INVESTMENT AGREEMENT
Exhibit
10.4
THIS
INVESTMENT AGREEMENT (the "Agreement") is made as of May l, 2007 by and between
BUZZ KILL, INC., a New York corporation (the "Producer") and EASTERN RESOURCES,
INC., a Delaware corporation ("Financier").
WHEREAS,
Financier desires to provide funding to the Producer in the amount of Eight
Hundred Thousand Dollars ($800,000) for the production (principal photography
only) and exploitation of a motion picture currently entitled "Buzz Kill" (the
"Picture") based upon the literary work entitled "Buzz Kill" written by Xxxxxx
Xxxxxxxx and Xxxx Xxxxxxx (the "Property");
WHEREAS,
the Producer and Financier desire to establish the terms and conditions as
between themselves and as to their relationship with regard to the production
and exploitation of the Picture; and
NOW,
THEREFORE, in consideration of the mutual promises herein contained and other
good and valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the parties hereto hereby agree as follows:
l. Financier
Contribution.
Financier shall provide Producer with the amount of Eight Hundred Thousand
Dollars ($800,000) or as otherwise agreed to in writing by the parties (the
"Financing"). Payment shall be made in accordance with the Schedule of Cash
Flow
attached hereto as Exhibit "A" from Gottbetter Capital’s escrow account.
Producer hereby acknowledges the receipt of Twenty Five Thousand Dollars
($25,000) of the Financing.
2. Budget.
Producer warrants and represents that the current budget for the Picture is
as
set forth in the budget attached hereto as Exhibit "B" (the "Budget") and made
a
part hereof and that notwithstanding any other provision hereof or in any other
agreement, the negative cost of the Picture, including all Picture related
expenditures of any kind whatsoever, shall not exceed One Million One Hundred
Thousand Dollars ($1,100,000) without the prior written consent of Financier.
All monies received by the Producer shall be expended in accordance with the
Budget subject only to reasonable variations necessitated by the exigencies
of
production and consistent with weekly progress reports that Producer shall
provide to Financier.
3. Recoupment.
Financier is hereby granted a "first priority" right of recoupment in an amount
equal to the sum of the Financing; provided, however, if Producer provides
any
financing for Picture, Financier’s Financing shall be subordinate to such sums
raised by Producer. All payments to Financier by Producer shall be defined,
paid
and accounted for in accordance with the Definition and Application of Proceeds
a copy of which is attached hereto as Exhibit "C" and made a part hereof. For
purposes of clarity, the distribution of any monies received from the
exploitation of the Picture shall be as follows: (a) for any financing debt
incurred by Producer and approved by Financier, not to exceed Three Hundred
Thousand Dollars ($300,000) (Financier hereby acknowledges that its shareholders
approve a One Hundred Thousand Dollars ($100,000) loan from Producer for the
Picture) plus twenty percent (20%); (b) next any equity debt incurred by
Financier to be returned via divided plus twenty percent (20%) (which Producer
shall pay to Financier the amount of Eight Hundred Thousand Dollars ($800,000)
plus twenty percent (20%) out of such monies received by Producer in order
to
satisfy the recoupment of Financier’s equity debt); (c) next any other third
party subordinate debt; and (d) any Net Proceeds of the Picture to paid in
accordance with Paragraph 4 and Exhibit "C".
4. Financier
Net Proceeds Participation.
In
addition, Producer hereby grants to Financier a fifty percent (50%) of the
Net
Proceeds of the Picture, to be defined, paid and accounted for in accordance
with Exhibit "C". Notwithstanding the foregoing, in the event the Financing
does
not equal the final, actualized budget for the Picture, Financier’s percentage
shall be calculated as the amount equal to fifty percent of the fraction with
a
numerator equal to the amount of the Financing and a denominator equal to the
amount of the final, actualized budget. For purposes of illustration only,
if
the Budget is One Million One Hundred Thousand Dollars ($1,100,000) and
Financier’s contribution is Eight Hundred Thousand Dollars
($800,000) times fifty percent (50%) then the final percentage is
thirty six percent (36%).
5. Credit.
Financier or its designee(s) shall receive:
(a)
a
single, exclusive "in association with" company credit which shall substantially
conform to the following:
"In
Association with Gottbeter Capital"
Such
credit shall appear in the main titles of all positive prints of the Picture,
on
a separate card immediately following the presentation credit given
[Xxxxx/Xxxxxxx Designee] and shall appear in all paid advertising for the
Picture where credit is given to [Xxxxx/HundleyDesignee], subject to customary
exclusions.
(b)
exclusive Executive Producer credit which shall substantially conform to the
following: "Executive Producer: Xxxx Xxxxxxxxxx"
Such
credit shall appear on a single card, in the main titles of all positive prints
of the Picture and shall appear in all paid advertising for the Picture where
credit is given to the producers, subject to customary exclusions and shall
be
subject to dilution by additional third party financiers, if any, subject to
the
written consent of the Financier, such consent not to be unreasonably withheld.
Such Executive Producer credit shall only be diluted with Financier’s prior
written approval.
Except
as
provided herein, all aspects of the above credits to be accorded Financier
shall
be in the Producer’s sole discretion. The Producer shall contractually obligate
all third parties to meet the foregoing credit requirements. No casual or
inadvertent failure of the Producer to comply with the provisions of this
Agreement regarding credit, and no failure of any third party to comply with
such obligations, shall constitute a breach of this Agreement by the Producer.
Upon receipt of written notice from the Financier of any failure by the Producer
to comply with any applicable credit provisions, the Producer shall use
reasonable efforts to cure prospectively or to cause a prospective cure of
any
such failure. In no event shall the Producer be liable or responsible for any
acts or omissions with respect to credits by any independent exhibitor,
non-subsidiary distributor or sub-distributor, newspaper, magazine, television
station, record company or any other independent person, firm or entity,
provided, however, that upon receipt of written notice from the Financier,
the
Producer shall use reasonable efforts to cause any of the foregoing to cure
prospectively any such failure to comply.
6. Representations
and Warranties.
The
Producer, its principals, officers, employees and agents warrant and represent
that:
(a)
they
have or shall validly acquire(d) all necessary underlying rights in any and
all
literary and/or intellectual property required for the production and
exploitation of the Picture, including, without limitation, the exclusive motion
picture rights to the Property;
(b)
they
have no knowledge of any contingent liabilities which could restrict the sale
or
distribution of the Picture or any ancillary, allied or subsidiary rights of
the
Picture;
(c)
they
are fully authorized to enter into and fully perform hereunder and that this
Agreement does not and shall not violate any other agreement or the rights
of
any third party;
(d)
no
third party has received nor shall receive more favorable terms for providing
financing for the Picture than Financier without Financier’s prior written
approval, such approval not to be unreasonably withheld; and
(e)
Producer indemnifies and holds Financier harmless against any and all claims,
losses, awards, actions, judgments, costs or expenses (including without
limitation, reasonable outside attorney’s fees and costs) related to any breach
of its representations, warranties or agreements hereunder.
7. Insurance.
Producer shall secure (or shall cause the distributor of the Picture to secure)
general liability and errors and omissions insurance for the Picture and shall
list Financier as additional insured parties under such insurance policies.
Investor shall receive certificates of insurance so providing upon execution
hereof (or promptly following issuance of the errors and omissions policy,
if
not currently in place).
8. Right
of Inspection/Financial Statements.
At all
times from the inception of any transactions related to the Picture, the
Producer represents that it will keep full and faithful copies of all such
documents related to the Picture and books of account in which shall be entered
fully and accurately each transaction of the Producer and the production of
the
Picture. Provided Financier provides the Producer with reasonable notice, all
of
said documents and books shall be open to the inspection and examination of
Financier during normal business hours.
9. Entire
Agreement; Modification.
This
instrument and the Development Financing Agreement dated as of February 21,
2007, constitute the entire agreement between the Producer and Financier. It
may
not be modified except in a writing signed by both parties.
10. Assignment.
Neither
party may assign this Agreement or the rights and obligations contemplated
hereunder without the other's written consent.
11. Governing
Law.
This
Agreement shall be construed in accordance with and governed by the laws of
the
State of New York.
l2. Counterparts.
This
Agreement may be executed simultaneously in two (2) or more counterparts, each
of which shall be deemed an original but all of which together shall constitute
one and the same instrument.
IN
WITNESS WHEREOF, the parties have caused this Agreement to be executed by their
duly authorized officers and their corporate seals to be hereunto affixed as
of
the day and year first above written.
| EASTERN RESOURCES, INC.: | ||
| |
|
|
| By: | /s/ Xxxxxx Xxxxx | |
|
Its:
|
President |
|
| BUZZ KILL, INC.: | ||
| |
|
|
| By: | /s/ Xxxxxx Xxxxx | |
|
An Authorized Signatory |
||
EXHIBIT
"C"
Definition
and Application of Proceeds
This
Exhibit "C" is attached to and made part of that certain agreement, dated
as of
May
1,
2007 by and between Buzz Kill, Inc. a New York corporation (therein and herein
referred to as "Producer" or "Company") and Eastern Resources, Inc. (therein
and
herein referred
to as "Financier" or "Participant").
X.
Xxxxx
Proceeds: As
used
herein, the term "Gross Proceeds" shall be defined as all
gross
monies actually received by Company from the licensing, distribution and
other
exploitation
of any and all rights of every kind, nature and description (whether now
known
or
yet to
be devised) in and to the feature length motion picture currently entitled
"Buzz
Kill" (the
"Picture") in any and all media throughout the universe.
B.
Deductions
From Gross Proceeds:
There
shall be deducted from Gross Proceeds the
aggregate of the following, which shall be deducted on a continuing basis
and
shall be deemed
recouped by Company in the order listed:
(1)
Distribution
Expenses: All
costs
and expenses incurred in connection with the distribution,
exploitation and turning to account of the Picture of whatever kind or nature
or
which are customarily treated as distribution expenses in the motion picture
industry, to the extent
that the same are neither included in the cost of production of the Picture
or
paid by any distributor
or licensee appointed by Company. If Company reasonably anticipates that
such
distribution
expenses will be incurred in the future, Company may, for a reasonable time,
set
up
appropriate reserves therefore. Such distribution expenses shall include,
without limitation: (a)
all
costs in preparing and delivering the Picture for distribution; (b) any and
all
costs and expenses
in connection with changing the title of the Picture, re-cutting, re-editing
or
shortening
or lengthening the Picture for release in any territory or for exhibition
on
television or
other
media or in order to conform to the requirements of censorship authorities;
(c)
all sums
paid
or accrued on account of sales, use, receipts, income, excise, remittance
or
other taxes
(however denominated) to any governmental authority assessed upon the negatives,
duplicate
negatives, prints or sound records of the Picture or upon the use or
distribution of the
Picture or upon the revenues derived therefrom or any part thereof or upon
the
remittance of
such
revenues or any part thereof, (provided that no event shall Company's own
United
States Federal or State income taxes and franchise taxes based on Company's
net
income or income
taxes payable to any country or territory by Company based on the net earnings
of Company
in such country or territory be deductible hereunder); (d) any and all sums
paid
or accrued
on account of duties, customs, and imposts, costs of acquiring permits and
any
similar authority
to secure the entrance, licensing, exhibition, performances use or televising
of
the Picture
in any country or part thereof; (e) expenses of transmitting to the United
States any funds
accruing to Company from the Picture in foreign countries; (f) all costs
and
expenses, including
reasonable attorneys' fees, loss, damage or liability suffered or incurred
by
Company in
connection with; any action taken by Company (whether by litigation or
otherwise) in copyrighting,
protecting and enforcing the copyright of or other rights and sources of
revenue
to
be
derived from, the Picture; (g) the collection of any and all sums due to
Company
from any
distributor or licensee appointed by Company in connection with the Picture;
(h)
preventing
and/or recovering damages for unauthorized exhibition or distribution of
the
Picture
or any impairment of, incumbrance on or infringement upon the rights of Company
in and
to
the Picture; (i) auditing of books and records of any distributor or licensee
appointed by
Company and other accounting costs associated with the distribution of the
Picture; (j) all amounts
paid or payable to or for the benefit of actors, writers, composers, directors
or others, pursuant
to applicable collective bargain agreements and/or any law or governmental
regulation
or decree now or hereafter in force by reason of and/or as a condition or
consideration
for any, exhibition, use, reuse, rerun, performance, sale, license and/or
distribution
of the Picture and/or copies of all or any part thereof on television,
supplemental markets
or otherwise (herein "Residuals"), together with all taxes, pension fund
contributions' and
other
costs payable in respect of such Residuals and in respect of percentage
participations in
the
Picture, provided that if any net proceeds Participant under this Agreement
or a
principal stockholder
of any Participant or their respective heirs, executors, administrators,
successors or
assigns, are entitled either directly or by way of participation in any pension
fund to any such
Residuals, the amount pay-able on account thereof shall be treated as an
advance
against the
participant's net proceeds participation hereunder; (k) the cost of all
insurance (to the extent
the same is not included in the cost of production of the Picture) covering
or
relating to
the
Picture including, but not limited to, errors and omissions
insurance.
(2)
Production
Deferments: Any
amount not paid in connection with the cost of production
of the Picture and payable after deduction of those expenses listed in, Section
I above, to any party providing rights, materials, services or facilities
in
connection with the production
of the Picture, as a fixed sum the payment of which, vests upon the expiration
of a period of time and/or the attainment of a specified level of receipts
of
the Picture, whether or not such deferment is defined or computed in the
same
manner as set forth in this Exhibit "C".
(3)
Recoupment
of Financing/Cost of Production and Premium:
To
Producer for any
financing debt incurred by Producer and approved by Financier, not to exceed
Three Hundred
Thousand Dollars ($300,000) (Financier hereby pre-approves a One Hundred
Thousand
Dollars ($100,000) loan from Producer for the Picture) plus twenty percent
(20%); (b)
next
any equity debt incurred by Financier to be returned via divided plus twenty
percent (20%);
(c) next any other third party subordinate debt for all costs of production
and
other related
costs with respect to Picture ("Production Cost").
(4)
Other
Deferments: Any
amount not included in the cost of production of the Picture
and payable after deduction of those expenses listed in Sections 1, 2 and
3
above, to any party providing rights, materials, services or facilities in
connection with the production of the Picture, including Participant, as
a fixed
sum the payment of which vests upon the expiration,
of a period of time and/or the attainment of a specified level of receipts
of
the Picture,
whether or not such deferment is defined or computed in the same manner as
set
forth in
this
Exhibit "C."
(5) Net
Proceeds: All
sums
remaining
after deduction of the foregoing shall be defined
as "Net Proceeds" and applied in the manner prescribed in the Agreement to
which
this Exhibit
"C" is attached and payable on a pro rata, pari passu basis
with all other participants.
C.
Accounting
and Statements:
(1)
Company shall maintain complete and accurate books and records of account
with
respect to the distribution and exploitation of the Picture. Company shall
render to Participant,
on a quarterly basis for the first two (2) years after initial distribution
of
the Picture, and on a semi-annual basis for the next two (2) years, a written
statement of monies due
Participant hereunder, if any (the "Participation Statement") and such
Participation Statement
shall be accompanied by remittance to Participant of any amounts shown to
be due
to
Participant thereon. Thereafter, Participation Statements and payments shall
be
provided on
an
annual basis for as long as the Picture generates revenue. Any Participation
Statement rendered by Company hereunder shall be deemed conclusively true
and
correct and binding upon
Participant unless Participant-delivers to Company, in writing, specific
objections setting forth
specific transactions or items objected to and the basis-therefor, within
a
period of two (2) years from the date such Participation Statement was mailed
to
Participant.
(2)
Participant shall have the right to examine the books and records of
Company
to the extent that they pertain to the Picture. Such examination shall be
made
during reasonable business hours and upon reasonable advance notice, at the
regular place of business of
Company where such books and records are maintained and shall be conducted
by a
Certified
Public Accountant appointed by Participant. Such examination shall be made
not
more
frequently than once in any twelve-month period and no more than once with
respect to any
accounting period or Participation Statement rendered hereunder.
(3)
No
action suit or proceeding arising out of this Agreement or concerning any
Participation-Statement
shall be maintained against Company unless commenced within thirty (30)
months after the date such Participation Statement is mailed to
Participant.
End
of
Exhibit "C"
