EXHIBIT 10.35
AGREEMENT made this 20th day of August 1998
BETWEEN American Champion Media Inc.
0000 Xxx Xxxxxxx, Xxxxx 000
Xxx xxxx, Xxxxxxxxxx 00000
X.X.X.
(herein called "Producer")
OF THE FIRST PART
-AND-
Portfolio Entertainment Inc.
000 Xxxxxx Xx., Xxxxx 000
Xxxxxxx, Xxxxxxx
X0X 0X0
(herein called "Distributor")
OF THE SECOND PART
1. GRANT OF RIGHTS
a) Producer hereby grants to Distributor the sole and exclusive right
to distribute, license, sub-license, market and exploit the series
entitled "Xxxxx Xxxxx" (the "Series") in its original and all other
languages, in all media including, without limitation, all forms of
television (including free, pay, cable, satellite, hotel/motel, closed
circuit (including systems installed on airlines and ships, and on
armed forces bases) and non-theatrically in the territories (the
"Territory") and for the term described in Schedule "A" attached
hereto hereinafter provided. Producer hereby grants to Distributor the
exclusive right to distribute all further television episodes of the
Series on the same terms provided herein. Such rights (herein called
"Rights") include the rights to:
i) make minor cuts or edits to meet censorship and time segment
requirements with consent from the Producer, provided that Distributor
shall not delete the credits or copyright notice as they appear in the
Series and to.
ii) insert Distributor's standard credit and logo. Producer grants to
Distributor the right to use clips and stills from the Series and the
names and likenesses of all persons who appear in connection with the
Series for the purpose of advertising and reasonable business
judgement, to maximize the exploitation of the Rights granted
hereunder.
2. TERM
The initial term of this Agreement shall commence on the execution of
this Agreement and shall expire three years later. Upon expiration or
termination, all rights shall revert to the Producer.
3. DELIVERY
a) Producer shall deliver to Distributor the following elements of
the Series as are necessary for Distributor to perform its services
hereunder including, specifically, those items described in Schedule
"B".
b) Producer shall deliver the Series to the Distributor in conformity
with international broadcast standards and practices: in the event that
any of Distributor's licensees of the Series rejects the Product due to
non-conformity with such standards and practices, Distributor may, at
its option, terminate this Agreement and be relieved of all its
obligations hereunder. If there is a termination by the Distributor, it
should not be relieved of its obligations to pay any monies due and
owing to the Producer.
c) Producer shall, at its sole expense, secure and maintain copyright
protection for the Series by registering copyright therein within (90)
days of its first transmission and shall ensure that the appropriate
copyright notice is embodied in the credits on the Series.
4. COMPENSATION
a) In consideration for the services Distributor is rendering to
Producer hereunder, Distributor shall retain as its sole and exclusive
property from all sales of the Series, the distribution fees expressed
as a percentage of Gross Receipts as set out in Schedule "A" and all
reasonable and verifiable direct distribution expenses incurred in
connection with the distribution of the Series. Such expenses include,
without limitation: long distance phone calls, fax, photocopying,
delivery, bank charges, a pro rata share of direct pre-market
promotion, shipping, customs brokers, duplication of screening
cassettes and Series master tapes, PAL duplication, promotional
material, duplication i.e. slides and black & white prints, and any
direct publicity or promotional costs e.g. paid advertising,
withholding taxes (excluding income taxes) and costs incurred in
connection with the collection of monies owed.
b) "Gross Receipts" shall be defined to mean all monies actually
received by Distributor or its sub-distributors relating to the
exploitation of the Series.
c) After the termination of this Agreement, Distributor shall
nevertheless be entitled to receive distribution fees and recoupment of
distribution expenses due to it in respect of all agreements, for
exploitation of the Series in the Territory made by or on behalf of the
Producer between the dates of the commencement and termination of
rights granted to Distributor hereunder.
5. REPORTS AND ACCOUNTING
a) The Distributor shall give photo copies, within 10 (ten) business
days after execution to the Producer of all contracts into which the
Distributor shall enter for the exploitation of the Rights.
b) Distributor shall report all sales and account to Producer in
writing within sixty (60) days after the end of each calendar quarter
hereunder. The reports shall contain such information and data as
conform with normal and standard industry practice and such other
information data as shall be mutually agreed to between Distributor and
Producer, including copies of all contracts into which the Distributor
shall enter for the exploitation of the Rights. In this connection, it
is agreed that the reports shall include the following categories of
deductions to be made from Gross Receipts: Distributor's distribution
fees, distribution expenses, withholding taxes and any costs of
litigation directly tied to the distribution of the Series. Distributor
shall consult Producer with regard to paid advertising and printing
expenses.
c) After retaining Distributor's distribution fees and deducting
distribution expenses, withholding taxes and any costs of litigation,
Distributor shall attach to the report(s) a Cheque payable to Producer
in the appropriate amount of the balance of Gross Receipts received
during the period covered by the report(s). With respect to blocked
funds, Distributor will report such funds to Producer and, to the
extent permitted by applicable law, Producer will have the right to
require Distributor to deposit Producer's share of such funds in its
bank account in the country where such funds are blocked.
d) Distributor shall keep true, complete and accurate books of
account and records pertaining to all financial transactions in
connection with the performance of Distributor's obligations under this
Agreement. Such books and records shall be available for inspection by
Producer or its representatives at Distributor's place of business
during normal business hours upon 24 hours notice to Distributor.
Producer or its representatives shall have the right to make copies of
the pertinent parts of all such books and records that directly relate
to such financial transactions.
e) Any dispute or objection relating to a statement may be raised
within two (2) years of the date of such statement. Thereafter
Producer's rights in connection with such error, dispute or statement
are forever waived. In the event that the Distributor's record is found
in excess of 10% error, the cost of the audit into the distributor's
record shall be assumed by the Distributor, provided that the
discrepancy noted in the audit is in excess of US$2,OOO (two thousand).
6. PROMOTIONAL MATERIALS AND LOAN MATERIAL
a) Producer shall furnish the Distributor with samples of advertising
materials, presentation reel, audition prints and/or video cassettes
for Series. Such items shall be shipped to the Distributor directly
upon request. If such items are supplied in insufficient quantities for
reasonable promotion, the Distributor shall have the right to prepare
with the Producer's approval video-cassettes for audition purposes with
respect to Series and, in such event, the Producer shall, out of sales
receipts, reimburse the Distributor for the cost of preparation of such
video-cassettes, unless such costs have been paid for by a third party.
In like manner, if brochures, flyers, or paper publicity are inadequate
for reasonable promotion, the Distributor has the right to prepare
brochures and, in this event, the Producer shall, out of sales
receipts, reimburse the Distributor for the cost of preparation of such
brochures, unless paid for by a third party .
b) At the expiration of the term of this Agreement, the Distributor
shall return to the Producer all such audition material as shall then
be in the Distributor's possession, at the Producer's expense.
c) Producer shall supply the Distributor on a loan basis all
materials described in Schedule "B".
7. WARRANTY
a) Producer warrants that Producer has the right to grant Distributor
the rights granted herein, that Distributor's exercise of those rights
will not infringe or violate the rights of any third party; that
Producer has the right and authority to enter into this Agreement, that
Producer has not entered into any agreement inconsistent with the terms
hereof and that the rights granted hereunder are free and clear of any
encumbrances. Producer to supply Distributor with termination letter
from any and all expired or terminated distribution agreements.
b) Producer warrants that it has obtained the necessary music
synchronization licenses for the exploitation and exhibition of the
Series as contemplated herein; and that all musical compositions in the
Series are controlled by ASCAP, BMI or another performing rights
society haying jurisdiction, or are in the public domain, or are
controlled by Producer (in which case licenses therefore are hereby
granted at no cost to Distributor).
c) Distributor warrants that it has the right to enter into this
Agreement. Distributor further warrants that it will not duplicate or
otherwise reproduce the Series in any manner, nor contractually permit
any of its sublicensees to do so, except specifically in connection
with the distribution of the Series as permitted hereunder. Distributor
will use its reasonable efforts to obtain the return of such items.
8. INDEMNIFICATION
a) Each party shall indemnify and hold the other party, such parties
parent and affiliated entities, licensees, assigns, and their
respective agents, successors, officers, and employees, harmless from
and against any and all liabilities, claims, losses, or damages
(including reasonable attorney's fees and expenses) arising out of or
in connection with the breach or alleged breach of the indemnifying
party's representations, warranties, agreements and/or undertakings
contained herein.
b) Upon written request of and at the option of the indemnitee, which
request will be promptly given, the indemnitor will assume the defense
of any claim, demand or action against such indemnitee and will, upon
request by the indemnitee, allow the indemnitee to participate in the
defence thereof, such participation to be at the expense of the
indemnitee. Settlement by the indemnitee shall be made only with the
prior written consent of the indemnitor, which consent shall not be
unreasonably withheld.
9. DEFAULT
Without prejudice to any other rights which either party may have
against the other, this Agreement may be terminated at the option of
each of the parties in either of the following events:
a) If the other party shall be in material default hereunder and
shall have failed to cure such default within thirty (30) days after
written notice thereof; or
b) If the other party shall be adjudicated a bankrupt or make a
general assignment for the benefit of its creditors.
Distributor shall nevertheless be entitled to receive distribution fees
due to it in respect of all agreements made by on behalf of the
Producer between the date of the commencement and termination of rights
granted hereunder for the term of the series in the Territory.
10. ERRORS AND OMISSIONS
Producer agrees to obtain errors and omissions insurance covering
claims in amount acceptable to Distributor in respect of the Series by
not later than delivery of the Series.
Such errors and omissions insurance shall be in effect for a period of
five years from the date of delivery and shall name Distributor as an
additional named insured as its interest may appear, must be issued by
a recognized insurance company specializing in the issue of errors and
omissions insurance.
11. RETURN OF MATERIALS
At the end of the term of this Agreement, Distributor will destroy or
return to Producer at Producer's expense the copies of the Series and
the materials set out in Schedule "B" subject to normal wear and tear.
In the event that Producer requests the destruction of these materials,
Distributor will provide Producer with a certificate of destruction of
the materials.
12. NOTICES
Any notice required to be given hereunder shall be given in writing and
delivered personally or sent by prepaid telegram or registered 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 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.
13. MISCELLANEOUS
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 except as herein
otherwise provided.
14. APPLICABLE LAW
This Agreement shall be construed according to the laws of the Province
of Ontario applicable to contracts made and wholly to be performed
therein.
15. BINDING AGREEMENT
This Agreement constitutes and contains the entire understanding
between the parties and cannot be changed or modified except in writing
signed by both of the parties hereto.
Please indicate your agreement with the foregoing by signing in the
space provided below for your signature.
Yours very truly,
PORTFOLIO ENTERTAINMENT INC.
Per:
/s/ Xxx Xxxxx August 21, 1998
---------------------------------------
(Distributor) Date
ACCEPTED AND AGREED TO:
Per:
/s/ Xxxxxxx X. Xxxx August 21, 1998
---------------------------------------
(Producer) Date
SCHEDULE "A"
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SERIES: Xxxxx Xxxxx (39 x 30)
TERRITORIES: World excluding U.S.A. but to include Puerto Rico
RIGHTS: Television (cable, free, pay, satellite, etc)
Non-Theatrical
DISTRIBUTION
FEE: 35% of all gross television and non-theatrical sales
In territories where a sub-distributor is used,
combined fees will not exceed 45%
SCHEDULE "B"
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MATERIALS TO BE SUPPLIED:
A) 1 - Digital Betacam Videotape of each episode. Separate audio
tracks for music + effects and narration. No blacks.
B) Synopses of each episode, promotional information and
presentation reel.
C) Music cue sheets and production cue sheet.
D) Selection of at least 10 colour transparencies of Series.
E) Cast and crew bios.
F) Post-production script of each episode.
G) List of residual obligations of series.
H) Sales One-Sheet.
