Exhibit 10.8
[Letterhead of Capital Cities/ABC, Inc.]
February 3, 1995
Xxxxx Xxxxxxxx
PEB, Inc.
00 Xxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Dear Xxx:
This letter will outline and confirm the mutual understanding and
agreement between Capital Cities/ABC Multimedia Group ("CC/ABC") and PEB, Inc.
("PEB"), for CC/ABC to license PEB'S insertion system on the terms and
conditions set forth below.
The parties anticipate that the provisions set forth below will be
reflected in a more definitive agreement. The definitive agreement may also
include other representations, warranties, conditions and indemnities. Pending
negotiation and execution of a more definitive agreement this letter agreement
shall constitute the binding agreement of the parties.
1. The System. The System shall consist of hardware and software designed
to permit the seamless insertion of an image into a live broadcast on a real
time basis so that the inserted image appears to be part of the background or
scene being broadcast without any degradation of the broadcast signal.
2. License of the System. Subject to the terms and conditions set forth
below, PEB will license to CC/ABC the right to use the System in connection with
telecasts of events in the Designated Sports as defined below. The System may be
used by all programming units of CC/ABC and its subsidiaries, including ABC
Sports and ESPN.
3. Term. The term of the agreement for each of the Designated Sports shall
be for a period of one year commencing upon the earlier of (i) the first
commercial use of the System in that sport by CC/ABC or any of its subsidiaries
or (ii) the first commercial use of the System in that sport by any other local
or regional broadcaster. The term "first commercial use" shall mean the
insertion of any advertising for which a fee is charged.
4. Exclusivity. During the term of the Agreement, the rights to be
licensed to CC/ABC shall be exclusive to the United States, its territories and
possessions (and such additional territories as may be granted by the holders of
rights in such events to CC/ABC and its subsidiaries subject to existing PEB
agreements) in the following types of sports programming (the "Designated
Sports"):
(a) National Telecasts of football games, including National
Football League games (subject, however, to CC/ABC or any subsidiary obtaining
requisite approvals, if any, from the rights holders).
(b) National Telecasts of regular and post-season baseball games
whether major league, minor league or college, including the Little League World
Series (subject, however, to CC/ABC or any subsidiary obtaining requisite
approvals, if any, from the rights holders).
(c) A "National Telecast" shall consist of a telecast of a single
game, or a series of games telecast by a single programming entity during the
same broadcast window which in the aggregate is capable of being received by at
least 50% of the television households in the case of broadcasts on free
over-the-air television (including the ABC Television Network) or 50% of the
cable households in the case of broadcasts on cable (including ESPN).
(d) XXX agrees from the date of this agreement and continuing until
the expiration of the exclusivity period for each of the Designated Sports PEB
shall not enter into an agreement with any third party unless PEB shall have
first notified CC/ABC of the terms of the proposed license and shall have
offered CC/ABC the opportunity to enter into an agreement on the same terms and
conditions. If CC/ABC does not accept such terms within 10 business days after
receipt thereof from PEB, the PEB may enter into an agreement with such third
party.
5. Additional Sports. CC/ABC and PEB agree to negotiate in good faith from
time to time concerning the license of the System for use in additional sports.
It is the intention of the parties that if CC/ABC materially assists PEB in the
developing the System for use in a particular sport, CC/ABC shall have an
exclusive right for the use of the System in such sport on terms to be
negotiated.
6. Provision of System. PEB will provide to CC/ABC a minimum of two fully
operational systems as well as appropriate personnel to assist CC/ABC in the
installation of the System and to train CC/ABC personnel in the operation of the
System. Such Systems shall be provided a sufficient time in advance of the date
on which the CC/ABC or any subsidiary intends to televise an event to permit
CC/ABC to install and test the System. CC/ABC shall submit all requests for the
provision of the System at least 10 days prior to the date on which ABC or any
subsidiary desires to have the System available for use in a broadcast in the
Designated Sports. PEB shall be responsible for maintaining the System in good
operating order. If CC/ABC desires the use of additional Systems, PEB agrees to
make additional systems available, subject to the parties reaching agreement
with respect to the allocation of costs for the acquisition of such additional
Systems.
2
7. License Fees
(a) As consideration for the license of the System, CC/ABC shall
pay, or shall cause its subsidiaries to pay, to PEB a license fee equal to 30%
of the "incremental net advertising revenues" derived by CC/ABC or any
subsidiary from the use of the System.
(b) The term "incremental net advertising revenues" shall mean the
advertising revenues actually collected by CC/ABC or any subsidiary from the
sale of advertising actually inserted using the System minus any advertising
agency commissions. Incremental net advertising revenues shall not include any
other advertising revenues collected by CC/ABC or any subsidiary.
(c) CC/ABC agrees that CC/ABC and its subsidiaries shall be solely
responsible for the solicitation and sale of advertising to be inserted
utilizing the System. Such insertion advertising shall be sold separately or
shall be separately allocated by ABC to reflect the incremental revenue
attributable to the use of the System.
(d) CC/ABC and its subsidiaries shall use their reasonable best
efforts to solicit advertising to be inserted with the System. It is expressly
understood, however, that neither CC/ABC nor any subsidiary has made any express
or implied warranty or representation concerning the amount of advertising
revenues that may be generated utilizing the System.
(e) CC/ABC acknowledges that PEB reasonably has expectations of
revenue from the use of the System during the period of exclusivity and that a
mechanism to assure fair pricing of the advertising will be developed as part of
the more definitive agreement. CC/ABC agrees to use its reasonable best efforts
to solicit advertising for the use of the System. It is the intent of CC/ABC to
maximize the value of the System.
8. Termination. If the System is reliably working and in proper order and
capable of inserting advertising on a real-time basis during live sporting
events in the Designated Sports and in accordance with ABC Sports engineering
standards, and neither CC/ABC nor any Subsidiary has used the System or been
able to sell any advertising to be inserted by the System for a period of 45
consecutive days during the broadcast season for each of the Designated Sports
commencing with the first commercial use of the System, then PEB may, upon 10
days' prior written notice, terminate the Agreement and demand the return of the
System.
9. Publicity. Following the execution of this agreement and the successful
test of the System as described in paragraph 10 below, CC/ABC and PEB shall
issue mutually acceptable press releases announcing the agreement and the launch
of the System. CC/ABC and PEB agree to make available representatives to answer
any questions concerning the System and its launch by CC/ABC.
3
10. Interim Test of System. CC/ABC agrees to use its reasonable best
efforts to use the System during the telecast by the ABC Sports unit of CC/ABC
of the NFL Skills Event on February 4, 1995. In no event, however, shall CC/ABC
be required to include an image insertion in such telecast if in CC/ABC's
judgment such insertion is not of a quality commensurate with CC/ABC's
engineering standards. This is the only interim used authorized by this
agreement if the test is successful.
11. FCC Matters. If CC/ABC so requests, PEB agrees to assist CC/ABC in
obtaining any FCC approvals that may be necessary and in attending meetings with
the FCC staff to explain the use of the System.
Each party will bear its own expenses in connection with the negotiation,
delivery and execution of this letter and the definitive agreement. Each party
shall be responsible for the payment of the fees of any broker or finder
retained by such party. The parties do not know of any such broker or finder.
The parties agree that this letter shall constitute a binding commitment
and that it shall govern the respective rights and responsibilities of the
parties pending negotiation and execution of a more definitive agreement. The
parties agree to use their reasonable best efforts to negotiate the definitive
agreement as soon as practicable.
If this letter is acceptable to you, please sign below and return it to
us. We look forward to the successful and timely completion of this transaction.
Sincerely,
CAPITAL CITIES/ABC MULTIMEDIA GROUP
By /s/ Xxxxxxx Xxxxxxxx
--------------------------------
Xxxxxxx Xxxxxxxx, Vice President
Multimedia Group
ACCEPTED AND AGREED TO
PEB, INC.
By /s/ Xxxxx Xxxxxxxx
--------------------------
Xxxxx Xxxxxxxx
4
8/29/96
Xx. Xxx XxXxxxxx
PVI, Inc.
00 Xxxxxxx Xxxxxx
Xxxxxxxxx, Xxx Xxxxxx 00000
Re: ESPN, Inc. Use of PVI's Insertion System
Dear Xxx:
This letter, when signed by both parties, will confirm the recent conversations
between ESPN, Inc. ("ESPN") and PVI, Inc. ("PVI") regarding ESPN's license to
use PVI's electronic advertising insertion system. In certain respects, this
letter will also amend the letter agreement between Captial Cities/ABC, Inc.
("ABC"), on behalf of its self and its subsidiaries, including ABC Sports and
ESPN, and PVI (previously, PEB, Inc.) dated February 3, 1995 (the "Agreement").
Unless hereby amended, the parties agree that the terms and conditions of the
Agreement shall govern the relationship between ESPN and PVI during the term.
Unless otherwise defined, capitalized terms herein will have the same meaning
given to them in the Agreement and specifically, Nationally Telecast
cable/satellite Delivery College Football Games (on ESPN/ESPN2).
1. PVI acknowledges and agrees that ESPN, Inc. will continue to have the
right to use the System during the term and pursuant to the terms and
conditions of the Agreement. With respect to football, term of the
Agreement shall commence August 31, 1996.
2. A new Paragraph 12 will be added to the Agreement:
PVI represents and warrants to ESPN that (a) it has all rights necessary
to enter into and perform this Agreement; (b) the System and all
constituent elements thereof and its exploitation by ESPN as specified
herein will not infringe on any proprietary rights of any third party. PVI
will indemnify ESPN, its parent and subsidiary companies, and their
respective officers, directors, employees, shareholders and agents,
against any and all claims, demands and causes of action related to or
arising out of these representations and warranties or any of the other
covenants, undertakings or obligations of PVI stated in the Agreement. Any
and all results from ESPN's exploitation of the System shall be considered
"works made for hire" as that term is understood and interpreted under
U.S. and international copyright laws and, as between ESPN and PVI, will
be the sole and exclusive property of ESPN. To any extent that all such
rights do not vest in ESPN as "works made for hire." PVI hereby
irrevocably assigns to ESPN any and all right, title and interest in and
to such results, including but not limited to copyright.
3. The parties will, prior to the expiration of the Agreement, each endeavor
in good faith to negotiate an extension of the Agreement.
Please indicate your agreement with the above by signing both copies of this
letter where indicated below and returning one copy to me. The other copy is for
your files. Thank you for your cooperation in this matter.
Very truly yours,
/s/ Xxxxxx Xxxxxxxx
Xxxxxx Xxxxxxxx
Vice President, Special Sales
ACKNOWLEDGED AND AGREED:
PVI, INC.
By: /s/ Xxxxx X. Xxxxxxxx
------------------------
Title: President
---------------------
Date: August 31, 1996
----------------------
cc: Xxxxxx Xxxxxx, Esq. (ABC)
ESPN Legal Department
[Letterhead of PVI]
April 22, 1996
Xxxxx Xxxxxx
Executive Vice President
ABC Multimedia Group
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000
Dear Xxxxx:
This will confirm our recent discussions wherein we agreed that because Capital
Cities/ABC has yet to sell advertising for national telecasts of either baseball
or football games, that any exclusive rights granted to CC/ABC or its affiliates
to use, or negotiate for use, the PVI System for telecasts in the United States,
or any other territory, are hereby terminated.
PVI values is association with CC/ABC and looks forward to a productive
relationship. Therefore, we agree that CC/ABC and its affiliates shall be
granted a non-exclusive right to use the PVI System under terms provided in
the letter agreement of February 3, 1995 until February 28, 1997.
Yours truly,
Xxx XxXxxxxx
