Document:

exhibit_10-3.htm

    Exhibit
10.3

     

    DIRECTV

     

    PERFORMANCE
STOCK UNIT AWARD AGREEMENT

     

    THIS PERFORMANCE STOCK UNIT AWARD
AGREEMENT (this “Agreement”), dated as of
January 4, 2010 (“Effective Date”), is entered
into between DIRECTV, a Delaware corporation (“DIRECTV”), and Michael D.
White (“Executive”).

     

    WHEREAS, at its meeting on
December 21, 2009, the Compensation Committee of DIRECTV’s Board of
Directors (the “Committee”) approved the grant
to Executive of restricted stock units (the “Stock Units”), upon the terms
and conditions set forth herein and subject to the terms and conditions of the
Amended and Restated 2004 Stock Plan of The DIRECTV Group, Inc. (as it
may be amended from time to time, the “Plan”); and

     

    WHEREAS, at its meeting on
November 18, 2009, the Board of Directors of The DIRECTV Group, Inc.
(“Board”) approved the
material terms and conditions of Executive’s employment as President and Chief
Executive Officer of DIRECTV, including the grant of the Stock Units;
and

     

    WHEREAS, the Committee and the
Board each has also approved the terms and conditions of an employment agreement
with Executive effective as of January 1, 2010 (such agreement, as it
may be amended from time to time, is referred to herein as the “Employment Agreement”);
and

     

    WHEREAS, both the Committee
and the Board authorized the Chairman of the Committee to execute this Agreement
on behalf of DIRECTV, in accordance with the resolutions adopted by each of the
Committee and the Board at their respective meetings as referenced
above.

     

    NOW THEREFORE, in
consideration of services rendered and to be rendered by Executive, and the
mutual promises made herein and the mutual benefits to be derived therefrom,
DIRECTV and Executive agree as follows:

     

    1. Defined
Terms.  Any capitalized term used herein and not otherwise
defined herein shall have the meaning assigned to such term in the
Plan.  Whenever the following words or phrases are used herein with
the first letter capitalized, they shall have the respective meaning specified
below:

     

    “Award” means the grant to
Executive of Stock Units pursuant to this Agreement and the Plan.

     

    “Annual Performance Factor”
means the factor determined annually with respect to the Performance Measures as
established by the Committee pursuant to Section 8(a) and used to compute the
Final Performance Factor.

     

    “Company” means DIRECTV and its
Subsidiaries.

     

    “Early Vesting Date” means
Executive’s Termination Date if Executive is terminated without Cause (as
defined in the Employment Agreement), or if Executive’s employment is terminated
due to his resignation for an Effective Termination (as defined in the
Employment Agreement), or due to his death or Disability (as defined in the
Employment Agreement) in each case prior to the Vesting Date.

     

    “Final Performance Factor”
means the final performance factor determined as of the Vesting Date pursuant to
Section 8(a) and used to establish the number of Stock Units (if any) which
shall vest under this Agreement.

     

    “Performance Measure” means one
of the three performance measures to be established by the Committee in
accordance with Section 10 of the Plan for the Performance Period and
Section 2.4(a) of the Employment Agreement.

     

    “Performance Period” means the
period beginning on January 1, 2010 and ending on December 31,
2012.

     

    “Termination Date” means the
date on which Executive’s employment with the Company terminates, if prior to
the Vesting Date.

     

    “Vesting Date” means
December 31, 2012.

     

    2. Grant.  Subject
to the terms of this Agreement and the Plan, DIRECTV hereby grants to Executive
a Stock Unit Award with respect to an aggregate of Four Hundred Thirty-Five
Thousand, Four Hundred (435,400) Stock Units (subject to adjustment as provided
in Section 14 of the Plan).  As used herein, the term “Stock
Unit” shall mean a non-voting unit of measurement which is deemed for
bookkeeping purposes to be equivalent to one outstanding share of DIRECTV’s
Class A Common Stock (subject to adjustment as provided in Section 14 of
the Plan) solely for purposes of the Plan and this Agreement.  The
Stock Units shall be used solely as a device for the determination of the
payment to be made to Executive if such Stock Units vest pursuant to
Section 3 or Section 7.  The Stock Units shall not be
treated as property or as a trust fund of any kind.  This Award is
intended to be a Performance-Based Award, as defined in Section 10 of the
Plan.

     

    3. Performance
Based Vesting.  Subject to Section 7, as of the Vesting
Date, the Award shall vest and become nonforfeitable with respect to that number
of Stock Units determined by multiplying the Final Performance Factor times the
total number of Stock Units comprising the Award (subject to adjustment under
Section 14 of the Plan).

     

    4. Continuance
of Employment.  Except as otherwise provided in Section 7
or pursuant to the Plan or the Employment Agreement, Executive’s continued
employment or service through the Vesting Date is required as a condition to the
vesting of the Award and the rights and benefits under this
Agreement.  Partial employment or service, even if substantial, during
the Performance Period will not entitle Executive to any proportionate vesting
or avoid or mitigate a termination of rights and benefits upon or following a
termination of employment or services, except as otherwise provided in
Section 7 below or under the Plan or the Employment Agreement.

     

    5. Limitations
on Rights Associated with Stock Units.  Executive shall have no
rights as a stockholder of DIRECTV, no dividend rights (except as expressly
provided in Section 8(c) with respect to Dividend Equivalents) and no
voting rights, with respect to the Stock Units and any shares of Common Stock
underlying or issuable in respect of such Stock Units, until such shares of
Common Stock are actually issued to and held of record by
Executive.  No adjustments will be made for dividends or other rights
of a holder for which the record date is prior to the date of issuance of the
shares of Common Stock, except as otherwise provided in
Section 8(c).

     

    6. Restrictions
on Transfer.  Neither the Stock Units nor any interest therein
or amount or shares payable in respect thereof may be sold, assigned,
transferred, pledged or otherwise disposed of, alienated or encumbered, either
voluntarily or involuntarily.  The transfer restrictions in the
preceding sentence shall not apply to (a) transfers to DIRECTV,
(b) transfers by will or the laws of descent and distribution, or
(c) transfers permitted under Section 15(i) of the Plan.

     

    7. Effect of
Termination of Employment on Vesting.  If DIRECTV terminates
Executive’s employment for Cause (as defined in the Employment Agreement) or if
Executive’s employment terminates other than due to his death, Disability (as
defined in the Employment Agreement) or termination without Cause (as defined in
the Employment Agreement) or resignation by Executive for an Effective
Termination (as defined in the Employment Agreement), the Award of Stock Units
hereunder and all other rights and benefits of Executive under this Agreement
shall terminate on Executive’s Termination Date, unless otherwise approved by
the Committee.  If DIRECTV terminates Executive’s employment without
Cause or if Executive’s employment terminates due to his death or Disability, or
due to his resignation for an Effective Termination, prior to the Vesting Date,
the Award shall immediately vest on the Early Vesting Date as to the total
number of Stock Units comprising the Award (subject to Section 14 of the
Plan) without regard to the level of performance with respect to the Performance
Measures.

     

    8. Timing
and Manner of Distribution with Respect to Stock Units.

     

    (a) Determination
of Number of Vested Stock Units.

     

    On or
prior to the last day of February in each of 2011 and 2012, the Committee
shall determine the Annual Performance Factor for the immediately preceding
fiscal year, in accordance with the Plan.  As soon as practicable
after the Vesting Date, the Committee shall determine the Annual Performance
Factor for the 2012 fiscal year and shall determine the Final Performance
Factor, in accordance with the Plan.  The Final Performance Factor, as
so determined by the Committee, shall be multiplied by the total number of Stock
Units comprising this Award to determine the number of Stock Units that have
become vested as of the Vesting Date.  In the case of an Early Vesting
Date, the number of vested Stock Units shall be as provided in
Section 7.

     

    (b) Timing
and Manner of Distribution.

     

    Notwithstanding
anything to the contrary in the Plan, DIRECTV shall deliver to Executive the
number of shares of Common Stock equal to the number of vested Stock Units
subject to this Award (subject to Section 14 of the Plan and subject to
Sections 8(e) and 12 below) on the later of (i) January 15th of the
calendar year following the calendar year of Executive’s termination of
employment or (ii) the date that is six months after Executive’s termination of
employment.

     

    (c) Dividend
Equivalents.

     

    As of the
Vesting Date (or, if applicable, the Early Vesting Date) Executive shall be
entitled to payment for Dividend Equivalents (if any) with respect to vested
Stock Units. For purposes of this Agreement, “Dividend Equivalents” means
the aggregate amount of dividends paid by DIRECTV on the number of shares of
Common Stock equivalent to the number of Stock Units that become vested during
the period from the Effective Date until the date the shares of DIRECTV Common
Stock associated with the vested Stock Units are issued or the cash amount paid
(without interest or other adjustments to reflect the time value of money but
subject to adjustment pursuant to Section 14 of the
Plan).  Dividend Equivalents (if any) will be paid at the same time as
the shares of DIRECTV Common Stock associated with the vested Stock Units to
which they relate are issued or the cash amount provided for in
Section 8(e) is paid.  Dividend Equivalents shall be paid in cash
except as otherwise provided in Section 8(f).

     

    (d) Termination
of Stock Units.

     

    To the
extent that any Stock Units fail to vest as of the Vesting Date, or if the Award
has terminated pursuant to Section 7, such unvested Stock Units shall
immediately terminate without payment.  Executive shall have no
further rights with respect to such terminated Stock Units.

     

    (e) Payment
of Cash in Lieu of Common Stock.

     

    Notwithstanding
anything in Section 8(b) to the contrary, the Committee, in its sole
discretion, may elect to cause the Company to pay cash in an amount equal
to the Fair Market Value of the vested Stock Units, determined as of the date on
which the shares of Common Stock would otherwise have been issued pursuant to
Section 8(b) and payable within ten business days after such
date.

     

    (f) Payment of Common Stock in
Lieu of Cash for Dividend Equivalents

     

    Notwithstanding
anything in Section 8(c) to the contrary, the Committee, in its sole
discretion, may elect to cause the Company to pay Dividend Equivalents (if
any) in shares of Common Stock in lieu of cash, if and to the extent that
DIRECTV issues shares of Common Stock to Executive in respect of the vested
Stock Units pursuant to Section 8(b).  The number of shares of
Common Stock payable as Dividend Equivalents will be determined by (i)
determining the aggregate cash amount of Dividend Equivalents payable, and
(ii) dividing such amount by the Fair Market Value of a share of Common
Stock at the same date on which the Fair Market Value of shares of Common Stock
associated with the vested Stock Units are established.

     

    9. Adjustments
Upon Specified Events.  As provided in Section 14 of the
Plan, upon the occurrence of certain events relating to or affecting the Common
Stock as contemplated by Section 14 of the Plan, the Committee shall, in
such manner, to such extent (if any) and at such times as it deems appropriate
and equitable in the circumstances, make adjustments in the number of Stock
Units and the number and type of shares of Common Stock (or other securities or
property) that may be issued in respect of the Award or provide for a cash
payment or the assumption, substitution or exchange of the Award or the shares
of Common Stock or other securities subject to the Award, based upon the
distribution or consideration payable to holders of Common Stock
generally.  All rights of Executive hereunder are subject to such
adjustments and other provisions of the Plan.

     

    10. Possible
Early Termination of Award.  As permitted by Section 14 of
the Plan, and without limiting the authority of the Committee under any of the
provisions of Section 14 of the Plan, the Committee retains the right to
terminate all or any portion of the Award upon a dissolution of DIRECTV or a
reorganization event or transaction in which DIRECTV does not survive (or does
not survive as a public company in respect of its outstanding Common
Stock).  This Section 10 is not intended to prevent future
vesting (including provision for future vesting) if the Award (or a substituted
Award) remains outstanding following a transaction described in Section 14
of the Plan.

     

    11. Leaves of
Absence.  Absence from work caused by authorized sick leave or
other leave approved in writing by DIRECTV or the Committee shall not be
considered a termination of employment by DIRECTV for purposes of
Section 7, unless otherwise determined by the Committee.

     

    12. No
Limitations on Acceleration; Deferral.

     

    (a) No
Limitation on Acceleration.

     

    The
Employment Agreement, in particular Section 4.9 thereof, contains express
provisions regarding Section 280G and/or 4999 of the Code of the type described
in Section 14(f) of the Plan. Accordingly, the limitations on acceleration set
forth in Section 14(f) of the Plan shall not apply to this Award.  A
reduction, if any, to this Award or other effect related to Section 280G and/or
Section 4999 shall be governed by the Employment Agreement.

     

    (b) Section 409A
of the Code.

     

    Notwithstanding
anything herein to the contrary, (i) if, at the time of Executive’s
termination of employment with DIRECTV, Executive is a “specified employee” as
defined in Section 409A of the Code, and the deferral of the commencement
of any payments or other consideration otherwise payable hereunder as a result
of such termination of employment is necessary in order to prevent the
imposition of any accelerated or additional tax under Section 409A of the
Code, then DIRECTV will defer the commencement of the payment of any such
payments or other consideration hereunder (without any reduction in such
payments or other consideration ultimately paid or provided to Executive) until
the date that is six months following Executive’s termination of employment with
DIRECTV (or the earliest date as is permitted under Section 409A of the
Code) and (ii) if any other payments of money or other consideration due to
Executive hereunder would cause the application of an accelerated or additional
tax under Section 409A of the Code, such payments or other consideration
shall be deferred if deferral will make such payment or other consideration
compliant under Section 409A of the Code, or otherwise such payment or
other benefits shall be restructured, to the extent possible in a manner,
determined by the Committee or the Board, that does not cause such an
accelerated or additional tax or result in an additional cost to
DIRECTV.  DIRECTV shall consult with its legal counsel and tax
accountants in good faith regarding the implementation of the provisions of this
Section 12(b), which shall be done only in a manner that is reasonably
acceptable to Executive; provided, however, that
neither DIRECTV, any subsidiary or other affiliate of DIRECTV, nor any of their
employees or representatives shall have any liability to Executive with respect
thereto.

     

    13. Executive
Not a Shareholder.  Neither Executive nor any Beneficiary or
Personal Representative of Executive shall have any of the rights or privileges
of a stockholder of DIRECTV as to any shares of Class A Common Stock subject to
the Award until the issuance and delivery to him or such other person of a
certificate (or book entry in lieu thereof) evidencing the shares registered in
his or such other person’s name.  No adjustment will be made for
dividends or other rights as a stockholder as to which the record date is prior
to such date of delivery, except as otherwise provided in Section 8(c) or
as otherwise approved by the Committee.

     

    14. No
Guarantee of Continued Service.  Nothing contained in this
Agreement or the Plan constitutes an employment or service commitment by DIRECTV
or confers upon Executive any right to remain employed by DIRECTV, interferes in
any way with the right of DIRECTV at any time to terminate such employment or
affects the right of DIRECTV to increase or decrease Executive’s other
compensation or benefits.  Nothing in this Section 14, however,
is intended to adversely affect any independent contractual right of Executive
under the Employment Agreement (or any other agreement between DIRECTV and
Executive) without his consent thereto.

     

    15. Notices.  Any
notice to be given under the terms of this Agreement shall be in writing and
addressed: to DIRECTV at 2230 East Imperial Highway, El Segundo, California
90245, to the attention of the Corporate Secretary; and to Executive at the
address on file with DIRECTV, or at such other address as either party
may hereafter designate in writing to the other.

     

    16. Effect of
Agreement.  This Agreement shall be binding upon and inure to
the benefit of any successor or successors of DIRECTV, except to the extent the
Committee determines otherwise.

     

    17. Entire
Agreement; Governing Law.  The Plan is incorporated herein and
made a part hereof by this reference.  Subject to Section 19
below, the Plan and this Agreement constitute the entire agreement of the
parties with respect to the subject matter hereof and supersede in their
entirety all prior undertakings and agreements of DIRECTV and Executive with
respect to the subject matter hereof.  The construction,
interpretation, performance and enforcement of this Agreement and the Award
shall be governed by the internal substantive laws, but not the choice of law
rules, of the State of Delaware.

     

    18. Plan.  The
Award and all rights of Executive with respect thereto are subject to, and
Executive agrees to be bound by, all of the terms and conditions of the
provisions of the Plan, to the extent such provisions are applicable to Awards
granted to Eligible Persons.  Executive acknowledges receipt of a copy
of the Plan, and agrees to be bound by the terms thereof.  Unless
otherwise expressly provided in other Sections of this Agreement,
provisions of the Plan that confer discretionary authority on the Committee do
not (and shall not be deemed to) create any rights in Executive unless such
rights are expressly set forth herein or are otherwise in the sole discretion of
the Committee specifically so conferred by appropriate action of the Committee
under the Plan after the date hereof.

     

    19. Employment
Agreement.  If any provision of this Agreement is inconsistent
with any provision of the Employment Agreement, the provisions of the Employment
Agreement shall control.

     

    20. Tax
Withholding.  Upon the distribution of shares of the Common
Stock in respect of the Stock Units or Dividend Equivalents, or payment of cash
in respect of the Stock Units or Dividend Equivalents, if any, pursuant to
Section 8(c) or otherwise in accordance with the Plan, DIRECTV shall have
the right at its option to (a) require Executive to pay or provide for
payment in cash of the amount of any taxes that DIRECTV may be required to
withhold with respect to such distribution, or (b) deduct from any amount
payable to Executive the amount of any taxes which DIRECTV may be required
to withhold with respect to such payment or distribution.  In any case
where a tax is required to be withheld in connection with the delivery of shares
of Common Stock or other payment under this Agreement, the Committee may, in its
sole discretion, direct DIRECTV to reduce the number of shares of Common Stock
to be delivered by (or otherwise reacquire) the appropriate number of shares of
Common Stock, valued at their then Fair Market Value, to satisfy such
withholding obligation.

     

    21. Limitation
on Executive’s Rights.  Participation in the Plan confers no
rights or interests other than as herein provided.  This Agreement
creates only a contractual obligation on the part of DIRECTV as to amounts
payable and shall not be construed as creating a trust.  Neither the
Plan nor any underlying program, in and of itself, has any
assets.  Executive shall have only the rights of a general unsecured
creditor of DIRECTV with respect to amounts credited and benefits payable in
cash, if any, with respect to the Stock Units and the Dividend Equivalents (if
any), and rights no greater than the right to receive the Common Stock (or
equivalent value) as a general unsecured creditor with respect to Stock Units
and the Dividend Equivalents (if any), as and when payable
hereunder.

     

    22. Amendment.  This
Agreement may be amended in accordance with the terms of the
Plan.  Any such amendment must be in writing and signed by
DIRECTV.  The terms and conditions of this Agreement may not be
restricted or limited by any amendment of this Agreement or the Plan without
Executive’s consent.

     

    23. Counterparts.  This
Agreement may be executed in any number of counterparts, each of which
shall be deemed an original but all of which together shall constitute one and
the same instrument.

     

    24. Section Headings.  The
Section headings of this Agreement are for convenience of reference only
and shall not be deemed to alter or affect any provision hereof.

     

    IN WITNESS WHEREOF, DIRECTV
has caused this Agreement to be executed on its behalf by the Chairman of its
Compensation Committee and Executive has hereunto set his hand as of the date
and year first above written.

     

    
      	 
      	
              DIRECTV

              By:  /s/ CHARLES R.
      LEE                                                              

              Charles R. Lee

              Chairman of the
      Compensation

              Committee

            
	 
      	
              EXECUTIVE

              By:  /s/ MICHAEL D.
      WHITE                                                              

              Michael D. WhiteOption Purchase Agreement

 Exhibit 10.6 
 OPTION/PURCHASE AGREEMENT
 This Option/Purchase Agreement (the “Agreement”) dated as of July 20, 2009, by and between Audience Productions, Inc. a Washington corporation (“Purchaser”) and Andrew Craft and Michael Zam (collectively, “Owner”).
  

	1.	REPRESENTATIONS AND WARRANTIES 

  

	 	a.	Sole Owner: Owner represents and warrants to Purchaser that Owner is the sole and exclusive author and proprietor, throughout the world, of that certain unpublished original screenplay written by Owner currently entitled “Lydia Slotnick Unplugged” (the “Work”), and that Owner owns and controls the rights granted herein to Purchaser, inclusive of all copyrights therein. Notwithstanding the generality of the foregoing, the definition of Work shall not include the original musical compositions “You Make Me Wanna Fly”  by Andrew Craft & Steve Conte, and "“The Rules Of The Game” by Andrew Craft & Doug Lubahn, or derivative musical works thereof, as they are now entitled or may be entitled in the future.

  

	 	b.	Prior Uses: Owner represents and warrants to Purchaser that the Work has not been published in any place in the world, and that no other copyright relating to the Work has been effected, no other registration relating to copyright protection thereof has been made effective and no other registration relating to copyright protection thereof has been made.

  

	 	c.	Copyright Information: Owner represents and warrants that the copyright information set forth in paragraph 1a. and 1b. above is true and correct.

  

	 	d.	Prior Versions: Owner represents and warrants that no motion picture or dramatic version of the Work or any part thereof has been authorized or produced; no development or production based on the Work or any part thereof has been authorized, produced, presented or broadcast on radio or television; and no written or oral agreement or commitment whatsoever with respect to the Work or any rights therein have heretofore been made or entered into by or on behalf of Owner; none of the rights herein granted and assigned, or purported to be granted and assigned, to Purchaser have been granted or assigned to any other person.

  

	 	e.	No Infringement or Violation of Third Party Rights: Owner represents and warrants that the Work is not adapted from any other literary, dramatic or other material of any kind or nature nor does the Work copy or use the plot, scenes, sequences, story or characters of any other literary, dramatic or other material; that the Work does not infringe upon any statutory or common law rights in any other literary, dramatic or other materials; that no material in the Work is libelous or violative of the rights of privacy or any other rights of any other person and the full use of the rights in the Work herein granted to Purchaser will not violate any rights of any person; and that the Work is not in the public domain in any country in the world where copyright protection is available. Owner’'s representation and warranties do not extend to changes made to the Work by Purchaser, and Purchaser indemnifies Owner on the same terms as set forth above with regard to any such changes made to the Work.

  

	 	f.	No Impairment of Rights: Owner represents and warrants to Purchaser that Owner is the exclusive proprietor throughout the world of the rights in the Work herein granted to Purchaser; that Owner has not assigned, licensed or in any manner encumbered or impaired said rights; that Owner has not committed or omitted to do any act by which the rights might be diminished or impaired; and that there is no outstanding claim or litigation pending against the title, ownership or copyright of the Work or any part thereof or in the rights therein. Owner further represents and warrants that no attempt hereafter will be made to encumber, diminish or impair any of the rights herein granted and that all appropriate protection of such rights will continue to be maintained by Owner.

  

 

	2.	COMPENSATION FOR SCREENPLAY 

  

	 	a.	Option: Owner grants to Purchaser an exclusive option to purchase the sole and exclusive motion picture and other rights set forth in Paragraphs 5 and 6 herein. As full consideration, and without any reservations as to the sufficiency thereof, Purchaser agrees to pay and Owner agrees to accept the sum of Two Hundred Dollars ($200) (the “Option Fee”), applicable against the purchase price set forth below.  The initial term of the Option shall be for six (6) months (the “Option Term”) commencing as of the date set forth above. At Purchaser’s discretion, the

  

 

	 	a.	Option Term may be extended for up to two additional, consecutive periods each equal to three (3) months, provided that written notice is sent to Owner prior to the end of the then current Option Term accompanied by an additional Option Fee of One Hundred Dollars ($100) for each such extension, all of which shall be applicable against the “Purchase Price,” as further described below. If, after one year, Purchaser has filed a registration statement with the Securities and Exchange Commission relating to a securities offering to produce the Work, then the Option Term may be extended by Purchaser on a running basis for up to eight (8) additional, consecutive three (3) month terms upon notice to Owner and payment of an additional Option Fee of One Hundred Dollars ($100) for each three (3) month extension of the Option Term as exercised by Purchaser.

  

	 	b.	Purchase Price: If Purchaser elects to exercise its Option to purchase the rights set forth herein, Purchaser shall give Owner written notice of Purchaser’s election, and shall pay to Owner the Purchase Price, reduced by the sum of the Option Fee(s). The Purchase Price shall be Two and One/Half Percent (2.5%) of the “Production Budget”, measured as of the commencement of principal photography excluding financing fees, bonds, bonding fees, contingency, and all compensation paid to Owner, except in no event shall the Purchase Price be less than Fifty Thousand Dollars ($50,000) or more than Two Hundred Fifty Thousand Dollars ($250,000).  If at the time of exercise of Purchaser’s option, the Production Budget is not set, then the minimum amount set forth above will be paid to Owner upon exercise of the Option and adjusted as necessary upon commencement of principle photography.

  

	 	c.	Contingent Compensation: If Purchaser or its assignee produces a motion picture materially based on the Work, and Owner is not in breach of this Agreement, then in addition to the compensation set forth above, Purchaser shall pay to Owner additional, contingent compensation (“Contingent Compensation”) equal to two Percent (2%) of One Hundred Percent (100%) of Purchaser’s (Common Shareholders’) cash distribution, if any, earned and received by Purchaser from exploitation of the first motion picture based on the Work only if Owner receives sole screenplay credit. If Owner receives shared screenplay credit, then Owner shall receive One Percent of One Hundred Percent (1% of 100%) of Purchaser’s (Common Shareholders’). Purchaser’s (Common Shareholders’) cash distribution shall be defined, calculated and payable pursuant to the same definition and calculation as contained in the agreement between Purchaser or its assignee and the motion picture’s financing entity, a copy of which will be provided to Owner.

  

	 	d.	Payment: With respect to any payment to be made to Owner hereunder, it is expressly agreed that should Purchaser fail to make such payment as herein provided due to a force majeure type event, then Purchaser shall not be deemed in default hereunder, and will have a reasonable opportunity to cure such failure.  Payments to Owner hereunder will be made by check(s) drawn on Purchaser’s (or its assignee’s) bank account.

  

 

	3.	INDEMNIFICATION 

 Owner does hereby agree at all times to indemnify and hold Purchaser harmless of and from any and all claims, demands, liabilities, losses, costs or expenses (including attorneys’ fees) or causes of action arising out of or in connection with any breach or claim of breach of any of Owner’s representations, warranties, covenants or agreements herein contained. Owner’s obligations under this section relate only to the rights in the Work acquired by Purchaser hereunder and not to any changes or additions which are made by Purchaser in the exercise of the rights granted Purchaser hereunder. As to such changes or additions, Purchaser shall indemnify Owner on the same basis as set forth above.

 

 

	4.	REVERSION/TURNAROUND 

 If, at the expiration of any Option Term Purchaser has not exercised its rights either to extend the Option Term or to purchase the rights, both as hereinabove provided, all rights previously granted to Purchaser in the Work, unless agreed to otherwise, shall revert back to Owner and Owner shall retain all Option Fees paid.

 

 

	5.	RIGHTS GRANTED 

 Upon Purchaser’s exercise of its Option, Owner hereby grants, sells and assigns to Purchaser, solely, exclusively, in perpetuity and throughout the world, all rights in and to the Work. Owner shall concurrently herewith execute a short form assignment in the form of Exhibit “A” attached hereto for filing in the copyright office as evidence of such grant of rights.  Without limiting the generality of the foregoing, Owner specifically grants the following particular rights:
 

 

	 	a.	Motion Pictures: To make any number of silent, sound, talking and/or musical motion picture versions of the Work or any part or parts thereof, in any format or delivery system now or hereafter known.

  

	 	b.	Copies: To make copies and reproductions of such motion pictures on
35mm film, film of other widths and/or gauges, videotape, and/or discs and any other material, whether now known or hereafter invented.

  

	 	c.	Production, Distribution: To produce, transmit, distribute and exhibit such motion pictures by and with sound and voice recording, reproducing and transmitting devices, radio devices, television devices and all other devices and improvements, present or future, which may now or hereafter be used for or in connection with the production, transmission, distribution and exhibition of any present or future kind of motion picture productions.

  

	 	d.	Telecast: To televise such motion pictures, and to produce motion pictures for purposes of television and to transmit, reproduce, distribute, exhibit, advertise and exploit such motion pictures in any manner.

  

	 	e.	Adaptations: To translate, adapt, arrange, change, transpose, add to and subtract from the Work and title thereof to such extent as Purchaser may desire, to make remakes or sequels to and new versions and adaptations of the Work or any part or parts thereof (including the right to make television series), to use excerpts from the Work for the title, subtitles, text and dialogue of such motion pictures, to interpolate other material in such motion pictures, and to use the Work or any part or parts thereof or the title, theme and characters thereof in conjunction with any other literary, dramatic, musical or other material of any kind in the making of such motion pictures and the advertising, exploitation and publicizing thereof.

  

	 	f.	Digital Media: To produce, reproduce, distribute, exhibit, vend and otherwise exploit all digital media rights in connection with the Work.

  

	 	g.	Exploitation: To produce, reproduce, distribute, exhibit, vend, and otherwise exploit and dispose of such motion pictures, trailers, and stills in connection therewith for any and all motion picture uses and purposes, including theatrical, non-theatrical, pay television, video cassette and disc and sound record uses and purposes, and to authorize and license others so to do, throughout the world, including the right to make and use and exploit sound records, sound on film, tape and cassettes, audio-visual devices of any type, and all other contrivances and devices now or hereafter used for producing, recording, transmitting, distributing and exhibiting motion pictures.

  

	 	h.	Copyright: To secure copyright and renewals and extensions of copyright in such motion pictures in the United States and in all other countries of the world where the same may be secured or is provided for, in the name and for the benefit of Purchaser or otherwise.

  

	 	i.	Title: To use the title by which the Work is now, or hereafter may be, known as the title of any motion picture or motion pictures based thereon in whole or in part, or in which any part of the Work is used, or for any other motion picture or motion pictures or in the exercise of any of Purchaser’s rights hereunder; but, Purchaser shall not be obligated to use said title, and may use any other title or titles for any motion picture version or versions of the Work and may change the title of any such motion picture from time-to-time.

  

	 	j.	Publishing: To publish or license for publication the screenplay of each motion picture version in English or any other language and in any part of the world, including novelizations based on the Work.

  

	 	k.	Merchandising: To exploit, sell, and dispose of merchandising rights and commercial tie-up rights, and to authorize and license others so to do, with the right to protect such merchandise and rights by copyright, trademark, patent or otherwise in Purchaser's name or that of its nominee(s).

  

	 	l.	Records: To record as sound records (whether in disc, cartridge, tape, magnetic, electronic or other form) the Work and versions and adaptations thereof and to deal in and exploit the same and music publishing rights in and to the Work and to license others so to do.

  

	 	m.	Life Story: To use Owner’s biography, story, experiences, name, likeness, correspondence, memorabilia, photographs, recollections, anecdotes, and other information relating to Owner’s life, approved in each instance by Owner, as they relate to the Work and its promotion.

  

	 	n.	Legitimate Stage: To adapt and/or produce any number of plays for the legitimate theatre based on the Work.

  

 

	 	o.	Rights to Make Changes: Having acknowledged understanding of the needs of motion picture production by granting Purchaser the unlimited right to change, vary, alter, add to, take from, substitute, combine and modify the Work, Owner hereby waives (for itself, its heirs, executors, administrators and assigns) the benefits of any provision of law known as the “droit moral” or any similar laws or legal principles, and agrees (for itself, its heirs, executors, administrators, and assigns) not to institute, support, maintain or permit directly or indirectly any litigation or proceedings instituted or maintained on the ground that any motion picture produced, distributed or exhibited by Purchaser and based, or claimed to be based, upon the Work or using any material therefrom, in any way constitutes an infringement or violation of any of its “droit moral” or is in any way a defamation or mutilation of the Work, or of any part thereof, or contains unauthorized variations, alterations, modifications, changes or translations.

  

 

	6.	INCIDENTAL RIGHTS 

 Without limiting the generality of the other grants contained herein, upon Purchaser’s exercise of the Option and agreement on Contingent Compensation, the following rights are also hereby granted, sold and assigned to Purchaser solely, exclusively, in perpetuity and throughout the world, to be exercised, however, only in connection with and for the purpose of advertising, publicizing, promoting and exploiting motion picture versions of the Work, and Purchaser’s exploitation of the other rights granted herein.
 

	 	a.	Broadcast: The right to broadcast by radio or television (by living actors, transcriptions and other present or future means) dramatic versions, sketches, scenes, adaptations and material from or based upon the Work or any motion picture version thereof, and announcements of or concerning such motion pictures, which announcements may include material from the Work or from such motion pictures.

  

	 	b.	Print Publication: The right to print and publish in such form and publications as Purchaser may desire for advertising and promotional purposes (including newspapers, fan magazines and trade periodicals) and to copyright in its own name, or the name of its nominee, excerpts, dialogue, summaries, synopses, sketches, dramatizations, novelizations or other adaptations of or selections from the Work and for any motion picture version thereof, not to be serialized, and the right to use excerpts from the Work and such motion pictures in heralds, programs, booklets, posters, lobby displays, press books and all other media of advertising and publicity, including commercial tie-ups.

  

	 	c.	Use of Name: The right to identify Owner as the author of the Work.

  

 

	7.	EXERCISE OF PURCHASER’S RIGHTS 

 It is agreed that all rights granted to Purchaser herein may be exercised by Purchaser with respect to all drafts, revisions, adaptations, arrangements, dramatizations, translations (to the extent Owner is able to obtain such rights) and other versions of the Work which may heretofore have been written or which may hereafter be written by or with the authority of Owner.  It is further agreed that Purchaser shall be under no obligation to exercise or put to use any of the rights acquired by Purchaser hereunder and that Purchaser may exercise any one or more of said rights at any time.

 

	8.	CREDIT 

 If no other screenwriter is engaged by Purchaser to provide services on the screenplay, Owner will be granted an on-screen, single card “Written By” credit in the main credits. If additional writers are engaged to work on the Work and/or if the motion picture is produced pursuant to an applicable agreement, then the screenwriting credit may be adjusted by Purchaser to take into account the contributions of other writers and/or the protocols set forth in the applicable agreement. Unless otherwise required by the protocols of an applicable agreement, Owner is guaranteed no less than shared writing credit. Owner will be granted the aforesaid credits in all print and other promotions of the motion picture, excluding only award ads and other standard industry exclusions. Notwithstanding the provisions of this section, the parties agree that any accidental or inadvertent failure by Purchaser to grant any of the credits provided for herein shall not be deemed a material breach of this Agreement.

 

	9.	PUBLICITY 

 All publicity, paid advertisements, press notices, or other information with respect to the exploitation of any of the rights granted hereunder by Owner to Purchaser shall be under the sole control of Purchaser, and Owner shall not consent and/or authorize any person or entity to release such information without the express prior written approval of Purchaser.

 

 

	10.	RIGHT TO ENGAGE IN PREPRODUCTION 

 Owner acknowledges that during any and all applicable Option Terms, Purchaser may undertake development, preproduction and production activities in connection with any of the rights to be acquired hereunder.

 

	11.	OPTION PERIOD RESTRICTIONS 

 During any and all applicable Option Terms, Owner shall not exercise or otherwise utilize any of the rights herein granted to Purchaser nor the rights reserved to Owner; nor shall Owner permit the use of or use any other rights reserved to Owner in a way that would in any manner or for any purpose unfairly compete, interfere, or conflict with the full and unrestricted use of the rights herein granted to Purchaser.

 

	12.	COPYRIGHT OF WORK 

 If the Work is hereafter published in any territory, Owner shall take and complete any and all steps and proceedings, required by law of any territory within which such publication occurs, to secure copyright in the Work, to prevent the Work from falling into the public domain by reason of such publication and to reserve for Purchaser all rights in any such publication granted to Purchaser hereunder.  Owner shall take such steps and proceedings as may be necessary to renew or extend any and all copyrights now or hereafter secured upon the Work.  As a material part of the consideration moving to Purchaser for its execution of this Agreement, Owner, without the payment of any further consideration by Purchaser, shall (promptly upon any such renewal or extension) assign to Purchaser, for such renewed or extended term, all of the rights in the Work which are granted to Purchaser under this Agreement.  Owner hereby waives the provisions of Sections 203 and 304(c) of Title 17 of the U.S. Code, if either of said Sections is applicable, to the maximum extent permitted by law.  If Owner has the right to and does exercise any termination rights under either of said Sections, then Purchaser shall, nonetheless, have the right of first negotiation and first refusal rights with respect to any proposal by Owner to grant any other person any of the rights herein granted Purchaser.

 

	13.	ADDITIONAL DOCUMENTATION 

 Owner agrees to execute and procure any other and further instruments necessary to convey, assign and copyright the rights in the Work herein granted by Owner to Purchaser in any territory throughout the world.  If it shall be necessary under the laws of any territory that copyright registration be acquired in the name of Owner, Purchaser is hereby authorized by Owner to apply for said copyright registration in the name of Owner; and, in such event, owner shall and does hereby assign and transfer the same unto Purchaser, subject to the rights in the Work reserved hereunder by Owner.
Owner further agrees, upon request, duly to execute, acknowledge, procure and deliver to Purchaser such short form assignments as may be requested by Purchaser for the purpose of recording copyright ownership (or other bona fide purpose), in the United States or elsewhere.

 

	14.	INSTITUTION OF LEGAL ACTION 

 Owner does hereby grant to Purchaser the free and unrestricted right, but at Purchaser’s own cost and expense, to institute in the name and on behalf of Owner any and all suits and proceedings at law or in equity to enjoin and restrain any infringement of the rights herein granted; and Owner does hereby assign and set over unto Purchaser any and all cause or causes of action arising or resulting by reason of or based upon such infringement or infringements, and Owner does hereby assign and set over unto Purchaser any and all recoveries obtained in any such action.  Owner agrees that Owner will not compromise, settle or in any manner interfere with any such litigation, if brought, and Purchaser does hereby agree to indemnify and save harmless
Owner from any costs or damages which Owner may suffer as a direct result of any such suits or proceedings, except to the extent, if any, that any such suit or proceeding is the result of a breach by Owner of Owner’s representations, warranties or agreements hereunder.

 

	15.	DVD 

 Purchaser shall provide Owner with one DVD of the picture when commercially available, if ever.

 

 

	16.	ATTORNEY-IN-FACT 

 Owner agrees duly to acknowledge, execute and deliver (or to procure same) any and all further instruments relating to the origin, copyright ownership, clearances of privacy and personality rights, and Purchaser’s enforcement of rights granted to Purchaser herein, that Purchaser reasonably deems necessary or expedient to carry out and effectuate such purposes.  If Owner fails to do so, however, Purchaser shall have the right, and Owner hereby appoints Purchaser or its nominee, as Owner’s irrevocable attorney-in-fact and coupled with an interest, to execute, acknowledge, deliver and file (or to produce others to do so) such further instruments as Purchaser deems reasonably necessary or desirable to protect, defend or enforce Purchaser’s rights hereunder.  Purchaser shall have the benefit of all of Owner's right, title and interest in and to any agreements, assignments, releases and other instruments in writing heretofore or hereafter executed in favor of Owner, if any, insofar as any said documents purport to grant or grant Owner any of the rights herein granted to Purchaser, together with the full benefit of any representation, warranty or agreement made by any other person in favor of Owner. For clarification, Purchaser’s power-of-attorney granted herein does not extend to the execution by Purchaser of motion picture financing or distribution agreements on behalf of Owner that would make Owner a direct party to such agreements.

 

	17.	ASSIGNMENT 

 Purchaser may assign, transfer, license, delegate or grant all or any part of its rights, privileges, and property hereunder to any person.  This Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective heirs, executors, administrators, successors and assigns.  In the event Purchaser shall sell or assign all of its right, title, and interest in and to the Work, and in the event such transferee shall assume all of the executory obligations of Purchaser as of the date of such transfer, Purchaser shall be, and is hereby, released from all further obligations to Owner hereunder accruing from and after the date of such transfer.

 

	18.	MISCELLANEOUS 

  

	 	a.	Member of Public: Neither Purchaser’s entering into this Agreement, nor anything herein contained, nor submission of the Work to Purchaser shall put Purchaser in a worse position with respect to the Work and rights therein than Purchaser would otherwise have been in as a member of the general public.

  

	 	b.	Entire Understanding; Governing Law: This Agreement, including the exhibits attached hereto: (i) Contains the full and complete understanding of the parties and supersedes all other agreements between the parties whether written or oral with respect to the subject matter hereof; (ii) Shall be construed in accordance with the laws of the State of California, without giving effect to its choice of law rules.  Owner agrees that venue for any claims arising from this Agreement will be a court of competent jurisdiction within King County, Washington.

  

	 	c.	Waiver: No waiver by either party of any breach hereof shall be deemed a waiver of any preceding or succeeding breach hereof.  Purchaser shall not be liable for any breach of this Agreement unless it shall have received written notice from Owner of such breach and shall not, within a reasonable time after receipt of such notice, have cured such breach.

  

	 	d.	Relationship: Nothing herein contained shall constitute a partnership between or joint venture by the parties hereto, or constitute either party the agent of the other.  Neither party shall hold itself out contrary to the terms of this paragraph, and neither party shall become liable for the representation, act, or omission of the other, contrary to the provisions hereof. This Agreement is not for the benefit of any third party and shall not be deemed to give any right or remedy to any third party, whether referred to herein or not.

  

	 	e.	Severability: Nothing contained in this Agreement shall be construed so as to require the commission of any act contrary to law, and wherever there is any conflict between any provision of this Agreement and any material statute, law, ordinance, order or regulation contrary to which the parties have no legal right to contract, the latter shall prevail, but in such event, any provision of this Agreement so effected shall be curtailed and limited only to the extent necessary to bring it within the legal requirements; provided, however, that no other provision of this Agreement shall be affected thereby and such other provision shall continue in full force and effect.

  

	 	f.	Section Headings: Section headings are for convenience only and shall not be deemed part of this Agreement or used to construe it or otherwise be given any legal effect.

  

 

	 	g.	Attorney’s Fees: If an action is brought in connection with this agreement, the prevailing party shall be entitled to collect from the losing party all reasonable legal fees and costs incurred therein.

  

	 	h.	Counterparts: This Agreement may be executed in one or more counterparts which may be delivered by email or facsimile signature, but all of which, taken together, shall constitute but one original document.

  

 

	19.	NOTICES 

 All notices hereunder may be served personally or by certified or registered mail, telegraph, overnight courier service or cable to the following addresses, or such substitute address as either party may designate by written notice to the other.  The date of deposit of such notice in the United States mail or the date of delivery thereof to the telegraph or cable office shall be deemed the date of service of any notice. The addresses to which any such notice, accountings or statements are to be sent are as follows:

Purchaser:
Audience Productions, Inc.
c/o Jay T. Schwartz
2311 N. 45th St., Ste. 310
Seattle, WA 98103

Owner:
Andrew Craft
101 West 80th Street
Apt. 6E
New York, NY 10024

Michael Zam
 c/o William Morris Endeavor
9601 Wilshire Blvd. 3rd Fl.
Beverly Hills, CA 90210 

IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the date

first written above. 
  

									
	NAME OF OWNER:	 		 	PURCHASER: AUDIENCE PRODUCTIONS, INC.
					
	By:	 	 /s/ ANDREW CRAFT                                 /s/ MICHAEL ZAM
	 		 	By:	 	 /s/ JAY T. SCHWARTZ

	Name:	 	Andrew Craft                                               Michael Zam	 		 	Name:	 	Jay T. Schwartz
		 		 		 	Title:	 	President

 Exhibit A 
 Short Form of Assignment
  

		KNOW ALL BY THESE PRESENTS:  that in consideration of the payment of good and valuable consideration, receipt of which is hereby acknowledged, the undersigned party, Andrew Craft and Michael Zam (collectively “Owner”) hereby sells, grants, assigns and sets over unto Audience Productions, Inc., a Washington corporation (“Purchaser”) and its representatives, heirs, successors, and assigns, in perpetuity and throughout the world, the sole and exclusive motion picture, television, and allied and ancillary rights of every kind and nature (except certain specified reserved rights), including, without limitation, limited publication, radio, and television rights for advertising and exploitation purposes, in and to the literary, dramatic and/or musical writings and materials (“Work”) described as follows: 

   

	 		Title: “Lydia Slotnick Unplugged”

  

	 		Authors: 1. Andrew Craft, 2. Michael Zam

  

	 		Date and Place of Publication: Unpublished

  

	 		WGA Registration #: 108908

  

	 		Name of Copyright Registrant: Andrew Craft

  

 

		Said rights include, without limitation, all plots, themes, titles, dialogue, language, incidents, action, story, characters, and copyrights thereof and all renewals and extensions of such copyright, and any translations, novelizations, dramatizations, sequels, remakes and other adaptations or versions thereof, now made or hereafter created, made or permitted to be made by the Owner.  This assignment is of all rights acquired pursuant to a certain Option/Purchase Agreement dated as of July 20, 2009, between the parties hereto and is subject to all of the terms and conditions of said Agreement.

   

 

		Owner shall obtain or cause to be obtained renewals of all United States copyrights in and to the Work, whether or not referred to herein, and shall assign said rights under said renewal copyrights to Purchaser without further consideration.  Purchaser is also hereby empowered to bring, prosecute, defend, and appear in suits, actions, and proceedings of any nature under or concerning all copyrights in and to the Work and all renewals thereof, or concerning any infringement of any such copyright or renewal copyright, or interference with any of the rights hereby granted to Purchaser under said copyrights or renewals thereof, in its own name or in the name of the copyright proprietor and/or Owner, but at the expense of Purchaser, and at its option, Purchaser may join such copyright proprietor and/or Owner as a party in such suit, action or proceeding; any recovery therefrom is hereby assigned to Purchaser.

   

 

		Owner hereby assigns to Purchaser all documents heretofore or hereafter executed in favor of Owner by any third party insofar as such documents affect or pertain to any of the rights herein granted to Purchaser.

 

IN WITNESS WHEREOF, the undersigned have executed this assignment as of July 20, 2009.
  

									
	NAME OF OWNER:	 		 	PURCHASER: AUDIENCE PRODUCTIONS, INC.
					
	By:	 	 /s/ ANDREW CRAFT                                 /s/ MICHAEL ZAM
	 		 	By:	 	 /s/ JAY T. SCHWARTZ

	Name:	 	Andrew Craft                                               Michael Zam	 		 	Name:	 	Jay T. Schwartz
		 		 		 	Title:	 	President

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