upon Owners' and/or Distributor's contractual
obligations to their licensees, distributors and exhibitors, and/or infringe
upon any of Owners' and/or Distributor's rights in and to the Picture.
1.2
The Initial Term of this Agreement shall be automatically extended for an
additional period of Five (5) years (the "Extension Term") if the "Gross
Receipts" (as defined herein) accruing during the Initial Term from the
exploitation of the Picture equal or exceed in the aggregate, the sum of Five
Hundred Thousand Dollars (US$ 500,000).
2.
DISTRIBUTION EXPENSES
Distributor shall, in Distributor's sole discretion, have the right to expend
and pay for up to Twenty Five Thousand Dollars (US $25,000) during the Term in
initial "Distribution Expenses" (such as term is defined in paragraph 6.1 herein
below)
3.
DISTRIBUTION FEES
3.1
Distributor will be entitled to and shall receive a fee of Twenty Five percent
(25%) from the gross amounts of all sales or distribution deals made throughout
the entire universe with the exception of the United States which fee shall be
Twenty Percent (20%), (hereafter referred to as the "Distribution Fee").
Notwithstanding the foregoing, if and to the extent that Distributor desires to
use a sub-distributor, sub-agent and/or sub-licensee to sell, license,
distribute the Territory Rights to one or more distributors, then Distributor
may increase the Distribution Fee an additional ten percent (10%), provided that
Distributor receives Owner's prior written approval for such increase.
3.2
For the purpose of this Agreement, "Gross Receipts" shall mean all amounts
actually received by or credited to the account of Distributor, from the
exploitation of the Rights to the Picture in the Territory without any
deductions therefrom
3.3
To the extent that any Gross Receipts are received by or credited to Distributor
or to Owner following the expiration of the Term ("Post Term Gross Receipts"),
Distributor shall be paid Distributor's Distribution Fee and Distributor's
Distribution expenses (if any) from such Post Term Gross Receipts in accordance
with the terms and conditions of this paragraph, paragraph 9 and this Agreement.
4.
EXPENSES
4.1
Distributor will be responsible for its own overhead operating expenses
including office overhead incurred in connection with its fulfilling its
obligations under this Agreement (it being agreed that such overhead expenses do
not include "Distribution Expenses" as defined herein below).
5
DISTRIBUTION EXPENSES
5.1
For the purposes herein, "Distribution Expenses" means any and all third party
costs and expenses specifically incurred by Distributor in connection with
Distributor's sales, licensing, leasing, distributing, advertising, promoting,
publicizing, servicing and exploitation of the Picture in all media now known or
hereafter devised in the Territory.
6.
REPRESENTATIONS AND WARRANTIES AND COPYRIGHT REGISTRATION OF THE PICTURE:
6.1
Owner warrants and represents to Distributor that: Owner has the absolute right
to grant to Distributor, all of the rights and privileges granted to Distributor
hereunder; that Owner will, upon completion of the production of the Picture,
own or control all rights of every kind and nature in and to the Picture, and
all music and performances contained therein; that all payments have