(Page 1 of 87) . - IOINAI BERTRAM FIELDS (SBN 024199) 4. BFields%? ?rm.com 0 ?0 2' CHARL . SHEPHARD (SBN 073129) CShe hard Greenber Glusker.com B3 3 It. Reese tags?) A . 4 GREE ERG GL SKER FIELDS ?f ?5??98'95 1900 Avenue of the Stars, let Floor - Los Angeles, Calrforma 90067-4590 Sherri 8. Carter. utiye O?iceIIClerk 6 Telephone: 310.553.3610 . sleep,? 7 Fax: 3 - Cristina Grijal a Attorne for Plaintiffs . 8 Irwin inkler and Films, Inc. 9 QI 136, g. (A) 4AM 0 10 SUPERIOR COURT 0 TATE OF CALIFORNIA . COUNTY OF LOS ANGELE has IRWIN WINKLER and WINKLER Case No. 2523; FILMS, INC., - :3 '4 :18 13 COMPLAINT FOR BREACH OF 5: g: Plaintiffs, CONTRACT AND FRAUD WARNER BROS. ENTERTAINMENT En 16 INC. and DOES 1 through 10, o< 33 17 Defendants. [.19 18 19 20 Plaintiffs, Irwin Winkler and Winkler Films, Inc., allege as follows: 21 22 INTRODUCTION 23 Plaintiffs produced a hugely successful ?lm for Warner Bros. Gillian: n1 A, a 24 ?Goodfellas.? By contract, plaintiffs were entitled to 50% Sit/g 25 Of its gross receipts after ?breakeven.? ?Goodfellas? took $275 million at the box of?ce and from other revenue sources. It cost legs; - 53 27 $30 million to produce. Yet, Warner Bros. claims that ?Goodfellas? in?ate} net I 28 pro?ts and actually lost money. Warner Bros. even charged $40 million fag" 94574n01033369015.l a, is": El COMPLAINT FOR BREACH OF CONTRACT AND F?glg); 3 1] Cl DIE Doc# 1 Page# 1 - Doc ID 1628318697 - Doc Type OTHER (Page 2 of 87) 1 ?interest? on its $30 million cost of production. But that was only the tip of the 2 iceberg. This was ?studio accounting? on steroids. It was also fraud. What Warner 3 Bios. represented as the receipts of ?Goodfellas? were really only a fraction of the 4 actual receipts. Warner Bros. concealed more than $140 million of its actual 5 receipts. In fact, ?Goodfellas? made very substantial net profits. But Warner Bros. 6 quietly pocketed Winkler's share of those pro?ts, plus years of unea_med interest on 7 Winkler?s money. Winkler only discovered the truth in 2014. 8 . 9 FACTS RELEVANT TO EACH CAUSE OF ACTION 10 The Parties 2 1 1. Plaintiff Irwin Winkler (?Winkler?) is a resident of Los Angeles in 12 County, California and a motion picture producer. Prior to the events alleged Egg; 13 hereinbelow, Winkler produced such well known and successful ?lms as ?Rocky,? 5 14 ?Rocky and ?Rocky ?Raging Bull,? ?The Right Stuff? and others. Winkler 15 has been nominated for SO Academy Awards, four of those for ?Best Picture.? He E3 $351: 16 has won 12 Academy awards, including one for ?Best Picture.? Winkler?s services. g3 17 as a producer are supplied by Winkler Films, Inc., a corporation wholly owned by 18 Winkler. 19 2. Warner Bros. Entertainment Inc. (?Warner?) is a Delaware corporation 20 in the business, among others, of ?nancing, producing and distributing motion 21 pictures and television programs throughout the world. Warner?s principal place of 22 business is its studio in Los Angeles County, California. 23 3. The true names and capacities of defendants named herein as Does 1 24 through 10 are unknown to plaintiffs who therefore sue said defendants by such 25 fictitious names. Plaintiffs will ask leave of this court to amend this complaint to 26 show their true names and capacities when the same have been ascertained. I.) 27 Plaintiffs are informed and believe, and, on that ground, allege, that Does I i 28 I 2 COMPLAINT FOR BREACH OF CONTRACT AND FRAUD 1 Doc# 1 Page# 2 - Doc ID 1628318697 - Doc Type OTRER (Page 3 of 87) . 1 through 10 were reSponsible, in some manner, for defendants? acts and misconduct 2 hereinafter alleged, for which they are liable to plaintiffs. 3 The Contract 4 4. During .1981, plaintiffs entered into a written contract with Warner for 5 the ?nancing and distribution of ?lms produced by plaintiffs (the ?1981 Contract?). 6 A copy of the 1981 Contract is attached as Exhibit hereto and incorporated by 7 reference herein. 8 Under the 1981 Contract plaintiffs were entitled to 50% of the net 9 pro?ts and 5% of the gross receipts after ?break-even? of each picture plaintiffs 10 produced. Plaintiffs took a substantial risk by opting for a very large share of net 2 I pro?ts plus a share of gross receipts payable only after the'?lm reaches gag? 12 ?breakeven.? Plaintiffs were betting that ?lm revenues would substantially exceed 13 costs, passing the point of breakeven, and earning signi?cant net pro?ts. 14 The li?ilm 15 6. In 1990, after the enormous success of their ?Rocky? ?lms, plaintiffs 16 initiated, assembled and produced another extraordinary ?lm entitled ?Goodfellasfi 38 17 The picture was based on the best selling book ?Wiseguys? by Nick Pileggi. It was 18 directed by Martin Scorsese and starred Robert De Niro, Joe Pesci and Ray Liotta. 19 The picture was ?nanced and, in most media, distributed by Warner. 20 7. ?Goodfellas? proved to be a critical and box of?ce success. It received 21 six Academy Award nominations and won 30 awards from ?lm critics. Plaintiffs 22 now know (but did not learn until 2014) that the ?lm took in at least $275 million at 23 the box of?ce, from home video and television. This was a remarkable number for 24 a ?lm released at that time, particularly since ?Goodfellas? cost less than 25 $30 million to produce. to 26 The Fraud 27 8. Despite what plaintiffs now know is the very signi?cant amount by C: 28 which ?Goodfellas?? extraordinary, but hidden, receipts exceeded its Very low cost, r? 94674-00103n3690l5J . 3 "n COMPLAINT FOR BREACH OF CONTRACT AND FRAUD Doc# 1 Page# 3 Doc ID 1628313697 - Doc Type OTHER FJ (Page Warner has repeatedly represented to plaintiffs that there were no net pro?ts from ?Goodfellas,? that the ?lm never even reached ?break-even? and that it actually lost money. These representations were false, and Warner knew it. Warner concealed from plaintiffs a vast amount of the ?lm?s actual receipts. The true ?gures would have shown that ?Goodfellas? substantially exceeded ?break-even? and earned very signi?cant net pro?ts. 9. Pursuant to the 1981 Contract, Warner issued periodic written ?reports? to plaintiffs, representing to plaintiffs the receipts and expenses of 9 ?Go'odfellas.? Until 2014, each of Warner?s reports intentionally misrepresented 10 the receipts of ?Goodfellas,? reporting to plaintiffs that the ?lm?s receipts were just 11 a fraction of its actual receipts and far less than its expenses, so that, according to 12 Warner?s reports, there were no net pro?ts, and ?breakeven? could probably never 13 be achieved. 14 In particular, .Warner massively understated the home video receipts of 15 ?Goodfellas.? In each of its reports, what Warner represented to plaintiffs as ?Total 16 Domestic Video,? ?Total Foreign Video,? and ?Total Domestic and Foreign Video? 1900 Avenue of the Stars, 2] st Floor Los Angeles, California 90067-4590 17 was, in each such case, really only one-?fth of the true number. In its 2009 report 1.8 (its last report until 2014) Warner represented that ?Total DOmestic and Foreign GREEN BERG GLUSKER FIELDS CLAMAN 3c MACHTINGER LLP 19 Video? receipts were only $32 million. In fact, such receipts at the time were 20 $128 million. 21 To support its misrepresentation of ?Total? home video receipts in its reports, 22 Warner also misrepresented the amount of home video revenue it received from 23 every one of 74 separate countries listed in its reports. It falsely reported to II, 24 plaintiffs a separate and precise dollar amount as the home video receipts from 25 every one of the 74 listed countries. In fact, the precise dollar amount reported by r. 3 26 Warner for each such country was really only one-?fth of the actual video receipts 27 from that country. For example, in its 2009 report, Warner represented that the {3 28 home video receipts from Argentina were $105,709. In fact, the home video I 94674-00103i2369015J 4 - COMPLAINT FOR BREACH OF CONTRACT AND FRAUD Doctt 1 Pagett 4 Doc ID 1628318697 - Doc Type OTHER (Page 5 of L. 0 1 receipts from Argentina were $522,545. And Warner represented that the home 2 video receipts from Australia were $800,061, when, in fact, they were an 3 extraordinary $4,000,305. Similarly, every one of the '74 precise dollar amounts 4 represented by Warner to be the home video receipts from every one of the 74 5 countries was really only one-?fth of the true amount of such receipts. 6 A copy of Warner?s 2009 report its last report before 2014 is attached '7 hereto as Exhibit and incorporated by reference herein. 8 10. The 1981 Contract provided in paragraph 6.03 that ?All? of 9 Warner?s receipts from home video distribution would be included as ?gross 10 receipts? in computing plaintiffs? contingent compensation. At no place in that 11 contract was it provided that only 20%, or one-?fth, or anything less than ?All? of 12 Warner?s receipts from home video would be counted as ?gross receipts? or that Egg; 13 80%, or four-?fths, or any part of such receipts would be excluded from that 14 computation and retained by Warner, as if those receipts had never existed. 15 Warner prepared the 1981 contract. If that contract had been intended to i Eggs 16 provide that only 20% of Warner?s home video receipts would be included in gross $8 17 receipts, Warner could have and would have explicitly said so, as it has done in 18 contracts with others. Instead, the 1981 Contract, prepared by Warner, does not 0 19 contain the ?gure or the words ?one??fth.? It expressly provides that ?All? 20 of Warner?s receipts from home video distribution are to be counted as ?gross 21 receipts.? 22 1 1. Plaintiff is informed and believes and, on that ground, alleges that, as 23 of its 2014 report, Warner had actually received $175 million from home video '24 distribution of ?Goodfellas?; but that, contrary to the 1981 Contract, Warner 25 concealed $140 million of that $175 million from plaintiffs and excluded it in 26 computing plaintiffs? contingent compensation, disclosing, and giving plaintiffs 27 credit for, only $35 million, rather than the true ?gure of $175 million. Since its 28 5 COMPLAINT FOR BREACH or CONTRACT AND FRAUD Docs 1 pages 5 Doc ID 1628318697 Doc Type omen (Page 6 of 87) GREENBERG GLUSKER FIELDS CLAMAN MACHTINGER LLP 1900 Avenue of the Stars, 2 Floor Los Angeles, California 90067-4590 . 2014 report, the amount of Warner?s home video receipts ?'om ?Goodfellas? has undoubtedly increased. 12. And? Warner engaged in another form of fraud as well. Having made positive statements in its periodic written reports about the amount of home video receipts of ?Goodfellas,? Warner had the af?rmative duty to disclose all facts necessary to prevent such positive statements from being materially misleading. In addition to its misrepresentations alleged hereinabove, Warner failed to make such essential disclosures. To prevent the af?rmative statements in its written reports from being materially misleading, Warner had. the af?rrnative duty to disclose to plaintiffs, in each of its reports, that the amounts it was reporting to them as total home video receipts were, in fact, only 20% of the actual home video receipts and that each of the many sums it represented as home video receipts in various categories and from various countries was, in fact, only 20% of the true number.? Each of Warner?s reports required such disclosures in order to avoid being materially misleading. But, until 2014, Warner failed to make any such disclosure to plaintiffs. On the contrary, Warner actively concealed such facts; and, until 2014, its written reports to plaintiffs remained materially misleading and, indeed, outright false. - mm 13. facts pursuant to a deliberate scheme by Warner to hide the vast bulk of its home Warner issued its false and fraudulent reports and concealed the true video receipts from plaintiffs and others with similar contracts on other Warner ?lms. Warner?s fraudulent scheme had at least four goals: (1) that plaintiffs and such others would not even know of the existence of such concealed receipts and would not obtain the bene?t of such receipts in the computation of their contingent compensation, (2) that Warner could keep all such concealed revenue for itself, (3) that plaintiffs ?and such others would not even know that they should, or were entitled to, make a complaint or objection to any of Warner?s reports or audit 94674-00l03i2369015J 6 COMPLAINT FOR BREACH OF CONTRACT AND FRAUD Doc# 1 Page# 6 Doc ID 1628313697 Doc Type OTHER (Page 7 of 87) - Wamer?s books or ?le a civil action, and (4) that, no matter how successful a 2 Warner ?lm might be, it would be virtually impossible for the ?lm to reach what 3 Warner would report as ?break-even? or for it?to receive what Warner would report 4 as ?net pro?ts.? 5 Warner carried out its scheme by exercising its complete and absolute control 6 over Warner Home Video, its wholly owned home video subsidiary.? That total 7 control gave Warner the ability to determine, in its own sole and uncontrolled 8 discretion, what part, if any, of home video receipts from ?Goodfellas? Warner 9 would elect to withdraw from its subsidiary and what part, if any, of such receipts it 2 10 would-elect to retain in its subsidiary?s bank account, subject to Warner?s complete 2 1 1 and continuing control. If Wamerhad simply instructed its wholly owned video gm it 12 subsidiary to pay over to Warner only 20% of the home video receipts from g: 13 ?Goodfellas? and not to pay Warner the remaining 80%, in order to exclude from Egg? 14 plaintiffs? contingent compensation the 80% of receipts that Warner voluntarily 15 rejected, Warner?s conduct would have been a violation of the implied covenant of gig? 16 good faith and fair dealing inherent in every contract. 3.13 17 But Warner?s scheme was even more cynical and devious than that. Warner 18 didn?t reject the 80% balance. Quite the contrary. After drawing down the ?rst 0 19 20% of home video receipts, Warner subsequently took the 80% balance as well, 20 but tried to disguise and conceal that subsequent receipt by calling it something 21 else. Warner actually withdrew from its wholly owned home video subsidiary 22 100% of the receipts from the home video distribution of ?Goodfellas,? less home 23 video costs. ,But, seeking to deprive plaintiffs (and others with the same Contract) 24 of any bene?t from most of the home video revenue it received, Warner withdrew 25 that revenue from its subsidiary in separate intercompany transfers and tried to- 2.6 disguise its transfers by giving them a different label. As the home video revenue 27 from ?Goodfellas? was received by its subsidiary, it was commingled with other {3 28 funds, and Warner withdrew from its subsidiary an amount equal to 20% of that r? 7 COMPLAINT FOR BREACH OF CONTRACT AND Doc# 1 Page# 7 Doc ID 1628318697 Doc Type OTHER (Page 8 of 87) I o. 1 revenue, which it reported to plaintiffs as the ?total? such revenue; Later, having 2 complete and absolute control of its wholly owned subsidiary, Warner withdrew 3 from that subsidiary an amount equal to the remaining 80% balance of such video 4 revenue, less video costs. That balance, although received by Warner, was 5 concealed and went unreported. 6 Pursuant to its scheme, Warner concealed from plaintiffs (and others with . 7 similar contracts) its receipt of the 80% balance from its wholly owned subsidiary, 8 even though that 80% balance also represented home video receipts of 9 ?Goodfellas.? Warner disclosed to plaintiffs, and such others, only its initial i 10 withdrawal of 20% and included only that 20% in the computation of the 1 1 contingent compensation of plaintiffs and such others, concealing from them the in 12 80% balance it actually received and kept for itself. Warner?s written reports to 535:; 13 plaintiffs and such others falsely showed only the 20% of home video receipts 14 Warner had initially withdrawn and falsely represented that number as the ?total? of 15 such receipts. E5 E30 16 To ?thher its deceitful scheme, Warner even caused its wholly owned a $8 17 subsidiary to execute a sham ?contract? with Warner concerning home video i 18 receipts. Having total and unlimited control of its wholly owned subsidiary, 19 Warner could have inserted 50%, 100% or any other amount or percentage of such 20 receipts it wanted in the sham ?contract? it caused its subsidiary to sign. But, to 21 further its fraudulent scheme, Warner elected to have that document provide that 22 Warner would receive only 20% of home video receipts from its wholly owned 23 subsidiary, which would create the false impression that Warner was leaving 80% 24 in its subsidiary?s bank account. Of course, Warner knew that this was simply a 25 pretense and that, in reality, Warner would withdraw from its subsidiary the 26 100% of the home video receipts less home video costs. 27 Contrary to what Warner?s sham ?contract? pretended was Warner?s ?deal? if; 28 with its wholly owned subsidiary, Warner intended to withdraw and did, in fact, tr" 94674-00103Q369015J 8 COMPLAINT FOR BREACH OF CONTRACT AND FRAUD Doc# 1 Pages 8 - Doc ID 1628318697 Doc Type OTHER (Page 9 of 87) - o. I withdraw from its subsidiary 100% of home video receipts, less home video costs. 2 'Warner planned that, if it was discovered that what it was reporting as total home I 3 video receipts was really only 20% of its actual home video receipts, Warner could I 4 make the bogus claim (as it now does) that, ?by contract,? it was limited to 20% of 5 home video receipts, even though Warner knew that it was not limited at all by the 6 sham contract, that it could have put whatever percentage it desired in that sham 7 ?contract? and that, regardless of what the sham ?contract? provided, it could and 8 would withdraw from its wholly owned subsidiary .1 00% of home video revenue 9 less home video costs. And, even if its concealed receipt of the 80% balance of 10 home video revenue was discovered, Warner planned to claim falsely (as it now i 11 does) that its receipt of the 80% balance was simply an unrelated intercompany .1 no 3 Egg 12 transfer, rather than what Warner knew it actually was, Warner?s receipt of the 233:; 13 net balance of home video revenue, a balance Warner had the duty to report to 14 plaintiffs and others with similar contracts. 15 Warner?s conduct in carrying out this deceitful scheme to hide and pocket the E: E20 16 lion?s share of home video receipts (more than $140 million in the case of l7 ?Goodfellas?) and to exclude that vast sum from the computation of plaintiffs? 18 contingent compensation, was, among other things, a willful violation of the 19 implied COVenant of good faith and fair dealing. But it was more than that. 20 Warner?s falsely representing in its written reports to plaintiffs ?gures for home i 21 video receipts that were, in fact, only one-?fth of the true and actual video receipts, 22 and its issuing such false and misleading reports while failing to disclose and 23 concealing that every one of the many home video ?gures in its reports was only 24 20% of the true figure were acts of intentional fraud. 2 25 Further Misconduct 26 14. In addition, even though Warner disclosed in its reports to plaintiffs 1:1 27 and included in computing Winkler?s contingent compensation only twenty percent :1 28 of Warner?s true home video receipts, Warner even deducted, from the twenty i? 94674-001030369015J 9 COMPLAINT FOR BREACH or CONTRACT AND FRAUD D003 1 Page# 9 Doc ID 1628318697 Doc Type OTHER (Page 10 of 87) - - 1 percent of home video revenue it disclosed, one hundred percent of items it claimed 2 were homeivideo costs, even retaining those deducted sums itself, rather than 3 paying them to its home video subsidiary. And, in computing what it falsely 4 reported as net losses, Warner further reduced the twenty percent of home video 5 revenue it disclosed to plaintiffs by improperly charging and deducting from that 6 twenty percent of home video revenue, substantial ?distribution fees,? despite the 7 fact that Warner claims that it was not even the home video distributor. And 8 Warner even kept all such distribution fees for itself, rather than paying them over i 9 to the wholly owned subsidiary that it represents was the home video distributor. In 2 10 all of their interactions alleged herein, Warner treated its wholly owned home video 11 subsidiary as simply another division of Warner that did)in every respectold. And Warner treated the home video receipts of its wholly owned subsidiary 325% 13 simply as money to be paid over to Warner after deduction of home video costs. 14 Plaintiffs are informed and believe and, on that ground, allege that Warner 15 also misrepresented the receipts and expenses of ?Goodfellas? in other ways, Egg Ego 16 including, for example, the intentional misallocation of revenue from the EE 17 exploitation of ?packages? of Warner ?lms, so as to deny ?Goodfellas? its proper or 18 reasonable share of such revenues. 19 i 15. Warner compounded its misrepresentations by also stating falsely and 20 repeatedly, in sending its written reports to plaintiffs, that?the ?de?cit? between 21 ?Goodfellas? expenses and the much lower ?gures it falsely represented as the 22 ?lm?s receipts was so very large that it would not even issue further reports to 23 plaintiffs, unless they were specifically requested. In other words, according to 24 Warner, there was no point in its issuing more reports, since there was no realistic 25 chance of ?Goodfellas? ever achieving ?breakeven? or net pro?ts, despite the fact 26 that Warner knew, but concealed, that this ?lm, costing only $30 million, had 27 generated over $275 million at the box of?ce and from other revenue sources. 28 94674e0103r2359mu 10 Ln COMPLAINT FOR BREACH OF CONTRACT AND FRAUD 1 Page? 10 - DOC: ID 1628318697 - Doc Type OTHER (Page 11 of 87) Fraudulent Intent p?n l6. Warner?s misrepresentations and failures to disclose, alleged hereinabove, were more than just ?reckless.? They were intentional. Warner knew that each of such representations was false when made and knew that an honestvand open disclosure that what its reports showed was only 20% of Warner?s actual video receipts could easily have been made in each report and was essential to prevent each such report from being materially misleading. Knowing these things, Warner deliberately omitted any such disclosure until 2014, when it feared its fraud would be discovered. And, when it issned its repeated misrepresentations CD and failed to disclose that what its reports showed as ?total video receipts? was only p?n p?u-A 20% of its actual video receipts, Warner was Well aware that the 1981 Contract hJ called for the inclusion, in computing plaintiffs? net profits, breakeven and gross receipts, of ?All? of Warner?s receipts from home video distribution, notjust 20%; and Warner knew that its actual receipts from home video distribution of ?Goodfellas,? including its ?Total Domestic and Foreign Video? receipts and every Ch category of video receipts in its reports were, in fact, ?ve times what it represented Los Angeles, California 90067-4590 p?a 1900 Avenue of the Stars, 2 Floor in its reports as such receipts and included in computing plaintiffs? contingent 00 compensation. And, having taken pains in preparing its reports to plaintiffs to GREENBERG GLUSKER FIELDS CLAMAN 8r. MACHTINGER LLP p?n VD divide by ?ve each of the 74 precise dollar amounts of actual home videoreceipts b0 CD from each of the 74 listed countries, Warner was well aware that every one of the 21 74 precise dollar amounts it represented as the home video receipts from every one 22 of the 74 listed countries was, in fact, only one-fifth of the actual home video 23 receipts from that country. And Warner made all of its. false representations and 24 failures to disclose alleged in this complaint pursuant to its fraudulent scheme 25 . allegedihereinabove, with full knowledge that plaintiffs would believe that the 26 numbers Warner was reporting were the actual home video receipts and not just 27 20% of those receipts, and intending that plaintiffs would rely on its false and 28 misleading reports by taking no action to complain or protest about them or to audit 94674-00l03f23690l5.l 1 if! COMPLAINT FOR BREACH OF CONTRACT AND FRAUD Doc# 1 Page# 11 Doc ID 1628318697 Doc Type OTHER (Page Wamer?s books or to ?le any civil action to collect the sums that, in reality, were 2 due plaintiffs or to seek relief for Warner?s fraud. 3 Materialig: 4 17. Warner?s misrepresentations and failures to disclose, as alleged 5 hereinabove, were highly material. Had Warner not misrepresented and concealed I 6 its receipts, including the amount of total home video receipts and every one of the 7 individual dollar amounts from every one of the 74 listed countries that made up the 8 total home video receipts, and had Warner disclosed and truthfully reported the true 9 amount of its receipts, including total home video receipts and all such numbers, 2 10 the receipts of ?Goodfellas? would substantially have exceeded its expenses, the 11 ?lm would not only have achieved ?breakeven,? there would have been very gmg? l2 substantial net pro?ts and gross receipts payable to plaintiffs. In fact, unknown to 323% 13 plaintiffs until 2014, ?Goodfellas? had reached ?breakeven? and had earned very 14 substantial net pro?ts years before 2014, and very substantial sums had long been 15 due to plaintiffs under the 1981 Contract. 5% . Egg? 16 I Reliance i 3.3 17 18. In reasonable reliance on Warner?s misrepresentations alleged 18 hereinabove, and unaware of the facts Warner concealed and failed to disclose, i 19 plaintiffs did refrain, until 2014, from taking any action, in writing or otherwise, to 20 complain about or object to Warner?s reports, or to audit Wamer?s books and 21 records and refrained, before ?ling this action, from commencing any prior civil 22 action against Warner with respect to ?Goodfellas.? As a direct and proximate 23 result of Warner?s intentional and fraudulent misrepresentations and failures to 24 disclose alleged hereinabove, plaintiffs did not know until 2014 that they had any 25 possible claim against Warner or any reason to audit Warner?s books .or any basis to 26 object to or complain?about Warner?s reports or any ground or basis for ?ling any 27 civil action against Warner. 28 94674-00103f2369015J COMPLAINT FOR BREACH OF CONTRACT AND FRAUD Doc# 1 Page? 12 Doc ID 162831869? Doc Type OTHER (Page 13 of 87) 1 Discovery Of The Truth 2 19. By 2014, five years had passed without plaintiffs receiving any reports 3 from Warner on ?Goodfellas,? supposedly because of the large ?de?cit? falsely 4 represented by Warner. In 2014, plaintiffs? new accountant requested such a report. 5 Questioned as to its reporting of home video revenue, knowing that all of its prior 6 reports had been materially misleading and concerned that it could now be charged 7 with fraud, Warner, for the ?rst time, inserted in its 2014 report a warning note, 8 ?nally disclosing to plaintiffs that only of its home video revenue was being 9 reported, a critical fact that Warner knew had been essential to prevent its prior 2 10 reports from being materially misleading, and a critical fact that Warner knew it 1 1 could have and should have disclosed in every one of its prior reports, but elected A . (-893 12 instead to conceal. Egg?? 13 Warner?s warning note in its 2014 report, ?nally disclosing that the numbers a Egg; 14 it was reporting as "total? home video receipts were, in fact, only of its 15 home video receipts, contradicts its present claim that the numbers it had been E3 :32? 16 reporting were, in fact, 100% of its homeyideo revenue, and its present claim that 38 17 the reported numbers were 100% of what Warner was entitled to by contract, as 18 well as its present claim that the 80% balance of home video receipts Warner 19 withdrew later from its subsidiary had nothing to do with home video receipts. If 20 those claims by Warner had been true, the home video numbers Warner reported . 21 would have been 100% of Warner?s home video income, notjust the it now I 22 admits that it reported. But the 2014 note showing that it reported only was 23 an admission that all of those claims were and are false. i 24 Moreover, by its 2014 note, Warner admitted that, all along, it had only been 25 reporting rather than ?All,? of its home video revenue, as the 1981 Contract 26 required and Warner represented. That warning note in 2014 was also an admission 27 by Warner that, since of its home video receipts for 2014 was $35 million, 28 100% of home video receipts, as of 2014, was $175 million and that, in every one :2 COMPLAINT FOR BREACH OF CONTRACT AND FRAUD Doc# 1 Pagefi 13 - Doc ID 1628318697 - Doc Type OTHER {Page 14 of . 1 of its reports, its actual home video revenue had been fivetimes the home video - 2 ?gure it reported; and it was an admission, that, since it had reported only of 3 home video revenue, the 80% balance it also withdrew from its wholly owned 4 subsidiary necessarily represented the 80% balance of ?home video receipts? and 5 was not merely some unidenti?ed intercompany transfer of funds that did not need 6 to be disclosed. 7 Warner may claim that the ?nally disclosed on its 2014 report meant 8 it was reporting 20% of its subsidiary?s income. But that would contradict still 9 another of Warner?s claims, that what it had been reporting was its own home 10 video revenue and that it had no duty to report any income of its subsidiary. 1 1 Finally, Warner?s adding a warning note-to its 2014 report that it was .4 n-o a. {Lag 12 reporting only 20% of its home video revenue was also an admission that such a 323:9: 13 note was necessary to prevent its reports from being materially misleading and that 14 its prior reports, which omitted any such note, were, in fact, materially misleading. ups; . 15 It was also an admission that Warner does not believe, as it now contends, that E: E29 16 Winkler already knew Warner was only reporting 20% of its home video revenue. 17 If Warner really believed that Winkler knew this all along, there was no need or 18 purpose for changing its reporting in 2014 to point it out. 19 Having discovered in 2014 that Warner had misrepresented and concealed 20 the true facts, as alleged hereinabove, and had failed to pay plaintiffs the very 21 substantial sums due them in respect of their contingent compensation on 22 ?Goodfellas,? plaintiffs claimed the right to such payment. But Warner refused, in 23 and has continued to refuse, to make any such payment; and, in repudiation of its '24. obligation-under the 1981 Contract, Warner has denied that it has, or ever had, any 2S obligation to report or to include in computing Winkler?s contingent compensation 26 anything more than 20% of Warner?s home video receipts. g: 27 28 i? 94674-00103f23690l5J 14 FOR OF CONTRACT AND FRAUD Docit 1 Pages! 14 - Doc ID 1628318697 - Doc Type OTHER _(Page 15 of 87) 1 FIRST CAUSE OF ACTION 2 (Breach of Contract Against Warner) 3 20. Plaintiffs incorporate by reference paragraphs 1 through 19 4 hereinabove as though fully set forth herein. 5 21. Plaintiffs have done everything required of themunder the 1981 6 contract and are in no manner or respect in breach thereof. 7 22. Warner?s failure and subsequent refusal to pay plaintiffs the sums due 8 them pursuant to the 1981 Contract, its failure to provide truth?ll reports to 9 plaintiffs, its misrepresenting, concealing and failing to disclose to plaintiffs the 10 true receipts of ?Goodfellas? in its reports, its concealing from plaintiffs vast sums 1 1 that should have been included in computing plaintiffs? contingent compensation, 12 its cynical scheme intended to conceal from plaintiffs its fraud and falsely git-Tag 13 explain or Justify its conduct 1f dlscovered, its improper fees, interest and other costs, its misallocatlng revenues to detriment, and -5 15 its denial that it has or ever had any obligation to report or include in computing 16 plaintiffs? contingent compensation any more than 20% of Wamer?s home video meoe . . 38 17 receipts, all constituted willful and material acts by Warner in breach and ?32 18 repudiation of the express and implied of the 1981 Contract. 0 . 19 23. At all relevant times, Warner had the unrestricted right and ability to 20 receive from its wholly owned home video subsidiary all or any such part of 21 ?Goodfellas? home video receipts as Warner desired. As alleged hereinabove, 22 Warner received all of the home video receipts of ?Goodfellas? less video costs. 23 Warner?s carrying out its scheme to withdraw the ?Goodfellas? home video receipts 24 in separate transfers, the' ?rst transfer representing 20% 'of such video receipts, the 25 subsequent transfer representing 80% of such receipts less video costs, and to g; 26 represent to plaintiffs that only the ?rst such transfer was received and that it was 27 the ?total? of such receipts, while concealing that, in fact, it was only 20% of the I (-3 28 total of such receipts and concealing its receipt of the second and far larger transfer I 5 I 0" COMPLAINT FOR BREACH OF CONTRACT AND FRAUD Doc# 1 Page?! 15 - Doc ID 162831869? - Doc Type OTHER (Page such receipts from its wholly owned subsidiary, so that Warner could seek to 2 exclude that far larger sum in computing and paying Winkler?s contingent 3 compensation, was also a violation of the covenant of good faith and fair dealing 4 inherent in the 1981 Contract, as in every contract. 5 24. As a direct and proximate result of Warner?s fraudulent acts of 6 intentional misrepresentation, failure to disclose and concealment alleged 7 hereinabove, plaintiffs remained unaware, until 2014, of the true facts with 8 reference to the actual receipts of ?Goodfellas? and remained unaware, until 2014, 9 that plaintiffs had any right or need to present any claim or objection with respect to 10 Wamer?s reports of such receipts or any right or need to audit Warner?s books or 1 1 any right or need to file a civil action against Warner, and, by its fraud, Warner gm 12 prevented plaintiffs from complaining about or objecting to Warner?s reports prior '13 to 2014 and from auditing Warner?s books and records with respect to the receipts 14 and expenses of ?Goodfellas? and from commencing any civil action against 15 Warner with reSpect to ?Goodfellas? at any time prior to 2014. Egg; 16 25. As a direct and proximate result of Warner?s acts of breach and 17 repudiationalleged hereinabove, plaintiffs have been damaged in a sum in excess of 18 $18 million. 0 19 2O SECOND CAUSE OF ACTION 21 (In The Alternative, Fraud Against All Defendants) 22 26. Plaintiffs incorporate by reference paragraphs 1 through 19 and 21 23 through 25 hereinabove as though fully set forth herein. 24 27. Warner?s fraudulent conduct alleged hereinabove prevents plaintiffs? 25 First Cause of Action from being time barred by any statute or contractual 26 provision. In the event, however, that a Court were to hold that plaintiffs? First 27 Cause of Action is somehow time barred, either by statute or by contract, plaintiffs 28 will have been damaged in a sum in excess of $18 million, as a direct and in. 94674-00103Q369015J l6 COMPLAINT FOR BREACH OF CONTRACT AND FRAUD Doc# 1 Page? 16 - Doc ID 1628318697 - Doc Type OTHER (Page 1? of 87) 1 proximate result of Warner?s fraudulent conduct alleged hereinabove that led 2 plaintiffs to take no action to assert their claims or protect their rights prior to 2014. 3 28. By reason of the facts alleged hereinabove, plaintiffs would, in that 4 event, be entitled to an award of exemplary damages. 5 WI-IEREFORE, plaintiffs pray judgment as follows$18 million or such greater sum as shall be found; 7 2. For pre-judgment interest thereon at the highest lawful rate; 8 3. For exemplary damages; and 9 4. For costs of suit and such other and further relief as the Court shall 10 deem properDATED: September 21, 2015 GREENBERG GLUSKER FIELDS 3 5% 13 CLAMAN MACHTINGER LLP a 235 14 . 5153's By: 36 15 BERTRAM FIELDS o; ?n 6 Attorneys for Irwm W1 er ea and kaler Films, IncCOMPLAINT FOR BREACH OF CONTRACT AND FRAUD Doc# 1 Page? 17 - Doc ID 1628318697 - Doc Type OTHER (Page 18 of 87) {-31 E: 1 4.3 TE- EXHIBIT A Doc# Page# 18 - Doc ID 1628318697 - Doc Type OTHER (Page 19 of 87) -O J. THIS dated as of March 1,'1981, between WARNER BROS. a_Delaeere corporation ("Warner") and HINKLER PILHS. a California corpore- tion 1.01 Pictures: Producer shall produce and deliver to Warner, and Warner shall finance and distribute. certain feature length ?ction pictures I - (hereinafter separately referred to as the "Picture" and collectively referred to as the "Picturesq) upon all of the terms and conditions herein contained. 1.02 Term: . a Ihe.term of Producer's services hereunder (hereinafter referred to as the "Term") shellvcommence on'the date tollouing the expira- tion or termination?oi the term of the Pinahcing and Sale Agreements (the Agreements") dated'Herch Il 1975, as amended, between ChartoEf-winkler Produc- tions, Inc. ("Chartoff-Uinkler") United Artists_Corporation ("United") and shall continue thereafter ?or_a period of three years, or four (4) .years {it the parties hereto shall-mutually agree in writing prior to the expiration of said three-year period to so extend the Term). The provisions of'this Agreement with respect to all Pictures as to which the basic literary material has been approved for'develop- ment for possible production prior to the expiration of the Term hereof shall continue to apply to such Pictures after the expiration of the Term until completion or abandonment'oi such Pictures. 1.03 - . Subject to the provisions of subparsgraph of this Paragraph 1.03, Producer will furnish the exclusive professional services o? . Irwin Winkler ("Hinkler") in connection with the development and production of the Pictures, it being expressly understood and agreed that during the Term, Hinkler shall not render any professional services of any kind in connection with theatrical motion pictures. television films. or otherwise in the field - of slthoutzt?eisrt ?r?iten consent of Warner first had and p?ig?qsgiin?g?s?gg?a as to any picture produced or in than a picture governed by the prior to March I, 1981, Hinkler shall have thesright ??.ren?er services.inteonnection with the follow-up work on such picture (such as checking a rough cut thereof or supervising a televisions version thereof) provided that Winkler's services are minor, incidental. or do not interfere with his services hereunder. - (bl Notwithstanding anything to the contrary contained in subparsgraph oi this Paragraph 1.03, Producer shall have the right to . produce and to furnish the services of Hinkler in connection with the development and the production of the following projects (the "Outside Projects"); - .. Feature length theatrical motion pictures in which the principal male character is the character "Rocky" (the "Rocky Picture") except that in the event that United shall not proceed with the financing and distribution of a Rocky Picture. then. if Producer or Hinkler acquires from United sndfor chartoEf-Hinkler during the Term the right to develop and produce a Rocky PictureI Harner shall have a first negotiation and first refusal right with respect to the Rocky Picture in accordance with the procedures set forth in Exhibit (attached.hereto and by this reference made a part hereof) and Producer will from tine to time advise?Warner as to the'stetus of the rights in the Rocky PicturesEXHIBITA, Page .13- . Docs 1 Pages 19 Doc ID 1628318697 Doc Type omen (Page proposed feature length theatrical motion picture tentatively entitled "Weeds"; . - A proposed feature length theatrical motion picture tentatively entitled "The Right Stuff"; A contemplated feature length theatrical motion picture based primarily on ballet and ballet performances: A proposed feature length biographical motion picture concerning Prank Costello; (vi) A proposed feature length theatrical motion picture based upon the work to Catalonia" written by George Orwell; (vii) A proposed feature length theatrical motion picture based upon an original screenplay entitled "Compliments of the Author" written by Israel Horovitr; and Rejected Projects and Abandoned Projects (as said terms are hereinafter defined 1.10 hereof). ?1304, Literary.PropertIee5 Development_Pund: Subject to the provisions of Paragraph 1.03(b) hereof, Producer will first submit to Harner from time to time during the Term all literary properties, story ideas. story outlines; screenplays and similar materials proposed by Producer for use in connection with the development and production of Pictures hereunder including, without limitation. all such materials created or conceived by Producer or Vinkler or any other employees of Producer. Producer will not submit or cause to be submitted any materials referred to herein to any person' firm or corporation other than warner unless and until such mdterialmhaa been submitted to and rejected by Harner. with respect to all materials submitted to Harner by Producer hereunder, Warner shall be deemed to have rejected such materials unless Werner shall notify Producer uithin three_i3) weeks after receipt of the submission of such material that such material is approved for development and possible production hereunder providedI howevar. if the material submitted is in the form of a screenplay, then said three-week period shall be extended for an additional four (4) weeks in order to enable Harner to budget such material. it) If Warner rejects or is deemed to have rejected any material submitted to it hereunder, then Producer may at its option either: elect to acquire any such material by use of the said term is hereinafter defined) in which case such eloped under the provisions of this Agreement; or Development Fund (as material shall be dev (ii) elect to proceed with the development of such material itself or with any third party,'in which event the Development Fund shall not be utilized for the acquisition of such material-and the provisions of Para- graph l.10 shall apply. (dJ' Harner shall make available to Producer during the Term a fund (herein referred to as the "Development Fund") in the amount of $200,000 for utilization by Producer for optioning or acquiring_literary material (which material need not be submitted to Warner for its approval or, having been submitted to Warner, thereafter is rejected or abandoned by Warner) and for utilization by Producer to commission the writing of screenplays based upon such literary material subject;.however. tb the following provisions: EXHIBIT A, Page _1 9 Doc# 1 Pages 20 - Doc ID 1628318697 - Doc Type OTHER (Page Producer will consult with Harner prior to each use of the Development Fund and will give good faith consideration to Harner's views and recommendations but in the event of. any disagreement the l?roducer'a decision shall be final. - . (ii) Producer shall not expand, without Hamer'a consent, more than $100,000 in connection with the acquisition andfor development of any one literary property. - of principal photography hereunder pghterinl vith respect to which monies ft'hc. 'liceelcpesnt cuss ?Ifli?cif he amended, Warner shall res tore to the ?'evelognent'. 12sec. ?ar?r tenant. dices}, tip the; suns expended from the Development Rind. armies-specs "tad-?e: acquisition anafor development of such material. (562} Marne: iron fith to time submit to Producer literary :sooiyyv?id'??af, after} _u inept screenplays and similar material which and production hereunder. with respect to any were? to Producer. Producer shall be ga?ny? semeste?m unless Producer shall notify Hornet I'Qxf'geeks a'f?f?r Ethe' sue-neg.qu to'Producer of any such material that such material is approved by Producer for acquisition and/or development hereunder. . 1.05 Development'? Creative and Businessdlecisiona: (Git) arcane-er g'?'ijegaLtgo furnish the services of Hinkler . .e'gnnect'i'on- ?lth-{the development'of- t'h?e- screenplays uni-budgets for each Hecate ea .an vliji'c'h' is in accordance n'ith the provisions of Paragraph-1,06 hereof; and_ as individual. producer of all Pictures which are production" {is said tern is: hereinafter defined), subject, . However, o'f- oi Paragraph L03. ?aid - sh'ali- include with vars-er 'eit?h :r.es'pect to the development and supervising, thus-gsecv-i?ces of all meters"; W5 b'?e restate is immaculate: are the Pictures- :9 .he' sees-mead hereunder-I :eepbens- of: area erases}. reel-Ectjim' age-3121; othery?prepr?'du??trion service's Cil?SE-bt?sr?f perfcirnad by . :?rodl?i?ee?'e'i: - 'g?eph. 31s otherwise provided in this suhparagraph the development and production oflthe 56:! ?ea-mm? "Er; seems; we Between 'Bh'ek part i??is he?- Financier. is: Lehtkr'ieg- fig-he'd: 11h i-a? ne'nraeibe-sae .egit'urarrgewfrg'm} Earner that Harriet;- mil-1- mire .e'n'cpedit Amt:qu in making decisions in ?drier petite-Shots up. the ?dev?el'lopne - tur'e" 3 and at?hat? steel-rill. 'n'cit? E?e'fii'?e combat-(d ne?- Tr Riot-urn} thereby the I lie-reef? be case opera: ire; 315' Warner Thea" has-goal? decided- this? to; ?nance; been li?cture. Producer recognizes, however, that were. ?be tier-E Rafa-a:- genuinely desires to cause a Picture to -pro'duc?igi_ irjf: refrain ail-segue. can be obtained, and the parties Ei-s the 9.5 this Agreement that a Picture vill not the 'p?rovfifeipns; 9E Paragraph .2.17(c) to become operet ive, I until: the; 'p'art?ies'v this: i1 icy of ind ing ementa su itabl 119th parse-ea. iQ?EQihg 'ral statement embodied ea part of the "were-15L I?.th pert-insa'ipeei- vicalily agree as follows: . . - 2 The final form of the screenplay of each Picture shall be subject to mutual agreement. If the parties are unable to mutually agree. ?R'afirna'it {?e?i?et abandon dire lope . {r't: 3" 1:1. L. N- 1" I: r? .A?r'eemie??t= until mutual. (reopen: reached discretion Elf-{without ran'y .o ?f?l ion to; d? 'the not "the. Facing-'9 .5, I. L. a -T.- EXHIBIT A, Page 20 Doc# 1 Page? 21 - Doc ID 3 1628318697 - Doc Type OTHER (Page 22 of 87) 2 {El i-n. . - If} Elf" . (2) With respect to'the screenplay writer, a Picture need not be abandoned for failure to engage a particular writer as long as Narner states its intention to engage another writer and moves and expeditiously to attempt to mutually agree with Producer upon such other writer. 'With respect to the selection of the director and the principal stars-of a Picture, it is agreed that at any time after a screenplay and budget have been approved, and notwithstanding Warner's?desire to finance the production of such Picture, Producer can require that.the Picture be aban- doned unless Narner moves expeditiously to engage a director and principa1.star or stars. The parties have discussed at length the meaning of the term "move expeditiously" in this context, and have determined that it will be applied in utmost good faith by both parties. However, in order to give Producer further _aseurance, it is agreed that if Producer-believes that Warner has not moved expeditiously in the selection of a director andfor principal star, Producer may give appropriate written notice to warner as stating this fact. Harner will than, within not more than 20 days from receipt of such notice, designate a list of.one or more directors and/or one or more persons to portray the principal role or roles involved, vhom Warner would be willing to engage. If the parties are unable to mutually agree upon and engage any of the persons on such listis), then the same procedure shall, if Horne: so elects, be repeated nor more than 2 additional times shall submit another list within 20 days'from the determination that all-persons on the prior list cannot be engaged Eat the Picture). Hhen the foregoing procedure has been exhausted three (3) separategtimes {or on the expiration of a 20 day period within which another list may be submitted, it no list has been submitted during such period), and provided Producer designates in writing a director andIor prin? cipal star (as the case may require) with when Producer is prepared to proceed, Producer-may require that the.Picture be abandoned and may exercise its rights under Paragraph 2.l7(c) hereot, provided it actually utilizes the services of the person or persons so designated by Producer, and subject to all of the other provisions and requirements of said Hith respect to all Pictures produced'hereunder, Producer shall have the so-called "final cut", subject to the following: Said.fina1 cut shall be.aubject to any con-' may exist in the agreement entered into with the as mutually agreed upon between the parties hereto. Elicting provisions which director of such.Picture, (ii) The provisions of subpsragraphs (g).and of Paragraph 2.01 hereof, and subparsgraph of Paragraph 5.02 hereof, shall apply in the premises. . - 2. 1.06 BettinguPieturea?for Productionr At such time as a screen which warner.elects to budget, Warner will so ?arner and Producer shall then proceed ex In preparing such budget, Warner and Prod budgeting procedures, and Producer will advise and consult to the'fulleat extent with Harner's production, budgeting'snd creative personnel. In the event Earner approves such budget, warnetfeiil?nd?ify=Prpduce??of op? proval in writing and the parties shall'then-progged to ast?mnt to engage the principal members of the cast and the diregtar-ot the:PitturE involvEdj no any polishing.or revising of the screenplay which nhy be regdirtd such personnel, and establish the starting date for commencement of principal photography of such Picture, all in accordance with?and subject to the previ? sions of Paragraph 1.95 hereof. play has been developed hereunder notify Producer in writing, and peditiously to prepare such budget. user will follow Harper's customary EXHIBIT A,_Page 21 . Doc# 1 Pages 22 Doc ID 1628318697 - Doc Type OTHER (Page 23 of 87) 1.3: C. .. . "9:532? b34013, Mae; '38 E'?'ei ?ea Ber-?easeler 1am! mam Eire?#3311 . 'direEt?r pf such Eirture ane'beenwd?gsgeu, and a has ne?er;- ee?egqgee fer; manganese-u;- . principal ignore-graph; er. ?nch fei'egueei each =Pipture forlt?gj?uepqeps?herect? 1.0? 'Paygents: Except as otherwise set forth in this Agreement and provided that Ernducer and ?in kler are not in default-of any material obligation to be kept and performed by them hereunder. the following pro- visions shall apply: ?Annualuoverhead Payment, (1) Garner inatter referredIto as the "Annual Overheadifaymeht91 a: pet gore than $l20t000 per year at the rate_o? not more than the?icrn upon? receipt of invoices from Producergtat-?h e3: siding.- mouse a 5?s payments shall include the following.erpeneos of.Praducer: The salary and ?ringe.bene?its payable by Producer to one secretary at an aggregate~rste not to exceed $2008.61 per month: (ii) The professional fees charged to Producer by its accountant at a rate not-to exceed. $1500 per-month; The salary and fringe benefits payable by Producer to a general assistant at a rate not to exceed $1,400.33 per month: (iv) the car-rental for one automobile . being leased by Producer at a rate not'to exceed' $666.60 per month: Entertainment expenses of Producer and Hinkler in an aggregate amount not to exceed? 02166266 per month; (vi) Office rental not to exceed $1,000 per nonth.(providcd such office is used by Producer as its principal place of business); and (vii) Hiscellsneoue unaccounted for expenses not to exceed $1,250 per month. (2) Said payments shall be subject to adjustments and suspension as hereinafter provided. (33 Payment shall be allocated to the unseen Edging twinning-adj?i?ictures delivered to Hernor hereunder l? hereof with respect to the: wedges-2st. .anduction Fee Advance. (1) Rather shell to as the "Production Fee Advance the Term, which-sun shall he pays month, Payments of the Productio advances against the Production provided to be paid pursuant to shall be allocated to'the direct involved.- - pay to Producer the sun (hereinafter-referred "9 of $500,000 per year as to each year of to Produc?r at the rete?nf $01,666.67 per Pee Advance shall constitute non-returnable fees (as said term is hereinafter defined) subparsgraph of this Paragraph 1.0? and coats of production of the Picture or Pictures AEXHIBIT A, Page-?22 Doc# 1 Page# 23 - Doc ID 1628318697 Doc Type OTHER {Page 24 of 87) -individual producer thereof the payable as followsthe second year of the Term, fewer than three (3) Pictures have been "set for production" (as said term is herein~ above defined), then??arner hhall have the right to uithold payment of the Production Foe Advancevfor each subsequent year of the Term, and such Hith- holdin3.sha11 not in any way diminish or derogate iron'ths obligations of Producer and Winkle: under this Agreement for the_?ull period of the remaining portion of the Term. ,Production_Fees (1) Warner shall pay to Producer for producing the Pictures hereunder and for furnishing the services of Hinkler as following fees (hereinafter referred to as actually produce the "Production Fees"): (1) $385,000 for each of the first three (3) Pictures produced hereunder; (11) $010,000-for each as the fourth and fiEth 'Pictures produced hereunder: and $435,000 for the aixth_and each sub-. sequent Picture_produced hereunder. (2) The Production Fees shall accrue and be ~(iJ 20: thereof (less the Production Pee Advances, if any) at such tine as a .Picture is set for production; 60! thereof at the-rate of 31 per week (less the Production Pee advances, if any) for twenty (20) weeks commencing six (6) weeks prior to the scheduled cone msncenent of principal photography of the Picture subject. however, to the provisions -of Paragraph 2.15 hereof; 20% thereof (less the Production Fee Advances, if anyJ-on delivsry of the answer print of the completed Picture. warns: shall_haVe the right to apply against the Pro- duction Pee (less $10,000} payable in connection with each Picture an amount equal to the Production Pee advances it any, uhich have not been applied against the Production Fee of a Picture. Contingent Production Fee (1) Harper will pay to Producer a fee (the in connection with each Picture in the ?011 a final direct cost of production of each ?Contingent owing amounts uch Picture. Production Pee") depending upon th ,Direct Coat 0E.Production Contingent Production Pee Under $5,000,000 35,000,000 to $1,500,000 $7,500,000 to $10,000,000 $10,000,000 to $12,500,000 $12,500,000 to $15,000,000 Over $15,000,000 - 525,000 ?93:,500 1,212,500 1,037,500 1,762,500 1,950,000 EXHIBIT A, Page 23' Doc# 1 Page# 24 - Doc ID 1628318697 - Doc Type OTHER (Page 25 of 87) eleven-id hindst?o?s lees-shelling. tin-II: it?ll-?13 ewes- re?d'i 9? 1 he. "?mte-sh-i-es-teegiih, after reEBnEni??t. fer? Hi?? ?eaew?hii?li?. hi! either. ideas t? ??me ?end enteresrz'eiger ted ?a bi . . . .. gemstone-l reed? eveshnager?fie?qgegi if" shy? but Eng-,1, g'aasu :aerers?e?nts? ij'ng the: seen-re; preps :?t?hstd thenp'plic's?li?lb res pear-p to wear-er ?nfif?aeeu.bneis. .. gcrh?eJSEEh Producer-an.amount (hereinafter ?X'b?zthesgrose receipts ids-spid ters- to necessajinlg? enlarge-age or :Pe?r'?i??ph be. "upping:bneakeben??bisiej ?hirh dEtErnined snd;payhble=puesgng? to ?iih?gtion-B Heroes. (2) _Net Profit Participation; -- (1) Border will pay to Producer an amount (hereinafter re- . ferred to 502 Share") equal to 501 of 100% of the Net Profits (as said tern is hereinafter defined in Paragraph 6.02 hereof) of each Picture. Said Net Profits shall be computed. determined. payable and accounted for in accordance with the provisions of Section 6 hereof. All "Third Party Gross Pnrticipations" and all "Third Party Net Participations" (as said terms are defined in Paragraph 6.01) payable in connection with the Picture shall be borne by Producer out of Producer's 502 Share of the Net Profits except that the Producer?s 502 Share. after deducting the actual dollar amount of ill SUch Third Party Gross Participations and Third? Party Net Participations (hereinafter collectively referred to as "Third Party Participatione) shall not be reduced below an amount (the "Floor") equal to 202 of 1001 of the Net Profits of such Picture. - (3). In the event that the Third Party Participations exceed the amount required to reach-the loor. then said Third Party Participa- tions_ahell be treated as follows: If there are both Third Party Gross Participations' and-Third Party Net Participationo, the Third Party Net Participations shall be deducted from Producer's 501 Share first. and if after such deduction the Floor has not been reached, Third Party Gross Participations shall be deducted from Producer's 50! Share until the Plant is reached. (ii) All Third Party Gross Participations and Third Party Net Participations which are not absorbbd by Producer within Producer's. 501 Share shall be absorbed by Warner. (3) Legal Fees: With respect to cach'Picture produced hereunderl Warner shall pay to Producer a sum not exceeding $15,000 to reimburse Producer for its attorneys' fees incurred in connection with the production of such Picture. with thn?Understendiog that in the event ?raducer's attorneys shall .render services in connection with Picture which are reasonably worth more than $15,000, Producer pay so notify Narner in writing. and in such event. -warner will cause its own Legal Deper applicable to such Picture. Amounts (3) shall be payable on attorneys, or presentation to Earner payment of the'same, but not-earlier payable to Producer pursuant to this receipt of invoices from Producer's of'receipted invoices shoving Producer's than one-half thereof on cbnmencenent of principal photography of the Picture involved. and the balance on delivery to- g) Rainer of such Picture. I A-ll . - EXHIBIT A, Page 24 n? Doc# Page# 25 Doc ID 1628318697 - Doc Type OTHER (Page 26 of 87) (E Warner shall apply Producer's Cross-Col Miscellaneous: Ifl? {Pj?s?de?.thar an:event of default (as said term is defined not asserted in connection with the Picture and tb~PEnder his with prowided to be paid to Producer pursuant Land ifJ pgitnia Paragraph 1.0? shall west as follows: 20: thereof at such tins as the Picture is set for production; {ii} 60! thereof at the rate of 32 per week for twenty (20) weeks commencing on the date which is six (6) weeks prior to'the scheduled date for commencement of principal photography of the Picture; . 20! thereof upon delivery of the answer print of the Picture. In the ewant that the sarvices_of Winkler are terminated with respect to a Picture by reason of an event of default,.then no_contiugsnt payments shall be payable with respect to the Picture and Garner shall have complete offset rights_ss to any and all damages claimed by warner as result of the event of default'subjectI however, to adjustment if and when the amount of such damages shall be determined by settlement, arbitration or litigation. (2) The Pictures produced hereunder shall be cross- collnteralired.in groups of two (2) determined by the order in which the Pictures commenced principal photography in accordance with the following provisions which shall apply to each such group: As used herein. the term "Deficit" shall mean the amount._if any. by which the aggregate of items through'(sJ(iw) of Paragraph 6.02 expended in connection with the Picture.in the group which has oot_rosched Net Profits (the "Loss Picture?) exceeds?the gross receipts (as . said term is defined in Paragraph 6.03'hereof} of such Picture. The Deficit shall be determined as of the close of each accounting period provided for in Paragraph 6.10 hereof. (ii) Harner shall have the right to withhold from the Producer's 501 Share of the first Picture in the group to reach as: Profits an amount ("Producer's Cross-Collatersliied to exceed 201 of the Producer's 502 ShareI provided that if the Producer's 501 Share is less than 252 of 1002 of the said Not Profits then the Producer's Cross-Collateralized Share shall be the difference between Producer's 502 Share and the Floor. For example, if the Producer's 50! Share is 301 oE-l001 of said Net Profits, then Producer's Crobs-Gollsteralized Share will be_63 of 1002 of said Not Profits but if Producer's 501 Shore is 241 of 1001 of said NetProfitsl then Producer's Cross-Collaterslized Share will be h: of 1002 of said Not Profits. Except as hereinafter otherwise provided herein, lsteralized Share against an amount equal to 501 of the Deficit. if any, of the other Picture in the group until such time as the other Picture has reached Net Profits. Thereafter. 1002 of the Producer's 502 Share shall be paid to Producer currently as earned and the Producer's Gross-Collateralized Share_being withheld by Earner shall thereupon be released to Producer together with interest at the "Commercial Paper Rate" (as said term is hereinafter defined) from the dste such sums are withheld to the data released. As used herein, the term "Commercial Psper Rate" shall mean the rate per annum equal to the average rate reported for the most . recent weekly period in the Wall Street Journal weekly listing {which listing generally appears on Hondsy) entitled "Federal Reserve Deta:Weekly Interest I I 8 EXHIBIT A, Page 25 Doc# 1 Page# 26 Doc ID 1628318697 Doc Type OTHER (Page 2? of 87) Icalendar year} make a residual I Rates" - relating to commercial paper. If the Hall Street Journal ceases to I publish said listing or if such publication is not published for any week with respect to which such information is required hereunder, such average rate shall be determined on the basis of quotations received for the previous week from three New York commercial paper dealers of recognized standing. (iv) Harner shall also release from Producer's Cross- Collatcralired Share from time to time any sums being held by Narnar in excess of 502 of the Deficit together with interest at the rate provided for in subsection above from the date such sums are withheld to the data released. At any time subsequent to six (6) months after the first general release of the second Picture in the group in the United States. or three (3) months after the first general release of such Picture outside the United StatesJ whichever is later, Harner will, at Producer?s written request (which request may not be made more frequently than once each estimate of the ultimate Deficit, if any, of any Picture which has not then reached Net Profits. Such estimates shall be made in good faith on the basis of facts and information known to ?arner?at the time. and'Warner willI concurrently with the making of such estimate, release Producer?s Cross-Collaterized Share based upon such estimated eventual DeficitI rather than on the actual Deficit at the time. It is specifically understood and agreed that Warner's estimate of eventual deficits in accordance with the foregoing shall be final and binding upon Producer; and in no event shall any payments be made predicated on?sny estimated eventual Net Profits of any Picture. (vi) It is agreed that except as may be permitted pursuant to this subdivision (vi) Producerfa 501 Share of a Picture shall not, after the deduction of Producer's Cross-Collateralinsd Share,_be less than the Floor. Nothing herein contained shall be construed to prevent Harner from requesting Producer to accept less than 201 of 1002 of_the Net Profits of a profitable Picture in a group, and nothing herein contained shall be construed so as to prevent Producer from refusing such reduction for any reason whatso- ever, and neither party_shall be deemed_te have acted in bad faith by reason of requesting or rejecting such reduction below 201 of 1002. (vii) The net proceeds derived from the Loss Picture after the Deficit is eliminated shall be paid one-half to Producer until Producer has recouped an amount equal to Producer's Cross-Collateralized Share applied against the Deficit plus interest on said amount at the rate provided for in Paragraph 6.02 hereof from the data said amount is withheld to the date released. 1.08 Trans? rtation and cases: If Winkler shall be required.to make preproduction tr'ps mor??thhn fifty (50) miles from Loo Angeles. California, or shall be required to travel more than fifty (50) miles tram Los Angeles. California to the location site of any Picture during the production thereof, then the'follnwing provisions shall apply. Producer shall be entitled to be reimbursed for the following round trip transportations (first class and by air, if available): (1) Round trip transportation for Hinkler; (ii) If the trip is for more than three (3) consecutive days. round trip transportation for Winkler's wife: and EXHIBIT A, Page 26 Doc# 1 Page# 27 Doc ID 1628313697 Doc Type OTHER (Page the trip is for four (4) consecutive weeks or more to a distant location for a Picture actuall in principal photography, one round trip transportation for each of Ninkler?s children who accompanies hits. . . . In addition to the transportation provided for in aboye, Werner will reimburse Producer the sum of One Thousand Five Hundred Dollars week as and for Hinkler's living expenses: Expenses for any period less than a week shall be prorated and for this purpose the daily rste shall-be one-seventh of the weekly rate. 'Producer bill submit to Heroes adequate evidEnce in support of reinbursemeat of the transportation and living expenses provided for in and shove.' l.09 Credit: Provided that Producer and Hinkler are not in default of any material obligation to be kept and performed by then hereunder and provided that a Picture. as released.'waa produced substantially under the direct supervision of Winkler, then Winkler shall be entitled to the following credits: - . (of winkler-shall be entitled to "An Irvin Winkler Production" above or before the only by the Hornet logo and pr Picture and'in all paid advertising. less than 501 of the sire of all positive prints of the Pic used to display the title of in size of type which is less production creditI if anyl acc 'Such credit shall be in size or type not ype used to-display the_titls of the Picture on ture and not less than 352 of the size of type he Picture in paid advertising but in no event then that used for the so-called possessory or orded to the director of the Picture. Hinkler shall be entitled to be accorded the credit "Produced,by Irvin Hinkler" on all positive prints of the Picture on a separ? ate card directly preceding the.director?s "directed by" credit and in all paid advertising. Such credit shall be in size of type not less than 502 of the ,Warner's billing obligations with respect to Hinkler in connection with paid advertising shall be subject to the exceptions set forth in Paragraph provided that. notwithstanding anything to.the contrary contained in said Paragraph if in any Excluded Advertising (as such term is hereinafter defined in Paragraph the director's i so-cslled possessory or production credit sndfor the director's Pdirected by? . l.lO_ Producer's Outside activities: g?iinynibu?gh?, the tern "Rejected Project? shall mean '?ar?Er (provided that such material is h! the Development Fund) and the term the development or production of to abandon, which project however was to be based upon literary material submitted by Producer to Rsrner as distinguished from literary materia1.ovned by Harner uhidh is submitted by {h Earner to Producer. A-h 9-1.0 EXHIBIT A, Page 27 Doc# 1 Page# 28 Doc ID 1628318697 - Doc Type OTHER (Page foo: Producer's activities in connection with the development and/or production of Outside Projects shall be subject to the following pro- visions: . with respect to an Abandoned Project. the provisions of Paragraph 2.l7(cJ hereof shall apply: . In the event that Producer shall commence principal photography of an Outside Project-for or with any third party. Producer shall have the right to render its production services in connection therewith and to furnish the serviccg of as the individual producer thereof. which prohiHEdi?hhueVer. that Producer shall'use its best to do such ongoing work as'is necessary hereunder so long as such work does not interfer?f?ith=?i?hg?i?? ?er?icca-mnlcobnection with the Outside Project. Thefl'erm shall are extended as; ca oneehalf ofsthe period (the "Outside Pidhure-Enclusivity eight (3) weeks beiore,the start of principal Project and continuing thereafter until.sdx (6) seeks sitar completion of 'priocipal photography. (iv) During the Outside.yicture Excluaivity Period the. amount payable pursuant to Paragraph be r?duced by SOZ. Producer agrees to use its best effortsitoihaVe.the production oi the Outside Picture be respo?sible ig--3? ouch Overhead Payment_psyable during the Outside Picture Exclusivity Period as possible and?warner's obligation to make such payment shall be reduced to the extent of such assumption of responsibility. .- 'During the Outside Picture Exclusivity Period the amount payable pursuant to Paragraph 1.07(b) hereof shell?be reduced by 1001 provided.'houcver. if in connection with a ChartoiE-Hinkler Project are non-exclusive and Robert Chartoff is principally responsible for the actual production of such project, then the amounts payable pursuant to said Paragraph 1107(b) shall be reduced by 501. days after the close of each cal-adder; Tern} grease!? yil?f?adgi'se' :N?s?rne'r' in writing as Its. 'ohg appear development ahd?cr . (8) I teases?; safari? e?eaeamncno or. premised. Outside" rr?sje ceasing wars-g Lag; Necks, after; consume sash-ariseswal- sale I :ccnnetfi?qi it as - interruption f?LthEEphymehth h; the annual Overhead Payment or Production Pee Advance pursuant?to Paragraphs l.07(a) and hereof?by reason of Pro- activities in connection with the Outside Projects. but it is agreed for a period equivalent to the in connection with the Outside eggaeegg; and do gatheimhr?e an extended. as'provided ior'in this subdivision It); no further?phfnehth?shall he?due'?roducer under Paragraphs and hereof. with respect to Aband?ned Projects. all costs incur- red in connection'thereuith under the terms of this Agreement. and all pay- ments under Paragraphs and hereof uhiCh have not been charged?to the?coat:of??rdd?EEiOng? dopepart?cular Picture (all herein called "Abandon- hedt Ghats"l to'thc cost of production of the an is commenced hereunder. Ac such.tinefug principsi 6E h'second Picture is commenced hereunderI an1?32: EXHIBIT A, Page 28 ?1 Dead 1 Page# 29 Doc ID 1628318697 - Doc Type OTHER (Page 30 of . .i . . ue? the aggregate of such Abandonment Costs shall be charged equally to the first two (2) Pictures produced hereunder and the foregoing procedure shall be repeated iodeiinitely so that the aggregate of all Abandonment Costs referred to in this subparagraph it) shall be charged'eeuslly to the cost of production - of all Pictures produced under this Agreement. Notwithstanding the foregoing, however, Abandonment Costs shall not be charged to any Pictures produced hereunder for the purpose of determining ?breekeven? or "moving'breakeven" under the provisions of_Paragraph hereof. with respect to a project submitted by Harner to Producer, which project was previously under development by Varner with a third party and then abandoned, Warner and Producer shall negotiate at the time of acceptance of each project by Producer the amount, if any, of Hsrner?s abandoned property costs for such project which shall be treated as Abandonment Costs hereunder if the project is thereafter abandoned hereunder. . - If yroducer proceeds with the production of an Outside Project?hased upon an Abandoned Project or if Earner shall proceed with- the: pitidnc?tfihn inf? as notice. piht?rle eases sage; messages-as,grease: ease. regs-1s: as; ethenii'ea assesses wiser-assess sidestep-sweetie: Trigg- cost-s inserted sonnet-travesty the stretched when 129; "longer lie included~in.gbehdonment Epsts?heneunde? ?nd pauper:ad3ustmenps and sceounoihgs hereunder shall be made. . . 1.11 _Seque1s, Remakesuand Television Films: is): time within 10 years after the release of a eletu?e, eggs ?anv?time period if Hinkler has produced a I notion pictnhesduring the two-year period immediately Wain?riptq??ses to produce a theatrical remake of such thereoi-w or any other motion pictures or tele- - in upon literary moterial?first suggested -or suhmiitgdf??f?ryduce? of this Agreement, Warner will so notify Producer in writing,?and in such event, Warner will, if re- is ready, willing and able to render in-koedb?ag?h with ?roducer as to the terms and_con- dicions upon safes Egpducpr wouldqsuppix the services of Winkle: as individual pessuseegge cenntc?fonavith.the.remhkh{ sequel, television film or televisions he fh?'remake or sequel the terms and condi: than those contained in this Agree- ment with respect to the production ot the 2i6ture. - If the partits hereto are unable to agree with respect to the terms and conditions upon which Producer would supply the services oi Hinkler within thirty (30) days after the commencement.of such negotiations, then Warner shall be free-to proceed with the production of such remake, sequel, television film or television series without further obligation to Producer or Winkler with respect thereto except as follows: (I) Warner shall nevertheless he obligated to pay Producer, with respect to any theatrical remake or theatricallsequel, the Production Fees and contingent payments provided to be paid pursuant to sub- paragraphs (el and (E) of Faragraph 1.07 hereof (it being agreed that said contingent payments shall not be subject to provided, however, that in the event the Picture involved (or anylsubaequcnt motion picture in the case of a second or third sequel or remake, as the case may be) received a nomination for an Academy Award, Harnar may only proceed. with the production of such theatrical remake or theatrical,eequel if it complies with this subdivision (1EXHIBIT A, Page 29 Dot:# 1 Pages! 30 - Doc ID 1628318697 - Doc Type OTHER (Page 31 of 87) . At least $350.b00 has been expended in developing the project involved on items mutually agreed upon between the parties, or if they cannot agree, on items designated by Producer; and (ii) 'The parties have still not been able to mutually agree upon the particulars of such project screenplay. budget, east, director and other'essential-elements involved in the production thereof). with respect to any television film or television series based upon or adapted from such underlying literary material, if Uinkler is available to render services in connection therevith, and the parties are unable to agree with respect to the.ccmpensatien payable to Producer or to Hinkler with respect thereto, or if a national network involved will not approve the engagement of Winkler as individual producer or executive producer of such television film-or television series, Harncr will include in the gross receipts of the Picture involved as referred to in the first sentence of this? Paragraph 1.11, without distribution fees. the following amounts: FeatureeLength Television and Pilots; .lwl/Z hours or less 5.7.?50 Here hours 3 2,750 for each full 1f2 hour hour 1 hour 1-1/2 hours The foregoing series fees shall be increased by 102 for each subse- 1 Series (per episode) i quent year of the series on a cumulative basis 1.12 Confidentiality: Producer and Winkler shall keep secret all confidential matters and trade secrets of Harner'of which they are made aware. and of which they become aware, during the Term, and will not disclose such matters to any person. firm or corporation. either during the farm or there- after without Harner's written consent. Harner shall keep secret all confi- ?dential matters and trade secrets of Producer of which Warner is made aosreI and of which Earner becomes aware, during the Term. and will not disclose such i matters to any person, firm or corporation, either during_the Term or there- after without Prodocer's written consent. Producer and "inkler shall deliver prompt-Ii. it'd! Harrier} upon the: r, .c'ermlpac ion Lo 5' this! ?Agreement,- Or .at aspires-egress an. record's, report-sand :vot?gf?dboypegtnl g?auili??bri?? thereof jn?their possession .?grgogqancezo this (assesses adding-25,139: development =s'nd-i'or precise nice-oi! . . . Warner shall consult with Winklif'in"cohnectfbawwjah thE?advertising campaign'iincluding, . without limitation. trailers), marketing plan and release pattern for the - release of each Picture.in the United States and Canada.and Winkler shall have _the right to consult with the matters relating to release in the rest of the world. Harner shall give good faith consideration to'Hinkler's suggestions and recommendations but in'the event of any disagreement warner's decision shall be final and binding. tive print of each Picture as Winkler first erecutes Harner! Harner shall furnish Winkler with a 16mm posi- eoon as 16mm prints are available provided'thst a standard form of private use agreement. 1.15 Qonflictih If any of the provisions of this Section 1 shall with any provision contained in Sections'Z through 7 hereofl the provisions of this Section 1 shall-prevail and the conflicting provision contained in any other Sections-of.this Agreement shell be deemed modified to conform theretoEXHIBIT A, Page 30 Doo# 1 Page# 31 Doc ID 1628318697 Doc Type OTHER (Page 32 of 37) pnooucnon. DETAILS, 2.01 ISEecificetions: Subject to the provisions.of Section 1 hereof; I the Picture will'iiomplf with the following specifications: . - hai?tod?ce?d.? in accordance Hi I mutually retest-with no material increenpitay. (tithiiut the written consent of nonempty-j" not; uni-y? 15? iipp?'ov'e?; pgrsunnt to Section 1 hereof, but shall i zaps! Legal Departments under+ the clearance p?bt?dgr?eo ?nd .gmign'??ions insurance policy. Notwithstanding Ehenges in said screenplay may be made during-fth'e ?dn?ig's'e dg principal -pliotb?graphy_ of the Picture; without the prior nurse-ageing: of} is notified of such on the th the ,screenp'lay deviation- between the H?arner, Said - . It will be produced at studios and locations approved by . I . Homer and principal photography thereon will commence on a date approved by . Homerdirected; 3mm spares; Humane route gigging. mien he; 'byL?Rar?er? .3de retro-g ?131 folio artists aggregated by" .m'ich?fiig?t of". hppzoesfl? js?hja-n be- Ema direct-or ofr' second unit uterine-re; funned'itot?, Elna eti'j??a auditor. res-,oocii-nte ?nesse? ?nd product ion serene-c n'nt- x'shatli be subject to. the of garnet: - tinie- iequi?r-B? ?dr the; prediction-pf the gpon the which production h?c?h'i'adiil?e- 5594159? fgfictyre?gnn {Mini-indie 'vithin the approve-m E?oh :pqup?c??-ow Budget: - . go)- :19 Micki-nemesis lattice- . ?oj end; gar-Jinan '?xpfx'es?ty: "f?cjr, 'Jth'ea'r?itrure 13?s: forge-sh.- ,approv?e?d 15:5; Learner. 'ahlp? i??ali-be' 42's "new remake: wastes-i.- use {i?e-I?ic?nre heads I . one). the ~1iig?ghitsinta-r?g; ?gutted; there-in nears-?. . atoning-e- apprise-nit. quote in the ?R-i-c'ture than, Be .?'ondu?ee'd n'd performed} ?23?;th ?rings-L :sgi'nge'rs and conductors approved by veri?er; It will be photographed in color, negative Eilni'desig-nated by Homer; and, unless specified by- Hornet to the contrary, be. photographed with no hard matte-?nd 'v'ith for an aspect ratio of 1.?5 to l. The have-go. running- tine, exclusive of main and and titles, of not lesis' that} minutes, .andfhot curfe- than 125 minutes: shall be recorded ailiixha? aerate-ehij 21:11; .cldorzfuubus' ggt'lfgoeecaa?iya I'yxi?nc?? end-reoqu g; using 33511131 rav stock Ire: Iy?'y?c?r?c?idi'i??i: giggled. :g'ggigig; - ?efr?fa??jy "v?r?itti tja?'aoho?nsrn?hih mesa ?11; Its-"ml! E??t??cexco?t?iommzt?m ?o'ffi?'?o?k I .. or redeem 'f 173mb?? 552%er pFQE-i?csir?eiinss; t?y' with ch?e- in wanker-scenes gush gong-59:3; sneewuiti'bji the: first-Eden's for exhibition in first-class theatres? can therefrom". A-J '14- L.-.. . EXHIBIT A, Page3l Doc? 1 Page?! 32 - Doc ID 1628318697 Doc Type OTHER (Page 33 of 87) . It will be originally except to the extent indicated in the In the event any non-English-spsaking actors shall be em?lpped in the production of ths.Eirtstet they will each, in all easement-aims; me gp?a?ili?i'es "?ssile their ?fie?s?sd?tii? lines. "half-5h 41?51 which Eaton uiLl streenpla sass-as :i??tp ,the f?sagFi-sh - Bhgfishespsaking actors:approved by Harder appearing in the Picture: and . It will confo Production Code of the Notion Pict thereof) and qualify for a rating rm?to the standards and requirements of the ure Association of America (or any?successor not less restrictive than the current rating and a certificate of the British Board of Film Censors conferring a rating not less restrictive than its nearest equivalent of the current rating of the notion Picture Association of America. Producer acknowledges that it is aware that television networks and stations in the United States. Canada and elsewhere require that programming transmitted.over their facilities be acceptable for viewing by "family" audiences and that the inclusion in the Picture of unacceptable material could materially affect or destroy the tele- vision income potential of the Picture. Accordingly, if any portion of the Picture can reasonably be expected to be unacceptable for television broadcast, Producer will shoot andfor record so-called "cover shots" or alternative scenes, sound or dialogue which can be used in lieu of any such unacceptable scenes, sound or dialogue, in accordance with United States network standards, and, in addition, Producer shall shoot and record such other so-called "cover shots" or alternative scenes, sound or dialogue uhich'Harner notifies Pr are necessary or dosir concerned. oducer able for purposes of television broadcast of the Picture o' 2.02 Consents and i revala:' aEB.5usiness and creative decisions in connection with ?a the production of the Picture ?hall be determined in accordance with Section 1 hereof. Wherever the consent or approval of Harnsr is required pursuant to any provision of this Agreement, the same shall not be deemed to have been given unless in writing, signed by an officer of Harner. The approval by Warner of any element requiring its approval shall not constitute an authorization to Producer to enter into any agreement or commitment with respect thereto or any other item or element unless specifically authorized and instructed so to do in each instance by. Harner, and until Harmer shall have given its approval and instructed Producer to contract in respect thereof, Harner will have no liability or obligation whatsoever in respect thereof to Producer or any other party. - id) Earner shall have the right at any time, with or without cause (subjeCt to Paragraph 2.1? hereof), to suspend, dipcontinus or abandon or terminate production of the Picture, and to terminate its obligations?under this Agreement in respect of the Picture, by giving written-notice thereof to Producer, all without aEfccting, diminishing or terminating any of Harner's rights under this Agreement, provided, however, that no suspension, discontin- uance, abandonment or termination under this shall relieve Rarner of its obligations as to payment of the annual Overhead Payment under of Paragraph 1.07 hereof and of the Production Pee Advance under subpsragraph of Paragraph 1.0? hereo EXHIBIT A, Page 32 Doc# 1 Pages 33 - Doc ID 1623318697 Doc Type OTHER (Page 34 of 87) [it a n- _ariaing out of or in the course of his.e -at the same rate as if such insurance had been (3) Producer will comply with all applicable laws, statutes, ordinances, rules, regulations and requirements of'all governmental agencies and regulatory bodies, and Producer'uill duly and apply for and procure all necessary consents, licenses and permits which may be required from any thereof in connection uith this Agreement and the production of the Picture, including, without limitations, the qualification of the Picture for "nationality" of the country (or countries) of production and for all aide, subsidies, licenses, quota and other benefits resulting or accruing_therefrom. and all work permits and immigration requirements. 2.03 Insurance: . - a Proddcer will maintain or cause to be maintained.for the Picture negatiVe and cast insurance and adequate liability, property damage and errors and omissions insurance and such other insurance as warner may require, the cost of all of which shall be included in the direct cost of production? of the Picture. Producer will also carry all Workmen's Compensation Insurance required by'law for the benefit of Producer's employees. Producer will indem- nify-Harner against all claims, actions and liability which may be asserted by or on behalf of any person engaged by Producer by reason of-injury or death or by or on behalf of any person by reason*of.sccident, injury[ death or property damage resulting from any negligence?or fault on the part of Producer. . - 'Hegstive and cast insurance shall be for the fuil'value of the Picture or the maximum percentage of the full value for uhich insurance can be obtained. All insurance shall be written by insurance companies of adequate responsibility, the policies and binders thereof shall be delivered to Harmer and bear appropriate endorsements providing for the payment of the proceeds'thereof to Warner or such other parties as Harmer shall direct, as their interests may appear; provided however that all such cost insurance policies may contain such reasonable deductible provisions as may be approved by Harmer.? Cast insurance shall include all cast principals designated.by Burner and the director of the Picture. If Harmer has blanket insurance policies in force at the time of commencement of principal photography and if the insurer is willing to extend the coverage thereof to the Picture, Producer sha11_occept such coverage in such amounts, with such limits of liability, and upon such terms and conditions as warmer In such event; there shall be Picture a premium may consider reasonabIE'or necessary. charged to the direct cost of production of the in respect of such insurance computed in the same manner and issued directly to Producer by the insurance company on h-Qone-picture" basis. If_Producer shall desire or require insurance in excess of, or in'addition,to, suy_such insurance, Producer shall have the right (but shall not be obligated) to apply for and to procure the same at Producer's sole cost and expenses and'vithout any portion of the cost thereof being charged to the Picture or Hornet. Any recovery under any applicable insurance policy {other than insurance referred to in the last sentence of hereof) shall (unless? Warner in its discretion shall agree in writing to the name being used solely for thh'production and completion of the Picture in accordance with the terms of this-Agreement) be paid to Warner in reduction of its financings hereunder. If at any time any claim shall be made in respect to the Picture or any of the literary?materisl or music contained therein or'any rights in or pertaining to any thereof or any personnel engaged or involved in the production thereof, Producer will forthwith advise Warner in writing in respect-thereof and of all details relating thereto. Producer will cooperate with Harner, and the insur-_ ance carriers in respect to each such claim, the defense and disposition thereof, and will abide by Harner's instructions in the premises. Producer will not, without the consent of Warner, do or fail to do any act or thing which could affect the rights of Earner or any of its insurance carriers. ?16? EXHIBIT A, Page 33 Doc# 1 Page# 34 - Doc ID 1628318697 Doc Type OTHER (Page u-r: 2.04 Contracts: a All contracts of Producer with respect to the Picture shall be in customary form approved by Hefner and shall be consistent with applicable.collectiVe bargaining agreements and not ihconsistent with Pro- ducer's warranties or with any contracts shall be in Harner's name and if approved by Harner shall be signed . . by duly authorized officer of Warner, and shall otherwise comply in all - respects with the requirements of this AEreenent._ Warner's executives and I attorneys may participate in the negotiation and, to the extent consistent with the application of (33.o? Paragraph l.07.hereo?, in the _prepsration of such contracta,~snd the same shall be approved by Harner's Legal Department prior to execution. In no event shall Harner have any re- sponsibility with respect to the adequacy or sufficiency of any documents and no opinion by any of Herner'a attorneys, nor the acceptance of the Picture by Harner, shall be construed so as to,rel ease or relieve Producer from any of its? representations. warranties, indennifications or covenants hereunder. Producer shall deliver an executed copy of each such contract to IWarner's Legal Depart- nent within 5 days after the execution thereof. tion, the right to suspend the services to re'quire ?medical terminations to the sec-h contracts,? . .end the right to bring actions for the purpose!?on iprdtectfing such rights and interests. All costs and attorney's fees?, I incurred by Warner under this paragraph :shsil?l-le included the of:production of the Picture. and compensation of personnel end/or Producer shall not, without warner'e consent, agree to sepia; anyr-pere'p'nz'or g?e?qei?e?e any: girl's'tiergi'al or rights in connection with the 'l?ict??l?h in Ehp?le; ?r participating; ennui-estate. gr: Net ?Ptofi't promi'de'd," upoeye 5, to been prb?e?if?nsg, hat. ea Isfec'h' - m: pu?h. gent-rants: anal-=1. 'bg' fii?r'egar'de'd: star the: purpose cf infWLi?dEd: ratg?e?meuspggagraph new "2pf?gtapl'l: 1.07 93-91;: 1.59?er thefphr'poei??s 6i l'ate'ralie?ed ?hjare [as said; tit-111' is dei?ed ?th off Paragraph I_'n the: event. sin-?eases; Fund-to acguire Literary mate; rial itj'o engage. Immature?! s?s agreeing? grits?. 'L-Rroduc'er Eli-all, have Pares?nsess at {the the Et-?o t-H'e- arm-er- of jfeti are; one; to.- tease 15255;: of the, Net?Pi'o'Eifte- without '?raezobeai-nihg ?H'hrne?'o. cans-en's and; ?ng tile-93?: Arwriiter {a percentage 5f? the he}: Prof-it?s nae pee :?efg?cegegg 5?1 :ge mar er.- feet. theories ?t'he'z' estee- n?rgy wife};- ?is screenplay ersa?iti s?e' pIojt to once: 2511322 heme; of: 31h: use. 'P-tb?i??s . .hB: accorded [shared credit. without that; .- - . Producer shall not, without Harner's consent, .enter into 4 - any collective bargaining agreement. Producer will excepts such collective bargaining agreements or letters *lel?nr. or' pier-soar: nel engaged by Producer and not furnisheg?arhar; hereunder "as! may. be' d1.- rectc?d by Werner. Except to the extent '5th any. guild or union that the Picture ?is not to be covered mytkainerts confetti-Vetbar-gaining .a'g?re??uf?fl?. leach; imagine union; has {permitted ?hj? Earner-*5: har? :dii'ihi??c agreements, Meander a?ell b'eihound by, and will adhere to and comply ui?h?, an?!z reader-19m; :Rarner's collective bargaining agreements cage-e, hours; conditions of employ-neat. pension and welfare Pl??dl'?hli'bhi'??g?3iEX) and credits, but nothing herein contained shall be construed so as. to make Warner and Producer joint employers of any personnel. Hith respect to personnel employed by Producer, either directly or on loan out from other employers not parties to collective bar- - gaining. agreements containing pension and welfare plans corresponding to those . . 17 I: EXHIBIT A, Page 34 . Doc# 1 Page# 35 Doc ID 1628318697 Doc Type OTHER {Page u-u? contained in Warner's collective may, botushall not be obligated to, make the employer's contributions t" I welfare plans in accordance with Warnerisgeqllh?tiye;hsr and on behalf of Producer, and Producer?shall furnishi?n tion and data available to Producer and which maytbe-nec .?hayleiy?t?at to tomput?teueh contribptiona_and?pai the same to Ehe union, . guinVZEEQPEce?dr thereto. 'All bath contributions-shall - he includedyinithe sprees the-Fitters; where the pension sr-oergara plan.invo?wedfnisogre sires ss-essiqyee!s contribution, Predator as directed by'warner,'and shall remit handling in accordance with the applicable collective bargaining agreement. seer pith am. {informa- in ord?r-to? 2.05 Credits: . a Producer shall not enter intg any-agreement tonghe_gj?ing of credit or billing, in paid advertising?or pubbicifquoithbut;Earner?p prior specific approval of thevform, extent billing. Not later than 30 days after completion o?-p?inci?slgp?qt?graphy of=rhe:Piep ture, Producer will deliver to Warner a complete written statement showing the exact form and manner in which Producer proposes to make up the main and end titles of the Picture. If Producer has not theratofore delivered to Warner copies of all of its contracts containing credit obligations, Producer shall accompany such statement with a complete written statement showing the full text of all such obligations'not included in contracts theretofore.delivered. Following delivery of all such information, the parties will consult with each other with respect to the credits and will attempt to agree upon the final form of such credits and upon the release title of the Picture to be used in the United states and England, having due regard to the contractual obligations approved by Harneryand Herner's contractual obligations under collective - bargaining agreements or otherwise. If the parties are unable to agree as to such matters, the decision of Producer-with respect to the main and and titles of the Picture shall be'final, subject to said contractual obligations, and the decision of Warner with respect to paid advertisements and publicity shall be final,?subject to said contractual obligations. Producer will not make up the titles of the Picture until such matters have been determined-as aforesaid. I Unless specifically agreed:by Harneg;in wri?ihg'to'the contrana Harneris obligation to accord?credit in advertisements Shall apply only to the billing portion (excluding artwork a?d.sdv?rtising copyI-qf ado vertisenents issued by Hornet or under its?direct-control relating;primanily Eg.thei?? tore, uhich-nre deeded,prior~to the date 5,1sars a?tEr release pf: them care-(Bus shall not apply as to the credits . I to be'atg to under Paragraph 1.09 hereof); and bill- I anyncime to the following (herein called I ?recreate ?d??f?iaihghf: radio and television advertising, group, list or special advertisements, commercial tie-ups or by-produots, or any advertisements of 3 column inches or less. 'The?rights and remedies of the person for whose benefit any such credit provision is made, in the event of any breach of any such credit provision, shall be limited to the right of such person to recover damages, if any, in an action at law, and in no event shalL any such person be entitled by reason of any such breach to tarminate such agreement or seck?or be entitled to enjoin or restrain the exhibition of the Picture, and all contracts in which provision is made for the giving of credit shall expressly so provide'cn the face thereof. - Unless'instructed by Harner to the contrary, Producer oi11_includc in the main title of the Picture'presentation and distribution 0 credits in form and substance, designated by Warner, together with such credits and trademarks on the main and and titles of the Picture on Warner may specify; Producer will also include in the title cards of the Picture a copyright notice in form and substance approved by Warner and such other seals, emblems, dis- claimers and credits as may be designated by warner.7.- a {3 .9 EL EXHIBIT A, Page 35 SJ Doc# 1 Pages 36 - Doc ID 1628318697 - Doc Type OTHER (Page HHS Kai with the credits determined or pre- ?mred the extent that it can do so without with any guild or union. In no . f' Ehdwevcgu sheri??hrusr=be Ei?bie or responsible for any acts or omis- sions with respect to credits by any exhibitor, non-subsidiary distributor or subdistributor, newspaper, magazine, record company or other person, firm ,or corporation. 2.06 Studio Facilities: If the Picture is produced in whole or in part at any studio owned or controlled by Hornet, or in?which Warner has a substantial interest (herein called "Harper's Studio" Producer will comply . . with all rules, regulations and practices prevailing at such studio. All 1 duping, dubbing, recording, rerecording, scoring, special effects, editing. titling, making of trailers and other technical and mechan required in connection with production of the Picture shall be done studio, utilizing the personnel of regular departments concerned wit involved, unless Hornet expr elsewhere. miniatures, ical'work at Warner's the work early consents or requires that such work be done All laboratory work required in connection distinguishbd from release printing) shall laboratory or laboratories designated by Harner. Producer warrants.that it has no conmitnent with respect to the ?ordering of each laboratory work,.and has not heretofore entered, and will not hereafter.enter, into any agreement relating thereto. Producer shall, at Warner's request,-dcliver to "erect a written agreement signed by the labora- tory pursuant to which such laboratory agrees to hold all negative and positive film and other property in its possession pertaining to the Picture for the sole account of Harner, except that Producer may have access to and possession of the daily rushes and work prints, to the extent necessary to enable Producer to produce the Picture: 2.07 Laboratory work: with.production offthe'Picture (as be'ordered from and performed by a . 2.08? Rushes: Warner's ?monies-ri?es: as" "all of the Picture'at reasonable times negative andf?eafstse prints of the Picture.and may run or rsughrfuts,n?d cut sequences and other prints and sound tracks st:such may desire. In no event shall any daily rushes,?rou?h cuts, cut-sequences-or any other negative or positive film or sound track connected with the Picture be exhibited by Producer publicly or privately except for bone Eide production? purposes. If the Picture is produced away from Harner'a Studio, Hornet may require daily rushes and other film to be shipped to Warner's Studio or to such 'place in London, home or Paris as Warner may direct. Any costs of shipping and returning such film shall be included in the budget-and the direct cost of- production of the Picture. 2.09 Previews: Except as hereinafter 2.09, Producer?shall not preview the Pi the right-t?iprevd w, once only, its final cut of the of Paragraph.l.05, subject to'sny sconrlictihg-?ho?isions whidh3nay Eli tfin the agreement entered into with the to'Harner's right to approve the date, dine and plate 61 such ?refi?wh issrset need not preview the Picture, but may laces as it desires and whether for production do so as many times and in such or does so Warner will notify Hinkler of each provided in this Paragraph store without Harncr's approval. or publicity purposes and it warn such preview,prior thereto in sufficient time to enable ?inkler to be present. If the Picture has not been fully scored at the time of any preview, then stock music trach.supplied by Warner shall be used for such preview. All preview costs shall be'charged to the cost of production of the Picture. I EXHIBIT A. Page _36 Doc# 1 Page# 37 - Doc ID 1628318697 Doc Type OTHER (Page 38 of 37) {ref-idih :1'th? sen?Isa . galls 3 pa; law:- era. cxgepx? :to- Eh?o' skirts.spit-steamy pig: was; in; 93;; errant-?- gig uped?h?rs?i?n?; ith?e safe; vestiges:ape-:Eazegriggl? impulse. eithfa'iit' - tissues; add. $5.35 Earner; so, gaging-ea; yak-ink as: r?te?l?efa- sea; amuse-.53? app-auger; be damages-?nk on; .scpoaririve. passe of'the Picture phallmnotk ?thnuE the prior cd??ehtsc? Harper asks any puts or changes in any negative of and publicity rights in respect of the Picture and the production thereof shall be vested exclusively in'Warner subject to the provisions of Paragraph 1.13 hereof. Producer will not issue or authorize any advertising, publicity or exploitsti or the production thereof of any kind or character uh publicist, press or publicity representative without 2.11 Adventiein' and_Publicit?E theretoI not to be unreasonably withheld. . 1b)" Herpereaay assign to the Picture during the_production i . as it may deem advisable. publihity as? end the election of Warner. be regular engaged by Harner for the Picture. In eitherfevent the sasseiEsj compensation and expenses of such persons shall he ihti??h?;in?the direct host o??produhtion of the?Picture. Any and all costs incurred'or expended for advertising or re or the production thereof in respect of which provision is made in the approved budget or which may be incurred or expanded uith the seas:th mandatorqu (grog-?d?ing the cost of personnel referred to in erasure) prior t-_o the theg??ptgregto Harneersuaps beachargeg ta t?c=coat of pgo?pchionro? mg. ts seepraelgeegr?or-?as to to'which no provision_ia contained treax??: as distribution expenses. (d1 All trailers of the Picture shall be produced by Earner and not by Producer. The coat of production of all trailers for theatrical distribution and exhibition of the Picture shall be included in the?direct cost of production of the Picture. All other trailer costs shall be treated as distribution expenses. . ?crust shall consult with Hinkler with respect to the selection of the person or persons primarily responsible for the managing of i the advertising campaign for the'Picture and with respect to the trailers to be - . produced and to be used. - . 2.12 :Harner's Re' paentative: representative dhbd"Producer will keep ad 'tion of the Picture. It production is at Producer will furnish such representative Warner may designate a production? . vised as to all phases of the produc- a place other than Warner's Studio, with office space and facilities at at all times have access to. all books, records, contracts, screenplays, pro- duction notes and all other infor?ation and data of every kind relating to the Picture and the production thereof, and shall have the right to take excerpts .therefrom. The coat to Harner of such representative shall'be included?in the . direct coat of production of the PictureEXHIBIT A, Page 37 Doc# 1 Page# 38 Doc ID 1628318697 - Doc Type OTHER (Page 2.13 Production and Delivem?;8chcdule: with the production of the Picture diligently; with customary practices and standards,?and wil Production Department daily copies of daily call sheets and detailed produc- tion reports in customary form, which reports shall reflect all changes in the production schedule. 'Ihe term "production"w as used in this Agreement. shall (unless the context shall otherwise require) mean the doing, performing, crest- ing, manufacturing?and delivering of all actsl elements, materials, products and things of every kind, whether before, during or after photography of the Picture, required to fully complete and deliver the Picture to Earner in accord? once with this Agreement and the approved shooting schedule or cross-plot. without limiting the generality of the foregoing,_excapt to the extent specifi- cally provided to the contrary in Section 1 hereof, Producer will, subject to Paragraph 2.15 hereof, and provided Warner has not terminated this Agreement with respect to the Picture or-ahsndoned production of the Picture, deliver the completed Picture to Harmer not later than 9 months after commencement of principal photography or 6 months after completion of principal photography, whichever is the later. Delivery shall not be deemed complete until Producer has delivered all items enumerated in the Delivery.8chedule attached hereto or . required by any provision of this Agreement to be delivered to Warner. Time is and shall be of the essence of this Agreement and failure by Producer to complete any of'the aforesaid matters within the time herein required shall constitute a material default 9n the part of the Producer. Producer will proceed in good faith and in accordance I prepare and deliver to Warner's 2.14 Pilm Librar Pro dh-Hardrobe - .s2- Producer grants to Harner'the exclusive right to retain and use all cutouts, trims,.second takes, teats, sound effects track, dialogue track, music tracks, process keys and backgrounds, and such portions of the Picture as finally edited as may he desired by Harmer for inclusion in warner's stock shot, process shot, acund effects and music libraries, together with the right to use and grant-others the right to use the same for any purpose, but nothing herein contained shall be construed to grant to Warner any rights hith respect to any such material which Producer does not have any applicable collective bargaining or individual contracts. warmer shall not be obligated to pay Producer for any of the foregoing materials or rights, or to account to Producer for any.prsceeds derived by Warner therefrom. Warner may dispose of, as junk, all film=and sound recordings referred to in the Delivery Schedule (not including the Picture or sound negative, or_protective masters of the 'completed Picture) after they have served their purposes and are not deemed suitable for library purposes by Warner. . 511 physical properties acquired for the Picture and not consumed during production (including, but not limited to, wardrobe, props, materials, supplies and equipment) shall, as between Producer and Warner, be the property of Warner and shall be delivered to Warner or its nominee immedi4 ately after the same shall not be needed in the production of the Picture. Any revenue derived from the sale or other disposition of such properties' within one (1) year of the delivery of the Picture shall be applied in reduc- tion of the negative cost of the Picture. 2.15 . s. Prdd?cer shall not be deemed in ?Esult hereunder and shall not be liable to Earner to the extent that Producer is unable to commence or complete photography or production of the Picture at the times herein required by reason of any fire, earthquake,uflood, epidemic, accident, explosion, casualty, strike, lockout, riot, civil disturbance, act of public enemy, embargo, war, act of God, or the death. illness or incapacity of the individual producer, director or any principal member of the cast of the Picture, or the default of the director or any principal member of the cast or any municipal, county, state or national ordinance or lawl or any executive or judicial orders, or any failure or delay of the laboratory processing the negatives of the Picture or similar causes bayond Producer's control. Hornet shall not be . -11? EXHIBIT Page 38 Does 1 Page# 39 Doc ID 1628318697 Doc Type OTHER (Page 40 of 87) amassing-snailensures: be liable to ,gegapggr with facilitie reducer to the extent a, equipment or person-? causes beyond its control. In an jpment or personnel caused by any such .?le facilities, equipment or personnel? eluding Producer. in such manner as it may, ?If production oflthe Picture is the: e; on. incapacity. 9f: the Bunny df?r?a??it-T?tteesxiivisna ne?fuli?i: are}: 2ni6.nr=any? other meow-signbegs armament-=1 .Idir?ec'r swagger airplay,? for the. s-half 115?s ail-aide: 'ro ign?d?rls=spproypl, pr enactzto of the _Eigture. . .Tbe accrual and payment of all sums due Producer under of ?aragreph 1.07 hereof shall be suspended without notice .during.ell-periods: . . . That Winkle: does not render services hereunder becauee of'illness or incapacity. - (ii) That production of the ?icture involved is prevented or interrupted because of any be the events referred to in the first paragraph oftthis Paragraph 2.15. including the death, illness or incapacitj of'the A director or a principal member of the cast. . - If any-matter referred to in subparagraph above- shall exist for 10 consecutive business days. or an aggregate-of 14 business days or more} during principal photography of a Picture' or if any matter? referred to in shall exist for necks or more, warner may terminate thia.A3reensnt with involved. It genitals;an?;paymentauunder in?? ?ip 5} pariqdivf "Pict?ne.ihvb1yed? uniggag?he'eceruaIVEed ?ith?qr *hugihpss ?hyejafterlfrodudEfigives Warner written notice requiring such cruise be required hereunder. oth If any illness or incapacity of Winkler should continue for anemone {?st-ind 42?. ?13: interwar"- iie' deli-??e rot- 390: asya =s5e? it'd-finger one nope-ct?. to: any: SE j: or uh? 5?s, re use t?h en: set: its; 'Lproduc ion-r, {shearinjandft? and with respect to all Pictures theretotore herennaErL and any and.a11 literary materials and screenpley5.uhlch have theratofore been acquired or developed hereunder. - (die Harnen nay investigate able mate-21'1- e?xx ?lm! oversee. . the nature and extent of any actual . and winkier shall submit to reason- snip; in;cpnneetibn therewith, and may have his own physi- .pgnaegpehher (E) If all activities of Producer in connection with the development of_Piotures to be produced hereunder are'auspended or discontinued by reason of events referred to in subpsragraph (s)_of this Paragraph 2.15. than thalaccrual and payment of all sums due Producer under eubparagraphs and of Paragraph 1.07 hereof and the rousing of the Term shall be suspended during the period of suspension or discontinuance.. .- a" El L4 _s -22- . i 5' . Page 39 Doc# 1 Page# 40 Doc ID 1628318697 - Doc Type OTHER (Page 41 of 87) .-. i oval. q. 'provisicns of this agreement. receipt q=E~qrittea notice gram vead.deyelgpedvhereunder?- ?iyii apegi_ eta-[snares Ther?epnsisgt is see. 'ci'E a. special-.3 . intal?'ah?. and. it in exp 2.16 Default:' 1 a Any material failure, breach or default by Producer under cured within 2& hours after receipt o? tori race-mouse Bee's ?ying; th ure by kintier togpertorg his exclusiuegor gho.r1aes arner specifying the particulars, shall-constitute "events of default" for the purposes hereof and shall be referred to herein as "default"- . If any.defeu1t shall Occur, after while such default remains in effect,_uithout limiting its rights to recover damages for such default. or any other rights or remedies which warns: may have at law or_in equity or under this Agreement: Haruer may at any thus there- abandon production of the Picture under this egres- ment, subject to the provisions of Paragraph 2.1? hereof, - (ii) take over production of the Picture, as more pertitu-v larly provided for in Paragraph 2.18 hereof. Regardless of.uhetherv?arner ?hell proceed-nude: anbparar graphs or of this Paragraph-inl?hm arbor-may} ah?any time.a?tar a default has occurred and uhile such default remai?? fnzei?ect? diseh?tinueg or require any other party to discontinue. fur?ihhi?g pf Eisensina, and/or facilities for the Picture under t?ir;Ag;agmenth and may?im??iiateiy withdraw all moneys from the production agcgunt its bole signature. - In addition to its fanatic remit?ins resultisgg?foh-a default with respect to particular Pictuf?s; reg . . de'ffauiztmap'r any state: remap: gt'gagafes which. earner a theffickureg or ?ictuEEsTinyatged- nr_at.laeh a; have him respect :bn'incequityl {agreement it?r?fhate in_its entirety. but such Producerjs?righta.in and to and with ?elin?red hereunder, and any egg-a?-flliterag? materials hn'd?ztgg?r'g'gjlpi hate acquired; 11-? penetrate-?es. ego; agreed that; ~tli'or character; 526519.195: ?hjch-?n?aoty?e; r?'aeojiil?isors yuan-natal: reassigd: Egy .a agreed that Harner shall have the right to seek and obtain i to prevent the rendition of as 2.17 "Abandonment: In the event that the production of a Picture is abandoned pursuant to the provisions of the Agreeaent. the following provi- sions shall apply: Warner shall be rel whatsoever to Prdducer hereunder in conn respect to the following obligations: eased and discharged from any liability ection with said Picture except with Warner shall honor all contractual commitments entered into by Producer with the approrai of or at.the'direction of Harner (unless such abandonment was occasioned by'Producer'a default, in which-case Producer'ehall indemnify Warner against all such commitmentsEXHIBIT Page 40 . Door 1 Page# 41 Doc ID 1628318697 Doc Type (Page 42 of 87) . (ii) Warner shall pay to Producer the Production Fee payable in connection with such Picture at the times and manner elsewhere herein set forth provided that said Picture has been set for-production (as said term is herein defined in subparagraph of Paragraph 1.06) and that Producer is not in default. Any unpaid balance of the Production Pee which has theretofcre accrued and been unpaidlahell be paid not later than 10 days after such abandon- ment. Harper shall pay the installments of the Annual Over- head Payment provided for in subparagrapb of Paragraph 1.0? and the Produc- tion Pee Advance provided ?or_in aubperagraph of Paragraph 1.0? provided that Producer is not.in default. - - A . Subject to the provisions of of this Paragraph 2.1? Producer shall have no right. title or interest of any kind or character in or to the underlying literary, dramatic or musical material or screenplay or_any film. photographs. sound recordings. props. wardrobe or other material theretofore produced or created for or in connection with the Picture. .9: inrenttonanykotlih?:c?p?r??ht? infany thereof. or any of the revenues shall be free to produce and . cabbage q?:ah picture based upon said material. I ?t so}; part thereof in accordance with such arrangements as it may daeire to mshe._all without informing or accounting to Producer. whether with respect to any participating interest in the receipts of such motion picture. or otherwise. .(cl Notwithstanding the foregoing. if production oE_a Picture 'ia abandoned for any reason other than Producer's default. and if the underlying literary material for such Picture was owned. controlled. suggested-or submit- ted by Producer. then Producer shall have the option to acquire or reacqnire all of warner'a right. title and interest in and to such material and any screenplay developed hereunder. by giving written notice to Harner of its election so to do within one year {rem the date of abandonment. or 30 days prior to the date on which the rights to any literary material involved are acheg?tEH toir?' it is earlier (herein called i ){paying or causing to be paid to Harncr within an amountlequal f?r?h?-Eull amount of its costs incurred in eonngc? of such costs recouped by reason [Eetbe cost o? production of the Pictures to which such costs have been charged hereof. together with an amount equal to for in Paragraph 6.02 hereof. and (ii) delivering?top?arner;within the qption? period a written undertaking by a party haying financial-responsiuiliny satia- 'Eactoryvto Earner pursuant to which such party agrees to indemnify Harner..and hold Warner harmless. of and from all claims. demands; actions. costs. expenses and liability of every kind arising out of any executory obligations contained in any contracts or commitments which may have been made in connection with the' _propos?d production of the Picture hereunder. and for the purposes of this ;s?p?ivicinn to be parties having .ifinanhial-reg?onsibi ~-Universal Pictures. Paramount Twentieth Century-Pox Film Corpora- tiqny Corporation. The Ladd Company. and Orion Pictures Company: and delivering to Harner an Assumption Agreement . in the form prescribed by the Writers Guild of America Basic,Agreement in effect at the time. Time is and shall be of the essence of this subparagraph IE. during the option period. Producer shall propose to enter into an A - 2r. - - EXHIBIT A. Page 41 Doc# 1 Page# 42 - Doc ID 1628318697 - Doc Type OTHER (Page agreement with any third party for the production andlor distribution of the' ?_Picture on terms and conditions andfor involving material elements which differ materially from those applicable to the Picture hereunder. Producer shall . submit such different terms. conditions and elements to Warner in writing. and Earner shall thereupon have 10 days from such submission within which to elect to preempt such proposal. If Harner does not exercise its right to preempt such proposal within said 1Q day period. then Producer shall have the right to enter into the agreement with such third party and Earner shall have_no further rights with respect to ouch material. subject to subdivisions (1) and {ii} of this subpsragraph In the event Producer shall.2during the option period. cause any additional writing to be done in connection with the Picture and shall not exercise its rights under this subparsgraph Harnsr shall have the.right. after the expiration of.the sption.period..to acquire all of Pro- ducer's rightJ title and interest in and to such additional writing by paying' Producer its actuaI.cost therefor together with interest at the rate provided - for in Paragraph 6102-hereof from the date Producer expended any sums.to.the date oi paymenty? Notwithstanding anything herein contained. Producer shall bs_obiigated to exercise its option pursuant tb aubperagraph?ic) above. and' cemply with the foregoing requirements if principal photography of the Picture is commenced by Producer or by any other party under the direct supervision 'of Hinkler as individual producer thereof. '2.18 IakerOvar-Ri hts; - If'Producer'shall be in default hereunder. or if at any time the actual direct cost of production of the Picture. plus warner's esti~_ mated cost to complete, exceeds the budgeted direct cost of production by 102' or?more. for any reason whatsoever. or should Producer fail for any reason whatsoever to deliver the Picture to Earner within the time herein required. or should it be readily apparent. in Warner's opinion. that Producer will not deliverithe-Picture to Warner within the time herein required, Warner may, at any time thereafter. take over'production of the Picture by giving notice to 'Producer of its election so to do. Hdrner agrees to consult with Producer. as to such takeover. during or prior to the Zi-hoor period immediately preceding Harner's exercise or its election to take over production of the Picture. lf Warner takes over production. Producer will. to the extent it has such rights. and does hereby, assign to-warner all of Producer's contracts and all of Producer's right. title and interest in and to the Picture. the negative and 'copyright thereof. and the literary..dramatic and musical material on which the Picture is based. and will assemble and deliver to Harner all such contracts. negative and positive film. sound records and other material of every kind connected with the Picture. and?in this connection. Herner may enter upon any premises or wherever said items may be and take possession of all or any part thereof. using all necessary force so to do, Producer will'also make available to Earner and Warner may take possession of all monies theretofore advanced by Hornet in connection with the production of a Picture and not theretofore so expended by Producer. If?Warner shall take over production of the Picture. as aforesaid. and if neither Winkle: nor Producer shall be in default. (as said term is defined in Paragraph 2.16 hereof) Hinkler shell continue?to render his services as individual producer of such Picture in accordance with the provi- sions set forth in subparagraph of this Paragraph 2.18 and Producer shall nevertheless be entitled to?ail payments provided for in Paragraph 1.0? hereof with respect to such Picture. . - U1 . I .cn Doc# 1 Page? 43 Doc ID 1628318697 Doc Type OTHER (Page Earner takes over production of the Picture: i Earner may thereafter make or.caose to be made all payments representing production costs directly to the party or parties entitled thereto; the procedure set forth in 3.0? hereof shall no longer apply and Harner may withdraw any monies on deposit in any bank account upon,its sole signature: - and no payments of any kind shall be mnde'to Producer for any production costs . . in connection.with the Ficture; (ii) Harner may substitute directors, artists snd?ail ?other personnel (as to sound or picture) and may cut. edit, score and make such changes in the ricture or screenplay and production schedule thereoE as . it may desire Eree_o??any and all limitations. restrictions or conditions: Harper?nay nevertheless thereaitsr abandon production of the Picture; and will not and'it hereby waives the right to make any claim that it sustained any loss or damage by reason,?or as a result, - - I of any action taken by Hornet-pursuant to this.2aragraph 2.18. Notwithstanding:aoything herein to the contrary contained, - I Harnar shall not substitute another individual producer or individual producers . for Winkler under the foregoing provisions unless Hinkler shall fail or refuse to comply with specific instructions given to him by Warner is writing with respect_to the production of such Picture'aftcr Harner shall have?taken over - production as aforesaid. - - EXHIBIT A, Page 43 Doc# 1 Page# 44 - Doc ID 1628318697 Doc Type omen (Page 3.01 Financing: Subject to the terms of this Agreement and provided Warner has given all consents and approvals required, and upon condition that no default is in existence. Earner, will, except as herein provided, furnish or cause one or more other parties to furnish all funds required to finance the direct cost oprroduction of the Picture. Harner shall not be obligated to furnish any funds for.any obligation in connection with the Picture, unless the relevant contract or commitment was entered into in accordance with this Agree- ment, particularly Paragraphs 2.02 and 2.04 hereof. All funds furnished hera-' under shall be accounted for as part of the cost of production of the Picture, and if any such funds should be used for items not properly chargeable to the cost of-production of the Picture, Producer shall, upon demand, refund the same. or Warner may, without prejudice to any other right or remedy, deduct the same i from any monies otherwise payable to the Producer under this Agreement or otherwise. . . . a As used herein, "preproduction costf? means only: ., the underlying literary material upon which the Picture; to'?p?baaea3 :the cost of writing the screenplay based upon said literaryematsptali,an?IMcJ such amount as may be necessary, in Harper's opinion,"in connection with other preproduction activities in connec~ tion with the Picture, such as location scouting tripe, preliminary sketches or drawings or designing of costumes, tests and telephone and telegraph charges connected with'preliminary negotiations with respect to the Picture. To the extent approved by Harner, preprcduction costs shall be furnished by Harner as and when required, provided Warner?s Legal Department has approved the documents pursuant to which rights in and to-the underlying literary material are to be acquired, and all such rights have been assigned to Warner. 3.03? ,Prcductii-ongsin?auclin' subject to the provisions of Section 1 . . hereof, Warner shall not as attracts; to furnish any funds hereunder (other than.?or preprosegtgogiqbst? with Paragraph 3.02 hereof) at any time before Warner.hos elected to proceed with production of the Picture in accordance.with the provisions hereof or at any time before there shall have been delivered to Warner, and to such other parties ss'may have undertaken to supply?production funds, all such assignments, contracts and other documents as may be reasonably required to evidence and effectuate the purposes and intent. of this Agreement. specifically including assignments to Harner of the underlyr ing literary material and screenplay, agreements covering the services of the I individual producer (if other than Uinkler), director and principal members of the cast, laboratory pledgeholder's agreements, and insurance policies. Should Warner furnish any funds, or provide any facilities or services prior to delivery of any of the aforesaid items, Harner shall not be deemed to have waived any of said conditions. 3.0? Bodkin Procedures: I ?isl All production funds, whether furnished persons other than Earner, shall, if requested by Producer, be deposited into a special production account in a bank designated by Narner. No monies other than production funds shall be deposited in said account. Withdrawals from said -account shall be.made for use solely in the production of the-Picture in . accordance with-this Agreement, and shall be reflected in the production - reports made by Producer as herein provided, and shall, except as herein otherwise provided, be made only by check, draft or other order signed by a deeignee of Producer satisfactory to Harder and countersigned by a designee of Earner. Producer will designate as one of the persons authorized to sign on behalf of Producer a person designated by Hornet, but, as between the parties hereto, it is agreed that such designed of Harmer may not (unless specifically authorized by Producer) sign checks, drafts or orders except in the circumstances referred to in Paragraphs 2.16 and 2.18 hereof, or to close the account after completion of production. - Warner Page# 45 - Doc ID 1628318697 - Doc Type OTHER (Page 46 of 87) a: ?33 .recaipts and all some actually expended for the production of the Plot s. Production funds shall, except_as herein provided, be furnished from time to.tine in installments in such amounts as shall reasonably be required by Producer to meat production commitments}, Producer shall, on I Thursday of each week advise Warner?s Controller in writing of the amount required by Producer for producer commitments during the week, giving such detail as warner may require' and shall accompany each such advice with an itemized statement of All expenditures and commitments made during the preceding week; (ii) a cumulative statement of all expenditures and.commit- manta made in respect oi the Picture to the last day o?_such week: and an estimate of the amounts required to ,rl?t?ss?chahudget'item; After-c?hple?ion of principal photography the reports Liid be -delivered once every_2 weekh. The amounts reyuire35.to by Earner, shall be deposited in said Hondey of the succeeding week. i6) Thereishall?hegpaid when?due. from monies on deposit teasers account; hIEEitcms properly included in the direct cost of the ?icturetdekcE' :t?gt ail payments for facilities._lsbor and personnel furnished gn?ifor property-?nd sales taxes, insurance premiums, hangeqqend-yther items properly chargeable to the Picture may be yebyrsarneretost?ei?s ti 5?}psrtiea entitled thereto; and except susc?erzersaesse esse.??g require a production account, Garner may make costs directly to the party or est-isles: E?'e'fgss?re- - - 3.05- During the production of the Picture for 2 years thereafter} Producer shall keep complete books of account, together with vouchers, receipts and other records . showing in detail all receipts and all expenses and charges incurred in the true accurate and production?of the Picture. Harner shall have the right, at all times, to cause Producer's books and records to be checked and audited. make copies of I all such books and?recbrda and to take excerpts thersirom. All'books and L- . records referred to herein shall be kept in Los angeles. New York city or london, whichever.ia closest to the principal place of production. within 90 deye_?ollowing delivery oi the ansher print of the-Picture to Harmer. Producer . . shall deliver to Warner a statement; certified by one of its officers and its accountants, in which there shall be set forth detailed itemizations of all ure,- . (other than the sums spent directly by Warner and the receipts relating thare~ i to) and. if required by Warnerl the aforesaid books and records. 3.06 Securit - . 'Zsi Upon condition that'Producer shall not at any time be in default with respect to a Picture, all funds which Hornet shall furnish or cause to be furnished hereunder, together with interest thereon, shall be repaysble only out of gross receipts as provided in Section 6 hereof. IflProducer owns the rights in the literary material upon which a Picture is based and if Producer has not-assigned said rights to Harder hereunder, than Producer agrees that. prior to the delivery of such Picture, if Producer is holding any properties with respect to such PictureI Producer_will hold the Picture and all such properties,as trustee for Warner with like effect as if Warner had delivered possession thereof to Producer to hold as trustee for Earner. - 28 -- Page 45? Doc# 1 Pages 46 - Doc ID 1628318697 Doc Type OTHER (Page 47 of 87) If Producer executes any contracts pertaining to a Picture for the literary. dramatic and musical material to be contained therein or any contracts with directors, writers, artists and others, Producer will cause said contracts to he assignable to Warner or its designer and will assign said to Warner or its Hesignce if Warner or its dosignec so elects. EXHIBIT A, Page 46 Doc# 1 Page# 47 Doc ID 1628318697 Doc Type OTHER (Page 48 of 87) . its part to be performed and observed '-to Earner all of the rights and liens. to. swarms. metc,: Producer hereto represents and war- rants that it is duly organtrea under'the laws of the State of California; that it has taken all'necessary action to authorize the execution and delivery of this Agreement; and that it does not. and will not violate any provision of its Articles or Certificate of Incorporation, its By-Lays. or-any contract or other agreement to which.it is a party. The rights and remedies of Producer and warnnr hereunder will he governed?solely by this Agreement as the same may hereafter be amended and modified from time to time; Producer represents and warrants that it is a bone fide corporate business entity established for a valid business purpose within the_meaning of'the tax laws.o? the United'States. Producer further acknowledges_that the foregoing representations and warranties will ba?relied upon by Warner for the purpose of determining whether or not it is necessary to mate withholdings for 0.3. Padaral'taxes from moneys paid to Producer hereunder. and Producer agrees that if withholdings are not made from said payments. and if thereafter it is determined that such withholdinga'were legally required. Producer'will indemnify Warner against all less. costs. damages._and expenses relating.thereto. - .- . Producer warrants and represents that it has the right. power and authority to enter into and perform and observe the obligations on pursuant to this Agreement and to grant if anyI herein granted and agreed to be granted to Harnar hereunder. . Producer further warrants and represents with respect to a Picture but only if and to the extent that Producer acquired or acquires the rights in?the literary material upon which the Picture is based that: It'will own prior to the commencement of principal photography of the.Picture all necessary rights in and to the literary material upon which the Picture is based and the title thereof and will con and control the sole. exclusive and perpetual right to distribute. exhibit and otherwise exploit the Picture and all parts thereof and all literary. dramatic and musical material contained therein and upon which the Picture is or is to be based in any manner and form whatsoever throughout the universe. (ii) Neither the Picture. nor any part thereof. nor any of the literary, dramatic or musical material contained therein or upon which the Picture is or is to be based. nor the firmzof. corporation_of any right. license or to Harner hereunder. will violate or infringe span the passenger, trade name, copyright. literary, dramatic. music. artis?ibq?perhohal. private, civil. contract or property right or rights or-gny?ofher right of any person; firm or corporation. and that Producer has.obtained or will. prior to commencement of principal photography of the Picture. obtain valid written clearances from any and all persons. firms and corporations whose rights may be violated or infringed. 1 It has not sold. assigned. transferred or conveyed, and will not soila assign. transfer or convey, to any person. firm or corpora- tion. any right. title.or interest in or to the Picture. or any part thereof. or'any of the literary, dramatic or musical material contained therein or upon which the Picture is or is to be based. adverse to or derogatory of any of the - 30'? EXHIBIT A, Page 47 Doc# 1 Page# 48 Doc ID 1628318697 - Doc Type (Page 49 of based, required for the full and complete exercise and en .losaes, empanses-iincluding reasonable cou . officers, directors or ,payable to Producer such amounts as.Harne vreasonable. All rights and remedy uhich may be available to Warner. . ?13553: ?nances jar. grluiiegje?s granted to? {be re: . '?grEE??nEs minister ear-amine; any- person; trimmer diet-ribs t'e- err-agree; summarise :ni?i?rey'tebeuisin? shod ee-egaee production eases ihluhdle?or shenanigans. an anagram nee?veneers? of the-ulTi?thiinsi. i'iSstnat-ic's tar-smear asserts-l crohusih'ed'meeg?ln "cospon- which memoir-ere: is .or to be 'Easedag and 3r?r'6er?has1hd? jeic?sed-any?r?ghtror tak?nyany'action and assesses aid; not exercise any: are..th any. "Efions?hjich man's ?3591? 99'3"? (iv) It nuns and controls all motion picture and other rights in and to the Picture and all parts thereof and all literary, dramatic and musical materisi'contained therein and upon yhich the Picture is or is to he of all rights, granted to Warner hereunder, firm or corporation whatso- licensas?ond privileges granted and agreed to,be uithaut?pny limitation on the part of any person; ever.- . - (V) Neither the dialogue nor the photography of the Picture contains; nor will either of them contain, any raEerence to, or re- presentation of, any product, commodity or service which can be construed as an advertisement'or recommendation of such product, commodity or.service. 6.03 Indemnit Producer will indemnify, and hold Warner, its sub- sidiaries, affiliates, licensees, agents, employees and assignees, harmless of, from and against any charges, claims, damages, cost, judgments, decrees, nael fees), penalties and liabili- ties-of any kind or nature whatsoever uhich may be sustained or suffered by or secured against Warner or any-of its subsidiaries, affiliates, assignees, mployees by reason at. based upon. relating to, or arising out of, a breach of any of the covenanta,-reprasenta- tions or warranties contained in this Agreement, or in the exercise or at- tEmpted exercise of any of the rights, licenses or privileges herein granted or purported to be granted to Harmer or by reason of any claims, actions or proceedings asserted or instituted, relating to or growing out of any such breach or failure, or claim of breach, or any failure of any of the covenants, agreements, warranties or representations-made by Producer under any provision of this Agreement. Garner may set off against any moneys payable to Producer by Earner.'uhather under this Agreement or otherwise, the amount of any lia- bility of Producer to Warner under this Paragraph 4.03. In addition, pending the final determination of such_liability, Warner may withheld from any moneys may deem necessary to cover Producer's claim or action: except, however, olding to the extent that such claim cy and the carrier has acknowledged Warner and any insurance carrier involved may laim or_action upon such terms as they may deem remedies of Harner hereunder shall be cumulative and shall not-interfere with dr present the exercise of any other right or potential liability on account of any auc that.Harner sha11 not make any such uithh or action is covered by an'insurance poli such coverage in writing. compromise or settle such EXHIBIT A, Page 48 Doc# 1?Page# 49 - Doc ID 1628318697 Doc Type OTHER (Page users: -I ?5.01? gerritorz: The teen "Territory" as used in this agreement shall mean the entire universe. '5.02 Grant of xi hts: warner shall own, and to the extent that Producer has or obtains such rights, Producer does hereby.3rant to Herner, solely and exclusively, in perpetuity, throughout the Territory. (3) across: (1) ?The right, under copyright and otherwise, to ex- hibit, distribute, market, exploit, sell, advertise, publicize, perform, turn toest??unt?ahd{derijehrg?enueg in any_fbrm or manner from the Picture, car- goes.? 1 ?hgrefrgmiand orailers thereof; ., I i. its-tastes; .1. thehtricalg aeget??atr a - ,-home shoeings, educational, industrial, dangeidia?}punpoees and usages, a: trade; and in-oonnection with i?het?cr?the da?er?eg?or-profit or otherwise) to use and perform a all nominee: tussle The right to select, designateI or change the title of the-2ioture in its discretion and to release the Picture in any or all parts of the Territory under such title or titles as Usrner may designate. The right in its sole discretion to make any and all changes and modifications in the Picture which Warner shall determine to be necessary or desirable (including, without limitation, cutting, re-cutting, editing, re-editlng, additions, re-recordinga, resooring,-dubbing and/or remaking and/or reorganizing the.Pieture or any part or parts thereof) by reason o? rulings, regulations or requirements of authorities.or for the purposes.of reissue, television or substandard releases or foreign releases or to satisfy o6 any agreements or understandings between Harner and any governmental or other organiation. Further, and with- out limitation o? any of the foregoing, Haruer shall have the right to make foreign Versions (including title, superimposed or dubbed versions) and the right to make shorter versions of the ?icture end an and all other changes which it may deem appropriate or advisable for the purposes of marketing the Picture in any part of the'Territo ry; and if in the opinion of Warner the original language soundtrack or any part thereof shall not meet the require- ments of Warner or shall be deemed inisrior or defective in any respect, Harder shall have the right in its sole discretion'to dub or record a new English language soundtrack or any part thereof, and in such latter event, the coat thereof shall-be deemed and included in the cost of production of the Picture. (is) The-right to cause nonmercial messages and-announce~ to be exhibited broadcast before and after any exhibition of the Picture and to interrupt any exhibition of the Picture to exhibit, broadcast or transmit any such commercial messages and.annountemsnta. The right to use its name and tredemarh on the posi- tive prints of the Picture and in'trailers thereof and in all aduertising and publicity relating thereto in such manner, positionI form and substance as Harner may elect.? Warner shall also hare the right to indicate on all positivs prints of the Picture and in all trailers and other advertising and publicity that it or any of its subdistributors is the distributor.of the Picture in such manner and position and by the use of such words, phrases, logos, trademarks or insignia as it shall determine. . in." EXHIBIT A, sage 49 Doc# 1 Page# 50 Doc ID 1628318697 - Doc Type OTHER (Page 51 of 87) rezzt?ii?egt 16.5.? madman 45.55: ?E'rqguc?suwf "V'fce'i th 5e arid Meade-got; ?tibnfs? thereof oi. the; director. said. gate-bag; grog-1}: $331,534.! *6 3-: ri?'dixc??r to .broad the? Erma ifa'. higher] by red :e}te?tfieol Ethnic}; m4, ell; pie 13in: h? to; he: 15m: li??t?ie?ii- synapse a rea urea 11 - q; new. e.1_ ant: n's - the rear . to manufacture and procure such positive guq'nd to cou'ce the performance of ouch to? the; nib-cow 3g isotherm} ?require; 319' eithih-itfea gear-manned . :?es-Ei?ce-?h?dq?e-?a 'hgg?ft??t gel-ghee. are forgo? ire; rota pr?it-i-y?i ?11313. appraisers? and .and 'inta, comma-march as}; met-1?31 tig' S??edyle .EtgtIEcheki-eh?ef?to and copies" node-h?gricg?ep; akin-41 I ?urn-mar {was ??ibifta advertise-,- traffic? in or; com: xii-e, ijcturre or. 31:69: engrant enacts. 1f; atriuutin?e- fem 6116,9375 .feaniare?ia. merge-aggrin?ra (?end egtz?giafgsa ?ne'e?eric'cuie' me? 1535;- omega! stir-??it each. bir- M- Hathe'r- mar-L in- determine; fihtiild?i'hs any" lo?orat?r'i'eie owned or {ro?hcer weights that jias 11.6 .cmig?y??gl girl; respect priory: 5mg; iepy'cotl'ijer T?Boriaiof Got-1'5. or. 1 ergo; end-3111?- not "anew-119m any agroaeent-a: vi?th- ?h _;Epr .??r?ern?h?ll the .0181 .??ssun?lera the tired: chi-aide 3.0 Khmii-ictii?e- egg print-om: othfey'r muss-era dimer will n'oc' 132?: this hbtfi?n picture? to?; ?c'oligparphl'ie' wo?fk??ud prince. (vii) The right to cause to be uted, in connection with the exhibition and distribu -vertioiug accessories (including lithographo, program: and booklets) of on types and kinds, solely of Hornet. all coeta shall be as an expense of distribution hereunder manufactured and distrib- tion of the I'icturael ad- lobby displays, slides. souvenir which .oholl be the property arm: by Homer and charged and recouped . him: one rethink: 3153f ouch" weenie ?and to? extent as publicize and exploit the Warner- in. ire digger-ion Joey tattooing :ata ?ijgi g?nbiinc'??zeht; Iagi?i?IFos-tds; ionic-icy 62:21.11st pul'ri' ""li't'io'gi? so'e?ll'e'd cooper? fodk??rt?i?Ei?vi'hg- ensoged in with or: ?for each-ibi- tt?orm. herein: r??cnrerb'?r gg? .f?en? maze;- i 31? ?Hz-r 3151519321. masochism ipiibmr?it-Qw Lois every.- gem. it'rgd?e .ehpg-?L .- Hui-fiery] wow gage-.1103: exploitation, gob macaw gag-4 garages? gag, i?sh?e??t? were 551151 p?h 9 yogi-215g {curiae-3. :11; 45 13,613.. concrete-i egsgj?rriyins; tier-urn aloe. 'ax?lgitth'?w rim ?rszeajtl-fon 'a'lfd ?ling; kin?- relhg??i" to weights; etithe; product-?ing ?1331} - r?oix?aeujc; of Homer. {131? K?oubje?t orna- to gt may- he .eo'nt'ic?i'?j?d {if cgritgeet'hsz; pp?tgved .of ?h-?yf ?ower, rendering; oer- and, .80 man-g pub 331? ma i?i?t?rg-?th?e harem. iih'a'ne?aeosi voices and other sound. veil-i; 15:8? ream-Hinge, films: and other reproduc- the east, end. persons rendering .afervli-teo in with-the iti?c?ture-g including; eel-1 wheel lLe'd- of Producer under its contracts with coat the literary material and in and television. whether by or film or otherwise. in any language; Jot?tri?e tgapuliljjoh- or authorize the publication. of the screenplay on which the Picture is based, and . abridge-lento, tietion- -53- . EXHIBIT A, Page 50 Doc# 1 Page# 51 - Doc ID 1628318697 Doc Type OTHER (Page 52 of 87) t; 4'1 .23 _proprietor or otherwise, take such steps a . or distribution of the Picture, .license, market and exploit the The right (but not the obligation) to cauae?the Picture to be copyrighted in the name at Warner and to renew and extend any such copyright if Warner shall so elect; warner shall not be liable to Pro- ducer, or any other person, firm or corporation, if there is any defect in any such copyright. Warner may, in its own name or in the name of the copyright Harmer-may deem necessary or to prevent unauthorised exhibition or any infringement of the cepyright of the Picture, or to prevent any impairment of, encumbrance on, or infringement upon the right of Producer or Harner under this Agreement: and Garner or its nominee may, as Producer's attorney-in-fact, execute, acknowledge, verify and deliver all instruments pertaining thereto in the name and on behalf of Producer. appropriate by action at law, or otherwise (xi) The right to generally'deal'throughout the Territory in and with the Picture and the properties thereof in such_msnner as warnar may elect and deed advisable. - - - suszb: 411 right, title-and interest (subject only to the right, if an of the composer to receive customary royalties} in and to all music and lyrics and written for or in connection with the Picture {other than previously copyright.music and/or lyrics with the Picture and licensed to Producer by the copyright proprietor thereof and not written specifically for the Picture): Horne: may assign all or any part of its rights under this paragraph to any music publisher designated by Harner, including a publisher which is a subsidihry or affiliated corporation of Warner. PHONOGRAPH RECORDS: The right to use and license any other person' firm or corporation to use all or any part of the sound record- ings made for the Picture andVor all or any part of the musical scores and individual parts used in, or in connection with, the Picture for the purposes of producing or rc-producing phonograph, tape, wire or other recordings of any kind, whether in albumiform, single records, cartridges, cassettes, tapes or otherwise, and uhether or not designated.for sale to the public, electric, transcriptions for advertising purposes or any other purpose. Warner may assign or license all or any part'of its rights under this paragraph to any record company, producer or distributor of records, including any'record company, producers or distributors which are subsidiary or affiliated cor- porations-of Earner. . Hasosasozsrso ass COMMERCIAL TIE-UPS: 'The right to use, exercise, employ and exploit all of the characters, situations, objects, prop- erties,'uardrobe, designs, equipment or events depicted, described or portrayed in the Picture. Hornet may license, sublicense?snd/or assign all or any part o?.the rights granted to it under this subparagraph to distributors, sub-' distributors, licensees or sublicensees, including any which are or may be subsidiary or affiliated corporations of Earner. assure or szmsa's ssavmss: All 'right, title and inter at in and to the results and proceeds of Hinkler's services hereunder. 5.03 ?gsles Policies: Hornet shall hare complete suthority?to icture and all rights herein granted to it, hods, policies and terms as it may, in its business judgment, determine, subject to the provisions of Paragraph 1.13 hereof. Warner shall not be required to itself exercise any of the rights granted to it but may license or sublicense any or all thereof, as it may elect, to any licensee, sublicenaee or subdistributor. Harner may modify, amend, cancel, adjust and alter all sgreements,.erhibition licenses, rental terms,.sa1es methods and policies relating to the distribution, exhibition and exploitation of the?Picture and any other rights herein granted to it as it may in accordance with such sales met EXHIBIT Page 51 n. Doc# 1 Pages 52 Doc ID 1628318697 Doc Type OTHER (Page 53 of 1.. - event-2m -- gage: any liab- _-ter1ne and rentale'as Hornet may deem fair and Iv? aeenf?'dlv just and itn?cee?nee orndecreaae the eminent of any allowance to anyei?i c?'n?aee' for. goiter; "ing and exploitation, whether or not manned {IE-ii .. .5. option; and exhilirrion; log-:- theiPi-gtiire :(ge 'qE?or: .rie?ea-? u-po pr. ?4111: forgone}. or both, and: jointly license the?. diet ris- _*onhe'r. or separately. ea? it shrill. deem. egrf?me.? decide. to re?ijeege the-Picture ii: men have he tie ?-oflu- if? my rainbow-g. itself for" em linemen-incurred i'r't "ebhnecei'pni .Qherie?iqtha-ahd' 'ehh'll account ?or the'Ip'r'o'c'eede thereof- .ii'o' th??r?l?i ed 5 one a: @331 Ud-th??r?hil?lih?ve the" Pie} and;1 of . it?d enemas-:15 merger: or {isomer one; 9'1" ure- i'sr - we . 3:3" B'?E?in: granted: to it; the: examine-?of ?Eminent-:th engagement m?tw'ion. warranty, guarantee or agreement as . knew. be deriVedjromlthe distribution of is; nor. ea Mfg: aw retre??s?' ?rem- . - . .. ginger? get; ?ee-gunmen. or? chemo: re,- 13. pa the ?qih "i .. the: .- In ?no :E-lrl?t?y u'p'o?n a'n'y .cl-ai'ai ?re?ghter:that?Vermith fail-ed to realize orderean oh?i'ch :ehbulgd lioenee?el?izeo. Nazi-oer does not guarantee the pert-breadbo- {by?A any .ij'tn licen?'h?eje, 6E :eneereuv were bij' lie-Fl?! Wit-hung; there- Ehn?t- tony ench?Tlgic?ngey m?lapalk?c- payment otqeny? Jo line?pa?iy'eble to Warner :hy vtr?l?iivjdfi-Hn} Reine-r, hereunder aha-? he the? Such aa may he actually received by it .Ero?mxon'jg out?! licence; n?le?ef'iifeir?er'rellecte the? option contained in Paragraph earner-exam ligh??gp-pnohligation to delay the licensing 'of ?che; Instead.) it" shall have the right, in its sole we? at name canoe or permit any such television .. . A 50?: . ii to'j?lijej'?g a washing or other basis. Warner ney.(or .vn'ti grief; re?ne eat-lie Picture in such places in any part of (Mite far no. 1. the policies of Werner-and If: glee: --_fn3 customs" one conditions in each territory, eh?li?eiot limited-en..- reenl't'e 'o our}. renent? or law?s or herewith-inges- QE print ?where. the ??b??nof by Homer any country ?territory-aha vhgz?orerqnentrr or a'e'lf-Ilnigatgion, the. . ne'g-jegagp- be Hague: therein :sn?n be creme; jogger? Broiiucer.Acknowledges that it' . . . .. - max-be; inadr'l'eelilje Tor?n'npro'fitiob?le .to: release or distribute the Picture. on to th?esi?a?ae has} -et_ar-_ted-, end; .t?lje. at? thereof 'tfith the e'be'olute right . in neon-So?e; garner. 'ir'e??Ehalf up genre} '6'i?edf?tf'i?j; 56: any reason uhata'oever' and: in: reopen: off? anygpere "ferritzorm. nljere} egg nh'eth'a'r the Winter-e- .reureaeegag?a?a if we gem: the zeae?ea of: Ei?te' tro?eumin?a theta? 'iT'i?'?Yi the gage; .p?fi Lehic? grinding.- ere-11.3% :eima?mi lingeetqpte?- or? dissenting header fawn. ?ue uterine-z, geek-miner bit, on; agreements? nun?e??e :qrr- heme-?ner node. hy: its. awnings-zinger pursuant to any resolution"of the ?ail? organizet ion) or made by 1Werner alone e'if'li; any- marinate-:-ewe-engage; agency?relating to any particular country or territory. 5,05; ?Li cnaee?to?ontrolled meatreev y?g??nCI??L Hornet-?nay license Picture or" rli'ghata connected therewith to any -and all theatres. television stations. or other agencies or outlets in which Warner may have an interest; directly'or indirectly, upon such proper under the circumstances. a representation or 'werrancy no or control; any theatreoL a in the United States or to any thereof. ..'l'elevieion Stnt'i'one or Other Nothing herein contiined ehell be construed as by Warner that it now has, or will hereafter ha television ?etatione or other agenCiea or outlet oleewhere; or that the Picture will be licensed EXHIBIT A, Paige .52 Doc# 1 53 Doc ID 1628318691!r Doc Type ?fe. -17n- the: of and? he 'na-rket-i?ri?; OTHER (Page 54 of 37) wees-ea ?shers -oaw?hrnh Producer irrevocably constitutes hit-?: Habit?! 5 o' 5.05. - '3 sea-s estates}. measured-es {?ue {eliminates- m6. ?ah viird?xhe. . in respect of the Territory shall immediately-uia? ??oos ng?nt?u?iea; erosted'or.tnming into existence vest honorary.st Hornet; and Producer will, if requested so to do?hya?ocner. executeHsth instru?eots _n??f?ts true and lawful attorney to execute. :nEodrdfon nndg?ll instruments, documents and consents which in Warner all of such rights and to accom- ?hc??d a 5.06 Material: All rights acquired from third parties in and to the literhry materiel gincluding.all screenplays based in whole or in part thereon} upon which the Picture is based or which shall be contained therein shall be owned by Warner free and clear of any lien. claim, charge. obligation or encumbrance other than such thereof as nay be expressly provided for in the?agreenents under yhichxauch rights were acquired. Producer will, and it dose-hereby, sell. transfer. assign and set over to Warner, subject only as aforesaid, all of its right. title and interest-heretofore or hereafter acquired in_and to all such material. Warner