MARKETING, ADVERTISING AND SALES AGREEMENT
THIS MARKETING, ADVERTISING AND SALES AGREEMENT (this "Agreement") is
entered into on January 23, 1997, to have effect from and as of November 18,
1996 (the "Effective Date"), by and between INTERNATIONAL MEDIA SERVICES LTD.,
a limited liability company organized under the laws of Bermuda ("IMS"), and
INNOVA FILM GMBH, a limited liability company organized under the laws of
Germany ("Innova").
WHEREAS:
A. Pursuant to license no. 00280 dated November 11, 1996 (the "UT-2
License"), the Ukrainian National Council for Television and Radio (the
"NKTB") has granted to Broadcasting Company "Studio 1+1" in the Form of a
Limited Liability Company, a limited liability company organized under the
laws of Ukraine ("Studio 1+1"), the right to broadcast on the Second National
Television Channel of Ukraine ("UT-2").
B. The grant of the UT-2 License was conditioned on the termination of
Innova's broadcast rights under that certain Agreement on International
Cooperation for the Organization of Television Broadcasting on the First
National Television Channel of Ukraine, dated July 26, 1995, as amended,
between Innova and the National Television Company of Ukraine (the
"Innova-NTCU Agreement").
C. Pursuant to that certain Contract for International Cooperation
between Tele Radiogesellschaft Studio 1+1 and Innova Film GmbH to Produce
Programmes for Ukrainian Television, entered into in November, 1996 (the
"Innova-Studio 1+1 Agreement"; and, together with the UT-2 License, the "UT-2
Documents"), Studio 1+1 has granted to Innova, inter alia, the exclusive right
for the broadcasting of advertising within the television programming produced
by Studio 1+1 and transmitted via UT-2.
NOW THEREFORE, in consideration of the premises and for other good and
valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties
hereto hereby agree as follows:
Article 1
1.1 IMS confirms that it is aware of the contents of the UT-2
Documents and agrees not to take any action which would threaten Innova's
rights thereunder.
Article 2
2.1 Innova hereby assigns to IMS the exclusive right to market and
sell broadcasting time for advertising which has been allocated to Innova
pursuant to the UT-2 Documents, under the following conditions:
2.1.1 marketing and sales activities may be carried out with
advertising partners with no restriction as to their nationality;
2.1.2 advertising for political parties or advertising promoting the
ideological objectives of any group, association, country or religious
community, other than in compliance with Ukraine law, is not permitted;
2.1.3 the images in graphic form should not be offensive; and
2.1.4 the guidelines of Studio 1+1 shall apply in the assignment of
broadcasting times.
2.2 In return for receiving the rights specified in Article 2.1, IMS
hereby undertakes:
2.2.1 to reimburse Innova and its Ukrainian subsidiary Enterprise
Inter-Media for costs incurred in connection with (i) purchasing and producing
program material and (ii) adapting program material; provided, however, that
such costs must be approved quarterly in advance by IMS in order to be
eligible for reimbursement. Innova shall be required to submit a proposed
quarterly budget (the "Innova Quarterly Budget") to IMS at least one month in
advance of each new quarter. IMS and Innova shall jointly approve and finalize
each Innova Quarterly Budget within two weeks of IMS' receipt thereof;
2.2.2 to reimburse costs incurred by Innova in
connection with the purchasing of material and the employment of the
services of outside individuals and institutes for specific purposes.
Such costs may include:
(a) staff costs;
(b) rental of premises in Kiev and additional
costs for power, heating, cleaning and maintenance;
(c) costs of transportation, vehicles and
freight;
(d) travel and insurance costs;
(e) administration costs, including office
supplies, postage, telephone, legal, advisory and
tax-advisory services;
(f) other expenses not specifically listed
which Innova incurs in carrying out its obligations
under the UT-2 Documents; and
(g) expenses connected with the adaptation of a variety of
audio-visual programs (e.g., cinema and video films, series, shows, sport
and music programs and news reports) that can be transmitted on
television. For purposes of this Agreement, the term "adapt" shall mean
the reworking of broadcasting material to make it suitable for the
Ukrainian viewing audience (e.g., translation into Ukrainian commentary);
provided, however, that all such costs must be included in the Innova
Quarterly Budget in order to be eligible for reimbursement by IMS.
2.3.1 IMS shall bear the cost of all obligations and liabilities of
Innova relating to the television operations of Innova in Ukraine that are (a)
outstanding at the Effective Date or (b) incurred during the period from the
Effective Date through December 31, 1996 ("Ukraine Television Obligations").
The parties agree that Ukraine Television Obligations shall not include any
fines, interest, penalty payments or similar assessments levied by any court
or fiscal authority against Innova in connection with any tax practices of
Innova, or tax return or similar filing made or omitted to be made by Innova
with respect to any period, prior to January 1, 1997. IMS shall not bear the
cost of or be
liable in any way for any obligations or liabilities of Innova through
December 31, 1996 other than Ukraine Television Obligations.
2.3.2 IMS shall bear the cost of all obligations and liabilities
incurred by Innova from January 1, 1997. IMS shall make promptly such payments
to Innova as shall be necessary to meet Ukraine Television Obligations
incurred subsequent to such date, including, without limitation, payments due
from Innova pursuant to the terms of the Innova-Studio 1+1 Agreement.
Article 3
3.1 Throughout the financial year, Innova shall make available to IMS
all accounting information and documentation relating to reimbursable expenses
incurred by Innova in connection with the UT-2 Documents.
3.2 In addition to the reimbursement of expenses as specified in
Articles 2.2 and 2.3 above, Innova shall receive from IMS the following
monthly payments (to be paid at the beginning of every month to such account
as designated by Innova):
3.2.1 from the Effective Date through December 31, 1996
- $5,000 per month;
3.2.2 from January 1, 1997 - $6,000 per month;
3.2.3 from January 1, 1998 - $7,000 per month;
3.2.4 from January 1, 1999 - $8,000 per month;
3.2.5 from January 1, 2000 - $9,000 per month;
3.2.6 from January 1, 2001 - $9,500 per month;
and
3.2.7 from January 1, 2002 - $10,000 per month
until the termination of this Agreement.
Article 4
4.1 This Agreement shall terminate upon the earlier of (i) the mutual
agreement of the parties and (ii) the expiry of the UT-2 License or the
Innova-Studio
1+1 Agreement.
Article 5
5.1 This Agreement shall be governed by and construed in accordance
with the laws of Bermuda.
5.2 Subject to Section 5.3, the parties shall make a good faith effort
to resolve by negotiation among themselves any dispute, controversy or claim
arising out of, relating to, or in connection with, this Agreement, or the
breach, termination or validity hereof (a "Dispute").
5.3 Any Dispute which the parties shall not have been able to resolve
in accordance with Section 5.2 within thirty (30) days after such Dispute has
arisen shall be finally settled by arbitration in accordance with such
arbitration agreement as shall be currently in effect binding the parties
hereto.
5.4 The provisions of this Article 5 shall survive the termination of
this Agreement.
Article 6
6.1 Any notice required or permitted by this Agreement shall be in
writing. Such notices shall be written (i) in English when given to IMS and
(ii) in English or German when given to Innova. Such notices shall be deemed
to have been given (i) when delivered personally, (ii) twenty-four hours after
being transmitted by telecopy (facsimile) or (iii) seven days after being sent
by air courier, subject to confirmation of receipt. Notices sent to the
parties shall be to the addresses or numbers specified in Article 7.
6.2 If any provision of this Agreement is invalid, ineffective,
unenforceable or illegal for any reason, such decision shall not affect the
validity or enforceability of any or all of the remaining provisions. The
parties agree that should any provision of this Agreement be invalid or
unenforceable, they shall promptly enter into good faith negotiations to amend
such provision in such a way that, as amended, it is valid and legal and to
the maximum extent possible carries out the original intent of the parties as
to the issue or issues
in question.
6.3 The failure of a party to exercise any right given to it under
this Agreement, or to insist upon strict compliance with the terms of this
Agreement by the other party, shall not constitute a waiver of the terms and
conditions of this Agreement with respect to any subsequent breach thereof,
nor a waiver by either of the parties of its rights at any time thereafter to
require strict compliance with all the terms of this Agreement.
6.4 This Agreement may be executed in several counterparts, each of
which shall be deemed an original and all of which together shall constitute
one and the same instrument.
6.5 This Agreement contains the entire agreement between the parties
with respect to the subject matter hereof and cancels and invalidates all
prior commitments or representations which may have been made by the parties
either orally or in writing with respect to the subject matter hereof.
6.6 This Agreement may be amended, modified or supplemented only by a
written instrument authorized and executed on behalf of the parties. Neither
IMS nor Innova may assign or transfer any of its rights or obligations under
this Agreement without the prior consent of the other party.
6.7 The terms and provisions of this Agreement shall be binding on the
legal successors and permitted assigns, transferees and delegates of each
party hereto.
6.8 Each party hereto shall execute and deliver such other documents
and take such other actions as may reasonably be requested by the other party
hereto in order to consummate or implement the transactions contemplated
hereby.
Article 7
7.1 The addresses of the parties are as
follows:
IMS: International Media Services
Ltd.
Clarendon House
Church Street
Xxxxxxxx XX CX
Bermuda
Tel: 0 000 000 0000
Fax: 0 000 000 0000
Innova: Innova Film GmbH
Xxxxxxxxxx-Xxxxx Xx. 00-00
00000 Xxxxxxxxxx, Xxxxxxx
Fax: 00 000 000 0000
Tel: 00 000 000 000
IN WITNESS WHEREOF, the parties hereto have caused their duly
authorized representatives to execute this Marketing, Advertising and Sales
Agreement on the date first above written.
INNOVA FILM GMBH INTERNATIONAL MEDIA
SERVICES LTD.
By:_______________ By:____________________
Name: Name:
Title: Title:
