DISTRIBUTION AGREEMENT GLO/KMG - A/11/98
GLOBAL ENTERTAINMENT PRODUCTIONS BV
(hereinafter referred to as "Global")
and
KALEIDOSCOPE MEDIA GROUP INCORPORATED
(hereinafter referred to as "KMG")
Preamble
Whereas Global are producers of films (produced principally for television)
and, unless otherwise stipulated, will own and/or control all the relevant
rights to:
o such films; including, but not limited to, the rights to produce and
distribute such films on a world wide basis and in what ever format they may
choose eg. film, video, compact disc, etc;
o any related music (subject to such restrictions as will be stipulated for each
film which may become subject to this agreement); and
o any products which may be derived from such films and which will or may
become the subject of related merchandising agreements
and
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Whereas KMG are film distributors and have expertise in syndication and all
other avenues of marketing pertaining to film and allied products, including but
not limited to.
* cable television;
* network television both free and to pay;
* home videos;
* merchandising of film related products.
I. Definitions:
The following meanings, unless clearly inconsistent with the context, will be
assigned to words and phrases used in this agreement and any sub agreements.
Programs: films produced by or acquired by Global, be they films intended
for a single showing, mini series or full series, and
irrespective the presentation medium e.g. 16mm film, 35mm
film, video film, compact disc etc.
Merchandise: products based on programs, be they based on the story,
characters or animals featured in the story, any other products
based in any way on the story, etc., whether such products be in
the printed medium. electronic medium, clothing, toys or any
other product based on or derived from the programs.
Gross revenue: the total revenue collected from the distribution of each
program, subject only, in the case of advertising sales to the
deduction of the standard ad sales fee of 10%. and the ad agency
commission of 15% of the total revenue, where such ad sales fee
or ad agency commission is paid away to a third party for bona
fide services rendered.
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Third party: a party at arms length to the parties to this agreement,
and/or any associate or related party to the parties to this
agreement.
Global: Global Entertainment Productions BV.
KMG: Kaleidoscope Media Group Incorporated.
Victory: Victory Media Management a German company with who are
associated, as co-producers and/or co-owners with Global in some
or all of the programs which will be subject to this agreement.
Master
agreement: this agreement.
Sub agreement: a sub agreement of this agreement relating to a specific
program.
Ad sales fee: the standard fee paid to an advertising agent, normally 10% of
the total revenue generated by such sale.
Ad agency
commission: the standard commission paid to advertising agencies, normal1y
at the rate of 15% of total advertising revenue in respect of
the particular sale.
Domicilium: the domicilium execulandi et citandi of the parties, being:
Global-
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KMG
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SeaGull: SeaGull Entertainment Incorporated, an associate company of KMG.
North America: the United States of America excluding Canada.
Canada: Canada, both English and French speaking unless otherwise
stated.
USA: the United States of America.
Domestic: the United States of America.
The territory: the USA and Canada.
Other
territory: any country, state or area not forming part of the territory.
2. Joint Distribution
Global and KMG hereby agree that they will jointly distribute
programs and merchandise produced or acquired by Global in the
territory, such distribution to be based on systems and methodology
developed by KMG and agreed by Global
3. Other Territory
KMG may be in a position to assist with distribution in some other
territory, in such event they will only proceed with the specific
consent of Global given in writing. In the event of KMG being the
effective cause of a revenue producing agreement in such other
territory they will be
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entitled to a fee of 10% (or such other percentage as may be agreed by
the parties) of the gross revenues from the transaction in question.
4. On-going Representation
the parties have agreed in good faith that - subject to the programs
produced or acquired by Global being of a standard or a type suitable
for distribution in the territory and subject to the revenues from
KMG's distribution of programs being in accordance with budgets
prepared in advance and agreed by both parties in all the various
distribution channels available in the territory - It Is the intention
of Global to offer all programs intended for the territory, to KMG for
distribution, and it is the intention of KMG to undertake the
distribution of all such programs,
5. Sub Agreements
a separate sub agreement of this agreement shall be entered into by the
parties to this agreement in respect of each program to be distributed
jointly by the parties. The sub agreement is intended to ensure
effective implementation of this agreement and shall deal with matters
which are specific to each such program. Sub agreements shall be
negotiated by the parties in good faith and shall form part of this
agreement and be subject to the conditions of this agreement.
6. Production and/or Acquisition Costs
all costs of producing and/or acquiring programs shall be borne by
Global, assisted, where Global has so agreed, by financing arranged by
Victory. KMG shall be only in the distribution and/or sale of completed
programs and any merchandise related thereto.
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7. KMG Program Advice
while KMG will not be directly involved in producing or purchasing
programs they will, if so requested by Global, advise on the
suitability of programs for distribution in the territory, including if
appropriate advice as to measures and/or adaptations which could render
programs suitable, or more suitable, for distribution in the territory.
8. Distribution Expense Budget
the parties shall jointly compile an expense budget for the marketing
and distribution costs of each program, such costs shall be only the
direct costs of distribution of the said program. This budget will be
included in the sub agreement for the related program. The budget shall
not be exceeded either in total or in respect of individual items
unless such excess is approved by both parties in writing. Approved
(budgeted) expenditure will be funded by Global as incurred and in any
case where such approved expense is in the first instance paid by KMG
the amount so paid will be refunded by Global, against an invoice
from KMG. Refunds are to be made within 30 days of KMG's invoice. Full
details of all distribution expenses incurred shall be audited by a
suitably qualified CPA should either party request such an audit. Such
audit expenses shall be treated as distribution expenses.
9. Distribution Fee
a distribution fee based on the gross revenues (as defined) derived in
respect of each program shall be calculated on the following basis:
* domestic syndication/cable 35%
* domestic free or pay network television 25%
* home video 20%
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* all other - including North American
merchandising 30%
The distribution fee, calculated as above, shall be paid 50% to Global
and 50% to KMG. Distribution fees shall be payable only out of actual
receipts from contracts giving rise to the fees in question (see clause
10) and shall be a first charge against such receipts once expenses
referred to in clause 8 above have been recouped.
10. Application of Total Revenue
the total revenue derived from each program subject to joint
distribution shall be applied as follows:
* firstly the related distribution costs paid by Global shall be
refunded to Global;
* secondly, once the full amount of related distribution costs have
been refunded, the next tranche of receipts shall be applied to paying
the distribution fee, each installment to be shared 50/50 by Global
and KMG;
* thereafter any further receipts shall constitute net profit and shall
be paid to Global;
Revenues shall be distributed monthly as and when received.
11. Revenue to Global Bank Account
all revenue shall be paid into a central fund or account controlled by
Global, as and when received, and the disbursements referred to in 8
shall be made out of such fund or account. Should KMG so require such
fund or account shall be audited by a suitably qualified CPA and the
cost of such audit shall be treated as distribution expenses.
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12. Global to Approve all Contracts
each and every contract, of sale or otherwise, arising out of this
agreement shall be subject to Global's approval (which shall not be
unreasonably withheld) and shall not be binding until signed by
Global's authorized representative.
13. Sales Budgets and Evidence of Title
unless otherwise agreed in writing no sub agreement shall be binding on
the parties unless, prior to or concurrently with, signature of
such sub agreement:
* KMG have produced a detailed revenue budget (acceptable to Global),
which shall be a schedule to the sub agreement, reflecting the
anticipated revenues from distribution of the program and sales of
related merchandise;
*Global have provided evidence of clear title to the relevant program
and/or merchandise to the extent relevant to the particular sub
agreement.
14. Right to Distribute Related Products
once KMG have entered into an agreement with Global to distribute a
particular program, they shall be entitled (subject to satisfactory
performance) and obliged, to market any ancillary programs to such
programs and also any related merchandise.
15. Global to Have all Right and Title
all right title and ownership in the programs and any related products
or merchandise shall be vested in and remain with Global at all times
and KMG will use its best
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endeavours to prevent any breach and to advise on any such breach that
may come to their attention.
16. Credit as Joint Distributors
both Global and KMG shall be given credit as joint distributors of any
program or related products, in all publicity material including,
without limiting the general application of this provision, any press
release, information brochure etc, including also any verbal
statements, made.
17. Subcontracting by KMG
should KMG wish to sub contract any of their obligations in terms of
this agreement they may do so only with the written consent of Global.
KMG shall be solely responsible for the remuneration of a sub
contractor appointed in terms of this provision but any payments to
approved subcontractors will be reimbursed if provided for in the
budget referred to in clause 8.
18. Good Faith
all representations made by the parties to each other in respect of
this agreement, any sub agreement or any aspect of such agreements are
required to have been made in the utmost good faith.
19. Warranties
Global warrants that it will control, and where appropriate, will
properly license, all material which becomes subject to this agreement,
including any sub agreement. Global and KMO both warrant that they are
legally competent and entitled to enter into this agreement and any sub
agreements, and that they are not under any disability
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which could in any way hamper their performance under any such
agreement, and that they will provide to each other such indenmities
and warranties as may become necessary. The parties further agree to
idemnify each other and any employee or other servant, director or
other officer, agent or consultant or shareholder or owner against any
including legal costs arising from any breach or default by the party
concerned.
20. Taking Effect
notwithstanding the date of signature, this agreement, any sub
agreement or related agreement shall only take effect, when approved by
or an behalf of Global's board of directors, Such approval to be given
within seven days of signature of the relevant agreement.
21. Duration or Term
this agreement shall be for an initial period of three years and shall
continue in force thereafter subject to termination by either party
giving the other six months notice in writing.
22. Amendments to be in Writing
this agreement supersedes all other arrangements to date of its taking
effect between the parties and no amendment to this agreement shall
have any force and effect unless reduced to writing and agreed by both
parties.
23. Assignment
no purported assignment of this agreement or any pant thereof shall be
of any force or effect unless reduced to writing and agreed by both
parties.
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24. Law of England
this agreement and, unless otherwise provided, any sub or related
agreement shall be subject to the laws of England.
25. Arbitration
to avoid litigation the parties hereto agree that any dispute arising
under this agreement shall be submitted to an independent arbitrator to
be appointed by the President for the time being of the Law Society of
England. The selection of the arbitrator shall be influenced by
consideration of whether the dispute relates to fact or law or both
fact and law. The decision of the arbitrator shall be final and shall
be binding on both parties. The parties shall provide the necessary
funds for the arbitration in equal shares but the arbitrator shall, as
part of his final decision make an order as to how the costs should
finally be borne by the parties.
Signed in ____________________ this _______ day of ___________
199___
For: Kaleidoscope Media Group Incorporated
__________________________ Witness 1 _______________
Director
(Who warrants that he is
empowered to sign this agreement) Witness 2 ________________
Signed in Amsterdam this 19th day of November 1998.
For: Global Entertainment Productions BV.
/s/ xxxxxxxxxx Witness 1 ___________________
--------------------------------
Director
(Who warrants that he is
empowered to sign this agreement) Witness 2 ___________________
