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
