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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): June 30, 1995
JONES PROGRAMMING PARTNERS 2-A, LTD.
(Exact name of registrant as specified in its charter)
Colorado 0-20944 84-1088819
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(State of Organization) (Commission File No.) (IRS Employer
Identification No.)
P.O. Box 3309, Englewood, Colorado 80155-3309 (303) 792-3111
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(Address of principal executive office and Zip Code) (Registrant's telephone no.
including area code)
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Item 2. Acquisition or Disposition of Assets.
On June 30, 1995, Jones Programming Partners 2-A, Ltd. (the "Partnership"), a
Colorado limited partnership, sold its one-third ownership interest in
Household Saints to Jones Entertainment Group, Ltd. (the "General Partner"),
the Colorado corporation that serves as the Partnership's General Partner, for
$1,389,166. The General Partner purchased the Partnership's interest in
Household Saints at a purchase price sufficient to enable the Partnership to
recover its net investment in the film.
The General Partner had obtained three independent appraisals of the fair
market value of the Partnership's interest in Household Saints. The average of
the three independent appraisals of the fair market value of the Partnership's
interest in Household Saints was $298,450. Appraisals were obtained by the
General Partner because the Partnership's limited partnership agreement allows
the General Partner to purchase completed programming projects from the
Partnership if the purchase price is an amount no less than the average of
three independent fair market value appraisals.
The purchase price was paid $500,000 in cash at closing on June 30, 1995,
$500,000 in the form of a non-interest bearing promissory note payable on June
30, 1996 and $389,166 in the form of a non-interest bearing promissory note
payable on June 30, 1997.
The General Partner has not yet determined how the proceeds from the sale of
Household Saints will be used by the Partnership. It is possible that the
Partnership will use a portion of the sale proceeds to invest in an additional
programming project. The General Partner has also not yet determined what
portion of the sale proceeds from Household Saints will be distributed to the
limited partners. At a minimum, however, the Partnership will distribute
enough of the sale proceeds to the limited partners to cover the limited
partners' federal income tax liability, if any, resulting from the sale.
Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Purchase and Sale Agreement dated June 30, 1995 by and between Jones
Programming Partners 2-A, Ltd. and Jones Entertainment Group, Ltd.
2
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
JONES PROGRAMMING
PARTNERS 2-A, LTD.
a Colorado limited partnership
By Jones Entertainment Group, Ltd.,
its General Partner
By: /s/ Theodore A. Henderson
Theodore A. Henderson
Dated: July 7, 1995 Vice President
3
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EXHIBIT INDEX
2 Purchase and Sale Agreement dated June 30, 1995 by and between Jones
Programming Partners 2-A, Ltd. and Jones Entertainment Group, Ltd.
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EXHIBIT 2
PURCHASE AND SALE AGREEMENT
This agreement, made this 30th day of June, 1995, by and
between Jones Programming Partners 2-A, Ltd., a Colorado limited partnership
("Seller"), and Jones Entertainment Group, Ltd., a Colorado corporation
("Buyer").
WHEREAS, Seller has a one-third beneficial ownership interest
in the motion picture Household Saints, as set forth in the letter agreement
dated as of April 25, 1992 by and among New Line Productions, Inc., Jones
Entertainment Group, Ltd., Columbia Tri Star Home Video and Novena Films, Inc.,
as amended June 4, 1992 (the "Deal Memo"), a copy of which is attached as
Exhibit A to this purchase and sale agreement; and
WHEREAS, Buyer desires to purchase from Seller, and Seller
desires to sell to Buyer, on the terms and conditions hereinafter set forth,
all of the rights of Seller in Household Saints.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein set forth and each act done pursuant hereto, the parties
hereto, intending to be legally bound, do represent, warrant, covenant and
agree as follows:
1. Transfer of Assets. On June 30, 1995 (the "Closing
Date"), Seller shall sell, convey, transfer and assign to Buyer, and Buyer
shall purchase from Seller, all of the rights of Seller of every kind and
character in Household Saints including, without limitation, all rights of
Seller pursuant to the terms and conditions of the Deal Memo.
2. Assumption of Liabilities. On the Closing Date,
Buyer shall assume all liabilities and obligations of Seller with respect to
Household Saints including, without limitation, the liabilities and obligations
of Seller under the Deal Memo.
3. Purchase Price. Buyer shall acquire and accept the
assets of Seller with respect to Household Saints and shall pay to Seller the
aggregate purchase price of $1,389,166, to be paid $500,000 in cash on the
Closing Date,
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$500,000 in the form of a non-interest bearing promissory note payable in full
12 months from the Closing Date and $389,166 in the form of a non-interest
bearing promissory note payable in full 24 months from the Closing Date.
4. Governing Law. The construction, interpretation and
enforcement of this purchase and sale agreement and the rights of the parties
hereunder shall be governed by the laws of the State of Colorado without regard
to any jurisdiction's conflicts of law provisions.
5. Assignment. This agreement may not be assigned by
any party hereto without the prior written consent of the other party.
IN WITNESS WHEREOF, the parties hereto have caused this
purchase and sale agreement to be executed by their duly authorized
representatives on the day and year first above written.
SELLER:
JONES PROGRAMMING PARTNERS 2-A, LTD.
BY: JONES ENTERTAINMENT GROUP, LTD.
By: /s/ Theodore A. Henderson
Theodore A. Henderson
Executive Vice President
BUYER:
JONES ENTERTAINMENT GROUP, LTD.
By: /s/ Glenn R. Jones
Glenn R. Jones
President
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EXHIBIT A
NOVENA FILMS, INC.
P.O. Box 167
Upper Nyack, NY 10960
As of April 25, 1992
Ira Deutchman
New Line Productions, Inc.
1500 Broadway
New York, New York 10036
Carl Vogel
Jones Entertainment Group Ltd.
9697 E. Mineral Street
PO Box 3309
Englewood, CO 80155
Gina Resnick
Columbia TriStar Home Video
3400 Riverside Drive
Burbank, CA 91505-4627
Re: "Household Saints"
Dear Ira, Carl, and Gina:
When signed by New Line Productions, Inc. ("New Line"), Columbia
TriStar Home Video ("Col/TriStar"), Jones Entertainment Group ("Jones") and
Novena Films, Inc. ("Novena"), this letter (the "Deal Memo") shall constitute
the material terms and conditions between the parties relating to the
financing, production, distribution and ownership of a motion picture
tentatively entitled "Household Saints" (the "Picture") as follows. All
parties, when referred to in the aggregate, shall be called "Participants".
1. THE PICTURE
A. Budget. of Household Saints will be not more than $5
million (the "Budget"), including interest, bond fees and
contingency, and the Picture shall be produced in
accordance with the Final Budget as approved by the parties
hereto.
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As of April 25, 1992
B. Approved Elements of the Picture:
(i) Based on the book by Francine Prose entitled
"Household Saints".
(ii) Screenplay by Nancy Savoca and Richard Guay.
(iii) Executive Producer: Jonathan Demme.
(iv) Producers: Richard Guay and Peter Newman.
(v) Director: Nancy Savoca. Richard Guay is hereby
approved as a replacement director, in the
event of the death or disability of Nancy
Savoca.
(vi) Cast: Tracy Ullman, Vince D'Onofrio (both of
whom are deemed to be "Essential Elements" as
such is defined in the Interparty Agreement),
Lili Taylor and Judith Malina.
(vii) No replacements: None of the above approved
Elements may be replaced or withdrawn without
the express approval of all parties hereto,
subject to the rights of the Completion
Guarantor pursuant to the Interparty Agreement.
C. Schedule - Principal photography starting 6/24 - 42 days;
wrap - 8/12; delivery - 12/31.
2. GRANT OF RIGHTS
Novena owns all the rights necessary to produce and
distribute the Picture (subject only to the Security and Loan
Agreements of even date herewith, with New Line and Jones,
granted in consideration for a Bridge Loan. Said agreements are
attached hereto as Exhibit 3). Novena hereby irrevocably and
exclusively grants, sells, assigns and transfers its rights in
the Picture as follows:
A. To New Line, the worldwide distribution rights in all media
now known or hereafter devised, for the Term as herein
below defined, except for North American Home Video rights.
("New Line's Distribution Rights").
B. To Col/TriStar, the North American home video distribution
rights, for the Term as herein below defined.
("Col/TriStar's Distribution Rights").
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As of April 25, 1992
C. To Jones, upon "Mandatory Delivery" of the Picture as
defined below, the ownership of the copyright and all other
rights not otherwise granted ("Reserved Rights") therein,
in perpetuity, subject only to A. and B. above.
Notwithstanding A. above, Jones also has certain rights
related to North American TV per paragraph 4b(i) below, and
notwithstanding B. above, Jones shall also have the right
to sub-distribute videocassettes of the Picture to cable TV
customers of Jones or its affiliates, in accordance with 7
B(i) below;
3. ADVANCES AND DELIVERY
A. New Line, Col/Tristar and Jones shall pay to Novena the
amount of $1,666,667 each ("Advances") in accordance with
3B. below. Novena will bank the New Line and Col/Tristar
acquisition agreements with a bank approved by all parties
(the "Bank"), which will provide financing in the amount of
$5 million. In the event that the actual direct costs
budgeted are less than $4,260,011, as reflected in the
Budget of May 7, 1992 (the top sheet is attached hereto),
and/or the financing charges charged by the Bank are less
than $150,000, any excess thereof shall be returned by
Novena in equal shares to New Line, Jones and Col/TriStar.
Novena shall use its reasonable best efforts to have the
Bank make direct payment thereof to New Line, Jones and
Col/TriStar. New Line, Col/Tristar and Novena agree to
execute an Interparty Agreement with the bank and
completion bond company, which shall be negotiated in good
faith. In lieu of being a party to the Interparty
Agreement, Jones agrees to provide a stand-by Letter of
Credit to the bank to be negotiated in good faith, so long
as such Letter cannot be called in the absence of the
completion of "Mandatory Delivery".
B. New Line, Col/TriStar and Jones shall each pay to the Bank,
pursuant to the Interparty Agreement upon completion of
Mandatory Delivery (which means acceptance in accordance
with Exhibits 1 and 2 of the items marked "Schedule A" on
New Line's and Col/TriStar's respective delivery schedules,
as attached hereto), the amount of $1,666,667 each.
Simultaneously, Novena shall deposit into escrow the sum of
$10,000 -- as a Delivery Reserve. The Delivery Reserve
shall be released back to Novena upon Novena's completion
of General Delivery (which means acceptance in accordance
with Exhibits 1 and 2 of the items marked "Schedule B" on
New Line's and Col/TriStar's respective delivery
schedules).
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As of April 25, 1992
4. TERM
The Term of New Line's and Col/TriStar's
Distribution Rights shall be as follows:
A. The Initial Term shall commence on the date hereof and
expire: (i) for New Line, 15 years from date of initial
theatrical release; and (ii) for Col/TriStar, 15 years from
date of Picture's "Availability" as defined in Exhibits 1
and 2. After each party's Initial Term has expired, New Line
and Col/TriStar shall each have the right to renew their
rights subject to Jones' right, at five year intervals
thereafter, to acquire New Line's and/or Col/TriStar's
Distribution Rights, but only in the event Jones has not,
by each of said dates, recouped its Advance hereunder, and
provided further, that Jones then has a bona fide offer for
the applicable Distribution Rights which guarantees no less
than $50,000 in Picture's Gross Receipts (as such term is
hereinafter defined) if Jones is acquiring New Line's
Distribution Rights, and $75,000 if Jones is acquiring
Col/TriStar's Distribution Rights, and which offer New
Line, or Col/TriStar, as applicable, chooses not to match.
If acquired by Jones, as set forth above, the term of the
rights acquired by Jones shall be in perpetuity.
B. Notwithstanding the above,
(i) North American television rights, as now known
or hereinafter devised, shall be assigned by
New Line to Jones on the date 10 years from the
date of the Picture's initial theatrical
release, provided Jones or an affiliate is then
actively involved in the television
distribution business; and
(ii) New Line may enter into foreign licenses which
have terms of up to 20 years from the date of
the Picture's initial theatrical release, and
if Jones should exercise its rights to acquire
New Line's Distribution Rights as set forth
above, such licenses shall be honored by Jones
or its assignees.
5. P&A
(a) New Line and Jones will each pay four
hundred thousand dollars ($400,000) for theatrical P&A expenses
and New Line agrees to spend no less than said eight hundred
thousand dollars ($800,000) for prints, advertising,
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As of April 25, 1992
promotion, and marketing, including creative costs, for marketing
and distributing the Picture theatrically but not including any
charges for overhead or interest ("Original P&A"). Jones will pay
said $400,000 to New Line upon Mandatory Delivery. If New Line
wishes to spend more than $800,000 on P&A it shall seek approval
from all parties. The Original P&A and any approved additional
P&A may be recouped as per paragraph 8 hereof. If the parties do
not all agree to additional P&A, New Line may nevertheless make
such expenditure, but any such unapproved additional P&A shall be
recouped only to the extent New Line expends its own funds
thereon (e.g., not Picture's Gross Receipts), and only out of
Participant Gross Receipts derived from U.S. and Canada
theatrical film rental revenues after full recoupment of Original
P&A and any additional approved P&A.
(b) The full expenditure by New Line of the
Original P&A in accordance with this Deal Memo and Exhibit 1, is
a material term hereof and the parties agree that Col/TriStar,
Jones and Novena's remedies in case of New Line's failure or
refusal to spend the full, original P&A, shall be as set forth in
the Off-Set Letter attached hereto and made a part hereof or as
otherwise set forth in this Deal Memo and Exhibit 1.
6. CONTINGENCY
If the full contingency amount of approximately
$475,000 in the Final Approved Budget is not used for Production
Costs, (the "Unused Balance") then to the extent the Unused
Balance equals or is less than 25% of the full contingency amount
it shall be paid to Jones; any Unused Balance in excess of 25% of
the full contingency amount but less than 50% thereof shall be
paid to Novena; and any Unused Balance greater than 50% of the
full contingency amount shall be paid equally to all four
parties.
7. TERMS RELATING TO INDIVIDUAL PARTIES
A. New Line
i) Certain Terms
New Line will approve all delivery items for
itself and on behalf of Jones. Payment of Advance and
$400,000 P&A (including marketing and promotion) commitment
upon Mandatory Delivery. Agrees to spend $800,000 as per
paragraph 5. Guaranteed theatrical release by Fine Line
Features division of New Line in no less than 25 of top 40
ADIS within a time period after Delivery to be negotiated
in good faith. Con-
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As of April 25, 1992
sultation with Participants on sales and marketing campaign
and distribution plans. Foreign will provide minimum sales
projections on a territory by territory basis and shall
have to get the Participants' approval to make sales of
less than such amounts. New Line will keep complete and
accurate books and records regarding its Distribution
Rights and will account and give audit rights to
Participants as per Standard Terms and Conditions (Exhibit
1). Will control its Distribution Costs as per Exhibit 1.
ii) Distribution Fees - 20% -except Domestic TV,
which is 10% to New Line and 10% to Jones,
which shall be accounted to Jones pursuant to
New Line's standard accounting provisions (when
Jones obtains TV rights they split 20% fee with
New Line and account to New Line in the same
manner). See Paragraph 8 for Payment terms.
iii) Share of Participants Profits. (as defined in
Paragraph 8) - 20%.
B. Col/Tristar
i) Certain Terms - Payment of Advance upon
Mandatory Delivery. Will allow Jones to
sub-distribute videocassettes to its own or its
affiliates cable TV customers as of date 2
years from initial home video release. Will
sell videocassettes to Jones for said purpose
at cost plus a mark-up of $2.00 per cassette.
Will keep complete and accurate books and
records regarding Distribution Rights and will
account and give audit rights to the
Participants as per its Standard Terms and
Conditions (Exhibit 2). Distribution Costs as
per Exhibit 2.
ii) Distribution Fee - 20%. See Paragraph 8 for
Payment terms.
iii) Share of Participants Profits (as defined in
Paragraph 8) - 20%.
C. Jones
i) Certain Terms - Payment of Advance
simultaneously with New Line and Col/TriStar.
$400,000 P&A commitment as per paragraph 5.
Jones shall keep complete and accurate books
and records relating to the Picture and shall
be responsible for accounting to third parties,
profit participants
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As of April 25, 1992
and shall account to Participants for
Participants Gross Receipts and Participants
Profits in connection with the Picture as set
forth in Paragraph 8 and subject to Paragraph 9
below Jones shall give audit rights on the same
terms and conditions as contained in Exhibits 1
and 2 and have the same rights of Remedies and
Assignability as appear therein in paragraphs
17 and 14, respectively. Revenues, net of
Jones' actual costs, derived from sale of
videocassettes to its or its affiliate's cable
TV customers shall be included in Participants
Gross Receipts. Will control its Distribution
Costs as per Exhibit 1 and Paragraph 8 hereof.
Jones shall not make any changes in or to the
Picture, except that it shall have the same
rights specifically afforded to Columbia/TriStar
and New Line in Exhibits 1 and 2.
ii) Compensation - A producer's fee of One Hundred
Thousand ($100,000) Dollars to be paid out of
the Budget by Novena.
iii) Share of Participants Profits - 25% escalates
to 50% - see Paragraph 8 for terms.
D. Novena
i) Certain Terms - Will make warranties and
representations on Property to all parties
consistent with standard warranties and
representations in the motion picture industry;
produce the Picture; obtain a completion bond
from a bond company approved by all parties;
obtain bank financing for production of the
Picture; make assignable contracts with all
parties; obtain standard E&O insurance on the
Picture on which the other parties shall each
be named as additional co-in-sureds; make
Mandatory and General Delivery. Upon Mandatory
Delivery, all rights (including copyright) and
obligations (i.e., talent and music residuals,
and accounting and auditing) will be assigned
to Jones, subject to paragraph 9 hereof. The
original negative and certain other film
elements shall be kept at DuArt Labs in New
York City and Novena shall give Jones a lab
access letter thereto.
ii) Compensation - Producing Fees as per Final
Approved Budget.
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As of April 25, 1992
iii) Share of Participant Profits - 35%
de-escalating to 10% - see Paragraph 8.
8. ALLOCATION OF REVENUES
A. Definitions - "Picture's Gross Receipts" will be defined as
revenues received by or credited to any of the Parties
hereto derived from the exploitation of the Picture and all
rights arising therefrom in all media, in all territories,
in perpetuity. The Picture's Gross Receipts, less the
deductions by each party of the items listed in B(i), (ii),
and (iii) below shall constitute "Participants Gross
Receipts", which shall be remitted by each party to Jones
who shall account and distribute said funds as set forth
below. From the Participants Gross Receipts, shall be
deducted, in the order set forth below, the items listed in
C(i) and (ii) and (iii) below. The remaining revenues shall
constitute "Participants Profits" and such Participants
Profits shall be distributed as set forth in D(i) below.
B. From the Picture's Gross Receipts:
(i) Distribution Fees - New Line and Col/TriStar
shall each recoup and retain their respective
20% distribution fees; in the case of North
American TV, New Line shall recoup 20%, of
which it shall retain 10% and pay Jones 10% or,
in accordance with 4B(i) above, vice versa.
(ii) Distribution Costs - Each party receiving
Picture's Gross Receipts shall recoup and
retain therefrom its actual, out-of-pocket
third-party, verifiable distribution costs,
which shall not include any charges for
overhead or interest. Marketing, promotion,
including creative costs, and publicity costs
shall be included in this category, except for
theatrical "P&A" which shall be recouped as per
8B(iii) below. Jones' direct, actual
out-of-pocket third-party verifiable costs
incurred in record keeping and accounting to
the Participants up to the amount of $1,000 per
month shall also be deemed Distribution Costs.
The Parties' agreement as to contractual
controls of these costs are as contained in
Exhibits 1 and 2.
(iii) P&A - New Line and Jones shall recoup their
Original P&A expenses, as defined in paragraph
5, on a pari passu basis. New Line shall retain
its
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As of April 25, 1992
share of P&A recoupment from its distribution
revenues and it shall remit Jones' share of P&A
recoupment directly to Jones. To the extent New
Line and Jones do not recoup their Original P&A
out of New Line's distribution revenues, it
shall be recouped in first position out of
Participants Gross Receipts. New Line may
recoup any additional approved P&A and any
unapproved additional P&A only as set forth in
paragraph 5 above.
C. The remaining revenues are Participant Gross Receipts.
Jones shall deduct, allocate and pay therefrom, in the
following order:
(i) Outstanding P&A - To New Line and Jones, any
unrecouped Original P&A and to New Line any
approved additional P&A and unapproved
additional P&A, but only as set forth in
paragraph 5.
(ii) Interest on Advances - to be recouped pari
passu at the rate of 12% per annum, or less if
all parties agree.
(iii) Advances - to be recouped pari passu in
proportion to each parties Advances.
D. The remaining revenues are Participant Profits and Jones
shall allocate and pay them as follows:
(i) Until Novena has received $1 million in
Participant Profits, the distribution shall
be as follows:
Novena 35%
Jones 25%
New Line 20%
Col/Tristar 20%
ii) After Novena has received $1 million and until
Novena has received $2 million of Participants
Profits in the aggregate, the distribution
shall be as follows:
Novena 25%
Jones 35%
New Line 20%
Col/Tristar 20%
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As of April 25, 1992
iii) After Novena has received $2 million of
Participant Profits in the aggregate, the
distribution shall be as follows:
Novena 10%
Jones 50%
New Line 20%
Col/Tristar 20%
9. RESIDUALS, REUSE FEES ("Residuals") AND OTHER JOINT EXPENSES
Novena will use its best efforts to obtain all rights to
use the music in the Picture in all media, in perpetuity in consideration for
lump sum payments (i.e., without further royalties due). Notwithstanding, Jones
and New Line agree to pay any residuals or reuse fees arising from that party's
distribution or ownership of the Picture and to recoup any such payment as a
Distribution Cost, not subject to the caps on Distribution Costs set forth
herein and in the Exhibits. If there are not sufficient Gross Receipts to
recoup said payments as Distribution Costs, then said party may request each
party to contribute a pro-rata share thereof, and each party (including Col/
TriStar) shall promptly make such pro-rata payment. In the case of residuals or
reuse fees arising from Col/TriStar's distribution of the Picture, Jones agrees
to make such payments and to recoup or be reimbursed therefor in accordance
with the foregoing procedure. The above procedure shall also be used to pay any
other joint expenses of the Participants, which have been approved by all
parties.
10. WARRANTY
Each party warrants and represents that its entire
compensation with respect to the Picture is as reflected in this Agreement and
there are no separate agreements or benefits to any party hereto not disclosed
herein.
11. ARBITRATION
New Line and Jones agree that financial disputes arising
out of New Line accounting to Jones as set forth in Exhibit 1, Paragraph 10
(which accountings are not incontestable as defined in Paragraph 10b of Exhibit
1), shall be submitted to arbitration in New York. The terms and conditions
governing said Arbitration shall be in accordance with the A.A.A. Rules and
Regulations, and be negotiated in good faith between New Line and Jones prior
to the institution of any such arbitration proceeding.
* * *
If the above reflects everyone's understanding of our major
deal points and structure, please sign below. This letter
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As of April 25, 1992
may be signed in counterparts. This letter, Exhibits 1 and 2, the Delivery
Schedules, the Off-Set Letter and the agreement between Jones and New Line,
dated as of June 15, 1992 (a copy of which is attached hereto), shall, in the
aggregate, constitute the Agreement between the parties hereto and may not be
modified or changed without a writing signed by all parties. If there is any
conflict between this Deal Memo and the exhibits attached hereto, the terms of
this Deal Memo shall control.
Notwithstanding the above, in the event the Picture has not
commenced principal photography by August 1st, 1992 or Novena has not obtained
Bank financing by July 15, 1992, then, in either case, this agreement shall
automatically terminate by its own terms and have no further force or effect as
of the first of said dates to occur.
Very Truly Yours,
NOVENA FILMS, INC.
By: Richard Guay
Its: President
Accepted and Agreed:
NEW LINE PRODUCTIONS, INC. COLUMBIA TRISTAR HOME VIDEO
By: Donna Bascom By: Gina M. Resnick
Its: Senior Vice President Its: _______________________________
JONES ENTERTAINMENT GROUP, LTD.
By: Carl E. Vogel
Its: President
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COLUMBIA TRISTAR HOME VIDEO
A SONY PICTURES ENTERTAINMENT company
June 4, 1992
Ms. Donna Bascom
Senior Vice President
New Line Productions, Inc.
888 Fifth Avenue
New York, NY 10106
Re: HOUSEHOLD SAINTS
Dear Donna:
In connection with that agreement and the exhibits attached thereto
dated as of April 25, 1992 (collectively, the "Deal Memo") by and between
Novena Films, Inc., New Line Productions, Inc. ("New Line"), Jones
Entertainment Group and Columbia TriStar Home Video ("CTHV") regarding the
production and distribution of the motion picture entitled "Household Saints"
(the "Picture"), New Line and CTHV have made the following agreements:
1. In the event that New Line fails to expend Eight Hundred Thousand
Dollars ($800,000) in prints and advertising ("P & A") costs (as set forth in
Paragraph 5 of the Deal Memo and Paragraph 9 of New Line's Standard Terms and
Conditions which is Exhibit 1 to the Deal Memo) for the United States and
Canadian (not more than ten percent (10%) of the total P&A shall be spent in
Canada) theatrical release of the Picture pursuant to the terms of the Deal
Memo then CTHV may withhold and offset and deduct the following amounts from
any monies now owing or to becoming owing to New Line or any affiliate of New
Line (except for monies derived from the Picture) under any agreement between
New Line or any affiliate of New Line and CTHV or a parent or subsidiary of
CTHV:
<PAGE> 15
HOUSEHOLD SAINTS
Page 2
New Line P & A expended CTHV Offset Amounts
- - ----------------------- -------------------
Less than $200,000 $1,360,000
Between $200,000 and $399,999 $2.25 per dollar not spent
Between $400,000 and $499,999 $2.00 per dollar not spent
Between $500,000 and $599,999 $1.85 per dollar not spent
Between $600,000 and $699,999 $1.60 per dollar not spent
Between $700,000 and $774,999 $1.25 per dollar not spent
Above $775,000 No Offset
New Line will provide CTHV and Jones with a certificate executed by an officer
of New Line certifying the amount which was actually spent for P & A for the
theatrical release of the Picture in the United States and Canada by no later
than the Videogram Availability Date (as defined in the CTHV's Standard Terms
and Conditions which is Exhibit 2 to the Deal Memo) of the Picture. CTHV shall
have the right to audit (although Jones shall have the right to compel CTHV to
conduct an audit) New Line's books and records concerning New Line's P & A
expenditure for the theatrical release of the Picture in the United States and
Canada.
Notwithstanding the foregoing, CTHV shall not charge New Line with an offset
for the amounts between $775,000 and $800,000 which New Line did not spend on
P&A. Such $25,000 shall not be included when calculating the offset amounts.
2. New Line and Columbia TriStar both agree that Columbia TriStar
shall have the right and obligation to pay Jones from monies otherwise owing to
New Line under any agreement between Columbia TriStar and New Line the
difference between $400,000 and one-half (1/2) of the amount actually spent by
New Line on P&A (i.e. if New Line spent $500,000 on P&A, Columbia TriStar would
pay Jones $150,000 which is $400,000 less one-half (1/2) of $500,000). Such
monies would be paid to Jones to the extent Jones has not received one-half
(1/2) of the P&A not actually spent by New Line from New Line. Columbia TriStar
would be obligated to pay such monies to Jones only upon Columbia TriStar
having monies otherwise payable to New Line as set forth herein.
3. New Line agrees to provide, at no cost to CTHV, access to all
domestic theatrical advertising and publicity materials related to the Picture
(including, but not limited to, all theatrical posters, key artwork, color
transparencies, color slides, publicity
<PAGE> 16
HOUSEHOLD SAINTS
Page 3
stills, billing block, press kits) created by New Line and will provide access
to the theatrical trailer of the Program, provided that CTHV will pay for all
shipping costs associated with the delivery of such items to CTHV.
4. Except as hereby amended all other terms and conditions of the
Deal Memo shall continue in full force and effect.
If this meets with your approval, please sign in the space
provided below.
Best Regards,
/s/ GINA M.RESNICK
Gina M. Resnick
Agreed to this 19th day of
June, 1992
New Line Productions, Inc.
By: Donna Bascom
Its: Senior Vice President
Agreed to this 18th day of
June, 1992
Jones Entertainment Group Limited
By: Carl E. Vogel
Its: President
PS/mf
9217c2
cc: A. Ayers
B. Barron
B. Chardavoyne
T. Muller
A. Mastracco
P. Schlessel
C. Simmons
S. Sparks
