FORM OF
AMENDED AND RESTATED PROGRAM LICENSE AGREEMENT
This AMENDED AND RESTATED PROGRAM LICENSE AGREEMENT is entered into as of _______ by and between DENNEVAR B.V., a Netherlands corporation, (hereinafter "Licensor") and THE UNIVISION NETWORK LIMITED PARTNERSHIP, a Delaware limited partnership ("Licensee"), and amends and restates that certain PROGRAM LICENSE AGREEMENT made as of the 17th day of December, 1992 by and between Licensor and Licensee.
WHEREAS, Licensor has or will have rights in the United States of America, including all territories and possessions thereof other than
Puerto Rico (the "Territory"), to license certain television programs in the Spanish language or with Spanish subtitles produced by and to be produced by CORPORACION VENEZOLANA DE TELEVISION, C.A. (VENEVISION) ("CVT") and other entities controlled by CVT (CVT and all of the companies it controls, and Licensor being hereinafter referred to collectively as "Venevision").
WHEREAS, Licensee operates the Univision Spanish language television network and the Galavision Spanish language television network of affiliated television broadcast stations and cable television systems (such networks being hereinafter referred to as the "Networks" and those television broadcast stations affiliated with such Networks that are now or hereafter directly or indirectly majority owned and operated by Univision Communications Inc. ("UCI") or a direct or indirect subsidiary of UCI or with respect to which UCI or a direct or indirect subsidiary of UCI has the right to designate a majority of the board or similar governing body, and in each case, which broadcast in the Spanish language format being hereinafter referred to as the "Stations") and desires to acquire the right to broadcast certain of the programs produced, to be produced or otherwise marketed by Televisa over the Networks in the Territory and Licensor is willing to grant such a license upon the terms, provisions and conditions herein set forth.
WHEREAS, Univisa, Inc. ("Univisa") is simultaneously herewith entering into an Amended and Restated Program License Agreement, dated as of the date hereof (the "Univisa Agreement"), with the Licensee to license certain television programming for broadcast over the Networks.
NOW, THEREFORE, in consideration of the mutual promises and covenants herein contained, the parties hereto agree as follows:
1. Right of First Offer of Programming.
1.1 Pursuant to the terms and conditions hereof, Licensor hereby grants Licensee the option to obtain an exclusive license for the broadcast over the Networks in the Territory of all Programs (as hereinafter defined). The option may be exercised as follows:
(a) First, Licensee will have a first option to accept for exclusive license in the Territory, subject to all the other terms and conditions of this Agreement: (i) Programs in an amount that, when aggregated with Programs accepted pursuant to Section 1.1(a) of the Univisa Agreement, will be sufficient to fill 18 hours of programming per day in aggregate for the two Networks combined, and (ii) any news Programs.
(b) Second, Licensee will have a first option, subject to all the other terms and conditions of this Agreement, to accept for exclusive license in the Territory, any Programs in an amount which, when aggregated with the amount of Programs accepted pursuant to paragraph (a) above, will be sufficient to satisfy the representation and warranty included in Section 7.3 hereof.
1.2 For purposes of this Agreement only:
(a) "Programs" means (i) programs initially produced in the Spanish language or programs with Spanish subtitles produced by third parties or co- produced by Venevision with third parties to which Venevision owns sole television broadcast rights in the Territory (and which is not a Co-Produced Program (as defined below)); (ii) all television programs in the Spanish language or programs with Spanish subtitles, previously produced directly or indirectly by or for Venevision and to be produced directly or indirectly by or for Venevision for broadcast at any time to which Venevision or Licensor owns television broadcast rights in the Territory and which are available for broadcast including, without limitation, in the following categories: novelas, musicals, variety shows, situation comedies, game shows, talk shows, children's shows, news shows, cultural and educational programs, and sports programs; and (iii) movies produced by Venevision and for which Venevision or Licensor owns the television broadcast rights in the Territory, from and after the time that such movies become available for free television broadcast in the Territory. Each Program shall be available for license to Licensee in the Territory pursuant to the terms of this Agreement upon the first to occur of (i) the date when such Program is initially broadcast by Venevision or (ii) the date when such Program is first made available for broadcast by any third party. Except as provided in the following paragraph, if Licensor or Venevision shall produce directly or indirectly any Spanish Language or Spanish subtitled programming for broadcast in the Territory it shall be deemed a Program subject to the terms and conditions of this Agreement.
The term "Programs" does not include Special Programs (other than Venevision Produced U.S. Special Programs, as defined below), Co-Produced Programs or Default Programs (each as defined below) or local news or public affairs programs (it being understood that all such local programs will be produced or acquired by Licensee or its affiliated stations). "Co-Produced Programs" means programs originally produced for
broadcast in the Spanish language or with Spanish subtitles, previously produced, or to be produced, by Venevision for broadcast pursuant to co-production agreements with unaffiliated third parties or produced by unaffiliated third parties (in each case, other than any broadcaster in and to the Territory) (i) under which Venevision does not own the right to permit the broadcast of such program in the Territory and/or (ii) under which Venevision is required to share with such third parties the revenue derived from the broadcast of such program in the Territory. No program that would otherwise be a Program under Section 1.2(a)(ii) shall become a Co-Produced Program solely because Venevision or Licensor licenses or sells distribution rights in the Territory prior to or during production of such program and neither Venevision nor Licensor shall enter into any agreement to the contrary. In order for a program to be a Co-Produced Program, some material underlying property right of such program must be provided by such unaffiliated third party and such unaffiliated third party must participate in the development and production of the Program in exchange for such third party's distribution rights in the Territory or participation in distribution revenues from the Territory. Nothing contained in this Agreement shall prevent Licensor or Venevision from licensing broadcast rights (in exchange for cash or in-kind services or property other than Programs) for territories other than the Territory to programs initially produced in the Spanish language or programs with Spanish language subtitles that are developed and produced in the Territory by unaffiliated third party producers located in the Territory, including broadcasters, provided that neither Licensor nor Venevision has participated in any way in the development or production of any such program. Venevision agrees that it will use its good faith efforts not to structure agreements with respect to programs in a manner intended to cause such programs not to be considered Programs hereunder.
(b) "broadcast" or "network broadcast" means all electronic forms or other means now known or hereafter developed of transmission and re-transmission, including but not limited to over-the-air television, cable television, low power television, multi-point distribution systems, wire, fiber optics, microwave, and satellite, except for purposes of delivery of the Programs pursuant to Section 4.
(c) "Affiliate" of a person means any person that directly or indirectly controls, is controlled by, or is under common control with the person in question. For the purposes of this definition, "control", when used with respect to any person, means the power to direct the management and policies of such person, directly or indirectly, whether through the ownership of voting securities, by contract or otherwise. Affiliate shall not mean any television station that has entered into an affiliation agreement with the Networks but is otherwise not an Affiliate of UCI any Person that controls CVT or any person under common control with, but not directly or indirectly controlled by, CVT.
1.3 Licensor and its Affiliates shall have the right and ability to, and to permit others to: (i) transmit or re-transmit in any electronic form or other means, from any television station in Venezuela, or via satellite which receives its signal from any earth station or other facility in Venezuela, any Programs which may also be covered by
this Agreement, notwithstanding the fact that such transmissions or re-transmissions may be viewed in the Territory, provided that neither Licensor nor its Affiliates consent to the re-transmission of such Programs by any television station in the Territory or by any cable system in the Territory; and (ii) market and promote and otherwise generate revenues (including, but not limited to the sale of advertising time) attributable to the ability of viewers in the Territory to receive such Programs.
2. Notification, Acceptance and Licensing of Programming. Not less than once in each calendar quarter during the term of this Agreement, Licensor will deliver a written notice (an "Availability Notice") to Licensee specifying all Programs which (a) have become available for license by Licensee since the delivery of the preceding Availability Notice or (b) may no longer be available to Licensee on an exclusive basis. Such notice shall be accompanied, if practicable, by a video tape pilot or representative episode of each of the new Programs (except for live Programs). If Licensee desires to license any Programs, it must notify Licensor of its acceptance in writing (an "Acceptance") within thirty days of receipt of the Availability Notice. Such Acceptance shall specify the name of the Accepted Program, the name of the Network on which it is to be broadcast, the date and time period in which Licensee intends to commence the broadcast of the Accepted Program (which date shall be not more than 180 days from the date of Acceptance with respect to Programs other than novelas and shall be not more than 270 days from the date of Acceptance with respect to novelas), and such other information as may reasonably be requested by Licensor. An Acceptance shall constitute the exercise by Licensee of its option for the Program(s) accepted and upon receipt by Licensor of such Acceptance, the Program(s) covered by each such Acceptance shall without further action be automatically licensed to Licensee on the terms and conditions of this Agreement. Subject to the terms and conditions set forth herein, Licensee shall have exclusivity in the carriage of all accepted Programs ("Accepted Programs") for broadcast in the Territory from the date of acceptance to the conclusion of the applicable Broadcast Period. If no such Acceptance is received with respect to any or all available Programs, Licensor shall be free to license all such unaccepted Programs ("Unaccepted Programs") to others in the Territory for not more than one run over a period of one year (which license, in the case of novelas, may also provide for one rerun), subject to Licensee's right of first refusal described in Section 3; provided, however, that during the Broadcast Period of a Program licensed by Licensee, Licensor shall not license any other person or entity to broadcast in the Territory reruns of such Program or other Programs of the same series as such Program.
In order to avoid the "warehousing" of Programs by the Licensee, (A) Licensee shall not issue Acceptance Notices without specifying the intended broadcast commencement date and time period; however, Licensee shall have the right at any time for any bona fide reason, on not less than 10 days' written notice to Licensor at least 60 days prior to the intended broadcast date, (i) to switch dates and times among previously Accepted Programs or among previously Accepted Programs and programs acquired from another source, provided that after giving effect to such switch all other requirements with
respect to broadcast and scheduling of Programs contained in this Agreement continue to be satisfied and/or (ii) to rescind Acceptance with respect to any Program, and to issue an Acceptance Notice with respect to a substitute Program, provided that (x) the substitute Program shall be broadcast in the time slot originally reserved for the rescinded Program and (y) the rescinded Program shall thereafter constitute a Default Program, (B) Licensee shall not issue Acceptance Notices with respect to more Programs than it is capable of airing over the Networks; and (C) Licensee shall not broadcast any First-Run Program (other than news) on either of the Networks (X) between the hours of 1:00 a.m. and 9:00 a.m. unless Licensee can demonstrate that it is commercially reasonable to broadcast such program during such period or (Y) during any other time period during which Licensee cannot reasonably expect the 70% broadcast coverage requirement described in the following paragraph to be satisfied.
Subject to the preceding paragraph, with respect to any Accepted Program, Licensee must commence the broadcast of the Program on one of the Networks over at least 70% of such Network's coverage (as determined by the number of Hispanic television households potentially reached by the applicable Network) within 180 days following notice of its Acceptance (except for novelas where the time for commencement may be extended for an additional 90 days because of scheduling problems) and shall continue to broadcast the Program without substantial interruption over such minimum of 70% Network coverage until the conclusion of the Broadcast Period (as defined below). Should Licensee fail to comply with the broadcast commencement, 70% coverage and continuous broadcast provisions of this paragraph, Licensee's license with respect to the Program (a "Default Program") shall be terminated 10 days following written notice of non-compliance unless Licensee demonstrates compliance or excusable non-compliance with such provisions. In the event of termination, the Default Program shall be subject to re-license by Licensor to others at any time or from time to time (without any right of first refusal or other right applicable to Licensee, whether pursuant to Section 3 or otherwise). The parties acknowledge that this provision is designed to avoid "warehousing" of product by Licensee and that in the event Licensee breaches the provisions of this paragraph, Licensor's damages are incapable of calculation and the remedies set forth herein are appropriate under the circumstances.
For purposes of this Agreement only:
(a) "Broadcast Period" means (i) for novelas or other Programs with a plot line continuing through more than one episode, the time necessary to broadcast all episodes on a continuing basis without substantial interruption and (ii) for all other programs (excluding one-program shows), (x) for weekly programs, the time period necessary to broadcast 26 episodes of the Program without substantial interruption, which under normal circumstances is expected to be 26 continuous weeks and (y) for daily programs (Monday through Friday), 26 weeks.
(b) "without substantial interruption" means that the Programs will be scheduled and run on a continuing periodic basis except for occasional network
preemption to accommodate one-time specials or programs which, because of their nature or timeliness or because of FCC Rules, must in Licensee's reasonable judgment be broadcast in lieu of the regularly scheduled Program.
3. Right of First Refusal. If any other person or entity wishes to accept for broadcast in the Territory any Unaccepted Programs which Licensor has offered to it pursuant to Section 2, Licensor shall send a written notice (a "Second Chance Notice") to Licensee specifying the name of any such Programs and the license terms offered by such person or entity that wishes to accept such Unaccepted Programs. Licensee shall have a right of first refusal, good for three business days from receipt of the Second Chance Notice to acquire such Unaccepted Program, subject to the same conditions offered by such other person or entity, for the Program Royalty (as defined in Section 5) plus the amount, if any, by which the license fee offered by such other person or entity exceeds the Program Royalty attributable to combined net time sales for the time slot in which such Program is broadcast. Any such Unaccepted Programs which are not accepted in writing by Licensee within three business days of receiving a Second Chance Notice may be licensed to such other person or entity. Rights to exploit Unaccepted Programs will be granted to other persons or entities for not more than one run over a period of one year (provided that, in the case of novelas, such rights may include the right to one rerun), and if the same Program is offered thereafter in the Territory, it will once again be offered to Licensee pursuant to Section 1 hereof. All episodes of a novela which are to be shown within one year from the showing of the first episode shall be deemed to be the same Program for the purposes of the requirement to offer all programming first to Licensee.
4. Delivery, Expenses And Use Of Programs.
4.1 Following Licensee's acceptance of Programs pursuant to Sections 2 or 3 of this Agreement, Licensor shall deliver to Licensee, at Licensee's expense, and in accordance with Licensee's reasonable and customary instructions, a visual and aural reproduction of each such Program or Program episode via satellite or video tape suitable for broadcast and formatted for U.S. broadcast in accordance with past practices, at least ten days prior to Licensee's scheduled broadcast, except for live broadcasts or as otherwise agreed by the parties. Programs will be deemed delivered by Licensor when transmitted to the satellite when actually received if shipped by freight, or when made available through permission to re-transmit the signal of an affiliate of Licensee.
4.2 Licensee agrees that as soon as practicable following receipt of each satellite transmission or video tape delivery, it will examine it to determine whether it is physically suitable for broadcasting and notify Licensor immediately upon detecting any defect rendering such copy unsuitable for telecast. In such cases, Licensor shall promptly deliver at its own expense either a physically suitable tape or (except in the case of novelas) a tape of another Program in the same series, subject to verification of the defect.
4.3 Licensee agrees to return each video tape delivered by Licensor to Licensor on the reels and in the containers in which it was shipped, in the same condition as received, reasonable wear and tear through proper use excepted, as soon as practicable after telecast. Licensee shall pay all costs of returning the tapes to Licensor. Should Licensor request that the video tape be sent to a location other than Licensor's warehouse, Licensor will bear responsibility for shipping costs above those which would have been applicable for shipping the video tape to Licensor's warehouse.
4.4 The video tapes shall at all times remain the property of Licensor subject to Licensee's rights as herein provided. The risk of loss, damage, destruction or disappearance of any tape shall be borne by Licensee from the time of delivery to Licensee until the return thereof to Licensor or Licensor's designee and as to any tape or part thereof lost, stolen, destroyed or damaged after delivery to Licensee and before the return thereof, Licensee shall pay Licensor the cost of replacement thereof, which payment shall be limited to the cost of replacing the raw video tape.
4.5 Licensee will not, and will not authorize others to copy, duplicate or re-license any Program unless necessary for Licensee's own network broadcast. Any duplicate or copy of any part of the Program (including trailers) made by Licensee for its own purposes will be erased following the broadcast of the Program. Upon receipt of written request from Licensor, an officer of Licensee shall certify in writing the destruction of all such copies.
4.6 Licensor will furnish to Licensee glossy prints of still photos, synopses, casts and all other promotional material for the promotion and exploitation of the Programs, if available. Licensor grants to Licensee the right to use and license others to use Licensor's name and, unless Licensee is advised by Licensor that the rights of Licensor are limited (in which case, to the extent not limited), to use and license others to use the name and likeness of, and biographical material concerning, each star, featured performer, writer, director and producer in the Programs and the titles of each program and fictitious persons and locales therein, for advertising and publicity, of the Programs, and any broadcaster or sponsor thereof, but not for direct endorsement of any product or service, provided that any such use will protect the copyrights of Licensor. To the extent available to Licensor after reasonable efforts, Licensor will furnish Licensee with music cue sheets for the Programs and the information necessary for administration of rights payments and compliance with Section 507 of the Federal Communications Act of 1934, as amended concerning broadcast matter and disclosures required thereunder, insofar as that Section applies to persons furnishing program material for television broadcasting ("Section 507"). Subject to the foregoing and subject to Licensor's reasonable prior approval, Licensee shall have the right to produce its own promotional material for or from the Programs.
4.7 Licensee agrees to include in its broadcast of Accepted Programs all copyright notices and all credits made part of each Accepted Program including but not limited to stars, directors, producers and writers. Licensee shall exhibit
the Accepted Program as delivered in the Spanish language or with Spanish subtitles and no change, alteration or addition may be made to any Program without Licensor's consent except as may be necessary for the insertion of commercials during natural breaks in the Program, or except as may be necessary to comply with Licensee's broadcast standards and practices and applicable government rules and regulations.
4.8 Subject to Section 7.1 and 7.3 and Licensee's remedies for a breach thereof, Licensor may, at its sole and absolute discretion, withdraw any Program and terminate any license with respect to such Program if Licensor reasonably determines that the broadcast thereof is likely to: (i) infringe the rights of third parties, (ii) violate any law, court order, governmental regulation or ruling of any governmental agency, (iii) otherwise subject the Licensor to any material liability. In addition, Licensor reserves the right to withdraw any Program prior to the conclusion of the applicable Broadcast Period if, for any reason, the program is no longer being produced by or available to Venevision or Licensor. In the event of any such withdrawal or termination, Licensor shall give Licensee as much notice as possible, and the parties shall have no obligations to each other with regard to Programs not produced, subject to Section 7.1 and 7.3 and Licensee's remedies for a breach thereof. No Program that is withdrawn pursuant to this Section 4.8 shall be relicensed to a third party in the Territory without being first offered to Licensee pursuant to Section 1.
4.9 The license granted to Licensee with respect to each Accepted Program (other than novelas) shall be for one Network broadcast of each Program or Program episode, subject only to FCC rules and regulations and to tape delay in certain of Licensee's affiliated outlets to accommodate time zone differences. In addition, within 24 hours of the original broadcast, Licensee may broadcast a repeat of any Program, free of the restrictions contained herein regarding Network coverage. Except as herein provided, without the express permission of Licensor, not to be unreasonably withheld, no Program or Program episode may be rerun during any Broadcast Period.
Notwithstanding the prohibition on reruns during a Broadcast Period, Licensee will have the option at the end of any Broadcast Period to license one (1) rerun of each novela (herein "Protected Rerun"). Such option must be exercised in writing not later than thirty (30) days before the end of the Broadcast Period for each such novela. The terms of such Protected Rerun license shall be the same as for the original license, except that the time during which the broadcast must commence will be one (1) year instead of one hundred and eighty (180) days.
5. Royalties.
5.1 Licensee shall pay Licensor a royalty in cash for the Programs offered to it (the "Program Royalty") in an amount equal to a percentage of "combined net time sales" as Licensor and Televisa shall from time to time designate in a joint written notice to Licensee (which designation shall not be made more frequently than annually); provided that aggregate percentage royalties paid under this Section 5 and
Section 5 of the Televisa Agreement shall not exceed 11% of combined net time sales for the period commencing on the date hereof and ending on December 31, 1996, 13.5% of combined net time sales for the period commencing on January 1, 1997 and ending on December 31, 1997, and 15% of combined net time sales for all periods commencing on or after January 1, 1998 until the termination of this Agreement. For purposes of this Agreement, "combined net time sales" shall mean all time sales of the Stations and the Networks, including barter and trade and television subscription revenue (including, without limitation, satellite subscription revenue), less advertising commissions, Special Event Revenue (as defined below), music license fees, outside affiliate compensation, and taxes (other than withholding taxes) paid by Licensee pursuant to Section 5.3 hereof and similar taxes paid by the Stations calculated in accordance with U.S. generally accepted accounting principles ("GAAP"). Notwithstanding the foregoing, no revenues of the Galavision Network received prior to the closing of the acquisition of the assets of the Galavision Network by Licensee pursuant to the Galavision Network Option Agreement between Univisa and Licensee entered into as of December 17, 1992 shall be included in combined net times sales for purposes of computing the Program Royalty. Unless otherwise agreed in writing between the parties, barter and trade sales shall be valued at the fair market value of the goods or services received by the Licensee or the Stations.
5.2 Program Royalties shall be paid currently on a monthly basis on the twelfth business day after the end of each month in a single payment to Licensor based upon the parties' good faith best estimate at such time of the amounts accrued. Appropriate adjustment (the "Adjustment") will be made to Program Royalties on a quarterly basis within 45 days after the end of each quarter, and the full amount thereof shall be paid or credited, as the case may be, with the next monthly payment of Program Royalties for any difference between the amounts so paid and those finally determined to have accrued. In all cases, the calculation of the Adjustment will be made as promptly as practicable by Licensee, and in the event of any disputes the determination shall be made by a nationally recognized independent certified public accounting firm mutually selected by Licensor and Licensee (or, if they fail to designate such a firm within 10 days after written notice of a dispute, by such firm designated by the President of the American Arbitration Association (or his designee)), whose determination will be final and binding upon the parties. The fees and expenses of such firm shall be paid one-half by Licensor and one-half by Licensee, unless ...