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EXHIBIT 10.58
Execution Agreement
AFFILIATION AGREEMENT
THIS AGREEMENT made as of the 27th day of February, 1997 is by and
between THE BOX Worldwide, Inc., a Florida corporation ("Network"), and
Satellite Services, Inc., a Delaware corporation ("Affiliate"), regarding the
cable television programming services collectively and currently known as "The
Box" (whether in their current analog format or in any other digitized,
compressed, modified, replaced or otherwise manipulated format; whether
satellite-delivered [the "Satellite Service"] and/or locally individualized,
constituted and delivered [the "Primary Service"] via a music video
server/jukebox [an "Earthbox"], which programming services may be referred to
hereinafter together or singly as the "Services" or the "Service", and which
references shall all be interpreted, whether in the singular or plural form, in
the way most favorable to Affiliate). The parties hereby mutually agree as
follows:
1. RIGHTS:
(a) Grant of Rights. Network hereby grants to Affiliate and
its affiliates, and Affiliate hereby accepts on behalf of itself and its
affiliates,
(i) the non-exclusive right, but not the obligation, to
exhibit, distribute and authorize the reception of each Service
by cable or other wire or fiber optic transmission system or any
other transmission path provided by a material substance, whether
now existing or developed in the future, ("Cable") in the
Operating Areas (as defined herein) of Cable Systems (as defined
herein);
(ii) the non-exclusive right, but not the obligation, to
exhibit, distribute and authorize the reception of each Service
by any satellite master antenna television system ("SMATV"),
multipoint distribution service ("MDS"), multichannel multipoint
distribution service ("MMDS"), any system or enterprise
(regardless of whether such system or enterprise is affiliated
with the owner and/or operator of any required distribution
equipment) that distributes audio/visual signals and/or
programming over the distribution facilities of a common carrier
by means of a video dialtone connection or other common carrier
arrangement, whether now existing or developed in the future
("OVS/VDT"), and/or any other system or enterprise that
distributes audio/visual signals and/or programming by any other
means of distribution, whether
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now existing or developed in the future, that meets the System
Qualifications of Exhibit A hereto;
(iii) the non-exclusive right, but not the obligation, to
exhibit and subdistribute each Service to, and authorize the
reception of each Service by, any MDS, MMDS and/or any other
system or enterprise that distributes audio/visual signals and/or
programming by any other means of distribution (other than Cable
and OVS/VDT), whether now existing or developed in the future,
that does not meet the System Qualifications of Exhibit A hereto,
but that is located within and/or serving customers located
within the Distribution Areas (as defined herein) of Cable
Systems or any other video distribution system or enterprise that
meets the System Qualifications of Exhibit A hereto;
(iv) the non-exclusive right, but not the obligation, to
exhibit and subdistribute the Service to, and authorize the
reception of the Service by, any SMATV that does not meet the
System Qualifications of Exhibit A hereto; and
(iv) the non-exclusive right, but not the obligation, to
exhibit, distribute, subdistribute and authorize the reception of
each Service nationwide (including, collectively, the United
States, the District of Columbia and the territories, possessions
and commonwealths of the United States) to any person or entity
that receives the signal of either or both of the Services by
means of equipment capable of receiving audio/visual signals
and/or programming directly from any satellite, whether now
existing or developed in the future, including, without
limitation, C-Band and Ku-Band signals, whether or not such
signals are digitized, compressed, modified, replaced or
otherwise manipulated, including tier-bit access rights and
tier-addressed messaging rights ("Satellite").
The rights granted to Affiliate in this Section 1(a) and elsewhere in
this Agreement are also granted hereby to any affiliate of Affiliate. As used in
this Agreement, an "affiliate of Affiliate" shall include any entity meeting the
requirements of paragraphs I.1, II or III of Exhibit A hereto as if such entity
were a Cable television system or other video distribution system or enterprise.
"Operating Area" of a Cable television system or other video
distribution system or enterprise shall mean that geographic area where the
owner or operator of the system or enterprise is authorized by appropriate
governmental authority to operate an audio or video distribution facility and is
operating an audio or video distribution facility within such area; provided,
however, that if a franchise or license is not required for the distribution of
television services in a particular geographic
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area, then the Operating Area of a system or enterprise shall mean that
geographic area where the system or enterprise is operating regardless of the
presence or absence of a franchise or license.
"Distribution Area" of a Cable television system or other video
distribution system or enterprise shall mean (A) the Operating Area of such
system or enterprise, (B) other areas of counties in which the Operating Area of
such system or enterprise is wholly or partially located but which areas are not
the subject of a Cable television franchise or license or, if a Cable television
franchise or license exists in such areas, the owner or operator of such
franchise or license is not distributing the Services, and (C) areas of counties
(which areas are contiguous to counties where an Operating Area of a system or
enterprise is wholly or partially located) that are not the subject of a Cable
television franchise or license or, if a Cable television franchise or license
exists in such areas, the owner or operator of such franchise or license is not
distributing the Services within such areas.
"Cable System(s)" shall mean any audio and/or video distribution system
or enterprise that (1) meets the System Qualifications of Exhibit A hereto, and
(2) provides television services, which may include other audio/visual services,
by Cable.
"Subdistribute" or "subdistribution" shall mean the distribution of a
Service by Affiliate, or an affiliate of Affiliate, to an unaffiliated third
party who in turn sells such Service to a viewing customer, where such third
party pays Affiliate, or an affiliate of Affiliate, fees for licensing of such
Service, as opposed to only transport fees, some portion of which is then paid
to Network by Affiliate pursuant to the terms of this Agreement.
"Alternative Technology(ies)" shall mean SMATV, MDS, MMDS, OVS/VDT,
Satellite and/or any other means of distribution (other than Cable) whether now
existing or developed in the future.
(b) Affiliate shall have the right, upon written notice to Network
within thirty (30) days thereof, to elect to include under this Agreement, and
to demand authorization from Network, if necessary, and if elected by Affiliate,
to launch, relaunch, or to continue to distribute (x) the Satellite Service
and/or (y) subject to the provisions of Section 4(b) hereof, the Primary Service
on any Cable television system or other video distribution system or enterprise
(regardless of whether such system or enterprise is affiliated with the owner of
any required distribution equipment) that meets the System Qualifications of
Exhibit A hereto (or for which Affiliate has and exercises subdistribution
rights as provided in Sections 1(a)(iii) through (v) hereof and regardless of
whether such system or enterprise is a Cable television system. Any Cable
television system or other video distribution system or enterprise that
Affiliate elects to include under this Agreement shall be referred to in this
Agreement, individually, as a "System" or, collectively, as
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"Systems". Upon receipt of such a notice, Schedule 1 hereof shall be deemed to
include such System, and such System shall be included as a System under this
Agreement as of the later of: (i) the launch or relaunch date of a Service on
such System, (ii) the date such System first meets the qualifications of Exhibit
A hereto, or (iii) the date for inclusion specified in such notice if such
notice is properly given pursuant to Section 11 hereof. Any then-existing
agreement between or among Network and any one or more third parties applicable
to any such System for carriage of such Service shall terminate and cease to be
effective with respect to such System as of the effective date of the addition
or deemed addition of such System to Schedule 1. Affiliate shall have the right,
in Affiliate's sole and absolute discretion, to discontinue carriage of either
or both Services on any or all Systems, and to delete any or all Systems from
Schedule 1 hereto, by providing Network with written notice within forty-five
(45) days of such deletion.
2. TERM:
(a) Unless earlier terminated pursuant to the terms of this
Agreement, the "Term" of this Agreement shall consist of, collectively, the
Initial Term and any number of Renewal Terms (each as defined herein). The
"Initial Term" of this Agreement shall be for seven (7) years commencing as of
the date hereof.
(b) This Agreement shall automatically renew for successive five
(5) year periods (each a "Renewal Term" and the first such Renewal Term, if any,
shall be referred to herein as the "First Renewal Term") after the expiration of
the Initial Term, and each Renewal Term, unless either, (i) this Agreement is
terminated earlier in accordance with the terms hereof, or (ii) Affiliate
provides written notice to Network of its intent to terminate this Agreement, in
Affiliate's sole and absolute discretion, a minimum of forty-five (45) days
prior to the end of the Initial Term or any Renewal Term.
3. CONTENT OF THE SERVICES:
(a) Based upon a weekly average, during the Term the programming on
the Primary Service shall contain not less than [ * ] music
videos. Based upon a weekly average, during the Term the programming on the
Satellite Service shall contain not less than [ * ] music videos.
Neither advertising announcements (for which Network is compensated by a third
party, not including affiliated entities), nor marketing and promotional
announcements (for which Network is not compensated by a third party, including
affiliated entities) shall be deemed to be programming for the purpose of
calculating the percentages set forth in the first two sentences of this Section
3(a). Network shall, during each month of the Term, send one (1) copy of its
monthly program schedule for each Service (if any) to Affiliate, in care of:
Programming Department. Network agrees that neither of the Services shall
contain (i) programming that has received, or had it been rated would have
received, an MPAA "X" or "NC-17"
* Indicates that material has been omitted and confidential treatment has
been requested therefor. All such omitted material has been filed separately
with the Commission pursuant to Rule 24b-2.
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rating; (ii) religious programming; (iii) a sufficient quantity of children's
programming such that either Service could be characterized as a children's
programming service; (iv) live or taped excerpts or entire portions of actual
courtroom trials, hearings or other similar proceedings as a substantial
component of the programming; (v) pay-per-view movies or events; (vi) financial
news; (vii) blackouts; or (viii) direct on air sales programming (as defined
herein). Notwithstanding the foregoing, each Service may include direct on-air
sales programming (not to exceed [ * ] in length) in the commercial
announcement time allotted to Network pursuant to Section 3(b) hereof; and up to
[ * ] in each hour for the marketing of Network products and Network
licensed merchandise ("Network Merchandising") as provided in Section 3(b)
hereof.
(b) Network shall make available to Affiliate not less than
[ * ] of commercial announcement time per hour of each Service, to be used at
Affiliate's option and control. All such commercial announcement time shall be
equally distributed throughout each and every hour of the applicable Service.
Furthermore, at any time the programming on either Service is anything other
than music videos, none of the commercial announcement time provided to
Affiliate in connection with such programming shall occur during a terminal
break. For purposes of this Section 3(b), "terminal break" shall mean the period
between the actual or apparent end of one program and the actual or apparent
beginning of another program. Affiliate shall have the right to retain for
itself all of the proceeds derived from the sale of the commercial announcement
time furnished to it hereunder. Network commercial announcement time on either
Service shall not exceed ten (10) minutes in any hour; provided, however, that
Network Merchandising shall not be included for purposes of determining the
number of commercial announcement minutes allotted to Network under this Section
3(b). If, in any System, Affiliate is not using the commercial announcement time
allotted to it hereunder, then Network may use Affiliate's unused commercial
announcement time in such System for its own promotional (but not commercial)
announcements. If, pursuant to the immediately preceding sentence, Network is
using any or all of Affiliate's commercial announcement minutes for promotional
announcements on either Service, such announcements may be pre-empted by such
System at any time to insert its own commercial or promotional announcements.
Network shall properly "tone-switch", using industry-recognized equipment, via
audible or inaudible signals, all commercial announcement minutes contained
within the programming of the Satellite Service to enable Affiliate to insert
its commercial announcements. At Affiliate's sole option, Network shall either
(x) properly program each Earthbox with the necessary switching cues to enable
Affiliate to insert its commercial announcements in the Primary Service or (y)
insert Affiliate's commercial announcements in a manner to be mutually agreed on
by the parties hereto. If Network fails properly to "tone-switch" (or, in the
case of an Earthbox, otherwise to identify such commercial announcement minutes)
to enable Affiliate to insert its commercial announcements as provided herein
then, in addition to
* Indicates that material has been omitted and confidential treatment has
been requested therefor. All such omitted material has been filed separately
with the Commission pursuant to Rule 24b-2.
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Affiliate's other remedies hereunder or at law or in equity, Affiliate shall
have the right, without first notifying Network, to preempt the applicable
Service to insert its commercial announcements. Network shall reimburse
Affiliate for all costs incurred by Affiliate or any affiliate of Affiliate
associated with any change by Network in the method of identifying such
commercial announcement minutes in either Service.
(c) If for any reason, including, without limitation, causes beyond
the control of Network, Affiliate, in good faith, determines that either or both
Service(s) include(s) programming prohibited in Section 3(a) hereof and/or does
not include programming of at least the quantity, quality, type and content as
required in Section 3(a) hereof, Affiliate may, in addition to any and all
remedies available to Affiliate hereunder, at law or in equity, at its option,
either (i) discontinue carriage of the applicable Service(s) on any or all
Systems and delete such System or Systems from Schedule 1 hereof, effective at
any time by giving notice to Network within ten (10) days thereof; or (ii)
receive a credit against the Fees (as defined herein) or any Renewal Amounts (as
defined herein) payable by Affiliate to Network pursuant to this Agreement in
the proportion that the hours of programming each day that either is prohibited
by Section 3(a) hereof or deviates from the programming required in Section 3(a)
hereof bears to the total hours the applicable Service(s) are transmitted each
day; such credit to be applied against the Fees payable in any month.
(d) No less than once per day in alternating day parts, but
including each and every day part, each Service shall include the following
audible message: "This programming is brought to you through the cooperation and
support of your local cable company."
(e) During the Term, Network shall provide the Satellite Service in
its entirety to Affiliate. When the phrase "in its entirety" is used in this
Section 3(e), it means that each Service Subscriber receiving the Satellite
Service (a "Satellite Subscriber") shall be able to receive, at all points in
time, programming received at each such point in time by any other subscriber to
the Satellite Service, and if any other subscriber to the Satellite Service is
receiving, at a given point in time, programming that is different from the
programming received by any Satellite Subscriber at such point in time,
Affiliate shall have the unconditional right (in addition to any other remedies
available to Affiliate at law or in equity) to elect which programming it
desires to receive and utilize at any System, which programming it desires to
subdistribute hereunder, and/or which programming it will authorize for
reception by Satellite Subscribers.
(f) In the event that any System, in its sole and absolute
judgment, notifies Network it is unsatisfied with the playlist format of music
videos installed in such System's Earthbox, Network shall, within fifteen (15)
days of such notice, furnish such System with copies of the playlist formats in
all of
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Network's other Earthboxes. If such System then notifies Network of its
desire to select any of such playlist formats (a "Reprogram System"), then
Network shall duplicate such playlist format in the designated Earthboxes in
such Reprogram System no later than thirty (30) days after notification of such
selection. Such Reprogram System shall guarantee to Network [ * ] percent
[ * ] of the per-subscriber revenue received by Network from Primary Subscribers
(as defined herein) served by the applicable Earthbox in such Reprogram System
in the month immediately prior to the month that it became a Reprogram System.
Any Reprogram System may terminate its obligation to guarantee such revenue to
Network by subsequently agreeing to allow Network to resume selection of the
programming for the applicable Earthboxes. A Reprogram System shall have no
obligation to guarantee such revenue to Network if it notifies Network that it
wishes to review the playlist formats of any other distributor of the Primary
Service that is operating in any area with reasonably similar demographics in
two categories: [ * ] and [ * ] . Network shall,
within fifteen (15) days of such notice, furnish such Reprogram System with
copies of such playlist formats and such Reprogram System may then notify
Network of its selection of any such playlist format, which Network shall
duplicate in the designated Earthboxes no later than thirty (30) days after
notification of such selection. Furthermore, Network agrees that the price it
charges Primary Subscribers who call Network to program the music videos
provided by an Earthbox shall not be more than the price it charges any
subscriber receiving the Primary Service who is served by a distributor of the
Primary Service operating in any part of Affiliate's Distribution Area; provided
that Network shall not be required to equalize such prices in such Distribution
Area until Affiliate or any System so requests in a written notice to Network.
Furthermore, notwithstanding any other provision of this Agreement to the
contrary, if Affiliate's Cable television subscribers constitute not less than
fifty percent (50%) of the multi-channel video programming subscribers in a
given community, then Affiliate shall be entitled to "genre exclusivity" in such
community; that is, no other distributor in such community shall be permitted by
Network to operate any playlist format the genre of which is substantially
similar to any playlist format operated by Affiliate in such community
hereunder.
(g) Network agrees that it shall not authorize the terrestrial
broadcast television exhibition of either Service, any portion thereof, or any
programming derived therefrom within the Distribution Areas of any System;
provided, however, that Network may authorize the terrestrial broadcast
television exhibition of either Service within the Distribution Area of any
System on any terrestrial broadcast television station (i) that is owned and
operated either by Network or an affiliate of Network and (ii) that is located
within the Distribution Area of any System in which either (A) less than
twenty-five percent (25%) of the cable television households in the Designated
Marketing Area ("DMA") (the "Minimum Distribution") of such station are
subscribers of such System, or (B) neither Service is carried on a level of
* Indicates that material has been omitted and confidential treatment has
been requested therefor. All such omitted material has been filed separately
with the Commission pursuant to Rule 24b-2.
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service that is the first or second most highly penetrated level of service on a
sufficient number of headends in such System to meet the Minimum Distribution.
In the event Network authorizes the terrestrial broadcast television exhibition
of either Service in an area that is also served by a Cable television system
that (x) becomes a System hereunder after the date of such broadcast
authorization, (y) either has or subsequently attains the requisite Minimum
Distribution and (z) carries a Service on a level of service that is the first
or second most highly penetrated level of service on a sufficient number of
headends in such System to meet the Minimum Distribution, then Network shall
permanently cease such exhibition no later than twelve (12) months after the
date the applicable Service is first launched in such System. Notwithstanding
the foregoing provisions of this Section 3(g), Network may authorize the
terrestrial broadcast television exhibition of the Primary Service in the DMAs
of Chicago, Illinois, and/or St. Louis, Missouri, and/or within the political
boundaries of New York City, New York; provided that such terrestrial broadcast
may only be through a low-power television transmitter, as that term is defined
by the rules and regulations of the Federal Communications Commission.
(h) For purposes of this Agreement, "direct on-air sales
programming" shall mean any programming that includes the direct on-air
marketing, offering for sale and/or sales of products and/or services,
including, without limitation, home-shopping, infomercials and direct response
advertising, regardless of the length of such programming, which may include
product or service demonstrations, promotions, testimonials and/or referrals and
may be in a documentary, talk-show, news, information or other disguised format.
Direct on-air sales programming shall not include Network's regularly scheduled
commercial announcement time (i.e., the commercial announcements distributed
throughout the Services during other programming that are generally less than
thirty (30) seconds in length and primarily used for promotional announcements
or third party advertising of products and services that are not directly sold
to the viewer during such commercial announcements).
4. DELIVERY AND DISTRIBUTION OF THE SERVICES:
(a) During the Term, Network shall, at its own expense, deliver a
signal of the Satellite Service to the earth station of each System designated
by Affiliate or an affiliate of Affiliate to receive the Satellite Service (a
"Satellite System"), to each Satellite Subscriber and, for the purposes of
Section 4(h) hereof, to other locations within the continental United States
designated by Affiliate (in its sole and absolute discretion), by transmitting
such signal via a domestic satellite commonly used for transmission of Cable
television programming. No later than the date upon which the aggregate number
of subscribers (including Service Subscribers) to the Satellite Service first
exceeds [ * ] , Network shall fully encrypt the satellite
signal of the Satellite Service utilizing scrambling technology commonly used in
the domestic Cable television industry. Except
* Indicates that material has been omitted and confidential treatment has
been requested therefor. All such omitted material has been filed separately
with the Commission pursuant to Rule 24b-2.
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as otherwise provided in this Section 4(a), Affiliate shall, at its own expense,
furnish an earth station and all other facilities necessary for the receipt of
such satellite transmission and the delivery of the signal of the Satellite
Service to the Satellite Subscribers in such Satellite Systems. In the event
Network either (i) changes the satellite to which the Satellite Service is
transmitted to a satellite or other transmission medium not susceptible to
viewing by a Satellite System's or Satellite Systems' then-existing earth
station equipment without affecting the receipt of the signals of any other
programming or other services then received or committed to being received by
such Satellite System(s), (ii) changes the technology used by Network to encrypt
the signal of the Satellite Service to a technology not compatible with a
Satellite System's or Satellite Systems' then existing descrambling equipment,
or (iii) compresses, digitizes, or otherwise modifies the signal of the
Satellite Service in such a manner that it cannot be received or utilized by a
Satellite System(s), then Affiliate shall have the right to delete from Schedule
1 of this Agreement, immediately, any such Satellite System(s), and to
discontinue carriage of the Satellite Service, immediately, in any such
Satellite System(s); provided that this right of deletion and discontinuance
shall not apply to any Satellite System(s) if: (1) Network agrees,
unconditionally, to reimburse promptly such Satellite System(s), as the case may
be, for (A) the cost to such Satellite System(s) to acquire and install
equipment necessary to receive the signal of the Satellite Service from such new
satellite, and/or (B) the cost to such Satellite System(s) to acquire and
install equipment necessary for them to descramble, receive and/or utilize the
signal of the Satellite Service; (2) physical space exists at the then-existing
headend or earth station site to accommodate the necessary equipment; and (3)
current zoning and other restrictions permit such additional equipment. Network
agrees to provide Affiliate with at least 120 days' prior written notice of a
satellite or technology change as set forth in subsections (i) through (iii)
above; provided, however, that if a satellite change is the result of a force
majeure event as set forth in Section 10 hereof, no prior written notice shall
be required.
(b) Each System that carries the Primary Service is set forth on
Schedule 1 hereto. During the Term, Affiliate shall notify Network of any
additional System or Systems that will carry the Primary Service. Within
forty-two (42) days of such notification, Network shall deliver and install a
number of Earthboxes in each such System or Systems as set forth below. The
number of Earthboxes Network shall be required to deliver and install shall be
determined by the aggregate number of subscribers in each such System or Systems
that receive the level or levels of service on which the Primary Service is to
be carried ("Primary Subscribers"), as set forth below, for a minimum of
eighteen (18) hours per day. Network shall not be required to deliver and
install any Earthbox in any System (x) with fewer than [ * ] subscribers or (y)
the largest headend of which serves fewer than [ * ]
subscribers, unless mutually agreed to by Affiliate and Network; provided that
Affiliate may purchase,
* Indicates that material has been omitted and confidential treatment has
been requested therefor. All such omitted material has been filed separately
with the Commission pursuant to Rule 24b-2.
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install and maintain the requisite equipment for systems serving fewer than
[ * ] subscribers and Network shall provide all assistance
Affiliate reasonably requires to program and operate such equipment.
If the number of Primary then, the number of Earthboxes
Subscribers in a System is: required to be installed shall be:
--------------------------- ----------------------------------
[ * ] [ * ]
[ * ] [ * ]
In addition to the foregoing requirements, Network shall be required to deliver
and install one (1) additional Earthbox for each incremental [ * ] Primary
Subscribers over [ * ] Primary Subscribers in each System. Each Earthbox
delivered and installed by Network hereunder shall (i) include all programming
and equipment ("Earthbox Systems") necessary and appropriate for Network to
fulfill its obligations under this Agreement, (ii) be in good working condition
(including the Earthbox Systems), and (iii) be maintained in good working
condition (including the Earthbox Systems). In the event of a total failure of
any Earthbox or Earthbox System, Network shall (A) deliver a "DigiCipher"
receiver (or equivalent equipment) within twenty-four (24) hours of Affiliate's
or an affiliate of Affiliate's notification of such failure to Network, to
enable the affected System to receive and temporarily cablecast the Satellite
Service in lieu of the Primary Service, and (B) deliver and install replacements
for the failed Earthbox or Earthbox Systems at such System within seven (7) days
of Affiliate's or an affiliate of Affiliate's first notification of such failure
to Network. In the event of a partial failure of any Earthbox or Earthbox
System, Network shall deliver and install replacement parts at such System
within twenty-four (24) hours of Affiliate's or an affiliate of Affiliate's
notification of such failure to Network. Network shall be responsible for all
costs and liabilities arising from or relating to: (1) the delivery,
installation, maintenance and repair of the Earthboxes and Earthbox Systems, and
(2) the delivery of the requisite DigiCipher receivers (or equivalent
equipment), unless such costs or liabilities result from the negligence of
Affiliate or an affiliate of Affiliate, in which case Affiliate shall be
responsible only for the direct costs and liabilities arising from such
negligence. In addition, Network shall have a technical staff available to
Affiliate and any affiliate of Affiliate via telephone twenty-four (24) hours
per day throughout the Term hereof to assist with any problems or questions
relating to the Earthboxes or Earthbox Systems. This Agreement does not convey,
sell, or assign to Affiliate or any affiliate of Affiliate any right or interest
in or to the Earthboxes or the Earthbox Systems. In the event of the expiration
or termination of this Agreement as to any or all Systems, each such System
shall use commercially reasonable efforts to make the Earthbox(es) and Earthbox
System(s) in such System(s) available to Network for the orderly removal of the
same in a timely manner.
* Indicates that material has been omitted and confidential treatment has
been requested therefor. All such omitted material has been filed separately
with the Commission pursuant to Rule 24b-2.
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(c) Network shall provide to each Satellite System, to each Primary
System, to each Satellite Subscriber and to each Primary Subscriber a video and
audio signal of the applicable Service of a technical quality equivalent to the
greater of the following: (i) comparable to the technical quality of audio and
video signals delivered by other Cable television programming services, or (ii)
the analog technical standards set forth in Exhibit B hereof for a Cable
television programming service delivered in an analog format. Each System, if
any, shall deliver to its Service Subscribers a principal video and audio signal
of each Service of a technical quality at least comparable to other Cable
television programming services, but in no event shall Affiliate be obligated to
deliver a signal of either Service of a quality that is higher than the
technical quality of such Service as provided by Network hereunder. In the event
Network commences delivery of a Service in a digital or other non-analog format,
Network and Affiliate shall negotiate in good faith to establish applicable
technical standards, which standards shall result in a signal of such Service
that is at least as high in quality, as perceived by a typical viewer of such
Service, as the analog standards set forth in Exhibit B hereto.
(d) Affiliate and each System shall have the right to exhibit,
distribute, subdistribute and authorize the reception of either or both Services
pursuant to this Agreement as full-time or part-time services in an analog form,
a digital or modified format, or in any combination thereof. Except as otherwise
provided herein, the Systems, if any, shall distribute the Services during the
hours each such Service is carried by such Systems, without alteration, editing
or delay. Network agrees that Affiliate shall have complete authority to
control, to designate and to change the channel(s) over which each Service is to
be carried on each System.
(e) Network retains and reserves any and all rights in and to all
signal distribution capacity contained within the bandwidth of the signal of the
Satellite Service, including, without limitation, the vertical blanking interval
("VBI"), audio subcarriers and all other distribution capacity contained within
the bandwidth of the signal of the Satellite Service between Network's uplink
facilities and the Systems or Affiliate's other first downlink facilities. In
addition, Network shall have the right to use the signal distribution capacity
contained within the bandwidth of the signal that Network uses to communicate
with the Earthboxes solely for the purposes of programming, controlling and
updating the Earthbox Systems to facilitate distribution of the Primary Service
hereunder. Affiliate retains and reserves any and all rights in and to, and may
use in its sole discretion, all signal distribution capacity contained within
the bandwidth of the signal of the Services, including, without limitation, the
VBI, audio subcarriers or channels and any other portions of the bandwidth that
may be created or made usable as a result of the conversion of the signal of one
or both of the Services to a compressed, digital or other non-analog format as
received at each System or Affiliate's other first downlink facilities from such
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System or other first downlink facility (or, in the case of the Primary Service,
the System headend or other location of the Earthbox) to the Service Subscribers
served by such System or other first downlink facility. Nothing herein shall
preclude Affiliate from exercising and exploiting the rights retained and
reserved by Affiliate pursuant to this Section 4(e) by any means and in any
locations freely and without restriction; provided, however, that any such use
by Affiliate or the Systems shall not materially degrade, or otherwise
materially interfere with, the picture quality of the Services or the audio
portion of the signal of the Services that is the principal audio carriage
frequency of the Services. In the event Network uses the signal distribution
capacity of either Service as permitted hereunder, including, without
limitation, the VBI or audio subcarriers, for the transmission of any other
service, programming, material or product, Network shall not promote such
service, programming, material or product on the Service without the prior
written consent of Affiliate. Furthermore, Network covenants that no other
information, service, programming, data, material or product shall be contained
on the same line(s) of the VBI as any closed-captioning service and/or
identification rating data.
(f) Each System or other distribution system or enterprise may
carry either or both of the Services on the basic level of service, on any tier,
in a package of other services, a la carte, or in any combination thereof.
(g) Except as otherwise permitted herein, Affiliate shall not
itself, and shall not authorize others to, copy, tape or otherwise reproduce any
part of either Service without Network's prior written authorization and in each
of the Systems shall take reasonable and practical security measures to prevent
the unauthorized or otherwise unlawful copying, taping or other reproduction of
either Service by others through the facilities of a System. Neither Network nor
its affiliates shall make any claim against Affiliate or its affiliates for any
home taping by anyone viewing either Service and Affiliate may promote home
taping as part of Affiliate's marketing efforts. Network acknowledges that this
Section 4(g) does not restrict Affiliate's practice of connecting its
subscribers' videocassette recorders or other devices susceptible to use for
home duplication of video programming to the facilities of a System.
(h) Network hereby grants Affiliate, and any affiliate of
Affiliate, the right to receive the signals of the Services, to digitize,
compress, modify, replace or otherwise technologically manipulate the signals,
and to transmit the signals (one or more times) as so altered (the "Altered
Signals") to a satellite(s), or to a location(s) within the continental United
States designated by Affiliate (in its sole and absolute discretion), for
redistribution to terrestrial or other reception sites capable of receiving and
utilizing the Altered Signals, provided that no such alteration, transmission,
redistribution, reception or other use shall cause a material change in a
viewer's perception of the principal video or principal audio presentation of
the Services.
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Network hereby grants Affiliate, any affiliate of Affiliate, and any System (i)
the right to transmit the Altered Signals for the uses set forth in Section 1(a)
of this Agreement or for any other purpose consistent with the intent of the
parties hereto, and (ii) the right to transmit the Altered Signals to any third
party, provided that such third party is authorized by Network pursuant to a
written agreement or otherwise to receive and or distribute the Services. In
addition, Network grants Affiliate the right to receive the signals of the
Services, to digitize, compress or modify the signal of the Services into a
three-dimensional or other augmented or enhanced version, and to distribute such
version to a System(s) or to any other party on the same terms and conditions
set forth herein with respect to distribution of the Services. Furthermore,
Network shall not change the signals of the Services in such a way as to
interfere with, or technically or technologically to defeat, Affiliate's, any
affiliate of Affiliate's, or any System's rights under this Section 4(h). In the
event Network interferes with or otherwise prevents receipt, digitization,
compression, modification, replacement, utilization or manipulation of the
signals of either or both of the Services by Affiliate, any affiliate of
Affiliate, or any System or any location pursuant to the terms of this Section
4(h), then Affiliate shall have the right, in addition to any and all remedies
available to Affiliate at law or in equity, to delete any or all Systems from
Schedule 1 of this Agreement, immediately, and to discontinue carriage,
immediately, of such Service in any or all Systems.
(i) Network hereby grants to Affiliate the right to transmit the
signals of the Services as received or generated at the headend of any System to
the Cable television system(s) of one or more unaffiliated third parties, the
physical facilities of which are connected by Cable or microwave transmission to
the physical facilities of the headend of such System, provided that such third
party is authorized by Network pursuant to a written agreement or otherwise to
receive and/or distribute the signal of an applicable Service. Network also
hereby grants Affiliate the right to receive the signals of the Services from
any unaffiliated third party, the physical facilities of which are connected by
Cable or microwave transmission to the physical facilities of the headend of a
System.
(j) Notwithstanding anything herein to the contrary, and provided
the Satellite Service is programmed by Network and is not programmed
interactively by viewers of the Satellite Service, Affiliate shall have the
right, but not the obligation, to preempt the Satellite Service on the Systems
for up to: [ * ] each day during the Term of this
Agreement to insert other programming (the "Affiliate Inserts"). Affiliate shall
provide Network with at least thirty (30) days' prior written notice of the time
periods during which Affiliate will preempt the Satellite Service for the
Affiliate Inserts; provided, however, that Affiliate may preempt the Satellite
Service for the Affiliate Inserts up to [ * ] without prior
notice to Network. Affiliate may preempt the Satellite Service
* Indicates that material has been omitted and confidential treatment has
been requested therefor. All such omitted material has been filed separately
with the Commission pursuant to Rule 24b-2.
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for an Affiliate Insert only during a terminal break. Affiliate's preemption of
the Satellite Service for the exhibition of the Affiliate Inserts shall be
subject to the following limitations: (i) Affiliate shall not preempt the
Satellite Service for more than one (1), thirty (30) minute period during the
time period from 8:00 p.m. to 11:00 p.m., Eastern Time ("Prime Time"); (ii) the
Affiliate Inserts shall not comprise a simulcast or tape-delayed segment of
programming from any other cable television service, other than a news,
informational, or political service created for Affiliate or an affiliate of
Affiliate; (iii) the Affiliate Inserts shall be spaced at least one (1) hour
apart; provided, however, that Affiliate may preempt the Satellite Service for
one (1) continuous hour during any time period other than Prime Time, with
Network's consent, which consent shall not be unreasonably withheld or delayed
by Network; (iv) the editorial and production quality of the Affiliate Inserts,
as measured by the average viewer, shall be materially similar or better than
the editorial and production quality of the Satellite Service, taking into
account any differences in content and format; (v) during any hour of the
Satellite Service that is preempted for one (1), thirty (30) minute Affiliate
Insert, Affiliate shall be entitled to only fifty percent (50%) of the
commercial announcement time to which Affiliate would otherwise be entitled
during such hour pursuant to Section 3(b) hereof; and (vi) during any hour of
the Satellite Service that is preempted for one (1) continuous hour, Affiliate
shall not be entitled to the commercial announcement time for such hour to which
Affiliate would otherwise be entitled during such hour pursuant to Section 3(b)
hereof.
k) Upon request by Affiliate, Network and Affiliate shall negotiate
in good faith regarding the joint creation, development and distribution of
multimedia, interactive and/or computer applications related to or based on
either Service or either Service's programming; provided, however, that neither
Network nor Affiliate shall have such an obligation to negotiate regarding any
such application if Network is the sole owner of such application and if Network
is creating, developing and distributing such application itself without the
involvement of any third party, except for a third party that is assisting
Network solely as an employee or independent contractor. Network further agrees
that if it grants or offers, or has granted or offered, to any third party
(including an affiliate of Network) the rights to exhibit, distribute,
subdistribute and/or authorize the reception of any multimedia, interactive or
computer application(s) relating to or based on either Service or either
Service's programming, whether or not such application is to be offered in
conjunction with or separate from such Service, Network shall promptly offer
such rights to Affiliate upon terms and conditions, each of which is at least as
favorable as that contained in any such third party grant or offer of rights.
Affiliate shall be entitled to exhibit, distribute, subdistribute and/or
authorize the reception of any such multimedia, interactive or computer
application(s) at a rate no greater than [ * ] of the lower
of (i) Network's then current cable television industry average rate for such
rights or (ii) Network's then-current cable television
* Indicates that material has been omitted and confidential treatment has
been requested therefor. All such omitted material has been filed separately
with the Commission pursuant to Rule 24b-2.
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industry rate card for such rights, if such rate card then exists.
5. FEES:
In consideration of the terms and conditions set forth herein, Affiliate
and Network shall, subject to Sections 5(b) (i), (ii), (iii) and (iv), each pay
the following amounts:
(a) For each calendar month during the Initial Term and the First
Renewal Term (if any), each of the parties hereto shall pay to the other party,
if applicable, the following amounts calculated on a System-by-System basis:
i. DISTRIBUTION OF THE PRIMARY SERVICE ON A FULL-TIME BASIS
Affiliate shall elect, for each System carrying the Primary Service
full-time, to be governed by either subsection i.A or i.B of this
Section 5(a). Affiliate shall notify Network of its election no more
than two (2) times each calendar year, and each election shall be
effective until notification of a subsequent election.
A. Affiliate shall pay [*] Fee (as defined below) for the Primary
Service. Network shall pay Affiliate the greater of either (x)
[ * ] of the net telephone collections (i.e., total revenues
received from AT&T or a similar telephone service, less only any
applicable sales taxes) received by Network from calls from viewers ho
request specific music videos offered by such System on the Primary
Service via an Earthbox located at such System's headend (or other
location of such Earthbox) each month during the Term and the First
Renewal Term (if any) (the "Affiliate Share"), plus any amounts payable
by Network to Affiliate pursuant to Section 7(e) hereof, or (y) the
amount obtained by multiplying, each month during the pertinent calendar
quarter, [*] times the number of Service Subscribers served by such
System (the "Guaranteed Amount").
B. Affiliate shall pay Network a per Service Subscriber fee of [*]
multiplied each month by the number of Service Subscribers in the System
who receive the Primary Service during such month (the "Fee"), which
number shall be calculated pursuant to Section (5)(e) hereof. Network
shall pay Affiliate for promotional support of the Primary Service (the
"Promotional Payment") a monthly amount equal to [*] multiplied by the
number of Service Subscribers in the applicable System who receive the
Primary Service during such month. Affiliate and Network hereby agree
that each System may use the Promotional Payment for, among other
things, cross-channel promotional announcements, which shall be valued
at the applicable System's then-current commercial advertising rate
card.
* Indicates that material has been omitted and confidential treatment has
been requested therefor. All such omitted material has been filed separately
with the Commission pursuant to Rule 24b-2.
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ii. DISTRIBUTION OF THE PRIMARY SERVICE ON A PART-TIME BASIS
Affiliate shall elect, for each System carrying the Primary Service
part-time, to be governed by either subsection ii.A or ii.B of this
Section 5(a). Affiliate shall notify Network of its election no more
than two (2) times each calendar year, and each election shall be
effective until notification of a subsequent election.
A. Affiliate shall pay [*] Fee for the Primary Service. Network
shall pay Affiliate the Affiliate Share for each System that elects this
option. Network shall have no obligation to pay Affiliate a Guaranteed
Amount for any such System; or
B. Affiliate shall pay Network the Fee for each such System that
elects this option. Network shall pay Affiliate the Promotional Payment
for each such System.
iii. DISTRIBUTION OF THE SATELLITE SERVICE ON EITHER A FULL-TIME BASIS
OR A PART-TIME BASIS
Except as provided in Section 5(a)(iv) below, Affiliate shall pay
Network the Fee for each System distributing the Satellite Service;
provided, however, that the Satellite Service shall be
[ * ] following the initial launch of the
Satellite Service in such System, regardless of when the Satellite
Service is first launched in such System.
iv. DISTRIBUTION OF BOTH THE PRIMARY SERVICE ON A FULL-TIME BASIS AND
THE SATELLITE SERVICE ON EITHER A FULL-TIME BASIS OR A PART-TIME BASIS
In the event a System is carrying both (x) the Primary Service on a
full-time basis and on the first or second most highly penetrated level
of service in such System, and (y) the Satellite Service on either a
full-time basis or a part-time basis then, regardless of whether
Affiliate is receiving payment pursuant to Section 5(a)(i)(A) or Section
5(a)(i)(B), Affiliate shall be entitled to carry the Satellite Service
in such System and free of any obligation to pay a Fee therefor.
(b) "Service Subscriber(s)" shall mean each location to which
Affiliate, pursuant to this Agreement, intentionally authorizes a Service
directly, through an affiliate, or through the subdistribution of such Service
to an unaffiliated third party. Service Subscribers shall include each occupied
single family dwelling, each occupied dwelling in a multiple unit building and
each bar, restaurant and other residential or commercial location where such
Service is received. If Affiliate provides such Service to multiple unit
complexes, including,
* Indicates that material has been omitted and confidential treatment has
been requested therefor. All such omitted material has been filed separately
with the Commission pursuant to Rule 24b-2.
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without limitation, apartments, hotels and motels, on a bulk-rate basis, then
the number of Service Subscribers attributable to each such bulk-rate subscriber
shall be equal to the total monthly retail rate the complex is charged in the
applicable System for such Service or for the level or package of services in
which such Service is carried, as the case may be, divided by Affiliate's, or
the pertinent affiliate of Affiliate's, standard monthly retail rate a non-bulk
rate subscriber is charged in the applicable System for such Service or for such
level or package of services, as the case may be; provided, that if any such
multiple-unit complex is situated outside a System's Distribution Area, then the
number of Service Subscribers attributable to such bulk-rate subscriber shall be
equal to the total monthly retail rate such complex is charged for such Service
or for the level or package of services in which such Service is carried, as the
case may be, divided by the monthly retail rate a non-bulk rate subscriber is
charged for such Service or for a substantially similar level or package of
services, as the case may be, in the System that is geographically nearest to
such complex, provided, however, that in no event will the number of Service
Subscribers calculated for any such complex exceed the actual number of occupied
dwelling units receiving such Service in such complex. Service Subscriber shall
not include (i) employees of Affiliate or any affiliated party who are not
charged for such Service; (ii) public officials, administrative personnel or
public buildings that are not charged for such Service; (iii) subscribers who
have not paid their monthly rate to Affiliate, or an affiliate of Affiliate, for
a given month and are subsequently disconnected; or (iv) any location to which
Affiliate or an affiliate of Affiliate indirectly provides such Service through
an unaffiliated third party pursuant to the rights granted in Sections 4(h) and
4(i) hereof. Any subscriber who receives such Service in more than one package
of services or on more than one basis from any System shall be included in the
Service Subscriber count as only one Service Subscriber.
(c) Network shall have the right to negotiate the Fee or Fees,
Affiliate Share, Guaranteed Amount and/or Promotional Payment applicable to any
Renewal Term after the First Renewal Term (if any) upon written notice to
Affiliate at least twelve (12) months prior to the end of the First Renewal Term
(if any) or any succeeding Renewal Term. Any such revised amount (collectively,
"Renewal Amounts") shall be effective upon the later of the commencement of such
Renewal Term or the January 1 following agreement of the parties as to the
Renewal Amounts. The amounts provided for herein for the last year of the First
Renewal Term (or any succeeding Renewal Term for which the parties have agreed
to Renewal Amounts) shall remain in effect after the expiration of such earlier
Term until the Renewal Amounts become effective as provided in the immediately
preceding sentence. Such Renewal Amounts shall be effective for the remainder of
such five (5) year Renewal Term.
(d) Notwithstanding any provision of this Agreement to the
contrary, in the event that at any time during the Initial Term or
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during any Renewal Term, Network proposes and Affiliate accepts any surcharge
for any programming on a Service, any increase in the Fees or Renewal Amounts
due during a Renewal Term and otherwise payable hereunder or any reduction in
the Affiliate Share, the Guaranteed Amount or the Promotional Payment, Affiliate
shall have the right, but not the obligation, to carry the applicable Service in
any or all Systems on the basic level of service, on any tier, in a package of
other services, a la carte, or in any combination thereof. Likewise,
notwithstanding any provision of this Agreement to the contrary, in the event
that at least sixty (60) days prior to the expiration of the First Renewal Term
(if any) hereunder, Affiliate and Network have failed to agree on the Renewal
Amounts and either Affiliate or Network notifies the other party that such first
party chooses to cease negotiations of the Renewal Amounts, Network shall give
Affiliate notice of the Renewal Amounts to be paid hereunder and such Renewal
Amounts shall be deemed the Renewal Amounts to be paid during such succeeding
Renewal Term. Affiliate shall then have the right, but not the obligation, in
its sole and absolute discretion, to continue to provide the applicable Service
pursuant to this Agreement, on the basic level of service, on any tier, in any
package of other services, a la carte or in any combination thereof.
(e) Any undisputed Fees or undisputed Renewal Amounts payable by
Affiliate to Network shall be due and payable forty-five (45) days after the end
of the pertinent calendar month during the Term. In the event of a good faith
dispute regarding any such Fees or Renewal Amounts, no such disputed Fees or
Renewal Amounts shall be due or payable by Affiliate to Network nor subject to
the recovery of prejudgment interest or the terms or conditions of Section 5(f)
below, unless and until such dispute has been resolved to the satisfaction of
Affiliate and Network. Any undisputed amounts payable by Network to Affiliate
hereunder shall be due and payable no later than forty-five (45) days after the
end of each quarter calendar year during the Term. Notwithstanding the foregoing
provisions of this Section 5(e), in the event Affiliate is distributing the
Service to not fewer than [ * ] Service Subscribers on February 28, 1997, then
Affiliate shall pay such amounts to Affiliate as set forth in the succeeding
sentence. Any amounts payable by Network to Affiliate hereunder shall first be
estimated and then shall be due and payable not later than on the twelfth
calendar day after the end of the pertinent month in the following manner: all
such amounts shall be estimated based on the average monthly payment for the
preceding twelve (12) months for such payment in such System (the "Estimated
Payments"); where there have been fewer than twelve (12) such payments for such
System, then the monthly average for all Affiliate's Systems receiving a similar
payment shall instead be used, until such time as there have been twelve
Corrected Payments (as defined below) for the applicable kind of payment in the
applicable System; as soon as Network has complete actual data in respect of
such payment and such System, Network shall submit a report, in a form
reasonably acceptable to Affiliate, detailing such actual data (the "Corrected
Payment"); and the variance
* Indicates that material has been omitted and confidential treatment has
been requested therefor. All such omitted material has been filed separately
with the Commission pursuant to Rule 24b-2.
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between the Corrected Payment and the Estimated Payment shall be accounted for
as an adjustment to the next Estimated Payment for such System. For each
calendar quarter during the Term for which Fees or Renewal Amounts are payable,
the number of Service Subscribers shall be equal to the number of Service
Subscribers as of the first day of each calendar year, adjusted quarterly for
launches, acquisitions, deletions and divestitures. Service Subscribers in
launched or acquired Systems shall be added in the calendar quarter following
completion of the launch or acquisition. Service Subscribers in divested or
deleted Systems shall be deducted from the Service Subscribers count effective
in the calendar quarter of the completion of the divestiture or deletion.
Notwithstanding the foregoing, in no event shall Affiliate be required to pay
Fees or Renewal Amounts on a number of Service Subscribers in any calendar
quarter greater than the average of the actual number of Service Subscribers as
of the first day of the applicable quarter and the actual number of Service
Subscribers as of the last day of the applicable quarter. For each month during
the Term for which amounts are payable by Network to Affiliate hereunder, the
number of Service Subscribers shall be equal to the number of Service
Subscribers as of the first day of each month.
(f) Any undisputed Fees or undisputed Renewal Amounts, and any
amounts payable by Network to Affiliate hereunder that are unpaid after they are
due and payable shall accrue interest at one and one-half percent (1.5%) per
month or the highest lawful rate, whichever is less, from the due date until
payment is received by Network or Affiliate, respectively. The party that is
late in making such payments shall be liable to the other party for all
reasonable costs and expenses (including, but not limited to, fines,
forfeitures, attorneys' fees, disbursements and administrative or court costs)
in connection with the collection of any such overdue amounts.
(g) Affiliate shall have the right to preview the Satellite Service
in any system or enterprise that meets the System Qualifications of Exhibit A
hereto, on a full-time or part-time basis free of any obligation to pay Fees
therefor for periods of up to one (1) month (which such periods may not be
continuous) in order to determine subscriber preferences; provided, however,
that no system or enterprise may preview the Satellite Service more often than
twice per year. Any System or other enterprise that meets the System
Qualifications of Exhibit A hereto and that provides programming services to a
number of subscribers at least equal to the minimums set forth in Sections
4(b)(x) and (y) hereof, shall have the right to preview the Primary Service, on
a full-time or part-time basis, free of any obligation to pay Fees or Renewal
Amounts therefor for periods of up to one (1) month; provided, however, that no
such system or enterprise may preview the Primary Service more than once during
the Term hereof.
6. REPORTS:
(a) Affiliate shall send to Network, as soon as is
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reasonably practicable after the beginning of each calendar month for which a
payment from Network to Affiliate is to be made hereunder, a statement on a form
mutually acceptable to Affiliate and Network. Each statement shall set forth the
total number of Service Subscribers and such other information pertinent
hereunder that relates to the computation of the amount(s) due from Network for
such calendar month. Affiliate shall send to Network, not later than forty-five
(45) days after the end of each calendar quarter during the Term, a statement on
a form mutually acceptable to Affiliate and Network. Each statement shall set
forth the total number of Primary Subscribers and Satellite Subscribers and such
other information as Network may reasonably request that is pertinent hereunder
and which relates directly to the computation of the amount due to Network for
such calendar quarter. Affiliate shall deliver such statement to Network prior
to or along with the amount payable to Network as provided in this Agreement.
(b) Affiliate and Network each agree to keep and maintain accurate
books and records of all matters directly relating to this Agreement in
accordance with generally accepted accounting principles. During the Term and
for one (1) year after the termination of this Agreement, such books and records
of each party shall be available to the other party for inspection and audit,
during normal business hours, at the inspecting party's expense, at the other
party's offices upon reasonable notice to the other party. Each party's right to
perform such audit shall be limited to once in any twelve (12) month period
during the Term and shall be limited to an audit with respect to amounts to be
paid in the current and prior calendar years only. If either party audits the
other party's books hereunder, the inspecting party must make any claim against
the other party within the earlier of three (3) months after the inspecting
party or the inspecting party's representative leaves the other party's offices,
or twenty-four (24) months after the close of the earliest month that is the
subject of such claim. In addition, any such claim, if and when made, must
relate to the then-current calendar year or the immediately preceding calendar
year only. If a claim is not made within any limitation set forth herein, then
the Fees, any Renewal Amounts, and all reports required hereunder shall be
deemed final and incontestable, and the inspecting party shall be deemed to have
forever and conclusively waived its right, whether known or unknown, to collect
any shortfalls from the other party for the period(s) audited. Notwithstanding
the foregoing, Affiliate shall have the unconditional right, at any time during
the Term, and for one (1) year after the expiration or termination of this
Agreement (regardless of the reason for such expiration or termination) to audit
Network's books and records to ascertain whether Network has complied with the
provisions of Section 13(f) hereof; and Affiliate shall have the unconditional
right, at any time during the Term and for one (1) year after the expiration or
termination of this Agreement (regardless of the reason for such expiration or
termination) to make a claim against Network if Affiliate determines, based upon
such audit, that Network has not complied with the provisions of Section 13(f)
hereof.
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7. PROMOTION:
(a) Affiliate shall use reasonable efforts to promote the Services
within the Operating Areas of the Systems. Network shall provide promotional,
marketing and sales material to Affiliate, as available and at Network's cost.
Network agrees (i) to spend television and radio broadcast advertising monies in
DMAs that include substantial portions of the Operating Areas of the Systems
therein and (ii) to spend other marketing monies (i.e., other than broadcast
advertising monies) within the Operating Areas of the Systems to maximize sales
of the Services to Affiliate's cable television subscribers and satellite
subscribers and to Affiliate's potential cable television subscribers and
satellite subscribers in an amount, in both cases, relative to all advertising
and marketing monies spent by Network that is equal to or greater than the ratio
of the number of Affiliate's cable television subscribers (in the Systems) to
the total number of cable television subscribers in cable television systems
carrying a Service, including Affiliate's cable television subscribers (in the
Systems); provided, however, that Network's spending on advertising and
marketing monies in DMAs where neither Service is distributed except by
terrestrial broadcast television authorized by Network pursuant to the terms of
Section 3(g) hereof.
(b) Except to the extent prohibited by any bona fide agreement
negotiated at arm's length between Network and any third party rights holder of
the programming on the Services regarding distribution of the programming
comprising the Services, Affiliate may create, edit, reproduce, distribute and
exhibit promotional segments or clips of the programming of the Services for
purposes of promoting such Services, including, without limitation, use of such
promotional segments or clips on any pay-per-view preview service or any
on-screen programming guide service. Affiliate may tape or otherwise reproduce
any portion of either Service in the exercise of the rights granted herein.
Network agrees to use its best efforts to obtain all the rights necessary for
Affiliate to utilize the programming comprising each Service in the manner set
forth in this Section 7(b).
(c) Network may not undertake marketing tests, surveys, rating
polls and/or other research targeted and/or focused on the Systems or the
Systems' subscribers in connection with a Service without Affiliate's prior
written consent, which consent may be withheld or delayed in Affiliate's sole
and absolute discretion. Network shall provide Affiliate, without cost to
Affiliate, with the results of such research to the extent it applies to a
System or Systems or the subscribers therein. With respect to any tests,
surveys, rating polls and/or other research that apply to a System or Systems
for which Network seeks Affiliate's cooperation, Network shall notify Affiliate
of the nature and scope of each such project and, upon Affiliate's prior written
consent to such project (which consent may be withheld in Affiliate's sole and
absolute discretion), Affiliate shall, to the extent permitted by applicable law
and company policy, cooperate in such research by rendering such assistance as
Network may reasonably request and as
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Affiliate can reasonably provide, the cost of which assistance shall be borne by
Network. Network shall otherwise keep the results of all research relating to a
System or Systems confidential under the provisions of Section 12 hereof and
shall retain the results of such research in an aggregate form only, which
results do not identify any subscriber, Cable television system, Alternative
Technology system, Cable television operator, or Alternative Technology
Operator.
(d) Affiliate acknowledges that the names and marks "THE BOX", "THE
BOX" (with design), "THE BOX, MUSIC TELEVISION YOU CONTROL" (with design),
"MUSIC TELEVISION YOU CONTROL", "XPOSURE" (with design), "BOXtalk", "BOXtunes",
and "THE BOX Worldwide", (and the names of certain programs that appear in the
Services) are the exclusive property of Network and its suppliers and that
Affiliate has not and will not acquire any proprietary rights therein by reason
of this Agreement. Network shall have the right to approve any use of such names
or marks by Affiliate in publicity about Network or the products or programming
included in the Services. Use of such names and marks in routine promotional
materials such as program guides, program listings and xxxx stuffers shall be
deemed approved unless Network specifically notifies Affiliate to the contrary
prior to such use by Affiliate.
(e) In addition to the amounts Network may become obligated to pay
to Affiliate pursuant to the other provisions of this Agreement, Network agrees
that, in the event Network includes any direct on-air sales programming on
either of the Services, Network shall pay to Affiliate the greater of (i) [*] of
Net Sales (as defined herein) or (ii) the then prevailing industry average home
shopping service rebate (the greater of the rebates described in clauses (i) and
(ii) of this Section 7(e) is referred to herein as the "Prevailing Rebate") on
all products and services sold to respondents in the Systems' zip code areas by
such direct on-air sales programming on the Services. Furthermore, Network shall
pay Affiliate the Prevailing Rebate on all products and services sold to
respondents in the Systems' zip code areas who call Network or its agent to
program music videos within the Primary Service. "Net Sales" means gross sales
less taxes, fees, returns and allowances, freight out and cash discounts.
Network agrees that, in the event Network includes any direct on air sales
programming on either of the Services, Network shall, to the extent not
prohibited by applicable law, provide Affiliate with lists of the names and
addresses of respondents from within the zip code areas of the Systems who
respond to such direct on-air sales programming or who purchase products or
services after calling Network to program music videos within the Primary
Service, for use by Affiliate, any affiliate of Affiliate, or any System or
Systems. For the purposes of calculating all of the commissions payable to
Affiliate by Network pursuant to this Section 7(e), where a zip code area is
occupied by a System and one or more distributors of a Service, Affiliate shall
receive a pro rata share of the Net Sales as set forth above, but based on the
ratio of Service Subscribers to total subscribers (including Service
Subscribers) to such Service in the zip code.
* Indicates that material has been omitted and confidential treatment has
been requested therefor. All such omitted material has been filed separately
with the Commission pursuant to Rule 24b-2.
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(f) Network and Affiliate hereby acknowledge that (i) their
interests are often in direct conflict, (ii) their relationship is often
adversarial, and (iii) Network could cause Affiliate significant harm by the
nature of Network's communications to Affiliate's subscribers or to the
governmental entities or franchise or licensing authorities whose opinions and
actions could adversely affect Affiliate's cable television systems or other
video distribution systems or enterprises. Therefore, Network shall not initiate
communications with any subscribers or franchise or licensing authorities or
governmental entities in the Operating Area of any cable television system or
other video distribution systems or enterprises that meet the System
Qualifications of Exhibit A hereto without Affiliate's prior written approval,
and under no circumstances shall Network engage in any communications with any
subscribers or franchise or licensing authority or governmental entity in the
Operating Area of any such system or enterprise that would, or could, adversely
interfere with Affiliate's relations with subscribers, or Affiliate's relations
with any governmental entity or community in any such Operating Area. This
provision shall not apply, (A) to any national advertising by Network in
connection with a Service, (B) to any proceeding before any judicial body, or
(C) to communications with Congress or with any other branch or agency of the
Federal government. This Section 7(f) shall survive the expiration or
termination of this Agreement (regardless of the reason for such expiration or
termination) for a period of two (2) years.
(g) Network shall not include in a Service any advertisements for
"888", "800," "900," or "976" telephone services, or other telephone services or
similar services that xxxx a caller for placing or confirming the call (other
than for the telephone company's cost of the call), that relate directly or
indirectly to gambling, astrological, psychic, occult, sexual or romantic
activities, or adults-only services, or that are directed at children; provided,
however, that notwithstanding the foregoing, Network may include in a Service
advertisements for dating, psychic and astrological services until the earlier
to occur of: (i) the date on which the number of subscribers receiving the
signal of a Service nationwide (including Service Subscribers but excluding
terrestrial broadcast television exhibition of such Service) first exceeds
[ * ] ; (ii) the date on which Network first reports
[ * ] dollars [ * ] or more in gross advertising revenue for any
twelve-month period; or (iii) the date on which the number of Service
Subscribers exceeds [ * ] .
(h) In addition to any other amounts Network may be obligated to
pay to Affiliate hereunder, Affiliate agrees to pay, for ongoing marketing and
promotional support of the Services in the Systems, the amount of [ * ] per
Service Subscriber in Systems where a Service was launched between and including
January 1, 1996 and July 1, 1997. Affiliate shall not be required to submit to
Network affidavits or any other proof of performance relating to
* Indicates that material has been omitted and confidential treatment has
been requested therefor. All such omitted material has been filed separately
with the Commission pursuant to Rule 24b-2.
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the expenditure of such payments.
8. WARRANTIES AND INDEMNITIES:
(a) Network represents and warrants to Affiliate that (i) Network
is a corporation duly organized, validly existing and in good standing under the
laws of the State of Florida; (ii) Network has the power and authority to enter
into this Agreement and to perform its obligations hereunder fully; (iii)
Network is under no contractual or other legal obligation that will in any way
interfere with its full, prompt and complete performance hereunder; (iv) the
individual executing this Agreement on behalf of Network has the authority to do
so; (v) Network is in compliance with all laws, rules, regulations and court and
administrative decrees to which it is subject including, without limitation, all
applicable rules and regulations of the Federal Communications Commission (the
"FCC"); (vi) Network has, or will have acquired at the pertinent time when all
or part of a Service is made available to Affiliate, good title to, and/or each
and every property right (whether relative to tangible or intangible property),
or license, usage or other right necessary or appropriate whatsoever to
effectuate the acts or performances contemplated by, or satisfy the obligations
imposed on it pursuant to, this Agreement, including all permits, rights,
licenses and approvals necessary, required or appropriate for any and all
performances through to the premises and to the listeners frequenting the
premises of Service Subscribers; (vii) neither the Services, any program related
thereto, or any component thereof is subject to, or the subject of, any lien,
encumbrance, charge, lis pendens, administrative proceeding, governmental
investigation, or litigation pending or threatened; (viii) the use and
exhibition of the Services by Affiliate, as contemplated by this Agreement, will
not cause Affiliate to violate any law, rule, regulation or court or
administrative decree; and (ix) the obligations created by this Agreement,
insofar as they purport to be binding on Network, constitute legal, valid and
binding obligations of Network enforceable in accordance with their terms.
(b) Affiliate represents and warrants to Network that (i) Affiliate
is a corporation duly organized and validly existing under the laws of the State
of Delaware; (ii) Affiliate has the power and authority to enter into this
Agreement and to perform its obligations hereunder fully; (iii) Affiliate is
under no contractual or other legal obligation that will in any way interfere
with its full, prompt and complete performance hereunder; (iv) the individual
executing this Agreement on behalf of Affiliate has the authority to do so; and
(v) the obligations created by this Agreement, insofar as they purport to be
binding on Affiliate, constitute legal, valid and binding obligations of
Affiliate enforceable in accordance with their terms.
(c) Network represents, warrants and covenants that (i) the
Services comply, and will continue to comply, in all respects with the
commercial matter limitations of the Children's Television Act of 1990, Public
Law 101-437 (October 18, 1990) and
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the regulations of the FCC promulgated thereunder, as the same may apply to
cable television systems and cable operators, including 47 C.F.R. Section
76.225, 76.305, and as the same may be amended from time to time ("Children's
Television Regulations") and that Network shall provide Affiliate with all
records demonstrating such compliance under the Children's Television
Regulations as are necessary for Affiliate to demonstrate its timely compliance
as a cable operator with the commercial matter limitations and record keeping
requirements of the Children's Television Regulations; and (ii) the Services
comply, and will continue to comply, in all respects with all origination
cablecasting regulations of the FCC, including but not limited to 47 C.F.R.
Sections 76.205 - 76.221 (political equal time, personal attack, lotteries and
sponsorship identification), as the same may be amended from time to time
("Origination Cablecasting Requirements"), and that Network shall provide
Affiliate with all necessary documentation required thereunder for Affiliate to
meet its documentation and public file requirements under the Origination
Cablecasting Requirements in a timely manner. In the event that any other
programming offered by the Services is among the kind of programming that is
regulated by federal, state or local law, as the same may apply to cable
television systems and cable operators, or other non-broadcast television
distributors, then Network shall provide Affiliate with all statements, records
or other documents reasonably necessary for Affiliate to demonstrate timely
compliance as a cable operator or distributor with such laws and regulations.
(d) Affiliate and Network shall each indemnify, defend and forever
hold harmless the other, the other's affiliated companies and each of the
other's (and the other's affiliated companies') respective present and former
officers, shareholders, directors, employees, partners and agents, against and
from any and all losses, liabilities, claims, costs, damages and expenses
(including, without limitation, fines, forfeitures, attorneys' fees,
disbursements and court or administrative costs) arising out of any breach of
any term of this Agreement or any warranty, covenant or representation contained
herein.
(e) Without limiting the provisions of Section 8(d) hereof, Network
shall indemnify, defend and forever hold Affiliate and Affiliate's affiliated
companies and each of Affiliate's and Affiliate's affiliated companies'
respective present and former officers, shareholders, directors, employees,
partners and agents harmless from and against any and all losses, liabilities,
claims, costs, damages and expenses (including, without limitation, fines,
forfeitures, attorneys' fees, disbursements and court or administrative costs)
arising directly or indirectly out of: (i) the content of the Services, or the
use and delivery of the Services hereunder (including, but not limited to,
sponsorship, promotional and advertising spots, any background music and
anything else inserted by Network or any party other than Affiliate), including,
without limitation, any losses, liabilities, claims, costs, damages and expenses
based upon any suit, lien, encumbrance, charge, lis pendens, administrative
proceeding, government investigation or litigation relating to the
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Services, any program included therein or any component thereof, or based upon
alleged or proven libel, slander, defamation, invasion of the right of privacy
or publicity, or violation or infringement of copyright (including music
performance rights for any and all performances through to Affiliate's
subscribers), literary or music synchronization rights, obscenity, indecency, or
any other form or forms of speech (whether or not protected by the Constitution
of the United States or any State) or otherwise arising out of the content of
the Services as furnished by Network hereunder or caused by or arising out of
any breach of any of Network's representations or warranties hereunder (provided
that Affiliate shall, to like extent, indemnify Network and Network's affiliated
companies and each of Network's and Network's affiliated companies' respective
present and former officers, shareholders, directors, employees, partners and
agents for any deletion or addition of material by Affiliate to a Service which
deletion from, or addition to, such Service gives rise to losses, liabilities,
claims, costs, damages and expenses (including, without limitation, fines,
forfeitures, attorneys' fees, disbursements and court or administrative costs));
or (ii) the sale or marketing of any products or services by, through or on the
Services, including, without limitation, claims related to product liability,
patent, trademark, copyright infringement, right of privacy or publicity,
express or implied warranties, warranties relating to compliance with any
applicable governmental laws or regulations, obscenity and personal injuries
(physical, economic or otherwise), to any person who may use, consume or be
affected by the products and services sold or marketed by, through or on the
Services.
(f) In connection with any indemnification provided for in this
Section 8, each party shall so indemnify the other only if the party claiming
the indemnity shall give the indemnifying party prompt notice of any claim or
litigation to which its indemnity applies; it being agreed that the indemnifying
party shall have the right to assume the full defense of any or all
negotiations, claims or litigation to which its indemnity applies. The
indemnified party shall cooperate fully (at the cost of the indemnifying party)
with the indemnifying party in such defense and in the settlement of such claim
or litigation, and the indemnified party shall make no compromise or settlement
of any such claim without the prior written consent of the indemnifying party.
The settlement of any claim or action by the indemnified party without the prior
written consent of the indemnifying party shall release the indemnifying party
from its obligations hereunder with respect to such claim or action so settled.
(g) Network represents, warrants and covenants that (i) it has
procured and shall maintain during the Term, general liability insurance
covering the Service, the Programming and all elements thereof from a nationally
recognized insurance carrier and in accordance with industry standards; (ii)
such insurance shall have minimum limits of at least $1,000,000 per occurrence
and a $3,000,000 annual aggregate for all claims, and shall carry a deductible
of not more than $10,000 for any single claim; (iii)
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such insurance shall provide coverage not only with respect to claims asserted
during the term of the insurance policy, but also with respect to claims that
are asserted during a period of not less than three (3) years following
expiration of such term; (iv) Affiliate shall be named as an additional insured
and loss payee on the insurance policy and such policy shall provide that the
proceeds thereof shall be payable to Affiliate; (v) Network shall provide
Affiliate with documentation to such effect upon the execution hereof; (vi) at
least thirty (30) days' prior to the expiration of such policy, Network shall
provide Affiliate with appropriate proof of issuance of a policy that continues
in force and effect the insurance coverage of the insurance so expiring; and
(vii) Network shall provide Affiliate with thirty (30) days' written notice of
any changes in such policy; provided, however, that Network shall not make any
revisions to such policy that could adversely affect Affiliate's rights without
Affiliate's prior written consent.
(h) The representations, warranties and indemnities contained in
this Section 8 shall continue throughout the Term and the indemnities shall
survive the expiration or termination of this Agreement, regardless of the
reason for such expiration or termination.
9. EARLY TERMINATION RIGHTS:
(a) In addition to Network's other rights at law or in equity or
pursuant to other provisions of this Agreement, Network may, by so notifying
Affiliate, terminate this Agreement: (i) if Affiliate is in material breach of
this Agreement; provided, however, that if such breach is of the type that is
curable, then Network shall not exercise its termination or other rights at law
or in equity hereunder unless Network has, by so notifying Affiliate in writing,
given Affiliate at least thirty (30) days from the time such notice is received
by Affiliate to cure such material breach fully and to demonstrate to Network
that such material breach has been cured, and provided further, that if such
breach is confined to a System or to a limited number of Systems, Network shall
have the right to terminate this Agreement only as to such System or Systems; or
(ii) if Affiliate has filed a petition in bankruptcy, is insolvent, or has
sought relief under any law related to Affiliate's financial condition or its
ability to meet its payment obligations; or (iii) if any involuntary petition in
bankruptcy has been filed against Affiliate, or any relief under any such law
has been sought by any creditor(s) of Affiliate, unless such involuntary
petition is dismissed, or such relief is denied within thirty (30) days after it
has been filed or sought.
(b) In addition to Affiliate's other rights at law or in equity or
pursuant to other provisions of this Agreement, and in addition to any other
right to terminate provided hereunder, Affiliate may, by so notifying Network,
terminate this Agreement: (i) if Network is in material breach of this
Agreement, provided, however, if such breach is of the type that is curable,
then
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Affiliate shall not exercise its termination or other rights at law or in equity
hereunder unless Affiliate has, by so notifying Network, given Network at least
thirty (30) days from the time such notice is sent, to cure such material breach
fully and to demonstrate to Affiliate that such material breach has been cured,
unless a shorter cure period is specified elsewhere in this Agreement for a
specific breach, in which case such shorter cure period shall apply; or (ii) if
Network has filed a petition in bankruptcy, is insolvent or has sought relief
under any law related to Network's financial condition or its ability to meet
its payment obligations; or (iii) if any involuntary petition in bankruptcy has
been filed against Network, or any relief under any such law has been sought by
any creditor(s) of Network, unless such involuntary petition is dismissed, or
such relief is denied, within thirty (30) days after it has been filed or
sought; or (iv) on at least fifteen (15) days' notice in the event that delivery
of a Service is discontinued or interrupted for a continuous period of fifteen
(15) days.
10. FORCE MAJEURE:
Except as herein provided to the contrary, neither Affiliate nor Network
shall have any rights against the other party hereto for the non-operation of
facilities or the non-furnishing of a Service if such non-operation or
non-furnishing is due to an act of God; inevitable accident; fire; lockout;
flood; tornado; hurricane; strike or other labor dispute; riot or civil
commotion; earthquake; war; act of government or governmental instrumentality
(whether federal, state or local); failure of performance by a common carrier;
failure in whole or in part of technical facilities; or other cause (financial
inability excepted) beyond such party's reasonable control. In the event of
non-operation or non-furnishing of a Service, Affiliate shall have the right,
immediately, to insert programming of its choice on the channel otherwise
identified with such Service until such time as such Service is fully
operational again. If such non-operation or non-furnishing of a Service is
caused by any incapacity in Network's distribution facilities, then credit shall
be given or payment made to Affiliate on that portion of such Service that is
affected by any interruption during any month equal to the product of (x) the
Fees, any Renewal Amounts, Affiliate Share, Guaranteed Amount and/or Promotional
Payment, respectively, for the applicable Service that would be due for such
month, calculated in accordance with this Agreement, assuming no interruption of
such Service during such month, multiplied by (y) a fraction, the numerator of
which is the total number of hours of interruption of such Service during such
month and the denominator of which is the total number of hours of such Service
that would have been provided and carried by a System or Systems during such
month absent such interruption(s). If such non-operation or non-furnishing of a
Service is caused by any incapacity in Affiliate's distribution facilities,
then, if Affiliate is paying Fees for the receipt of such Service, Affiliate
shall receive a credit on Fees on that portion of such Service that is affected
by any such interruption during any month, to be calculated as set forth in the
immediately
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preceding sentence; and if Network is paying Affiliate the Affiliate Share,
Guaranteed Amount and/or Promotional Payment for carriage of such Service,
Network shall not be required to make such payments to Affiliate during the
period of such interruption.
11. NOTICES:
Any notice or report given under this Agreement shall be in writing,
shall be sent postage prepaid by registered or certified mail return receipt
requested or by hand or messenger delivery, or by Federal Express or similar
overnight delivery service, or by facsimile transmission, to the other party, at
the following address (unless either party at any time or times designates
another address for itself by notifying the other party thereof by certified
mail, in which case all notices to such party thereafter shall be given at its
most recently so designated address):
To Network: THE BOX Worldwide, Inc.
0000 Xxxxxxx Xxxxxx
Xxxxx Xxxxx, Xxxxxxx 00000
Attention: Chief Financial Officer
To Affiliate: Terrace Tower II
0000 XXX Xxxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile Number: (000) 000-0000
Attention: Senior Vice President,
Programming
cc: Legal Department
Notice or report given by personal delivery shall be deemed given on delivery.
Notice or report given by mail shall be deemed given on the earlier to occur of
actual receipt thereof or on the fifth day following mailing thereof in
accordance with the notice requirements of this Section 11. Notice or report
given by Federal Express or similar overnight delivery service shall be deemed
given on the next business day following delivery of the notice or report to
such service with instructions for overnight delivery. Notice or report given by
facsimile transmission shall be deemed given on the day of transmission if a
business day, or on the next business day after the day of transmission if not
transmitted on a business day.
12. CONFIDENTIALITY; PRESS RELEASES:
Neither Affiliate nor Network shall disclose (whether orally or in
writing, or by press release or otherwise) to any third party (other than each
party's respective officers, directors and employees, in their capacity as such,
and their respective auditors and attorneys; provided, however, that the
disclosing party agrees to be responsible for any breach of the provisions of
this Section 12 by such officers, directors, employees, auditors or attorneys),
any information with respect to the terms and provisions of this Agreement, any
information obtained in any inspection and/or audit of the other party's books
and records,
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any information contained in any data or report required or delivered hereunder
or any materials related thereto; and Network shall not use or disclose to any
third party any information regarding Affiliate's promotion of a Service,
including, but not limited to, Affiliate's promotional or marketing plans,
programs or strategies, as well as the results therefrom, and any information
regarding Affiliate's, any affiliate of Affiliate's or any System's subscribers,
or Alternative Technology subscribers including, but not limited to, the number
of such subscribers, including Alternative Technology subscribers except (as to
all of the preceding): (i) to the extent necessary (but redacted to the greatest
extent possible) to comply with law or with the valid order of an administrative
agency or a court of competent jurisdiction, in which event the party making
such disclosure shall so notify the other as promptly as practicable (and, if
possible, prior to making such disclosure) and shall seek confidential treatment
of such information; (ii) as part of its normal reporting or review procedure to
its parent company, its auditors or its attorneys; provided, however, that the
disclosing party agrees to be responsible for any breach of the provisions of
this Section 12 by such parent company, its auditors or attorneys; (iii) in
order to enforce its rights or perform its obligations pursuant to this
Agreement provided that prior to such disclosure such party shall seek
confidential treatment of such information; and (iv) if mutually agreed by
Affiliate and Network, in advance of such disclosure, in writing. Network shall
not use or disclose information (whether personally identifiable information or
not) to any third party regarding Affiliate's or any affiliate of Affiliate's
cable television subscribers or Alternative Technology subscribers (unless such
information is obtained from the subscribers themselves in a communication that
does not violate the provisions of Section 7(f) hereof) and shall not engage in
any direct mailing or telephone solicitation, for any purpose, to cable
television subscribers or Alternative Technology subscribers of Affiliate or any
affiliate of Affiliate. This Section 12 shall survive, indefinitely, the
expiration or termination of this Agreement regardless of the reason for such
expiration or termination.
13. MISCELLANEOUS:
(a) Assignment; Binding Effect; Reorganization. This Agreement,
including both its obligations and benefits, shall redound to the benefit of,
and be binding on the respective transferees and successors of the parties,
except that neither this Agreement nor either party's rights or obligations
hereunder shall be assigned or transferred by either party without the prior
written consent of the other party; provided, however, no consent shall be
necessary in the event of an assignment to a successor entity resulting from a
merger, acquisition or consolidation by either party or assignment to an entity
under common control, controlled by or in control of either party.
Notwithstanding the foregoing, Network shall give Affiliate thirty (30) days'
prior written notice of a change in the control or ownership of a Service or
Network. In such event, this Agreement shall continue
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but, upon the date of such change of control, at Affiliate's option, (i)
Affiliate may carry such Service on the basic level of service, on any tier, in
any package or packages, or on an a la carte basis in any or all Systems; or
(ii) any or all of the Systems may be deemed deleted from Schedule 1 hereto and
carriage of such Service may be discontinued on any or all of the Systems;
provided, however, that Affiliate shall have the option to continue or restore
carriage of such Service in any or all Systems at any time during the Term. For
purposes of this paragraph, the term "control" means the power to direct the
management and policies of an entity, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise.
(b) Service Combinations. In the event that a Service(s) is(are)
merged with, or Network acquires control of, or Network is acquired by or merges
with, or control of Network is acquired by, or such Service(s) is(are) acquired
by, any other programming service or the owner of any other programming service,
if Affiliate has (at the time of such merger or acquisition) an affiliation
agreement with any such other service or entity, Affiliate shall have the option
to choose to continue carriage of such Service(s) and of such other service, as
the case may be, under either this Agreement or under such other affiliation
agreement. If Affiliate does not have an affiliation agreement with such other
service or entity, Affiliate shall have the option to elect to have this
Agreement continue to apply to such Service(s) after such merger or acquisition,
or to any surviving service after such merger or acquisition.
(c) Entire Agreement; Amendments; Waivers. This Agreement contains
the entire understanding of the parties and supersedes and abrogates all
contemporaneous and prior understandings of the parties, whether written or
oral, relating to the subject matter hereof, including in particular the letter
agreement between Network and Affiliate dated March 7, 1995. This Agreement may
not be modified except in writing executed by both parties hereto. Any waiver of
any provision of, or right included in, this Agreement must be in writing and
signed by the party whose rights are being waived. No waiver by either Affiliate
or Network of any breach of any provision hereof shall be or be deemed to be a
waiver of any preceding or subsequent breach of the same or any other provision
of this Agreement. The failure of Affiliate or Network to enforce or seek
enforcement of the terms of this Agreement following any breach shall not be
construed as a waiver of such breach.
(d) Governing Law. The obligations of Affiliate and Network under
this Agreement are subject to all applicable federal, state and local laws,
rules and regulations (including, but not limited to, the Communications Act of
1934, as the same may be amended from time to time, and the rules and
regulations of the FCC promulgated thereunder), and this Agreement and all
matters or issues collateral thereto shall be governed by the laws of the State
of New York (except for issues of perpetuity which shall be governed by the laws
of the State of Colorado), without
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regard to choice of law rules.
(e) Relationship. Neither Affiliate nor Network shall be, or hold
itself out as, the agent of the other under this Agreement. No subscriber of
Affiliate shall be deemed to have any privity of contract or direct contractual
or other relationship with Network by virtue of this Agreement or Network's
delivery of a Service to Affiliate hereunder. Likewise, no supplier of
advertising or programming or anything else included in a Service by Network
shall be deemed to have any privity of contract or direct contractual or other
relationship with Affiliate by virtue of this Agreement or Affiliate's carriage
of such Service hereunder. Nothing contained herein shall be deemed to create,
and the parties do not intend to create, any relationship of partners, joint
venturers or agents, as between Affiliate and Network, and neither party is
authorized to or shall act toward third parties or the public in any manner that
would indicate any such relationship with the other. Network disclaims any
present or future right, interest or estate in or to the transmission facilities
of Affiliate and any affiliate of Affiliate and the parents, subsidiaries,
partnerships or joint venturers controlling the Systems on which a Service is
transmitted, such disclaimer being to acknowledge that neither Affiliate nor the
transmission facilities of the Systems (nor the owners thereof) are common
carriers.
(f) Favorable Terms. Network agrees that if it gives or offers, or
has given or offered, to any third party (i) a lower net effective rate per
subscriber for a Service than Affiliate is paying per Service Subscriber
hereunder, (ii) the right to demand an Earthbox with fewer subscribers to the
Primary Service in a Cable television system than is provided herein, (iii) a
more favorable Promotional Payment, (iv) a more favorable Affiliate Share, (v) a
more favorable Guaranteed Amount, or (vi) any other economic or non-economic
term, provision, covenant or consideration, that are or is more favorable to
such third party than Affiliate is receiving hereunder (clauses (i) through (vi)
above, individually and collectively, shall be referred to herein as a "More
Favorable Provision"), then Network shall promptly offer such More Favorable
Provision to Affiliate for the same amount of time such More Favorable Provision
is or was available to such third party. A More Favorable Provision shall not
include any pertinent term, provision, covenant or consideration given or
offered to any third party, provided it is the identical term, provision,
covenant or consideration offered and granted to Affiliate the same number of
times at one or more previous points in time. A More Favorable Provision shall
include any term, provision, covenant or consideration, regardless of whether
there is a corresponding term, provision, covenant or consideration concerning
the subject matter of such More Favorable Provision in this Agreement or whether
such term, provision, covenant or consideration relates to such third party's
entire subscriber base or less than the entire base (e.g., a More Favorable
Provision relating to a "test" of "sample" group of subscribers). The
calculation of net effective rate shall include all economic and
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non-economic terms and provisions of an agreement that involve financial or
other outlays (excluding contingent liabilities) by either party for the benefit
of the other or in direct or indirect connection with the rates for the
Services, or that involve direct or indirect consideration payable by either
party to the other, such as discounts, credits, marketing support or adjustments
of any kind including, but not limited to, actual per subscriber rates, launch
reimbursements, advertising support, volume or other discounts, reimbursements,
channel position fees, discounts, credits or rebates, pre-payment of loans,
deductions for uncollected accounts, market contributions and other incentives,
cash payments (whether conditional or not), sales or leases of equipment, studio
facility discounts, free or discounted marketing materials, payment terms and
other financings. In determining "net effective rates," the actual number of
subscribers to each Service (rather than projected or expected subscribers or
the number of such third party's subscribers who are not actually subscribers to
such Service) will be considered.
When comparing the "net effective rates" of Affiliate and any third
party distributor of the Services, all subscribers to the Services of Affiliate
and each distributor shall first be divided into six (6) classes, and then the
"net effective rates" for the subscribers in each class shall be separately
compared; the six (6) classes of subscribers to the Services shall be: (A) all
subscribers to whom the Primary Service is available full-time but for whom no
Fee is paid; (B) all subscribers to whom the Primary Service is available
full-time and for whom a Fee is paid; (C) all subscribers to whom the Primary
Service is available part-time but for whom no Fee is paid; (D) all subscribers
to whom the Primary Service is available part-time and for whom a Fee is paid;
(E) all subscribers to whom the Satellite Service (but not the Primary Service)
is available; and (F) all subscribers to whom the Primary Service is available
full-time and the Satellite Service is also available either full-time or part
time, provided only that both Services are available on the first or second most
highly penetrated levels of service.
Without limiting the foregoing, and for purposes of comparing the actual
rate per subscriber to a Service payable by Affiliate to the actual rate per
subscriber to such Service payable by a third party distributor of such Service
distributing such Service through the use of any television distribution system
or enterprise, the penetration of such Service for such third party distributor
shall be calculated as if the denominator includes all recipients of any
television service through such system or enterprise, regardless of the number
of parties distributing television services through such system or enterprise.
Network agrees to provide to Affiliate a written certification on each
annual anniversary date of this Agreement, signed by a duly authorized officer
of Network, stating that Network has satisfied its obligations under this
Section 13(f). Notwithstanding the foregoing, the provisions of this Section
13(f) shall not apply to any agreement between Network and any
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distributor that has expired prior to the date hereof.
(g) Severability. The invalidity under applicable law of any
provision of this Agreement shall not affect the validity of any other provision
of this Agreement, and in the event that any provision hereof is determined to
be invalid or otherwise illegal, this Agreement shall remain effective and shall
be construed in accordance with its terms as if the invalid or illegal provision
were not contained herein; provided, however, that both parties shall negotiate
in good faith with respect to an equitable modification of the provision, or
application thereof, held to be invalid and provisions logically related
thereto.
(h) No Inference Against Author. Network and Affiliate each
acknowledge that this Agreement was fully negotiated by the parties and,
therefore, no provision of this Agreement shall be interpreted against any party
because such party or its legal representative drafted such provision.
(i) No Third Party Beneficiaries. The provisions of this Agreement
are for the exclusive benefit of the parties hereto and their permitted assigns,
and no third party shall be a beneficiary of, or have any rights by virtue of,
this Agreement.
(j) Headings. The titles and headings of the sections in this
Agreement are for convenience only and shall not in any way affect the
interpretation of this Agreement.
(k) Non-Recourse. Notwithstanding anything contained in this
Agreement to the contrary, it is expressly understood and agreed by the parties
hereto that each and every representation, warranty, covenant, undertaking and
agreement made in this Agreement was not made nor intended to be made as a
personal representation, undertaking, warranty, covenant, or agreement on the
part of any incorporator, stockholder, director, officer, partner, employee or
agent, past, present or future, or any of them, and any recourse, whether at
common law, in equity, by statute or otherwise, against any of them is hereby
forever waived and released.
(l) Taxes. Affiliate shall have the right to withhold any portion
of any amounts payable by Affiliate to Network that Affiliate is required to
withhold by applicable law, and to pay any such amounts over to any appropriate
governmental authority. Network shall provide such assistance as is necessary to
enable Affiliate to discharge its obligation to withhold and/or pay taxes on
Network's behalf. Network shall indemnify, defend and forever hold harmless
Affiliate and any affiliate of Affiliate from and against any and all
liabilities, claims, costs (including attorneys' fees), damages, liens,
encumbrances, charges, suits or actions arising directly or indirectly out of
any tax or other amount withheld, paid or otherwise collected by Affiliate on
Network's behalf, or owed or paid by Network to any governmental entity.
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The parties hereto have executed this Agreement as of the date first
above written.
AFFILIATE: NETWORK:
By:/s/ XXXXX X. XXXXXX By:/s/ XXXXXXX X. XXXXX
------------------------------ -----------------------------
Title: Vice President-Programming Title: President, The Box U.S.A
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