hobbit arbitration

8/13/2019 Hobbit Arbitration

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EXHIBIT 1

ILED: NEW YORK COUNTY CLERK 12/23/2013 INDEX NO. 161383/

YSCEF DOC. NO. 6 RECEIVED NYSCEF: 12/23/


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THE RESOLUTION EXPERTS'Demand for rbitration Before J MSInstructions for Submittal of Arbitration to JAMS

Demand for Arbitration Based on Pre-Dispute ProvisionIf 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 ArbitrationB. 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 clauseD. 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 ArbitrationWhether or not a certain arbitrator has been deSignated i 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 ArbitrationB. 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 clauseE Initial non-refundable 400 Case Management Fee (CMF) per partyEach 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.

Page 1 ofUpdated 11 1812013Resolution Centers Worldwide. 1.800.352.5267. www.jamsadr.com

(c) copyright 2013 JAMS. All rights reserved.


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THE RES 0 LUTI 0 N EXPERTS'Demand for Arbitration Before JAMSTO 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: ICAEmail: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 FloorCity: /LOS Angeles State/Province: F

Zip: 190048

Zip: 190067TelePhone:\31 0-20 1-7454 Fax: 131 0-553-0687 Email: [email protected]

FROM CLAIMANT name):INeW Line Cinema LLCAddress:1888 Seventh Avenue, 20th Floor

City: I ew YorkTelephone:\ Fax: State/Province: INY Ernei :1Representative/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 AngelesTelePhone:1212-474-1 000; 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.

Page 2 ofUpdated 11 18 2013

Resolution Centers Worldwide. 1_800.352.5267. www_jamsadr.comc) copyright 2013 JAMS. All rights reserved_


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THE RES 0 l UTI 0 N EX PERTSDemand for Arbitration Before JAMSArbitration Agreement: This demand is made pursuant to the arbitration agreement which the parties made asfollows (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 ArbitrationProvision 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 applicablearbitration 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)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 datethis Demand is served whether rees to the Expedited Procedures./

Signed (Claimant):(may be signed by an attorney) I IDate I 2. . J i / f D /I :vType Print Name: lEvan R. CheslerPlease 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.

Page 3 of6Updated 11 1812013

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 m0) copyright 2013 JAMS. JI rights reserved.


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THE RESOLUTION EXPERTS'Demand for rbitration Before J MS

COMPLETION OF THIS SECTION IS REQUIRED FOR CLAIMS INITIATED IN CALIFORNIAA. Please indicate if this IS 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; and3) 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 76 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; or4} An m p l o y ~ 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 250,000oMore than 250,000o ecline to State

C. In California. consumers (as defined above) with a gross monthly income of less than 300 ofthe federal poverty guidelines are entitled to a waiver of the arbitration fees. In those cases, therespondent must pay 100% of the fees. Consumers must submit a declaration under oath stating the consumer'smonthly income and the number of persons living in his or her household. Please contact JAMS at 1-800-352-5267for further information.

Page4of6Updated 1111812013Resolution Centers Worldwide. 1.800.352.5267. www.jamsadr.com(e) copyright 2013 JAMS. All rights reserved.


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( Desolation ofSmaug ), which will be released in the United States on December 13,2013. New2 Line denies that it has any liability to Miramax.3 2 Under the plain and unambiguous terms of a Quitclaim Agreement, dated as of4 August 21, 1998, between New Line Cinema Corporation and Miramax Film Corp. ( the5 Agreement, a true and correct copy of which is attached hereto as Exhibit A), Miramax is entitled6 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. (Agreement8 4.c.l (emphasis added), 4.c.2.) In accordance with that provision, it is not disputed that New9 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: n Unexpected Journey,11 which was produced by New Line and theatrically released in the United States in December12 2012. As such, New Line has already complied fully with paragraph 4.c as it relates to The Hobbit3 Book.

14 3 The Desolation ofSmaug is the second, not the first, motion picture based on The5 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 based17 on The Hobbit Book.18 4. Notwithstanding the plain language of the Agreement, which expressly limits19 payment to Miramax to the ''first motion picture based on The Hobbit Book, counsel for Miramax20 has asserted that New Line must pay Miramax 5% of the adjusted gross receipts from the second21 motion picture based on The Hobbit Book-Desolat ion ofSmaug.22 5. The Agreement provides that [a]II disputes arising with respect to the23 definition, computation, accounting for or payment of the contingent consideration provided for in24 paragraph 4.c shall be submitted exclusively to confidential and binding arbitration in the25 County and State of New York, regardless of the amount in controversy, before a single former26 judge as arbitrator under the Streamlined Arbitration Rules and Procedures of27 JAMSlEndispute Jd. 4.c.7.) Accordingly, New Line respectfully demands arbitration of28 this existing and substantial controversy.

ARBITRAnON - STATEMENT OF CLAIM -- CONFIDENTIAL


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PARTIESAt 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 Corporation4 converted under Delaware law to a Delaware limited liability company with the new name, New5 Line Cinema LLC, the Claimant herein. Under Delaware law, New Line is the same entity as6 New Line Cinema Corporation, and owns and is subject to, among other things, all of the rights7 and obligations of New Line Cinema Corporation under the Agreement. Accordingly, both New8 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 York10 limited liability company. On information and belief, Miramax is a successor-in-interest to or11 otherwise owns the rights and is subject to the obligations of Miramax Film Corp. under the12 Agreement.314 8

BACKGROUNDUnder 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 defined16 in paragraph 2, including, among other things, the motion picture rights in four of J.R.R. Tolkien's17 literary works: The Hobbit Book and the three books comprising The Lord o he Rings Trilogy,18 i.e. The Fellowship o he Ring he Two Towers and The Return o he King. (Agreement19 ~ 4 . a . 1 .20 9 In consideration of the quitclaimed rights, New Line paid to Miramax Film Corp. in21 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 Film26 Corp. Contingent Consideration, defined to mean 5% of adjusted gross receipts, with respect to27 each of the Original Pictures . (Agreement 4.c.l-2.)28

-3-ARBIT RATION - ST TEMENT OF CL IM - CONFIDENTI L


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12. The Agreement expressly defines the Original Pictures to mean with respect to2 each of the four books separately which comprise [The Hobbit Book] and The Lord of the Rings'3 [Trilogy], the first motion picture, i any, based in whole or in part upon such book which is4 produced by or pursuant to the authority of Purchaser, but excluding remakes. (Agreement5 4.c.l.i (emphasis added).)6 13 Paragraph 4.c further expressly provides that a motion picture shall be deemed to7 be a picture based on [The Hobbit Book] if either (a) the main story line of the book is8 substantially the main story line of the picture, or (b) the events or incidents in the picture are9 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) or11 Bilbo Bagins as the lead character, or c) the title or subtitle o the picture is 'The Hobbit' or12 'Hobbit'is any part o he title or subtitle o he picture . (/d. (emphasis added).)13 14 New Line produced the motion picture The Hobbit: An Unexpected Journey, which14 was released for theatrical distribution in the United States in December 2012. The Hobbit: An15 Unexpected Journey is the one and only Original Picture based on The Hobbit Book as expressly16 set forth in paragraph 4.c of the Agreement. In accordance with the Agreement's unambiguous17 terms, New Line has already paid Miramax total aggregate Contingent Consideration of18 approximately $25 million to date in connection with The Hobbit: An Unexpected Journey.9 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 o the Rings Trilogy. In accordance with the Agreement's21 unambiguous terms, New Line has already paid Miramax (or its predecessor, Miramax Film22 Corp.) total aggregate Contingent Consideration in excess of $90 million in connection with those23 three Original Pictures.24 16. Because New Line has paid Miramax (or its predecessor, Miramax Film Corp.) the25 Contingent Consideration due on the first motion picture with respect to each of the four books26 under paragraph 4.c .l. i, no further payment is due with respect to any further motion picture based27 on these books.28

4ARBITRATION - STATEMENT OF CLAIM - CONFIDENTIAL


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I 17. New Line is in the process of producing and completing for distribution two2 additional motion pictures based on he Hobbit Book: (l) Desolation of Smaug, which will be3 released in the United States on December 13, 2013, and (2) the provisionally titled he Hobbit:4 There and Back Again ( There and Back Again ), which New Line intends to complete and begin5 distributing in 2014.6 18. Despite the unambiguous language of the Agreement and New Line's full7 compliance with the Agreement, Miramax's counsel has infonned New Line that it believes it is8 entitled to receive additional Contingent Consideration under the Agreement for the release of9 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 he Hobbit Book. (Agreement 4.c.l.)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 to13 receive additional Contingent Consideration, in addition to the Contingent Consideration already14 received, for forthcoming motion pictures based on he Hobbit Book.15 20. New Line denies that Miramax is or will be entitled to payment of any additional16 Contingent Consideration under the Agreement in connection with motion pictures based on The17 Hobbit Book.8

19202122232425262728

21. Through this Demand, New Line seeks a declaration that Contingent Considerationis payable under the Agreement only with respect to the Original Pictures as defined in paragraph4.c of the Agreement and that the motion pictures he Desolation of Smaug and There and BackAgain (or any subsequent motion picture based on he Hobbit Book) do not constitute OriginalPictures as defined in the Agreement.

JURISDICTION22. 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 byconfidential and binding arbitration before JAMSlEndispute.

23. In particular, paragraph 4.c.7 of the Agreement provides:

-5-ARBITRATlON - STATEMENT OF CLAIM CONFIDENTIAL


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23456789

10

123

14

All disputes arising with respect to the calculation and accounting for the PurchasePrice and with respect to the definition, computation, accounting for or payment ofthe contingent consideration provided for in this paragraph 4.c (but no others) shallbe submitted exclusively to confidential and binding arbitration in the County andState of New York, regardless of the amount in controversy, before a single formerjudge as arbitrator under the Streamlined Arbitration Rules and Procedures ofJAMSlEndispute (herein, JAMS ) in effect at the time the arbitration demand isserved, except as such Rules are varied herein. The arbitrator shall be mutuallyselected from a panel of at least five (5) former judges submitted by JAMS. If theparties cannot agree, then the process shall be repeated no more than twice. If theparties still do not agree then JAMS shall designate the arbitrator. The demand forarbitration shall be served by certified or registered United States mail, returnreceipt requested, to the notice addresses set forth in paragraph 8 below. Eachparty shall have all rights of pre-hearing discovery permitted under New York CivilPractice Law and Rules, subject only to such limitations as the arbitrator may orderand subject to the timetable for evidentiary hearings. Each party shall bear its owncounsel fees and costs. Each party shall pay 50% of the fee of the arbitrator andother expenses of arbitration as assessed by JAMS.

FIRST CAUSE OF ACTION(Declaratory Relief Against Miramax)

24. New Line incorporates paragraphs 1-23 above, inclusive, of this Demand as though15 fully set forth herein.1617

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 Contingent19 Consideration with respect to additional motion pictures based on he Hobbit Book20 27. As a result, a present, actual and justiciable controversy exists between New Line21 and Miramax regarding the parties' rights, duties, and obligations.22 28. As set forth above, Miramax s position is improper, unauthorized and23 impermissible under the Agreement. New Line has (a) fully satisfied its obligation to pay24 Contingent Consideration under the Agreement and (b) no obligation to pay any Contingent25 Consideration under the Agreement with respect to any additional motion pictures based on he26 Hobbit Book2728

6ARBITRA TION - STATEMENT OF CLAIM CONFIDENTIAL


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1 PRAYER FOR RELIEF2 WHEREFORE, New Line respectfully prays for the following relief:3 1. For a declaration that Contingent Consideration is payable under the Agreement4 only with respect to Original Pictures as defined in paragraph 4.c of the Agreement;5 2. For a declaration that Desolation ofSmaug There nd Back Again or any other6 subsequent motion picture based on he Hobbit Book does not constitute an Original Picture;789

1011121314151617181922122232425262728

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 FirmWorldwide Plaza

825 Eighth Avenue

and

New York, NY 10019212) 474-1000

MUNGER TOLLES OLSON LLPJohn W. SpiegelKelly M. Klaus355 South Grand Ave., 35th FloorLos Angeles, CA 90071213) 683-9100

Attorneys for New Line Cinema LLC

7ARBITRATlON - STATEMENT OF CLAIM -- CONFIDENTIAL


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xhibit


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A u g Z l 9 8 6: ap.:,:.

SUBJECT: IAMBOItEB- IHEiiOBBrr'. . . .. THE LORD OF THE O SDA1E: As of A { ~ ~ st- j \ \ l lCf--g

QUITCLAIM AGREEMENTThe 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 onthe 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 fullthe I IDO\JIit ~ u i r e d pursuant toParagraph 4.b below, and (c) .Purchaser QU e 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 Agreementr 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;

1


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8.

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. , '

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10. cenificate ofAuthorsbip dated April 28. 1998 from PhilippaBoyens;11. Agreement dated. as ofDccemba 2. 1997 between Miramax FihnCorp. and John Howe;12. Certificate ofResull$ and Proceed.sdated ~ ofOccember 2. 1997.from 10hn Howe;13. Agreement dated as of e c e ~ b e r 2. 1997 between Miramax FilmCorp. ~ Alan Lee;J4 Cenificate t 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.

II

18.J9.

Agreement dated as of 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 1998 fromWingNut Pibns. Ltd., Peter Jackson and Fran Walsh;LiteraryPUrchase 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 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.e l a r i f y i n ~ merchandising rights;

, 2


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;, 36; 8121.1 98

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.;SelllcmentApement and ~ dated as ofNovember20, 1992 b e t w ~ D The Saul ZaenI2 COmpany, 00 die one hud, andMetro-GoldwynMayer, 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. ToUdenaildGeocsc 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$hing

Agreement 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 MifflinCompanyand r g e Allen.Unwin. Ltd. for The Lord of heRings 1'bsu VCtltlJQeS33. Publ;$hing ~ m c D t dated JIDUary 16, i956 betweenUitgeverij H ~ SpecUUmN.V. and George Aller. and Unwin. Ltd.for'''TbeLord of he Rings . .34. Publisbinl J t C C ~ n t dated July S, 1956 betweenPaulus Vodeg and


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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 betweenA 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'lbeLordOf 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 Agreementdated January 16, 1961 between S'J'6nhielniaWydawnicza 'fC%ytelnik and George Allen & Unwin. Ltd. tor ' TheTwo Towers .PUblishing (excludingU,S., dependencies, & Philippines)Agreement dated Marcb 3,1961 between George AlIeil Unwin. Ltd.and Penguin Books Umited for The HobbIt '.PUbliShing ~ t dared June 2.2, 1961 between Amtrico FI 4aLamarcs . Co. and Geor e ADen. a UnwiD. Ltd. for ''The Hobbit .Publishing Agri:cment datedNovember 21; 1961 betweenSp6tdziclnia 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 ofme 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 iCiReiubrandt 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. Snyder of RembrandtFilms to R a ~ o r Unwin. Esq.ot' George Allen &. Unwin. L(d.. 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 IwanamiSboteJ1 and Ge.or,ge Allen &. Unwin. for l l Ie Hobbit53. 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 deWiksclIIGdJas F.Urlag AB _Uld Oeorge AJJen k Unwin. Ltd. forTheLord oftbe Rings ~ olwnes).SS Publ i sben Agrcemwt dated November 7, 1966 betweenGyodetldalske NotWsk- Forlag AIS and Georp All,.. ) & Unwin.

Ud. o r ~ T b c u d o Ihe Rings .(three o l ~ s ) -S6. Agreement datedFebn,wy 27. 1967 between DomtJd Swan andGcor,c Allen & Unwin. Ltd.57. LelJetdataUlUluaI)' 18. 1968 from OeorgeAllcn & Unwin. L1d. toJ.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 (threev o ~ _ s . .

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

60. Publishers Agreement d$edMay 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. Snyderof Rembrandt Films from Katzka-:-Bemc Productions, [nco

5


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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 WilliamL. 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. ~ daIcd ~ 8, 1969 JSdith Mary Tolkien. Johnfrancis Rcuel ToJkien. MiCbael.I:fiWy .RcueI Tolkiea, Cbri5CophetReuel Tolkien. Priscilla Mat)' Ann Tolkien, Michael GeorgeDavid Reuel ToUcien. JoaoAnoc Rcucl Tolk:ieD and United ArtistsCorporation.70. Pisfributots Apeomcnt cWed July 8. 1969 between K.aob-Beme

ProcillctiOOS and United Artists Corporatiop.71. FmanClDg and Sec:anty ~ m 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 EMcutorCorpocatiOD 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 Jwy8. 1969 CNm Uniled Arti5C$ Corporalion 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 n United ArtistsC o r p o r a 1 i ~ n _dKat: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; MeyersAltman to Vnited ArtiSts Corporation. .Gnmlot 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 ofXerox COIpOration.Agn:emcntdaled IS ofMay 6 980 between Cbtislopber Rel,lelTolkien. t:rank u d williarascm.1hmpton Company Ltd.. heSI 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 gAssigDment ofCopyri,bt dated Januasy 1. 1934 betWUJl~ p h c r Tolkien and Elrond Limited.ASliignmcnt ofCopyright dated 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 ~ n t daIcd as ofDecember 14, 1984 betweenTolkiM,Frank RichardWilliamaon;HamptonCompany. 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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\. v.36 8 2 98

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Copyrigbl b Report dated April 24, 1996 froID ThomsonThomson to Miramax rJlmCo r p . .95.96. dated November 6, )997 from Peter: ~ Nelson to NeilSacker; .97. Letter daIcd November 10.1997 from Peter Martin NehOl1 lONeil

Sacker. .98. $ertlement Agreement and MutUal Rclease'da4e


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109. LeuerAgree.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 toJamboree .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 be 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 isowned 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 TwoTowers , 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. 1 S 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 W ~ cteatcd by one or both ofthem in connection with tbePic:w1t but any failure todelivCf $ucb0IhU materialnat 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 or9


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:i)

owned by.Miramax or Hardware are together r e f ~ to a i 1be P r oM(c;xcept that as to item 2.a. 98 above. oDly those rigbts set forth in Paragraphs . 1 . 2.5 t5.4.6.1.6.2.6;3,6.4, 8.1.2co the extent J : a n s f e r a b J ~ in law but neveribc1ess In no way~ ~ t i n g froui or affecting Mi.ramus 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. it ms 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 tothe Property. except as provided in dJe Underlyingk em 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 orcncumMances in or against the Property by auy pcrson.-finn. orCOIpOration. nO to thebest 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 oc:wrring pm. to the. dale hereof;. . d Miramax has nol heretofore produced or uthorized 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 m ti 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,g r ~ n t s or understaodiDgs, other Iban wjthMiramax 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


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)

A U ~ Z l ~ 9 B 0 6 : 3 Z PP 0 3

, Mir..m.ax makes DOother n:presentallons, or warrainie5 or GOven.ants. ~ s OfilJlPlied. , '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 aadcosts (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 m payment by 1\m:baser to MirarftaX orme 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,: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

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 teasonableoutside 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 toPWcbase:r's authority. ,of IJDY motion pictwe. television prolfUil or olbeT FoductiOn (s),in, any andallllUUlDCl'S,' metboy andlor u ~ . c J i R , c t i o n of Mjramax 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 ofMiramax (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 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


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of EidUbjl B alt8cbed hereto; upon request y P u r ~ . MiruJax sball erant to .Purcba$er any and all waivers necessary to clear Ibc .MPAATitleBwuu reJistnilioD of thetitles ' J a m ~ . ' The Lord ofebe Rings , 'The Fellowship of die Rings , '1'hc TwoTowers-. l l ie Return of he 1 G n ~ . aDd ''1be H ~ b i t and shall widldrawMiramax' sMPAA Title_Bureau registration upon e q u ~ by Purchaser. Miramax ain'CS that it will DOl.prOtest Purdlasc:r's registration of such titles. .. . J . . .(5) f and to the e,uent that Miranux. beaefits from any repre$eDtations,wuranties, indemnities and obligations contained in'theUndcdyioglteros, and i f and to 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. Purchasershall 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 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


26/63

6:32P~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 tilt 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 isproduc:ed for inteDdedthcauical release, MirouIwt's participation sball be defined. calculated, ICC


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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 . ~ . abandoJlInut 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) AlldispUtes wing with respect to abe c a J c u 1 a l i o ~ and accout1tiiJg for thePurchase 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. 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 registeredUIiited 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 NewYork Civil PncticeLaw and Rules, subject only to such limitations 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 e 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.rprodllCer 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 with Paragraph 4.babove, tben Minmu 5balI h a ~ me right 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


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AI,J,9 - 2 1 98 06: P P 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 ~ byMiramax and Purchaser.(sucb approvalto be in writing. or lhematively.the .pprovedpress rdcase to be attached. 8$' an x h i b i ~ bcrc:to) pertUting to the 5Ubjea .matterlImof. ., . FURTHER JNSTRUMF.NTS:1be a . r t i ~ hereto aiR e to sign and/or deliver to ..each adler 5l1Ch furthcrinstrumerus as may IUSOIiably be required to carry our or e.ffectuatethe pwposes IDd iateD1'of this Quitclaim Agnemenl.lf eitberpmy fails to do so witbio arcasoaable time after RCeipt ora written request iherefor. then the zcquesting party isbCreby appointed l$ 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 copyof .any such document to tbc.otherparty. .8. NOTICE: Notices required by Ibis Quitcliim t shall bem writing. Anynotices ~ 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: 212-9413934New 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 VicePres.idem. u s i l i e s ~ and Legal Affairsfacsimile NUII\bcr. 212-956-1931suzanne Rosencrans:ScmorViCe.;Pre$.idenl

N ~ w LiRe m . a (4poCllliun825 N. SanVicenie . . .~ Angeles. < ; i I l i f ( J ~ 90069f ~ 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 cvtntof stich ass1gnmel1t or ..cease. each panys h ~ l ~ v ~ l e s ~ p ~ l y iable for be p c d ~ o iu obligations o ~ IbisQuitclaim Agrcen1eOt, Tlli$ Qqitclaim Agn:ement sbaII be. bin


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d S : 3 3 P P O B

\

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, Stateof 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: MitarnaJts $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 termhereofshallbe an action fordamages andMiramax 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 suchCOUnteEpat1. 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 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 t parties wilh respec 10the subjc:ct matter c ~ 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 hccebymerged 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 othere x c a 4i hercin expressly _set forth. ThisQuitclaimAgrcciDi:Dt IU y not be ~ or mOdified ~ b y aWJiti.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 rnIN 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: 8 2 98 16


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.\i)

SHORT FORMQUITCLAIMQUITCL.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) oneor 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 ofbooks 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 existene or known now orin tile future.CONTROlLING DOCUMENT: This transfer and a s i ~ ~ ts subect roall theterms andoonditions of the QuitclaimAgreement dated as of Uf. f l ~belWeen Owner and Coinpany. to which Quitclaim Agreement tliiSSOTtFqtm Quhclainiisas .Exhibit Bit. .IN ~ WHEREOF. the undersigned has executed this .docUment this .. Z.S-H---d a y o f ~ . ,1998 .

State of tJltvv ju viCounty of NVtd 1 trAc- .

On ~ 2 6 : I ~ q < g before me..... Vi Cd= personally appeared. . . and .. ersonally known tome 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 t methatbelshettheyc x e c u ~ ihesame in hislhcrltbeir authoriicd eapacit}t(ies). and that by hislher theirsignature(s) on the iDstrU.mCnt theperson(s). or d1e entity upon bebalf of which the .person(s) acted, executed the instru,mcntWITNESS my hand ~ d yfficialS 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 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, discoveredor devised fucluding, without liinitation,' free television, videocassettes and video discs, .(ii) Licenses from Company to a third party (hereinafter referred to assubdistri,butor ) of the right to clistribute the Picture (i.e., the right to license exhibitors toexhibit the-Picture),iii) The license or lease of positive prints and/or trailers of the Picture (asdistinguished from theHcenSes referred to in [iJ and [iiJ preceding); theSale 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 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 actually

reeeivedby cOmpany in connection with the Picture. .C. Royalties with respect to the exploitation of home video devices embodying the

P i ~ t u . r e compute


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

. Gross receipts shall be detennined after all refunds; credits, discounts, a1lowaftcesand adjustments granted to exhibitors, whether Occasioned by c O n d e m n a ~ o n by boards ofcensorship, . 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 or

a p p l i ~ byCOmpany to the Picture. Other advance payments and security deposits shall not beincluded 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 orassignment of aU or any part of Companys 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 thefollowing:

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, then 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 distributionof the P.icture, or upon the revenues derived therefrom, or any part thereof;. any andall sums paid Or acCrued on ~ 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 byCompany in filing net income, corporate, franchise, exCess profits or similar tax returns. Subjectto the foregoing, Participarit shall not be required to p yor participate in (i) Company's or anysubdistributors United States Federal and State income taxes and franchise taxes based onCompanys or such subdistributors net income; or i ~ ) any income tax payable to any countrY or. .S:\LORDR\ExbibitGRMiImIn.0821.98 -2-


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territory by Co.mpany or any subdistributor ~ e d On thenete mings of Company ..or suchsubdistributor 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 orotherwise receive or derive. any and all tax or Qther benefits of any kind or .natUre 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 ofSound 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, anyuse. re-use of re-run thereof for any purpose or in any m ~ e r whatsoever ( h ~ i n calledresiduals ), and all taxes, pension fund contributions, and other 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 of Participant, .or any such stockholderare entitled, either directly or by way o participation 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\ExhibitQRM illl1l8X 0821 98 -3-


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licensee either a flat sum or a percentage of the receipts, or, both, for any right to a:group. ofmotion 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 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 grossreceipts, '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 beincluded 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 suc t 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 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 s or representatjons that any part of any such foreign currencies may be converted intoUS. 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 thereceipts is blocked and part is remittable to the United States s be ~ h a r g e d proportionatelyagainst the blocked and dollar receipts from said territory; However, i 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 o 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-


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-- .,.

any reason, Company shall have the right t deduct and' retain for its oWn account an amountequal to any such overpayment from any ~ that may thereafter become due or payable byCompany to Participant or for Participant's account, or may demand repayment from Participantin which event Participant shall repay the same when demand is made. The right of Participantto 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 ~ 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 ~ 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 ofscoountare 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 byCompany. 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 auditsliall be conducted only by a reputable public accountant (subject toCompany'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 notto interfere with Company's nonnal business activiqes. In this regard, Company shall have theright to fix the date for the coinmencement of any such audit. so as to coordinate $aid date withthe commencement dates ofany other audits with respect to the Picture to be Conducted by tbii'dparty participants. Participant shall not have the right to examine or inquire into. aIiy matters oritems which are embraced by or contained in any such statement after the expiration of twelve(12) months from and after the date o mailing 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 becontained 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 first reflected on' a statement submitted mQre than twelve (12) moilthsprior to the date of mailing of such cumulative statement. Participant shall be forever barredfrom 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-


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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 o mmling o the statement on which suchtransaction or item was first reflected and unless such action' or proceeding is coJ;l1I1lenced withirisix (6) months' after cielivery o such writteli b j ~ o n . Participmtis right to xmiun 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 thepurpose o compariSon or otherwise; provided, however, that in the event that Company includesin, or deducts 'ti"pm, the gross receipts any ~ expended or received in cOnnection with anysums expended or received in cOnnection with any o the transaCtions referred to jn. the firstsentence o Paragraph 4 o this Exhibit, Participant.shall have the right to eXamine COmpany'srecords with respect to the other motion pictlire{s) which are part o he group o motion pictureswhich are the subject o such transaction(s), but only insofar as such records relate to such. particular trapsaction or tran,sactions.8; Holding o funds: Company shall not be considered a trustee,. pledgeholder, fiduciary oraJ,gent of Participant by reason o anything done Qr any. money Collected by it, and shall not beobligated to' segregate receipts o the Picture from its other funds. .9. Ownership: Participant shall not:have any lien or other rights in or to the gross receiptso the Picture, it being understood that the references herein thereto are intended solely for thepurpose o detennining .the time, manner and amount o 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 o 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 o the cOrpOrations Comprising

Company ormy o Company s or their subsidiaries or aftil.iates). (:ompany ~ a y modify,. amend .Cartcel, adjust ~ alter .all agreements; exhibition licenses, rental terms, sales methods and.policies relating to the distribution,exhibitioD and exploitationo the Picture and any other o itsrights as it may deem advisable; adjust, increaSe or ~ r e a s e . t h e amount o 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 o 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 tY es o 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 .parto the Territory as ~ y beconsistent with t h ~ business policies o Company, and Company in itsSole discr;etiori may detenniile for any reason, an4 in respect o any part o he Territory, when;where and whether the picture should be released, re-releasedor reissued and the duration o any

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

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sole discretion. Participant shall e bound by the tenns, provisions ~ d conditions of anyagreements heretofore or ,hereafter made by Company (or its subsidiaries) pursuant to anyresolution of the Motion Picture Export Association (or ~ i m i a r organiz9:tion) or made byCOmpany alone with any government or goverpmentaI agency made by Company alone With anyg o v ~ i n m e n t or governmental agency relating to any partIcular country orterritory._ 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: f Company licenses the exhibition ofihe 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 termsconsistent 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 e 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 ofCompany'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 afinancially responsible party, be released 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 asassign ) 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 }Vouldresult 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-


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~ s i g n all or part oftliemonies payable to Participant (or any t r ~ f e t e e ) h'ereunder, other , banbyway o bona fide gift, bequest or devise, dissolution o ?articipant (if a corporation) or corporatemerger or acquisition o aU o Participant s assets if Participant has s u b s t a n t i ~ a s ~ t s bther thanthe Picture), Company s

hobbit arbitration

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