EXHIBIT 10.12
LICENSE AGREEMENT
This License Agreement ("Agreement") is entered into as of the 12th day
of February, 1999, by and between COLORADO SATELLITE BROADCASTING, INC., 00000
Xxxxxx Xxxxxx Xxxx, Xxxxxx Xxxxxx, Xxxxxxxxxx 00000 (hereinafter referred to as
"CSB" or "Licensee") and PLEASURE LICENSING LLC, 00 Xxxx Xxxxx, X.X. Xxx 000,
Xxxxxxxxxx, Xxx Xxxxxx 00000 (hereinafter referred to as "Licensor").
CSB owns and operates networks for exhibition of audio visual material
over all forms of cable or satellite television, including basic cable
television, pay and subscription television, pay-per-view and satellite
transmission. Additionally, CSB is in the process of developing networks for
exhibition or transmission over various forms of Internet or so-called Worldwide
Web for access by television or personal computers.
Licensor is and for many years has been in the business of producing
and distributing motion pictures intended primarily for the adult market.
Licensor currently owns the rights granted hereunder with respect to an
inventory of approximately 4,000 motion pictures which have been acquired and/or
produced by Licensor, or its affiliate companies.
It is the intention of the parties to enter into this Agreement
relating to all Catalog Pictures and New Releases (as defined below). The
Catalog Pictures and New Pictures are collectively referred to as the Pictures.
Reference to Licensor in this Agreement shall include Licensor and Pleasure
Productions(R), Plum ProductionsTM, Western VisualsTM, Outlaw ProductionsTM,
ABV VideoTM and HIP Video(R). The term "Internet", as used herein, shall refer
to information transmitted via a global computer network which is accessed via
Internet Protocol (IP) codes and viewed by an Internet browser.
IN CONSIDERATION of the mutual covenants herein contained, and for
other good and valuable consideration, the receipt and sufficiency of which are
acknowledged, the parties agree as follows:
1. DEFINITIONS
1.1 As used in this Agreement, certain capitalized terms shall have the
meaning as specifically set forth in Addendum "A" which is incorporated herein
by this reference.
2. GRANT OF RIGHTS
Subject to the terms and conditions hereof, and as set forth below, as
to each and every Picture, Licensor hereby grants to CSB the right and license
under copyright to broadcast, exhibit and/or display any and all versions of the
Pictures over any form of cable or satellite television and/or by way of any
form of Internet transmission, whether known or hereafter discovered.
CSB is hereby granted the following rights, the exclusivity or
non-exclusivity thereof to be determined as set forth in Section 6 below:
2.1. The right to distribute and publish the Pictures using all forms
of satellite, cable or Internet transmission to television sets, computer
monitors or other devices intended to receive and exhibit audio visual images,
whether now known or hereafter discovered, including any and all forms of
pay-television and pay per view television, including CATV or cable television,
any form of pay television, pay-over-the-air television system, closed circuit
system, satellite master antenna television system, DBS system (including,
without limitation, KU-Band), hotel/motel system, and any and all other Pay
Television system which exhibit motion pictures as part of a Pay or Pay-Per-View
Service. Such systems include, without limitation, hotels, motels, inns, lodges,
hospitals, nursing homes, convalescent homes, military bases, prisons, ships,
oil rigs, dormitories and the like carrying a Pay or Pay Per View Service via
satellite, cable or Internet transmission.
2.2. The method of exhibition of motion pictures and other programs
over television receivers where consumers purchase the right to view such motion
pictures or other programs on a fee-per-exhibition basis, in: (i)
non-residential institutions (including, without limitation, hotel or motel
rooms or hospital rooms or in other non-common or non-public areas of other
institutions, with transmission via either satellite, cable or internet) is
referred to as "Non-Residential Pay-Per-View", and (ii) homes is referred to as
"Residential Pay-Per-View." The term "Pay-Per-View" when used herein shall
include both Residential Pay-Per-View and Non-Residential Pay-Per-View.
2.3. The rights to distribute and publish the Pictures via a "narrow
band" Internet service (i.e., below 56k "dial up" modem connections) and via a
"broadband" Internet service (i.e., 56k or above "dial up" modem connections)
and all forms of internet transmission whether now known or hereafter discovered
(herein the AInternet Rights").
2.4. The Television, Pay-Per-View and Internet Rights granted hereunder
include the rights to exhibit, broadcast, display and radio simulcast, all or
any portions of the Picture(s), including excerpts therefrom, and to
subdistribute such rights to a joint venture or a majority owned subsidiary, in
all versions in and throughout the Territory.
2.5. The right to make such edits, changes, alterations and
modifications in the Pictures, including changing the title of any Picture, as
CSB, determines in its sole discretion, is appropriate or necessary for time
restrictions, to comply with any applicable censorship requirements, to create
new versions to accommodate CSB's marketing plans or to take advantage of new
opportunities to market and exploit new and different versions of adult motion
pictures in and throughout the Territory in the media licensed to CSB hereunder.
The parties acknowledged that Licensor will deliver to CSB, if and as requested,
masters of all existing versions of the Picture(s) plus any and all existing
outtakes or cover shots, wrap-arounds, director's cuts, interviews, productions
stills, artwork, etc., as may be available, all in accordance with CSB's
delivery requirements as set forth in the addenda attached hereto. In all
events, such available masters shall include at least a fully-edited so-called
XXX version and a fully-edited so-called soft or cable version, if such version
has been produced. In the event new versions are created by Licensor after
delivery to CSB of XXX and Cable versions, including any versions into any
foreign language, Licensor agrees to immediately furnish CSB with masters of
such new or dubbed versions in accordance with the delivery specifications set
forth in the addenda attached hereto.
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2.6. The rights granted to CSB hereunder shall include the right to
create new and different versions of the Pictures for exhibition via satellite,
cable or the Internet, as contemplated above. Such derivative versions may
constitute separately copyrightable derivative works of Licensor and may include
material from any XXX versions, cable versions, outtakes and cover shots
furnished by Licensor, as well as additional material owned by CSB. Such
versions shall include so-called XX versions to conform to the current standards
of Ten Channel, one of CSB's affiliated systems. Such new versions shall be
delivered to Licensor only upon the termination of CSB=s rights to such Pictures
under this License Agreement, and Licensor shall pay CSB one dollar ($1.00) for
each such picture. Other than the license rights set forth herein, CSB shall
have no rights to the derivative works so produced.
2.7. The right to translate and dub the title and soundtrack of any and
all versions of the Pictures in any languages, and to distribute such dubbed
versions throughout the Territory.
2.8. The right to copy, in any form or medium which CSB determines
appropriate, the Pictures and to distribute such copies in the normal course of
CSB's satellite, cable or Internet business, such copies may be used for example
as screening cassettes, duplicate masters furnished to one or more television,
Pay-Per-View or Internet systems or copies to be used as promotional or
marketing materials in connection with CSB's business activities or those of its
licensees. Such copies may not be sold by CSB to the public as a separate
standalone product, such as a VHS cassette or DVD disc.
2.9 The right to advertise and publicize the Pictures, their exhibition
and/or any exploitation of the Pictures contemplated hereunder. This right shall
include the right to use all or any portion of the Pictures in any medium or by
any means to advertise or publicize any of CSB=s business activities.
Hereinafter, all of the rights granted under this Section may be
referred to collectively as the "Rights."
3. TERM
3.1. This Agreement shall have a term of five (5) years commencing on
the date of delivery of the first Picture to CSB pursuant thereto. Thereafter,
the Agreement may be renewed for a term of five (5) additional years upon such
terms and conditions as the parties hereto shall mutually agree.
3.2. Notwithstanding the provisions of paragraph 3.1 hereof, as to New
Releases, such Rights shall continue for a term of five (5) years commencing
upon the earlier of the date of the first exhibition of the Picture by or ninety
(90) days after delivery of each such New Release to CSB.
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4. TERRITORY
The territory in which Licensor may exercise each and all of the rights
granted herein shall be the territory of North, Central and South America
("Territory"). CSB's rights may be exercised in any country in and throughout
the Territory, including their respective territories and possessions.
5. DELIVERY OF PICTURES TO CSB
5.1. Licensor currently owns the rights granted herein with respect to
an inventory of approximately 4,000 motion pictures which have been produced
and/or acquired by Licensor or affiliated companies. A list of certain of those
motion pictures setting forth their titles is set forth on Exhibit A hereto, and
a list of the remaining titles (including the recently acquired catalog of
Western Visuals pictures) shall be provided to CSB within thirty (30) days of
the date hereof. For convenience, these motion pictures are referred to herein
as "Catalog Pictures."
Licensor agrees to deliver such screening cassettes, or other material
as may be requested by CSB, to permit CSB to evaluate the Catalog Pictures. CSB
shall have the right to select as many Catalog Pictures as it can reasonably
exploit in the Territory.
5.2. Commencing in April 1999, Licensor further agrees to deliver to
CSB as Pictures hereunder, three (3) new motion pictures hereafter produced by
Licensor or its affiliated companies ("New Releases") per month throughout the
Term hereof, and CSB agrees to accept a minimum of three (3) such New Releases.
New Releases submitted each month shall consist of one "A Film" (a Production
shot entirely on 35mm film with a budget over $60,000); one "B Film" (a High End
Video-Budgeted over $30,000); and one "C Film" (a Low End Video-Budgeted over
$20,000).
Upon receipt of delivery materials relating to each Picture hereunder,
including each New Release, CSB shall have a period of 30 days within which to
evaluate all such materials and determine whether they are acceptable to CSB.
CSB shall have the absolute right to reject any films submitted for technical
reasons or for reasons related to CSB=s editing standards. If CSB's rejection is
for technical reasons, CSB shall notify Licensor of the technical defects in the
material delivered and Licensor will remedy any and all such defects, at no cost
to CSB, within ten (10) days of such notice. If CSB's rejection is for reasons
related to its editing standards, Licensor will replace the rejected Picture(s)
within thirty (30) days after Licensor receives notice of such rejection, with
another Picture(s) in the same category as that of the Picture rejected.
6. EXCLUSIVITY
Except with respect to the pre-existing rights of third parties to the
Catalog Pictures and for any and all rights relating to the Internet, each and
all of the Rights granted to CSB hereunder shall be exclusive to CSB in the
United States during the Term and Licensor agrees to take all action necessary
to ensure that CSB is accorded the right to exploit such Rights without
interference from any third party. It is acknowledged and agreed that all rights
in territories outside of the United States shall be non-exclusive.
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7. PAYMENT BY CSB
In full consideration of all of the Rights granted hereunder and each
of the terms and conditions of this Agreement, and conditioned upon Licensor's
full and faithful performance of all obligations to be performed hereunder, CSB
agrees to pay Licensor as follows:
7.1. CSB agrees to deliver to Licensor a total of 700,000 shares (the
"Catalog Shares") of common stock of New Frontier Media, Inc., the parent
company of CSB, and to issue to Licensor five (5) year warrants to purchase an
additional 700,000 shares (the "Warrant Shares") of common stock of New Frontier
Media, Inc., in the form attached hereto. CSB and New Frontier further agree
that the resale of $200,000 worth of the Catalog Shares and all of the Warrant
Shares shall be registered with the Securities and Exchange Commission on or
before December 31, 1999 and the registration statement for such shares shall
remain continuously effective until Licensor no longer owns any Catalog Shares
or Warrant Shares.
7.2. With respect to each New Release delivered to CSB hereunder and
accepted by CSB, CSB shall pay Licensor the following amounts:
7.2.1. With respect to each "A Film", the sum of $20,000.00 cash
7.2.2. With respect to each "B Film", the sum of $10,000.00 cash; and
7.2.3. With respect to each "C Film", the sum of $5,000.00 cash.
All such payments for "A Films" shall be payable as follows: 25%
within ten (10) days after delivery of all required delivery materials,
including materials relating to both the cable version and XXX version of the
Picture; 37.5% shall be payable within sixty (60) days after the first
Exhibition of the Picture by or at the authorization of CSB; and 37.5% shall be
payable within ninety (90) days after the first Exhibition of the Picture by or
at the authorization of CSB.
All such payments for "B Films" or "C Films" shall be payable as
follows: 25% within ten (10) days after delivery of all required delivery
materials, including materials relating to both the cable version and XXX
version of the Picture; and 75% shall be payable within sixty (60) days after
the first Exhibition of the Picture by or at the authorization of CSB.
8. COSTS AND EXPENSES
8.1. Licensor shall be responsible for making all payments which may
become due to any union or guild and to any person or persons who rendered
services in or in connection with the Picture by virtue of the use made of the
Picture hereunder, including, without limitation, all residual, reuse, rerun,
pension and health and welfare fund, and payroll tax payments.
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8.2. As between Licensor and CSB, CSB shall be responsible for all
editing costs and making all payments which may be required to be paid on
account of CSB's exercise of its rights hereunder, except to the extent such
payments are the responsibility of Licensor, as set forth in Section 8.1 above.
9. CONFIDENTIALITY
Neither Licensor or CSB shall disclose to any third party (other than
their respective employees, agents or representatives in their capacity as
such), any information with respect to the financial terms and provisions of
this Agreement except: (i) to the extent necessary to comply with law or the
valid order of a court of competent jurisdiction, in which event, the party
making such disclosure shall so notify the other, in writing, within five (5)
days, and shall seek confidential treatment of such information, (ii) as part of
its normal reporting or review procedure to its parent company, its auditors and
its attorneys, provided, however, that such parent company, auditors, and
attorneys agree to be bound by the provisions of this paragraph 9, (iii) in
order to enforce its rights pursuant to this Agreement, and (iv) to any bona
fide prospective purchaser of the stock or assets of such party.
10. REPRESENTATIONS AND WARRANTIES OF CSB
CSB hereby represents and warrants that it has the full power and
authority to enter into this agreement and to fully perform its obligations
under this Agreement, that the Agreement is an enforceable and binding
agreement, and that it does not conflict with any other agreement or obligation
of CSB.
11. REPRESENTATIONS AND WARRANTIES OF THE LICENSOR
Licensor hereby warrants and represents to CSB as follows:
11.1. Licensor owns all appropriate and necessary rights in and to the
Pictures which are the subject hereof to permit CSB to peacefully exercise each
of the Rights granted hereunder without interference from any third party and
without claim that such exercise constitutes a violation of the rights of any
third party. The Licensor guarantees to CSB that each of the Pictures was
produced in compliance with all applicable laws, that all actors and actresses
in the Pictures were over 18 years of age when they rendered their performance,
and that all Documentation, including but not limited to, proper age/consent
documents are maintained on file as required by law and may be inspected by CSB
or its designated agent during normal business hours upon request with 24-hour
notice.
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11.2. Licensor is the sole owner of all Rights granted to Licensee
hereunder; Licensor has not previously assigned, pledged, or otherwise
encumbered the same; the Pictures do not violate any rights of privacy; the
Pictures are not defamatory; neither the Titles, the Documentation, nor any
parts thereof, nor any materials contained therein or synchronized therewith,
nor the exercise of any right, violated or will violate, or will infringe, any
trademark, trade name, contract, agreement, copyright (whether common law or
statutory), patent, literary, artistic, dramatic, personal, private, civil, or
other property right or right of privacy or any similar law or regulation or
other right whatsoever of, or slanders or libels, any person, firm, corporation,
or association whatsoever. Notwithstanding the foregoing, Licensor makes no
representation or warranties with respect to the laws or regulations of any
state, country or territory outside of the United States and/or the States of
Alabama, Kentucky, Mississippi, Oklahoma, Utah, North Carolina, South Carolina,
Tennessee or West Virginia, or Northern Florida, or any other jurisdiction
hereinafter adopting laws or regulations similar to the laws of such named
states.
12. INDEMNITY
12.1. Each party hereto shall at times defend, indemnify and hold
harmless the other and their parent, subsidiary and affiliated companies,
successors, licensees and assigns and their respective officers, directors,
employees and agents (herein, the "Indemnified Parties"), against and from any
and all claims, damages, liabilities, costs and expenses, including reasonable
counsel fees (collectively "claims") arising out of any breach by such party
(herein, the "Indemnitor") of any representation, warranty, covenant or other
provision hereof . The Indemnified Parties shall notify the Indemnitor in
writing of each such claim, and shall have the right to defend such claims
through counsel of its own choosing.
12.2. The Indemnified Parties shall afford the Indemnitor the
opportunity to participate in any compromise, settlement, litigation or other
resolution of a third party claim, or, in the event the Indemnitor elects not to
defend such claim, the Indemnified Parties may assume the defense of any such
claim or litigation, at Indemnitor=s cost and expense, with counsel of
Indemnified Parties's own choosing. In the event the Indemnitor elects to assume
the defense, the Indemnitor shall afford Indemnified Parties the opportunity to
participate fully in such defense at Indemnified Parties's expense.
12.3. Neither party shall compromise, settle or otherwise resolve any
such claim or litigation without the other party's prior written consent, which
shall not be unreasonably withheld; provided, however, that failure to respond
within five (5) business days following receipt of written notice of such
proposed compromise shall constitute consent to the proposed compromise,
settlement or resolution.
12.4. All representations, warranties and indemnities contained in this
Agreement shall survive an independent investigation made by Indemnified Parties
and the suspension or the termination of this Agreement.
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13. SEVERABILITY
Subject to this section, if any provision of this Agreement or the
application thereof to any party of circumstance shall, to any extent, be
invalid and/or enforceable, the remainder of this Agreement and the application
of such provision to any other parties or circumstances other than those as to
which it is held invalid and/or unenforceable, shall not be affected thereby,
and each such other term and provision of this Agreement shall be valid and be
enforceable to the fullest extent permitted by law.
14. FURTHER DOCUMENTS
The Licensor and CSB shall promptly execute, acknowledge, and deliver
or promptly procure the executing, acknowledgment and delivery of any and all
further assignments, agreements and instruments which may be deemed reasonably
necessary or expedient to effectuate the purposes of this Agreement.
15. WAIVERS
No waiver by either party of any breach or default under this Agreement
shall be deemed to be a waiver of any proceeding or subsequent breach or
default.
16. NOTICES
All notices or remittances which either party may wish to serve and/or
may be required to serve on the other under this Agreement, shall be in writing
and shall be served by personal delivery thereof or by prepaid certified mail,
return receipt requested, or by prepaid overnight air express delivery,
addressed to the respective parties at their addresses herein above set forth.
17. RELATIONSHIP OF THE PARTIES
Nothing in this Agreement contained shall be deemed to constitute
either of the parties being an agent of the other. Neither party shall hold
itself out contrary to the terms of this Agreement and neither party shall
become liable by reason of any representation, act or omission of the other
contrary to the provisions hereof. Licensor is in all respects acting an
independent contractor.
18. TERMINATION.
This Agreement may be terminated by either party upon written notice to
the other party if such other party shall make a general assignment for the
benefit of creditors, or shall admit in writing its inability to pay its debts
as they become due, or any proceeding is commenced by or against such party (or
in the case of CSB, by or against New Frontier Media, Inc.) under any provision
of the U.S. Bankruptcy Code or under other bankruptcy or insolvency law,
including assignment for the benefit of creditors (and in the case of an
involuntary proceeding, such proceeding is not dismissed within 60 days of the
filing thereof).
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19. ENTIRE AGREEMENT
This Agreement contains the full and complete understanding between the
parties hereto and supersedes all prior understandings, whether within or oral,
pertaining to the subject matter hereof and cannot be modified except by a
written instrument signed by the parties hereto.
20. APPLICABLE LAWS
This Agreement shall be governed by the laws of Colorado and the
federal laws of the United States of America applicable therein.
21. ASSIGNMENT
This Agreement may not be assigned by either party hereto, by operation
of law or otherwise without the express written consent of the other, which
consent shall not be unreasonably withheld, delayed or conditioned.
22. COUNTERPARTS
This Agreement may be executed in counterparts, each of which shall
constitute an original and all of which, when taken together, shall constitute
one agreement.
23. PARTIES BOUND BY AGREEMENT
This Agreement is binding upon the parties hereto and upon their
respective successors and permitted assigns.
IN WITNESS WHEREOF, the parties hereto have duly executed and delivered
this Agreement as of the date first herein above.
LICENSEE: COLORADO SATELLITE BROADCASTING, INC.
/s/ Xxxxxxx Xxxxxx
--------------------------------------------
By: Xxxxxxx Xxxxxx, Executive Vice President
LICENSOR: PLEASURE PRODUCTIONS, INC.
/s/ Xxxxxxx Xxxxxxxx
--------------------------------------------
By: Xxxxxxx Xxxxxxxx, President
NEW FRONTIER MEDIA, INC. hereby guarantees
the obligations of its subsidiary, Colorado Satellite
Broadcasting, Inc. hereunder.
NEW FRONTIER MEDIA, INC.
/s/ Xxxxxxx Xxxxxx
--------------------------------------
By: Xxxxxxx Xxxxxx, Executive Vice President
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