RIGHT OF FIRST REFUSAL AGREEMENT
Exhibit 10.1
EXECUTION VERSION
This Right of First Refusal Agreement (the “Agreement”) is dated as of August 29,
2006, by and among Lions Gate Entertainment Corp., a corporation incorporated under the laws of
British Columbia (the “Company”), Sobini Films, a California corporation, and Xxxx Xxxx, an
individual (“Amin”).
RECITALS
WHEREAS, the Company and Amin were party to that certain letter agreement dated as of June 6,
2000 (as amended, the “Prior Agreement”), pursuant to which Amin served as Vice Chairman of
the Company;
WHEREAS, the Prior Agreement contained certain right of first refusal provisions with respect
to distribution rights in motion pictures produced by Amin;
WHEREAS, effective April 13, 2006, the “Term” under the Prior Agreement was completed;
WHEREAS, Amin is the sole equity owner of Sobini; and
WHEREAS, the Company, Sobini and Amin desire to continue a right of first refusal arrangement
between the Company and Sobini in accordance with the terms set forth herein;
NOW THEREFORE, in consideration of the mutual covenants and agreements contained herein, the
parties hereto agree as follows:
AGREEMENT
1. Right of First Refusal.
a) The Company shall have a right of first refusal (a “Right of First Refusal”) with
respect to worldwide distribution rights in any motion picture produced by Sobini (other than as a
producer for hire) alone or in conjunction with others to the extent that Sobini controls the
licensing of such distribution rights (a “Qualifying Picture”) during the term of this
Agreement (as set forth in Section 2 below); provided, however, that such
Right of First Refusal shall not apply to any rights to distribute a Qualifying Picture that has
been licensed, transferred or otherwise disposed of prior to the time that Sobini controls the
licensing of such distribution rights unless at such later time Sobini has obtained the control of
the Subject Distribution Rights (as hereinafter defined). Such a Right of First Refusal shall
apply to all rights to distribute the Qualifying Picture in the United States (“U.S.
Rights”) and to all rights to distribute the Qualifying Picture outside of the United States
(“Foreign Rights”). The rights as to which the Company has the Right of First Refusal set
forth in this Section 1 shall be referred to herein as “Subject Distribution
Rights.”
b) Sobini shall notify the Company in writing of any Qualifying Picture (a “First Refusal
Notice”) setting forth a description of the proposed director, lead actor and amount of the
budget for the Qualifying Picture (the “Material Elements”). The Company shall have until
5:00 p.m. (PT) on the eighth business day following provision of a First Refusal Notice by Sobini
(the “Exercise Period”) to notify Sobini in writing (an “Exercise Notice”) that the
Company is exercising its right to negotiate in good faith to acquire the U.S. Rights and/or the
Foreign Rights.
If the Company so exercises its Right of First Refusal with respect to the U.S. Rights and/or
with respect to the Foreign Rights, the Company shall thereon be obligated to negotiate with Sobini
in good faith for a period of ten business days (the “Negotiation Period”).
c) If the parties fail to reach an agreement (or are deemed to fail to reach an agreement)
prior to the expiration of the Negotiation Period with respect to U.S. Rights and/or Foreign
Rights, subject to and in accordance with subsections (e) and (f) below, Sobini may
accept any third party offer to acquire U.S. Rights and/or Foreign Rights on monetary terms and/or
conditions materially more favorable to Sobini than the monetary terms and conditions offered by
the Company to Sobini during the Negotiation Period and/or may sell or license Foreign Rights on a
territory-by-territory basis without any further obligation to the Company.
d) The Company’s failure to provide an Exercise Notice prior to the expiration of the Exercise
Period shall be deemed an election by the Company to not exercise its Right of First Refusal to
acquire any of the Subject Distribution Rights. In the event the Company fails to provide an
Exercise Notice within the applicable Exercise Period or fails to negotiate with Sobini during the
appropriate Negotiation Period, Sobini shall have the right to dispose of the Subject Distribution
Rights with respect to a Qualifying Picture without any further obligation to the Company.
e) Subject to subsection (f), if at any time there is a substantial change in the
Material Elements pertaining to a Qualifying Picture, Sobini shall within ten business days
following such change provide a First Refusal Notice to the Company describing such change of
Material Elements. The Exercise Period, the Negotiation Period and the mechanics for the Company’s
exercise or deemed election not to exercise its rights under any such First Refusal Notice shall be
the same as set forth in subsection (b) above. For purposes of this Agreement, a
“substantial change” in the Material Elements pertaining to a Qualifying Picture shall mean (i) any
change in the proposed director or lead actor or (ii) a decrease of more than 10% in amount of the
proposed budget.
f) Notwithstanding anything to the contrary in this Agreement, if Sobini validly enters into
an agreement with a third party regarding the U.S. Rights or the Foreign Rights in a Qualifying
Picture, and thereafter there is a substantial change in Material Elements pertaining to such
Qualifying Picture, and Sobini has therefore complied with its first refusal obligations as set
forth herein, the Company’s Right of First Refusal shall not apply to such Qualifying Picture. By
way of clarification, in such event, Sobini would, among other things, not be require to provide a
subsequent First Refusal Notice to the Company with respect to a Qualifying Picture, even if the
Material Elements of such Qualifying Picture were to change substantially subsequent to the time
such agreement is entered into.
2. Term. This Agreement shall be deemed effective as of, and the term shall commence
on, April 14, 2006, and be subject to an indefinite, rolling 12-month term until terminated in
accordance with Section 4 hereof.
3. Compensation. During the term of this Agreement, in consideration for the
provisions of Section 1 hereof, the Company shall pay to Sobini the amount of $250,000 per
year (the “Advance”). The Advance shall be due and payable monthly in advance in equal
installments. If the Agreement is terminated other than at the end of an Agreement year, the
Advance owed for the partial year shall be a prorated amount of the full Advance for such year.
The Company shall be entitled to recoup the Advance in the form of a production fee payable out of
the budget of two Qualifying Pictures annually that the Company chooses to distribute
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hereunder, such production fee to be equal to $90,000 per Qualifying Picture (the
“Production Fee”). If the Company distributes less than two Qualifying Pictures during a
year of the Agreement, the Company shall be entitled to increase the number of Qualifying Pictures
for which it shall receive the Production Fee in any subsequent year, such that the aggregate
amount of Production Fees paid pursuant to this Agreement equals the aggregate amount of Advances
paid pursuant to this Agreement, but only so long as the Agreement has not been terminated and has
not expired.
4. Termination. This Agreement may be terminated by either the Company or Sobini at
any time upon 12 months’ written notice. Subject to the Company’s obligation to pay Sobini a
prorated portion of the annual Advance as set forth in Section 3 hereof, effective as of
the termination date, this Agreement shall be of no further force and effect, and none of the
Company, Sobini nor Amin shall have any further obligations thereunder.
5. No Employee Status. The parties acknowledge that Amin was previously an employee
of the Company, but that such employment relationship has terminated. The Company and Amin agree
that nothing contained in this Agreement shall be construed to create an employment relationship
between the Company and Amin.
6. Non-Sobini Pictures. The parties acknowledge that it is intended that the right of
first refusal provisions contained herein apply to all motion pictures produced by Sobini and Amin.
It is expected that Amin will not directly or indirectly (through an owned and/or controlled
entity) produce any motion pictures during the term of this Agreement except motion pictures
produced by Sobini. To the extent Amin does produce any motion pictures outside of Sobini, either
directly or through an entity he owns and/or controls, then any such motion picture shall be deemed
to be a “Qualifying Picture” under this Agreement and all provisions of this Agreement shall apply
to such motion picture.
7. Miscellaneous.
a) Notices. All notices and other communications hereunder shall be in writing and
shall be given by hand delivery to the other party or by registered or certified mail, return
receipt requested, postage prepaid, or by a nationally recognized overnight courier addressed as
follows:
If to Sobini or to Amin:
Xxxx Xxxx
c/o Sobini Films
0000 Xxxxxxxx Xxx., Xxxxx 000X
Xxxxx Xxxxxx, XX 00000
c/o Sobini Films
0000 Xxxxxxxx Xxx., Xxxxx 000X
Xxxxx Xxxxxx, XX 00000
With a copy to:
Xxxx Xxxxxxx LLP
Attn: Xxxxx X. Xxxxxx
1999 Ave. of the Stars, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Tel: (000) 000-0000
Attn: Xxxxx X. Xxxxxx
1999 Ave. of the Stars, Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Tel: (000) 000-0000
If to the Company:
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Lions Gate Entertainment Corp.
0000 Xxxxxxxx Xxx., Xxx. 000
Xxxxx Xxxxxx, XX 00000
Attention: Xxxxx Xxxxx
0000 Xxxxxxxx Xxx., Xxx. 000
Xxxxx Xxxxxx, XX 00000
Attention: Xxxxx Xxxxx
with a copy to:
O’Melveny & Xxxxx LLP
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx Xxxxxx
0000 Xxxxxx xx xxx Xxxxx, Xxxxx 000
Xxx Xxxxxxx, XX 00000-0000
Attention: Xxxxxxx Xxxxxx
or to such other address as either party shall have furnished to the other in writing in accordance
herewith. Notice and communications shall be effective when actually received by the addressee.
b) Governing Law/Arbitration. This Agreement shall be governed and construed in
accordance with the laws of the State of California applicable to contracts entered into and fully
performed in California. Any dispute or claim arising out of or relating to this Agreement shall
be submitted to binding arbitration to be held in Los Angeles, California. The prevailing party as
to the material issues in any such dispute shall be entitled to reimbursement from the
non-prevailing party for his or its reasonable outside attorneys fees and expenses (including,
without limitation, arbitration expenses) incurred by the prevailing party in connection with such
dispute; provided, however, that Amin’s and Sobini’s total collective obligation to
provide such reimbursement to the Company shall be limited to $25,000.
c) No Injunctive Relief. The sole and exclusive remedy for any breach of this
Agreement shall be limited to an action for damages, and under no circumstances shall either party
hereto be entitled to equitable relief or to restrain or enjoin the distribution of any motion
picture hereunder.
d) Amendments. This Agreement may be amended or modified only by a written instrument
executed by each party hereto.
e) Titles and Headings. Paragraph or other headings contained herein are for
convenience of reference only and shall not affect in any way the meaning or interpretation of any
of the terms or provisions hereof.
f) Entire Agreement. This Agreement constitutes the entire agreement among the
parties with respect to the subject matter hereof and supersedes all prior agreements, negotiations
and understandings of the parties with respect to the subject matter hereof, including but not
limited to the right of first refusal provisions in the Prior Agreement.
g) Successors and Assigns. This Agreement is binding upon the parties hereto and
their respective successors, permitted assigns, heirs and personal representatives. Except as
specifically set forth herein, neither of the parties may assign the rights and duties of this
Agreement or any interest therein, by operation of law or otherwise, without the prior written
consent of the other party; provided, however, that without such consent the
Company may and shall assign this Agreement to and provide for the assumption thereof by any
successor to all or substantially all of its assets and business by merger, consolidation or
transfer of assets.
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h) Waiver. The failure of either party at any time or times to require performance of
any provision hereof shall in no manner affect the right of such party at a later time to enforce
the same. No waiver by either party of the breach of any term or covenant contained in this
Agreement, whether by conduct or otherwise, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing waiver of any such breach, or a waiver of the breach of any
other term or covenant contained in this Agreement.
i) Mutual Drafting. Each of the parties hereto have been represented by counsel in
the negotiation and drafting of this Agreement. Accordingly, no inference as to the meaning or
interpretation of any clause or provision of this Agreement shall be made on the basis of which
party was the “drafter” of such clause or provision.
j) Counterparts. This Agreement, and any document or instrument entered into, given
or made pursuant to this Agreement or authorized hereby, and any amendment or supplement hereto or
thereto may be executed in two or more counterparts, and by each party on a separate counterpart,
each of which, when executed and delivered, shall be an original and all of which together shall
constitute one instrument, with the same force and effect as though all signatures appeared on a
single document.
k) Severability. In construing this Agreement, if any portion of this Agreement shall
be found to be invalid or unenforceable, the remaining terms and provisions of this Agreement shall
be given effect to the maximum extent permitted without considering the void, invalid or
unenforceable provision.
[Signatures Appear on Following Page]
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EXECUTION VERSION
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date first set
forth above.
LIONS GATE ENTERTAINMENT CORP. |
|||||
| By: | /s/ Xxxxx Xxxxx | ||||
| Name: Xxxxx Xxxxx | |||||
| Title: General Counsel & EVP – Corporate Operations | |||||
SOBINI FILMS |
|||||
| By: | /s/ Xxxx Xxxxxxxxxxxx | ||||
| Name: Xxxx Xxxxxxxxxxxx | |||||
| Title: Atty | |||||
| XXXX XXXX |
|||||
| By: | /s/ Xxxx Xxxx | ||||
| Name: Xxxx Xxxx | |||||
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