[EXHIBIT 10.1.28]
OPTION AND ACQUISITION AGREEMENT
"Libertad" (aka Heroes of the Third World War)
AGREEMENT dated as of December 20, 2004, by and between Allied
Capital Corporation (formerly Xxxxxxxxx Xxxxxxx Productions Inc and
Xxxxxxxxx Xxxxxxx Properties Inc.), a company incorporated pursuant to
the laws of Ontario having its head office at 000 Xxxxxxxxx Xxxxxx,
Xxxxxxx, in the province xx Xxxxxxx, Xxxxxx the ("Owner") and Film and
Music Entertainment Inc., a company incorporated under the laws of the
state of Nevada with offices at 0000 Xxxxxxxx Xxxx., Xxx Xxxxxxx, in
the state of California herein referred to as the ("Purchaser").
WHEREAS:
I. The Purchaser is desirous of acquiring from the Owner an option (the
"Option") to purchase all right, title and copy right in and to an
original story by Xxxxxxxxx Xxxxxxx and a screenplay based thereon by
Xxxxxxx Xxxxxxxxx (the "Writers") provisionally or definitively
entitled "Libertad" also known as "Heroes of the Third World War"
date 1992 (Jointly, the "Property"), as such term is more fully
defined in subsection 3a(i) hereof, for the purposes of carrying out
the development and the production and distribution of, inter alia, a
motion picture film (the "Film" or the "Picture" ).
II. The Owner is desirous of granting the Option to the Purchaser.
NOW, THERFORE, in consideration of the mutual covenants and premises
contained herein and for other good and valuable consideration (the
receipt and sufficiency of which are hereby acknowledged), the
parties hereby agree as follows:
1. Option
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In consideration of the payment by the Purchaser of the sum of
Twenty Five Thousand U.S. Dollars ($25.000.00 USD) (the "Initial
Option Payment"), (which shall be applicable against the Purchase
Price set forth in Paragraph 2 b)) the receipt and sufficiency of
which are hereby acknowledged, the Owner hereby grants to the
Purchaser an irrevocable and exclusive option, for a period of one (1)
year commencing on December 20, 2004 and ending on December 31, 2005
(the "Initial Option Period") to purchase all of the Rights (as such
term is defined in 3(a)(ii) below) in and to the Property (as such
term is defined in 3(a)(i) below).
In consideration of the payment by the Purchaser of the
additional sum of Twelve Thousand Five hundred U.S. Dollars
($12,500.00 USD) (which shall be applicable against the Purchase Price
set forth in paragraph 2 b)) paid any time prior to the end of the
Initial Option Period, the Purchaser shall be entitled to extend the
Option for a further period of six (6) months (the "Second Option
Period"), commencing on December 31, 2005 and ending June 30, 2005. If
the Initial Option Period or Second Option Period ends in as Saturday,
Sunday, or holiday, it will be deemed to end on the close of business
in Los Angeles, California on the first succeeding business day.
Purchaser shall pay Owner, upon execution of this agreement. The
Purchaser acknowledges that the Owner has delivered all documents
required to authenticate Owner's chain of title and Purchaser has
reviewed and approved such documents.
The Initial Option Period and the Second Option Period are
collectively herein referred to as the "Option Period".
Throughout the Option Period, the Purchaser shall have the right
to engage in any and all activities in respect of the property which
are typical in the entertainment industry with respect to the
development and preproduction stages of a film (the "Development
Period"), such development activities to include, without limitation,
the exclusive rights to:
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i) Negotiate and enter into any contracts relating to the
financing, production and/or distribution of the Film. Without
limiting the foregoing, the Purchaser shall have the right to
obtain an interim financing commitment from a recognized bank
or financial institution for financing of the Film;
ii) Revise the screenplay and hire writers other than the Owner
to do so at the sole discretion of the Purchaser.
iii) Carry out chain of title searches and any other searches
relating to the conveyance to the Purchaser of the necessary
title to exploit the rights granted to the Purchaser hereunder.
Purchaser shall have no liability to the Owner with
respect to any pre-existing development funding expenses, save
and except for the obligations specified in Section 8,
regardless of whether the Purchaser does, or does not, exercise
the Option during the Option Period.
2. Exercise of the Option and Acquisition of the Rights
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a) Exercise of Option
The Purchaser may at any time during the Option Period
exercise the Option and thereby acquire the Rights (as such
term is Defined in 3(a)(ii) below), by payment to the Owner
(subject to paragraph 4 hereunder), upon exercise of the
Option, of the Purchase Price (as such term is hereafter
defined). The Purchaser shall be deemed to have secured the
financing for the development and production of the film at
such time as a completion bond covering the Picture becomes
effective. If negotiations with a financier are occurring at
the expiration of the Option Period (as it may be extended in
paragraph I above), the Option Period shall be automatically
deemed extended for a period not to exceed thirty (30) days in
order to complete subsequent negotiations. In the event the
Purchaser fails to duly and timely exercise the Option, the
Option shall terminate and the Owner shall be free to grant the
Rights to any third party without further obligation to the
Purchaser subject to Section 10 herein. If within two (2) years
after the termination of the Option, the Film is subsequently
produced with financing arranged for by a person or corporate
entity, to which the Owner is introduced by Xxxx Xxxx or other
employees of the Purchaser, the provisions of this Agreement
shall apply even though the Exclusive option Period has
terminated.
In the event that the Purchaser exercises the Option
during the Option Period but does not commence principal
photography within four (4) years from the date of the
exercise of the Option, all Rights granted to the Purchaser
herein, shall revert to the Owner without any reimbursement of
the Purchase Price, Development, or Pre-Production Expenses,
and the Owner shall be free to grant the Rights to any third
party without further obligation to the Purchaser.
b) Purchase Price
The Purchase Price means an amount equal to Two and One
Quarter percent (2.25%) of the cash Film Budget with a minimum
price of Two Hundred Twenty Five Thousand U.S. Dollars
($225,000.00 USD). The cash Film Budget shall mean the final
budget approved by, the completion bonder (or financier if
there is no completion bond) but after deducting interest and
financing costs, producer's fees to Owner, Purchaser and its
employees, overhead and contingencies. Any and all sums paid
to Owner pursuant to Paragraph 1 shall be applied to and
reduce the amount payable on exercise of the Option.
3. Grant of Rights
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a) Rights Granted
2 Int. (sig.)
This Option refers to the exclusive and irrevocable right
of the Purchaser to irrevocably acquire, upon exercise of
the Option, the Rights (as such term is defined in 3(a)(ii)
below) in and to the Property (as such term is more
defined in 3(a)(i) below).
(i) The Property
For the purposes hereof, the "Property" shall mean the
original story by Xxxxxxxxx Xxxxxxx, treatment and screenplay by
Xxxxxxx Xxxxxxxxx provisionally or definitively entitled
"Libertad" dated 1992 and all past, present and future versions
and all rights in and to the Property, including any rewrites or
polishes written by the Writers, and including, without
limitation, the title, central premise, setting, format,
contents, characters, characterizations, stories, original idea
and concept created by the Writers, and other elements contained
therein, all of which rights the Owner owns entirely and without
limitation or restriction throughout the world and in perpetuity,
with full and unrestricted rights to assign all right title and
interest in and to the property free and clear of any liens,
claims or encumbrances. Owner's right in the Property are not
subject to any rights of reversion or rescission. Owner has
acquired all right and copyright of any kind and nature that were
owned or acquired by Xxxxxxxxx Xxxxxxx Productions Inc. ("KSP")
in or to the Property or any literary material that is part of
the Property.
(ii) The Rights
For the purposes hereof, the "Rights" shall mean all rights,
title and interest and all copyright in and to the Property, such
Rights to be granted, assigned and conveyed to the Purchaser
irrevocably, in perpetuity, exclusively, throughout the universe
in any and all languages and for exploitation in all media,
whether now known or hereafter in existence, including, without
limitation, exploitation on line, electronically or by internet or
other means now known or hereinafter discovered including, but not
limited to, all motion picture, television and allied rights which
shall include, without limitation, the exclusive worldwide,
perpetual rights to produce one or more motion pictures and
remakes and sequels thereof, television long form and series
rights, merchandising and commercial tie-up rights, screenplay
publishing rights, promotional rights for any advertising related
to any production based upon the rights acquired and ancillary
rights, and the perpetual, exclusive, universe-wide right to
distribute, exploit and otherwise use any such production in any
and all media whether now known or hereafter discovered,
including, without limitation, soundtrack album, free television,
cable television, syndication, pay television, satellite,
pay-per-view television, closed circuit telecast, home video, CD
and laser disk, DVD, internet, and non-theatrical rights and any
and all other distribution and delivery media, whether now known
or hereafter discovered. Without limiting the foregoing, Owner
hereby irrevocably assigns, licenses and grants to Purchaser,
throughout the universe, in perpetuity, the rights, if any, of
Owner to authorize, prohibit and/or control the renting, lending,
fixation, reproduction and/or other exploitation of any motion
picture or other production based on the Screenplay by any media
and means now known or hereafter devised as may be conferred upon
Owner under applicable laws, regulations or directives, including
without limitation, any so-called rental and lending rights
pursuant to any European Economic Community ("EEC") directives
and/or enabling or implementing legislation, laws or regulations
enacted by the member nations of the EEC, and Owner acknowledges
that the compensation payable under this Agreement, includes,
without limitation, adequate and equitable remuneration for the
"Rental and Lending Rights". Purchaser shall have the sole,
perpetual right to use, exploit, advertise and exhibit the
foregoing and the advertising, publicity and promotion thereof, in
any and all media whether now known or hereafter devised, in all
languages, as Purchaser in its sole and unfettered discretion
shall determine. Such rights include, without limitation, all
motion picture rights, sequel, remake and prequel rights and all
novelization, publishing, merchandising, and ancillary rights with
respect to the Property and the Film and all rights represented in
the Purchase Agreement.
The Owner hereby agrees that the exercise of the Option by
the Purchaser shall trigger the express waiver by the Owner in
favor of the Purchaser, its successors, assigns and licensees, of
any so-called moral rights which the Owner may have, now and in
the future, in and to the Purchaser, and such waiver shall be
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applicable throughout the world and for the duration of such
moral rights and any renewal thereof.
4. Credit
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It is agreed that the Owner shall receive a shared
Producer credit on the Film with the Purchaser's
representative Xxxx Xxxx in the form of "Producer" or
"Executive producer" in the name of "Xxxxxxxxx Xxxxxxx", that
may be on a separate card but in the same form and size as Xx.
Xxxx'x Producer credit as the parties shall mutually
determine. Neither party shall receive Producer credit in ads
unless the other one receives Producer credit and each of the
parties shall receive Producer credit wherever the other
receives Producer credit. The Writers shall receive a credit
on tile Film in the form of "Writer Xxxxxxx Xxxxxxxxx", (or
such other credit as the parties may agree upon) "Based On An
Original Story By Xxxxxxxxx Xxxxxxx". If another writer is
credited, it is understood and agreed that such credit shall
be at the discretion of the Purchaser and the Owner and shall
in all cases be subject to standard industry or regulatory
exclusions as well as to the consent of distributors and
financiers.
5. Representations and Warranties
------------------------------
The Owner represents and warrants as follows:
(a) The Owner has the right and power to enter into this
agreement and to grant to the Purchaser the Rights set
forth herein and all such rights are not encumbered in
any way.
(b) The Owner has the full power to assign the Rights to the
Purchaser.
(c) The Owner has not licensed, transferred assigned
hypothecated or encumbered the Rights.
(d) The Owner is the owner of any and all right, title and
interest including, without limitation, any copyright in the
Property, and of all of the Rights being granted herein.
(e) The Property is an original work of authorship and does
not violate or infringe upon the rights of any third party
under the laws of copyright, trademark, privacy, publicity,
defamation or otherwise.
(f) The Property has not previously been exploited in any
medium and is not and will not be subject to any claims, liens
or encumbrances, save and except the repayment of the
development costs set forth at subparagraph 10 hereof.
(g) The Owner is, a corporation duly constituted to conduct
business in the Province of Ontario, Canada.
6. Bankruptcy
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In the event the Purchaser or its successor or assignee
who at the time is owner of the Option has been adjudicated
bankrupt prior to the exercise of the Option, any and all
rights granted to the Purchaser that have not been exercised
by the Purchaser at that time, including any of the Rights
contemplated by this option which remain unexercised, will,
subject to the requirements of United States Bankruptcy Law,
revert back to the Owner without any reimbursement of the
Purchase Price, Pre-Existing Development Expenses, or other
amounts received by the Owner and without any other
formalities necessary thereto. For greater certainty, if the
Purchaser has exercised the Option paid the Purchase Price and
the Pre-Existing Development Expenses, but has not produced
any prequel, sequel or remake thereof, then it is only the
rights to the prequel, sequel and remake that would revert
back to the Owner. If the Purchaser (or such successor or
assignee) has exercised the Option, paid the Purchase Price
and the Pre-Existing Development Expenses but has been
adjudicated bankrupt prior to start of Principal Photography,
then the rights to the Property (including the right to
develop and
4 Int. (sig.)
produce the Picture), would also revert back to the Owner,
subject to the requirements of United States Bankruptcy Law
and to any then existing liens.
7. Assignment
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The Purchaser may freely assign this Agreement or any of
its rights and obligations hereunder to any wholly owned
subsidiary or affiliate, or arms length entity formed by the
Purchaser for the purpose of producing the Film, provided
however that such assignee assumes all the Purchaser's
obligations hereunder and under any agreements constituting the
chain of title. Any Assignment by the Purchaser of this
Agreement including all the Purchaser's obligations hereunder,
to all unrelated third party shall require the prior approval
of the Owner, Owner's approval shall not be unreasonably
withheld. Such unrelated party shall assume in writing, all
obligations set forth hereunder. The Owner may assign this
Agreement, to a wholly owned subsidiary or affiliate without
the prior consent of the Purchaser provided however that such
assignee assumes all the Purchaser's obligations under the
Writer's Agreement dated September 6, 1988 with Xxxxxxx
Xxxxxxxxx. For greater certainty, provided that the Purchaser
has exercised the Option, the Purchaser shall be wholly
responsible for the performance of Owner's obligations under
the Writers Agreement dated September 6, 1988 with Xxxxxxx
Xxxxxxxxx.
8. Approval
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The Purchaser shall reasonably seek the approval of the
Owner during the period prior to the exercise of the Option,
during production, post production and distribution, on all
business, financial and creative aspects of the development,
production and exploitation of the Property and the Film
production(s) including sales and/or distribution of the Film.
In the event of a dispute between the parties on matters
pertaining to the financing of the Film the decision of
Purchaser's representative Xxxx Xxxx shall be final. In the
event of a dispute between the Owner and the Purchaser in
respect of all other matters relating to the Film other than
regarding the financing, the decision of the financier(s) as
represented by the Purchaser's representative Xxxx Xxxx shall
control.
9. Producer's Fees
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It is anticipated, but not guaranteed, that the Budget
shall include Producer's Fees to the Owner and the Purchaser
represented by Xxxx Xxxx of Two Hundred and Fifty, Thousand US
Dollars ($250,000.00 USD) each. If either party is obliged or
desire to share or otherwise pay Producer's Fees or similar
amounts to third parties, it shall be deducted from or paid
out of the Producer's Fees payable to such person and not off
the top. Any reduction of the budgeted Producer's Fees payable
to Owner and Purchaser represented by Xxxx Xxxx shall be
subject to mutual approval, it being agreed that the
Producer's Fees payable to the Owner shall be equal to that
payable to the Purchaser. The Purchaser and the Owner shall
share equally all producer fees and the Producer's share of
net profits of the Film. The Owner shall be paid all fees pro
rata and pari passu with the Purchaser simultaneously, as
provided for in the Budget. There is no floor as to the
percentage of net profits paid to Owner or Purchaser.
Producer's share of net profits of the Film shall be
accounted for and paid to the Owner semi-annually for the
first five (5) years following completion of the Film and
annually thereafter. The Purchaser shall provide the Owner, on
timely basis, with excerpts from the financing and
distribution agreements entered into by the Purchaser in
connection with the Film and specify the amount and timing of
the payments to be made to the Owner there under. In addition
the Owner shall have the right to examine the Purchaser's
books and record annually on reasonable prior notice and
during normal business hours in order to verify accounting and
payments to the Owner. However any accounting or payment not
questioned by the Owner within eighteen (18) months after
having been
5 Int. (sig.)
rendered or made shall be deemed binding upon the Owner unless
the Owner commences a court proceeding with respect to the same
within six (6) months of the Purchaser denying the validity of
such query in whole or in part.
10. Pre-existing Development Funding Expenses
-----------------------------------------
The budget shall be determined by the Purchaser. Such
budget shall include reimbursement to Owner for the
development of the Film (to the extent supported by
appropriate documentation) and for the assumption of
liabilities specified in Schedule "B" hereto, to parties who
previously provided development funding (the "Development
Financiers"). The Owner has previously entered into agreements
with the Secretary of State for Trade and Industry (England)
("British Screen Ventures"), the Canadian Broadcasting
Corporation, Home Box Office Inc., Telefilm-Canada, Channel 4
Television Ltd. and the Owner is obligated to repay said
Development Financiers. The owner has represented that the
Development Financiers have, to date, advanced not more than
$300,000 USD (at the current exchange rates of the respective
currencies of the Development financiers as at the date of
execution of this Agreement). The Owner has provided to the
Purchaser, all of the contracts with such Development
Financiers. The payments due to the Owner and the Development
Financiers are set forth in Schedule "B" hereto. The
Purchaser, its assignees or designated affiliates shall pay
the amounts due to the Development Financiers (including the
Owner) in the respective currencies of each of the Development
Financiers, after exercise of the Option but not later than
the first day of Principal Photography of the Film and the
Purchaser shall indemnify the Owner against any obligations to
such Development Financiers, in the amounts stated in Schedule
"B".
Upon exercise of the Option and payment of the Purchase
Price, the Owner will assign its rights in the underlying
story and in the existing screenplays to the Purchaser or its
assignees or its designated affiliates, and the Purchaser or
such assignees (whose obligations will be guaranteed by the
Purchaser) will assume the obligations of the Owner under
Owner's employment agreement with Xxxxxxx Xxxxxxxxx. The Owner
will execute, acknowledge and deliver an Assignment and
Purchase Agreement to the Purchaser. Purchaser shall reimburse
Owner for or make payment of all development expenses and
costs specified in Schedule "B" upon start of principal
photography.
11. Notices
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All notices and payments hereunder shall be given to the
parties at their respective addresses first set forth above or
at such other address as to which a party may give notice
hereunder. All notices shall be sufficiently given when the
same shall be deposited so addressed, postage prepaid, in the
facilities of any overnight delivery service or delivered by
personal delivery.
12. Further Documents
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The Owner agrees to execute or cause to be executed at
the Purchaser's request any and all additional documents or
instruments necessary to effectuate the purposes of this
agreement, including, without limitation a Short Form
Assignment substantially in the form attached hereto as
Schedule "A".
13. General
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This agreement shall be interpreted under the laws of the
State of California, United States of America and of the
federal laws of the United States applicable therein. The
parties consent to the jurisdiction of the state and federal
courts having jurisdiction in the State of California over any
action or proceeding arising out of or relating to this
agreement. No waiver of any term hereof shall be deemed to be
continuing or be deemed to waive any other term hereof. Each
party's rights and remedies herein shall be cumulative and the
exercise of any remedy or right shall not limit any other
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Remedy or right hereunder, at law or in equity. This agreement
may not be modified, nor any provision waived except by a
writing signed by both of the parties. This agreement,
including Schedule "A" and Schedule "B" constitutes the entire
understanding of the parties concerning the subject matter
hereof; all prior negotiations and understandings are merged
herein. Paragraph headings are for convenience and shall not
be given any legal effect. Any schedule to this agreement
shall form an integral part thereof. If any provision hereof
is deemed to be illegal or unenforceable, then the remainder
of the provisions shall be deemed to continue in full force
and effect, and the illegal or unenforceable provision shall
be deemed modified in such a way that its intent is
nevertheless complied to the fullest extent legally possible.
14. Remedies
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Upon the exercise of the Option under Section 2 above,
the rights granted to Purchaser hereunder are irrevocable and
shall not be subject to reversion. Owner hereby agrees that in
the event of breach of this agreement by Purchaser, Owner's
remedies shall be limited to an action for damages and in no
event shall Owner be entitled to seek rescission, reversion, to
injunctive or other equitable relief.
IN WITNESS WHEREOF, the parties here have caused this Agreement
to be executed as of the day and year first above written.
Allied Capital Corporation Film and Music
Entertainment Inc.
By: /s/Xxxxxxxxx Xxxxxxx By: /s/ Xxxx Xxxx
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(Sig.) (Sig.)
Its: President Its: Chairman
--------------------- ----------------------
The undersigned each acknowledges that all rights the undersigned, or
either of them, may have or may have had in and to the Property have
been transferred or assigned by the undersigned, directly or by mesne
assignment(s), or by Articles of to Allied Capital Corporation and
further acknowledges and agree individually that any right of
reversion or rescission that either of the undersigned may have had or
has in regard to the Property or any part thereof is void and of no
effect.
Xxxxxxxxx Xxxxxxx Productions Inc.
BY: Xxxxxxxxx Xxxxxxx (Sig.) Xxxxxxxxx Xxxxxxx (Sig.)
------------------------ ------------------------
Xxxxxxxxx Xxxxxxx
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EXHIBIT "A"
ASSIGNMENT - OPTION AGREEMENT
KNOW ALL PERSONS BY THESE PRESENTS: That in consideration of
the payment of One Dollar ($1.00) and other good and valuable
consideration, receipt whereof is hereby acknowledged, the
undersigned, Allied Capital Corporation (hereinafter referred to as
the "Owner") hereby sell, grant, assign and set over unto Film and
Music Entertainment Inc. (hereinafter referred to as the "Purchaser")
and its representatives, successors and assigns forever, the
irrevocable option to purchase from the undersigned all motion
picture, television and allied rights throughout the world in
perpetuity in and to that certain original literary work described as
follows:
Title: "Libertad" aka "Heroes of the Third World" (Sreenplay)
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Author: Xxxxxxx Xxxxxxxxx
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The undersigned and Purchaser have entered into or intend to
enter into a formal option agreement, relating to the transfer
and assignment of the foregoing rights in and to said literary
work, which rights and expiration dates are or will be more
fully described in said option agreement dated as of December
20, 2004 and this Assignment is expressly made subject to all
of the terms, conditions and provisions contained or to be
contained in said option agreement.
IN WITNESS WHEREOF, the undersigned has executed this
Assignment this 14th day of 01, 2005
Int. (sig.)
Allied Capital Corporation
By: Xxxxxxxxx Xxxxxxx (Sig.)
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Its: President
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SCHEDULE "B"
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Pre-existing Development Funding Expenses
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British Screen Ventures 26,400 pounds*
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Channel Four 2,047 pounds
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Telefilm Canada 99,358 CDN$
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Canadian Broadcasting Corporation 37,500 CDN$
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Allied Capital Corporation 115,000 CDN$
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HBO 2,047 US$
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* Plus accrued interest and 20% premium
9
