Exhibit 10.41



 





Exhibit 10.41




CONFIDENTIAL TREATMENT REQUESTED: INFORMATION FOR WHICH CONFIDENTIAL TREATMENT HAS BEEN REQUESTED
IS OMITTED AND IS NOTED WITH “*****.” AN UNREDACTED VERSION OF THIS DOCUMENT HAS BEEN FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.




 





MASTER DISTRIBUTION AGREEMENT

(FILM PRODUCTIONS)




Dated as of July 25, 2007




between




MQP, LLC

as Issuer,




and




LIONS GATE FILMS, INC.

as Distributor,




 





 









 





     MASTER DISTRIBUTION AGREEMENT (FILM PRODUCTIONS), dated as of July 25, 2007, between MQP, LLC,
a Delaware limited liability company, as “Issuer” and LIONS GATE FILMS, INC. as
“Distributor”.



INTRODUCTORY STATEMENT




     WHEREAS, Issuer, Distributor and the Revenue Participation Holders (as defined in the RP
Purchase Agreement) have entered into that certain Revenue Participation Purchase Agreement (the
“RP Purchase Agreement”) pursuant to which Issuer has agreed to sell, and each of the
Revenue Participation Holders has agreed to purchase, Revenue Participations (as defined in the RP
Purchase Agreement) in each Funded Qualifying Project on the terms set forth therein; and



     WHEREAS, Issuer and the Revenue Participation Holders each desire to have Distributor
distribute each Funded Qualifying Project on the terms set forth herein;



     NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth in this
Agreement and the RP Purchase Agreement and for other good and valuable consideration (the receipt
and sufficiency of which is hereby acknowledged by each of the parties hereto), the parties hereby
agree as follows:



1. DEFINITIONS AND ACCOUNTING TERMS.




     1.1 Defined Terms. As used in this Agreement the following terms shall have the
respective meanings set forth in this Section 1.1. Unless otherwise defined herein, all
defined terms shall have the meanings ascribed thereto in the RP Purchase Agreement.



     “Accounting Period” shall mean, with respect to a Funded Qualifying Project, (i) each
***** period during the ***** following the Release Date for such Funded Qualifying Project and
(ii) thereafter, each quarterly period during the Term; provided, however, that the
first Accounting Period for each Funded Qualifying Project shall commence on the date of receipt of
the first Gross Receipts for such Funded Qualifying Project.



     “Adjusted Receipts” has the meaning set forth in Section 6.3.4.



     “Affiliate” shall mean any Person, which, directly or indirectly, is in control of, is
controlled by, or is under common control with another Person. For purposes of this definition, a
Person shall be deemed to be “controlled by” another Person if such latter Person
possesses, directly or indirectly, the power either to direct or cause the direction of the
management and policies of such controlled Person whether by contract or otherwise.



     “Affiliate Payment” shall mean, with respect to a Qualifying Project, an amount
payable to (i) Issuer, LGEI, Distributor or any of their respective Affiliates, (ii) any officer,
director or management of Issuer, LGEI or Distributor or any entity in which officer, director or
management of Issuer, LGEI or Distributor has any interest or (iii) any officer, director or
management of any affiliate of Issuer, LGEI or Distributor or any entity in which any officer,
director or management of any affiliate of Issuer, LGEI or Distributor has any interest,



 









 







excluding in each case payments expressly permitted hereunder; provided, however, that each
Executive Producer Fee shall not be considered an Affiliate Payment.



     “Agreement” means this Master Distribution Agreement, as amended, supplemented or
otherwise modified, renewed or replaced from time to time, and references to “Schedules”
and “Sections” refer to Schedules and Sections of this Agreement.



     “Ancillary Rights” means and includes, without limitation, the right to exploit all
ancillary, incidental and subsidiary rights in and to any Funded Qualifying Project, including,
without limitation, all Merchandising, commercial tie-ins, music, music publishing, soundtrack,
photonovel, novelization, screenplay publication, interactive media, multi-media, and theme park
(or other “themed” or location-based attraction) rights.



     “Applicable Law” shall mean all provisions of statutes, rules, regulations and orders
of the United States of America, any state thereof or municipality therein or of any foreign
governmental body or of any regulatory agency applicable to the Person in question, and all orders
and decrees of all courts and arbitrators in proceedings or actions in which the Person in question
is a party.



     “Appellate Arbitrators” has the meaning set forth in Section 13.2.



     “Arbitral Board” has the meaning set forth in Section 13.1.



     “Business Day” shall mean any day other than a Saturday, Sunday or other day on which
banks are required or permitted to close in either the Province of Quebec or the State of
California.



     “CIPO” shall mean the Canadian Intellectual Property Office.



     “Co-Financier” means a Person that is not an Affiliate of LGEI, the Issuer or the
Distributor who makes an investment in a Qualifying Project pursuant to a Co-Financing Transaction.



     “Co-Financing Amount” means, with respect to a Qualifying Project, all amounts
actually received by Issuer or its Affiliates on a non-refundable basis from any Co-Financing
Transaction; provided, however, that Co-Financing Amounts shall exclude any
Co-Financing Participations.



     “Co-Financing Participation” means any amount payable to any Person that is not an
Affiliate of LGEI in connection with a Co-Financing Transaction, including pass through and
defeasance amounts.



     “Co-Financing Transaction” means, with respect to a Funded Qualifying Project, (i) tax
advantaged financing transactions, including, without limitation, tax credits, government
incentives, labor credits, sale/leaseback transactions, governmental subsidy/rebate programs or
similar transactions and other so-called “soft money” transactions, in each case, that are
contemplated to create a so-called “soft money” benefit, or (ii) a transaction pursuant to



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which a Person that is not an Affiliate of LGEI makes an equity investment in such Funded
Qualifying Project.



     “Defect Notice” has the meaning set forth in Section 8.1.



     “Delivery” has the meaning set forth in Section 8.1.



     “Delivery Materials” means (a) for any Funded Qualifying Project that is a Film
Production, those materials listed on Schedule “DM” and (b) for any Funded Qualifying
Project that is neither a Film Production nor a Television Production (e.g. a “direct-to-video”
Production), such materials as Distributor shall notify Issuer in writing no less than ***** prior
to Delivery of such Funded Qualifying Project.



     “Distribution Expenses” has the meaning set forth in Schedule “GR”.



     “Distribution Fee” has the meaning set forth in Section 4.



     “Distribution Records” has the meaning set forth in Section 7.3.



     “Distribution Rights” means with respect to each Funded Qualifying Project the sole,
exclusive and irrevocable right, under copyright, throughout the Term, to (and to license others
to) exhibit, distribute, market, display, project, transmit, broadcast, perform, advertise,
publicize, exploit, sell copies of, dispose of and otherwise communicate publicly or privately
and/or turn to account such Funded Qualifying Project, in whole or in part (and its plot, themes
and other elements), and trailers and clips and excerpts therefrom, in any and all languages and
versions, in the Territory, on any and all kinds, sizes, gauges and/or widths of film, tape,
computer, electronic, digital, on-line transmission by any and every means, method, process or
device or other delivery systems now known or hereafter developed, and in all markets and media now
known and exploited, now known and hereafter exploited, and not yet known or devised, including,
without limitation, Ancillary Rights, Theatrical Rights, Non-Theatrical Rights, Television Rights
and Home Video Rights.



     “Distributor Collateral” has the meaning set forth in Section 19.



     “Distributor Security Agreement” has the meaning set forth in Section 19.



     “Distributor Security Interest” has the meaning set forth in Section 19.



     “Encumbrance” means any lien (statutory or other), claim, charge, security, interest,
mortgage, deed of trust, pledge, hypothecation, assignment, conditional sale or other title
retention agreement, preference, priority or other security agreement or preferential arrangement
of any kind, and any easement, encroachment, covenant, restriction, right of way, defect in title
or other encumbrance of any kind.



     “Film Production” means a Production that is intended to be exploited theatrically and
specifically excludes a Television Production.



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     “Force Majeure” has the meaning set forth in Section 17.



     “Free Television” means (a) exhibition over television broadcast stations, whether
network stations or independent stations, where no charge is made to the viewer and/or (b)
exhibition by means of satellite or cable television for which subscribing members of the public
may pay for the transmission service provided by the satellite or cable system, but do not
otherwise pay a premium for the programming transmitted by the satellite or cable system.



     “Funded Qualifying Project” shall mean any Qualifying Project in which the Revenue
Participation Holders have purchased a Revenue Participation, and, for the purposes of this
Agreement only, in which Distributor has been granted Distribution Rights, the Related Rights and
other rights pursuant to Section 2.



     “GAAP” shall mean generally accepted accounting principles in the United States of
America in effect from time to time consistently applied (except for accounting changes in response
to FASB releases, or other authoritative pronouncements).



     “Gross Receipts” has the meaning set forth in Schedule “GR”.



     “Home Video Rights” means and includes, without limitation, the sole and exclusive
right (1) to manufacture, advertise, promote, exploit and distribute the Funded Qualifying Projects
on a sale, lease or rental basis directly or through licensees, in all languages, versions, and
sizes, on all formats of video devices now known or hereafter known or devised, including, without
limitation, (a) any and all forms of videocassettes, cartridges, phonograms, tape, video discs,
laser discs, 8mm recordings and any other visual or optical recording, (b) any and all forms of DVD
(including, without limitation, HD-DVD and Blu-Ray), DVD-ROM, and Internet access-ready DVDs, CD-I
and CD-ROM, Video Compact Discs, or (c) on Videograms, and (2) the right to exploit the Funded
Qualifying Projects by means of Video-On-Demand or Near Video-On-Demand, and all forms of digital
or on-line exploitation, distribution and/or transmission (including, without limitation, Internet
transmission) and computerized or computer-assisted media.



     “Indemnified Party” has the meaning set forth in Section 12.1.



     “Indemnifying Party” has the meaning set forth in Section 12.1.



     “Issuer Collateral” has the meaning set forth in Section 20.



     “Issuer Event of Default” has the meaning set forth in Section 11.2.



     “Issuer Obligations” has the meaning set forth in Section 6.2.



     “Issuer Security Agreement” has the meaning set forth in Section 20.



     “Issuer Security Interest” has the meaning set forth in Section 20.



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     “JAMS” has the meaning set forth in Section 13.



     “LGEI” means Lions Gate Entertainment Inc., a Delaware corporation.



     “Merchandising” includes, without limitation, the right to create and exploit
computer, video and other electronic games based upon a Funded Qualifying Project or any element
thereof, including, without limitation, the sole and exclusive right to create or license the
creation of interactive programs, whether in CD-ROM, DVD (including, without limitation, HD-DVD and
Blu-Ray), set-top or arcade formats; and the right to create and exploit toys, comic books and
so-called “making of books,” apparel, food and beverages, posters, and any and all other
commodities, services or items based upon a Funded Qualifying Project or any element thereof.



     “Near Video-On-Demand” incorporates the definition of Video-On-Demand, except that,
instead of the consumer determining the starting time for viewing the Funded Qualifying Project,
the consumer is able to select the starting time from viewing times determined by the provider,
where the provider permits a selection of starting times not more than 15 minutes apart.



     “Nonpublic Information” means information which has not been disseminated in a manner
making it available to investors generally, within the meaning of Regulation FD.



     “Non-Theatrical Markets” means and includes, without limitation, airlines, schools,
libraries, hospitals, hotels, Army, Navy, Air Force and other military or armed services
installations, and ships at sea flying the flag of a country in the Territory or which are serviced
from within the country of such flag, and other institutions that typically license recorded
entertainment materials from programming suppliers.



     “Non-Theatrical Rights” means and includes, without limitation, the sole and exclusive
right to exploit the Funded Qualifying Projects in Non-Theatrical Markets by any and all means,
whether now known or hereafter known or devised.



     “Other Releasing Costs” shall mean, with respect to a Funded Qualifying Project, the
aggregate of the following costs and expenses, which costs and expenses shall be actual
out-of-pocket costs and expenses paid or payable within *****: home video/DVD manufacturing,
duplication, shipping and marketing costs for such Funded Qualifying Project and all other actual
out-of-pocket distribution, manufacturing or other costs and expenses paid to an unaffiliated third
party (other than participations, residuals, or as otherwise included in P&A Costs, Direct Costs,
or otherwise duplicated costs) with respect to such Funded Qualifying Project.



     “P&A Costs” shall mean, with respect to a Funded Qualifying Project that is a motion
picture, the aggregate of the following costs, which costs shall be actual out-of-pocket costs paid
or payable within ***** or incurred not later than ***** after the date of the first theatrical
release: all prints, marketing, advertising, promotion and publicity costs incurred in the exercise
by Distributor of the theatrical distribution rights in such Funded Qualifying



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Project (i) in the
United States; and (ii) for any other territory in which Distributor directly distributes such
Funded Qualifying Project.



     “Pay-Per-View” means exhibition over a service for which subscribers pay a premium on
a per-program basis for each program which they choose to receive.



     “Pay Television” means exhibition over a service for which subscribers pay a premium
for the programming transmitted (e.g., HBO).



     “Permitted Encumbrances” means: (a) Encumbrances for taxes not yet due and payable;
(b) Encumbrances arising from and pursuant to the Transaction Documents; (c) Encumbrances arising
in the ordinary course of production of a Production, including, without limitation, those arising
out of or with respect to or pursuant to any collective bargaining agreement (e.g., guild liens,
possessory liens of laboratories, transfer facilities and other post-production facilities); (d)
Encumbrances created under any distribution agreement entered into with a Subdistributor in the
ordinary course of business in connection with the distribution or exploitation of any Funded
Qualifying Project; (e) Encumbrances created pursuant to the terms of any Co-Financing Transaction;
(f) Encumbrances in favour of any completion guarantor providing a completion guarantee for any
Funded Qualifying Project; (g) Encumbrances in favour of any interim financier of the production
costs for a Funded Qualifying Project; and (h) the Senior Lender Encumbrances.



     “Person” shall mean any natural person, corporation, division of a corporation,
limited liability company, partnership, trust, joint venture, association, company, estate,
unincorporated organization or government or any agency or political subdivision thereof.



     “Proceedings” has the meaning set forth in Section 13.



     “Production” means any motion picture or television production of every kind and
character whatsoever, including, without limitation, all present and future technological
developments, whether produced by means of any photographic, electrical, electronic, optical,
mechanical or other processes or devices now known or hereafter devised, and their accompanying
devices and processes whereby pictures, images, visual and aural representations are recorded or
otherwise preserved for projection, reproduction, exhibition, or transmission by any means or media
now known or hereafter devised in such manner as to appear to be in motion or sequence, including,
without limitation, computer generated pictures and graphics other than video games.



     “Production Specifications” shall mean, in respect of each Funded Qualifying Project,
the documents or items pre-approved in writing by the Revenue Participation Holders in respect of
such Funded Qualifying Project pursuant to the RP Purchase Agreement.



     “Rebate Costs” has the meaning set forth in Section 7.4.



     “Rebates” has the meaning set forth in Section 7.4.



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     “Regulation FD” means Regulation FD as promulgated by the US Securities and Exchange
Commission under the Securities Act and Exchange Act as in effect from time to time.



     “Residuals” shall mean the costs incurred and payments required under applicable
collective bargaining agreements (in all applicable jurisdictions) by reason of or as a condition
to use or exhibition of a Funded Qualifying Project in any media.



     “Revenue Participation Holders” shall mean SGF and LGEI and each of their respective
permitted successors and assigns, and “Revenue Participation Holder” means any one of them.



     “RPMRR” shall mean the Register of Personal Movable Real Rights (Quebec).



     “Rules” has the meaning set forth in Section 13.



     “Senior Lender Encumbrances” shall mean the Encumbrances in favour of the Senior
Lenders and the Senior Loan Administrative Agent.



     “Senior Lender InterCreditor” shall mean the intercreditor agreement to be entered
into by SGF and the Senior Loan Administrative Agent.



     “Senior Lenders” shall mean the lenders in the Senior Loan Syndicate.



     “Senior Loan Administrative Agent” shall mean JP Morgan Chase Bank, National
Association.



     “Senior Loan Syndicate” shall mean the senior credit facilities in favour of Lions
Gate Entertainment Corp. and LGEI administered by the Senior Loan Administrative Agent.



     “Settlement Date” means, the ***** following the end of an Accounting Period.



     “Settlement Report” has the meaning set forth in Section 7.2.



     “SGF” means SGF Entertainment Inc. and its successors and assigns.



     “Short Form License Agreement” has the meaning set forth in Section 10.2.3.



     “Subdistributor” has the meaning set forth in Section 4.2.



     “Television Production” means a Production that is intended to be exploited on any
form of television including, without limitation, Free Television, Pay Television and Pay-Per-View
and specifically excludes a Production exploited theatrically.



     “Television Rights” means and includes, without limitation, the sole and exclusive
right to exploit the Funded Qualifying Projects by means of television signal, without regard as to
how such signal is distributed (e.g., broadcast over the air, or via satellite, fiberoptic cable,
telephone wire, or any and all forms of Internet, wireless or other computer or digital



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technology, or any other form of technology, now known or hereafter known or devised. Television Rights
includes, without limitation, the right to exploit the Funded Qualifying Projects via Pay
Television, Pay-Per-View and Free Television.



     “Term” means, with respect to a Funded Qualifying Project, the duration of time that
Issuer owns and/or controls the Distribution Rights for such Funded Qualifying Project.



     “Territory” means, with respect to a Funded Qualifying Project, those countries and
territories for which Issuer owns and/or controls all or a portion of the Distribution Rights.



     “Theatrical Rights” means and includes, without limitation, the sole and exclusive
right to rent, lease, license, exhibit, distribute and otherwise deal in and with the Funded
Qualifying Projects for viewing by the public in theatres, in any and all languages or versions,
and including, without limitation, the right to enter into rentals, leases and licenses respecting
all theaters or other places of public viewing, without regard as to how the Funded Qualifying
Projects are distributed to theatres (e.g., on any and all sizes and gauges of film, tape or disc
or distribution to theatres by any other means, whether now known or hereafter known or devised,
including, without limitation, satellite, cable or other electronic transmission).



     “Third Party Participation” means, with respect to a Funded Qualifying Project, any
amount payable to any Person other than (i) LGEI, Issuer, Distributor or any Affiliate thereof or
(ii) any officer, director, management employee of any of LGEI, Issuer, Distributor or any
Affiliate thereof, whether characterized as a deferment, gross participation, net participation,
profit participation, contingent compensation, box office bonus, award or credit bonus, or
otherwise which amount is based, dependent, computed, or payable, in whole or in part, on the net
or gross receipts, earnings, or proceeds derived from such Funded Qualifying Project or any
percentage of the foregoing or is payable at such time as any such receipts, earnings, or proceeds
equal a specified amount whether such receipts, earnings, or proceeds are computed in the same
manner as provided in the Distribution Agreement or are otherwise computed or any similar type of
payment or the economic equivalent thereof. For the avoidance of doubt, (a) a “Third Party
Participation” shall include, “deferments” payable in connection with a Funded Qualifying
Project which are fixed obligations in a definite amount whether or not the receipts, earnings, or
proceeds of such Funded Qualifying Project equal a specified amount, and (b) a “Third Party
Participation” shall not include Co-Financing Participations unless (i) the contractual
arrangements with a Co-Financier require such Co-Financier’s Co-Financing Participation to be paid
from Gross Receipts in the same position in the Waterfall as Third Party Participations and (ii)
such contractual arrangements have been disclosed to the Revenue Participation Holders in the
Production Specifications.



     “Third Party Payments” has the meaning set forth in Section 6.1.



     “UCC” shall mean the Uniform Commercial Code, as applicable in the State of Delaware.



     “USCO” shall mean the United States Copyright Office.



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     “Videograms” means and includes, without limitation, any and all forms of computer
software, or any configuration of computer software and technology, for private use by consumers by
any means, whether now known or hereafter known or devised.



     “Video-On-Demand” means and includes, without limitation, the transmission of a Funded
Qualifying Project through any method now known or hereafter devised, including, without
limitation, broadcast television signal, whether analog or digital, or via satellite, cable,
telephone wire, fiberoptics, cyberspace, Internet or other computerized or digital technology,
on-line transmission, every sort of electronic transmission or any and all other delivery systems,
to a television receiver, computer monitor or other comparable display, whereby the consumer can
select the Funded Qualifying Project from a central library and whereby the consumer determines the
starting time of the Funded Qualifying Project.



     “Waterfall” has the meaning set forth in Section 6.3.



     1.2 Computation of Time Periods. Unless otherwise stated in this Agreement, in the
computation of a period of time from a specified date to a later specified date, the word
“from” means “from and including”, the word “through” means “to and
including”, and the words “to” and “until” each mean “to but
excluding”.



     1.3 Accounting Terms / Ratios.



          1.3.1 Except as otherwise expressly provided herein or in the RP Purchase Agreement, all
accounting terms not defined herein or in the RP Purchase Agreement shall be construed in
accordance with GAAP.




          1.3.2 All calculations of financial ratios hereunder shall be calculated to the same number of
decimal places as the relevant ratios are expressed in and shall be rounded upward if the number in
the decimal place immediately following the last calculated decimal place is five or greater, and
rounded down if otherwise.




     1.4 Rules of Construction. Unless the context otherwise clearly requires:



          1.4.1 whenever the context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms;




          1.4.2 the word “will” shall be construed to have the same meaning and effect as the
word “shall”;




          1.4.3 any definition of or reference to any agreement, instrument or other document herein
shall be construed as referring to such agreement, instrument or other document as from time to
time amended, supplemented or otherwise modified (subject to any restrictions on such amendments,
supplements or modification set forth herein);




          1.4.4 any reference to any law herein shall be construed as referring to such law as from time
to time amended;




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               1.4.5 any reference herein to any Person, or to any Person in a specified capacity, shall be
construed to include such Person’s successors and assigns or such Person’s successors in such
capacity, as the case may be;





	1.4.6	 	the words “herein,” “hereunder” and other words of similar import refer
to this Agreement as a whole and not to any particular Schedule, Section, or other
subdivision;
	 
	1.4.7	 	to the extent that there are any inconsistencies with the terms and conditions of this
Agreement and the terms and conditions of the RP Purchase Agreement, the terms and conditions of
the RP Purchase Agreement shall prevail; and
	 
	1.4.8	 	all capitalized terms not otherwise defined herein shall have the meaning attributed
thereto in the RP Purchase Agreement and shall be incorporated herein as if herein recited at
length.





2. GRANT OF RIGHTS.




     2.1 Issuer hereby grants and conveys the Distribution Rights to Distributor, to the extent
owned or controlled by Issuer.



     2.2 Issuer hereby grants the Related Rights to Distributor, to the extent owned or controlled
by Issuer.



     2.3 Distributor shall have the sole and exclusive right to advertise, publicize, promote and
market each Funded Qualifying Project by any means in the Territory and over the Internet.



     2.4 Issuer shall not release or disclose any information, advertising or publicity relating to
any Funded Qualifying Project in the Territory without Distributor’s prior written approval.



3. EXPLOITATION DECISIONS.




     3.1 Subject to the terms of the RP Purchase Agreement and the terms and conditions of this
Agreement, Distributor shall have absolute discretion concerning the exploitation of each Funded
Qualifying Project, including the right to release and distribute (and/or refrain from releasing
and distributing) each Funded Qualifying Project in such manner and media, and through such
releasing or distribution entity or entities (and/or to engage such Subdistributors or licensees).
Issuer agrees that any such determination on the part of Distributor and its sublicensees regarding
any matter affecting the exploitation of a Funded Qualifying Project shall be binding and
conclusive upon Issuer. Without limiting the foregoing:



          3.1.1 Distributor may, at its discretion, prepare closed-captioned versions of the Funded
Qualifying Projects and use excerpts, clips and trailers thereof for advertising and promotional
purposes.




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          3.1.2 Distributor may incorporate onto Videograms of a Funded Qualifying Project (A) preceding
and/or following the main and end titles of such Funded Qualifying Project, Distributor’s or any of
Distributor’s, sublicensees’, Affiliates’ and affiliated licensees’
names, trademarks, logos, trailers, clips, (B) excerpts of other Funded Qualifying Projects,
(C) Distributor’s standard “opening” and “closing” sequences, including, without limitation, an
introductory visual “logo” with or without music, (D) any legal notices or other information which
Distributor determines is necessary, (E) paid advertising (provided monies received from such paid
advertising shall be included in Gross Receipts) and (F) any so-called “making of” or “behind the
scenes” documentary footage or programming, including, without limitation, any part of the
electronic press kits, featurettes, interviews, television specials and publicity clips prepared in
connection with such Funded Qualifying Project.




          3.1.3 Distributor may incorporate trailers, clips or excerpts of a Funded Qualifying Project
on Videograms of other Productions and may incorporate trailers, clips or excerpts of other
Productions on Videograms of a Funded Qualifying Project.




          3.1.4 Distributor shall have the right, at its discretion, to either make any and all changes
and modifications in a Funded Qualifying Project (including, without limitation, its title) which
Distributor shall determine to be necessary or desirable by reason of censorship, registration
(i.e. ratings) or other requirements of governmental or other authorities or law, all at Issuer’s
sole cost and expense as part of the Distribution Expenses of such Funded Qualifying Project.
Issuer agrees to cooperate with Distributor to clear customs, registrations and censorship or
similar authorities and any fees associated therewith may be deductible from any amounts payable to
Issuer. Distributor shall have the right to select, designate or change the title of a Funded
Qualifying Project in its discretion and to release such Funded Qualifying Project in any or all
parts of the Territory under such title or titles as Distributor may designate.




          3.1.5 Distributor may include Distributor’s (or one or more of Distributor’s or any of
Distributor’s sublicensees’, affiliates’ and affiliated licensees’ names) name, logo, trademark or
emblem in such manner, position, form and substance as Distributor may elect on the prints of the
Funded Qualifying Projects, and on all advertising and publicity materials for the Funded
Qualifying Projects (including, without limitation, any trailers of the Funded Qualifying
Projects), together with such words as Distributor may elect indicating that such Funded Qualifying
Projects are being distributed by Distributor or any of Distributor’s sublicensees’, affiliates’
and affiliated licensees’ names.




     3.2 Maximizing Gross Receipts. Distributor shall use diligent efforts and skill
(consistent with the quality standards of first-class distributors of Productions) in the
distribution and exploitation of the Funded Qualifying Projects in all media throughout the
Territory to maximize Gross Receipts, including, without limitation, obtaining any permits
permissions and/or clearances necessary to exploit the Funded Qualifying Projects in all
territories throughout the Territory.



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     3.3 Copies of License Agreements. Distributor shall provide Issuer with copies of all
license agreements entered into by the Distributor in connection with any Funded Qualifying Project
or any rights therein, promptly upon execution thereof.



     3.4 Theatrical Release of Film Productions. For each Funded Qualifying Project that
is a Film Production, Distributor shall release such Funded Qualifying Project theatrically. The
size, date, cost and scope of such theatrical release shall be determined in the sole discretion of
Distributor and in accordance with the standards of first-class distributors of Productions taking
into account its theatrical release pattern for films of a similar genre and budget.



4. DISTRIBUTION FEE




     4.1 Distribution Fee. For each Funded Qualifying Project, Distributor shall be
entitled to receive a distribution fee, on an uncrossed basis with all other Funded Qualifying
Projects (the “Distribution Fee”), in an amount equal to ***** for such Funded Qualifying
Project, escalating on a prospective basis only to ***** for such Funded Qualifying Project at such
time, if ever, as the sum of the aggregate amount actually paid to SGF pursuant to the RP Purchase
Agreement on account of its Revenue Participation for such Funded Qualifying Project shall equal
***** paid by SGF for such Revenue Participation, and further escalating on a prospective basis
only to ***** for such Funded Qualifying Project at such time, if ever, as the sum of the aggregate
amount actually paid to SGF pursuant to the RP Purchase Agreement on account of its Revenue
Participation such Funded Qualifying Project shall equal ***** paid by SGF for such Revenue
Participation; provided, however, that the Distributor shall not be entitled to a
Distribution Fee on any Gross Receipts relating to the principal license fee payable by a U.S.
licensee for any Funded Qualifying Project that is a Television Production. Any escalation in the
Distribution Fee for a Funded Qualifying Project, and the date of such escalation, shall be
indicated in the Settlement Report for such Funded Qualifying Project for the Accounting Period in
which such escalation occurred. In the event that SGF contests the amount actually paid to SGF
pursuant to the RP Purchase Agreement on account of its Revenue Participation for such Funded
Qualifying Project, then the Distribution Fee shall not escalate to ***** (as the case may be),
until such time as the parties hereto have had the opportunity to review and agree on such amount,
and the date upon which such amount was actually paid to SGF, and any overpayment of such
Distribution Fee shall be corrected in the Settlement Report for the next Accounting Period (or
Accounting Periods, if Gross Receipts are not sufficient to correct such overpayment in such next
Accounting Period).



     4.2 Subdistribution. Distributor shall be entitled to the Distribution Fees set forth
above, in any part of the Territory where Distributor exploits each Funded Qualifying Project
either directly or through a third party that is not an Affiliate of Distributor to which all or
part of the Distribution Rights are licensed or sublicensed (“Subdistributor”), regardless
of the amounts retained by any such Subdistributor.



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5. DISTRIBUTION EXPENSES.




     All Distribution Expenses incurred in connection with the Distribution of each Funded
Qualifying Project in the Territory shall be advanced by Distributor and recouped as provided in
Section 6.



6. ALLOCATION OF GROSS RECEIPTS.




     6.1 Third Party Payments. All Third Party Participations, Residuals, music
synchronization, performance and other mechanical fees, and any other license fees (including,
without limitation, all literary, all EU copyright directives, artistic, musical, technological
and/or intellectual property rights fees) in connection with each Funded Qualifying Project shall
be the obligation of Issuer and shall not be the obligation of Distributor (collectively,
“Third Party Payments”). Issuer shall deliver each Funded Qualifying Project free and
clear of any Encumbrances, other than Permitted Encumbrances. Upon Delivery of a Funded Qualifying
Project to Distributor in accordance with the terms of this Agreement, Distributor shall assume any
applicable union and/or guild payment obligation(s) due to such union(s) and/or guild(s) as a
result of Distributor’s exploitation of the Distribution Rights for such Funded Qualifying Project
in the Territory and each payment made by Distributor in respect of such obligations shall be
considered a Third Party Payment.



     6.2 Paymaster Services. So long as Distributor controls the Distribution Rights with
respect to a Funded Qualifying Project, then with respect to each such Funded Qualifying Project
during the Term, Distributor agrees to (i) provide to Issuer paymaster services in connection with
the payment of Third Party Payments and other Distribution Expenses for such Funded Qualifying
Project and (ii) advance, on behalf of Issuer the Third Party Payments and other Distribution
Expenses (the “Issuer Obligations”). Distributor’s agreement to pay Issuer Obligations in
its capacity as paymaster pursuant to the immediately preceding sentence is subject to
Distributor’s timely receipt from Issuer of all contractual provisions and cost and participation
information relating to the Funded Qualifying Projects which Issuer hereby agrees to provide on a
timely basis. Distributor shall be entitled to fully recoup, as a Distribution Expense, any amount
advanced in respect of Issuer Obligations, including any amount paid by Distributor on account of
Third Party Payments, out of Gross Receipts.



     6.3 Allocation of Gross Receipts. Subject to any rights and remedies of Distributor
as set forth in this Agreement, Distributor shall, on an ongoing and continuing basis, deduct and
allocate the following items from Gross Receipts from each Funded Qualifying Project, on a
continuing basis in the following order of priority (the “Waterfall”):



          6.3.1 First, to the payment of any required Third Party Payments, including, without
limitation, any Co-Financing Participations that are included in such Third Party Payments;
provided however, that all unreimbursed Third Party Payments and Co-Financing
Participations paid or earned prior to or during such Accounting Period shall be retained by
Distributor; provided further, however, that if a Co-Financing Transaction



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requires that such Co-Financing Participation be paid at a higher or lower level of the Waterfall, then such
Co-Financing Participation shall, with respect to the Gross Receipts received in connection with
such applicable Funded Qualifying Project, be deducted and paid to such co-financing participant at
such applicable level of the Waterfall; provided further, however, that if the
contractual arrangements relating to a Third Party Payment require that such Third Party Payment be
paid at a higher or lower level of the Waterfall, then such Third Party Payment shall, with respect
to the Gross Receipts received in connection with such applicable Funded Qualifying Project, be
deducted and paid to such the applicable third party participant at such applicable level of the
Waterfall.



          6.3.2 Second, to Distributor on account of the Distribution Fee for such Accounting
Period;




          6.3.3 Third, To Distributor on account of all unreimbursed Distribution Expenses paid
or incurred during or prior to such Accounting Period shall be retained by Distributor (for
purposes of the foregoing, “incurred” shall mean Distribution Expenses that Distributor is
obligated to pay to third parties prior to or during the applicable Accounting Period), which
amounts shall include all unreimbursed Third Party Payments paid or earned prior to or during such
Accounting Period (for purposes of the foregoing, “earned” shall mean with respect to third
parties the amount that Distributor is contractually obligated to pay to such third parties as a
result of the calculation of revenues and expenses recognized, or events occurring, during the
Accounting Period in question, and, with respect to Residuals, amounts that Distributor is
contractually obligated to pay pursuant to collective bargaining agreements with all applicable
guilds as a result of the calculation of revenues and expenses recognized during the Accounting
Period in question); and




          6.3.4 Fourth, all remaining amounts (“Adjusted Receipts”) shall be distributed
to the Revenue Participation Holders (and, if applicable, (a) any Co-Financier, on account of
Co-Financing Participations and (b) any third party recipient of a Third Party Payment), as set
forth in the RP Purchase Agreement.




     6.4 Gross Receipts Not Crossed. Gross Receipts shall be disbursed through the
Waterfall on a Funded Qualifying Project-by-Funded Qualifying Project and Gross Receipts from one
Funded Qualifying Project will not be crossed with Gross Receipts from any other Funded Qualifying
Project.



7. ACCOUNTING / SETTLEMENT REPORTS / AUDIT.




     7.1 Accounting Period. Distributor shall account to Issuer with respect to each
Funded Qualifying Project distributed by Distributor hereunder for each Accounting Period.



     7.2 Settlement Reports. On each Settlement Date, Distributor shall render to Issuer
(with a copy to each Revenue Participation Holder, provided that Distributor’s inadvertent failure
to provide such copy to any Revenue Participation Holder shall be a breach of this Agreement) a
settlement report for each Funded Qualifying Project (each, a “Settlement Report”). Each
Settlement Report shall be delivered by Distributor to Issuer on each Settlement Date together with
any sums being shown due to Issuer. Settlement Reports



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rendered by Distributor may be changed from
time to time to give effect to year-end adjustments made by Distributor’s accounting department or
public accountants, to items overlooked, to correct errors, or to reflect any indebtedness which
may become uncollectible for any similar purposes. Should Distributor make any overpayment to
Issuer hereunder for any reason, Distributor shall have the right to deduct and retain for its own
account an amount equal to any such overpayment from any sums that may thereafter become due or
payable by Distributor to Issuer or for Issuer’s account. Should Distributor make any underpayment
to Issuer hereunder for any reason, Distributor shall on the next succeeding Settlement Date pay to
Issuer an amount equal to any such underpayment; provided, however, that all
amounts payable to Issuer hereunder shall be subject to all laws and regulations now or hereafter in
existence requiring the deduction or withholding of payments for income or other taxes payable by
or assessable against Issuer arising out of or in connection with this Agreement. Distributor
shall have the right to make such deductions and withholdings, and the payment thereof to the
governmental agency concerned in accordance with its interpretation in good faith of such laws and
regulations shall constitute payment hereunder to Issuer, and Distributor shall not be liable to
Issuer for the making of such deductions or withholdings or the payment thereof to the governmental
agency concerned. In any such event Issuer shall make and prosecute any and all claims which it
may have (and which it desires to make and prosecute) with respect to the same directly with the
governmental agency having jurisdiction in the premises.



     7.3 Accounting Records. Books of account in respect of the distribution of each
Funded Qualifying Project (which books of account are hereinafter referred to collectively as the
“Distribution Records”), shall be kept at Distributor’s or its Affiliates’ various offices
(both in the United States and abroad) where generated or customarily kept, for as long as such
Distribution Records are customarily retained by such office (provided, however,
that the foregoing obligation shall not apply to any Subdistributors of a Funded Qualifying
Project) and in the form customarily maintained by Distributor or such Affiliates.



     7.4 Audits. Issuer and each Revenue Participation Holder shall each have the right,
at its own expense, but not more than *****, to audit the Distribution Records at the aforesaid
office in order to verify the Settlement Reports rendered hereunder in connection with each Funded
Qualifying Project. Any such audit shall be conducted only by a certified public accountant
during reasonable business hours and in such manner as not to interfere with Distributor’s normal
business activities, shall not continue for more than ***** and be conducted by a third party
accounting firm approved by the Revenue Participation Holders (Sills & Adelmann, Hacker, Douglas &
Company, and any of the so-called “Big-Four” accounting firms are hereby pre-approved), provided
that no such firm is compensated on a “percentage of recovery” basis, it being understood that
Distributor shall have the right to approve any “percentage of recovery” retainer), provided,
however, that such third party accounting firm shall agree in writing, for the benefit of
Distributor, to be bound by the same duties of confidentiality arising under this Agreement and the
RP Purchase Agreement. The Issuer and each Revenue Participation Holder shall be entitled to
conduct the audit within ***** of the Issuer or each Revenue Participation Holder’s notice to
conduct the audit. Issuer shall not have the right to examine or inquire into any matters or
items which are contained in any such Settlement Report after the expiration of ***** from and
after the date



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of receipt of such Settlement Report, and such Settlement Report shall be final and
conclusive upon Issuer upon the expiration of such ***** period notwithstanding that the matters or
items embraced by or contained therein may later be contained or referred to in a cumulative
statement pertaining to more than one Accounting Period. Except in the context of litigation, such
cumulative statement shall not be subject to audit by Issuer to the extent the material contained
therein was first reflected on a Settlement Report submitted more than ***** prior to the date of
mailing of such cumulative statement. Issuer shall be forever barred from maintaining or
instituting any action or proceeding based upon, or in any way relating to, any
transactions had by Distributor, its Affiliates, or its licensees, in connection with the
Funded Qualifying Projects which are reflected on any Settlement Report rendered hereunder, or the
accuracy of any item appearing therein, unless written objection thereto stating with specificity
the particular transaction(s) or item(s) to which Issuer objects shall have been delivered by
Issuer to Distributor prior to the expiration of the ***** period with respect to such Settlement
Report unless such action or proceeding is commenced within such period. Notwithstanding the
foregoing, a notice of intention to conduct an audit or to institute litigation shall interrupt
each aforementioned ***** period. In the event the audit is not conducted or litigation instituted
within a reasonable delay from the date of such notice, the right to conduct such audit or
institute litigation shall terminate ***** from a written notice thereof by the Distributor. The
Issuer and each Revenue Participation Holder shall be entitled to examine: all licensing,
distribution and sub-distribution agreements relating to Funded Qualifying Projects. If a Funded
Qualifying Project has been distributed, licensed, sub-distributed or packaged with Productions
which are not Funded Qualifying Projects (“Packaged Projects”), the Issuer and each Revenue
Participation Holder shall be entitled to examine all licensing, distribution and sub-distribution
agreements in connection with such Funded Qualifying Project and such Packaged Projects, as well as
all accounts, records, Distribution Records, Settlement Reports and documents which set forth,
inter alia, the price allocation for such Funded Qualifying Project and such Packaged Projects. In
connection with the delivery of each Settlement Report, Distributor shall provide an officer’s
certificate that (i) sets forth the amount of all rebates, advances and credits allocated to one or
more Funded Qualifying Projects pursuant to agreements with film processing laboratories or other
home video replication entities (e.g., film duplication advances) for such Accounting Period
(collectively, “Rebates”) (on a Production by Production basis), (ii) the aggregate amount,
if any, of any out-of-pocket third party costs (“Rebate Costs”) incurred in acquiring such
Rebates allocated to one or more Funded Qualifying Projects (on a Production by Production basis),
and (iii) certifies that, taking into account all of the facts and circumstances, the Rebates and
Rebate Costs were allocated to the Funded Qualifying Projects in a fair and reasonable manner. To
the extent that the results of an audit of the Distribution Records reveals that additional
Adjusted Receipts are due to Issuer, Distributor agrees to pay such sums to Issuer together with
interest thereon at LIBOR, accruing from the date such amount should have been paid to Issuer.



     7.5 Statements and Payments. All statements and payments contemplated by this
Agreement shall be sent to the respective parties address as set forth in Section 16.



8. DELIVERY.




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     8.1 Definition and Procedures. Issuer shall deliver each Funded Qualifying Project in
strict conformity with the Production Specifications applicable to such Funded Qualifying Project.
“Delivery” shall mean Distributor’s receipt, at Issuer’s sole cost and expense, of all
Delivery Materials applicable to each Funded Qualifying Project. If all the Delivery Materials are
not timely delivered to Distributor, or if any of the Delivery Materials are incomplete or
technically unacceptable, or if the Funded Qualifying Project does not conform to the Production
Specifications, Distributor shall notify Issuer in writing specifying
the defects (“Defect Notice”). Such Defect Notice shall be delivered within ***** of receipt by
Distributor of the last item required for Delivery sent by Issuer. If Issuer fails to cure the
specified defects within ***** from the date such Defect Notice was sent, or if Issuer fails to
timely deliver the Funded Qualifying Project, Distributor may secure acceptable replacements and
withhold from Adjusted Receipts or any other amounts due to Issuer Distributor’s reasonable
estimate of the cost of conforming the Funded Qualifying Project and or delivery of the Funded
Qualifying Project to the requirements of this Agreement. Notwithstanding the foregoing, approval
by Distributor of less than all Delivery Materials or any release of the Funded Qualifying Project
shall not be deemed a waiver by Distributor of Issuer’s obligation of complete Delivery of the
Funded Qualifying Project hereunder. Under no circumstances shall Issuer be relieved of the
obligation to complete Delivery of all of the Materials required hereunder, unless Distributor
shall so notify Issuer in writing designating the particular Materials which need not be delivered
by Issuer to Distributor.



9. REPRESENTATIONS AND WARRANTIES.




     9.1 Representations and Warranties by each Party. Each party hereby severally
represents, warrants and agrees as follows:



          9.1.1 Organization and Related Matters. Such party (i) is duly organized, validly
existing and in good standing under the laws of the applicable state and/or country in which it is
organized; (ii) has all necessary power and authority to carry on its business as now being
conducted; and (iii) has the necessary power and authority to execute, deliver and perform this
Agreement and any related agreements to which it is a party.




          9.1.2 Authorization. The execution, delivery and performance of this Agreement and
any related agreements by such party has been duly and validly authorized by all necessary action
on the part of such party. This Agreement constitutes the legal, valid and binding obligation of
such party, enforceable against such party in accordance with its terms except as such
enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws and equitable principles relating to or limiting creditors’ rights generally.




          9.1.3 No Conflicts. The execution, delivery and performance of this Agreement and any
related agreements by such party will not violate or constitute a breach or default (whether upon
lapse of time and/or the occurrence of any act or event or otherwise) under (i) the charter
documents of such party; (ii) any law to which such party is subject; or (iii) any contract to
which such party is a party that is material to the financial condition, results of operations or
conduct of the business of such party.




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     9.2 Representations and Warranties of Issuer. With respect to each Funded Qualifying
Project, Issuer represents and warrants to Distributor as of the date of the Short Form License
Agreement with respect to each Funded Qualifying Project (except with respect to the
representations and warranties in Section 9.2.1 which are made as of the date hereof):



          9.2.1 Clear Title. Issuer has not entered into any agreement with or made any
Obligations to any third party with respect to such Funded Qualifying Project which might conflict
or interfere with or adversely affect any of the provisions of this Agreement or the use or
enjoyment by Distributor of any of the Distribution Rights granted to it hereunder. Issuer has not
sold, assigned, transferred or conveyed, and will not sell, assign, transfer or convey, to any
party any right, title or interest in and to such Funded Qualifying Project or any part thereof, or
in and to the dramatic or literary material upon which it is based, adverse to or in derogation of
the Distribution Rights granted to Distributor.




          9.2.2 Litigation. Such Funded Qualifying Project and the Distribution Rights granted
to Distributor as contemplated hereunder will not, and there has been no claim that the Funded
Qualifying Project does, infringe upon, violate or conflict with any rights whatsoever of any
Person. There is not now outstanding any litigation or threatened litigation, or any claims,
demands, investigations or threats of claims, with respect to the Funded Qualifying Project, the
literary, dramatic or musical material upon which the Funded Qualifying Project is based, or which
is used therein, or the physical properties thereof.




          9.2.3 Funded Qualifying Project.




               9.2.3.1. Copyright. The Funded Qualifying Project has been duly and properly
registered (and, if appropriate, renewed) for copyright in the United States by or on behalf of the
owner of such copyright, or can be so registered (and, if appropriate, renewed), and the copyrights
in the Funded Qualifying Project and the literary, dramatic and musical materials upon which the
Funded Qualifying Project is based, or which are contained in the Funded Qualifying Project, are
and will be valid and subsisting during the Term throughout the Territory.



               9.2.3.2. Compliance. The Funded Qualifying Project, and all parts thereof, will be,
or has been produced in compliance with any and all relevant laws, rules and regulations, whether
state, federal, international or local (i.e., those imposed by any union, guild or labor
organization), applicable to the production and completion of Productions.



               9.2.3.3. Accurate Delivery. All deliverables required to be delivered by Issuer
pursuant to the Delivery Schedule, including, without limitation, cast lists, credits, “paid ad”
and talent restrictions statements, and copies of documents, are complete and accurate and
Distributor will incur no liability to any third party from its reliance thereon and/or compliance
therewith.



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10. COVENANTS.




     10.1 Covenants Applicable to Each Party. Each Party to this Agreement hereby
covenants to the other that it will at all times:



          10.1.1 Compliance with Laws, Etc. Comply in all material respects with all Applicable
Law.




          10.1.2 Payment of Taxes, Etc. Pay and discharge or otherwise satisfy, before the same
shall become delinquent or subjected to penalty, all taxes imposed upon it or its property which
are due, except where the amount or validity thereof is currently being contested in good faith by
appropriate proceedings, if any, and reserves in conformity with GAAP with respect thereto have
been provided on the books and records of such Party or any consolidated group to which such Party
is a party.




          10.1.3 Preservation of Existence, Etc. (i) Preserve and maintain its corporate
existence, and (ii) qualify and remain qualified in good standing as a foreign corporation under
the laws of each jurisdiction where its ownership, lease or operation of property or the conduct of
its business requires such qualification, and (iii) take all reasonable action to maintain all
rights, privileges, permits, licenses and franchises necessary or desirable in the normal conduct
of its business.




     10.2 Covenants of Issuer. Issuer hereby covenants to Distributor that it will at all
times:



          10.2.1 Keeping of Books. Implement and maintain administrative and operating
procedures, and keep and maintain at such place or places as may from time to time be customary
pursuant to its ordinary business practices, all documents, books, records and other information,
reasonably necessary in connection with the activities of such party contemplated by the
Transaction Documents.




          10.2.2 Performance of Documents. Timely and fully (A) perform, observe and comply in
all material respects with all of the provisions, covenants and other terms required to be
performed or observed by it under each Transaction Document to it is a party in accordance with its
terms, (B) maintain each such Transaction Document in full force and effect, and (C) make to each
other party to each such Transaction Document such demands and requests for information and reports
or for action as such party is entitled to make under such Transaction Document.




          10.2.3 Short Form License Agreement. Execute and deliver to Distributor a short form
license agreement, in form satisfactory to Distributor, (each, a “Short Form License
Agreement”) with respect to each Funded Qualifying Project.




     10.3 Covenants of Distributor. Distributor will at all times, unless consented to in
writing by Issuer:



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          10.3.1 Allocated Costs. Whenever Distributor (i) makes any expenditures or incurs any
liability in respect of a group of Productions which includes one or more of the Funded Qualifying
Projects, or (ii) receives from any licensee either a flat sum or a percentage of the receipts, or
both, for any right to a group of Productions which includes any of the Funded Qualifying Projects,
under any agreement (whether or not the same shall provide for the exhibition, sale, lease or
delivery of positive prints of any of said Productions) which does not specify what portion of the
license payments apply to the respective Productions in the group (or to such prints or other
material, if any, as may be supplied), then, in any and all such
situations, Distributor shall, in good faith, include in, or deduct from, the Gross Receipts
for any such Funded Qualifying Projects, as the case may be, such sums in a non-discriminatory
manner.




          10.3.2 Manner of Distribution. Notwithstanding anything to the contrary contained
herein, Distributor will distribute each Funded Qualifying Project (including, without limitation,
expending amounts for prints and advertising for each Funded Qualifying Project) in accordance with
the standards of first-class distributors of Productions and in a non-discriminatory manner
commensurate with the treatment of Productions owned solely by Distributor or an Affiliate thereof,
taking into account the genre, budget, marketplace, strength of competition, time of the year, the
director, the rating and NRG index scores of such Funded Qualifying Project; provided,
however, Distributor is making no representation, warranty or guaranty that any receipts
received with respect to any Funded Qualifying Project from any media or territory will be
comparable to the receipts received for any other Production distributed by Distributor in such
media or territory. The determination whether a Funded Qualifying Project has been distributed in
a non-discriminatory manner will be made based upon the overall treatment of the applicable Funded
Qualifying Project over all media and territories, rather than on a transaction-by-transaction
basis. Subject to the terms and conditions hereof and the RP Purchased Agreement, Distributor
shall have complete and exclusive discretion and control (which it shall exercise in a manner
consistent with the standards of first-class distributors of Productions of similar genre and
budget) as to the time, manner, terms and extent of distribution, exhibition and exploitation of
each Funded Qualifying Project, in accordance with such policies, terms and conditions and through
such Persons as Distributor in its business judgment (which it shall make in a manner consistent
with the standards of first-class distributors of Productions of similar genre and budget) may
determine proper or expedient. Except as permitted under or as contemplated by the Transaction
Documents, to the extent that Distributor enters into any transactions under this Agreement with
Affiliates, Distributor shall do so and shall perform its obligations and enforce its rights
thereunder upon terms consistent with those upon which Distributor customarily conducts business at
such time, applied on a non-discriminatory basis as if such Funded Qualifying Projects were not
subject to this Agreement.




     10.4 Subdistribution. Distributor shall have the sole discretion to sell,
subdistribute or license any Distribution Rights and/or Related Rights with respect to any Funded
Qualifying Project in a non-discriminatory manner commensurate with the treatment of Productions
owned solely by Distributor or an Affiliate thereof. With respect to such subdistribution
agreements entered into by Distributor, Distributor shall exercise the same degree of diligence and
skill in the performance of its duties in connection therewith as it



- 20 -









 







applies to its or its
Affiliates own Productions not subject to this Agreement, and shall take or cause to be taken all
such actions as may be necessary or desirable to collect Gross Receipts from time to time, all in
accordance with Applicable Law.



11. EVENT OF DEFAULT / REMEDIES.




     11.1 By Distributor; Limitation of Issuer’s Remedies. Upon the occurrence and
continuance of a breach by Distributor of any of its agreements, representations, warranties,
obligations and covenants set forth herein or the Transaction Documents (each a
“Distributor Event of Default”), the sole and exclusive remedy of Issuer or any Revenue
Participation Holder for such Distributor Event of Default shall be to bring an action at law to
recover damages, and neither Issuer nor any Revenue Participation Holder shall be entitled to any
form of equitable relief. In no event shall Issuer, any Revenue Participation Holder or any party
transferring rights or rendering services in connection with a Funded Qualifying Project be
entitled to terminate or rescind this Agreement or Distributor’s rights with respect to a Funded
Qualifying Project or enjoin or restrain or otherwise interfere with Distributor’s distribution,
exhibition or other exploitation of any Funded Qualifying Project or Distributor’s use, publication
or dissemination of any advertising issued in connection with the Funded Qualifying Project. In
furtherance of and without limiting the foregoing, Issuer agrees that it shall not interfere or
authorize or cause any other party to interfere with the rights of Distributor and its
Subdistributors to quietly and peacefully enjoy and possess all rights in the Funded Qualifying
Projects, including, without limitation, all rights under copyright, to the extent owned or
controlled by Issuer.



     11.2 By Issuer. Upon the occurrence and during the continuance of a breach by Issuer
of any of its agreements, representations, warranties or covenants set forth herein (each a
“Issuer Event of Default”), then Distributor shall have the right to terminate this
Agreement and to seek any and all remedies available at law and in equity. Notwithstanding the
foregoing, Distributor shall not have the right to withhold and reserve from any monies whatsoever
payable to Issuer or its designee hereunder, other than amounts relating to any Issuer Obligations.



12. INDEMNIFICATION.




     12.1 Mutual Indemnity. Each party (“Indemnifying Party”) hereby indemnifies,
defends and holds harmless the other party and its successors, licensees, assigns, and employees,
officers and directors (collectively for the purposes of this Section “Indemnified Party”)
from and against any and all liability, loss, damage, cost and expense, including, reasonable
attorney’s fees (but excluding lost profits or consequential damages) arising out of any breach or
claim by a third party with respect to any warranty, representation or agreement made by the
Indemnifying Party herein. The Indemnified Party shall promptly notify the Indemnifying Party of
any claim to which the foregoing indemnification applies and the Indemnifying Party shall
undertake, at its own cost and expense, the defense thereof. The Indemnified Party may, at its
option and expense, engage its own counsel. If the Indemnifying Party fails to promptly appoint
competent and experienced counsel, the Indemnified Party may engage its own counsel and the
reasonable charges in connection



- 21 -









 







therewith shall promptly be paid by the Indemnifying Party. If
the Indemnified Party settles or compromises any such suit, claim or proceeding, the amount thereof
shall be charged to the Indemnifying Party, provided that the Indemnifying Party’s reasonable prior
approval has been secured.



     12.2 Control of Litigation. Distributor shall have the right to assume the defense of
any claim made by a third party and arising from a breach or alleged breach of any representation,
warranty or agreement of Issuer hereunder or that otherwise may be subject to the indemnity set
forth in Section 12.1. Issuer shall have the right as well as the obligation to consult and
cooperate with Distributor in connection with any such claim and, upon Distributor’s request, to furnish
Distributor with any and all evidence, materials or other information relevant thereto. Issuer
shall have the right (at Issuer’s sole expense) to have Issuer’s own counsel present in connection
with the defense of any such claim, provided that such counsel fully cooperates with Distributor’s
counsel and in no way interferes with the handling of the case by Distributor’s counsel. Issuer
understands and agrees that all aspects of the defense of any such claim, whether as part of any
litigation, negotiations or otherwise (including any decision regarding any settlement), shall be
controlled by Distributor, Distributor shall be free to use counsel of Distributor’s choice in
connection therewith, and such control shall in no way abrogate or diminish Issuer’s obligations
under Section 12.1.



13. ARBITRATION.




     All actions or proceedings arising in connection with, touching upon or relating to this
Agreement between the parties, the breach thereof and/or the scope of the provisions of this
Section 13 (a “Proceeding”) shall be submitted to the Judicial Arbitration and
Mediation Service or its successor (“JAMS”) for binding arbitration under its Comprehensive
Arbitration Rules and Procedures if the matter in dispute is over ***** or under its Streamlined
Arbitration Rules and Procedures if the matter in dispute is ***** (as applicable, the
“Rules”) to be held solely in Los Angeles, California, U.S.A., in the English language in
accordance with the provisions below.



     13.1 Each arbitration shall be conducted by an arbitral tribunal (the “Arbitral
Board”) consisting of a single arbitrator who shall be an attorney or a retired judge with at
least ten (10) years experience in commercial matters and the motion picture industry or the
television industry, as applicable. The arbitrator shall be mutually agreed upon by the parties.
If the parties are unable to agree on an arbitrator, the arbitrator shall be appointed by JAMS.
The Arbitral Board shall assess the cost, fees and expenses of the arbitration against the losing
party, and the prevailing party in any arbitration or legal proceeding relating to this letter
agreement shall be entitled to all reasonable expenses (including reasonable attorney’s fees).
Notwithstanding the foregoing, the Arbitral Board may require that such fees be borne in such other
manner as the Arbitral Board determines is required in order for this arbitration clause to be
enforceable under Applicable Law. The parties shall be entitled to conduct discovery in accordance
with Section 1283.05 of the California Code of Civil Procedure; provided that (i) the Arbitral
Board must authorize all such discovery in advance based on findings that the material sought is
relevant to the issues in dispute and that the nature and scope of such discovery is reasonable
under the circumstances; and (ii) discovery shall be



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limited to depositions and production of
documents unless the Arbitral Board finds that another method of discovery (e.g., interrogatories)
is the most reasonable and cost efficient method of obtaining the information sought.



     13.2 There shall be a record of the proceedings at the arbitration hearing and the Arbitral
Board shall issue a Statement of Decision setting forth the factual and legal basis for the
Arbitral Board’s decision. If neither party gives written notice requesting an appeal within *****
after the issuance of the Statement of Decision, the Arbitral Board’s decision shall be final and
binding as to all matters of substance and procedure, and may be enforced by a
petition to the Los Angeles County Superior Court or such other court having jurisdiction over
the parties for confirmation and enforcement of the award. If either party gives written notice
requesting an appeal within ***** after the issuance of the Statement of Decision, the award of the
Arbitral Board shall be appealed to three neutral arbitrators (the “Appellate
Arbitrators”), each of whom shall have the same qualifications and be selected through the same
procedure as the Arbitral Board. The appealing party shall file its appellate brief within *****
after its written notice requesting the appeal and the other party shall file its brief within
***** thereafter. The Appellate Arbitrators shall thereupon review the decision of the Arbitral
Board (applying the same standards of review and all of the same presumptions) as if the Appellate
Arbitrators were a California Court of Appeals reviewing a judgment of the Los Angeles County
Superior Court, except that the Appellate Arbitrators shall in all cases issue a final award and
shall not remand the matter to the Arbitral Board. The decision of the Appellate Arbitrators shall
be final and binding as to all matters of substance and procedure, and may be enforced by a
petition to the Los Angeles County Superior Court or such other court having jurisdiction over the
parties, which may be made ex parte, for confirmation and enforcement of the award. The party
appealing the decision of the Arbitral Board shall pay all costs and expenses of the appeal,
including the fees of the Appellate Arbitrators and the reasonable outside attorneys’ fees of the
opposing party, unless the decision of the Arbitral Board is reversed, in which event the costs,
fees and expenses of the appeal shall be borne as determined by the Appellate Arbitrators.



     13.3 Subject to a party’s right to appeal pursuant to the above, neither party shall challenge
or resist any enforcement action taken by the party in whose favor the Arbitral Board, or if
appealed, the Appellate Arbitrators, decided. The Arbitral Board (or the Appellate Arbitrators, if
applicable) shall have the power to enter temporary restraining orders, preliminary and permanent
injunctions. Neither party shall be entitled or permitted to commence or maintain any action in a
court of law with respect to any matter in dispute until such matter shall have been submitted to
arbitration as herein provided and then only for the enforcement of the Arbitral Board’s award (or
if appealed, the Appellate Arbitrators’ award); provided, however, that prior to
the appointment of the Arbitral Board (or if appealed, the Appellate Arbitrators) or for remedies
beyond the jurisdiction of an arbitrator, at any time, either party may seek pendente lite relief
in a court of competent jurisdiction in Los Angeles County, California or such other court that may
have jurisdiction over the parties, without thereby waiving its right to arbitration of the dispute
or controversy under this section. All arbitration proceedings (including, without limitation,
proceedings before the Appellate Arbitrators) shall be closed to the public and confidential and
all records relating thereto shall be permanently sealed, except as necessary to obtain court
confirmation of the



- 23 -









 







arbitration award. The provisions of this Section 13.3 shall supersede
any inconsistent provisions of any prior agreement between the parties. Nothing in this
Section 13.3 shall prevent either party from seeking interlocutory and/or injunctive relief
from a court of competent jurisdiction pursuant to the preceding paragraph, subject to the terms of
this Section 13.3.



14. WAIVER/ GOVERNING LAW / PROCEEDINGS.




     14.1 No Waiver. No waiver of any default or breach of this Agreement by either party
shall be deemed a continuing waiver or a waiver of any other breach or default, no matter how
similar.



     14.2 Governing Law. The laws of the State of California and the United States of
America applicable to contracts made and performed entirely in California shall govern (i) the
validity and interpretation of this agreement, (ii) the performance by the parties of their
respective obligations hereunder, and (iii) all other causes of action (whether sounding in
contract or in tort) arising out of or relating to this Agreement, or the termination of this
Agreement.



     14.3 Legal Proceedings. Distributor, its successors and assigns, are hereby empowered
to bring, prosecute, defend and appear in suits, actions and proceedings of any nature under or
concerning infringement of or interference with any of the Distribution Rights granted.
Distributor will notify Issuer in writing ***** prior to commencement of any suit, action or
proceedings. Issuer may participate in any suit, action or proceeding using counsel of its choice.
Issuer’s expenses will be reimbursed from any recovery in equal proportion with Distributor’s
expenses. If Distributor fails to take necessary action, Issuer may, but will not be obligated to,
take such action in Issuer’s or Distributor’s name with all recoveries belonging to Issuer. If
Issuer elects not to participate, all recoveries in connection therewith shall belong solely to
Distributor. If both parties participate, all recoveries shall be deemed to be part of Gross
Receipts.



15. INSURANCE.




     Distributor shall on behalf of Issuer for the benefit of Distributor, with respect to each
Funded Qualifying Project for which Distributor has the Distribution Rights, procure and maintain
in full force and effect standard producer’s liability (errors and omissions) insurance issued by a
nationally recognized insurance carrier covering the Funded Qualifying Project with minimum limits
of at least ***** for any claim arising out of a single occurrence and ***** for all claims in the
aggregate. Such insurance:



     15.1 shall be written on either (i) an occurrence basis, in which event it shall remain in
full force and effect until the end of the term thereof and may not be permitted to lapse, or (ii)
a claims-made basis, in which event it shall remain in full force and effect until the end of the
term thereof, shall cover any claims made at any time during the term thereof and may not be
permitted to lapse;



     15.2 may not be canceled without ***** prior written notice to Distributor;




- 24 -









 








     15.3 shall not carry a deductible larger than *****;




     15.4 shall name Distributor its parent, subsidiaries and related companies, its licensees and
affiliates and its officers, directors, agents and employees, as additional insureds and such
addition shall be endorsed by the insurance carrier and acknowledged by the underwriter;



     15.5 shall provide coverage for the Funded Qualifying Project, and advertising and promotion
materials with respect thereto, and shall be primary and not contributing to or in excess of any
such insurance maintained by Distributor with regard to all of the Rights.



     15.6 All costs and expenses of such insurance shall be a Distribution Expense.



16. NOTICE.




     Any notice or demand which any party is required, or may desire, to give to the other parties
shall be in writing and shall be given by addressing the same to the other parties at the address
hereinafter set forth, or at such other address as may be designated in writing by any such party
by notice given to the other in the manner prescribed in this Section 16 and shall be deemed
effective (i) when delivered personally during normal business hours, (ii) on the date of receipt
specified in any return receipt if it shall have been deposited postage prepaid in the United
States mail (certified or registered with return receipt requested), (iii) on the second Business
Day after dispatch by Federal Express, DHL, Airborne or other recognized international courier
service, or (iv) when sent by facsimile transmission, if, and only if, such facsimile transmission
is followed within two (2) Business Days by a written notice sent in accordance with clauses (i),
(ii) or (iii) above, whichever of the foregoing shall first occur; provided, however, that any
notice alleging a default must be given by the means set forth in clauses (i), (iii) or (iv) above.



     Any notice or demand to Distributor shall be addressed as follows:


Lions Gate Films, Inc.

2700 Colorado Avenue, Suite 200

Santa Monica, California 90404

Attn: General Counsel

Telephone: (310) 449-9200

Facsimile: (310) 255-3840




     Any notice or demand to Issuer shall be addressed as follows:


MQP, LLC

2700 Colorado Avenue, Suite 200

Santa Monica, California 90404

Attn: Chief Executive Officer

Telephone: (310) 449-9200

Facsimile: (310) 255-3840




- 25 -









 





17. FORCE MAJEURE.




     If either party’s performance hereunder is prevented by reason of an event of Force Majeure,
then during the existence of such event, the effected party shall not be liable for its failure to
timely perform its obligations hereunder and this Agreement shall be extended for a period equal to
the delay caused by the occurrence of the Force Majeure. “Force Majeure” as used herein
shall mean fire, flood, epidemic, earthquake, explosion, accident, labor dispute or strike, Act of
God or public enemy, riot or civil disturbance, invasion, war (whether declared) or armed conflict,
inability to obtain personnel or facilities, failure of common carriers, any municipal ordinance,
any state or federal law, governmental order or regulation, order of any court of competent
jurisdiction, restriction imposed by the Motion Picture Export Association of America, Inc. or any
other similar thing or occurrence not within the control of that party.



18. HOLDING OF MONIES.




     Distributor shall not be obligated to segregate Gross Receipts from other funds held or
received by it, and Distributor shall not be deemed a trustee, pledgeholder or fiduciary of Issuer
or any Revenue Participation Holder in respect of Gross Receipts that may be or become payable to
such parties.



19. SECURITY INTEREST IN FAVOR OF DISTRIBUTOR.




     Subject to Distributor not being in breach of this Agreement and the RP Purchase Agreement,
Issuer hereby grants to Distributor a security interest (“Distributor Security Interest”)
in all rights granted to Distributor in connection with each Funded Qualifying Project, including
the Distribution Rights, the Related Rights, the right of access to the Materials and all proceeds
of the foregoing, including proceeds of proceeds (the “Distributor Collateral”), as
collateral security for Issuer’s timely performance of its obligations hereunder, for the right of
Distributor to receive the Distribution Fee and for the right of Distributor to recoup all amounts
expended on account of Issuer Obligations, including Distribution Expenses and Third Party
Participations, which security interest shall be in a form registrable in the State of Delaware,
the Province of Quebec, the CIPO and the USCO. Other than as provided in the RP Purchase
Agreement, Issuer warrants and represents that it has not previously assigned, granted or
transferred an interest in the Distributor Collateral to any party which would conflict, interfere
or be inconsistent with the Distributor Security Interest granted to Distributor herein. Issuer
agrees to execute UCC-1 financing statements, copyright mortgages, laboratory access letters, the
security agreement delivered herewith (the “Distributor Security Agreement”), other
security documentation required by Distributor and any such other document as Distributor may
require to perfect, protect, publish, record, register or evidence the foregoing Security Interest.
If Issuer fails to deliver such security documents within 30 days after Distributor’s request
therefor, Issuer irrevocably appoints Distributor to execute such security documents as Issuer’s
attorney-in-fact, coupled with an interest.



20. SECURITY INTEREST IN FAVOR OF ISSUER.




- 26 -









 








     Subject to Issuer not being in breach of this Agreement and subject to Issuer and each Revenue
Participation Holder not being in breach of the RP Purchase Agreement, Distributor hereby grants to
Issuer and each Revenue Participation Holder, a security interest (“Issuer Security
Interest”) in and to (i) the Gross Receipts for each Funded Qualifying Project, and (ii) the
Rights, the Ancillary Rights, the Related Rights and the tangible and intangible assets for each
Funded Qualifying Project, solely to the extent required to distribute and exploit such Funded
Qualifying Project (“Issuer Collateral”), which security interest shall be in a form
registrable in the State of Delaware, the Province of Quebec, the CIPO and the USCO. Issuer
acknowledges and agrees that the security interest granted to it by Distributor shall be subject to
Permitted Encumbrances and the Senior Lender Encumbrances, provided, however, that the Senior
Lender InterCreditor Agreement shall provide that Issuer shall have a first priority security
interest in its share of Gross Receipts for each Funded Qualifying Project, subject to the terms of
the Senior Lender InterCreditor Agreement. Other than as provided in the RP Purchase Agreement,
Distributor warrants and represents that it has not previously assigned, granted or transferred an
interest in the Issuer Collateral to any party which would conflict, interfere or be inconsistent
with the Issuer Security Interest granted to Issuer herein. Distributor agrees to execute UCC-1
financing statements, copyright mortgages, laboratory access letters, the security agreement
delivered herewith (“Issuer Security Agreement”), other security documentation required by
Issuer and any such other document as Issuer may require to perfect, protect, publish, record,
register or evidence the foregoing Issuer Security Interest. If Distributor fails to deliver such
security documents within 30 days after Issuer’s request therefor, Distributor irrevocably appoints
Issuer to execute such security documents as Distributor’s attorney-in-fact, coupled with an
interest.



21. ASSIGNMENT.




     21.1 Distributor shall have the right, at any time, to sell, transfer, assign or hypothecate
any or all of its right, title and interest, in and to the Funded Qualifying Project and the
negative and copyright thereof to any party which is acquiring all or a substantial part of
Distributor’s business in a sale or as a result of a consolidation or merger; provided,
however, that any such sale, transfer, assignment or hypothecation shall be subject to the
rights of Issuer hereunder. Upon the purchaser, transferee or assignee assuming in writing the
performance of Distributor’s executory obligations hereunder in place and stead of Distributor,
Distributor shall be released and discharged of and from any further liability or obligation
hereunder and none of the monies or other consideration received by, or paid or payable to,
Distributor shall constitute Gross Receipts hereunder, and Issuer shall have no rights in respect
of any thereof. In addition, Distributor may assign this Agreement or its rights hereunder,
without the need to obtain the prior written consent of Issuer, (i) in connection with its
corporate credit facilities, (ii) in connection with any financing or interim financing of a Funded
Qualifying Project, or (iii) to any of its Affiliates or Subsidiaries, provided,
however, that any such assignment shall be subject to the rights of Issuer hereunder.



     21.2 Issuer may assign Issuer’s right to receive the monies payable to Issuer hereunder,
provided, however, that (i) any such assignment shall be in writing and in form and substance
satisfactory to Distributor; (ii) Distributor shall not be required to accept or honor any



- 27 -









 







assignment or assignments which would result in requiring Distributor to make payments to an aggregate of
more than two (2) parties unless a single party is designated to receive and disburse all monies
payable to Issuer and all other parties entitled to share therein; (iii) in no event shall any
party other than Issuer have the right to audit Distributor’s records by reason of such assignment;
and (iv) any such assignment shall at all times be subject to all pertinent laws and governmental
regulations and to all of the rights of Distributor hereunder.



     21.3 Notwithstanding anything contained in this Agreement, neither the Issuer nor any Revenue
Participation Holder may assign its rights under this Agreement to any Direct Competitor.



     22. AMENDMENTS AND WAIVERS. Neither this Agreement nor any term hereof may be changed,
waived, discharged or terminated orally or in writing, without the prior written consent of the
parties hereto and each Revenue Participation Holder. Notwithstanding the foregoing, any term of
this Agreement may be amended and the observance of any such term may be waived (either generally
or in a particular instance and either retroactively or prospectively) with (but only with) the
written consent of all of the parties hereto and each Revenue Participation Holder; provided,
however, that no such amendment or waiver shall extend to or affect any obligation not expressly
waived or impair any right consequent therein. No delay or omission to exercise any right, power
or remedy accruing to any party hereto or each Revenue Participation Holder shall impair any such
right, power or remedy of such party nor be construed to be a waiver of any such right, power or
remedy nor constitute any course of dealing or performance hereunder.



23. MISCELLANEOUS.




     23.1 This Agreement consists of these provisions, the attached exhibits and schedules all of
which exhibits and schedules are herein incorporated by this reference and made a part hereof.
Nothing contained herein shall be deemed to create a relationship of partnership, joint venture,
agency, fiduciary or employment between the parties.



     23.2 This Agreement sets forth the entire understanding of the parties regarding the subject
matter hereof and supersedes all prior oral or written agreements between them.



     23.3 This Agreement may not be changed, modified, amended or supplemented, except in a writing
signed by both parties and the Revenue Participation Holder.



     23.4 Section headings are inserted herein for convenience only and do not constitute a part of
this Agreement.



     23.5 Neither Issuer nor Distributor shall disclose to any third party (other than its
respective employees, directors and officers, in their capacity as such on a need-to-know basis),
any information with respect to the financial terms and provisions of this Agreement except: (i) to
the extent necessary to comply with the law or the valid order of a court of competent
jurisdiction, in which event(s) the party making such disclosure shall so notify the other as
promptly as practicable (if possible, prior to making such disclosure) and shall seek confidential
treatment of such information, (ii) to the extent necessary to comply with S.E.C.



- 28 -









 




or similar disclosure requirements, (iii) to its parent and affiliated companies, their banks
(and their respective advisors and attorneys), prospective financiers and investors (and such
persons’ investment bankers, agents, attorneys, accountants and necessary experts), auditors,
investment bankers, attorneys and similar professionals, provided that such companies, banks,
advisors, financiers, investors, investment bankers, experts, auditors, accountants, attorneys and
similar professionals agree to be bound by the provisions of this subparagraph, and (iv) in order
to enforce its rights pursuant to this Agreement. Issuer acknowledges that it may, from time to
time, come into possession of material Nonpublic Information regarding Distributor and its
Affiliates and that U.S. securities laws prohibit any person or entity in possession of such
material Nonpublic Information from purchasing or selling securities of Distributor or any of its
Affiliates. Issuer agrees that it will use any material Nonpublic Information regarding
Distributor and its Affiliates in accordance with Issuer’s compliance policies and Applicable Law,
including, without limitation, federal, provincial and state securities laws




     23.6 Issuer and Distributor shall each execute, acknowledge and deliver any and all further
documents that are necessary, expedient or proper to implement, administer and effectuate the
purpose and intent of this Agreement. If Issuer fails to deliver such additional documents within
***** after Distributor’s request therefor, including, without limitation, a Short Form License
Agreement with respect to each Funded Qualifying Project, Issuer irrevocably appoints Distributor
to execute such additional documents as Issuer’s attorney-in-fact, coupled with an interest.



     23.7 The invalidity, illegality or unenforceability of any provision of this Agreement,
pursuant to judicial decree, shall not affect the validity or enforceability of any other provision
of the Agreement, all of which shall remain in full force and effect.



     23.8 Nothing in this Agreement shall confer any rights or remedies under or by reason of this
Agreement on any Persons other than Issuer and its successors and assigns nor shall anything in
this Agreement relieve or discharge the obligation or liability of any third person to any party to
this Agreement, nor shall any provision give any third person any right of subrogation or action
over or against any party to this Agreement. Notwithstanding the foregoing and anything to the
contrary contained in this Agreement, the parties expressly acknowledge and agree that each Revenue
Participation Holder is an intended third party beneficiary with respect to Section 6,
Section 7, Section 10, Section 11, Section 12 and Section
13 of this Agreement and as such, each Revenue Participation Holder shall be entitled to
directly exercise its rights or the rights of Issuer under this Agreement without the
concurrence of Issuer.



[Remainder of page intentionally left blank]




- 29 -









 








     IN WITNESS WHEREOF, the parties have executed this Master Distribution Agreement as of the
date first above written.



	 	 	 	 	 
	 	LIONS GATE FILMS INC.

 	 
	 	By:  	/s/ Wayne Levin
 	 
	 	 	Name:  	Wayne Levin 	 
	 	 	Title:  	General Counsel 	 
	 



	 	 	 	 	 
	 	MQP, LLC

 	 
	 	By:  	/s/ Wayne Levin
 	 
	 	 	Name:  	Wayne Levin 	 
	 	 	Title:  	Director 	 
	 



[Signature Page]





 









 








SCHEDULE “GR”



Schedule “GR” to Master Distribution Agreement (Film Productions) dated July 25, 2007
between MQP, LLC, as Issuer, and Lions Gate Films, Inc., as Distributor (the “Agreement”).




GROSS RECEIPTS — DISTRIBUTION EXPENSES



1. Definitions. As used in this Schedule “GR”, all defined terms shall have the
meanings as defined in the Agreement, unless specifically defined herein, and all references to
“Paragraphs” shall refer to paragraphs of this Schedule “GR”.



2. Gross Receipts. For the purposes of this Agreement, “Gross Receipts” shall
mean, for each Funded Qualifying Project, one hundred percent (100%) of all amounts, other than
Co-Financing Amounts, actually received by Issuer, LGEI, Distributor or any of their Affiliates,
net of applicable withholding taxes, in respect of the exhibition, distribution, sale, licensing,
sub-licensing and exploitation of such Funded Qualifying Project in all gauges, formats, media (now
known or hereafter devised) and languages (except as otherwise provided herein) throughout the
universe and for greater certainty, including, without limitation, the Rights, all right, title and
interest to any associated rights, Merchandising, Ancillary Rights, secondary or publishing rights,
including, without limitation, pre-sales, advances, bonuses, prizes and similar proceeds regardless
of when such amounts are received (i.e., whether they are received prior to or after the purchase
of Revenue Participations in the applicable Funded Qualifying Project, provided the Revenue
Participation Holders purchase Revenue Participations in the applicable Funded Qualifying Project
and provided further that such amounts are generated prior to the Repurchase Date), but excluding
advances, etc. taken into account in the definition of P&A Costs and Other Releasing Costs and
Affiliate Payments, including, without limitation, the following:





	 	A.	 	All non-refundable sums actually received by Distributor from the following
sources:






	 	(i)	 	Licenses by Distributor directly to exhibitors of the right
to exhibit the Funded Qualifying Project by means of Theatrical,
Non-Theatrical or Television;
	 
	 	(ii)	 	Licenses by Distributor to Subdistributors, net of any fees
and expenses charged by such Subdistributor;
	 
	 	(iii)	 	The sale or lease of souvenir Funded Qualifying Projects and
booklets;
	 
	 	(iv)	 	Recoveries by Distributor from actions based on unfair
competition, piracy and/or infringements of copyrights and trademarks of the
Funded Qualifying Project, which recoveries are intended to compensate
Distributor for losses sustained in respect of the Funded Qualifying Project
and shall be fairly and reasonably allocated among all 




 









 






	 	 	 	Productions involved therein; provided, that no Distribution Fee shall be charged on any portion
of such recovery included in the Gross Receipts that represents punitive,
rather than actual or statutory, damages;
	 
	 	(v)	 	The net receipts from so-called “four-wall” deals on a
collective basis, i.e., the sums received by Distributor from theater(s) where
Distributor has taken over the operation of such theater(s) specifically for
the exhibition of the Funded Qualifying Project, less all out-of-pocket costs
of operating the theater(s) and those advertising costs that would normally
and actually be paid by theaters and which are paid by Distributor;
	 
	 	(vi)	 	Monies received from the Copyright Royalty Tribunal (or
similar agencies established under the laws of any jurisdiction);
	 
	 	(vii)	 	Exploitation of the Ancillary Rights;
	 
	 	(viii)	 	Monies received by Distributor from the distribution, sale or other
exploitation of Home Video Rights and any Video Levies (as defined below)
collected by Distributor, less local taxes, rebates, discounts, credit
adjustments for defective Videograms, customs duties, import charges,
shipping, mailing and insurance charges, dubbing and subtitling costs, and
mastering and submastering costs; provided, however, that
Distributor shall have the right to deduct up to ***** of all such monies as a
reserve for returns and credits of any nature, including, without limitation,
those on account of one hundred percent (100%) or a lesser return privilege,
defective merchandise, exchange privilege, promotional credits, errors in
billing, unusual overstock, bad debts and errors in shipping, which reserves
shall be liquidated within *****, pursuant to Distributor’s customs and
practices. “Video Levies” shall mean levies or other charges
collected under operation of law with respect to the Funded Qualifying Project
in the Territory on the sale of video recorders, blank video cassettes or
video discs or similar items or the rental of Videograms which become payable
to the Copyright Owner or the distributor of the Funded Qualifying Project.
Distributor shall be entitled to collect all revenue from Video Levies.






	 	B.	 	Gross Receipts shall be determined after all reserves, refunds, credits,
discounts, allowances and adjustments granted to exhibitors and Subdistributors,
whether occasioned by condemnation by boards of censorship, settlement of disputes or
otherwise. advance payments and guarantees shall not be included in Gross Receipts
until earned by the exhibition of the Funded Qualifying Project or forfeited.




-Schedule“GR” Page 2 -









 












	 	C.	 	Gross Receipts shall not include (a) any portion thereof which is contributed
to charitable organizations in connection with or related to premieres of the Funded
Qualifying Project; (b) the receipts which are the contractually acquired property of
the following parties, whether or not Subsidiaries or divisions of Distributor: (i)
exhibitors or others who may use or actually exhibit the Funded Qualifying Project,
(ii) radio or television broadcasters (including, without limitation, pay, cable, and
closed circuit systems), (iii) book or music publishers, (iv) phonograph record
producers or distributors and (v) merchandisers, manufacturers and the like.






	 	D.	 	Amounts charged back to Distributor or its Affiliates in any Accounting
Period for damaged goods and returns of home video units shall reduce Gross Receipts
in such Accounting Period.




3. Distribution Fees. Distribution fees of Distributor shall be computed as provided in
Section 4.



4. Distribution Expenses. “Distribution Expenses” shall mean, on an uncrossed
basis, Distributor’s actual, direct, verifiable, out-of-pocket third party expenses incurred in
connection with the distribution and exploitation of a Funded Qualifying Project, which shall
exclude, for sake of clarity, any finance and interest charges in connection therewith but which
shall include, without limitation, all P&A Costs and Other Releasing Costs. The Distribution
Expenses shall include, without limitation, all costs, charges and expenses actually incurred by
Distributor, or a Subdistributor accounting to Distributor, in connection with the distribution,
exhibition, advertising, exploitation and turning to account of the Funded Qualifying Project, or
in the exercise of any of Distributor’s other rights (including, without limitation, Ancillary
Rights) in the Funded Qualifying Project, of whatever kind or nature, including, without
limitation, all costs, charges and expenses incurred for or in connection with any of the following
(provided, that (i) no item of cost shall be charged more than once and (ii) if any item of cost
shall have been deducted from the Gross Receipts in any prior accounting period and any such cost
is thereafter reimbursed to Distributor, an appropriate adjustment shall be made without any
Distribution Fee charged in respect of the amount so reimbursed):





	 	A.	 	All negatives, sound tracks, prints, and other physical properties utilized
in connection with the distribution of the Funded Qualifying Project (“Physical
Properties”).
	 
	 	B.	 	All services and facilities rendered or utilized in connection with the
transportation, preparation, checking and servicing of the Physical Properties or
other properties used in rendering distribution services, including, without
limitation, any cost of cutting, editing, dubbing or subtitling the Funded Qualifying
Project or other services or facilities used in preparing the Funded Qualifying
Project for exhibition including, without limitation, costs of shipping containers and
cans, laboratory and warehouse storage, insurance packaging, freight, transportation,
shipping and handling charges.




-Schedule
“GR” Page 3 -









 












	 	B.	 	Advertising, promoting, marketing, exploiting and publicizing (collectively,
“Advertising”) the Funded Qualifying Project in any way, including without
limitation, all costs associated with Videograms including without limitation the
creation of bonus material, and new artwork, of cooperative, theater or joint
Advertising in connection with exhibition of the Funded Qualifying Project in theaters
or other places where an admission is charged, which Distributor pays or is charged
with; costs of publicity materials; tours and personal appearances; salaries, living
costs and traveling expenses of regular employees of Distributor, where such employees
are assigned to render services in the Territory in connection with the Advertising of
the Funded Qualifying Project, appropriately allocated to the Funded Qualifying
Project; trailers, including without limitation, the cost of production thereof.
	 
	 	C.	 	All costs and expenditures in connection with so-called four-wall deals not
recouped pursuant to Paragraph 2.A.(v).
	 
	 	D.	 	All costs of preparing and delivering the Funded Qualifying Project for
distribution, including without limitation, all costs incurred in connection with the
following: Screenings and audience testing and market studies; the production of
foreign language versions of the Funded Qualifying Project, whether dubbed,
superimposed or otherwise; changing the title of the Funded Qualifying Project for
release in any part of the Territory or for exhibition on television or other media,
or in order to conform to the particular national or political prejudices likely to be
encountered in any part of the Territory or for any other purpose or reason;
censorship costs including, without limitation, the legal costs of censorship
proceedings; and producing and delivering trailers of the Funded Qualifying Project.
	 
	 	E.	 	All sales, use, receipts, excise, remittance, value added and other taxes
(however denominated) to any governmental or taxing authority assessed upon, or with
respect to, the negatives, duplicate negatives, prints or sound records of the Funded
Qualifying Project, or upon the use, distribution or other exploitation of the Funded
Qualifying Project, or upon the revenues derived therefrom, or any part thereof and
any and all sums paid or accrued on account of duties, customs and imports, costs of
acquiring permits, and any similar authority to secure the entry, licensing,
exhibition, performance, use or televising of the Funded Qualifying Project in any
country or part thereof, regardless of whether such payments or accruals are assessed
against the Funded Qualifying Project or the proceeds thereof or against a group of
Productions in which the Funded Qualifying Project may be included or the proceeds
thereof (in the latter case with an allocation being made to the Funded Qualifying
Project that is fair and reasonable). In no event shall the recoupable amount of any
such tax (however denominated) imposed upon Distributor be decreased (nor the Gross
Receipts increased) because of the manner in which such taxes are elected to be treated by




-Schedule
“GR” Page 4 -









 






	 	 	 	Distributor in filing net income,
corporate franchise, excess profits or similar tax returns. There shall be no
deduction from the Gross Receipts, and Issuer shall not be required to pay or
participate in, (x) Distributor’s or any Subdistributor’s United States Federal and
State income taxes and franchise taxes based on Distributor’s or such
Subdistributor’s net income, or (y) any income tax payable to any country or
Territory by Distributor or any Subdistributor based on the net earnings of
Distributor or such Subdistributor in such country or Territory. Expenses of
transmitting to the United States any funds accruing to Distributor from the Funded
Qualifying Project in foreign countries, such as cable expenses, or any discounts
from such funds taken to convert such funds directly or indirectly into U.S.
dollars and the cost of contesting or settling any of the matters described above,
with a view to reducing the same, shall similarly be deducted. If any taxes
deducted pursuant hereto are subsequently refunded to Distributor by the taxing
authority to which such taxes were initially paid, the Distribution Expenses
previously deducted pursuant to this Paragraph shall be readjusted by
crediting thereto an amount equal to so much of such refund received by Distributor
as shall represent a refund of taxes in respect of the Funded Qualifying Project
previously deducted.
	 
	 	F.	 	Copyright, patent and trademark expenses; royalties payable to manufacturers
of sound recording and reproducing equipment; reasonable legal fees to other than
Distributor’s regularly employed legal department; and any and all other expenses in
addition to those referred to herein incurred by Distributor in connection with the
licensing of the Funded Qualifying Project for exhibition or for other uses of the
Funded Qualifying Project including, without limitation, any exploitation of the
rights granted to Distributor.
	 
	 	G.	 	Dues and assessments from the MPAA or any similar associations or bodies,
including, without limitation, payments for the support of the Academy of Motion
Picture Arts and Sciences.
	 
	 	H.	 	Costs and expenses (including, without limitation, reasonable attorneys’
fees) incurred by Distributor in connection with the following: All costs incurred in
securing any amounts included in Gross Receipts, any action taken by Distributor
(whether by litigation or otherwise) in enforcing collection of Gross Receipts
including, without limitation, costs of collection from the Copyright Royalty Tribunal
(or similar agencies established under the laws of any jurisdiction); or (on a pro
rata basis) for checking attendance and exhibitors’ receipts; or to prevent
unauthorized exhibition or distribution of the Funded Qualifying Project; or to
prosecute or defend actions under the anti-trust laws; or to prevent any impairment
of, encumbrance on or infringement upon, the rights of Distributor in and to the
Funded Qualifying Project; or to audit the books and records of any exhibitor,
Subdistributor or licensee; or to recover monies due pursuant to any agreement
relating to the distribution or exhibition of the Funded




-Schedule “GR” Page 5 -









 






	 	 	 	Qualifying Project;
provided, that no deduction shall be made for the fees or salaries of Distributor’s
regularly employed staff attorneys and accountants.






	 	J.	 	All monies paid or payable pursuant to applicable collective bargaining
agreements by reason of any exhibition or other exploitation of the Funded Qualifying
Project or by reason of, or as a condition for, any use, re-use or re-run thereof for
any purpose or in any manner whatsoever (herein called “Residuals”), and all
taxes, pension fund contributions, and other costs and payments computed on or payable
in respect of any such residuals or participations in the net profits or Gross
Receipts of the Funded Qualifying Project to any Person, including, without
limitation, any firm, corporation, guild, union, trustee or fund (other than
Distributor); provided, however, that if Issuer or any principal stockholder of
Issuer, or any heirs, executors, administrators, successors or assigns of Issuer or
any such stockholder, is entitled, either directly or by way of participation in any
pension fund, to any such Residuals, the amount payable shall be treated as an advance
against Issuer’s share of the receipts hereunder, and conversely, any share of the
receipts paid to Issuer hereunder shall constitute an advance against such Residuals
payable to or for the benefit of Issuer or any principal stockholder or member of
Issuer, or any such heirs, executors, administrators, successors or assigns; provided
further that this Paragraph shall not be interpreted to require Distributor to
make any payments that it is not required under the Agreement to make.
	 
	 	K.	 	Participations including without limitation Third Party Participations;
	 
	 	L.	 	All costs associated with the exploitation of the Home Video Right including
without limitation, all manufacturing, reproduction, shipping, packaging, storage,
boxing, sorting and delivery of Videograms.
	 
	 	M.	 	All insurance covering or relating to the distribution of the Funded
Qualifying Project, including, without limitation, errors and omissions insurance (to
the extent not provided by Issuer); provided, that Distributor shall not be obligated
to take out or maintain any such insurance. The net receipts of any insurance policy
maintained by Distributor in respect of the Funded Qualifying Project actually
received by Distributor by way of reimbursement for any cost or expense previously
deducted as a Distribution Expense shall be applied in reduction of such cost or
expense to the extent that the same was reimbursed by such proceeds.
	 
	 	N.	 	All discounts, rebates, or credits actually received by Distributor or any
Subdistributor shall be taken into account in computing Distribution Expenses in the
Accounting Period in which such discount, rebate or credit is actually received, with
the exception of those based upon either (i) the volume or quantity of Advertising,
prints, negatives, Videograms or other materials ordered annually, or




-Schedule “GR” Page 6 -









 






	 	(ii)	 	the manner or time of payment of any Distribution Cost and Expense which shall
not be taken into account.
	 
	 	O.	 	Any and all other expenses in addition to those referred to herein incurred
by Distributor in connection with the exercise of the Rights in the Funded Qualifying
Project.




5. Allocations. Wherever Distributor (i) makes any expenditures or incurs any liability
in respect of a group of Productions that includes a Funded Qualifying Project, or (ii) receives
from any licensee either a flat sum or a percentage of the receipts, or both, for any right to a
group of Productions that includes the Funded Qualifying Project, under any agreement (whether or
not the same shall provide for the exhibition, sale, lease or delivery of positive prints of any of
the said Productions) which does not specify what portion of the license payments apply to the
respective Productions in the group (or to such prints or other material, if any, as may be
supplied), then in any and all such situations, Distributor shall, reasonably and in good faith,
include in, or deduct from (as the case may be), the Gross Receipts such sums in a
non-discriminatory manner.



6. Reserves. In addition to the reserves mentioned above in Paragraph 4, if
Distributor reasonably anticipates taxes, residuals, or other reasonably anticipated costs,
expenses or losses relating to the Funded Qualifying Project, which, if and when incurred, will be
properly deductible hereunder, Distributor may set up appropriate reserves therefor. If
Distributor establishes a reserve for retroactive wage adjustments, taxes, residuals, uncollectible
accounts, or other reasonably anticipated costs, expenses, or losses relating to the Funded
Qualifying Project, and after ***** from the establishment of such reserve, such reserve is not
liquidated or collected and no proceeding is pending protesting any such cost, expense, or loss, or
no tax audit is pending, Distributor shall liquidate such reserve (or remaining portion thereof)
and make a corresponding adjustment in the Gross Receipts of the Funded Qualifying Project or in
the Distribution Expenses, subject to the right of Distributor to thereafter deduct any such cost,
expense, or loss if a proceeding is thereafter instituted protesting such cost, expense, or loss,
or if a tax audit is thereafter commenced, or, if any such cost, expense, or loss is thereafter
otherwise incurred, sustained, or paid for by Distributor. The foregoing shall be subject to, and
without prejudice to, the right of Distributor to make corrections and adjustments from time to
time.



7. Foreign Receipts. No sums received by Distributor in respect of the Funded Qualifying
Project shall be included in Gross Receipts or in Settlement Reports hereunder for the purpose of
determining Issuer’s share payable to Issuer, unless such sums are freely remittable to Distributor
in U.S. dollars in the United States, or used by Distributor. Sums derived from territories
outside of the United States which are not remittable to Distributor in the United States in U.S.
dollars by reason of currency or other restrictions may be reflected on statements rendered
hereunder for informational purposes only, and Distributor shall, at the request and expense of
Issuer (subject to any and all limitations, restrictions, laws, rules, and regulations affecting
such transactions), deposit into a bank designated by Issuer in the country involved, or pay to any
other party designated by Issuer in such territory, such part thereof, if any, as would have been
payable to Issuer hereunder. Such deposits or payments to or for Issuer shall


-Schedule “GR” Page 7 -









 






constitute remittance to Issuer, and Distributor
shall have no further responsibility therefor. Distributor makes no warranties or representations
that any part of any such foreign currencies may be converted into U.S. dollars or transferred to
the account of Issuer in any foreign country. Costs incurred in a territory during a period when
all receipts are blocked shall be charged only against blocked receipts from such territory. Costs
incurred in a territory during a period when part of the receipts is blocked and part is remittable
to the United States shall be charged proportionately against the blocked and dollar receipts from
said territory. However, if costs charged against blocked receipts, in either of the foregoing
instances, have not been recovered therefrom within ***** after such costs were incurred, the
deficit shall be computed in dollars at the official rate or such rate of exchange as may be
announced from time to time by Bank of America, as Distributor may elect.



8. Settlement Reports. Distributor shall render to Issuer (with a copy to each Revenue
Participation Holder, provided that Distributor’s inadvertent failure to provide such copy to any
Revenue Participation Holder shall be a breach of this Agreement) the Settlement Reports as set
forth in Section 7.2. Such Settlement Report shall show, in as much detail as Distributor
usually furnishes in such statements rendered to other parties, the appropriate calculations
pursuant to this Schedule. Statements and any sums due with respect to the Funded Qualifying
Project shall be prepared in U.S. dollars and provided to Issuer on each Settlement Date; provided
that no statement shall be rendered for any period in which no receipts are received or charges
incurred. Statements rendered by Distributor may be changed from time to time to give effect to
year-end adjustments made by Distributor’s accounting department or public accountants, to items
overlooked, to correct errors, or to reflect any indebtedness which may become uncollectible for
any similar purposes. Should Distributor make any overpayment to Issuer hereunder for any reason,
Distributor shall have the right to deduct and retain for its own account an amount equal to any
such overpayment from any sums that may thereafter become due or payable by Distributor to Issuer
or for Issuer’s account, or may demand repayment from Issuer in which event Issuer shall repay the
same when such demand is made. Any U.S. dollars due and payable to Issuer by Distributor pursuant
to any such statement shall be paid to Issuer simultaneously with the rendering of such statement;
provided, that all amounts payable to Issuer hereunder shall be subject to all laws and regulations
now or hereafter in existence requiring the deduction or withholding of payments for income or
other taxes payable by or assessable against Issuer. Distributor shall have the right to make such
deductions and withholdings, and the payment thereof to the governmental agency concerned in
accordance with its interpretation in good faith of such laws and regulations shall constitute
payment hereunder to Issuer, and Distributor shall not be liable to Issuer for the making of such
deductions or withholdings or the payment thereof to the governmental agency concerned. In any
such event Issuer shall make and prosecute any and all claims which it may have (and which it
desires to make and prosecute) with respect to the same directly with the governmental agency
having jurisdiction in the premises.



9. Ownership. Issuer shall not have any lien or other rights in or to any of the receipts
of the Funded Qualifying Project, it being understood that the references herein thereto are
intended solely for the purpose of determining the time, manner and amount of payments, if any, due
to Issuer hereunder.




-Schedule “GR” Page 8 -









 




10. No Warranties. Distributor has not made any express or implied representation,
warranty, guarantee or agreement (i) as to the amount of Gross Receipts which will be derived from
the distribution of the Funded Qualifying Project, or (ii) that there will be any sums payable to
Issuer hereunder, or (iii) that the Funded Qualifying Project will be favorably received by
exhibitors or by the public, or will be distributed or that any such distribution will be
continuous, or (iv) that it now has or will have or control any theaters or other facility in the
United States or elsewhere, or (v) that any non-subsidiary licensee will make payment of any sums
payable pursuant to any agreement between such licensee and Distributor, Distributor’s obligation
hereunder being limited to accounting only for such license fees as may be actually received by
Distributor from such licensee. In no event shall Issuer make any claim that Distributor has
failed to realize receipts or revenues which should or could have been realized in connection with
the Funded Qualifying Project or any of Distributor’s rights therein.



11. Excess of Permitted Payments. In the event the proceeds payable to Issuer hereunder
shall exceed that permitted by any law or governmental regulation, Distributor shall (at Issuer’s
cost) use its reasonable efforts to assist Issuer in the application to the appropriate authority
for the right to pay Issuer all of the Gross Receipts payable to Issuer pursuant to the Agreement
and shall pay the difference between the proceeds payable pursuant to the Agreement and the
proceeds permitted to be paid at such time, if ever, as it may be legally permissible to
Distributor to pay the difference.





-Schedule “GR” Page 9 -









 








SCHEDULE “DM”



Schedule “DM” to Master Distribution Agreement (Film Productions) dated July 25, 2007
between MQP, LLC, as Issuer, and Lions Gate Films, Inc., as Distributor (the “Agreement”).




DELIVERY MATERIALS




QUALITY CONTROL REQUIREMENTS:




     All film, sound and video materials shall be in accordance with the custom and standard of the
local film industries throughout the Territory.



ASPECT RATIOS:



The Picture shall not be in an aspect ratio other than the standard theatrical 1:85 to 1 without
Lions Gates prior written consent. No elements shall be “letter boxed” without Lions Gates prior
written consent.




DELIVERY PROVISIONS:



All materials to be delivered on an “if available” basis shall not be considered part of Delivery
for purposes of deeming delivery complete if such materials are not available. In the event the
original Legal and Publicity Documents are in a language other than English, the documents shall be
provided along with the English translation. All Film and Video Materials, unless indicated
otherwise, shall be vaulted in a reputable laboratory. The Original Negative (or, if applicable,
the Digital Intermediate Negative) and the Color Interpositive Protection Master shall be vaulted
in separate laboratories (or in separate film vaults if vaulted at the same laboratory). All Film
and Video Materials shall be of first class technical quality. The Picture shall be shot and
delivered on 35mm film stock. The Picture shall be shot and delivered in the English language. The
Picture shall have an M.P.A.A. rating of no more restrictive than “___”. The Picture shall have a
total run time of no less than ___minutes. If the Picture has been submitted to any Film
Festival, a list of such festivals shall be delivered on or before the Delivery Date. This schedule
of Delivery Requirements is on a non-precedential basis.



If the Picture contains any English subtitles, the Delivery Requirements shall be revised to
incorporate the necessary Film Materials and Video Materials.




A. Delivery Locations:



1. “Vice-President of Post Production Services; Attn: Valoen Power”: Lions Gate Entertainment
Corp., 2700 Colorado Avenue, Suite 200, Santa Monica, CA 90404.




 









 







2. Vice President, Legal & Business Affairs; Attn: Charlyn Adkins”: Lions Gate Entertainment
Corp., 2700 Colorado Avenue, Suite 200, Santa Monica, CA 90404.




B. Film Materials:



1. Original Negative: The original 35mm picture negative (without scratches or defects)
fully cut, edited and assembled complete with credits and main, narrative (if any), end and all
descriptive titles, and conforming to the final edited version of the action work print of the
Picture approved by Lions Gate and in all respects ready and suitable for the manufacture of a
protection interpositive. (Deliver to “Vice-President of Post Production Services”).




OR



1. Digital Intermediate Negative: The original Digital Intermediate Negative (without
scratches or defects) fully cut, edited and assembled complete with credits and main, narrative (if
any), end and all descriptive titles, and conforming to the final edited version of the action work
print of the Picture approved by Lions Gate and in all respects ready and suitable for the
manufacture of a protection interpositive. (Deliver to “Vice-President of Post Production
Services”).



2. Quad Optical Sound Track Negative: One (1) fully mixed and recorded original 35mm
optical sound track negative of the Picture, of technically acceptable quality prepared for
printing in perfect synchronization with the Original Negative and conforming in all respects to
the Answer Print approved by Lions Gate. The Optical Sound Track Negative shall contain Dolby SR,
Dolby SRD, SDDS and D.T.S. digital information. Note: All digital information must be contained
on the optical soundtrack negative in order to playback the applicable digital formats. All proper
licenses for Dolby SR, Dolby SRD, SDDS and D.T.S. must be paid in full for a worldwide theatrical
release including, a U.S. national theatrical release, without limitations or restrictions and
copies of said licenses shall be delivered. (Deliver to “Vice-President of Post Production
Services”).



3. Printmaster (2-Track LT RT and 6-Track 5.1): One (1) 2-Track and one (1) 6-Track stereo
master of the dubbed soundtrack of the Picture along with the corresponding M.O. disk, CD ROM
drives, etc. The Printmaster shall be in perfect synchronization and shall conform in all respects
to the final delivered version(s) of the Picture. With respect to format, the Protool Files on DVD
shall be delivered. Note: Lions Gate shall provide Grantor with a copy of its technical
specifications. (Deliver to “Vice-President of Post Production Services”).



4. Answer Print: One (1) first class (pristine or new) composite 35mm positive print of
the Picture fully timed or color corrected, manufactured from the Original Negative or, if
applicable, the Digital Intermediate Negative (item #1 above) and the Optical Sound Track Negative
(item #2 above), fully titled, with the sound track printed thereon in perfect synchronization with
photographic action and conformed to the final edited version of the


- Schedule
“DM” Page 2 -









 






action work print of the Picture approved by Lions Gate and in all respects ready and suitable for
distribution and exhibition. (Deliver to “Vice-President of Post Production Services”).



5. Color Interpositive Protection Master: One (1) 35mm color corrected and complete
interpositive master of the Picture, conformed in all respects to the Answer Print for protection
purposes without scratches or defects. If the Picture is in black and white, one (1) graded or
timed protection master of the Picture, conformed in all respects to the Answer Print unless
otherwise requested by the “Executive Vice-President of Physical Operations”. If applicable, the
Color Interpositive Protection Master shall be manufactured from the pristine (new) Digital
Intermediate Negative. (Deliver to “Vice-President of Post Production Services”).



6. Color Internegative/Dupe Negative: One (1) 35mm Internegative manufactured from the
color interpositive protection master suitable for the manufacturing of worldwide commercially
acceptable 35mm composite release prints without scratches or defects, of any kind, including but
not limited to acceptable focus, manufactured on polyester based stock. (Deliver to
“Vice-President of Post Production Services”).



7. Check Print: One (1) first class (pristine or new) composite 35mm positive print of the
Picture fully timed or color corrected, manufactured from the Color Internegative/Dupe Negative
(item #6 above) and Optical Sound Track Negative (item #2 above), fully titled, with the sound
track printed thereon in perfect synchronization with photographic action and conformed to the
final edited version of the action work print of the Picture approved by Lions Gate and in all
respects ready and suitable for distribution and exhibition. (Deliver to “Vice-President of Post
Production Services”).



8. Titles/Textless Backgrounds: One (1) original 35mm textless (i.e. without any
superimposed lettering) main and end title background optical negative and one (1) 35mm textless
(i.e. without any superimposed lettering) main and end title background interpositive protection
master (which includes all in-show scenes, narrative and all descriptive titles with textless
backgrounds) conformed in all respects to the background of the Original Negative or, if
applicable, to the background of the Digital Intermediate Negative. (Deliver to “Vice-President of
Post Production Services”).



9. Sound Tracks (Stems): The separate stereo discrete dialogue tracks, stereo discrete
sound effects tracks and stereo discrete music effects from which the original composite sound
track master was made. A separate dialogue track for each language into which the Picture has been
dubbed by Producer shall be provided. With respect to format, the Protool Files on DVD shall be
delivered. Note: If the original language of the Picture (or any part thereof) is other than
English, an English dub is also required. (Deliver to “Vice-President of Post Production
Services”).



10. Music Tracks (Source): One (1) copy of the original licensed music (with each song in
its entirety and assembled in the order that they appear in the Picture) which Lions Gate can
utilize in connection with creating trailers for the Picture, and if soundtrack album rights


- Schedule “DM” Page 3 -









 






are granted to Lions Gate, from which Lions Gate can produce a soundtrack album. The Music Tracks shall
be delivered to Lions Gate on a Compact Disc (CD). An inventory of the tracks shall also be
provided. (Deliver to “Vice-President of Post Production Services”).



11. Music Tracks (Score): One (1) copy of the original score (with each song in its
entirety and assembled in the order that they appear in the Picture) which Lions Gate can utilize
in connection with creating trailers for the Picture, and if soundtrack album rights are granted to
Lions Gate, from which Lions Gate can produce a soundtrack album. The Music Tracks shall be
delivered to Lions Gate on a Compact Disc (CD). An inventory of the tracks shall also be provided.
(Deliver to “Vice-President of Post Production Services”).



12. Spanish Dialogue Track: If currently available or subsequently created by Grantor (or
by any other distributor of the Picture), one (1) Spanish dialogue track in perfect synchronization
with the music and effects track of the feature. The Spanish Dialogue Track may be delivered to
Lions Gate in its available format. (Deliver to “Vice-President of Post Production Services”).



13. French Dialogue Track: If currently available or subsequently created by Grantor (or
by any other distributor of the Picture), one (1) French dialogue track in perfect synchronization
with the music and effects track of the feature. The French Dialogue Track may be delivered to
Lions Gate in its available format. (Deliver to “Vice-President of Post Production Services”).



14. Foreign Language Dialogue Track: If currently available or subsequently created by
Grantor (or by any other distributor of the Picture), one (1) dialogue track for each language
respective to the Territory granted Lions Gate under the Agreement in perfect synchronization with
the music and effects track of the feature. The Dialogue Track may be delivered to Lions Gate in
its available format. (Deliver to “Vice-President of Post Production Services”).



15. M&E Track/6+2 (5.1 and 2.0): The combined mixed music tracks and the 100% fully
filled effects track where the effects track contains all effects including any effects recorded on
the dialogue track. This M&E Track shall also include a separate dialogue guide track. There
shall be no English dialogue in the M&E tracks. If any dialogue is treated or used as a sound
effect, an additional sweetner channel is to be used containing said dialogue. If the Picture is
to be released with digital sound, an additional multi-channel 100% fully filled M&E Track, minus
any English dialogue or narration, shall be delivered in order to recreate the appropriate digital
format. The stereo audio configuration shall be left/center/right/left surround/right
surround/subwoofer. With respect to format, the Protool Files on DVD shall be delivered. Note:
Lions Gate shall provide Grantor with a copy of its technical specifications. (Deliver to
“Vice-President of Post Production Services”).



16. M&E Track/4+2: The combined mixed music tracks and the 100% fully filled effects track
where the effects track contains all effects including any effects recorded on the dialogue
track. This M&E Track shall also include a separate dialogue guide track. There


- Schedule
“DM” Page 4 -









 






 shall be no English dialogue in the M&E tracks. If any dialogue is treated or used as a sound effect, an
additional sweetner channel is to be used containing said dialogue. If the Picture is to be
released with digital sound, an additional multi-channel 100% fully filled M&E Track, minus any
English dialogue or narration, shall be delivered in order to recreate the appropriate digital
format. The stereo audio configuration shall be left/center/right/surround/optional
material/dialogue guide track. With respect to format, the Protool Files on DVD shall be delivered.
Note: Lions Gate shall provide Grantor with a copy of its technical specifications. (Deliver to
“Vice-President of Post Production Services”).



17. D,M&E Track: The discrete stereo dialogue, discrete stereo music and discrete stereo
effects. With respect to format, the Protool Files on DVD shall be delivered. Note: Lions Gate
shall provide Grantor with a copy of its technical specifications. (Deliver to “Vice-President of
Post Production Services”).



18(a). Trims and Outs: All unused takes and trims, and all other film, video and
soundtrack materials produced for or used in the process of preparing the Picture (e.g. all
original camera negative and/or digital camera media with the corresponding original production
sound, and all first generation video dailies made directly from the production camera source and
the production mixers recorded sound). (Deliver to “Vice-President of Post Production Services”).



18(b). Editorial Paperwork/Files: Copies of the code books/flex files, the final line
script from the production, the negative cutters inventory (if applicable), the final non-linear
editing project files and/or EDL’s, the camera reports, the sound reports, the re-recording sound
reports (including all ADR and TV lines) and all other paperwork used in connection with the post
production of the Picture. (Deliver to “Vice-President of Post Production Services”).



19. Closed Captioned Version: To the extent created, all closed captioned elements. In
addition, Grantor shall provide Lions Gate with the name of the vendor (including the phone number
and contact name) used for the creation of the Closed Captioned Materials, if any, in connection
with the television exhibition of the Picture. (Deliver to “Vice-President of Post Production
Services”).



20. Television “Cover Shots”: If required in order to enable the Picture to be exhibited
on network television, the necessary television elements, as applicable, including “cover shots”
(for content) and dialogue coverage (for language) shall be provided. TV coverage shall be compiled
by an editor in chronological order in accordance with the sequence of events in which scenes
occurred in the feature. Coverage will be compiled on one or two reels of 35mm negative
(accompanied with the matching video and flex file) on one or two additional reels on a newly
created video tape with window burn-ins to be used for video editing. The negative reel will be
cut together by the feature negative cutters in accordance with the editors work print reel or
reels and/or video tape. Also, the matching production track shall be
supplied on one or two reels and/or DAT, along with access to the original production


- Schedule “DM” Page 5 -









 






sound. Enough TV coverage shall be supplied to create a TV version with a running time of no less than 85
minutes for domestic distribution purposes and no less than 94 minutes for international
distribution purposes. A clearly noted, marked up final line script of all TV coverage will be
supplied along with the TV coverage elements, as well as all other applicable paperwork and/or
files noted in item 18(b) above. (Deliver to “Vice-President of Post Production Services”).




C. Video Materials:



1. Digital High Definition Video Masters (HDCam SR): Two (2) HDCam SR video masters in
the 24P format, in a 4:4:4 color space, as follows: (i) one (1) video master in the 4X3 (1.33:1
full frame) format and one (1) video master in the 16X9 (1.78:1 full frame) format. Each video
master shall contain proper head slates (which include, without limitation, the title, running
time, aspect ratio, audio configuration, name of the record vendor, the date of creation, etc.).
Channels 1 & 2 shall contain stereo audio. Channels 3 & 4 shall contain 100% fully filled stereo
M&E. Channels 5 & 6 shall contain Dolby E. All textless backgrounds shall be attached to the tail
of each video master. The textless backgrounds shall be in the proper aspect ratio and shall be
color timed. (Deliver to “Vice-President of Post Production Services”).



2. Digital Standard Definition Video Masters: Three (3) Digital Beta video masters
individually manufactured (conversions not acceptable unless it is a down conversion from the
Digital High Definition Video Master referenced above (HDCam SR)) in the NTSC format as follows:
one (1) video master (panned and scanned in the 4X3 (1.33:1 aspect ratio) if the Picture is in 1.85
ratio or in anamorphic), one (1) video master in the 16X9 (1.78 full frame) format and one (1)
video master in the 4X3 (1.85 letterbox) format, and three (3) Digital Beta video masters
individually manufactured (conversions not acceptable unless it is a down conversion from the
Digital High Definition Video Master referenced above (HDCam SR)) in the PAL format as follows:
one (1) video master (panned and scanned in the 4X3 (1.33:1 aspect ratio) if the Picture is in 1.85
ratio or in anamorphic), one (1) video master in the 16X9 (1.78 full frame) format and one (1)
video master in the 4X3 (1.85 letterbox) format. Each video master shall contain proper head slates
(which include, without limitation, the title, running time, aspect ratio, audio configuration,
name of the record vendor, the date of creation, etc.). Channels 1 & 2 shall contain stereo audio.
Channels 3 & 4 shall contain 100% fully filled stereo M&E. All textless backgrounds shall be
attached to the tail of each video master. The textless backgrounds shall be in the proper aspect
ratio and shall be color timed. The inclusion of textless backgrounds shall be noted in the head
slate of each video master. (Deliver to “Vice-President of Post Production Services”).




     (a) The transfer process from film to videotape shall not
cause any coloration when a pure white, gray or black scene is reproduced.




     (b) For full frame or panned and scanned versions, all transfers done from widescreen or
anamorphic film elements to tape must be panned and scanned so as to make them acceptable for
television framing. In the case of 1.85:1 or 1.66:1 elements, framelines



- Schedule “DM” Page 6 -









 







in the picture (letter
boxing) are not acceptable except in the case of titles. If necessary, for title safety, the main
and/or end title sequences may be transferred with a slight or minimal letterbox format so long as
the framelines are wiped with a complimentary color to the picture behind the credits. (White or
colored titles in a black field need not be wiped). Additionally, no manipulation of the video
master(s), except with respect to standard color correction, will be acceptable (i.e. speed ups,
slow downs, squeezes, etc.) without the prior written approval of Lions Gate.


3. DLT: If available, one (1) fully built DLT. The DLT shall be accompanied by a DLT
Specifications Form. All material (including any music embodied therein) shall be fully cleared
for Lions Gates exploitation thereof in all media granted Lions Gate under the Agreement throughout
the Territory during the Term without any additional clearance costs (or other supplemental
payments) required to be paid in connection therewith. (Deliver to “Vice-President of Post
Production Services”).



4. Digital High Definition Television Video Masters (HDCam SR): Two (2) HDCam SR video
masters in the 24P format, in a 4:4:4 color space, individually manufactured from the original film
element as follows: (i) one (1) video master in the 4X3 (1.33:1 full frame) format and one (1)
video master in the 16X9 (1.78:1 full frame) format with a running time of no less than 85 minutes
for domestic distribution purposes and no less than 94 minutes for purposes of international
distribution purposes. Each video master shall contain proper head slates (which include, without
limitation, the title, running time, aspect ratio, audio configuration, name of the record vendor,
the date of creation, etc.). Channels 1 & 2 shall contain stereo audio. Channels 3 & 4 shall
contain 100% fully filled stereo M&E. The Digital High-Definition Television Masters shall be free
of excessive and/or graphic violence, grotesque scenes, profanity, obscene language, nudity, sexual
activity, etc. that are not reasonably expected to be seen on free broadcast television and/or on
ships and airplanes. In the event that the music in the television version of the Picture varies
from the music in the original delivered version of the Picture, a Music Cue Sheet and the Music
Licenses shall be delivered. Note: If the Picture, as delivered, is free of excessive and/or
graphic violence, grotesque scenes, profanity, obscene language, nudity, sexual activity, etc., the
Digital Television Master shall be deemed deleted. (Deliver to “Vice-President of Post Production
Services”).





(a) The transfer process from film to videotape shall not cause any coloration
when a pure white, gray or black scene is reproduced.




(b) All transfers done from widescreen or anamorphic film elements to tape must be
panned and scanned so as to make them acceptable for television framing. In the
case of 1.85:1 or 1.66:1 elements, framelines in the picture (letter boxing) are
not acceptable except in the case of titles. If necessary, for title safety, the
main and/or end title sequences may be transferred in the
letterbox format so long as the framelines are wiped with a complimentary color to
the picture behind the credits. (White or colored titles in a black field need not
be wiped). Additionally, no manipulation of the video master(s),



- Schedule “DM” Page 7 -









 







except with
respect to standard color correction, will be acceptable (i.e. speed ups, slow
downs, squeezes, etc.) without the prior written approval of Lions Gate.


5. Digital Trailer Video Master: If available, one (1) High Definition Video Master
and/or one (1) Digital Beta video master individually manufactured (conversions not acceptable
unless it is a down conversion from the Digital High Definition Video Master referenced above
(HDCam SR)) Trailer Video Master in the NTSC format (panned and scanned if the Picture is in 1.85
ratio or in scope) made from the interpositive of the feature. Channels 1 & 2 shall contain stereo
audio. Channels 3 & 4 shall contains 100% fully filled stereo M&E. All textless backgrounds shall
be attached to the tail of the trailer video master. All music embodied therein shall be fully
cleared for Lions Gates exploitation thereof in all media granted Lions Gate under the Agreement
throughout the Territory during the Term without any additional clearance costs (or other
supplemental payments) required to be paid in connection therewith. (Deliver to “Vice-President of
Post Production Services”).



6. Digital High Definition Unrated Video Masters: To the extent applicable, two (2) HDCam
SR video masters in the 24P format, in a 4:4:4 color space, as follows: (i) one (1) video master
in the 4X3 (1.33:1 full frame) format and one (1) video master in the 16X9 (1.78:1 full frame)
format. Each video master shall contain proper head slates (which include, without limitation, the
title, running time, aspect ratio, audio configuration, name of the record vendor, the date of
creation, etc.). Channels 1 & 2 shall contain stereo audio. Channels 3 & 4 shall contain 100%
fully filled stereo M&E. The Digital Unrated High Definition Masters shall contain such outtakes,
scenes and footage that would result in a rating of “NC-17” if the Picture were rated by the
M.P.A.A. All textless backgrounds shall be attached to the tail of the unrated masters. In the
event that the music, footage, dialogue, etc. in the unrated version of the Picture varies from the
music, footage, dialogue, etc. in the original (rated) version of the Picture, a Music Cue Sheet,
the Music Licenses, a Dialogue Continuity and Sporting List and all other respective documentation
shall be delivered. In the event that the audio in the unrated version of the Picture varies from
the audio in the original (rated) version of the Picture, all respective audio materials shall be
delivered (i.e. Printmaster (5.1), M&E Track and Sound Track (5.1 Stems)). NOTE: A list (or similar
documentation) identifying the footage (and the placement of the footage by means of accurate time
codes) that has been added to the unrated version of the Picture shall be delivered. (Deliver to
“Vice-President of Post Production Services”).





(a) The transfer process from film to videotape shall not cause any coloration
when a pure white, gray or black scene is reproduced.




(b) All transfers done from widescreen or anamorphic film elements to tape must be
panned and scanned so as to make them acceptable for television
framing. In the case of 1.85:1 or 1.66:1 elements, framelines in the picture
(letter boxing) are not acceptable except in the case of titles. If necessary, for
title safety, the main and/or end title sequences may be transferred in the
letterbox format so long as the framelines are wiped with a complimentary



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color to the picture behind the credits. (White or colored titles in a black field need not
be wiped). Additionally, no manipulation of the video master(s), except with
respect to standard color correction, will be acceptable (i.e. speed ups, slow
downs, squeezes, etc.) without the prior written approval of Lions Gate.



D. Publicity / Promotional Materials:



1. Color Photography: A minimum of three hundred (300) different (approved) production
color digital photographs depicting scenes in the Picture with members of the cast (including
principals) appearing therein. The photography shall be delivered digitally in the highest
resolution format possible (a minimum of 300dpi) and saved as a Tiff File. The Contact Sheets and a
photo identification caption list shall be provided. The distinction between “kill shots” and
“approved shots” shall be clearly made (either directly on the contact sheets or on a separate
list). Note: Any and all talent approvals or other authorizations that are required in connection
with the use of the delivered photography shall be secured and delivered. (Deliver to “Vice
President, Legal & Business Affairs”).



2. Advertising Materials: One (1) copy of all advertisements, paper accessories and other
advertising materials, if any, prepared by Grantor, the Producer or by any other party affiliated
with the Picture, including, without limitation, press clippings, newspaper ads (including, the
artwork, billing and title treatment for the newspaper ad), cast and crew interviews, commentaries,
one-sheet posters, flyers, behind-the-scene footage, key art elements and transparencies,
television spots, etc. Note: If key art is available, it shall be delivered in a layered Photoshop
file in the highest resolution format possible. All materials (including any music) shall be fully
cleared for Lions Gates exploitation thereof in all media granted Lions Gate under the Agreement
throughout the Territory during the Term without any additional clearance costs (or other
supplemental payments) required to be paid in connection therewith. Any and all talent approvals or
other authorizations that are required in connection with the use of the materials shall be secured
and delivered. In the event that any material is not fully cleared as set forth above, a written
statement outlining in detail the material that has not been cleared shall be provided. In the
event that a written statement outlining in detail the material that has not been cleared is not
provided, the material(s) will be considered approved for all purposes. (Deliver to “Vice
President, Legal & Business Affairs”).



3. Electronic Press Kit: One (1) Electronic Press Kit (“EPK”) created using 35mm film or
broadcast quality video tape suitable in all respects for exploitation. The EPK shall contain
interviews with the principal cast, interviews with the principal crew (e.g. director and
producer), behind-the-scenes footage, “bloopers”, outtakes, “making of” footage, production
footage, etc. The EPK shall have four track discrete audio with the voice-over and/or
narration on one track, the dialogue on a separate track, the music on a separate track and the
effects on a separate track. All footage (including the music embodied therein, behind-the-scene
footage, etc.) shall be fully cleared for Lions Gates exploitation thereof in all media granted
Lions Gate under the Agreement throughout the Territory during the Term (and all


- Schedule “DM” Page 9 -









 







releases with
respect thereto shall be delivered) without any additional clearance costs (or other supplemental
payments) required to be paid in connection therewith. Any and all talent approvals or other
authorizations that are required in connection with the use of the materials shall be secured and
delivered. In the event that any material is not fully cleared as set forth above, a written
statement outlining in detail the material that has not been cleared shall be provided. In the
event that a written statement outlining in detail the material that has not been cleared is not
provided, the EPK will be considered approved for all purposes. Note: It is understood and agreed
that the use of the materials is subject to those third party contractual restrictions, which
restrictions shall be delivered to Lions Gate in writing on or before the Delivery Date. (Deliver
to “Vice President, Legal & Business Affairs”).



6. Screening Copy: One (1) DVD copy of the Picture. (Deliver to “Vice President, Legal &
Business Affairs”).



7(a). Ancillary Materials (DVD “Bonus” Materials): One (1) Digital Beta video master in
the NTSC format containing all material created by Grantor (or by any other party affiliated with
the Picture) for the inclusion in the DVD master. Channels 1 & 2 shall contain stereo audio.
Channels 3 & 4 shall contain 100% fully filled stereo M&E. Textless background shall be attached to
the tail of the video master. All material (including any music embodied therein, behind-the-scene
footage, etc. ) shall be fully cleared for the exploitation thereof in all media granted Lions Gate
under the Agreement throughout the Territory during the Term (and all releases with respect thereto
shall be delivered). In the event that any material is not fully cleared as set forth above, a
written statement outlining in detail the material that has not been cleared shall be provided. In
the event that a written statement outlining in detail the material that has not been cleared is
not provided, the Ancillary Materials will be considered approved for all purposes. (Deliver to
“Vice President, Legal & Business Affairs”).



7(b). Ancillary Audio Materials (DVD “Bonus” Materials): The discrete stereo audio,
discrete stereo dialogue, discrete stereo music and discrete stereo effects. With respect to
format, the Protool Files on DVD shall be delivered. (Deliver to “Vice President, Legal & Business
Affairs”).




E. Legal and Publicity Documents:



1. Laboratory Access Letter: Three (3) original copies of the Laboratory Access Letter
granting Lions Gate irrevocable access during the Term to all Film and Video Materials, as
applicable. The Laboratory Access Letter shall be signed by Grantor and the laboratory. Lions
Gate shall provide Grantor with a copy of its standard Laboratory Access Letter. (Deliver to “Vice
President, Legal & Business Affairs”).



2. Press Books: Five (5) Press Books, including (approved) biographies (one to three
typewritten pages in length) of the principal cast and crew members, a complete cast and crew list,
the running time, production notes (item #3 below), synopsis (item #6 below), etc. (Deliver to
“Vice President, Legal & Business Affairs”).




- Schedule “DM” Page 10 -









 







3. Production Notes: One (1) copy of the (approved) production notes of the Picture
prepared by the Unit Publicist, including items relating to: underlying work (original screenplay,
book, etc.), places where the Picture was photographed, anecdotes about the production of
background of the Picture. The Production Notes shall be approved by all respective parties and/or
individuals. (Deliver to “Vice President, Legal & Business Affairs”).



4. Feature Dialogue Continuity and Spotting List: One (1) copy in the English language of
a detailed, final dialogue and action continuity, in an acceptable format, of the completed Picture
and one (1) copy in the English language of a detailed, final spotting list, in an acceptable
format, of the Picture. Note: If the original language of the Picture (or any part thereof) is
other than English, the English subtitles shall be included. (Deliver to “Vice President, Legal &
Business Affairs”).



5. Trailer Dialogue Continuity and Spotting List: If a Trailer is delivered, if
available, one (1) copy in the English language of a detailed, final dialogue and action
continuity, in an acceptable format, of the completed trailer and one (1) copy in the English
language of a detailed, final spotting list, in an acceptable format, of the trailer. (Deliver to
“Vice President, Legal & Business Affairs”).



6. Synopsis: One (1) full synopsis of the Picture. (Deliver to “Vice President, Legal &
Business Affairs”).



7. Screen Credit Obligations: One (1) summary of the Screen Credit Obligations (main
titles) for all individuals and entities affiliated with the Picture, and one (1) copy of the main
titles and the end titles as they exactly appear on screen. In addition to a hard copy, the screen
credits shall be delivered to Lions Gate electronically. If the Picture is under the jurisdiction
of any guild/union, Grantor shall deliver the documentation evidencing the credits (main and end
titles) have been approved by the respective guild/union. All respective waivers, if any, shall be
provided. (Deliver to “Vice President, Legal & Business Affairs”).



8. Advertising Credit Provisions: Two (2) copies of the Advertising Credit Obligations
(including all obligations, restrictions, approval and/or consultation rights pertaining to paid
advertising, excluded ads, audio ads, trailers, TV spots, artwork, billing block, commercial
tie-ins, merchandising, bloopers, trims and outtakes, “making of” films, behind-the-scene footage,
etc.) for all individuals and entities affiliated with the Picture. If there are no advertising
credit provisions, a written statement on which Lions Gate can rely on indicating such shall be
provided. If the Picture is under the jurisdiction of any domestic and/or foreign guild/union,
Grantor shall deliver the documentation evidencing the credits have been approved by the respective
guild/union (including, without limitation, a copy of the Notice Of Tentative
Writing Credit form as required by the WGA, the final determination of the writing credits as
determined by the WGA and, if applicable, proof of payment of the Script Publication Fee). All
respective waivers, if any, shall be provided. If the Picture is not under the jurisdiction of any
union/guild, a written statement indicating such shall be provided. (Deliver to “Vice President,
Legal & Business Affairs”).




- Schedule
“DM” Page 11 -









 







9. Billing Block: Two (2) copies of the approved and final billing block. The billing
block shall include all required logos and the Copyright Notice for the motion picture. The
camera-ready artwork for all logos required to be included shall be delivered on a disc and
electronically. Each logo shall be delivered as an EPS file and as a jpeg and/or pdf file and shall
be delivered independent of the billing block. In addition to a hard copy, the billing block shall
be delivered to Lions Gate electronically. (Deliver to “Vice President, Legal & Business Affairs”).



10. Name and Likeness Provisions: Two (2) copies of all name and likeness restrictions
and/or obligations pertaining to all individuals and entities affiliated with the Picture
(including any still, likeness and/or artistic rendering approval rights). If there are no name and
likeness restrictions and/or obligations, a written statement on which Lions Gate can rely on
indicating such shall be provided. (Deliver to “Vice President, Legal & Business Affairs”)



11. Talent Agreements (executed): Copies of the agreements for the principal cast
(inclusive of any featured voices and cameo appearances), key personnel (e.g. director, director of
photography, costume designer, production designer, editor, screenwriters (inclusive of all
agreements for all rewrites), author of any underlying work, (or other owner of the underlying
material, if applicable), producer(s), unit production manager, 1st assistant director,
2nd assistant director, music producers (if applicable), etc.) and all Releases for all
individuals appearing in the Picture. The respective Agent’s name, address, fax and phone number
shall be provided. All Nudity Riders, if any, shall be provided. All agreements for all minors
appearing in the Picture shall be provided. The Work Permits and Guardian Release Forms shall
accompany all agreements for all minors. All Agreements and Releases shall include work-for-hire
language and language that prevents injunctive relief. If applicable, and to the extent
required by applicable law, all Talent Agreements for all minors shall be confirmed by the court.
In the event that court confirmation is not applicable, a letter from an attorney in the
jurisdiction in which principal production took place stating that the agreements are valid,
binding and enforceable under the laws of said jurisdiction shall be provided. (Deliver to
“Vice President, Legal & Business Affairs”).



12. Music Cue Sheet: Two (2) copies of the Music Cue Sheet of the Picture. The music cue
sheet shall include the title of each composition (inclusive of any “samples”), the composers,
publishers, copyright owners, form of usage (e.g. background, instrumental, etc.), performing
rights society (e.g. BMI, ASCAP, etc.), as well as film footage and running time. (Deliver to
“Vice President, Legal & Business Affairs”).



13. Music Cue Sheet (Trailer): If a Trailer is delivered, one (1) copy of the Music Cue
Sheet of the Trailer. The music cue sheet shall include the title of each composition (inclusive
of any “samples”), the composers, publishers, copyright owners, form of usage (e.g. background,
instrumental, etc.), performing rights society (e.g. BMI, ASACAP, etc.), as well as film footage
and running time. (Deliver to “Vice President, Legal & Business Affairs”).




- Schedule “DM” Page 12 -









 







14. Certificates of Origin: Ten (10) original notarized Certificates of Origin issued by
an authorized agent in the country of origin (or Certificates of Nationality certified by the
official applicable government agency) and, if applicable, the Canadian Content Certificate.
(Deliver to “Vice President, Legal & Business Affairs”).



15. Assignment of Rights (notarized): Three (3) original notarized assignments of the
rights granted Lions Gate in and to the Picture under the Agreement. Lions Gate will prepare the
document for Grantor’s review, approval and execution. (Deliver to “Vice President, Legal &
Business Affairs”).



16. Copyright Registration Certificates: One (1) U.S. Copyright Registration Certificate
/ Form PA (stamped by the Library of Congress) for the screenplay and one (1) U.S. Copyright
Registration Certificate / Form PA (stamped by the Library of Congress) for the motion picture. If
the certificates (Form PA) have not yet been returned from the Library of Congress, Grantor shall
deliver a copy of each certificate (Form PA) along with a copy of the cover letter and check that
accompanied each certificate (Form PA) to the Copyright Office. Grantor agrees to immediately
deliver one (1) copy of the Copyright Registration Certificates to Lions Gate when received from
the Library of Congress. Note: If the screenplay and/or motion picture has been recorded with the
Canadian Copyright Office, the Certificate of Registration of Copyright shall be provided. (Deliver
to “Vice President, Legal & Business Affairs”).



17. Producer’s Errors and Omissions Insurance Policy: One (1) copy of the Insurance
Application (executed), one (1) copy of the Insurance Policy, and an original Certificate of Errors
& Omissions Insurance (and the Endorsement) naming each (i) Lions Gate Entertainment Corp., each
partner therein and division thereof, and its respective parents, subsidiary and related entities,
distributors, licensees and assigns, and the respective officers, directors, shareholders,
employees and agents of the foregoing, 2700 Colorado Avenue, Suite 200, Santa Monica, CA 90404 (ii)
Maple Pictures Corporation, 2 Bloor Street West, Suite 1001, Toronto, ON M4W 3E2 and (iii) JP
Morgan Chase Bank, 1111 Fannin, 10TH Floor, Houston, Texas 77002 as an additional
insured. The minimum coverage shall be ***** for a single occurrence and ***** for aggregate
claims with a deductible of no more than ***** for a minimum term of ***** from the Delivery Date
but, no less than ***** from Lions Gates initial commercial release date. Grantor shall be
responsible for all deductibles and retentions under the policy. The policy shall cover all aspects
of the Picture and any and all materials relating thereto (including all underlying material with
respect thereto, the release of a soundtrack album, if applicable, and all behind-the-scene
footage, “making of” documentaries, bloopers, and all trims and outtakes, as well as the title
thereof, the music therein, and the
distribution/release of the motion picture on video cassettes, tapes, discs and future technology)
and the endorsements to this effect shall be delivered. Documentation evidencing that the premium
has been paid in full for the entire ***** term and a guarantee of at least ***** written notice of
cancellation or other material change to the policy shall be provided. The policy shall include a
provision that the policy shall be primary and not contributory to any other insurance provided for
the benefit of or by any additional insured. The insurance carrier shall agree to name any other
person and/or entity as an additional


- Schedule “DM” Page 13 -









 






 insured, at no additional cost, and provide a Certificate of
Insurance with respect thereto, as requested by Lions Gate throughout the policy term. Note: A
Rights Period Endorsement Policy is not acceptable and coverage under a blanket policy is not
acceptable. (Deliver to “Vice President, Legal & Business Affairs”).



18. Music Licenses (executed): Copies of the Music Licenses (synchronization, master and
mechanical) for all music (inclusive of “samples”) used in the Picture and proof of payment of the
licensing fees. All licenses shall provide for all media (on a full buy-out basis) necessary to
effect the terms of the Agreement (including, but not limited to, Internet (without limitations)
and future media as devised throughout the Term) throughout the Territory during the Term without
any future payment obligations (e.g. “step” payments, video bonuses, box office bonuses, etc.). All
licenses and agreements shall include language that prevents injunctive relief and shall preclude
the licensor from terminating the license. (Deliver to “Vice President, Legal & Business Affairs”).



19. Music Licenses (Trailer): If a Trailer is delivered, copies of the Music Licenses
(master, synchronization and mechanical) for all music (inclusive of “samples”) used in the Trailer
and proof of payment of the licensing fees. All licenses shall provide for all media necessary to
effect the terms of the Agreement (including, but not limited to, Internet and future media as
devised throughout the Term) throughout the Territory during the Term. All licenses and agreements
shall include language that prevents injunctive relief and shall preclude the licensor from
terminating the license. (Deliver to “Vice President, Legal & Business Affairs”).



20. Composer Agreement (executed): One (1) copy of the Composer Agreement (inclusive of a
Certificate of Authorship) and all other agreements for all other music personnel (including,
without limitation, the Music Supervisor and any co-publishing or administration agreements). All
Agreements shall include language that prevents injunctive relief. (Deliver to “Vice President,
Legal & Business Affairs”).



21. Music Lyrics: One (1) copy of all song lyrics used in the Picture. (Deliver to “Vice
President, Legal & Business Affairs”).



22. Chain of Title: Complete chain of title materials (including, without limitation, a
copy of Grantor’s Articles of Incorporation, an original Certificate of Authorship executed by each
Writer, an original Author’s Attestation executed by each Writer and, to the extent applicable, the
executed Publisher’s Release) suitable for filing with the United States Copyright Office and
reasonably suitable to Lions Gates primary lender and insurance carrier indicating that
Grantor has full right, title and interest in and to the Picture and all underlying property with
respect thereto (including, without limitation, proof of payment of all fees due in connection with
the purchase of the screenplay and all underlying materials, if any, upon which the screenplay is
based (e.g. Option Payment(s), Purchase Price, Fixed Compensation, Passive Payments, etc.)). All
Chain of Title documents shall include language that prevents injunctive relief. (Deliver to “Vice
President, Legal & Business Affairs”).




- Schedule “DM” Page 14 -









 







23. UCC Search: One (1) current UCC Search of Grantor, Production Company and all other
respective entities (from a reputable service) from the following states: (i) California; (ii) the
state of Grantor’s principal place of business; and, (iii) the state of producer’s principal place
of business. Each search report must show that the Picture is free and clear of any and all liens.
Each report must include copies of the referenced filings, if any, and shall identify the
collateral. (Deliver to “Vice President, Legal & Business Affairs”).



24. M.P.A.A. Rating Certificate: One (1) M.P.A.A. Certificate of Approval and Rating.
(Deliver to “Vice President, Legal & Business Affairs”).



25. Title Report: One (1) current (within sixty (60) days of the Delivery Date) Title
Report showing that the title of the Picture is available for use without infringing any other
person or entity’s rights. If the title of the Picture has insurance coverage under the Errors and
Omissions Insurance Policy, a copy of the Title Report submitted to the insurance carrier will
suffice. (Deliver to “Vice President, Legal & Business Affairs”).



26. Copyright Report: One (1) current (within sixty (60) days of the Delivery Date)
Copyright Report (from a reputable service; i.e. Thomson & Thomson) showing that Grantor has good
clear title to the Picture and all underlying rights. The Copyright Report must include the
specifics of the referenced filings, if any. (Deliver to “Vice President, Legal & Business
Affairs”).



27. Copyright Mortgage and Assignment (notarized): Three (3) original agreements, fully
executed by Grantor, granting Lions Gate a first position security interest in and to the rights
granted Lions Gate in and to the Picture under the Agreement. Lions Gate will prepare the document
for Grantor’s review, approval and execution. (Deliver to “Vice President, Legal & Business
Affairs”).



28. UCC Financing Statement: One (1) UCC-1 Financing Statement granting Lions Gate a first
position security interest in and to the rights granted Lions Gate in and to the Picture under the
Agreement. Lions Gate will prepare the document for Grantor’s review and approval. (Deliver to
“Vice President, Legal & Business Affairs”).



29. Stock Footage Licenses / Clip Licenses / Legal Clearances/Releases: If the Picture
contains any stock footage, film clips, TV clips, news clips, media clips, radio clips, print
media, paintings, posters, logos, artwork, copyrighted and/or trademarked materials, any materials
which includes a trademark (registered or pending), photographs, portraits, books,
publications, any third party likeness, etc., copies of all licenses (and proof of payment of the
licensing fee) shall be provided. All licenses shall provide for all media granted Lions Gate under
the Agreement throughout the Territory during the Term (including the use of any music embodied
therein). In the event that the Picture contains any stock footage, a Stock Footage Cue Sheet shall
be provided. All licenses and releases shall include language that prevents injunctive relief and
shall preclude the licensor from terminating the license. Note: In the event that there is any
music in any clip (whether score and/or source), the Music Cue


- Schedule “DM” Page 15 -









 






Sheet delivered for the motion
picture shall include such music. (Deliver to “Vice President, Legal & Business Affairs”).



30. Shooting Script: One (1) copy of the final shooting script.

(Deliver to “Vice President, Legal & Business Affairs”).



31. Fact Sheet (executed): One (1) completed Fact Sheet. Lions Gate shall provide
Grantor with a copy of its standard Fact Sheet. (Deliver to “Vice President, Legal & Business
Affairs”).



32. Dolby (Dolby SR and Dolby SRD) License Agreements: One (1) copy of the fully executed
license agreements in full force and effect for unlimited distribution of the Picture throughout
the Territory during the Term and proof of payment of the fees. (Deliver to “Vice President, Legal
& Business Affairs”).



32. SDDS License Agreement: One (1) copy of the fully executed license agreement in full
force and effect for unlimited distribution of the Picture throughout the Territory during the Term
and proof of payment of the fee. (Deliver to “Vice President, Legal & Business Affairs”).



34. Digital Theater Systems License Agreement (DTS): One (1) copy of the fully executed
license agreement in full force and effect for unlimited distribution of the Picture throughout the
Territory during the Term and proof of payment of the fee. (Deliver to “Vice President, Legal &
Business Affairs”).



35. IRS Tax Forms: The original executed IRS Forms (as applicable) shall be provided.
(Deliver to “Vice President, Legal & Business Affairs”).



36. Dubbing/Subtitling Restrictions: One (1) statement of all dubbing and subtitling
restrictions relating to the replacement of any voice, including the dubbing of dialogue in a
language other than the language in which the Picture was originally recorded. If there are no
Dubbing/Subtitling Restrictions, a written statement on which Lions Gate can rely on indicating
such shall be provided. (Deliver to “Vice President, Legal & Business Affairs”).



37. Cutting/Editing Restrictions: One (1) statement of all third party cutting/editing
restrictions including, without limitations, any and all consultation rights accorded to any
individual including, without limitation, the Director (whether by contract or by union
affiliation). If there are no Cutting/Editing Restrictions, a written statement on which Lions Gate
can rely on indicating such shall be provided. (Deliver to “Vice President, Legal & Business
Affairs”).



38. Cast and Crew List: One (1) complete list of all cast and all crew members. The
list shall include the names of all cast and crew members, their contact information (agent name,
address, fax and phone number), their affiliation to the Picture and union affiliation, if any.
(Deliver to “Vice President, Legal & Business Affairs”).




- Schedule “DM” Page 16 -









 







F. Complete 35MM Trailer Materials: All available, if any, Trailer Materials. (Deliver to
“Vice-President of Post Production Services”).



1. Trailer Picture Negative: If available, one (1) 35mm negative (without scratches or
defects), fully cut, edited and assembled, of the completed trailer.



2. Trailer Optical Sound Track Negative: If available, one (1) fully mixed and recorded
original 35mm optical sound track negative of the Completed Trailer prepared for printing in
perfect synchronization with the Trailer Picture negative.



3. Trailer Magnetic Sound Track: If available, one (1) 35mm original magnetic
three-track, consisting of separate dialogue, music and 100% filled sound effects, fully recorded
and equalized in perfect synchronization with the Trailer Picture Negative.



4. Trailer Answer Print: If available, one (1) first class sample composite 35mm positive
print of the Completed Trailer, fully timed and color corrected, manufacture from the Trailer
Picture Negative and Trailer Sound Track Negative, with the sound track printed thereon in perfect
synchronization with photographic action and with Lions Gate identification symbols as Lions Gate
shall determine, in all respects ready and suitable for distribution and exhibition.



5. Trailer Overlay Text: If available, one (1) 35mm negative of the text used for
superimposing the lettering of the Completed Trailer fully cut to match the trailer picture
negative.



6. Trailer Sound Track: If available, the separate dialogue tracks, sound effect tracks,
narration tracks and music tracks, each in 35mm magnetic tracks from which the original Trailer
Magnetic Sound Track was made.



7. Trailer Textless Background: If available, one (1) 35mm textless (i.e. without any
superimposed lettering) background negative of the Completed Trailer conformed in all respects to
the background of the Trailer Negative.





- Schedule “DM” Page 17 -