EXHIBIT 10.11
SOUTH CAROLINA EDUCATIONAL COMMUNICATIONS, INC.
0000 Xxxxxxxx Xxxx
Xxxxxxxxxxx, X.X. 00000
As of July 26, 1999
Lightpoint Entertainment, Inc.
Disney MGM Studios
The Xxx X Xxxxxxxxxx Xxxxxx
Xxxx Xxxxx Xxxxx, XX 00000
Attn: Mr. Xxxxxxx Xxxxxx
Re: "XXXXXX AND PALS"/DISTRIBUTION AGREEMENT
Dear Xx. Xxxxxx:
Following are the terms of the agreement between South
Carolina Educational Communications, Inc. ("Distributor") and Lightpoint
Entertainment, Inc. ("Producer") concerning the predominantly live action
children's television series presently entitled "Xxxxxx and Pals" (the "Series")
and its distribution by Distributor to PBS and/or APS stations and affiliates.
1. Producer will produce the Series for broadcast by
Distributor and will deliver the completed work to South Carolina ETV ("SC ETV")
or PBS for preparation for broadcast. The Series will consist of at least 39 and
up to 52 half-hour programs (such number to be agreed by the parties hereto),
which Producer will finance or co-finance with third parties. Distributor will
have no obligation to make any contribution to financing of the Series but will
use its best efforts to seek underwriters for the Series. Distributor will
charge such fee for securing underwriting as is agreed by the parties hereto.
2. The pilot for the Series will be delivered not later than
September 1, 1999, and the balance of the Series programs will be delivered on a
schedule to be mutually agreed by Producer and Distributor, for a premiere on a
date to be mutually agreed. Distributor will cause SC ETV to be the Public
Broadcasting Presenting Station.
3. Producer hereby agrees to produce, complete and deliver the
Series to Distributor in accordance with all the terms and conditions set forth
herein, including but not limited to the project description and completion
schedule contained in Exhibit A hereto, the budget contained in Exhibit B
hereto, and a schedule of deliverables to be mutually agreed, all of which are
expressly incorporated herein. The Series will meet the technical specifications
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for public broadcasting previously furnished to Producer by Distributor (and
Producer acknowledges receipt thereof).
4. Producers performance hereunder will conform to the highest
professional standards in the public broadcasting industry, consistent with
production standards for programs of similar length, nature and budget.
5. Producer hereby grants to Distributor, for broadcast on SC
ETV and for sublicensing of broadcast rights to PBS and/or APS stations and
affiliates, exclusive English-language and Spanish-language broadcast rights, as
well as English-language and Spanish-language home video rights, for the
territory (the "Territory") of North America (i.e., the U.S., Canada, Puerto
Rico, the Virgin Islands and Guam), for a period of five (5) years from the date
that the last episode of the Series is delivered, provided that Producer may
terminate Distributor's distribution rights after the end of the third broadcast
season unless by such time at least eighty (80%) of all PBS stations in the
Territory are airing the Series or are committed to do so. Distributor will have
the right to enter into broadcast sublicenses with any PBS or APS station or
affiliate for a minimum of six (6) plays and up to unlimited plays by each such
station or affiliate over the three (3) year broadcast period, and SC ETV will
have the same broadcast rights. Producer also grants to Distributor the right to
make, publish and exhibit excerpts of the programs in the Series (in textual and
audiovisual form) for purposes of promotion and advertising of the Series.
6. Distributor will be responsible for distribution, promotion
and outreach. Activities contemplated in connection therewith are set forth in
Exhibit C, attached hereto, which Exhibit, although addressed to a prior
prospective producer, is deemed applicable hereto, but the activities actually
undertaken by Distributor will be mutually determined and agreed by Producer and
Distributor. Producer acknowledges and agrees that Exhibit C is attached as a
guideline in that regard, and that nothing herein will be deemed to constitute
Exhibit C a statement of obligation on the part of Distributor. License fees
charged to broadcasting stations for the Series will conform to the standard and
customary fees charged for similar programs distributed by Distributor.
7. Distributor will have the right but not the obligation to
seek third-party funding for distribution, promotion and outreach expenses
("Expenses") in connection with the Series. Any Expenses not covered by such
third-party funding will be paid by Producer; provided, however, that any
Expenses incurred by Distributor which are neither covered by third-party
funding nor paid by Producer will be reimbursed, pro rata and pari passu with
production costs and cost of manufacture, in the case of merchandising, from
gross receipts from distribution of the Series and exploitation of any and all
rights therein, both within and without the public broadcasting system. Producer
hereby agrees to provide to Distributor funding
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for Expenses in the amount of Two Hundred Fifty Thousand ($250,000), to be
provided on a mutually agreed schedule for mutually agreed costs.
8. (a) In consideration of its services hereunder, Distributor
will be entitled to receive five (5%) percent of "Net Profits" derived by
Producer, regardless when paid, from exploitation of the Series within the
Territory during the term of this agreement.
(b) For purposes hereof, "Net Profits" will mean 100% of gross
receipts from exploitation of the Series in the Territory and any and all rights
therein less only:
i) production costs;
ii) Expenses incurred by Distributor whether paid by
Producer, Distributor, or third parties if reimbursable to them;
iii) in the case of merchandising, expenses of
manufacture and customary and reasonable merchandising license fees;
iv) customary and reasonable third-party or related
entity (Victory Distribution, Inc.) distribution fees and expenses
provided they are determined according to and within comparable
industry standards; and
v) reasonable expenses incurred by Producer to
protect and enforce the "Xxxxxx and Pals" trademarks and related
intellectual property rights, provided that any damage award, net of
reasonable legal expenses, will be considered gross receipts for
purposes hereof.
(c) Producer expressly acknowledges and agrees that the
definition of Net Profits for Distributor will be the same as for Producer.
(d) For purposes of clarity, the parties acknowledge that
Distributor will be the exclusive distributor for broadcast and home video
rights in the Territory, and Producer will be the exclusive distributor, through
third parties and its related entity, Victory Distribution, Inc., for broadcast
and home video rights outside the Territory, as well as worldwide merchandise
and ancillary rights.
9. Each party agrees that where proceeds from distribution and
exploitation of the Series are paid to said party (the "Payee"), the Payee will
account to the other party with respect thereto and will pay over to the other
party the share due such other party pursuant to this Agreement. Each party
agrees to cooperate with and assist the other party with such accounting,
including but not limited to documenting those costs and expenses set forth in
Paragraph 8(b) above to the extent they are known to, or have been kept track of
by, one
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party rather than the other. The Payee will pay the other party its
participation hereunder quarterly, not later than sixty (60) days after the
close of each calendar quarter, and will provide quarterly statements showing
all transactions producing gross receipts and all expenses deducted therefrom.
Such statements will be sent quarterly regardless of whether any payment is due.
10. Distributor will have the right to review the script for
each episode of the Series in both draft and final forms, and will have a right
of meaningful consultation in regard to all aspects of development and
production, including but not limited to casting of the Series. Distributor also
will have a right of consultation with respect to exploitation of ancillary
rights, including but not limited to merchandising. With respect to
merchandising, Distributor's consultation will be for purposes of helping to
ensure that merchandise sold in connection with or based on the Series is
inconsistent with the purposes of public television (i.e., in appearance or
function or in the manner in which it is offered for sale to consumers). Any
change in the title of the Series or in the appearance of any character will be
subject to mutual approval of the parties.
11. Producer acknowledges and agrees that no broadcast of the
Series on any PBS or APS station or affiliate will contain any offer of
merchandise to viewers unless agreed to in advance in writing by Distributor.
12. Any sponsor, endorser and/or underwriter secured by
Producer, and any credit (underwriting, sponsorship or otherwise) to be accorded
to any person or entity, in connection with the Series in the Territory during
the subsistence of Distributor's distribution rights hereunder (as set forth in
Paragraph 5 above) will be subject to Distributor's prior written approval.
Distributors decision whether or not to consent will be based upon its
determination as to whether such affiliation or credit will adversely affect or
interfere with the appeal and appropriateness of the Series for the PBS and APS
stations and affiliates.
13. Each of Producer and Distributor will maintain adequate
and complete books and records of all of their transactions in connection with
the Series, and the other party or its designee(s) will have the right to
inspect and make copies of such books and records, for purposes of verifying the
accuracy of payments due and owing under this Agreement and deductions taken in
calculating such payments. Such inspection may be made upon reasonable prior
notice to the other party and at the place where such records are regularly
kept.
14. Producer represents and warrants that the Series will be
of broadcast quality, will contain a copyright notice in legally acceptable form
and substance, and will comply with all program specifications, technical
standards and guidelines established by SC ETV and provided to Producer prior to
completion of production. Producer further represents and warrants that (i) it
is free to enter into this agreement and has the sole, exclusive and complete
right to grant the rights herein granted; (ii) it has secured all necessary
rights, clearances,
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permissions and/or licenses with respect to all materials and elements embodied
in, and all Persons performing services in connection with, the Series; (iii)
the Series is original and does not and will not violate or infringe upon the
rights of any person or entity, including but not limited to trademark,
copyright, privacy or publicity, nor does it or will it defame or libel any
persons or entity; and (iv) it has not and will not enter into any agreement or
arrangement that would violate, infringe or conflict with the rights herein
granted or that would impede Distributor in, or prevent Distributor from, the
complete enjoyment of all the rights herein granted.
15. Distributor represents and warrants that it is free to
enter into this agreement and to perform as required hereunder.
16. Each of Producer and Distributor agrees to indemnify and
hold harmless the other party and SC ETV, and their respective officers,
directors, agents and employees and, in the case of Producer as indemnitor,
every public broadcasting station or affiliate airing the Series, from and
against any and all claims, suits, causes of action, liability, losses, costs
and expenses (including reasonable attorneys' fees and disbursements, whether in
respect to a third-party claim or in litigation between the parties), damages
and recoveries (including but not limited to amounts paid in settlement, with
the approval of the indemnitor, not to be unreasonably withheld or delayed)
arising out of any claim of breach of any of the above-stated warranties and
representations.
17. Each party hereto agrees to notify the other promptly, in
writing, of any legal claim or action of which it has knowledge which is related
in any way to this Agreement or performance hereunder.
18. As between Producer and Distributor, Producer owns the
Series, including, without limitation each component program thereof, and the
title. Producer reserves all rights in and to the Series not specifically
granted to Distributor.
19. Producer will obtain and maintain, at its expense,
adequate insurance coverage to guarantee the effectiveness of its indemnity in
Paragraph 16 above, as well as general liability coverage for the Series in an
amount mutually agreed by the parties and will add both Distributor and SC ETV
to each such policy as additional insureds.
20. For the amount of Three Thousand Five Hundred Dollars
($3,500), which will be a production expense payable to Distributor from the
Series production budget, Distributor will provide broadcaster's liability
insurance (Errors and Omissions) for the broadcast of the Series on public
television for the period of Distributor's broadcast rights hereunder, and
Producer will be added to the policy as an additional insured for this project
only. The policy has a Five Million Dollar ($5 million) coverage limit and a
Five Thousand Dollars ($5,000) deductible per occurrence, which deductible will
be borne by Producer. Pro-
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ducer acknowledges that home video distribution is not
covered under the policy, and agrees to provide insurance coverage for such
distribution pursuant to Paragraph 19 above.
21. The parties' warranties and representations and
indemnification obligations will survive the termination or expiration of this
Agreement.
22. Any use by Producer of the PBS, APS, SC ETV or CPB
(Corporation for Public Broadcasting) name or logo will be subject to
Distributor's prior written approval. When Distributor has decided upon the
avenue of distribution for the Series (APC versus PBS, e.g.), Distributor will
provide the appropriate logo(s) and will review the credits to ensure that the
series is packaged properly for such distribution.
23. The screen credits for the Series will include the
following credits:
(a) "Xxxxxx and Pals" is a Lightpoint Entertainment production
produced in association with SC ETV and presented on public television by SC
ETV"; and,
(b) "Xxxxx Xxxxx -- SCE TV's Executive In Charge."
Any reference to the Series in printed material in the Territory during the
broadcast period set forth in Paragraph 5 above will include the language set
forth in Subsection (a) of this Paragraph 23.
24. Distributor will have the right to terminate this
Agreement at any time if Producer fails to perform or comply with any material
agreement set forth herein. Termination will be effective upon written notice by
Distributor to Producer, and will be in addition to any other remedies, legal or
equitable, that Distributor may have against Producer with respect to this
Agreement.
25. Neither party will have the right to assign this Agreement
without the prior written consent of the other party.
26. All notices, requests, demands, reports or other
communications required or permitted under this Agreement will be in writing and
will be deemed to have been duly given or served when delivered to or received,
by mail, by facsimile transmission or by hand, at the respective addresses of
the parties set forth on the first page of this Agreement, or to such other
address as either party will hereafter designate in writing.
A copy of all notices to Distributor will be sent to Kaufmann,
Feiner, Yamin, Xxxxxx & Xxxxxxx LLP, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxx X. Xxxxxx, Esq. (Fax (000) 000-0000) and to Xxxxxx Xxxxxxx,
ETV Endowment, 0000 Xxxxxxxx Xxxx, Xxxxxxxxxxx, Xxxxx Xxxxxxxx 00000.
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A copy of all notices to Producer will be sent to Xxxx
Xxxxxxxx, Esq. at Lightpoint's address as first above given (Fax: (407)
000-0000).
27. No waiver by either party of any breach of the Agreement
by the other party will constitute a waiver of any other breach or of any other
provision of this Agreement or of any prior or subsequent breach of the same
provision.
28. This Agreement will be construed and interpreted under New
York law applicable to contracts made and wholly performed in the State of New
York without regard to the principles of conflict of laws.
29. This Agreement constitutes the entire understanding of the
parties with respect to the Series, and supercedes all prior and contemporaneous
agreements, whether written or oral, and no representations or statements made
by either party which are not stated herein will be binding on the parties.
30. Nothing herein will be deemed to constitute the parties
hereto as partners or joint venturers.
31. This Agreement will inure to the benefit of and will be
binding upon each of the parties and their successors. It may not be modified
except in a written instrument signed by both parties.
32. This Agreement may be executed in counterpart, and
the signed original of the two parties, taken together, will constitute one
original.
Very truly yours,
SOUTH CAROLINA EDUCATIONAL
COMMUNICATIONS, INC.
By:
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Its:
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LIGHTPOINT ENTERTAINMENT, INC.
By:
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Its:
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EXHIBIT A
PROJECT DESCRIPTION: Xxxxxx and Pals
A live action children's television show for the pre-school market
promoting educational values and featuring virtual characters and sets.
EXHIBIT B
The budget for each episode will exceed the sum of one hundred thousand
dollars ($100,000).
