Common use of Distribution and Exploitation Clause in Contracts

Distribution and Exploitation. (i) The Master Distributor shall contract with Subdistributors (including the Studio Distributor pursuant to each Studio Distribution Agreement) to exploit the Film Rights to all Completed Films in accordance with the terms of the MVL License Agreement. Except as otherwise expressly provided herein, the Master Distributor shall have complete and exclusive discretion and control (which it shall exercise in accordance with its customary business practices and in good faith) as to the time, manner, terms and extent of distribution, exhibition and exploitation of the Film Rights for each Completed Film, in accordance with such policies, terms and conditions and through such Persons as the Master Distributor in its business judgment (which it shall make in accordance with its customary business practices and in good faith) may determine proper or expedient. The Master Distributor shall perform all of its obligations under each Distribution Agreement as and when required pursuant to the terms thereof. Without limiting the foregoing, the Master Distributor shall, with respect to each Motion Picture distributed by Paramount, (A) give notice to Paramount of the commencement of the “Exclusive Negotiation Period” under, and as defined in, Section 3(B) of the Paramount Agreement, with respect to such Motion Picture, as and when commercially reasonable to do so, (B) provide Paramount with all information regarding Participations and Residuals in connection with the Reserved Territories described in Section 12 of the Paramount Agreement, and (C) provided it elects to have Paramount distribute such Motion Picture, notify Paramount pursuant to Section 2.B of the Paramount Agreement of its election that such Motion Picture be distributed by Paramount under the Paramount Agreement, and provide a copy of such notice to the Control Party. The Master Distributor shall take actions corresponding to (A) through (C) above with respect to Distribution Agreements entered into with Studio Distributors other than Paramount, if applicable. The Theatrical Distribution of each Completed Film in the United States and the other Geographical Territories shall be a “wide release” (as such term is defined in the Paramount Agreement). The Home Video Distribution of each Completed Film shall be on a simultaneous sell-through and rental basis. The Theatrical Distribution and the Home Video Distribution of each Completed Film in the United States shall be through a Major Studio. (ii) Prior to the commencement of principal photography for a Motion Picture, the Master Distributor shall enter into pre-sale agreements, on behalf of MVL, with respect to all of the Reserved Foreign Distribution Rights for such Motion Picture. The target for the sale of the Reserved Foreign Distribution Rights with respect to each Completed Film shall be thirty-three percent (33%) of the Budget of such Motion Picture. The Master Distributor shall use commercially reasonable efforts to maximize the sale price of the Reserved Foreign Distribution Rights. If the sale of the Reserved Foreign Distribution Rights does not achieve such target, the Master Distributor shall attempt in good faith to make up the shortfall by, at its election, entering into other Co-Financing Transactions for such Completed Film. Any Co-Financing Amounts received pursuant to such Co-Financing Transactions (other than amounts with respect to clause (b) in the definition of “Co-Financing Commitment”) shall be counted toward such target for sale of the Reserved Foreign Distribution Rights for such Motion Picture. (iii) In addition, the Master Distributor may, at its election, enter into other Co-Financing Transactions. Any Co-Financing Amounts received pursuant to such Co-Financing Transactions shall be counted toward the target described in Section 3(c)(ii) for sale of the Reserved Foreign Distribution Rights for such Motion Picture. The Master Distributor agrees that it shall comply with the obligations set forth in Schedule 2 hereto. If any Co-Financing Transaction grants to any third party any right to participate in the Gross Receipts in a Motion Picture (other than with respect to clauses (a) or (b) of the definition of “Co-Financing Commitment” or Third Party Participations within the Participations Cap), such Co-Financing Transaction shall be in form and substance reasonably satisfactory to the Control Party. (iv) In connection with the sale of the Reserved Foreign Distribution Rights, the Master Distributor shall arrange for production financing with respect to the Reserved Foreign Distribution Rights. Any loans made in connection with a Co-Financing Loan Agreement or other Co-Financing Transaction shall provide that amounts borrowed thereunder to fund production of a Motion Picture shall be disbursed to the related Production Company on a pro-rata basis with, or prior to, Film-Related Advances made under the Credit Agreement. (v) The Master Distributor shall give prior written notice to the Control Party, together with copies thereof, of (x) each proposed Distribution Agreement to be entered into after the Closing Date, and (y) each proposed amendment to the Paramount Agreement or any other Distribution Agreement to be entered into after the Closing Date and the Control Party shall have a reasonable period of time to exercise its rights as provided in the Transaction Documents with respect to clause (y) after receipt thereof.