and any attempted assignment without
such consent shall be void. It is understood and agreed that CTC may
exercise its rights and perform its obligations hereunder, in whole or
in part, by itself or may license or assign its rights and obligations
to HBD or any other entity.
(f) Force Majeure. In the event of war, fire, flood, labor troubles,
strike, riot, act of governmental authority, acts of God, or other
similar contingencies beyond the reasonable control of either of the
parties interfering with the performance of the obligations of such
party, the obligations so affected shall be deferred or eliminated to
the extent necessitated by such event or contingency without liability,
but this Agreement shall otherwise remain unaffected. Notice with full
details of any circumstances referenced herein shall be given by the
affected party to the other party within ten days after its occurrence.
The affected party shall use due diligence, where practicable, to
minimize the effects of or end any such event.
(g) Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the state of Utah without
regard to conflict of laws principles.
(h) Severability. All of the provisions of this Agreement are intended
to be distinct and severable. If any provision of this Agreement is or
is declared to be invalid or unenforceable in any jurisdiction, it
shall be ineffective in such jurisdiction only to the extent of such
invalidity or unenforceablility. Such invalidity or unenforceability
shall not affect either the balance of such provision, to the extent it
is not invalid or unenforceable, or the remaining provisions hereof, or
render invalid or unenforceable such provision in any other
jurisdiction.
(i) Disclaimer. It is understood and acknowledged that neither CTC nor
HBD is an American Federation of Television and Radio Artists (AFTRA)
signatory company.
(j) Headings. The headings of sections and subsections have been
included for convenience only and shall not be considered in
interpreting this Agreement.
13
(k) Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original and all
of which together shall constitute one and the same Agreement. This
Agreement may be executed and delivered by electronic facsimile
transmission with the same force and effect as if it were executed and
delivered by the parties simultaneously in the presence of one another.
(l) Assistance of Counsel. Each party acknowledges that (i) it has
carefully read this Agreement, (ii) it has had the assistance of legal
counsel of its choosing (and such other professionals and advisors as
it has deemed necessary) in the review and execution hereof, (iii) the
meaning and effect of the various terms and provisions hereof have been
fully explained to it by such counsel, (iv) it has conducted such
investigation, review and analysis as it has deemed necessary to
understand the provisions of this Agreement and the transactions
contemplated hereby, and (v) it has executed this Agreement of its own
free will.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
on the date first written above.
HM:
XXXXXXXXX MANAGEMENT, INC.
By: /s/
-----------------------------
Name:
Title:
CIRTRAN CORPORATION
By: /s/
-----------------------------
Name: Xxxxx Xxxxxxxx
Title: President
14
SCHEDULE 1
PRODUCT AND ACCESSORIES
Description of each component:
------------------------------
Endorsed Product:
-----------------
Electric Indoor Grill with Deluxe Stand including three Plates
Accessories:
------------
Additional Plates
Hot Dog Plate
1
--------------------------------------------------------------------------------
