INDEX NO. 650251/2018 FILED: NEW YORK COUNTY CLERK 01/18/2018 11:22 AM NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 01/18/2018 SUPREME COURT COUNTY FRANK STATE NEW YORK OF NEW YORK OF DARABONT, PRODUCTIONS, AGENCY, THE OF FERENC, and INC., INC., DARKWOODS CREATIVE ARTISTS LLC, Index No.: Plaintiffs, Date Summons filed: -against- NETWORK AMC HOLDINGS SEGALL ENTERTAINMENT AMC LLC, NETWORKS PRODUCTIONS, THROUGH FILM SUMMONS STU INC., DOES and INC., AMC LLC, 1 10, Defendants. TO THE ABOVE YOU in this action NAMED ARE and DEFENDANTS: HEREBY to SUMMONED a copy serve of your to answer answer on the delivered to you the Plaintiffs' of complaint attached the at the attorneys Plaintiffs address stated below. If this serve not days the summons answer If limitation demanded within 20 delivered personally after was service you stated in the days to you of the do not personally an answer a judgment service, in the summons serve above, after State is complete, to the may the excluding of New in the York, attached be entered day you as provided by complaint. 1 of 27 of must you, of New service. serve you York, If this the must summons answer within law. within complaint against State by the default, applicable for the time relief was 30 INDEX NO. 650251/2018 FILED: NEW YORK COUNTY CLERK 01/18/2018 11:22 AM NYSCEF DOC. NO. 1 Plaintiffs designate New The of venue is Defendants requires Dated: RECEIVED NYSCEF: 01/18/2018 basis the place New York, New as the County in New reside York of trial. place York a contractual and County, County. BLANK York ROME LLP 2018 18, January to be New trial of York By: D. J rry Bernstein Nicholas R. Tambone The Chrysler 405 Lexington New Tel. Building Avenue New York, York 10174 885-5000 (212) -and- WEITZMAN KINSELLA KUMP Dale 4 ALDISERT Chad R. Fitzgerald C. Liskin Wilshire Santa AMC NETWORK 11 Penn New AMC Tel. (310) Pro Hac AMC York, New York, New FILM INC., Defendant York HOLDINGS 10001 LLC, Defendant Plaza York, STU SEGALL 4705 Ruffin Diego, 10001 New York 10001 PRODUCTIONS, INC., Defendant Road CA 92123 2 of 27 3rd California Floor 90401 566-9800 Vice Application for Plaintiffs Defendant Plaza New San York NETWORKS 11 Penn LLC, Plaza 11 Penn New ENTERTAINMENT Blvd. Monica, Attorneys TO: LLP F. Kinsella Aaron 808 ISER Forthcoming provision INDEX NO. 650251/2018 FILED: NEW YORK COUNTY CLERK 01/18/2018 11:22 AM NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 01/18/2018 SUPREME COURT COUNTY DARABONT, PRODUCTIONS, AGENCY, STATE NEW YORK OF NEW YORK OF FRANK THE OF FERENC, CREATIVE and INC., DARKWOODS INC., ARTISTS LLC, Index Plaintiffs, No.: -against- NETWORK AMC HOLDINGS ENTERTAINMENT AMC LLC, SEGALL NETWORKS PRODUCTIONS, THROUGH AMC LLC, INC., STU INC., DOES and COMPLAINT FILM 1 10, Defendants. Frank Plaintiffs Inc. Productions, LLC ("CAA") Weitzman Iser Inc. Darabont Aldisert "Defendants" or "Defendants"), and Stu allege AMC Segall and action Film against Creative LLC Inc. ("Stu Artists LLP Agency, Kinsella and AMC Defendants Holdings Productions, Darkwoods Rome Blank attorneys, this bring and Darabont, "Darabont"), their by LLP, and Inc.") Frank f/s/o (collectively Network" Network"), ("AMC ("AMC Inc. Ferenc, "Plaintiffs" "Plaintiffs"), & Kump LLC Networks Frank (collectively Entertainment "AMC" f/s/o Darabont, Network Studios" Studios"), (AMC Segall") AMC (collectively as follows: I. INTRODUCTION 1. that Having AMC's wrongful to withholding Walking litigation Dead conduct hundreds ("TWD" between recently the completed of millions or the parties well extends "Series" "Series") currently of audit its beyond from dollars through pending of AMC's accounting artificially deflated the improper in this 3 of 27 creators of the court, AMC license hit has fees. television which self-dealing, it is now records, used is the a variety In clear addition series The subject of of shady INDEX NO. 650251/2018 FILED: NEW YORK COUNTY CLERK 01/18/2018 11:22 AM NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 01/18/2018 AMC that learned in the discovery AMC against produced redact anything AMC's bad AMC. As recover employed cable guarantee that equivalent of based were "all not 4. packaging Under for that market the derivative productions Darabont's August Plaintiffs "imputed profits on $280 million AMC of not would now come CAA packaged out, exposing over breaches fee" Plaintiffs Fear The entitled for to seasons also alone. be made asserted Walking in the contractual Darabont's must to AMC series performing seven first 2013 17, which formula, TWD about are on December highest its Plaintiffs TWD Dead on the additional and claims Dead Talking TWD. 7, 2010 are redacted Series. Defendants TWD-the basis. and license formula series lawsuits AMC but AMC that has new protections. action Series, of the affiliates value truth on the against a sham fee Plaintiffs the filed self-dealing television, success lawsuit license fair for packages on the than between length, TWD, of use imputed or derivative agency pending transactions" position spinoffs their more AMC's arms' an arms on AMC's based Plaintiffs' reduce television-by that profits producer-Robert during tactics. TWD developed TWD with recently Plaintiffs producers underlying But litigation from in the agreeing Plaintiffs And, TWD contains definition. compensation on AMC's based assert Plaintiffs filed to artificially of history Studios' Plaintiffs damages and of their as part AMC 3. created after faith bad that in discovery profit its another that more. self-dealing additional Series even at issue, to its until on the to Plaintiffs and related not of millions tens learned definition accounting a result, in participate Plaintiffs to Kirkman's Darabont 2. that provision relevant faith It was agreement self-dealing evidence litigation. a profit has Kirkman's very to hide year last late to withhold below, attempted pending Kirkman-also the described practices, accounting entitled agreement to periodically 4 of 27 with AMC, audit and AMC's CAA's books rights and as the records INDEX NO. 650251/2018 FILED: NEW YORK COUNTY CLERK 01/18/2018 11:22 AM NYSCEF DOC. NO. 1 related RECEIVED NYSCEF: 01/18/2018 to the participation 2014 Series. statements to tens of millions caused by the Plaintiffs of against AMC fees subject of (the of AMC's attached an entirely that this license in New and TWD formula audit York rather license fee and than an imputed is subject to Darabont entered profit the claims TWD on improper imputed its with transactions arms' arms requiring Studios AMC that requires own which AMC with filed license to their related agreement all damages action. complaints, protection, self-dealing beyond participants which for 30, amounting participants' Kirkman's fee, contract, already-pending as audit Darabont's, license and AMC's other the that revealed provision than as well of September 2017. other regarding litigation), agreement, in July four and Kirkman above profit through breaches Plaintiffs' in Plaintiffs AMC California and records. numerous all audited 2010) to Plaintiffs, to Kirkman have (October addressed reports Robert self-dealing fee, an use and affiliates, fair length, has market fees. At 6. profile name in his negotiated with protection, AMC produced impression Kirkman the attached protection that their 2017, books actual fee revealed damages pending different license audits inception Plaintiffs' Kirkman's actual license submitted lawsuits Series' the Plaintiffs Complaint, in additional dollars In August 5. from Plaintiffs' inadequate formally of this date issued Period" Period"). "Audit (the audits of the As to profit in discovery to Plaintiffs Kirkman a profit did not definition to the on the participants and into in the obtain for prior any inferior benefit Series. redacted egregiously with agreement his negotiated him entitling improperly had Darabont TWD. agreement, other that time pending self-dealing to Darabont's. 5 of 27 broad of any he was AMC, "most favored more favorable despite However, agreement Kirkman's action, his Plaintiffs giving protection Worse in his yet, highest- nation" ("MFN") AMC provisions broad when the agreement, AMC the flatly MFN it was false and thus, refused to INDEX NO. 650251/2018 FILED: NEW YORK COUNTY CLERK 01/18/2018 11:22 AM NYSCEF DOC. NO. 1 provide RECEIVED NYSCEF: 01/18/2018 of the review other profit favorable AMC Upon from Darabont license fee, In of the Kirkman that public and is brought of Plaintiffs' to even auditors, to determine whether TWD agreement, Kirkman revised of Kirkman's was license of the Kirkman's terms key actual filing necessary filing the that agreements other though participants had more Darabont. public this agreement action This the learning and was than withheld improperly light agreements provisions 7. participants' TWD or other Kirkman's Plaintiffs' Kirkman the agreement, audit on August reports Plaintiffs' to address license to protection is subject fee in the agreement to an actual entitled audit litigation that learned to prevent rather fee, than against improper auditors gained 2017 31, then Darabont an imputed self-dealing. access to address this to the revelation. claims. II. AND JURISDICTION 8. The Defendants the are parties agreed is proper Venue and County, the of New residents contractually 9. has jurisdiction Court parties over York and their contractually CPLR § 503 agreed to venue § 301 because is in New of business place primary in this CPLR under Defendants to jurisdiction under VENUE and York, Court. because Defendants in New York reside in New York County. III. THE A. The Plaintiffs Plaintiff 10. resident screenwriter, PARTIES of the State director, Frank of California. and is an individual Darabont producer Darabont who who is a prolific wrote and and directed 6 of 27 is, and at all relevant highly successful feature films such times film and as The was, a television Shawshank INDEX NO. 650251/2018 FILED: NEW YORK COUNTY CLERK 01/18/2018 11:22 AM NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 01/18/2018 Redemption directed and The Series' Series the executive producer provided executive Series' second and producer in Los located entertainment AMC talent broker helped to a share TWD The which groundbreaking services on all and and an was season first episodes is a California Inc. and produced during corporation, with "loan-out" through company all At California. County, the its relevant which times, Darabont provides industry. Darabont with corporation, all At California. liability Network Artists of business and the of the sports deal for Series' provides relevant his its principal times, and writing Ferenc, place of Inc. was and is in the services directing Agency, located agencies. LLC in Los CAA is a Delaware Angeles County, to develop Modified Adjusted Network Entertainment the Gross Series for Receipts agent, AMC. company, liability CAA California. talent is Darabont's Darabont limited and CAA in that capacity, is contractually for ("MAGR") of the is one its role in to AMC. Defendants Defendant 14. limited its wrote television, episodes during is a California County, Creative place leading B. Inc. through Plaintiff its principal bringing other for industry. 13. entitled TWD developed several co-wrote Angeles is a and entertainment Angeles company in Los was Ferenc, "loan-out" CAA and Productions, located in the Plaintiff 12. world's and showrunner and Inc. services producing with created showrunner Darkwoods Productions, business Series' the of business place Darkwoods wrote episode, Plaintiff principal a pilot Darabont Mile. season. 11. his Green company, was formerly AMC with its principal known place as "American LLC of business Movie 7 of 27 ("AMC Network" Network") in New York Classics is a Delaware County, LLC." Company New AMC York. INDEX NO. 650251/2018 FILED: NEW YORK COUNTY CLERK 01/18/2018 11:22 AM NYSCEF DOC. NO. 1 Network RECEIVED NYSCEF: 01/18/2018 and Dead, television exhibits AMC information and entities, and AMC enhance liability company, Studios is the with successor Productions, information for agreement solely operated belief, the with information and Upon belief, AMC breaches of Darabont's 17. with its principal with to the guild AMC AMC Inc. and production entities, agreement, detriment Defendant place Stu owns AMC belief, Inc. including doing from in New of business so by production agreement Darabont's and improper with to and Defendant York controls its control Studios, means Darabont's Darabont belief, AMC Studios inception. County, wholly Stu Upon the is a publicly-traded Inc.") AMC York. under for signatory Series' limited Darabont. payments information the with Series all is the New County, the for exercised AMC is a Delaware agreement Inc. ("AMC Inc. indirectly for Upon TWD for York responsible requirements. Networks place in New Productions, company of Studios" Studios") ("AMC to AMC's party AMC over authority AMC Upon companies. breaches agreement signatory Segall Stu information and interests and LLC to Darabont's is the and as Walking of Plaintiffs. detriment of business place Studios its principal Network own AMC control to commit Holdings original the its them to the Film in interest production Defendant corporation, interests its principal to comply exercised to cause AMC Series, as the 16. Network. own Inc., and agreement has its Network The "arrangements" or production AMC-affiliated Fear and Dead, Talking "understandings" other and Studios, Defendant 15. Segall AMC belief, including protect Studios TWD, including to transactions-or so pursuant does them-with calls programming, New Upon York. AMC and to cause and Delaware Studios authority them to protect and AMC over AMC to commit and enhance of Plaintiffs. Segall of business Productions, in San Diego Inc. County, 8 of 27 ("Stu Segall") California. is a California Upon information corporation, and its INDEX NO. 650251/2018 FILED: NEW YORK COUNTY CLERK 01/18/2018 11:22 AM NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 01/18/2018 belief, Stu TWD solely (in owned 19. amend 10, are and Complaint Upon alleged here, knew and participated in counseled Defendants and aided counseled Defendants as alleged more Upon was the and Defendants, each and of the are the the of the terms for agreement agreement were other Defendants and other Defendants of Does 1 through acts in the or seek to those wrongful those wrongful 10 and Defendants, by if and 1 through Does belief, in concealing defendants 10, when 10 participated committed will Plaintiffs 1 through and in perpetrating Doe are of Defendants capacities names. information specific Doe and principal, with the and fictitious capacities Upon acts. names by Does belief, entities and/or acts, acts from below. fully agent, of and defendant foregoing AMC. true Defendants and or more one of the names those of the with affiliated those true for liable information acted are information acts Defendants is on Darabont's name though or all some unaware sue to allege discovered. 20. even belief, and/or therefore are Plaintiffs, and currently they and whose company requirements, or in part) Plaintiffs this guild information whole 1 through Does services AMC. Upon 18. were with to comply with negotiated is a production Segall in doing or alter employee, other the belief, acts alleged of ego one knowledge, the liabilities or more consent, of the other each here, Defendants' for is responsible the of the of the and other approval. As such, Defendants. IV. RELATED 21. 2013 Creative Plaintiffs in an action Artists captioned Agency, a lawsuit commenced Frank LLC v. Darabont, AMC Network ACTIONS against Ferenc, Inc., Entertainment 9 of 27 in this Defendants Darkwoods LLC, on December Court Productions, AMC Film Holdings Inc., 17, and LLC, INDEX NO. 650251/2018 FILED: NEW YORK COUNTY CLERK 01/18/2018 11:22 AM NYSCEF DOC. NO. 1 AMC RECEIVED NYSCEF: 01/18/2018 Networks 654328/2013 New (the York, asserted faith fair and has The them provided attempted to delay was Audit revealed audit, AMC under and numerous to participants County Hurd, were to the Series In Prior the of 26, Action, of in the The on heard good contractual its 2016. of Court covenant discovery were with Prior parties September 15, the audit were Kirkman's rights AMC rights, September other assess to allowing participation profit repeatedly Plaintiffs' are and audit 30, AMC alleged of audit delays, submitted which AMC, broad 2014 in July below. all (the 2017. During The the participants' profit Plaintiffs' audit in claims agreement. their submitted parallel and through to adequately in Darabont's have AMC's Series actions Superior audit against Court of reports AMC California, to AMC, in the Kirkman Court Supreme County of and Los other of New Angeles2 Angeles David Alpert, Circle of .Confusion Confusion Entertainment, Inc., ,David Productions, LLC, New Circle Charles Eglee, and United Bongo Drum, Inc. v. AMC Film Holdings, Inc., ,Charles LLC, AMC Valhalla Productions, All that clear Despite by necessary in the Plaintiffs reports contract Plaintiffs and Supreme implied September Action TWD, of the auditors protection York¹ audit. audit of the supply on Plaintiffs' Plaintiffs Despite Plaintiffs' commenced of New related inception breaches after for Plaintiffs' which MFN records the Prior in the breaches TWD. No. submission. Studios. completed, Shortly Gale Anne AMC from broad profit and statements agreements, of the Confusion by in the of Issue of the AMC's exhibition of Bransten. breach from Index 10, pending Eileen stemming agreement Darabont's obstruct 23. 1 currently refused underlying York, are is currently contract, a Note filed judgment and participations "Audit" "Audit") Plaintiffs books of Network's summary AMC's statements breach 1 through Does Honorable relief, AMC with Action the for Under to audit for declaratory and motions 22. TWD and concluded, before action and Inc., Prior The York, of causes cross-motions 2017. light of New dealing, Productions, Action" Action"). in connection obligations filed Segall "Prior County Plaintiffs Action Stu Inc., 10 of 27 in of INDEX NO. 650251/2018 FILED: NEW YORK COUNTY CLERK 01/18/2018 11:22 AM NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 01/18/2018 August 2017 actions are for here which TWD, in August Actions agreement Kirkman's to collectively AMC with Kirkman attached referred agreement MFN and rise in these complaints "Kirkman Darabont give 2017, as the to the The Actions.") not did to additional actions. of Kirkman's terms know before the audit claims because (These public of the filing of Darabont's protection. On August 24. connection with Kirkman the definition to Kirkman's additional which Actions, not had in light 2017, of MAGR, that claims 31, Plaintiffs' discovered of the public important revealed auditors agreement in provisions related Kirkman's undisclosed submitted of AMC's because of filing audit reports 7, 2010 with revised to address obstruction. V. BACKGROUND A. Darabont 25. Studios A TWD Darabont's true (the successor things, copy of to Stu in interest sets forth the services, producing a long-form executed Agreement" Agreement"), "Darabont correct and Agreement terms Series the through Darabont Segall and compensation services, Inc. for predecessor-in-interest as Exhibit is attached Darabont The the Series Series' Series Entertainment, LLC, AMC Networks Inc., Stu Segall Productions, " 1 through 40, Supreme Court of New York, County of New York, that the New York action has been consolidated with Robert understanding "Does to California 2 and/or 1. episode bonuses, AMC Stu AMC Agreement, first production Network transferred August dated Studios' AMC Agreement Production, producing agreement among first script, directing Segall. Studios is the other episode services, I LLC, and Inc., Five Moons Productions Plaintiffs' Index No. 655380/2017. It is Kirkman's action in California and dismissed. Circle .of Robert Kirkman, 44 Strong Productions, Inc.; David Alpert; LLC; Glen Mazzara; of Productions, LLC; New Circle of Confusion Productions, Inc.; Gale Anne Hurd; and Valhalla Inc. v. AMC Film Holdings, LLC; AMC Network Entertainment, LLC; AMC Networks Inc.; Stu Entertainment, Segall Productions, Inc.; Stalwart Films, LLC; TWD Productions, LLC; Striker Entertainment, LLC; Five Moons Productions, Inc.; AMC TV Studios, LLC; Crossed Pens Development LLC; and Does 1 through 40, Superior Court Robert Kirkman; Confusion of California, County of Los Angeles, Case No. BC 672124. 11 of 27 INDEX NO. 650251/2018 FILED: NEW YORK COUNTY CLERK 01/18/2018 11:22 AM NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 01/18/2018 consultant screen services, establishes Darabont's Agreement also statements related to the and Studios' production and importance of collectively entitled which it did. air its on AMC own would designed purposes actually dealing with definition. Because the the both Series. accounting of (See the Ex. the license to profit between transaction. with AMC fees a series, participants the an ILF such This differs would from be used as Plaintiffs studio the I 12 of 27 situation Plaintiffs are the itself, it to itself the to Series, fee" ("ILF") for right the MAGR no license network due in which Series to like company to calculate and and self-produced to itself because MAGR of licensing license credit minus industry the a vertically-integrated may vertically-integrated and AMC if that, AMC Series. to produce Series of receives to a share AMC, an "imputed When 1., ¶ B(13)(d)(ii).) broadcasts the provides definition elect writing, as Modified Studios of the success could known in the for series for to a share entitled stature producing Agreement MAGR calculate and be exchanged nature Darabont a long-form and AMC be both would Plaintiffs' industry. to fees funds AMC is also on the based of receipts original Agreement, AMC The MAGR of Darabont event, produces of to 25% of entertainment Agreement a pool CAA AMC, "tentpole" or a flagship network. to define broadcast AMC agreement to up prepare gross CAA's developing of a percentage participation addition Darabont the ("MAGR")-essentially MAGR In this on based in stature, under deductions. Under 28. of Darabont's also Darabont The profit in the expertise and participation), productions. AMC's to audit with is entitled (profit theatrical and rights certain Under on Darabont's audit an artist Series Receipts costs 27. based the works auditors Darabont from Gross with using for producing, profits Adjusted Series is typical As as to derivative Darabont provided 26. directing, rights compensation contingent and credits, a studio fee to the for need self- licenses a INDEX NO. 650251/2018 FILED: NEW YORK COUNTY CLERK 01/18/2018 11:22 AM NYSCEF DOC. NO. 1 television RECEIVED NYSCEF: 01/18/2018 to an unaffiliated series license fee entities engage in true such participants 29. the and for negotiated which the and Affiliated TWD Companies serve entity is no to the to protect need "impute" to and other, the programs." 30. The the a unaffiliated of profit interests The first MAGR definition] will be no MAGR participant with broader MFN MAGR participation favorably than MAGR favorability MFN provision less favorable respect to the "With states, . . . in no event is defined of the also for MAGR than Series" any the "the definition with shall 11 13 of 27 "AMC's third (the pay on terms party "Affiliate AMC to for right requires license license fee the participant be determined fee "most [in set applicable to any The be defined based the other second, Artist' of Artist's calculation on favored Darabont's ¶ 13(d)(ii)(G)). to the participation distinct two imputed relating individual specifically to the would with studio. ; id., MAGR Artist's other Network MFN" to matters an comparable Provision imputed "ILF (the respect shall that states to have that added) Darabont provides should Darabont (emphasis an unaffiliated by that, elected unrelated AMC what to ensure had with Transaction AMC guaranteeing terms monetary Affiliate produced AMC Agreement transactions of wanted if by controlled Accordingly, 1. ¶ 13(d)(iii) value Agreement provisions. provision this market programming Darabont similar than Series. be on (Ex. put, fair to the the entities Darabont position Darabont into the Series, worse will enters Simply equal comparable that that the in the language comparable broadcast agreed one provided produce company Company Provision" Provision").) nation" be in no Affiliated Transaction for he would obtained for ILF broadcasting unaffiliated distributors the from Agreement and producing with transactions is paid negotiations Darabont the be exercised, independent fee there situation, as Plaintiffs. of both option license arms-length Because option this an actual because In that network. Series; on Artist's less it being MAGR to INDEX NO. 650251/2018 FILED: NEW YORK COUNTY CLERK 01/18/2018 11:22 AM NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 01/18/2018 definition taken id., not and whole, as a whole 31. book of copy the of defined, used (id., the ¶¶ third 33. "No In the provide supplier party actual AMC license Agreement. network case for sales of other an ILF (or fee and and of "MAGR as a MFN" ; AMC to an Indeed, the in their within if there is no AMC last be charged participants agreements, also the third fee ¶ 11(b); provides production into regarding (including the party supplier emphasis 11.b. AMC's initial Darabont) comparable I 14 of 27 sentence be thereof such supplier producer/deficit for exhibited that mention of the where shall negotiation of Network entity is no Section 100%" of "5% 2. added.) AMC company There faith to good correct and definition standard parameters if true "MAGR usual that, MAGR. of sentence the Option as Exhibit of a grant provides, subject financier, (Id., a license TWD with stature." impute shall that A is attached include definition in accordance paid Agreement fees Agreement Walking Purchase Agreement" Agreement"). Agreement MAGR a in "The a "Literary into "Kirkman Kirkman Kirkman overhead) Author's Kirkman Studios (the rights underlying entered (the producer/deficit fee with The pay Kirkman for consistent financier) having accounted and the Network of the of the 11(c)) owned 2009 30, version and 11(a) financier producer/deficit AMC terms as to distribution (including would material computed, by and publicly-filed The MAGR and November dated recently 32. created Kirkman series, Agreement" Purchase taken definitions" MAGR several definition Agreement Kirkman Because comic from terms MAGR participant's added).) TWD Kirkman's Dead" individual (emphasis ¶ 13(d)(iv) B. on based to another as compared right, of Kirkman license fee." AMC chose provides that TWD, rather an ILF than in the Agreement (Emphasis to expressly "no it television states: added.) INDEX NO. 650251/2018 FILED: NEW YORK COUNTY CLERK 01/18/2018 11:22 AM NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 01/18/2018 distribution license (See fee.") in pertinent and elect to make [Kirkman] Pilot to, the any right or aspects on terms for AMC C. which Conceals production copy to such or assert any filed the Prior of the from of these MAGR, third the party agreements paragraph on other Kirkman 3. Although Series 24 of with and exploitation have offered (in parties monetary lieu thereof AMC terms comparable unrelated negotiation." Language on December June Series profit (Ex. third so. the or in of, agrees party emphasis 2, ¶ 24; agreed to MAGR. Kirkman Prior AMC Although Agreement 15 of 27 Darabont 2013. AMC included participants, in the I From which produced agreements, the 17, 4, 2014, Agreement parties relevant be on arms-length Action Action redacted third to do Provision" Provision"). Prior the should consideration transactions Agreement's with In distribution distribution AMC AMC that it appropriate deems that provides [Kirkman] its production, to unaffiliated similar Transaction Kirkman claim will after imputed Agreement informed AMC Companies into has production, Companies.) programs agreements be redacted of Kirkman's enters in the as Exhibit provisions AMC such to Kirkman with where rights Affiliated the Plaintiffs correct attached thereof, connection and to object with Affiliate of AMC's copies in as, when to Affiliated comparable 35. document same transactions ("Kirkman's added.) could waives the offering AMC's distributors and Series, attributed the AMC that Companies and Receipts Affiliates," acknowledges production/distribution/exploitation addition with further Gross added.) with "Dealings heading Pilot Series, to the emphasis of Affiliated use of the and applicable that the expressly respect 1, ¶ 13(d)(ii); "[Kirkman] exploitation of the Ex. part: with be charged Under 34. may shall fees by AMC that Kirkman. in the it relates (entitled Prior certain to produce directly first its redacted heavily including Action agreed made Action to the all calculation With true is provisions unredacted "Dealings A INDEX NO. 650251/2018 FILED: NEW YORK COUNTY CLERK 01/18/2018 11:22 AM NYSCEF DOC. NO. 1 TIVE); RECEIVED NYSCEF: 01/18/2018 Affiliates" Affiliates")-which — contains entirely redacted Action. (Id.) from AMC's 36. to obtain failed that the had no Kirkman transaction exception the participant that Kirkman did a different others or her Prior false impression that Kirkman Kirkman Darabont not. Agreement. obtained in affiliate each with instance, transaction provision aaa agaffiliate ~wwwwwawwm ~@gaumww~~ gw ~ vwagw~~if Darabont Thus, protection Darabont Kirkman However, and Agreement, Agreement. of the participants did in his transaction affiliate in the term agreement. transaction produced to the profit Some above-is AMC in the an essential and in his affiliate in the Prior Darabont the fee language following audit. facts: improper Darabont and superior was believed reasonably agreement, protection (a) AMC Network the contemplated concealment Provision yet, from and AMC the to pay AMC AMC now and I 16 of 27 the fee other to disclose Agreement transaction license Kirkman's failed Studios been numerous to provide Kirkman licensing Darabont contradicts failed Specifically, that has an actual language-requiring undermines Worse Darabont's that AMC's Transaction Action. requires (b) for license contractual and TWD. agreements, Darabont's reason Affiliate during TWD; inferior redacted on the whatsoever materially had a provision that different has thus Darabont protection thus AMC obtain not The auditors and gave Agreement discussed to anything Kirkman. 37. Kirkman's redactions participants such had by Kirkman Kirkman was in their believed obtained of the Provision of Kirkman, aw~) w~ profit AMC v~ ~ disclosed participant's~w ~agmw~ asm~ ae'gw ~ wowgamawwmwg reasonably taken profit Transaction Affiliate transaction that to believe provisions the and improper Agreement several are version affiliate any reason There the Kirkman's contains an actual between license AMC exposed. publicly than profit participants. language no fee AMC that positions and an ILF- rather to Darabont's from concealed to an ILF reference for Studios has exhibition and of AMC INDEX NO. 650251/2018 FILED: NEW YORK COUNTY CLERK 01/18/2018 11:22 AM NYSCEF DOC. NO. 1 Network RECEIVED NYSCEF: 01/18/2018 for which the that mandates AMC on which comparable (not any enters programs is governed into similar after arms-length Kirkman's by transaction licensing with transactions terms unrelated negotiation" negotiation"-i.e., third that AMC Studios to disclose this language Transaction Affiliate on monetary "be between TWD for license imputed) TWD of license AMC and with comparable the of terms monetary Network actual the set at fair be terms for distributors party the Provision, market value. AMC's 38. MAGR Darabont's AMC's the Action Prior Agreement Transaction ILF Transaction is flawed judgment in the entitled Prior Prior MAGR Agreement fee to be paid to the Action the not does and benefit is that and not does by allow AMC of this because in for Network "better" the be pending "better" than an ILF at all AMC language. but instead for Studios the Indeed, Agreement uses I 17 of 27 TWD. primary an ILF for TWD for AMC of the This summary Kirkman's the fair Darabont defense TWD. that an actual Thus, because as to it is not), Darabont's-in instead in the Affiliate occurred motion requires Prior Affiliate (which correct AMC by Darabont's ever affiliates was made in language in the discovery imputes by of concealed Darabont's Studios substantially to Darabont that Plaintiffs' position of of violation a serious arguments governed AMC between if AMC's would AMC that a breach of the extent the Action affiliates as addressed and disclosure key Prior ILF to the transaction But, definition negates in the between incorrect, Proper reduced language is itself to Darabont obligations, significantly apply no Action. audit Action. position any argument license taken Provision, contractual have "transaction" of part Prior concealed has Provision is not Kirkman would Kirkman's AMC Action. in the obligations because of AMC's a breach MFN, discovery Kirkman failure market would raised an actual be in the license fee, INDEX NO. 650251/2018 FILED: NEW YORK COUNTY CLERK 01/18/2018 11:22 AM NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 01/18/2018 is no logic as to the Under participation entertainment audit of the the reports public Plaintiffs' were of the disclosure Angeles reports were and of the & Douglas in Los revised subsequently an audit inception Hacker, by audit defense of the TWD strains fee. conducted from Studios located this Records conducted accounts license Plaintiffs AMC Although affiliates. who Kirkman Agreement, the from LLP Company, to which had (the in television submitted resubmitted through Series specialize initially profit to AMC AMC on August in July 2017 31, been previously and withheld Auditors. 40. 2011 was audits. industry The in light public and Agreement, from audit to an actual Books Darabont The certified at all apply received 2014. 30, "Auditors" "Auditors"), 2017. the statements September not AMC between occurs of AMC's Audit 39. that it would ILF, Plaintiffs' D. from transaction" "actual there The through September but including, which audit, not 30, limited AMC a) Apple's iTunes through September rather through 30, the AMC than should a mere September 20% 30, inception the numerous of the of the breaches in October Series Darabont Agreement following: licensed is distributing AMC, services. the period revealed 2014, service. treated improperly not to, covers TWD to Apple only reported AMC after 2014, EST As by 20% of the deducted iTunes reported royalty. 2014 via electronic more and of the a result, AMC $18,000,000 I 18 of 27 through distribution even a distribution that the AMC Apple, for its from receipts Audit Apple though fee it received underreported during from fees. AMC, through ("EST") it received revenue by revenue has sell own is charging 100% than its distribution as direct revenue TWD have Apple for Apple from Period. EST INDEX NO. 650251/2018 FILED: NEW YORK COUNTY CLERK 01/18/2018 11:22 AM NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 01/18/2018 AMC b) Channels of to a 20% subject Bay AMC TWD. distribution fee. ranging from distribution fees at 10%, inclusive its receipts third the third does not allow AMC distribution. Under whichever contract provision improper 2014 by than more On a hit c) their appear products fees). and AMC Here, Hyundai, failed integration on has for and any reduced certain during other will AMC on fee Kirkman the belief, is engaging are entitled AMC a minimum, September often to has 30, substantial pay fees a series (so-called product product integration fees Audit the companies to account is distribution through receipts AMC Plaintiffs At own AMC's caps unless provision, their charging Period. of episodes $1,575,000 is required Audit for fee to Plaintiffs. companies TWD, during from MFN subdistributors, also and distribution gross these 20% own other and whereas fees, its International video, are information result Fox Agreement assessing Upon the to account failed revenue AMC fees, and screen at least totaling to account fees parties Darabont fees best the receipts third MAGR nets like from its sub-distribution during series of The to charge $14,000,000 home any Darabont's distribution international, these distributors. party in direct applied of distribution party from Agreement 100% However, with agreements certain 5% to 20%. fees the for is reporting distribution deducting sub-distribution into Anchor and ("FIC") distribution entered who Period. have for to Plaintiffs To likewise all integration from extent the paid to have Gerber AMC product integration product revenue. AMC d) Season by more 5. According than $2,800,000 underreported to the for payment these license fees schedules, episodes. I 19 of 27 from AMC FIC has related to understated Series the episodes gross in receipts INDEX NO. 650251/2018 FILED: NEW YORK COUNTY CLERK 01/18/2018 11:22 AM NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 01/18/2018 As caused FIC to license AMC affiliate, in all of AMC's comparable to the unrelated Sundance for receipts transactions Transaction To by having third generated has distributors party like subject are its by during on to and Upon other back with comply LLC (" Striker" ("Striker") and the reducing TWD must transactions information disguised license terms similar into artificially similarly FIC 15% to gross affiliated AMC Darabont's Affiliate Elvia LLP, and Frank, music charged for fee improperly and various services AMC addition, of the to 35% improperly as its merchandising gross revenues is charging its gross reducing own receipts 50% by than more Period. administration AMC h) In merchandising, included receipts 25% retains agreements. Audit the Entertainment Striker TWD. TWD AMC gross ancillary for licensing $3,400,000 g) Striker hired agency fee Cashman AMC that TWD, Agreement, "monetary programs." for an Affiliate enters Company fee Darabont the be on fees AMC FIC, ("Sundance"), to Darabont's comparable license extent transactions AMC distribution named for Under Asia. license Affiliated with Provision. licensing AMC's the the deal Channel subject are that requires the and affiliates a below-market Series. such its distribution International in Europe distributors party television Sundance on which terms paid f) and with the all affiliates, to territories which third foreign Series transactions Provision, belief, the several Transaction with of AMC's part e) that soundtrack and fee against receipts revenue, in on top of publishing. charged are distribution a 50% on music law receipts publishing fees firms paid to FTI including generally performed I 20 of 27 Loeb an accountant Consulting, & Loeb in-house LLP by and studios Pryor and that INDEX NO. 650251/2018 FILED: NEW YORK COUNTY CLERK 01/18/2018 11:22 AM NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 01/18/2018 should were be absorbed overstated AMC's Comic-Con AMC production and failed the extent credits than $1,750,000 during the the failed to include as an offset engaged be treated k) AMC Plaintiff practice as an offset against deducted Inc. Ferenc, tax its in this improperly tax credits AMC against production seasons, production costs. from Agreement for filming as an offset Season other for a TWD in $37,600 against corrected ultimately for $414,499 fees $18,800. only credits for Darabont The Georgia statements. $800,000 AMC of Georgia of cost State these distribution Period. for the participation Audit was from from this should invoice credits AMC's a result, a marketing included $800,000 assigned to include by tax receives has charges corresponding Plaintiffs' on AMC received As initially costs but charges. distribution AMC Georgia. overhead Yet banner. j) AMC's more by i) error, by this 4 to an affiliated on the costs the MAGR not does Series. allow for for To tax Georgia entire Plaintiffs' entity profits this deduction. AMC 1) participants. extent and that reduce profits, profit respective The was without interest interest inflated are it is a breach participants applied as a result in advances $1,500,000 does advances Plaintiffs' m) statements Agreement participants' other to other advances on their Darabont The deducted improperly not from deducted of the for allow MFN these deductions. Plaintiffs' to provide advances profit And, profit provision comparable providing to other paid to the statements those to Plaintiffs based in MAGR. to AMC's of AMC's production improper I 21 of 27 costs practices on Plaintiffs' discovered participation during the INDEX NO. 650251/2018 FILED: NEW YORK COUNTY CLERK 01/18/2018 11:22 AM NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 01/18/2018 And, when statutory rate audit. the n) extent the that favorable of rather than right any participants who their additional any recent an actual paid license fee, which Darabont's Affiliate whichever contract fee fee subject to be more Transaction Provision, nets the more at all. Plaintiffs are favorable result subject to AMC has To the entitled ILF to the under the extent that Transaction Affiliate Plaintiffs' than favorable be to TWD for Studios of whether to Kirkman's him entitles itself MAGR entitled Actions. AMC must question the Plaintiffs' to calculate license fee with provided are Agreement to To more Plaintiffs Kirkman Network license raises Provision, to an actual provision actual or were claims, Kirkman the AMC from fee or determined is deemed that at above. obtained provisions, in the identified disclosure license entitlement claims license an imputed Kirkman's Provision public Transaction Affiliate to use audit discussed Actions additional revealed MFN Kirkman MAGR respective interest period. MAGR the of the to pre-judgment entitled audit the contains that auditors are during are part their impacting Plaintiffs due Agreement an imputed Kirkman's were Darabont The benefit that The of benefit is obtained, profits through o) the for provisions information to the a judgment benefit formula and of MAGR Darabont's MFN. After 41. AMC on response 42. supplemental several to the Plaintiffs about occasions audit their the audit audit reports but claims, to AMC, AMC Plaintiffs never reached out to a substantive provided reports. Plaintiffs audit submitted of recently all profit provided participation notice to AMC statements 22 of 27 that that Plaintiffs post-date will be conducting September 30, 2014. a INDEX NO. 650251/2018 FILED: NEW YORK COUNTY CLERK 01/18/2018 11:22 AM NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 01/18/2018 Upon 43. by a 50% charging and merchandising for another profit and distribution fee commercial tie-ins, participant in more resulted information than AMC belief, on revenues damages CAUSE FIRST Breach 44. Plaintiffs as if fully set forth 45. incorporate part waived, or made terms has as alleged and 40 distribution fee fee to 35% has to date. ACTION in paragraphs 1 through of this 43 Complaint of the of the conditions, Darabont and covenants, promises except Agreement, required as excused, and will and breached, continue to breach, Darabont the as follows: the committing breaches discovered the by Auditors outlined in above; Plaintiffs' b) records Plaintiffs' Plaintiffs distribution 35% AMC. materially By all conditions by above a) paragraph favorable as Defendants) allegations performed impossible AMC Agreement have as to the 46. such rights to Plaintiffs here. Plaintiffs on their the obligation Contract All (Against MFN ancillary to Plaintiffs OF of its to a more to adjust failure in additional $1,500,000 for agreeing The breached received while onTWD. also By obstructing but including, not to conduct ability limited to, to disclose refusing the the audit Kirkman of AMC's books Agreement and to the Auditors; c) By Agreement and Agreement in the d) 35%, by By in contravention to comply failing improperly Prior with the the concealing MAGR MFN relevant provision provisions in the of the Darabont Kirkman Action; to reduce failing of the MAGR the distribution MFN provision. I 23 of 27 fee on ancillary rights from 50% to INDEX NO. 650251/2018 FILED: NEW YORK COUNTY CLERK 01/18/2018 11:22 AM NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 01/18/2018 47. a direct As Plaintiffs been have and in an amount damaged of AMC's result proximate of the breaches at trial, to be determined Darabont in no but Agreement, event than less $10,000,000. SECOND Breach of CAUSE OF of Good Covenant Implied All (Against 48. Plaintiffs set forth as if fully 49. among incorporate in every of everything that contractual its Darabont Agreement receive the among other and and fair by engaging in bad to be determined each that of faith faith good conduct the Complaint has will party do purpose. in the implied dealing Plaintiffs' to frustrate in bad engaged party' party's another contract's fair and intended AMC Agreement. with contracting do to accomplish covenant the and Failing faith rights conduct to by, refusing to provide with Plaintiffs the of Kirkman's benefit definition; b) Obstructing c) Improperly Action in a manner transaction As dealing of this is a covenant Agreement, to interfere anything and it will breached Darabont do benefits, Plaintiffs' 51. 47 things: MAGR affiliate Dealing 1 through Darabont the will party has a) Prior in paragraphs including presupposes of the benefits no rights contract the AMC 50. Fair and Defendants) allegations contract, that parties contracting enjoyment Faith here. Implied the the ACTION a direct implied at trial, audit that led Kirkman the redacting Plaintiffs and rights, Agreement that to believe during Kirkman in the discovery had not received protection. and proximate in the Darabont but in no event result of AMC's breaches Agreement, Plaintiffs than $10,000,000. less 24 of 27 have of the been covenant damaged of good faith in an amount INDEX NO. 650251/2018 FILED: NEW YORK COUNTY CLERK 01/18/2018 11:22 AM NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 01/18/2018 THIRD CAUSE OF ACTION Judgment Declaratory All (Against 52. Plaintiffs set forth as if fully A 53. AMC's (and AMC that Kirkman are imputed to under license actual license belief, AMC the rights 56. Plaintiffs' (1) (2) subject Kirkman's now rights and duties 1 through 51 of this Complaint seek formula, actual license the the is necessary Upon Provision. will a determination by of the and and and rights (1) at this that they Plaintiffs' Plaintiffs information provide the Court. and Plaintiffs of the duties time from Kirkman's not of the conditions appropriate of it the fee contend or (2) Protection, AMC that license better to the that claiming contend also AMC and Agreement by an actual Plaintiffs that terms ILF also requires Transaction determination and parties, Darabont to ascertain the another. a declaratory subject fee deflated Agreement, contend Darabont Series. ofTWD. absent to honor determination Plaintiffs also Plaintiffs as to the Transaction Affiliate the Plaintiffs instead Affiliate provisions into under Provision. and between exists, deliberately Darabont a judicial to one has in the Plaintiffs contract entered broadcasts to Kirkman's obligations duties egos an ILF Plaintiffs' desire judicial ILF and initial MFN otherwise. two for for to subject of AMC's and arisen, Transaction allow MAGR of the A Agreement. not Studios Plaintiffs a declaration parties' AMC contends 55. has AMC Affiliate does fee, better in paragraphs alter that contend the fee, allegations respective and/or principals Agreement entitled, their about to Darabont's Network with controversy Plaintiffs subject AMC justiciable their and the here. affiliates) 54. is not incorporate Defendants) to contract judgment Plaintiffs' provision, that Affiliate subject Provision. 25 of 27 Plaintiffs are Transaction to Kirkman's entitled to the Provision, or Affiliate better Transaction of INDEX NO. 650251/2018 FILED: NEW YORK COUNTY CLERK 01/18/2018 11:22 AM NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 01/18/2018 Plaintiffs WHEREFORE, A. to As Plaintiffs' in an amount damages fees, B. Good trial, Faith but and in no C. Fair formula, subject contract provision, D. New January to York, 18, Third contractual Plaintiffs' Granting New Breach in no event to Kirkman's Plaintiffs plus of than less as follows: Defendants Contract, of rights and any monetary awarding plus $10,000,000, of the for duties entitled Transaction relief that Court the actual and just and proper. LLP g By: B D. erry The Chrysler Lexington New Tel. .72- nstein R. Tambone 405 Building Avenue New York, York 10174 885-5000 (212) -and- KINSELLA KUMP Dale Chad Aaron 808 Santa 24 26 of 27 WEITZMAN LLP & ALDISERT ISER F. Kinsella R. Fitzgerald C. Liskin Wilshire Monica, Blvd. 3rd California Darabont Plaintiffs' 2018 Nicholas the ILF (1) Kirkman's deems ROME and of Provision; BLANK York better or (2) Transaction Affiliate a judicial withTWD to the Provision, costs; Judgment, Declaratory in connection are and fees, of at to be determined attorneys' interest, Covenant Implied in an amount damages Plaintiffs further Breach for Action Cause that Affiliate Action of monetary $10,000,000, a declaration subject but Cause awarding than parties' for of Action at trial, Second Plaintiffs' including Cause against judgment costs; Plaintiffs' less to of the Agreement, and Dealing, event As declaration Dated: to As First to be determined attorneys' interest, request respectfully Floor 90401 license fee FILED: NEW YORK COUNTY CLERK 01/18/2018 11:22 AM NYSCEF DOC. NO. 1 INDEX NO. 650251/2018 RECEIVED NYSCEF: 01/18/2018 Tel. (310) Pro Hac Attorneys 27 of 27 566-9800 Vice Application for Plaintiffs Forthcoming