As of July 31, 1997
Bloomfield Mercantile, Inc.
c/x Xxxxxxxx Television Services, Inc.
000 Xxxxxxxxx Xxxxxx
Xxxxx Xxxxx, XX 00000
Attention: Xxxx X. Xxxx, Esq.
RE: Playboy Television Programming in Scandinavia
Ladies and Gentlemen:
Reference is made to that certain letter agreement dated January 13, 1997
between Playboy Entertainment Group, Inc. ("Playboy") and Bloomfield
Mercantile, Inc. ("Bloomfield") regarding the expansion of the operations of
Playboy TV-Latin America, LLC to Spain and Portugal (the "Iberian Agreement").
Pursuant to Paragraph 8 of the Iberian Agreement, Playboy granted to
Bloomfield, among other rights, a first negotiation and matching right (the
"Negotiation/Matching Right") to participate in a new venture if Playboy were
to operate a Playboy-branded television service (a "Playboy Service") in all or
any territory of Sweden, Finland, Denmark, Norway, Germany, Austria or
Switzerland via a venture with a non-Playboy entity. Although Playboy is not
operating a Playboy Service in any of such territories via a venture with a non-
Playboy entity, Playboy does intend itself to establish and operate a Playboy
Service in the territory of Norway, Sweden, Denmark and Finland (collectively,
"Scandinavia"; and such a Playboy Service is referred to as "PBTV/S"), that
Playboy intends be distributed for a fixed period (the "Term") on an exclusive
basis by the Modern Times Group ("MTG"), pursuant to a distribution agreement
with MTG (the "Distribution Agreement"). The Distribution Agreement also
contemplates the potential expansion to some or all of the Baltic States for
exhibition rights in certain feature programs. Additionally, Playboy
concurrently is negotiating with Bloomfield to form a joint venture limited
liability company (the "Venture") to operate a Playboy Service in Germany and
Scandinavia. If Playboy and Bloomfield or an affiliate of Bloomfield
(Bloomfield and its affiliates are each referred to as a "Bloomfield Entity")
were able to consummate their agreement (the "JV Agreement") for the formation
of the Venture to operate a Playboy Service in Germany and Scandinavia prior to
Playboy's entering into the Distribution Agreement with MTG, the Venture, and
not Playboy directly, would enter into a distribution agreement with MTG, and
the Venture would acquire Playboy-branded programming from Playboy for PBTV/S to
be distributed by MTG. However, it appears that Playboy will enter into the
Distribution Agreement with MTG prior to finalizing and entering into, if ever,
the JV Agreement with a Bloomfield Entity.
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Accordingly, in light of the foregoing and instead of any Negotiation/Matching
Right or any other right under the Iberian Agreement or otherwise in favor of
any Bloomfield Entity in connection with PBTV/S or the Distribution Agreement,
as finally agreed upon by Playboy and MTG, including any amendments thereto (the
"Playboy/MTG Distribution Agreement"), Playboy and Bloomfield agree as follows:
1. Playboy shall enter into the Playboy/MTG Distribution Agreement, providing
for minimum guaranteed license fee payments (the "License Fees") to
Playboy for the distribution of PBTV/S by MTG.
2. Playboy and a Bloomfield Entity shall continue to negotiate in good faith
regarding the JV Agreement. If Playboy and a Bloomfield Entity enter into
and execute the JV Agreement and the Venture is formed by Playboy and a
Bloomfield Entity prior to the end of the Term, if ever: (a) Playboy shall
assign to the Venture the Playboy/MTG Distribution Agreement, including the
right to receive payment of all License Fees and other sums payable by MTG
to Playboy under the Playboy/MTG Distribution Agreement (collectively, "MTG
Payments") with respect to all periods of the Term following the date of
formation of the Venture; and (b) Playboy and a Bloomfield Entity shall
negotiate in good faith regarding the treatment, sharing and payment of the
MTG Payments and all related programming costs in connection therewith for
all periods of the Term preceding the date of formation of the Venture.
3. If by the end of the Term, Playboy and a Bloomfield Entity are unable to
enter into and execute the JV Agreement for the formation of the Venture
for the operation of a Playboy Service in Germany and Scandinavia, then
Playboy and a Bloomfield Entity shall negotiate in good faith some form of
consideration, if any, from Playboy to Bloomfield in connection with the
Playboy/MTG Distribution Agreement ("Bloomfield's Scandinavian
Consideration"). Neither Playboy nor Bloomfield shall have any further
obligations to the other with respect to PBTV/S, the Playboy/MTG
Distribution Agreement, the MTG Payments or Bloomfield's Scandinavian
Consideration if Playboy and a Bloomfield Entity are not able to enter into
and execute an agreement in connection with Bloomfield's Scandinavian
Consideration or the JV Agreement.
4. The Negotiation/Matching Right shall survive the execution of this letter
agreement with respect to applicable transactions other than those covered
by this letter agreement, in accordance with the provisions of such
Negotiation/Matching Right as set forth in the Iberian Agreement.
If this letter agreement correctly sets forth the agreement between Playboy and
Bloomfield with respect to PBTV/S, the proposed Playboy/MTG Distribution
Agreement and Bloomfield's rights in
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connection therewith, please execute a copy of this letter agreement in the
appropriate space provided below.
Very truly yours,
PLAYBOY ENTERTAINMENT GROUP, INC.
By: /s/ Xxxxxxx X. Xxxx
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Xxxxxxx X. Xxxx
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Name and Title
ACCEPTED AND AGREED TO:
BLOOMFIELD MERCANTILE, INC.
By: /s/ Xxxx Xxxx
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Attorney-in-fact
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Name and Title
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