Re: "UNIQUE" / PLATINUM STUDIOS LLC / OPTION /ACQUISITION OF RIGHTS
Exhibit
10.14
As
of
December 11, 2003
PLATINUM
STUDIOS LLC
c/o
Xxxxxxx Xxxxxx Agency
Xxx
Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx
Xxxxx, XX 00000
Attn:
Xxxx Xxxxxx
Re:
|
"UNIQUE"
/ PLATINUM STUDIOS LLC / OPTION /ACQUISITION
OF
|
RIGHTS |
Gentlemen:
Reference
is hereby made to the agreement ("Agreement") dated as of December
11, 2003, between XXXX DISNEY PICTURES ("WDP") and PLATINUM STUDIOS
LLC ("Owner") for WDP's option to acquire all right, title and interest in
and
to the unpublished graphic novel written and owned by Owner entitled "UNIQUE"
(formerly entitled "JAUNT") in connection with a possible Motion Picture based
thereon tentatively entitled "UNIQUE" (the "Picture").
WDP
shall
have no obligation to perform pursuant to this side letter ("Side Letter")
unless and until: (i) WDP receives an executed original of this Side Letter
and
the Agreement, in form and substance acceptable to WDP and (ii) the Conditions
Precedent set forth in Paragraph 1 of the Agreement have been
satisfied.
Based
on
the unique circumstances presented and in consideration of the mutual covenants
and agreements contained in the Agreement, the parties hereby agree as follows
on a non-precedential basis:
1.
|
Reference
is made to Paragraph 2.2.a. of the Agreement. Notwithstanding
anything to the contrary therein, WDP hereby acknowledges and agrees
that the Initial Option Period shall end twenty-four (24) months
following
the earlier
to occur of: (a) satisfaction of the Conditions Precedent set forth
in
Paragraph 1 of the Agreement or (b) the date on which WDP pays Xxxxxxx
Xxxxxx for the commencement
of his writing services in connection with the
Picture.
|
2.
|
Reference
is made to Paragraph 3.1.c. of the Agreement, which is
hereby deleted
in its entirety and replaced with the following new Paragraph
3.1.c.:
|
"c.
|
Television
Series.
|
(i)
|
If
either: (A) 25,000 or more units of the Property are sold as a
graphic novel (provided that Owner submits documentation substantiating
such amount in form and substance acceptable to WDP in its sole
discretion) prior to commencement of principal photography of the
Picture
or (B) the Property is listed among the top 200 titles on ICv2's
Top 300
Comics Actual Index (xxx.xxx0.xxx) during any month prior to the
commencement of principal photography of the Picture, and the Picture
is
produced and released as a feature-length Theatrical Motion Picture,
then
the following royalties are payable for each episode of a television
series based upon the Picture, as produced for a particular broadcast
season:
|
1
Primetime
Network (i.e., ABC, CBS or NBC)
|
||||
Running
Time
|
Payment
|
|||
30
minutes (or less)
|
$ |
2,250
|
||
60
minutes (or less, but in excess
|
$ |
2,750
|
||
of
30 minutes)
|
||||
90
minutes (or more)
|
$ |
3,250
|
||
Non-
Primetime Network or Non-Network
|
||||
Running
Time
|
Payment
|
|||
30
minutes (or less)
|
$ |
1,125
|
||
60
minutes (or less, but in excess
|
$ |
1,375
|
||
of
30 minutes)
|
||||
90
minutes (or more)
|
$ |
1,625
|
(ii)
|
If: (A)
25,000 units of the Property are not sold as a graphic novel
prior to commencement of principal photography of the Picture or
(B)
the Property is not listed among the top 200 titles on ICv2's Top
300
Comics
Actual Index (xxx.xxx0.xxx) during any month prior to the
commencement
of principal photography of the Picture, and the Picture is produced
and released as a feature-length Theatrical Motion Picture, then,
in lieu of the television series royalties set forth in Paragraph
3.1.c(i)
above,
the following royalties are payable for each episode of a television
series
based upon the Picture, as produced for a particular broadcast
season:
|
Primetime
Network (i.e., ABC, CBS or NBC)
|
||||
Running
Time
|
Payment
|
|||
30
minutes (or less)
|
$ |
750
|
||
60
minutes (or less, but in excess
|
$ |
1,250
|
||
of
30 minutes)
|
||||
90
minutes (or more)
|
$ |
1,750
|
||
Non-
Primetime Network or Non-Network
|
||||
Running
Time
|
Payment
|
|||
30
minutes (or less)
|
$ |
375
|
||
60
minutes (or less, but in excess
|
$ |
625
|
||
of
30 minutes)
|
||||
90
minutes (or more)
|
$
|
875
|
" | |
2
3.
|
Alternative
Production Source Credit. Reference is made to Paragraph 4. of the
Agreement. The following shall be added as Paragraph 4.4
thereto:
|
"4.4
|
Alternative
Production Source Credit. Provided: (a) the Property is listed on the
Diamond Comic Distributors, Inc. U.S. preview catalog prior to
commencement
of principal photography on any direct-to-video motion picture,
television
motion picture and/or television series produced hereunder which
is
substantially
based on the Property (each an "Alternative Production"); and (b)
Owner
is not in breach or default hereunder, then subject to network
approval, any
applicable guild and/or union restrictions and WDP's standard exclusions
and
exceptions (including artwork title exceptions), WDP shall accord
Owner source
credit in connection with any such Alternative Production produced
by
WDP
hereunder, as follows:
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(i)
|
On
Screen. On a separate card (which card may be shared in WDP's sole
discretion with other source material on which the Alternative
Production is based), in the main titles if any other non-cast
member
(excluding financier[s] or distributor[s] of the Picture and WDP's
presentation credit) is accorded credit in the main titles (otherwise
in
the end titles), below or after the title, in substantially the form
of
"Based on the Platinum Studios comic book created by Xxxxx Xxxxxxxx
Xxxxxxxxx," or if the title of the Alternative Production is materially
different from that of the Property, then said credit shall be
substantially in the form of 'Based on the Platinum Studios comic
book
`Unique' created by Xxxxx Xxxxxxxx Xxxxxxxxx"
in an average size of type not less than the larger of: (i) fifty
percent
(50%) of the average size of type of the title of the Alternative
Production
on screen or (ii) one hundred percent (100%) of the average size
of type
utilized to accord credit the screenwriter credit on
screen.
|
(ii)
|
Paid
Ads. In paid ads issued or controlled by WDP, in the billing
block portion only, if any, (i.e., if such otherwise applicable paid
ad
does
not have a billing block, Owner shall not be entitled to receive
credit
in
such paid ad), below or after the regular ie., not artwork) title
of
the Alternative
Production, in substantially the form of "Based on the comic book
by Xxxxx Xxxxxxxx Xxxxxxxxx," or if the title of the Picture is materially
different
from that of the Property, then said credit shall be substantially
in
the
form of "Based on `Unique' by Xxxxx Xxxxxxxx Xxxxxxxxx" in an average
size of type not less than the larger of: (i) thirty-five percent
(35%)
of
the average size of the regular i.e., not artwork) title of the
Alternative Production
in such billing block or (ii) one hundred percent (100%) of the
average
size of type utilized to accord the screenwriter credit in such
billing
block. If the regular billing block is used in the jacket of the
videocassette
or video disc (i.e., if such otherwise applicable videocassette
and/or video disc does not have a billing block, Owner shall not
be entitled to receive credit in such videocassette and/or video
disc),
Owner's
name shall appear as part of the regular billing block of said
videocassette
and/or video disc.
|
(iii)
|
Excluded
Ads: In the billing block portion only, if any, of any so-called
excluded ads issued or controlled by WDP in which the screenwriter
is accorded credit in such billing block (i.e., if such otherwise
applicable excluded ad does not have a billing block, then Artist
shall
not be entitled to receive credit in such excluded ad), below or
after the
regular
(i.e., not artwork) title of the Alternative Production in such
billing block,
in substantially the form "Based on the comic book by Xxxxx Xxxxxxxx
Xxxxxxxxx," or if the title of the Picture is materially different
from
that of the Property, then said credit shall be substantially in
the form
of "Based on `Unique' by Xxxxx Xxxxxxxx Xxxxxxxxx," in an average
size of
type not less than the larger of: (i) thirty-five percent (35%) of
the
average size of type of the regular (i.e., not artwork) title of
the
Picture in such billing block;
or (ii) one hundred percent (100%) of the average size of
type utilized
to accord the screenwriter credit in such billing block. Notwithstanding
the foregoing, Artist shall not be entitled to receive credit in
congratulatory, nomination and/or award ads in which only the person(s)
so recognized receive credit, special ads, ads specially exempted
by Paragraphs 8-203d., 8-203f. and 8-203g. of the DGA Basic Agreement,
ads
announcing a personal appearance, radio ads and the audio portion
of
teasers, trailers and television ads."
|
3
Except
as
expressly set forth herein, all provisions of the Agreement shall remain
unchanged and in full force and effect and may not be modified except by a
writing executed
by all parties to the Agreement. Capitalized terms not defined herein shall
have
the same meaning as set forth in the Agreement.
Please
confirm the foregoing as accurately reflecting the agreement and understanding
of the parties by signing in the space provided below.
Very truly yours, | |||
XXXX DISNEY PICTURES | |||
|
By:
|
/s/ Xxxxxxx X. Xxxxxx | |
XXXXXXX X. XXXXXX | |||
Its: | SENIOR VICE PRESIDENT | ||
BUSINESS AFFAIRS |
ACCEPTED
AND AGREED:
PLATINUM
STUDIOS, LLC
By:
Xxxxx
Xxxxxxxxx
Its:
Chairman
4
DATE:
|
As of December 11, 2003 | ||
"UNIQUE" / PLATINUM | |||
SUBJECT:
|
|
STUDIOS LLC/ OPTION / | |
ACQUISITION OF RIGHTS |
This
Memorandum of Agreement ("Agreement") dated as of December 11, 2003, sets forth
the terms of the agreement between XXXX DISNEY PICTURES ("WDP") and PLATINUM
STUDIOS LLC ("Owner") for WDP's option to acquire all right, title and
interest
in and to the unpublished graphic novel written and owned by Owner entitled
"UNIQUE"
(formerly entitled "JAUNT") (the "Property," as more fully defined in
Paragraph
14.11 below) (subject to Owner's reserved rights as set forth in Paragraph
6.
below) in connection with a possible Motion Picture based thereon tentatively
entitled "UNIQUE"
(the "Picture").
1.
|
CONDITIONS
PRECEDENTWDP
shall have no obligation to perform under this Agreement unless and
until:
|
1.1
|
WDP
receives an executed original of this Agreement including all attachments
hereto (in form and substance acceptable to
WDP);
|
1.2
|
WDP
receives an executed agreement (in form and substance acceptable
to WDP)
between WDP and Xxxxx Xxxxx ("Xxxxx") (or his loan-out company) for
Xxxxx'x
directing services in connection with the
Picture;
|
1.3
|
WDP
receives an executed agreement (in form and substance acceptable
to WDP)
between WDP and Xxxxx Xxxxxx ("Xxxxxx") (or his loan-out company)
for
Xxxxxx'x producing services in connection with the
Picture;
|
1.4
|
WDP
receives an executed agreement (in form and substance acceptable
to WDP)
between WDP and Xxxxx Xxxxxxxx Xxxxxxxxx ("Xxxxxxxxx") (or his loan-out
company) for Xxxxxxxxx'x producing services in connection with the
Picture;
|
1.5
|
WDP
receives an executed agreement (in form and substance acceptable
to WDP)
between WDP and Xxxxxxx Xxxxxx ("Xxxxxx") (or his loan-out company)
for
Xxxxxx'x writing services in connection with the Picture;
and
|
1.6
|
WDP
approves, in its sole discretion, the chain-of-title of the rights
granted
to WDP herein, approves all agreements with respect thereto, and
receives
all assignments and releases (including publisher's releases) that
it
requires in connection therewith (in form and substance acceptable
to
WDP).
|
5
2.
|
OPTION
/ PURCHASE OF RIGHTS
|
2.1
|
Option;
Rights Granted. Owner hereby grants to WDP the exclusive and
irrevocable
option ("Option") to acquire all right, title and interest, including,
without limitation,
all forms of: motion picture, television, digital television, video
and
computer games, videocassette, video and laser disc, computer assisted
media (including, but not limited to, CD-ROM, CD-I and similar disc
systems, interactive media and multimedia and any other devices or
methods
now existing or hereafter devised), character, remake, sequel, sound
record, theme park, stage play, merchandising and all allied, ancillary
and subsidiary rights therein of every kind and nature, now known
or
hereafter devised, throughout the universe and in perpetuity, in
all
languages, in and to the Property
(collectively the "Rights," as more fully defined in Paragraph 5.
below),
subject only to the reserved rights enumerated in Paragraph 6.
below.
|
2.2
|
Option
Period.
|
a.
|
Initial
Option Period. The Option may be exercised by
written notice
given at any time commencing as of the date of this Agreement and
ending
twenty-four (24) months following satisfaction of the Conditions
Precedent
set forth in Paragraph 1. above (the "Initial Option Period"), subject
to
extension as set forth below.
|
b.
|
First
Extended Option Period. The Initial Option Period may be extended, in
WDP's sole discretion, for an additional period of twelve (12)
months
(the "First Extended Option Period") commencing upon the expiration
of the
Initial Option Period by written notice to Owner during the Initial
Option. Period,
subject to extension as set forth
below.
|
c.
|
Second
Extended Option Period. The First Extended Option Period
may be extended, in WDP's sole discretion, for an additional period
of six
(6)
months (the "Second Extended Option Period") commencing upon the
expiration
of the First Extended Option Period by written notice to Owner during
the
First Extended Option Period, subject to extension as set forth
below.
|
d.
|
Suspension
/ Extension. The Initial Option Period as extended, if ever, by the
First Extended. Option Period and the Second Extended Option Period,
is hereinafter referred to as the "Option Period." Notwithstanding
anything
to the contrary contained herein, any option period may be further
extended
for any period during which a claim with respect to the Property
has been
asserted and remains unresolved (provided that, with respect to any
claim
that is not based on Lender's and Owner's representations, warranties
or
obligations
hereunder, such extension shall not exceed eighteen (18) months unless
(i)
a lawsuit has been filed with regard to such claim, (ii) an agreement
to
enter into arbitration has been reached, (iii) an agreement to enter
into
any other judicial proceeding or alternative dispute resolution proceeding
[e.g., mediation, so-called "rent-a-judge" proceedings, etc.] has
been
reached, in which case this eighteen
(18) month time limitation shall not apply), or (iv) WDP has entered
into
settlement negotiations, in which case this eighteen (18) month time
limitation shall not apply), and for any period during which WDP's
development and/or production
activities based upon the Property are interrupted or postponed due
to any
occurrence of an event of force majeure, including without limitation,
any
labor strike, threatened labor strike, or other labor
dispute.
|
6
2.3
|
Option
Consideration.
|
a.
|
Initial
Option Period. In consideration of Owner's grant to WDP of
the
Option, WDP shall pay Owner the sum of $300,000 (the "Initial Option
Fee")
upon execution and delivery of this Agreement by Owner to WDP and
satisfaction
of the Conditions Precedent set forth in Paragraph 1. above (whichever
last occurs), which Initial Option Fee shall be fully applicable
against
the "Purchase Price" set forth in Paragraph 2.6
below.
|
b.
|
First
Extended Option Period. If WDP extends the Initial Option Period as
set forth in Paragraph 2.2.b. above, WDP shall pay Owner the additional
sum of $100,000 (the "First Extended Option Fee") upon the commencement
of the First Extended Option Period, which First Extended Option
Fee shall not be applicable against the "Purchase Price" set forth
in
Paragraph
2.6 below.
|
c.
|
Second
Extended Option Period. If WDP extends the First Extended
Option Period as set forth in Paragraph 2.2.c. above, WDP shall pay
Owner
the additional sum of $50,000 (the "Second Extended Option Fee")
upon the
commencement of the Second Extended Option Period, which Second
Extended
Option Fee shall not be applicable against the "Purchase Price" set
forth
in Paragraph 2.6 below.
|
2.4
|
Exercise
of Option. The Option shall be deemed exercised upon either notice
given to Owner (or Owner's agent) during the Option Period or the
commencement
of principal photography of the Picture, if
ever.
|
2.5
|
License.
Owner exclusively licenses WDP (and Persons and entities engaged
by WDP) to engage in preproduction, development and writing activities
based on or pertaining to the Property during the Option Period.
Owner
acknowledges that Owner shall have no right, title or interest in
or to
the results and proceeds of any such activities, whether or not the
Option
is exercised, and that such results and proceeds shall be the sole
property of WDP, whether or not the Option is
exercised.
|
2.6
|
Purchase
of Property. If WDP exercises the Option, WDP will own all of the
Rights (subject only to the reserved rights enumerated in Paragraph
6.
below), and as payment in full for Owner's grant of the Rights to
WDP and
for all of the promises, representations, warranties and agreements
made
by Owner hereunder, and provided Owner is not in breach or default
hereunder, Owner shall be entitled to receive the sum of
$1,000,000 (the "Purchase Price") less the Initial Option Fee i.e.,
$300,000) previously
paid to Owner pursuant to Paragraph 2.3.a. above, which sum shall
be
payable
to Owner upon the earlier to occur of the exercise of the Option
by notice
to Owner or the commencement of principal photography of the Picture,
if
ever.
|
7
2.7
|
Production
Bonus. If the Picture is produced and released as a
feature-length
Theatrical Motion Picture, and provided that Owner is not in breach
or
default hereunder,
then Owner shall be entitled to receive a bonus in the amount of
$250,000,
which
amount shall accrue and become payable to Owner upon commencement
of
principal
photography of the Picture as a feature-length Theatrical Motion
Picture,
if ever.
|
2.8
|
Fair
Compensation. Owner acknowledges that the compensation provided
to be paid pursuant to Paragraphs 2.3.a., 2.3.b. (if applicable)
2.3.c (if
applicable)
and 2.6 (if applicable) above, is by itself fair, reasonable and
sufficient compensation
for the rights granted to WDP hereunder whether or not any production
bonus pursuant to Paragraph 2.7 above or contingent payment pursuant
to
Paragraph 2.9
below ever becomes payable to
Owner.
|
2.9
|
Contingent
Payments. If the Picture is produced and released as a feature-length
Theatrical Motion Picture, and Owner is not in breach or default
hereunder, then Owner shall be entitled to receive the following,
as
applicable:
|
a.
|
At
such time, if ever, that the Picture achieves "Start Point #1" (as
defined
in Paragraph 2.10.d. below), the flat sum of
$250,000;
|
b.
|
At
such time, if ever, that the Picture achieves "Start Point #2" (as
defined
in Paragraph 2.10.e. below), an amount equal to 1-1/4% of 100% of
the
Adjusted
Defined Receipts, if any, of the Picture accruing from Start Point
#2;
and
|
c.
|
At
such time, if ever, that the Picture achieves "CP Start Point" (as
defined
in Paragraph 2.10.f. below), the percentage of Adjusted Defined
Receipts,
if any, in Owner's contingent payment set forth in Paragraph 2.9.b.
above
shall escalate prospectively (i.e., not retroactively) to an amount
equal
to 2-1/2% of 100% of the Adjusted Defined Receipts, if any, of the
Picture, in excess
of and accruing after CP Start Point is achieved, if
ever.
|
2.10
|
Definitions.
The following definitions shall apply to this
Agreement:
|
a.
|
"Adjusted
Defined Receipts" as referenced herein shall be defined, computed,
accounted for and paid in accordance with WDP's Exhibit "DRCB" (and
the
rider thereto), and is defined as the Defined Receipts specified
in
Paragraph
1.1.A. of Schedule 1 thereof (subject to the exclusions set forth
in
Paragraph 1.1.B. of Schedule 1 thereof), less the deductions set
forth in
Paragraph
1.1.C. of Schedule 1 thereof, but substituting theatrical reissue
costs
in
place of the theatre level advertising expenses set forth in Paragraph
1.1.C.1, of Schedule 1 thereof (i.e., costs incurred in connection
with
conversions, checking,
collections, residuals, trade dues, licenses, taxes and theatrical
reissue
costs).
|
8
b.
|
"Defined
Receipts" as referenced herein shall be defined, computed and accounted
for in accordance with WDP's Exhibit "DRCB" (and the rider thereto).
|
c.
|
"Contingent
Proceeds" and "Contingent Bonus Formula" as referenced herein shall
be
defined, computed, accounted for and paid in accordance with WDP's
Exhibit
"CB" (and the rider thereto).
|
d.
|
"Start
Point #1" as referenced herein shall be defined as the end of the
accounting period, if ever, in which Contingent Proceeds, if any,
are
achieved in accordance with the "Contingent Bonus Formula" set forth
in
Exhibit "CB" and the rider thereto), except that for the purpose
of
calculating Start Point #1 only, in lieu of those "Percentage Deductions"
set forth in the Contingent Bonus Formula, the Percentage Deduction
shall
instead be an "off-the-top" zero percent (0%) in all territories
and media
described therein.
|
e.
|
"Start
Point #2" as referenced herein shall be defined as the end of the
accounting period, if ever, in which Contingent Proceeds, if any,
are
achieved in accordance with the "Contingent Bonus Formula" set forth
in
Exhibit "CB" (and the rider thereto) except that for the purpose
of
calculating Start Point #2 only, in lieu of those "Percentage Deductions"
set forth in the Contingent Bonus Formula, the Percentage Deduction
shall
instead be an "off-the-top" twenty percent (20%) in all territories
and
media described therein.
|
f.
|
"CP
Start Point" as referenced herein shall be defined as the end of
the
accounting
period in which there are first Contingent Proceeds, if ever, from
the
Picture
as calculated pursuant to WDP's Exhibit "CB" (and the rider
thereto).
|
3.
|
ROYALTIES
|
3.1
|
Theatrical
Sequels; Theatrical Remakes; Television Programs. If the Picture
is produced and W DP thereafter produces a Sequel to or Remake of
the. Picture,
or a Television Motion Picture based on the Picture, and provided
Owner is
not engaged to write for the applicable production, and further provided
Owner is not in breach
or default of a material term or condition hereunder, then Owner
shall be
entitled to receive the applicable royalty specified below, it being
understood and agreed that Owner
shall bear and be responsible for the payment of any and all third
party
royalties or use payments of any kind claimed by or through Owner
to be
payable in connection with the Property ("Third Party Royalties"),
and
shall fully indemnify WDP in connection with any and all Third Party
Royalties.
|
9
a.
|
Theatrical
Sequel. If WDP, in its sole discretion, produces a feature-length
Theatrical Motion Picture Sequel to the Picture based upon a character
(whether or not the name of such character in such Theatrical Motion
Picture
Sequel is the same as the name of such character in the Property)
or plot
line(s)
from the Property which does not appear in the Picture, Owner shall
be
entitled
to one hundred percent (100%) of the Purchase Price actually paid
to
Owner
pursuant to Paragraph 2.6 above and one hundred percent (100%) of
the
Production
Bonus actually paid to Owner pursuant to Paragraph 2.7. above plus,
as
a contingent payment, contingent payments of such sequel, which payments
shall
be equal to one hundred percent (100%) of the contingent payments
to which
Owner was entitled for the Picture as set forth in Paragraph 2.9
above
(e.g.,
[i] at such time, if ever, that such feature-length Theatrical
Motion
Picture Sequel
achieves Start Point #1, the flat sum of $250,000 [ii] at such time,
if
ever, that
such feature-length Theatrical Motion Picture Sequel achieves Start
Point #2,
an amount equal to 1-1/4% of 100% of Adjusted Defined Receipts, if
any, of
such
Sequel accruing from Start Point #2 and [iii] at such time, if ever,
that
such feature-length
Theatrical Motion Picture Sequel achieves CP Start Point, an amount
equal to 2-1/2% of the Adjusted Defined Receipts, if any, of such
Sequel,
on a prospective basis); provided, however, that if WDP, in its sole
discretion,
produces a feature-length Theatrical Motion Picture Sequel that is
based
upon a character (whether or not the name of such character in
such Theatrical
Motion Picture Sequel is the same as the name of such character in
the
Property) or plot line(s) from the Property which appears in the
Picture,
Owner
shall be entitled to one-half (1/2) of the Purchase Price actually
paid to
Owner
pursuant to Paragraph 2.6 above and one-half (1/2) of the Production
Bonus
actually paid to Owner pursuant to Paragraph 2.7 above plus, as a
contingent
payment, a percentage of the contingent payments (if any) of such
feature-length
Theatrical Motion Picture Sequel, which contingent payment shall
be
equal to one-half (1/2) of the contingent payments to which Owner
was
entitled
for the Picture as set forth in Paragraph 2.9 above (e. [i] at such
time,
if
ever, that such feature-length Theatrical Motion Picture Sequel achieves
Start Point
#1, the flat sum of $125,000 [ii] at such time, if ever, that such
feature-length
Theatrical Motion Picture Sequel achieves Start Point #2, an amount
equal
to 0.625% of 100% of Adjusted Defined Receipts, if any, of such Sequel
accruing
from Start Point #2 and [iii] at such time, if ever, that such
feature-length
Theatrical Motion Picture Sequel achieves CP Start Point, an amount
equal
to 1-1/4% of the Adjusted Defined Receipts, if any, of such Sequel,
on a
prospective
basis).
|
b.
|
Theatrical
Remake. One-third (1/3) of the Purchase Price actually paid to Owner
pursuant to Paragraph 2.6 above and one-third (1/3) of the Production
Bonus actually paid to Owner pursuant to Paragraph 2.7. above plus,
as a
contingent payment, contingent payments of such feature-length Theatrical
Motion Picture Remake, which payments shall be equal to one-third
(1/3) of
the contingent payments to which Owner was entitled for the Picture
as set
forth in Paragraph 2.9 above (e.g„ [i] at such time, if ever, that such
feature-length Theatrical
Motion Picture Remake achieves Start Point #1, the flat sum of
$83,333
[ii] at such time, if ever, that such feature-length Theatrical Motion
Picture
Remake achieves Start Point #2, an amount equal to 0.42% of 100%
of
Adjusted Defined Receipts, if any, of such Remake and [iii] at such
time,
if ever, that such feature-length Theatrical Motion Picture Remake
achieves CP Start Point, an amount equal to 0.83% of the Adjusted
Defined
Receipts, if any, of such Remake, on a prospective
basis).
|
10
c.
|
Television
Series.
|
(i)
|
If
either: (A) 25,000 or more units of the Property are sold as a
graphic novel (provided that Owner submits documentation substantiating
such amount in form and substance acceptable to WDP in its sole
discretion) prior to commencement of principal photography of the
Picture
or (B) the Property is listed among the top 200 titles on ICv2's
Top 300
Comics Actual Index (xxx.xxx0.xxx) during any month prior to the
commencement of principal photography of the Picture, and the Picture
is
produced and released as a feature-length Theatrical Motion Picture,
then
the following royalties are payable for each episode of a television
series based upon the Picture, as produced for a particular broadcast
season:
|
Primetime
Network (i.e., ABC, CBS or NBC)
|
||||
Running
Time
|
Payment
|
|||
30
minutes (or less)
|
$ |
2,000
|
||
60
minutes (or less, but in excess
|
$ |
2,500
|
||
of
30 minutes)
|
||||
90
minutes (or more)
|
$ |
3,000
|
||
Non-
Primetime Network or Non-Network
|
||||
Running
Time
|
Payment
|
|||
30
minutes (or less)
|
$ |
1,000
|
||
60
minutes (or less, but in excess
|
$ |
1,250
|
||
of
30 minutes)
|
||||
90
minutes (or more)
|
$ |
1,500
|
(ii)
|
If:
(A) 25,000 units of the Property are not sold as a graphic novel
prior to commencement of principal photography of the Picture or
(B) the
Property is not listed among the top 200 titles on ICv2's Top 300
Comics
Actual Index (xxx.xxx0.xxx) during any month prior to the
commencement
of principal photography of the Picture, and the Picture is produced
and
released as a feature-length Theatrical Motion Picture, then in lieu
of
the television series royalties set forth in Paragraph 3.1.c (i)
above,
the following royalties are payable for each episode of a television
series based upon the Picture, as produced for a particular broadcast
season:
|
11
Primetime
Network (i.e., ABC, CBS or NBC)
|
|
Running
Time
|
Payment
|
30
minutes (or less)
|
$500
|
60
minutes (or less, but in excess
|
$1,000
|
of
30 minutes)
|
|
90
minutes (or more)
|
$1,500
|
Non-
Primetime Network or Non-Network
|
|
Running
Time
|
Payment
|
30
minutes (or less)
|
$250
|
60
minutes (or less, but in excess
|
$500
|
of
30 minutes)
|
|
90
minutes (or more)
|
$750
|
d.
|
Movies(s)-of-the-Week
or Mini Series. An aggregate sum of $25,000
for the first two (2) hours, $10,000 for each additional hour thereafter
(prorated for portions thereof), not to exceed a maximum of $100,000,
regardless
of running time.
|
e.
|
Reruns
and Royalties. Twenty percent (20%) of the applicable royalty
set forth in Paragraphs 3.1.c. and 3.1.d. above shall be payable
for each
of the first five (5) network reruns in the combined territory of
the
United States and
Canada. No further rerun payments shall be made thereafter unless
required
by the MBA (as defined below), and if so required, at the minimum
rate
specified therein.
|
f.
|
Generic
Spin-Off Series. If WDP, in its sole discretion, produces a so-called
"generic" spin-off series based upon a television series based upon
the
Picture, and if Owner receives sole "Based Upon Characters Created
by"
credit with respect to the television series, then Owner shall be
entitled
to receive an amount
equal to fifty percent (50%) of the applicable amount set forth in
Paragraph
3.1.c., above, for each so-called "generic" spin-off series. A "generic"
spin-off series is a series in which a central character in a continuing
role was created
by Owner and appeared in the Picture and the original series based
thereon.
No royalties will be payable to Owner for any so-called "planted"
spinoff
series. A "planted" spin-off series is a spin-off from the original
television series
in which no central character in the Picture or the original television
series appears in a continuing role in the spin-off
series.
|
12
g.
|
Payment
of Royalties. Unless specified otherwise, theatrical payments
due under this Paragraph 3.1 shall be payable upon commencement of
principal photography and television payments shall be payable upon
the
initial
United States broadcast. Except as expressly set forth herein, WDP
shall
not be obligated to make any so-called residual, re-run, foreign
use or
theatrical use payments to Owner with respect to any motion pictures
produced by WDP based on the
Property.
|
h.
|
Inclusive
of MBA Minimums. To the extent, if at all, this Agreement is subject
to the Writers Guild of America Theatrical and Television Basic
Agreement
(the "MBA"), the royalty and rerun payments set forth in this Paragraph
3. are inclusive of any minimum royalties and rerun fees payable
under
the MBA for the corresponding use. Any additional payment required
by the
MBA under this or any other paragraph of this Agreement shall be
payable
at the minimum rat e required under the MBA.
|
i.
|
Payments
in Lieu of Any Other Royalties. The payments set forth in
Paragraph 3.1 are in lieu of any other sequel, remake, or separation
of
rights payments,
including, without limitation, any such payments, if any, that Owner
would
be entitled to receive pursuant to any applicable collective bargaining
agreement.
|
3.2
|
Merchandising.
If the Picture is produced and released as a featurelength Theatrical
Motion Picture, and provided Owner is not in breach or default of
a
material term or condition hereunder, Owner shall be entitled to the
following merchandising
royalty:
|
a.
|
If
either: (A) 25,000 or more units of the Property are sold as a
graphic
novel (provided that Owner submits documentation substantiating such
amount in form and substance acceptable to WDP in its sole discretion)
prior to commencement of principal photography of the Picture or
(B) the
Property is listed
among the top 200 titles on ICv2's Top 300 Comics Actual Index
(xxx.xxx0.xxx)
during any month prior to commencement of principal photography
of the Picture:
|
i.
|
At
such time, if ever, that the domestic i.e., United States and Canada)
theatrical box office gross revenues as reported in
Daily
Variety
(the "Domestic Box Office Revenue") of the Picture equals or exceeds
one and three-quarter times (1 -3/4x) the "Negative Cost" (as defined
in
Paragraph 3.2.d.i. below) of the Picture (the "Merchandise Royalty
Start
Point"), Owner shall be entitled to an amount equal to six and
one-half percent (6-1/2%) of 100% of "Net Merchandising Income" (as
defined in Paragraph 3.2.d.ii. below), if any, retroactive to first
dollar
of Net Merchandising Income, if any. (By way of example only, if
the
Negative Cost of the Picture equals $40,000,000, then Owner would
be
entitled to receive
an amount equal to six and one-half percent (6-1/2%) of 100% of Net
Merchandising Income, if any, retroactive to first dollar of Net
Merchandising
Income, if any, when and if the Picture achieves Domestic Box Office
Revenue of at least $70,000,000).
|
13
ii.
|
At
such time, if ever, that the Domestic Box Office Revenue of the Picture
equals or exceeds two times (2x) the Negative Cost of the Picture,
Owner
shall be entitled to an amount equal to seven and one-half percent
(7-1/2%) of 100% of Net Merchandising Income, if any, retroactive
to first
dollar of Net Merchandising Income, if
any.
|
iii.
|
At
such time, if ever, that the Domestic Box Office Revenue of the Picture
equals or exceeds two and one-half times (2-1/2x) the Negative
Cost of the Picture, Owner shall be entitled to an amount equal to
eight
and three-quarters percent (8-3/4%) of 100% of Net Merchandising
Income, if any, retroactive to first dollar of Net Merchandising
Income, if any.
|
iv.
|
Until
such time, if ever, that the Merchandise Royalty Start Point is achieved,
the Defined Receipts, if any, of the Picture shall include merchandising
royalties, as defined in Paragraph 2 of Schedule B to Exhibit
CB ("the CB Merchandising Royalties").
|
v.
|
Disgorgement.
If and when the
Merchandise Royalty Start Point
is achieved, an amount equal to the CB Merchandising Royalties
shall
be removed and disgorged from the Defined Receipts of the Picture.
The
CB Merchandising Royalties and components thereof, including without
limitation, revenues, royalties and associated costs utilized in
the calculation
of CB Merchandising Royalties which are removed and disgorged
from Defined Receipts pursuant to the preceding sentence shall
be
included in the calculation of Net Merchandising Income. An amount
equal
to any sums payable to Owner as a result of including CB Merchandising
Royalties in Defined Receipts shall be fully credited and deducted
from Owner's share of Net Merchandising Income, as applicable.
|
b.
|
If:
(A) 25,000 units of the Property are not sold as a graphic novel
prior to
commencement of principal photography of the Picture or (B) the
Property
is not listed among the top 200 titles on ICv2's Top 300 Comics Actual
Index (xxx.xxx0.xxx) during any month prior to commencement
of principal photography of the Picture, then, in lieu of the
merchandising royalty set forth in Paragraph 3.2.a. above, at such
time,
if ever, that the Picture achieves Start Point #1, Owner shall be
entitled
to an amount equal to five percent (5%) of 100% of "Net Merchandising
Income" (as defined in Paragraph 3.2.d. below), if any, retroactive
to
first dollar of Net Merchandising Income, if
any.
|
14
(i)
|
Until
such time, if ever, that Start Point #1 is achieved, the Defined
Receipts, if any, of the Picture shall include CB Merchandising Royalties.
|
(ii)
|
Disgorgement.
If and when the Picture
achieves Start Point #1, an amount equal to the CB Merchandising
Royalties
shall be removed and disgorged from those Defined Receipts included
in the
calculation of Start Point #1, to the extent that the removal and
disgorgement of such Defined Receipts does not prevent the Picture
from
achieving Start Point #1. The CB Merchandising Royalties and components
thereof, including without limitation, revenues, royalties and associated
costs utilized in the calculation of CB Merchandising Royalties which
are
removed and disgorged
from Defined Receipts pursuant to the preceding sentence shall be
included
in the calculation of the Net Merchandising Income. Start Point
#1 shall be recalculated in accordance with the prior sentence for
each
applicable accounting period until an amount equal to the total CB
Merchandising
Royalties that are removed and disgorged from Defined Receipts
are fully utilized and included in the calculation of the Net Merchandising
Income, as applicable. An amount equal to any sums payable
to Owner as a result of including CB Merchandising Royalties in Defined
Receipts shall be fully credited and deducted from Owner's share
of Net
Merchandising Income, as
applicable.
|
c.
|
Owner's
share of Net Merchandising Income set forth in this Paragraph
3.2 shall be inclusive of any amounts payable to Owner in connection
therewith pursuant to any applicable guild agreement (which shall
be
deemed paid at the minimum applicable payment required).
|
d.
|
Definitions.
The following definitions shall apply to this Paragraph 3.2:
|
(i)
|
"Negative
Cost" as referenced herein shall be defined as an amount equal to
the sum
of the following: (a) the Cost of Production of the Picture as set
forth
in Paragraph 1.5 of Schedule 1. of WDP's Exhibit "CB" attached hereto
and
incorporated herein; provided, however, that solely for
the purpose of calculating Negative Cost hereunder, the third to
last
sentence
of Paragraph 1.5 of Schedule 1. of WDP's Exhibit "CB" shall be deleted;
(b) fifteen percent (15%) of the Cost of Production as set forth
in
Paragraph D. of WDP's Exhibit "CB" (the "15% Charge"); and (c) the
funding
charge set forth in Paragraph C. of WDP's Exhibit "CB" (the "Funding
Charge"); provided, however, with respect to any reference herein
to a multiple of the Negative Cost of the Picture, the applicable
multiplier
shall be applied only to the Cost of Production and not to the
15%
Charge or the Funding Charge which shall be included only once.
By
way of example only, and without limiting the foregoing, "two (2)
times
the Negative Cost" shall be calculated as an amount equal to the
sum of
the
following: a) two (2) times the Cost of Production; b) an amount
equal to
the 15% Charge; and c) an amount equal to the Funding Charge.
|
15
(ii)
|
With
respect to items of merchandising (including interactive games and
other
products and services) based on the Picture, "Net Merchandising
Income" as used herein shall mean as follows:
|
(a)
|
For
items sold by a licensee of WDP or licensee of an affiliate of WDP
("WDP
Affiliate"), the royalties WDP (or WDP Affiliate,
if applicable) receives from such licensee that are remaining
after WDP first deducts a percentage deduction of thirty percent
(30%) on
all such royalties and thereafter deducts any outof-pocket costs
and
royalties to third parties (including any royalty granted to Owner
in
connection with the Picture other than as the rights holder as set
forth
in this Agreement); or
|
(b)
|
For
items sold by WDP or WDP Affiliate at the wholesale or
retail level, at WDP's discretion, an amount equal to either: (A)
seven
percent (7%) of the wholesale price of such items sold by WDP at
the
wholesale
level (less a reasonable allowance for returns); or (B) seven percent
(7%) of fifty percent (50%) of the gross retail revenues of such
items
sold by WDP at the retail level (less a reasonable allowance for
returns)
after WDP first deducts a percentage deduction of thirty percent
(30%)
inclusive of subdistributor fees and thereafter deducts any out-ofpocket
costs and royalties to third parties (including any royalty granted
to
Owner in any capacity in connection with the Picture other than as
the
rights holder as set forth herein).
|
(c)
|
In
no event shall any items of merchandise be treated as falling under
both
provisions (i) and (ii) above. Posters furnished to exhibitors for
display
or promotion, advertisements, jackets of video discs and cassettes
and
phonorecords, printed programs and promotional novelizations of the
story
of the Picture and other publications
relating to the Picture, soundtrack recordings from the Picture,
and
distribution of promotional material and exhibition of any "trailer"
or
Featurette (as defined in Paragraph 16 below) for the Picture, shall
not
be considered "merchandise."
|
e.
|
Owner
shall have the right to consult with WDP with respect to merchandise
in
connection with the Picture; provided that in the event of disagreement
WDP's decision shall be final and binding. Owner hereby acknowledges
that other parties may have similar consultation rights with WDP
in
connection with the Picture. Owner's right of consultation shall
be
personal to Owner and may not be assigned or delegated to any third
party
|
16
3.3
|
Live
Stage Production Royalty.
|
a.
|
"Broadway"
Production. If WDP exercises the Stage Rights (as defined
in Paragraph 5.1.f. below) hereunder and WDP produces a "first-class"
(as
such term is customarily defined in the legitimate stage industry)
live
stage production
based on the Property, and such stage production is performed in
New
York on "Broadway" (a "Broadway Production"), then, provided Owner
is not
in
breach or default hereunder, Owner shall be entitled to receive the
following, as
applicable:
|
(1)
|
the
sum of $10,000 upon the date (the "Opening Date") of the first paid
public
performance of such Broadway Production in New York on "Broadway"
(if
ever);
|
(2)
|
the
additional sum of $10,000 at such time, if ever, that such Broadway
Production has been continuously performed in New York on "Broadway"
for a
period of one (1) year from the Opening Date;
and
|
(3)
|
the
additional sum of $10,000 at such time, if ever, that such Broadway
Production has been continuously performed in New York on "Broadway"
for a
period of two (2) years from the Opening
Date.
|
b.
|
"Off-Broadway"
Production. If WDP exercises the Staqe Rights
hereunder and WDP produces a "first-class" (as such term is customarily
defined in the legitimate stage industry) live stage production based
on
the Property, and such stage production is performed in
New York
"Off-Broadway" (i.e., any theatre in the city of New York, seating
no less
than ninety-nine [99] persons and no more than four hundred and
ninety-nine
[499] persons) (an "Off-Broadway Production"), then, provided Owner
is not
in breach or default hereunder, Owner shall be entitled to receive
the following, as applicable:
|
(1)
|
the
sum of $5,000 at such time, if ever, that such Off-Broadway
Production has been continuously performed in New York "Off-Broadway"
for
a period of one (1) year from the date (the "Off-Broadway Opening
Date")
of the first paid public performance of such Off-Broadway Production
in
New York "Off-Broadway"; and
|
(2)
|
the
additional sum of $5,000 at such time, if ever, that such Off-Broadway
Production has been continuously performed in New York "Off-Broadway"
for
a period of two (2) years from the OffBroadway Opening
Date.
|
17
d.
|
Except
as set forth in Paragraphs 3.3.a and 3.3.b. above, Owner shall
not be entitled to any compensation in connection with WDP's exercise
of
the Stage Rights set forth in Paragraph 5.1.f.
above.
|
4.
|
CREDIT
|
Provided
that Owner is not in breach or default of a material term or condition
under
this Agreement and the Property is listed on the Diamond Comic Distributors,
Inc. U.S.
preview catalog prior to the commencement of principal photography of the
Picture,
then subject to WDP's standard exclusions and exceptions (including artwork
title exceptions) and subject to any guild or union restrictions, Owner shall
be
accorded credit on any feature-length Theatrical Motion Picture produced and
released hereunder
which is substantially based upon the Property, as follows:
4.1
|
Source
Credit.
|
a.
|
On-Screen:
On a separate card (which card may be shared in WDP's
sole discretion with other source material on which the Picture is
based)
in the main titles, if any (otherwise in the end titles), below or
after
the title, in substantially the form of "Based on the Platinum Studios
graphic novel created by Xxxxx Xxxxxxxx Xxxxxxxxx," or if the title
of the
Picture is materially different from that of the Property, then said
credit shall be substantially in the form of "Based on the Platinum
Studios graphic novel `Unique' created by Xxxxx Xxxxxxxx Xxxxxxxxx,"
in an average size of type not less than the larger of (i) fifty
percent
(50%) of the average size of type of the title of the Picture on
screen or
(ii) one hundred percent (100%) of the average size of type utilized
to
accord the screenwriter
credit on screen.
|
b.
|
Paid
Ads: In paid ads issued or controlled by WDP, in the billing block
portion only, if any (i.e., if such otherwise applicable paid ad
does not
have a billing block, Owner shall not be entitled to receive credit
in
such paid ad), below
or after the regular (i.e., not artwork) title of the Picture, in
substantially the form "Based on the graphic novel by Xxxxx Xxxxxxxx
Xxxxxxxxx," or if the title of the Picture is materially different
from
that of the Property, then said credit shall be substantially in
the form
of "Based on 'Unique' by Xxxxx Xxxxxxxx Xxxxxxxxx," in an average
size of
type not less than the larger of (i) thirty-five percent (35%) of
the
average size of the regular (i.e., not artwork) title of the Picture
in
such billing
block or (ii) one hundred percent (100%) of the average size of type
utilized
to accord the screenwriter credit in such billing
block.
|
c.
|
Excluded
Ads: In the billing block portion only, if any, of any so-called
excluded ads issued or controlled by WDP in which the screenwriter
is
accorded credit in such billing block (i.e., if such otherwise applicable
excluded ad does not have a billing block, then Owner shall not be
entitled to receive credit in such excluded ad), below or after the
regular (i.e., not artwork) title of the Picture in such billing
block, in
substantially the form "Based on the graphic novel
by Xxxxx Xxxxxxxx Xxxxxxxxx," or if the title of the Picture is materially
different
from that of the Property, then said credit shall be substantially
in the
form of "Based on `Unique' by Xxxxx Xxxxxxxx Xxxxxxxxx," in an average
size of type not less than the larger of: (i) thirty-five percent
(35%) of
the average size of type of the regular (i.e., not artwork) title
of the
Picture in such billing block; or (ii) one hundred percent (100%)
of the
average size of type utilized to accord the screenwriter credit in
such
billing block. Notwithstanding the foregoing, Artist shall
not be entitled to receive credit in congratulatory, nomination and/or
award ads, special ads, ads specially exempted by Paragraphs 8-203d.,
8-203f. and 8203g. of the DGA Basic Agreement, ads announcing a personal
appearance, radio ads and the audio portion of teasers, trailers
and
television ads.
|
18
4.2
|
WDP
shall accord on screen credit in the end titles of the Picture to
the
author
and the illustrator of the Property in substantially the form "Graphic
novel written by
Xxxx Xxxxxx and illustrated by Stefano Cardoselli," or if the title
of the
Picture is materially
different from that of the Property, then said credit shall be
substantially in the form
of "Based on `Unique' written by Xxxx Xxxxxx and illustrated by Stefano
Cardoselli."
|
4.3
|
As
used herein, "size" means height, width and thickness. All other
characteristics
of Owner's credit under this Agreement shall be at WDP's sole discretion.
WDP's inadvertent failure to accord credit in accordance with the
provisions of this Paragraph 4. shall not be deemed a breach of this
Agreement. Within a reasonable
time after receipt of written notice from Owner specifying a material
failure to accord Owner credit in accordance with this Agreement,
WDP
shall use reasonable efforts to cure prospectively any such material
failure to accord Owner credit hereunder with regard to positive
prints
and/or advertising materials, the masters for which are created after
the
date of WDP's receipt of such notice. WDP shall use reasonable
efforts
to inform all third party subdistributors of the credit obligations
contained herein; provided, however, that the failure of said
subdistributors to comply with the abovecredit
requirements shall not constitute a breach of this
Agreement.
|
5.
|
RIGHTS
GRANTED
|
5.1
|
Owner
hereby specifically and irrevocably grants to WDP, solely, exclusively,
throughout the universe and in perpetuity, all right, title and interest
of every kind and nature in and to the Property (subject only to
the
reserved rights enumerated in Paragraph 6. below), including without
limitation the following:
|
a.
|
The
right to develop, produce and exploit Motion Pictures (including
without
limitation, Theatrical Motion Pictures and Television Motion Pictures
and
Sequels and Remakes thereof) based upon or adapted from all or any
part of
the Property throughout the universe, in perpetuity and in all languages
and all elements
therein for all now known or hereafter existing uses, media, and
forms,
including, without limitation, all copyrights (and renewals and extensions
thereof), motion picture, television, digital television, videocassette
and video or laser disc, any
computer-assisted media (including, but not limited to, CD-ROM, CD-I
and
similar disc systems, interactive media and multi-media and any other
devices or methods now existing or hereafter devised) and allied
rights
therein.
|
19
b.
|
The
right to produce Sound Records in any format or medium now known
or
hereafter devised of all or any part of the Property and any and
all
Motion
Pictures (including, without limitation, Theatrical Motion Pictures
and
Television
Motion Pictures and Sequels and Remakes thereof) produced hereunder,
specifically including the exclusive motion picture synchronization
rights
in the Property and each and every part thereof, and the exclusive
right
to use all or any part of the Property upon the parts of instruments
serving to reproduce
the same mechanically.
|
c.
|
The
right to adapt, use, dramatize, arrange, change, vary, modify,
alter,
transpose and make musical or nonmusical versions of the Property
and
any
parts thereof including, without limitation, the characters; to add
to,
interpolate
in and subtract-or omit from the Property, plot, subplots, themes,
situations,
action, titles, language, speech, songs, music, lyrics, dancing,
choreography,
sound, sound effects, scenes, dialogue, incidents, characters and
characterizations
thereof; to translate any of the foregoing into all languages; to
include
in Motion Pictures and other items provided for in this Paragraph
5. such
plot,
subplots, themes, situations, action, titles, language, speech, songs,
music, lyrics,
dancing, choreography, sound, sound effects, scenes, dialogue, incidents
and
characters, characterizations and other material (whether or not
based
upon, or
taken from, the Property) as WDP, in its sole and uncontrolled discretion,
may deem
advisable, it being the intention hereof that WDP shall have the
exclusive, absolute
and unlimited right to use the Property, and each and every part
thereof,
for motion picture purposes (and all other purposes granted hereunder)
in
any manner it may, in its uncontrolled discretion, deem advisable
with the
same
force and effect as though WDP were the sole author of the Property,
all
without
in any way being accountable or liable to Owner for any use that
WDP
may
make thereof, excepting only the compensation and screen credit
obligations
(if any) to Owner contained herein. Owner hereby waives the benefits
of any provision of law known as "droit moral," or any similar laws,
and
agrees
not to institute, support, maintain or authorize any action or lawsuit
on
the ground
that any Motion Pictures or Sound Records, or other items produced
hereunder
in any way constitute an infringement of any of Owner's "droit moral"
or
a defamation or mutilation of any part thereof, or contain unauthorized
variations,
alterations, modifications, changes or translations. Owner shall
not
have
any right, title or interest whatsoever in or to any plot, subplot,
story,
character,
music, lyrics, dialogue, screenplay or other material of any kind
created
by or for WDP in the exercise of WDP's rights hereunder, or in any
Motion
Pictures produced hereunder or any material created by WDP in connection
therewith.
|
d.
|
The
right to telecast directly from the performance to the audience
on
live television any adaptation of the Property.
|
20
e.
|
The
right to broadcast and exploit the Property or any part thereof including,
without limitation, the characters, and the right to broadcast and
exploit
all or any part of any Motion Picture (including, without limitation,
Theatrical Motion
Pictures and Television Motion Pictures and Sequels and Remakes
thereof)
or Sound Record produced hereunder, by radio and television, digital
television, videocassette, video or laser disc and computer games,
any
computer assisted media (including, but not limited to, CD-ROM, CD-I
and
similar disc systems,
interactive media and multi-media and any other devices or methods
now
existing or hereinafter devised), or otherwise, whether by electrical
transcription,
film, tape, or otherwise, in any language or medium.
|
f.
|
The
right to perform the Property or adaptations thereof on the spoken
stage with actors appearing in person in the immediate presence of
the
audience
("Stage Rights"), including, without limitation, the sole and exclusive
right,
in perpetuity, throughout the universe, to exercise all theme park
rights
with respect to the Picture and/or the Property, including without
limitation the right to use
the Picture, the title of the Picture, characters therefrom and
elements thereof
(including, without limitation, characters, scenes, music, costumes
and
sets
and/or footage from the Picture) in WDP's (its parent and the
subsidiaries, licensees
and affiliates thereof, collectively "Disney" for purposes of this
Paragraph
5.1) existing and future theme parks, resorts, attractions, so-called
location-based
and/or regional entertainment centers, cruise ships and any of
the
foregoing licensed or operated by Disney (collectively, "Theme Parks"),
and in
any Disney-themed variety show (e g„ Disney's World-On-Ice, any Disney
Circus)
or other arena type show, in any manner and for any use, whether
now
known
or hereafter invented or devised, including, but not limited to,
in
connection
with live shows in Theme Parks, theatrical stage performances in
Theme
Parks, so-called "walk-around" performances or characters and/or
as the
basis in whole or in part for any ride or attraction in any Theme
Park,
and to make
sponsorship deals in connection with any of the foregoing, with no
obligation
whatsoever, financial or otherwise, to Owner.
|
g.
|
The
right to produce and publish a novelization of the Picture; for
purposes
of advertising and promotion of the Picture and not for sale, the
right to
produce and publish (with or without illustrations by photographs,
drawings or cartoons)
stories, synopses, excerpts, summaries, resumes and/or fictionalizations
based upon or adapted from the Property or any part or element thereof
including, without limitation, the characters, and to publish "making
of
books
concerning the Picture. WDP shall not publish other publications
including
comic books or graphic novels based upon the Picture without first
obtaining
Owner's permission.
|
21
h.
|
The
right to write and prepare screenplays, teleplays,
treatments, storyboards
and all other plans, specifications and designs for Motion Pictures
and
any Sound Records produced hereunder, and to cause musical compositions,
including both words and music, utilizing or based upon or adapted
from all or any part of the Property or any title or titles thereof
to be
written and composed, and to include such musical compositions in
Motion
Pictures and Sound Records produced hereunder.
|
L
|
The
right to manufacture, sell, furnish, supply and distribute products,
by-products, services, facilities, merchandise and commodities of
every
nature and description now known or hereafter devised, including,
but not
limited
to, still photography, drawings, posters, artwork, toys, games, items
of
wearing
apparel, foods, beverages and similar items, which make reference
to or
are based upon or adapted from the Property or any part thereof or
any
Motion Picture
produced hereunder and the right to make trade deals and commercial
tie-ups
of all kinds involving the Property, or any part thereof, including,
but
not limited
to, the characters.
|
j.
|
The
right to copyright Motion Pictures (including, without limitation,
Theatrical
Motion Pictures and Television Motion Pictures and Sequels and
Remakes
thereof) and any versions thereof, Sound Records, musical compositions,
screenplays, teleplays, characters and all other items provided for
in
this Paragraph 5. and secure copyright and/or trademark registration
and
protection
thereof in all countries and territories where such protection is
available,
in WDP's own name or otherwise, together with the right to manufacture
copies thereof, and to distribute, sell, vend, lease, license, exhibit,
transmit,
broadcast, project, reproduce, publish, use, perform, advertise,
publicize,
market, exploit, turn to account and derive revenue in any form or
manner
therefrom, without any territorial restriction whatsoever, by any
and all
media,
methods, systems and processes now or hereafter known, invented,
used
or contemplated, specifically including television, digital television,
video and
computer games, video or laser discs, videocassettes and any
computer-assisted
media (including, but not limited to, CD-ROM, CD-I and similar disc
systems,
interactive media and multi-media and any other devices or methods
now
existing or hereafter devised), and the right to import or export
such
copies into
or out of any territory without restriction. It is further expressly
understood and
agreed that Motion Pictures and all other items that may be produced
hereunder
shall constitute independent derivative works, and WDP and its
successors,
assigns and licensees shall have the perpetual right to exercise
the
rights
granted in this Paragraph 5.1.j. irrespective of the expiration,
termination, transfer
or renewal of any copyright owned or controlled by Owner, or any
heirs,
executors,
widow, widower, children, successors or assigns of Owner. WDP shall
in no event have any less rights by reason of this Agreement than
any
member
of the public may now or hereafter
have.
|
22
k.
|
Insofar
as Owner is concerned, the right to use a translation in any language
of the title or titles by which the Property or any part thereof
are now
known
or may hereafter be known as the title or titles of the Motion Picture
(whether
or not based upon or adapted from the Property) produced hereunder,
and
the right to exploit, distribute and exhibit any Motion Picture produced
hereunder
under any other title or titles that WDP may deem proper in its
uncontrolled
discretion.
|
1.
|
The
right to use any of the rights set forth in this Paragraph 5. in
connection
with the promotion, publicizing and advertising of any Motion Picture
or
other production relating to the Property or the exploitation thereof
and
in connection
with any commercial tie-up, or the manufacture, advertising, distribution
and/or sale of any products, commodities or services in connection
therewith.
|
M.
|
The
right to utilize the rights granted hereunder in connection with
any
so-called "Author-Written Sequel(s)" (i.e., a literary property [graphic
novel, comic book, story, novel, drama or otherwise], whether written
before or after the Property and whether written by Owner or by a
successor-in-interest of Owner using one or more of the characters
appearing in the Property, and whose plot is substantially different
from
that of the Property).
|
n.
|
All
rights, including all exclusive exploitation rights, of every kind
and
nature (including any and all copyrights and neighboring rights,
to the
extent such assignment is allowed by law) in and to the Property
to WDP.
All rights to such Property are owned by WDP solely and exclusively,
for
the duration of the rights in each country and area and space, in
all
languages, and throughout the universe. Owner and WDP are aware and
hereby
acknowledge that new rights to the Property may come into being and/or
be
recognized in the future, under the law and/or in equity (hereafter
the
"New Exploitation Rights"), and Owner intends
to and does hereby grant and convey to WDP any and all such New
Exploitation
Rights to the Property granted by Owner hereunder. Owner and WDP
are also aware and do hereby acknowledge that new (or changed) (1)
technology,
(2) uses, (3) media, (4) formats, (5) modes of transmission and (6)
methods of distribution, dissemination, exhibition or performance
(hereafter the "New Exploitation Methods") are being and will inevitably
continue to be developed
in the future, which would offer new opportunities for exploiting
the
Property.
Owner intends and does hereby grant and convey to WDP any and all
rights
to such New Exploitation Methods with respect to the Property. Owner
hereby
agrees to execute any document WDP deems in its interest to confirm
the
existence of the preceding and to effectuate its purpose to convey
such
rights
to WDP, including without limitation the New Exploitation Rights
and any
and all rights to the New Exploitation Methods. Owner further hereby
agrees that Owner will not seek (1) to challenge, through the courts,
administrative governmental
bodies, private organizations, or in any other manner the rights
of WDP to
exploit the Property by any means whatsoever or (2) to thwart, hinder
or subvert
the intent of the grants and conveyances to WDP herein and/or the
collection by WDP of any proceeds relating to the rights conveyed
hereunder.
|
o.
|
All
other rights of every kind and character whatsoever now known or
unknown
in and to the Property, subject only to the rights specifically reserved
to Owner in Paragraph 6. below.
|
5.2
|
WDP
shall have all rights herein granted to it in all existing and future
versions,
translations, dramatizations, arrangements, revisions, supplements
and
reissues
of the Property written or published by or with the authority of
Owner and
Owner's
successors, assigns and licensees, as well as all prior drafts, notes,
research, source material and other works owned or controlled by
Owner
upon which the Property is based and from which the Property is adapted.
All rights granted WDP under this Agreement shall be cumulative,
and WDP
may exercise or refrain from exercising any one or more of said rights
separately from, simultaneously, together or in connection with any
other
rights granted to WDP hereby or obtained by WDP from other sources,
and
regardless of whether said rights are granted in the disjunctive
or
conjunctive.
|
6.
|
RESERVED
RIGHTS
|
Only
the
following rights (the "Reserved Rights") to the Property are reserved to Owner
for Owner's use and disposition, subject, however, to the provisions of this
Agreement:
6.1
|
Publication
Rights. Owner shall have the right to publish, distribute and
promote
(provided such promotion shall be consistent with the Reserved Rights
set
forth
in this Paragraph 6 [e.g_, any such promotion shall be static, unless
otherwise approved
in advance in a writing signed by WDP in its sole good faith
discretion]) printed
versions of the Property on a worldwide basis in comic book form
i.e.,
comic books,
comic strips and graphic novels), including translations and reissues,
whether hardcover
or softcover, in magazines or other periodicals, whether in installments
or otherwise,
in any means now known or hereafter devised for the presentation
of text
or comic art by various delivery systems (e.g., electronic retrieval
and
internet transmissions
[provided comic art is static unless otherwise approved in advance
in a
writing
signed by WDP in its sole good faith discretion; provided, and by
way of
example
only, WDP hereby acknowledges that the minimal motion depicted in
Owner's
2003 holiday card
submitted
to WDP (xxxx://xxx.xxxxxxxxxxxxxxx.xxx/xxxxxxx
card 2003.php), a screen
grab of which
is attached hereto and incorporated herein by this reference as
Exhibit
"A," would be approved to the extent the characters depicted do not
have
audible
voices; provided further, that WDP acknowledges that audible narration
by
an offscreen narrator consisting of 200 words or less would be
acceptable]), which may be copyrighted in the name of Owner, all
subject
to WDP's rights provided for in Paragraph 5.
above. Notwithstanding anything to the contrary above, said reserved
publication rights
do not include picture books, coloring books, novelizations and other
publications that do not contain the story line of the Property in
written
words, all of which are included
in the rights granted to WDP. In addition, Owner shall cause the
Publisher(s) of
the Property to execute and deliver to WDP the Publisher's release
in the
form attached
hereto as Schedule II (Publisher's Release) within thirty (30) days
after
the date such agreement is fully
executed.
|
23
6.2
|
WDP
and Owner hereby acknowledge that Owner owns world wide comic book
and
graphic novel publication rights to the
Property.
|
6.3
|
Direct
Market Merchandising. The non-exclusive right to continue to
manufacture,
sell and/or distribute merchandise ("Pre-Existing Merchandise") based
on
the Property
(other than the "Film Elements" [as defined in Paragraph 6.4 below],
which
rights are
granted exclusively to WDP) solely in the so-called "Direct Market"
(as
defined below) pursuant
to binding agreements entered into prior to the date which is eight
(8)
weeks prior to the
commencement of principal photography of the Picture ("Pre-Existing
Merchandise Date").
A complete list of all current agreements of Owner in connection
with
Pre-Existing Merchandise
("Pre-Existing Merchandise Agreements") in existence as of the date
of
execution
of the Agreement is attached hereto as Schedule V. Commencing on
the date
of this
Agreement, Owner shall only enter into merchandising agreements with
respect to the Property
which possess an initial term ending one (1) year from the first
shipping
date (which shipping
date shall be no more than six [6] months from commencement of such
merchandising
agreement) and optional or renewal terms of six (6) months or less.
Owner
acknowledges
that after the Pre-Existing Merchandise Date, Owner shall neither
enter
into any
new merchandising agreement nor renew or allow to be renewed or exercise
or allow to be
exercised any option to extend the term of any merchandising agreement
in
connection with
the Property. For purposes of this Agreement, "Direct Market" shall
mean
and refer to the
economic market comprised of (i) comic book, science-fiction, fantasy,
and/or hobby specialty
stores and the distributors thereto; and (ii) such other comic-book
specialty stores and
comic-book mail-order retailers that purchase some or all of their
new-comics inventory on
predominantly a nonreturnable basis from (A) publishers directly,
(B)
comics-specialty distributors
such as, but not limited to, Diamond Comic Distributors, Inc., and/or
(C)
specialty licensees
such as, but not limited to, Dynamic Forces, Inc. or American
Entertainment. Owner
shall be strictly prohibited from using WDP's name or the name of
WDP's
parent, subsidiaries,
subsidiaries of its parent, affiliates, associates, successors and
assigns
or from making
any reference to the Picture or using any Film Elements, in connection
with, among other
things, the manufacturing, selling, advertising and/or distribution
of the
Pre-Existing Merchandise
without the express prior written approval of a WDP Business Affairs
executive. For
purposes of clarification, WDP's right to manufacture, sell and/or
distribute merchandise based
on the Property shall be non-exclusive on or after the date of WDP's
exercise of the Option,
as more fully set forth in Paragraph 5, above, and shall be exclusive
commencing on the
Pre-Existing Merchandise Date. In connection with Pre-Existing
Merchandise, Owner (a) shall
maintain in full force and effect customary insurance for licensees
with
respect to the manufacture,
distribution and sale of (or any other activity[ies] which involve)
Pre-Existing Merchandise
naming those Owner must indemnify in Paragraph 8, below, as additional
insureds;
and (b) shall otherwise comply with the terms of this Agreement.
|
24
WDP
shall retain the exclusive right to merchandise
the Property pursuant to Paragraph
5 above commencing on the Pre-Existing Merchandise Date and continuing
for
a
period until three (3) years following the conclusion of the domestic theatrical
release
of the Picture (the "Post-Cycle Date"). If at any time following the Post-Cycle
Date
WDP
has ceased merchandising the Property, then Owner may, pursuant to the
conditions
set forth in the preceding paragraph, resume the right to manufacture, sell
and/or
distribute Direct Market merchandise based on the Property ("Post-Cycle
Merchandise")
pursuant to binding agreements entered into after the Post-Cycle Date
and
prior
to the date which is eight (8) weeks prior to the commencement of principal
photography
of another project (e.g, television series, sequel, remake, direct-to-video)
(a
"Subsequent Production") based on the Property ("Post-Cycle Merchandising").
Owner
shall only enter into Post-Cycle Merchandising agreements with respect to the
Property
which possess an initial term of one (1) year or less from the first shipping
date (which
shipping date shall be no more than six [6] months from the commencement of
such
merchandising agreement) and optional or renewal terms of six (6) months or
less.
Owner acknowledges that after the date which is eight (8) weeks prior to the
commencement
of principal photography of a Subsequent Production, Owner shall neither
enter into any new Post-Cycle Merchandising agreement nor renew or allowed
to
be
renewed or exercise or allow to be exercised any option to extend the term
of
any Post-Cycle
Merchandising agreement in connection with the Property. There shall be a
new
Post-Cycle Date for each Subsequent Production which shall be three (3) years
following
the conclusion of the domestic theatrical release of such Subsequent
Production.
6.4
|
General
Restrictions on Reserved
Rights.
|
a.
|
Use
of Film Elements by Owner.
|
(i)
|
Owner
shall have no right in the exercise of any of the Reserved
Rights to use (or to authorize third parties to use) any "Film
Elements" (as defined below) or to promote, publicize, market,
advertise or otherwise exploit the Reserved Rights in such a manner
as to
tie or connect such Reserved Rights with the Picture
or any other production produced by WDP hereunder. As used
herein, "Film Elements" shall mean WDP's name or the name of WDP's
parent,
subsidiaries of its parent, affiliates, successors and
assigns (and any trademarks, copyrights, service marks, or logos
of the foregoing) and any element specifically created, written,
authorized or licensed by or on behalf of WDP (or WDP's parent,
subsidiaries of its parent, affiliates, successors or assigns), whether
in
connection with any Theatrical Production or Television Production
or
exploitation of the Rights or otherwise, including but not
limited to, screenplay, teleplay, title (other than the title "Unique"),
music, lyrics, themes, costumes, designs, plots, scenes, logos, settings,
artwork (including key artwork), characters, advertising
and publicity materials or other
material.
|
25
(B)
|
Nothing
in this Paragraph 6 shall restrict in any manner WDP's
right to design, manufacture, license, sell, display or exploit
posters
furnished exhibitors for display or promotion, advertisements,
jackets
of video devices and sound records relating to any Theatrical Production
or Television Production and distribution of promotional materials
and products (including but not limited to the licensing of any
"give
away" or other items as part of a commercial tie-up arrangement for
any
Theatrical Production or Television Production) and exhibition of
any
"trailer"
or promotional films relating to any Theatrical Production or Television
Production.
|
(C)
|
It
is expressly agreed that Artist's reserved rights under Paragraphs
6.1 and 6.3 above relate only to the Property and not to any screenplay,
characters, teleplay, music, lyrics, sequels or other material written
by
or created by or for or authorized by WDP, even though the same may
contain characters or other elements contained in the
Property.
|
7.
|
WARRANTIES
|
Owner
hereby represents, warrants and agrees that:
7.1
|
Owner
is the sole owner of all rights (including the Rights, as defined
in
Paragraph 5. above) herein granted or intended to be granted and
has full
power and authority to grant said rights to
WDP;
|
7.2
|
Owner
has full power and authority to agree to restrictions upon the
exercise
of the rights (if any) reserved to Owner, including those restrictions
(if
any) as more particularly set forth in Paragraph 6.
above;
|
7.3
|
None
of the rights granted to WDP hereunder has been granted, encumbered,
or otherwise disposed of in any manner to any Person, firm or other
entity
and Owner has not granted any other rights to the Property; no Motion
Picture based in whole or in part upon the Property has been produced
or
authorized by or with the knowledge
or consent of Owner; neither the Property nor any version thereof
nor any
play
or dramatic adaptation based thereon in whole or in part has been
published or presented
or authorized on television, stage or on the spoken stage by or with
the
knowledge
or consent of Owner;
|
7.4
|
Owner
has not done or omitted to do and will not do or omit to do any act
.or
thing by license, grant, or otherwise, which will or may impair or
encumber any of the rights herein granted or interfere with the full
enjoyment of said rights;
|
7.5
|
There
are no claims or litigation pending or threatened which will or might
adversely affect any of the rights herein granted to
WDP;
|
26
7.6
|
The
Property is original with Owner; neither the Property nor any part
thereof
is taken from or based upon any other material except material wholly
owned by Owner; and neither the Property nor any part thereof, or
the
exercise by WDP of the rights herein granted, will violate or infringe
upon the trademark, trade name, copyright, patent, and to the best
of
Owner's knowledge (or that which Owner should know in the exercise
of
reasonable diligence and prudence) literary, dramatic, musical, artistic,
personal,
civil or property right or any other right of any Person, or invade
the
right of privacy or constitute a libel or slander of any
Person;
|
7.7
|
The
Property is not in the public domain, and enjoys, and will enjoy,
either
statutory or (to the extent that it may exist) common law protection
in
the United States and all countries adhering to the Berne and Universal
Copyright Conventions; and the rights granted to WDP hereunder are
and
will be exclusive; and
|
7.8
|
Attached
hereto, marked "Schedule I" and made a part of this Agreement by
this
reference, is a statement of all publications, if any, prior uses,
if any,
prior versions,
adaptations and translations, if any, and copyright status of the
Property. Such
statement shall also set forth the existence, if any, of any valid
agreement with third parties for the publication or dramatic production
of
the Property.
|
8.
|
INDEMNITY
|
8.1.
|
Owner
will defend, indemnify, make good, save and hold harmless WDP,
its
parent, subsidiaries, subsidiaries of its parent and/or affiliated
companies, the officers
and directors of the foregoing, and its successors and assigns, from
and
against
any losses, damages, costs, liabilities, charges, reasonable attorneys'
fees, recoveries,
actions or judgments from a court of competent jurisdiction, penalties,
guild fees or awards, expenses and any other losses whatsoever which
may
be obtained against, imposed upon or suffered by WDP, its parent,
subsidiaries, subsidiaries of its parent and/or affiliated companies,
the
officers and directors of each of the foregoing and its successors
and/or
assigns, by reason of the breach or alleged breach of any warranty,
covenant, agreement or representation herein made by
Owner.
|
8.2.
|
Except
with respect to (i) matters constituting a breach by Owner of any
of the
representations, warranties and/or agreements contained herein, or
(ii)
gross negligence,
willful misconduct, or recklessness by Owner, or (iii) a third party
claim
relating,
referring, or arising out of actions by Owner that are outside the
course
and scope of Owner's services in connection with the Picture, WDP
agrees
to indemnify Owner and hold Owner harmless from and against any and
all
damages and expenses (other than with respect to any settlement entered
into without WDP's written consent or claim to which WDP has not
been
notified) arising out of any third party claim against Owner resulting
from WDP's development, production, distribution and/or exploitation
of
the Picture or any element thereof and shall provide Owner with a
defense
(with counsel
of WDP's choice), provided, Owner cooperates with WDP and follows
WDP's
reasonable instructions in connection with such claim. Nothing herein
shall be deemed a
waiver of WDP's right of subrogation, except that WDP shall waive
its
right of subrogation
to the extent such damages and expenses are covered by this indemnity.
The
foregoing shall not limit WDP's right to include any such damages
and
expenses in the negative cost of the Picture or as a distribution
cost for
the Picture.
|
27
9.
|
PRIOR
INSTRUMENTS
|
9.1
|
Owner
hereby grants to WDP all of Owner's right, title, and interest in
and
to
any and all agreements, assignments, releases and other instruments
or
documents in
writing (collectively "Instruments") heretofore or hereafter executed
in
favor of Owner, or
any predecessor of Owner, insofar as said Instruments grant or purport
to
grant to Owner,
or any such predecessor, any of the rights, privileges and property
herein
granted
to WDP, together with the full benefit of all representations, warranties
and agreements
made by any party in favor of Owner or any such predecessor, insofar
as
the
same pertain to or affect any of the rights, privileges and property
herein granted to WDP.
|
9.2
|
Owner
represents and warrants that: (a) any such Instruments (if any
exist)
have not been amended, modified or cancelled in any way, and are
in full
force and
effect as originally signed; (b) Owner has not granted or assigned
any
right, title or interest
heretofore acquired by Owner in, to or under said Instruments in
a manner
inconsistent
herewith; and (c) there has been paid to the party or parties entitled
thereto all
sums which have heretofore become payable under any of said Instruments,
and, except
as herein specifically provided, Owner will hereafter pay or cause
to be
paid, to the
party or parties entitled thereto, all sums which may hereafter accrue
under said Instruments.
|
10.
|
COPYRIGHTS
|
10.1
|
Owner
further grants and assigns to WDP an exclusive, irrevocable license,
in perpetuity, in and to any and all of Owner's right, title and
interest
in and to any and all copyrights in and to the Property and each
and every
part thereof contained therein, together with all benefits of said
copyrights and all remedies held thereunder, and all actions and
causes of
action for infringement or violation of said copyrights, or any other
rights in the Property or relating thereto, and all damages, profits,
penalties and other recoveries and all other rights of every kind
and
character which Owner may now or hereafter have directly or indirectly
as
a result of any such infringement or violation,
but only insofar as said copyrights pertain to or affect any of the
rights, privileges and property herein granted to
WDP.
|
10.2
|
Owner
agrees: (a) to prevent the Property from becoming injected into the
public
domain; (b) to cause to be affixed to each copy of the Property or
any
part thereof published or offered for sale by or with the authority
of
Owner notice of copyright
complying in all respects with the United States Copyright law and
with
the Universal Copyright Convention; (c) to register the Property
wherever
necessary for such protection; (d) to contract henceforth for the
benefit
of WDP for the above but
not the obligation, to complete any such copyright assignment, fill
in any
blanks which
may be left therein (including dates, Copyright Office registration
information, etc.),
execute the same in Owner's name, or obtain execution thereof by
others,
as the case may be, and record the same in the United States Copyright
Office, or elsewhere, as WDP sees fit. WDP shall provide Owner with
copies
of such documents and five (5) days (reducible in WDP's sole discretion
due to exigencies) to execute such documents before WDP executes
as
Owner's attorney-in-fact.
|
28
11.
|
TRADEMARKS
|
11.1
|
Grant:
WDP grants to Owner and Owner hereby accepts a non-exclusive, worldwide
royalty-free license to use the trademarks (i.e., the words, names,
designs, logos, brands, symbols, devices, trade dress or any combinations
thereof) presently used or hereafter devised in connection with the
Property (collectively, the "Marks") in connection with Owner's Reserved
Rights as set forth in Paragraph 6 above (i.e., the right to publish,
distribute and promote printed versions of the Property in comic
book form
[the "Comic Books"] and the right to manufacture, sell and/or distribute
merchandise
based on the Property solely in the so-called "Direct Market" [the
"Direct-Market
Merchandise"]). The grant of rights herein shall specifically not
include
use of the
Marks in connection with publications or merchandise other than the
Comic
Books or
Direct Market Merchandise or merchandise associated with the Picture
or
any other productions
or derivative works produced by WDP hereunder or based upon the Film
Elements.
|
11.2
|
Term:
The license granted in this Paragraph 11 shall last in perpetuity,
unless
sooner terminated by the terms of this Agreement or pursuant to Owner's
reversion
rights set forth Paragraph 17 below. In the event of a breach of
this
Paragraph
11 by Owner, all use of the Marks by Owner shall cease immediately
upon
Owner's
receipt of notice from WDP of the breach and termination. Upon termination
of the
license granted in this Paragraph 11, all rights granted in this
Paragraph
11 will revert
to WDP.
|
11.3
|
Right
of Owner to Sublicense: Any of the rights granted under this
Paragraph
11 may be sublicensed by Owner during the term of the license. Any
such
sublicense granted by Owner hereunder shall be terminated upon the
termination of this
license.
|
11.4
|
No
Assignment: This license shall be non-assignable. Any attempt by
Owner
to assign this license shall constitute a material
breach.
|
11.5
|
Quality
Control:
|
(a)
|
Owner
acknowledges that if any of the Comic Books or Direct-Market
Merchandise were of inferior quality, the substantial goodwill established
in the Marks would be impaired. Accordingly, Owner agrees that the
goods
comprising
the Comic Books and all Direct-Market Merchandise will (i) be of
high
quality,
(ii) comply with all international, federal, state and local laws
and
(iii) be fit
for consumers' anticipated uses.
|
29
(b)
|
Owner
shall submit to WDP each Comic Book and/or item of Direct-Market
Merchandise to assure compliance with the quality control standards
set forth in Paragraph 11.5(a) above. Any approval by WDP shall not
be
deemed to constitute an opinion by WDP that any item is safe or complies
with all applicable laws. Owner shall remain fully and solely responsible
for all product safety and for ensuring that all Comic Books and
all
Direct-Market Merchandise
are in compliance with all applicable
laws
|
(c)
|
In
the event that the above-stated quality standards are not met or
maintained throughout the term of this license, WDP has the right
to
require that Owner and its affiliates meet the quality standards
as set
forth in Paragraph 11.5 (a) above within a reasonable period of time.
|
11.6
|
Alteration
to the Work: Owner may not make material alterations or changes
to the quality of the Comic Books and Direct-Market Merchandise or
the
Marks after
approval by WDP as set forth in 11.5(b) above without seeking permission
from WDP.
|
11.7
|
Intellectual
Property Rights: Owner agrees that it will not, during the term
of
this license or thereafter, attack the title or any rights of WDP,
or any
related company
of WDP, in and to the Marks. Owner agrees to assist WDP and to cooperate
fully
with WDP to procure any protection or to protect any of the rights
of WDP
to the Marks.
|
11.8
|
Notification
of Third Party Infringement: Owner will notify WDP of any infringement,
imitation or act inconsistent with WDP's ownership of the Marks of
which
Owner
becomes aware. WDP shall in its sole discretion determine whether
or not
to take any action with respect to. such infringement or act and
Owner
agrees to reasonably cooperate
and to comply with any requests by WDP for assistance in pursuing
such
action.
|
11.9
|
Ownership:
Owner's use of the Marks shall inure to WDP's benefit. Owner
acknowledges and agrees that WDP is the exclusive owner of the Marks,
and
of any
trademark incorporating a Xxxx, as well as any future trademark rights
created by other
use on or in association with the Comic Books or Direct-Market
Merchandise. Without
limiting the foregoing, if Owner for any reason is found to have
obtained
any interest
in the Marks (or of any trademark incorporating a Xxxx, as well as
any
future trademark
rights created by other use on or in association with the Comic Books
or
Direct-Market
Merchandise), Owner shall assign those rights to WDP, together with
the
goodwill
attaching to that part of the business in connection with which such
trademarks are
used.
|
30
12.
|
USE
OF OWNER'S NAME
|
WDP
shall
have the right to publish, advertise, announce and use in any manner
or
medium
the name, biography and photographs or other likenesses of Owner in connection
with any exercise by WDP of its rights hereunder; provided, however, that
with
respect to any third party commercial tie-ins in connection with the Picture,
Owner shall
not
be depicted as personally endorsing any product or service; provided further
that
the
use of Owner's name in the billing block in connection with any such third
party
commercial
tie-in shall not constitute a personal endorsement of such product or
service
by Owner.
13.
|
ASSIGNMENT
|
WDP
may
assign, transfer, license, delegate and/or grant all or any part of its rights,
privileges and property hereunder to any Person. This Agreement shall be
binding
upon and shall inure to the benefit of the parties hereto and their respective
heirs, executors, administrators, successors and assigns. Owner shall not
assign, transfer,
license, delegate or grant all or any part of Owner's rights hereunder to any
other Person or entity.
14.
|
DEFINITIONS
|
As
used
herein:
14.1
|
"Copies"
with reference to a Motion Picture or Sound Record, means and includes
any
negative or positive print, dupe, negative, video or other electronic
tape
recording, disc or other physical article of any kind produced, reproduced
or re-recorded by means of any photographic, electrical, electronic,
mechanical, computer-assisted media or other processes or devices
now or
hereafter known, invented, used or contemplated
on which such Motion Picture and/or Sound Record or any part thereof,
is
printed, imprinted, recorded, reproduced or duplicated, together
with any
package, cartridge,
cassette or other container in which the same may be distributed
or
sold.
|
14.2
|
"Copies"
with reference to a screenplay or teleplay, means any typewritten
or
printed copies thereof in substantially the form used in connection
with
production of the Motion Picture involved, whether or not accompanied
by
explanatory notes or comments,
still photographs or other
illustrations.
|
14.3
|
"Copies"
with reference to a musical composition or the lyrics thereof,
means
any copies, arrangements, orchestrations or versions thereof, whether
or
not in the form used in connection with the Motion Picture
involved.
|
14.4
|
"Motion
Picture" or its equivalent, means and includes a motion picture,
cinematograph film and/or photoplay of every kind and character
whatsoever, including the Sound Records thereof, as well as trailers
and
clips thereof, produced by means of any
photographic, electrical, electronic, mechanical or other processes
or
devices now or hereafter known, invented, used or contemplated, by
which
photographs, pictures, drawings, images or other visual reproductions
or
representations are or may be printed,
imprinted, recorded or otherwise preserved on film, tape or any other
material of any description (whether translucent or not) for later
projection or exhibition in such manner that the same are or appear
to be
in motion on a screen, mirror, tube or other medium or device, whether
or
not accompanied by Sound Records.
|
31
14.5
|
"Television
Motion Picture" means a Motion Picture produced hereunder based upon
the
Property initially exhibited on television, including without limitation:
(a) a pilot, or an episode of a television series (episodic or anthology),
it being understood that a "television series" includes the pilot
therefor, regardless of length and regardless of whether there is
any
binding commitment for any ensuing series of episodes from such pilot;
(b)
a so-called single or movie-of-the-week ("MOW"); or (c) a so-called
"Miniseries"
consisting of a Television Motion Picture which is a serialization
of the
plot or story based upon the Property, and is intended for exhibition
sequentially in two or more
segments.
|
14.6
|
"Theatrical
Motion Picture" means a Motion Picture produced hereunder based upon
the
Property which is initially exhibited as a general theatrical release
(ea, public or private screenings and/or previews and/or a limited
theatrical test run of one [1] week or less shall not constitute
a
theatrical release for purposes of this
Agreement).
|
14.7
|
"Person"
includes any association, organization, partnership, business trust,
corporation or governmental agency, as well as natural
persons.
|
14.8
|
"Remake"
means a Motion Picture utilizing the characters of the Property and
depicting the same plot or story as that portrayed in the initial
Motion
Picture, which plot or story does not continue the original story
or carry
it forward or backward in time.
|
14.9
|
"Sequel"
means a Motion Picture utilizing the principal character or characters
of
the Property, initial Motion Picture or any Sequel or Remake thereof
participating in entirely different events than those portrayed in
any
preceding Motion Picture(s), whether prior to, concurrent with or
subsequent to the events portrayed in any preceding Motion Picture(s)
and
whose plot is substantially new.
|
14.10
|
"Sound
Records" means and includes sound recordings and reproductions
of every kind and character whatsoever produced by means of any
electrical,
electronic, mechanical or other processes or devices now known or
hereafter known, invented, used or contemplated by which sound may
be
recorded for later transmission
or playback, whether or not simultaneously, or in synchronization
or times
relation, with Motion Pictures.
|
14.11
|
"Property"
means the aforementioned unpublished graphic novel written by Owner
currently entitled "UNIQUE" (formerly entitled "JAUNT") and the underlying
literary material upon which it is based, and includes its title
or title
and subtitles, and all themes,
stories, storylines, plots, characters and their names, artistic
renderings and all other elements and materials (written, drawn,
illustrated or otherwise), sequels, prequels
and spin-offs, and all prior, present and future versions, adaptations
and
translations
thereof (whether written by Owner or by others), its music, lyrics,
choreography,
sets, costumes, orchestrations, arrangements, if any, and wherever
throughout the world protectible thereby, its statutory and common
law
copyright or copyrights, all present or future renewals and extensions
of
such copyrights and all rights comprehended in such copyrights, and
each
and every part of all thereof.
|
Notwithstanding
the foregoing, the Property shall not be deemed to include:
(a)
|
unique
elements (etc ., plots, characters) existing only in "planted spin-off
graphic
novels or comic books (i.e., a graphic novel or comic book series
in which no central
character in the Property appears in a continuing role in the spin-off
graphic novel
or comic book); provided, however the unique elements of such planted
spin-off shall not be included in the Property only if (i) Owner
gives
notice to WDP in writing of any Property character's appearance in
the
planted spin-off; and (ii) no Property character
appears in more than three (3) issues of such planted spin-off if
released
as a comic book series (or the equivalent length of three [3] comic
books
[i.e., approximately 100 standard United States comic book pages]
if in
strip, graphic novel or other form [e.g„
if any planted spin-off is released as a graphic novel, any Property
character shall not appear in more than 100 pages of such graphic
novel]);
|
(b)
|
unique
elements (etc.., plots, characters) existing only in so-called "crossover"
graphic novels or comic books (i.e., an established graphic novel
or comic
book series featuring characters not originally part of the Property
and
in which a central character from the Property makes an appearance);
|
(c)
|
any
"Excluded Character" i.e., any established or preexisting character,
which
character has previously appeared in an unrelated established comic
book/gra.phic
novel or other media such that it did not originate in the Property)
which
visits
the Property; provided, however such Excluded Character(s) shall
not be
included in the Property only if: (i) Owner gives notice to WDP in
writing
of any Excluded Character(s)
appearance in the Property, provided that such notice shall not be
required
after three (3) years following the conclusion of the domestic theatrical
release of the Picture unless and until Owner is aware that WDP is
in
development in connection
with any other production hereunder based on the Property, provided,
further
that notwithstanding the foregoing, at any time, Owner agrees to
provide
WDP with a list of all Excluded Characters appearing in any issue(s)
of
the Property as requested
by WDP), (ii) such Excluded Character(s) do not appear in more than
three
(3)
issues of Property if released as a comic book series (or the equivalent
length of three
(3) comic books [i.e., approximately 100 standard United States comic
book
pages]
if in strip, graphic novel or other form [e.g, if the Property is
released
as a graphic
novel, any Excluded Character shall not appear in more than 100 pages
of
such graphic novel]) within a period of eighteen (18) months, and
(iii)
and no more than two (2)
different Excluded Characters appear in the Property in any eighteen
(18)
month period,
provided that solely for the purposes of this subparagraph (iii),
if an
Excluded Character appears in less than five (5) pages of an issue
of the
Property, such Excluded
Character's appearance shall not be counted as one of the two (2)
Excluded
Characters permitted to appear in the Property in any eighteen (18)
month
period;
|
32
(d)
|
any
"Planted Character(s)" i.e., any character[s] or group of characters
Leg,-, such as "X-Men" or alien world] which is created for the express
purpose of being spun-off
elsewhere in which such property the Planted Character[s] will be
the
central character[s]
in such property); provided, however such Planted Character(s) shall
not
be included in the Property only if: (i) Owner gives notice to WDP
in
writing prior to such Planted Character(s) appearance in the Property,
provided that such notice shall not be required after three (3) years
following the conclusion of the domestic theatrical release of the
Picture
unless and until Owner is aware that WDP is in development in connection
with any other production hereunder based on the Property, provided,
further
that notwithstanding the foregoing, at any time, Owner agrees to
provide
WDP with a list of all Planted Characters appearing in any issue(s)
of the
Property as requested
by WDP); (ii) such Planted Character(s) do not appear in more than
three
(3) issues of Property if released as a comic book series (or the
equivalent length of three (3)
comic books [i.e., approximately 100 standard United States comic
book
pages] if in strip, graphic novel or other form [e
g_, if the Property is released as a graphic novel, any Planted
Character shall not appear in more than 100 pages of such graphic
novel]),
(iii) no more than two (2) Planted Character(s) appear in the Property
in
eighteen (18) months, and (iv) the Planted Character(s) appear in
the
spin-off property no later than six (6) months after the Planted
Character(s) first appearance in the Property;
or
|
(e)
|
any
characters from any "planted spin-off" or "crossover" graphic novel
or
comic
book series or other non-comic media (e.g, a video game character)
solely
to the extent
such characters are featured in connection with the Property as part
of an
advertisement
for or excerpt from (e.g., a teaser story) such "planted spin-off"or
"crossover"
graphic novel or comic book series or other non-comic media attached
to
the
Property;
|
provided
Owner shall not grant any motion picture,
television, or any other allied or ancillary
rights of any kind, known and/or unknown, to any third party with respect to
any
characters or stories contained in the Property or any other element to which
WDP acquires rights. pursuant to this Agreement, such rights having been
exclusively granted to WDP hereunder (e.g, any grant of motion picture or other
rights to "planted spin-off(s)"
or "crossover" graphic novels or comic books must specifically exclude the
use
of characters and/or stories contained in the Property, or any other element
to
which WDP acquires rights pursuant to this Agreement). Owner hereby represents
and warrants that
there are no, nor will there be any, Excluded Characters or Planted Characters
in the
first
installment of the Property which Owner hereby represents has been created
a
graphic novel (whether initially published as a graphic novel, comic book or
comic book series). "Property" does not include the material referred to in
Paragraph 5.1.h. above written or prepared by WDP or under WDP's
authority.
33
15.
|
NO
OBLIGATION TO USE
|
WDP
is
not obligated to produce, distribute, or exploit the Picture, or, if
commenced,
to continue the production, distribution, or exploitation of the Picture in
any
territory. Regardless of whether or not WDP elects to produce, distribute and/or
exploit
the Picture, WDP is not obligated to use in whole or in part any literary or
other material acquired by WDP hereunder.
16.
|
FEATURETTE
|
WDP
contemplates filming and exploiting films, including without limitation,
"behind-the-scenes"
or "making of productions and/or writing "behind-the-scenes" or "making
of books (jointly and severally "Featurette Rights") about the development
and
production of the Picture produced hereunder. Owner hereby agrees and consents
to such filming and exploitation (including without limitation use of any film
clip footage [or still] from such Picture and behind-the-scenes photography
[or
still] and filmed interviews
with Owner) and hereby grants to WDP the right to use Owner's name, voice and
likeness in connection with such Featurette Rights in any and all media known
and unknown for no additional consideration inasmuch as the compensation payable
to Owner
under this Agreement for the Picture shall be deemed to include compensation
for
all rights granted pursuant to this Paragraph 16.
17.
|
REVERSION
|
17.1
|
If
principal photography of the Picture has not commenced within seven
(7)
years from the date the Option is exercised (if ever) (the "Reversion
Date"), then upon
written notification to WDP and WDP's failure to commence principal
photography (as
such term is commonly understood in the motion picture industry)
of the
Picture within
ninety (90) days of WDP's receipt of such notice, the Rights granted
to
WDP by Owner
hereunder shall revert to Owner (excluding the rights to any screenplay(s)
or other
material written by or on behalf of WDP); provided, however, that
WDP may
delay the
Reversion Date for a three (3) year period if WDP so elects prior
to the
Reversion Date,
and if WDP so elects then Owner shall be entitled to receive the
sum of
$250,000 for
such three (3) year period, which sum shall be an advance against
the
production bonus
and shall accrue and become payable to Owner upon written notification
from an authorized
Business Affairs executive of WDP to Owner of WDP's decision to delay
the
Reversion
Date; provided, further, that the foregoing periods shall be extended
for
any period
during which a claim with respect to the Property has been asserted
and
remains unresolved,
and for any period during which WDP's development and/or production
activities
based upon the Property are interrupted or postponed due to any occurrence
of
an event of force majeure, including without limitation, any labor
strike,
threatened labor
strike, or other labor dispute.
|
17.2
|
At
such time, if ever, that the Rights revert to Owner pursuant to
Paragraph
17.1 above, WDP shall be provided with a first-priority security
interest/lien (including, but not limited to, a copyright mortgage
and
UCC-1 s for the State of California,
State of New York, and New York County) ("Lien") for the applicable
costs
in connection with the Property and the Picture as set forth in Paragraphs
17.3.a. or17.3.b. below, plus accrued interest thereon from the time
an
item of cost was paid, incurred
or charged, at an annual rate (the "Interest Rate") equal to 125%
of the
U.S. prime
rate as published by the Bank of America, as such rate may vary from
time
to time.
Such costs plus interest shall be paid to WDP no later than the time
the
Picture is set up for development as a theatrical, direct-to-video,
television Motion Picture or other production by a third party. In
addition, in the event of a reversion, the Rights shall revert
to Owner subject to the assumption by such third party of all of
WDP's
obligations
in connection with the
Picture.
|
34
17.3
|
At
such time, if ever, that the Rights revert to Owner pursuant to
Paragraph
17.1 above, then with respect to those materials developed or written
by
or for WDP in connection with the Picture after the date of this
Agreement
(the "WDP Materials"), WDP (in its sole discretion) shall
either:
|
a.
|
convey
to Owner all rights in and to the WDP Materials, in which case, WDP
shall
be entitled to reimbursement of, and have a Lien against the Property
and
the WDP Materials for, an amount equal to all amounts paid, and all
costs
incurred, by WDP in connection with the Picture (the "WDP Costs"),
plus
accrued interest thereon from the time an item of cost was paid,
incurred
or charged, at the Interest Rate;
or
|
b.
|
retain
all rights in and to the WDP Materials, in which case,
Owner shall
acquire no rights in or to the WDP Materials, and WDP shall be entitled
to
reimbursement
of, and have a Lien against the Property for, the amounts paid by
WDP
to Lender pursuant to Paragraphs 2.3 and 2.6 above, plus accrued
interest
thereon
from the time an item of cost was paid, incurred or charged, at the
Interest
Rate.
|
17.4
|
Notwithstanding
anything to the contrary set forth in Paragraphs 17.1, 17.2
and 17.3 above, in the event the Rights revert to Owner pursuant
to
Paragraph 17.1
above, Owner shall not have any right to:(a) use (or to authorize
third
parties to use) WDP's name or the name of WDP's parent, subsidiaries
of
its parent, affiliates, successors
and assigns (and any trademarks, copyrights, service marks, or logos
of
the foregoing); or (b) promote, publicize, market, advertise, or
otherwise
exploit any of the Rights or any of the rights in the WDP Materials
(if
any) obtained by Owner in such a manner as to tie or connect such
rights
with WDP or WDP's parent, subsidiaries of its parent, affiliates,
successors and assigns.
|
18.
|
BREACH
|
No
waiver
by either party of any breach hereof shall be deemed a waiver of any preceding
or succeeding breach hereof. WDP shall not be liable for any breach of this
Agreement unless WDP shall have received written notice from Owner of such
breach and shall not have cured such breach within ten (10) business days after
receipt of such
notice. In the event of any claim involving a breach or alleged breach of any
of
Owner's representations or warranties, or any claim that may impair or interfere
with any of the rights granted hereunder: (a) any option period(s) provided
for
hereunder shall be extended automatically, without cost to WDP, until any such
claim or litigation or alleged breach is resolved and the rights granted
hereunder can be acquired free and clear of any claims, demands, liens or
encumbrances of any kind whatsoever; and (b) if WDP sustains a claim against
Owner, WDP may, in addition to all its other legal and equitable remedies,
rescind this Agreement, and in such event, Owner shall pay WDP any monies
received from WDP in connection with the Property. Owner's representations,
warranties and resultant obligation to indemnify WDP in the event of any breach
thereof shall survive rescission of this Agreement.
35
19.
|
RELATIONSHIP
OF PARTIES
|
Nothing
herein contained shall constitute a partnership between or joint venture
by
the
parties hereto, or constitute either party the agent of the other. Neither
party shall
hold itself out contrary to the terms of this Paragraph 20., and neither party
shall become
liable for the representation, act or omission of the other contrary to the
provisions
hereof. This Agreement is not for the benefit of any third party and shall
not
be
deemed
to give any right or remedy to any third party, whether referred to herein
or
not.
20.
|
LEGAL
REQUIREMENTS
|
Nothing
contained in this Agreement shall be construed so as to require the commission
of any act contrary to law, and wherever there is any conflict between any
provision of this Agreement and any material statute, law, ordinance, order
or
regulation contrary to which the parties have no legal right to contract, the
latter shall prevail, but in such event any provisions of this Agreement so
affected shall be curtailed and limited only to the extent necessary to bring
it
within the legal requirements; provided, however, that no other provision of
this Agreement shall be affected thereby and such other provisions
shall continue in full force and effect.
21.
|
NOTICES
|
Any
notice pertaining hereto shall be in writing. Any such notice and any
payment
due hereunder shall be served by delivering said notice or payment personally
or
by sending it by mail, cable (postage or applicable fee prepaid) or by fax
or
telecopy (in which case a copy shall be sent by overnight mail and shall be
deemed to have been
received one hour after the commencement of normal business hours in the place
of receipt on the next business day following the date of dispatch) as follows
(or as subsequently
designated in writing):
To Owner: | Xxxxxxx Xxxxxx Agency | |
000 Xx Xxxxxx Xxxxx | ||
Xxxxxxx Xxxxx, XX 00000 | ||
Attn: Xxxx Xxxxxx | ||
With a courtesy | Xxxxx & Xxxxxx, LLP | |
0000 Xxxxxxxx Xxxxxxxxx, 0xx Xxxxx | ||
Xxxxxxx Xxxxx, XX 00000 | ||
Attn: Xxx Xxxxx | ||
To WDP: | XXXX DISNEY PICTURES | |
000 Xxxxx Xxxxx Xxxxx Xxxxxx | ||
Xxxxxxx, XX 00000-0000 | ||
Attn:
Senior Vice President
Legal
Affairs
|
The
date
of personal delivery, mailing, or delivery to the cable office of such
notice
or
payment shall be deemed the date of service of such notice or payment,
unless
otherwise specified herein; provided, however, that any notice which
commences
the running of any period of time for WDP's exercise of any option or
WDP's
performance of any other act shall be deemed to be served only when actually
received by WDP. If the last day on which the parties hereto are empowered
to
give notice pursuant to any provision of this Agreement or to perform any other
act which the parties are required or may desire to perform under or in
connection with this Agreement
should fall on a Saturday, Sunday or holiday, then the parties hereto shall
have
until the end of the first full business day following said Saturday, Sunday
or
holiday
within which to give notice or to perform such act.
22.
|
CONSTRUCTION
|
For
purposes of construction, the Agreement shall be deemed to have been
jointly
drafted by all parties hereto and any ambiguities shall not be construed against
any party.
23.
|
GENERAL
|
The
terms
and conditions of this Agreement are those set forth hereinabove, and in the
schedules attached hereto as Schedule I (Previous Publication History),
Schedule
II (Publisher's Release), Schedule III (Short Form Option) and Schedule IV
(Short Form Assignment), which by this reference are incorporated into and
made
a part
hereof. This Agreement constitutes the entire agreement between the parties
and
supersedes all prior and contemporaneous written or oral agreements pertaining
thereto
and can only be modified by a writing signed on behalf of both parties hereto.
No
modification, alteration or amendment of this Agreement shall be valid or
binding unless
in
writing and signed by the party to be charged with such modification,
alteration
or amendment. Owner's sole and exclusive remedy for WDP's breach or termination
of this Agreement or any term hereof (including any term pertaining to
credit,
if any) shall be an action for damages and Owner irrevocably waives any right
to
seek and/or obtain rescission and/or equitable and/or injunctive
relief.
36
IN
WITNESS WHEREOF, the parties hereto have executed and delivered this Agreement
as of the date and year first written above.
Xxxx Disney Pictures | |||
|
By:
|
/s/ Xxxxxxx X. Xxxxxx | |
XXXXXXX X. XXXXXX | |||
Its: | SR. VICE PRESIDENT | ||
BUSINESS AFFAIRS |
ACCEPTED
AND AGREED:
PLATINUM
STUDIOS LLC
By:
/s/ Xxxxx Xxxxxxxxx
Xxxxx
Xxxxxxxxx
Its:
Chairman
Fed
ID
#:
37
SCHEDULEI
PREVIOUS
PUBLICATION HISTORY
With
respect to the provisions of Paragraph 7.8 of the foregoing agreement,
Owner
makes the following representations and warranties with respect to the
Property:
There
has
been no prior publication and/or prior use of any kind whatsoever of the
Property, and there have been no prior versions, adaptations nor translations
of
any kind whatsoever of the Property other than the current Pre-Existing
Merchandise (as defined in Paragraph 6.3 of the foregoing agreement). There
are
no prior agreements of any kind whatsoever with any third parties for
publication and/or distribution of the Property other than the current
Pre-Existing Merchandise Agreements set forth in Schedule
V. The Property has not been registered for copyright.
38
SCHEDULE
II
PUBLISHER'S
RELEASE
In
consideration of the payment of One Dollar ($1.00) and other good and
valuable
consideration, receipt of which is hereby acknowledged, the undersigned
hereby
acknowledges and agrees, for the express benefit of XXXX DISNEY PICTURES
("WDP") and its representatives, successors and assigns forever, that the
undersigned has no claim to or interest in the worldwide motion picture rights
(silent, sound,
talking), television rights, digital television rights, video and computer
games
rights,
radio broadcasting rights, videocassette or video or laser disc rights, any
computer
assisted media rights (including, but not limited to CD-ROM, CD-I and similar
disc systems, interactive media and multi-media and any other methods or devices
now existing or hereafter devised), character rights, sequel rights, remake
rights, theme park rights, sound record rights, live stage rights, merchandising
rights or any other rights, including without limitation any allied, ancillary
or subsidiary rights, of any kind other than
publication rights heretofore granted to the undersigned, in or to that certain
literary
work published by the undersigned and described as follows:
Titled:
"UNIQUE "
Author: Platinum
Studios
LLC
Date
and
Place of Publication:________________,20
Copyright
Registration: _______________________
The
undersigned hereby consents to the publication and copyright by and/or in the
name of said author, author's heirs, representatives, licensees and assigns,
in
any and all languages, in any and all countries of the world, and in any form
of
media, of synopses, excerpts and summaries, not exceeding 10,000 words in length
each, of the said literary work, and/or any motion picture, television or other
versions thereof based principally upon said literary work, for the purpose
of
advertising, publicizing and/or exploiting
any such motion picture, television or other versions, but there shall be no
limitation in length with
respect to any motion picture, television or other version not based principally
upon said work, including but
not
limited to, sequel motion pictures and television series.
IN
WITNESS WHEREOF, the undersigned has executed this instrument this 15th day of
October,
2004.
|
By:
|
/s/ Xxxxx Xxxxxxxxx | |
Xxxxx Xxxxxxxxx |
39
SCHEDULE
III
SHORT
FORM OPTION
For
good
and valuable consideration, the receipt and sufficiency of which ishereby
acknowledged, PLATINUM STUDIOS LLC ("Owner") hereby grants to XXXX DISNEY
PICTURES ("Purchaser"), its successors and assigns, the exclusive and
irrevocable
option ("Option") to acquire all right, title and interest in and to the graphic
novel
written by Owner entitled "UNIQUE" (formerly entitled "JAUNT") (which together
with
the
title, themes, contents, characters and other versions thereof, is hereinafter
called
the "Property") including, without limitation, all forms of: motion picture,
television,
digital television, video and computer games, videocassette, video and laser
disc,
computer assisted media (including, but not limited to, CD-ROM, CD-I and similar
disc
systems, interactive media and multi-media and any other devices or methods
now
existing
or hereafter devised), character, remake, sequel, sound record, theme
park, stage
play, merchandising and all allied, ancillary and subsidiary rights therein
of
every kind
and
nature, now known or hereafter devised, throughout the universe and in
perpetuity,
in all languages, in and to the Property, as more particularly set forth in
and
subject
to the terms and. conditions of that certain Memorandum of Agreement for
Option/Acquisition
of Rights dated as of December 11, 2003, between Owner and Purchaser
(the "Agreement"). If Purchaser exercises the Option, the rights granted to
Purchaser
shall include the copyright and all rights in and to the Property of every
kind
and
nature or description, now or hereafter known, recognized, contemplated,
developed,
invented, devised or at any time coming into existence, including the
exclusive,
absolute and unlimited right to use the Property and each and every part
thereof,
for any purpose in any manner, as more particularly set forth and subject to
the
terms
and
conditions of the Agreement.
PLATINUM STUDIOS LLC | |||
Dated:
October
15, 2004
|
By:
|
/s/ Xxxxx Xxxxxxxxx | |
Xxxxx Xxxxxxxxx | |||
Its: | Chairman | ||
40
State
of
California
)
County
of
Los Angeles )
On
this
the 15th day of
October, 2004, before me, Xxxx XxXxxxxxx (here insert name and title of the
officer), personally appeared Xxxxx Xxxxxxxxx personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person(s)
who
me(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) | ||||
/s/Xxxx
XxXxxxxxx
|
XXXX
XX
XXXXXXX
|
|||
Notary
Signature
|
Commission
#
1460275
|
|||
|
Notary
Public
- California
|
|||
Los Angeles County | ||||
My Comm. Expires Jan 5, 2008 |
41
SCHEDULE
IV
SHORT
FORM ASSIGNMENT
KNOW
ALL
PERSONS BY THESE PRESENTS: That the undersigned, for value
received, hereby sells, assigns, transfers and grants in perpetuity unto XXXX
DISNEY
PICTURES and its successors and assigns (herein called "Assignee"), all right,
title and interest in and to the unpublished graphic novel written by PLATINUM
STUDIOS
LLC ("Owner") entitled "UNIQUE" (formerly entitled "JAUNT"), including
without
limitation, the title, themes, contents, characters and other versions thereof
(collectively,
the "Property"), with copyright in the name of_Platinum Studios,
LLC registered
in the United States Copyright Office, No.______________________,
on
The
rights granted to Assignee shall include, without limitation, all forms of:
motion picture, television, digital television, video and computer games,
videocassette,
video and laser disc, computer assisted media (including, but not limited to,
CD-ROM, CD-I and similar disc systems, interactive media and multi-media and
any
other devices or methods now existing or hereafter devised), character, remake,
sequel,
sound record, theme park, stage play, merchandising and all allied, ancillary
and subsidiary rights therein of every kind and nature, now known or hereafter
devised, throughout the universe and in perpetuity, in all languages, in and
to
the Property (the "Rights"). Said grant of Rights is more particularly set
forth
in and subject to the terms and conditions of that certain Memorandum of
Agreement for Option/Acquisition of the Rights between Owner and Assignee,
dated
as of December 11, 2003.
Owner
hereby agrees to allow Assignee to obtain or cause to be obtained renewals
of all United States copyrights in and to said Property, whether or not referred
to herein, and hereby assigns said Rights under said renewal copyrights to
Assignee; and should the Owner fail to do any of the foregoing, Owner hereby
irrevocably appoints
Assignee 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 Owner,
as
Assignee may deem
necessary or proper to accomplish the same.
[REMAINDER
OF THIS PAGE INTENTIONALLY LEFT BLANK]
42
Assignee
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 Property and all renewals thereof, 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, but at the expense of Assignee, and, at its option, Assignee may
join such copyright proprietor and/or Owner
as
a party plaintiff or defendant in any such suit, action or
proceeding.
PLATINUM STUDIOS LLC | |||
Dated:
October
15, 2004
|
By:
|
/s/ Xxxxx Xxxxxxxxx | |
Xxxxx Xxxxxxxxx | |||
Its: | Chairman | ||
State
of
California
)
County
of
Los Angeles )
On
this
the 15th day of
October, 2004, before me, Xxxx XxXxxxxxx (here insert name and title of the
officer), personally appeared Xxxxx Xxxxxxxxx personally known to me
(or proved to me on the basis of satisfactory evidence) to be the person(s)
who
me(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) | ||||
/s/Xxxx
XxXxxxxxx
|
XXXX XX XXXXXXX | |||
Notary
Signature
|
Commission
# 1460275
|
|||
|
Notary
Public
- California
|
|||
Los Angeles County | ||||
My Comm. Expires Jan 5, 2008 |
43
SCHEDULE
V
PRE-EXISTING
MERCHANDISING AGREEMENTS
Unique
Deals (property based)
Dynamic
Forces
Date: | July 1, 2003 |
Term: | 5 years |
Territory: | World Wide |
Licensed Articles: |
(a)
Paper based collectibles such as Lithographs, Posters, Poster Calendars,
trading cards; (b) Resin materials including, but not limited to,
statues,
busts, dioramas, snow globes; and (c) Plastic figures
including action figures, de-formed
mini-figures.
|
Marketing Dates: | Beginning March 2005 |
Morrigan Press | |
Date: | August 2003 |
Term: | 5 years |
Worldwide
license to publish role-playing games and supplements online and in
print.
Cafe
Press
No
term.
Ongoing mail order sales of one-off product based on "Unique" consisting
of:
Unique
Teddy Bear
ESCHER
Property sticker (Bumper)
ESCHER
Property sticker (Rectangular) ESCHER Property Jr. Spaghetti Tank
ESCHER
Property Jr. Baby Doll T-Shirt ESCHER Property Ash Grey T-Shirt
ESCHER
Property White T-Shirt
ESCHER
Property Fitted T-Shirt
ESCHER
Property Dog T-Shirt
ESCHER
Corp. Messenger Bag
ESCHER
Corp. Tote Bag
ESCHER
Corp. Sticker (Rectangular)
ESCHER
Corp. Mug
ESCHER
Corp. Large Mug
Are
You
UNIQUE T-Shirt (yellow)
Are
You
UNIQUE T-Shirt (xxxx)
Are
You
UNIQUE Bumper Sticker
Unique
stickers
Unique
Green T-Shirt
44
Unique
Lunchbox
Unique
Messenger Bag
Unique
Tote Bag
Unique
Greeting Cards (Package of 6)
Unique
thong
Unique
Flying Disc
Unique
Mouse Pad
Unique
logo mug
Unique
T-Shirt
Unique
Cap
Unique
Bumper Sticker
All
items
above are from the cafe press site:
xxxx://xxx.xxxxxxxxx.xxx/xxxxxxxxxxxxxxx/000000
Zazzle
No
term.
Ongoing mail order sales of one-off product based on "Unique"
Top
Cow Productions, Inc.
Non-Exclusive
vis a vis Dynamic Forces
Term: | 5 years |
Territory: | World Wide |
Licensed
Articles:
|
(a)
Paper based collectibles such as Lithographs, Posters, Poster Calendars,
trading cards; (b) Resin materials including, but not limited to,
statues,
busts, dioramas, snow globes; (c) Plastic figures including action
figures, de-formed mini-figures; and (d) Any other form of comic-based
collectibles that are typically sold to comic book and science
fiction
fans online and in hobby
stores.
|
45
EXHIBIT
"DRCB"
This
Exhibit is attached to and made part of the Agreement dated as of December
11,
2003 between XXXX DISNEY PICTURES ("WDP") and PLATINUM STUDIOS ("Owner') for
WDP's option to acquire all right, title and interest in and to the unpublished
comic book written and owned by Owner entitled "Unique", relating to the motion
picture project currently entitled "UNIQUE" or such other project(s) or
production(s) described therein (the "Picture").
NOTE:
PLEASE READ CAREFULL
This
Exhibit DRCB sets forth the contractual formula to be used solely for the
definition, computation, and accounting of Defined Receipts and payment, if
any,
of Artist's Defined Receipts Contingent Bonus as provided in the
Agreement.
Artist
understands and agrees that: (i) the defined terms shall have the meanings
described in this Exhibit DRCB; (ii) the words or defined terms used herein
may
not
necessarily correspond in any way to generally accepted accounting principles
or any other definitions associated with the practices of accounting or
auditing;
(iii) there is no guarantee whatsoever that, and it is uncertain whether, any
Defined
Receipts Contingent Bonus will become payable to Artist, regardless of the
level
of
income, revenues, profits and/or receipts, if any, that WDP, Affiliates or
Related
Parties, or any distributor or exhibitor realizes from the exploitation of
the
Picture;
(iv) Artist shall be entitled to the payment of Defined Receipts Contingent
Bonus
amounts only in accordance with the terms hereof, and Artist acknowledges
and
understands that any such payment is entirely speculative; (v) Artist has been
represented
by counsel or other representative(s) of their choice in the negotiation of
the
terms
of the Agreement and this Exhibit DRCB; (vi) Artist has a full understanding
of
the
terms of the Agreement and this Exhibit DRCB; (vii) WDP's, Affiliates' and
Related
Parties' accountings for financial reporting, tax reporting or other purposes
are
not
prepared in the same manner as accountings pursuant to this Exhibit DRCB;
(viii)
no
fiduciary relationship whatsoever exists between WDP and Artist, including
without
limitation, arising from the obligation of WDP to account for Defined Receipts
and
potentially to pay a Defined Receipts Contingent Bonus to Artist; (ix) the
terms
of this
exhibit are part of a comprehensive negotiated agreement that contains both
economic
and non-economic terms; and, which taken as a whole, is the product of an
arm's
length give and take negotiation whether or not changes have been made to this
Exhibit
DRCB; and (x) no representations whatsoever, expressed or implied, have
been
made
to Artist that are contrary to this Paragraph.
Initialed: (Artist)
00
XXXXXXX
XXXX
DEFINED
RECEIPTS CONTINGENT BONUS FORMULA
"Adjusted
Defined Receipts" shall mean the remaining Defined Receipts (as defined in
Paragraph 1.1.A of the attached
Schedule 1, subject to the exclusions set forth in Paragraph 1.1.B of said
Schedule), after the deduction of the Defined Receipts Deductions set forth
in
Paragraph 1.1.C of the attached Schedule 1.
Artist's
"Defined Receipts Contingent Bonus" shall be Artist's percentage or share (as
set forth in and subject to
the
applicable terms of the Agreement to which this Exhibit DRCB is attached) of
the
Adjusted Defined Receipts.
The
terms
used in this Defined Receipts Contingent Bonus Formula are defined in, and
the
Defined Receipts Contingent Bonus hereunder shall be accounted for, pursuant
to
the terms and conditions of the attached Schedule
1:
47
SCHEDULE
I
1.
|
DEFINITIONS
|
1.1
|
Defined
Receipts
|
A.
|
"Defined
Receipts" means the aggregate of all receipts actually received by
WDP on
behalf of the Picture in U.S. dollars in the U.S. or in a foreign
currency
which are not Restricted Funds, only
from:
|
1.
|
WDP's
direct distribution of the Picture in
theatres and on television ("TV"), including theatrical
and non-theatrical exhibitions, and free, cable
and pay TV exhibitions.
|
2.
|
Distribution
of the Picture by any Person
other than WDP licensed by WDP with an
obligation to report receipts and expenses to WDP
(a "Subdistributor"). WDP shall, to the extent
reported and accounted to WDP, treat all such
receipts received and earned by the Subdistributor,
and all distribution costs incurred by
the Subdistributor as though such receipts were
received and earned by WDP and such distribution
costs were incurred by WDP; and the licensing
or other arrangement between WDP and
each Subdistributor shall not be taken into account
in WDP's accounting to Artist under this
Exhibit DRCB.
|
3.
|
Manufacture
and distribution of audio-visual
cassettes, video discs and all electronic, digital
and/or optical storage and/or transmission formats,
any analog or digital reproductions, or any
similar device and/or format embodying the complete
Picture in linear form, whether now known
or hereafter devised ("Video Devices"); provided
that Defined Receipts for Video Devices shall
be: (a) if WDP distributes Video Devices, a royalty
in an amount equal to 20% of the sums actually
received by such entity (less taxes, credits
and returns) from its distribution thereof; or
(b) royalties actually received by WDP from any
unaffiliated third party Video Device distributor
less royalties payable to other third parties.
|
4.
|
"Flat
Sale" licenses for the theatrical exhibition
of the Picture for a specified period for any
territory or area (excluding the U.S. and Canada)
in consideration of the payment of a specified
amount not calculated by a percentage of
receipts of the applicable licensee.
|
5.
|
Compensatory
receipts (less all costs and
fees) from copyright infringers of the Picture.
|
6.
|
Receipts
from theater box office operated
by WDP in connection with four-wall or road
show exhibitions of the Picture to the extent receipts
from all such exhibitions taken as a whole
exceed costs incurred for all such exhibitions.
|
7.
|
Cash
subsidies granted by governmental
agencies or prizes to the extent granted
solely with respect to the Picture.
|
48
8.
|
The royalties
as provided in Schedules
A (Music) and B (Soundtrack Records,
Merchandising/Publishing), which are attached hereto and incorporated
herein by this reference.
|
B.
|
Defined
Receipts ExclusionsThe
following are not included in Defined
Receipts:
|
1.
|
Box
office or other amounts retained by
any theater or other exhibition venue (except as
specified in Paragraph 1.1.A.6 hereof) for their own
account; and receipts of: roadcasters and other
transmitters by all means now known or hereafter
devised; wholesale or retail distributors, licensors
or sellers of Video Devices, audio devices
and other products; book or music publishers;
merchandisers and retailers; or any other
similar Person, whether or not any or all such
excluded Persons are owned, operated or controlled
by WDP, Affiliates or Related Parties.
|
2.
|
Amounts
received from advance payments
or security deposits unless earned by exhibition or broadcast, or
(subject
to Paragraph 1.1.A.2)
unconditionally non-returnable, and refunds,
rebates or adjustments granted to other Persons by WDP.
|
3.
|
Amounts
payable in foreign currency and not received by WDP in the U.S. due
to
remittance
restrictions ("Restricted Funds"). Restricted
Funds shall not be included in Defined Receipts
nor accounted for unless and until they have
been received by WDP in U.S. dollars in the
U.S. or expended by WDP in the territory in which
held, except as provided in 1.1.B.3(a) below.
|
(a)
|
If any
Defined Receipts Contingent
Bonus becomes payable to Artist
under this Agreement, Artist may notify
WDP in writing that Artist desires to have
included in Artist's Defined Receipts Contingent
Bonus, Artist's share of Restricted
Funds in a particular territory and designate
a bank or other representative in such
country, to whom payment may be made
for Artist's account. Upon WDP's receipt
of such notice and all required permissions,
such payment shall be made to Artist's
representative at Artist's expense.
Upon payment of Artist's share of
Restricted Funds, WDP shall have no further
obligation to account for such Restricted
Funds whether as Defined Receipts
or otherwise.
|
(b)
|
On
Artist's written request, WDP
shall report to Artist the amount of Restricted
Funds (if any) which under this Paragraph
1.1.B.3 have not yet been included
in Defined Receipts as of the closing
date of the most recent statement which
has been furnished to Artist under Paragraph
2.1 below.
|
49
4.
|
Amounts
collected in connection with the
distribution of the Picture as taxes or for payment
of taxes (e.g., admission, sales, use or value
added taxes, etc.).
|
5.
|
Amounts
collected from exhibition of the Picture
contributed to charitable organizations.
|
6.
|
Receipts
from remakes, prequels, sequels,
radio or TV series or other derivative uses
of the Picture or any element thereof.
|
7.
|
Salvage
value or receipts derived from print
stocks, film or tape clips, stock footage, stills,
props, sets, wardrobe, or other items included
in Cost of Production except and only any
sums received from the sale of cars purchased
specifically in connection with the Picture
and sold within six months after completion
of photography, which sums shall be included
in the Defined Receipts of the
Picture.
|
C.
|
Defined
Receipts Deductions "Defined Receipts Deductions" means the aggregate
of all the
following costs, expenses and charges paid, advanced or
incurred by WDP or a Subdistributor, on a continuing basis,
directly or indirectly, in connection with the distribution,
exhibition and exploitation of the Picture:
|
1.
|
Theatre
Level Advertising Expenses
|
"Theatre
Level Advertising Expenses" shall mean all payments made, sums expended or
credits allowed by WDP in connection with advertising and exploitation at the
theatre level (whether or not WDP shares with the exhibitor
the cost of such advertising and exploitation). "Theatre
Level Advertising" shall include, but not be limited
to, advertising in newspapers, on radio and television,
personal appearances by actors and other production
personnel in connection with or for the Picture, salaries
and expenses of WDP's publicity-advertising personnel
and field exploitation persons, all of which shall be
appropriately allocated (in WDP's business judgment) to
the
Picture to the extent that such expenses shall be paid
or
incurred in connection with advertising at the theatre
level.
2.
|
Conversion
|
Conversion
to U.S. dollars and remittance of Defined Receipts to the U.S., including costs
and fees of contesting
the imposition of restrictions.
3.
|
Checking
|
Checking
attendance and receipts, and investigating unauthorized use of the Picture,
whether payable to or incurred by WDP employees or other Persons.
4.
|
Collections
|
Collection
of Defined Receipts including attorneys' and auditors' fees and costs, and
liability incurred by WDP in connection therewith.
50
5.
|
Residuals
|
Payments
as required by applicable collective bargaining
agreements by reason of exhibition of the Picture
or any part thereof in any media. Any such payments
made to or on behalf of Artist shall be deducted
against Artist's Defined Receipts Contingent Bonus
(if
any) to the extent not prohibited by the applicable
collective bargaining agreement. Any payments
under this Exhibit DRCB made to Artist prior to payment of residuals shall
constitute a credit against such residuals to the extent not prohibited by
the
applicable
collective bargaining agreement; provided that any such credit, when applicable,
shall not be taken a second time against Artist.
6.
|
Trade
Dues
|
The
allocable portion, as determined in WDP's business
judgment, of dues, assessments, legal fees and costs (including antitrust and
piracy matters), and contributions
to the MPAA, AMPTP or similarly constituted or substitute Persons throughout
the
universe.
7.
|
Licenses
|
All
licenses, duties, customs charges, fees or any other amounts to permit
exploitation of the Picture.
8.
|
Taxes
|
Taxes
and
governmental fees of any nature, including costs of contesting them, and
interest and penalties thereon
(other than WDP or Subdistributor corporate income
taxes), imposed directly or indirectly on the Picture or any part thereof or
on
the Defined Receipts or the license, distribution or exhibition of the Picture,
or collection, conversion or remittance of monies connected therewith. Foreign
remittance and withholding taxes charged
to the Picture shall be determined as follows: the then-current effective tax
rate for a particular country and distribution medium shall be multiplied by
the
Defined Receipts from such country and distribution medium.
1.2.
|
Miscellaneous
Definitions
|
A.
|
Includes
|
"Includes" (and
equivalents "included" or "including")
and "such as", are illustrative and not intended to be limiting.
B.
|
Person
|
Any
corporation, partnership or other business entity or natural
person.
.C.
|
WDP
|
For
the
purposes hereof, "WDP" means Xxxx Disney
Pictures and Television and Affiliates engaged in the
business of theatrical, non-theatrical and television distribution
of motion pictures. WDP shall not include: any
theatrical exhibitor, radio or television transmitter or broadcaster;
any satellite, cable or other pay television operator,
nor any Person transmitting the Picture to such operators
or any one else by any method or delivery system;
any wholesale distributor or retailer of video discs, videocassettes
or similar devices; any book or music publisher;
any producer or distributor of audio products; any
merchandiser; or any other similar Person, whether or not
any
of the foregoing excluded Persons are owned in whole
or
in part, operated or controlled by WDP.
51
D.
|
Affiliate
|
For
purposes of this Exhibit DRCB, "Affiliate" shall mean any entity (other than
Xxxx Disney Pictures and
Television) that is a subsidiary of The Xxxx Disney Company (i.e., an entity
of
which The Xxxx Disney Company
owns, directly or indirectly through one or more intermediaries,
more than 50% of the voting stock) and each
other entity which, directly or indirectly through one or
more
intermediaries, controls, or is controlled by, or is under
common control with, The Xxxx Disney Company. For
purposes of this definition, the terms "control," "controls,"
and "controlled" mean the power to direct the management
and policies of such entity, whether through the
ownership of voting securities, by contract or otherwise.
E.
|
Related
Party
|
For
purposes of this Exhibit DRCB, "Related Party"
shall mean any entity (other than an entity included in
the
definitions of WDP and Affiliate) which The Xxxx Disney
Company owns directly or indirectly through one or more
intermediaries, more than 10% of the voting stock.
F.
|
Territory
|
1.
|
U.S.
is the United States, together with
any other countries licensed by or through the
distributing organization(s) servicing the U.S. for
WDP.
|
2.
|
Canada
is Canada, together with any other
countries licensed by or through the distributing
organization(s) servicing Canada for WDP.
|
3.
|
The
United Kingdom (U.K.) is United Kingdom
of Great Britain and Northern Ireland, Republic
of Ireland, Channel Islands, Isle of Man, Gibraltar,
Malta.
|
4.
|
Foreign
is all countries (other than U.S.,
U.K. and Canada) and any other areas in the
universe.
|
5.
|
All
foregoing references to countries include
their territories and possessions, and olitical
subdivisions.
|
6.
|
Distribution
to armed forces shall be included
in the particular territories where such exhibitions
shall occur. Distribution to airlines, ships
and other means of transportation shall be included
in the territory of their respective national
origin.
|
G.
|
Agreement
|
"Agreement"
is the agreement to which this exhibit
is attached, together with this exhibit, and any other attached amendments,
exhibits and schedules.
2.
|
ACCOUNTING
|
2.1.
|
Statements
|
WDP
shall
give Artist quarterly summary statements
relating to the calculation of Artist's Defined Receipts Contingent Bonus for
the first two years after the date established by WDP as the date of first
general release
of the Picture in the U.S. (or if there is no U.S. general
release, then upon general release outside the U.S.);
semiannually for the next two years; and annually thereafter
if any Defined Receipts Contingent Bonus is payable
to Artist or, if none due, only on Artist's written request,
provided such request is made not more than once
per
year. Statements shall be issued within 90 days after
the
end of each accounting period and accompanied with
payment of any amount shown due Artist. Notwithstanding
the foregoing, if the Picture has been made
available for U.S. TV syndication and the first statement
thereafter issued shows that more than $500,000
in Defined Receipts would be needed before Artist
would be entitled to receive Defined Receipts Contingent
Bonus, WDP shall have no further obligation to render
statements to Artist. If the Picture is generally reissued
in the U.S. theatrically, then WDP shall resume quarterly
statements for one year from the date of such reissue
and thereafter in accordance with the above.
52
2.2.
|
Incontestability
|
Statements
are subject to correction or amendment
by WDP at any time. Each statement and all matters
of accounting and methodology are conclusive and
binding on Artist 24 months after each statement is issued,
unless Artist objects in writing within that 24 month
period, specifying in detail the particular items on the
statement and the nature of the objection(s). If the objections
are raised timely, but are not resolved, Artist may
initiate a claim with respect to such objections, provided
such claim is instituted within 6 months following the
date
of the initial written objection or prior to the expiration
of the period of the applicable statute of limitations,
whichever occurs first. Artist may not institute
or maintain a claim against WDP with respect to any
item
or transaction on a statement, whether in a lawsuit,
an arbitration or any other proceeding unless Artist
has first provided WDP with a timely and detaile written
objection to such item or transaction. WDP must keep
books of account for any given transaction on a statement
for 24 months after the initial reporting of such transaction.
All time periods referred to in this paragraph commence
upon issuance of the first statement on which any
particular transaction is reflected, and the reappearance
of a transaction in cumulative statements shall
not
cause the running of any time period to toll or recommence.
2.3.
|
Books
|
The
items
reflected in the statements, to the extent
they have not become incontestable or have not been previously examined, may
be
examined at Artist's expense, once in each 12 month period (the first of which
commences upon issuance of the first statement hereunder).
Such statements may only be examined by a national firm of reputable CPA's,
the
selection of which is subject to WDP's approval not to be unreasonably
withheld. WDP
shall make available for examination those
books of account with respect to the distribution of the Picture which WDP
customarily maintains at its Burbank-area
offices Each examination of any statement
or statements for a particular accounting period must
be
concluded within the earlier of six months following
commencement or an aggregate of 30 examination
days. A copy of the report of such examination
shall be delivered by Artist to WDP when it is
made
available to Artist. Artist shall have no right to inspect
or copy any tax return of WDP or any Subdistributor,
Affiliate or any Related Party, or require the production of any such tax return
or any information contained therein.
53
2.4.
|
Withholdings
|
All
amounts payable to Artist under this Agreement
shall be subject to all present and future laws and
regulations requiring the reporting, deduction or withholding
of payments for taxes or otherwise. WDP shall have
the
right to make such deductions and withholdings, and
the
payment or reporting thereof to the governmental agency
concerned in connection with WDP's good faith determination
of such laws and regulations shall constitute payment
hereunder to Artist. WDP shall not be liable to Artist
for the making of such reports, deductions and/or withholdings
or the payment thereof to the governmental agency
concerned. In any such event, Artist shall have the
sole
responsibility for bringing and maintaining any claims
against third parties regarding such reporting, deductions
or withholdings.
2.5.
|
Address
|
All
statements shall be deemed issued when mailed to Artist at the address for
notices under this Agreement.
2.6.
|
Reserves
|
WDP
shall
have the right from time to time and in its
business judgment to establish and adjust reserves for any
distribution costs, uncollected accounts or other items which
WDP
believes in its business judgment will be deductible
from or credited against Defined Receipts hereunder.
WDP agrees to liquidate reserves within an appropriate
period of time within WDP's business judgment.
2.7.
|
Tax
Credits
|
WDP
shall
have the sole right to take whatever credits (including investment tax credits),
deductions or other
benefits that may be available throughout the universe,
with respect to taxes and excises payable in any way in connection with the
Picture or otherwise, without any accounting, credit or payment obligation
to
Artist.
3.
|
ADDITIONAL
TERMS
|
3.1.
|
Arbitration
|
WDP
and
Artist agree that any dispute between them concerning the rights and obligations
of WDP and Artist under this Exhibit DRCB, whether sounding in contract or
tort,
may only be adjudicated in accordance with the following procedure:
A.
|
Either
(i) WDP and Artist shall mutually select
an arbitrator, or (ii) if they cannot agree on such arbitrator,
WDP and Artist shall each select one arbitrator
and those two arbitrators shall then select a third arbitrator.
|
B.
|
The
parties shall arbitrate the dispute in accordance
with the then-prevailing Commercial Arbitration
Rules of the American Arbitration Association (except
to the extent expressly set forth elsewhere in this Exhibit
DRCB) and judgment on the award rendered by the
arbitrator(s) may be entered in any court having jurisdiction
thereof.
|
54
3.2.
|
No
Representation
|
WDP
has
no obligation to distribute the Picture and
if it
does so, Artist acknowledges that WDP has no obligation
to maximize Defined Receipts and has not made
any
representations with respect to the likelihood or amount
of
Defined Receipts, deferments, contingent proceeds
or Defined Receipts Contingent Bonus, if any, which
will or may be derived from distribution of the Picture.
3.3.
|
Control
of Exploitation and Marketing
|
A.
|
As
between WDP and Artist, WDP shall have
exclusive and perpetual control of the distribution, marketing,
advertising, publicizing, exploitation, sale or other
disposition of the Picture and may distribute, or withhold
or withdraw the Picture from distribution at its sole
discretion with respect to one or more territories or media.
WDP may distribute the Picture with other pictures whether
or not WDP has any interest in such other pictures.
|
B.
|
For
all purposes under this Exhibit DRCB, allocations
of Defined Receipts, costs, rights and other matters
relating to the Picture and other motion pictures shall
be allocated by WDP in its business judgment and in accordance
with WDP's prevailing business
practice.
|
C.
|
With
respect to trailers and shorts exhibited with
the Picture outside of the U.S. and Canada, Defined Receipts
shall be reduced by 3% for trailers and 5% for shorts.
|
D.
|
As
between WDP and Artist, WDP owns all rights to the Picture and its
Defined
Receipts and Contingent Proceeds, including the right to encumber,
transfer or dispose of them and Artist shall have no right, title
or
interest therein. Artist acknowledges that its sole right under this
Exhibit is a contractual right to contingent compensation in the
form of,
and measured by, the
|
E.
|
WDP,
its agents and assigns, in its and their business
judgment, shall be entitled to distribute the Picture
on a percentage basis or make flat sales, make and
cancel contracts, adjust and settle disputes, and give allowances
and rebates to distributors, licensees, exhibitors
or other Persons whether or not any such entity is
owned, operated or controlled by WDP, Affiliates or Related
Parties.
|
F.
|
WDP
shall have complete discretion in determining
the extent, if any, to which it will audit or check payments or charges
to
WDP or assert claims with respect thereto.
|
G.
|
Artist
acknowledges that WDP is part of a large,
diversified international group of affiliated companies
engaged in a variety of business activities. WDP has informed Artist
that
it frequently enters into business transactions with Affiliates and
Related Parties, and Artist acknowledges and agrees that WDP is
entitled
(but is not obligated) to, and may, in its sole discretion,
enter into agreements or other arrangements with
Affiliates and Related Parties in connection with any or
all rights relating to the Picture, including, without limitation,
all exploitation rights and all subsidiary, ancillary or
other rights relating thereto (the "Exploitation Rights"). Artist
hereby acknowledges and agrees that WDP is under
no obligation, express or implied, to offer the Exploitation
Rights or any part thereof to unaffiliated or unrelated
third parties, whether in lieu of or in addition to offering
such rights to Affiliates and Related Parties, or to otherwise
seek or secure any business arrangements with any
unaffiliated or unrelated third parties with respect thereto.
Without limiting the generality of any other provision
of the Agreement, Artist hereby waives any right to make any claim
or seek
any relief, whether at law or in equity (specifically including injunctive
relief), asserting
the existence and/or breach of any such express or implied obligation.
|
55
In
addition, Artist acknowledges and agrees that
any
agreement or other arrangement by WDP with an Affiliate
or Related Party regarding the Exploitation Rights shall
be
conclusively presumed to be fair, reasonable and unobjectionable
unless Artist shall establish that such agreement
or other arrangement is on financial terms which,
taken as a whole, are materially less favorable economically
to WDP than the terms of Similar Transactions
generally entered into by WDP with unaffiliated
or unrelated third parties; or if there are no such
unaffiliated or unrelated Similar Transactions, then by
WDP
with Affiliates or Related Parties (as applicable); or
if
there are no such Similar Transactions with Affiliates or
Related Parties, then by Affiliates with any other Affiliate or
Related Party (any such materially less favorable agreement
or arrangement being hereinafter referred to as a
"Less
Favorable Arrangement"). For purposes hereof, the
term
"Similar Transactions" shall mean agreements or other
arrangements relating to motion pictures similar to the
Picture (including WDP or non-WDP Pictures) which involve
rights which are comparable to the Exploitation Rights
or
any relevant part thereof. WDP and Artist agree
that in any arbitration between them under Paragraph
3.1 above, concerning whether WDP has entered
into a Less Favorable Arrangement, the arbitrator(s)
shall select an independent national accounting
firm with entertainment accounting expertise who shall be present with the
arbitrator(s) during the arbitration proceedings, and, on the basis of the
evidence presented (including any expert testimony presented by the
parties and admitted into evidence), shall provide a written
report to the arbitrator(s) solely on the issue of whether
there was a Less Favorable Transaction; and the above
referenced records and report shall be kept in strictest
confidence by the accounting firm and disclosed only
to
the arbitrator(s) who shall have authority, subject to a
protective order maintaining the confidentiality of the information
to the fullest extent permitted by law, to disclose
to the parties only those relevant portions of the report
indispensable to the adjudication of the issue. If pursuant
to Paragraph 3.1 above, the arbitrator(s) conclude(s)
that WDP has entered into a Less Favorable Arrangement with an Affiliate or
Related Party, Artist's sole and
exclusive remedy shall be the right to receive an adjustment
on the next accounting statement when due, including any additional payments
that may be required, pursuant to Paragraph 2.1 hereof, modified to the extent
required
to render such Less Favorable Arrangement not a Less Favorable Arrangement.
3.4.
|
Sales
of All Rights
|
56
A.
|
If
after completion and delivery of the Picture to WDP, WDP sells all
its
right, title and interest in the Picture (other than to an Affiliate
or
through merger or consolidation),
Artist may elect that:
|
1.
|
The
net sum received by WDP shall constitute
Defined Receipts hereunder but further income
of purchaser in connection with the Picture
shall not be included in Defined Receipts, or,
|
2.
|
The
net sum received by WDP shall not
be included in Defined Receipts and all receipts
and expenses (other than the purchase price
paid to WDP) of the purchaser relating to the
Picture shall be treated for purposes of accounting
to Artist, as though they were receipts
and expenses of WDP, provided that upon
assumption by purchaser of such obligation,
the sale shall be considered a novation
and WDP shall thereafter have no obligation
of any kind to Artist.
|
B.
|
Artist's
election shall be made within 7 days after WDP notifies Artist in
writing
that it proposes to
make such sale and identifies the purchaser and purchase
price. If WDP does not receive written notice of Artist's election
within
7 days after issuance of WDP's notice,
then WDP shall have the right, but not the obligation,
to make such election on Artist's
behalf.
|
3.5.
|
Assignment
by Artist
|
A.
|
Artist
may assign Artist's right to receive its
Defined Receipts Contingent Bonus hereunder in whole or
in part, at any time after the release of the Picture, subject
to WDP's approval not to be unreasonably withheld
and provided that such assignment does not subject
WDP to any additional liability in connection with the
assignment. However, in no event shall WDP be obligated
to account to more than one Person. In any event,
WDP's obligation to pay in accordance with any assignment,
or designation of a disbursing agent, shall be conditioned
on WDP's receipt of written notice thereof, in form
satisfactory to WDP, and WDP's payment in accordance
therewith shall satisfy WDP's payment obligations
to Artist hereunder. Artist's right to examine
WDP's books of account shall not be assignable without WDP's prior
written
consent and in any event shall be limited to one Person.
|
B.
|
WDP
shall have the right of first refusal with respect to any proposed
assignment of Artist's right to receive Defined Receipts Contingent
Bonus
hereunder upon
equivalent terms (to the extent economically matchable)
offered to Artist by a bona fide third party. Artist
shall notify WDP of the terms of any such proposed
assignment and WDP shall have 7 business days
within which to elect to accept such terms. Artist shall
make no change in such terms which are adverse to Artist's
interest without giving WDP the opportunity to accept
such changed terms. If WDP does not elect to accept
such terms, then Artist shall be free to accept the proposed
terms of assignment from such bona fide third party
provided that if such proposed assignment is not concluded
within 30 days following the expiration of the 7 business
day period referred to above, WDP's right of first refusal
under this Paragraph 3.5.B shall revive and shall apply
to each subsequent offer received by Artist. This Paragraph
3.5.B shall not apply to family
gifts.
|
57
3.6.
|
General
Terms
|
A.
|
This
Agreement is not for the benefit of any third party and shall not
create a
partnership, joint venture, agency, trust or fiduciary obligation
between
WDP and Artist or make Artist WDP's agent or create a relationship
between
WDP and Artist other than creditordebtor to the extent amounts are
due
hereunder.
|
B.
|
WDP
may, in its business judgment, commingle
Contingent Proceeds or Defined Receipts with any
other funds.
|
C.
|
Nothing
in this Exhibit DRCB or the Agreement
shall give Artist the right to a lien on the Picture,
the Contingent Proceeds or Defined Receipts.
|
D.
|
Artist
shall not be entitled to interest or any other gain which may accrue
as a
result of WDP's obligation to pay Artist's Defined Receipts Contingent
Bonus (or part thereof) even in the event of a dispute between Artist
and
WDP concerning the interpretation of this Exhibit DRCB, non-payment
hereunder or otherwise.
|
E.
|
Headings
are for convenience only and are of
no effect in construing the contents of this
Agreement.
|
F.
|
Artist
waives any right at law or equity to revoke, terminate, diminish
or enjoin
any rights granted or acquired by WDP hereunder by reason of a claimed
nonpayment of monies allegedly due and payable hereunder, it being
agreed
that Artist's sole remedy for any such alleged non-payment shall
be
limited to a claim for any such money that is due and payable
hereunder.
|
END
OF
EXHIBIT DRCB
58
SCHEDULE
"A"
REFERRED
TO IN PARAGRAPH 1.1.A.8 OF EXHIBIT DRCB
MUSIC
PUBLISHING
1.
|
A
royalty equal to fifteen percent (15%) of Music Publishing Contingent
Proceeds ("MPCP") received by WDP
from the exploitation of music publishing rights (i.e., mechanical
reproduction, public performance, sheet
music/folios and synchronization) to the original music and/or lyrics
written specifically for and synchronized
in the Picture as generally released (the "Music") shall be included
in
Defined Receipts.
|
2.
|
Music
Publishing Defined Receipts ("MPDR") shall mean all monies actually
received by WDP with respect to
the Music excluding any advance, guarantee or minimum royalty payment
received by WDP in connection with
any subpublishing, collection, licensing or other agreement, unless
such
payment is specifically attributable
to the Music.
|
3.
|
MPCP
shall mean MPDR less the following:
|
(a)
|
Royalties
or other monies payable by WDP to the composer(s) and/or lyricist(s)
of
the Music.
|
(b)
|
All
additional shares of MPDR payable by WDP to such composer(s), lyricist(s)
and/or any other third
party co-publishers, administrators or other
participants.
|
(c)
|
Collection
or other fees customarily and actually charged by The Xxxxx Xxx Agency,
Inc., or any other
collection agent used by WDP.
|
(d)
|
Copyright
registration fees and the costs of transcribing lead
sheets.
|
(e)
|
All
other administration and exploitation expenses incurred with respect
to
the Music including, without
limitation, the costs of producing demonstration records,
advertising and promotion expenses,
costs or amounts payable to third-party publishers, co-publishers,
administrators, publishing
participants, subpublishers, licensees, trustees or collection
agents, attorneys' and accountants'
fees directly related to the Music, and damages and expenses incurred
by
reason of
infringement claims, but excluding rents, overhead, salaries and
other
similar general expenses.
|
4.
|
If
Artist is entitled to receive a direct royalty or other type of payment
with respect to the Music, then no portion
of MPCP will be included in Defined
Receipts.
|
XXXX
DISNEY PICTURES
MUSIC
PUBLISHING
SCHEDULE
"A" TO EXHIBIT DRCB
59
SCHEDULE
"B"
REFERRED
TO IN PARAGRAPH 1.1.A.8 OF EXHIBIT DRCB
1.
|
SOUNDTRACK
RECORDS: In the event WDP receives any royalties in respect of the
soundtrack album(s)
("Album") and/or other "phonorecords" (as that term is defined in
the U.S.
Copyright Act of 1976, 17 U.S.C.
Sections 101, et. seq.) derived from the soundtrack of the Picture
("Soundtrack Records"), then WDP agrees that such royalties will
be
computed as follows for inclusion in Defined
Receipts:
|
1.1
|
If
an Affiliate distributes Soundtrack Records, then the royalty included
in
Defined Receipts shall equal
2% % ("Royalty Rate") of the suggested retail list price (or the
equivalent wholesale royalty) for net sales of the
Album through normal retail channels in the United States ("USNRC
Sales").
The Royalty Rate shall be otherwise
defined, computed, reduced and accounted for on the same basis that
the
Affiliate customarily accounts
to third party recipients including, without limitation, in respect
of
foreign sales, configurations variations,
taxes, flat fee licensing, coupling, singles, free goods, packaging
deductions, royalty base and all other
reductions and deductions. Royalties hereunder shall only be included
in
Defined Receipts prospectively after
the recoupment from the aggregate royalty payable (or accrued against
advances or other charges) by WDP
in respect of Soundtrack Records (including royalties payable to
artists,
producers, record companies, film personnel,
music supervisors, musicians and the royalty payable pursuant to
this
Schedule B) of the following: (i)
all recording costs of the master recordings embodied in Soundtrack
Records; (ii) any re-recording costs of master
recordings which are re-recorded for Soundtrack Records; and (iii)
all
costs of converting the master recordings
in the Picture from motion picture recordings to phonograph record
use
(including, re-recording costs, reuse
fees, editing, sweetening, etc.).
|
1.2
|
In
the event that WDP receives its royalties from the exploitation of
Soundtrack Records by a third party distributor, then the royalty
to be
included in Defined Receipts shall be the "Soundtrack Contingent
Proceeds"
(as defined below).
|
1.3.
|
"Soundtrack
Contingent Proceeds" shall mean all revenues received by WDP from
the
exploitation of Soundtrack Records, if any, as set forth in the applicable
Soundtrack Records agreement after deduction of the following costs
and
third party royalties:
|
(a)
|
A
sum equivalent to the actual dollar amount (including any fixed cash
amounts, advances
and/or royalties) actually paid to all third party performers and/or
participants with respect to the music/soundtrack contained in Soundtrack
Records and/or the Picture, including without limitation, cash payments
and/or royalties payable to artists, producers, record companies,
film
personnel, music supervisors and
musicians.
|
(b)
|
A
sum equivalent to all artwork costs for Soundtrack Records to the
extent
such artwork costs
are paid by or charged to WDP, remixing and remastering costs,
re-recording costs, reuse fees, license fees
and similar costs attributable to the recording/production and/or
licensing of the master recordings embodied
on Soundtrack Records, except to the extent such costs are included
in the
negative cost of the Picture
and to the extent such Soundtrack Records costs and fees have actually
been incurred directly or indirectly
by WDP.
|
(c)
|
Any
legal fees or related expenses incurred by WDP for outside legal
counsel
engaged at WDP's election to: document and/or negotiate the applicable
Soundtrack Records agreement; in protecting or defending WDP's rights,
privileges and benefits with respect to Soundtrack Records and/or
any
master recordings recorded/acquired for the Picture and/or Soundtrack
Records; and/or in connection with any dispute involving any
release/distribution agreement pertaining to Soundtrack
Records.
|
(d)
|
In
the event the Soundtrack Records distributor pays WDP any nonreturnable
advance against royalties, a reasonable reserve shall be applied
towards
(i) third party payments payable prior to the Soundtrack Record
distributor's recoupment of such advance at the "net" artist rate;
and
(ii) unrecouped costsincurred
by WDP in respect of any Soundtrack Records and/or in excess of the
budgeted cost of the music for the
Picture.
|
60
1.4.
|
Notwithstanding
the foregoing, no royalties shall be included hereunder for any so-called
"storyteller" or "read-along" phonorecords or for any phonorecords
embodied in other merchandise or for any audiovisual devices now
known or
hereafter devised.
|
1.5.
|
If
Artist is entitled to receive a direct royalty or other type of payment
with respect to Soundtrack Records, then no royalties from Soundtrack
Records will be included in Defined
Receipts.
|
2.
|
MERCHANDISING/PUBLISHING.
With respect to items of merchandising (including interactive games
and
other products and services) and book publication (including children's
storytelling recordings, as distinguished
from soundtrack records, but excluding souvenir programs and similar
publications) based on the Picture,
then:
|
2.1
|
For
items sold by a licensee of WDP, the royalties WDP receives from
such
licensee shall be included in Defined Receipts of the Picture after
first
deducting (i) a percentage deduction of: fifty percent (50%), inclusive
of
subdistributor fees, for items sold in the U.S.; sixty-five percent
(65%),
inclusive of subdistributor fees, for items sold outside the U.S.;
and
fifteen percent (15%) plus any subdistributor's fees for any book
novel;
and (ii) out-of-pocket costs and royalties to third parties;
or
|
2.2
|
For
items are sold by WDP at the wholesale or retail level, at WDP's
discretion, either:(i) an amount equal to seven (7%) of the wholesale
price of such items sold by WDP at the wholesale level (less a reasonable
allowance for returns); or (ii) an amount equal to seven percent
(7%) of
fifty percent (50%) of the gross retail revenues of such items sold
by WDP
at the retail level (less a reasonable allowance for returns) shall
be
included in Defined Receipts of the Picture after first deducting
(a) a
percentage deduction of fifty percent (50%) for items sold in the
U.S.;
sixty-five percent (65%) for items sold outside the U.S.; and fifteen
percent (15%) with respect to any book novel; and (b) out-of pocket
costs
and royalties to third parties.
|
2.3
|
In
no event shall any items of merchandise be treated as falling under
both
provisions 2.1 or 2.2 above.
|
2.4
|
If
Artist is entitled to receive a direct royalty or other type of payment
with respect to the exercise
of merchandising and book publication rights, then no royalties therefrom
will be included in Defined Receipts.
|
XXXX
DISNEY PICTURES
SOUNDTRACK
RECORDS/MERCHANDISING/PUBLISHING
SCHEDULE
"B" TO EXHIBIT DRCB
61
RIDER
TO
EXHIBIT "DRCB"
This
Rider is attached to and made a part of Exhibit "DRCB" which is attached to
the
agreement
("Agreement") dated as of December 11, 2003 between XXXX DISNEY PICTURES ("WDP")
and PLATINUM STUDIOS LLC ("Owner") relating to the Picture identified
therein.
1.
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With
respect to Paragraph 1.1.A.2. (DEFINITIONS, DEFINED RECEIPTS),
Subdistributors
hereunder shall be deemed to include WDP sales agents (if
any).
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2.
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With
respect to Paragraph 1.1.A.5. (DEFINITIONS, DEFINED RECEIPTS), the
words
"excluding costs of WDP in-house counsel in connection with such
copyright
infringement
claims" shall be inserted immediately after the word "costs" but
within
the parenthetical;
and the words "unfair competition, trademark, and/or patent infringement
and/or defamation claims" shall be inserted immediately after the
word
"infringers."
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3.
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With
respect to Paragraph 1.1.A.8. (DEFINITIONS, DEFINED RECEIPTS), the
words
"and other receipts" shall be inserted immediately after the word
"royalties" in the first line.
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4.
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With
respect to Paragraph 1.1 .A. (DEFINITIONS, DEFINED RECEIPTS), the
following are added as new Paragraphs 9. and 10. thereof: "9. Receipts
from the distribution of trailers for the Picture; and 10. Receipts
allocable to the Picture as received from the Copyright Tribunal,
payable
pursuant to Section III of the 1976 U.S. Copyright Act. There will
be no
Percentage
Deduction applied to the receipts under this subparagraph
10."
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5.
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With
respect to Paragraph 1.1.B.3. (DEFINITIONS, DEFINED RECEIPTS XCLUSIONS),
after the word "WDP" in the seventh line, the words "for any purpose"
shall be inserted; and the following shall be added at the end of
the
Paragraph, "or unless freely remittable to the U.S. in U.S. dollars.
There
shall be no unreasonable delay with respect to the conversion and
remittance of foreign receipts
hereunder."
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6.
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With
respect to Paragraph 1.1.B.5. (DEFINITIONS, DEFINED RECEIPTS EXCLUSIONS),
the words "any charitable screening" shall be inserted immediately
after
the word "from" in the first line.
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7.
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With
respect to Paragraph 1.1.B.7. (DEFINITIONS, DEFINED RECEIPTS EXCLUSIONS),
the words "or such other major items" shall be inserted immediately
after
the word "cars" in the fifth line.
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8.
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With
respect to Paragraph 1.1.C.3. (DEFINITIONS, DEFINED RECEIPTS EDUCTIONS,
CHECKING), the following shall be added thereto: "provided such checking
costs shall not exceed one percent (1%) of the worldwide Defined
Receipts
of the Picture."
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9.
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With
respect to Paragraph 1.1.C.4. (DEFINITIONS, DEFINED RECEIPTS DEDUCTIONS,
COLLECTIONS), the word "outside" shall be inserted immediately after
the
word "including" in the first line and also immediately after the
word
"and" in the second line.
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10.
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With
respect to Paragraph 1.1.1.C.6. (DEFINITIONS, DEFINED RECEIPTS DEDUCTIONS,
TRADE DUES), the following sentence is added to the end of this paragraph:
"Notwithstanding the foregoing, Defined Receipts shall not be reduced
by
more than: (1) $250,000
in the aggregate for domestic trade association fees payable by WDP
to the
M.P.A.A., A.M.P.T.P.
and/or any similarly constituted or substitute person or successor
organization to which WDP may now or hereafter belong on account
of
receipts or proceeds from the distribution
of the Picture; and (2) $250,000 in the aggregate for foreign trade
association fees payable
by WDP to the M.P.E.A. and/or any successor organization to which
WDP may
now or hereafter belong on account of receipts or proceeds from the
distribution of the Picture."
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62
11.
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With
respect to Paragraph 1.1.C.8. (DEFINITIONS, DEFINED RECEIPTS DEDUCTIONS,
TAXES), (a) the words "(appropriately allocated)" shall be inserted
immediately after the word "nature" in the first line; and (b) the
following shall be added as the last sentences thereof:
"In the event of any tax refunds and/or in the event of any interest
adjustment, Distribution
Costs shall be credited (without any Percentage Deduction taken)
with
respect thereto.
The words 'corporate income taxes' appearing herein shall mean taxes
based
on net income,
so-called excess profits, and to the extent such are in the nature
of
taxes based on net income
or so-called excess profit taxes -- franchise and corporation income
taxes. Also to the extent
any such taxes paid by WDP are deducted and subsequently refunded,
an
appropriate retroactive
adjustment shall be made."
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12.
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With
respect to Paragraph 1.2.F.1. (DEFINITIONS, MISCELLANEOUS DEFINITIONS, TERRITORY),
the
following words shall be added thereto: "and all transportation
companies, armed services or institutions flying the flag of the
U.S."
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13.
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With
respect to Paragraph 1.2.F.6. (DEFINITIONS, MISCELLANEOUS DEFINITIONS,
TERRITORY), the words "such exhibitions shall occur" in the second
and
third lines shall be deleted and the words "agreements relating to
such
exhibition are entered into" shall be inserted in place
thereof.
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14.
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With
respect to Paragraph 2.1. (ACCOUNTING, STATEMENTS), (a) solely in
the
event Owner is receiving Defined Receipts Contingent Bonus payments
hereunder within the first two years, then (i) the word "three" shall
replace the word "two" in the third line; (ii) the word
"year" shall be inserted immediately after the word "next" in the
seventh
line; (iii) the words
"two years" shall be deleted therefrom; and (b) "$500,000" shall
be
changed to "$750,000" in the seventeenth
line.
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15.
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With
respect to Paragraph 2.1. (ACCOUNTING, STATEMENTS), the following
is
added immediately before the last sentence thereof: "but the foregoing
shall not limit Owner's right
to request a statement as provided in the first sentence of this
paragraph
2.1." And the following
is added to the last sentence thereof: "and if the Picture is broadcast
on
prime time network
television in the U.S. or exhibited on a premium pay TV service or
The
Disney Channel or
similar pay cable stations in the first free TV window, in the U.S.,
WDP
shall account therefor by
issuing a quarterly statement for one year starting on the accounting
period within which the Picture
has been so exhibited, accompanied by payment of the amount, if any,
shown
thereby to be
due Owner."
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16.
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With
respect to Paragraph 2.2. (ACCOUNTING, INCONTESTABILITY), the number
"36"
shall be substituted for the numeral "24" in each place therein;
the word
"issued" shall be deleted from the fifth line thereof and the word
"received" substituted therefor; and the numeral "12" shall be substituted
for the numeral "6" in the tenth line
thereof
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17.
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With
respect to Paragraph 2.2. (ACCOUNTING, INCONTESTABILITY), the following
shall be inserted immediately after the word "objection" in the eleventh
line: "or if commenced in 6 months after completion of audit, if
such
audit is commenced prior to, but completed on a timely basis after
said
36-month period."
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18.
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With
respect to Paragraph 2.2. (ACCOUNTING, INCONTESTABILITY) the following
sentence shall be inserted immediately after the sentence ending
with the
word "first" in
the thirteenth line: "The foregoing period within which Owner may
raise
objections shall recommence,
but only with respect to certain transactions or items included in
previous statements that have been thereafter revised and/or
corrected."
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63
19.
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With
respect to Paragraph 2.3. (ACCOUNTING, BOOKS), the word "national"
is
deleted
from the seventh line.
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20.
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With
respect to Paragraph 2.3. (ACCOUNTING, BOOKS), the word "issuance"
is
deleted from the fifth line and the word "delivery" is substituted
therefor, and the following sentence
shall be inserted immediately after the word "withheld" in the ninth
line:
"The 'big five' accounting firms excluding Price Waterhouse Coopers
are
pre-approved by WDP subject to any conflict of interest that may
exist or
arise. Laventhol & Xxxxxxx or any successor-in-interest or any of its
present or former principals or employees shall be deemed not approved
by
WDP so long
as they are representing Silver Screen Partners as auditors and/or
if they
previously represented
Silver Screen as auditors on any WDP picture. In addition, any auditor(s)
that represents
Touchwood Pacific Partners I and/or Interscope Communications Inc./Nomura,
Xxxxxxx
and Xxxxx Unit One Film Partners and/or any other financier of the
Picture
and/or any other WDP picture shall be deemed not approved by
WDP."
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21.
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With
respect to Paragraph 2.4. (ACCOUNTING, WITHHOLDINGS), the following
shall be added at the end thereof: "Any moneys so recovered by Owner
resulting from such claims or prosecutions shall be retained by Owner
unless WDP has a prior existing claim or lien, provided however that
nothing herein shall be deemed a waiver of either party's rights
or
remedies in law or equity.
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22.
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With
respect to Paragraph 2.6. (ACCOUNTING, RESERVES), the following shall
be
added thereto: "In any event, WDP shall liquidate any such reserves
within
12 months after establishing the same unless there is any claim and/or
litigation pending, in which case WDP may continue to maintain such
reserves".
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23.
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With
respect to Paragraph 3.3.A. (MISCELLANEOUS, CONTROL OF EXPLOITATIONAND
MARKETING) the following shall be added after the word "Owner" in
the
first line: "subject to Owner's consultation rights, if any, in connection
therewith as more fully set forth in this
Agreement,"
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24.
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With
respect to Paragraph 3.3.A. (MISCELLANEOUS, CONTROL OF EXPLOITATION
AND MARKETING), the following shall be added following the last sentence
thereof: "subject to, and except as provided to the contrary in the
Agreement to which this Rider is attached. Notwithstanding the foregoing,
there shall be no sub-distribution of the Picture in the U.S.
or Canada unless WDP customarily uses sub-distributors for distribution
in
the U.S. and/or Canada and at that time with respect to substantially
all
other motion pictures during the same calendar
year."
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25.
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With
respect to Paragraph 3.3.B. (ADDITIONAL TERMS, CONTROL OF EXPLOITATION
AND MARKETING), the words "good faith" shall be inserted immediately
after
the word "business" in the fourth
line.
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26.
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With
respect to Paragraph 3.3.C. (ADDITIONAL TERMS, CONTROL OF EXPLOITATION
AND MARKETING), the words "trailers and" are deleted from the first
line,
and the words "for trailers and 5% " are deleted from the third line
thereof.
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27.
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With
respect to Paragraph 3.4.A.1. (ADDITIONAL TERMS, SALES OF ALL RIGHTS),
the word "sum" in the first line shall be changed to
"sum(s)."
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64
28.
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With
respect to Paragraph 3.4.A.2. (ADDITIONAL TERMS, SALES OF ALL RIGHTS),
the following shall be inserted immediately after the word "assumption"
in
the eighth line: "in writing and subject to full
performance."
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29.
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With
respect to Paragraph 3.4.B. (ADDITIONAL TERMS, SALES OF ALL RIGHTS),
the
words "14 business days" shall be substituted for the words "7 days"
in
the each place therein. In addition, the words "and other material
terms"
shall be inserted immediately after the word "price" in the fourth
line.
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30.
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With
respect to Paragraph 3.5.A (MISCELLANEOUS, ASSIGNMENT BY OWNER),
the words "completion of services" shall be inserted immediately
after the
word "after"
in the third line; and the words "the release of the Picture" in
the third
line shall be deleted.
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31.
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With
respect to Paragraph 3.5.A. (ADDITIONAL TERMS, ASSIGNMENT BY OWNER),
the
following shall be added after the word "Picture" in the third line:
"or
to Artist's loan-out company or other closely held corporation and
vice-versa; provided that, and subject to, all parties signing WDP's
customary (i) Notice of Irrevocable Authority and (ii) Acknowledgment
of Notice of Irrevocable
Authority."
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32.
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With
respect to Paragraph 3.5.B. (ADDITIONAL TERMS, ASSIGNMENT BY OWNER),
the
word "material" shall be inserted before the word "change" in the
eighth
line thereof,
and the following words shall be added to the last sentence thereof:
"or a
transfer to any corporation or entity wholly owned or controlled
by
Owner."
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END
OF
RIDER
65
EXHIBIT
"CB"
This
Exhibit is attached to and made part of the Agreement dated as of December
11,
2003 between XXXX DISNEY PICTURES ("WDP") and PLATINUM STUDIOS ("Owner") for
WDP's option to acquire all right, title and interest in and to the unpublished
comic book written and owned by Owner entitled "Unique", relating to the motion
picture project currently entitled "UNIQUE" or such other project(s) or
production(s) described therein (the "Picture").
NOTE:
PLEASE READ CAREFULL
This
Exhibit CB sets forth the contractual formula to be used solely for the
definition, computation, and accounting of Contingent Proceeds and payment,
if
any, of Lender's Contingent Bonus as provided in the Agreement.
Lender
and Artist understand and agree that: (1) the defined terms shall have the
meanings described in this Exhibit CB; (ii) the words or defined terms used
herein may not necessarily correspond in any way to generally accepted
accounting principles or any other definitions associated with the practices
of
accounting or auditing; (iii) there is no guarantee whatsoever, and it is
unlikely, that any Contingent Bonus will become payable to Lender, regardless
of
the level of income, revenues, profits and/or receipts, if any, that WDP,
Affiliates or Related Parties, or any distributor or exhibitor realizes from
the
exploitation of the Picture; (iv) Lender shall be entitled to the payment of
Contingent Bonus amounts only in accordance with the terms hereof, and Lender
and Artist acknowledge and understand that any such payment is entirely
speculative; (v) Lender and Artist have been represented by counsel or other
representative(s) of their choice in the negotiation of the terms of the
Agreement and this Exhibit CB; (vi) Lender and Artist have a full understanding
of the terms of the Agreement and this Exhibit CB; (vii) WDP's, Affiliates'
and
Related Parties' accountings for financial reporting, tax reporting or other
purposes are not prepared in the same manner as accountings pursuant to this
Exhibit CB; (viii) no fiduciary relationship whatsoever exists between WDP,
on
the one hand, and Lender and Artist, on the other hand, including without
limitation, arising from the obligation of WDP to account for Contingent
Proceeds and potentially to pay a Contingent Bonus to Lender; (ix) the terms
of
this exhibit are part of a comprehensive negotiated, agreement that contains
both economic and non-economic terms; and, which taken as a whole, is the
product of an arm's length give and take negotiation whether or not changes
have
been made to this Exhibit CB; and (x) no representations whatsoever, expressed
or implied, have been made to Lender or Artist that are contrary to this
Paragraph.
Initialed: (Lender)
and (Artist)
66
EXHIBIT
CB
CONTINGENT
BONUS FORMULA
"Contingent
Proceeds" shall mean the Defined Receipts, if any, remaining after WDP deducts
and retains for its own account, the following items on a continuing basis
in
the following order of priority:
A.
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FIRST
DEDUCTION - First, an amount equal to the following percentages
("Percentage Deduction") of Defined
Receipts:
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•
From
Defined Receipts (other than Flat Sales and Free TV)
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||
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oU.S.
and Canada
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30% |
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oU.K.
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35%
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oForeign
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40%
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•
From
Flat Sales Defined Receipts
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15%
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•
From
Free TV Defined Receipts
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||
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oU.S.
Network
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25%
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oU.S.
Non-Network and Canada
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35%
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oForeign
and U.K.
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40%
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B.
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SECOND
DEDUCTION - Next, from the remaining amount of Defined Receipts,
an amount
equal to the Distribution
Costs plus an additional 10% of Ad and Publicity
Costs.
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C.
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THIRD
DEDUCTION - Next, from the remaining amount of Defined Receipts,
if any,
whether or not funds
are actually borrowed for the Picture, and irrespective of the
actual funding arrangements or WDP's
actual financing costs for the Picture or WDP's borrowing rate, as
WDP's
funding charge, an amount
equal to 1.25 times the prime rate of the Bank of America, as the
same may
vary from time to time,
on the total amount of the Fourth Deduction below, commencing from
the
respective dates on which
amounts chargeable under the Fourth Deduction are paid or incurred
(whichever first occurs) and continuing
until the middle of the accounting period in which those amounts
are
recouped.
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D.
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FOURTH
DEDUCTION - Next, from the remaining amount of Defined Receipts,
if any,
an amount equal to
the Cost of Production plus an additional 15% of Cost of Production,
which
15% shall be charged concurrently
with the incurring of the respective items of Cost of
Production.
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E.
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FIFTH
DEDUCTION - Next, from the remaining amount of Defined Receipts,
if any,
an amount equal to the
Other Contingent Amounts. The
remaining amount, if any, shall be the Contingent Proceeds from which
Lender's percentage or share thereof (the "Contingent Bonus") shall
be
calculated. The
terms used in this Contingent Bonus Formula are defined in, and the
Contingent Bonus hereunder shall be accounted for, pursuant to the
terms
and conditions of the attached Schedule
1:
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67
SCHEDULE
1
1.
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DEFINITIONS
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1.1
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Defined
Receipts
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A.
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"Defined
Receipts" means the aggregate of all receipts actually received by
WDP on
behalf of the Picture in U.S. dollars in the U.S. or in a foreign
currency
which are not Restricted Funds, only
from:
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1.
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WDP's
direct distribution of the Picture in
theatres and on television ("TV"), including theatrical
and non-theatrical exhibitions, and free, cable
and pay TV exhibitions.
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2.
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Distribution
of the Picture by any erson
other than WDP licensed by WDP with an
obligation to report receipts and expenses to WDP
(a "Subdistributor"). WDP shall, to the extent
reported and accounted to WDP, treat all such
receipts received and earned by the Subdistributor,
and all distribution costs incurred by
the Subdistributor as though such receipts were
received and earned by WDP and such distribution
costs were incurred by WDP; provided,
however, that WDP's applicable Percentage
Deduction shall include the Subdistributor's
distribution fee, and the licensing or
other arrangement between WDP and each Subdistributor
shall not be taken into account in WDP's
accounting to Lender under this Exhibit CB.
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3.
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Manufacture
and distribution of audio-visual
cassettes, video discs and all electronic, digital
and/or optical storage and/or transmission formats,
any analog or digital reproductions, or any
similar device and/or format embodying the complete
Picture in linear form, whether now known
or hereafter devised ("Video Devices"); provided
that Defined Receipts for Video Devices shall
be: (a) if WDP distributes Video Devices, a royalty
in an amount equal to 20% of the sums actually
received by such entity (less taxes, credits
and returns) from its distribution thereof; or
(b) royalties actually received by WDP from any
unaffiliated third party Video Device distributor
less royalties payable to other third parties.
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4.
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"Flat
Sale" licenses for the theatrical exhibition
of the Picture for a specified period for any
territory or area (excluding the U.S. and Canada)
in consideration of the payment of a specified
amount not calculated by a percentage of
receipts of the applicable licensee.
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5.
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Compensatory
receipts (less all costs and
fees) from copyright infringers of the Picture.
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6.
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Receipts
from theater box office operated
by WDP in connection with four-wall or road
show exhibitions of the Picture to the extent receipts
from all such exhibitions taken as a whole
exceed costs incurred for all such exhibitions.
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68
7.
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Cash
subsidies granted by governmental
agencies or prizes to the extent granted
solely with respect to the Picture.
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8.
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The
royalties as provided in Schedules
A (Music) and B (Soundtrack Records,
Merchandising/Publishing), which are attached
hereto and incorporated herein by this reference.
There will be no Percentage Deduction
applied to the royalties under this subparagraph
8. There
shall not be any Percentage Deduction on Defined
Receipts from each of Paragraph 1.1.A.5 and Paragraph
1.1.A.7 above. If the respective costs relating to each of Paragraph
1.1.A.5, 1.1.A.6 or Paragraph 2 of Schedule
B, and applicable Percentage Deduction, if any, pursuant to Paragraph
1.2,
exceed receipts from each of Paragraph 1.1.A.5, 1.1.A.6 or Paragraph
2 of
Schedule B, respectively, such excess costs of each shall separately
be
deductible as a Distribution Cost.
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B.
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Defined
Receipts Exclusions
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The
following are not included in Defined Receipts:
1.
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Box
office or other amounts retained by
any theater or other exhibition venue (except as
specified in Paragraph 1.1.A.6 hereof) for their own
account; and receipts of: broadcasters and other
transmitters by all means now known or hereafter
devised; wholesale or retail distributors, licensors
or sellers of Video Devices, audio devices
and other products; book or music publishers;
merchandisers and retailers; or any other
similar Person, whether or not any or all such
excluded Persons are owned, operated or controlled
by WDP, Affiliates or Related
Parties.
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2.
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Amounts
received from advance payments
or security deposits unless earned by exhibition
or broadcast, or (subject to Paragraph 1.1.A.2) unconditionally
non-returnable, and refunds,
rebates or adjustments granted to other Persons
by WDP.
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3.
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Amounts
payable in foreign currency and
not received by WDP in the U.S. due to remittance
restrictions ("Restricted Funds"). Restricted
Funds shall not be included in Defined Receipts
nor accounted for unless and until they have
been received by WDP in U.S. dollars in the
U.S. or expended by WDP in the territory in which
held, except as provided in 1.1.B.3 (a) below.
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(a)
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If any
Contingent Bonus becomes
payable to Lender under this Agreement,
Lender may notify WDP in writing
that Lender desires to have included in
Lender's Contingent Bonus, Lender's share
of Restricted Funds in a particular territory
and designate a bank or other representative
in such country, to whom payment
may be made for Lender's account. Upon
WDP's receipt of such notice and all required
permissions, such payment shall be made
to Lender's representative at Lender's expense.
Upon payment of Lender's share of
Restricted Funds, WDP shall have no further
obligation to account for such Restricted
Funds whether as Defined Receipts
or otherwise.
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69
(b)
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On
Lender's written request, WDP
shall report to Lender the amount of Restricted
Funds (if any) which under this Paragraph
1.1.B.3 have not yet been included
in Defined Receipts as of the closing
date of the most recent statement which
has been furnished to Lender under Paragraph
2.1 below.
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4.
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Amounts
collected in connection with the
distribution of the Picture as taxes or for payment
of taxes (e.g., admission, sales, use or value
added taxes, etc.).
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5.
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Amounts
collected from exhibition of the
Picture contributed to charitable organizations.
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6.
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Receipts
from remakes, prequels, sequels,
radio or TV series or other derivative uses
of the Picture or any element thereof.
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7.
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Salvage
value or receipts derived from print
stocks, film or tape clips, stock footage, stills,
props, sets, wardrobe, or other items included
in Cost of Production except and only any
sums received from the sale of cars purchased
specifically in connection with the Picture
and sold within six months after completion
of photography, which sums shall be included
in the Defined Receipts of the Picture without
any Percentage Deduction.
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1.2.
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PercentageDeduction
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"Percentage
Deduction" means the percentage of Defined Receipts set forth in the Contingent
Bonus Formula
as the First Deduction which WDP shall deduct and retain for its own
account.
1.3.
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Distribution
Costs
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A.
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"Distribution
Costs" means the aggregate of all costs, expenses and charges paid,
advanced or incurred
by WDP or a Subdistributor, directly or indirectly, in connection
with the
distribution, exhibition and exploitation of the Picture, which are
not
included in Cost of Production, including any of the
following:
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1.
|
Ad
and Publicity Costs
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Advertising,
promoting, marketing, exploiting and publicizing
(collectively "ad" or "advertising") in connection with
the
Picture, including the cost of ad space, time, and physical
material used for ads and commercials; shipping,
integrating and monitoring of ads and commercials;
preparation and dissemination of ad material;
salaries, fees, travel and business expenses of WDP
advertising and marketing executives, personalities connected
to the Picture, and publicists, press representatives
and field exploitation persons appropriately
allocated (in WDP's business judgment) to the
Picture, whether or not incurred by or paid to WDP employees
or other persons; previews, screenings, premieres,
film festivals, trade shows and sales events; entertainment
of press and personalities; research and tests
of
ad concepts and effectiveness; press books and kits,
trailers, stills and other accessories and publicity releases;
advertising allowances to theatres or other exhibitors
regardless of how made; commercial tie ups; other
advertising and publicity costs whether directed to the
consumer or the exhibitor and institutional costs.
70
2.
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Conversion
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Conversion
to U.S. dollars and remittance of Defined Receipts to the U.S., including costs
and fees of contesting
the imposition of restrictions.
3.
|
Checking
|
Checking
attendance and receipts, and investigating unauthorized use of the Picture,
whether payable to or incurred by WDP employees or other Persons.
4.
|
Claims
|
All
expenses, costs and attorneys' fees in connection with
the
investigation, assertion, prosecution or defense of claims
or
litigation relating to the Picture and the gross amount
paid for the settlement or satisfaction of any claims,
judgments or decrees in connection therewith.
5.
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Collections
|
Collection
of Defined Receipts including attorneys' and auditors' fees and costs, and
liability incurred by WDP in connection therewith.
6.
|
Copyright
and Royalties
|
Copyright,
trademark and patent costs in connection with
the
Picture and royalties payable with respect thereto.
7.
|
Other
Versions
|
Making,
delivering and using foreign, radio, TV or any other media versions of the
Picture, or titles thereof, or making changes required by censorship and rating
considerations.
8.
|
Residuals
|
Payments
as required by applicable collective bargaining
agreements by reason of exhibition of thePicture
or any part thereof in any media. Any such payments
made to or on behalf of Lender shall be deducted
against Lender's Contingent Bonus (if any) to the
extent not prohibited by the applicable collective bargaining
agreement. Any payments under this Exhibit CB
made
to Lender prior to payment of residuals shall constitute
a credit against such residuals to the extent not prohibited
by the applicable collective bargaining agreement;
provided that any such credit, when applicable,
shall not be taken a second time against Lender.
9.
|
Insurance
|
Insurance
coverage for any and all risks of loss or liability
with respect to the Picture and any components thereof.
WDP may elect in its sole discretion to self-insure
as
to any items of risk, and charge an amount equal
to
the insurance premium WDP would otherwise have
paid
for such insurance.
71
10.
|
Trade
Dues
|
The
allocable portion, as determined in WDP's business
judgment, of dues, assessments, legal fees and costs (including
antitrust and piracy matters), and contributions
to the MPAA, AMPTP or similarly constituted or substitute Persons throughout
the
universe.
11.
|
Licenses
|
All
licenses, duties, customs charges, fees or any other amounts to permit
exploitation of the Picture.
12.
|
Prints
|
Prints
of
the Picture including lab, labor, service and materials,
titles, discs, dubbing, subtitling, gauge reductions,
inspection, repair, shipping, storage, delivery and insurance
thereon.
13.
|
Taxes
|
Taxes
and
governmental fees of any nature, including costs of contesting them, and
interest and penalties thereon
(other than WDP or Subdistributor corporate income
taxes), imposed directly or indirectly on the Picture or any part thereof or
on
the Defined Receipts or the license, distribution or exhibition of the Picture,
or collection, conversion or remittance of monies connected therewith.
Foreign remittance and withholding taxes charged
to the Picture shall be determined as follows: the then-current effective tax
rate for a particular country and distribution medium shall be multiplied by
the
Defined Receipts from such country and distribution medium.
14.
|
Transportation,
Shipping Packaging, etc.
|
Transportation,
shipping, warehousing, reels and containers, and all other costs of delivering
the Picture for exhibition.
B.
|
All
discounts, rebates or credits received by WDP specifically relating
to the
Picture shall be taken into account in computing Distribution Costs
hereunder other than those based on: (i) volume or quantity of
advertising, prints,
negatives or other materials, or (ii) the manner or time of payment
of any
Distribution Cost item.
|
1.4
|
.Other
Contingent Amounts
|
"Other
Contingent Amounts" means amounts such as deferments, defined receipts,
contingent bonus (or similar payment), or otherwise, to any Person including
Lender for rights or services in connection with the Picture,
excluding: (1) the Contingent Bonus payable to Lender
or
retained by WDP hereunder; and (2) contingent bonus payments (or other
contingent payments) which reduce Lender's Contingent Bonus to the extent
provided in this Agreement. Other Contingent Amounts will be deducted if, when
and to the extent that WDP's obligation to pay them accrues, whether or not
such
payments have become due or been made and regardless of whether WDP has
recovered the Cost of Production.
72
1.5.
|
Cost
Of Production
|
"Cost
of
Production" is the aggregate of all costs, charges,
claims and expenses paid or incurred by WDP in connection
with the development, production and delivery of
the
Picture and its trailers, including payments required to
be
made following production of the Picture, determined in
the
customary manner WDP accounts for production costs
at
the time the Picture is produced. If WDP's facilities
are used, a use charge shall be included in the Cost
of
Production in accordance with the then-current WDP
facilities charge schedule. To the extent that WDP employees
render services in connection with the Picture, employee
fringe benefit costs for such employees shall not
exceed the effective fringe benefit rate for Xxxx Disney Pictures
and Television employees during the fiscal year preceding
the fiscal year in which the services were rendered.
To the extent that WDP's contractual obligation to
pay
Defined Receipts to any Person, including Lender, for
rights or services in connection with the Picture accrues
before any Contingent Proceeds hereunder have been
derived, such payments of Defined Receipts shall be deemed
included in the Cost of Production regardless of whether
the obligation is fixed or dependent upon Defined Receipts.
An additional amount by which the Cost of Production
exceeds the approved Picture budget by the lower
of
$300,000 or 10% of the budget shall be deemed included
in Cost of Production, but such excess overbudget
amount shall not itself bear WDP's funding charge
set forth as the Third Deduction in Paragraph C. of the
Contingent Bonus Formula nor the additional 15% charge
set forth as the Fourth Deduction in Paragraph D. of the Contingent Bonus
Formula. Excess costs incurred due to force majeure, changes requested or
approved by WDP as confirmed by a Business Affairs executive of WDP in writing,
and retroactive increases to scale personnel
under collective bargaining agreements are excluded from overbudget
computation.
1.6.
|
Miscellaneous
Definitions
|
A.
|
Free
TV
|
"Free
TV"
is television exhibition for which no fee or subscription is charged to the
viewer.
B.
|
Network
|
"Network"
means ABC, NBC or CBS or any other similar
affiliated group of Free TV television stations broadcasting
more than fifteen hours of prime time programming
per week with eighty percent U.S. clearance.
C.
|
Includes
|
"Includes" (and
equivalents "included" or "including")
and "such as", are illustrative and not intended to be limiting.
D.
|
Person
|
Any
corporation, partnership or other business entity or natural
person.
E.
|
WDP
|
For
the
purposes hereof, "WDP" means Xxxx Disney
Pictures and Television and Affiliates engaged in the
business of theatrical, non-theatrical and television distribution
of motion pictures. WDP shall not include: any
theatrical exhibitor, radio or television transmitter or broadcaster;
any satellite, cable or other pay television operator,
nor any Person transmitting the Picture to such operators
or any one else by any method or delivery system;
any wholesale distributor or retailer of video discs, videocassettes
or similar devices; any book or music publisher;
any producer or distributor of audio products; any
merchandiser; or any other similar Person, whether or not
any
of the foregoing excluded Persons are owned in whole or in part, operated or
controlled by WDP.
F.
|
Affiliate
|
For
purposes of this Exhibit CB, "Affiliate" shall mean any entity (other than
Xxxx
Disney Pictures and Television)
that is a subsidiary of The Xxxx Disney Company
(i.e., an entity of which The Xxxx Disney Company
owns, directly or indirectly through one or more intermediaries, more than
50%
of the voting stock) and each
other entity which, directly or indirectly through one or
more
intermediaries, controls, or is controlled by, or is under
common control with, The Xxxx Disney Company. For
purposes of this definition, the terms "control," "controls,"
and "controlled" mean the power to direct the management
and policies of such entity, whether through the
ownership of voting securities, by contract or otherwise.
G.
|
Related
Party
|
For
purposes of this Exhibit CB, "Related Party" shall mean any entity (other than
an entity included in the definitions of WDP and Affiliate) which The Xxxx
Disney Company owns directly or indirectly through one or more intermediaries,
more than 10% of the voting stock.
73
H.
Territory
1. U.S.
is
the United States, together with any other countries licensed by or through
the
distributing organization(s) servicing the U.S. for WDP.
2. Canada
is
Canada, together with any other countries licensed by or through the
distributing organization(s) servicing Canada for WDP.
3. The
United Kingdom (U.K.) is United Kingdom of Great Britain and Northern Ireland,
Republic of Ireland, Channel Islands, Isle of Man, Gibraltar,
Malta.
4. Foreign
is all countries (other than U.S., U.K. and Canada) and any other areas in
the
universe.
5. All
foregoing references to countries include their territories and possessions,
and
political subdivisions.
6. Distribution
to armed forces shall be included in the particular territories where such
exhibitions shall occur. Distribution to airlines, ships and other means
of
transportation shall be included in the territory of their respective national
origin.
1
Agreement
"Agreement"
is the agreement to which this exhibit is attached, together with this exhibit,
and any other attached amendments, exhibits and schedules.
|
2.
ACCOUNTING 2.1.
Statements
|
WDP
shall
give Lender quarterly summary statements relating to the calculation of Lender's
Contingent Bonus for the first two years after the date established by WDP
as
the date of first general release of the Picture in the U.S. (or if there
is no
U.S. general release, then upon general release outside the U.S.); semiannually
for the next two years;and annually
thereafter
if any Contingent Bonus is payable to Lender or, if none due, only on Lender's
written request, provided such request is made not more than once per year.
Statements shall be issued within 90 days after the end of each accounting
period and accompanied with payment of any amount shown due Lender.
Notwithstanding the foregoing, if the Picture has been made available for
U.S.
TV syndication and the first statement thereafter issued shows that more
than
$500,000 in Defined Receipts would be needed before Lender would be entitled
to
receive Contingent Bonus, WDP shall have no further obligation to render
statements to Lender. If the Picture is generally reissued in the U.S.
theatrically, then WDP shall resume quarterly statements for one year from
the
date of such reissue and thereafter in accordance with the above.
2.2. incontestability
Statements
are subject to correction or amendment by WDP at any time. Each statement
and
all matters of accounting and methodology are conclusive and binding on Lender
24 months after each statement is issued, unless Lender objects in writing
within that 24
month
period, specifying in detail the particular items on the statement and the
nature of the objection(s). If the objections are raised timely, but are
not
resolved, Lender may initiate a claim with respect to such objections, provided
such claim is instituted within 6 months following the date of the initial
written objection or prior to the expiration of the period of the applicable
statute of limitations, whichever occurs first. Lender may not institute
or
maintain a claim against WDP with respect to any item or transaction on a
statement, whether in a lawsuit, an arbitration or any other proceeding unless
Lender has first provided WDP with a timely and detailed written objection
to
such item or transaction. WDP must keep books of account for any given
transaction on a statement for 24 months after the initial reporting of such
transaction. All time periods referred to in this paragraph commence upon
issuance of the first statement on which any particular transaction is
reflected, and the reappearance of a transaction in cumulative statements
shall
not cause the running of any time period to toll or recommence.
2.3.
Books
The
items
reflected in the statements, to the extent they have not become incontestable
or
have not been previously examined, may be examined at Lender's expense, once
in
each 12 month period (the first of which commences upon issuance of the first
statement hereunder). Such statements may only be examined by a national
firm of
reputable CPA's, the selection of which is subject to WDP's approval not
to be
unreasonably withheld.WDP shall make available for examination
those
books of account with respect to the distribution of the Picture which WDP
customarily maintains at its Burbank-area offices. Each examination of any
statement or statements for a particular accounting period
must
be
concluded within the earlier of six months following commencement or an
aggregate of 30 examination days. A copy of the report of such examination
shall
be delivered by Lender to WDP when it is made available to Lender. Lender
shall
have no right to inspect or copy any tax return of WDP or any Subdistributor,
Affiliate or any Related Party, or require the production of any such tax
return
or any information contained therein.
2.4.
Withholdings
All
amounts payable to Lender under this Agreement shall be subject to all present
and future laws and regulations requiring the reporting, deduction or
withholding of payments for taxes or otherwise. WDP shall have the right
to make
such deductions and withholdings, and the payment or reporting thereof to
the
governmental agency concerned in connection with WDP's good faith determination
of such laws and regulations shall constitute payment hereunder to Lender.
WDP
shall not be liable to Lender for the making of such reports, deductions
and/or
withholdings or the payment thereof to the governmental agency concerned.
In any
such event, Lender shall have the sole responsibility for bringing and
maintaining any claims against third parties regarding such reporting,
deductions or withholdings.
74
2.5.
Address
All
statements shall be deemed issued when mailed to Lender at the address for
notices under this Agreement.
2.6.
Reserves
WDP
shall
have the right from time to time and in its business judgment to establish
and
adjust reserves for any distribution costs, uncollected accounts or other
items
which WDP believes in its business judgment will be deductible from or credited
against Defined Receipts hereunder. WDP agrees to liquidate reserves within an
appropriate period of time within WDP's business judgment.
2.7.
Tax Credits
WDP
shall
have the sole right to take whatever credits (including investment tax credits),
deductions or other benefits that may be available throughout the universe,
with
respect to taxes and excises payable in any way in connection with the Picture
or otherwise, without any accounting, credit or payment obligation to
Lender.
3.
ADDITIONAL TERMS
3.1.
Arbitration
WDP
and
Lender agree that any dispute between them concerning the rights and obligations
of WDP and Lender under this Exhibit CB, whether sounding in contract or.tort,
may only be adjudicated in accordance with the following procedure:
A.
Either
(i) WDP and Lender shall mutually select an arbitrator, or (ii) if they cannot
agree on such arbitrator, WDP and Lender shall each select one arbitrator
and
those two arbitrators shall then select a third arbitrator.
B.
The
parties shall arbitrate the dispute in accordance with the
then-prevailingCommercial
Arbitration
Rules of the American Arbitration Association (except to the extent expressly
set forth elsewhere in this Exhibit CB) and judgment on the award rendered
by
the arbitrator(s) may be entered in any court having jurisdiction
thereof.
3.2.
No Representation
WDP
has
no obligation to distribute the Picture and if it does so, Lender acknowledges
that WDP has no obligation to maximize Defined Receipts and has not made
any
representations with respect to the likelihood or amount of Defined Receipts,
deferments, Contingent Proceeds or Contingent Bonus, if any, which will or
may
be derived from distribution of the Picture.
3.3.
Control of Exploitation and Marketing
A. As
between WDP and Lender, WDP shall have exclusive and perpetual control of
the
distribution, marketing, advertising, publicizing, exploitation, sale or
other
disposition of the Picture and may distribute, or withhold or withdraw the
Picture from distribution at its sole discretion with respect to one or more
territories or media. WDP may distribute the Picture with other pictures
whether
or not WDP has any interest in such other pictures.
B. For
all
purposes under this Exhibit CB, allocations of Defined Receipts, costs, rights
and other matters relating to the Picture and other motion pictures shall
be
allocated by WDP in its business judgment and in accordance with WDP's
prevailing business practice.
C.
With
respect to trailers and shorts exhibited with the Picture outside of the
U.S.
and Canada, Defined Receipts shall be reduced by 3% for trailers and 5% for
shorts.
D. As
between WDP and Lender, WDP owns all rights to the Picture and its Defined
Receipts and Contingent Proceeds, including the right to encumber, transfer
or
dispose of them and Lender shall have no right, title or interest therein.
Lender acknowledges that its sole right under this Exhibit is a contractual
right to contingent compensation in the form of, and measured by, the Contingent
Bonus Formula.
E. WDP,
its
agents and assigns, in its and their business judgment, shall be entitled
to
distribute the Picture on a percentage basis or make flat sales, make and
cancel
contracts, adjust and settle disputes, and give allowances and rebates to
distributors, licensees, exhibitors or other Persons whether or not any such
entity is owned, operated or controlled by WDP, Affiliates or Related
Parties.
F. WDP
shall
have complete discretion in determining the extent, if any, to which it will
audit or check payments or charges to WDP or assert claims with respect
thereto.
G. Lender
acknowledges that WDP is part of a large, diversified international group
of
affiliated companies engaged in a variety of business activities. WDP has
informed Lender that it frequently enters into business transactions with
Affiliates and Related Parties, and Lender acknowledges and agrees that WDP
is
entitled (but is not obligated) to, and may, in its sole discretion,
enter into agreements or other arrangements with Affiliates and Related Parties
in connection with any or all rights relating to the Picture, including,
without
limitation, all exploitation rights and all subsidiary, ancillary or other
rights relating thereto (the "Exploitation Rights"). Lender hereby acknowledges
and agrees that WDP is under no obligation, express or implied, to offer
the
Exploitation Rights or any part thereof to unaffiliated or unrelated third
parties, whether in lieu of or in addition to offering such rights to Affiliates
and Related Parties, or to otherwise seek or secure any business arrangements
with any unaffiliated or unrelated third parties with respect thereto. Without
limiting the generality of any other provision of the Agreement, Lender hereby
waives any right to make any claim or seek any relief, whether at law or
in
equity (specifically including injunctive relief), asserting the existence
and/or breach of any such express or implied obligation.
75
In
addition, Lender acknowledges and agrees that any agreement or other arrangement
by WDP with an Affiliate or Related Party regarding the Exploitation Rights
shall be conclusively presumed to be fair, reasonable and unobjectionable
unless
Lender shall establish that such agreement or other arrangement is on financial
terms which, taken as a whole, are materially less favorable economically
to WDP
than the terms of Similar Transactions generally entered into by WDP with
unaffiliated or unrelated third parties; or if there are no such unaffiliated
or
unrelated Similar Transactions, then by WDP with Affiliates or Related Parties
(as applicable); or if there are no such Similar Transactions with Affiliates
or
Related Parties, then by Affiliates with any other Affiliate or Related Party
(any such materially less favorable
agreement
or arrangement being hereinafter referred to as a "Less Favorable Arrangement").
For purposes hereof, the term "Similar Transactions" shall mean agreements
or
other arrangements relating to motion pictures similar to the Picture (including
WDP or non-WDP Pictures) which involve rights which are comparable to the
Exploitation Rights or any relevant partthereof. WDP and Lender agree that
in
any arbitration between them under Paragraph 3.1 above, concerning whether
WDP
has entered
into a Less Favorable Arrangement, the arbitrator(s) shall select an independent
national accounting firm with entertainment accounting expertise who shall
be
present with the arbitrator(s) during the arbitration proceedings, and, on
the
basis of the evidence presented (including any expert testimony presented
by the
parties and admitted into evidence), shall provide a written report to the
arbitrator(s) solely on the issue of whether there was a Less Favorable
Transaction; and the above referenced records and report shall be kept in
strictest confidence by the accounting firm and disclosed only to the
arbitrator(s) who shall have authority, subject to a protective order
maintaining the confidentiality of the information to the fullest extent
permitted by law, to disclose to the parties only those relevant portions
of the
report indispensable to the adjudication of the issue. If pursuant to Paragraph
3.1above, the arbitrator(s) conclude(s)
that WDP has entered into a Less Favorable Arrangement with an Affiliate
or
Related Party, Lender's sole and exclusive remedy shall be the right to receive
an adjustment on the next accounting statement when due, including any
additional payments that may be required, pursuant
to Paragraph 2.1 hereof, modified to the extent required to render such Less
Favorable Arrangement not a Less Favorable Arrangement.
3.4.
Sales of All Rights
A.
If
after completion and delivery of the Picture to WDP, WDP sells all its right,
title and interest in the Picture (other than to an Affiliate or through
merger
or consolidation), Lender may elect that:
1. The
net
sum received by WDP shall constitute Defined Receipts hereunder but further
income of purchaser in connection with the Picture shall not be included
in
Defined Receipts, or,
2. The
net
sum received by WDP shall not be included in Defined Receipts and all receipts
and expenses (other than the purchase price paid to WDP) of the purchaser
relating to the Picture shall be treated for purposes of accounting to Lender,
as though they were receipts and expenses of WDP, provided that upon assumption
by purchaser of such obligation, the sale shall be considered a novation
and WDP
shall thereafter have no obligation of any kind to Lender.
B.
Lender's election shall be made within 7 days after WDP notifies Lender in
writing that it proposes to make such sale and identifies the purchaser and
purchase price. If WDP does not receive written notice of Lender's election
within 7 days after issuance of WDP's notice, then WDP shall have the right,
but
not the obligation, to make such election on Lender's behalf.
3.5.
Assignment by Lender
A. Lender
may assign Lender's right to receive its Contingent Bonus hereunder in whole
or
in part, at any time after the release of the Picture, subject to WDP's approval
not to be unreasonably withheld and provided that such assignment does not
subject WDP to any additional liability in connection with the assignment.
However, in no event shall WDP be obligated to account to more than one Person.
In any event, WDP's obligation to pay in accordance with any assignment,
or
designation of a disbursing agent, shall be conditioned on WDP's receipt
of
written notice thereof, in form satisfactory to WDP, and WDP's payment in
accordance therewith shall satisfy WDP's payment obligations to Lender
hereunder. Lender's right to examine WDP's books of account shall not be
assignable without WDP's prior written consent and in any event shall be
limited
to one Person.
B. WDP
shall
have the right of first refusal with respect to any proposed assignment of
Lender's right to receive Contingent Bonus hereunder upon equivalent terms
(to
the extent economically matchable) offered to Lender by a bona fide third
party.
Lender shall notify WDP of the terms of any such proposed assignment and
WDP
shall have 7 business days within which to elect to accept such terms. Lender
shall make no change in such terms which are adverse to Lender's interest
without giving WDP the opportunity to accept such changed terms. If WDP does
not
elect to accept such terms, then Lender shall be free to accept the proposed
terms of assignment from such bona fide third party provided that if such
proposed assignment
is not concluded within 30 days following the expiration of the 7 business
day
period referred to above, WDP's right of first refusal under this Paragraph
3.5.B shall revive and shall apply to each subsequent offer received by Lender.
This Paragraph 3.5.B shall not apply to family gifts.
3.6.
General Terms
A. This
Agreement is not for the benefit of any third party and shall not create
a
partnership, joint venture, agency, trust or fiduciary obligation between
WDP
and Lender or make Lender WDP's agent or create a relationship between WDP
and
Lender other than creditordebtor to the extent amounts are due
hereunder.
B. WDP
may,
in its business judgment, commingle Contingent Proceeds or Defined Receipts
with
any other funds.
C. Nothing
in this Exhibit CB or the Agreement shall give Lender the right to a lien
on the
Picture, the Contingent Proceeds or Defined Receipts.
D. Lender
shall not be entitled to interest or any other gain which may accrue as a
result
of WDP's obligation to pay Lender's Contingent Bonus (or part thereof) even
in
the event of a dispute between Lender and WDP concerning the interpretation
of
this Exhibit CB, non-payment hereunder or otherwise.
E. Headings
are for convenience only and are of no effect in construing the contents
of this
Agreement.
F. Lender
waives any right at law or equity to revoke, terminate, diminish or enjoin
any
rights granted or acquired by W.DP hereunder by reason of a claimed nonpayment
of monies allegedly due and payable hereunder, it being agreed that Lender's
sole remedy for any such alleged non-payment shall be limited to a claim
for any
such money that is due and payable hereunder.
END
OF EXHIBIT CB
76
MUSIC
PUBLISHING
1.
|
A
royalty equal to fifteen percent (15%) of Music Publishing Contingent
Proceeds ("MPCP") received by WDP from the exploitation of music
publishing rights (i.e., mechanical reproduction, public performance,
sheet music/folios and synchronization) to the original music and/or
lyrics written specifically for and synchronized in the Picture
as
generally released (the "Music") shall be included in Defined
Receipts.
|
2.
|
Music
Publishing Defined Receipts ("MPDR") shall mean all monies actually
received by WDP with respect to the Music excluding any advance,
guarantee
or minimum royalty payment received by WDP in connection with any
subpublishing, collection, licensing or other agreement, unless
such
payment is specifically attributable to the
Music.
|
3.
MPCP
shall mean MPDR less the following:
(a)
|
Royalties
or other monies payable by WDP to the composer(s) and/or lyricist(s)
of
the Music.
|
(b)
|
All
additional shares of MPDR payable by WDP to such composer(s), lyricist(s)
and/or any other third party co-publishers, administrators or other
participants.
|
(c)
|
Collection
or other fees customarily and actually charged by The Xxxxx Xxx
Agency,
Inc., or any other collection agent. used by
WDP.
|
(d)
|
Copyright
registration fees and the costs of transcribing lead
sheets.
|
(e)
|
All
other administration and exploitation expenses incurred with respect
to
the Music including,
|
|
without
limitation, the costs of producing demonstration records, advertising
and
promotion expenses, costs or amounts payable to third-party publishers,
co-publishers, administrators, publishing participants, subpublishers,
licensees, trustees or collection agents, attorneys' and accountants'
fees
directly related to the Music, and damages and expenses incurred
by reason
of infringement claims, but excluding rents, overhead, salaries
and other
similar general expenses.
|
|
4.
If Lender is entitled to receive a direct royalty or other type
of payment
with respect to the Music, then no portion of MPCP will be included
in
Defined Receipts.
|
77
XXXX
DISNEY PICTURES
MUSIC
PUBLISHING
SCHEDULE
"A" TO EXHIBIT CB
1.
|
SOUNDTRACK
RECORDS: In the event WDP receives any royalties in respect of the
soundtrack
|
album(s)
("Album") and/or other "phonorecords" (as that term is defined in the U.S.
Copyright Act of 1976, 17
U.S.C.
Sections101, et. seq.) derived from the soundtrack of the Picture ("Soundtrack
Records"), then WDP
agrees
that such royalties will be computed as follows for inclusion in Defined
Receipts:
1.1
If an
Affiliate distributes Soundtrack Records, then the royalty included in Defined
Receipts shall equal 2'/4 % ("Royalty Rate") of the suggested retail list
price
(or the equivalent wholesale royalty) for net sales of the Album through
normal
retail channels in the United States ("USNRC Sales"). The Royalty Rate shall
be
otherwise defined, computed, reduced and accounted for on the same basis
that
the Affiliate customarily accounts to third party recipients including, without
limitation, in respect of foreign sales, configurations variations, taxes,
flat
fee licensing, coupling, singles, free goods, packaging deductions, royalty
base
and all other reductions and deductions. Royalties hereunder shall only be
included in Defined Receipts prospectively after the recoupment from the
aggregate royalty payable (or accrued against advances or other charges)
by WDP
in respect of Soundtrack Records (including royalties payable to artists,
producers, record companies, film personnel, music supervisors, musicians
and
the royalty payable pursuant to this Schedule B) of the following: (i) all
recording costs of the master recordings embodied in Soundtrack Records;
(ii)
any re-recording costs of master recordings which are re-recorded for Soundtrack
Records; and (iii) all costs of converting the master recordings in the Picture
from motion picture recordings to phonograph record use (including, re-recording
costs, reuse fees, editing, sweetening, etc.).
1.2
In
the event that WDP receives its royalties from the exploitation of Soundtrack
Records by a third party distributor, then the royalty to be included in
Defined
Receipts shall be the "Soundtrack Contingent Proceeds" (as defined
below).
1.3.
"Soundtrack Contingent Proceeds" shall mean all revenues received by WDP
from
the exploitation of Soundtrack Records, if any, as set forth in the applicable
Soundtrack Records agreement after deduction of the following costs and third
party royalties:
(a) A
sum
equivalent to the actual dollar amount (including any fixed cash amounts,
advances-and/or royalties) actually paid to all third party performers and/or
participants with respect to the music/soundtrack contained in Soundtrack
Records and/or the Picture, including without limitation, cash payments and/or
royalties payable to artists, producers, record companies, film personnel,
music
supervisors and musicians.
(b) A
sum
equivalent to all artwork costs for Soundtrack Records to the extent such
artwork costs are paid by or charged to WDP, remixing and remastering costs,
re-recording costs, reuse fees, license fees and similar costs attributable
to
the recording/production and/or licensing of the master recordings embodied
on
Soundtrack Records, except to the extent such costs are included in the negative
cost of the Picture and to the extent such Soundtrack Records costs and fees
have actually been incurred directly or indirectly by WDP.
(c) Any
legal
fees or related expenses incurred by WDP for outside legal counsel engaged
at
WDP's election to: document and/or negotiate the applicable Soundtrack Records
agreement; in protecting or defending WDP's rights, privileges and benefits
with
respect to Soundtrack Records and/or any master recordings recorded/acquired
for
the Picture and/or Soundtrack Records; and/or in connection with any dispute
involving any release/distribution agreement pertaining to Soundtrack
Records.
(d) In
the
event the Soundtrack Records distributor pays WDP any nonreturnable advance
against royalties, a reasonable reserve shall be applied towards (i) third
party
payments payable prior to the Soundtrack Record distributor's recoupment
of such
advance at the "net" artist rate; and (ii) unrecouped costs
incurred
by WDP in respect of any Soundtrack Records and/or in excess of the budgeted
cost of the music for the Picture.
1.4.
Notwithstanding the foregoing, no royalties shall be included hereunder for
any
so-called "storyteller" or "read-along" phonorecords or for any phonorecords
embodied in other merchandise or for any audiovisual devices now known or
hereafter devised.
1.5. If
Lender is entitled to receive a direct royalty or other type of payment with
respect to
Soundtrack
Records, then no royalties from Soundtrack Records will be included in Defined
Receipts.
2.
MERCHANDISING/PUBLISHING. With respect to items of merchandising
(including interactive games and other products and services) and book
publication (including children's storytelling recordings, as distinguished
from
soundtrack records, but excluding souvenir programs and similar publications)
based on the Picture, then:
2.1
For
items sold by a licensee of WDP, the royalties WDP receives from such licensee
shall be included in Defined Receipts of the Picture after first deducting
(i) a
percentage deduction of: fifty percent (50%), inclusive of subdistributor
fees,
for items sold in the U.S.; sixty-five percent (65%), inclusive of
subdistributor fees, for items sold outside the U.S.; and fifteen percent
(15%)
plus any subdistributor's fees for any book novel; and (ii) out-of-pocket
costs
and royalties to third parties; or
2.2
For
items are sold by WDP at the wholesale or retail level, at WDP's discretion,
either: (i) an amount equal to seven (7%) of the wholesale price of such
items
sold by WDP at the wholesale level (less a reasonable allowance for returns);
or
(ii) an amount equal to seven percent (7%) of fifty percent (50%) of the
gross
retail revenues of such items sold by WDP at the retail level (less a reasonable
allowance for returns) shall be included in Defined Receipts of the Picture
after first deducting (a) a percentage deduction of fifty percent (50%) for
items sold in the U.S.; sixty-five percent (65%) for items sold outside the
U.S.; and fifteen percent (15%) with respect to any book novel; and (b) out-of
pocket costs and royalties to third parties.
2.3In
no
event shall any items of merchandise be treated as falling under both provisions
2.1 or 2.2
above.
2.4
If
Lender is entitled to receive a direct royalty or other type of payment with
respect to the exercise of merchandising and book publication rights, then
no
royalties therefrom will be included in Defined Receipts.
78
XXXX
DISNEY PICTURES
SOUNDTRACK
RECORDS/MERCHANDISING/PUBLISHING
SCHEDULE
"B" TO EXHIBIT XX
XXXXX
TO
EXHIBIT "CB"
This
Rider is attached to and made a part of Exhibit "CB" which is attached to
the
agreement ("Agreement") dated as of December 11, 2003 between XXXX DISNEY
PICTURES ("WDP") and PLATINUM STUDIOS LLC ("Owner") relating to the Picture
identified therein.
1. With
respect to Paragraph A of the Contingent Bonus Formula (FIRST DEDUCTION),
the
following shall be added thereto as the last sentence thereof: "As to any
medium
or means of exploitation not currently in general use, the applicable Percentage
Deduction applied shall be consistent with that customarily applied by WDP
in
general with respect to such respective medium and/or means of
exploitation."
2. With
respect to Paragraph B. of the Contingent Bonus Formula (SECOND DEDUCTION),
the
following new sentences shall be added at the end thereof: "There shall be
included in such 10% charge (and not separately deducted) the salaries and
fees
of any such advertising or marketing executives of WDP, but this is not to
be
construed as including other salaries or fees in said 10% charge, such as
salaries of the publicist in charge of publicity for the Picture, and of
regular
employees of WDP rendering services in connection with field exploitation
and
salaries and fees of special publicists and advertising personnel. Also included
in said 10% charge (and not separately deducted) are costs of utilities,
local
telephone, office copying, duplicating machines and other institutional costs
at
the office of WDP's theatrical film distributors."
3. With
respect to Paragraph 1.1 .A.2. (DEFINITIONS, DEFINED RECEIPTS), Subdistributors
hereunder shall be deemed to include WDP sales agents (if any).
4. With
respect to Paragraph 1.1.A.5. (DEFINITIONS, DEFINED RECEIPTS), the words
"excluding costs of WDP in-house counsel in connection with such copyright
infringement claims" shall be inserted immediately after the word "costs"
but
within the parenthetical; and the words "unfair competition, trademark, and/or
patent infringement and/or defamation claims" shall be inserted immediately
after the word "infringers."
5. With
respect to Paragraph 1.1 .A.8. (DEFINITIONS, DEFINED RECEIPTS), the words
"and
other receipts" shall be inserted immediately after the word "Royalties"
in the
first line.
6. With
respect to Paragraph 1.1 .A. (DEFINITIONS, DEFINED RECEIPTS), the following
are
added as new Paragraphs 9. and 10. thereof: "9. Receipts from the distribution
of trailers for the Picture; and 10. Receipts allocable to the Picture as
received from the Copyright Tribunal, payable pursuant to Section III of
the
1976 U.S. Copyright Act. There will be no Percentage Deduction applied to
the
receipts under this subparagraph 10."
7. With
respect to Paragraph 1.1.B.3. (DEFINITIONS, DEFINED RECEIPTS EXCLUSIONS),
after
the word "WDP" in the seventh line, the words "for any purpose" shall be
inserted; and the following shall be added at the end of the Paragraph, "or
unless freely remittable to the U.S. in U.S. dollars. There shall be no
unreasonable delay with respect to the conversion and remittance of foreign
receipts hereunder."
8. With
respect to Paragraph 1.1.B.5. (DEFINITIONS, DEFINED RECEIPTS EXCLUSIONS),
the
words "any charitable screening" shall be inserted immediately after the
word
"from" in the first line.
9. With
respect to Paragraph 1.1.B.7. (DEFINITIONS, DEFINED RECEIPTS EXCLUSIONS),
the
words "or such other major items" shall be inserted immediately after the
word
"cars" in the fifth line.
10. With
respect to Paragraph 1.3.A. (DEFINITIONS, DISTRIBUTION COSTS), the following
is
inserted immediately after the word "Subdistributor" in the third line: "solely
to the extent WDP bears or otherwise accepts such Subdistributors costs and/or
expenses."
11. With
respect to Paragraph 1.3.A.1. (DEFINITIONS, DISTRIBUTION COSTS, AD AND PUBLICITY
COSTS), the words "and reasonably," shall be inserted immediately after the
word
"appropriately" in the eleventh line.
12. With
respect to Paragraph 1.3.A.1. (DEFINITIONS, DISTRIBUTION COSTS, AD AND PUBLICITY
COSTS), the words "related to the Picture" shall be inserted immediately
after
the word "costs" in the twentieth line.
13. With
respect to Paragraph 1.3.A.3 (DEFINITIONS, DISTRIBUTION COSTS, CHECKING),
the
following shall be added thereto: "provided such checking costs shall not
exceed
one percent (I%) of the worldwide Defined Receipts of the Picture."
14. With
respect to Paragraph 1 .3.A.4. (DEFINITIONS, DISTRIBUTION COSTS, CLAIMS),
the
word "reasonable shall be inserted immediately after the word "and" in the
first
line.
15. With
respect to Paragraph 1 .3,A.4. (DEFINITIONS, DISTRIBUTION COSTS, CLAIMS),
the
following shall be added thereto: "Any and all amounts deducted pursuant
to this
Paragraph 1 .3.A.4. must be reasonably allocated to the Picture. Additionally,
there shall be no deduction for costs respecting any defense, settlement
or
judgment of anti-trust claims and no deduction for attorney fees with respect
to
any litigation matter between WDP and Owner that results in a final judgment
on
the merits in Owner's favor."
16. With
respect to Paragraph 1 .3.A.5. (DEFINITIONS, DISTRIBUTION COSTS, COLLECTIONS),
the word "outside" shall be inserted immediately after the word "including"
in
the first line and also immediately after the word "and" in the second
line.
17. With
respect to Paragraph 1 .3.A.5. (DEFINITIONS, DISTRIBUTION COSTS, COLLECTIONS),
the following shall be added as the last sentence thereof: "The foregoing
charges shall not be deemed to limit WDP's right to charge in-house legal
production services as a Cost of Production."
18. With
respect to Paragraph 1 .3.A.9. (DEFINITIONS, DISTRIBUTION COSTS, INSURANCE),
the
following sentence is added at the end thereof: "Any net insurance recovery
for
an item included in the Cost of Production, or as an item of Distribution
Costs
(as applicable) shall be applied to reduce the Cost of Production under
Paragraph 1.5. or the Distribution Costs under Paragraph 1.3., as applicable.
In
the event WDP elects to self-insure and charges a premium as part of the
Cost of
Production, then upon the occurrence of an insurable event, WDP shall within
a
reasonable time reduce the Cost of Production of the Picture by an amount
equal
to an amount an insurance company charging a like premium would have paid
to WDP
with respect to such insurable event."
79
19. With
respect to Paragraph 1.3.A.9. (DEFINITIONS, DISTRIBUTION COSTS,
INSURANCE),
the following is added at the end thereof: "WDP agrees not to deduct as a
distribution cost any reserve against a loss for which WDP has elected to
self
insure and has charged a self insurance premium equivalent as a distribution
cost hereunder."
20. With
respect to Paragraph 1.3.A. 10.
(DEFINITIONS, DISTRIBUTION COSTS, TRADE DUES), the following sentence is
added to the end of this paragraph: "Notwithstanding the foregoing, Defined
Receipts shall not be reduced by more than: (1) $250,000 in the aggregate
for
domestic trade association fees payable by WDP to the M.P.A.A., A.M.P.T.P.
and/or any similarly constituted or substitute person or successor organization
to which WDP may now or hereafter belong on account of receipts or proceeds
from
the distribution of the Picture; and (2) $250,000 in the aggregate for foreign
trade association fees payable by WDP to the M.P.E.A. and/or any successor
organization to which WDP may now or hereafter belong on account of receipts
or
proceeds from the distribution of the Picture."
21. With
respect to Paragraph 1.3.A.12. (DEFINITIONS, DISTRIBUTION COSTS, PRINTS),
the
following shall be added as the last sentences thereof: "Such costs shall
not
include the costs for the mastering, artwork or duplication of Video Devices
of
the Picture for commercial distribution. Also, the allocable and proportional
share of any lab rebates for print costs (to the extent related to the Picture)
shall be credited to lab print costs for the Picture, but Owner shall have
no
audit rights with respect to any such rebates."
22. With
respect to Paragraph 1.3.A.13. (DEFINITIONS, DISTRIBUTION COSTS, TAXES),
(a) the
words "(appropriately allocated)" shall be inserted immediately after the
word
"nature" in the first line; and (b) the following shall be added as the last
sentences thereof: "In the event of any tax refunds and/or in the event of
any
interest adjustment, Distribution Costs shall be credited (without any
Percentage Deduction taken) with respect thereto. The words 'corporate income
taxes' appearing herein shall mean taxes based on net income, so-called excess
profits, and to the extent such are in the nature of taxes based on net income
or so-called excess profit taxes -- franchise and corporation income taxes.
Also
to the extent any such taxes paid by WDP are deducted and subsequently refunded,
an appropriate retroactive adjustment in Distribution Costs shall be
made."
23. With
respect to Paragraph 1.4 (DEFINITIONS, OTHER CONTINGENT AMOUNTS), the words
"a
financier which only provides financing for the Picture and does not provide
producing or other services (e.g., Silver Screen Partners or other similar
financiers) or" shall be inserted immediately prior to the word "Owner" in
the
sixth line.
24. With
respect to Paragraph 1.4. (DEFINITIONS, OTHER CONTINGENT AMOUNTS), the following
shall be added thereto as the last sentence: "Notwithstanding anything to
the
contrary hereinabove, Contingent Proceeds participations to others shall
not be
deducted in computing Owner's Contingent Bonus; provided, however, the foregoing
shall not be deemed a limitation of WDP's right to reduce Owner (if Owner's
Contingent Bonus is reducible), it being further provided that if Owner's
Contingent Bonus is reducible by third party participations under the Agreement
to which this Exhibit is attached, such third party participations which
are
used to reduce Owner's Contingent Bonus shall not also be deductible hereunder
(i.e. no double reduction/deduction).
25. With
respect to Paragraph 1.5.
(DEFINITIONS, COST OF PRODUCTION), the words "(but not contingent bonuses
or contingent proceeds deferments)" shall be inserted immediately after the
word
"Receipts" in the seventeenth line.
26. With
respect to Paragraph 1.5.
(DEFINITIONS, COST OF PRODUCTION), the following is added thereto: "No
item of cost of production will be again charged as a distribution cost,
or vice
versa."
27. With
respect to Paragraph 1.5.
(DEFINITIONS, COST OF PRODUCTION), the figure of "$300,000" in the
twenty-fifth line thereof is deleted therefrom and the figure "$400,000"
is
substituted therefore. and the following words shall be added after the
word
"writing"
in the thirty-fourth line thereof: "and losses to WDPc reimbursed by net
insurance recoveries."
28. With
respect to Paragraph 1 .6.H. 1. (DEFINITIONS, MISCELLANEOUS DEFINITIONS,
TERRITORY), the following words shall be added thereto: "and all transportation
companies, armed services or institutions flying the flag of the
U.S."
29. With
respect to Paragraph 1 .6.H.6. (DEFINITIONS, MISCELLANEOUS DEFINITIONS,
TERRITORY), the words "such exhibitions shall occur" in the second and third
lines shall be deleted and the words "agreements relating to such exhibition
are
entered into" shall be inserted in place thereof.
30. With
respect to Paragraph 2.1. (ACCOUNTING, STATEMENTS), (a) solely in the event
Owner is receiving Contingent Bonus payments hereunder within the first two
years, then (i) the word "three" shall replace the word "two" in the third
line;
(ii) the word "year" shall be inserted immediately after the word "next"
in the
seventh line; (iii) the words "two years" shall be deleted therefrom; and
(iv)
and (b) "$500,000" shall be changed to "$750,000" in the sixteenth
line.
31. With
respect to Paragraph 2.1. (ACCOUNTING, STATEMENTS), the following is added
immediately before the last sentence thereof: "but the foregoing shall not
limit
Owner's right to request a statement as provided in the first sentence of
this
paragraph 2.1." And the following is added to the last sentence thereof:
"and if
the Picture is broadcast on prime time network television in the U.S. or
exhibited on a premium pay TV service or The Disney Channel or similar pay
cable
stations in the first free TV window, in the U.S., WDP shall account therefor
by
issuing a quarterly statement for one year starting on the accounting period
within which the Picture has been so exhibited, accompanied by payment of
the
amount, if any, shown thereby to be due Owner."
32. With
respect to Paragraph 2.2. (ACCOUNTING, INCONTESTABILITY), the number "36"
shall
be substituted for the numeral "24" in each place therein; the word "issued"
shall be deleted from the fifth line thereof and the word "received" substituted
therefor; and the numeral "12" shall be substituted for the numeral "6" in
the
tenth line thereof.
33. With
respect to Paragraph 2.2. (ACCOUNTING, INCONTESTABILITY), the following shall
be
inserted immediately after the word "objection" in the eleventh line: "or
if
commenced in 6 months after completion of audit, if such audit is commenced
prior to, but completed on a timely basis after said 36-month
period."
80
34. With
respect to Paragraph 2.2. (ACCOUNTING, INCONTESTABILITY) the following sentence
shall be inserted immediately after the sentence ending with the word "first"
in
the thirteenth line: "The foregoing period within which Owner may raise
objections shall recommence, but only with respect to certain transactions
or
items included in previous statements that have been thereafter revised and/or
corrected."
35. With
respect to Paragraph 2.3. (ACCOUNTING, BOOKS), the word "national" is deleted
from the seventh line.
36. With
respect to Paragraph 2.3. (ACCOUNTING, BOOKS), the word "issuance"
is
deleted
from the fifth line and the word "delivery" is substituted therefor, and
the
following sentence shall be inserted immediately after the word "withheld"
in
the ninth line: "The big five' accounting firms excluding Price Waterhouse
Coopers are pre-approved by WDP subject to any conflict of interest that
may
exist or arise. Laventhol & Xxxxxxx or any successor-in-interest or any of
its present or former principals or employees shall be deemed not approved
by
WDP so
long
as
they are representing Silver Screen Partners as auditors and/or if they
previously represented Silver Screen as auditors on any WDP picture. In
addition, any auditor(s) that represents Touchwood Pacific Partners I and/or
Interscope Communications Inc./Nomura,
Xxxxxxx
and Xxxxx Unit One Film Partners and/or any other financier of the Picture
and/or any other WDP picture shall be deemed not approved by WDP."
37. With
respect to Paragraph 2.4. (ACCOUNTING, WITHHOLDINGS), the following shall
be
added at the end thereof: "Any moneys so recovered by Owner resulting from
such
claims or prosecutions shall be retained by Owner unless WDP has a prior
existing claim or lien, provided however that nothing herein shall be deemed
a
waiver of either party's rights or remedies in law or equity.
38. With
respect to Paragraph 2.6. (ACCOUNTING, RESERVES), the following shall be
added
thereto: "In any event, WDP shall liquidate any such reserves within 12 months
after establishing the same unless there is any claim and/or litigation pending,
in which case WDP may continue to maintain such reserves".
39. With
respect to Paragraph 3.3.A. (MISCELLANEOUS, CONTROL OF EXPLOITATIONAND
MARKETING) the following shall be added after the word "Owner" in the first
line: "subject to Owner's consultation rights, if any, in connection therewith
as more fully set forth in this Agreement,"
40. With
respect to Paragraph 3.3.A. (MISCELLANEOUS, CONTROL OF EXPLOITATION AND
MARKETING), the following shall be added following the last sentence thereof:
"subject to, and except as provided to the contrary in the Agreement to which
this Rider is attached. Notwithstanding the foregoing, there shall be no
sub-distribution of the Picture in the U.S. or Canada unless WDP customarily
uses sub-distributors for distribution in the U.S. and/or Canada and at that
time with respect to substantially all other motion pictures during the same
calendar year."
41. With
respect to Paragraph 3.3.B. (ADDITIONAL TERMS, CONTROL OF EXPLOITATION AND
MARKETING), the words "good faith" shall be inserted immediately after the
word
"business" in the fourth line.
42. With
respect to Paragraph 3.3.C. (ADDITIONAL TERMS, CONTROL OF EXPLOITATION AND
MARKETING), the words "trailers and" are deleted from the first line, and
the
words "for trailers and 5% " are deleted from the third line
thereof.
43. With
respect to Paragraph 3.4.A.1. (ADDITIONAL TERMS, SALES OF ALL RIGHTS), the
word
"sum" in the first line shall be changed to "sum(s)."
44. With
respect to Paragraph 3.4.A.2. (ADDITIONAL TERMS, SALES OF ALL RIGHTS), the
following shall be inserted immediately after the word "assumption" in the
eighth line: "in writing and subject to full performance."
81
45. With
respect to Paragraph 3.4.B. (ADDITIONAL TERMS, SALES OF ALL RIGHTS), the
words
"14 business days" shall be substituted for the words "7 days" in the each
place
therein. In addition, the words "and other material terms" shall be inserted
immediately after the word "price" in the fourth line.
46. With
respect to Paragraph 3.5.A (MISCELLANEOUS, ASSIGNMENT BY OWNER), the words
"completion of services" shall be inserted immediately after the word "after"
in
the third line; and the words "the release of the Picture" in the third line
shall be deleted.
47. With
respect to Paragraph 3.5.A. (ADDITIONAL TERMS, ASSIGNMENT BY OWNER), the
following shall be added after the word "Picture" in the third line: "or
to
Artist's loan-out company or other closely held corporation and vice-versa;
provided that, and subject to,all parties signing WDP's customary (i) Notice
of
Irrevocable Authority and (ii) Acknowledgment of Notice of Irrevocable
Authority."
48. With
respect to Paragraph 3.5.B. (ADDITIONAL TERMS, ASSIGNMENT BY OWNER), the
word
"material" shall be inserted before the word "change" in the eighth line
thereof, and the following words shall be added to the last sentence thereof:
"or a transfer to any corporation or entity wholly owned or controlled by
Owner."
82