Program Supply and Trademark License Agreement - Playboy Entertainment Group Inc. and Playboy TV - Latin America LLC
Execution Copy
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CONFIDENTIAL
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_________________________
PLAYBOY TV - LATIN AMERICA
PROGRAM SUPPLY AND TRADEMARK LICENSE AGREEMENT
_________________________
Between
PLAYBOY ENTERTAINMENT GROUP, INC.
as Licensor
and
PLAYBOY TV - LATIN AMERICA, LLC
as Company
DECEMBER 23, 2002
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omissions have been indicated by asterisks ("***"), and the omitted text has
been filed separately with the Securities and Exchange Commission.
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<S> <C> <C>
1. DEFINITIONS.............................................................................................1
2. GRANT OF PROGRAM LICENSE................................................................................6
2.1 Grant..........................................................................................6
(a) Existing Library......................................................................6
(b) New Programs..........................................................................6
(c) Acquired Movies.......................................................................6
(d) "Wall-to-Wall" Material...............................................................7
(e) Program Hour Requirement..............................................................7
(f) Format Rights.........................................................................7
(g) Alta Loma Programs....................................................................7
(h) Spice-Hot Feed........................................................................8
2.2 Approved Uses of Licensed Programming..........................................................8
(a) Licensed Programming Use..............................................................8
(b) Spillover.............................................................................8
(c) Puerto Rico...........................................................................8
(d) Sublicensing..........................................................................9
(e) Editing...............................................................................9
(f) Exclusive Supplier....................................................................9
(g) Streaming.............................................................................9
2.3 Company Produced Programming...................................................................9
(a) Development...........................................................................9
(b) Minimum Company Produced Programming Budget..........................................10
(c) Company Format Programming...........................................................10
(d) Scheduling of the Company Service....................................................10
2.4 Licensor ***..................................................................................10
(a) Cost.................................................................................10
(b) Branded Format Programming and Localized Licensed Programs...........................10
(c) Branding Removal.....................................................................10
2.5 Licensor Ownership............................................................................11
(a) Goodwill.............................................................................11
(b) Work For Hire........................................................................11
(c) All Other Rights Retained by Licensor; Covenant not to Challenge.....................11
2.6 Use Rights....................................................................................11
2.7 Services Provided by Licensor.................................................................11
3. TRADEMARK LICENSE AND QUALITY CONTROL..................................................................12
3.1 Grant of Exclusive License....................................................................12
(a) Company Rights.......................................................................12
(b) Permitted Licensor Activity Relating to Media in the Territory.......................12
3.2 All Other Rights Retained by Licensor.........................................................12
3.3 Restriction on Sub-Licensing..................................................................13
3.4 Duration of License...........................................................................13
3.5 Company's ***.................................................................................13
3.6 Restriction on Scope of Services..............................................................13
3.7 Restrictions on Modifications of Trademarks...................................................13
3.8 License of Additional Trademarks..............................................................14
3.9 Quality Control...............................................................................14
(a) Program Restrictions.................................................................14
(b) Advertising and Home Shopping Restrictions...........................................14
(c) Inspection Rights....................................................................15
3.10 Title and Protection of the Licensor Trademarks; Use of the Licensor Trademarks...............15
3.11 Form..........................................................................................16
3.12 Maintenance of Distinctive Quality of Licensor Trademarks.....................................16
3.13 Advertising and Publicity.....................................................................16
3.14 Ownership of the Licensor Trademarks..........................................................17
(a) Prosecution and Maintenance of Licensor Trademarks...................................17
(b) Cooperation of Company...............................................................17
(c) Covenant of Company..................................................................17
(d) Cooperation of Parties to Register Licensor Trademarks...............................17
3.15 Infringements.................................................................................17
(a) Notice...............................................................................17
(b) Control of Proceedings...............................................................17
(c) Procedures and Costs.................................................................17
(d) Equitable Relief.....................................................................18
(e) Use of the Term "Licensor"...........................................................18
4. LICENSE TERM AND MEDIA HOLDBACKS.......................................................................18
4.1 License Term..................................................................................18
4.2 No Home Video Rights..........................................................................18
4.3 Other Home Video Rights.......................................................................18
5. CENSORSHIP; WITHDRAWAL OF PROGRAMS.....................................................................18
5.1 Censorship....................................................................................18
5.2 Withdrawal of Programs........................................................................18
5.3 Advertising...................................................................................19
6. DELIVERY AND RETURN....................................................................................19
6.1 Access and Delivery Items.....................................................................19
6.2 Title to Delivery Materials...................................................................19
7. PROGRAM AND TRADEMARK LICENSE FEES.....................................................................20
7.1 Due and Payable...............................................................................20
7.2 Wire Transfers................................................................................20
7.3 Late Payment..................................................................................20
7.4 Restricted Funds..............................................................................20
7.5 Currency......................................................................................21
7.6 Maintenance of Records and Audit Rights.......................................................21
8. INDEMNITIES............................................................................................22
8.1 Representations and Warranties................................................................22
(a) By Licensor..........................................................................22
(b) By the Company.......................................................................22
8.2 Indemnification...............................................................................22
(a) By Licensor..........................................................................22
(b) By Company...........................................................................23
8.3 Musical Compositions..........................................................................23
8.4 Procedure.....................................................................................23
9. TERMINATION............................................................................................23
9.1 Expiration of Term............................................................................23
9.2 Renewal.......................................................................................23
9.3 Early Termination on Breach...................................................................24
9.4 Inadvertent Breach............................................................................24
9.5 Cross Default.................................................................................24
9.6 Dissolution of Company........................................................................24
10. EFFECTS OF TERMINATION.................................................................................24
10.1 Survival of Obligations.......................................................................24
10.2 Termination of Rights.........................................................................25
10.3 Further Assurances............................................................................25
11. EQUITABLE RELIEF.......................................................................................25
12. DISPUTE RESOLUTION.....................................................................................25
13. MISCELLANEOUS..........................................................................................27
13.1 Force Majeure.................................................................................27
13.2 Binding Effect; No Assignment.................................................................27
13.3 Invalidity....................................................................................27
13.4 Waivers, Remedies Cumulative, Amendments, etc.................................................27
13.5 Notices.......................................................................................28
13.6 Governing Law.................................................................................29
13.7 Entire Agreement..............................................................................29
13.8 Rules of Construction.........................................................................29
(a) Headings.............................................................................29
(b) Tense and Case.......................................................................29
(c) Agreement Negotiated.................................................................30
13.9 Counterparts..................................................................................30
13.10 Relationship Between the Parties..............................................................30
13.11 Time Is of the Essence........................................................................30
SCHEDULES
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Schedule 2.1(a) Existing Library
Schedule 2.1(b) 2001 PTVLA New Programming Schedule
Schedule 3.1 Licensor Trademarks
Schedule 6.1 Delivery Materials
</TABLE>
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Execution Copy
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THIS PROGRAM SUPPLY AND TRADEMARK LICENSE AGREEMENT (this
"Agreement") is entered into as of December 23, 2002 and effective as of April
1, 2002 (the "Effective Date"), between Playboy Entertainment Group, Inc., a
Delaware corporation ("PEGI"), and Playboy TV-Latin America, LLC, a California
limited liability company ("Company").
RECITALS
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WHEREAS, the Company is the owner and operator of the Company Service
(as defined below);
WHEREAS, Licensor (as defined below) is the owner of certain rights
in and to certain television programs, movies and other content as described
herein; and
WHEREAS, the Company wishes to license from Licensor and Licensor
wishes to license to the Company on the terms and conditions set forth in this
Agreement certain television programs, movies and other content for use on the
Company Service.
NOW, THEREFORE, in consideration of the foregoing and the mutual
agreements contained herein, and intending to be legally bound, the parties
agree as follows:
1. DEFINITIONS.
-----------
In this Agreement (including the Recitals hereto) the following terms
will have the following meanings unless otherwise stated:
"AAA" has the meaning set forth in Section 12.3.
"Acquired Movie" means a program acquired by Licensor (or any of its
Affiliates) from a third party that is at least 60 minutes in length and
represents an edited or unedited version of an adult film (i.e., a film which
contains actual sex acts).
"Affiliate" means any Person, directly or indirectly through one or
more intermediaries, controlling, controlled by, or under common control with
the specified Person. For purposes of the foregoing, "control" (and
"controlled" and "controlling," respectively), as used in the immediately
preceding sentence, means the possession, direct or indirect, of the power to
direct or cause the direction of the management and policies of the specified
Person (whether by the holding of shares or other equity interests, the
possession of voting or contract rights or otherwise). Notwithstanding the
foregoing, the Company will not be deemed an Affiliate of Licensor.
"After Tax Basis" means a basis such that any payment (the "Original
Payment") received or deemed to have been received by a Person (the
"Recipient") will be supplemented by a further payment to the Recipient so
that the sum of the two payments will equal the Original Payment, after taking
into account (x) all taxes that would result from the receipt or accrual of
such payments, if legally required, and (y) any reduction in taxes that would
result from the deduction of the expense indemnified against, if legally
permissible. In the event that the expense indemnified against is used to
reduce taxes by way of amortization or depreciation, payments made on an After
Tax Basis will be refunded in each taxable year of the recipient in which such
expense is deductible in an amount equal to the sum of (i) the tax savings
attributable to such deduction plus (ii) any reduction in taxes that would
result from the deduction of any amounts described in clause (i) as increased
hereby. All payments hereunder will be calculated on the assumptions that the
recipient was subject to tax at the highest marginal rates of tax applicable
to such class of taxpayer and that it could benefit from the deduction of any
expense at such rate of tax. In the event that a taxing authority will treat
any indemnification payment as not includible in gross income or disallow any
deduction taken into account hereunder, the indemnification will be recomputed
and further payments or refunds made.
"Agreement" has the meaning set forth in the introductory paragraph.
"Alta Loma Program" has the meaning set forth in Section 2.1(g).
"Amended Distribution Agreement" means the Amended Distribution
Agreement, effective as of the Effective Date, between PEGI and the Company.
"Basic Cable" has the meaning currently or hereafter commonly
understood in the television industry, but will also include for all purposes
of this Agreement any broadcast or other transmission (whether by satellite or
otherwise) to television sets or other television devices, now or hereafter
known, of a program service (other than any free television terrestrial
broadcast station) (a) that is included as part of a package of program
services for which members of the public pay a periodic fee for the right to
receive such package of program services, and (b) for which program service a
separate fee is not generally charged for the right to receive the particular
service in question.
"Blocked Funds" has the meaning set forth in Section 7.4.
"Branded" means a television service or Program where Licensor's or
any Licensor Affiliate's name or trademarks are used in connection, or closely
associated, with such television service or program, or any related
advertising.
"Branded Channels" means the PTVLA Channels and the Spice Channels.
"Branded Company Originated Marks" has the meaning set forth in
Section 3.7.
"Branded Format Programming" has the meaning set forth in Section
2.1(f).
"Caribbean Basin" means the following territories: Anguilla, Antigua
and Barbuda, Aruba, Barbados, Bermuda, the British Virgin Islands, the Cayman
Islands, Cuba, Dominica, Dominican Republic, Grenada, Haiti, Jamaica,
Montserrat, St. Kitts & Nevis, St. Lucia, St. Vincent and the Grenadines,
Trinidad and Tobago, and the Turks and Caicos Islands.
"Company" has the meaning set forth in the introductory paragraph.
"Company Format Programming" has the meaning set forth in Section
2.3(c).
"Company Guaranteed Minimum License Fee" has the meaning set forth in
Section 7.
"Company Indemnified Parties" has the meaning set forth in Section
8.2(a).
"Company Operating Agreement" means the Second Amended and Restated
Operating Agreement, effective as of the Effective Date, between PEGI and
Lifford relating to the formation and governance of the Company, as amended
from time to time.
"Company Produced Programming" has the meaning set forth in Section
2.3(a).
"Company Produced Programming Budget" has the meaning set forth in
Section 6.2.1 of the Company Operating Agreement.
"Company Service" means Playboy TV-Latin America, the television
service which includes the PTVLA Channels, the Spice Channels, the Venus
Channel, any other television program or channel operated by the Company from
time to time in accordance with this Agreement and the Operating Agreement and
any other permitted activity contemplated herein or therein.
"CPI" means the Consumer Price Index for all Urban Consumers as
released by the Bureau of Labor Statistics, U.S. Department of Labor. If the
Bureau of Labor Statistics, U.S. Department of Labor (i) substantially revises
the methodology (in contrast to benchmark adjustments or other corrections of
previously published data), (ii) discontinues publication of any of the data
referred to above or (iii) temporarily discontinues publication of any of the
data referred to above, the parties shall select a substitute for the revised
or discontinued data, in order to provide substitute data to lead to the same
adjustment result, insofar as possible, as would have been achieved by
continuing the use of the original data as it may have fluctuated had it not
been revised or discontinued.
"Customer Service and Shipping Department" means Licensor's
department, formerly known as the traffic department, that processes all
requests made to Licensor and its Affiliates for duplication and shipment of
Delivery Materials and marketing materials.
"Delivery Materials" means the materials set forth on Schedule 6.1.
"DirectTV Latin America, LLC" means the satellite DTH pay TV service,
and its successors and assignees.
"Dispute" has the meaning set forth in Section 12.2.
"Effective Date" has the meaning set forth in the introductory
paragraph.
"Existing Library" means any program or movie to which Licensor (or
its Affiliates) owns or has obtained the rights to in the Media in the
Territory as of March 31, 2002 each of which is set forth on Schedule 2.1(a)
hereto.
"Fiscal Year" has the meaning set forth in the Company Operating
Agreement.
"Force Majeure" has the meaning set forth in Section 13.1.
"Format Rights" has the meaning set forth in Section 2.1(f).
"Home Video Rights" has the meaning set forth in Section 4.2.
"Hot Brands" means those trademarks listed under "Hot Trademark" on
Schedule 3.1 attached hereto.
"IP - Validity Dispute" has the meaning set forth in Section 12.1.
"License Fees" has the meaning set forth in Section 7.
"Licensed Programming" means, collectively, the Existing Library, the
New Programs, the Acquired Movies, Playboy Brand Format Programming, the Alta
Loma Programs (subject to Section 2.1(g)), Wallpaper and any other Programs
which may be made available to the Company hereunder.
"Licensor" means PEGI and any of its Affiliates that hold any of the
rights licensed hereunder or which may provide services hereunder, or such
successor or assignee as may be permitted herein.
"Licensor Additional Marks" has the meaning set forth in Section 3.8.
"Licensor Indemnified Parties" has the meaning set forth in Section
8.2(b).
"Licensor Trademarks" means the trademarks and the registrations or
pending registrations therefor, as listed under such heading in Schedule 3.1
hereto, owned by Licensor or to which Licensor has all necessary rights to
grant the license as set forth herein, and the Licensor Additional Marks.
"Lifford" means Lifford International Co. Ltd., an International
Business Company incorporated under the laws of the British Virgin Islands, a
party to the Company Operating Agreement and a member of the Company.
"Localized Licensed Programming" has the meaning set forth in
Section 2.2(e).
"Losses" has the meaning set forth in Section 8.2(a).
"Media" means all forms of television exhibition, transmission and
distribution whether now existing or developed in the future and whether on a
subscription, pay-per-view, video-on-demand, or free basis, including but not
limited to the following: (i) conventional VHF or UHF television broadcast,
(ii) Basic Cable and pay cable, (iii) "over the air pay" subscription
television (STV), (iv) direct broadcasting by satellite (DBS), (v) master
antenna television systems (MATV), (vi) multipoint distribution services
(MDS), (vii) multichannel multipoint distribution services (MMDS), (viii)
satellite master antenna television systems (SMATV), and (ix) microwave
transmission. Except as otherwise provided herein, Media shall exclude
Streaming.
"Member" has the meaning set forth in the Company Operating Agreement.
"Net Revenue" shall have the meaning set forth in Section 7.
"New Programs" means television programs or movies that are similar
in content, style, mix and budget to the Existing Library, that are not
included in the Existing Library which are acquired or produced by Licensor
after March 31, 2002. Compilations of Programs previously provided to Company
shall be considered New Programs if such compilations are prepared in a manner
consistent with Licensor's activities in 2001 and the number of such
compilations provided hereunder shall be consistent with the number produced
in 2001. In the event Licensor obtains the rights in the Media in the
Territory to a television program or movie for which Licensor previously had
other rights in such program or movie, such program or movie shall not be
considered a New Program hereunder without the prior consent of the Company.
"Notice" has the meaning set forth in Section 12.2.
"Original Payment" has the meaning set forth in this Section 1.
"PEGI" has the meaning set forth in the introductory paragraph.
"Permitted Sublicensee" has the meaning set forth in Section 3.3.
"Person" means an individual, general partnership, limited
partnership, limited liability company, corporation, trust, estate, real
estate investment trust, association or any other entity.
"Playboy Brands" means those trademarks listed under the heading
"Playboy Marks" on Schedule 3.1 attached hereto.
"Playboy Competition" has the meaning set forth in Section 3.9(b).
"Playboy TV en Espanol" means those Spanish language networks
operated by PEGI and its Affiliates based on the Playboy Brands.
"Playboy TV" means those television networks operated by PEGI and its
Affiliates based on the Playboy Brands.
"Program" or "Programming" means any television program, movie or
other content which is, or may be, scheduled to be, broadcast or transmitted
on the Company Service.
"Proposed Activity" has the meaning set forth in Section 3.5.
"PTVLA Channels" means those Branded channels included as part of the
Company Service that are based on Playboy TV.
"Recipient" has the meaning set forth in this Section 1.
"Remediable Breach" has the meaning set forth in Section 9.3(b).
"Response" has the meaning set forth in Section 12.2.
"Rules" has the meaning set forth in Section 12.3.
"Spice Brands" means those trademarks listed under the heading "Spice
Marks" on Schedule 3.1 attached hereto.
"Spice Channels" means those Branded channels included as part of the
Company Service that are based on the Spice Network.
"Spice-Hot Feed" has the meaning set forth in Section 2.1(h).
"Spice Network" means, collectively, Spice, Spice 2, Spice Platinum,
Spice Hot, Spice 2 Hot, The Hot Zone, The Hot Network, Vivid TV, and successor
networks, if any, as Licensor may include from time-to-time.
"Streaming" means ***.
"Sublicense" has the meaning set forth in Section 2.2(d).
"TCP" has the meaning set forth in Section 3.1(a).
"Term" has the meaning set forth in Section 9.1.
"Termination Date" has the meaning set forth in Section 10.2.
"Territory" means: (a) Mexico and each country comprising Central and
South America; (b) the Caribbean Basin; (c) Spain; (d) Portugal; (e) Andorra;
and (f) the territories and possessions of each of the foregoing, if any.
"Trade Materials" means trade presentations, business cards,
invoices, stationery and other similar printed matter reflecting names under
which the Company conducts business.
"Unbranded" means a television service, Program or a block of
Programs where Licensor's or any Licensor Affiliate's name or trademarks are
not used in connection or closely associated with such television service,
Program or block of Programs or any related advertising other than in
customary production, logo credits or end sequences of such Program, for use
solely in the credit block in advertising for such Program, where applicable.
Unbranded Programs include Branded Programs which have been edited to remove
all Licensor Trademarks pursuant to Section 2.4(c).
"Unbranded Channels" means any channel which may be operated by the
Company where Licensor or any Licensor Affiliate's name or trademarks are not
used in close connection or closely associated with such channel.
"Venus Channel" means the television program service known as "Venus"
and any other television program service, channel or network operated by Venus
TV, Inc. and Contribution S.A. and distributed for viewing in the Territory by
Claxson Interactive Group Inc., a British Virgin Islands corporation, and its
subsidiaries.
"Wallpaper" has the meaning set forth in Section 2.1(d).
2. GRANT OF PROGRAM LICENSE.
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2.1 Grant. Upon and subject to the terms and conditions set forth in
this Agreement and to Licensor's retained rights pursuant to Section 2.5,
Licensor hereby grants to the Company and the Company hereby accepts an
exclusive license during the Term (or until Licensor loses its rights in or to
any Licensed Programming) to distribute, exhibit and display the Licensed
Programming on the Company Service subject to the terms herein.
(a) Existing Library. Licensor represents and warrants that the
Existing Library consists of all Programs for which Licensor (and/or its
Affiliates) owns rights in the Media in the Territory as of March 31, 2002,
including (but not limited to) Playboy, Spice and Hot Branded Programs and
adult films licensed by Licensor and its Affiliates and any other programming
or content, including Wallpaper, and the Acquired Movies as set forth on
Schedule 2.1(a) attached hereto.
(b) New Programs. Each Fiscal Year Licensor and/or its Affiliates
will produce or acquire the rights in the Media in the Territory to New
Programs. The parties acknowledge that: (i) the New Programs for Fiscal Year
2002 will include those Programs produced or acquired by Licensor (or its
Affiliates) pursuant to Licensor's 2002 production budget, including any
Programs produced or acquired subsequent to March 31, 2002 and prior to the
date of this Agreement but not previously made available to the Company; and
(ii) the content, style, mix and budget of the *** program hours of New
Programs provided to the Company pursuant to Section 2.1(e) shall meet the
category mix specifications detailed in Schedule 2.1 (b) (Programming Delivery
Based on 2001 Categories).
(c) Acquired Movies. Whenever Licensor and/or its Affiliates
acquire the rights to an Acquired Movie for exploitation in the United States,
it will also acquire the rights for such Acquired Movie in the Media in the
Territory, unless such rights are unavailable or are not available on
commercially reasonable terms. If the rights to such Acquired Movie are not
available in the Media for the Territory, or are available in only a portion
of the Territory, on commercially reasonable terms, Licensor will so notify
the Company, and the Company will determine whether it wishes to acquire the
rights in the Territory for such Acquired Movie. If the Company wishes to
acquire such rights, Licensor will acquire such rights for the Company on
terms to be agreed to by the Company. The Company shall reimburse Licensor for
any material incremental costs associated with such acquisition.
(d) "Wall-to-Wall" Material. Licensor will provide the Company
with copies of, or access to, all bumpers, promos, interstitials and other raw
materials produced by Licensor and/or its Affiliates for use in its television
business (collectively, the "Wallpaper"). The Company may exhibit Wallpaper in
the form provided or may modify, edit or utilize them to create appropriate
Wallpaper for the Company Service, subject to the terms and conditions of the
trademark license set forth in Section 3 and all applicable laws and
regulations within the Territory.
(e) Program Hour Requirement. Licensor shall make available
hereunder: (i) at least *** program hours of New Programs for the Company
Service; and (ii) in addition to any Acquired Movies included in New Programs
set forth on Schedule 2.1(b), *** Acquired Movies for the Company Service;
provided, however, that the Company acknowledges that Licensor shall not be
required to provide the Company with any more than *** program hours of New
Programs, and, in addition to any Acquired Movies included in New Programs,
*** Acquired Movies, for each Fiscal Year during the Term. The parties
acknowledge that if differently rated versions of the same Program or movie
are provided to the Company hereunder, such different versions shall be
counted as one movie or Program. Notwithstanding the foregoing, the Company
acknowledges and agrees that: (A) for the year 2002, Licensor shall provide
the Company a pro rated amount of program hours for nine calendar months of
such year equal to *** program hours of New Programs and, in addition to any
Acquired Movies included in New Programs, *** Acquired Movies; and (B) unless
the Term is extended pursuant to Section 9.2 herein, for the year 2012,
Licensor shall provide the Company a pro rated amount of program hours for
three calendar months of such year equal to *** program hours of New Programs
and, in addition to any Acquired Movies included in New Programs, *** Acquired
Movies.
(f) Format Rights. Licensor hereby grants the Company the
exclusive right, to create, produce, develop, commercialize, and distribute
Programs, in the Spanish and/or Portuguese languages, in the Territory for use
in the Media, which Programs are based upon any titles, formats (including,
without limitation, the "Night Calls" format), concepts or other elements
developed, owned or controlled by Licensor or its Affiliates, whether now
existing or hereinafter acquired or created (collectively, the "Format
Rights") subject to Licensor's prior written approval of any such production,
which shall not be unreasonably withheld or delayed. Each Program or other
production based on the Format Rights created by, or, on behalf of, the
Company ("Branded Format Programming") shall be owned by Licensor in
accordance with Section 2.5 and subject to Section 2.2 herein, provided,
however, Licensor shall pay the Company for any use of any Branded Format
Programming pursuant to the terms of the Amended Distribution Agreement.
(g) Alta Loma Programs. The parties acknowledge that Licensor
and/or its Affiliates produce additional programs which: (i) are intended for
adults and do not contain nudity; and (ii) do not carry any of the Licensor
Trademarks set forth on Schedule 3.1 other than: (x) in customary production,
presentation and logo credits in the title or end sequences of such program,
or (y) for use solely in the credit block in advertising for such program.
These programs are intended for "first run" on domestic television networks or
channels other than Playboy TV or the Spice Network. Licensor produces and
sells such programming under the Alta Loma banner. This programming may
consist, from time to time, of movies, series, and/or specials. (Any such
non-nude program, whether produced by Licensor or one of its Affiliates, and
whether carrying the "Alta Loma" or any other brand, will be referred to as an
"Alta Loma Program").
(1) Option to Acquire Rights. Licensor will offer the Company
rights to any Alta Loma Program for a fee equal to *** of the production
budget for such program. If the Company chooses to pay such fee, Licensor
shall make such Alta Loma Program available to the Company on the same terms
as, and such program shall be considered, a Licensed Program hereunder,
provided, however, that such program will not be counted as a part of the
program hour requirement as described in Section 2.1(e). If the Company does
not choose to obtain a license for a given Alta Loma Program: (i) the Company
will have the right to act as Licensor's exclusive sales agent for that
program throughout the Territory and will receive a *** distribution fee on
such sales, plus reimbursement of reasonable costs; provided, however, that in
the event an Alta Loma Program is produced pursuant to an agreement which
gives a third-party co-producer or commissioning network the right to
distribute such program in a region or regions of the Territory (or otherwise
restricts Licensor's right to grant the Company the right to act as sales
agent for such program), Licensor will pay to the Company *** of the total
revenue which Licensor (or its Affiliates) receives from the exploitation of
such program in the Media in such region(s) of the Territory; and (ii)
Licensor shall have the right to produce or co-produce not more than *** per
year of Alta Loma Programs. The Company acknowledges that the following
criteria shall not count towards the *** per year of Alta Loma Programs: (a)
repeat showings of the same program; and (b) Alta Loma Programs for which the
Company has agreed to pay *** of the production budget. PTVLA shall use
commercially reasonable efforts to distribute Alta Loma Programs in the
Territory in regards to any Alta Loma Program for which it has sales and
distribution rights.
(h) Spice-Hot Feed. Licensor shall provide the Company with one
feed to Spice Hot, Spice 2 Hot, Hot Network or Hot Zone (the "Spice-Hot
Feed"). The costs associated with the Company's exploitation of the Spice-Hot
Feed will be borne by the Company; provided, however, that Licensor shall be
responsible for the uplink and other Spice-Hot Feed signal
availability-related costs.
2.2 Approved Uses of Licensed Programming. The Company may exploit
the Licensed Programming as follows:
(a) Licensed Programming Use. Branded Programming shall only be
displayed or transmitted on the PTVLA Channels or on the Spice Channels in
accordance with the respective Branding as appropriate as set forth on
Schedule 3.1 attached hereto unless any such Branding is previously removed by
the Company such that such Programming would be characterized as Unbranded
hereunder pursuant to Section 2.4(c). In no event shall the Company display or
transmit Branded Programming on the Venus Channel or any other Unbranded
Channel without Licensor's prior written consent.
(b) Spillover. Licensor and the Company acknowledge and agree
that the accidental or de minimis "spillover" into the Territory of
transmissions to Licensor customers outside of the Territory will not be a
breach of the grant of rights hereunder and that the accidental or de minimis
"spillover" outside of the Territory of transmissions to Company customers
inside the Territory will not be a breach of the grant of rights hereunder.
(c) Puerto Rico. Notwithstanding any territorial or other
restrictions contained in this Agreement, the parties hereto acknowledge that
the distribution of the Company Service in Puerto Rico in the Spanish language
via DirectTV Latin America shall not be deemed to violate any such territorial
restrictions.
(d) Sublicensing. The Company shall have the right to license the
Licensed Programming to third parties for exhibition and use in the Media in
the Territory (each a "Sublicense") subject to the following terms: (i) the
Company may grant a Sublicense for any Unbranded Licensed Programming at its
sole discretion, and (ii) may grant a Sublicense for any Branded Programming
subject to Licensor's prior written approval which shall not be unreasonably
withheld or delayed, provided, however, that, in any event, any such Licensed
Programming must first be exhibited on the Company Service (i.e., "downstream
windows").
(1) Sales Agents. The Company may, in its sole discretion and
solely in accordance with this Section, utilize sales agents to handle
permitted sub-licensing of Licensed Programming to third parties on an
arms-length basis based on prevailing market rates (whether or not such third
party is an Affiliate of the Company. Unless the Company receives Licensor's
prior written consent to use a different procedure: (i) a sales agent may not
enter into any outright sales or sales of unlimited runs; (ii) all agreements
negotiated on the Company's behalf by any sales agent will be subject to the
Company's prior approval, and all contracts will be entered into by the
Company directly with the purchaser, which must be an end-user (e.g., a
broadcaster, direct-to-home or Private Network operator); (iii) any sales
agent will be compensated on a commissions-only basis; and (iv) and any sales
agency agreement must be terminable at will by the Company on not more than
six (6) months written notice.
(e) Editing. Subject to and consistent with the terms of Section
3 (Trademark License and Quality Control) and Section 5 (Censorship;
Withdrawal of Programs), the Company may, at its sole cost and expense, edit,
dub or subtitle in Spanish and/or Portuguese, or otherwise alter Licensed
Programming as necessary to comply with local language or custom or local
broadcasting requirements ("Localized Licensed Programming"). Such altered
Licensed Programming, including, without limitation, the rights to any edited,
dubbed or subtitled tracks related thereto, shall be owned exclusively by
Licensor subject to the terms of Section 2.5 herein, provided, however,
Licensor shall pay the Company for any use of any such altered Licensed
Programming pursuant to the terms of the Amended Distribution Agreement.
(f) Exclusive Supplier. Except for Company Produced Programming
and Company Format Programming, Licensor will be the exclusive supplier of
Programs on the PTVLA Channels and Spice Channels regardless of whether such
Programs are produced and owned by Licensor, or whether Licensor acquires such
Programs for the Company.
(g) Streaming.
***
2.3 Company Produced Programming.
(a) Development. Beginning on January 1, 2003, each year during
the Term, the Company shall produce Programs for exhibition on the Company
Service ("Company Produced Programming"). All such Company Produced
Programming shall be subject to domestic and international law. All Company
Produced Programming which is Branded shall be subject to the prior written
approval of Licensor, which shall not be unreasonably withheld or delayed, and
shall be produced consistent with Licensor's standards (including, but not
limited to, the content restrictions set forth herein) and subject to domestic
and international law including, without limitation, the Child Protection
Restoration and Penalties Enhancement Act of 1990. The inclusion of any
Company Produced Programming on the Company Service shall be in addition to
and in no way diminish the *** program hours of New Programs and *** Acquired
Movies required to be provided by Licensor pursuant to Section 2.1(e).
(b) Minimum Company Produced Programming Budget. Subject to
Section 9.2 herein, the Company shall annually spend the Company Produced
Programming Budget in accordance with the provisions of Article 6 of the
Company Operating Agreement.
(c) Company Format Programming. ***. Any Branded Company Format
Programming shall be subject to the content restrictions set forth herein and
domestic and international law including, without limitation, the Child
Protection Restoration and Penalties Enhancement Act of 1990. *** acknowledges
that the use of Company Format Programming is subject to the non-compete
provisions set forth in Article 14 of the Company Operating Agreement.
(d) Scheduling of the Company Service. In reasonable consultation
with Licensor, the Company shall determine, the timing, order, placement and
other scheduling-related details of all Programs to be transmitted on the
PTVLA Channels throughout the Territory.
2.4 Licensor ***.
(a) Cost. At the expiration or earlier termination of this
Agreement, for any reason, Licensor ***.
(b) Branded Format Programming and Localized Licensed Programs.
In respect to any Branded Format Programming or any Localized Licensed
Programming, at the expiration or earlier termination of the Agreement, for
any reason, Licensor ***.
(c) Branding Removal. If Licensor ***. The Company acknowledges
and agrees that if any Branded Programming ***.
2.5 Licensor Ownership.
(a) Goodwill. ***; provided, however, that, any and all goodwill
associated with the Licensor Trademarks included as part of any Branded
Company Produced Programming shall inure to the sole benefit of Licensor.
(b) Work For Hire. Subject to Section 2.4, any Branded Format
Programming or any Localized Licensed Programming produced by the Company
shall be a work made for hire specially ordered or commissioned by Licensor
within the meaning of the United States Copyright Act, made for the sole
benefit of Licensor and Licensor shall be the sole and exclusive owner
thereof. In the event that any right, title or interest, except for any right,
title or interest granted to the Company hereunder to any Branded Format
Programming or Localized Branded Programming, or part thereof, may not, by
operation of law, vest in Licensor, then the Company hereby conveys, transfers
and assigns to Licensor all right, title and interest, except for any right,
title or interest granted to the Company hereunder throughout the world and
without further consideration, in and to such Branded Format Programming or
Localized Branded Programming retroactive to the date of creation. The
assignment of the Branded Format Programming or Localized Branded Programming
under this Section includes all rights of paternity, integrity, attribution
and withdrawal and any other rights known as, or substantially similar to,
"moral rights." To the extent such moral rights may not be assigned under
applicable law and to the extent such assignment is not allowed by the laws in
the various countries moral rights exist, the Company hereby waives such moral
rights and consents to any action that would violate such moral rights in the
absence of such consent.
(c) All Other Rights Retained by Licensor; Covenant not to
Challenge. All rights not expressly granted to the Company hereunder are
reserved by Licensor for its own use and benefit. Without limiting the
generality of the foregoing, the Company shall not challenge the validity of
Licensor's ownership of the Licensed Programming or any intellectual property
registration or application for registration thereof or contest the fact that
the Company's rights under this Agreement are solely those of the Company,
which rights shall terminate in accordance with the provisions of Section 9.
2.6 Use Rights. Licensor shall have the exclusive rights to Branded
Company Produced Programming, Branded Format Programming and Branded Company
Format Programming as set forth in the Amended Distribution Agreement. In the
event that Licensor desires to use Branded Company Produced Programming,
Branded Format Programming or Branded Company Format Programming other than on
Playboy TV en Espanol, the parties shall negotiate in good faith reasonable
financial terms for such distribution on a case-by-case basis.
2.7 Services Provided by Licensor. In addition to any License Fees
payable to Licensor pursuant to Section 7, the Company will be entitled to
purchase from Licensor specific services, which request Licensor shall not
unreasonably refuse, which Licensor routinely performs for itself (such as
creative services, the creation of on-air promos, Customer Service and
Shipping Department services as described in Section 6.1 hereof, and residual
accounting) at Licensor's actual direct cost, without mark-up, but including
all related staffing costs.
3. TRADEMARK LICENSE AND QUALITY CONTROL.
-------------------------------------
3.1 Grant of Exclusive License.
(a) Company Rights. Upon and subject to the terms and conditions
set forth in this Agreement, Licensor hereby grants to the Company, and the
Company hereby accepts, an exclusive license to use the Licensor Trademarks in
the Territory in connection with: (i) the broadcast, transmission and
distribution of the Company Service and the applicable Programs as part of the
Company Service, (ii) the Company's sublicensing rights provided herein; and
(iii) the promotion and marketing of the Company Service and the applicable
Programs as part of the Company Service, including through the use of Trade
Materials ***. Notwithstanding the foregoing, the Company shall not have any
right to use any of the Licensor Trademarks on or in connection with any
Program that is not Licensed Programming except as the name of the channel on
which such Program is broadcast or as approved by Licensor in connection with
any Company Produced Programming. Further, the Company shall not have the
right to use the Licensor Trademarks on or in connection with any product,
goods or services except the Company Service and the Programs.
(b) Permitted Licensor Activity Relating to Media in the
Territory. During the Term, Licensor shall not itself use or authorize any
other person to use the Licensor Trademarks or any confusingly similar
designation within the Territory in connection with Media in the Territory
other than Internet promotion and marketing for the Company Service; provided,
however, that the following shall not constitute a breach of this
sub-paragraph 3.1(b): (i) use of the Licensor Trademarks or any confusingly
similar designation in customary production, presentation and logo credits in
advertising for and the title or end credits sequences of programs licensed to
others in the Territory as permitted hereunder, and (ii) use of the Licensor
Trademarks or any confusingly similar designation in connection with any
Media, or any programs or other items of any description included in any
Media, which is not intended for general reception in the Territory but is
received in the Territory due to unintentional spillover, so long as that
Media was transmitted in a manner not intended for general reception in the
Territory.
3.2 All Other Rights Retained by Licensor. All rights not expressly
granted to the Company hereunder are reserved to Licensor for its own use and
benefit. Without limiting the generality of the foregoing, nothing in this
Agreement shall prevent Licensor from doing any or all of the following: (a)
subject to the restrictions set forth herein, using or granting one or more
others the right or license to use the Licensor Trademarks outside of the
Media in any area of the world including the Territory; (b) using or granting
one or more others the right or license to use the Licensor Trademarks on or
in connection with Media in any area of the world other than the Territory;
(c) using or granting one or more others the right or license to use the
Licensor Trademarks on or in connection with any service (other than a service
in the Media and the activities described in Sections 2.2 and Section 2.1(g)
(Alta Loma) of this Agreement) or goods in any or all areas of the world
including the Territory; and (d) retaining and exercising the exclusive rights
hereby reserved to Licensor to design, manufacture, advertise, promote, sell
and distribute and license the design, manufacture, advertising, promotion,
sale and distribution of any and all products and services in any or all areas
of the world including the Territory other than Media in the Territory.
3.3 Restriction on Sub-Licensing. Licensor acknowledges that for the
Company to conduct its business the Company will need to procure licenses of
the Licensor Trademarks for use by systems operators and other distributors of
the Programming for the purposes of distributing, marketing or advertising
such Branded Channels or Branded Programming, (each, a "Permitted
Sublicensee"). Licensor agrees that it will enter into trademark sublicense
agreements with the Company and Permitted Sublicensees pursuant to the
permitted grant of any Sublicense of Licensed Programming hereunder. The term
of such sublicense agreements will be consistent with Licensor's customary
practices for licenses of similar scope and will provide Licensor with rights
of approval and control reasonably satisfactory to Licensor; provided, that
the license fee or other payment terms will be in the discretion of the
Company. To facilitate the foregoing, Licensor and the Company will develop
standard form licensing agreements as soon as reasonably practicable following
the date hereof. The Company will not otherwise sub-license any of the
Trademarks without the prior written consent of Licensor.
3.4 Duration of License. The trademark license granted pursuant to
this Section 3 shall continue in force until any termination of this Agreement
in accordance with the provisions of Section 9.
3.5 Company's ***. If Licensor (or any of its Affiliates) proposes to
enter into a new license of the Trademarks in any region of the Territory for
any use in broadcast media other than those covered by this Agreement (other
than with respect to any addition of the "Playboy" Magazine or an option or
renewal of license granted prior to the commencement of the Agreement) and
which could reasonably be expected to compete with the Company Service (a
"Proposed Activity"),***.
3.6 Restriction on Scope of Services. During the Term, the Company
shall not be involved in providing any television program service or channel
using the Licensor Trademarks which is intended for general reception, whether
by use of decoder devices or otherwise, outside the Territory; provided,
however, that, a television program service or channel using the Licensor
Trademarks that is received outside the Territory due to unintentional
spillover shall not constitute a breach of this Agreement so long as it was
not transmitted in a manner intended for general reception outside the
Territory.
3.7 Restrictions on Modifications of Trademarks. The Company shall
not use, cause or authorize to be used any word, device, design, slogan or
symbol confusingly similar to any or all of the Licensor Trademarks other than
a Licensor Trademark. Without limiting the generality of the foregoing, during
the Term, any or all of the following shall not be used by the Company on or
in connection with the Company Service or the Programs without, in each case,
Licensor's express prior written consent: (i) permutations of any or all of
the Licensor Trademarks; (ii) secondary or combination marks including or
derived from any of the Licensor Trademarks; (iii) new words, devices,
designs, slogans or symbols derived from any of the Licensor Trademarks.
Notwithstanding the foregoing, Licensor shall not withhold consent for any
mark that would otherwise violate this Section (collectively "Branded Company
Originated Marks") unless it reasonably determines that such Branded Company
Originated Mark or the Company's intended use thereof would be detrimental to
the Licensor Trademarks or Licensor. Upon termination of this Agreement, the
Company shall immediately cease all use of any Branded Company Originated
Marks and Licensor and the Company shall negotiate in good faith terms for the
sale of such Branded Company Originated Marks to Licensor.
3.8 License of Additional Trademarks. Licensor hereby agrees to
include as Licensor Trademarks licensed hereunder with respect to the
applicable Company Service (i) any trademarks or permutations, secondary,
combination or derivative marks owned by Licensor and its Affiliates and used
in connection with the broadcast, transmission, advertising or promotion of
the Licensed Programming in the United States and worldwide outside the
Territory provided that the same are, in Licensor's reasonable determination,
at such time applicable to the Company Service, as the case may be, and are
available for use by the Company pursuant hereto and are available for
registration by Licensor in the Territory, and (ii) any other mark to which
Licensor consents to include pursuant hereto (all of such marks the "Licensor
Additional Marks"). The Company may not attempt to register or otherwise gain
any other rights than as set forth herein in and to Licensor Additional Marks.
If, in Licensor's reasonable discretion, based on the Company's use in the
Territory of such Licensor Additional Marks, Licensor elects to register any
such Licensor Additional Marks in the Territory, the Company shall reimburse
Licensor for the costs of such registration and the maintenance thereof during
the Term, if the Company elects to continue such use. The Company will at
Licensor's written request, and at Licensor's cost, register and maintain any
Branded Company Originated Mark that Licensor approves pursuant hereto, if the
Company elects to continue such use.
3.9 Quality Control. All Programs and other material transmitted by
the Company shall comply with the specifications set forth in this Section
3.9. Licensor acknowledges that the Venus Channel and any Unbranded Channel or
Program is not subject to this Section 3.9.
(a) Program Restrictions. Although the Programs transmitted by the
Company Service will depict nudity and will allow strong or explicit language,
the Company is prohibited from transmitting and covenants that it will not
knowingly permit, on the Branded Channels, the transmission or exhibition of
scenes, Wallpaper, or other material depicting any of the following: (i) the
glorification of violence or gratuitous violence; (ii) rape, nonconsensual
intercourse or other nonconsensual sexual activity; (iii) bondage, incest,
sadism or masochism, bestiality, extreme sexual explicitness or the graphic
close-up of genitals; or (iv) child pornography, including, without
limitation, instances where an actor is the legal age for consent but is
portrayed as under the legal age for consent. In that regard, no actor will
appear nude or engage in sexual conduct in any Program who is not at least the
age of majority (e.g., eighteen (18) years of age in the United States)
consistent with the laws and regulations of each jurisdiction within the
Territory where such Program is transmitted. Notwithstanding the foregoing,
(i) the standards applied by Licensor from time to time for Playboy TV in the
United States shall be the controlling standards and any material transmitted
on Playboy TV or the Spice Networks shall be deemed acceptable by Licensor for
transmission on the Branded Channels and (ii) any materials provided, or
approved by Licensor under this Agreement shall be deemed acceptable for
transmission on the Branded Channels.
(b) Advertising and Home Shopping Restrictions. All advertising
transmitted on the Branded Channels, exhibited through Wallpaper, and all
direct marketing activities conducted on the Branded Channels shall comply
with the specifications set forth in this Section 3.9(b) and all applicable
laws and regulations in the Territory. The Company shall not transmit
advertising or direct marketing programs or exhibit Wallpaper or other
materials which advertise or promote any of the following: (i) firearms (or
advertisements from any gun lobby organization) and other weapons, explosives
or fireworks; (ii) massage parlors, sex clubs, sexually explicit audio-visual
products (e.g., X-rated or similar "hard core" videos), sex toys, materials
depicting graphic sexual conduct or depicting any matter subject to the
restrictions set forth in Section 3.9(a) above; (iii) classified advertising,
including, but not limited to, psychics or similar persons or services; (iv)
religious organizations and cults; or (v) magazines which compete with any
edition of the "Playboy" magazine or any other publication, product or service
published, produced, financed, branded, identified with or distributed by any
Person who is engaged in the publication or distribution of any magazine
which, in Licensor's discretion, competes with any edition of the "Playboy"
magazine (whether in the print, television or Internet industry, or any other
medium of delivery now known or hereinafter created) ("Playboy Competition").
Further, the Company shall not advertise or promote the Branded Channels or
otherwise use the Licensor Trademarks in any media in connection with any of
the foregoing. Notwithstanding the foregoing, and Wallpaper, advertising or
direct marketing programs provided by Licensor under this Agreement or
otherwise expressly approved in writing by Licensor shall be deemed acceptable
by Licensor for distribution and display on the Branded Channels.
(c) Inspection Rights. Except for any items or Programs prepared
or provided by Licensor, the Company shall submit to Licensor for its
inspection representative samples of all items and materials with respect to
which a Licensor Trademark is utilized pursuant hereto (including, without
limitation, any Programs, all advertising, and all promotional and marketing
materials) for Licensor's prior written approval at least ten (10) days prior
to their intended distribution. If Licensor does not reply to any such
submission within ten (10) days, such submission will be deemed rejected.
3.10 Title and Protection of the Licensor Trademarks; Use of the
Licensor Trademarks. The Company hereby acknowledges that except for the
license expressly granted in this Agreement, the Company has not acquired and
will not acquire any rights, title or interest in the Licensor Trademarks by
reason of this Agreement and further acknowledges each of the following: the
great value of the goodwill associated with the Licensor Trademarks; the
worldwide recognition thereof; that the proprietary rights therein (including,
without limitation, all rights that Licensor may have by virtue of
international agreements that protect famous marks and common law rights) and
the goodwill associated therewith are solely owned by and belong to Licensor;
that the Licensor Trademarks and other related words, devices, designs and
symbols are inherently distinctive or have secondary meaning firmly associated
in the mind of the general public with Licensor, the respective subsidiaries
and Affiliates and their activities; and that all additional goodwill
associated with the Licensor Trademarks created through the use of such
Licensor Trademarks by the Company shall inure to the sole benefit of
Licensor. The Company agrees not to use the Licensor Trademarks in any manner
which, directly or indirectly, would dilute, demean, ridicule or otherwise
tarnish the image of the Licensor Trademarks or Licensor, or any of its
Affiliates. During and after the Term, the Company shall not:
(a) attack or question the validity of, or assist any individual
or entity in attacking or questioning, the title or any rights of or claims by
any or all of Licensor, its subsidiaries and Affiliates and their respective
licensees and sublicensees in and to the Licensor Trademarks or any other
trademark, copyright or such other intellectual or intangible property
associated or connected with Licensor, its respective Affiliates, their
publications, published material and activities;
(b) directly or indirectly seek for itself or assist any third
party to use or acquire any rights, proprietary or otherwise, in any patent,
trademark, copyright or such other intellectual or intangible property
associated or connected with Licensor, its Affiliates, their publications,
published material or activities, without, in each case, the prior express
written consent of Licensor;
(c) in any way seek to avoid the Company's duties or obligations
under this Agreement because of the assertion or allegation by any individual
or entity that any or all of the Licensor Trademarks are invalid or by reason
of any contest concerning the rights of or claimed by Licensor; or
(d) file or prosecute one or more trademark applications in
connection with the Company's use or intended use of the Licensor Trademarks
or any mark or designation of any kind that is confusingly similar to or
dilutive of the Licensor Trademarks, unless expressly requested to do so in
writing by Licensor.
3.11 Form. The Company shall use the Licensor Trademarks in the form
stipulated by Licensor and shall include such trademark and copyright notices
as Licensor may request in connection with the protection of Licensor's
ownership of the Licensor Trademarks. The Company shall also observe all
directions given by Licensor as to colors and size of the representations of
the Licensor Trademarks and their manner and disposition in connection with
the Programs.
3.12 Maintenance of Distinctive Quality of Licensor Trademarks. The
use of the Licensor Trademarks by the Company shall at all times be in keeping
with and seek to maintain their distinctiveness and reputation as determined
by Licensor.
3.13 Advertising and Publicity. The Company hereby acknowledges that,
as between the Company and Licensor, the Licensor Trademarks are the sole and
exclusive property of Licensor. The Company, and any sublicensee of the
Licensed Programming and solely in connection with the sublicensed Licensed
Programming, shall have the right to develop and distribute in the Territory
advertising, publicity and promotional materials relating to the Company
Service and the Programs, including advertising telecasts of the Programs or
any person appearing therein (unless Licensor has specifically notified the
Company to the contrary); provided, however, that any such advertising,
publicity and promotional materials (other than material obtained directly
from Licensor) shall comply with applicable law and the following
restrictions:
(a) all such materials shall comply with the restrictions set
forth in this Section 3 and be subject to Licensor's approval rights pursuant
thereto;
(b) all such materials shall clearly identify the Licensor
Trademarks with a legible credit line with the wording "Playboy" (or the
`Rabbit Head Design,' etc.) is the mark of and used with the permission of
Playboy or its Affiliates, as the case may be, or such other words as Licensor
may designate from time to time;
(c) in no event may any advertising, publicity or promotional
material using the names of Licensor, the name of a Branded Program or the
name of any person appearing in a Branded Program be used to constitute an
endorsement, express or implied, of any party, sponsor, product or service;
and
(d) in no event without Licensor's prior approval, in each
instance, may any advertising, publicity or promotional material be in any
language other than Spanish, Portuguese or English.
Other than as expressly set forth in this Agreement, the Company shall make no
use of the Licensor Trademarks or any confusingly similar designation without
the prior express written consent of Licensor in each instance. The Company
shall also make no use whatsoever of any other trademark, trade name or
service mark that is the property of Licensor or any of its Affiliates without
the prior express written consent of Licensor in each instance. The Company
similarly agrees that it will not authorize or purport to authorize any third
party to make any such use and, if Licensor's consent thereto is obtained in
accordance with this Section 3, 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 material supplied to them by the Company in accordance
with the Company's rights hereunder.
3.14 Ownership of the Licensor Trademarks.
(a) Prosecution and Maintenance of Licensor Trademarks. Licensor
shall pay all renewal fees and take such other actions as are commercially
reasonable to prosecute the applications for and maintain the registrations of
the Licensor Trademarks in the Territory during the Term.
(b) Cooperation of Company. The Company will on request give to
Licensor or its authorized representative any information as to its use of the
Licensor Trademarks which Licensor may require and will render during the Term
any assistance reasonably required by Licensor in registering and maintaining
the registrations of the Licensor Trademarks.
(c) Covenant of Company. The Company will not make any
representation or do any act to the effect that it has any right, title or
interest in or to the ownership or use of any of the Licensor Trademarks
except under the terms of this Agreement.
(d) Cooperation of Parties to Register Licensor Trademarks. Each
party shall at its own expense, if required by the other, do all such acts and
execute all such documents as may be necessary to confirm the license granted
hereunder in respect of any of the Licensor Trademarks and to record the
Company as a registered user of the registered Licensor Trademarks on the
trademarks register in the Territory. The Company hereby agrees that any such
entry with respect to any Company Service on any trademark register may be
cancelled by Licensor on termination of this Agreement with respect to such
Company Service, for whatever reason, and that it will assist Licensor insofar
as may be necessary to achieve such cancellation including by executing any
necessary documents.
3.15 Infringements.
(a) Notice. Each party shall as soon as it becomes aware thereof
give the other written notice of (i) any use or proposed use by any other
person, firm or company of a trade name, trademark or trade dress or mode of
promotion or advertising which amounts or might amount either to infringement
in the Territory of Licensor's rights in connection with the Licensor
Trademarks or to passing off in the Territory, and (ii) any allegation or
claim by any other person, firm or company that any of the Licensor Trademarks
are invalid within the Territory or that use of any of the Licensor Trademarks
infringes any rights of another party or that any of the Licensor Trademarks
are otherwise attacked or open to attack within the Territory.
(b) Control of Proceedings. Licensor shall have the sole right
to control and conduct all proceedings relating to any claim or suit arising
out of or relating to any of the matters described in this Section 3 and to
decide what action (if any) to take in respect thereof. The Company expressly
covenants no discussions by the Company whatsoever with any and all claimants
and litigants, no compromise or settlement by the Company of any claim or suit
and no negotiations by the Company with respect to any compromise or
settlement shall be had, made or entered into without the prior written
approval of Licensor.
(c) Procedures and Costs. Licensor shall bear the cost of all
proceedings pursuant to this Section 3 and shall be entitled to retain any
damages recovered pursuant to such proceeding. At Licensor's cost, the Company
shall provide any assistance reasonably requested by Licensor, and the Company
shall agree to being joined as a party in any such proceeding at the request
of Licensor. The parties may mutually agree to jointly conduct and control any
such proceeding, in which case the costs and proceeds thereof shall be borne
equally by the parties.
(d) Equitable Relief. The Company acknowledges that the
Company's failure to cease using the Licensor Trademarks upon the expiration
or termination of this Agreement, will result in irreparable harm to Licensor
for which there is no adequate remedy at law. Accordingly, in such event,
Licensor shall be entitled to preliminary or temporary equitable relief in any
Federal or State court of competent jurisdiction located in the State of
California without regard to the provisions of Section 12, without the
necessity of posting bond unless otherwise required by applicable law by way
of any or all of the temporary and permanent injunctions and such other relief
as any court of competent jurisdiction may deem just and proper.
(e) Use of the Term "Licensor". As used in this Section 3, in
each instance, "Licensor" shall mean Licensor or its licensors, as the case
may be.
4. LICENSE TERM AND MEDIA HOLDBACKS.
--------------------------------
4.1 License Term. In each instance, the term of the Company's
rights in and to any Licensed Programming shall begin upon the availability of
such Licensed Programming to the Company, and shall end on the sooner to occur
of: (i) the term of Licensor's rights in and to such Licensed Programming; or
(ii) the duration of the Term.
4.2 No Home Video Rights. The Company shall not have the right to
distribute any Licensed Programming for non-public exhibition in a private
residence by means of discs, cassettes or electronic analog or digital storage
devices now existing or invented in the future ("Home Video Rights"). Home
Video Rights shall not include any decoding, recording or storage devices
(whether now existing or hereinafter devised) which allow viewers to view,
record or store programs broadcast via the Media.
4.3 Other Home Video Rights. The Company acknowledges that, in
certain cases, Licensor may be offered the rights in the Media in a Territory
as part of Licensor's acquisition of Home Video Rights. Licensor shall obtain
these Media rights, in its discretion, provided that, in the event the fees
for such Media rights are unreasonable, Licensor shall consult with the
Company and obtain the Media rights for the Company at the Company's own cost.
Nothing herein shall effect Licensor's rights to acquire separately the Home
Video Rights.
5. CENSORSHIP; WITHDRAWAL OF PROGRAMS.
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5.1 Censorship. The Company is willing to accept and pay for the
Existing Library and New Programs regardless of censorship regulations or the
potential for same throughout the Territory or in any individual country or
political subdivision within the Territory. The Company will elect, consistent
with applicable law, either to: (i) edit out the Programming as supplied by
Licensor, provided that the storyline of such edited Programming may not be
altered, (ii) blackout the region(s) where the censorship problem occurs, or
(iii) not use such Programming, provided, that any such effected New Programs
nonetheless shall count towards the requirements set forth in Section 2.1(e).
All costs of editing and/or blackout will be borne by the Company; provided,
that the Company will make good faith efforts to obtain waivers of such
restrictions or will permit Licensor to make such efforts on behalf of the
Company. Without limiting the Company's rights under Section 2.2(e), the
Company will only make such cuts or deletions as are necessary to conform to
applicable censorship regulations.
5.2 Withdrawal of Programs.
(a) Notwithstanding any other term of this Agreement to the
contrary, Licensor may, in its sole but reasonable discretion, withdraw any
Program if Licensor determines that the transmission thereof would or might
reasonably be expected to (i) infringe upon the rights of others; (ii) violate
the law, court order, government regulation or other ruling of any
governmental agency; or (iii) subject Licensor to any liability, other than
due to a breach by Licensor of its covenants and representations in this
Agreement.
(b) If Licensor elects to withdraw any Program as set forth in
paragraph 5.2(a) above before any telecast, the Company will have the right,
in its sole discretion, to require Licensor to deliver another program of
comparable quality (which program will constitute a Program hereunder). If
Licensor elects to withdraw any Program, any transportation, dubbing and
assembly costs incurred and paid by the Company with respect to the withdrawn
Program will be refunded by Licensor promptly upon the Company's presentation
of reasonable evidence of such expenditures.
(c) If a withdrawn Program has been delivered, the Company will,
at Licensor's request, either promptly erase such Program or return it to
Licensor at Licensor's expense.
5.3 Advertising.
(a) In all advertising and publicity relating to any Branded
Program or any transmission thereof, the Company will comply with the
advertising and billing credit requirements furnished by Licensor. The Company
will not make or permit to be made, in any advertising, publicity or
otherwise, any statements which (i) constitute or may be understood to be an
endorsement of any sponsor, product, article or service by Licensor or any of
its Affiliates or by any person or entity that appears in or otherwise renders
any services or provides any materials for use in any Branded Program or (ii)
indicate or may be understood to indicate the Licensor, any of its Affiliates,
or any person that appears in or otherwise renders any services or provides
any materials for use in any Program is connected or associated with any
sponsor, product, article or service.
(b) The Company will not advertise or promote, in any manner,
any Program withdrawn by Licensor.
(c) The Company will not authorize or permit any excerpt or clip
from any Branded Program to be used for promotional purposes to be in excess
of one (1) minute in length.
(d) The Company will not advertise or promote any Branded
Program earlier than sixty (60) days prior to the first day of the month in
which the Branded Program will first air.
6. DELIVERY AND RETURN.
-------------------
6.1 Access and Delivery Items. The Company will have full and
immediate access to all Delivery Materials set forth on Schedule 6.1, and
other tangible manifestations of the rights licensed hereunder, solely as
requested by the Company from Licensor's Customer Service and Shipping
Department, or other designee as Licensor may from time-to-time designate.
Licensor shall provide the Company, at no extra cost to the Company, with one
original copy of each of the Delivery Materials and shall provide the same for
all Programs, Acquired Movies, Wallpaper or any other content required to be
made available to the Company hereunder from time-to-time during the Term.
6.2 Title to Delivery Materials. It is expressly agreed that title in
and to any Delivery Material provided to the Company hereunder will remain in
Licensor at all times and that title, including copyrights therein, will vest
in Licensor upon the creation thereof, subject only to the possession and
control thereof by the Company from the date of delivery through the end of
the related license period solely for the purposes of exercising its rights
hereunder. The Company will execute, acknowledge and deliver to Licensor any
instruments of transfer, conveyance or assignment in or to any such Delivery
Materials necessary or desirable to evidence or effectuate Licensor's
ownership thereof and in the event that the Company fails or refuses to
execute, acknowledge or deliver any such instrument or documents then Licensor
will be deemed to be, and the Company hereby nominates, constitutes and
appoints Licensor, its true and lawful attorney-in-fact irrevocably to execute
and deliver all such instruments in the Company's name or otherwise, it being
acknowledged that such power is a power coupled with an interest. The Company
will not have the right to use any Delivery Materials except in the exercise
of the rights granted to the Company hereunder and in accordance with all
limitations on said rights as are contained in this Agreement.
7. PROGRAM AND TRADEMARK LICENSE FEES.
----------------------------------
The Company will pay to Licensor each Fiscal Year license fees
(the "License Fees") equal to the greater of: (i) seventeen and one-half
percent (17.5%) of the aggregate Net Revenue of the Company; or (ii) the
Company Guaranteed Minimum License Fee (as described below). For purposes
hereof, "Company Guaranteed Minimum License Fee" means: ***. As used herein,
the term "Net Revenue" means gross revenues earned and actually collected,
less any applicable withholding taxes, excluding: (I) the PTVLA Channel
Distribution Fee (as defined in the Amended Distribution Agreement); (II)
amounts paid to PTVLA by Playboy.com pursuant to Section 5.1 of the Web Site
Revenue Share Agreement effective as of April 1, 2002 between the Company,
Playboy.com, Inc., and Claxson Interactive Group, Inc.; and (III) any revenues
from (A) advertising; (B) from the sublicense of any Unbranded Company Format
Programming and Unbranded Company Produced Programming; and (C) revenues from
the exploitation by the Company of any Alta Loma Program rights acquired by
the Company as Licensed Programming pursuant to Section 2.1(g)(1), to the
extent that such revenues can be separately identified. The Company
acknowledges that for purposes of the calculation of the License Fee pursuant
to the terms of this Section, Net Revenue shall include the net revenue
associated with the Venus Channel as of the Effective Date whether or not the
transaction contributing the Venus Channel to the Company has closed by the
Effective Date. The Company further acknowledges that it may not exploit its
right hereunder through a sublicensee in a manner that circumvents the intent
of the Parties (e.g., distributing the Company Service through a Permitted
Sublicensee). Notwithstanding the foregoing, in the event this Agreement is
terminated or expires, any License Fees owed to Licensor hereunder shall be
adjusted on a pro rata basis based on the date of such termination or
expiration during such Fiscal Year.
7.1 Due and Payable. The License Fees shall be due and payable to
Licensor as follows: (i) the Company Guaranteed Minimum License Fee shall be
paid ***; and (ii) any overages based on Net Revenue above the Company
Guaranteed Minimum License Fee shall be ***. Any necessary adjustments thereto
shall be made within thirty (30) days after the Company receives audited
financial statements.
7.2 Wire Transfers. Payments of License Fees will be made by wire
transfer of immediately available funds, net of any withholding required by
applicable law. Licensor will from time to time designate one or more accounts
into which such payments will be made and may designate one or more Affiliates
to receive such payments.
7.3 Late Payment. Any payment not made when due will bear interest
from the date due to and including the date payment in full is made at a rate
equal to the reference rate of the Bank of America for U.S. domestic customers
as in effect on the date payment was due.
7.4 Restricted Funds. Monies actually received by the Company outside
the U.S. in U.S. dollars or in a currency freely convertible to U.S. dollars
and freely remittable to the U.S. shall be deemed to have been received by the
Company as of the end of the applicable accounting period during which such
monies were received, and, as applicable, converted into U.S. dollars at the
actual exchange rate applicable to the Company. Monies actually received by
the Company outside the U.S. in any currency and not freely remittable to the
Company in the U.S. in U.S. dollars shall be considered "Blocked Funds", and
shall not be included in Net Revenues. However, upon the Company's receipt of
written notice from Licensor that the Licensor desires a settlement of its
share of a particular item of Blocked Funds, the Company shall deposit the
Licensor's share of such Blocked Funds (i.e., the License Fees) in a bank
account in the applicable country, in the Licensor's name, subject to all
applicable laws and regulations. Such deposit shall fully satisfy the
Company's obligations to Licensor with respect to such Blocked Funds and
Licensor's share thereof, and any taxes, expenses or other charges incurred in
connection with the making of such deposit shall be deducted from Licensor's
share of such Blocked Funds, or otherwise charged to or paid by Licensor in
advance, if required to make such deposit.
7.5 Currency. The License Fees shall be paid *** in U.S. Dollars. To
the extent the calculation of the License Fees are based on revenues received
in other currencies, such revenues shall be calculated using the exchange rate
published in the Wall Street Journal or, with respect to Mexico, Brazil,
Argentina and Venezuela, as quoted by the Central Bank of such country, as of
the last day of the month during which the payment is due. Where License Fees'
payments are due by the Company in a country where, pursuant to the reasonable
advice of legal counsel, it is unlawful to make License Fees' payments in that
country in accordance with this Agreement, notice thereof in writing will be
given by the Company to Licensor and said License Fees' payments shall be
deposited in whatever currency is allowable, for the benefit or credit of
Licensor, by wire transfer into an accredited bank in that country as shall be
acceptable to Licensor.
7.6 Maintenance of Records and Audit Rights.
(a) The Company shall keep accurate books of account and records
covering all transactions relating to or arising out of this Agreement. The
Company shall permit Licensor and its nominees, employees, accountants, agents
and representatives to (i) have full access to and inspect such books and
records during normal business hours upon reasonable notice, and (ii) to
conduct an examination of and to copy all such books and records. The Company
shall maintain in good order and condition all such books and records for a
period of either: (i) five years after the expiration of the Term or the
earlier termination of this Agreement, or in the event of a dispute between
the parties hereto, until such dispute is resolved, whichever date is later;
or (ii) such period of time required under applicable laws and regulations,
whichever period is longer. Receipt or acceptance by Licensor of any sums paid
by the Company hereunder shall not preclude Licensor from questioning the
correctness thereof at any time.
(b) If an inspection or examination referred to in paragraph (a)
above discloses, or Licensor or the Company otherwise discover, an
underpayment of License Fees, the amount of such underpayment shall be paid by
the Company to Licensor not later than thirty (30) days after determination
thereof plus interest from the date the payment should have been made to and
including the date of payment in full at a rate equal to the reference rate of
the Bank of America for U.S. domestic customers as in effect on the date
payment should have been made. If such underpayment of License Fees by the
Company is in excess of ten percent (10%) of the aggregate License Fees earned
during any quarterly period under inspection, the Company shall, in addition
to paying Licensor the amount of such underpayment, reimburse Licensor for all
reasonable costs and expenses of conducting such inspection or examination.
(c) If an inspection or examination referred to in paragraph (a)
above discloses, or Licensor or the Company otherwise discovers, an
overpayment of License Fees, the amount of such overpayment shall be credited
against future payments of License Fees, unless the period for which the
overpayment was made is the final period covered by this Agreement, in which
case the amount of the overpayment shall be paid by Licensor to the Company
within thirty (30) days after determination thereof.
(d) The Company shall provide Licensor with year-end audited
financial statements within: (i) forty-five (45) days of the end of calendar
year 2002; and (ii) thirty (30) days of the end of each calendar year during
the Term thereafter.
8. INDEMNITIES.
-----------
8.1 Representations and Warranties.
(a) By Licensor. Licensor represents and warrants that, except as
set forth in the Schedules hereto: (i) it is duly authorized to enter into the
transactions contemplated by this Agreement; (ii) this Agreement is a valid
and binding obligation of Licensor, enforceable against it in accordance with
its terms; (iii) the performance of Licensor's obligations hereunder does not
violate any agreement, law, rule, or regulation binding on Licensor or
Licensor's charter documents; (iv) it has, and will continue to have during
the Term, all rights in and to the Existing Library, New Programs, Wallpaper
and any other content provided hereunder necessary to fulfill its obligations
hereunder (except that with respect to the Existing Library, no such
representation is made as to any program not listed on Schedule 6.1); (v) the
Existing Library, New Programs, Wallpaper and any other content provided
hereunder are not subject to licenses which conflict with the rights granted
herein, and the use thereof by the Company as contemplated herein will not
infringe upon the copyright, literary or dramatic right or right of privacy of
any third party or constitute a libel or slander of any third party; and (vi)
Licensor has disclosed all information having a material adverse effect on the
rights granted hereunder, and that all such information is true and correct to
the best of Licensor's knowledge and belief.
(b) By the Company. The Company represents and warrants that: (i)
it is duly authorized to enter into the transactions contemplated by this
Agreement; (ii) this Agreement is a valid and binding obligation of the
Company, enforceable against it in accordance with its terms; (iii) the
performance of the Company obligations hereunder does not violate any
agreement, law, rule, or regulation binding on the Company or the Company
charter documents; (iv) it will not use the Licensed Programming expect as
authorized by this Agreement; (v) it has, and will continue to have during the
Term, all rights in and to the Company Produced Programming and Company Format
Programming and any other content provided hereunder necessary to fulfill its
obligations hereunder; (vi) the Company Produced Programming and Company
Format Programming and any other content provided hereunder are not subject to
licenses which conflict with the rights granted herein, and the use thereof by
Licensor as contemplated herein will not infringe upon the copyright, literary
or dramatic right or right of privacy of any third party or constitute a libel
or slander of any third party; and (vii) the Company has disclosed all
information having a material adverse effect on the rights granted hereunder,
and that all such information is true and correct to the best of the Company's
knowledge and belief.
8.2 Indemnification.
(a) By Licensor. Licensor will indemnify and hold harmless the
Company and its members, managers, directors, officers, shareholders,
employees, agents, representatives and Affiliates (collectively, the "Company
Indemnified Parties"), on an After Tax Basis, from and against all claims,
losses, damages (including loss of profits and consequential damages awarded
to unrelated third parties, if any, but excluding loss of profits and
consequential damages otherwise suffered by the Company Indemnified Parties),
expenses, judgments, costs and liabilities (including reasonable attorneys'
fees and costs) (collectively, "Losses") incurred by the Company Indemnified
Parties arising from Licensor's breach of any obligation, representation or
warranty contained in this Agreement or by reason of any claim, resulting in
liability to the claimant or a settlement approved in writing by Licensor,
which may be made alleging that any of the Licensed Programming or other
materials furnished by Licensor for public exhibition as authorized hereunder
infringe upon the copyright, literary or dramatic right or right of privacy of
any claimant or constitutes a libel or slander of such person, except with
respect to any material added by the Company (including as permitted
hereunder) and except with respect to music which is specifically covered by
Section 8.3 below. Licensor shall not be required to provide indemnification
for any Losses solely and directly caused by the action or inaction of any
Company Indemnified Party.
(b) By Company. The Company will indemnify and hold harmless
Licensor and its directors, officers, shareholders, employees, agents,
representatives and Affiliates (collectively, the "Licensor Indemnified
Parties"), on an After Tax Basis, from and against all Losses incurred by the
Licensor Indemnified Parties arising from (i) the breach or alleged breach of
any provision of this Agreement by the Company; or (ii) any claim, resulting
in liability to the claimant or a settlement approved in writing by the
Company, which may be made alleging that any of the Company Produced
Programming, Branded Format Programming, Company Format Programming or other
materials furnished by the Company as authorized hereunder infringe upon the
copyright, literary or dramatic right or right of privacy of any claimant or
constitutes a libel or slander of such person, except with respect to any
material added by Licensor, but excluding any Losses for which the Company
must indemnify Licensor pursuant to Section 8.2(a) above. Without limiting the
foregoing, the Company shall specifically so indemnify Licensor and such other
parties from and against all Losses made or assessed against Licensor arising
from the transmission of any material that should have been edited for
censorship or other than as contained in the Delivery Materials as delivered
by Licensor, or from the temporary or permanent loss of any such material. The
Company shall not be required to provide indemnification for any Losses solely
and directly caused by the action or inaction of any Licensor Indemnified
Party.
8.3 Musical Compositions. Licensor warrants and represents that
to the best of its knowledge, information and belief, the performing rights in
all musical compositions contained in the Licensed Programming are: (i)
controlled by a performing rights society having jurisdiction, (ii) controlled
by Licensor, or (iii) in the public domain. Licensor does not represent or
warrant that the Company may exercise the performing rights to said musical
compositions without the payment of a performing rights royalty. The Company
will be solely responsible for the payment of such royalty and will hold
Licensor free and harmless therefrom.
8.4 Procedure. If a claim by a third party is made against an
indemnified party, the indemnified party will promptly notify the indemnifying
party of such claim. Failure to so notify the indemnifying party will not
relieve the indemnifying party of any liability which the indemnifying party
might have, except to the extent that such failure materially prejudices the
indemnifying party's legal rights. The indemnifying party will have thirty
(30) days after receipt of such notice to undertake, conduct and control
through counsel of its own choosing (subject to the approval of the
indemnified party, such approval not to be unreasonably withheld) and at its
expense.
9. TERMINATION.
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9.1 Expiration of Term. The term of this Agreement is ten (10) years,
commencing on the Effective Date hereof, unless sooner terminated pursuant to
the other provisions of this Section (the "Term").
9.2 Renewal. No later than ***, PEGI shall notify the Company in
writing if it intends to renew or extend this Agreement. ***. If PEGI elects
not to renew or extend this Agreement, the parties hereto agree and
acknowledge that ***.
9.3 Early Termination on Breach. Either party may without prejudice
to its other remedies terminate this Agreement immediately by notice in
writing to the other on or after the occurrence of any of the following:
(a) the commission of one or more material breaches of this
Agreement by the other party which are not capable of remedy; provided,
however, that in case of a breach by the Company, such breach is not caused by
Licensor as a Member of the Company; or
(b) the commission of a material breach of this Agreement by the
other party which is capable of remedy (a "Remediable Breach") which shall not
have been remedied within a period of thirty (30) days after the party in
breach has been given notice in writing specifying that Remediable Breach and
requiring it to be remedied; provided, however, that such thirty (30) day
period shall be extended for such additional period, not to exceed
one-hundred-twenty (120) days, as shall be reasonably necessary if that
Remediable Breach is incapable of remedy within that thirty (30) day period
and during that additional period the party in breach shall diligently
endeavor to remedy that Remediable Breach, but only if such extension would
not reasonably be expected to have a material adverse effect on the party
giving notice of such breach. However, in respect of the breach of any
obligation to make payment hereunder, the cure period shall not be extended as
provided in the foregoing proviso. Notwithstanding the foregoing, Licensor may
not terminate this Agreement in case of a breach by the Company if such breach
is caused by Licensor as a Member of the Company; or
(c) the bankruptcy or insolvency of, a general assignment for the
benefit of creditors or similar event by, or the appointment of a trustee,
receiver or similar person for the other party;
(d) the other party being prevented by an event of Force Majeure
from performing its obligations or the party exercising such right of
termination being prevented by an event of Force Majeure from exercising its
rights under this Agreement for a period of one-hundred-twenty (120)
consecutive calendar days; and provided, further, that in case of a breach by
the Company, such breach is not caused by Licensor as a Member of the Company.
9.4 Inadvertent Breach. The parties agree that any inadvertent breach
relating to Licensor's obligations with respect to any individual Program
shall constitute a Remediable Breach and shall not constitute grounds for
termination hereof if Licensor provides comparable substitute Programming for
the applicable Program.
9.5 Cross Default. The uncured material breach of the Company
Operating Agreement by either party or their Affiliates shall cause this
Agreement to terminate, unless such breach was caused by the party seeking
termination hereunder.
9.6 Dissolution of Company. The dissolution of the Company shall
cause this Agreement to terminate.
10. EFFECTS OF TERMINATION.
----------------------
10.1 Survival of Obligations. The termination of this Agreement for
whatever reason shall not effect Articles 8, 10, 12 and 13, and Sections
2.3(c), 2.4(c), 2.5, 3.10, 6.2 and 7.6 of this Agreement.
10.2 Termination of Rights. Upon the date on which any termination of
this Agreement for whatever reason takes effect (the "Termination Date") all
rights of the Company hereunder (other than any rights that the Company may
have arising from the conduct of, or performance hereof by, Licensor) will
immediately terminate and automatically revert to Licensor and the Company
will cease to make any use of the Licensed Programs and other materials
provided by Licensor hereunder, and shall promptly destroy or return the same
to Licensor, in each case as directed by Licensor. Further, the Company shall
immediately amend its charter documents so that its name no longer includes
any reference to any trademark of Licensor or any confusingly similar
designation or mark, if such a reference is included its name.
10.3 Further Assurances. Upon termination of this Agreement, the
parties will perform all other acts which may be necessary or useful to render
effective the termination of the Company's interests in the Licensed Programs,
Licensor Trademarks and other materials furnished by Licensor hereunder and
the Company will execute any assignment, conveyance, acknowledgment or other
document that Licensor may reasonably request relinquishing such interests.
Without limiting the foregoing, the Company hereby consents to any application
which Licensor may make to limit or terminate the Company's status as a
registered user of the Licensor Trademarks and irrevocably agrees not to
contest, oppose or dispute such application.
11. EQUITABLE RELIEF.
----------------
Each of Licensor and the Company acknowledges that any material
breach of this Agreement by such party, including, by way of example, the
Company's failure to cease using any Programming supplied hereunder upon the
expiration or termination of this Agreement, will result in irreparable harm
to the other party for which there is no adequate remedy at law. Accordingly,
in such event, Licensor or the Company, as the case may be, will be entitled
to preliminary or temporary equitable relief in any Federal or State court of
competent jurisdiction located in Los Angeles County, California and, except
in the case of an IP-Validity Dispute, pending a final determination in
accordance with Section 12, without the necessity of posting bond unless
otherwise required by applicable law by way of any or all of the temporary and
permanent injunctions and such other relief as any court of competent
jurisdiction may deem just and proper.
12. DISPUTE RESOLUTION.
------------------
12.1 Notwithstanding the foregoing and the provisions of this Section
12, the parties hereto agree in the event any third-party brings a dispute
concerning: (i) the validity, ownership, or control of the Licensor Trademarks
or the Licensor Additional Marks, Branded Company Originated Marks or the
copyrights or other intellectual property rights to any Licensed Programming
or any Branded Programming (an "IP-Validity Dispute"); the parties, (a) shall
seek to have such dispute litigated in a court of law and brought in the state
or federal courts in Los Angeles, California and (b) shall irrevocably submit
to the exclusive jurisdiction of such courts, (x) shall waive any objection to
choice of venue in any such action or proceeding in such courts, (y) shall
waive any objection that any such court is an inconvenient forum or does not
have jurisdiction over any party hereto, and (z) shall waive any right they
may have to request a jury trial.
12.2 If any dispute or difference of any kind whatsoever shall arise
between the parties in connection with, arising out of or relating to this
Agreement (including any schedule or exhibit hereto), or the breach,
termination or validity thereof (a "Dispute"), the parties shall attempt to
settle such Dispute in the first instance by mutual discussions. Within ten
(10) business days of the receipt by a party of a notice of the existence of a
Dispute ("Notice"), the receiving party shall submit a written response to the
other party ("Response"). Both the Notice and the Response shall include (i) a
statement of each party's position with regard to the Dispute and a summary of
arguments supporting that position; and (ii) the name and title of the senior
executive who will represent that party in attempting to resolve the Dispute
pursuant to this Section 12.2. Within five (5) business days of receipt of the
Response, the designated executives shall meet and attempt to resolve the
Dispute. All negotiations pursuant to this clause shall be confidential and
shall be treated as compromise and settlement negotiations, and no oral or
documentary representations made by the parties during such negotiations shall
be admissible for any purpose in any subsequent proceedings. If any Dispute is
not resolved for any reason within twenty (20) days of receipt of the Response
(or within such longer period as to which the parties have agreed in writing),
then, on the request of any party the Dispute shall be submitted to
arbitration in accordance with Sections 12.2-12.5 herein.
12.3 Any Dispute not timely resolved in accordance with Section 12.1
shall be finally and exclusively settled by arbitration in accordance with the
International Arbitration Rules of the American Arbitration Association
("AAA") then in effect (the "Rules"), except as modified herein. The
arbitration shall be held in Los Angeles, California. The arbitration
proceedings shall be conducted, and the award shall be rendered, in the
English language.
12.4 If the Dispute (including claims and counterclaims) is for less
than $5 million, there shall be one arbitrator. The parties shall have fifteen
(15) days from the receipt by the respondent of the demand for arbitration to
agree on an arbitrator. If the parties fail to timely agree, on the request of
any party such arbitrator shall be appointed by the AAA in accordance with the
Rules and the procedures set forth herein. If the Dispute (including claims
and counterclaims) is for more than $5 million, there shall be three neutral
and impartial arbitrators of whom the claimant and the respondent shall each
appoint one, within fifteen (15) days of the receipt by respondent of a copy
of the demand for arbitration. The two arbitrators so appointed shall select a
third arbitrator to serve as presiding arbitrator, such selection to be made
within twenty (20) days of the selection of the second arbitrator. If any
arbitrator is not appointed within the time limits set forth herein, such
arbitrator(s) shall be appointed by the AAA in accordance with the Rules and
the procedures set forth herein. There shall be no restriction on the
nationality of any arbitrator. Any arbitrator appointed by the AAA shall be
either a retired judge with experience in international commercial cases or a
practicing attorney with at least 15 years experience with large commercial
cases and experience as an international arbitrator. The AAA shall send
simultaneously to each party an identical list of at least nine arbitrator
candidates, and each party shall be permitted to strike two names from the
list, rank the remaining arbitrators in order of preference and return the
list to the AAA within ten (10) days of the transmittal date. If a party does
not return the list within the time specified, all persons named therein shall
be considered acceptable. From among the persons who remain on both lists and
in accordance with the designated order of mutual preference, the AAA shall
invite the acceptance of an arbitrator to serve. There shall be no
restrictions on the nationality of any arbitrator.
12.5 The hearing on the merits shall be held as expeditiously as
possible, if practicable no later than four months after the appointment of a
single arbitrator or five months after the appointment of the third
arbitrator, as applicable. The hearing shall, if practicable, last no longer
than ten days, which shall be consecutive, if possible. The award, which shall
be in writing and shall briefly and concisely state the findings of fact and
conclusions of law on which it is based, shall be rendered, if practicable,
within twenty (20) days of the close of the hearing. In rendering an award,
the arbitrator(s) shall be required to follow the law of the State of New
York. The arbitrator(s) are not empowered to award damages in excess of
compensatory damages and each party hereby irrevocably waives any right to
recover such damages with respect to any dispute resolved by arbitration. The
arbitrator(s) shall have the authority to award the costs of the arbitration
(including attorneys' fees and expenses) to the prevailing party. The award
shall be final and binding upon the parties and shall be the sole and
exclusive remedy between the parties regarding any claims, counterclaims,
issues or accounting presented to the arbitral tribunal. Judgment upon any
award may be entered in any court having jurisdiction thereof. Any costs or
fees (including attorney's fees and expenses) incident to enforcing the award
shall be charged against the party resisting such enforcement.
12.6 By agreeing to arbitration, the parties do not intend to deprive
any court of its jurisdiction to issue a pre-arbitral injunction, pre-arbitral
attachment or other order in aid of arbitration proceedings and the
enforcement of any award. Without prejudice to such provisional remedies as
may be available under the jurisdiction of a national court, the arbitral
tribunal shall have full authority to grant provisional remedies or modify or
vacate any temporary or preliminary relief issued by a court, and to award
damages for the failure of any party to respect the arbitral tribunal's orders
to that effect.
12.7 The parties shall take all actions necessary for awards and
other judgments resulting from the provisions set forth above to be recognized
and enforceable in the respective jurisdictions of organization of the parties
and, to the extent necessary, in other jurisdictions in the Territory.
13. MISCELLANEOUS.
-------------
13.1 Force Majeure. Subject to the right to terminate set forth in
Section 9.3, neither party will be liable to the other for any failure or
delay in delivery of Delivery Materials, or the inability to telecast any of
the Programs, due to accident involving breakdown of any satellite or of
transmission facilities or equipment, labor disputes, acts of God, failure of
carriers, failure or delay of laboratories, of or any other cause beyond the
control of such party (each, an event of "Force Majeure") and such
performances will be excused to the extent that it is prevented by reason of
any of the foregoing conditions. Notwithstanding the foregoing, an event of
Force Majeure will not include censorship restrictions or any restriction by
any jurisdiction on a party's right to transfer funds.
13.2 Binding Effect; No Assignment. The provisions of this Agreement
shall be binding on and ensure to the benefit of the successors of each party
hereto; provided, however, that no party may not assign, transfer, pledge,
hypothecate, charge or otherwise dispose of or subcontract any of its rights
or obligations hereunder without the prior written consent of the other party.
Notwithstanding the foregoing; (i) either party may assign its rights and
obligations hereunder to an Affiliate of such party, but the original party
will remain responsible and liable for such Affiliate's compliance with all of
such original party's obligations hereunder, and, in the case of an assignment
by Licensor, such Affiliate must be the owner of the Licensor Trademarks; and
(ii) in the event Lifford (or an Affiliate of Lifford which is then a member
of the Company) elects to dissolve the Company due to a breach by PEGI (or an
Affiliate of PEGI which is then a member of the Company) of the Company
Operating Agreement, Lifford (or such Affiliate) may cause the Company's
rights hereunder to be assigned to Lifford (or to an Affiliate of Lifford),
provided that the Company's rights under the this Agreement are assigned to
the same assignee. Nothing in this Agreement, expressed or implied, is
intended to confer on any Person other than the parties hereto or their
respective permitted successors and assigns, any rights, remedies, obligations
or liabilities under or by reason of this Agreement.
13.3 Invalidity. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction will, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof or affecting the validity or
enforceability of such provisions in any other jurisdictions.
13.4 Waivers, Remedies Cumulative, Amendments, etc.
(a) No failure or delay by either party hereto in exercising any
right, power or privilege under this Agreement will operate as a waiver
thereof nor will any single or partial exercise by either party hereto of any
right, power or privilege preclude any further exercise thereof or the
exercise of any other right, power or privilege.
(b) Except as otherwise provided in this Agreement, the rights
and remedies herein provided are cumulative and not exclusive of any rights
and remedies provided by law.
(c) No provision of this Agreement may be amended, modified,
waived, discharged or terminated, other than by the express written agreement
of the parties hereto nor may any breach of any provision of this Agreement be
waived or discharged except with the express written consent of the party not
in breach.
13.5 Notices.
(a) All notices, requests, demands and other communications
required to be given under this Agreement will conclusively be deemed to have
been duly given: (i) when hand delivered, (ii) the next business day if sent
by a generally recognized overnight courier service that provides written
acknowledgment by the addressee of receipt, or (iii) when received (with
appropriate answerback), if sent by facsimile transmission or other generally
accepted means of electronic transmission addressed as follows:
If to Licensor to:
Playboy Entertainment Group, Inc.
Attention: President
2706 Media Center Drive
Los Angeles, CA 90065
United States of America
Fax Number: (323) 276-4500
with a copy to:
Playboy Enterprises, Inc.
Attention: General Counsel
680 North Lake Shore Drive
Chicago, IL 60611
United States of America
Fax Number: (312) 266-2042
with a copy to:
Skadden, Arps, Slate, Meagher & Flom LLP
Attention: Rodd Schreiber, Esq.
333 W. Wacker Drive
Suite 2100
Chicago, IL 60606
United States of America
Fax Number: (312) 407-0411
If to the Company:
Playboy TV - Latin America, LLC
c/o Claxson Interactive Group Inc.
Attention: Chairman and Chief
Executive Officer
404 Washington Avenue, 8th Floor
Miami Beach, FL 33139
United States of America
Fax Number: (305) 894-3606
with a copy to:
Claxson Interactive Group Inc.
Attention: General Counsel
404 Washington Avenue, 8th Floor
Miami Beach, FL 33139
United States of America
Fax Number: (305) 894-4803
with a copy to:
Clifford Chance US LLP
Attention: L. Kevin O'Mara, Esq.
200 Park Avenue
New York, NY 10166
Fax Number: (212) 878-8375
or to such other address, or facsimile transmission number as the relevant
addressee may hereafter by notice hereunder substitute.
(b) All notices will be deemed given when received at the
address(es) as provided in paragraph (a) above.
13.6 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 OF 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 California.
13.7 Entire Agreement. This Agreement, together with its
attachments, constitutes the entire agreement between the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
understandings, oral and written, between the parties hereto with respect to
the subject matter hereof.
13.8 Rules of Construction.
(a) 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.
(b) Tense and Case. Throughout this Agreement, as the context may
require, references to any word used in one tense or case will include all
other appropriate tenses or cases.
(c) Agreement Negotiated. The parties hereto are sophisticated
and have been represented by lawyers throughout the negotiation and execution
of this Agreement who have carefully negotiated the provisions hereof.
13.9 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.
13.10 Relationship Between the Parties. This Agreement will not be
construed to place the parties in the relationship of partners or joint
venturers. The Company shall have no power to obligate or bind any or all of
Licensor and its subsidiaries or Affiliates in any manner whatsoever except as
expressly set forth in the Company Operating Agreement.
13.11 Time Is of the Essence. Time will be of the essence with
respect to each and every obligation of the Company and Licensor hereunder.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the date first
above written.
LICENSOR:
PLAYBOY ENTERTAINMENT GROUP, INC.
By: /s/ James L. English
---------------------------------
Name: James L. English
Title: President
COMPANY:
PLAYBOY TV-LATIN AMERICA, LLC
By: /s/ James L. English
---------------------------------
Name: Its member, Playboy
Entertainment Group, Inc.
Title:
By: James L. English
President
By: /s/ Amaya Ariztoy
---------------------------------
Name: Its member, Lifford
International Co. Ltd.
Title:
<PAGE>
Schedule 2.1(a)
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Existing Library
[SCHEDULE OMITTED]
<PAGE>
Schedule 2.1(b)
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2001 PTVLA New Programming Schedule
[SCHEDULE OMITTED]
<PAGE>
Schedule 3.1
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Licensor Trademarks
[SCHEDULE OMITTED]
<PAGE>
Schedule 6.1
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Delivery Materials
[SCHEDULE OMITTED]