Distribution Agreement - Orion Home Entertainment Corp. d/b/a Orion Home Video and Playboy Entertainment Group Inc.
[LOGO - ORION]
HOME VIDEO
Mr. Bill Asher
Director of Planning - New Business
PLAYBOY ENTERTAINMENT GROUP, INC.
9242 Beverly Blvd.
Beverly Hills, CA 90210
As of June 27, 1996
Re: Playboy Distribution Agreement
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Dear Mr. Asher:
This deal letter, when signed by both parties, shall confirm the agreement
("Agreement") between Orion Home Entertainment Corporation d/b/a Orion Home
Video ("Orion") and Playboy Entertainment Group, Inc. ("Playboy"), that Orion
shall be the exclusive distributor of certain home video programs and product
produced by and/or on behalf of Playboy as set forth below, throughout the
Territory (as defined below).
1. Output Term: The term of the Agreement shall be for three years commencing
March 1, 1996 ("Output Term"). After two years, if Playboy is no longer in
the business of producing or having produced on its behalf motion pictures
of like type and kind as described herein, Playboy may terminate the
Agreement, upon written notice to Orion, as to the third year of the Output
Term.
2. Distribution Term: For each individual Product (as defined below),
distributed under this Agreement, Orion shall have a Distribution Term of
seven and one-half (7 1/2) years from the earlier of the complete delivery
of materials for that motion picture or street date of such Product
("Distribution Term"), Orion shall have a right of "Sell-Off" (as that term
is commonly used in the industry) of six (6) months for each individual
Product. Notwithstanding the expiration of the Distribution Term for a
particular motion picture, Orion retains a right of last refusal as to the
renewal/extension of the distribution rights for each individual motion
picture.
3. Territory: The territory ("Territory") is the United States of America and
Canada, their respective territories, possessions and commonwealths,
including, without limitation, Puerto Rico, Guam and the US Virgin Islands.
The Territory shall also include United States and Canadian armed forces
installations anywhere in the world, airlines and ships serviced out of the
United States and/or Canada and other similar areas customarily included in
such territories. Orion specifically retains the right to distribute the
Product in sub-titled and/or dubbed format(s). If Playboy requests Orion to
distribute the Product in a specified language (whether sub-titled or
dubbed) and Orion declines to so distribute the
1888 Century Park East, Los Angeles, California 90067-1728
(310) 282-0550 Fax: (310) 201-0798
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Product in such format, then Playboy is free to license those specific,
limited distribution rights as to that individual Product in the specified
language and/or format to another company.
4. Product:
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A. Playboy shall produce or have produced on Playboy's behalf and
deliver a minimum of six Playboy branded motion pictures per year of
the Output Term as follows: Each of the said six motion pictures
("Branded Product") shall have a production budget of between
$1,200,000 and $2,000,000 per motion picture and shall be at least
equal in production value and content to the Impulse films previously
produced by or on behalf of Playboy which said films have been
previously shown to Orion.
B. Playboy shall also produce or have produced on Playboy's behalf
and deliver a minimum of eight unbranded motion pictures per year of
the Output Term as follows: Playboy guarantees that each of the said
motion pictures ("Unbranded Product") shall have a production budget
within ten percent (10%) of the average production budget of the eight
Unbranded Product motion pictures selected by Orion for release during
the first year of the Output Term which are as follows: Gentleman's
Bet, Hard Time, Who Killed Buddy Blue?, Romancing Sara, Killing For
Love, The Affair, Access Denied, Hungry for You. Playboy shall make
available to Orion for inspection, audit and/or review the budgets of
these Unbranded Product motion pictures upon Orion's request for same.
C. Branded Product and Unbranded Product shall be collectively
referred to as "Product", although distribution rights are individual
to each motion picture.
D. Orion requires both an Unrated and MPAA-Rated version of Unbranded
Product. Only a Rated version of Branded Product is required for
Orion. Product shall be delivered pursuant to Orion's standard
delivery schedule (attached hereto as schedule A). Orion will identify
its post-production house for purposes of delivery by Playboy but
Orion reserves its right to quality check all materials, the cost of
such checks being recoupable distribution expense.
5. Rights Granted:
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A. Playboy hereby grants Orion the sole and exclusive right to
manufacture, distribute, advertise, publicize, promote, rent and sell
all Product on video cassette (analog and/or digital) and all linear
translations and forms (non-interactive) of video and optical disc
(including but not limited to laser disc, CD-ROM and Digital Versatile
Disc ("DVD")) in the Territory during the Distribution Term.
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B. Playboy shall, whenever possible, pre-approve acceptable uses of
the Playboy name, credit block(s), artwork and logo(s). Subject to the
following, Orion may so use the Playboy name, credit block(s), artwork
and/or logo(s) for each Product. Orion shall have the right to use the
Playboy logo and name on the video/disc packaging of Branded Product,
but may not use the Playboy logo or name on the video/disc packaging
of Unbranded Product. If Orion contemplates using the Playboy name,
credit block(s), artwork and/or logo(s) in a manner inconsistent with
the Playboy's previous approval, then Orion shall seek Playboy's
approval for this inconsistent use. If Orion does not receive approval
or disapproval from Playboy within 5 days after the request for such,
then the material submitted is then deemed approved.
C. In trade advertising, Orion shall have the right to the full and
reasonable use of the Playboy name, logo and other brand equity for
both Unbranded and Branded Product. In consumer advertising, only
Branded Product may be afforded the use of the Playboy name logo
and/or other brand equity, all subject to Paragraph 9 herein.
D. Playboy shall have meaningful consultation rights as to marketing
plans for each Product. Playboy shall have approval of all premium
offers, unless preapproved by Playboy. Orion shall have the right to
offer Playboy branded premiums (logo/name cups, shirts, mugs, pens,
etc.) for Branded Product. Such promotional items shall be available
to Orion at Playboy's acquisition cost.
E. Orion shall release and distribute Product in a like manner and
kind as other similar Orion Home Video direct-to-video releases.
6. Distribution Fees and Guarantees:
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A. Branded Product: Orion's distribution fees shall be 20% of the
gross receipts received by Orion. After the payment of Orion's
distribution fees on Branded Product, the remainder of gross receipts
for each Branded Product motion picture shall be payable as follows:
(1) Recoupment: Orion shall recoup all customary
manufacturing, distribution, marketing, advertising and
promotional costs and expenses directly paid or incurred from
gross receipts, including but not limited to printing, packaging,
duplication, shipping and delivery costs, residuals (which Orion
shall pay after Playboy supplies the pertinent information), and
such marketing costs and expenses as for publicity and talent
tours, multi-pack premiums, and the VSDA screener program. The
maximum allowable fixed marketing expense per Branded Product
motion picture shall be $105,700 (see attached Schedule A). The
maximum
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allowable mailer advertisement expense per Branded Product for the
first year of the Output Term shall be $90,000. Thereafter, the
maximum allowable mailer expense will be adjusted upward to account
for distributor rate changes. Orion specifically reserves the right to
consult with Playboy and seek approval for additional marketing
expenditures.
(2) Allocations of marketing expenses shall be done on a pro
rata basis as between like Product (multiple Branded Product, multiple
Unbranded Product) or Product with non-Playboy motion picture(s)
(Branded Product with non-Playboy motion picture(s), Unbranded Product
with non-Playboy motion picture(s)). If an allocation on a non-pro
rata basis is contemplated by Orion, then Orion shall seek the
approval of Playboy for such allocation.
(3) Advance Guarantee: There shall be a guaranteed advance for
each Branded Product paid as follows to Playboy in the total amount of
$350,000:
(a) Fifty percent (50%) of the total Advance Guarantee
($175,000.00) shall be paid to Playboy upon complete delivery of all
materials for each Branded Product.
(b) Twenty-five percent (25%) of the total Advance
Guarantee ($87,500.00) shall be paid to Playboy 120 days after the
complete delivery of all materials for each Branded Product.
(c) The remaining twenty-five percent (25%) of the
total Advance Guarantee ($87,500) shall be paid to Playboy 210 days
after the complete delivery of all materials for each Branded Product.
(3) Remainder: The remainder of gross receipts, after recoupment
by Orion of (A) (1), (2) and (3) above, shall be paid 25% to Orion and
75% to Playboy.
B. Unbranded Product: On a motion picture-by-motion picture basis, gross
receipts from the sale and exploitation of Unbranded Product shall be
payable as follows:
(1) Advance Acquisition Payment: A total of $50,000 per
Unbranded Product shall be paid as follows by Orion to Playboy as
complete and total payment for the acquisition of Distribution and
related rights for each Unbranded Product motion picture:
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(a) Fifty percent (50%) of the total Advance Acquisition
Payment ($25,000) shall be paid by Orion to Playboy upon the complete
delivery of materials for each Unbranded Product motion picture.
(b) Twenty-five percent (25%) of the total Advance
Acquisition Payment ($12,500) shall be paid by Orion to Playboy 120
days after the complete delivery of materials for each Unbranded
Product motion picture.
(c) The remaining twenty-five percent ($12,500) of the
total Advance Acquisition Payment ($12,500) shall be paid by Orion to
Playboy 210 days after the complete delivery of materials for each
Unbranded Product motion picture.
4. Remainder: All gross receipts after the payments as noted
above shall be paid to Orion.
7. Design, Duplication and Packaging: Orion shall perform all customary
design, marketing, printing, packaging, duplication, shipping and delivery
services in the regular course of business and shall recoup the same as set
forth in Paragraph 6 above. Playboy shall supply to Orion, upon reasonable
request (if available), and at no cost or expense to Orion, design
materials, artwork, films, slides and the like for the purposes of box
(sleeve) design and advertising.
8. Representations and Warranties: The parties to this Agreement represent and
warrant that they each have the power and authority to enter into this
Agreement, to grant all of the rights herein granted, that there are not
now known to either party any outstanding claim, lien, encumbrance or right
of any nature which can or will impair or interfere with any of the rights
herein granted to Orion, that the exercise of any of the rights granted
Orion will not violate the rights of any third party nor require Orion to
make any payment of any kind to a third party. Playboy shall indemnify
Orion, its officers, shareholders and employees from any claim inconsistent
with this Paragraph.
9. Trademarks, Service Marks, Copyrights and Credits: The parties agree that
the trademarks and copyrights of each party shall be protected and that
credits and logos shall be appropriately utilized upon reasonable and
appropriate notice thereof.
A. Except as otherwise provided herein, Orion shall submit all
advertising, or marketing and packaging materials concerning any element of
any Product in representative form to Playboy for Playboy's prior written
approval at least fifteen (15) days prior to their intended distribution.
Orion also must secure Playboy's prior written approval of all media for
advertising and distribution and the specific publications, broadcasters
and exhibitors which will be running the advertisements. Orion will not
disseminate any advertising material or packaging that has not been so
approved by
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Playboy in each instance. If Orion submits advertising, packaging,
marketing or other material to Playboy for approval and does not receive
either approval or disapproval from Playboy within five (5) business days
from such submission, then the material shall be deemed approved by
Playboy; and
B. Orion hereby acknowledges that the trade names "Playboy" and
"Playmate" and the registered trademark and service mark "Playboy," the
Playboy "Rabbit Head Design" and trade names "The Playboy Channel" and
"Playboy at Night" (collectively, the "Playboy Marks") are the sole and
exclusive property of Playboy. Orion shall have the right to develop and
distribute advertising, publicity, and promotional materials relating to
any Product and packing therefor incorporating both Orion's trademarks,
trade names or service marks and/or the Playboy Marks in connection with
Orion's rights hereunder; provided, however, that any such materials and
packaging (other than material obtained directly from Playboy) shall,
C. Clearly identify the Playboy Marks with a legible credit line with
the wording "Playboy" (or the "Rabbit Head Design" or "The Playboy Channel"
or "Playboy At Night" or "Playmate," as the case may be) is the mark of and
used with the permission of Playboy Enterprises, Inc." or such other words
as Playboy may designate:
D. Be submitted in representative form to Playboy for Playboy's prior
written approval in each case at least fifteen (15) days prior to their
intended distribution. Playboy may disapprove any use if such use (i)
jeopardizes the validity of any of the Playboy Marks, (ii) does not conform
to previously approved uses of the Playboy Marks, or (iii) does not conform
to Playboy's standards, which may vary from time to time. Except as
otherwise provided herein, Orion will not disseminate any material or
packaging that has not been so approved by Playboy. If Orion submits
advertising, packaging, marketing or other material to Playboy for approval
and does not receive either approval or disapproval from Playboy within
five (5) business days from such submission, then the material shall be
deemed approved by Playboy; and,
E. Other than as otherwise expressly set forth herein, Orion shall
make no use of the Playboy Marks or any confusingly similar designation
without the prior express written consent of Playboy in each instance.
Orion shall also make no use whatsoever of any other trademark, trade name
or service mark that is the property of Playboy or any of its programs, or
suppliers of Playboy without the prior express written consent of Playboy
in each Instance. Orion similarly agrees that it will not authorize or
purport to authorize any third party to make any such use, and it will
expressly provide in any applicable third party agreements that such third
parties will only be entitled to use such names and marks on materials
supplied to them by Orion in accordance with Orion's rights hereunder.
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10. Notices: All notices and other communications shall be in writing and shall
be delivered as follows:
A. If to Playboy, to: Playboy Entertainment Group, Inc..
9242 Beverly Boulevard
Beverly Hills, CA 90210
Fax: (310) 246-4050
Attention: Mr. Barry Leshtz
Sr. V.P. & General Manager, Home Video
Copy to: Sr. V.P., Business & Legal Affairs
B. If to Orion, to: Orion Home Entertainment Corporation
1888 Century Park East
Los Angeles, CA 90067
Fax: (310) 282-9902
Attention: Mr. Herbert Dorfman
Copy to: Attention: Business & Legal Affairs
Fax (310) 282-9902
11. Governing Law: This Agreement shall be governed by and construed in
accordance with the laws, of the State of California.
The parties intend to execute a more formal agreement in near future
incorporating certain additional terms and conditions, to be negotiated in good
faith. Until such more formal document is executed, this letter, when signed by
both parties, shall constitute the binding agreement between the parties.
AGREED AND ACCEPTED:
PLAYBOY ENTERTAINMENT GROUP, ORION HOME ENTERTAINMENT
INC. CORPORATION d/b/a ORION HOME
VIDEO
By: /s/ Myron DuBow By: /s/ Herb Dorfman
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Its SR. Vice-Pres. President - Orion Home Video
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SCHEDULE A
DELIVERY SCHEDULE
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This Schedule "A" is attached to and incorporated in the agreement
("Agreement") between Playboy Entertainment Group, Inc. ("Producer") and Orion
Home Entertainment Corporation ("Orion" or "Distributor") dated as of June 27,
1996 with respect to certain home video programs and product defined therein as
Product.
Producer agrees as a material obligation hereunder to make full and
complete delivery of each and every item listed below to Distributor in the Los
Angeles area to the persons and places designated by Distributor (except as
specifically noted below where only access to Distribution is required). Such
delivery by Producer will consist of making physical delivery to Distributor or
its designee at Producer's sole cost and expense (transportation costs prepaid).
1. Composite Answer Print: Delivery of our access to one complete,
final, first class composite 35mm positive print of the Picture, printed liquid
gate, fully corrected to release print standards in the color process in which
the Picture was photographed, fully cut, main and end titled, edited, scored and
assembled with the soundtrack printed thereon in perfect synchronization with
the photographic action and fit and ready for exhibition and distribution (the
"answer print"). The answer print shall be manufactured by the laboratory
approved by Distributor, and capable of manufacturing release prints of the
Picture.
2. Negatives: Delivery of or access to the complete original 35mm picture
negative and the optical composition sound negative in perfect synchronization
with the picture negative, both fully cut, main and end titled, scored, edited
and assembled and conformed in all respects to the answer print, which negatives
shall be of first class quality so that first class intermediates and positive
prints can be made therefrom, and shall be free of scratches or injury.
3. Interpositive: Delivery of or access to one first class 35mm
interpositive (IP) of the Picture (picture only). The IP shall be fully cut,
main and end titled, edited and assembled and conformed in all respects to the
above-mentioned composite positive print, and original negative. The IP must be
manufactured using the liquid gate process, in first generation from the
original negative after the answer print has been manufactured in accordance
with Paragraph 1 above.
4. Magnetic Music Master: One magnetic 1/4" track or DAT of the original
music score for the Picture, suitable for reproducing first class stereophonic
tapes or other recordings therefrom.
5. Textless Background: Delivery of or access to a clear background
(textless, i.e., without any superimposed lettering) negative of the main and
end titles and all descriptive titles, including the backgrounds for inserts,
if any, in the Picture and of any other parts of the Picture which contain any
lettering together with an interpositive of the foregoing items.
6. Work Print: If editing on film, access to the work print of the
Picture, consisting of the editing and/or cutting prints that were used in the
final editing of the Picture, assembled and conformed in all respects to the
answer print, together with the separate 35mm magnetic dialogue, music and sound
effects working tracks which shall also be assembled and conformed in all
respects to the answer print. If posted electronically, access to the work
cassettes. Access to all applicable paperwork.
7. (a) Magnetic Print Master (Domestic): Delivery of or access to a
complete first class clean dubbed and rerecorded master of the soundtrack of the
Picture on 35mm magnetic, 24 track, or other mutually agreed upon professional
audio format fully cut, edited and assembled and conformed in all respects to
the answer print. Track configuration should be standard LT-RT printmaster with
matrix encoding (Dolby or Ultra) and Dolby A or SR noise reduction.
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(b) Magnetic Master (Foreign): If available, for purposes of looping
dialogue into foreign language versions of the Picture, access to or delivery
of:
(i) A full and complete 35mm magnetic, 24 track or other
mutually agreed upon professional audio format composed of music and fully
filled effects tracks recorded in a standard L-C-R-S track configuration without
matrix encoding, but with Dolby A or SR noise reduction, fully cut, edited and
assembled and conformed in all respects to the answer print.
(c) Three-Stripe Magnetic Print Master (Domestic): Delivery of or
access to a complete first class clean dubbed and rerecorded master of the
soundtrack of the Picture on 35mm magnetic, 24 track, or other mutually agreed
upon professional audio format composed of separate dialogue, music and sound
effects tracks (3-stripe) fully cut, edited and assembled and conformed in all
respects to the answer print. Track configuration should be standard D,M,E, with
Dolby A or SR noise reduction.
(d) Stems: Delivery of or access to the final dialogue, music and
effects stems used for the final mix.
8. Video Material: D-1 525/60 is required of all delivered versions with
audio channels 1&2 being LTRT and 3&4 M&E. Textless backgrounds should be
recorded at least 2 minutes after end of program with additional color bars.
9. Trailer Material: All positive and negative picture and sound material
required for publicity and advertising purposes, including selected "takes" and
"out-takes" of the Picture requested by Distributor.
10. Television Version: Delivery of or access to the negative and positive
print of all alternative takes, cover shots, looped dialogue lines and other
material (hereinafter collectively referred to as "cover material") which
Distributor requires in connection with rating, censorship and television
exhibition requirements. Producer shall create a complete television version of
the Picture, at least 8,460 feet in length of 35mm film, suitable for exhibition
by television in the licensed territory and conforming to the continuity
standards of United States television networks and United States television
stations generally. In this connection, Producer shall provide access to the
following:
(a) One (1) first class 35mm IP, printed liquid gate, of the entire
reel of each reel of the TV Version of the Picture fully cut, edited and
assembled, in which there is contained all or any part of the cover material.
(b) Magnetic Print Master (Television): Delivery of or access to a
complete first class clean dubbed and rerecorded master of the television
version soundtrack of the Picture on 35mm magnetic, 24 track, or other mutually
agreed upon professional audio format fully cut, edited and assembled and
conformed in all respects to the television version. Track configuration should
be standard LT-RT printmaster with matrix encoding (Dolby or Ultra) and Dolby A
or SR noise reduction.
11. Alternate Music Versions: If Orion approves an alternate music
version, the following items, to the extent required, if any portion of the
musical compositions or sound recordings (collectively "music") contained on
the soundtrack of the Picture is not available for use in any and all media:
(a) One (1) original soundtrack negative for the entire reel of each
reel of the Picture in which there is contained all or any part of any
eliminations of and/or substitute music for any music contained in the original
soundtrack negative of the Picture, fully cut, edited and assembled in perfect
synchronization with the photographic action in all respects and conformed in
all respects to the entire reel of each reel of the sample composite
positive print, including therein any dubbed sound, sound effects or music
dubbed into said original soundtrack negative.
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(b) The complete 3-stripe magnetic soundtrack master from which the
soundtrack negative referred to in (a) above was made.
(c) If the main and/or end titles of the original 35mm picture negative
of the Picture contained any credits relating to music contained in the original
soundtrack negative, but not contained in the alternate soundtrack negative
referred to in (a) above, then a newly photographed set of 35mm negative main
and/or end titles, as the case may be, of the Picture, fully cut, edited and
assembled and conformed in all respects (including, without limitation, length)
to the main and/or end titles, as the case may be, of the original 35mm picture
negative of the Picture referred to above, excluding only from such newly
photographed main and/or end titles, as the case may be, any credits relating to
music which are contained in the original soundtrack negative referred to above,
but not contained in the alternate soundtrack negative referred to in (a) above,
but, including in such newly photographed main and/or end titles, as the case
may be, such credits as may be required for any music contained in the original
soundtrack negative which are not contained in the original soundtrack negative
referred to above.
(d) One (1) interpositive printed from the original negative of the
main and/or end titles, as the case may be, referred to in (c) above, fully cut,
edited and assembled and conformed in all respects to the original negative of
the main and/or end titles, as the case may be, referred to in (c) above.
12. Miscellaneous Material: Delivery of or access to all such film,
soundtrack facilities and material as may be available, necessary and proper for
the purpose of enabling Distributor to obtain and manufacture positive release
prints of the Picture and all trailers thereof as may be reasonably required by
Distributor for the purpose of distributing, exhibiting, and exploiting the
Picture and said trailers throughout the distribution territory in 35mm and 16mm
and in all systems, i.e., standard, wide screen, scope, etc.
13. Cuts, Trims: Delivery of or access to the negative and positive prints
of all cutouts, trims, second takes, tests, sound effects tracks, dialogue
tracks and music tracks made by Producer in connection with the production of
the Picture, together with all scrap film connected with the Picture, whether
or not included in the completed Picture.
14. Stills: The original black and white and color negatives, two (2) sets
of black and white contact proof sheets of all still photographs taken in
connection with said Picture, and all color transparencies. In no event shall
Producer deliver less than the black and white negatives and two (2)
corresponding positive prints of each of the following; 100 production stills of
said Picture, 85 of which shall depict production scenes of the Picture and 15
of which shall be gallery or portrait sittings of the principal members of the
case of said Picture, and no less than 75 color transparencies. All of said 100
black and white negatives shall be 8" x 10" in size (which may be enlarged to
said 8" x 10" size from any other smaller original negative), and each such
photograph shall be of reproduction quality suitable for use by Distributor for
advertising and lithograph material and so-called poster artwork. Each
photograph shall bear an appropriate caption identifying the subject and scene
depicted. Any and all approvals or other authorizations that may be required in
connection with Distributor's use of said photographs will be secured by
Producer and delivered to Distributor at the time Producer delivers the
respective photographs to Distributor.
15. Publicity Material: All publicity material which may have been prepared
by or for Producer by any person, firm or corporation in connection with the
Picture, but not less than one complete set of all advertising materials
available, including without limitation press books, posters and publicity
material.
16. Dialogue and Action Continuity: One (1) typewritten or photo-reproduced
copy of a detailed combined dialogue and action continuity of the completed
Picture, conformed in all respects to the dialogue and action contained in the
completed Picture.
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17. Screenplay: One (1) copy of the final screenplay or shooting script
used by Producer in connection with photography of the Picture, as well as the
film editor's papers, code books and similar materials if requested by Orion.
18. (a) Music Cue Sheets: One (1) copy of the music cue sheet(s) of the
Picture and any other materials delivered to Distributor which contain music,
including without limitation trailer and promotional reels, in the form attached
as Exhibit "B-1" hereto, setting forth: (1) the title of the musical
compositions and sound recordings, if applicable, (2) names of the composers and
their performing rights society affiliation; (3) names of recording artists; (4)
the nature, extent and exact timing of the uses made of each musical composition
in the Picture, (5) the name and address of the owner of the copyright of each
musical composition and sound recording, (6) the name and address of the
publisher and company which controls the sound recording, and (7) the other
information requested in Exhibit "B-1."
(b) Composer and Conductor's Score: If requested by Distributor, the
entire musical score used by the composer and/or conductor, together with all
original music (including all musical compositions), manuscripts, instrumental
and vocal parts and other music prepared by or under the supervision of Producer
in connection with the Picture.
19. Music Licenses: Copies of all synchronization, performance and master
use licenses in connection with the music contained in the Picture.
20. Contracts: Copies of all employment contracts with principal cast
members, directors, producers, writers and composers, and all chain-of-title
documentation regarding the literary property upon which the Picture is based.
To the extent requested by Distributor, any additional licenses, contracts,
releases, assignment and/or other written permissions from the proper parties in
interest permitting Producer to use any musical, literary, dramatic and other
materials of whatever nature used by it in the production of the Picture.
21. M.P.A.A.: A paid rating certificate from the Code and Rating
Administration of America, Inc., and production code number.
22. Copies of Synopses: One (1) copy of a brief synopsis in the English
language of the story of the Picture and one (1) copy of any synopsis prepared
in a foreign language.
23. Producer's Statement Re Credits: A complete statement in triplicate
setting forth the names of all persons to whom Producer is contractually
obligated to accord credit on the screen or in any paid advertising, publicity
or exploitation of the Picture, hereinafter referred to as "credit", and to
include in such statement excerpts from any such agreements defining or
describing the form and nature of such required paid advertising credits, in
accordance with the Agreement to which this exhibit is attached. Producer agrees
that such statement shall be delivered to Distributor as early as possible and
in no event shall such statement contain inconsistent requirements for credit.
Producer shall also deliver a list identifying all cast members of the Picture.
Time is of the essence with respect to these requirements, and failure to make
timely delivery shall constitute a material breach of this Agreement.
24. Statement of Costs: A certified statement of the actual direct costs
of production of the Picture.
25. Other Instruments: Upon Distributor's request, such instruments as
Distributor may deem necessary or proper to evidence, maintain or effectuate any
or all of the security or other rights granted to Distributor under any
provisions of this Agreement; and should Producer fail to execute, acknowledge
and deliver any such instrument upon Distributor's request therefor, Distributor
may do so, for and on behalf of Producer, as Producer's attorney-in-fact.
26. Name and Address of Custodian of Undelivered Material; With respect to
any material provided for herein which is not physically delivered to
Distributor, the name and address of the custodian as to each undelivered
element.
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27. Title to Foreign Language Elements: If any foreign language elements
of the Picture are in the possession or custody of a foreign laboratory,
Distributor shall have access to said foreign language elements, notwithstanding
that other distributors may have access thereto as well. If Distributor has
advanced monies for such foreign language elements, title to such elements shall
be held by the foreign laboratory in the name of Distributor.
28. Errors and Omissions Insurance: Certificate of Producer's Errors and
Omissions insurance policy covering the Picture and required endorsements
thereto adding Distributor as an additional named insured.
29. Laboratory Access Letter: If all preprint material is not owned and
held in the name of Orion, a letter from a first class laboratory in a form
similar to the attached Exhibit "B-2" certifying that all preprint materials are
in good condition and that first class, commercially acceptable release prints
can be processed from the negative materials.
30. Residuals: A statement in the form attached hereto as Exhibit "B-3"
containing the following information for purposes of determining residual
payments: (1) Date principal photography commenced; (2) Name and address of each
writer, director, actor, actress, unit production manager, first and key second
assistant directors and any other personnel entitled to residuals (and, if
writer, director, actor, actress, unit production manager, first and key second
assistant directors or other personnel is a loan-out, name of lender also),
together with the following information concerning each: (i) Social Security
number, (ii) W-4 classification (marital status and number of dependents
claimed) and a photocopy of individual's W-4 form if available, (iii) length of
employment of SAG personnel (actual time worked or guaranteed time, whichever is
higher, expressed in weeks and days) and (iv) a copy of Notice of Tentative
Writing Credits or if no WGA writer involved, a statement by Producer so
stating. If PGA or DGA personnel employed, Producer must list same or submit a
statement setting forth that no members of such unions or guilds were employed
in connection with the Picture. If AFM personnel employed, Producr must so
state.
31. Ownership, Exemption or Reduced Rate Certificate: A certified
statement containing the name and address of each participant in net profits to
whom Distributor must account and make payment (including the Producer) who is
not a resident of the United States, and with respect to each: (1) United States
Internal Revenue Form #1001 (Ownership, Exemption or Reduced Rate Certificate)
completed in full and signed by each such participant; (2) From the appropriate
taxing or other authority of the government of the foreign country of residence
of each participant in net profits: (i) A certificate described in Paragraph "A"
of said Form #1001 that such nonresident profit participant is either a
nonresident alien individual or fiduciary, a foreign partnership, a foreign
corporation or other foreign entity, a nonresident foreign partnership composed
in whole or in part of nonresident aliens, or a nonresident foreign corporation,
and (ii) Any other certificate issued to the Distributor as withholding agent to
be used to qualify the nonresident profit participant for exemption from
withholding tax under existing tax treaties.
32. Legal Opinions, etc: All legal opinions, searches and other documents
which Producer is required to deliver to Orion under the foregoing Agreement.
33. Picture Produced Outside U.S.: If the Picture was produced, in whole
or in part, outside the United States and if requested by Distributor, the
following additional items:
(a) A Certificate of Nationality and Certificate of Origin issued by
local authorities.
(b) Censorship clearance certificate issued by local authorities.
(c) An export license covering all negative and positive film relating
to the Picture issued by local authorities.
34. Exclusive License: An Exclusive License in the form attached as
Exhibit "A".
5
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35. Sexually Explicit Scenes: If the Picture contains any sexually
explicit scenes, then Producer shall deliver to Orion a statement, which
identifies the scenes and sets forth the names and ages of all performers
appearing in scenes; said statement shall be delivered in accordance with the
Child Protection and Obscenity Enforcement Act of 1988.
Acceptance by Orion of less than all of the foregoing items with respect to
the Picture and/or release of the Picture, prior to delivery of all of the
aforesaid items, shall in no event be construed as a waiver by Distributor of
Producer's obligation to deliver any such item not so delivered. No waiver of
delivery of any such item shall be valid or binding unless in writing and signed
by Distributor.
Distributor shall have the right to inspect and examine the material and
documents tendered as delivery hereunder and shall advise Producer within thirty
(30) days after the tendered delivery if and wherein same is not complete,
whereupon Producer shall promptly deliver to Distributor any items which it
shall have failed to deliver in the first instance. Distributor may (but shall
not be obligated to) accept delivery of the Picture if such delivery shall not
be complete, in which event Distributor may supply, or require Producer
thereafter to supply, at the sole cost and expense of Producer, such items which
Producer shall have failed to deliver in the first instance. Such acceptance of
incomplete delivery shall not be deemed to be a waiver of Distributor's right to
demand and require a full delivery as herein defined. All sums advanced by
Distributor which Distributor shall have the right but not the obligation to
advance, for delivery items not furnished or made available by Producer shall be
paid to Distributor by Producer promptly on demand. To secure the payment by
Producer to Distributor of any such sum, Producer assigns to Distributor any and
all amounts otherwise payable to Producer under this Agreement.
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EXHIBIT "A"
EXCLUSIVE LICENSE
-----------------
In consideration of Ten Dollars ($10.00), paid by Orion Home Entertainment
Corporation ("Licensee"), and for other good and valuable consideration, receipt
of which is hereby acknowledged, the undersigned does hereby grant, assign and
license to Licensee under the copyright laws of the United States and Canada,
the following rights:
1. Picture:
------------------------
2 Term: Seven and One-Half (7 1/2) years from the earlier of complete
delivery of materials for each individual motion picture or street date for
that individual motion picture.
3. Territory: The "Territory" hereunder shall mean the United States and
Canada, their respective territories and possessions, including, without
limitation, Puerto Rico, Guam, the U.S. Virgin Islands and the Panama Canal
Zone, and their armed forces PX's wherever located (the "Licensee
Territory").
4. Rights: The sole and exclusive right and license to manufacture Licensed
Video Devices respecting the Picture; to distribute, sell, rent, advertise,
publicize and promote such Licensed Video Devices in the Territory for non-
commercial private home use; to authorize others to do each of the
foregoing; and to issue or authorize the issuance of public performance
licenses for such Licensed Video Devices ("Home Video Rights").
This license is executed in accordance with and is subject to the terms and
conditions of the Letter Agreement dated as of June 27, 1996, between the
undersigned and Licensee relating to the license to Licensee of the above
described rights in the Picture.
IN WITNESS WHEREOF, the undersigned has caused these presents to be signed
by its duly authorized officer on ____________, 1996.
PLAYBOY ENTERTAINMENT GROUP, INC.
By:
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Its:
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