**Exhibit 10.6**

 

**SALES AGENCY AGREEMENT**

 

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

 

**1.****            ****TERM/TERRITORY**:

 

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

 

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

 

**2.****            ****ENGAGEMENT OFPINNACLE:**  In consideration of the mutual covenantscontained herein, Licensor hereby engages Pinnacle for the Agency Term as thesales agent of Licensor for the purpose of the sale, license, or otherdisposition of the Licensed Rights in the Picture in the Territory and Languagefor the Distribution Term.

 

**a.****            ****Exclusivity ofAgency**: Pinnacleshall be the sole and exclusive agent of Licensor for the License of theLicensed Rights throughout the Territory during the Agency Term.  Pinnacle’s engagement hereunder is coupledwith an interest and is irrevocable during the Term.

 

**b.****            ****GeneralObligation**: Asagent of Licensor, during the Agency Term, Pinnacle shall render all serviceswhich are customarily rendered by sales agents of similar quality anddistinction in connection with the licensing of distribution rights for MotionPictures, including, without limitation, (i) act in good faith in itsreasonable business judgment to negotiate and conclude agreements for theLicense of any of the Licensed Rights to the Picture with a view to maximizingthe share of Gross Receipts available to Licensor; (ii) identifying andnegotiating with prospective Licensees; (iii) provided Licensor complies withits delivery requirements set forth in paragraph 4, assuming responsibility forand coordinating the delivery to the Licensees of all required deliverymaterials under the License Agreements; (iv) as set forth in paragraph 5,monitoring and assisting in the collection of payments owing to Licensor underthe License Agreements; (v) investigating reports of non-compliance byLicensees of their obligations under the License Agreements; and (vi)consulting with Licensor regarding the status of sales and collections and themarketing of the Picture.

 

**c.****            ****Representation ofOther Film Makers**:Licensor acknowledges that it has been advised by Pinnacle that Pinnacle willact 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 shalldeliver to Pinnacle (at Licensor’s sole cost and expense) all materials anddocuments set forth on Schedule B.

 

“Cloud 9”

 

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

 

**b.****            ****Conformity And/OrFailure To Make Delivery**:  If any item which Licensor isrequired to deliver hereunder does not conform to requirements set forth onSchedule A or Licensor fails to deliver any such materials or documents,Licensor shall indemnify and hold Pinnacle harmless (consistent with theindemnity provisions set forth in paragraph 7.f against all third party claimsand damages arising therefrom. Costs incurred by Pinnacle in correctingdeficient delivery items or in creating delivery items not delivered byLicensor will be recoupable from Licensor as Distribution Expenses hereunderand are not subject to prior approval or any caps on Distribution Expenses.

 

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

 

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

 

**a.****            ****Proceeds:** Each License Agreement shallrequire that all Gross Receipts are paid to Pinnacle.

 

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

 

**c.****            ****Priority ofDisbursements:**All funds received by Pinnacle in connection with the Picture are to bedisbursed in the following order of priority:

 

•      First, in payment to Pinnacle of theDistribution Expenses;

 

•      Second, in payment to Pinnacle of the AgencyFee;

 

•      Thereafter, to Licensor.

 

**d.****            ****Residuals andDeferments:** Foravoidance of doubt, Licensor is solely responsible for any deferments, profitparticipations, or residuals payable to any individual or entity for servicesin connection with the Picture.

 

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**5.****            ****AGENCY FEE ANDEXPENSES:**

 

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

 

**b.****            ****DistributionExpenses:**  Pinnacle shall not, without approval fromLicensor, 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 thefront or end credits of the Picture in the Territory, as well as on all artworkand promotional materials for the Territory.

 

**7.****            ****GENERALPROVISIONS:**

 

**a.****            ****Arbitration:** This agreement is subject to binding IFTA arbitration in English in LosAngeles, California, and is to be construed, interpreted, and enforced inaccord with the laws of the State of California, excluding California’s choiceof law provisions.  Accordingly, Licensorand Pinnacle, each as to and for the benefit of the other hereby irrevocablysubmit to the jurisdiction of courts of the State of California and the UnitedStates for the purpose of any action, suit or proceeding arising out of orrelated to the subject matter of, or transactions contemplated by, thisAgreement.  The prevailing party in anyaction related to or arising out of this agreement is entitled to recover all outsideattorney’s fees and costs (including expert costs) in bringing or defendingsuch action.

 

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

 

**c.****            ****Default:** No breach by either Party of any term or condition herein shall bedeemed material until the other Party has given Notice to the breaching Partyand such Party fails or refuses to substantially cure or correct the applicablebreach after such Notice is served within: twenty (20) days for monetary breaches; and (ii) thirty (30) days fornon-monetary breaches.   During the cureperiod for monetary breaches, the Party not in breach may suspend itsperformance hereunder.  Moreover, if theParty in breach fails to cure either a monetary or a non-monetary breach withinsuch prescribed time period, such Party is thereafter deemed in default of thisAgreement, and the Party not in breach, at such Party’s election, may, withoutlimitation, as to its other remedies terminate this Agreement by Notice to theother Party.

 

**d.****            ****Errors and Omissions:** Licensor shall maintain in full force and effect throughout the Termstandard form producer’s liability insurance (error and omissions insurance)with limits of not less than one million Dollars (US$1,000,000) per occurrenceand three million Dollars (US$3,000,000) total and with a deductible notgreater 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 beterminated without thirty (30) days prior written notice to the above-mentionedadditional insured parties and the certificates issued naming such parties asadditional insured entities shall include statements to this effect. As acondition subsequent to Pinnacle’s obligations hereunder, Licensor shallfurnish Pinnacle with a certificate of such insurance within ten (10) daysfollowing execution of this Agreement by Licensor.

 

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

 

**f.****             ****Indemnities:**

 

**(i)****           ****By Licensor**: Licensor shall indemnify Pinnacle, its affiliates, officers, directors,partners, employees, exhibitors, licensees, and assignees, against any and allclaims, liability, damages, costs and expenses, including reasonable outsideattorney’s fees, in connection with any third party claim or action arising outof or relating to: (i) any breach by Licensor of any representation or warrantyherein; and (ii) the License Agreements (provided they are in Pinnacle’sstandard form or a form approved by Licensor) and any financing arrangementsfor the Picture, provided that Pinnacle has not engaged in negligence or breachof the Agreement through its conduct or omission directly giving rise to suchaction, and to the extent not resulting from a material breach by Pinnacle ofits obligations under this Agreement.

 

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

 

**g.****            ****Notices:** All Notices required hereunder must be in writing and transmitted eitherby 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 copyto:

 

Kleinberg Lopez Lange Cuddy& Edel LLP

2049 Century Park East,Suite 3180

Los Angeles, California  90067-3205

Attention:  Robert M. Lange, Esq.

 

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

 

**h.****            ****Schedules:** This Agreement includes and incorporates the following Schedules thatare 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 ormodification shall be binding or effective unless in writing and signed by bothParties. This Agreement will control in the event of any conflict in termsbetween this Agreement and the Schedules. Capitalized terms (unless proper names) are defined terms with meaningsset forth on Schedule B.  This Agreementcontains the entire agreement and understanding between the Parties hereto withrespect to the subject matter hereof and the transactions contemplated herebyand 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 jointventure between the parties hereto or establish any agency or fiduciaryrelationship between them.  This Agreementis not for the benefit of any third party and should not be deemed to give anyright or remedy to any such party whether referred to herein or not. If any ofthe provisions of this Agreement become invalid, illegal or unenforceable inany respect under any law, for any reason, such provision is deemedautomatically adjusted to the minimum extent necessary to conform to therequirements for validity as declared at such time and, as so adjusted, aredeemed a provision of this Agreement as though originally included herein.  In the event that the provision invalidatedis of such a nature that it cannot be so adjusted, the provision is deemeddeleted from this Agreement as though such provision had never been includedherein, and the validity, legality and enforceability of the remaining provisionshereof are not in any way affected or impaired.

 

IN WITNESS WHEREOF, Pinnacleand 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 theabove to be picture to pictures w/out commercial blacks)

 

•      1-DBC TRAILER (NTSC)– split track OR tiedonto 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 filingsfor the motion picture

 

•      Title report

 

•      Copyright Notices for program content and forArtwork, if different

 

•      Complete song list, including musicpublishing information

 

•      Contractual credit requirements

 

•      Credit Block, main title obligations and endtitle 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 onetitle))

 

Gentlemen:

 

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

 

For good and valuableconsideration, 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 thatwe have now entered into arrangements whereby you hold in your possession andyour 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 bedelivered to you, Pinnacle and its designees shall at all times have completeand free access to said Materials.

 

3.  You will at all times perform all laboratoryservices requested by Pinnacle or its designees relating to the Picture whichlaboratory services will be performed by you at prevailing rates at Pinnacle’ssole expense.

 

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

 

5.  You presently have no claim or lien againstthe Picture or the Materials nor insofar as Pinnacle is concerned will you assertany claim or lien against the Picture or the Materials except for your chargesfor 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 foryour 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 anyway revoke, rescind or modify any representations, rights or agreements grantedin favor of Pinnacle hereunder.

 

7.  This agreement is irrevocable and may not bealtered or modified except by a written instrument executed by Pinnacle andProducer.

 

Please signify youragreement 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 materialsheld by laboratory on the Picture)

 

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**SCHEDULE B**

**DEFINED TERMS**

 

**“Advance”** means the minimum guaranteepayable 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 (inall currency) during the Distribution Term net of withholding taxes and bankfees (e.g., wire transfer charges) and which are credited to or received byPinnacle and/or to Licensor or paid with the consent or at the direction ofeither Pinnacle or Licensor to any third party.

 

“**Cable Free TV**” means only the transmission by means of coaxialor fiber-optic cable of a Motion Picture Copy for reception on televisionreceivers in private living accommodations without a charge being made to theviewer for the privilege of viewing a Motion Picture.

 

**“CablePay TV”**means transmission orretransmission of a Motion Picture Copy by means of an encoded signal overcoaxial or fiber-optic cable for reception on television receivers in privateliving 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 specialchannel which transmits a Motion Picture along with other programming on anongoing 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 suchbroadcast signal originated for the right to use the decoding device to receiveand retransmit the programming on such channel throughout such place.

 

**“DistributionExpenses”**means,subject to the overall cap, if any, set forth in the Agreement to which thisschedule is attached, all of Pinnacle’s customary out-of-pocket distributionexpenses net of discounts and rebates including without limitation, thereasonable and proper costs of materials delivered to Licensees (e.g., costs ofmanufacture, storage, vaulting, freight, delivery and courier costs), outsideaudit fees for audits of distributors (net of any recovery of audit costs),advertising, publicity (including publicity events such as press conferencesand the costs associated with the attendance of key talent, director),publicist fees associated with a special promotion (excluding Pinnacleemployees), outside legal expenses (to enforce any subdistribution or third-partyagreements), messenger and courier costs, reasonable travel and entertainingcosts (to the extent that such costs directly relate to the Picture), marketexpenses and miscellaneous expenses.

 

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

 

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

 

**“GrossReceipts”**meansan amount equal to the sum of (i) the Advances; and (ii) the Overages.    For avoidance of doubt, Gross Receiptsexclude (i) all sums paid by any third party for delivery materials, (ii) allaudit costs that are recovered from sublicensees or other parties, (iii) allfunds paid in connection with the Picture, and (iv) revenues received fromthird parties for costs (e.g., for materials) charged to and paid for by (or onbehalf of) such third parties.

 

**“Home VideoGross 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) andall related Incidental Rights thereto.

 

**“Home VideoRental”**meansVideo and Home Video other than Home Video Sell Through.

 

**“Home VideoSell Through”**means the manufacture and distribution of Videograms (restricted to theVideogram type(s) and format(s) authorized in the Agreement) for purposes ofsale to the public for private non-commercial use where ownership of suchVideograms transfers to such ultimate purchasing members of the public who usethe Videograms for private non-commercial use.

 

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

 

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

 

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

 

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

 

**“LicenseAgreements”**means a written agreement (based on Pinnacle’s customary Motion Picture LeaseAgreement which is hereby approved by Licensor) executed by Licensor (or itsassignee/designee or, as provided herein, by Pinnacle on Licensor’s behalf) inwhich any or all of the Licensed Rights to the Picture are Licensed to aLicensee within the Territory for not longer than the Distribution Term.

 

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

 

**“MotionPicture”**means any audiovisual workconsisting of a series of related images that, when shown in succession, impartan impression of motion, with accompanying sounds, if any.

 

**“MotionPicture 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 toexploitation by a specific physical form, for example, the exploitation ofVideograms, then Motion Picture Copy with respect to such medium is limited tosuch physical form.

 

**“Non-Theatrical”**meansexploitation of a Motion Picture Copy by direct exhibition before an audienceat facilities or organizations not primarily engaged in the business ofexhibiting Motion Pictures including, but not limited to, educationalorganizations, 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 flyingthe flag of countries within the Territory.

 

**“On-Line”**means exploitation of a MotionPicture by exhibition, broadcast, or transmission of a Motion Picture Copy overwhat is commonly known as the Internet or WorldWideWeb, an intranet, or a multi-nodecomputer network by any means, including satellite or over coaxial or fiber-opticcable, in such manner as to permit viewing the complete Motion Picture on videodisplays (including television monitors) without alteration of the originalcontinuity of, or sequence of images comprising, the Motion Picture.  On-Line Exploitation, if On-Line Rights arepermitted to be Licensed hereunder, is limited to transmission (includingresidence on, or transmission via, servers) within the Territory tointermediate and ultimate users

 

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

 

**“Overages”** means all other sums payable by aLicensee in addition to (or in lieu of) any Advance in consideration for theexploitation of any of the Licensed Rights (including “Overages” as defined anddesignated in the License Agreements, any television or box office escalatorsregardless of whether characterized in any License Agreement as an additionalAdvance, and all royalties collected which are paid in cash, credit, subsidy,or kind (in all currency) at any time before, during, and after theDistribution Term net of withholding taxes and bank fees (e.g., wire transfercharges) and which are received by or credited to Pinnacle and/or to Licensoror paid with the consent or at the direction of either Pinnacle or Licensor toany third party.

 

**“PayTV”** means all forms of TerrestrialPay TV, Cable Pay TV, and Satellite Pay TV exploitation of a Motion PictureCopy.

 

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

 

**“ReservedRights”**means all rights other than the Licensed Rights, including, withoutlimitation:  (i) the underlyingintangible property relating to the Licensed Rights and the Picture, includingall 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 theLicensed Rights.

 

**“Rights”** means the right to Exploit thePicture and all rights incidental to such Exploitation.  When preceded by a defined term denoting aparticular 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.

 

**“SatelliteFree TV”**meansonly the up-link transmission of a Motion Picture Copy to a satellite and itsdown-link transmission to a terrestrial satellite reception dish for thepurpose of viewing of a Motion Picture on television receivers in privateliving accommodations without a charge being made to the viewer for theprivilege of viewing a Motion Picture. For purposes of this definition, neither governmental televisionreceiver assessments or taxes, nor regular periodic basic satellite servicecharges (other than subscriptions paid for the right to receive specificprogramming channel(s) or amounts paid for the right to receive specificprograms on a fee-per-exhibition basis) are a charge to the viewer.

 

**“SatellitePay TV”**means the up-linktransmission of a Motion Picture Copy by means of an encoded signal to asatellite and its down-link transmission to a terrestrial satellite receptiondish and a decoding device for the purposes of viewing a Motion Picture ontelevision receivers in private living accommodations where a charge is made:(i) to the viewer for the right to use the decoding device for viewing anyspecial channel which transmits a Motion Picture along with other programmingon an ongoing basis; or (ii) to the operator of a hotel, motel, apartmentcomplex, co-operative, condominium project, or similar place located distantfrom the place where such broadcast signal originated for the right to use thedecoding device to receive and retransmit the programming on such channelthroughout such place.

 

**“SoundtrackRecord”**meansthe manufacture and exploitation of recordings in any form embodying all or anypart of the soundtrack of the Picture or any re-recording of all or any part ofthe soundtrack of the Picture (packaged and labeled in such a way as to beidentifiable with the Picture) in lieu of the actual soundtrack thereof.

 

**“Television”**means allforms of Free TV and Pay TV exploitation of a Motion Picture Copy.

 

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

 

**“TerrestrialFree TV”**meansonly standard over-the-air broadcast by means of Hertzian waves of a MotionPicture Copy which is intended for reception on television receivers in privateliving accommodations without a charge being made to the viewer for theprivilege of viewing a Motion Picture. For purposes of this definition, neither governmental television receiverassessments nor taxes are a charge to the viewer.

 

**“TerrestrialPay TV”**meansonly over-the-air broadcast of a Motion Picture Copy by means of encodedHertzian waves for reception on a television receiver in private livingaccommodations by means of a decoding device where a charge is made: (i) to theviewer for the right to use the decoding device for viewing any special channelwhich transmits a Motion Picture along with other programming on an ongoingbasis; or (ii) to the operator of a hotel, motel, apartment complex, co-operative,condominium project or similar place located distant from the place where suchbroadcast signal originated for the right to use the decoding device to receiveand retransmit the programming on such channel throughout such place.

 

**“Theatrical”**meansexploitation of a Motion Picture Copy by direct exhibition in conventional ordrive-in theaters that are open to the general public on a regularly scheduledbasis and charge an admission fee to view a Motion Picture.

 

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

 

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

 

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

 

**“Video” or “HomeVideo”**meansthe manufacture, distribution, rental, license, lease or sale of Videograms(restricted to the Videogram type(s) and format(s) authorized in theAgreement), which enable a Motion Picture to be perceived visually on atelevision 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 arelicensed to a Licensee in a License Agreement.

 

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

 

**“Videocassette”** means a VHS or Beta cassette orcomparable magnetic storage device in the format(s) identified as beinglicensed to A Licensee in the Agreement which is designed to be used forstoring a Motion Picture Copy on a permanent basis and is used in conjunctionwith a reproduction apparatus to cause a Motion Picture to be visible on thescreen of a television receiver.

 

**“Videogram”** means any type of Videocassetteor Video Disc, but only to the extent the specific type of electronic storagedevice and its format is identified as being licensed to a Licensee in theAgreement.

 

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

 

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

 

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