EXHIBIT 10.3
DATE 18 MAY 2004
PERSISTENCE OF VISION SDN BHD (1)
PEAK ENTERTAINMENT LTD (2)
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AGREEMENT FOR THE PROVISION
OF CO PRODUCTION SERVICES
RE: "MONSTER IN MY POCKET - THE QUEST"
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THIS AGREEMENT is made the 18th day of May 2004
BETWEEN
(1) Persistence of Vision Sdn Bhd, LG Floor, Faculty of Creative
Multimedia, Multimedia University, Xxxxx Xxxxxxxxxx, 00000 Xxxxxxxxx,
Xxxxxxxx ("POV") (which expression shall include its successors in
title and assigns) and;
(2) PEAK ENTERTAINMENT LIMITED of Xxxxxxx Xxxx, Xxxxxxx Xxxx, Xxxxxxxx,
Xxxxxxxxxx, XX00 0XX ("PEAK") (a company incorporated under the laws of
the United Kingdom)
WHEREAS
(A) PEAK wishes POV to co-produce an animated television programme for
children provisionally entitled "Monster in my Pocket - The Quest" and
comprising 26 episodes each having an episodic commercial slot length
of 30 minutes inclusive of titles and credits, 22 minutes of animation
excluding titles and credits as set out in EXHIBIT A "Production
Services"
(B) POV wishes to carry out such co-production work in accordance with the
requirements of this Agreement.
NOW IT IS HEREBY AGREED as follows:-
DEFINITIONS
In this Agreement, the following words and phrases should have the
following meanings:
"the Cashflow" the cashflow of the POV Budget (as defined
below) set out in Exhibit B;
"POV Representative" Xxxxx Xxxxx Xxxxxx or their designee;
"the PEAK Materials" the material to be delivered by PEAK to POV
identified in paragraph 2 of Exhibit A;
"the Delivery Materials" the delivery materials which POV shall
deliver to PEAK set out in paragraph 4 of
Exhibit A;
"PEAK's Representative" Xxxx Xxxxx or their designee;
"the Production Schedule" the delivery milestones and payment schedule
for the provision of the Production Services
(as defined below) set out in Exhibit A and
payments from PEAK to POV corresponding to
the deliveries from POV to PEAK set out in
Exhibit C (1) & (2);
"the Production Services" the production services to be provided by
POV as set out in Exhibit A;
"the POV Budget" the budget agreed as set out in Exhibit B;
"the Specifications" the specifications set out in paragraph 1 of
Exhibit A;
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"Creative Retakes" Retakes to digital layout, animation,
special effects, lighting or compositing
that deviate from storyboards or any
reference materials supplied by PEAK,
excluding minor timing alterations;
"Technical Retakes" Retakes to digital layout, animation,
special effects, lighting or compositing
necessitated by original take by POV not
conforming to storyboards, broadcast
specification or any reference materials
supplied by PEAK.
1. TERMS AND RIGHTS
1.1. PEAK has prepared a cashflow budget for the pre-production, CG
animation production and post-production ("Production Budget")
and a production schedule for the Series. Subject to further
agreement, the Production Budget shall be US$7,100,000. The CG
animation production schedule has been agreed by the parties
hereto.
1.1.1. PEAK Shall;
(a) contribute, unless further financing be procured from
other co-production parties, US$100,000 financing per
episode to the CG Animation Production Budget (by way
of cash and/or deferment of pre-production and
post-production fees);
(b) pay the US$ 100,000, if by way of cash, as per the
Production Schedule as set out in Exhibit C(1) & C(2)
& D;
(c) be charged any interest incurred by POV, as a result
of receiving loan funds from Malaysia Debt Ventures
(MDV) or any bank and the interest charges will be
billed to PEAK and payable to POV on a monthly basis;
(d) be responsible for the pre-production and
post-production work of the Series and shall receive
US$148,077 per episode for its work out of the
Production Budget;
(e) recoup the contribution and/or deferment from future
proceeds in position to be negotiated by all
co-production parties, including the parties hereto;
(f) subject to the ownership to be shared by other
co-production parties who contribute to the financing
of the Production Budget, own 90.9% of the right of
the Series and receive 90.9% of worldwide Net
Proceeds from all sources and in perpetuity;
(g) subject to distribution rights to be granted to other
parties, be designated as the sole and exclusive
worldwide distributor of all exploitable rights
regarding the Series.
(h) furnish POV with scripts, model pack (to include 13
main character models, all secondary character
models, 3 vehicle models, all main props, 8 main
locations, colour keys and key backgrounds), exposure
sheets, audio tapes (and/or CD audio) with edited
dialogue and all other pre-production materials up to
timed or slugged storyboards.
(i) shall pay the progress payments, as per the agreed
Production Schedule, in the event the MDV funding
does not come through.
(j) in the event Peak can not pay the progress payments
and the project is terminated, Peak will be
responsible for paying for the total cost of the work
done at the date of the termination and all costs
associated with the work, including all hardware and
software purchased specifically for this series.
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1.1.2. POV Shall;
(a) contribute to delivering the 3-minute trailer and to
US$25,000 financing per episode to the CG Animation
Production Budget in accordance to the schedule of
the Production Budget;
(b) be responsible for CG production of the Series based
on the Property and the pre-production materials
supplied by PEAK and shall receive US$100,000 per
episode by stages for its CG production work out of
the Production Budget. The CG animation to be
produced thereof shall not be sub-standard to the
quality of the 3-minute trailer;
(c) commence the CG animation production of the series
and receive 50% downpayment of the fee to do the
set-ups, upon signing of the agreement and shall
further receive the balance of the CG animation
production fees depending on stages of completion as
set out in Exhibit C(1) & C(2). If for any reason the
full production does not commence past the delivery
of the trailer, POV will invoice PEAK, US$187,000
plus any costs to cover the production completion of
the 3-minute trailer and any "Additional Production
Services" and PEAK agrees to pay in full.
(d) recoup the contribution from future proceeds in
position to be negotiated by all parties, including
the parties hereto;
(e) own 9.1% of the Series, receive 9.1% of worldwide Net
Proceeds from all sources and in perpetuity.
1.1.3. Net Proceeds
"Net Proceeds" as used herein, shall mean gross
receipts from exploitation of the Series in any and
all media (whether now known or hereafter
discovered), including merchandising and licensing
relating to the Series, in all territories, and in
perpetuity, less (a) distribution fees and expenses
(to be agreed in formal agreement), (b) the
Production Budget including all deferments and (c)
marketing expenses (to be agreed in formal
agreement). For the avoidance of doubt, Net Proceeds
shall include any revenue or proceeds arising from
any sale or assignment of any rights (including but
not limited to merchandising and broadcasting rights)
generated from or associated with the Series.
2. PRODUCTION SERVICES
2.1 POV shall provide and supply to PEAK all the CG Animation
Production Services to enable the Programmes (as defined in
Exhibit A) to be produced in accordance with this Agreement
and the Specifications. All dates and time periods for the
provision of the Production Services shall be in accordance
with the Production Schedule.
2.2 PEAK undertakes to supply to POV the PEAK Materials according
to the dates stated on the production schedule to enable POV
to undertake the CG Animation Production Services. Should
there be any delay in PEAK's delivery of the complete
Pre-Production Materials (defined as PEAK's Materials) of each
and every episode to POV, then POV shall have the equivalent
additional time to deliver the corresponding and the
subsequent episodes, due to this delay.
2.3 POV shall be entitled to give comments to PEAK in respect of
the PEAK Materials and PEAK agrees to give consideration to
such comments in good faith within (48) hours.
2.4 If PEAK requires POV to supply services or facilities in
addition to or different from those mentioned in the CG
Animation Production Services for the 3-minute trailer and for
the 26-episode series or require an alteration or extension to
the Production Schedule or alterations to previously approved
items ("Additional Production Services" and "Creative
Retakes") it is agreed that POV will notify PEAK that such
services constitute Additional Production Services and
Creative Retakes. POV shall submit to PEAK within (7) calendar
days a quotation of the cost and the additional time required
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to deliver said Additional Production Services and Creative
Retakes. Provided PEAK shall have given its prior written
consent to POV, within (7) calendar days, POV will do so in
accordance with the agreed quotation. If such consent is not
received by POV as per agreed stipulated timeline, it is
deemed that consent is not provided by PEAK.
2.5 It is understood that the cost of any such Additional
Production Services and Creative Retakes (strictly as agreed
in advance in writing by PEAK in accordance with clause 2.4)
will be an additional cost ("Additional Cost") over and above
the POV Budget for the CG Animation Production Services. The
Additional Cost(s) will be invoiced by POV and paid by PEAK at
such installments (50% downpayment upon confirmation of cost
and 50% balance upon completion of said Additional Production
Services and Creative Retakes), as PEAK and POV shall have
agreed at the time of the request for the Additional
Production Services and Creative Retakes.
2.6 PEAK shall pay for Creative Retakes at a rate equivalent to
US$ 50.00 per second for animation only and US$ 75.00 per
second for digital layout, animation, VFX, compositing.
2.7 POV shall not change any element of the Production Services or
Specifications without the prior written consent of PEAK.
3. APPROVALS AND DELIVERY
3.1 POV shall submit the materials specified in paragraph 5 of
Exhibit A to PEAK for approval in accordance with the
timetable specified therein.
3.2 POV undertakes to carry out any Technical Retakes requested by
PEAK, which are not Additional Production Services or Creative
Retakes. Such Technical Retakes shall be undertaken by POV
within the reasonable period of time specified by PEAK and the
appropriate material shall be resubmitted to PEAK for
approval.
3.3 All such Technical Retakes carried out by POV during the
approval process shall be at POV's cost.
3.4 All transportation and delivery expenses incurred in the
approval process shall be borne by the sender.
3.5 In the event that PEAK does not approve the relevant material
after the first re-submission by POV, PEAK shall be entitled
to carry out any such modifications at its expense.
3.6 Delivery of Delivery Materials to PEAK shall be made to
Xxxxxxx Xxxx, Xxxxxxx Xxxx. Xxxxxxxx, Xxxxxxxxxx, XX00 0XX or
such other address as PEAK shall notify POV of in writing, on
or before the Delivery Dates set out in the Production
Schedule and time is of the essence.
3.7 PEAK shall give notice in writing to POV within (7) calendar
days of the delivery of the last item(s) forming the Delivery
Materials confirming either that PEAK have accepted the
Delivery Materials ("Acceptance") or that the Delivery
Materials or any part thereof does not meet the Production
Services as specified in Exhibit A together with details of
such defects, and confirmation as to whether PEAK requires
replacement thereof ("Rejection"). Any such replacement, which
is required to conform to the terms of this Agreement, shall
be carried out by POV at POV's expense expeditiously and to
such timetable, as PEAK shall reasonably require. If no
written notice of acceptance or rejection, of the Delivery
Materials, is received by POV within (7) calendar days, POV
shall deem this as acceptance of PEAK.
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3.8 Any acceptance by PEAK of late or incomplete delivery shall
not constitute a waiver of any of PEAK's rights in respect of
such late or incomplete delivery.
3.9 In the event of the Producer and/or Director (representative/
designated supervisor from PEAK) (as defined and identified in
Exhibit A) being unable to participate in every episode
forming part of the Programmes, PEAK shall procure suitable
replacement(s) which shall be confirmed by mutual good faith
agreement of both POV and PEAK.
3.10 Approvals from PEAK shall constitute acceptance of completion
of all stages of production as stated in the Production
Schedule.
3.11 All the costs incurred by the PEAK's designated supervisor
including salaries, tax, transportation, accommodation and
other incidental costs will be fully borne by PEAK.
3.12 POV shall deliver to PEAK daily "Previews" of the animation
synchronised with dialogue of each Episode on POV's FTP site.
Previews means animation preview without lighting, rendering,
SFX and compositing in QuickTime or Avi file. PEAK will then
provide POV with a daily approval and retakes list (if any)
within two working days and approvals will be given by PEAK to
POV within 2 working days from the FTP delivery date and time.
4. PAYMENT OF POV BUDGET
4.1 Subject to Clauses 14, 15 and 17 hereunder and subject to POV
complying with its obligations under this Agreement, PEAK
shall pay to POV sums contributing towards the POV Budget in
accordance with the Production Schedule as set out in Exhibit
C(1) & C(2) & D and upon receipt of appropriate invoices.
4.2 For the avoidance of doubt, the amounts to be paid to POV
under this Agreement as outlined in Exhibit C(1) & C(2) shall
be in full and final settlement of all work to be undertaken
and supplied under this Agreement (other than as provided for
in respect of Additional Production Services and Creative
Retakes as defined in clauses 2.4 and 2.5 above) and such sums
shall include amounts in respect of overheads and services to
be supplied hereunder.
4.3 If Additional Production Services and Creative Retakes are
requested and provided in accordance with clauses 2.4 and 2.5,
PEAK shall pay POV the Additional Costs in the instalments as
stated in clause 2.5 and 2.6.
4.4 Should PEAK fail to make a payment for a particular Episode in
accordance with the Production Schedule within seven (7)
business days from the receipt of a written notice to that
effect from POV, then POV may withhold delivery of any
Episodes until PEAK has remedied its default for such Episode
under this paragraph.
4.5 The payment shall be immediate upon receipt of invoice of PEAK
from POV. PEAK should fax POV proof of payment, i.e. advice of
remittance.
ACCOUNT NAME: PERSISTENCE OF VISION SDN BHD
ACCOUNT NUMBER: 514600142392
BANK NAME: Malayan Banking Berhad
ADDRESS: Xxxxx 0 & 0, Xxxxxx XXX,
Xx. 0, Xxxxx Xxxxxx Xxxxxx,
00000 Xxxxx Xxxxxx, Xxxxxxxx.
SWIFT CODE: MBBEMYKLA
BRANCH CODE: 27-14600
BRANCH: Jalan Sultan Ismail, Kuala Lumpur, Malaysia
BRANCH TEL NUMBER: x000-0000 0000
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5. COPYRIGHT AND OTHER RIGHTS AND GRANT OF RIGHTS
5.1 POV with full title guarantee hereby irrevocably and
unconditionally assigns and transfers to PEAK the entire
copyright and all other rights title and interest of
whatsoever nature (whether or not now in existence) in and to
the Programmes (by way of present assignment of present and
future copyright) and all rights and benefits in and to the
results products and proceeds of all of the Production
Services provided or intended to be provided by POV hereunder
and all other rights, benefits and consents arising in
connection with the Programmes throughout the world and in all
media (whether or not now in existence) and in all languages
to hold the same unto PEAK absolutely for the full period of
copyright throughout the world (and all renewals, reversions
and extensions thereof) and thereafter in perpetuity. The
foregoing grant shall include but not be limited to all
rental, lending and cable retransmission rights.
5.2 POV hereby irrevocably and unconditionally undertakes to PEAK
to do all such further acts and execute all such further
documents as may from time to time be required to vest in PEAK
all such rights as may be necessary to exploit, advertise and
promote the Programmes in all media throughout the world, and
in the event POV is unable or unwilling to do so within a
reasonable time then POV hereby irrevocably appoints PEAK the
right to do so as agent or attorney on its behalf.
5.3 POV hereby waives the benefit of any provision of law known as
"droit moral" or "moral rights" or any similar laws in any
legal jurisdiction throughout the world (whether or not now
existing).
6. INSURANCE
6.1 POV shall obtain from a reputable insurance company adequate
production insurances as requested by PEAK prior to production
and subject to premiums detailed in the Budget such policies
("Policies") shall be approved by PEAK which wherever possible
shall be without unusual deductions or exclusions.
6.2 POV shall not do or neglect to do any thing or act which shall
negate any policy of insurance obtained by POV or PEAK. POV
shall likewise take no steps to prevent or delay any insurance
claim under any such insurance policy and shall provide any
reasonable assistance or support requested by PEAK in respect
thereof.
6.3 PEAK shall be an additional insured party as a named
beneficiary on POV's Policies.
7. EDITORIAL CONTROL
7.1 PEAK's Representative shall at reasonable times and upon prior
written notice of not less than (5) calendar days have
reasonable access to POV's premises or any premises or
location(s) under its control and PEAK shall further be
entitled to view, inspect and remove at PEAK's expense any and
all materials and physical items generated by POV hereunder
including all rushes and cut sequences of the Programmes and
including any paperwork sound-recording or soundtrack.
7.2 PEAK shall have the full and final say and editorial control
in respect of all creative decisions throughout the production
of the Programmes, in all decisions concerning the overall
financial management of the production of the Programmes and
full editorial control of the final cut of all versions of the
Programmes PROVIDED THAT POV shall be consulted in good faith
in all such respects and that PEAK shall give good faith
consideration to POV's views.
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8. CREDITS AND PUBLICITY
8.1 PEAK shall decide and have the right to approve all credits to
be incorporated in the Programmes. PEAK shall where
appropriate provide POV as soon as practicable after
commencement of production with a list of all proposed credits
for inclusion in the Programmes.
8.2 PEAK will accord an on-screen credit to POV as a co-producer
of the Programmes, the position and size of such credit to be
as is customary for UK television producers and in the form
set out in paragraph 1.8 of the Specifications. PEAK shall
also use best endeavours and where reasonable to do so in
addition provide credit to POV in any paid advertising,
promotion and publicity; and on any packaging related to the
sale of DVDs and video cassettes incorporating the Programme.
If PEAK has notified such credit obligations to any other
person to whom it has granted any rights to exploit the
Programmes PEAK shall not be liable for the failure of such
person to honour such obligations provided that PEAK shall use
all reasonable endeavours to remedy any breach of the POV
credit provision on a prospective basis.
8.3 Any breach of clause 8.2 by PEAK shall entitle POV solely to
the recovery of damages and the rights granted by POV to PEAK
shall not be capable of termination or revocation by reason of
such breach.
8.4 Except as referred to in 8.5, POV shall not without the prior
written approval of PEAK disclose any details or information
(other than to its professional advisers) or issue or
authorise the issue of any advertisement or publicity
regarding the Programmes or this Agreement or the business of
PEAK or the Broadcaster.
8.5 POV shall be entitled to use the name of PEAK and the
Programme, and brief excerpts of the Programme and materials
relating thereto in any advertising publicity and promotional
material relating to POV its parent and subsidiary companies
subject to prior written approval of PEAK where any such use
by POV shall be prior to the first transmission of the
Programme in the United Kingdom.
9. REPRESENTATIVES
PEAK's Representative may give any approvals or consents required to be
given by PEAK under this Agreement or otherwise requested by POV, and
PEAK shall be entitled to rely upon the POV Representative as having
the right to take decisions on behalf of POV, all such approvals to be
given in a timely manner in accordance with and so as not to disrupt or
delay the Production Schedule.
10. WARRANTIES
POV warrants and undertakes as follows:
10.1 POV is a company duly and properly organised and existing
according to the laws of Malaysia and it has the power and the
authority to enter into this Agreement and perform its
obligations under it;
10.2 except to the extent that any rights are already owned by PEAK
or become vested in PEAK pursuant to the operation of this
Agreement, POV (and no other person or entity) shall become
the first owner throughout the world in all languages of the
entire copyright and underlying rights (if any) and the
beneficiary of all consents, waivers or contractual
entitlements in connection with the Programmes (including
without limitation the Production Services) for the purposes
of assigning them to PEAK;
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10.3 in respect of any work carried out for the Programmes, and
subject to the rights of the Performing Rights Society (or its
affiliated organisations based outside of the United Kingdom)
in any musical works used in the Programmes POV shall
irrevocably secure and pay for all rights and consents of
owners of material featured in the Programmes and other
persons supplying rights, services and facilities in respect
of the Programmes to allow PEAK the unrestricted and unlimited
exploitation of the Programme(s) throughout the world in all
formats and all media (now known or hereafter devised) and
will provide documentation or other evidence in support, if
requested;
10.4 POV has not and it will not assign, license, mortgage, charge
or otherwise deal with or encumber any rights whatsoever in
the Programmes or any materials or physical items relating to
the Programmes;
10.5 all other important agreements relating to the Programmes
shall be in writing;
10.6 there are no claims or proceedings pending or threatened,
which might affect POV's ability to perform its obligations
under this Agreement or which otherwise, might adversely
affect the production, delivery or exploitation of the
Programmes;
10.7 POV shall promptly advise PEAK of the occurrence of any event
or the existence of any condition, which will adversely affect
the financial condition of POV and/or its ability to fulfill
its obligations under this Agreement;
10.8 the Production Services in Exhibit A is achievable;
10.9 the Programmes will be produced to a standard of first class
technical, as per broadcast's standard quality.
PEAK warrants and undertakes as follows:
10.10 the format and concept of the Monster in my Pocket is original
to and totally owned by Xxxxxxxx entertainment Group Inc who,
in an agreement dated 11 November 2003 have granted the
exploitation rights to PEAK;
10.11 the format and concept of the Monster in my Pocket does not
infringe any rights, trade marks or so called intellectual
property rights of any third party; and
10.12 Peak has the authority to contract POV to undertake the
Production Services.
11. INDEMNITY
11.1 POV will indemnify PEAK against all loss (direct or indirect),
actions, claims, costs, proceedings or damages directly
arising from any breach or non-performance by it of any
agreement, undertaking or warranty given by it in this
Agreement and against all costs and expenses incurred and
payments made on legal advice in settling any action, claim or
proceedings arising from such breach or non-performance of any
of the provisions of this Agreement, PROVIDED THAT POV shall
be consulted in good faith with regard to any such claims
and/or proposed settlements and PEAK shall give good faith
consideration to POV's views.
11.2 PEAK will indemnify POV against all loss (direct or indirect),
actions, claims, costs, proceedings or damages directly
arising from any breach or non-performance by it of any
agreement, undertaking or warranty given by it in this
Agreement and against all costs and expenses incurred and
payments made on legal advice in settling any action, claim or
proceedings arising from such breach or non-performance of any
of the provisions of this Agreement, PROVIDED THAT PEAK shall
be consulted in good faith with regard to any such claims
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and/or proposed settlements and POV shall give good faith
consideration to PEAK's views
12. PRODUCTION CONTRACTS AND CLEARANCES
12.1 If requested, POV shall, as soon as reasonably practicable,
provide to PEAK drafts of all agreements for the provision or
purchase of services or goods for approval including all
agreements with freelance personnel.
12.2 POV shall ensure that all production contracts or engagements
entered into by POV in connection with the Programmes shall:-
12.2.1 be in writing and fully executed and dated;
12.2.2 be consistent with the terms of this Agreement;
12.2.3 contain, where possible, a grant of
rights/consents/permissions on an unconditional and
irrevocable basis to permit the unlimited
exploitation of the Programmes world-wide in all
formats and all media (now known or hereafter
devised);
12.2.4 contain a waiver of moral rights and all other
similar rights in all jurisdictions throughout the
world;
12.2.5 provide for all inclusive buy-out fees, i.e. no
additional fees, guild payments, residuals,
royalties, repeat fees, participation's or any other
similar payments shall be due in respect of the
broadcast, sale or other exploitation of the
Programmes in any and all media (whether now existing
or invented in the future) throughout the world for
the full period of copyright and thereafter in
perpetuity except in respect of performance and
broadcasting royalties payable in respect of musical
works where the copyright is assigned to PRS or one
of its affiliates.
13. OWNERSHIP OF MATERIALS
13.1 POV acknowledges that any and all materials, documentation and
physical items produced or acquired by it for or in connection
with the Programmes or for recording the Programmes and
arising as a result of the Production Services (including
inter alia any and all materials supplied to POV by PEAK)
("the Materials") shall be the sole and exclusive property of
PEAK.
13.2 Upon completion of the Production Services, and if requested
by PEAK, POV hereby undertakes to provide a list of the
Materials and PEAK shall determine whether it will require at
its sole cost and expense the return of such Materials or any
of them to PEAK in the United Kingdom or require the
destruction of the same or the disposal of the Materials in
any other way as directed by PEAK. In the event that PEAK
shall not have so directed POV within 28 days of completion of
the Production Services PEAK agrees to pay to POV reasonable
storage charges relating to such Materials.
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14. FORCE MAJEURE
In the event that the production of the Programmes shall be prevented
or substantially interfered with by reason of fire, earthquake,
hurricane, flood, natural catastrophe, casualty, accident, riot or war,
Act of God, political upheaval, law ordinance or executive or judicial
order of authorities, lock-out, labour dispute or the death or
incapacity of the director, producer or any principal member of the
crew supplied by PEAK or any other cause reasonably beyond the control
of POV and PEAK, then neither POV nor PEAK shall be in default or
breach of this Agreement and the obligations of POV and PEAK towards
each other shall be suspended for the duration of the event, and the
Production Schedule and the time within which POV is obliged to
complete its services hereunder shall be extended for a period
equivalent to the period of any such event but the maximum duration of
such extension shall be 12 (twelve) weeks.
15. TAKEOVER/ABANDONMENT
15.1 PEAK shall have the right to take over (either partially or
completely) or abandon the rendition of the Production
Services upon giving written notice to POV of its election to
do so in any of the following events:
15.1.1 POV is in material breach of any of its warranties,
undertakings or obligations under this Agreement
other than a remediable breach of which PEAK gives
POV notice and which is remedied to the satisfaction
of PEAK within 10 (ten) days of such notice;
15.1.2 there is an overspend or there is in PEAK's opinion
likely to be an overspend which in the opinion of
PEAK has arisen or will arise because of the
imprudent, negligent or deliberate act or omission of
POV or as a consequence of a `Force Majeure' event;
15.1.3 PEAK has terminated this Agreement under Clause 17 or
has the right to do so.
15.2 If PEAK elects to take over or abandons pursuant to clause
15.1:
15.2.1 POV shall assign the benefit of all production
contracts and all similar contracts relating to the
Programmes which PEAK requests to have assigned to it
and PEAK shall be responsible for performing POV's
obligations under all production contracts approved
by PEAK as from the date of their assignment to PEAK;
15.2.2 POV shall provide a statement of account to PEAK
containing details of all costs incurred to the date
of take-over or abandonment together with details of
contractual commitments to be honoured by POV, and in
the event of termination by PEAK pursuant to clause
17.1.6 hereof, PEAK shall only be liable for the
production cost incurred up to the end of the
Production Phase in which termination was notified in
accordance with the schedule and Production Phases
outlined in Exhibit C. PEAK will also make good faith
negotiations to cover any long term financial
commitments made directly in connection with the
Programmes by POV prior to notification of
termination by PEAK.
15.2.3 POV shall not undertake any further obligation in
relation to the Programmes unless required by PEAK to
do so;
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15.2.4 PEAK shall have the right to proceed with the
production and completion of the Programmes in such
manner (if at all) as it may decide;
15.2.6 Except in respect of binding commitments as referred
to in 15.2.2 hereof, PEAK shall have no further
obligation to advance sums to POV in respect of POV
Budget and any Additional Costs.
15.3 Any takeover or abandonment by PEAK shall not in any way
affect the rights and remedies which PEAK has under this
Agreement or at law by reason of any breach by POV of any of
its warranties, undertakings or contractual obligations under
this Agreement.
15.4 PEAK shall be entitled at any time after taking over
production of the Programmes pursuant to Clause 15.1 to
abandon production of the Programmes and provided that PEAK
shall have complied with its obligations pursuant to 15.2.3
hereof POV hereby irrevocably agrees that it shall have no
objections or claims against PEAK or any other party providing
finance or resources for the Programmes in that event.
16. OVERSPEND
16.1 If POV becomes aware that other than in relation to and arising from
approved Additional Production Services, the total cost is likely to
exceed the POV Budget POV shall forthwith:
16.1.1 prepare and submit to PEAK a full statement of
account containing details of costs incurred but not
yet paid for and an estimate of costs likely to be
incurred to complete the rendition of the Production
Services;
16.1.2 submit detailed proposals for reducing the cost of
the items allowed for in POV Budget;
16.1.3 comply with any reasonable directions given by PEAK
to reduce any expense.
16.2 If, following the procedures set out above, there shall
continue to be overspend or likely overspend, then POV shall
be solely responsible for and pay for all such overspend
unless the overspend was due to events or circumstances
entirely outside the control of POV and POV has complied with
Clause 16.1 in which event PEAK shall pay for any such
overspend, or shall be entitled to take-over or abandon
production of the Programme in accordance with cause 15
hereof.
16.3 In the event that the Production Schedule is extended or
delayed by reason of any default of POV, then POV shall pay or
reimburse PEAK for all additional costs reasonably incurred by
PEAK as a direct result thereof. Any amounts so payable shall
be paid promptly on presentation of an invoice.
17. TERMINATION
17.1 Without prejudice to any rights under this Agreement, PEAK
shall be entitled, by notice in writing, to terminate POV's
engagement to provide the Production Services if:
17.1.1 POV is in breach of any term of this Agreement, which
is incapable of remedy or if capable of remedy is not
remedied within 10 (ten) business days of POV
becoming aware or being notified of it;
17.1.2 POV is declared or becomes insolvent;
17.1.3 POV suffers the making of an administration order or
has a receiver (including an administrative receiver)
or manager appointed over the whole or any part of
11
its assets or if an order is made or a resolution is
passed for its winding up (except for the purposes of
amalgamation or reconstruction) or a notice is issued
convening a meeting of POV's creditors or POV enters
into or proposes to enter into any composition or
arrangement with its creditors or a court order is
obtained against POV which is likely in the opinion
of PEAK to materially affect POV's financial
condition or ability to fully perform all of its
obligations hereunder or if POV ceases or threatens
to cease to carry on business;
17.1.4 an event of force majeure shall continue for a period
either consecutive or in the aggregate of 12 (twelve)
weeks or more (and in respect of the circumstances
mentioned in this sub-clause POV shall equally have a
right to terminate); or
17.1.5 POV shall abandon or announce that it intends to
abandon the business of providing production services
or suffers a change in the majority ownership or
control of its business.
17.1.6 PEAK so desires, at its absolute discretion, before
the start of the animation production of Episode 6,
subject to PEAK paying for all milestones met by POV
per Exhibit C1 & C2 and subject to POV having the
right to complete Episodes 1 to 5 and PEAK agreeing
to pay for these.
17.2 In the event of termination of this Agreement or the provision
of POV's services hereunder all rights, benefits and
entitlements acquired by PEAK as set out in this Agreement
shall remain vested in PEAK PROVIDED THAT PEAK shall have
complied with its payment obligations under 15.2.3 hereof.
18. MISCELLANEOUS
18.1 A waiver of any breach of this Agreement shall not waive any
prior or subsequent breach. All remedies shall be cumulative
and the waiver of any one shall not waive any other.
18.2 PEAK shall be entitled to assign this Agreement (in whole or
in part) to any subsidiary or affiliated company of PEAK or to
any other third party provided that PEAK shall remain
responsible for its obligations hereunder. POV shall not
assign this Agreement without the prior written approval of
PEAK which approval shall not be withheld other than for the
purpose of corporate reconstruction or amalgamation, which
shall not require PEAK's approval.
18.3 If any part of this Agreement or the application thereof to
either party shall for any reason be adjudged by any court or
other legal authority of competent jurisdiction to be invalid
such judgement shall not affect the remainder of this
Agreement, which shall continue in full force and effect.
18.4 Any notices required to be given under the provisions of this
Agreement shall be in writing in English and shall be deemed
to have been duly served if hand delivered, posted by
registered or recorded delivery or sent by facsimile/e-mail
and any notice so given shall be deemed to have been served:
(a) if hand delivered, at the time of delivery; (b) if posted,
on the third day after posting and such communication shall be
sent by registered or recorded delivery; (c) if sent by
facsimile/e-mail upon confirmation of successful transmission.
12
18.5 Notices shall be sent:
To POV: To PEAK:
LG Floor, Faculty of Creative Multimedia, Xxxxxxx Xxxx
Multimedia University, Xxxxxxx Hill
Jalan Multimedia, 63100 Cyberjaya, Bakewell
Malaysia Xxxxxxxxxx
XX00 0XX
Attention: Xxxxx Xxxxx Xxxxxx Attention: Xxxx Xxxxx
18.6 This Agreement supersedes and cancels all previous
arrangements, understandings, representations or agreements
between the parties hereto either oral or written with respect
to the Programmes and constitutes the entire agreement between
POV and PEAK with reference to the Programmes and no variation
of any of the terms or conditions hereof may be made unless
such variation is agreed in writing and signed by the parties.
18.7 Nothing in this Agreement is intended to or shall be deemed to
constitute a partnership or joint venture between POV and
PEAK.
18.8 The clause headings in this Agreement are for the convenience
of the parties only and shall not limit, govern or otherwise
affect its interpretation in any way.
19. PROPER LAW
19.1 This Agreement shall be governed by and construed in
accordance with the laws of England and Wales.
19.2 The parties hereby submit to the exclusive jurisdiction of the
courts of England and Wales.
20 RIGHTS OF THIRD PARTIES
A person who is not a party to this Agreement has no right under the
Contracts (Rights of Third Parties) Xxx 0000 (the"1999 Act") to enforce
or to rely upon any term of this Agreement but this does not affect any
right or remedy of a third party which exists or is available apart
from the 1999 Act
13
SIGNED by Xxxxx Xxxxx Xxxxxx )
for and on behalf of )
POV )
In the presence of )
SIGNED by Xxxx Xxxxx )
for and on behalf of )
Peak Entertainment Limited )
In the presence of )
14
EXHIBIT A
THE PRODUCTION SERVICES
1. THE SPECIFICATIONS
THE PROGRAMME
1.1 Name of Programme: Monster in my Pocket -
The Quest
1.2 Number of Episodes: 26
1.3 Length (animation running time): 22 minutes
1.4 Length (inclusive of main and end
titles and commercial breaks): 30 minutes and 0 seconds
1.5 Original concept from M.E.G.
KEY PERSONNEL
1.6 Producer: tbc
Director: tbc
TECHNICAL REQUIREMENTS
1.7 TBA
CREDITS
1.8 The end credit will be "A PEAK Entertainment/ Cosgrove Hall
Films/ POV Production"
1.9 Primary Studio: Persistence of Vision Sdn Bhd (POV), LG Floor,
Faculty of Creative Multimedia, Xxxxx Xxxxxxxxxx, 00000
Xxxxxxxxx, Xxxxxxxx
2. MATERIALS TO BE DELIVERED FROM PEAK TO POV:
Series bible for the Programmes, final scripts, model pack (to include
13 main character models, all secondary character models, 3 vehicle
models, all main props, 8 main locations, colour keys, and key
backgrounds), exposure sheets, audio tapes (and/or CD audio) with
edited dialogue, and all other pre-production materials up to timed or
slugged storyboards.
3. THE PRODUCTION SERVICES TO BE CARRIED OUT BY POV IN ACCORDANCE WITH
THIS AGREEMENT AND THE SPECIFICATIONS: Rigging of all key characters,
model, texture and rigging of one new character per episode, model and
texture up to 8 new props per episode, animatic, digital layout,
animation, special effects, lighting, rendering, compositing. Providing
comments on scripts, storyboards and production design.
4. DELIVERY MATERIALS
Upon completion of the production work which is the subject of this
Agreement, POV shall deliver to PEAK the following materials on the
dates set out in the Production Schedule as set out in Exhibit C(1) &
C(2).
15
5. APPROVALS
5.1 POV will send the following items to PEAK for approval and PEAK shall
approve or provide reasons for rejection within the timescales outlined
below:
---------------------------------------------------------------------------------------------------------
Item Comments/Approval back to POV Corrections to PEAK
---------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------
1) Final 3D models complete with
textures
2) Set-ups inclusive of rigs (skinned Within (7) calendar days of receipt Within (7) calendar days of
skeleton) by PEAK from POV receipt by POV from PEAK
3) Blend shapes (morphs)
4) Animatic
5) Animation
6) SFX
7) Final Composite
---------------------------------------------------------------------------------------------------------
16
EXHIBIT B
THE POV BUDGET AND THE CASHFLOW
THE POV BUDGET:
US$ 3,250,000 FOR 26 EPISODES:
1) US$ 260,000 (US$ 10,000 x 26 episodes) for the Set-ups in the cash flow
budget
2) US$ 2,340,000 (US$ 90,000 x 26 episodes) in the cash flow budget
2) USD 650,000 (US$ 25,000 x 26 episodes) in the financing budget which will
be received from the first recoupment, but not exceeding 9.10% of
Worldwide Net Proceeds, from all sources and in perpuity.
THE CASHFLOW:
TERMS OF PAYMENT:
1) US$ 260,000 FOR THE SET-UPS:
50% downpayment, upon signing of Agreement = US$ 130,000
15% instalment in July 2004 = US$ 39,000
20% instalment in August 2004 = US$ 52,000
15% final instalment in September 2004 = US$ 39,000
2) US$ 2,340,000, FOR THE 26 EPISODES, AT US$ 90,000 PER EPISODE
50% upon receipt of PEAK's materials per episode = US$ 45,000
20% upon PEAK's 100% approval of animation per episode = US$
18,000
20% upon delivery of each completed episode = US$ 18,000
10% upon delivery of technical retakes per episode = US$ 9,000
17
EXHIBIT C(1)
MONSTERS IN MY POCKET
SET-UPS FOR (26) EPISODES
a) DELIVERY SCHEDULE OF THE SET-UPS FROM POV TO PEAK
--------------------------------------------------------------------------------------
Balance of 50% of 50% of environment Balance of 50% of
50% of Character Character Models models upload to environment models
# Models Upload to FTP Upload to FTP from FTP from POV to upload to FTP from
from POV to PEAK POV to PEAK PEAK POV to PEAK
--------------------------------------------------------------------------------------
1 2-Jul-04 13-Aug-04 27-Aug-04 30-Sep-04
--------------------------------------------------------------------------------------
(b) PAYMENT SCHEDULE OF PEAK TO POV
------------------------------------------------------------------------------------------------------------------------------
50% Downpayment 15% Instalment 20% Instalment 15% Instalment TOTAL
------------------------------------------------------------------------------------------------------------------------------
1-Jun-04 USD 130,000.00 1-Jul-04 USD 39,000.00 1-Aug-04 USD 52,000.00 1-Sep-04 USD 39,000.00 USD 260,000.00
------------------------------------------------------------------------------------------------------------------------------
1
EXHIBIT C(1)
MONSTER IN MY POCKET
DELIVERY MILESTONES AND PAYMENT SCHEDULE (FIRST 5 EPISODES)
20% upon last daily preview
Total Net Amount 50% upon pre-production reception on FTP site 20% upon shipment of digital
# Ep # To Be Billed shipped from PEAK to POV from POV to PEAK beta from POV to PEAK
-----------------------------------------------------------------------------------------------------------------------------------
1 1 USD 90,000.00 30-Jul-04 USD 45,000.00 22-Oct-04 USD 18,000.00 10-Dec-04 USD 18,000.00
-----------------------------------------------------------------------------------------------------------------------------------
2 2 USD 90,000.00 6-Aug-04 USD 45,000.00 5-Nov-04 USD 18,000.00 31-Dec-04 USD 18,000.00
-----------------------------------------------------------------------------------------------------------------------------------
3 3 USD 90,000.00 13-Aug-04 USD 45,000.00 26-Nov-04 USD 18,000.00 28-Jan-05 USD 18,000.00
-----------------------------------------------------------------------------------------------------------------------------------
4 4 USD 90,000.00 27-Aug-04 USD 45,000.00 10-Dec-04 USD 18,000.00 18-Feb-05 USD 18,000.00
-----------------------------------------------------------------------------------------------------------------------------------
5 5 USD 90,000.00 3-Sep-04 USD 45,000.00 7-Jan-05 USD 18,000.00 18-Mar-05 USD 18,000.00
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL USD 450,000.00 USD 225,000.00 USD 90,000.00 USD 90,000.00
---------------------- --------------------- ------------------ -----------------
10% upon shipment of technical
retakes to postproduction from
# Ep # POV to PEAK
-----------------------------------------------------
1 1 24-Dec-04 USD 9,000.00
-----------------------------------------------------
2 2 14-Jan-05 USD 9,000.00
-----------------------------------------------------
3 3 11-Feb-05 USD 9,000.00
-----------------------------------------------------
4 4 4-Mar-05 USD 9,000.00
-----------------------------------------------------
5 5 1-Apr-05 USD 9,000.00
-----------------------------------------------------
TOTAL USD 45,000.00
----------------------
2
EXHIBIT C(2)
MONSTER IN MY POCKET
DELIVERY MILESTONES AND PAYMENT SCHEDULE (FIRST 5 EPISODES)
20% upon last daily preview
Total Net Amount 50% upon pre-production reception on FTP site 20% upon shipment of digita
# Ep # To Be Billed shipped from PEAK to POV from POV to PEAK beta from POV to PEAK
-----------------------------------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------------------------------
1 6 USD 90,000.00 10-Sep-04 USD 45,000.00 21-Jan-05 USD 18,000.00 1-Apr-05 USD 18,000.00
-----------------------------------------------------------------------------------------------------------------------------------
2 7 USD 90,000.00 24-Sep-04 USD 45,000.00 7-Jan-05 USD 18,000.00 25-Feb-05 USD 18,000.00
-----------------------------------------------------------------------------------------------------------------------------------
3 8 USD 90,000.00 1-Oct-04 USD 45,000.00 21-Jan-05 USD 18,000.00 18-Mar-05 USD 18,000.00
-----------------------------------------------------------------------------------------------------------------------------------
4 9 USD 90,000.00 8-Oct-04 USD 45,000.00 8-Apr-05 USD 18,000.00 20-May-05 USD 18,000.00
-----------------------------------------------------------------------------------------------------------------------------------
5 10 USD 90,000.00 22-Oct-04 USD 45,000.00 11-Feb-05 USD 18,000.00 29-Apr-05 USD 18,000.00
-----------------------------------------------------------------------------------------------------------------------------------
6 11 USD 90,000.00 29-Oct-04 USD 45,000.00 25-Feb-05 USD 18,000.00 13-May-05 USD 18,000.00
-----------------------------------------------------------------------------------------------------------------------------------
7 12 USD 90,000.00 19-Nov-04 USD 45,000.00 18-Mar-05 USD 18,000.00 17-Jun-05 USD 18,000.00
-----------------------------------------------------------------------------------------------------------------------------------
8 13 USD 90,000.00 26-Nov-04 USD 45,000.00 22-Apr-05 USD 18,000.00 17-Jun-05 USD 18,000.00
-----------------------------------------------------------------------------------------------------------------------------------
9 14 USD 90,000.00 10-Dec-04 USD 45,000.00 1-Apr-05 USD 18,000.00 1-Jul-05 USD 18,000.00
-----------------------------------------------------------------------------------------------------------------------------------
10 15 USD 90,000.00 24-Dec-04 USD 45,000.00 29-Apr-05 USD 18,000.00 22-Jul-05 USD 18,000.00
-----------------------------------------------------------------------------------------------------------------------------------
11 16 USD 90,000.00 21-Jan-05 USD 45,000.00 6-May-05 USD 18,000.00 12-Aug-05 USD 18,000.00
-----------------------------------------------------------------------------------------------------------------------------------
12 17 USD 90,000.00 28-Jan-05 USD 45,000.00 8-Jul-05 USD 18,000.00 26-Aug-05 USD 18,000.00
-----------------------------------------------------------------------------------------------------------------------------------
13 18 USD 90,000.00 18-Feb-05 USD 45,000.00 3-Jun-05 USD 18,000.00 16-Sep-05 USD 18,000.00
-----------------------------------------------------------------------------------------------------------------------------------
14 19 USD 90,000.00 25-Feb-05 USD 45,000.00 22-Jul-05 USD 18,000.00 16-Sep-05 USD 18,000.00
-----------------------------------------------------------------------------------------------------------------------------------
15 20 USD 90,000.00 18-Mar-05 USD 45,000.00 10-Jun-05 USD 18,000.00 30-Sep-05 USD 18,000.00
-----------------------------------------------------------------------------------------------------------------------------------
16 21 USD 90,000.00 25-Mar-05 USD 45,000.00 8-Jul-05 USD 18,000.00 28-Oct-05 USD 18,000.00
-----------------------------------------------------------------------------------------------------------------------------------
17 22 USD 90,000.00 15-Apr-05 USD 45,000.00 15-Jul-05 USD 18,000.00 11-Nov-05 USD 18,000.00
-----------------------------------------------------------------------------------------------------------------------------------
18 23 USD 90,000.00 22-Apr-05 USD 45,000.00 12-Aug-05 USD 18,000.00 16-Dec-05 USD 18,000.00
-----------------------------------------------------------------------------------------------------------------------------------
19 24 USD 90,000.00 13-May-05 USD 45,000.00 19-Aug-05 USD 18,000.00 31-Dec-05 USD 18,000.00
-----------------------------------------------------------------------------------------------------------------------------------
20 25 USD 90,000.00 20-May-05 USD 45,000.00 16-Sep-05 USD 18,000.00 27-Jan-06 USD 18,000.00
-----------------------------------------------------------------------------------------------------------------------------------
21 26 USD 90,000.00 3-Jun-05 USD 45,000.00 23-Sep-05 USD 18,000.00 10-Feb-06 USD 18,000.00
-----------------------------------------------------------------------------------------------------------------------------------
TOTAL USD 1,890,000.00 USD 945,000.00 USD 378,000.00 USD 378,000.00
------------------ ---------------- ----------------- ---------------
10% upon shipment of technical
retakes to postproduction from
# Ep # POV to PEAK
---------------------------------------------------
---------------------------------------------------
1 6 15-Apr-05 USD 9,000.00
---------------------------------------------------
2 7 11-Mar-05 USD 9,000.00
---------------------------------------------------
3 8 1-Apr-05 USD 9,000.00
---------------------------------------------------
4 9 3-Jun-05 USD 9,000.00
---------------------------------------------------
5 10 13-May-05 USD 9,000.00
---------------------------------------------------
6 11 27-May-05 USD 9,000.00
---------------------------------------------------
7 12 1-Jul-05 USD 9,000.00
---------------------------------------------------
8 13 1-Jul-05 USD 9,000.00
---------------------------------------------------
9 14 15-Jul-05 USD 9,000.00
---------------------------------------------------
10 15 5-Aug-05 USD 9,000.00
---------------------------------------------------
11 16 26-Aug-05 USD 9,000.00
---------------------------------------------------
12 17 9-Sep-05 USD 9,000.00
---------------------------------------------------
13 18 30-Sep-05 USD 9,000.00
---------------------------------------------------
14 19 30-Sep-05 USD 9,000.00
---------------------------------------------------
15 20 14-Oct-05 USD 9,000.00
---------------------------------------------------
16 21 11-Nov-05 USD 9,000.00
---------------------------------------------------
17 22 25-Nov-05 USD 9,000.00
---------------------------------------------------
18 23 30-Dec-05 USD 9,000.00
---------------------------------------------------
19 24 13-Jan-06 USD 9,000.00
---------------------------------------------------
20 25 10-Feb-06 USD 9,000.00
---------------------------------------------------
21 26 24-Feb-06 USD 9,000.00
---------------------------------------------------
TOTAL USD 189,000.00
-----------------
3
EXHIBIT D
(1) ASSIGNMENT OF THIS AGREEMENT (INCLUDING ALL EXHIBITS) TO A PEAK
MALAYSIAN ENTITY
When a company controlled by PEAK Entertainment Holdings Inc. is fully
established and registered under the laws of Malaysia, PEAK may assign
all rights and obligations of this Agreement to the new PEAK Malaysian
company. This assignment may be effected by PEAK advising POV in
writing at the address specified for Notices in clause 18.5.
(2) APPROVAL FOR POV SECURING LOAN AGAINST THIS AGREEMENT
For purpose of POV being able to secure loan funds as mobilization
expenses for the CG Animation Production of the series, Monster in my
Pocket - The Quest, PEAK hereby agrees to POV, using this Agreement, to
secure loan funds from Malaysian Debt Ventures (MDV) or any bank using
the contract value of US$ 835,000, which is the cost of Set-ups of the
26 episodes (US$ 260,000) and the cost of the first five (5) episodes
(US$ 575,000) of the series.
(3) SHORT TERM FINANCING OF PAYMENTS DUE IN RESPECT OF EPISODES 1-5 AND
SET-UP OF 26 EPISODES
The purpose of the above loan funding from MDV (or any other bank) is
to provide the cashflow required by POV between signature of this
Agreement and the establishment of a PEAK company in Malaysia. PEAK has
agreed to cover the cost of this arrangement in above clause 1.1.3 (c).
PEAK has been and will continue to expend all reasonable endeavours to
ensure the PEAK company is established in Malaysia by September 2004,
complete with committed funds sufficient to finance the entire
Production Budget requirement.
PEAK's obligations to make payments according to Exhibit C1 are thus
delayed, with POV receiving these monies in the first instance from
MDV, in the form of a loan, according to the same schedule. The
ultimate liability for these payments rests with PEAK as confirmed
below.
PEAK agrees to pay the full amount due in respect of Episodes 1-5 and
the Set-up of Episodes 1-26 no later than the date of delivery of these
Delivery Materials in full, whether or not any PEAK Malaysian company
has been incorporated and irrespective of the interim financing
arrangements entered into by POV.
5
