Digital Channel Platform Agreement - Loral Skynet(R)(1) and Playboy Entertainment Group Inc.
Playboy Entertainment Group, Inc.
Contract Number GSS0210100
Terms and Conditions
February 4, 2003
Page 1 of 24
EXECUTED AGREEMENT
LORAL SKYNET/PLAYBOY ENTERNTAINMENT GROUP, INC.
DIGITAL CHANNEL PLATFORM AGREEMENT
Contract Number GSS0210100
This Digital Channel Platform Agreement (the "Agreement") is made
and entered into as of this 4th day of February, 2003, by and between Loral
Skynet(R)(1), a Division of Loral SpaceCom Corporation, a Delaware corporation
having a place of business at 500 Hills Drive, Bedminster, New Jersey 07921
(hereinafter "SKYNET," which expression shall include its successors and
permitted assigns), and Playboy Entertainment Group, Inc., a Delaware
corporation having its principal place of business at 2706 Media Center Drive,
Los Angeles, California 90065 (hereinafter "PLAYBOY," which expression shall
include its successors and permitted assigns). PLAYBOY and SKYNET will be
referred to collectively herein as the "Parties," and each individually as a
"Party."
W I T N E S S E T H
WHEREAS, SKYNET operates a domestic satellite system and offers
services to commercial customers on such satellite system;
WHEREAS, PLAYBOY provides, among other things, cable/satellite
television programming, studio production services and
compression/encryption/uplink service to itself and/or other third parties;
WHEREAS, SKYNET and PLAYBOY desire to create and market to potential
customers a multi-channel video and audio transmission service, including video
compression, uplink, and satellite capacity via SKYNET's Telstar 7 satellite;
and
WHEREAS, SKYNET and PLAYBOY each agrees to perform certain
obligations and duties set forth herein and to abide by the terms of this
Agreement;
----------
(1) SKYNET and its logo are registered trademarks of Loral SpaceCom
Corporation.
LORAL SKYNET AND PLAYBOY PROPRIETARY
<PAGE>
Playboy Entertainment Group, Inc.
Contract Number GSS0210100
Terms and Conditions
February 4, 2003
Page 2 of 24
NOW, THEREFORE, in consideration of the foregoing premises and of
the mutual covenants hereinafter contained, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Parties hereto agree as follows:
1. CONTRACT DOCUMENTS AND DEFINITIONS
1.1 Contract Documents. The contract documents consist of this
Agreement and the following Appendices, as each may be amended from time to
time, which are attached hereto and incorporated into this Agreement by this
reference:
Appendix 1 MCPC Technical Specifications/Engineering/Operations Plan
Appendix 2 Non-Disclosure Agreement, dated October 15, 2002
1.2 Definitions. Terms that begin in capital letters, other than
names of Parties and Section headings, used in the various Sections of this
Agreement, whether singular or plural, shall have the meanings specified below,
unless otherwise defined in the text of this Agreement.
"Affiliate" of a Party shall mean: (i) a Person directly or
indirectly (through one or more intermediaries) controlling, controlled by, or
under common control with that Party; or (ii) any executive officer, director,
or general partner of that Party. For the purposes of this definition "control"
means the possession, direct or indirect, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise.
"Background Information" shall mean all Confidential Information and
Intellectual Property of such Party in any form, including the specifications,
designs, engineering details, marketing analyses, certification procedures,
business models, and other data pertaining to the provision of Services
hereunder.
"Bankruptcy Exception" shall mean all applicable bankruptcy,
insolvency, and similar laws affecting creditors' rights generally.
"Confidential Information" shall mean all information, in any form,
furnished or made available directly or indirectly by one Party to the other
Party, which is marked confidential, restricted, proprietary, or with similar
designation, including: (i) all specifications, drawings, designs, documents,
correspondence, software, documentation, source code, data, and other materials
and work products produced in the course of performance of this Agreement, (ii)
all information concerning the operation, businesses, or affairs of a Party or
the relation of such Party with its customers, employees, and service providers
(including customer lists, customer information, account information, and
consumer markets), (iii) software provided to a Party hereto by or through the
other Party, and (iv) other information, systems, and designs and architecture,
and data stored on magnetic media or otherwise or communicated orally by any
Party, and obtained,
LORAL SKYNET AND PLAYBOY PROPRIETARY
<PAGE>
Playboy Entertainment Group, Inc.
Contract Number GSS0210100
Terms and Conditions
February 4, 2003
Page 3 of 24
received, transmitted, processed, stored, archived, or maintained by a Party
under this Agreement. "Confidential Information" shall not include any
information (i) that (a) the Party receiving the information was already in
possession of prior to disclosure thereof by the Party furnishing the
information, (b) was then available to the public, or (c) becomes available to
the public at no fault to the Party receiving the information; (ii) that is
disclosed pursuant to a legal requirement or in accordance with an order of a
court of competent jurisdiction or regulatory agency; (iii) that is in the
public domain through no fault of the receiving Party; (iv) that is
independently developed by the receiving Party; or (v) that is lawfully
disclosed to the receiving Party by a third party without breach of any
confidentiality restrictions. For purposes limited to this definition only,
"Party" shall also include Affiliates of such Party.
"Customers" shall mean Persons directly contracting for Services
from SKYNET and/or PLAYBOY.
"Failure" shall mean any of the following: (1) the failure of the
uplinking or video compression equipment; (2) the inability to pass signals
through a space segment when it is illuminated with any authorized transmitted
carrier; or (3) an occurrence of multiple or consecutive Interruptions, for
specified periods, as may be set forth in applicable contracts between SKYNET
and Customers and as measured by PLAYBOY and/or SKYNET's Hawley, Pennsylvania
earth station; provided that in each case the affected Customer shall have
vacated its signal to permit verification.
"Foreground Information" shall mean the Confidential Information and
Intellectual Property developed by one or both of the Parties in connection with
the performance of this Agreement, which shall not include any Background
Information of either Party.
"Fully Protected," with respect to the Telstar 7 satellite, shall
mean that, in the event of a Failure not caused by a Customer, the Customer's
space segment service will be restored on spare equipment on the satellite at
the time of Failure or on a comparable space segment on the same satellite, or
on another SKYNET satellite then in orbit, as may be set forth in applicable
contracts between SKYNET and Customers. Fully Protected transponders are
Non-Preemptible.
"Indemnification Claim" shall mean a claim for indemnification under
Section 8 of this Agreement.
"Indemnitee," "PLAYBOY Indemnitee," or "SKYNET Indemnitee" shall
mean a Party, an Affiliate of a Party, and the respective officers, directors,
employees, agents, successors, and assignees of each.
"Indemnitor" shall mean PLAYBOY or SKYNET, as the case may be.
LORAL SKYNET AND PLAYBOY PROPRIETARY
<PAGE>
Playboy Entertainment Group, Inc.
Contract Number GSS0210100
Terms and Conditions
February 4, 2003
Page 4 of 24
"Intellectual Property" shall mean any and all patents, patentable
inventions, discoveries, improvements, ideas, methodologies, processes,
databases, and software (including source code and object code), programming
tools, drawings, specifications, diagrams (including systems, sub-systems, and
board level), manuals, and documentation, copyrights in writings, designs, mask
works, know-how, trade secrets (including confidential and other non-public
information), trademarks, trade names, contract or licensing rights,
confidential and proprietary information protected under contract or otherwise
under law, and any other similar rights or interests in intellectual property.
"Interruption" shall mean a period during which the Services fail to
meet the performance specifications for such Services, as may be set forth in
applicable contracts between SKYNET and Customers and as measured by PLAYBOY
and/or SKYNET's Hawley, Pennsylvania earth station.
"Law" shall mean any code, law (including common law), ordinance,
regulation, reporting or licensing requirement, rule, or statute having
jurisdiction over a Party or its assets, Liabilities, or business, including
those promulgated, interpreted, or enforced by any regulatory authority.
"Liability" shall mean any direct or indirect, primary or secondary,
liability, indebtedness, obligation, penalty, cost, or expense (including costs
of investigation, collection, and defense), claim, deficiency, guaranty, or
endorsement of or by any Person (other than endorsements of notes, bills,
checks, and drafts presented for collection or deposit in the ordinary course of
business) of any type, whether accrued, absolute or contingent, liquidated or
unliquidated, matured or unmatured, or otherwise.
"Lien" shall mean any conditional sale agreement, default of title,
easement, encroachment, encumbrance, hypothecation, infringement, lien,
mortgage, pledge, reservation, restriction, security interest, title retention,
or other security arrangement, or any adverse right or interest, charge, or
claim of any nature whatsoever of, on, or with respect to any property or
property interest, other than (i) Liens for current property taxes not yet due
and payable, and (ii) Liens that do not materially impair the use of or title to
the assets subject to such Lien.
"Litigation" shall mean any action, arbitration, cause of action,
claim, complaint, criminal prosecution, or governmental or other examination,
investigation, hearing, or administrative or other proceeding relating to or
affecting a Party, its business, its assets (including contracts related to it),
or the transactions contemplated by this Agreement.
"Losses" shall mean any and all demands, claims, actions, or causes
of action, assessments, losses, diminution in value, damages, liabilities,
settlements, judgments, payments, fines, penalties, costs, and expenses,
including interest, penalties,
LORAL SKYNET AND PLAYBOY PROPRIETARY
<PAGE>
Playboy Entertainment Group, Inc.
Contract Number GSS0210100
Terms and Conditions
February 4, 2003
Page 5 of 24
cost of investigation and defense, and reasonable attorneys' and other
professional fees and expenses.
"MCPC" shall mean the multi-channel per carrier video and audio
transmission service as described in the Operations Plan.
"Non-Preemptible," with respect to the Telstar 7 satellite, shall
mean that transponder service may not be preempted to restore any other
customer's protected service.
"Operations Plan" shall mean the MCPC Technical
Specifications/Engineering/ Operations Plan attached as Appendix 1 and
incorporated into this Agreement by reference.
"Optional Services" shall mean those optional Services that may be
provided by PLAYBOY to Customers, as described in Section 3.2.3 of this
Agreement and the Operations Plan.
"Party" shall mean a party to this Agreement.
"Person" shall mean a natural person or any legal, commercial or
governmental entity, such as, but not limited to, a corporation, general
partnership, joint venture, limited partnership, limited liability company,
trust, business association, group acting in concert, or any person acting in a
representative capacity.
"Platform" shall mean the MCPC platform, combining space segment,
uplinking, and video compression, as described in Section 2 of this Agreement.
"Services" shall mean the Third-Party Channels on the Platform and
associated uplinking, video compression, authorization/deauthorization, and
other services to be marketed and sold to Customers pursuant to this Agreement,
including any Optional Services, as applicable, that may be provided by PLAYBOY
to Customers.
"Third-Party Channels" shall mean the digital compressed video
channels on the Platform available to be leased by third-party content providers
other than PLAYBOY.
"Third Party Claim" shall mean any Litigation that is instituted
against an Indemnitee by a person or entity other than an Indemnitor and which,
if prosecuted successfully, would result in a Loss for which the Indemnitee may
seek indemnification under Section 8.
LORAL SKYNET AND PLAYBOY PROPRIETARY
<PAGE>
Playboy Entertainment Group, Inc.
Contract Number GSS0210100
Terms and Conditions
February 4, 2003
Page 6 of 24
2. PLATFORM CONFIGURATION
The Parties hereto agree to establish the MCPC Platform on two
Telstar 7 C-Band transponders as described more fully in the Operations Plan,
configured as follows:
Each transponder will consist of eight (8) digital compressed video
channels, statistically multiplexed with a maximum 5mbps limit set on each
channel. PLAYBOY will transmit eight (8) digital compressed video channels to
the two Telstar 7 C-Band transponders. SKYNET will have sole responsibility for
leasing the remaining eight (8) Third-Party Channels to third-party content
provider Customers. The respective number of PLAYBOY and third-party Customer
channels allocated to each of the two transponders will be configured so to
provide maximum value to end-users. The initial allocation of each third-party
Customer channel to one of the two transponders shall be as solely determined by
PLAYBOY. Any subsequent change to the allocation shall require the consent of
both Parties.
3. SCOPE OF SERVICES AND COMPENSATION
3.1 SKYNET Obligations. SKYNET shall be responsible during the term
of this Agreement to provide or cause to be provided the following portion of
the Platform and Services, subject to the terms hereof:
3.1.1 Satellite Capacity. SKYNET shall provide two Fully
Protected 36 MHz C-Band transponders (Transponders C5 and C23) on its Telstar 7
satellite (the "Satellite Capacity"). One of these transponders, Transponder C5,
has already been leased to PLAYBOY under a separate agreement between SKYNET and
PLAYBOY, dated as of October 1, 2001 (hereinafter referred to as the "Space
Segment Agreement"). The provision of the Satellite Capacity on Transponder C5
shall be subject to the terms and conditions of the Space Segment Agreement. If
there exists any conflict between the terms and conditions contained in the
Space Segment Agreement and this Agreement, the Space Segment Agreement terms
and conditions shall control.
SKYNET's failure to provide Satellite Capacity in conformance
with this Section 3.1.1 shall be deemed a material breach of this Agreement.
Satellite Capacity provided herein is comprised of: (1) bare
transponder capacity; (2) telemetry, tracking, and control ("TT&C") of the
Telstar 7 satellite; and (3) maintenance of the Telstar 7 satellite used to
provide said bare transponder capacity. During the term of the Agreement SKYNET
shall have the right to make intra-satellite changes to any of the Satellite
Capacity assignments, provided, that such changes are directly related and
limited to: (1) an operational concern that affects the health of the Telstar 7
satellite; (2) an interference issue which otherwise cannot be corrected; or (3)
regulatory issues or concerns. If required, such assignment change shall be made
with not less than thirty (30) days prior written notice to PLAYBOY.
LORAL SKYNET AND PLAYBOY PROPRIETARY
<PAGE>
Playboy Entertainment Group, Inc.
Contract Number GSS0210100
Terms and Conditions
February 4, 2003
Page 7 of 24
3.1.2 Transponder Protection. In the event of Failure of the
Satellite Capacity, SKYNET shall restore the Satellite Capacity on spare
equipment on the satellite at the time of Failure or on a comparable space
segment on the same satellite, or on another SKYNET satellite then in orbit.
3.1.3 Sales and Marketing. SKYNET will have primary
responsibility for direct sales activities and marketing of the Platform and
Services, and shall provide the personnel (including sales, marketing, and
customer service personnel) necessary to fulfill orders for the Services that
are placed in compliance with a contract previously executed between SKYNET and
a Customer (a "Customer Contract").
3.1.4 Customer Contracts. SKYNET will enter into Customer
Contracts for Services directly with Customers, upon such terms and conditions
as may be agreed between SKYNET and the Customers, and will provide the Services
set forth in this Section 3.1 (exclusive of any Optional Services to be provided
by PLAYBOY pursuant to Section 3.2 of this Agreement) as required in connection
with the Customer Contracts.
3.1.5 Customer Care and Technical Support. SKYNET will
establish and provide Customer Care and Technical Support functions for
Customers, which will include providing information to PLAYBOY regarding
Customer conditional access activation/ deactivation requirements, for cable
headends and direct-to-home service providers, as described more fully in the
Operations Plan.
3.1.6 No Additional Obligations. Except as expressly set forth
herein, SKYNET shall not be obligated nor shall it be authorized to perform any
of the obligations or duties of PLAYBOY set forth in Section 3.2 below.
3.2 PLAYBOY Obligations. PLAYBOY shall be responsible during the
term of this Agreement to provide or cause to be provided the following portion
of the Services, subject to the terms hereof:
3.2.1 Satellite Capacity. PLAYBOY agrees to contribute its 36
MHz Fully Protected C-Band Transponder C5, as described in Section 3.1.1, to the
Platform.
3.2.2 Uplink and Video Compression. PLAYBOY will provide
uplink and video compression services for the Platform, using Motorola
Digicipher II Plus Compression, as more fully described in the Operations Plan.
3.2.3 Optional Services. PLAYBOY will provide to SKYNET, for
sale to Customers, a list of Optional Services, such as downlink and turnaround
services, playback origination, and other services that PLAYBOY may elect to
provide to Customers, as more fully described in the Operations Plan. Unless the
Parties agree otherwise, SKYNET will collaborate with PLAYBOY to sell and bill
such Optional
LORAL SKYNET AND PLAYBOY PROPRIETARY
<PAGE>
Playboy Entertainment Group, Inc.
Contract Number GSS0210100
Terms and Conditions
February 4, 2003
Page 8 of 24
Services to Customers on PLAYBOY's behalf, and will remit service charges
corresponding to such Optional Services to PLAYBOY. Nothing contained herein
shall prevent PLAYBOY from directly entering into contracts with Customers to
provide such Optional Services.
3.2.4 Andrita Studios. PLAYBOY will provide the uplink, video
compression, and Optional Services from its Andrita Studios facility in Los
Angeles, California. The Andrita Studios facility will also manage conditional
access for cable headends receiving programming on the Platform, as more fully
described in the Operations Plan. The Andrita Studios facility shall be staffed
so as to provide operational support for such services to SKYNET on a full-time,
24 hours per day, 7 days per week, 365/366 days per year basis. PLAYBOY's
failure to operate its Andrita Studios facility and provide the services
described in this Section 3.2 and the Operations Plan in accordance with this
Agreement shall be deemed a material breach of this Agreement. PLAYBOY will
provide, upon request by SKYNET, daily trouble reports.
3.2.5 Sales and Marketing. PLAYBOY will assist SKYNET, as
SKYNET may reasonably request, in the sales and marketing of the Platform and
Services.
3.2.6 Customer Contracts. PLAYBOY will provide the Optional
Services as described in this Section 3.2 and the Operations Plan as required in
connection with Customer Contracts. PLAYBOY shall not have, and shall not
represent to any Person that it has, any authority to bind SKYNET with respect
to any Customer Contracts.
3.2.7 No Additional. Obligations. Except as expressly set
forth herein, PLAYBOY shall not be obligated nor shall it be authorized to
perform any of the obligations or duties of SKYNET set forth in Section 3.1
above.
3.3 Expenses and Compensation.
3.3.1 Payment of Expenses. Except as may be provided in this
Agreement , each of the Parties shall bear and pay all costs and expenses
incurred by it or on its behalf in connection with the transactions contemplated
hereunder.
3.3.2 Pricing. SKYNET shall have sole responsibility and
authority for determining the prices for the sales to Customers of the
Third-Party Channels on the Platform. Notwithstanding the foregoing, SKYNET may
not agree to lease any Third-Party Channel to a Customer at less than ***** per
month without the prior approval of PLAYBOY, which approval shall not be
unreasonably withheld or delayed.
LORAL SKYNET AND PLAYBOY PROPRIETARY
<PAGE>
Playboy Entertainment Group, Inc.
Contract Number GSS0210100
Terms and Conditions
February 4, 2003
Page 9 of 24
PLAYBOY shall have sole responsibility and authority for
determining the prices for the sales of Optional Services, but agrees that its
rates shall be competitive with industry rates for the provision of similar
services.
PLAYBOY and SKYNET shall use their standard credit/risk
assessment policies when evaluating a potential Customer to determine whether a
security deposit or some other form of security for non-payment is required from
the Customer.
3.3.3 Revenue Share. SKYNET and PLAYBOY agree to share the
gross revenues received by SKYNET from Customers relating to the lease of the
eight Third-Party Channels on PLAYBOY's Transponder C5 and the SKYNET
transponder, excluding any revenues attributable to any Optional Services
provided by PLAYBOY, as follows:
***** *****
----- -----
Leased channels 1-2: ***** *****
Leased channels 3-5: ***** *****
Leased channels 6-8: ***** *****
SKYNET shall collect service charges from Customers pursuant
to the Customer Contracts executed between SKYNET and the Customer, *****,
subject to adjustment, as necessary, at the end of each calendar quarter. Unless
the Parties otherwise agree, ***** agreements between SKYNET and PLAYBOY for
space segment capacity. To the extent that the amount of PLAYBOY's revenue share
for any given month exceeds the amount of monthly charges due from PLAYBOY to
SKYNET for space segment capacity, SKYNET shall issue a check to PLAYBOY for the
difference. SKYNET shall have no obligation to remit to PLAYBOY, and PLAYBOY
shall not be entitled to receive, any share of the Customer revenues until such
revenues are collected and received by SKYNET.
***** in the manner set forth above.
PLAYBOY shall enter in contracts with customers with respect
to its own channels on the Platform. Such sales are outside the scope of this
Agreement, and create no obligation of PLAYBOY to share any of the revenues
generated from such channels.
3.3.4 Interruptions and Failure Credits. The Parties recognize
that Failures or Interruptions may occur with respect to the Services. Customers
may be credited for outages and interruptions, pursuant to the terms and
conditions of the applicable Customer Contracts. Any such credits shall reduce
the gross revenues to be shared between SKYNET and PLAYBOY, but, subject to
Section 8 of this Agreement, shall not otherwise give rise to any claims,
rights, obligations, or liabilities as between SKYNET and PLAYBOY. SKYNET will
not issue credits for outages or interruptions in
LORAL SKYNET AND PLAYBOY PROPRIETARY
<PAGE>
Playboy Entertainment Group, Inc.
Contract Number GSS0210100
Terms and Conditions
February 4, 2003
Page 10 of 24
excess of what is required in any Customer Contract without the prior approval
of PLAYBOY.
3.3.5 Customer Non-Payment or Breach. In the event that a
Customer fails to make payment for Services by the applicable due date or
otherwise is in material breach of the Customer Contract, and the Customer
Contract provides that such failure to pay or material breach gives SKYNET the
right to terminate the Customer Contract, SKYNET may, without the prior consent
of PLAYBOY, elect not to terminate the Customer Contract. In such event, SKYNET
shall remit to PLAYBOY the share of the revenues (including Optional Services
revenues) that would be due to PLAYBOY if the Customer were current in its
payments or were not in material breach of the Agreement, pursuant to Section
3.3.3 of this Agreement, in advance on or before the beginning of the month in
which the corresponding Services are to be rendered to the Customer, until such
time as the non-payment or material breach of the Customer Contract is cured or
the Customer Contract is terminated, whichever is earlier. This Section 3.3.5
shall not apply to the extent that both Parties agree not to terminate a
Customer.
4. RIGHT OF PLAYBOY TO UNUSED CHANNELS
During the term of this Agreement, PLAYBOY shall have the right to utilize any
unused Third-Party Channels on the Platform at the rate of ***** per month,
payable to SKYNET. Such capacity shall be subject to preemption by SKYNET for
Customer Contracts, upon at least ten (10) business days notice to PLAYBOY, and
will be otherwise subject to the terms and conditions of the Space Segment
Agreement. In the event of preemption SKYNET shall use reasonable efforts to
provide similar capacity on other available SKYNET space segment. At such time
as there remains one (1) available Third-Party Channel on the Platform, unless
the last Third-Party Channel is sold together with other Third-Party Channels,
PLAYBOY shall automatically be granted an option to lease such remaining
Third-Party Channel at a rate of ***** per month. PLAYBOY shall have thirty (30)
days to exercise the option and notify SKYNET of its intention to enter into an
agreement for such last channel for the remaining term of this Agreement and
upon such other terms and conditions set forth in that certain Space Segment
Agreement. Section 3.3.3 of this Agreement shall not apply to any such use by
PLAYBOY.
5. JOINT OBLIGATIONS AND RIGHTS
5.1 Identification and Pursuit of Offerings. PLAYBOY and SKYNET
shall cooperate in good faith and use their respective commercially reasonable
efforts and resources to provide sales leads and to generally support sales of
the Platform and Services.
5.2 Service Level Commitments. Each of PLAYBOY and SKYNET shall
perform its obligations (i) in the manner set forth herein and in the Operations
Plan,
LORAL SKYNET AND PLAYBOY PROPRIETARY
<PAGE>
Playboy Entertainment Group, Inc.
Contract Number GSS0210100
Terms and Conditions
February 4, 2003
Page 11 of 24
and (ii) if not expressly set forth herein, in a manner commercially reasonable
for a company in the same industry (collectively, the "Service Levels"). Except
as expressly set forth herein, if a Party fails to meet any Service Level, it
shall promptly (a) investigate the causes of the problem, (b) use all
commercially reasonable efforts to correct the problem, (c) begin meeting the
Service Levels as soon as practicable and (d) reasonably advise the other Party
of the status of remedial efforts being undertaken with respect to such
problems. The other Party will cooperate and assist in determining, identifying,
and correcting such problems. On a quarterly basis, the Parties shall review the
Service Levels and any failures to meet such Service Levels and make any
adjustments to the Service Levels as the Parties deem appropriate.
5.3 Non-Competition. During the term of this Agreement, SKYNET shall
not: (i) acquire content for any of the Third-Party Channels on the Platform
from any Person that produces or provides adult entertainment video programming
that competes with PLAYBOY's adult entertainment programming or (ii) until all
of the Third-Party Channels have been leased, enter into any other similar
revenue sharing agreement, as described herein, with any Person originating a
similar C-Band, cable Platform from the States of Oregon, Washington or
California. PLAYBOY shall not enter into any agreement with any other provider
of space segment capacity (e.g., PanAmSat) for the creation and/or marketing of
a multi-channel digital platform similar to the Platform hereunder. Nothing
contained herein shall preclude PLAYBOY from distributing its programming via an
alternative transmission provider including, but not limited to, Headend In The
Sky (HITS), iN-Demand L.L.C. and/or TVN Entertainment Corporation. Any Party
which engages in any activities in violation of this Section shall be deemed in
material breach of this Agreement.
5.4 Right to Approve Content. Other than any PLAYBOY programming
which may be included on the Platform as provided in Section 4, no programming
or other video channel content may be added to the Platform for sale to
Customers without the prior approval of both SKYNET and PLAYBOY, which approval
shall not be unreasonably withheld or delayed.
5.5 Customer Default or Termination. Subject to Section 3.3.5 and
Section 8 of this Agreement, and notwithstanding any other provision in this
Agreement to the contrary, the default or termination of a Customer under
contract with SKYNET for Services, whether such default or termination is with
or without cause under the Customer Contract, shall not give rise to any claims,
rights, obligations, or liabilities of the Parties as against each other.
6. REPRESENTATIONS AND WARRANTIES
6.1 Representations and Warranties of PLAYBOY. PLAYBOY hereby
represents and warrants to SKYNET as follows:
LORAL SKYNET AND PLAYBOY PROPRIETARY
<PAGE>
Playboy Entertainment Group, Inc.
Contract Number GSS0210100
Terms and Conditions
February 4, 2003
Page 12 of 24
6.1.1 PLAYBOY is a corporation duly organized, validly
existing, and in good standing under the laws of the State of Delaware. PLAYBOY
has all requisite corporate power and authority to own, lease, and operate its
properties, to carry on its business as now being conducted, and to execute and
deliver this Agreement and to perform its terms.
6.1.2 The execution and delivery of this Agreement and the
consummation of the transactions contemplated herein have been duly and validly
authorized by all necessary corporate action in respect thereof on the part of
PLAYBOY. This Agreement has been duly and validly executed by PLAYBOY and,
assuming this Agreement constitutes a valid and binding agreement of SKYNET,
represents a valid and binding obligation of PLAYBOY, enforceable in accordance
with its terms subject to the Bankruptcy Exception. The execution, delivery, and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, will not conflict with or constitute a breach, violation,
or default, or create a Lien, under the Articles of Incorporation or Bylaws of
PLAYBOY or any Law or any judgment, decree, governmental permit or license, or
permit, indenture, or other material agreement or instrument of PLAYBOY or to
which PLAYBOY is subject.
6.1.3 PLAYBOY understands and agrees that neither this
Agreement nor the provision of Services hereunder shall, or shall be deemed to,
convey title or any other ownership interest to PLAYBOY, in or to SKYNET's
Telstar 7 satellite or any equipment, software, or other property used by SKYNET
in connection with the performance of this Agreement.
6.2 Representations and Warranties of SKYNET. SKYNET hereby
represents and warrants to PLAYBOY as follows:
6.2.1 SKYNET is a division of Loral SpaceCom Corporation,
which is a corporation duly organized, validly existing, and in good standing
under the laws of the State of Delaware. Loral SpaceCom Corporation has all
requisite corporate power and authority to execute and deliver this Agreement
and to perform its terms.
6.2.2 The execution and delivery of this Agreement and the
consummation of the transactions contemplated herein have been duly and validly
authorized by all necessary corporate action in respect thereof on the part of
SKYNET. This Agreement has been duly and validly executed by SKYNET and,
assuming this Agreement constitutes a valid and binding agreement of PLAYBOY,
represents a valid and binding obligation of SKYNET, enforceable in accordance
with its terms subject to the Bankruptcy Exception. The execution, delivery, and
performance of this Agreement, and the consummation of the transactions
contemplated hereby, will not conflict with or constitute a breach, violation,
or default, or create a Lien, under the Articles of Incorporation or Bylaws of
Loral SpaceCom Corporation or any Law or any judgment, decree, governmental
permit or license, or permit, indenture, or other material agreement
LORAL SKYNET AND PLAYBOY PROPRIETARY
<PAGE>
Playboy Entertainment Group, Inc.
Contract Number GSS0210100
Terms and Conditions
February 4, 2003
Page 13 of 24
or instrument of Loral SpaceCom Corporation or to which Loral SpaceCom
Corporation is subject.
6.2.3 SKYNET understands and agrees that neither this
Agreement nor the provision of Services hereunder shall, or shall be deemed to,
convey title or any other ownership interest to SKYNET, in or to the PLAYBOY
Andrita Studios facility or any equipment, software, or other property used by
PLAYBOY in connection with the performance of this Agreement.
7. INTELLECTUAL PROPERTY
7.1 Rights to Intellectual Property. Except as set forth in this
Section 7 below, nothing contained in this Agreement shall be construed as
either Party's licensing or granting to the other Party any rights to
Intellectual Property owned or used by such first Party or its Affiliates
without its prior written consent.
7.2 Party Trade Names. Each Party grants to the other limited
permission (without expense) to utilize certain of that Party's designated
trademarks, trade names, trade devices, logos, codes, insignia, and symbols
(collectively, the "Marks") in advertising and promotion of the Platform and the
Services, provided such use is approved in advance in writing by such Party and
conforms to the standards and guidelines of such Party and the terms of this
Section 7.2. Marks may be used only to advertise and promote the Platform and
the Services during the term of this Agreement and may not be used in any other
way or in connection with any other products or services. Nothing in this
Agreement creates in the other Party, and the other Party agrees not to assert,
any rights in the Marks. Neither Party may use any Mark or otherwise refer to
the other Party in any public advertisement or promotion without having first
submitted such advertisement or promotion to such other Party for express
written approval with respect to, but not limited to, content, style,
appearance, composition, timing, and media.
7.3 Proprietary Rights. Each Party hereto acknowledges that it does
not intend to transfer any Confidential Information or Intellectual Property to
the other Party in connection with this Agreement. Notwithstanding the
foregoing, any Intellectual Property or Foreground Information produced by
collaboration of the Parties wherein each Party has made an inventive
contribution, to the extent it does not incorporate any Background Information
of either Party, shall be jointly owned by the Parties without any appropriate
right or obligation of accounting to the other Party for profits from
exploitation of the rights, and licensed by each Party to the other on a
non-exclusive, irrevocable, royalty-free, perpetual, and worldwide basis.
Subject to the preceding sentence, any Foreground Information produced solely by
one Party hereunder or wherein only one Party has made an inventive
contribution, to the extent it does not incorporate any Background Information
of the other Party, shall be the sole property of such first Party.
LORAL SKYNET AND PLAYBOY PROPRIETARY
<PAGE>
Playboy Entertainment Group, Inc.
Contract Number GSS0210100
Terms and Conditions
February 4, 2003
Page 14 of 24
7.4 Background Information.
Each Party hereto acknowledges that it may be furnished with,
receive, or otherwise have access to information of or concerning the other
Party which such Party considers to be Background Information or otherwise
restricted ("Restricted Information"). Each Party will clearly mark or otherwise
clearly indicate, whether orally or in writing, that such information is
Restricted Information. Each Party's Restricted Information shall be and remain
the property of such Party or its licensors, as the case may be. No Restricted
Information, or any part thereof, received from the other Party hereto, shall be
sold, assigned, leased, commercially exploited, or otherwise disposed of to
third parties by such Party receiving such Restricted Information or its
employees or agents. Restricted Information provided to each Party from such
other Party in connection with the performance of this Agreement shall not be
utilized by such receiving Party for any purpose other than that of performing
its obligations or exercising its rights contemplated hereunder. Each Party
shall use at least the same degree of care, but in no event less than a
reasonable degree of care, to prevent disclosing Restricted Information of the
other Party to third parties as it employs to avoid unauthorized disclosure,
publication, or dissemination of its own information of a similar nature;
provided that the Parties may disclose such Restricted Information to entities
performing services required hereunder or to subcontractors, suppliers, or
agents where (i) use of such entity is permitted to be used by such other Party,
(ii) such disclosure is necessary or otherwise naturally occurs in that entity's
scope of responsibility, and (iii) the entity agrees in writing to assume the
obligations described in this Section 7.4. Each Party agrees to take reasonable
steps to ensure that its employees, agents, and/or independent contractors
comply with this Section 7.4. Upon the termination or expiration of this
Agreement, or at any time requested by a Party, each Party shall return or
destroy, as such Party may direct, all documentation in any medium that
contains, refers to, or relates to the Background Information of the requesting
Party. Each Party acknowledges and agrees that a breach of their respective
obligations of this Section 7.4 would cause the other irreparable harm for which
there is no adequate remedy at law and that accordingly each is entitled to
injunctive relief and other equitable relief for the enforcement thereof in
addition to damages or any other relief available at law.
8. INDEMNIFICATION AND LIABILITY
8.1 Agreement of Indemnitors to Indemnify.
8.1.1 Each Party agrees to indemnify, defend (at the other
Party's request), and save harmless the other Party and their Indemnitees from
and against any Losses that arise out of or result from (1) injuries or death to
persons or damage to property, including theft, in any way caused by the
performance of the Services performed by such Party hereunder; (2) assertions
under workers' compensation or similar acts made by persons furnished by such
Party or by any of its subcontractors or by reason of any injuries to such
persons for which such Party is responsible under workers' compensation laws;
(3) any failure on the part of such Party to satisfy all claims to third
LORAL SKYNET AND PLAYBOY PROPRIETARY
<PAGE>
Playboy Entertainment Group, Inc.
Contract Number GSS0210100
Terms and Conditions
February 4, 2003
Page 15 of 24
parties for labor, equipment, materials, and other obligations relating directly
or indirectly to the performance of the Services, unless caused by the other
Party hereto; (4) Third Party Claims arising from any breach or failure to
perform any covenant or agreement made in this Agreement; (5) Third Party Claims
arising from the inaccuracy, untruth, incompleteness, or breach of any
representation or warranty contained in or made pursuant to this Agreement or in
any certificate, schedule, or Appendix furnished pursuant hereto or thereto; (6)
infringement or alleged infringement of any third-party patent, copyright,
trademark, database, trade secret, or similar rights occurring due to the use,
sale, or licensing of any software, content, products, or services supplied or
used by such Party in the performance of its obligations hereunder; or (7) libel
or slander against, or invasion of the right of privacy, publicity, or property,
or any misappropriation of any other right, of any third party in connection
with the services or content supplied by such Party hereunder.
8.1.2 Each Party shall use its reasonable efforts to secure
indemnification rights from each third party from which it after the date hereof
licenses software, content, products, or services to be used by such Party
and/or its Affiliates in connection with the Services, which rights cover Losses
incurred by the other Party and its Indemnitees arising out of or resulting from
the infringement or alleged infringement of third-party patent, copyright,
trademark, database, trade secret or similar rights by the use of such licensed
software, content, product, or services in connection with the Services to the
same extent that the first Party is covered for such Losses.
8.2 Limitations on Liability.
8.2.1 Except for breaches of the obligations set forth in
Section 7 above and each Party's indemnification obligations set forth in this
Section 8, each Party's liability hereunder to the other Party, if any, for any
cause whatsoever, and regardless of form of action, whether in contract or tort,
including negligence, warranty, strict liability, or otherwise, shall be limited
to *****.
8.2.2 Notwithstanding anything to the contrary in this
Agreement, neither Party hereto shall be liable to the other for any exemplary,
incidental, indirect, punitive, special, or consequential damages (including
without limitation any payment for lost business, future profits, loss of
goodwill, reimbursement for expenditures made or commitments entered into,
advertising costs, termination of employees or employees' salaries, overhead or
facilities incurred or acquired based upon the business derived or anticipated
under this Agreement), whether foreseeable or not.
8.2.3 All persons furnished by either Party hereto shall be
considered solely that Party's employees or agents, and such Party shall be
responsible for payment of all unemployment, social security, and other payroll
taxes, including contributions required by law.
LORAL SKYNET AND PLAYBOY PROPRIETARY
<PAGE>
Playboy Entertainment Group, Inc.
Contract Number GSS0210100
Terms and Conditions
February 4, 2003
Page 16 of 24
8.3 Procedures for Indemnification.
8.3.1 An Indemnification Claim shall be made promptly by an
Indemnitee by delivery of a written notice to the Indemnitor requesting
indemnification and specifying the basis on which indemnification is sought and
the amount of asserted Losses, if known, and, in the case of a Third Party
Claim, containing (by attachment or otherwise) such other relevant information
as such Indemnitee shall have concerning such Third Party Claim.
8.3.2 If the Indemnitee desires to participate in, but not
control, any defense, compromise, and settlement of a Third Party Claim, it may
do so at its sole cost and expense. If, however, the Indemnitor fails or refuses
to undertake the defense of such Third Party Claim within thirty (30) days after
written notice of such claim has been given to the Indemnitor by the Indemnitee
(or such shorter period if necessary to avoid prejudice to the defense of such
Third Party Claim), the Indemnitee shall have the right to undertake the
defense, compromise, and settlement of such claim with counsel of its own
choosing.
8.3.3 No settlement of a Third Party Claim involving the
asserted liability of the Indemnitor under this Section shall be made without
the prior written consent by or on behalf of the Indemnitor which consent shall
not be unreasonably withheld or delayed. If the Indemnitor assumes the defense
of a Third Party Claim, (i) no compromise or settlement thereof may be effected
by the Indemnitor without the Indemnitee's consent, which consent shall not be
unreasonably withheld or delayed (it being understood that such consent must be
given if (1) there is no finding or admission of any violation of Law or any
violation of the rights of any Person and no effect on any other claim that may
be made by or against the Indemnitee, (2) the sole relief provided is monetary
damages that are paid in full by the Indemnitor, and (3) the compromise or
settlement includes, as an unconditional term thereof, the giving by the
claimant or the plaintiff to the Indemnitee of a release, in form and substance
satisfactory to the Indemnitee, from all liability in respect of such Third
Party Claim), and (ii) the Indemnitee shall have no liability with respect to
any compromise or settlement thereof effected without its consent. Each
Indemnitee shall provide such assistance to the Indemnitor as may be reasonably
requested by the Indemnitor in connection with the defense of the Third Party
Claim.
8.3.4 Upon determination of the amount of an Indemnification
Claim, whether by agreement between the Indemnitor and the Indemnitee or by an
arbitration award or by any other final adjudication, the obligation of the
Indemnitor shall be immediately satisfied through payment to the appropriate
Indemnitee.
8.4 Insurance. The liability of the Indemnitor with respect to any
Indemnification Claim shall be reduced by any insurance proceeds received by the
Indemnitees as a result of any Losses upon which such Indemnification Claim is
based.
LORAL SKYNET AND PLAYBOY PROPRIETARY
<PAGE>
Playboy Entertainment Group, Inc.
Contract Number GSS0210100
Terms and Conditions
February 4, 2003
Page 17 of 24
9. AUDIT RIGHTS
PLAYBOY shall have the right, at its own expense and on thirty (30) days written
notice to SKYNET, to audit the records of SKYNET to verify the revenues received
by SKYNET from Customers that are subject to the revenue share set forth in
Section 3.3.3 of this Agreement. Records subject to audit under this Section 9
shall extend no more than three (3) years prior to the request date. If such
audit indicates an amount due to PLAYBOY, SKYNET shall promptly pay to PLAYBOY
the amount underpaid. In addition, if such audit indicates that the amount
underpaid is greater than ten percent (10%) of the total amount of the revenue
share due to PLAYBOY under Section 3.3.3 of this Agreement, SKYNET shall pay to
PLAYBOY, within five (5) working days of the completion of the audit, its
reasonable out-of-pocket expenses incurred to conduct the audit, up to a maximum
of twenty thousand dollars ($20,000.00). Notwithstanding the foregoing, PLAYBOY
may not exercise its right to audit more than once per year. Audit scheduling
shall be by mutual agreement (which agreement shall not be unreasonably
withheld). PLAYBOY shall use its best efforts to complete any audit with in five
(5) working days. Copies of all audit reports (which shall only state the final
results of such audit) shall be furnished to all Parties and shall be considered
Confidential Information hereunder.
SKYNET shall have the right, at its own expense and on thirty (30) days written
notice to PLAYBOY, to audit PLAYBOY's technical and operations logs, and such
other information as SKYNET may reasonably request, and to inspect the equipment
as specified in the Operations Plan at PLAYBOY's Andrita Studios facilities, to
verify PLAYBOY's compliance with its obligations set forth in Sections 3.2.2,
3.2.3, 3.2.4, and 5.2 of this Agreement. Records subject to audit under this
Section 9 shall extend no more than three (3) years prior to the request date.
If such audit and inspection indicates that PLAYBOY has materially failed to
comply with such obligations, PLAYBOY shall pay to SKYNET its reasonable
out-of-pocket expenses incurred to conduct the audit and inspection, up to a
maximum of twenty thousand dollars ($20,000.00). In addition, PLAYBOY shall
remedy such material failure to comply within five (5) working days or, in the
event equipment is required to remedy the failure, as soon as reasonably
practicable. Notwithstanding the foregoing, SKYNET may not exercise its right to
audit and inspect more than once per year. Audit and inspection scheduling shall
be by mutual agreement (which agreement shall not be unreasonably withheld) and
must be completed within five (5) working days. Copies of all audit reports
(which shall only state the final results of such audit) shall be furnished to
all Parties and shall be considered Confidential Information hereunder.
10. DISPUTE RESOLUTION
10.1 Informal Dispute Resolution. Prior to the initiation of formal
dispute resolution procedures, the Parties shall first attempt to resolve their
dispute informally, as follows:
LORAL SKYNET AND PLAYBOY PROPRIETARY
<PAGE>
Playboy Entertainment Group, Inc.
Contract Number GSS0210100
Terms and Conditions
February 4, 2003
Page 18 of 24
10.1.1 Designated representatives of each of the Parties (the
"Representatives") shall meet for the purpose of endeavoring to resolve such
dispute. The Representatives shall meet as often as the Parties reasonably deem
necessary in order to gather and furnish to each other all information with
respect to the matter in issue which the Parties believe to be appropriate and
germane in connection with its resolution. The Representatives shall discuss the
problem and negotiate in good faith in an effort to resolve the dispute without
the necessity of any formal proceeding. During the course of negotiations, all
reasonable requests made by one Party to the other for non-privileged
information, reasonably related to this Agreement, shall be honored in order
that each of the Parties may be fully advised of the other's position. The
specific format for the discussions shall be left to the discretion of the
Representatives, but may include the preparation of agreed-upon statements of
fact or written statements of position.
10.1.2 If the Representatives conclude in good faith that
amicable resolution through continued negotiation in this form does not appear
likely, the matter will be escalated by formal written notification to a joint
panel of PLAYBOY and SKYNET senior executive officers. This panel will meet as
required to attempt to resolve the dispute. The number and nature of the senior
executive officers will depend on the issues in dispute, but will include those
senior executive officers with authority to resolve all matters in dispute. At
either Party's election this panel will be facilitated by an external
facilitator designated by both Parties whose fees and expenses will be shared
equally by the Parties.
10.1.3 Formal proceedings for the resolution of a dispute may
not be commenced until the earlier of:
(a) the panel referred to in Subsection 10.1.2 above
concluding in good faith that amicable resolution through continued negotiation
of the matter does not appear likely; or
(b) thirty (30) days after the initial request to negotiate
the dispute. This provision shall not be construed to prevent a Party from
instituting, and a Party is authorized to institute, formal proceedings earlier
to avoid the expiration of any applicable limitations period, or to preserve a
superior position with respect to the other Party's creditors, or as provided in
Section 10.4.
10.2 Arbitration. If the Parties are unable to resolve any
controversy arising under this Agreement as contemplated by Section 10.1 and if
such controversy is not subject to Section 10.4 of this Agreement, then such
controversy shall be finally settled under the Rules of Conciliation and
Arbitration of the American Arbitration Association ("AAA Rules") by one or more
arbitrators appointed in accordance with said AAA Rules. The arbitration shall
take place in New York City, New York, and shall be conducted in English. The
arbitrator(s) shall apply the substantive (not the conflicts) law of the state
specified in the choice of law provision set forth elsewhere in this Agreement.
The arbitrator(s) shall not limit, expand, or modify the terms of this Agreement
nor award
LORAL SKYNET AND PLAYBOY PROPRIETARY
<PAGE>
Playboy Entertainment Group, Inc.
Contract Number GSS0210100
Terms and Conditions
February 4, 2003
Page 19 of 24
damages in excess of compensatory damages, and each Party waives any claim to
such excess damages. The award shall be in United States dollars. Judgment upon
the award rendered in the arbitration may be entered in any court having
jurisdiction thereof. Each Party shall bear its own expenses (including
attorney's fees) and an equal share of the expenses of the arbitrator(s) and the
fees of the arbitration. Nothing in this Agreement shall be construed to
preclude any Party from seeking injunctive relief in order to protect its rights
pending arbitration. A request by a Party to a court for such injunctive relief
shall not be deemed a waiver of the obligation to arbitrate. Both the foregoing
agreement of the Parties to arbitrate any and all such disputes, claims, and
controversies, and the judgments and/or awards rendered through any such
arbitration shall be final and binding on the parties and may be specifically
enforced by legal proceedings in any court of competent jurisdiction.
10.3 Continued Performance. Each Party agrees to continue performing
its obligations under this Agreement while any dispute is being resolved unless
and until such obligations are terminated by the termination or expiration of
this Agreement.
10.4 Equitable Remedies. The Parties acknowledge that, in the event
that one Party breaches (or attempts or threatens to breach) its obligations
under Section 7 ("Intellectual Property"), the other Party will be irrevocably
harmed. In such circumstance, the non-breaching Party may proceed directly to
Court.
11. TERM AND TERMINATION
11.1 Term. The term of this Agreement shall commence on the date
hereof and shall continue for a period of five (5) years, until February 3, 2008
(the "Initial Term"). This Agreement may be renewed by either Party for
additional consecutive one (1) year terms (each a "Renewal Term") by providing
written notice to the other Party at least sixty (60) days prior to the
expiration date of the Initial Term or Renewal Term then effect, unless the
other Party provides written notice within thirty (30) days of its receipt of
the notice of renewal of its intention not to renew.
11.2 Termination. This Agreement may be terminated at any time:
11.2.1 By mutual consent of the Parties; or
11.2.2 By either Party in the event of a material breach by
the other Party of any material representation, covenant, or agreement contained
in this Agreement which has not been cured within thirty (30) days after the
receipt of written notice by the breaching Party of such breach.
11.2.3 Upon receipt of notice of non-renewal or proper
termination of this Agreement, no new Customer Contracts or extensions of
existing Customer Contracts may be entered into with a term extending beyond the
termination date. Notwithstanding anything to the contrary herein, each Party
agrees to perform its
LORAL SKYNET AND PLAYBOY PROPRIETARY
<PAGE>
Playboy Entertainment Group, Inc.
Contract Number GSS0210100
Terms and Conditions
February 4, 2003
Page 20 of 24
obligations and duties with respect to the Services set forth herein to the
extent necessary to perform Customer Contracts executed prior to notice of
non-renewal or termination of this Agreement, and the rights and obligations of
the Parties under this Agreement shall apply to such Customer Contracts for the
term thereof as though this Agreement were still in effect.
11.3 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 11.2, this Agreement shall become void, except
that:
11.3.1 the provisions of this Section 11 and Sections 7, 8, 9,
and 10 shall survive any such termination,
11.3.2 a termination pursuant to Section 11.2.2 shall not
relieve the breaching Party from Liability for an uncured breach of this
Agreement, and
11.3.3 a termination of this Agreement shall not affect the
rights and obligations of the Parties under any other agreement unless so
provided therein.
12. MISCELLANEOUS
12.1 Entire Agreement. Except as otherwise expressly provided
herein, this Agreement (including any Appendices) constitutes the entire
agreement between the Parties with respect to the transactions contemplated
hereunder and supersedes all prior arrangements or understandings with respect
thereto, written or oral. Nothing in this Agreement, expressed or implied, is
intended to confer upon any Person, other than the Parties, an Indemnitee, or
their respective successors or permitted assigns, any rights, remedies,
obligations, or liabilities under or by reason of this Agreement.
12.2 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 (or if urgent
notice is required, by telephone) and shall be delivered by hand, confirmed
facsimile, reputable overnight mail, or mailed by first-class, registered, or
certified mail, return receipt requested, postage prepaid, addressed as follows:
PLAYBOY:
2706 Media Center Drive
Los Angeles, California 90065
Attention: Jim English
Telephone No.: 323-276-4000
Fax No.: 323-275-4500
LORAL SKYNET AND PLAYBOY PROPRIETARY
<PAGE>
Playboy Entertainment Group, Inc.
Contract Number GSS0210100
Terms and Conditions
February 4, 2003
Page 21 of 24
SKYNET:
500 Hills Drive
Bedminster, New Jersey 07921
Attention: Marcie Cetani
Telephone No.: 908-470-3460
Fax No.: 908-470-2453
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
which shall be delivered shall be deemed sufficiently given, served, sent, or
received for all purposes at such time as it is delivered to the addressee named
above as to each Party, with the signed messenger receipt, facsimile
confirmation, return receipt, or the delivery receipt being deemed conclusive
evidence of such delivery.
12.3 Amendments. This Agreement may be amended only by a subsequent
writing signed by both Parties upon the approval of each of the Parties.
12.4 Counterparts; Facsimile. This Agreement may be executed in two
or more counterparts all of which shall be one and the same Agreement and shall
become effective when one or more counterparts have been signed by each Party
and delivered to the other Party. Delivery of a signature page by facsimile
transmission shall be deemed to be legally sufficient execution and delivery of
the page and the agreement or instrument for which it relates.
12.5 Headings. The headings in this Agreement are for convenience
only and shall not affect the construction or interpretation of this Agreement.
12.6 Successors and Assigns. All terms and conditions of this
Agreement shall be binding upon and inure to the benefit of and be enforceable
by any successor to PLAYBOY and any successor to SKYNET. Neither Party shall be
entitled to assign this Agreement and any of its rights and obligations
hereunder to any third party without the other Party's prior written consent,
which consent shall not be unreasonably withheld or delayed. Notwithstanding the
foregoing, each Party expressly shall have the right to assign this Agreement,
including its rights, duties, and obligations hereunder, to its parent
corporation or any present or future Affiliate or subsidiary, or in connection
with the reorganization, merger, combination, or acquisition or sale of all or
any part of its business or operations. In any assignment, the assignee shall
agree in writing to assume all of the assigning Party's obligations,
liabilities, terms, and conditions of this Agreement.
12.7 Severability. If any provision of this Agreement shall be held
to be illegal, invalid, or unenforceable, such illegality, invalidity, or
unenforceability shall attach only to such provision and shall not in any manner
affect or render illegal, invalid, or unenforceable any other provision of this
Agreement, and this Agreement shall be
LORAL SKYNET AND PLAYBOY PROPRIETARY
<PAGE>
Playboy Entertainment Group, Inc.
Contract Number GSS0210100
Terms and Conditions
February 4, 2003
Page 22 of 24
carried out as if any such illegal, invalid, or unenforceable provision were not
contained herein. If any provision of this Agreement is so broad as to be
unenforceable, the provision shall be interpreted to be only so broad as is
enforceable.
12.8 Taxes. Each Party shall bear sole responsibility for all taxes,
assessments, and other levies related to its performance of this Agreement.
12.9 Interpretations. The Parties acknowledge and agree that this
Agreement has been reviewed, negotiated, and accepted by both Parties and their
attorneys and shall be construed and interpreted according to the ordinary
meaning of the words used so as fairly to accomplish the purposes and intentions
of the Parties hereto.
12.10 Relationship of the Parties. Each of the Parties acknowledges
that it is acting as an independent contractor, and each Party has the sole
right and obligation to supervise, manage, contract, direct, procure, perform,
or cause to be performed, all work or other obligations to be performed by such
Party under this Agreement. Nothing herein contained shall be deemed or
construed by either Party hereto or by any third party to create any rights,
obligations, or interests in any third party, or to create any association,
partnership, joint venture, the relation of principal and agent, the relation of
employer and employee, or any fiduciary relationship of any kind between the
Parties hereto.
12.11 Publicity. Neither Party shall publicize or advertise in any
manner the fact that it is providing Services to Customers pursuant to this
Agreement, without the prior written approval (which shall not be unreasonably
withheld or delayed) of the other Party, for each item of such advertising or
publicity. The foregoing prohibition shall include but not be limited to news
releases, letters, correspondence, literature, promotional materials, or
displays of any nature or form. Each request for approval hereunder shall be
submitted in writing to the representative designated in writing by each Party;
and approval, in each instance, shall be effective only if in writing and signed
by said representative. Nothing herein shall prevent either Party from providing
to the Federal Communications Commission or any other governmental agency
information concerning this Agreement as required by Law or in response to a
request for information by such governmental agency. Notwithstanding the
foregoing, either Party may refer to the fact that it is providing the Services
without the other Party's prior approval so long as such statements by the
referencing Party (1) are limited to statements of fact and (2) do not act as an
implied or direct endorsement of any product or service of the referencing Party
by the other Party.
12.12 Covenant of Good Faith. Each Party agrees that, in its
respective dealings with the other Party under or in connection with this
Agreement, it shall act in good faith.
12.13 Force Majeure. Each Party shall be excused from performance
under this Agreement and shall have no liability to the other Party for any
period it is
LORAL SKYNET AND PLAYBOY PROPRIETARY
<PAGE>
Playboy Entertainment Group, Inc.
Contract Number GSS0210100
Terms and Conditions
February 4, 2003
Page 23 of 24
prevented from performing any of its obligations, in whole or in part, as a
result of delays caused by the other Party (or a subcontractor or agent thereof)
or by an act of God, war, civil disturbance, fire, court order, labor dispute,
third party performance or nonperformance, government or regulatory order or
action, technical failure caused by devices, matters, substances, or materials
beyond or out of the reasonable control of such Party, or other cause beyond its
reasonable control, and such nonperformance shall not be a default under, or
grounds for termination of, this Agreement.
12.14 Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without giving
any effect to its conflict of law provisions.
12.15 Compliance with Laws. The Parties and all persons furnished by
either of the Parties shall comply at their own expense with all applicable
federal, state, local, and foreign laws, ordinances, regulations, and codes,
including the identification and procurement of required permits, certificates,
licenses, insurance, approvals, and inspections in performance of this
Agreement.
12.16 No Waiver/Cumulative Remedies. No failure to exercise and no
delay in exercising, on the part of either Party, any right, remedy, power, or
privilege under this Agreement shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power, or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power, or privilege. The rights, remedies, powers, and privileges
herein provided are cumulative and not exclusive of any rights, remedies,
powers, and privileges provided by law.
12.17 Export Control. PLAYBOY will not use, distribute, transfer, or
transmit any products, software, or technical information (even if incorporated
into other products) provided to it by SKYNET under this Agreement except in
compliance with U.S. and any other applicable national or local export laws and
regulations, including the International Traffic in Arms Regulations, 22 C.F.R.
sections 120-130 and the Export Administration Regulations, 15 C.F.R. sections
730-744 (the "Export Laws"). PLAYBOY will not, directly or indirectly, export or
re-export the following items to any country which is in the then current list
of prohibited countries specified in the applicable Export Laws: (a) software or
technical data disclosed or provided to PLAYBOY by SKYNET or SKYNET's
subsidiaries or Affiliates; or (b) the direct product of such software or
technical data. PLAYBOY agrees to promptly inform SKYNET in writing of any
written authorization issued by the U.S. Department of Commerce and/or State
office of export licensing to export or re-export any such items referenced in
(a) or (b). PLAYBOY also will not, without the prior written consent of SKYNET,
export or re-export, directly or indirectly, any technical data or software
furnished hereunder subject to the Export Laws from the country in which SKYNET
first provided the technical data or software to PLAYBOY hereunder, except to
the United States. SKYNET agrees to comply with the same foregoing requirements
in respect to any products, software, or technical information (even if
incorporated with other products) provided to SKYNET by
LORAL SKYNET AND PLAYBOY PROPRIETARY
<PAGE>
Playboy Entertainment Group, Inc.
Contract Number GSS0210100
Terms and Conditions
February 4, 2003
Page 24 of 24
PLAYBOY under or in connection with this Agreement. The obligations stated above
in this clause will survive the expiration, cancellation, or termination of this
Agreement.
PLAYBOY ENTERTAINMENT LORAL SKYNET, A DIVISION OF
GROUP, INC. LORAL SPACECOM CORPORATION
By: /s/ James L. English By: /s/ Sandra James
Print: James L. English Print: Sandra James
Title: President Title: Director, Contract Management
Date: 2/6/03 Date: 13 Feb 03
LORAL SKYNET AND PLAYBOY PROPRIETARY