MSHE/AGE V.3
AGREEMENT
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This AGREEMENT made this 1st day of November, 1996 between MSH Entertainment
Corporation, Inc. (hereinafter referred to as "MSHE"), a Utah corporation
whose address is 000 Xxxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000 and
Xxxxxx/Xxxxxxx Entertainment, Inc. (referred to as "AGE"), whose address is 000
Xxxx 00xx Xxxxxx, 0xx floor, New York, New York, 10019 (with MSHE and AGE being
collectively called "Parties").
WITNESSETH
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WHEREAS AGE warrants and represents that AGE owns all the rights, title and
interest, including all materials including, but not limited to, scripts, story
ideas, treatments, adaptations, trademarks, toy designs, merchandising and the
titles, characters, drawings, plots, themes and storylines for a proposed
television series and merchandising and toy line entitled "Vanpires"
(hereinafter the "Property"); and
WHEREAS the Parties desire to enter into a co-production arrangement
("Co-Production Agreement") as outlined herein for the purpose of producing the
Property; and
WHEREAS the Parties desire to produce thirteen (13) episodes of the Property to
be sold as a television series ("Series") and toy line and merchandising items
(collectively "Merchandising"); and
WHEREAS the Parties desire to establish each Party's rights in connection with
the Property and the proceeds derived from any sales, production and/or
distribution of the Property and share profits therefrom with each other as set
forth herein: and
WHEREAS, the Parties hereby agree as follows:
NOW THEREFORE, in consideration of the mutual promises contained herein, the
Parties agree as follows:
1. ADOPTION OF RECITALS: The Parties hereto adopt the above recitals as
being true and correct.
2. CO-PRODUCTION: The Parties are undertaking a co-production
("Co-Production") for the production of the Series.
3. TERM: The term of this Agreement shall be in perpetuity unless sooner
terminated by mutual agreement of the Parties and shall continue for:
a. the duration of any and all copyrights shared and/or owned by the
Co-Production; or
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b. so long as the Parties shall be entitled to compensation with
respect to any Agreements and/or licenses to third parties in connection with
the Property and/or the Series, including all modifications, additions, options.
extensions, renewals, substitutions for, and replacement of such agreements,
directly or indirectly; and
c. for purposes herein, any agreements made, entered into or resumed
within six (6) months immediately following the termination of any particular
prior agreements with the Parties, shall be deemed a substitution or replacement
of such agreements; and
d. as used herein, the term "Agreements" means any and every written
agreement entered into, in existence, directly or indirectly relating to the
Property and/or the Series.
4. TITLE TO ASSETS: Except as provided below, any and all assets and all
forms of exploitation of the Property including, but not limited to, all
ancillary and allied rights thereto, including but not limited to toys, games,
merchandising, music rights, stage rights, television rights, radio broadcasting
rights, book publishing, motion pictures and all other rights including the
copyright (herein collectively referred to as the "Rights") shall be owned by
and title held by AGE.
5. CONCEPT: It is acknowledged that the Property is the creation of AGE,
and that the further creation of the Series shall be the contribution of AGE and
MSHE.
6. OWNERSHIP: All ownership rights including the underlying rights of the
Property and Series, rights of trademark and copyright and renewals thereof,
shall, except as noted herein, be in the name of AGE. The care, custody and
control of all master tapes produced hereunder shall remain with MSHE and at its
facility in San Francisco, unless otherwise instructed by AGE.
7. CAPITAL AND OTHER CONTRIBUTIONS: Each of the Parties have agreed to
contribute in cash and/or a combination of cash and services the following:
a. AGE:
(1). AGE shall provide cash and services of One Million Three
Hundred Thousand Dollars ($1,300,OOO.OO) for the production of the thirteen
(13) episodes of the Series, according to the schedule of payments as outlined
in the attached addendum ("Addendum").
(2). AGE shall be the Producer of the Series;
(3). AGE shall maintain creative control over the production of
the Series but agrees to engage in active and meaningful consultation with MSHE;
however, in the event of a dispute, the decision of AGE shall govern.
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(4). AGE agrees to deliver to MSHE complete design work for the
Property on or about October 21, 1996.
(5). AGE agrees to the deliverables outlined in the attached
Addendum.
b. MSHE:
(1). MSHE shall be the co-producer of the Series;
(2). MSHE shall provide cash and services of Six Hundred and Fifty
Thousand Dollars ($650,000) for the production of the thirteen (13) episodes of
the Series, a schedule of payments as outlined in the attached Addendum;
(3). MSHB shall provide the necessary amount, expected to be up to
fifty (50) Intel computer work stations to properly implement the "Overlord"
animation system in order to produce the Series. The system must be installed
and functioning on a beta basis on or about November 21, 1996 and have produced
a test program acceptable and satisfactory to AGE, in its sole descretion, of
approximately two (2) minutes in duration, based on AGE storyboards, character
and background design. MSHE agrees to the deliverables schedule outlined in the
attached Addendum;
(4). In order to meet the above mentioned threshold, AGE shall
deliver to MSHE complete design work on or about October 21, 1996.
(5). The use of MSHE Communications' production facility,
(formally East End Communications) on a priority basis, at no additional cost,
for both the production and post-production of the Series;
(6). Arrangement of all necessary insurance for the production
including E&O insurance, in a manner subject to AGE's approval.
(7). All the necessary hardware and software to meet the creative
criteria of AGE and deliver 13 half hour episodes of high broadcast quality CGI
animation;
(8). MSHE shall arrange to have Xxxxx Xxxxx available to work on
the episodes of the Series on a priority basis;
(9). MSHE shall cause to be opened and each Party shall deposit
its respective funds in a mutually agreed upon bank account solely for the
purpose of producing the Series. Any and all expenditures related to the
production of the Property shall be made from this account. Prior to the opening
of the account, AGE and MSHE shall each designate a signatory on the account,
subject to the approval of AGE. Additionally, MSHE will provide, if requested,
from time to time, detailed explanations of how MSHE intends to finance its
working capital needs both specifically related to the production contributions
and working capital for general corporate needs.
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8. CONTROL OF THE PROPERTY: All decisions relating to the activities of the
Property, and any and all decisions with respect to third party contractual
Agreements, creative, business, financial and legal matters in connection with
the Property, and all subsidiary and ancillary rights thereto and all
exploitation thereof, shall be remain with AGE.
9. WARRANTS: MSHE shall issue warrants to AGE, for nominal consideration,
for the right to purchase up to one (1) million common shares of MSHE for a
period up to four (4) years from the execution date of this Agreement. The
warrants shall be covered in a separate agreement (the "Warrant Agreement").
10. INTEL: MSHE will execute a cooperation agreement with Intel, as
previously presented to AGE. Should MSHE be unable to complete such an
agreement or should MSHE complete an agreement that contradicts the spirit of
the role intended for Intel within this Agreement, AGE may in its own discretion
automatically terminate this Co-Production Agreement with MSHE by seven (7) days
written notice of same, and shall thereafter have no further obligation to MSHE.
11. PARTICIPATION: Subject to the production of the Series and to the
performance of MSHE's obligations hereunder, it is agreed to by the Parties
hereto that both AGE and MSHE shall be placed in first position to both fully
recoup, pari passu, their initial investments in the production of the Series
($1.3 million to AGE, and $650,000 to MSHE) from 100% of revenues received by
AGE from the domestic and foreign broadcast of the Series; video licenses and
sales: and CD-ROM licenses and sales. Thereafter, once both Parties have fully
recouped, MSHE shall receive an economic interest from the licensing activities
relating to the Property as follows:
a. Series - 5% of the net advertising sales revenue earned by AGE in
the U.S. from the broadcast of the Series:
Toys, domestic - 1% of the net Toy revenues earned by AGE in the
U.S.:
Toys, international - 2% of the net Toy revenues earned by AGE
internationally;
Merchandising - 2% of the net merchandising revenues earned by AGE
including, but not limited to, Video, CD-ROM and Foreign Broadcast
rights.
b. "Net revenue" is defined as those revenues actually received by AGE
after deduction of any fees paid to independent agents.
c. From time to time, and with proper notice to AGE, MSHE shall have
reasonable access to the books and records of AGE as they pertain to the
Property only.
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12. "VANPIRES" CREDITS: Subject to the Production of the Series, and subject
to the performance of all obligations hereunder, MSHE shall be entitled to a
mutually agreed upon co-production credit on a separate card, and those persons
from MSHE who perform pre-approved, by AGE, services on the Series shall receive
a credit related to the services which they provided.
13. WARRANTIES. Indemnification:
a. AGE hereby warrants and represents that AGE:
(1). has the right and capacity to enter into this Agreement and
is not prevented by law or otherwise from so doing;
(2). owns the rights and the underlying rights to the Property and
is able by law to enter into this Agreement and can produce proof of same;
(3). has not entered into any other agreement whatsoever with
third parties which adversely effects the Parties' rights hereunder or is
inconsistent in any manner with any term set forth hereunder, and
(4). shall have authorized the signing party to execute this
Agreement on behalf of AGE.
b. AGE hereby indemnities and holds harmless MSHE from and against any
and all claims, liabilities, damages, and costs including but not limited to
reasonable attorney's fees and court costs arising from any breach by AGE of any
representations, warranty or agreement made by AGE hereunder.
c. MSHE hereby warrants and represents that MSHE:
(1) owns all the necessary rights to the Overlord Animation
System:
(2) has the right and capacity to enter into this Agreement and is
not prevented by law or otherwise from so doing;
(3) has not entered into any other agreement whatsoever with third
parties which adversely affects the Parties' rights hereunder or is inconsistent
in any manner with any term set forth hereunder: and
(4) shall have authorized the signing party to execute this
Agreement on behalf of MSHE.
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d. MSHE hereby indemnifies and holds harmless AGE from and against any
and all claims, liabilities, damages and costs including, but not limited to,
reasonable attorney's fees and court costs arising from any breach by MSHE of
any representations, warranty or agreement made by MSHE hereunder.
15. BUDGET: The budget for the Series shall be prepared by MSHE and AGE,
with AGE having final approval.
16. ADDITIONAL DOCUMENTS: Each Party hereto shall execute and deliver any
and all additional papers, documents and other instruments and shall do any and
all further acts and things reasonably necessary in connection with the
performance of his obligations hereunder to carry out the intent of the
Agreement.
17. MERCHANDISING: AGE shall have the exclusive right to merchandise the
Property including all toys, merchandising and games and any ancillary products
created or derived from the Property.
18. DEFAULT/TAKEOVER RIGHTS: MSHE acknowledges that AGE will be entering
into binding commitments to deliver fully produce episodes of the Series to
third parties and will incur substantial liability in the event of late-delivery
or non-delivery of Series episodes. Accordingly, it is agreed that in the event
that MSHE defaults in making delivery of technically satisfactory animation of
the Series episodes on the schedule set forth on the Addendum annexed hereto,
which default persists after seven (7) days written notice of default from AGE
to MSHE, then if such event, and without limiting AGE's other rights or remedies
under this Agreement or pursuant to law. AGE shall have immediate right to take
over further production of the Series episodes. In the event of such uncured
default, MSHE shall, upon AGE's written notice, deliver to AGE (or to any third
party designee) any and all program materials including, without limitation, any
computer programs and any pictorial or audio/visual works created, by computer
or otherwise, in the course of MSHE's producing the animation for the Series
episodes. Furthermore, in such event, MSHE shall make available to AGE (or AGE's
designee) the Overlord Software and will provide such technical personnel as may
be necessary to enable AGE (or its designee) to utilize such Overlord Software
to complete production and delivery of the animation for the Series episodes
uncompleted as of the time such default and takeover of production, if ever.
19. ENTIRE AGREEMENT: This Agreement and all the exhibits attached
represents the entire and complete Agreement among the Parties hereto with
respect to the subject matter hereof and supersedes all previous agreements,
understandings or representations whether oral or written, between the Parties
regarding the subject matter hereof.
20. NON-WAIVER: No delay or failure by a Party to exercise any right under
this Agreement, and no partial or single exercise of that right, shall
constitute a waiver of that or any other right, unless otherwise expressly
provided herein, and no waiver shall be effective unless made in writing.
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21. CAPTIONS: The captions of the various paragraphs and sections of this
Agreement are intended to be used solely for convenience of reference and are
not intended and shall not be deemed for any purpose whatsoever to modify or
explain or to be used as an aid in the construction of any provision.
22. COUNTERPARTS: This Agreement may be executed in counterparts with each
original being deemed a whole and complete copy.
23. ASSIGNMENT: MSHE may not assign, sell, grant a security interest in, or
otherwise dispose of their interest in the Property unless agreed to in writing
by AGE.
24. AMENDMENTS: This Agreement cannot be amended, modified or changed in any
way whatsoever except by a written instrument duly signed by the Parties hereto.
25. AUTHORITY: The corporations which are Parties hereto warrant and
represent that they have the power and authority to enter into this Agreement.
26. VOID PROVISIONS: If any provision hereof as applied to any Party or to
any circumstance Shall be adjudged by a Court to be void or unenforceable, the
same shall in no way affect any other provisions hereof, the application of such
provision in any other circumstances or the validity or enforceability hereof.
27. SUCCESSORS AND ASSIGNS: Except where provided to the contrary, this
Agreement, and all provisions hereof, shall inure to the benefit of and be
binding upon the Parties hereto, their successors in interest, assigns,
administrators, executors, heirs and devisees.
28. GOVERNING LAW: This Agreement shall be construed in accordance with and
governed by the laws of the State of New York and consent to jurisdiction of the
Federal courts located in New York City with respect to resolution of any
disputes arising hereunder.
The Parties herein have fully read, understood and executed this Agreement
freely and voluntarily. By signing In the spaces provided below, the Parties
accept and agree to all the terms and conditions of this Agreement.
In Witness Whereof the Parties hereto have caused this Agreement to be duly
executed.
/s/Xxxxxx Xxxxxxx /s/Xxxxxx Xxxxx
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Xxxxxx/Xxxxxxx Entertainment, Inc. MSH Entertainment Corporation
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/s/ Xxxx Xxxxxxx /s/ Xxxxxx Xxxxx
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Print Name Print Name
Its President Its Chairman
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Title Title
Date 11/1/96 Date 11/1/96
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9. AGE to deliver scripts, voice
tracks, and storyboards on one per week
weekly basis for episodes 3 beginning week
through 13. of 5/15/97
10. AGE to deliver full music mixing AGE & MSHE to
for episodes 3 through 13 to contribute $100M and
MSHE one week prior to the $50M per week,
delivery date of the broadcast one per week respectively, for nine
master (full audio mix) of each beginning week weeks beginning July
episode by MSHE to AGE. of 7/28/97 28, 1997.
11. MSHE to deliver broadcast
for episodes 3 through 13
(assumes all spot production one per week
activities completed by MSHE beginning week
at its facilities). of 8/3/97
/s/ Xxxxxx X. Xxxxx /s/Xxxxxx Xxxxxxx
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MSH Entertainment Corporation, Inc. Xxxxxx Xxxxxxx Entertainment, Inc.
19. COUNTERPARTS.
For the convenience of the parties, any number of counterparts of this
Warrant may be executed by the parties hereto and each such executed
counterparts shall be, and shall be deemed to be, an original Instrument.
20. NO INCONSISTENT AGREEMENTS.
The Company will not on or after the date of this Warrant enter into any
agreement with respect to its accuracies which is Inconsistent with the rights
granted to the Holders of this Warrant or otherwise conflict with the provisions
hereof. The rights granted to the Holders hereunder do not in any way conflict
with and are not Inconsistent with the rights granted to holders of the
Company's securities under any other agreements, except rights that have been
waived.
21. SATURDAYS, SUNDAYS, AND HOLIDAYS.
If the Expiration Date falls on a Saturday, Sunday or legal holiday, The
Expiration Date shall automatically be extended until 5:00 p.m. the next
business day.
AGREED
XXXXXX XXXXXXX ENTERTAINMENT INC. MSH ENTERTAINMENT CORPORATION
/s/ Xxxx Xxxxxxx /s/ Xxxxxx Xxxxx
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Signature Signature
Xxxx Xxxxxxx Xxxxxx Xxxxx
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Printed Name Printed Name
President Chairman
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Title Title
11/1/96 11/1/96
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Date Date
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