EXHIBIT 10.17
COOPERATION AGREEMENT
THIS COOPERATION AGREEMENT (the "AGREEMENT"), is made as of this 5th day of
June, 2006, by and between Xinhua Finance Media Limited, a company established
and existing under the laws of the Cayman Islands ("XFM"), and Small World
Television,LLC, a company established and existing under the laws of Delaware
("SW"). XFM and SW are hereinafter collectively referred to as the "PARTIES" and
individually as a "PARTY".
WHEREAS:
The Parties wish to cooperate for the production of Programs (as defined
below), licensing of Distribution Rights (as defined below) in relation to the
Programs, and exploitation of other rights in relation to the Programs.
NOW, THEREFORE,
In consideration of the foregoing premises, and the representations,
warranties, and mutual covenants contained herein and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged, the
Parties hereto hereby agree as follows:
1. INTERPRETATION
1.1. DEFINITIONS. Each of the following terms when used in this Agreement has
the meaning ascribed to it in this Section 1.1:
"Accounting Period" has the meaning ascribed in Section 5.3.
"Affiliate" means, in relation to any person, any other
person which, directly or indirectly, controls
or is controlled by or is under common control
with such person and for the purposes of this
definition "control" when used with respect to
any specified person means the power to direct
the management and policies of such person,
directly or indirectly, whether through the
ownership of voting securities, by contract or
otherwise, and the terms "controlling" and
"controlled" have meanings correlative to the
foregoing.
"Anti-Piracy PSA" has the meaning ascribed in Section 2.3.
"Approved Treatment" has the meaning ascribed in Section 3.1.
"Business Day" means any day when banks are open for business
in the Territory.
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"Cable Television" means the one-way transmission to subscribers
of video programming service or other
programming service via a cable system, direct
broadcast satellite, or any other multi-channel
video programming distribution system.
"Claimant" has the meaning ascribed in Section 16.3.
"Development Plan" has the meaning ascribed in Section 3.3.
"Digital Distribution" means the distribution of Programs by
electronic means intended primarily for viewing
on personal computers or wireless devices.
"Dispute Notice" has the meaning ascribed in Section 16.3.
"Distribution Rights" means the non-exclusive rights to broadcast,
transmit, exhibit, show and /or demonstrate the
Programs (including any edited version) or
parts or portions thereof by any and all forms
of broadcast television, cable television,
satellite and digital distribution to an
intended audience in accordance with the terms
of this Agreement.
"Episode" means a self-contained production of an
independent script that is part of a series of
similar themed productions that make up a
Program under this Agreement.
"Exclusive Period" has the meaning ascribed in Section 6.2.
"Fee Statement" has the meaning ascribed in Section 5.3.
"General and
Administrative Rights" has the meaning ascribed in Section 3.3(b).
"Gross Revenues" means all fees generated as a result of the
licensing of Distribution Rights and
Non-Distribution Rights under this Agreement.
"Intellectual Property
Rights" means:
(a) any and all proprietary rights provided
under: (i) patent law; (ii) copyright law;
(iii) trade-▇▇▇▇ law; (iv) design patent
or industrial design law; (v)
semi-conductor chip or mask work law; or
(vi) any other statutory provision or
common law principle applicable to this
Agreement, including trade secret law,
which may provide a right in
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either ideas, formulae, algorithms,
concepts, inventions or know-how
generally, or the expression or use of
such ideas, formulae, algorithms,
concepts, inventions or know-how; and
(b) any and all applications, registrations,
licenses, sub-licenses, agreements or any
other evidence of a right in any of the
foregoing.
"Licensing Party" has the meaning ascribed in Section 5.3.
"▇▇▇▇ Licensee" has the meaning ascribed in Section 11.
"▇▇▇▇ Licensor" has the meaning ascribed in Section 11.
"Net Revenues" means Gross Revenues minus brokerage fees not
to exceed 20% of the Gross Revenues and similar
amounts paid to third parties.
"Non-Distribution Rights" has the meaning ascribed in Section 5.2.
"Non-Licensing Party" has the meaning ascribed in Section 5.3.
"PRC" means the People's Republic of China.
"Program Budget" has the meaning ascribed in Section 3.3.
"Program Material" means all characters (including their names,
puppets, animatronics, voices and mannerisms)
frames, stills, film clips, photographs, sets,
artwork, animation, settings, themes,
storylines, treatments, scripts, dialogue,
music, audio clips, and the like which comprise
or are depicted in any episodes, during the
Term, of the television Programs produced under
this Agreement, including the characters,
derivative characters, episodes, trademarks and
service marks now listed or later added to an
exhibit to this Agreement, in all cases in any
and all media now existing or hereafter
created, including without limitation,
internet, wireless, cable, satellite, over the
air television, print, recordings, and
audiovisual works, video games, board games and
other forms of games, stories, guides, or
books.
"Programming Costs" has the meaning ascribed in Section 3.3(a).
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"Programs" means the television programs to be produced by
SW pursuant to the terms of this Agreement.
"Residual Distribution
Rights" has the meaning ascribed in Section 6.4.
"Respondent" has the meaning ascribed in Section 16.3.
"Satellite Television" means the transmission to subscribers of video
programming service via direct broadcast
satellite.
"Territory" means the World.
"Treatment" has the meaning ascribed in Section 3.1.
1.2. BUSINESS DAY. In the event that any act is required hereunder to be done,
any notice is required hereunder to be given, or any period of time is to
expire hereunder on any day that is not a Business Day, such act shall be
required to be done or notice shall be required to be given or the time
shall expire on the next succeeding Business Day.
1.3. In this Agreement:
(a) the headings are inserted for convenience only and shall not affect
the construction of the Agreement;
(b) unless the context requires otherwise, words incorporating the
singular shall include the plural and vice versa and words importing a
gender shall include every gender; and
(c) references herein to Sections and Recitals are to sections and
recitals of this Agreement.
2. PRODUCTION OF THE PROGRAMS
2.1. SW hereby agrees to arrange for the production of no fewer than sixteen
Programs, as more specifically described in Exhibit A to this Agreement.
SW's responsibilities shall include, without limitation, developing,
writing, creating, casting, directing, producing, obtaining all third party
rights clearances for, filming, and timely delivering to XFM the Programs.
Each Program will consist of a series of 16 to 200 episodes, as mutually
agreed by the Parties.
2.2. SW shall enter into a separate agreement with a qualifed PRC production
company to be approved by XFM (the "PRODUCTION COMPANY"), which shall
assume from SW, SW's obligations to produce Programs under this Agreement
in consideration of $6,022,000.00 of the Programming Costs, as defined
below.
2.3. SW shall develop, write, create, cast, direct, produce, obtain third-party
rights clearances for, tape, and timely deliver third-party produced
content, including music videos, for the Programs in consideration of XFM's
payment of the Programming Costs ($6,022,000.00 of which SW shall pay to
the Production Company by separate
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agreement) and General and Administrative Costs and Promotional and Launch
Costs associated with the Programs. SW's responsibilities include, without
limitation, providing promotional and production launch services such as
creating promotional graphics and print advertisements, as well as
television and radio commercial campaigns. SW shall also create commercial
campaigns for channel 8 branding. SW shall also create and develop public
service announcements aimed at prevention of the unauthorized taking,
copying or use of copyrighted materials ("ANTI-PIRACY PSAS"), pursuant to
any contracts entered into for such Anti-Piracy PSAs as mutually agreed to
by the Parties.
3. TREATMENTS, BUDGETS AND PROGRAM APPROVAL
3.1. For each of the Programs, SW shall submit one or more treatments for XFM's
consideration as the basis for the Program ("TREATMENT"). Each Treatment
shall set forth the concept to be used as the basis for the Program and
communicate the essential idea for the Program. Treatments may be submitted
by SW singly or in one or more groups. XFM shall accept or reject each
Treatment within fifteen (15) days after such Treatment is submitted by SW.
Treatments which, as of the date hereof, have been approved by XFM are set
forth in Exhibit A to this Agreement (the "APPROVED TREATMENTS").
3.2. INTENTIONALLY DELETED
3.3. For each Treatment which has been accepted by XFM, SW shall provide a draft
development plan and production budget for each new Episode for XFM's and
approval, such approval not to be unreasonably withheld (the "DEVELOPMENT
PLAN"). The Development Plan shall contain in line item fashion, the
proposed development and production schedule, and a budget for XFM's
approval that shall include at least the following items (the "PROGRAM
BUDGET"):
(a) All direct costs and expenses previously incurred or to be incurred in
the creation, development, pre-production, production, post-production
and delivery to XFM of the Program; ("PROGRAMMING COSTS");
(b) All carrying costs incurred by SW for retaining of employees and
consultants for production purposes under this Agreement for the
applicable Program and the overhead attendant thereto, and fair
allocations of all costs and expenses of SW associated with or
benefiting the Program, including research and development, general
and administrative and overhead expenses and facilities ("GENERAL AND
ADMINISTRATIVE COSTS"); and
(c) The costs for providing promotional and production launch services
such as creating promotional graphics and print advertisements as well
as television and radio campaigns ("PROMOTIONAL COSTS").
Development Plans and Program Budgets to which the parties have already
agreed are set forth in Exhibit B to this Agreement. The Parties, may, from
time time, amend the Develepment Plans and Program Budgets by written
agreement.
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3.4. Any expenditures in excess of the approved Program Budget for a Program are
prohibited without the prior written approval of XFM. A Budget may be
revised from time to time during production of the Program upon written
mutual agreement of XFM and SW. All costs within an approved Program Budget
for the production of the Programs shall be paid by XFM in accordance with
the Payment Schedule contained in Exhibit B. The amount of USD $2,250,000
pre-paid by XFM to SW on April 10, 2006 which is Payment 1 on the Payment
Schedule shall be credited as set forth in the Payment Schedule.
3.5. Subject to restrictions imposed by any government authority of the PRC or
any province thereof, and further subject to any restrictions imposed as a
result of the approval of Treatments applicable thereto, SW shall have
editorial control over the development and production of all new Episodes,
but shall consult with XFM on a meaningful, timely and ongoing basis
regarding the material development and production decisions and shall give
good faith consideration to XFM's opinions. Without limiting the foregoing,
SW will make available to XFM a treatment of each Episode on the production
site prior to the start of principal photography (or in the case of digital
capture, the equivalent commencement point) and XFM shall have the right to
approve or reject any Episode treatment and require changes if XFM
reasonably believes any Episode based on such Episode treatment will
conflict with the censorship laws, rulings or policies within the PRC or
any province thereof, or be otherwise culturally or politically
inappropriate for broadcast within the PRC.
3.6. XFM shall have the right to review any completed Episode rough cuts at the
post production site and XKM shall have the right to require editing of
such rough cuts if XFM reasonably believes the Episode has substantially
deviated from the Episode treatment or will conflict with the censorship
laws, rulings or policies within the PRC or any province thereof or is
otherwise culturally or politically inappropriate for broadcast within the
PRC.
3.7. If XFM reasonably withholds approval of any Treatment, Development Plan, or
Episode treatment and SW refuses to make the necessary changes to conform
such Treatment, Development Plan, or Episode treatment to XFM's requested
changes, or the completed Episode rough cut does not conform with an
Episode treatment, then SW will not be credited with delivery of a Program
for purposes of this Agreement. XFM and SW may choose to substitute with a
new Treatment, Development Plan, or Episode treatment.
3.8. If XFM requests changes during principal photography (or the digital
equivalent) to an Episode treatment which had been approved by XFM, where
the changed scene or content was reasonably apparent from the contents of
the Episode treatment, XFM shall pay all reasonably and actually incurred
out-of-pocket expenses required by virtue of the changes and any additional
production costs due to the delay.
3.9. SW shall treat the Programs as first priority and shall produce and deliver
the Programs prior to undertaking projects for other customers, and shall
devote all necessary personnel and resources to fulfill its commitments
hereunder.
4. CO-OWNERSHIP OF PROGRAM
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4.1. XFM and SW shall respectively own an undivided 58% and 42% interest in all
new Episodes and new Program Material created for the new Episodes during
the Term of this Agreement; provided, however, that XFM shall have the sole
and exclusive right and obligation to register, administer and enforce such
jointly-owned copyrights, trademarks and other intellectual property rights
in the joint name of XFM and SW. Upon request, SW will cooperate with XFM
in connection with the registration, administration and enforcement of such
rights. The parties will execute, promptly upon request, all further
reasonable and necessary documents to effectuate the provisions of this
paragraph.
4.2. If SW desires to produce an additional series of episodes of any of the
Programs beyond those described in the Development Plan attached hereto as
Exhibit B or if XFM requests SW to do so, then SW shall promptly prepare
and present to XFM a supplementary Development Plan for such additional
series of episodes which shall be in a format similar to that of Exhibit B
(any such supplementary Development Plan being hereinafter referred to as a
"SUPPLEMENTARY DEVELOPMENT PLAN"). The Supplementary Development Plan shall
set forth Small World's good faith estimate of a proposed development and
production schedule and shall establish a good faith Program Budget in
connection with such additional series of episodes. It is anticipated that
the Program Budget costs identified in the Supplementary Development Plan
shall reflect increases over the costs set forth in the Program Budget for
the previous series of episodes. XFM shall have ninety (90) days after
delivery to it of a Supplementary Development Plan to approve production of
the additional series of episodes described in such Supplementary
Development Plan. XFM shall be entitled to approve the production of an
additional series of some of the Programs without necessarily approving
others which are identified in the Supplementary Development Plan. If XFM
approves the Supplementary Development Plan as to any of the series of
Programs described therein, then the Supplementary Development Plan,
insofar as it applies to the series of Programs so approved, shall be
incorporated into this Agreement and the terms of this Agreement shall
apply in all respects thereto. However, XFM shall relinquish all rights
with respect to episodes thereafter produced of any Programs described in
the Supplementary Development Plan, the series for which have not been not
approved by XFM within such ninety (90) day period and SW shall have the
sole right thereafter to produce additional episodes of such Programs and
shall have all right, title and interest in additional episodes of such
Programs without having any further obligation to XFM.
4.3. If XFM makes a written request for SW to produce an additional series of
episodes of any of the Programs beyond those described in the Development
Plan attached hereto as Exhibit B and SW fails to prepare and send to XFM a
Supplementary Development Plan within ninety (90) days after such written
request or if SW notifies XFM in writing that SW does not desire to produce
an additional series of episodes of any of the Programs, then SW shall
relinquish all rights with respect to episodes thereafter produced of such
Program(s) and XFM shall have the sole right thereafter to produce
additional episodes of such Program(s) without having any further
obligation to SW.
5. SHARING OF REVENUE
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5.1. XFM shall be entitled to receive fifty-eight percent (58%) and SW shall be
entitled to receive forty-two percent (42%) of all Net Revenue arising from
the exploitation of any right relating to the Programs in any and all media
now existing or hereafter developed any where in the universe or anywhere
in any virtual environment, including online video game settings, except as
set forth in Section 5.2 below.
5.2. For all Net Revenues realized from licensing of rights not directly
associated with the distribution of Programs ("NON-DISTRIBUTION RIGHTS"),
including, without limitation, Net Revenues realized from the placement of
products in Programs and any Anti-Piracy PSA contracts created and aired
XFM shall receive fifty-eight percent (58%) and SW shall receive forty-two
percent (42%) of the Net Revenues; provided, however, advertising revenue
from the broadcast of Programs will be retained by XFM in its entirety.
5.3. Within thirty (30) days following the end of each Calendar Quarter during
the Term (the "ACCOUNTING PERIOD"), any Party who licenses Distribution
Rights or Non-Distribution Rights (the "Licensing Party") shall furnish to
the other Party (the "NON-LICENSING PARTY") a complete and accurate
statement (each a "FEE STATEMENT") certified by an officer of Licensing
Party, showing, with respect to all Programs licensed by Licensing Party:
the (i) identity of each recipient of any Distribution Rights or
Non-Distribution Rights, as applicable; (ii) each such recipient's
location; (iii) Licensed Program description; (iv) the license fee received
by Licensing Party during the Accounting Period; and (v) the portion of
such license fee payable to the Non-Licensing Party.
(a) Licensing Party shall pay Non-Licensing Party the amount shown on the
Fee Statement concurrently with the delivery of such Fee Statement.
Licensing Party shall make all payments to Non-Licensing Party
hereunder in U.S. dollars with respect to Net Revenues. In calculating
the amount of U.S. dollars to be paid to Non-Licensing Party,
Licensing Party shall calculate the Net Revenues due in the national
currency of the country of the Territory and then convert it into U.S.
dollars based upon the exchange rate quoted by Bloomberg as of the
date the Net Revenue payments are due except as otherwise provided in
Subparagraphs (b) or (d) below, and Licensing Party shall furnish
Non-Licensing Party with external evidence with respect to the
authenticity of the exchange rates used, such as a bank statement.
(b) In the event Licensing Party cannot, because of applicable laws and
restrictions of the country of the Territory where remittance is
restricted (or the U.S.), make remittances in U.S. dollars as herein
above provided, then, upon submission to Non-Licensing Party of
evidence of such event, unless prohibited by law or governmental
restriction, Non-Licensing Party shall (A) receive Net Revenues due in
the national currency at such bank(s) accounts(s) as Non-Licensing
Party designates or (B) have Net Revenues due deposited in Licensing
Party's interest bearing account or in a joint trust account with
resulting interest. Such deposit shall satisfy Licensing Party's
payment obligation with respect to such payment, which shall be deemed
paid on the date of such deposit. Such payment amount shall be
remitted in U.S. dollars to Non-Licensing Party on the date remittance
restrictions terminate, based on the exchange rate as quoted by the
Bank on such date. In no event shall any remittance restrictions in a
particular country as comprises the Territory relieve Licensing Party
of the obligation of reporting,
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and ultimately remitting, all Net Revenues as required hereunder.
(c) In the event that amounts payable to Non-Licensing Party are not
remitted in full within ninety (90) days after expiry of the required
payment period (which in the case of Net Revenues shall be thirty (30)
days following the end of an Accounting Period), and Licensing Party
has not provided evidence to Non-Licensing Party that because of laws
and restrictions in a country or countries of the Territory, amounts
payable could not be remitted, then Licensing Party shall pay to
Non-Licensing Party an amount equal to one percent (1%) per annum
above the prime rate for HK$ loans quoted by the Bank (or maximum rate
permitted by law, if any) for the default amount, without any
deductions (other than for withholding or remittance tax purposes) on
the outstanding balance. Interest will become due on the first day the
payment is not made beyond the 181st day the payment is delinquent,
and shall accrue on a daily basis for the day on which payment is
delinquent until the delinquent amounts are paid.
(d) In the event Non-Licensing Party shall suffer any exchange losses
arising from late payments, including those late payments arising as a
result of understated amounts due discovered as a result of an audit,
such losses shall be determined by deducting the U.S. dollars actually
received by Non-Licensing Party from the U.S. dollars which would have
been received if the delinquent balance had been paid on the last due
date at the exchange rate quoted by the Bank for that date (plus
interest, if applicable, calculated in accordance with Subparagraph
(c) above of this Agreement). Any resulting shortfall will be paid
immediately by Licensing Party to Non-Licensing Party in U.S. dollars
(if so able to pay, otherwise, payment of such shortfall will be
remitted to Non-Licensing Party pursuant to the terms of Subparagraph
(b) above). The last due date, for purposes of determining the
exchange rate, shall be deemed to be the first day a payment becomes
delinquent.
(e) Licensing Party will use its commercially reasonable efforts at all
times to obtain government approval for remittance of all sums due to
Non-Licensing Party at the earliest possible date. Licensing Party is
fully obligated to provide this commercially reasonable effort whether
sums due to Non-Licensing Party are held by Licensing Party, or have
been deposited into a bank account in Non-Licensing Party' name.
5.4. Licensing Party shall be entitled to deduct from the total amounts
otherwise payable hereunder to Non-Licensing Party and promptly pay on
behalf of Non-Licensing Party any taxes and/or fees which local law
requires to be levied against amounts due to Non-Licensing Party in order
to avoid any interest charges or other penalties; provided, that Licensing
Party shall not pay such taxes or fees if Non-Licensing Party has advised
Licensing Party in writing not to do so. Non-Licensing Party shall
indemnify Licensing Party against any interest charges or other penalties
with respect to such taxes and any such additional charges or penalties as
a result of Non-Licensing Party's advice not to pay any taxes or fees as
aforesaid. If new or revised law(s) establishing fees, taxes or other
impositions are promulgated in the Territory, Licensing Party shall notify
Non-Licensing Party promptly upon Licensing Party becoming aware of such
promulgation and in ample time to afford Non-Licensing
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Party an opportunity to contest such impositions through the appropriate
legal channels. Licensing Party shall file all necessary tax returns or
other government documents on Non-Licensing Party's behalf which are
required by local law, within the time period required by local law. The
original receipt, and the computations for such taxes as may be deducted
from the amounts due to Non-Licensing Party, must accompany the remittance
of the Fee Statement in the Accounting Period in which such tax deduction
is made. If local law stipulates that the original tax receipt must be
retained by the Licensing Party, a bona fide copy thereof must be attached
to the Fee Statement.
6. DISTRIBUTION AND NON-DISTRIBUTION RIGHTS
6.1. Except as provided in Section 6.2, either Party shall be entitled to
license Distribution Rights and Non-Distribution Rights to the Programs
provided that the terms shall be mutually agreed by both Parties.
6.2. Subject to the provision of Section 6.3 below, the Distribution Rights to
the Programs listed in Exhibit A shall be licensed by XFM for distribution
within the PRC to Shanghai Camera Media Investment Co., Ltd. or Inner
Mongolia Film & TV Culture Media Co. Ltd. ("IMTV") for a period of one
year, on an exclusive basis in areas within the PRC where IMTV has landing
rights upon terms as are mutually agreed by the Parties. During the
exclusive one-year period ("EXCLUSIVE PERIOD"), either Shanghai Camera
Media Investment Co., Ltd. or IMTV shall have the exclusive right to one
original-broadcast and one re-run broadcast of each Episode
6.3. Notwithstanding the provision of Section 6.2, in the event that Shanghai
Camera Media Investment Co., Ltd. or IMTV decides in its absolute
discretion to terminate the distribution of the Programs for whatever
reason, the Programs may be licensed to other parties in the PRC on such
terms and price as mutually agreed by both Parties with 58% of the Net
Revenues derived therefrom going to XFM and 42% of such Net Revenues going
to SW.
6.4. Either party shall have the right throughout the term to exploit all
existing and future forms of distributing the Programs not otherwise
addressed in this Agreement (the "RESIDUAL DISTRIBUTION RIGHTS") subject to
a division of the Net Revenue with 58% going to XFM and 42% going to SW.
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7. TERM OF THE AGREEMENT
7.1. This Agreement shall become effective immediately upon execution by duly
authorized signers of both Parties and continue in perpetuity, unless
terminated earlier as otherwise provided in this Agreement.
8. EVENTS OF TERMINATION
8.1. Notwithstanding Section 7, both XFM and SW shall be entitled at any time,
by giving thirty (30) days prior notice in writing to each other, to
terminate this Agreement forthwith in any of the following events:
(a) if either party commits a material breach of any of the terms or
conditions of this Agreement and fails to remedy the same within
thirty (30) days of being required in writing by the non-breaching
party so to do; or
(b) if either party is unable to pay its debts as they fall due or a
petition is presented or meeting convened for the purpose of winding
up the party or either party enters into liquidation whether
compulsorily or voluntarily or compounds with its creditors generally
or has a receiver appointed of all or any part of its assets or takes
or suffers any similar action in consequence of debt.
Termination under Section 8.1 is not intended to be the sole remedy for
breach of this Agreement and will not preclude a Party from the exercise of
any other rights or remedies that may now or subsequently exist in law or
in equity or by statute or otherwise.
8.2. Neither the expiration nor termination of this Agreement shall release any
of the Parties from the obligation to perform any other duty or to
discharge any other liability that had been incurred prior thereto. Upon
termination of this Agreement, the terms and conditions of this Agreement
shall continue to apply to Programs which have been delivered by SW to XFM
as of the date of such termination. Upon such termination, this Agreement
shall terminate as to any Programs which have not been delivered to XFM as
of the date of such termination whether or not in development or production
("UNCOMPLETED PROGRAMS"). Upon such termination, SW shall own all
copyright, trademark and other intellectual property rights in and to
Uncompleted Programs, including the Treatments on which such Uncompleted
Programs are or would be based.
9. RELATIONSHIP AND LIABILITIES OF PARTIES
The parties are independent contractors with respect to each other. Nothing
herein shall create any association, partnership or joint venture or make
either party the agent of the other. No fiduciary obligations exist between
or among the parties hereto nor are any fiduciary obligations created by or
under this Agreement.
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10. MARKETING EXPERTISE AND KNOW-HOW; CONFIDENTIALITY
The materials and information supplied by one party to the other party
hereunder, including, without limitation, sales and financial data, plans,
artwork, style guides, design elements, character profiles, unpublished
copyrighted material, marketing and promotional strategies, the terms and
conditions of this Agreement, and other information which is proprietary in
nature or is a trade secret (collectively, the "PROPRIETARY INFORMATION")
constitute, relate to, contain and form a part of confidential and
proprietary information of such party disclosing the Proprietary
Information. Each of the parties hereto acknowledges and agrees that the
Proprietary Information is highly confidential and that disclosure of the
Proprietary Information, except as otherwise authorized hereunder, could
result in serious harm to the other party. Among other damage, unauthorized
disclosure of Proprietary Information will (i) damage the owner's carefully
planned marketing strategies, (ii) reduce interest in the Proprietary
Information, (iii) make unique or novel elements of the intellectual
property susceptible to imitation or copying by competitors, infringers or
third parties prior to release of the information or materials, (iv) damage
proprietary protection in undisclosed or unpublished information or
materials, and (v) provide unauthorized parties with materials capable of
being used to create counterfeit and unauthorized merchandise, audio-visual
products or other products, all of which will seriously damage a party's
rights and business. Except as expressly approved in writing by the
disclosing party or as authorized hereunder, a party shall not reproduce or
use the Proprietary Information and shall not discuss, distribute,
disseminate or otherwise disclose the Proprietary Information or the
substance or contents thereof, in whole or in part, in its original form or
in any other form, with or to any other person or entity other than (i) to
the extent necessary to effectuate the purposes of this Agreement, (ii) to
the extent such information becomes publicly available, or (iii) to the
extent disclosure is compelled by a government authority or order of a
court of competent jurisdiction, in which case the party required to
disclose will provide prior written notice of any such disclosure to the
other party.
11. TRADEMARK LICENSE.
Each Party to this Agreement provides the other with a non-exclusive
license to use the other's trademarks, trade names, service marks and logos
("Marks"), as listed in Exhibit C and such other Marks the Parties may
agree to in writing, for the limited purposes of promoting the Programs in
accordance with the terms hereof. The Party licensing the Marks (the "▇▇▇▇
Licensee") acknowledges and agrees that: (i) all such uses shall be subject
to the owning Party's (the "▇▇▇▇ Licensor") prior written approval; (ii)
each Party will use the other Party's Marks in the appropriate manner as
set forth herein; (iii) the ▇▇▇▇ Licensor's Marks and all goodwill
associated therewith are and shall remain the sole property of the ▇▇▇▇
Licensor; (iv) nothing in this Agreement shall confer in the ▇▇▇▇ Licensee
any right of ownership in the ▇▇▇▇ Licensor's Marks; (v) the ▇▇▇▇ Licensee
shall not now or in the future contest the validity of the ▇▇▇▇ Licensor's
Marks or adopt Marks which are confusingly similar to the ▇▇▇▇ Licensor's
Marks; and (vi) upon the reasonable written request of the ▇▇▇▇ Licensor,
the ▇▇▇▇ Licensee shall provide samples of advertising and documentation
utilizing the ▇▇▇▇ Licensor's Marks. It is expressly understood and agreed
that the license granted herein by one Party is intended for the use solely
by the
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other Party and may not be assigned or transferred without the prior
written consent of the ▇▇▇▇ Licensor. The licenses granted pursuant to this
Section shall automatically terminate upon termination of this Agreement,
and each Party shall immediately cease all use of all information provided
hereunder, including, without limitation, each Party's Marks.
12. REPRESENTATIONS AND WARRANTIES.
12.1. Each Party represents, warrants and covenants to the other as follows and
acknowledges that the other Party has relied upon the completeness and
accuracy of such representations, warranties and covenants in entering into
this Agreement:
(a) it has the corporate capacity to enter into this Agreement and to
perform each of its obligations hereunder; and
(b) it has duly authorized, executed and delivered this Agreement and this
Agreement constitutes a legally valid and binding obligation of it
enforceable against it in accordance with its terms except as such
enforcement may be limited by applicable bankruptcy, insolvency and
other laws of general application affecting the enforcement of
creditors' rights and subject to general equitable principles.
12.2. SW further represents, warrants and covenants to XFM as follows and
acknowledges that XFM has relied upon the completeness and accuracy of such
representations, warranties and covenants in entering into this Agreement:
(a) SW will not introduce into the Programs any defamatory or obscene
matter or other objectionable material of any kind whatsoever whether
or not it would give rise to any cause of action;
(b) SW shall ensure that all content contained in the Programs (including
any edited versions) complies with the laws and regulations of the
Territory;
(c) SW will not infringe upon the Intellectual Property Rights of any
person in the performance of its obligations under this Agreement. SW
has not granted and, during the term of this Agreement, will not grant
any rights or licenses to the whole or any part of the Programs that
would conflict with SW's obligations or XFM's rights under this
Agreement, and, to the best knowledge of SW after due inquiry, there
exist no facts, agreements or other documents by which SW is bound
that would conflict with SW's obligations or XFM's rights under this
Agreement; and
(d) No marketing documents, presentations, solicitations, or similar
materials which make reference to XFM, this Agreement or the
arrangements contemplated hereunder shall be distributed or otherwise
made available to any without the prior written approval of XFM.
13. INDEMNIFICATION.
13
13.1. XFM agrees to indemnify SW, its subsidiaries, officers, directors, agents
and employees from and against any and all claims, damages, losses and
expenses, including reasonable attorneys' fees, arising out of or relating
to (i) any breach of representations, warranties, covenants or agreements
made by XFM herein, or (ii) negligent acts or omissions of XFM or of anyone
employed by XFM and for whose acts XFM may be liable.
13.2. SW agrees to indemnify XFM, its officers, directors, agents, employees,
successors and assigns from and against any and all claims, damages, losses
and expenses, including reasonable attorneys' fees, arising out of or
relating to (i) any breach of representations, warranties, covenants or
agreements made by SW herein, or (ii) by the negligent acts or omissions of
anyone employed by SW for whose acts SW may be liable.
14. INSURANCE.
14.1. SW shall secure and maintain customary Comprehensive General Liability and
such other liability insurance as XFM may reasonably request; provided,
however, that XFM shall not require such insurance to have limits of more
than $1,000,000 for any single party's claim arising out of a single
occurrence and $3,000,000 for all claims arising out of a single
occurrence. All such insurances shall include XFM as an additional insured,
and SW shall furnish XFM with certificates of such insurance upon XFM's
request.
14.2. XFM shall make reasonable efforts to cause the Production Company to
secure and maintain customary Comprehensive General Liability and such
other liability insurance as SW may reasonably request; provided, however,
that SW shall not require such insurance to have limits of more than
$1,000,000 for any single party's claim arising out of a single occurrence
and $3,000,000 for all claims arising out of a single occurrence. All such
insurances shall include SW as an additional insured, and the Production
Company shall furnish SW with certificates of such insurance upon SW's
request.
15. TRADE SECRETS; GOODWILL.
By entering into this Agreement or otherwise, no Party shall acquire any
rights to or under any goodwill, trademark, trade name, patent or copyright
or application for any thereof, trade secret, web page or other property of
the other Party and its Affiliates. If, during the term of this Agreement,
any such rights should become for any reason whatsoever vested in either
Party by operation of law or otherwise, the other Party, as applicable,
agrees that it shall immediately, at the request of the counter Party, as
applicable, or on the termination or expiration of this Agreement, assign
any and all such rights, together with any goodwill appurtenant thereto, to
the other Party as applicable. Each Party agrees that it shall immediately
cease to use the Marks of any other Party upon termination of this
Agreement.
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16. MISCELLANEOUS.
16.1. Notices. All communications required or permitted to be given hereunder
shall be in writing and shall be deemed to have been duly given if (i)
delivered personally with receipt acknowledged, (ii) sent by registered or
certified mail, return receipt requested, (iii) sent by telecopy with
confirmation or (iv) sent by recognized commercial overnight courier for
next Business Day delivery, addressed to the Parties at the following
addresses and facsimile numbers or to such other addresses or facsimile
numbers as any Party shall hereafter specify by communication to the other
Parties in the manner provided herein:
If to XFM:
Attention: General Counsel
Telephone: ▇▇▇ ▇▇▇▇ ▇▇▇▇
Facsimile: 852 2541 8266
If to SW:
Attention: _________________________
Telephone: _________________________
Facsimile: _________________________
Notice of change of address shall be deemed given when actually received or
upon refusal to accept delivery thereof; all other communications shall be
deemed to have been given, received and dated on the earlier of: (i) when
actually received or upon refusal to accept delivery thereof, (ii) on the
date when delivered personally or via telecopy, (iii) one (1) Business Day
after being sent by overnight courier and (iv) four (4) Business Days after
mailing, as aforesaid.
16.2. Assignment. No Party hereto shall assign or otherwise transfer this
Agreement or any interest or right hereunder or delegate the performance of
any of its obligations hereunder to any third party other than an Affiliate
without the prior written consent of the other affected Party which consent
may be withheld in such other Party's sole discretion. Any such attempted
assignment, transfer or delegation without the other Party's prior written
consent will be deemed null and void and result in the immediate
termination of this Agreement without necessity of any notice.
16.3. Governing Law and Arbitration. This Agreement shall be governed by and
construed in accordance with the laws of Hong Kong. Any dispute,
controversy or claim arising out of or relating to this Agreement, or the
breach, termination or invalidity thereof, shall be settled by binding
arbitration in accordance with the UNCITRAL Arbitration Rules as present in
force in the manner set forth in this Section 16.3.
(a) The procedures of this Section 16.3 may be initiated by a written
notice (a "DISPUTE NOTICE") given by one party (a "CLAIMANT") to the
other, but not before thirty (30) days have passed during which the
parties have been unable to reach a resolution. The Dispute Notice
shall be accompanied by (i) a statement of the Claimant describing the
dispute in reasonable detail and (ii)
15
documentation, if any, supporting the Claimant's position on the
dispute. Within twenty (20) days after the other party's (the
"RESPONDENT") receipt of the Dispute Notice and accompanying
materials, the dispute shall be resolved by binding arbitration in
Hong Kong under the UNCITRAL Arbitration Rules. All arbitration
procedures pursuant to this paragraph (a) shall be confidential and
treated as compromise and settlement negotiations and shall not be
admissible in any arbitration or other proceeding.
(b) The Parties shall agree on a single arbitrator to resolve the dispute.
If the Parties fail to agree on the designation of an arbitrator
within a twenty (20)-day period the Hong Kong International
Arbitration Centre shall be requested to designate the single
arbitrator. If the arbitrator becomes disabled, resigns or is
otherwise unable to discharge the arbitrator's duties, the
arbitrator's successor shall be appointed in the same manner as the
arbitrator was appointed.
(c) Any award arising out of arbitration (i) shall be binding and
conclusive upon the Parties; (ii) shall be limited to a holding for or
against a party, and affording such monetary remedy as is deemed
equitable, just and within the scope of this Agreement; (iii) may not
include special, indirect, incidental, consequential, special,
punitive or exemplary damages or diminution in value; (iv) may in
appropriate circumstances include injunctive relief; and (v) may be
entered in a court.
(d) Arbitration shall not be deemed a waiver of any right of termination
under this Agreement, and the arbitrator is not empowered to act or
make any award other than based solely on the rights and obligations
of the Parties prior to termination in accordance with this Agreement.
(e) The arbitrator may not limit, expand or otherwise modify the terms of
this Agreement.
(f) Each party shall bear its own expenses incurred in any arbitration or
litigation, but any expenses related to the compensation and the costs
of the arbitrator shall be borne equally by the Parties to the
dispute.
(g) If any action or proceeding is commenced to construe or enforce this
Agreement or the rights and duties of the Parties hereunder, then the
Party prevailing in that action, and any appeal thereof, shall be
entitled to recover its attorney's fees and costs in that action or
proceeding, as well as all costs and fees of any appeal or action to
enforce any judgment entered in connection therewith.
16.4. No Modification Except in Writing. This Agreement shall not be changed,
modified, or amended except in writing signed by the Parties hereto. No
terms of any purchase order, invoice, or similar document will amend or
supplement this Agreement, even if it is accepted or signed by the
receiving Party.
16.5. Waiver. A Party's failure to enforce at any time any provision of this
Agreement, or any right in respect thereto, or to exercise any election
hereunder, shall not be considered to be a waiver of such provision, right,
or election or to affect the validity of this Agreement. No waiver shall be
effective unless given in writing signed by the
16
Party making such waiver. A waiver at one time shall not constitute a
subsequent waiver of the same condition, breach, default or occurrence at
any other time unless such waiver so explicitly provides.
16.6. Severability. If one or more provisions of this Agreement are held to be
unenforceable under applicable law, such provision shall be excluded from
this Agreement and the balance of the Agreement shall be interpreted as if
such provision was so excluded and shall be enforceable in accordance with
its terms.
16.7. Cumulative Remedies. No remedy or election hereunder shall be deemed
exclusive, but shall, wherever possible, be cumulative with all other
remedies at law or in equity. Any specific right or remedy provided in this
Agreement shall not be exclusive but will be cumulative of all rights and
remedies set forth herein and allowed at law.
16.8. Further Assurances. Each of the Parties hereto agrees to execute such
documents, and take such actions, as may reasonably be required to
effectuate the terms and conditions of this Agreement.
16.9. Force Majeure. No Party shall be liable for any failure to perform any
obligation hereunder, or from any delay in the performance thereof, due to
causes beyond its control, including industrial disputes of whatever
nature, acts of God, public enemy, acts of government, failure of
telecommunications, system malfunctions, fire or other casualty.
16.10. No Third Party Beneficiaries. Nothing expressed or implied in this
Agreement is intended, or shall be construed, to confer upon or give any
person other than the Parties hereto and their respective successors and
permitted assigns, any rights or remedies under or by reason of this
Agreement.
16.11. Controlling Language. This Agreement has been executed in English, and
the English language version shall control notwithstanding any translations
of this Agreement.
16.12. Time of the Essence. The times established in accordance with this
Agreement for the performance of the obligations set out in this Agreement
are of the essence.
16.13. Counterparts. This Agreement may be executed in one or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
16.14. Entire Agreement. This Agreement supersedes, terminates and otherwise
renders null and void certain prior written and/or oral agreements between
the Parties with respect to the matters hereinabove expressly set forth.
This Agreement represents and incorporates the entire understanding of the
Parties hereto with respect to the matters herein expressly set forth and
each Party acknowledges that there are no warranties, representations,
covenants or understandings of any kind, nature or description whatsoever
made by any Party to any other Party, except as are herein and therein
expressly set forth.
Remainder of Page Intentionally Left Blank; Execution Page Follows
17
IN WITNESS WHEREOF, the parties have entered into this Agreement as of the date
first above written.
XINHUA FINANCE MEDIA LIMITED
By: /s/ ▇▇▇▇▇ ▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇
Title: CEO
SMALL WORLD PRODUCTIONS LIMITED
By: /s/
--------------------------------
Name:
------------------------------
Title: CEO
18
EXHIBIT A
[Treatments already approved by XFM at the time of execution of the agreement.]
19
EXHIBIT B
[Details of Small World Television Development Plan (May 2006) - Rundowns and
show descriptions of different programs.]
20
EXHIBIT C
[TRADEMARKS]
21