**Exhibit 10.28**

 

DISTRIBUTION AGREEMENT

 

AGREEMENTmade as of April 1, 2005 by and among Public Media Works, Inc. andCarpool Guy Partners LLC (collectively, “Licensor”), on the one part, and LAIdeas Inc. (“LA Ideas”), on the other.

 

WHEREAS,Licensor has the sole and unrestricted right, power and authority to grant therights herein granted and agreed to be granted in and to the “Picture” ashereunder described and defined, and

 

WHEREAS,LA Ideas desires to acquire from Licensor the rights herein granted and agreedto be granted in and to the Picture.

 

NOW,THEREFORE, in consideration of the representations and warranties hereinafterset forth and of the mutual covenants of the parties hereto, it is agreed asfollows:

 

1.             PICTURE.  The subject of this Agreement is the motion picturecurrently entitled “Carpool Guy” produced by Licensor and directed by CorbinBernsen (“Picture”).

 

2.             TERRITORY.  The “Territory” for which the rights grantedto LA Ideas in this Agreement shall consist of the Universe.

 

3.             TERM. The rights granted to LA Ideas in thisAgreement are granted in perpetuity commencing on the date hereof (“Term”).

 

4.             GRANTOF RIGHTS.  The sole and exclusive “VideogramRights” to the Picture during the Term in the Territory and the sole andexclusive right to exploit the Picture by means of “Video On Demand”, “Pay PerView”, and “Internet Transmission” during the Term in the Territory.

 

4.1           “VideogramRights” shall mean the right to manufacture, advertise, promote and distributeon a sale or rental basis, DVDs, video compact discs, laser discs, videotapesor any other analog or digital recording devices containing visual images nowknown or hereafter discovered for use by consumers.

 

4.2           “Video On Demand”shall mean the transmission of a selected video program from a video libraryvia a system where reception of said video program at any viewing time selectedby the viewer is available only upon payment of a charge therefor, which chargeis in addition to any charge for reception of the television service and/orprogramming channel.

 

4.3           “Pay Per View”shall mean the transmission of aselected video program via a television system where reception of said videoprogram at a viewing time selected by the viewer from a limited number ofviewing times is available only upon payment of a charge therefor, which chargeis in addition to any charge for reception of the television service and/orprogramming channel.

 

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4.4           “Internet Transmission” shall mean thetransmission of a selected video program to a consumer via the Internet (throughdigital downloading or otherwise), where such transmission is available onlyupon payment of a charge therefor, which charge is in addition to any chargefor Internet services

 

4.5           Without inany way limiting the generality of the grant of rights set forth in this Section ofthe Agreement, LA Ideas is granted and shall be vested with the followingrights for the purpose of distribution of the Picture as set forth hereunder:

 

4.5.1        Useof Title.  To use the title of the Pictureand to change the title of the Picture if necessary or desirable in order tomake the Picture suitable for exhibition in any and all parts of the Territory.

 

4.5.2        Additionof LA Ideas Name, Trademark and Logo. To use the name, trademark and logo of LA Ideas or any of itssubsidiaries, affiliates or its parent in the credits of the Picture and in alladvertising and publicity relating thereto, in such a manner, position, formand substance as LA Ideas may reasonably elect to identify LA Ideas as thedistributor of the Picture.

 

4.5.3        Changes.  To make such changes, additions, alterations,cuts, interpolations and elimination as LA Ideas may deem necessary ordesirable in order to adapt and make the Picture suitable for exhibition in anyand all parts of the Territory, provided, however, that no material changeshall be made in any of the credits or the copyright notice appearing inpositive prints or videotapes of the Picture as delivered by Licensor to LAIdeas.

 

4.5.4        Publicityand Advertising.  To publicize,advertise and exploit the Picture throughout the Territory during the Term andto cause or permit others so to do including, without limitation, the right inconnection with, and solely for the purpose of advertising, publicizing andexploiting, the Picture to (i) publish and to license and authorize othersto publish in such forms as LA Ideas may deem advisable, synopses, summaries,resumes and stories of any excerpts from the Picture and from any literary ordramatic material included in the Picture or upon which the Picture is based,and in newspapers, magazines, trade periodicals and in all other medial ofadvertising and publicity whatsoever; (ii) broadcast by radio andtelevision, and to license and authorize others to so broadcast in theTerritory, parts of the Picture, and any literary or dramatic material includedin the Picture or upon which the Picture is based, and to use in conjunctiontherewith any other literary, dramatic or musical material; and (iii) use,license and authorize others to use the name, physical likeness of any actor,writer, director or executive producer rendering services in connection withthe Picture, provided, however, LA Ideas shall abide by

 

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anyreasonable restrictions on the use of the name, physical likeness and voice ofany actor, writer, director or executive producer rendering services inconnection with the Picture set forth in any agreement between Licensor andsuch person of which Licensor notifies LA Ideas in writing in advance.

 

4.5.5        PromotionalAnnouncements.  To cause promotionalannouncements of the Picture to be made (should LA Ideas desire to do so) andprints thereof to be manufactured, exhibited and distributed by every means,method and device now or hereafter known.

 

4.5.6        Copies.  To manufacture and/or procure an unlimitednumber of copies of the Picture.

 

4.5.7        Claims.  To assert, prosecute, handle and settle inany and all parts of the Territory all claims or actions or causes of actionagainst any and all persons for the unauthorized or illegal use, copyingreproduction, release, distribution, exhibition or performance of the Pictureor any part of versions thereof, or of the literary, dramatic or musicalmaterial upon which the Picture is based or which are used therein, or any partor version thereof, in any media which is part of the rights granted hereunder orfor the enforcement or protection of all or any rights herein granted orpurported to be granted to LA Ideas, together with full and complete authorityand power of attorney in the name of Licensor or otherwise to do all or any ofthe foregoing, and to execute, acknowledge, verify and deliver any allconsents, documents, releases or other papers or documents of any kindpertaining thereto or any thereof in the name of or on behalf of Licensor,which Licensor fails or refuses, after request and reasonable notice, toexecute, acknowledge, verify and/or deliver. LA Ideas may settle any claim pursuant to this Section whichinvolves the collection of money only or the payment of money only out of GrossProceeds collected or to be recouped out of Gross Proceeds hereunder withoutthe prior consent of Licensor.  IfLicensor, or any parent or affiliated company, is to pay any money or incur anyobligation in connection with such settlement, or if such settlement imposesany limitation on Licensor’s rights or interests in the Picture, LA Ideas shallnot agree to such settlement without the prior written consent of Licensor.

 

4.5.8        Sub-License.LA Ideas may grant further sub-license(s) in respect of the rights granted toit hereunder to any third parties.

 

5.             DELIVERY.

 

5.1           PhysicalElements.  Licensor shall deliver thePicture to LA Ideas, free and clear from any liens, encumbrances, or any claimswhatsoever.  In connection therewith, Licensorshall deliver to LA Ideas the physical elements as set forth in

 

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the “DeliveryRequirements” attached hereto as Exhibit A.  Such elements shall be delivered to KyleBorg, or such other person as may be designated by LA Ideas from time to time.

 

5.2           Documents.  Licensor also agrees to concurrently deliverto LA Ideas the following:

 

5.2.1        Chainof Title Documents.  Any and alldocuments necessary to prove or effectuate the chain of title.

 

5.2.2        Certificateof Insurance.  A certificate oferrors and omissions insurance, naming as an additional insured “LA Ideas Inc.”,its affiliated and subsidiary entities, and the successors, licensees, assigns,officers and directors of each of the foregoing at no cost to LA Ideas.  Such policy shall be endorsed to provide LAIdeas with not less than 30 days notice of cancellation or material change insuch policy.  Licensor agrees that it willkeep such insurance in effect throughout the term hereof and such policy shallbe issued by an insurance company acceptable to LA Ideas with not less thanlimits of $1,000,000 per claim and $3,000,000 in the aggregate and a deductibleof not more than $10,000 per claim.  If,after the initial three year term of such errors and omissions insurancepolicy, the prevailing industry standard deductible is higher than $10,000,then the deductible on any renewal policy for the remainder of the term shallbe such prevailing industry standard rate.

 

5.2.3        Scripts.  A copy of the final shooting script; alegible typewritten copy in the English language of a detailed continuityscript containing final dialogue (word for word), narration, song vocals, aswell as a cut by cut description of the action, conforming exactly to thephotographic action and soundtrack; one copy of the editor’s code book, if any;and one copy of the lined script.

 

5.2.4        MusicCue Sheets.  A copy of a music cuesheet showing the particulars of all music, the title of each composition,names of composers, publishers, and copyright owner(s) and/or synchronizationand performance rights owner(s); the usages (whether instrumental,instrumental-visual, vocal, vocal-visual or otherwise), the place and number ofsuch uses, running time for each cue, the performing rights society involved,and any other information customarily set forth in music cue sheets.

 

5.2.5        PublicityMaterials.  Publicity materials,including at least reproduction quality color and black and white photographsof the principal actors and key scenes from the Picture**.**

 

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5.2.6        PromotionalMaterials.  Where available, a blackand white production stat (being a high contrast black and white print) of thelogo of the title of the Picture; where available, a color 5” by 4”transparency of the title logo.

 

5.2.7        DubbingRestrictions.  A statement of anyrestrictions as to the dubbing of the voice of any player, if any.

 

5.2.8        CuttingRestrictions.  A statement of anyrestrictions as to the cutting or editing of the Picture, if any.

 

5.2.9        Titles.  A typewritten list of the main titles and endtitles.

 

5.2.10      Biographies.  A biography of each of the principal membersof the cast.

 

5.2.11      Synopsis.  A brief synopsis in English (one typewritten page inlength) of the content.

 

5.2.12      Credits.  The statement(s) of credits to accord crediton the screen, in advertising and on recordings, and excerpts as to anyrestrictions as to use of name and likeness.

 

5.2.13      Cast.  One (1) copy of a list indicating thename of the character portrayed by each player and a complete description ofthe character.

 

5.3           Inspection.   All of the elements required in paragraphs5.1 and 5.2 above are sometimes collectively referred to herein as the “DeliveryMaterials”.  To the extent that deliveryis incomplete or fails to meet the requirements specified herein, LA Ideasshall so notify Licensor, and Licensor shall immediately thereafter correct allsuch deficiencies. If Licensor fails to meet such requirements then withoutwaiving any of LA Ideas’ other rights and remedies, LA Ideas shall have theright, but not the obligation, to cure the defect.  The cost of any element of delivery suppliedby LA Ideas which is omitted by Licensor, or does not meet the creative andtechnical specifications herein, may be recouped by LA Ideas from anydisbursements to or for the account of Licensor hereunder.

 

6.             PARTICIPATION.

 

6.1           Subject tothe full and faithful performance of this Agreement by Licensor and providedLicensor is not in material default of this Agreement, in consideration of therights, license and privileges herein granted, LA Ideas agrees to pay Licensorits share of “Gross Proceeds” (defined below) as set forth in this Section.

 

6.2           GrossProceeds shall be applied in the following manner and in the order set forth:

 

6.2.1        LAIdeas shall deduct and retain a “Distribution Fee” as follows:

 

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6.2.1.1     Forthe United States:  Twenty Percent (20%) ofGross Proceeds; and

 

6.2.1.2     Forthe rest of the Territory:  Thirty Percent(30%) of Gross Proceeds;

 

6.2.2        LAIdeas shall recoup its Distribution Costs and Expenses as defined in Section 7.4;and

 

6.2.3        100%of the remaining Gross Proceeds after Licensor deducts its Distribution Fee andrecoups its Distribution Costs and Expenses (“Remaining Gross Proceeds”) shallbe paid to Licensor; provided, however, that:

 

6.2.3.1     50% of the Remaining Gross Proceeds derivedsolely from sales of Videograms and/or Internet Transmissions made on or fromthe website carpoolguy.com or any other website affiliated with the Pictureshall be retained by LA Ideas (as the assignee of Shoolery Designs, Inc.) asset forth in that certain agreement between Shoolery Designs, Inc. andPublic Media Works, dated as of February 1, 2005 (“Shoolery Agreement”);and

 

6.2.3.2     A royalty of Fifty Cents ($.50) shall be retainedby LA Ideas (as the assignee of Shoolery Designs, Inc.) as set forth inthe Shoolery Agreement for each DVD and/or other home video unit of the Picturesold or distributed and not returned**d**uring the Termin the Territory except sales derived from the website carpoolguy.com or any otherwebsite affiliated with the Picture.

 

6.3           GrossProceeds shall be defined, calculated, accounted for and paid as set forth inSections 7 and 8 below.

 

7.             GROSSPROCEEDS, DISTRIBUTION COSTS AND EXPENSES.

 

7.1           GrossProceeds.  “Gross Proceeds” shallmean all monies actually collected by LA Ideas from the distribution of thePicture by means of Videograms, Video on Demand, Pay Per View and Internet Transmission(herein sometimes collectively called “distribution”).

 

7.2           Exclusionsfrom Gross Proceeds.

 

Thefollowing shall not be included in Gross Proceeds:

 

7.2.1        Refunds.  Any monies paid to LA Ideas and thereafterrefunded (and if any such monies have been included in computing any sums paidto

 

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Licensor,such payment shall be deemed an overpayment); it is understood money shall berefunded only in exercise of good faith business judgment.

 

7.2.2        Advancesand Security Deposits.  Any moniesreceived by LA Ideas in the nature of advances or security deposits until suchmonies are earned or become non-refundable.

 

7.2.3        Discountsand Allowances.  All discounts orallowances paid or granted to third parties in the ordinary course of businessin connection with the distribution of the Picture as permitted hereunder.

 

7.2.4        Taxes.  All sums paid or accrued on account of sales,use, value of the Picture, receipts, income remittance, and any other taxes,however denominated, to any governmental authority directly or indirectlyrelated to the Picture (but not including any corporate income or franchise taxon LA Ideas’ or any affiliates’ income), including any cost (fairly apportionedby LA Ideas to the Picture hereunder) of contesting the same and all sums paidor accrued on account of all duties, customs and imposts, costs of acquiringpermits and other similar authority to secure the entry and exercise of therights hereunder.

 

7.2.5        Claims.  Amounts paid, or reasonably reserved, for thepayment of any claims, actions or causes of action arising out of LA Ideas’distribution of the Picture.

 

7.3           DistributionCosts and Expenses.  LA Ideas shalladvance all Distribution Costs and Expenses and shall recoup the same inaccordance with Section 6.2.2.  “DistributionCosts and Expenses” shall mean the following:

 

7.3.1        Manufacture/Duplicationof Discs, Etc.  All costs incurred inconnection with the manufacture, duplication, delivery, insurance and storageof discs, tapes and/or other Videograms of the Picture;

 

7.3.2        PromotionalAnnouncements.  If LA Ideasdetermines that it is necessary or desirable to deliver to any of its licenseesin connection with its distribution of the Picture, promotional announcements,in whatever length or lengths, LA Ideas shall cause such promotionalannouncements to be prepared.  The costthereof shall be considered “Promotional Costs” (as defined below).

 

7.3.3        Advertising,Sales, Marketing and Publicity.  Advertising,sales, marketing and publicity costs (“Promotional Costs”), including withoutlimitation, all costs incurred by LA Ideas in connection with Section 4.5.5above, the cost of advertising in newspapers, trade papers, magazines, overradio or television, sales promotion books and the cost of press kits andsynopses, the cost of entertaining and travel, relating to the

 

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advertising,sales, marketing and publicity of the Picture, and the cost of any and alladvertising and promotional activities; provided, however, for any advertisingor promotional materials relating to more than one of LA Ideas property, thecosts thereof shall be fairly allocated and the allocated amount charged hereto.  Promotional Costs must be approved by Licensor prior toexpenditure.  Such approval shall bedeemed granted unless reasonable objection is received in writing within 3business days after receipt of LA Ideas’ notice of its desire to expend suchcosts.

 

7.3.4        Miscellaneous.  All other costs incurred by LA Ideas inconnection with the distribution of the Picture.

 

7.3.5        Costsof Collection.  Costs, including, butnot limited to, reasonable attorneys’, outside accountants, and collectionagency’s fees and costs incurred in any claim or proceeding brought by oragainst LA Ideas in collection of any Gross Proceeds in connection with thePicture or the Agreement.  The foregoingshall include the cost of securing royalty payments from the Copyright RoyaltyTribunal, AGICOA, and similar and successor organizations, such cost to be aportion of LA Ideas’ overall cost for securing such payments for all programsdistributed by LA Ideas, if any, prorated based upon the amount that therecovery for the Picture bears to the amount recovered for all payments sosecured.

 

7.4           Residuals.  It is expressly understood and agreed thatthe costs for rerun, reuse or residual payments arising out of the distributionof the Picture hereunder shall be paid and borne solely by Licensor, including,without limitation, pension, health and welfare paid to or in connection withactors, writers, directors and musicians who provided services or grantedrights in connection with the production of the Picture pursuant to certaincollective bargaining agreements entered into by Licensor, rerun or reusepayments required by any and all collective bargaining agreements to whichLicensor is a party or by which it may be bound, any and all additionalpayments (whether expressed in fixed amounts or in percentages, including, butnot limited to, television rerun, re-use payments and/or any other paymentsrequired to be made to or on behalf of persons or firms used in or furnishingrights in the Picture by reason of any collective bargaining agreement and/orindividual employment agreements) required to be made with respect to anypersons or firms who render services upon or furnish material or rights for thePicture, except as set forth in Paragraphs 7.2.3.1 and 7.2.3.2 above, togetherwith all taxes, fees, contributions and similar expenses attributable to suchpayments.

 

7.5           Music.  All Music synchronization license fees andmaster use license fees payable in connection with the exercise of distributionrights granted hereunder shall be paid and borne solely by Licensor.

 

7.6           GrossProceeds; No Guarantee.  LA Ideasmakes no warranty or representation about whether or not any Gross Proceedsshall be realized or the extent thereof,

 

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and LAIdeas shall have no liability to Licensor if any Gross Proceeds which arerealized fail to reach any particular level.

 

8.             ACCOUNTING.

 

8.1           AccountingPeriods.  Gross Proceeds hereundershall be computed by LA Ideas based upon the aggregate of Gross Proceedsderived from distribution of the Picture during accounting periods (herein “accountingperiods”) as specified below.  The firstaccounting period hereunder shall commence on the date the Picture is firstdistributed under this Agreement.  LAIdeas shall render accountings on a quarterly basis.  LA Ideas shall render an accounting statementto Licensor within thirty (30) days after the end of each accounting periodduring which any Gross Proceeds are received by LA Ideas hereunder orDistribution Expenses are incurred hereunder. LA Ideas shall have the right, in its sole discretion, to change thedate in which to render an accounting, but in no event shall any accountingperiod be longer than the time period agreed to above.  Each accounting statement shall be set forthin reasonable detail the Gross Proceeds received by LA Ideas during theaccounting period covered by such statement and the share thereof, if any, payableto Licensor.  Concurrently with thefurnishing of any such statement, LA Ideas shall pay Licensor and any otherparties as set forth herein its share of Gross Proceeds, if any, payable toLicensor pursuant to said accounting statement. If, during any accounting period or periods, LA Ideas incurs a net loss,such loss or losses shall be carried forward into one or more accountingperiods in which Gross Proceeds are realized and applied as a reduction of saidGross Proceeds.  LA Ideas may, during thependency of any claim brought against LA Ideas by any third party with respectto any breach of any warranty or agreement made by Licensor under theAgreement, withhold any sums payable to Licensor hereunder in an amount which,in LA Ideas’ reasonable business judgment, is sufficient to satisfy Licensor’sliability to LA Ideas in connection therewith. LA Ideas may also, in each accounting statement, provide for reserveswhich, in LA Ideas’ reasonable business judgment, are sufficient to cover anypotential returns and the potential liability of LA Ideas from claims broughtagainst LA Ideas by any third party with respect to the Picture.  LA Ideas shall liquidate reserves for returnswithin twelve (12) months.

 

8.2           Booksand Records.  During any periods inwhich Licensor is entitled to accountings hereunder, and for at least two (2) yearsthereafter, LA Ideas shall maintain books and records relative to GrossProceeds derived from distribution of the Picture by LA Ideas during thatPeriod.  LA Ideas shall retain any booksand records with respect to any item objected to until such objection isresolved.

 

8.3           Examinationof Books and Records.  If Licensor sorequests in writing, and affording LA Ideas at least ten (10) businessdays’ notice, LA Ideas will permit Licensor’s designated certified accountantto make an examination, at Licensor’s expense, of such of its books and recordsas may be necessary to verify the accuracy of any statement submitted toLicensor by LA Ideas hereunder, which

 

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examinationwith respect to each statement must take place during reasonable businesshours, at LA Ideas’ office, only once during the one (1) year periodsubsequent to the delivery of such earnings statement.  Said examination may relate only to the sumscontained on the last four (4) earnings statements, provided thatexamination shall not cover statements previously examined.  No examination shall continue longer thanthirty (30) days after commencement thereof. LA Ideas need not furnish Licensor with copies of any records inspected,but Licensor may copy said records or make extracts therefrom at its soleexpense.

 

8.4           Incontestability.  Each statement rendered hereunder shall bebinding upon Licensor and not subject to objection for any reason unless suchobjection is made in writing stating the basis thereof and delivered to LAIdeas within one (1) year from delivery of such statement or, if anexamination is commenced prior thereto, within ninety (90) days from thecompletion of such examination.  Unlessnotice is given to LA Ideas as provided in this Section 8.4, eachstatement and other account rendered by LA Ideas shall be final, conclusive andbinding upon Licensor and shall constitute an account stated.  The inclusion of any item from a priorstatement on subsequent statements shall not render such prior-appearing itemcontestable or recommence the running of the applicable one (1) yearperiod with respect thereto.

 

9.             WARRANTIESAND REPRESENTATIONS; INDEMNIFICATION.

 

9.1           Warrantiesand Representations.  In order toinduce LA Ideas to enter into this Agreement, Licensor warrants and representsto LA Ideas as follows:

 

9.1.1        Licensorhas the right, power and authority to enter into this Agreement and grant to LAIdeas all of the rights and licenses herein granted and agreed to be granted toLA Ideas; that the execution and delivery of this Agreement does not and willnot violate the Certificate of Incorporation of or By Laws of Licensor or anycourt or administrative ruling, contract, instrument or any other agreement, towhich Licensor is a party or by which it may be bound.

 

9.1.2        Licensoris the sole and absolute owner of and has the absolute right to grant to orvest in LA Ideas all of the rights, licenses and privileges granted to orvested in or to be granted to or vested in LA Ideas under this Agreement.

 

9.1.3        Allof the following have been or will be fully paid or discharged:

 

9.1.3.1     Allclaims and rights of owners of copyrights of literary, dramatic, musical rightsand other property or rights in or to all stories, plays, scripts, scenarios,themes, incidents, plots, characters, dialogue,

 

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music,words, and other material of any nature whatsoeverappearing, used, or recorded in the Picture;

 

9.1.3.1     Allclaims and rights with respect to the use, distribution, performance,exhibition and exploitation of the Picture, and any music contained therein,throughout the Territory;

 

9.1.3.2     Allcosts of producing and completing the Picture have been fully paid ordischarged, and there are not, and there will not be outstanding at any timeduring the term hereof, liens, claims, charges, encumbrances, restrictions,agreements, commitments, arrangements whatsoever with any person, firm orcorporation, or any obligation (past, present or future), or any defaultsunder, or breaches, of any contract, license or agreement which can, or will, inany way interfere with, impair, abrogate or adversely or otherwise affect anyof the rights granted to LA Ideas pursuant to the terms of this Agreement, andthat there are not and will not be any payments of any kind required to be madeby LA Ideas in respect, or as a result, of any use of the Picture pursuant tothe rights and license herein granted to LA Ideas, except as set forth in Paragraphs6.2.1.1 and 6.2.2.2.

 

9.1.4        Neitherthe Picture nor any part thereof, nor any materials contained therein orsynchronized therewith, nor the title thereof, nor the exercise of any right,license or privilege herein granted, violates or will violate, or infringes or willinfringe, any trademark, trade name, contract, agreement, copyright (whethercommon law or statutory) patent, literary, artistic, dramatic, personal,private, civil or property right or right of privacy or “moral rights ofauthors” or any other right whatsoever of, or slanders or libels, any person,firm, corporation, or association whatsoever.

 

9.1.5        Licensorowns or controls, without any limitations or restrictions whatsoever, allrights granted hereunder in and to the Picture and all the soundtracks thereof;and has obtained all necessary licenses required for the production,synchronization, exhibition, performance, distribution, marketing andexploitation of the Picture hereunder (including the dramatic and non-dramaticmusic performance rights to the music contained therein) throughout theTerritory and during the Term, for any and all purposes licensed hereunder andby every means, method and device now or hereafter known or required for thefull, complete and unlimited exercise and enjoyment by LA Ideas of each and allof the rights herein granted to it.

 

9.1.6        Theperforming rights to all musical compositions contained in the Picture arecontrolled by the Society of European State Authors and Composers, Inc. (“SESAC”),Associated Music Publishers, Inc. (“AMPI”), American

 

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Societyof Composers, Authors and Publishers (“ASCAP”), Broadcast Music Inc. (“BMI”) ortheir affiliates or are in the public domain or are controlled by Licensor tothe extent required for the purpose of this Agreement.

 

9.1.7        Withrespect to the payment of rerun or residual payments, there are no restrictionswhich would or could prevent LA Ideas from distributing the Picture by anymedia or means for which rights are granted to LA Ideas hereunder and there arenot and will not be any payments (out of any part of any revenues from thedistribution or exploitation of the Picture or otherwise) which must be made byLA Ideas to any actors, musicians, directors, writers or to other persons whoparticipated in the Picture, or to any union, guild or other labor organizationfor any right to exhibit the Picture or as compensation in connection with suchexhibition or for any other use of the Picture or any of the rights therein andthereto granted hereunder.

 

9.1.8        ThePicture has been duly and properly registered for copyright in the UnitedStates or can and prior to delivery to LA Ideas will be so registered, and thecopyright will be valid in the United Stats and in all countries party to theUniversal Copyright Convention or the Berne Convention.  The copyrights in the Picture and theliterary, dramatic and musical material upon which the Picture is based orwhich are contained in the Picture will be valid and subsisting during the termthroughout the Territory, and no part of the Picture is in the public domain.

 

9.1.9        LAIdeas will quietly and peacefully enjoy and possess each and all of the rights,licenses and privileges granted or purported to be granted to it throughout theterm and the Territory without hindrance on the part of any third party.  There is not now outstanding any litigationor threatened litigation, or any claims or demands or threats of claims, withrespect to the Picture, the literary, dramatic or musical material upon whichthe Picture is based, or which is used therein, or the physical propertiesthereof.

 

9.1.10      Licensorhas not sold, assigned, transferred or conveyed, and will not sell, assign,transfer or convey, to any party, any right, title or interest in and to thePicture or any part thereof or in and to the dramatic or literary material uponwhich it is based, adverse to or derogatory of the rights granted to LA Ideas,and Licensor has not an will not authorize any other party to exercise anyright to take any action which might tend to derogate from or compete with therights herein granted or purported to be granted to LA Ideas.

 

9.2           Licensor’sIndemnity.  Licensor does hereby andshall at all times defend, indemnify and save harmless LA Ideas, its subsidiary,parent and affiliated

 

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companies,its officers, directors and employees, and its licensees and assignees, of andfrom any and all claims, demands, and causes of action, or any thereof arisingout of or relating to or connected with or resulting from any actual or allegedbreach by Licensor or any of its representations, warranties, covenants orundertakings under the Agreement.  Uponnot more than ten (10) day notice from LA Ideas of any such claims,demands or action being advanced or commenced, Licensor agrees to adjust,settle, or defend the same (at Licensor’s election) at the sole cost ofLicensor; if Licensor shall fail promptly to do so, LA Ideas shall have theright and is hereby authorized and empowered by Licensor to appear by itsattorneys in any such action, to adjust, settle, compromise, litigate, contest,satisfy judgments and take any other action necessary or desirable for thedisposition of such claim, demand or action; in any such case Licensor withinfifteen (15) days after demand therefor by LA Ideas shall fully reimburse LAIdeas for all such payments and expenses, including attorneys’ fees; ifLicensor shall fail so to reimburse LA Ideas then, without waiving its rightotherwise to enforce such reimbursement, LA Ideas shall have the right todeduct the said amount of such payments and expenses, or any part thereof, fromany sum payable or accruing, to or for the account of Licensor under this orany other agreement.

 

9.3           Credits. Licensor warrants and represents thatthe main and end titles of the Picture delivered to LA Ideas hereunder containor shall contain all necessary and proper credits for the actors, directors,writers and all other persons appearing in or connected with the production ofthe Picture who are entitled to receive the same.  Licensor shall deliver to LA Ideas as part ofthe delivery requirements of the Picture hereunder a complete statement settingforth the names of all persons to whom Licensor is contractually obligated toaccord any credit in any advertising, publicity or exploitation of the Pictureand to include in such statements excerpts from any such agreements definingand describing the form and nature of such required credits.  LA Ideas shall be entitled to rely entirelyupon Licensor’s aforesaid warranty and statements to be delivered as aforesaidand if by reason of any improper information or lack of information containedin Licensor’s said statements, LA Ideas shall accord to any person improper orinsufficient credit or no credit and such person by reason thereof shall madeany claim against LA Ideas, then at the election of LA Ideas, evidenced bywritten notice to Licensor, Licensor agrees at its own cost and expense, todefend, indemnify and hold LA Ideas harmless against any such claim, action orproceeding, including any judgment that may be sustained against LA Ideas byreason thereof.  If LA Ideas elects, orif Licensor, following receipt from LA Ideas of such written notice, shall failto promptly undertake the defense of any such claim, then LA Ideas mayundertake such defense, at the expense of Licensor, which shall be deemed toinclude court costs and reasonable outside attorneys’ fees, and may, in goodfaith, settle or adjust the same of such terms as LA Ideas may deem fair andproper.  Licensor will upon demandreimburse LA Ideas for any such costs.  LAIdeas shall have the right to deduct the amount of its expenses incurred as aresult of the defense of such claim, including the amount of any judgmentsrequired to be paid by LA Ideas from any sums payable or

 

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accruingunder this Agreement to or for the account of Licensor.  LA Ideas shall inform its licensees of theprovisions of this Section.   No casualor inadvertent failure by LA Ideas or failure by its licensees to comply withthe provisions of this Section shall constitute a breach of thisAgreement; provided, however, that if LA Ideas casually or inadvertently failsto comply with this Section, then upon written notice to LA Ideas specifyingsuch failure in reasonable detail, LA Ideas shall use reasonable efforts toprospectively cure such failure as to prints and advertisements not yet printedor committed to as of the date of LA Ideas’ receipt of such notice. LA Ideas orits relevant subsidiary or affiliate shall have the right to add a logo cardcredit as the distributor of the Picture in the Territory, in a form specifiedby LA Ideas in last position on screen.

 

10.           LAIDEAS INDEMNIFICATION.

 

LAIdeas does hereby and shall at all times defend, indemnify and save harmlessLicensor, its subsidiary, parent and affiliated companies, its officers,directors and employees, from any and all claims, actions or causes of actionbrought or made by third parties unaffiliated with Licensor arising out of anydistribution by LA Ideas of the Picture contrary to the terms of this Agreementor a breach by LA Ideas of its covenants and agreements hereunder (other than aclaim to which Licensor’s indemnity applies).

 

11.           DEFAULT.

 

Therights herein granted by Licensor are of a unique character and of such valuethat the loss of these rights could not be adequately compensated in damages inan action at law, and a breach by Licensor of any material provision hereunderwill cause irreparable injury.  Licensortherefore expressly agrees that LA Ideas shall be entitled to seek equitablerelief by way of temporary restraining order, preliminary or permanentinjunction or otherwise to prevent the breach of this Agreement and to secureits enforcement.  However, the sole rightof Licensor as to any breach or alleged breach by LA Ideas shall be therecovery of money damages, and the rights herein granted by Licensor shall notterminate by reach of such breach.  Eachof LA Ideas’ several rights, remedies and options hereunder shall be cumulativeand no one of them is exclusive of the others or of any right, remedy orpriority allowed by law or in equity, and the pursuit of one remedy shall notbe deemed a waiver of any other remedy.  Withoutlimiting the generality of the foregoing, the rights granted herein shall notterminate, abate or otherwise be adversely affected if Licensor shall beadjudicated a bankrupt, or a receiver, trustee or liquidator shall be appointedto administer its affairs or assets, or if Licensor shall file a petition inbankruptcy or a petition for an arrangement with creditors under Chapter XI ofthe bankruptcy laws of the United States, or similar laws of otherjurisdictions, or make a general assignment of its assets for the benefit ofcreditors.

 

12.           MISCELLANEOUS.

 

12.1         No Liens.  All Gross Proceeds derived from distributionof the Picture shall be received by LA Ideas as its sole and absolute propertyand, as between LA Ideas

 

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andLicensor, LA Ideas’ only obligation under this Agreement shall be to pay toLicensor sums equal to Licensor’s share of Gross Proceeds, if any, becomingpayable hereunder.  There is acreditor-debtor relationship between LA Ideas and Licensor with respect topayment of amounts due Licensor hereunder and nothing contained herein shall beconstrued to create an agency, trust or fiduciary obligation with respect tosuch amounts or to prevent LA Ideas from commingling any such amounts with anyother funds or give Licensor a lien on the Picture and Licensor waives anyright to claim to the contrary.  LA Ideas’obligation to pay Licensor hereunder shall not bear interest nor entitleLicensor to gains which may accrue to such funds prior to payment to Licensor.

 

12.2         NoFiduciary Obligation.  No fiduciaryor separation of funds obligations of any sort are created by this Agreement.

 

12.3         LA Ideas’Authority.  Except for Licensor’sapproval right with respect to Promotional Costs, as between Licensor and LAIdeas, LA Ideas shall have complete authority to exploit its distributionrights hereunder throughout the Territory in accordance with such methods,policies and terms as it may in good faith determine.  LA Ideas agrees to use good faith efforts toexploit its distribution rights hereunder, provided, however, that Licensorunderstands that LA Ideas has not made any representations or warranties,express or implied, as to the amount of proceeds to be derived from the exploitationof the Picture nor that there will be any sum payable to Licensor hereunder northat LA Ideas will successfully exploit the Picture.  Further, LA Ideas may refrain from exploitingany or all of its rights in the Picture in any particular territory if LA Ideas,in its good faith opinion, believes it is desirable to do so; provided, howeverthat if LA Ideas elects to completely abandon its distribution of the Pictureby written notice to Licensor, then this Agreement shall terminate and allrights granted herein shall revert to Licensor.”

 

12.4         ForceMajeure.  Anything herein containedto the contrary notwithstanding, neither party shall be liable to the other indamages by virtue of any failure to perform hereunder caused by any causebeyond its control customarily considered an event of force majeure, including,but not limited to, fire, earthquake, flood, epidemic, accident, explosion,casualty, strike, lockout, labor controversy, riot, civil disturbance, act of apublic enemy, embargo, war, act of God, any governmental ordinance or law, theissuance of any executive or judicial order, any failure or delay of anytransportation agency, any failure or delay with respect to the electrical orsound equipment or apparatus, or by any laboratory, any failure without fault,to obtain material, transportation, power, or any other essential thingrequired in the conduct of its business or any similar causes.

 

12.5         NoPartnership.  Nothing hereincontained shall constitute a partnership between or joint venture by theparties hereto, or constitute either party the agent of the other.  Neither party shall hold itself out contraryto the terms of this paragraph, and neither party shall be or become liable byany representation, act or omission

 

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of theother contrary to the provisions hereof. This Agreement is not for the benefit of any third party and shall notbe deemed to give any right or remedy to any such party whether referred toherein or not.  LA Ideas shall not beconsidered a trustee, pledge holder, fiduciary or agent of Licensor by reasonof anything done or any money collected by it.

 

12.6         NoImplied or Continuing Waiver.  Nofailure on the part of LA Ideas or Licensor to exercise and no delay in exercising,and no course of dealing with respect to any right, power or privilege underthis Agreement shall operate as a waiver thereof, nor shall any single orpartial exercise of any right, power or privilege under this Agreement precludeany other or further exercise thereof or the exercise of any other right, poweror privilege.

 

12.7         Notices.  All notices and other communications to begiven by either party hereunder shall be in writing and shall be delivered byhand, sent by facsimile, air express, or certified mail return receiptrequested.  Every notice shall be deemedreceived if hand-delivered, on the date of delivery; if by facsimile, on thedate of confirmation of such transmittal’s completion;  if by air express, on the date of delivery;and if sent otherwise, on the third (3rd) day after its mailing,exclusive of Saturdays, Sundays and holidays. All notices and communication hereunder shall be addressed as follows,unless the parties agree in writing otherwise:

 
|   | To LA Ideas:                  | LA Ideas Inc.                            |   |
|--------|-------------------------------|------------------------------------------|--------|
|   |                          | 6222 Wilshire  Boulevard                 |   |
|   |                          | Suite 400                           |   |
|   |                          | Los Angeles,  California 90048-5100      |   |
|   |                          | Attention: Kyle  Borg                    |   |
|   |                          |                                     |   |
|   | With a copy  concurrently to: |                                     |
|   |                          |                                     |   |
|   |                          | Weissmann,  Wolff, Bergman, Coleman      |   |
|   |                          | Grodin &  Evall, LLP            |   |
|   |                          | 9665 Wilshire  Boulevard, Suite 900 |   |
|   |                          | Beverly Hills,  California 90212         |   |
|   |                          | Attention:  Andrew J. Schmerzler         |   |
|   |                          |                                     |   |
|   | To Licensor:                  | Public Media  Works                      |   |
|   |                          | Carpool Guy  Partners LLC                |   |
|   |                          | 4759 Oxnard  Street                      |   |
|   |                          | Van Nuys,  California 91411              |   |

 

12.8         Headings.  The headings of this Agreement or anyparagraphs hereof are inserted for the purpose of convenient reference and itis recognized that they may not accurately or adequately describe the contentsof the paragraphs which they head.  Suchheadings shall not be deemed to limit, cover or in any way affect the scope,

 

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meaningor intent of this Agreement, or any part thereof, nor shall they otherwise begiven any legal effect.

 

12.9         EntireAgreement.  This Agreement supersedesand cancels all prior negotiations and understandings in the premises betweenthe parties, and contains all of the terms, conditions and promises of theparties hereto in the premises.  Nomodification hereof shall be valid or binding unless in writing and executed byboth parties hereto.  No officer,employee or representative of LA Ideas has any authority to make anyrepresentation or promise not contained in this Agreement, and Licensor has notexecuted this Agreement in reliance on any such representation or promise.

 

12.10       GoverningLaw.  This Agreement shall beconstrued and interpreted pursuant to the applicable federal laws of the UnitedStates and the substantive laws of the State of California and the venue forany dispute shall be the courts located in Los Angeles County, California.

 

12.11       Violationof Law.  Nothing contained hereinshall be construed as to require the commission of any act contrary to law, andwherever there is any conflict between any provision of this Agreement and anymaterial statute, law or ordinance contrary to which the parties have no legalright to contract, the latter shall prevail, but in such event the provisionsof this Agreement affected shall be curtailed and limited only to the extentnecessary to bring it within legal requirements.

 

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12.12       Person.  As used herein, the term “persons” shall,unless the context clearly provides to the contrary, include any association,organization, partnership, business trust or corporation as well as naturalpersons.

 

IN WITNESS WHEREOF, theparties hereto have caused this Agreement to be executed by their dulyauthorized officers as of the day and year above written.

 
|   | PUBLIC MEDIA  WORKS, INC. |
|--------|---------------------------|
|   |                      |
|   |                      |
|   | By:                       | /s/ Corbin  Bernsen |   |
|   | Print Name:               | Corbin Bernsen |   |
|   | Print Title:              | President |   |
|   |                      |
|   |                      |
|   | CARPOOL GUY  PARTNERS LLC |
|   |                      |
|   |                      |
|   | By:                       | /s/ Thomas A.  Szabo |   |
|   | Print Name:               | Thomas A. Szabo |   |
|   | Print Title:              |   |   |
|   |                      |
|   |                      |
|   | LA IDEAS INC.             |
|   |                      |
|   |                      |
|   | By:                       | /s/ Kyle Borg |   |
|   | Print Name:               | Kyle Borg |   |
|   | Print Title:              | COO |   |
|        |                           |  |  |  |

 

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**EXHIBIT ”A”**

 

**DELIVERY REQUIREMENTS**

 

The following items shallbe delivered to LA Ideas:

 

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**EXHIBIT ”B”**

 

**DELIVERY SCHEDULE**

 

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