honor under this court's decision in general data come an obligation is material if the parties agree of the obligation is immaterial in the face of the contract here in paragraph three of the common agreement it was agree that the  here it's talking about a the paragraph is called contingent compensation and sorry if if the picture is produced with the art it as the producer that would become one of the artist fully performs all required services and in relation to the picture and are not otherwise in breach or default thereof or shall be entitled to receive the following contingent comp compensation so essentially what we're talking about here in terms of real dollars is and so how isn't the word material in a fact implied in that sentence i just read and not otherwise a material the term material your honor refers to a term that if breached would excuse the future performance of another party and here the parties have agreed that any breach by cohen will excuse the future performance of the debtor and the well what is going to be the result here correction or what this excuse is here is the future or performance under the contract and there really aren't other remaining terms left for the debtor to perform other than those that would be excused by this breach so if you consider the remaining terms for both sides on the petition date look at what were the obligations for cohen and what were the obligations for the debtor and any breach of any of cullen's remaining obligations would excuse the performance of any of the debtors remaining obligation therefore those terms as of the petition date were material even if they're ancillary to that to the main substance of the contract well of course we disagree as to what the main substance of the contract is but to your point your honor as this court said in footnote twelve of general data come even if those terms would be considered immaterial and or otherwise a clickable state law if the parties have agreed that the terms are material for the purposes of their contract then those terms are material on their face and the court should respect the determination of the parties but but i mean isn't there a difference though between having a material obligation to do something under the contract and having a right under the contract i mean rights and obligations are different right obligations in clause are so closely linked to performance rights are different they can be options it can be all these other things is so don't you have to show that there was not just other rights under the contract or that were still lingering around you have to show that there was additional purpose warman's that had to be done as opposed to just people having additional rights and if you have to show that what additional performance is left to do here honor we do now agree that there must be additional performance by both parties on the petition date and i think you and i can agree for a moment that the obligation the performance from the debtors to pay continued compensation well looking your honor now at the claims and i mean don't you have to show ok that's not just a right of indemnification but there was some something that triggered that right down the road of performance as opposed to this and someday maybe this might get  at it is a contingent obligation your honor but so is the right to pay the contingent compensation it's based on the performance of the movie and here it is undisputed that as of the petition date cohen had this obligation to indemnify and that's a valuable right and we know that because the in this contract the parties agree that were he to breach that right then he would stop being paid which is the most fundamental of his rights under the contract but as it hasn't the statue of released internationally your honor and so i don't think it stretches the imagination to believe that there could be statue of limitations in any jurisdiction in the world that is longer than five years and four months and so as of the petition day this was a real bright that was a like seen it doesn't appear to be a final version of the contract it appears to be a market and two thousand three hundred and twenty eight doesn't appear to be sun and so i hate to take us down the road of authenticity and and other things like this but i sure feel a lot better when the test one of the elements of the test is to look at a contract quote on its face quote and i have a contract that is a markup on signed and i have another user or contract purported contract that's unsung i don't do it now but it does seem like if we're going to look at the face of a contract it's really nice if i see something that looks signed their summary judgment motion and they attached to a declaration of one of their employees who purported to authenticate this document as the binding contract in this case and so while i agree it would be nice if it was a honor and my point is that because the parties agreed that any doesn't have a right to seek the injunction i do your honor that he may not be successfully able to seek an injunction but it doesn't prevent him from filing such a claim which would require the debtor or spyglass to then impose the claim and i think mr cohen could have a colorful argument that although he gave up those rights he did so he did so in return for promised compensation that under this hypothetical your honor was therefore breach and so i think it would be up to a court in that case to determine whether that right to give up that obligation was material but i think what we need to remember here is that the remedy for a material breach does not necessarily have to include the right to seek an injunction and so getting that particular remedy does not render a preachin material in fact not breaching party has the opportunity to select its remedy and whether that's to seek an action for damages or to  prevent further performance under the contract is that the option of the non breaching party carrier owner i think it is although interesting and challenging to analyze which of these provisions would be considered material under state law were state law to apply here your honor that the court need not go that far if we look at the contract itself under general day to come because the contract says that a breach will excuse future performance then the parties have agreed that these approvingly at least two or three times in the beginning of that opinion i believe that exide was decided correctly and is and valid binding opinion of this court where it applies it simply doesn't apply here in x i i there was no argument or allegation by either party that the contract itself determines which terms were material because the breach of a term would excuse the future performance of another party that issue simply wasn't presented and excited so excited correctly moved to what we the analysis which is if the contract is not plain on its face you look to other principles of state law to help you interpret a contract because that was a new york contract they applied the new york substantial performance doctoring and they did so carefully by examining the record and applying that factor stated in a restatement to each of the provisions of that contract but exide in no way purported to create any bright line rule or to change the court's decision in general they did which of course it cited approvingly but referring back to the columbia gas system case well we have held that the determination of what constitutes a material breach is governed by relevant state law and everything seem to talk about material and you're saying well yeah but you can contract around it and other cases where they've contracted around it they have a pretty robust remedy sections and here we have one sentence in a non remedies provision of the asset purchase agreement so if i'm uncomfortable saying that that's enough then there has to be something that's material and i gone through at least some of the continuing company it's a softer obligations d of owen and i'm not saying anything that looks that looks to be particularly material the last one i didn't mention was the if i can address general data st your honor i would direct you to pave six hundred and twenty three where it says that if an eligible executive breached one of these provisions it would excuse the future performance of general data com by contractual definition they are poor such obligations are material i would then direct your attention your honor to fight no twelve which is if you're looking at the last five years and printed at the very end i had and it says and it rids to be st to their what they referred to as their dissenting colleagues but it was actually a concurring opinion just for clarity and they say while that holly has done a very thorough job of analyzing each obligation under state law that he has erred by not relying on the terms of the face of the contract and it says we are satisfied that the parties intended the provisions of six to be material no further an analysis is therefore required and where their colleagues erred was by substituting their own views on materiality for what the parties explicitly informally agreed as being material and vital to their contract and there is very much the same as what we have here your honor which is also the same as what happened in  decision out of new york's bankruptcy courts where again the parties had agreed that a term the breach of a term when and the future performance of another party and that case is clear that even if the terms would otherwise be immaterial materiality is determined by the agreement of the parties is so so so i mean i guess i guess the thought is to just walk through what you think is reached here a meeting it seems that there's conditions pre triggered and rights and obligations that exist but i mean i don't think a person breaches something just because they say well i might have a later right to do that is that right hasn't triggered yet therefore i mean  clarify your honor we are not taking the position that mr cohen is in breach of any provision here and i don't believe that that is the test what we're trying to determine is as of the petition date where there are obligations that could be preached and that if those were breached would it but would somebody but if you force yourself back into the language of the contract which you really really really want to do and i understand why you really really want to do that the contingent compensation language says and not otherwise in breach or to fall in so it seems to me that if we want to start talking about under performance on both sides then that then there has to be some sort of trigger for  both sides having so under performance respectfully your honor that we're not taking the position that there has been under performance bible sides nor do i believe that there needs to be what the country not test your honor and i'll paraphrase because i'm not reading it is that where the contract is then underperformed meaning that there are remaining obligations on either side that could be breached i as of the position course your honor and let me clarify under performance in the way that term is used in countryman does not equal breach under performance means that the cases exist that have not yet been fully performed it does not mean that you contract under which the obligation of both the bankrupt and the other part of the contract are so far under performed that the failure of either to complete performance would constitute a block to real breach excusing performance of the performed that the failure to perform looking forward looking the future breach by failing to perform those obligations would render the contract materially unperformed or breached and here your honor i think it is undisputed that it very often happens within the bankruptcy contract that there are contracts that have not been breached by either party as of the petition date but they still have ongoing material obligations looking forward the contract is you have to be fully performed so so speaking speaking of other contracts is just means that any contract with indemnification provisions for the life of the contract would satisfy the countryman test no your honor it does not it does mean that in this case your honor because here unlike in many other contracts the parties explicitly provided that the breach of cohen's indemnification obligation like the breach of any other application would excuse future performance and then there may be many other contracts where there is an indemnification provision that if breached does not excuse future performance of the other party for example if you look at the other cases that were cited by i n g and mr cali obligations but the court acts i determined that those obligations had expired under the terms of the contract so that is different your honor than here but even if these even if the terms and x i had not expired under the terms of the contract there was excise that the breach of those terms what excuse the future performance of another party and that's the difference that we had but let me just pick up on those two questions are you saying that on your reading of the cowen obligation for which mr cohen would be required to indemnify on your door any jurisdiction in the world using the terms as laid out in this contract i believe that would be a factual matter that the court could have considered on summary judgment but i know that's not what happened here  evidence whatsoever but until that time a contract structured like this would seem to be able to do pretty nicely as a workaround for the bankruptcy  at least until one of the parties could show that there will be no worldwide claims ever likely brought against them and then we have not i mean that's kind of a hard thing to show because some jurisdictions might have a more lax discovery rule than others and situation where you can basically work around three hundred and sixty five and if you structure contract this way because that's that's where the parties wanted to agree to larry i mean that's a that's not that i'm not pushing that too to too far down the road i'm on i understand your point your honor but i think we have to remember here that spyglass chose to take this contract because it believed that it was a value to them and that collins remaining obligations were a value is spyglass believe that there were no remaining obligations on behalf of mr cullen there's no reason for them to take this contract in fact as i believe will learn from the case being argued after mine and i don't want to be too much about that spyglass is going to take the position that they know very well have not to take a contract that they don't deal a piper on behalf of spyglass media formally learn formally known as lantern entertainment you honored spyglass was the purchaser of the weinstein company assets an agreement at all well your honor there is the fact that there are rights to be purchased under the contract does not in fact mean that it's executor or not that's that's two questions down the road ok you're not us want to buy the cohen contract at all because your honor that cohen contract represented a present transfer back in september twenty one m september  and eleven of the intellectual property that was provided under that work for hire contract so those rights that was a present transfer back then that intellectual property so then why even once the petition came down later on you want to call it all you can't because you want to that is how those rights were transferred to that but ok so then if they were pre partition rights and they're already purchased why post petition when you go through with the sale would you want the cohen agreement at all because the county beam in iran it is the evidence of that transfer and the rights that came with it the rights not to interfere relate back to that present transfer in september two thousand and eleven but if cohen were to attempt to having previously transferred his interest subject to the two hundred and thirty thousand dollars plus contingent comes compensation then i guess me what he wants is the is the contingent compensation you're  maybe it's just goodwill no there was an amendment to the asset purchase agreement iran whereby whereby spyglass agreed to pay the post closing participation payments that related to the coast closing exploitation of the film so that is why it's not that is why they agreed in our paint those codes closing obligations because that was an amendment to the a p a in one of the series of amendments that occurred so they contractually agreed to pick up that obligation but solely for uses and exploitation when he owned the film the let's go through the obligations there claiming that two things that the remaining obligations are material and if you don't think they're necessarily material on their own look what we did ringback in section three we agreed that they are vitriol because if there's any breach or default then  we don't have to perform we can terminate but iran and i think it's a far i would say that language in paragraph three is a far cry from rendering this particular provision and those continuing obligations to the extent they exist as material your honor it is not unusual for a contract to provide that if the parties only obligated to pay so long as the other party is not in a pretty but your argument is is is different that let's let's assume for the moment they are immaterial but you and i have agreed in my contract that they or material so material that if you're in breach of the fault call he doesn't get his money if he's in any way breach of all so we made an agreement we've done enron which is allowed in cases like that to come to around the usual exact jory contract materiality so let's go to exide right an excised looked at new york law new york court appeals case as to when it is material and it's a breach in a contract which substantially defeats the purpose of that contract that can be grounds for a recession ok so here rescission would not just be not pay it would not be doesn't just relate to those contingent payments a rescission here would mean that the weinstein company has been titled to the initial paint the initial compensation and if cullen were entitled to rescind he would be able to get his he had no right to get these intellect this intellectual property back there's no forfeit right for the initial payment now and if you look at what they refer to the indemnification rights and non injunction rights then an injunction right is just basically an agreement not to breach in the future so because clearly to seek an injunction after you've signed away the rights  talks about the representations warranties and undertakings they all relate to cohen's right to transfer the intellectual property ok so the weinstein companies indemnified against an act by cohen or a representation by cohen that he didn't own the intellectual property that it wasn't his intellectual property or that he had sold it x so once again it all goes back to that performance the performance of the delivery of the intellectual property and i think it's important here and i would like to answer the question actually that ms butcher caused how the bankruptcy court should determine whether a contract is executor well you look to the contra ok we don't need to have a evidentiary hearing where the inferences that the court can sure are clear ok and we cited support in marilyn's case for that here determining the substance of the contract it's pretty easy the contract itself k refers to itself as a work for hire contract in paragraph not ok a work for hire contract is a cut a particular type of contract which has come scott under the very similar circumstances and the same type of performance obligations and that case was found not to not contravene found not to be executor so here the bankruptcy court did have anything close to paragraph three i mean let me just if this picture is produce the me look at the opening to paragraph three with cohen is the producer and co and fully performs all required services obligations and in relation to the picture and is not otherwise in breach or default colors and title to cont cohen says no so therefore you say he's in breach or default of the asset purchase agreement when you pay him continue to pay him consent to come sation no you or i but i don't think that that renders this pretty vision material as of the time of the release of the film that goes right to the core ok was it was for so everything is about the delivery of the contract everything is about formants which was think the test is whether the breach would excuse performance by the other party that's the countryman test so in this case it looks like what you just said to me provision and it's breached by cohen then he is no longer intitled to performance by you for contention conversation that seems like you just breach and hear the contingent this is there this provision ok which is just in the description of contingent compensation and has been pointed out is not in the remedy section so i don't think we should give it too much weight but it still does not permit recovery of the initial payment that was granted it was only the continued performance going to vote but miss butcher's point is that there is a plus here and similar to some cases like that of com like hawker beechcraft in the southern district think of new york and  guard properties you can contract around backed and the question is d does the single sentence admittedly not in a remedy section i agree with does that give them the right not to perform to give you the right not to perform if in any way no matter what it is mr cohen does not abide by the agreement and i just picked out one provision that still exist called it's a wonderful life and it has this incredible run many years afterwards and cohen attempts to a signed the contract in his right to receive contention comes into x and you going to pay him contingent compensation that that that s n e of cohen first st of all you have a rd go to the asylum but i also think i think we have to recognize that just stopping the payment of contingent compensation which is just one of the elements of the compensation it doesn't defeat the entire contract materiality has the answer is your answer to  i'm not you know that provision in we're talking about a hypothetical here you know i'm not sure that that provision would in fact excuse payment going forward i judge here was intitled to make the logical and reasonable inferences based on the based on this contract based on the two nomination of this contract as a work for hire contract which has a specific meaning in the industry and which has been interpreted by bankruptcy courts in the past so and long standing cases to contests and contacts and stein and day have been allowed around for a very long presiding over a bank or a chapter eleven case involving hundreds of such contracts and is involved with presiding over the kind you know the conduct of th parties argument these contracts are all the same and go to the heart of the business goes to how this business was conducted so this contract has to be looked at in the context of the contracts of the company and the business of the company and it has to be looked at in the context of a work for hire agreement so here the bankruptcy court did as and the district court went through the same analysis looked at the substance of the contract and drew the logical inferences as a court is entitled to we didn't and you cannot point to any evidence that they would they didn't attempt to least heard you on materiality you know you have thoughts on kind of just supposing materiality just just just suppose materiality what are your thoughts on performance i'm sorry and i'm not sure i understand the question i know well i mean i guess the faut is i think i'm hearing you say that this is not a material obligation right but if it were a material  couldn't you still prevail if you said it was will you know it it's there's no remaining on performance to be done you know in unproportionate is kind of a strange way of calling it but there's nothing there's nothing presently but there was nothing and the point i'm trying to make is that if there is no issue and you think the fact that this bankruptcy case was filed six years after the release of this film so  case then doesn't that give a different reading to paragraph three yes your honor and i guess i was not clear but i believe that that if you know goes into the materiality case but the truth is it would have been a very different story if as of the closing da there that's so so if such a claim were present this is a different game because but but in the absence of any such claim it's hard to say that there isn't one performance of claim at that time ok if there was a claim at either the closing date or the filing date and exists or somebody was out there whether there was a case that was pursued or not but somebody out there making a claim saying come in didn't make this movie he has no rights transferred or i own this movie then and the indemnification provision would be material because you're buying an asset and you want the indemnification because with that comes a litigation but here five and a half later there was no dispute there was no issue so there was no materiality in terms of what is deemed to be materiality if and i ask you this question  give you ask it again if cohen performs all the required services and is in no not in breach of the fault of the agreement he's entitled to receive contingent compensation cohen proposes to transfer his rights to contingent compensation to embroil where you pay i mean how can i don't think i can answer that question i mean i'm not the kind i'm not the man with the payment obligation i think the question is more whether or not you could terminate or stop payments at that point not whether they would the the it would seem the easy answer is if it's not a material violation then we're not going we're not we're continue to allow the contents of conversation to be paid to the successor of cohen but you keep backing off of making a definitive answer and every time you do that what you're really saying is that in your client's mind it is a material obligation and absolutely not your honor that's with all due respect if you're asking me a question about something i mean i could easily say yes we'll make the payment but i don't have the ability to say that right i mean i'm not the person making the claim that you know would my client likely make  hypothetical that wouldn't affect my client at all ok because assigning a mere payment right and not assigning the rights would not affect my client at all so i don't think it would be material ok there's no the contract here is for a movie for the production of a movie ok if he were to a sign of commerce sign his rights to receive payment that would have nothing to do with the right and proceeds of land is an artist engagement services here and there in connection with the picture thing works were made for high especially order commissioned by company in connection with the motion picture and or audiovisual were company shall exclusively own or now known are here after existing rights of every kind throughout the universe in perpetuity in all languages ok no and it says further no breach of this agreement by either party shall in any way affect companies ownership of the picture all right there so the substance of the contract is clear the material provisions of the contract are clear i can't imagine why my client would care if the contingent payments were going to somebody other than calm whether or not that would impact their obligation to make the payments i don't know but i don't think it's a hypothetical that really relates to the substance of this agreement the substance of this agreement is the delivery of a motion picture that was done ok and the language in paragraph three that is relied on doesn't say that it is a material obligation it just says and are not otherwise in breach of the court here i mean that could be from way language it doesn't render the contract material warranties which all relate to that delivery of the film and intellectual price right property rights are pertinent to that so i don't think we can give we could we can or should give too much weight to a throwaway phrase in you know a little in and section of the contract that is most dedicated to the calculation of this contingent compensation and if you didn't come and sation remember only comes into play if the film is a success ok and if it meets you know these the adjusted the time receipts etc so i mean let's look we have to put things in context now because cohn is trying to get the payments that he didn't get for the six years between the release of the film and the filing of the minds in companies petition and he's reaching back trying to get those contingent payments now i think they i think the account is trying to put inordinate weight on that language but if you look at those i think it's five words or i'm sorry it's seven words in the context of this agreement in context of a much more substantive provisions i don't think it is realistic to treat that as taking an immaterial and making it material restarted this discussion with why would it be why would spike last want to tell an agreement at all i would like to point out that as your owners have recognized the ip rights were transferred here prior to the petition date if there was no value in the current agreement they could simply have ip rights as an asset through the bankruptcy they took on this contract and then we were ordered by the court to be contingent compensation on a go forward basis specifically because they chose to take this contract my nd point your honor is that has argued for recession requirement of an executor a contract no other case that he has cited or that i have been able to find has adopted that standard every case in which he realized speaks to  the continued performance under the contract and no case that they require that the parties be obligated to unwind the contract in this case as he suggested that mr cohen would have to repay money and somehow and produce a film that is simply not the standard and if you are to look at the supreme court's decision in twenty one thousand dollars technology it carefully analyzes what it means to reject a contract under section three sixty five dollars and it says that is not a recession standard it is a breach standard and in his brief for what amounts to a bright line rules that a work for hire contract is by definition not exactly tory the moment that the work is released and the rights are transferred he makes that argument for a bright line rule based only on two cases that are each thirty years old or more one his main case being the can text decision out of the th circuit and although they can tax decision decided that the scott contracts the t v contracts were not exactly tory and also considered another group of contracts the predator contracts and that analysis parties had argued for a bright line rule based on the subject of the contract and the position of the debtor and there was a licensing agreement and they argued that in all the cases they had found a license and had been found to be executor henri it was because the debtor was the license or and the th circuit was careful and deliberate to explain that there are no bright line rules when it comes to an executive or a contract based on the subject of the contract or the position of the debtors and it said instead that it has to turn to quote the particular rights and duties of each contracting party to the contracted issue and in can tax and in stein and day although those decisions came out to hold  relevant contracts were not exactly torrie they did so only after detailed analysis of each provision of the contract and never purported to create a bright line rule if even if they had purported to do so your honor which they do not i would remind you also those cases were decided more than thirty years ago more than fifteen years before this court's decision in general data come i believe those decisions are consistent with generally to come but they are no way to rule iran thank you very much