LASER VIDEODISC SUBLICENSE
DEAL MEMORANDUM
as of October 1, 1995
PIONEER ENTERTAINMENT (USA) L.P.
0000 Xxxx 000xx Xxxxxx
Xxxx Xxxxx, Xxxxxxxxxx 00000-0000
Ladies and Gentlemen:
This Memorandum sets forth the principal terms and conditions of
the agreement between LIVE Film and Mediaworks Inc. ("LIVE") and
Pioneer Entertainment (USA) L.P. ("PIONEER") regarding a license
from LIVE to PIONEER to manufacture during the Term, and to
distribute and sell, during the Term and Sell-Off Period, Laser
Videodiscs embodying Programs in the Territory (as such
capitalized terms are hereinbelow defined), subject to and in
accordance with the following terms and conditions:
A. PARTIES: LIVE and PIONEER.
B. DATE OF AGREEMENT: As of October 1, 1995.
C. PROGRAMS: For purposes of this Agreement, "Programs" shall
be defined as and shall consist of the following:
(1) Catalog Programs, which refers to any and all motion
pictures or other programs which LIVE or its affiliates first
made available for sale or rental in the Territory prior to the
date of this Agreement in the one-half inch (1/2") NTSC
videocassette format or in any of the Reserved Disc Formats (as
defined in Paragraph D. below) with English soundtrack (or
original foreign language soundtrack with English subtitles)
under any of the tradenames, trademarks or label identifications
designated in subparagraph C(3) below, and with respect to which
LIVE owns or controls all the rights being granted by LIVE to
PIONEER hereunder; and,
(2) New Release Programs, which refers to any and all
motion pictures or other programs which LIVE or its affiliates
shall first make available for sale or rental to the general
public in the Territory during the Term of this Agreement in the
one-half inch (1/2") NTSC videocassette format or in any of the
Reserved Disc Formats (as defined in Paragraph D. below) with
English soundtrack (or original foreign language soundtrack with
English subtitles) under any of the tradenames, trademarks or
label identifications designated in subparagraph C(3) below, and
with respect to which LIVE owns or controls, or shall, during the
Term hereof, own or control all the rights being granted by LIVE
to PIONEER hereunder, except as provided in Paragraph C. (4)
below.
(3) Designated Labels: Notwithstanding anything to the
contrary contained herein, but subject to all other restrictions
and limitations on or to the rights herein granted to PIONEER,
LIVE is only licensing to PIONEER hereunder the right to embody
in Laser Videodiscs those Programs embodied in English language
(or original foreign language soundtrack with English subtitles)
videocassettes which LIVE either released and distributed in the
Territory prior to the date of this Agreement or will release and
distribute during the Term hereof under any of the following
tradenames, trademarks or label identifications: LIVE Home Video,
Carolco Home Video, Family Home Entertainment, Avid Home
Entertainment, Vestron Video. Vestron Video International,
Vestron Pictures, Vestron Music, Lightning Video, Lightning Video
International, and Children's Video Library, or any successor
tradenames, trademarks or label identifications under which LIVE
shall release all or substantially all of the motion pictures
which LIVE previously released under any of the above designated
tradenames, trademarks or label identifications. As of the date
of this Agreement, the above designated tradenames, trademarks,
and label identifications constitute all the tradenames,
trademarks and label identifications currently being used by LIVE
and its affiliates. Upon PIONEER'S request, LIVE shall undertake
to inform PIONEER of the Catalog Programs currently available
under each of the above designated tradenames, trademarks or
label identifications, together with the date of the expiration
of LIVE'S rights with respect thereto. Not withstanding anything
to the contrary contained herein, PIONEER's rights hereunder with
respect to any Catalog Programs previously released by LIVE under
the Vestron Video or associated labels are expressly subject to
the rights, if any, of Image Entertainment, Inc. ("Image")
pursuant to that certain agreement between LIVE, as successor-in-interest
to Vestron, Inc. and Image dated November 30, 1987, as
amended and supplemented (the "Image Agreement"). LIVE has
furnished to PIONEER a copy of the Image Agreement. Upon
PIONEER's request, LIVE shall undertake to inform PIONEER of the
rights, if any, Image has with respect to any particular Catalog
Program previously released by LIVE under the Vestron Video or
associated labels pursuant to the Image Agreement.
(4) Excluded Programs. Notwithstanding anything to the
contrary contained herein, in the event LIVE obtains Laser
Videodiscs rights to a substantial number of motion pictures or
other programs from a third party (either by acquisition of,
merger or consolidation with the third party by LIVE, or by way
of any licensing or distribution arrangement between LIVE and the
third party, or otherwise), then such motion pictures and other
programs shall not be deemed Programs hereunder. However, if the
Laser Video disc distribution rights for the Territory to any or
all of such Programs shall become available during the Term for
licensing to any third party (other than pursuant to any
licensing or distribution arrangement(s) which were contractually
committed as at the time of LIVE'S acquisition of such Programs),
then PIONEER shall have the right of first negotiation and
"matching" last refusal (each for a period of ten days unless the
party shall mutually agree otherwise) before LIVE shall have the
right to license the Laser Video disc distribution rights to any
or all such Programs to any non-affiliated, independent third
party during the Term of this Agreement. Not withstanding
anything to the contrary contained herein, Excluded Programs
shall not be deemed to include the acquisition by LIVE of
individual Programs during the ordinary course of LIVE'S
business.
D. AUTHORIZED LANGUAGES:
1. English (either the original English soundtrack
version, or, if applicable, the original foreign language version
with either dubbed English soundtrack or English subtitles); and
2. Spanish (either the original English or non-Spanish
soundtrack version with Spanish sub-titles or, if applicable, the original
Spanish soundtrack version); and
3. French (either the original English or non-French
version with French dubbed soundtrack or, if applicable, the
original French soundtrack version).
In no event however shall the language version of the Program
which PIONEER shall release hereunder differ from the language
version of such Program as released by LIVE.
E. AUTHORIZED FORMATS: Laser Videodiscs only. As used herein,
"Laser Videodiscs" shall refer only to eight-inch (8") or twelve-inch (12")
NTSC videodiscs in the analog (non-digital) video laser optical format used by
PIONEER as of July 12, 1988 together with any improvements and enhancements to
such formats which have been made since July 12, 1988 through the date of this
Agreement (e.g., AC-3 and digital sound) or, subject to LIVE'S approval
which LIVE will not unreasonably withhold, which may be
promulgated in the future provided such formats, notwithstanding
any such future improvements or enhancements shall, in LIVE'S
reasonable determination, remain separate and distinct formats
from the Reserved Disc Formats (as hereinafter defined). For the
avoidance of doubt, Laser Videodiscs shall not include the MPEG-1
(Video CD), MPEG-2 (Digital Video Disc) or CD-Rom formats or any
other similar or dissimilar disc formats as such formats are
promulgated as of the date of this Agreement or as such formats
may be promulgated in the future ("Reserved Disc Formats"); it
being understood and agreed that LIVE reserves the unfettered
right to manufacture, distribute, sell and otherwise exploit, and
to authorize others to manufacture, distribute, sell and
otherwise exploit, any or all of the Programs embodied in any or
all of the Reserved Disc Formats at any time and anywhere in the
universe.
F. TERRITORY: United States, provided, that (1) Puerto Rico
and other territories, possessions or commonwealths of the United
States, (2) any military bases of the United States wherever
located throughout the world, and (3) Canada, shall be included
in the Territory with respect to each Program only if and to the
extent LIVE owns or controls the right to distribute and sell
Laser Videodiscs of such Program in such territories,
possessions, commonwealths, military bases or countries: provided
further, that LIVE shall notify PIONEER if it does not own or
control such rights before its delivery of such Program to
PIONEER. At no time will PIONEER exploit or authorize the
exploitation of Laser Videodiscs embodying the Programs outside
of the Territory except as may be authorized by the appropriate
rights holder pursuant to a separate agreement. PIONEER shall
undertake and perform any and all actions (short of commencing
any lawsuit) which are reasonably necessary or desirable
(including any such actions as may be reasonably required or
desired by LIVE) to prevent the transhipment of Laser Videodiscs
embodying the Programs outside of the Territory and PIONEER shall
refrain from any and all actions which do or may likely cause or
result in the transhipment of Laser Videodiscs outside of the
Territory. Without limiting the generality of the foregoing,
PIONEER shall not transact any business with any person or entity
that PIONEER knows or has reason to know is engaged in the
transhipment of Laser Videodiscs outside of the Territory. LIVE
shall undertake and perform any and all actions (short of
commencing any lawsuit) which are reasonably necessary or
desirable (including any such actions as may be reasonably
required or desired by PIONEER) to prevent the transhipment of
Laser Videodiscs into the Territory.
G. TERM: Starting on October 1, 1995 and ending on the earlier
of (i) the last day of the calendar quarter during which all
advances paid to LIVE pursuant to Paragraph K. below are recouped
in full, or (ii) the latter of (x) the date which is ninety (90)
days following the "release date of the 54th New Release Program"
as hereinafter defined, and (y) September 30, 1998. As used
herein, the "release date of the 54th New Release Program" shall
refer to the date upon which LIVE shall first make the fifty-fourth (54th)
New Release Program hereunder available for sale or
rental to the general public in the Territory by means of 1/2"
NTSC videocassettes or any of the Reserved Disc Formats.
Notwithstanding anything to the contrary contained herein,
Pioneer shall have no rights hereunder with regards to any New
Release Program which LIVE shall make available for sale or
rental in the Territory concurrently or after the release date of
the 54th New Release Program; provided, however, if one or more
New Release Programs are released concurrently with the release
of the 54th New Release Program, whichever of such New Release
Programs is determined by PIONEER to be the "lead" title, will be
considered to be the 54th New Release Program.
(1) Right to Terminate Particular Programs. LIVE may at
any time terminate the rights granted to PIONEER hereunder with
respect to any Program if either: (a) LIVE's right to
manufacture, distribute or sell Laser Videodiscs embodying such
Program expire or are terminated; (b) if in LIVE's judgment such
termination is prudent to minimize the possible damage from any
pending or threatened claim, demand, action or proceeding; or (c)
for any other reason, including marketing reasons, causing LIVE
to cut-out or place on moratorium the distribution in the
Territory, or any part thereof, of 1/2 " NTSC videocassettes of
the English language version of such Program from LIVE's
distribution at the Wholesale Level; provided, however, LIVE
represents that it has no intention to cause Programs to be cut-out or
place on moratorium strictly for marketing reasons on a
regular or frequent basis or as part of a strategy common to its
marketing of all Programs. LIVE's termination of any Program
pursuant to the foregoing provisions shall not constitute a
breach of LIVE's obligations hereunder and shall not affect any
Laser Videodiscs embodying such Program sold by PIONEER prior to
the date of such termination. At LIVE's written request, PIONEER
will as soon as practicable cease advertising, promoting or
offering for sale Laser Videodiscs embodying such Program and
shall return to LIVE or its designee any and all Laser Videodiscs
embodying such Program and all advertising, labels and
promotional materials relating to such Program which are then in
the possession, custody or control of PIONEER. At LIVE's written
request, PIONEER will also revise its advertising and promotional
materials to indicate that Laser Videodiscs embodying such
Program are no longer available, provided LIVE shall reimburse
PIONEER for all direct, out-of-pocket, reasonable costs actually
paid by PIONEER in connection therewith. Upon LIVE's written
request, PIONEER will discontinue fulfilling existing orders or
orders which may be in the process of transmittal to PIONEER for
Laser Videodiscs embodying such Program. Upon return to LIVE of
all Laser Videodiscs embodying such Program, LIVE will reimburse
PIONEER for its actual cost of manufacturing (i.e., pressing and
packaging) the Laser Videodiscs so returned plus the cost of
shipping and handling. If during the Term hereof, LIVE shall
elect to reactivate a Program which LIVE previously cut-out or
placed on moratorium, then PIONEER shall again have the right to
distribute or re-distribute, as the case may be, Laser Video
discs embodying such Program. Notwithstanding anything to the
contrary herein contained, LIVE shall not be responsible to
reimburse PIONEER's costs in respect to any Program with respect
to which LIVE exercises its right of termination as a result of
the expiration, during the Term of this Agreement, of the term of
LIVE's home video distribution rights in and to and with respect
to that Program. After PIONEER notifies LIVE in writing of its
desire to schedule the Laser Videodisc release of a particular
Program, LIVE will, in a timely fashion, inform PIONEER of the
date upon which the term of LIVE's home video rights to that
Program will expire.
H. SELL-OFF PERIOD: PIONEER shall not manufacture any quantity
of Laser Videodiscs in excess of the amount reasonably required
by PIONEER to fill orders actually received by PIONEER during the
Term or reasonably anticipated to be received by PIONEER during
the Term. At the end of the Term, PIONEER shall give LIVE or its
designee the opportunity to purchase any or all of PIONEER's
then-existing inventory of Laser Videodiscs and any or all
packaging, labels, advertising, promotional and publicity
materials related thereto at PIONEER's actual cost of
manufacturing (i.e., pressing and packaging) thereof plus the
cost of shipping and handling such Laser Videodiscs and/or
materials to LIVE or its designee. During the twelve (12) month
period immediately following the end of the Term, PIONEER will
have the non-exclusive right to sell-off any inventory of Laser
Videodiscs which LIVE chooses not to purchase pursuant to the
foregoing provisions. At the end of said twelve (12) month sell-off period,
PIONEER will erase or destroy any and all remaining
copies of Laser Videodiscs and shall furnish to LIVE with an
affidavit from an officer of PIONEER confirming that all Laser
Videodiscs have been erased or destroyed.
I. RIGHTS LICENSED: Subject to the condition precedent that
PIONEER has satisfied and performed each and every one of
PIONEER's material duties and obligations pursuant to the terms
of this Agreement, LIVE grants to PIONEER the exclusive right,
license and privilege to manufacture Laser Videodiscs embodying
the Programs during the Term and in the Territory, and the right
to advertise, sell, lease, rent, distribute and otherwise market
and exploit such Laser Videodiscs at the "Wholesale Level" and
"Direct Consumer Level" in the Territory on an exclusive basis
during the Term and on a non-exclusive basis during the Sell-off
Period, subject to and in accordance with all the terms and
conditions of this Agreement. Subject to the rights of use and
to the extent of such rights owned or controlled by LIVE, PIONEER
will have the non-exclusive right during the Term and Sell-off
Period and in the Territory, to use in any medium, LIVE's
tradenames, trademarks and label identifications designated in
subparagraph C(4) above, and the names, likenesses and voices of
the principal performers and other persons who have rendered
services in connection with the works and performances embodied
in the Programs, and biographical material concerning them, for
advertising purposes solely in connection with the distribution
of Laser Videodiscs embodying the Programs pursuant to this
Agreement.
(1) "Wholesale Level" means the level of distribution at
which Laser Videodiscs are initially distributed by PIONEER to
wholesalers, retailers, rack jobbers or other customers through
traditional channels of distribution for ultimate sale or rental
to the retail consumer. The Wholesale Level excludes the Direct
Consumer Level.
(2) "Direct Consumer Level" means the level of distribution
at which Laser Videodiscs are distributed directly by PIONEER to
the retail consumer, including, but not limited to, sales through
any direct response distribution method such as any direct mail
or mail order distribution, telephone order, any "Club Plan" (as
hereinafter defined), home shopping networks, "800" and "900"
numbers, infomercials and similar methods of "order"
distribution. A "Club Plan" shall refer to the distribution at
the Direct Consumer Level of Laser Videodiscs (a) under a plan or
arrangement through which a subscriber thereto is obligated to
purchase a number of Laser Videodiscs within a specific period of
time or a plan under which Laser Videodiscs are shipped
automatically to customers at specific intervals, or a
combination thereof, (b) under a plan or arrangement through
which a subscriber (who may or may not have any obligation to
purchase a specific number of Laser Videodiscs within a specific
period of time) shall purchase Laser Videodiscs on a positive
option basis (i.e., no automatic shipments), and (c) through
PIONEER's direct mail club presently referred to as "PIONEER's
Laserdisc Fan Club". PIONEER is currently party to an agreement
with Columbia House dated April 7, 1993 ("Columbia House
Agreement") pursuant to which PIONEER has granted to Columbia
House a non-exclusive license to sell Laser Videodiscs embodying
the Programs during the Term throughout the Territory at the
Direct Consumer Level only through Club Plans. The term of the
Columbia House Agreement shall expire on September 30, 1995.
PIONEER will not renew, extend or replace the Columbia House
Agreement without LIVE's prior written consent, which consent
LIVE shall not unreasonably withhold, if and to the extent any
such renewal, extension or replacement agreement will cover any
or all of the Programs licensed hereunder. Even if LIVE shall
consent to PIONEER's renewal, extension or replacement of the
Columbia House Agreement, the term of such agreement shall expire
no later than upon the expiration or termination of the Term of
this Agreement. If PIONEER shall renew, extend or replace the
Columbia House Agreement with LIVE's prior consent, then PIONEER
agrees that fifty percent (50%) of any and all monies, including
advance payments (which if received by PIONEER in consideration
of a grant of rights in and to the Programs together with other
motion pictures shall be fairly and reasonably allocated by
PIONEER amongst the Programs and such other motion pictures), and
royalties which are received by or credited to the account of
PIONEER from Columbia House pursuant to the any approved
extension, renewal or replacement of the Columbia House Agreement
(excluding any monies which Columbia House pays to PIONEER in
reimbursement for the pressing and packaging cost customarily
charged by PIONEER for Laser Videodiscs plus shipping and
handling) will be credited to LIVE's account hereunder and paid
to LIVE as and when due hereunder.
(3) Limitation and Reservation of Rights. The rights
hereby granted to PIONEER shall be limited solely and exclusively
to the home use, non-public exhibition of Laser Videodiscs in
private homes and residences where no admission fee is charged.
Without limiting the specificity of the preceding sentence, the
rights hereby granted to PIONEER shall not include any rights
with respect to, inter alia, any form of theatrical exhibition,
nontheatrical exhibition, public performance and/or any form of
exhibition of any kind or character whatsoever, whether public or
private, which is delivered, in whole or in part, by means of any
broadcast transmission, microwave transmission, cable
transmission, satellite transmission or any other remote signal
transmission, whether now known or hereafter devised, including,
but not limited to, any form or method or manner of free
television, pay television, cable television and/or high
definition television, transmission over the Internet, on-line
services, telecommunications, coaxial or fiber optic cable or any
similar means of delivery of any kind or character whatsoever.
Notwithstanding anything to the contrary contained herein,
PIONEER shall not without obtaining the express written approval
of LIVE in each and every instance, have the right to secure
arrangements pursuant to which Laser Videodiscs embodying the
Programs may be sold (a) where a commercial sponsor pays a
royalty, fee or other remuneration to receive the benefit of
being identified as a sponsor by logo or otherwise on the outer
packaging of such Laser Videodiscs or by being so identified
within the motion picture or program embodied therein, or before
or after the main titles or end credits therein ("Sponsorships")
or (b) to a purchaser (including PIONEER and its affiliates) for
the purpose of selling or giving away, or offering to sell or
give away, such Laser Videodiscs as an inducement or incentive to
buy or use that purchaser's other goods or services, whether or
not such Laser Videodiscs are packaged together with such
purchaser's other goods or services ("Commercial tie-ins" or
"Premiums"); it being expressly understood and agreed that LIVE
shall reserve the right to make, or to authorize others,
including, but not limited to PIONEER and its affiliates, to
solicit and secure the type of arrangements described in (a) and
(b) above. Except to the extent otherwise expressly provided to
the contrary herein, all rights, title, licenses, privileges and
interests of each and every kind and character whatsoever, in and
to and with respect to any and all Programs and each and every
element therein and thereof, and in and to and with respect to
all trademark interests and copyright interests and other rights
therein and thereto, and in and to and with respect to any and
all materials of any kind whatsoever furnished by or under the
authority of LIVE to PIONEER pursuant to this Agreement, whether
tangible or intangible, whether now in existence or hereafter
created or discovered, whether or not competitive with the
rights, licenses and privileges granted to PIONEER pursuant to
this Agreement, are and shall be and shall remain, as between
PIONEER and LIVE, entirely reserved to and owned and controlled
by LIVE and are and shall be deemed the sole and exclusive
property of LIVE, in all respects and in all languages formats,
uses and media throughout the universe, for the sole and
exclusive use or other exploitation or disposition by LIVE, its
successors, licensees and assigns, and each and every of such
rights, title, licenses, privileges and interests may be
exercised and utilized and conveyed and exploited by LIVE, its
successors, licensees and assigns, concurrently herewith or at
any time hereafter, without any limitation or restriction of any
kind whatsoever, without obligation to PIONEER, and without
regard to the extent to which any such rights may be competitive
with PIONEER and the rights, licenses and privileges granted to
PIONEER pursuant to this Agreement.
(4) Label Designation, The Laser Videodiscs of each Program
will be released by PIONEER on the same label as LIVE releases
the English language version 1/2" NTSC videocassettes of such
Program unless LIVE shall designate otherwise. PIONEER will have
the right to use its name and trademark (always following the
words: "Exclusively distributed by..." or a designation similar
thereto approved by LIVE) in advertising, publicity, promotional
materials and packaging relating to the Laser Videodiscs in such
size, manner, position and type as LIVE shall approve, which such
approval LIVE will not unreasonably withhold so long as the
proposed usage is within customary trade practices, but in no
event shall PIONEER's name and trademark be more prominently
displayed than LIVE's name and trademark thereon.
(5) Catalog Availability. All Programs released by PIONEER
pursuant to this Agreement period will remain active in PIONEER's
catalog throughout the Term and Sell-Off Period unless LIVE
terminates PIONEER's rights with respect to any particular
Program pursuant to G(1) above. In this connection, PIONEER
agrees that during the Term it will at all times maintain an
inventory of finished goods of each title it releases as is
reasonably necessary to fulfill all orders which PIONEER will
likely receive for such title during the next ninety (90) days.
Additionally, PIONEER agrees that it will not at any time, during
the Term and Sell-Off Period, sell or otherwise dispose of any
inventory of Laser Videodiscs as distress goods, at close-out
prices, or for salvage value at less than PIONEER's then
prevailing wholesale prices for comparable titles, without the
express written consent of LIVE in each and every instance. The
foregoing restrictions on the disposition of the Programs shall
not be applicable during the Sell-Off Period. Upon the
expiration or termination of the Term, all reproduction materials
previously furnished by LIVE or made by or under the authority of
PIONEER relating to the Programs (e.g., masters, artwork, etc.)
which are in the possession, custody or control of PIONEER will
be returned to LIVE at PIONEER's expense.
J. PIONEER'S RELEASE OBLIGATIONS:
(1) Catalog Programs. Upon's PIONEER's request, LIVE will
undertake to inform PIONEER of all Catalog Programs then-currently available
for distribution by means of Laser Videodiscs
by PIONEER pursuant to this Agreement. LIVE shall have the
right, at any time during the term, to request PIONEER to release
Laser Videodiscs of any specific Catalog Program not theretofore
released by PIONEER. In the event that PIONEER shall fail to
release any Catalog Program which LIVE has specifically requested
to be released within one hundred twenty (120) days following
PIONEER's receipt of the elements (e.g., technically acceptable
master) essential to PIONEER's ability to manufacture Laser
Videodiscs of such Catalog Program, then such Catalog Program
shall be excluded from this Agreement and PIONEER shall have no
rights in such Catalog Program whatsoever, and LIVE shall have
the absolute right to license such Catalog Program to any person
or entity and/or otherwise to exploit Laser Videodiscs embodying
such Catalog Title without any notice or compensation due
PIONEER. In no event, however, shall LIVE request PIONEER to
release more than one (1) Catalog Program during any calendar
month .
(2) New Release Programs. Unless LIVE shall request
otherwise, PIONEER shall release Laser Videodiscs of each and
every New Release Program upon the earliest date (but in no event
sooner) on which LIVE shall initially release the same new
release Program in the Territory with English soundtrack (or with
its original foreign language soundtrack with English sub-titles)
in either the 1/2" NTSC videocassette format or in any of the
Reserved Disc Formats ("first release date"). If PIONEER fails,
refuses or is unable to release Laser Videodiscs of any New
Release Program on the First Release Date (except pursuant to
LIVE'S request), and such failure continues for a period of
ninety (90) days or more after PIONEER's receipt of written
notice of such failure, then PIONEER shall not be deemed to be in
breach of this Agreement but such New Release Program shall be
automatically excluded from this Agreement, PIONEER shall have no
rights in such New Release Program whatsoever, and LIVE shall
have the absolute right to exploit or authorize others to exploit
Laser Videodiscs embodying such New Release Program without
further notice or compensation due PIONEER.
K. ADVANCE: $4,600,000 which PIONEER shall pay to LIVE in two
(2) equal installments payable as indicated below, which LIVE
shall accept as a non-returnable advance chargeable against and
recoupable, on a cross-collateralized basis, from all royalties
earned by LIVE hereunder with respect to sales of Laser
Videodiscs embodying the Programs. The first installment of
$2,300,000 shall be due on execution of this Agreement and the
second installment of $2,300,000 shall be due on or before
January 1, 1997; provided, however, the due date for the second
installment shall be accelerated one day for each day between
October 1, 1995 and the date of LIVE's actual receipt of the
first installment. Notwithstanding the foregoing, the amount of
the second installment shall be reduced if and to the extent of
the amount of royalties, if any, earned and received by LIVE
under this Agreement in excess of $2,300,000 during the time
between payment of the first and second installments. The
Advance is a minimum net sum due LIVE and may not be set-off for
any reason nor may any taxes or charges of any kind be deducted
from it.
L. ROYALTIES:
(1) Royalty Rates/Minimum Royalty Amounts. Subject to the
most favored nations provisions in Paragraph N below, with
respect to each Program, PIONEER shall pay to LIVE the greater of
either (a) the royalty calculated by applying the applicable
percentage royalty rate to the Gross Receipts attributable to
each Program; it being understood and agreed that the applicable
royalty rate increases shall only apply prospectively, or (b) the
minimum royalty calculated by applying the applicable minimum
royalty amount to the number of Laser Videodiscs embodying each
Program sold and not returned, pursuant to either (A), (B) or (C)
below, as applicable. Set forth on Exhibit "A" annexed hereto
and by its reference made a part hereof, is a listing of all
Laser Videodiscs embodying Catalog Programs with respect to which
PIONEER or its affiliates have combined sales of more than ten
thousand (10,000) but less than or equal to twenty five thousand
(25,000) units (net of returns) as of the date of this Agreement.
Set forth on Exhibit "B" annexed hereto and by its reference made
a part hereof, is a listing of all Laser Videodiscs embodying
Catalog Programs with respect to which PIONEER or its affiliates
have combined sales twenty five thousand (25,000) units or more
(net of returns) as of the date of this Agreement.
(A) Catalog Programs Not Listed on Exhibits "A" or "B"
and New Release Programs:
1. Royalty:
Cumulative Sales Level Royalty Rate Level of Distribution
(units sold per Program
during the Term and not
returned)
1 - 5,000 25% Wholesale and Direct Consumer Level
5,001 - 20,000 30% Wholesale and Direct Consumer Level
20,001 - 35,000 35% Wholesale and Direct Consumer Level
35,001 - 50,000 37.5% Wholesale and Direct Consumer Level
50,001+ 40% Wholesale and Direct Consumer Level
2. Minimum Royalty Amount:
Amount No. of Sides
$3.75 1 sided Laser Videodisc
$4.50 2 sided Laser Videodisc
$5.25 3 sided Laser Videodisc
$6.00 4 (or more) sided Laser Videodisc
(B) Catalog Programs Listed on Exhibit "A":
1. Royalty:
Cumulative Sales Level Royalty Rate Level of Distribution
(units sold per Program
during the Term and not
returned)
1 - 20,000 30% Wholesale and Direct Consumer Level
20,001 - 35,000 35% Wholesale and Direct Consumer Level
35,001 - 50,000 37.5% Wholesale and Direct Consumer Level
50,001+ 40% Wholesale and Direct Consumer Level
2. Minimum Royalty Amount:
Amount No. of Sides
$3.75 1 sided Laser Videodisc
$4.50 2 sided Laser Videodisc
$5.25 3 sided Laser Videodisc
$6.00 4 (or more) sided Laser Videodisc
(C) Catalog Programs Listed on Exhibit "B":
1. Royalty:
Cumulative Sales Level Royalty Rate Level of Distribution
(units sold per Program
during the Term and not
returned)
1 - 35,000 35% Wholesale and Direct Consumer Level
35,001 - 50,000 37.5% Wholesale and Direct Consumer Level
50,001+ 40% Wholesale and Direct Consumer Level
2. Minimum Royalty Amount:
Amount No. of Sides
$3.75 1 sided Laser Videodisc
$4.50 2 sided Laser Videodisc
$5.25 3 sided Laser Videodisc
$6.00 4 (or more) sided Laser Videodisc
(2) "Gross Receipts" shall refer to and shall consist of
any and all monies and other consideration received or earned by
or credited to PIONEER and its affiliate and any sublicensees
approved by LIVE with respect to each Program, from the exercise
of PIONEER's rights pursuant to the terms of this Agreement
without deductions of any kind whatsoever except for the
deduction of any Laser Videodiscs of such Program physically
returned to PIONEER by its customers for which PIONEER has issued
credits to such customers; provided, however, the deduction for
the number of actual returned Laser Videodiscs (excluding
defectives) of each Program shall in no event exceed twenty
percent (20%) of the Gross Sales attributable to that Program.
For purposes hereof, the term "affiliate" as used in the
preceding sentence shall not be deemed to include any affiliate
of PIONEER which duplicates, manufactures, packages or renders
related laboratory services in respect of Laser Videodiscs, it
being understood and agreed that the payments made by PIONEER to
any such related company in consideration for their duplication,
manufacturing, packaging and related laboratory services shall
not be included in Gross Receipts hereunder, nor PIONEER's
Laserdisc Fan Club so long as it purchases Laser Videodiscs
embodying Programs from PIONEER at the same prices which PIONEER
charges to other customers in a similar class of trade, it being
understood and agreed that the monies which PIONEER's Laserdisc
Fan Club receives from its resale of such Laser Videodiscs to
its customers shall not be included in Gross Receipts hereunder.
Notwithstanding anything to the contrary contained herein, only
sales, use and other taxes collected by PIONEER from its
customers and paid by PIONEER to the relevant taxing authorities
may be deducted from the Gross Receipts in calculating the
royalty payable to LIVE hereunder.
(3) Promotional Free Goods. Solely for promotional
purposes, LIVE will permit PIONEER to furnish Laser Videodiscs on
a no-charge basis to critics, reviewers, publishers, motion
picture companies, radio and television stations and other
customary recipients of promotional "free goods" for which LIVE
will not receive any royalty; provided, however, PIONEER agrees
that, with respect to each and every Program, the number of Laser
Videodiscs given away as "free" promotional goods, excluding any
promotional copies which PIONEER furnishes to LIVE, during each
accounting period will not exceed two percent (2%) of the Gross
Receipts during that accounting period attributable to such
Program. For purposes of computing any amounts due LIVE, any
shipments of Laser Videodiscs in excess of said limitation will
be considered as if sold at not less than the average gross
wholesale price for the Laser Videodiscs of such Program during
the accounting period in which such excess shipments are made.
All promotional free goods shipped by PIONEER will be clearly and
prominently marked: "Promotional Goods. Not for Sale or Rental."
M. ACCOUNTING/RECOUPMENT OF ADVANCE: PIONEER will mail to LIVE
a detailed statement as of March 31, June 30, September 30 and
December 31 in each year within forty-five (45) days after each
such date, and all royalties earned by LIVE as of the close of
such quarter-annual accounting period shall be paid to LIVE upon
rendition of each statement after deducting any and all
unrecouped advances having been paid to LIVE prior to the close
of the applicable quarter-annual accounting period.
(1) Books and Records. PIONEER will keep and maintain at
its principal offices complete and accurate records of all
financial transactions regarding each and every Program released
by PIONEER pursuant to this Agreement in accordance with
generally accepted accounting principles on a consistent, uniform
and non-discriminatory basis throughout the Term. PIONEER will
also keep and maintain complete and accurate copies of every
statement from third parties, and all contracts, vouchers,
receipts, computer records, audit reports, correspondence and
other writings received from its customers and all other parties
pertaining to each and every Program released by PIONEER pursuant
to this Agreement.
(2) Reserve For Returns. During each accounting period and
with respect to each Program, PIONEER may withhold a reasonable
reserve against subsequent returns which PIONEER shall establish
in its sound business judgment based on its historical rate of
returns but which in no event shall exceed twenty percent (20%)
percent of the Gross Receipts of such Program during the
applicable accounting period. All such reserves shall be
liquidated no later than with the rendition of the statement
rendered one (1) year following the statement on which such
reserve was first maintained. LIVE'S account balance, including
all reserves which are being held by PIONEER against LIVE's
account, as of the date of this Agreement pursuant to the Laser
Videodisc Sublicense Deal Memorandum as of October 1, 1991
between them (or their respective affiliates or predecessors-in-interest)
will be carried forward under this Agreement (and such
previously held reserves shall be liquidated in accordance with
the immediately preceding sentence); provided, however, any
royalties earned by LIVE in respect of Laser Video disc sales
made by PIONEER before October 1, 1995 shall be fully paid to
LIVE as and when due in accordance with the aforesaid prior
Agreement and shall not be credited against any advances made by
PIONEER to LIVE under this Agreement.
(3) Audit Rights. Continuing until two (2) years after the
latter of the end of either the Term or the Sell-Off Period, if
any, LIVE may examine and copy on its own or through its
representatives PIONEER's financial records regarding any or all
of the Programs on at least thirty (30) days' advance written
notice but no more frequently than once a year. The examination
will be at LIVE's expense unless an underpayment of more than ten
percent (10%) is uncovered, in which case PIONEER will pay the
costs of examination on demand and receipt of documentation of
costs.
N. MOST FAVORED NATIONS: In the event PIONEER shall enter
during the Term hereof any licensing agreement or arrangement
(whether written or oral) with any non-affiliated third party
pursuant to which PIONEER is granted exclusive Laser Videodisc
distribution rights in the Territory (or at least the United
States) in and to fifty (50) or more motion pictures, and in the
event any such agreement or arrangement contains any financial
provisions (other than in respect of the amount of any recoupable
advances being paid by PIONEER thereunder) including, without
limitation, the royalty rates, minimum royalty amounts payable
thereunder, any limitations or restrictions on any cross-collateralization
between motion pictures licensed thereunder
and/or the frequency of the rendition of accounting statements or
royalty payments thereunder, which are more favorable to such
non-affiliated third party than those contained in this
Agreement, then PIONEER shall immediately notify LIVE of such
more favorable financial provisions and LIVE shall have the
right, but not the obligation, to modify this Agreement to
include any of such more favorable provisions retroactively to
the date upon which such more favorable provisions first become
effective in any such third party agreement. PIONEER shall and
does hereby agree to be bound by any such modifications which
LIVE elects to make. No further document or written instrument
between PIONEER and LIVE shall be necessary or required to
effectuate such modifications. PIONEER shall provide LIVE or its
designee with access to such third party agreements for the
purpose of verifying the matters set forth in this Paragraph N
except if and to the extent PIONEER is precluded from doing so by
reason of any third party contractual restrictions placed upon
PIONEER requiring PIONEER to keep the terms of such agreements
confidential. At LIVE's request, PIONEER will provide LIVE with
copies of any such third party contractual restrictions requiring
such confidentiality.
O. BEST EFFORTS: PIONEER will use its best efforts and skill
in the manufacture, advertising, promotion, distribution and
exploitation of Laser Videodiscs embodying the Programs. Any and
all costs paid or incurred by PIONEER or its authorized
subdistributors relating to the mastering, manufacturing,
packaging, selling, distributing, advertising, promoting or
publicizing Laser Videodiscs hereunder shall be borne solely and
exclusively by PIONEER on a non-recoupable basis.
P. DELIVERY:
(1) Delivery of Masters. LIVE shall use its best efforts
to inform PIONEER of its release schedule (to the best of LIVE's
knowledge) at least six (6) months in advance of the release of
each New Release Program in order to enable PIONEER to determine
whether it will release Laser Videodiscs embodying each such New
Release Program pursuant to the terms of this Agreement; provided
LIVE's failure to do so shall not constitute a breach hereunder.
Within thirty (30) days of its receipt of each such release
schedule, PIONEER shall use its best efforts to notify LIVE in
writing of its election not to release Laser Videodiscs of any
New Release Program first shown thereon, if applicable; provided
PIONEER's failure to do so shall not constitute a breach
hereunder nor PIONEER's election to release Laser Videodiscs of
such New Program pursuant to the terms of this Agreement. Not
less than two (2) months prior to LIVE's scheduled First Release
Date of any New Release Program which PIONEER has elected to
release hereunder, LIVE shall deliver to PIONEER in the manner
hereinafter provided either (a) a one inch (1") D2 digital
videotape master if readily available (the "pan and scan"
version, if readily available), or, if not readily available, (b)
a one inch (1") analog videotape master or submaster of the best
quality readily available (the "pan and scan" version, if readily
available) and a three-quarter inch PCM audio tape (if readily
available), in each case technically suitable for the
reproduction of Laser Videodiscs, and (c) a reasonable quantity
of color stills or transparencies (if readily available, and if
not available, then in black and white) suitable for the
preparation of packaging, advertising and promotional materials
for such Program. With respect to each Catalog Program which
PIONEER elects to release hereunder, LIVE shall deliver to
PIONEER the materials described above in the manner hereinafter
provided not less than three (3) months prior to the date PIONEER
has scheduled to release Laser Videodiscs of such Catalog Program
hereunder; provided PIONEER shall have given LIVE not less than
four (4) months advance written notice of such release date. If
PIONEER requests to be delivered hereunder materials for a
Program which are not readily available to LIVE and LIVE must
create or locate access to any additional film, videotape or
sound elements of that Program for delivery to PIONEER hereunder,
then PIONEER shall reimburse LIVE for its actual cost of creating
such materials (plus five percent), or a reasonable charge for
locating access to such materials, as applicable, on a non-recoupable
basis; provided, however, that if LIVE shall elect to
use any such additional film, videotape or sound elements in
connection with its release or re-release of such Program in the
one-half inch (1/2") NTSC videocassette format or in any of the
Reserve Disc Formats, then LIVE shall reimburse PIONEER for
seventy five percent (75%) of its payment to LIVE for such
materials. The cost of creating the color separations for the
laser videodisc jackets shall be borne solely by PIONEER on a
non-recoupable basis. The cost of remastering any of the
Programs, or adding enhancements to the masters of any of the
Programs (e.g., THX Sound) shall be borne solely by PIONEER on a
non-recoupable basis and LIVE shall have the free and
unrestricted right to use or authorize other to use such
materials in connection with its exploitation of the Programs,
provided that LIVE hereby agrees to enter into any appropriate
licenses or agreements with any Third Party rights holder which
are generally required as a precondition to any person's use of
any such enhancements and will pay any additional license fee or
costs required thereunder.
(2) Method of Delivery. Unless PIONEER and LIVE agree
otherwise in writing, the delivery of each videotape master or
submaster and audio tape shall at LIVE's election be accomplished
either by providing PIONEER with laboratory access thereto or by
loan of materials. If the latter, PIONEER will return each such
master or submaster to LIVE or its designee within a reasonable
time not to exceed thirty (30) days without LIVE's written
permission following PIONEER's receipt thereof. PIONEER will
reimburse LIVE for all shipping costs incurred by LIVE in the
delivery of any materials provided to PIONEER on loan.
(3) Requisite Approvals. If PIONEER does not use items as
supplied by LIVE in connection with the duplication of Laser
Videodiscs, or the promotional, advertising and packaging and
labeling materials relating thereto, then PIONEER will submit to
LIVE samples of the items it desires to use and shall obtain
LIVE's prior written consent before using any such other items.
(4) Duplication of Laser Videodiscs. The duplication of
Laser Videodiscs embodying the Programs shall be performed by one
or more laboratories designated by PIONEER (each individually
referred to as a "Laboratory"). The costs of duplicating,
manufacturing, storing, insuring, and shipping any an all Laser
Videodiscs hereunder, shall be borne solely and exclusively by
PIONEER on a non-recoupable basis. Each videotape master,
submaster and any other film, sound, audio or video element or
other materials relating to the Programs, including any
enhancements thereto, created or used by or under the authority
of PIONEER pursuant to this Agreement shall be held by each
Laboratory in the name of LIVE, and shall be made available for
use by LIVE or its designees provided LIVE or its designees, as
applicable, shall be responsible for their laboratory charges,
subject, however, to reasonable notice on the part of LIVE, and
subject further, however, to the immediate duplication needs of
PIONEER. On the first day of each month during the Term of this
Agreement, PIONEER shall furnish to LIVE a written statement
setting forth with respect to each Program released or to be
released by PIONEER pursuant to this Agreement, among other
things, the number of Laser Videodiscs ordered by PIONEER, the
number of Laser Videodiscs produced by each Laboratory and the
number of Laser Videodiscs delivered to PIONEER or to any other
persons or entities at the request or direction of PIONEER. LIVE
shall have the right to inspect each Laboratory and duplicating
facility and to cause each Laboratory to adhere to LIVE's
instructions with respect to matters of security involving the
Laser Videodiscs, and/or with respect to matters of security
involving the videotape masters, submasters or other materials
used for the creation of the Laser Videodiscs, and/or with
respect to the technical quality of the Laser Videodiscs produced
by each Laboratory. In the event that LIVE, in its sole
discretion, uses an anti-copying device (such as, for example,
Macrovision), in connection with LIVE's distribution of 1/2"
NTSC videocassettes or Reserved Disc Formats of any or all of the
Programs, and provided further that an anti-copying device or
anti-copying protection technology is then currently available
for Laser Videodisc application, then PIONEER shall, upon LIVE's
written notice to PIONEER, and at PIONEER's sole cost and expense
on a non-recoupable basis, use an anti-copying device or anti-copying
protection technology in connection with PIONEER's
distribution of Laser Videodiscs of such Programs. Prior to the
distribution of any Laser Videodiscs embodying any Program,
PIONEER shall furnish to LIVE, for the review and approval of
LIVE, a one-half inch (1/2") viewing cassette duplicated from the
master or submaster from which PIONEER intends to manufacture
such Laser Videodiscs, as well as a descriptive listing of all
locations in the Program where "chapter stops" have been placed.
PIONEER will also send to LIVE a sample Laser Videodisc
duplicated from said master or submaster (the "check disc") if
PIONEER has elected, in its sole discretion, to make a check disc
for a particular Program. If PIONEER has elected not to make a
check disc for a particular Program, PIONEER will nevertheless
make a check disc of a particular Program for LIVE if LIVE shall
request such in writing and agree to reimburse PIONEER for its
actual cost therefor. LIVE shall notify PIONEER in writing of
LIVE's approval (or disapproval, in which event LIVE's objections
shall be stated with reasonable specificity) of such cassette or,
if applicable, check disc, within ten (10) business days after
LIVE's receipt thereof, or it shall be deemed approved.
(5) Cutting and Editing. Each and every Program shall be
reproduced by PIONEER and embodied by PIONEER in Laser Videodiscs
in their entirety and in the form delivered by LIVE. PIONEER
shall not have the right to cut, edit, dub, time compress, time
expand, compliment, supplement or in any way modify any Program
without the express written consent of LIVE in each and every
instance, except PIONEER shall have the right to add "chapter
stops" provided LIVE has pre-approved the location of their
placement within the particular Laser Videodisc. Unless PIONEER
has obtained the prior written consent of LIVE, PIONEER shall not
(a) embody in Laser Videodiscs more than one Program and/or (b)
embody in any Laser Videodiscs any other motion pictures,
programs or programming, or trailers, commercials, advertising or
any other materials unless either included in the videotape
master or submaster furnished by LIVE to PIONEER or expressly
approved by LIVE in writing, and/or (c) physically package
together Laser Videodiscs of more than one Program, and/or (d)
physically package together Laser Videodiscs of any Program
together with Laser Videodiscs of other motion pictures, programs
or programming or other products and/or (e) create or distribute
Laser Videodiscs composed of trailers or excerpts of Programs for
promotional purposes or otherwise. PIONEER shall not delete or
alter the credits from the main credits or end titles of any
Programs. Without limiting the foregoing, PIONEER's right to
create, manufacture, sell and distribute during the Term, Laser
Videodiscs embodying any version of a Program which has not
theretofore been released by LIVE in English language 1/2" NTSC
videocassettes including, without limitation, so-called "Special
Edition Laser Videodiscs" shall be subject to LIVE's prior
written consent in each such instance, which consent LIVE may
withhold in its sole discretion. In each instance where LIVE
shall consent to PIONEER's release of a Special Edition Laser
Videodisc of any Program during the Term, it is the intention of
the parties hereto to supplement this Agreement by a separate
writing or document covering such Special Edition Laser
Videodisc; it being understood and agreed that only if and to the
extent the terms and conditions of any such separate writing or
document shall expressly or by necessary implication conflict
with the terms and conditions in this Agreement, then the terms
and conditions of such separate writing or document shall prevail
but in all other respects, the terms and conditions in this
Agreement applicable to the Programs shall also govern the
respective rights, title, interests and obligations of the
parties hereto with respect to each such Special Edition Laser
Videodisc.
(6) Preexisting Special Edition Laserdiscs. Nothing in
this Agreement shall be deemed to alter or otherwise affect the
respective rights and obligations of the parties hereto or their
affiliates or predecessors-in-interest pursuant to any separate
arrangements or agreements between them covering the Special
Edition Laser Videodiscs of the following six (6) Programs which
were initially released by PIONEER prior to the date of this
Agreement: "Terminator 2: Judgment Day Collector's Special
Edition (Director's Cut)", "Basic Instinct", "Rambling Rose",
"Platoon", "Glengarry Xxxx Xxxx", and "Xxx Xxxxxxx"
(collectively, the "Preexisting Special Edition Laser Videodiscs
Agreements"). The parties hereby acknowledge that each of the
aforesaid six (6) preexisting Special Edition Laser Videodiscs
(collectively, the "Preexisting Special Edition Laser
Videodiscs") incorporated various materials pertinent to the
applicable Program contained in such Preexisting Special Edition
Laser Videodisc including, without limitation, interview footage
with members of the cast and crew, storyboards, textual
information and other elements which were not included in the
Programs when they were initially produced for theatrical release
in the U.S. (collectively, the "Supplemental Materials"). For
purposes of clarification, the following materials shall not be
deemed to be part of the Supplemental Materials: (i) any
material which was first photographed on film or recorded in
magnetic videotape or other material which was generated in
connection with the original production of the applicable Program
which is the subject of the Preexisting Special Edition Laser
Videodiscs, whether or not such material was included in the
originally released version or any other preexisting version of
such Program (e.g., cuts, outtakes, etc.); and (ii) any material
to which LIVE has been granted free access and use pursuant to
its license with the applicable rights holder.
To the extent that the Supplemental Materials include
materials and compilations of materials which were created
exclusively by or for PIONEER and which are owned or controlled
by PIONEER (collectively, the "PIONEER Supplemental Materials")
and notwithstanding anything to the contrary contained in the
Preexisting Special Edition Laser Videodiscs Agreements, PIONEER
hereby licenses to LIVE the right to use, adapt and otherwise
exploit and authorize others to use, adapt and otherwise exploit
any or all of the PIONEER Supplemental Materials solely in
connection with the manufacture, distribution, sale, advertising,
marketing, publicity, promotion and other disposition of the
Programs on any or all Reserved Disc Formats. PIONEER further
confirms that it has no objection to LIVE's exploitation of the
Supplemental Materials in any or all Reserved Disc Formats,
subject to the following terms and conditions:
(A) This license is granted without any
representations or warranties of any kind, whether express or
implied.
(B) LIVE acknowledges that various third parties may
also have certain rights in and to the Supplemental Materials.
Promptly following the execution of this Agreement, PIONEER will
furnish LIVE with copies of all applicable contracts between
PIONEER and independent third parties concerning the Supplemental
Materials to the extent any such contracts would directly affect
the use or exploitation by LIVE of the Supplemental Materials in
any of the Reserved Disc Formats, or the relevant excerpts
therefrom which specify restrictions or limitations (including,
but not limited to, third party rights of approval or
consultation) on the use or exploitation of the Supplemental
Materials, or any portion therefrom, in any of the Reserved Disc
Formats. LIVE agrees to adhere to all such third party
restrictions or limitations of which PIONEER informs LIVE.
(C) Without limiting the generality of the foregoing,
the parties further agree that LIVE shall be solely responsible
for obtaining any and all further clearances, releases, consents
and authorizations that are or may prove to be required from all
persons or entities (other than PIONEER or its affiliates) in
connection with the exploitation of the Supplemental Materials as
set forth herein. LIVE shall also pay any fees and other
payments required including, without limitation, any so-called
union or guild re-use fees or music synchronization license fees
in connection with the exploitation of the Supplemental
Materials.
(D) The foregoing license for the PIONEER Supplemental
Materials and waiver of objection shall continue for a term to be
co-extensive and co-terminus with LIVE's exclusive distribution
rights to the Programs which are the subject of the Preexisting
Special Edition Laser Videodiscs pursuant to LIVE's license
agreement with the appropriate rights holder (as the term of any
such license may be from time to time renewed or extended);
provided LIVE agrees it will not, either directly or through
third parties, publicly release any Supplemental Materials sooner
than January 1, 1997. Any videodisc in any Reserved Disc Format
which incorporates all or a portion of the Supplemental Materials
shall hereafter be referred to as a "LIVE Special Edition Disc."
(E) The foregoing license shall be deemed exclusive to
LIVE for those territories and countries for which LIVE holds
exclusive distribution rights as of the effective date of this
Agreement.
(F) With respect to all sales of LIVE Special Edition
Discs by or under the authority of LIVE, LIVE shall pay to
PIONEER a royalty equal to thirty cents (U.S. $0.30) per LIVE
Special Edition Disc sold or otherwise distributed for sale by or
under authority of LIVE. No royalty shall be due on any
videodisc returned or shipped as replacements for lost or
defective discs or distributed for promotional purposes. Any
royalty payable to PIONEER hereunder will be in addition to any
royalty or other remuneration which LIVE is obligated to pay to
any third party in order to exploit the Supplemental Materials
described herein. Commencing with the first full calendar
quarter following the initial sale of any copies of the
applicable LIVE Special Edition Disc, LIVE will send to PIONEER a
statement of account setting forth (a) the number of LIVE Special
Edition Discs manufactured by or under the authority of LIVE
during such quarter-annual accounting period, (b) the number of
LIVE Special Edition Discs sold or otherwise distributed for sale
by or under the authority of LIVE, and (c) the royalties earned
by PIONEER as of the close of such quarter-annual accounting
period. Such statement of account shall be sent to PIONEER,
together with payment of such royalties, within forty five (45)
days following the end of such quarter-annual accounting period.
During each accounting period and with respect to each LIVE
Special Edition Disc, LIVE may withhold a reasonable reserve
against subsequent returns which LIVE shall establish in its
sound business judgment based on its historical rate of returns
but which in no event shall exceed twenty percent (20%) of the
gross sales of such LIVE Special Edition Discs during the
applicable accounting period. All such reserves shall be
liquidated no later than with the rendition of the statement
rendered one (1) year following the statement on which such
reserve was first maintained.
(G) Within two (2) years from the rendition of each
accounting statement, PIONEER may examine and copy on its own or
through its representatives LIVE's financial records regarding
any or all of the LIVE Special Edition Discs on at least thirty
(30) days' advance written notice but no more frequently than
once a year. The examination will be at PIONEER's expense unless
an underpayment of more than ten percent (10%) is uncovered, in
which case LIVE will pay the costs of examination on demand and
receipt of documentation of costs.
(H) In consideration of the payment of the aforesaid
royalty, PIONEER agrees to give LIVE free and unrestricted access
to all masters, advertising and promotional accessories, artwork
and other materials created or used by PIONEER in connection with
LIVE's production, manufacture, duplication, distribution or
other exploitation of each of the LIVE Special Edition Discs;
provided LIVE will pay all costs arising in any way by reason of
the license granted hereunder including processing, laboratory,
transfer and shipping charges and the costs involved in replacing
any lost or damaged materials delivered to LIVE. No later than
thirty (30) days following the initial release of the applicable
LIVE Special Edition Disc for which any Supplemental Materials
were requested by LIVE, LIVE shall, at LIVE's sole expense,
return all such Supplemental Materials to such location as
PIONEER may designate.
(I) Following the expiration or termination, if ever,
of LIVE's license to use PIONEER's Supplemental Materials
relating to a particular Program as hereinabove provided, LIVE
shall have no further right to use or exploit any part or parts
of the PIONEER Supplemental Materials relating to such Program in
any of the Reserved Disc Formats.
(J) Except as authorized or permitted hereunder or
under the Preexisting Special Edition Laser Videodiscs
Agreements, (a) the Supplemental Materials will not be used by
LIVE for any other purposes whatsoever, and (b) LIVE will not
make any reproduction of or from the Supplemental Materials
whatsoever, in whole or in part, except for use in and as part of
the LIVE Special Edition Discs.
(K) Except as otherwise provided herein, PIONEER
reserves all of its rights in and to the PIONEER Supplemental
Materials. As between PIONEER and LIVE, legal title to the
PIONEER Supplemental Materials shall remain with PIONEER. LIVE
represents and warrants that the incorporation of the PIONEER
Supplemental Materials, in whole or in part, shall in no way
affect PIONEER's continued, separate and (as between PIONEER and
LIVE) exclusive copyright ownership in the PIONEER Supplemental
Materials and that the copyright ownership of PIONEER will not
merge with the applicable LIVE Special Edition Disc nor deprive
PIONEER or any part of its copyright ownership.
(7) Copyright Notices. PIONEER shall not delete or alter,
and PIONEER shall not authorize the deletion or alteration of,
any copyright and/or trademark notice which is affixed on or in
any Programs or on the packaging or labels for any Laser
Videodiscs furnished by LIVE to PIONEER pursuant to Paragraph O.
PIONEER shall not release any Laser Videodiscs and PIONEER shall
not exploit any Programs, unless such Laser Videodiscs and
Programs contain each and all of the copyright notices, trademark
notices, and other notices which are or may be required by LIVE.
(8) Credits. PIONEER shall embody and shall incorporate,
in such manner as shall be determined by LIVE, any and all
credits and credit lists as may be designated by LIVE, on to each
and all of the Laser Videodiscs and any and all publicity,
advertising, promotional, packaging and labeling materials
therefor.
(9) Quality of Laser Videodiscs. The Laser Videodiscs
manufactured and distributed by PIONEER shall be of first-class
quality, and shall conform to the visual and audio quality of the
master or submaster and other audio/video materials supplied by
LIVE. PIONEER shall establish and maintain quality control
procedures and inspection procedures to ensure that defective or
substandard Laser Videodiscs are not distributed or otherwise
used or exploited by PIONEER, and shall consult on an ongoing,
meaningful basis with LIVE with respect thereto. In the event
PIONEER is advised or otherwise becomes aware that such defective
or substandard Laser Videodiscs are being distributed, then, at
the sole expense of PIONEER on a non-recoupable basis, PIONEER
shall cause all such Laser Videodiscs to be returned and replaced
in a timely fashion. PIONEER shall erase or destroy all such
defective or substandard Laser Videodiscs, and PIONEER shall
furnish to LIVE an affidavit from an officer of PIONEER
confirming such return and replacement and erasure or
destruction.
(10) Wide Screen Versions. If LIVE delivers a "pan and
scan" version for each New Release Program, then subject to any
contractual limitations or requirements imposed on LIVE, LIVE
will also deliver to PIONEER in the manner hereinabove provided a
master or submaster of the best quality readily available of the
"wide screen" version for each New Release Program provided a
master or submaster embodying such "wide screen" version is
readily available. If LIVE has to create a videotape master or
submaster of a "wide screen" version of a New Release Program to
enable its delivery to PIONEER in the manner hereinabove
provided, then, at LIVE's request, PIONEER will reimburse LIVE
for its actual cost of such master or submaster (plus five
percent) on a non-recoupable basis. If PIONEER does not
reimburse LIVE for such costs pursuant to the immediately
preceding sentence, the cumulative units sold and not returned of
the "pan and scan" and "wide screen" versions of the same Program
shall be added and counted together for purposes of determining
the number of cumulative units sold and not returned of such
Program. If PIONEER does reimburse LIVE for such costs at LIVE's
request, then the units sold and not returned of the "pan and
scan" version shall be counted separately and apart from the
units sold and not returned of the "wide screen" version of the
same Program.
(11) Ownership of Materials. As between LIVE and PIONEER,
legal title to all masters, submasters and other materials
furnished by LIVE to PIONEER hereunder shall at all times remain
in LIVE and legal title in and to any materials, including
masters, submasters, film, sound, audio and video elements and
other materials created or used by or under the authority of
PIONEER pursuant to this Agreement and all rights (including
copyrights) therein and thereto shall vest in LIVE upon the
creation thereof, subject only to possession and control thereof
by PIONEER during the Term solely for the purpose of PIONEER's
exercise of the rights licensed to PIONEER herein. PIONEER shall
execute, acknowledge and deliver to LIVE any instruments of
transfer, conveyance or assignment to any such materials deemed
by LIVE necessary or desirable to evidence or effectuate LIVE's
or its designee's ownership thereof and in the event that PIONEER
fails or refuses to execute, acknowledge or deliver any such
instruments or documents within ten (10) days following LIVE's
written request therefor, then LIVE shall be and PIONEER hereby
irrevocably nominates, constitutes and appoints LIVE as its true
and lawful attorney-in-fact, to execute and deliver all such
instruments and documents in LIVE's name or otherwise; it being
acknowledged that such power is a power coupled with an interest.
At LIVE's request, but not more frequently than once per calendar
quarter, PIONEER will promptly notify LIVE in writing of the
location of all such masters, submasters and other materials
created or used by or under the authority of PIONEER pursuant to
this Agreement. LIVE will at all times have unrestricted free
access to any and all materials, including masters, submasters,
film, sound, audio and video elements and other materials created
or used by or under the authority of PIONEER pursuant to this
Agreement and LIVE shall have the right to use any or all such
materials in connection with its exercise of any rights reserved
to LIVE hereunder, including, but without limitation, the
Reserved Disc Formats.
(12) Final Disposition of Materials. Upon the expiration or
sooner termination of the Term of this Agreement, and at the
election of LIVE, PIONEER shall either (a) ship to LIVE all
videotape masters, submasters, film, sound, audio and video
elements and other materials and other materials which were
either furnished to PIONEER by LIVE pursuant to this Agreement or
created or used by or under the authority of PIONEER pursuant to
this Agreement and the costs of such shipment shall be borne by
LIVE, or (b) immediately erase or destroy all such videotape
masters, submasters and all such other materials (the costs of
which shall be borne by PIONEER) and furnish to LIVE an affidavit
from an officer of PIONEER confirming that all such materials
have been erased or destroyed.
Q. PACKAGING, ADVERTISING, MARKETING:
(1) Packaging and Labeling Materials. All Laser Videodiscs
distributed by PIONEER pursuant to the Agreement shall be
packaged and labeled by PIONEER at the sole cost and expense of
PIONEER on a non-recoupable basis, using packaging and labeling
materials in such form as shall be approved in writing by LIVE in
each and every instance. Upon request by PIONEER, LIVE shall
furnish PIONEER with any readily available color transparencies
of artwork which transparencies may be adapted by PIONEER (at
PIONEER's cost on a non-recoupable basis) for packaging,
provided, however, that any and all out-of-pocket costs incurred
by LIVE (plus five percent) with respect to such transparencies
shall be reimbursed by PIONEER to LIVE. Any packaging materials
furnished by LIVE to PIONEER will be deemed pre-approved provided
PIONEER uses much materials only for the packaging or purposes
that LIVE intended. No change or deletion or addition, of any
kind whatsoever, shall be made by PIONEER with respect to such
materials. Without limiting the generality of the foregoing,
there shall be no such change or deletion or addition in
connection with any copyright notice, trademark notice, or
similar notices, and/or in connection with any credits or
xxxxxxxx, including, but not limited to, the size or prominence
or position or color of any such credits or xxxxxxxx. PIONEER
shall submit to LIVE, for the approval of LIVE, samples of all
packaging and labeling materials created by or under the
authority of PIONEER pursuant to this Agreement. LIVE's approval
of any such materials will be considered given if within five (5)
business days of LIVE's receipt of such sample, LIVE neither (a)
notifies PIONEER in writing of its disapproval or (b) notifies
PIONEER in writing that LIVE need to obtain the approval of one
or more third parties, in which event, LIVE will use its
reasonable efforts to obtain such third party approvals as soon
as is practicable.
(2) Packaging and Labeling Design Services. Subject to
separate agreement between the parties, in lieu of furnishing
certain pre-approved materials to PIONEER in order for PIONEER to
design artwork and create jacket film from which the Laser
Videodisc jacket and label can be manufactured pursuant to (1)
above, LIVE may, but only at PIONEER's request, design the
artwork for the jacket and label for each Laser Videodisc for
each Program designated by PIONEER and to create color
transparencies for such artwork (collectively, "Design
Services"). LIVE will receive compensation for providing any
Design Services for any Program in an amount to be mutually
agreed upon by the parties, which compensation shall be non-recoupable
and in addition to any other advances or royalties due LIVE hereunder.
(3) Advertising and Promotional Materials. At LIVE's
request, PIONEER shall furnish to LIVE copies of any and all
advertising and promotional materials which have been or are
intended to be published or distributed or otherwise used by
PIONEER, including, but not limited to, any and all catalogs,
guides, brochures, circulars, and any and all other items, of any
kind or character whatsoever, relating or referring to any or all
of the Programs. In the event that any advertising or
promotional materials for any or all Programs also refer or
relate to any other motion pictures or programs, then, all
Programs shall be specifically referenced and identified on all
such advertising and promotional materials as a product owned and
controlled by and licensed with the permission of LIVE, in such
form as shall be determined by LIVE. Upon request by PIONEER,
LIVE shall furnish PIONEER with reasonable quantities of readily
available point-of-purchase promotional materials and other
advertising and promotional materials relating to the Programs,
provided, however, that any and all out-of-pocket costs incurred
by LIVE (plus five percent) with respect to such promotional
materials shall be reimbursed by PIONEER to LIVE.
(3) Marketing and Promotion Plans. PIONEER shall consult
with LIVE on a regular and frequent, meaningful basis, during the
Term of this Agreement, and if applicable during the Sell-Off
Period, regarding PIONEER's proposed marketing and promotional
and exploitation strategy for any and all Programs and for the
exercise of PIONEER's rights pursuant to this Agreement. PIONEER
shall give due consideration to selling to third party
distributors where such distributors provide sales coverage and
other marketing opportunities supplementary to those of PIONEER.
Notwithstanding anything herein to the contrary, PIONEER shall
not (a) advertise or promote any Laser Videodiscs embodying any
particular Program, prior to the commencement by LIVE of
advertising or promotion with respect to the English language
1/2" NTSC videocassettes of such Program in the Territory, (b)
engage in any sales solicitations of Laser Videodiscs embodying
any particular Program, prior to the date such solicitations are
commenced by LIVE with respect to the English language 1/2" NTSC
videocassettes embodying such Program in the Territory, or (c)
release Laser Videodiscs embodying any particular Program, prior
to the date of release of the English language 1/2" NTSC
videocassettes by LIVE of such title in the Territory. LIVE will
inform PIONEER on a regular basis of its 1/2" NTSC videocassette
release schedule for the Programs in the Territory.
R. FREE COPIES: PIONEER will provide LIVE with ten (10) Laser
Videodiscs of each Program free of charge and, at LIVE's request,
as many as an additional two hundred fifty (250) Laser Videodiscs
of each Program at PIONEER's cost of manufacturing (i.e.,
pressing and duplication) plus the cost of shipping and handling.
The Laser Videodiscs of each Program which PIONEER furnishes to
LIVE free of charge will be free of royalties and will not be
counted in the limitation of promotional free goods as provided
in Paragraph L(3). Additionally, PIONEER will provide LIVE for
its lending library to its employees, with one (1) copy of each
Laser Videodisc of each motion picture or program (other than the
Programs) which PIONEER shall initially release during the Term.
S. FORCE MAJEURE: PIONEER shall have the right, at its
election, to suspend the Term of this Agreement if due to any
labor controversy or adjustment thereof affecting the Laser
Videodisc industry as a whole (and not merely PIONEER) or to any
other cause not within PIONEER's control or which PIONEER cannot
by reasonable diligence have avoided, PIONEER is materially and
adversely hampered in the manufacture, distribution or sale of
Laser Videodiscs in the Territory (an "Event of Force Majeure").
In no event shall inclement weather ever be considered in an
Event of Force Majeure. Such suspension shall commence upon
written notice to LIVE of, and last for the duration of, any such
Event of Force Majeure. Throughout the duration of any such
suspension, PIONEER will continue to perform its obligations
hereunder, including its accounting and payment obligations
hereunder, except if and to the extent PIONEER is unable to do so
as a direct result of the Event of Force Majeure. At PIONEER's
election, a period of time equal to the duration of such
suspension(s) shall be added at the end of the then current Term,
and such Term shall be accordingly extended, but in no event
shall the Term hereof be extended for a period greater than six
(6) months in the aggregate.
T. DEFAULT AND TERMINATION:
(1) PIONEER's Default. PIONEER will default if (a) PIONEER
becomes insolvent or fails to pay its debts when due; (b) PIONEER
makes any assignment for the benefit of creditors, or seeks
relief under any bankruptcy law or similar law for the protection
of debtors, or suffers a petition of bankruptcy to be filed
against it or a receiver or trustee appointed for substantially
all of its assets; (c) PIONEER breaches any material term,
covenant, or condition under this Agreement; (d) PIONEER makes or
attempts to make any assignment or transfer of this Agreement or
engages or attempts to engage any sublicensee to exploit any of
the rights granted to PIONEER without first obtaining LIVE's
prior consent in writing; (e) PIONEER suspends or discontinues
its sales, marketing or other operations as a wholesale
distributor of Laser Videodiscs in the Territory in any material
way. LIVE will give PIONEER written notice of any claimed
default. If the default is incapable of cure, then PIONEER will
be in default immediately upon receipt of LIVE's notice. If the
default is capable of cure, then PIONEER will have ten (10) days
after its receipt to cure any monetary default and thirty (30)
days after its receipt to cure any non-monetary default. If the
default is incapable of cure, or if PIONEER fails to cure within
the times provided, if any, then LIVE in addition to any other
rights or remedies may terminate or rescind this Agreement as to
any or all Programs. LIVE may then proceed against PIONEER for
legal and equitable relief, including suspending delivery of any
or all Programs, enjoining any further exercise by PIONEER of the
rights granted herein, and declaring all unpaid amounts owing to
LIVE immediately due and payable.
(2) LIVE's Default. LIVE will default if it fails to abide
by any material requirement of this Agreement imposed on LIVE or
breaches any covenant, condition, representation or warranty made
by LIVE under this Agreement. PIONEER will promptly give LIVE
written notice of any claimed default. If the default is
incapable of cure, then LIVE will be in default immediately upon
receipt of PIONEER's notice. If the default is capable of cure,
then LIVE will have thirty (30) days after its receipt to cure
such default. If the default is incapable of cure or if LIVE
fails to cure any default capable of cure within said thirty (30)
day period, then PIONEER may proceed against LIVE for available
relief, including PIONEER's right to suspend the Term hereof
pursuant to Paragraph S hereof.
U. REPRESENTATIONS AND WARRANTIES:
(1) PIONEER's Warranties. PIONEER hereby represents,
warrants and agrees, as follows:
(a) PIONEER has the full right, power, capacity and
authority to enter into this Agreement and to satisfy and perform
each and all of the terms and conditions hereof. The consent of
no other person and/or entity is necessary for PIONEER to enter
into this Agreement. PIONEER has undertaken and performed any
and all corporate actions and other actions necessary and
appropriate to authorize the execution of this Agreement and the
performance of each and all of the provisions hereof.
(b) PIONEER shall distribute and exploit Laser
Videodiscs embodying the Programs strictly in accordance with the
terms of this Agreement, and PIONEER shall not master, duplicate,
manufacture, sell, advertise, market, promote, publicize, copy,
use, distribute or otherwise exploit or dispose of the Programs
or any Laser Videodiscs embodying the Programs or any videotape
masters, submasters, film, sound, audio, video, advertising or
packaging elements or materials relating to the Programs except
as specifically provided pursuant to this Agreement.
(c) PIONEER is not, and PIONEER shall not be, subject
to any contracts, agreements, obligations, or disability, of any
kind or character whatsoever, which will prevent or interfere
with PIONEER fully keeping and performing any and all the
representations, warranties, agreements, covenants and conditions
to be kept or performed by PIONEER pursuant to this Agreement.
(d) PIONEER shall undertake and perform any and all
actions (short of commencing litigation) which are or may be
reasonably necessary or appropriate for the protection of any and
all of LIVE's interest in and to each and every of the Programs
and any and all materials provided by LIVE to PIONEER or created
by, or under the authority granted to, PIONEER pursuant to this
Agreement in connection with the Programs including, but not
limited to, each and all of LIVE's rights and interest in and to
any and all trademarks and copyrights in respect of each and all
of the Programs. Without limiting the generality of the
preceding sentence, PIONEER has not permitted and shall not
permit any lien, charge, pledge, mortgage or other encumbrance to
attach to any or all of the Programs or said elements or
materials, and PIONEER has not granted and shall not grant any
such lien, charge, pledge, mortgage or other encumbrance to any
person or entity.
(e) Without limiting the generality of the preceding
provisions of this paragraph, there are and shall be no liens,
claims, encumbrances, legal proceedings, restrictions or
agreements of any kind whatsoever, which will conflict or
interfere with, limit, derogate from, be inconsistent with, or
otherwise affect any of the provisions of this
Agreement or the enjoyment by LIVE of any of the rights or
benefits granted to LIVE pursuant to this Agreement.
(f) PIONEER shall undertake and perform any and all
actions (short of commencing litigation) which are or may be
reasonably necessary or appropriate to prevent the unauthorized
use, duplication and/or exhibition of Laser Videodiscs embodying
the Programs, and PIONEER shall cooperate with LIVE, and LIVE
shall cooperate with PIONEER in any and all actions or
proceedings with LIVE deems necessary or appropriate to protect
against such unauthorized use or duplication or exhibition and/or
to protect the copyright or interest in the Programs.
(g) PIONEER's warranties, representations and
agreements shall survive the expiration of the Term of this
Agreement. None of PIONEER's warranties, representations and
agreements shall in any way be limited by reason of any
investigation made by LIVE or by reason of any documents or
agreements or instruments or information heretofore or hereafter
submitted by PIONEER to LIVE.
(2) LIVE's Warranties. LIVE hereby represents, warrants
and agrees, as follows:
(a) LIVE has the full right, power, capacity and
authority to enter into this Agreement and to satisfy and perform
each and all of the terms and conditions hereof. The consent of
no other person and/or entity is necessary for LIVE to enter into
this Agreement. LIVE has undertaken and performed any and all
corporate actions and other actions necessary and appropriate to
authorize the execution of this Agreement and the performance of
each and all of the provisions hereof.
(b) LIVE is not, and LIVE shall not be, subject to any
contracts, agreements, obligations, or disability, of any kind or
character whatsoever, which will prevent or interfere with LIVE
fully keeping and performing any and all the representations,
warranties, agreements, covenants and conditions to be kept or
performed by LIVE pursuant to this Agreement.
(c) Without limiting the generality of the preceding
provisions of this paragraph, there are and shall be no liens,
claims, encumbrances, legal proceedings, restrictions or
agreements of any kind whatsoever, which will conflict or
interfere with, limit, derogate from, be inconsistent with, or
otherwise affect any of the provisions of this
Agreement or the enjoyment by PIONEER of any of the rights or
benefits granted to PIONEER pursuant to this Agreement.
(d) LIVE owns or controls without any limitations,
restrictions or encumbrances whatsoever, all other rights granted
to PIONEER hereunder and LIVE has obtained all necessary licenses
and permissions required for the manufacture, sale, distribution,
advertising and exploitation of Laser Videodiscs embodying the
Programs throughout the Territory pursuant to and consistent with
the terms and conditions of this Agreement, as may be required
for the full and unlimited exercise and enjoyment by PIONEER of
all the rights herein granted to it.
(e) LIVE has made all the necessary or required
approvals in connection with the artwork provided by LIVE to
PIONEER hereunder.
(f) All obligations with respect to each and all of
the Programs, and the distribution and exploitation thereof,
including, but limited to, all salaries, royalties, license fees,
service charges, laboratory charges, fees for artwork and the
like, have heretofore been or will be fully paid and PIONEER
shall have no obligations for such future salaries, royalties,
residuals, deferments, license fees, service charges, fees for
artwork or similar payments except as provided in this Agreement.
All synchronization and mechanical fees and costs associated with
the use of the music and all fees and charges incurred or
committed to by LIVE, including, but not limited to, payments by
reason of the manufacture, sale, rental or exploitation of Laser
Videodiscs embodying the Programs, have been paid or will be paid
by LIVE except as provided in this Agreement.
(g) Each Program is not and will not be in the public
domain and will be validly copyrighted within the Territory. No
Program will be allowed to fall into the public domain anywhere
in the Territory during the Term. Each Program as delivered to
PIONEER will contain all proper copyright and, if applicable,
trademark notices.
(h) Neither any Programs nor anything contained
therein (including, but limited to, any music and sound
synchronized therewith and the titles thereof) or the
manufacture, distribution and exploitation of Laser Videodiscs or
the exercise by PIONEER of any of the rights granted it
hereunder, does or will violate or infringe upon any rights of
any kind or nature whatsoever, of any person or entity or
constitute a libel or slander.
(i) The credit lists and other materials delivered by
LIVE to PIONEER will be complete and accurate and PIONEER will
incur no liabilities to any third parties arising out of its
compliance with such lists and use of such materials for their
intended purpose.
(j) LIVE's warranties, representations and agreements
shall survive the expiration of the Term of this Agreement. None
of LIVE's warranties, representations and agreements shall in any
way be limited by reason of any investigation made by PIONEER or
by reason of any documents or agreements or instruments or
information heretofore or hereafter submitted by LIVE to PIONEER.
V. INDEMNITY: Each party hereby undertakes and agrees to
indemnify, save and hold the other party free and harmless from
and against any and all liability, loss, damage, cost or expense
(including reasonable attorneys' fees and costs), in connection
with any claims and demands made or actions, suits or proceedings
brought by third parties arising out of, in connection with or
related to any failure by the indemnifying party to fulfill its
obligations under this Agreement, or any claim by any person or
entity which is inconsistent with any of the covenants,
warranties or representations made by the indemnifying party in
this Agreement. The indemnifying party will reimburse the other
party promptly upon written demand at any time after the date
hereof in respect of any liability, loss, damage, cost or expense
(including reasonable attorneys' fees) which such party has paid,
incurred or suffered to which the foregoing indemnity relates.
The indemnifying party shall be duly notified of any claim or
demand hereunder and shall have the option to participate and/or
defend, at its own expense, in connection with the settlement or
litigation thereof. No settlement shall be made by either party
hereunder without the prior written consent of the indemnifying
party, which consent shall not be unreasonably withheld.
W. GOVERNING LAW. This Agreement shall be governed and
constructed in accordance with the laws of the State of
California applicable to agreements entered into and fully
performed therein. Any controversy or claim arising out of or
relating to this Agreement and/or any alleged breach thereof
shall be brought and shall be resolved exclusively in the
appropriate state or federal court located in the County of Los
Angeles, State of California, and LIVE and PIONEER each hereby
consent and submit to the exclusive jurisdiction and venue of
said court located in the County of Los Angeles, State of
California.
X. ASSIGNMENT AND SUBLICENSING: LIVE may freely assign,
transfer or sublicense any of its rights under this Agreement,
but no such assignment, transfer or sublicense shall relieve LIVE
of its obligations, representations, warranties and indemnities
under this Agreement. This Agreement is personal to PIONEER.
PIONEER may not assign or transfer this Agreement, or engage any
subdistributor, sublicensee or agent to exploit any of the rights
granted to PIONEER, whether voluntarily or involuntarily, without
the prior written consent of LIVE which consent LIVE may withhold
in LIVE's sole discretion, other than to its parent, any
affiliated company or any entity into or with which it may merge
or be consolidated or any company which acquires all or
substantially all of PIONEER's stock or assets.
(1) Restrictions and Sublicensing. If PIONEER proposes to
assign or transfer this Agreement or to engage any sublicensee to
exploit any of the rights granted to PIONEER hereunder, then, in
each such instance, PIONEER shall notify LIVE in writing of all
material terms and conditions thereof, including the identity of
the intended assignee, transferee or sublicensee, the Programs
intended to be covered thereby and the part or parts in the
Territory to be included therein. PIONEER shall have neither the
right nor power to make such assignment or transfer or to engage
any such sublicensee until PIONEER has received the prior written
consent of LIVE which LIVE may withhold in its sole discretion
unless such assignment is to its parent, any affiliated company
or any entity into or with which it shall have merged or been
consolidated or any company which acquires all or substantially
all of PIONEER's stock or assets, in which event, LIVE's written
consent shall not be required. Until LIVE shall notify PIONEER
to the contrary in writing, LIVE approves the engagement or
appointment of Columbia House as a sublicensee of PIONEER to
distribute Laser Videodiscs of the Programs through Mail Clubs in
the Territory during the Term on a non-exclusive basis; provided,
the terms of any agreement affecting the Programs which PIONEER
shall desire to enter into with Columbia House during the Term
(including any modifications, amendments, renewals or extensions
of the currently-existing agreement between them) shall be
subject to the prior written consent of LIVE.
(3) No Release. If LIVE does consent to any assignment or
transfer of this Agreement or the engagement of any sublicensee,
then this Agreement will be binding on such authorized assignee,
transferee or sublicensee but will not relieve PIONEER of any of
PIONEER's obligations under this Agreement.
Y. INITIAL PRESS RELEASE: LIVE shall, in consultation with
PIONEER, prepare the first press announcement or other publicity
publicizing the nature of this Agreement, the contents of which
shall be subject to PIONEER's prior approval, which PIONEER shall
not unreasonably withhold. LIVE and PIONEER shall have the right
to jointly and/or concurrently release such mutually-approved
initial press announcement to the trade and/or public on a date
or on date(s) designated by LIVE. If PIONEER shall thereafter
decide to release a press announcement or other publicity
relative to the nature of this Agreement it shall have the right
to do so, subject to LIVE's prior approval of the contents
thereof, which LIVE shall not unreasonably withhold.
Z. CONFIDENTIALITY: The parties hereto shall receive all
information relating to their respective operations as
confidential information and shall use its reasonable efforts to
keep and maintain such information confidential by not readily
disclosing, revealing, publishing, reporting or transferring such
confidential information to others, except as reasonably
necessary in the conduct of each party's business, Without
limiting the generality of the foregoing, each party may disclose
such confidential information to the following persons which are
set forth herein solely for purposes of example and not by way of
limitation: (a) to such employees of each party, in the
performance of their capacity as such, such information as may be
required for the performance of their responsibilities hereunder,
(b) to the extent necessary to comply with the law, including
federal and/or state securities laws, or the valid order of a
court of competent jurisdiction, in which event the party making
such disclosure shall so notify the other and shall seek
confidential treatment of such information, (c) as part of each
party's normal reporting or review procedure to its parent
company auditors, attorneys and principle banks, if such parties
agree to be bound by the provisions of this Paragraph Z, (d) as
part of any audit of any parties books and records and (e) in
order to enforce the rights of each party pursuant to this
Agreement.
AA. MISCELLANEOUS PROVISIONS:
(1) Separability. In the case of any conflicts between any
term of this Agreement and any material law, ordinance, rule or
regulation, the latter will prevail.
(2) Relationship. Nothing herein contained shall be
construed to create a partnership, joint venture, agency,
fiduciary or employment relationship between the parties.
(3) No Waiver. No waiver of any breach will be a waiver of
any other breach of the same or any other provision. No waiver
is effective unless in writing. The exercise of any right will
not be deemed a waiver of any other right or of any default of
the other party.
(4) Remedies Cumulative. All remedies are cumulative, and
resort to one will not preclude resort to any other at any time.
(5) Notices. Except as otherwise provided herein, all
notices and payments will be sent to the parties at the addresses
specified on page 1 hereof, either by telex, telegram, telefax,
courier or first class mail, postage pre-paid. Either party may
change its place for notice by like notice. All payments and
statements which PIONEER is required or desires to send to LIVE
will be sent to the attention of LIVE's Vice President Royalties.
All legal notices which PIONEER is required or desires to send to
LIVE will be sent to the attention of LIVE's Executive Vice
President of Legal and Business Affairs. A courtesy copy of all
legal notices which LIVE is required or desires to send to
PIONEER will be sent to Pioneer North America, Legal Dept., at
PIONEER's address specified on page 1 hereof.
(6) Modification. No modification or amendment of this
Agreement, including this paragraph, shall be effective unless in
writing, signed by both parties.
(7) Captions. Captions and paragraph headings are for
convenience only.
(8) Entire Agreement. This Deal Memorandum contains the
principal terms and conditions of the agreement and understanding
by and between the parties regarding its subject matter, and
supersedes all previous written or oral understandings and
representations between the parties regarding its subject matter,
if any. Each party expressly waives in favor of the other any
right to rely on such prior written or oral understandings or
representations, if any there may be.
(9) Full Execution Required. This Agreement shall not
become effective until signed by a duly authorized officer of
PIONEER and counter signed by a duly authorized officer of LIVE.
IN WITNESS WHEREOF, the parties hereto have executed this
Deal Memorandum to be effective as of October 1, 1995.
PIONEER ENTERTAINMENT (USA) L.P. LIVE FILM AND MEDIAWORKS INC.
By: By:
Xxxxxx X. Xxxxxx
Its: Its: Executive Vice President
EXHIBIT "A"
TITLE EDPNO DLR. SIDES LIVE EXP. TERRITORY
PR.
Basic Instinct pse 33014 48.99 4 April 12, 2005 A
Crying Game ws 33349 24.49 2 June 30, 2008 C
Xxxxxxx: Truth
or Dare 25820 24.49 2 January 11, 2006 B
Xxxx XxXxxxxxx:
Get Back 33262 24.49 2 December 18, 2006 A
The Piano ws 33725 27.99 3 May 25, 2009 C
Platoon 34384 34.99 3 January 15, 1998 A
Reservoir Dogs ws 33269 24.49 2 Perpetuity A
Stargate 34400 31.49 3 February 22, 2020 A
Terminator 2 -
Judgment Day sp 33433 34.99 3 June 11, 2006 A
Total Recall 34019 27.99 2 October 30, 0000 X
Xxxxxxxxx:
Xx Xxxxxx Xxxxxx, Xxxxxxx-xxxxxxxx Xxxxxx and French-speaking Canada
B= United States and English-speaking Canada
C= United States
EXHIBIT "B"
TITLE EDPNO DLR. SIDES LIVE EXP. TERRITORY
PR.
Basic Instinct 26905 27.99 3 April 12, 2005 A
Basic Instinct ws 26906 27.99 3 April 12, 2005 A
Stargate ws 34399 31.49 3 February 22, 2020 A
Terminator 2 -
Judgment Day sp ws 33434 34.99 3 June 11, 2006 A
Terminator 2 -
Judgment Day sp
collectors edition 33435 83.99 6 June 11, 2006 A
Universal Soldier 33068 24.49 2 April 12, 0000 X
Xxxxxxxxx:
Xx Xxxxxx Xxxxxx, Xxxxxxx-xxxxxxxx Xxxxxx and French-speaking Canada
B= United States and English-speaking Canada
C= United States
