“STREETS OF LEGEND”
(a.k.a. “QUATTRO NOZA”)
This agreement
(the “Agreement”) is made and entered into as of
March 24, 2005, by and between Sobini Films
(“Grantor”) and Lions Gate Films Inc.
(“LGF”) with respect to that certain motion picture
presently entitled “Streets of Legend” (a.k.a.
“Quattro Noza”).
1.
Picture: The “Picture” shall mean that certain
motion picture presently entitled “Streets of Legend”
(a.k.a. “Quattro Noza”) and any and all versions
thereof (if and as available) and all “bloopers”,
footage, trims and outtakes thereof (if and as available)
(including, without limitation, the Director’s Cut and the
Final Cut and any and all versions of each of the foregoing, all
versions rated by the Motion Picture Association of America and
unrated versions of the Picture, “behind the scenes”,
“making of” and any and all other documentary or short
films concerning the Picture, and all footage,
“bloopers”, trims and out-takes of each of the
foregoing), produced by, on behalf of or at Grantor’s
direction, in the year 2003, starring Robert Beaumont and Brihanna
Hernandez in the principal lead and supporting roles, written by
Joey Curtis and Albert Hernandez and directed by Joey
Curtis.
2.
Territory: The “Territory” shall mean and
include each of the following: (a) United States of America
(including but not limited to, Guam. Saipan, Midway Island, the
Trust Territory Islands, the Caroline Islands, the Marshall
Islands, the Virgin Islands, Puerto Rico and American Samoa)
(“U. S.”), its territories, possessions, trusteeships
and commonwealths and all military bases, ships at sea, airlines
and oil rigs flying the flag of the U.S., (b) Canada
(including, but not limited to, Quebec, Prince Edward Island, the
Northwest Territories, the Yukon Territories and Newfoundland), its
territories, possessions, trusteeships and commonwealths, and all
military bases, ships at sea, airlines and oil rigs flying the flag
of Canada, and (c) for the purposes of Television exploitation
in the U. S. only (the “Additional Television
Territory’’), Bermuda and the Bahamas
Islands.
3. Rights
Granted: Grantor hereby grants to LGF, on an exclusive basis,
all distribution rights in and to the Picture and the underlying
material with respect thereto throughout the Territory, under
copyright and otherwise, in all languages and in all media, whether
now known or hereafter devised, including, without limitation, all
Theatrical, Non-Theatrical, Home Video, Television, and ancillary
and derivative rights in and to the Picture, by all methods of
delivery, whether now know or hereafter devised, including without
limitation, all Internet Delivery Mechanisms, all as such rights
may be more specifically defined in Schedule “A”, which
is attached hereto and incorporated herein by this reference
(collectively, the “Rights”), but expressly excluding
the copyright in and to the Picture, all soundtrack album,
Electronic Publishing Rights, literary publishing (including,
without limitation, all print publication and novelization rights),
merchandising rights, and all remake, prequel and sequel rights
(including, without limitation, any and all television spin-off
rights) in and to the Picture, except as otherwise set forth
herein. Without limiting the generality of the foregoing, the
Rights granted to
“Streets
of Legend” (a.k.a. “Quattro Noza”)
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LGF hereunder
shall include, without limitation, the exclusive right to market,
advertise, promote and publicize the Picture in all media, whether
now known or hereafter devised.
a.
Remakes, Prequels & Sequels : LGF’s negotiation
rights with respect to remakes, prequels and sequels of the Picture
shall be pursuant to the terms of that certain executed employment
agreement dated June 6, 2000 (as amended) by and between Lions
Gate Entertainment Corp., a corporation incorporated under the laws
of British Columbia and Mark Amin with respect to the employment of
Amin.
b.
Television Exploitation : Upon LGF’s receipt of
Grantor’s written request, which written request must be
received by LGF no later than December 31, 2005 (the
“Television Notice”), LGF shall submit the Picture to
Showtime for inclusion under LGF’s pay television output
agreement with Showtime Networks (the “Showtime
Agreement”). If LGF does not receive the Television Notice on
or before December 31, 2005, then (i) LGF shall not
submit the Picture to Showtime for inclusion under the Showtime
Agreement (except as otherwise set forth in this subparagraph), and
(ii) LGF and Grantor shall cooperate in connection with the
sale of the first cycle Television Rights in and to the Picture in
the Territory. Following December 31, 2005, Grantor shall have
the right to issue written notice to LGF requesting that LGF submit
the Picture to Showtime for inclusion under the Showtime Agreement
(the “Secondary Notice”). Upon LGF’s receipt of
the Secondary Notice, LGF shall have the right, but not the
obligation, to submit the Picture to Showtime for inclusion under
the Showtime Agreement. If, following LGF’s receipt of the
Secondary Notice, LGF elects not to submit the Picture to Showtime
for inclusion under the Showtime Agreement, then LGF and Grantor
shall continue to cooperate in connection with the sale of the
first cycle Television Rights in and to the Picture in the
Territory until such time as such sale is complete. Any submission
by LGF of the Picture to Showtime for inclusion under the Showtime
Agreement pursuant to the terms of this subparagraph shall be
subject to Showtime’s right to accept or reject such
submission pursuant to the terms of the Showtime
Agreement.
4. Term:
The “Term” of this Agreement shall commence as of the
date first written above and shall terminate seven (7) years
from LGF’s initial commercial theatrical release of the
Picture in the Territory plus an additional six (6) month
non-exclusive sell-off period. Notwithstanding the foregoing, if
the Picture is included in the Showtime Agreement pursuant to the
terms of Paragraph 3(b) hereinabove, the Term, with respect to all
rights necessary to give effect to the Showtime Agreement, shall
extend for the term of the Picture required under the Showtime
Agreement. It is understood and agreed that LGF shall not
manufacture more Home Video devices during the last six
(6) months of the Term than it reasonably expects to sell
during the Term exclusive of the sell-off period (provided that no
inadvertent over-manufacturing shall be deemed a breach of this
Agreement). Without limiting the generality of the foregoing, LGF
shall have a right of first negotiation (for a period of ten
(10) days commencing prior to the expiration of the Term) with
respect to any extensions of the Term hereof.
5. Minimum
Guarantee: Not applicable.
“Streets
of Legend” (a.k.a. “Quattro Noza”)
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6. Grantor
P&A Commitment; Release Commitment:
a.
Grantor P&A Commitment : Grantor shall spend no less
than Two Hundred Thousand Dollars ($200,000.00) (the “Grantor
P&A Commitment”) solely in connection with the print,
marketing, advertising and publicity costs for LGF’s
Theatrical release of the Picture in the Territory. The Grantor
P&A Commitment shall be spent pursuant to a mutually approved
budget (to be negotiated in good faith by the parties) (the
“P&A Budget”). Any print and advertising
expenditure in connection with the initial commercial theatrical
release of the Picture in excess of the Grantor P&A Commitment
shall be subject to mutual written approval between the parties,
which approval shall not be unreasonably withheld by Grantor and
shall be deemed rejected if not given within five (5) days of
Grantor’s receipt of LGF’s written request for such
approval. If any such additional print and advertising costs are
paid for by LGF, such costs shall be recoupable as Distribution
Expenses pursuant to the terms of Paragraph 7
hereinbelow.
b.
Release Commitment : LGF shall cause the initial commercial
theatrical release of the Picture on one (1) screen in the
Territory.
a.
Grantor’s Participation : From One Hundred Percent
(100%) of all monies received by LGF on a non-refundable basis from
the exploitation of the Picture in all media throughout the
Territory, LGF shall be entitled to deduct the following on a
continuing basis and in the following order: (i) LGF’s
Distribution Fee for all media; and (ii) LGF’s
Distribution Expenses (as that term is defined hereinbelow), but
expressly excluding the Grantor P&A Commitment. All revenues
remaining after the foregoing deductions shall be referred to
herein as “AGR”. The AGR shall be allocated One Hundred
Percent (100%) to Grantor. That portion of the AGR allocated to
Grantor pursuant to this paragraph shall be referred to herein as
“Grantor’s Participation”. LGF shall be entitled
to cross-collateralize all revenues received by LGF in connection
with the Picture from all media throughout the Territory for the
purposes of recouping LGF’s recoupable Distribution Expenses
and the Home Video Advance (as that term is defined hereinbelow).
LGF shall not be entitled to cross-collateralize revenues received
by LGF from the exploitation of the Picture with revenues received
by LGF in connection with any other motion picture property. The
Picture shall not be used as a loss-leader. If LGF includes the
Picture in a package of films licensed to a third party, then the
price allocated to the Picture shall be on the basis of a
reasonable allocation of revenues in light of the commercial worth
of the motion pictures in the package, as determined by LGF in the
exercise of its reasonable good faith business judgment.
b. Home
Video Advance : As an advance against Grantor’s
Participation, Grantor shall be entitled to receive a “Home
Video Advance” for the Picture in an amount equal to Fifty
Percent (50%) of Grantor’s projected share of AGR derived
from the Initial Home Video Release (as that term is defined
hereinbelow) of the Picture, as projected by LGF in its reasonable
good faith business judgment (which projection shall include a
reserve for returns based upon LGF’s reasonable good faith
business judgment). As used herein, “Initial Home Video
Release” shall be the period commencing on LGF’s
initial Home Video Street Date for the Picture and
“Streets
of Legend” (a.k.a. “Quattro Noza”)
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continuing
until the end of the calendar quarter during which LGF’s
initial Home Video Street Date for the Picture occurs. Grantor
hereby acknowledges and agrees that the AGR projection made by LGF
pursuant to the terms of this paragraph is an estimate that is
subject to change and that the financial information contained
therein is not a true and accurate statement of the actual amount
of revenues that will be collected by LGF or the actual amount of
revenues payable to Grantor. Grantor shall not rely on any
information contained in any such projection for any purpose
whatsoever. Grantor shall not have the right to dispute such
projection (or any and all components thereof). One Hundred Percent
(100%) of the Home Video Advance shall be payable thirty
(30) days following the end of the first calendar quarter
during which LGF’s initial Home Video Street Date for the
Picture occurs (unless LGF’s initial Home Video Street Date
for the Picture occurs in the second half of such quarter, in which
event the Home Video Advance shall be payable ninety (90) days
following the end of the first calendar quarter during which
LGF’s initial Home Video Street Date for the Picture occurs).
Notwithstanding the foregoing, if LGF’s initial Home Video
Street Date for the Picture is less than thirty (30) days
prior to the end of the calendar quarter, then One Hundred Percent
(100%) of the Home Video Advance shall be payable thirty
(30) days following the end of the second calendar quarter
following LGF’s initial Home Video Street Date for the
Picture.
c. LGF’s
“Distribution Fee” shall equal Fifteen Percent (15%) of
One Hundred Percent (100%) of all Gross Receipts received by LGF
from the exploitation of the Picture in all media throughout the
Territory.
d. As used
herein, “Distribution Expenses” shall mean, with
respect to all rights granted to LGF hereunder, one hundred percent
(100%) of the aggregate of all actual, direct, out-of-pocket, third
party costs expended or incurred by LGF in direct connection with
the distribution and exploitation of the Picture throughout the
Territory in all media, including, without limitation, all DLT
Creation Costs, and all conversion, manufacturing, duplication,
shipping, marketing, advertising, promotion and publicity costs,
and all costs to complete Delivery of the Picture (to the extent
(i) LGF elects to cure any failure of Grantor to complete
Delivery of the Picture in accordance with the Delivery Schedule
and/or (ii) LGF is required to take “access” to
any Delivery Materials pursuant to the Delivery Schedule; and/or
(iii) Grantor is not required to deliver such elements under
the Delivery Schedule). The Grantor P&A Commitment shall not be
included in Distribution Expenses hereunder.
e. Home
Video Marketing Expenses : Grantor and LGF shall mutually
approve the initial marketing budget for the initial Home Video
exploitation of the Picture in the Territory, which budget shall
include the advertising, duplication and DVD authoring, compression
and replication costs (the “Approved Marketing
Budget”). LGF shall have the right to reallocate the
subcategories contained in the Approved Marketing Budget for the
Picture and shall have the right to spend up to ten percent (10%)
above the Approved Marketing Budget. Commencing as of the date that
is twelve (12) months following LGF’s initial Home Video
Street Date for the Picture, LGF’s Home Video marketing
expenses shall not exceed an amount that is equal to twelve percent
(12%) of the Gross Receipts received by LGF from the exploitation
of the Home Video Rights in and to the Picture.
“Streets
of Legend” (a.k.a. “Quattro Noza”)
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