As of October 2, 2003
RuffNation Films, LLC
x/x Xxxxxxx Xxxxxxxx & Xxxxxxxxx, P.C.
Carnegie Hall Tower
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxx, Esq.
Ladies and Gentlemen:
Reference is made to the agreement between RuffNation Films, LLC ("you" or the
"Promoter Venturer") and us (sometimes referred to hereinafter as "Sony" or
"Sony Venturer"), dated as of September 20, 2002 [SMU 02-329.4(2)], with respect
to the formation of a joint venture, as such agreement may have been modified or
supplemented (the "Joint Venture Agreement"). The provisions of the short-form
agreement preceding the Basic Agreement (all of which are part of the Joint
Venture Agreement) are hereinafter referred to as the "Short-Form Provisions".
The following, when signed by you and by us will modify the Joint Venture
Agreement. Unless specifically provided to the contrary below, all terms defined
in the Joint Venture Agreement will have the same meanings when used below.
1. Term. The first sentence of Section 3(a)(1) of the Short-Form Provisions is
hereby deleted in its entirety and replaced with the following:
"The term of this agreement with respect to the Film Venture (hereinafter, the
"Film Term") shall commence as of September 20, 2002, and shall continue in
force for a period (such period, the "Initial Film Term") ending on the later of
September 30, 2006 and the date an which you satisfy your Film Commitment (as
such term is defined in the modification hereof dated as of September 30, 2003)
(unless such Period is extended or suspended as provided herein). (Each of the
three (3) years between the data hereof (e.g., October 2, 2003 to October 2,
2006) shall be an "Extended Contract Year".)"
2. Film Commitment. Sony acknowledges your delivery of "Xxxxxx" as the First
Film, which constitutes one (1) of the two (2) Films with respect to which you
are required to fund the creation, production and marketing thereof.
Notwithstanding anything to the contrary in paragraph 1 of the Short-Term
Provisions, you agree that during the initial Film Term, in lieu of the second
Film, you shall fund the creation, production and marketing of nine (9) Films
and Deliver to Sony Home Videos of such Films (each, a "Commitment Film") for
Sony's release on DVD and any other format on which Sony elects to release such
Films (the "Film Commitment"). As with the First Film, Sony shall have the
exclusive right, throughout the world and in perpetuity, to manufacture, market,
distribute and otherwise Home Videos in any and all formats (including, without
limitation, any DVD hereof) embodying each of the Films.
3. Commitment Films Treated as Second Film. For all purposes of the Joint
Venture Agreement other than paragraph 3 of the Short-Form Provisions, each
Commitment Film shall be deemed and treated as a Second Film.
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4. Soundtrack Albums.
(a) Notwithstanding anything to the contrary in the Joint Venture
Agreement, in lieu of releasing a Soundtrack Album for the second Film (i.e.,
the first Commitment Film), Sony will release a Soundtrack Album in the United
States for each of the Commitment Films provided the Venturers mutually agree
that such Commitment Film warrants the release of a Soundtrack Album, subject in
each case to the mutual approval in writing by the Venturers of a budget in
connection with the production and marketing of each Soundtrack Album. For the
avoidance of doubt, all other provisions (including without limitation
subparagraph 10(d) of the Short-Form Provisions) regarding Soundtrack Albums
that are not in conflict with this paragraph 4 shall remain in full force and
effect.
(b) If Sony and you (i) mutually agree in writing that a Commitment
Film warrants the release of a Soundtrack Album and (ii) mutually approve in
writing a budget in connection with the production and marketing of such
Soundtrack Album, and Sony fails to release such Soundtrack Album within 3
months after such Soundtrack Album has been Delivered to Sony, you may notify
Sony, within 60 days after the end of the 3 month period concerned, that you
intend to release or license such Soundtrack Album in the United States if Sony
does not release such Soundtrack Album in the United States within 60 days after
Sony's receipt of your notice ("Soundtrack Album Cure Period"). If Sony fails to
release such Soundtrack Album before the end of the Soundtrack Album Cure Period
in the United States, you shall have the right to release or enter into an
agreement for the release of such Soundtrack Album in the United States with a
third party licensee on terms and conditions to be approved by the Sony Venturer
(the "Outside Licensing Right"). If you exercise your Outside Licensing Right
and you distribute any Soundtrack Album, then you shall promptly reimburse Sony
for any out-of-pocket costs actually incurred by Sony with respect to such
Soundtrack Album. If you exercise your Outside Licensing Right and a third party
licensee distributes any Soundtrack Album, then (A) you shall promptly reimburse
the Label Venture for master use costs actually paid or incurred by the Label
Venture in respect of such Soundtrack Album, and (B) if Sony has incurred
marketing costs equal to or in excess of $40,000 in respect of such Soundtrack
Album, an additional 50% of Promoter Venturer's net revenue in respect of such
Soundtrack Album shall be paid to the Label Venture. Your only remedy for
failure by Sony to release a Soundtrack Album in the United States shall be to
exercise your Outside Licensing Right in accordance with this subparagraph. If
you fail to give Sony any of the notices described in the foregoing provisions
of this subparagraph within the appropriate time period specified in this
agreement, your rights under this subparagraph shall lapse. A Soundtrack Album,
for the purposes of this subparagraph only, when Sony has announced its
availability for sale.
5. Foreign Release Commitment. Section 10(c)(3) of the Short-Form Provisions is
hereby deleted in its entirety and replaced with the following:
"Provided you have fulfilled all your material obligations under this agreement,
Sony, on behalf or the Film Venture, shall release on Home Video each Commitment
Film in at least three major European territories to be mutually selected within
3 months following the initial commercial release in the United States of the
Commitment Film embodied on such Home Video (each such territory, a "Release
Territory"). If Sony fails to do so you may notify Sony, within 60 days after
the end of the 3 month period concerned, that you intend to release or license
that Commitment Film on Home Video in the Release Territory concerned if Sony
does not release that Commitment Film on Home Video in the Release Territory
concerned within 60 days after Sony's receipt of your notice ("Release Territory
Cure Period"). If Sony fails to release the Commitment Film on Home Video before
the end of the Release Territory Cure Period in the Release Territory concerned,
you shall have the right to release or enter into an agreement for the release
of such Commitment Film on Home Video in the Release Territory concerned with a
third party licensee on terms and conditions to be reasonably approved by the
Sony Venturer (the "Release Territory Outside Licensing Right"). Your only
remedy for failure by Sony to release a Commitment Film on Home Video in any
Release Territory shall be to exercise your Release Territory Outside Licensing
Right in accordance with this section 10(c)(3). If you fail to give Sony any of
the notices described in the foregoing provisions of this section 10(c)(3)
within the appropriate time period specified in this agreement, your rights
under this section 10(c)(3) shall lapse."
6. Except as expressly modified above, the terms and provisions of the Joint
Venture Agreement remain, in all other respects, unmodified, are hereby ratified
and reaffirmed and shall continue in full force and effect.
Very truly yours,
SONY MUSIC, A Group of
Sony Music Entertainment Inc.
By: /s/ Xxx Xxxxxx
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Xxx Xxxxxx
EVP, BA & NT, SMEI
SVP, BA & ADM, SONY MUSIC,
A GROUP OF SMEI
ACCEPTED AND AGREED TO:
RUFFNATION FILMS, LLC
By: /s/ Xxxxx Xxxxxxxx
----------------------------
Xxxxx Xxxxxxxx
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