Text marked by “*” has been omitted pursuant to a
request for confidential treatment and was filed separately with
the Securities and Exchange Commission.
DISTRIBUTION AGREEMENT
This DISTRIBUTION AGREEMENT (the
“Agreement”) is
entered into with an effective date of the 5th day of June, 2008 by
and between PLAYERS NETWORK, INC., a Nevada corporation
(“PNTV”) and MICROPLAY, INC., a Nevada corporation in
formation, (the “
Distributor”). PNTV and Distributor are collectively the
“Parties”.
WHEREAS ,
PNTV owns the proprietary content, services and brand names more
particularly described and set forth on Exhibit “A”
hereto and referred to hereafter as the “PNTV Content”;
and
WHEREAS, Distributor
desires to acquire from PNTV, and PNTV desires to grant to
Distributor, the distribution rights for the PNTV Content on the
specific terms set forth herein;
NOW, THEREFORE ,
in consideration of the mutual agreements set forth herein, the
Parties agree as follows:
1.
TERM. The
initial term (the “Initial Term”) of this Agreement
shall be for three years. Commencing in year two the Parties agree
to enter into good faith negotiations to renew the Agreement under
substantially the same terms and conditions described herein for
one additional term (the “Renewal Term”).
2.
CLOSING; COUNTERPARTS; FAXES .
The consummation of this Agreement will take place by the execution
of documents by the appropriate and designated signatories in two
or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same
instrument, and upon consummation of the $2,000,000 equity
financing contemplated by Distributor herein (the
“Financing”)(the “Closing ” ).
This Agreement may also be executed via facsimile, which shall be
deemed an original.
3.
GRANT OF DISTRIBUTORSHIP .
PNTV hereby grants the Distributor the following distribution
rights (the “Distribution Rights”) as
follows:
3.1
Exclusive,
worldwide distribution rights to PNTV’s proprietary
content and brand name (the “Content”) via all
mobile devices including but not limited to all devices
connected to any wireless network(s). The grant of right of
right as described above via “any wireless
network(s)” shall under no circumstances supersede the
non-mobile exclusions defined in 3.2 below.
3.2
Exclusive,
worldwide distribution rights to the Content on all
non-English-speaking IP platforms, excluding only Content to
be received on TV sets (“TV Delivery”),
PNTV’s owned and operated websites, affiliates or
subscribers carrying PNTV’s content and/or channel on
platforms other than mobile, such mobile right shall remain
exclusive to Distributor, and North American partners on
websites such as Google Video and Blinkx now or in the future
except as agreed herein. The Parties acknowledge that websites
such as Google Video and Blinkx can be viewed worldwide and
PNTV has no control over who views it in which countries
around the world. Such viewing will not be considered a breach
of this Agreement. It is expressly agreed and understood
between the Parties hereto that PNTV is prohibited from
entering into any agreement or arrangement with any other
parties (besides the Distributor) regarding the distribution
of the Content in the exclusive fields of use granted herein
to Distributor, without the express, written permission of
Distributor, or except as otherwise provided and agreed to by
the Parties herein.
3.3
Exclusive
worldwide distribution rights to the Content on all
MicroPlay’s English-speaking IP platforms.
It
is understood that PNTV retains all rights not specifically
granted herein to all other Fields of Use. Nothing herein
shall be construed to limit PNTV’s advertising or
promotion of its own products and services. It is further
understood that Distributor acquires no ownership rights in
the PNTV Content or any portion thereof, whether now existing
or later created, except as provided herein, but rather only
the right to use and distribute the PNTV Content as specified
herein.
The
costs of repurposing and delivery of the Content shall be
financed by Distributor and recouped by Distributor pursuant
to the Revenue Share. All such costs to be approved in advance
in writing by Distributor. Such costs shall be billed by PNTV
to Distributor, 50% due upon approval of the specific project
by Distributor and 50% in arrears within 30 days of
billing.
With
regard to the future production or acquisition of PNTV
Content, Distributor shall have the right to distribute any
such new PNTV Content pursuant to the terms of this Agreement,
provided Distributor pays 30% of the final, verifiable
production budget(s) (the “Budget”) or acquisition
costs for all such content. In the event that Players Network
functions as a production company as a work for hire, of if a
third party, such as a sponsor or distributor, (the
“Third Party”) elects to finance the production or
acquisition of specific content (“Individual
Content”), then PNTV shall offer Distributor the right
of first refusal to finance 30% of the Budget of the
Individual Content subject to the following: (i) If
Distributor elects to exercise its right of first refusal to
finance 30% of the Budget, Distributor acknowledges that it
may be above and beyond the Budget if the Third Party finances
more that 70% and/or up to 100% of the Budget. In that case
PNTV shall retain any overages, and Distributor will retain
its 30% ownership in perpetuity of PNTV’s share of the
applicable Individual Content, and Distributor shall have the
exclusive right to distribute such Individual Content as
provided herein. PNTV shall use reasonable efforts to get the
Third Party to grant Distributor distribution rights to the
Individual Content. (ii) in this scenario, if
Distributor
declines its right of first refusal and elects not to finance
the Individual Content, Distributor will nevertheless retain
its exclusive distribution rights as provided herein. PNTV
shall use reasonable efforts to get the Third Party to grant
Distributor distribution rights. If Distributor declines its
right of first refusal and elects not to finance 30% of the
Budget, Distributor shall have no ownership interests in that
Individual Content.
Text marked by “*” has been omitted pursuant to a
request for confidential treatment and was filed separately with
the Securities and Exchange Commission.
Only
in the event a Third Party finances a project 100% in a work
for hire project and is not subject to the rights granted to
Distributor herein, then the distribution of that content may
be subject to Third Party approval.
Commencing
from the date of Closing of this Agreement, all rights of
first refusal granted herein by PNTV to Distributor shall have
a seventeen (17) business day time limit (the “Time
Limit”). If Distributor does not exercise its right of
first refusal in writing within the Time Limit, then the
opportunity shall be deemed refused. If the project being
presented by PNTV to Distributor has a shorter time limit than
17 business days based on the verifiable requirements of a
third party (i.e. a show is opening in 10 days and the
producer wants PNTV to cover the opening) then the Time Limit
shall be reduced to the actual time between offering
Distributor the right of first refusal and the locked-in first
day of if necessary execution.
Distributor
shall provide a Production Fund (the “Fund”)
(initial amount to be determined at the sole discretion of
Distributor) that PNTV can draw down on to cover
Distributor’s 30% share of the costs of such future PNTV
Content. Distributor may elect to replenish the Fund at its
sole determination.
If
Distributor elects not to finance 30% of certain new content
(“Nonfinanced Content”), then it will not have the
right to distribute that new content as provided herein,
unless otherwise agreed in writing between the Parties hereto
or as previously provided for in this Section 3 regarding
Third Party and Individual Content.
4.
MARKETING.
PNTV
and Distributor shall act in good faith to enter into a
co-operative agreement to cross-market and cross-promote their
respective brand(s) and business interest(s) on each
company’s platforms, including any international television
and mobile platforms each company controls now or in the
future.
5.
CONSIDERATION
. As
consideration for
PNTV
being the exclusive content provider and/or aggregator of Las Vegas
and Gaming Lifestyle programming to Distributor, and as partial
consideration for the grant of the Distributorship herein,
Distributor shall issue to PNTV * Shares of Common Stock of
Distributor (the “PNTV Shares”) which, upon issuance,
shall represent *% of the issued and outstanding Common Stock of
Distributor on a fully diluted basis. Distributor agrees that it
may, at its * * and at its * *, * any * of the PNTV Shares for * *
with the * * * * * on a * *. Notwithstanding the foregoing, in the
event that Distributor elects to * any of the * of Distributor
owned by its founding shareholders, Distributor shall * that number
of the * * equal on a *-* * as those * being * by the
founding shareholders.
In the event that MicroPlay is * *, up to a maximum of *% of the *
* may be * by PNTV to PNTV’s shareholders as a * at
Distributor’s * * and at Distributor’s *
*.
Text marked by “*” has been omitted pursuant to a
request for confidential treatment and was filed separately with
the Securities and Exchange Commission.
PNTV
shall receive 40% of the adjusted gross revenues received by
Distributor in connection with the Distribution Rights granted
in Section 3 herein, (the “Revenue Share”). The
Revenue Share is defined as gross revenues derived directly
from the distribution of the Content, less third party fees
including applicable taxes and revenue participations. Revenue
participants shall be subject to mutual approvals of the
Parties in advance, such approvals not to be unreasonably
withheld.
Any
deal involving packaging or bundling of the Content
as
part of a Premium Package including but not limited to
Membership Clubs, Site Subscription fees, or other revenue
generating packages of content and/or games and/or discounted
services, etc. (a “Package”) on any of
Distributor’s platforms, or subdistributed or
sublicensed to third parties including YuuZoo, shall be
subject, on a case by case basis, to PNTV’s
pre-approval, if it is not within the terms of the
Distribution Rights granted herein, such approval not to be
unreasonably withheld. PNTV and Distributor shall also use
reasonable efforts to negotiate an equitable Revenue Share on
each Package consistent with the intent of this
Agreement.
All
promotions, sweepstakes, merchandising or other
revenue-generated ancillary business opportunities (the
“Ancillary Opportunities”) promoted by, marketed
in, or attached to the Content, shall
be subject, on a case by case basis, to PNTV’s
pre-approval if it is not within the terms of the Distribution
Rights granted herein, such approval not to be unreasonably
withheld. PNTV and Distributor shall also use reasonable
efforts to negotiate an equitable Revenue Share for such
Ancillary Opportunities consistent with the intent of this
Agreement.
All
distribution, subdistribution, licensing or sublicensing of
the Content, Package or Ancillary Opportunity to any third
parties including YuuZoo, shall be subject, on a case by case
basis, to PNTV’s pre-approval if it is not within the
terms of Distribution Rights granted herein, such approval not
to be unreasonable withheld. PNTV and Distributor shall also
use reasonable efforts to negotiate an equitable Revenue Share
for such distribution, subdistribution, licensing or
sublicensing consistent with the intent of this
Agreement.
All
approval rights granted herein by Distributor to PNTV shall
have a twenty-one (21) day time limit (the “Time
Limit”). If PNTV does not exercise its approval right in
writing within the Time Limit, then the opportunity shall be
deemed approved. Notwithstanding the aforesaid, if the project
being presented to PNTV by Distributor for approval has a
shorter time limit than 21 days based on the verifiable
requirements of a third party, then the Time Limit shall be
reduced to the actual time between offering PNTV its right of
approval and the locked-in first day of necessary execution
less two days. PNTV agrees and acknowledges that it is not
entitled to share in any of Distributor’s revenues
generated on any platform from the PlaySpace including Real
Play.
Text marked by “*” has been omitted pursuant to a
request for confidential treatment and was filed separately with
the Securities and Exchange Commission.
Upon
Request, Distributor shall supply games in the Play For Fun
space only to PNTV for its owned and operated website only. In
exchange, PNTV shall promote to its website visitors that if
they want to play these games as Real Play, they should go to
Distributor’s IP or mobile site, and when possible,
provide a link to Distributor’s site, subject to legal
restrictions.
I
t
is the intention between the Parties hereto that all
calculations be calculated in accordance with General Accepted
Accounting Principals (GAAP)
In
order to maintain its distribution rights, Distributor agrees
that Distributor shall pay PNTV an Annual Minimum Guarantee as
an advance against Players Network’s Revenue Share as
set forth herein:
| |
5.1
|
During
the first year of the Agreement, the aggregate amount due pursuant
to the Annual Minimum Guarantee shall be $425,000, payable as
follows:
|
| |
i)
|
Completion
of investment into Distributor in the aggregate of *
|
| |
ii)
|
90
days after the date of Closing.
|
| |
b.
|
*
equal payments of * on the last day of each calendar quarter or
3-month period commencing 90 days from the date of
Closing.
|
| |
5.2
|
Thereafter,
the Annual Minimum Guarantee shall be paid for the duration of the
Initial Term. The Parties agree to negotiate in good faith the
Annual Minimum Guarantee for the Renewal Term(s), if any, with *%
of the annual amount to be payable upon the last day of each
calendar quarter.
|
| |
5.3
|
Within
90 days after the end of each *-* (yearly) period, PNTV will
receive an audited accounting of Distributor’s revenues and
shall receive whatever amount, if any, of its Revenue Share that
exceeds the Annual Minimum Guarantee.
|
|
5.4 |
PNTV
or
its designated auditor shall have the right, upon reasonable
written notice, during normal business hours, to inspect the
Distributor’s
books
and records and other documents and material in Distributor’s
possession
or control to determine the amount of the revenue payable under
this Agreement. PNTV
shall
bear the expense of an audit with the exception of instances where
the Distributor
is
found, through such an audit, to be in violation of this Agreement.
In such instances, Distributor
will
be invoiced, and shall pay the invoiced amount to PNTV within 30
days, for all time, travel and material costs associated with the
audit. Audits shall be conducted during regular business hours at
Distributor’s
f acilities
and shall not unreasonably interfere with Distributor
's
business. Audits shall be conducted no more than one time per one
year period. Distributor
shall
within 30 days immediately pay any overdue adjustments to the
Revenue Proceeds revealed by such audit. In the event that PNTV
engages a third party to perform the audit, such auditor shall be
from a nationally recognized certified public accounting firm and
such third party auditor shall be subject to reasonable
restrictions regarding confidential
information.
|
Text marked by “*” has been omitted pursuant to a
request for confidential treatment and was filed separately with
the Securities and Exchange Commission.
| |
5.5
|
PNTV
shall use its reasonable efforts to assist in developing and
producing a VOD or otherwise Television Channel for YuuPlay or
Distributor (the “Non PNTV Content”), and to receive
compensation for such development and producing services as
negotiated in good faith between the Parties, or as agreed to in
other signed documents, such as consulting agreements, between the
Parties. Upon agreement to compensation for the above referenced
services, PNTV shall facilitate introductions to its distribution
partners.
|
| |
5.6
|
The
Parties anticipate that they will cooperate on additional business
development matters and Content development matters which may not
be covered by this Agreement
|
|
