PLAYBOY TV/SCANDINAVIA
Memorandum of Agreement
As of July 29, 1997
1. Overview
This Memorandum of Agreement (the "Agreement") sets forth the essential
terms and conditions under which Playboy Entertainment Group, Inc. ("PEGI")
will license programming to the Modern Times Group ("MTG") for the purposes
of broadcasting a pay television service known as Playboy TV/Scandinavia
("PBTV/S"). This Agreement consists of twenty-three (23) Section cover
pages and the attached Exhibit A of PEGI's Standard Terms and Conditions
for agreements of this type. In the event of any inconsistencies between
such cover pages and Standard Terms and Conditions, the cover pages shall
prevail.
2. Program Supply for PBTV/S
PEGI will supply MTG with *** Program Hours of New Programs per Year. For
the purposes of this Agreement, a "New Program" is a program never before
broadcast on the PBTV/S service. A "Year" is any consecutive 12-month
period commencing on the launch date of the PBTV/S service or any
anniversary thereof. "Program Hours" shall be calculated as follows:
(a) programs 11-40 minutes in length shall be treated as .5 Program Hours,
(b) programs 41-70 minutes in length shall be treated as 1.0 Program
Hours, and (c) programs 71-100 minutes in length shall be treated as 1.5
Program Hours. Program Hours for programs of greater length shall be
calculated in an analogous manner.
3. Supply of Movies
In addition to the programs and interstitial materials supplied by PEGI for
the PBTV/S service, PEGI will supply to MTG a total of *** movies (the
"Movies") per Year, for unbranded transmission within the Territory during
such Year by a single Non-Standard TV service of MTG's choice other than
PBTV/S.
4. The Playboy TV/Scandinavia Service
PBTV/S will run as a 4-hour block each night, commencing no earlier than
10:00 pm and no later than 1:00 am Stockholm time.
*** Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
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PBTV/S will be sold to DTH consumers only as a part of a "package" that
also includes TV 1000 and TV 1000 Cinema; this package is currently
referred to as "Viasat Gold." Pricing to the consumer for the Viasat Gold
package has been set at 199 SEK per month; PEGI will have the right of
consultation over any pricing variance from this level. MTG agrees that
neither TV 1000 nor TV 1000 Cinema will be available to consumers without
PBTV/S.
In the event that PBTV/S is distributed to consumers via pay cable
television as part of the Viasat Gold package (or any other "bundling" of
services), the parties will negotiate a fair proportion of gross revenues
due PEGI for the PBTV/S service in relation to total gross revenues
received by MTG from the distribution of such a package(s). In the event
that PBTV/S is sold to consumers via pay cable television on an a la carte
basis, PEGI will have approval over the retail price charged to consumers
for the PBTV/S service.
5. Territory
5.1 For PBTV/S
The "Territory" for the PBTV/S service will consist of Norway, Sweden,
Denmark and Finland.
5.2 For Movies
The "Territory" for the Movies will consist of Norway, Sweden, Denmark
and Finland. To the extent that the Non-Standard TV rights for a given
Movie in the Baltic States are controlled by PEGI for the applicable
Year of the Term and have not been granted to a third party at the
time this Agreement is executed, the Territory for such Movie will
also include the Baltic States. If the Non-Standard TV rights for a
given Movie are controlled by PEGI for the applicable Year of the Term
and have been previously granted to a third party or third parties for
one or more territories in the Baltic States but not all territories
in the Baltic States, the Territory for such Movie will also include
that (those) territory(ies) within the Baltic States for which such
rights have not been previously granted. MTG acknowledges that the
Non-Standard TV rights to a particular Movie may be subject to home
video holdbacks in some or all of the Baltic States, and MTG agrees
that MTG's rights to the Movies in the Baltic States, if any, shall be
subject to, and MTG shall abide by, all of such holdbacks, as
instructed by ▇▇▇▇.
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6. Languages
PBTV/S will be authorized to transmit programs in English, Norwegian,
Swedish, Danish, and Finnish.
7. Term
The "Term" of the Agreement will be *** years, commencing on the launch
date. MTG agrees that the launch date will be no later than September 30,
1997, and will be deemed to have occurred when any programming supplied by
▇▇▇▇ is exhibited in any part of the Territory over any form of Non-
Standard TV by or under the authority of MTG.
8. Program Schedule
PEGI will schedule the PBTV/S service in its entirety. Each program day
will consist of a mix of New Programs and Encore Programs. An "Encore
Program" is the repeat of a program that has already aired as a New
Program.
In order to fill each hour to its entirety, PEGI will supply MTG with
interstitial material and promos of certain upcoming programs.
MTB shall have the right to exhibit each of the Movies *** times over a
single Non-Standard TV service in the Territory other than PBTV/S during
the Year for which the particular Movie is delivered by ▇▇▇▇. In no event
may MTG use any of the "PlayboyMarks" (as defined in the Standard Terms and
Conditions) in connection with any of such exhibitions.
9. Delivery Materials
For each month of the Term, PEGI will provide MTG with a program schedule,
which will identify each New Program, each Encore Program, each
interstitial and each promo that is to be transmitted each day. PEGI will
also provide MTG with one NTSC Betacam copy of each program, interstitial
and promo, and MTG will then be responsible for the assembly of a given
day's broadcast from these materials. The cost of shipping these materials
from Los Angeles will be borne by MTG. During the first month of each Year
of the Term, PEGI also will provide to MTG one NTSC Betacam copy of each of
the *** Movies for such Year. MTG shall be responsible for any assembly or
preparation of materials for the exhibition of the Movies, and the cost of
shipping all materials in connection with the Movies from Los Angeles will
be borne by MTG.
*** Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
3
10. Dubbing and/or Subtitling
PEGI will supply an English-language version of each New Program,
interstitial, promo and Movie. If PEGI owns or acquires at no cost,
versions of certain New Programs or Movies in the other authorized
languages, these also will be provided to MTG. MTG may, at its cost, dub or
sub-title any program, interstitial, promo and/or Movie, subject to PEGI's
approval of the quality of such dubbing and/or subtitling. *** At the end
of the Term, all dubbed and/or subtitled materials *** will be destroyed by
MTG, and MTG shall deliver to PEGI a certificate of destruction reasonably
acceptable to PEGI.
11. Media
MTG will be authorized to transmit PBTV/S into all Non-Standard TV media in
the Territory throughout the Term (the "Media"). MTG also will be
authorized to transmit each Movie on a single Non-Standard TV service in
the Territory other than PBTV/S during the particular Year of the Term for
which the particular Movie was delivered by PEGI. For the purposes of this
Agreement, "Non-Standard TV" shall include pay cable television and DTH
transmission. PEGI acknowledges that MTG may also distribute the PBTV/S
service via the DTH platform to consumers who receive the service via
SMATV, MMDS, DBS, or DSS technologies. Such technologies will be considered
part of the DTH component of this Agreement. Non-Standard TV specifically
excludes terrestrial broadcast television and basic subscription (i.e.,
"non-premium pay") television.
12. Marketing and Distribution
MTG will bear all responsibility for the marketing and distribution of the
PBTV/S service in the Media throughout the Territory. PEGI will use
reasonable efforts to supply MTG with marketing materials as needed to
support the sales and marketing of the PBTV/S service. All duplication,
printing, distribution and similar marketing costs will be borne by MTG.
MTG agrees as part of its marketing plan to run cross-promotional
advertisements for the Viasat Gold package on its other Non-Standard TV
services ***. In MTG's cross-promotional advertisements for the Viasat Gold
package, MTG shall give substantially the same prominence to PBTV/S as it
does to other third party channels as components of the Viasat Gold
package.
*** Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
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13. Exclusivity
MTG will be the exclusive distributor for PBTV/S in DTH media in the
Territory throughout the Term.
For pay cable television, PEGI will grant MTG the exclusive right to
distribute the PBTV/S service in the Territory for one year from the
commencement of the Term. On a country-by-country basis, if, at the end of
Year 1, MTG has not secured access for PBTV/S in cable television systems
representing at least 50% of the cable television households in a given
country at such time, that country will become non-exclusive to MTG for
PBTV/S for the medium of pay cable television for the remainder of the
Term.
14. ***
PEGI acknowledges that MTG will achieve pay cable television coverage by
subdistributing the PBTV/S service to cable television operators, via
contracts with each cable television operator (each, a "Cable Distribution
Agreement"). PEGI will have approval rights over the terms and conditions
of each Cable Distribution Agreement. ***
15. Technical Operations
MTG will handle and pay for all technical functions, including provision
for satellite transponders, uplink, playback, subscriber management
services, costs of assembly, music performance fees, shipping, and the
like.
16. Program License Fees
16.1 For PBTV/S DTH Homes
Program license fees for PBTV/S will be the sum of: a) the "Minimum
Guaranteed License Fees"; and b) the "Subscriber-Based Overage":
*** Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
5
16.1.1 The Minimum Guaranteed License Fees
The Minimum Guaranteed License Fees for each Year will be as follows:
***
The payment schedule for such Minimum Guaranteed License Fees will be
as follows:
***
16.1.2 The Subscriber-Based Overage
MTG will calculate the average number of subscribers to the Viasat
Gold package each month of the Term. For the following monthly
subscriber counts, MTG will pay PEGI an additional Subscriber-Based
Overage as follows:
When Average Subscriber The Subscriber-Based
Counts Are Between... Overage Will Be
*** ***
* on subscribers *** through the actual number.
*** Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
6
By way of example, if for month ***, the average number of subscribers
to the Viasat Gold package is ***, MTG will pay PEGI a Subscriber-
Based Overage of ***. If, for month ***, the average number of
subscribers to the Viasat Gold package is ***, MTG will pay PEGI a
Subscriber-Based Overage of ***.
For multiple-dwelling units, offices buildings and other consumers who
do not receive PBTV/S through an individual subscription, but rather
receive it on a "group" basis, such as via SMATV, each residence,
office or other individual unit capable of receiving PBTV/S shall be
counted as a subscriber for purposes of calculating the Subscriber-
Based Overage. Similarly, for hotels and motels, hospitals and other
multiple-room facilities receiving PBTV/S that are occupied only on a
day-by-day, temporary basis for which a daily charge is incurred (as
opposed to apartment buildings, office buildings, dormitories and
other multiple-dwelling units that are occupied on a longer term
basis), the number of subscribers on a particular day shall be
calculated by multiplying the total number of rooms in such facility
on such day by the greater of (a) the average monthly occupancy rate
of such facility, or (b) ***. The average number of subscribers for a
particular month shall be determined by averaging the number of
subscribers on the first day of the month and the number of
subscribers on the last day of the month.
Payment of Subscriber-Based Overages will be made on a monthly basis,
30 days after the close of the appropirate month.
16.2 For PBTV/S Cable Television Homes
For cable television distribution of the PBTV/S service, MTG will remit to
PEGI all sums actually collected from distribution through cable television
operators, ***. In the event that PBTV/S is bundled with other services in
a package, MTG will remit to PEGI the fair proportion (as agreed by the
parties) of net revenues actually collected from the distribution of such
package(s), ***.
Payments will be made on a monthly basis, included with the accounting
statement for that month.
*** Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
7
16.3 For Movies
MTG will pay PEGI the sum of US *** per Movie, payable as follows:
***
17. Accounting
MTG will handle the collection of all moneys due from the consumer and/or
cable television operators. 30 days after the close of a given month, MTG
will provide PEGI with an accounting statement that details the following:
17.1 For Viasat Gold DTH Homes
a) Number of subscribers at the beginning of the month.
b) Number of subscribers at the end of the month.
c) Mean average number of subscribers for that month.
d) Actual revenues collected from the sale of the Viasat Gold
package to those households for that month.
17.2 For Cable Television Homes (For Each Individual Cable
Television Operator)
a) Number of subscribers at the beginning of the month.
b) Number of subscribers at the end of the month.
c) Mean average number of subscribers for that month.
d) Actual revenues collected from monthly subscriptions to
PBTV/S for the month.
e) Actual revenues collected from pay-per-view sales of PBTV/S
for that month.
***
As indicated in the Program License Fees Section, any Subscriber-
Based Overage due PEGI from DTH subscriber counts and any revenues
*** from cable television distribution will be
*** Confidential information omitted pursuant to a request for
confidential treatment filed separately with the Securities and
Exchange Commission.
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due with the statement for the appropriate month.
18. Advertising
PEGI reserves the right to schedule up to *** of advertising for products
bearing any Playboy Marks sold by PEGI or its affiliates. Use of such
advertising time will be at the discretion of PEGI but will conform to any
guidelines set by any relevant regulatory body in the Territory.
19. Other Adult Services or Programs
PEGI acknowledges that MTG exhibits certain adult films within its current
roster of channels.***
Accordingly, MTG warrants that: ***
20. Censorship
MTG shall accept and pay for all programming supplied by PEGI for the
PBTV/S service and all Movies regardless of censorship regulations or the
potential for same throughout the Territory or in any individual country or
area within the Territory. MTG will be obliged either to edit the
programming, including the Movies, as supplied by ▇▇▇▇ (subject to PEGI's
approval) or blackout the territory(ies) where the censorship problem
occurs, with all costs of editing and/or blackout to be borne by MTG.
21. Transfer of PEG Rights
PEGI reserves the right to transfer this Agreement to an affiliate in which
PEGI or its parent company, Playboy Enterprises, Inc. ("PEI"), is a
shareholder, partner, member or other equity participant. ***
*** Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
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22. Transfer of MTG Responsibilities
In the event that MTG merges or affiliates with any other owners, operators
or providers of distribution, this Agreement will automatically take effect
for all parties to such mergers or affiliations. ***
23. ***
IN WITNESS WHEREOF, ▇▇▇▇ and MTG have executed this Agreement as of July 29,
1997.
PLAYBOY ENTERTAINMENT GROUP, INC.
/s/ ▇▇▇▇ ▇▇▇▇▇
By:____________________________
Sr VP International
____________________________
Name and Title
MODERN TIMES GROUP
/s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇
By:____________________________
CEO, PAY TV
____________________________
Name and Title
*** Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
EXHIBIT A
PLAYBOY TV/SCANDINAVIA MEMORANDUM OF AGREEMENT
(Standard Terms and Conditions)
The following are the Standard Conditions to and a part of the Playboy
TV/Scandinavia Memorandum of Agreement dated as of July 29, 1997 (the
"Agreement") attached hereto by and between the Modern Times Group ("Licensee")
and Playboy Entertainment Group, Inc. ("Licensor") with regard to the Playboy
TV/Scandinavia pay television service ("PBTV/S"). All defined terms used in
these Standard Terms and Conditions but not defined herein are defined in the
cover pages of the Agreement (the "Cover Pages").
1. DELIVERY AND RETURN: Licensor shall deliver to Licensee the delivery
materials as set forth in the Cover Pages. Delivery to Licensee at its
address set forth below shall be deemed delivery hereunder. All costs of
delivery and return of tapes and all risks of loss in transit or while in
Licensee's possession or control shall be borne by Licensee. All shipping
costs will be paid by Licensee as all shipping will be via Freight Collect.
At all times after receipt of tapes, Licensee shall keep the tapes in
Licensee's exclusive possession and control until returned as hereafter
provided. Licensee will not make or authorize others to make copies of the
programs, Movies or other exhibition materials other than the minimum
number of copies necessary to exhibit them. Licensee shall furnish an
affidavit with respect to any lost, stolen or destroyed tapes. All tapes
and parts or replacements thereof shall remain the property of Licensor at
all times. licensee shall promptly examine each tape and shall give
Licensor immediate written notice if said tape is not physically suitable
for exhibition other than the need to dub the tapes into the authorized
languages. The tape or tapes shall be deemed acceptable unless Licensor is
notified no later than ten (10) days after delivery thereof that a tape is
defective. At its option, Licensor may furnish another tape of said program
or Movie, or a suitable tape of another similar program or movie or grant
Licensee a proportionate credit in the Minimum Guaranteed Licensee Fees or
Movie license fees, but Licensor shall have no other obligation or
liability whatsoever. Original undubbed Licensor-supplied tapes and reels
of each program, movie or other exhibition materials shall be returned
within sixty (60) days of receipt by Licensee in the same condition as
received, normal wear and tear excepted, either directly to Licensor or to
such address as Licensor may designate. Licensee shall, within forty-eight
(48) hours after the date of the last scheduled exhibition of each program,
Movie and other exhibition materials, in Licensor's discretion, either
destroy and provide Licensor with an acceptable certificate of destruction,
or sell and deliver to Licensor all dubbed sound tracks and all optical
and/or magnetic sound tracks and all copies and tapes of such materials
manufactured by or at the instance of Licensee, whether or not any of said
sound tracks, materials or tapes were actually utilized by Licensee in
connection with the exercise of rights granted to Licensee hereunder.
Additionally, within ten (10) days after the end of the Term or earlier
termination of Licensee's exhibition rights or this Agreement with respect
to a particular program or Movie, Licensee shall send to Licensor all
transparencies, artwork and other marketing supplies, and all ratings and
censorship certificates, correspondence and other documents in connection
with such program or Movie. It is expressly agreed that title in and to any
material provided to Licensee hereunder shall remain in Licensor, and that
title in and to any such material created by, for or at the instance of
Licensee and all rights including copyrights therein shall vest in Licensor
upon the creation thereof, subject only to possession and control thereof
by Licensee during the Term for the applicable program or Movie solely for
the purpose of exercise of the rights granted herein. Licensee will
execute, acknowledge and deliver to Licensor any instruments of transfer,
conveyance or assignment in or to any such material necessary or desirable
to evidence or effectuate Licensor's ownership thereof, and in the event
that Licensee fails or refuses to execute, acknowledge or deliver any such
instrument or documents, then Licensor shall be deemed to be and Licensee
hereby nominates, constitutes and appoints Licensor Licensee's true and
lawful attorney-in-fact irrevocably to execute and deliver all such
instruments in Licensee's name or otherwise, it being acknowledged that
such power is a power coupled with an interest. Anything herein to the
contrary notwithstanding, Licensee shall not have the right to use any
dubbed sound tracks, sub-titled materials,
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optical sound tracks, or tapes made therefor except in the exercise of the
rights granted to Licensee hereunder and in accordance with all limitations
on said rights as are contained in this Agreement. It is distinctly
understood and agreed that all payments, fees, royalties, residual payments
and the like shall be the sole obligation of Licensee with respect to the
production of and use of any and all dubbed magnetic sound tracks, sub-
titled materials, and all optical sound tracks and tapes containing optical
sound tracks made by, for or at the instance of Licensee, and Licensee
hereby indemnifies Licensor with respect thereto.
2. CREDITS AND ALTERATION OF TAPES: Licensee may make only such cuts or
deletions as are necessary to make the programs, Movies and other materials
supplied by Licensor (collectively, "Materials") conform to the orders of
any duly authorized public censorship authority, its time segment
requirements and its continuity acceptance standards. Licensee will provide
Licensor with a description of the editing which it intends to perform
prior to doing so, and such editing shall be subject to the prior written
approval of Licensor (not to be unreasonably withheld). Additionally, once
the editing is completed, such edited version shall be supplied to Licensor
for its prior-to-broadcast approval (such approval not to be unreasonably
delayed or withheld). Licensee will not delete the copyright notice and/or
credits incorporated in the Materials as delivered by Licensor. Licensee
will not and will not authorize others to copy, duplicate or sub-license
any tape nor part with possession thereof.
3. PAYMENT: Licensee shall pay Licensor the Minimum Guaranteed License Fees,
Subscriber-Based Overage and Movie license fees stipulated in the Cover
Pages at the times and in the manner therein specified. Said payments shall
be due and payable whether or not any one or more of the programs or Movies
is actually exhibited. Any payment not made within thirty (30) days of its
due date shall bear legal interest equal to the lesser of 12% per annum or
the maximum legal rate, from the due date until paid. Acceptance of any
payment after its due date shall not constitute a waiver by Licensor of any
of its rights except as to such payment. All payments shall be made only in
U.S. dollars by wire transfer of immediately available federal funds to
LaSalle National Bank, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
ABA#: ▇▇▇▇▇▇▇▇▇, Benefit of: Playboy Entertainment Group, Inc. (PEGI),
Account #: ▇▇▇▇▇▇▇.
4. SUBSTITUTION OF PROGRAMS; CERTIFICATE OF PERFORMANCE:
----------------------------------------------------
a. Licensor may, in its absolute discretion, withdraw any Materials if
Licensor determines that the exhibition thereof would or might (i)
infringe upon the rights of others; (ii) violate the law, court order,
government regulation or other ruling of any governmental agency;
(iii) interfere with the actual or contemplated use of the Materials
or the material or rights contained therein for any purpose other than
the exhibition of the Materials in Licensee's basic area; or (iv)
subject Licensor to any liability.
b. If Licensor elects to withdraw any program or Movie as set forth in
the preceding Sub-paragraph 6.a., Licensor shall have the right, in
its sole discretion, either to deliver another program or movie of
comparable quality to Licensee (which program or movie shall be deemed
to replace the program or Movie withdrawn) or reduce the number of
programs or Movies to be delivered hereunder ("Partial Cancellation")
by one, and Licensee shall be given a pro rata refund or credit of the
license fees (based on whether the program or Movie already has been
exhibited, with the first exhibition on any service being worth *** of
the portion of the license fee attributable to such withdrawn program
or Movie, the second exhibition on any service being worth *** of such
portion of the license fee and subsequent exhibitions on any service
worth *** of such portion of the license fee each), at Licensor's
election, of such portion of the license fee attributable to such
withdrawn program or Movie. ***
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*** Confidential information omitted pursuant to a request for confidential
treatment filed separately with the Securities and Exchange Commission.
c. If a tape of any withdrawn program or Movie has been shipped to
Licensee, Licensee will promptly return it to Licensor.
5. WARRANTY AND INDEMNITY: Licensor MAKES NO REPRESENTATIONS, WARRANTIES OR
INDEMNITIES, EXPRESS OR IMPLIED EXCEPT AS SPECIFICALLY SET FORTH IN THIS
PARAGRAPH:
Subject to Paragraph 21 hereof, Licensor agrees to indemnify and save
Licensee harmless from the amounts of any damages (except loss of profits
and consequential damages, if any) awarded in any final judgment entered
against Licensee, by reason of any claim which may be made alleging that
any of the programs or Movies 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
Licensee and except with respect to music which is specifically covered by
Paragraph 6 below:
6. ADDITIONAL WARRANTIES: Licensor warrants and represents that to the best of
its knowledge, information and belief, the performing rights in all musical
compositions contained in the programs or Movies are controlled by (a) a
performing rights society having jurisdiction; or (b) Licensor; or (c) in
the public domain. Licensor does not represent or warrant that Licensee may
exercise the performing rights to said musical compositions without the
payment of a performing rights royalty or license fee. If Licensee is
required to pay a performing rights royalty or license fee, Licensee shall
be solely responsible for the payment of such royalty or fee and shall hold
Licensor free and harmless therefrom.
7. EXHIBITION RESTRICTIONS AND REQUIREMENTS: Licensee will not delete the
copyright notice and/or credits incorporated in any Materials as delivered
by Licensor. Furthermore, without Licensor's prior written approval,
Licensee shall not couple any Materials with any other material or add any
material to any of the Materials. Notwithstanding anything to the contrary
in this Agreement, in no event shall Licensee exhibit on the same channel
or frequency as PBTV/S, within the Territory during the Term, any
programming produced, distributed or licensed by or which carries the brand
of any other men's magazine, such as and including Penthouse and Hustler.
8. ASSIGNMENT AND SUB-LICENSE PROHIBITED: This Agreement and the rights and
licenses granted hereunder to Licensee are personal to Licensee, and except
as expressly authorized under the Cover Pages, Licensee shall not sell,
assign, mortgage, pledge or hypothecate any such rights or licenses in
whole or in part without obtaining the prior written consent of Licensor,
nor shall any of said rights or licenses be assigned or transferred by
Licensee to any third party by operation of law or otherwise. Any action in
violation of the foregoing shall be null and void and without effect. In
the event Licensor consents to any such action by Licensee, Licensee shall
nevertheless continue to remain fully and primarily responsible and liable
to Licensor for due, full, complete and faithful performance of all terms
and conditions of this Agreement to be performed on the part of Licensee.
Licensor may assign, transfer, pledge or hypothecate all or any part of the
payments to be received by Licensor hereunder. Licensee agrees that in the
event of receipt of written notice of assignment by ▇▇▇▇▇▇▇▇, monies due to
Licensor shall be paid to any third party assignee in accordance with
Licensor's instructions. Licensor may assign this Agreement to any
corporation controlling, controlled by or under common control with
Licensor or to any person or entity that may hereafter become the licensor
of the Materials.
9. RESERVATION OF RIGHTS: All licenses, rights and interest in, to and with
respect to the Materials not specifically granted to Licensee shall be and
are specifically and entirely reserved to Licensor and may be fully
exploited and utilized by Licensor.
10. RECEPTION FROM OUTSIDE EXHIBITIONS: Licensee acknowledges that satellite or
terrestrial exhibitions of the Materials intended for reception outside the
Territory may be received by television sets located within such Territory,
and Licensee agrees that such unintended reception shall not constitute a
breach of this Agreement by Licensor.
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11. SPILL-OVER RETRANSMISSION: It is acknowledged that due to the "footprint"
of the satellites used by Licensee, Licensee's transponder signal may
"spill over" beyond the boundaries of the Territory. To the extent such
"spill over" is not intended by Licensee, Licensee's signal is encrypted
and not authorized for receipt beyond the Territory and Licensee does not
receive compensation for such "spill over," Licensee shall have no
liability to Licensor for such "spill over." Licensor shall be free to seek
recovery from any third party for such "spill over" retransmission.
12. BRAND RIGHTS: Licensee may publicize and advertise exhibitions of a program
or Movie or any person appearing therein (unless specifically notified to
the contrary) in the Territory for publicity and exploitation only of such
particular program or Movie but (i) advertising material pertaining to a
specific program or Movie may be used to advertise only that specific
program or Movie, (ii) advertising containing the name or likeness of a
person may be used to advertise only the specific program or Movie in which
such person appears, and (iii) in no event shall the names of such persons
or of Licensor be used in such manner so that such use may be construed as
an endorsement, express or implied, of any party, sponsor, product or
service. All such advertising may be only in the authorized Languages and
shall be subject to Licensor's prior written approval at least thirty (30)
days prior to its intended distribution. Licensee hereby acknowledges that
the trade names "Playboy" and "Playmate" and the registered trademark and
service mark "Playboy," the Playboy "Rabbit Head Design" and trade names
"The Playboy Channel," "Playboy TV," "Playboy Television" and all related
or derivative names or marks (collectively, the "Playboy Marks") are the
sole and exclusive property of Licensor's affiliate, PEI, and that all uses
of the Playboy marks shall inure solely to the benefit of PEI. Licensee
shall have the non-exclusive right to develop and distribute advertising,
publicity, and promotional materials relating to the programs or PBTV/S,
but not the Movies, incorporating certain of the Playboy Marks in
connection with Licensee's rights hereunder; provided, however, that such
rights shall relate to the programs for PBTV/S licensed under this
Agreement and not extend to the Movies or any other program, shall expire
on the expiration of the Term or earlier termination of the Agreement,
shall not be exercised without reference to a particular program or PBTV/S
generically, and any such materials incorporating any Playboy Mark shall:
i. Clearly identify the Playboy Mark using a legible credit line
with whatever credit or notice required by Licensor, such as
"'Playboy' is the mark of and used with the permission of Playboy
Enterprises, Inc." or such other words as Licensor may designate;
ii. Be submitted in representative form to Licensor for Licensor's
prior written approval in each case at least thirty (30) days
prior to their intended distribution. Licensor may disapprove any
use if, in Licensor's opinion, such use (i) jeopardizes the
validity of any of the Playboy Marks, (ii) does not conform to
previously approved uses of the Playboy Marks, (iii) does not
conform to Licensor's standards, which may vary from time to
time, or (iv) negatively affects or impacts the good name, good
will or reputation of Licensor or PEI. Licensee will not
disseminate any material that has not been so approved by
Licensor; and
iii. Be issued only in the authorized languages.
It is expressly understood that Licensor shall retain all good will
associated with the Playboy Marks, and no good will from same will
inure to Licensee or to any person or entity other than Licensor or
PEI. Other than as expressly set forth in this Paragraph, Licensee
shall make no use of the Playboy Marks or any confusingly similar
designation without the prior express written consent of Licensor in
each instance. Licensee 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 suppliers or producers without the prior express written
consent of Licensor in each instance. Licensee similarly agrees that
it will not authorize or purport to authorize any third party to make
any such use, and it will expressly provide in any applicable third
party agreements that such third parties will only be entitled to use
such names and marks in accordance with Licensee's rights
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hereunder. Licensee also must secure Licensor's prior written approval
of all media of advertising and distribution and the specific
publications, broadcasters and exhibitors that will be running the
advertisements. Licensee will not disseminate any advertising material
that has not been so approved by Licensor in each instance.
Additionally, Licensee agrees that except as expressly authorized in
accordance with this Paragraph, Licensee shall not, without Licensor's
prior written consent, permit any product or service to be advertised
or promoted with the use or involvement of, or bearing the designation
of, any part of any Playboy Mark, on, as a part of, or in connection
with any television service of Licensee or any advertising, publicity
or promotion of any such television service.
13. ADVERTISING CREDITS: Licensee will comply with all instructions furnished
to it by Licensor with respect to advertising credits, and Licensee agrees
to and will indemnify and hold Licensor harmless from any loss, damage,
cost or expense (including reasonable attorneys' fees) incurred or suffered
by Licensor by reason of the failure by Licensee to adhere to and observe
any such credit instructions.
14. CONTINGENT ROYALTIES: In the event that any monies are paid to or become
due to or can be claimed by Licensee in connection with any use of the
Materials or copyright or related materials thereof other than as licensed
hereunder, such monies shall be received and held by Licensee in trust for
Licensor.
15. DEFAULT AND TERMINATION: If Licensee defaults in the payment of any
installment of any Minimum Guaranteed License Fees, Subscriber-Based
Overage, Movie license fees or any other payment to Licensor, or if
Licensee defaults in the performance of any of the other obligations
hereunder and such default shall not be cured within ten (10) days after
written notice thereof to Licensee, or if Licensee becomes insolvent, or if
a petition under any bankruptcy act shall be filed by or against Licensee
(which petition, if filed against Licensee, shall not have been dismissed
within thirty (30) days thereafter), or if Licensee executes an assignment
for the benefit of creditors, or if a receiver is appointed for the assets
of Licensee, or if Licensee takes advantage of any applicable insolvency or
any other like statute, or if Licensor notifies Licensee that it in good
faith has reasonable doubts that Licensee can or will continue to perform
hereunder, and Licensee fails to give adequate financial security and
assurances within fifteen (15) days of said notice (any of the above acts
is hereinafter called "event of default"), then Licensor may, in addition
to any and all other rights which it may have against Licensee, terminate
this Agreement and any other agreements between the parties then in
existence by giving written notice to Licensee at any time after the
occurrence of such event of default. Whether or not Licensor exercises such
right of termination, Licensor shall upon the occurrence of such event of
default have no further obligation to deliver tapes of Materials hereunder
and shall be entitled to immediate return of all tapes theretofore
delivered to and in possession of Licensee. Upon termination, Licensor may
recover from Licensee the entire unpaid Minimum Guaranteed License Fees,
Subscriber-Based Overages, Movie licensee fee payments and any other
payments then owed to Licensor, plus interest at the lesser of 12% per
annum or the maximum legal rate on that portion of the payments that was
delinquent prior to the termination, and any consequential damages.
Licensee acknowledges that the terms hereof and the industry custom of
licensing programs substantially in advance of the scheduled exhibition
dates, have the effect of rendering the programs and Movies hereunder
unmarketable in the Territory during any period that includes the Term of
this Agreement or any part thereof. Licensee also acknowledges that, by
reason of the foregoing, no method exists for accurate measurement of
damages for any breach of Licensee's agreement to pay Licensor as provided
in this Agreement. It is therefore agreed that, in addition to all other
remedies available at law, in equity, or under other provisions of this
Agreement, Licensor shall be entitled (upon breach by Licensee of such
agreement to pay Licensor) to recover from Licensee, as liquidated damages,
the total unpaid Minimum Guaranteed License Fees, Subscriber-Based Overages
and Movie licensee fee payments for the Term, and in addition, reasonable
attorneys' fees or collection agency fees if an attorney or collection
agency is retained by Licensor at any time to enforce the provisions
hereof, plus such other amounts as may be due hereunder. The remedies
provided herein are not exclusive but are cumulative and in addition to all
other remedies existing at law, in equity, or in
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courts of bankruptcy. Subject to Paragraph 23 below, in the event that
either party commences litigation to enforce, interpret or declare any of
the terms, covenants, conditions or obligations of this Agreement,
prevailing party shall be entitled to recover all costs, fees and expenses
of or in preparation for, litigation, appeal, review, or post-judgment or
order, collection or enforcement efforts. All parties to this Agreement
agree that the court shall retain and reserve jurisdiction in any judgment
over the parties and the subject matter for purposes of enforcing this
paragraph.
16. TAXES: Licensee shall pay, without limitation, any tax, levy or charge
howsoever denominated, imposed or levied (excluding only any applicable net
income or franchise taxes imposed or levied against Licensor) by any
statute, law, rule or regulation now in effect or hereafter enacted
including, without limitation, sales, use, property and excise or other
similar taxes, licenses, import permits, state, county, city or other taxes
howsoever denominated relating to or imposed on license fees, rentals,
negatives, tapes or other material, or the right or privilege to use the
same in connection with any program or Movie licensed hereunder whether or
not billed or demanded by Licensor; it being the intent hereof that the
payments specified as the consideration of the license granted herein shall
be a net amount, free and clear of any tax, levy or charge of whatsoever
kind or nature howsoever denominated. To the extent that any such taxes,
levies or charges or penalties and interest thereon are paid by Licensor,
Licensee shall reimburse Licensor on demand, and on the failure of Licensee
to reimburse Licensor, Licensor will have available to it all of the
remedies provided for herein with respect to failure to pay the Minimum
Guaranteed License Fees, as well as such other remedies as may be provided
by law. If Licensee denies liability for any tax, levy or charge which
Licensor must pay or collect, Licensee shall indemnify Licensor for any
liability, penalty or interest which may result, and Licensor shall have
the immediately aforementioned remedies against Licensee for the collection
of same. Licensor shall have no obligation to contest or dispute any tax
assessed or levied. Licensee shall have the right to do so at its sole cost
and expense.
17. EXEMPTION: In regard to any payment due Licensor hereunder which is subject
to withholding taxes required by any tax laws, Licensee shall use its best
efforts to cooperate with Licensor in supplying Licensor with, and helping
Licensor file the tax-exemption form specified by the appropriate Double
Taxation Treaty that will allow Licensee to make such payment in full
without the withholding of any such taxes.
18. GOVERNMENT AND OTHER LEVIES AND FEES: In the event Licensee receives
compensation as the result of any form of governmental levy, now or
hereinafter imposed, for the copying, by any means, of the sound or visual
elements of any Materials licensed hereunder, or as a result of any relay
of any Materials by cable or other transmission networks, such compensation
will be held in trust for and paid over to Licensor.
19. NO CENSORSHIP CONDITION: This Agreement is not subject to any censorship
conditions or restrictions. Thus, Licensee's payment and other obligations
are not conditioned on any of the Materials meeting any censorship
requirements or being approved by any censorship or other authority.
20. LICENSEE INDEMNITY: Licensee will indemnify Licensor, its officers,
directors and employees from all claims, liabilities and judgments,
together with reasonable costs and expenses of litigation and reasonable
counsel fees arising from the breach or alleged breach of any provision of
this Agreement by Licensee or the use, exhibition or other exploitation of
any element of any Materials or Playboy Mark other than as expressly
authorized under this Agreement. Licensee shall specifically so indemnify
Licensor and such other parties from such claims, liabilities, judgments,
costs, expenses and fees made or assessed against Licensor arising from the
exhibition of any material in connection with or relating to any Materials
other than material delivered by Licensor for exhibition, or from the
temporary or permanent loss of any such material.
21. REQUIREMENTS FOR LICENSOR CONTENT INDEMNITY: Notwithstanding any other
terms herein to the contrary, Licensor's indemnification will be valid in
the event of a claim involving an allegation of
Page 6 of 9
violation of the laws insofar as the content of any Materials is concerned,
only in the event each of the following conditions is met:
a. Immediate telephone contact be made with both the General Counsel's
office of Licensor in Chicago at ▇▇▇-▇▇▇-▇▇▇▇ and Licensor's Senior
Vice President, International Sales, in ▇▇▇▇▇▇▇ Hills at ▇▇▇-▇▇▇-▇▇▇▇
or other numbers hereafter specified by Licensor. Such telephone
notification should be immediately followed with a letter containing
copies of all papers that have been served and giving complete
information then available regarding the incident.
b. Licensor shall have the right to approve Licensee's choice of counsel
and to determine in advance the terms of retention.
c. Licensor will assist in defended actions only and will not be
responsible in cases where there is any admission of guilt by anyone
charged with violation of the law as to the content of any Program.
Settlement or dismissal of any case will not be allowed, except with
Licensor's prior written consent.
d. Actual or prospective parties involved in such prosecution shall make
no voluntary disclosure regarding support or lack thereof by Licensor
under this policy.
22. WAIVER: A waiver by either party of any breach or default by the other
party will not be construed as a continuing waiver of the same or any other
breach or default under this Agreement.
23. ARBITRATION:
a. Except as provided in Sub-paragraph 23.d. below, if Licensor (or any
affiliate of Licensor) or Licensee has any claim, right or cause of
action against the other arising out of this Agreement or the
transactions contemplated hereby that the parties shall be unable to
settle by agreement between themselves, such claim, right or cause of
action shall be determined by arbitration in accordance with the
UNCITRAL Arbitration Rules. The American Arbitration Association shall
serve as the appointing authority. Arbitration shall take place in the
State of California, the United States of America and shall be
conducted in the English language. Any party may seek enforcement or
recognition of any arbitration award in any proper court having
jurisdiction in the United States or elsewhere.
b. Licensor and Licensee recognize that this Paragraph 23 is governed by
the United Nations convention on the Recognition and Enforcement of
Foreign Arbitral Awards (the New York Arbitration Convention)(New York,
June 10, 1958) (the "Convention") and that any differences between the
parties hereto arising out of this Agreement or any Other Agreement,
whether contractual or not, shall be considered as "commercial" under
the federal law of the United States and under Italian law, and that
this Paragraph 23 constitutes a written agreement to arbitrate within
the meaning of the Convention.
c. All decisions of the arbitrators and any award or awards made by them
shall be conclusive and nonappealable and binding on all parties to the
arbitration, their attorneys and successors in interest.
d. As an exception to the agreement under this Paragraph 23 to arbitrate
any claim, right or cause of action arising out of this Agreement or
the transactions contemplated hereby (i) any claim, right or cause of
action involving the rights of Licensor or any affiliate of Licensor in
intellectual property, including the validity or enforceability
thereof, shall not be arbitrable, and (ii) if Licensor, in its good
faith belief, believes that Licensor or any of Licensor's or Licensor's
affiliates' rights or properties will be irreparably harmed or that an
appropriate remedy is not timely or readily available or enforceable
through arbitration, then Licensor, in its discretion, may bring an
action,
Page 7 of 9
including for equitable relief, in a court of law in any appropriate
jurisdiction (a "Licensor Action") and pursue such Licensor Action,
through final entry of judgment. In connection with any Licensor
Action, Licensee irrevocably submits to the non-exclusive jurisdiction
of the courts of the State of California or any jurisdiction in which
the Licensor Action is brought and waives any rights that Licensee
might have to contest such jurisdiction. Licensee further
acknowledges and agrees that in addition to any other jurisdiction
where the pursuit of a Licensor Action is appropriate, the County of
Los Angeles, State of California is an appropriate locale for the
resolution of any such Licensor Action, and that such locale will not
subject Licensee to unreasonable inconvenience or hardship. In the
event that process must be served in connection with any such Licensor
Action, Licensee agrees that such process may be served in the same
manner as notices are to be given pursuant to Paragraph 24, below.
Service shall be deemed complete when notice is deemed given pursuant
to such Paragraph 24. Licensee hereby appoints the Secretary of the
State of California as Licensee's agent for receipt of any service of
process.
e. This Agreement and any dispute in connection therewith shall be
governed by and interpreted under laws of the State of California
applicable to contracts entered into and fully performed therein.
24. NOTICES: Any notice which either party hereto may desire to give or which
is required under the terms of this Agreement shall be given in writing by
mail (by registered or certified mail if to a U.S. address) or by
facsimile, telex or telegraph or by personal service (in all cases, all
charges prepaid) to the addresses noted below. In the event any such notice
is given by mail, such notice shall be deemed given on the date five (5)
business days following the date after deposit in the United States mail.
If notice is given by any other method, such notice shall be deemed given
on the date deposited with the telegraph or telex company or on the date
personal delivery is made, provided that notice given by facsimile shall be
deemed given upon receipt by sender of electronic confirmation that the
notice was received. A copy of all notices to Licensor shall be
concurrently sent by one of the methods provided in this Paragraph 24, to
Playboy Enterprises, Inc., ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, Attention: General Counsel. Licensee's address for notice purposes
shall be as follows: Modern Times Group, c/o Modern Times Broadcasting, Pay
TV Division, ▇▇▇▇▇ Malarstrand 65, Box 17104, S-104 Stockholm Sweden,
Attention: ▇▇. ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Telecopier Number: 011-46-8-5624-1010.
Licensor's address for notices purposes shall be as follows: Playboy
Entertainment Group, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Senior Vice President International Sales and
Senior Vice President, Business and Legal Affairs. Telephone Number: (310)
246-4077.
25. COUNTERPART EXECUTION: This Agreement may be executed in counterparts but
shall not be deemed to be effective until and unless executed by Licensor
at its home office, and the date of execution by Licensor shall be deemed
to be the effective date of the Agreement. When so executed by each party,
the counterparts together shall be deemed an original and shall constitute
one and the same instrument.
26. ENTIRE AGREEMENT: This Agreement, including all Exhibits hereto,
constitutes the complete and entire agreement between the parties, and all
prior understandings are merged herein. This Agreement cannot be changed or
terminated orally, and no amendments, modifications or assignments hereof
shall be binding upon Licensor until accepted in writing by a duly
authorized officer of Licensor in California. The titles of the paragraphs
of this Agreement are for convenience only and shall not in any way affect
the interpretation of this Agreement or any paragraph hereof.
27. INVALIDITY: If any provision or any application of any provision of this
Agreement is adjudged illegal, unenforceable or invalid and such
adjudication has become final and non-appealable, such provision or
application shall be deemed deleted without affecting the remainder of this
Agreement unless such deletion shall have a material adverse effect upon
the rights or obligations of either party hereto and notice of such effect
is given as provided in the following sentence. Either party may notify the
other
Page 8 of 9
within forty-five (45) days after such adjudication has become final and
non-appealable that in its opinion such deletion would have a material
adverse effect upon the notifying party and that this Agreement is
terminated by reason thereof, but the existence of such effect and the
termination of this Agreement shall be subject to contest by the party
receiving such notice if the receiving party notifies the other party
within forty-five (45) days after service of the notice of termination upon
the receiving party of the receiving party's desire so to contest the
matter and thereafter proceeds promptly with a proceeding so to contest the
matter. During such time as the matter is being contested, this Agreement
shall remain in full force and effect.
28. CONFIDENTIALITY: Neither Licensee nor any of its successors or assigns or
their respective representatives shall disclose to any third party (other
than their respective employees, in their capacity as such) any information
with respect to the provisions of this Agreement except: (i) to the extent
necessary to comply with law or the valid order of a court of competent
jurisdiction, in which event Licensee shall notify Licensor of the
disclosure obligation and shall seek confidential treatment of such
information, (ii) as part of its normal reporting procedure to its parent
company, its auditors and its attorneys; provided, however, that such
parent company, auditors and attorneys agree to be bound by the provisions
of this Paragraph; and (iii) in order to enforce its rights pursuant to
this Agreement in a court of competent jurisdiction. All press releases and
public disclosures relating to any provisions of this Agreement shall be
subject to Licensor's sole approval in each instance.
29. EU TERRITORY: In the event the Territory or any portion thereof under this
Agreement is within the European Union ("EU"), formerly known as the
European Economic Community, then, anything in this Agreement to the
contrary notwithstanding, no obligations created or imposed under this
Agreement may be exercised or enforced in manner contrary to Community Law
of the EU.
- END OF STANDARD TERMS AND CONDITIONS -
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