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Exhibit 10.15
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EXCLUSIVE LICENSE, MANUFACTURING AND MARKETING AGREEMENT
THIS EXCLUSIVE LICENSE, MANUFACTURING AND MARKETING AGREEMENT
(the
"Agreement") is made and entered into this ___ day of June, 2007
by and between
CIRTRAN MEDIA CORP. (fka Diverse Media Group Corp.), a Utah
corporation ("CMC"),
and FULL MOON ENTERPRISES, INC., a Nevada corporation, dba Ball
Blaster
("Licensor").
RECITALS
A. Licensor has filed a Provisional U.S. Patent Application
No.
60/837,380 (together with any patents issued thereunder, the
"Provisional Patent
Application") for a multi-use exercise machine utilizing a large
inflatable
rubber ball (the "Product"). Licensor has developed the common
law trademark
"Ball Blaster" for use in connection with the Product (the
"Trademark").
B. CMC is engaged in the marketing and distribution of products
through
various distribution channels, including traditional retail
channels as well as
catalogs, internet, live shopping and other channels.
C. Subject to the terms of this Agreement, Licensor desires to
grant to
CMC an exclusive license to the Product that is the subject of
the Provisional
Patent Application and to the Trademark to market the Product as
well as the
exclusive rights to further develop, manufacture, market,
distribute and sell
the Product and future products based on the Provisional Patent
Application
through all distribution channels.
D. The parties desire to set forth their agreements in
writing.
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, and intending to be
legally bound,
the parties agree as follows:
1. License of Product Intellectual Property.
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(a) Licensor hereby grants to CMC during the term of this
Agreement an
exclusive, including as to Licensor, worldwide license, subject
to Section 3(b),
to (a) use the intellectual property described in the
Provisional Patent
Application, the Trademark "Ball Blaster" and the stylized Ball
Blaster logo,
and the designs, technical drawings, manufacturing
specifications and know-how,
trade secrets and other proprietary information and technology,
and any other
patents, patent applications or inventions relating to the
Product and any
follow-on product developed by or on behalf of Licensor
(collectively the
"Product Intellectual Property") to manufacture, make, market,
distribute and
sell the Product and any improvements to the Product developed
by CMC worldwide
in all channels of trade, (b) to develop improvements to the
Product utilizing
the Provisional Patent Application or other Product Intellectual
Property, and
(c) to sublicense any of the rights granted to CMC under this
Agreement, subject
to the terms and conditions of this Agreement, with the prior
written consent of
Licensor, which consent shall not be unreasonably withheld. For
the avoidance of
doubt, during the term of this Agreement, Licensor shall not
license any third
party to manufacture, market or distribute the Product or to
otherwise use the
Product Intellectual Property and Licensor shall not engage in
any such
activities on his own behalf, unless agreed to in writing at the
sole discretion
of CMC.
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<PAGE>
(b) Licensor represents, warrants and covenants that it has
all
necessary power and authority to grant to CMC the rights to the
Product
Intellectual Property in this Agreement, and neither the
granting of the rights
nor the exercise of them by CMC will infringe or violate the
intellectual
property or other proprietary or intangible rights of any other
person or
entity. Licensor has not been and is not, as of the date of this
Agreement, a
party to any litigation enforcing or defending Licensor's rights
in, to or with
respect to the Product or the Product Intellectual Property, and
Licensor is not
aware of any such claims made or threatened involving the
validity of Licensor's
rights in, to or with respect to the Product or Product
Intellectual Property.
(c) CMC shall have the right to make modifications,
accessions,
improvements, new versions, redesigns or adaptations
(collectively
"Improvements") of the Product and the Product Intellectual
Property during the
term of this Agreement. All such Improvements shall be the sole
property of CMC,
both during and after the term of this Agreement, unless CMC
does not renew this
Agreement pursuant to Section 5(a), Licensor terminates this
Agreement pursuant
to Section 5(b), CMC terminates this Agreement pursuant to
Section 5(c), or
Licensor terminates this Agreement pursuant to Section 5(d)
(collectively, a
"CMC Termination"). CMC shall be entitled to continue to use the
Improvements
after the term of this Agreement unless it is a result of a CMC
Termination,
except to the extent that the use of the Improvements would
constitute
infringement of any patents obtained from the Provisional Patent
Application or
of any registered trademarks included in the Product
Intellectual Property.
(d) CMC shall prosecute the Provisional Patent Application. CMC
shall
have the right to deduct its reasonable out of pocket expenses
for the
preparation, filing, and prosecution of the Provisional Patent
Application from
future royalties due to Licensor under this Agreement. Licensor
grants to CMC
the right to apply for additional patents on the Product
provided that such
patents shall be applied for in the name of Licensor and
licensed to CMC during
the Term and according to the conditions of this Agreement. CMC
shall have the
right to deduct its reasonable out of pocket expenses for the
preparation,
filing, and prosecution of any such patent application (but in
no event more
than $10,000) from future royalties due to Licensor under this
Agreement. CMC
shall obtain Licensor's prior written consent before incurring
expenses for any
United States or foreign patent application.
2. Manufacturing.
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(a) CMC or its affiliates shall arrange for the manufacture of
the
Product for sale pursuant to CMC's marketing and distribution
rights. CMC may
source the Product at facilities of its affiliates, at its
discretion.
Notwithstanding anything herein to the contrary, at all times
during the term of
this Agreement, CMC shall consult with Licensor as to all
manufacturing
standards and specifications for any Product subject to this
Agreement, which
standards and specifications shall be subject to Licensor
approval, which shall
not be unreasonably withheld. CMC hereby agrees that CMC shall
not advertise,
promote, market, sell or otherwise distribute any Product that
deviates in any
substantial manner from the standards and specifications as
approved by
Licensor.
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<PAGE>
(b) CMC will cause all Product manufactured by it to bear
such
reasonable and customary notices of the patent obtained for the
Product as
Licensor may request.
3. Marketing and Distribution.
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(a) CMC shall have the right to advertise, promote, market, sell
and
otherwise distribute the Product throughout the world by means
of direct
response television programming, internet, catalog, live home
shopping, credit
card stuffers, print and radio campaigns and through other
retail and wholesale
channels (collectively, the "Territory") and shall do so at its
own expense. CMC
shall have the right to change or create new packaging for the
Product for sale
in the Territory without the approval of Licensor and may sell
the Product under
its own trademarks, service marks, symbols or trade names, if
any. CMC shall
also have the right to sell and distribute the Product in the
Territory
advertising with and using the Licensor trademarks as described
in Section 1(a)
above. CMC agrees to conduct its business relating to the
Product in substantial
compliance with all applicable laws, rules and regulations and
not to engage in
any illegal, deceptive, misleading or unethical practices.
(b) Licensor acknowledges that CMC cannot reasonably be expected
to
immediately distribute the Product through all channels of
distribution or into
all areas of the Territory. CMC shall conduct test marketing in
selected markets
in the United States as set forth on Schedule A attached hereto
("Test
Marketing"). The Test Marketing shall continue until CMC has
obtained sufficient
data to decide whether wide scale marketing of the Product is
justified in
accordance with Schedule A. During the period of the Test
Marketing, CMC may
purchase minimum quantities and distribute the Product, but CMC
shall not make
any binding commitments to distribute Product beyond the Test
Marketing (other
than remaining inventory) unless CMC has notified Licensor that
the Test
Marketing was a success.
(c) Upon the conclusion of the Test Marketing, CMC will notify
Licensor
whether wide scale marketing of the Product ("Roll-out") is
justified. Roll-out
will be conclusively presumed to be justified if the Media
Efficiency Ratio
("MER") exceeds 2:1. The MER is the ratio of total sales
generated by the Test
Marketing divided by the total media expense of the Test
Marketing. CMC will
provide Licensor with a good faith forecast of future sales
after the Test
Marketing. If Roll-out is justified, CMC will market the Product
in accordance
with this Agreement within 60 days after such determination. If
CMC notifies
Licensor that Roll-out is not justified then, at Licensor's
option, either (i)
the parties will attempt to negotiate such modifications to this
Agreement as
shall be acceptable to the parties and will thereby justify wide
scale
marketing, or (ii) if Licensor so elects, or if the parties are
unable to
negotiate acceptable modifications within a reasonable time
after the end of
Test Marketing, this Agreement shall terminate. A termination
pursuant to this
Section 3(c) shall be without penalty or charge by either party;
provided that
CMC shall be entitled to use Licensor's Product Intellectual
Property to
liquidate any inventory of Product held by it at the end of the
Test Marketing
period (including inventory which it sir firmly committed to
purchase from
subcontractors) over a six month period from the date of
termination. Licensor
shall have the right, exercisable during the first 30 days of
such six month
period, to purchase CMC's remaining inventory of Product at
CMC's cost.
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<PAGE>
(d) CMC shall have sole and exclusive control over its
distribution
decisions and in no event will CMC be obligated to expend
resources to market or
distribute the Product beyond what CMC, in its sole discretion,
determines is
justified. CMC will determine, in its sole discretion, the
manner and method of
marketing and distribution of the Product, including marketing
expenditures,
selection of a spokesperson, advertising and promotion,
packaging, distribution
channels and suggested price of the Product.
(e) During the term of this Agreement, Licensor covenants and
agrees
that neither it nor any other person deriving its rights from
Licensor (other
than CMC and its affiliates) shall manufacture, market,
advertise, sell or
distribute the Product, any improvements or derivations thereof
or any other
product based on the Patent ("Restricted Products").
Notwithstanding the above,
Licensor shall be entitled to advertise, promote, market, sell
and otherwise
distribute the Product after written approval by CMC, in its
discretion, on a
non-exclusive basis, through specified channels of trade in
specific markets
(which may be specific geographic markets outside the U.S. or
specific
retailers) not served nor intended to be served by CMC ("Allowed
Markets"). CMC
may expressly condition its approval of an Allowed Market on
Licensor's
agreement to meet performance benchmarks in the Allowed Market
based on sales
revenue, sales growth, marketing activity, distribution
penetration, customer
satisfaction or other criteria (the "Performance Criteria"). If
(i) CMC notifies
Licensor that it has failed to attain or maintain to one or more
of the
Performance Criteria for an Allowed Market, and Licensor fails
to correct such
failure within thirty days after receiving such notice, and (ii)
CMC intends to
service such Allowed Market, then CMC may revoke its approval in
writing as to
such Allowed Market and Licensor shall no longer service such
market. If CMC
grants permission for Licensor to distribute the Product,
Licensor agrees to
purchase all such Product directly from CMC at the wholesale
price CMC charges
third party distributors and retailers for purchases of similar
quantities.
4. Compensation; Calculation and Payment of Royalties. CMC
shall
compensate Licensor as follows:
(a) CMC shall pay Licensor a royalty (the "Royalty") of 4% of
the price
per unit of Product received by CMC (the "Unit Price") from
third parties on all
Products sold by CMC in the Territory through direct response
television
programming and 11% of the Unit Price for Products sold through
all other means,
including through retail distributors. The Unit Price in the
case of sales to a
distributor or retailer shall be the price per unit received by
CMC, less any
rebates or refunds, and not the price at which such distributor
or retailer
sells the Product to a third party, unless CMC or an affiliate
becomes a
distributor or retailer, in which case the Unit Price shall be
the price per
unit at which such distributor or retailer sells the Product to
a third party.
In the case of sales by CMC directly to consumers, the Unit
Price shall be the
price, less any rebates, refunds, credit card charges and
shipping and handling
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