1
EXHIBIT 10.11
Services Agreement
-between-
Group W Network Services
-and-
Recovery Network, Inc.
dated as of April 1, 1998
2
TABLE OF CONTENTS
1. Services. ..............................................................1
2. Additional Services ....................................................1
3. Term ...................................................................1
4. Charges and Payment ....................................................2
5. Termination ............................................................2
6. Representations and Warranties .........................................3
7. Indemnification ........................................................5
8. Notices ................................................................5
9. Confidentiality; Public Announcement ...................................6
10. Employee Matters........................................................7
11. Subject to Law..........................................................8
12. Limitation of Liability.................................................8
13. Assignment..............................................................8
14. Force Majeure...........................................................8
15. General.................................................................9
16. Certain Definitions....................................................10
Exhibit 1 - Master Control/Playback Services...........................12
Exhibit 2 - Traffic Services...........................................15
Exhibit 3 - Compressed Satellite Space Segment, Uplink and Encryption
Services ..................................................17
Exhibit 4 - Consumable Goods...........................................19
Exhibit 5 - Service Fees...............................................20
Exhibit 6 - New York-Stamford Interconnect/Earth Station Facilities....21
-i-
3
SERVICES AGREEMENT ("Agreement") dated as of April 1, 1998 (the
"Effective Date") by and between Group W Network Services, a division of Group W
Broadcasting, Inc., a Delaware corporation, with offices at 000 Xxxxxx Xxxxx,
Xxxxxxxx, Xxxxxxxxxxx 00000 ("GWNS") and Recovery Network, Inc., a Colorado
corporation with offices at 0000 0xx Xxxxxx, Xxxxx 000, Xxxxx Xxxxxx, Xxxxxxxxxx
00000 ("Customer").
WHEREAS, GWNS provides traffic, playback, uplink and compressed
satellite space segment services, facilities and equipment to support television
programming; and
WHEREAS, Customer owns the "Recovery Network" program service
("Network"); and
WHEREAS, Customer desires to purchase, and GWNS desires to provide
Customer, certain Services to be used in Customer's operation of Network;
NOW, THEREFORE, GWNS and Customer hereby agree as follows:
1. Services.
Subject to all of the terms and conditions of this Agreement, GWNS
agrees to provide for Customer, and Customer agrees to obtain from GWNS,
the following services ("Services") 24 hours per day, 7 days per week:
1.1. Master Control/Playback Services as described in Exhibit 1
hereto.
1.2. Traffic Services as described in Exhibit 2 hereto.
1.3. Compressed Satellite Space Segment, Uplink and Encryption
Services as described in Exhibit 3 hereto.
2. Additional Services, Consumable Goods.
In addition to the Services set forth in Section 1, GWNS shall provide
such other services, facilities and equipment as may from time to time
be agreed upon between Customer and GWNS ("Additional Services").
Consumables may be purchased on a non-exclusive basis as described in
Exhibit 4 hereto.
3. Term.
3.1. This Agreement shall be effective and enforceable as of the
Effective Date and shall continue in full force and effect for a
period of five (5) years from the Commencement Date (as defined
below) (the "Term"), unless the Agreement is sooner terminated
or extended in accordance
-1-
4
with its terms. The Services shall commence at the earliest on
July 1, 1998 and at the latest on September 1, 1998 (the
"Commencement Date"). Customer shall select the Commencement
Date and notify GWNS in writing forty-five (45) days in advance
of the Commencement Date it selects. If Customer does not select
a Commencement Date, then for purposes of payment the
Commencement Date shall be deemed to be September 1, 1998.
3.2. GWNS shall have a right of first negotiation and a right to
match any third party offer to provide services similar to the
Services for the Network and Customer's other networks, if any,
upon expiration of the Term.
4. Charges and Payment.
4.1. In consideration of the Services to be performed by GWNS during
the Term, from the Commencement Date Customer shall pay to GWNS
the amounts described in Exhibit 5 hereto, as adjusted in
accordance with Section 4.2. All one-time, monthly and other
fees shall be due and payable thirty (30) days in advance,
except to the extent indicated otherwise in this Agreement.
4.2. Past due payments shall incur a late payment charge of 1.5%
thereof per month (or the maximum permitted by law, if less).
Any costs, including legal fees and disbursements, incurred by
GWNS in enforcing this Agreement shall be paid by Customer.
Billing disputes shall be submitted in writing to GWNS (to the
attention of "Vice President, Finance - Group W Network
Services") within thirty (30) days of Customer's receipt of the
applicable invoice.
5. Termination.
5.1. Either party may terminate this Agreement in whole but not in
part (a) upon at least thirty (30) days' prior written notice by
the terminating party specifying that the other party has
breached any of its material obligations or any representation
or warranty hereunder, if such breach is not cured within thirty
(30) days after delivery of such notice or (b) upon prior
written notice by the terminating party if (i) the other party
files a petition in bankruptcy or if such a petition is filed
against such party, (ii) the other party takes advantage of any
insolvency law, (iii) the other party generally fails to pay its
debts as such debts become due, (iv) the other party makes an
assignment for the benefit of
-2-
5
creditors or (v) a receiver, liquidator or trustee is appointed
in respect of all or a substantial portion of the other party's
property or affairs.
5.2. Without limitation of the provisions of Section 5.1, GWNS may
terminate this Agreement in whole but not in part upon prior
written notice to Customer, if Customer fails to pay any amount
otherwise due and payable hereunder within thirty (30) days of
notice from GWNS that such amount has not been paid.
5.3. Without limitation of the provisions of Section 5.1, Customer
may terminate this Agreement in whole but not in part upon at
least one hundred and twenty (120) days prior written notice to
GWNS.
5.4. In the event that Customer terminates this Agreement as
described in Section 5.3, or GWNS terminates this Agreement as
described in Section 5.1 or Section 5.2, Customer shall pay to
GWNS (without limitation to any other amounts due or payable to
GWNS under this Agreement, at law or in equity) (a) all amounts
owing to GWNS but unpaid as of the effective date of termination
and (b) as further consideration for the provision of Services
and Additional Services by GWNS hereunder and not as a penalty,
the applicable "Termination Liability" set forth on Exhibit 5
hereto, adjusted in accordance with this Section 5.4, and (c) a
"Cancellation Charge" equal to twice the applicable monthly
Services and Additional Services fees under this Agreement as of
the effective date of termination. The Termination Liability
shall decrease on a prorated basis between annual permitted
termination dates. Any amount required to be paid pursuant to
this Section 5.4 shall be due and payable within thirty (30)
days following the effective date of termination of this
Agreement.
6. Representations and Warranties.
6.1. Each of Customer and GWNS represents and warrants to the other
that:
6.1.1. It has the right, power and authority to enter into and
to fully perform this Agreement;
6.1.2. When executed and delivered, this Agreement shall
constitute a valid and binding obligation of such party;
6.1.3. It has not entered and shall not enter into any
agreement or arrangement that could reasonably be
expected to limit the
-3-
6
performance of its obligations, or diminish or impair
the rights of the other party, hereunder;
6.1.4. Except as previously disclosed, there are no liens,
encumbrances, actions, suits or proceedings pending
before any Governmental Authority (as defined in Section
11) or, to the knowledge of such party, threatened
against it, that could reasonably be expected to limit
the performance of its obligations, or to diminish or
impair the rights of the other party, hereunder;
6.1.5. It is, and during the Term shall remain, in full
compliance with all applicable treaties and other
international agreements, laws, statutes, rules,
regulations, ordinances and orders (collectively,
"Laws");
6.1.6. No approvals, consents, authorizations, permissions,
licenses, certificates or permits (collectively,
"Approvals") of any third party are needed for the
performance of its obligations hereunder that have not
been obtained and do not remain in full force and effect
as of the execution hereof, and
6.1.7. As of the Effective Date of this Agreement, (a) it has
neither sought nor has any intention voluntarily to seek
the protection of any bankruptcy law; (b) it has no
reason to believe that any of its creditors has caused
or intends to cause it to become the subject of any
proceedings under any bankruptcy law; and (c) it has no
knowledge of any state of facts which, if known to its
creditors, (i) would cause it voluntarily to seek the
protection of any bankruptcy law or (ii) might
reasonably cause any such creditor to cause it to become
the subject of any proceeding under any bankruptcy law.
Except as expressly set forth above, GWNS makes no representation or
warranty to Customer and hereby expressly disclaims all other
warranties, express or implied, including but not limited to any
warranty of merchantability or fitness for a particular purpose.
6.2. Customer represents and warrants to GWNS that:
6.2.1 The content of all Customer programming produced or
postproduced by GWNS or on GWNS's facilities or
transmitted by GWNS hereunder ("Customer Programming")
shall not violate or infringe any Law, civil right,
property right, right of privacy,
-4-
7
right of publicity, copyright, trademark right, or other
right of any person, firm or corporation, or constitute
defamation, obscenity or indecency; and
6.2.2. Customer has all rights in and to all Customer
Programming hereunder.
7. Indemnification.
7.1. Each of GWNS and Customer agrees to indemnify, defend and hold
the other party, its parent and affiliated entities, and the
officers, directors, employees and agents of each of the
foregoing, harmless from and against any and all claims,
demands, damages, liabilities, costs and expenses (including
reasonable attorneys' fees and disbursements) arising out of or
caused by the breach of any representation, warranty or
undertaking made by such party hereunder.
7.2. The party seeking indemnification hereunder shall notify the
indemnifying party in writing of any claim or action to which
such indemnification applies. The indemnifying party may, at its
option, undertake the defense of any such claim or action and
permit the party seeking indemnification to participate therein
at its own expense. The settlement of any such claim or action
by the party seeking indemnification without the indemnifying
party's prior written consent (which shall not be unreasonably
withheld) shall release the indemnifying party from its
obligations hereunder with respect to the claim or action so
settled. The settlement of any such claim or action by the
indemnifying party shall not, without the indemnified party's
consent, require the indemnified party to render any performance
other than the payment of money.
7.3. The provisions of Sections 7.1 and 7.2 shall survive the
expiration or earlier termination of this Agreement.
8. Notices.
8.1. Any notice which a party hereto is required to give or may
desire to give in connection with this Agreement shall be in
writing and delivered by hand; by overnight delivery service;
independently confirmed telecopy; or by certified or registered
mail, return receipt requested, postage and charges prepaid;
addressed as follows:
-5-
8
If to GWNS:
Group W Network Services
Attention: Xxxxx X. Xxxxxxx
President
000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Facsimile: 000-000-0000
with a copy to:
Group W Network Services
Attention: Law Department
000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Facsimile: 000-000-0000
If to Customer:
Recovery Network
Attention: Xxxx Xxxxxxx
Vice President of Operations
0000 0xx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
with a copy to:
Recovery Network
Attention: Xxxx Xxxxxx
General Counsel
0000 0xx Xxxxxx, Xxxxx 000
Xxxxx Xxxxxx, Xxxxxxxxxx 00000
Facsimile: (000) 000-0000
8.2. Either party may change its address for notice purposes by
notifying the other party in accordance with Section 8.1.
9. Confidentiality; Public Announcement.
9.1. Each party hereto agrees that it shall not, without the prior
written consent of the other, disclose or communicate to any
third party any Information (as defined in this Section 9.1)
that is disclosed to it by the other party, and the party
receiving such Information shall use reasonable efforts (which
-6-
9
need not include the commencement of any action or proceeding
against any unauthorized user of such Information) to prevent
the unauthorized disclosure or communication of such
Information. For purposes of this Agreement, the term
"Information" shall mean information that is conspicuously
identified as being confidential or proprietary. All Information
shall remain the property of the party furnishing same. Nothing
contained herein shall be construed as restricting, or creating
any liability for, the disclosure, communication or use of
Information that (a) is or becomes publicly known through no
wrongful act of the receiving party; (b) is received from a
third party without restriction and without breach of this
Agreement; (c) is independently developed by the receiving
party; or (d) is disclosed pursuant to governmental or judicial
requirement.
9.2. Neither party hereto shall disclose to any third party (other
than its respective employees, in their capacity as such) any
information with respect to the financial provisions of this
Agreement except (a) to the extent necessary to comply with
applicable Laws or appropriate Governmental Authorities, in
which case the party making such disclosure shall so notify the
other and shall seek confidential treatment of such information;
(b) as part of its normal reporting or review procedure to its
parent companies, auditors or attorneys, provided, however, that
such parent companies, auditors or attorneys agree to be bound
by the provisions of this Section 9.2; or (c) in order to
enforce its rights pursuant to this Agreement.
9.3. Any press release or other publicity materials concerning this
Agreement shall be issued only with the mutual consent of the
parties; provided, however, that neither party shall be
prohibited from stating, in the normal course of its business,
that it does business with the other and the general nature of
such business.
10. Employee Matters.
Neither party's employees shall be deemed to be employees or agents of
the other party for any purpose, and shall not be entitled to receive
any benefits or to participate in any employee benefits plan of the
other party. Customer and GWNS shall be solely responsible for payment
of all salaries, benefits, worker's compensation and all related costs
with respect to their respective employees and agents, and each party
shall indemnify the other party for any costs incurred in connection
with any of the foregoing.
-7-
10
11. Subject to Law.
This Agreement is subject to all applicable Laws of all international,
foreign, United States, state and local governmental authorities,
regulatory bodies and courts having jurisdiction (collectively,
"Governmental Authorities"). The performance of this Agreement by both
parties hereto is expressly contingent upon, and subject to, the
obtaining and continuance of such Approvals from such Governmental
Authorities as may be required or necessary for the purposes hereof, and
such terms and conditions as may be imposed therein. Each party shall
use all reasonable efforts (and the other party shall cooperate with
such party) to obtain in a timely manner, and maintain in effect, any
Approvals that may hereafter be required by any Governmental Authority
having jurisdiction with respect to such party's obligations hereunder.
12. Limitation of Liability.
12.1. Notwithstanding any other provision of this Agreement, under no
circumstances shall (a) GWNS be liable to Customer or to any
third party for any loss of revenue, lost profits, lost capital,
overhead, claims of third parties for service interruption, or
any special, indirect, incidental or consequential damages of
any type or (b) GWNS's total liability in connection with the
performance of this Agreement exceed the aggregate sum of all
fees actually paid by Customer to GWNS pursuant to this
Agreement.
12.2. GWNS shall not be liable or responsible for (a) any
interception, or damages caused by interception, of a scrambled
signal or (b) any Customer Programming signal outside the points
where such signal enters into or departs from GWNS's
transmission system.
13. Assignment.
Neither party may assign or otherwise transfer any of its rights or
obligations under this Agreement without the prior written consent of
the other. Consent will not be unreasonably withheld or delayed.
14. Force Majeure.
Notwithstanding any other provision of this Agreement, neither party
shall have any liability to the other for any failure to fulfill its
obligations hereunder if such failure is due to any labor dispute,
delays caused by equipment suppliers, fire, flood, Law, political
action, act of God or any other cause beyond the
-8-
11
reasonable control of the party unable to perform. In the event of any
such occurrence, the time period for performance under this Agreement
shall be correspondingly extended.
15. General.
15.1. Nothing contained herein shall be deemed to create, and the
parties do not intend to create, any relationship of partners or
joint venturers or agent and principal, and neither party shall
represent the contrary to any third party.
15.2. A waiver by either party of any of the terms or conditions of
this Agreement in any one instance or a waiver by either party
of a breach of this Agreement shall not be deemed or construed
to be a waiver of such terms or conditions for the future or a
waiver of any subsequent breach.
15.3. All remedies contained in this Agreement shall be in addition to
other remedies available at law or in equity, by statute or
otherwise, except as herein otherwise provided.
15.4. This Agreement and all matters or issues collateral hereto shall
be interpreted in accordance with the laws of the State of New
York applicable to agreements made and performed wholly therein.
15.5. The Exhibits annexed to this Agreement are an integral part
hereof and are incorporated herein by this reference.
15.6. This Agreement constitutes the entire agreement between the
parties hereto with respect to the subject matter hereof and may
be modified only by a writing executed by both of the parties
hereto. Any purchase order or similar order or request for the
provision of Services or Additional Services hereunder shall be
subject to this Agreement.
15.7. The titles of the sections of this Agreement are for convenience
only and shall not in any manner affect the interpretation of
any section of this Agreement.
15.8. Nothing contained in this Agreement shall be construed so as to
require the commission of any act contrary to law, and wherever
there is any conflict between any provision of this Agreement
and any Law, such Law shall prevail; provided, however, that in
such event the provision(s) of this Agreement so affected shall
be curtailed and limited only to the extent necessary to permit
compliance with the minimum legal requirement, no
-9-
12
Other provisions of this Agreement shall be affected thereby and
all of such other provisions shall continue in full force and
effect.
15.9. The provisions of this Agreement are only for the benefit of the
parties hereto, and no third party may seek to enforce or
benefit from such provisions.
15.10. This Agreement may be executed in counterparts, each of which
shall be deemed an original, and all such counterparts together
shall constitute but one and the same instrument.
16. Certain Definitions.
Except as specified otherwise, when used in this Agreement or any
Exhibits or amendments hereto, the following terms shall have the
meanings specified in the respective sections cited below. Defined terms
shall include both the singular and the plural, as the context requires.
"Additional Services" is as defined in Section 2.
"Agreement" is as defined in the recitals.
"Approvals" is as defined in Section 6.1.6.
"Cancellation Charge" is as defined in Section 5.4.
"Commencement Date" is as defined in Section 3.1.
"Customer" is as defined in the recitals.
"Customer Programming" is as defined in Section 6.2.1.
"Effective Date" is as defined in the recitals.
"Governmental Authorities" is as defined in Section 11.
"GWNS" is as defined in the recitals.
"Information" is as described in Section 9.1.
"ISCI" is as defined in Exhibit 2.
"Laws" is as defined in Section 6.1.5.
-10-
13
"Network" is as defined in the recitals.
"Renewal Date" is as defined in Section 4.3.
"Services" is as defined in Section 1.
"Technical Specifications" is as defined in Exhibit 3.
"Term" is as defined in Section 3.1.
"Termination Liability" is as defined in Section 5.4.
IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the date first set forth above.
GROUP W NETWORK SERVICES RECOVERY NETWORK, INC.
By: /s/ XXXXX X. XXXXXXX BY: /s/ XXXX X. XXXXXXX
---------------------- --------------------------
Name: Xxxxx X. Xxxxxxx Name: Xxxx X. Xxxxxxx
Title: President Title: SR. V.P. of Operations
Date signed: 5/21/98 Date signed: May 21, 1998
-11-
14
EXHIBIT I - MASTER CONTROL/PLAYBACK SERVICES
The master control function designed for Customer provides a facility
which produces both high quality dual channel (stereo) audio and video. The
master control will be operated by a master control operator who will be
responsible for loading program material into an automated playback system (a
shift supervisor will also be on duty at all times who will supervise the
operations of the Network and other GWNS clients). The operator's primary
responsibility will be the playback of program material via an automated system.
The playback system will provide a system for both the preparation of the daily
program logs and needed program certifications, as well as assisting the
operator in actual switching.
The master control facility will also have full access to the "house"
router system. Having access to the central router allows the control room
operation access to such areas as the studio operation, video tape rooms, GWNS's
satellite receiving capability and the ability to access GWNS's terrestrial
interconnect system into many points in New York City including The Switch,
Waterfront Communications and AT&T "NR". Attached as Exhibit 6 is a schematic
diagram of the GWNS Stamford complex indicating antenna and terrestrial
facilities.
As stated above, the master control area will contain an automated
playback system for the playback of programming. Primary programming, commercial
and interstitial material originate from five (5) betacam SP units controlled by
the automated system. The basic complement of equipment used in the control room
is the following:
5 - Sony PVW 2800 betacam SP units
1 - Automated control unit
1 - Playback room video and audio monitoring system
In addition to the facilities stated above, equipment such as audio and video
test generators, patch panels, and WWV synchronization are included in the
overall master control equipment complement.
The playback facility hardware design is based on the premise that primary
programming material will be supplied on betacam SP video tape and be nominally
between 30 minutes and 60 minutes in length and be ready for playback to air.
The playback facility will transition consistent with GWNS's overall client
transition plan from a tape playback to a file server based system during the
Term of this Agreement. Customer will continue to supply GWNS betacam SP tapes
or materials in other standard industry formats as mutually agreed, during and
after the transition.
-12-
15
GWNS shall use an equipment configuration in the provision Of Master
Control/Playback Services to Customer substantially as follows:
A. An automated switcher with audio follow video and manual backup
capability with downstream keying capability.
B. An automated playback system with five (5) beta SP tape machines for air
play.
C. Associated synchronization equipment conforming to broadcast
EIA-RS-170-A standards, including sync generators, signal generators,
and time base correctors.
D. Associated audio/video distribution and routing equipment, racks,
consoles and test equipment.
E. Comprehensive monitoring system to view outgoing and return signals to
monitor the signal at various points throughout the transmission path.
F. Sufficient uninterrupted (UPS) and back-up generator power and HVAC for
all technical and equipment areas.
G. Equipment providing output signals, per channel, of discrete stereo
audio and standard NTSC video for delivery to its compression and/or
transmission facility in accordance with the technical specifications.
All origination equipment shall meet manufacturer's specifications in effect at
the time of GWNS's purchase. Unless specific brand type or model or equipment is
specified above GWNS shall have the right to use such equipment as GWNS deems
appropriate to perform the services.
GWNS will execute the delivery of the Customer signal according to schedules
based on a program log supplied by Customer. The programming will consist of
videotape elements supplied to GWNS in advance of the air date. Occasional live
feeds may be required, but shall be treated on a project-by-project basis
separate from this Agreement, with responsibility for delivering the feed to
GWNS antenna or terrestrial interconnections assumed by Customer.
In addition to program signal, GWNS will transmit DTMF cue tones or other
signaling elements according to times and specifications provided by Customer.
GWNS will provide facilities for down-stream keying of the network
identification bug and will insert as directed on the program log.
-13-
16
GWNS shall monitor all programming distributed and provide Customer with an "as
aired" log. Included in this report, on an element-by-element basis, will be
details of any deviation from the program log, and details indicating the actual
programming which was transmitted. This report will include a description of the
deviation from the scheduled log and any corrective action taken by GWNS.
GWNS will monitor the transmission path, including downlink returns, to verify
transmission integrity. Any service interruption, transmission signal
degradation, or failure of the distribution will be documented and reported in
writing to Customer. Reports will contain details including, but not limited to:
time, duration, nature of interruption or degradation. Notice of problems shall
take place as expediently as possible and complete reports shall be submitted
within forty-eight (48) hours of the occurrence.
GWNS will designate a management level person as a contact who will address all
business and contractual issues including the "on-air look" to insure that
Customer's reasonable expectations for Network operations are being met.
GWNS will provide authorization and deauthorization services for commercial
(cable headend) decoders for Network affiliates of Customer. Required actions
will be executed in a timely manner upon written or verbal communication from
designated Customer personnel.
-14-
17
EXHIBIT 2 - TRAFFIC SERVICES
The traffic operation will have the responsibility to prepare the daily program
log in accordance with a "run sheet" (log instructions in electronic form)
provided by Customer. GWNS will accept and return all video tape (any shipping
charges are billable to Customer). GWNS will also maintain a reasonable tape
library consisting of up to 1,000 hours of program content to support the
Network.
Customer will have the following obligations in respect of the traffic function:
A. Customer will be responsible for securing and shipping all programming
material that will be used in programming the Network to GWNS.
B. All programming delivered on video tape will be delivered on beta SP
stock. Upon mutual agreement other formats may be used.
C. All video tape will arrive at GWNS's facility a minimum of 72 hours
prior to air. Shorter lead times will occasionally be accommodated with
time sensitive material.
D. All programming will be delivered in the NTSC analog format. Upon mutual
agreement other formats may be used.
The fees in Exhibit 5 are based on the foregoing and may be raised, if
necessary, to compensate for Customer's failure to perform any of such
obligations in a timely manner.
GWNS will electronically accept the data comprising the log for Customer's
programming elements. GWNS will convert this information into a format required
by GWNS's traffic management/real time controller or functionally equivalent
automation system.
GWNS will cross-reference Customer's log elements against the GWNS database by
the following: Industry Standard Commercial Identification ("ISCI") numbers,
house number, element duration, and other traffic management codes as
appropriate. GWNS will confirm that all elements required by the Customer log
are in-house, active, and properly prepared for playback. Missing elements or
other problems will be flagged and appropriate actions to resolve the problem
will be taken in an expedient manner.
Log events will be monitored on a real-time basis during playback to air. A
certified feedback, or "as aired," report will be generated and returned to
Customer within twenty-four (24) hours of actual airdate. This report will be
transferred electronically in a format specified by Customer in order to
seamlessly confirm the distribution of programming elements. The electronic
reporting will conform to specifications and requirements of the traffic and
billing computer and information systems utilized by Customer. Hard copy logs
and reports related to the transmission of the Network may also be required.
-15-
18
GWNS shall provide one (1) full-time traffic assistant. Traffic will be
accomplished on a system operated by technicians, provided by GWNS.
Source tapes for primary and back-up programming, promotional and interstitial
material supplied to GWNS by customer shall be beta SP video tape stock and
shall be manufactured in accordance with NTSC broadcast standards. All tape
stock shall be supplied by and shall remain the property of Customer. Customer
acknowledges that it is directly responsible for arranging for and paying the
costs of the following: (i) costs for shipping of its tape material to and from
the origination facility (currently in Irvine, CA); (ii) the delivery of any
satellite turnaround programming to the origination facility; and (iii) any
third party-provided fiber optic, transponder or microwave transport. GWNS will
provide climatically-controlled storage for library video tapes, not to exceed
1,000 hours.
-16-
19
EXHIBIT 3 - COMPRESSED SATELLITE SPACE SEGMENT, UPLINK AND ENCRYPTION SERVICES
GWNS will provide a digitally compressed uplink service via a
transponder-protected transponder on the Galaxy VII satellite, for distribution
of the Network on a twenty-four (24) hour basis.
This compressed transponder capacity utilizes Scientific Atlanta PowerVu
compression technology which GWNS has purchased, installed, operates and
maintains. This compression hardware is physically located at the GWNS Glenbrook
earth station facility where uplinking to the Galaxy VII satellite will occur.
The satellite transmission facility shall consist of a 9.0 meter antenna or its
equivalent or larger, that complies with 2 degree spacing.
GWNS shall provide a protected microwave and/or fiber path from its origination
facility, if inter-facility transport is required, with equipment meeting the
Technical Specifications. One or more redundant paths shall be provided and
switched into service if a failure occurs in the primary paths.
Appropriate testing will be conducted by GWNS prior to the distribution of
specific services in order to ensure that the facilities provided by GWNS meet
the following "Technical Specifications":
A. There will be a full-time channel with video exciter or upconverter and
HPA in a fully automatic 1:1 switching configuration. There will be one
(1) primary and one (1) protection HPA, upconverter or exciter
protecting the programmer's services
B. Sufficient uninterrupted (UPS) and back-up generator power and HVAC for
all technical and equipment areas shall be provided.
C. The design goal for analog services shall be broadcast quality standard
EIA RS-250B satellite relay from the input of the protection switch,
including a satellite loop using a 9.0 meter or larger antenna, to the
output of the receive monitoring switch. The loop performance is subject
to the transponder used meeting minimum performance specifications as
specified by PanAmSat.
D. The design goal for compressed services, if any, shall be video and
audio performance as specified by the compression system manufacturer.
Industry standards for compressed video services are not available and
manufacturer specifications shall be used until appropriate standards
have been accepted.
-17-
20
E. The maintenance limits of the analog system, and where appropriate the
compression system, shall be:
Video channel signal to noise (>10KHz) 52.0dB
Video channel differential gain 10%
Video channel differential phase 4%
Video channel chrominance to luminance delay 60nS
Audio channel signal to noise (>1KHz)54.0dB
Audio channel harmonic distortion (1KHz) 1%
(Audio channels shall be tested at peak program level of +18dBm)
F. The microwave and/or fiber optic facility used to transport the channels
from the origination facility to the compression/transmission facility,
if any, shall be protected, including automatic protection switching.
The design goal for microwave systems shall be ANSI T1.502 - 1988 short
haul and the maintenance limit shall be ANSI TI.502-1988 medium haul
performance. The design goal for fiber optics systems shall be ANSI
TI.502-1988 medium haul and the maintenance limit shall be as follows:
(Audio channels shall be tested at peak program level of +1dBm)
Video channel signal to noise (>10KHz) 50.0dB
Video channel differential gain 8%
Video channel differential phase 2%
Video channel chrominance to luminance delay 50nS
Audio channel signal to noise (>1KHz) 54.0dB
Audio channel harmonic distortion (1KHz) %
In the case of the digitally compressed channel, baseband video and associated
audio will be fed into the input of the compression equipment. One (1) video and
up to four (4) audio subcarriers can be accommodated. The output of the PowerVu
equipment will consist of a single data stream which will carry Network's signal
and those of other GWNS clients. This combined data stream will be transmitted
into the exciter and HPA uplink chain through to Galaxy VII transponder #9. The
compressed satellite space segment will consist of a data channel not less than
6.7 Mbps.
GWNS will also provide encryption management services for the authorization of
Network affiliates' decoders. Customer represents that it has approximately 300
affiliates as of December 1997.
The entire transmission path is made up of redundant hardware for maximum system
reliability. The Glenbrook facility is staffed on a full-time basis with both
fully qualified operations and engineering personnel (who provide service to
both Customer and other GWNS clients).
-18-
21
EXHIBIT 4 - CONSUMABLE GOODS
Consumables have not been included in the service pricing. Major consumables are
video tape stock and shipping. In the case of video tape stock, GWNS will
invoice Customer its cost plus a 20% administrative fee. Since the price of
consumables cannot be projected over the course of a five (5) year service
contract, GWNS will invoice Customer on a monthly basis for any consumables.
Payment for consumables is due net thirty (30) days from the receipt of
invoice.
-19-
22
EXHIBIT 5 - SERVICE FEES
1. Monthly Service Fee and annual cost escalation for Master
Control/Playback, Traffic, Uplink, Encryption and Compressed Satellite
Space Segment Services:
Year Monthly Service Fee Annual Cost Escalation
1 $83,500.00 0%
2 $83,500.00 0%
3 $85,170.00 2%
4 $87,725.00 3%
5 $90,795.00 3.5%
2. Termination Liability(1): $150,000.00
3. Cancellation Charge: In the event that contracted
service is canceled, an additional
charge equal to two (2) months
service fee will be added to the
relevant Termination Liability.
4. Payment:
Service Fee: Payable monthly, 30 days in
advance.
Consumables: Payable net 30 days.
--------------
(1) In the event that the contracted service is canceled prior to the
conclusion of a sixty (60) month service commitment, a termination charge equal
to 1/60 of the Termination Liability will be assessed for each unused month, or
fraction thereof, out of the sixty (60) month commitment.
-20-
23
EXHIBIT 6
NEW YORK-STAMFORD Interconnect/Earth Station Facilities
[image]
24
THE RECOVERY NETWORK, INC.
0000 0XX XXXXXX, XXXXX 000
XXXXX XXXXXX, XXXXXXXXXX 00000
October 27, 1998
Group W Network Services
Attention: Xxxxx X. Xxxxxxx, President
000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Facsimile: 000-000-0000
Group W Network Services
Attention: Law Department
000 Xxxxxx Xxxxx
Xxxxxxxx, XX 00000
Facsimile: 000-000-0000
Re: Services Agreement dated as of April 1, 1998 (the "Agreement")
between Group W Network Services ("Group W"), a division of
Group W Broadcasting, Inc. and The Recovery Network, Inc.
("Recovery").
Ladies and Gentlemen:
All capitalized terms used but not defined in this side letter
(including the Schedule hereto) shall have the meaning assigned to such terms in
the Agreement.
Exhibit 5 and each reference thereto in the Agreement is hereby deleted.
In lieu of each reference to Exhibit 5, each such reference in the Agreement is
hereby amended to refer to "the Side Letter," which shall mean this letter and
Schedule 1 hereto (the "Side Letter").
The fees, charges and/or payments under the Agreement are as set forth
at Schedule 1 hereto.
Section 9 of the Agreement shall apply to this Side Letter and Schedule
1 hereto.
Except as amended hereby, the Agreement is ratified and confirmed in all
respects by the parties hereto. Nothing herein shall confer or be deemed
to confer any right, remedy, benefit or
25
Group W Network Services
Xxxxx X. Xxxxxxx October 27, 1998
Page 2
entitlement on any third-party. This amendment shall be construed pursuant to
and in accordance with the laws of the State of New York, without regard to
conflict of laws principles, and may be executed in counterparts, including by
telecopy, each of which shall be deemed an original, all of which taken together
shall constitute one and the same amendment.
Very truly yours,
THE RECOVERY NETWORK, INC.
/s/ XXXX XXXXXXX
-----------------------------------
By: Xxxx Xxxxxxx
Title: Vice President of Operations
ACCEPTED AND AGREED
this 27th day of October, 1998
GROUP W NETWORK SERVICES
-------------------------------
By:
Title:
26
SCHEDULE 1
----------
1. Monthly Service Fee and annual cost escalation for Master
Control/Playback, Traffic, Uplink, Encryption and Compressed Satellite
Space Segment Services:
Year Monthly Service Fee Annual Cost Escalation
1 $83,500.00 0%
2 $83,500.00 0%
3 $85,170.00 2%
4 $87,725.00 3%
5 $90,795.00 3.5%
2. Termination Liability(1): $150,000.00
3. Cancellation Charge: In the event that contracted
service is canceled, an additional
charge equal to two (2) months
service fee will be added to the
relevant Termination Liability.
4. Payment:
Service Fee: Payable monthly, 30 days in
advance.
Consumables: Payable net 30 days.
---------------
(1) In the event that the contracted service is canceled prior to the
conclusion of a sixty (60) month service commitment, a termination
charge equal to 1/60 of the Termination Liability will be assessed for
each unused month, or fraction thereof, out of the sixty (60) month
commitment.
27
[GROUP W NETWORK SERVICES-LETTERHEAD]
As of May 1, 1999
The Recovery Network, Inc.
Attention: Xx. Xxxxxxx X. Xxxxx
President
Recovery Network
000 Xxxxx Xxxxxx Xxxxxxxxx, Xxxxx 0
Xxxxx Xxxxxx, XX 00000
Re: Services Agreement between Group W Network Services, a business
unit of CBS Corporation ("GWNS"), and The Recovery Network, Inc.
("Recovery") dated as of April 1, 1998, as amended by Side
Letter dated October 27, 1998 (the "Agreement")
Dear Xxxx:
This letter sets forth certain terms and conditions modifying the
referenced Agreement. By way of background: by notice dated February 9, 1999
GWNS terminated the Agreement effective March 12, 1999 based on Recovery's
breach of its payment obligations. By subsequent letters GWNS extended the
effective date of termination while the parties discussed terms and conditions
pursuant to which the Agreement might be modified. Having concluded such
discussions to their mutual satisfaction, Recovery and GWNS hereby agree to
modify the Agreement on the terms and conditions set forth below.
1. GWNS hereby withdraws its termination notice.
2. The parties to the Agreement hereby ratify the letter agreement dated
April 15, 1999, proffered by the undersigned to Xx. Xxxxxx X. Xxxxx and
countersigned by Xx. Xxxxx, as an effective and legally binding
modification of the Agreement. A copy of such letter agreement as
executed is annexed hereto as Exhibit A and incorporated herein by this
reference.
3. Recovery represents to GWNS that the 500,000 shares of its stock
transferred pursuant to the above letter agreement's penultimate
paragraph represent less that 4.9% of its total outstanding shares.
28
4. Recovery acknowledges that free transferability of Recovery's shares
transferred to GWNS as contemplated in the above letter agreement is
material in order for GWNS to realize the benefit of its bargain
hereunder. GWNS shall have the right to request registration thereof
(but not more than one (1) such registration every twelve months),
including effectuation of all appropriate related notices,
qualifications and compliances, at Recovery's sole cost and expense, in
order to permit or facilitate the sale thereof. Recovery shall effect
such registration and related matters promptly upon receipt of GWNS's
request. In addition, should Recovery determine to register any of its
securities, it shall so notify GWNS and include in such registration and
in any underwriting involved therein, such of GWNS's shares in Recovery
as GWNS shall have specified by written request(s) made within twenty
(20) days after GWNS's receipt of Recovery's notice. Recovery shall
indemnify and hold harmless GWNS, its affiliates and their officers and
directors with respect to all claims, losses, expenses, damages, and
liabilities arising out of any untrue or allegedly untrue statement of a
material fact contained in any prospectus, offering circular or other
document incident to any such registration, qualification or compliance,
or omission of a material fact therefrom.
5. The promissory note contemplated by point number 5 of the above letter
agreement (the "Note") is executed and delivered contemporaneously
herewith. Recovery hereby represents to GWNS that Recovery has no
indebtedness or obligation which is superior in right or time to the
Note and that there exists no mortgage, pledge, lien, or other security
interest of any kind upon any of Recovery's property or assets of any
character, whether now owned or hereafter acquired, in respect of any
indebtedness or obligation of Recovery, except as disclosed herein.
Recovery has outstanding certain Secured Promissory Notes dated April
13, 1999 (the "Secured Notes"), which Secured Notes are secured by the
company's website XxxxxxxxXxxxxxx.xxx. The principal balance of the
Secured Notes is $725,000; such principal and all accrued interest
thereon is due and payable in full October 31, 1999.
6. Recovery hereby reiterates specifically with application to the
Agreement and this amendment each of the representations and warranties
made by it in Section 6.1 of the Agreement.
Capitalized terms used and not defined in this amendment shall have the meanings
assigned to such terms in the Agreement. The parties acknowledge that the above
letter agreement is written in a vernacular that does not uniformly utilize
capitalized
29
terms defined in the Agreement and agree that such vernacular shall not be
grounds for any dispute or argument concerning construction or interpretation of
the Agreement.
The Agreement as amended hereby is ratified and confirmed in all respects.
Nothing herein shall confer or be deemed to confer any right, remedy, BENEFIT or
entitlement on any third party. This amendment shall be construed pursuant to
and in accordance with the laws of the State of New York, without regard to
conflict of laws principles, and may be executed in counterparts, each of which
shall be deemed an original, all of which taken together shall constitute one
and the same instrument.
Sincerely yours,
/s/ XXXXX X. XXXXXXX
--------------------------
Xxxxx X. Xxxxxxx
Enclosure
Ratified and Agreed:
THE RECOVERY NETWORK, INC.
By: /s/ XXXXXXX XXXXX
--------------------------
Name: Xxxxxxx Xxxxx
Title: PRESIDENT
30
NON-SUBORDINATED PROMISSORY NOTE
$75,000 Dated: May 1, 1999
FOR VALUE RECEIVED, THE RECOVERY NETWORK, INC. ("Maker"), a Colorado corporation
with its principal offices at 0000 0xx Xxxxxx, Xxxxx 000, Xxxxx Xxxxxx,
Xxxxxxxxxx 00000 UNCONDITIONALLY PROMISES TO PAY to GROUP W NETWORK SERVICES, a
business unit of CBS Corporation ("Holder"), the principal amount of
Seventy-Five Thousand Dollars ($75,000), together with interest as set forth
below. Principal and interest shall be payable in lawful money of the United
States of America to Holder at its office at 000 Xxxxxx Xxxxx, Post Office Box
10210, Stamford, Connecticut 06904-2210 or at such other address as may be
designated by Holder in writing to Maker.
1. Payment of Principal and Interest. The principal balance of
this Note, together with interest thereon, shall be due and payable on December
30, 1999.
2. Interest Rate. The principal amount shall bear interest at the
fixed rate of ten percent (10%) per annum, based on a 360-day year.
3. Default. If any default hereunder shall have occurred and be
continuing, Holder may proceed to protect and enforce its rights either by suit
in equity or by action at law, or both, whether for specific performance of any
covenant or agreement contained in this Note or in aid of the exercise of any
power granted pursuant to this Note, or may proceed to enforce any other legal
or equitable right as the holder of this Note. No remedy is intended to be
exclusive and each remedy shall be cumulative. If Maker shall default in the
payment of principal of or interest on this Note, it will pay to Holder further
amounts, to the extent lawful, as shall be sufficient to pay the reasonable
costs and expenses of collection, including reasonable lawyers' fees,
disbursements and other charges.
4. Covenants. Maker hereby agrees that, so long as any principal
amount of this Note remains outstanding and unpaid or any other amount is owing
to Holder hereunder:
(a) Financial Statements. Maker shall furnish to Holder:
(i) As soon as available, but in any event within 90
days after the end of each fiscal year of Maker, a copy of the audited balance
sheet of Maker as at the end of such year and the related audited statements of
income and statements of stockholders' equity and cash flow for such year,
setting forth in each case in comparative form the corresponding figures for the
previous year; and
31
2
(ii) As soon as available, but in any event within 45
days after the end of each of the first three quarterly periods of each fiscal
year of Maker, the unaudited balance sheet of Maker as at the end of such
quarter and the related unaudited statements of income and statements of
stockholders' equity and of cash flows of Maker for such quarter and the portion
of the fiscal year through the end of such quarter, setting forth in each case
in comparative form the corresponding figures for the previous year. If the
financial statements described in this subsection 4(a)(ii) are audited by
Maker's certified public accountants, Maker shall furnish to Holder such audited
financial statements;
all such financial statements to be certified by a responsible officer of Maker
as fairly stating the financial position of Maker at the dates and for the
periods referred to therein and as having been prepared in accordance with
generally accepted accounting principles consistently applied (subject, in the
case of quarterly financial statements, to normal year-end audit adjustments and
the absence of footnotes).
(b) Certificates. Maker shall furnish to Holder,
concurrently with the delivery of the financial statements referred to in
Subsection 4(a)(i) and (ii) above, a certificate of a responsible officer of
Maker stating that, to the best of such officer's knowledge, during the period
since the delivery of the previous such certificate (or if no such certificate
has been previously delivered, since May 1, 1999) Maker has observed or
performed in all material respects all of its covenants and other agreements
contained in this Note, and that such officer has obtained no knowledge of any
default except as specified in such certificate.
(c) No Superior Obligation. Maker shall not incur or suffer
to be incurred any obligation to which this Note would be subordinate.
(d) Restriction on Liens. Maker will not directly or
indirectly create or incur, or suffer to be created or incurred or to exist, any
mortgage, pledge, lien, or other security interest of any kind upon any of its
property or assets of any character, whether now owned or hereafter acquired, in
respect of any indebtedness or obligation of Maker.
(e) When Maker May Merge, Etc. Maker shall not consolidate
with or merge into, or transfer all or substantially all of its assets to, a
third party unless:
(i) such third party is a corporation organized
under the laws of the United States, one of the
States thereof or the District of Columbia;
32
3
(ii) the resulting, surviving or transferee third
party assumes all the obligations of Maker under
this Note; and
(iii) immediately before and after giving effect to
such transaction, no default shall have occurred
and be continuing under this Note.
(f) Substitution of Successor: Maker Not Released. Upon any
consolidation or merger, or any transfer of all or substantially all of the
assets, of Maker in accordance with Subsection 4(d), the successor third party
formed by such consolidation or into which Maker is merged or to which such
transfer is made shall succeed to, and be substituted for and may exercise every
right and power of, Maker under this Note with the same effect as if such
successor third party had been named as Maker herein, provided Maker shall not
be released from its obligation under this Note.
5. Obligation of Maker Unconditional. Nothing herein is intended
to or shall impair the obligation of Maker, which is absolute and unconditional,
to pay to Holder the principal of and interest on this Note as and when the same
shall become due and payable in accordance with its terms, nor shall anything
herein prevent Holder from exercising all remedies otherwise permitted by
applicable law upon default under this Note.
6. Waiver. Maker hereby waives presentment for payment, demand,
notice of dishonor and protest, and all other demands or notices in connection
with the delivery, performance, default or enforcement of this Note. No failure
on the part of the Holder to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any such right preclude any other or further exercise thereof or the
exercise of any other right.
7. Prepayment. The Maker may prepay all or part of the
indebtedness (principal and interest) evidenced by this Note at any time without
penalty.
8. Binding Effect. This Note shall be the binding and valid legal
obligation of the Maker and its legal representatives, executors, heirs,
successors and assigns.
9. Governing Law. This Note shall be governed by and construed in
accordance with the laws of the State of New York.
10 Waiver of Trial by Jury. THE MAKER HEREBY WAIVES ANY RIGHT TO
TRIAL BY JURY IN CONNECTION WITH ANY MATTERS ARISING OUT OF THIS TRANSACTION.
33
4
11. Jurisdiction. THIS NOTE SHALL BE GOVERNED BY THE LAW OF THE
STATE OF NEW YORK. THE MAKER HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
ANY NEW YORK STATE OR UNITED STATES FEDERAL COURT SITTING IN NEW YORK OVER ANY
ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO THIS NOTE, AND THE MAKER
HEREBY IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR
PROCEEDING SHALL BE HEARD AND DETERMINED IN SUCH NEW YORK STATE OR FEDERAL
COURT. THE MAKER IRREVOCABLY CONSENTS TO THE SERVICE OF ANY AND ALL PROCESS IN
ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES OF SUCH PROCESS TO THE
MAKER, VIA REGISTERED- OR CERTIFIED MAIL, AT ITS ADDRESS SPECIFIED IN THIS NOTE.
THE MAKER AGREES THAT A FINAL, UNAPPEALABLE JUDGEMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN OTHER JURISDICTIONS BY
SUIT ON THE JUDGEMENT OR IN ANY OTHER MANNER PROVIDED BY LAW. THE
34
MAKER FURTHER WAIVES ANY OBJECTION TO VENUE IN SUCH STATE AND ANY OBJECTION TO
AN ACTION OR PROCEEDING IN SUCH STATE ON THE BASIS OF FORUM NON CONVENIENS.
THE RECOVERY NETWORK, INC.
By: /s/ XXXXX X. XXXX
------------------------
Name Xxxxx X. Xxxx
Title: In House Counsel
STATE OF CALIFORNIA )
)
) ss: July 20, 1999
)
COUNTY OF LOS ANGELES )
-------------- )
On this the 20 day of July, 1999 before me Xxxxxxx X. Xxxxxxxx the undersigned
-------------------
(Name of Notary)
officer, personally appeared Xxxxx X. Xxxx who acknowledged himself to be the
-------------
(Name of Officer)
IN HOUSE COUNSEL of The Recovery Network, Inc., a corporation, and that he as
------------------
(Title of Officer)
such officer, being authorized so to do, executed the foregoing instrument for
the purposes therein contained, by signing the name of the corporation by
himself as such officer. In witness whereof I hereunto set my hand.
[NOTARY SEAL]
/s/ XXXXXXX X. XXXXXXXX
-------------------------------
Notary Public
My Commission Expires: 12/12/02
