270 Legal [Sample Agreements]

MASTER COVERED PICTURE PURCHASE AGREEMENT

This MASTER COVERED PICTURE PURCHASE AGREEMENT (this “Agreement”) is made and entered into as of May 25, 2007 (the “Effective Date”), by and between LG Film Finance I, LLC, a Delaware limited liability company (“Purchaser” or “FilmCo”), and Lions Gate Films Inc., a Delaware corporation (“LGF”). Capitalized terms not otherwise defined herein shall have the meaning set forth in Schedule A hereto, the provisions of which are hereby incorporated by reference.

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1. PURCHASE AND SALE OF COVERED PICTURES.

1.1 Purchase and Sale Obligations.

1.1.1 Covered Picture Purchase and Sale Commitment. Subject to the terms and conditions of this Agreement, Purchaser agrees to purchase and acquire from LGF, and LGF agrees to sell to Purchaser, the Rights throughout the Territory held by LGF as of the Initial Investment Date (which shall include all Rights held by LGE Affiliates immediately prior to the Initial Investment Date) for the applicable Covered Picture, free and clear of all Encumbrances, other than the Permitted Liens, in and to (a) the first twenty-three (23) Motion Pictures (including the first ***** Excess Cap Pictures) which meet the Covered Picture Criteria that are produced or acquired by LGF and which have their respective Initial Theatrical Release Dates during the Investment Period or the Catch-Up Period, if any (the “Covered Picture Commitment”) and (b) in the event the first twenty-three (23) Covered Pictures Purchaser acquires from LGF during the Investment Period include less than three (3) Sequels, each subsequent Covered Picture (x) which is a Sequel, and (y) is produced or acquired by LGF and has its Initial Theatrical Release Date during the Sequel Investment Period up to a maximum of the Sequel Target. With respect to such Covered Pictures (including Sequels) which are acquired by Purchaser from LGF hereunder, from and after the applicable Initial Investment Date for such acquired Covered Pictures, Purchaser shall be responsible for all Third Party Participation and Residual payment obligations with respect thereto. Purchaser’s obligations under this Section 1.1.1 shall be referred to as “Purchase Obligations”, and LGF’s obligations under this Section 1.1.1 shall be referred to as “Sale Obligations”. Notwithstanding anything in this Agreement to the contrary, Purchaser (x) shall have no Purchase Obligations and LGF shall have no Sale Obligations during any Suspension Period or after the occurrence of a Stop Funding Event, and (y) shall not be required to acquire the Rights to any Covered Picture if, after giving effect to such acquisition, the FundCo Aggregate Investment Amount would be in excess of the Maximum Investment Amount. For purposes of calculating the number of Covered Pictures transferred to Purchaser in satisfaction of the Covered Picture Commitment or the Sequel Target, any Retransferred Picture shall be excluded, unless and until such Retransferred Picture is resold to Purchaser under this Agreement. The parties agree that, subject to Section 1.6 and Section 10.1, each Motion Picture produced or acquired by LGF or an LGE Affiliate on or after the Effective Date and continuing until the end of the Investment Period or Sequel Investment Period, if applicable, that is a Covered Picture (and with respect to the Sequel Investment Period, also a Sequel) shall be subject to the Sale Obligations and the Purchase Obligations. Except as set forth in Section 1.6.6, LGF shall not be obligated to sell to Purchaser and Purchaser shall not be required to purchase the Rights for any Covered Picture after the termination of Investment Period or, with respect to Sequels, after the termination of the Sequel Investment Period, if applicable. With respect to all Covered Pictures acquired by Purchaser, Purchaser acknowledges and agrees that it shall have and shall discharge (when and as they become due and payable) all obligations with respect to the payment of Participations and Residuals. To the extent that any Rights required to be sold by LGF to Purchaser hereunder are owned or controlled, prior to the Initial Investment Date, by any LGE Affiliate, LGF shall acquire such Rights from such LGE Affiliate prior to the Initial Investment Date and such Rights shall be conveyed to Purchaser together with all other Rights sold to Purchaser by LGF on the Initial Investment Date.

1.1.2 “Bug” and “Away From Her”. The parties hereto agree and acknowledge that the Motion Picture entitled “Bug” is a Covered Picture and shall be the first Covered Picture to be acquired by Purchaser from LGF under this Agreement. The parties further agree and acknowledge that the Purchaser shall have the option, exerciseable by the Purchaser (at the direction of FundCo) at any time within thirty (30) days from the Effective Date, to acquire from LGF the Motion Picture entitled “Away from Her”. If Purchaser (at the direction of FundCo) elects to exercise its option to purchase the Rights to “Away From Her”, Purchaser shall give written notice to LGF prior to the expiration of thirty (30) days from the Effective Date. The purchase and sale of Rights to “Bug” and “Away From Her” (if Purchaser exercises its option under this Section 1.1.2) shall be subject to all of the terms and conditions of this Agreement; provided, however, the time periods prescribed in the first sentence of Section 2.3 shall not be applicable to “Bug”.

1.2 Consecutive Initial Theatrical Release Dates.

1.2.1 Determination of Covered Pictures. The determination of the Covered Pictures subject to the Sale Obligations and the Purchase Obligations shall be made on the basis of the chronological order of the Initial Theatrical Release Dates for such Covered Pictures.

1.2.2 Obligation to Acquire in Chronological Order. Without limitation of Section 1.11 of this Agreement, the Purchase Obligations and the Sale Obligations shall be executed in the chronological order of the Initial Theatrical Release Dates for such Covered Pictures. In any instance in which LGF is required to sell, or Purchaser is obligated to acquire multiple Covered Pictures, the sale and purchase of the Covered Pictures shall be effected in the chronological order of such Covered Pictures’ Initial Theatrical Release Dates, with the intent of this provision being that Purchaser shall acquire during the Investment Period the first twenty-three (23) Covered Pictures the respective Initial Theatrical Release Dates for which occur after the Effective Date of this Agreement and during the Investment Period, and that, if applicable, Purchaser shall acquire during any Sequel Investment Period up to the number of Sequels equal to the Sequel Target which shall be the first Sequels to have their Initial Theatrical Release Dates in the U.S. after commencement of the Sequel Investment Period to a maximum of the Sequel Target.

1.3 No Consultation or Approval Rights. As between LGF and Purchaser, LGF shall control all decisions (e.g., business, financial, creative or otherwise) (a) relating to the development, financing, production or acquisition of Motion Pictures by LGF and its Affiliates that are or may become Covered Pictures hereunder, or (b) prior to the purchase and sale of the Rights to a Covered Picture hereunder, concerning whether to pursue and/or consummate any Co-Financing Transaction, and Purchaser shall have no consultation or approval rights with respect thereto.

1.4 Purchase Shortfall; Extension of Investment Period. If, on the third (3rd) anniversary of the Investment Commencement Date (the “Third Anniversary Date”), Purchaser has acquired from LGF the Rights to fewer than twenty-three (23) Covered Pictures (a “Purchase Shortfall”), and the Purchase Shortfall has not been caused by Purchaser’s breach of its Purchase Obligations hereunder, LGF shall no earlier than one (1) Business Day after the Third Anniversary Date give written notice to Purchaser of the Purchase Shortfall (the “Purchase Shortfall Notice”). Purchaser shall have a one-time option (the “Investment Period Extension Option”) exercisable (at the sole direction of FundCo, with the consent of the Administrative Agent) to extend the Investment Period until the earliest of (a) Purchaser’s acquisition from LGF of Rights in and to the twenty-third (23rd) Covered Picture (excluding Retransferred Pictures other than those re-acquired by Purchaser), (b) the occurrence of a Stop Funding Event, or (c) the last day of the Contribution Period; provided, however, Purchaser may exercise the Investment Period Extension Option only if at the time of its exercise no Suspension, Purchaser Default and/or Stop Funding Event has occurred and is continuing. If Purchaser elects to exercise the Investment Period Extension Option, it shall give written notice to LGF within ten (10) days after Purchaser’s receipt of the Purchase Shortfall Notice, if any.

1.5 Sequel Target; Sequel Target Shortfall; Sequel Investment Period. If on the last day of the Investment Period (other than if such Investment Period terminates due to a Stop Funding Event), Purchaser has acquired from LGF the Rights to twenty-three (23) Covered Pictures but such Covered Pictures include less than the Sequel Target, the Sequel Investment Period shall automatically commence and shall terminate upon the earliest to occur of (a) Purchaser’s purchase from LGF of the Rights to that number of Sequels that, together with any Sequels purchased during the Investment Period, equals the Sequel Target, (b) a Stop Funding Event, (c) the first date on which LGE has the right to exercise the Repurchase Option, or (d) the last day of the Contribution Period (such extension period, the “Sequel Investment Period”). There shall be no Sequel Investment Period if, during the Investment Period, Purchaser acquires from LGF and LGF sells to Purchaser the Rights to three (3) or more Sequels.

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1.6.4 Suspension Period Pictures. Subject to Section 1.6.5, during any Suspension Period, LGF and its Affiliates shall have the right, outside of FilmCo and without any obligation or liability to Purchaser, to continue to produce, acquire, own, finance and/or fund and exploit all Rights in or to all Motion Pictures that, but for the Suspension, would have been Covered Pictures purchased by Purchaser hereunder (collectively, “Suspension Period Pictures”), and to retain for LGF’s own account all of the Gross Receipts and all Co-Financing Amounts generated from such Suspension Period Pictures.

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1.7.1 Excess Cap Picture Option. Purchaser shall have a one-time option (exercisable solely at the direction of FundCo, with the consent of the Administrative Agent) to purchase the Rights to the ***** Excess Cap Picture, which option, if exercised, shall require LGF to sell to Purchaser and Purchaser to purchase from LGF the Rights to such ***** Excess Cap Picture and all subsequent Excess Cap Pictures produced or acquired by LGF or any LGE Affiliate the respective Initial Theatrical Release Dates for which occur during the Investment Period, any Catch-Up Period or (if a Sequel) any Sequel Investment Period, subject to the other terms and conditions set forth in this Agreement (the “Excess Cap Picture Option”).

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1.7.2 Super Excess Cap Pictures. Purchaser shall not be obligated to purchase from LGF and LGF shall not be obligated to sell to Purchaser the Rights to any Super Excess Cap Picture produced or acquired by LGF or any LGE Affiliate the Initial Theatrical Release Date for which occurs during the Investment Period, any Catch-Up Period or (if a Sequel) any Sequel Investment Period, except as set forth below. For purposes of this Agreement, any Super Excess Cap Picture the Rights to which Purchaser acquires from LGF shall count towards Purchaser’s obligation to acquire ***** Excess Cap Pictures; provided, that any purchase by Purchaser of a Super Excess Cap Picture pursuant to the exercise of a Super Excess Cap Picture Option shall not be deemed to be the exercise by Purchaser of the Excess Cap Picture Option. With respect to a Funded Picture that after its Initial Investment Date becomes a Super Excess Cap Picture, the Super Excess Cap Picture Option shall be exercised or not exercised as set forth in Section 1.7.2(iii).

(i) Super Excess Cap Picture Option. On a Super Excess Cap Picture by Super Excess Cap Picture basis, Purchaser shall have a one-time option (exercisable solely at the direction of FundCo, with the consent of the Administrative Agent) to purchase the Rights to such Super Excess Cap Picture (the “Super Excess Cap Picture Option”).

(ii) Exercise of Super Excess Cap Picture Option.

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1.11.2 Initial Theatrical Release Date Not Within Thirty Days of Purchase. If the Initial Theatrical Release Date for a Covered Picture has not occurred within thirty (30) days following the payment by Purchaser of the Initial Purchase Price (or within ninety (90) days of the termination of the Investment Period in the case of Covered Pictures purchased during the Catch-Up Period) other than for events of Force Majeure, LGF shall so notify Purchaser, including in such notice the new scheduled Initial Theatrical Release Date, if known (a “Change in Theatrical Release Date Notice”). Purchaser shall have the right (at the direction of FundCo, with the consent of the Administrative Agent), within five (5) Business Days after its receipt of the Change in Theatrical Release Date Notice to cause LGF to repurchase the Rights from Purchaser, by delivering written notice of Purchaser’s election to cause such repurchase, in which event all Rights transferred to Purchaser hereunder must be re-transferred by Purchaser to LGF, and LGF must repurchase such Motion Picture, in return for the payment by LGF to Purchaser of the applicable Retransfer Price, which re-transfer and payment shall occur not later than ten (10) Business Days after Purchaser’s notice.

1.11.3 Covered Pictures Not Released in Chronological Order. If before the Initial Theatrical Release Date of any one or more of the Covered Pictures (excluding any Retransferred Pictures) acquired by Purchaser (each, an “Unreleased Purchased Picture”), one or more other Motion Pictures that would otherwise be Covered Pictures subject to the Purchase Obligations and Sale Obligations (each, an “Alternative Covered Picture”) have their Initial Theatrical Release Dates prior to the Initial Theatrical Release Dates of any Unreleased Purchased Picture, LGF or Purchaser shall provide written notice to the other party of the same and Purchaser shall have the option, exercisable in its discretion (at the sole direction of FundCo) within five (5) Business Days after the receipt by LGF or Purchaser, as applicable, of the foregoing notice, to require LGF to repurchase from Purchaser the Rights to any Unreleased Purchased Picture and to sell to Purchaser the Rights to the Alternative Covered Picture (if more than one, then the Alternative Covered Picture with the earliest Initial Theatrical Release Date), subject to the Purchase Obligations and Sale Obligations set forth in Section 1.1 and all other terms and conditions set forth in this Agreement. If Purchaser so exercises, the applicable Unreleased Purchased Picture and all Rights thereto shall be retransferred by Purchaser to and repurchased by LGF at the applicable Retransfer Price, which re-transfer and payment shall occur no later than fifteen (15) days after LGF’s receipt of Purchaser’s exercise notice, and simultaneously therewith, the applicable Alternative Covered Picture and all Rights thereto shall be sold and transferred by LGF to Purchaser and purchased by Purchaser for the applicable Purchase Price.

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1.11.9 Sale Obligation for Retransferred Pictures. Other than with respect to Retransferred Pictures pursuant to the exercise by Purchaser of the Purchaser MAE Put Option, any Retransferred Picture shall be re-sold by LGF to Purchaser in accordance with the other terms and conditions of this Agreement if (i) the Retransferred Picture is a Covered Picture, and (ii) the Initial Investment Date for such Retransferred Picture would occur during the Investment Period (or Catch-Up Period, if any) or (with respect to a Sequel) during the Sequel Investment Period, as applicable, and (iii) the scheduled Initial Theatrical Release Date for such Retransferred Picture is scheduled to be within thirty (30) days of the date of the date on which such Retransferred Picture is re-sold to Purchaser.
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