Exhibit 10.7d
CONFIDENTIAL
-------------------------
PLAYBOY TV - LATIN AMERICA
AMENDED AND RESTATED PROGRAM SUPPLY AND TRADEMARK LICENSE
AGREEMENT
-------------------------
Between
PLAYBOY
ENTERTAINMENT GROUP, INC.
as Licensor
and
PLAYBOY TV - LATIN AMERICA, LLC
as Company
November 10, 2006
<PAGE>
Table of Contents
Page
1.
DEFINITIONS..............................................................1
2. GRANT
OF PROGRAM
LICENSE.................................................8
2.1.
Grant..............................................................8
2.2.
Approved Uses of
Licensed Programming.............................11
2.3.
Company Produced
Programming......................................13
2.4.
Licensor Option to
Purchase.......................................13
2.5.
Licensor
Ownership................................................14
2.6.
Use
Rights........................................................15
2.7.
Services Provided by
Licensor.....................................15
3.
TRADEMARK LICENSE AND QUALITY
CONTROL...................................15
3.1.
Grant of Exclusive
License........................................15
3.2.
All Other Rights
Retained by Licensor.............................17
3.3.
Restriction on
Sub-Licensing......................................17
3.4.
Duration of
License...............................................17
3.5.
Company's Right of
First Negotiation..............................17
3.6.
Restriction on Scope
of Services..................................18
3.7.
Restrictions on
Modifications of Trademarks.......................18
3.8.
License of Additional
Trademarks..................................18
3.9.
Quality
Control...................................................19
3.10.
Title and Protection of the Licensor Trademarks; Use of the
Licensor
Trademarks.............................................20
3.11.
Form..............................................................21
3.12.
Maintenance of Distinctive Quality of Licensor
Trademarks.........21
3.13.
Advertising and
Publicity.........................................21
3.14.
Ownership of the Licensor
Trademarks..............................22
3.15.
Infringements.....................................................22
4. LICENSE
TERM AND MEDIA
HOLDBACKS........................................23
4.1.
License
Term......................................................23
4.2.
No Home Video
Rights..............................................23
4.3.
Other Home Video
Rights...........................................23
5.
CENSORSHIP; WITHDRAWAL OF
PROGRAMS......................................24
5.1.
Censorship........................................................24
5.2.
Withdrawal of
Programs............................................24
5.3.
Advertising.......................................................24
6.
DELIVERY AND
RETURN.....................................................25
6.1.
Access and Delivery
Items.........................................25
(i)
<PAGE>
6.2.
Title to Delivery
Materials.......................................25
7. PROGRAM
AND TRADEMARK LICENSE FEES; OTHER
FEES..........................25
7.1.
Due and
Payable...................................................26
7.2.
Wire
Transfers....................................................26
7.3.
Late
Payment......................................................26
7.4.
Restricted
Funds..................................................27
7.5.
Currency..........................................................27
7.6.
Maintenance of Records
and Audit Rights...........................27
7.7.
Distribution
Fee..................................................28
7.8.
Licensor Distribution
In Belize...................................29
8.
INDEMNITIES.............................................................29
8.1.
Representations and
Warranties....................................29
8.2.
Indemnification...................................................30
8.3.
Musical
Compositions..............................................31
8.4.
Procedure.........................................................31
9.
TERMINATION.............................................................31
9.1.
Expiration of
Term................................................31
9.2.
Renewal...........................................................31
9.3.
Early Termination on
Breach.......................................32
9.4.
Inadvertent
Breach................................................32
9.5.
Cross
Default.....................................................32
9.6.
Dissolution of
Company............................................32
10. EFFECTS OF
TERMINATION..................................................33
10.1.
Survival of
Obligations...........................................33
10.2.
Termination of
Rights.............................................33
10.3.
Further
Assurances................................................33
11. EQUITABLE
RELIEF........................................................33
12. DISPUTE
RESOLUTION......................................................33
12.1.
IP-Validity
Dispute...............................................33
12.2.
Dispute, Notice and
Response......................................34
12.3.
Arbitration.......................................................34
12.4.
Number of
Arbitrators.............................................34
12.5.
Hearing...........................................................35
12.6.
Jurisdiction......................................................35
12.7.
Enforceability....................................................35
13.
MISCELLANEOUS...........................................................35
13.1.
Force
Majeure.....................................................35
(ii)
<PAGE>
13.2.
Binding Effect; No
Assignment....................................36
13.3.
Invalidity.......................................................36
13.4.
Waivers, Remedies
Cumulative, Amendments, etc....................36
13.5.
Notices..........................................................36
13.6.
Governing
Law....................................................38
13.7.
Entire
Agreement.................................................38
13.8.
Rules of
Construction............................................38
13.9.
Counterparts.....................................................38
13.10.
Relationship Between the
Parties.................................38
13.11.
Time Is of the
Essence...........................................38
SCHEDULES
---------
Schedule 2 1(a)
Existing Library
Schedule 2 1(b)
2001 PTVLA New Programming Schedule
Schedule 3 1 Licensor
Trademarks
Schedule 6 1 Delivery
Materials
(iii)
<PAGE>
THIS
AMENDED AND RESTATED PROGRAM SUPPLY AND TRADEMARK LICENSE AGREEMENT
(this "Agreement")
is entered
into on November 10, 2006, between Playboy
Entertainment Group, Inc., a Delaware corporation ("PEGI"), and
Playboy TV-Latin
America, LLC,
a California limited liability company (including its
subsidiaries, collectively the "Company").
RECITALS
WHEREAS, the Company is the owner and
operator of the Company Service (as
defined below);
WHEREAS,
Licensor (as defined below) is the owner of certain rights in
and
to certain television programs, movies and other content as
described herein;
WHEREAS, the Company licenses from Licensor on the
terms and
conditions
set forth in this
Agreement certain television programs, movies and other
content for use on the Company Service and the Licensor
Trademarks (as
defined
below).
WHEREAS,
the parties entered into that certain Program Supply and
Trademark License Agreement as of December 31, 2002 and effective
as of April 1,
2002 as amended by that First Amendment to Program Supply and
Trademark License
Agreement for Playboy-TV-Latin America, LLC as of June 17, 2004 and
effective as
of January 1, 2004 (as so amended, the "Original Agreement").
WHEREAS,
the parties desire to
amend the Original
Agreement in order to,
among other
things, (i) extend the term of the Original Agreement for an
additional ten (10)
years and (ii) provide
a license to the Company including
its subsidiaries, the Playboy Lifestyle Companies (as defined
below) for the use
of Licensor Trademarks
and Licensed
Programming in connection with the Playboy
Lifestyle Business
(as defined below), each as more fully set forth in
this
Agreement.
NOW,
THEREFORE, for good and valuable consideration, the receipt,
adequacy
and legal sufficiency of which are hereby acknowledged, the parties
hereby amend
and restate the Original Agreement in its entirety as follows:
1.
DEFINITIONS.
In this
Agreement (including the Recitals hereto) the following terms
will
have the following meanings unless otherwise stated:
"AAA" has
the meaning set forth in Section 12.3.
"Acquired
Movie" means a program acquired by Licensor (or any of its
Affiliates) from a
third party
that is at
least 60 minutes in length and
represents an edited
or unedited version of
an adult film (i.e., a
film which
contains actual sex acts).
"Adult-Oriented"
means, with respect to
a Channel or program,
that such
Channel or program
features content that is comparable to or more explicit than
the content that is exhibited
<PAGE>
on the Channels in the
Territory as of the date of this
Agreement;
it being
understood that
content that would be rated no more restrictively than "R" by
the Motion Picture Association of America as such rating standards
are currently
in effect is not "Adult-Oriented" content.
"Affiliate" means any Person, directly or indirectly
through one or
more
intermediaries,
controlling,
controlled by, or
under common control
with the
specified Person. For purposes of the foregoing, "control" (and
"controlled" and
"controlling,"
respectively), as used
in the immediately
preceding
sentence,
means the possession,
direct or indirect,
of the power to direct
or cause the
direction of the management and policies of the specified Person
(whether by the
holding of
shares or other equity interests, the possession of voting or
contract rights or otherwise). Notwithstanding the foregoing,
the Company will
not be deemed an Affiliate of Licensor.
"After
Tax Basis" means a basis such that any
payment (the "Original
Payment") received or deemed to have been received by a Person (the
"Recipient")
will be supplemented
by a further
payment to the
Recipient so that the sum of
the two payments will equal the Original Payment, after taking into account (x)
all taxes that would
result from the
receipt or accrual of such payments, if
legally required,
and (y) any
reduction in taxes that would result from the
deduction of the expense indemnified against, if legally permissible. In the
event that the expense
indemnified
against is used to
reduce taxes by way
of
amortization or
depreciation,
payments made on an After Tax Basis will be
refunded in each
taxable year of the recipient in which such expense is
deductible in an amount equal to the sum of (i) the tax savings
attributable to
such deduction
plus (ii) any
reduction in taxes that would result from the
deduction of any
amounts described in clause (i) as increased hereby. All
payments hereunder
will be calculated on the assumptions that the recipient was
subject to tax at the highest marginal rates of tax applicable
to such class of
taxpayer and that it
could benefit
from the deduction of any expense at
such
rate of tax. In the event that a taxing authority will treat any
indemnification
payment as not
includible in gross income or disallow any deduction taken into
account hereunder, the
indemnification will
be recomputed and further payments
or refunds made.
"Agreement" has the meaning set forth in the introductory
paragraph.
"Alta Loma
Program" has the meaning set forth in Section 2.1(g).
"Amended
Distribution
Agreement"
means
the Amended and Restated
Distribution Agreement, dated the date hereof, between PEGI and the
Company.
"Basic
Cable" has the meaning currently or hereafter commonly understood
in the television
industry, but will also include for all purposes of this
Agreement any
broadcast or other transmission (whether by satellite or
otherwise) to
television sets or
other television
devices, now or hereafter
known, of a
program service (other than any free television terrestrial
broadcast station) (a) that is included as part of a package of
program services
for which members of the public pay a periodic fee for the right to
receive such
package of program services, and (b) for which program service a
separate fee is
not generally
charged for the right to receive the particular service in
question.
"Blocked Funds" has
the meaning set forth in Section 7.4.
2
<PAGE>
"Branded"
means a television
service or Program
where Licensor's or
any
Licensor Affiliate's
name or trademarks currently existing or hereafter created
by Licensor or its
Affiliates are used in
connection, or closely
associated,
with such television service or Program, or any related
advertising.
"Branded
Channels" means the PTVLA Channels, the Playboy Lifestyle
Channel
and the Spice Channels.
"Branded
Company Originated Marks" has the meaning set forth
in Section
3.7.
"Branded
Format Programming" has the meaning set forth in Section
2.1(f).
"Caribbean
Basin" means the following territories: Anguilla, Antigua and
Barbuda, Aruba,
Barbados, Bermuda, the British Virgin Islands, the Cayman
Islands, Cuba,
Dominica, Dominican Republic, Grenada, Haiti, Jamaica,
Montserrat, St.
Kitts & Nevis,
St. Lucia, St. Vincent and the Grenadines,
Trinidad and Tobago, and the Turks and Caicos Islands.
"Channel"
has the meaning set forth in the Company Operating Agreement.
"Company"
has the meaning set forth in the introductory paragraph.
"Company
Format Programming" has the meaning set forth in Section
2.3(c).
"Company
Guaranteed
Minimum License Fee" has the meaning set forth in
Section 7.
"Company
Indemnified Parties" has the meaning set forth in Section
8.2(a).
"Company
Operating Agreement" means the Third Amended and Restated
Operating Agreement, dated the date hereof, between PEGI and
Lifford relating to
the formation and governance of the Company, as amended from time
to time.
"Company
Produced Programming" has the meaning set forth in Section
2.3(a).
"Company
Produced Programming Budget" has the meaning set forth in
Section
6.2.1 of the Company Operating Agreement.
"Company
Service" means Playboy TV-Latin America, the television service
which includes the PTVLA Channels, the Spice Channels, the Venus Channel, the
Playboy Lifestyle Programming Services, the G-Channel and any other
television
program or channel operated by the Company or any of its
subsidiaries from
time
to time in accordance
with this Agreement and the Company Operating Agreement
and any other permitted activity contemplated herein or
therein.
"CPI"
means the Consumer
Price Index for all Urban Consumers as released
by the Bureau of Labor
Statistics, U.S.
Department of Labor.
If the Bureau of
Labor Statistics,
U.S. Department of Labor (i) substantially revises the
methodology (in
contrast to
benchmark adjustments or other corrections of
previously published
data), (ii)
discontinues
publication of any of
the data
referred to above or (iii) temporarily discontinues publication of any of the
data
3
<PAGE>
referred to above, the
parties shall
select a substitute for the revised or
discontinued data,
in order to provide substitute data to lead to the same
adjustment result,
insofar as possible, as would have been achieved by
continuing the use of
the original data as
it may have fluctuated
had it not
been revised or discontinued.
"Customer
Service and Shipping
Department" means
Licensor's
department,
formerly known as the
traffic department,
that processes all
requests made to
Licensor and its Affiliates for duplication and shipment of Delivery
Materials
and marketing materials.
"Delivery
Materials" means the materials set forth on Schedule 6.1.
"DirectTV
Latin America, LLC"
means the satellite DTH pay TV service, and
its successors and assignees.
"Dispute"
has the meaning set forth in Section 12.2.
"Existing
Library" means any program or movie to
which Licensor (or
its
Affiliates) owns or
has obtained the rights to in the Media in the Territory as
of March 31, 2002 each of which is set forth on Schedule 2.1(a)
hereto.
"Fiscal
Year" has the meaning set forth in the Company Operating
Agreement.
"Force
Majeure" has the meaning set forth in Section 13.1.
"Format
Rights" has the meaning set forth in Section 2.1(f).
"G-Channel" has the meaning set forth in the Company Operating
Agreement.
"Home
Video Rights" has the meaning set forth in Section 4.2.
"Hot
Brands" means those trademarks listed under "Hot Trademark" on
Schedule 3.1 attached hereto.
"IP -
Validity Dispute" has the meaning set forth in Section 12.1.
"License
Fees" has the meaning set forth in Section 7.
"Licensed
Programming" means
collectively, the
Existing Library, the New
Programs, the Acquired Movies, Playboy Branded Format Programming,
the Alta Loma
Programs (subject to Section 2.1(g)), Wallpaper and any other
Programs which may
be made available to the Company hereunder.
"Licensor"
means PEGI and any of its Affiliates that hold any of the
rights licensed
hereunder or which may provide services hereunder, or such
successor or assignee as may be permitted herein.
"Licensor
Additional Marks" has the meaning set forth in Section 3.8.
"Licensor
Indemnified
Parties" has the meaning set forth in Section
8.2(b).
4
<PAGE>
"Licensor
Trademarks"
means the trademarks and the registrations or
pending registrations
therefor, as listed under such heading in Schedule
3.1
hereto, owned by Licensor or to which Licensor has all necessary
rights to grant
the license as set forth herein, and the Licensor Additional
Marks.
"Lifestyle
Oriented"
means, with respect to content, Programs or
advertising supported Channels, such content, Program, or advertising
supported
Channel, that is
primarily focused on
themes associated with the attitudes and
values of a group
of persons or social classification, including without
limitation, habits of consumption, dress, recreation and way of
living; it being
understood that
Lifestyle Oriented
content does not
include
"Adult-Oriented"
content.
"Lifford"
means Lifford International Co. Ltd., an International Business
Company incorporated
under the laws of the
British Virgin Islands, a party to
the Company Operating Agreement and a member of the Company.
"Localized
Licensed Programming" has the meaning set forth in Section
2.2(e).
"Losses"
has the meaning set forth in Section 8.2(a).
"Management Committee"
has the meaning set forth in the Company Operating
Agreement.
"Media"
means all forms of
linear and nonlinear
television
exhibition,
transmission and
distribution
whether now existing
or developed in the future
and whether on a
subscription,
pay-per-view,
video-on-demand
or free basis,
including but
not limited to the following: (i) conventional VHF or UHF
television broadcast,
(ii) Basic Cable and
pay cable, (iii) "over the air pay"
subscription
television (STV), (iv) direct broadcasting by satellite (DBS),
(v)
master antenna television systems (MATV), (vi) multipoint
distribution
services
(MDS), (vii)
multichannel
multipoint
distribution
services (MMDS), (viii)
satellite master antenna television systems (SMATV), (ix) microwave
transmission
and (x) IP television
encrypted to a set top box. Solely with respect to the
Playboy Lifestyle
Business (other than
the Playboy Lifestyle
Channel), Media
shall include the Playboy Lifestyle Media as defined below.
Notwithstanding
the
foregoing, except as
provided herein,
in the Program Supply
Agreement or any
Related Documents, Media shall exclude Streaming.
"Member"
has the meaning set forth in the Company Operating Agreement.
"Net
Revenue" shall have the meaning set forth in Section 7.
"New
Programs" means television programs or movies that are
similar in
content, style, mix and budget to the Existing Library, that are
not included in
the Existing Library
which are acquired or produced by Licensor after March 31,
2002. Compilations
of Programs
previously
provided to the Company shall be
considered New Programs if such compilations are prepared in a
manner consistent
with Licensor's
activities in 2001 and the number of such compilations provided
hereunder shall be
consistent
with the number
produced in 2001. In
the event
Licensor obtains
the rights in the Media in the Territory to a television
program or movie for which Licensor previously had other rights in
such program
or movie, such program
or movie shall not be considered a New Program hereunder
without the prior consent of the Company.
5
<PAGE>
"Newco"
means a soon to be formed Argentine limited liability company and
wholly owned subsidiary of Playboy Lifestyle Holding.
"Notice"
has the meaning set forth in Section 12.2.
"Original
Payment" has the meaning set forth in this Section 1.
"Original
Agreement" has the meaning set forth in the recitals.
"PEGI" has
the meaning set forth in the introductory paragraph.
"Permitted
Sublicensee" has the meaning set forth in Section 3.3.
"Person"
means an individual,
general partnership,
limited
partnership,
limited liability company, corporation, trust, estate, real estate investment
trust, association or any other entity.
"Playboy
Brands" means those trademarks listed under the heading
"Playboy
Marks" on Schedule 3.1 attached hereto.
"Playboy
Competition" has the meaning set forth in Section 3.9(b).
"Playboy
Lifestyle Business" has the meaning set forth in the Company
Operating Agreement.
"Playboy
Lifestyle
Channel"
means the television program service
containing Playboy Lifestyle Programming Services to be
launched by the Playboy
Lifestyle Companies in
the Territory and which may be named "Playboy Lifestyle
Channel" or any other name including names using Licensor
Trademarks
permitted
hereunder and approved by the Management Committee.
"Playboy
Lifestyle Channel USA" means an advertising supported, 24 hours
a
day, 7 days a week
linear television
programming
service (which may also be
distributed nonexclusively on a pay per view or video on demand
basis offered as
a premium on demand or
subscription on demand
solely to subscribers
of the 24
hours a day, 7 days a week linear television programming service) containing
Playboy Lifestyle
Programming
Services in the US
Lifestyle Territory,
to be
launched by the Playboy Lifestyle Companies subject to Section
3.1(a) which may
be named "Playboy
Lifestyle Channel" or
any other name
including names
using
Licensor
Trademarks
permitted hereunder
and approved by the Management
Committee. For
clarity, the Playboy Lifestyle Channel USA shall not include
delivery via wireless devices, internet or mobile television or
any other means
of non linear television transmission now in existence or hereafter
created.
"Playboy
Lifestyle Companies" means collectively Playboy Lifestyle
Holding
and Newco.
"Playboy
Lifestyle Holding" means Playboy Lifestyle Holding, LLC, a
wholly
owned subsidiary of the Company that is a Delaware limited
liability company.
6
<PAGE>
"Playboy
Lifestyle Media" has the meaning set forth in the Company
Operating Agreement.
"Playboy
Lifestyle Net Revenue" has the meaning set forth in Section 7.
"Playboy
Lifestyle Net Revenue Fee" has the meaning
set forth in Section
7.
"Playboy
Lifestyle Programming
Service" has the
meaning set forth in the
Company Operating Agreement.
"Playboy
TV en Espanol" means those Spanish language networks operated by
PEGI and its
Affiliates based on
the Playboy
Brands, excluding the Playboy
Lifestyle Programming Service.
"Playboy
TV" means those television networks operated by PEGI and its
Affiliates based
on the Playboy Brands, excluding the Playboy Lifestyle
Programming Service.
"Portuguese Africa
Distribution
Territory"
means, with respect to
distribution in any and all Media, (a) the Republic of Angola;
(b) Republic of
Mozambique; (c) the Democratic Republic of Sao Tome and Principe;
(d) Cap Verde;
(e) Guinea-Bissau;
and (f) the
territories,
possessions and
commonwealths of
each of the foregoing, if any.
"Program"
or "Programming" has the meaning set forth in the Company
Operating Agreement.
"Proposed
Activity" has the meaning set forth in Section 3.5.
"PTVLA
Channels" means those Branded Channels, other than the Playboy
Lifestyle Programming Service, included as part of the Company
Service that are
based on Playboy TV.
"PTVLA
Portugal Feed" means the PTVLA Channel as
originally telecast
by
the Company in Portugal.
"Recipient" has the meaning set forth in this Section 1.
"Remediable Breach" has the meaning set forth in Section
9.3(b).
"Response"
has the meaning set forth in Section 12.2.
"Rules"
has the meaning set forth in Section 12.3.
"Spice
Brands" means those trademarks listed under the heading
"Spice
Marks" on Schedule 3.1 attached hereto.
"Spice
Channels" means those Branded Channels included as part of the
Company Service that are based on the Spice Network.
"Spice-Hot
Feed" has the meaning set forth in Section 2.1(i).
7
<PAGE>
"Spice
Network" means
collectively, Spice
Digital Networks, Club
Jenna,
Spice:xcess, fresh!
and shorteez, and
successor networks, if
any, as PEGI may
include from time-to-time, as programmed by PEGI.
"Streaming" means the delivery of audio and/or visual programming
whether
in real time or by program download (including, but not limited to, RealVideo,
any format that operates on the Windows Media Player or any other
streaming or
direct download audio and/or visual software) through the data
delivery protocol
known as TCP/Internet
Protocol or any successor or replacement protocol to any
recipient for purposes of viewing.
"Sublicense" has the meaning set forth in Section 2.2(d).
"TCP" has
the meaning set forth in Section 3.1(a).
"Term" has
the meaning set forth in Section 9.1.
"Termination Date" has the meaning set forth in Section 10.2.
"Territory" shall have
the meaning
set forth in the
Company Operating
Agreement.
"Trade
Materials" means trade
presentations,
business cards,
invoices,
stationery and other
similar printed matter
reflecting
names under which
the
Company conducts business.
"Unbranded" means a
television
service, Program or a block of Programs
where Licensor's or any Licensor Affiliate's name or trademarks are
not used in
connection or closely associated with such television service,
Program or block
of Programs or any related advertising other than in customary
production, logo
credits or end sequences of such Program, for use solely in the credit block
in
advertising for such
Program, where
applicable.
Unbranded Programs include
Branded Programs
which have been edited to remove all Licensor Trademarks
pursuant to Section 2.4(c).
"Unbranded
Channels" means any channel which may be operated by the
Company where Licensor
or any Licensor
Affiliate's name or
trademarks are not
used in close connection or closely associated with such
channel.
"US
Lifestyle Territory" has the meaning set forth in the Company
Operating Agreement.
"Venus
Channel" means the television program service known as "Venus"
and
any other television
program service,
channel or network operated by Venus TV,
Inc. and Contribution S.A.
"Wallpaper" has the meaning set forth in Section 2.1(d).
2. GRANT
OF PROGRAM LICENSE.
2.1. Grant.
Upon and subject to
the terms and conditions set forth
in this Agreement and
to Licensor's retained
rights pursuant to Section 2.5,
Licensor hereby
grants to the Company and the Company hereby accepts an
exclusive license
during the Term (or
until
8
<PAGE>
Licensor loses its
rights in or to any
Licensed Programming)
to distribute,
exhibit and display the Licensed Programming on the Company
Service subject to
the terms herein.
Notwithstanding
anything to the contrary in this Agreement,
without the express
written permission
of Licensor,
the Company shall not
be
entitled to use
the Licensed Programming in connection with the Playboy
Lifestyle Business
except for
Licensed Programming that is suitable for the
Playboy Lifestyle
Channel containing Lifestyle Oriented content subject to
Licensor's ability to grant such rights.
(a) Existing Library.
Licensor represents and warrants that
the Existing Library
consists of all
Programs for which
Licensor (and/or
its
Affiliates) owns
rights in the Media in
the Territory
as of March 31,
2002,
including (but not limited to) Playboy, Spice and Hot Branded
Programs and adult
films licensed by
Licensor and its
Affiliates
and any other
programming
or
content, including
Wallpaper, and the
Acquired Movies as set forth on Schedule
2.1(a) attached hereto.
(b) New Programs. Each Fiscal Year Licensor and/or its
Affiliates will
produce or acquire the rights in the Media in the Territory to
New Programs. The parties acknowledge that the content, style, mix
and budget of
the 180 program
hours of New
Programs provided to the Company pursuant to
Section 2.1(e) shall meet the category mix specifications detailed in Schedule
2.1(b) (Programming Delivery Based on 2001 Categories).
(c) Acquired Movies.
Whenever Licensor
and/or its Affiliates
acquire the rights to an Acquired Movie for exploitation in the United States,
it will also acquire
the rights for such Acquired Movie in the Media in the
Territory,
unless such
rights are unavailable or are not available on
commercially
reasonable terms.
If the rights to such
Acquired Movie are not
available in the Media for the Territory, or are available in only a portion
of
the Territory, on
commercially
reasonable terms,
Licensor will so
notify the
Company, and the
Company will determine whether it wishes to acquire the rights
in the Territory for such Acquired Movie. If the Company wishes to
acquire such
rights, Licensor will
acquire such rights for the Company on terms to be agreed
to by the Company.
The Company shall reimburse Licensor for any material
incremental costs associated with such acquisition.
(d) "Wall-to-Wall" Material. Licensor will provide the Company
with copies of, or access to, all bumpers, promos, interstitials and other raw
materials produced by
Licensor and/or its
Affiliates for use in its television
business (collectively, the "Wallpaper"). The Company may exhibit Wallpaper
in
the form provided or
may modify,
edit or utilize
them to create
appropriate
Wallpaper for the Company Service, subject to the terms and
conditions of the
trademark license set forth in Section 3 and all applicable laws
and regulations
within the Territory.
(e) Program Hour
Requirement. Licensor
shall make
available
hereunder: (i) at least one hundred eighty (180) program hours of
Adult Oriented
New Programs
for the Company
Service; and (ii) in addition to any Acquired
Movies included in New Programs set forth on Schedule 2.1(b), two
hundred twelve
(212) Adult Oriented Acquired Movies for the Company Service;
provided, however,
that the Company acknowledges that Licensor shall not be required
to provide the
Company with any more
than one hundred eighty (180) program hours of New
Programs, and, in
addition to any Acquired Movies included in New Programs, two
9
<PAGE>
hundred twelve (212) Acquired Movies, for each Fiscal Year during the
Term. The
parties acknowledge
that if differently
rated versions of the
same Program or
movie are provided to the Company hereunder, such different versions shall be
counted as one movie or Program. Notwithstanding the foregoing, the Company
acknowledges and
agrees that, unless
the Term is extended
pursuant to Section
9.2 herein for the year 2022, Licensor shall provide the Company a pro rated
amount of program
hours for three
calendar months of
such year equal to forty
five (45) program hours of New Programs and, in addition to any
Acquired Movies
included in New Programs, fifty three (53) Acquired Movies.
(f) Format Rights.
Licensor hereby grants the Company the
exclusive right, to
create, produce,
develop, commercialize, and distribute
Programs, in the Spanish and/or Portuguese languages, in the Territory for use
in the Media, which
Programs are based upon any titles,
formats (including,
without limitation,
the "Night
Calls" format), concepts or other elements
developed, owned or
controlled
by Licensor or its Affiliates, whether now
existing or hereinafter acquired or created (collectively,
the "Format
Rights")
subject to Licensor's prior written approval of any such
production, which shall
not be unreasonably
withheld or delayed. Each Program or other production based
on the Format Rights created by, or, on behalf of, the Company
("Branded Format
Programming") shall be
owned by Licensor in
accordance
with Section 2.5 and
subject to Section 2.2 herein, provided, however, Licensor shall
pay the Company
for any use of any
Branded Format
Programming
pursuant to the terms of the
Amended Distribution Agreement and Sections 2.4(b) and 2.6
herein.
(g) Alta Loma Programs. The parties acknowledge that
Licensor
and/or its Affiliates
produce additional
programs which: (i)
are intended for
adults and do not
contain nudity; and (ii) do not carry any of the
Licensor
Trademarks set forth
on Schedule 3.1 other than: (x) in customary production,
presentation and logo credits in the title or end sequences of such
program, or
(y) for use solely in the credit block in advertising for such program. These
programs are
intended for "first run" on domestic television networks or
channels other than Playboy TV or the Spice Network. Licensor
produces and sells
such programming under the Alta Loma banner. This programming may
consist, from
time to time, of movies, series, and/or specials. (Any such non-nude program,
whether produced by Licensor or one of its Affiliates, and whether carrying the
"Alta Loma" or any other brand, will be referred to as an "Alta
Loma Program").
(h) Option to Acquire Rights. Licensor will offer the
Company
rights to any Alta Loma Program for a fee equal to twenty
percent (20%) of the
production budget for
such program.
If the Company chooses to pay such fee,
Licensor shall make such Alta Loma Program available to the Company on the
same
terms as, and such program shall be considered, a Licensed Program hereunder,
provided, however,
that such program will not be counted as a part of the
program hour requirement as described in Section 2.1(e). If the
Company does not
choose to obtain a license for a given Alta Loma Program: (i) the Company will
have the right to act as Licensor's exclusive sales agent for that program
throughout the
Territory and will receive a twenty percent (20%) distribution
fee on such sales, plus reimbursement of reasonable costs;
provided, however,
that in the event an Alta Loma Program is produced pursuant to an agreement
which gives a
third-party
co-producer or
commissioning
network the right
to
distribute such
program in a region or regions of the Territory (or otherwise
restricts Licensor's
right to grant the Company the right to act as sales agent
for such program),
Licensor will pay to
10
<PAGE>
the Company twenty
percent (20%) of the
total revenue which
Licensor (or its
Affiliates) receives
from the exploitation of such program in the Media in such
region(s) of the Territory; and (ii) Licensor shall have the right
to produce or
co-produce not more
than 15 hours per year of Alta Loma Programs. The Company
acknowledges that the
following criteria
shall not count
towards the 15 hours
per year of Alta Loma Programs: (a) repeat showings of the same
program; and (b)
Alta Loma Programs for which the Company has agreed to pay twenty
percent (20%)
of the production budget. The Company shall use commercially
reasonable efforts
to distribute
Alta Loma Programs in the Territory in
regards to any Alta Loma
Program for which it has sales and distribution rights.
(i) Spice-Hot Feed.
Licensor shall provide the Company with
one feed to Club Jenna, fresh!, Spice:xcess and shorteez (the
"Spice-Hot Feed").
The costs associated with the Company's exploitation of the Spice-Hot Feed
will
be borne by the Company; provided, however, that Licensor shall be
responsible
for the uplink and other Spice-Hot Feed signal availability-related
costs.
2.2. Approved Uses of Licensed Programming. The Company may exploit
the Licensed Programming as follows:
(a) Licensed
Programming Use. Branded Programming shall only
be displayed or transmitted on the PTVLA Channels, the Playboy
Lifestyle Channel
or on the Spice Channels in accordance with the respective Branding as
appropriate as set
forth on Schedule 3.1 attached hereto unless any such
Branding is previously
removed by the Company such that such Programming would
be characterized as Unbranded hereunder pursuant to Section
2.4(c). In no event
shall the Company display or transmit Branded Programming on the Venus
Channel
or any other Unbranded Channel without Licensor's prior written
consent.
(b) Spillover.
Licensor and the Company acknowledge and agree
that the accidental or de minimis "spillover" into the Territory of
transmissions to
Licensor customers outside of the Territory will not be a
breach of the grant of rights hereunder and that the accidental or de minimis
"spillover" outside of
the Territory
of transmissions to Company customers
inside the Territory will not be a breach of the grant of rights
hereunder.
(c) Puerto Rico.
Notwithstanding
any territorial or other
restrictions contained
in this Agreement, the
parties hereto
acknowledge that
the distribution of
the Company Service in Puerto Rico in the Spanish language
via DirectTV Latin
America shall not be deemed to violate any such territorial
restrictions.
(d) Sublicensing. The
Company shall have the right to license
the Licensed
Programming and
Branded Format
Programming to third
parties for
exhibition and use in the Media in the Territory (each a
"Sublicense")
subject
to the following terms: (i) the Company may grant a Sublicense for
any Unbranded
Licensed Programming at its sole discretion, and (ii) may grant a
Sublicense for
any Branded
Programming and/or Branded Format Programming subject to
Licensor's
prior written
approval which shall not be unreasonably withheld or delayed,
provided, however,
that, in any event, any such Licensed Programming must first
be exhibited on the Company Service (i.e., "downstream
windows").
11
<PAGE>
(e) Sales Agents. The
Company may, in its sole discretion and
solely in accordance with this Section, utilize sales agents to
handle permitted
sub-licensing of Licensed Programming to third parties on an
arms-length basis
based on prevailing market rates (whether or not such third party is an
Affiliate of the Company). Unless the Company receives
Licensor's prior written
consent to use a different procedure: (i) a sales agent may not enter
into any
outright sales or sales of unlimited runs; (ii) all agreements
negotiated on the
Company's behalf by
any sales agent
will be subject
to the Company's prior
approval, and all
contracts will be
entered into by the Company directly with
the purchaser, which must be an end-user (e.g., a broadcaster,
direct-to-home or
Private Network
operator);
(iii) any sales
agent will be compensated on a
commissions-only
basis; and
(iv) and any sales agency agreement must be
terminable at will by
the Company
on not more than six (6) months written
notice.
(f) Editing.
Subject to and consistent with the terms of
Section 3 (Trademark
License and Quality
Control) and Section 5
(Censorship;
Withdrawal of
Programs), the Company
may, at its sole cost and expense, edit,
dub or subtitle in
Spanish and/or
Portuguese,
or otherwise alter Licensed
Programming as
necessary to comply with local language or custom or local
broadcasting
requirements
("Localized Licensed
Programming").
Such altered
Licensed Programming,
including, without
limitation, the rights to any edited,
dubbed or subtitled
tracks related thereto, shall be owned exclusively by
Licensor subject to the terms of Section 2.5 herein, provided,
however, Licensor
shall pay the
Company for any use of any such
altered Licensed Programming
pursuant to the terms of the Amended Distribution Agreement and Sections 2.4(b)
and 2.6 herein.
(g) Exclusive
Supplier.
Except
for Company Produced
Programming and
Company Format
Programming,
Licensor will be the exclusive
supplier of Programs on the PTVLA Channels and Spice Channels regardless of
whether such Programs
are produced and owned by Licensor, or whether Licensor
acquires such Programs for the Company.
(h) Streaming.
(i) During
the Term, Licensor shall not, and shall
direct Playboy.com
not to, distribute in the Territory via Streaming to
television any scheduled-based programming in blocks of six or more
hours.
(ii) Except
as otherwise provided by the Company
Operating Agreement, in the event that the Company believes that it
is necessary
to the business
of the Company to engage in any activity that constitutes
Streaming, it shall
contact PEGI in writing seeking permission. Except as
otherwise required by the Company Operating Agreement, PEGI shall consider such
request in good faith on a case by case basis, taking into account,
among other
things, (a) whether
such activity competes
with PEGI or
Playboy.com; and
(b)
whether such activity is consistent with the activities of the
Company. Except
as otherwise required by the Company Operating Agreement, PEGI
shall be under no
obligation to approve
a Streaming request
that does not, in PEGI's reasonable
discretion satisfy the foregoing criteria.
12
<PAGE>
2.3. Company Produced Programming.
(a) Development. Each
year during the Term, the Company shall
produce Programs for
exhibition
on the Company
Service and for
sublicensing
("Company Produced Programming"). All such Company Produced
Programming shall be
subject to domestic
and international
law. All Company
Produced Programming
which is Branded shall
be subject to the prior written approval of Licensor,
which shall not be
unreasonably
withheld or delayed, and shall be produced
consistent with Licensor's standards (including, but not limited
to, the content
restrictions set forth
herein) and subject to
domestic and
international law
including, without
limitation, the Child
Protection Restoration
and Penalties
Enhancement Act of
1990. The inclusion of any Company Produced Programming on
the Company
Service shall be in addition to and in no way diminish the
one-hundred-eighty
(180) program hours of
New Programs and
two-hundred-twelve
(212) Acquired Movies
required to be
provided by Licensor
pursuant to Section
2.1(e).
(b) Minimum Company Produced Programming Budget. Subject to
Section 9.2 herein,
the Company shall annually spend the Company Produced
Programming Budget in accordance with the provisions of Article 6
of the Company
Operating Agreement.
(c) Company Format Programming. The Company shall be the sole
and exclusive owner of any and all Programs or other materials
created by, or on
behalf of, the
Company that are exclusively based on titles, formats, or
concepts wholly
original to the Company but which are not based on
titles,
formats, concepts or
other elements exclusively owned or controlled by Licensor
under applicable law ("Company Format Programming"). Any Branded Company Format
Programming, Branded
Localized Licensed
Programming and Branded Company Format
Programming shall be
subject to the content
restrictions set forth
herein and
domestic and
international
law including, without limitation, the Child
Protection Restoration
and Penalties Enhancement Act of 1990. The Company
acknowledges that the
use of Company
Format Programming is subject to the
non-compete provisions
set forth in Article 14 of the Company Operating
Agreement.
(d) Scheduling
of the Company Service. In reasonable
consultation with
Licensor, the Company
shall determine,
the timing,
order,
placement and other scheduling-related details of all Programs to
be transmitted
on the PTVLA Channels throughout the Territory.
2.4.
Licensor Option to Purchase.
(a) Cost. At the
expiration or earlier
termination
of this
Agreement, for any
reason, Licensor may, at its option, purchase from the
Company the
entire right, title and interest in and to all of the Branded
Company Produced
Programming, any
Branded Company Format
Programming, or
the
rights to any edited, dubbed or subtitled tracks created by the
Company pursuant
to Section
2.2(e) for an amount equal to twenty five percent (25%) of the
aggregate cost of production of such Branded Company Produced
Programming or any
Branded Company Format
Programming. If
Licensor chooses to purchase any or all
Branded Company
Produced Programming or Branded
Company Format Programming
pursuant to this Section 2.4(a), the Company shall promptly
provide Licensor
with written
documentation
13
<PAGE>
evidencing the aggregate cost of such production. Whenever possible during the
Term, for Branded
Company Produced Programming and Branded Company Format
Programming, the
Company shall use commercially reasonable efforts to acquire
all rights, licenses
and clearances
in perpetuity; provided, however, the
Company shall not be
responsible for future
guild or union residual or similar
obligations.
(b) Branded
Format Programming and Localized Licensed
Programs. In respect to any Branded Format Programming or any
Localized Licensed
Programming, at the
expiration or earlier termination of the Agreement, for any
reason, Licensor
may, at its option, pay to the Company a fee equal to
twenty-five percent
(25%) of the aggregate
cost of production of
such Branded
Format Programming or
Localized Licensed
Programming in
consideration for any
future use of such Branded Format Programming or Localized Licensed
Programming
by Licensor.
(c) Branding Removal.
If Licensor chooses not to purchase any
or all Branded Company Produced Programming, Branded Company Format
Programming,
Branded Format Programming or Localized Licensed Programming, the Company must
remove all Licensor Trademarks and any look-and-feel contained therein which is
reasonably associated
with Licensor and/or the Licensor Trademarks prior to any
further use or
disposition
of such Branded Programming not purchased by
Licensor. The
Company acknowledges and agrees that if any such Branded
Programming is used or
disposed of contrary to the provisions of this Section,
such use shall
constitute a breach of
this Agreement
and, in addition to
any
other remedies
that may be
available to
Licensor, such Branded Programming
shall, at no cost to Licensor, immediately and automatically become
the sole and
exclusive property of Licensor.
2.5. Licensor Ownership.
(a) Goodwill. Subject
to Section 2.4,
Licensor
acknowledges
and agrees that the Company is and will be the sole and
exclusive owner of all
right, title, and
interest throughout
the world, including
without limitation
all intellectual
property and other proprietary rights in and to Company
Produced Programming;
provided, however,
that, any and all goodwill associated
with the Licensor
Trademarks included as
part of any Branded Company Produced
Programming shall inure to the sole benefit of Licensor.
(b) Work For Hire.
Subject to Section 2.4, any Branded Format
Programming or any Localized Licensed Programming produced by the
Company shall
be a work made for hire specially ordered or commissioned by
Licensor within the
meaning of the
United States Copyright Act, made for the sole benefit of
Licensor and Licensor
shall be the sole and
exclusive owner
thereof. In the
event that any right, title or interest, except for any right,
title or interest
granted to the Company hereunder to any Branded Format Programming or Localized
Branded Programming,
or part thereof, may not, by operation of law,
vest in
Licensor, then the Company hereby conveys, transfers and assigns to
Licensor all
right, title and
interest, except for
any right, title or
interest granted to
the Company hereunder throughout the world and without further
consideration, in
and to such Branded Format Programming or Localized Branded Programming
retroactive to the
date of creation.
The assignment of the Branded Format
Programming or Localized Branded Programming under this Section includes all
rights of paternity, integrity, attribution and withdrawal and any
other rights
known as, or substantially
14
<PAGE>
similar to, "moral
rights." To the extent such moral rights may not be assigned
under applicable
law and to the extent
such assignment
is not allowed by
the
laws in the various countries moral rights exist, the Company
hereby waives such
moral rights and consents to any action that would violate such moral rights in
the absence of such consent.
(c) All Other Rights
Retained by
Licensor; Covenant not to
Challenge. All
rights not expressly granted to the Company hereunder are
reserved by
Licensor for its own use and benefit. Without limiting the
generality of the
foregoing,
the Company
shall not challenge
the validity of
Licensor's ownership
of the Licensed
Programming or any intellectual property
registration or
application for
registration thereof
or contest the fact that
the Company's rights under this Agreement are solely those of the
Company, which
rights shall terminate in accordance with the provisions of Section
9.
2.6. Use Rights. Licensor shall have the exclusive rights to
Branded
Company Produced
Programming,
Branded Format
Programming and
Branded Company
Format Programming as set forth in the Amended Distribution Agreement. In the
event that Licensor desires to use Branded Company Produced
Programming, Branded
Format Programming or
Branded Company Format
Programming other than on Playboy
TV en Espanol, the
parties shall negotiate in good faith reasonable financial
terms for such distribution on a case-by-case basis. In the event that
Licensor
desires to use Branded Company Produced Programming, Branded Format Programming
and Branded Company
Format Programming produced for the Playboy Lifestyle
Business in the US
Lifestyle Territory and all applicable non-competition
provisions set forth
in Section 14.3 of the Company Operating Agreement have
expired, the parties
shall negotiate in good faith reasonable financial terms
for such distribution on a case-by-case basis.
2.7. Services Provided by Licensor. In addition to any License
Fees
payable to Licensor
pursuant to Section 7, the Company will be entitled to
purchase from Licensor
specific services,
which request Licensor shall not
unreasonably refuse,
which Licensor routinely performs for itself (such as
creative services, the creation of on-air promos, Customer Service and Shipping
Department services as described in Section 6.1 hereof, and
residual accounting)
at Licensor's actual
direct cost, without
mark-up, but including all related
staffing costs.
3.
TRADEMARK LICENSE AND QUALITY CONTROL.
3.1. Grant of Exclusive License.
(a) Company
Rights. Upon and subject to the terms and
conditions set forth in this Agreement, Licensor hereby grants to the
Company,
and the Company
hereby accepts, an exclusive license to use the Licensor
Trademarks in the Territory in connection with: (i) the broadcast,
transmission
and distribution of
the Company Service and the applicable Programs as part of
the Company Service;
(ii) the Company's
sublicensing
rights provided
herein;
(iii) the promotion
and marketing of the Company Service in any and all media,
now known or hereafter
devised, and the applicable Programs as part of the
Company Service,
including through the use of Trade Materials, provided,
however, that the
Company shall not conduct any such promotion or marketing via
Transmissi
