__________ Productions, Inc.
Re: _____________
Dear _______________:
1. Parties. This letter will confirm the agreement
("Agreement") reached between __________________ ("Distributor")
and _________________ ("Owner") with respect to the feature film
presently entitled __________________ ("the Picture"), whereby
Owner has engaged the services of "Distributor" as exclusive authorized
sales agent of Owner for the Picture in the Territory (as defined below),
upon the following terms and conditions.
2. Term. The term of this agreement ("Term") shall commence
as of this date of this Agreement and shall expire __________________
years after delivery (as defined below) provided however that the term
shall automatically be extended for an additional __________________
years if Owner receives __________________ ($__________________)
or more as it's share of the Gross Receipts as defined below. However,
at
any time during the Term, Distributor shall be authorized to enter into
sublicense agreements extending up to __________________ years in
length.
3. Territory. Distributor shall have the right to sublicense the
Picture
during the Term in the entire universe excluding the United States, and
Canada and their respective possessions and territories ("the
Territory").
4. Rights. Distributor shall have all rights in the Territory during
the Term in all media now known or hereafter developed including without
limitation theatrical, video devices (including videocassette and
videodisc)
television (including free, cable, pay and satellite) and electronic
publishing.
All other rights including print publishing are reserved to Owner. In
the
event that electronic publishing rights are not exploited within five (5)
years from the date of execution of this Agreement, such rights shall
revert to Owner.
5. Division of Gross Receipts. As used in this Agreement, the
term "Gross Receipts" shall mean all non-refundable moneys or credits
payable by foreign or, if applicable, U.S. distributors once actually
received by Distributor in United States Dollars from all sales and e
xploitation of the Picture. For purposes of determining and
calculating the distribution fees payable to Distributor hereunder,
Gross Receipts shall be calculated net of withholding taxes and
collection costs. Gross Receipts shall be divided between
Owner and Distributor as follows:
a. Distributor shall first deduct and retain its fee of
twenty percent (20%) of Gross Receipts. Distributor shall
bear the fees of any subdistributor from its said fee.
b. Distributor shall next deduct and retain a flat fee
of __________________ Thousand U.S. dollars
($__________________ ) to cover a portion
of Distributor's general out-of-pocket expenses (e.g., travel,
hotels, temporary personnel, sales offices, entertainment,
equipment rentals, sales trips, public relations fees and
overhead expenses, etc.) incurred in connection with
the sale of the Picture and attending various sales markets
where the Picture will be offered to foreign distributors.
c. Distributor shall next deduct and retain an
amount equal to all direct out-of-pocket distribution
expenses applicable to the Picture incurred by Distributor,
including without limitation advertising, creative fees, printing,
screening rooms, cassettes and the like. Provided that Owner
has provided sufficient delivery materials to create same,
Distributor shall at a minimum produce a professional
quality trailer, a one-sheet and a poster for the Picture.
Distributor agrees to expend a minimum of
__________________Thousand Dollars ($__________________)
in direct out-of-pocket distribution expenses to promote the Picture.
Distributor agrees to consult in good faith with Owner r
regarding the marketing plan and artwork prior to the commencement
of execution thereof, it being understood that Distributor's decisions
regarding these matters shall be final and controlling. Distributor shall
not be entitled to deduct any such expenses without Owner's prior
written approval not to be unreasonably withheld
d. Provided Owner is not in breach of Owner's representations
and warranties of this Agreement and has made complete Delivery, the
balance shall be Owner's share of Gross Receipts and shall be paid
to Owner in accordance with Paragraph 9 of this Agreement.
e. Advance. Distributor shall furnish Owner
a __________________ Dollar ($__________________)
Advance against Owner's share of the Gross Receipts payable
on the later of execution of this Agreement or complete delivery
of the Delivery Items in Schedule "A".
6. Delivery. On completion of the Picture, Owner shall
deliver to Distributor, at Owner's expense, all those items ("Items")
relating to the Picture referred to in Schedule
"A"
("Delivery"). All Items delivered to Distributor by Owner shall be of
first class,
professional quality, suitable for theatrical exhibition and acceptable
to foreign television broadcasters' quality control requirements.
Distributor shall approve or disapprove of the technical quality
of the Delivery Items within three (3) weeks of Distributor's
receipt thereof. Any objections regarding such technical quality not
made within said time period shall be deemed waived. Owner shall
retain possession of the negative of the Picture but Distributor shall
have access thereto and shall be furnished with customary laboratory
access letters. If Owner has an Errors and Omissions insurance policy
for the Picture, Distributor shall be named as an additional insured. If
Distributor elects to purchase an Errors and Omissions Insurance Policy
for the Picture, Owner shall be named as an additional insured, and such
cost shall be a deductible distribution expense hereunder.
7. Owner's Consultation Rights. Distributor agrees to consult
with Owner in good faith, if Owner is readily available, prior into
entering into sublicensing agreements in the following "major"
territories: Italy, Germany, England, Spain, France, Japan, and
Australia.
However, Distributor, shall have final approval right as to any such
agreements.
Distributor and Owner shall mutually establish minimum guarantee amounts
per territory (hereinafter "Territorial Minimums"). Nothing contained
herein or in the schedule of Territorial Minimums shall be deemed to
require Distributor in fact to obtain any such Territorial Minimum(s),
but, rather, it is the intention of the parties hereto that Distributor
may
not enter into an agreement for an amount less than the applicable
Territorial Minimum without first obtaining Owner's approval not to be
unreasonably withheld.
8. Distributor's Rights. Distributor shall have the right to
advertise, promote, sell, assign and sublicense without limitation the
theatrical, video, television and all other rights and otherwise exploit
and deal with the Picture and its title, in Distributor's sole good faith
discretion, in connection with Distributor's sale of the Picture in the
Territory. Distributor shall also have the right to change or edit the
Picture and its title, but only to the extent reasonably necessary for
censorship requirements and the foreign exploitation of the Picture
including, without limitation, re-editing, re-mixing, adding to and
deleting from, and adding appropriate credits to the Picture as
Distributor shall deem reasonably necessary or appropriate.
Any and all expenses incurred by Distributor in connection with
changes in the Picture shall be paid for by Distributor and deemed
distribution expenses recoupable by Distributor pursuant to
Paragraph 5c of this Agreement, and shall be subject to the
approval requirements set forth therein. Distributor shall further
have the right to sell the Picture along with other pictures, i.e., in
groups or "packages," in which case proceeds from the exploitation
of the group or package shall be allocated by Distributor among the
various motion pictures in an equitable manner to be determined in
good faith by Distributor.
9. Accounting. Distributor shall report to and make appropriate
payments to Owner on a calendar quarterly basis, commencing upon
collection of first moneys. Distributor shall maintain a separate trust
account for the Gross Receipts derived from the Picture and a copy
of all bank statements for said account shall be sent directly by the
bank to Owner. Owner's share of the Gross Receipts shall be held
in trust by Distributor for Owner. Owner shall have a lien on
Owner's share of the Gross Receipts. Subject to Distributor's retention
of reasonable reserves for distribution expenses, Owner's share of the
Gross Receipts shall be disbursed to Owner within thirty (30) days of
receipt by Distributor thereof and interest shall accrue at the rate of
1.5% per month on any sums more than 30 days past due. Accounting
statements shall be sent to Owner within thirty (30) days following the
close of the applicable accounting period. Distributor shall maintain
complete books and records with regard to all sales and rentals of the
Picture in Los Angeles county. A copy of each distribution or licensing
Agreement that Distributor enters into shall be furnished to Owner within
thirty (30) days of complete execution thereof Owner shall have customary
audit rights with respect to Distributor's records pertaining to the
Picture,
exercisable at Distributor's offices not more frequently than once every
twelve (12) months. In the event an audit is conducted and it discloses
that the Owner has been underpaid the greater of 5% of the amount paid
or $1,000.00, then Distributor shall reimburse Owner its reasonable,
actual out-of-pocket audit costs. Accounting statements shall be
incontestable thirty -six (36) months after they are mailed by
Distributor
to Owner at the above address or as Owner may designate in writing
unless written objection is made by Owner. Copies of all contracts,
payments, and statements due to Owner shall be sent to Harris Tulchin,
Esq.,
and 10% of all sums paid to Owner shall be payable directly into the
Harris Tulchin & Associates Client's Trust Account, 11377 W. Olympic
Blvd., 2nd Floor, Los Angeles, CA 90064-1683.
10. Warranties. Owner represents and warrants to the best
of Owner's knowledge that it has the right to enter into this Agreement
and grants the rights in question; that the Picture is (or will be upon
Delivery) registered for copyright in the United States and is protected
or protectible under the copyright or similar laws of all other countries
in the Territory; that there are (or as of the Delivery will be) no
claims,
security interests (other than any required by the Screen Actors Guild),
liens, claims, lawsuits or other legal entanglements or encumbrances, or
any other agreements of any kind, inconsistent with or which could tend
to diminish the right granted to Distributor hereunder; that
Distributor's
exercise of the rights granted shall not violate the right of any other
person
or entity; and that no moneys will become due from Distributor to any
person, party, organization or society by Distributor's exercise of the
rights granted hereunder. Distributor represents and warrants to the
best of Distributor's knowledge that it has the capacity to enter into
this Agreement, is not insolvent or in danger of bankruptcy, that any
changes Distributor makes to the Picture (except for censorship
requirements) will not expose Owner to liability, and that Distributor
is in the motion picture distribution business and will continue in
said business during the Term hereof.
11. Indemnification. Owner shall defend, indemnify and
hold Distributor harmless from and against any all claims, obligation
and expenses (including attorney's fees and costs incurred by
Distributor),
litigation and judgments of any kind whatsoever arising from or related
to
any breach of this Agreement by Owner. Distributor shall defend,
indemnify
and hold Owner harmless from and against any all claims, obligation and
expenses (including attorney's fees and costs incurred by the Owner),
litigation and judgments of any kind whatsoever arising from or related
to
any breach of this Agreement by Distributor and for any liability arising
from material added to the Picture or changes made to the Picture by
Distributor, except for censorship changes.
12. Agency Coupled With An Interest. Because of the
costs and expenses which will be incurred by Distributor in
marketing the Picture, the agency relationship created hereby
shall be deemed coupled with an interest until recoupment of all
advances and expenses incurred by Distributor in connection with the
Picture
13. Arbitration and Jurisdiction. This Agreement shall
be interpreted in accordance with the laws of the State of California,
applicable to agreements executed and to be wholly performed therein.
Any controversy or claim arising out of or in relation to this Agreement
or the validity, construction or performance of this Agreement, or the
beach thereof, shall be resolved by arbitration before a single
arbitrator
in accordance with the rules and procedures of the American Film
Marketing Association, as said rules may be amended from time to time.
Such rules and procedures are incorporated and made a part of this
Agreement by reference. If the American Film Marketing Association
shall refuse to accept jurisdiction of such dispute, then the parties
agree to arbitrate such matter in accordance with the rules and
procedures set forth in the California Code of Civil Procedure in
Los Angeles before a single arbitrator familiar with entertainment
law approved by each of the parties who shall be either a retired
judge and/or procured through and in accordance with the rules
of the Judicial Arbitration and Mediation Service. The parties
agree hereto that they will abide by and perform any award
rendered in any arbitration conducted pursuant hereto, that
any court having jurisdiction thereof may issue a judgment
based upon such award and that the prevailing party in
such arbitration and/or confirmation proceeding shall be
entitled to recover its reasonable attorney's fees and expenses.
The arbitration will be held in Los Angeles and any award shall
be final, binding and non-appealable. The parties agree to
accept service of process in accordance with the AFMA Rules.
14. Additional Documentation. Owner and Distributor
agree to negotiate in good faith and enter into such further and
additional agreements, and to execute such additional documents,
as shall be reasonably necessary to carry out the purpose of this
Agreement.
Notwithstanding the foregoing, this Agreement shall constitute
and set forth the full and complete agreement between the parties
and shall be legally binding on the parties. Except as expressly
provided herein, neither party has made any promises, representations
or warranties to the other party in connection with negotiation or
execution of this Agreement. This Agreement may not be modified
or amended except pursuant to a written agreement between the
parties. Any and all estimates or projections as to sales of the
Picture by either party shall be deemed statement of opinion only
and shall not be binding on the parties.
15. Right of First Negotiation. Provided that Distributor
is not in material breach of this Agreement, Distributor shall have
a right of first negotiation with respect to any extension of the Term
hereof.
16. Assignment. Neither party shall have the right to
assign this Agreement, unless to a parent, affiliate, or subsidiary,
or an individual or entity acquiring all or the majority of the
outstanding
shares or assets of such party, without the prior written consent of the
other party, such consent not to be unreasonably withheld, it being
understood that Owner shall nevertheless have the right to assign its
rights in the Picture and its rights to receive moneys hereunder
subject to the terms and conditions of this Agreement without
Distributor's consent, upon written notice to Distributor specifying
the name, address and telephone number of the assignee. Distributor
may nevertheless license the Picture in various territories in
accordance with the terms of this Agreement without Owner's
prior written approval.
17. Termination.
a. No failure by either party hereto to
perform any of its obligations under this Agreement shall be deemed to
be a material breach of this Agreement until the non-breaching party
has given the breaching party written notice of its failure to perform
and such failure has not been corrected within thirty (30) days from
and after the giving of such notice. In the event of an uncured material
breach, either party shall be entitled to terminate this Agreement by
written notice to the other party, obtain monetary damages and other
appropriate relief and in the case of Owner, regain all of its rights in
the
Picture subject to existing executory contracts and licenses
respecting the Picture.
b. Owner shall have the right to terminate
this Agreement and cause all rights herein conveyed to Distributor to
revert to Owner subject, however, to agreements with third parties
conveying rights in the Picture (in respect to which Owner shall be
deemed an assignee of all of Distributor's rights therein in respect to
the Picture), by written notice to Distributor in the event that
Distributor files a petition in bankruptcy or consents to an involuntary
petition in bankruptcy or to any reorganization under Chapter 11 of the
Bankruptcy Act. Notwithstanding anything to the contrary which
may be contained in the preceding sentence, in the event that
Distributor files a petition in bankruptcy or consents to an involuntary
petition in bankruptcy or to any reorganization under Chapter 11 of the
Bankruptcy Act, Owner shall not be entitled to terminate this Agreement
if thereafter: (1) Distributor shall segregate Owner's share of the
moneys
that Distributor receives in connection with the Picture and place the
moneys that Distributor receives in connection with the Picture into a
separate trust account and that such moneys shall not be commingled
with Distributor's other funds, and Owner's share of such moneys shall
become Owner's property immediately upon the collection by Distributor
and (2) this procedure is approved by the Bankruptcy Court. In
connection with the foregoing, Distributor hereby grants to Owner
a security interest in the Picture and the right to receive moneys
from the exploitation of the Picture ("Security Interest"). Appropriate
UCC 1 Financing Statements will be signed by Distributor to perfect
said security interest. Owner may by written notice to Distributor
execute against Owner's Security Interest if and only if Distributor
files a petition in bankruptcy or consents to an involuntary bankruptcy
or a re-organization under Chapter 11 and Owner is entitled to terminate
this Agreement in accordance with the other provisions of this paragraph.
18. Advertising Materials: Provided that Distributor has
fully recouped all of its actual costs and expenses in connection with
advertising and promotional materials from all sources of Gross Receipts,
the right to use same to advertise and promote the Picture shall revert
to
Owner at the conclusion of the term hereof. In the event that Owner is
unrecouped as aforesaid, Distributor shall furnish such materials to
Owner upon the payment to Distributor of the unrecouped portion
of the costs and expenses thereof. Owner shall nevertheless have
access to such materials for use in connection with a U.S. distribution
agreement at no additional costs other than duplication costs, if any.
19. Confidentiality: Each party will regard and preserve
as confidential all information related to the business (past, present,
or
future) of the other party and/or its clients and suppliers, that may
arise
or may be obtained from any source, other than the public domain, as a
result of this Agreement, including without limitation the terms and
conditions of this Agreement. Neither party will, without first
obtaining
the other party's written consent, not to be unreasonably withheld,
disclose
or use for its benefit said information to any person, firm or
enterprise, other
than the parties' respective attorneys and accountants, except as
required by law.
WHEREFORE, Owner and Distributor have entered into
this Agreement as of the date hereof.
Very truly yours,
Its: __________________
Harris Tulchin on behalf of
__________________ Distribution Co.
AGREED AND ACCEPTED:
By: __________________
Its: __________________
Copyright 1997 Harris Tulchin
All Rights Reserved