DISTRIBUTION AGREEMENT

Exhibit 10.28

 

DISTRIBUTION AGREEMENT

 

AGREEMENT made as of April 1, 2005 by and among Public Media Works, Inc. and Carpool Guy Partners LLC (collectively, “Licensor”), on the one part, and LA Ideas Inc. (“LA Ideas”), on the other.

 

WHEREAS, Licensor has the sole and unrestricted right, power and authority to grant the rights herein granted and agreed to be granted in and to the “Picture” as hereunder described and defined, and

 

WHEREAS, LA Ideas desires to acquire from Licensor the rights herein granted and agreed to be granted in and to the Picture.

 

NOW, THEREFORE, in consideration of the representations and warranties hereinafter set forth and of the mutual covenants of the parties hereto, it is agreed as follows:

 

1.              PICTURE .  The subject of this Agreement is the motion picture currently entitled “Carpool Guy” produced by Licensor and directed by Corbin Bernsen (“Picture”).

 

2.              TERRITORY .  The “Territory” for which the rights granted to LA Ideas in this Agreement shall consist of the Universe.

 

3.              TERM .  The rights granted to LA Ideas in this Agreement are granted in perpetuity commencing on the date hereof (“Term”).

 

4.              GRANT OF RIGHTS .  The sole and exclusive “Videogram Rights” to the Picture during the Term in the Territory and the sole and exclusive right to exploit the Picture by means of “Video On Demand”, “Pay Per View”, and “Internet Transmission” during the Term in the Territory.

 

4.1            “Videogram Rights” shall mean the right to manufacture, advertise, promote and distribute on a sale or rental basis, DVDs, video compact discs, laser discs, videotapes or any other analog or digital recording devices containing visual images now known or hereafter discovered for use by consumers.

 

4.2            “Video On Demand” shall mean the transmission of a selected video program from a video library via a system where reception of said video program at any viewing time selected by the viewer is available only upon payment of a charge therefor, which charge is in addition to any charge for reception of the television service and/or programming channel.

 

4.3            “Pay Per View” shall mean the transmission of a selected video program via a television system where reception of said video program at a viewing time selected by the viewer from a limited number of viewing times is available only upon payment of a charge therefor, which charge is in addition to any charge for reception of the television service and/or programming channel.

 

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4.4            “Internet Transmission” shall mean the transmission of a selected video program to a consumer via the Internet (through digital downloading or otherwise), where such transmission is available only upon payment of a charge therefor, which charge is in addition to any charge for Internet services

 

4.5            Without in any way limiting the generality of the grant of rights set forth in this Section of the Agreement, LA Ideas is granted and shall be vested with the following rights for the purpose of distribution of the Picture as set forth hereunder:

 

4.5.1         Use of Title .  To use the title of the Picture and to change the title of the Picture if necessary or desirable in order to make the Picture suitable for exhibition in any and all parts of the Territory.

 

4.5.2         Addition of LA Ideas Name, Trademark and Logo .  To use the name, trademark and logo of LA Ideas or any of its subsidiaries, affiliates or its parent in the credits of the Picture and in all advertising and publicity relating thereto, in such a manner, position, form and substance as LA Ideas may reasonably elect to identify LA Ideas as the distributor of the Picture.

 

4.5.3         Changes .  To make such changes, additions, alterations, cuts, interpolations and elimination as LA Ideas may deem necessary or desirable in order to adapt and make the Picture suitable for exhibition in any and all parts of the Territory, provided, however, that no material change shall be made in any of the credits or the copyright notice appearing in positive prints or videotapes of the Picture as delivered by Licensor to LA Ideas.

 

4.5.4         Publicity and Advertising .  To publicize, advertise and exploit the Picture throughout the Territory during the Term and to cause or permit others so to do including, without limitation, the right in connection with, and solely for the purpose of advertising, publicizing and exploiting, the Picture to (i) publish and to license and authorize others to publish in such forms as LA Ideas may deem advisable, synopses, summaries, resumes and stories of any excerpts from the Picture and from any literary or dramatic material included in the Picture or upon which the Picture is based, and in newspapers, magazines, trade periodicals and in all other medial of advertising and publicity whatsoever; (ii) broadcast by radio and television, and to license and authorize others to so broadcast in the Territory, parts of the Picture, and any literary or dramatic material included in the Picture or upon which the Picture is based, and to use in conjunction therewith any other literary, dramatic or musical material; and (iii) use, license and authorize others to use the name, physical likeness of any actor, writer, director or executive producer rendering services in connection with the Picture, provided, however, LA Ideas shall abide by

 

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any reasonable restrictions on the use of the name, physical likeness and voice of any actor, writer, director or executive producer rendering services in connection with the Picture set forth in any agreement between Licensor and such person of which Licensor notifies LA Ideas in writing in advance.

 

4.5.5         Promotional Announcements .  To cause promotional announcements of the Picture to be made (should LA Ideas desire to do so) and prints thereof to be manufactured, exhibited and distributed by every means, method and device now or hereafter known.

 

4.5.6         Copies .  To manufacture and/or procure an unlimited number of copies of the Picture.

 

4.5.7         Claims .  To assert, prosecute, handle and settle in any and all parts of the Territory all claims or actions or causes of action against any and all persons for the unauthorized or illegal use, copying reproduction, release, distribution, exhibition or performance of the Picture or any part of versions thereof, or of the literary, dramatic or musical material upon which the Picture is based or which are used therein, or any part or version thereof, in any media which is part of the rights granted hereunder or for the enforcement or protection of all or any rights herein granted or purported to be granted to LA Ideas, together with full and complete authority and power of attorney in the name of Licensor or otherwise to do all or any of the foregoing, and to execute, acknowledge, verify and deliver any all consents, documents, releases or other papers or documents of any kind pertaining thereto or any thereof in the name of or on behalf of Licensor, which Licensor fails or refuses, after request and reasonable notice, to execute, acknowledge, verify and/or deliver.  LA Ideas may settle any claim pursuant to this Section which involves the collection of money only or the payment of money only out of Gross Proceeds collected or to be recouped out of Gross Proceeds hereunder without the prior consent of Licensor.  If Licensor, or any parent or affiliated company, is to pay any money or incur any obligation in connection with such settlement, or if such settlement imposes any limitation on Licensor’s rights or interests in the Picture, LA Ideas shall not agree to such settlement without the prior written consent of Licensor.

 

4.5.8         Sub-License . LA Ideas may grant further sub-license(s) in respect of the rights granted to it hereunder to any third parties.

 

5.              DELIVERY .

 

5.1            Physical Elements .  Licensor shall deliver the Picture to LA Ideas, free and clear from any liens, encumbrances, or any claims whatsoever.  In connection therewith, Licensor shall deliver to LA Ideas the physical elements as set forth in

 

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the “Delivery Requirements” attached hereto as Exhibit A.  Such elements shall be delivered to Kyle Borg, or such other person as may be designated by LA Ideas from time to time.

 

5.2            Documents .  Licensor also agrees to concurrently deliver to LA Ideas the following:

 

5.2.1         Chain of Title Documents .  Any and all documents necessary to prove or effectuate the chain of title.

 

5.2.2         Certificate of Insurance .  A certificate of errors and omissions insurance, naming as an additional insured “LA Ideas Inc.”, its affiliated and subsidiary entities, and the successors, licensees, assigns, officers and directors of each of the foregoing at no cost to LA Ideas.  Such policy shall be endorsed to provide LA Ideas with not less than 30 days notice of cancellation or material change in such policy.  Licensor agrees that it will keep such insurance in effect throughout the term hereof and such policy shall be issued by an insurance company acceptable to LA Ideas with not less than limits of $1,000,000 per claim and $3,000,000 in the aggregate and a deductible of not more than $10,000 per claim.  If, after the initial three year term of such errors and omissions insurance policy, the prevailing industry standard deductible is higher than $10,000, then the deductible on any renewal policy for the remainder of the term shall be such prevailing industry standard rate.

 

5.2.3         Scripts .  A copy of the final shooting script; a legible typewritten copy in the English language of a detailed continuity script containing final dialogue (word for word), narration, song vocals, as well as a cut by cut description of the action, conforming exactly to the photographic action and soundtrack; one copy of the editor’s code book, if any; and one copy of the lined script.

 

5.2.4         Music Cue Sheets .  A copy of a music cue sheet showing the particulars of all music, the title of each composition, names of composers, publishers, and copyright owner(s) and/or synchronization and performance rights owner(s); the usages (whether instrumental, instrumental-visual, vocal, vocal-visual or otherwise), the place and number of such uses, running time for each cue, the performing rights society involved, and any other information customarily set forth in music cue sheets.

 

5.2.5         Publicity Materials .  Publicity materials, including at least reproduction quality color and black and white photographs of the principal actors and key scenes from the Picture .

 

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5.2.6         Promotional Materials .  Where available, a black and white production stat (being a high contrast black and white print) of the logo of the title of the Picture; where available, a color 5” by 4” transparency of the title logo.

 

5.2.7         Dubbing Restrictions .  A statement of any restrictions as to the dubbing of the voice of any player, if any.

 

5.2.8         Cutting Restrictions .  A statement of any restrictions as to the cutting or editing of the Picture, if any.

 

5.2.9         Titles .  A typewritten list of the main titles and end titles.

 

5.2.10       Biographies .  A biography of each of the principal members of the cast.

 

5.2.11       Synopsis .  A brief synopsis in English (one typewritten page in length) of the content.

 

5.2.12       Credits .  The statement(s) of credits to accord credit on the screen, in advertising and on recordings, and excerpts as to any restrictions as to use of name and likeness.

 

5.2.13       Cast .  One (1) copy of a list indicating the name of the character portrayed by each player and a complete description of the character.

 

5.3            Inspection .   All of the elements required in paragraphs 5.1 and 5.2 above are sometimes collectively referred to herein as the “Delivery Materials”.  To the extent that delivery is incomplete or fails to meet the requirements specified herein, LA Ideas shall so notify Licensor, and Licensor shall immediately thereafter correct all such deficiencies. If Licensor fails to meet such requirements then without waiving any of LA Ideas’ other rights and remedies, LA Ideas shall have the right, but not the obligation, to cure the defect.  The cost of any element of delivery supplied by LA Ideas which is omitted by Licensor, or does not meet the creative and technical specifications herein, may be recouped by LA Ideas from any disbursements to or for the account of Licensor hereunder.

 

6.              PARTICIPATION .

 

6.1            Subject to the full and faithful performance of this Agreement by Licensor and provided Licensor is not in material default of this Agreement, in consideration of the rights, license and privileges herein granted, LA Ideas agrees to pay Licensor its share of “Gross Proceeds” (defined below) as set forth in this Section.

 

6.2            Gross Proceeds shall be applied in the following manner and in the order set forth:

 

6.2.1         LA Ideas shall deduct and retain a “Distribution Fee” as follows:

 

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6.2.1.1      For the United States:  Twenty Percent (20%) of Gross Proceeds; and

 

6.2.1.2      For the rest of the Territory:  Thirty Percent (30%) of Gross Proceeds;

 

6.2.2         LA Ideas shall recoup its Distribution Costs and Expenses as defined in Section 7.4; and

 

6.2.3         100% of the remaining Gross Proceeds after Licensor deducts its Distribution Fee and recoups its Distribution Costs and Expenses (“Remaining Gross Proceeds”) shall be paid to Licensor; provided, however, that:

 

6.2.3.1      50% of the Remaining Gross Proceeds derived solely from sales of Videograms and/or Internet Transmissions made on or from the website carpoolguy.com or any other website affiliated with the Picture shall be retained by LA Ideas (as the assignee of Shoolery Designs, Inc.) as set forth in that certain agreement between Shoolery Designs, Inc. and Public Media Works, dated as of February 1, 2005 (“Shoolery Agreement”); and

 

6.2.3.2      A royalty of Fifty Cents ($.50) shall be retained by LA Ideas (as the assignee of Shoolery Designs, Inc.) as set forth in the Shoolery Agreement for each DVD and/or other home video unit of the Picture sold or distributed and not returned d uring the Term in the Territory except sales derived from the website carpoolguy.com or any other website affiliated with the Picture.

 

6.3            Gross Proceeds shall be defined, calculated, accounted for and paid as set forth in Sections 7 and 8 below.

 

7.              GROSS PROCEEDS, DISTRIBUTION COSTS AND EXPENSES .

 

7.1            Gross Proceeds .  “Gross Proceeds” shall mean all monies actually collected by LA Ideas from the distribution of the Picture by means of Videograms, Video on Demand, Pay Per View and Internet Transmission (herein sometimes collectively called “distribution”).

 

7.2            Exclusions from Gross Proceeds .

 

The following shall not be included in Gross Proceeds:

 

7.2.1         Refunds .  Any monies paid to LA Ideas and thereafter refunded (and if any such monies have been included in computing any sums paid to

 

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Licensor, such payment shall be deemed an overpayment); it is understood money shall be refunded only in exercise of good faith business judgment.

 

7.2.2         Advances and Security Deposits .  Any monies received by LA Ideas in the nature of advances or security deposits until such monies are earned or become non-refundable.

 

7.2.3         Discounts and Allowances .  All discounts or allowances paid or granted to third parties in the ordinary course of business in connection with the distribution of the Picture as permitted hereunder.

 

7.2.4         Taxes .  All sums paid or accrued on account of sales, use, value of the Picture, receipts, income remittance, and any other taxes, however denominated, to any governmental authority directly or indirectly related to the Picture (but not including any corporate income or franchise tax on LA Ideas’ or any affiliates’ income), including any cost (fairly apportioned by LA Ideas to the Picture hereunder) of contesting the same and all sums paid or accrued on account of all duties, customs and imposts, costs of acquiring permits and other similar authority to secure the entry and exercise of the rights hereunder.

 

7.2.5         Claims .  Amounts paid, or reasonably reserved, for the payment of any claims, actions or causes of action arising out of LA Ideas’ distribution of the Picture.

 

7.3            Distribution Costs and Expenses .  LA Ideas shall advance all Distribution Costs and Expenses and shall recoup the same in accordance with Section 6.2.2.  “Distribution Costs and Expenses” shall mean the following:

 

7.3.1         Manufacture/Duplication of Discs, Etc.   All costs incurred in connection with the manufacture, duplication, delivery, insurance and storage of discs, tapes and/or other Videograms of the Picture;

 

7.3.2         Promotional Announcements .  If LA Ideas determines that it is necessary or desirable to deliver to any of its licensees in connection with its distribution of the Picture, promotional announcements, in whatever length or lengths, LA Ideas shall cause such promotional announcements to be prepared.  The cost thereof shall be considered “Promotional Costs” (as defined below).

 

7.3.3         Advertising, Sales, Marketing and Publicity .  Advertising, sales, marketing and publicity costs (“Promotional Costs”), including without limitation, all costs incurred by LA Ideas in connection with Section 4.5.5 above, the cost of advertising in newspapers, trade papers, magazines, over radio or television, sales promotion books and the cost of press kits and synopses, the cost of entertaining and travel, relating to the

 

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advertising, sales, marketing and publicity of the Picture, and the cost of any and all advertising and promotional activities; provided, however, for any advertising or promotional materials relating to more than one of LA Ideas property, the costs thereof shall be fairly allocated and the allocated amount charged hereto.  Promotional Costs must be approved by Licensor prior to expenditure.  Such approval shall be deemed granted unless reasonable objection is received in writing within 3 business days after receipt of LA Ideas’ notice of its desire to expend such costs.

 

7.3.4         Miscellaneous .  All other costs incurred by LA Ideas in connection with the distribution of the Picture.

 

7.3.5         Costs of Collection .  Costs, including, but not limited to, reasonable attorneys’, outside accountants, and collection agency’s fees and costs incurred in any claim or proceeding brought by or against LA Ideas in collection of any Gross Proceeds in connection with the Picture or the Agreement.  The foregoing shall include the cost of securing royalty payments from the Copyright Royalty Tribunal, AGICOA, and similar and successor organizations