AMENDMENT AGREEMENT
THIS AMENDMENT AGREEMENT (this "Amendment Agreement") is
entered into as of this 1st day of January 1999 by and between
Princeton Video Image, Inc. (formerly known as Princeton Electronic
Billboard, Inc.), a corporation organized and existing under the
laws of the State of New Jersey ("PVI"), and Publicidad Virtual,
S.A. de C.V., a limited liability corporation organized and
existing under the laws of Mexico ("PUBLICIDAD") (each of PVI and
PUBLICIDAD, a "Party" and collectively, the "Parties").
PRELIMINARY STATEMENTS
A. Pursuant to that certain License Agreement, dated as of
March 1, 1994 (the "License Agreement"), by and between PVI and
PUBLICIDAD, PVI granted PUBLICIDAD an exclusive license to use the
Licensed Technology within the Territory and to operate one or more
Systems in connection therewith or to permit third parties to do
so.
B. The Parties now wish to amend the terms of the License
Agreement, upon the terms and conditions set forth in this
Amendment Agreement.
NOW, THEREFORE, in consideration of mutual covenants and
promises set forth in this Amendment Agreement, the Parties hereby
agree as follows:
1. AMENDMENT OF LICENSE AGREEMENT.
The Parties hereby agree to amend the License Agreement as set
forth in this Section 1.
1.1 Amendment of Section 1. To provide for new definitions
of terms required under this Amendment Agreement, a new Section
1.15 is hereby added to the License Agreement, to read in its
entirety as follows:
" 1.15 "Affiliate" shall mean, with respect to any
person, another person that controls, is controlled by or
is under common control with, such first person. For
these purposes, "control" shall refer to: (i) the
possession, directly or indirectly, of the power to
direct the management or policies of a person, whether
through the ownership of voting securities, by contract
or otherwise; or (ii) the ownership, directly or
indirectly, of at least 50% of the voting securities or
other ownership interest of a person. Without limiting
the generality of the foregoing, PUBLICIDAD acknowledges
and agrees that Presencia en Medios, S.A. de C.V.,
Xxxxxxx Xxxx, Xxxxx Xxxx and Xxxxxxx Xxxxxxxx and their
respective Affiliates and relatives constitute Affiliates
of PUBLICIDAD, and that any entity that is an Affiliate
of any of such persons shall also be an Affiliate of
PUBLICIDAD."
1.2 Amendment of Section 2.1.1. To provide for the payment
of royalties by PUBLICIDAD, Section 2.1.1 of the License Agreement
is hereby amended, to read in its entirety as follows:
" 2.1.1 (a) In consideration for the License
Fee, the receipt of which is hereby acknowledged, and
PUBLICIDAD's obligation to pay royalties under this
Agreement, subject to the terms and conditions of this
Agreement, PVI hereby grants to PUBLICIDAD an exclusive,
perpetual license
throughout the Territory, (i) to exploit the Licensed
Technology through Permitted Uses thereof, directly, and
by leasing, subleasing, sublicensing or otherwise
conveying rights to others to exploit the Licensed
Technology themselves within the Territory; and (ii) to
operate as lessee or licensee one or more Systems in
connection with such exploitation or to cause or permit
others to do so within the Territory.
" (b) PUBLICIDAD shall pay to PVI a running
royalty upon all Net Revenues received during each
calendar year during the term of this Agreement, in
incremental rates, as follows:
Incremental Annual
Royalty Tier Net Revenue Volume Applicable Royalty Rate
1st US$3,000,000 17%
2d > US$3,000,000 but
US$6,000,000 25%
3rd >US$6,000,000 20%
The incremental annual Net Revenue volumes reflected
above shall be adjusted, on a pro rata basis, with
respect to any partial calendar year during the term of
this Agreement.
" (c) For purposes of this Section 2.1.1,
"Net Revenues" shall mean (i) all amounts received by
PUBLICIDAD in connection with the conduct of its
business, net of any bona fide and customary agency
commissions payable by PUBLICIDAD to third parties with
respect to such amounts, and (ii) all amounts received by
any Affiliate of PUBLICIDAD in connection with
exploitation of the Licensed Technology or the operation
of the System(s) licensed hereunder, net of any bona fide
and customary agency commissions payable by such
Affiliate to third parties with respect to such amounts.
PUBLICIDAD acknowledges and agrees that fees payable
pursuant to consulting arrangements with third parties
shall not constitute bona fide and customary agency
commissions for purposes of this Agreement.
" (d) For purposes of Section 2.1.1(c), on
each January 1 during the term of this Agreement
PUBLICIDAD shall certify to PVI as to whether any Sub-Licensee
or User or any party to whom sales commissions are paid is an
Affiliate of PUBLICIDAD.
" (e) Without the prior written consent of
PVI, neither PUBLICIDAD nor any Sub-Licensee or User
shall accept or solicit any non-monetary consideration in
connection with the use of the Licensed Technology or
System(s) other than as would be reflected in Net
Revenues, except for commercially reasonable use for
demonstrations to potential advertisers, Sub-Licensees
and Users.
" (f) All royalty payments due under this
Agreement shall be paid quarterly, within ten (10) days
after the end of each calendar quarter, in U.S. Dollars.
Each such payment shall be accompanied by a report
showing, for the subject calendar quarter, all Net
Revenue received by
PUBLICIDAD and/or its Affiliates during such quarter.
PUBLICIDAD shall submit such a report even if no
royalties are due under this Agreement with respect to
any quarter. Each such report shall also set forth the
Net Revenues, if any, to which Section 2.1.1(h) applies.
Royalty payments not paid when due shall bear simple
interest at the rate of one percent per month until paid.
" (g) (i) PUBLICIDAD shall pay minimum
royalties in the amount of US$250,000 for each calendar
year in which PVI's total gross operating revenues
(including, without limitation, all royalties payable by
PUBLICIDAD under this Agreement) are at least
US$1,000,000. In order to effect this minimum royalty,
at the end of the second and fourth calendar quarters of
each such calendar year PUBLICIDAD shall have paid PVI no
less than the following minimum royalty amounts:
At the end of Cumulative minimum royalties to be paid
2nd Quarter US$125,000
4th Quarter US$250,000
Within thirty (30) days after PVI's audited financial
statements with respect to an entire calendar year are
finalized and made available to PUBLICIDAD, the
appropriate party shall make any payment or refund, as
the case may be, that is necessary to effect the intent
of this Section 2.1.1(g)(i), based on the total gross
operating revenues reflected in such financial
statements.
" (ii) The report delivered by
PUBLICIDAD pursuant to Section 2.1.1(f) with respect to
the second and fourth calendar quarters of each calendar
year shall indicate how much of the payment accompanying
such report is royalties on actual Net Revenues and how
much is an additional payment made by PUBLICIDAD to reach
the applicable threshold set forth in Section
2.1.1(g)(i). Any such additional payments shall be non-refundable
and non-creditable against any other payments
payable by PUBLICIDAD under this Agreement, except as
provided in the next succeeding sentence. If and to the
extent the total royalties on actual Net Revenues paid or
payable by PUBLICIDAD with respect to any calendar year
exceed US$250,000, any additional payment made by
PUBLICIDAD under this Section 2.1.1(g) shall be
creditable against such excess royalties.
" (iii) Notwithstanding the
foregoing, in the event that any material default of PVI
under this Agreement renders it impossible for PUBLICIDAD
to generate Net Revenues in accordance with the terms of
this Agreement, PUBLICIDAD shall so notify PVI, in
writing. Commencing thirty (30) days after the date on
which PVI receives any such notice, to the extent PVI has
not remedied such default in a manner that makes it
possible for PUBLICIDAD to generate Net Revenues once
again, PUBLICIDAD's obligation to pay minimum royalties
under this Section 2.1.1(g) shall be suspended, until PVI
has so remedied such default. Furthermore, the aggregate
minimum royalties payable by PUBLICIDAD with respect to
any calendar year during which any such suspension occurs
shall be adjusted appropriately, on a pro rata basis, to
reflect the duration of such suspension.
" (h) In the event that PVI, from time to
time, procures additional rights with respect to
telecasts in the Territory, PVI shall offer PUBLICIDAD,
in writing, the right to make electronic insertions into
such telecasts in the Territory under this Agreement.
Such offer shall be accompanied by PVI's proposed terms
and conditions for such arrangement. Within the period
of time specified in such offer (which shall be
reasonable), PUBLICIDAD shall notify PVI whether
PUBLICIDAD wishes to obtain such right and, if so,
whether PUBLICIDAD accepts PVI's proposed terms and
conditions. In the event that PUBLICIDAD wishes to
obtain such right but does not accept PVI's proposed
terms and conditions, the parties shall negotiate in good
faith to attempt to agree upon mutually acceptable terms
and conditions upon which PUBLICIDAD will obtain such
right, provided that such agreement can be reached within
a reasonable period of time. If, after such terms and
conditions are agreed to, PUBLICIDAD or its Sub-Licensees
or Users make any such insertions, PUBLICIDAD shall share
with PVI the Net Revenues generated by such insertions,
upon such terms and conditions. Any such payments shall
be in addition to, and not in lieu of, the royalties on
such Net Revenues payable by PUBLICIDAD pursuant to the
preceding provisions of this Section 2.1.1.
" (i) At any time during January 2001, and
during every second January thereafter, either party (the
"initiating party") may notify the other that such party
wishes to re-negotiate the then current royalty rate
applicable to the first royalty tier. Following delivery
of any such notice the parties shall re-negotiate such
royalty rate diligently and in good faith for a period of
at least ninety (90) days. In the event that, at the end
of such ninety-day period, the parties shall not have
agreed upon a new royalty rate, the initiating party,
upon further notice to the other party, may initiate an
arbitration pursuant to Section 8.17 for the purpose of
establishing such new royalty rate. Unless the parties
otherwise agree, any new royalty rate established under
this Section 2.1.1(i): (i) shall be effective retroactive
to the date of the initiating party's notice requesting
renegotiation; and (ii) shall be neither greater than
twenty-five percent (25%) nor less than ten percent
(10%). In the event of any adjustment of the first tier
royalty rate under this Section 2.1.1(i), PUBLICIDAD's
annual minimum royalty obligation under Section 2.1.1(g)
automatically shall be adjusted (retroactive to the date
of the initiating party's notice requesting
renegotiation) in direct proportion to the increase or
decrease in the first tier royalty rate."
" (j) All references in this Agreement to
"dollars" or "$" shall refer to U.S. Dollars. All
royalties and payments payable under this Agreement shall
be calculated, and all payments by PUBLICIDAD under this
Agreement shall be made, in U.S. Dollars. For each
quarter and each currency, payments due shall be
calculated at the rate of exchange published in The Wall
Street Journal, Eastern U.S. Edition, for the last
business day of such quarter.
" (k) During the period of time when
PUBLICIDAD is obligated to pay royalties or other
payments under this Agreement, and for two years
thereafter: (i) PUBLICIDAD shall keep complete and
accurate records pertaining to all Net Revenues in
sufficient detail to permit PVI to confirm the accuracy
of royalty and payment calculations under this Agreement;
and (ii) at
the request of PVI, PUBLICIDAD shall permit PVI or an
independent, certified public accountant appointed by
PVI, at reasonable times during regular office hours and
upon reasonable notice, to examine such records as may be
necessary (A) to determine the correctness of any report
or payment made under this Agreement, or (B) to obtain
information as to the royalties and other payments
payable for any period in the case of PUBLICIDAD's
failure to report or pay pursuant to this Agreement.
Results of any such examination shall be made available
to both parties.
" (l) PVI shall bear the full cost of the
performance of any such audit, unless such audit
discloses that the royalty and other payments actually
made by PUBLICIDAD were less than 95% of the amount that
should have been paid with respect to the period in
question. In such case, PUBLICIDAD shall bear the full
cost of the performance of such audit.
" (m) In the event that PUBLICIDAD is
required to withhold any tax to the tax or revenue
authorities in any country in the Territory in connection
with any payment to PVI due to the laws of such country,
such amount shall be deducted from the royalty or other
payment to be made by PUBLICIDAD, and PUBLICIDAD shall
notify PVI and promptly furnish PVI with copies of any
tax certificate or other documentation evidencing such
withholding. Each party agrees to cooperate with the
other party in claiming exemptions from such deductions
or withholdings under any agreement or treaty from time
to time in effect."
1.3 Amendment of Section 2.1.4.
(a) In order to clarify the intent of the parties,
Section 2.1.4 of the License Agreement is hereby amended by adding
the words "infringe upon or otherwise" immediately after the words
"in any manner which would", in the second sentence.
(b) In order to clarify the means by which international
telecast revenue will be shared under the License Agreement,
Section 2.1.4 of the License Agreement is hereby amended by adding
the words ", PVI and/or the relevant Copyright Controller (or
similar such person)" immediately after the words "with the
relevant Other Licensee(s)" in the third sentence.
1.4 Clarification of Sections 2.2, 2.7. PVI agrees that,
effective as of the date hereof, it shall diligently perform its
obligations under Sections 2.2 and 2.7 of the License Agreement.
In addition, PVI's support obligations under Section 2.2 shall
include the obligation to provide spare parts for the Systems, when
reasonably available, at PUBLICIDAD's sole cost and expense.
1.5 Amendment of Section 3.3.1. In order to provide for
indemnification in lieu of insurance, Section 3.3.1 of the License
Agreement is hereby amended by adding the following at the end
thereof":
"Upon PUBLICIDAD's request, PVI may, in its sole
discretion, accept contractual indemnification from a
third party(ies) acceptable to PVI in lieu of any
insurance coverage otherwise required to be carried by
any Sub-Licensee or User, in whole or in part."
1.6 New Section 3.3.6. To reflect the Parties' additional
agreement, a new Section 3.3.6 is hereby added to the License
Agreement, to read in its entirety as follows:
" 3.3.6 PUBLICIDAD covenants that, during the
term of this Agreement, PUBLICIDAD shall not , without
PVI's prior written consent, engage in any business other
than the exploitation in the Territory of the Licensed
Technology and related business activities."
1.7 New Section 3.3.7. To reflect the Parties' additional
agreement, a new Section 3.3.7 is hereby added to the License
Agreement, to read in its entirety as follows:
" 3.3.7 PUBLICIDAD covenants that, during the
term of this Agreement (except as permitted under this
Agreement in the Licensed Territory) and for a period of
one (1) year thereafter, PUBLICIDAD and its Affiliates
shall not, without the consent of PVI (which shall not be
unreasonably withheld or delayed), individually or
collectively, directly or indirectly, in any capacity,
way or manner, be or become interested in or associated
with any person, firm or business that designs, markets
or sells, anywhere in the world, products or services
that directly compete with PVI's exploitation of the
Licensed Technology, including products and services
making use of the Licensed Technology then offered by PVI
or which PVI has announced its plan or intention to
offer. If the restrictions set forth in this Section
3.3.7 shall be found to be unenforceable by reason of the
extent, duration or scope thereof or otherwise, then the
court or arbitrator, as the case may be, that makes such
determination shall reduce such extent, duration, scope
or other provisions of this Section 3.3.7 in order to
render them enforceable, and such reduced restrictions
shall then be enforceable in the manner contemplated in
this Section 3.3.7. In the event of any material breach
of the terms of this Section 3.3.7, PVI shall have the
right to enforce the provisions hereof by seeking
injunctive or other relief in any court, and neither this
Agreement nor pursuit of injunctive relief in any court
shall in any way limit the remedies at law or in equity
otherwise available to PVI."
1.8 Amendment of Section 3.4.1. To afford PVI flexibility in
licensing the Licensed Technology to Other Licensees outside the
Territory, Section 3.4.1 of the License Agreement is hereby
amended, to read in its entirety as follows:
" 3.4.1 PVI covenants that, in connection
with every agreement that PVI enters into with any other
person or entity regarding the licensing, sublicensing or
other conferral of any rights upon such person or entity
to exploit the Licensed Technology and the use of Systems
anywhere else in the world outside the Territory, PVI
shall make adequate and equitable provision or
arrangement for the sharing with PUBLICIDAD and/or the
relevant Sub-Licensee(s) of revenue generated by such
person or entity in connection with electronic images,
inserted via the Licensed Technology, that are seen in
the Territory."
1.9 Amendment of Section 7.1. To clarify the intention of
the parties, Section 7.1 of the License Agreement is hereby
amended, to read in its entirety as follows:
" 7.1 Term. It is contemplated by the parties that
the license granted by this Agreement is perpetual and
shall remain in effect with respect to the Know-How after
the expiration of the last to expire of the Licensed
Patents necessary for the use, lease, sublicense or other
transfer of rights to use the Products in the Territory.
This Agreement shall commence as of the date of this
Agreement and, unless sooner terminated as provided under
this Article 7, shall terminate only upon the mutual
agreement of the parties."
1.10 Amendment of Section 7.5. To provide for certain of the
new or amended Sections of the License Agreement to survive
termination of the License Agreement, Section 7.5 of the License
Agreement is hereby amended, to read in its entirety as follows:
" 7.5 SURVIVING RIGHTS. Termination of this
Agreement shall not affect the obligations of any party
that shall have accrued as of the time of such
termination. Further, the parties' obligations under
Articles 5 and 6 and Sections 2.1.1(f)-(m), 2.4, 2.5,
3.3.2, 3.3.7, 4.2, 7.4, 8.3, 8.4, 8.12, 8.13 and 8.17
shall survive any termination of this Agreement."
1.11 New Section 8.17. To provide for the use of arbitration
in the event of a dispute between the Parties, a new Section 8.17
is hereby added to the License Agreement, to read in its entirety
as follows:
" 8.17 ARBITRATION. Any dispute arising out of or
relating to any provisions of this Agreement, or the
parties' performance of their respective obligations
hereunder, that cannot be resolved by the parties shall
be settled by means of binding arbitration under the then
current commercial arbitration rules of the American
Arbitration Association, which shall be conducted by a
panel of three (3) arbitrators appointed in accordance
with such rules. Any such arbitration shall be designed
to conclude within four (4) months of the commencement
thereof, shall be held at a mutually agreeable location
(or, if the parties cannot agree, in New York City) and
shall be conducted in the English language.
Notwithstanding any other provision of this Agreement, in
connection with any arbitration concerning Section
2.1.1(i), the arbitration panel shall have no authority
to make any determination regarding the existence of an
event of default or whether this Agreement may be
terminated. All of the reasonable fees and expenses
associated with any such arbitration incurred by both
parties shall be borne by the party that does not prevail
in such arbitration, as determined by the arbitrators."
2. MISCELLANEOUS.
2.1 Effective Date. This Amendment Agreement shall be
effective as of the date hereof.
2.2 Capitalized Terms. All capitalized terms not otherwise
defined in this Amendment Agreement shall have the respective
meanings assigned thereto in the License Agreement.
2.3 Limited Waiver. Each party (a "waiving party") hereby
waives its rights with respect to any Event of Default, Material
Event of Default or other breach under the Agreement
of the other party that the waiving party either has knowledge of,
or has reason to have knowledge of, as of the date of this
Amendment Agreement; provided, however, that no waiver of any
previous Event of Default, Material Event of Default or other
breach under this Section 2.3 shall be, or shall be construed as, a
waiver thereof for the future or of any subsequent occurrence
thereof.
2.4 Continuing Effect of License Agreement. Except as
amended herein, in all other respects the License Agreement shall
remain in full force and effect and be unaffected by this Amendment
Agreement.
* * *
PAGE
IN WITNESS WHEREOF, each of the Parties has caused this
Amendment Agreement to be executed on March 3, 1999 to be effective
as of the date first written above.
PRINCETON VIDEO IMAGE, INC.
By: /s/ Xxxxxxxx Xxxxxxx
-----------------------
Name: Xxxxxxxx Xxxxxxx
---------------------
Title: VP/CFO
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PUBLICIDAD VIRTUAL, S.A. DE C.V.
By: /s/ Xxxxxxx Xxxx
-----------------------
Name: Xxxxxxx Xxxx
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Title: President
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