Exhibit 10.7
DISTRIBUTOR/SALES AGENT
Dated as of July 17, 1995
HEP I PARTNERS
Re: THE SECRET AGENT CLUB, starring HULK HOGAN
Gentlemen:
1. PARTIES. This letter will confirm the agreement ("Agreement")
reached between United Film Distributors, Inc. ("Distributor/Sales Agent") and
HEP I PARTNERS ("Owner/Grantor") with respect to the feature film THE SECRET
AGENT CLUB (the "Picture") whereby Owner has engaged the services of Distributor
as the exclusive authorized international sales, collections and servicing agent
of Owner for the Picture in the Territory (as defined below), upon the following
terms and conditions.
2. PICTURE. (a) Owner confirms that the Picture will be or is shot in
color, in the English language, with a running time of no less than 92 minutes
including main and end titles, and shall qualify for an MPAA rating not more
restrictive than "R".
3. TERM. The term of this Agreement ("Term") shall commence as the date
of this Agreement and shall continue in perpetuity.
4. TERRITORY. Distributor shall have the right to sublicense the
Picture during the Term throughout the entire universe.
5. LICENSED RIGHTS. The Licensed Rights in the Picture which
Distributor may sublicense ("Rights") are the exclusive rights in the Territory
to exhibit the Picture, substantially as produced or represented by Owner other
than customary dubbing, subtitling and limited editing for censorship purposes
as is customary in each local country) in any and all media, now known or
hereafter devised or improved including, but not limited to: theatrical
exhibition (35mm), non-theatrical exhibition (as customarily defined in the
motion picture industry), television exhibition (including pay, cable, free,
satellite and pay-per-view), exhibition by means of video device (videocassette,
disc or other format), for private home use (including the right to manufacture,
distribute, rent and sell such video devices for such purposes) and any and all
other means of exploitation of the Picture and any Rights therein, whatsoever,
including merchandising, publication and soundtrack album rights. All other
rights are excluded, including, the rights to exploit, license, or represent any
and all "derivative works", such as sequels and remakes.
6. DIVISION OF GROSS RECEIPTS. As used in this Agreement, the term
"Gross Receipts" shall mean all non-refundable monies or credits payable by
foreign distributors once actually received by Distributor in United States
Dollars including, without limitation, advances, minimum
guarantees, "overages", and other license fees or receipts, net of any
withholding or other foreign remittance taxes. Gross Receipts shall be divided
between Owner and Distributor as follows:
(a) Distributor shall first deduct and retain its fee of
Twenty percent (20%) out of total Gross Receipts;
(b) Distributor shall next deduct and retain the portion
attributable to cover Distributor's general out-of-pocket expenses
(e.g., travel, hotels, temporary personnel, sales offices,
entertainment, equipment rentals, sales trips, public relations fees
and overhead expenses, etc.) incurred in connection with the sale of
the Picture and attending various sales markets where the Picture will
be offered to foreign distributors. Said amount shall be fairly
apportioned in the event the expenses apply to matters other than the
Picture.
(c) Distributor shall also deduct and retain an amount equal
to all direct out-of-pocket distribution expenses applicable to the
Picture incurred by Distributor including, without limitation, creative
fees, printing, shipping, postage, courier, screening rooms and
cassettes, laboratory, legal and accounting fees directly related to
agreements with foreign distributors, telephone, telecopier and the
like. Distributor shall also be entitled to deduct its expenses
incurred including, without limitation, the creation of "additional"
technical materials such as, but not limited to, negatives,
internegatives, magnetic and optical soundtracks, trailers, television
spots, one-sheets, stills and any and all other advertising, publicity
and marketing expenses, of any kind, as advanced by Distributor.
(d) Provided Owner has complied with all terms and conditions
of this Agreement including, without limitation, timely Delivery, the
balance shall be Owner's share of Gross Receipts and shall be paid to
Owner in accordance with Paragraph 10 of this Agreement.
7. DEPOSIT ACCOUNT. All Agreements shall provide that any and all Gross
Receipts under the Agreements shall be paid by each licensee directly to a bank
account (the "Deposit Account") established by and under the control of
Distributor or its designee.
8. DELIVERY. On or before April 1, 1996, Owner shall deliver to
Distributor, at Owner's expense, all those items ("Items") relating to the
Picture referred to in Exhibit "A" ("Delivery"). All Items delivered to
Distributor by Owner shall be of first class, professional quality, suitable for
theatrical exhibition and acceptable to foreign television broadcasters quality
control requirements.
9. DISTRIBUTOR'S RIGHTS. Distributor shall have the right to advertise,
promote, sell, assign and sublicense, without limitation, the theatrical, video,
television and all other rights, and otherwise exploit and deal with the Picture
and its title, in Distributor's sole good faith discretion, in connection with
Distributor's sublicense of the Picture in the Territory. Distributor shall also
have the right to change or edit the Picture and its title, but only to the
extent reasonably necessary for the foreign exploitation of the Picture
including, without limitation, re-editing, re-mixing, adding to and deleting
from, and adding appropriate credits to the Picture as Distributor shall deem
reasonably necessary or appropriate provided same does not conflict with
subparagraph (a) below. Any and all expenses incurred by Distributor in
connection with changes in the Picture shall be deemed
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distribution expenses recoupable by Distributor pursuant to Paragraph 6 of this
Agreement. Distributor shall further have the right to sell the Picture along
with other pictures, i.e. in groups or "packages", in which case proceeds from
the exploitation of the group or package shall be allocated by Distributor among
the various motion pictures in an equitable manner to be determined in good
faith by Distributor.
(a) Owner will notify Distributor, in writing, of its
contractual obligations with respect to credits or advertising of
persons, names and/or likenesses in connection with the Picture.
Failure by Owner to give written notice, as indicated herein, shall
release Distributor from any liability or responsibility in connection
therewith and Owner hereby agrees to indemnify and hold Distributor
harmless from the consequences of any action with respect thereto.
(b) Distributor shall have the right, but not the obligation,
to include in the main and end titles of the Picture and in all
advertising and publicity materials for the Picture, its corporate logo
and the words "Distributed by", "Released by", or a similar indication
of Distributor's function. Owner hereby acknowledges its obligation to
provide Distributor with a listing of the main and end titles so that
Distributor may make a determination as to the placement of its logo
and credit in accordance with the provisions of this Paragraph 9. Owner
further agrees to consult with Distributor at the time the credits are
prepared to determine if Distributor wishes to have its credit and logo
included therewith.
10. ACCOUNTING. Distributor shall report to and make appropriate
payments to Owner on a calendar quarterly basis, commencing upon collection of
first monies, for the first eighteen (18) months of the Term and semi-annually
thereafter. Accounting statements shall be sent to Owner within thirty (30) days
following the close of the applicable accounting period. Owner shall have
customary audit rights with respect to Distributor's records pertaining to the
Picture, exercisable at Distributor's offices not more frequently than once
every twelve (12) months. Accounting statements shall be incontestible
twenty-four (24) months after they are mailed by Distributor to Owner at the
above address or such other address as Owner may designate in writing.
11. INDEMNIFICATIONS/REPRESENTATIONS & WARRANTIES.
(a) Owner represents and warrants that it has the full right, power and
authority to enter into this Agreement and to perform all of its obligations and
undertakings herein; that Owner has not entered into any agreement with any
third party that is inconsistent with or in derogation of the rights, privileges
and benefits being granted to Distributor; that the rights granted are free and
clear of any claims, liens or encumbrances whatsoever; and, that it will not, by
action or inaction, cause Distributor to be deprived of any of the benefits
granted hereunder.
(b) Owner represents and warrants that, with respect to any of its
obligations hereunder (including, without limitation, any materials supplied
hereunder or actions undertaken or omitted herefrom), that neither the Picture,
nor any part thereof, nor the title thereof, nor the exercise by Distributor or
its licensees or assigns of any right, license or privilege herein granted,
violates or infringes or will violate or infringe any trademark, trade name,
contract, agreement, copyright (common law or statutory), patent, literary,
artistic, dramatic, personal, private, civil or property right
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or right of privacy or any other right or defames any person, firm, corporation,
or association whatsoever.
(c) Owner warrants and agrees that it will indemnify and hold
Distributor and its successors, licensees and assigns, directors, shareholders,
officers, employees, agents, attorneys and other representatives harmless from
and against any and all liability, loss, judgments, damages, costs and expenses,
including reasonable attorneys' fees, arising solely out of or relating to any
breach or alleged breach by Owner hereunder in connection with any suits
relating to the Picture.
(d) Distributor warrants and agrees that it will indemnify and hold
Owner and its successors, licensees and assigns, directors, shareholders,
officers, employees, agents, attorneys and other representatives harmless from
and against any and all liability, loss, judgments, damages, costs and expenses,
including reasonable attorneys' fees, arising solely out of or relating to any
breach or alleged breach by Distributor hereunder in connection with any suits
relating to the Picture.
12. REMEDIES. In the event of any breach or alleged breach of this
Agreement by Distributor, Owner's sole remedy shall be an action at law for
damages, if any; Owner shall not have the right to terminate or rescind this
Agreement or any sublicenses for the Picture entered into by Distributor.
Because of the costs and expenses which will be incurred by Distributor in the
marketing and promotion of the Picture, the agency relationship created hereby
shall be deemed coupled with an interest.
13. ARBITRATION. Any dispute, controversy or claim arising out of or
relating to the enforcement, interpretation or alleged breach of this Agreement
shall be submitted to and resolved by binding arbitration in Los Angeles,
California before one neutral arbitrator appointed in accordance with the
Commercial Arbitration Rules of the American Arbitration Association, and
judgment on the award rendered by the arbitrator may be entered in and
enforceable by any court having jurisdiction thereof.
14. THIRD PARTY PAYMENTS. Owner is responsible for all third party
payments including, but not limited to, any and all residuals, refuse fees, and
any other union or guild payments which may become payable as a result of
Distributor's exercise of the Rights granted hereunder.
15. ADDITIONAL DOCUMENTS. Each of the parties hereto agrees to execute
any additional documents which may be required or be desirable to fully
effectuate the purposes and intents of this Agreement or to carry out the
obligations with the parties hereunder, provided that they are not inconsistent
with the provisions of this Agreement. Owner hereby appoints Distributor its
sole and exclusive attorney-in-fact with full and irrevocable power and
authority in Owner's name to execute, acknowledge, deliver, file, register,
renew, extend, enforce and defend all copyrights in the Picture in the
Territory. Before Distributor may exercise its power of attorney hereunder, it
must first submit the documents at issue to Owner with ten (10) business days to
return the same.
16. MISCELLANEOUS. This Agreement contains the entire understanding and
supersedes all prior understandings of the parties hereto relating to the
subject matter hereof, and this agreement may not be modified, nor may any
provision be waived, except by an instrument in writing signed by both parties.
No payment under this Agreement shall operate as a waiver of any provision
hereof.
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No waiver of any breach or default under this Agreement shall operate as a
waiver of any preceding or subsequent breach or default. Neither party shall be
deemed a fiduciary, partner, joint venturer, employee, or agent of the other
party. Neither party shall hold itself out contrary to the provision of this
Agreement or shall become liable by reason of any representation, act or
omission of the other party contrary to the provisions hereof. Notwithstanding
anything herein or elsewhere contained, this Agreement is solely for the mutual
benefit of Owner and Distributor, and no third party (whether or not referred to
herein) is intended or shall be deemed to be a third party beneficiary hereof.
Paragraph headings used herein are for convenience only and shall not be used in
any way to interpret the provisions of this Agreement. All items which have not
been addressed shall be negotiated in good faith pursuant to the prevailing
customs and standards in the entertainment industry. Any and all estimates or
projections as to sales of the Picture by either party shall be deemed
statements of opinion only and shall not be binding upon the parties.
17. NOTICES. All notices given may be given by facsimile with
conformational receipt, by personal delivery or by certified mail, return
receipt requested. The date of any personal delivery or facsimile shall be
deemed the date of the giving of notice. Notice shall be addressed to the
parties at their respective addresses as follows, subject to change by written
notice:
TO OWNER: HEP I PARTNERS
c/o Hit Entertainment, Inc.
1990 Westwood Boulevard
The Penthouse
Los Angeles, California 90025
TO DISTRIBUTOR: HIT ENTERTAINMENT
1990 Westwood Boulevard
The Penthouse
Los Angeles, California 90025
18. APPLICABLE LAW. This Agreement shall be governed and construed in
accordance with the laws of the State of California.
If the foregoing accurately sets forth your understanding, please
indicate your agreement to this Agreement by signing in the space provided
below.
Very truly yours,
United Film Distributors, Inc.
By: /s/
ACCEPTED AND AGREED TO
HEP I PARTNERS
By: Hit Entertainment, Inc., its
general partner
By: /s/
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