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EXHIBIT 10.77
CHANNEL DISTRIBUTION AGREEMENT
THIS CHANNEL DISTRIBUTION AGREEMENT (the "AGREEMENT") is made this 3rd
day of July, 1997, between DMX Inc., ("DMX") a Delaware corporation having its
registered office at 11400 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx 0000, Xxx Xxxxxxx,
Xxxxxxxxxx 00000-0000, and Xtra Music Limited, a company incorporated under the
laws of the United Kingdom ("XTRA") (collectively hereinafter referred to as
the "PARTIES" and individually as a "PARTY").
WHEREAS DMX distributes various channels of digital audio programming
in the United States and other markets;
WHEREAS DMX formerly distributed such digital audio programming in
Europe through two subsidiaries of DMX, DMX-Europe N.V. and DMX-Europe (UK)
Limited (the "COMPANIES") pursuant to that certain Technology License and
Services Agreement dated as of May 19, 1993, and that certain Trademark
Agreement effective as of July 1, 1992 (the "FORMER LICENSES"); the Companies
have been placed in insolvency proceedings;
WHEREAS, in connection with the Subscription and Shareholders
Agreement dated as of December 18, 1996 (the "SUBSCRIPTION AGREEMENT"), DMX has
agreed to license such digital audio programming to Xtra for distribution in
Europe on the terms and conditions set forth herein.
NOW, THEREFORE, for and in consideration of the mutual covenants and
conditions hereinafter set forth, the Parties agree as follows:
l. CERTAIN DEFINITIONS
As used in this Agreement, the following terms shall have the
following meanings:
1.1 "AFFILIATE(S)" shall mean, with respect to either Party, a
company directly or indirectly controlling, controlled by or under common
control with such Party. A company shall be deemed, for the purposes of this
Agreement, to control a corporation or other entity if such company possesses,
directly or indirectly, the power to direct or cause the direction of the
management and policies of such corporation or other entity, whether through
the ownership of voting securities, by contract or otherwise.
1.2 "CHANNELS" shall mean all channels of audio programming
provided by DMX to its Customers (except for those channels which are subject
to an exclusive license from DMX to any Customer) and all Territory-Specific
Channels.
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1.3 "COMMERCIAL ESTABLISHMENT" shall mean each and every premise
(including, without limitation, any restaurant, bar or similar social facility,
office, factory, work-place, place of business, school, university or other
educational facility, religious, government or other public facility, military
installation or facility, air, train, bus or other public transportation
facility, park, place frequented by the public, hotel, motel, club or similar
hospitality facility or medical facility), whether or not business is conducted
at such premises, except for premises which are Private Residences, it being
understood that in the case of a shopping center or other multiple-business
facility, each separate business occupying a distinct space within such
facility shall be deemed to constitute a separate Commercial Establishment.
1.4 "CONFIDENTIAL INFORMATION" shall mean financial, marketing,
Subscriber, engineering, satellite, broadcast and other technical or
transmission data, software, computer and systems management, programming,
licensing, and any other information relating to the conduct of the business of
either Party, and not generally available to the public, in any form
whatsoever.
1.5 "CONTENT SUPERVISION AUTHORITIES" shall have the meaning
described in Section 2.5, below.
1.6 "CUSTOMERS" shall mean any and all third parties located
outside of the Territory who are authorized by DMX to receive the Channels.
1.7 "DELIVERY SITE" shall mean the site used from time to time by
DMX as its studio to create the signal for the Channels, which site is located
as of the date of this Agreement at Denver, Colorado, U.S.A.
1.8 "DMX MARKS" shall mean the trademarks, service marks, and
trade names and other similar property relating to DMX and/or the Channels that
are specified on Exhibit "A" attached hereto.
1.9 "ENHANCEMENTS" shall mean revisions, modifications or
additions to any or all of the Channels by DMX and made available in the
ordinary course by DMX to its Customers.
1.10 "EXPLOIT" shall mean to sell directly to customers or to
license another to sell to customers, but only if the holder of such license
sells to customers.
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1.11 "FORCE MAJEURE" shall mean any delays, pre-emptions or other
failure to perform when such delays, pre-emptions or failures are due to any
cause beyond the control of the Party whose performance is so affected,
including, without limitation, an act of God, fire, war, strike, riot, labor
dispute, natural disaster, technical failure (including the failure of all or
part of the equipment of others, including the communications satellite(s) on
which the Channels are delivered) or any other reason beyond the control of the
Party whose performance is prevented during the period of such occurrence,
including any legal prohibition, significant, change of law or application of
laws governing performance hereunder, decree, regulation or requirement of any
governmental authority having jurisdiction.
1.12 "INCREMENTAL COSTS" shall have the meaning described in
Section 5.1, below.
1.13 "MAINTENANCE" SHALL mean the general updating of the formats
and contents of the Channels by DMX and made available in the ordinary course
by DMX to its Customers.
1.14 "XTRA SERVICE" shall mean the digital audio service provided
to Subscribers by Xtra, its Affiliates, or its Licensees.
1.15 "PRIVATE RESIDENCE" shall mean any single dwelling unit or
multiple dwelling unit private residences, including without limitation,
apartment and condominium buildings, residential hotels, residences for
military personnel or separate unit student housing, but not including
transient or temporary residence establishments such as hotels, motels or
medical care facilities.
1.16 "PROMOTIONAL MATERIALS" shall mean any marketing, promotional
or advertising materials which incorporate the DMX Marks.
1.17 "SERVICE TECHNOLOGY" shall mean the technology, that
(i) is owned by, acquired by, or licensed to DMX, (ii) DMX has the right
to license as provided herein, and (iii) is necessary for the reception,
transmission or distribution of the Channels, including, without limitation,
the addressing system for cable decoder boxes.
1.18 "SUBSCRIBER" shall mean a paying customer to whom Xtra, its
Affiliate, or its Licensee provides, for the payment of a prescribed fee, any
or all of the Channels.
1.19 "TECHNICAL ACCESSORIES" shall mean all other portions of the
signal that transmits the Channels that may be created or made usable now or in
the future for purposes other than transmitting the Channels.
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1.20 "TERM" shall mean the term of this Agreement as set out in
Section 11.1, below.
1.21 "TERRITORY" shall mean the territory within the countries
listed on Exhibit "B", attached hereto, as such countries are constituted as of
the date of this Agreement, and such territory shall not be affected by any
subsequent alteration of the boundaries of those countries or the emergence of
new political entities within or including such territory.
1.22 "TERRITORY-SPECIFIC CHANNELS" shall mean any Channels which
are produced by DMX specifically for Use and distribution to Subscribers in the
Territory, or any part thereof.
1.23 "TRADEMARK TERM" shall mean that two-year period beginning on
the Closing Date (as defined in the Subscription Agreement).
1.24 "USE" shall mean to down-link from the Delivery Satellite,
receive, decode, digitize, compress, encode, scramble, edit, substitute
programming, insert advertising in, uplink and transmit the signal of the
Channels to Subscribers in the Territory, as permitted by the terms of this
Agreement.
2. RIGHTS OF XTRA WITH RESPECT TO THE CHANNELS
2.1 GRANT OF LICENSE. Subject to the terms of this Agreement, DMX
hereby grants to Xtra and Xtra hereby accepts the exclusive, non-transferable,
royalty-free license and right during the Term to market, distribute and
license the Channels to Subscribers and to Use the signal of the Channels, the
Service Technology, and the Technical Accessories in the Territory. This
Agreement does not give Xtra any right or license to distribute or to Use the
Channels, the Service Technology, or the Technical Accessories outside of the
Territory.
2.2 FAILURE TO EXPLOIT LICENSE. Xtra agrees to Exploit the
Channels in substantially all of the Territory; provided, however, that DMX's
only remedy for the failure by Xtra to Exploit the Channels shall be to take
the actions described in this Section 2.2. If Xtra fails to Exploit the
Channels in a substantial portion of the Territory, and does not cure such
failure to Exploit within ninety (90) days of notice by DMX, then at the
conclusion of such ninety day period the license granted pursuant to Sections
2.1 and 2.4 shall become a non-exclusive license and DMX shall be relieved of
its obligations under Section 2.10, below. If Xtra fails to Exploit the
Channels in any country that is a part of the Territory, and does not cure such
failure to Exploit within ninety (90) days of notice by DMX, then at the
conclusion of such ninety day
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period the license granted pursuant to Section 2.1 and 2.4 shall become a
non-exclusive license with respect to such country and DMX shall be relieved of
its obligations under Section 2.10, below, with respect to such country. All or
any part of the Territory that becomes non-exclusive pursuant to this Section
2.2 shall be referred to as a "NON-EXCLUSIVE TERRITORY", and the date on which
that Non-Exclusive Territory becomes non-exclusive pursuant to this Section 2.2
shall be referred to as the "NON-EXCLUSIVE DATE". If DMX does not Exploit the
Channels within a Non-Exclusive Territory within 180 days of the Non-Exclusive
Date, and if Xtra does Exploit the Channels within that Non-Exclusive Territory
within 180 days of the Non-Exclusive Date, then the license granted pursuant to
Sections 2.1 and 2.4 shall again become an exclusive license for that
Non-Exclusive Territory and the rights of Xtra under Section 2.10, below, with
respect to that Non-Exclusive Territory shall be restored.
2.3 SUBLICENSE. During the Term Xtra shall be entitled to
sublicense third parties to redistribute the Channels in the Territory,
provided that such sublicensing does not entitle such sub-licensee to do any
act or thing which if done by Xtra would be a breach of the terms of this
Agreement.
2.4 TECHNICAL ACCESSORIES. During the Term and subject to the other
restrictions described in this Agreement, Xtra shall have the exclusive right to
Use in the Territory any Technical Accessories included within the signal of the
Channels for any lawful purpose, including, but not limited to close captioning,
games, sweepstakes, contests, advertising and promotions. Xtra shall obtain any
license or authorization required under applicable law for such Use, and shall
not use the Technical Accessories in a jurisdiction in any manner which is not
lawful in that jurisdiction. If Xtra determines in its sole discretion not to
use any part of the Technical Accessories, Xtra may license such Technical
Accessories to DMX or to another third party for any lawful purpose.
2.5 CENSORSHIP AND PROGRAM SUBSTITUTION. DMX acknowledges and
agrees that the Channels may be subject to censorship by certain government
authorities and may be edited by them or by Xtra according to guidelines and
directives prescribed by such authorities ("CONTENT SUPERVISION AUTHORITIES")
prior to distribution within certain countries in the Territory. Xtra shall
have the right to edit programs and, with the prior approval of DMX where
reasonably possible, which approval shall not be unreasonably withheld,
substitute programs solely in order to comply with codes, practices, directives
or orders from the Content Supervision Authorities. To enable Xtra to comply
with any governmental programming standards and practices and other
governmental and regulatory directives, Xtra may retransmit the Channels with a
delay from the time the signal is received. Except as expressly provided
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in this Agreement, including this Section 2.5, Xtra shall use the Channels
without insertion (whether of advertising or otherwise), deletion, or editing.
2.6 INSERTION OF LOGO AND XXXX OF XTRA. Xtra shall have the right
to use its own logo, station identity xxxx, trade name, service xxxx or other
identifiers within the Channels as part of its network identity and branding
within the Xtra Service.
2.7 INCLUDING CHANNELS IN XTRA SERVICE; ADDITION OF CHANNELS. Xtra
shall be entitled, in its sole discretion, to include any or all of the
Channels in the Xtra Service. Xtra shall be entitled, at its sole discretion,
to create and distribute additional channels within the Xtra Service and within
the Territory; provided, however, that DMX shall have to right to approve
(acting reasonably) such additional channels that are distributed with the
Channels. Xtra may request that DMX create such additional Channels or
Territory-Specific Channels on terms and conditions to be agreed between the
Parties, or Xtra may create such channels itself or through the engagement of
third parties. Any such additional channels created by or on behalf of Xtra
shall be owned solely by Xtra.
2.8 COMMERCIAL ANNOUNCEMENTS. Xtra shall be entitled, in its sole
discretion, to include commercial announcements within the Channels distributed
to Commercial Establishments, so long as such commercial announcements relate
specifically to the Commercial Establishment to which such Channels are
distributed. Furthermore, Xtra shall be entitled to include in the Channels the
same types of commercial announcements and/or advertisements that DMX includes
in the Channels as provided to its Customers. Except as provided herein, no
commercial announcements will be included in any of the Channels.
2.9 RESTRICTIONS ON USE. In order to ensure the integrity of the
Channels and compliance with the restrictions that may be applicable to the
underlying programming, sound recording, music and statutory use permits, Xtra
shall not, and the rights granted herein shall not be interpreted to grant Xtra
or any other person any right to:
2.9.1 Record, make or manufacture any recordings or other
reproductions of any Channel for commercial use, other than to
effect distribution as part of the Xtra Service; or
2.9.2 Transmit, re-transmit or authorize the transmission
or re-transmission of any Channel outside the Territory.
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Xtra shall not distribute the Channels over any medium or in any manner that
does not permit Xtra to institute adequate controls to prevent the reception,
transmission, or retransmission of any Channel outside the Territory by any
person. Controls imposed by Xtra that are equivalent to the controls imposed
by DMX in the United States on the same medium to prevent unauthorized
transmission or retransmission shall be deemed to be adequate controls for
purposes of the preceding sentence. Notwithstanding anything else contained in
this Agreement, the transmission of the Channels outside the Territory solely
because a portion of the footprint of the satellite used by Xtra falls outside
the geographical boundaries of the Territory shall not violate Xtra"s
obligations under this Agreement if (i) DMX-UK does not otherwise Exploit or
Use the Channels outside the Territory, and (ii) substantially all of the
footprint of the satellite used by DMX-UK falls within the Territory.
2.10 NON-COMPETITION. DMX agrees that during the Term it will not
distribute the Channels or any of them in the Territory via any medium, nor
will DMX authorize any other person to do the same. Notwithstanding the
foregoing, DMX shall be entitled to distribute video channels or music services
other than the Channels in the Territory, so long as the format of such other
music services is not substantially similar to that of the Channels.
2.11 DELETION OF CHANNEL. At any time and from time to time, DMX
shall be entitled, in its sole discretion, to delete one or more Channels from
the Channels offered to its Customers, and upon such deletion such Channel
shall cease to be available to Xtra. DMX may not delete a Channel pursuant to
this Section 2.11 unless, at least thirty days before the effective date of
such deletion, DMX provides to Xtra (i) notice of the deletion, (ii) one or
more disks inscribed with the music programming for the Channel as of the date
of the notice, and (iii) a copy of the software prepared by DMX to select the
music for such Channel; provided, however, that in order to delete a Channel,
DMX shall not be required to provide any software or other intellectual
property that DMX does not own or otherwise have right to transfer to Xtra. The
provisions of Section 6.3 shall apply to the use by Xtra of any items provided
pursuant to this Section 2.11.
2.12 ENHANCEMENTS AND MAINTENANCE. DMX shall provide Enhancements
and Maintenance to Xtra at the same time as DMX provides Enhancements and
Maintenance to DMX's Customers.
3. DELIVERY AND DISTRIBUTION
3.1 DELIVERY OF THE CHANNELS. DMX shall deliver to Xtra at the
Delivery Site digital audio signals of the Channels, to enable Xtra to Use the
signal in a manner and quality as contemplated by this Agreement. DMX shall
provide Xtra with
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any technical information in its possession that is reasonably requested by
Xtra for the purpose of uplinking, downlinking, receiving the Channels in the
Territory, and interfacing the signal of the Channels to the Xtra Service.
3.2 SATELLITE AND UPLINK ARRANGEMENTS. Xtra shall designate the
satellite to be used to transmit the Channels to Europe (the "Designated
Satellite") and shall arrange to uplink the Channels from the delivery point
at DMX's Denver studio to the Designated Satellite.
3.3 CHANGE IN DELIVERY SATELLITE. Xtra shall provide written
notice to DMX of any planned permanent change in the Designated Satellite not
less than ninety (90) days prior to such change, If a temporary change in the
Designated Satellite is required, DMX and Xtra shall each use their reasonable
efforts (including the earliest practicable notice by Xtra to DMX of such
events) to avoid any interruption of or disruption in delivery of the Channels
to the Subscribers. Each Party shall be responsible for its own costs
associated with any permanent or temporary change in the Designated Satellite,
including administrative and technical costs of aligning or setting reception
equipment.
4. LICENSE OF TRADEMARKS
4.1 LICENSE TO TRADEMARKS FOR PROMOTIONAL PURPOSES. DMX hereby
grants to Xtra for the Trademark Term a non-exclusive, non-transferable,
royalty-free license to use the DMX Marks for the distribution, marketing and
promotion of the Channels to Subscribers and potential Subscribers within the
Territory.
4.2 APPROVAL RIGHTS. Xtra shall not use the DMX Marks in
distribution, marketing, promotion or advertising without the prior written
approval of such use by DMX. In its sole discretion, DMX shall be entitled to
provide Xtra with a copy of its corporate guidelines or style guides for proper
usage of the DMX Marks, which guidelines shall be followed by Xtra. In
addition, Xtra agrees to use the DMX Marks on materials of high quality and in
a manner which upholds the image and reputation of DMX.
4.3 PROCEDURE FOR APPROVAL. In the event that Xtra proposes to
produce Promotional Materials, Xtra shall provide samples of such proposed
Promotional Materials to DMX for its approval. Within ten (10) days of receipt
of such proposed Promotional Materials, DMX shall, in writing, either approve
or object to the use of the DMX Marks on such proposed Promotional Materials,
and, in the event of an objection, DMX shall state its reasons for such
objection. In the event that DMX does not object to the use of the DMX Marks
within such ten (10) day period, such use shall be deemed to be approved and
the proposed Promotional Materials may be used. Upon
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request, Xtra shall provide DMX with samples of all approved Promotional
Materials as used by Xtra.
4.4 CONSEQUENCES OF TERMINATION. Upon the earlier of the
expiration of the Trademark Term or the termination of this Agreement
("TRADEMARK TERMINATION DATE"), Xtra shall immediately discontinue all use of
the DMX Marks or marks confusingly similar thereto.
4.5 USE OF "FORMERLY KNOWN AS DMX". For two (2) years after the
earlier of the expiration of the Trademark Term or the date on which Xtra stops
using the DMX Marks for the distribution, marketing and promotion of the
Channels to Subscribers and potential Subscribers within the Territory, Xtra
shall be entitled to refer to the Channels in its promotional materials as
"formerly known as DMX" or "formerly know as Digital Music Express".
5. COSTS AND REPORTING REQUIREMENTS
5.1 PAYMENT OF INCREMENTAL COSTS. Xtra shall pay to DMX the
incremental costs incurred by DMX for the creation and delivery of the Channels
to Xtra ("INCREMENTAL COSTS"), including without limitation, the following
costs and charges:
a. All costs of creation and delivery of the Territory-Specific
Channels made at the request of Xtra; and
b. All costs of modifications to the Channels, Enhancements, or
Maintenance made at the request of Xtra.
On a quarterly basis, DMX shall provide to Xtra an invoice which sets forth the
amount and nature of such Incremental Costs, and within thirty (30) days of
receipt of the invoice, Xtra shall pay to DMX the amount of Incremental Costs
set forth in such invoice. DMX shall have no obligation to create, deliver, or
effect any Territory-Specific Channels, Enhancements, or Maintenance requested
by Xtra.
5.2 INTEREST. In the event that any payments due under Section 5.1
from Xtra are not paid on the due date therefor, there shall be added to the
amount of such payment interest for the period from the due date until payment
is made, at an interest rate equal to the lesser of 10 percent per annum or the
highest legal rate under applicable law.
5.3 WITHHOLDING AND SIMILAR CHARGES. All payments shall be made in
U.S. Dollars and shall be paid in full without setoff or counterclaim and free
and clear of and without any deduction or withholding for or on account of any
taxes, unless required to do so by law. Each party shall make application to
any relevant tax authority for double tax
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relief in respect of amounts payable hereunder if the other party so requests
in writing. Xtra shall be responsible for collecting and paying any income,
franchise, sales, use, occupational, general service or other taxes,
assessments, licenses, or other charges assessed, levied, imposed or collected
by any governmental or political entity, or any agencies or instrumentalities
thereof, with respect to its receipt or distribution of the channels or any
other activity hereunder, except income taxes payable by DMX. Each party shall
provide the other party with any documentation reasonably requested by the
other party to permit the other party to claim a credit or deduction for
foreign taxes paid or born by the other party.
5.4 COST RECORDS AND AUDITS. DMX shall keep accurate and complete
records and accounts of all Incremental Costs. No more than twice in each one
(1) year period during the Term, and for one (1) year following expiration or
termination of this Agreement, on reasonable notice to DMX during normal
business hours, Xtra shall have the right to appoint an internationally
recognized accounting firm to examine and audit such Incremental Cost records.
All costs of conducting such an audit shall be borne by Xtra, unless it is
determined that the Incremental Costs paid to DMX for the period to which such
audit relates have been over-reported by DMX by more than five percent (5%), in
which case DMX shall pay the cost of the audit. All information obtained by
Xtra as a result of such audit shall be treated as Confidential Information in
accordance with the provisions of Section 7 of this Agreement.
6. OWNERSHIP OF INTELLECTUAL PROPERTY
6.1 OWNERSHIP OF CHANNELS. Except as otherwise provided herein,
DMX retains all rights, title and interest in and to the Channels and all
programming produced for or included in the Channels, including worldwide
rights for use in all media.
6.2 OWNERSHIP OF MARKS. Xtra hereby acknowledges the right, title
and interest of DMX and its Affiliates in and to the DMX Marks and the right of
DMX to use and license the use of the DMX Marks. Xtra agrees not to claim any
title to the DMX marks or any right to use the DMX Marks except as permitted by
this Agreement. At no time shall Xtra adopt or use, without the prior written
consent of DMX, any variation of the DMX Marks or any work or xxxx likely to be
similar to, or confused with, the DMX Marks. Any and all goodwill arising from
the use by Xtra of the DMX Marks shall inure solely to the benefit of DMX. As
may be required by law, Xtra will at its expense record this Agreement and
register the DMX Marks with appropriate government authorities in the
Territory, and DMX will cooperate in effecting such recordation and
registration. Xtra shall not assert any claim to the DMX Marks or such
goodwill, either during or after the Term of this Agreement, and Xtra shall not
take any action that could
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be detrimental to the goodwill associated with the DMX Marks.
6.3 COPYRIGHT, MUSIC PERFORMANCE, SOUND RECORDING AND REPRODUCTION
RIGHTS AND FEES. Xtra shall acquire from the owners, composers, licensees
and/or music or copyright rights societies all of the intellectual property
rights necessary for the distribution of the Channels in the Territory,
including copyrights, synchronization of music contained in the Channels and
non-dramatic performing rights, mechanical, performing and author's rights in
each musical composition and sound recording contained in the Channels. Xtra
shall also be responsible for all royalties, fees, and other charges of any
kind with respect to such rights.
7. CONFIDENTIALITY
7.1 NON-DISCLOSURE OF CONFIDENTIAL INFORMATION. Neither Xtra nor
DMX shall disclose to any third party (other than its respective employees or
financial and legal advisers, in their capacity as such) any Confidential
Information concerning the other Party derived in the course of performance
hereunder, including, without limitation, any information relating to
identification of Subscribers or financial material obtained through any audit,
or any of the terms of this Agreement, except:
7.1.1 to the extent necessary to comply with law or the
valid order of a court of competent jurisdiction or a regulatory
authority having jurisdiction, in which event the Party making such
disclosure shall so notify the other Party as promptly as practicable
(and, if possible, prior to making such disclosure) and shall seek
confidential treatment of such information;
7.1.2 as part of its reporting or review procedure to its
parent company, its auditors, attorneys and potential investors
provided, however, that such parent company, auditors, its attorneys
and potential investors agree to be bound by the provisions of the
confidentiality provisions of this Agreement;
7.1.3 in order to enforce its rights pursuant to this
Agreement;
7.1.4 as part of its obligation to make timely disclosure
to public investors in its securities; or
7.1.5 to the extent necessary to engage third parties to
distribute the Channels or manufacture equipment for distribution of
the Channels in accordance with this Agreement, provided that such
third party distributors or manufacturers agree to comply with the
confidentiality provisions of this Agreement.
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8. REPRESENTATIONS AND WARRANTIES
8.1 REPRESENTATIONS OF DMX. DMX hereby represents and warrants to
Xtra that:
8.1.1 DMX is a corporation duly organized and validly
existing under the laws of Delaware.
8.1.2 DMX has the power and authority to enter into this
Agreement and to perform fully its obligations hereunder.
8.1.3 DMX is under no contractual or other legal obligation
which shall in any way interfere with its full, prompt and complete
performance hereunder, except to the extent that any continuing rights
of the Companies under the Former Licenses would interfere with the
rights granted under this Agreement.
8.1.4 Within the United States, neither the Channels nor
any material or programming contained therein shall libel, slander or
defame any person, or violate, infringe upon or give rise to or
advance any claim with respect to any contractual right, common law
right or any other right of any party (including, without limitation,
any copyright, patent, trademark, literary or dramatic right, music
synchronization or performance right or right of privacy or publicity)
or violate any law.
8.2 REPRESENTATIONS OF XTRA. Xtra hereby represents and warrants
to DMX that:
8.2.1 Xtra is a corporation duly organized and validly
existing under the laws of the United Kingdom.
8.2.2 Xtra has the corporate power and authority to enter
into this Agreement and to perform fully its obligations hereunder.
8.2.3 Xtra is under no contractual or other legal
obligation which shall in any way interfere with its full, prompt and
complete performance hereunder.
8.2.4 Xtra shall during the Term have valid licenses or
other authorizations granted by the appropriate governmental
authorities throughout the Territory, if required under applicable
law, to distribute the Channels in accordance with this Agreement, and
will operate such systems throughout the Term in accordance with such
licenses or authorizations.
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9. COMPLIANCE WITH LAWS AND LICENSES
9.1 REGULATORY COMPLIANCE. Xtra shall ensure that the content of
the Xtra Service complies in all aspects with the regulatory requirements in
the Territory or any part thereof. Xtra further undertakes to obtain any
requisite governmental approvals required in the Territory or any part thereof
for the distribution of the Xtra Service.
9.2 PIRACY. Xtra agrees that it will not authorize parties other
than Subscribers to receive the signal of the Channels, nor will it authorize
others to copy, take or otherwise reproduce any part of the Channels without
the prior written consent of DMX. Xtra further agrees to take all reasonable
and practical security measures to prevent the unauthorized or otherwise
unlawful copying, taping or distribution of the Channels by others; provided,
however, security measures that are equivalent to the security measures taken
by DMX in the United States on the same medium to prevent unauthorized or
otherwise unlawful copying, taping or distribution of the Channels by others
shall be deemed to be adequate security measures for purposes of this sentence.
10. INDEMNIFICATION
10.1 INDEMNIFICATION. Each Party shall indemnify and hold the other
Party harmless from and against any and all claims, liabilities, costs and
expenses, including attorneys fees and costs, arising out of any breach by such
Party of any of its respective representations, warranties or covenants herein
contained. In addition, without limiting the foregoing, Xtra shall indemnify
and hold DMX harmless against any and all claims, liabilities, costs and
expenses, including attorneys fees and costs, arising from and in connection
with (i) any non-payment of any amounts payable in respect of copyrights, and
music and sound recording performance and reproduction rights, arising from the
distribution of the Channels in the Territory; (ii) any assertion by any third
party that the distribution, promotion, and other exploitation of the Channels,
and any programming contained therein, violate or infringe upon any rights of
such third party in the Territory, unless such third party is not a creditor
(as of the date of this Agreement), receiver or trustee of the Companies and
the claims of such third party derive from a purported grant of rights by DMX
to the third party that is inconsistent with this Agreement; or (iii) the
failure of Xtra to obtain or maintain proper governmental authority to
distribute the Channels in the Territory.
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10.2 PROCEDURE FOR INDEMNIFICATION. The Party entitled to
indemnification hereunder (the "INDEMNIFIED PARTY") shall notify the other
Party hereto (the "INDEMNIFYING PARTY") in writing of the claim or action for
which such indemnity applies. The Indemnifying Party shall undertake the
defense of any such claim or action and permit the Indemnified Party to
participate therein at the Indemnified Party's own expense. The settlement of
any such claim or action by an Indemnified Party, without the Indemnifying
Party's prior written consent, shall release the Indemnifying Party from its
obligations hereunder with respect to such claim or action so settled. The
Indemnifying Party shall not settle or otherwise dispose of any claim without
the prior written consent of the Indemnified Party, which consent shall not be
unreasonably withheld.
11. TERM AND TERMINATION
11.1 TERM. Unless terminated earlier pursuant to the provisions of
this Agreement, the Term of this Agreement shall be a period of five (5) years
from the Closing Date (a defined in the Subscription Agreement).
11.2 TERMINATION FOR BREACH. This Agreement may be terminated by a
party (the "NOTICING PARTY") as follows:
11.2.1 thirty (30) days following written notice by the
Noticing Party to the other Party (the "NOTICED PARTY") of any
material inaccuracy of a representation made by the Noticed Party
herein or in the Subscription Agreement or of a material breach by the
Noticed Party of any of its obligations hereunder or under the
Subscription Agreement, if such misrepresentation or breach is not
cured within the thirty (30) period following such notice;
11.2.2 immediately upon written notice by the Noticing Party
to the Noticed Party if the Noticed Party has made a voluntary
petition for protection under the bankruptcy laws, or if the Noticed
Party has taken any similar action in consequence of debt;
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11.2.3 thirty (30) days following written notice by the
Noticing Party to the Noticed Party if the Noticed Party has been the
subject of the filing of an involuntary petition in bankruptcy, or if
any distress or attachment is levied or any receiver is appointed in
respect of the business or a substantial part of the property or
assets of the Noticed Party, unless such petition, distress,
attachment, or receiver is dismissed within such thirty-day period; or
11.2.4 upon thirty (30) days following written notice by
the Noticing Party to the Noticed Party if any event of Force Majeure
shall continue for a period of sixty (60) consecutive days.
The exercise of any right to termination under this Section 11.2 is not an
exclusive remedy, and the Noticing Party may in addition exercise any other
remedy available to it in law or equity.
11.3 EFFECT OF TERMINATION. The expiration or termination of this
Agreement for whatever reason shall not affect any rights of either Party which
may have accrued prior to such expiration or termination. Subject to the
foregoing, neither party shall by reason of the expiration or termination of
this Agreement be liable to the other for compensation or damage on account of
the loss of present or prospective profits on distribution or anticipated
distribution of the Channels, or expenditures, investments or commitments made
in connection therewith. Upon the expiration or termination of this Agreement,
Xtra shall promptly pay all outstanding and/or accrued Incremental Costs to DMX
and return to DMX, or otherwise dispose of as DMX may reasonably instruct, all
tapes and materials in relation to the Channels, programming contained therein,
advertisements or Promotional Materials, and other materials, documents and
papers provided to Xtra and relating to the Channels which Xtra may have in its
possession or under its control.
12. MISCELLANEOUS
12.1 NOTICES. Any notice in connection with this Agreement shall be
in writing and shall be delivered by air courier or by facsimile to the
addresses or facsimile numbers given below. Notice given by air courier shall
be deemed given when recorded on the records of the air courier as received by
the receiving party. Notice given by facsimile shall be deemed given upon
transmission if on a business day and during business hours in the country of
receipt, otherwise notice shall be deemed to have been given at 9:00 a.m. on
the next business day in the country of receipt.
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If to DMX:
DMX Inc.
00000 Xxxx Xxxxxxx Xxxx., Xxxxx 0000
Xxx Xxxxxxx, Xxxxxxxxxx 00000
If to Xtra:
Xtra Music, Limited
x/x Xxxxxx xxx Xx.
Xxxxxxxx Xxxxxx
Xxxxxxxxxx
Xxxxxxxxxxxxxxx XX00 0XX
Attn: Xxxxxxx Xxxxxxx and Xxxxxxx Xxxxxx
with a copy to:
Xxxxxx X. Xxxxxxxxxx
000 Xxxx Xxxx
Xxxxx Xxxxxxx, XX 00000
Either party may change its address by giving notice to the other in the manner
set forth above.
12.2 GOVERNING LAW; JURISDICTION AND VENUE. This Agreement
has been negotiated and entered into in the State of California and this
Agreement shall be governed by and construed in accordance with the laws of the
State of California, without giving effect to its conflict of laws rules. The
Parties hereby irrevocably agree that any legal action or proceedings with
respect to this Agreement may be brought in the courts of the State of
California, or in any United States District Court of California and by
execution and delivery of this Agreement, each party irrevocably submits to
each such jurisdiction and irrevocably waives any and all objections which it
may have as to venue in any of the above courts.
12.3 WAIVER OF JURY TRIAL. EACH PARTY HEREBY AGREES TO
WAIVE ITS RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY DEALINGS AMONG THE PARTIES RELATING TO THE
SUBJECT MATTER OF THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT. The scope of
this waiver is intended to be all encompassing of any and all disputes that may
be filed in any court and that relate to the subject matter of this
transaction, including contract claims, tort claims, breach of duty claims, and
all other common law and statutory claims. Each Party acknowledges that this
waiver is a material inducement to enter into a business relationship, that
each other Party has already relied on this waiver in entering into this
Agreement, and will continue to rely on this waiver in any future dealings.
Each Party further warrants and represents that it has reviewed this waiver
with its legal counsel, and that it knowingly and
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voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
12.4 ASSIGNMENT. The right and obligations of the Parties
may be assigned in whole or in part, voluntarily or by operation of law,
without the prior written consent of the other Party if such assignment is to
an Affiliate of the assigning Party. Each Party shall notify the other within
seven (7) days of any such assignment. In addition, DMX shall be entitled to
assign its rights and obligations under this Agreement in connection with a
merger or acquisition transaction (in whatever form) between DMX and a
subsidiary of Tele-Communications, Inc. Except as expressly provided, neither
Party may assign or transfer this Agreement to any third party without the
consent of the other Party, which consent shall not be unreasonably withheld.
12.5 NO PARTNERSHIP. Nothing contained herein shall be
deemed to create, and the Parties do not intend to create, any relationship of
partners or joint venturers as between Xtra and DMX with respect to this
Agreement. Neither Xtra nor DMX shall be, or shall hold itself out to be, the
agent of the other under this Agreement. No Subscriber shall be deemed to have
any privity of contract or direct contractual or other relationship with DMX by
virtue of this Agreement or DMX's delivery of the Channels to Xtra hereunder.
12.6 SEVERABILITY. If at any time, any provision of this
Agreement is, or becomes under any law, or is found by a court of competent
jurisdiction to be illegal, void, invalid, prohibited or unenforceable, then
such provision shall be ineffective to the extent of such illegality, voidness,
invalidity, prohibition or unenforceability and the remaining provisions of
this Agreement shall remain in full force and effect. In such event, the
Parties shall thereafter use their respective best endeavors to negotiate and
agree upon a substitute provision which is valid and enforceable and achieves
to the greatest extent the legal and commercial objectives of the prohibited
provision.
12.7 CAPTIONS AND HEADINGS. The captions and headings
herein are included for convenience only and shall not be considered a part of
or used to construe this Agreement.
12.8 COSTS OF PREPARATION. Each of the Parties herein
undertakes to bear its own costs in relation to and arising from the
preparation and execution of this Agreement.
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12.9 ATTORNEYS' FEES AND EXPENSES. Each Party hereby
agrees to be responsible for and to pay upon demand all costs and expenses,
including, without limitation, reasonable attorneys' fees incurred by another
Party in connection with any dispute between such parties concerning this
Agreement and the transactions contemplated herein in which the latter Party
prevails (whether or not suit is filed).
12.10 SUCCESSORS AND PERMITTED ASSIGNS. This Agreement
shall be binding upon and shall inure to the benefit of the Parties and their
respective successors, assigns and permitted assignees.
12.11 FORCE MAJEURE. Neither DMX nor Xtra shall be liable
to the other for any event of Force Majeure. In the event of any such delay,
pre-emption or failure due to Force Majeure, the Party whose performance is
affected shall promptly notify the other Party of the nature and anticipated
length of continuance of such Force Majeure, and during such period both
Parties shall be excused from performance.
12.12 SURVIVAL. Upon termination of this Agreement for any
reason, Sections 4.4, 6.1, 6.2, 7.1, 10.1, 10.2, 12.1, 12.2, 12.3, 12.9, and
12.12 (including any definitions that are necessary to the operation of such
sections) shall continue to remain in full force and effect.
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12.13 ENTIRE AGREEMENT. This Agreement (together with all
Schedules attached hereto, which are incorporated herein by this reference) and
the Subscription Agreement (and all documents delivered pursuant thereto)
constitute the whole agreement between the Parties and it is expressly declared
that no variations hereof shall be effective unless made in writing and signed
by both Parties. All prior terms sheets and other correspondence between the
parties shall be deemed to have lapsed upon the signing of this Agreement.
IN WITNESS WHEREOF, the parties hereto have entered into this
Agreement as of the date first set forth above.
DMX Inc.
By: /s/ XXXXXX XXXXX XXX
-------------------------
Its: CFO
------------------------
Xtra Music, Limited
By: /s/ XXXXXX X. XXXXXXXXXX
-------------------------
Its:
------------------------
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EXHIBIT A
TRADEMARKS
O ICT
O INTERNATIONAL CABLECASTING TECHNOLOGIES INC.
O ICT & DESIGN (FORMER CORPORATE LOGO)
O DMX DJ
O DMX
O DIGITAL MUSIC EXPRESS
O DMX & DESIGN:
[DIGITAL MUSIC EXPRESS LOGO]
O DMX WORLD LOGO:
[LOGO]
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EXHIBIT B
TERRITORY
1. EUROPE: Albania, Andorra, Austria, Belarus, Belgium, Bosnia
and Herzegovina, Bulgaria, Croatia, the Czech Republic, Denmark, Estonia,
Finland, France, Germany, Greece, Hungary, Iceland, Ireland, Italy, Latvia,
Liechtenstein, Lithuania, Luxembourg, Macedonia, Malta, Moldova, Monaco,
Xxxxxxxxxxx, Xxxxxx, Xxxxxx, Xxxxxxxx, Xxxxxxx, Xxxxxx, Xxx Xxxxxx, Xxxxxx &
Montenegro, Slovakia, Slovenia, Spain, Sweden, Switzerland, Turkey, Ukraine,
United Kingdom, Vatican City, Yugoslavia, and any political entity whose borders
are enclosed entirely within the countries listed in this paragraph 1.
2. MIDDLE EAST: Bahrain, Cyprus, Egypt, Iran, Iraq, Israel, Jordan,
Kuwait, Lebanon, Oman, Palestine, Qatar, Saudi Arabia, Syria, United Arab
Emirates, Yemen, and any political entity whose borders are enclosed entirely
within the countries listed in this paragraph 2.
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