Exhibit 10.8
DISTRIBUTOR/SALES AGENT
Dated as of March 4, 1996
HEP II PARTNERS
Re: SANTA WITH MUSCLES, starring HULK HOGAN
SKELETONS, starring RON SILVER, JAMES COBURN
Gentlemen:
1. PARTIES. This letter will confirm the agreement ("Agreement") reached between United Film Distributors, Inc. ("Distributor/Sales Agent") and HEP II PARTNERS ("Owner/Grantor") with respect to the feature films SANTA WITH MUSCLES and SKELETONS (the "Picture") whereby Owner has engaged the services of Distributor as the exclusive authorized international sales, collections and servicing agent of Owner for the Picture in the Territory (as defined below), upon the following terms and conditions.
2. PICTURE. (a) Owner confirms that the Picture will be or is shot in color, in the English language, with a running time of no less than 92 minutes including main and end titles, and shall qualify for an MPAA rating not more restrictive than "R".
3. TERM. The term of this Agreement ("Term") shall commence as the date of this Agreement and shall continue in perpetuity.
4. TERRITORY. Distributor shall have the right to sublicense the Picture during the Term throughout the entire universe.
5. LICENSED RIGHTS. The Licensed Rights in the Picture which Distributor may sublicense ("Rights") are the exclusive rights in the Territory to exhibit the Picture, substantially as produced or represented by Owner other than customary dubbing, subtitling and limited editing for censorship purposes as is customary in each local country) in any and all media, now known or hereafter devised or improved including, but not limited to: theatrical exhibition (35mm), non-theatrical exhibition (as customarily defined in the motion picture industry), television exhibition (including pay, cable, free, satellite and pay-per-view), exhibition by means of video device (videocassette, disc or other format), for private home use (including the right to manufacture, distribute, rent and sell such video devices for such purposes) and any and all other means of exploitation of the Picture and any Rights therein, whatsoever, including merchandising, publication and soundtrack album rights. All other rights are excluded, including, the rights to exploit, license, or represent any and all "derivative works", such as sequels and remakes.
6. DIVISION OF GROSS RECEIPTS. As used in this Agreement, the term "Gross Receipts" shall mean all non-refundable monies or credits payable by foreign distributors once actually received by Distributor in United States Dollars including, without limitation, advances, minimum
guarantees, "overages", and other license fees or receipts, net of any withholding or other foreign remittance taxes. Gross Receipts shall be divided between Owner and Distributor as follows:
(a) Distributor shall first deduct and retain its fee of
Twenty percent (20%) out of total Gross Receipts;
(b) Distributor shall next deduct and retain the portion
attributable to cover Distributor's general out-of-pocket expenses
(e.g., travel, hotels, temporary personnel, sales offices,
entertainment, equipment rentals, sales trips, public relations fees
and overhead expenses, etc.) incurred in connection with the sale of
the Picture and attending various sales markets where the Picture will
be offered to foreign distributors. Said amount shall be fairly
apportioned in the event the expenses apply to matters other than the
Picture.
(c) Distributor shall also deduct and retain an amount equal
to all direct out-of-pocket distribution expenses applicable to the
Picture incurred by Distributor including, without limitation, creative
fees, printing, shipping, postage, courier, screening rooms and
cassettes, laboratory, legal and accounting fees directly related to
agreements with foreign distributors, telephone, telecopier and the
like. Distributor shall also be entitled to deduct its expenses
incurred including, without limitation, the creation of "additional"
technical materials such as, but not limited to, negatives,
internegatives, magnetic and optical soundtracks, trailers, television
spots, one-sheets, stills and any and all other advertising, publicity
and marketing expenses, of any kind, as advanced by Distributor.
(d) Provided Owner has complied with all terms and conditions
of this Agreement including, without limitation, timely Delivery, the
balance shall be Owner's share of Gross Receipts and shall be paid to
Owner in accordance with Paragraph 10 of this Agreement.
7. DEPOSIT ACCOUNT. All Agreements shall provide that any and all Gross Receipts under the Agreements shall be paid by each licensee directly to a bank account (the "Deposit Account") established by and under the control of Distributor or its designee.
8. DELIVERY. On or before April 1, 1996, Owner shall deliver to Distributor, at Owner's expense, all those items ("Items") relating to the Picture referred to in Exhibit "A" ("Delivery"). All Items delivered to Distributor by Owner shall be of first class, professional quality, suitable for theatrical exhibition and acceptable to foreign television broadcasters quality control requirements.
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