EXHIBIT 10.6
LETTER AGREEMENT DATED MAY 16, 2000 BETWEEN THE COMPANY AND DLT ENTERTAINMENT
LTD.
XXX XXXXXXX'X
DLT ENTERTAINMENT LTD
00 XXXX 00xx XXXXXX. XXX XXXX, X.X. 00000
TELEPHONE (212) 245-M0
Fax: (212! 315o1132
Telex: 820084
Dated as of May 16, 2000
Mr. Joey Di Francesco
Raven Moon International, Inc.
000 Xxxxxxxxxxxxx Xxxxxxx - Xxxxx 000
Xxxxxxxx, XX 00000
Re: Xxxx D's Kids Club
Dear Joey:
This sets forth the terms and conditions of the agreement (the "Agreement")
between Raven Moon International ("Producer") located at 000 Xxxxxxxxxxxxx
Xxxxxxx -- Xxxxx 000, Xxxxxxxx, Xxxxxxx 00000 and DLT Entertainment Ltd. ("DLT")
including where applicable DLT's subsidiaries, subdistributors, sublicensees
and/or agents, located at 00 Xxxx 00 Xxxxxx, Xxx Xxxx, XX 00000 relating to the
television series entitled "Xxxx D's Kid's Club" (the "Program"). The Program
shall initially consist of three (3) half (1/2) hour episodes, with additional
half (1/2) hour episodes to be produced, in the event DLT obtains a broadcaster
commitment.
1. GRANT OF RIGHTS
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In the event DLT obtains a broadcaster commitment in the United States,
Producer hereby grants to DLT the exclusive right to distribute, license, market
and exploit the Program in the Media in the Licensed Territory hereinafter
provided. Such rights include the right to dub the Program into foreign
languages, and to make cuts or edits to meet censorship and time segment
requirements. DLT shall use its best efforts, subject to DLT's reasonable
business judgment, to maximize the exploitation of the rights granted hereunder.
All rights not granted to DLT herein are reserved to Producer.
2. MEDIA
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The rights hereunder shall permit DLT to exploit the Program in all forms
of television now or hereafter known, (including, but not limited to, free
television, cable television, pay cable television, subscription television,
over-the-air pay television, closed circuit television, master antenna
television, direct broadcast satellite television), all forms of home video now
or hereafter known, (including, but not limited to, videocassette, videodiscs,
CD-ROM, all forms of DVD, video games), non-theatrical, armed forces and
in-flight use. (the "Media").
3. LICENSED TERRITORY
------------------
The rights hereunder shall permit DLT to exploit the Program throughout the
world. ("Licensed Territory").
4. TERM
----
The tern of this Agreement shall commence one (1) year from the later of
the date of delivery of the three (3) half (1/2) hour episodes or October 1,
2000 and shall continue through and until September 30, 2001 (the "Term"). If
DLT obtains a broadcaster commitment, then the Term shall be automatically
extended for five (5) years from the date of the initial broadcast license.
Thereafter, the Term shall be automatically renewed for additional two (2) year
periods, unless either party notifies the other to the contrary at least sixty
(60) days prior to the end of the then current period.
5. APPROVAL OF AGREEMENTS
----------------------
The principal business terms of all agreements to be made by DLT in
connection with the Program shall be subject to Producer's prior approval and
DLT shall provide Producer with a fully executed copy of each such agreement.
Producer will not unreasonably withhold or delay any such approval. Failure to
obtain such approval due to time constraints or inadvertence shall not be a
breach of the Agreement or impair the effectiveness of the Agreement.
6. DELIVERY
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Producer shall timely deliver to DLT such first-class technically
acceptable broadcast quality elements of the Program as are necessary for DLT to
perform DLT's services hereunder.
These shall include but not be limited to:
1- Digital betacam - NTSC (Action to Action - No Commercial Breaks)
Videocassette Master with STEREO MIXED ENGLISH AUDIO on Channels I and
2 and STEREO MUSIC AND EFFECTS on Channels 3 and 4
1 - Post Production "As Broadcast" dialogue continuity script
Set of Music Cue Sheets
Promotional materials including slides, photographs, press releases.
VHS preview copies to be created by Producer at the sole cost
of Producer. Producer shall pay the cost of shipping the VHS
preview copies.
In the event DLT requires additional materials after satisfactory delivery,
DLT will advance, as a distribution expense, the cost of creating and delivering
such materials, provided that any services required to be rendered by Producer
shall be provided without change.
7. COMMISSIONS
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a. DLT's distribution commissions shall be applied to one hundred percent
(100%) of Gross Receipts as follows:
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UNITED STATES, Its Territories and Possessions
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Network Prime Time Exhibition: 10%
NBC, CBS, ABC, FOX and PBS
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Cable television, pay cable television, subscription 20%
television, over-the-air pay television, closed circuit
television, master antenna television, direct broadcast
satellite television and any "network" not included in
the above Network Prime Time Exhibition category.
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Home video (in any format), non-theatrical, armed 25%
forces and in-flight use.
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Syndication and any other use not specifically 30%
mentioned elsewhere.
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WORLDWIDE, excluding the United States, its territories and possessions
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Non-theatrical, home video (in any format), 25%
interactive media, video game and similar media,
armed forces and in-flight use.
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All forms of television 30%
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b. With respect to the home video rights, DLT shall have the option of
either licensing these rights to a third party at the commission rates set forth
above or releasing the home video through DLT's own division. In the event DLT's
division releases the home video, OLT will then be responsible for all aspects
of marketing the home video including but not limited to creating the video
sleeve, printing, tape duplicating, shipping, etc. DLT will collect all Gross
Receipts and will then deduct from the Gross Receipts all of the costs
associated with the creation and release of the home video and share the balance
of the remaining revenue on a 50/50 split.
c. "Gross Receipts" is defined to mean all revenue (without any
deductions), generated by the exploitation of the Program by DLT, its
subsidiaries, sub-distributors, sublicensees and agents with the exception of
barter sales where the barter agent's commission shall first be deducted.
d. "Net Receipts" is defined as Gross Receipts less DLT's distribution
commissions.
e. After the termination of this Agreement, DLT shall nevertheless be
entitled to receive commissions due it in respect of all agreements entered into
or substantially negotiated during the Term, and any renewals and extensions
thereof for the exploitation of the Program in the Licensed Territory.
8. DISTRIBUTION COSTS AND EXPENSES
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a. After deduction of the commissions set forth in paragraph 7 above, DLT
shall recoup from the Net Receipts of the Program all reasonable direct
distribution costs and expenses, including but not limited to the Program costs
associated with promotional cassettes, rating service fees, withholding taxes,
shipping of promotional material, the manufacture of prints and videotapes,
music and effects tracks, script duplication, publicity material, bank transfer
charges, insurance, dubbing and production of foreign language tracks and
advertising expenses. DLT agrees that all marketing-related expenses for
publicity and advertising shall be subject to Producer's prior approval.
b. Producer shall bear the cost of all licenses, fees, royalties and other
required payments in connection with reruns and reuses of the Program including
but not limited to residual and other similar payments required by any
applicable union or guild agreement relative to persons performing services in
the production of the Program. DLT shall supply Producer with all necessary
reports and information reasonably required to calculate and make such payments.
9. REPORTS AND ACCOUNTINGS
-----------------------
a. DLT shall report and account to Producer in writing within thirty (30)
days following the end of each calendar quarter. The reports shall contain such
information and data as conform with normal and standard industry practice and
such other reasonable information and data as shall be requested by Producer.
b. After retaining DLT's commissions and recouping distribution costs as
provided in paragraphs 7 and 8 hereof, DLT shall attach to the report(s) a check
payable to Producer in the appropriate amount for the balance of Gross Receipts
received during the period covered by the report(s), less U.S. withholding tax,
if applicable. With respect to blocked or restricted funds, DLT will report such
funds to Producer and, to the extent permitted by applicable law, Producer will
have the right to require DLT to deposit Producer's share of such funds in its
bank account in the country where such funds are blocked or restricted.
c. DLT shall keep true, complete and accurate books of account and records
consistent with generally accepted accounting procedures pertaining to an
financial transactions in connection with the performance of DLT's obligations
under this Agreement. Such books and records shall be available for inspection
by Producer or their representatives at DLT's place of business during normal
business hours no more than once a year during the Term or any extensions or
renewals thereof at a time or times mutually acceptable to DLT and Producer upon
thirty (30) days written notice from Producer.
10. MERCHANDISING/LICENSING
-----------------------
Producer shall retain the merchandising, licensing, book publishing and
music rights in and to the Program and DLT shall receive ten percent (10%) of
all Gross Receipts derived from the exploitation of such media. Producer shall
be obligated to report and account to DLT in writing within thirty (30) days
following the end of each calendar quarter, The reports shall contain such
information and data as conform with normal and standard industry practice and.
such other reasonable information and data as shall be requested by DLT.
11. COPYRIGHT
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Producer shall insure that its copyright of the Program is properly
registered and shall use reasonable steps to ensure that the copyright of the
Program is properly protected in any market in which the Program is distributed
by DLT.
12. WARRANTY
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a. Producer represents and warrants that Producer has the right to grant
DLT the rights granted herein and that DLT's exercise of those rights will not
infringe or violate the rights of any third party. Producer shall maintain a
standard Errors and Omissions insurance policy for the Program during the Term
hereof and any extensions or renewals thereof having limits of not less than One
Million Dollars ($1,000,000) for any single occurrence and of not less than
Three Million Dollars ($3,000,000) for all occurrences taking place in any one
year. Such insurance shall provide for coverage of DLT, its affiliated companies
and the officers, directors, agents and employees of the same.
b. Producer represents and warrants that it has obtained and fully paid for
the necessary music synchronization licenses for the exploitation and exhibition
of the Program as contemplated herein throughout the Term in the Licensed
Territory hereof and any extensions thereof; and that all musical compositions
in the Program are controlled by ASCAP, BMI or another performing rights society
having jurisdiction, or are in the public domain, or are controlled by Producer
(in which case licenses thereof are hereby granted at no cost to DLT).
c. DLT represents and warrants that it has the right to enter into this
Agreement. DLT further warrants that it will not duplicate or otherwise
reproduce the Program in any manner, nor permit any of its sublicensees to do
so, except specifically in connection with the distribution of the Program as
permitted hereunder.
d. DLT represents and warrants that it shall use its best efforts to
market, distribute and otherwise exploit the Program as permitted hereunder.
e. DLT represents and warrants that it has all requisite power and
authority to enter into this Agreement and to carry out the transactions
contemplated by this Agreement, and that neither the execution, delivery and
performance of this Agreement nor the consummation of the transactions
contemplated by this Agreement has or will constitute a breach or default of DLT
under any contract, instrument or agreement to which DLT is a party.
13. INDEMNIFICATION
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Producer shall defend, indemnify and hold DLT harmless from and against any
demand, claim, action, liability,-and expense (including reasonable attorneys'
fees) arising out of Producer's breach of any of the representations,
warranties, or provisions contained in this Agreement; provided, that DLT shall
promptly notify Producer of any such demand, claim, etc., and that Producer
shall have the right to control the defense and to approve any settlement
thereof.
DLT shall defend, indemnify, and hold Producer harmless from and against
any demand, claim, action, liability and expense (including reasonable
attorneys' fees) arising out of DLT's failure to perform its services as
provided in this Agreement; provided, that Producer shall promptly notify DLT of
any such demand, claim, etc., and that DLT shall have the right to control the
defense and to approve any settlement thereof.
14. DEFAULT
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At any time during the Term hereof, or any extensions or renewals, if DLT
is in breach or default of any material covenant, undertaking or agreement
contained in this Agreement and fails to cure, correct or remedy such breach or
default within ten (10) days after receipt of written notice from Producer
specifying same, or if DLT is adjudicated a bankrupt, or petitions for or
consents to any relief under any bankruptcy reorganization, receivership,
liquidation, compromise or arrangement or moratorium statutes, whether now in
force or hereafter enacted, or makes an assignment for the benefit of creditors,
or a receiver, liquidator, trustee or custodian is appointed for all or a
substantial part of DLT's assets and such receiver or custodian is not
discharged within thirty (30) days from the date of appointment thereof, then,
in any of said events, Producer may exercise all or any of the remedies, rights
or privileges hereinafter outlined which shall be deemed to be cumulative and
not exclusive. Such remedies, rights and privileges are:
a. To cancel and terminate this Agreement, effective upon written notice to
DLT, in which event DLT shall have no further rights to negotiate, solicit or
enter into agreements or licenses with respect to the Program and Producer shall
be relieved of any further obligations to DLT hereunder other than the
obligation, if any, to pay commissions to DLT with respect to license fees
received by Producer before or after such termination under license agreements
entered into by DLT hereunder before such termination.
b. To exercise such other rights or remedies as Producer may have at law,
including without limitation Producer's right if any, to recover damages in the
event of DLT's breach or default.
c. To perform all existing license agreements previously obtained or
entered into hereunder and to receive and apply the proceeds of such license
agreements in accordance with the provisions of this Agreement, including the
payment to DLT of any commissions payable to DLT hereunder on account of license
fees derived from such license agreements.
15. NOTICES
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Any notice required to be given hereunder shall be .given in writing and
delivered personally or sent by facsimile, prepaid telegram or certified mail to
each of the parties at their respective addresses hereinabove set forth or at
such other addresses as any party may hereafter notify the other of in such
manner. Any notice sent by facsimile, telegram or by certified mail shall be
deemed given on the day such notice is given to the telegraph office or mailed,
as the case may be. Notice by facsimile shall only be effective if actual
receipt thereof by an individual, natural person of suitable authority for the
notice concerned can be demonstrated by the party serving the notice.
16. MISCELLANEOUS
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a. This Agreement shall not be construed so as to constitute a partnership
or a joint venture between the parties hereto, and no party is deemed to be the
representative or the agent of the other and neither party by virtue of this
Agreement shall have any right, power or authority, express or implied, to act
on behalf of or enter into any undertaking binding the other party except as
herein otherwise provided.
b. This Agreement shall be governed by the law of the State of New York
applicable to contracts to be performed wholly in New York and the state and/or
federal courts of New York shall have exclusive jurisdiction.
c. This Agreement constitutes and contains the entire understanding between
the parties and cannot be changed or modified except in a writing signed by both
of the parties hereto.
d. No term or provision hereof shall be deemed waived or any breach
excused, unless such waiver or consent shall be in writing and signed by the
party claimed by the other to have waived or consented. Any consent by any party
to, or waiver of, a breach by the other, whether express or implied, shall not
constitute a consent to, waiver of, or excuse for any other different or
subsequent breach.
Please indicate your agreement with the foregoing by signing in the space
provided below for your signature.
Very truly yours, DLT Entertainment Ltd.
By: /s/ Xxxx Xxxxxx
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Xxxx Xxxxxx
Date: June 2, 2000
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ACCEPTED AND AGREED TO:
RAVEN MOON INTERNATIONAL
By: /s/ Xxxx XxXxxxxxxxx
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Xxxx XxXxxxxxxxx
Date: June 9, 2000
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