Appendix | E

Sample Distribution Agreement

The following represents a sample agreement between a Producer and Sales Agent. As in any standard contract between Producer and Sales Agent, the Sales Agent will be referred to as “Distributor.” (In this respect, it is always important for a Producer to be absolutely clear about the rights he is signing away and if he is signing with a Sales Agent, sometimes referred to as a “Distributor” in contracts, who represents his projects for sale in the marketplace, or with an actual “Distributor” who will license projects and exhibit the projects to audiences.)

This is a standard contract, which may be used in the United States and other territories as well. This is intended simply as a guideline for filmmakers to understand what a standard contract between a Producer and a Sales Agent consists of and what the Sales Agent may require of you by way of deliverables and terms of contract. While this is an actual standard contract between a Producer and a Sales Agent, this is one example, so do understand, different Sales Agents will have different specific guidelines and technicalities which they will require filmmakers to follow, depending on the type of project, the territories they are representing, the media they are representing your project for, etc.

The information appearing in this “sample contract” is by no means indicative of the terms a filmmaker may be offered and should not be taken as such; it simply represents some industry “norms.” It is intended as an educational tool only, and the contract a filmmaker is offered by a Sales Agent may differ in content and scope. The terms of agreement and specifics of the “Elements” or deliverables will vary greatly as may other contractual terms such as length of term, recoupable expenses, and percentage of sale a sales agency will take for representing your film. This “sample contract” is not intended to represent the exact contract you might receive from a Sales Agent for representation of your film.

We always strongly recommend filmmakers consult a qualified and reputable entertainment attorney to negotiate the finer points of their individual contracts.

DISTRIBUTION AGREEMENT

DATE:[DATE OF AGREEMENT]
DISTRIBUTOR:[SALES AGENT]
SALES AGENT ADDRESS LINE 1
SALES AGENT ADDRESS LINE 2
PRODUCER:[PRODUCER]
PRODUCER ADDRESS LINE1
PRODUCER ADDRESS LINE 2
I.PICTURE: TITLE OF PICTURE
TERRITORY: [The entire universe]
II.TERM: Seven (7) years following the date of the full and complete delivery of all delivery materials set forth in the Delivery Materials List (which is attached hereto and hereby incorporated herein) for Distributor’s exploitation of the Picture in the Territory (“Term”). All licensing and/or distribution agreements which Distributor enters into on behalf of Producer shall not have licensing periods which exceed the Term without the prior written consent in each case by Producer.
III.EXCLUSIVE GRANT OF RIGHTS. [PRODUCER] hereby grants to [SALES AGENT], solely and exclusively, throughout the Territory and during the Distribution Term all the necessary rights for [SALES AGENT] to manufacture, promote, market and sell, and otherwise exploit the Picture in any or all of the Formats by any means determined by [SALES AGENT] in its sole discretion (including, without limitation, In-Flight, mail order, catalog, non-theatrical, rental subscription service sales, box sets and direct response sales). All rights not specifically granted to [SALES AGENT] hereunder are expressly reserved by [PRODUCER].
IV.DISTRIBUTOR’S FEE: Twenty-five percent “off-the-top” (“Distributor’s Fee”) of all gross monies and revenue actually paid to or credited to the account of the Distributor from the sale, lease, license, distribution or exploitation of the Picture in the Territory without any deductions (“Gross Receipts”). Notwithstanding anything to the contrary contained herein, any advance payments or security deposits shall not be included in the computation of Gross Receipts until such payments or deposits are actually nonreturnable, earned, forfeited or applied by Distributor to the Picture.
V.DISTRIBUTER’S EXPENSES: Distributor shall expend and recoup from “Producer’s Share of Gross Receipts” (as defined below), all of Distributor’s out-of-pocket servicing, marketing, publicity, promotion, delivery, distribution and any other customary expenses paid or incurred by Distributor in connection with the Picture (including, without limitation, all costs of the marketing and advertising campaign for Picture) (“Distributor’s Expenses”). Distributor’s Expenses shall not exceed the sum of Thirty Thousand Dollars (U.S. $30,000) without the prior written approval of Producer. Distributor’s Expenses shall be included in the Picture’s budget as a Marketing Fee.
VI.PRODUCER’S SHARE OF REMAINING GROSS RECEIPTS: From first Gross Receipts, Distributor shall deduct and retain a sum which equals the Distributor’s Fee, then Distributor’s Expenses, then recoupment of the Performance Guarantee. Thereafter; from all remaining Gross Receipts, seventy-five percent (75%) thereof shall be paid to Producer (“Producer’s 75% Share”), in accordance with the accounting provisions herein below (“Producer’s Share of Gross Receipts”) and twenty-five percent (25%) thereof shall be paid to Sales Agent.
VII.DELIVERY OF THE PICTURE: WARRANTIES: The Picture and all delivery materials set forth on the Delivery Material List (Exhibit A) shall be delivered no later than [AGREED UPON DELIVERY DATE]. Time is of the essence. Producer warrants and represents that Producer owns or controls all rights granted to Distributor hereunder, that there are no liens and/or encumbrances and/or judgments against and on the Pictures and/or on the rights granted to Distributor hereunder, and that Producer has the right to enter into and be bound by the terms and conditions of this Deal Memo.
VIII.ACCOUNTINGS: Distributor shall render written statements yearly. All statements shall be sent not later than forty-five (45) days after the end of the respective accounting period and shall be accompanied by all monies due Producer. Distributor shall keep complete and accurate books and records at Distributor’s corporate offices in [CITY OF SALES AGENT’S OFFICES] with respect to Gross Receipts, Distributor’s Expenses and Producer’s Share of Gross Receipts. Distributor agrees that Producer may, once during each one (1)-year period, but only once with respect to any particular accounting statement rendered hereunder, audit Distributor’s books and records at Distributor’s corporate offices in [CITY OF SALES AGENT’S OFFICES] only (as described above) and make extracts and copies thereof for the purpose of determining the accuracy of Distributor’s accounting statements rendered to Producer. All audits shall be made during regular business hours upon thirty (30) days’ prior written notice and shall be conducted on Producer’s behalf by an independent certified public accountant. Each examination shall be made at Producer’s sole cost and expense at Distributor’s [CITY OF SALES AGENT’S OFFICES] corporate offices where books and records are maintained. In the event that an audit reveals a discrepancy of five percent (5%) or more, Distributor shall reimburse Producer the reasonable costs of such audit.
IX.CREDITS/EDITING: Distributor will not alter or permit to be deleted any credit, logo, copyright or trademark notice or other legal notice included in the Picture. Distributor will comply or cause the compliance with all billing requirements and restrictions provided to Distributor by Producer. Distributor will not have the right to cut or edit the Picture except as follows: for governmental censorship; to avoid legal claims; to meet standards and practices of broadcasters; and for length for particular media (such as television).
X.REPRESENTATION AND WARRANTIES.
1.  [PRODUCER] represents and warrants as follows:
(a)It has full right, power and authority to enter into and perform this Agreement and to grant to [SALES AGENT] all the rights herein granted, and will continue during the Distribution Term to possess such right, power and authority.
(b)All of the following have been, or will be, fully paid or discharged by [PRODUCER]
(i)all claims and rights of owners of copyrights in the Picture and in the literary, dramatic, musical or other material appearing, used or recorded in the Picture (including, without limitation, any and all guild and union payments which may be or become due) and
(ii)all claims and rights of any persons, firms or entities with respect to the use, distribution, performance, and exploitation of the Picture, and any music contained therein.
(c)Neither the Picture nor any part thereof, nor any materials contained therein or synchronized therewith, nor the exercise by [SALES AGENT] of any rights herein granted, violates or will violate, or infringes or will infringe, any trademark, trade name, contract, agreement, license, copyright (whether common law or statutory), patent, literary, artistic, dramatic, personal, private, civil or property right, or right of privacy or any law or regulation or other right whatsoever, or slanders or libels, any person, firm, corporation or association whatsoever.
(d)It has not sold, assigned, transferred or conveyed, and will not sell, assign, transfer or convey, to any party, any right, title or interest in and to the Picture or any part thereof adverse to or in derogation of the rights granted to [SALES AGENT], and further, [PRODUCER] expressly acknowledges and agrees that it has not and will not authorize any person, firm or entity other than image to promote, market, sell, distribute or exploit the Picture in the Formats in the territory during the Distribution Term.
(e)All Elements required to be delivered under Paragraph 5 are, or will be, made available to [SALES AGENT] pursuant to all of the terms and conditions of Paragraph 5 and must be of a quality suitable for the manufacture therefrom of commercially acceptable units, and notwithstanding the foregoing, the masters required to be delivered under Paragraph 5 must conform with the technical specifications described in Schedule 1 of this agreement, and the synopses, copyright, credit and other written information required to be delivered under Paragraph 5 and further described in Schedule 2 of this agreement must be true, accurate and correct in all respects.
XI.INDEMNIFICATION: [PRODUCER] and [SALES AGENT] hereby indemnify, defend and hold the other, and their respective subsidiaries, affiliates, licensees, agents, officers, directors and employees harmless from and against any and all demands, claims, actions or causes of action, assessments, liabilities, judgments, damages, losses, costs or expenses whatsoever (including reasonable attorney’s fees of outside counsel of indemnitee’s choice incurred (a) in connection therewith (which will also include costs and expenses incurred in investigating, preparing or defending against any action, suit, proceeding or investigation, commenced or threatened) and (b) in seeking indemnification therefore, which may be sustained, incurred or suffered by, or secured against, the indemnitee, or any of its subsidiaries, affiliates, licensees, agents, officers, directors or employees, by reason of or arising out of, a breach by the indemnitor of any of the representations, warranties, covenants or agreements contained herein, or in the exercise by [SALES AGENT] of any of the rights, licenses or privileges granted hereunder. Promptly after learning of the occurrence of any event which may give rise to its rights under the provision of this Paragraph 4, the indemnitee shall give written notice of such matter to the indemnitor. The indemnitee shall cooperate with the indemnitor in the negotiation, compromise, and defense of any matter. The indemnitor shall be in charge of and control such negotiations, compromise, and defense of any matter. The indemnitor shall be in charge of and control such negotiations, compromise and defense and shall have the right to select counsel with respect thereto, provided that the indemnitor shall promptly notify the indemnitee of all developments in the matter. In no event shall the indemnitee compromise or settle any such matter without the prior written consent of the indemnitor, and the indemnitor shall not be bound by any such compromise or settlement absent it prior written consent. This paragraph 4 will survive the termination of this Agreement.
XII.DELIVERY: [PRODUCER] hereby agrees to deliver to [SALES AGENT] all of the materials described below (the “Elements”). Preparation and delivery of the Elements will be at [PRODUCER]’s expense. All costs associated with the use of the Elements, except as expressly provided in this Agreement, as well as the cost of delivery of the Elements back to [PRODUCER], will be at [SALES AGENT]’s expense. [PRODUCER] hereby understands, acknowledges and agrees that all Elements delivered to [SALES AGENT] shall be pre-approved for [SALES AGENT]’s use and further understands, acknowledges and agrees that it will bear any costs and expenses incurred by [SALES AGENT] if [PRODUCER] deems any such pre-approved Elements unacceptable following [SALES AGENT]’s receipt of said Elements (ie: in the event [PRODUCER] delivers photographs for use by [SALES AGENT] in connection with the design of the Unit jacket but later deems said photographs unacceptable for use), [PRODUCER] will be solely responsible for 100% of the costs and expenses incurred by [SALES AGENT] in connection with said photographs.
1.The following Elements must be delivered to [SALES AGENT] as soon as possible but in no event later than thirty (30) days following full execution of this agreement, time is of the essence:
(a)The following masters:
(i)A digital Betacam NTSC video master in the original aspect ratio and enhanced for the 16:9 format (unless the Picture was originally shot full frame). Widescreen video masters not enhanced for the 16:9 format should be retransferred for the 16:9 format from film elements if available. Artificially squeezed video masters will not be accepted.
The parties agree that, in addition to the above-described masters, [PRODUCER] may deliver any other versions of the masters [PRODUCER] may have available; however, such additional masters may not be delivered in lieu of the above-described masters and, further, [SALES AGENT], in its sole discretion, may determine which master (or masters) to use.
      The above-described masters must meet the technical requirements set forth on SCHEDULE 1, attached hereto and incorporated herein by this reference.
(b)2 channel stereo and 24 bit 5.1 surround sound mix
(c)Video trailer of the Picture, if available
(d)Any ancillary materials available
(e)Detailed written information regarding run time, aspect ratio and type of audio track
(f)Copies of all music publishing rights and clearance agreements
(g)Music cue sheets for each Format for the Picture, which must include complete song titles, the music publishers, song run times and all appropriate credits, including the complete names of the performing artists, songwriters and composers.
(h)Lyrics for each song contained in the Picture, as available
(i)The (original) artwork described on SCHEDULE 2
(j)A complete statement setting forth the names of all persons to whom [PRODUCER] is contractually obligated to accord credit in any advertising, publicity or exploitation of the Picture and to include in such statement excerpts from such agreements defining and describing the form and nature of such required credits.
(k)“Chain-of-title” verification in and to the Picture
(l)Evidence of Errors & Omission Insurance (One Million ($1,000,000) each occurrence/Three Million ($3,000,000) in the aggregate per Picture) including certificate of insurance naming image as an additional insured for the term of the Agreement.
2.Notwithstanding anything contained in this Agreement to the contrary, [PRODUCER] understands, acknowledges and agrees that the Elements delivered to [SALES AGENT] must, in all respects, contain current, correct and accurate information, and, further, must be of suitable quality and content to effectively package, market and sell the Pictures, as determined by [SALES AGENT] in its sole but reasonable discretion. Unacceptable material, for example, includes, but is not limited to, outdated or incorrect information, negative film, digital scans of printed materials, poor duplicate slides and frame grabs taken from the master. As soon as possible after the tendered delivery of each item specified in Paragraph 5.1 above, [SALES AGENT] will advise [PRODUCER] if any Elements are unacceptable, unsuitable or incomplete and [PRODUCER] will promptly thereafter deliver suitable and complete Elements. If such unsatisfactory delivery of any of the Elements has not been cured in total within thirty (30) days from receipt by [PRODUCER] of notice from [SALES AGENT] in accordance with the delivery requirements of [SALES AGENT], [SALES AGENT] will have the right to either:
(a)create or cause to be created any and all materials necessary to remedy to unsatisfactory Elements delivered to [SALES AGENT] by [PRODUCER], the cost and expense of which will be, at [SALES AGENT]’s sole discretion, either charged back to [PRODUCER] or offset against any unpaid Advance and/or Royalties and Net Profits due hereunder; or,
(b)terminate this Agreement with respect to any Picture for which satisfactory delivery of the Elements has not been made, in which event all of the obligations of [SALES AGENT] hereunder with respect to such Picture will terminate.
XIII.ACCOUNTING RECORDS AND AUDIT RIGHTS: [SALES AGENT] will keep full and complete records of all transactions relating to the Picture. No more frequently than once per each year of the Distribution Term, and upon reasonable notice, [PRODUCER] may, at its own expense, audit [SALES AGENT]’s records in order to verify earnings statements rendered hereunder. Any such audit will be conducted at [SALES AGENT]’s corporate headquarters or such other location as [SALES AGENT] shall deem pertinent and shall be conducted by a certified public accountant upon reasonable notice to [SALES AGENT] and during [SALES AGENT]’s normal business hours. Any statement not questioned by [PRODUCER] by notice in writing within one year from the date of such statement will be deemed final and conclusive. [PRODUCER]’s right to examine [SALES AGENT]’s records will be limited to only those books, records and accounts applicable and relevant to this Agreement.
XIV.FURTHER ACTIONS AND CHAIN OF TITLE VERIFICATION: [PRODUCER] will execute and deliver to [SALES AGENT], promptly upon request of [SALES AGENT], any other instruments or documents considered by [SALES AGENT] to be necessary or desirable to evidence, effectuate or confirm this Agreement, or any of the terms and conditions hereof.
XV.DEFAULT: In the event either party should violate any of the material terms and conditions of this Agreement and such default will remain uncured for a period of thirty (30) days after written notice has been delivered to the defaulting party, then in such event the other party will have the right to terminate all or any part of this Agreement by delivering written notice to the defaulting party of its intention to terminate. In the event [PRODUCER] is in breach of the representations and warranties given in Paragraph 4, [SALES AGENT] will have the right to immediately terminate this Agreement and [PRODUCER] will be required to immediately reimburse [SALES AGENT] for any unrecouped Advance and all of its actual out-of-pocket costs and expenses incurred in connection with the Picture.
XVI.TERMINATION: Upon expiration of the Distribution term or pursuant to Paragraph 8 above, [SALES AGENT] will submit to [PRODUCER] written inventory of all Units subject to the expiration or termination; provided, however, that [SALES AGENT] will continue to have the right to sell such Units during the Sell-Off period. At the end of the Sell-Off period, at [PRODUCER]’s option, [PRODUCER] may either purchase any unsold Units at [SALES AGENT]’s cost or have [SALES AGENT] destroy said Units and submit to [PRODUCER] a certificate as evidence of destruction. [SALES AGENT] will also, upon the date of expiration or termination, return any materials delivered under Paragraph 5 then in [SALES AGENT]’s possession. [SALES AGENT] will account to [PRODUCER], within one hundred twenty (120) days after the expiration of the Sell-Off period, for all Units sales made during the Sell-Off Period, and previously made but not accounted for, and will pay [PRODUCER] the royalties and or Net Profits due.
XVII.[PRODUCER]’S COPYRIGHT AND TRADEMARK OBLIGATION: [PRODUCER] hereby agrees that it will promptly undertake to secure and diligently preserve throughout the Distribution Term of this agreement any and all necessary and proper trademarks, service marks and/or copyright registrations, in the appropriate class or classes, pertaining to the Picture.
XVIII.GENERAL PROVISIONS:
1.Amendments. This agreement cannot be amended, modified or changed in any way whatsoever, except by a written instrument duly executed by both parties hereto, and this Agreement supersedes all prior written or oral agreements, statements or representations.
2.Governing Law. This Agreement will be construed and interpreted in accordance with the laws of California applicable to contracts made and fully performed in California.
3.Force Majeure. In the event that either party is unable to perform its obligations, pursuant to this Agreement due to any fire, casualty, lockout, riot, war, act of God, riot, labor strike, disability, sickness, death, insurrection, natural catastrophe, or the exercise of authority of either the federal or state government or any political subdivision thereof, or any event beyond either party’s reasonable control, including, but not limited to, vehicular mechanical failures or accidents that are not under either party’s reasonable control that renders either party’s performance hereunder, in whole or in part, impossible, then, the parties agree that this Agreement will immediately terminate and that within fifteen business days thereafter, [PRODUCER] will immediately reimburse [SALES AGENT] for the full amount of the advances paid.
4.Relationship of the Parties. Nothing herein will be construed to create a joint venture or partnership by or between [PRODUCER] and [SALES AGENT] so as to make either party hereto an agent or partner of the other. Neither party will become liable or bound by any representation, act, omission or agreement of the other which is contrary to the provisions of this Agreement.
5.Delivery of Elements and Statements. All Elements delivered pursuant to Paragraph 5 will be sent to the parties, at the address set forth in Paragraph 15.6.
6.Notices. All notices hereunder will be in writing and sent by certified or registered mail, telecopier, or messenger to the addresses set forth below: To [SALES AGENT]: [SALES AGENT] [SALES AGENT ADDRESS] [SALES AGENT PHONE] [SALES AGENT FAX] Any such notice or approvals sent hereunder will be deemed served or received upon delivery, except notices sent by telecopier, which will be deemed delivered when sent. Each party may designate in writing such other place or places that notices may be given hereunder; provided, however, that any notice of change of address will only be effective upon actual receipt thereof by the other party.
7.Assignment. Except with respect to assignments by either party to a parent entity which acquires or succeeds to all or substantially all of the assigning party’s assets or voting stock, this Agreement cannot be assigned without the written consent of the other party provided that such consent is not unreasonably withheld.
8.Integration. This Agreement, together with any exhibits and schedules, is entire and complete, and no representations, warranties, agreements or covenants, express or implied, of any kind or character whatsoever have been made by either party to the other except as expressly set forth in this Agreement. This Agreement constitutes the entire agreement between the parties with respect to the subject matter hereof.
9.Arbitration. Any disputes, controversies or claims arising out of or relating to this Agreement, including the issue of arbitrability of any such disputes, shall be resolved by binding arbitration before [ARBITRATING JUDGE]. The arbitrator shall award the prevailing party its reasonable arbitration, expert and attorneys’ fees, costs and expenses. Any interim or final arbitration award may be enforced in any court of competent jurisdiction.
10.Attorneys’ Fees. In the event of any action, suit or proceeding arising out of or related to this Agreement, the prevailing party therein will be entitled to recover, and the other party or parties thereto agree to pay, the prevailing party’s costs and expense in connection therewith including, without limitation, reasonable attorneys’ fees.
11.Severability. In the event that any provision in this Agreement will be held invalid or unenforceable, such provision will be severable from and such invalidity or unenforceability will not be construed to have any effect on the remaining provision of this Agreement.
12.Waiver. The failure by either party, at any time, to require performance by the other party of any of the provisions hereof will be deemed a waiver of any kind nor will it in any way affect the waiving party’s rights thereafter to enforce the same.

IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first written above.

[SALES AGENT]
By:____________________
SalesAgent
Its:____________________
[Company Title]

[PRODUCER]
By:____________________
Producer
Its:____________________
[Company Title]

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