Hobbit Litigation - Miramax Opposes Arbitration

8/13/2019 Hobbit Litigation - Miramax Opposes Arbitration

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Exhibit A

ILED: NEW YORK COUNTY CLERK 12/24/2013 INDEX NO. 161383/

YSCEF DOC. NO. 12 RECEIVED NYSCEF: 12/24/



For Court Clerk Use Only:REQUEST FOR JUDICIAL INTERVENTIONIAS Entry Date(7/2012)UCS-840

COUNTY OF__________________________ _____________________COURT,Judge Assigned

Date Index Issued:_____/_____/________ ex No: _____________________

RJI Date

attach a caption rider sheet.Enter the complete case caption. Do not use et al or et ano. If more space is required,

PTION:

Plaintiff(s)/Petitioner(s)

ainst-

Defendant(s)/Respo

Check ONE box only and specify where indicated.TURE OF ACTION OR PROCEEDING:

COMMERCIALTRIMONIAL

G Business Entity (including corporations, partnerships, LLCs, etc.)Contested

G ContractNOTE: For all Matrimonial actions where the parties have children under

G Insurance (where insurer is a party, except arbitration)the age of 18, complete and attach the MATRIMONIAL RJI Addendum.

G UCC (including sales, negotiable instruments)For Uncontested Matrimonial actions, use RJI form UD-13.

G Other Commercial:____________________________________________RTS(specify)

Asbestos

NOTE: For Commercial Division assignment requests [22 NYCRR 'Breast Implant

202.70(d)], complete and attach the COMMERCIAL DIV RJI Addendum.Environmental: ________________________________________________

REAL PROPERTY: How many properties does the application include? _______(specify)

G CondemnationMedical, Dental, or Podiatric Malpractice

G ResidentialG Mortgage Foreclosure (specify):Motor Vehicle

Property Address: ___________________________________________Products Liability:_______________________________________________

NOTE: For Mortgage Foreclosure actions involving a one- to four-family,(specify)

owner-occupied, residential property, or an owner-occupiedOther Negligence:_______________________________________________

condominium, complete and attach the FORECLOSURE RJI Addendum(specify)

G Tax Certiorari - Section: __________ Block: __________ Lot: _________Other Professional Malpractice:____________________________________

G Tax Foreclosure(specify)

G Other Real Property:__________________________________________Other Tort:_____________________________________________________(specify)(specify)

SPECIAL PROCEEDINGSHER MATTERS

G CPLR Article 75 (Arbitration) [see NOTE under Commercial]Certificate of Incorporation/Dissolution [see NOTE under Commercial]

G CPLR Article 78 (Body or Officer)Emergency Medical Treatment

G Election LawHabeas CorpusG MHL Article 9.60 (Kendra's Law)Local Court Appeal

G MHL Article 10 (Sex Offender Confinement-Initial)Mechanic's Lien

G MHL Article 10 (Sex Offender Confinement-Review)Name Change

G MHL Article 81 (Guardianship)Pistol Permit Revocation Hearing

G Other Mental Hygiene:_________________________________________Sale or Finance of Religious/Not-for-Profit Property(specify)

Other:________________________________________________________

G Other Special Proceeding:______________________________________(specify)

Answer YES or NO for EVERY question AND enter additional information where indicated.ATUS OF ACTION OR PROCEEDING:

If yes, date filed: ________/________/____________a summons and complaint or summons w/notice been filed?

If yes, date served: ________/________/____________a summons and complaint or summons w/notice been served?

If yes, judgment date: ________/________/____________is action/proceeding being filed post-judgment?

G Commercia

NO YES

GGGG

GG

INDEX NO. 161383/


Supreme New York

161383/2013 12 11 2013

Miramax, LLC;

Harvey Weinstein; and

Robert Weinstein

New Line Cinema Corporation; and

Warner Bros. Entertainment Inc.

X

X

X

X

12 10 2013

12 11 2013



If yes, judgment date: ________/________/____________Check ONE box only AND enter additional information where indicated.TURE OF JUDICIAL INTERVENTION:Infant's Compromise

Note of Issue and/or Certificate of Readiness

Date Issue Joined: ______/______/__________Notice of Medical, Dental, or Podiatric Malpractice

Return Date: ______/______/__________Relief Sought: _________________________Notice of Motion

Return Date: ______/______/__________Relief Sought: _________________________Notice of Petition

Return Date: ______/______/__________Relief Sought: _________________________Order to Show Cause

Relief Sought: _________________________Other Ex Parte Application

Poor Person Application

Request for Preliminary Conference

Residential Mortgage Foreclosure Settlement Conference

Writ of Habeas Corpus

Other (specify): ____________________________________________________________________________________________________

List any related actions. For Matrimonial actions, include any related criminal and/or Family Court cases.LATED CASES:If additional space is required, complete and attach the RJI Addendum. If none, leave blank.

Relationship to Instant CaseJudge (if assigned)Index/Case No.se Title

For parties without an attorney, check "Un-Rep" box AND enter party address, phone number and e-mail address in space provided.RTIES:

If additional space is required, complete and attach the RJI Addendum.

Insurance Car

(Y/N):

Joined

IssueAttorneys and/or Unrepresented Litigants:Parties:

p

-

litigants, provide address, phone number and e-mail address.address of all attorneys that have appeared in the case. For unrepresentedProvide attorney name, firm name, business address, phone number and e-mail

3rd-party plaintiff).indicate party role(s) (e.g. defendant;List parties in caption order and

Name:

GRole(s):

Name:

GRole(s):

Name:

GRole(s):

Name:

GRole(s):

Name:

GRole(s):

EVIOUSLY BEEN FILED IN THIS ACTION OR PROCEEDING.

D HAVE BEEN NO RELATED ACTIONS OR PROCEEDINGS, NOR HAS A REQUEST FOR JUDICIAL INTERVENTIONFFIRM UNDER THE PENALTY OF PERJURY THAT, TO MY KNOWLEDGE, OTHER THAN AS NOTED ABOVE, THERE A

______________________________________________Dated: ________/________/____________ SIGNATURE

_____________________________________________________________________________________________

PRINT OR TYPE NAMEATTORNEY REGISTRATION NUMBER

Court

G YES

G NO

G YES

G NO

G YES

G NO

G YES

G NO

G YES

G NO

Stay 01 09 2014

Miramax, LLC

Plaintiff

Boies, Schiller & Flexner LLP

333 Main Street

Armonk, NY 10504

(914) 749-8200

Harvey Weinstein

Plaintiff

Robert Weinstein

Plaintiff


333 Main Street

Armonk, NY 10504


333 Main Street

(914) 749-8200

Armonk, NY 10504

(914) 319-0580

New Line Cinema Corporation

Defendant

Warner Bros Entertainment, Inc.

Defendant

3976586 Motty Shulman

12 23 2013

Evan Chesler

Cravath, Swaine & Moore LLP

825 8th Avenue

New York, NY 10019

(212) 479-1000 [email protected]

Evan Chesler

Cravath, Swaine & Moore LLP

825 8th Avenue

New York, NY 10019

(212) 479-1000 [email protected]

/s/ Motty Shulman



INDEX NO. UNASSI




1

SUPREME COURT OF THE STATE OF NEW YORKCOUNTY OF NEW YORK

MIRAMAX, LLC; HARVEY WEINSTEIN;

and ROBERT WEINSTEIN;

Plaintiffs,

v.

NEW LINE CINEMA CORPORATION; andWARNER BROS. ENTERTAINMENT INC.

Defendants.

Index No:

COMPLAINT

Plaintiffs Miramax, LLC (“Miramax”), Harvey Weinstein and Robert Weinstein

(collectively, “Plaintiffs”) for their Complaint against Defendants, New Line Cinema

Corporation (“New Line”) and Warner Bros. Entertainment Inc. (“Warner Bros.”) (collectively,

the “Defendants” or “Warner”) allege, upon information and belief, as follows:

INTRODUCTION

1. This case is about greed and ingratitude. It arises in connection with a decision by

Warner Bros. and New Line executives to divide a motion picture based on J.R.R. Tolkien’s The

Hobbit into three installments and Warner Bros and New Line’s claim that, as a result of that

unilateral decision, Plaintiffs are not entitled to their previously agreed upon share of revenue

from The Hobbit film. Warner’s position is simply an improper attempt to deprive the people

originally responsible for hugely successful films being made from the works of J.R.R. Tolkien

of their right to share in revenue from two out of the three filmed installments of Tolkien’s The

Hobbit .

2. In 1998, Plaintiffs sold New Line the film rights to J.R.R. Tolkien’s four books:

The Hobbit: Or There and Back Again (“The Hobbit ”) and The Lord of the Rings trilogy The



2

Fellowship of the Ring, The Two Towers and The Return of the King. New Line acquired these

film rights after Plaintiffs already spent over $10 million developing the film adaptation of

Tolkien’s works. In exchange for the film rights, New Line promised to pay Plaintiffs

contingent compensation of, among other things, 5% of the gross receipts of the “first motion

picture” based on the books, but specifically excluding any contingent compensation for

“remakes.”

3. Following the massive critical and commercial success of The Lord of the Rings

film trilogy, Warner decided to release a film based on J.R.R. Tolkien’s novel The Hobbit .

However, unlike the three films in The Lord of the Rings series, each of which was based on one

book from that trilogy, Warner unilaterally decided to split the one Hobbit book into three

installments, in the manner of a long form television drama.

4. The three-part motion picture collectively tells the entire story of The Hobbit ,

with each installment telling only part of the story and the final installment, which bears the

name of Tolkien’s book The Hobbit: Or There and Back Again, completing the telling of

Tolkien’s story.

5. Using its unilateral decision to divide The Hobbit motion picture into three

installments as a pretext, Warner now claims that it can keep all the revenues from the second

and third installments of The Hobbit and that it does not need to pay Plaintiffs their 5%

contingent compensation because, according to Warner, the second and third installments of The

Hobbit are not the “first motion picture” based on The Hobbit and are therefore effectively

remakes, which are not covered by the parties’ agreement.

6. Warner’s position is particularly outrageous because the parties’ agreement

specifically includes a “most favored nation” provision promising Plaintiffs they would be paid



3

in a manner that is no less favorable than Peter Jackson, the director of all the installments of The

Hobbit film. Warner’s refusal to acknowledge Plaintiffs’ participation rights is nothing more

than a shallow attempt to deprive Plaintiffs of their fair and previously agreed to share of revenue

from Warner’s exploitation of The Hobbit book. Warner’s position is inconsistent with the

parties’ intent, the terms of the parties’ written contract, Warner’s own director’s statement that

each of The Hobbit installments was written and shot as part of a single motion picture and

Warner’s projections, budgeting and negotiations relating to The Hobbit .

THE PARTIES

7.

Plaintiff Miramax, LLC is a Delaware limited liability company with its principal

place of business in Santa Monica, California. The members of Miramax are ultimately residents

of, among other jurisdictions, California. Miramax is in the business of developing, producing

and distributing motion pictures. Miramax is the successor-in-interest to Miramax Film Corp.

with respect to the rights at issue in this Complaint.

8. Harvey Weinstein is a resident of the State of New York.

9. Robert Weinstein is a resident of the State of New York.

10. New Line Cinema Corporation and Warner Bros Entertainment Inc. are Delaware

corporations with their principal places of business in New York and California. New Line and

Warner Bros. are in the business of developing, producing and distributing motion pictures.

11. This Court has personal jurisdiction over Defendants pursuant to CPLR §§ 301

and 302. Venue in this Court is proper pursuant to CPLR § 503.

THE SHARING AGREEMENT

12. On or about August 21, 1998, Miramax and New Line entered into a written

agreement (the “Sharing Agreement”) with respect to motion picture projects based on the J.R.R.



4

Tolkien literary works The Hobbit: Or There and Back Again and The Lord of the Rings, a

trilogy consisting of books entitled The Fellowship of the Ring, The Two Towers and The Return

of the King (collectively, with The Hobbit , the “Literary Properties”). A copy of the Sharing

Agreement is attached as Exhibit A and incorporated herein by reference.

13. Pursuant to Section 4 of the Sharing Agreement, Miramax is entitled to 5% of the

gross receipts of theatrical and television exploitation of the Literary Properties, on a basis no

less favorable than that accorded to Peter Jackson, the director of films based upon the Literary

Properties.

14.

By written agreement, Miramax assigned to the Weinsteins 50% of its share of the

gross receipts from the Sharing Agreement. Warner was notified of and acquiesced to the

assignment from Miramax to the Weinsteins. The Weinsteins are third party beneficiaries under

the Sharing Agreement.

15. Under the Sharing Agreement, Plaintiffs were entitled to receive, and have

received, contingent compensation from the three films based on the three books in The Lord of

the Rings trilogy, which films were distributed by Warner from 2001 through 2003. Each film in

the trilogy was based on the corresponding book in the series.

16. Under the Sharing Agreement, Plaintiffs are also entitled to contingent

compensation with respect to The Hobbit . However, unlike its previous practice with respect to

The Lord of the Rings, Warner decided to divide the single Hobbit story into three installments,

planning to release these installments over three consecutive years.

17. As noted by the director of The Hobbit , Peter Jackson, “[w]e wrote these all at the

same time and we shot them all at the same time.” All three installments have the same title –

The Hobbit – with only the subtitle for each installment being different. Collectively, the three



5

installments comprise a work based on The Hobbit in which Plaintiffs are to share under the

Sharing Agreement.

18. Warner released the first installment, The Hobbit: An Unexpected Journey in

December 2012. Warner is scheduled to release the second such installment, The Hobbit: The

Desolation of Smaug on December 13, 2013, followed by the third such installment The Hobbit:

There and Back Again in December 2014.

19. Now that it has elected to split The Hobbit into three installments, Warner claims

that Plaintiffs may share only in revenue from the first installment of the film (released in 2012

as The Hobbit: An Unexpected Journey) and refuses to pay Plaintiffs any compensation derived

from the second or third installments of The Hobbit (The Hobbit: The Desolation of Smaug and

The Hobbit: There and Back Again). Warner has thus effectively taken the absurd position that

the second and third installments of the film are remakes, and that Plaintiffs are therefore not

entitled to contingent compensation. Warner takes this position solely to deprive Plaintiffs of

their right to share in the revenues from two of the three filmed installments of The Hobbit .

20. Moreover, Warner’s current position that Plaintiffs are not entitled to share in the

revenues from the second and third installments of The Hobbit is inconsistent with Warner’s

projections, budgeting and negotiations with regard to The Hobbit , which expressly recognized

Plaintiffs’ contractual right to contingent compensation from all installments of The Hobbit.

FIRST CAUSE OF ACTION

(Declaratory Judgment)

21. Plaintiffs incorporate by reference all prior paragraphs as though set forth herein.

22. An actual controversy exists between the parties insofar as Plaintiffs contend they

are entitled to share in the gross receipts earned from the second and third installments of The

Hobbit and Warner contends to the contrary.



6

23. Warner’s claims are inconsistent with the Sharing Agreement and with the

analogous provisions of the Peter Jackson Agreement which it incorporates by reference.

24. Plaintiffs thus seek a determination that Warner must pay Plaintiffs their rightful

share of the gross receipts for the last two installments of The Hobbit.

25. At this point the controversy with Defendants relates solely to whether the second

and third installments of The Hobbit are considered an Original Picture as provided for in the

Sharing Agreement and, because Defendants contend that Plaintiffs have no right to

compensation under the Sharing Agreement for the second and third installments of The Hobbit ,

there is no dispute with respect to the definition, computation, accounting for or payment of the

contingent consideration.

SECOND CAUSE OF ACTION

(Breach of Contract)


27. Under the terms of the Sharing Agreement, Warner is obligated to pay Plaintiffs

their contingent compensation with respect to The Hobbit . Defendants have anticipatorily

breached the Sharing Agreement by taking the position that they are not obligated to pay

Plaintiffs their contingent compensation for the second and third installments of The Hobbit as

set forth in multiple communications from Warner, including John Rogovin’s November 18,

2010, and Wayne M. Smith’s October 31, 2013 letters to Bert Fields.

28. As a result of Defendants’ breach, Plaintiffs have been injured by amounts

expected to exceed $75 million.

THIRD CAUSE OF ACTION

(Breach of Implied Covenant of Good Faith and Fair Dealing)




7

30. The implied covenant of good faith and fair dealing requires that Warner not do

anything which has the effect of destroying or injuring the right of Plaintiffs to receive the fruits

of the contract.

31. By splitting The Hobbit into three installments and claiming that Plaintiffs may

share only in revenue from the first installment of the film, Warner seeks to deprive Plaintiffs of

their rightful share of the revenues from two of the three filmed installments of The Hobbit .



FOURTH CAUSE OF ACTION

(Promissory Estoppel)

33. Plaintiffs incorporate by reference all prior paragraphs as though fully set forth

herein.

34. Warner clearly and unambiguously promised Plaintiffs contingent compensation

from the film exploitation of The Hobbit book.

35. Plaintiffs reasonably relied on this promise when they consented to the Sharing

Agreement and the related promises therein.





EXHIBIT A



A u g - Z l - 9 8 06:0ap

.:,:.

SUBJECT: "IAMBOItEB-· "IHEiiOBBrr'·. . . .. "THE LORD OF THE O S

DA1E: As of A { ~ ~ st- j \ \ l lCf--g

QUITCLAIM AGREEMENT

The following are lhc lermsof the quitclaim agreemenJ ("QUitclaim Aereement")betWeen MIRAMAXFlLM CORP. ("Minmu") and.NEW LINE CINEMACORPORA110N ("Purchaser"), with respect to (a) one or more moIion pictures b.1lsed on

the lituaty works .referred to in 2.b.3 below, such motion piCture ptoject(s) being alsoknown as "Jartlboree" (collectively. the "Pictute"). including witbOuJ JimiOOOl1. any and allsynopses. treatments._5Cenarios, screenplays iUJ.dlor otherwrittetl m8reria1 pcrtainjoSthereto, aDd (b) the literary work: refermi to in 2.b.2 below. and (c) the liIcrary worksrcfcl'rcd to in 2.\>.3 below; including l l ~ g h t s in cormoctioD theleWitb OUJd an tangibleaDd. intangjble ~ c s respectinr aU of the foregoing. Whether in existence or knO\1llIlnow or in the future. . - . -

1. CONDITION PRECEDENT: sball bave o b l i g ~ o n b e ~ u n d c r uniessand uDtil (a) delivery to Miramaxof a o'opyof tbUi Quitclaim Aercemenl exCC'tUedbyPurchaser. (b) I'Urcbaser pays to Miramu in full·the I.IDO\JIit ~ u i r e d pursuant toParagraph 4.b below, and (c) .Purchaser QU5e5 to be ~ e w t e d and delivered to MinJnax •

WGA Literiry Mati riIl A5sumption- AgR:emeat in the fOIm attached as 'Exhibit "A".This Quitclaim Agreement shill be x c : c u ~ by Purchaser and Mii'amax cqncurrently.

2. PROPERTY: Reference is hereby made to:

a-

v_36: ,'21198

The followiog items rcbding' to the Picture(C(,lllectiVcIy.1be "UJ;ldedyine IleaIS");

1. ~ u e r (option) Ap"ecmc:Dt dated August 8. 1997 between The SaulZaelilz Coropany aPd Miramn Film eoq,;;

2.

3.

4.

s.

6.

7.

l..ctkr Agreement dared August 8, 1997 between The SaUl ZaentlComparty md Miro:m.M Film Corp., amending the Letter Agreement

r e f ~ r r e d to in " ... above.

Ucenst m e n t dared August 8. 1997 between-The Saw Zaerit1.Company and Miraml11' F1lm Corp.;

M e r c h a n ~ i n g Agreement daIed August 8, 1997between The SaulZaenu Company ud MirIllWt Film o r p ~lbeme Park License g r e e ~ n t dated August 8, 1991 between TheSaul ZacDtz Company and Miramax film Corp.:

Letter daIed r-c:bruary 5,1998 from Miramax Film Corp. to TheSaul Zacntz Co. ~ e r c i s i n g the option for "The Lord of the Rings'"

~ n t datcdMay 29, 1998 b e t w ~ WingNut~ b n s Ltd. and Crimbil Equities Limited flslo Tiro Sanders;

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9.

Agreement dated July 13, 1998 betweeJl H ~ w a r c Distribution.Inc. ("Hardwire"). on the 9I1C hand iwI Stephen Sinclair aDdPhilipP8 Boyens on the other baud (,'Writinl Agreemear'');

Cettifjcare of u ~ p dated April 28. 1998. from StephenSinclair. , '

P.03

10. cenificate ofAuthorsbip dated April 28.1998 from PhilippaBoyens;

11. Agreement dated. as of Dccemba 2. 1997 between Miramax FihnCorp. and John Howe;

12. Certificate of Resull$ and Proceed.s dated ~ of Occember 2. 1997.from 10hn Howe;

13. Agreement dated as of e c e ~ b e r 2. 1997 between Miramax FilmCorp. ~ d Alan Lee;

J4 Cenificate ot ResUlts and Proceeds dated as of December 2, 1997,from 10hn Lee: '

IS. Agreement dated as of JUly 3, 1996 between Mitamax Film Corp.on tbeone band and WingNut films, Ltd • Peter Jackson ,and franWalsh on the other band; ,

16.

I I .

18.

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Agreement dated as of c h 6. 1997 ,between HardwareDistrib\1tion. Inc. on the ODe hand.oo WingNut Films, Ltd., PeterJackson and Frau Walsh on the other hand;

CertiflCale'ofResuksand Proceeds dated as of July l ~ . 1998 from

WingNut Pibns. Ltd., Peter Jackson and Fran Walsh;

Literary PUrchase Agreement dated July 8, 1 9 6 9 ~ between GeorgeAllen & Unwin. Ltd., and UliitccJ Artists Corporation;

Literary Purchase Agreement dared July 8. 1969, becween Sas.c;oonTrustee and Executor Corporation Ltd • and Uniled ArtistsCorporation; .

20. Merchandising ~ dated July 8, 1969, between SassoonTI'USb:e aod Executor Corporation, Ltd.. and United ArtistsCoIpOl'ation (in form like Schedule D '0 the document described iniumt 19 a b o V ~ ) ; ' , '

21. M e r c h a n d i s ~ Agm:menl dated July 8, 1969. between GeorgeAllen & Unwm. Ltd • and United Artists COIpOration, (in fonnlike Schedule D &0 the document described in item 18 abOve);

22. Letter agn:etnMt October 20. 1975. between United ArtistsCotporation. on the ODe part.'and George Allen & Unwin. Ltd •and C.A. Bank, &. Trust InlCmaiionaJ, Ltd. (Dame changed fromSaS6oo.o Trustee &. Exccuwr:CotpOration. Ltd.). on tlIe other part.

e l a r i f y i n ~ merchandising rights;

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23.

24.

25.

26.

.27.

28.

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Lease Aereemeut as ofDecember 2. 1976 between The SaulZaentt Company and United Arti5U Corporation.

Agreement and Assignmen( dated of Decembt:r2. 1976 betweenUnited Artists CotpotatiOD ~ The Saul Zaenti ProductionCompany. .

· .etta agreement dated Noveinbec 16. 19M I, on the letrerhead ofSzold & B ~ d w e n . . P.C, addressed to AJbert M. Bcodich, Esq •The Saul Zaentt Production COmpany, and signed by RoyOainsburg ofSzold & BI3ndwc:n and The Saul e D t Z ProductionCoiilpany and Elan MeTChandisiDg, Inc.;

Selllcment Apement and · R ~ dated as of November20, 1992 b e t w ~ D The Saul ZaenI2 COmpany, 00 die one hud, andMetro-Goldwyn·Mayer, Inc. (fNa MGMtUA €oJilmunicationsCo • Inc., and as successor 10 MOMlUA Eilleftainmen[ Co., UniledArtists P i ~ U i ' O S . I n ~ . , M c t r o - G o l < l W Y D · M a y e r P j ~ u r e s , Inc • andMGMlUA H ~ m e Eolertainnv:nlGroup). MGM/UA Disttibution Co.and United AnistsPr()dUcUQDS.lJ1c., on Ihe other bmd.

Publishing ApeemcDt daIcd Decanbu 2, 1936 betweenJ R-.R. ToUdenaild Geocsc Allen &. UnWin. Ltd. for die 'TheHobbit".

US. Publishing AgrccmcDt datc4 May 21, 1937 between TheHO Jgbton Mift1in Corppany aDd GeorJe Allen & Unwin. Ltd.

29. Publishing Agreement dated'Januuy 3. 1947 between GeOrge Allen&.. Unwin. Ltd. and K o o ~ r a t i v a ForbuDdct foe "The Hobbit".

30. Publishing Agreement dated l'-Jovcmber 26, 1952 between J.R.R.TollieD and George Allen Unwin, Ltd. for'"The Lord of the Rings".

31. U.S. (including all dcpcudenciQ and the Philippines) Publi$hingAgreement dated August 11. 1 9 ~ 4 between Houghton Mifflin Co.Illld George Allen Unwin. Lut fol''Tbc fellowship ()f1he Ring" .

. 32. U.S. (including au dcpcndeOciC5 and the Philippines) PublishingA g r c ~ ' dated SeplCmbcr 16, 19S4 betwcen.Hougbtofl MifflinCompany·and r g e Allen.Unwin. Ltd. ·for "The Lord of heRings" 1'bsu VCtltlJQeS •.

33. Publ;$hing ~ m c D t dated JIDUary 16, i956 betweenUitgeverij H ~ SpecUUm·N.V. and George Aller. and Unwin. Ltd.for'''Tbe Lord of he Rings". .

34. Publisbinl J t C C ~ n t dated July S, 1956 betweenPaulus Vodeg and <kolge: Allen & Unwin. Ltd. fot "The Hobbi,"

. 35. PublisbiDg A ~ m e n t dated Sep.embcr5. 1956 betweenM ~ . Aimqvis[ &: W i k s e ~ b e t s r : O r ~ and GeOrge Allen &Unwin. Ltd. for "The: klJowship of the Ring".

3



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36.

37.

38.

39.

40.

41.

42.

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P u b 1 i ~ i n j Aan:ement dated July 8. 19S8 between . . .S.,ordziclnia Wydawnicza ''Czytelnik" and George Allen & Unwin.Ltd. for "The Fellowship of the D g " .Publishing ~ t dared December 18, 19S8.between.Panstwowe WydanUctwolSKRYand c o r ~ Allm & Unwin, Ltd.for "Tbe Hobbit".

Publishing Agreement a ~ Jimuary S. 1959 betweenUitgcverij Hc:t Spc:ctrum N.V. and Allen &. Unwin,. Ltd.for "The Hobbit".

PublishiDgAgR:emelitdatCd March 12, 1959 betweenM. Newman P\lblishing Co., Ltd. and George Allen & Unwin. Ltd.for "The Hobbit".

-P u ~ l i s h i n g AgJeemcnt dared lanuaty 2.1, 1960 between

A l m q Y i ~ t ~ WlbelllGobm FOrla, and Georee ADen &; Unwin,Ltd. for "1be Two Towers". . .

PubliShing Agreement daledFebruary 11, 1960 between .AD Rabm &: Sjl}grenIBokRSrJag and George Allen & UDwin, Ltd.tor -Ibe Hobbit":

Publishing g I e c ~ t dated September' 28, 1960 betweenC o m p . n j . ~ FaI)rilCdiwra and George Allen &. Unwin. ltd.{or·'lbeLord·Of be lUDgs·'. .

43. Pub&hin, m e n t dared January 10. 1961 betweenCompania General Fabril EdilOria and George Allen 8t. Unwin, Ltd.forf'Tbe Ilobbit"'.

44.

45.

46.

4.7.

.48.

PublisbiDg Agreement·dated January 16, 1961 between S'J'6nhielniaWydawnicza 'fC%ytelnik" and George Allen & Unwin. Ltd. tor '"TheTwo Towers".

PUblishing (excluding·U,S., dependencies, & Philippines)Agreement dated Marcb 3,1961 between George AlIeil Unwin. Ltd.and Penguin Books Umited for "The HobbIt"'.

PUbliShing A ~ t dared June 2.2, 1961 between Amtrico FI"4aLamarcs &. Co. and GeorBe ADen. a UnwiD. Ltd. for ''The Hobbit".

Publishing Agri:cment dated November 21; 1961 between

Sp6tdziclnia y d a w n i c ~ a " Q y t e l i l i k " a n d George AlleD &. Unwin.Ud. for -rbe Rewm of me King".

Agreement dated April" 2, 1962 ~ t W c : e D J.R.R. ToUcien& George.Allen &: Unwin. Lcd. and William L.Snydcr duing business iCi

Reiubrandt Fdms.

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49. A m e D ~ t dated April 2, 1962 between 1 . R ~ -ToWen & GeorgeA l l ~ " Unwin. Ltd. and WlllilDl.L. Snyder doing business asRembranclt Film$.

:;0. . Letter daIed March 27.1963 from William L. Snyderof RembrandtFilms to R a ~ o r Unwin. Esq.ot' George Allen &. Unwin. L(d.

S . Agreement AUJU$t l4. 196'·between George Allen &.

UnWin and LOngman 8. Green & Company L i m i ~ .~ 2 . Publishing Agrec:mclu dated September 3. 1965 between Iwanami

SboteJ1 and Ge.or,ge Allen &. Unwin. for " l l Ie Hobbit"

53. Letter dared March 24. 1966 froin AJ.ia a r t h o l o m e w of HOug-htonMifflin_ Company to Raynor Unwin of George: Allen" Unwin. Ltd.

~ 4 . -Publishers AgR;cmcot dated Octoh« 31. 1966between Ahilqvist de.

WiksclIIGdJas F.Urlag AB _Uld Oeorge AJJen k Unwin. Ltd. for"The Lord oftbe Rings" ( ~ "olwnes).

SS.Pub l i sben Agrcemwt dated November 7, 1966 betweenGyodetldalske NotWsk- Forlag AIS and Georp All,.. ) & Unwin.

Ud. o r ~ " T b c u . d oC Ihe Rings .(three o l ~ s ) -S6. Agreement dated Febn,wy 27. 1967 between DomtJd Swan and

Gcor,c Allen & Unwin. Ltd.

-57. LelJetdataUlUluaI)' 18. 1968 from OeorgeAllcn & Unwin. L1d. to

J.R,R. ToWeD.

S 8 . ~ l i 5 b e t · $ Agrmnent 4aAcd fwfarch 7, 1967 between CEAUE andGe.orge Allen & Unwin, Ltd.. for '"The Lord of the Rings" (three

v o ~ _ s . ) .

59. Agreement dared May 10. 1967 between Caedmoo: Records, Inc.and georse Allen & Unwin. Ltd.

60. Publishers Agreement d$ed May 17, 1967 between Hyuron Shn.~ . and George Allen & Unwin, Lid for "The LQrd of the Rill,s"(three vols.).

61. Publishcl's A.greeme"t dated October 4. 1961 between EditionsStock aM George AlleD &. Unwin. Ltd. for " T b e H ~ i t " .

62. AP-amK:GldatedNovcmbcr29., 1963 between George Allen &Unwin, Ltd._ and The Dramatic Publishing Company.

63. PUblisiten g ~ t dated January 31. 1968 between Gyldendaland George Allen-& U D ~ i n . Ltd. for 'The o b ~ i t " .

64. Letter -agreement daced March 6. 1968 to William L. Snyder

of Rembrandt Films from Katzka-:-Bemc Productions, [nco

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65. Letttr dated June 18. 1968 to William L. Snyder of RembrandtFllIm f r o ~ K a t z b . B e m e Productions, Inc.

P.07

66. A ~ m e n t d a t e d . J u n e 18 . 1968 between Kattb.-Beme Productionsand William L. Snyder.

67. Agreement daleClJi.ne 18,1968 between Kattka-Beme ProdUcUODSand United Artists Corporation.

68.. Agteenlenl dated July 8.1969 between JAR. ToIJcicJ) and UJl.itedAnists Corporation.

69. A ~ daIcd ~ 8, 1969 JSdith Mary Tolkien. John·francis Rcuel ToJkien. MiCbael.I:fiWy .RcueI Tolkiea, Cbri5CophetReuel Tolkien. Priscilla Mat)' Ann 1 Tolkien, Michael GeorgeDavid Reuel ToUcien. JoaoAnoc Rcucl Tolk:ieD and United ArtistsCorporation. ..

70. Pisfributots Apeomcnt cWed July 8. 1969 between K.aob-BemeProcillctiOOS and United Artists Corporatiop.

71. FmanClDg and Sec:anty ~ m e o t dated July 8. 1969 becween

Katzka-Beme Productions·*lid Ullitcd Corporation.

72. N o t i ~ of mvoeable.Aurhority dated July 8, 1969 m SassoonTl'U$tee &lid EMcutor CorpocatiOD Ltd. to United AnistsCorporation. .

73.

74.

7' .

7().

77.

78.

79.

Leucr dated July S. 1969 from n i t ~ Anisu CorporatiOl1 toSassocm Trusrce and Executor COrporation. Ltd. . .

Letter datc4 July 8. 1969 from United Artists Corporation toGeorge .Allen & Unwin, Ltd. .

Leum-daCCd July 8, ·1%9 from United Artists Corporauion toSas$OOl1 TruStee and Executor CorpOration. Ltd..

Lausr dalcd Jwy·8. 1969 CNm Uniled Arti5C$ Corporalion w·George Alk:n &: Unwin, Ltd.

Notice ofImtvocable Authority dated July 8. 1969 fromGeorge AIleD. &. Unwin. Ltd to United Artists Corporation.

·Noticc ofIrrcvocable Authority dated July 8. 1 9 6 ~ fromGeorge Allea & Unwin,ud .10 United Artists CoIpontion.

Notice of Irrevocable Authority daled July 8. 1969 from SassoonTlU5tee and Executor Corporation Ltd to UDitedArrisfSCorporation. . .

SO. Ag.recmcDt dated Ju"e 12, 1972 e e n United ArtistsC o r p o r a 1 i ~ n _d·Kat:d:a-Beme Productions.

81.· Letter Agn:ernent dated December 4. 1972 between Kattka-Beme

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PrOductiOns and United Artists Corporati.OD.

82. Letter aated February 13,.1974 from Szold. Brimdwen. Meyers &·Ahman to UrutedArtistsCorporation.

83.

84.

8S.

86.

87.

88.

90.

91.

92.

93.

94.

·.Uuerdmld luly 31.1975 from e g i s t t a r Q e n e ~ ' ~ OfficeoftbeBahamas to Sassoon Trust and Ex.ccutor ~ r p o r a t i o n .

Letier dated JUne 16.19-,6 r o ~ SzoJcl,

BrandwcB; Meyers &Altman to Vnited ArtiSts Corporation. .

Gnml ot dated December 2, 1976 between The Saul Zaentz. Production Company and Uruted AltiSt5 Corporation.

·Leuer m e n ~ dated OclC)ber 6, 197'7 from Monell. Peel &:Garnlen 10 Roben Schneider of Xerox COIpOration.

Agn:emcntdaled IS of May 6 • . 980 between Cbtislopber Rel,lelTolkien. t:rank u d williarascm.1hmpton Company Ltd.. The

SI tl Zaeoa Production Company and Elan Mcrcbandisin" ABC •.RankinIBass Productions. Arthur Rankin. Jr • J u l ~ s Bass.

~ 1 D e D t cbI_d IS ofJanuary 1, 1983 between 101m F.R.ToDder..

.MK;:bllCJ H.R. Tolkien. Cbri&i:opbet' R. Tolkicn. Priscilla M.A.R.Tolkieliand The Saul ZaCl\tz ProdUCQon Company. BJanM e ~ d i s i n g .AssigDment of Copyri,bt dated Januasy 1. 1934 betWUJl, ~ p h c r Tolkien and Elrond Limited.

ASliignmcnt ofCopyrightdated January I, 1984 between John,Michael and Priscilia Toltien and lbe TolkienTrust.

I...euecdatc.d May 4. 1984 from Roy GaiDsburg Qf 5%01d &B r m d w e n ~ · P . C . 1 O Albert M. Bendich f ~ Saul ZaenuProduction o m p ~ y . · a n d aneelled e n c r ~ e d May 4. 1984.fromRoy Gainsbcq to Saul Zaenrz and Elan Mercbaodi$ing.

SettleincDt Agreement aJid Release daled Oc1obcr ,1994(inCOJ:1JP1e1c) ~ e e n the Estat,e of J.lt.R. Tolk.e.ln. The sani Zaeotz

.Production Company, ~ a n Mcrcbaudising, Hamplon Company,Ltd, and W ~ r Bros;. Warner Home Video

S e u l e ~ l 1 t A ~ n t daIcd as of December 14, 1984 betweenTolkiM,··Frank RichardWilliamaon;Hampton

Company. J..td., The Saul n t z Company, Elan ~ b a o d i s i n gand TPlX Subsidiary CoIp. (flkJa ~ a n k i a l B a s $ Productions. Inc.),ABC, Anbur Rankin. JuleS BIlS$•. Sony Corpolatiun of Amc:rica..Al3C Video Enterprises. .

Trademoirk Licensing Agreement dUW as of January •• 1994-betWCf;:D The Saul Zaentz Company and Iron Crown &terpriliCS.~ ~ . . .

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Copyrigbl b Report dated April 24, 1996 froID Thomson &Thomson to Miramax rJlm C o r p . ' .95.

96. ~ dated November 6, )997 from Peter: ~ Nelson to NeilSacker; .

97. Letter daIcd November 10.1997 from Peter Martin NehOl1 lONeilSacker. .

98. $ertlement Agreement and MutUal Rclease'da4e<) July ,1998between Miramax and 1be Jackson Panics", .

99. ~ r agreement dated July- 1998 between Miramax aDdHudwarc on the one bud, and Jack$OD, Walsh. WingNul, andWETA on the Olhcr band.

100. Copyright Research p o r t dated Januaiy 24, 1996 from ThomsonIt IbomSon to MinuDax" .

101., wier dated November 24. 1997 from Petel" Martin Nelson .10 N ~ JSacker.

102.

103.

Leacc agreement daacd as of Maxcll6, 1997,· adcke55CO to NeilS a c k ~ fl(mJ Pe;1crMartiD Nelson, witbproYision for ,1.igna1ure by,but not 5igncd by, WinsNut RIms. Ltd., Perer Jaeks()o, Fran

W a l ~ h . and Miramax. .

~ t c r ~ ~ l a i l u a t y 3, '997 to Vk:lci c:bcrkas from George DaVis,refcfCDC14g "Peter lacboo - Overall . and h e r e ~ 1 i c e d .1IgrCC00000t.(COllSiStiog ofriwo l c t ~ agreemenu dated as of June 27,1994 s e d to Kem KamiD5) marked with the noredcolJlll1eBts.

)04, . Letter dated FcbnWy 7,1996 floJu1'lurman G. Rudman (0 AlbenM. Bendich.

105. Short Form .TransfcrlRelease dated November 20. 1992, ~ u t e dby Metro-GoldwYn-Maycr, Inc., in favor of The Saul Zaentt

CompUlY, with respect c.u \hC.mm,ned f C a t U ~ motion picmR:entitled ·'J.RR. Tolkieu's Lotd·ofthe Rings'".

106. Short Form r a o s f e c J R e ~ date4 Novembu 20, 1992 executed byMotro-Goldwyu-Maycsr, Inc., in favor oCThe; Saul Za.entz .Company. with p c : c t to thc.Iitea:1II)' loVod cnlided "The Lord ofrhe

Rings''.

107, Letter agreement dated May 14, .199S·betwclen MiramaX FihnCcnp.

IUld Marty a ~ PrQductions, Inc • foi- the senices of Marty Katz

with respect.to "Jamboree".

108. Cenificate of&ga:emeJit dated May 15. 1998 in favQr of MiramaxFilin Corp .eecutedby Marty Katz and by Many Katz Productions.

Inc. · . . .

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109. Leuer·Agree.mcnt a ~ May i4. 1998. addreSsed to Daniel Ostrofffrom-Miramax Film axp., executed by Thomas ·G. SmithProductions, Inc., for the setvices'ofTom Smith with respect to"Jamboree".

110. Cenificale of EltgKgClocot. diatW JWIC 1, 1998 in favor of MirmlAXfilm Corp. executed by Thomas G. Smith and ThOtms G. SmithProc;SuctioDS,luc.

111. p U b ~ g Agm:mcnt Ocrober 14, .1966 between Ernst lCJettVerlag and George Allen &. Unwin. Ltd. for "The Lord of theRings".

I U. LeUer dated AUp$ l 7, 1998 from Mitamax Film Corp. to The SaulZaeou Company ~ ~ c r c i 5 i n g the option for ~ Hobbit".

113. Deal Memo ~ u t e d ) (undated) belween ~ .Ltd.. and Lousia Zezu.

Purcbaser aeltO()wledgei familiarity with abe foregoing dc)cuments.

b. . T h c f ~ l o V l l i n , literary malaial (co1kctively, the "literat)' Material . ):

( l) Any md III m*tial wriueo by StePhen S.inclait al)dPbilippa Boycns:m connection with lbo i ~ t u r e pumaant to theWriting Aarcemcnt.. and, i f i m ~ to the extent that i t exists and is

owned by Hardware orMiramax. any other material ~ ~ bY themin COnocctiOD with the but any failure to deliver such.OIhermaterial nOC iIl.Mirauutx·$ C)r Hardware's pos5ession to PUlihasershall not be a h of this ~ t c l a i m Agreement;

(2) The worlt c:ot1t1cd ~ Hobbit: Or'I'bere and Back Again",written by J.R-R. T o l k i ~ n ; .

(3) The work entitled "The Lord of rhc Rings", aT ilos-y consistingofbooks n t i t l e d ~ Fellowship .of the RiDg"" "The Two

Towers", and "The Retu"' of the King", written by J.R.R.·Tolkien;

(4) All material wrineo or aeated by Pew Jackson and/Or Fran Walshpursuant to the apemeDtS refeaed co iu items 2.a."1S. 2.a.16 and2.a.11 b o v ~ , and. if and to the extait lhat it exists and is owned byMiramax or Hardware, '.ny other I W ~ cteatcd by one or both of·them in connection with tbePic:w1t but any failure todelivCf $ucb0IhU material·nat ii{Miriu'nax's or Hardware's p o s $ ~ i o n toPurchaser sbalI not be a breach of this Quilcbim AgR:ement.

c. T h e ' ' w E T A J n v e n ~ ; (8$ defined in item.2 .a.98 above) .

. d. Miramax $ right [0 use any and all of he technolozy described in and inaccordance \Vim Paragraph S.4 of item 2.b.98 above.

The.Uter.y Material and all rights and copyrights a c q ~ therein by Miramax, thePicture, the.Underlying Items, the ~ A I n v ~ ~ " , 1 h e rights described in Paragraph2.d above. and any and all other smucrialS jn connection with the Picture r e a t e ~ for or

9



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owned by.Miramax or Hardware are together r e f ~ to a i 1be " P r o M "(c;xcept that as to item 2.a. 98 above. oDly those rigbts set forth in Paragraphs . 1 . 2.5 t

5.4.6.1.6.2.6;3,6.4, 8.1.2·co the extent J : a n s f e r a b J ~ in law but neveribc1ess In no way~ ~ a t i n g froui or affecting Mi.ramu·s rights. r . 1 2 . 2 insofar as applicable. .12,24. 1225 and Exhibit "EO' arc included in tbe Ftoperty). Upon 1Cqllest Qf Purchaser andpayment of Purchase Price (as tbal is deflDCd Paragraph 4.b. below), i r ~wi1ldeliversuch copies or me UndetlyiDJ roms as itlD.iy have in its possession and such

.' items of we Literary MateriallS it may have. in its POSse5$ion, receipt of which is bereby

acknowledgedby PuiY;ba...er.

3. WARRANl'IES: Miram," p ~ s e n t s and WOUTaDU that:

a.. Miramax bas not heretofore w1d, g r l U l ~ assigned. mongKged, pledged,hypothocated or otherwise i s p o ~ of any rigb,t. titk or that it acquired in and to

the Property. except as provided in dJe Underlying k e m s . . . .

b. .To the best ofMiranwt) knowledge. cxcijJt to the e x ~ t 5c:l furth'iD theUiJdcrlyjq Itc:w. IS of the date hereof tbete ale no d ~ c l a i ~ or i ~ . orcncumMances in or against the Property by auy pcrson.-finn. orCOIpOration. nO to the

best of Mitamax's knowledge. as oftbc date hereof. is h e ~ pending anyUugation or threatof HtigaiioncOocCnWtg tbe Property; .

. .c:. All fum (e.,., not optional) Obligations tequUed to'be e r f ~ ~ . theUnc$cdYlIllltem5 by Minmu pnOl:' to date hefeofhave been pcrfOnDed, &Deluding, butnot t c d to, all payment obliiatiom r oc:wrring pm. to the. dale hereof;

. ' . d. Miramax has nol heretofore produced or authorized &be ~ c t i o n ofa. iDotiOn p i c t U t e ~ television. radio or lDy other production CX' otheI: work based on

.Litcr.y.Matezial; . .

e. Miramax bas the right to coler into this Qui1C1. A&rtic:incnt with u r c h a . ~ { "and the right to pcriorm aD of Miramax'5 ~ g a u O I i S beIeunde:; .

f . . OCher than ileDl$ $pc:cified in Parap-aph i.a..above 10 whicb Miramax'andlorHardware ~ . a s i ~ n : a t o r Y , ocilbct M.t.ramax nor Haidwarc: has entered into any agmements ormadcaoy COJllIDltments a . f f e c t i ~ . r i g h t s in ,lIe Property; aDd, to the best of Mirainax's'and

.flatdWaIe'Si ) ~ e .

other mati applicable collectivebtqaining egreemcDtsthe

UnderJyinglterm. b e ~ l i e no c;ontr.cts, ~ n 1 S or t h e r d o c u m e n t . ~ affeCting'therights.

..

. . "The lack of a sipawreby Mil'aruax or ~ ~ ~ Provided for in any ofthe Underlying Items does not derogate (rom the validity br effect of such ltetns.

b. Miram4x has l i v e r c d the written notice of ~ t ~ S O , and paidthC SUQl, specifiedin paragraph 4 (a) of item' 2 .. 1·'above. . .

i. bL'l d e l i v e ~ the written nohu of exereise, a,nd piid the sum specifiedin paragraph 4.(b) of item 2.a.l abOve. . . .

Except as set forth above in this paragraph l or elscwhete in this QuiccJaimA ~ t , Miramax Jmb::s DO reptesenlaUOO$ or waaaotie$ UIO -any covelWllS,a g r ~ n t s or understaodiDgs, other Iban wjth·Miramax or Hardwue that may .have been

e n t e ~ into by ''The Jacbon Partico" or any diem. or to any acts of conunission oromission by ""The Jackson Parties".or any of.tbem. .

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, Mir..m.ax makes DOother n:presentallons, or warrainie5 or GOven.ants. ~ s Of

ilJlPlied. ' , '

Miramax shall defend. indemnify and otbelwiSe hold PurchaSer. its parent,

offICers. directOrs. employees. agents. ~ ~ D t a t i v e . s . affaIiares. successors .Iid assignstee and barmless ffunl and , a i n ~ any lad III ,liabilities, cJaism, demancb) damageS aad

costs (iI1cluding lQSOQ8b1e ot.USide anomey's fees) ~ i n ' g out of or rcs1iJring frOID any

~ h by Miramax ofMiramu's l'eprt:Sentatiolls. warranties w g r e e l l l C l 1 ~ contained inthis Quitclaim A ~ l .4, PURCHASE OF PRopERTY:

a. Rights and obligations:

, (1), In 4:OtUidcration of he rmirual covenants 'and coodiliotis herein'contained. and cooditioMd upon me payment by 1\m:baser to MirarftaX or me "PwchasePrice" as that ternt u"defined'w Pat. . . . .h. below. Mihmax does hereby quitclaim toPtltcbaser aD (J{Miramax's right, tide. and iolQCSt in aDd to the Propeny.

(2) ,PurchaSer hereby ap:es to c:any out anclfaithfuUy pedonn each and

all of the executory 1eI:mS.~ O V e D a l n $ .

cooditiODsaod other provi$ions J:t,:quiredto

be keptand performed subsequent So «be dtIc bereofby MirIunU or Hardware contaioed in thea g r c e ~ t s s ~ c d in PuaaraPbs . a . l ~ . i n c l u s i ~ c . abow and in all of he o1her

U n d c f , I Y i D ~ J e c m s ' (excluding t ~ 2 . ~ 9 8 , 2.L t02 and 1.L,103) requited to be kept andpedonDcd. by Miramu o{ H a r d w ~ subsequent to tl;e date hereof under and by virtU,e ofme ,uadelJy;ng 1rcIDs. ' "

(3) IVrcbaser - i l l ~ . defend and otha'wisc boJ4Mir.vnax. itsparent, 5ubsidiarios and affiliatedCompanicsand. their p c c t i v e offjecis. ditecrors,

s I I a r ~ d c l s . employees. _,cpu. ICpl'C.seatatiVCS. s u ~ i.:nd as$igos harmless fromand againSt BY and .u a m a ~ . ' claims. 4ciDands,liabWtiC5 or costs (wcJuding teasonable

outside aIlOmey's fees and co5t5) t h e ~ , o r Illy of may sllffcr or incur arisio& out ofor resulting from{a) any bJUCh o f ~ representations, warrantie50 ' agreementsbcreWldcr at (b) U J ~ develOpment, productiOn. distribution and exploitation by n : h a . 4 i e t orany ofPUn:haser's subsidiaries. $ ~ s o r s . assigns or i ~ P S e e i or otherwise purSuant to

PWcbase:r's authority. ,of IJDY motion pictwe. television prolfUil or olbeT FoductiOn (s),in, any andallllUUlDCl'S,' metbo<b' and media whether now known or hereafter devised QI"

invented, based in whole. orm art on Ihc Litcraiy Pro,peny or any part f . and

olbcrwise In o n ~ t i o n with,any use by u ~ ~ of he Propelt}'. e"cepl i t h J ' ~ s p e c t to'material added to the sctl:CPplays l>y andlor u ~ . c J i R , c t i o n ofMjramax or Hardware. Inconnection :with ~ fOrtBoin, sbaU ~ e i:be riabt toseJett counsel, for, .and tosettle, any suc.h claun or demand prOVIded chat ~ ~ ~ have ~ ' e x d u s w e n g h t toapprove Illy ponion'or such e t t 1 ~ .... may coRSdnne an obligation on the, part of'

Miramax (such approvill Rot to be uoreasonably withbeld), and provided further thatPurch&ser 5hal.I not b a v ~ a right of Set-off in CODDection with any mat1er unrelated lO thisQuhCIaim Agrocment, against or in dCrogatioo of he' c:onttnecnt comider&ioD provided torjn Paragrapb 4., below. '

(4) C o n ~ e n t 1 y with lbe ~ u t i o n hereof, sball execute and

deliver to Mirarnax Ibc WGA LiteraryMatmal AssumptiOn Agrumcnt t t a d ) e d hereto asExhibit ..A ... and upon satisfaction of he Conditioos Precedent set forth in Paragraph 1,above shall cxeCute and deliver to PwclJaser a Short Form Quitclaim ill the: Jonn

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of EidUbjl "B" alt8cbed hereto; upon request y P u r ~ . MiruJax sball erant to .Purcba$er any and all waivers necessary to clear Ibc .MPAATitleBwuu reJistnilioD of thetitles ' · J a m ~ " . '"The Lord ofebe Rings", 'The Fellowship of die Rings", '1'hc TwoTowers-. "l l ie Return of he 1 G n ~ " . aDd ''1be H ~ b i t " and shall widldrawMiramax' sMPAA Title_Bureau registration upon e q u ~ by Purchaser. Miramax ain'CS that it will DOl

.prOtest Purdlasc:r's registration of such titles. .

. . • J . . .(5) I f and to the

e,uentthat

Miranux. beaefits from any repre$eDtations,wuranties, indemnities and obligations contained in'theUndcdyioglteros, and i f and to rheextent that such represenwlOOs. w a m n t i ~ s ~ indemnities and obligations ttanSferable.Miramuquitclaims to Purchaser the beac:fit thereof. .

- - (6) Miramax wiD. not.assert any "chanpd elements" b C s in respect of thesubject matter of his Quitclaim Agreement. . -

b. Purc:base Price, Audit Right:

(1) In o n s i ~ a t i o n in .fun for the rigbls quitclaime4 .bei'eUnde.r. Purchaser

shall y to Miramu: the amount (the ''Pwclwe Price") equal to tho aggregate of (x)S l l ~ 5 6 , 0 4 6 . 9 9 ( a ~ u m c q u a l l o Miramax's direct il\CUJlCdregardinl the Picture anda motion picture proJect Or projects based on '"The Hobbit Or 11.tCre and Back Again" but

such t s $haIl not mclude ally 1065 in foreign exchaDge rate as referred co in Paragraphs1.S and 1.9_ of item 2.a.98 above or 0Cbctwise, or ovethead amounts paid Or .burscd byMiramax un<b' tile Petu: J..cU()D overall deaL i . ~ .• itDns 2 •.102 and 2.a.: 103 above) and(y) [he u m oI_SSOO.OOOin respect of Miramu'Ji v ~ for the P i ~ . P U r c ~ ~ : 8 b a l lpay Purchase Price.to MiraJitax, by wire tmisfer. within two (2) bUsiDeas days arterexecution this Quitclaim b y the p a r t j e s ~ " I b ¢ a f ~ n r i o n e d . ~ tJ3D$fershan be to Beaeficjary; Miramax'Fllm Corp • 375 Greenwich Su-eet. ~ e w York. NewYork 100)-3; Bank: Chase. M-"al tJn Bank:. 1 Chase ~ Plua.. New York. Newyork 10005. ABA II: o2ioooo21.AcCouftt NUlO.ber: 910259370S. .

(2) Purchaser shall have sixty (60)daY5 followiDe p.ljoulcnt otthe PurcbasePrice to MiPmax to audit Miramax for the pulpOte ofcontu:miag that MitamaX's direct~ were ·actUally expended by Miramax in o ~ o n wilh the Picture. Such audit shalfbe upon ..ot Jess thaD three (3) oays written, -Qotice to and shall be

c:oDduCtcd during lqUW buSinC6S hours at the. place where sucb records are kept. I f t isfi.naI1y Ulat me audit lbows a Det ~ v e r p a y m e n t by PurcbaSer'of the PurchasePrice as .tennined OPderparagrapb 4.b.(l) above. then MinuxJu. 51W1 refund.,uchoveqlaymcnt wjtbin ~ D (10) u 5 ~ days after such fioal detennination.

c. Contingent Consideration:

(1) f'Otlbcpurposes of this p a r ~ t h e fonowing teamS bave t.hefollowmg meanings:

(i) The "Original PictureS" means wjch ~ each of thefour books 5epatalely which compri5C ''The Hobbit; Or Thete And BlCk Again" and ' 7M

. Lord of he Rings", the first motiOn picwre, i f auy. based in whole or in pitt upon suchbook 1iVbkh is prOduced by (II pursuant to the authority of fUrcbast'.t, but excludingrerDakes. A motiOn picture slmllbe deemed to be a picWre based OD the book. ''The Hobbit:Or- There and Back Again" if either <a) the main story line ofdie boOk is. subStaatiaIJy memain story line of the picture. or (b) We events or iocidcrWi in tbepicw.re are primarily the,

•. 36: 1121/98 11



06:32P' ~ "

Or incidents uonl the book and the i ~ bas both the chatacrers Smaug'the( ' : : , Dcagon and Thorln The Dwarf(or Olher which would satiSfy tbeir stOIy , .

fUnctions) or Bilbo Bagins as the lewJ ctw'aCter, or (c:) the ~ t l e or Subtitle of he picrure is•..The Hobbit" or "Hobbit" i$ any part of he title or subtitle of he piaure.

P . o s

(ii) "GR." IilcaDs "adjusted gross receipts" ~ defmed. calculated,accounted (or and paid pursuant to the Exhibit"GR" and me Rider 1 aDd Rider 2 theretocontained in b i t ~ ' attached hereto and by this teference made a part hereof.

(ill)' 1V'.,.AGJl" nleans "adjusted gross receiptS" as defined,calculated, lCCounted for and paid pursuauuo ti lt t a t i o n of'Television ModifiedAdjusted Gross ReceiptS" conta.i1\e.d ,inExhibit "C-l" attached hereto and by this referencemade a pan bereof.

, (Z) M to each oClhe Original Pictures whicb is produc:ed for inteDdedthcauical release, MirouIwt's participation sball be defined. calculated, ICC<MmtCd for and

, paid in accOrdance .with ihe pwvUiOns of EUibit "C". As to each OriJinal Picture-which isinitially ~ I e a s e d in the United Stares, tbeaUicallY. ,or bas a rbc:atrical release in the UnitedStalCS within six months after jrs initiat United States release inthc first medium in whicb itis e l e a S e d ~ . Miramax's participation sball ,9& of ca.' As to each web OrigiolI'Pictun: intended fQr theatrical tc1ease,wbic:b bas itS 'initial reJe.se in theUnited Stites in oil

medium other than motion pictwe theaters and,is not relea$ed in motion i ~ c m e a ~ in

the: United States witbirt six months following, its initial United states release, MiramaX·sparticipation shall be 2 112% of GR prvvided. however, that .in any country outside of theUnited'States wbicb the i ~ is initially t e l ~ in theaters Mirunax·s participationwith J p c : c t to OR. in that COUAtry shaD 'be S%, and for thar purpose rbe following, if soldandlor licensed togerher, stWl each be deemed a single country: Benelux (Belgium.Netherlands, m b o u r g ) ; Germany; AJIStria. and GermaD-speiaking SMtz:crlaod; Frauce

. and Prench..speiliilg Switzerland; ftaly and t a l i ~ · s p e a k n l Swia:cdand; and inclusive ofL i ~ b t e r m c i n when: sold andIor lkeDsed as part of any of he foregoing; ~ D a v i a'(Sweden. Demnark. Norway, FlIllaDd). To the sime effect,'if.any other c:ountr;ies, are soldor licensed together.and i f an Original Picture is ~ l c l S c d rbeatrically in any of chccountries so sold or licensed together, then Minmax's participation with respect to GR inthat countrY shall be S% C ( ) m p ~ in the same manner as I f uch country bad been sold orlicensed separately. ,,

(3) The calculation of GR for i r a m ~ shall be, PO less favorable tQ

Miramax than me calculation ofGR accuded toPeIet Jackson (whetbcftbrougb WingNutFilms Ltd., or olbcrWise) w i ~ ~ t to Ihc O r i g i n a l , P i c ~ $ ~ t b a t the video r o y a l ~w ~ c h is include< in GR shall be'2S%reatal. 112% seU-throu (as ~ I U r a s t e d with 40%rmeal, 20% selHbJ'ougb for Peter Jactson).11$ is o ~ fully ' in x h i b i t · ' C · · ~ ' a o dtlmt s<fUndtrack and meichllldising royalties ate not on a favori1Cnatioo basis.

, (4) With respect each Origmm ,PietWe wbich is nOt prodlK:ed forinitial theatrical release. ' s participation shall bedcfine4, calcutated,accounted forand paid in lIC(;onianc:e with the provisions of Exhibit "'C-l ot ~ shall be S ~ or TV -AGRN C ) ~ w i t h s t a n d i Q g the proYisioDs 0 ' Exhibit "C-l" 'with te$peCt to, accountiug for and 'a c ~ n t i n g statementS pertaininl to MiramJ.X·s participation in TV-AGR and Miramax'5

, auditing rights wilh respect lbercto. the provisiOlU ofExhibir Ole rather dum ofExbibit C... shall govern.

" (5) P ~ h a s U ~ that die first Original Pietwe e I ~ e d by or ,pursuOinl1O the authority ofPtu'cbaser shall be intended. for ,initial tbeatricIl release in theUnited States and shAJJ have its initial n:lease in the United SWc$' in motion picture theaters.

\/.36: 8/41198 13

I

TOTAl.. P . O l



. .(.....

i.

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(6) The CO riPutalion and payment f ~ s paniclpaUon ~respect to any of theOrigi$la1 PictuJc5 shalI Dol b e a o s . ~ - c o n a t e r a I i z e d ~ OUly manner withproceeds, x p e 1 1 5 ~ , t ~ orOtber deductions from· any other motion pioture or, production(whether produced U n u a n ~ to this agreement or I h e I w i . ~ ) . abandoJlIn£ut COStS or anyover-budget add bac.t. PurChaser shall not w--off any moniCi owed by Mirarnax toPurcllaser'Oil'any a t f U l b l ~ J a t e d to tlUs Quitclaim ~ t a g a i n s t Mitamax'sparticipations hereunder. ,.

(7) All·dispUtes wing with respect to abe c a J c u 1 a l i o ~ and accout1tiiJg for the

Purchase .. with respect (oche defiDitiQrl. o ~ o n . acrount:ing for: or paymentof the o n t i D , e n t C O Q s ~ t i o n provided for in this paragr8ph 4.c (but DO others) sball be:>ubmhlcd exclusively to coofidential.tnd biQdingarf,itiaiion in the County and ~ ofNew York. regardless ofebe amount i n c o n t r o v ~ r s y , befure a single fOrmeijudge.asarbitrator Q ~ the Streamlined Arbilfllioo R.ules IIDd Proceduta of AMSlEndispure( b e ~ , "SAMS") ill effect altbe time.the r b i t r ~ o n deJDMdis served, except as suchRules &Ie Yltied herein. The arbitrator shall be mutuallY selected from a-paoelof• leastfive (5) fanner judges sUbmitttcl'by lAMS. I f b:c cannO.f agJee. aheo the ~ $ Sshall be e p e a t ~ no.more tbIn twice. Ifme a r t i ~ still do not then lAM;S Shall

~ s j 8 a a I . e ibc axbitmtor. The delDlDd for ariJitrati9ll shall be,5ClVed by cenified Of registered

UIiited Slates, man, rewm rcc:eipt to the Idq1'esscs setfoi1h in a r . ~ h '8be o,*. Each p.rty sh&ll have all riP.ts orpre-hearinj discover) permitted undcf the New

York Civil PncticeLaw and Rules, subject only to such limitations a . ~ the. .-bitratorsnay ,order aDd subject to rhe ~ I e for evidentiary bearings. Each party h ~ beat its own. couosel fees and costs. Eacb party shall pay SO% of the fee ofdie arbitrator,aod other

e x p e n ~ s ofillPitmioo as assessed by JAMS ..

d. Credit:

. lob.WcinsleiQ ed Hcuvey W ~ i t J s t e i n shall be: acxonW shaml ExecutiveProducer e d i l for Ihe k ~ onsa,een OD'a sepai8.te card which may but need Dot containcredits for theOtber executive pcoduCers. and in paid ads oftbe ' ( , u b j e c t to New ,Linc's standard c l u s j O D S ) provided that ,Bob Weinstein', and Harwy Weinstein's creditis moot less duw second and thirdposjtjon,respectiveJy.of III e ~ r i V e producen.and

~ b a J l be in s iu no smaller tbaDany other eueutJve producer or producerCredit BobWeinstein's and ·Iiarvey Wemstdn's executive ~ credit may be sbared. Other

aspects of theil, cn:dit~ J

b¢-aube disCretion of Purchaser but irl any event Man .appear inads and on I C ~ whenever-and whcre\'ef any.other eXeCutive OT odic.r·prodllCer j$: ,

a c c o r d e d ~ . .

,5. Q U I T C L ~ C O N T I N G E N C Y : Unless and until Puicbaser pays Co Miramax infull the amount roquimi pursuant to Paragrapb 4:b., above, Purchaser shall not have anybenefit of Or rigbrs uDderthd QuircJaim A8Jl'C'inem, aD rights in the y shaD r ~ nwith M i r a m a X . l h e ~ "sbaU be no obligation execute 'and to l i v e f to l\m;haser dte b o r tForm QuifClaim. a n d ~ abaJl no. mae any tiliRl.S n the U n ~ r e d States CopyrightOffICe or h c r e rcgardiog tbesubject'inlttec of lbi$ I a i m A g r ~ n t . Iff'Utcllaser.

, fails to make dmely payment oCtbe Pun:hase Price in ~ o e with Paragraph 4.babove, tben Minmu 5balI h a ~ me right I t IS elcWoneither to IermiDa": or enforce this ,Quitclaim ~ 1 l J e O t . ~ rigbl to renuiJlar.e to be exercised on notiCe given within five (5)business "-ysaftcr the date on which timely pey.nent of he P ~ b a s e Price was due: inaccordaDc.e with Pv.lQlpb 4.b above. , F a i l ~ to give notice within sucb five (5) business

~ y s period shall constitute i l waivcr of thCtoregOmg right to terminate.

v.36; 8/21198 14



AI,J,9 - 2 1 98 06: 3 3 PP.07 .

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6. PRESS E : After u I l ~ e < : U t i o n of this Quitclaim (or as beparties may otbcrwiso ~ c e ) . PurclWer and Miramax a p 10 issue a joint press release,p r c ~ by Miramax and Purchaser.(sucb approvalto be in writing. or lhematively.the .pproved press rdcase to be attached. 8$' an x h i b i ~ bcrc:to) pertUting to the 5Ubjea .matter·lImof. .

, . FURTHER JNSTRUMF.NTS:1be a . r t i ~ hereto aiR e to sign and/or deliver to ..each adler 5l1Ch furthcrinstrumerus as may IUSOIiably be required to carry our or e.ffectuate

the pwposes IDd iateD1'of this Quitclaim Agnemenl.lf eitber pmy fails to do so witbio arcasoaable time after RCeipt ora written request iherefor. then the zcquesting party isbCreby appointed l$ r r e v o c a b l e . ~ in fact for the ~ d W pany to do so in abe other'party's name or on its behalf. and tbe ECquesting party sbaJlpromptly deliver a tnJc copy of .any such document to tbc.otherparty. .

8. NOTICE: Notices required by Ibis Quitcliim t shall bem writing. Anynotices ~ r shall be liven by facsimiJe (With the O r i p ~ by ovemigbt CoUrier 51.lcb asFedEx). by delivery, or by overnight u r i e t i e r v i e e . s ~ asfedEx or bymaiUn, (posIpaid via n:Jistercd or f i e d m a i J . return receipr reque5lc:4) to the appropriatepatties at the addresses set forth below. The effe(tjve dale of JlOticcs shall be tbe date

.of facsimile transmission. pe.r5ooal delivery. deljvery to me overnight courier r v i C e . ormailing· . : . .

ToMiramax:

with a copy to:

To PUrchaser:

with acopy to:

7966 Bew;rly BoulevardLos Angeles. CA 90048Ann: Bob Osher". Co,.Piesident, ProductionF ~ N u m b e t : 2 1 3 - 9 " i - 4 2 1 9 .

Vidti OIerkasseDior ~ P ~ d c n t . . D U 5 ~ 5 and Legal AffairsMjwnaxPilm COrp. .11 SIICet, S t ~ FloorNew York. New York 10013Facsimile Number: 212-941·3934

New I.Jne ~ D l J l C o r p o r ~ o n&88 Seventh Avenue. 20th floorNew York. NYIOl()6

Attention: lJenjamln lJnkin. Senior Executive VicePres.idem. u s i l i e s ~ ' and Legal Affairs

facsimile NUII\bcr. 212-956-1931

suzanne Rosencrans:ScmorViCe.;Pre$.idenl

N ~ w LiRe m . a (4poCllliun825 N. SanVicenie . . .~ Angeles. < ; i I l i f ( J ~ 90069

f ~ i m i l e Number: 31()"967..6704

9: ASSIQNMENT; Each party•• rights with respecl to tbls Qui1CWm Agreement maybe freely assigned and licensed. butin me cvtnt of stich ass1gnmel1t or ..cease. each panys h ~ l ~ v ~ l e s , ( ~ p ~ l y iable for Cbe p c d ~ o iu obligations o ~ Ibis

Quitclaim Agrcen1eOt, Tlli$ Qqitclaim Agn:ement sbaII be. bin<liJJg upon shali1lluce'tothe f i t of the parties hereto and $cir C s p e c t i ~ e sUccesSors aDd assigns.

.36: &121198 15



_ A u ~ - 2 1 - 9 B d S : 3 3 P P.OB

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10. GOVERNlNo LAW AND JURlSDIC110N: This Quitclaml Alreement shall be-governed by the law of he Stale of New YOtk appliC11blelO _agreements eMCUtcd and to bewholly pcrfQl'mcd therein and cXtept as otherwise Provide4 in Paragraph 4.c.(7) above Ibepanies ~ t b a l l b e Federal and-state and City court51ocated irI_New y ~ County, State

of New York., sIWJ have sole and ~ l u s i v c j w U d i ~ of illy cJaiJm ansmg hereunder_ and of any_actionto enfolee or intcrprettbis Quitclaim Agreement.

t L NOINlUNCTIVEREUEF: MitarnaJt·s $ole and ~ c l u s i v e remedy for Pon:baSer'Sbreach or caoc:ellalion of thiS ~ t c l a i m Agreementor any termhereof shall be an action for

damages and Miramax irrevocably waives any right to seek. n d l o r ~ 1e5cissiOJi aDdIorequitable and/or injunctive l i ~ f .

12. C O ~ A R T S ; ThiS QuitcJalm A,teemcmt may be e ~ i e d i n counterpartsand wbcm each pUty bas ~ g n e d and d e l i ~ e r e d at JCa5t such COUnteEpat1. to the otherparty. each U n ~ 5baD deeiDcdan originlll. and aU Coumapatts_taken together shallCOJl5titutc ODe -and the same agreement IIid diectivc as to boIh s . -nus u i t c l ~~ t may be executed vi. facsimile _signatUrcs. wbici) shil a v ~ lbesamc force, aDdeffect IS i f hey original ~ s n a t U R l S . and the originalsigoaturc copy _shall be forwardedto the other partY expeditiously. .

13. ENTIRE AGR.6,EMIiNT: 1l:iis is the entire I n e m of tM parties wilh respec( 10

the subjc:ct matter c ~ f ~ supersedes an priur understandings, cOmmwUCaDons and

agreements.t b e t

vnitten or oral, ofocc t w ~

dJc-panies. and any such priorW\d.erstandiDgS, cOmmunications or m c n u arc hcceby merged into tW$ QuitclaimA g r c e m ~ n t . No promises. P D ~ 5 , r e ~ n t a t i o i t $ . wamnties or otber agrcemenr.shave been made by part)' to me. other e x c . a,4i hercin expressly _set forth. ThisQuitclaim AgrcciDi:Dt IU.y not be ~ or mOdified ~ b y a WJiti.og $igned by bothpatties or duly authorized ~ ~ . For the avOidance ofdoubt., in the event\here is a discrepimCy between-the tmm of Exhibit "e" aodIor Exhibit ''(:-1'' and any oftbeforegoing provwons of his QUitclaim Agreement, the tenns of the o ~ g o i . n g provisions ofthis Quitclaim Agtecmcot shaU pe r n .

IN WITNESS WHEREoF, the patties hesdo bave exCCUWd this QuitclaimAgreemcot as of the day and year u e n above.

ACCEPIEl) AND AGREED;

B y : - - : ; . . _ " " ' = . " . . . . . ~ ~ ~ - - z = - _ - " i ~Its:_______ __ - _ : _

v.36: 8121198 16



.

\i)

SHORT FORM QUITCLAIM

QUITCL.AJM:For good and valuable consideration. receipt of whicbis hereby.acknowledged, the Undersigned, MIRAMAX FILM CORP. ("Owner"), does herebyquitclaim lO NEW LINE CINEMA CORPORATION("Compa,ny"), its successors and .assigns, forever, au of Owner'5 p r e s ~ n t a n d f\1rure .right. tWe and intqest in and to (a) one

or more motion pictures based on the literary works by ~ R . Tollden entitled 'TheLordof the Rings" (a Trilogy consisting ofbooks e n t i t l e d ' ~ F e l l o w s h i p oftbe Ring", '"TheTwo T9wers-- and "The Return of.the King"), such motion pictilrc project(s) also being .known as l a m b o r e e " ( c o l l ~ v e l Y t the. "Picture"), c l u d i n g w i t h o u t funitation, any and allsynopses. treatments, scenarios, screenplays, and/or other written miteriahegaiding thePiCt1lIe, and (b) me literary work written by J.R.R. Tolkien entitled "The Hobbit: Or h e r ~and Back Again", and (c) the literary work entitled WZ'he Lord of the Rings", a Trilogyconsisting of books entitled 'The Fellowship of he Ring", "The Two Towers" and "TheReturn of the King"; including all copyrights· in connection therewith and.all tanglble andintangible properties respeCting all of the forePll8. ~ t h e r iIi existen¢e or known now orin tile future.

CONTROlLING DOCUMENT: This transfer and a S s i ~ ~ ts sub·ect roall the·terms andoonditions of the Quitclaim·Agreement dated as ·of·· .. Uf. f l ~belWeen Owner and Coinpany. to which QuitclaimAgreement tliiSSOTtFqtm Quhclainiis

as .Exhibit "Bit. .

IN ~ . .WHEREOF. the undersigned has executed this .docUment this .. Z.S-H---d a y o f ~ . ,1998 .

State of tJltvv' 'ju-vi-County of NVtd '1trAc- .

On ~ 2 6 : I ~ q < g before me.~ .... Vi Cd=:£ personally appeared. . . and .. . . ... ..' ersonally known to

·me ( o r . p ~ e d t o me on the a s i s o f ~ ~ f a c t o r y evidence) to bcthe person(s) whose .~ e ( s ) W a r e subSCIj.bed to the.within mstrument and.acknowledged to methatbelshettheyc x e c u ~ ihesame in hislhcrltbeir authoriicd eapacit}t(ies). and that by hislher/theirsignature(s) on the iDstrU.mCnt the·person(s). or d1e entity upon bebalf of which the .person(s) acted, executed the instru,mcnt

WITNESS my hand ~ d yfficial JS i g n a t u r c O f N o t a r y ~ ~ e a 1 )

TOTAL P.02



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.EXHIBIT "GR".

ADJUSTED GROSS.RECEIPTS

1>/2-1 ( 9 ~Referen.ce is hereby made to the Principal Agreement dated as of betWeenMiramax Film Corp. ("Participant"), on the part, and New Line Cinema Corp; ("Company"),

on the other part, to which this Exhibit "GR" (''Exhibit") is attached.

1. Definitions: As used in this Exhibit, the following terms shall have the meaningsindicated: .

A. "Participant": . The party to the Agreement to which this Exhibit is attached isentitled to receive sums calcuIatedon thebasi.s of the net profits of he Picture;

. B. "Picture": The motion picture referred to in the Underlyirig Agreement to

w h i ~ h this Exhibit is attached;

C. "Territory": Unless otherwise defined in the U ~ d e r l y i n g Agreement to which

this Exhibit is attached, the.eritire universe.

2.·of:

"Gross Receipts": As used in.this Exhibit, "gross receipts" shall mean the aggregate

A AIl sums actually received by Company from the following:

(i) Licenses from Company directly to exhibitors of the right· to exhibit thePicture for any and all purposes (including reisslles) on any and all sizes and ·gauges of film, in1lQY and at] languages or versions, by any means, method, process or device now or hereafter

, "mown, invented, discovered·or devised fucluding, without liinitation,' free television, video

cassettes and video discs, .

(ii) Licenses from Company to a third party (hereinafter referred to as

"subdistri,butor") of the right to clistribute the Picture (i.e., the right to license exhibitors to

exhibit the-Picture),

(iii) The license or lease· of positive prints and/or trailers of the Picture (as

distinguished from theHcenSes referred to in [iJ and [iiJ preceding); the·Sale or lease of so:uvenirprograms and booklet$; recoyeries by Company from infringements of copyrights in the Picture;

.and t,he receipts from the exhibition of the Picture where Company has taken over e operation.of he theatre (i.e., so-:called "four-wall ~ l s " ) specifically for exhibition of he Picture.

. B. . All aid, subsidies (including so-called Early monies) and cash prizes ·actuallyreeeivedby cOmpany in connection with the Picture. .

C. Royalties with respect to the exploitation of home video devices embodying theP i ~ t u . r e , compute<J in accordance with Exhibit "GR-l.It

S:\LORDR\ExhibitGR. MiJarnIIl(.08.21.98 -1-



- ,

.D. Royalties with respect to the· exploitation of soUndtrack recordings, musicpublishing and merchandising. relating to the Picture, computed in accordance with Exhibits"GR-2," "GR-3" and "OR-4," respectively. .

. Gross receipts shall be detennined after all refunds; credits, discounts, a1lowaftces

and adjustments granted to exhibitors, whether ·Occasioned by c O n d e m n a ~ o n , by boards of·censorship, . ettlement of disputes or otherwise. Non-returnable advance payments and

.. ·guarantees ~ a U not be mc)uded in gross receipts. until earned by the exhibition of the Picture ora p p l i ~ by·COmpany to the Picture. Other advance payments and security deposits shall not be

included in gross receipts until earned by the e x h i b i t i o ~ of the Picture, forfeited, or applied by.C9mpany to· .the Picture. Gross receipts shall not inclUde (i) any portion thereof which iscontributed to charitable 9 ~ g ~ o n s ; (ii) the reCeipts of the following partie$,_whether or notdivisions, subsidiaries or affiliates of Company or any· company comprising COmpany: (a)exhibitors or otliers who inay use· or actUally· exhibit the Picture; (b) radio or ·televisionbroadcasters (mcluding, without limitation, cable and· closed circuit systems), (c) book or music

. publishers, (d) phonograph record producers· ·or distributors, ·and (e) merchandisers,manufactUrers 8 n ~ the lifce; (iii) any sums ~ d or paYlible to, or derived by, CompllDY for or in

· Connection· i $ , o ~ as a result of, Company's .production andlor exploitation of any motion· picture(s) Which constitute a remake of, or sequel to,. the ·Picture, or the sale, transfer or

assignment of aU or any part of Company·s right to produce and/or exploit same; and (iv) anysums paid or payable to Company ·or any company comprising Company or any of its· or theirsubsidiaries, affiliates or di\'isions for or in connection with, Ot as the result of their furnishing,.supplying, rendering, procuring, arranging for or making available any materials, equipment,

l facilities or ·services in connection with the production of he Picture..I

3.. Adjusted Gross Receipts: The ·'adjuSted gross receiptstl .ofthe Picture shall mean thegross receipts remaining after the deduction therefrom on a continuing basis, regardless of when

. _ mcurred or payable, of the costs, charges and expenses incurred in connection with any of the

following:

A. All sales, use, receipts, excise, remittance, value added and 9ther taxes (howeverdenominated)·tO any governmental or taxing authority assessed upon or With respect to, the

n e g a t i v e s , ~ d u p l i c a t e · negatives, prints or sound records of the Picture, ·orupon the use or· distribution·of the P.icture, or upon· the revenues derived therefrom, or any part thereof;. any andall sums ·paid :Or acCrued on a ~ u n t of duties, customs and imposts, ·costs ofacquiring permits,.and any sinularauthoi:ity"to secure the entry, licensing, ~ x h i b i t i o ~ performance, use or televisingof he Pict1:D'e in any country or part thereo£:regardless of whether such payments or accruals areassessed against the Picture or the proceeds thereof or against a group of motion pictures inwhich. the Picfuremay be included or the proceeds t1.tereof. In no event shall the recou.pablelQllount of-any such tax. (however denominated) imposed upon Company be decreased (nor the

gross receipts htcreased) ~ u s e of the manner m hich such taxes are elected to be treated by·Company in filing net" income, corporate, franchise, exCess profits or similar tax returns. Subjectto the foregoing, Participarit shall not be required to payor participate in (i) Company's or anysubdistributor·s United States· Federal and State income taxes and franchise taxes based onCompany·s or such subdistributors net income; or ( i ~ ) any income tax payable to any countrY or

. .

S:\LORDR\ExbibitGR·MiImIn.0821.98 -2-



territory by Co.mpany or any subdistributor ~ e d On theneteamings of Company ..or such·subdistributor in such country territory. Company shall be entitled to claimimd receive, andin no event shall Participant be entitled, directly or d i r e c t l y , to claim, share or participate in or·otherwise receive or derive. any and all tax or" Qther benefits of any kind or .natUre a r i ~ g out of,in connection with or otherwise accruing in reSpeCt of any and all taxes (however denominated)described in this Paragraph ~ including; without limitation, any and all tax credits or deductions

directly or indirectly attributable thereto Qt basedt h e r e o n . E x ~ n s e s

of transmitting to theUnited States any funds accruing to Company from the Picture in foreign coUntries. such as cableexpenses, or any discountS from such funds taken to convert such funds directly or indirectly intoU.S.·dollars and the cost ofcontestjng or settling' any of he matters descnDed above, with'a viewto reducing 'the same. shall similarly be deducted.

B. Copyright, patent and· trademark expenses; royalties payable to manufacturers of

Sound recOrding and reproducing equipment; dues and assessments of the Motion Picture.Association ofAmerica or other associations or o d i e s ~ including payments for the support of heAcademy of Motion Picture Arts and Sciences. legal fees, and any and all other expenses inaddition to those referred to herein inCUITed by Company in cOnnection with the l i ~ i n g ' of thePicture for exhibItion or for other uses of he PictUre. .

C. Costs and expenses (including reaSonable attorneys' fees), incurred by Companyin c o n n ~ t i o n with any action taken by Company (whether by litigation otherwise) inenforcmg collection of gross receipts; or (on a pro rata basis) for checking attendance andexhibitors' receipts; or to prevent unauthorized exhibition or distribtition of he Picture; or to

. prevent any impainnent of. encumbrance on or infringement upon, the rights ofCompany in andJ to the Picture; or in connection with the auditlng of books and records of any exhibitor,

subdistributor or licensee; or to recover monies due pursuant to any agreement relating to thedistribution or exhibition of he Picture.

D: All payments paid or payable purSuant to applicabJ.e collective bargainingagreements by reason ofany exhibition of the Picture or by reason of, or as a condition for, any

use. re-use of re-run thereof for any purpose or in any m ~ e r whatsoever ( h ~ i n called"residuals"), and all taxes, pension fund contributions, and other c o ~ and payments computedon or payable in respect of any such residuals or participations' in the net profits or gross receiptsof the PiCture to any ~ r s o n , ' finn, corporation, guild, union, trustee or fund (other thanCompany); provided, however, that if Participant, or any prinCipZll stockholder ofParticipant, orany h e i r s ~ e x e c u t o r s , administrators, sUcCessors or assigns ofParticipant, .or any such stockholderare entitled, either directly or by way ofparticipation in any pension fund, to any such residuals,the amount payable on account thereof shall not be deducted under this Paragraph "D"., but. shall(to the extent p e n n i s s i b l ~ under applicable collective bargaining agreements) be treated as anadvance against Partidpant'sshare :of the receipts hereunder. and C o n v e r s e l y ~ any share of thereceipts paid to Participant· hereunder shall constitute an advance against such residuals payable

to or for the benefit of Participant or any principal stockholder of a r t i ~ i p a n t , or any such· heirs,executors, administratOrs, successors or assigns. .

4. Allocations: Whenever Company (i) makes any expenditures or incurs any liability in{" . \ respect of a group of motion pictures, which includes' the Picture, or (ii) receives from any,,

S:u..oRDR\ExhibitQR·Milll1l8X.0821.98 -3-



licensee either a flat sum or a percentage of the receipts, or, both, for any right to a:group. of

motion pictures, which includes the Picture, under any'agreement (whether or not the same shallprovide for the exhibition, sale,lease or delivery ofpositive prints ofany of said motion pictures)Which does not specify what portion of the license payIilentsapply to the r ~ s ~ v e motionpictures in the group (or to such prints or other material" if any, '8$Iilay be supplied), then in anyand all s,uch situations, Company shall, in' good faith, include in, or deduct from, the gross

receipts, 'as the' case may be, such sums as may be reasonable. If Company reasonablyantiCipates retroactiye wage adjustments, taxes, residuals, uncollectable 8ccounts, or ,otherreasonably anticipated costs, expenses or losses relating to' the Picture, which, if and whenincurred, will be properly deductible hereunder, Company may set up appropriate reservestherefor. Company agrees to liquidate any such reserves within a'reasonabletime.

, ,

S. Foreign Receipts: No sums received by Company in respect of the 'Picture shall be

included in gross receipts or in statements hereunder for the pmpose of determmmg any amountpayab1e'to ~ a r t i c i p a n t , unless sucJt sums are , ~ l y remittable'to Company in U.S. dollars in theUnited States, Qr used by Company.' Sums derived from ~ t o r i e s putsi,deof the United States,or used'by e o i n ~ y . Sums derived from teirltories outside of he United States which are notremittable to Gompany in the' United' StateS in U.S. dollars by reason of currency or otherrestrictions ShaIlbe reflected on statements rendered hereunder for informational pQIj>oses only,and Company shall, at the request and expense of participant (subject to any and aI11imitations,restrictions, laws, rules, and regulations affecting 'such transactions), deposit into a bankdesignated by Participant 'in ,the country involved, or pay to any other party designated byParticipant in, such C 0 1 i n t r y ~ such part thereof: i f any, as would have been payable to Participanthereunder. Such, deposits or payments to' or, for Participant shall constitute reiDittance to

)\ Participant, imd Company sball have no further, responsi\>ility therefor. Company makes no, ~ t i e s or representatjons that any part of any such foreign currencies may be converted into

US. dollarsot transferred to the acCount ofParticipan,t in ~ y foreign coUJitry. Costs incurred ina1erritory during a period when aU receipts are blocked shall be charged oDly against blockedreceipts 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 s¥ l be~ h a r g e d

proportionatelyagainst the blocked and dollar receipts from said territory; However, i f costs charged againstblOcked receipts, in either of the foregoing 'instances, have Dot been recovered, therefrom withintwelve (12) months after such costs were incurred, the deficit sball be computed,in dollars at theofficial rate of exchange in effect the end ofsuch twelve 02) month period and recovered byCOmpany from d o l l ~ receipts, irrespective of he source.

6., EarriingsStatements: Company sh811 render to Participant periodic statements 'showing,in summary form, tbeappropriate calculations pursuant to this Exhibit. Such statements may beon a billings or collections basis, as Company may from time ,to time ~ ~ e c t . Statements shall berendered quarterly durlngthe twenty-four (24) month period following,the initial release of thePicture, semi-annually during the next thirty-six (36) months and annually thereafter; provided,

that no s t a t ~ m e n t need by rendered for any period in which D o ~ i p t s 'are received or charges'incurred. Statements rendered by COmpany may be changed from time to time to give effect toyear-end adjustments made by Company's Accounting Department or public accountants, or toitems overlooked, tc? correct errors, to reflect any indebtedness which may become uncollectable,or for any other purposes. Should Company make any overpayment to Participant hereunder for

S : ~ \ E x h i b i t G R . Minmsx.0821.98 -4-



(-- . ,

. ,.

\

any reason, Company shall have the right to deduct and' retain for its oWn account an amount

equal to any such overpayment from any s ~ that may thereafter become due or payable by

Company to Participant or for Participant's account, or may demand repayment from Participant

in which event Participant shall repay the same when demand is made. The right of Participant·

to receive, and the obligation of Company account for, any share of the gross receipts of thePicture shall tenninate if the firsi earnings statement issued after the Picture has been made

. available for exhibition on syndicated television in the United States shQWS a deficit ~ d e rParagraph 3 h ~ r e o f w h i c h would require in excess of Five Hundred ThoUsand Dollars ($500,000)in gross receipts to reach net profits hereunder. Any U.S. dollars due and'payable to Part icipant'

by Company pursuant to any such statement shall be paid to Participant simultaneously with therendering of such statement; provided, however, that all amounts payable ·to Participant

h e r e ~ d e r 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 agaiilstParticipant. COmpany shall have the right to make such deductions and withholdings, and thepaYment thereof to. the governmental agency concerned in accordance with its mterpretation ingood faith of such laws and regulations shall c o ~ t l i t e payment hereunder to Particip8J;1t, andCompany.shall not be liable to Participant for the making of such deductions or withholdings or

the payment thereOf to the governmental agency concerned. In any such event Participant shall

make. and prosecute any aIid. all claims which it may have (and which it desireS to make andprosecute) wi th respect to the same directly with the governmental agency having jurisdiction inthe premises.

7. Accounting Records and Audit Rights: Company shall keep at its main offices in theUn.ited States books ofaccount relating to the distribution oftlie Picture (which books ofscoount

are hereinafter referred to as "reCords"), whiCh shall be kept on the same basis, in the samemanner, at the same place and for the same periods as such records are customarily kept by

Company. PartiCipant may, at its own expense,but not more than once -annually, audit the

a p p l i c a b ) ~ records at the aforesaid. office in order to verify earnings statements .rendered. hereunder. Any such audit·sliall be conducted only by a reputable public accountant (subject to

Company's reasonable approval) during reasonable :blisiness hours and shall not continue formore than thirty (30) consecutive days. Any such audit shall be. conducted in such manner as not

to interfere with Company's nonnal business activiqes. In this regard, Company shall have the

right to fix the date for the coinmencement of any such audit. so as to coordinate $aid date with

the commencement dates ofany other audits with respect .to the Picture to be Conducted by tbii'd

party participants. Participant shall not have the right ·to examine or inquire into. aIiy matters or

items which are embraced by or contained· in any such statement after the expiration of twelve

(12) months from and after the date ofmailing 'of such statement, and such statement shall be.fmal and conclusive upon Participant upon the expiration of such twelve (12) month periodnotwithstanding that the matters or items embraced' by or c o n t a i n ~ therein may' later be

contained or referred to iq'a cumulative statement pertaining to more than ~ m e accounting period.

Such cumulative statement shall not be subject to audit by Participant to the extent the material

contained therein w ~ ' first reflected on' a statement submitted mQre than twelve '(12) moilths

prior to the date of mailing of such cumulative statement. Participant shall be forever barred

from maintaining or instituting 8l1Y action or proceeding based upon, or in anywise relating to, .

any . ransactions had by Company, or itsli eensees, in connection with the PictUre which' are

'embraced by or reflected on any statement rendered hereunder, or the accuracy of any item

S:\LORDR\ExhibitGR- Minunax.0821.98 -5-



..\"

appearing ~ e r e i n , tiIiIess ~ t t e n objection thereto shall have. been delivered 'by Participant· toCoIripany within twelve (12) months after the date of mmling of the statement on which suchtransaction or item was first reflected and unless such action' or proceeding is coJ;l1I1lenced withirisix (6) months' after cielivery ofsuch writteli b j ~ o n . Participmtis right to exmiune Company'srecordS is limited to the Picture, 'and under no circumstances sballParticipant .have the right toe ~ n e records relating to Company's buSines.s 'generally or any other motion picture for ·the

purpose of compariSon or otherwise; provided, however, that in the event that Company includesin, or deducts 'ti"pm, the gross receipts any s ~ expended or received in cOnnection with anysums' expended or received in cOnnection with any of the transaCtions· referred to jn. the' first

sentence of Paragraph 4 of this Exhibit, Participant.shall have the right to eXamine COmpany'srecords with respect to the other motion pictlire{s) which are part of he group ofmotion pictureswhich are the subject of such transaction(s), but only insofar as such records relate to such.'particular trapsaction ·or tran,sactions.

8; Holding of funds: Company shall not be considered a trustee,. pledgeholder, fiduciary oraJ,gent 'of Participant by reason of anything done Qr any. money Collected by it, and shall' not beobligated to' segregate receipts of the Picture from its other funds. .

9. Ownership: Participant shall not:have any lien or other rights in or to the gross receiptsof the Picture, it being understood that the references herein thereto are intended' solely for thepurpose of detennining .the time, manner and amount of payments, i f any, du:eto Participanthereunder. .

10. Sales Policies: Company shall have complete a u t h o r i ~ to liciense, m,arket and exploit thePicture and all rights therein,·.or to. refrain from So doing, in accc)rdance with such sales m e t h o d s ~policies and terms as it ~ y , ~ its reasonable business jUdgnlent, eXercised in good faith,determine. Company s ~ l n ~ t be required to itself exercise any of its rights but may license;

· sub-licerise or aSSign any or all thereot: .as it may e l e c ~ to any licensee, sub-licensee,suMistributor or assignee (including, without ·Iimitatiori, any' of the cOrpOrations Comprising

· Company or my of Company's or their subsidiaries or aftil.iates). (:ompany ~ a y modify,. amend •.Cartcel, adjust ~ d alter .all agreements; exhibition licenses, rental terms, sales methods and.policies relating to the distribution,exhibitioD and exploitation of the Picture and any other of itsrights as it may deem advisable; adjust, increaSe or ~ r e a s e . t h e amount of any.allowance to anyexhibi.tor or licensee for advertising and exploitation whether 'or Dot included in ariy theretoforeeXisting agreement or license; license' the distribution and exhibition of the Picture (or other

· rights) upon percentage ~ n t a l or flat. rentals, or both, and joiritiy with other motion pictures orseparately, as it. sluill deem desirable; Company sh8li' have the 'right, in its sole discretion, tolicense the Picture for television or other tYPes of exhibition at any time, and cause or permitany such teleVision or other exhibition to be on' a sponsorship, sustained or other basis. .Company may. but shall not be required to, r e l ~ ; reissue o r " r e - r e l ~ the Picture in any .partof the Territory as ~ y be·consistent with t h ~ business policies of Company, and Company in its

Sole discr;etiori may detenniile for any reason, an4 in respect of any part of he Territory, when;where and whether the picture should be'released, re-released·or reissued and the duration of any

~ c h releaSe, ~ - r e l e a s e or reissue: I f he number of motion pictures which may be i s t r i b ~ t e d by .Company in any country or territory shall be lumted by government, industry ot self-limitation,the selection ofmotion pictures to be distributed by Company therein shall b by Company in its

-6-



r · ·

(1. )

,r .

\

sole discretion. Participant shall be bound 'by the tenns, provisions ~ d conditions of anyagreements heretofore or ,hereafter made by Company (or its subsidiaries) pursuant to any·resolution of the Motion Picture Export Association (or ~ i m i 1 a r organiz9:tion) or made byCOmpany alone with any government or goverpmentaI agency made' by Company alone With any

g o v ~ i n m e n t or governmental agency relating to any partIcular country or·territory._ Nothingcontained in this Paragraph 10 shall be deemed to, nor shall it, limit or restrict Company's rightsunder Paragraph 12 hereof. . ,

11. Licenses to Controlled,Facilities; No Warranties: I f Company licenses the exhibition of

ihe Picture to any theatre or television station'or other facility owned ,or controlled by Companyor in which Company has an jnterest, directly or indirectly, Company shall so upon terms

consistent i ~ those upon which Company licenses the exhibition of the PictUre to facilities'inwhich it does not ha,ve an interest. ComPany has not made any express or impliedrepresentation, warranty, guarantee or agreement (i) as to the mttount of gross receipts whichwill be derived from the distribution of the Picture, or (il) that there will be any sUinS payable toParticipant hereunder, or (iii) that the Picture will be favorably received by exhibitors or by thepublic, or wil1 be distributed or that any suchdistributiol l will be continuous, or (iv) that it now

· has or Will have or control any theatres or, facilities in the United States or elsewhere, or (v) that

. . any licensee Will make payment of any sums payable pUrsuant to any agreement between suchlicensee and Company, Company's obligation hereunder being limited to accounting only forsuch sums, as may be actually received by CompaIiy from such licensee. In no event shallParticipant malce ,any claim that Company has failed to realize receipts or revenues which shouldor could have been realized in conneCtion with the Picture or any of Company's rights therein.

12. Sale of Picture: Company shall 'have the right, at any time, to sell, transfer, ~ s i g n orhypothecate all of its right, title 'and interest, in and to the Picture and the negative and copyrightthereof; provided. that' any such sale, transfer, assignment or hypothecation shall be ~ u b j e c t t oParticipant's rights hereunder. Upon the p u r c ~ e r , transferee or assignee,asswning performanceof Company's obligations bereunder in place and stead of Company, Company shall, provided

· that such purchaser, transferee or assigriee is at the time of its assuming performance a

financially responsible party, be released ' ~ d disCharged of and from any further liabilitY orobligation hereunder and none of the monies or other consideration received by, or paid orpayable to, Company sluiU constitute gross receipts hereunder, and P8rticipant shan have norights iIi respect ofany thereof. .

13. Assignment§. Etc.; Participant shall not have the right, prior to the completion anddelivery' of the Picture, to sell, assign, transfer or hypothecate (&II hereinafter referred to as"assign") all or any part of Participant's right to receive the monies payable to Participanthereunder. Thereafter, Participant may assign Participanfs said pght, provided, however, that (i)

C o Q l p ~ y shall not be required to accept or honor any assigruitent or assignments which }Vould

result in requiring Company 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 Participant arid

· to the parties entitled to share therein; and (ii) in no event shall any party other than P ~ c i p a n thave the right to audit Company's recoids by reason of such assignment Any such assignmentshall at all times be. subj ect to all pertinent laws and governmental. regulations'and to all of the

r i g h ~ of Company hereunder. In the event that Participant (or any'transferee) shall ,propose to

S:\LORDR\ExhibitGR-MirBn\IJ(.08.21.98 -7-



.. \

)

\)

./

~ . s i g n all or part oftliemonies payable to Participant (or any t r ~ f e t e e ) h'ereunder, other , ban·byway of bona fide gift, bequest or devise, dissolution of?articipant (if a corporation) or corporatemerger or acquisition'ofaU of Participant's assets ( i f Participant has s u b s t a n t i ~ ' a s ~ t s bther thanthe Picture), Company shall have the ·right of first refusal to acquire the, same" which rightCompany may eX,ercise within ten (to) days after reCeipt of written ,notice from Participant (orany transferee) 'specifYing ~ t e i m s and conditions upon which Participant (or any transferee)

p r o p o s e ~to make such assignment. Should Company fail to exercise said right of first

r ~ f u s a lasaforesaid, then participant (or any transferee) shall Dot assign monies or any part thereOf to, any

third party upon tenns and conditions more'favorable to such'third'partythan those set forth·insaid written notice without again giving Company the opportunity to exercise said right of first

'refusal in accordance with the foregoing procedure.,

•••••

S:\LORDR\ExhibitGR·Mirammc.08.2I.98 -8-



EXJlIBIT "GR-l"

VIDEO DEVICES

. "

Provided that Company is vested with the right to manufacture and distribute t h ~ Picture onvideo c::assettes, video tapes, video discs and similar Compact audio-visual devices ("Video

Devices") .intended to be sold or leased to the public as a 4evice intended primarily for "homeuse" (as such term is commonly understood.in the motion picture industry), and that Participantor anythitd party affiliated with or subsidiary to Participant or of which Participant has

b e n ~ f i c i a l o r constructive control shall not be entitled; separate .and apart or in4ependently fromthis Exhibit, to any portion of the royalties or revenues derived from .any . Video Devicemanufacturing ,and distribution rights in the Picture, the gross receipts of he Picture z;ba11 includea royalty on "Video Gross Receipts" (as defined below) in accordance with . he appl cableperceJ.1tages set forth below.

. 1; With respect Video Devices manufactured and sold in the United states, the grossreceipts of the Picture shall include:

(a) Twenty percent (20%) of Video Gross Receipts from the exploitation ofthe Picture on videocassettes with a suggested retail price ofmore than $29.95;

, (b), Ten p e r c e ~ t (looA,) of Video Gross Receipts from the exploitation of,thePicture on .videocassettes with a suggested retail price o f $ 2 ~ . 9 5 or less;

(c) The royalty late on any laserdisc, or any Video Devices other thenvi<ieocassettes (new technologies included), will be three-fourths (3/4) of the otherwiseapplicable royalty rate;

" .(d) No royalty shall be Included in the gross receipts of the Picture for VideoDevices where ,the Video Gross Receipts derived exceed Company's manufacturing costs by

$1.00 or less (i.e., remainders); .

(f) With respect to Video Devices distributed for ultiJnate distribution by mailorder, "clq,b" sales or similar plans, through k¢y-outlet marketing, subdistributors, or as part of apremium promotion whereby items are distributed as an inducement to the p ~ c h a s e of suchVideo Devices, the royalty rate Will be fifty perCent (50%) of he otherwise appliCable rate,

(g) The royalty rate on any Video Device sold fOr distribution through militaryexchange .channels will be one-half (112) of he other applicable royalty rate,

(11) With respect to Video Devices not consisting entirdy of the entire Picture as

released theatrically to the general public, the amount to be included in the gross receipts of thePicture shall be prorated by multiplying such amount by a fraction the numeratoiofwhich is therunning time of all scenes or "highlights" from the Picture inclUded on such Video Device, andthe denominator of which is the total running time of such Video Device; provided, however,that no amount shall be included in the gross receipts of. the picture in respect of Video Devices.which include scenes or "highlights" from the Picture for promotional or advertising purposes.

S:\LORI>R'iEl hibitGR- Miramsx.08.2I:98 -9-



. ,

2. As to VideO Devices sold outside the United States, the amount included in the

gross receipts of the ricture shall be one-half (112) of the. amount r ~ f e r r e d t o in Paragraph 1above. The aforesaid amount shalll?e computed in the national currency of the country to whichthe wholesale priCe So elected applies and shall be paid at same rate of x ~ h a n g e 8li the rate at

which Company is paid; provided, however, ·that such amounts on such Video Devices shall not

.be included in the gross receiptS of the Piciure until payment therefor has actually been reCeivedby Company in the United States. .

3. "Video Gross Receipts" means lOOOAl of all monies 'actually received by or

credited to the account of Company from, the' exploitation of the Picture on Video Devices,subject to the following exclUsions and deductions:

(a) Exclusions from Video Gross Receipts: Video Gross Receipts shall bedetennined after all r e f u n d s ~ credits, discounts, rebates, allowances and adjustments granted tosubdistributors, wboles81ers, retailers and other purchasers and licensees. In addition, the

following shall be exclude4 from Video Gross Receipts:

(i) . Any monies derived by any local subdistributor, wholesaleror retailer from the sale ofVideo Devjces, or by any l o ~ a l sales or.PrQmotional·orgaIrlzation forservices rendered on their behalf: w b e ~ r or not such subdistributor,. wholesaler, ·retailer or sales.or promotional organization is owned operated or a n a g ~ or controlled ·by Company; providedhowever, in the event i d ~ Devices are sold or leased to any such owned, operated or managed .subdistributor, w h o l ~ s a l e r or retailer, Company a g r e e ~ that the terms of such sale or lease shallbe substantially the same as the tenns of sale or lease of Video Devices to Unrelated entities, inaccordance with industry standards. .

(ii) Any sums Que, but not paid, to Company.

(iii) .The salvage value of any videotape, cassettes or other materialspurchased by or manufactured by Company and'not sold as Video Devices. '

(b) Deductions from Video Gross Receipts: Video Gross ·Receipts shall be

reduced by:

(i) 'Any sums paid to or retained by any Servicing entity.

(ii) Any o u ~ i d e costs actually incurred in connection With the collection

of monies included in Video Gross Receipts, including outside attorneys', and outside a u d i t o r s ~fees and costs, and any and all loss, .damage or liability actually suffered or actually incurred by

Company in the collection of such monies, whether by litigation or otherwise, ~ the Q ~ p u t a t i o nof Video Gross Receipts hereunder. .

(iii) Any arid all sums paid or accrued on account of sales, Use, value

added, receipts, Income, excise, remittance' and 'other taxes (however denominated) to any

governmental authorities, assessed upon the Video Devices, or upon the use or distribution Of

)

S:\l.DRDR\ExhibitGR. Milan\lX.08.21.98



(\I

Video Devices or upon the revenues derived therefrom or any part thereof or upon the remittanlleofsuch revenues or any part thereof. and any and all sums pBid or c c r u e d on account offreight, .

s h i p p i n g ~ handling or insurance in connection with the sale of Video· Devices , duties. customsand imports, costs of acquiring permits, quotas and any similar a1ithority to secure the. entry.Jicensmg, .sale exhibition, performance, or other use of Video Devices in any .eountiy or part·

. thereof regardless of whether such payments or accrUals are assessed against Video Devices orthe proceeds thereof or against a group of motion pictures or prograins in which the V i d ~Devices or proceedsthereofniay be i n c l u d e d ~ In no event shall the d e d ~ c t i b l e ~ o u n t any suchtax (however denominated) imposed upon Company be decreased (nor the Gross Receiptsincreased) ·1>ecause of the manner in which such taxes are elected to be1reated by Company infiling net income, corporate franchise, e?,cess profits or similar tax ·retumS. Notwithstanding the. oregoing, Company's own income taxes and· franchise taxes based on Company's net incOme.and any income taxes paid to any country or territory· by Company based on the net earnings· of

Company in such country or territory (to the·extent computed and assessed solely-by the reasonofvolUntary retention in such country or territory by Colllpany ofany portion of Gross Receipts)shall not be deductible.in c o m p ~ g Gross Receipts hereUnder. Notwithstanding to the con1rarycontained herein, P a r t i ~ i p a n t shall have no right to inspect or. copy any income or franchise taxreturn of Company or any of its subsidiaries or affiliates or to require Company or any of its

.subsidiaries or affiliates to produce any such tax return or any lnformation contained herein.

(iv) Company shall have the righuo deduct and to reserve for returns andcredits of any nature, including, without. limitation, those ·on account of one hundred percent(100%) or a lesser return privilege, defective m e r c h a n d i ~ , exchange privilege. promotionalcredits, errors inbiUing, unusual overstock, bad debts and .errors in shipping; and .

(v) Any additional costs (which are not ~ c l u d e d in the costs of

.. . production of the Picture) Incurred in connection with the reproduction of the Picture for thepurpose of enabling the issuance ofVideo Devices therefrom.

4. ·Royalties shall not be payable on Video Devices furnished without charge for

promotional purposes or as a sales inducement or otherwise to distributors, subdistributors,dealers, reviewers and others. All royalty-free Video Devices distributed for promo1:ionalpurposes shall be stamped or marked·with a legend to the effect thatsuch Video Devices are forpromotional purposes only a,nd are "not for·s8Ie." .

•••••

·S:\LoItQR\ExhibitGR-Miramax.08.21.98 -11-



(- .. , .

EXHIBIT "(;R-l" . "

SOUNDTRACK ROYALTIES

Provided that Company is'vestedwith record m a n u f a ~ t u r i n g rights in and to the music cOntainedin the soundtrack of the Picture, and that Participant or any' third' partyafliliated with orsubsidiary to Participant or of which Participant has beneficial or constructive contro " shall notbe entitled, separate and apart or independently from this Exhibit, to any portion of the royalties,or revenues derived from any record manufacturing rights in any such ·music:·

A. If Company (as opposed to a third·.party assignee, designee.or licensee) shall usethe soundtrack of the Picture for'· the purpose of manufactuiing, distributing, selling andadvertising commercial phonograph records (hereinafter "soundtrack .recOrds") of .the music,musical compositions, sound effectS andlordialogue used in the soundtrack of he Picture, thegross receipts of he Picture shall include a royalty detemrinedas follows:

1. An ain.ount equivalent to seven and one-half percent (7-112%) of thesuggested list price (excluding Federal Excise Taxes, or the equivalent thereof, local taxes, if

any, ands ~ d a r d

container charges) of ninety percent (90%) of soundtrack recordsmanufactured and sold in the United States. As to soundtrack records not consisting entirely of

music, musical compositions, sound effects andlor dialogue from the soundtrack of he Picture,the, royalties to be included in the gross 'receipts of the Picture shall·be prorated by multiplyingsuch royalty by a fraction, the numerator of which is the number of "bands" of such record of

, mUSic, musical composition, sound.effeCtS· and/or dialogue from the soundtrack of the Picture,and the denoniinator of which is the total number of "bands" of such record. A"band" from thesound track of the Picture shall in,clude music and ~ u s i c a l compositions taken from the actualsound track of the Picture as well ~ rerecordings of portions of, or an of, such music or musical

~ m p o s i t i o n s by the:. ~ e artist originally perfonning on the actual sowidtrack.

2, As to soundtrack records, sold outside the United States, the. royalty

included in the gross receipts of the Picture shall be one-half (112) of the royalty referred to inParagraph 1 above and shall, be CalCullited, at Company's election, upon the suggested: retail. listprice of such soundtrack records. in the country ()f manufacture, the United States, England, or

" the country of sale. The amounts of such royalties shall be. computed in the national currency of

the country to which the list price so elected applies and shall be paid at the same rate pf

exchange as the rate at which New York is paid; provided, however, that .royalties on suchreCords shall not be included in the gross r e c e ~ p t s of the Picture until payment. therefor .hasactiJally beenreceived by New York in the UnitedStates.

3. In ' ~ s p e c t of phonograph. records sold through any so-called tlree:ordclubs" or similar sales plans and devices, the royalty shall be one-half(ll2) .of that referred to in

,'Paragraphs 1 and 2 of this Exhibit "GR-2", depending upon where' such phonograph records aresold; provided, however, ~ t 'there shall ~ no royalty with respect to phonograph records givento members' of such record clubs as "bonus" .or "free" phonograph records as a result of joiningthe club andlorpurchasing a. required number of phonograph records. No royalty shall becomputeq with respect to soundtrack records given away or furnished on a "no charge" basis todisc jockeys, radio stations, dealers or others.

s:\LORDR\ExhibilQR- Mirimax.0821.98 -12-



. ,

(--:-.. 4. In c o m p ~ t i n g the nuinber of soundtrack records manufactured and sold .

hereunder, Company shall have the right to deduct the returns and credits of any nature,

including, without limitation, those on acc()lint of hundred percent (1 OOOA,) or a lesser returnprivilege, defective merchandise, exchange privilege, promotionai CredIts, errors in billing,unusual overstock and errors in shipping. '

5. From the royalties computed' as set forth above, there shall first bededucted the aggregate of the following CostS and exPeJises, and only the balance of royaltiesremaining after such ded.uctions shall h 8 v ~ been macJe shall be included in ·the gross receipts of

·the Picture:

(a) Any amounts and royalties·which shall be payable to the person(s)

whose performanCe(s) is/are contained. on the soundtrack ~ r d in accord8nce with theagreement(s) which may have been entered into with.any suchperson(s);

(b) All costs, ·expenses and fees with respect to. the' soundtrack recordincurrtd by C o m p ~ y , or any Company comprising Company or its or their subsidiaries,

divisions or affiliates, linderagteement(s) with the American Federation of Television' and RadioArtists of the United. states and Canada or any other guild or union wherever located. and

whether DOW or' hereafter in existence. Said costs shall include, but not-be limited to, reusage or

re-recording fees. and where there is no appropriate union scale reuse fee, actual recording Costs;

8l1d

(c) Any. additional costs (which are not included in the cost of

production of the Picture) incurred in connection with th.e recording or rerecording of .thes o ~ d t r a c k for the purpose of enabling the issuance of rerecordings therefrom. .

. B. If a third-party .assignee, 'designee or licensee (as opposed to Company)

shall use the soundtrack of the Picture for the purpose of manufacturi,ng;d i s t r i b u t i n g ~

selling andadvertising Soundtrack records, Company shall i ~ c l u d e in the gross reeeipts of he Picture (in lieuof the royalty provided'in Section A) a oyalty equivaient to that earned from the ·actual sale of

s.uch soundtrack records and actually received by Company from any such assignee, designee or

licensee with respect thereto less an a d p U n i s t r a t i o ~ fee in an lQIlount equal to' fifteen percent(15%) ofone hUndred percent (100%) ofall ~ c h sums, and thereafter, less any costs, amounts or

. oyalties which may be payable.in respect ofany of he itemS set forth in Section A, Paragraph 5 ..of his 'Exhibit "GIi-2t1.

• •••••

S·:\LORDR\EJchibitGR.MU3max.08.21 :98 ~ 1 3 -



}

. .

EXHIBIT ttGR-3"

MUSIC PUBLiSHING RIGHTS

Provided that Company is vested with music pUblishing rights in and to the music contained inthe soundtrack of the Picture and the full· publisher's share thereof, and that Participant or any

third party affiliated with" or subsidiary to Participant or of which Participant has beneficial or. cOnstructive control shall not be entitled, separate and apart or independently from .this Exhibit;to any portion of the royalties or reyenues derived from any music publishing g h t s i n any .such

music, Company shall require music publi$er to which it may grant publishing rights (whichmay be aD. affiliated or related" company) to pay to Company, with ~ e s p e c f to music and lyrics

.written specifically for and synchronized in the Picture as released, and the gross receipts of the

PictUre shall include, the ~ l I o w i n g royalty:

A;. An amount equal to twenty percent (20%) of .the· "Publisher's Share" of

mechanical reproduction and performing fees i'eceived by· the publisher in the United States;

B. Two cents ($.02) per copy in respect of printed piano or piano.,vocalcopiessoldand paid for alid not returned in the United States and the Dominion of Canada;

C. Two cents ($.02) per copy in resPect of orchestration, choral editionS and otherprinted arrangementS which lire soJd 8 D d p ~ d · for and not returned in the United States and the

Dominion ofCanada; and

D. An amount equal to twenty p e r ~ t (20%) of the "publisher'S Share" of any or allreceipts of the publisher in the United States frQm any other source not herein specificallyprovided for. . "

The "Publisher's Share" shail be deemed to mean:

1. With respect to mechanical reproduction f e e s ~ ·the amount actuallycollected by the publisher less collection fees and·any and aU r o y ~ t i e s paid to authors,composers or any other third parties; and .

2. With respeCt to performing fees, the amounts actually collected by thepublisher from any perfonning rights sOciety (it being understood that authors"and"composers ate

generally paid separately and directly by such perfotming rights societies) less any portion of

sucl1 royalties payable to others and any reasonable cost and expense inadlninistering thecollection of such fees. .

•••••

S:\l..ORDR\ExhibitGR· Minanax.08.21.98 -14-



\J

EXHIBIT " G ~ - 4 "MERCHANDISINGINOVELiZATlON PUBLICATION ROYALTIES

..

Provided that Company is vested with merchandising rightS in and to the Picture, and thatParticipant or any third party affiliated. with ·or subsidiary to Participant or of which Participant

has ben¢ficialor constructive control shall not be entitled, separate or apart or independentlyfrom this Exhibit, to' any portion of the royalties or revenues denved from any suchmerchandising rights, there shall be included in the gross receipts of he Picture: .

A. .If Company (as opposed to a third party assignee, designee or licensee) shallexercise merchandising rights in the Picture, an amount equivalent to fifty percent (50%) of allliCense fees (in excess of all royalties and participations) earned from the actual $ale of

merChandising items and actually received by Company directly as a result of the exercise byCompany itselfofsuch e r c h ~ d i s i n g rights.

B. If a third-party assignee, designee or licensee (as opposed to Company) shall.exercise such merchandising rights, Company shaU include in' the gross receipts of the Picture (in

lieu of the amount provided in Section A), at its election, 'an amount equivalent to either:

1. Ei@ty-five percent (85%) of the net sums (in excess of all royalties andparticipations) earned and' actually received from such third':'party assignee, designee or licensee;"

or

2. Fifty percent (50%) of the net sums (in excess of all royl;llties. andparticipations) derived by stich ~ d . ; . p a r t y assignee, designee or licensee from the exercise of

such merchandising rights. .

Provided-that Company is vested with n o v e l i z a ~ o n pUbliCation rights with respect to the Picture,- and that P ~ c i p a n t 'or any third party affiliated with or. subsidiary to Participant or of whjch

Participant has "Qeneficial or constructive "control shall not be entitled. separate or apart or

i ~ d e p e n d e i l t l y from this Exhibit, to any portion of royalties or t e v e n u e ~ derived from sU'ch

novelization publication rights, there shall be included In the gross receipts of the Picture, at

Company's election, an ~ o u n t equivalent to either:

. 1. The net sums earned and actu8Ily received by Company from independentthird-party publishers from the publication of novelizationS of the screenplay of the Picture (inexcess olal1 royalties' and participations to the writers of such novelizations); or

2. Five percent (5%) of the net sums .derived by the publisher of such

novelizations from the publication thereof (in excess of all royalties and participations to the

writers of such novelizations). "

•••••

S:\LORDR\ExhibitGR- Miramax.0821.98 -15-



_•.,

y

" ' \'.,.I

. RIDER 1

DATED AS OF ~ / 2 1 (;8 TO EXHIBIT "GR"

I. As herein in this rider ("Rider 1 the "Exhibit" means Exhibit "GR" ( i n c ~ u d i n g"GR-I ", "GR-2", "GR-3" ~ d " G ~ - 4 " ) , attac4ed a s ~ x h i b i t "C" to the Quitclaim'Agreement (the"Principal Agreement"), dated as of . ~ /2-11 If g , between New Line Cinema Corp.and .Miramax Film Corp; ("Participant").

2. In the event of any inconsistency between any of the provisions of this Rider 1,the EXhibit "GR", and the frfucipal Agreement, the Principal Agreement shall prevail over Rider1 and the Exhibit "GR", and Rider 1 shall prevail over the Exhibit.

3. For the pwpose ofdefining "Gross Receipts," "Company" shall include New Line.Cinema Corp. and alI of its subsidiaries engagCd in the dismbutionQfmotion pictures.

4. Referencing Paragraph 2 of the EXhibit, non-returnable advance payments andguarantees $hall be include4 in Gross Receipts when received by Company, but only if such nonreturnable advance payinents and guarantees are a l l ~ b l e solely to the Picture and may not be

cross-collateralized by the payor thereof with receipts or earnings from any other motion picture.

5. Referencing Paragraph 2' of the Exhibit, if any coIDpany which is affiliated .withCompany (e.g. TNT) is an end user, the smn to be included in Gross Receipts with respectthereto sbali be given the value that such 'user would pay a non-affiliated liCenSor.

6... Company shall furnish Participant with. accounting statements on a quarterly basis. for three (3) years after the initial theatrical release of the Picture and:. thereafiersemi-annually,

'. setting forth, in such reason8ble detail as is customary in ·the motion picture industry,Participant's share of ~ j u s t e d gross reCeipts andlor net profits, if any. Accounting statementsshall be rendered and payntent made, if any, within sixty (60) days follOwing the end of the.applicable-period.

7. Participant shall have the right.to audit Company's' books andrecards pertainingto'the Picture 'where, such books and records are ~ y maintained. 'Participant may conductsuch audits not mor:e than once every twelve (12) months. Participant shall, be deemed to haveconSented an accounting statement rendered to Participant and said acCounting statement shallbe conclusive and binding upon Participant. and not subject to any' objection by Participant forany reason unless specific written b j ~ t i o r i s t o said accounting statement have been delivered,to'

Company within thirty-six (36) months from the date Participant first received said accountingstatement. P ~ c i p a n t may not maintain any i:tction, suit or proceeding against Company relatingto an.accounting s t a t e m e ~ t Urtless c o m m ~ n c e d in a court of competent u r i s . d i ~ t i o n within thirtysix (36) months from the date a r t i c i p ~ t first ~ e i v e d said accounting statement.

-1-



8. Referencing Paragraph 3B, costs paid in respect of trade dues and assessments- . shall not exceed one percent (1%) of Gross Receipts.

9. Referencing Paragraph 3C, costS paid in respect of checking and collection shall

not exceed one percent (1%) of Gross Receipts for the firs.t Ten Million Dollars ($10,000,000) inGross Receipts and thereafter shall not exceed one-half of one. percent (0.5%) o fGross Receipts.

10. Rebates which are received by Company in a segregated manner solely withrespect to the' Picture and not· with respect to the Picture combined with other pictures or as towhich Company receives third party statements showing the amount of he rebate att:ti.butable tothe Picture shall be credited against distribution expenses.

11. The following language is inserted before the. words, "then· in any and all suchsituations" on line 8 of Paragraph 4 of the Exhibit: Itoi' an allocation is specified but suchallocation Was controlled by Company." _

12. Referencing Paragraph 4 of the Exhibit, reServes shall in any event be liquidatedwithin eighteen (18) months.

13. Video: Referencing Exhibit R ~ l :(a) Applicability ofGR-l. Paragr¥h 1 of Exhibit DNP-l, which by its terms

applies· to Video Devices sold in ~ e United S.tates only shall· also' apply in respect of Video

Devices sold in Canada and all foreign territories wherein. Company self-disiributes VideoDevices or distributes Video· e v i ~ e s through a "rent a system", joint venture or similararrangement (collectively, a "Rent A System Arrangement"). Video Gross Receipts shall becalculated at the wholesale price level (i.e., "at source")

. (b)Subdistribution. In' those territories wherein Company distributes Video. Devices through a subdistributor (as opposed to seif-distrihution' o r a Remt A System

Arrangement), Exhibit GR-l ·shall. not apply and revenue derived shall be included in Gross

Receipts on a "gross" not a "royalty" basis (Le., Paragraph 2A of the' Exhibit, the Paragraphotherwi$e applicable in respect of subdistribution arrangements, shall apply).

(c) Costs. When video revenue is included in Gross Receipts on a royalty

basis, only those costs specifica1lyitemizedin Paragraph 3 of Exhibit GR-lmay be excluded or

deducted from home. video revenue in calculating the'royaltr and no distribution expenses

incurred in .connection wjth such video exploitation, other than "residUals", may be deducted.

14. Reference is made to Exhibit "GR-2" of he Exhibit:

.(a) In line I o f Pai-agraph A.I, the wordS "seven and. 'one-half percent (7

112%) shall be replaced by "ten percent (10%)."

(b) In line 4 of Paragraph A.I, the words "ninety percent (90%)" shall be

replaced by "one hundred percent (100%)."

S:\LORDIlIAplusGR-Mimmaxl.Doc;OII.lJ.9i -2-



"\

/

,i

-IS. Reference is made. to Exhibit "GR-3" of he Exhibit:

(a) In Paragraphs A and D, the words "twenty percent (20%)" shall be deletedand replaced by. the words "fifty percent (50%)". -

16. There shall be no double deductions. Costs which Company is pennitted todeduct under separate p r o v i s i o ~ of E x h i b i ~ GR shall be deducted only once pursuant towhichever provision Company may elect.

17. A statement of the "cost of production" shall be furnished to Participant withinthirty (30) days of the delivery to Participant of the first participation t e m e n t , which statementshall be subject to r ~ j u s t m e n t by Company from time to time to correctly reflect the cost of

production'ofthe Picture.

NEW LINE CINEMA CORP. MiRAMAX FILM C

BY: __ ~ ~ L - ~ ~ ~ __ ~Its:,___ =--_____ - - - : r I ' -_

By:I t s : ~ ~ ~ - ~ r - ~ - - - - - - - -

-3-



( ~ - .

I'

. RIDER 2 :

DATED AS OF -g121 {f8 TOEXHIBIT"GR",

"GR-l", "GR-2", "GR-3". AND "GR-4"

1. As used in this rider ("Rider 2'') the "Exhibit". ~ ExhliJit "OR"; "OR 1"; "OR-2"; " O R - 3 ' ~ and ' O R - 4 " Which are collectively referred to as Exhibit "C" to the

Q ~ t d 8 i m Agreement between i r a m ~ Film Corp. ( " ~ i ~ , , ) and New LineCmema Corp., dated as of l5 f ( r18.. . the "Pnnclpal Agreement").

Paragraph references are to the paragiaphs set forth in the Exhibit, and all defined

tenns Used herein are as defined in s3id Exhibit, Unless otherwise stated to thecontrary. Inconsistencies between· the provisions of he Principal Agreement, the

Exhibit and Riders 1 and 2 shall be treated·8$ follows: Rider 1 h a l l · p r ~ v a 1 1 over theExhibit .Ridet2 shall prevail over Rider 1·and the Exhibit. The Principal

Agreement shall prevail over Riders 1 and 2 and the Exhibit.

2. Introduction. For the. purpose ·of defining "Gross Receipts," "Company" shall mean

New Line Cinema Corp., its subsidiaries, and their subsidiaries.

3. Paragraph LA. Paragraphl.A shall read: "'Participant' : Miramax Film Corp."

4. Paragraph1.B. The ~ f u 1 i t i o n of"Picture" shall mean the applicable Original

C·;. Picture, as defined in the Principal Agreement The words "Underlying Agreement"

'\ shall be deleted and replaced with· the words P r i n c ~ p a l Agreement" in Paragraphs1.B. and 1.C.

r ··. \

5. Paragraph 2.A. The words "or credited to" shall be inserted after the word "by" inthe first line. .

6. Paragraph 2.A.(i). In line 4, the words " l i ~ n s e s for theatrical exhibition, non

theatrical exhibition," shall be inserted after the words ''without llmitation" in line 4;

and the words "andpay, .subscription and/or Cable exhibition, as well as all forms

of'shall be inserted atkrthe words "free televi.sion"; and in line 5, the words "or

other device, o w ~ o w n or hereafter devised, designed to be used iIi conjuriction

with a reproduction apparatus which caUses subStantially the entfre Picture to be

visible on the screen of a standard consumer television receiver or comparable

devi.ce, now known or hereafter designed, and any ~ d all computer assisteddevices" shall be iriserted after the words "video discs." . .

7. Paragraph 2.A.(ii). Atthe end ofiine 3, the wOJ;'ds "provided, however, that

Company shall not use a subdistributor for the initial theatrical release of the Picturein the United States without first providing notice·to Miramax" shall be inserted .

Receipts from flat sal(:S (as set forth m aragraph 4 of he Exhibit) shall be included

·inGross Receipts. In the event that any foreign subdistributor of he Picture is a

related entity of Company, the fee of such foreign s u b d i s t r i b ~ t o r shall n()t exceed

S:\Lordring\Mirarn;ooider 4 - .08.21.98



8.

9.

the fee customarily charged by third party subdistributors in the applicable territory.If Company transfersjntemational sales agency,rights to a Time Warner entity, adistribUtion fee shall be deducted only i fsuch Time Warner entity is rendering bonafide sales agency services. The distribution fee'taken by such Time Warner entityshall be no greater than that Which would be taken by a third partym the samecircumstanCes after anns length negotiations.

Paragniph,2.A.(iii). After the word "Picture" in line 3, the words ''unfaircompetition, trademark infringement and/or piracy actions, or similar causes of

action" ~ h a l l be inserted. '

New Paragraph 2.E. Monies derived from the exploitation ofsubstantially the entirePicture in media not yet devised, provided such monies shall be included in GrossReceipts in the same manner as they' are then custOmarily inchided in the industry(e.g:, monies may be included on a royalty basis).

10. Paragraph 2. (unnumbered). In sll;bsection (i), the words "any sums from charitablepremieres of he Pioture actually contributed to charity" shall be'inserted in lieu of

the cuttent text. '

11. Paragraph 3.ACil and W). The words "real property taxes" shall be inserted· after thewords "income taxes" in subsections (i) and (ii).

12.paragnlph 3.B. Costs paid in respect f t r a d ~ and assessments shall not exceed OneHundred'Thousand Dollars ($100,000) in Connection with each theatrical motionPicture hereUnder: The words "(the foregoing allocable to the Picture in a fair'andreasonable mariner), and any and all other expenses directly related to the expensesset forth in this sub-paragraph 3.B. nlcuiTedby Company in connection with thelicensing of the Picture for exhibition or for other uses of he PictUre," shall beinserted after "legal fees" in line 4, and the existing text ~ h a l l be deleted.

13. Paragraph 3.e. No dedl,iction shall be made for the fees or salaries of Company'sregularly employed staff auomeysand accountants.

, "

14. Paragraph 3.0. The word ' ~ o f ' in line three is replaced with the word "or". Thefollowing sentence shall be added at the end of Paragraph 3.D: "Nothfug coJitainedin this subparagraph 3'.D. shall be conStrued as authorizing the deduction of anythird party participation in the ,gross receipts, adjusted gross receipts or net profits of

'the Picture in calculating 'adjusted gross receipts' hereunder."

15. Pamgraph 4: The following sentence shall be added at the end of Paragraph 4:

''Nothing contained in this paragraph shall be construed as permitting Company totake deductions from 'Gross Receipts' in order to reach 'adjust¢ gross receipts' ,other than such deductions as are pennitted pursuant to the other paragraphs of hisExhibit. Wherever reserves are taken under this Exhibit, such reServes sJ;uUI be

S:\Lonfring\Miramaxrider 4 •.0821.98 2



liquidated within' a reasonable time, but not later than eighteen (18) months afterbeing established." .

16. Paragraph 5. The second sentence of this 'Paragraph shall ~ deleted.

17. Paragraph 6. Company shall furnish Participant with accounting statements on a

quarterly basis for four (4) years after the initial theatrical release of the Picture and,thereafter semi-lPUlually setting forth, in such reasonable deWI. as is customary in. the motion picture industry, Participant's share ofGross ReCeipts, if any. ' .

Accounting statements shall be rendered' and payment made, i f any, within sixty(60) days following the end of the applicable period. If he Picture is reissuedandlor Gross ReCeipts exceed Five Hundred Thousand Dollars ($500,000) in anyquarter, quarterly statements shall be resumed; and if he Picture is released to prime .time U.S. network television andlor a U.S. payor cable netWork, statements shall beissued for quarterly accounting periods during which revenue from such source areincluded in Gross Receipts. The word "be" shall be inserted in lieu oftJIe word"by" in line 6. The words after "account" in line 13 to the word "hereunder" in line1-9 shall :be deleted.

18. Paragraph 7. The number "30" is changed to "45" in line 9.

19. Paragraph 10. If sales or licenses for the distribution'of he Picture are notn e g o t i a t ~ by Company 9n an arms-length basis, Company shall neverthCIess value.sucIi sale or liccllSeas though it were n e g o t i a ~ on an 8fI:llS-Iength basis forpurposes ofaccounting to Mitamax. The Picture will be treated on a nOn-.discriminatory basis with respect to other pictures with which the Picture is sold in apackage.

20. Paragraph 12. In line 3, the o l I o ~ g ' words shall be added after the word"thereof': "provided tlult unless such sale; transfer or assignment by Company is to

a so-calledinajor. or mini-major motion picture company or distributor or financiallyresponsible party or purchaser ofsubstantially all ofCompany's stocks or assets,which aSsumes in writing the. penormahce of ali ofCompany's obligations,Cotnpany shall remain secondarily liable to Participant for all obligatioilshereunder. "

21. Paragraph 13. The word "appiicable" shall be inserted prior to $eword "Picture"in line 2; and the words "With respect to such Picture" shall be inserted after theword "hereilnder" in line 4. .

22. EXHIBIT "GR-}" Video Devices.

(a) Introduction. Video Devices shall include all home video devices(including videocassettes, video discs, laser disc and all home videodevices now or e r ~ r devised).

S:\Lordring\Miramaxrider 4 - .08.21.98 3



(b)

(c)

(d)

(e)

,Paragi-aph l(a). "Twenty percent (20%Y' shall 'be changed to "Twentyfive percent 2 ~ % ) " .

Paragraph 100., "Ten percent (10%)" shall be changed to "Twelve andone-half percent 1 2 - ~ %)".

Paragraph3M(iii). In line 10, the word "of' shall be inserted after theword "ainount".

Paragraph 3(b){v). The following shall,be added to this sub-paragraph:' " fo r purposes of clarification, the deductions pennitted under this sub

paragraph 3(b)(v) are limited to mastering costs."

(f) 'Paragraph 2. In line 1, the words, "shall be one-halfof' shall be-deleted(Le., the royalty shall not be reduced for Video Devices because they 'aresold outside the United States).

(g) Paragraph 3(b)(i).- The deduction under this sub-pan;tgraph shall be no

more than seven percent (7%) of the monies derived by the servicingentity from Video Devices 'hereunder.

23. This Rider 2 and the subject matter hereof, is non-precedential with respect to futurenegotiations between the parties or their representatives (whether or riot related tothe Picture) d , except for,Peter Jackson and Ftan,Walsh, rieithet: party: hereto shalldisclose the temis of this Rider 2 or e fact of its existenCe to any motion pictureindustry talent except: (i) as required by law, governmental or,der or regulation; or(ii) to the parties' r ~ p r e s e n t a t i v e s o r e m p l o y e e s on a "need to know" ~ i s .

MIRAMAX FILM CORP. NEW LINE CINEMA CORP.

B y : ~ ~ ~ ____ ~ ~ ___Its: __ ~ ~ __ ~ + - _ ___

B y : ~ ~ ~ ~ ~ ~ ~ ~ __Its: - - ~ - - - - - - - - - - - - - ? ~ - -

, S:\Lordring\Miramaxridcr4 -,.08.21.98 4



r·· ·,\.. \

,

NEW·LIN.E CINEMA

Steve t<at"man. Esq.WeissmaMWoIff Bergman Cole.man &Silverman

August 27. 1Q98

Re: -The lord of the Rings" - Exhibit C ~ 1

Dear Steve:

BZ:lto.End.

Please confirm that the enclosed i8 .

) N W LiN C I N ~ ooRPoAA'noH_ SE\IENtl1 N U et./aVVORIC, HEW '0108

ta PtfON (212) 4 ~ r r . FAX (1.12) 1M·'811

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6-20-36 . 5 : 1 s r ~ 8 E V E ~ " Y HilLS C A " ~ 7 f t 6 7 ' 0 6 8 4 3 0 0 0 J e ' ) 2 1 2 : ' 3/11

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~ a r t or an Aqreell1ent C ~ h e ~ A ? r e e " ' . ~ t : . ' · ) betw.en H ~ LIN£TELrVlstON . INC • . ( " P r o d u c e r ~ J ) nd lRAHAX FtLM CORP. . .( " I ' ~ r ~ i c i r a n t " ) . clat:ed a .. o t -s. 2.11 • 1 9 ~ 8 • .in coftneetLon witht ~ e t e l evs ion p r o 9 r 5 ~ s ( i " ~ i Y l d u . ly or co l lec t ive ly as the

~ o n t e x t o t t h e A ~ e . .nent "a,/ I'«quict:. ) refer red t o 1.n theAqree. .ent ( t he "pr09ram t l

) .

1. Gen@[al computation. "ModIfied Adjusted GrossProceecls"·.eans "Gross Receipt&," a.· d.f1netiin paravraph I I ,ie55 the fo·llowi"'J# 4 . d u c : ~ . d in "the following seq..aence:

V: and

(a) . tBarter Fees," a5 def ined in p.raQraph I I I .

ell) ".oh:t: .ributlon Fees ," as def ined in paragraph IV.

eel " D 1 s ~ r i b u t i o l \ ExpenClIs.·1 8£ d n f i n ~ d in paratyraph

" "

(d) "Product.ion cost ." e ~ . / S Q t ined in paragraph VI,~ i t h i n t e r e s ~ on the u ~ r g e o u p e d port.inb tha re9f a t 12S\ of thep.rilfte i ;ate Ch.rged fromti l l le to t lmebl ' Producer '" pr "nc;ipallender or- gther financinq ent i ty a t the t ime ~ h . e in te res t i siJ\'pute4 by Producer; int.er:-e.·t sha l l be deduot·.d b-fore p r incipa 1.provided t ha t interest: she l l not be ~ h a ~ q e ~ on ovprhead andoverhead shal l not be chan,_d on int.ere:::.t .

11. Gross Receipts.

(a) In Cenerol . "Gross Receipts" means a l l CIl-.h

received · ( in U .S. Collari l in the UniLed Sea t• • ) by or credi ted. tothe account .o t ProdUcer from any eXhlbi tor , ·subdis t r ibuter . o ~other- l i cens• • ·for thCl r i9h t · to cause the . te lecas t or othere x h l ~ l t i o n ot ~ h e p r 0 9 r a ~ to an a u d i e ~ c ~ 1n any medium, Duch Ie.11forl1l$ of tele\fis ipn , h o ~ e \ ,1".0 and t h e a t r i c a l .()r

n o n ~ h e . t r i c a l d i r e c t project-ion; provided t.hat. , .H:h r e 6 p e ~ t totbe no",e video c1 i e t r b \ l ~ len or the Procjrar' , Produc:e.r sh a l linc lud• . in Gross .Rece lp te ." illrIount equal to t ~ . t & p e c i - f · i e dpursuant to paraqraph XII h ~ r ~ o t . M.o advance or secur i t y .depo&ltpaid to Producer shaU·conut i t \&teGross ~ e c e i p t s unleS&4nd untilsuch advance or . B c u r i ~ y deposit becomee n ~ n r e t u r n A b l ~ . Pcoclucer:oheaH alsO inc lude in the Gross R.ce1pta# w.ithout Dis t r ibu t ionFees. al\ alftount equal to ~ o t Of" a l l 91"06, . l iCef t s . f . es reeelvecsby Producer trmn "Merchandislnq," les5 r o y a l t i e ~ andp ..r t icipat"ioft$ payable to t h i rd p .rtiefi .. "Merchondisin9NIlc:ans

l:ieenliiing t he uee. of the tradelll&rli;5. t rade h3lries t &.erviee ",ark.ilnd copyr i9h ts in connect ion with thE' 1Ilanufacturft ,distr i ·but; lonand ~ e l e "ot ar t i . c l • • of 1 \ \ ~ r C h a n ~ U . 5 c involving char .ac t . r£ or otberelements" which ",oke ,-,elet"ence CQ c r ilre based .Upon the p r 0 ' l r a ~ ;but Ghall · no t i nc ludo phon09l"aph r - e c o r : ~ : i , t apes , disks," pr in tedpublicatioJ\s l i t e r a ry Material. music or- lyr.l.cs..

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(b) Ad1uetlllant:c in Crots l leceiRte . Groas. R ~ c . i p t G Are. u ~ j e c t t o i ldjust . n ~ s for r efunds , rebates , . c red i t s ,settleW\etlts. and discount,.. It any a ... ~ n t t l lat i . owed byPt'oducer o r any other dl.s tr lbutor t.o a l i ¢ e h se a connectiotlw i t h the exh ib i t ion of . the Prowram or t h e -explo i t . ion otsUbsi.d.iarY r i g h t s , such . · coQpt t ra t ive adv( l 't16.l.ng·allowanee,$ha l l ' b e .et OLf by the l icehlJee froll the amount owed Ft)r tbD' r igh t t o ealllif SU.lch eXhibition o r t.o e x p l o i t 5ubsl,dlary r1Qhts ,then Gross Rpcelpts sha l l ~ augmented by such a.ou.nt.

..I I I . Bart.rr.... "»artQr Fees" in c:onnectJol'\ with rftvenue

received by P r O d u ~ e r f r ~ m the direct sa le ot c o " . r e i a l t ime Ohthe ProgrAIa ("Ad .Revonue"J shal . l be allocated a . fo l lows:

(a) Fi r s t , . ,dve,rtisin9 _gency COlhfnissions on AdR . v ~ n u e 6hel1 be d . d u ~ t ~ d ;

(b) Nctxt, there ehall be deducted a barter aalee' e O ~ f n l S 8 i o n o f lo t ; and .

( e ) 1 ' h e reltl.jndcar ..ha l l be i n C ' l l J d C ~ in Gro$s I teeeipts .

IV. ~ i § t . r i b u t i o o f ees . · 'Distr i .bution Fees· ' a re t hofQl lowin9 percentage6 of the. Croas Rac:_ipts. as a p p l i c a b l G ~

tal No foo in connect ion ~ ~ t h respec t to.Gro*&Receip1:s d.eriv.d frolft the 'aqreeme.nt ,( if .. ny) .a\ l thor lz ing thein i t ia l Itf i rat run" ~ x h i b i t i o n of t.h. Pr09ralll pn U.S. net\llorkpri l la t i l t . f ree t . levls1on; ( i . e . , "Ie, CBS, NBC, Fee) and UPN,The. WB, TNT and H8Q; o r

(b' 1St of C r o ~ s ' R e c e ~ p t s derived f r o ~ aqrea",ontsa U U l o r i z i n q e x h i b i ~ i o n o f the Program (o ther .than purliuant. t:osubpara9rapn ( . , abOve) i t such a q r e e J l \ e n ~ 5 ara entered. in to byProducer , or 7-112' of t.h'1' .U1tl5 ao tua l ly rccei \ led by: Proclucerfrom 0 thit"d pa r ty if Producer dovs: not; d i r e c t l y d i s t r i b u t e t h ep.rDg'I : 'Ohl , .

. V" oi s t r butioD ,xpenS@9. · ' D i 6 t r i b u t i o n E ~ p e . n s e s " meansa l l a ~ c u a l f o u t ~ o f - p ~ c : ' k e t ~ o s ~ 1 I a n 4 . x p . n G e G p a i ~ . b ) ' p r o d ~ ~ r ' (orpaid by· other . d 1 . l · i i ~ r l b u t o r l f .borne by Producer)· . I n , c o ~ n e . ~ t . 1 o nwith the marketing. proIWotion, dist .r ibution, e J ( h ~ b i t . . i o n or otberexp lo i t a t ion of t .he pr09ral l land'any cubaidiaryr- lqhte there in, in

' , U l IMad1a and in a U l a " q u ~ C J . £ , includin<J, hut not l i l l l i ted to :

(a) Ahyr e r un , l I ' :e . r e s i d u a l , r o y . l t y , o r ot.her guildo r union m a n d a ~ e d payMent with r e s p e c t to ~ n y per son o r withrespect to any r ight , and .ny payrol l t a ~ and 9ui1d o r uniont r lnqe benef i t p.yarient 1n eonnect ion therewith;

(b) Any cos t in connection with t·ta. p t " e ~ r a t i . , n ,m a ~ i n 9 , duplicat ion, edit ing' . cutt in9/ .dubbinq. S U b t i ~ 1 . i n 9 , I

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po8 .e.,s10n. paCkincJ, in.pection, rep. ir , Gtorage. p r o ~ e c t . i o n , andshipment ( . ~ ~ h as to or r r o ~ .ny l . ~ o ~ o t o r y , dis t r ibutor; orl i censee , inc ludinq ~ h e pa),rient o f any cUstOlllS, tee£, C ; ~ x . c : , O:r

illlposts in connection therQwith) o r ahyn e l j J . ~ i v e

o r pOsi t ive t.1.1111. . e r ia le . 'audio o r v i d e o t a p e , S l o u , u l t r . c k ~ ..till photQgraph,se r i p t . e o n t ~ n u i ty . h e e t . o r cuei ;heet 'lncluc:U"9. b ~ t notl imited t.o. coa t s ot tac; i l i t les , labora tory \oIork, zoa..,- f11_ or rawaudio' or video tape . t o c ; ~ . reels. e o n t . i l i n . r 5 , a ~ d other' " a t : ~ r 1 a l so r i : e r v i , c ~ $ ( b u t no t C'o.ts paid in conneet ion wi th . . .n\lfac:t\lrln9hOlM v ideo dev ice s ) ; :

(Cl Adver t i s ing , pub l i c i ty , or proftlntion cOlOte,'aliowancea o r other actual expen'iies al locable ~ o tbQ program inconnec t ion l iar.with;

' (d) Any t ax l e v i G ~ upon. p .y .b l e with respect : to , o ra r i s i n g inc:ot lnect ion wit.h ~ h . ' ~ x p ' l o i t ~ t i o n , uso, d i e t r i b u t i o n ,revenue., or a a t e r i a l s Of th_ PrograM, inehldinv. but n o t l b , i t e d

't.o. llialea Cross Race ip ts , tu rnover wi thho Id ing, remi ttanc:::e, ,exc i s e , " " . , ' and personal property or silll11el' t . . x e ~ , bu texclUding a n y ~ t incollle. CO(porate, t r6nchiseor ~ ) C C Q S G prof i t stax :

fe) Any cost o f c ; o n v e ~ t i , ; q , t r a n e i n i t t i n 9 , o r , ral l lU:t inqc\ l r l 'ency o ' l locable to and in conn&ction wit.h the proCJram;

"re) Anv c o s t , o f c;;ollectin9 money fro",. Checkinq , ther . c ~ i p t 5 0 r costs Of aud i t in ; any d i s t r 1 b u t . ~ r ot" l i c :ensee ;

, (9) ~ n y cost in connection with any claim b ~ o u 9 h t ~01:" aqa, inat any d i s t r i b u to r ar 1 ~ u n l e e f ) r o v ~ c : l e d t .hat any amounts

r e c o v ~ r e d uh,der any such c:lailll sha l l be' includeod in ( ;1 '05&

flee. ipt , s ;

. (h) Any governJlient"1 tee or co." of a'll' qovernll'er.lt"ll teense or pOl"Jllit, ' incluctinq, b ~ t not l imited ~ O . those requiredf o r import , e)(port , lie. 'nainCl, Qxhibit . ion" or c-nsor , .hip, or t -he

, cost O f c:ontes: t inq ,8If'Y o f the, Game or any ot'oltr l"f 9ulation o r l evaf fec t i r \9 the Proqralll; ,

( i ) AnyeO,.t. ,o tob ta i'rii 119, ,mclint. n i n9, protecting, orreqJ.st. . . "9 any i r i tanqible r lcj'htti, inclucUnq. but not 1 . ~ t . d to ,c:opyr ights ' . t rad.",arks , end trade, n&lIIel , in COnn@c'l: ion wi t,h thePrQ9r.Jn.

(j) Any c:o.t of pro tect in9 t h e P r o C J r ~ l I \ , o r any" a t . r i a l , . in connecti()n . . , i th t.he Pr09reJII, phys ' icol ly or ' from1.qa1 enc:ulIIbrance, by security aeasuras, l e9al ae1:ion, or

otherwise:

(k) ~ n y A c t u a , l ~ o u t . ~ ~ . le<Jal and outs ide aC'countin9t _ o ~ or cour t costa a l l o c ~ ~ ) ~ , t o and c o n n . ~ ~ i o n wleh the

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Proqralll (net: o t any int.ul'ance recr"ff ry or 01:har re.iJ lbunu,..ant of6ueb c08t:s);

(1) Any r . O B ~ or e r r o r B - a n d - u ~ i . ~ j o n c i n ~ u r a n e e .orinsurance c:overinCJ physic: .l " I a tg r i a l s a l locab le to and in

c o n r t ~ c t i o n with t he Program:

C ~ ) Trad. and aarket ~ . & o c 1 a ~ i o n dues and • • • • • • •ent••s uppar t payment e to industry a c a d e l f t i e ~ or inct : i tut lons and c o s t .of . A ~ k . t attendance a l locable t:o A"d in ~ n f t e c t i o n with theProqralll;' and

en) . Any aCJenay packaging fee .or cOlllmission. i fappl c a b . l ~ (t.o the extent payable in connect ion " ' i th the

d i . t r i b ~ t i o n o ~ t he Program Dr b a ~ e d on revenue r ece ived ) .

VI. Pi'PQuetign Coat.. "Product ion Cost" mean& a l l aetual ,

out -o t -pocke teos t s a n d expenses paid by Producer o r an _n t l eyowned o r .control led by P r o d u c ~ r in connect jon . t i th "Produe t io f t tt

(wh ich i .e dee ned t.o mean t:h{l dfl ve.lopm.nt •.pre-production,product ion • .-nd post"prQduct.icln or the Pr-oqi"OI'll, inclusive ofpI la t . . presen ta t ion and a l l o t h e r . p i . o d e s of any l e n C J ~ n ) , .ifle) udin9 , w i t.hu\lt Urai tat ion:

. fa) Any cost ot " -type l iSited i l l paragraph V tfineurred i l l conn.et.ion with Product ion rather than distr ibution(i bein9 undarst.ood that ' any par t . icular iteJl inc luded 1;'Product ion Cos t l l ay not. Also be recouped 'a:; a Dist . r ibot - ion£xpens@);

. (b) Iuly cost for t ~ Q . r i9ht to \ la. o r purchasef a c i l j t i e s , e q u i p ~ e n 1 : , M a t ~ r i a l s o r s e r v i e e . ("abOvp t he l ine ,q

.• be low the l i ne . " o r ot .ber) intoncl f d to be usecs in connect.1onwith. pr:oduetion;

(C) Any C;05t of wcitin<j, o r r iqh t5 to use ul lderlyinql i t e r a c y ~ art ist iC, m U $ i c ~ l , Qr i n t e l l ~ c t . u a l prop.rt.y Grmater ia ls . intended to bQ used in .co"nec:tio·n with the PrCC1ram:

t o q a ~ b e r wi th 0.11 execut ive or ~ r e i 1 t i v ~ roya l t ies : payab le wi th

reap.c:t t h e r ~ ~ o ; .

Cd) - A.ny f inancinq co_tal

(el Any COGt of C 4 ~ t in3urance . ne98t ive insurance orother custo", .ry produc t - ian - re la ted insurance, o r in5ucanceeoverin9 persor\al inj\2l'Y or- proper ty dal'lage (pr-ovid&d E.hat a l lapp l icab le . i " " l l u ~ a · n c . recov el ' i •• s h a l ~ be .included in Gross

t teceipts) ;

Cf.) Cost u[ any outs ide p ~ o d u c : t i o n a u d i t o r :

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(q) Any continqont o r derArred ~ . o u n c pa i d or payablefor the ' a i r value of se rv i ces 'andared in ccmnec:tiQn v i t hPr-oduction, wbet.ber a t 1 8 ~ a l l l o u n ~ ~ r · e par t i . c ipa t ion 1n o r

p e r c e ' n ~ a C J ~ o f Groce R e e e l p ~ . (or .ah) ' p o r ~ j o r » I::hereot).;

(h) Any eoat o t t i t l e , t r a d e ~ a ~ k or copyright • •arCho ~ · r e 9 i ~ t r ~ t i o n ;

U , Any a'lency pll lrkag1n9 tee or eoall l issiof t , ·1(appUc:able ( to t ho extent s.u;:h i s payable 1" eonne.ction w·ith orat. the tillle of the produetion of the t>rogrclU):. and

. ' ( j ) .Overhead COllt ~ q u a l to 1 0 t o a l l itellls ofI 'roduetion Coet.

Any j ~ e J I I IIIay be included in Jlroduet.ior. Cost when· theob l i9a t i on t o pay 15 noncontinqe.nt, .van i f paylften-c 'h.ac not yet

.been ..ade. T ' t · ~ r o c l u e . r , fUrnishes any·of it5·o1lrn raeil if :1eSl.

equiplftent i l I \ a t e r 1 a l i i ~ or $Qrvic• • in connection With Productio.n' lor -which Producer nAs a $ I t : . " d l l ~ c l .. t . .eor would otherwise hovelIIade a paYJllent to ath ed par ty , the e"Qu,nt o t s u c h at.Andard r a t eOJ;' t h e .amount t ha t Ot.herwise woiild bave beten pa i d t;o a ' lch t h i r d·par' ty s h a l l ,be dee,.aQ e d i r e c ~ · CO$t i,ncluded an itQlI\ o f

p r o d u ~ t i o n Cos.t.

VII. As;eounting Grouping:;. It thePro9ro.It I . i:s an ep180C11esQries, t h e ~ all P r ~ r a ' " epiSQ(les produced for eaeh broadc.5tsoasaon ~ h a l l be qroupecl as a . u n i ~ end t reated s e p a r a t a l y fo raccounting and 411 otl1er purpose.. H o t w ~ t h ~ t A n d i n q . n y t : h ~ n 9 tothe con t r a r y c9iltained in tha fot ' l lgoinq. it the· Cr-oss Rece1pt,:sfrom the Proqra.m produced , tor any broadcast aOlliDon are

i n & ~ r t i c i . f t t t.o par l l \ i t th40l fu l l r e c ~ p " ' ..n t • .,d · ~ . i . l I \ b \ a r s e l l l e n t a t

a i l of the itells se t forth in paraqrapl\ 1 .hereot, then i " such

event, the ful l ~ I l \ o u n t of the QxeeSS of such i te l lc over thc:Gro86itoe6iptc flr'QIII the Progt"Dm pn;J( uced ror: sucn t;tl"oade.st seaeon.sha l l bo c .. r i e . d torwat'd (01 ' backward) a n d ~ h ~ l l be t r ea t ed l iS

i teas: to ~ fUl ly r e ~ o u p c t d and reilntJurs8d out o f ,the Gros .Receipts t r o ~ t h ~ P r o g r a ~ p r o d u e ~ d for the s u c ~ Q . d l ~ 9 {orprececH.ng r b r o a d c a s ~ sC3.son o r ,seasons p r ~ o r · ·.to, the COlllputation.and d ~ s t r i b u t i o n o f ' a n y H o d i f i ~ d Adju&teCS .Gr06$ Receipts frolft the

P r O C j l r ~ m .VIII . ,Stat_mInt. a l l ~ PayMllU. p r ~ u e j r .$hall render to

per t . ic ipant periodiC . t a t ....nts pursuant to t .hlc ACJreelftent. ,Suchs t a t eaen t . aaybe .on a b i l l i n 9 s o ~ collectlQns bas is al: ProducerlIey f ro . c1lfte to t i l l le e lec t . statements s ha l l be reoQeredquar t e r ly ·rOr • P f r l ~ Of tvo years (but in "ny event: t·or 80 longas tne Pr09r.rn (it all epis i ; )d lcser iec ) for which suchstate" 'entcor* rendered c,;ontinues in i t s f i r s t run on a n.ational 'eel .visionnetwork) S h O w . L n 9 b i ~ 1 i . n 9 s or c o ~ l e c t i o n . ( 4 s the C . 8 ~ ilia), be) and

t h Q r e a t t ~ r on II .eJ1li .. n n ~ a 1 bas1-lI, ·provJ.de.d tha t no st.tel llentneed be rendered· for any period in which no receipts are rece1v4d

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O t charqes Lneurred. Each 9 t a ~ e m e n t ~ h a l 1 be rendQred wi th inn1h.ety . 90) days at ter t:he c lose ot t .he p e r i o d ~ o r wbtch ~ h e. tatelll.J ' lt i8 r e n d e t - ~ d . Statements rendered nay ba chaJ'l90cl froa

t ime t:o tllftQ to give e f f e c t to .itelfts overlooked,. t : ·o corl" ' .cte ~ r o r a ' on< ' for ~ J . a n i l . r purpOIi:QS.. A.ny t I . S . d o l l a t 5 due end~ y . b l . to Par t i c ipan t by producer purau.nt to any such s ta tement, .ha l l be p a ~ d t o p , a r ~ i e i p a n t s;i.. . l ~ a n Q O U 8 1 y w i t h tbe rende.r1ng ~ fsuch stateJftent. Any 1riithholcling or deduet ion r e q u i ~ e c t by 1 • ., ••Ybe . a d ~ . .

IX. Aecounting 'Beeorde a n ~ A u d ~ t B q h ~ $ . Producer sbal lIteep a t · i t s lIIain off ices i f t ' ~ h e unit.cd Stat.es book. of account~ e l a t i n 9 t.o t he distr ibut .10n Of ebe Suries (herein.ft._i ' re (er rAdto as "recOrds"), 'whieh I iIhall be kept on the saftle be_is, ih the

s a l f t ~ Il\anner, a t . t . h ~ • • • place and for t.he ~ a . J t l a p . r 1 o d ~ as suoh~ e e o r d s are custolu.r11yJcept lJ1 Producer . p a r t 1 c i ~ n t . ay••l t s o\oln expense, but n o t more than once·.annuctlly·. aud i t t he

. p p l i ~ G b l e . r ~ c o r d • .a t cuch of t ice in order to veri fy earn nge

ct:at·ellent:.e; rendered I'Ilitreutlder. Any auch Audit $ h a l l ..,. e()nductedonly . by a r-.pi.tt.ble public accountant (sub ject t.o Producer 'sr e a S O " A b ~ e approval) dur ing r e . ~ o n a b l e bus1ne.5 h o u r ~ And . _h . l lno t continue f o r m o ~ e than t h i r t y (lO) consecut ive daYG. Anysuch a u d i t 91\.11 be conducted ir'l such m a n n ~ r as hO· t to i .n ter terewith P ~ o d u . e e r ' & norllla.l business a c t i v i t i e s . . . Particlplli ll t "sballnot h a ~ e t h e ' r i g h t io e x a f t l 1 n ~ or inqulr-e i n t o any lI'Iattera o r .it:eml: which are e J i t b r a ~ e d by o r c ( ' ' " t . l n . ~ in any suCh statelDenta C t e r t h e ~ X p i l ' a ~ i o n o f twenty . t.OUt' U4 months fro", aM a t t . e rthe d ~ t e . ot ~ . l l i " g o f such state"'.:Jnt •• d ~ u c h s t a ~ •• h t 81\a11be. t i n a l and Conclus ive Up07\ Pertic;ipant upon the expiratl<;)n Ofsuch tJofel1cy .. t ou r (24) month per iod n.otwitnst :andinq. t ba t themAtters o r lteJlls eJllbraeed by or cont . . ined the.rein may l a t e r becont.ained or r e f e r r e d to 11\ a CUMulative lIt.at·emcmt perta1nln9 toaore triun one ' lieeountinq periOd. Such cUlluJ,.Hv". statellient Gball

·not I;)e subject to audi t by partic, ipant to thA e)( tant the materialcontained thArein wa. f i r s t ref lected on a c ~ a t e m e n t s u b f t i t t . ~m o ~ e t h a n twenty. tour (24) .nont.hs pri-or to th date of "';IIiH.n, 'of.uch c u l ' l u . l l a ~ 1 v . s tatel l lent . po'll"'ticipant sh;all be forev.er barredf ro . lIIainta.lninq or i n sUtu t1 l lq ' any tact ion or · pro¢::eedinq b a ~ G dUpOIl,·· or in any vay r e l a t i nq t . o , any t ransact . ions had byProduc:er-. or i t 5 l j ; ~ e n s e p . ~ . J : " connectiol' \ ' t ~ t h the P ~ t x 1 r . a J I I wh1eba r . eJIIbracacS by or refleet:.tid·ohany st.-tement rendered hereWlder.or - the eec"treC:Y of·any. · i tbi appear1ft9 therein, unleG8 wl;it:tenobjection· thereto s h i l l have been d . l i y e l ' e ~ b y P a r t i c i p a n t t oProducer-wi th in t ' t en ty-four (24 )Jllonths af ter the ' d a t e ot lUll H.n9of the statement on whic:h such t ransaction or it-ell "'",s f i r s t

r ~ f l e c t e d anc) v'nless such oct 1.on or proceed in ; i s C;OMmen'cedw ~ t h i n twelve (12) ~ n ~ s a f t e r de l ive r y o t euch w r i t t e nobject ion. par t i c ipan t ' : I riQht co examine P r o C l u c ~ r ' 6 . r e ~ ~ r d . 1 ..

1111'11teCl to tbe program. and .under no c ~ r e u " , s t a n c e s a ha l l .partic:· ipCint h ~ " e t he r 9 h t to · examine I:"ecords r e b c i n q ~ oProducer 's bus iness 9cnera.l1y or ·any othf r product .ion for thepurpose o t e o ~ p a r i s o n o r o t ~ e r w i s e .

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_..."\1

x. ~ Q r e i Q D . ~ Y r r e n c v · I f enyfore i9n 9 Q V e ~ n ~ e n t . sha l lblOCk U •• conver5i .on o r t r a " ~ l I I i . t : t . a l of c\1treJ.lcy to be ihc iuded in

G r o . ~ Receipts . Producer 1" i t s . "18 cUtile'retion may payPart :1.c pant h i . or i t c share or: HmUt ied Ad jus ted Groaa Proceeds

.pp l1cab la t h e r . ~ o by d.pgs i t1ng ~ b e s a ~ Q in paTt i c1pon t ' 5 n D . ~and at Pa r t i c i p a n t ' s . ~ p e ~ $ e w i ~ ~ u c h depository as P a r t i c i p a n t5hall r.quulI"t, subject to ~ r o d t l C : e r l . · . p p r o v a l . Pt"oducet"' "hal lno t i ty par t ic"ipant at any such depo8it· •

. Xl. a" la t lgnsh ip o t rAttlSU'. PrOCiucr.r s ha l l not bA d • • •ed• fiducl.t 'Y. partner. or jo in t v ~ n t . u . r e r of P . r ~ i c i p a n t .Pilrt icipant has no leqal or b o n . t i ~ i a l olotnership i J ~ t : e r e e ~ in t hePrc:a9rall,' any Proqram, o r in any.' thing created pursuant -t.o r ivhts

. i n : the p ~ O C J r a f t l , b\lt only the contlngent: r i9ht topaYAent6pec i f i ed herein. ~ n y pledq8. h y p ~ t h e e a t i o n , a o r ~ 9 . g e , or othere l l c l D l b l ' . n ~ . of. the P r 0 9 ~ a " l any oleJllent o t t h . PCQ9rarn or anyP r 0 9 r ~ ~ . o r .ny th inq crea t ed pursuant to the r19hts in the.Pr09r.all, or 'any assiqn",.nt., .• l e or t ransfer or r1CJftt:$ herein,p"'rported to ~ aada I)y Part ic ipant , sha l l be void; prov1de41 that

.•£.ter the co.ple t ion o'f P""ticipd:nt '6 perfcirmanee .ul')der t h i sA9reelDent, any acsi901- .n t , sale . or t ~ a " I ' . r 'of .Part . l .cipant . 'ar i g h t to rece ive paYlll.nt under thics .lCh·lbit. sba l l be va l i d i f it.hal l b& lIlact. "pecif ical ly .ubjeet . to Producer 'S ric;yhts herein;.andprov1de t u t " ~ h e r , t ha t in such i n & t . n ~ . i,n whiCh P a r ~ i e i p a n t5 h a l l wish co 'aaJce any 'Qh ilss1tjnlDent., A.1•• or t ran'sfer inwhole or in pArt . to any t ~ 1 r d par·t.y., ot.her ~ h a n · by ··91lt Qr

~ q u e s t . Part ic ipant sha l l f i r $ ~ m a ~ e A writ ten of fe r toProdUcer, ~ h a t by i t s own terms anal l i ~ r Q v o c a b l e for a ~ 1 ~ a 5 t'30 day5 {roft P ~ a d u ~ e r ' s rece ipt thereof, to .ake such a a 8 i g f t D ~ n t tsa18,' or · t t .na fpr to Producer b n t h e '• • 111. terJlls and cond·n.iofts onwhich 5uch' .8sivnmeht . cale. O ~ ~ ~ . n a C . r would be . ade to suchthi i-d per ty . , P a r ~ i c " i " a n t wa'ives any r i C J h t t . ~ bl'inq I lu i t .9a1nll:1:.

. < producer or any Distr'1t)utor- 'with respect to any flat tereonn,c t ion with t h i s A9relUllent for r . U e f o t h e r t h ~ n money

daIl'8'08. As between . p a r t . i c i p . n ~ _04 producer. Prod\lcerShallhave cole discre t ion: ~ c • • ~ a fair and r e e . ~ n . b l e al locat ion otany amount t h a t is perlllitte4 ~ N l e r th is e)(hibit (6Uc:h Cros .Receipts , a O i ~ t . r tbUtion £xpen8e. or -an ~ t . e l l l Of Product ion Cost)(rollt a n y la rger $UIft -in which . i t i$ .included; t·g .determine Whetl)ot"to' ' inc", .ny 'Dis t r ibu t ion t"pense orit .eftl of Produc.tion CO$t, .w"en it is; lnc:urred. ant,Jl'\oW it hcol f tput ed; to 4et."lIIine Wben· ~ h . C O f t v . r 5 i Q n o r t r a n 6 r n i ~ t a l of eurrency s ha h occur and thee)(changc··r:ate at which 8uch convers.1on . h a ~ l .occur; to df ter .. ".what i t ~ , . s ine lud.d in Production Cost . h . l l be considered dIrec tcost '" a ..di:.tLnquishcd fcom overhea.d: to detorJlline a l l t e r• • ofeach BC)reelllont, ' i t . Y. for tbe d1stribu1:.ion of Proqram. o r tha

. x p l o l ~ a t . i o f t of .uHidia ry r i q h ~ s , including, but n o t l i m i ~ e d t o ,_ a ~ l t . l ' ' ' •• f e c ~ i " 9 ti ..e, place, IllediulTI. frequency at uee. and

p . y a e n t : ~ o se t t l e -.ny claiM with respect to any such 4greelfteht

·or , , i n r o . cpac t ' to the. PC:OCjr.",; to re ta in · r e a ~ O " ..blQ port ion8 o fDefIned P r o c ~ . d s I S ceser.ves for cont inqent . u n ~ O l h l > u t e < 1 , o rret roact ive d ~ b t s ; and to ' eOllnninqle funds apr. l ie .hIe to paYlncnts

..

7

BOOd

. Id ~ O : L 0 .B6 - 1 2 - 6n'(1

I



SENT BY:

()

G O · d

or be ld by Prodveor. Producer ~ k e a no r-."re·Gentat.icn o rVArr4nty ~ 1 t h respAet to Producer 'a e[fortG in c Q n n e e ~ 1 o n ~ i t hthe d i a t ~ b u t l o n or the P r o q r ~ ~ or ~ M p l o i t a t i o n o f subsidiary :

r i9htG, o r t h ~ t . .such d 1 . t ~ · i b u t ...on o r e x p l o i t . e ti o n w i l l r e s u l t inany m i n i ~ U D a.ount Of Gross Recaip t . or NQd1Cled Adjusted Gro55proc.ads. . . .Pl"ocbac. r . includes New Line Televis ion . Ine •• · New.Line Cinellla Corp . , an" .nvent . , i tyo",nad pr c:;ontrolled by . i1;hero t the Co%'0901n9 which i s engAge:d to ".".lop end/or·produce. thePro9rall'l. The tar l l l . ha l l n o ~ include: any other (Mtraon, tirln orcorpora t ion 4 i . ~ r i b u t i n q the p ~ o q r . ~ o r exploit i"9 . u b . l d i . ~ yr i q h t s ~ h e r e 1 n ; ,ucAibit .orsO.r o the te who lIay ac tua l ly . ach ib i t the'r09r4111 to t h ~ pvbUCi t:adlc> o r t..19vision· bro .de• • ........ cabledperat .or$; .anufecturers , whOlosales or r e ta i l e r . o f .VideoDevices; .book. lIa9a%i"e or .uGlc publ isher&; pbonoqraph record"roduc·.c-. vr d i . s t r l b ~ t o r s ~ .&t\d ... " C a c t ~ r ~ r s . di . t rUn.t tor6 •

. " h o l e B a l e r ~ . r ~ t C l i 1 e r . o r o p . r ~ t O l " 6 ot any t ype . o f l I I e r c h a ~ d i • • •.qoods, ......vj.c.elP o r t:heme park or o t h . t a t t rac t ions , whether o rnot any ot t h e fore901ngu". aff i l i a ted with Pc-odUC81:'.

XII . Y.ldeo Q\}ViccJj. ptcviciect t h a t Producer i8 vea t .d withth& ~ i g h t tQ .anutacture . a n O d i . t r i b u t e t h e P r o 9 ~ . ~ on videoc a s c c t t e s , Y i d e o t .pe& ~ n d si l l l l lar cornp.Jet: ..udiovi sual devices.by f'orl'llat now k . f t o " , , , o ~ l . t . c . t.o ..a e. deViseel. il'Jtlmcied to be s o l dot" l e a sed t f ) the p u ~ l i e 4 device j,ntenC ed pr1I11u'i1y t o r ~ h o . .u.c.," ( . s s u ~ h · t . ~ r M . i s · o ~ i f t ~ m l y understood i f t the l I Iotion pict . _reindustry) C"Video oevic;ee"J. and tha t such Video Devices. eonais ts o l e ly o t ~ h e or ig ina l . Cubstan'tlally complet.e vers ion o t OftO o rmore ep isod . s Of ~ h e ProeJraJft. (e .g •• a l l l o ~ n t Shal t be ifleluclodin GrOlit5 Reeaipts in re$pect of Video Devices wnich include'siDiple ...e•nec o r t l h i 9 h U g h t s " fro", ~ h e Pro9r.all\whether ft>rproMotional C)r advert is ing pUl"posesor.otber-wlse), Groce aecoiptltshal:l . include an amount determined AI' follows: .

C·e) An amount equivalent to t" 'enty percent (20t) o fdu " h o l . a e ~ e .priee Ce)(cludi".9 Fader-al Ekc:ise Taxes, or thalequ iva len t ·t.hereof, l oca l t l ucea . if . "Y • .-nd s tandard c:ontain""rchal"ges) .c t taal , ly received by P r ~ ~ c e r f:c:.. 5uctl Video I;)evtcee",anufactu.red end .sold in the UI'l1.ted S t a t . i (it be inq underst.oodt h a t ~ n o Distr b ~ t i o n 1 e e sha l l be c ~ . r g e d gn ,,"el\ aftlount.,. .

(b) As ~ Q Video b ~ \ i i c : a s so ld out:l:ide the U n i t e ~ .s ta te . , the . lftount include<1 in Gross ReeoLpt5 sha l l . ~ . one-hal f(1/2) th_ OJilount refec.e<2 to 1npar_qa;-aph XIII.) above and .ha l lbe ca l cu l a t . " Producer" .. e lec t ion , upon the whOleaale pr i ce ofc'lch Video Devlc.s in the countrY'of " ,enufacture , tho Unitedst.ates, £ngland, o r t:be country o t cale. Th.. aforesaid amount~ h . l l bp- cOlllput.d in tJ'le na t ion . l ~ " ' r r " h c y . ( ) f . t ~ 6 c o u n t ~ ·towhich ~ \ I I ~ ",holes. le price 40 alar:teCS app11es and aha l l be pa id a t

~ h e s a m e r a t . ~ f e x c h a n g e a s ".w Line. i s pa id ; provi .dud. however,t ha t su'Ch ail lount5 on lPuch Vjdeo D.vices t ;hal l noe b • . included inGroa . ' lhl,cC'ipts u n ~ i l .paYJllent t . h e f ' ~ f o t " h e ~ actual ly boan rece iveda,y P r g 4 ~ c ; e r in t h e unit.ed States ' ,

B

d BO : LO B 6 - Y z - 6 n ~



Sffff BY' e"20-S8 5:20P)l

".,

(e) In r e sp - c t ' o f Vidoo t;QviOQ., e o l d t h r o u g h any"club." or aiml' lar sa1es plan . and devie:a&, the . . .ount 1nelucladin C ~ O . 6 ~ . c e i p t S sho l1bc one-halt (1/2) of t ha t r e f e r r ~ d ~ a in

p ~ r . 9 r ~ p b . XII(a) and (b) d ~ p . n d i n 9 ~ p o n whare such'video Devices

e ra cold ; provided t h a t there eha l l bon ~

amounti n c ~ u d a d

in ,Gr058 t t .ce ip tsvi , t t \ l " e l J p e c ~ tq V1dOO De\lu:o. 9iven tg, . . l I Ibers of

sudh clubs as hbonus" or "free" video Devic• • a . a reeul t o tjoin1nq the ~ l u b and/or,purchas1nq required number of V i d ~ o ''Device£.. Ho ~ . - o u n t inelu(le;din Oro• • Receipte . h ~ 1 1 be COIIIputedvit.h res'pact to video Oevice. given aW41Y or furnished on a "nocharge" basis '1 o d . a l . J : ' ~ or ot.her_.

(4) , roducer sh a l l have t h . r i gh t ~ o daduct , .nd ~ ore • • ve fo r re turns and c r e d i t s o f aft)' nature . lnelutUnq. ~ i t h o u tlilllitat1on,I t h o . e on ,account of one hundred percent (100 ' ) O ~ al • • • • r e 1 : u ~ n p ~ i y i l e g e . d . t . c ~ i v . merchandi£8, . ~ c h a n 9 0priv i lege, p r o l ' A a ~ i o J " l a l credits . errore in bi l l ing . unusualo v e r s ~ o c k and errors in ~ n i p p i n q .

(e) Froll\ the alAount(s) cOJilputec2 115 se t tort .h above,~ h e r o c h a l l fir,.t: be d . c 2 u c ~ . c 1 the aqqreCJat.a o f the t o l l t ; ) ~ i ' n f Jeo&1:sand expen'ecG, and on.v tne balance of such aillount(s)ralllainlng•• t . e r &ouch deduet..iona shal l have been ..ad. , shal l beincluded 1ft Cross R ~ c e i p t . & ;

(1) Any a.ounta and ~ o y . l t i . ~ which shal l bapayable in connect ion wi t.n tJ'U.' 1 mam,fac1:.ur i nQ . nddiat.ribut.ion o f t h e Video Dev ic .5 to t h ~ , p . r son(s ) who• •

,pertormance(sJ i e /are contained on such Video Oev.$.cea inaccordance wit.h t h e ag l "ee " , . n t ( s ) which "UA), h a v e been enteredin to with . ~ y . u ~ h perGonCG)r

, C11) ..11 coSt'5. exp.n • • and fe . . wit.ll respect:~ o ~ h e Video Oevices 1 ~ e u r r l t d a:.y Producer: or i t s G ~ b s l d i a r yor a f f i l i a t ed . compan1'es, under a9ree:"'ent'(G) with any aM a l lqUlld& or unions wherever located and whethor now orhereaf te r in axi5tence:

_ ( i U ) Any add i t iona l costs (whieh a re not:~ ' n c h a d e d ~ h e (;osts of production or ~ h a prO<Jralll) inc;:urredinconnect icm with the z-eproduotioh Of the Progralll for ,thepurpoaeof enablinq ,t.he iasuanee ofVidao oevieeD t.hat'etr.oBl.

( f ) I f ' in any foreign terr i tory, Prqducer does notdi. trJ :bute Video Devices 1tse lC but instoead u s e s . &ubcSiatl 'ibutor, t.he alltOunt l"cliaoed in G r o . ~ Receipts pursuant:. to '=.hi.Bparagr.ph XlIX shal l be an amount equal to the a .ounts a c t ~ a l 1 Y

~ . c Q i v e d by Producer fro", SUM lSubdi.tributor from such exereiGeor 'Kuch video Oevice distribUtion riqht& in 9uch t e r r i t o r y (and

Producer s h a l l c;:barfJe A Distr ibuti .on Fee or 1-1/ '2 ' on SUChalllOunt).

END OF MODIFIED ADJUSTED GROSS rROCEEPS D E F I N I ~ I O H

I

r

I:I

Id S O : L O S 6 - I Z - 6 n 'f

O I -d



SUPREME COURT OF THE STATE OF NEW YORK

COUNTY OF NEW YORK



Plaintiffs,

v.

NEW LINE CINEMA CORPORATION; and

WARNER BROS. ENTERTAINMENT INC.

Defendants.

Index No. 161383/2013

NOTICE OF MOTION

ORAL ARGUMENT REQUESTED

PLEASE TAKE NOTICE THAT, upon the annexed Affirmation of Motty Shulman,

dated December 23, 2013, together with the attached exhibits, and upon all prior pleadings and

proceedings, Plaintiff Miramax, LLC (“Miramax”) will move this Court at 60 Centre Street,

Motion Submission Room 130, New York, New York on January 9, 2014 at 9:30 A.M., or as

soon thereafter as counsel can be heard, for an Order permanently staying the arbitration

proceeding commenced by Defendant New Line Cinema Corporation against Plaintiff Miramax,

pursuant to Section 7503 of the CPLR, upon the ground that the parties have not entered into an

agreement to arbitrate the dispute at issue, and for such other and further relief as this Court

deems just and proper.

INDEX NO. 161383/




Pursuant to CPLR 2214(b), opposing papers and cross-motion, if any, must be served

seven (7) days before the return date.

Dated: December 23, 2013

Armonk, NY

Respectfully Submitted,

BOIES, SCHILLER & FLEXNER LLP

By: __/s/ Motty Shulman___________________

Motty Shulman

James Ostaszewski333 Main Street

Armonk, NY 10504

P: 914-749-8200

F: [email protected]

[email protected]

Counsel for Plaintiff Miramax, LLC

To:

Evan Chesler Karin DeMasi

Cravath, Swain & Moore LLP

825 Eighth Avenue New York, NY 10019

212-474-1000

[email protected]@cravath.com

Counsel for Defendant New Line Cinema Corporation



SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NEW YORK



Plaintiffs,

v.


Defendants.

Index No. 161383/2013

Affirmation of Motty Shulman in Support

of Miramax’s CPLR § 7503(b)

Motion to Stay Arbitration

STATE OF NEW YORK ) ss.:COUNTY OF WESTCHESTER )

MOTTY SHULMAN, an attorney admitted to practice in the Courts of the State of New

York, affirms, pursuant to CPLR § 2106, under the penalty of perjury as follows.

1. This action for declaratory, contractual and equitable relief was commenced on

December 10, 2013, because Defendants have repudiated and refused to acknowledge their

obligation to pay Plaintiffs their rightful contingent compensation for the second and third

installments of The Hobbit motion picture as required by an August 21, 1998 written agreement

between Miramax, LLC (“Miramax”) and New Line Cinema Corporation (“New Line”) (the

“Sharing Agreement”).

2. The limited question raised by this action is whether the second and third

installments of the three-part motion picture telling the story of J.R.R. Tolkien’s The Hobbit are

included within the contingent compensation obligations of the Sharing Agreement or, as

Defendants maintain, are effectively “remakes,” which are excluded from the Sharing

Agreement’s contingent compensation obligation.





2

3. This affirmation is submitted in support of Miramax’s CPLR § 7503(b) motion to

stay a JAMS arbitration initiated by New Line on December 3, 2013 (the “Arbitration”). The

Arbitration should be stayed because: (i) the parties never agreed to arbitrate the dispute that is

the subject of this action; (ii) the parties specifically agreed that this Court – and not an arbitrator

– would have jurisdiction over the subject matter of this action; and (iii) it is well settled New

York law that the question of whether a valid agreement to arbitrate exists is for the Court, not an

arbitrator, to decide.

BACKGROUND

A. The Sharing Agreement

4. Pursuant to the Sharing Agreement, Miramax agreed to sell New Line the motion

picture and television rights to J.R.R. Tolkien’s literary works The Hobbit and The Lord of the

Rings trilogy. In exchange for these rights, New Line agreed to pay Miramax (and its assignees):

(i) a “Purchase Price” of approximately $11.7 million to reimburse Miramax for its direct costs

and overhead relating to its investment in The Hobbit (the “Purchase Price”); and (ii) 5% of the

gross receipts of the theatrical and television exploitation of The Hobbit and The Lord of the

Rings (the “Contingent Compensation”).

5. The Purchase Price to be paid by New Line is set forth in Section 4(b) of the

Sharing Agreement and allowed New Line to audit Miramax’s direct costs and to seek

reimbursement from Miramax if, within 60 days, it determined that Miramax’s costs were not

expended in connection with the Picture (as defined in the Sharing Agreement).

6. Miramax’s Contingent Compensation rights are set forth in two different sections

of the Sharing Agreement. First, Section 4(c)(1) identifies the motion pictures, referenced in the

Sharing Agreement as “Original Pictures,” for which Miramax will receive Contingent



3

Compensation. Thereafter, Sections 4(c)(2) and 4(c)(4) set forth how Miramax’s Contingent

Compensation for the Original Pictures will “be defined, calculated, accounted for and paid for”.

7. Specifically, Section 4(c)(1) provides that New Line must pay Contingent

Compensation for any Original Pictures, which are identified as the “first motion picture, if any,

based in whole or in part upon” The Hobbit and The Lord of the Rings “but excluding remakes.”

8. Section 4(c)(1) does not explain what it means to be a motion picture based on

The Lord of the Rings, but does explain with respect to The Hobbit as follows:

A motion picture shall be deemed to be a picture based on The Hobbit: Or There

and Back Again if either (a) the main story line of the book is substantially the

main story line of the picture, or (b) the events or incidents in the picture are primarily the events or incidents from the book and picture has both the charactersSmaug The Dragon and Thorin The Dwarf (or other characters which wouldsatisfy their story functions) or Bilbo Baggins as the lead character, or (c) the titleor subtitle of the picture is “the Hobbit” or “Hobbit” is any part of the title orsubtitle of the picture.

9. Having explained which motion pictures are considered Original Pictures and thus

subject to Contingent Compensation payments, the Sharing Agreement then explains how

Miramax’s Contingent Compensation for the Original Pictures will “be defined, calculated,

accounted for and paid for” depending on whether the motion picture is theatrically released.

Section 4(c)(2) provides that “[a]s to each of the Original Pictures which is produced for

intended theatrical release, Miramax’s participation shall be defined, calculated, accounted for

and paid for in accordance with the provisions of Exhibit ‘C’” (emphasis added). Section

4(c)(4) then provides that “[w]ith respect to each Original Picture which is not produced for

initial theatrical release, Miramax’s participation shall be defined, calculated, accounted for



4

and paid in accordance with the provisions of Exhibit ‘C-1’ and shall be 5% of TV-AGR”

(emphasis added).1

10. The referenced Exhibits C and C-1 (the “Exhibits”) set forth in detail the

definition for, among other things, the terms “gross receipts” and “adjusted gross receipts” and

provide the computational formulas, audit rights, earning statement requirements and

calculations for how the Contingent Compensation will be paid.

B. The Forum Selection and Arbitration Provisions

11. The Sharing Agreement (also known as a Quitclaim Agreement) contains a clear

forum selection clause to deal with any claims between the parties arising under the agreement or

any disputes on how to interpret the agreement. Specifically, Section 10 of the agreement

provides that “the parties agree that the Federal and State and City courts located in New York

County, State of New York, shall have sole and exclusive jurisdiction of any claims arising

hereunder and of any action to enforce or interpret this Quitclaim Agreement” (emphasis added).

12. This broad forum selection clause contains a limited carve-out for disputes

regarding mathematical calculations of specific monies owed under the Sharing Agreement to be

determined in a confidential arbitration proceeding. This arbitration carve-out is specifically

limited to disputes regarding either: (i) “the calculation and accounting for the Purchase Price”;

or (ii) “the definition, computation, accounting for or payment of the” Contingent

Compensation. Sharing Agreement ¶ 4(c)(7) (emphasis added).

13. The limited nature of these two arbitration carve-outs is reflected in the language

of the arbitration provision itself which provides that:

1 Section 4(c)(3) of the Sharing Agreement also provides that Miramax’s participation

shall be “no less favorable” than what is afforded to film director Peter Jackson, with certainspecific details “more fully set forth” within Exhibit C.



5

All disputes arising with respect to the calculation and accounting for thePurchase Price and with respect to the definition, computation, accounting for

or payment of the contingent consideration provided for in this paragraph 4.c(but no others) shall be submitted exclusively to confidential and bindingarbitration in the County and State of New York. (emphasis added).

14. Thus, the arbitration carve-out is limited to disputes relating to “the definition,

computation, accounting for or payment of the” Contingent Compensation – not to disputes

regarding whether a particular installment of a motion picture is covered by the term Original

Pictures or whether a particular motion picture is deemed to be a picture based on The Hobbit .

Additionally, the arbitration provision’s inclusion of the words “but no others” specifically

excludes all disputes not relating to either the Purchase Price or “the definition, computation,

accounting for or payment of the” Contingent Compensation from the arbitration provision.

Such disputes, and any “action to enforce or interpret this Quitclaim Agreement,” are to be

brought in this Court as provided for in the forum selection clause in Section 10 of the Sharing

Agreement.

C. The Nature of This Action

15. Under the Sharing Agreement, Plaintiffs are entitled to receive, and have

received, Contingent Compensation from the three films based on the three books in The Lord of



16. Plaintiffs are also entitled to Contingent Compensation with respect to The

Hobbit . However, unlike its previous practice with respect to The Lord of the Rings, Warner

decided to divide the single Hobbit story into three installments, planning to release these

installments over three consecutive years.



6





Sharing Agreement.

18. The three installments of The Hobbit within the meaning of Original Pictures

because each installment satisfies the three alternative tests provided in Section 4(c)(1) of the

Sharing Agreement. Each installment is based on the main story line of the book and the event

in the motion picture are based on events from the book and contain the characters Smaug The

Dragon, Thorin The Dwarf and Bilbo Baggins.

19. Additionally, “the title or subtitle of the picture is ‘the Hobbit’ or ‘Hobbit’ is any

part of the title or subtitle of the picture.” Sharing Agreement ¶ 4(c)(1). Warner released the

first installment titled The Hobbit: An Unexpected Journey in December 2012 and the second

such installment, The Hobbit: The Desolation of Smaug on December 13, 2013. The third

installment, which carries the actual name of J.R.R. Tolkien’s The Hobbit: Or There and Back

Again is scheduled to be released in December 2014.

20. Having elected to split The Hobbit into three installments, Warner claims that

Plaintiffs may share only in revenue from the first installment of the film (released in 2012 as

The Hobbit: An Unexpected Journey) and refuses to pay Plaintiffs any compensation derived

from the second or third installments of The Hobbit . Warner has thus effectively taken the

position that the second and third installments of the film are remakes, and that Plaintiffs are

therefore not entitled to Contingent Compensation.



7

21. Warner’s current position that Plaintiffs are not entitled to share in the revenues

from the second and third installments of The Hobbit is also inconsistent with Warner’s


Plaintiffs’ contractual right to Contingent Compensation from all installments of The Hobbit.

22. Plaintiffs’ lawsuit is specifically limited to the question of whether Plaintiffs are

entitled to Contingent Compensation for the second and third installments of The Hobbit and

does not include any claim for monies owed or disputes relating to the definition, computation,

accounting for or payment of Contingent Compensation in connection with The Lord of the

Rings motion picture or the first installment of The Hobbit .

D. The Arbitration

23. On December 3, 2013, New Line served Miramax with a Statement Claim and

Demand for Arbitration Before JAMS (the “Arbitration Demand”). A copy of the Arbitration

Demand is attached hereto as Exhibit 1.

24. New Line’s Arbitration Demand does not relate to any dispute between the parties

regarding the definition, computation, accounting for or payment of Contingent Compensation

owed to Miramax. Rather, as stated in New Line’s Arbitration Demand, New Line seeks a

declaration that: (i) “Contingent Compensation is payable under the Agreement only with

respect to Original Pictures as defined in paragraph 4.c of the Agreement”; and (ii) the second

and third installment of The Hobbit “does not constitute an Original Picture.” Arbitration

Demand at p. 7.

25. On December 6, 2003, Miramax’s California counsel received a notice of

Commencement of Arbitration from JAMS. A copy of the Commencement of Arbitration is

attached hereto as Exhibit 2.



8

26. On December 10, 2013, the instant action was filed. A copy of the Complaint

filed in this Action is attached hereto as Exhibit 3.

27. Shortly after filing the instant action, I informed both JAMS and New Line’s

counsel about the filing of this lawsuit and that Miramax “disputes the jurisdiction of JAMS to

arbitrate this matter as well as the arbitrability of New Line Cinema, LLC’s claim, insofar as the

claim is not covered by the arbitration provision contained in the parties’ agreement.” A copy of

the December 10, 2013 letter to JAMS is attached as Exhibit 4.

28. New Line was served with the Summons and Complaint in this action on

December 11, 2013.

29. Miramax has not participated in the Arbitration and, to my knowledge, has not

made or been served with an application to compel arbitration.

ARGUMENT

A. Arbitration Provisions Must Clearly and Unequivocally Cover the Dispute at Issue

30. An arbitration agreement will only be enforceable if it clearly and unequivocally

covers the dispute at issue. TMP Worldwide Inc. v. Franzino, 269 A.D.2d 332, 332 (1st Dep’t

2000) (“It is well settled that a party will not be compelled to arbitrate and, thereby, to surrender

the right to resort to the courts, absent a clear, explicit and unequivocal agreement to arbitrate.”).

The level of clarity required for an agreement to arbitrate “is greater than with respect to other

contractual terms” and “must not depend upon implication or subtlety.” Howard v. Greenbriar

Equity Group, LLC, 872 N.Y.S.2d 691 (N.Y. Sup. Ct. 2008).

31. Parties to a contract are free to draft arbitration clauses as broadly or as narrowly

as they choose and the fact that a party signifies a willingness to arbitrate on certain limited

issues does not bind it to arbitrate all other disputes. Id. (“An agreement to arbitrate some issues



9

between the parties will not be construed as an agreement to arbitrate all issues between the

parties.”). In fact, if the parties have only elected to resolve certain specific disputes by

arbitration, rather than “all disputes,” then the arbitration clause “must be read conservatively if

it is subject to more than one interpretation.” Trump v. Refco Properties, Inc., 194 A.D.2d 70,

74 (1st Dep’t. 1993) (reversing lower court’s denial of motion to stay arbitration), lv denied,

83 N.Y.2d 754 (1994).

32. When a dispute arises as to the scope of an arbitration clause, the burden is on the

party seeking arbitration to show that a “clear and unequivocal” agreement to arbitrate exists.

See Gerling Global Reinsurance Corp. v. Home Ins. Co., 302 A.D.2d 118, 123 (1st Dep’t. 2002)

(holding that the party seeking arbitration had failed to demonstrate that the dispute was within

the scope of the arbitration clause), lv denied 99 N.Y.2d 511 (2003). To the extent there is any

ambiguity whether a particular dispute is covered by an arbitration provision, it is not subject to

arbitration. See Prote Contracting Co., Ltd. v. Bd of Educ. of City of New York, 135 A.D.2d

523, 524-25 (2d Dep’t 1987) (holding that the parties’ arbitration clause was “ambiguous and,

thus, unenforceable” because another provision of the relevant contract “arguably” reserved the

dispute “for the courts”); Robert Stigwood Organization, Ltd. v. Atlantic Recording Corp.,

83 A.D.2d 123, 126 (1st Dep’t 1981) (holding that, where the arbitration clause at issue arguably

could be read as applying only to “accounting procedures, methods of computation and

payments,” the parties would not be compelled to arbitrate a dispute regarding whether a

recording company maintained continuing rights to royalties from the exploitation of a musical

composition).



10

B. This Action is Not Covered by the Limited Arbitration Carve-Out

33. This action is covered by the Sharing Agreement’s forum selection clause and is

specifically excluded from the limited arbitration provision relied upon by New Line.

34. The forum selection clause broadly covers “any claims” arising under the Sharing

Agreement and “any action to enforce or interpret” the Sharing Agreement. Sharing Agreement

at ¶ 10. By contrast, the arbitration carve-out that New Line relies upon is specifically limited to

disputes regarding either: (i) “the calculation and accounting for the Purchase Price”; or (ii) “the

definition, computation, accounting for or payment of the” Contingent Compensation. Sharing

Agreement at ¶ 4(c)(7) (emphasis added). This action does not relate to either of these disputes.

35. The only issue presented in this action and in the Arbitration Demand is whether

the second and third installments of The Hobbit are “Original Pictures.” This is distinct from and

unrelated to any dispute between the parties regarding “the definition, computation, accounting

for or payment of the” Contingent Compensation owed to Plaintiffs on the first installment of

The Hobbit or The Lord of the Rings films.

36. This distinction is made clear by the fact that the arbitration carve-out uses the

very same words – “the definition, computation, accounting for or payment of” – as used in

Sections 4(c)(2) and 4(c)(4) of the Sharing Agreement. Thus any disputes relating to the

computation of the Contingent Compensation as provided in Sections 4(c)(2) and 4(c)(4) are

covered by the arbitration carve-out but disputes relating to what is an Original Picture under

Section 4(c)(1) and not covered by the arbitration carve out. Indeed, the arbitration carve-out’s

use of the words “but no other” specifically excludes such disputes.

37. The forum selection clause and the arbitration clause complement each other.

Whereas all legal disputes to “enforce” or “interpret” the language of the Sharing Agreement



11

itself are properly submitted to New York courts, substantive disputes regarding calculation of

the Purchase Price and Contingent Compensation are properly submitted to arbitration.

Although the arbitration clause mentions that it will apply to disputes over the “definition,

computation, accounting for or payment of the contingent consideration,” this does not require

the arbitrator to “interpret” the Sharing Agreement; rather it requires the arbitrator to apply the

provisions (including the defined terms) from the Exhibits.

38. Even if there were an arguable conflict between the forum selection clause and

the arbitration clause, such a conflict would only indicate that there is no “clear” and

“unequivocal” agreement to arbitrate. On this point, the Stigwood case is illustrative. Id. The

Stigwood case related to a party’s right to share in the royalties to the Bee Gees’ commercially

successful song “Jive Talkin’.” Id. at 124. The song was featured prominently in the soundtrack

to the film “Saturday Night Fever,” and Stigwood initially shared the royalties from the

soundtrack with Atlantic Recording Corporation. Id. After this commercial success, Stigwood

then re-released the soundtrack, this time replacing the studio version of the Bee Gees song with

a live version and claiming that no further royalties were owed to Atlantic. Id. Stigwood further

invoked the parties’ arbitration clause, which required arbitration over “paragraph 18 and any

other provisions of this agreement relating to accounting procedures, methods of computation

and payments.” This provision was actually broader than Section 4(c)(7) of the Sharing

Agreement, because paragraph 18 of the Stigwood agreement broadly covered the parties’

continuing rights to royalties. Id. at 125. Nonetheless, the court rejected this argument due to

the qualifying language in the arbitration clause, limiting it to disputes regarding computation of

payments owed under the agreement. Id. at 126 (“It is manifest that the controversy between the

parties only incidentally relates to ‘accounting procedures, methods of computation and



12

payments.’ In essence the dispute is rather over whether Atlantic has continuing rights to

royalties realized from Stigwood's exploitation of the album containing the substituted rendition

of The Bee Gees' composition.”). Moreover, the court found that the limiting language

prevented it from broadly interpreting the reference to paragraph 18. Id. Therefore, the court

held that the broadly worded arbitration clause was not sufficient to clearly and unequivocally

establish a right to arbitrate. Id. Similarly here, if the arbitration clause in Section 4(c)(7) were

read broadly so as to draw a conflict with the forum selection clause, this would still not suffice

to clearly and unequivocally establish a right to arbitrate, in light of the limiting language.

C. The Arbitability of this Dispute is for This Court – Not the Arbitrator – to Decide

39. Under New York law, “[t]he threshold issue of whether a valid agreement to

arbitrate exists is for the court and not an arbitrator to decide.” O'Donnell v. Arrow Electronics,

Inc., 294 A.D.2d 581, 581-82 (2d Dep’t 2002). Courts will not leave the issue of arbitrability

itself to an arbitrator to decide, unless there is a “clear and unmistakable” agreement to do so. In

re Sherwood, 108 A.D.3d 979, 970 N.Y.S.2d 124, 125 (3d Dep’t 2013) (“reject[ing] respondents'

contention that an arbitrator, rather than a court, should decide whether the parties' dispute is

arbitrable” because the parties did not have a “clear and unmistakable agreement to arbitrate

arbitrability”). In the present action, there is no such “clear and unmistakable” agreement. The

issue of “arbitrability” is never mentioned in the agreement, which only sets forth two very

narrow instances where arbitration is to occur. By its express terms, “no other[]” issues are to be

submitted to arbitration. Sharing Agreement at ¶ 4(c)(7).

40. Moreover, New Line agreed in the Sharing Agreement for all disputes relating to

the interpretation of the Sharing or Quitclaim Agreement to be decided by this Court. Sharing

Agreement at ¶ 10 (“[T]he Federal and State and City courts located in New York County, State



13

of New York, shall have sole and exclusive jurisdiction of any claims arising hereunder and of

any action to enforce or interpret this Quitclaim Agreement”).

41. No previous application has been made for the relief requested herein.

Dated: December 23, 2013Armonk, NY

By: /s/ Motty ShulmanMotty Shulman333 Main StreetArmonk, NY 10504P: 914-749-8200

F: [email protected] for Plaintiff Miramax, LLC



EXHIBIT 1





THE RESOLUTION EXPERTS'

Demand for Arbitration Before JAMS

Instructions for Submittal of Arbitration to JAMS

Demand for Arbitration Based on Pre-Dispute Provision

If you wish to proceed with an arbitration by executing and serving a Demand for Arbitration on the appropriate party,please submit the following items to JAMS:

A Two (2) copies of the Demand for Arbitration

B. Proof of service of the Demand on the appropriate partyE.g., copy of certified mail receipt signed by recipient or sworn statement of service by a non-partyover 18 years of age.

C. Two (2) copies of the entire contract containing the arbitration clause

D. Initial non-refundable $400 Case Management Fee (CMF) per partyEach party may submit its own CMF, or to expedite the commencement of the proceedings oneparty may elect to submit both or al/ CMFs. In lengthier, more complex cases additional CMF maybe billed. For cases involving consumers, see JAMS POlicy on Consumer Arbitrations Pursuant toPre-Dispute Clauses.

OR

Arbitration Based on Post-Dispute Fully Executed Arbitration Agreement, Oral Stipulation or Court OrderCompelling Arbitration

Whether or not a certain arbitrator has been deSignated, if the parties have agreed to arbitrate at JAMS or the courthas ordered that the parties arbitrate at JAMS, kindly forward the following items:

A. Two (2) copies of the Demand for Arbitration

B. Proof of service of the Demand on the appropriate partyE.g., copy of certified mail receipt signed by reCipient or swom statement of service by a non-partyover 18 years of age.

C. Two (2) copies of Executed Arbitration Agreement OR Court Order appointing arbitrator/JAMS;Please contact JAMS to obtain the appropriate form (e.g • Arbitration Agreement)

D. Two (2) copies of the entire contract, if any. containing an applicable arbitration clause

E. Initial non-refundable $400 Case Management Fee (CMF) per party

Each party may submit its own CMF, or to expedite the commencement of the proceedings one party

may elect to submit both or all CMFs. In lengthier, more complex cases additional CMF may be billed.For cases involving consumers, see JAMS Policy on Consumer Arbitrations Pursuant to Pre-DisputeClauses.

Please submit to your local JAMS Resolution Center.

Once the above items are received, JAMS will contact all parties to commence the arbitration process, includingthe aPPOintment of an arbitrator and scheduling of a hearing date.

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Resolution Centers Worldwide. 1.800.352.5267. www.jamsadr.com(c) copyright 2013 JAMS. All rights reserved.



THE RES 0 LUTI 0 N EX PERT S'


TO RESPONDENT: IMiramax Film NY LLC

(Name of the Party on whom Demand for Arbitration is made)

Address:17966 Beverly Boulevard

City: ILOS Angeles

TelePhone:\ Fax:1

Representative/Attomey (if known):IBertram Fields

State/Province: ICA

Email:1

(Name of the Representative/Attorney of the Party on whom Demand for Arbitration is made)

Address: Greenberg Glusker Fields Claman & Machtinger LLP 1900 Avenue of the Stars, 21st Floor

City: /LOS Angeles State/Province: FA

Zip: 190048

Zip: 190067

TelePhone:\31 0-20 1-7454 Fax: 131 0-553-0687 Email: [email protected]

FROM CLAIMANT (name):INeW Line Cinema LLC

Address:1888 Seventh Avenue, 20th Floor

City:

Iew York

Telephone:\ Fax:

State/Province: INY

Ernei :1

Representative/Attomey of Claimant (if known): Evan Chesler and Karin DeMasi; John Speigel and Kelly Klaus

(Name of he Represenlative/Attomey of the Party Demanding Arbitration)

Address: Cravath, Swaine & Moore LLP 825 Eighth Avenue; Munger Tolles & Olson LLP 355 South Grand Ave, 35th Floor

State/Province: CA

ziP:110106

Zip: /100 19; 90071ity: I ew York; Los Angeles

TelePhone:12 12-474-1 000; 213-683-9100 Fax: 212-474-3700; 213-683-5142 Email: [email protected];[email protected];

[email protected]; [email protected]

Nature of Dispute: Claimant hereby demands that you submit the following dispute to final and binding arbitration (amore detailed statement of the claim(s) may be attaChed}.

D'.put.,Iee attached Statement of ClaIm.

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Resolution Centers Worldwide. 1_800.352.5267. www_jamsadr.com

(c) copyright 2013 JAMS. All rights reserved_



THE RES 0 l UTI 0 N EX PER TS'


Arbitration Agreement: This demand is made pursuant to the arbitration agreement which the parties made as

follows (cite location of arbitration provision and attach two (2) copias of entire agreement).

Arbitration Paragraph 4.c.7 of the attached Quitclaim Agreement provides for arbitration of this matter in New York under the Streamlined Arbitration

Provision Location: Rules and Procedures of JAMS. (Ex. A to attached Statement of Claim.)

Claim Relief Sought By Claimant: Claimant asserts the following claim and seeks the following relief

(including amount in controversy. if applicable).

Claim: See attached Statement of Claim.

Response: Respondent may file a response and counter-claim to the above-stated claim according to the applicable

arbitration rules. Send the original response and counter-claim to the claimant at the address stated above with two (2)

copies to JAMS.

Request for Hearing:

JAMS is requested to set this matter for hearing at: INew York. NY

(Preferred Hearing Location)

Election For Expedited Procedures (Comprehensive Rule 16.1)

I By checking the box to the left. Claimant requests that the Expedited Procedures described in JAMS ComprehensiveRules 16.1 and 16.2 be applied in this matter. Respondent shall indicate not later than seven (7) days from the date

this Demand is served whether' rees to the Expedited Procedures.

/Signed (Claimant):(may be signed by an attorney)

I I I iDate· I '2.' . J5• Ii / f D / '

I :v

Type I Print Name: lEvan R. Chesler

Please include a check payable to JAMS for the required initial, non-refundable 400 per party depositto be applied toward your Case Management Fee and submit to your local JAMS Resolution Center.

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Resolution Centers WorldWide. 1 . 8 0 0 . 3 5 2 ~ 5 2 6 7 . W W W . ~ j a m s a d r . c o m(0) copyright 2013 JAMS. AJI rights reserved.



THE RESOLUTION EXPERTS'


COMPLETION OF THIS SECTION IS REQUIRED FOR CLAIMS INITIATED IN CALIFORNIA

A. Please indicate if this DIS or ILl IS NOT a CONSUMER ARBITRATION as defined by California

Rules of Court Ethics Standards for Neutral Arbitrators, Standard 2(d) and (e):

"Consumer arbitration" means an arbitration conducted under a pre-dispute arbitration provision contained in a contract that meetsthe criteria listed in paragraphs (1) through (3) below. "Consumer arbitration" excludes arbitration proceedings conducted under orarising out of public or private sector labor-relations laws, regulations, charter provisions, ordinances, statutes, or agreements.

1) The contract is with a consumer party, as defined in these standards;

2) The contract was drafted by or on behalf of the non-consumerparty; and

3) The consumer party was required to accept the arbitration provision In the contract.

"Consumer party- is a party to an arbitration agreement who, in the context of that arbitration agreement, is any of the following:

1) An individual who seeks or acquires, including by lease, any goods or services primarily for personal, family, orhousehold purposes Including, but not limited to, finanCial services, insurance, and other goods and services asdefined in section 1761 of the Civil Code;

2) An individual who is an enrollee, a subscriber, or insured in a health-care service plan within the meaning of section1345 of the Health and Safety Code or health-care insurance plan within the meaning of section 106 of the InsuranceCode;

3) An individual with a medical malpractice claim that is subject to the arbitration agreement; or

4} An e m p l o y e ~ or an appficant for employment in a dispute arising out of or relating to the employee's employment orthe applicant's prospective employment that is subject to the arbitration agreement.

If Respondent disagrees with the assertion of Claimant regarding whether this IS or IS NOT a CONSUMER ARBITRATION,

Respondent should communicate this objection In writing to the JAMS Case Manager and Claimant within seven (7)calendar days of service of the Demand for Arbitration.

B. If this is an EMPLOYMENT matter, Claimant must complete the following information:

Effective January 1, 2003, private arbitration companies are required to collect and publish certain information at least quarterly,and make it available to the public in a computer-searchable format. In employment cases, this includes the amount of theemployee's annual wage. The employee's name will not appear in the database, but the employer's name will be published.Please check the applicable box below:

Annual Salary: 0 Less than $100,000

0$100,000 to $250,000

oMore than $250,000

o ecline to State

C. In California. consumers (as defined above) with a gross monthly income of less than 300% of

the federal poverty guidelines are entitled to a waiver of the arbitration fees. In those cases, the

respondent must pay 100% of the fees. Consumers must submit a declaration under oath stating the consumer's

monthly income and the number of persons living in his or her household. Please contact JAMS at 1-800-352-5267for further information.

Page4of6

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Resolution Centers Worldwide. 1.800.352.5267. www.jamsadr.com

(e) copyright 2013 JAMS. All rights reserved.



1Evan R. Chesler

2 Karin A. DeMasi

3 CRAVATH, SWAINE & MOORE LLP

Worldwide Plaza

4 825 Eighth AvenueNew York, NY 10019

5 212-474-1000

6 John W. Spiegel

Kelly M. Klaus

7 MUNGER TOLLES & OLSON LLP

8 355 South Grand Ave., 35th Floor

Los Angeles, CA 90071

9 213-683-9100

10 Attorneys for Claimant New Line Cinema LLC11

12

13JAMS

14

15

NEW YORK CITY, NEW YORK

16 NEW LINE CINEMA LLC, a Delawarelimited liability company,

17

18

19vs.

Claimant,

20 MlRAMAX FILM NY, LLC, a New York

limited liability company,

21

22Respondent.

JAMS File No.

STATEMENT OF CLAIM

23 Claimant New Line Cinema LLC (''New Line") alleges against Respondent Miramax Film

24 NY LLC ("Miramax") as follows:

25

26 1.

INTRODUCTION

This dispute concerns Miramax's demand that New Line pay it a portion of the

27 revenue derived from two forthcoming pictures based on lR.R. Tolkien 's book, The Hobbit: Or

28 There and Back Again ("The Hobbit o o ~ ' ) , including, "The Hobbit: The Desolation o Smaug,"

ARBITRA TION - STATEMENT OF CLAIM - CONFIDENTIAL



("Desolation ofSmaug"), which will be released in the United States on December 13,2013. New

2 Line denies that it has any liability to Miramax.

3 2. Under the plain and unambiguous terms of a Quitclaim Agreement, dated as of

4 August 21, 1998, between New Line Cinema Corporation and Miramax Film Corp. ("the

5 Agreement," a true and correct copy of which is attached hereto as Exhibit A), Miramax is entitled

6 to 5% of the adjusted gross receipts, referred to in the Agreement as "Contingent Consideration",

7 only for the ''first motion picture" based "in whole or in part" on The Hobbit Book. (Agreement

8 4.c.l (emphasis added), 4.c.2.) In accordance with that provision, it is not disputed that New

9 Line has already paid Miramax 5% of adjusted gross receipts (as defined in paragraph 4.c.I.ii}-

10 approximately $25 million to date-for the motion picture The Hobbit: An Unexpected Journey,

11 which was produced by New Line and theatrically released in the United States in December

12 2012. As such, New Line has already complied fully with paragraph 4.c as it relates to The Hobbit

13 Book.

14 3. The Desolation ofSmaug is the second, not the first, motion picture based on The

15 Hobbit Book, and accordingly, New Line does not owe any payment to Miramax under the

16 Agreement in connection with this second motion picture, or any subsequent motion picture based

17 on The Hobbit Book.

18 4. Notwithstanding the plain language of the Agreement, which expressly limits

19 payment to Miramax to the ''first motion picture" based on The Hobbit Book, counsel for Miramax

20 has asserted that New Line must pay Miramax 5% of the adjusted gross receipts from the second

21 motion picture based on The Hobbit Book-Desolat ion ofSmaug.

22 5. The Agreement provides that "[a]II disputes arising . . . with respect to the

23 definition, computation, accounting for or payment of the contingent consideration provided for in

24 . . . paragraph 4.c . . . shall be submitted exclusively to confidential and binding arbitration in the

25 County and State of New York, regardless of the amount in controversy, before a single former

26 judge as arbitrator under the Streamlined Arbitration Rules and Procedures of

27 JAMSlEndispute . . . . (Jd. 4.c.7.) Accordingly, New Line respectfully demands arbitration of

28 this existing and substantial controversy.

-2-ARBITRAnON - STATEMENT OF CLAIM -- CONFIDENTIAL



1

2 6.

PARTIES

At all relevant times, New Line was and is a Delaware limited liability company.

3 On December 31, 2009, the Delaware corporation named "New Line Cinema Corporation"

4 converted under Delaware law to a Delaware limited liability company with the new name, "New

5 Line Cinema LLC," the Claimant herein. Under Delaware law, New Line is the same entity as

6 New Line Cinema Corporation, and owns and is subject to, among other things, all of the rights

7 and obligations of New Line Cinema Corporation under the Agreement. Accordingly, both New

8 Line Cinema Corporation and New Line Cinema LLC are referred to herein as "New Line".

9 7. On information and belief, at all relevant times, Miramax was and is a New York

10 limited liability company. On information and belief, Miramax is a successor-in-interest to or

11 otherwise owns the rights and is subject to the obligations of Miramax Film Corp. under the

12 Agreement.

13

14 8.

BACKGROUND

Under the Agreement, Miramax Film Corp. quitclaimed to New Line (the

15 "Purchaser" in the Agreement) all of its right, title, and interest in and to the "Property" as defined

16 in paragraph 2, including, among other things, the motion picture rights in four of J.R.R. Tolkien's

17 literary works: The Hobbit Book and the three books comprising The Lord of he Rings Trilogy,

18 i.e., The Fellowship of he Ring, The Two Towers and The Return of he King. (Agreement

19 ~ 4 . a . 1 . )

20 9. In consideration of the quitclaimed rights, New Line paid to Miramax Film Corp. in

21 1998 a dollar amount equal to $11,756,046.99, the "Purchase Price" under the Agreement.

22 (Agreement 4.h.1.)

23 10. Under the Agreement, New Line also agreed to pay Miramax Film Corp. certain24 "Contingent Consideration," as defmed in paragraph 4.c. (Agreement 4.c.)

25 11. Paragraph 4.c provides, in pertinent part, that New Line will pay Miramax Film

26 Corp. Contingent Consideration, defined to mean 5% of adjusted gross receipts, with respect to

27 "each of the Original Pictures". (Agreement 4.c.l-2.)

28

-3-ARBIT RATION - STATEMENT OF CLAIM - CONFIDENTIAL



12. The Agreement expressly defines the "Original Pictures" to mean "with respect to

2 each of the four books separately which comprise [The Hobbit Book] and 'The Lord of the Rings'

3 [Trilogy], the first motion picture, if any, based in whole or in part upon such book which is

4 produced by or pursuant to the authority of Purchaser, but excluding remakes." (Agreement

5 4.c.l.i (emphasis added).)

6 13. Paragraph 4.c further expressly provides that a "motion picture shall be deemed to

7 be a picture based on [The Hobbit Book] if either (a) the main story line of the book is

8 substantially the main story line of the picture, or (b) the events or incidents in the picture are

9 primarily the events or incidents from the book and the picture has both the characters Smaug The

10 Dragon and Thorin the Dwarf (or other characters which would satisfy their story functions) or

11 Bilbo Bagins as the lead character, or (c) the title or subtitle of the picture is 'The Hobbit' or

12 'Hobbit'is any part of he title or subtitle of he picture". (/d. (emphasis added).)

13 14. New Line produced the motion picture The Hobbit: An Unexpected Journey, which

14 was released for theatrical distribution in the United States in December 2012. The Hobbit: An

15 Unexpected Journey is the one and only Original Picture based on The Hobbit Book as expressly

16 set forth in paragraph 4.c of the Agreement. In accordance with the Agreement's unambiguous

17 terms, New Line has already paid Miramax total aggregate Contingent Consideration of

18 approximately $25 million to date in connection with The Hobbit: An Unexpected Journey.

19 15. New Line has also produced an Original Picture based in whole or in part on each

20 of the three books in The Lord of the Rings Trilogy. In accordance with the Agreement's

21 unambiguous terms, New Line has already paid Miramax (or its predecessor, Miramax Film

22 Corp.) total aggregate Contingent Consideration in excess of $90 million in connection with those

23 three Original Pictures.

24 16. Because New Line has paid Miramax (or its predecessor, Miramax Film Corp.) the

25 Contingent Consideration due on the "first motion picture" with respect to each of the four books

26 under paragraph 4.c .l. i, no further payment is due with respect to any further motion picture based

27 on these books.

28

-4-ARBITRATION - STATEMENT OF CLAIM - CONFIDENTIAL



I 17. New Line is in the process of producing and completing for distribution two

2 additional motion pictures based on The Hobbit Book: (l) Desolation of Smaug, which will be

3 released in the United States on December 13, 2013, and (2) the provisionally titled The Hobbit:

4 There and Back Again ("There and Back Again"), which New Line intends to complete and begin

5 distributing in 2014.

6 18. Despite the unambiguous language of the Agreement and New Line's full

7 compliance with the Agreement, Miramax's counsel has infonned New Line that it believes it is

8 entitled to receive additional Contingent Consideration under the Agreement for the release of

9 Desolation ofSmaug and There and Back Again-motion pictures that are decidedly not the "the

10 first motion picture . . . based in whole or in part" upon The Hobbit Book. (Agreement 4.c.l.)

11 19. In a letter dated November 13, 2013, Bertram Fields of the law finn of Greenberg

12 Glusker Fields Claman & Machtinger LLP asserted that his client, Miramax, has the right to

13 receive additional Contingent Consideration, in addition to the Contingent Consideration already

14 received, for forthcoming motion pictures based on The Hobbit Book.

15 20. New Line denies that Miramax is or will be entitled to payment of any additional

16 Contingent Consideration under the Agreement in connection with motion pictures based on The

17 Hobbit Book.

18

19

20

21

22

23

24

25

26

27

28

21. Through this Demand, New Line seeks a declaration that Contingent Consideration

is payable under the Agreement only with respect to the Original Pictures as defined in paragraph

4.c of the Agreement and that the motion pictures The Desolation ofSmaug and There and Back

Again (or any subsequent motion picture based on The Hobbit Book) do not constitute Original

Pictures as defined in the Agreement.

JURISDICTION

22. The Agreement provides that the parties' dispute over Miramax's right to payment

of additional Contingent Consideration under paragraph 4.c of the Agreement shall be resolved by

confidential and binding arbitration before JAMSlEndispute.

23. In particular, paragraph 4.c.7 of the Agreement provides:

-5-ARBITRATlON - STATEMENT OF CLAIM -- CONFIDENTIAL



1

2

3

4

5

6

7

8

9

10

11

12

13

14

All disputes arising with respect to the calculation and accounting for the Purchase

Price and with respect to the definition, computation, accounting for or payment of

the contingent consideration provided for in this paragraph 4.c (but no others) shall

be submitted exclusively to confidential and binding arbitration in the County and

State of New York, regardless of the amount in controversy, before a single former

judge as arbitrator under the Streamlined Arbitration Rules and Procedures ofJAMSlEndispute (herein, "JAMS") in effect at the time the arbitration demand is

served, except as such Rules are varied herein. The arbitrator shall be mutually

selected from a panel of at least five (5) former judges submitted by JAMS. If the

parties cannot agree, then the process shall be repeated no more than twice. If the

parties still do not agree then JAMS shall designate the arbitrator. The demand for

arbitration shall be served by certified or registered United States mail, return

receipt requested, to the notice addresses set forth in paragraph 8 below. Each

party shall have all rights of pre-hearing discovery permitted under New York Civil

Practice Law and Rules, subject only to such limitations as the arbitrator may order

and subject to the timetable for evidentiary hearings. Each party shall bear its own

counsel fees and costs. Each party shall pay 50% of the fee of the arbitrator and

other expenses of arbitration as assessed by JAMS.


(Declaratory Relief Against Miramax)

24. New Line incorporates paragraphs 1-23 above, inclusive, of this Demand as though

15 fully se t forth herein.

16

17

25.

26.

New Line has complied fully with all of its obligations under the Agreement.

A present, actual controversy exists between New Line and Miramax with respect

18 to Miramax's contention that New Line has an obligation under the Agreement to pay Contingent

19 Considerat ion with respect to additional motion pictures based on The Hobbit Book.

20 27. As a result, a present, actual and justiciable controversy exists between New Line

21 and Miramax regarding the parties' rights, duties, and obligations.

22 28. As set forth above, Miramax's position is improper, unauthorized and

23 impermissible under the Agreement. New Line has (a) fully satisfied its obligation to pay

24 Contingent Consideration under the Agreement and (b) no obligation to pay any Contingent

25 Consideration under the Agreement with respect to any additional motion pictures based on The

26 Hobbit Book.

27

28

-6-ARBITRA TION - STATEMENT OF CLAIM -- CONFIDENTIAL



1 PRAYER FOR RELIEF

2 WHEREFORE, New Line respectfully prays for the following relief:

3 1. For a declaration that Contingent Consideration is payable under the Agreement

4 only with respect to Original Pictures as defined in paragraph 4.c of the Agreement;

5 2. For a declaration that Desolation ofSmaug, There and Back Again, or any other

6 subsequent motion picture based on The Hobbit Book, does not constitute an Original Picture;

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3. For such other and further relief that the Arbitrator may deem just and proper.

Dated: November 26, 2013

CRAVATH, SWAINE & MOORE LLP,

By

Members of the Firm

Worldwide Plaza

825 Eighth Avenue

and

New York, NY 10019(212) 474-1000

MUNGER TOLLES & OLSON LLP

John W. Spiegel

Kelly M. Klaus

355 South Grand Ave., 35th Floor

Los Angeles, CA 90071

(213) 683-9100

Attorneys for New Line Cinema LLC

-7-ARBITRATlON - STATEMENT OF CLAIM -- CONFIDENTIAL



Exhibit A



A u g - Z l - 9 8 06:0ap

.:,:.

SUBJECT: "IAMBOItEB-· "IHEiiOBBrr'·. . . .. "THE LORD OF THE O S

DA1E: As of A, { ~ ~ st- j \ \ l lCf--g

QUITCLAIM AGREEMENT

The following are lhc lermsof the quitclaim agreemenJ ("QUitclaim Aereement")betWeen MIRAMAXFlLM CORP. ("Minmu") and.NEW LINE CINEMACORPORA110N ("Purchaser"), with respect to (a) one or more moIion pictures b.1lsed on

the lituaty works .referred to in 2.b.3 below, such motion piCture ptoject(s) being alsoknown as "Jartlboree" (collectively. the "Pictute"). including witbOuJ JimiOOOl1. any and allsynopses. treatments._5Cenarios, screenplays iUJ.dlor otherwrittetl m8reria1 pcrtainjoSthereto, aDd (b) the literary work: refermi to in 2.b.2 below. and (c) the liIcrary worksrcfcl'rcd to in 2.\>.3 below; including a l l ~ g h t s in cormoctioD theleWitb OUJd an tangibleaDd. intangjble ~ c s respectinr aU of the foregoing. Whether in existence or knO\1llIlnow or in the future. . - . -

1. CONDITION PRECEDENT: sball bave o b l i g ~ o n b e ~ u n d c r uniessand uDtil (a) delivery to Miramaxof a o'opyof tbUi Quitclaim Aercemenl exCC'tUedbyPurchaser. ~ (b) I'Urcbaser pays to Miramu in full·the I.IDO\JIit ~ u i r e d pursuant toParagraph 4.b below, and (c) .Purchaser QU5e5 to be ~ e w t e d and delivered to MinJnax •

WGA Literiry Mati riIl A5sumption- AgR:emeat in the fOIm attached as 'Exhibit "A".This Quitclaim Agreement shill be x c : c u ~ by Purchaser and Mii'amax cqncurrently.

2. PROPERTY: Reference is hereby made to:

a-

v_36: ,'21198

The followiog items rcbding' to the Picture(C(,lllectiVcIy.1be "UJ;ldedyine IleaIS");

1. ~ u e r (option) Ap"ecmc:Dt dated August 8. 1997 between The SaulZaelilz Coropany aPd Miramn Film eoq,;;

2.

3.

4.

s.

6.

7.

l..ctkr Agreement dared August 8, 1997 between The SaUl ZaentlComparty md Miro:m.M Film Corp., amending the Letter Agreement

r e f ~ r r e d to in " ... above.

Ucenst m e n t dared August 8. 1997 between-The Saw Zaerit1.Company and Miraml11' F1lm Corp.;

M e r c h a n ~ i n g Agreement daIed August 8, 1997between The SaulZaenu Company ud MirIllWt Film o r p . ~lbeme Park License g r e e ~ n t dated August 8, 1991 between TheSaul ZacDtz Company and Miramax film Corp.:

Letter daIed r-c:bruary 5,1998 from Miramax Film Corp. to TheSaul Zacntz Co. ~ e r c i s i n g the option for "The Lord of the Rings'"

A ~ n t datcdMay 29, 1998 b e t w ~ WingNut~ b n s , Ltd. and Crimbil Equities Limited flslo Tiro Sanders;

1



06:0BP.

. '\:

1.\

)"

y,)6: 8 1 2 ' ~ 1 S

8.

9.



P.03

10. cenificate ofAuthorsbip dated April 28. 1998 from PhilippaBoyens;






16.

I I .

18.

J9.








22. Letter agn:etnMt October 20. 1975. between United Artists

Cotporation. on the ODe part.'and George Allen & Unwin. Ltd •and C.A. Bank, &. Trust InlCmaiionaJ, Ltd. (Dame changed fromSaS6oo.o Trustee &. Exccuwr:CotpOration. Ltd.). on tlIe other part.


, 2



0 6 : 0 B P

;, 36; 8121.1'98

23.

24.

25.

26.

.27.

28.

P.04









31. U.S. (including all dcpcudenciQ and the Philippines) Publi$hing

Agreement dated August 11. 1 9 ~ 4 between Houghton Mifflin Co.Illld George Allen Unwin. Lut fol''Tbc fellowship ()f1he Ring" .





3



Aug·Zl-98 06:09P,

v.16: '11119$

36.

37.

38.

39.

40.

41.

42.

P .os

P u b 1 i ~ i n j Aan:ement dated July 8. 19S8 between . . .S.,ordziclnia Wydawnicza ''Czytelnik" and George Allen & Unwin.Ltd. for "The Fellowship of the D g " .Publishing ~ t dared December 18, 19S8.between.Panstwowe WydanUctwolSKRYand c o r ~ Allm & Unwin, Ltd.for "Tbe Hobbit".

Publishing Agreement a ~ Jimuary S. 1959 betweenUitgcverij Hc:t Spc:ctrum N.V. and Allen &. Unwin,. Ltd.for "The Hobbit".

PublishiDgAgR:emelitdatCd March 12, 1959 betweenM. Newman P\lblishing Co., Ltd. and George Allen & Unwin. Ltd.for "The Hobbit".

-P u ~ l i s h i n g AgJeemcnt dared lanuaty 2.1, 1960 between

A l m q Y i ~ t ~ WlbelllGobm FOrla, and Georee ADen &; Unwin,Ltd. for "1be Two Towers". . .

PubliShing Agreement daledFebruary 11, 1960 between .

AD Rabm &: Sjl}grenIBokRSrJag and George Allen & UDwin, Ltd.tor -Ibe Hobbit":

Publishing g I e c ~ t dated September' 28, 1960 betweenC o m p . n j . ~ FaI)rilCdiwra and George Allen &. Unwin. ltd.{or·'lbeLord·Of be lUDgs·'. .

43. Pub&hin, m e n t dared January 10. 1961 betweenCompania General Fabril EdilOria and George Allen 8t. Unwin, Ltd.forf'Tbe Ilobbit"'.

44.

45.

46.

4.7.

.48.

PublisbiDg Agreement·dated January 16, 1961 between S'J'6nhielnia

Wydawnicza 'fC%ytelnik" and George Allen & Unwin. Ltd. tor '"TheTwo Towers".

PUblishing (excluding·U,S., dependencies, & Philippines)

Agreement dated Marcb 3,1961 between George AlIeil Unwin. Ltd.and Penguin Books Umited for "The HobbIt"'.

PUbliShing A ~ t dared June 2.2, 1961 between Amtrico FI"4aLamarcs &. Co. and GeorBe ADen. a UnwiD. Ltd. for ''The Hobbit".

Publishing Agri:cment dated November 21; 1961 between

Sp6tdziclnia y d a w n i c ~ a " Q y t e l i l i k " a n d George AlleD &. Unwin.Ud. for -rbe Rewm of me King".

Agreement dated April" 2, 1962 ~ t W c : e D J.R.R. ToUcien& George.Allen &: Unwin. Lcd. and William L.Snydcr duing business iCi

Reiubrandt Fdms.

4



0 6 : 0 9 P

v.36· 1/2.191

P . 0 6

49. A m e D ~ t dated April 2, 1962 between 1 . R ~ -ToWen & GeorgeA l l ~ " Unwin. Ltd. and WlllilDl.L. Snyder doing business asRembranclt Film$.

:;0. . Letter daIed March 27.1963 from William L. Snyderof RembrandtFilms to R a ~ o r Unwin. Esq.ot' George Allen &. Unwin. L(d.

S . Agreement AUJU$t l4. 196'·between George Allen &.

UnWin and LOngman 8. Green & Company L i m i ~ .~ 2 . Publishing Agrec:mclu dated September 3. 1965 between Iwanami

SboteJ1 and Ge.or,ge Allen &. Unwin. for " l l Ie Hobbit"

53. Letter dared March 24. 1966 froin AJ.ia a r t h o l o m e w of HOug-htonMifflin_ Company to Raynor Unwin of George: Allen" Unwin. Ltd.

~ 4 . -Publishers AgR;cmcot dated Octoh« 31. 1966between Ahilqvist de.

WiksclIIGdJas F.Urlag AB _Uld Oeorge AJJen k Unwin. Ltd. for"The Lord oftbe Rings" ( ~ "olwnes).

SS.Pub l i sben Agrcemwt dated November 7, 1966 betweenGyodetldalske NotWsk- Forlag AIS and Georp All,.. ) & Unwin.

Ud. o r ~ " T b c u . d oC Ihe Rings .(three o l ~ s ) -S6. Agreement dated Febn,wy 27. 1967 between DomtJd Swan and

Gcor,c Allen & Unwin. Ltd.

-57. LelJetdataUlUluaI)' 18. 1968 from OeorgeAllcn & Unwin. L1d. to

J.R,R. ToWeD.

S 8 . ~ l i 5 b e t · $ Agrmnent 4aAcd fwfarch 7, 1967 between CEAUE andGe.orge Allen & Unwin, Ltd.. for '"The Lord of the Rings" (three

v o ~ _ s . ) .

59. Agreement dared May 10. 1967 between Caedmoo: Records, Inc.and georse Allen & Unwin. Ltd.

60. Publishers Agreement d$ed May 17, 1967 between Hyuron Shn.~ . and George Allen & Unwin, Lid for "The LQrd of the Rill,s"(three vols.).

61. Publishcl's A.greeme"t dated October 4. 1961 between EditionsStock aM George AlleD &. Unwin. Ltd. for " T b e H ~ i t " .

62. AP-amK:GldatedNovcmbcr29., 1963 between George Allen &Unwin, Ltd._ and The Dramatic Publishing Company.

63. PUblisiten g ~ t dated January 31. 1968 between Gyldendaland George Allen-& U D ~ i n . Ltd. for 'The o b ~ i t " .

64. Letter -agreement daced March 6. 1968 to William L. Snyder

of Rembrandt Films from Katzka-:-Bemc Productions, [nco

5



·06:09P

.. ,.

V.36: a11S8

65. Letttr dated June 18. 1968 to William L. Snyder of RembrandtFllIm f r o ~ K a t z b . B e m e Productions, Inc.

P.07

66. A ~ m e n t d a t e d . J u n e 18 . 1968 between Kattb.-Beme Productionsand William L. Snyder.

67. Agreement daleClJi.ne 18,1968 between Kattka-Beme ProdUcUODS

and United Artists Corporation.

68.. Agteenlenl dated July 8.1969 between JAR. ToIJcicJ) and UJl.itedAnists Corporation.

69. A ~ daIcd ~ 8, 1969 JSdith Mary Tolkien. John·francis Rcuel ToJkien. MiCbael.I:fiWy .RcueI Tolkiea, Cbri5CophetReuel Tolkien. Priscilla Mat)' Ann 1 Tolkien, Michael GeorgeDavid Reuel ToUcien. JoaoAnoc Rcucl Tolk:ieD and United ArtistsCorporation. ..

70. Pisfributots Apeomcnt cWed July 8. 1969 between K.aob-BemeProcillctiOOS and United Artists Corporatiop.

71. FmanClDg and Sec:anty~ m e o t

dated July 8. 1969 becweenKatzka-Beme Productions·*lid Ullitcd Corporation.

72. N o t i ~ of mvoeable.Aurhority dated July 8, 1969 m SassoonTl'U$tee &lid EMcutor CorpocatiOD Ltd. to United AnistsCorporation. .

73.

74.

7' .

7().

77.

78.

79.

Leucr dated July S. 1969 from n i t ~ Anisu CorporatiOl1 toSassocm Trusrce and Executor COrporation. Ltd. . .

Letter datc4 July 8. 1969 from United Artists Corporation toGeorge .Allen & Unwin, Ltd. .

Leum-daCCd July 8, ·1%9 from United Artists Corporauion toSas$OOl1 TruStee and Executor CorpOration. Ltd..

Lausr dalcd Jwy·8. 1969 CNm Uniled Arti5C$ Corporalion w·George Alk:n &: Unwin, Ltd.

Notice ofImtvocable Authority dated July 8. 1969 fromGeorge AIleD. &. Unwin. Ltd to United Artists Corporation.

·Noticc ofIrrcvocable Authority dated July 8. 1 9 6 ~ fromGeorge Allea & Unwin,ud .10 United Artists CoIpontion.

Notice of Irrevocable Authority daled July 8. 1969 from SassoonTlU5tee and Executor Corporation Ltd to UDitedArrisfSCorporation. . .

SO. Ag.recmcDt dated Ju"e 12, 1972 e e n United ArtistsC o r p o r a 1 i ~ n _d·Kat:d:a-Beme Productions.

81.· Letter Agn:ernent dated December 4. 1972 between Kattka-Beme

6



0 6 : 0 9 P

r ~\

1

0'.36. 8121198

P . O S



83.

84.

8S.

86.

87.

88.

90.

91.

92.

93.

94.


Letier dated JUne 16. 19-,6 r o ~ SzoJcl, BrandwcB; Meyers &Altman to Vnited ArtiSts Corporation. .





~ 1 D e D t cbI_d IS ofJanuary 1, 1983 between 101m F.R.ToDder...MK;:bllCJ H.R. Tolkien. Cbri&i:opbet' R. Tolkicn. Priscilla M.A.R.Tolkieliand The Saul ZaCl\tz ProdUCQon Company. BJan

M e ~ d i s i n g .AssigDment of Copyri,bt dated Januasy 1. 1934 betWUJl, ~ p h c r Tolkien and Elrond Limited.







Trademoirk Licensing Agreement dUW as of January •• 1994-

betWCf;:D The Saul Zaentz Company and Iron Crown &terpriliCS.~ ~ . . .

7



O G : I O P

\.v.36· 8121198

P.09



97. Letter daIcd November 10.1997 from Peter Martin NehOl1 lONeil

Sacker. .





102.

103.




)04, . Letter dated FcbnWy 7,1996 floJu1'lurman G. Rudman (0 Alben

M. Bendich.

105. Short Form .TransfcrlRelease dated November 20. 1992, ~ u t e dby Metro-GoldwYn-Maycr, Inc., in favor of The Saul ZaenttCompUlY, with respect c.u \hC.mm,ned f C a t U ~ motion picmR:entitled ·'J.RR. Tolkieu's Lotd·ofthe Rings'".


Rings''.




108. Cenificate of&ga:emeJit dated May 15. 1998 in favQr of Miramax

Filin Corp .eecutedby Marty Katz and by Many Katz Productions.Inc. · . . .

8



Aug-21-98 0 6 : 1 P P P . 1 Q

\













(4) All material wrineo or aeated by Pew Jackson and/Or Fran Walshpursuant to the apemeDtS refeaed co iu items 2.a."1S. 2.a.16 and2.a.11 b o v ~ , and. if and to the extait lhat it exists and is ownedbyMiramax or Hardware, '.ny other I W ~ cteatcd by one or both of·them in connection with tbePic:w1t but any failure todelivCf $ucb0IhU material·nat ii{Miriu'nax's or Hardware's p o s $ ~ i o n toPurchaser sbalI not be a breach of this Quilcbim AgR:ement.




9



O G : 3 1 P P . 0 2

r·····

:i)

owned by.Miramax or Hardware are together r e f ~ to a i 1be " P r o M "(c;xcept that as to item 2.a. 98 above. oDly those rigbts set forth in Paragraphs . 1 . 2.5 t

5.4.6.1.6.2.6;3,6.4, 8.1.2·co the extent J : a n s f e r a b J ~ in law but neveribc1ess In no way~ ~ a t i n g froui or affecting Mi.ramu·s rights. r . 1 2 . 2 insofar as applicable. .12,24. 1225 and Exhibit "EO' arc included in tbe Ftoperty). Upon 1Cqllest Qf Purchaser andpayment of Purchase Price (as tbal is deflDCd Paragraph 4.b. below), i r ~wi1ldeliversuch copies or me UndetlyiDJ roms as itlD.iy have in its possession and such

.' items of we Literary MateriallS it may have. in its POSse5$ion, receipt of which is berebyacknowledgedby PuiY;ba...er.

3. WARRANl'IES: Miram," p ~ s e n t s and WOUTaDU that:

a.. Miramax bas not heretofore w1d, g r l U l ~ assigned. mongKged, pledged,hypothocated or otherwise i s p o ~ of any rigb,t. titk or that it acquired in and to

the Property. except as provided in dJe Underlying k e m s . . . .

b. .To the best ofMiranwt) knowledge. cxcijJt to the e x ~ t 5c:l furth'iD theUiJdcrlyjq Itc:w. IS of the date hereof tbete ale no d ~ c l a i ~ or i ~ . orcncumMances in or against the Property by auy pcrson.-finn. orCOIpOration. nO to the

best of Mitamax's knowledge. as oftbc date hereof. is h e ~ pending anyUugation or threatof HtigaiioncOocCnWtg tbe Property; .

. .c:. All fum (e.,., not optional) Obligations tequUed to'be e r f ~ ~ . theUnc$cdYlIllltem5 by Minmu pnOl:' to date hefeofhave been pcrfOnDed, &Deluding, butnot t c d to, all payment obliiatiom r oc:wrring pm. to the. dale hereof;

. ' . d. Miramax has nol heretofore produced or authorized &be ~ c t i o n ofa. iDotiOn p i c t U t e ~ television. radio or lDy other production CX' otheI: work based on

.Litcr.y.Matezial; . .

e. Miramax bas the right to coler into this Qui1C1. A&rtic:incnt with u r c h a . ~ { "and the right to pcriorm aD of Miramax'5 ~ g a u O I i S beIeunde:; .

f . . OCher than ileDl$ $pc:cified in Parap-aph i.a..above 10 whicb Miramax'andlorHardware ~ . a s i ~ n : a t o r Y , ocilbct M.t.ramax nor Haidwarc: has entered into any agmements ormadcaoy COJllIDltments a . f f e c t i ~ . r i g h t s in ,lIe Property; aDd, to the best of Mirainax's'and

.flatdWaIe'S i ) ~ e . other mati applicable collectivebtqaining egreemcDts theUnderJyinglterm. b e ~ l i e no c;ontr.cts, ~ n 1 S or t h e r d o c u m e n t . ~ affeCting'therights.

..

. . "The lack of a sipawreby Mil'aruax or ~ ~ ~ Provided for in any ofthe Underlying Items does not derogate (rom the validity br effect of such ltetns.

b. Miram4x has l i v e r c d the written notice of ~ t ~ S O , and paidthC SUQl, specifiedin paragraph 4 (a) of item' 2 .. 1·'above. . .

i. bL'l d e l i v e ~ the written nohu of exereise, a,nd piid the sum specifiedin paragraph 4.(b) of item 2.a.l abOve. . . .

Except as set forth above in this paragraph l or elscwhete in this QuiccJaimA ~ t ,Miramax Jmb::s DO reptesenlaUOO$ or waaaotie$ UIO -any covelWllS,a g r ~ n t s or understaodiDgs, other Iban wjth·Miramax or Hardwue that may .have been

e n t e ~ into by ''The Jacbon Partico" or any diem. or to any acts of conunission oromission by ""The Jackson Parties".or any of.tbem. .

".3'6: 8/21198 10



)

A U ~ - Z l ~ 9 B 0 6 : 3 Z P

P . 0 3


ilJlPlied. ' , '



costs (iI1cluding lQSOQ8b1e ot.USide anomey's fees) ~ i n ' g out of or rcs1iJring frOID any~ h by Miramax ofMiramu's l'eprt:Sentatiolls. warranties w g r e e l l l C l 1 ~ contained inthis Quitclaim A ~ l .4, PURCHASE OF PRopERTY:




all of the executory 1eI:mS. ~ O V e D a l n $ . cooditiODsaod other provi$ions J:t,:quired to be keptand performed subsequent So «be dtIc bereofby MirIunU or Hardware contaioed in thea g r c e ~ t s s ~ c d in PuaaraPbs . a . l ~ . i n c l u s i ~ c . abow and in all of he o1her




outside aIlOmey's fees and co5t5) t h e ~ , o r Illy of may sllffcr or incur arisio& out ofor resulting from{a) any bJUCh o f ~ representations, warrantie50 ' agreementsbcreWldcr at (b) U J ~ develOpment, productiOn. distribution and exploitation by n : h a . 4 i e t or

any ofPUn:haser's subsidiaries.$ ~ s o r s .

assigns ori ~ P S e e i

or otherwise purSuant toPWcbase:r's authority. ,of IJDY motion pictwe. television prolfUil or olbeT FoductiOn (s),in, any andallllUUlDCl'S,' metbo<b' and media whether now known or hereafter devised QI"




(4) C o n ~ e n t 1 y with lbe ~ u t i o n hereof, sball execute anddeliver to Mirarnax Ibc WGA LiteraryMatmal AssumptiOn Agrumcnt t t a d ) e d hereto asExhibit ..A ... and upon satisfaction of he Conditioos Precedent set forth in Paragraph 1,above shall cxeCute and deliver to PwclJaser a Short Form Quitclaim ill the: Jonn

~ , ) 6 : 81211911 11



r·-·:

'

i

P . 0 4

of EidUbjl "B" alt8cbed hereto; upon request y P u r ~ . MiruJax sball erant to .Purcba$er any and all waivers necessary to clear Ibc .MPAATitleBwuu reJistnilioD of thetitles ' · J a m ~ " . '"The Lord ofebe Rings", 'The Fellowship of die Rings", '1'hc TwoTowers-. "l l ie Return of he 1 G n ~ " . aDd ''1be H ~ b i t " and shall widldrawMiramax' sMPAA Title_Bureau registration upon e q u ~ by Purchaser. Miramax ain'CS that it will DOl

.prOtest Purdlasc:r's registration of such titles. .

. . • J . . .(5) I f and to the e,uent that Miranux. beaefits from any repre$eDtations,wuranties, indemnities and obligations contained in'theUndcdyioglteros, and i f and to rhe

extent that such represenwlOOs. w a m n t i ~ s ~ indemnities and obligations ttanSferable.Miramuquitclaims to Purchaser the beac:fit thereof. .

- - (6) Miramax wiD. not.assert any "chanpd elements" b C s in respect of thesubject matter of his Quitclaim Agreement. . -

b. Purc:base Price, Audit Right:

(1) In o n s i ~ a t i o n in .fun for the rigbls quitclaime4 .bei'eUnde.r. Purchaser

shall y to Miramu: the amount (the ''Pwclwe Price") equal to tho aggregate of (x)S l l ~ 5 6 , 0 4 6 . 9 9 ( a ~ u m c q u a l l o Miramax's direct il\CUJlCdregardinl the Picture and

a motion picture proJect Or projects based on '"The Hobbit Or 11.tCre and Back Again" butsuch t s $haIl not mclude ally 1065 in foreign exchaDge rate as referred co in Paragraphs1.S and 1.9_ of item 2.a.98 above or 0Cbctwise, or ovethead amounts paid Or .burscd byMiramax un<b' tile Petu: J..cU()D overall deaL i . ~ .• itDns 2 •.102 and 2.a.: 103 above) and(y) [he u m oI_SSOO.OOOin respect of Miramu'Ji v ~ for the P i ~ . P U r c ~ ~ : 8 b a l lpay Purchase Price.to MiraJitax, by wire tmisfer. within two (2) bUsiDeas days arterexecution this Quitclaim b y the p a r t j e s ~ " I b ¢ a f ~ n r i o n e d . ~ tJ3D$fershan be to Beaeficjary; Miramax'Fllm Corp • 375 Greenwich Su-eet. ~ e w York. NewYork 100)-3; Bank: Chase. M-"al tJn Bank:. 1 Chase ~ Plua.. New York. Newyork 10005. ABA II: o2ioooo21.AcCouftt NUlO.ber: 910259370S. .

(2) Purchaser shall have sixty (60)daY5 followiDe p.ljoulcnt otthe PurcbasePrice to MiPmax to audit Miramax for the pulpOte ofcontu:miag that MitamaX's direct~ were ·actUally expended by Miramax in o ~ o n wilh the Picture. Such audit shalfbe upon ..ot Jess thaD three (3) oays written, -Qotice to and shall be

c:oDduCtcd during lqUW buSinC6S hours at the. place where sucb records are kept. I f t isfi.naI1y Ulat me audit lbows a Det ~ v e r p a y m e n t by PurcbaSer'of the PurchasePrice as .tennined OPderparagrapb 4.b.(l) above. then MinuxJu. 51W1 refund.,uchoveqlaymcnt wjtbin ~ D (10) u 5 ~ days after such fioal detennination.

c. Contingent Consideration:

(1) f'Otlbcpurposes of this p a r ~ t h e fonowing teamS bave t.hefollowmg meanings:

(i) The "Original PictureS" means wjch ~ each of thefour books 5epatalely which compri5C ''The Hobbit; Or Thete And BlCk Again" and ' 7M

. Lord of he Rings", the first motiOn picwre, i f auy. based in whole or in pitt upon such

book 1iVbkh is prOduced by (II pursuant to the authority of fUrcbast'.t, but excludingrerDakes. A motiOn picture slmllbe deemed to be a picWre based OD the book. ''The Hobbit:Or- There and Back Again" if either <a) the main story line ofdie boOk is. subStaatiaIJy memain story line of the picture. or (b) We events or iocidcrWi in tbepicw.re are primarily the,

•. 36: 1121/98 11



06:32P' ~ "

Or incidents uonl the book and the i ~ bas both the chatacrers Smaug'the( ' : : , Dcagon and Thorln The Dwarf(or Olher which would satiSfy tbeir stOIy , .

fUnctions) or Bilbo Bagins as the lewJ ctw'aCter, or (c:) the ~ t l e or Subtitle of he picrure is•..The Hobbit" or "Hobbit" i$ any part of he title or subtitle of he piaure.

P . o s

(ii) "GR." IilcaDs "adjusted gross receipts" ~ defmed. calculated,accounted (or and paid pursuant to the Exhibit"GR" and me Rider 1 aDd Rider 2 theretocontained in b i t ~ ' attached hereto and by this teference made a part hereof.

(ill)' 1V'.,.AGJl" nleans "adjusted gross receiptS" as defined,calculated, lCCounted for and paid pursuauuo ti lt t a t i o n of'Television ModifiedAdjusted Gross ReceiptS" conta.i1\e.d ,inExhibit "C-l" attached hereto and by this referencemade a pan bereof.

, (Z) M to each oClhe Original Pictures whicb is produc:ed for inteDdedthcauical release, MirouIwt's participation sball be defined. calculated, ICC<MmtCd for and

, paid in accOrdance .with ihe pwvUiOns of EUibit "C". As to each OriJinal Picture-which isinitially ~ I e a s e d in the United Stares, tbeaUicallY. ,or bas a rbc:atrical release in the UnitedStalCS within six months after jrs initiat United States release inthc first medium in whicb itis e l e a S e d ~ . Miramax's participation sball ,9& of ca.' As to each web OrigiolI'Pictun: intended fQr theatrical tc1ease,wbic:b bas itS 'initial reJe.se in theUnited Stites in oil

medium other than motion pictwe theaters and,is not relea$ed in motion i ~ c m e a ~ in

the: United States witbirt six months following, its initial United states release, MiramaX·sparticipation shall be 2 112% of GR prvvided. however, that .in any country outside of theUnited'States wbicb the i ~ is initially t e l ~ in theaters Mirunax·s participationwith J p c : c t to OR. in that COUAtry shaD 'be S%, and for thar purpose rbe following, if soldandlor licensed togerher, stWl each be deemed a single country: Benelux (Belgium.Netherlands, m b o u r g ) ; Germany; AJIStria. and GermaD-speiaking SMtz:crlaod; Frauce

. and Prench..speiliilg Switzerland; ftaly and t a l i ~ · s p e a k n l Swia:cdand; and inclusive ofL i ~ b t e r m c i n when: sold andIor lkeDsed as part of any of he foregoing; ~ D a v i a'(Sweden. Demnark. Norway, FlIllaDd). To the sime effect,'if.any other c:ountr;ies, are soldor licensed together.and i f an Original Picture is ~ l c l S c d rbeatrically in any of chccountries so sold or licensed together, then Minmax's participation with respect to GR inthat countrY shall be S% C ( ) m p ~ in the same manner as I f uch country bad been sold orlicensed separately. ,,

(3) The calculation of GR for i r a m ~ shall be, PO less favorable tQ

Miramax than me calculation ofGR accuded toPeIet Jackson (whetbcftbrougb WingNutFilms Ltd., or olbcrWise) w i ~ ~ t to Ihc O r i g i n a l , P i c ~ $ ~ t b a t the video r o y a l ~w ~ c h is include< in GR shall be'2S%reatal. 112% seU-throu (as ~ I U r a s t e d with 40%rmeal, 20% selHbJ'ougb for Peter Jactson).11$ is o ~ fully ' in x h i b i t · ' C · · ~ ' a o dtlmt s<fUndtrack and meichllldising royalties ate not on a favori1Cnatioo basis.

, (4) With respect each Origmm ,PietWe wbich is nOt prodlK:ed forinitial theatrical release. ' s participation shall bedcfine4, calcutated,accounted forand paid in lIC(;onianc:e with the provisions of Exhibit "'C-l ot ~ shall be S ~ or TV -AGRN C ) ~ w i t h s t a n d i Q g the proYisioDs 0 ' Exhibit "C-l" 'with te$peCt to, accountiug for and 'a c ~ n t i n g statementS pertaininl to MiramJ.X·s participation in TV-AGR and Miramax'5

, auditing rights wilh respect lbercto. the provisiOlU ofExhibir Ole rather dum ofExbibit C... shall govern.

" (5) P ~ h a s U ~ that die first Original Pietwe e I ~ e d by or ,pursuOinl1O the authority ofPtu'cbaser shall be intended. for ,initial tbeatricIl release in theUnited States and shAJJ have its initial n:lease in the United SWc$' in motion picture theaters.

\/.36: 8/41198 13

I

TOTAl.. P . O l



......

i.

P.06

. .

(6) The CO riPutalion and payment f ~ s paniclpaUon ~respect to any of theOrigi$la1 PictuJc5 shalI Dol b e a o s . ~ - c o n a t e r a I i z e d ~ OUly manner withproceeds, x p e 1 1 5 ~ , t ~ orOtber deductions from· any other motion pioture or, production(whether produced U n u a n ~ to this agreement or I h e I w i . ~ ) . abandoJlIn£ut COStS or anyover-budget add bac.t. PurChaser shall not w--off any moniCi owed by Mirarnax toPurcllaser'Oil'any a t f U l b l ~ J a t e d to tlUs Quitclaim ~ t a g a i n s t Mitamax'sparticipations hereunder. ,.

(7) All·dispUtes wing with respect to abe c a J c u 1 a l i o ~ and accout1tiiJg for the

Purchase .. with respect (oche defiDitiQrl. o ~ o n . acrount:ing for: or paymentof the o n t i D , e n t C O Q s ~ t i o n provided for in this paragr8ph 4.c (but DO others) sball be:>ubmhlcd exclusively to coofidential.tnd biQdingarf,itiaiion in the County and ~ ofNew York. regardless ofebe amount i n c o n t r o v ~ r s y , befure a single fOrmeijudge.asarbitrator Q ~ the Streamlined Arbilfllioo R.ules IIDd Proceduta of AMSlEndispure( b e ~ , "SAMS") ill effect altbe time.the r b i t r ~ o n deJDMdis served, except as suchRules &Ie Yltied herein. The arbitrator shall be mutuallY selected from a-paoelof• leastfive (5) fanner judges sUbmitttcl'by lAMS. I f b:c cannO.f agJee. aheo the ~ $ Sshall be e p e a t ~ no.more tbIn twice. Ifme a r t i ~ still do not then lAM;S Shall

~ s j 8 a a I . e ibc axbitmtor. The delDlDd for ariJitrati9ll shall be,5ClVed by cenified Of registered

UIiited Slates, man, rewm rcc:eipt to the Idq1'esscs setfoi1h in a r . ~ h '8

be o,*. Each p.rty sh&ll have all riP.ts orpre-hearinj discover) permitted undcf the NewYork Civil PncticeLaw and Rules, subject only to such limitations a . ~ the. .-bitratorsnay ,order aDd subject to rhe ~ I e for evidentiary bearings. Each party h ~ beat its own

. couosel fees and costs. Eacb party shall pay SO% of the fee ofdie arbitrator,aod othere x p e n ~ s ofillPitmioo as assessed by JAMS ..

d. Credit:

. lob.WcinsleiQ ed Hcuvey W ~ i t J s t e i n shall be: acxonW shaml ExecutiveProducer e d i l for Ihe k ~ onsa,een OD'a sepai8.te card which may but need Dot containcredits for theOtber executive pcoduCers. and in paid ads oftbe ' ( , u b j e c t to New ,Linc's standard c l u s j O D S ) provided that ,Bob Weinstein', and Harwy Weinstein's creditis moot less duw second and thirdposjtjon,respectiveJy.of III e ~ r i V e producen.and

~ b a J l be in s iu no smaller tbaDany other eueutJve producer or producerCredit BobWeinstein's and ·Iiarvey Wemstdn's executive ~ credit may be sbared. Otheraspects of theil, cn:dit ~ J b¢-aube disCretion of Purchaser but irl any event Man .appear inads and on I C ~ whenever-and whcre\'ef any.other eXeCutive OT odic.r·prodllCer j$: ,

a c c o r d e d ~ . .

,5. Q U I T C L ~ C O N T I N G E N C Y : Unless and until Puicbaser pays Co Miramax infull the amount roquimi pursuant to Paragrapb 4:b., above, Purchaser shall not have anybenefit of Or rigbrs uDderthd QuircJaim A8Jl'C'inem, aD rights in the y shaD r ~ nwith M i r a m a X . l h e ~ "sbaU be no obligation execute 'and to l i v e f to l\m;haser dte b o r tForm QuifClaim. a n d ~ abaJl no. mae any tiliRl.S n the U n ~ r e d States CopyrightOffICe or h c r e rcgardiog tbesubject'inlttec of lbi$ I a i m A g r ~ n t . Iff'Utcllaser.

, fails to make dmely payment oCtbe Pun:hase Price in ~ o e with Paragraph 4.babove, tben Minmu 5balI h a ~ me right I t IS elcWoneither to IermiDa": or enforce this ,Quitclaim ~ 1 l J e O t . ~ rigbl to renuiJlar.e to be exercised on notiCe given within five (5)business "-ysaftcr the date on which timely pey.nent of he P ~ b a s e Price was due: in

accordaDc.e with Pv.lQlpb 4.b above. , F a i l ~ to give notice within sucb five (5) business~ y s period shall constitute i l waivcr of thCtoregOmg right to terminate.

v.36; 8/21198 14



AI,J,9 - 2 1 98 06: 3 3 PP.07 .

-',

"\}

6. PRESS E : After u I l ~ e < : U t i o n of this Quitclaim (or as beparties may otbcrwiso ~ c e ) . PurclWer and Miramax a p 10 issue a joint press release,p r c ~ by Miramax and Purchaser.(sucb approvalto be in writing. or lhematively.the .pproved press rdcase to be attached. 8$' an x h i b i ~ bcrc:to) pertUting to the 5Ubjea .matter·lImof. .

, . FURTHER JNSTRUMF.NTS:1be a . r t i ~ hereto aiR e to sign and/or deliver to ..each adler 5l1Ch furthcrinstrumerus as may IUSOIiably be required to carry our or e.ffectuatethe pwposes IDd iateD1'of this Quitclaim Agnemenl.lf eitber pmy fails to do so witbio arcasoaable time after RCeipt ora written request iherefor. then the zcquesting party isbCreby appointed l$ r r e v o c a b l e . ~ in fact for the ~ d W pany to do so in abe other'party's name or on its behalf. and tbe ECquesting party sbaJlpromptly deliver a tnJc copy of .any such document to tbc.otherparty. .

8. NOTICE: Notices required by Ibis Quitcliim t shall bem writing. Anynotices ~ r shall be liven by facsimiJe (With the O r i p ~ by ovemigbt CoUrier 51.lcb asFedEx). by delivery, or by overnight u r i e t i e r v i e e . s ~ asfedEx or bymaiUn, (posIpaid via n:Jistercd or f i e d m a i J . return receipr reque5lc:4) to the appropriatepatties at the addresses set forth below. The effe(tjve dale of JlOticcs shall be tbe date

.of facsimile transmission. pe.r5ooal delivery. deljvery to me overnight courier r v i C e . ormailing· . : . .

ToMiramax:

with a copy to:

To PUrchaser:

with acopy to:

7966 Bew;rly BoulevardLos Angeles. CA 90048Ann: Bob Osher". Co,.Piesident, ProductionF ~ N u m b e t : 2 1 3 - 9 " i - 4 2 1 9 .

Vidti OIerkasseDior ~ P ~ d c n t . . D U 5 ~ 5 and Legal AffairsMjwnaxPilm COrp. .11 SIICet, S t ~ FloorNew York. New York 10013Facsimile Number: 212-941·3934

New I.Jne ~ D l J l C o r p o r ~ o n&88 Seventh Avenue. 20th floorNew York. NYIOl()6Attention: lJenjamln lJnkin. Senior Executive Vice

Pres.idem. u s i l i e s ~ ' and Legal Affairsfacsimile NUII\bcr. 212-956-1931

suzanne Rosencrans:ScmorViCe.;Pre$.idenl

N ~ w LiRe m . a (4poCllliun825 N. SanVicenie . . .~ Angeles. < ; i I l i f ( J ~ 90069

f ~ i m i l e Number: 31()"967..6704

9: ASSIQNMENT; Each party•• rights with respecl to tbls Qui1CWm Agreement maybe freely assigned and licensed. butin me cvtnt of stich ass1gnmel1t or ..cease. each panys h ~ l ~ v ~ l e s , ( ~ p ~ l y iable for Cbe p c d ~ o iu obligations o ~ Ibis

Quitclaim Agrcen1eOt, Tlli$ Qqitclaim Agn:ement sbaII be. bin<liJJg upon shali1lluce'tothe f i t of the parties hereto and $cir C s p e c t i ~ e sUccesSors aDd assigns.

.36: &121198 15



d S : 3 3 P P.OB

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10. GOVERNlNo LAW AND JURlSDIC110N: This Quitclaml Alreement shall be-governed by the law of he Stale of New YOtk appliC11blelO _agreements eMCUtcd and to bewholly pcrfQl'mcd therein and cXtept as otherwise Provide4 in Paragraph 4.c.(7) above Ibepanies ~ t b a l l b e Federal and-state and City court51ocated irI_New y ~ County, State

of New York., sIWJ have sole and ~ l u s i v c j w U d i ~ of illy cJaiJm ansmg hereunder_ and of any_actionto enfolee or intcrprettbis Quitclaim Agreement.

t L NOINlUNCTIVEREUEF: MitarnaJt·s $ole and ~ c l u s i v e remedy for Pon:baSer'S

breach or caoc:ellalion of thiS ~ t c l a i m Agreementor any termhereof shall be an action fordamages and Miramax irrevocably waives any right to seek. n d l o r ~ 1e5cissiOJi aDdIorequitable and/or injunctive l i ~ f .

12. C O ~ A R T S ; ThiS QuitcJalm A,teemcmt may be e ~ i e d i n counterpartsand wbcm each pUty bas ~ g n e d and d e l i ~ e r e d at JCa5t such COUnteEpat1. to the otherparty. each U n ~ 5baD deeiDcdan originlll. and aU Coumapatts_taken together shallCOJl5titutc ODe -and the same agreement IIid diectivc as to boIh s . -nus u i t c l ~~ t may be executed vi. facsimile _signatUrcs. wbici) shil a v ~ lbesamc force, aDdeffect IS i f hey original ~ s n a t U R l S . and the originalsigoaturc copy _shall be forwardedto the other partY expeditiously. .

13. ENTIRE AGR.6,EMIiNT: 1l:iis is the entire I n e m of tM parties wilh respec( 10

the subjc:ct matterc ~ f ~

supersedes an priur understandings, cOmmwUCaDons andagreements. t b e t vnitten or oral, ofoc c t w ~ dJc-panies. and any such priorW\d.erstandiDgS, cOmmunications or m c n u arc hcceby merged into tW$ Quitclaim

A g r c e m ~ n t . No promises. P D ~ 5 , r e ~ n t a t i o i t $ . wamnties or otber agrcemenr.shave been made by part)' to me. other e x c . a,4i hercin expressly _set forth. ThisQuitclaim AgrcciDi:Dt IU.y not be ~ or mOdified ~ b y a WJiti.og $igned by bothpatties or duly authorized ~ ~ . For the avOidance ofdoubt., in the event\here is a discrepimCy between-the tmm of Exhibit "e" aodIor Exhibit ''(:-1'' and any oftbeforegoing provwons of his QUitclaim Agreement, the tenns of the o ~ g o i . n g provisions ofthis Quitclaim Agtecmcot shaU pe r n .

IN WITNESS WHEREoF, the patties hesdo bave exCCUWd this QuitclaimAgreemcot as of the day and year u e n above.

ACCEPIEl) AND AGREED;

B y : - - : ; . . _ " " ' = . " . . . . . ~ ~ ~ - - z = - _ - " i ~Its:_______ __ - _ : _

v.36: 8121198 16



.

\i)





as .Exhibit "Bit. .






TOTAL P.02



\

".,...

.)

.EXHIBIT "GR".

ADJUSTED GROSS.RECEIPTS

1>/2-1 ( 9 ~Referen.ce is hereby made to the Principal Agreement dated as of betWeen

Miramax Film Corp. ("Participant"), on the part, and New Line Cinema Corp; ("Company"),on the other part, to which this Exhibit "GR" (''Exhibit") is attached.

1. Definitions: As used in this Exhibit, the following terms shall have the meaningsindicated: .

A. "Participant": . The party to the Agreement to which this Exhibit is attached is

entitled to receive sums calcuIatedon thebasi.s of the net profits of he Picture;

. B. "Picture": The motion picture referred to in the Underlyirig Agreement to

w h i ~ h this Exhibit is attached;

C. "Territory": Unless otherwise defined in the U ~ d e r l y i n g Agreement to whichthis Exhibit is attached, the.eritire universe.

2.·of:

"Gross Receipts": As used in.this Exhibit, "gross receipts" shall mean the aggregate

A AIl sums actually received by Company from the following:

(i) Licenses from Company directly to exhibitors of the right· to exhibit thePicture for any and all purposes (including reisslles) on any and all sizes and ·gauges of film, in

1lQY and at] languages or versions, by any means, method, process or device now or hereafter, "mown, invented, discovered·or devised fucluding, without liinitation,' free television, video

cassettes and video discs, .

(ii) Licenses from Company to a third party (hereinafter referred to as

"subdistri,butor") of the right to clistribute the Picture (i.e., the right to license exhibitors to

exhibit the-Picture),

(iii) The license or lease· of positive prints and/or trailers of the Picture (as

distinguished from theHcenSes referred to in [iJ and [iiJ preceding); the·Sale or lease of so:uvenirprograms and booklet$; recoyeries by Company from infringements of copyrights in the Picture;

.and t,he receipts from the exhibition of the Picture where Company has taken over e operation.

of he theatre (i.e., so-:called "four-wall ~ l s " ) specifically for exhibition of he Picture.

. B. . All aid, subsidies (including so-called Early monies) and cash prizes ·actuallyreeeivedby cOmpany in connection with the Picture. .

C. Royalties with respect to the exploitation of home video devices embodying theP i ~ t u . r e , compute<J in accordance with Exhibit "GR-l.It

S:\LORDR\ExhibitGR. MiJarnIIl(.08.21.98 -1-



- ,

.D. Royalties with respect to the· exploitation of soUndtrack recordings, musicpublishing and merchandising. relating to the Picture, computed in accordance with Exhibits"GR-2," "GR-3" and "OR-4," respectively. .

. Gross receipts shall be detennined after all refunds; credits, discounts, a1lowaftces

and adjustments granted to exhibitors, whether ·Occasioned by c O n d e m n a ~ o n , by boards of·censorship, . ettlement of disputes or otherwise. Non-returnable advance payments and

.. ·guarantees ~ a U not be mc)uded in gross receipts. until earned by the exhibition of the Picture ora p p l i ~ by·COmpany to the Picture. Other advance payments and security deposits shall not be

included in gross receipts until earned by the e x h i b i t i o ~ of the Picture, forfeited, or applied by.C9mpany to· .the Picture. Gross receipts shall not inclUde (i) any portion thereof which iscontributed to charitable 9 ~ g ~ o n s ; (ii) the reCeipts of the following partie$,_whether or notdivisions, subsidiaries or affiliates of Company or any· company comprising COmpany: (a)exhibitors or otliers who inay use· or actUally· exhibit the Picture; (b) radio or ·televisionbroadcasters (mcluding, without limitation, cable and· closed circuit systems), (c) book or music

. publishers, (d) phonograph record producers· ·or distributors, ·and (e) merchandisers,

manufactUrers8 n ~

the lifce; (iii) any sums~ d

or paYlible to, or derived by, CompllDY for or in· Connection· i $ , o ~ as a result of, Company's .production andlor exploitation of any motion· picture(s) Which constitute a remake of, or sequel to,. the ·Picture, or the sale, transfer or

assignment of aU or any part of Company·s right to produce and/or exploit same; and (iv) anysums paid or payable to Company ·or any company comprising Company or any of its· or theirsubsidiaries, affiliates or di\'isions for or in connection with, Ot as the result of their furnishing,.supplying, rendering, procuring, arranging for or making available any materials, equipment,

l facilities or ·services in connection with the production of he Picture..I

3.. Adjusted Gross Receipts: The ·'adjuSted gross receiptstl .ofthe Picture shall mean thegross receipts remaining after the deduction therefrom on a continuing basis, regardless of when

. _ mcurred or payable, of the costs, charges and expenses incurred in connection with any of the

following:

A. All sales, use, receipts, excise, remittance, value added and 9ther taxes (howeverdenominated)·tO any governmental or taxing authority assessed upon or With respect to, the

n e g a t i v e s , ~ d u p l i c a t e · negatives, prints or sound records of the Picture, ·orupon the use or· distribution·of the P.icture, or upon· the revenues derived therefrom, or any part thereof;. any andall sums ·paid :Or acCrued on a ~ u n t of duties, customs and imposts, ·costs ofacquiring permits,.and any sinularauthoi:ity"to secure the entry, licensing, ~ x h i b i t i o ~ performance, use or televisingof he Pict1:D'e in any country or part thereo£:regardless of whether such payments or accruals areassessed against the Picture or the proceeds thereof or against a group of motion pictures inwhich. the Picfuremay be included or the proceeds t1.tereof. In no event shall the recou.pablelQllount of-any such tax. (however denominated) imposed upon Company be decreased (nor thegross receipts htcreased) ~ u s e of the manner m hich such taxes are elected to be treated by·Company in filing net" income, corporate, franchise, exCess profits or similar tax returns. Subjectto the foregoing, Participarit shall not be required to payor participate in (i) Company's or anysubdistributor·s United States· Federal and State income taxes and franchise taxes based onCompany·s or such subdistributors net income; or ( i ~ ) any income tax payable to any countrY or

. .

S:\LORDR\ExbibitGR·MiImIn.0821.98 -2-



territory by Co.mpany or any subdistributor ~ e d On theneteamings of Company ..or such·subdistributor in such country territory. Company shall be entitled to claimimd receive, andin no event shall Participant be entitled, directly or d i r e c t l y , to claim, share or participate in or·otherwise receive or derive. any and all tax or" Qther benefits of any kind or .natUre a r i ~ g out of,in connection with or otherwise accruing in reSpeCt of any and all taxes (however denominated)described in this Paragraph ~ including; without limitation, any and all tax credits or deductionsdirectly or indirectly attributable thereto Qt based t h e r e o n . E x ~ n s e s of transmitting to theUnited States any funds accruing to Company from the Picture in foreign coUntries. such as cableexpenses, or any discountS from such funds taken to convert such funds directly or indirectly intoU.S.·dollars and the cost ofcontestjng or settling' any of he matters descnDed above, with'a viewto reducing 'the same. shall similarly be deducted.

B. Copyright, patent and· trademark expenses; royalties payable to manufacturers of

Sound recOrding and reproducing equipment; dues and assessments of the Motion Picture.Association ofAmerica or other associations or o d i e s ~ including payments for the support of heAcademy of Motion Picture Arts and Sciences. legal fees, and any and all other expenses inaddition to those referred to herein inCUITed by Company in cOnnection with the l i ~ i n g ' of the

Picture for exhibItion or for other uses of he PictUre. .

C. Costs and expenses (including reaSonable attorneys' fees), incurred by Companyin c o n n ~ t i o n with any action taken by Company (whether by litigation otherwise) inenforcmg collection of gross receipts; or (on a pro rata basis) for checking attendance andexhibitors' receipts; or to prevent unauthorized exhibition or distribtition of he Picture; or to

. prevent any impainnent of. encumbrance on or infringement upon, the rights ofCompany in andJ to the Picture; or in connection with the auditlng of books and records of any exhibitor,

subdistributor or licensee; or to recover monies due pursuant to any agreement relating to thedistribution or exhibition of he Picture.

D: All payments paid or payable purSuant to applicabJ.e collective bargaining

agreements by reason ofany exhibition of the Picture or by reason of, or as a condition for, anyuse. re-use of re-run thereof for any purpose or in any m ~ e r whatsoever ( h ~ i n called"residuals"), and all taxes, pension fund contributions, and other c o ~ and payments computedon or payable in respect of any such residuals or participations' in the net profits or gross receiptsof the PiCture to any ~ r s o n , ' finn, corporation, guild, union, trustee or fund (other thanCompany); provided, however, that if Participant, or any prinCipZll stockholder ofParticipant, orany h e i r s ~ e x e c u t o r s , administrators, sUcCessors or assigns ofParticipant, .or any such stockholderare entitled, either directly or by way ofparticipation in any pension fund, to any such residuals,the amount payable on account thereof shall not be deducted under this Paragraph "D"., but. shall(to the extent p e n n i s s i b l ~ under applicable collective bargaining agreements) be treated as anadvance against Partidpant'sshare :of the receipts hereunder. and C o n v e r s e l y ~ any share of thereceipts paid to Participant· hereunder shall constitute an advance against such residuals payableto or for the benefit of Participant or any principal stockholder of a r t i ~ i p a n t , or any such· heirs,executors, administratOrs, successors or assigns. .

4. Allocations: Whenever Company (i) makes any expenditures or incurs any liability in. \ respect of a group of motion pictures, which includes' the Picture, or (ii) receives from any,,

S:u..oRDR\ExhibitQR·Milll1l8X.0821.98 -3-



licensee either a flat sum or a percentage of the receipts, or, both, for any right to a:group. of

motion pictures, which includes the Picture, under any'agreement (whether or not the same shallprovide for the exhibition, sale,lease or delivery ofpositive prints ofany of said motion pictures)Which does not specify what portion of the license payIilentsapply to the r ~ s ~ v e motionpictures in the group (or to such prints or other material" if any, '8$Iilay be supplied), then in anyand all s,uch situations, Company shall, in' good faith, include in, or deduct from, the gross

receipts, 'as the' case may be, such sums as may be reasonable. If Company reasonablyantiCipates retroactiye wage adjustments, taxes, residuals, uncollectable 8ccounts, or ,otherreasonably anticipated costs, expenses or losses relating to' the Picture, which, if and whenincurred, will be properly deductible hereunder, Company may set up appropriate reservestherefor. Company agrees to liquidate any such reserves within a'reasonabletime.

, ,

S. Foreign Receipts: No sums received by Company in respect of the 'Picture shall be

included in gross receipts or in statements hereunder for the pmpose of determmmg any amountpayab1e'to ~ a r t i c i p a n t , unless sucJt sums are , ~ l y remittable'to Company in U.S. dollars in theUnited States, Qr used by Company.' Sums derived from ~ t o r i e s putsi,deof the United States,or used'by e o i n ~ y . Sums derived from teirltories outside of he United States which are not

remittable to Gompany in the' United' StateS in U.S. dollars by reason of currency or otherrestrictions ShaIlbe reflected on statements rendered hereunder for informational pQIj>oses only,and Company shall, at the request and expense of participant (subject to any and aI11imitations,restrictions, laws, rules, and regulations affecting 'such transactions), deposit into a bankdesignated by Participant 'in ,the country involved, or pay to any other party designated byParticipant in, such C 0 1 i n t r y ~ such part thereof: i f any, as would have been payable to Participanthereunder. Such, deposits or payments to' or, for Participant shall constitute reiDittance to

)\ Participant, imd Company sball have no further, responsi\>ility therefor. Company makes no, ~ t i e s or representatjons that any part of any such foreign currencies may be converted into

US. dollarsot transferred to the acCount ofParticipan,t in ~ y foreign coUJitry. Costs incurred ina1erritory during a period when aU receipts are blocked shall be charged oDly against blockedreceipts 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 s¥ l be ~ h a r g e d proportionatelyagainst the blocked and dollar receipts from said territory; However, i f costs charged againstblOcked receipts, in either of the foregoing 'instances, have Dot been recovered, therefrom withintwelve (12) months after such costs were incurred, the deficit sball be computed,in dollars at theofficial rate of exchange in effect the end ofsuch twelve 02) month period and recovered byCOmpany from d o l l ~ receipts, irrespective of he source.

6., EarriingsStatements: Company sh811 render to Participant periodic statements 'showing,in summary form, tbeappropriate calculations pursuant to this Exhibit. Such statements may beon a billings or collections basis, as Company may from time ,to time ~ ~ e c t . Statements shall berendered quarterly durlngthe twenty-four (24) month period following,the initial release of thePicture, semi-annually during the next thirty-six (36) months and annually thereafter; provided,that no s t a t ~ m e n t need by rendered for any period in which D o ~ i p t s 'are received or charges'incurred. Statements rendered by COmpany may be changed from time to time to give effect toyear-end adjustments made by Company's Accounting Department or public accountants, or toitems overlooked, tc? correct errors, to reflect any indebtedness which may become uncollectable,or for any other purposes. Should Company make any overpayment to Participant hereunder for

S : ~ \ E x h i b i t G R . Minmsx.0821.98 -4-



-- . ,

,.

any reason, Company shall have the right to deduct and' retain for its oWn account an amount

equal to any such overpayment from any s ~ that may thereafter become due or payable by

Company to Participant or for Participant's account, or may demand repayment from Participant

in which event Participant shall repay the same when demand is made. The right of Participant·

to receive, and the obligation of Company account for, any share of the gross receipts of the

Picture shall tenninate if the firsi earnings statement issued after the Picture has been made. available for exhibition on syndicated television in the United States shQWS a deficit ~ d e rParagraph 3 h ~ r e o f w h i c h would require in excess of Five Hundred ThoUsand Dollars ($500,000)in gross receipts to reach net profits hereunder. Any U.S. dollars due and'payable to Part icipant'

by Company pursuant to any such statement shall be paid to Participant simultaneously with therendering of such statement; provided, however, that all amounts payable ·to Participant

h e r e ~ d e r 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 agaiilstParticipant. COmpany shall have the right to make such deductions and withholdings, and thepaYment thereof to. the governmental agency concerned in accordance with its mterpretation ingood faith of such laws and regulations shall c o ~ t l i t e payment hereunder to Particip8J;1t, andCompany.shall not be liable to Participant for the making of such deductions or withholdings or

the payment thereOf to the governmental agency concerned. In any such event Participant shallmake. and prosecute any aIid. all claims which it may have (and which it desireS to make andprosecute) wi th respect to the same directly with the governmental agency having jurisdiction inthe premises.

7. Accounting Records and Audit Rights: Company shall keep at its main offices in theUn.ited States books ofaccount relating to the distribution oftlie Picture (which books ofscoount

are hereinafter referred to as "reCords"), whiCh shall be kept on the same basis, in the samemanner, at the same place and for the same periods as such records are customarily kept by

Company. PartiCipant may, at its own expense,but not more than once -annually, audit the

a p p l i c a b ) ~ records at the aforesaid. office in order to verify earnings statements .rendered. hereunder. Any such audit·sliall be conducted only by a reputable public accountant (subject to

Company's reasonable approval) during reasonable :blisiness hours and shall not continue for

more than thirty (30) consecutive days. Any such audit shall be. conducted in such manner as not

to interfere with Company's nonnal business activiqes. In this regard, Company shall have the

right to fix the date for the coinmencement of any such audit. so as to coordinate $aid date with

the commencement dates ofany other audits with respect .to the Picture to be Conducted by tbii'd

party participants. Participant shall not have the right ·to examine or inquire into. aIiy matters or

items which are embraced by or contained· in any such statement after the expiration of twelve

(12) months from and after the date ofmailing 'of such statement, and such statement shall be.fmal and conclusive upon Participant upon the expiration of such twelve (12) month periodnotwithstanding that the matters or items embraced' by or c o n t a i n ~ therein may' later be

contained or referred to iq'a cumulative statement pertaining to more than ~ m e accounting period.

Such cumulative statement shall not be subject to audit by Participant to the extent the materialcontained therein w ~ ' first reflected on' a statement submitted mQre than twelve '(12) moilths

prior to the date of mailing of such cumulative statement. Participant shall be forever barred

from maintaining or instituting 8l1Y action or proceeding based upon, or in anywise relating to, .

any . ransactions had by Company, or itsli eensees, in connection with the PictUre which' are

'embraced by or reflected on any statement rendered hereunder, or the accuracy of any item

S:\LORDR\ExhibitGR- Minunax.0821.98 -5-



..\"

appearing ~ e r e i n , tiIiIess ~ t t e n objection thereto shall have. been delivered 'by Participant· toCoIripany within twelve (12) months after the date of mmling of the statement on which suchtransaction or item was first reflected and unless such action' or proceeding is coJ;l1I1lenced withirisix (6) months' after cielivery ofsuch writteli b j ~ o n . Participmtis right to exmiune Company'srecordS is limited to the Picture, 'and under no circumstances sballParticipant .have the right toe ~ n e records relating to Company's buSines.s 'generally or any other motion picture for ·the

purpose of compariSon or otherwise; provided, however, that in the event that Company includesin, or deducts 'ti"pm, the gross receipts any s ~ expended or received in cOnnection with anysums' expended or received in cOnnection with any of the transaCtions· referred to jn. the' first

sentence of Paragraph 4 of this Exhibit, Participant.shall have the right to eXamine COmpany'srecords with respect to the other motion pictlire{s) which are part of he group ofmotion pictureswhich are the subject of such transaction(s), but only insofar as such records relate to such.'particular trapsaction ·or tran,sactions.

8; Holding of funds: Company shall not be considered a trustee,. pledgeholder, fiduciary oraJ,gent 'of Participant by reason of anything done Qr any. money Collected by it, and shall' not beobligated to' segregate receipts of the Picture from its other funds. .

9. Ownership: Participant shall not:have any lien or other rights in or to the gross receiptsof the Picture, it being understood that the references herein thereto are intended' solely for thepurpose of detennining .the time, manner and amount of payments, i f any, du:eto Participanthereunder. .

10. Sales Policies: Company shall have complete a u t h o r i ~ to liciense, m,arket and exploit thePicture and all rights therein,·.or to. refrain from So doing, in accc)rdance with such sales m e t h o d s ~policies and terms as it ~ y , ~ its reasonable business jUdgnlent, eXercised in good faith,determine. Company s ~ l n ~ t be required to itself exercise any of its rights but may license;

· sub-licerise or aSSign any or all thereot: .as it may e l e c ~ to any licensee, sub-licensee,suMistributor or assignee (including, without ·Iimitatiori, any' of the cOrpOrations Comprising

· Company or my of Company's or their subsidiaries or aftil.iates). (:ompany~ a y

modify,. amend •.Cartcel, adjust ~ d alter .all agreements; exhibition licenses, rental terms, sales methods and.policies relating to the distribution,exhibitioD and exploitation of the Picture and any other of itsrights as it may deem advisable; adjust, increaSe or ~ r e a s e . t h e amount of any.allowance to anyexhibi.tor or licensee for advertising and exploitation whether 'or Dot included in ariy theretoforeeXisting agreement or license; license' the distribution and exhibition of the Picture (or other

· rights) upon percentage ~ n t a l or flat. rentals, or both, and joiritiy with other motion pictures orseparately, as it. sluill deem desirable; Company sh8li' have the 'right, in its sole discretion, tolicense the Picture for television or other tYPes of exhibition at any time, and cause or permitany such teleVision or other exhibition to be on' a sponsorship, sustained or other basis. .Company may. but shall not be required to, r e l ~ ; reissue o r " r e - r e l ~ the Picture in any .partof the Territory as ~ y be·consistent with t h ~ business policies of Company, and Company in its

Sole discr;etiori may detenniile for any reason, an4 in respect of any part of he Territory, when;where and whether the picture should be'released, re-released·or reissued and the duration of any

~ c h releaSe, ~ - r e l e a s e or reissue: I f he number of motion pictures which may be i s t r i b ~ t e d by .Company in any country or territory shall be lumted by government, industry ot self-limitation,the selection ofmotion pictures to be distributed by Company therein shall b by Company in its

-6-



1)

.

\


g o v ~ i n m e n t or governmental agency relating to any partIcular country or·territory._ Nothingcontained in this Paragraph 10 shall be deemed to, nor shall it, limit or restrict Company's rights

under Paragraph 12 hereof. . ,







· that such purchaser, transferee or assigriee is at the time of its assuming performance afinancially responsible party, be released ' ~ d disCharged of and from any further liabilitY orobligation hereunder and none of the monies or other consideration received by, or paid orpayable to, Company sluiU constitute gross receipts hereunder, and P8rticipant shan have norights iIi respect ofany thereof. .



result in requiring Company 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 Participant arid· to the parties entitled to share therein; and (ii) in no event shall any party other than P ~ c i p a n thave the right to audit Company's recoids by reason of such assignment Any such assignmentshall at all times be. subj ect to all pertinent laws and governmental. regulations'and to all of the





.. \

)

\)

./

~ . s i g n all or part oftliemonies payable to Participant (or any t r ~ f e t e e ) h'ereunder, other , ban·byway of bona fide gift, bequest or devise, dissolution of?articipant (if a corporation) or corporatemerger or acquisition'ofaU of Participant's assets ( i f Participant has s u b s t a n t i ~ ' a s ~ t s bther thanthe Picture), Company shall have the ·right of first refusal to acquire the, same" which rightCompany may eX,ercise within ten (to) days after reCeipt of written ,notice from Participant (orany transferee) 'specifYing ~ t e i m s and conditions upon which Participant (or any transferee)

p r o p o s e ~ to make such assignment. Should Company fail to exercise said right of first r ~ f u s a l asaforesaid, then participant (or any transferee) shall Dot assign monies or any part thereOf to, anythird party upon tenns and conditions more'favorable to such'third'partythan those set forth·insaid written notice without again giving Company the opportunity to exercise said right of first

'refusal in accordance with the foregoing procedure.,

•••••

S:\LORDR\ExhibitGR·Mirammc.08.2I.98 -8-



EXJlIBIT "GR-l"

VIDEO DEVICES

. "





(a) Twenty percent (20%) of Video Gross Receipts from the exploitation of

the Picture on videocassettes with a suggested retail price ofmore than $29.95;



" .(d) No royalty shall be Included in the gross receipts of the Picture for Video

Devices where ,the Video Gross Receipts derived exceed Company's manufacturing costs by$1.00 or less (i.e., remainders); .



(11) With respect to Video Devices not consisting entirdy of the entire Picture asreleased theatrically to the general public, the amount to be included in the gross receipts of thePicture shall be prorated by multiplying such amount by a fraction the numeratoiofwhich is therunning time of all scenes or "highlights" from the Picture inclUded on such Video Device, andthe denominator of which is the total running time of such Video Device; provided, however,that no amount shall be included in the gross receipts of. the picture in respect of Video Devices.which include scenes or "highlights" from the Picture for promotional or advertising purposes.




. ,

2. As to VideO Devices sold outside the United States, the amount included in the

gross receipts of the ricture shall be one-half (112) of the. amount r ~ f e r r e d t o in Paragraph 1above. The aforesaid amount shalll?e computed in the national currency of the country to whichthe wholesale priCe So elected applies and shall be paid at same rate of x ~ h a n g e 8li the rate at

which Company is paid; provided, however, ·that such amounts on such Video Devices shall not

.be included in the gross receiptS of the Piciure until payment therefor has actually been reCeivedby Company in the United States. .

3. "Video Gross Receipts" means lOOOAl of all monies 'actually received by or

credited to the account of Company from, the' exploitation of the Picture on Video Devices,subject to the following exclUsions and deductions:

(a) Exclusions from Video Gross Receipts: Video Gross Receipts shall bedetennined after all r e f u n d s ~ credits, discounts, rebates, allowances and adjustments granted tosubdistributors, wboles81ers, retailers and other purchasers and licensees. In addition, thefollowing shall be exclude4 from Video Gross Receipts:

(i) . Any monies derived by any local subdistributor, wholesaleror retailer from the sale ofVideo Devjces, or by any l o ~ a l sales or.PrQmotional·orgaIrlzation forservices rendered on their behalf: w b e ~ r or not such subdistributor,. wholesaler, ·retailer or sales.or promotional organization is owned operated or a n a g ~ or controlled ·by Company; providedhowever, in the event i d ~ Devices are sold or leased to any such owned, operated or managed .subdistributor, w h o l ~ s a l e r or retailer, Company a g r e e ~ that the terms of such sale or lease shall

be substantially the same as the tenns of sale or lease of Video Devices to Unrelated entities, inaccordance with industry standards. .

(ii) Any sums Que, but not paid, to Company.

(iii) .The salvage value of any videotape, cassettes or other materialspurchased by or manufactured by Company and'not sold as Video Devices. '

(b) Deductions from Video Gross Receipts: Video Gross ·Receipts shall be

reduced by:

(i) 'Any sums paid to or retained by any Servicing entity.

(ii) Any o u ~ i d e costs actually incurred in connection With the collection

of monies included in Video Gross Receipts, including outside attorneys', and outside a u d i t o r s ~fees and costs, and any and all loss, .damage or liability actually suffered or actually incurred by

Company in the collection of such monies, whether by litigation or otherwise, ~ the Q ~ p u t a t i o nof Video Gross Receipts hereunder. .

(iii) Any arid all sums paid or accrued on account of sales, Use, value

added, receipts, Income, excise, remittance' and 'other taxes (however denominated) to any

governmental authorities, assessed upon the Video Devices, or upon the use or distribution Of

)

S:\l.DRDR\ExhibitGR. Milan\lX.08.21.98



\I

Video Devices or upon the revenues derived therefrom or any part thereof or upon the remittanlleofsuch revenues or any part thereof. and any and all sums pBid or c c r u e d on account offreight, .

s h i p p i n g ~ handling or insurance in connection with the sale of Video· Devices , duties. customsand imports, costs of acquiring permits, quotas and any similar a1ithority to secure the. entry.Jicensmg, .sale exhibition, performance, or other use of Video Devices in any .eountiy or part·

. thereof regardless of whether such payments or accrUals are assessed against Video Devices or

the proceeds thereof or against a group of motion pictures or prograins in which the V i d ~Devices or proceedsthereofniay be i n c l u d e d ~ In no event shall the d e d ~ c t i b l e ~ o u n t any suchtax (however denominated) imposed upon Company be decreased (nor the Gross Receiptsincreased) ·1>ecause of the manner in which such taxes are elected to be1reated by Company infiling net income, corporate franchise, e?,cess profits or similar tax ·retumS. Notwithstanding the. oregoing, Company's own income taxes and· franchise taxes based on Company's net incOme.and any income taxes paid to any country or territory· by Company based on the net earnings· of

Company in such country or territory (to the·extent computed and assessed solely-by the reasonofvolUntary retention in such country or territory by Colllpany ofany portion of Gross Receipts)shall not be deductible.in c o m p ~ g Gross Receipts hereUnder. Notwithstanding to the con1rarycontained herein, P a r t i ~ i p a n t shall have no right to inspect or. copy any income or franchise taxreturn of Company or any of its subsidiaries or affiliates or to require Company or any of its

.subsidiaries or affiliates to produce any such tax return or any lnformation contained herein.

(iv) Company shall have the righuo deduct and to reserve for returns andcredits of any nature, including, without. limitation, those ·on account of one hundred percent(100%) or a lesser return privilege, defective m e r c h a n d i ~ , exchange privilege. promotionalcredits, errors inbiUing, unusual overstock, bad debts and .errors in shipping; and .

(v) Any additional costs (which are not ~ c l u d e d in the costs of

.. . production of the Picture) Incurred in connection with the reproduction of the Picture for thepurpose of enabling the issuance ofVideo Devices therefrom.

4. ·Royalties shall not be payable on Video Devices furnished without charge forpromotional purposes or as a sales inducement or otherwise to distributors, subdistributors,dealers, reviewers and others. All royalty-free Video Devices distributed for promo1:ionalpurposes shall be stamped or marked·with a legend to the effect thatsuch Video Devices are forpromotional purposes only a,nd are "not for·s8Ie." .

•••••

·S:\LoItQR\ExhibitGR-Miramax.08.21.98 -11-



(- .. , .

EXHIBIT "(;R-l" . "

SOUNDTRACK ROYALTIES

Provided that Company is'vestedwith record m a n u f a ~ t u r i n g rights in and to the music cOntainedin the soundtrack of the Picture, and that Participant or any' third' partyafliliated with or

subsidiary to Participant or of which Participant has beneficial or constructive contro " shall notbe entitled, separate and apart or independently from this Exhibit, to any portion of the royalties,or revenues derived from any record manufacturing rights in any such ·music:·

A. If Company (as opposed to a third·.party assignee, designee.or licensee) shall usethe soundtrack of the Picture for'· the purpose of manufactuiing, distributing, selling andadvertising commercial phonograph records (hereinafter "soundtrack .recOrds") of .the music,musical compositions, sound effectS andlordialogue used in the soundtrack of he Picture, thegross receipts of he Picture shall include a royalty detemrinedas follows:

1. An ain.ount equivalent to seven and one-half percent (7-112%) of thesuggested list price (excluding Federal Excise Taxes, or the equivalent thereof, local taxes, if

any, and s ~ d a r d container charges) of ninety percent (90%) of soundtrack recordsmanufactured and sold in the United States. As to soundtrack records not consisting entirely of

music, musical compositions, sound effects andlor dialogue from the soundtrack of he Picture,the, royalties to be included in the gross 'receipts of the Picture shall·be prorated by multiplyingsuch royalty by a fraction, the numerator of which is the number of "bands" of such record of

, mUSic, musical composition, sound.effeCtS· and/or dialogue from the soundtrack of the Picture,and the denoniinator of which is the total number of "bands" of such record. A"band" from thesound track of the Picture shall in,clude music and ~ u s i c a l compositions taken from the actualsound track of the Picture as well ~ rerecordings of portions of, or an of, such music or musical

~ m p o s i t i o n s by the:. ~ e artist originally perfonning on the actual sowidtrack.

2, As to soundtrack records, sold outside the United States, the. royalty

included in the gross receipts of the Picture shall be one-half (112) of the royalty referred to inParagraph 1 above and shall, be CalCullited, at Company's election, upon the suggested: retail. listprice of such soundtrack records. in the country ()f manufacture, the United States, England, or

" the country of sale. The amounts of such royalties shall be. computed in the national currency of

the country to which the list price so elected applies and shall be paid at the same rate pf

exchange as the rate at which New York is paid; provided, however, that .royalties on suchreCords shall not be included in the gross r e c e ~ p t s of the Picture until payment. therefor .hasactiJally beenreceived by New York in the UnitedStates.

3. In ' ~ s p e c t of phonograph. records sold through any so-called tlree:ordclubs" or similar sales plans and devices, the royalty shall be one-half(ll2) .of that referred to in

,'Paragraphs 1 and 2 of this Exhibit "GR-2", depending upon where' such phonograph records aresold; provided, however, ~ t 'there shall ~ no royalty with respect to phonograph records givento members' of such record clubs as "bonus" .or "free" phonograph records as a result of joiningthe club andlorpurchasing a. required number of phonograph records. No royalty shall becomputeq with respect to soundtrack records given away or furnished on a "no charge" basis todisc jockeys, radio stations, dealers or others.

s:\LORDR\ExhibilQR- Mirimax.0821.98 -12-



. ,

4. In c o m p ~ t i n g the nuinber of soundtrack records manufactured and sold .

hereunder, Company shall have the right to deduct the returns and credits of any nature,including, without limitation, those on acc()lint of hundred percent (1 OOOA,) or a lesser returnprivilege, defective merchandise, exchange privilege, promotionai CredIts, errors in billing,

unusual overstock and errors in shipping. '


·the Picture:

(a) Any amounts and royalties·which shall be payable to the person(s)whose performanCe(s) is/are contained. on the soundtrack ~ r d in accord8nce with theagreement(s) which may have been entered into with.any suchperson(s);

(b) All costs, ·expenses and fees with respect to. the' soundtrack record

incurrtd by C o m p ~ y , or any Company comprising Company or its or their subsidiaries,divisions or affiliates, linderagteement(s) with the American Federation of Television' and RadioArtists of the United. states and Canada or any other guild or union wherever located. andwhether DOW or' hereafter in existence. Said costs shall include, but not-be limited to, reusage or


8l1d




shall use the soundtrack of the Picture for the purpose of manufacturi,ng; d i s t r i b u t i n g ~ selling andadvertising Soundtrack records, Company shall i ~ c l u d e in the gross reeeipts of he Picture (in lieuof the royalty provided'in Section A) a oyalty equivaient to that earned from the ·actual sale of


licensee with respect thereto less an a d p U n i s t r a t i o ~ fee in an lQIlount equal to' fifteen percent

(15%) ofone hUndred percent (100%) ofall ~ c h sums, and thereafter, less any costs, amounts or


• •••••




}

. .

EXHIBIT ttGR-3"

MUSIC PUBLiSHING RIGHTS

Provided that Company is vested with music pUblishing rights in and to the music contained inthe soundtrack of the Picture and the full· publisher's share thereof, and that Participant or any

third party affiliated with" or subsidiary to Participant or of which Participant has beneficial or

. cOnstructive control shall not be entitled, separate and apart or independently from .this Exhibit;to any portion of the royalties or reyenues derived from any music publishing g h t s i n any .such

music, Company shall require music publi$er to which it may grant publishing rights (whichmay be aD. affiliated or related" company) to pay to Company, with ~ e s p e c f to music and lyrics

.written specifically for and synchronized in the Picture as released, and the gross receipts of the

PictUre shall include, the ~ l I o w i n g royalty:

A;. An amount equal to twenty percent (20%) of .the· "Publisher's Share" of

mechanical reproduction and performing fees i'eceived by· the publisher in the United States;

B. Two cents ($.02) per copy in respect of printed piano or piano.,vocalcopiessoldand paid for alid not returned in the United States and the Dominion of Canada;

C. Two cents ($.02) per copy in resPect of orchestration, choral editionS and otherprinted arrangementS which lire soJd 8 D d p ~ d · for and not returned in the United States and the

Dominion ofCanada; and

D. An amount equal to twenty p e r ~ t (20%) of the "publisher'S Share" of any or allreceipts of the publisher in the United States frQm any other source not herein specificallyprovided for. . "

The "Publisher's Share" shail be deemed to mean:

1. With respect to mechanical reproduction f e e s ~ ·the amount actuallycollected by the publisher less collection fees and·any and aU r o y ~ t i e s paid to authors,composers or any other third parties; and .

2. With respeCt to performing fees, the amounts actually collected by thepublisher from any perfonning rights sOciety (it being understood that authors "and"composers ate

generally paid separately and directly by such perfotming rights societies) less any portion of

sucl1 royalties payable to others and any reasonable cost and expense inadlninistering thecollection of such fees. .

•••••

S:\l..ORDR\ExhibitGR· Minanax.08.21.98 -14-



\J

EXHIBIT " G ~ - 4 "MERCHANDISINGINOVELiZATlON PUBLICATION ROYALTIES

..

Provided that Company is vested with merchandising rightS in and to the Picture, and thatParticipant or any third party affiliated. with ·or subsidiary to Participant or of which Participant

has ben¢ficialor constructive control shall not be entitled, separate or apart or independentlyfrom this Exhibit, to' any portion of the royalties or revenues denved from any suchmerchandising rights, there shall be included in the gross receipts of he Picture: .

A. .If Company (as opposed to a third party assignee, designee or licensee) shallexercise merchandising rights in the Picture, an amount equivalent to fifty percent (50%) of allliCense fees (in excess of all royalties and participations) earned from the actual $ale of

merChandising items and actually received by Company directly as a result of the exercise byCompany itselfofsuch e r c h ~ d i s i n g rights.

B. If a third-party assignee, designee or licensee (as opposed to Company) shall.exercise such merchandising rights, Company shaU include in' the gross receipts of the Picture (inlieu of the amount provided in Section A), at its election, 'an amount equivalent to either:

1. Ei@ty-five percent (85%) of the net sums (in excess of all royalties andparticipations) earned and' actually received from such third':'party assignee, designee or licensee;"

or

2. Fifty percent (50%) of the net sums (in excess of all royl;llties. andparticipations) derived by stich ~ d . ; . p a r t y assignee, designee or licensee from the exercise of

such merchandising rights. .

Provided-that Company is vested with n o v e l i z a ~ o n pUbliCation rights with respect to the Picture,

- and that P ~ c i p a n t 'or any third party affiliated with or. subsidiary to Participant or of whjchParticipant has "Qeneficial or constructive "control shall not be entitled. separate or apart or

i ~ d e p e n d e i l t l y from this Exhibit, to any portion of royalties or t e v e n u e ~ derived from sU'ch

novelization publication rights, there shall be included In the gross receipts of the Picture, at

Company's election, an ~ o u n t equivalent to either:

. 1. The net sums earned and actu8Ily received by Company from independentthird-party publishers from the publication of novelizationS of the screenplay of the Picture (inexcess olal1 royalties' and participations to the writers of such novelizations); or

2. Five percent (5%) of the net sums .derived by the publisher of such

novelizations from the publication thereof (in excess of all royalties and participations to the

writers of such novelizations). "

•••••

S:\LORDR\ExhibitGR- Miramax.0821.98 -15-



_•.,

y

' \'.,.I

. RIDER 1








6... Company shall furnish Participant with. accounting statements on a quarterly basis

.for three

(3) years after the initial theatrical releaseof

the Pictureand:.

thereafiersemi-annually,'. setting forth, in such reason8ble detail as is customary in ·the motion picture industry,Participant's share of ~ j u s t e d gross reCeipts andlor net profits, if any. Accounting statementsshall be rendered and payntent made, if any, within sixty (60) days follOwing the end of the.applicable-period.



-1-



8. Referencing Paragraph 3B, costs paid in respect of trade dues and assessments- . shall not exceed one percent (1%) of Gross Receipts.

9. Referencing Paragraph 3C, costS paid in respect of checking and collection shall

not exceed one percent (1%) of Gross Receipts for the firs.t Ten Million Dollars ($10,000,000) inGross Receipts and thereafter shall not exceed one-half of one. percent (0.5%) o fGross Receipts.

10. Rebates which are received by Company in a segregated manner solely withrespect to the' Picture and not· with respect to the Picture combined with other pictures or as towhich Company receives third party statements showing the amount of he rebate att:ti.butable tothe Picture shall be credited against distribution expenses.

11. The following language is inserted before the. words, "then· in any and all suchsituations" on line 8 of Paragraph 4 of the Exhibit: Itoi' an allocation is specified but suchallocation Was controlled by Company." _

12. Referencing Paragraph 4 of the Exhibit, reServes shall in any event be liquidatedwithin eighteen (18) months.

13. Video: Referencing Exhibit R ~ l :

(a) Applicability ofGR-l. Paragr¥h 1 of Exhibit DNP-l, which by its termsapplies· to Video Devices sold in ~ e United S.tates only shall· also' apply in respect of Video

Devices sold in Canada and all foreign territories wherein. Company self-disiributes Video

Devices or distributes Video· e v i ~ e s through a "rent a system", joint venture or similararrangement (collectively, a "Rent A System Arrangement"). Video Gross Receipts shall becalculated at the wholesale price level (i.e., "at source")

. (b)Subdistribution. In' those territories wherein Company distributes Video. Devices through a subdistributor (as opposed to seif-distrihution' o r a Remt A System

Arrangement), Exhibit GR-l ·shall. not apply and revenue derived shall be included in GrossReceipts on a "gross" not a "royalty" basis (Le., Paragraph 2A of the' Exhibit, the Paragraph

otherwi$e applicable in respect of subdistribution arrangements, shall apply).

(c) Costs. When video revenue is included in Gross Receipts on a royalty

basis, only those costs specifica1lyitemizedin Paragraph 3 of Exhibit GR-lmay be excluded or

deducted from home. video revenue in calculating the'royaltr and no distribution expenses

incurred in .connection wjth such video exploitation, other than "residUals", may be deducted.

14. Reference is made to Exhibit "GR-2" of he Exhibit:

.(a) In line I o f Pai-agraph A.I, the wordS "seven and. 'one-half percent (7

112%) shall be replaced by "ten percent (10%)."

(b) In line 4 of Paragraph A.I, the words "ninety percent (90%)" shall be

replaced by "one hundred percent (100%)."

S:\LORDIlIAplusGR-Mimmaxl.Doc;OII.lJ.9i -2-



"\

/

,i

-IS. Reference is made. to Exhibit "GR-3" of he Exhibit:

(a) In Paragraphs A and D, the words "twenty percent (20%)" shall be deletedand replaced by. the words "fifty percent (50%)". -

16. There shall be no double deductions. Costs which Company is pennitted todeduct under separate p r o v i s i o ~ of E x h i b i ~ GR shall be deducted only once pursuant towhichever provision Company may elect.

17. A statement of the "cost of production" shall be furnished to Participant withinthirty (30) days of the delivery to Participant of the first participation t e m e n t , which statementshall be subject to r ~ j u s t m e n t by Company from time to time to correctly reflect the cost of

production'ofthe Picture.

NEW LINE CINEMA CORP. MiRAMAX FILM C

BY: __ ~ ~ L - ~ ~ ~ __ ~Its:,___ =--_____ - - - : r I ' -_

By:I t s : ~ ~ ~ - ~ r - ~ - - - - - - - -

-3-



~ - .

I'

. RIDER 2 :

DATED AS OF -g121 {f8 TOEXHIBIT"GR",

"GR-l", "GR-2", "GR-3". AND "GR-4"

1. As used in this rider ("Rider 2'') the "Exhibit". ~ ExhliJit "OR"; "OR 1"; "OR-

2"; " O R - 3 ' ~ and ' O R - 4 " Which are collectively referred to as Exhibit "C" to the

Q ~ t d 8 i m Agreement between i r a m ~ Film Corp. ( " ~ i ~ , , ) and New LineCmema Corp., dated as of l5 f ( r18.. . the "Pnnclpal Agreement").

Paragraph references are to the paragiaphs set forth in the Exhibit, and all defined

tenns Used herein are as defined in s3id Exhibit, Unless otherwise stated to thecontrary. Inconsistencies between· the provisions of he Principal Agreement, the

Exhibit and Riders 1 and 2 shall be treated·8$ follows: Rider 1 h a l l · p r ~ v a 1 1 over theExhibit .Ridet2 shall prevail over Rider 1·and the Exhibit. The Principal

Agreement shall prevail over Riders 1 and 2 and the Exhibit.

2. Introduction. For the. purpose ·of defining "Gross Receipts," "Company" shall meanNew Line Cinema Corp., its subsidiaries, and their subsidiaries.

3. Paragraph LA. Paragraphl.A shall read: "'Participant' : Miramax Film Corp."

4. Paragraph1.B. The ~ f u 1 i t i o n of"Picture" shall mean the applicable Original

Picture, as defined in the Principal Agreement The words "Underlying Agreement"

'\ shall be deleted and replaced with· the words P r i n c ~ p a l Agreement" in Paragraphs1.B. and 1.C.

··\

5. Paragraph 2.A. The words "or credited to" shall be inserted after the word "by" inthe first line. .

6. Paragraph 2.A.(i). In line 4, the words " l i ~ n s e s for theatrical exhibition, non

theatrical exhibition," shall be inserted after the words ''without llmitation" in line 4;

and the words "andpay, .subscription and/or Cable exhibition, as well as all forms

of'shall be inserted atkrthe words "free televi.sion"; and in line 5, the words "or

other device, o w ~ o w n or hereafter devised, designed to be used iIi conjuriction

with a reproduction apparatus which caUses subStantially the entfre Picture to be

visible on the screen of a standard consumer television receiver or comparable

devi.ce, now known or hereafter designed, and any ~ d all computer assisteddevices" shall be iriserted after the words "video discs." . .

7. Paragraph 2.A.(ii). Atthe end ofiine 3, the wOJ;'ds "provided, however, thatCompany shall not use a subdistributor for the initial theatrical release of the Picture

in the United States without first providing notice·to Miramax" shall be inserted .

Receipts from flat sal(:S (as set forth m aragraph 4 of he Exhibit) shall be included

·inGross Receipts. In the event that any foreign subdistributor of he Picture is a

related entity of Company, the fee of such foreign s u b d i s t r i b ~ t o r shall n()t exceed

S:\Lordring\Mirarn;ooider 4 - .08.21.98



8.

9.

the fee customarily charged by third party subdistributors in the applicable territory.If Company transfersjntemational sales agency,rights to a Time Warner entity, adistribUtion fee shall be deducted only i fsuch Time Warner entity is rendering bonafide sales agency services. The distribution fee'taken by such Time Warner entityshall be no greater than that Which would be taken by a third partym the samecircumstanCes after anns length negotiations.

Paragniph,2.A.(iii). After the word "Picture" in line 3, the words ''unfaircompetition, trademark infringement and/or piracy actions, or similar causes ofaction" ~ h a l l be inserted. '

New Paragraph 2.E. Monies derived from the exploitation ofsubstantially the entirePicture in media not yet devised, provided such monies shall be included in GrossReceipts in the same manner as they' are then custOmarily inchided in the industry(e.g:, monies may be included on a royalty basis).

10. Paragraph 2. (unnumbered). In sll;bsection (i), the words "any sums from charitablepremieres of he Pioture actually contributed to charity" shall be'inserted in lieu of

the cuttent text. '

11. Paragraph 3.ACil and W). The words "real property taxes" shall be inserted· after thewords "income taxes" in subsections (i) and (ii).

12.paragnlph 3.B. Costs paid in respect f t r a d ~ and assessments shall not exceed OneHundred'Thousand Dollars ($100,000) in Connection with each theatrical motionPicture hereUnder: The words "(the foregoing allocable to the Picture in a fair'andreasonable mariner), and any and all other expenses directly related to the expensesset forth in this sub-paragraph 3.B. nlcuiTedby Company in connection with thelicensing of the Picture for exhibition or for other uses of he PictUre," shall be

inserted after "legal fees" in line 4, and the existing text~ h a l l

be deleted.

13. Paragraph 3.e. No dedl,iction shall be made for the fees or salaries of Company'sregularly employed staff auomeysand accountants.

, "

14. Paragraph 3.0. The word ' ~ o f ' in line three is replaced with the word "or". Thefollowing sentence shall be added at the end of Paragraph 3.D: "Nothfug coJitainedin this subparagraph 3'.D. shall be conStrued as authorizing the deduction of anythird party participation in the ,gross receipts, adjusted gross receipts or net profits of

'the Picture in calculating 'adjusted gross receipts' hereunder."

15. Pamgraph 4: The following sentence shall be added at the end of Paragraph 4:

''Nothing contained in this paragraph shall be construed as permitting Company totake deductions from 'Gross Receipts' in order to reach 'adjust¢ gross receipts' ,other than such deductions as are pennitted pursuant to the other paragraphs of hisExhibit. Wherever reserves are taken under this Exhibit, such reServes sJ;uUI be

S:\Lonfring\Miramaxrider 4 •.0821.98 2






quarterly basis for four (4) years after the initial theatrical release of the Picture and,thereafter semi-lPUlually setting forth, in such reasonable deWI. as is customary in

. the motion picture industry, Participant's share ofGross ReCeipts, if any. ' .Accounting statements shall be rendered' and payment made, i f any, within sixty(60) days following the end of the applicable period. If he Picture is reissuedandlor Gross ReCeipts exceed Five Hundred Thousand Dollars ($500,000) in anyquarter, quarterly statements shall be resumed; and if he Picture is released to prime .time U.S. network television andlor a U.S. payor cable netWork, statements shall beissued for quarterly accounting periods during which revenue from such source areincluded in Gross Receipts. The word "be" shall be inserted in lieu oftJIe word"by" in line 6. The words after "account" in line 13 to the word "hereunder" in line

1-9 shall :be deleted.



20. Paragraph 12. In line 3, the o l I o ~ g ' words shall be added after the word

"thereof': "provided tlult unless such sale; transfer or assignment by Company is toa so-calledinajor. or mini-major motion picture company or distributor or financiallyresponsible party or purchaser ofsubstantially all ofCompany's stocks or assets,which aSsumes in writing the. penormahce of ali ofCompany's obligations,Cotnpany shall remain secondarily liable to Participant for all obligatioilshereunder. "







(b)

(c)

(d)

(e)

,Paragi-aph l(a). "Twenty percent (20%Y' shall 'be changed to "Twentyfive percent 2 ~ % ) " .

Paragraph 100., "Ten percent (10%)" shall be changed to "Twelve andone-half percent 1 2 - ~ %)".

Paragraph3M(iii). In line 10, the word "of' shall be inserted after theword "ainount".

Paragraph 3(b){v). The following shall,be added to this sub-paragraph:' " fo r purposes of clarification, the deductions pennitted under this sub

paragraph 3(b)(v) are limited to mastering costs."

(f) 'Paragraph 2. In line 1, the words, "shall be one-halfof' shall be-deleted(Le., the royalty shall not be reduced for Video Devices because they 'aresold outside the United States).

(g) Paragraph 3(b)(i).- The deduction under this sub-pan;tgraph shall be nomore than seven percent (7%) of the monies derived by the servicingentity from Video Devices 'hereunder.

23. This Rider 2 and the subject matter hereof, is non-precedential with respect to futurenegotiations between the parties or their representatives (whether or riot related tothe Picture) d , except for,Peter Jackson and Ftan,Walsh, rieithet: party: hereto shalldisclose the temis of this Rider 2 or e fact of its existenCe to any motion pictureindustry talent except: (i) as required by law, governmental or,der or regulation; or(ii) to the parties' r ~ p r e s e n t a t i v e s o r e m p l o y e e s on a "need to know" ~ i s .

MIRAMAX FILM CORP. NEW LINE CINEMA CORP.

B y : ~ ~ ~ ____ ~ ~ ___Its: __ ~ ~ __ ~ + - _ ___

B y : ~ ~ ~ ~ ~ ~ ~ ~ __Its: - - ~ - - - - - - - - - - - - - ? ~ - -

, S:\Lordring\Miramaxridcr4 -,.08.21.98 4



\

,

NEW·LIN.E CINEMA

Steve t<at"man. Esq.WeissmaMWoIff Bergman Cole.man &

Silverman

August 27. 1Q98

Re: -The lord of the Rings" - Exhibit C ~ 1

Dear Steve:

BZ:lto.End.

Please confirm that the enclosed i8 .

) N W LiN C I N ~ ooRPoAA'noH_ SE\IENtl1 N U et./aVVORIC, HEW '0108

ta PtfON (212) 4 ~ r r . FAX (1.12) 1M·'811

. ~ ; ....



.

}:

6-20-36 . 5 : 1 s r ~ 8 E V E ~ " Y HilLS C A " ~ 7 f t 6 7 ' 0 6 8 4 3 0 0 0 J e ' ) 2 1 2 : ' 3/11

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~ a r t or an Aqreell1ent C ~ h e ~ A ? r e e " ' . ~ t : . ' · ) betw.en H ~ LIN£TELrVlstON . INC • . ( " P r o d u c e r ~ J ) nd lRAHAX FtLM CORP. . .( " I ' ~ r ~ i c i r a n t " ) . clat:ed a .. o t -s. 2.11 • 1 9 ~ 8 • .in coftneetLon witht ~ e t e l evs ion p r o 9 r 5 ~ s ( i " ~ i Y l d u . ly or co l lec t ive ly as the

~ o n t e x t o t t h e A ~ e . .nent "a,/ I'«quict:. ) refer red t o 1.n theAqree. .ent ( t he "pr09ram t l

) .

1. Gen@[al computation. "ModIfied Adjusted GrossProceecls"·.eans "Gross Receipt&," a.· d.f1netiin paravraph I I ,ie55 the fo·llowi"'J# 4 . d u c : ~ . d in "the following seq..aence:

V: and

(a) . tBarter Fees," a5 def ined in p.raQraph I I I .

ell) ".oh:t: .ributlon Fees ," as def ined in paragraph IV.

eel " D 1 s ~ r i b u t i o l \ ExpenClIs.·1 8£ d n f i n ~ d in paratyraph

" "

(d) "Product.ion cost ." e ~ . / S Q t ined in paragraph VI,~ i t h i n t e r e s ~ on the u ~ r g e o u p e d port.inb tha re9f a t 12S\ of thep.rilfte i ;ate Ch.rged fromti l l le to t lmebl ' Producer '" pr "nc;ipallender or- gther financinq ent i ty a t the t ime ~ h . e in te res t i siJ\ 'pute4 by Producer; int.er:-e.·t sha l l be deduot·.d b-fore pr incipa 1.provided t ha t interest: she l l not be ~ h a ~ q e ~ on ovprhead andoverhead shal l not be chan,_d on int.ere:::.t .

11. Gross Receipts.

(a) In Cenerol . "Gross Receipts" means a l l CIl-.h

received · ( in U .S. Collari l in the UniLed Sea t• • ) by or credi ted. tothe account .o t ProdUcer from any eXhlbi tor , ·subdis t r ibuter . o ~other- l i cens• • ·for thCl r i9h t · to cause the . te lecas t or othere x h l ~ l t i o n ot ~ h e p r 0 9 r a ~ to an a u d i e ~ c ~ 1n any medium, Duch Ie.11forl1l$ of tele\fis ipn , h o ~ e \ ,1".0 and t h e a t r i c a l .()r

n o n ~ h e . t r i c a l d i r e c t project-ion; provided t.hat. , .H:h r e 6 p e ~ t totbe no",e video c1 i e t r b \ l ~ len or the Procjrar' , Produc:e.r sh a l linc lud• . in Gross .Rece lp te ." illrIount equal to t ~ . t & p e c i - f · i e dpursuant to paraqraph XII h ~ r ~ o t . M.o advance or secur i t y .depo&ltpaid to Producer shaU·conut i t \&teGross ~ e c e i p t s unleS&4nd untilsuch advance or . B c u r i ~ y deposit becomee n ~ n r e t u r n A b l ~ . Pcoclucer:oheaH alsO inc lude in the Gross R.ce1pta# w.ithout Dis t r ibu t ionFees. al\ alftount equal to ~ o t Of" a l l 91"06, . l iCef t s . f . es reeelvecsby Producer trmn "Merchandislnq," les5 r o y a l t i e ~ andp ..r t icipat"ioft$ payable to t h i rd p .rtiefi .. "Merchondisin9NIlc:ans

l:ieenliiing t he uee. of the tradelll&rli;5. t rade h3lries t &.erviee ",ark.ilnd copyr i9h ts in connect ion with thE' 1Ilanufacturft ,distr i ·but; lonand ~ e l e "ot ar t i . c l • • of 1 \ \ ~ r C h a n ~ U . 5 c involving char .ac t . r£ or otberelements" which ",oke ,-,elet"ence CQ c r ilre based .Upon the p r 0 ' l r a ~ ;but Ghall · no t i nc ludo phon09l"aph r - e c o r : ~ : i , t apes , disks," pr in tedpublicatioJ\s l i t e r a ry Material. music or- lyr.l.cs..

" . : .. ,



SENT 8Y:

)

... ~ " "'''jlSVJ.j

8-20-98 5:16PM

(b) Ad1uetlllant:c in Crots l leceiRte . Groas. R ~ c . i p t G Are. u ~ j e c t t o i ldjust . n ~ s for r efunds , rebates , . c red i t s ,settleW\etlts. and discount,.. It any a ... ~ n t t l lat i . owed by

Pt'oducer o r any other dl.s tr lbutor t.o a l i ¢ e h se a connectiotlw i t h the exh ib i t ion of . the Prowram or t h e -explo i t . ion ot

sUbsi.d.iarY r i g h t s , such . · coQpt t ra t ive adv( l 't16.l.ng·allowanee,$ha l l ' b e .et OLf by the l icehlJee froll the amount owed Ft)r tbD' r igh t t o ealllif SU.lch eXhibition o r t.o e x p l o i t 5ubsl,dlary r1Qhts ,then Gross Rpcelpts sha l l ~ augmented by such a.ou.nt.

..I I I . Bart.rr.... "»artQr Fees" in c:onnectJol'\ with rftvenue

received by P r O d u ~ e r f r ~ m the direct sa le ot c o " . r e i a l t ime Ohthe ProgrAIa ("Ad .Revonue"J shal . l be allocated a . fo l lows:

(a) Fi r s t , . ,dve,rtisin9 _gency COlhfnissions on AdR . v ~ n u e 6hel1 be d . d u ~ t ~ d ;

(b) Nctxt, there ehall be deducted a barter aalee

' e O ~ f n l S 8 i o n o f lo t ; and .

( e ) 1 ' h e reltl.jndcar ..ha l l be i n C ' l l J d C ~ in Gro$s I teeeipts .

IV. ~ i § t . r i b u t i o o f ees . · 'Distr i .bution Fees· ' a re t hofQl lowin9 percentage6 of the. Croas Rac:_ipts. as a p p l i c a b l G ~

tal No foo in connect ion ~ ~ t h respec t to.Gro*&Receip1:s d.eriv.d frolft the 'aqreeme.nt ,( if .. ny) .a\ l thor lz ing thein i t ia l Itf i rat run" ~ x h i b i t i o n of t.h. Pr09ralll pn U.S. net\llorkpri l la t i l t . f ree t . levls1on; ( i . e . , "Ie, CBS, NBC, Fee) and UPN,The. WB, TNT and H8Q; o r

(b' 1St of C r o ~ s ' R e c e ~ p t s derived f r o ~ aqrea",ontsa U U l o r i z i n q e x h i b i ~ i o n o f the Program (o ther .than purliuant. t:o

subpara9rapn ( . , abOve) i t such a q r e e J l \ e n ~ 5 ara entered. in to byProducer , or 7-112' of t.h'1' .U1tl5 ao tua l ly rccei \ led by: Proclucerfrom 0 thit"d pa r ty if Producer dovs: not; d i r e c t l y d i s t r i b u t e t h ep.rDg'I : 'Ohl , .

. V" oi s t r butioD ,xpenS@9. · ' D i 6 t r i b u t i o n E ~ p e . n s e s " meansa l l a ~ c u a l f o u t ~ o f - p ~ c : ' k e t ~ o s ~ 1 I a n 4 . x p . n G e G p a i ~ . b ) ' p r o d ~ ~ r ' (orpaid by· other . d 1 . l · i i ~ r l b u t o r l f .borne by Producer)· . I n , c o ~ n e . ~ t . 1 o nwith the marketing. proIWotion, dist .r ibution, e J ( h ~ b i t . . i o n or otberexp lo i t a t ion of t .he pr09ral l land'any cubaidiaryr- lqhte there in, in

' , U l IMad1a and in a U l a " q u ~ C J . £ , includin<J, hut not l i l l l i ted to :

(a) Ahyr e r un , l I ' :e . r e s i d u a l , r o y . l t y , o r ot.her guildo r union m a n d a ~ e d payMent with r e s p e c t to ~ n y per son o r withrespect to any r ight , and .ny payrol l t a ~ and 9ui1d o r union

t r lnqe benef i t p.yarient 1n eonnect ion therewith;

(b) Any cos t in connect ion with t·ta. p t " e ~ r a t i . , n ,m a ~ i n 9 , duplicat ion, edit ing' . cutt in9/ .dubbinq. S U b t i ~ 1 . i n 9 , I

. I .d90:LO B 6 - t z - 6 n ~



SENT BY; 8-20-96 S: J6PfIl 8l'VERLY triLLS CA ....78&1.088430001#'1212;. 31 11

"

" 2G/teI. . , \ ' }

jy

' l ' O " d

po8 .e.,s10n. paCkincJ, in.pection, rep. ir , Gtorage. p r o ~ e c t . i o n , andshipment ( . ~ ~ h as to or r r o ~ .ny l . ~ o ~ o t o r y , dis t r ibutor; orl i censee , inc ludinq ~ h e pa),rient o f any cUstOlllS, tee£, C ; ~ x . c : , O:r

illlposts in connection therQwith) o r ahyn e l j J . ~ i v e

o r pOsi t ive t.1.1111. . e r ia le . 'audio o r v i d e o t a p e , S l o u , u l t r . c k ~ ..till photQgraph,se r i p t . e o n t ~ n u i ty . h e e t . o r cuei ;heet 'lncluc:U"9. b ~ t notl imited t.o. coa t s ot tac; i l i t les , labora tory \oIork, zoa..,- f11_ or rawaudio' or video tape . t o c ; ~ . reels. e o n t . i l i n . r 5 , a ~ d other' " a t : ~ r 1 a l so r i : e r v i , c ~ $ ( b u t no t C'o.ts paid in conneet ion wi th . . .n\lfac:t\lrln9hOlM v ideo dev ice s ) ; :

(Cl Adver t i s ing , pub l i c i ty , or proftlntion cOlOte,'aliowancea o r other actual expen'iies al locable ~ o tbQ program inconnec t ion l iar.with;

' (d) Any t ax l e v i G ~ upon. p .y .b l e with respect : to , o ra r i s i n g inc:ot lnect ion wit.h ~ h . ' ~ x p ' l o i t ~ t i o n , uso, d i e t r i b u t i o n ,revenue., or a a t e r i a l s Of th_ PrograM, inehldinv. but n o t l b , i t e d

't.o. llialea Cross Race ip ts , tu rnover wi thho Id ing, remi ttanc:::e, ,exc i s e , " " . , ' and personal property or silll11el' t . . x e ~ , bu texclUding a n y ~ t incollle. CO(porate, t r6nchiseor ~ ) C C Q S G prof i t stax :

fe) Any cost o f c ; o n v e ~ t i , ; q , t r a n e i n i t t i n 9 , o r , ral l lU:t inqc\ l r l 'ency o ' l locable to and in conn&ction wit.h the proCJram;

"re) Anv c o s t , o f c;;ollectin9 money fro",. Checkinq , ther . c ~ i p t 5 0 r costs Of aud i t in ; any d i s t r 1 b u t . ~ r ot" l i c :ensee ;

, (9) ~ n y cost in connection with any claim b ~ o u 9 h t ~01:" aqa, inat any d i s t r i b u to r ar 1 ~ u n l e e f ) r o v ~ c : l e d t .hat any amounts

r e c o v ~ r e d uh,der any such c:lailll sha l l be' includeod in ( ;1 '05&

flee. ipt , s ;

. (h) Any governJlient"1 tee or co." of a'll' qovernll'er.lt"ll teense or pOl"Jllit, ' incluctinq, b ~ t not l imited ~ O . those requiredf o r import , e)(port , lie. 'nainCl, Qxhibit . ion" or c-nsor , .hip, or t -he

, cost O f c:ontes: t inq ,8If'Y o f the, Game or any ot'oltr l"f 9ulation o r l evaf fec t i r \9 the Proqralll; ,

( i ) AnyeO,.t. ,o tob ta i'rii 119, ,mclint. n i n9, protecting, orreqJ.st. . . "9 any i r i tanqible r lcj'htti, inclucUnq. but not 1 . ~ t . d to ,c:opyr ights ' . t rad.",arks , end trade, n&lIIel , in COnn@c'l: ion wi t,h thePrQ9r.Jn.

(j) Any c:o.t of pro tect in9 t h e P r o C J r ~ l I \ , o r any" a t . r i a l , . in connecti()n . . , i th t.he Pr09reJII, phys ' icol ly or ' from1.qa1 enc:ulIIbrance, by security aeasuras, l e9al ae1:ion, or

otherwise:

(k) ~ n y A c t u a , l ~ o u t . ~ ~ . le<Jal and outs ide aC'countin9t _ o ~ or cour t costa a l l o c ~ ~ ) ~ , t o and c o n n . ~ ~ i o n wleh the

]

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Proqralll (net: o t any int.ul'ance recr"ff ry or 01:har re.iJ lbunu,..ant of

6ueb c08t:s);(1) Any r . O B ~ or e r r o r B - a n d - u ~ i . ~ j o n c i n ~ u r a n e e .or

insurance c:overinCJ physic: .l " I a tg r i a l s a l locab le to and inc o n r t ~ c t i o n with t he Program:

C ~ ) Trad. and aarket ~ . & o c 1 a ~ i o n dues and • • • • • • •ent••s uppar t payment e to industry a c a d e l f t i e ~ or inct : i tut lons and c o s t .of . A ~ k . t attendance a l locable t:o A"d in ~ n f t e c t i o n with theProqralll;' and

en) . Any aCJenay packaging fee .or cOlllmission. i fappl c a b . l ~ (t.o the extent payable in connect ion " ' i th the

d i . t r i b ~ t i o n o ~ t he Program Dr b a ~ e d on revenue r ece ived ) .

VI. Pi'PQuetign Coat.. "Product ion Cost" mean& a l l aetual ,out -o t -pocke teos t s a n d expenses paid by Producer o r an _n t l eyowned o r .control led by P r o d u c ~ r in connect jon . t i th "Produe t io f t tt

(wh ich i .e dee ned t.o mean t:h{l dfl ve.lopm.nt •.pre-production,product ion • .-nd post"prQduct.icln or the Pr-oqi"OI'll, inclusive ofpI la t . . presen ta t ion and a l l o t h e r . p i . o d e s of any l e n C J ~ n ) , .ifle) udin9 , w i t.hu\lt Urai tat ion:

. fa) Any cost ot " -type l iSited i l l paragraph V tfineurred i l l conn.et.ion with Product ion rather than distr ibution(i bein9 undarst.ood that ' any par t . icular iteJl inc luded 1;'Product ion Cos t l l ay not. Also be recouped 'a:; a Dist . r ibot - ion£xpens@);

. (b) Iuly cost for t ~ Q . r i9ht to \ la. o r purchasef a c i l j t i e s , e q u i p ~ e n 1 : , M a t ~ r i a l s o r s e r v i e e . ("abOvp t he l ine ,q

.• be low the l i ne . " o r ot .ber) intoncl f d to be usecs in connect.1onwith. pr:oduetion;

(C) Any C;05t of wcitin<j, o r r iqh t5 to use ul lderlyinql i t e r a c y ~ art ist iC, m U $ i c ~ l , Qr i n t e l l ~ c t . u a l prop.rt.y Grmater ia ls . intended to bQ used in .co"nec:tio·n with the PrCC1ram:

t o q a ~ b e r wi th 0.11 execut ive or ~ r e i 1 t i v ~ roya l t ies : payab le wi th

reap.c:t t h e r ~ ~ o ; .

Cd) - A.ny f inancinq co_tal

(el Any COGt of C 4 ~ t in3urance . ne98t ive insurance orother custo", .ry produc t - ian - re la ted insurance, o r in5ucanceeover in9 persor\al inj\2l'Y or- proper ty dal'lage (pr-ovid&d E.hat a l l

app l icab le. i " " l l u ~ a · n c .

recovel ' i ••s h a l ~

be .included in Grosst teceipts) ;

Cf.) Cost u[ any outs ide p ~ o d u c : t i o n a u d i t o r :

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(q) Any continqont o r derArred ~ . o u n c pa i d or payablefor the ' a i r value o f se rv i ces 'andared in ccmnec:tiQn v i t hPr-oduction,

wbet.bera t 1 8 ~ a l l l o u n ~ ~ r · e par t i . c ipa t ion

1no r

p e r c e ' n ~ a C J ~ o f Groce R e e e l p ~ . (or .ah) ' p o r ~ j o r » I::hereot).;

(h) Any eoat o t t i t l e , t r a d e ~ a ~ k or copyright • •arCho ~ · r e 9 i ~ t r ~ t i o n ;

U , Any a'lency pll lrkag1n9 tee or eoall l issiof t , ·1(appUc:able ( to t ho extent s.u;:h i s payable 1" eonne.ction w·ith orat. the tillle of the produetion of the t>rogrclU):. and

. ' ( j ) .Overhead COllt ~ q u a l to 1 0 t o a l l itellls ofI 'roduetion Coet.

Any j ~ e J I I IIIay be included in Jlroduet.ior. Cost when· theob l i9a t i on t o pay 15 noncontinqe.nt, .van i f paylften-c 'h.ac not yet

.been ..ade. T ' t · ~ r o c l u e . r , fUrnishes any·of it5·o1lrn raeil if :1eSl.equiplftent i l I \ a t e r 1 a l i i ~ or $Qrvic• • in connection With Productio.n' lor -which Producer nAs a $ I t : . " d l l ~ c l .. t . .eor would otherwise hovelIIade a paYJllent to ath ed par ty , the e"Qu,nt o t s u c h at.Andard r a t eOJ;' t h e .amount t ha t Ot.herwise woiild bave beten pa i d t;o a ' lch t h i r d·par' ty s h a l l ,be dee,.aQ e d i r e c ~ · CO$t i,ncluded an itQlI\ o f

p r o d u ~ t i o n Cos.t.

VII. As;eounting Grouping:;. It thePro9ro.It I . i:s an ep180C11esQries, t h e ~ all P r ~ r a ' " epiSQ(les produced for eaeh broadc.5tsoasaon ~ h a l l be qroupecl as a . u n i ~ end t reated s e p a r a t a l y fo raccounting and 411 otl1er purpose.. H o t w ~ t h ~ t A n d i n q . n y t : h ~ n 9 tothe con t r a r y c9iltained in tha fot ' l lgoinq. it the· Cr-oss Rece1pt,:sfrom the Proqra.m produced , tor any broadcast aOlliDon are

i n & ~ r t i c i . f t t t.o par l l \ i t th40l fu l l r e c ~ p " ' ..n t • .,d · ~ . i . l I \ b \ a r s e l l l e n t a t

a i lof the itells

se tforth in

paraqrapl\ 1 .hereot, then i "suchevent, the ful l ~ I l \ o u n t of the QxeeSS of such i te l lc over thc:Gro86

itoe6iptc flr'QIII the Progt"Dm pn;J( uced ror: sucn t;tl"oade.st seaeon.sha l l bo c .. r i e . d torwat'd (01 ' backward) a n d ~ h ~ l l be t r ea t ed l iS

i teas: to ~ fUl ly r e ~ o u p c t d and reilntJurs8d out o f ,the Gros .Receipts t r o ~ t h ~ P r o g r a ~ p r o d u e ~ d for the s u c ~ Q . d l ~ 9 {orprececH.ng r b r o a d c a s ~ sC3.son o r ,seasons p r ~ o r · ·.to, the COlllputation.and d ~ s t r i b u t i o n o f ' a n y H o d i f i ~ d Adju&teCS .Gr06$ Receipts frolft the

P r O C j l r ~ m .VIII . ,Stat_mInt. a l l ~ PayMllU. p r ~ u e j r .$hall render to

per t . ic ipant periodiC . t a t ....nts pursuant to t .hlc ACJreelftent. ,Suchs t a t eaen t . aaybe .on a b i l l i n 9 s o ~ collectlQns bas is al: ProducerlIey f ro . c1lfte to t i l l le e lec t . statements s ha l l be reoQeredquar t e r ly ·rOr • P f r l ~ Of tvo years (but in "ny event: t·or 80 long

as tne Pr09r.rn (it all epis i ; )d lcser iec ) for which suchstate" 'entcor* rendered c,;ontinues in i t s f i r s t run on a n.ational 'eel .visionnetwork) S h O w . L n 9 b i ~ 1 i . n 9 s or c o ~ l e c t i o n . ( 4 s the C . 8 ~ ilia), be) and

t h Q r e a t t ~ r on II .eJ1li .. n n ~ a 1 bas1-lI, ·provJ.de.d tha t no st.tel llentneed be rendered· for any period in which no receipts are rece1v4d

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O t charqes Lneurred. Each 9 t a ~ e m e n t ~ h a l 1 be rendQred wi th inn1h.ety . 90) days at ter t:he c lose ot t .he p e r i o d ~ o r wbtch ~ h e. tatelll.J ' lt i8 r e n d e t - ~ d . Statements rendered nay ba chaJ'l90cl froat ime t:o tllftQ to give e f f e c t to .itelfts overlooked,. t : ·o corl" ' .ct

e ~ r o r a ' on< ' for ~ J . a n i l . r purpOIi:QS.. A.ny t I . S . d o l l a t 5 due end~ y . b l . to Par t i c ipan t by producer purau.nt to any such s ta tement, .ha l l be p a ~ d t o p , a r ~ i e i p a n t s;i.. . l ~ a n Q O U 8 1 y w i t h tbe rende.r1ng ~ fsuch stateJftent. Any 1riithholcling or deduet ion r e q u i ~ e c t by 1 • ., ••Ybe . a d ~ . .



. p p l i ~ G b l e . r ~ c o r d • .a t cuch of t ice in order to veri fy earn ngect:at·ellent:.e; rendered I'Ilitreutlder. Any auch Audit $ h a l l ..,. e()nductedonly . by a r-.pi.tt.ble public accountant (sub ject t.o Producer 'sr e a S O " A b ~ e approval) dur ing r e . ~ o n a b l e bus1ne.5 h o u r ~ And . _h . l lno t continue f o r m o ~ e than t h i r t y (lO) consecut ive daYG. Anysuch a u d i t 91\.11 be conducted ir'l such m a n n ~ r as hO· t to i .n ter terewith P ~ o d u . e e r ' & norllla.l business a c t i v i t i e s . . . Particlplli ll t "sballnot h a ~ e t h e ' r i g h t io e x a f t l 1 n ~ or inqulr-e i n t o any lI'Iattera o r .it:eml: which are e J i t b r a ~ e d by o r c ( ' ' " t . l n . ~ in any suCh statelDenta C t e r t h e ~ X p i l ' a ~ i o n o f twenty . t.OUt' U4 months fro", aM a t t . e rthe d ~ t e . ot ~ . l l i " g o f such state"'.:Jnt •• d ~ u c h s t a ~ •• h t 81\a11be. t i n a l and Conclus ive Up07\ Pertic;ipant upon the expiratl<;)n Ofsuch tJofel1cy .. t ou r (24) month per iod n.otwitnst :andinq. t ba t themAtters o r lteJlls eJllbraeed by or cont . . ined the.rein may l a t e r becont.ained or r e f e r r e d to 11\ a CUMulative lIt.at·emcmt perta1nln9 to

aore triun one ' lieeountinq periOd. Such cUlluJ,.Hv". statellient Gball·not I;)e subject to audi t by partic, ipant to thA e)( tant the materialcontained thArein wa. f i r s t ref lected on a c ~ a t e m e n t s u b f t i t t . ~m o ~ e t h a n twenty. tour (24) .nont.hs pri-or to th date of "';IIiH.n, 'of.uch c u l ' l u . l l a ~ 1 v . s tatel l lent . po'll"'ticipant sh;all be forev.er barredf ro . lIIainta.lninq or i n sUtu t1 l lq ' any tact ion or· pro¢::eedinq b a ~ G dUpOIl,·· or in any vay r e l a t i nq t . o , any t ransact . ions had byProduc:er-. or i t 5 l j ; ~ e n s e p . ~ . J : " connectiol' \ ' t ~ t h the P ~ t x 1 r . a J I I wh1eba r . eJIIbracacS by or refleet:.tid·ohany st.-tement rendered hereWlder.or - the eec"treC:Y of·any. · i tbi appear1ft9 therein, unleG8 wl;it:tenobjection· thereto s h i l l have been d . l i y e l ' e ~ b y P a r t i c i p a n t t oProducer-wi th in t ' t en ty-four (24 )Jllonths af ter the ' d a t e ot lUll H.n9of the statement on whic:h such t ransaction or it-ell "'",s f i r s t

r ~ f l e c t e d anc) v'nless such oct 1.on or proceed in ; i s C;OMmen'cedw ~ t h i n twelve (12) ~ n ~ s a f t e r de l ive r y o t euch w r i t t e n

object ion. par t i c ipan t ' : I riQht co examine P r o C l u c ~ r ' 6 . r e ~ ~ r d . 1 ..1111'11teCl to tbe program. and .under no c ~ r e u " , s t a n c e s a ha l l .partic:· ipCint h ~ " e t he r 9 h t to · examine I:"ecords r e b c i n q ~ oProducer 's bus iness 9cnera.l1y or ·any othf r product .ion for thepurpose o t e o ~ p a r i s o n o r o t ~ e r w i s e .

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G r o . ~ Receipts . Producer 1" i t s . "18 cUtile'retion may payPart :1.c pant h i . or i t c share or: HmUt ied Ad jus ted Groaa Proceeds.pp l1cab la t h e r . ~ o by d.pgs i t1ng ~ b e s a ~ Q in paTt i c1pon t ' 5 n D . ~and at Pa r t i c i p a n t ' s . ~ p e ~ $ e w i ~ ~ u c h depository as P a r t i c i p a n t5hall r.quulI"t, subject to ~ r o d t l C : e r l . · . p p r o v a l . Pt"oducet"' "hal lno t i ty par t ic"ipant at any such depo8it· •





. < producer or any Distr'1t)utor- 'with respect to any flat tereonn,c t ion with t h i s A9relUllent for r . U e f o t h e r t h ~ n moneydaIl'8'08. As between . p a r t . i c i p . n ~ _04 producer. Prod\lcerShallhave cole discre t ion: ~ c • • ~ a fair and r e e . ~ n . b l e al locat ion otany amount t h a t is perlllitte4 ~ N l e r th is e)(hibit (6Uc:h Cros .Receipts , a O i ~ t . r tbUtion £xpen8e. or -an ~ t . e l l l Of Product ion Cost)(rollt a n y la rger $UIft -in which . i t i$ .included; t·g .determine Whetl)ot"to' ' inc", .ny 'Dis t r ibu t ion t"pense orit .eftl of Produc.tion CO$t, .w"en it is; lnc:urred. ant,Jl'\oW it hcol f tput ed; to 4et."lIIine Wben· ~ h . C O f t v . r 5 i Q n o r t r a n 6 r n i ~ t a l of eurrency s ha h occur and thee)(changc··r:ate at which 8uch convers.1on . h a ~ l .occur; to df ter .. ".what i t ~ , . s ine lud.d in Production Cost . h . l l be considered dIrec tcost '" a ..di:.tLnquishcd fcom overhea.d: to detorJlline a l l t e r• • ofeach BC)reelllont, ' i t . Y. for tbe d1stribu1:.ion of Proqram. o r tha


p . y a e n t : ~ o se t t l e -.ny claiM with respect to any such 4greelfteht·or , , i n r o . cpac t ' to the. PC:OCjr.",; to re ta in · r e a ~ O " ..blQ port ion8 o fDefIned P r o c ~ . d s I S ceser.ves for cont inqent . u n ~ O l h l > u t e < 1 , o rret roact ive d ~ b t s ; and to ' eOllnninqle funds apr. l ie .hIe to paYlncnts

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or be ld by Prodveor. Producer ~ k e a no r-."re·Gentat.icn o rVArr4nty ~ 1 t h respAet to Producer 'a e[fortG in c Q n n e e ~ 1 o n ~ i t hthe d i a t ~ b u t l o n or the P r o q r ~ ~ or ~ M p l o i t a t i o n o f subsidiary :r i9htG, o r t h ~ t . .such d 1 . t ~ · i b u t ...on o r e x p l o i t . e ti o n w i l l r e s u l t inany m i n i ~ U D a.ount Of Gross Recaip t . or NQd1Cled Adjusted Gro55proc.ads. . . .Pl"ocbac. r . includes New Line Televis ion . Ine •• · New.Line Cinellla Corp . , an" .nvent . , i tyo",nad pr c:;ontrolled by . i1;hero t the Co%'0901n9 which i s engAge:d to ".".lop end/or·produce. thePro9rall'l. The tar l l l . ha l l n o ~ include: any other (Mtraon, tirln orcorpora t ion 4 i . ~ r i b u t i n q the p ~ o q r . ~ o r exploit i"9 . u b . l d i . ~ yr i q h t s ~ h e r e 1 n ; ,ucAibit .orsO.r o the te who lIay ac tua l ly . ach ib i t the'r09r4111 to t h ~ pvbUCi t:adlc> o r t..19vision· bro .de• • ........ cabledperat .or$; .anufecturers , whOlosales or r e ta i l e r . o f .VideoDevices; .book. lIa9a%i"e or .uGlc publ isher&; pbonoqraph record"roduc·.c-. vr d i . s t r l b ~ t o r s ~ .&t\d ... " C a c t ~ r ~ r s . di . t rUn.t tor6 •

. " h o l e B a l e r ~ . r ~ t C l i 1 e r . o r o p . r ~ t O l " 6 ot any t ype . o f l I I e r c h a ~ d i • • •.qoods, ......vj.c.elP o r t:heme park or o t h . t a t t rac t ions , whether o r

not any ot t h e fore901ngu". aff i l i a ted with Pc-odUC81:'.

XII . Y.ldeo Q\}ViccJj. ptcviciect t h a t Producer i8 vea t .d withth& ~ i g h t tQ .anutacture . a n O d i . t r i b u t e t h e P r o 9 ~ . ~ on videoc a s c c t t e s , Y i d e o t .pe& ~ n d si l l l l lar cornp.Jet: ..udiovi sual devices.by f'orl'llat now k . f t o " , , , o ~ l . t . c . t.o ..a e. deViseel. il'Jtlmcied to be s o l dot" l e a sed t f ) the p u ~ l i e 4 device j,ntenC ed pr1I11u'i1y t o r ~ h o . .u.c.," ( . s s u ~ h · t . ~ r M . i s · o ~ i f t ~ m l y understood i f t the l I Iotion pict . _reindustry) C"Video oevic;ee"J. and tha t such Video Devices. eonais ts o l e ly o t ~ h e or ig ina l . Cubstan'tlally complet.e vers ion o t OftO o rmore ep isod . s Of ~ h e ProeJraJft. (e .g •• a l l l o ~ n t Shal t be ifleluclodin GrOlit5 Reeaipts in re$pect of Video Devices wnich include'siDiple ...e•nec o r t l h i 9 h U g h t s " fro", ~ h e Pro9r.all\whether ft>rproMotional C)r advert is ing pUl"posesor.otber-wlse), Groce aecoiptltshal:l . include an amount determined AI' follows: .

C·e) An amount equivalent to t" 'enty percent (20t) o fdu " h o l . a e ~ e .priee Ce)(cludi".9 Fader-al Ekc:ise Taxes, or thalequ iva len t ·t.hereof, l oca l t l ucea . if . "Y • .-nd s tandard c:ontain""rchal"ges) .c t taal , ly received by P r ~ ~ c e r f:c:.. 5uctl Video I;)evtcee",anufactu.red end .sold in the UI'l1.ted S t a t . i (it be inq underst.oodt h a t ~ n o Distr b ~ t i o n 1 e e sha l l be c ~ . r g e d gn ,,"el\ aftlount.,. .

(b) As ~ Q Video b ~ \ i i c : a s so ld out:l:ide the U n i t e ~ .s ta te . , the . lftount include<1 in Gross ReeoLpt5 sha l l . ~ . one-hal f(1/2) th_ OJilount refec.e<2 to 1npar_qa;-aph XIII.) above and .ha l lbe ca l cu l a t . " Producer" .. e lec t ion , upon the whOleaale pr i ce ofc'lch Video Devlc.s in the countrY'of " ,enufacture , tho Unitedst.ates, £ngland, o r t:be country o t cale. Th.. aforesaid amount~ h . l l bp- cOlllput.d in tJ'le na t ion . l ~ " ' r r " h c y . ( ) f . t ~ 6 c o u n t ~ ·to

which ~ \ I I ~ ",holes. le price 40 alar:teCS app11es and aha l l be pa id a t~ h e s a m e r a t . ~ f e x c h a n g e a s ".w Line. i s pa id ; provi .dud. however,t ha t su'Ch ail lount5 on lPuch Vjdeo D.vices t ;hal l noe b • . included inGroa . ' lhl,cC'ipts u n ~ i l .paYJllent t . h e f ' ~ f o t " h e ~ actual ly boan rece iveda,y P r g 4 ~ c ; e r in t h e unit.ed States ' ,

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(e) In r e sp - c t ' o f Vidoo t;QviOQ., e o l d t h r o u g h any"club." or aiml' lar sa1es plan . and devie:a&, the . . .ount 1nelucladin C ~ O . 6 ~ . c e i p t S sho l1bc one-halt (1/2) of t ha t r e f e r r ~ d ~ a in

p ~ r . 9 r ~ p b . XII(a) and (b) d ~ p . n d i n 9 ~ p o n whare such'video Devices

e ra cold ; provided t h a t there eha l l bo n ~ amount i n c ~ u d a d in ,Gr058 t t .ce ip tsvi , t t \ l " e l J p e c ~ tq V1dOO De\lu:o. 9iven tg, . . l I Ibers of

sudh clubs as hbonus" or "free" video Devic• • a . a reeul t o tjoin1nq the ~ l u b and/or,purchas1nq required number of V i d ~ o ''Device£.. Ho ~ . - o u n t inelu(le;din Oro• • Receipte . h ~ 1 1 be COIIIputedvit.h res'pact to video Oevice. given aW41Y or furnished on a "nocharge" basis '1 o d . a l . J : ' ~ or ot.her_.

(4) , roducer sh a l l have t h . r i gh t ~ o daduct , .nd ~ ore • • ve fo r re turns and c r e d i t s o f aft)' nature . lnelutUnq. ~ i t h o u tlilllitat1on,I t h o . e on ,account of one hundred percent (100 ' ) O ~ al • • • • r e 1 : u ~ n p ~ i y i l e g e . d . t . c ~ i v . merchandi£8, . ~ c h a n 9 0priv i lege, p r o l ' A a ~ i o J " l a l credits . errore in bi l l ing . unusualo v e r s ~ o c k and errors in ~ n i p p i n q .

(e) Froll\ the alAount(s) cOJilputec2 115 se t tort .h above,~ h e r o c h a l l fir,.t: be d . c 2 u c ~ . c 1 the aqqreCJat.a o f the t o l l t ; ) ~ i ' n f Jeo&1:sand expen'ecG, and on.v tne balance of such aillount(s)ralllainlng•• t . e r &ouch deduet..iona shal l have been ..ad. , shal l beincluded 1ft Cross R ~ c e i p t . & ;

(1) Any a.ounta and ~ o y . l t i . ~ which shal l bapayable in connect ion wi t.n tJ'U.' 1 mam,fac1:.ur i nQ . nddiat.ribut.ion o f t h e Video Dev ic .5 to t h ~ , p . r son(s ) who• •

,pertormance(sJ i e /are contained on such Video Oev.$.cea inaccordance wit.h t h e ag l "ee " , . n t ( s ) which "UA), h a v e been enteredin to with . ~ y . u ~ h perGonCG)r

, C11) ..11 coSt'5. exp.n • • and fe . . wit.ll respect:~ o ~ h e Video Oevices 1 ~ e u r r l t d a:.y Producer: or i t s G ~ b s l d i a r yor a f f i l i a t ed . compan1'es, under a9ree:"'ent'(G) with any aM a l lqUlld& or unions wherever located and whethor now orhereaf te r in axi5tence:

_ ( i U ) Any add i t iona l costs (whieh a re not:~ ' n c h a d e d ~ h e (;osts of production or ~ h a prO<Jralll) inc;:urredinconnect icm with the z-eproduotioh Of the Progralll for ,thepurpoaeof enablinq ,t.he iasuanee ofVidao oevieeD t.hat'etr.oBl.

( f ) I f ' in any foreign terr i tory, Prqducer does notdi. trJ :bute Video Devices 1tse lC but instoead u s e s . &ubcSiatl 'ibutor, t.he alltOunt l"cliaoed in G r o . ~ Receipts pursuant:. to '=.hi.Bparagr.ph XlIX shal l be an amount equal to the a .ounts a c t ~ a l 1 Y

~ . c Q i v e d by Producer fro", SUM lSubdi.tributor from such exereiGeor 'Kuch video Oevice distribUtion riqht& in 9uch t e r r i t o r y (andProducer s h a l l c;:barfJe A Distr ibuti .on Fee or 1-1/ '2 ' on SUChalllOunt).

END OF MODIFIED ADJUSTED GROSS rROCEEPS D E F I N I ~ I O H

I

r

I:I

Id S O : L O S 6 - I Z - 6 n 'f

O I -d



JAMS

NEW YORK CITY, NEW YORK

NEW LINE CINEMA LLC, a Delaware limited liabilitycompany,

Claimant,

vs

MIRAMAX FILM NY, LLC, a New York limitedliability company,

Respondent.

S T A T E O F N E W Y O ~ )) ss.:

COUN1Y OF NEW Y O ~ )

AFFIDAVIT OF SERVICE

KEITII S. KAPLAN, being duly sworn, deposes and says:

I am over the age of18 years, not a party to this action and am employed at 825 EighthAvenue, Room 3800, New Y o ~ NY 10019.

On the 26th day ofNovember, 2013, I served the annexed documents entitled:DEMAND FOR ARBITRATION and STATEMENT OF CLAIM upon:

Mr. Bertram Fields, Esq.Greenberg G1usker Fields Claman & Machtinger LLP1900 Avenue of the Stars, 21 st FloorLos Angeles, CA 90067

Miramax Film NY LLCLegal Department7966 Beverly BoulevardLos Angeles, CA 90048

by depositing a true copy of he aforementioned document in properly addressed, postage prepaid,Certified mail, return receipt requested wrappers in a depository under the exclusive care and

custody of b. U.S. Postal Service located within the York.

Affirmed to before me this

7 ;e::J1J];lU[[NYLIT:2649752v2:3800FW: 11/2612013-05;08 PM])

.RoeEFIT B. ZWILLICHNoiry Public, Stale of New York

:.: No.01ZW463095906alified iii NewYl>rk County

ComIDisSion expires October 31,2014



EXHIBIT 2





EXHIBIT 3





INDEX NO. UNASSI




1

SUPREME COURT OF THE STATE OF NEW YORKCOUNTY OF NEW YORK



Plaintiffs,

v.


Defendants.

Index No:

COMPLAINT

Plaintiffs Miramax, LLC (“Miramax”), Harvey Weinstein and Robert Weinstein

(collectively, “Plaintiffs”) for their Complaint against Defendants, New Line Cinema

Corporation (“New Line”) and Warner Bros. Entertainment Inc. (“Warner Bros.”) (collectively,

the “Defendants” or “Warner”) allege, upon information and belief, as follows:

INTRODUCTION

1. This case is about greed and ingratitude. It arises in connection with a decision by

Warner Bros. and New Line executives to divide a motion picture based on J.R.R. Tolkien’s The

Hobbit into three installments and Warner Bros and New Line’s claim that, as a result of that

unilateral decision, Plaintiffs are not entitled to their previously agreed upon share of revenue

from The Hobbit film. Warner’s position is simply an improper attempt to deprive the people

originally responsible for hugely successful films being made from the works of J.R.R. Tolkien

of their right to share in revenue from two out of the three filmed installments of Tolkien’s The

Hobbit .

2. In 1998, Plaintiffs sold New Line the film rights to J.R.R. Tolkien’s four books:

The Hobbit: Or There and Back Again (“The Hobbit ”) and The Lord of the Rings trilogy The



2

Fellowship of the Ring, The Two Towers and The Return of the King. New Line acquired these

film rights after Plaintiffs already spent over $10 million developing the film adaptation of

Tolkien’s works. In exchange for the film rights, New Line promised to pay Plaintiffs

contingent compensation of, among other things, 5% of the gross receipts of the “first motion

picture” based on the books, but specifically excluding any contingent compensation for

“remakes.”

3. Following the massive critical and commercial success of The Lord of the Rings

film trilogy, Warner decided to release a film based on J.R.R. Tolkien’s novel The Hobbit .

However, unlike the three films in The Lord of the Rings series, each of which was based on one

book from that trilogy, Warner unilaterally decided to split the one Hobbit book into three

installments, in the manner of a long form television drama.

4. The three-part motion picture collectively tells the entire story of The Hobbit ,

with each installment telling only part of the story and the final installment, which bears the

name of Tolkien’s book The Hobbit: Or There and Back Again, completing the telling of

Tolkien’s story.

5. Using its unilateral decision to divide The Hobbit motion picture into three

installments as a pretext, Warner now claims that it can keep all the revenues from the second

and third installments of The Hobbit and that it does not need to pay Plaintiffs their 5%

contingent compensation because, according to Warner, the second and third installments of The

Hobbit are not the “first motion picture” based on The Hobbit and are therefore effectively

remakes, which are not covered by the parties’ agreement.

6. Warner’s position is particularly outrageous because the parties’ agreement

specifically includes a “most favored nation” provision promising Plaintiffs they would be paid



3

in a manner that is no less favorable than Peter Jackson, the director of all the installments of The

Hobbit film. Warner’s refusal to acknowledge Plaintiffs’ participation rights is nothing more

than a shallow attempt to deprive Plaintiffs of their fair and previously agreed to share of revenue

from Warner’s exploitation of The Hobbit book. Warner’s position is inconsistent with the

parties’ intent, the terms of the parties’ written contract, Warner’s own director’s statement that

each of The Hobbit installments was written and shot as part of a single motion picture and

Warner’s projections, budgeting and negotiations relating to The Hobbit .

THE PARTIES

7.

Plaintiff Miramax, LLC is a Delaware limited liability company with its principal

place of business in Santa Monica, California. The members of Miramax are ultimately residents

of, among other jurisdictions, California. Miramax is in the business of developing, producing

and distributing motion pictures. Miramax is the successor-in-interest to Miramax Film Corp.

with respect to the rights at issue in this Complaint.

8. Harvey Weinstein is a resident of the State of New York.

9. Robert Weinstein is a resident of the State of New York.

10. New Line Cinema Corporation and Warner Bros Entertainment Inc. are Delaware

corporations with their principal places of business in New York and California. New Line and

Warner Bros. are in the business of developing, producing and distributing motion pictures.

11. This Court has personal jurisdiction over Defendants pursuant to CPLR §§ 301

and 302. Venue in this Court is proper pursuant to CPLR § 503.

THE SHARING AGREEMENT

12. On or about August 21, 1998, Miramax and New Line entered into a written

agreement (the “Sharing Agreement”) with respect to motion picture projects based on the J.R.R.



4

Tolkien literary works The Hobbit: Or There and Back Again and The Lord of the Rings, a

trilogy consisting of books entitled The Fellowship of the Ring, The Two Towers and The Return

of the King (collectively, with The Hobbit , the “Literary Properties”). A copy of the Sharing

Agreement is attached as Exhibit A and incorporated herein by reference.

13. Pursuant to Section 4 of the Sharing Agreement, Miramax is entitled to 5% of the

gross receipts of theatrical and television exploitation of the Literary Properties, on a basis no

less favorable than that accorded to Peter Jackson, the director of films based upon the Literary

Properties.

14.

By written agreement, Miramax assigned to the Weinsteins 50% of its share of the

gross receipts from the Sharing Agreement. Warner was notified of and acquiesced to the

assignment from Miramax to the Weinsteins. The Weinsteins are third party beneficiaries under

the Sharing Agreement.

15. Under the Sharing Agreement, Plaintiffs were entitled to receive, and have

received, contingent compensation from the three films based on the three books in The Lord of



16. Under the Sharing Agreement, Plaintiffs are also entitled to contingent

compensation with respect to The Hobbit . However, unlike its previous practice with respect to

The Lord of the Rings, Warner decided to divide the single Hobbit story into three installments,

planning to release these installments over three consecutive years.






5


Sharing Agreement.

18. Warner released the first installment, The Hobbit: An Unexpected Journey in

December 2012. Warner is scheduled to release the second such installment, The Hobbit: The

Desolation of Smaug on December 13, 2013, followed by the third such installment The Hobbit:

There and Back Again in December 2014.

19. Now that it has elected to split The Hobbit into three installments, Warner claims

that Plaintiffs may share only in revenue from the first installment of the film (released in 2012

as The Hobbit: An Unexpected Journey) and refuses to pay Plaintiffs any compensation derived

from the second or third installments of The Hobbit (The Hobbit: The Desolation of Smaug and

The Hobbit: There and Back Again). Warner has thus effectively taken the absurd position that

the second and third installments of the film are remakes, and that Plaintiffs are therefore not

entitled to contingent compensation. Warner takes this position solely to deprive Plaintiffs of

their right to share in the revenues from two of the three filmed installments of The Hobbit .

20. Moreover, Warner’s current position that Plaintiffs are not entitled to share in the

revenues from the second and third installments of The Hobbit is inconsistent with Warner’s


Plaintiffs’ contractual right to contingent compensation from all installments of The Hobbit.


(Declaratory Judgment)


22. An actual controversy exists between the parties insofar as Plaintiffs contend they

are entitled to share in the gross receipts earned from the second and third installments of The

Hobbit and Warner contends to the contrary.



7

30. The implied covenant of good faith and fair dealing requires that Warner not do

anything which has the effect of destroying or injuring the right of Plaintiffs to receive the fruits

of the contract.

31. By splitting The Hobbit into three installments and claiming that Plaintiffs may

share only in revenue from the first installment of the film, Warner seeks to deprive Plaintiffs of

their rightful share of the revenues from two of the three filmed installments of The Hobbit .



FOURTH CAUSE OF ACTION

(Promissory Estoppel)

33. Plaintiffs incorporate by reference all prior paragraphs as though fully set forth

herein.

34. Warner clearly and unambiguously promised Plaintiffs contingent compensation

from the film exploitation of The Hobbit book.

35. Plaintiffs reasonably relied on this promise when they consented to the Sharing

Agreement and the related promises therein.





EXHIBIT A



06:0BP.

. '\:

1.\

)"

y,)6: 8 1 2 ' ~ 1 S

8.

9.



P.03

10. cenificate ofAuthorsbip dated April 28. 1998 from PhilippaBoyens;






16.

I I .

18.

J9.








22. Letter agn:etnMt October 20. 1975. between United Artists

Cotporation. on the ODe part.'and George Allen & Unwin. Ltd •and C.A. Bank, &. Trust InlCmaiionaJ, Ltd. (Dame changed fromSaS6oo.o Trustee &. Exccuwr:CotpOration. Ltd.). on tlIe other part.


, 2



0 6 : 0 B P

;, 36; 8121.1'98

23.

24.

25.

26.

.27.

28.

P.04









31. U.S. (including all dcpcudenciQ and the Philippines) Publi$hing

Agreement dated August 11. 1 9 ~ 4 between Houghton Mifflin Co.Illld George Allen Unwin. Lut fol''Tbc fellowship ()f1he Ring" .





3



0 6 : 0 9 P

r ~\

1

0'.36. 8121198

P . O S



83.

84.

8S.

86.

87.

88.

90.

91.

92.

93.

94.


Letier dated JUne 16. 19-,6 r o ~ SzoJcl, BrandwcB; Meyers &Altman to Vnited ArtiSts Corporation. .





~ 1 D e D t cbI_d IS ofJanuary 1, 1983 between 101m F.R.ToDder...MK;:bllCJ H.R. Tolkien. Cbri&i:opbet' R. Tolkicn. Priscilla M.A.R.Tolkieliand The Saul ZaCl\tz ProdUCQon Company. BJan

M e ~ d i s i n g .AssigDment of Copyri,bt dated Januasy 1. 1934 betWUJl, ~ p h c r Tolkien and Elrond Limited.







Trademoirk Licensing Agreement dUW as of January •• 1994-

betWCf;:D The Saul Zaentz Company and Iron Crown &terpriliCS.~ ~ . . .

7



O G : I O P

\.v.36· 8121198

P.09



97. Letter daIcd November 10.1997 from Peter Martin NehOl1 lONeil

Sacker. .





102.

103.




)04, . Letter dated FcbnWy 7,1996 floJu1'lurman G. Rudman (0 Alben

M. Bendich.

105. Short Form .TransfcrlRelease dated November 20. 1992, ~ u t e dby Metro-GoldwYn-Maycr, Inc., in favor of The Saul ZaenttCompUlY, with respect c.u \hC.mm,ned f C a t U ~ motion picmR:entitled ·'J.RR. Tolkieu's Lotd·ofthe Rings'".


Rings''.




108. Cenificate of&ga:emeJit dated May 15. 1998 in favQr of Miramax

Filin Corp .eecutedby Marty Katz and by Many Katz Productions.Inc. · . . .

8



Aug-21-98 0 6 : 1 P P P . 1 Q

\













(4) All material wrineo or aeated by Pew Jackson and/Or Fran Walshpursuant to the apemeDtS refeaed co iu items 2.a."1S. 2.a.16 and2.a.11 b o v ~ , and. if and to the extait lhat it exists and is ownedbyMiramax or Hardware, '.ny other I W ~ cteatcd by one or both of·them in connection with tbePic:w1t but any failure todelivCf $ucb0IhU material·nat ii{Miriu'nax's or Hardware's p o s $ ~ i o n toPurchaser sbalI not be a breach of this Quilcbim AgR:ement.




9



)

A U ~ - Z l ~ 9 B 0 6 : 3 Z P

P . 0 3


ilJlPlied. ' , '



costs (iI1cluding lQSOQ8b1e ot.USide anomey's fees) ~ i n ' g out of or rcs1iJring frOID any~ h by Miramax ofMiramu's l'eprt:Sentatiolls. warranties w g r e e l l l C l 1 ~ contained inthis Quitclaim A ~ l .4, PURCHASE OF PRopERTY:




all of the executory 1eI:mS. ~ O V e D a l n $ . cooditiODsaod other provi$ions J:t,:quired to be keptand performed subsequent So «be dtIc bereofby MirIunU or Hardware contaioed in thea g r c e ~ t s s ~ c d in PuaaraPbs . a . l ~ . i n c l u s i ~ c . abow and in all of he o1her




outside aIlOmey's fees and co5t5) t h e ~ , o r Illy of may sllffcr or incur arisio& out ofor resulting from{a) any bJUCh o f ~ representations, warrantie50 ' agreementsbcreWldcr at (b) U J ~ develOpment, productiOn. distribution and exploitation by n : h a . 4 i e t or

any ofPUn:haser's subsidiaries.$ ~ s o r s .

assigns ori ~ P S e e i

or otherwise purSuant toPWcbase:r's authority. ,of IJDY motion pictwe. television prolfUil or olbeT FoductiOn (s),in, any andallllUUlDCl'S,' metbo<b' and media whether now known or hereafter devised QI"




(4) C o n ~ e n t 1 y with lbe ~ u t i o n hereof, sball execute anddeliver to Mirarnax Ibc WGA LiteraryMatmal AssumptiOn Agrumcnt t t a d ) e d hereto asExhibit ..A ... and upon satisfaction of he Conditioos Precedent set forth in Paragraph 1,above shall cxeCute and deliver to PwclJaser a Short Form Quitclaim ill the: Jonn

~ , ) 6 : 81211911 11



.

\i)





as .Exhibit "Bit. .






TOTAL P.02



1)

.

\


g o v ~ i n m e n t or governmental agency relating to any partIcular country or·territory._ Nothingcontained in this Paragraph 10 shall be deemed to, nor shall it, limit or restrict Company's rights

under Paragraph 12 hereof. . ,







· that such purchaser, transferee or assigriee is at the time of its assuming performance afinancially responsible party, be released ' ~ d disCharged of and from any further liabilitY orobligation hereunder and none of the monies or other consideration received by, or paid orpayable to, Company sluiU constitute gross receipts hereunder, and P8rticipant shan have norights iIi respect ofany thereof. .



result in requiring Company 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 Participant arid· to the parties entitled to share therein; and (ii) in no event shall any party other than P ~ c i p a n thave the right to audit Company's recoids by reason of such assignment Any such assignmentshall at all times be. subj ect to all pertinent laws and governmental. regulations'and to all of the





EXJlIBIT "GR-l"

VIDEO DEVICES

. "





(a) Twenty percent (20%) of Video Gross Receipts from the exploitation of

the Picture on videocassettes with a suggested retail price ofmore than $29.95;



" .(d) No royalty shall be Included in the gross receipts of the Picture for Video

Devices where ,the Video Gross Receipts derived exceed Company's manufacturing costs by$1.00 or less (i.e., remainders); .



(11) With respect to Video Devices not consisting entirdy of the entire Picture asreleased theatrically to the general public, the amount to be included in the gross receipts of thePicture shall be prorated by multiplying such amount by a fraction the numeratoiofwhich is therunning time of all scenes or "highlights" from the Picture inclUded on such Video Device, andthe denominator of which is the total running time of such Video Device; provided, however,that no amount shall be included in the gross receipts of. the picture in respect of Video Devices.which include scenes or "highlights" from the Picture for promotional or advertising purposes.




. ,

4. In c o m p ~ t i n g the nuinber of soundtrack records manufactured and sold .

hereunder, Company shall have the right to deduct the returns and credits of any nature,including, without limitation, those on acc()lint of hundred percent (1 OOOA,) or a lesser returnprivilege, defective merchandise, exchange privilege, promotionai CredIts, errors in billing,

unusual overstock and errors in shipping. '


·the Picture:

(a) Any amounts and royalties·which shall be payable to the person(s)whose performanCe(s) is/are contained. on the soundtrack ~ r d in accord8nce with theagreement(s) which may have been entered into with.any suchperson(s);

(b) All costs, ·expenses and fees with respect to. the' soundtrack record

incurrtd by C o m p ~ y , or any Company comprising Company or its or their subsidiaries,divisions or affiliates, linderagteement(s) with the American Federation of Television' and RadioArtists of the United. states and Canada or any other guild or union wherever located. andwhether DOW or' hereafter in existence. Said costs shall include, but not-be limited to, reusage or


8l1d




shall use the soundtrack of the Picture for the purpose of manufacturi,ng; d i s t r i b u t i n g ~ selling andadvertising Soundtrack records, Company shall i ~ c l u d e in the gross reeeipts of he Picture (in lieuof the royalty provided'in Section A) a oyalty equivaient to that earned from the ·actual sale of


licensee with respect thereto less an a d p U n i s t r a t i o ~ fee in an lQIlount equal to' fifteen percent

(15%) ofone hUndred percent (100%) ofall ~ c h sums, and thereafter, less any costs, amounts or


• •••••




_•.,

y

' \'.,.I

. RIDER 1








6... Company shall furnish Participant with. accounting statements on a quarterly basis

.for three

(3) years after the initial theatrical releaseof

the Pictureand:.

thereafiersemi-annually,'. setting forth, in such reason8ble detail as is customary in ·the motion picture industry,Participant's share of ~ j u s t e d gross reCeipts andlor net profits, if any. Accounting statementsshall be rendered and payntent made, if any, within sixty (60) days follOwing the end of the.applicable-period.



-1-






quarterly basis for four (4) years after the initial theatrical release of the Picture and,thereafter semi-lPUlually setting forth, in such reasonable deWI. as is customary in

. the motion picture industry, Participant's share ofGross ReCeipts, if any. ' .Accounting statements shall be rendered' and payment made, i f any, within sixty(60) days following the end of the applicable period. If he Picture is reissuedandlor Gross ReCeipts exceed Five Hundred Thousand Dollars ($500,000) in anyquarter, quarterly statements shall be resumed; and if he Picture is released to prime .time U.S. network television andlor a U.S. payor cable netWork, statements shall beissued for quarterly accounting periods during which revenue from such source areincluded in Gross Receipts. The word "be" shall be inserted in lieu oftJIe word"by" in line 6. The words after "account" in line 13 to the word "hereunder" in line

1-9 shall :be deleted.



20. Paragraph 12. In line 3, the o l I o ~ g ' words shall be added after the word

"thereof': "provided tlult unless such sale; transfer or assignment by Company is toa so-calledinajor. or mini-major motion picture company or distributor or financiallyresponsible party or purchaser ofsubstantially all ofCompany's stocks or assets,which aSsumes in writing the. penormahce of ali ofCompany's obligations,Cotnpany shall remain secondarily liable to Participant for all obligatioilshereunder. "







.:".

SENT BY:

LO d


O t charqes Lneurred. Each 9 t a ~ e m e n t ~ h a l 1 be rendQred wi th inn1h.ety . 90) days at ter t:he c lose ot t .he p e r i o d ~ o r wbtch ~ h e. tatelll.J ' lt i8 r e n d e t - ~ d . Statements rendered nay ba chaJ'l90cl froat ime t:o tllftQ to give e f f e c t to .itelfts overlooked,. t : ·o corl" ' .ct

e ~ r o r a ' on< ' for ~ J . a n i l . r purpOIi:QS.. A.ny t I . S . d o l l a t 5 due end~ y . b l . to Par t i c ipan t by producer purau.nt to any such s ta tement, .ha l l be p a ~ d t o p , a r ~ i e i p a n t s;i.. . l ~ a n Q O U 8 1 y w i t h tbe rende.r1ng ~ fsuch stateJftent. Any 1riithholcling or deduet ion r e q u i ~ e c t by 1 • ., ••Ybe . a d ~ . .



. p p l i ~ G b l e . r ~ c o r d • .a t cuch of t ice in order to veri fy earn ngect:at·ellent:.e; rendered I'Ilitreutlder. Any auch Audit $ h a l l ..,. e()nductedonly . by a r-.pi.tt.ble public accountant (sub ject t.o Producer 'sr e a S O " A b ~ e approval) dur ing r e . ~ o n a b l e bus1ne.5 h o u r ~ And . _h . l lno t continue f o r m o ~ e than t h i r t y (lO) consecut ive daYG. Anysuch a u d i t 91\.11 be conducted ir'l such m a n n ~ r as hO· t to i .n ter terewith P ~ o d u . e e r ' & norllla.l business a c t i v i t i e s . . . Particlplli ll t "sballnot h a ~ e t h e ' r i g h t io e x a f t l 1 n ~ or inqulr-e i n t o any lI'Iattera o r .it:eml: which are e J i t b r a ~ e d by o r c ( ' ' " t . l n . ~ in any suCh statelDenta C t e r t h e ~ X p i l ' a ~ i o n o f twenty . t.OUt' U4 months fro", aM a t t . e rthe d ~ t e . ot ~ . l l i " g o f such state"'.:Jnt •• d ~ u c h s t a ~ •• h t 81\a11be. t i n a l and Conclus ive Up07\ Pertic;ipant upon the expiratl<;)n Ofsuch tJofel1cy .. t ou r (24) month per iod n.otwitnst :andinq. t ba t themAtters o r lteJlls eJllbraeed by or cont . . ined the.rein may l a t e r becont.ained or r e f e r r e d to 11\ a CUMulative lIt.at·emcmt perta1nln9 to

aore triun one ' lieeountinq periOd. Such cUlluJ,.Hv". statellient Gball·not I;)e subject to audi t by partic, ipant to thA e)( tant the materialcontained thArein wa. f i r s t ref lected on a c ~ a t e m e n t s u b f t i t t . ~m o ~ e t h a n twenty. tour (24) .nont.hs pri-or to th date of "';IIiH.n, 'of.uch c u l ' l u . l l a ~ 1 v . s tatel l lent . po'll"'ticipant sh;all be forev.er barredf ro . lIIainta.lninq or i n sUtu t1 l lq ' any tact ion or· pro¢::eedinq b a ~ G dUpOIl,·· or in any vay r e l a t i nq t . o , any t ransact . ions had byProduc:er-. or i t 5 l j ; ~ e n s e p . ~ . J : " connectiol' \ ' t ~ t h the P ~ t x 1 r . a J I I wh1eba r . eJIIbracacS by or refleet:.tid·ohany st.-tement rendered hereWlder.or - the eec"treC:Y of·any. · i tbi appear1ft9 therein, unleG8 wl;it:tenobjection· thereto s h i l l have been d . l i y e l ' e ~ b y P a r t i c i p a n t t oProducer-wi th in t ' t en ty-four (24 )Jllonths af ter the ' d a t e ot lUll H.n9of the statement on whic:h such t ransaction or it-ell "'",s f i r s t

r ~ f l e c t e d anc) v'nless such oct 1.on or proceed in ; i s C;OMmen'cedw ~ t h i n twelve (12) ~ n ~ s a f t e r de l ive r y o t euch w r i t t e n

object ion. par t i c ipan t ' : I riQht co examine P r o C l u c ~ r ' 6 . r e ~ ~ r d . 1 ..1111'11teCl to tbe program. and .under no c ~ r e u " , s t a n c e s a ha l l .partic:· ipCint h ~ " e t he r 9 h t to · examine I:"ecords r e b c i n q ~ oProducer 's bus iness 9cnera.l1y or ·any othf r product .ion for thepurpose o t e o ~ p a r i s o n o r o t ~ e r w i s e .

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G r o . ~ Receipts . Producer 1" i t s . "18 cUtile'retion may payPart :1.c pant h i . or i t c share or: HmUt ied Ad jus ted Groaa Proceeds.pp l1cab la t h e r . ~ o by d.pgs i t1ng ~ b e s a ~ Q in paTt i c1pon t ' 5 n D . ~and at Pa r t i c i p a n t ' s . ~ p e ~ $ e w i ~ ~ u c h depository as P a r t i c i p a n t5hall r.quulI"t, subject to ~ r o d t l C : e r l . · . p p r o v a l . Pt"oducet"' "hal lno t i ty par t ic"ipant at any such depo8it· •





. < producer or any Distr'1t)utor- 'with respect to any flat tereonn,c t ion with t h i s A9relUllent for r . U e f o t h e r t h ~ n moneydaIl'8'08. As between . p a r t . i c i p . n ~ _04 producer. Prod\lcerShallhave cole discre t ion: ~ c • • ~ a fair and r e e . ~ n . b l e al locat ion otany amount t h a t is perlllitte4 ~ N l e r th is e)(hibit (6Uc:h Cros .Receipts , a O i ~ t . r tbUtion £xpen8e. or -an ~ t . e l l l Of Product ion Cost)(rollt a n y la rger $UIft -in which . i t i$ .included; t·g .determine Whetl)ot"to' ' inc", .ny 'Dis t r ibu t ion t"pense orit .eftl of Produc.tion CO$t, .w"en it is; lnc:urred. ant,Jl'\oW it hcol f tput ed; to 4et."lIIine Wben· ~ h . C O f t v . r 5 i Q n o r t r a n 6 r n i ~ t a l of eurrency s ha h occur and thee)(changc··r:ate at which 8uch convers.1on . h a ~ l .occur; to df ter .. ".what i t ~ , . s ine lud.d in Production Cost . h . l l be considered dIrec tcost '" a ..di:.tLnquishcd fcom overhea.d: to detorJlline a l l t e r• • ofeach BC)reelllont, ' i t . Y. for tbe d1stribu1:.ion of Proqram. o r tha


p . y a e n t : ~ o se t t l e -.ny claiM with respect to any such 4greelfteht·or , , i n r o . cpac t ' to the. PC:OCjr.",; to re ta in · r e a ~ O " ..blQ port ion8 o fDefIned P r o c ~ . d s I S ceser.ves for cont inqent . u n ~ O l h l > u t e < 1 , o rret roact ive d ~ b t s ; and to ' eOllnninqle funds apr. l ie .hIe to paYlncnts

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Hobbit Litigation - Miramax Opposes Arbitration

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