Exhibit 10.27
CO-PRODUCTION AGREEMENT
This Agreement (this "Agreement") is to acknowledge the interest of Hollywood
Productions, Inc. ("HP") and North Folk Films, Inc. ("NFF") and the terms by
which the parties would agree to co-produce and co-finance the motion picture
feature currently entitled Battle Studies (the "Picture") which to be
co-produced, directed and based on a screenplay by Xxxxxxx Xxxxxxxx
("Xxxxxxxx"). The parties acknowledge and agree that the title of the Picture
shall remain as stated herein unless NFF and/or Xxxxxxxx shall agree otherwise
in writing. The parties further acknowledge and agree that the first choice for
an alternative title for the Picture shall be Machiavelli Rises.
1. CAPITALIZATION: HP and NFF shall invest the sum of Two Hundred Thousand
($200,000) Dollars each in the Picture. The parties acknowledge and agree that
the Picture's budget provides for a Ten (10%) Percent contingency fund. If the
initial capitalization by the parties has been expended, then each party shall
invest promptly an amount up to an additional Twenty Thousand ($20,000) Dollars
in compliance with such contingency fund. Further, the parties acknowledge and
agree that if such contingency funds have been expended completely, then each
party shall be responsible for investing up to an additional Twenty Thousand
($20,000) Dollars as an "overcall." However, any use of the "overcall" that is
attributable to NFF and/or Xxxxxxxx that would be attributable to NFF and/or
Xxxxxxxx if the parties had entered into an agreement with a completion bond
company (e.g., overages in film stock, scheduling changes which shall increase
the Picture's budget, film developing, printing, picture editing), shall be
deducted from the NFF portion of the "overcall." HP's portion of the "overcall"
shall be for such uses which include, but are not limited to, marketing,
festivals, distribution and other expenditures that are not directly
attributable to NFF and/or Xxxxxxxx.
2. LLC: HP and NFF acknowledge and agree that a New York State limited
liability company (LLC) shall be formed by HP and NFF solely for the purposes of
financing, producing and generally exploiting this Picture and any and all
allied, subsidiary and ancillary rights as stated herein. The proposed name of
the LLC shall be BATTLE STUDIES PRODUCTIONS, LLC with an alternative name of
MACHIAVELLI RISES PRODUCTIONS, LLC. If the first name shall not be available. HP
and NFF shall be co-managers of the LLC and shall own interests in the LLC on a
50/50 basis subject to the terms stated herein.
3. CONTRIBUTIONS OF PARTIES:
(a) NFF and Xxxxxxxx shall provide exclusive services in such areas which
shall include, but not be limited to, consulting regarding the development,
production, marketing, distribution and general exploitation of the Picture and
engaging in co-managing the operations of the LLC with HP.
(b) HP shall provide non-exclusive services in such areas which shall
include, but not be limited to, consulting regarding the development,
production, marketing, distribution and general exploitation of the Picture
and engaging in co-managing the operations of the LLC with NFF. 4. COPYRIGHT
AND OTHER RIGHTS:
(a) The copyright to the Picture and the screenplay that is the basis for
the Picture, and any ancillary, subsidiary rights, including but not limited to,
prequels, sequels, remakes and merchandising, shall be owned in the name of the
LLC. The parties shall be entitled to share equally in all proceeds derived from
such aforementioned markets and rights except as otherwise stated herein.
(b) Although the copyright in any play or book written by Eprhaim Xxxxxxxx
or a third party (mutually agreed upon by the parties) would be owned jointly by
the LLC, the authorship of such play or novel shall be attributed to Xxxxxxxx or
such third party mutually agreed upon by the parties.
(i) Until the parties receive a recoupment of One Hundred and Thirty
Five (135%) Percent of their own respective investments, the monies derived by
HP and NFF, Xxxxxxxx or an affiliate, subsidiary, successor or related entity to
the parties, shall share equally in all proceeds from any and all rights,
whether now known or hereafter devised, derived in connection with such play or
novel.
(ii) After the parties receive a recoupment of One Hundred and Thirty
Five (135%) Percent of their own respective investments, the monies derived by
HP and NFF, Xxxxxxxx or an affiliate, subsidiary, successor or related entity to
the parties, shall share in all proceeds from any and all rights, whether now
known or hereafter devised, derived in connection with such play or novel in the
following proportions: NFF (or Xxxxxxxx) or an affiliate, subsidiary, successor
or related entity to the partie -60%; HP--40%.
(c) The parties acknowledge and agree that the copyright to the Picture and
any novel or play based on the Picture shall be owned solely by Xxxxxxxx or an
affiliate, subsidiary, successor or related entity (which shall be bound by the
terms of this Agreement) after a period of Ten (10) years from the completion of
principal photography of the Picture in the case of the copyright to the Picture
and after Twelve (12) years from the completion of principal photography of the
Picture in the case of the copyright in any play or novel based on the Picture.
However, Xxxxxxxx or an affiliate, subsidiary, successor or related entity
(which shall be bound by the terms of this Agreement) shall assume the
responsibilities and the costs for maintaining the copyright in the Picture and
any play or novel based on the Picture and bringing any action or defending any
claim or action arising from the copyright of the Picture and/or any play or
novel based on the Picture and such exploitation of the Picture and/or any play
or novel based on the Picture. If Xxxxxxxx or an affiliate, subsidiary,
successor or related entity (which shall be bound by the terms of this
Agreement) is unable or unwilling to assume such responsibilities and costs,
then HP or an affiliate, subsidiary, successor or related entity (which shall be
bound by the terms of this Agreement) shall have the right but not the
obligation to assume such responsibilities and costs and shall be the sole owner
of the copyright of the Picture and/or any play or novel based on the Picture.
5. WARRANTIES AND REPRESENTATIONS:
(a) NFF warrants and represents that it is the sole and exclusive
owner to the rights stated herein with rights that are free and clear of any
encumbrances, liens, charges or claims of every kind and that HP has not and
shall not convey, grant, transfer or pledge such rights to a third party. NFF
shall provide the required documentation regarding "chain of title" regarding
the screenplay, its author, Xxxxxxxx and NFF.
(b) HP shall contribute its non-exclusive services in such areas which
shall include, but not be limited to, the development, producing and
post-production, marketing, distribution and general exploitation of the Picture
as well as co-managing the operations of the LLC with NFF.
(c) The parties warrant and represent that each has the right, power
and authority to enter into this Agreement and, that to the best of each Party's
knowledge and belief, such a LLC shall not violate, conflict with or impair the
rights of any other person or entity.
6. CREATIVE AND BUSINESS DECISIONS:
(a) All creative decisions of the LLC concerning the development and
production which do not affect the financing or scheduling of the Picture shall
be decided by NFF in consultation with HP.
(b) All business decisions of the LLC concerning the development,
production, post-production, marketing, distribution and general exploitation of
the Picture, including, but not limited to, any and all ancillary or subsidiary
rights, shall be mutually agreed upon by NFF and HP.
(c) All decisions concerning the LLC itself shall be mutually agreed
upon by the Parties.
(d) All agreements entered into by the LLC shall be signed by both
parties unless they agree to the contrary. Neither party may enter into any
agreement on behalf of the LLC with any third party without the express written
permission of both parties, not to be unreasonably withheld. Each party shall
indemnify and hold the other party harmless from any and all claims,
liabilities, or damages (including reasonable attorneys' fees) arising out of
any breach of the provisions of this Agreement.
(e) The parties acknowledge and agree that Xxxxxxxx' "Director's Cut"
(as such term is commonly understood within the entertainment industry) shall be
the version submitted to potential sales agents, distributors and other
licensees and in any initial preview of the Picture in the New York and Los
Angeles markets. However, the parties further acknowledge and agree that the use
of the 'Director's Cut" in any initial preview of the Picture in the New York
and Los Angeles markets shall be subject to any negotiations between the parties
and any potential sales agents, distributors or other licensees. Notwithstanding
the preceding statement, HP promises to use "best efforts" to have such
"Director's Cut" utilized by any potential sales agents, distributors or other
licensees in any initial preview of the Picture in the New York and Los Angeles
markets.
7. BANK ACCOUNT: Upon mutual consent of the parties, the parties shall open
a bank account in the LLC's name and deposit their investments concurrently.
Each party shall designate in writing on the bank's signatory card Three (3)
signatories to the bank account; however, this bank account shall require only
One (1) signature from each of the parties. All funds received by the LLC shall
be deposited in the LLC's account.
8. CREDITS: The parties hereby agree that the following described credits
shall be accorded on the screen (in the main titles) on all positive prints of
the Picture and in all promotional and advertising materials and paid
advertisements, when practicable, in which one Party is or both parties are
mentioned in connection with the Picture or the LLC.
(a) Xxxxx Xxxxxxxx shall receive an Executive Producer credit which
may be shared with other executive producers as agreed upon by the parties.
Xxxxxx X. XxXxxxx shall receive a Producer credit which may be shared with other
producers as agreed upon by the parties. Xxxxxxx Xxxxxxxx shall receive a credit
in substantially the following form: "Produced, Written ad Directed by Xxxxxxx
Xxxxxxxx."
(b) The credits "HOLLYWOOD PRODUCTIONS, INC." and "NORTH FOLK FILMS,
INC." as well as an "AN XXXXXXX XXXXXXXX FILM" credit or any other appropriate
production credits shall appear on separate title cards (either in the opening
or closing credit sequences) on all positive prints of the Picture. Such credits
shall also appear in any promotional and publicity materials and in paid
advertisements, when practicable, in the same positions in which one Party is or
both parties are mentioned in connection with the Picture or the LLC.
(c) This provision shall not restrict the addition of third parties to
said credits and shall not restrict the parties' discretion in placing the order
of said credits which may include third parties.
(d) Decisions regarding size and style of said credits and any
additions or changes in such credits (when there is the presence of third
parties), shall be decided by the parties through mutual consent. However, in
the event of a disagreement, such issues shall be decided by NFF in consultation
with HP. However, this provision shall not contradict any stated provisions in
sections (a), (b) and (c) of this paragraph unless there is the written consent
of both parties.
(e) All other decisions concerning the form and names to be included
in other credits shall be decided by the Parties through their mutual consent.
However, in the event of a disagreement, such issues shall be decided by NFF in
consultation with HP.
9. LLC DISTRIBUTION: Cash funds that are not required to meet the operation
of the business of the LLC (including any reserves mutually agreed upon by the
Parties for operational expenses) shall be distributed in the following order:
(a) First, for the payment and satisfaction of loans and liens (if
any);
(b) Second, for the recoupment of the monies invested by the parties
until the parties receive One Hundred and Thirty Five (135%) Percent of each
party's respective investment. In the event that the Picture shall run
overbudget and the contingencies and the "overcall" have been spent, then NFF
shall provide or cause to be provided additional funding in an arrangement that
shall not diminish or otherwise affect HP's percentage of "Net Proceeds." If NFF
is unable or unwilling to provide or arrange for such additional funding, HP
shall have the right but not the obligation to provide such additional funds. In
such an event, HP shall receive One (1%) Percent of the "Net Proceeds" from
NFF's share for every Ten Thousand ($10,000) Dollars contributed by HP. (Such
points shall be pro rated if so required.) [Solely for the purposes of
illustration, if HP shall invest an additional $15,000, then HP would be
entitled to receive an additional One and One-Half (1-1/2) Percent of the "Net
Proceeds" from NFF's share of such "Net Proceeds." Again, solely for the
purposes of illustration, if HP shall invest an additional $5,000, then HP would
be entitled to receive an additional One-Half (1/2) Percent of the "Net
Proceeds" from NFF's share of such "Net Proceeds."]
In addition, HP shall be entitled to the repayment of such additional monies at
an interest rate of 13.5% per annum prior to the repayment of monies to NFF;
(c) Third, the payment of development costs incurred or to be
incurred by NFF in the sum of Twenty Five Thousand ($25,000) Dollars and
incurred or to be incurred by HP in the sum of Ten Thousand ($10,000) Dollars as
well as for the payment of deferments to the crew and any other persons or
entities which provide goods and/or services in connection with the Picture on a
pro rata pari passu basis. The parties acknowledge and agree to the deferments
that have been negotiated with the crew and Xxx XxXxxxxx for her services as a
Casting Director (See Schedule "A"). Any other deferments shall require the
prior written approval of both parties; and
(d) Forth, Fifty (50%) Percent of any and all "Net Proceeds" to each
party. The term "Net Proceeds" or any equivalent term shall be defined and
calculated as stated herein or in accordance with any sales, licensing or
distribution agreement(s) entered into by the Parties and any sale agent,
licensee or distributor in connection with the Picture. Any crew profit
participation shall be allocated from the parties' "Net Proceeds."
(i) The parties' contingent compensation shall be derived from One
Hundred (100%) Percent of the LLC's share of the "Net Proceeds" derived from the
Picture and any and all ancillary, subsidiary or derivative rights based on the
Picture. The parties shall share equally the LLC's share of the "Net Proceeds,"
subject to any terms to the contrary stated herein.
(ii) For the purposes of this Agreement, the definition of "Net
Proceeds" or any similar term under this Agreement shall be in accordance with
any similar definition of such term in any distribution, sales agent or
licensing agreement entered into by the LLC and a distributor, sales agent or
licensee. If there is no such definition in such agreements, then the Parties
agree that such "Net Proceeds" shall be defined in accordance with any financing
agreement(s) entered into by the LLC and any financing sources or after
repayment of all loans and to all investment sources and the payment of any and
all deferments.
(iii) Concerning the Xxxx Xxxx Mansion Location Agreement dated March
30, 1998 between North Fork Films, Inc. and the Oheka Management Corporation, it
shall be clarified that the Oheka Management Corporation or the entity which it
represents shall be entitled solely to a percentage of the "Net Proceeds" which
shall be deducted equally from both parties' shares of such "Net Proceeds" and
that the Oheka Management Corporation or the entity which it represents shall
have no ownership rights to the Picture or any aspect of the Picture. The
parties agree that they shall enter into a more formal Location Agreement with
the Oheka Management Corporation.
(iv) The parties acknowledge and agree that Ten (10%) Percent of the
first One Million ($1,000,000) Dollars which the parties shall receive as "Net
Proceeds" shall be distributed to members of the crew based on the number of
days and weeks worked on the Picture.
10. TAX ALLOCATION: For tax purposes, the taxable income and loss of the
LLC shall be allocated in the following order:
(a) Tax gains and losses shall first be allocated to the LLC; and
(b) Additional tax gains and losses, if any, shall thereafter be
allocated Fifty (50%) Percent to each party.
11. TRANSFER OF INTERESTS: Neither party may transfer or assign its
interests in the LLC without the written consent of the other party.
12. COMPENSATION: The parties agree to the following compensation to be
paid on a deferred basis pro rate pari passu as all other deferments as stated
in paragraph 9(c) of this Agreement:
Xxxxx Xxxxxxxx (Executive Producer) $25,000
Xxxxxx X. XxXxxxx (Producer) $25,000
Xxxxxxx Xxxxxxxx (Director) $25,000
(Screenwriter) $25,000
(Producer) $25,000
Rashbaum's and XxXxxxx'x compensation shall be paid to HP.
13. RESIGNATION/TERMINATION:
(a) If Xxxxxxxx shall resign or be discharged from this Picture for
cause (i.e., illegal or fraudulent acts or gross negligence), Xxxxxxxx shall be
entitled to all monies due until the time of resignation or discharge and shall
not be entitled to any deferments.
(b) If NFF shall exceed the budget of the Picture (including any
contingencies and "overcalls") by Thirty Five (35%) Percent or more, HP shall
have the right but not the obligation to "take over" the Picture. However,
subject to the terms stated herein, the rights of NFF shall be unaffected.
14. DISSOLUTION AND TERMINATION:
(a) Events of Dissolution: The LLC shall be dissolved and terminated
and its business wound up upon the first to occur of the following:
(1) the expiration of the stated term of the LLC; or
(2) the mutual consent of both parties to dissolve; or
(3) by operation of law.
(b) Distributions: If the LLC shall be dissolved for any reason, no
further business shall be conducted, except for the taking of such actions as
shall be necessary for the winding up of the affairs of the LLC, the sale of its
assets and the distribution of its assets in the following order:
(1) First, for the payments of all of the LLC's debts and
expenses, valid and existing claims of third parties and indebtedness against
the LLC's assets, or for which adequate provisions shall be made therefore; and
(2) Second, to the parties in accordance with paragraph 8 of this
Agreement.
(c) No party shall have the right to cause a voluntary or involuntary
liquidation of the LLC without the written consent of both parties.
15. ACCOUNTING: Each party shall have the right to examine the books and
records (and make copies and extracts thereof) of the LLC during reasonably
business hours and upon Five (5) business days notice to the other party. The
books and records of the LLC shall be located at a site to be mutually agreed
upon by the parties. Such examination of the books and records of the LLC shall
occur no more than once per year. A production accountant and an accountant for
the LLC shall be mutually selected by the parties for such purposes which shall
include, but not be limited to, the preparation of an annual report for all
revenues and expenditures in connection with the LLC as well as quarterly
accounting statements from the time the LLC begins to generate revenue.
16. CHOICE OF LAW: This Agreement shall be construed, interpreted and
enforced in accordance with the laws of the State of New York applicable to
agreements executed and to be performed wholly within the State of New York.
17. ARBITRATION: Any controversy or dispute arising out of or relating to
this Agreement shall be subject to binding arbitration in New York City in
accordance with the Rules of the American Arbitration Association (AAA) as
decided by One (1) arbiter to be mutually approved by the Parties with a
background and experience in the entertainment industry and whose decision shall
be final, binding and non-appealable and may be entered in a court of competent
jurisdiction. The prevailing party shall be entitled to recovery of reasonable
costs and attorneys' fees.
18. OTHER XXXXXXX XXXXXXXX PROJECTS AND OTHER HP LLCS: HP shall have the
right of first negotiation and final refusal regarding the next Two (2) projects
that Xxxxxxxx shall write, produce and/or direct, provided that HP shall contact
Xxxxxxxx within Thirty (30) business days after submission of such a project and
within Seven (7) business days after the final negotiation by the parties
concerning such a project. Subject to the preceding statement, each of the
parties may engage in other business LLCs or make investments exclusively for
such Party's own account, whether or not involving the ownership, production or
exploitations of entertainment projects or LLCs, and neither party shall have
any interest in the business LLCs or investments by the other party.
Notwithstanding the foregoing, the parties agree that each party shall devote
sufficient time as shall be reasonably necessary to fulfill its duties and
obligations in connection with the LLC.
19. VIDEOCASSETTE COPY AND FILM PRINT: Each party shall be entitled to
receive at the LLC's expense, One (1) high quality videocassette copy of the
Picture for private personal use and the right to purchase a print of the
Picture at personal expense and at cost. It is agreed that the receipt and use
of any copy of the Picture shall be for personal and/or non-competitive use by
the parties which shall not interfere with any of the distribution agreements or
other contracts entered into by the LLC.
20. AMENDMENT: This Agreement may not be modified except by a written
instrument signed by the parties.
21. ENTIRE AGREEMENT: The parties acknowledge and agree that HP dos approve
the agreement entered into by NFF prior to the execution of this Agreement
subject to the execution of more formal location agreement concerning the Xxxx
Xxxx Mansion. Subject to final approval of the budget by the parties, this
Agreement constitutes the sole and entire understanding between the parties. Any
prior agreements, promises, understandings or negotiations not expressly set
forth in this Agreement are of no force or effect whatsoever. The parties
acknowledge and agree that in the absence of executed originals of this
Agreement, the execution of this Agreement by the facsimile signatures of the
parties shall be binding on the parties and their successors and assignees.
IN WITNESS THEREOF, the parties acknowledge their assent to the terms and
conditions stated herein and indicate such assent in the space below.
ACKNOWLEDGED AND AGREED:
By: /s/ Xxxxxx XxXxxxx
HOLLYWOOD PRODUCTIONS, INC.
Its: Vice President
By: /s/ Xxxxxxx Xxxxxxxx
NORTH FOLK FILMS, INC.
Its:
the day of April, 1998
