EXHIBIT 10.17
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Portions denoted with an asterisk have been omitted
and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential
treatment.
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DISTRIBUTION SERVICES AGREEMENT
TERM SHEET
1. PARTIES:
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(a) Twentieth Century Fox Home Entertainment, Inc. "Fox"); and
(b) Artisan Home Entertainment, Inc. ("Artisan").
2. DISTRIBUTION TERRITORY: The U.S., its territories and possessions (i.e.,
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including Puerto Rico) ("Distribution Territory").
3. PICTURES: This Agreement covers all Motion Pictures for which Artisan has
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or acquires the right of Home Video Distribution during the Term, including
Artisan's existing catalog, new productions and new acquisitions ("Pictures").
4. TERM: The period commencing August 1, 1998 and ending *
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("Term").*
5. DISTRIBUTION SERVICES: For each Picture for which Artisan engages in Home
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Video Distribution during the Term, except as provided in Paragraph 6., Fox
shall have the exclusive right and obligation to provide Artisan with:
(a) for VHS format Video Devices only, duplication services *; and
(b) for all formats of Video Devices (including DVD), the following
services (collectively, "Distribution Services"):
(i) physical distribution services (including pick, pack and ship
and returns processing services);
(ii) retail merchandising and inventory management services;
(iii) credit evaluation, billing and collection services;
(iv) co-op and other advertising credit administration services; and
(v) customer service services for VMI Customers.
6. EXCEPTIONS TO EXCLUSIVITY: *
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7. FOX'S DISTRIBUTION SERVICES FEE:
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*
8. GROSS RECEIPTS: *
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9. NET RECEIPTS: *
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10. RESERVES:
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*
11. PAYMENT: *
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12. CROSS-COLLATERALIZATION / SHORTFALLS: *
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13. ARTISAN'S OBLIGATIONS: For each Picture for which Artisan engages in Home
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Video Distribution during the Term:
(a) Duplication (VHS): For VHS format Video Devices of such Picture,
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Artisan shall cooperate with Fox in arranging for timely duplication of
such Video Devices by Fox's duplicator(s), including by making reproduction
masters and packaging artwork and materials timely available to Fox's
duplicator(s) and by providing, subject to Fox's reasonable approval, order
entry, management and tracking services and component inventory management
services for Video Devices of such Picture. Fox and Artisan shall cooperate
in good faith at all times to minimize scheduling conflicts between
Artisan's duplication and Fox's duplication and Fox shall use commercially
reasonable efforts to accommodate Artisan's duplication (taking into
account Artisan's commercial needs as well as Fox's); *, Fox shall use
commercially reasonable efforts to assist Artisan in resolving such
dispute, it being agreed that Fox shall have the right to pay all invoices
for duplication of Video Devices of Pictures in its reasonable discretion
and to deduct all such amounts paid as Distribution Services Costs
hereunder. At all times, Artisan shall be the sole owner of all materials
with respect to Pictures, including reproduction masters, packaging
materials, and Video Devices.
(b) Delivery of Finished Goods (DVD): For DVD format Video Devices of
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Pictures, Artisan shall timely deliver finished goods to Fox or Fox's
distributor.
(c) Sales and Marketing Activities: Artisan shall engage in sales and
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marketing activities in types and amounts that are customary in the home
video industry as practiced by Artisan as of the date hereof for similar
product, and Artisan shall timely provide Fox with all sales information
(including all order entry and returns authorization information on a per-
customer basis) reasonably required to permit Fox to provide Distribution
Services to Artisan. Artisan's sales activities shall be subject to the
following restrictions:
(i) All sales to customers of Artisan for whom Fox provides vendor-
managed inventory services ("VMI Customers") shall be made on the same
terms and conditions as then in-effect for sales of similar Fox
product to such VMI Customers, except that the following terms and
conditions may vary: pricing (including performance rebates and
discounts); and slotting, display, co-op and other advertising
allowances, payments, rebates and credits;
(ii) In connection with all sales to customers of Artisan for whom
Fox does not provide vendor-managed inventory services ("Non-VMI
Customers"), Artisan shall be responsible for all customer service
services;
(iii) Fox shall not be obligated to provide direct-to-store
distribution to any customer of Artisan that Fox is not then providing
with direct-to-store distribution of similar Fox product; and
(iv) Fox shall not be obligated to provide vendor-managed inventory
services to any customer of Artisan that Fox is not then providing
with vendor-managed inventory services for similar Fox product.
(d) Sales and Marketing Costs: Artisan shall be directly responsible for
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all costs in connection with the selling, advertising and promotion of
Video Devices of the Pictures, including design, production and manufacture
of marketing and advertising materials, press kits, trailers, screening
Video Devices, media purchases, mailers, promotions, fulfillment, design,
production and shipment of display and point-of-purchase advertising (if
not shipped with Video Devices), advertising agency and public relations
fees, consultant fees, sales incentive programs, trade show and
entertainment costs, commercial tie-ins and sales commissions
(collectively. "Sales and Marketing Costs"). Fox shall have no
responsibility for Sales and Marketing Costs.
(e) Taxes: Artisan shall be directly responsible for all amounts (however
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denominated) required to be remitted to taxing authorities as sales, use,
excise, VAT, commodity, remittance, withholding and comparable or similar
taxes with respect to Cassettes of the Pictures (collectively, "Taxes").
Fox shall have no responsibility for Taxes.
(f) Payments to Third Parties: Except as expressly provided herein, Fox
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shall have no obligation to make any payment of any kind to any third
Parties with respect to Video Devices of the Pictures for any reason
whatsoever, including residuals or royalties, as such payments, if any, are
the responsibility and obligation of Artisan.
14. *
15. CHANGE OF CONTROL: In the event a third Party which has a substantial home
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video distribution system in the Distribution Territory enters into a joint
venture with, merges with, or is consolidated with or acquires control of or
comes under common control with Artisan, Artisan shall have the right to
terminate the Agreement on six months prior written notice to Fox.
16. EXPIRATION/TERMINATION PROCEDURES: Fox and Artisan shall agree on mutually
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acceptable expiration/termination procedures, including procedures for
estimating amounts of retail inventory in the field, and goods in transit.
17. OWNERSHIP OF DATA: As between Artisan and Fox, Artisan shall be the sole
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owner of all data generated by Fox or its vendors with respect to Video Devices
of the Pictures, including without limitation all point-of-sale data from VMI
Customers with respect to such data. Fox shall treat all such data as
Confidential Information of Artisan pursuant to the Amended and Restated Mutual
Confidentiality and Non-Disclosure Agreement dated as of March 1, 1998 between
Fox and Artisan. Notwithstanding anything in the foregoing two sentences to the
contrary, Fox and its employees, agents and vendors shall have an irrevocable
license for the Term to use such data solely for the purpose of providing
Distribution Services to Artisan hereunder.
18. OTHER TERMS AND CONDITIONS: All other Terms and Conditions shall be subject
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to good faith negotiation to be mutually agreed. Unless and until a long-form
distribution services agreement is signed, this Term Sheet shall constitute a
binding agreement between Fox and Artisan. Any modification of the above terms
shall be in writing and signed by Fox and Artisan.
By signing in the spaces provided below, Fox and Artisan accept and agree to all
of the terms and conditions of this Term Sheet.
TWENTIETH CENTURY FOX HOME ARTISAN HOME ENTERTAINMENT. INC.
ENTERTAINMENT, INC. ("Artisan")
("Fox")
/s/ Laura Cook /s/ Amir Malin
By: _______________________ By: ___________________________
Its: SVP Its: CEO
Legal & Business
Exhibit A1 - Pricing Schedule
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Exhibit A2 - Pricing Schedule
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Exhibit A3 - Pop-up Slipcase Pricing
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Exhibit A4 - Rigid Slipcase Pricing
*