SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10-K/A
AMENDED ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1994
Commission File No. 0-17342
LIVE ENTERTAINMENT INC.
(Exact name of Registrant as specified in its charter)
Delaware 95-4178252
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
15400 Sherman Way, Van Nuys, California 91406
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (818) 988-5060
Securities registered pursuant to Section 12(b) of the Act:
Name of exchange on
Title of each class which registered
Common Stock, $.01 par value Nasdaq SmallCap Market
Series B Cumulative Convertible Nasdaq SmallCap Market
Preferred Stock, $1.00 par value
Securities registered pursuant to Section 12(g) of the Act:
Contingent Payment Rights
(Title of Class)
Indicate by check mark whether the Registrant (1) has filed
all reports required to be filed by Section 13 or 15(d) of the
Securities Exchange Act of 1934 during the preceding 12 months (or
for such shorter period that the Registrant was required to file
such reports), and (2) has been subject to such filing requirements
for the past 90 days. Yes X No
Indicate by check mark if disclosure of delinquent filers
pursuant to Item 405 of Regulation S-K is not contained herein, and
will not be contained, to the best of Registrant's knowledge, in
definitive proxy or information statements incorporated by
reference in Part III of this Form 10-K/A or any amendment to this
Form 10-K/A. [X]
The aggregate market value of the voting common stock held by
non-affiliates of the Registrant as of May 12, 1995 was
approximately $4,613,498.
Indicate by check mark whether the registrant has filed all
documents and reports required to be filed by Section 12, 13 or
15(d) of the Securities Exchange Act of 1934 subsequent to the
distribution of securities under a plan confirmed by a court.
Yes X No
As of May 12, 1995, there were 2,418,700 shares of the
Registrant's Common Stock, 4,197,302 shares of the Registrant's
Series B Cumulative Convertible Preferred Stock and 15,000 shares
of the Registrant's Series C Convertible Preferred Stock
outstanding.
<PAGE>
AMENDMENT NO.1
The undersigned registrant hereby amends the following items,
and financial statements, exhibits or other portions of its Annual
Report on Form 10-K dated March 20, 1995 as filed with the
Securities and Exchange Commission on March 20, 1995 as set forth
on the following pages hereto:
PART III
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K
(a)(3) The following exhibits are filed as part of this amendment:
10.12 Agreement, dated as of January 1, 1995, between
Carolco Pictures Inc. and LIVE Film and Mediaworks Inc.
10.77 Short Form Deal Memo dated as of June 21, 1994
between International Video Productions Inc. and
Le Studio Canal+(U.S.)
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the
Securities Exchange Act of 1934, the Registrant has duly caused
this amendment to be signed on its behalf by the undersigned
thereunto duly authorized.
LIVE ENTERTAINMENT INC.
By /s/ MICHAEL J. WHITE
Michael J. White
Executive Vice President
Dated: May 16, 1995
<PAGE>
EXHIBIT INDEX
10.12 Agreement, dated as of January 1, 1995, between Carolco
Pictures Inc. and LIVE Film and Mediaworks Inc.
10.77 Short Form Deal Memo dated as of June 21, 1994 between
International Video Productions Inc. and Le Studio
Canal+(U.S.)
AGREEMENT
This Agreement, made as of this first day of January, 1995, is
made and entered into by LIVE Film and Mediaworks Inc. ("LIVE") and
Carolco Pictures Inc. ("Carolco") with respect to the following
facts:
A. WHEREAS, LIVE, as (as successor in interest to LIVE Home
Video Inc.) and Carolco Pictures Inc. are parties to that certain
Agreement dated July 27, 1987, as the same has been restated and
amended from time to time up to the date hereof (the "Domestic
Master Agreement").
B. WHEREAS, Carolco has developed a screenplay called
"Cutthroat Island" and has assigned all rights in such screenplay
to Cutthroat Productions L.P. ("CPLP").
C. WHEREAS, CPLP is producing a motion picture tentatively
entitled "Cutthroat Island" based substantially on such screenplay
(the "Picture").
D. WHEREAS, CPLP has granted all distribution rights in the
Picture to Cutthroat Distribution Inc., a California corporation
("CDI").
E. WHEREAS, CPLP solely and exclusively owns and controls the
right to cause the production and exploitation of Remakes and
Sequels (as defined in paragraph 4 below) of the Picture
(collectively, the "Cutthroat Sequel Rights").
F. WHEREAS, the Cutthroat Sequel Rights have been pledged
("Bank Security") to Credit Lyonnais Bank Nederland N.V.
("Collateral Agent") as Collateral Agent for itself and other
participating banks ("Banks") to secure repayment of certain
obligations to the Banks pursuant to a certain loan or loans made
by the Banks with respect to the Picture.
G. WHEREAS, pursuant to agreements between Carolco and CPLP,
conditioned only upon, and immediately upon, the release of the
Bank Security, CPLP is required to reconvey the Cutthroat Sequel
Rights to Carolco.
H. WHEREAS, the parties desire to confirm that the Picture is
not covered by the Domestic Master Agreement and to induce LIVE to
enter into a home video distribution agreement with CDI pursuant to
which LIVE shall license from CDI, upon terms and conditions upon
which LIVE and CDI have agreed, the exclusive home video
distribution rights in and to the Picture throughout the United
States and Canada (the "CDI Video Agreement"), and Carolco will
benefit from LIVE doing so.
I. WHEREAS, the terms of the Domestic Master Agreement are
more favorable to LIVE than the terms of the CDI Video Agreement.
J. WHEREAS, in order to settle and resolve the dispute
between them whether the Picture is covered by the Domestic Master
Agreement and to induce LIVE not to make claims against CPLP or CDI
that the Picture is covered by the Domestic Master Agreement,
Carolco and LIVE are willing to enter into the agreements, and
Carolco is willing to make the payments, all as hereinafter set
forth.
K. WHEREAS, LIVE and Carolco agree that the compensation to
be provided to LIVE pursuant to this Agreement represents their
fair and reasonable current estimation of the value of the
anticipated economic loss which LIVE will suffer as a result of the
less favorable terms to LIVE of the CDI Video Agreement, in light
of the fact that the actual amount of the loss is impossible to
calculate as of the date of execution of this Agreement.
NOW, THEREFORE, for and in consideration of the promises,
terms and conditions set forth herein, the parties agree as
follows:
1. Except as expressly provided in paragraph 4(a) below with
respect to the Cutthroat Video Sequel Rights (as defined in
such paragraph 4(a)), the Picture shall not be subject to the
Domestic Master Agreement.
2. Concurrently with the execution of this Agreement by Carolco,
LIVE shall execute the CDI Video Agreement.
3. Carolco agrees to pay to LIVE the sum of $3,311,231 (the
"Agreed Fee").
a. Carolco agrees to pay the Agreed Fee to LIVE as follows:
i. $811,231 on the date of execution of this Agreement
("First Payment");
ii. $1,000,000 on or before February 28, 1995 ("Second
Payment");
iii. $1,000,000 on or before March 31, 1995 ("Third
Payment"); and,
iv. $500,000 on or before April 15, 1995 ("Fourth
Payment").
b. Solely to secure Carolco's full and timely payment of the
Second, Third and Fourth Payments, concurrently upon the
execution of this Amendment, Carolco shall, at its own
cost, deliver or cause to be delivered to LIVE or its
designee a documentary letter of credit issued by a bank
in a form reasonably satisfactory to LIVE and drawable
upon LIVE's delivery to the issuing bank of all drawing
certificates as required by the terms of the letter of
credit ("Carolco LC"). The Carolco LC shall have a face
value of $2,500,000 and partial drawings in the amounts
of the Second, Third and Fourth Payments shall be
permitted thereunder. Carolco may, at its election, pre-
pay any or all of the Second, Third or Fourth Payments at
any time, without discount.
4. a. Carolco hereby agrees that throughout the Agreement Term
(as defined in the CDI Video Agreement) Remakes and
Sequels of the Picture produced during the Agreement Term
shall be treated in the same manner as under the Domestic
Master Agreement (the "Cutthroat Video Sequel Rights").
LIVE acknowledges that its rights in the Cutthroat Video
Sequel Rights shall not survive the completion of any
foreclosure of the Bank Security by the Collateral Agent
or the Banks and the lapse of all rights of Carolco to
the Cutthroat Sequel Rights as a result thereof.
b. Carolco hereby represents and warrants to LIVE that (i)
conditioned only upon, and immediately upon, the release
of the Bank Security, CPLP is obligated to reconvey to
Carolco the Cutthroat Video Sequel Rights, free and clear
of any lien or adverse interest in favor of any party,
(ii) immediately upon the release of the Bank Security,
Carolco will take any and all action that is necessary or
appropriate to cause the Cutthroat Video Sequel Rights to
be reconveyed to Carolco, (c) if, following the release
of the Bank Security, Carolco does not exercise its
rights to obtain the reconveyance of the Cutthroat Video
Sequel Rights from CPLP, free and clear of any lien or
adverse interest in favor of any party, Carolco shall
allow LIVE to exercise such rights to cause CPLP to
reconvey the Cutthroat Video Sequel Rights to Carolco,
and (d) Carolco will not convey or authorize the
conveyance of the Cutthroat Sequel Rights except to a
party that acknowledges that the conveyance is subject to
LIVE's rights as described in this paragraph 4 applicable
to the Cutthroat Video Sequel Rights.
5. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and each of their predecessors,
successors, agents and assigns.
6. Each party confirms that with regard to the terms and
provisions hereof, they have been presented with and have
exercised the opportunity to confer with counsel of their
choice. The parties further confirm and represent that (a)
each of the persons executing this Agreement on behalf of a
corporation or other entity has full power and authority to do
so on behalf of the corporation or entity for which he is
signing and that no other or further authority or execution by
any other person for such corporation or entity is necessary;
(b) they have read and understand the effect of this
Agreement, that they have talked with their attorneys
regarding the terms, conditions and effects, including but not
limited to income tax consequences, of executing this
Agreement; and, (c) this Agreement has been executed freely,
voluntarily and willingly by them.
IN WITNESS WHEREOF, the parties hereto have executed this
Agreement on the dates set forth opposite their respective names,
to be effective as of the last of such dates.
LIVE Film and Mediaworks Inc.
BY: ________________________
ITS: ________________________ DATE: ________________________
Carolco Pictures Inc.
BY: ________________________
ITS: ________________________ DATE: ________________________
LIVE HOME VIDEO INC.
SHORT FORM DEAL MEMO
Principal Terms & Conditions
Date of Agreement: As of June 21, 1994
Licensor: Le Studio Canal +(U.S.)
Distributor: International Video Productions Inc., a wholly-
owned subsidiary of LIVE Home Video Inc.
Picture: "Stargate" starring Kurt Russell and James Spader,
directed by Roland Emmerich based on an original
screenplay co-written by Roland Emmerich and Dean
Devlin.
Picture
Specifications: 35mm film, aspect ratio of 1:2.35, color, Dolby or
DTS stereo, primarily in English language per the
script (not post-synched or dubbed except as
required by the exigencies of production or
creatively), between 90 and approximately 120
minutes excluding main titles and end credits, MPAA
rating of "PG-13" or less restrictive, and produced
at a direct cost budget of $50 million or more.
License Term: An initial period of 25 years from the date of
Distributor's first video release of the Picture.
The License Term shall be extended an additional 5
years if Licensor's account is unrecouped at the
end of the initial period. Following expiration of
the License Term, Distributor shall have a one year
non-exclusive sell-off period plus a right to first
negotiation/matching last refusal (as against
Distributor's last best offer) to renew and extend
the License Term.
Territory: US and Canada, their territories and possessions
and their embassies, military bases and
governmental installations wherever located
throughout the world, but not including non-
theatrical or public performance rights.
Authorized
Languages: All
Rights Granted: Exclusive Video through all existing or emerging
channels of distribution (including, without
limitation, retail sales; direct mail, video clubs,
telemarketing and other direct response sales;
door-to-door sales, pay-per-transaction sales;
supermarket sales; drug store sales; school and
library sales (but not including non-theatrical or
public performance rights); sponsorship, premium
and commercial tie-ins sales, all by means of
cassettes, video discs and any or all other
electronic or information storage devices in all
sizes, formats and configurations, now or hereafter
known, plus all incidental rights customarily
associated therewith. With respect to sponsorship,
premium and commercial tie- in sales, Distributor
shall consult and coordinate with Licensor,
provided, however, Distributor shall have final
decision-making authority with regard thereto.
Licensor shall also grant Distributor certain
rights of first negotiation and certain last
refusal rights as set forth immediately hereafter
with respect to the possible acquisition of the
aforesaid video rights to any theatrical Remake or
Sequel based on, derived from, or inspired by the
Picture which is produced during the License Term.
In the event the parties cannot come to terms
during the first negotiation period, Licensor shall
be free to accept an offer from any third party
with respect to any such Remake or Sequel, provided
however, that the offer is greater than
Distributor's last best offer.
Distributor's
Edit,
Dubbing/Subtitling,
Closed-Caption
& Other Alteration
Rights: Distributor shall have the right to make or
exploit, or to authorize others to make or exploit,
Videos embodying dubbed and subtitled versions of
the Picture, closed-captioned and descriptive video
versions of the Picture intended primarily for the
physically impaired, supplemented video versions
(e.g., "director's cut", unrated versions, special
editions, etc) and the like. Except in connection
with Distributor's exercise of such rights, and
subject to third party cutting rights (of which
Licensor shall inform Distributor in writing within
seven (7) days of execution of this agreement),
Distributor shall not cut the Picture nor alter or
delete any screen credit, logo, trademark or
copyright notices appearing in the Picture;
provided Distributor may integrate into Videos
embodying the Picture before the main titles and/or
after the end credits the name and trademarks of
Distributor and its sublicensees, anti-piracy
warnings in Distributor's customary form, and
commercial and promotional advertisements or
announcements (e.g., trailers).
Rights Reserved: All rights not granted to Distributor are reserved
to Licensor ("Reserved Rights"). The Reserved
Rights include, without limitation, the following
distribution rights: Non-Theatrical, Non-
Residential Pay-Per-View (Hotel/Motel), Commercial
(Public) Video, Airlines and Ships, Residential
Pay-Per-View, Pay TV, Free TV and Video On Demand.
Additionally, the Reserved Rights include all
Interactive Multimedia rights, including the right
to exploit video games derived from the Picture in
all platforms, provided, however, Distributor may
exploit the Picture in its linear version on
interactive-capable platforms such as CD-I, CD Rom,
Video CD, etc. Licensor may exercise the Reserved
Rights without further obligation or notice to
Distributor, subject to the holdback provisions and
minimum theatrical requirements set forth herein.
Holdbacks on
Licensor: Licensor shall not exploit or authorize any person
or entity to exploit the Picture in the Territory
in the following media sooner than the date set
forth below corresponding to such media:
(a) Residential Pay-Per-View: Not sooner than
three (3) months following the date of Video
Availability. "Video Availability" shall mean the
earlier of either:
(i) Six (6) months following the initial
theatrical release of the Picture in the Territory;
or
(ii) The initial video release of the
Picture in the Territory.
(b) Pay-TV and Free-TV: Not sooner than the
earlier of either (i) 6 months following the date
of Video Availability of the Picture in the
Territory or (ii) 12 months following the date of
the first theatrical release of the Picture in the
Territory.
(c) Video On Demand: Not sooner than the earlier
of either (i) 36 months following the date of Video
Availability of the Picture in the Territory or
(ii) 42 months following the date of the first
theatrical release of the Picture in the Territory.
Licensor shall use its best efforts to receive the
holdbacks set forth in this subparagraph (c) from
MGM. Licensor shall notify and consult with
Distributor in order to accommodate Distributor's
concerns in Licensor's ongoing negotiations with
MGM with regard to this holdback. Failure to
obtain this holdback shall not be deemed to be a
breach of this Agreement.
Holdback on
Distributor Except as provided in the next sentence,
Distributor shall not make Videos embodying the
Picture available for sale or rental to the general
public in the Territory sooner than the 6 months
following the date of the first theatrical release
of the Picture in the Territory. Notwithstanding
the foregoing, subject to the agreement of MGM,
Distributor and Licensor agree that Distributor may
elect to reduce this holdback period to as early as
three (3) months following the first theatrical
release of the Picture in the Territory in the
event the Picture fails to achieve certain levels
of commercial success (upon which the parties and
MGM must agree) during its theatrical release in
the Territory. To that end, representatives of
each party shall promptly following the execution
hereof meet and consult with representatives of MGM
to determine the criteria acceptable to each of
them which would permit Distributor to accelerate
this holdback period. Failure to reach agreement
shall not be deemed to be a breach of this
Agreement.
Minimum Recoupable
Guarantee: Conditioned upon Licensor's due performance of its
obligations hereunder, Distributor shall pay to
Licensor a minimum guarantee ("MG") of $11,500,000
fully recoupable in the manner indicated below.
MG Payment
Schedule: 25% on execution of this Deal Memo ("First
Payment"); 30% on Distributor's acceptance of
delivery ("Second Payment"); 22.5% on or before
December 31, 1994 ("Third Payment"); and 22.5% on
the date of Video Availability ("Fourth Payment").
Making the Second Payment is subject to
satisfaction of each of the Conditions Precedent
specified below. Making each Payment other than
the First Payment is conditioned on all prior
Payments having become due and payable.
Letter(s) of
Credit: In order to secure Distributor's obligation to make
payment of the Third and Fourth Payments,
Distributor, at its election, shall either:
(a) issue to Licensor concurrently with making the
Second Payment an irrevocable Letter(s) of Credit
in form and substance satisfactory to Licensor and
its lead bank with a face amount of $3,675,000
which will remain open until July 15, 1995; or
(b) furnish to Licensor concurrently with making
the Second Payment some other form of security
(e.g., escrow funds, bank guarantee, etc.)
satisfactory to Licensor; or
(c) make the Third and Fourth Payments discounted
to present value concurrently with the Second
Payment. The amount of the discount will be
computed using an annual discount rate based on
LIBOR plus .125%.
Division of Gross: Distributor will make the following continuing
payments and recoupments from the gross receipts
actually received by or credited to Distributor (or
its "Primary Subdistributor(s)" in the Territory
unless otherwise set forth below) from the
exploitation of the Rights, net of any returns and
discounts ("Gross Receipts"), determined on a
rolling basis in the order of priority set forth
below. "Primary Subdistributor(s)" is hereby and
hereafter defined to mean WEA Corp. or any
successor company which performs similar services
on behalf of Distributor in acting as its primary
subdistributor in the U.S. for video rental and
sell through, and MCA Canada or any successor
company which performs similar services on behalf
of Distributor in acting as its primary
subdistributor in Canada for video rental and sell
through. All other subdistributors engaged by
Distributor to exploit the Rights including,
without limitation, Rentrak and Pioneer, shall not
be deemed to be Primary Subdistributors.
(a) First, Distributor shall at all times during
the Term retain:
(i) 27.5% of Gross Receipts which Distributor
receives directly in instances where Distributor is
not using a subdistributor; and
(ii) 27.5% of Gross Receipts which a Primary
Subdistributor receives with Distributor being
responsible to absorb the distribution fees of such
Primary Subdistributor; and
(iii) 27.5% of the Gross Receipts which
Distributor receives from Pioneer LDCA or Rentrak
with Distributor not being responsible to absorb
the distribution fees of such subdistributor; and
(iv) the greater of either:
(A) 18% of Gross Receipts which
Distributor receives from any subdistributor (other
than a Primary Subdistributor, Pioneer LDCA or
Rentrak) with Distributor not being responsible to
absorb the distribution fees of such
subdistributor; or
(B) 27.5% of Gross Receipts which any
such subdistributor receives with Distributor being
responsible to absorb the distribution fees of such
subdistributor.
The fees set forth in this paragraph (a) inclusive
of all subparagraphs above shall collectively
hereafter be referred to as the "Distribution Fee".
(b) Next, all costs and expenses paid, incurred or
accrued by Distributor or any subdistributor
[provided, however, that if Distributor is not
responsible to absorb the distribution fees of such
subdistributor pursuant to subparagraphs (a) (iii)
or (a)(iv)(A) above, then the costs of such
subdistributor shall not be recoupable under this
paragraph (b)] for the exploitation of the Rights
("Distribution Expenses") shall be recouped from
100% of any Gross Receipts remaining.
(c) Next, 100% of any Gross Receipts remaining
will be credited to Licensor's account until the MG
plus interest having accrued thereon at the per
annum rate of PRIME plus 2% has been fully recouped
therefrom. Notwithstanding the foregoing, in the
event Distributor shall receive a better interest
rate for the cost of money, it shall apply such
better rate to the benefit of Licensor.
(d) Last, Distributor will pay Licensor 60%, and
shall retain for its own account 40%, of any Gross
Receipts remaining.
(e) Reserves for rental priced Video returns shall
be as follows:
(i) For months 1 through 12 from the first
video release date of the Picture, reserves for returns
shall not exceed 11% of gross sales net of
discounts;
(ii) For months 13 through 15 from the first
video release date of the Picture, reserves for
returns shall not exceed 5% of gross sales net of
discounts;
(iii) Thereafter, no other reserves for
rental priced Videos shall be used;
(iv) The reserves set forth above shall be
fully liquidated within 15 months of the first
video release date of the Picture.
(f) Reserves for sell through priced Video returns
shall not exceed 25% of gross sales net of
discounts and shall be liquidated no later than
with the rendition of the accounting statement
rendered 1 year following the statement on which
such reserve was first maintained.
Accounting
Statements: Statements shall be rendered quarterly within 60
days after the end of each calendar quarter during
the first 2 years following the date of the first
video release of the Picture in the Territory.
Thereafter, accounting statements shall be rendered
semi-annually within 60 days following the end of
each calendar half-year.
Licensor's
Delivery
Requirements: (a) Licensor shall, at Licensor's cost, deliver
to Distributor both "pan and scan" and "letterbox"
versions of the original linear version of the
Picture which is theatrically released by MGM in
the U.S. including digital masters, trailers, radio
and television spots, and advertising and
promotional materials (including, the key-art
prepared under MGM's authority for the theatrical
release in the Territory and, if produced, any
"making of" documentary) relating thereto and such
other items and documents, including certificates
of standard Producer's Errors and Omissions
insurance, which Distributor requires or desires
for exploitation of the Rights; all in accordance
with Distributor's customary delivery schedule.
(b) In addition, if available to Licensor,
Licensor shall, at Distributor's request and cost,
deliver or grant unrestricted and free access to
Distributor of "pan and scan" or "letterbox"
versions, as Distributor may elect, of all other
linear versions of the Picture hereafter created
during the License Term (such as foreign versions,
alternate language tracks and dubbed versions,
airline versions, television versions, unrated
versions, producer's cuts, director's cuts, special
or additional footage versions, etc.) including all
digital masters, trailers, radio and television
spots, and advertising and promotional materials
relating thereto.
(c) All delivery materials must be of first-
class quality and meet the Picture Specifications
above.
Outside Delivery
Date: The later of (a) the date of the first theatrical
release of the Picture in the Territory or
(b) September 30, 1994. Time is of the essence.
Licensor hereby guarantees full, complete and
satisfactory delivery of the Picture to
Distributor. In the event it should fail to so
deliver, it shall reimburse Distributor all monies
paid by Distributor as set forth immediately
hereafter. Distributor shall have fifteen (15)
business days within which to accept delivery after
materials have been made available to Distributor
pursuant to the deadlines set forth above. The
parties hereto agree to set forth by July 25, 1994
mutually satisfactory provisions regarding cure
periods with respect to Delivery materials.
Minimum Theatrical
Release
Requirements: In undertaking the Theatrical release of the
Picture:
(a) Licensor will cause MGM ("MGM") to place the
Picture in general theatrical release throughout
the Territory in November, 1994 provided, however,
any delay of the theatrical release by MGM will not
be deemed a breach of this Agreement until January
1, 1995 (the "Outside Theatrical Release Date").
Time is of the essence.
(b) Licensor will cause MGM to spend no less than
$15,000,000 (with media buys of no less than
$7 million dollars) on pre-opening and opening week
Prints and Ads (as defined in the MGM agreement)
calculated from the date of the MGM Agreement to a
date seven (7) days after the initial theatrical
release of the Picture in the Territory.
(c) Licensor will cause MGM to give Distributor
reasonable advance notice of all premieres of the
Picture in the Territory and to furnish Distributor
with a reasonable number of invitations thereto for
Licensor, its employees and customers.
(d) Liquidated damages in the amount of one dollar
for each dollar of P&A which is not spent as
required shall be payable to distributor if the
aforesaid minimum theatrical release requirements
are not satisfied in full. Without limiting its
rights, Distributor shall have the right to set-off
and deduct the amount of any such liquidated
damages from any monies due Licensor.
(e) Licensor shall permit Distributor to have
access to all information it obtains from any audit
of MGM's books and records relating to the P&A
expenses and Distributor shall have full audit
rights of the books and records of Licensor with
respect thereto.
Residuals,
Participations,
Music and Other
Clearances: Participations, music and other clearances shall be
Licensor's sole responsibility. With respect to
certain residuals, Distributor shall pay any
residual payments due to the DGA, SAG and WGA.
Licensor shall immediately reimburse Distributor in
full the amount of such residuals plus third party
payroll service costs and interest at the rate of
prime +2% per annum if Licensor fails to reimburse
Distributor within five (5) days following
Distributor's notice to Licensor of each said
residual payment.
Licensor's
Representations: Licensor hereby makes all standard representations
and warranties contained in Distributor's Standard
Agreement including, without limitation: that
Licensor has full authority to execute this
Agreement, to carry out the terms hereof and to
grant to Distributor all the Rights to the Picture;
that no liens or encumbrances on the Picture or its
Underlying Material affecting Distributor's Rights
do now or will any time hereafter exist other than
the liens previously disclosed by Licensor to
Distributor for which Licensor will furnish non-
disturbance letters as hereinbelow provided; that
the Picture is entitled to full copyright
protection throughout the Territory and Term; that
nothing in the Picture or its Underlying Material
infringes any right of any third party; and that
Licensor, at Licensor's sole cost, has or will
obtain and maintain in effect throughout the Term
all music licenses regarding the music embodied in
the Picture, and has obtained all music performance
rights granted to Distributor in this Agreement.
Licensor agrees to defend, indemnify and hold
harmless Distributor against any breach or alleged
breach of any of Licensor's warranties and
representations.
Security
Agreement: In order to secure the Rights granted to
Distributor under this Agreement, Licensor shall
grant and assign to Distributor a continuing
security interest in and copyright mortgage on the
"Collateral" as defined in a customary Security
Agreement to be negotiated in good faith.
Distributor acknowledges that Licensor has
disclosed the existence of prior liens in the
Picture. Licensor shall obtain non-disturbance
agreements from each and every such lien holder as
part of the grant of the security interest to
Distributor as soon as reasonably possible but in
no event later than the Outside Delivery Date and
thereafter as required by Distributor should the
need arise, provided Distributor subordinates its
lien in the Picture as may be required. Licensor's
failure to timely deliver the aforementioned non-
disturbance letters shall be deemed to be a
material breach which will allow Distributor at its
option to terminate this agreement. If such an
event should occur, Distributor shall be
immediately reimbursed all sums previously paid to
Licensor plus interest at the rate of Prime +2% per
annum.
Distributor's
Subdistri-
bution/Assignment
Rights: Yes, in Distributor's discretion.
Conditions
Precedent: This Agreement is conditioned upon Licensor's
delivery and Distributor's acceptance of all
applicable chain of title documents, and
Distributor's receipt of additional customary
collateral documents to be negotiated in good faith
including, without limitation, an Exclusive
Assignment and Mortgage of Distribution Rights,
Security Agreement and related financing
statement(s) and Power of Attorney To Register and
Sue (the "Additional Documents") executed by
Licensor, and where applicable, notarized as soon
as reasonably possible but in no event later than
the Outside Delivery Date provided Distributor
shall concurrently execute appropriate
subordination agreements. Licensor's failure to
timely deliver the aforementioned Additional
Documents shall be deemed to be a material breach
which will allow Distributor at its option to
terminate this agreement. If such an event should
occur, Distributor shall be immediately reimbursed
all sums previously paid to Licensor plus interest
at the rate of Prime +2% per annum.
Miscellaneous: (a) Nothing herein contained shall be construed to
create any partnership, joint venture, agency,
fiduciary or employment relationship between the
parties.
(b) This Agreement shall inure to the benefit of
and bind Licensor's and Distributor's successors
and assigns
(c) In the event of Distributor's breach of this
Agreement, subject to Distributor's full payment of
the MG or its posting Letter(s) of Credit or other
security satisfactory to Licensor therefor,
Licensor's remedies shall be limited to an action
at law for money damages and/or for an accounting.
(d) Licensor shall have customary audit rights of
Distributor's books and records regarding its
distribution of the Picture.
(e) No modification or amendment of this
Agreement, including this subparagraph, will be
effective unless in writing, signed by both
parties.
(f) Each party expressly waives in favor of the
other any right to rely on any oral understandings
or representations, if any there may be.
(g) Licensor agrees to authorize, execute,
acknowledge and deliver such other and further
documentation as may reasonably be required by
Distributor to perfect and protect the Rights
granted hereunder including the appropriate
documents referred to under the paragraph set forth
herein entitled "Conditions Precedent".
(h) This Agreement incorporates by reference the
terms and conditions contained in Distributor's
standard distribution agreement applicable to
agreements of this kind, all of which remain
subject to the parties good faith negotiation. This
Agreement constitutes an enforceable and binding
agreement between the parties hereto.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the date herein first written.
Agreed to and Accepted By:
INTERNATIONAL VIDEO PRODUCTIONS INC.
BY:
TITLE:
DATE:
LE STUDIO CANAL + (U.S.)
BY:
TITLE:
DATE:
