DISTRIBUTION AGREEMENT
This agreement (the "Agreement") is entered into as of October 28, 1998,
by and between SPYGLASS ENTERTAINMENT GROUP, L.P., a Delaware limited
partnership ("Spyglass") and XXXXX MEDIA GmbH & CO. KGAA ("Xxxxx"), a German
corporation, as successor-in-interest to Taurus Film GmbH and Co. KG.
In consideration of the mutual covenants contained herein and for good
and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties hereto agree as follows:
1. DEFINITIONS
Capitalized terms used herein without definition shall have the meaning
ascribed to them in Schedule "A" hereto.
2. LICENSED PICTURES.
2.1. COVERED PICTURES.
The Motion Pictures which are the subject of this Agreement (the
"Pictures") are, subject to the provisions of paragraph 2.2, below, the first
seven (7) Motion Pictures produced, co-produced or acquired by Spyglass or one
of its Affiliated Companies, intended for theatrical release, which have
Commencement Dates (as defined in paragraph 2.3, below) on or after the date
hereof, with respect to which Spyglass or one of its Affiliated Companies owns
or controls all of the Xxxxx Rights (as defined in paragraph 3, below), and
which meet the following criteria: (i) each Pictures must have a Budget of not
less than the Minimum Budget Amount (as defined in paragraph 2.3, below), and
not more than the Maximum Budget Amount (as defined in paragraph 2.3, below);
(ii) each Pictures must be originally recorded primarily in the English
language, and must be filmed primarily in color on 35mm film; and (iii) Spyglass
or one (1) or more of its Affiliated Companies shall own or control one hundred
percent (100%) of the worldwide distribution rights to such Motion Picture;
provided, however, that with respect only to those Pictures which Spyglass
acquires (I.E., Motion Pictures for which Spyglass acquires distribution rights
but does not produce or co-produce) ("Acquired Pictures"), Spyglass must have
acquired the distribution rights to the Picture (inclusive of the Xxxxx Rights)
prior to the date of commencement of principal photography of the Picture
(provided, however, that the foregoing requirement shall not apply to Pictures
developed and controlled by The Xxxx Disney Company ("Disney") or, if
applicable, by such other Major Studio with which Spyglass may then have an
overall agreement for the development, production and distribution of theatrical
Motion Pictures). Notwithstanding anything to the contrary contained herein, the
Motion Picture currently entitled SIXTH SENSE, directed by M. Night Xxxxxxxxx,
the Motion Picture currently entitled THE INSIDER to be directed by Xxxxxxx Xxxx
and the Motion Picture currently entitled MISSION TO MARS to be directed by
Xxxxx xx Xxxxx, shall be included as Pictures pursuant to this Agreement subject
to all of the terms and provisions of this Agreement except as otherwise
expressly provided herein. For purposes of this Agreement, the three (3)
Pictures referred to in the preceding sentence are collectively referred to
herein as the "Pre-Existing Pictures," and the specifications set forth in
Schedule "B" hereto shall apply to the Pre-Existing Pictures
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
notwithstanding any variation from the requirements set forth in this paragraph
2.1. For purposes of this Agreement, the following motion picture studios
(including, without limitation, such studios' theatrical distribution divisions
and, except as set forth herein, their subsidiaries and affiliates) are each
deemed to be a "Major Studio": Disney, Sony Pictures Entertainment, Inc.,
Universal Studios, Inc., Warner Bros., Twentieth Century Fox, Paramount Pictures
or MGM (provided, however, that, notwithstanding anything to the contrary
contained herein, Miramax, Sony Classics or any other "classics" film division
of any such studio shall not be considered a Major Studio for any purpose
hereunder). The parties agree that the first five (5) Pictures to be covered un
this Agreement are the Motion Pictures currently entitled SIXTH SENSE, THE
INSIDER, KEEPING THE FAITH, SHANGHAI NOON and MISSION TO MARS.
2.2. OPTION TO ACQUIRE ADDITIONAL QUALIFIED PICTURES.
Spyglass hereby grants Xxxxx the option to increase the number of Motion
Pictures to be included hereunder as qualified Pictures from seven (7) to twelve
(12) Pictures, upon the terms and conditions set forth in this paragraph 2.2. In
connection with Xxxxx'x option, in addition to any other notice requirements
hereunder, Spyglass shall give Xxxxx notice of the scheduled Commencement Date
for the *** Picture not later than thirty (30) days prior to the scheduled
Commencement Date of such Picture. Subject to Spyglass's obligation to timely
provide the above-referenced notice, Xxxxx may exercise its option at any time
up to the later of *** or the scheduled *** of the *** (as indicated in
Spyglass's notice); provided, however, that if the actual *** of the *** is
later than the date listed in Spyglass's notice, then Xxxxx shall have until the
later of *** or that date which is *** after the *** of the *** within which to
exercise its option. If Xxxxx elects to exercise its option, it shall provide
Spyglass with written notice thereof in the manner set forth herein not later
than the last day on which Xxxxx may exercise its option as set forth herein. If
Xxxxx does not provide such notice by the applicable date, Xxxxx shall be deemed
to have elected not to exercise its option.
2.3. MAXIMUM AND MINIMUM BUDGET AMOUNTS; COMMENCEMENT DATE.
For purposes of this Agreement, the "Minimum Budget Amount" is ***
Dollars ($***). The "Maximum Budget Amount" is *** Dollars ($***). For purposes
of this Agreement, the "Commencement Date" for a Picture shall be (i) the date
of commencement of principal photography of all Pictures other than Acquired
Pictures which are subject to the proviso in clause (v) of paragraph 2.1, above,
and (ii) with respect to those Acquired Pictures which are subject to the
proviso in clause (v) of paragraph 2.1, above, the later of the date of
commencement of principal photography or the date of acquisition by Spyglass.
Notwithstanding anything to the contrary contained herein, the Maximum Budget
Amount shall not apply to THE INSIDER or to MISSION TO MARS (provided, however
that the calculation of the percentage portion of the Minimum Guarantee payable
with respect to MISSION TO MARS shall be subject to the last sentence of
paragraph 7.1, below.)
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
3. GRANT OF RIGHTS.
3.1. XXXXX RIGHTS.
3.1.1. Subject to the terms and conditions of this Agreement, including,
without limitation, the language restrictions set forth in paragraph 3.1.2,
below, and the territorial restrictions set forth in paragraph 5, below, with
respect to each Picture, Spyglass hereby grants to Xxxxx the following rights:
3.1.1.1. All Cinematic, Video, Television, Hotel and New Media Rights,
in and to the Pictures during the Exploitation Term for each Picture (as set
forth in paragraph 4.2, below) for exploitation in the German Territories (as
set forth in paragraph 5, below).
3.1.1.2. All Television Rights in and to the Pictures during the
Exploitation Term for each Picture for exploitation in the Italian and Spanish
Territories (each as defined in paragraph 5, below); provided, however, that
such Television Rights shall not include the right to exploit the Pictures prior
to the Television Availability Date (as defined in paragraph 4.3, below).
3.1.1.3. All Cinematic, Video, Television, Hotel and New Media Rights,
in and to the Pictures during the Exploitation Term for each Picture (as set
forth in paragraph 4.2, below) for exploitation in the Russian Territories (as
set forth in paragraph 5, below).
3.1.2. Xxxxx'x rights to exploit the Pictures hereunder are subject to
the following language restrictions:
3.1.2.1. With respect to the German Territories, Xxxxx may exploit the
Xxxxx Rights (as defined in paragraph 3.1.3, below) in a German language dubbed
or subtitled version; provided, however, that, with respect to the Pay TV
Rights, Xxxxx may exploit the Pay TV Rights in a subtitled version only to the
extent that the Pay TV transmission is by means of an encoded signal intended
for reception on a viewing device in private living accommodations by means of a
decoding device. In addition to the foregoing, (i) in Switzerland, Xxxxx may
also exploit the Cinematic Rights in a French dubbed or subtitled version, (ii)
in Germany, Austria and Switzerland, Xxxxx may also exploit the Cinematic
(provided, however, that, with respect to the Non-Theatrical Rights, the parties
will decide whether or not the provisions of this clause (ii) shall apply on a
case-by-case basis), Videogram (but not by means of Videocassettes) and Pay TV
Rights in the English language without subtitles and (iii) in any country of the
German Territories, Xxxxx may exploit the Pictures on DVD (or any other new home
video playing device) in an English language version with or without subtitles
only as long as (A) the DVD version released by Xxxxx in the German Territories
is one primarily intended for German speaking viewers (I.E., Xxxxx is not
authorized to release the DVD version intended for release in the United
States), and (B) the packaging for the DVD release of a Picture is in German;
provided, however, that with respect to Xxxxx'x right to exploit the Pictures in
English without subtitles, (X) Xxxxx may do so only to the extent that
exploitation in English without subtitles in such media is customarily
undertaken by Buena Vista or Warner Bros. in Germany (which the parties
acknowledge is currently the case), and (Y) with respect to the Pay TV Rights,
Xxxxx may exploit the Pay TV rights in English without
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
subtitles only to the extent that the Pay TV transmission is by means of an
encoded signal intended for reception on a viewing device in private living
accommodations by means of a decoding device.
3.1.2.2. With respect to the Italian Territories, Xxxxx may exploit the
Xxxxx Rights only in an Italian dubbed or subtitled version. In addition, with
respect to the Pay TV Rights, Xxxxx may also exploit the Xxxxx Rights in the
Italian Territories in an English language version with or without subtitles,
but only to the extent that the Pay TV transmission is by means of an encoded
signal intended for reception on a viewing device in private living
accommodations by means of a decoding device.
3.1.2.3. With respect to the Spanish Territories, Xxxxx may exploit the
Xxxxx Rights only in a Spanish dubbed or subtitled version. In addition, with
respect to the Pay TV Rights, Xxxxx may exploit the Xxxxx Rights in the Spanish
Territories in an English language version, with or without subtitles, but only
to the extent that the Pay TV transmission is by means of an encoded signal
intended for reception on a viewing device in private living accommodations by
means of a decoding device.
3.1.2.4. In the Russian Territories, Xxxxx may exploit the Pictures in
any of the prevailing national languages in the Russian Territories, in a dubbed
or subtitled version, except that, with respect to any medium included in the
Xxxxx Rights hereunder, Xxxxx may not exploit the Pictures in any such medium in
the Russian Territories in a subtitled version until such time as at least two
(2) major studios are regularly exploiting Motion Pictures in such medium in any
country of the Russian Territories; provided, however, that, notwithstanding the
foregoing, Xxxxx may exploit the Television Rights to a Picture in the Russian
Territories in a subtitled version (provided, however, that, with respect to any
Pay TV telecast of any such Picture, such telecast shall be by means of an
encoded signal intended for reception on a viewing device in private living
accommodations by means of an encoded signal intended for reception on a viewing
device in private living accommodations by means of a decoding device) upon the
later of (i) eighteen (18) months after the initial U.S. theatrical release of
such Picture, (ii) eighteen (18) months after the initial theatrical release of
such Picture in the Russian Territories, or (iii) twelve (12) months after the
home video release of the Picture in the Russian Territories. In addition to the
foregoing, Xxxxx may exploit the Pictures in the Russian Territories on DVD (or
any other new home video playing device) in an English language version with or
without subtitles only as long as (A) the DVD version released by Xxxxx in the
Russian Territories in one primarily intended for local language speaking
viewers (I.E., Xxxxx is not authorized to release the DVD version intended for
release in the United States), and (B) the packaging for the DVD release of a
Picture in the applicable country of the Russian Territories is in the language
in which Xxxxx is authorized to release subtitled versions of such Picture in
such country; provided, however, that Xxxxx shall be entitled to release the
Picture on DVD in an English language version only to the extent that it is
customary industry practice in the Russian Territories to do so.
3.1.3. The rights granted to Xxxxx in this paragraph 3.1 and the rights
granted to Xxxxx in paragraphs 9.2 and 10.2, below, are collectively referred to
herein as the "Xxxxx Rights." Xxxxx'x rights to exploit the Xxxxx Rights in the
German Territories are collectively referred to herein as the "German Rights."
Xxxxx'x rights to exploit the Xxxxx Rights in the Italian Territories are
collectively referred to herein as the "Italian Rights." Xxxxx'x rights to
exploit the
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
Xxxxx Rights in the Spanish territories are collectively referred to herein as
the "Spanish Rights." Xxxxx'x rights to exploit the Xxxxx Rights in the Russian
Territories are collectively referred to herein as the "Russian Rights."
3.2. SPYGLASS RIGHTS.
3.2.1. With respect to each Picture, as between Spyglass and Xxxxx,
Spyglass, or Spyglass and one or more of its Affiliated Companies, shall own and
control all rights in and to the Pictures not expressly granted to Xxxxx
hereunder, including, without limitation, all Pay TV Rights (provided, however,
that Spyglass shall not be entitled to exploit or authorize the exploitation of
a Picture for more runs than is customary at the time in the pay television
industry in Italy and Spain) in the Italian and Spanish Territories prior to the
Television Availability Date (as defined in paragraph 4.3, below), and all Ship,
Airline, Remake, Sequel, Interactive, Internet, Merchandising, Soundtrack and
Music Publishing Rights, all other ancillary rights (whether now known or
hereafter devised) not expressly included in the Xxxxx Rights (including,
without limitation, all commercial tie-in rights and theme park rights), and all
other rights to create and exploit derivative works of any kind or nature based
upon each Picture, all rights to license film clips from each Picture, all
rights to each Picture in any language not authorized hereunder, as well as all
rights of every kind and nature in and to each Picture outside of the Territory
(collectively the "Spyglass Rights"). As between Xxxxx and Spyglass, except as
provided in paragraph 15.14, below, Spyglass may exploit the Spyglass Rights as
Spyglass sees fit, without restriction; provided, however, that Spyglass may not
exploit a Picture on DVD (or any other new home video playing device) in German
during the Exploitation Term for such Picture.
3.2.2. With respect to the Spyglass's reserved ***, *** and *** to the
extent that any such rights (except for print and electronic publication rights
which shall not be subject to the provisions of this paragraph 3.2.2) are
exploited in any country of the German Territories, if as of the time Xxxxx
renders each accounting statement rendered by Xxxxx hereunder, any *** (as
defined in paragraph 6.8, below) has not generated sufficient Gross Receipts (as
defined in paragraph 6.1, below) to exceed the *** (which, for purposes of this
Agreement shall be that point when the *** of the *** in the ***are such that
***its *** *** of the *** in the ***), then, to the extent that the reserved
***, *** *** *** *** which Spyglass has exploited in the German Territories ***
to any *** in such *** within ten (10) business days after Spyglass's receipt of
Xxxxx'x accounting statement, *** shall ***to *** *** ***only *** and ***)
***the *** of such ***, *** or *** in the German Territories. In addition, with
respect to the *** to the Pictures, such rights shall not be exploited in the
Territory by either party hereunder (but may be exploited by Spyglass outside of
the Territory to the extent that Spyglass employs technology sufficient to
prohibit viewing of the Pictures by viewers located within the Territory).
3.2.3. With respect to Spyglass's reserved Interactive Rights for a
Picture, in the event that Spyglass proposes to engage a third party distributor
for purposes of exploiting such rights in the German Territories or any part
thereof, prior to doing so, Spyglass shall afford Xxxxx a right of first
negotiation and first refusal to acquire such distribution rights. In that
regard, if at any time during the Exploitation Term for a Picture, Spyglass
determines to engage a third party distributor for purposes of exploiting the
Interactive Rights to such Picture for exploitation in the German Territories,
Spyglass shall give Xxxxx written notice to such effect. If, within five (5)
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
business days after Xxxxx'x receipt of Spyglass's notice, Xxxxx does not notify
Spyglass that it wishes to negotiate with Spyglass to acquire such distribution
rights, Spyglass shall be free to enter into an agreement with any third party
with respect to such rights without any further obligation to Xxxxx hereunder.
If Xxxxx timely notifies Spyglass that it wishes to negotiate to acquire such
distribution rights, upon receipt of Xxxxx'x notice, Xxxxx and Spyglass shall
negotiate in good faith with respect to Xxxxx'x acquisition of such rights for a
period of up to thirty (30) days from the date of Spyglass's receipt of Xxxxx'x
notice (the "Negotiating Period"). In that regard, the parties acknowledge that,
in connection with such negotiation, Xxxxx may seek to acquire such rights for
the entire German Territories or for any one (1) or more countries in the German
Territories (provided, however, that if Xxxxx does not seek to acquire such
distribution rights for the entire German Territories, Spyglass shall be free to
enter into an agreement with a third party or parties with respect to such
rights for that portion of the German Territories for which Xxxxx has not sought
to acquire such rights, without any further obligation to Xxxxx hereunder). If
the parties reach an agreement during the Negotiating Period (the "Negotiated
Agreement"), they shall promptly enter into a distribution agreement with
respect to such rights, which distribution agreement will reflect the Negotiated
Agreement. If the parties fail to reach a Negotiated Agreement by the end of the
Negotiating Period, Spyglass shall be free to negotiate with any other party
with respect to a grant of such distribution rights to such party; provided,
however, that, prior to entering into an agreement with any other party for such
party to acquire such rights on financial terms that are not by at least ***%)
more favorable to Spyglass than what Xxxxx last offered during the Negotiating
Period, Spyglass shall notify Xxxxx in writing of the financial terms of such
party's offer (a "First refusal Notice"). Xxxxx shall then have a period of ten
(10) business days after its receipt of the First refusal Notice within which to
notify Spyglass n writing if Xxxxx wishes to enter into an agreement with
Spyglass on such financial terms. If Xxxxx notifies Spyglass that it wishes to
enter into an agreement on the financial terms contained in the First refusal
Notice, then the parties shall be deemed to have agreed upon such matters, and
they shall promptly enter into a distribution agreement with respect to such
rights, which distribution agreement will reflect the terms contained in the
First refusal Notice. If Xxxxx fails to notify Spyglass in writing within the
time allowed of its intent to enter into an agreement on the terms set forth in
the First refusal Notice, then Spyglass shall be free to enter into an agreement
with the other party, provided that such agreement is not on terms less
favorable to Spyglass than those offered to Xxxxx in the First refusal Notice.
In the event Spyglass does not enter into an agreement with a party on the terms
specified in the First refusal Notice (or on terms more favorable to Spyglass
than those contained in the First refusal Notice), then this procedure shall be
repeated with respect to any other distribution agreement for such rights which
Spyglass proposes to enter into, unless and until Spyglass finally enters into
such an agreement.
3.3. XXXXX'X RIGHTS WITH RESPECT TO NON-QUALIFYING MOTION PICTURES.
3.3.1. With respect to (i) each Motion Picture produced, co-produced,
financed or otherwise acquired by Spyglass or any one of its Affiliated
Companies which is intended for theatrical release and which has a Commencement
Date prior to the Commencement Date of the seventh Picture hereunder (or, if
Xxxxx exercises its option pursuant to paragraph 2.2, above, prior to the
Commencement Date of the twelfth Picture hereunder), and with respect to which
Spyglass or one of its Affiliated Companies owns or controls any of the Xxxxx
Rights, which does not qualify as a Picture pursuant to the provisions of
paragraph 2.1, above, (including, without limitation, Motion Pictures with Final
Budgets (as defined in paragraph 7.9, below) which are less
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
than the Minimum Budget Amount or which exceed the Maximum Budget Amount) and
(ii) each Motion Picture produced, co-produced, financed or otherwise acquired
by Spyglass or any one of its Affiliated Companies which has a Commencement Date
prior to the Commencement Date of the seventh Picture hereunder and which does
qualify as a Picture pursuant to the provisions of paragraph 2.1, above, but for
which, as of the Commencement Date, Spyglass was not able to satisfy the
condition precedent set forth in paragraph 7.4.1, below, or which ceases to
remain qualified as a Picture hereunder due to any other provision of this
Agreement (other than Pictures which are subject to paragraph 14.2, below) (each
type of Motion Picture referred to in clauses (i) and (ii) hereof being referred
to herein as an "Additional Picture"), Xxxxx shall have an option to acquire the
same rights in and to such Additional Picture as Xxxxx is acquiring hereunder
with respect to the Pictures, in accordance with the procedure set forth below;
provided, however, that, if the reason any such Motion Picture does not qualify
as a Picture pursuant to paragraph 2.1, above, is that Spyglass or one of its
Affiliated Companies does not own or control all of the Xxxxx Rights with
respect to such Motion Picture, then, upon Xxxxx'x exercise of its option, Xxxxx
shall acquire such of the Xxxxx Rights with respect to such Motion Picture as
Spyglass and its Affiliated Companies own or control, except that, Xxxxx m ay
elect not to acquire the Russian Rights to any such Motion Picture.
3.3.2. Prior to licensing any of the Xxxxx Rights to an Additional
Picture to any licensee with respect to nay country in the Territory, Spyglass
shall provide Xxxxx with written notice setting forth the identity of the
Additional Picture's *** and *** (which notice shall also indicate, with respect
to any such individual who is to receive a Gross Participation (as defined in
paragraph 6.4, below) with respect to the Picture, the fee payable to such
individual and the terms of such individual's Gross Participation), and the
anticipated delivery date of the Picture to Xxxxx. Concurrently with providing
such notice, Spyglass shall also provide Xxxxx with a copy of the Additional
Picture's ***, *** and *** of the ***. If, at the time Spyglass provides such
notice, the Additional Picture has not commenced principal photography, the ***
and *** identified in Spyglass's notice shall be those proposed for the
Additional Picture, and the *** and *** provided shall be the proposed *** and
the most current version of the *** (subject to such changes thereto as do not
materially alter the *** and *** of ***. In connection with the foregoing, a
proposed *** provided to Xxxxx hereunder shall contain Spyglass's good faith
estimate as to the *** for such Additional Picture. To the extent the *** of the
*** exceeds the *** of the ***, notwithstanding anything to the contrary
contained herein, the Minimum Guarantee initially payable by Xxxxx with respect
to such Picture shall be based on the amount of the proposed *** (up to the ***
by Spyglass, in good faith, in the proposed *** provided to Xxxxx hereunder). To
the extent that the amount of the *** is less than the *** of the ***,
notwithstanding anything to the contrary contained herein, the initial Minimum
Guarantee payable by Xxxxx with respect to such Picture shall be based on the
*** ***, not on the ***. In the event Xxxxx exercises its option with respect to
any Additional Picture, Xxxxx may condition its exercise of such option on the
*** identified in Spyglass's notice, or any *** identified in Spyglass's notice,
being an "***" for purposes of *** of such Picture, but only to the extent that
(i) with respect to the ***, the fee payable to the *** is *** Dollars ($***) or
more, or the *** is entitled to receive a Gross Participation (as defined in
paragraph 6.4 below) of *** percent (***%) or more, or (ii) with respect of any
*** the fee payable to such *** is *** Dollars ($***) or more, or the cast
member is entitled to receive a Gross Participation of *** percent (***%) or
more, or, with respect to a ***, the fee payable to such cast
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
member is *** Dollars ($***) or more, or the *** is entitled to receive a Gross
Participation of *** percent (***%) or more. Additionally, if, at the time
Spyglass provides such notice, the Additional Picture has not commenced
principal photography, Spyglass's notice shall set forth the scheduled date for
commencement of principal photography and, to the extent available, shall
include the proposed production schedule.
3.3.3. Xxxxx shall have *** after its receipt of Spyglass's notice
pursuant to paragraph 3.3.2, above, within which to notify Spyglass if Xxxxx
wishes to acquire rights to the Additional Picture specified in Spyglass's
notice.
3.3.4. If, pursuant to paragraph 3.3, above, Xxxxx elects to acquire
rights to any Additional Picture in accordance with this paragraph 3.3, then,
upon Xxxxx'x notice to Spyglass pursuant to paragraph 3.3.3, above, that it is
exercising its option to acquire rights to such Additional Picture such
Additional Picture shall become a "Picture" for all purposes hereunder.
Notwithstanding anything to the contrary contained herein, an Additional Picture
for which Xxxxx elects to exercise its option pursuant to this paragraph 3.3
shall not count as one of the seven (7) (or twelve (12)) Pictures which Spyglass
is required to deliver to Xxxxx hereunder, except for those Additional Pictures
for which the Final Budget exceeds the Maximum Budget Amount which shall count
as one of the seven (7) (or twelve (12)) Pictures which Spyglass is required to
deliver to Xxxxx hereunder. In addition, with respect to any such Additional
Pictures for which Xxxxx elects to exercise its option pursuant to this
paragraph 3.3, if Spyglass or one of its Affiliated Companies does not own or
control all of the Xxxxx Rights with respect to such Additional Picture, then
notwithstanding anything to the contrary contained herein, the Minimum Guarantee
payable with respect to such Additional Picture shall be *** be *** in
accordance with the provisions of ***, and based on such of the *** with respect
to such Picture as ***.
3.4. RIGHT OF FIRST REFUSAL WITH RESPECT TO TELEVISION PROGRAMS.
3.4.1. With respect to any television program produced, co-produced or
acquired by Spyglass (including, without limitation, any television series or
television mini-series) prior to the Commencement Date of the seventh Picture
hereunder (or, if Xxxxx exercises its option pursuant to paragraph 2.2, above,
prior to the Commencement Date of the twelfth Picture hereunder), for which
Spyglass or one (1) or more of its Affiliated Companies owns or controls the
Television Rights for the Territory (which rights Spyglass shall use its
reasonable good faith efforts to acquire and maintain), Xxxxx shall have a right
of first refusal to acquire rights equivalent to the Television Rights granted
to Xxxxx hereunder for the Territory with respect to such television program
(which, for purposes of this paragraph 3.4, are referred to herein as the "Xxxxx
Television Rights") as set forth more fully herein.
3.4.2. With respect to any such television program (each a "Program"),
prior to licensing the Xxxxx Television Rights (or any portion thereof) to such
Program to any licensee with respect to any country in the Territory, and prior
to screening any version of such Program for any distributor considering
acquiring rights for any country in the Territory, Spyglass shall provide Xxxxx
with written notice setting forth the identity of the Program's ***(or ***) and
***, to the extent that such elements have been determined. Concurrently with
providing such notice, Spyglass shall also provide Xxxxx with a copy (if
available) of the Program's *** (and if such
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
Program is a television series, Spyglass shall provide both the then-current
overall *** and the ***, if available) and current teleplay (provided, however,
that if such Program is a series, Spyglass shall provide the *** and any ***
then-existing for the ***, and if such Program is a mini-series, Spyglass shall
also provide a copy of the *** (if any) for the mini-series). Notwithstanding
anything to the contrary contained herein, in the event Xxxxx exercises its
option with respect to any Program, Xxxxx may condition its exercise of such
option on the ***and ***in connection with the ***.
3.4.3. Xxxxx shall have a period of *** days after its receipt of
Spyglass's notice pursuant to paragraph 3.4.2, above, within which to notify
Spyglass if Xxxxx wishes to acquire the Xxxxx Television Rights to such Program
for the Territory, for a license term of ***from the availability date (as
determined by Spyglass) for such Program. If Xxxxx so notifies Spyglass, Xxxxx
and Spyglass shall promptly enter into a license agreement with respect to such
Program, incorporating the terms and conditions set forth in this paragraph 3.4
and such other terms and conditions as are customary for agreements of such
type, for a license term of***, with the license fee payable by Xxxxx with
respect to such Program to be an amount equal to *** percent (***%) of the
amount of the budget for such Program (which, for purposes of such license
agreement, shall include the ***of the Program, a *** and an *** payable to
Spyglass in an amount not to exceed *** percent (***%) of the amount of the
***and a *** in an amount not to exceed *** percent (***%) of the ***);
provided, however, that if Spyglass or one (1) of its Affiliated Companies does
not own or control all of the Xxxxx Television Rights with respect to such
Program, then the amount payable with respect to such Program shall be reduced
from the amount which would otherwise be payable hereunder, in accordance with
the provisions of ***, but only as such provisions relate to the Xxxxx
Television Rights (I.E., *** percent (***%) for the German Rights, *** percent
(***%) for the Italian Rights and *** percent (***%) for the Spanish Rights and
zero for the Russian Rights). If Xxxxx does not notify Spyglass that it wishes
to acquire the Xxxxx Television Rights to such Program within the *** period set
forth above, Spyglass shall be free to enter into an agreement with any third
party with respect to such Program without any further obligation to Xxxxx
hereunder.
3.4.4. Notwithstanding anything in paragraphs 3.4.2 and 3.4.3, above, to
the contrary, if, pursuant to paragraph 3.4.3, above, Xxxxx notifies Spyglass
that it does not want to acquire rights to a submitted Program (or if Xxxxx does
not notify Spyglass that it wishes to acquire rights to such Program within the
time allowed), and prior to the time Spyglass licenses rights to such Program to
a third party with respect to any country in the Territory, any material element
(which, for purposes of this paragraph, shall be deemed to be ***, a***, the***,
a change in the ***, a change in the *** (I.E., from a ***, *** or a similar
change *** of the Program) or an *** percent (***%)) of the Program is changed
or newly added, Spyglass shall resubmit the Program (along with the changed
elements) to Xxxxx for reconsideration. Concurrently with Spyglass's
resubmission of such Program to Xxxxx, Spyglass will provide Xxxxx with written
notice identifying and describing in reasonable detail the changed elements, and
Spyglass shall include with such notice the materials which Spyglass is required
to provide pursuant to 3.4.2, above, to the extent that any such materials have
changed from the time they were originally submitted to Xxxxx. With respect to
any Program resubmitted to Xxxxx pursuant to this paragraph 3.4.4, if, within
***after Xxxxx'x receipt of Spyglass's resubmission notice Xxxxx does not notify
Spyglass that it wishes to acquire rights to such Program, Spyglass shall be
free to enter into an agreement with any third party with
-----------------------
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
respect to such Program without any further obligation to Xxxxx hereunder, but
subject once again to the changed elements provisions of this paragraph 3.4.4.
If Xxxxx timely notifies Spyglass that it wishes to negotiate to acquire rights
to such Program, the procedures set forth in paragraph 3.4.3, above, shall
apply.
4. TERM.
4.1. EXPLOITATION TERM.
With respect to each Picture Delivered hereunder (as defined in
paragraph 11.1, below), the term of Xxxxx'x rights under this Agreement to
exploit such Picture (the "Exploitation Term") shall commence on October 28,
1998. The Exploitation Term for each Picture with respect to each country of the
Territory shall end on that date which is twenty (20) years after the Television
Availability Date (as defined in paragraph 4.3., below) for such Picture in the
applicable country. Notwithstanding anything to the contrary contained herein,
with respect to Xxxxx'x exploitation of the Television Rights to each Picture,
during the last year of the Exploitation Term for each Picture, Xxxxx shall not
be entitled to exhibit or authorize the exhibition of a Picture for more than
*** customary Pay Television run and *** customary Free Television run in each
country of the Territory. After the end of the Exploitation Term for a Picture,
Xxxxx shall have no further rights to exploit such Picture.
4.2. HOLDBACKS.
4.2.1. With respect to the exploitation of the Xxxxx Rights in the
German and Russian Territories, Xxxxx shall not exhibit a Picture in the German
or Russian Territories until the earlier of (i) nine (9) months after Delivery
of the Essential Delivery Elements for such Picture to Xxxxx (the "Outside
Theatrical Release Date") (provided, however, that Xxxxx will give good faith
consideration (but shall not be obligated) to extending such holdback period to
twelve (12) months if so requested in writing by Spyglass, which request must
set forth Spyglass's reasons for the requested extension), or (ii) the date of
the initial theatrical release of such Picture before the general public in the
United States. In addition, Xxxxx shall not permit sales or rentals of
Videograms of any Picture to the general public in the German or Russian
Territories until the earlier of (A) such Picture's United States home video
"Street Date") (which, for purposes of this Agreement, shall be the date on
which the Picture's United States distributor authorizes sales or rentals of
Videograms of the Picture to the general public), (B) nine (9) months after the
date of the initial theatrical release of such Picture before the general public
in the United States, or (C) six (6) months after the Outside Theatrical Release
Date. For purposes of this Agreement, the Television Availability Date for each
Picture in each country of the German and Russian Territories shall be the
earlier of (1) the date on which Xxxxx first exploits the Television Rights to a
Picture in such country, or (2) eighteen (18) months after the date of the
initial theatrical release of such Picture before the general public in the
United States.
4.2.2. With respect to the exploitation of the Xxxxx Rights in the
Italian Territories, Xxxxx shall not exhibit a Picture in the Italian
Territories until the Television Availability Date for such territory. The
Television Availability Date for each Picture in each country of the Italian
Territories shall be the earlier of (i) thirty-seven (37) months after the date
of the initial
-----------------------
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
theatrical release of such Picture before the general public in the United
States, (ii) thirty-one (31) months after the date of the initial theatrical
release of such Picture in Italy, or (iii) twenty-five (25) months after the
home video Street Date in Italy; provided, however, that if the general custom
and practice in the motion picture industry in the Italian Territories changes
such that the holdbacks set forth above change substantially from those set
forth herein, the parties will give good faith consideration to either
lengthening or shortening such holdbacks as may be appropriate.
4.2.3. With respect to the exploitation of the Xxxxx Rights in the
Spanish Territories, Xxxxx shall not exhibit a Picture in the Spanish
Territories until the Television Availability Date for such territory. The
Television Availability Date for each Picture in each country of the Spanish
Territories shall be earlier of (i) thirty-eight (38) months after the date of
the initial theatrical release of such Picture before the general public in the
United States, (ii) thirty-two (32) months after the date of the initial
theatrical release of such Picture in Spain, or (iii) twenty-six (26) months
after the home video Street Date in Spain; provided, however, that if the
general custom and practice in the motion picture industry in the Spanish
Territories changes such that the holdbacks set forth above change substantially
from those set forth herein, the parties will give good faith consideration to
either lengthening or shortening such holdbacks as may be appropriate.
5. TERRITORY.
Xxxxx may exploit the applicable Xxxxx Rights to each Picture in the
following territories: Germany, Austria, Liechtenstein, Switzerland, Luxembourg,
Alto Adige, Italy, San Marino, Vatican City, Monte Carlo, Spain, Andorra,
Gibraltar, Russia, Kazakhstan, Kyrgyzstan, Tajikistan, Uzbekistan, Turkmenistan,
Azerbaijan, Armenia, Georgia, Ukraine, Belarus, Estonia, Latvia, Lithuania and
Moldavia (collectively the "Territory"). For purposes of this Agreement,
Germany, Austria, Liechtenstein, Switzerland, Luxembourg and Alto Adige are
collectively referred to herein as the "German Territories," Italy, San Marino,
Vatican City and Monte Carlo are collectively referred to herein as the "Italian
Territories," Spain, Andorra and Gibraltar are collectively referred to herein
as the "Spanish Territories," and Russia, Kazakhstan, Kyrgyzstan, Tajikistan,
Uzbekistan, Turkmenistan, Azerbaijan, Armenia, Georgia, Ukraine, Belarus,
Estonia, Latvia, Lithuania and Moldavia are collectively referred to herein as
the "Russian Territories." Notwithstanding the foregoing, with respect only to
MISSION TO MARS, in the event that, prior to Delivery of such Picture to Xxxxx,
Spyglass licenses the first free television cycle for such Picture to Antenna 3
for the Spanish Territories, then, with respect to such picture, the Territory
shall not include the Spanish Territories.
6. GROSS RECEIPTS.
6.1. DEFINITION OF "GROSS RECEIPTS".
With respect to each Picture, "Gross Receipts" means the sum of the
following amounts derived with respect to the Xxxxx Rights calculated on a
continuous basis.
6.1.1. ***from the***, except for the ***. The parties acknowledge that
***shall not be included in Gross Receipts hereunder for any purpose.
-----------------------
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
6.1.2. ***by way of***, except for the***.
6.1.3. ***percent (***%) of all ***which amounts are ***and which arise
from***; provided, however, that Xxxxx shall be required to include any such
monies in Gross Receipts hereunder only to the extent that Xxxxx is entitled to
retain such monies as opposed to monies which Xxxxx is legally required to
collect and pay to a third party. Notwithstanding anything to the contrary
contained herein, Xxxxx shall account to and pay to Spyglass the monies referred
to in this paragraph directly without including such monies in Gross Receipts
for any other purposes hereunder, including, without limitation, for purposes of
the payment of Xxxxx'x ***or ***is otherwise entitled to***. Such accountings
and payments shall be made at the ***the accountings provided by Xxxxx pursuant
to paragraph 6.8, below.
6.2. EXCLUSION FROM GROSS RECEIPTS.
6.2.1. Notwithstanding the foregoing, the parties acknowledge that the
Gross Receipts shall not include any of the following:
6.2.1.1. ***or *** until such time as the same are***, except if any
such *** or *** are ***, they shall be included in the Gross Receipts as and
when they are *** or *** Xxxxx or the applicable subdistributor.
6.2.1.2. Any amounts collected and paid by Xxxxx or its subdistributor
as *** or for ***, such as ***, *** and ***.
6.2.1.3. All monies received by or credited to Xxxxx or any of its
subdistributors with respect to***, and *** percent (***%) of all monies
received by or credited to Xxxxx or any of its subdistributors with respect to
***which amounts are ***and which arise from ***, ***, *** (except those
directly or reasonably allocable to the Pictures), ***or the like. If Spyglass
receives any monies covered under the provisions of this paragraph 6.2.1.3,
Spyglass shall promptly pay such monies to Xxxxx.
6.2.1.4. All monies received by or credited to Xxxxx or any of its
subdistributors, licensees or assigns from exploitation of the***, or any of
the***, ***or***.
6.2.2. For purposes of computing Gross Receipts and Distribution
Expenses hereunder, all references in this Agreement to "Xxxxx" mean Xxxxx Media
GmbH & Co. KgaA, its affiliated Companies and Xxxxx'x subdistributors.
References in this Agreement to "Xxxxx" shall not include any of the following
(regardless of whether or not any of the foregoing are subdivisions, affiliates
or licensees of Xxxxx): (i) exhibitors or others who may actually exhibit the
Picture to the public; (ii) radio or television broadcasters; (iii) cable
operators; or (iv) manufacturers, wholesalers or retailers of video discs,
cassettes or similar devices.
6.3. DISTRIBUTION EXPENSES.
Xxxxx'x deductible distribution expenses ("Distribution Expenses") in
connection with a Picture shall mean all *** and *** in connection with the***,
***, ***and ***of such
-----------------------
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
Picture (except for ***and the *** which shall not be included as Distribution
Expenses for any purpose hereunder), of whatever kind or nature, or which are
customarily treated as *** under customary accounting procedures in the motion
picture industry (but *** or similar allowances), including, without limitation,
the following:
6.3.1. All *** of whatever kind or nature charged to Xxxxx (or ***) by
any of *** or *** to any of the Pictures.
6.3.2. The cost and expense of all ***and***, ***and *** and***,
including the cost of ***and all other expenses connected therewith, and ***and
***and ***and***. Xxxxx may manufacture or cause to be manufactured as many or
as few ***and ***for use in connection with a Picture as it, in its sole
discretion, may consider advisable or desirable.
6.3.3. All ***and ***for ***and ***by such means and to such extent as
Xxxxx may, in its uncontrolled discretion, deem desirable (except as is
expressly limited hereunder), including, without limitation, ***and***, and
other ***engaged in, with or for***, to the extent Xxxxx pays, shares in or is
charged with all or a portion of such costs, and all other ***relating to
such***.
6.3.4. All costs of *** and***, including, without limitation, all costs
incurred in connection with the ***of a Picture authorized hereunder, whether
*** or otherwise, as well as any and all costs and expenses in connection with
***a Picture (but only to the extent that Xxxxx may otherwise have the right to
do so pursuant to this Agreement) for ***or for *** in any ***, or in order to
***, or for any other purpose or reason permitted hereunder. The costs referred
to in this paragraph shall include all charges for *** and ***, whether or not
incurred at a studio owned or controlled by Xxxxx; provided, however, that if
any such charges for *** are incurred at a studio owned or controlled by Xxxxx,
such charges shall be at the***; provided, however, that in no event shall such
charges be***.
6.3.5. All sums paid on ***and other *** (however denominated) to
***upon the ***or *** of a Picture, or upon the *** or *** of a Picture, or ***
therefrom, or any part thereof; provided, however, that the taxes that are
included as Distribution Expenses hereunder shall be limited to those which are
customarily included as distribution expenses in the *** by distributors of
first-run major motion picture studio feature length Motion Pictures in the ***.
Any and all sums paid or accrued on ***, ***, *** or and any similar ***of a
Picture in ***or part thereof, regardless of whether such payments or accruals
are *** or the *** thereof or *** (which allocation shall be determined in good
faith, as may be reasonable and consistent with the prevailing custom and
practice in the motion picture industry) in which a Picture may be included or
the proceeds thereof. In no event shall the deductible amount of any such tax
(however denominated) imposed upon Xxxxx, be decreased (nor Gross Receipts
increased) because of the manner in which such ***are *** by Xxxxx in ***.
Notwithstanding the foregoing, (i) Xxxxx'x own *** and *** based on Xxxxx'x ***;
and (ii) *** payable to any country or territory by Xxxxx based on Xxxxx'x ***
or *** and which is computed and assessed solely by reason of Xxxxx'x retention
in such country or territory of any portion of the Gross Receipts, shall not be
deductible hereunder.
-----------------------
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
6.3.6. All costs and expenses of ***to ***any funds accruing to Xxxxx
from a Picture in any country of the ***other than ***, such***, and any ***
from such funds taken to *** such *** or *** into *** for purposes of *** to
Spyglass hereunder; provided, however, that Xxxxx will not deduct as a
Distribution Expense the cost of *** (I.E., ***) payable to Spyglass hereunder
into ***.
6.3.7. All costs and expenses, including reasonable *** by Xxxxx in
connection with: (i) any action taken by Xxxxx (whether by way of *** or
otherwise) in ***, and other *** and ***; (ii) ***; (iii) the *** and other sums
due Xxxxx from *** and others with respect to a Picture, or to *** due pursuant
to any agreement relating to the *** of a Picture; (iv) *** and ***; (v) *** for
*** of a Picture, or *** or ***, ***; (vi) *** and *** under the *** (including
***) affecting the ***or *** of a Picture or Xxxxx'x ability to *** and its ***
and *** (provided, however, that Xxxxx shall not be entitled to deduct costs
hereunder which it incurs in connection with *** which affect Xxxxx generally
and are not specifically related to a Picture); and (vii) *** of any exhibitor,
subdistributor or licensee with respect to a Picture.
6.3.8. *** to *** of ***, and a *** and assessments of, and
contributions by Xxxxx to, *** or *** comprised of a *** or *** (not to exceed
in any event a maximum of *** percent (***%) of the Gross Receipts of such
Picture), but only for purposes relating to the *** and *** or *** of motion
pictures.
6.3.9. In the event any person *** against Xxxxx or any of its licensees
relating to a Picture, which ***, in Xxxxx'x judgment, is of *** or ***, and
which *** is covered by Spyglass's ***under this Agreement but for which
Spyglass has not yet agreed to ***, Xxxxx may deduct under this paragraph 6.3.9
such amount as Xxxxx may deem reasonably necessary to cover any *** or *** which
may be ***. Subject to the provisions of ***, Xxxxx shall have the right to
***and *** any ***. After the***, or after the *** thereof, the amount
previously deducted hereunder shall be adjusted accordingly with the next
accounting statement rendered hereunder, and any unused portion of the
applicable reserve relating to *** shall be promptly liquidated. Nothing
contained herein shall be construed as a waiver of any of either party's
warranties contained in this Agreement, or a waiver of ***or otherwise which
either party may have, including, without limitation, the right to *** hereunder
to *** or *** out of, or resulting from, any *** of any *** of such party. Xxxxx
agrees that any reserves established by Xxxxx pursuant to this paragraph 6.3.9,
to the extent not used to *** or *** any *** shall be liquidated within twelve
(12) months.
6.3.10. All amounts paid by Xxxxx (as opposed to amounts paid by
Spyglass) of any kind or nature (including, without limitation, ***or ***) to or
for the benefit of *** and others, pursuant to applicable *** or any law or
governmental regulation or decree now or hereafter in force, by reason of, or as
a condition or consideration for, any *** or *** of a Picture or copies of all
or any part thereof (collectively "***"), together with all *** and other costs
paid or payable with respect to such Residuals or with respect to *** in a
Picture. Notwithstanding the foregoing, Spyglass shall assume all responsibility
for paying all *** arising in connection with the Pictures, except that Xxxxx
shall pay any Residuals arising solely out of Xxxxx'x or any of its *** or ***
for use in the Territory, and the exhibition or other exploitation of such ***
or *** (except for any such
-----------------------
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
*** arising out of Spyglass's or any of its licensees' or assignees' use of any
such materials which, as between Xxxxx and Spyglass, shall be Spyglass's sole
responsibility), and, except as expressly provided herein, nothing contained
herein shall in any way obligate *** to pay any such ***, not shall anything
contained herein in any way limit any other right or remedy available to Xxxxx
(including, without limitation, Xxxxx'x rights pursuant to paragraph 13.5.2,
below).
6.3.11. All *** (as defined in paragraph 6.4 below) paid by Xxxxx
hereunder.
6.3.12. The cost of all *** covering or relating to a Picture (as
distinguished from any *** obtained to *** of a Picture), including, without
limitation, *** and all *** or other ***, it being understood, however, that
Xxxxx shall not be obligated *** or *** any such ***. All *** payable to Xxxxx
and relating to *** shall be credited against ***.
6.4. GROSS PARTICIPATIONS.
6.4.1. As part of the Distribution Expenses payable by Xxxxx hereunder,
Xxxxx hereby agrees to reimburse Spyglass for a portion of that portion of the
*** actually paid by Spyglass to ***and *** (including, without limitation, ***
who render other services in connection with a Picture) of each Picture which
contingent compensation is calculated based solely on the *** of the Picture's
distributors without deduction of any amounts (other than customary "***")
including, without limitation, *** or the *** (as defined in ***, below) of the
Picture ("Gross Participations"), in accordance with the provisions of paragraph
76.4.2., below). For purposes of this Agreement, Gross Participations shall not
include any *** in *** or ***, but shall include *** in *** after the *** of
only ***. Notwithstanding the foregoing, unless otherwise agreed to by Xxxxx,
Xxxxx'x obligation to pay any portion of the Gross Participation payable to any
***or *** of a Picture shall apply only to *** or *** who, within the *** period
prior to their engagement in connection with the applicable Picture, have
entered into an employment agreement (either directly or through such *** or ***
***) and rendered services in connection with a Motion Picture in connection
with which the *** or *** was contractually entitled to receive (and actually
did receive) and Gross Participation in connection with such Motion Picture
payable by a ***, and such Motion Picture generated at least *** (***)
admissions in ***. If an *** or *** has been engaged to render services in
connection with a Motion Picture which otherwise qualifies as a Picture
hereunder and such ***or *** is entitled to receive a Gross Participation, and,
pursuant to the provisions of this paragraph 6.4.1, Xxxxx would not be obligated
to reimburse Spyglass for a portion of such Gross Participation due to the fact
that the *** or *** did not meet the qualifications set forth in the immediately
prior sentence, then, unless Spyglass notices Xxxxx in writing not later than
the Commencement Date for such Motion Picture that Spyglass has elected to waive
its right to seek or receive any portion of such *** Gross Participation from
Xxxxx, then, notwithstanding anything to the contrary contained herein, such
Motion Picture shall become an Additional Picture and shall be subject to the
provisions of paragraph 3.3, above.
6.4.2. The portion of an *** or *** Gross Participation payable by Xxxxx
hereunder shall be an amount equal to the actual Gross Participation paid to
such *** or ***, multiplied by a fraction, the numerator of which is the***, and
the denominator of which is the ***
-----------------------
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
(with such *** being calculated in accordance with the applicable provisions of
the *** for such *** or ***); provided, however, that for purposes of
calculating the amount of Gross Participations payable hereunder by Xxxxx with
respect to a Picture, (i) the total amount of Gross Participations payable to
any *** or *** prior to that point in time at which Gross Receipts derived with
respect to such Picture *** shall not exceed a percentage amount equal to the
***of *** of *** or *** as such *** or *** was ***($***), the maximum percentage
Gross Participation which may be included hereunder for purposes of calculating
Xxxxx'x share would be ***(***)); (ii) Xxxxx shall not be required to pay any
portion of an *** or *** Gross Participation in excess of Xxxxx'x *** set forth
in *** of this sentence until such time as Xxxxx has *** in accordance in
accordance with the provisions of ***; and (iii) the total of all Gross
Participations payable in connection with the Picture shall not exceed ***
percent (***%) of the Picture's ***. Notwithstanding anything to the contrary
contained herein, including, without limitation, the provisions of paragraph
6.1.1, above, Xxxxx acknowledges that the portion of each Picture's Minimum
Guarantee allocated to the *** and ***, and to the ***, pursuant to ***, shall
be included in Gross Receipts hereunder and in the Picture's *** for purposes of
calculating the amount of Gross Participations payable by Xxxxx hereunder.
6.4.3. With respect to each Picture, at such time as Spyglass is
required to make payment of a Gross Participation to an *** or *** for which
Xxxxx is required to make a payment to Spyglass hereunder, Spyglass shall send
to Xxxxx a written notice setting forth the amount of the Gross Participation to
be paid to such *** or *** and the data which Spyglass used to calculate the
amount of such Gross Participation. Concurrently with giving such notice,
Spyglass shall provide Xxxxx with detailed information relating to the
calculation of such Gross Participation, which shall include, at a minimum, a
copy of all relevant portions of the *** or *** relating to the *** of such ***
or *** Gross Participation and a detailed summary of the Picture's *** certified
as being correct by Spyglass and ***. Within thirty (30) days after Xxxxx'x
receipt of Spyglass's notice and the accompanying information required
hereunder, if Xxxxx does not dispute the amount Spyglass is requesting Xxxxx to
pay as its share of such *** or *** Gross Participation, Xxxxx shall pay such
amount to Spyglass within the thirty (30) day period referred to above, and
Xxxxx and Spyglass is requesting Xxxxx to pay as its share of such *** or ***
Gross Participation, Xxxxx shall so notify Spyglass within the thirty (30) day
period referred to above, and Xxxxx and Spyglass shall meet in an attempt to
mutually resolve such dispute. If the parties are unable to resolve such
dispute, either party may submit such dispute to binding arbitration in
accordance with the provisions of paragraph 25.4, below. If Xxxxx disputes
Spyglass's calculation of the amount Spyglass is requesting Xxxxx to pay as its
share of such *** or *** Gross Participation, Xxxxx shall nevertheless pay to
Spyglass the amount Xxxxx believes is the correct amount of its share of such
*** or *** Gross Participation within the thirty (30) day period referred to
above. If Xxxxx makes a payment to Spyglass with respect to any Gross
Participation and it is ultimately determined that the amount Xxxxx paid was in
excess of the amount it actually owed, Spyglass shall promptly refund to Xxxxx
the amount of***. If the amount paid by Xxxxx was less than the amount it
actually owed, Xxxxx shall pay to Spyglass***.
-----------------------
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
6.5. FOREIGN FUNDS
With respect to any Gross Receipts received by Xxxxx in a *** other ***,
Xxxxx shall *** Spyglass's share of any such *** to *** prior to reporting the
same to Spyglass. The rate of exchange with respect to any such funds shall be
the rate of exchange *** and *** to Xxxxx at the time Xxxxx actually ***, and
Xxxxx shall have no obligation to convert any such Funds to United States
currency at any time prior to the time Xxxxx is required to remit such funds (if
any) to Spyglass hereunder so as to ***. If the transmission of any Gross
Receipts derived from the Picture from any *** or ***, *** or other government
imposed restrictions, then, if Xxxxx elects by giving notice to Spyglass to sc
effect or Spyglass so requests by giving Xxxxx notice to such effect. Xxxxx
shall (to the extent permitted under the laws of any such ***) cause Spyglass's
share of Gross Receipts to which Spyglass would be entitled upon *** to the ***
to be deposited in Spyglass's name (or in such name as Spyglass may designate)
in any bank or other depository designated by Spyglass (or by Xxxxx if Xxxxx
elects to so deposit such monies and Spyglass fails to designate a depository,
in which event, Xxxxx will give notice to Spyglass as to the details of such
deposit) in such territory or country. Such deposit will, for the purposes of
this Agreement, be deemed payment to Spyglass of the amount deposited (computed
at the ***prevailing and reasonably available to Xxxxx at the time such deposit
is made) and Xxxxx shall have no further liability to Spyglass in connection
with any monies so deposited.
6.6. ***.
For purposes of this Agreement the Pictures shall ***. The *** to have
Commencement Dates hereunder (which the parties acknowledge are SIXTH SENSE, THE
INSIDER, KEEPING THE FAITH, SHANGHAI NOON) shall constitute ***. The *** to have
Commencement Dates hereunder (the first of which the parties acknowledge is ***)
shall constitute ***. If Xxxxx exercises is option pursuant to paragraph 2.2,
above, the *** to have Commencement Dates hereunder shall constitute the ***.
6.7. *** ***.
With respect to each ***, Kirsch shall pay to Spyglass *** percent
(***%) of the *** derived from exploitation of the *** in the ***. Each ***
shall be *** for hereunder on a ***, but the Pictures *** shall not be *** as
between the *** and the ***. In that regard, the *** with respect to the
Pictures in each *** shall be computed as follows: Xxxxx shall deduct from the
Gross Receipts derived from the exploitation of the ***for the Pictures that
***, on a *** and *** ***, (i) a distribution fee ("Distribution Fee") in an
amount equal to ***percent (***%) of the Gross Receipts derived from the
exploitation of the ***for the Pictures in the *** (which Distribution Fee shall
be inclusive of ***), (ii) all Distribution Expenses incurred in connection with
the exploitation of the *** for the Pictures in *** (provided, however, that,
with respect to the last Picture in each *** Xxxxx may not deduct Distribution
Expenses in excess of the lesser of ***(***) or *** percent (***%) of the amount
of the *** for such Picture), and (iii) the *** Recoupable Minimum Guarantee
Payments allocated to the *** pursuant to ***, for the Pictures in the *** The
balance of the Gross Receipts for the Pictures in the ***. The balance of the
Gross Receipts
-----------------------
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
for the Pictures in the *** remaining after Xxxxx has deducted the amounts set
forth herein, is referred to herein as the *** for that ***
6.8. ACCOUNTING STATEMENTS.
Xxxxx shall render accounting statements to Spyglass with respect to
each Picture no later than *** after the close of each accounting period during
which Xxxxx receives any Gross Receipts with respect to such Picture, and teach
such statement shall set forth in summary the Gross Receipts received by Xxxxx
during the accounting period with respect to such Picture and the permitted
charges, costs and expenses deducted from such Gross Receipts with respect to
such Picture (including, without limitation, *** ***and *** relating to *** in
such *** which Xxxxx is entitled to deduct hereunder). To the extent that any
accounting statement shows that any Picture has generated Net Receipts (after
taking into account Xxxxx'x *** with respect to *** (which shall be reflected in
a separate statement)), Xxxxx shall pay Spyglass's chare of such Net Receipts to
Spyglass together with the accounting statement. To the extent that Xxxxx has
previously paid Net Receipts to Spyglass with respect to any ***, if the second
accounting statement issued after the last Picture in the *** has been released
on Videograms shows for that *** that Xxxxx has incurred a deficit with respect
to such *** (I.E., the *** of the unrecouped Recoupable minimum Guarantee
Payments for the *** in the ***, plus the Distribution Expenses for the Pictures
in the ***, plus Xxxxx'x Distribution Fees for the *** in the *** exceeds the
amount of the Gross Receipts for the *** in the *** plus any payments made to
Xxxxx by Spyglass pursuant to paragraph 3.2.2, above, with respect to any of the
***in the ***, within ten (10) business days after Spyglass's receipt of such
accounting statement, Spyglass shall pay to Xxxxx the amount of such deficit, up
to the amount of Net Receipts previously paid to Spyglass by Xxxxx with respect
to such ***. For purposes hereof, the "Accounting Period" with respect to each
Picture shall be ***for a period of *** *** after the date of the first
accounting statement rendered with respect to such Picture, and then ***until
the end of the Exploitation Term for such Picture in all countries of the ***
(provided, however, that if during any Accounting Period after Xxxxx begins
rendering *** accounting statements, there are no Gross Receipts with respect to
a Picture, then, commencing with the next Accounting Period, the Accounting
Periods for that Picture shall be *** until such time as there are reportable
Gross Receipts for that Picture, after which time Xxxxx shall resume rendering
*** accounting statements for as long as such Picture continues to generate
Gross Receipts).
6.9. AUDIT RIGHTS.
6.9.1. Each of (i) Spyglass's calculation of the *** of each Picture and
the *** amount payable by Xxxxx with respect thereon, (ii) Spyglass's
calculation of Xxxxx'x share of *** required hereunder, and (iii) Xxxxx'x
calculation of ***, shall be subject to audit in accordance with the provisions
of this paragraph 6.9. In that regard, the party desiring an audit (the
"Requesting Party"). The Responding Party will respond to the Requesting Party's
request and provide the requested information within thirty (30) days after the
date of the Responding Party's receipt of the request. If the Responding Party
does not timely respond to the Requesting Party's request, the information
provided by the Responding Party is inadequate or the Requesting Party desires
to independently confirm the accuracy of the information provided, the
Responding Party will permit the Requesting Party, or an independent certified
public accountant, designated by the Requesting Party
-----------------------
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
(but which, unless otherwise approved by the Responding Party, shall be one of
the so-called "big six" national accounting firms), to make an examination, at
the Requesting Party's expense, of the Responding Party's books and records,
which examination may take place upon thirty (30) days' advance written notice
to the Responding Party, at the Responding Party's offices during reasonable
business hours. With respect to any audit conducted hereunder, if, after the
final conclusion of any legal proceedings relating to amounts claimed to be owed
by the Requesting Party, a court or arbitrator determines, or if the Responding
party acknowledges, that the Responding Party has underpaid the Requesting Party
with respect to any payment due hereunder, the Responding Party shall promptly
pay to the Requesting Party with respect to any payment due hereunder, the
Responding Party shall promptly pay to the Requesting Party the ***, ***. In the
event that Xxxxx is the Requesting Party, in addition to having the right to
audit Spyglass's books and records hereunder, Xxxxx shall also have the right to
audit the books and records of the Picture's production entity for purposes of
verifying the calculation of the *** and the *** amount applicable thereto, to
the extent that such production entity is an Affiliated Company of Spyglass. If
such production entity is not an Affiliated Company of Spyglass, then, in
addition to the audit rights accorded to Xxxxx hereunder, the following shall
apply: With respect to Acquired Pictures, if the application production
company's records are not available to Spyglass, then, at Xxxxx'x request,
Spyglass will deliver to Xxxxx a *** certified by such production company
setting forth the amount of Spyglass's *** (as defined in ***) for such Picture.
If Spyglass has an audit right with respect to such production company, Xxxxx
may cause Spyglass to exercise any audit rights it may have with respect to such
production entity (but at Xxxxx'x cost) and to provide Xxxxx with a copy of the
results of such audit as it relates to the calculation of the ***.
6.9.2. Each statement rendered by either party hereunder shall be
binding upon the recipient as to the transactions reflected therein for the
first time upon the expiration of *** from and after the date such statement is
rendered, provided that this limitation shall not apply to any portion of any
statement to which the recipient files written objections at any time during
such ***period. If the recipient notifies the party providing such statement in
writing of any objections the recipient has to any accounting statement, such
objections shall be deemed waived unless the recipient commences appropriate
legal proceedings within *** after the date propounding party receives notice of
the recipient's objections.
7. MINIMUM GUARANTEE PAYMENTS.
7.1. MINIMUM GUARANTEE AMOUNT.
As consideration for the rights granted to Xxxxx hereunder, but subject
to the provisions of ***, with respect to each Picture, Xxxxx will pay to
Spyglass an amount (the "Minimum Guarantee") equal to the sum of (i) ***(***%)
of the lesser of the *** of each Picture or the actual *** of such Picture
(provided, however, that, with respect to Acquired Pictures, the amount payable
purchase to this clause (i) shall instead be an amount equal to *** percent
(***%) of the *** (as defined in ***) for such Picture), and (ii) the Additional
Financing Payment (as defined in ***). The Minimum Guarantee shall be payable
***percent (***%) upon delivery to Xxxxx of an *** (in accordance with the
provisions of ***, and in the form attached hereto as ***) *** to the *** to
which ***, and *** to Xxxxx of the *** which are to be *** to Xxxxx, and ***
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
percent (***%) upon Xxxxx'x acceptance (or deemed acceptance) of the *** in
accordance with ***. Notwithstanding the foregoing, with respect only to MISSION
TO MARS, (A) solely for purposes of calculating the amount payable pursuant to
clause (i) of this paragraph, the amount of the *** for such Picture shall not
exceed *** ($***), and (B) if the *** are excluded from the Territory with
respect to such Picture pursuant to the last sentence of paragraph 5, above, the
percentage amount payable pursuant to clause (i) of this paragraph shall be ***
percent (***%) instead of *** percent (***%).
7.2. ADDITIONAL FINANCING PAYMENT.
For purposes of this Agreement, the "Additional Financing Payment" shall
be calculated as follows:
7.2.1. The amount of the Additional Financing Payment shall be the sum
of two (2) numbers, the first of which shall be the product of the amount of the
*** (or the ***, if applicable) of the Picture times ***% times the *** times a
fraction the numerator of which is the ***and *** referred to above or the ***
(as defined in ***) for the Picture, and the denominator of which is *** (***),
and the second of which shall be product of the amount of the *** of the Picture
times ***% times the *** times a fraction the numerator of which is the total
number of *** between the *** of *** of *** of the Picture and the earlier of
the *** to Xxxxx the *** and *** referred to above or the *** for the Picture,
and the denominator of which is *** (***).
7.2.2. By way of example, and not by way of limitation, for purposes of
computing the Additional Financing Payment with respect to a Picture, if (i) the
***for a Picture is *** ($***), (ii) the *** is *** percent ***%, (iii) the ***
between the *** and the *** and *** referred to above is ***, and (iv) the ***
between the *** of *** of *** of the Picture and the *** and *** referred to
above is *** (***) months, the amount of the Additional Financing Payment for
such Picture would be *** Dollars ($***).
7.3. MINIMUM GUARANTEE AMOUNT FOR CERTAIN ADDITIONAL PICTURES.
Notwithstanding anything in paragraph 7.1, above, to the contrary, with
respect to each Additional Picture for which Xxxxx elects to exercise its option
pursuant to paragraph 3.3, above, and with respect to which Spyglass or one of
its Affiliated Companies does not own or control all of the Xxxxx Rights, then,
in lieu of the percentage amount otherwise payable pursuant to paragraph 7.1,
above, the Minimum Guarantee payable with respect to such Additional Picture
shall be a percentage of the ***for such Additional Picture calculated based on
the *** set forth in ***, for each of the Xxxxx Rights (but exclusive of the ***
if Xxxxx elects not to acquire such Rights) with respect to such Additional
Picture that are owned or controlled by Spyglass or one of its Affiliated
Companies.
7.4. CONDITIONS PRECEDENT
Notwithstanding anything to the contrary contained in paragraph 7.1,
above, Xxxxx'x obligation to pay the Minimum Guarantee with respect to a Picture
shall be subject to the following
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
conditions precedent, each of which must be satisfied before Xxxxx is required
to pay any monies with respect to such Picture:
7.4.1. Spyglass having delivered to Xxxxx the Final Budget for the
Picture (provided, however, that this condition precedent shall not apply to the
Pre-Existing Pictures); provided, however, that if Spyglass is unable to provide
Xxxxx with the Final Budget for a Picture (except for the Pre-Existing
Pictures), notwithstanding anything to the contrary contained herein, such
Picture shall become an Additional Picture hereunder.
7.4.2. Spyglass having obtained all insurance coverage required pursuant
to paragraph 18, below, with Xxxxx having been named as an additional insured on
all such policies and insurance certificates naming Xxxxx as an additional
insured having been delivered to Xxxxx.
7.4.3. Spyglass having delivered to Xxxxx the most current version of
the screenplay for the Picture.
7.5. REFUND OF MINIMUM GUARANTEE PAYMENTS FOR NON-QUALIFIED PICTURES.
If, at any time after Xxxxx has paid the Minimum Guarantee for a
Picture, or any portion thereof, the Picture ceases to remain qualified as a
Picture for any reason, upon Xxxxx'x request (but subject to the provisions of
paragraph 14.2, below, with respect to any Picture which ceases to remain
qualified as a Picture due to a failure to meet the Minimum Theatrical Release
Requirements set forth in paragraph 14.2, below), Spyglass shall repay to Xxxxx
(to the extent not paid or payable to Xxxxx by the Picture's completion
guarantor) the full amount of the Minimum Guarantee (up to the amount previously
paid by Xxxxx), plus interest thereon at the Interest Rate.
7.6. ADJUSTMENTS TO MINIMUM GUARANTEE PAYMENTS.
7.6.1. Notwithstanding anything contained in paragraphs 7.1 and 7.2,
above, to the contrary, if at the time Xxxxx is required to pay the first
installment of the Minimum Guarantee for a Picture, the United States Dollar/***
exchange rate (the "Exchange Rate") as published in the European WALL STREET
JOURNAL on the December 31, March 31, June 30 or September 30 (whichever is
closest) immediately prior to the Commencement Date of the Picture is greater
than the Upper Benchmark or lower than the Lower Benchmark, the U.S. Dollar
equivalent of the Minimum Guarantee payable with respect to the Picture shall be
adjusted (I.E., either increased or decreased) by an amount equal to the U.S.
Dollar equivalent (computed at the Exchange Rate) of the difference between the
cost in *** to pay the Minimum Guarantee applicable to the Picture at the
Exchange Rate and the amount it would have cost in ***to pay the Minimum
Guarantee if the exchange rate as of the Commencement Date of the Picture were
the Upper or Lower Benchmark, as applicable. For purposes of this Agreement, the
Upper Benchmark shall be *** (***) to ***, and the Lower Benchmark shall be
***(***) to ***. By way of example and not by way of limitation, if the Minimum
Guarantee payment applicable to a Picture calculated in accordance with ***, was
*** (***), and the Exchange Rate as of the Commencement Date of the Picture was
*** (***) to ***, the Minimum Guarantee payable with respect to such Picture
would be reduced by *** ($***) (which represents the U.S. Dollar equivalent of
*** (***) calculated at such Exchange Rate). Alternatively, if the Exchange Rate
as of the Commencement Date of the Picture was ***
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
(***) to ***, the Minimum Guarantee payable with respect to such Picture would
be increased by *** ($***) (which represents the U.S. Dollar equivalent of ***
(***) calculated at such Exchange Rate). In the event that the amount of the
Minimum Guarantee payable hereunder with respect to a Picture is adjusted
pursuant to this paragraph 7.6.1, then all references in this Agreement to the
Minimum Guarantee being *** percent (***%) of applicable index (I.E., ***, etc.)
with respect to such Picture shall be deemed to be adjusted to reflect the
actual percentage of the applicable index with respect to such Picture which
such Minimum Guarantee payment represents. From and after the date on which ***,
the adjustments to Minimum Guarantee payments referred to in this paragraph
7.6.1 shall be based on the U.S. Dollar/*** exchange rate rather than the U.S.
Dollar/*** exchange rate. At such time, the Upper and Lower Benchmarks shall be
recalculated based on the U.S. Dollar/*** exchange rate in effect as of the date
of such currency conversion, and all references herein to the Exchange Rate
shall be deemed to be references to the U.S. Dollar/*** exchange rate as
published in the European WALL STREET JOURNAL on the dates indicated in the
first sentence of this paragraph.
7.6.2. Except with respect to ***, not later than *** after Delivery of
each Picture, Spyglass shall provide Xxxxx with a statement setting forth the
estimated *** of the Picture. In the event that the estimated *** of the Picture
is less than the amount of the Final Budget, concurrently with providing such
statement, Spyglass shall pay to Xxxxx an amount (the "Initial Adjustment
Amount") equal to the difference between (i) the Minimum Guarantee actually paid
and (ii) *** percent (***%) of the estimated *** of the Picture plus the
adjusted Additional Finance Payment calculated in the same manner as set forth
in paragraph 7.2, above, but utilizing the actual *** as the basis for such
calculation rather than the amount of the ***. If the estimated *** statement
indicates that an Initial Adjustment Amount is due to Xxxxx and Spyglass does
not make such payment at the time it provides the estimated *** statement,
subject to the provisions of paragraph 13.5.3, below, Xxxxx may deduct such
amount from any further payments which would otherwise be due to Spyglass
hereunder, including, without limitation, payment of Xxxxx'x Minimum Guarantee
(or any portion thereof) with respect to any other Picture. Not later than four
(4) months after Delivery of the Picture, Spyglass shall provide Xxxxx with a
certified statement setting forth in detail the actual *** of the Picture. In
the event that the actual Production Cost of the Picture is less than the
estimated *** of the Picture, concurrently with providing such statement,
Spyglass shall pay to Xxxxx an amount equal to the difference between ***percent
(***%) of the estimated *** of the Picture and *** percent (***%) of the actual
*** of the Picture, plus ***, with such *** from the date of *** of the ***
pursuant to ***, through the date of payment of such amount. In the event that
the actual *** of the Picture is greater than the estimated *** of the Picture,
concurrently with providing such statement, Xxxxx shall pay to Spyglass an
amount equal to the difference between *** percent (***%) of the actual *** of
the Picture and *** percent (***%) of the estimated *** of the Picture, plus
***, with such *** from the date of *** pursuant to ***, through the date of
repayment of such amount. With respect to Acquired Pictures for which the amount
of Spyglass's Acquisition Cost is subject to adjustment, then the provisions of
this paragraph 7.6.2. shall apply, except that all references in this paragraph
to the *** shall be deemed to refer to the Acquisition Cost as set forth in
Spyglass's statement pursuant to paragraph 7.4.1., above, and all references in
this paragraph to the *** shall be deemed to refer to the final adjusted
Acquisition Cost.
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
7.7. ALLOCATION OF MINIMUM GUARANTEE PAYMENTS: RECOUPABLE MINIMUM
GUARANTEE PAYMENTS.
7.7.1. The ***percent (***%) Minimum Guarantee payment payable hereunder
with respect to each Picture shall be allocated among the Xxxxx Rights as
follows:
7.7.1.1. *** percent (***%) shall be allocated to the German Rights,
with such *** percent (***%) being allocated *** percent (***%) to that portion
of the German Rights consisting of Television Rights (the "German Television
Rights"), *** percent (***%) to that portion of the German Rights consisting of
Video Rights and *** percent (***%) being allocated to the remaining German
Rights.
7.7.1.2. ***percent (***%) shall be allocated to the Italian Rights.
7.7.1.3. *** percent (***%) shall be allocated to the Spanish Rights.
7.7.1.4. *** percent (***%) shall be allocated to the Russian Rights,
with such *** percent (***%) being allocated to that portion of the Russian
Rights consisting of Theatrical Rights.
7.7.2. The Minimum Guarantee payments allocated to the German Rights
except for the German Television Rights (I.E., *** out of the total *** percent
(***%) Minimum Guarantee), are referred to herein as the "Recoupable Minimum
Guarantee Payments."
7.8. BUDGET.
For purposes of this Agreement, the "Budget" for a Picture is the budget
prepared by Spyglass setting forth the estimated Production Cost of the Picture
inclusive of (i) an *** to Spyglass in an amount equal to *** percent (***%) of
all ***, ***, *** set forth in such budget (but not including ***or the *** set
forth in clauses (ii) and (iv) below), up to a maximum of *** Dollars ($***)
(and provided, however, that in no event shall the total of all *** to Spyglass
for all Pictures which have Commencement Dates during any calendar year exceed
***Dollars ($***) in the aggregate); (ii) a *** payable to Spyglass or one of
its Affiliated Companies (or to ***) not to exceed *** Dollars ($***) (provided,
however, that the maximum *** which Spyglass may include in the Budget shall
increase by a percentage amount equal to the lesser of ***percent (***%) or the
amount of the MPAA Adjustment during each calendar year of this Agreement
commencing in 2000), (iii) the actual *** payable by Spyglass or any of its
Affiliated Companies to a ***, and (iv) a *** in an amount equal to *** percent
(***%) of the *** set forth in such budget. Notwithstanding the foregoing,
except with respect to SIXTH SENSE, THE INSIDER and MISSION TO MARS in no event
may the Budget for a Picture include any *** or any items of *** in excess of
*** Dollars ($***).
-----------------------
*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
7.9. FINAL BUDGET.
The "Final Budget" for the Picture shall be the Budget for the Picture
as it exists at the ***of the Picture, as approved by Spyglass, the *** or other
*** providing *** for the Picture (if any) (but only to the extent that the ***
or such *** has a right to approve such Budget) and the Picture's ***(provided,
however, that if any such party has not approved the Picture's Budget as of the
*** of the Picture, the "Final Budget" shall be the Budget in effect as of the
*** of the Picture as approved by the Picture's ***).
7.10. PRODUCTION COST: ACQUISITION COST.
7.10.1. The "Production Cost" of a Picture means the *** the Picture as
certified by Spyglass or any of its Affiliated Companies, including, without
limitation, all *** and *** paid in connection with the *** thereof, but
exclusive of any *** or other *** to any party (including, without limitation,
Spyglass) or any fees to Spyglass or any of its Affiliated Companies (except for
the *** and *** set forth in paragraph 7.8, above, which shall be included in
the Production Cost), and exclusive of any ***, ***or other *** or *** to
Spyglass or any of its Affiliated Companies or on its behalf relating to the
Picture (including, without limitation, any ***or *** of all or any portion of
the *** ***). Such costs shall include, without limitation, all *** and *** for
the *** of any *** the Picture; *** of *** for the Picture (provided, however,
that in no event shall *** in connection with such Picture in the aggregate
exceed *** Dollars($***)); fees paid for *** and ***, including, without
limitation, the Picture's *** (if other than ***); fees and costs for ***, ***,
***, *** and ***; *** in connection with ***, *** and *** activities; *** and
***; charges of any *** of the Picture and all sums which any such *** is
entitled to recoup in connection with the Picture; and ***fees for Spyglass's or
any of its Affiliated Companies *** and *** who render services in connection
with production of the Picture (but not including any *** or expenses incurred
in connection with *** or other matters not directly relating to the development
or production of the Picture). For purposes of calculating the Production Cost
of a Picture, any cash payments received by Spyglass (or any of Spyglass's
Affiliated Companies or any co-producer of such Picture) with respect to ***,
shall be applied to reduce the Production Cost of the Picture. For purposes of
clarification, to the extent that *** or *** have been provided for use in
connection with a Picture, such that the ***or *** (thereby resulting in a
savings on the Production Cost of the Picture), the Production Cost of a Picture
shall not be further reduced by the value of such *** or *** provided by a third
party in connection with *** or ***.
7.10.2. The "Acquisition Cost" of a Picture means (i) the lesser of the
*** for such Picture (which, for purposes of this Agreement, shall be an amount
equal to the *** of the Picture agreed upon by Spyglass and the ***) or the ***
for such Picture (which, for purposes of this Agreement, shall be an amount
equal to the cost of *** of the Picture agreed upon by Spyglass and the ***),
plus (ii) the *** and *** set forth in paragraph 7.8, above. (For purposes of
clarification the method set forth in this paragraph 7.10.2 would be the basis
upon which the Minimum Guarantee would be calculated for the Motion Picture
currently entitled *** in the event Spyglass acquires certain rights (but not
all rights) to this Motion Picture and Xxxxx exercises its option pursuant to
paragraph 3.3, above, to acquire rights to such Motion Picture,)
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
8. SECURITY FOR SPYGLASS'S OBLIGATIONS.
As security for (i) Spyglass's obligation to deliver each Picture
hereunder, (ii) Spyglass's obligation to make payments to Xxxxx pursuant hereto
and (iii) Spyglass's obligation to allow Xxxxx to recoup all monies recoupable
by Xxxxx hereunder, including without limitation the Recoupable Minimum
Guarantee Distribution Expenses and third party participations, from the Gross
Receipts from which it is entitled to so recoup, Spyglass shall, as a condition
to Xxxxx'x obligations hereunder, grant to Xxxxx a security interest in and to
(A) the Xxxxx Rights with respect to each Picture, (B) Spyglass's interest in
the screenplay for each Picture and the literary property, if any, which is the
basis for the Picture (but only to the extent necessary to allow Xxxxx to
exploit the Xxxxx Rights) and (C) all proceeds from the exploitation of the
Xxxxx Rights for the Exploitation Term which Xxxxx is entitled to retain
hereunder other than the amounts payable to Spyglass hereunder; provided,
however, that Spyglass shall not be required to xxxxx Xxxxx such a security
interest with respect to THE INSIDER. In connection with Xxxxx'x security
interest, Spyglass agrees that Xxxxx shall have a non-exclusive right of access
to all physical materials comprising each Picture to the extent necessary to
allow Xxxxx to enforce its security interest in the event Spyglass defaults in
its obligation to Deliver any such Picture or in the payment of any sums due to
Xxxxx pursuant hereto. Spyglass agrees to execute copyright mortgages, UCC-1
Financing Statements and all other documents requested by Xxxxx and reasonably
necessary to allow Xxxxx to perfect its security interest as set forth in this
paragraph. If Spyglass fails to execute or deliver to Xxxxx any of the foregoing
documents within ten (10) days after Xxxxx'x request that Spyglass execute, and
Spyglass's receipt of, any such documents, then Spyglass hereby appoints Xxxxx
as Spyglass's irrevocable attorney-in-fact, with the right, but not the
obligation, to do any and all acts and things necessary to execute, acknowledge
and deliver any such document, in Spyglass's name and on Spyglass's behalf,
which appointment shall be deemed to be a power coupled with an interest and
shall be irrevocable. With respect to each Picture delivered hereunder, Xxxxx
agrees to enter into reasonable and customary interparty/intercreditor
agreements with each Picture's production lender, the completion guarantor, any
other distributor with whom Spyglass has a multiple distribution agreement and
who is granted a security interest in a Picture, and, at Spyglass's request, the
Screen Actors Guild and the Directors Guild of America and any other applicable
guild or union, to the extent any of them are granted a security interest in a
Picture; provided, however, that any such agreement must contain customary
non-disturbance language with respect to Xxxxx'x rights hereunder.
9. ADVERTISING AND CREDIT.
9.1. CREDIT REQUIREMENTS.
Concurrently with its Delivery of the Essential Delivery Elements with
respect to each Picture hereunder, Spyglass will provide Xxxxx with a list of
all required screen credits (if not already contained in each Picture), paid
advertising and publicity and promotional requirements (if any), Xxxxx will
comply with these requirements at all times after their receipt.
9.2. XXXXX'X ADVERTISING AND CREDIT RIGHTS.
Subject to Spyglass's requirements and restrictions of which Xxxxx is
given timely notice and the provisions of this Agreement, during the
Exploitation Term for each Picture Xxxxx
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
will give the exclusive right, in the Territory with respect to the Xxxxx
Rights, to (i) advertise, publicize and promote each Picture; (ii) include in
all such advertising and promotional publicity the name, voice and likeness of
any person who has rendered services in connection with any Picture, but not as
an endorsement for any product or service other than the Picture in question and
(iii) include at the beginning and the end of each Picture Xxxxx'x or its
designee's distribution credit or logo. In addition, in the German Territories
and the Russian Territories, with respect to exploitation of the Xxxxx Rights,
Xxxxx shall have the right to include a presentation credit in the main titles
of each Picture (but only if such presentation credit can be inserted without
altering the music cues), and in all trailers and paid advertisements issued in
connection with the Picture, to be shared with the proprietary credit accorded
to Spyglass (or such other credit as Spyglass may designate, which may include,
without limitation, the Picture's United States distributor) substantially in
the form "Spyglass Entertainment Group [and/or its designee] and Xxxxx Film
[and/or its designee] Present." In exercising these rights Xxxxx may not alter
or delete any credit, logo, copyright notice or trademark notice appearing on
any Picture.
10. DUBBING, SUB-TITLING AND EDITING.
10.1. SPYGLASS'S RIGHTS AND REQUIREMENTS.
Spyglass will timely provide Xxxxx with any dubbing, sub-titling or
editing requirements and restrictions applicable to each Picture or its
trailers. Xxxxx will comply with these requirements and restrictions (including,
without limitation, any contractual requirements or restrictions accorded to any
talent rendering services in connection with a Picture; provided, however, that
Spyglass shall promptly reimburse Xxxxx for any cost incurred by Xxxxx as a
result of complying with any such requirements or restrictions) after their
receipt in creating an authorized dubbed, sub-titled or edited version of each
Picture or its trailers. As between Spyglass and Xxxxx, Xxxxx will be
responsible for preparing all non-English language versions of the Picture
necessary for Xxxxx'x exploitation of the Xxxxx Rights in the Territory. In that
regard, Xxxxx shall recoup such costs as a Distribution Expense.
10.2. XXXXX'X RIGHTS.
Subject to Spyglass's requirements and the provisions of this Agreement,
including, without limitation, the provisions of paragraph 3.1.3, above, Xxxxx
will have the non-exclusive right (but not the obligation) to: (i) dub each
Picture in the German, French, Italian, Russian and Spanish language, and in all
national languages of the countries in the Territory; (ii) sub-title each
Picture in the German, French, Italian, Russian and Spanish language, and in all
national languages of the countries in the Territory; and (iii) edit each
Picture (but solely for purposes of censorship, and, with respect to the
Television Rights, for time and the insertion of commercial announcements),
subject to any third party contractual restrictions agreed to by Spyglass of
which Xxxxx is timely notified. In connection with the foregoing, Spyglass shall
provide Xxxxx with access to any French and Italian dubbed and subtitled version
for each Picture to which Spyglass has access.
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
10.3. LIMITATIONS.
In exercising its rights under this Agreement, above, Xxxxx shall not
alter or delete any credit, logo, copyright notice or trademark notice appearing
on any Picture.
11. DELIVERY AND RETURN.
11.1. DELIVERY.
"Delivery" of a Picture means delivery to Xxxxx of all of the materials
and documents specified in Schedule "B" hereto (the "Delivery Materials") with
respect to the Picture in accordance with the requirements of this paragraph and
paragraph 11.4, below, and Xxxxx'x acceptance of the Film Elements (as set forth
in Schedule "B" hereto) in accordance with Paragraph 11.2, below. Spyglass shall
Deliver the Essential Delivery Elements (as defined below) with respect to each
Picture on or before that date which is *** after the completion of principal
photography of such Picture (the "Delivery Date"); provided, however, that if a
Picture's United States theatrical distributor intends to initially release the
Picture within ninety (90) days after the Picture is delivered to such
distributor, and an earlier Delivery Date is necessary in order to meet a
scheduled release date of the Picture in the German Territories, then Spyglass
shall Deliver the Essential Delivery Elements for such Picture to Xxxxx not
later than thirty (30) days after delivery of the Picture to its United States
theatrical distributor (which date shall be the required Delivery Date for such
Picture for all purposes hereunder), and Spyglass shall use its reasonable
efforts to Deliver the Essential Delivery Elements for such Picture to Xxxxx
simultaneously with Spyglass's delivery of such Picture to its United States
theatrical distributor. Notwithstanding the foregoing, except with respect to
Pictures which are subject to the proviso in the immediately prior sentence, the
Essential Delivery Elements for ***(***) Picture may be delivered by that date
which is*** (***) *** after the completion of principal photography of such
Picture, the Essential Delivery Elements for *** (***) Picture (in addition to
the Picture previously mentioned in this sentence) may be delivered by that date
which is *** *** *** after the completion of principal photography of such
Picture, and the Essential Delivery Elements for *** (***) Picture (in addition
to the *** (***) Pictures previously mentioned in this sentence) may be
delivered by that date which is *** (***) *** after the completion of principal
photography of such Picture. The Film Elements which are required to be
physically delivered to Xxxxx as indicated in Schedule "B" hereto shall be
physically delivered to Xxxxx, at Spyglass's expense, by making delivery to a
film laboratory or other facility designated by Xxxxx; provided, however, that
Xxxxx shall promptly reimburse Spyglass for its costs in manufacturing and
shipping such Film Materials after Xxxxx has accepted such materials as provided
herein (which costs shall be recouped by Xxxxx as a Distribution Expense
hereunder). The Film Elements to which Xxxxx is to be given laboratory access
shall be Delivered by Spyglass delivering to Xxxxx two fully executed letters
substantially in the form attached hereto as Schedules "E-l" and "E-2," giving
Xxxxx access to such materials at one of Technicolor Rome, Technicolor London,
Technicolor Los Angeles or at such other laboratory or facility as may be
mutually agreed upon by Spyglass and Xxxxx. The Publicity Materials and the
Legal and Publicity Documents shall be physically delivered to Xxxxx, at one
location designated by Xxxxx, at Xxxxx'x expense. Except as otherwise provided
herein, the Delivery Materials shall be delivered to the delivery location
specified by Xxxxx. For purposes of this Agreement, the Delivery Materials
listed in Schedule "B" hereto marked with an asterisk are collectively referred
to herein as the "Essential Delivery Elements."
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
11.2. EVALUATION OF FILM ELEMENTS.
All Film Elements will automatically be considered satisfactory if Xxxxx
does not notify Spyglass otherwise within *** (***) *** after Delivery of each
such item. If Xxxxx so notifies Spyglass (which notice will state with
reasonable specificity the nature of Xxxxx'x objections with respect to such
material) and Spyglass so elects, Xxxxx will immediately return to Spyglass any
Film Elements which Xxxxx claims are unacceptable, at Spyglass's cost. If,
pursuant to an arbitration conducted in accordance with Schedule "C" hereto,
Xxxxx'x notice is determined to be incorrect, then Xxxxx will promptly reimburse
Spyglass for the costs referred to in the immediately prior sentence. If Xxxxx'x
notice is accurate, then Spyglass will timely correct any defects or deliver new
Film Elements, at Spyglass's cost. If Spyglass has not corrected any such
Delivery defect within *** (***) *** of its receipt of Xxxxx'x notice, except
with respect to a Delivery defect relating to materials Delivered pursuant to
paragraph 1.6 of Schedule "B" hereto, Xxxxx may either cure the Delivery defect
and *** the *** as a *** or *** with respect to such Picture; provided, however,
that with respect to Xxxxx'x right to *** with respect to such Picture, unless
the defective element is an Essential Delivery Element and is one which
prohibits Xxxxx from exploiting the Xxxxx Rights to such Picture, Xxxxx shall
afford Spyglass a ***in accordance with the procedures set forth above nor to
exercising its *** with respect to such Picture. If with respect to any Picture
there is a dispute as to whether or not a Delivery defect exists (or whether or
not such Delivery defect has been cured), Xxxxx'x right to terminate the
Agreement with respect to such Picture shall be subject to the arbitration
provisions of Schedule "C" hereto.
11.3. FAILURE TO EFFECT TIMELY DELIVERY.
If the Essential Delivery Elements for any Picture are not Delivered to
Xxxxx hereunder by the applicable Delivery Date, and, at least ***(***) ***
prior to the Delivery Date, Spyglass has given Xxxxx written notice that it will
not be able to Deliver the Essential Delivery Elements for such Picture by the
Delivery Date, then Xxxxx shall have the right, at its election (which shall be
made within *** (***) *** after the Delivery Date), to either (i) accept
Delivery of the Essential Delivery Elements with respect to such Picture after
the Delivery Date, or (ii) terminate the Agreement with respect to such Picture.
If, with respect to any Picture, Spyglass does not give the *** (***) *** notice
referred to above, then Xxxxx shall have the same rights specified in the first
sentence of this paragraph, except that the *** (***) *** period referred to
above shall be extended to (***) ***. If Xxxxx elects to terminate the Agreement
with respect to such Picture, Xxxxx acknowledges that, subject to Spyglass's
compliance with the provisions of paragraph 11.4, below, such termination shall
be Xxxxx'x sole remedy with respect to Spyglass's failure to timely Deliver such
Picture. Notwithstanding the foregoing, nothing contained in this paragraph 11.3
shall in any way limit any rights or remedies otherwise available to Xxxxx in
the event Spyglass wrongfully refuses to Deliver any Picture hereunder. For
purposes of this paragraph, Spyglass shall be deemed to have wrongfully refused
to Deliver a Picture to Xxxxx hereunder if, after the Delivery Date, Spyglass
has not Delivered the Essential Delivery Elements for such Picture to Xxxxx
within *** (***) *** after Spyglass has delivered equivalent delivery elements
for such Picture to the Picture's United States distributor (but only with
respect to Pictures which Spyglass is required to deliver to the United States
distributor), or if Spyglass has not delivered the Essential Delivery Elements
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
for such Picture to Xxxxx within *** (***) *** after Spyglass has delivered
equivalent delivery elements for such Picture to a distributor in any
international territory (which, for purposes of this paragraph, shall be deemed
to be the ***).
11.4. EFFECT OF TERMINATION.
If Xxxxx elects to terminate the Agreement with respect to a Picture
pursuant to either paragraph 11.2 or 11.3, above, (i) within ten (10) business
days after Spyglass's receipt of Xxxxx'x notice of termination with respect to
such Picture, Spyglass shall repay to Xxxxx the full amount of the Minimum
Guarantee installments previously paid to Spyglass with respect to such Picture,
plus interest thereon at the Interest Rate; (ii) Xxxxx shall be relieved from
any further obligations pursuant to this Agreement with respect to such Picture,
including, without limitation, any obligation to pay any portion of the Minimum
Guarantee with respect to such Picture which Xxxxx has not previously paid;
(iii) upon Spyglass's request, Xxxxx shall return to Spyglass all Delivery
materials previously delivered to Xxxxx with respect to such Picture, at
Spyglass's sole expense; and (iv) all rights granted to Xxxxx hereunder with
respect to such Picture shall automatically revert to Spyglass and neither Xxxxx
nor any of Xxxxx'x subdistributors shall have any further right with respect to
such Picture, or any further right to exploit such Picture or any of the Xxxxx
Rights with respect to such Picture. Notwithstanding anything to the contrary
contained herein, in the event that Spyglass timely submits the issue of whether
or not Delivery to Xxxxx has been effected to arbitration pursuant to the
provisions of Schedule "C" hereto, the ten (10) business day period referred to
in the first sentence of this paragraph 11.4 shall not commence until such time,
if ever, as the Arbitrator (as defined in Schedule "C" hereto) issues its
decision pursuant to the provisions of Schedule "C" hereto that Delivery to
Xxxxx was not effected (or was not timely effected).
11.5. PICTURE SPECIFICATIONS.
In addition to the delivery specifications set forth in Schedule "B"
hereto, each Picture as Delivered shall be completely finished, fully edited and
titled and fully synchronized with language, dialogue, sound and music recorded
with sound equipment pursuant to valid licenses, and of a technical quality
adequate for general release in first-class theaters.
11.6. ADDITIONAL MATERIALS.
With respect to each Picture, Xxxxx will accord Spyglass access to and
the right to use any and all foreign language tracks and subtitled versions of
such Picture created by Xxxxx in connection with its exploitation of the
Licensed Rights; provided, that Spyglass shall reimburse Xxxxx for any direct,
out-of-pocket duplication costs incurred by Xxxxx in making such material
available to Spyglass. In the event Xxxxx requires access to copies of any
foreign language tracks or subtitled versions (including, without limitation,
the Italian and Spanish dubbed and subtitled versions of the Picture), masters,
advertising or promotional materials, artwork or other materials created in
connection with exploitation of the Spyglass Rights, including, without
limitation, any edited version of a Picture or the advertising and promotional
materials created by Spyglass or the Picture's United States distributor
(collectively "Additional Materials"), Spyglass shall accord Xxxxx access to any
such Additional Materials which Spyglass has in its possession or under its
control or to which the Picture's United States distributor has access; provided
that Xxxxx shall reimburse
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
Spyglass for any direct, out-of-pocket costs incurred by Spyglass in making such
materials available to Xxxxx. With respect to all physical materials created or
manufactured by Xxxxx pursuant to this Agreement, Spyglass shall own all
copyrighted materials contained in this paragraph shall give Xxxxx the right to
exploit any copyrighted material contained in any such physical materials (it
being understood that the sale of any such physical materials to a third party
who has been licensed rights to exploit such Picture shall not constitute
exploitation of the copyrighted material contained in such physical materials)
after the expiration of the Exploitation Term with respect to such Picture).
With respect to materials which are delivered to Xxxxx hereunder, title to all
such materials delivered will remain with Spyglass, subject to Xxxxx'x right
hereunder. At the end of the Exploitation Term with respect to each Picture.
Xxxxx will return all Physical Materials delivered to Xxxxx hereunder to
Spyglass at Spyglass's expense.
12. SUSPENSION AND WITHDRAWAL.
12.1. SPYGLASS'S RIGHT.
Spyglass may suspend Delivery or exploitation of any Picture or withdraw
any Picture (i) if Spyglass determines that its continued exploitation might
infringe the rights of others, violate any law or subject Spyglass to any
liability; or (ii) due to events of Force Majeure (as defined below), provided
however, that a suspension or withdrawal of a Picture by Spyglass shall not
constitute a breach of this Agreement by Spyglass.
12.2. EFFECT OF SUSPENSION.
If any Picture is suspended pursuant to paragraph 12.1, above, and such
suspension would otherwise shorten the Exploitation Term for such Picture, the
Exploitation Term with respect to such suspended Picture will be extended for
the length of each suspension. If any suspension lasts for more than three (3)
consecutive months, either party may terminate this Agreement with respect to
any suspended Picture (and only with respect to such suspended Picture), on ten
(10) days' prior written notice. In such event, to the extent that such
suspension was not the result of any act or omission by Xxxxx, Spyglass shall
reimburse Xxxxx for any direct, out-of-pocket costs incurred by Xxxxx (and not
otherwise deducted as a Distribution Expense) in connection with Xxxxx'x
exercise of the Xxxxx Rights in the Territory for such suspended Picture, and
Shall repay to Xxxxx a pro rata amount of the unrecouped portion of the Minimum
Guarantee paid with respect to such Picture based on the remaining portion of
the Exploitation Term for such Picture, the media and the country or countries
for which such Picture was suspended. as provided more fully in paragraph 11.3
above, plus interest thereon at the Interest Rate.
12.3. "FORCE MAJEURE"
"Force Majeure" means the material interruption of or interference with
the preparation, production, post-production or completion and Delivery of a
Picture by reason of fire, flood, earthquake or public disaster, acts of God
(including. without limitation, inclement weather), strike or other labor
disturbance, war, riot, governmental action, regulation or decrees, casualties,
accidents, illness or incapacity of a principal member of the cast of the
Picture or the Picture's director, any failure to perform or delay by any
laboratory or supplier, any delay or lack of transport,
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
any cause or occurrence beyond Spyglass's control, or other events which are
customarily considered events of force majeure in the motion picture industry.
13. DEFAULT AND TERMINATION.
13.1. XXXXX'X DEFAULT
Xxxxx will be in default if Xxxxx (i) becomes insolvent or fails to pay
its debts when due; (ii) makes an assignment for the benefit of creditors, or
seeks relief under any bankruptcy law or similar law for the protection of
debtors, or suffers a bankruptcy petition to be filed against it or a receiver
or trustee appointed for substantially all of its assets, and the same is not
removed within thirty (30) days; (iii) breaches any material term, covenant or
condition of this Agreement; (iv) any material representation or warranty made
by Xxxxx hereunder proves to be inaccurate; or (v) attempts to make any
assignment or transfer of this Agreement without first obtaining Spyglass's
consent as required by paragraph 23, below. Notwithstanding anything to the
contrary contained herein, a default by Xxxxx that is applicable to Picture
shall not be deemed a default as to any other Picture, and no default hereunder
by Xxxxx with respect to a Picture shall in any way relieve Spyglass of its
obligations hereunder with respect to any other Picture; provided, however, that
nothing contained herein shall obligate Spyglass to continue to deliver Pictures
hereunder for which Xxxxx has not yet paid any portion of the Minimum Guarantee
for such Picture after an event of default by Xxxxx.
13.2. NOTICE TO XXXXX.
Spyglass will give Xxxxx written notice of any claimed default. If the
default is incapable of cure, then Xxxxx will be in default immediately upon
receipt of Spyglass's notice. If the default is capable of cure then Xxxxx will
have ten (10) business days after their receipt of such notice to cure any
monetary default, and thirty (30) days after its receipt of such notice to
commence a cure of any non-monetary default; provided, however, that a cure of
any such default will not release Xxxxx from its indemnity obligations pursuant
to paragraph 17.2, below, If the default is incapable of cure, or if Xxxxx fails
to cure within the time provided, then subject to any restrictions set forth in
paragraph 13.5, below. Spyglass may proceed against Xxxxx for available relief
provided for under this Agreement.
13.3. SPYGLASS'S DEFAULT
Spyglass will be in default if (i) Spyglass becomes insolvent or fails
to pay any debts to Xxxxx when due; (ii) Spyglass makes any assignment for the
benefit of creditors, or seeks relief under bankruptcy law or similar law for
the protection of debtors, or suffers a bankruptcy motion to be filed against
them or a receiver or trustee is appointed for substantially all of their
assets, and the same is not removed within sixty; (60) days (iii) any material
representation or warranty made by Spyglass hereunder proves to be inaccurate;
or (iv) Spyglass breaches any material term, covenant or condition of this
Agreement.
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
13.4. NOTICE TO SPYGLASS.
Xxxxx will give Spyglass written notice of any claimed default. If the
default is incapable of cure, then Spyglass will be in default immediately upon
receipt of Xxxxx'x notice. if the default is capable of cure, then Spyglass will
have ten (10) business days after its receipt of such notice to cure any
monetary default, and thirty (30) days after its receipt of such notice to
commence a cure of any non-monetary default. If the default is incapable of
cure, or if Spyglass fails to cure within the time provided, then Xxxxx may
proceed against Spyglass for available relief provided for under this Agreement.
13.5. REMEDIES
13.5.1. A waiver by either parry of any breach of this Agreement shall
not be deemed a waiver of any prior or subsequent breach hereof. No waiver shall
be effective unless in writing. The exercise of any right will not be deemed a
waiver of any other right or any default of the other party, except as otherwise
specified in this Agreement. All remedies of either party shall be deemed
cumulative and the pursuit of any one remedy shall not be deemed a waiver of any
other remedy. In the event of any breach of this Agreement by Xxxxx (except a
breach arising out of Xxxxx'x exploitation of any Picture outside of the
Territory, in any media not authorized hereunder or after the expiration of the
Exploitation Term) except as expressly provided in paragraph 13.5.2, below,
Spyglass's sole remedy shall be the recovery of money damages, and Spyglass
shall not have the right to terminate or rescind this Agreement or to enjoin or
restrain the use of or the exhibition, distribution, advertising or exploitation
of any Pictures for which Xxxxx has paid any portion of the Minimum Guarantee
applicable to such Picture. Subject to Xxxxx'x having paid the applicable
Minimum Guarantee payment, all rights granted or agreed to be granted to Xxxxx
hereunder with respect to each Picture will be irrevocably vested in Xxxxx
during the Exploitation Term and shall not be subject to rescission by Spyglass
for any cause whatsoever.
13.5.2. Notwithstanding anything to the contrary in paragraph 3.5.1,
above, or otherwise in this Agreement, in the event that Spyglass contends that
Xxxxx is in default hereunder as a result of Xxxxx'x failure to pay the Minimum
Guarantee (or any portion thereof) for a Picture when due (a "Xxxxx Funding
Default"). and Xxxxx has not cured such alleged default within the time allowed.
Spyglass shall have the following rights:
13.5.2.1. Upon expiration of the cure with respect to the alleged Xxxxx
Funding Default, if Xxxxx has not previously paid the amounts which Spyglass
claims are due, Spyglass may submit such dispute to binding arbitration in
accordance with the provisions of paragraph 25.4, below. If the arbitrator
determines that Xxxxx has in fact committed a Xxxxx Funding Default and, within
ten (10) business days after the issuance of the arbitrator's final award, Xxxxx
has paid the amount specified in the arbitrator's award as being due and owing,
plus interest thereon at the Interest Rate with such interest accruing from the
date which such amount should have originally been paid, then Xxxxx shall be
deemed to have satisfied its obligations to Spyglass with respect to the payment
of such amounts and Spyglass shall have no further remedies against Xxxxx with
respect to such Xxxxx Funding Default, provided, however, that such Xxxxx
Funding Default shall continue to count as the first Xxxxx Funding Default for
purposes of paragraph 13.5.2.2, below). If and only if, Xxxxx did not provide
Spyglass with a written notification as to the
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
basis upon which Xxxxx disputes Spyglass's contention that a payment is due
prior to the end of the cure period with respect to the alleged Xxxxx Funding
Default, (ii) the arbitrator determines that Xxxxx has in not committed a Xxxxx
Funding Default and, (iii) within ten (10) business days after the issuance of
the arbitrator's final award, Xxxxx has not paid the amount specified in the
arbitrator's award as being due and owing, plus interest thereon at the Interest
Rate with such interest accruing from the date which such amount should have
originally been paid, then, in addition to any other relief accorded to Spyglass
pursuant to such arbitration award, Spyglass shall have the right to terminate
this Agreement with respect to all Pictures for which Xxxxx has not paid the
full amount of the Minimum Guarantee as of the date of Spyglass's termination
notice, with such termination becoming effectively immediately upon Xxxxx'x
receipt of Spyglass's termination notice, in which event, Spyglass shall have no
further obligation to Deliver any Pictures hereunder for which Xxxxx has not
paid the full amount of the Minimum Guarantee as of the date of Spyglass's
termination notice. In such event (A) Xxxxx shall be relieved from any further
obligations pursuant to this Agreement with respect to all Pictures for which it
has not paid the full amount of the Minimum Guarantee as of the date of
Spyglass's termination notice, and (B) all rights granted to Xxxxx hereunder
with respect to such Pictures shall automatically revert to Spyglass and Xxxxx
shall have further right to exploit such Pictures or any of the Xxxxx Rights
with respect to such Pictures, it being understood that Spyglass's rights
pursuant to this paragraph 13.5.2.1 shall apply only to Pictures for which Xxxxx
has not paid the full amount of the Minimum Guarantee. With respect to Pictures
for which Xxxxx has paid a portion but not all of the Minimum Guarantee, in the
event Spyglass terminates this Agreement with respect to any such Picture,
concurrently therewith, Spyglass shall refund to Xxxxx the portion of the
Minimum Guarantee previously paid by Xxxxx with respect to such Picture.
13.5.2.2. If pursuant to an arbitration conducted pursuant to paragraph
25.4 below, Xxxxx is determined to have committed a second Xxxxx Funding
Default, or if, with respect to a second alleged Xxxxx Funding Default, Xxxxx
has not provided Spyglass with a written notification as to the basis upon which
Xxxxx disputes Spyglass's contention that a payment is due prior to the end of
the cure period with respect to the second alleged Xxxxx Funding Default, then
at any time during the ninety (90) day period immediately following the issuance
of a final arbitration award with respect to the second Xxxxx Funding Default
(or following the end of the applicable cure period if Xxxxx has not provided
the written notification referred to above), Spyglass may terminate this
Agreement with respect to all Pictures for which Xxxxx has not paid the full
amount of the Minimum Guarantee as of the date of Spyglass's termination notice,
with such termination becoming effective immediately upon Xxxxx'x receipt of
Spyglass's termination notice, in which event Spyglass shall have enough further
obligation to Deliver any Pictures hereunder for which Xxxxx has no paid the
full amount of the Minimum Guarantee as of the date of Spyglass's termination
notice. In such event, 9i) Xxxxx shall be relieved form any further obligations
pursuant to this Agreement with respect to all Pictures for which it has not
paid the full amount of the minimum Guarantee as of the date of Spyglass's
termination notice; and (ii) all rights granted to Xxxxx hereunder with respect
to such Pictures shall automatically revert to Spyglass and Xxxxx shall have no
further right to exploit such Pictures or any of the Xxxxx Rights with respect
to such Pictures, it being understood that Spyglass's rights pursuant to this
paragraph 13.5.2.2 shall apply only to Pictures for which Xxxxx has not paid the
full amount of the Minimum Guarantee. With respect to Pictures for which Xxxxx
has paid a portion but not all of the Minimum Guarantee, in the event Spyglass
terminates this Agreement with respect o any such Picture, concurrently
therewith,
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
Spyglass shall refund to Xxxxx the portion of the Minimum Guarantee previously
paid by Xxxxx with respect to such Picture.
13.5.3. In addition to any other rights or remedies accorded to Xxxxx
hereunder, at law, in equity or otherwise, if during the Exploitation Term for
any Picture, Xxxxx is required to pay any Residuals with respect to such
Picture, promptly upon Spyglass's receipt of written notice from Xxxxx that
Xxxxx has paid such Residuals, Spyglass shall fully reimburse Xxxxx for such
Residual payment. If Spyglass has not reimbursed Xxxxx for such Residual payment
within thirty (30) days after Spyglass's receipt of Xxxxx'x notice, Xxxxx shall
be entitled to deduct the amount of such Residual payment, plus interest thereon
at the Interest Rate (with such interest accruing from the date Xxxxx made the
Residual payment), from any further payments which would otherwise be due to
Spyglass hereunder, including, without limitation, payment of Xxxxx'x Minimum
Guarantee with respect to any Picture.
13.5.4. Notwithstanding anything to the contrary contained herein, Xxxxx
acknowledges that, with respect to Minimum Guarantee payments which have been
pledged by Spyglass to a production lender and with respect to which Xxxxx has
entered in an interparty agreement or notice of assignment, Xxxxx may not
exercise any offset rights accorded to Xxxxx pursuant to this Agreement with
respect to any such Minimum Guarantee payments for so long as Spyglass's
indebtedness to such lender is outstanding.
14. ADDITIONAL TERMINATION RIGHTS
14.1. KEY MAN PROVISION.
If at any time prior to the ***of the *** hereunder (of, if Xxxxx
exercises its option pursuant to paragraph 2.2, above, prior to the *** of
the***), Xxxxxx ceases to be involved with Spyglass and its Affiliated Companies
(collectively "Spyglass") on a basis consistent with his current and prior
involvement (other than by virtue of his death) Xxxxx shall have the right to
terminate this Agreement with respect to all Pictures which do not have
Commencement Dates prior to the date Xxxxxx ceases to be involved with Spyglass
as set forth herein. Xxxxx shall have a period of *** (***) *** after its
receipt of written notice from Spyglass that Xxxxxx has ceased to be involved
with Spyglass within which to notify Spyglass if Xxxxx will terminate the
Agreement as to such future Pictures. if Xxxxx does not notify Spyglass of its
intention within such *** (***) ***period, Xxxxx shall be deemed to have elected
not to terminate this Agreement. If Spyglass does not give Xxxxx the notice
specified above within *** (***) *** after the date Xxxxxx ceases to be involved
with Spyglass, Xxxxx shall have the right to terminate this Agreement as to such
future Pictures at any time after it receives actual knowledge that Xxxxxx has
ceased to be involved with Spyglass as set forth herein. If Xxxxx elects to
terminate this Agreement as to such future Pictures as provided herein, Spyglass
shall be relieved from any further obligation to deliver any Motion Pictures
hereunder which do not have a Commencement Date prior to the date of such
termination, and Xxxxx shall be relieved form any further obligation to make any
payment hereunder with respect to any Motion Picture which have a Commencement
Date after the date of such termination. If Xxxxx elects (or is deemed to have
elected) to continue this Agreement, the parties' rights and obligation shall
remain the same as they were prior to Xxxxxx ceasing to be involved with
Spyglass.
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
14.2. MINIMUM THEATRICAL RELEASE REQUIREMENTS.
If, with respect to any Picture for which Xxxxx has paid the Minimum
Guarantee (except for Additional Pictures with a ***or *** below the ***), such
Picture is not theatrically released (i) in *** (utilizing no less than ***
(***) prints in ***(***) key cities with respect to Pictures with a Final Budget
of *** ($***)n or more or utilizing not less than *** (***) prints in *** (***)
key cities with respect to Pictures with a Final Budget of less than ***
($***)), (ii) in *** (utilizing not less than *** (***) prints in *** (***) key
cities), and (iii) (A) in the *** by *** on at least*** (***) screens not later
than *** (***) *** after the date of Delivery of the Essential Delivery Elements
for such Picture to Xxxxx, or (B) if the Picture is theatrically released in the
*** by a *** not later than *** (***) *** after the date of Delivery of the
Essential Delivery Elements for such Picture to Xxxxx but on fewer than ***
(***) screens, (1) if the Picture is theatrically released by a major motion
picture distributor utilizing not less than the number of prints indicated in
each of the *** (with no minimum print requirement), *** (utilizing not less
than *** (***) prints), and *** (with no minimum print requirement), within ***
(***) *** after the date of Delivery of the Essential Delivery Elements for such
Picture to Xxxxx, (2) Spyglass has received payment of a minimum guarantee from
a major motion picture distributor in ***for *** language distribution rights
(exclusive of ***) to the Picture in an amount equal to not less than ***
percent (***%) of the Production Cost of the Picture, or (3) any combination of
the alternatives set forth in subclauses (1) and (2) of this sentence, then, in
addition to any other rights accorded to Xxxxx hereunder, within *** (***) ***
after Spyglass's failure to satisfy the provisions of any of clauses (i), (ii)
or (iii), above, the parties shall negotiate in good faith a reduction of the
Minimum Guarantee for such Picture; provided, however, that if the parties are
unable to agree as to such a reduction either party may elect to submit the
determination of such reduction to arbitration in accordance with the provisions
of paragraph 25.4, below. In connection with the foregoing, until such time as
Xxxxx and Spyglass have reached an agreement as to the amount of the negotiated
reduction in the Minimum Guarantee with respect to such Picture, and Spyglass
has actually paid such amount to Xxxxx, notwithstanding anything to the contrary
contained herein, Xxxxx shall be entitled to withhold from all payments due to
Spyglass an amount equal to ***percent (***%) of the Minimum Guarantee paid with
respect to such Picture. The theatrical release requirements set forth in this
paragraph 14.2 are collectively referred to herein as the "Minimum Theatrical
Release Requirements."
15. SPYGLASS'S REPRESENTATIONS, WARRANTIES AND COVENANTS.
Spyglass represents, warrants and covenants to Xxxxx that:
15.1. Spyglass is an entity in good standing duly qualified to transact
business in the State of Delaware and all places where such qualifications is
required or in which the failure to so qualify could have a material adverse
effect on Spyglass's business or Spyglass's ability to perform its obligations
under this Agreement. The parties signing this Agreement on behalf of Spyglass
have full authority to enter into this Agreement on behalf of Spyglass.
15.2. Spyglass controls, and will have the right to grant to or vest in
Xxxxx, the Xxxxx Rights with respect to each Picture (provided, however, that,
with respect to each Picture (provided, however, that, with respect to
Additional Pictures for which Spyglass or one of its
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
Affiliated Companies does not own or control all of the Xxxxx Rights, Spyglass
represents and warrants only that it will control, and will have the right to
grant to or vest in Xxxxx, only those of the Xxxxx Rights which it purports to
own or control).
15.3. Except with respect only to one (1) Motion Picture which has a
Commencement Date prior to the Commencement Date of the seventh Picture
hereunder (or, if Xxxxx exercises its options pursuant to paragraph 2.2, above,
prior to the Commencement Date of the twelfth Picture hereunder), Spyglass or
one of its Affiliated Companies shall own or control the Xxxxx Rights with
respect to all Motion Pictures produced or co-produced by Spyglass or any of its
Affiliated Companies. In that regard, with respect to each Motion Picture to be
produced or co-produced by Spyglass or any of its Affiliated Companies prior to
the Commencement Date of the seventh Picture hereunder (or, if Xxxxx exercises
its option pursuant to paragraph 2.2., above, prior to the Commencement Date of
the twelfth Picture hereunder), Spyglass agrees to use its best efforts to
acquire (or to cause its Affiliated Company to acquire) rights in and to such
Motion Picture equivalent to the Xxxxx Rights.
15.4. All of the following will have been paid or discharged prior to
Delivery of the Essential Delivery Elements for each Picture hereunder, or will
otherwise be paid or discharged when due:
15.4.1. all contractual amounts due and owing by Spyglass to owners of
copyrights in literary, dramatic or musical rights and other property or rights
in or to all stories, plays, scripts, scenarios, themes, incidents, plots,
characters, dialogue, music, words and other material of any nature whatsoever
appearing, used or recorded in such Picture;
15.4.2. all contractual or statutory amounts due and owing by Spyglass
to owners of inventions and patent rights with respect to the recording of any
and all dialogue, music and other sound effects recorded in such Picture, and
with respect to the use of all equipment, apparatus, appliances and other
materials used in photographing, recording or manufacturing such Picture;
15.4.3. all contractual and statutory amounts due and owing by Spyglass
with respect to the use, distribution, performance, exhibition and exploitation
of such Picture, and any music contained therein, throughout the Territory
(except for (i) royalties, residuals, supplemental market, deferment, contingent
compensation and similar payments (subject to the provisions of clause (ii) of
this paragraph 15.4.3), which Spyglass will promptly pay (or cause to be paid)
when due, (ii) contingent compensation obligations to the extent allocable to
Xxxxx pursuant to paragraph 6.4., above, which payments shall be Xxxxx'x
responsibility and (iii) music performance fees which, subject to the provisions
of paragraph 15.11, below, shall be Xxxxx'x responsibility);
15.4.4. all costs of producing and completing such Picture.
15.5. The main and end titles of each Picture will contain all necessary
and proper credits for the actors, directors, writers and all other persons
appearing in or connected with the production of such Picture who are entitled
to receive credit in connection therewith.
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
15.6. Subject to the exceptions set forth in paragraph 16.3, below, and
the liens referenced in last sentence of paragraph 8, above, there are not, and
will not be, outstanding at any time during the Exploitation Term with respect
to each Picture any liens, claims, charges, encumbrances, restrictions,
agreements, commitments or arrangements whatsoever with any person or entity, or
any obligation (past, present or future), or any breach of any contract, license
or agreement, which will materially interfere with, impair, abrogate or
adversely affect any rights granted to Xxxxx pursuant to this Agreement. Except
to the extent expressly provided herein, and except as may be required by any
law, rule or act of any governmental authority in any country in the Territory,
there are not, and will not be, any payments of any kind required to be made by
Xxxxx with respect to, or as a result of, any use of the Pictures pursuant to
the rights and licenses granted to Xxxxx hereunder.
15.7. No Picture, nor any part thereof, nor any materials contained
therein or synchronized therewith, nor the title thereof, nor the exercise of
any right, license or privilege granted herein, will violate or infringe any
trademark, trade name, contract, agreement, copyright (whether common law or
statutory), patent, literary, artistic, dramatic, personal, private, civil,
property or privacy right or "moral rights of authors" or any other right of,
nor will it slander or libel, any person or entity.
15.8. None of the Pictures shall contain any advertising matter for
which compensation has been or will be received by Spyglass or, to Spyglass's
knowledge, by any other person or entity (except with respect to Product
placements, for which no such notice shall be required).
15.9. Prior to that time the Essential Delivery Elements for a Picture
are delivered to Xxxxx, such Picture shall not have been released, distributed
or exhibited theatrically, non-theatrically, by means of television or by any
other medium in Germany.
15.10. Spyglass has not sold, assigned, transferred or conveyed, and
will not sell, assign, transfer or convey, to any party, any right, title or
interest in or to the Pictures or any part thereof, or in or to the dramatic or
literary material upon which any of the Pictures are based, which sale,
assignment, transfer or conveyance would be adverse to the rights granted to
Xxxxx hereunder.
15.11. The performing rights to all musical compositions contained in
the Pictures shall be:
15.11.1. controlled by the American Society of composers, Authors and
Publishers, Broadcast Music, Inc. or similar organizations in other countries,
or their affiliates (including, without limitation XXXX, SUISA, SACL etc);
15.11.2. in the public domain in the Territory; or
15.11.3. controlled by Spyglass to the extent required for the purposes
of this Agreement and Spyglass shall similarly control or have licenses for any
necessary synchronization and recording rights.
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
15.12. Neither Spyglass nor any of its Affiliated Companies has entered
into any Agreement with any contractual restrictions which would prevent Xxxxx
from exploiting the Xxxxx Rights and, except with respect to Xxxxx'x share of
any Gross Participations payable hereunder, there are not, and will not be, any
payments (out of any part of any revenues from the distribution or exploitation
of the Pictures or otherwise) which must be made by Xxxxx (other than obtaining
appropriate music performance licenses from the applicable performing rights
societies, and any costs associated with the dubbed or subtitled version of any
Picture which is prepared by Xxxxx) to any actors, musicians, directors, writers
or other persons who participated in the Pictures, or to any union, guild or
other labor organization for any right to exhibit the Pictures or as
compensation in connection with such exhibition or for any other use of the
Pictures or any other use of the rights granted hereunder. Any and all such
payments shall be the sole responsibility of and shall be by Spyglass.
15.13. The copyright in each Picture, and the literary, dramatic and
musical material upon which each Picture is based or which is contained in a
Picture, will be valid and subsisting throughout the Territory for the duration
of such copyright, and no pan of any thereof is in the public domain.
15.14. Notwithstanding anything to the contrary contained herein, during
the Exploitation Term for a Picture, Spyglass may not exploit or authorize the
exploitation (including, without limitation, Television and Videogram
exploitation from outside the Territory with the intention to exploit within the
Territory, but excluding Ship and Airline Rights) of any Picture in any manner
which would infringe upon any of the Xxxxx Rights.
16. XXXXX'X REPRESENTATIONS, WARRANTIES AND COVENANTS.
Xxxxx represents, warrants and covenants to Spyglass that:
16.1. Xxxxx is an entity in good standing duly qualified to transact
business in all places where Xxxxx transacts business. The parties signing this
Agreement on behalf of Xxxxx have full authority to enter into this Agreement on
behalf of Xxxxx.
16.2. Xxxxx has full authority to enter into and completely perform this
agreement. Xxxxx has not, and will not undertake any action which might impair
Spyglass's rights under this Agreement. There are no existing or threatened
claims or litigation which would adversely affect or impair Xxxxx'x ability to
completely perform under this Agreement.
16.3. Xxxxx will honor all restrictions and requirements with respect to
the exercise of the Xxxxx Rights or any other rights granted in this Agreement
as such restrictions and requirements may be duly given to Xxxxx by Spyglass in
conformity with this Agreement, provided, however, that Spyglass may not agree
to any restrictions which would materially reduce or interfere with Xxxxx'x
ability to exploit any of the Xxxxx Rights in the Territory. In that regard,
Xxxxx agrees that the following shall not constitute restrictions which would
materially reduce or interfere with Xxxxx'x ability to exploit any of the Xxxxx
Rights in the Territory (but only to the extent that Xxxxx receives prior
written notice from Spyglass as to any such restrictions): (i) customary
advertising restrictions, (ii) affording a prominent director the right to
supervise the creation of dubbed or
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
subtitled versions of a Picture, provided, however, that, such director's
unavailability to supervise the creation of a dubbed or subtitled version of a
Picture cannot prevent Xxxxx from preparing any such version), and (iii)
affording principal cast members the first right to dub such cast member's voice
in connection with a dubbed version of a Picture (provided that such cast member
is fluent in the language into which the Picture will be dubbed) or the right to
consult with the Picture's distributors as to the Picture's theatrical release
pattern (provided, however, that (A) Xxxxx'x decisions shall be final with
respect to the Picture's theatrical release, and (B) Spyglass shall promptly
reimburse Xxxxx for any costs incurred by Xxxxx in complying with any such
requirements). Notwithstanding anything to the contrary contained herein, Xxxxx
may not exploit or authorize the exploitation (including, without limitation,
Television and Videogram exploitation from inside the Territory with the
intention to exploit outside the Territory) of any Picture in any manner which
would impinge upon any of the Spyglass Rights. Except as may be otherwise agreed
between the parties, Xxxxx will not exploit any Spyglass Rights in the Pictures
or any other rights not officially licensed to Xxxxx in this Agreement, nor will
Xxxxx exploit any Picture outside the Territory, after the applicable
Exploitation Term, in any language not authorized hereunder. In connection with
the New Media Rights granted hereunder, Xxxxx may exploit the New Media Rights
with respect to a Picture only to the extent that such Picture, as exhibited
using such means of expression, can be viewed by the general public solely
within the German Territories.
17. INDEMNITIES.
17.1. Spyglass's Indemnities.
17.1.1. Spyglass will defend, indemnify and hold harmless Xxxxx
(including its officers, directors, partners, owners, shareholders, employees
and agents) against any and all third party claims and expenses (including,
without limitation, reasonable attorneys' fees) and liabilities due to
Spyglass's breach of any of its obligations, representations or warranties set
forth in this Agreement or with respect to any third party's failure to pay or
discharge any of the following Prior to Delivery of the Essential Delivery
Elements for each Picture hereunder, or otherwise when due:
17.1.1.1. all contractual amounts due and owing to owners of copyrights
in literary, dramatic or musical rights and other property or rights in or to
all stories, plays, scripts, scenarios, themes, incidents, plots, characters,
dialogue, music, words and other material of any nature whatsoever appearing,
used or recorded in such Picture:
17.1.1.2. all contractual or statutory amounts due and owing to owners
of inventions and patent rights with respect to the recording of any and all
dialogue, music and other sound effects recorded in such Picture, and with
respect to the use of all equipment, apparatus, appliances and other materials
used in photographing, recording or manufacturing such Picture;
17.1.1.3. all contractual and statutory amounts due and owing with
respect to the use, distribution, performance, exhibition and exploitation of
such Picture, and any music contained herein, throughout the Territory (except
for (i) royalties, residuals, supplemental market, deferment, contingent
compensation and similar payments (subject to the provisions of clause 60 of
this paragraph 15.4.3, which Spyglass will promptly pay (or cause to be paid)
when due,
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
(ii) contingent compensation obligations to the extent allocable to Xxxxx
pursuant to paragraph 6.4, above, which payments shall be Xxxxx'x responsibility
and (iii) music performance fees which, subject to the provisions of paragraph
15.11, above, shall be Xxxxx'x responsibility);
17.1.1.4. all costs of producing and completing such Picture.
17.1.2. Spyglass will remain responsible for honoring Spyglass's
indemnities despite any assignment pursuant to paragraph 23, below.
17.2. XXXXX'X INDEMNITIES.
Xxxxx will defend, indemnify and hold harmless Spyglass (including its
officers, directors, partners, owners, shareholders, employees and agents)
against any and all third party claims and expenses (including, without
limitation, reasonable attorneys' fees) and liabilities due to Xxxxx'x failure
to comply with any restriction on the exercise of any rights granted to it or
for breach of any of Xxxxx'x obligations, representations or warranties set
forth in this Agreement. Xxxxx will remain responsible for honoring Xxxxx'x
indemnities despite any assignment pursuant to paragraph 23, below.
17.3. NOTIFICATION, CONTROL OF DEFENSE.
Each party agrees that, upon receipt or presentation of any claim or
notification of the institution of any third party action with respect to which
indemnification might be required hereunder, such party will promptly notify the
other party in writing thereof with respect to any such indemnification, the
indemnity shall have the right to control the course and conduct of such
defense. Any such indemnitee shall have the right, in its discretion and at its
sole expense, to retain independent counsel and to participate in any such
defense; provided, however, that, in no event shall the indemnitee have a right
to settle the applicable dispute without the indemnitor's prior written consent
(unless the indemnitee first waives its claims for indemnification hereunder by
the indemnity).
18. INSURANCE COVERAGE.
Spyglass shall cause Xxxxx and Xxxxx'x theatrical subdistributors to be
named as additional insureds with respect to each Picture under the errors and
omissions insurance policy for such Picture, with such coverage continuing for a
period of three (3) years from the date Spyglass initially tenders Delivery of
such Picture hereunder (provided, however, that, prior to the expiration of the
initial term of the policy, Spyglass shall renew the policy to extend the term
until three (3) years after Delivery of such Picture hereunder), and shall
provide for written notice to Xxxxx of any cancellation of or material change in
such insurance coverage which written notice shall be given to Xxxxx not less
than ten (10) days prior to such cancellation of or material change in such
insurance coverage. Such insurance shall provide for coverage in an amount not
less than ***Dollars ($***) for any one (1) claim and *** Dollars ($***) in the
aggregate for all claims and shall have a deductible of no greater than (i) ***
Dollars ($***) in the aggregate and *** Dollars ($***) per claim, or (ii) such
amount as is approved by Chase Manhattan Bank as the deductible. Spyglass shall
cause its carrier to assume primary responsibility notwithstanding that Xxxxx
may also have its own
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
insurance coverage. All insurance coverage required pursuant to this paragraph
shall be at Spyglass's sole cost and expense.
19. CONSULTATION RIGHTS: PREMIERES.
19.1. Spyglass shall consult with Xxxxx'x designated representative on a
regular basis (but in no event less frequently than quarterly) with respect to
the status of all projects Spyglass has in development, with the intent of
allowing Xxxxx to determine in advance which of such projects may become
Pictures licensed hereunder. In addition Spyglass shall use its good faith
efforts to inform Xxxxx about any project Spyglass intends to acquire or start
principal photograph 7.1., above; provided, however, that Spyglass's inadvertent
failure to so notify Xxxxx shall not constitute a breach of this Agreement.
19.2. With respect to any Motion Picture produced by Spyglass or any of
its Affiliated Companies which the parties believe may become a Picture licensed
hereunder, Spyglass shall use its reasonable efforts to arrange for Xxxxx'x
representatives to attend at least one (1) screening of such Motion Picture (to
the extent that such screening has been otherwise scheduled, it being understood
that Spyglass would not have to schedule a screening for the purpose of allowing
Xxxxx" representatives to attend at which individuals other than or in addition
to the Motion Picture" production personnel, representatives of Spyglass or the
Motion Picture's United States distributor are invited to attend.
19.3. With respect to each Picture, Spyglass shall use its reasonable
efforts to invite five (5) of Xxxxx'x principal executives and up to twelve (12)
guests designated by Xxxxx to all premieres in Italy and Spain, and all major
film festivals in Europe at which the Picture will be screened (including,
without limitation, the Cannes Film Festival). In that regard, Spyglass will use
reasonable efforts to provide Xxxxx with tickets for Xxxxx'x principal
executives and guests to attend all such screenings.
20. DISTRIBUTION.
20.1. As between Spyglass and Xxxxx, but subject to the provisions of
paragraph 23, below, Xxxxx shall have complete authority to distribute each
Picture and license the exhibition thereof throughout the Territory in
accordance with such sales methods, policies and terms as it may, in its good
faith discretion, determine. Xxxxx shall have the broadest possible latitude in
the distribution of each Picture, and the exercise of its judgment in good faith
in all matters pertaining thereto shall be final. Xxxxx has not made any express
or implied representation, warranty, guarantee or agreement as to the amount of
proceeds which will be derived from the distribution of the Picture, or has
Xxxxx made any express or implied representation, warranty, guarantee or
agreement that there will be any sums payable to Spyglass hereunder, or that the
Picture will be favorably received by exhibitors or by the public, or will be
distributed continuously. In no event shall Xxxxx incur any liability based upon
any claim that Xxxxx has failed to realize receipts or revenue which should or
could have been realized. Upon Spyglass's request, Xxxxx will consult with
Spyglass, meaningfully and in good faith, as to Xxxxx'x theatrical and home
video distribution plans and release campaign with respect to any Picture;
provided, however, that in the event of any dispute between Xxxxx and Spyglass,
Xxxxx'x decision shall be final.
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
20.2. Xxxxx may distribute each Picture either itself or with respect to
Theatrical and Home Video distribution of the Pictures, through an Affiliated
Company, through a Major Studio, through a pre-approved subdistributor listed in
Schedule "D" hereto, or through any other subdistributors approved by Spyglass,
which approval shall be made in good faith, not to be unreasonably withheld and
which may not frustrate or impede Xxxxx'x right to distribute a Picture.
20.3. Nothing contained herein shall be construed as a representation or
warranty by Xxxxx that it now has or will hereafter have or control any theatres
or agencies in the Territory or elsewhere.
21. WITHHOLDING TAX.
Spyglass acknowledges that the monies payable to Spyglass under this
Agreement are subject to taxation in compliance with the statutory regulations
of the Federal Republic of Germany. Xxxxx is therefore obliged to withhold
taxes, as provided by law, from the monies payable to Spyglass hereunder
(including, without limitation the Minimum Guarantee) and to pay such taxes to
the appropriate governmental authority. The amount of the applicable withholding
tax is determined by applicable German law. Due to the double taxation
convention between the United States and the Federal Republic of Germany (the
"Tax Treaty"), Spyglass is entitled to file an application for a certificate of
tax exemption (an "Exemption Certificate") from the withholding tax in the full
amount or in the amount acceptable according to the double taxation convention
at the competent Tax Office of the Federal Republic of Germany (the "Tax
Authority"). Xxxxx undertakes to send Spyglass the necessary application form or
forms and Spyglass agrees to execute and return such form or forms as
expeditiously as practicable. Spyglass will provide Xxxxx with information
documents as soon as practicable if those documents are required by the Tax
Authority to ensure that all liabilities and payments made under this Agreement
qualify under the Tax Treaty. If the Exemption Certificate is issued, the monies
payable to Spyglass shall be paid without any deduction for taxes, as and to the
extent so provided in the Exemption Certificate.
22. FURTHER DOCUMENTS.
Each party hereto shall execute and deliver to the other party an other
documents consistent herewith the requesting party considers reasonably
necessary or desirable to evidence, effectuate or confirm this Agreement, or any
of the terms and conditions hereof, including, without limitation, (i) any and
all documents which Xxxxx deems reasonably necessary to allow it to exploit the
Xxxxx Rights in the Territory, and (ii) any and all documents which Spyglass
deems reasonably necessary to evidence the termination or expiration of the
Xxxxx Rights to any Picture after the end of the Exploitation Term for such
Picture.
23. ASSIGNMENT.
23.1. XXXXX'X LIMITATIONS.
Xxxxx may assign or transfer any of its rights hereunder (i) to a
financially responsible company which acquires all or substantially all of
Xxxxx'x assets, (ii) to any Affiliated Company; (iii) as otherwise permitted
hereunder or (iv) in connection with an assignment or grant of a security
interest to a bank or other lender as security for a loan to Xxxxx; provided,
however that Xxxxx shall
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
remain primarily liable hereunder. Nothing in this paragraph shall be deemed to
prohibit Xxxxx from exploiting any of the Xxxxx Rights through a subdistributor
in accordance with ( and subject to the restrictions set forth in) the
provisions of paragraph 20.2, above.
23.2. SPYGLASS'S RIGHTS.
Spyglass may assign, transfer or sublicense any of its rights under this
Agreement, including, without limitation, an assignment or grant of security
interest to a bank or other lender as security for a loan to Spyglass, but no
such assignment, transfer or sublicense will relieve Spyglass of its obligations
under this Agreement, unless to a financially responsible company which acquires
all or substantially all of Spyglass's assets.
24. NOTICES AND PAYMENTS
All notices which either party shall be required to give hereunder shall
be in writing and shall be served by telegraph, cable, telex, facsimile,
overnight courier (such as Federal Express or D.H.L.) or personal delivery.
Service of any notice or delivery or any payment, statement or other paper upon
either party shall be deemed complete if and when the same is personally
delivered to such party, or upon receipt by such party of a telegram, cable,
telex, courier package or facsimile. Any party's inadvertent failure to provide
the courtesy copies referred to below shall not constitute a breach of this
Agreement. Until further notice, the addresses and facsimile numbers of the
parties for any notice shall be:
SPYGLASS:
Spyglass Entertainment Group, L.P.
000 Xxxxx Xxxxx Xxxxx Xxxxxx
Animation Building 3F4
Burbank, California 91521-1855
Attention: Co-Chairman
Fax No.: ___________________
with a copy to:
Spyglass Entertainment Group, L.P.
000 Xxxxx Xxxxx Xxxxx Xxxxxx
Animation Building 3F4
Xxxxxxx, Xxxxxxxxxx 00000-0000
Attention: Legal and Business Affairs
Fax No.: ___________________
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
XXXXX:
Xxxxx Xxxxx XxxX & Xx. XxxX
Xxxxxx-Xxxxxxx-Xxxxxxx 2
D-85737 Ismaning
Germany
Attention: Xx. Xxxxxxx Xxxxxxxx
Fax No.: x00-00-0000-0000
with a copy to:
International Television Trading Corp.
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX
XXX
Attention: Xx. Xxxxxxxx Xxxx
Fax No.: x0-000-000-0000
and
Xxxxxx Xxxxxxx & Pancione
Xxxxxxxxxxxxxxx 00
XX-0000 Xxxxxx
Xxxxxxxxxxx
Attention: Xxxxxx Xxxxxxxxxx, Esq.
Fax No.: x00-0-000-0000
25. MISCELLANEOUS PROVISIONS.
25.1. The titles of the paragraphs of this Agreement are for convenience
only and shall not in any way affect the interpretation of this Agreement.
25.2. Due to the well developed body of law in California with respect
to the subject matter of this Agreement, this Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable to
contracts entered into and fully performed therein.
25.3. In the event of any dispute arising under or related to this
Agreement, the prevailing party shall be entitled to recover its attorneys' fees
and costs incurred therein.
25.4. In the event of a dispute which the parties are entitled to submit
to arbitration pursuant to either paragraph 6.4.3 or paragraph 14.2, above, such
dispute shall be settled by binding arbitration in Los Angeles, California in
accordance with the rules of the American Arbitration Association, and the
judgment upon any award rendered by the arbitrators may be entered in any court
having jurisdiction thereof. Nothing contained herein shall prevent any party
from seeking and obtaining equitable relief, including, without limitation,
prohibitory or mandatory
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
injunctions, specific performance, or extraordinary writs, to the extent
otherwise permitted hereunder.
25.5. Nothing contained herein shall in any way be construed to
interpret this agreement as creating a partnership, joint venture or employment
relationship between the parties hereto. Each party is acting independently
hereunder and shall independently discharge all obligations imposed on it by any
applicable federal, state or local law, regulation or order now or hereafter in
force or affect.
25.6. This Agreement and the other agreements entered into in connection
herewith contain the entire understanding of the parties relating to the subject
matter hereof and supersedes any prior understanding of the parties. Each party
acknowledges that no representation or agreement not expressly contained in this
Agreement or in any of the other agreements entered into in connection herewith
has been made to the other party or any of such parties' agents, employees or
representatives. This Agreement may not be modified or amended except in writing
signed by each party hereto.
25.7. Neither party hereto will disclose to any third party (other than
Xxxxx'x and Spyglass's respective directors, officers, shareholders, employees,
attorneys and accountants acting in their capacity as such) any information with
respect to the financial terms of this agreement, except (i) to the extent
necessary to comply with applicable law or a valid court order (in which event
the party required to make such disclosure will so notify the other party and
will seek confidential treatment of the information to be disclosed), (ii) as
part of a party's normal reporting or review procedures to its parent company,
its auditors or its attorneys (provided, however, that such parent company,
auditors or attorneys, as applicable, shall be bound by the confidentiality
provisions of this paragraph), (iii) to the extent necessary to enforce a
party's rights or remedies under this Agreement, (iv) to a party's primary
lenders or financiers, or to a lender providing funding in connection with any
Picture (provided, however, that, upon request from the other party, the party
making such disclosure shall obtain a confidentiality agreement from such
lenders or financiers), (v) to any actual or potential investors (provided,
however, that, in the event of a public offering, the party wishing to disclose
this Agreement shall use its good faith efforts to keep this agreement
confidential) or (vi) to any subdistributor in Italy and Spain.
IN WITNESS WHEREOF, the parties hereto have executed this agreement as
of the day and year first written above.
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
"Spyglass"
SPYGLASS ENTERTAINMENT GROUP, L.P.
By: Astra Entertainment Group, LLC
Its: General Partner
By /S/
-------------------------------------
Its
-------------------------------------
"Xxxxx"
XXXXX MEDIA GMBH & CO. KGAA
By /S/
-------------------------------------
Its
-------------------------------------
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
SCHEDULE "A"
DEFINITIONS
1. CINEMATIC DEFINITIONS.
1.1. "CINEMATIC" means all forms of Theatrical, Non-Theatrical and
Public Video exploitation of a Motion Picture.
1.2. "THEATRICAL" means exploitation of a Motion Picture Copy for direct
exhibition in conventional or drive-in theaters, licensed as such in the place
where the exhibition occurs, which are open to the general public on a regularly
scheduled basis and which charge an admission fee to view the Motion Picture.
1.3. "NON-THEATRICAL" means exploitation of a Motion Picture Copy for
direct exhibition before an audience by and at the facilities of either
organizations not primarily engaged in the business of exhibiting Motion
Picture, such as in educational organizations, churches, restaurants, bars,
clubs, trains, libraries, Red Cross facilities, oil rigs and oil fields, or by
and at the facilities of governmental bodies such as in embassies, military
bases, military vessels, and other governmental facilities flying the flag of
any country in the licensed Territory, by means of any media now known or
hereafter developed, including, without limitation, film, Videogram, closed
circuit television and satellite transmission. By way of clarification, but not
limitation, Non-Theatrical does not include Commercial Video, Public Video,
Airline, Ship or Hotel exploitation.
1.4. "PUBLIC VIDEO" means exploitation of a Motion Picture Copy embodied
in a Videogram for direct exhibition before an audience in a "mini-theater," an
"MTV theater" or like establishment which charges an admission to use the
viewing facility or to view the Videogram and which is not licensed as a
traditional motion picture theater in the place where the viewing occurs.
2. VIDEO DEFINITIONS.
2.1. "VIDEO" means all forms of Home Video and Commercial Video
exploitation of a Motion Picture.
2.2. "HOME VIDEO" means the exploitation of a Motion Picture Copy
embodied in a Videogram which is rented or sold to the viewer for viewing the
embodied Motion Picture in private living accommodations where no admission fee
is charged with respect to such viewing. Home Video does not include the public
performance, diffusion, exhibition or broadcast of the Videogram.
2.3. "COMMERCIAL VIDEO" means the exploitation of a Motion Picture Copy
embodied in a Videogram for direct exhibition before an audience by and at the
facilities of either organizations not primarily engaged in the business of
exhibiting Motion Pictures, such as in educational organizations, churches,
restaurants, bars, clubs, trains, libraries, Red Cross facilities, oil rigs and
oil fields, or by and the facilities flying the flag of the licensed Territory,
but only to the extent that such exploitation is not otherwise utilized in the
Territory as a form of Non-Theatrical
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
exploitation. By way of clarification but not limitation, Commercial Video does
not include Non-Theatrical, Public Video, Airline, Ship or Hotel exploitation.
3. ANCILLARY DEFINITIONS.
3.1. "AIRLINE" means exploitation of a Motion Picture Copy for direct
exhibition in airplanes, wherever located, which are operated by an airline
flying the flag of any country in the licensed territory for which Airline
Rights are granted, but excluding airlines which are customarily licensed from a
location outside the licensed Territory or which are only serviced in but do not
fly the flag of a country in the licensed Territory.
3.2. "SHIP" means exploitation of a Motion Picture Copy for direct
exhibition in ocean-going vessels, wherever located, which are operated by a
shipping line flying the flag of any country in the licensed Territory for which
Ship Rights are granted, but excluding shipping lines which are customarily
licensed from a location outside the Territory or which are only serviced in but
do not fly the flag of a country in the licensed Territory.
3.3. "HOTEL" means the exploitation of a Motion Picture Copy for direct
exhibition in temporary or permanent living accommodations such as hotels,
motels, apartment complexes, co-operatives or condominium projects by means of
closed-circuit television systems where the telecast originates within or in the
immediate vicinity of such living accommodations.
3.4. "INTERACTIVE" means the exploitation of copyrights, trademarks, or
other rights with respect to a Motion Picture (but excluding exploitation of the
linear version of the complete Motion Picture (regardless of whether such
complete version is the version initially released to the general public or an
edited version of the version initially released to the general public)) by
means of CD/ROM, CD-I, dedicated video game platform (such as Sega Genesis,
Nintendo, 3DO, etc.) or any other similar device or format where the user or
viewer is given interactive control over the images displayed on-screen (whether
by means of manipulating such images or selecting the order in which such images
appear) or is otherwise given control over the content of the on-screen display
generated by such device.
3.5. "INTERNET" means the exploitation of the linear version of a
complete Motion Picture by means of the system of interconnected computers
commonly known as the Internet or by means of any similar interconnected
communications network which, by its nature, would permit the general public
without regard to geographic or territorial limitations to view such Motion
Picture, whether for free or a fee.
3.6. "MERCHANDISING" means the exploitation of copyrights, trademarks or
other rights with respect to a Motion Picture in connection with products, goods
or services other than the Motion Picture itself, and includes, without
limitation, print publication rights, but does not include Interactive Rights,
Soundtrack Rights or Music Publishing Rights.
3.7. "MUSIC PUBLISHING" means the exploitation of the copyright in any
musical compositions (as opposed to the recordings of those musical
compositions) contained in the soundtrack of any Motion Picture in connection
with any use other than the exploitation of the Motion Picture itself or
advertising or promotion for the Motion Picture.
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
3.8. "SOUNDTRACK" means the exploitation of any musical recordings (as
opposed to the musical compositions embodied in such recordings) contained in
the soundtrack of any Motion Picture by means of a record album (which includes,
without limitation, compact discs, audio cassettes, vinyl records and any other
device commonly sold to the public which embodies music only).
4. TELEVISION DEFINITIONS.
4.1. "TELEVISION" means all forms of Free TV and Pay TV exploitation of
a Motion Picture.
4.2. "FREE TV" means all forms of Terrestrial Free TV, Cable Free TV and
Satellite Free TV exploitation of a Motion Picture.
4.3. "TERRESTRIAL FREE TV" means standard over-the-air broadcast by
means of Hertzian waves of the linear version of a Motion Picture Copy which is
intended for reception on a viewing device in private living accommodations
without a charge being made to the viewer for the privilege of viewing the
Motion Picture. For purposes of this definition, neither governmental viewing
device assessments nor taxes will be deemed a charge to the viewer.
4.4. "CABLE FREE TV" means the transmission by means of coaxial or
fiber-optic cable of the linear version of a Motion Picture Copy for reception
on a viewing device in a private living accommodations without a charge being
made to the viewer for the privilege of viewing the Motion Picture. For purposes
of this definition, neither governmental viewing device assessments or taxes,
nor the regular periodic service charges (other than a charge paid with respect
to Pay TV) paid by a subscriber to a cable television system will be deemed a
charge to the viewer.
4.5. "SATELLITE FREE TV" means the up-link transmission of the linear
version of a Motion Picture Copy to a satellite and its down-link transmission
to a terrestrial satellite reception dish for the purpose of viewing the Motion
Picture on a viewing device in private living accommodations which is located in
the immediate vicinity of the reception dish without a charge being made to the
viewer for the privilege of viewing the Motion Picture. For purposes of this
definition, neither governmental viewing device assessments nor taxes will be
deemed a charge to the viewer.
4.6. "PAY TV" means all forms of Terrestrial Pay TV, Cable Pay TV,
Pay-Per-View, Video-on-Demand and Satellite Pay TV exploitation of a Motion
Picture.
4.7. "TERRESTRIAL PAY TV" means standard over-the-air broadcast of the
linear version of any Motion Picture Copy by means of encoded Hertzian waves for
reception on a viewing device in private living accommodations by means of a
decoding device where a charge is made: (i) to the viewer for the right to use
the decoding device for viewing any special channel which transmits the Motion
Picture along with other programming; or (ii) to the operator of a hotel, motel,
apartment complex, co-operative, condominium project or similar place located
distant from the place where such broadcast signal originated for the right to
use the decoding device to receive and retransmit the programming on such
channel throughout such place.
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
4.8. "CABLE PAY TV" means transmission or retransmission of the linear
version of a Motion Picture Copy by means of an encoded signal over coaxial or
fiber-optic cable for reception on a viewing device in private living
accommodations by means of a decoding device where a charge is made: (i) to the
viewer for the right to use the decoding device or viewing any special channel
which transmits the Motion Picture along with other programming; or (ii) to the
operator of a hotel, motel, apartment complex, co-operative, condominium
project, or similar place located distant from the place where such broadcast
signal originated for the right to use the decoding device to receive and
retransmit the programming on such channel throughout such place.
4.9. "SATELLITE PAY TV" means the uplink transmission of the linear
version of a Motion Picture Copy by means of an encoded signal to a satellite
and its down-link transmission to a terrestrial satellite reception dish and a
decoding device for the purpose of viewing the Motion Picture on a viewing
device in private living accommodations which is located in the immediate
vicinity of the reception dish and decoding device where a charge is made: (i)
to the viewer for the right to use the decoding device for viewing a special
channel which transmits the Motion Picture along with other programming; or (ii)
to the operator of a hotel, motel, apartment complex, co-operative, condominium
project, or similar place located distant from the place where such broadcast
signal originated for the right to use the decoding device to receive and
retransmit the programming on such channel throughout such place.
5. NEW MEDIA
"NEW MEDIA" means the exploitation of a Motion Picture Copy by means of
a medium not currently used to exhibit Motion Pictures to the general public,
whether now known or hereafter devised, including, without limitation,
transmission or retransmission of a Motion Picture Copy by means of an on-line
computer related connection such as the Internet or other similar means of
transmission; provided, however, that in exploiting the New Media Rights, each
Picture may be exploited only in its complete linear form.
6. USAGE DEFINITIONS
6.1. "AFFILIATED COMPANY" means, with respect to any party to this
Agreement, any Person (including any officer, director, employee or partner of
any Person) owned or controlled by, controlling or under common control with the
party. Ownership directly or indirectly of fifty percent (50%) of one hundred
percent (100%) or more of the voting stock or other voting equity security of a
Person, or in the case of a partnership, fifty percent (50%) or more of the
general partnership interests in such partnership, will in all cases be deemed
control.
6.2. "BROADCAST" means the communication to the public of any form of
Motion Picture Copy by means of wire, cable, wireless diffusion or radio waves
which allows the Motion Picture to be viewed on a viewing device. Broadcast
means the same as telecast or diffusion.
6.3. "CASSETTE" has the same meaning as Videocassette.
6.4. "CD/ROM" means a Motion Picture Copy or any portion thereof
embodied in a read-only-memory compact disc, which is used for viewing the
embodied Motion Picture by means of a personal computer (or similar device).
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
6.5. "CD/I" means a Motion Picture Copy or any portion thereof embodied
in an interactive compact disc (i.e., a compact disc which allows the user to
manipulate or otherwise control the images produced by the compact disc, other
than by means of fast-forward and rewind) which is used for viewing the embodied
Motion Picture by means of a personal computer (or similar device).
6.6. "EXHIBITION" means public performance.
6.7. "INTEREST RATE" means a rate per annum equal to the thirty (30) day
LIBOR rate. For purposes of this Agreement, interest on any payment made
hereunder shall be calculated from the date the payment was actually made until
the date the party who has made such payment receives repayment in full.
6.8. "MOTION PICTURE" means an audiovisual work consisting of a series
of related images which, when shown in succession, impart an impression of
motion, with accompanying sounds, if any.
6.9. "MOTION PICTURE COPY" means the embodiment of a Motion Picture in
any physical form, including film, tape, cassette or disc, in its linear form.
Where a specific medium is limited to exploitation by a specific physical form,
for example, to exploitation of Videograms, then "Motion Picture Copy" with
respect to such medium is limited to such physical form.
6.10. "PAY-PER-VIEW" means transmission or retransmission of a Motion
Picture copy (whether by means of Terrestrial broadcast, Cable transmission or
Satellite transmission) for reception on a viewing device in private living
accommodations by means of a decoding device where a charge is made to the view
the specific Motion Picture being transmitted, where the Motion Picture being
transmitted or retransmitted is scheduled for telecast or for storage in the
decoding device (or such other device as may be provided for such purpose) at a
specified time.
6.11. "REMAKE" means a new Motion Picture based substantially on a prior
Motion Picture which new Motion Picture tells substantially the same story (even
though such new Motion Picture may be set in a different location or time period
than the prior Motion Picture) and contains substantially the same characters
(even though such characters may have different names or characteristics) as the
prior Motion Picture.
6.12. "RIGHTS" means, with respect to any licensed medium, the specific
rights under copyright to do, and to authorize others to do, in accordance with
the agreement of the parties, the following, but only as may be strictly
necessary to exploit the Work in the licensed medium: (i) to make duplicate
copies of the Work; (ii) to make supplemental promotional Works, such as
trailers, posters, and advertising accessories, derived from the original Work
for the sole purpose of exploiting the Xxxxx Rights in the original Work; (iii)
to distribute publicly authorized copies of the Work; (iv) to publicly perform
authorized copies of the Work, to the extent authorized; and (v) to publicly
display authorized copies of the Work, to the extent authorized.
6.13. "SEQUEL" means a new Motion Picture based on a prior Motion
Picture which new Motion Picture contains one (1) or more characters from the
prior Motion Picture and either (i) continues the story line from the prior
Motion Picture, (ii) presents a story line which
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
precedes the story line contained in the prior Motion Picture or (iii) presents
a new story line involving one (1) or more principal characters from the prior
Motion Picture. A Sequel may be in the form of (i) a feature length Motion
Picture, (ii) a Motion Picture intended primarily for broadcast on television or
(iii) a television series.
6.14. "VIDEO-ON-DEMAND" means transmission of a Motion Picture Copy
(whether by means of Terrestrial broadcast, Cable transmission or Satellite
transmission) for reception on a viewing device in private living accommodations
by means of a decoding device where a charge is made to the viewer for the right
to view the specific Motion Picture being transmitted and where the viewer
selects the specific Motion Picture to be telecast and the specific time when
the Motion Picture shall be telecast.
6.15. "VIDEOCASSETTE" means a VHS, Beta, High 8 or Video 8 cassette or
electronic storage device in any authorized format designed to be used in
conjunction with a reproduction apparatus which causes a Motion Picture to be
visible on the screen of a viewing device. A Videocassette does not include any
type of Videodisc.
6.16. "VIDEOGRAM" means any type of Videocassette, Videodisc, CD/ROM or
CD/I, but only to the extent the specific type of electronic storage device and
its format is authorized in the Agreement.
6.17. "VIDEODISC" means any laser or capacitance disc or other form of
mechanical storage device (including, without limitation, digital video discs
and compact discs) designed to be used in conjunction with a reproduction
apparatus which causes a Motion Picture to be visible on a viewing device. A
Videodisc does not include any type of Videocassette.
6.18. "WORK" means any original expression of authorship in the
literary, scientific or artistic domain, whatever may be the mode of form of its
expression.
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
SCHEDULE "B"
DELIVERY SCHEDULE
Delivery of a Picture will consist of (i) making physical delivery of
the indicated materials to such delivery locations as Xxxxx may designate and
(ii) making those of the Essential Delivery Elements (as defined below) to which
Xxxxx is to be given laboratory access (as indicated herein) available by means
of a fully executed Laboratory Access Letter in the form attached hereto as
Exhibit 1. All materials delivered hereunder shall be of first-class technical
quality in accordance with the customary standards of the motion picture
industry and shall be delivered at Xxxxx' expense. Delivery of the Picture shall
be accompanied by a list showing which items are in which containers. The
elements hereunder marked with an asterisk (*) are the items constituting the
"Essential Delivery Elements." Spyglass shall also give Xxxxx laboratory access
by means of a fully executed Laboratory Access Letter in the form attached
hereto as Exhibit 2 to any of the materials listed in this schedule of which
Spyglass has the source materials of any such materials on deposit with a
laboratory or facility.
1. FILM ELEMENTS.
1.1. ANSWER PRINT. Physical delivery of one (1) first class 35mm
composite fully timed print of the Picture (the "Answer Print"), fully titled
and assembled, made from an Interpositive struck from the Original Negative and
the Monaural Optical Negative or the Stereo Optical Negative if the Picture is
to be released in Dolby or Ultra Stereo or in Dolby Spectral Recording, in
synchronization with and conformed to the final edited version of the action
work print of the Picture, in all respects ready and suitable for distribution
and exhibition. The Answer Print's picture and sound quality must conform to the
quality standards for motion pictures made by a major motion picture studios in
Los Angeles, California. The Answer Print must have been made on Xxxxxxx Kodak,
AGFA or Fuji safety photographic raw stock and must correspond to American
Standards Specification 2-22, 36-1947 for cutting and perforation dimensions
from 35mm motion picture positive raw stock. The Answer Print must be delivered
on reels in carrying cases.
1.2. INTERNEGATIVE. Laboratory access to one (1) 35mm fully timed
internegative of the Picture, conforming in all respects to the Answer Print and
the composite check print.
1.3. SOUND TRACK MATERIALS.
1.3.1. MONAURAL SOUND TRACK. Laboratory access to one (1) 35mm original
three-track monaural magnetic sound master. Dolby encoded (the "International
Monaural Master") consisting of separate dialogue, music and sound effects
tracks, fully recorded, equalized and synchronized with the Picture action and
conforming in all respects to the Answer Print.
1.3.2. DOLBY/ULTRA STEREO SOUND TRACK. If the Picture is to be released
in Dolby or Ultra Stereo or in Dolby Spectral Recording, in addition to the
International Monaural Master, laboratory access to one (1) 35mm original
four-track Dolby A, Dolby SR, Ultra Stereo or Dolby Spectral Recording magnetic
sound master consisting of music, effects and surrounds, fully recorded,
equalized and synchronized with the Picture action and conforming to in all
aspects to the Answer Print.
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
1.4. DIGITAL VIDEO CLONE. Laboratory access to one (1) "DCT" Master
Feature from the Interpositive struck from the Original Negative (16:9 - in the
same aspect ratio of the theatrical release-anamorphic) with Dolby or Ultra
Stereo soundtrack if the Picture is to be released in stereo.
1.5. TEXTLESS BACKGROUND. Laboratory access to one (1) 35mm fully timed
textless optical house original negative of the backgrounds which run under the
main, end and narrative titles, conformed to the Original Negative.
1.6. FILM MATERIALS. Laboratory access to any and all prints,
interpositives, sound effects tracks, dialogue tracks, music tracks and other
film materials made by Spyglass in connection with production of the Picture or
any trailers for the Picture (collectively the "Film Materials").
1.7. CONTINUITY. Physical delivery of a detailed, final dialogue and
action continuity of the Picture containing all dialogue, narration and song
vocals (if available), as well as a cut by cut description of the Picture
action, conformed to the Answer Print (the "Continuity"). If the Picture was
recorded in a language other than English, the Continuity shall contain a
literal English translation of the Picture's dialogue and any song lyrics.
2. MUSIC ITEMS.
To the extent any of the following items are required to be delivered
hereunder, such items shall be delivered by means of physical delivery.
2.1. MUSIC CUE SHEETS. One (1) copy of a music cue sheet showing the
particulars of all music contained in the Picture, including, without
limitation, the title of each composition; the names of composers, publishers
and copyright owners; the location in the Picture of each composition, showing
the film footage and running time for each cue, the performing rights society
involved and any other information customarily set forth in music cue sheets.
2.2. MUSIC CONTRACTS/LICENSES/ASSIGNMENTS. If necessary as a result of a
claim having been made or if required by a music collection society, and if
requested by Xxxxx, copies of the following contracts, licenses, license
confirmation letters and assignments, which must convey to Spyglass the right to
use the music, lyrics or recordings, as applicable, in the Picture, in whole or
part, in all media now known or hereafter devised, throughout the universe, in
perpetuity, without payment of any further compensation for the grant of such
rights and shall include the right to use the music, lyrics or recordings, as
applicable, in connection with advertising, promoting and publicizing the
Picture, subject to any restrictions imposed upon Spyglass with respect to such
rights in or out of context of the Picture, subject only to payment of fees to
applicable performing rights societies:
2.2.1. MUSIC AND LYRIC CONTRACTS. Duplicate originals or legible copies
of all contracts covering the acquisition and performance of all music and
lyrics utilized in connection with the Picture.
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
2.2.2. MUSIC LICENSES. A copy of valid licenses paid for by Spyglass for
the full period of copyright for the synchronous recording of all copyrighted
music and recordings in the Picture and the performance thereof in the
Territory.
2.2.3. MUSIC ASSIGNMENTS. If the rights granted to Distributor include
music publishing rights, an assignment from the composer of all original music
written for the Picture to Xxxxx or its designee, duly executed and acknowledged
by said composer.
2.2.4. LICENSE CONFIRMATION LETTERS. If a fully signed music license has
not been delivered with respect to a music composition or recording, then a copy
of each license confirmation letter from Spyglass to the applicable licensor,
confirming the terms and conditions of each music license entered into between
Spyglass and the licensor in connection with the Picture, which terms and
conditions must be in accordance with the requirements of this paragraph 2.2.
2.2.5. MUSIC CONFIRMATION REPORT. A copy of a completed music
confirmation report specifying the status of all license confirmation letters,
music licenses, assignments and agreements in connection with the Picture.
3. DOCUMENTS.
To the extent any of the following items are required to be delivered
hereunder, such items shall be delivered by means of physical delivery:
3.1. FINAL SHOOTING SCRIPT. A copy of the final shooting script of the
Picture
3.2. MPAA MATERIALS.
3.2.1. CERTIFICATE. A certificate evidencing a rating from the Motion
Picture Association of America, Inc. ("MPAA") Code And Rating Administration
which is not more restrictive than that specified in the Agreement, and written
acknowledgement from the MPAA that all of its charges in connection with the
Picture have been paid.
3.2.2. TITLE REGISTRATION. Evidence that the Picture's title has been
registered under the rules of the MPAA Title Registration Bureau and that,
pursuant to such registration procedures, Spyglass has the right to use the
Picture's title.
3.3. DUBBING RESTRICTIONS. A statement of any restrictions on dubbing
the voice of any performer, including, without limitation, dubbing dialogue in a
language other than the language in which the Picture was recorded.
3.4. CHAIN-OF-TITLE DOCUMENTS. If requested, duplicate originals or
legible copies of all instruments or contracts covering the acquisition of
literary, dramatic, music and other works and materials of whatever nature upon
which the Picture may be based or used in the production of the Picture,
including, without limitation, copyright and title search reports, and publisher
and individual releases.
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
3.5. CONTRACTS. If requested as a result of a claim having been made,
duplicate originals or legible copies of all agreements, licenses, waivers, or
other documents relating to production of the Picture (provided, however, that
Xxxxx may request copies of documents other than those listed in paragraph
3.5.1, below, only in the event such documents are related to a claim which has
been asserted against Xxxxx, any of its Affiliated Companies or any of its
subdistributors or licensees), including, without limitation:
3.5.1. SERVICE CONTRACTS. Those covering the rendition of services by
writers, directors and principal cast members rendering any services in
connection with the Picture;
3.5.2. PHOTOGRAPHIC RELEASES. Releases signed by all persons appearing
recognizably in the Picture, the Trailer or any advertising materials, who may
not have provided such a release in any other employment agreement;
3.5.3. FEATURETTE CLEARANCES. Those covering the right to use an
individual's name and likeness in featurette motion pictures dealing with the
Picture;
3.5.4. RENTAL CONTRACTS. Those covering location rentals, prop
clearances and equipment rentals; and
3.5.5. PRODUCTION CONTRACTS. Those covering the rendition of services by
production personnel.
3.6. CERTIFICATE OF ORIGIN. A certificate of origin of the Picture, duly
notarized and signed by Spyglass, specifying the country of origin of the
Picture.
3.7. E&O CERTIFICATE. An Errors & Omission Certificate naming Xxxxx and
its sublicensees as additional insureds.
4. CREDIT ITEMS.
To the extent any of the following items are required to be delivered
hereunder, such items shall be delivered by means of physical delivery:
4.1. CREDIT STATEMENT. A statement of credits applicable to the Picture
(the "Credit Statement") setting forth the names of and Spyglass's credit
obligations toward all persons to whom Spyglass is contractually obligated to
accord credit in connection with the Picture on the screen, in any paid
advertising, in paperback books, on sound recordings and on videocassette
packages. The Credit Statement shall include verification of the writing credits
set forth therein by the appropriate writers guild and a statement of any
restrictions regarding the use of the name or likeness of any person rendering
services in connection with the Picture.
4.2. TITLES. Two (2) typewritten lists of the main and end title credits
of the Picture.
4.3. PAID ADVERTISING REQUIREMENTS. Two (2) copies of the paid
advertising requirements for the Picture, including a top sheet which indicates
the exact placement, wording and
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
size of each paid advertising credit, and a summary of all contractual
requirements with respect to paid advertising.
5. PUBLICITY AND ADVERTISING MATERIALS.
To the extent any of the following items are required to be delivered
hereunder, such items shall be delivered by means of physical delivery:
5.1. STILLS. Contact proof sheets of a selection of black and white
still photographs (the "Black and White Stills") taken by the unit photographer
(the "Photographer") and either the original negative of all Black and White
Stills or access to them; and a comprehensive selection of fifty (50) different
original color transparencies taken by the Photographer (the "Color
Transparencies") and access to all original Color Transparencies, but in no
event less than the number of selections available to the U.S. distributor. Each
Black and White Still and Color Transparency shall be accompanied by a notation
identifying the persons and events depicted therein and shall be suitable for
reproduction for advertising and publicity purposes.
5.2. STORIES/ARTICLES. Any stories including but not limited to the
production notes written by the Unit Publicist on various aspects of events
during production of the Picture, which are deemed by the Unit Publicist to be
suitable for column placement and feature stories, if any, involving the
principal performers, supporting performers, writers, individual producers,
director, production personnel, locations and special interest material that the
Unit Publicist has reason to believe will be of use in marketing the Picture. A
sampling of available published articles and reviews of the Picture.
5.3. SYNOPSIS. A brief synopsis in the English language (approximately
one (1) typewritten page in length) of the story of the Picture.
5.4. ADDITIONAL PUBLICITY MATERIALS. Two (2) copies of the textless
poster artwork, two (2) key art transparencies or two (2) copies of the key art
on CD, two (2) electronic press kits (on Betacam SP PAL) (if available), ten
(10) one-sheet original posters, two (2) copies of at least three (3) TV spots
(on Betacam SP PAL), but in no event less spots that the number of available to
the U.S. distributor.
6. TRAILER PRINT MATERIALS.
Physical delivery of one (1) combined continuity and master English
sporting/subtitle list of the trailer. Laboratory access to the following
trailer print materials: 35mm trailer internegative, interpositve of neutral
textless background of the trailer and 35mm trailer M&E track.
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
SCHEDULE "C"
DELIVERY ARBITRATION PROVISIONS
Xxxxx and Spyglass hereby agree that in the event any dispute arises
between any of the parties hereto as to whether Delivery of any of the Delivery
Materials has been made in accordance with the requirements of paragraph 11 of
the Agreement to which this Schedule "C" is attached (the "Agreement"), such
dispute shall be submitted to binding arbitration in accordance with the
provisions hereof, which arbitration shall result in a finding that Delivery
either has or has not been effected. In connection with any such arbitration,
the following procedure shall apply:
1. SPYGLASS'S ARBITRATION NOTICE.
If Xxxxx objects to the sufficiency of any materials Delivered by
Spyglass by written notice as provided in paragraph 11.2 of the Agreement (an
"Objection Notice") and Spyglass disputes the validity of Xxxxx' objection,
then, prior to the expiration of the thirty (30) day cure period referred to in
paragraph 11.2 of the Agreement, Spyglass shall give Xxxxx notice (an
"Arbitration Notice") that Delivery of the materials referred to in Xxxxx'
Objection Notice has been effected notwithstanding the Objection Notice and that
Spyglass has elected to submit the issue of whether Delivery of such materials
has been effected (and such issue only) for expedited arbitration in accordance
with the procedures set forth in paragraph 3, below.
2. XXXXX' ARBITRATION NOTICE
If Spyglass purports to cure a Delivery defect which is the subject of
an Objection Notice, Xxxxx shall have ten (10) days after is receipt of
Spyglass' notice that is has cured such defect within which to verify that
delivery of the materials in question has been effected in accordance with the
specifications of the Objection Notice and to notify Spyglass that either
Delivery of such materials has been effected or that Delivery of such materials
has not been effected (an "Arbitration Notice") and Xxxxx has elected to submit
the issue of whether Delivery of such materials has been effected (and such
issue only) for expedited arbitration in accordance with the procedures set
forth in paragraph 3 below. If Xxxxx fails to give either of the notices
described above, then Delivery of such materials shall be deemed to have been
effected.
3. ARBITRATION PROCEDURE.
In the event that either Spyglass or Xxxxx elect to submit the issue of
whether Delivery of some or all of the Delivery Materials has been effected to
expedited binding arbitration pursuant to this paragraph 3, the following
procedure shall apply:
3.1. The arbitration shall be submitted to one (1) arbitrator (the
"Arbitrator") who shall be selected as follows: Xxxxx and Spyglass shall each
appoint one (1) arbitrator within five (5) business days after the issuance of
an Arbitration Notice, and those arbitrators shall then appoint the Arbitrator
within ten (10) business days after the issuance of an Arbitration Notice and
shall concurrently give written notice of such appointment to Xxxxx and
Spyglass; provided, however, that if either Xxxxx or Spyglass fails to appoint
its respective arbitrator within the time allowed, then the
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
arbitrator appointed by the other party shall have full authority to act as the
sole Arbitrator of the arbitration.
3.2. The arbitration shall commence at a location in Los Angeles,
California, to be chosen by the Arbitrator within three (3) days after the date
of appointment of the Arbitrator. The arbitration shall continue on each
consecutive business day until finally concluded, unless continued by the
Arbitrator for good cause shown, but in no event shall the arbitration continue
for more than five (5) days from the commencement thereof.
3.3. The parties and their representatives shall make available to the
Arbitrator all relevant documents and materials. During the three (3) day period
prior to the commencement of the arbitration, the parties shall participate in
an exchange of information. In this regard, the parties to the arbitration shall
be entitled to reasonable discovery for the purposes of such arbitration,
including, without limitation, document production and the taking of
depositions. If any such discovery is not voluntarily conducted by the parties,
the party desiring such discovery may apply to the Arbitrator at the outset of
the arbitration for particular discovery requests. The Arbitrator may deny only
such discovery as is unreasonable or is intended to unduly delay the prompt
conclusion of the arbitration. In that regard, the parties agree that, upon such
application, the Arbitrator shall have the authority to order any non-complying
party to produce any relevant documents or to make any of its employees or
representatives available for deposition. The Arbitrator shall also have the
authority to impose appropriate sanctions upon any party who fails to comply
with a discovery order issued by the Arbitrator. Such sanctions may include
entry of a final arbitration award against a non-complying party.
3.4. The arbitration must result in a finding that Delivery of the
materials in question either has been effected or that Delivery of such
materials has not been effected and the Arbitrator shall promptly notify Xxxxx
and Spyglass in writing of the finding made. The Arbitrator shall issue a final
award in accordance with the provisions hereof no later than one (1) day after
the conclusion of the arbitration. If the Arbitrator finds that Delivery of the
materials in question has not been effected, in addition to any rights Xxxxx may
have pursuant to paragraph 11.2 of the Agreement, if Xxxxx does not terminate
the Agreement pursuant to paragraph 11.2, Spyglass shall promptly cure the
applicable delivery defects to the extent that such defects are capable of being
cured.
4. COSTS AND EXPENSES OF ARBITRATION.
The Arbitrator's final award shall provide for payment by the losing
party of the Arbitrator's and any court reporter's fees, as well as the outside
attorneys' fees and costs incurred by the prevailing party in the arbitration.
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
SCHEDULE "D"
APPROVED SUBDISTRIBUTORS
Constantin, Kinowelt, Concorde, VCL Medien (provided, however, that VCL
is not approved as a theatrical subdistributor), all U.S. majors.
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
SCHEDULE "E-1"
LAB ACCESS LETTER
ESSENTIAL DELIVERY ITEMS
Date:
----------
Technicolor S.p.A.
Xxx Xxxxxxxxx, 0000
00000, Xxxx
Re: "___________" (the "Picture")
Gentlemen:
You acknowledge that there are now on deposit with you the following
preprint materials for the above-entitled motion picture (collectively the
"Materials"):
o One (1) 35mm internegative of the feature of the Picture;
o One (1) 35mm internegative of the textless background of the main and
end titles of the Picture (not applicable if main and end titles are over
black); and,
o One (1) 35mm optical soundtrack negative of the English language
version of the feature of the Picture.
You are hereby instructed and directed that all Materials in your
possession shall be held by you in the name, and for the account of, Spyglass
Entertainment Group, L.P. ("Spyglass"), subject to paragraph 2 below. You are
hereby advised Spyglass has granted certain exclusive rights to distribute and
exhibit the Picture to Xxxxx Media GmbH & Co. KgaA ("Xxxxx") or its assignees.
Accordingly, you are hereby irrevocably authorized and instructed to honor all
orders of Xxxxx (its successors, assigns, and sub-licensees) upon the following
terms:
o All laboratory services and materials ordered by either Spyglass or
Xxxxx shall be at the sole expense of the party ordering the same.
o You will not assert against Spyglass or Xxxxx any lien at common law
or under any applicable statute against any Materials relating to the Picture by
reason of any unpaid charges incurred by the other, and you will not refuse to
honor any orders of either party because of unpaid charges incurred by the other
party.
o The Materials mentioned above shall not be removed from your
Laboratory without the prior written consent of Spyglass and Xxxxx, which shall
not be unreasonably withheld
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
provided that Spyglass gives reasonable advance written notice to Xxxxx, and
provided that Spyglass delivers to Xxxxx a new lab access letter, signed by the
new lab, on substantially the same terms as contained herein and that such
access and removal shall not prejudice, hinder or cause a detriment to the
exercise of Xxxxx'x rights in the Picture.
The instructions contained herein are irrevocable without the written
consent of, and may not be altered or modified except in writing signed by,
Spyglass and Xxxxx.
Please confirm your agreement to the foregoing by signing below where indicated.
Very truly yours,
SPYGLASS ENTERTAINMENT GROUP, LP
By:
---------------------------------
Its:
--------------------------------
AGREED TO AND ACCEPTED BY:
TECHNICOLOR S.p.A.
By:
---------------------------------
Its:
--------------------------------
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
SCHEDULE "E-2"
LABORATORY ACCESS LETTER
FOR SPYGLASS MOTION PICTURES
Date:
-----------------
Technicolor, Inc.
0000 Xxxxxxxxxx Xxxx.
Xxxxx Xxxxxxxxx, XX 00000
Re: LABORATORY ACCESS LETTER FOR SPYGLASS MOTION PICTURES
Ladies and Gentlemen:
1. PICTURES: With respect to the Theatrical Motion Picture(s) listed on
Schedule 1 attached hereto, as the same may be amended, modified or supplemented
from time to time by a supplement in the form of Annex 1 attached hereto (each,
a "SUPPLEMENT") (collectively, the "PICTURES" and each individually, a
"PICTURE"):
(a) The undersigned Spyglass Entertainment L.P. ("SPYGLASS") has granted
to Xxxxx Media GmbH & Co. KgaA ("XXXXX MEDIA") and its successors, assigns and
licensees, the right to distribute and exhibit the Pictures pursuant to a
distribution agreement between Spyglass and Xxxxx Media ("XXXXX DISTRIBUTION
AGREEMENT").
Pursuant to the Xxxxx Distribution Agreement, Spyglass is hereby
instructing you to grant access to the "MATERIALS" (as defined below an
in accordance with the provisions set forth below) for the Pictures to
Xxxxx Media.
2. MATERIALS: Technicolor North Hollywood ("LABORATORY") hereby
acknowledges that it has received the materials set forth on Schedule 1 attached
hereto or, with respect to any Picture set forth on a Supplement, the materials
set forth on such Supplement, of and pertaining to the applicable Picture and
any trailers thereof ("TRAILERS" for the Pictures) (the "MATERIALS" for the
Pictures). Laboratory further acknowledges that the Materials for the Pictures
which are currently in Laboratory's possession are of standard commercial
quality and suitable for making duplications materials from which commercially
acceptable release prints of the Pictures and Trailers therefor, and dubbed and
subtitled versions thereof, can be manufactured. Such materials set forth on
Schedule 1 shall remain in the control of Laboratory and shall not be removed
from Laboratory's actual possession and control without the express written
consent of Xxxxx Media, except to a facility which enters into and delivers to
Xxxxx Media a Laboratory Access Letter in favor of Xxxxx substantially in the
form hereof. All other Materials shall at all times be in Laboratory's Access to
under Laboratory's constructive control (i.e., on loan to third parties with
obligation to return the same upon completion of any interim work), and if any
of such other Materials leave Laboratory's possession, Laboratory shall retain
the power and right to cause any person having possession thereof to return such
Materials to Laboratory within a reasonable period following Xxxxx Media's
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
request, in order that Laboratory may fulfill orders pursuant to Paragraph 3.
below. Laboratory shall initially hold the Materials for the Pictures under its
normal terms of business at Laboratory's premises in North Hollywood,
California.
3. ORDERS:
(a) XXXXX MEDIA ORDERS: This will authorize, direct and instruct
Laboratory to fill all orders from Xxxxx Media and its successors, assigns and
licensees, for positive prints, internegatives duplicating material or other
material for the Pictures and Trailers therefore in any gauge or format, and any
replacements thereof, and any other of the party ordering the same. All
materials or services which Laboratory may supply or furnish to or on order of
Xxxxx Medial or its successors, assigns and licensees and Spyglass shall not be
concerned with or be responsible for any credit arrangements which Laboratory
may make with Xxxxx Media or its successors, assigns and licensees. Moreover,
Laboratory agrees not to look and will not look to Spyglass nor assert any claim
or lien, statutory or otherwise, against Spyglass or its respective property or
any material pertaining to any Picture by reason of any obligation of Xxxxx
Media or its successors, assigns and licensees or any work, labor, service or
material which Laboratory may perform or furnish to Xxxxx Media or its
successors, assigns and licensees.
4. IRREVOCABILITY: The instructions, authorizations and directions
herein contained in favor of Xxxxx Media are being relied on by Xxxxx Media and
are coupled with an interest and may not be revoked, rescinded or in any way
modified with respect to the Pictures without the written consent of Xxxxx
Media.
5. LABORATORY ACKNOWLEDGMENT: By signing in the space provided below,
Laboratory agrees that it will (a) fill all orders from Xxxxx Media in
accordance with the authority granted herein and (b) be bound by the foregoing
instructions and directions.
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
This Laboratory Access Letter may be signed in any number of
counterparts, each of which shall constitute an original and all of which taken
together shall constitute one and the same instrument.
By signing in the spaces provided below, the signatories agree to all of
the terms and conditions herein set forth.
Very truly yours,
SPYGLASS ENTERTAINMENT L.P.
By
--------------------------------------
Its Authorized Representative
ACCEPTED AND AGREED TO:
TECHNICOLOR LABORATORIES ("Laboratory")
By
--------------------------------------
Its Authorized Representative
XXXXX MEDIA GmbH & Co. KGAA
By
--------------------------------------
Its Authorized Representative
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
ANNEX 1
SUPPLEMENT TO LABORATORY ACCESS LETTER
Laboratory: TECHNICOLOR LABORATORIES
TITLE OF PICTURE: "[PICTURE]"
PICTURE ITEMS
Original Picture Negative (complete with credits and main, narrative
(if any), end and all descriptive titles)
Answer Print
Color Interpositive Protection Master
Duplicating Negatives
YCM Silver Separation Masters (if created)
Textless Backgrounds
TV Format Titles
SOUND ITEMS
________Optical Soundtrack Negative
________Sound and Music Masters (Printmasters, MO discs, stems)
TRAILER MATERIALS
Such trailer materials as Spyglass has or will have under its control,
whether completed trailer materials or trailer production materials.
ACKNOWLEDGED BY:
TECHNICOLOR LABORATORIES
("Laboratory")
By
---------------------------
Title
Date:
---------------------------
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*** Terms represented by this symbol are considered confidential. These
confidential terms have been omitted pursuant to a Confidential Treatment
Request filed with the Securities and Exchange Commission ("SEC") and have been
filed separately with the SEC.
