EXHIBIT 6.40
As of August 2, 1999
Cinergi Pictures Entertainment, Inc.
Mr. Xxxxx Xxxxxx
0000 Xxxxxxxx
Xxxxx Xxxxxx, Xx. 00000-0000
Re: FOREIGN SALES AGREEMENT
Gentlepersons:
Further to our conversations, this letter shall briefly outline the terms of
our agreement ("Agreement") for Cinergi Picture Entertainment, Inc.
("Cinergi") to act as Total Film Group, Inc.'s ("TFG") exclusive international
sales agent on the Picture(s) as described below. The terms are as follows:
CONDITIONS PRECEDENT: This Agreement is subject to (1) the closing of the
financing documentation for the Picture(s) (as described below); (2) the
funding of all funds due pursuant to such financing documentation and (3)
TFG's receipt of copies of this Agreement fully executed by Cinergi and Xxxxx
Xxxxxx ("MK") (collectively "Conditions Precedent").
1. Services to be provided by Cinergi: Cinergi shall be responsible for
making all sales of the Picture(s) (as defined below) in the Territory (as
defined below), negotiating long form agreements, delivering required
materials and otherwise servicing the agreements, making relevant
registrations with collection societies, collecting payments due, etc.,
following up with distributors on release plans, marketing strategies and
release budgets, monitoring distribution results and overages due and
assisting with foreign publicity of the Picture(s).
2. Pictures: Three (3) pictures in a budget range between $6 and $12
million. TFG has an approval right on each minimum sales prices provided by
Cinergi. Such minimum sales price list(s) will be based on the fact that the
elements listed for each Picture will be attached to such Picture. TFG shall
have the right to substitute any of the Pictures.
3. Territory: The world excluding U.S., its dominions (including Puerto
Rico) and English Speaking Canada.
4. Rights: Cinergi shall exploit all forms of the theatrical, non-theatric
al, home video, public video, commercial video, pay-television, pay-per-view,
video-on-demand, DVD, free television, airline (flying the flag of any of the
countries in the Territory), hotel and ship-at-sea rights (flying the flag of
any of the countries in the Territory) throughout the Territory. All other
rights not listed above shall be reserved by TFG.
5. Term: This Agreement shall take effect on the date of signature of
this Agreement and shall continue thereafter for a term of 30 (thirty) months
from delivery of the Picture(s). Cinergi shall be entitled to negotiate
license agreements with license terms of up to 20 years from delivery. If
Cinergi wishes to negotiate license agreements with longer terms, then such
longer terms shall be subject to TFG's prior written approval. Cinergi shall
continue, after the expiration of the Term, to be responsible for servicing
the Picture(s) (unless otherwise specified by written notice by TFG) until the
expiration of each such agreement and in all events shall continue to be paid
its Fees (as defined below) on all Gross Receipts arising therefrom.
Notwithstanding the foregoing, TFG shall be able to terminate this Agreement
by written notice if: (i) Cinergi files bankruptcy; and (ii) MK is no longer
devoting a material portion of his time to the sales of the Picture(s).
However, Cinergi shall continue to be paid its Fees on Gross Receipts derived
from agreements negotiated by Cinergi prior to such termination.
6. Distribution Expenses: TFG shall advance the following Distribution
Expenses for the costs and expenses in connection with the distribution,
advertising, exploitation and/or attending film markets during the Term
("Distribution Expense"): (i) for budgets between $6,000,000 and $8,500,000:
$75,000; (ii) for budgets between $8,500,001 and $11,000,000: $120,000; (iii)
for budgets above $11,000,001: $150,000. There shall be no other recharge of
corporate overhead or costs. Such Distribution Expenses shall be recouped by
TFG as described in Paragraph 7 below.
7. Cinergi's Fees: Gross Receipts (as defined below) shall be applied in
accordance with the collection agreement, but for the avoidance of doubt shall
entitle Cinergi on a continuing and ongoing basis to be paid by the collection
agent out of the Gross Receipts (as defined below) in respect of the
distribution of the Picture(s) throughout the Territory as its sales
commission in consideration of its services hereunder 15% (fifteen percent) of
100% of the Gross Receipts derived from the Territory provided that:
A. Until such time the financing entity ("Financier") recoups its
investment in the Picture and TFG recoups the Distribution Expenses advanced
pursuant to the provisions of Paragraph 6, Cinergi shall only be entitled to a
10% (ten percent) sales commission; and
B. Once the Financier has recouped its investment and TFG has
recouped the Distribution Expenses advanced pursuant to the provisions of
Paragraph 6, Cinergi shall be entitled retrospectively to a 15% (fifteen
percent) sales commission.
Other points are:
x. Xxxxx Receipts shall be amounts received from all sources in the
Territory including, minimum guarantees, outright licenses, overages, and
amounts received from collection agencies for cable retransmissions,
royalties, etc. net of withholding taxes and bank fees.
b. Cinergi shall distribute the Picture(s) in good faith in arms
length transactions and TFG - or its affiliates - shall be the licensing
entity on all distribution agreements. The Picture(s) shall also not be
included in agreements that are cross-collateralized with any other motion
Picture(s) distributed by Cinergi. Cinergi shall meaningfully consult with
TFG over the selection of potential distributors and licensing agreements
being negotiated for the Picture(s). Cinergi shall not close any distribution
agreements for advances or outright license fees that are less than 90% of the
accepting price(s) as they will be contained in the approved minimum sales
prices list for the applicable country(ies) or territory(ies) without TFG's
approval.
c. Cinergi shall supply full accounting statements (showing
contracted sales, Gross Receipts and Cinergi's Fees by territory) to provide
the Fee. Such statements shall be rendered monthly until 18 months from
delivery and no less the quarterly for the next 2 years and no less than
semi-annually thereafter. TFG shall be entitled to audit Cinergi's books and
all other related records in relation to the Picture(s).
d. Cinergi and TFG shall mutually agree in good faith the delivery
date for each Picture and the materials that shall be delivered to Cinergi.
e. Cinergi agrees that Gross Receipts deriving from the
exploitation of each Picture shall be paid into a collection account in U.S.$
and Cinergi shall direct distributors to remit thereto all monies due under
each distribution agreement.
We shall negotiate a more formal agreement in good faith based upon the
principal terms outlined above. Until such more formal agreement is executed
this letter shall be a binding agreement.
If the foregoing is acceptable to you, please confirm your agreement by
signing in the space below.
Sincerely yours,
TOTAL FILM GROUP, INC.
By: /s/ Xxxxxx Xxxxx
Its: President
ACCEPTED AND AGREED TO:
CINERGI PICTURES ENTERTAINMENT, LLC
By: /s/ Xxxxx Xxxxxx
Its:
Revised 2/15/00
CINERGI INTERNATIONAL DELIVERY SCHEDULE
EXHIBIT "A"
A. ACCESS TO
A. TFG SHALL PROVIDE CINERGI ACCESS TO:
1. (a) One (1) 35mm wholly original English version soundtrack
negative of the film, fully cut, main and end titled, assembled, and conformed
in all respects to the final form of the Film; and
(b) One (1) 35mm wholly original color Film negative of the Film,
fully cut, main end titled, assembled and conformed in all respects to the
final form of the Film
The Film and soundtrack negative shall not contain any physical damage, and
all splices in the negatives shall be sound, secure, and transparent when
viewed by transmitted lights.
2. One (1) 35mm mono Magnetic 3 track of the Film containing separate
music, separate effects and separate dialogue 100% filled.
3. (i) One (1) 35 mm four or six track dialogue stem to serve as the
final stereo master or one (1) copy on DA-88 or 1/2 inch digital tape.
(ii) One (1) 35 mm four or six track music stem to serve as the
final stereo master~ or one (1) copy on DA-88 or 1/2 inch digital tape.
(iii) One (1) 35 mm four or six track effects stem to serve as the
final stereo master; or One (1) copy on DA-88 or 1/2 inch digital tape.
(iv) One (1) magnetic music master on DAT/DA88 format.
4. All unused takes, cutouts, trims, second takes, tests,
sound-effects tracks, dialogue tracks, process keys and background, whether
negative, positive or magnetic, produced for or used in the production of the
Film, whether or not used in the final version of the Film.
B. TFG SHALL DELIVER THE FOLLOWING TO THE LABORATORY OR LABORATORIES
DESIGNATED BY CINERGI.
1. One (1) 35 mm Interpositive of the Film fully cut, main-and-end
titled, edited and assembled, conforming in all respects to the edited
final form of the Film (the "Interpositive").
2. One (1) Internegative taken from the Interpositive described in
above ("Internegative").
3. One (1) 35 mm English language combined optical approved and
graded check print, taken from the Internegative described in 2. above.
4. One (1) 35 mm Dolby Stereo English-version optical soundtrack
negative of the Film that conforms to edited final form of the Film.
5. One (1) 35 mm Dolby Stereo magnetic twin-track print master of the
film, if available, or one (1) D88 containing the combined music, effects and
dialogue, that conforms to the edited final form of the Film.
6. One (1) 35 mm Dolby Stereo magnetic one hundred percent (100%)
filled music and effects soundtrack of the Film, if available, or one (1) D8
8, that conforms to the edited final form of the Film.
7. One (1) 35 mm Interpositive and one (1) Internegative of the
textless backgrounds of main and end titles, inserts, and all descriptive
titles in the Film.
8. One (1) XXX X-1 digital original telecine letter boxed master
video tape of the Film, one (1) XXX X- 1 digital original telecine full-frame
master video tape of the Film, one (1) XXX X-1 16x9 and, one (1) XXXX X-0
digital original telecine full-frame master video tape of the Film with the
stereo final mix soundtrack thereof on channels one (1) and two (2), and the
music and effects soundtrack thereof on channels three (3) and four (4).
C. TFG SHALL DELIVER THE FOLLOWING TO CINERGI
All agreements, licenses, stories, synopses, biographies, and other
documents required to be delivered hereunder shall be in the English language
or, if in another language, accompanied by an English-language translation
thereof Delivery of the Film shall be accompanied by a list showing which
items are in which boxes.
1. Laboratory Access Letter executed by Company and the applicable
laboratory.
2. (i) As many original or first-generation color transparencies as
are available (but not less than fifty (50).
(ii) As many original or first-generation 8x 10 black and white
negatives for still 8x 10 photographs as are available (but not less than
fifty (50) together with captioned still photographs made therefrom.
TFG represents and warrants to CINERGI that all still photographs, negatives,
transparencies and other similar materials delivered hereunder will be
approved by all persons, firms, corporations and other entities, whose
approval is required for the use and exploitation thereof in connection with
the Film.
3. Sufficient interview and other videotape footage to enable CINERGI
to produce an electronic press kit of the Film.
4. One (1) 35 mm mono-magnetic three-track of the Film that matches
the edited final form of the Film, containing separate stripings of (i) the
music, (ii) the effects and (iii) the dialogue.
5. One (1) 8x10 textless color transparency and one (1) 8x10 color
transparency with text of the key techanical poster-ready artwork, including
the full credit block and title treatment.
6. Five (5) copies of a press book or other material of the Film
containing a synopsis of the Film, production notes and biographies of main
stars, director, and main crew.
7. One (1) typewritten copy each of the detailed and complete
dialogue and action continuity and spotting list of the complete Film.
8. One (1) music cue sheet setting forth (a) the title of all of the
musical compositions and sound recordings contained in the Film, (b) the names
of the composers and their performing rights affiliation, (c) the names of the
recording or performing artists, (d) the nature, extent, and exact timing of
the uses made of each of the said musical compositions and sound recordings,
and (e) the name and address of the publisher(s) that control the said musical
compositions and companies that control the said sound recordings.
9. Copies of all of the fully executed music synchronization and
master use licenses (all of which shall contain a grant of rights consistent
with the terms of the Agreement) for all of the musical compositions and sound
recordings contained in the Film.
10. Written statement of screen credit and advertising credit
obligations applicable to the Film, together with typewritten,
English-language layouts of the said screen credit and advertising credits.
Screen credits and advertising credits must comply with all applicable guild
and union requirements and the individual employment agreements to accord
credit on the screen, in advertising, in paperbacks and on recordings; and
excerpts from such employment agreements with respect to the foregoing, as
well as outlining any restrictions as to the use of name and likeness.
11. A written list of the full and complete Main and End Credits of
the Film.
12. Photographic copies of all agreements or other documents, fully
executed, relating to the engagement of the writer, director, producer,
composer and principal cast members as well as persons whose names are
accorded paid credit. Producer shall provide access (and copies upon request)
to the agreements in respect of all other personnel in connection with the
Film.
13. A written statement of all dubbing/sub-titling restrictions and
all other restrictions of whatsoever kind or nature relating to the Film, if
any.
14. Certificates of Errors and Omissions Insurance coverage (as
described in and otherwise in connection with the Agreement).
15. One (1) complete set of perfected chain of title documentation,
in accordance with the Agreement, including without limitation, Copyright
Search and Title Search Reports, the Library of Congress Copyright
Registration Certificate (when available), and the M.P.A.A. Rating Certificate
(when available).
16. Five (5) original notarized Certificates of Authorship in a form
to be approved by CINERGI.
17. Five (5) original notarized Producer's Certificates in a form to
be provided by CINERGI.
18. Fifteen (15) original notarized Certificates of Nationality, or
Certificate of Origin.
19. A certificate from a duly authorized officer of the completion
guarantor of the Film certifying the final direct cash production cost of the
Film to be delivered as soon as possible after delivery.
ASSIGNMENT AGREEMENT
This Assignment Agreement is made on this 25th day of January, 2000 by and
between Cinergi Pictures Entertainment Inc. ("Cinergi"), a Delaware
corporation qualified to do business in California and Total Film Group, Inc
("TFG"), a (California) corporation.
Reference is made to that certain Foreign Sales Agreement dated as of August
2, 1999 by and between Cinergi and TFG (the "Agreement").
Cinergi hereby irrevocably assigns the Agreement to C-2 Pictures, LLC, a
California limited liability company whose members, Cinergi and Xxxxx Xxxxxx
Productions LP, a California limited partnership, each own a 50% member
interest.
All terms and conditions of the Agreement remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this Assignment Agreement,
effective as of the date first written above.
Cinergi Pictures Entertainment, Inc.
By: /s/ Xxx Xxxxxxxxxx, Xx. Executive VP
Total Film Group, Inc.
By: /s/ Xxxxxx Xxxxx, President
