DISTRIBUTION AGREEMENT
“DRINKING BUDDIES”
As of April 1, 2013
This agreement (“Agreement”) is entered into between Sony Pictures Worldwide Acquisitions Inc. (“SPWA”) and Drinking Buddies, LLC(“Licensor”), confirming SPWA’s acquisition of certain rights to the motion picture (and all versions thereof) currently entitled “DRINKING BUDDIES” (by whatever title such motion picture is now or may hereafter become known, the “Picture”).
For good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the parties have agreed to the following:
1.Conditions Precedent. All of SPWA’s obligations hereunder shall be subject to and conditioned upon the satisfaction of all of the following conditions precedent (collectively, the “Conditions Precedent”): (i) full execution of this Agreement; (ii) full execution of the Instrument of Transfer (in the form attached hereto as Schedule D); (iii) SPWA’s receipt and approval of the chain-of-title for the Picture; (iv) SPWA’s receipt and approval of the E&O Documentation (as defined herein);and (v) SPWA’s receipt of the fully-executed acting agreements for the Principal Cast (as defined herein).
2. Picture Specifications. Licensor shall deliver to SPWA a new and original live-action feature-length motion picture of first class technical quality in accordance with the following specifications (collectively, the “Picture Specifications”):
2.1.Writer/Director. The Picture was written and directed by Joe Swanberg (“Swanberg”).
2.2.Cast. The Picture starsOlivia Wilde, Anna Kendrick, Jake Johnson, Ron Livingston, Ti West, Frank V. Ross, Mike Brune, and Swanberg (collectively, the “Principal Cast”).All acting agreements with such Principal Cast(and any other actors in lead/cameo roles) shall provide for, without limitation, an obligation for all such actors to provide customary promotional and publicity services, and expressly allow full use of their respective names, photographs, likenesses, acts, poses, sound effects, voices and biographies (“Attributes”) in marketing, promotion, publicity and packaging for the Picture, as provided in Paragraph 3.2.3., below, subject only to customary limitations for talent of their respective stature (e.g., Fifty Percent (50%)/Seventy-Five Percent (75%) approval of stills; font size protection for on-screen and billing block credit).
2.3.Running Time. The Picture has a running time (including main and end titles) of ninety-one (91) minutes.
2.4.Title. The title of the Picture to be delivered by Licensor shall be “DRINKING BUDDIES” or such other title as may be selected by SPWA in SPWA’s sole discretion (“Delivered Title”). Once the Picture has been delivered to SPWA, on a non-precedential basis, Licensor shall have a right of consultation over SPWA’s selection of a non-English-language title or a title change which is not a direct translation or local non-English-language equivalent of the Delivered Title; provided, for the avoidance of doubt, SPWA shall have the right to select a non-English-language title, in SPWA’s sole discretion, which is a direct translation or local non-English-language equivalent of the Delivered Title. Licensor shall provide SPWA with a current (i.e., dated no earlier than thirty (30) days prior to the Delivery Date) version of the following, consistent with Licensor’s representations and warranties made hereunder: (i) a copyright report issued by Thomson CompuMark; and (ii) a title report and opinion for the Delivered Title issued by Dennis Angel.
2.5.Original/Synchronized. The Picture was photographed in color, using high-definition (HD) video and is of first class technical quality. The Picture is an entirely new and original sound film telling a continuous story with all necessary dialogue (which dialogue shall be originally recorded in the English language, except to the extent otherwise required by the screenplay), music, lyrics and sound effects, fully edited, titled, and assembled with the sound track fully synchronized with the photographic action thereof. The Picture shall be delivered with materials from which first-class release materials can be made.
2.6.No Endorsement. Notwithstanding any so-called “product placement” in the Picture which has been the subject of proper legal clearance, the Picture shall not depict, show or contain photography of any product, commodity or service in such manner as to constitute express or implied advertising or the endorsement thereof, nor unduly emphasize same unless approved by SPWA in advance in writing.
2.7.Music on Screen. The Picture does not include any musical performance by any individual appearing on screen.
2.8.MPAA Rating. The Picture shall qualify for, and be delivered with, a rating not more restrictive than “R” (or the equivalent thereof) by the Classification and Rating Administration of the Motion Picture Association of America (“MPAA”), or any successor thereto.
3. Territory/Rights/Term.
3.1. Territory. For purposes of this Agreement, (i) the “Territory” shall mean the universe excluding the United States and Canada; (ii) the “United States” shall mean the fifty states of the United States of America, the District of Columbia and Puerto Rico, and the territories, possessions, and commonwealths of the United States of America (including the U.S. Virgin Islandsand Guam), Bermuda (non-exclusively), Bahamas (non-exclusively),any territory subject to the jurisdiction of an Indian tribe or band, or Alaskan village, which is recognized by United States federal law or formally acknowledged by a state of the United States, ships and aircraft flying the flag/based out of the United States,marine installations including oil rigs serviced from any jurisdiction comprising part of the United States, military installations wherever situated at which armed forces of the United States are stationed, and any other governmental installations of the United States, wherever situated throughout the universe; and (iii) “Canada” shall mean the ten provinces, the Yukon, Northwest, and Nunavuit territories of Canada, and any successor countries occupying in whole or in part the geographic territory known as Canada as of the date of the Agreement, and the territories, possessions and commonwealths of Canada, any territory subject to the jurisdiction of an Indian tribe or band, which is recognized by Canadian federal law or formally acknowledged by a province of Canada, ships and aircraft flying the flag/based out of Canada, marine installations including oil rigs serviced from any jurisdiction comprising part of Canada, military installations wherever situated at which armed forces of Canada are stationed, and any other governmental installations of Canada wherever situated throughout the universe.
3.1.1. Notwithstanding the foregoing, for purposes of clarification, the Territory shall include: (i) non-exclusive Spanish language (dubbed and/or subtitled) Television Rights in Bermuda; (ii) non-excusive English language Television Rights in Bermuda; (iii) exclusive Spanish language (dubbed and/or subtitled) Television Rights in the Bahamas; provided, Spanish-language SAP shall be non-exclusive; and (iv) non-excusive English language Television Rights in the Bahamas.
3.1.2.DRM/Overspill. Licensor shall only authorize the transmission of the Picture via Transmission Means (as defined in Schedule E) using digital rights management technology and geofiltering solutions (collectively, “DRM”) as SPWA requires in connection with its own motion picture products in a comparable window and of comparable quality to the Picture. Licensor shall neither itself exploit nor authorize any exploitation of the Picture outside the Territory where such exploitation: (i) is intended for or capable of reception in the Territory; and/or (ii) infringes or is intended to infringe on SPWA’s exploitation of the Rights in the Territory during the Term; and/or (iii) encourages or motivates parallel importation (e.g., grey market exporting) of the Picture into the Territory.
3.2. Rights. Licensor hereby grants toSPWA the sole and exclusive right, under copyright, throughout the Term, to (and to license others to) exhibit, distribute, market, display, project, transmit, reproduce, broadcast, perform, advertise, publicize, exploit, sell copies of, dispose of and otherwise communicate publicly or privately and/or turn to account the Picture (and its plot, themes and other elements), and trailers and clips and excerpts therefrom, in any and all languages and versions, in the Territory, on any and all kinds, sizes, gauges and/or widths of film, tape, computer, electronic, digital, on-line transmission by any and every means, method, process or device or other delivery systems now known or hereafter developed in the following media (now known and hereafter exploited and not yet known or devised)(hereinafter referred to as “Rights”):Theatrical Rights, Non-Theatrical Rights, Video Rights, Television Rights, and Promotional Rights (as all such terms are defined in Schedule E).
3.2.1.Licensor Reserved Rights. For the avoidance of doubt, subject to the Promotional Rights, Licensor reserves all ancillary, incidental and subsidiary rights in and to the Picture including, without limitation, all merchandising, character licensing, music, music publishing, soundtrack album, master recording rights, photonovel, novelization, screenplay publication, stage play (on on non-precedential basis),and theme park (or other “themed” or location-based attraction) rights.
3.2.2.Derivative Productions.
3.2.2.1.Right of First Opportunity for Derivative Productions. If and when Licensor elects to license the distribution and exploitation rights in and to each subsequent and/or derivative work based on the Picture, irrespective of the intended medium of exploitation of such derivative work, including, without limitation, remakes, sequels, prequels, television series and spinoffs (and excluding, for the avoidance of doubt, stage plays,on non-precedential basis) (“Derivative Production(s)”) in the Territory, SPWA shall have a “Right of First Opportunity for Derivative Productions”, which shall mean that Licensor shall provide SPWA with the option to license each Derivative Production on substantially the same terms as this Agreement (including, without limitation, a minimum guarantee payment in proportion to the final negative cost for such Derivative Production as the proportion of the Minimum Guarantee (as defined herein) to thefinal negative cost of the Picture). Licensor shall provide SPWA with such option in writing along with the following (collectively, “Derivative Production Information”): (i) for a Derivative Production which is in post-production or completed, a screener of such Derivative Production and the following information: screenplay, producer(s), writer(s), director, principal cast, and production budget; and (ii) for a Derivative Production which is in development or production, a screenplay along with the following information, as available: the attached director or a list of proposed directors, the attached principal cast or a list of proposed principal cast, and the budget top sheet or a good faith estimated budget range. SPWA shall have until the date thirty (30) days following the later of: (a) the date Licensor provided SPWA with such option and the Derivative Production Information; or (b) the date of SPWA’s initial release of the Picture, in which to elect whether it will exercise such option. If SPWA does not exercise such option, then SPWA shall have either a Right of First Negotiation and First Refusal for Derivative Productions or a Right of First Negotiation and Last Refusal for Derivative Productions (assuch terms are defined below). The Right of First Opportunity for Derivative Productions shall be considered as a “rolling right”, i.e., such right shall be considered active for SPWA in respect of each subsequent Derivative Production intended for initial exploitation in the applicable media, provided SPWA has acquired or licensed Rights in the immediately preceding Derivative Production intended for initial exploitation in such media. For purposes of clarification, SPWA has no obligation to acquire or license any Derivative Productions and failure to acquire a Derivative Production intended for initial exploitation in one medium shall not waive rights for Derivative Productions intended for initial exploitation in any other media.
3.2.2.2.Right of First Negotiation and First Refusal for Derivative Productions. If SPWA does not exercise its Right of First Opportunity for Derivative Productions and SPWA does not cause a theatrical release of the Picture anywhere in the Territory, SPWA shall have a “Right ofFirst Negotiation and First Refusal for Derivative Productions”, which shall mean that if and when Licensor elects to license a Derivative Production in the Territory, then the parties shall negotiate in good faith for SPWA’s acquisition of the Rights in such Derivative Production. Licensor shall provide SPWA with written notice of its intent to license such Derivative Production along with the Derivative Production Information. If the parties cannot reach a mutually satisfactory agreement with respect to the acquisition of such Derivative Production by the date thirty (30) days following the later of: (i) the date Licensor provided SPWA with such written notice and the Derivative Production Information; or (ii) the date of SPWA’s initial release of the Picture, Licensor shall be free thereafter to make and/or receive offers from third parties with respect to such Derivative Production for six (6) months thereafter (“Third Party Derivative Production Offer”); provided: (a) before accepting a Third Party Derivative Production Offer on financial terms that are less favorable to Licensor than the last offer made to SPWA, Licensor must notify SPWA in writing of the terms thereof and SPWA shall have fifteen (15) days after receipt of notice within which to match such Third Party Derivative Production Offer; (b) if SPWA elects to match the Third Party Derivative Production Offer (or if an agreement in principle is otherwise agreed to pursuant to this paragraph), then the parties shall promptly enter into an agreement respecting SPWA’s license of the applicable rights in such Derivative Production; and (c) if Licensor has not accepted a Third Party Derivative Production Offer in accordance with the terms hereof within such six (6) month period, Licensor must again negotiate in good faith with SPWA for SPWA’s acquisition of the Rights in such Derivative Production in accordance with the terms of this paragraph. For the avoidance of doubt, Licensor shall be permitted to accept a Third Party Derivative Production Offer on financial terms more favorable to Licensor than the last offer made to SPWA, whereupon Licensor shall have no further obligations to SPWA in respect of any further Derivative Productions.
3.2.2.3.Right of First Negotiation and Last Refusal for Derivative Productions. If SPWA does not exercise its Right of First Opportunity for Derivative Productionsand SPWA causes a theatrical release of the Picture anywhere in the Territory, SPWA shall have a “Right of First Negotiation and Last Refusal for Derivative Productions”, which shall mean that if and when Licensor elects to license a Derivative Production in the Territory, then the parties shall negotiate in good faith for SPWA’s acquisition of the Rights in such Derivative Production. Licensor shall provide SPWA with written notice of its intent to license such Derivative Production along with the Derivative Production Information. If the parties cannot reach a mutually satisfactory agreement with respect to the acquisition of such Derivative Production by the date thirty (30) days following the later of: (i) the date Licensor provided SPWA with such written notice and the Derivative Production Information; or (ii) the date of SPWA’s initial release of the Picture, Licensor shall be free thereafter to make and/or receive a Third Party Derivative Production Offer;provided: (a) before accepting a Third Party Derivative Production Offer, Licensor must notify SPWA in writing of the terms thereof and allow SPWA ten (10) business days after receipt of such written notice within which to match such Third Party Derivative Production Offer; and (b) if Licensor has not accepted a Third Party Derivative Production Offer in accordance with the terms hereof within such six (6) month period, Licensor must again negotiate in good faith with SPWA for SPWA’s acquisition of the Rights in such Derivative Production in accordance with the terms of this paragraph.
3.2.3.The Rights granted to SPWA shall include the right to use the Attributes of all artists appearing in the Picture, the director thereof, and others appearing in or connected with the Picture in connection with the Rights granted hereunder, and the exhibition, distribution, marketing, advertising, promotion, exploitation and publicizing of the Picture in any and all parts of the Territory and to do any and all of the foregoing for promotional purposes on the Internet, in promotional merchandising, commercial tie-ins (including without limitation co-promotions) or other endorsements, and to write and publish articles concerning each thereof in connection with the exploitation, publicizing, advertising and licensing of the Picture, subject only to contractual restrictions (“Contractual Restrictions”) of such use provided Licensor has informed SPWA of such Contractual Restrictionsprior to Delivery (as defined herein), in writing, provided further that such Contractual Restrictionsshall be customary in the motion picture industry, including but not limited to not having any restrictions on the use of any name in the billing block on any item of merchandising or commercial tie-in. Notwithstanding anything provided to the contrary, SPWA shall have the sole and exclusive right to advertise, publicize, promote and market the Picture by any means (including, without limitation, over the Internet) in the Territory. Licensor shall not release or disclose any information, advertising or publicity relating to the Picture in the Territory without SPWA’s prior written approval.