First Look Agreement
As of
The following shall constitute the principal terms of a "first look" agreement between and , LLC ("Content Provider"), it being the intent of the parties to enter into a more formal, long-form agreement with respect to the option, purchase and sale of any particular property (or properties) as contemplated below, which agreement shall include the terms and conditions provided for herein (where applicable), and such other terms and conditions as are customary for such agreements in the motion picture industry taking into account the stature of Content Provider and therein (including, without limitation, accounting and audit rights provisions, late payment financing charges, related party transactions, etc.) to be negotiated in good faith between the parties.
First Look
Production Company's Rights.
For the Term hereof (as extended, if extended, as provided below), the Production Company (including ) shall have an exclusive "first look" and option to purchase (for the option fees and purchase prices as set forth below) any and all properties, subject to Content Provider's exclusions as set forth below, which are solely owned and controlled by Content Provider (provided that if and to the extent any rights to any such properties are not solely owned and controlled by Content Provider, then such rights therein as are solely owned and controlled by Content Provider shall be subject to said "first look"), from the "Content Provider Library" (as defined below), which the Production Company desires to develop as a live-action feature film intended for initial theatrical release ("Feature Film") anywhere in the universe. Upon payment of the applicable portion of the purchase price (as provided in Section (4.B.i)) below, Content Provider shall assign to the Production Company (to the extent that said rights are owned and controlled by Content Provider) the sole and exclusive (subject to Section (1.C.i) below) right under copyright and otherwise, to develop, produce, distribute, advertise, promote and otherwise exploit a Feature Film based on the property purchased hereunder, in any language, in perpetuity (subject to Content Provider's reserved rights and reversion right as set forth below), in any and all territories throughout the universe, and by any and all means and methods now or hereafter known (including, but not limited to, Theatrical, Non-Theatrical, Television, Home Video (encompassing videocassette, videodisc, all other forms of videograms whether now known or hereafter devised), any computer-assisted media (including, but not limited to, CD-ROM and similar disc systems (but not CD-I), DVD, Internet distribution, cable-modem and any other devices or methods now existing or hereafter devised) provided that the version of the Feature Film exploited via any such computer-assisted media must be essentially the same version exploited in the other media (i.e., in a consecutive linear format and not an interactive format) and certain allied and ancillary rights, including music, music publishing, screenplay publishing and soundtrack rights (subject to Content Provider's reserved rights and administrative rights as set forth below) (collectively, the "Rights"). The Rights shall also include the right to produce and exploit Feature Film sequels, prequels and/or remakes (as such terms are customarily understood in the motion picture industry, i.e., with respect to sequels and/or prequels, Feature Films in which any of the characters appearing in the first Feature Film based on a property are depicted in new or different events than those in which such characters participated in such first Feature Film, and with respect to remakes, Feature Films in which the characters appearing in the first Feature Film based on a property are depicted as participating for the most part in the same events in which said characters participated in such First Feature Film) of any Feature Film produced pursuant hereto, subject to the payment of the applicable option fees and purchase prices and Content Provider's reversion rights as set forth below.
First Look Submissions/Production Company Response Period.
The Parties acknowledge that the "Content Provider Library" consists of hundreds of comics, graphic novels, serializations, storybooks, etc. During the Term (as defined in Section (2.C) below), Content Provider shall select and present properties from the Content Provider Library for the Production Company's first look consideration hereunder, provided that Content Provider shall present no less than such properties in each year of the Term. The first such presentation shall consist of no less than such properties. Those properties in the Content Provider Library not so selected and presented by Content Provider shall not be presented (i.e., "pitched") by Content Provider to third parties other - than talent (i.e., writers, directors and/or actors) during the Term, except that Content Provider shall have the right to present to any third parties those properties that Content Provider wishes to develop for initial release in television and/or as animation (as opposed to live-action) projects, provided that Content Provider informs such parties of the Production Company's Feature Film "first look" rights hereunder with respect thereto.
Within 0 days of Content Provider's presentation of a Content Provider property to the Production Company as provided above (provided that the property in question is either an English-language property or an English-language translation thereof is provided to the Production Company by Content Provider, and, if not, then the Production Company shall have 0 days to respond) (hereinafter, the "Production Company Response Period"), the Production Company shall notify Content Provider in writing as to whether or not it will option such property hereunder. The Production Company's failure to provide any written notice to Content Provider within the Production Company Response Period (or notice that it will not option such property) shall constitute a rejection of said property hereunder, giving Content Provider the right to develop and/or produce the property elsewhere without any further obligation to the Production Company; provided, however, that Content Provider shall not submit more than properties for the Production Company's consideration hereunder within any consecutive period (a "Bulk Submission"), unless the parties have mutually agreed in good faith on the time period in which the Production Company must respond to the properties included in such Bulk Submission. If the Production Company notifies Content Provider in writing within the Production Company Response Period that it will option such property hereunder, the Production Company shall be obligated to pay the applicable option fee as and when provided for in Section 4. below (i.e., upon Content Provider's furnishing to the Production Company of a short- form option agreement and the Production Company's approval of chain of title for the applicable property, subject to the additional terms and conditions set forth in Section (4.A) below), failing which Content Provider shall have the right to develop and/or produce the property elsewhere without any further obligation to the Production Company.
Content Provider's Reserved Rights.
(Content Provider hereby reserves (a) "television program rights" (defined as the right to develop, produce, distribute, advertise, promote and otherwise exploit any property as a television pilot, movie-of-the-week, special or episodic series for initial exhibition in any television medium, and not to be released theatrically unless the parties otherwise mutually agree in writing on the terms of such theatrical exploitation or unless and until the Production Company's rights with respect to such property terminate or revert to Content Provider as provided for herein), subject to Section (1.C.iii) and (1.C.ii) below, (b) all print publication rights in any and all properties other than screenplay publishing, subject to Section (1.C.iv) below,(c) all interactive rights, (d) theme rights, (e) live theater and radio rights and (vi) all animation rights, subject to Section (1.C.iii) below. Any rights not specifically granted to the Production Company herein are reserved to Content Provider. Without limiting the generality of the foregoing, the Production Company hereby acknowledges and agrees that it shall only acquire non-exclusive rights with respect to the characters appearing in any Feature Film produced pursuant hereto, and that Content Provider shall have the right to use and exploit such characters (whether or not included in the original property) in connection with the exercise of any of Content Provider's reserved (and/or reverted) rights hereunder, subject to Section (1.C.v) below. For the avoidance of doubt, if the property purchased by the Production Company hereunder is a serial (e.g., a comic book or strip with more than one episode, volume or issue), the Production Company's rights to the elements appearing in the property (e.g., characters, settings, devices, etc.) shall be negotiated in good faith as part of the long-form option agreement to be entered into with respect to such property pursuant hereto (i.e., the parties shall mutually agree on which elements of such property shall be exclusively granted to the Production Company for purposes of exercising the Production Company's Rights, subject always to Content Provider's reserved rights as provided herein, and provided that in no event shall the Production Company's Rights include any elements which appear in the serial after the date of the Production Company's purchase of such property hereunder, all right, title and interest to which shall be reserved to Content Provider). In the event that the parties are unable to so mutually agree with respect to such elements, then Content Provider shall have the right to withdraw said property from this first look agreement, and Content Provider shall have the right to develop and/or produce the property elsewhere without any further obligation to the Production Company.
other than half-hour animated television series rights which are addressed in Section C.(iii) below, the television program rights to properties purchased by the Production Company hereunder shall be subject to a first negotiation/first refusal right in favor of the Production Company. For purposes hereof, said first negotiation/first refusal right shall mean the following: Content Provider and the Production Company shall negotiate in good faith for a period of 0 days, and in the event that the parties cannot reach agreement within said period on the terms and conditions of the Production Company's acquisition of any such television program rights, then Content Provider may negotiate with third parties regarding such television program rights, but before Content Provider may enter into any agreement with respect thereto on financial terms which are (on the whole) equal or less favorable to Content Provider than the terms last offered by the Production Company, Content Provider shall inform the Production Company in writing of the principal terms of the less favorable offer that Content Provider is prepared to accept ("Acceptable offer"), and the Production Company shall have the option ("Acceptable Offer Matching Right") to acquire the television program rights which are the subject of said Acceptable Offer under the same terms and - conditions set forth in the Acceptable Offer (provided that the Production Company shall not have to match non-financial terms which other third parties cannot match), provided that the Production Company must notify Content Provider in writing of its election to exercise such Acceptable Offer Matching Right as aforesaid within 0 days of its receipt of the terms of the applicable Acceptable offer; otherwise, Content Provider shall be free to accept the Acceptable Offer. In the event that Content Provider does conclude an agreement for the disposition of such television program rights with a third party pursuant to the foregoing, such agreement must provide for an 0 months holdback period on the exploitation of said rights commencing from the earlier of (a) the date of the actual initial release of the Production Company Feature Film (in any medium) and (b) the date which is 0 years from the date of the payment by the Production Company of the option fee for the applicable property hereunder.
all half-hour animated television series rights to the properties in the Content Provider Library are reserved to Content Provider, and Content Provider shall be free to exploit same in Content Provider's sole discretion without any obligation to the Production Company whatsoever. All other animation rights to any properties purchased by the Production Company hereunder shall be "frozen" and neither party shall have the right to exploit same unless the parties mutually agree otherwise in writing.
the novelization rights with respect to any Feature Film produced pursuant hereto shall be subject to a first negotiation/first refusal right in favor of the Production Company on the same terms and conditions as set forth in Section (1.C.ii) above.
If, in connection with the development and/or production of a property after the option and/or acquisition thereof by the Production Company hereunder, a new character is created by or at the direction of the Production Company and/or any executives and/or employees of the Production Company (as opposed to an "evolution" of an original character (or of a group or "race" of characters (e.g., "Klingons")), such as a reverse gender or reverse race character or a character that is created with a reasonably discernable link between the original character and the evolved character (including, without limitation, and for purposes of illustration only, a character is "aged", is given a new power or ability, is introduced as related to or a part of a family or recognized group or race of characters (e.g., "Supergirl", "Batgirl", etc.), the character's name reuses a name or part of a name such that it appears to be derived from or connected with the original character (e.g., the "Franklin Richards" character, which is introduced as the son of Reed and Sue Richards of the "Fantastic Four")), and as opposed to a character created by or at the direction of Content Provider and/or any executives and/or employees of Content Provider ("New Production Company-created Character"), then the Production Company shall own the rights to said character (subject to the other terms and conditions of this agreement), provided that Content Provider shall have the right to utilize any such New Production Company-created Character(s) in connection with its exercise/exploitation of its reserved rights hereunder, subject to the following: (i) with respect to the merchandising of said character, the terms of Section 9. below shall apply, (ii) with respect to Content Provider's exercise of reserved publishing rights and interactive rights (including video game rights), if the exercise thereof includes said New Production Company-created Character, the Production Company shall be entitled to an amount equal to % of all non-refundable, non-returnable income received by Content Provider from the exploitation of such rights (Content Provider Publishing/Interactive Gross Receipts), after Content Provider's deduction "off-the-top" from said Content Provider Publishing/Interactive Gross Receipts of a % distribution fee and recoupment of all of Content Provider's direct, out-of-pocket costs and expenses incurred in connection therewith, and (iii) with respect to Content Provider's exercise of any other reserved rights to the extent such exercise includes said New Production Company-created Character, the Production Company shall be entitled to an amount equal to % of all non-refundable, non-returnable net income received by Content Provider from the exploitation of such rights (i.e., after recoupment by Content Provider of any direct, out-of-pocket cost and expenses incurred, and/or direct, out-of-pocket investments made, by Content Provider in connection therewith). Further, if and to the extent any new non-character elements (such as a setting, a device, etc.) created by or at the direction of the Production Company and/or any executives and/or employees of the Production Company (as opposed to by or at the direction of Content Provider and/or any executives and/or employees of Content Provider) have identifiably unique properties or characteristics and names (e.g., the "Starship Enterprise," the "neuralizer" used in "Men in Black"), then such non-character elements shall be treated as a New Production Company-created Character for all purposes hereof, provided that new storylines and plots created by or at the direction of the Production Company and/or any executives and/or employees of the Production Company shall only receive such treatment if and to the extent that Content Provider's exploitation thereof would otherwise constitute an infringement of the Production Company's rights under applicable copyright law. For the avoidance of doubt, for purposes of determining whether a new character or a new non- character element has been created by or at the direction of the Production Company and/or any executives and/or employees of the Production Company for purposes of this Section only, the existence of a "work-for- hire" or similar agreement between the Production Company and any writer/creator shall not be dispositive, but Content Provider shall have the burden of furnishing written evidence that such new character or new non-character element was created by or at the direction of Content Provider and/or executives and/or employees of Content Provider (e.g., correspondence between a Content Provider executive and the writer/creator in question reflecting Content Provider's instructions to said writer/creator).
Notwithstanding anything to the contrary herein, in any and all events, Content Provider shall have the right to use the title(s) of, and/or any logos (other than credit logos) created in connection with, any Feature Film, in connection with the exploitation of its reserved rights hereunder, without any compensation being payable to the Production Company therefor.
Content Provider's Excluded Properties.
The following properties and/or rights shall not be subject to the Production Company's "first look" hereunder:
any property which Content Provider has developed, is developing or hereafter develops at its (currently ) offices, specifically including, without limitation, any property created by or with (e.g., "", "", etc.).
any rights in any properties previously sold by Content Provider to third parties (e.g., if Content Provider reserved sequel, remake and/or other rights in connection with the sale of "", such rights are not subject to the first look hereunder).
any property in which Content Provider obtains any rights as a result of a pending settlement with (and certain affiliated companies) and and certain affiliated companies.
The property currently entitled "".
Up to properties in each of the Initial Term, the Second Term and the Third Term (all as defined below, and if and to the extent applicable) which Content Provider may designate, in its sole discretion, as a property to be developed as a high-budget motion picture (i.e., with a Content Provider proposed production budget of at least ) ("High Budget Project(s)"), provided that Content Provider shall first present such High Budget Project(s) to the Production Company hereunder with Content Provider's rough budget proposal (which shall be confirmed in writing by Content Provider promptly after such presentation), and the following shall apply:
if the Production Company is not prepared to contractually commit to acquiring/developing/producing the applicable High Budget Project in accordance with Content Provider's budget proposal (or at a higher budget) within the Production Company Response Period, then Content Provider shall be free to develop, produce and exploit said High Budget Project(s) with one or more third parties without any further obligation to the Production Company whatsoever.
if the Production Company is prepared to contractually commit to acquiring/developing/producing the applicable High Budget Project in accordance with Content Provider's budget proposal (or at a higher budget) within the Production Company Response Period, the parties will negotiate in good faith the terms and conditions thereof for a period of- 0 days which period shall commence no later than the last day of the Production Company Response Period). If the parties cannot agree on such terms and conditions within said , then Content Provider shall be free to develop, produce and exploit said High Budget Project(s) with one or more third parties, provided that if Content Provider is willing to accept financial terms which on the whole are equal to or less favorable to Content Provider than those last offered by the Production Company, Content Provider shall offer the Production Company the right to match such equal or less favorable offer.
any properties acquired by Content Provider after the date set forth above, unless the Production Company is prepared to contractually commit to develop and produce said properties as an English-language production budgeted between and and intended for general theatrical release in the within the Production Company Response Period and to recognize and comply with any applicable third party entitlements or requirements of which Content Provider has notified the Production Company in writing (provided that such properties shall otherwise be subject to the terms and conditions of Section (1.B.i) above).
Term
0 years from the date set forth above ("Initial Term"). The parties agree that the Production Company shall option at least property hereunder within the first 0 days of the Initial Term hereunder, subject to Content Provider's making available to the Production Company, upon commencement of the Initial Term hereunder, a minimum of properties which are available for option under the terms hereof. If at the conclusion of such 0 days period, the Production Company has not optioned a Content Provider property hereunder, this agreement shall be automatically terminated without the need for any further action on the part of Content Provider or the Production Company.
In the event that the Production Company shall have either:
optioned properties from Content Provider hereunder during the Initial Term, or
commenced principal photography (subject to events of force majeure as commonly understood in the motion picture industry or cast or director unavailability, but only if such persons have previously been made "pay-or-play" in writing), and provided that commencement of principal photography of any Feature Film shall only count for purposes hereof if any failure to complete production of the Feature Film in question is due only to events beyond the reasonable control of the Production Company, of at least one Feature Film based on a purchased property hereunder during the Initial Term, then the Initial Term shall automatically be extended for an additional and consecutive period ("Second Term") under the same terms and conditions hereof. If the requirements for such automatic extension of the Initial Term are not fully satisfied, then this agreement shall automatically expire at the end of the Initial Term without the need for any further action on the part of Content Provider or the Production Company, provided that any payments accrued and not yet paid in full to Content Provider hereunder shall remain payable by the Production Company. In the event that this agreement is extended for such Second Term, but the Production Company fails to option at least Content Provider property hereunder within the first0 days of such Second Term, then this agreement shall be automatically terminated without the need for any further action on the part of Content Provider or the Production Company, provided that any payments accrued and not yet paid in full to Content Provider hereunder shall remain payable by the Production Company.
In the event that the Production Company shall have (a) commenced principal photography during the Second Term (subject to events of force majeure as commonly understood in the motion picture industry or cast or director unavailability, but only if such persons have previously been made "pay-or-play" in writing, and provided that commencement of principal photography of any Feature Film shall only count for purposes hereof if any failure to complete production of the film Feature Film in question is due only to events beyond the reasonable control of the Production Company, of at least Feature Films based on properties purchased hereunder, and (b) theatrically released during the Initial Term and/or Second Term at least Feature Films produced under this agreement on a minimum of screens (for each such Feature Film) with respect to a foreign-language Feature Film, and on a minimum of screens in the with respect to an English-language Feature Film, then the Second Term shall automatically be extended for an additional and consecutive period ("Third Term") under the same terms and conditions hereof. If the requirements for such automatic extension of the Second Term are not fully satisfied, then this agreement shall automatically expire at the end of the Second Term without the need for any further action on the part of Content Provider or the Production Company, provided that any payments accrued and not yet paid in full to Content Provider hereunder shall remain payable by the Production Company. In the event that this agreement is extended for such Third Term, but the Production Company fails to option at least Content Provider property hereunder within the first 0 days of such Third Term, then this agreement shall be automatically terminated without the need for any further action on the part of Content Provider or the Production Company, provided that any payments accrued and not yet paid in full to Content Provider hereunder shall remain payable by the Production Company. The Initial Term, if and to the extent extended to a Second Term and a Third Term as provided herein, is sometimes referred to herein as the "Term".
Overhead and Development Funds
During the Initial Term, the Production Company shall provide Content Provider with a non-accountable, non-recoupable (except as provided in Sections (3.C) and (5.A) below) development fund ("Development Fund") of . The Development Fund shall be payable to Content Provider in equal monthly installments, subject to the terms of Section 2. above. Content Provider shall have the right to expend the Development Fund in connection with the acquisition and development of properties as Content Provider shall determine in its sole discretion.
During the Initial Term, the Production Company shall provide Content Provider with a non-accountable, non-recoupable (except as provided in Section (3.C) below) contribution to Content Provider's general overhead expenses ("Overhead Fund") of . The Overhead Fund shall be payable in equal monthly installments (subject to the terms of Section 2.above), and shall be expended by Content Provider in its sole discretion, provided that expenditures incurred by Content Provider in connection with any specific property after the Production Company has optioned same hereunder shall be reimbursed by the Production Company to Content Provider upon submission of Content Provider's invoices and accompanying "back-up" documentation therefor and are not intended to be included in said overhead Fund.
Notwithstanding that the Development and Overhead Funds are not recoupable from any financial entitlements of Content Provider hereunder, the Production Company shall have the right to include % thereof in the Negative Cost of the first Feature Film produced pursuant hereto, and thereafter shall apportion such Development and Overhead Funds equally among the Negative Cost of all Feature Films produced pursuant hereto (e.g., if two such Feature Films are produced, then % thereof shall be included in the Negative Cost of each such Feature Film, and so on).
Option/Purchase Prices
In consideration for a 0 years option to acquire the Rights to each property which the Production Company elects to option in the Initial Term hereunder, the option fee shall be , payable upon execution of a mutually approved short- form-option agreement and the Production Company's approval of chain of title (provided that (a) such approval may not be unreasonably withheld, (b) if no written objection thereto is furnished by the Production Company to Content Provider within 0 daysof Content Provider's submission thereof to a Production Company business affairs executive, said chain of title shall be deemed accepted by the Production Company for all purposes hereof, and (c) if any such written objection is so timely furnished by the Production Company and Content Provider shall not be able to cure the deficiency specified by the Production Company to the Production Company's reasonable satisfaction within of Content Provider's receipt of said notice, Content Provider shall have the right to exclude said property front this agreement and to offer same to third parties, provided that (i) Content Provider must first notify the Production Company in writing of its intent to do so, and the Production Company shall have a 0 days period from its receipt of said notification to accept said chain of title for purposes hereof and to pay the applicable option fee, and (ii) if the chain of title that Content Provider intends to submit to a third party is materially different from that previously submitted to the Production Company, Content Provider must first submit the materially different chain of title to the Production Company, which submission shall be treated in the same manner as an initial submission of chain of title and all of the foregoing provisions shall apply with respect to such second submission, except that the Production Company shall only have 0 days to review same). The applicable option fee for the Rights to properties optioned in the Second Term if any, of the agreement shall be and the option fee for properties optioned in the Third Term, if any, of the agreement shall be (all payable as provided above).
In consideration for the acquisition of the Rights to each property which the Production Company elects to purchase hereunder, Content Provider shall be paid an amount equal to % of the amount by which such Feature Film's final direct negative cost (excluding only overhead, third party bond fees (if any), unspent contingency and direct, out-of-pocket financing costs, but inclusive of any fixed, as opposed to contingent, deferments) ("Negative Cost"), as certified to Content Provider by the completion guarantor for the applicable Feature Film, or if there is no such Guarantor, by an appropriate executive of the Production Company (provided that in all events Content Provider shall have customary audit rights with respect to such Negative Cost) exceeds (no cap shall exist with respect to the foregoing), which amount shall be payable to Content Provider as follows:
one half of said sum shall be calculated based on the "all-in" final production budget ("Budget") approved by the Production Company for such Feature Film (which Budget shall be furnished to Content Provider no later than upon commencement of principal photography thereof), and paid to Content Provider no later than upon commencement of principal photography of said Feature Film, and the Rights to the applicable property shall then vest with the Production Company only upon the payment to Content Provider of such amount, and
the balance of said sum shall be calculated based on the Negative Cost and paid to Content Provider within 0 days of Content Provider's receipt of the Negative Cost certification for such Feature Film, which certification shall be provided to Content Provider within 0 days of complete. delivery to the Production Company of said Feature Film, and in any and all events such certification must be provided and the applicable payment made to Content Provider prior to the earlier of (a) the date of the initial release or screening of such Feature Film (including in film festivals and press screenings) in any media, and (b) the date which is the 0 years anniversary of the commencement of principal photography of such Feature Film.
The option fees with respect to the Rights to any Feature Film sequels, prequels and/or remakes to any of the properties purchased hereunder shall be % of the applicable option fees payable for the original property, which option fees shall be payable to Content Provider no later than commencement of principal photography of the sequel, prequel and/or remake in question, subject to Section (5.B) below. The purchase price for the Rights to such Feature Film sequels, prequels and/or remakes shall be calculated and paid in the same manner as the purchase price for the first Feature Film as provided in Section (4.B) above.
Reversion
In the event that the Production Company has optioned a Content Provider property hereunder and not commenced principal photography of a Feature Film based thereon within the 0 years period following the option thereof (subject to events of force maj eure as commonly understood in the motion picture industry or cast or director unavailability, but only if such persons have previously been made "pay-or-play" in writing, and provided, however, that commencement of principal photography of any Feature Film shall only count for purposes hereof if any failure to complete production of the Feature Film in question is due only to events beyond the reasonable control of the Production Company), then the Rights to such property shall revert to Content Provider, subject to a lien in the Production Company's favor in an amount equal to that portion of the Development Fund (if any) which was used by Content Provider to acquire/develop the property in question, plus interest thereon in the amount of prime plus %, to be repaid to the Production Company upon set-up elsewhere, but in no event later than commencement of principal photography of any production based on such property set up elsewhere by Content Provider. The amount reimbursable to the Production Company pursuant to the foregoing shall also be subject to increase if and to the extent that Content Provider also wishes to acquire the rights to any materials created by the Production Company in connection with the Production Company's development of such property, by an amount equal to the Production Company's direct, out-of-pocket development costs incurred in connection with the creation of such materials plus interest thereon in the amount of prime plus % (to be repaid on the same basis as provided in the foregoing sentence).
The Production Company's right to produce a Feature Film sequel (or prequel) and/or remake to any Feature Film produced pursuant hereto will revert to Content Provider with no further obligation to the Production Company if the Production Company has not paid the option fee set forth above for such Feature Film sequel (or prequel) Rights within the time period ending on the earlier of (i) the date which is after the date of the initial release of the prior Feature Film upon which such sequel, prequel or remake is to be based ("Prior Feature Film") in any media, and (ii) the date which is after the start of principal photography of such Prior Feature Film. Once the Rights to any such Feature Film sequel, prequel and/or remake have been so optioned, if the Production Company has not commenced principal photography of a Feature Film based thereon within the 0 years period following such option (subject to events of force majeure as commonly understood in the motion picture industry or cast or director unavailability, but only if such persons have previously been made "pay-or-play" in writing, and provided, however, that commencement of principal photography of any Feature Film shall only count for purposes hereof if any failure to complete production of the Feature Film in question is due only to events beyond the reasonable control of the Production Company), then such Rights shall revert to Content Provider, subject to the lien described in Section (5.A) above. For the avoidance of doubt, if such sequel, prequel and/or remake rights revert to Content Provider as provided for herein, this shall mean that all rights in and to all elements (including, without limitation, characters, settings, devices, titles, etc.) of the Prior Feature Film(s) produced by (or on behalf of) the Production Company shall revert to Content Provider and Content Provider shall have the right to exploit same without any further obligation to the Production Company and the Production Company shall no longer have any interest in said rights except in connection with the Production Company's continuing exploitation of its Rights to such theretofore produced Feature Films.
Additional Compensation.
With respect to each Feature Film produced pursuant hereto, the following additional compensation shall be paid to Content Provider or , as applicable:
Content Provider
Contingent compensation in an amount equal to % of adjusted gross receipts received by or credited to the Production Company from the exploitation of such Feature Film in any and all media and any sequels and prequels thereto (not cross-collateralized among any such Feature Films), with such adjusted gross receipts to be defined, calculated, accounted for and paid pursuant to a definition to be negotiated in good faith between the parties ("AGR"), from all sources throughout the world after "cash breakeven" (as such term is customarily understood in the motion picture industry) with an "across-the- % of AGR after "cash breakeven" with an "across- the-board" % distribution fee, and escalating further to % of AGR at "initial actual breakeven" (as such term is customarily understood in the motion picture industry), provided that video receipts shall be calculated as follows:
on the basis of a % royalty for rental sales and % for sell-through sales (it being agreed that video royalties shall be based on the wholesale price and no distribution fee or costs or expenses shall be deductible therefrom); and/or
in the event that video exploitation is done on a "rentrak" or other rental revenue sharing basis, then % of the Production Company's gross receipts therefrom (without any fees or costs whatsoever being deductible) shall also be included in gross receipts.
In connection with each Feature Film produced pursuant hereto, Content Provider shall receive the following bonus payments, if any, which bonus payments shall be applicable against the Contingent Compensation payable pursuant to sub Section (6.A.i) above:
With respect to a Feature Film (as defined below), bonus payments of (a) if and when cumulative box office for the territory as reported by EDI reaches , (b) if and when cumulative box office for the rest of the world exclusive of the territory (the "Foreign Territory") as reported by EDI, if readily available (or if such EDI statistics are not readily available, then as reported by Daily Variety), reaches , (c) if and when cumulative box office for the territory as reported by EDI reaches , (d) if and when cumulative box office for the Foreign Territory as reported by EDI, if readily available (or if such EDI statistics are not readily available, then as reported by Daily Variety), reaches s, (e) if and when cumulative box office for the territory as reported by EDI reaches and (f) if and when cumulative box office for the Foreign Territory as reported by EDI, if readily available (or if such EDI statistics are not readily available, then as reported by Daily Variety), reaches .
With respect to a Foreign Feature Film (as defined below), bonus payments of each if and when (a) cumulative box office for the Foreign Territory as reported by EDI, if readily available (or if such EDI statistics are not readily available, then as reported by Daily Variety),reaches an amount equal to times the Negative Cost of such Feature Film, (b) cumulative box office for the territory as reported by EDI reaches an amount equal to times the aggregate of (i) the direct, out-of-pocket print and advertising costs (if any) incurred by the Production Company solely for the purposes of distributing such Foreign Feature Film in the territory, plus (ii) any direct, out-of-pocket dubbing, voice-over and/or subtitling costs (if any) incurred by the Production Company solely for the purpose of distributing such Foreign Feature Film in the territory, plus (iii) any direct, out-of-pocket production costs (if any) incurred by the Production Company solely for the purpose of distributing such Foreign Feature Film in the territory, but only to the extent such production costs are in addition to, and do not constitute part of, the Negative Cost of such Foreign Feature Film ( (i) , (ii) and (iii) being collectively referred to hereinafter as "FFF Distribution Costs"), (c) cumulative box office for the Foreign, Territory as reported by EDI, if readily during pre-production of the applicable Feature Film and % thereof on a weekly basis during principal photography of the applicable Feature Film (provided that such amounts shall be deemed to constitute an advance against a customary 20/60/10/10 payment schedule)'. To-the extent that the Negative Cost of such Feature Film is greater than the Budget, the payment of the balance of such executive producer/producer fee shall be paid to Content Provider pursuant to the terms of Section (4.B) (ii) above (i.e., within 0 days of Content Provider's receipt of the Negative Cost certification for the applicable Feature Film). producer/producer fee payable available (or if such EDI statistics are not readily available, then as reported by Daily Variety), reaches an amount equal to times the Negative Cost of such Feature Film, (d) cumulative box office for the as reported by EDI reaches an amount equal to times the FFF Distribution Costs for such Feature Film, (e) cumulative box office for the Foreign Territory as reported by EDI, if readily available (or if such EDI statistics are not readily available, then as reported by Daily Variety), reaches an amount equal to times the Negative Cost of such Feature Film, and (f) cumulative box office for the as reported by EDI reaches an amount equal to times the FFF Distribution Costs for such Feature Film.
With respect to all Feature Films, the Production Company shall furnish the EDI and Daily Variety box office reports to Content Provider via telecopier within 0 days of the Production Company's receipt of same.
shall be entitled to an executive producer/producer fee in an amount equal to % of such Feature Film's Negative Cost (as certified and subject to Content Provider's audit rights as provided above), with a compensation floor of and a ceiling of , provided that if the Budget for the Feature Film exceeds , then said ceiling shall be the greater of (a) and (b) an amount equal to 's then- prevailing producer fee "quote" (as such term is commonly understood in the motion picture industry). Said fee shall be initially calculated based on the Budget of the applicable Feature Film, and, based on such initial calculation, such amount shall be payable % thereof on a weekly basis during pre-production of the applicable Feature Film and % thereof on a weekly basis during principal photography of the applicable Feature Film (provided that such amounts shall be deemed to constitute an advance against a customary 20/60/10/10 payment schedule)'. To-the extent that the Negative Cost of such Feature Film is greater than the Budget, the payment of the balance of such executive producer/producer fee shall be paid to Content Provider pursuant to the terms of Section (4.B.ii)(ii) above (i.e., within 0 days of Content Provider's receipt of the Negative Cost certification for the applicable Feature Film).
shall also be paid an executive producer/producer development fee ("Development Fee"), concurrently with the payment of the option fee for a Feature Film as provided in Section (4.A) above, which Development Fee shall be applicable against the executive producer/producer fee payable , in an amount equal to with respect to the fourth Feature Film produced pursuant hereto, and in an amount equal to with respect to the fifth such Feature Film and all Feature Films thereafter produced pursuant hereto.
Minimum Budget.
With respect to properties acquired by the Production Company hereunder, if the Production Company produces an English-language Feature Film based thereon (except for an English-language production which takes place in the UK with predominantly UK actors) (" US Feature Film"), the Budget must be at least . If the Production Company produces a foreign-language Feature Film based thereon, or, an English-language Feature Film which takes place in the UK with predominantly UK actors ("Foreign Feature Film"), there shall be no minimum production budget. The Production Company acknowledges that the foregoing is of the essence and a material term of this agreement.
Credits.
With respect to each Feature Film produced by the Production Company pursuant hereto, Content Provider and (as applicable) shall be accorded and entitled to the following credits:
will receive, at his option, a shared Executive Producer or Producer credit. In addition, Content Provider can elect to receive up to two more (shared) co-producer credits for 1-2 Content Provider executives, at Content Provider's sole discretion, provided that if and/or Content Provider is obligated to accord any such executive an executive producer or producer credit with respect to a particular project, one of such additional credits shall be a (shared) executive producer or producer credit, provided that Content Provider has notified the Production Company in writing of such requirement by no later than concurrently with the submission to the Production Company of the chain-of- title for such project.
Content Provider shall be entitled to a Content Provider Studios Production Company credit, immediately following the presentation credit, a Content Provider Studios logo credit and a "Based upon a Content Provider Studios Comic" or similar mutually agreeable corporate credit.
The Production Company shall comply with all reasonable credit obligations incurred by Content Provider to third parties in connection with Content Provider's acquisition of the applicable property and furnished to the Production Company in writing, provided that no such credit obligations shall require a credit above or more prominent than the Production Company presentation and/or production credit. The above credits will be accorded in all on-screen credits in the main titles on a separate card no less prominent than any other Producer, Executive Producer and/or Production Company credits, and in all paid advertising and publicity issued (or controlled) by the Production Company or any of the Feature Film's distributors. Content Provider and the Production Company shall mutually approve, provided that in the event of any disagreement the decision of the Production Company shall control, (a) any other Production Company credit, and (b) if the Production Company wishes to accord more than one other Executive Producer and/or Producer credits, such additional Executive Producer and/or Producer credits.
Merchandising, Soundtrack Screenplay and Music Publishing, Commercial Tie-Ups
Any and all revenues derived from exploitation of merchandising, music publishing and/or soundtrack rights to a Feature Film produced by the Production Company hereunder shall be accounted for separately with no cross-collateralization. With respect to the exploitation of such merchandising rights, Content Provider shall control and administer same and Content Provider shall be entitled to a % distribution fee and the right to recoup all out-of-pocket costs and fees; thereafter, the balance, if any, shall be split between the parties hereto. With respect to the exploitation of such soundtrack rights, which the Production Company shall control and administer, Content Provider shall be paid a direct "separate pot" royalty equal to % of the suggested retail list price for worldwide sales of such album in all channels of distribution calculated with respect to all income from record one (1) but payable after the Production Company recoups all direct out-of-pocket producing and marketing costs and expenses (excluding overhead) paid to unaffiliated third parties directly in connection with the exploitation of such soundtrack rights (as opposed to in connection with the applicable Feature Film associated with said soundtrack). With respect to the exploitation of such music publishing rights, which the Production Company shall control and administer, Content Provider shall be paid a direct "separate pot" royalty equal to % of the net amounts payable to the Production Company from the exploitation thereof. With respect to the exploitation of screenplay publishing rights, which the Production Company shall control and administer, Content Provider shall be paid a direct "separate pot" royalty equal to % of the suggested retail price of published screenplays. The parties shall negotiate in good faith the terms of their respective participation in the revenues derived from commercial tie-ups.
Content Provider's logo and/or trademark (collectively, the "Mark(s)") shall appear on the outside packaging of all phonorecords (and tapes) in all configurations now known or hereafter devised, in all advertisements, on all marketing and promotional materials, and wherever the logo and/or trademark of the record distributor appears (it being acknowledged that if the approved billing block for the Feature Film is utilized, this shall suffice in respect of the foregoing). The Mark(s) shall be in the same size and prominence as any other logo and/or trademark. Content Provider shall have the right to accord a shared executive producer credit to such individual as Content Provider may designate. Such credit shall appear on the outside packaging of all phonorecords (and tapes) in all configurations known or hereafter devised and in all advertisements where any other executive producer credit appears. Such credit shall be in the same size, typestyle and prominence as the credit accorded to any executive producer in connection with such phonorecords.
Content Provider Participation in Production.
Content Provider shall have mutual approval with the Production Company of the final screenplay for any Feature Film (including sequels, prequels and remakes thereof), provided that as between Content Provider and the Production Company, the Production Company's decisions shall control in the event of a disagreement, provided further, however, that the Production Company agrees to comply with and be subject to any consultation and/or approval rights and procedures in favor of third parties of which the Production Company has been notified in writing by Content Provider concurrently with Content Provider's submission to the Production Company of the chain of title for such project. Content Provider shall also have the right to approve of any third party profit participations accorded in connection with any Feature Film if and to the extent any such participations would dilute Content Provider's profit participation hereunder. The Production Company shall meaningfully consult with Content Provider with respect to the budget, cast, director and final cut of each Feature Film (including sequels, prequels and remakes thereof). Content Provider shall have the right (but not the obligation) to have a representative present at all reasonable times during all production and post-production activities (including, without limitation, on the set) for any Feature Film, at the Production Company's cost, provided that the expenses for travel and accommodations and the per diem (and any other perquisites) to be furnished by the Production Company to accommodate such presence are appropriate under the circumstances taking into account the Budget for the applicable Feature Film, provided that if the Budget for a Feature Film is equal to or exceeds , then Content Provider and shall be accorded the Production Company's "first-class" treatment with respect to such presence, and provided further, that in all events, regardless of the Budget for the Feature Film, Content Provider and shall be treated no less favorably than the most favorable treatment accorded any other person attached to such Feature Film in this regard. Content Provider shall also have the right to have a representative present when and where rough cut sequences and dailies of any Feature Film are being shown, provided that to the extent any such rough cut sequences and/or dailies of the Picture are being separately circulated to any other persons for viewing, Content Provider shall be separately sent a copy thereof for viewing at its offices. Content Provider shall be added as an additional named insured on the Production Company's commercial liability, production package and errors and omissions insurance policies for each Feature Film. Content Provider shall be provided with a minimum of complimentary videocassette copies of each Feature Film produced pursuant hereto no later than when such Feature Film becomes generally commercially available on video, and shall have the right to purchase additional copies from the Production Company at the Production Company's cost (so long as such purchases thereof are not for further sale by Content Provider). Content Provider shall be provided with at least invitations to any premieres of any Feature Film and/or screenings at film festivals where any such Feature Film is included, together with first-class travel and accommodations packages for persons (if available and used).
Representations and Warranties.
Each party hereby represents and warrants to the other as follows: (a) it has all necessary authority to make this agreement, upon its execution, the valid, binding and enforceable obligation of such party; (b) no consent, waiver or approval of any third party is necessary to its entering into and performance of this agreement or the consummation of the transactions contemplated hereby; and (c) this agreement, when duly executed, will constitute legal, valid and binding obligations of such party, enforceable against such party in accordance with the terms hereof (subject to equitable remedies and applicable bankruptcy, insolvency, fraudulent conveyance, reorganization or other similar laws affecting creditors' rights generally).
Confidentiality.
Neither party shall disclose the existence or terms and conditions hereof to any third parties except (a) to the extent same has become public knowledge other than as a result of a disclosure in violation of this agreement, (b) to their respective attorneys, accountants or other financial advisors (who shall also be required to observe such confidentiality requirements), (c) as required (in the opinion of such counsel, accountants or other financial advisors) by applicable law, or legal, regulatory, governmental or similar process, (d) to the extent reasonably necessary to enforce such de party’s rights hereunder and/or (e) pursuant to one or more mutually approved press release(s); provided, however, that each party shall also have the right to disclose its executive producer and/or producer fees hereunder to third parties for purposes of confirming and/or establishing "quotes" (as such term is customarily understood in the motion picture industry).
Notices.
All notices which either party wishes to serve on the other shall be in writing, addressed as follows: to Content Provider, Content Provider, LLC, Telecopier (), Attention: , with copies to , ,Telecopier (), Attention: , Esq., and to , Inc., , Telecopier (), Attention Mr. ;
To the Production Company, , Telecopier (), Attention Mr. .
All notices may only be served by one of the following methods: personally, by certified or registered mail (return receipt requested), courier service, telegraph, facsimile or cable. Either party may designate a substitute address by written notice to the other. The date which is 0 days following personal delivery, the date which is 0 days after the deposit of such notice in the mail, the date which is 0 days after delivery thereof to be telegraph or cable office, the date which is 0 days after sending by facsimile (provided there is an electronic answerback confirmation of even date) or the date which is 0 days after delivery to a courier service, shall be deemed the date of service of any notice from either party to the other party.
Governing Law; Forum; Dispute Resolution.
This agreement shall be governed by the laws of the State of applicable to agreements executed and wholly to be performed therein. The forum for the resolution of any dispute related to this agreement shall be the federal and state courts located in , and the parties hereby submit to the in personam jurisdiction of said courts and hereby waive any claim that such courts are an improper venue or an inconvenient forum. In the event of a material breach by either party of its obligations hereunder, the other shall have the right to terminate this agreement and seek damages resulting from such breach, provided that if such breach is a failure by the Production Company to pay monies when due hereunder, Content Provider shall only have the right to terminate the agreement if the Production Company has failed to cure such breach within 0 days of its receipt of written notice from Content Provider of such payment default, provided further that in no event shall Content Provider have the right to injunctive relief with respect to the exploitation of any Feature Film produced pursuant hereto. The prevailing party in any legal proceeding of any type related to this agreement shall receive, in addition to any other recovery, its actual attorneys’ fees and costs.
