Sample Business Contracts


Distribution Agreement [Amendment] - Playboy Entertainment Group Inc. and Universal Music & Video Distribution



As of February 28, 1997



Universal Music & Video Distribution
70 Universal City Plaza
Universal City, CA  91608
Attention:  Michael Ostroff, Esq.

RE:  Amendment to Playboy Entertainment Group, Inc. Distribution Agreement

Gentlemen:

Reference is made to that certain letter agreement dated as of August 22, 1991
between Uni Distribution Corp., now known as Universal Music & Video
Distribution ("Uni"), and Playboy Video Enterprises, Inc., the predecessor in
interest to Playboy Entertainment Group, Inc. ("Playboy"), as such letter
agreement has been supplemented and amended, including by that certain letter
amendment dated as of March 24, 1995 between Uni and Playboy (such as of March
24, 1995 letter amendment is referred to as the "First Amendment"; and such
August 22, 1991 letter agreement, as it has been supplemented and amended, is
referred to as the "Agreement").  All defined terms used in this second letter
amendment (the "Second Amendment") and not defined herein are defined in the
Agreement.  Uni and Playboy desire further to supplement and amend the Agreement
as follows:

1.   Term. The third contract year of the Term for both Catalog Programs and New
     Release Programs shall be extended to June 15, 1998, and the Term for both
     Catalog Programs and New Release Programs shall terminate on such date,
     subject to extension of the Term for only New Release Programs pursuant to
     subparagraph 3(a) of the First Amendment.

2.   No Extension or Refund for Unrecouped Catalog Program Advances.
     Subparagraph 6(b)(vii) of the First Amendment is amended by deleting all of
     the remainder of such subparagraph 6(b)(vii) of the First Amendment after
     the words "to Playboy pursuant to Paragraph 7 below." in Line 10 of such
     subparagraph. Thus, if Uni has not recouped the total amount of the
     Advances for all contract years of the Term for Catalog Programs paid to
     Playboy pursuant to Paragraph 7 of the First Amendment, there shall be no
     potential extension of the Term for Catalog Programs beyond June 15, 1998,
     nor shall Playboy be obligated to refund to Uni any portion of the then-
     unrecouped amount of such total Advances paid to Playboy.

3.   Formats. As of February 28, 1997, the format commonly known as "digital
     versatile disc(s)" ("DVD(s)") shall be excluded from the authorized formats
     under the


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     Agreement until the first to occur of the following dates (a) June 15,
     1998, or (b) the date on which Uni notifies Playboy (or Playboy notifies
     Uni) in writing, accompanied by reasonably satisfactory written evidence,
     that published Electronic Industry Association statistics evidence that the
     installed base of DVD hardware players in the United States for home video
     only use (versus hardware players with computer DVD capabilities) has
     reached three million (3,000,000) individual units (the first of such dates
     to occur is referred to as the "DVD Termination Date"). If the DVD
     Termination Date is prior to June 15, 1998, then as of the DVD Termination
     Date the authorized formats under the Agreement shall once again include
     DVDs.

4.   DVD Distribution.

     (a)  Image Entertainment, Inc.  Playboy shall have the right to grant to
          Image Entertainment, Inc. ("Image") the right to distribute any or all
          New Release Programs and Catalog Programs in any part of the Territory
          in the DVD format, at any time from February 28, 1997 through the DVD
          Termination Date.

     (b)  Grace Period.  If the DVD Termination Date is prior to June 15, 1998,
          then Playboy also shall have the right to grant to Image a six (6)-
          month "grace" period (the "Grace Period") following the DVD
          Termination Date during which Image shall continue to be authorized to
          manufacture, sell and distribute in the Territory DVDs of any or all
          New Release Programs and Catalog Programs that either have been
          previously released by Image or for which Image has paid Playboy an
          advance against Playboy's share of revenues from the distribution of
          such DVDs.

     (c)  Uni Royalty.  Playboy shall cause Image to pay to Uni a royalty equal
          to seven and one-half percent (7.5%) of all "net invoiced sales" by
          Image (and as otherwise defined in Section 5 of the Agreement) of DVDs
          of New Release Programs and Catalog Programs in the Territory during
          the period commencing February 28, 1997 and ending on the first to
          occur of (i) the end of the Grace Period, or (ii) June 15, 1998 (such
          period is referred to as the "DVD Distribution Term"). Such sums shall
          be payable by Image to Uni on a calendar quarterly basis. All
          allowances for reserves taken during the DVD Distribution Term shall
          be retroactively adjusted in accordance with the provisions of the
          Agreement regarding allowances for reserves, and any additional
          royalties payable to Uni on account of such adjustments shall be paid
          at the time of such adjustments, including, if applicable, after the
          DVD Distribution Term.

     (d)  Suggested Retail and Wholesale Pricing for DVD.  During the DVD
          Distribution Term, Playboy agrees that the suggested retail price
          in the Territory for DVDs of New Release Programs and Catalog Programs
          shall not be lower than the full suggested retail price for one-half
          inch (1/2") VHS videocassette copies ("Videocassettes") of the same
          New Release Program or Catalog Program in the Territory, and that the
          suggested wholesale price in

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          the Territory for DVDs of New Release Programs and Catalog Programs
          shall not be lower than the full suggested wholesale price for
          Videocassettes of the same New Release Program or Catalog Program in
          the Territory.

     (e)  Uni DVD Responsibilities. During the DVD Distribution Term, Uni shall
          have no responsibility for the manufacture, sale, collection of
          revenue or the distribution of DVDs by Image.

Except as set forth in this Second Amendment, the Agreement is not otherwise
modified in any respect, and the Agreement, as supplemented and amendment by
this Second Amendment, is ratified and confirmed.

If this Second Amendment accurately reflects the agreement between Uni and
Playboy with respect to the subject matter of it, please so indicate by signing
this Second Amendment in the appropriate space provided below.

Very truly yours,


PLAYBOY ENTERTAINMENT GROUP, INC.


By:  /s/ Myron DuBow
     --------------------------------
  Myron DuBow
  Sr. V.P. Business and Legal Affairs
-------------------------------------
        Name and Title


ACCEPTED AND AGREED TO:

UNIVERSAL MUSIC & VIDEO DISTRIBUTION


By:  /s/ Michael Ostroff
     --------------------------------
  Michael Ostroff
  Sr. V.P. Business & Legal Affairs
-------------------------------------
        Name and Title


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