Exhibit 10.33
FILM MARKETING AND DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of the 25th day of June, 2002, among First
Look Media, Inc., a Delaware corporation ("First Look"), Seven Hills Pictures,
LLC, a Connecticut limited liability company ("Seven Hills") and First
Look/Seven Hills, LLC, a Delaware limited liability company (the "F/SLLC"):
RECITALS:
A. First Look and Seven Hills have entered into certain agreements, including a
Securities Purchase Agreement dated as of May 20, 2002 ("Securities Purchase
Agreement"), and have formed F/SLLC, pursuant to a Limited Liability Company
Agreement (the "F/SLLC Agreement"), dated as of the date of this Agreement.
B. The purpose of F/SLLC, as set forth in the F/SLLC Agreement, and as set forth
in more detail in this Agreement, is (i) the establishment of a "print and ad"
fund (i.e., a fund covering United States marketing and distribution costs as to
theatrical release of films to be designated by the parties) and (ii) the United
States theatrical marketing and distribution of such designated films in
accordance with this Agreement.
C. This Agreement shall govern certain marketing and distribution activities and
the expenditure of funds for distribution costs and expenses in connection
therewith for the films made subject to this Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the promises and mutual covenants
and agreements hereinafter contained, First Look, Seven Hills and F/SLLC hereby
agree as follows:
1. Definitions. For purposes of this Agreement, the definitions set forth on
Exhibit A attached hereto and following definitions will apply:
(a) "Picture" will mean a new and original feature length motion
picture having an MPAA rating no more restrictive than an "R" rating, in 35 mm
color or black and white, with a running time of not less than 80 or more than
140 minutes, in customary aspect ratio and produced with the intention that such
Picture be released for exhibition in theaters in the United States.
(b) "Designated Picture" means a Picture produced, acquired, owned
and/or exclusively controlled for U.S. theatrical distribution by either First
Look or Seven Hills and designated by written notice from the party to this
Agreement which controls such Picture to the other parties to this Agreement as
a Picture to be distributed in the United States under this Agreement. "Seven
Hills Designated Picture" means a Picture so designated by Seven Hills. "First
Look Designated Picture" means a Picture so designated by First Look. A Picture
not so designated shall not be deemed a Designated Picture.
(c) "Designated Picture Disbursement Account" means, as to each
Designated Picture, a separate bank account of F/SLLC into which the funds for
disbursement of the Theatrical Distribution Costs (as defined in Exhibit A
attached hereto) relating to such Designated Picture shall be deposited and from
which account said funds shall be expended as to distribution of the subject
Designated Picture.
(d) "Designated Picture Collection Account" means, as to each
Designated Picture, a separate bank account of F/SLLC into which all collected
revenue from theatrical distribution in the United States of the subject
Designated Picture shall be deposited.
(e) "Designating Party" means, as between Seven Hills and First Look,
with respect to a particular Designated Picture, whichever party designated such
Designated Picture hereunder.
(f) "Authorized Signatory (or Signatories)" shall mean, as to each
Designated Picture Disbursement Account, the signatory person or signatory
persons representing the Designating Party that is authorized under the terms of
this Agreement to draw funds for payment of Theatrical Distribution Costs for
the subject Designated Picture.
(g) "Joint Signatories" means the signatories representing First Look
and Seven Hills, respectively, that are jointly authorized to draw funds from
the Designated Picture Collection Accounts in accordance with this Agreement.
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2. Funding and Designation of Pictures.
2.1 Funding. Upon the Closing (as defined in Section 1.3 of the
Securities Purchase Agreement), Seven Hills and First Look shall each deposit
into a single bank account of F/SLLC (the "LLC Funding Account") the sum of $2
million, resulting in an aggregate deposit of $4 million (the "Fund"),
representing the capital contribution to F/SLLC by First Look and Seven Hills in
accordance with Section 4.1 of the F/SLLC Agreement. Withdrawals from the LLC
Funding Account shall be made only in accordance with this Agreement and only
upon joint signature of representative(s) of each of First Look and Seven Hills
until such time as a Seven Hills Designated Picture or a First Look Designated
Picture is designated hereunder, at which time said funds shall be deposited in
the applicable Designated Picture Disbursement Account, which will be controlled
by the Designating Party as to the Designated Picture and subject to draw by the
Designating Party in accordance with this Agreement through the signature of an
Authorized Signatory of the Designating Party. Wherever feasible, funds in the
LLC Funding Account, Designated Picture Disbursement Accounts and Designated
Picture Collection Accounts shall be held in money market accounts earning
interest at prevailing money market interest rates.
2.2 Designation of Pictures. The Designated Pictures will be designated
alternatively by Seven Hills and First Look. The Designating Party shall be
entitled to use up to the entire $4 million balance of the Fund for the U.S.
marketing and theatrical distribution of its Designated Picture, provided that a
Letter of Credit is issued in a timely manner and as described in Section 3.3.
Seven Hills shall have the right to designate the initial Designated Picture for
initial theatrical release in the United States under this Agreement by a date
within six (6) months after the Closing ("Initial Seven Hills Designation
Date"), and shall cause such Designated Picture's U.S. theatrical release by a
date not later than 12 months after the Closing ("Initial Seven Hills Release
Date"). The Initial Seven Hills Designation Date and Initial Seven Hills Release
Date may be extended for up to three (3) months by reason of a Force Majeure
Event (as defined in Section 17).
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2.3 Designation and Release of Subsequent Pictures. After the first to
occur of (i) the initial theatrical release of the Initial Seven Hills
Designated Picture and (ii) the Initial Seven Hills Release Date (as may be
extended under Section 2.2), First Look shall have the right to designate its
initial Designated Picture not later than six (6) months after the Initial Seven
Hills Release Date, with U.S. theatrical distribution to commence not later than
eight (8) months after the Initial Seven Hills Release Date. The foregoing
procedure shall then alternate between Seven Hills and First Look as to
designation date and release date of subsequent Designated Pictures in
accordance with the time periods applicable to the initial First Look Designated
Picture. Notwithstanding the foregoing, if either party fails to meet either of
the applicable deadlines as to designation or release (subject in all cases to
extension for up to three (3) months if a Force Majeure Event should occur)
under Section 2.2 or this Section 2.3, the Designating Party shall have thirty
(30) days after written notice from another party (i.e., First Look, Seven Hills
or F/SLLC) to this Agreement within which to cure said failure. Failing such
cure, the subject Designating Party shall lose its right to release the subject
Designated Picture (the "Relinquished Release"), and the alternating procedure
shall go forward as if the Relinquished Release had been timely designated and
released. Any funds taken from the LLC Funding Account or any other account
hereunder as to said Relinquished Release shall immediately be redeposited by
the Designating Party of the Relinquished Release into the LLC Funding Account
upon such failure of cure.
2.4 Accelerated Release.
2.4.1 Notwithstanding anything to the contrary contained
herein, each of First Look and Seven Hills shall have the right to designate a
Picture for accelerated release ("Accelerated Release").
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2.4.2 An Accelerated Release may occur as follows: The
Designating Party may designate an Accelerated Release at any time after the
release date of the other party's most recent Designated Picture ("Prior
Designated Picture") prior to the Recoupment (as defined in Section 3.1) or
Replenishment (as defined in Section 3.2) of the full LLC Funding Account,
provided that the party designating an Accelerated Release shall provide full
new funding for Theatrical Distribution Costs for such Accelerated Release by
depositing the funds deemed necessary by the Designating Party in a separate
Designated Picture Disbursement Account specifically created for the Accelerated
Release. Said Designating Party shall be entitled to return of said Theatrical
Distribution Costs so advanced upon Recoupment or Replenishment by the preceding
Designating Party of Theatrical Distribution Costs with respect to the Prior
Designated Picture required to be backed by the Letter of Credit in accordance
with Section 3.3.
2.5 Non-Exclusivity. Designation of Pictures by either First Look or
Seven Hills shall be on a voluntary basis and this Agreement shall be
non-exclusive as to distribution arrangements by each of the parties as to
theatrical motion pictures controlled by it; provided, however, that once a
Picture is designated as a Designated Picture and marketed and/or released for
U.S. theatrical distribution utilizing the Fund or the LLC Funding Account, such
distribution shall be done exclusively under the terms hereof. It is also agreed
that First Look or Seven Hills shall have the right to arrange distribution in
the United States by an outside distributor ("Outside Distributor") of
theatrical and all other Rights to any of its Designated Pictures (such Pictures
being referred to as "Outside Pictures"), utilizing all or part of the LLC
Funding Account in accordance with this Agreement; provided that with respect to
any such Rights as to a Seven Hills Picture distributed through an Outside
Distributor, the provisions of Section 3 (other than Section 3.1) shall apply,
and Recoupment and Replenishment shall be based on the Designating Party's net
proceeds after deduction from gross receipts of the fees and distribution costs
of the Outside Distributor, all subject to the requirements of Section 3.3 as to
Letters of Credit; and provided, further, that any advance or deposit from an
Outside Distributor shall be paid and applied first toward Recoupment of any
portion of the Fund or LLC Funding Account, and any Outside Distributor shall be
instructed as a condition to any such outside distribution to make all payments
due with respect to a Designated Picture that the Outside Distributor is
distributing directly to F/SLLC for deposit in the applicable Designated Picture
Collection Account.
3. Contracts, Cash Flow, Recoupment and Replenishment.
3.1 Contracts; Cash Flow. Subject to Section 2.5, all exhibition and
distribution contracts with respect to distribution of each Designated Picture
shall (i) be subject to the approval of the Designating Party, (ii) be
negotiated and documented by the First Look Theatrical Distribution Department,
(iii) be made by and in the name of F/SLLC, (iv) be executed on behalf of F/SLLC
by the Designating Party and (v) provided that all Theatrical Gross Receipts (as
defined in Exhibit A attached hereto) shall be deposited in the Designated
Picture Collection Account as to the subject Designated Picture. First Look
shall be entitled to receive on a monthly basis, within twenty (20) days after
the end of each month, a Theatrical Distribution Fee (as defined in Section 6.1)
for each Designated Picture (other than Designated Pictures of Seven Hills
distributed in the U.S. by an Outside Distributor), paid solely from the
Theatrical Gross Receipts of the subject Designated Picture. The remainder of
the Theatrical Gross Receipts for any Designated Picture shall be retained by
F/SLLC and applied toward recoupment ("Recoupment") of the Theatrical
Distribution Costs expended on such Designated Picture and any excess balance
after Recoupment shall be paid and accounted for to the subject Designating
Party on a monthly basis in accordance with Section 18.1; provided that if Seven
Hills or First Look elects to spend in excess of $4 million in Theatrical
Distribution Costs as to any Designated Picture, any such excess shall be
recouped in third position out of such Theatrical Gross Receipts after payment
of the Theatrical Distribution Fee to First Look and Recoupment of $4 million,
and shall be paid and accounted for to the subject Designating Party when and if
available in accordance with Section 18.1.
3.2 Replenishment. Consistent with the F/SLLC Agreement, the
Designating Party shall pay into the Designated Picture Disbursement Account as
to the next Designated Picture the sum necessary to replenish ("Replenishment")
the LLC Funding Account to $4 million to the extent that Theatrical Gross
Receipts (less Theatrical Distribution Fees) as to U.S. theatrical distribution
of the subject Designated Picture held in the subject Designated Picture
Collection Account are less than $4 million (after including interest earned and
accumulated in said Designated Picture Collection Account) not later than six
(6) months after initial theatrical release in the U.S. of the subject
Designated Picture. To the extent that Theatrical Gross Receipts are later
received from theatrical distribution of such Designated Picture after
Replenishment, an amount equal to such Theatrical Gross Receipts (less
applicable Theatrical Distribution Fees) shall be distributed to such
replenishing party in accordance with Section 18.1 of this Agreement.
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3.3 Letters of Credit. Each of Seven Hills and First Look shall provide
for the benefit of the other party and the LLC, for deposit into the LLC Funding
Account, a Standby Letter of Credit issued by JPMorgan Chase Bank (or another
bank reasonably approved in writing by the beneficiary of said Letter of Credit)
(the "Letters of Credit") in form and substance reasonably satisfactory to both
First Look and Seven Hills and subject to the following requirements: Letters of
Credit shall be issued (a) not later than ten (10) days prior to first draw of
funds as to the subject Designated Picture (evidenced by a written notice, which
includes a copy of the form of Letter of Credit, to F/SLLC and the other party
from the Designating Party); (b) in an amount equal to 100% of the maximum
intended use of the LLC Funding Account as to a Designated Picture ("Maximum
Draw"); and (c) shall be irrevocable until full Recoupment or Replenishment of
the Maximum Draw. The Letters of Credit will provide funds toward Replenishment
as required under Section 3.2 including, without limitation, as to any
Accelerated Release. Said Maximum Draw may be increased only if the Designating
Party increases the applicable Letter of Credit or obtains an additional Letter
of Credit (as above described) in an amount equal to 100% of any such increase.
The only conditions to drawing against such Letters of Credit shall be (x)
failure of Recoupment or Replenishment with respect to the Designated Picture of
the party posting said Letter of Credit, (y) termination of this entire
Agreement or termination of any Rights under Section 19.3, or expiration of the
term of this Agreement; and (z) written demand to the issuing bank by the party
other than the Designating Party posting said Letter of Credit, based upon its
representation that the sum called constitutes a shortfall in such Recoupment or
Replenishment as required hereunder, or any other condition under (x) or (y)
above applies.
3.4 U.S. Theatrical Producer's Share. U.S. Theatrical Producer's Share
shall be defined in accordance with the definition thereof set forth in Exhibit
A attached hereto.
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4. Theatrical Distribution Services. Subject to Section 2.5, in consideration of
its Theatrical Distribution Fee hereunder, First Look shall provide the services
of its Theatrical Distribution Department as to exploitation of Theatrical
Rights (as defined in Section 5.1) for all Designated Pictures hereunder in the
United States, which services are described in Exhibit B attached hereto. First
Look agrees to maintain its Theatrical Distribution Department and to continue
its U.S. theatrical distribution business at a level at least equivalent to that
described in Exhibit B throughout the term of this Agreement. First Look agrees
to use commercially reasonable best efforts (consistent with sound business
practice) in rendering such distribution services as to Designated Pictures
customarily rendered in the U.S. theatrical distribution business. First Look
shall make available for the benefit of all Seven Hills Designated Pictures all
favorable contracts or deals as to laboratory services (including as to film
processing and film prints, tape reproduction, etc.) and marketing and
advertising placement arrangements, along with the benefit of all discounts and
rebates available to First Look. Except as provided in Section 2.5, no
distributor other than F/SLLC with the support of First Look may be employed or
used as to U.S. theatrical distribution as to any Designated Picture for which
any portion of the LLC Funding Account has been used without the prior written
approval of both Seven Hills and First Look.
5. Grant of Rights.
5.1 Theatrical Rights. Each of the parties hereby agrees to grant to
F/SLLC the exclusive and irrevocable right, license and privilege to distribute
in theaters (called "Theatrical Rights") throughout the United States, subject
to the provisions hereof, each of the Designated Pictures (except Outside
Pictures) designated hereunder during the Term hereof. The theatrical
distribution term as to such Designated Picture shall be two (2) years from the
release date of the subject Designated Picture.
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5.2 Seven Hills Designated Picture Ancillary Rights. As to each Seven
Hills Designated Picture hereunder (other than those distributed by an Outside
Distributor), Seven Hills will grant, assign and license to First Look, upon
designation of each Seven Hills Designated Picture, the exclusive and
irrevocable right, license and privilege to distribute and exploit throughout
the United States all video (including video on demand), DVD, free television,
pay television (including pay-per-view), basic cable, and all other television
media, and for U.S. ships at sea and U.S. armed forces installations
(collectively called "Ancillary Rights"), for a term of seven (7) years
("Ancillary Rights Term") after the applicable release date in the United
States; provided, however, that so-called "in flight" rights, all rights as to
merchandising, book and other publishing rights, soundtrack rights, music
publishing, literary rights, including, without limitation, television series,
sequel and remake rights, and all other rights not expressly granted or licensed
to F/SLLC or First Look hereunder, are expressly reserved by Seven Hills. First
Look shall use its best efforts (subject to sound business practice) in the
distribution and exploitation of said Ancillary Rights.
5.3 Foreign Sales Agency or Distribution. Seven Hills shall have the
right, but not the obligation, to designate First Look (or Overseas Filmgroup, a
division of First Look) as its foreign sales representative or foreign
distributor to any of the Seven Hills Designated Pictures ("Foreign Agency
Right") and, upon exercise of such Foreign Agency Right, First Look shall have
the right, but not the obligation, to accept such agency. If the parties agree
to such agency, First Look shall receive a sales agency fee equal to ten percent
(10%) of "foreign gross receipts" (as such term is customarily defined in
foreign sales agency agreements) as to each Designated Picture. In the event
that First Look is so designated, it will expend at least a minimum of $100,000
up to a maximum of $150,000 as to foreign direct marketing expenses with regard
to each such Designated Picture. The term of each such sales agency will be five
(5) years. A separate agreement will be negotiated in good faith with regard to
any such Designated Picture for which First Look is designated as foreign sales
agent or foreign distributor, including, without limitation, the foregoing
terms, customary warranties and representations, best efforts commitment on the
part of First Look, a list of approved minimum advances required on a
territory-by-territory basis and other customary clauses. Foreign distribution
agreements entered into will be made substantially in the form(s) provided by
the American Film Market Association, subject to reasonable approval by Seven
Hills.
All of the rights referenced under Sections 5.1, 5.2 and 5.3 are
sometimes collectively referred to herein as the "Rights."
5.4 Holdbacks. Holdbacks as to pay-per-view, video on demand, other video
(including DVD), pay television and free television (including cable
television), and in-flight, will be determined by the Designating Party as to
each Designated Picture.
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6. Distribution Fees.
6.1 Theatrical Distribution Fees. First Look shall receive (on a
monthly basis, within twenty (20) days after the end of each month), a sum equal
to ten percent (10%) of such Theatrical Gross Receipts solely out of Theatrical
Gross Receipts as to U.S. theatrical distribution of each Designated Picture
hereunder ("Theatrical Distribution Fee") other than Outside Pictures. Seven
Hills shall have no liability for payment of any Theatrical Distribution Fee
other than out of such Theatrical Gross Receipts. There will be no overhead or
other additional charge by First Look with regard to its distribution services
hereunder. By way of clarification and for the avoidance of doubt, and
notwithstanding any provision contained herein to the contrary, the net proceeds
from collection or infringement actions brought by Members of F/SLLC with
respect to Theatrical Rights to Designated Pictures (i.e. all gross proceeds
from such actions net of legal fees and costs) shall be included in the
Theatrical Gross Receipts of the particular Designated Picture, provided that
neither such proceeds nor Seven Hills as to such proceeds shall be subject to
any distribution fee hereunder.
6.2 Ancillary Rights Distribution Fees. First Look shall be entitled to retain a
distribution fee equal to ten percent (10%) of all Ancillary Gross Receipts (as
defined in Exhibit A attached hereto) with respect to the Ancillary Rights
("Ancillary Rights Distribution Fees") other than as to Outside Pictures. Seven
Hills shall have no liability for payment of any Ancillary Rights Distribution
Fee other than the foregoing retention by First Look. First Look shall be
entitled to deduct all direct out-of-pocket distribution costs paid or incurred
relating to said Ancillary Rights as defined, calculated and deductible in
accordance with Exhibit A ("Ancillary Distribution Costs") and agrees to assume
(in accordance with customary guild assumption agreements) and pay all guild
residual obligations (including fringe benefits and payroll taxes) of Seven
Hills as to each Seven Hills Designated Picture. Said residuals paid shall be
deductible by First Look as an Ancillary Distribution Cost. Proceeds from
exploitation of said Ancillary Rights shall not in any way be
cross-collateralized or cross-recouped with theatrical proceeds as to any
Picture. By way of clarification and for the avoidance of doubt, and
notwithstanding any provision contained herein to the contrary, the net proceeds
from collection or infringement actions brought by Members of F/SLLC or First
Look (or affiliates) with respect to Ancillary Rights to Designated Pictures
(i.e. all gross proceeds from such actions net of legal fees and costs) shall be
included in the Ancillary Gross Receipts of the particular Designated Picture
provided that such proceeds shall not be subject to any distribution fee
hereunder.
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7. Theatrical Distribution - Control. The plan of marketing, advertising and
distribution of each of the Designated Pictures shall be prepared by First Look
in consultation with Seven Hills' representative(s) and subject to final advance
approval by the Designating Party as to the subject Designated Picture; provided
that the Designating Party's decisions shall be final as to all elements
including, without limitation, marketing, advertising and distribution. In this
connection, Seven Hills shall be entitled to designate its own producer's
representative(s) to participate in preparing and to approve on behalf of Seven
Hills the plan of U.S. theatrical, marketing and advertising as to each Seven
Hills Designated Picture in consultation with the First Look Theatrical
Distribution Department. As to First Look Designated Pictures, First Look agrees
to consult with Seven Hills or its producer's representative as to selection,
marketing, advertising and distribution of its Designated Pictures, though all
First Look decisions as to First Look Designated Pictures shall be final.
8. Advertising and Other Distribution Costs. All Theatrical Distribution Costs
(as defined in Exhibit A) as to theatrical release of each Designated Picture
hereunder shall be incurred and paid for solely out of the LLC Funding Account
and the applicable Designated Picture Disbursement Account (except to the extent
advanced by a Designating Party as to an Accelerated Release under Section 2.4)
and any Theatrical Distribution Costs incurred or advanced in excess of $4
million by a Designating Party (or for its account)) as to a Designated Picture.
9. Screen and Advertising Credits. Each Designated Picture (other than Outside
Pictures) shall include for U.S. release in the main titles on screen and in all
U.S. paid advertisements and publicity a credit above the title in size of type
and prominence equal to the largest and most prominent credit accorded in
connection with the subject Designated Picture, as follows: "A First Look /Seven
Hills Release" (or such other credit as may be mutually agreed by First Look and
Seven Hills in writing). The logo of First Look and the logo of Seven Hills
shall appear in all paid advertisements (Designating Party logo first) as to
theatrical release in the U.S. and on separate, contiguous cards (the logo of
the Designating Party appearing first) in the end titles.
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10. Term of Agreement. The term of this Agreement shall be for a period of five
(5) years, commencing with the Closing, plus no more than 9 months for
completion of distribution in the U.S. of any Designated Picture hereunder
("Term"). Notwithstanding the foregoing, the Ancillary Rights Term shall be for
a period of seven (7) years after the applicable release date in the U.S. as
described in Section 5.2, subject to Section 19. The obligations of First Look
and Seven Hills with respect to Recoupment and Replenishment and the
effectiveness of applicable Letter(s) of Credit under Sections 3.1, 3.2 and 3.3
shall survive any termination or expiration of this Agreement in order to allow
for the winding up of the LLC.
11. Possession and Control of Film Materials and Delivery. The Designating Party
shall have exclusive possession and control of the negative, inter-negatives,
inter-positives and any and all related pre-print materials with respect to each
of its Designated Pictures hereunder. The Designating Party shall be responsible
for delivery to or access by F/SLLC as to theatrical distribution of the items
customarily required for U.S. theatrical distribution ("Theatrical Delivery
Items"). Seven Hills shall deliver to First Look the items customarily required
of a producer for U.S. distribution of Ancillary Rights ("Ancillary Delivery
Items"). Said delivery shall take place not later than the date for initial
theatrical release of the subject Designated Picture in the U.S. The Designating
Party shall have the right to select the film laboratory, sound laboratory and
other processing laboratories with respect to its Designated Pictures. All
Theatrical Distribution Costs other than the costs related to the delivery of or
access to the Theatrical Delivery Items shall be treated as Theatrical
Distribution Costs required to be paid out of the LLC Funding Account under this
Agreement; all Ancillary Distribution Costs other than the costs related to the
delivery of or access to the Ancillary Delivery Items shall be borne and
recouped by First Look in accordance with Exhibit A.
12. Payment of Production Costs. The Designating Party shall pay and be
responsible for all production costs, deferments (contingent or fixed) and
shares of gross receipts or net profits or other contingent participations with
respect to all of the Designated Pictures of said Designating Party; provided,
however, that the foregoing shall not apply with regard to assumption and
payment by First Look of residual payments due with respect to U.S. exploitation
of the Ancillary Rights as to Seven Hills Designated Pictures.
13. Music Performance Rights. All rights of every description and nature in and
to and in any way connected with the musical material contained in each
Designated Picture shall, as between F/SLLC and the other party, on the one
hand, and the Designating Party, on the other, be vested in and owned by the
Designating Party. The Designating Party shall be deemed to have represented and
warranted for the benefit of the other parties to this Agreement that it shall
have all synchronization and public performance rights in and to such musical
material so that neither F/SLLC nor the other party will not infringe the right
of any third party or parties in exercising its rights and performing its
obligations under this Agreement, and the Designating Party shall be deemed to
agree that it will indemnify and hold the other parties hereto harmless with
respect to any and all claims of any third party or parties with respect
thereto.
14. Copyright. The Designating Party agrees to utilize its commercially
reasonable best efforts to protect each of its Designated Pictures by copyright.
In this connection, the Designating Party will take all steps required to
register each of its Designated Pictures in the United States with the United
States Copyright office.
15. Warranties and Representations; Producer's Liability Insurance.
15.1 Warranties and Representations. Each of First Look and Seven Hills
hereby represents, warrants and agrees as to each of its Designated Pictures,
that
(a) It has the right to enter into this Agreement and will
have, prior to designation, the right to grant, assign, transfer and convey to
F/SLLC all rights and licenses herein contained and that each of its Designated
Pictures hereunder will be delivered to F/SLLC free and clear of any liens and
claims or demands of any kind or character whatsoever which would in any way
prejudice, affect or be inconsistent with the rights herein granted and agreed
to be granted to F/SLLC other than (i) purchase-money security interests, (ii)
materialmen's liens, laboratory liens and similar security interests, liens and
encumbrances arising by operation of law and which do not materially interfere
with the party's business or operations and (iii) with respect to First Look
Designated Pictures, the lien and security interest pursuant to the Credit,
Security, Guaranty and Pledge Agreement dated as of June 20, 2000 (as amended)
among XX Xxxxxx Xxxxx & Co., the Lenders named therein and First Look ("Chase
Credit Agreement").
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(b) It owns and controls or will own and control the exclusive
right to distribute, exhibit and otherwise exploit each of its Designated
Pictures in the manner and form contemplated hereunder throughout the United
States.
(c) All license fees, compensation, royalties and other
payments which may be payable to any person, firm or corporation for or on
account of the production photography, recording, reproduction, distribution,
exhibition and performance of its Designated Pictures and, in connection with
such Designated Picture, its sound (including music, lyrics and musical
compositions used therein), will be paid by the Designating Party in full when
due and payable.
(d) The rights of any third party or parties will not be
violated or infringed by the title of any of its Designated Pictures, nor will
the use by said Designating Party of any musical, literary or other material
contained therein constitute any violation or infringement of any rights of any
third party or parties.
15.2 Producer's Liability (Errors and Omissions) Insurance. Designating
Party shall provide as to each of its Designated Pictures, Certificates of
Insurance naming F/SLLC and the other party to this Agreement as additional
insureds with respect to a policy of producer's liability (errors and omissions)
insurance in the amount of $1,000,000 per occurrence/$3,000,000 aggregate
subject only to customary exclusions and deductibles not exceeding $25,000,
providing for cancellation only after thirty days' advance notice to the
additional insureds.
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15.3 Distributor Errors and Omissions Insurance. Each Designated
Picture shall be insured under the Distributor's liability insurance policy
covering errors and omissions held by First Look in the amount $1,000,000 per
occurrence/$3,000,000 aggregate subject only to customary exclusions and
deductibles, not exceeding $25,000, providing for cancellation only after thirty
days advance notice to additional insureds. Seven Hills and F/SLLC shall receive
Certificates of Insurance naming each as additional insureds as to each Seven
Hills Designated Picture.
16. Indemnification. For the purposes of this Section, F/SLLC, First Look and
Seven Hills, and their wholly-owned subsidiaries, corporations under common
ownership with it, subdistributors and licensees and its and their officers,
agents and employees are herein referred to as the "indemnitees." Each party
(each, an "Indemnifying Party") agrees to indemnify the indemnitees of the other
parties and to hold each of them harmless from and against any and all claims or
causes of action, liability, damages, judgments or decrees, direct costs and
expenses which may be obtained against or suffered, sustained or paid by any
such indemnitees by reason of or resulting from (a) any breach or failure or
claim of breach or failure of any of the covenants, agreements, warranties or
representations herein made by the Indemnifying Party or any infringement or
alleged infringement or violation or alleged violation by the Indemnifying Party
of any right or obligations set forth herein (contractual or otherwise) and (b)
any infirmity of title in any of the Indemnifying Party's Designated Pictures or
any part thereof or any right or property pertaining thereto as warranted. The
Indemnifying Party making such indemnity shall have the power of attorney to
handle, defend or settle any and all such claims or causes of action and, if the
indemnitees so request, each indemnitee shall cooperate in the defense thereof
at the expense of the indemnitee. No indemnitee shall settle or compromise any
claim or cause of action without first obtaining the written consent of the
Indemnifying Party.
17. Force Majeure Event. Notwithstanding anything to the contrary contained
herein, no party to this Agreement shall be liable to the other in damages or
otherwise by reason of any failure to perform hereunder caused by fire,
earthquake, flood, epidemic, accident, explosion, casualty, strike, labor
controversy, riot, civil disturbance, act of a public enemy, embargo, war, or
acts of God; or by any municipal, state or federal ordinance or law; by any
legally constituted authority (whether municipal, state or federal); by the
issuance of any executive or judicial order; by any failure or delay of any
transportation agency; by any failure or delay of a bank to make timely
transmission of funds after timely instruction; by any failure or delay in
respect to any electrical or sound equipment or apparatus, or by any laboratory;
by any failure without fault to obtain material, transportation, power or other
essential things required in the conduct of its business; or by any similar
cause beyond the control of any party ("Force Majeure Event"). If the
distribution of any Designating Party shall be materially interrupted by any
such cause, or if the majority of the motion picture theatres in the United
States exhibiting motion pictures distributed by F/SLLC shall be closed for any
reason whatsoever for a week or more, then, at the election of First Look or
Seven Hills, the term of F/SLLC's distribution right with regard to the
Designated Picture(s) affected by the foregoing and then being distributed by
15
F/SLLC and First Look may be suspended and extended for such time as such
condition may exist. The obligation to continue to distribute a Designated
Picture then in distribution shall not be affected by any Force Majeure Event if
such event does not affect F/SLLC's or the Designating Party's ability to
distribute. If a Force Majeure Event interferes with ability of F/SLCC or the
Designating Party to distribute a Designated Picture hereunder, the Designating
Party shall have the right to make its own arrangements for distribution of that
Designated Picture itself or through a third party during any suspension.
Notwithstanding anything to the contrary contained herein, if such Force Majeure
Event continues beyond a period of eight (8) consecutive weeks, either party
shall have the right to terminate this Agreement; provided that if such
suspension and/or termination occurs, the Designating Party shall be entitled to
expend the balance of the LLC Funding Account then available to theatrically
distribute (or arranged for such distribution) in the U.S. and to recoup the
balance thereof, subject to Replenishment in accordance with Section 3.2.
18. Accountings and Payments.
18.1 Theatrical Accountings. F/SLLC will prepare under the supervision
of the Designating Party as to each Designated Picture reasonably detailed
accountings relating to U.S. theatrical distribution thereof, including with
respect to Theatrical Gross Receipts, Theatrical Distribution Costs and
Theatrical Producer's Share (as defined on Exhibit A attached hereto) as to the
subject Designated Picture. Said accountings shall be prepared and delivered to
the other parties to this Agreement on a monthly basis, within 30 days after the
end of each month.
16
18.2 Ancillary and Foreign Accountings. First Look shall prepare and
deliver to Seven Hills detailed accountings broken down medium-by-medium as to
distribution in the U.S. of Ancillary Rights by First Look with respect to each
Seven Hills Designated Picture, including, without limitation, as to Ancillary
Gross Receipts, Ancillary Distribution Costs and Ancillary Producer's Share (as
defined in Exhibit A attached hereto) due Seven Hills as to each Designated
Picture. As to foreign sales representation under Section 5.3, accountings shall
be broken down on a territory-by-territory basis and on a medium-by-medium
basis, with copies of local distribution accountings forwarded to First Look
when received. All accountings with respect to Ancillary Rights and for foreign
distribution (i.e., outside the United States) shall be on a separate, non
cross-collateralized and non cross-recouped basis, as between Designated
Pictures, and shall not be taken into account as to Recoupment or Replenishment
under this Agreement. All accountings as to foreign distribution shall not be
cross-collateralized or cross-recouped as between separate territories. Said
accountings shall be prepared and delivered, along with any payments due, on a
monthly basis within 30 days after the end of each month.
18.3 Audit Rights. Each of First Look and Seven Hills shall have full
and complete customary audit rights with respect to all U.S. exploitation,
pursuant to this Agreement, of Theatrical Rights as to each Designated Picture
designated by the auditing party. Seven Hills shall have the right to audit,
utilizing the services of any auditor it selects, the books and records of First
Look (and any related or affiliated subsidiary or other affiliated entity) with
respect to exploitation of the Ancillary Rights in the U.S. The books and
records relating to said Ancillary Rights shall be kept in First Look's
principal offices located in Los Angeles, California. Said audit may be
conducted within 30 days during each six-month period (assuming prompt
availability of records and full cooperation by First Look).
19. Remedies. In addition to all rights and remedies provided in this Agreement
or granted by law or in equity, including, without limitation, recovery of
compensatory damages, Seven Hills and First Look shall be entitled to elect any
or all of the remedies set forth in this Section 19 in the event of a Material
Default (as defined below).
19.1 Material Default. "Material Default" shall include (i) any
material breach of a provision under this Agreement that remains uncured for a
period of 30 days after the defaulting party receives notice of such default
from the other party, including the failure by a party to fulfill its obligation
of Replenishment as required under Section 3.2, or provision, maintenance and
effectiveness of a Letter of Credit under Section 3.3 and (ii) as to First Look,
any "Event of Default" by First Look as defined in (a) the Chase Credit
Agreement or (b) the Convertible Promissory Note of even date herewith in the
amount of $2,000,000 in favor of Seven Hills (the "Convertible Promissory
Note"), in all cases, only where such Event of Default has not been cured within
the time periods prescribed in such instruments.
17
19.2 Liquidated Damages. In the event of Material Default by either
party, the non-defaulting party shall be entitled to liquidated damages as
follows: In consideration of difficulties, risk factors and failure of basic
performance pursuant to this Agreement, a reasonable estimate of the likely
damages which would be sustained in connection with placement with another
distributor for distribution of the non-defaulting party's Designated Picture
currently scheduled for or in release, the sum of $250,000, at the time of
Material Default (giving effect to all applicable cure periods) if such
Designated Picture is in U.S. Theatrical Release and $150,000, at the time of
Material Default (giving effect to all applicable cure periods), if such
Designated Picture has not yet been released theatrically in the U.S., but has
been so designated by the non-defaulting party hereunder, payable upon demand
after such incurred Material Default.
19.3 Termination of Agreement; Termination of Rights. If a Material
Default occurs, the non-defaulting party shall have the right, exercisable not
later than twenty (20) days after receipt by the non-defaulting party of written
notice (including specific reference to this Section 19.3) from the defaulting
party that the applicable cure period has expired, to elect to terminate: (a)
U.S. theatrical distribution of all of the non-defaulting party's Designated
Pictures in release or to be released hereunder; (b) distribution of the
non-defaulting party's Ancillary Rights as to any or all of non-defaulting
party's Designated Pictures (if First Look is the defaulting party), (c) the
Agency or Distribution Rights as to any Designated Pictures (if First Look is
the defaulting party) and/or (d) this Agreement in its entirety.
18
19.4 Termination Procedures. In the event of termination of this Agreement
and/or termination of any Rights described in Section 5, the following shall
apply:
(a) Termination of Theatrical Rights, Ancillary Rights and/or
Foreign Agency or Distribution Rights. Upon the termination of Theatrical
Rights, Ancillary Rights and/or Foreign Agency Rights, neither F/SLLC nor the
defaulting party will have any further right to exploit or distribute the
terminated Rights as to the subject Designated Pictures of the non-defaulting
party; provided, however, that (i) the non-defaulting party shall take over
distribution of the subject Designated Picture(s) as to Rights terminated, (ii)
all exhibition, distribution and other agreements therefor entered into by
F/SLLC and/or the defaulting party and any of its licensees or sub-distributors,
all contracts with exhibitors and subdistributors or other licensed distributors
shall remain in full force and effect and (iii) the defaulting party and F/SLLC
shall assign such agreements to the non-defaulting party. In such event, the
non-defaulting party shall have the right to possess and control all unplayed
exhibition contracts, subdistribution and distribution agreements (as
applicable) as to the subject Designated Picture(s), all records, including
books, billing and delivery records pertaining to such Designated Picture(s) of
the non-defaulting party as well as all funds on hand to which non-defaulting
party is then entitled shall be paid to the non-defaulting party. The
non-defaulting party shall fulfill any exhibition or sub-distribution contracts
obtained prior to a Material Default by F/SLLC or First Look (as to Ancillary or
Foreign Agency Rights) and collect gross receipts therefrom. Notwithstanding
such termination, First Look shall be entitled, unless First Look is in Material
Default hereof, to receive and Seven Hills shall account to First Look for, the
percentage of Distribution Fees under Section 6 hereof to which First Look would
otherwise have been entitled prior to termination and out-of-pocket expenses
incurred in connection therewith; provided, however, that the non-defaulting
party shall have the right to offset against any amounts as to which it is
required to account to the defaulting party any damages sustained by the
non-defaulting party by reason of the Material Default by First Look, in
addition to liquidated damages under Section 19.2.
(b) Upon termination of all or part of the Rights, the
non-defaulting party shall promptly receive exclusive possession of all film,
tape and other pre-print or reproduced materials and all other materials as to
its Designated Pictures, and all access letters shall be adjusted to reflect
exclusive control by the non-defaulting party, as to the subject terminated
Rights.
19
(c) Termination or Expiration of Entire Agreement. In the
event of (i) termination of the entire Agreement by Seven Hills as the non
defaulting party, or (ii) expiration (without written extension) of the Term of
this Agreement, all of the provisions as to termination of Theatrical Rights,
Ancillary Rights (as to Seven Hills) and Foreign Agency Rights (as to Seven
Hills), Sections 19.2 and 19.3 shall apply. In any such event, if Seven Hills is
the non-defaulting party, Seven Hills shall be entitled upon demand to immediate
return of its $2,000,000 capital contribution to F/SLLC and, consistent with
Section 4.7 of the F/SLLC Agreement, payment of the $2,000,000 capital
contribution of First Look shall be made to Seven Hills and applied in reduction
of the Convertible Promissory Note, reduced only to the extent that Seven Hills
has theretofore exercised its conversion rights under the Convertible Promissory
Note, all subject to (i) the Pledge and Security Agreement dated as of June 25,
2002 by First Look as Debtor, in favor of Seven Hills as Secured Party and (ii)
the Security Agreement dated as of June 25, 2002 by F/SLLC as Debtor, in favor
of Seven Hills as Secured Party. In the event that First Look or F/SLLC fails to
cooperate with any action or fails to execute any document or countersign any
instrument necessary or desirable to effectuate the foregoing within ten (10)
business days after receipt by First Look and F/SLLC of written request from
Seven Hills, First Look and F/SLLC hereby appoint Seven Hills as First Look's
and F/SLLC's attorney-in-fact, which appointment shall be deemed a power coupled
with an interest, with full rights of substitution and delegation, to take such
action or execute any such document, or countersign any such instrument in First
Look's and/or F/SLLC's name and on their behalf.
20. Arbitration. Any controversy, dispute or claim arising out of or relating to
this contract or breach thereof, shall be settled by arbitration in accordance
with Section 10.14 of the F/SLLC Agreement.
21. Further Assurances. Each party to this Agreement shall do and perform, or
cause to be done and performed, all further acts and things, and shall execute
and deliver all such other agreements, certificates, instruments and documents
as the other party or parties may reasonably request in order to carry out the
intent and accomplish the purposes of this Agreement, and the consummation of
the transactions contemplated hereby.
20
22. Amendments; No Continuing Waiver. No provision of this
Agreement may be waived, amended or modified except by a written instrument
signed in the case of amendment or modification, by Seven Hills, First Look and
F/SLLC or, in the case of a waiver, by the party against whom the waiver of such
provision is sought. No waiver by any party of any breach hereof shall be deemed
a waiver of any preceding or succeeding breach hereof, whether of the same or a
different nature.
23. Law Applicable. This Agreement shall be deemed made in, and is to be
construed and interpreted under the internal laws of the State of California.
24. Notices. All notices, payments, accountings and other data which is required
to be given hereunder (or any party may desire to send, deliver to or serve upon
any other party) shall be delivered in person to an officer of said party, by
certified or registered mail, by overnight courier, or by confirmed facsimile
(except for notice of termination pursuant to Section 19.3, which shall be given
by certified or registered mail) addressed or sent to the addresses set forth
below or at such other address, addresses or facsimile number(s) as the party
may designate from time to time in writing:
First Look and F/SLLC:
First Look Media, Inc.
0000 Xxxxxx Xxxxxxxxx, Xxxxxxxxx X
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
With copies to:
Xxxxxxxx Xxxxxx
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx Xxxx Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
Seven Hills and F/SLLC:
Seven Hills Pictures, LLC
0000 Xxxxx Xxxxxxx Xxxxxx
Santa Xxxxxx Building East
Suite 201
West Hollywood, California 90046
Attention: Xxxxxxx Xxxxxxx
Facsimile No.: (000) 000-0000
With a copy to:
Xxxx & Xxxxx Professional Corporation
0000 Xxxxxxx Xxxx Xxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Telephone (000) 000-0000
Attention: Xxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
21
25. Counterparts. This Agreement may be executed by original or facsimile
signature in any number of counterparts, each of which shall be deemed an
original but all of which shall constitute one and the same instrument.
26. Assignments. This Agreement shall be binding upon and inure to the benefit
of the heirs and successors of the parties. This Agreement shall not be
assignable by any party hereunder without the written consent of the other
parties and any attempt to make such an assignment shall be void.
Notwithstanding the foregoing, Seven Hills and First Look shall each have the
right to assign its rights to payment hereunder.
27. Headings. The headings of this Agreement or any Sections hereof are inserted
only for the purpose of convenient reference and may not accurately or
adequately describe the contents of the Sections which they head. Such headings
shall not be deemed to limit, cover or any way affect the scope, meaning or
intent of this Agreement or any part hereof, nor shall they otherwise be given
any legal effect.
22
28. Entire Agreement. This Agreement, together with the exhibits hereto and the
other agreements referred to herein, constitute the entire understanding and
agreement of the parties and supersedes all other prior understandings and
agreements, written or oral, between the parties. To the extent that any
provision of the F/SLLC Agreement conflicts with or is inconsistent with any
provision of this Agreement, this Agreement shall control.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers the day and year first above written.
FIRST LOOK/SEVEN HILLS, LLC
First Look Media, Inc., Member
By /s/ Xxxxxxxxxxx Xxxxxx
-----------------------------------
Xxxxxxxxxxx Xxxxxx
Its: Chief Executive Officer
And by
Seven Hills Pictures, LLC, Member
By: /s/ Xxxxxxx Xxxxxxx
-----------------------------------
Xxxxxxx Xxxxxxx
Its: Manager
FIRST LOOK MEDIA, INC.
By: /s/ Xxxxxxxxxxx Xxxxxx
-----------------------------------
Xxxxxxxxxxx Xxxxxx
Its: Chief Executive Officer
SEVEN HILLS PICTURES, LLC
By: /s/ Xxxxxxx Xxxxxxx
-----------------------------------
Xxxxxxx Xxxxxxx
Its: Manager
EXHIBITS:
Exhibit A - Definitions
Exhibit B - Services to be Provided by First Look Theatrical
Distribution Department
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EXHIBIT A
DEFINITIONS
1. "Theatrical Distribution Costs" means the aggregate of all direct costs,
expenses and charges (collectively "costs") paid, advanced or incurred by F/SLLC
or the Designating Party by reason of, in connection with, or relative to the
derivation of Theatrical Gross Receipts with respect to a Designated Picture
including:
1.1 "Checking Costs": All direct costs incurred to check attendance and
receipts at theatres in order to determine the accuracy of box office reports
and to investigate unauthorized exhibition or distribution in the U.S. of the
Designated Picture and to determine full utilization of the rights granted.
1.2 "Collection Costs": All costs incurred in connection with the
collection of monies includable within Theatrical Gross Receipts, including
reasonable fees of attorneys and auditors, and loss, damage or liability
suffered or incurred by the Designating Party in the collection of such monies,
whether by litigation or otherwise, it being agreed that the Designating Party
shall have final control as to all collection policy and decisions as to its
Designated Pictures.
1.3 "Advertising Costs": The aggregate of the costs enumerated in the
following sub-paragraphs (a) and (b).
(a) "General Advertising Costs": All costs incurred to
advertise, publicize and promote the Picture in any way including the following:
(i) Publications: Costs of purchasing advertising space in
newspapers, magazines, periodicals, trade papers and other printed
publications.
(ii) Radio and Television: Costs of purchasing advertising
time on radio and television; costs of physical materials used in the
production and broadcasting of commercials by radio and television;
costs of preparation, production and shipping of commercials; costs of
placement, integration and monitoring of commercials and other
advertising.
24
(iii) Direct Mail: Costs of preparing and mailing printed
advertising and promotional material.
(iv) Display: Costs of purchasing advertising space on
billboards and other locations, and of preparation, production and
distribution of display materials.
(v) Promotional Activities: Salaries, fees and living, travel
and business expenses of publicists, press representatives and field
exploitation personnel, allocated on the basis of time spent on the
Designated Picture whether paid by F/SLLC to its employees or other
persons on a good faith basis; salaries, fees and living, travel and
business expenses relating to tours and personal appearances of
personalities connected with the Designated Picture, paid to employees
of F/SLLC or other persons as required by the Designating Party; costs
of previews, screenings and premieres and costs incurred for producer's
representative(s) appointed by the Designating Party.
(vi) Entertainment: Costs of entertaining press and
personalities.
(vii) Commercial Tie-Ins: Costs of creation, procurement,
preparation, placement and supervision of promotional tie-ins with
commercial products, including the purchase of advertising space and
time.
(viii) Research, Surveys and Tests: Costs of formulation,
performance and evaluation of research, surveys, studies and tests of
advertising concepts, advertising campaigns, media effectiveness,
market demographics and like on a qualitative and quantitative basis.
(ix) Promotional Materials: Costs of creation, preparation,
production fabrication and distribution of press, books, press kits,
screening invitations, tickets, programs, featurettes, teaser trailers,
trailers, film clips, special photography, biographies, synopses,
billing sheets, lobby displays, stills, publicity releases, posters,
advertising accessories and sound records.
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(x) Printing Materials: Costs of creation, preparation,
production and fabrication of artwork, engravings, cuts, plates, color
separations and mechanicals, including the physical materials required
therefor.
(b) "Media Advertising for Theatrical Exhibition": For
definitional purposes, "Media Advertising for Theatrical Exhibition" refers to
costs incurred and approved by the Designating Party to advertise, publicize and
promote the Picture by means of national regional or local publications (other
than trade papers), radio and television, direct mail, display advertising, use
of websites, the internet and other computer driven electronic media,
promotional activities, entertainment and commercial tie-ins, in connection with
the Theatrical Exhibition of the Picture, whether engaged in by F/SLLC directly
or where F/SLLC pays, shares in, or is charged with all or a portion of the
costs thereof (whether effected by credits against or deductions from Theatre
Rentals). Any costs of Media Advertising for Theatrical Exhibition contributed
by exhibitors from exhibitor's share of box office receipts shall not be
included hereunder in the definition of a Distribution Expense.
1.4 "Physical Material Costs": All costs of motion picture copies
(including, without limitation, film prints, and other copies used for
theatrical distribution), including laboratory, labor, services, materials and
facilities costs in connection therewith.
1.5 "Shipping/Delivery Costs": All costs of inspection, repair and
renovation of motion picture copies, reels and containers, and all costs of
packing, storing, shipping and delivery thereof.
1.6 "Royalties": The costs of all licenses required to permit
exhibition, distribution or other use of the Designated Picture, trailers and
motion picture copies thereof, including fees for use of any patented equipment
or processes; synchronization, recording and performing royalties and fees with
respect to-performance of lyrics and music and literary material; any residuals
or re-use fees and costs advanced by F/SLLC, any costs incurred to acquire, use
and publish music advanced by F/SLLC.
26
1.7 "Insurance Costs": All costs for insurance coverage of any and all
risks of loss with respect to the Designated Picture and any components thereof,
including errors and omissions insurance and loss or damage to motion picture
copies and physical material insurance.
1.8 "Copyrighting Costs": All costs to obtain copyright and the
extension and renewal thereof, and other similar protections whenever incurred
within the Designating Party's sole discretion.
1.9 "Copyright Infringement Costs": All costs incurred to protect the
copyright ownership in the Designated Picture and to prevent any infringement of
copyright or violation of rights in and to the Designated Picture or any
elements thereof (whether by litigation or otherwise) and reasonable attorneys'
fees in connection therewith.
1.10 "Rebates and Discounts": All rebates and discounts as to any
Theatrical Distribution Cost hereunder, including, without limitation, as to
media advertising and laboratory services as to film prints, shall be deemed a
reduction in Theatrical Distribution Costs hereunder on a basis allocated to
each Designated Picture on a reasonable, proportionate and non-discriminatory
basis.
2. "Theatrical Producer's Share" means, with respect to a particular Designated
Picture, all "Theatrical Gross Receipts" (as hereinafter defined) with respect
to such Designated Picture less (a) the Theatrical Distribution Fee set forth in
Section 6.1 of the Agreement and (b) all Theatrical Distribution Costs.
2.1 "Theatrical Gross Receipts" means, with respect to a particular
Designated Picture, all monies actually received by F/SLLC or otherwise from
exhibitors with respect to Theatrical Rights (as defined in Section 5.1 of the
Agreement) to the Designated Picture after deducting any applicable refunds,
rebates, credits, discounts, allowances and adjustments, and coop advertising
credits granted to such parties by F/SLLC with respect to the Designated
Picture.
27
2.2 By way of clarification and for the avoidance of doubt, (a) there
shall be no double fees or double deductions taken with respect to any
distribution of any rights hereunder (that is, there shall be a single
distribution fee as set forth in Section 6.1 of the Agreement to First Look and
all of its subsidiaries and affiliated entities); (b) all costs and expenses
incurred with respect to multiple pictures shall be fairly and reasonably
allocated among such pictures. Proceeds from exploitation of Theatrical Rights
shall not in any way be cross-collateralized or cross-recouped with proceeds
from the exploitation of Ancillary Rights as to any Designated Picture and (c)
there shall be no overhead or additional charge by First Look with respect to
its distribution services hereunder.
3. "Ancillary Producer's Share" means, with respect to a particular Designated
Picture, all "Ancillary Gross Receipts" (as hereinafter defined) with respect to
such Designated Picture less (a) the Ancillary Distribution Fee set forth in
Section 6.2 of the Agreement and (b) all "Ancillary Distribution Costs" (as
hereinafter defined) with respect to such Designated Picture.
3.1 "Ancillary Gross Receipts" means, with respect to a particular
Designated Picture, all monies actually received by First Look (or any parent,
subsidiary, or affiliated company) from wholesalers, retailers, and other
purchasers and licensees by way of sale, rental or any other form of disposition
with respect to the exploitation of Ancillary Rights (as defined in Section 5.2
of the Agreement) to the Designated Picture after deducting any customary and
reasonable returns, refunds, rebates, credits, discounts, allowances and
adjustments, granted to such parties in the ordinary course of business by First
Look with respect to the Designated Picture.
3.2 "Ancillary Distribution Costs" means, with respect to a particular
Designated Picture, all actual out-of-pocket direct costs and expenses actually
paid by First Look pursuant hereto in connection with the distribution,
marketing or exploitation of Ancillary Rights to such Designated Picture,
including, without limitation, closed-captioning and other editorial expense,
advertising expenses, guild residuals (including fringe benefits and payroll
taxes), royalties to third parties pursuant to applicable agreements, publicity
, laboratory charges, checking and collection costs, and any other costs or
expenses customarily treated as marketing and distribution expenses with respect
to Ancillary Rights in the U.S. motion picture industry.
28
3.3 By way of clarification and for the avoidance of doubt, (a) there
shall be no double fees or double deductions taken with respect to any
distribution of any rights hereunder (that is, there shall be a single
distribution fee as set forth in Section 6.2 of the Agreement to First Look and
all of its subsidiaries and affiliated entities); (b) all costs and expenses
incurred with respect to multiple pictures shall be fairly and reasonably
allocated among such pictures. Proceeds from exploitation of said Ancillary
Rights shall not in any way be cross-collateralized or cross-recouped with any
other Designated Picture or with theatrical proceeds as to any Designated
Picture and (c) there shall be no overhead or additional indirect charge by
First Look with respect to its distribution services hereunder.
29
B. EXHIBIT B
SERVICES TO BE PROVIDED BY FIRST LOOK
THEATRICAL DISTRIBUTION DEPARTMENT
1. With respect to the theatrical distribution, First Look will provide
the following services:
set the release date to maximize the box office potential
against competitive films;
book the theatres nationwide;
coordinate the placement of trailers and one-sheets;
prepare the media schedule and budget;
place the advertising;
record box office results; and
billing and collections.
With respect to marketing, First Look will provide the following
services:
manage all publicity efforts both on a national level as well
as the field;
set promotions and word-of-mouth screenings; and
create one-sheet, ads and audio visual materials.
2. The First Look United States Theatrical Distribution Department is
described as follows:
President (head of marketing and distribution) - currently
XX Xxxxxx, President, First Look Pictures (the position
is ultimately in charge of all marketing and
distribution of the films);
Senior VP of Marketing and Distribution - currently
Xxxx Xxxxx, Xx. VP of Marketing and Distribution
(the position is particularly responsible for the
booking of theatres);
Director of Co-op Advertising and Print Control - currently
Xxxxxxx Xxxx, Director (the position handles
advertising arrangements with theatres and shipping
of prints using technicolor's shipping service);
VP of Publicity - currently Xxxxxx Xxxxxxxx,
VP Worldwide Publicity (the position is responsible
for arranging publicity on each picture, including
arranging local press and national press).
