INVESTMENT AGREEMENT
Exhibit 10.4
THIS
INVESTMENT AGREEMENT (the "Agreement") is made as of May l, 2007 by and between
BUZZ KILL, INC., a New York corporation (the "Producer") and EASTERN RESOURCES,
INC., a Delaware corporation ("Financier").
WHEREAS,
Financier desires to provide funding to the Producer in the amount of Eight
Hundred Thousand Dollars ($800,000) for the production (principal photography
only) and exploitation of a motion picture currently entitled "Buzz Kill" (the
"Picture") based upon the literary work entitled "Buzz Kill" written by Xxxxxx
Xxxxxxxx and Xxxx Xxxxxxx (the "Property");
WHEREAS,
the Producer and Financier desire to establish the terms and conditions as
between themselves and as to their relationship with regard to the production
and exploitation of the Picture; and
NOW,
THEREFORE, in consideration of the mutual promises herein contained and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
l. Financier
Contribution. Financier shall provide Producer with the amount of Eight
Hundred Thousand Dollars ($800,000) or as otherwise agreed to in writing by the
parties (the "Financing"). Payment shall be made in accordance with the Schedule
of Cash Flow attached hereto as Exhibit "A" from Gottbetter Capital’s escrow
account. Producer hereby acknowledges the receipt of Twenty Five Thousand
Dollars ($25,000) of the Financing.
2. Budget. Producer
warrants and represents that the current budget for the Picture is as set forth
in the budget attached hereto as Exhibit "B" (the "Budget") and made a part
hereof and that notwithstanding any other provision hereof or in any other
agreement, the negative cost of the Picture, including all Picture related
expenditures of any kind whatsoever, shall not exceed One Million One Hundred
Thousand Dollars ($1,100,000) without the prior written consent of Financier.
All monies received by the Producer shall be expended in accordance with the
Budget subject only to reasonable variations necessitated by the exigencies of
production and consistent with weekly progress reports that Producer shall
provide to Financier.
3. Recoupment. Financier
is hereby granted a "first priority" right of recoupment in an amount equal to
the sum of the Financing; provided, however, if Producer provides any financing
for Picture, Financier’s Financing shall be subordinate to such sums raised by
Producer. All payments to Financier by Producer shall be defined, paid and
accounted for in accordance with the Definition and Application of Proceeds a
copy of which is attached hereto as Exhibit "C" and made a part hereof. For
purposes of clarity, the distribution of any monies received from the
exploitation of the Picture shall be as follows: (a) for any financing debt
incurred by Producer and approved by Financier, not to exceed Three Hundred
Thousand Dollars ($300,000) (Financier hereby acknowledges that its shareholders
approve a One Hundred Thousand Dollars ($100,000) loan from Producer for the
Picture) plus twenty percent (20%); (b) next any equity debt incurred by
Financier to be returned via divided plus twenty percent (20%) (which Producer
shall pay to Financier the amount of Eight Hundred Thousand Dollars ($800,000)
plus twenty percent (20%) out of such monies received by Producer in order to
satisfy the recoupment of Financier’s equity debt); (c) next any other third
party subordinate debt; and (d) any Net Proceeds of the Picture to paid in
accordance with Paragraph 4 and Exhibit "C".
4. Financier Net Proceeds
Participation. In addition, Producer hereby grants to Financier a fifty
percent (50%) of the Net Proceeds of the Picture, to be defined, paid and
accounted for in accordance with Exhibit "C". Notwithstanding the foregoing, in
the event the Financing does not equal the final, actualized budget for the
Picture, Financier’s percentage shall be calculated as the amount equal to fifty
percent of the fraction with a numerator equal to the amount of the Financing
and a denominator equal to the amount of the final, actualized budget. For
purposes of illustration only, if the Budget is One Million One Hundred Thousand
Dollars ($1,100,000) and Financier’s contribution is Eight Hundred Thousand
Dollars ($800,000) times fifty percent (50%) then the final
percentage is thirty six percent (36%).
5. Credit. Financier or
its designee(s) shall receive:
(a) a
single, exclusive "in association with" company credit which shall substantially
conform to the following:
"In
Association with Gottbeter Capital"
Such
credit shall appear in the main titles of all positive prints of the Picture, on
a separate card immediately following the presentation credit given
[Xxxxx/Xxxxxxx Designee] and shall appear in all paid advertising for the
Picture where credit is given to [Xxxxx/HundleyDesignee], subject to customary
exclusions.
(b)
exclusive Executive Producer credit which shall substantially conform to the
following: "Executive Producer: Xxxx Xxxxxxxxxx"
Such
credit shall appear on a single card, in the main titles of all positive prints
of the Picture and shall appear in all paid advertising for the Picture where
credit is given to the producers, subject to customary exclusions and shall be
subject to dilution by additional third party financiers, if any, subject to the
written consent of the Financier, such consent not to be unreasonably withheld.
Such Executive Producer credit shall only be diluted with Financier’s prior
written approval.
Except as
provided herein, all aspects of the above credits to be accorded Financier shall
be in the Producer’s sole discretion. The Producer shall contractually obligate
all third parties to meet the foregoing credit requirements. No casual or
inadvertent failure of the Producer to comply with the provisions of this
Agreement regarding credit, and no failure of any third party to comply with
such obligations, shall constitute a breach of this Agreement by the Producer.
Upon receipt of written notice from the Financier of any failure by the Producer
to comply with any applicable credit provisions, the Producer shall use
reasonable efforts to cure prospectively or to cause a prospective cure of any
such failure. In no event shall the Producer be liable or responsible for any
acts or omissions with respect to credits by any independent exhibitor,
non-subsidiary distributor or sub-distributor, newspaper, magazine, television
station, record company or any other independent person, firm or entity,
provided, however, that upon receipt of written notice from the Financier, the
Producer shall use reasonable efforts to cause any of the foregoing to cure
prospectively any such failure to comply.
6. Representations and
Warranties. The Producer, its principals, officers, employees and agents
warrant and represent that:
(a) they
have or shall validly acquire(d) all necessary underlying rights in any and all
literary and/or intellectual property required for the production and
exploitation of the Picture, including, without limitation, the exclusive motion
picture rights to the Property;
(b) they
have no knowledge of any contingent liabilities which could restrict the sale or
distribution of the Picture or any ancillary, allied or subsidiary rights of the
Picture;
(c) they
are fully authorized to enter into and fully perform hereunder and that this
Agreement does not and shall not violate any other agreement or the rights of
any third party;
(d) no
third party has received nor shall receive more favorable terms for providing
financing for the Picture than Financier without Financier’s prior written
approval, such approval not to be unreasonably withheld; and
(e)
Producer indemnifies and holds Financier harmless against any and all claims,
losses, awards, actions, judgments, costs or expenses (including without
limitation, reasonable outside attorney’s fees and costs) related to any breach
of its representations, warranties or agreements hereunder.
7. Insurance. Producer
shall secure (or shall cause the distributor of the Picture to secure) general
liability and errors and omissions insurance for the Picture and shall list
Financier as additional insured parties under such insurance policies. Investor
shall receive certificates of insurance so providing upon execution hereof (or
promptly following issuance of the errors and omissions policy, if not currently
in place).
8. Right of
Inspection/Financial Statements. At all times from the inception of any
transactions related to the Picture, the Producer represents that it will keep
full and faithful copies of all such documents related to the Picture and books
of account in which shall be entered fully and accurately each transaction of
the Producer and the production of the Picture. Provided Financier provides the
Producer with reasonable notice, all of said documents and books shall be open
to the inspection and examination of Financier during normal business
hours.
9. Entire Agreement;
Modification. This instrument and the Development Financing Agreement
dated as of February 21, 2007, constitute the entire agreement between the
Producer and Financier. It may not be modified except in a writing signed by
both parties.
10. Assignment. Neither
party may assign this Agreement or the rights and obligations contemplated
hereunder without the other's written consent.
11. Governing Law. This
Agreement shall be construed in accordance with and governed by the laws of the
State of New York.
l2. Counterparts. This
Agreement may be executed simultaneously in two (2) or more counterparts, each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument.
IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed by their
duly authorized officers and their corporate seals to be hereunto affixed as of
the day and year first above written.
EASTERN
RESOURCES, INC.:
By:
/s/ Xxxxxx
Xxxxx
Its:
President
BUZZ
KILL, INC.:
By:
/s/ Xxxxxx
Xxxxx
An
Authorized Signatory