Exhibit 10.6


 


SALES AGENCY AGREEMENT


 


This
Sales Agency Agreement (“Agreement”) is entered into  as of June 28, 2005 (“Effective Date”)
between PINNACLE
ENTERTAINMENT, LLC (“Pinnacle”)
and OUT OF THE BLUE PRODUCTIONS, LLC (“Licensor”),
in connection with the motion picture currently entitled “Cloud 9” starring
Burt Reynolds and directed by                              
( the “Picture”).


 


1.             TERM/TERRITORY:


 


a.             Term: 
The term of this Agreement commences as of Effective Date and expires
upon the expiration of the audit rights set forth in paragraph 7.b below (“Term”).  The “Agency Term” is the period of time
during which Pinnacle is authorized to, and shall act as the exclusive agent of
Licensor, in connection with the licensing of distribution rights of the Picture
pursuant to this Agreement, which shall be three (3) years from the Effective
Date.  The “Distribution Term” is the
period of time during which Pinnacle may, and beyond which it shall not, permit
the Exploitation of the Licensed Rights, which shall be five (5) years from the
date of each License Agreement.


 


b.             Territory: 
The territory shall be the United States, Canada and all of their
territories and possessions thereof (“Territory”).


 


2.             ENGAGEMENT OF
PINNACLE:  In consideration of the mutual covenants
contained herein, Licensor hereby engages Pinnacle for the Agency Term as the
sales agent of Licensor for the purpose of the sale, license, or other
disposition of the Licensed Rights in the Picture in the Territory and Language
for the Distribution Term.


 


a.             Exclusivity of
Agency: Pinnacle
shall be the sole and exclusive agent of Licensor for the License of the
Licensed Rights throughout the Territory during the Agency Term.  Pinnacle’s engagement hereunder is coupled
with an interest and is irrevocable during the Term.


 


b.             General
Obligation: As
agent of Licensor, during the Agency Term, Pinnacle shall render all services
which are customarily rendered by sales agents of similar quality and
distinction in connection with the licensing of distribution rights for Motion
Pictures, including, without limitation, (i) act in good faith in its
reasonable business judgment to negotiate and conclude agreements for the
License of any of the Licensed Rights to the Picture with a view to maximizing
the share of Gross Receipts available to Licensor; (ii) identifying and
negotiating with prospective Licensees; (iii) provided Licensor complies with
its delivery requirements set forth in paragraph 4, assuming responsibility for
and coordinating the delivery to the Licensees of all required delivery
materials under the License Agreements; (iv) as set forth in paragraph 5,
monitoring and assisting in the collection of payments owing to Licensor under
the License Agreements; (v) investigating reports of non-compliance by
Licensees of their obligations under the License Agreements; and (vi)
consulting with Licensor regarding the status of sales and collections and the
marketing of the Picture.


 


c.             Representation of
Other Film Makers:
Licensor acknowledges that it has been advised by Pinnacle that Pinnacle will
act as the sales agent for third parties and/or for Pinnacle’s own films.


 


3.             DELIVERY: 
Within thirty (30) days following the Effective Date, Licensor shall
deliver to Pinnacle (at Licensor’s sole cost and expense) all materials and
documents set forth on Schedule B.


 


“Cloud 9”


 


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a.             Chain of Title: As a condition precedent to any
obligation of Pinnacle hereunder, promptly upon execution of this Agreement,
Licensor shall provide Pinnacle with the complete chain of title to the
Picture, which Pinnacle may have reviewed by independent outside counsel.  In the event that Pinnacle provides Licensor
with Notice of any deficiencies in the chain of title which would materially
impair the ability of any Licensee to Exploit any of the Licensed Rights or is
likely, in Pinnacle’s sole and reasonable judgment, to expose Pinnacle to
liability or otherwise adversely impact Pinnacle’s performance hereunder,
Licensor shall use all reasonable efforts to correct such deficiencies
promptly.  Pinnacle may suspend its
performance hereunder until such deficiencies are corrected and may, if such
deficiencies cannot be corrected, terminate this Agreement.


 


b.             Conformity And/Or
Failure To Make Delivery:  If any item which Licensor is
required to deliver hereunder does not conform to requirements set forth on
Schedule A or Licensor fails to deliver any such materials or documents,
Licensor shall indemnify and hold Pinnacle harmless (consistent with the
indemnity provisions set forth in paragraph 7.f against all third party claims
and damages arising therefrom. Costs incurred by Pinnacle in correcting
deficient delivery items or in creating delivery items not delivered by
Licensor will be recoupable from Licensor as Distribution Expenses hereunder
and are not subject to prior approval or any caps on Distribution Expenses.


 


c.             Name/Likeness/Editing: Licensor shall notify Pinnacle
of all credit obligations, restrictions on use of name/likeness, and editing
and any other restrictions to which the Picture is subject, or will be subject,
during the Distribution Term (“Format
Restrictions”).  Provided that
Licensor has notified Pinnacle of all Format Restrictions to which the Picture
is subject, or will be subject, during the Distribution Term, Pinnacle shall
notify each Licensee of the same and shall contractually require that such
Licensees comply with such restrictions.


 


4.             COLLECTIONS:   During the Agency Term, Pinnacle shall act
reasonably and diligently to collect sums due under the License Agreements.


 


a.             Proceeds: Each License Agreement shall
require that all Gross Receipts are paid to Pinnacle.


 


b.             Pinnacle
Accounting Statements:  Not less than semi-annually for
the first two (2) years, and annually thereafter, Pinnacle shall provide
Licensor detailed statements for the Picture (“Accounting Statements”).


 


c.             Priority of
Disbursements:
All funds received by Pinnacle in connection with the Picture are to be
disbursed in the following order of priority:


 


•      First, in payment to Pinnacle of the
Distribution Expenses;


 


•      Second, in payment to Pinnacle of the Agency
Fee;


 


•      Thereafter, to Licensor.


 


d.             Residuals and
Deferments: For
avoidance of doubt, Licensor is solely responsible for any deferments, profit
participations, or residuals payable to any individual or entity for services
in connection with the Picture.


 


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5.             AGENCY FEE AND
EXPENSES:


 


a.             Agency Fee: 
In consideration for its services hereunder, Pinnacle shall receive the
Agency Fee in accord with paragraph 4.c. 
The “Agency Fee” shall be a fee of twenty percent (20%) of the Gross
Receipts for Free TV and Pay TV Rights.


 


b.             Distribution
Expenses:  Pinnacle shall not, without approval from
Licensor, incur Distribution Expenses in excess of Twenty-Five Thousand Dollars
(US$25,000).


 


6.             CREDIT: 
Pinnacle may include Pinnacle’s name, trademark, and “video logo” in the
front or end credits of the Picture in the Territory, as well as on all artwork
and promotional materials for the Territory.


 


7.             GENERAL
PROVISIONS:


 


a.             Arbitration: 
This agreement is subject to binding IFTA arbitration in English in Los
Angeles, California, and is to be construed, interpreted, and enforced in
accord with the laws of the State of California, excluding California’s choice
of law provisions.  Accordingly, Licensor
and Pinnacle, each as to and for the benefit of the other hereby irrevocably
submit to the jurisdiction of courts of the State of California and the United
States for the purpose of any action, suit or proceeding arising out of or
related to the subject matter of, or transactions contemplated by, this
Agreement.  The prevailing party in any
action related to or arising out of this agreement is entitled to recover all outside
attorney’s fees and costs (including expert costs) in bringing or defending
such action.


 


b.             Audit: 
Upon thirty (30) days advance Notice, Licensor may audit Pinnacle’s
books and records for the Picture during normal business hours at the offices
where such books and records are kept, using a firm of chartered accountants in
order to verify all data reported by Pinnacle to Licensor.  Pinnacle shall make such books and records
available at its regular place of business in the United States, if any.  Licensor’s right to audit each accounting
period terminates if such audit is not commenced within two (2) years from the
close of such period.  Pinnacle’s books
and records may be audited no more than once annually.  If Pinnacle is found as a result of such
audit to have withheld for any reason save as provided for in this Agreement
monies due to Licensor hereunder, then Pinnacle shall forthwith pay the same to
Licensor.


 


c.             Default: 
No breach by either Party of any term or condition herein shall be
deemed material until the other Party has given Notice to the breaching Party
and such Party fails or refuses to substantially cure or correct the applicable
breach after such Notice is served within: 
twenty (20) days for monetary breaches; and (ii) thirty (30) days for
non-monetary breaches.   During the cure
period for monetary breaches, the Party not in breach may suspend its
performance hereunder.  Moreover, if the
Party in breach fails to cure either a monetary or a non-monetary breach within
such prescribed time period, such Party is thereafter deemed in default of this
Agreement, and the Party not in breach, at such Party’s election, may, without
limitation, as to its other remedies terminate this Agreement by Notice to the
other Party.


 


d.             Errors and Omissions: 
Licensor shall maintain in full force and effect throughout the Term
standard form producer’s liability insurance (error and omissions insurance)
with limits of not less than one million Dollars (US$1,000,000) per occurrence
and three million Dollars (US$3,000,000) total and with a deductible not
greater than ten thousand Dollars ($10,000) naming Pinnacle Entertainment LLC,
and its officers, employees, representatives, attorneys, successors, and


 


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assigns as additional insureds. 
Licensor shall ensure that the errors and omissions may not be
terminated without thirty (30) days prior written notice to the above-mentioned
additional insured parties and the certificates issued naming such parties as
additional insured entities shall include statements to this effect. As a
condition subsequent to Pinnacle’s obligations hereunder, Licensor shall
furnish Pinnacle with a certificate of such insurance within ten (10) days
following execution of this Agreement by Licensor.


 


e.             Representations
and Warranties:  Licensor hereby represents and warrants to
Pinnacle that: (i) it has full and complete authority to enter into this
Agreement; (ii) it has the right and authority to grant the Licensed Rights in
the Territory and Language during the Term free and clear of any claims, liens,
charges or encumbrances which would impair or affect such Licensed Rights or
rights incidental thereto; (iii) subject to the restrictions described in
paragraph 3.c. above, there are no rights of approval or control held by third
parties which in any way limit or restrict Pinnacle’s right to exploit the
Picture hereunder; and (iv) to the best of its knowledge there is no litigation
or threatened litigation involving the Picture or the Rights.  The individual signing on behalf of Licensor
below hereby represents and warrants that he or she is duly authorized to sign
on behalf of Licensor and that Licensor has complied with all corporate
formalities predicate to the license of the Rights and the execution of this
Agreement.


 


f.              Indemnities:


 


(i)            By Licensor: 
Licensor shall indemnify Pinnacle, its affiliates, officers, directors,
partners, employees, exhibitors, licensees, and assignees, against any and all
claims, liability, damages, costs and expenses, including reasonable outside
attorney’s fees, in connection with any third party claim or action arising out
of or relating to: (i) any breach by Licensor of any representation or warranty
herein; and (ii) the License Agreements (provided they are in Pinnacle’s
standard form or a form approved by Licensor) and any financing arrangements
for the Picture, provided that Pinnacle has not engaged in negligence or breach
of the Agreement through its conduct or omission directly giving rise to such
action, and to the extent not resulting from a material breach by Pinnacle of
its obligations under this Agreement.


 


(ii)           By Pinnacle: Pinnacle shall indemnify Licensor, its
affiliates, officers, directors, partners, employees, exhibitors, licensees,
and assignees, against any and all claims, liability, damages, costs and
expenses, including reasonable outside attorney’s fees, in connection with any
third party claim or action arising out of or relating to any material breach
by Pinnacle of any representation warranties under this Agreement, and any
negligence or breach of the Agreement by Pinnacle, directly giving rise to such
action.


 


g.             Notices: 
All Notices required hereunder must be in writing and transmitted either
by facsimile or express courier.


 


	
  All Notices to Pinnacle
  shall be sent to:

  	
   

  	
  All Notices to Licensor
  shall be sent to:

  
	
   

  	
   

  	
   

  
	
  Pinnacle Entertainment
  Inc.

  	
   

  	
  Out of the Blue
  Productions, LLC

  
	
  15821 Ventura Boulevard,
  Suite 320

  	
   

  	
  101 North Robertson, Suite
  920

  
	
  Encino, California 91436

  	
   

  	
  Oklahoma City, Oklahoma
  73102

  
	
  Attention: Michael Weiser

  	
   

  	
  Attention: John D.
  Simonelli

  



 


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with a copy
to:


 


Kleinberg Lopez Lange Cuddy
& Edel LLP


2049 Century Park East,
Suite 3180


Los Angeles, California  90067-3205


Attention:  Robert M. Lange, Esq.


 


Any Notice is
deemed to have been duly served if correctly addressed and sent by facsimile or
courier to the relevant party at that Party’s designated office above (as may
be changed from time to time by Notice to the other Party).  Any Notice so given is deemed served: (i) if
sent by facsimile, by the later of twenty four (24) hours from its transmission
or the commencement of normal business hours at its destination (if such Notice
is sent outside of normal business hours at such destination); and (ii) if sent
by courier, within three (3) business days of the date that such courier
package is sent.


 


h.             Schedules: 
This Agreement includes and incorporates the following Schedules that
are attached hereto and incorporated herein by this reference:


 


	
  Schedule A:

  	
   

  	
  Delivery Schedule

  
	
  Schedule B:

  	
   

  	
  Defined Terms

  



 


i.              Miscellaneous: 
This Agreement may not be modified orally and no waiver, amendment or
modification shall be binding or effective unless in writing and signed by both
Parties. This Agreement will control in the event of any conflict in terms
between this Agreement and the Schedules. 
Capitalized terms (unless proper names) are defined terms with meanings
set forth on Schedule B.  This Agreement
contains the entire agreement and understanding between the Parties hereto with
respect to the subject matter hereof and the transactions contemplated hereby
and supersede any and all prior or contemporaneous oral and written agreements,
promises, statements, representations and information given by either Party.
Nothing herein contained constitutes the formation of any partnership or joint
venture between the parties hereto or establish any agency or fiduciary
relationship between them.  This Agreement
is not for the benefit of any third party and should not be deemed to give any
right or remedy to any such party whether referred to herein or not. If any of
the provisions of this Agreement become invalid, illegal or unenforceable in
any respect under any law, for any reason, such provision is deemed
automatically adjusted to the minimum extent necessary to conform to the
requirements for validity as declared at such time and, as so adjusted, are
deemed a provision of this Agreement as though originally included herein.  In the event that the provision invalidated
is of such a nature that it cannot be so adjusted, the provision is deemed
deleted from this Agreement as though such provision had never been included
herein, and the validity, legality and enforceability of the remaining provisions
hereof are not in any way affected or impaired.


 


IN WITNESS WHEREOF, Pinnacle
and Licensor entered into this Agreement as of the Effective Date.


 


 


	
  PINNACLE ENTERTAINMENT,
  LLC

  	
   

  	
  OUT OF THE BLUE
  PRODUCTIONS, LLC

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  	
   

  	
  Its:

  	
   

  	
   

  



 


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SCHEDULE A


DELIVERY SCHEDULE


 


•      VHS screeners


 


•      Digital betacam masters


 


•      Digital beta SP masters


 


•      1-HD master (if available)


 


•      1-16x9 DBC NTSC master (Ch1/2 – St L / R  Ch 3 / 4 
- M&E) w/textless main and end


 


•      1-4x3FF DBC NTSC master (Ch1/2 – St L /
R  Ch 3 / 4  - M&E) w/textless main and end


 


(Note: All of the
above to be picture to pictures w/out commercial blacks)


 


•      1-DBC TRAILER (NTSC)– split track OR tied
onto tail end of movies


 


•      Closed caption masters


 


•      DLT masters


 


•      VHS/DVD key art


 


•      Color slides


 


•      Error and omissions insurance certificates


 


•      MPAA rating certificates


 


•      U.S. Copyright Office certificate of filings
for the motion picture


 


•      Title report


 


•      Copyright Notices for program content and for
Artwork, if different


 


•      Complete song list, including music
publishing information


 


•      Contractual credit requirements


 


•      Credit Block, main title obligations and end
title obligations


 


•      Story Synopsis


 


•      Foreign language matters


 


•      Music cue sheets


 


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•      Trailers music cue sheets


 


•      Music license materials


 


•      Access authorization


 


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EXHIBIT 1 TO SCHEDULE A


LABORATORY ACCESS LETTER


 


(ON PRODUCER’S LETTERHEAD)


 


Date:


 


(Laboratory Address)


 


RE:  (Film Title (all versions if more than one
title))


 


Gentlemen:


 


                                         (“Producer”)
has entered into a sales agency agreement (the “Agreement”) with Pinnacle Entertainment,
LLC (collectively “Pinnacle”) under which agreement Pinnacle has been granted
certain distribution rights in and to the film entitled                                                  
(the “Picture”).


 


For good and valuable
consideration, receipt of which is hereby acknowledged, it is hereby agreed,
for the express benefit of Pinnacle, as follows:


 


1.  You and Producer represent to Pinnacle that
we have now entered into arrangements whereby you hold in your possession and
your control at your offices located in                                         
all of the materials listed on the attached “Schedule” relating to the Picture
(the “Materials”).


 


2.  From such time as this letter shall be
delivered to you, Pinnacle and its designees shall at all times have complete
and free access to said Materials.


 


3.  You will at all times perform all laboratory
services requested by Pinnacle or its designees relating to the Picture which
laboratory services will be performed by you at prevailing rates at Pinnacle’s
sole expense.


 


4.  Neither Pinnacle nor Producer shall have any
liability for any indebtedness to you incurred by the other.


 


5.  You presently have no claim or lien against
the Picture or the Materials nor insofar as Pinnacle is concerned will you assert
any claim or lien against the Picture or the Materials except for your charges
for services rendered for and documents furnished to Pinnacle.  Similarly, insofar as Producer is concerned,
you will not assert any claim or lien against the Picture or the Materials for
your charges for services rendered and documents furnished to Pinnacle.


 


6.  Except upon Pinnacle’s prior written consent,
you shall not allow the Materials to be removed from your offices nor in any
way revoke, rescind or modify any representations, rights or agreements granted
in favor of Pinnacle hereunder.


 


7.  This agreement is irrevocable and may not be
altered or modified except by a written instrument executed by Pinnacle and
Producer.


 


Please signify your
agreement to the foregoing by signing where indicated below.


 


Very truly yours,


 


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  (Producer)

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  
	
   

  
	
  AGREED TO:

  
	
  (Laboratory)

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  
	
   

  
	
  AGREED TO:

  
	
   

  
	
  PINNACLE ENTERTAINMENT,
  LLC

  
	
   

  
	
  By:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Its:

  	
   

  	
   

  
						



 


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SCHEDULE TO EXHIBIT 1 TO SCHEDULE A


(PICTURE)


 


The Materials


 


(Listing of all materials
held by laboratory on the Picture)


 


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SCHEDULE B


DEFINED TERMS


 


“Advance” means the minimum guarantee
payable by a Licensee to secure any Licensed Rights and designated the “Advance”
in the License Agreements which are paid in cash, credit, subsidy, or kind (in
all currency) during the Distribution Term net of withholding taxes and bank
fees (e.g., wire transfer charges) and which are credited to or received by
Pinnacle and/or to Licensor or paid with the consent or at the direction of
either Pinnacle or Licensor to any third party.


 


“Cable Free TV” means only the transmission by means of coaxial
or fiber-optic cable of a Motion Picture Copy for reception on television
receivers in private living accommodations without a charge being made to the
viewer for the privilege of viewing a Motion Picture.


 


“Cable
Pay TV” means transmission or
retransmission of a Motion Picture Copy by means of an encoded signal over
coaxial or fiber-optic cable for reception on television receivers in private
living accommodations by means of a decoding device where charge is made: (i)
to the viewer for the right to use the decoding device for viewing any special
channel which transmits a Motion Picture along with other programming on an
ongoing basis; or (ii) to the operator of a hotel, motel, apartment complex, co-operative,
condominium project, or similar place located distant from the place where such
broadcast signal originated for the right to use the decoding device to receive
and retransmit the programming on such channel throughout such place.


 


“Distribution
Expenses” means,
subject to the overall cap, if any, set forth in the Agreement to which this
schedule is attached, all of Pinnacle’s customary out-of-pocket distribution
expenses net of discounts and rebates including without limitation, the
reasonable and proper costs of materials delivered to Licensees (e.g., costs of
manufacture, storage, vaulting, freight, delivery and courier costs), outside
audit fees for audits of distributors (net of any recovery of audit costs),
advertising, publicity (including publicity events such as press conferences
and the costs associated with the attendance of key talent, director),
publicist fees associated with a special promotion (excluding Pinnacle
employees), outside legal expenses (to enforce any subdistribution or third-party
agreements), messenger and courier costs, reasonable travel and entertaining
costs (to the extent that such costs directly relate to the Picture), market
expenses and miscellaneous expenses.


 


“Exploit” means the manufacture,
exhibition, broadcast, transmission, dissemination, reproduction, duplication,
distribution, sale, performance, publication, display, license, lease, use, or
exploitation by the means, and in the manners and media authorized by this
Agreement.


 


“Free TV” means all forms of Terrestrial
Free TV, Cable Free TV and Satellite Free TV exploitation of a Motion Picture.


 


“Gross
Receipts” means
an amount equal to the sum of (i) the Advances; and (ii) the Overages.    For avoidance of doubt, Gross Receipts
exclude (i) all sums paid by any third party for delivery materials, (ii) all
audit costs that are recovered from sublicensees or other parties, (iii) all
funds paid in connection with the Picture, and (iv) revenues received from
third parties for costs (e.g., for materials) charged to and paid for by (or on
behalf of) such third parties.


 


“Home Video
Gross Receipts” means Gross Receipts arising from Exploitation of the Home Video (and,
if part of the Licensed Rights, the Video-On-Demand, and On-Line Rights) and
all related Incidental Rights thereto.


 


“Home Video
Rental” means
Video and Home Video other than Home Video Sell Through.


 


“Home Video
Sell Through” means the manufacture and distribution of Videograms (restricted to the
Videogram type(s) and format(s) authorized in the Agreement) for purposes of
sale to the public for private non-commercial use where ownership of such
Videograms transfers to such ultimate purchasing members of the public who use
the Videograms for private non-commercial use.


 


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“Internet Simulcast” means the simultaneous exploitation of a
Motion Picture in such manner as to permit viewing the complete Motion Picture
on video displays (including television monitors) without alteration of the
original continuity of, or sequence of images comprising, the Motion Picture by
(i) exhibition, broadcast, or transmission of a Motion Picture Copy over what
is commonly known as the Internet or WorldWideWeb, an intranet, or a multi-node
computer network by any means, including satellite or over coaxial or fiber-optic
cable and (ii) via Free Television.


 


“Language” means (i) the original language
version of the Picture; and (ii) the original language version of the Picture
dubbed or subtitled (or otherwise alternatively communicated (e.g., simulcast))
in all languages, spoken or unspoken, now know or hereafter discovered or
devised.


 


“License” means lease, license, sale,
grant, transfer, or any other manner of transfer of intellectual property
consistent with the United States Copyright Act of 1976 as amended.


 


“Licensee” means the person or legal entity
to whom any Licensed Rights are Licensed pursuant to a License Agreement.


 


“License
Agreements”
means a written agreement (based on Pinnacle’s customary Motion Picture Lease
Agreement which is hereby approved by Licensor) executed by Licensor (or its
assignee/designee or, as provided herein, by Pinnacle on Licensor’s behalf) in
which any or all of the Licensed Rights to the Picture are Licensed to a
Licensee within the Territory for not longer than the Distribution Term.


 


“Licensed
Rights”
means (i) the exclusive: (a) Pay TV, Free TV, Video-on-Demand, and Pay-Per-View
Rights as the same may be exploited by any and all delivery systems and formats
now known or hereafter devised; (b) ship Rights for ships and oil rigs flying
the flag of countries within the Territory; (c) airline Rights for all
airplanes flying the flags of countries within the Territory; (d) customary
souvenir program Rights (e) On-Line Rights (including Exploitation by Internet
Simulcast); and (f) customary incidental rights directly related to the
exploitation of the foregoing (e.g. advertising, promotion, dubbing and
subtitling); and (ii) the non-exclusive right to exploit excerpts (clips) of
not more than three (3) minutes of the Picture for educational, informational,
and promotional purposes, including, without limitation, the right to make such
advertising materials available over the internet and other interactive mediums
but limited to exploitation in a linear, continuous, and sequential manner.  The Home Video Rights include Exploitation of
the Picture by video disc, CD-ROM, and all other formats and delivery media now
known or hereafter devised for purposes of viewing a motion picture in a linear
manner consistent with home video exploitation but not for exploitation of
ancillary rights such as video games or interactive media.  The Licensed Rights do not include the
Reserved Rights.


 


“Motion
Picture” means any audiovisual work
consisting of a series of related images that, when shown in succession, impart
an impression of motion, with accompanying sounds, if any.


 


“Motion
Picture Copy” means the embodiment of a Motion Picture in any physical linear form,
including film, tape, cassette or disc. Where a specific medium is limited to
exploitation by a specific physical form, for example, the exploitation of
Videograms, then Motion Picture Copy with respect to such medium is limited to
such physical form.


 


“Non-Theatrical”
means
exploitation of a Motion Picture Copy by direct exhibition before an audience
at facilities or organizations not primarily engaged in the business of
exhibiting Motion Pictures including, but not limited to, educational
organizations, churches, restaurants, bars, clubs, trains, buses, libraries,
prisons, industrial installations, Red Cross facilities, oil rigs, embassies,
military bases, military vessels or any other governmental facilities flying
the flag of countries within the Territory.


 


“On-Line” means exploitation of a Motion
Picture by exhibition, broadcast, or transmission of a Motion Picture Copy over
what is commonly known as the Internet or WorldWideWeb, an intranet, or a multi-node
computer network by any means, including satellite or over coaxial or fiber-optic
cable, in such manner as to permit viewing the complete Motion Picture on video
displays (including television monitors) without alteration of the original
continuity of, or sequence of images comprising, the Motion Picture.  On-Line Exploitation, if On-Line Rights are
permitted to be Licensed hereunder, is limited to transmission (including
residence on, or transmission via, servers) within the Territory to
intermediate and ultimate users


 


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in the
Territory by technical means which prohibit access (either directly or
indirectly) to any Person or technical means outside the Territory and which do
not, without Licensor’s prior written approval, permit the image to be stored
or copied by an intermediate or ultimate user except for purposes of: (i)
retransmission of the Picture to ultimate users located in the Territory (in
the case of an intermediate user); or (ii) facilitating a single viewing of the
Picture (in the case of an ultimate user). All
other rights not listed herein or under the term Licensed Rights are Reserved
Rights.


 


“Overages” means all other sums payable by a
Licensee in addition to (or in lieu of) any Advance in consideration for the
exploitation of any of the Licensed Rights (including “Overages” as defined and
designated in the License Agreements, any television or box office escalators
regardless of whether characterized in any License Agreement as an additional
Advance, and all royalties collected which are paid in cash, credit, subsidy,
or kind (in all currency) at any time before, during, and after the
Distribution Term net of withholding taxes and bank fees (e.g., wire transfer
charges) and which are received by or credited to Pinnacle and/or to Licensor
or paid with the consent or at the direction of either Pinnacle or Licensor to
any third party.


 


“Pay
TV” means all forms of Terrestrial
Pay TV, Cable Pay TV, and Satellite Pay TV exploitation of a Motion Picture
Copy.


 


“Pay-Per-View”
means the
broadcast of a Motion Picture Copy by means of an encrypted signal for
reception on television receivers in homes or non-residential institutions,
including hotels, motels and hospitals, where a charge is made to the viewer
for the right to use a decoding device to view the broadcast of a Motion
Picture at a time designated by the broadcaster for each viewing.


 


“Reserved
Rights”
means all rights other than the Licensed Rights, including, without
limitation:  (i) the underlying
intangible property relating to the Licensed Rights and the Picture, including
all trademarks and copyrights; and (ii) the right to Exploit the Picture: (a)
in the media, Language, and Territory upon expiration of the Distribution Term;
and (b) in all media, languages, and territories not included within the
Licensed Rights.


 


“Rights” means the right to Exploit the
Picture and all rights incidental to such Exploitation.  When preceded by a defined term denoting a
particular means, manner, or medium of exploitation, (i.e., Free TV Rights),
Rights is limited in meaning the right to exploit the Picture in the means,
manner, and medium comprising the defined term.


 


“Satellite
Free TV” means
only the up-link transmission of a Motion Picture Copy to a satellite and its
down-link transmission to a terrestrial satellite reception dish for the
purpose of viewing of a Motion Picture on television receivers in private
living accommodations without a charge being made to the viewer for the
privilege of viewing a Motion Picture. 
For purposes of this definition, neither governmental television
receiver assessments or taxes, nor regular periodic basic satellite service
charges (other than subscriptions paid for the right to receive specific
programming channel(s) or amounts paid for the right to receive specific
programs on a fee-per-exhibition basis) are a charge to the viewer.


 


“Satellite
Pay TV” means the up-link
transmission of a Motion Picture Copy by means of an encoded signal to a
satellite and its down-link transmission to a terrestrial satellite reception
dish and a decoding device for the purposes of viewing a Motion Picture on
television receivers in private living accommodations where a charge is made:
(i) to the viewer for the right to use the decoding device for viewing any
special channel which transmits a Motion Picture along with other programming
on an ongoing basis; or (ii) to the operator of a hotel, motel, apartment
complex, co-operative, condominium project, or similar place located distant
from the place where such broadcast signal originated for the right to use the
decoding device to receive and retransmit the programming on such channel
throughout such place.


 


“Soundtrack
Record” means
the manufacture and exploitation of recordings in any form embodying all or any
part of the soundtrack of the Picture or any re-recording of all or any part of
the soundtrack of the Picture (packaged and labeled in such a way as to be
identifiable with the Picture) in lieu of the actual soundtrack thereof.


 


“Television”
means all
forms of Free TV and Pay TV exploitation of a Motion Picture Copy.


 


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“Television
Gross Receipts” means Gross Receipts arising from Exploitation of the Pay TV, Free TV,
Internet Simulcast, and Pay-Per-View Rights.


 


“Terrestrial
Free TV” means
only standard over-the-air broadcast by means of Hertzian waves of a Motion
Picture Copy which is intended for reception on television receivers in private
living accommodations without a charge being made to the viewer for the
privilege of viewing a Motion Picture. 
For purposes of this definition, neither governmental television receiver
assessments nor taxes are a charge to the viewer.


 


“Terrestrial
Pay TV” means
only over-the-air broadcast of a Motion Picture Copy by means of encoded
Hertzian waves for reception on a television receiver in private living
accommodations by means of a decoding device where a charge is made: (i) to the
viewer for the right to use the decoding device for viewing any special channel
which transmits a Motion Picture along with other programming on an ongoing
basis; or (ii) to the operator of a hotel, motel, apartment complex, co-operative,
condominium project or similar place located distant from the place where such
broadcast signal originated for the right to use the decoding device to receive
and retransmit the programming on such channel throughout such place.


 


“Theatrical”
means
exploitation of a Motion Picture Copy by direct exhibition in conventional or
drive-in theaters that are open to the general public on a regularly scheduled
basis and charge an admission fee to view a Motion Picture.


 


“Third Party Approval” means any right of approval held by
directors, talent, or any other third party with whom or which Licensor or its
affiliates may contract in connection with a Picture.


 


“Transfer” means lease, license,
sale/purchase, assignment, transfer, or other conveyance of any right to
intellectual property consistent with the Copyright Act of the United States of
America.


 


“Underlying
Material”
means the literary and other material from which a Motion Picture is derived or
on which it is based, including all versions of the screenplay, all notes,
memos, directions, comments, ideas, stage business and other material
incorporated in any version of a Motion Picture and, to the extent necessary
rights and licenses have been obtained, all existing novels, stories, plays,
songs, events, characters, ideas or other works from which any version of a
Motion Picture is derived or on which it is based.


 


“Video” or “Home
Video” means
the manufacture, distribution, rental, license, lease or sale of Videograms
(restricted to the Videogram type(s) and format(s) authorized in the
Agreement), which enable a Motion Picture to be perceived visually on a
television screen when displayed through or as part of an electronic apparatus
(such as a television-type playback system) for private non-commercial use.
Home Video is restricted solely to the Videogram type(s) and format(s) that are
licensed to a Licensee in a License Agreement.


 


“Video Disc” means any laser or capacitance
disc or comparable optical or mechanical storage device in the format(s)
identified as being licensed to a Licensee in the Agreement which is designed
to be used for storing a Motion Picture Copy on a permanent basis and is used
in conjunction with a reproduction apparatus to cause a Motion Picture to be visible
on the screen of a television receiver.


 


“Videocassette” means a VHS or Beta cassette or
comparable magnetic storage device in the format(s) identified as being
licensed to A Licensee in the Agreement which is designed to be used for
storing a Motion Picture Copy on a permanent basis and is used in conjunction
with a reproduction apparatus to cause a Motion Picture to be visible on the
screen of a television receiver.


 


“Videogram” means any type of Videocassette
or Video Disc, but only to the extent the specific type of electronic storage
device and its format is identified as being licensed to a Licensee in the
Agreement.


 


“Video-On-Demand”
means
broadcast of a Motion Picture Copy by means of an encrypted signal for
reception by decoding and storage devices for viewing on television receivers
in homes or non-residential institutions, including hotels,


 


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motels and hospitals, where
a charge is made to the viewer on a fee-per-exhibition basis for the right to
use such decoding and storage device to view the broadcast of a Motion Picture
at a time selected by the viewer for each viewing.


 


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