Document:

Exhibit 10.3

 

DISTRIBUTION
AGREEMENT

 

This
Agreement and the attached Standard Terms (collectively, the “Agreement”) are dated as of September 30, 2015 and set
forth the terms of the Agreement between FONU2, Inc. doing business as Moon River Studios, Inc. (“Owner” or a “Party”)
of 135 Goshen Road Ext., Suite 205, Rincon, Georgia 31326 and Magna Entertainment (“Magna” or a “Party”)
(and together with the Owner, collectively, “Parties”) with respect to Owner’s engagement of Magna as agent
in connection with the distribution and exploitation of the motion picture “Yellow.” The motion picture (written by
Nick Cassavetes and Heather Wahlquist, directed by Nick Cassavetes and starring Heather Wahlquist, Sienna Miller, Melanie Griffith,
Lucy Punch, Ray Liotta, Gena Rowlands...), currently titled Yellow (“Picture”)  shall be distributed
on the following terms and conditions:

 

	1)
    Engagement	Magna
will be exclusive Owner’s agent for all sales, licensing, distribution, and other exploitation of the Picture in the Territory
(as defined below) across all Licensed Media (as defined below). Magna will also have the right to advertise and promote, and
arrange for the advertising and promotion of, the Picture.
	 	 
	2)
    Territory	Worldwide.
	 	 
	3)
    Term	The
    period beginning on execution of the Agreement and continuing for two (2) years from completion of materials delivery, with
    successive one (1) year extensions unless either Party ceases such extensions on sixty (60) days advance written notice to
    the other Party. For clarity, after expiration or termination of the Term, Magna will continue to receive its fee in connection
    with all exploitation of the Picture arranged by Magna during the Term for any agreements mutually agreed upon.  
	 	 
	4)
Licensed Media
	All
        forms of exploitation, whether on a free, paid or subscription basis, or otherwise, including without limitation:

                                                                                      

        (a)    
        theatrical

        (b)    
        via all forms of Internet Protocol delivery to all IP-capable devices; 

        (c)    
        via all forms of video-on-demand and pay-per-view;

        (d)    
        via all modes of television exhibition; 

        (e)    
        via traditional distribution of home video devices; 

        (f)     
        via so called “disc on demand,” “manufacture on demand,” and similar fulfillment services;

        (g)    
        to hotels, educational institutions, libraries, hospitals and corporate locations;

        (h)    
        to airlines, ships, oil rigs and military bases registered in and/or flying the flag of any part of the Territory.

	 	 
	5)
Gross Receipts
	All
    sums received by Magna in connection with all sales, licensing, distribution and exploitation of the Picture hereunder.

 

     

     

    

 

	6)
Magna Fee
	As
    partial consideration for Magna entering into this Distribution Agreement, the Owner shall have assumed and hereby fully guarantees
    $696,128.73 of indebtedness of Medient Studios, a predecessor to the Owner, to an entity that may be deemed an affiliate of
    Magna (which the Owner represents such funds were used by Medient Studios in connection with production expenses of the film
    “Yellow”) and the Owner shall immediately exchange such $696,128.73 of indebtedness for an 8% Senior Convertible
    Exchange Note of the Owner in the aggregate principal amount of $696,128.73 made payable to Magna, the form of which is annexed
    hereto as Exhibit 1. Upon the Owner’s recoupment and receipt of all distribution fees owed to it from the release of
    the film “Yellow”, and the payment of all obligations of the Owner to Magna pursuant to the Exchange Note, the
    balance of all remaining funds received by the Owner as a result of the distribution of the film Yellow, shall be paid to
    Medient and/or its debtors.
	 	 
	7)
Print & Advertising Spend
	For
    clarity, the budget for the Print & Advertising spend of the Picture, including without limitation the theatrical exhibition,
    and all promotion of the Picture, shall be mutually determined and agreed in advance by Owner and Magna.  Owner
    hereby approves Magna’s theatrical distribution of the Picture via Screen Media.
	 	 
	

        8)
        Additional Owner Representations
	Owner
hereby represents and warrants that the claims of breach of contract, breach of covenant and fair dealing, fraudulent misrepresentation,
and negligent misrepresentation that were filed against Nick Cassavetes, a producer of the Picture, in Los Angeles Superior Court
on December 18, 2012 by plaintiffs John Thomas and Twinspin Music, naming Owner as a defendant, have been fully and adequately
resolved and that no further action is, or will be, taken by any party in connection with any such claims. Further, Owner represents
that it is the exclusive owner of the worldwide distribution rights for the Picture. The foregoing representations shall be in
addition to any other representations made by Owner in this Agreement and any addendum hereto.

	 	 
	9)
    Allocation of Receipts	1.    Except as otherwise agreed, first, Magna will deduct and retain from Gross Receipts all funds until all obligations to
        Magna under the Note and is paid in full:.

        2.    After item 9.1 is fully satisfied, from Gross Receipts, Owner shall receive One Hundred Percent (100%) of further remaining
        sums pursuant to the payment terms as per the Agreement (“Net Receipts”).

        All
payments of Net Receipts to the Owner shall be made within thirty (30) days of actual receipt by Magna.

 

     

     

    

 

STANDARD
TERMS

 

	10)
    Appointment	Owner
    appoints Magna to act as Owner’s agent in connection with all sales, licensing, distribution and other exploitation
    of the Picture throughout the Territory and for the Term in the Licensed Media, in all formats and versions (including, without
    limitation, versions formatted for television as well as segments or episodes derived from the Picture), as further set forth
    in this Agreement and these Standard Terms. Magna shall additionally have the right to advertise and promote the Picture,
    and arrange for the advertising and promotion of the Picture, in all media now known or hereafter devised (the “Advertising
    Rights”). For clarity, capitalized terms used herein that are not defined shall have the meaning assigned to them in
    the Cover Sheet.  
	 	 
	11)
Accounting, Reporting & Payment
	Magna
        will make available accounting statements to Owner’s account via email, and will deliver to Owner payment of Net
        Receipts (if any) to the reporting and payment contact in accordance with paragraph 9 of the Agreement. All statements
        submitted to Owner shall include, at a minimum, transactional data and revenues generated by the Picture as reported to
        Magna by each such licensee of the Picture, and all expenses incurred hereunder.

        Owner
        shall have the right, upon at least thirty (30) days prior written notice, to audit Magna’s books and records solely
        related to the Picture, at Magna’s regular place of business and during Magna’s regular business hours. Such
        right to audit is limited to the Picture, and under no circumstances shall Owner have the right to examine records relating
        to Magna’s business generally, or with respect to any other titles or content. Such audit shall be conducted by
        an independent certified accountant at Owner’s sole cost and expense, and not more frequently than once per year.
        No statement may be audited more than once and no such audit shall be conducted in a manner that unreasonably interferes
        with Magna’s business.

	 	 
	12)
Residuals & Third Party Participations
	Owner
    is responsible for any and all residual and other additional or supplemental payments payable to any union, guild or other
    entity (e.g., SAG, DGA, WGA) required to be made by reason of the exploitation of the Picture and the advertising rights as
    set forth herein. Owner is responsible for paying all third party participations granted by Owner in connection with the Picture.
    
	 	 
	13)
    Delivery	All
    necessary clearance, preparation, and delivery to Magna of such materials necessary for the reasonable and efficient distribution
    and exploitation of the Picture (“Materials”) shall be at Owner’s sole cost and expense. Owner acknowledges
    and agrees that Owner’s failure to timely deliver Materials may prevent Magna from making the Picture available for
    distribution, and any delayed performance or non-performance by Magna arising from (i) Owner’s failure to meet its delivery
    obligations of the Materials hereunder, or (ii) the failure of the video elements of the Picture or any trailers for the Picture
    to meet quality control standards of any licensee shall not be a breach hereof by Magna. 

 

     

     

    

 

	14)
Source Copy Loss or Damage
	Owner
    is solely responsible for creating and retaining copies of the Picture or other Materials prior to submitting them to Magna.
    Magna shall not be responsible for any loss of or damage to physical elements of the Picture or other Materials submitted
    to Magna under any circumstances or for any reason whatsoever, provided such loss or damage is not the result of Magna’s
    negligence or willful misconduct. 
	 	 
	15)
    Editing	Magna
    will not edit, and will not permit third parties to edit the Picture except for the following purposes: (i) to prepare closed
    captioned, subtitled and/or dubbed versions the Picture; (ii) to avoid legal liability or conform the Picture to applicable
    laws, standards and practices; (iii) if applicable, to insert interstitial advertisements; (iv) if applicable, to compress
    the Picture and/or the credits as required by any third party licensee in connection with time limitations in a manner customary
    in the television industry; (v) to create clips, excerpts and segments for  promotional use or in connection with
    serialized exhibition of the Picture; and, (vi) if necessary, to create advertising and publicity materials for the Picture,
    including without limitation trailers, still photos and customized metadata.
	 	 
	16)
Magna Logo
	Magna
    shall be entitled to insert its trade names and/or logos before the main titles of the Picture and after the end titles of
    the Picture, and to insert such trade names and/or logos in all commercialization thereof and/or paid advertising related
    thereto.  At Magna’s option, it shall have the right to one additional logo to be added to the end titles.
    In addition, Magna shall have the right to assume two (2) executive producer credits on the Picture.
	 	 
	17)
    Publicity	Other
    than as required by law, Owner shall not, without Magna’s prior written consent, issue any press release or other publicity
    relating to the Agreement or reference any trade name, trademark, logo, or commercial symbol of Magna or its affiliated entities
    in brochures, websites, advertisements, email communications, client lists or any other promotional materials, and/or otherwise
    except as provided in these Standard Terms. The foregoing shall not prevent Owner from making incidental, non-derogatory references
    to the existence of the relationship between the Parties hereunder in general interviews, provided that such references do
    not violate the Confidentiality provision set forth below. 
	 	 
	18)
    Confidentiality	Other
    than as required by law, governmental authority, or to enforce its rights hereunder, neither Party will, without the express
    written consent of the other Party, disclose the terms of the Agreement or any other business information shared by the other
    Party which should reasonably be understood to be confidential, except to its attorneys, agents, accountants, investors, lenders,
    or directors on a “need-to-know” basis, provided that such persons are similarly required to keep such information
    confidential. 
	 	 
	19)
    Waiver	No
    waiver by either Party of any provision of the Agreement, or of any breach or default by the other Party shall constitute
    a continuing waiver, and no waiver shall be effective unless made in a signed writing.

 

     

     

    

 

	20)
    Representations & Warranties	Each
    of the Parties represents and warrants the following: (i) that it is a duly organized, validly existing corporation or other
    legally recognized business organization in good standing under the laws of its jurisdiction of incorporation or formation,
    and (ii) that it has the full legal right, power, and authority to execute this Agreement and to perform its obligations hereunder,
    and the consent of no other person or entity is necessary in connection with the foregoing. Owner further represents and warrants
    that it has obtained all rights and clearances necessary to exploit the Picture and all elements contained therein (as further
    set forth in the attached Schedule 1 and incorporated by reference herein) and that Owner has not entered into and
    will not enter into any agreement in conflict with Magna’s rights hereunder. 
	 	 
	21)
    Disclaimer	Magna
    agrees to use good faith efforts to generate exposure for the Picture and to maximize revenue from the sales, licensing, distribution
    and other exploitation of the Picture. However, Magna makes no representations or warranties that it will obtain opportunities
    to exploit the Picture or generate any minimum amount of revenue.
	 	 
	22)
    Insurance	Owner
    shall obtain, or cause to be obtained, a standard producer’s and distributor’s errors and omissions liability
    insurance policy in connection with the Picture, with minimum coverage limits in the amount of One Million Dollars ($1,000,000)
    per claim and Three Million Dollars ($3,000,000) in the aggregate. Upon request, Owner shall provide Magna with proof of such
    coverage, and a certificate naming Magna or sub-distributor as additional insured, in a form acceptable to Magna.
	 	 
	23)
    Indemnification	Each
    Party (an “Indemnifying Party”) agrees to defend, indemnify and hold harmless the other Party and such other Parties,
    control persons (as defined under the Federal Securities Laws), affiliates, officers, attorneys, members, directors, equity
    and/or debt holders, employees, agents, representatives and the other related persons (an “Indemnified Party”)
    from and against any third party claim, action, judgment or liability of any kind arising out of or in connection with any
    breach of any representation, warranty or agreement made by the Indemnifying Party in the Agreement or these Standard Terms
    or any addenda thereto.  By way of example, any cost or liability that results from Owner’s failure to clear
    the Picture or to own or control the applicable rights will be Owner’s sole responsibility.

 

     

     

    

 

	24)
Governing Law
	This
    Agreement and the terms and conditions set forth herein, shall be governed by and construed solely and exclusively in accordance
    with the internal laws of the State of New York without regard to the conflicts of laws principles thereof. The parties hereto
    hereby expressly and irrevocably agree that any suit or proceeding arising directly and/or indirectly pursuant to or under
    this Agreement shall be brought solely in a federal or state court located in the City, County and State of New York. By its
    execution hereof, the parties hereto covenant and irrevocably submit to the in personam jurisdiction of the federal and state
    courts located in the City, County and State of New York and agree that any process in any such action may be served upon
    any of them personally, or by certified mail or registered mail upon them or their agent, return receipt requested, with the
    same full force and effect as if personally served upon them in New York, New York. The parties hereto expressly and irrevocably
    waive any claim that any such jurisdiction is not a convenient forum for any such suit or proceeding and any defense or lack
    of in personam jurisdiction with respect thereto. In the event of any such action or proceeding, the party prevailing therein
    shall be entitled to payment from the other parties hereto of all of its reasonable counsel fees and disbursements.
	 	 
	25)
    Severability	If
    any provision of the Agreement shall be determined by any court of competent jurisdiction to be void and unenforceable, all
    other provisions of the Agreement shall nevertheless continue in full force and effect.
	 	 
	26)
    Complete Agreement:	This
        Agreement contains the full and complete understanding between the Parties and supersedes all prior agreements and understandings,
        and cannot be modified except in a writing signed by both Parties.

        

 

SIGNATURE
PAGE TO FOLLOW

 

     

     

    

  

By
signing below, the Parties agree to the terms set forth in this Agreement including the Standard Terms that are incorporated herein
by this reference. In the event of a conflict between the Agreement and the Standard Terms, the terms of the Agreement shall prevail:

 

	Magna
    Entertainment  	 	Fonu2,
    Inc.
	 	 	 	 	 
	 	 	 	 	 
	Name:	 	 	Name: 	Roger Miguel
	Title:	 	 	Title:	Chief Executive
    OfficerExhibit 10.4

 

Confidential

Memorandum of Understanding

 

PURPOSE

 

This Memorandum of Understanding (“MOU”)
between Effingham County Industrial Development Authority (“ECIDA”) and FONU2, a publicly traded company, that operates
under the name of Moon River Studios (“Moon River”). Moon River is currently in default under a Bond Lease and MOU
(with associated agreements) with the ECIDA that it wishes to terminate and renegotiate a new movie studio project. The planned
movie studio site is located in Effingham County, Georgia on property commonly known as the “North Tract”.

 

It is the common intention of the Parties to
develop an approximate 51-acre portion of the property for the purpose of making motion pictures and the development of studios
and sound stages. It is the stated goal of the ECIDA to attract businesses that will ultimately provide jobs and careers for the
citizens of Effingham County and beyond. It is the stated goal of Moon River to develop and construct movie studios to film and
edit motion pictures.

 

The Parties hereby seek to terminate any existing
obligations of either Party with respect to the former project on approximately 1,550-acres and commonly known as the “Studioplex”.

 

In its place, the Parties hereto seek to agree
on a revised film studio project that would be built on approximately 51-acres anticipating a minimum of $10M in direct capital
expenditures and the creation of 250 full time jobs within five (5) years by Moon River.

 

Initial Terms:

 

		1.	The scale of the revised project is to essentially reflect Phase 1 of former “Studioplex”
Master plan, approximately 51+/- acres.

 

		2.	10 Years of 100% ad valorem tax abatement with a PILT at a rate of $51,000 per year. ($10,000 per
acre “Freeze”.) First payment due at closing. Subsequent payments due 12 months from closing.

 

		3.	Will allow for use via lease on unencumbered property from time to time as long as there is no
impact on other tenants.

 

		4.	IDA to fund and complete access road and water line to site.

 

		5.	Moon River to utilize on-site septic system (with no further obligation by IDA for wastewater treatment).

 

		6.	IDA to control all acreage outside of lease agreement.

 

		7.	250 Job minimum to be created within five (5) years. Annual minimums will be required such that;
by the end of Year 1, 95 full time, permanent jobs are created and maintained, by the end of Year 2 a minimum of 100 full time,
permanent jobs have been created and maintained, by the end of Year 3 a minimum of 150 full time, permanent jobs have been created
and maintained, by the end of Year 4 a minimum of 200 full time, permanent jobs have been created and maintained and by the end
of Year 5 a minimum of 250 full time, permanent jobs have been created and maintained. See requirements table in attached Exhibit
“A”.

 

    

     

    

 

		8.	$10M Capital Investment minimum within five (5) years. Annual minimums will be required such that:
by the end of Year 1, $2,000,000 in building and/or equipment will have been invested directly by the company, by the end of Year
2, an additional $2,000,000 in building and/or equipment will have been invested directly by the company, by the end of Year 3,
an additional $2,000,000 in building and/or equipment will have been invested directly by the company, by the end of Year 4, an
additional $2,000,000 in building and/or equipment will have been invested directly by the company, by the end of Year 5, an additional
$2,000,000 in building and/or equipment will have been invested directly by the company. See requirements table in attached Exhibit
“A”.

 

		9.	Buy out at FMV by a mutually agreed appraiser after Year 2 cumulative targets have been met (i.e.
total capital investment of at least $4,000,000 and at least 100 full time jobs).

 

DEFINITIVE AGREEMENT

 

The parties agree that this document shall
be superseded by a definitive agreement that is mutually acceptable, which agreement will contain, among other things (1) the termination
of the MOU, Economic Development Agreement, Bond Purchase Loan Agreement, Lease Agreement, as well as other documents and agreements
generally dated July 1, 2013, all of which pertain to the 1,550-acres (Studioplex”) project; and (2) the terms and conditions
referenced herein pertaining to the “new” 51-acre project and other acceptable terms and conditions for the definitive
agreement. This MOU is an expression of interest only and is not a commitment of Moon River or ECIDA to enter into a binding agreement.
Each party acknowledges and agrees that except for the Confidentiality portion of this MOU, which provisions shall be binding upon
the parties, this MOU is not intended to be a contract or evidence of any contract or other binding obligation, and neither party
shall have any liability or legal obligation until such time as a mutually agreeable and more comprehensive agreement can be prepared,
executed and delivered by the parties. This MOU shall be governed in all respects by the laws of the State of Georgia.

 

IN WITNESS WHEROF,
the parties have signed this MOU as of the _____ day of October, 2015.

 

FONU2, INC. “Moon River Studios”

 

By: ________________________________

 

Name: _____________________________

 

Title: ______________________________

 

Date: ______________________________

  

EFFINGHAM COUNTY INDUSTRIAL DEVELOPMENT
AUTHORITY

  

By: ________________________________

 

Name: ______________________________

 

Title: _______________________________

 

Date: ______________________________

 

    2

     

    

 

Exhibit “A”

 

Rules for satisfying job and investment requirements
will be the same as under Schedules 4.2 and 4.4 of previous agreement.

 

The Jobs and investment requirements applicable
to the Company are set forth in the table below:

 

	PERFORMANCE PERIOD (INCLUDES ALL CALENDAR YEARS SCHEDULED BELOW, AND ANY YEAR THROUGH WHICH THE PERFORMANCE PERIOD IS EXTENDED)	COMMUNITY JOBS GOAL (CUMULATIVE)	CAPITAL INVESTMENT GOAL (CUMULATIVE) BY FONU2 (MOON RIVER)
	Year 1 (2016)	95	$2 million
	Year 2 (2017)	100	$4 million
	Year 3 (2018)	150	$6 million
	Year 4 (2019)	200	$8 million
	Year 5 – Year 20 (2020 & on)	250	$10 million

 

 

3

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