Exhibit 10.2
Portions of this Exhibit have been omitted pursuant to a request for
confidential treatment filed with the Securities and Exchange Commission. The
omissions have been indicated by asterisks ("*****"), and the omitted text has
been filed separately with the Securities and Exchange Commission.
BROADCAST FACILITIES, Inc.
SERVICES AND FACILITIES AGREEMENT
This Agreement is made as of April 1, 2008 and is by and between Broadcast
Facilities Inc., ("BFI"), a Delaware Corporation, located at 3030 Andrita
Street, Los Angeles, California 90065 and Playboy Entertainment Group, Inc.
("PEGI"), a Delaware Corporation with offices located at 2706 Media Center Dr.,
Los Angeles, California 90065, and whose telephone and facsimile numbers are
(323) 276-4000 and (323) 276-4505, respectively ("Customer").
RECITALS
A. Whereas, BFI currently leases fully protected capacity on satellite
transponders from Intelsat USA Sales Corp. ("Intelsat") and has sufficient
capacity thereon to resell to Customer transponder capacity sufficient for the
transmission of Customer's current thirteen (13) standard definition ("SD")
television channels (the "SD Channels") and currently sufficient for Customer's
high definition ("HD") channel(s) ***** (the "HD Channels" and together with the
SD Channels, the "Channels") should they be launched by Customer in the future
to cable MSOs, DTH operators and SMATV systems in North America (collectively,
the "Digital Channel Services"), all in accordance with the technical
specifications set forth in Exhibit A;
B. Whereas, BFI operates the Andrita Studios, an integrated production,
post-production, network origination and satellite transmission facility at 3030
Andrita Street in Los Angeles, California ("Andrita") and BFI desires to provide
to Customer the Digital Channel Services along with certain additional services
including: (i) compression, encryption, downlinking of Customer's Playboy en
Espanol Channel and uplinking of the SD Channels (collectively with the Digital
Channel Services and as further specified in Section 1(a), the "Transmission
Services"), all in accordance with the details and technical specifications set
forth in Exhibits A & B; (ii) network playback of all of the SD Channels
(excluding Playboy en Espanol), including Decocast services for four (4) of the
SD Channels (as further specified in Section 1(b), the "Network Playback
Services" and, together with the Transmission Services, the "Origination
Services"), all in accordance with the technical specifications set forth in
Exhibit B; (iii) a dedicated radio studio (the "Andrita Radio Studio"), in
accordance with the technical specifications set forth in Exhibit B and as
further specified in Section 1(c); (iv) post production services that include:
one (1) dedicated Final Cut Pro editing bay and ***** dedicated Final Cut Pro
edit stations (as further specified in Section 1(d), the "Dedicated Post
Production Services") in accordance with the technical specifications set forth
in Exhibit B; (v)
VOD encoding, VOD concatenation and VOD propagation to cable headends, Telco
systems and DTH operators via CMC, inDemand, or direct delivery via hard drive
or direct digital file delivery via fiber circuits or the internet (the "VOD
Services") in accordance with the technical specifications set forth in Exhibit
B, and as further specified in Section 1(e); (vi) five (5) closed offices and
twenty-one (21) office cubes including associated services such as parking,
janitorial services, security, access to common conference room facilities (all
such services to be provided at least at the same level and quality as they were
provided as of the date hereof) (the "Dedicated Office Facilities") in
accordance with the specifications set forth in Exhibit B and as further
specified in Section 1(f); and (vii) tape vault space for Customer's tapes that
are required for the Network Playback Services, the Dedicated Post Production
Services, the VOD Services or the Additional Services, said tape vault to be
exclusive to Customer, managed by Customer's employees and to only contain
active tapes (the "Tape Vault Services"). The Transmission Services, the Network
Playback Services, the Andrita Radio Studio, the Dedicated Post Production
Services, the VOD Services, the Dedicated Office Facilities and the Tape Vault
Services shall collectively be referred to as the "Dedicated BFI Services." In
addition, BFI will have a right of first refusal to provide Customer with
physical tape duplication services and conversion between the standards set
forth on the Playboy Rate Card, provided Customer intends to use a
non-affiliated third party for these services and provided BFI meets generally
accepted industry pricing, quality and delivery standards (the
"Duplication/Conversion Services"), as described in Section 1(h). In addition,
Customer will have the option to secure certain optional services, including but
not limited to encoding services other than the VOD Services, production
services, supplemental post-production services including additional Final Cut
Pro editing bays, audio suites, voice over booth(s), graphics bay(s), digital
archive services, IPTV services, Decocast services in addition to the four (4)
dedicated Decocast services provided in the Network Playback Services, off-air
compliance recording and fiber connectivity, all as set forth in Exhibit C
(collectively, the "Optional Services") and Exhibit D (the "Playboy Rate Card")
and as further specified in Section 1(i). In addition, in the event Customer
launches HD Channel(s) during the Term, BFI will provide the HD compression, HD
uplink and HD space capacity (collectively, the "HD Transmission Services"), and
the HD network playback (the "HD Network Playback Services") required to
originate these HD Channel(s), provided BFI has the capacity and facilities
available for the HD Channel(s) *****, all as further specified in Sections 1(j)
and 1(k). In addition to the Dedicated Office Facilities, BFI will also provide
five (5) closed offices and five (5) office cubes including associated services
such as parking, janitorial services, security, access to common conference room
facilities (all such services to be provided at least at the same level and
quality as they were provided as of the date hereof) (the "Additional Office
Facilities") in accordance with the specifications set forth in Exhibit B and as
further specified in Section 1(l). The Dedicated BFI Services, the
Duplication/Conversion Services, the Optional Services, the HD Transmission
Services, the HD Network Playback Service and the Additional Office Facilities
shall collectively be referred to as the "Andrita Services;" and
C. Whereas, Customer currently operates 13 SD Channels and manipulates and
distributes the SD Channels and additional media to multiple broadcast
television platforms including but not limited to Cable MSOs, DTH Operators,
SMATV Systems, and VOD Platforms and whereas Customer and BFI have simultaneous
with the execution of this Agreement entered into an agreement through which BFI
has purchased certain assets from
2
Customer or its affiliates necessary to provide the Andrita Services and under
which Customer has committed to enter into a service agreement to purchase the
Andrita Services from BFI under the terms and conditions contained herein during
the Term of this Agreement as defined below;
Now, therefore, in consideration of the mutual covenants and promises contained
herein and for other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the parties hereby agree as follows:
1. Services and Facilities: BFI will provide Customer the following services
and facilities from and in BFI's facilities at Andrita on the terms and
conditions set forth herein:
(a) The Transmission Services, in accordance with the details and
technical specifications set forth in Exhibits A & B, using the
Galaxy 23 ("G 23") Transponder 5, 15 and/or 23 or such other
satellite transponder(s) and/or satellite(s) that may replace G 23
Transponder 5, 15 or 23, or their replacements due to the failure of
G 23 Transponders 5, 15 or 23 to meet technical specifications
materially equivalent to those set forth in Exhibit A (the "BFI SD
Transponders"). The Transmission Services will be provided for the
entire Term. The Transmission Services will initially be provided
for 13 SD Channels (including Playboy TV en Espanol). ***** The
parties acknowledge that the Channel known as Club Jenna XX.5 will
terminate at midnight EST on March 27, 2008. If during the Term
Customer commences the origination of any additional SD Channel(s),
Customer must utilize BFI for the Transmission Services required to
originate said additional Channel(s) (the "Additional SD
Channel(s)") and BFI will provide Customer with the Transmission
Services for the Additional SD Channel(s) pursuant to this
Agreement, provided BFI has the capacity and facilities available
for the Additional SD Channel(s). Upon Customer's reasonable request
at any time, BFI shall, within five (5) days, notify Customer of the
number of Additional SD Channel(s) for which BFI has the capacity
and facilities to provide Transmission Services at such time. BFI
shall be responsible for responding to any failure of a BFI SD
Transponder and/or G23, including providing all appropriate notices
to Customer. Customer and BFI shall reasonably cooperate with each
other in connection with the response to any such failure, including
technical communications to third parties. Customer shall be solely
responsible for providing notice of any such failure to third
parties, including but not limited to Customer's affiliates. For all
purposes of this agreement, an "affiliate" shall mean with respect
to any "person" (which shall mean an individual, a partnership, a
corporation, a limited liability company, an association, a joint
stock company, a trust, a joint venture, an unincorporated
organization, any other business entity or a governmental entity (or
any department, agency, or political subdivision thereof)), any
other person directly or indirectly controlling or controlled by or
under direct or indirect common control with such specified person;
and for purposes of this definition, "control," as used with respect
to any person shall mean the possession, directly or indirectly, of
the power to direct or cause the direction of the management or
policies of such
3
person, whether through the ownership of voting securities, by
agreement or otherwise. For purposes of this definition, the terms
"controlling," controlled by" and "under common control with" shall
have correlative meanings.
(b) The Network Playback Services, in accordance with the details set
forth in Exhibit B, all specifically for creation, playback and
transmission of the SD Channels and data appurtenant thereto. The
Network Playback Services will be provided for the entire Term. The
Network Playback Services will initially be provided for 12 SD
Channels (not including Playboy TV en Espanol). ***** The parties
acknowledge that the Channel known as Club Jenna XX.5 will terminate
at midnight EST on March 27, 2008. If during the Term Customer
commences the origination of any Additional SD Channel(s) pursuant
to this Agreement, Customer must utilize BFI for the Network
Playback Services required to originate said Additional SD Channels
and BFI will provide the Network Playback Services for the
Additional SD Channel(s), provided BFI has the capacity and
facilities available for the Additional SD Channel(s). Upon
Customer's reasonable request at any time, BFI shall, within five
(5) days, notify Customer of the number of Additional SD Channel(s)
for which BFI has the capacity and facilities to provide Network
Playback Services at such time.
(c) The Andrita Radio Studio (as it is currently configured or with
improvements thereto made at BFI's sole discretion, unless Customer
requests in writing that BFI provide additional equipment, software
and/or functionality for the Andrita Radio Studio (and upon such a
request, the parties shall negotiate in good faith regarding
additional fees and charges), in accordance with the details set
forth in Exhibit B. The Andrita Radio Studio will be provided for
the first thirty-six (36) months of the Term (the "Andrita Radio
Studio Term"). At Customer's option, one hundred and twenty (120)
days prior to the end of the Andrita Radio Studio Term, BFI and
Customer will commence good faith negotiations on the terms and
conditions for an extension of the Andrita Radio Studio Term. In the
event BFI and Customer fail to reach agreement on the terms and
conditions for an extension of the Andrita Radio Studio Term prior
to the end of the Andrita Radio Studio Term, BFI shall be free from
any obligation to provide Customer with the Andrita Radio Studio
facilities after the Andrita Radio Studio Term.
(d) The Dedicated Post Production Services, in accordance with the
details set forth in Exhibit B. The Dedicated Post Production
Services will be provided for the first thirty-six (36) months of
the Term (the "Dedicated Post Production Services Term"). Customer
shall have the option to extend the Dedicated Post Production
Services Term on the then-existing terms and conditions for the
remainder of the Term, provided Customer provides BFI with written
notice thereof no later than ninety (90) days prior to the end of
the Dedicated Post Production Services Term.
4
(e) The VOD Services including VOD encoding, VOD concatenation and VOD
propagation to cable headends, Telco systems and DTH operators *****
all in accordance with the details set forth in Exhibit B. The VOD
Services will be provided for the Term.
(f) The Dedicated Office Facilities, in accordance with the details set
forth in Exhibit B. The Dedicated Office Facilities will be provided
for the first thirty-six (36) months of the Term (the "Dedicated
Office Facilities Term"). Customer shall have the option to extend
the Dedicated Office Facilities Term on the then-existing terms and
conditions for the remainder of the Term, provided Customer provides
BFI with written notice thereof no later than ninety (90) days prior
to the end of the Dedicated Office Facilities Term.
(g) The Tape Vault Services, in accordance with the details set forth in
Exhibit B. The Tape Vault Services shall be provided for the Term.
(h) The Duplication/Conversion Services in accordance with the details
set forth in Exhibit B and at the rates set forth on the Playboy
Rate Card shall be provided for the Term; *****
(i) The Optional Services, at Customer's option and in accordance with
and subject to the details set forth in Exhibit C and the Playboy
Rate Card. Customer may elect to receive any of the Optional
Services at any time during the Term, subject to BFI having
sufficient capacity (as solely determined by BFI) available at the
time of Customer's request to provide the requested services.
Exhibit D may be modified at any time during the Term, upon mutual
agreement of BFI and Customer.
(j) The HD Transmission Services, and in accordance with the details and
technical specifications set forth in Exhibits A and Exhibit B,
using the Galaxy 13 ("G 13") Transponder 11 or 13, or such other
satellite transponder(s) and/or satellite(s) that may replace G 13
Transponder 11 or 13 or their replacements due to the failure of G
13 Transponder 11 or 13 to meet technical specifications materially
equivalent to those set forth in Exhibit A (the "BFI HD Transponder"
and together with the BFI SD Transponders, the "BFI Transponders");
provided that BFI has the capacity and facilities available to
provide the HD Transmission Services as determined on a HD Channel
by HD Channel basis. The HD Transmission Services will be provided
from the date they commence for the remainder of the Term. Customer
must utilize the HD Transmission Services for all HD Channels it
launches during the Term, ***** Upon Customer's request at any time,
BFI shall, within five (5) days, notify Customer of the number of HD
Channels for which BFI has the capacity and facilities to provide HD
Transmission Services at such time. BFI shall be responsible for
responding to any failure of a BFI HD
5
Transponder and/or G13, including providing all appropriate notices
to Customer. Customer and BFI shall reasonably cooperate with each
other in connection with the response to any such failure, including
technical communications to third parties. Customer shall be solely
responsible for providing notice of any such failure to Customer's
third parties, including but not limited to Customer's affiliates.
(k) The HD Network Playback Services, in accordance with the details in
Exhibit B, all specifically for the creation, playback and
transmission of HD Channel(s) and data appurtenant thereto; provided
that BFI has the capacity and facilities available to provide the HD
Network Playback Services as determined on a HD Channel by HD
Channel basis. The HD Network Playback Services will be provided
from the date they commence for the remainder of the Term. Customer
must utilize the HD Network Playback Services for all HD Channels it
launches during the Term, ***** Upon Customer's reasonable request
at any time, BFI shall, within five (5) days, notify Customer of the
number of HD Channels for which BFI has the capacity and facilities
to provide HD Network Playback Services at such time.
(l) The Additional Office Facilities, in accordance with the details set
forth in Exhibit B. The Additional Office Facilities will be
provided for the first forty-five (45) days of the Term (the
"Additional Office Facilities Term"). Customer shall have the option
to extend the Additional Office Facilities Term on the then-existing
terms and conditions for the next forty-five (45) days of the Term
by providing BFI with written notice thereof.
(m) Notwithstanding anything to the contrary in this Agreement, this
Agreement shall only apply to content transmitted via broadcast,
cable television, DTH, SMATV or any Telco system (e.g. Verizon,
AT&T, etc.), and shall not apply to any content that is transmitted
over the Internet or any equivalent or successor technology
(including transmission via any IP or TCP/IP protocol, or any
equivalent or successor protocols), unless said Internet
transmission is incorporated in the transmissions and/or protocol
utilized by Customer's broadcast, cable television, DTH, SMATV, or
Telco systems.
2. Customer's Channels.
(a) Customer shall be solely responsible for the content of the Channels
and the creation and delivery of said content to BFI, and Customer
shall have the sole and exclusive right to license the reception of
the Channels. BFI shall have no rights whatsoever to the content of
the Channels except those required to perform the Andrita Services
reflected herein as directed to do so by the Customer. BFI shall
have no right to alter in any manner the content of the Channels
except as
6
required to perform the Andrita Services reflected herein, as
directed by Customer. Customer will be solely responsible for all
billing and collection from all persons and entities that have been
authorized to receive the Channels. BFI shall not be entitled to any
of such sums collected.
(b) *****
(c) BFI shall only authorize or de-authorize headends (or any similar
delivery mechanism) as instructed in writing by Customer, and shall
promptly do so upon its receipt of any such instruction. BFI shall
provide Customer with a list of all Customer IRDs currently
authorized by BFI's encryption system upon Customer's request.
(d) From time to time during the Term, at Customer's request, BFI shall
reasonably cooperate with Customer in connection with additional
projects involving the Andrita Services, so long as such cooperation
does not require BFI to incur any additional, non de minimis costs.
To the extent that such cooperation would require BFI to incur any
new additional, non de minimis costs, BFI shall notify Customer and
the parties shall meet to discuss whether to alter or continue the
proposed project, and any addition fees or charges to be paid by
Customer, in good faith.
3. Term. BFI shall commence providing the Andrita Services on the date hereof
(the "Commencement Date"), and this Agreement shall continue for a period
of sixty (60) months from the Commencement Date (the "Initial Term").
During the Term, BFI shall provide each Andrita Service to Customer for
the period set forth in the applicable provision of Section 1. Customer
shall have the option to extend the Initial Term for an additional
thirty-six (36) months on terms and conditions that are substantially the
same as the then-existing terms and conditions (the "Option Term").
Customer shall provide written notice to BFI of its intention to exercise
the Option Term no later than one hundred and twenty (120) days prior to
the expiration of the Initial Term. The "Term" shall consist of the
Initial Term together with the Option Term and the Transition Period, if
applicable, but in any case shall end at the termination of this Agreement
if terminated earlier pursuant to the terms hereof.
4. Fees. As full consideration for the Dedicated BFI Services, HD
Transmission Services and HD Network Playback Services, Customer shall pay
to BFI per month (prorated for partial months) the following amounts, as
set forth below (the "Monthly Charges"), as well as any fees set forth
below for Duplication/Standards Conversion Services and/or Optional
Services, as applicable ("Additional Charges").
(a) Subject to Section 4(b), Customer shall remit to BFI the following
amounts:
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(i) The Transmission Services:
***** per month per SD Channel
(ii) The Network Playback Services:
***** per month per SD Channel with an annual *****
increase on each anniversary of the Commencement Date.
(iii) The Andrita Radio Studio:
***** per month with an annual ***** increase on each
anniversary of the Commencement Date.
(iv) The Dedicated Post Production Services:
***** per month for one Final Cut Pro edit bay with an
annual ***** increase on each anniversary of the
Commencement Date.
***** per month for ***** Final Cut Pro work stations
with an annual ***** increase on each anniversary of the
Commencement Date.
(v) The VOD Services:
The rates reflected in Exhibit D with an annual *****
increase on each anniversary of the Commencement Date.
(vi) The Dedicated Office Facilities:
***** per square foot per month with an annual *****
increase on each anniversary of the Commencement Date.
(vii) Tape Vault Services:
8
***** per month with an annual ***** increase on each
anniversary of the Commencement Date.
(viii) Duplication/Conversion Services
The rates reflected in Exhibit D with an annual *****
increase on each anniversary of the Commencement Date.
(ix) The Optional Services:
The rates reflected in Exhibit D with an annual *****
increase on each anniversary of the Commencement Date.
(x) The HD Transmission Services:
The prevailing rate that BFI generally charges to third
parties for substantially equivalent HD Transmission
Services at the time the Customer HD Channel is
launched. *****
(xi) The HD Network Playback Services:
The prevailing rate that Customer is paying for Network
Playback Services for SD Channels at the time the
Customer HD Channel is launched.
(xii) The Additional Office Facilities:
***** per square foot per month with an annual *****
increase on each anniversary of the Commencement Date,
if applicable.
(b) The Monthly Charges (for the Dedicated BFI Services (other than the
VOD Services), HD Transmission Services and HD Network Playback
Services, as applicable) will be paid in advance and shall be due no
later than the first day of the month in which the applicable
Dedicated BFI Services are to be rendered (the "Due Date"). As a
courtesy, BFI shall send an invoice for the Monthly Charges thirty
(30) days prior to the Due Date, provided that Customer's failure to
receive an invoice shall not relieve Customer of its obligation to
pay the Monthly Charges by the Due Date. *****
9
(c) The Additional Charges for the VOD Services, the Additional Office
Facilities, the Duplication/Conversion Services and the Optional
Services, as detailed in Exhibit C and Exhibit D, shall be invoiced
after the applicable services are rendered to Customer and payment
shall be due within thirty (30) days after Customer's receipt of the
invoice, unless otherwise specified.
(d) All payments shall be made via electronic transfer to: BFI's account
as follows:
Incoming Standard Domestic Wiring Instructions:
Pay to Bank: *****
Address: *****
ABA: *****
Beneficiary: Broadcast Facilities Inc
3030 Andrita Street
Los Angeles, CA 90065
Account to Credit *****
ACH Instructions
Same as standard domestic wiring instructions, plus specify account
type: checking
SWIFT Method Instructions:
Bank Name: *****
Swift Code: *****
Account Number: *****
Account Name: *****
Beneficiary Customer: *****
(e) The Monthly Charges and Additional Charges (as applicable) shall
apply to each month, or fraction thereof (paid on a pro-rata basis),
that the applicable Andrita Services are provided to Customer and
accrue through and include the date that any Andrita Services are
discontinued in whole or in part, as provided for herein. Each month
will be considered to have thirty (30) days for billing purposes.
Customer may dispute any or all charges after receipt of the
applicable invoice. ***** Any late payments of undisputed amounts
due and payable hereunder to BFI shall be with interest at the
annual rate equal to ***** computed from the Due Date (with respect
to Monthly Charges) or from the date that is thirty (30) days
following Customer's receipt of the applicable invoice for
Additional Charges, continuing until the date on which payment is
made. If Customer fails to make payment of an undisputed amount when
due, then BFI shall have the right to discontinue any of the Andrita
Services and/or terminate this Agreement
10
ten (10) days following BFI's written notice to Customer of such
breach that is not cured by Customer within such ten (10) day
period. ***** In the event the Agreement is terminated by BFI due to
any uncured breach by Customer (including Customer's failure to pay
any amounts due pursuant to this Agreement and failure to cure such
default within ten (10) days after notice thereof), BFI shall be
entitled to retain any deposit hereunder in addition to any other
rights or claims BFI may have pursuant to this Agreement and/or by
law.
(f) Records; Inspection and Audit Rights.
(i) During the Term *****, BFI shall maintain accurate records
arising from or related to the Andrita Services provided
hereunder, including accounting records and documentation
produced in connection with the provision of the Andrita
Services; provided, that BFI shall maintain such records for
any longer duration required by any laws, statutes,
ordinances, regulations, rules, notice requirements, court
decisions, agency decisions, directives and orders of any
government and any governmental department or agency that is
applicable to Customer and of which BFI has reasonable prior
notice, and Customer shall pay any incremental, out-of-pocket,
non-de minimis costs incurred by BFI in connection with any
such longer retention.
(ii) *****
5. Performance Standard. BFI shall endeavor to meet the industry standard of
99.95% availability for the Network Playback Services, the Transmission
Services (excluding the Digital Channel Services) and the HD Network
Playback Services and the HD Transmission Services (excluding the Digital
Channel Services), should they be applicable, of the Customer-provided
media in accordance with the Customer-provided playlist (the "Performance
Standard Services") calculated on a Channel by Channel basis on an annual
basis during the Term of this Agreement. *****
6. Service Interruptions. Notwithstanding any contrary provision herein and
except only to the extent resulting from BFI's willful misconduct or
intentional breach of this Agreement, BFI shall not be responsible for and
shall not be in default of this Agreement as a result of, nor shall it be
held liable for any damages, claims, losses, or costs and expenses on
account of, any interruption of the Andrita Services, including the
Origination Services, to the extent that such interruption or failure
occurs due to any of the following: (i) damage to any equipment or
interruptions in the Andrita Services caused by electrical storms, fire,
weather, flood, natural disaster, national emergency or war, sabotage,
riots, governmental authority (only where such act of government or
governmental authority is not caused by BFI's intentional breach of its
obligations under this Agreement, acts of God, willful or criminal
misconduct of third parties beyond BFI's
11
reasonable control, or other forces outside the control of BFI; (ii)
interference from other communications systems, whether licensed or not,
that use the same frequency bands as the Transmission Services herein,
provided, that BFI shall use commercially reasonable efforts in its
reasonable discretion to mitigate or eliminate any such interference;
(iii) any interruption or out of specification performance of the BFI
Transponder, any associated satellite transponders; (iv) conditions, which
are beyond the control of BFI, that threaten the safety of operations and
maintenance personnel; (v) occasional interruptions due to passing of the
sun within the beamwidth of any associated BFI Transponder during the
spring and fall equinox periods beyond BFI's reasonable control and
customary care in the industry; (vi) degradation or interruptions of the
Channel due to protection switching; (vii) outage or interruption or
degradation due to atmospheric attenuation of the Channel; (viii) such
planned interruptions for testing or maintenance as may be agreed to in
advance between Customer and BFI; (ix) any failure of Customer to fulfill
an obligation hereunder where the failure of Customer to perform such
obligation causes a service interruption; and/or (x) compliance by BFI
with action by any court, agency, legislature or other governmental
authority that makes it unlawful for BFI to provide the Andrita Services
or any part thereof in accordance with this Agreement, in each case only
where such action is not caused by BFI's intentional breach of its
obligations under this Agreement ***** For the sake of clarity, BFI shall
not be responsible for any service interruptions for: (x) services or
facilities arranged by the Customer and not provided by BFI, (y) any feeds
into BFI provided by third parties or Customer whether arranged by BFI or
not and any interruption caused by or related to any media or playlist
provided by or on behalf of Customer. *****
7. Representations, Warranties and Covenants.
(a) By BFI. BFI warrants, represents and covenants to Customer that:
(i) it is in compliance with and will throughout the Term
continue to comply in all material respects with all laws
with respect to its rights and obligations under this
Agreement;
(ii) it has the power and authority to enter into this Agreement
and to fully perform its obligations hereunder;
(iii) it shall provide the Andrita Services in accordance with
and subject to the terms and conditions set forth in this
Agreement, and in a generally professional and workerlike
manner;
(iv) it has a valid and enforceable written agreement with
Intelsat for satellite transponder capacity which extends
beyond the Term of this Agreement, such agreement as of the
date hereof provides BFI with the necessary
12
satellite transponder capacity for and allows BFI to
provide the relevant Andrita Services specified in this
Agreement, and BFI shall maintain such agreement in full
force during the Term;
(v) subject only to paragraph 5, it makes no representation or
warranty, expressed or implied, regarding the performance
of the BFI Transponders and/or the equipment utilized in
providing the Andrita Services, including without
limitation the compression system, the encoder and third
party services, including those services and/or equipment
provided by Intelsat, utilized in the performance of the
Andrita Services, provided that BFI will take all necessary
steps to enforce its rights against Intelsat for the
benefit of Customer;
(vi) it shall not use the name of or logo of the Channels or the
names, titles or logos of any of its programs, or the
names, voices, photographs, likenesses or biographies of
any individual participant or performer in, or contributor
to, any program or any variations thereof, for any purposes
other than in the provision of the Andrita Services as
expressly authorized herein, without the express
authorization to do so (except in each case for
non-commercial use permitted under applicable law);
(vii) it has obtained, and shall maintain in full force during
the Term hereof, such federal, state and local
authorizations as are material and are necessary to operate
the business it is conducting in connection with its rights
and obligations under this Agreement;
(viii) it has no knowledge of any misrepresentation, breach of
warranty or covenant made by BFI hereunder;
(ix) execution and performance of its obligations hereunder does
not constitute a breach of any other agreement to which BFI
or its controlled affiliates are a party;
(x) it will, or will cause its affiliates to, comply in all
material respects with its agreement with Intelsat; and
(xi) *****
(b) By Customer. Customer warrants, represents and covenants to BFI
that:
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(i) it is in compliance with and will throughout the Term continue
to comply in all material respects with all laws applicable to, or with respect
to, the Channels and the provision of the Channels to BFI, Radio Content
produced by or for Customer, and Customer's rights and obligations under this
Agreement, including without limitation, Federal Communications Commission rules
and regulations governing the Channels and Radio Content, if any, all relevant
provisions of the Cable Television Consumer Protection and Competition Act of
1992, as amended, and the Communications Act of 1934, as amended and any
regulations promulgated under any applicable law or any of the foregoing;
(ii) it has the power and authority to enter into this Agreement and
to fully perform its obligations hereunder;
(iii) it shall provide the Channels to BFI at its sole cost and
expense (together with any necessary equipment as the parties agree to be added,
if any, including without limitation, backup or reserve equipment as Customer
shall require to decode Customer-provided inbound feeds), in accordance with and
subject to the terms and conditions set forth in this Agreement;
(iv) it has obtained, and shall maintain in full force during the
Term, such federal, state and local authorizations as are material and necessary
to operate the business it is conducting in connection with its rights and
obligations under this Agreement.
(v) It has obtained or will obtain at its sole expense all rights
necessary for the delivery of the Channels to BFI and for BFI to provide the
applicable Andrita Services with respect to such Channel (but expressly
excluding the intellectual property rights specifically associated with the
Andrita Services), including, without limitation, obtaining all necessary
Intellectual Property, including without limitation, all trademarks, copyrights,
licenses and any and all other proprietary, Intellectual Property and other use
rights necessary in connection therewith, and at all times during the Term
obtaining all necessary rights, title and interest in and to the names, titles
or logos of the Channels (or any successors thereto) and Radio Content, or any
of their programs, or the names, voices, photographs, music, likenesses or
biographies of any individual participant or performer in, or contributor to,
any program or Radio Content or any variations thereof and to perform its
obligations hereunder;
(vi) it shall not, without BFI's prior written approval, use any
name or logo of BFI (including any name or logo associated with Andrita Studios)
for any purpose (except for non-commercial use permitted under applicable law);
(vii) to Customer's actual knowledge, there is no actual or pending
investigation involving the Channels (or any content included in the Channels)
or Radio Content or any pending proceeding against Customer (or any of its
principals or affiliated companies) for the violation of any federal, state or
local law or regulation, as applicable;
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(viii) there are no outstanding (or, to the best of Customer's
knowledge, threatened) judgments or pending claims, liens, charges,
restrictions, or encumbrances on or related to the Channels or any programming
provided as part thereof or any Radio Content that may materially interfere with
BFI's rights or obligations under this Agreement;
(ix) it has no knowledge of any misrepresentation, breach of
warranty or covenant made by Customer hereunder; and
(x) execution and performance of its obligations hereunder does not
constitute a breach of any other agreement to which Customer or its controlled
affiliates are a party, and does not violate the rights (including intellectual
property rights) of any person or entity.
(xi) Insurance.
a) Customer will provide and maintain during the Term, the
following insurance coverages:
1. Statutory Workers' Compensation and Employers'
Liability insurance with a limit of liability on the latter of not less than
***** Customer shall use commercially reasonable efforts to cause its Workers'
Compensation carrier(s) to waive insurer's Right of Subrogation with respect to
BFI and affiliated companies.
2. A Comprehensive General Liability Insurance and/or
Excess Umbrella Liability policy which shall contain coverage parts for blanket
contractual (excluding breach of contract coverage), broad form property damage,
third party property damage, severability of interest, and primary, not
contributing coverage. Customer shall provide coverage with primary limits of
liability and/or excess umbrella liability coverage with not less than *****
combined single limit each occurrence.
3. Customer shall waive all rights of subrogation on
behalf of any insurance company insuring their interests.
b) Prior to use of any Andrita facilities, Customer shall
cause its insurance carrier(s) to add BFI and its respective successors,
assigns, licensees, officers, agents, directors, owners, shareholders, and
employees as additional insureds as their respective interests may appear
hereunder.
c) Customer will deliver to BFI original certificates of
insurance and policy endorsements evidencing the insurance coverage herein
specified. Thirty (30) days notice of cancellation shall be given to BFI prior
to cancellation or non-renewal. If Customer fails to deliver said insurance
certificate(s), BFI's failure to request delivery shall in no way be construed
as a waiver of its obligation to provide the insurance coverage specified in
these paragraphs.
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d) Failure by Customer to comply with the provision of this
Insurance section could result in suspension of the use of the Andrita
facilities as determined by BFI, effective upon thirty (30) days' prior written
notice to Customer, unless the failure is cured during such period.
8. *****
9. *****
10. *****
11. Force Majeure. Except as herein specifically provided to the contrary,
neither BFI nor Customer shall have any rights against the other party
hereto for the non-operation, malfunction, or failure of facilities or
equipment or the non-furnishing of the Andrita Services by BFI or the
Channels by Customer if such non-operation, malfunction, failure or
non-furnishing is due to any cause beyond the other party's reasonable
control, which may include: an act of God, fire, lockout, flood, tornado,
hurricane, strike or other labor dispute, riot or civil commotion,
earthquake, war, act of government or governmental instrumentality
(whether federal, state or local and in each case, only where such act of
government or governmental instrumentality is not caused by the other
party's intentional breach of its obligations under this Agreement, or
other cause beyond such party's reasonable control (all together, "Force
Majeure"). For the avoidance of doubt, a "cause beyond a party's
reasonable control" will not include occurrences arising from the willful
misconduct or negligence of the party asserting protection hereunder. BFI
shall take all reasonable actions available to it to restore the Andrita
Services following a Force Majeure event as soon as practical. *****
12. *****
13. Termination. This Agreement may be terminated prior to the end of the
Initial Term or Option Term, if applicable, as follows:
(a) in the event of a breach of any material term and/or condition,
representation and/or warranty contained herein (except as otherwise
provided in Section 4 (e) or Section 5), the non-breaching party may
terminate upon ***** prior written notice providing, with reasonable
specificity, the cause of such termination, unless such breach is
cured during such period or if incapable of cure during such period
then good faith efforts to cure have commenced, providing in such
case cure will be effected in no more than *****
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(b) by BFI, as provided in Section 4, in the event of a failure by
Customer to make payment of the Monthly Charges and cure such
failure within ***** after notice thereof;
(c) if a Force Majeure event continues for more than ***** and precludes
a party from performing its obligations hereunder, the other party
may terminate this Agreement upon written notice of such
termination; and
(d) by Customer in part on a Channel-by-Channel basis in the event that
BFI fails to meet or exceed the Performance Standard, as provided in
Section 5 of this Agreement.
14. *****
15. *****
16. *****
17. Governing Law and Jurisdiction. This Agreement shall be governed by and
interpreted under the laws of the State of California, without regard to
conflict of law rules. The parties agree that all litigation related to
this Agreement shall be brought in any state or federal court in Los
Angeles County and each party hereby submits itself to the exclusive in
personam jurisdiction of such court for purposes of any such litigation.
Neither party shall object to venue in any such court on the grounds of an
inconvenient forum or otherwise.
18. Assignment. Neither party may assign this Agreement without the express
written consent of the other party, not to be unreasonably withheld,
provided that: (a) Customer may assign its rights and obligations under
this Agreement in connection with a merger or sale of all or substantially
all of Customer's assets, or to any purchaser or transferee of some or all
of the Channels, including, but not limited to, any joint venture in which
Customer is a participant; provided that the assignee is at least as
capable as Customer in fulfilling Customer's obligations under this
Agreement (including payment obligations) and such assignee agrees to be
bound by all of the terms and obligations of Customer pursuant to this
Agreement as reasonably determined by BFI; and (b) BFI may assign its
rights and obligations under this Agreement in connection with a merger or
sale of all or substantially all of BFI's assets; provided that the
assignee is at least as capable as BFI of providing the services following
the transaction and such assignee agrees to be bound by all of the terms
and obligations of BFI pursuant to this Agreement as reasonably determined
by Customer; provided, further, that, notwithstanding the foregoing, BFI
may not assign any of its rights or obligations hereunder to any third
party that is a competitor of Customer or its affiliates, where such
company's business is primarily the adult
17
entertainment media industry. Subject to the foregoing, it is acknowledged
that this Agreement, and the terms and conditions contained herein, shall
be binding on all successors and assigns of the parties.
19. Notices. All notices, requests, demands, consents, directions and other
communications provided for hereunder shall be in writing and be either
delivered by facsimile transmission ("fax"), with confirmed electronic
receipt, or by means of U.S. certified mail, return receipt requested; if
to BFI to 3030 Andrita Street, Los Angeles, California 90065, ***** and if
to Customer at Customer's address set forth on the first page of this
Agreement; or, as to each party, at such other address as shall be
designated by such party in a written notice to the other party. All
notices shall, when delivered via fax shall be deemed effective on the
date receipt of such facsimile is so confirmed, and when delivered via
FedEx Express, UPS or other overnight carrier on the earlier of the actual
delivery date or next business day.
20. Confidentiality. BFI and Customer shall hold in confidence the information
contained in, or exchanged in connection with, this Agreement, however,
either BFI or Customer may disclose the existence of this Agreement, but
shall not disclose any specific terms and/or conditions including, but not
limited to, the Monthly Charges and Additional Charges. Nothing contained
herein shall prevent Customer from disclosing such technical information
as is required for reception of the Channel to the distribution systems.
Notwithstanding the foregoing, disclosure by either party is permitted:
(a) to its principals, auditors, attorneys, investors, lenders, insurance
agents, and proposed and actual successors in interest (in each case, who
are bound by confidentiality obligations with respect to such disclosure),
and (b) only to the extent necessary to comply with law, enforce its
rights and perform its obligations under this Agreement.
21. Entire Agreement. This Agreement constitutes the entire Agreement between
the parties with respect to the transactions contemplated herein and may
not be modified or changed except in writing executed by all parties
hereto. This Agreement supercedes and merges all prior written or oral
agreements, communications, commitments, or understandings with respect to
the matters provided for herein. Each party acknowledges that it is
entering into this Agreement in reliance only upon the provisions
expressly herein set forth, and not upon any covenants, representations,
warranties or other considerations not set forth herein, and that there
are no warranties, representations or covenants which extend beyond the
description of the express provisions of this Agreement.
22. Waivers. Any waiver of any provision of this Agreement must be in writing
and signed by the party whose rights are being waived. No waiver of any
right, obligation or breach of any provision hereof shall be or be deemed
to be a waiver of any other or similar right or obligation, or preceding
or subsequent breach of the same or any other provision of this Agreement.
The failure of Customer or BFI to enforce or seek enforcement of the terms
of this Agreement following any breach shall not be construed as a waiver
of such
18
breach. All remedies, whether at law, in equity or pursuant to this
Agreement shall be cumulative.
23. Relationship. Nothing in this Agreement shall be deemed to create a
relationship of joint venture, principal-agent or partnership between the
parties, and neither shall hold itself out in its advertising or in any
manner that would indicate any such relationship between the parties.
24. Taxes. Customer shall pay, or if required BFI will collect from Customer
and forward, to the relevant taxing authority, and Customer will hold BFI
harmless from any of the following imposed on Customer or BFI by such
taxing authority: all sales, use, universal service fee, excise and
similar taxes (including, without limitation, any fees payable to local or
state franchising authorities) and any other charges now or hereafter
imposed upon Customer or the Channels or any part thereof (including,
without limitation, any tax or charge based upon goods or services
furnished to Customer by BFI, which goods or services are then passed on
by Customer).
25. Severability. The invalidity under applicable law of any provision of this
Agreement shall not affect the validity of any other provision of this
Agreement, and in the event that any provision hereof is determined to be
invalid or otherwise illegal, this Agreement shall remain effective and
shall be construed in accordance with its terms as if the invalid or
illegal provision were not contained herein; provided, however, that both
parties shall negotiate in good faith with respect to an equitable
modification of the provision held to be invalid or unenforceable and
provisions logically related to it.
26. No Third Party Beneficiaries. The provisions of this Agreement are for the
exclusive benefit of the parties hereto and their permitted assigns, and
no third party shall be a beneficiary of, or have any rights by virtue of,
this Agreement.
27. Attorney's Fees and Costs. If any legal action or other proceeding is
brought for the enforcement of this Agreement or in connection with any
other matter related to this Agreement, the successful or prevailing party
shall be entitled to recover its reasonable attorneys' fees and other
costs incurred in connection with such action or proceeding in addition to
any other relief to which such party may be entitled.
28. Non-Recourse. Notwithstanding anything contained in this Agreement to the
contrary, it is expressly understood and agreed by the parties hereto that
each and every representation, warranty, covenant, undertaking, or
agreement made in this Agreement was not made nor intended to be made as a
personal representation, warranty, covenant, undertaking, or agreement on
the part of any individual of either party, and any recourse, whether in
common law, in equity, by statue or otherwise, against any individual is
hereby forever waived and released.
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29. Headings. The headings, captions and arrangements used in this Agreement
are, unless specified otherwise, for convenience of reference only and
shall not be deemed to limit, amplify or modify the terms of this
Agreement nor affect the meaning thereof.
30. Counterparts. This Agreement may be executed in several counterparts, each
of which shall be deemed an original and all such counterparts together
shall constitute but one and the same instrument. The parties also agree
that this Agreement shall be binding upon the electronic transmission by
each party of a signed signature page thereof to the other party. If such
an electronic transmission occurs, the parties agree that they will each
also immediately post, by FedEx, a fully-executed original counterpart of
the Agreement to the other party, provided that failure to do so or to
have evidence of such original signatures shall not affect the binding
nature of this Agreement on the parties hereto.
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In Witness Whereof, the parties hereto have entered into this Agreement as
of the date first above written.
PLAYBOY ENTERTAINMENT GROUP, INC.
By: /s/ Howard Shapiro
----------------------------------------------
Name: Howard Shapiro
Title: Vice President and Secretary
BROADCAST FACILITIES, INC.
By: /s/ Simon Bax
----------------------------------------------
Name: Simon Bax
Title: Chief Executive Officer and Secretary
Signature Page to Services and Facilities Agreement