Exhibit 10.11
PRODUCTION AGREEMENT
AGREEMENT made this day of March 2002 by and between the Principal, Raven Moon
Home Video Products, LLC., with principal offices at ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (hereinafter the "Raven Moon") and the Agent, MG
Studios, Inc. a Florida Corporation with principal offices at (hereinafter "MG
Studios"), collectively "Parties."
WHEREAS, Raven Moon represents it is a Florida corporation in the business of
entertainment production and distribution that requires production facilities
and production work for hire.
WHEREAS, MG Studios represents it is a Florida corporation that maintains
production facilities to video tape, edit and create computer graphics and
animation of the type necessary to meet Raven Moon's requirements.
WHERAS, MG Studios represents it is knowledgeable and experienced in the area of
television, animation and film production, and is willing and capable of
providing and performing same to and for Raven Moon.
NOW THEREFORE, by reason of these premises and in consideration of the mutual
covenants hereinafter set forth, the parties hereto agree as follows:
1. WORK FOR HIRE: All Properties created, produced or made in any form by MG
Studios its agents or assigns under this Agreement are "Works Made For
Hire" as that term is understood under the law of Agency, Copyright and
Trademark and all other applicable law. As such, Raven Moon is the
"Principal" and MG Studios is the "Agent" under this Agreement.
2. SCOPE OF AGREEMENT: This agreement is for the production of 12 videos of
the ▇▇▇▇ D's Kids Club Show (hereinafter "Properties" (or "Show" when
referred to herein individually)).
3. INCORPORATION: The parties hereby incorporate the March 18, 2002 "Budget
for 12 Additional Shows" (hereinafter "Exhibit A" attached to this
Agreement) in its entirety.
4. SCOPE OF FACILITIES/WORK/SERVICES: MG Studios agrees to provide the
all-inclusive Pre-Production, Production and Post Production facilities,
work and services as set forth in "Exhibit A." MG Studios may render the
same or similar services for others as well as to engage in other business
activities in the entertainment industry.
5. TIME:
a. REVIEW AND APPROVAL OF WORK IN PROGRESS: Raven Moon and MG Studios
agree to cooperate to establish a timely approval schedule for all
work in progress including "milestones" during or prior to
Pre-Production of each show and to effectuate such schedule upon
commencement or during Pre-Production of each Show. "Milestones" are
defined as those steps in Pre-Production, Production and Post
Production which are considered standard in the video production
industry including, but not limited to, script drafts and re-writes,
storyboarding (if any), principal photography, various stages of
animation, rough cut, final, etc.).
b. COMPLETION AND DELIVERY: MG Studios agrees to complete production of
the Properties within 36 months of the signing date of this Agreement,
or sooner as provided for in Paragraph 8 "Compensation" of this
Agreement. Under this scenario, MG Studios will use it's best efforts
to Complete and Deliver a final BetaSP master of one of the 12 shows
per every three months in a timely manner, provided that Raven Moon
does not default according to the payment schedule mentioned in
paragraph 8 of this agreement (The final Beta SP master of the first
Show is due from MG Studios to Raven Moon no later than or within 90
(Ninety) days after $210,000 for Pre-Production is received by MG
Studios on October 17th, 2002 or sooner). Completion and Delivery of
the Properties is defined as two dates. The Completion Date is the
1
date upon which Raven Moon approves the final edited version of a
Show, such approval not to be unreasonably withheld. The Delivery Date
is the date of delivery by MG Studios of a final approved master of
each of the Properties to Raven Moon on Beta SP format. The parties
may agree on a digital format at a later time should such aid the
duplication and distribution processes (each of which are outside of
this Agreement).
c. ACCELERATION OF COMPLETION AND DELIVERY DATES: The Parties agree to
accelerate the Completion and Delivery dates of the Properties upon
acceleration of payments by Raven Moon to MG Studios. Such
acceleration will "pull back" the completion and delivery dates of
each individual Show. In no event will the Completion and Delivery
date of the 12th and final Show be required sooner than December 31,
2002 even in the event the total due under paragraph 8b (plus any
amounts due under the Note) is paid by Raven Moon to MG Studios.
6. REVIEW: Raven Moon shall have the exclusive right to review and oversee all
work at any time on any Show and/or the Properties while such are in
progress and any and/all completed portions of any Show and/or Properties.
Raven Moon agrees to do all Reviews under this Paragraph in a timely manner
so as not to incur additional costs and overages. As such, Raven Moon and
MG Studios agree to schedule "milestone" reviews as established in
paragraph 5a above.
7. AUTHORIZATION OF OVERAGES (CHARGES ABOVE THOSE CONTEMPLATED IN EXHIBIT A):
MG Studios agrees not to incur any additional costs and overages above
those enumerated in Exhibit A without first advising Raven Moon in writing
of any additional costs or overages or additional charges and the costs of
such overages. Raven Moon retains the exclusive right to approve any and
all overages which may arise, whether at Raven Moon's behest or otherwise,
in writing prior to such overages accruing. Only Raven Moon may waive the
writing requirement of this Paragraph (Paragraph 7).
8. COMPENSATION:
a. Raven Moon agrees to pay MG Studios the amount of $10,000.00 (Ten
Thousand Dollars) beginning June 1, 2002.
b. Raven Moon will make payments to MG Studios on a regular basis (weekly
or monthly) which payments will total the amount of $135,700.00 (One
Hundred and Thirty-Five Thousand Dollars and Zero cents) (not
including any revolving debt owed to MG Studios outlined in paragraph
8d below) per episode, totaling $1,628,400.00 (One Million, Six
Hundred and Twenty-Eight Thousand, Four Hundred Dollars and Zero
cents) for all twelve (12) episodes during the term of this agreement.
c. Under no circumstances will Raven Moon be required to pay more than
$10,000.00 (Ten Thousand Dollars and Zero cents) per week except upon
its own accord. However, money which is otherwise due to MG Studios
resulting from changes approved by Raven Moon, or other monies
otherwise due, will be added to a revolving Note as described in
paragraph 8d below.
d. Monies accrued and due to MG Studios, additional costs and overages to
the budget approved by Raven Moon, and changes to the scope of
production approved by Raven Moon shall be added to a revolving Note,
which will be guaranteed by Raven Moon and that will bear an APR of 8%
(Eight percent).
e. Raven Moon may pay down debt owed on the revolving Note at any time
without penalty. Such payments will be applied to unpaid interest
first.
f. Should a Completion and Delivery deadline be missed by MG Studios as
outlined in paragraph 5b above, which missed deadline was not a result
of any approved action by Raven Moon, MG Studios will be responsible
2
for damages, unless such missed deadline is due to an act beyond MG
Studios' control or an act of God. In addition MG Studios will toll
(suspend) interest due on the Note for the entire period of the delay
between the original Delivery deadline date and the actual date of the
Delivery of the final Beta SP master to Raven Moon.
9. OUTSOURCING/SUBCONTRACTING: Notwithstanding provision under Paragraphs 6
and 7 above, in the event that both parties determine that it must, or
actually does outsource or subcontract work or services included in Exhibit
A, any overages or additional costs shall be allocated to the party which
caused them to be incurred.
10. INTELLECTUAL PROPERTY:
a. Raven Moon, among other things, is the creator, producer and owner of
the Properties brought into and/or created under this Agreement. Raven
Moon is the sole owner of any and all copyrights and trademarks in all
form or manner and retains such rights to all works made for hire by
MG Studios its agents, subagents or assigns under this Agreement.
b. Nothing under this Agreement shall be deemed to create ownership of
any intellectual property rights by MG Studios, its agents, sub-agents
or assigns in the Properties or any material used in the creation and
production of the Properties.
c. Nothing under this Agreement shall create a property ownership by
Raven Moon of any business process owned prior to this Agreement or
used by MG Studios during the scope of the work for hire relationship
here. , unless such business process is created at the written behest
of Raven Moon to MG Studios, in which case such business process would
also be a work for hire as referenced in Paragraphs 11a and 11b above.
d. Virtual set. Raven Moon claims all property rights to the virtual set
which Raven Moon financed and previously created and produced for uses
relating to ▇▇▇▇ D's Kids Club. The virtual set of ▇▇▇▇ D's Kids Club
will be used to create new works, derivative works and compilations
under this Agreement and shall remain the property of Raven Moon .
11. OTHER PROPERTY OWNERSHIP:
a. Until such time as Raven Moon has met its financial
obligation under Paragraph 8 above, MG Studios shall own the
right to physical possession of any tapes, discs or other
storage medium now known or known in the future containing
any Show and/or Properties.
b. In no event does this "physical ownership" extend to any
intellectual property right or any other property rights to
the content of the tapes, discs or other storage medium now
known or known in the future of any Show and/or Properties.
c. Physical ownership transfers to Raven Moon at the time that
Raven Moon has met its financial obligation under Paragraph
8 above.
d. Under no circumstances will MG Studios have a physical
possession property interest in any particular Show or
Properties for which Raven Moon has made payment in full.
12. MITIGATION OF DAMAGES: MG Studios agrees not to hold any tapes, discs or
other storage medium from Raven Moon under Paragraph 11 above for any
period of time during which the sale and distribution of such tapes, discs
or other storage medium by Raven Moon may enable Raven Moon to meet its
obligations to MG Studios. MG Studios agrees to release any final Beta SP
masters (or on any agreed form) to Raven Moon upon written request for a
3
reasonable period of time to enable Raven Moon to duplicate said masters.
MG Studios shall receive an accounting and a minimum of 30% gross sales of
duplicates made and of sales of such up until such time as Raven Moon has
met its financial obligation under Paragraph 8 above.
13. SATISFACTION OF LIENS: MG Studios agrees to provide Raven Moon all final
Properties free and clear of any and all liens, encumbrances or other
claims and MG Studios agrees to indemnify Raven Moon for all payments,
costs and fees associated with satisfaction of any and all liens,
encumbrances or other claims brought in connection with the Properties
unless said liens, encumbrances or other claims were incurred by or on
behalf of Raven Moon.
14. STUDIO REEL: Upon request by MG Studios, Raven Moon agrees to permit
limited use by MG Studios of any Properties created under this Agreement on
its "Reel" and/or in written or pictorial form. Such use by MG Studios
shall be limited to advertising and/or promotion of MG Studio's facility,
personnel and/or services. In any event, no use of the Properties will be
permitted until such time as MG Studios requests use in writing and Raven
Moon approves the use in writing.
15. CONFIDENTIALITY: Both Raven Moon and MG Studios agree that it will not at
any time, or in any fashion or manner divulge, disclose or otherwise
communicate to any person or corporation, in any manner whatsoever, any
proprietary information of any kind, nature, or description concerning any
matters affecting or relating to the business of each others company. This
includes its method of operation, or its plans, its processes, or other
data of any kind or nature that they know, or should have known, is
confidential and not already information that resides in the public domain.
Both Raven Moon and the MG Studios expressly agree that confidentiality of
these proprietary matters is extremely important and gravely affect the
successful conduct of business of each company and its goodwill, and that
any breach of the terms of this section is a material breach of this
Agreement.
16. TERMINATION: This Agreement may be terminated by the mutual agreement of
the parties at any time. Regardless of the reason of termination of this
Agreement, Raven Moon agrees to pay MG Studios all monies owed or incurred
up to the date of termination and MG Studio agrees to release all material
used in the creation of the Properties (tapes, props, costumes, production
art, animation discs, etc.) and all physical masters and copies of the
Properties to Raven Moon upon payment of all monies owed or incurred up to
the date of termination. Should Raven Moon fail to make timely payments
under this contract, such default shall be material and MG Studios shall
have the right to notify Raven Moon in writing of their default and shall
provide Raven Moon ninety (90) days in which to cure. Should Raven Moon not
cure their default within the thirty (90) day period, MG Studios shall have
the right to terminate this agreement.
16.01 TERMINATION:
a. Raven Moon or MG Studios have the right to terminate this Agreement at
any time with 30 days written notice for cause on the basis of the
other's incompetence, ineffectiveness, misconduct, inattention to
business, or noncompliance with the provisions of this Agreement.
b. Raven Moon shall have the right to terminate any episodes that MG
Studios has not video taped at the time of Raven Moon giving written
notice of such termination or cancellation of future episodes. Any
episodes that are currently in production shall be completed under the
terms of this Agreement and Raven Moon shall pay MG Studios any monies
owed or incurred in completion of these episodes currently in
production.
c. Regardless of the reason of termination of this Agreement, the parties
agree to continue to observe the terms and conditions of Section 15 of
this Agreement.
d. Raven Moon shall have the exclusive right to terminate this Agreement
without cause on or before May 30, 2002 to enable it to obtain
approval of this agreement from the Board of Directors by giving
written notice to MG Studios, provided that it addresses and complies
with paragraph 4 of the Letter of Intent between both parties dated on
March 15th, 2002.
4
17. In agreement with Raven Moon, MG Studios will accordingly carry the
necessary insurance liabilities for the production facility when in
production of the ▇▇▇▇ D's Kids Club shows.
18. ENTIRE AGREEMENT: This written Agreement, including Exhibit A (which has
been incorporated by reference herein), contains the sole and entire
agreement between the parties. This Agreement supercedes any and all other
agreements written or verbal by and between the parties and any individuals
who are employees or consultants of either Raven Moon or MG Studios. The
parties acknowledge and agree that neither has made any representation with
respect to the subject matter of this Agreement except as expressly stated
in the terms of this Agreement. The parties further acknowledge that any
previous statements or representations made by either party to the other
are now null and void and of no effect.
19. JURISDICTION: This Agreement shall be deemed executed in the State of
Florida and shall be construed under the laws of the State of Florida.
20. ARBITRATION: Unless specifically excluded above or by law, the parties
agree to submit any controversy or claim arising out of, or relating to any
provision(s) of this Agreement, or breach thereof, to binding Commercial
Arbitration rules of the American Arbitration Association, so long as such
arbitration allows both parties full rights of discovery. Judgment upon the
award rendered by the Arbitrator(s) shall be final and binding on the
parties and may be entered by either party in any court or forum, state or
federal, having jurisdiction. Arbitrator(s) shall award reasonable attorney
fees and arbitration costs to the prevailing party.
IN WITNESS WHEROF, the parties hereto have executed this Agreement as of the day
and year first written above.
Raven Moon Home Video Products, LLC. MG Studios, Inc.
By: /s/ By: /s/
----------------------------- -------------------------------
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇,
President President