(FILM PRODUCTIONS)
as Issuer,
as Distributor,
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1.4.6 | the words “herein,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particularSchedule,Section, or other subdivision; | |
1.4.7 | to the extent that there are any inconsistencies with the terms and conditions of this Agreement and the terms and conditions of the RP Purchase Agreement, the terms and conditions of the RP Purchase Agreement shall prevail; and | |
1.4.8 | all capitalized terms not otherwise defined herein shall have the meaning attributed thereto in the RP Purchase Agreement and shall be incorporated herein as if herein recited at length. |
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2700 Colorado Avenue, Suite 200
Santa Monica, California 90404
Attn: General Counsel
Telephone: (310) 449-9200
Facsimile: (310) 255-3840
2700 Colorado Avenue, Suite 200
Santa Monica, California 90404
Attn: Chief Executive Officer
Telephone: (310) 449-9200
Facsimile: (310) 255-3840
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LIONS GATE FILMS INC. | ||||
By: | /s/ Wayne Levin | |||
Name: | Wayne Levin | |||
Title: | General Counsel | |||
MQP, LLC | ||||
By: | /s/ Wayne Levin | |||
Name: | Wayne Levin | |||
Title: | Director | |||
A. | All non-refundable sums actually received by Distributor from the following sources: |
(i) | Licenses by Distributor directly to exhibitors of the right to exhibit the Funded Qualifying Project by means of Theatrical, Non-Theatrical or Television; | ||
(ii) | Licenses by Distributor to Subdistributors, net of any fees and expenses charged by such Subdistributor; | ||
(iii) | The sale or lease of souvenir Funded Qualifying Projects and booklets; | ||
(iv) | Recoveries by Distributor from actions based on unfair competition, piracy and/or infringements of copyrights and trademarks of the Funded Qualifying Project, which recoveries are intended to compensate Distributor for losses sustained in respect of the Funded Qualifying Project and shall be fairly and reasonably allocated among all |
Productions involved therein; provided, that no Distribution Fee shall be charged on any portion of such recovery included in the Gross Receipts that represents punitive, rather than actual or statutory, damages; | |||
(v) | The net receipts from so-called “four-wall” deals on a collective basis,i.e., the sums received by Distributor from theater(s) where Distributor has taken over the operation of such theater(s) specifically for the exhibition of the Funded Qualifying Project, less all out-of-pocket costs of operating the theater(s) and those advertising costs that would normally and actually be paid by theaters and which are paid by Distributor; | ||
(vi) | Monies received from the Copyright Royalty Tribunal (or similar agencies established under the laws of any jurisdiction); | ||
(vii) | Exploitation of the Ancillary Rights; | ||
(viii) | Monies received by Distributor from the distribution, sale or other exploitation of Home Video Rights and any Video Levies (as defined below) collected by Distributor, less local taxes, rebates, discounts, credit adjustments for defective Videograms, customs duties, import charges, shipping, mailing and insurance charges, dubbing and subtitling costs, and mastering and submastering costs;provided,however, that Distributor shall have the right to deduct up to*****of all such monies as a reserve for returns and credits of any nature, including, without limitation, those on account of one hundred percent (100%) or a lesser return privilege, defective merchandise, exchange privilege, promotional credits, errors in billing, unusual overstock, bad debts and errors in shipping, which reserves shall be liquidated within*****, pursuant to Distributor’s customs and practices. “Video Levies” shall mean levies or other charges collected under operation of law with respect to the Funded Qualifying Project in the Territory on the sale of video recorders, blank video cassettes or video discs or similar items or the rental of Videograms which become payable to the Copyright Owner or the distributor of the Funded Qualifying Project. Distributor shall be entitled to collect all revenue from Video Levies. |
B. | Gross Receipts shall be determined after all reserves, refunds, credits, discounts, allowances and adjustments granted to exhibitors and Subdistributors, whether occasioned by condemnation by boards of censorship, settlement of disputes or otherwise. advance payments and guarantees shall not be included in Gross Receipts until earned by the exhibition of the Funded Qualifying Project or forfeited. |
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C. | Gross Receipts shall not include (a) any portion thereof which is contributed to charitable organizations in connection with or related to premieres of the Funded Qualifying Project; (b) the receipts which are the contractually acquired property of the following parties, whether or not Subsidiaries or divisions of Distributor: (i) exhibitors or others who may use or actually exhibit the Funded Qualifying Project, (ii) radio or television broadcasters (including, without limitation, pay, cable, and closed circuit systems), (iii) book or music publishers, (iv) phonograph record producers or distributors and (v) merchandisers, manufacturers and the like. |
D. | Amounts charged back to Distributor or its Affiliates in any Accounting Period for damaged goods and returns of home video units shall reduce Gross Receipts in such Accounting Period. |
A. | All negatives, sound tracks, prints, and other physical properties utilized in connection with the distribution of the Funded Qualifying Project (“Physical Properties”). | ||
B. | All services and facilities rendered or utilized in connection with the transportation, preparation, checking and servicing of the Physical Properties or other properties used in rendering distribution services, including, without limitation, any cost of cutting, editing, dubbing or subtitling the Funded Qualifying Project or other services or facilities used in preparing the Funded Qualifying Project for exhibition including, without limitation, costs of shipping containers and cans, laboratory and warehouse storage, insurance packaging, freight, transportation, shipping and handling charges. |
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B. | Advertising, promoting, marketing, exploiting and publicizing (collectively, “Advertising”) the Funded Qualifying Project in any way, including without limitation, all costs associated with Videograms including without limitation the creation of bonus material, and new artwork, of cooperative, theater or joint Advertising in connection with exhibition of the Funded Qualifying Project in theaters or other places where an admission is charged, which Distributor pays or is charged with; costs of publicity materials; tours and personal appearances; salaries, living costs and traveling expenses of regular employees of Distributor, where such employees are assigned to render services in the Territory in connection with the Advertising of the Funded Qualifying Project, appropriately allocated to the Funded Qualifying Project; trailers, including without limitation, the cost of production thereof. | ||
C. | All costs and expenditures in connection with so-called four-wall deals not recouped pursuant toParagraph 2.A.(v). | ||
D. | All costs of preparing and delivering the Funded Qualifying Project for distribution, including without limitation, all costs incurred in connection with the following: Screenings and audience testing and market studies; the production of foreign language versions of the Funded Qualifying Project, whether dubbed, superimposed or otherwise; changing the title of the Funded Qualifying Project for release in any part of the Territory or for exhibition on television or other media, or in order to conform to the particular national or political prejudices likely to be encountered in any part of the Territory or for any other purpose or reason; censorship costs including, without limitation, the legal costs of censorship proceedings; and producing and delivering trailers of the Funded Qualifying Project. | ||
E. | All sales, use, receipts, excise, remittance, value added and other taxes (however denominated) to any governmental or taxing authority assessed upon, or with respect to, the negatives, duplicate negatives, prints or sound records of the Funded Qualifying Project, or upon the use, distribution or other exploitation of the Funded Qualifying Project, or upon the revenues derived therefrom, or any part thereof and any and all sums paid or accrued on account of duties, customs and imports, costs of acquiring permits, and any similar authority to secure the entry, licensing, exhibition, performance, use or televising of the Funded Qualifying Project in any country or part thereof, regardless of whether such payments or accruals are assessed against the Funded Qualifying Project or the proceeds thereof or against a group of Productions in which the Funded Qualifying Project may be included or the proceeds thereof (in the latter case with an allocation being made to the Funded Qualifying Project that is fair and reasonable). In no event shall the recoupable amount of any such tax (however denominated) imposed upon Distributor be decreased (nor the Gross Receipts increased) because of the manner in which such taxes are elected to be treated by |
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Distributor in filing net income, corporate franchise, excess profits or similar tax returns. There shall be no deduction from the Gross Receipts, and Issuer shall not be required to pay or participate in, (x) Distributor’s or any Subdistributor’s United States Federal and State income taxes and franchise taxes based on Distributor’s or such Subdistributor’s net income, or (y) any income tax payable to any country or Territory by Distributor or any Subdistributor based on the net earnings of Distributor or such Subdistributor in such country or Territory. Expenses of transmitting to the United States any funds accruing to Distributor from the Funded Qualifying Project in foreign countries, such as cable expenses, or any discounts from such funds taken to convert such funds directly or indirectly into U.S. dollars and the cost of contesting or settling any of the matters described above, with a view to reducing the same, shall similarly be deducted. If any taxes deducted pursuant hereto are subsequently refunded to Distributor by the taxing authority to which such taxes were initially paid, the Distribution Expenses previously deducted pursuant to thisParagraph shall be readjusted by crediting thereto an amount equal to so much of such refund received by Distributor as shall represent a refund of taxes in respect of the Funded Qualifying Project previously deducted. | |||
F. | Copyright, patent and trademark expenses; royalties payable to manufacturers of sound recording and reproducing equipment; reasonable legal fees to other than Distributor’s regularly employed legal department; and any and all other expenses in addition to those referred to herein incurred by Distributor in connection with the licensing of the Funded Qualifying Project for exhibition or for other uses of the Funded Qualifying Project including, without limitation, any exploitation of the rights granted to Distributor. | ||
G. | Dues and assessments from the MPAA or any similar associations or bodies, including, without limitation, payments for the support of the Academy of Motion Picture Arts and Sciences. | ||
H. | Costs and expenses (including, without limitation, reasonable attorneys’ fees) incurred by Distributor in connection with the following: All costs incurred in securing any amounts included in Gross Receipts, any action taken by Distributor (whether by litigation or otherwise) in enforcing collection of Gross Receipts including, without limitation, costs of collection from the Copyright Royalty Tribunal (or similar agencies established under the laws of any jurisdiction); or (on a pro rata basis) for checking attendance and exhibitors’ receipts; or to prevent unauthorized exhibition or distribution of the Funded Qualifying Project; or to prosecute or defend actions under the anti-trust laws; or to prevent any impairment of, encumbrance on or infringement upon, the rights of Distributor in and to the Funded Qualifying Project; or to audit the books and records of any exhibitor, Subdistributor or licensee; or to recover monies due pursuant to any agreement relating to the distribution or exhibition of the Funded |
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Qualifying Project; provided, that no deduction shall be made for the fees or salaries of Distributor’s regularly employed staff attorneys and accountants. |
J. | All monies paid or payable pursuant to applicable collective bargaining agreements by reason of any exhibition or other exploitation of the Funded Qualifying Project or by reason of, or as a condition for, any use, re-use or re-run thereof for any purpose or in any manner whatsoever (herein called “Residuals”), and all taxes, pension fund contributions, and other costs and payments computed on or payable in respect of any such residuals or participations in the net profits or Gross Receipts of the Funded Qualifying Project to any Person, including, without limitation, any firm, corporation, guild, union, trustee or fund (other than Distributor); provided, however, that if Issuer or any principal stockholder of Issuer, or any heirs, executors, administrators, successors or assigns of Issuer or any such stockholder, is entitled, either directly or by way of participation in any pension fund, to any such Residuals, the amount payable shall be treated as an advance against Issuer’s share of the receipts hereunder, and conversely, any share of the receipts paid to Issuer hereunder shall constitute an advance against such Residuals payable to or for the benefit of Issuer or any principal stockholder or member of Issuer, or any such heirs, executors, administrators, successors or assigns; provided further that thisParagraph shall not be interpreted to require Distributor to make any payments that it is not required under the Agreement to make. | ||
K. | Participations including without limitation Third Party Participations; | ||
L. | All costs associated with the exploitation of the Home Video Right including without limitation, all manufacturing, reproduction, shipping, packaging, storage, boxing, sorting and delivery of Videograms. | ||
M. | All insurance covering or relating to the distribution of the Funded Qualifying Project, including, without limitation, errors and omissions insurance (to the extent not provided by Issuer); provided, that Distributor shall not be obligated to take out or maintain any such insurance. The net receipts of any insurance policy maintained by Distributor in respect of the Funded Qualifying Project actually received by Distributor by way of reimbursement for any cost or expense previously deducted as a Distribution Expense shall be applied in reduction of such cost or expense to the extent that the same was reimbursed by such proceeds. | ||
N. | All discounts, rebates, or credits actually received by Distributor or any Subdistributor shall be taken into account in computing Distribution Expenses in the Accounting Period in which such discount, rebate or credit is actually received, with the exception of those based upon either (i) the volume or quantity of Advertising, prints, negatives, Videograms or other materials ordered annually, or |
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(ii) | the manner or time of payment of any Distribution Cost and Expense which shall not be taken into account. | ||
O. | Any and all other expenses in addition to those referred to herein incurred by Distributor in connection with the exercise of the Rights in the Funded Qualifying Project. |
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(Deliver to “Vice President, Legal & Business Affairs”).
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