Master Consulting Services Agreement

Master Consulting Services Agreement for the Development of Multimedia Products

AGREEMENT by and between Multimedia Producer, Inc., a corporation organized and existing under the laws of the State of New York, with a principal place of business at Fifth Avenue, New York, New York (hereinafter referred to as "Producer") and Consultants, Inc., a corporation existing under the laws of the State of New York, with a principal office at Valley Stream Parkway, Malvern, Pa. (hereinafter referred to as "Consultant").

WHEREAS, Producer desires to engage Consultant to provide certain consulting services in connection with the modification of Producer's multimedia products, and Consultant desires to provide such consulting services.

NOW, THEREFORE, in consideration of the mutual promises set forth herein, Producer and Consultant hereby agree as follows:

1. Services and Scope of Work

1.1. Services
Upon the terms and subject to the conditions contained herein, Consultant agrees to provide to Producer consulting services as are described on such Schedules as are executed from time to time by both parties to this Agreement (the "Schedules") each of which Schedules shall be consecutively numbered and annexed hereto. Such services shall be provided in accordance with the provisions of this Agreement and the applicable Schedule and will be on either a fixed price or time and materials basis as specified in the applicable Schedule. Each Schedule shall contain the information set forth in Exhibit 1 or Exhibit 2 hereto, as applicable.

1. Scope of Work
A Statement of Scope of Work (the "Statement") shall be included in each Schedule. Each Statement will contain a description of the tasks to be performed by Consultant, the modifications and documentation to be produced by Consultant, acceptance criteria and warranties for each modification, specifications, functional, performance and reliability requirements, warranty periods, a schedule of performance, a schedule of payments and a statement of Consultant's then-current rates, if applicable. The Statement may include such additional terms and conditions as the parties may wish to include.

2. Consultant Personnel

2.1. Consultant Project Manager
Consultant will appoint for each Schedule a qualified member of its staff to act as project manager (the "Consultant Project Manager"), whose duties shall be to act as liaison between Producer and Consultant.

2.2. Consultant Staff
Consultant will provide adequate staff to complete the services specified in the Schedule within the time frame set forth in the Schedule. Consultant will provide Producer with qualifications of all staff to be assigned to perform services under any Schedule. Producer shall have the right to evaluate all Consultant personnel assigned to perform services under any Schedule and to accept or reject any individual(s). In the event that any Consultant employee is found to be unacceptable to Producer, including, but not limited to, demonstration that he or she is not qualified, Producer shall notify Consultant of such fact and Consultant shall immediately remove said employee and, if requested by Producer, provide a replacement acceptable to Producer, within five (5) days of said notice. Producer may elect not to request a replacement, and, in that event Producer may terminate the applicable Schedule, without further liability of any kind, upon written notice to Consultant. Producer is the sole judge as to performance capability. Consultant agrees to ensure the continuity of Consultant employees assigned to perform services hereunder. Any removal or reassignment by Consultant of those of its employees assigned to perform services hereunder must be with one (1) month's prior written notice to Producer and with Producer's prior written consent as to the removal or reassignment and as to any replacement employee, who shall have substantially equivalent or better qualifications than the employee being replaced. In the event Consultant replaces any of its employees with Producer's consent, Consultant will promptly provide said replacement. Unless otherwise agreed to in writing by Producer, Consultant shall not remove or replace personnel provided hereunder. There will be no charge to Producer for any replacement provided in accordance with this Section while the replacement employee acquires the necessary orientation which shall not exceed five (5) working days.

2.3. Independent Contractor
Consultant is acting, in performance of this Agreement, as an independent contractor. Consultant shall provide under this Agreement the services of only those personnel who are employees of Consultant for federal tax purposes. Personnel supplied by Consultant hereunder are not Producer's employees or agents and Consultant assumes full responsibility for their acts. Consultant shall be solely responsible for the payment of compensation of Consultant's employees assigned to perform services hereunder and such employees shall be informed that they are not entitled to the provision of any Producer employee benefits. Producer shall not be responsible for payment of worker's compensation, disability benefits, and unemployment insurance or for withholding or paying employment related taxes for any Consultant employee, but such responsibility shall be solely that of Consultant. In the event that any federal, state or local government agency, any court or any other applicable entity determines that the personnel provided by Consultant or any permitted subcontractor or assignee of Consultant hereunder are employees of Producer for any purpose, Consultant agrees to indemnify and hold Producer harmless from all liabilities, costs and expenses (including, but not limited to, attorneys' fees) associated with such determination. In the event that any Consultant employee performing services hereunder is found to be not an employee of Consultant for federal tax purposes, Producer shall notify Consultant and Consultant shall immediately take appropriate corrective action or remove said employee from performing services hereunder and, if requested by Producer, provide a qualified replacement as set forth in Section 2.2 hereof. Notwithstanding any other provision of this Agreement, Consultant may not assign or subcontract any work to be performed hereunder without the express written consent of Producer, any such subcontract or assignment shall include the terms specified by Producer and any such subcontractor or assignee shall provide to Producer personnel who are employees of such subcontractor or assignee for federal tax purposes and the assurances and indemnities required to be provided by Consultant under this Section

3. Project Management

3.1. Producer Project Manager
Producer shall designate a project manager for each Schedule (the "Producer Project Manager") who shall act as a liaison between Producer and Consultant.

3.2. Progress Reports and Meetings
Consultant shall submit a detailed written Progress Report to the Producer Project Manager every month during the term of each Schedule. Such progress reports will detail the current status of Consultant activities, indication of the progress of the work being performed and resources expended since the last report, as well as a cumulative total to date, and identification of actual and anticipated problem areas, the impact thereof on Consultant's work effort, and action being taken or alternative actions to be taken to remedy such problems.

4. Fees, Expenses, Records and Taxes

4.1. Fees
Consultant agrees to invoice Producer, monthly in arrears for services provided to Producer by Consultant personnel under each Schedule which specifies that services performed thereunder are to be performed on a time and materials basis, in accordance with the daily rate and work schedule set forth in the Schedule. Such daily rate shall be in no event more than Consultant's standard published rate for an employee in that job classification. Consultant agrees to invoice Producer for services provided to Producer by Consultant personnel under each Schedule which specifies that services performed thereunder are to be performed on a fixed price basis in accordance with the schedule of payments set forth in the Schedule. Consultant shall submit, with each invoice, copies of time reports of employees which relate to the services being invoiced.

4.2. Expenses
Consultant shall invoice Producer monthly in arrears for expenses incurred as a result of performing services in accordance with any Schedule. Such expenses shall be limited to reasonable out-of-pocket expenses necessarily and actually incurred by Consultant in the performance of its services hereunder, provided that: (i) such expenses have been estimated in the Schedule and Producer has given its prior written consent for any such expenses; (ii) the expenses have been detailed on a form acceptable to Producer and submitted to the appropriate Producer Project Manager for review and approval; and (iii) if requested by Producer, Consultant submits supporting documentation in addition to the approved expense form.

4.3. Review of Fees and Expenses
Consultant shall submit the charges and/or expenses to be invoiced for services performed and the applicable time reports or documentation under any Schedule to the Producer Project Manager for that Schedule for review and approval prior to actual invoicing. The charges and/or expenses invoiced in accordance with this Section, except for any amounts disputed by Producer, shall be payable by Producer within thirty (30) days of Producer's receipt of each invoice. Any disputed charges and/or expenses shall not affect payment of non-disputed charges and/or expenses, in accordance with the terms of this Agreement.

4.4. Maximum Dollar Amount
Notwithstanding anything to the contrary contained herein, Producer shall not be liable for any charges and/or expenses under any Schedule for work done on a time and materials basis in excess of the Maximum Dollar Amount specified on such Schedule.

4.5. Records
Consultant shall maintain complete and accurate accounting records, in a form in accordance with generally accepted accounting principles, to substantiate Consultant's charges and expenses hereunder and Consultant shall retain such records for a period of one (1) year from the date of final payment under any Schedule.

5. Acceptance of Services

5.1. Acceptance Criteria
Each modification shall be subject to acceptance testing by Producer to verify that the modification satisfies the acceptance criteria mutually agreed to by Producer and Consultant for said modification. The acceptance criteria for each modification, which shall be included in the applicable Schedule, shall be jointly developed and mutually agreed to in writing by Producer and Consultant before work commences under the Schedule, when possible, but in no event later than thirty (30) days in advance of the date identified in the Schedule for production of the modification involved. If Producer in good faith cannot agree to any of the acceptance criteria proposed by Consultant, Producer may terminate this Agreement without incurring any liability hereunder. If a Schedule fails to set forth acceptance criteria for a modification, acceptability of such modification shall be based solely on Producer's satisfaction therewith.

5.2. Acceptance Testing
Acceptance testing for any modification shall commence within five (5) working days of the date on which Consultant notifies Producer Project Manager, in writing, that the modification has been satisfactorily completed, in Consultant's opinion, and is ready for acceptance testing by Producer. Acceptance testing shall continue for the period of time specified in the acceptance criteria or, if no such time period has been agreed upon by the parties, for a period of thirty (30) consecutive days ("the Initial Acceptance Period"). In the event that any modification does not conform to the acceptance criteria within the Initial Acceptance Period described above, Producer shall give Consultant written notice thereof. Producer shall cooperate with Consultant in identifying in what respects the modification has failed to conform to the criteria. Consultant shall, at no cost to Producer, promptly correct any deficiencies which prevent such modification from conforming to the criteria. Upon completion of the corrective action by Consultant, and at no additional cost to Producer, the acceptance test will be repeated until the modification has successfully conformed to the acceptance criteria. If the modification does not conform to the acceptance criteria within sixty (60) days after the end of the Initial Acceptance Period described above, Producer may (i) immediately terminate the applicable Schedule without any further obligation or liability of any kind and Consultant shall immediately reimburse Producer any amounts paid thereunder; or (ii) require Consultant to continue to attempt to correct the differences, reserving the right to terminate as aforesaid at any time. When the modification has successfully conformed to or satisfied the acceptance criteria Producer shall give Consultant written notice thereof.

6. Indemnity

6.1. Indemnity
Consultant agrees to defend at its own cost and expense any claim or action against Producer and/or its subsidiaries, for actual or alleged infringement of any patent, copyright or other property right (including, but not limited to, misappropriation of trade secrets) based on any service or other materials furnished to Producer by Consultant pursuant to the terms of this Agreement or the use thereof by Producer. Consultant further agrees to indemnify and hold Producer and/or its subsidiaries, harmless from and against any and all liabilities, losses, damages, costs and expenses (including, but not limited to, attorneys' fees) associated with any such claim or action. Consultant shall be liable for and shall indemnify and hold Producer and/or its subsidiaries harmless against any loss or damage in connection with or arising out of the fault or negligence of Consultant. Consultant agrees to indemnify Producer and/or its subsidiaries for any liability or expense due to claims for personal injury or damage to property arising out of the furnishing, performance or use of the services or materials provided hereunder as well as any claim for payment of compensation or salary asserted by an employee of Consultant. In the event that Consultant is a professional corporation, each of the members of said corporation hereby agrees to be held jointly and severally liable for any liability of Consultant set forth herein or arising hereunder.

7. Confidentiality and Proprietary Rights

7.1. Confidentiality
Consultant acknowledges that Producer and its subsidiaries are the owners of valuable trade secrets, and other confidential information and license same from others. Consultant further acknowledges that the services which Producer and/or its subsidiaries performs for clients are confidential; that to enable Producer and/or its subsidiaries to perform these services, its clients furnish confidential information concerning their business affairs, finances, properties, methods of operation and other data; that the good will of Producer and/or its subsidiaries depends, among other things, upon its keeping such services and information confidential and that unauthorized disclosure of the same would irreparably damage Producer and/or its subsidiaries; and that by reason of its duties hereunder, Consultant may come into possession of information concerning such services or information furnished by clients, even though Consultant does not himself take any direct part in or furnish the services performed for those clients. All such information owned by Producer and/or its subsidiaries, licensed by Producer and/or its subsidiaries or concerning clients of Producer and/or its subsidiaries and services rendered by Producer and/or its subsidiaries to such clients is hereinafter collectively referred to as "Confidential Information".

7.2. Non-Disclosure
Consultant agrees that, except as directed by Producer, Consultant will not at any time during or after the term of this Agreement or any Schedule disclose any Confidential Information to any person, or permit any person to examine and/or make copies of any reports or any documents prepared by Consultant or that come into Consultant's possession or under Consultant's control by reason of Consultant's services, and that upon termination of this Agreement, Consultant will turn over to Producer all documents, papers and other matter in Consultant's possession or under Consultant's control that contain or relate to such Confidential Information.

7.3. Injunctive Relief
Consultant acknowledges that disclosure of any Confidential Information by Consultant will give rise to irreparable injury to Producer and/or its subsidiaries or the owner of such information, inadequately compensable in damages. Accordingly, Producer or such other party may seek and obtain injunctive relief against the breach or threatened breach of the foregoing undertakings, in addition to any other legal remedies which may be available. Consultant acknowledges and agrees that the covenants contained herein are necessary for the protection of legitimate business interests of Producer and/or its subsidiaries and are reasonable in scope and content.

7.4. Proprietary Rights
Unless otherwise specified in a Schedule, all work performed under any Schedule, and all materials, products, modifications developed or prepared for Producer by Consultant under such Schedule (whether or not such Schedule is completed), are Confidential Information and the property of Producer and all title and interest therein shall vest in Producer and shall be deemed to be a work made for hire and made in the course of the services rendered hereunder. To the extent that title to any such works may not, by operation of law, vest in Producer or such works may not be considered works made for hire, all rights, title and interest therein are hereby irrevocably assigned to Producer. All such materials, including, but not limited to, the text, data, photographs, animation or graphics, video or audio segments used in the Producer's multimedia products, shall belong exclusively to Producer, with Producer having the right to obtain and to hold in its own name, copyrights, registrations or such other protection as may be appropriate to the subject matter, and any extensions and renewals thereof. Consultant agrees to give Producer and any person designated by Producer, any reasonable assistance required to perfect the rights defined in this Section. Unless otherwise requested by Producer, upon the completion of the services to be performed under each Schedule or upon the earlier termination of such Schedule, Consultant shall immediately turn over to Producer all materials and modifications developed pursuant to such Schedule, including, but not limited, working papers, narrative descriptions, reports and data. All modifications shall bear Producer's copyright and trade secret notices.

8. Warranties

8.1. Consultant Warranties
Consultant warrants that: (a) each of its employees assigned to perform services under any Schedule shall have the proper skill, training and background so as to be able to perform in a competent and professional manner and that all work will be performed in accordance with the applicable Schedule; (b) Producer shall receive free, good and clear title to all materials, modifications and products developed under this Agreement; (c) each and every modification contemplated by a Schedule shall conform to the specifications for same as mutually agreed to in writing by Producer and Consultant and shall meet the functional, performance and reliability requirements of Producer as set forth on the applicable Schedule; (d) for 120 days from (i) the date Producer notifies Consultant of Producer acceptance of a modification or (ii) the completion date of any Schedule, Consultant will, at no charge to Producer, furnish such materials and services as shall be necessary to correct any defects in the operation of the version of the modification or other products in Producer's possession and to maintain them in good working order in accordance with the specifications and functional, performance and reliability requirements for same. On any Schedule, the parties may agree upon additional warranties which will apply to the modification to be provided under that Schedule, in addition to those set forth herein which shall apply to all Schedules, whether or not a Schedule sets forth any additional warranties.

9. General

9.1. Timeliness of Performance
Consultant understands that prompt performance of all services hereunder is required by Producer in order to meet its schedules and commitments. In the event that any anticipated or actual delays in meeting Producer's deadlines or scheduled completion dates are caused by the unacceptable performance of any Consultant employee or any other cause within the reasonable control of Consultant, Consultant shall provide additional temporary personnel, as requested by Producer and at no charge to Producer, in order to complete the assignment involved in a timely manner. Neither party, however, shall be responsible for any delays that are not due to such party's fault or negligence or that could not have reasonably been foreseen or provided against.

9.2. Term and Termination
This Agreement shall commence on the date as indicated on the first Schedule attached hereto and shall continue in full force and effect thereafter unless and until terminated in accordance with the provisions of this Agreement or any Schedule or until satisfactory completion of the services provided for herein and in all Schedules, based on the acceptance criteria set forth in said Schedules. In the event of any material breach of this Agreement by either party, the other party may cancel this Agreement by giving thirty (30) days' prior written notice thereof; provided, however, that this Agreement shall not terminate at the end of said thirty (30) days' notice period if the party in breach has cured the breach of which it has been notified prior to the expiration of said thirty (30) days. In the absence of a material breach of this Agreement by Consultant, Producer may terminate this Agreement or any Schedule hereunder by giving Consultant two weeks prior written notice of its election to terminate said Agreement or Schedule. In such case, Producer agrees to pay Consultant for all costs incurred by Consultant with Producer's approval up to the effective date of termination.

9.3. Work Rules
Unless otherwise agreed to by the parties, Consultant's personnel and Consultant's permitted subcontractors and assignees shall observe the working hours, working rules, holiday schedules and policies of Producer while working on Producer's premises. Consultant's personnel and Consultant's permitted subcontractors and assignees will comply with Producer's security regulations particular to each work location.

9.4. Assignment
This Agreement shall be binding upon the parties' respective successors and permitted assigns. Neither party may assign this Agreement or any of its rights or obligations hereunder without the prior written consent of the other party, and any such attempted assignment shall be void, except that Producer may assign this Agreement, or any of its rights or obligations hereunder, upon written notice to Consultant, to any of its subsidiaries without the consent of Consultant. Furthermore, no work to be performed by Consultant hereunder shall be subcontracted to or performed on behalf of Consultant by any third party, except upon written permission by Producer. Consultant agrees that any assignment hereunder shall not relieve Consultant of its obligations hereunder.

9.5. Notices
Any notices or communication under this Agreement shall be in writing and shall be hand delivered or sent by registered mail return receipt requested or by confirmed facsimile transmission to the party receiving such communication at the address specified above or such other address as either party may in the future specify to the other party.

9.6. Governing Law
This Agreement shall be governed by and construed in accordance with the laws of the State of New York (without giving effect to conflicts of law). The sole jurisdiction and venue for any litigation arising out of this Agreement shall be an appropriate federal or state court located in the State of New York.

9.7. Modifications
No modification, amendment, supplement to or waiver of this Agreement or any Schedule hereunder, or any of their provisions shall be binding upon the parties hereto unless made in writing and duly signed by both parties.

9.8. Waiver
A failure of either party to exercise any right provided for herein, shall not be deemed to be a waiver of any right hereunder.

9.9. Complete Agreement
This Agreement and each Schedule attached hereto set forth the entire understanding of the parties as to the subject matter therein and may not be modified except in a writing executed by both parties.

9.10. Severability
In the event any one or more of the provisions of this Agreement or of any Schedule is invalid or otherwise unenforceable, the enforceability of the remaining provisions shall be unimpaired.

9.11. Publicity
Consultant agrees that it will not, without prior written consent of Producer in each instance refer to the existence of this Agreement or any Schedule in press releases, advertising or materials distributed to prospective customers without the prior written consent of Producer.

9.12. Most Favored Customer
Consultant agrees to treat Producer as its most favored customer. Consultant represents that all of the provisions of this Agreement and any Schedule are comparable to or better than the equivalent provisions being offered by Consultant to any of its other customers. If Consultant offers more favorable provisions to any customer during the terms of their contract periods than under this Agreement or any Schedule, such provision shall be made available to Producer.

9.13. Compliance with Law
Consultant warrants that it will comply with all applicable United States, state and local laws and regulations in its performance of its obligations hereunder.

9.14. Non-Solicitation
Consultant agrees not to solicit or make offers of employment or enter into consulting relationships with employees or other consultants of Producer during the term of this Agreement or Schedule and for a period of one (1) year thereafter.

9.15. Remedies
The rights and remedies of Producer as set forth in this Agreement are not exclusive and are in addition to any other rights and remedies available to it in law or in equity.

9.16. Headings
The headings contained in this Agreement are for purposes of convenience only and shall not affect the meaning or interpretation of this Agreement.

9.17. Surviving Sections
All provisions hereof relating to the following sections shall survive the termination of this Agreement: 6.1, 7.1, 7.2, 7.3, 7.4, 8.1, 9.14, 9.15.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date hereof.

EXHIBIT 1 - FIXED PRICE SCHEDULE

Schedule No.:

Consultant:

Nature of Services:

Services to be provided at:

Producer Project Manager:

Consultant Project Manager:

Consultant Employees Assigned:

Job Name Classification

Job Name Classification

Job Name Classification

Commencement Date:

Completion Date:

Statement of Scope of Work:

Amount to be charged for expenses:

Total Amount of Project:

Agreed to this day of ,

EXHIBIT 2 - TIME AND MATERIALS SCHEDULE

Schedule No.:

Consultant:

Nature of Services:

Services to be provided at:

Producer Project Manager:

Consultant Project Manager:

Consultant Employees Assigned:

Job Name Classification Daily Rate

Job Name Classification Daily Rate

Job Name Classification Daily Rate

Commencement Date:

Completion Date:

Maximum Dollar Amount:

Statement of Scope of Work:

Amount to be charged for Consultant Project Manager's services:

Amount to be charged for expenses:

Agreed to this day of ,