EXHIBIT 10.1
GENIUS PRODUCTS, INC.
HOMEVIDEO DISTRIBUTION AGREEMENT
AGREEMENT made as of February 6, 2002 between WARNER HOME VIDEO, a Division of
Time Warner Entertainment Company, L.P. ("WHV"), whose address is 0000 Xxxxxx
Xxxxxxxxx, Xxxxxxx, Xxxxxxxxxx 00000, and GENIUS PRODUCTS, INC. ("Grantor"),
whose address is 00000 Xx Xxxxxx Xxxx, Xxxxx 000, Xxx Xxxxx, XX 00000.
The Parties hereby agree as follows:
1. PICTURE(S): The "Picture(s)" shall mean and refer to the following
pre-recorded audio-visual programs intended primarily for linear playback
produced for or by, or which are under the control of, Grantor: (a) "Catalog
Titles" (as defined in Paragraph 4 below), and (b) "New Releases" (as defined in
Paragraph 5 below). Notwithstanding, and in addition to, the requirements
contained herein, each Picture shall conform to the following specifications:
(i) TECHNICAL SPECIFICATIONS: The Pictures are
audiovisual programs originally produced, recorded and
delivered in the English language.
(ii) RELEASE QUALITY: The Pictures shall be delivered
to WHV completely finished, fully edited, titled and
synchronized with language, dialogue, sound and music so each
are, in all respects, of a first-class technical quality ready
for exhibition on homevideo "Devices" (as hereinafter defined)
in the "Territory" (as hereinafter defined).
2. GRANT OF RIGHTS: Grantor hereby grants to WHV during the Term and in
the Territory the sole and exclusive "Homevideo Rights" (as set forth in
Paragraph 3 below) and "Incidental Rights" (as set forth in Paragraph 18 below)
in and to the Pictures, including, but not limited to, the necessary literary,
artistic, musical, technological, and intellectual property rights (including
without limitation copyrights, rental and lending rights, rights related to
copyright and/or neighboring rights recognized under the law of any foreign
jurisdiction).
3. HOMEVIDEO RIGHTS:
(a) The term "Homevideo Rights" as used herein shall mean the
right to manufacture and/or authorize the creation of Devices
containing copies of the Pictures and to exploit and distribute such
Devices for the intended purpose of noncommercial viewing by consumers
on Video Playback Systems (as defined below) in such manner that
viewing schedules, viewing frequency and interactive multimedia
functions inherent to such Devices (i.e., chaptering, bookmarking and
other similar user-programmable playback features) may be freely
controlled by the consumers.
(b) The term "Devices" as used herein shall mean any and all
forms and types of electronic, mechanical, magnetic, optical and/or
digital devices now known or hereafter devised (in all formats and
sizes) including, but not limited to, videocassettes, digital video
discs, DVDs, optical discs, semi-conductor chips, computer hard drives,
and/or personal digital video recorders ("PVRs")(e.g., Replay or Tivo)
upon which are encoded or stored an audiovisual duplication of the
Pictures for future retrieval by Video Playback Systems.
(c) The term "Video Playback Systems" as used herein shall
mean any electronic, mechanical, magnetic or optical apparatus now
known or hereafter devised which is capable of being operated by
consumers (i) directly in their places of dwelling, including, but not
limited to, videocassette players and optical disc players, (including,
but not limited to, all forms and types of DVD players) (ii) indirectly
from their places of dwelling through instant access direct delivery
transmission systems (including, without limitation, through any and
all "downloading" or "streaming" technologies whereby the Pictures are
digitally transmitted online, or via cable, satellite, or otherwise,
and stored on a Device for future retrieval and viewing by an end
consumer, which distribution of the Pictures shall be included in the
Homevideo Rights, or (iii) elsewhere on any such apparatus that is
designed to be portable and intended for personal use, such as laptop
computers and portable DVD players, and which can cause the Pictures to
be displayed on associated reproduction equipment including, but not
limited to, television receivers, television monitors and computer-type
displays in such manner as to be perceivable by, and visible and/or
audible to, the consumers.
(d) The term "Homevideo Rights" shall not include: (i) the
right to make public exhibitions of the Pictures, and (ii) the right to
broadcast, cablecast or otherwise telecast the Picture(s) on pay,
pay-per-view, free or other television systems in which viewing
schedules and viewing frequency (i.e., programming) are controlled in
whole or in part by television companies.
4. CATALOG TITLES: "Catalog Titles" shall include all releases on
Devices in the Territory of the Pictures set forth in EXHIBIT "G" attached
hereto and incorporated by reference herein, which Pictures have been released
in retail distribution channels prior to the date of this Agreement. All of the
Catalog Titles will be available for exploitation by WHV from the commencement
of the Term.
5. NEW RELEASES:
(a) "New Releases" shall include all children's videos
developed and/or produced by Grantor and that are not listed in EXHIBIT
G. Such Pictures are intended for family, children and/or adult
viewing, are intended to be released on standard or non-standard
television or directly to homevideo, and include (i) new Pictures to be
produced as set forth in this Paragraph 5, and (ii) existing Pictures
that have not been released in retail distribution channels prior to
the date of this Agreement.
(b) Grantor shall only be required to effect Delivery for
those New Releases that WHV elects in its sole discretion to release.
In connection with Grantor's production of New Releases during each
year of the Term, WHV shall have concept and script approval and
Grantor agrees to provide WHV monthly with an updated list of all such
proposed programming (along with a status report with respect to
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programming development, production and delivery of all such proposed
programming) (together, the "New Releases Production Status Report")
and, in addition, Grantor shall update the New Releases Production
Status Report more frequently as necessary to keep WHV informed of any
changes thereto. From the New Releases Production Status Report, WHV
shall select, in its sole and absolute discretion, which such
programming shall be released as New Releases. After production of each
New Release, Grantor shall deliver to WHV a screening copy thereof for
WHV's review and evaluation with respect to WHV's potential release of
such New Release. Following such review and evaluation, WHV may, in its
sole discretion, elect not to release such New Release. Each New
Release shall be of the same standard and quality as the Catalog
Titles, and, if rated by the MPAA, would receive a "G" or "PG" rating.
In the event that WHV elects not to release such New Release, Grantor
shall refund to WHV any New Release Recoupable Advance relating to that
New Release within ten (10) business days of WHV's notification that it
has elected not to release said title.
(c) BABY GENIUS RELEASE: WHV will make reasonable commercial
efforts to release a Baby Genius-branded title in the United States and
Canada in the second quarter of 2002; however, WHV's failure to do so
will not be a breach of this Agreement.
6. NEW PRODUCTIONS:
(a) BABY GENIUS BRAND: Grantor shall provide WHV with a
minimum of five (5) proposals for New Releases per year. Said proposals
shall be provided one at a time and shall include, but not be limited
to, the following: the concept, estimated budget and timeline, script
treatment, and support for developmental positioning. WHV shall have
sixty (60) days to determine whether to accept or reject such proposal
and WHV shall accept at least two (2) proposals in each twelve (12)
month period. Acceptance of a proposal in no way limits any of WHV's
rights under Paragraph 5.(b) of this Agreement. In the event WHV fails
to accept any of Grantor's proposals within a twelve (12) month period,
Grantor shall have the right to give WHV ninety (90) days' written
notice of its intent to terminate this Agreement with respect to future
Pictures only. In the event of termination under this provision, WHV
shall have the right to continue distributing, under the terms of this
Agreement, all Baby Genius and Kid Genius product in existence or
development as of the date of such termination. Notwithstanding the
foregoing, if WHV gives Grantor sales data that indicates the market
will not support two (2) titles annually, the parties agree to
renegotiate the obligations set forth in this Paragraph 6.(a).
(b) KID GENIUS BRAND:
(i) Grantor shall provide WHV with a minimum of five
(5) proposals for New Releases per year beginning in the year
in which WHV and Grantor mutually agree that the Kid Genius
product should be launched. Said proposals shall be provided
one at a time and shall include, but not be limited to, the
following: the concept, positioning statement, estimated
budget and timeline, script treatment, and support for
developmental positioning. WHV shall have sixty (60) days to
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determine whether to accept or reject such proposal and WHV
shall accept at least two (2) proposals in each twelve (12)
month period. Acceptance of a proposal in no way limits any of
WHV's rights under Paragraph 5.(b) of this Agreement.
(ii) WHV agrees to launch the Kid Genius line within
nine (9) months of acceptable Delivery fully complying with
Paragraph 12 of this Agreement of final video materials,
provided that said final materials are of the same standard
and quality as the Catalog Titles and other then-existing
Pictures. WHV also agrees to develop a marketing plan by the
end of 2002 that contemplates a Kid Genius video release in
2003.
(iii) In the event WHV fails to accept any of
Grantor's proposals within a twelve (12) month period, Grantor
shall have the right to give WHV ninety (90) days' written
notice of its intent to terminate this Agreement with respect
to future Pictures only. In the event of termination under
this provision, WHV shall have the right to continue
distributing, under the terms of this Agreement, all Baby
Genius and Kid Genius product in existence or development as
of the date of such termination. Notwithstanding the
foregoing, if WHV gives Grantor sales data that indicates the
market will not support two (2) titles annually, the parties
agree to renegotiate the obligations set forth in this
Paragraph 6.(b).
(iv) If WHV fails to release a Kid Genius video in
the United States and Canada in the timeframe set forth above
in Paragraph 6.(b)(ii) or if at any time during the Term of
this Agreement WHV decides to entirely discontinue the
distribution and production of Kid Genius-branded videos, then
Grantor shall have the right to elect to reclaim all rights,
title and interest in and to the Kid Genius videos (including
but not limited to the right of Grantor to self-distribute the
same), provided that (a) upon making such election, Grantor
promptly refunds to WHV any unrecouped portions of the New
Release Recoupable Advances related to the Kid Genius videos;
(b) Grantor agrees to develop new and different packaging for
the Kid Genius videos that is not confusingly similar to the
packaging developed by WHV, if any; (c) Grantor agrees to pay
WHV the product cost for any existing inventory of Kid Genius
videos that WHV turns over to Grantor; and (d) if, after
making such election, Grantor proposes at any time during the
Term, or any extension thereof, to enter into a distribution
agreement for the Kid Genius videos with a third party, then
Grantor must give WHV the first right to negotiate in
connection therewith and Grantor and WHV shall so negotiate in
good faith for a period extending for no less than thirty (30)
days unless agreement is earlier reached. In the event that no
agreement is reached within said thirty (30) days following
commencement of said negotiations, Grantor may negotiate
elsewhere; provided that if Grantor is thereafter prepared to
enter into an agreement with a third party for the license of
the homevideo rights for these titles, Grantor shall, before
entering into such agreement, give WHV notice of the proposed
terms thereof (and all modifications of such terms) and the
name of the party involved. In each instance, WHV shall then
have ten (10) business days in which to elect to acquire said
homevideo rights on the terms contained in the notice.
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7. SAN DIEGO ZOO AND WILD ANIMAL PARK VIDEOS:
(a) WHV shall release the San Diego Zoo and Wild Animal Park
Videos (the "Zoo Videos") in the United States and Canada within six
(6) months after acceptable Delivery in accordance with Paragraph 12 of
this Agreement of final materials.
(b) If WHV fails to release the Zoo Videos in the United
States and Canada within six (6) months after acceptable Delivery of
final materials fully complying with Paragraph 12 of this Agreement, or
if at any time during the Term WHV fails to include the Zoo Videos in
its normal solicitation process, then Grantor shall have the right to
elect to reclaim all rights, title and interest in and to the Zoo
Videos (including but not limited to the right of Grantor to
self-distribute the same), provided that (i) upon making such election,
Grantor promptly refunds to WHV any unrecouped portions of the New
Release Recoupable Advances related to the Zoo Videos; (ii) Grantor
agrees to develop new and different packaging for the Zoo Videos that
is not confusingly similar to the packaging developed by WHV, if any;
(iii) Grantor agrees to pay WHV the product cost for any existing
inventory of Zoo Videos that WHV turns over to Grantor; and (iv) if,
after making such election, Grantor proposes at any time during the
Term, or any extension thereof, to enter into a distribution agreement
for the Zoo Videos with a third party, then Grantor must give WHV the
first right to negotiate in connection therewith and Grantor and WHV
shall so negotiate in good faith for a period extending for no less
than thirty (30) days unless agreement is earlier reached. In the event
that no agreement is reached within said thirty (30) days following
commencement of said negotiations, Grantor may negotiate elsewhere;
provided that if Grantor is thereafter prepared to enter into an
agreement with a third party for the license of the homevideo rights
for these titles, Grantor shall, before entering into such agreement,
give WHV notice of the proposed terms thereof (and all modifications of
such terms) and the name of the party involved. In each instance, WHV
shall then have ten (10) business days in which to elect to acquire
said homevideo rights on the terms contained in the notice.
8. TERM: The "Term" of this Agreement shall commence upon the date of
this Agreement first set forth above and shall continue for a period of seven
(7) years following initial availability of Devices to consumers in each country
in the Territory. Notwithstanding the foregoing, in the event that the
Recoupable Advance set forth in Subparagraph 14.(d) hereof and the Additional
Recoupable Advance(s), if any, set forth in Paragraph 13 hereof have not been
fully recouped by WHV on the date upon which the "Term" would otherwise expire,
the "Term" shall be extended for a period equal to the length of time necessary
for WHV to recoup said Recoupable Advance(s) and Additional Recoupable
Advance(s), if any. If at any time after the expiration of the "Term" Grantor
desires to grant Homevideo Rights in the Pictures, Grantor shall afford WHV the
first right to negotiate in connection therewith, and Grantor and WHV shall so
negotiate in good faith for a period extending for no less than thirty (30) days
unless agreement is earlier reached. In the event that no agreement is reached
within said thirty (30) days following commencement of said negotiations,
Grantor may negotiate elsewhere; provided that if Grantor is thereafter prepared
to enter into an agreement with a third party for the license of Homevideo
Rights in the Pictures, Grantor shall, before entering into such agreement, give
WHV notice of the proposed terms thereof (and all modifications of such terms)
and the name of the party involved. In each instance, WHV shall then have ten
(10) business days in which to elect to acquire said Homevideo Rights on the
terms contained in the notice.
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9. TERMINATION FOR FAILURE TO DISTRIBUTE: In the event WHV elects to
release a New Release title but fails to announce said New Release to the retail
market in the United States and Canada within twelve (12) months of acceptable
Delivery fully complying with Paragraph 12 hereof of said New Release to WHV,
Grantor shall have the right to terminate this Agreement with respect to that
particular New Release only. Grantor must give WHV ninety (90) days' written
notice of its intent to terminate WHV's rights to a particular New Release
Picture under this provision and WHV shall have the right to cure. In the event
of termination of WHV's rights with respect to a particular New Release under
this Xxxxxxxxx 0, Xxxxxxx agrees to promptly refund to WHV the Recoupable
Advance related to that New Release.
10. SELL OFF: Upon the date of expiration of the Term or any extension
thereof, WHV shall have the right to continue to distribute all previously
manufactured Devices which may be remaining in inventory during a "sell-off"
period of six (6) months duration following such date of expiration of the Term.
11. TERRITORY: "Territory" means the entire universe, provided,
however, that WHV shall not have distribution rights to the following titles in
the following countries: (a) Argentina (with respect to "Mozart & Friends" and
"Mozart & Friends: Sleepytime" only; (b) Australia (with respect to "Mozart &
Friends" and "Mozart & Friends: Sleepytime" only; (c) Chili (with respect to
"Mozart & Friends" and "Mozart & Friends: Sleepytime" only; (d) Hong Kong (with
respect to "Mozart & Friends," "Mozart & Friends: Sleepytime" and "Four Seasons"
only; (e) New Zealand (with respect to "Mozart & Friends" and "Mozart & Friends:
Sleepytime" only; (f) Philippines (with respect to "Mozart & Friends," "Mozart &
Friends: Sleepytime" and "Four Seasons" only; and (g) Singapore (with respect to
"Mozart & Friends," "Mozart & Friends: Sleepytime" and "Four Seasons" only)
(collectively, the "Excluded Rights"). Notwithstanding the foregoing, in the
event that any of the Excluded Rights revert to Grantor or otherwise become
available at any time during the Term of this Agreement or any extension
thereof, such Excluded Rights shall automatically become part of the Grant of
Rights under this Agreement without the payment of any additional monies.
Grantor shall immediately notify WHV in writing as soon as any of the Excluded
Rights revert to Grantor or otherwise become available.
12. DELIVERY:
(a) Within ten (10) days of execution of this Agreement
Grantor shall make delivery of all items specified in Exhibit "B"
attached hereto and by this reference made a part hereof for the
Catalog Titles. Each New Release shall be delivered to WHV pursuant to
schedules to be provided to Grantor by WHV. Time of delivery is of the
essence to this Agreement. The Pictures as delivered shall be of
first-class technical quality in conformity with WHV standards for
programs of this type. Delivery shall not be deemed completed until WHV
has examined and approved in writing the film elements or video
elements (as the case may be) for the Pictures as submitted by Grantor.
(b) On a regular basis during all phases of preproduction,
production and post-production of the Pictures Grantor shall confer
with Xxx Xxxxx, or with any other representatives of WHV who may be
designated by WHV from time to time, in connection with quality control
and other technical matters pertaining to acceptable delivery of the
Pictures.
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[Confidential treatment has been requested with respect to the omitted portions
of this exhibit. The copy filed herewith omits the information subject to the
confidentiality request. Omissions are designated as **. A complete version of
this exhibit has been filed separately with the Securities and Exchange
Commission.]
(c) For all New Production proposals accepted by WHV, Grantor
shall obtain and deliver to WHV, in form and substance satisfactory to
WHV, and at Grantor's sole cost and expense, a completion guarantee
furnished by a party satisfactory to WHV guaranteeing delivery of the
Picture(s) to WHV in accordance with the requirements of this
Agreement. Said completion guarantee shall be delivered no later than
ten (10) days following WHV's acceptance of such New Production
proposal.
13. DVD DEVICES:
(a) ENHANCED CONTENT: Grantor and WHV shall mutually agree on
any content added to or created for inclusion on DVD Devices of each
Picture (the "Enhanced Content"), with WHV's decision final. WHV shall
also consult with Grantor regarding the costs to be incurred by WHV in
connection with the Enhanced Content. WHV shall be responsible for the
creation and production of the Enhanced Content. Grantor shall make
available free of charge any additional material required for the
creation of such Enhanced Content and shall be responsible for clearing
and obtaining all approvals for such material. All costs incurred by
WHV in connection with the Enhanced Content shall be treated as an
Additional Recoupable Advance, which WHV shall recoup from sums
otherwise payable as Grantor's Royalty.
(b) AUTHORING, ENCODING AND COMPRESSION: WHV shall be one
hundred percent (100%) responsible for all steps in the process leading
to and including the production of the masters which are made to serve
as prototypes for the duplication of the Pictures in the form of DVD
Devices of the Pictures, including, without limitation, authoring,
encoding and compression (the "Mastering Process"). All costs incurred
by WHV in the Mastering Process shall be treated as an Additional
Recoupable Advance, which WHV shall recoup from sums otherwise payable
as Grantor's Royalty.
(c) ACCESS TO MASTERS: Upon Grantor's request for access to
the master of DVD Devices for any Picture during or after the end of
the Term, WHV shall invoice Grantor for any unrecouped portion of the
costs incurred for the Enhanced Content and Mastering Process for such
Picture, which shall be paid by Grantor within thirty (30) days of such
invoice. Upon receipt of payment of such invoiced amounts, WHV shall
provide Grantor access to the master of DVD Devices for such Picture.
14. ROYALTY:
(a) GRANTOR'S ROYALTY: In full consideration of all rights
granted herein and all services to be performed hereunder, WHV will pay
to Grantor a royalty ("Grantor's Royalty") equal to ** of "Accountable
Receipts" (as defined in Exhibit A). Grantor's Royalty and Accountable
Receipts shall be computed, determined and payable in accordance with
and subject to the provisions of Exhibit "A" attached hereto and by
this reference made a part hereof.
(b) Notwithstanding the foregoing, WHV shall pay to Grantor a
Royalty equal to ** of "Accountable Receipts" (as defined in Exhibit
"A") for the following two (2) New Releases only, in the event WHV
elects to release said New Releases: (i) "Baby Genius at the Wild
Animal Park" and (ii) "Baby Genius at the San Diego Zoo" (collectively,
the "Zoo Videos").
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[Confidential treatment has been requested with respect to the omitted portions
of this exhibit. The copy filed herewith omits the information subject to the
confidentiality request. Omissions are designated as **. A complete version of
this exhibit has been filed separately with the Securities and Exchange
Commission.]
(c) In the event sales of any Picture distributed by WHV
under this Agreement exceed ** net units, WHV agrees to pay
Grantor a Royalty equal to ** of "Accountable Receipts" (as
defined in Exhibit "A") for that Picture only and only in
connection with sales from the ** net unit forward.
(d) RECOUPABLE ADVANCE:
(i) CATALOG TITLES: WHV shall advance to Grantor an
amount totaling ** for the "Catalog Titles" (the "Catalog
Title Recoupable Advance"), which WHV shall recoup from sums
otherwise payable as Amounts Payable on a fully
cross-collateralized basis from all homevideo distribution by
WHV throughout the Territory, and which Catalog Title
Recoupable Advance shall be payable in installments as
follows:
(a) ** thereof within ten (10) business days
following full execution of this Agreement; and
(b) ** thereof within ten (10) business days
following completion of acceptable Delivery of the
Catalog Titles fully complying with Paragraph 12 of
this Agreement, and provided that this Agreement has
been fully executed.
(ii) NEW RELEASES: For each New Release that WHV
elects to distribute, WHV shall advance to Grantor an amount
between ** and ** based upon a mutually agreed upon production
budget (the "New Release Recoupable Advance"), which WHV shall
recoup from sums otherwise payable as Amounts Payable on a
fully cross-collateralized basis from all homevideo
distribution by WHV throughout the Territory. In no event
shall WHV's additional advance for any New Release exceed **,
regardless of Grantor's proposed budget for the New Release.
The parties agree that all costs exceeding or in addition to
the mutually agreed-upon production budget (and New Release
Recoupable Advance) shall be paid by Grantor. In the event
that the actual production costs are less than the amount set
forth in the mutually agreed-upon production budget, Grantor
and WHV shall share such underages on a ** basis. The New
Release Recoupable Advance shall be payable in installments as
follows:
(a) ** thereof within ten (10) business days
of WHV's approval of the script;
(b) ** thereof within ten (10) business days
of WHV's receipt of the rough cut; and
8
[Confidential treatment has been requested with respect to the omitted portions
of this exhibit. The copy filed herewith omits the information subject to the
confidentiality request. Omissions are designated as **. A complete version of
this exhibit has been filed separately with the Securities and Exchange
Commission.]
(c) ** thereof within ten (10) business days
of completion of delivery of the New Release title
fully complying with Paragraph 12 of this Agreement.
(iii) The Catalog Title Recoupable Advance and the
New Release Recoupable Advance will be collectively referred
to as the "Recoupable Advance(s)".
15. WARRANTIES: Grantor hereby agrees, warrants and represents as
follows:
(a) Grantor has the right to grant to WHV the Homevideo Rights
and all Incidental Rights, including but not limited to the necessary
literary, artistic, musical, technological, intellectual property
rights (including without limitation copyrights, rental and lending
rights, and rights related to copyright and/or neighboring rights
recognized under the law of any foreign jurisdiction), and there are no
restrictions which could or would prevent WHV from exercising any
rights granted to WHV hereunder;
(b) Grantor has not and will not take any action that could or
would prevent the transfer to WHV of any newly created rights in the
Picture(s);
(c) Grantor is free to enter into and fully perform this
Agreement;
(d) Grantor has paid or will pay all charges, taxes, fees and
other amounts which have been or may become owed in connection with the
Picture(s) or the exploitation of Homevideo Rights or Incidental
Rights, and there are no pending claims, liens, charges, restrictions
or encumbrances on the Picture(s) or on the Homevideo Rights or
Incidental Rights;
(e) Grantor has paid or will pay all wages, gross or profit
participations, residuals, equitable or other remuneration for rental
and/or lending rights, reuse fees, synchronization/mechanical
royalties, and any and all other payments which must be made in
connection with the Picture(s) or the Devices and in connection with
exploitation of Homevideo Rights and Incidental Rights, to any third
parties including, but not limited to, musicians, directors, writers,
producers, announcers, publishers, composers, on-camera and off-camera
performers and other persons who participated in production of the
Picture(s), and to any performing rights societies, collection
societies, unions, guilds or other labor organizations;
(f) The main and end titles of the film and/or video elements
of the Picture(s) and all publicity, promotion, advertising and
packaging information and materials supplied by Grantor will:
(i) Contain all necessary and proper credits for the
actors, directors, writers and all other persons appearing in
or connected with the production of the Picture(s) who are
entitled to receive the same, and
(ii) Comply with all applicable contractual, guild,
union and statutory requirements and agreements.
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(g) Exercise of the Homevideo Rights and Incidental Rights
hereunder will not infringe on any rights of any third party,
including, but not limited to, rights affecting copyright, rental and
lending rights, rights related to copyright and/or neighboring rights
recognized under the law of any foreign jurisdiction, patent,
trademark, unfair competition, contract, property, defamation, privacy,
publicity or "moral rights;"
(h) Grantor has not granted and will not grant any Homevideo
Rights, Incidental Rights or any other rights in the Picture(s) or
other audiovisual works which might derogate or interfere with the
Homevideo Rights or Incidental Rights granted to WHV herein, and
Grantor has not granted and will not grant to any third party the right
to broadcast, cablecast or otherwise telecast the Picture(s) on basic
cable, pay or pay-per-view television in any country in the Territory
prior to twelve (12) months following availability of Devices to
consumers in each such country in the Territory, and on free or other
television systems prior to twenty-four (24) months following
availability of Devices to consumers in each such country in the
Territory;
(i) Each Picture is currently registered for copyright with
the United States Copyright Office, and Grantor shall maintain such
registration and any other existing copyright registrations in full
force and effect during the Term; provided, however, that Grantor
agrees to register for copyright in each country not party to the Berne
Convention upon notice from WHV of intent to distribute one or more
Pictures in any such country;
(j) Grantor has secured or will secure all necessary written
consents, permissions and approvals for incorporation into the
Picture(s) of the names, trademarks, likenesses and/or biographies of
all persons, firms, products, companies and organizations depicted or
displayed in the Picture(s), and Grantor has secured or will secure all
necessary written consents, permissions and approvals for incorporation
into the Picture(s) of any pre-existing film or video footage produced
by third parties;
(k) WHV shall have the right to quiet and peaceful enjoyment
of the Homevideo Rights and Incidental Rights;
(l) Grantor agrees to maintain a policy of Errors and
Omissions insurance in connection with the Picture(s), with limits of
no less than One Million Dollars ($1,000,000) per Picture, and to name
WHV as an additional insured thereon; and
(m) Grantor will not grant any security interest in the Rights
Granted that places any party in a priority position to WHV in the
Rights Granted. Grantor will obtain inter-creditor and/or
non-disturbance agreements to protect WHV's security interest (as set
forth in Paragraph 19 below) and/or its distribution rights hereunder,
as necessary.
(n) Each and every one of the representations and warranties
made by Grantor herein shall survive the Term and any extension thereof
and shall continue in full force and effect after expiration or
termination of this Agreement whether by operation of law or otherwise.
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16. INDEMNITY: Grantor shall at all times indemnify and hold harmless
WHV, its distributors, licensees, assignees and Affiliates (as defined in
Exhibit "A" hereto), and the officers, directors, employees and agents of all of
the foregoing, against and from any and all claims, damages, liabilities, costs
and expenses, including reasonable attorneys' fees and expert witness fees,
herein collectively called "claims," arising out of the exercise pursuant hereto
of Homevideo Rights, Incidental Rights or any other rights hereunder, the
contents of the Picture(s), any illegal act committed by Grantor in connection
with the Picture(s), or arising out of any breach by Grantor of any
representation, warranty or other provision hereof. Upon notice from WHV of any
such claim, or related demand or action being advanced or commenced, Grantor
agrees to adjust, settle, or defend same at the sole cost of Grantor, and WHV
shall have the right to approve any settlement or disposition thereof to the
extent that any rights or obligations of WHV may be concerned. If Grantor shall
fail promptly so to do, WHV shall have the right and is hereby authorized and
empowered by Grantor to adjust, settle, compromise, litigate, contest, satisfy
judgments and take any other action necessary or desirable for the disposition
of such claim, demand or action, and, if necessary, to appear by WHV's attorneys
in any action, all without affecting Grantor's indemnity; provided, that if
Grantor makes bonding arrangements reasonably satisfactory to WHV assuring WHV
of reimbursement for all payments and expenses in connection with such claims,
demands and causes of action (including, without limitation, reasonable
attorneys' fees and expert witness fees), WHV shall not settle such claim,
demand or cause of action without Grantor's consent, which shall not be
unreasonably withheld. The foregoing sentence shall not apply and WHV's right to
settle any claim, demand or cause of action and Grantor's indemnity obligation
shall remain unlimited where WHV deems advisable a settlement of a lawsuit in
which a claim, demand or cause of action for an injunction is made against the
exploitation of the Picture(s). Grantor shall fully reimburse WHV for all
payments and expenses incurred or made thereby by WHV, including attorneys' fees
and expert witness fees, within fifteen (15) days after demand therefor by WHV.
If Grantor shall fail so to reimburse WHV then, without waiving any of its
rights or remedies otherwise to enforce such reimbursement, WHV shall have the
right to deduct the amount of such payments and expenses from any sums accruing
to or for the account of Grantor under this Agreement or any other agreement.
17. COPYRIGHT PROTECTION: In the event Grantor shall fail to maintain
copyright protection for the Picture(s) pursuant to Subparagraph 15.(i) hereof,
WHV shall have the right as attorney-in-fact for Grantor to renew or obtain and
register the copyright therein in Grantor's name, and to execute and record such
documents as WHV may deem necessary to evidence WHV's rights hereunder. WHV
shall also have the right to bring, prosecute, defend and appear in suits,
actions and proceedings of any nature regarding any and all (a) copyrights in
and to the Picture(s) and all renewals thereof, and (b) any infringement or
interference with any of the rights hereby granted under said copyrights or
renewals thereof. Any such action may be brought in WHV's own name or in the
name of the copyright proprietor, but at the expense of Grantor, and, at WHV's
sole election, WHV may join such copyright proprietor (and/or Grantor if
copyright proprietor is a person or entity other than Grantor) as a party
plaintiff or defendant in any such suit, action or proceeding. Without limiting
any of its rights to otherwise enforce the terms of this Agreement, in the event
Grantor shall breach any other representations and warranties contained in this
Agreement, WHV shall have the right as attorney-in-fact for Grantor to take all
reasonable and necessary steps to preserve the Homevideo Rights, Incidental
Rights and other rights herein granted, including but not limited to making
payments due to third parties, and having done so WHV may thereafter deduct from
Grantor's Royalty otherwise payable any and all payments so made, as well as any
and all costs incurred in connection therewith.
11
18. INCIDENTAL RIGHTS: WHV shall have usual and customary incidental
rights ("Incidental Rights") in connection with the Picture(s) including, but
not limited to, the following:
(a) VERSIONS: The right to dub or add subtitles to the
Picture(s) in any language;
(b) CLOSED CAPTIONING: The right to prepare closed caption
versions of the Picture(s) for the benefit of the hearing-impaired;
(c) TITLES: The right to change the title of the Picture(s);
(d) ALTERATION OF PICTURE(S): The right to edit or modify the
Picture(s) in order to meet the requirements of censorship, community
standards, statute or ordinance; however, WHV shall not materially
alter the Picture(s) or make any change in the credits contained in the
Picture(s) without Grantor's approval, except that WHV may add to the
Picture(s) or Devices, or include on the packaging material thereof,
the names and logos of WHV and its licensees;
(e) SUBLICENSING: The right to sublicense or subdistribute any
of the Homevideo Rights and Incidental Rights on WHV's behalf upon such
terms and conditions as WHV, in its sole discretion, may deem proper or
expedient;
(f) RENTAL/LENDING: The right to authorize or prohibit the
rental and/or lending of Devices of the Picture(s), wherever the law of
any country of the Territory provides for such right;
(g) ADDITIONAL MATERIAL: The right to include in the
audiovisual encoding of Devices, placed either prior to or following
the Picture(s) (but not as part of the Picture(s) and not interrupting
the Picture(s)), other programs or motion pictures including, without
limitation, the Picture(s), trailers announcing homevideo availability
of other motion pictures and video programs contained in WHV's catalog,
trailers announcing theatrical availability of upcoming or current
Warner Bros. releases, promotions and contests, and advertising
relating to products and services;
(h) PROMOTION: The right to advertise, promote and publicize
the Picture(s) and Devices in any media, or authorize others to do so,
and such advertising, promotion and publicity may include synopses of
or excerpts from the Picture(s) or pre-existing advertisements,
publicity pieces and promotional materials, in whole or in part, for
the Picture(s);
(i) NAME AND LIKENESS: The right, subject to any pre-existing
contractual restrictions thereon of which Grantor shall give WHV timely
written notice, to use and authorize others to use on the packaging of
any Device the name and likeness of any person who rendered services in
connection with the Picture(s), and WHV may use and authorize others to
use said name and likeness (and the voice of such person) for the
purpose of advertising, promoting or publicizing the Picture(s) or
Devices.
12
19. SECURITY INTEREST: With respect to each Picture, as security for
Grantor's representation, warranties, obligations and agreements hereunder and
for the rights granted to WHV hereunder, including, without limitation, the
Homevideo Rights and Incidental Rights in and to each Picture and WHV's rights
to recoup all monies due to it hereunder, Grantor hereby pledges, conveys,
hypothecates, mortgages, assigns, sets over, delivers and grants to WHV a
continuing first priority security interest in all of the right, title and
interest of every kind or nature whatsoever of Grantor in and to, but none of
its obligations with respect to, the following described items, whether now
owned or existing or hereafter created, acquired or arising, and wheresoever
located (hereinafter collectively referred to as "Collateral"):
(a) All of the right, title, and interest of Grantor of every
kind (including, without limitation, copyrights and any extensions and
renewals thereof and any rights related to copyright and/or neighboring
rights recognized under the law of any foreign jurisdiction with
respect to each Picture), in and to all Homevideo Rights and Incidental
Rights granted to WHV under the Agreement and all like or similar
rights that may now or hereafter be retained or recovered by Grantor;
(b) All rights to possession held by or on behalf of Grantor
to all physical properties described in Exhibit "B" attached hereto,
necessary or desirable to WHV to exercise the Homevideo Rights or
Incidental Rights granted to WHV under the Agreement;
(c) All proceeds and products relating to or arising from any
of the foregoing, including accounts, contract rights, chattel paper,
all money and claims for money (whether or not such claims to money
have been earned by performance), general intangibles, documents and
instruments, including, but not limited to, all Gross Receipts,
Accountable Receipts (whether or not due, earned or payable to Grantor
under the Agreement) and any insurance now or hereafter payable by
reason of any loss or damage to any Collateral and any proceeds thereof
and all replacements, additions, accessions, substitutions, proceeds
and products relating to or arising from any of the Collateral;
(d) All of Grantor's rights under production, financing and
acquisition agreements in and to the exploitation of the rights granted
to WHV under the Agreement relating to motion pictures which if
completed would constitute the Picture(s); and
(e) All of Grantor's rights to all literary, dramatic, musical
and other material created for the Picture(s) or upon which the
Picture(s) are based or to be based, in whole or in part, or which are
used in connection with the Picture(s), including, without limitation,
screenplays and any underlying materials upon which screenplays are
based, and all common law and statutory domestic and foreign
copyrights, any rights related to copyright and/or neighboring rights
recognized under the law of any foreign jurisdiction, and rights and
interests in copyrights and renewals and extensions of copyrights, in
and to said literary, dramatic, musical and other written material; but
13
only to the extent necessary to protect WHV's ability to exercise the
Homevideo Rights and Incidental Rights in the Picture(s) during the
Term and in the Territory in the manner and to the extent provided for
in the Agreement.
20. EXCLUSIVITY: As of the date of this Agreement, Xxxxx Xxxxxxx is the
Senior Vice President Marketing and Production of Grantor and is directly
involved in the creative concepts/proposals of the Pictures and execution of
those proposals. Xxxxx Xxxxxxx specifically agrees that he will not produce any
video product outside of this Agreement during the Term and any extension
thereof so long as he is an employee of Grantor. It is further agreed by the
parties hereto that any children's video concepts developed by Grantor or Xxxxx
Xxxxxxx (so long as he is an employee of Grantor) whether or not for Grantor or
the Baby Genius or Kid Genius label shall fall under Paragraph 5 of this
Agreement. It is additionally agreed that in the event Xxxxx Xxxxxxx leaves
Grantor's employ during the first three (3) years of the Term of this Agreement,
he shall not create or develop any children's videos that would compete with the
Pictures. It is also agreed that WHV shall have the first right to negotiate in
connection with any other video concepts developed by Grantor or Xxxxx Xxxxxxx,
and Grantor and WHV shall so negotiate in good faith for a period extending for
no less than thirty (30) days unless agreement is earlier reached. In the event
that no agreement is reached within said thirty (30) days following commencement
of said negotiations, Grantor may negotiate elsewhere; provided that if Grantor
is thereafter prepared to enter into an agreement with a third party for the
license of homevideo rights for these other video concepts, Grantor shall,
before entering into such agreement, give WHV notice of the proposed terms
thereof (and all modifications of such terms) and the name of the party
involved. In each instance, WHV shall then have ten (10) business days in which
to elect to acquire said homevideo rights on the terms contained in the notice.
21. ADDITIONAL DOCUMENTS: Grantor shall promptly execute, acknowledge
and deliver to WHV all financing statements and other documents which WHV may
reasonably require to perfect, protect, evidence, renew and/or continue the
security interest in the Collateral granted hereunder or to effectuate any of
the purposes and intents of this Agreement. If Grantor fails to execute any such
document promptly upon request, Grantor hereby appoints WHV its irrevocable
attorney-in-fact to execute any such document on Grantor's behalf and Grantor
agrees that such appointment constitutes a power coupled with an interest and is
irrevocable throughout the Term or any renewal thereof. WHV shall have the right
to file and/or record this Agreement or any appropriate statement or document
with any relevant authority and, where permitted by applicable law, to do any of
the foregoing with or without execution by or on behalf of Grantor.
22. RELATIONSHIP OF PARTIES:
(a) NO PARTNERSHIP OR JOINT VENTURE: WHV shall not be deemed a
fiduciary, partner, or joint venturer of Grantor.
(b) ASSIGNMENT:
(i) BY WHV: WHV may not assign this Agreement without
Grantor's consent, provided that an assignment to any of WHV's
respective subsidiaries, parents, related or affiliated
14
companies or to any successor entity or other party acquiring
all or substantially all of the business or assets of WHV or
into which WHV may be merged or consolidated shall not require
Grantor's consent.
(ii) BY GRANTOR: Any pledge, hypothecation, mortgage,
or other encumbrance of the Picture(s), or any assignment,
sale or transfer of rights herein, purported to be made by or
on behalf of Grantor, shall be void; provided, however, that
after the completion of Grantor's delivery of each Picture in
accordance with the terms of this Agreement any assignment,
sale or transfer of Grantor's right to receive Recoupable
Advances and Grantor's Royalty under this Agreement shall be
valid if it shall be made specifically subject to WHV's rights
herein, and WHV's payment of Recoupable Advances and Grantor's
Royalty to the assignee, buyer or transferee shall be subject
to the execution of WHV's standard form of payment
authorization.
(c) REMEDIES: Grantor waives any right to purport to terminate
the Homevideo Rights or Incidental Rights granted hereunder or to
pursue any remedies in connection with this Agreement other than a suit
for money damages.
(d) WHV AFFILIATES: No Affiliate shall be considered as an
agent for or as the same entity as WHV.
(e) DISTRIBUTION AND EXPLOITATION: WHV shall have sole
discretion: (i) to determine the parties, sale price, and all other
terms of each agreement, if any, entered into by WHV for the
exploitation of Homevideo Rights and Incidental Rights; (ii) to settle
any claim with respect to any such agreement, any Devices, or the
Homevideo Rights and Incidental Rights; (iii) to distribute free or
promotional Devices; and (iv) to destroy or erase Devices. WHV shall
consult with Grantor regarding the marketing of the Pictures, with
WHV's decisions as to marketing final. WHV makes no representation or
warranty with respect to WHV's efforts in connection with the
exploitation of Homevideo Rights and Incidental Rights or that such
exploitation will result in any minimum amount of Amounts Payable.
(f) RECOUPMENT OF ADVANCE: At any time during the Term, if the
Recoupable Advance is not recouped from Grantor's Royalty WHV may, in
its sole discretion and upon ten (10) business days prior written
notice to Grantor, recoup such Advance from any other monies due
Grantor or any of its related or affiliated entities under this or any
other agreement between WHV and Grantor and/or any of their related or
affiliated entities.
23. CONFIDENTIALITY: All of the terms and conditions of this Agreement
shall remain confidential, and no public statement or other public announcement
regarding this Agreement in whole or in part shall be released, issued or made
without prior written approval of WHV.
24. MISCELLANEOUS:
15
(a) NOTICES: All notices to be given to WHV hereunder shall be
addressed to WARNER HOME VIDEO, a Division of Time Warner Entertainment
Company, L.P., 0000 Xxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxxxxx 00000,
attention: Senior Vice President Business Affairs and General Counsel.
All notices to be given to Grantor hereunder shall be addressed to
Grantor at the address for Grantor first above written, or such other
address as Grantor may indicate.
(b) UNENFORCEABILITY: If there is any conflict between any
provision of this Agreement and any present or future statute, law,
ordinance, regulation or collective bargaining agreement, the latter
shall prevail; provided, that the provision hereof so affected shall be
limited only to the extent necessary and no other provision shall be
affected.
(c) LIMITATIONS ON EXERCISE OF RIGHTS GRANTED: Notwithstanding
anything herein contained to the contrary, in the event that WHV is
prohibited (for reason of censorship or any other reason) by any
authority of the government of any country of the Territory (or of any
political Division of such country, such as a state or province) from
exercising Homevideo Rights in such country (or in such political
Division, as the case may be), the amount of said Recoupable Advance
otherwise payable to Grantor hereunder shall be reduced (and if already
paid, shall be proportionately refunded) by an amount calculated by
multiplying said Recoupable Advance by a fraction, the numerator of
which is the number of Video Playback Systems in use by consumers in
their places of dwelling in such country (or in such political
Division, as the case may be), and the denominator of which is the
number of Video Playback Systems in use by consumers in their places of
dwelling in the aggregate of all of those countries included in the
Territory in which Devices are or will be made available to consumers
by WHV, Affiliates, or their licensees. For purposes of making this
calculation, data with respect to the number of Video Playback Systems
in use shall be drawn by WHV from then current Worldwide VCR Population
Reports (or its equivalent) published by the Motion Picture Association
of America.
(d) FORCE MAJEURE: Notwithstanding any other provision of this
Agreement, the Term herein provided for, and any extension thereto, may
be suspended upon notice in any country of the Territory during all
periods in which manufacture, sales, distribution and/or marketing of
Devices in such country is prevented, hampered or interrupted because
of force majeure events (e.g. any labor dispute, industrial accident,
major fire, major theft, act of God, war, governmental action,
injunction, third party breach of contract, or other material
interference with WHV's business activities, or any other event beyond
WHV's control); thereafter, upon cessation of such event, the Term
shall resume running in such country and shall be extended therein by a
period of time equal to the number of days during which it was
suspended.
(e) EMU CONTINUITY PROVISION: The parties hereto confirm that
none of the following events shall either have the effect of
discharging or excusing performance under this Agreement, or give a
party to this Agreement the right to unilaterally alter or terminate
this Agreement: (i) the introduction of, changeover to or operation of
the euro; (ii) the substitution or replacement by the euro of the
currency or currencies originally designated in this Agreement; (iii)
the use of the euro in determining the value of the currency or
currencies originally designated in this Agreement; (iv) the tendering
of euros, in each case at the conversion rates specified in, and
16
otherwise calculated in accordance with, the regulations adopted by the
council of the European Union; or (v) the withdrawal from legal tender
of the currency or currencies originally designated in this Agreement
and the substitution of such currency or currencies by the euro as
lawful currency. The parties hereto further confirm that performance of
any of the pecuniary obligations described or set forth under this
Agreement (including the payment of interest hereunder) may be made in
the currency or currencies originally designated in this Agreement (so
long as such currency or currencies remain legal tender) or in euro, it
being expressly understood that performance of any of such obligations
shall be made in euro as of such time where the currency or currencies
originally designated in this Agreement are withdrawn from legal
tender.
(f) CEASE AND DESIST: In the event Grantor receives a cease
and desist letter or any threatened or actual claim with respect to the
use of the "Baby Genius" name, the "Kid Genius" name or the name of any
of the Pictures, Grantor shall immediately notify WHV of the same in
writing, and in the event WHV has to stop distributing any of the
Pictures as a result, Grantor shall refund any of the unrecouped
Advances (including the Additional Recoupable Advances), plus interest,
to WHV within ten (10) days of WHV's request therefor.
(g) FURTHER DOCUMENTATION: Grantor will, upon WHV's request,
promptly furnish to WHV copies of such agreements or other documents as
WHV may desire in connection with any provisions of this Agreement.
(h) AMENDMENTS: This Agreement cannot be amended, modified or
changed in any way except by a written instrument executed by both
parties.
(i) NO WAIVER: No delay in enforcing any right under this
Agreement shall constitute a waiver of such right. No waiver of any
default hereunder shall be effective unless executed in writing by the
party charged therewith, nor shall any waiver operate as a waiver of
any other default or of the same default on a future occasion.
(j) APPLICABLE LAW: This Agreement and all matters or issues
collateral thereto shall be governed by the laws of the State of
California applicable to contracts executed and performed entirely
therein without regard to principles of conflict of laws. The parties
herein agree that all actions, proceedings or litigation relating to
this Agreement shall be instituted and prosecuted solely within the
county of Los Angeles, State of California and each party hereby
consents to the jurisdiction of the state courts of California and the
federal courts located within the State of California with respect to
any matter arising out of or relating to this Agreement. If for any
reason a party to this Agreement may not be validly served at the
address first set forth above, then such party (other than WHV)
appoints the Secretary of State of the State of California to accept
service of process on such party's behalf. WHV designates and appoints
Xxxx Xxxxx, at the address herein specified, as its agent in the State
of California, or such other person as WHV may designate and appoint to
act as its agent. If for any reason said person may not be validly
served, then WHV appoints WHV's corporate secretary to accept service
of process on WHV's behalf.
17
(k) SIGNATURE IN COUNTERPART: This Agreement may be signed in
counterpart, each of which shall be deemed an original, but all of
which together shall constitute the Agreement.
(l) CAPTIONS: The captions herein are inserted for reference
and convenience only and in no way define, limit or describe the scope
of this Agreement or intent of the provisions.
(m) ENTIRE AGREEMENT: This Agreement contains the entire
understanding and supersedes all prior oral and written understandings
of the parties hereto relating to the subject matter herein.
IN WITNESS WHEREOF the parties hereto hereby execute this Agreement as of the
date first written above.
WARNER HOME VIDEO, a Division
of Time Warner Entertainment
Company, L.P. ("WHV")
By: /s/ illegible
-----------------------------
Its:
-----------------------------
GENIUS PRODUCTS, INC.
("Grantor")
By: /s/ Xxxxx Xxxxxxx
-----------------------------
Its: CEO
-----------------------------
I, Xxxxx Xxxxxxx, specifically acknowledge and agree to the provisions of
Paragraph 20 of this Agreement.
/s/ Xxxxx Xxxxxxx
-----------------------------
Xxxxx Xxxxxxx
18
Exhibit "A"
-----------
COMPUTATION OF ACCOUNTABLE RECEIPTS
-----------------------------------
AND AMOUNT OF GRANTOR'S ROYALTY
-------------------------------
1. GENERAL DEFINITIONS: As used in this Exhibit and in the Agreement,
the following terms shall have the following meanings:
"AGREEMENT" shall mean the Homevideo Distribution Agreement to which
this Exhibit is attached and made a part, inclusive also of this
Exhibit and all other Exhibits thereto.
"AFFILIATE" shall mean any entity which owns or controls, is owned or
controlled by, is under common ownership or control with, or is
otherwise related in whole or in part by way of ownership or control
with, WHV, including but not limited to parent companies, subsidiary
companies and sister companies of WHV. The word "control" (including
"controlled by" and "controls") as used in the preceding sentence shall
be deemed to mean possession, directly or indirectly, of the power to
command the course of management, policy making and business activity
of the entity or of WHV, as the case may be, through ownership of 50%
or more of voting securities.
"DIRECT MARKETING AFFILIATE" shall mean an Affiliate engaged in the
exploitation of Homevideo Rights through distribution of Devices
directly to consumers for homevideo exhibition (other than through
retail or wholesale outlets) through any direct marketing distribution
method, including direct mail, mail order, telephone order, club
membership, television and/or radio solicitations, continuity series
offerings or single title offerings ("Direct Mail Distribution"). Any
agreement between WHV and a Direct Marketing Affiliate shall be
negotiated at arms' length.
"UNRELATED THIRD PARTIES" shall mean any and all entities other than
WHV, Affiliates and Direct Marketing Affiliates.
2. GROSS RECEIPTS:
(a) "Gross Receipts" means the aggregate of the following:
(i) 100% of all sums actually received by WHV and
Affiliates from Unrelated Third Parties in U.S. Dollars in the
United States from the exploitation of Homevideo Rights other
than sums received pursuant to Subparagraph 2.(a)(ii) below.
(ii) 100% of all royalties actually received by or
credited to the account of WHV and WHV Affiliates (excluding
sums received by Direct Marketing Affiliates) in U.S. Dollars
in the United States from the exploitation of Homevideo Rights
through Direct Marketing Distribution which is conducted by
-1-
Unrelated Third Parties or Direct Marketing Affiliates to
which WHV or Affiliates supply ready-manufactured units of the
Devices. WHV shall not be obligated to pay to Grantor any
portion of any sums received by WHV which constitute
reimbursement to WHV for the cost of the ready-manufactured
units.
(b) 100% of all sums actually received by WHV in U.S. Dollars
in the United States from exploitation of Incidental Rights.
(c) Gross Receipts shall be deemed to exclude sums received by
WHV and/or Affiliates which represent sales taxes, value added taxes,
excise taxes, and similar taxes which are collected by WHV and
Affiliates as required by any requisite taxing authorities of any
government. Gross Receipts shall also be deemed to exclude foreign
currencies to the extent any foreign licensing society or organization
collects or withholds any portion thereof on behalf of or for the
benefit of Grantor.
(d) With respect to foreign currencies received by WHV and
Affiliates in connection herewith, it is agreed and understood that no
sums received shall be included in Gross Receipts hereunder unless and
until such sums (i) have been received in U.S. Dollars in the United
States, or (ii) such sums received which are capable of being remitted
to the United States have not been remitted within ninety (90) days
from the day such sums were capable of being remitted, in which latter
case these sums shall be included in Gross Receipts at the official or
unofficial rate of exchange, as WHV may elect, on the day such sums
were capable of being remitted. WHV's reasonable judgment with respect
to the rate of exchange applied for computation of conversion shall be
binding and conclusive upon Grantor provided WHV determines such
conversion rate in the same manner as WHV determines conversion rates
for other grantors to WHV of Homevideo Rights. WHV and Affiliates shall
not be liable in any way for any losses caused by fluctuation in the
rate of exchange or because of any failure by any person or entity to
convert or remit at any particular time or at a more favorable cost or
rate of exchange than the cost or rate of exchange at which such
conversion and remittance was accomplished.
(e) Gross Receipts are at all times subject to retroactive
adjustments for returns, refunds, credits, settlements, rebates and
discounts.
3. DEDUCTIBLE AMOUNTS: "Deductible Amounts" means the sum of the
following:
(a) PROTOTYPE COSTS: All direct, actual costs and expenses
incurred by WHV and Affiliates (including but not limited to costs of
development, facilities, materials, services, use of equipment, foreign
version dubbing, editing, sub-titling and closed captioning) in
connection with all steps in the process leading to and including the
production of the masters which are made to serve as prototypes for the
duplication of the Picture(s) in the form of Devices and the
-2-
development and production of domestic and foreign prototype packaging
and advertising for Devices. Each such cost shall be included as a
Deductible Amount when the obligation to pay for it is incurred or
contracted for, even if payment has not yet been made. If in connection
with such process WHV furnishes any of its own facilities, materials,
services or equipment for which WHV has a standard rate, then the
amount of such standard rate shall be deemed the amount of the
applicable cost;
(b) TAXES: All taxes which are levied upon or payable by WHV
and Affiliates with respect to all or part of the revenues derived from
the exploitation of Homevideo Rights, or upon remittance of all or part
of such revenues, but specifically excluding corporate income taxes
levied on net profits of WHV and Affiliates. In no event shall the
deductible amount of any such taxes (however denominated) imposed upon
WHV or Affiliates be decreased (nor the Gross Receipts increased)
because of the manner in which such taxes are elected by WHV to be
treated in filing net income, corporate franchise, excess profits or
other tax returns;
(c) REMITTANCE COSTS: All costs of transmitting or remitting
to the United States any funds accruing pursuant hereto to WHV or
Affiliates in foreign countries, such as cable expenses, bank charges,
and similar charges; and
(d) RESERVES: The amount of the reserves established by WHV
and Affiliates against Gross Receipts for future returns of Devices.
Said reserves shall be maintained at reasonable levels for a reasonable
amount of time consistent with WHV policies for its own product. It is
understood between the parties that one-half of such reserves shall be
liquidated no later than one (1) year following the Accounting Period
(as hereinafter defined) for which such reserves were set up and the
balance of such reserves shall be liquidated no later than two (2)
years following the Accounting Period for which such reserves were set
up; provided, however, that if WHV estimates that future returns will
exceed reserves as established at the end of any Accounting Period then
WHV shall have the right, after notice to Grantor, to establish
sufficient reserves to cover such estimated future returns.
4. ACCOUNTABLE RECEIPTS: "Accountable Receipts" means Gross Receipts
less Deductible Amounts.
5. AMOUNTS PAYABLE: "Grantor's Royalty" is defined in the Agreement.
The amount payable at the end of any Accounting Period is the net amount of
Grantor's Royalty earned from commencement of the Term of the Agreement through
the end of such Accounting Period, less the sum of the following:
(a) Any and all costs, expenses, and payments made or incurred
by WHV and Affiliates which were occasioned by Grantor's breach of any
of Grantor's representations and warranties contained in the Agreement;
-3-
[Confidential treatment has been requested with respect to the omitted portions
of this exhibit. The copy filed herewith omits the information subject to the
confidentiality request. Omissions are designated as **. A complete version of
this exhibit has been filed separately with the Securities and Exchange
Commission.]
(b) All interest charges computed on the unrecouped balances,
if any, for previous Accounting Periods; and
(c) All Recoupable Advances and Additional Recoupable
Advances, if any, plus Grantor's Royalty previously paid as of the end
of such Accounting Period.
Interest will be calculated on Recoupable Advances and Additional
Recoupable Advances, if any, at a rate per annum equal to 125% of the rate
announced from time to time by the First National Bank of Boston as its prime
rate on unsecured loans to its preferred customers. Said interest shall be
calculated from the date on which such Recoupable Advances and Additional
Recoupable Advances, if any, are paid until the date on which such Recoupable
Advances and Additional Recoupable Advances, if any, are recouped under this
Paragraph 5.
6. STATEMENTS AND PAYMENTS: WHV shall account to Grantor on a ** basis
for the Term commencing at any time designated by WHV, and if WHV does not
designate a time then on January 1 and July 1 of the applicable year (except
that the initial Accounting Period shall commence on the date of this Agreement
and shall continue only until the commencement of the next Accounting Period),
so long as the amounts due to Grantor exceed **. In the event the amounts due to
Grantor are less than **, then WHV shall account to Grantor on a ** basis (each
of the foregoing an "Accounting Period"). Within sixty (60) days after the end
of an Accounting Period, Grantor shall be sent a statement showing the
computation of Accountable Receipts and Grantor's Royalty for such Accounting
Period on a cumulative basis and Grantor shall be paid any balance due of any
amounts payable based thereon for such Accounting Period; except that Grantor
shall be sent statements only in the event that such statements will reflect a
payment due of Grantor's Royalty earned for the Accounting Period to which such
statement applies. Notwithstanding the foregoing, in the event that there are no
Royalties due to Grantor, WHV shall provide Grantor with quarterly statements
for the first three (3) years of the Term and then semi-annually for the
remainder of the Term, including any extension thereof. WHV's failure to send
any statement when due hereunder shall not be deemed a breach of this Agreement
unless Grantor shall have first given WHV written notice of such failure, and
WHV shall not have cured such failure within thirty (30) days after WHV's
receipt of such written notice.
7. CONCLUSIVENESS OF STATEMENTS: WHV shall keep all of WHV's books and
records directly relating to the Agreement in accordance with accepted
accounting principles. Grantor may, at WHV's offices and for and during
reasonable times within the regular course of business activities, but not more
than once per calendar year, have a certified public accountant inspect and make
copies of any such books and records not previously inspected, all at Grantor's
sole expense. Each such inspection shall be completed within thirty (30)
consecutive days. Each statement rendered shall be deemed conclusive unless
Grantor shall object in writing to WHV within 18 months after receipt thereof
and shall state in detail in such writing the basis for the objection. Grantor
-4-
shall be barred from bringing any legal proceeding on the subject matter of such
objections later than twelve (12) months after making such objections. If any
figures on a statement re-appear on, or are included in cumulative amounts on,
any later statement, the later statement shall be disregarded in computing
Grantor's time to object or bring such legal proceedings.
-5-
Exhibit "B"
-----------
DELIVERY REQUIREMENTS
---------------------
IT IS CONTEMPLATED AS OF THE DATE OF THIS AGREEMENT THAT GRANTOR SHALL DELIVER
THE PICTURES IN THE DIGITAL BETACAM FORMAT.
GRANTOR SHALL, AT GRANTOR'S COST, DELIVER THE ELEMENTS FOR THE PICTURE(S) LISTED
IN ITEMS 1 AND 2, BELOW, AS APPLICABLE, TO THE FOLLOWING ADDRESS OR TO ANY SUCH
OTHER ADDRESS AS WHV MAY INDICATE:
Warner Bros. Acquisitions Department
0000 Xxxxxx Xxxx.
Xxxx. 000, Xxxx 000
Xxxxxxx, XX 00000
Grantor shall, at Grantor's cost, deliver the materials and documents for the
Picture(s) listed in items 3 and 4, below, to the following address, or to any
such other address as WHV may indicate:
Warner Home Video Business and Legal Affairs
0000 Xxxxxx Xxxx.
Xxxx. 000, Xxxx 0000 Xxxxxxx, XX 00000
ATTN: Director of Legal Administration
1. FILM PROPERTIES, IF APPLICABLE:
Subject to WHV's examination and technical approval, a digital
component original video signal, and any additional footage for value-added
supplemental elements for DVD, all of which may be delivered on DCT or digital
Betacam format ("Video Elements"). Video that has originated in digital
composite form is not acceptable. If international distribution rights have been
granted, digital component original video signals of both NTSC and PAL standards
(as applicable to the Territory) are required.
In the event the Video Elements set forth above are not approved by
WHV, WHV may elect in its sole discretion to accept "Access" to the elements
("Film Elements") set forth below. The word "Access" as used in this Exhibit
shall mean the ability to use the Film Elements designated and to cause them to
be transferred at a lab selected by Warner Bros. Technical Operations, at
Grantor's cost. In addition, Access to Film Elements shall include all dubbed
and/or subtitled versions in all applicable foreign languages in accordance with
-1-
WHV's distribution rights as set forth in the Agreement to the extent that such
versions may exist or be produced for the Territory. All Film Elements shall be
of the highest quality, free from scratches, patches or other physical blemishes
and shall conform to the final edited version of the Picture(s) and shall be in
the same ratio of camera picture images in which the Picture(s) was
photographed.
(a) BLACK AND WHITE FILMS
Delivery of a 35mm fine grain. In the event this element is
unavailable, Grantor shall guarantee Access to the original camera
negative to allow WHV to create a new fine grain element from the
original negative at a lab of WHV's choice, at Grantor's cost.
Delivery of a 35mm magnetic sound master (stereo where
applicable). Dolby SR encoded with start marks. Audio track must be in
perfect synchronization with picture elements supplied. In the event a
35mm magnetic sound master is unavailable, Access to the optical sound
track negative is required. Data reduced audio source material is not
acceptable for delivery.
(b) COLOR FILMS
Delivery of a 35mm interpositive and a 35mm "screening" print
to be used for time comparison purposes. In the event that the 35mm
interpositive is unavailable, Grantor shall guarantee Access to the
original camera negative to allow WHV to create a new interpositive at
a lab of WHV's choice, at Grantor's cost.
Delivery of a 35mm magnetic sound master (stereo where
applicable), Dolby SR encoded with start marks. Audio track must be in
perfect synchronization with picture elements supplied. If the original
audio source is unavailable, Access to the optical sound track negative
is required.
(c) AUDIO FOR BOTH BLACK AND WHITE FILMS AND COLOR FILMS
If the Picture was recorded in six-track for digital
theatrical release, WHV will require Access to the six-track "SR"
encoded English mag master.
Delivery of an optical magneto disc is required for digital
theatrical features (where applicable) for theatrical distribution.
Delivery of a fully filled music and effects track is
required. This track must be 35mm "SR" encoded magnetic track in the
format of the original sound mix (either six-track or two-track).
Data reduced original audio source material is not acceptable
for delivery for any 35mm magnetic audio source materials.
-2-
(d) INTERNATIONAL DISTRIBUTION RIGHTS
When international distribution rights are granted, the
following Film Elements are also required for delivery to WHV:
A foreign textless background negative of any main, end or
narrative sections and all descriptive titles WITHOUT the
English-language text, but with the background action conforming in all
respects to the English version. In addition, title overlays must be
provided on a separate 35mm element.
A detailed combined dialogue continuity script.
If the original soundtrack of the Picture is nonaural, a mono
magnetic sound master conformed in all respect on a 35mm magnetic full
coat tape, with separate dialogue, music and sound effects tracks.
If the original soundtrack is six-track for digital theatrical
distribution, a six-track 35mm full cost magnetic English masters is
required in addition to a two track "SR" 35mm full coat magnetic
English master.
If the Picture is filmed in Dolby stereo, a two-track Dolby
35mm full coat magnetic English stereo master and a 35mm "SR" encoded
music and effects tracks are also required for delivery to WHV. Such
tracks must be matrixed to two-track Dolby configuration.
2. VIDEO PROPERTIES:
(a) SHOWS PRODUCED ON VIDEO. As stated above, WHV requires that the
Picture(s) originate in 35mm film. Notwithstanding the foregoing, in
the event that WHV elects, in its sole and absolute discretion, to
accept a picture produced on video, then Grantor shall deliver the
following:
One digital component original video signal, which may be
delivered on DCT or digital Betacam format.
NTSC submasters must be time coded with S.M.P.T.E. code. PAL
submasters must be time coded with E.B.U. code. Time codes are to be
identical to and regenerated from the original master (drop frame time
code preferred). The audio soundtrack on the video master must be in
perfect synchronization with the visual image. The Picture(s) must be
fully color corrected with proper color, shading and density as is
customarily required for network television exhibition.
-3-
A separate 24-track "SR" copy of the original sound master
with supplied tracks is required for delivery to WHV with time code in
complete synchronization to the original master.
(b) TAPE STANDARDS FOR 525/625 DIGITAL COMPONENT FORMAT
The component digital master (whether 525 NTSC and/or 625 PAL)
must be recorded in accordance with the following specifications:
Recording Format: Sony Digital Betacam format
Ampex DCT format
Tracks: A. Digital video
B. Digital Audio, Channels 1, 2, 3, 4
C. Analog audio (cue channel)
D. LTC continuous, matching VITC, DFTC or EBU with PGM start
at 01:00:00:00
E. Continuous control track
Cassette: DCT DIGITAL BETACAM
L 208 minutes 124 minutes
M 94 minutes n/a
S 32 minutes 40 minutes
Cassette must not show any physical signs of stress (cracks,
debris). Stock must not show any physical signs of stress
(edge damage, debris, etc.). Cassette should be transported in
shipping case.
Reference Tape: Sony current Digital Betacam.
Ampex current DCT.
Digital Video: RS-125M, 13.5(Y)/6.75(R-Y, B-Y), 8-bit.
Picture should be centered in the digital active line.
Peak white (100 ire) will be at digital 235 base 10.
Video shall not exceed 100 ire, at digital 235 base 10.
Black shall be at digital 16 base 10.
Color difference blanking is at digital 128, peaks at 16 and
240 (base 10).
Digital Audio: 48 kHz sampled, synchronized to video, 20 bits/sample
Channels 1, 2, 3, 4: AES/EBU format.
1 kHz tone at 0 VU shall reproduce at 0 dB in unity on all
channels.
Levels shall be maintained such that the headroom of the
system is not exceeded.
NO DIGITAL CLIPPING.
Audio shall not be Dolby encoded.
-4-
RF: RF envelope maximum/minimum points shall not vary by more than 10%.
Audio RF level shall be less than or equal to 1/4RF level of video.
Video and Audio RF and CTL shall be recorded continuously on the tape.
Errors: Errors shall not exceed the capability of error correction circuitry.
At NO TIME shall concealment be necessary.
Audio format: Ch 1 & 2 Stereo Composite Left & Right, in phase
Ch 3 & 4 Stereo M & E Left & Right, in phase
w/Ch 1 & 2
Cue: Mono Composite
Time Code: DFTC/EBU with matching LTC/VITC
(c) INTERNATIONAL DISTRIBUTION RIGHTS
When international distribution rights are granted, the following video
elements are also required:
One digital component video signal of the dubbed and subtitled
version in each applicable foreign language in accordance with WHV's
distribution rights as set forth in the Agreement, to the extent that
such versions may exist or be produced for the Territory.
A first generation digital submaster from the final 100%
completed original of both NTSC and PAL standards (as applicable to the
territory).
A separate magnetic audio element conformed in all respects
with the final digital edited master videotape, with separate dialogue,
music and effects tracks (mono and/or stereo).
A digital component original format first generation copy of
the background action of any main, end or narrative sections and all
descriptive titles, without the English-language text, but with the
background action conforming in all respects to the English version. A
digital component original textless reel must be fully color corrected
to match existing program material included in the feature submaster.
A detailed dialogue continuity script representing the digital
format NTSC (and/or PAL) first generation copy of the final edited
master.
3. MISCELLANEOUS:
(a) A reasonable quantity of pre-existing advertisements, publicity
pieces and promotion materials, including as a minimum but not limited to:
-5-
(i) A sufficient amount of color artwork (whether in the form
of slides, chromes, posters or otherwise) to enable WHV to produce
satisfactory packaging of the Devices, including "key" art or "poster"
art as used in the theatrical advertising campaigns;
(ii) a reasonable quantity of black-and-white and color stills
(with descriptions and data regarding the persons and subject matter
appearing in such stills);
(iii) samples of company logos and film title logos suitable
for reproduction;
(iv) theatrical trailers, television spots or similar
promotional materials;
(v) a pressbook or, if no pressbook exists, a quantity of
clippings and photographs such as would appear in a pressbook;
(vi) a detailed synopsis of the final screenplay, teleplay or
videoscript, as applicable (unless included in the pressbook); and
(vii) a reasonable number of copies of critics' reviews of the
Picture(s).
(b) A synopsis of the advertising credits which were used for
theatrical or television distribution, including billing percentages and
performer likeness restrictions.
(c) A list of the players in the cast identifying each player by the
roles he or she portrayed.
(d) A music cue sheet in customary form containing titles, composers,
timings, copyright owners and publishers.
(e) A copy of the proper copyright notice.
(f) A schedule of theatrical release dates listed by territory and
country, and a schedule of pay and free television availability dates listed by
territory and country.
4. LEGAL DOCUMENTS:
(a) A fully executed Laboratory Access Letter in the form attached.
(b) A Power-of-Attorney in the form attached.
(c) A fully-executed Instrument of Transfer in the form attached.
-6-
(d) A fully-executed Collateral Assignment of Copyrights in the form
attached.
(e) A clear, complete and accurate photocopy of each certain
Certificate of Copyright which indicates that the Picture(s) has been duly
registered for copyright with the United States Copyright Office and, upon
notice from WHV of its intent to distribute in a non-Berne Convention country,
in each other country in the Territory which has a registration procedure, and
any and all documentation pertaining to renewals of such registrations.
(f) Documentation in form reasonably acceptable to WHV indicating that
all rights in and to all music contained in the audio portion of the Picture(s)
have been cleared for use in the Picture(s) and Devices in the Territory for the
entire Term of the Agreement.
(g) A certificate of Errors and Omissions insurance naming WHV as an
additional insured.
(h) All other documents related to the Homevideo Rights and Incidental
Rights granted herein (including documents evidencing chain of title and
Grantor's unencumbered legal, valid and indefeasible title to the Picture(s)).
-7-
Exhibit "C"
-----------
LABORATORY ACCESS LETTER
From: GENIUS PRODUCTS, INC.
00000 XX XXXXXX XXXX, XXXXX 000
XXX XXXXX, XX 00000
Dated: FEBRUARY 6, 2002
To: ______________________________
______________________________
______________________________
Gentlemen:
We have on deposit with your laboratory certain negative, pre-print
and/or video materials relating to the motion picture or video program now
tentatively titled ________________ (herein called the "Picture(s)").
Please be advised that we have granted a license to WARNER HOME VIDEO,
a Division of Time Warner Entertainment Company, L.P. (herein called "WHV") and
its successors, assigns and licensees, to distribute and exhibit the Picture(s).
Accordingly, you are hereby authorized and directed to honor all orders of WHV
and its successors, assigns and licensees, for 35mm, 16mm and/or any other size
of dupe negatives, color reversible internegatives, interpositives and positive
release prints of the Picture(s), and/or access to video masters, video copies
and soundtrack elements, upon the following understandings:
1. All laboratory services and materials ordered by WHV or its
successors, assigns and licensees, with respect to the Picture(s), shall
be at the sole cost and expense of the party ordering the same, and you
agree to look solely to such party for payment of such charges as may be
incurred. All laboratory services and materials which may be ordered by
us with respect to the Picture(s) (including all items which we are
required to deliver to WHV under our agreement with WHV) shall be at our
sole cost and expense, and you agree to look solely to us for payment of
such charges. Neither WHV, nor its successors, assigns or licensees, nor
we, shall be responsible for any laboratory services or materials
ordered by any other party with respect to the Picture(s).
2. You will neither assert against WHV, its successors, assigns
or licensees, nor us, any lien at common law or under any statute
against any material relating to the Picture(s) by reason of any unpaid
charges incurred by any other party.
-1-
3. You will not refuse to honor any of our orders or the orders
of WHV, or its successors, assigns or licensees, for positive prints or
video copies of the Picture(s) by reason of any unpaid charges incurred
by the other party.
4. None of the above-mentioned existing pre-print and/or video
materials shall be removed from your possession without the written
consent of WHV and the undersigned, except that WHV shall be entitled to
remove materials purchased by WHV at any time without the further
consent of the undersigned.
The instructions contained herein are irrevocable during the term of
said license granted to WHV and may not be altered or modified during such term
except by an instrument in writing signed by us and by WHV, or our or its
respective successors, assigns and licensees.
Please confirm your understanding and agreement of the foregoing by
affixing your signature in the space provided below.
GENIUS PRODUCTS, INC.
By: /s/ Xxxxx Xxxxxxx
-----------------
Its: CEO
-----------------
AGREED TO AND ACCEPTED BY:
(Laboratory)
By:
Its:
-2-
Exhibit "D"
-----------
P O W E R O F A T T O R N E Y
-------------------------------
(SPECIAL)
KNOW ALL MEN BY THESE PRESENTS: That GENIUS PRODUCTS, INC. (herein
known as "Grantor"), the undersigned, whose address is 00000 Xx Xxxxxx Xxxx,
Xxxxx 000, Xxx Xxxxx, XX 00000, hereby irrevocably makes, constitutes and
appoints WARNER HOME VIDEO, a Division of Time Warner Entertainment Company,
L.P., 0000 Xxxxxx Xxxx., Xxxxxxx, Xxxxxxxxxx 00000 ("WHV") and its successors
and assigns, in connection only with all matters referred to in that certain
Agreement dated as of February 6, 2002 between WHV and Grantor by which Grantor
has granted to WHV certain Homevideo Rights and Incidental Rights in and to a
Picture described therein titled _____________________, true and lawful attorney
for Grantor and in Grantor's name, place and stead and for Grantor's use and
benefit:
(a) To appear by WHV's attorneys and adjust, settle, compromise,
litigate, contest, satisfy judgments pertaining to, or defend any and
all claims, demands or actions arising out of the exercise of the
Homevideo Rights, Incidental Rights or any other rights granted pursuant
to the Agreement;
(b) To adjust, settle or defend any and all claims arising out of
the breach by Grantor of any representation, warranty or other provision
contained in the Agreement;
(c) To approve any settlement or disposition of any action
brought by, or defended by, Grantor as to any third person which could
or would affect the rights of WHV under the Agreement;
(d) To renew, obtain and register copyright in the Picture(s) in
Grantor's name, and to execute and record such documents as WHV may deem
necessary to evidence WHV's rights under the Agreement as a matter of
record;
(e) To bring, prosecute, defend and appear in suits, actions and
proceedings of any nature under or concerning all copyrights in and to
the Picture(s) and all renewals thereof, or concerning any infringement
thereof, or interference with any of the rights granted by the Agreement
regarding said copyrights or renewals thereof, in WHV's own name or in
the name of, or as a co-party with, the copyright proprietor;
(f) To take all reasonable and necessary steps to preserve the
Homevideo Rights, Incidental Rights and all other rights granted to WHV
by the Agreement by doing all acts, executing all documents, and making
any and all necessary arrangements with, and payments to, third parties
on behalf of Grantor; and
-1-
(g) To execute, file and record any and all financing statements
and other documents and to take any other steps as are reasonable and
necessary to perfect, protect, evidence, renew and/or continue the
security interest in the Collateral granted to WHV under the Agreement.
GRANTOR GIVES/GRANTS unto WHV, as the attorney of Grantor, full power
and authority to do and perform each and every act and thing whatsoever
requisite, necessary, or appropriate to be done in and about the premises as
fully to all intents and purposes as Grantor might or could do, hereby ratifying
all that said attorney shall lawfully do or cause to be done by virtue of these
presents. Upon termination or expiration of this Agreement and upon full payment
of all amounts due to WHV, WHV will take any necessary action to terminate this
Power of Attorney.
Wherever the context so requires, the singular number includes the
plural.
Dated as of February 6, 2002.
GENIUS PRODUCTS, INC.
By: /s/ Xxxxx Xxxxxxx
---------------------
Its: CEO
---------------------
STATE OF California )
------------------------------------------
)ss
COUNTY OF Los Angeles )
------------------------------------------
On this the 6th day of February, 2002, before me,
Xxxxxx X. Xxxxxx ,
--------------------------------------------------
the undersigned Notary Public, personally appeared
Xxxxx Xxxxxxx ,
--------------------------------------------------
[ ] personally known to me
[X] proved to me on the basis of satisfactory evidence, to be the
person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
Witness my hand and official seal. [SEAL] XXXXXX X. XXXXXX
Commission # 1242932
/s/ Xxxxxx X. Xxxxxx Notary Public - California
------------------------------------ Los Angeles County
Notary Public My Comm. Expires Nov 22, 2003
-2-
Exhibit "E"
-----------
INSTRUMENT OF TRANSFER
KNOW ALL MEN BY THESE PRESENTS that for One Dollar ($1.00) and for
other good and valuable consideration, receipt of which is hereby acknowledged,
the undersigned GENIUS PRODUCTS, INC. (referred to herein as "Grantor"), hereby
grants and assigns to WARNER HOME VIDEO, a Division of Time Warner Entertainment
Company, L.P. ("WHV") and its successors and assigns, all of Grantor's rights,
titles and interests of every kind and nature in and to the sole and exclusive
right (including, without limitation, such rights under all copyrights and any
extensions and renewals thereof that may be in existence with respect to any of
the Pictures subject to the Agreement described below, including, without
limitation, in and to the underlying screenplay and all other literary, musical
and dramatic materials based upon, incorporated in, derived from, incorporating
or related to such Picture(s) or upon which such Picture(s) may be based (the
"Picture(s)")), (a) to exploit the Homevideo Rights during the Term and in the
Territory (as such terms are defined in the Agreement described below)
including, without limitation, to sell Devices (as such term is defined in the
Agreement described below) containing copies of the Picture(s) and to exploit
the Devices for the intended purpose of home video viewing by consumers in their
places of dwelling in such manner that viewing schedules and viewing frequency
may be freely controlled by the consumers, as such rights relate to the
Picture(s) and to the copyright and rights and interests of every kind or nature
in and to all works based upon, incorporated in, derived from, incorporating or
relating to the Picture(s).
Reference is made to that certain Homevideo Distribution Agreement
dated as of February 6, 2002 by and between Grantor and WHV (such agreement, as
it may be amended, modified, supplemented, renewed, extended, replaced, or
superseded from time to time, is herein referred to as the "Agreement") relating
INTER ALIA to the grant and assignment of the aforesaid rights and this
Instrument of Transfer is expressly made subject to the terms and conditions
contained in the Agreement, and to the extent of any inconsistency between this
Instrument of Transfer and the Agreement, the terms of the Agreement shall
prevail to the minimum extent necessary to rectify any such inconsistency.
Grantor hereby agrees to register or cause to be registered each of the
Picture(s) with the United States Copyright Office and agrees to obtain or cause
to be obtained renewals of all copyrights in and to said Picture(s), whether or
not referred to herein, and hereby assigns said rights to WHV; and should
Grantor fail or be unavailable to do any of the foregoing, Grantor hereby
irrevocably appoints WHV as attorney-in-fact, with full and irrevocable power
and authority to do all such acts and things, and to execute, acknowledge,
deliver, file, register and record all such documents, in the name and on behalf
of the Grantor, as WHV may deem necessary or proper in the premises to
accomplish the same, which power and authority shall be deemed coupled with an
interest and irrevocable.
-1-
WHV is also hereby empowered to bring, prosecute, defend and appear in
suits, actions and proceedings of any nature under or concerning all copyrights
in and to said Picture(s) and all renewals thereof, to the extent that the
rights granted to WHV are affected, or concerning any infringement thereof, or
interference with any of the rights hereby granted under said copyrights or
renewals thereof, in its own name or in the name of the copyright proprietor
and, at its option, WHV may join such copyright proprietor and/or the
undersigned as a party plaintiff or defendant in any such suit, action or
proceeding.
Dated as of February 6, 2002.
GENIUS PRODUCTS, INC.
By: /s/ Xxxxx Xxxxxxx
---------------------
Its: CEO
---------------------
STATE OF California )
------------------------------------------
)ss
COUNTY OF Los Angeles )
------------------------------------------
On this the 6th day of February, 2002, before me,
Xxxxxx X. Xxxxxx ,
--------------------------------------------------
the undersigned Notary Public, personally appeared
Xxxxx Xxxxxxx ,
--------------------------------------------------
[ ] personally known to me
[X] proved to me on the basis of satisfactory evidence, to be the
person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
Witness my hand and official seal. [SEAL] XXXXXX X. XXXXXX
Commission # 1242932
/s/ Xxxxxx X. Xxxxxx Notary Public - California
------------------------------------ Los Angeles County
Notary Public My Comm. Expires Nov 22, 2003
-2-
Exhibit "F"
-----------
COLLATERAL ASSIGNMENT OF COPYRIGHTS
-----------------------------------
KNOW ALL MEN BY THESE PRESENTS that for good and valuable
consideration, receipt of which is hereby acknowledged, the undersigned, GENIUS
PRODUCTS, INC., referred to herein as ("Grantor") hereby assigns, grants,
conveys and transfers for security to WARNER HOME VIDEO ("WHV") and its
successors and assigns throughout the Territory (as such term is defined in that
certain Homevideo Distribution Agreement dated as of February 6, 2002 between
Grantor and WHV, as the same may hereinafter be amended, modified, supplemented,
renewed, extended, replaced, or superceded from time to time, the "Agreement"),
all of Grantor's rights, titles and interests of every kind and nature, without
limitation, in and to the collateral described on Schedule A attached hereto and
incorporated by reference herein (the "Collateral"). Grantor hereby irrevocably
constitutes and appoints WHV its lawful attorney-in-fact to do all acts and
things permitted pursuant to the Agreement, which power and authority shall be
deemed coupled with an interest and irrevocable.
-1-
This Collateral Assignment of Copyright is expressly made subject to
the terms and conditions contained in the Agreement and to the extent of any
inconsistency between the terms of this Collateral Assignment of Copyright and
the Agreement, the terms of the Agreement shall prevail to the minimum extent
necessary to rectify such inconsistency. Upon termination or expiration of this
Agreement and upon full payment of all amounts due to WHV, WHV will take any
necessary action to terminate its security interest in the collateral.
Dated as of February 6, 2002.
GENIUS PRODUCTS, INC.
By: /s/ Xxxxx Xxxxxxx
---------------------
Its: CEO
---------------------
STATE OF California )
------------------------------------------
)ss
COUNTY OF Los Angeles )
------------------------------------------
On this the 6th day of February, 2002, before me,
Xxxxxx X. Xxxxxx ,
--------------------------------------------------
the undersigned Notary Public, personally appeared
Xxxxx Xxxxxxx ,
--------------------------------------------------
[ ] personally known to me
[X] proved to me on the basis of satisfactory evidence, to be the
person(s) whose name(s) is/are subscribed to the within instrument and
acknowledged to me that he/she/they executed the same in his/her/their
authorized capacity(ies), and that by his/her/their signature(s) on the
instrument the person(s), or the entity upon behalf of which the person(s)
acted, executed the instrument.
Witness my hand and official seal. [SEAL] XXXXXX X. XXXXXX
Commission # 1242932
/s/ Xxxxxx X. Xxxxxx Notary Public - California
------------------------------------ Los Angeles County
Notary Public My Comm. Expires Nov 22, 2003
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Schedule A to Exhibit F
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DESCRIPTION OF COLLATERAL
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Capitalized terms used herein without definition have the respective
meanings assigned such terms in the Homevideo Distribution Agreement dated as of
February 6, 2002 among Grantor and WHV (as it may be amended, modified,
supplemented, renewed, extended, replaced or superseded from time to time, the
"Agreement").
The Collateral shall mean all of the rights, titles and interests of
every kind or nature whatsoever of Grantor in and to, but none of its
obligations with respect to, the following described items, whether now owned or
existing or hereafter created, acquired or arising, and wheresoever located:
(a) All of the right, title, and interest of Grantor of every
kind (including, without limitation, copyrights and any extensions and
renewals thereof and any rights related to copyright and/or neighboring
rights recognized under the law of any foreign jurisdiction with
respect to each of the Pictures subject to the above-referenced
Homevideo Distribution Agreement (the "Pictures"), in and to all
Homevideo Rights and Incidental Rights granted to WHV under the
Agreement and all like or similar rights that may now or hereafter be
retained or recovered by Grantor;
(b) All rights to possession held by or on behalf of Grantor
to all physical properties described in Schedule B annexed hereto,
necessary or desirable to WHV to exercise the Homevideo Rights and/or
Incidental Rights granted to WHV under the Agreement;
(c) All proceeds and products relating to or arising from any
of the foregoing, including accounts, contract rights, chattel paper,
all money and claims for money (whether or not such claims to money
have been earned by performance) general intangibles, documents and
instruments, including, but not limited to, all Gross Receipts,
Accountable Receipts (whether or not due, earned or payable to Grantor
under the Agreement) and any insurance now or hereafter payable by
reason of any loss or damage to any Collateral and any proceeds thereof
and all replacements, additions, accessions, substitutions, proceeds
and products relating to or arising from any of the Collateral;
(d) All of Grantor's rights under production, financing and
acquisition agreements in and to the exploitation of the rights granted
to WHV under the Agreement relating to motion pictures which if
completed would constitute Picture(s); and
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(e) All of Grantor's rights to all literary, dramatic, musical
and other material created for the Picture(s) or upon which the
Picture(s) is based or to be based, in whole or in part, or which are
used in connection with the Picture(s), including, without limitation,
screenplays and any underlying materials upon which screenplays are
based, and all common law and statutory domestic and foreign
copyrights, and any rights related to copyright and/or neighboring
rights recognized under the law of any foreign jurisdiction, and rights
and interests in copyrights and renewals and extensions of copyrights,
in and to said literary, dramatic, musical and other written material;
but only to the extent necessary to protect WHV's ability to exercise
the Homevideo Rights and Incidental Rights in the Picture(s) during the
Term and in the Territory in the manner and to the extent provided for
in the Agreement.
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Schedule B to Exhibit F
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IT IS CONTEMPLATED AS OF THE DATE OF THIS AGREEMENT THAT GRANTOR SHALL DELIVER
THE PICTURES IN THE DIGITAL BETACAM FORMAT.
GRANTOR SHALL, AT GRANTOR'S COST, DELIVER THE ELEMENTS FOR THE PICTURE(S) LISTED
IN ITEMS 1 AND 2, BELOW, AS APPLICABLE, TO THE FOLLOWING ADDRESS OR TO ANY SUCH
OTHER ADDRESS AS WHV MAY INDICATE:
Warner Bros. Acquisitions Department
0000 Xxxxxx Xxxx.
Xxxx. 000, Xxxx 000
Xxxxxxx, XX 00000
Grantor shall, at Grantor's cost, deliver the materials and documents for the
Picture(s) listed in items 3 and 4, below, to the following address, or to any
such other address as WHV may indicate:
Warner Home Video Business and Legal Affairs
0000 Xxxxxx Xxxx.
Xxxx. 000, Xxxx 0000
Xxxxxxx, XX 00000
ATTN: Director of Legal Administration
1. FILM PROPERTIES, IF APPLICABLE:
Subject to WHV's examination and technical approval, a digital
component original video signal, and any additional footage for value-added
supplemental elements for DVD, all of which may be delivered on DCT or digital
Betacam format ("Video Elements"). Video that has originated in digital
composite form is not acceptable. If international distribution rights have been
granted, digital component original video signals of both NTSC and PAL standards
(as applicable to the Territory) are required.
In the event the Video Elements set forth above are not approved by
WHV, WHV may elect in its sole discretion to accept "Access" to the elements
("Film Elements") set forth below. The word "Access" as used in this Exhibit
shall mean the ability to use the Film Elements designated and to cause them to
be transferred at a lab selected by Warner Bros. Technical Operations, at
Grantor's cost. In addition, Access to Film Elements shall include all dubbed
and/or subtitled versions in all applicable foreign languages in accordance with
WHV's distribution rights as set forth in the Agreement to the extent that such
versions may exist or be produced for the Territory. All Film Elements shall be
of the highest quality, free from scratches, patches or other physical blemishes
and shall conform to the final edited version of the Picture(s) and shall be in
the same ratio of camera picture images in which the Picture(s) was
photographed.
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(a) BLACK AND WHITE FILMS
Delivery of a 35mm fine grain. In the event this element is
unavailable, Grantor shall guarantee Access to the original camera
negative to allow WHV to create a new fine grain element from the
original negative at a lab of WHV's choice, at Grantor's cost.
Delivery of a 35mm magnetic sound master (stereo where
applicable). Dolby SR encoded with start marks. Audio track must be in
perfect synchronization with picture elements supplied. In the event a
35mm magnetic sound master is unavailable, Access to the optical sound
track negative is required. Data reduced audio source material is not
acceptable for delivery.
(b) COLOR FILMS
Delivery of a 35mm interpositive and a 35mm "screening" print
to be used for time comparison purposes. In the event that the 35mm
interpositive is unavailable, Grantor shall guarantee Access to the
original camera negative to allow WHV to create a new interpositive at
a lab of WHV's choice, at Grantor's cost.
Delivery of a 35mm magnetic sound master (stereo where
applicable), Dolby SR encoded with start marks. Audio track must be in
perfect synchronization with picture elements supplied. If the original
audio source is unavailable, Access to the optical sound track negative
is required.
(c) AUDIO FOR BOTH BLACK AND WHITE FILMS AND COLOR FILMS
If the Picture was recorded in six-track for digital
theatrical release, WHV will require Access to the six-track "SR"
encoded English mag master.
Delivery of an optical magneto disc is required for digital
theatrical features (where applicable) for theatrical distribution.
Delivery of a fully filled music and effects track is
required. This track must be 35mm "SR" encoded magnetic track in the
format of the original sound mix (either six-track or two-track).
Data reduced original audio source material is not acceptable
for delivery for any 35mm magnetic audio source materials.
(d) INTERNATIONAL DISTRIBUTION RIGHTS
When international distribution rights are granted, the
following Film Elements are also required for delivery to WHV:
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A foreign textless background negative of any main, end or
narrative sections and all descriptive titles WITHOUT the
English-language text, but with the background action conforming in all
respects to the English version. In addition, title overlays must be
provided on a separate 35mm element.
A detailed combined dialogue continuity script.
If the original soundtrack of the Picture is nonaural, a mono
magnetic sound master conformed in all respect on a 35mm magnetic full
coat tape, with separate dialogue, music and sound effects tracks.
If the original soundtrack is six-track for digital theatrical
distribution, a six-track 35mm full cost magnetic English masters is
required in addition to a two track "SR" 35mm full coat magnetic
English master.
If the Picture is filmed in Dolby stereo, a two-track Dolby
35mm full coat magnetic English stereo master and a 35mm "SR" encoded
music and effects tracks are also required for delivery to WHV. Such
tracks must be matrixed to two-track Dolby configuration.
2. VIDEO PROPERTIES:
(a) SHOWS PRODUCED ON VIDEO. As stated above, WHV requires that the
Picture(s) originate in 35mm film. Notwithstanding the foregoing, in the event
that WHV elects, in its sole and absolute discretion, to accept a picture
produced on video, then Grantor shall deliver the following:
One digital component original video signal, which may be delivered on
DCT or digital Betacam format.
NTSC submasters must be time coded with S.M.P.T.E. code. PAL submasters
must be time coded with E.B.U. code. Time codes are to be identical to and
regenerated from the original master (drop frame time code preferred). The audio
soundtrack on the video master must be in perfect synchronization with the
visual image. The Picture(s) must be fully color corrected with proper color,
shading and density as is customarily required for network television
exhibition.
A separate 24-track "SR" copy of the original sound master with
SUPPLIED tracks is required for delivery to WHV with time code in complete
synchronization to the original master.
(b) TAPE STANDARDS FOR 525/625 DIGITAL COMPONENT FORMAT
The component digital master (whether 525 NTSC and/or 625 PAL) must be
recorded in accordance with the following specifications:
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Recording Format: Sony Digital Betacam format
Ampex DCT format
Tracks: A. Digital video
B. Digital Audio, Channels 1, 2, 3, 4
C. Analog audio (cue channel)
D. LTC continuous, matching VITC, DFTC or EBU
with PGM start at 01:00:00:00
E. Continuous control track
Cassette: DCT DIGITAL BETACAM
L 208 minutes 124 minutes
M 94 minutes n/a
S 32 minutes 40 minutes
Cassette must not show any physical signs of stress (cracks, debris). Stock must
not show any physical signs of stress (edge damage, debris, etc.). Cassette
should be transported in shipping case.
Reference Tape: Sony current Digital Betacam.
Ampex current DCT.
Digital Video: RS-125M, 13.5(Y)/6.75(R-Y, B-Y), 8-bit.
Picture should be centered in the digital active line.
Peak white (100 ire) will be at digital 235 base 10.
Video shall not exceed 100 ire, at digital 235 base 10.
Black shall be at digital 16 base 10.
Color difference blanking is at digital 128, peaks at 16 and
240 (base 10).
Digital Audio: 48 kHz sampled, synchronized to video, 20 bits/sample
Channels 1, 2, 3, 4: AES/EBU format.
1 kHz tone at 0 VU shall reproduce at 0 dB in unity on all
channels.
Levels shall be maintained such that the headroom of the
system is not exceeded.
NO DIGITAL CLIPPING.
Audio shall not be Dolby encoded.
RF: RF envelope maximum/minimum points shall not vary by more than 10%.
Audio RF level shall be less than or equal to 1/4RF level of video.
Video and Audio RF and CTL shall be recorded continuously on the tape.
Errors: Errors shall not exceed the capability of error correction circuitry. At
NO TIME shall concealment be necessary.
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Audio format: Ch 1 & 2 Stereo Composite Left & Right, in phase
Ch 3 & 4 Stereo M & E Left & Right, in phase
w/Ch 1 & 2
Cue: Mono Composite
Time Code: DFTC/EBU with matching LTC/VITC
(c) INTERNATIONAL DISTRIBUTION RIGHTS
When international distribution rights are granted, the following video
elements are also required:
One digital component video signal of the dubbed and subtitled version
in each applicable foreign language in accordance with WHV's distribution rights
as set forth in the Agreement, to the extent that such versions may exist or be
produced for the Territory.
A first generation digital submaster from the final 100% completed
original of both NTSC and PAL standards (as applicable to the territory).
A separate magnetic audio element conformed in all respects with the
final digital edited master videotape, with separate dialogue, music and effects
tracks (mono and/or stereo).
A digital component original format first generation copy of the
background action of any main, end or narrative sections and all descriptive
titles, without the English-language text, but with the background action
conforming in all respects to the English version. A digital component original
textless reel must be fully color corrected to match existing program material
included in the feature submaster.
A detailed dialogue continuity script representing the digital format
NTSC (and/or PAL) first generation copy of the final edited master.
3. MISCELLANEOUS:
(a) A reasonable quantity of pre-existing advertisements, publicity
pieces and promotion materials, including as a minimum but not limited to:
(i) A sufficient amount of color artwork (whether in the form
of slides, chromes, posters or otherwise) to enable WHV to produce
satisfactory packaging of the Devices, including "key" art or "poster"
art as used in the theatrical advertising campaigns;
(ii) a reasonable quantity of black-and-white and color stills
(with descriptions and data regarding the persons and subject matter
appearing in such stills);
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(iii) samples of company logos and film title logos suitable
for reproduction;
(iv) theatrical trailers, television spots or similar
promotional materials;
(v) a pressbook or, if no pressbook exists, a quantity of
clippings and photographs such as would appear in a pressbook;
(vi) a detailed synopsis of the final screenplay, teleplay or
videoscript, as applicable (unless included in the pressbook); and
(vii) a reasonable number of copies of critics' reviews of the
Picture(s).
(b) A synopsis of the advertising credits which were used for
theatrical or television distribution, including billing percentages and
performer likeness restrictions.
(c) A list of the players in the cast identifying each player by the
roles he or she portrayed.
(d) A music cue sheet in customary form containing titles, composers,
timings, copyright owners and publishers.
(e) A copy of the proper copyright notice.
(f) A schedule of theatrical release dates listed by territory and
country, and a schedule of pay and free television availability dates listed by
territory and country.
4. LEGAL DOCUMENTS:
(a) A fully executed Laboratory Access Letter in the form attached.
(b) A Power-of-Attorney in the form attached.
(c) A fully-executed Instrument of Transfer in the form attached.
(d) A fully-executed Collateral Assignment of Copyrights in the form
attached.
(e) A clear, complete and accurate photocopy of each certain
Certificate of Copyright which indicates that the Picture(s) has been duly
registered for copyright with the United States Copyright Office and, upon
notice from WHV of its intent to distribute in a non-Berne Convention country,
in each other country in the Territory which has a registration procedure, and
any and all documentation pertaining to renewals of such registrations.
(f) Documentation in form reasonably acceptable to WHV indicating that
all rights in and to all music contained in the audio portion of the Picture(s)
have been cleared for use in the Picture(s) and Devices in the Territory for the
entire Term of the Agreement.
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(g) A certificate of Errors and Omissions insurance naming WHV as an
additional insured.
(h) All other documents related to the Homevideo Rights and Incidental
Rights granted herein (including documents evidencing chain of title and
Grantor's unencumbered legal, valid and indefeasible title to the Picture(s)).
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Exhibit "G"
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CATALOG TITLES
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1. "Mozart and Friends"
2. "Mozart and Friends: Sleepytime"
3. "Four Seasons"
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