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EXHIBIT 10.5
DOVE INTERNATIONAL, INC. ("Dove", "we" or "us")
8955 Beverly Boulevard
West Hollywood, California 90048
September 12, 1996
Guinness Mahon & Co. Limited (the "Bank")
32 St. Mary At Hill
London, England EC3P 3AJ
Samuelson Entertainment Limited ("SEL")
23 West Southfield
London, England EC1A 9HY
Re: "WILDE" (THE "PICTURE")
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Dear Sirs:
Definitions used in the Agreement shall have the same meaning when
used herein unless the context otherwise requires.
The Bank has requested that we arrange for the deposit of the sum of
L.333,334 ("the Deposit") as security for the final payment of the Advance
payable when due pursuant to Clause 7.4 of the Inter-Party Agreement made
among, inter alia, the Bank, SEL and us (the "Inter-Party Agreement"), provided
and notwithstanding anything to the contrary in the Inter-Party Agreement, that
an aggregate of no less than G.B.L.5,135,844 production financing has been
advanced to SEL (after the date hereof) by June 30, 1997. We acknowledge that
the G.B.L.5,135,844 production financing requirement shall be reduced by the
following amounts upon payment or by holdback in the case of the payment to the
Bank as part of the first draw down and in the case of the Bank, (or holdbacks
in the case of the Bank) to the specified parties:
The Bank - G.B.L.135,000
British Screen Fund - G.B.L. 58,500
Donadio & Asworth, Inc. - G.B.L. 85,500
Wall-to-Wall TV, Ltd. - G.B.L. 5,000
Film Finances, Ltd. - G.B.L.136,749
Peter Frasers & Dunlop - G.B.L. 50,000
Miramax Film Corp
(approx.) - G.B.L.110,340
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TOTAL G.B.L.581,089
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Guinness Mahon & Co. Limited
Samuelson Entertainment Limited
Page 2
September 12, 1996
As an inducement for the Bank entering into the loan agreement with SEL to
finance the production costs of the Picture, in consideration of MV agreeing to
arrange for the Deposit to be placed with the Bank upon the terms and
conditions set out below, and SEL agreeing to amend the payment schedule and
the other terms herein in the Agreement as set out below, the parties hereby
agree, as follows:
1. MV hereby agrees to place or cause to be placed the Deposit by
no later than the opening of business (London time) on Friday,
September 13th with the Bank in an account charged in favor of
the Bank as security for our obligation to pay the sum of
L.333,334 on Delivery in accordance with terms of the
Agreement (as modified by the Inter-Party Agreement and this
letter agreement). The Bank agrees that interest on such
Deposit shall be unconditionally and irrevocably paid to MV
and the Deposit shall be released to MV upon our payment of
the payment pursuant to Section 15(b) of the Agreement. The
Deposit shall be unconditionally and irrevocably released to
MV if Delivery is not effected in accordance with the terms of
the Agreement (as modified by the Inter-Party Agreement and
this letter agreement ).
2. In consideration of the foregoing, we and SEL hereby agree
that MV shall be entitled to receive a 5% commission ("MV"
Commissions") from all Gross Receipts received by us in the
Territory after deduction of Dove's full Distribution Fee as
set out in Paragraph IV of Exhibit B to the Agreement until
such time as MV has received the sum of $120,000 (whereupon
such commission shall cease to be deducted from such Gross
Receipts), and we hereby unconditionally and irrevocably
undertake to pay such commission to MV to bank account
designated by MV to us in writing. Furthermore, SEL hereby
agrees that MV shall be entitled to: (i) the sum of $120,000
payable 5% from 100% of the gross receipts received by all
third party distributors from exploitation of the rights in
the Territory in the event the rights granted to us under the
Agreement terminate after the cure periods or as otherwise
provided in the Inter-Party Agreement (and after only the
Bank's recoupment of the amount of the unpaid portion of the
Advance due under Section 15(a) plus the Bank's actual costs
relating to the collection of the unpaid portion of the
Advance due under Section 15(a) and the disposition of the
rights generally described in Section 4(a) of the Agreement,
less all proceeds
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Guinness Mahon & Co. Limited
Samuelson Entertainment Limited
Page 3
September 12, 1996
received by the Bank (by the date of any payments by MV under
the Guaranty) from any sale, license or other disposition of
the rights generally described in Section 4(a) of the
Agreement (including by SEL or otherwise); and (ii) 8% of 100%
of net profits of the Picture ("MV Profits"), net profits
being payable, defined and accounted for in accordance with
the terms of the Collection Agreement made with, inter alia,
SEL, but in no event on terms less favorable than applicable
to any other profit participant.
3. In order to induce MV to arrange for the Deposit to be placed
with the Bank upon the terms and conditions set out herein, to
secure payment of all sums payable by him under the Guaranty
of even date to be given by MV to the Bank (the "Guaranty")
and the payment of the Deposit to the Bank if we do not make
timely payment of the Section 15(b) payment, and in order to
secure the payment of the MV Profits to MV hereunder by SEL,
SEL hereby grants and assigns to MV a continuing security
interest in, and copyright mortgage in, the Picture and in all
of Samuelson's right, title and interest in all elements,
including physical elements, properties, copyrights, contract
rights, inventories, accounts and general intangibles
associated with and relating to the Picture. Notwithstanding
the foregoing, MV acknowledges that such security interest
shall be subordinated only to liens in favor of us and the
Bank in the amount of the unpaid sums pursuant to Section
15(a) of the Agreement and interest as provided herein; and in
the case of the Bank provided that, the Bank executes a
nondisturbance agreement in a form and substance reasonably
satisfactory to MV and the Bank. SEL agrees to execute all
further documents MV may reasonably require to perfect,
evidence, renew and/or continue the security interest and
copyright mortgage and assignment hereby granted and/or to
effectuate the purposes and intents of this Agreement,
including, without limitation, the signing and delivery of
Uniform Commercial Code financing statement and mortgage of
copyright in a form and substance attached hereto as Exhibit
"A".
4. In addition, in order to induce MV to arrange for the Deposit
to be placed with the Bank upon the terms and conditions set
out herein and to deliver the Guaranty to the Bank, to secure
payment of all sums payable by him under the Guaranty and the
payment of the Deposit to the Bank if we do
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Guinness Mahon & Co. Limited
Samuelson Entertainment Limited
Page 4
September 12, 1996
not make timely payment of the Section 15(b) payment, we
hereby grant and assign to MV a continuing security interest
in, and copyright mortgage in, the Picture and in all of our
right, title and interest in all elements, including physical
elements, properties, copyrights, contract rights,
inventories, accounts and general intangibles associated with
and relating to the Picture. Notwithstanding the foregoing,
MV acknowledges that such security interest shall be
subordinated only to liens in favor of us and the Bank in the
amount of the unpaid sums pursuant to Section 15(a) of the
Agreement and interest as provided herein; and in the case of
the Bank provided that, the Bank executes a nondisturbance
agreement in a form and substance reasonably satisfactory to
MV and the Bank. We agree to execute all further documents MV
may reasonably require to perfect, evidence, renew and/or
continue the security interest and copyright mortgage and
assignment hereby granted and/or to effectuate the purposes
and intents of this Agreement, including, without limitation,
the signing and delivery of Uniform Commercial Code financing
statement and mortgage of copyright in a form and substance
attached hereto as Exhibit "B".
5. SEL (and the Bank, as assignee of SEL's rights under the
Agreement) and we agree to hereby amend the Agreement (which
shall in other respects remain in full force and effect save
as set out in the Inter-Party Agreement) by deleting the words
"November 1, 1996" appearing therein and adding after the
words "March 3, 1997" the words "and April 2, 1997". We
hereby confirm that we will be responsible for and pay to the
Bank: the interest charges incurred by SEL to the Bank caused
by changing payment of the Advance from two payments of
L.333,333 each on the first and last day of principal
photography to five payments of L.133,334 as set out in
Section 15(a) of the Agreement as amended in this Paragraph 5,
to a cap of L.20,000, such interest to be payable at the same
time as the payment pursuant to Section 15(b) of the Agreement
(as modified by Clause 7.4 of the Inter-Party Agreement and
this letter agreement). Such interest charges once paid may
be recouped by Dove as Distribution Expenses out of Gross
Receipts.
6. Dove and SEL (and the Bank, as assignee of SEL's rights under
the Agreement) hereby amend the Agreement (which shall in all
other
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Guinness Mahon & Co. Limited
Samuelson Entertainment Limited
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September 12, 1996
respects remain in full force and effect save as set out in
the Inter-Party Agreement), as follows:
(i) In the event that Dove fails to make timely payment
of the portion of Advance due under Section 15(a) of
the Agreement (as such payment dates are modified
herein), SEL and the Bank each agree that it will
provide Dove with one hundred five (105) days written
notice ("Cure Period Notice") specifying the portion
of Advance which has not been paid when due and
payable, prior to taking action against Dove or
terminating the rights grant under Section 4(a) of
the Agreement. Specifically, the rights granted to
Dove under Section 4(a) of the Agreement shall remain
vested pursuant to Section 4(a) and shall not revert
to SEL or be terminated until the end of such one
hundred five (105) day period (the "Cure Period").
In the event that Dove is simultaneously in default
under more than one of the payment obligations under
Section 15(a) (as modified by this letter agreement),
the Cure Periods shall run consecutively from
delivery of the Cure Period Notice for the then
earliest uncured payment default. (To illustrate: if
Dove does not pay a portion Advance payment due in
January and February 1997, then: (i) the Cure Period
for the January default shall commence on delivery of
the Cure Period Notice therefor and terminate 105
days thereafter, (ii) the Cure Period for the
February default shall commence on the date of
delivery of the February Cure Period Notice, provided
that so long as the January default is not cured the
February Cure Period shall be deemed to have
commenced upon delivery of the January Cure Period
Notice; and (iii) if Dove or any third party cures
the January default at any time during the Cure
Period therefore, then the February Cure Period shall
be deemed to have commenced on the date of actual
delivery of the February Cure Period Notice (and not
concurrent with delivery of the January Cure Period
Notice).) During each Cure Period, Dove shall have
the right to cure any such default under the
Agreement by making payment of the portion of Advance
that is the subject of the Cure Period Notice
(whereupon Dove shall be deemed to be in compliance
with the terms of the Agreement); provided, however,
that in the event that the default is cured after
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Guinness Mahon & Co. Limited
Samuelson Entertainment Limited
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September 12, 1996
the 60th day of the Cure Period, then and in such
event to effect such cure Dove (or the curing third
party) must pay the amount of the Advance then due
and payable, together with accrued interest thereon
at the rate equal to the fixed rate equivalent to 2%
per annum over LIBOR (as fixed or floating pursuant
to the exercise of SEL's option with the Bank)
(accrued for that number of days by which the date on
which the curing payment was made was beyond or in
excess of the 60th day of the Cure Period and such
interest charges once paid may be recouped by Dove as
Distribution Expenses out of Gross Receipts); and
(ii) Upon payment to SEL or the Bank (as the assignee of
SEL's rights under the Agreement) of all of the
amounts due under Section 15 of the Agreement
(together with interest on cure payments made after
the 60th day of a Cure Period, if applicable, as
described in Section 4(i) above), regardless of the
date paid (i.e., if paid by the dates provided for in
the Agreement (as modified herein) or whether paid
during any of the Cure Periods) and the payors
thereof (including, without limitation, whether paid
by Dove or a third party), the condition set forth in
the first sentence of Section 4(a) of the Agreement
shall be deemed satisfied for all purposes and Dove
shall unconditionally and indefeasibly own all of the
rights set forth and described in Section 4(a) of the
Agreement free and clear of any claims and the Bank's
security interest in the rights described under
Section 4(a) of the Agreement shall terminate.
(iii) In the event of the filing of a bankruptcy case by or
against us and provided, that the Advance has not
been paid by us or MV, the grant of rights under
Section 4(a) shall terminate (provided, however, that
our and MV's rights to repayment of amounts
previously paid by either or both of us shall
continue as set forth in the Inter-Party Agreement).
7. In order to induce the Bank to provide the production
financing to SEL, Dove hereby grants and assigns to the Bank a
continuing security interest in, and copyright mortgage in the
Picture and in all of our right, title and interest in all
elements, including physical elements, properties,
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Guinness Mahon & Co. Limited
Samuelson Entertainment Limited
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September 12, 1996
copyrights, contract rights, inventories, accounts and general
intangibles associated with and relating to the Picture.
Dove's rights pursuant to Section 4(a) of the Agreement in the
Picture until the sums due and payable under Section 15(a)
have been paid. Upon payment of the sums to the extent due
and payable under Section 15(a) by any party, such security
interest shall automatically terminate. We agree to execute
all further documents the Bank may reasonably require to
perfect, evidence, renew and/or continue the security interest
and copyright mortgage and assignment hereby granted and/or to
effectuate the purposes and intents of this Agreement,
including, without limitation, the signing and delivery of
Uniform Commercial Code financing statement and mortgage of
copyright in a form and substance attached hereto as Exhibit
"C". In addition, we agree to undertake our commercially
reasonable efforts to obtain subordination(s) for existing
lienholder(s) in our rights in the Picture in a form and
substance reasonably acceptable to the Bank, us and the
lienholder(s).
8. This Agreement and its validity, construction and performance
shall be governed in all respects by the laws of the State of
California, without giving effect to principals of conflicts
of laws. Each of you and us irrevocably consent to the
exclusive jurisdiction of the courts of the State of
California and the federal courts of the United States located
in California (Central District) for the purpose of any action
or in the proceeding relating to this agreement.
This letter may be signed in counterparts. Kindly indicate your
acceptance of its terms by signing and returning the enclosed copy.
Yours faithfully,
DOVE INTERNATIONAL, INC.
By:/s/ Steve Soloway
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Its:V.P. - General Counsel
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Guinness Mahon & Co. Limited
Samuelson Entertainment Limited
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September 12, 1996
AGREED AND ACCEPTED:
/s/ Premila Hoon
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GUINNESS MAHON & CO. LIMITED
/s/ Mark Samuelson
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SAMUELSON ENTERTAINMENT LIMITED
ACKNOWLEDGED WITH RESPECT TO PARAGRAPHS 3 AND 4:
/s/ Michael Viner
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MICHAEL VINER