Agreement Regarding Contract Extensions and New Ventures - Playboy Entertainment Group Inc. and Intelsat USA Sales Corp.
May 7, 2004
Intelsat USA Sales Corp.
3400 International Drive NW
Washington, DC 20008-3006
Attn: Mr. Stephen Spengler
RE: AGREEMENT REGARDING CONTRACT EXTENSIONS AND NEW VENTURES
Dear Mr. Spengler:
Reference is made to the following certain agreements:
A. Contract Number T70102100 between Playboy Entertainment Group, Inc.,
("Playboy") and Loral SpaceCom Corporation doing business as Loral
Skynet ("Loral") dated March 1, 2001 in connection with the C-Band
transponder capacity service on the Telstar 7 Satellite, now known
as the Intelsat Americas 7 Satellite ("IA 7"), Transponder 15 (the
"IA 7-C15 Agreement"). The IA 7-C15 Agreement was transferred and
assigned from Playboy to its wholly-owned subsidiary, Andrita
Studios, Inc. ("Andrita") effective February 1, 2004.
B. Contract number T70309257 between Andrita and Loral dated November
20, 2003 in connection with the C-Band satellite space segment
capacity, consisting of 18.0 MHz bandwidth allocation, on IA 7,
Transponder 9 (the "IA 7-C9 Agreement").
All rights and obligations pursuant to the IA 7-C15 Agreement, and the IA 7-C9
Agreement were assumed by Intelsat, Ltd. ("Intelsat") as part of its acquisition
of certain Loral assets and customer contracts as of March 17, 2004.
This letter, when signed by both parties, shall reflect the agreement (the
"Agreement") between Intelsat and Playboy in connection with the following:
1. IA 7-C15. Playboy and Intelsat agree to extend the term of the IA
7-C15 Agreement from its current term expiration of January 31, 2010
to a term expiration of January 31, 2013, as set forth more
specifically in the first amendment to the IA 7-C15 Agreement dated
May 7, 2004 (the "IA 7-C15 First Amendment"). The IA 7-C15 First
Amendment is attached hereto as Exhibit "A" and incorporated by this
reference as part of this Agreement.
2. IA 7-C9. Playboy and Intelsat agree to add an additional 18.0 MHz
bandwidth allocation to the IA 7-C9 Agreement, as set forth more
specifically in the first amendment to the IA 7-C9 Agreement dated
May 7, 2004 (the "IA 7-C9 First Amendment"). The IA 7-C9 First
Amendment is attached hereto as Exhibit "B" and incorporated by this
reference as part of this Agreement.
3. Digital Channel Platform Agreement. Playboy and Intelsat agree to
extend the term of that certain Digital Channel Platform Agreement
dated February 4, 2003 between Playboy and Loral (as predecessor in
interest to Intelsat) (the "Digital Channel Platform Agreement")
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from its current term expiration of February 3, 2008 to a term expiration
of January 31, 2013, as set forth more specifically in the first amendment
to the Digital Channel Platform Agreement dated May 7, 2004 (the "Digital
Channel Platform First Amendment"). The Digital Channel Platform First
Amendment is attached hereto as Exhibit "C" and incorporated by this
reference as part of this Agreement.
4. Preferred Global Provider. Playboy agrees that, for so long as the Digital
Channel Platform Agreement dated February 4, 2003 between Playboy and
Loral, as predecessor in interest and obligation to Intelsat, remains in
effect, Intelsat and its Affiliates shall be the preferred provider of
domestic and international satellite and terrestrial capacity for Playboy
and its Affiliates. As preferred provider, Playboy shall notify Intelsat
in writing of any new requirements for itself and/or its Affiliates
relating to space segment, terrestrial capacity or a combination of both,
and Intelsat and/or its Affiliates may submit a written bid (the "Intelsat
Bid") in connection with such requirements. The notice referred to above
shall include the origination and destination point(s), the amount of
capacity required, and a technical description thereof. Playboy further
agrees that provided that: 1) Intelsat's technology solution meets or
exceeds Playboy's requirements, as solely and reasonably determined by
Playboy; and 2) Intelsat's proposed terms and conditions comprising the
Intelsat Bid are equal to or at a lower price than the competing bids
received by Playboy in connection with the specific requirement for which
a proposal is being requested, as solely and reasonably determined by
Playboy, then Playboy shall be obligated to accept the Intelsat Bid. In
the event the Intelsat Bid is higher than competing bids received by
Playboy, Playboy will provide Intelsat with the terms and conditions that
would be acceptable to Playboy (the "Playboy Terms"), which Playboy Terms
shall not be higher than the lowest competing bid, and Intelsat shall have
the one-time right to meet the Playboy Terms within five (5) business days
of Playboy providing Intelsat with the Playboy Terms. Should Intelsat
elect not to meet the Playboy Terms, Playboy shall be free to secure its
capacity requirements from any source it elects, provided that such
capacity does not exceed the competing minimum bid. An "Affiliate" shall
be defined as any entity that any party may directly, or indirectly
through an intermediary, direct or cause the direction of the management
and policies of the specified entity without the approval or agreement of
third parties. In the event the approval or agreement of a third party is
required to direct or cause the direction of the management and policies
of a such an entity, Playboy agrees in good faith to submit the Intelsat
Bid to such third party for consideration; however, Intelsat acknowledges
that Playboy cannot control the ultimate vendor selection in this
situation.
5. Strategic Advice. Playboy shall provide Intelsat with strategic advice
regarding all reasonable aspects related to the domestic distribution of
cable networks, via satellite, to domestic cable headends, DTH platforms
and SMATV systems, as Intelsat reasonably requests such advice, so long as
the Digital Channel Platform Agreement remains in full force and effect.
Playboy's obligation to provide strategic advice shall not be deemed to
create a fiduciary duty on the part of Playboy, nor shall it be deemed to
place the parties in the relationship of partners or joint venturers.
6. Galaxy Carriage. Intelsat shall utilize best efforts to secure carriage
for Playboy on the Hong Kong based Galaxy platform. Intelsat shall further
make best efforts to secure playback and origination services from Galaxy
for the Playboy channels on Galaxy. Playboy acknowledges that Intelsat is
a partner in the Galaxy platform and can only utilize its best efforts,
but not guarantee such carriage, as such requires the agreement of the
other Galaxy platform partner(s).
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7. Notices. All notices, demands, requests, or other communications which may
be or are required to be given, served, or sent by one party to the other
party pursuant to this Agreement (except as otherwise specifically
provided in this Agreement) shall be in writing and shall be delivered by
confirmed facsimile, confirmed overnight mail, by hand or mailed by
first-class, registered or certified mail, return receipt requested,
postage prepaid, address as follows:
If to Playboy: Andrita Studios, Inc.
3030 Andrita Street
Los Angeles, CA 90065
Attention: Mr. William Tillson
Phone: 323-344-4610
Facsimile: 323-276-4500
Copy to: Playboy Entertainment Group, Inc.
2706 Media Center Drive
Los Angeles, CA 90065
Attention: Ms. Alexandra Shepard
If to Intelsat: Intelsat Ltd.
3400 International Drive NW
Washington, DC 20008-3006
Attn: Ramu V. Potarazu
Phone: 202 944 7200
Facsimile: 202 944 7860
Copy to: General Counsel
Either party may designate by notice in writing a new address or
addressee, to which any notice, demand, request, or communication may
thereafter be so given, served or sent. Each notice, demand, request, or
communication shall be deemed sufficiently given, served or sent for all
purposes three (3) days after depositing such notice in the United States
Mail, or one (1) day after delivery to a nationally recognized overnight
courier for overnight delivery if such notice is properly addressed and
the appropriate fee is prepaid, and the same day as hand delivered or
faxed with confirmation.
8. Headings. The section headings in this Agreement are inserted only as a
matter of convenience, and in no way define, limit or extend or interpret
the scope of this Agreement or of any particular section.
9. Governing Law. All questions with respect to this Agreement and the rights
and liabilities of the parties will be governed by the laws of the State
of New York, irrespective of the choice of laws provisions of New York or
any other jurisdiction. The parties each hereby consent to the personal
jurisdiction and venue in the state and federal courts sitting in the
State of New York.
10. Counterparts. This Agreement may be executed in two or more counterparts,
each of which will be deemed an original, but all of which together will
constitute one and the same instrument.
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11. Confidentiality. This Agreement shall be kept strictly confidential,
except for disclosure: (a) to the extend required by the law or legal
process, in which case the parties shall seek confidential treatment of
the document and the information contained herein, (b) as a part of normal
accounting and/or auditing procedures, (c) to each party's parent company,
provided any such party shall have agreed to keep this Agreement
confidential pursuant to an agreement. Notwithstanding the foregoing,
Intelsat shall have the right to issue a press release regarding this
Agreement provided such press release shall meet with Playboy's approval,
not to be unreasonably withheld.
12. Entire Agreement. This Agreement, together with its attachments,
constitute the entire agreement between the parties and supersedes all
prior agreements and understandings, oral and written, with respect to the
subject matter hereof.
Very truly yours,
PLAYBOY ENTERTAINMENT GROUP, INC.
BY: /s/ Alexandra Atkins Shepard
--------------------------------
Alexandra Atkins Shepard
Senior Vice President
AGREED AND ACCEPTED:
INTELSAT USA SALES CORP.
BY: /s/ Stephen Spengler
--------------------------
Stephen Spengler
Director and President
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Exhibit "A"
IA 7-C15 First Amendment
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