Exhibit 10.6
SERVICE AND LICENSE AGREEMENT
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This Service and License Agreement (this "Agreement") is made and entered
into as of June 9, 1997 (the "Effective Date"), by and between National Digital
Television, Inc., a Delaware corporation doing business as Headend in the Sky(R)
("HITS") and TVN Entertainment Corporation, a Delaware corporation ("TVN"). HITS
and TVN sometimes are referred to collectively in this Agreement as the
"Parties" and each individually as a "Party."
Recitals
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A. HITS is the owner of certain computer programs, documentation and
related information, including the intellectual property rights pertaining
thereto, described on Exhibit A to this Agreement (the "Software"). The primary
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function of the Software is to enable remote authorization and deauthorization
of General Instruments MPEG2 digital addressable television set-top devices, and
set-top devices of other manufacturers that are fully interchangeable with
General Instruments MPEG2 digital addressable set-top devices (collectively,
"Set-Tops") for the receipt of multichannel video programming.
B. HITS is in the business of providing addressable set-top services to
operators of cable television systems, including the remote authorization and
deauthorization of Set-Tops, and utilizes the Software and other proprietary
software and technology developed by HITS, or licensed by third parties to HITS,
for such purposes.
C. TVN wishes to obtain authorization and deauthorization services from
HITS for TVN's cable television operator affiliates ("TVN Affiliates") for a
period of one year, and thereafter obtain a license to use the Software for the
purpose of providing authorization and deauthorization services to subscribers
of TVN Affiliates.
D. HITS is willing to provide such authorization and deauthorization
services and grant such license to TVN on the terms and conditions stated in
this Agreement.
Agreements
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In consideration of the mutual covenants and promises stated in this
Agreement, HITS and TVN agree as follows:
1. Definitions. As used in this Agreement, the following capitalized terms
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have the following meanings:
(a) "Authorization Instructions" means instructions for any Set-Top to
mm on or off the reception of one or more video and (if and to the extent the
Software is capable of doing so) associated audio programming services that it
is capable of receiving.
(b) "Designated Headends" means cable television system headends that:
(A) are (i) located in the United States, (ii) operated by a TVN
Affiliate, and (iii) not a satellite master antennae television system,
multipoint distribution system, multichannel multipoint distribution system,
direct broadcast satellite system or direct-to-home satellite C-band or Ku-band
receiver, but only to the extent such headends serve subscribers of cable
television systems that meet the foregoing criteria; and
(B) are specified on Exhibit B as amended from time to time, to
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receive through Set-Tops the television programming services to which they have
subscribed, including the activation or deactivation of Set-Tops; provided,
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however, that TVN may add or delete Designated Headends by giving thirty days'
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prior written notice to HITS of additional headends of TVN Affiliates that
comply with the requirements of Section 2.3, or of the Designated Headends to
be-deleted and the effective date of deletion, upon which Exhibit B
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automatically shall be amended accordingly. With each such notice, TVN shall
deliver such information with respect to such Designated Headends as is required
by HITS in order to activate or deactivate them.
(c) "Documentation" means user manuals and other written materials
that relate to particular Object Code, including Maintenance Modifications and
Enhancements thereto if, when and to the extent such Maintenance Modifications
or Enhancements are delivered to TVN by HITS under this Agreement.
(d) "Enhancements" means modifications, additions or substitutions,
other than Maintenance Modifications, made by HITS to any Object Code or
Documentation that accomplish incidental, performance, structural, or functional
improvements; and "Basic Enhancements" means Enhancements that result from
warranty or maintenance services or that otherwise accomplish incidental,
structural, functional, and performance improvements for which HITS does not
generally impose a separate charge on its customers.
(e) "HITS Facilities" means HITS renders such services at the TCI
National Digital Television Center, 0000 Xxxx Xxx Xxxxx Xxxx, Xxxxxxxxx, XX
00000 and HITS' primary satellite transmission facility, 0000 Xxxx Xxxxx Xxxx,
Xxxxxxxxx, XX 00000.
(f) "Licensed Materials" means the Object Code and Documentation of
the
Software.
(g) "Maintenance Modifications" means modifications, updates, or
revisions made by HITS to any Object Code or Documentation of the Licensed
Materials that correct errors, support new releases of operating systems, or
support new models of input-output (I/O) devices with which any such Object Code
is designed to operate.
(h) "Object Code" means computer programming code for computer
programs in machine-readable form, contained in a medium that permits it to be
loaded into and operated
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on computers. Object Code of the Licensed Materials shall include Maintenance
Modifications and Enhancements thereto if, when and to the extent delivered by
HITS to TVN under this Agreement.
2. Interim Provision of Set-Top Authorization Services.
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2.1 Provision of Services. During the period commencing upon that first
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date on which HITS makes Set-Top Authorization Services available to TVN, and
ending upon the last day before the first anniversary of such date (the "Interim
Services Period"), HITS shall provide to TVN at the HITS Facilities, and TVN
shall purchase from HITS, the Set-Top Authorization Services. HITS shall
exercise commercially reasonable efforts to make Set-Top Authorization Services
available to TVN within 90 days after the Effective Date, subject to TVN
providing HITS with an appropriate billing interface and complying with HITS'
other technical requirements for HITS' provision of the Set-Top Authorization
Services. Following expiration of the Interim Services Period, HITS shall have
no responsibility whatsoever to provide any Set-Top Authorization Services, on a
transition basis or otherwise.
2.2 Nature of Services. "Set-Top Authorization Services" provided by HITS
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pursuant to this Agreement shall mean and consist only of (i) the receipt by
HITS from TVN at the HITS Facilities, through a compatible billing system
interface provided by TVN, of Authorization Instructions for TVN's Affiliates'
Set-Tops, and (ii) the retransmission by HITS via satellite of such
Authorization Instructions to Designated Headends in the form of a data stream.
It shall be the responsibility of TVN to take the data stream received from HITS
at Designated Headends and convert and deliver the Authorization Instructions
received in such data stream to Set-Tops of TVN Affiliates subscribers. HITS may
change the satellite or transponders on the existing satellite by which the
Interim Services are provided upon at least 60 days' prior written notice to
TVN, and TVN shall be responsible for notifying all TVN Affiliates of any such
change. Notwithstanding the foregoing, HITS shall not be required to give any
prior notice if such a change is required due to a Service Interruption (as
defined in Section 11.2) or due to an event of Force Majeure (as defined in
Section 12.11).
2.3 Equipment Responsibilities. TVN and TVN Affiliates shall be
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responsible for acquiring, installing and maintaining all equipment, software
and materials necessary for TVN Affiliates to receive the Authorization
Instructions, including all information necessary to transmit Authorization
Instructions from Designated Headends and to convert and deliver the
Authorization Instructions received in such data stream to their respective
subscribers' Set-Tops (including but not limited to all data lines, computers
and software required to accomplish the foregoing). Without limiting the
foregoing, TVN shall be responsible for providing a billing system interface
that is compatible with specifications provided by HITS upon execution of this
Agreement, including an appropriate dataline connection to the HITS Facilities.
HITS may modify such specifications from time to time to provide for new
functionality or correct problems, or in the event of a security breach. TVN
shall be responsible for ensuring that TVN Affiliates' equipment (including but
not limited to Set-Tops) is capable of receiving and processing Authorization
Instructions.
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2.4 Programming Issues. TVN acknowledges that HITS does not purport to
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grant to TVN, to any TVN Affiliates or to any of their subscribers, any right to
receive or distribute any programming services, and that HITS is acting solely
pursuant to instructions received from TVN and TVN Affiliates as to which
subscribers of TVN Affiliates are authorized to receive one or more of such
programming services. TVN shall be responsible for obtaining, or ensuring that
TVN Affiliates shall have obtained, authorizations from programming providers to
receive programming services through the Designated Headends and to maintain
such authorizations in effect during the Interim Services Period. TVN shall be
responsible for requiring that all TVN Affiliates pay when due all subscriber
and license fees payable to programming providers with respect to their carriage
of programming services delivered by TVN, and the provision of such programming
services to their subscribers. HITS shall have no responsibility for reporting
of subscriber counts or authorization activity to any programming providers.
3. License of Software.
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3.1 Grant of License. Subject to the terms, conditions and restrictions
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stated in this Agreement, commencing upon the first day after expiration of the
Interim Services Period and ending upon the date of expiration or earlier
termination of this Agreement (the "License Term"), HITS grants to TVN the
nonexclusive, nontransferable right and license (the "License") to use the
Licensed Materials for the sole and exclusive basis of issuing Authorization
instructions to subscribers (other than Ineligible Subscribers) of TVN
Affiliates that are served by Designated Headends.
3.2 Other Required Software and Authorizations. The License does not
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include any sublicense or other right with respect to any software not described
in Exhibit A to this Agreement, nor (absent the consent of the relevant third
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parties) programming code of third parties incorporated or imbedded in the
Object Code of the Licensed Materials ("Imbedded Third Party Software"). TVN
acknowledges that (i) software other than the Licensed Materials will be
required in order for TVN to be able to issue Authorization Instructions by
means of the Licensed Materials, and (ii) the authorization of certain third
parties may be necessary for TVN's use of Imbedded Third Party Software. HITS
shall advise TVN of any Third Party Software of which it is aware, prior to the
commencement of the Licensed Term; TVN shall be responsible for obtaining
licenses for its use thereof. It shall be a condition to the effectiveness of
the License, and to the obligations of HITS to deliver to TVN a copy of the
Software, that those parties owning the Imbedded Third Party Software have
granted to HITS all necessary consents and authorizations for the grant of the
License and the delivery of the Software to TVN.
3.3 Delivery of Licensed Materials. On or before the commencement of the
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License Period, HITS shall deliver to TVN a single copy of the Object Code and
Documentation for the Licensed Materials in their then-current form.
3.4 Location of Licensed Materials; Restricted Use. TVN shall install the
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Object Code of the Licensed Materials only on a single file server located at
0000 Xxxx Xxxxxxx,
0
Xxxxxxx, XX 00000, and shall not duplicate or make any copies of the Object Code
of the Licensed Materials except copies for backup purposes only. TVN shall not
permit any other person or entity to make any use of the Licensed Materials
whatsoever.
3.5 Use of Software. TVN acknowledges that it is solely responsible for
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obtaining all hardware, software, equipment and services necessary for it to
issue Authorization Instructions by means of the Licensed Materials, and that
HITS shall have no obligation to provide any of the foregoing.
4. Delivery of Maintenance Modifications and Enhancements. During the License
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Term, HITS shall deliver to TVN Basic Enhancements and Maintenance Modifications
created from time to time with respect to the Object Code and/or Documentation
of the Licensed Materials, if, as and when such Basic Enhancements and
Maintenance Modifications are developed by HITS. HITS shall have no obligation
to deliver any other Enhancements to or versions or releases of, the Software.
5. Fees and Payments.
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5.1 Calculation of Service and License Fees. TVN shall pay to HITS (i) for
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Set-Top Authorization Services, during the Interim Services Period, and (ii) for
the License, for each twelve month period during the License Term ending on an
anniversary of the Effective Date (each such period a "License Term Year"), an
mount calculated with respect to the number of Set-Tops of TVN Affiliates for
each month falling during the Interim Services Period or such License Term Year,
as applicable, as follows ("Fees"):
[*] active Set-Tops $[*] per month per active Set-Top
[*] active Set-Tops $[*] per month per active Set-Top
[*] active Set-Tops $[*] per month per active Set-Top
All Additional active Set-Tops $[*] per month per active Set-Top
Notwithstanding the foregoing, however, Fees for the Interim Services Period
shall not be less than [*] (the "Minimum Interim Services Fee") and for each
License Term Year shall not be less than [*] (for each License Term Year, the
"Minimum License Fee"). For each calendar month during the term of this
Agreement, the number of active Set-Tops of TVN Affiliates shall be equal to the
average number of Set-Tops served by Designated Headends during such month.
5.2 Payment of Service and License Fees.
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(a) On the Effective Date, TVN shall pay [*] of the Minimum Interim
Services Fee, and shall pay the balance thereof on the first day of the Interim
Services Period. TVN shall pay the Minimum License Fee for each License Term
Year in advance, on or before the first day of such License Term Year.
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
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(b) TVN shall pay to HITS the amount, if any, by which the actual
amount of Fees for each month during the Interim Services Period exceeds $[*],
within ten days after the date of invoice therefor given by HITS following the
end of such month. Absent manifest error, HITS' calculation of the number of
active Set-Tops on the basis of which such Fees are calculated shall be
conclusive.
(c) Within thirty days after the end of each month during the License
Term, TVN shall pay to HITS the amount, if any, by which the actual amount of
Fees for such month exceed $[*]. Each such payment shall be accompanied by a
written statement, certified by an officer of TVN, stating the total number of
active Set-Tops for the month to which such payment relates and the calculation
of Fees for that month.
(d) All amounts not paid when due shall bear interest until paid at
the rate of 1.5% per month, or the highest lawful rate, whichever is lower, and
all interest or discounting shall be compounded on a monthly basis.
5.3 Books and Records.
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(a) TVN shall keep and maintain in accordance with generally accepted
accounting principles accurate books and records with respect to the number of
active Set-Tops of TVN Affiliates. During the term of this Agreement and for a
period of two years thereafter, TVN shall make such books and records available
to HITS upon reasonable notice for inspection and audit during normal business
hours at TVN's offices, any such audit to be performed at HITS' expense unless
it reveals that Fees owed by TVN to HITS with respect to the period covered by
the audit exceed 105% of the Fees actually paid by TVN, in which ease TVN shall
reimburse HITS for its costs and expenses in conducting such audit.
(b) TVN shall require each TVN Affiliate to provide to TVN, on a
monthly basis, the information necessary for TVN to determine the amount of
Fees, and to afford TVN the right to audit the books and records relating to
such information. From time to time, upon the request of HITS (but not more
frequently than once in any six-month period), TVN shall exercise such audit
rights and report the results thereof to HITS.
6. Term and Termination.
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6.1 Term. This Agreement shall be effective on the Effective Date and,
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unless earlier terminated in accordance with paragraph 6.2, shall continue in
effect until the seventh anniversary of the Effective Date (the "Expiration
Date"), upon which it shall expire. Notwithstanding the foregoing, however, the
Expiration Date may be extended upon the mutual written agreement of HITS and
TVN, each in their discretion.
6.2 Termination. Either party may terminate this Agreement effective upon
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written notice to the other party: (i) in the event of the insolvency of the
other party or the institution of voluntary or involuntary proceedings in
bankruptcy or under any other insolvency law, or an
[*] = CERTAIN INFORMATION ON THIS PAGE HAS BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED WITH
RESPECT TO THE OMITTED PORTIONS.
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arrangement with creditors, or corporate reorganization, receivership or
dissolution, of the other party; (ii) in the event the other party fails to pay
any amount when due hereunder, and such failure is not cured within ten days
after written notice thereof by the non-breaching party to the breaching party;
or (iii) other party has breached any other material obligation under this
Agreement, or any of its representations or warranties under this Agreement are
inaccurate in any material respect, and such breach or inaccuracy is not cured
within ten days after written notice thereof by the non-breaching party to the
breaching party.
6.3 Effect of Termination. Termination or expiration of this Agreement
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shall not release either party from any liability arising out of or with respect
to periods prior to the effective date of termination. The obligations stated in
Articles 6, 7, 8, 9, 10 and 11 of this Agreement shall survive termination or
expiration of this Agreement.
6.4 Termination of the License. The License shall terminate upon
--------------------------
expiration or termination of this Agreement. Immediately upon expiration or
termination of this Agreement, TVN shall cease all use of the Licensed Materials
and delete all Licensed Materials from its computers, and immediately shall
return to HITS all copies of the Licensed Materials in TVN's possession or
control.
7. Protection of Proprietary Information.
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7.1 No Title to Licensed Materials in TVN. TVN's rights in the Licensed
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Materials are limited as described in Article 1, and TVN acquires no ownership
of or other title to any of the Licensed Materials by virtue of this Agreement.
7.2 Reservation of Rights and Acknowledgment. TVN acknowledges that the
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Licensed Materials constitute commercially valuable, proprietary products of
HITS, the design and development of which reflect the effort of skilled
development experts and the investment of considerable time and money. TVN
acknowledges that the Licensed Materials embody substantial trade secrets of
HITS, which pursuant to this Agreement are enraged to TVN in confidence, to use
only as authorized by this Agreement. HITS reserves and claims all rights and
benefits afforded under applicable laws, including federal copyright law, in the
Licensed Materials. Any distribution, copying or modification of Licensed
Materials not expressly authorized by this Agreement is strictly forbidden.
7.3 Protection of HITS Trade Secrets; Anti-Piracy Measures.
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(a) TVN shall not at any time disclose or disseminate any of the trade
secrets embodied in the Licensed Materials to any other person, firm or
organization or to any employee or agent of TVN who does not need to obtain
access thereto in connection with TVN's exercise of its rights under this
Agreement. TVN shall at all time exercise its best efforts to ensure that all
persons afforded access to the Licensed Materials protect HITS' trade secrets
against unauthorized use, dissemination or disclosure. TVN shall not reverse
engineer, descramble,
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decode, disassemble or decompile the Object Code of the Licensed Materials, or
attempt to do
so.
(b) TVN acknowledges the necessity of preventing unauthorized persons
from obtaining access to the Licensed Materials, Authorization Instructions or
any trade secrets or other confidential or proprietary information relating
thereto, in order to protect against the piracy and other unauthorized use
thereof, and of video programming by means thereof, and shall exercise
strenuous, diligent, good faith efforts to do so. Without limiting the
generality of the foregoing, TVN shall comply with such anti-piracy and other
security programs and procedures, if any, as HITS promulgates from time to time.
7.4 Restricted Rights. The Licensed Materials are provided to TVN with
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Restricted Rights. Use, duplication or disclosure by or on behalf of the United
States of America, its agencies and/or instrumentalities (the "Government") is
subject to the restrictions stated in subparagraph (c)(1)(ii) or the Rights in
Technical Data and Computer Software clause at DFARS 252.227-7013, or
subparagraphs (c)(1) and (2) of the Commercial Computer Software -- Restricted
Rights at CFR 52.227-19, and/or the particular department or agency regulations
or roles which provide HITS with protection equivalent to or greater than such
cited clauses and subparagraphs. TVN shall comply with all requirements of the
Government to obtain such Restricted Rights protection. The manufacturer of the
Licensed Materials is National Digital Television, Inc., 0000 Xxxx Xxx Xxxxx
Xxxx, Xxxxxxxxx, Xxxxxxxx 00000.
8. Representations and Warranties.
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8.1 Mutual Representations and Warranties. Each of HITS and TVN represents
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and warrants to the other that (i) it has full power and legal right to execute
and deliver this Agreement and to perform its obligations under this Agreement;
(ii) the execution, delivery and performance of this Agreement have been
authorized by all required action, corporate or otherwise, and do not violate or
conflict with any provisions of its charter or bylaws or any of its contractual
obligations or requirements of law binding on it; (iii) this Agreement
constitutes its legal, valid and binding obligation, enforceable against it in
accordance with its terms; and (iv) it has and shall maintain in full force and
effect throughout the term of this Agreement, all governmental permits, licenses
and authorizations required on its part to perform its obligations under this
Agreement.
8.2 Additional Representations and Warranties of TVN. TVN represents and
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warrants to HITS that (i) more than fifty percent of its issued and outstanding
voting stock is owned, beneficially and of record, by Messrs. Smart Xxxxx and
Mr. Xxxxxx Xxxxxx and Dr. S. Xxxxxx Xxxxxx, collectively (the "Controlling
Shareholders") (ii) such voting common stock is not subject to any voting trust
or other arrangement by which any person or entity other than the record holders
thereof has any right to vote such stock, or to any other restrictions on the
voting thereof, (iii) no person or entity other than the Controlling
Shareholders has (and no one of the Controlling Shareholders has) any rights,
contractual or otherwise, to appoint a majority of the board of directors of TVN
or otherwise to control the conduct of the affairs of TVN, and (iv) no
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person or entity other than the Controlling Shareholders holds any rights
(conditional or otherwise) to acquire, and TVN is under any obligation
(conditional or otherwise) to issue, any voting common stock of TVN, or rights
or securities convertible into voting common stock of TVN, the issuance,
exercise or conversion of which would cause any representation or warranty
stated in clause (i) above to be inaccurate.
9. Indemnification.
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9.1 Indemnification by TVN. TVN shall indemnify and hold harmless HITS and
----------------------
its affiliates, and their respective officers, directors, employees and
representatives from and against any and all liability, cost, loss or expense of
any kind (including attorneys' fees and costs), based upon, arising out of or
relating to: (i) any use by TVN or TVN Affiliates of Set-Top Authorization
Services or the Licensed Materials, or any services offered by TVN involving the
Set-Top Authorization Services or the use of the Licensed Materials; (ii) any
breach or nonperformance by TVN of any of its covenants, obligations,
representations or warranties stated in this Agreement; (iii) any claim by any
third party relating to failure or interruption of, or defect in, the
transmission or reception of Set-Top Authorization Services, unless caused by
the gross negligence or willful misconduct of HITS; (iv) all claims of any TVN
Affiliates and any subscribers of TVN Affiliates; (v) MPEG-II Royalties
attributable to TVN's or any TVN Affiliates' reception, distribution and set-top
equipment or programming purchases; and (vi) any claim, demand, or action
alleging that the Licensed Materials or the use thereof by TVN within the scope
of the License and in accordance with this Agreement, infringes any rights of
any third party in any United States copyrights or trademarks, or constitutes a
misuse or misappropriation of United States trade secrets of any third party, if
the claimed infringement, misuse or misappropriation described in this clause
(vi) arises out of or is based upon (A) the combination, operation or use of the
Licensed Materials with other equipment, code, programs or data not approved by
HITS, if such infringement, misuse or misappropriation would not have occurred
but for such combination, operation or use with such other equipment, code,
programs or data; (B) any modification of the Licensed Materials, other than a
modification by HITS; or (C) any use of the Licensed Materials outside the scope
of the License or otherwise not in accordance with this Agreement.
9.2 Indemnification by HITS. Subject to the limitation stated in Section
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10.2(a), HITS shall indemnify and hold harmless TVN and its affiliates, and
other respective officers, directors, employees and representatives from and
against any liability, cost, loss or expense of any kind (including attorneys'
fees and costs) arising out of or based on (i) any breach or nonperformance by
HITS of any of its covenants, obligations, representations or warranties stated
in this Agreement, or (ii) any claim, demand, or action alleging that the
Licensed Materials, or the use thereof by TVN within the scope of the License
and in accordance with this Agreement, infringes any rights of any third party
(other than TVN or any affiliate of TVN) in any United States copyrights or
trademarks, or constitutes a misuse or misappropriation of United States trade
secrets of any third party (other than TVN or any affiliate of TVN), and, in the
case of this clause (ii), defend and pay any costs, damages, or awards of
settlement, including court costs, arising out of any such claim, demand, or
action. If the Licensed Materials become
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subject to any such claim, demand or action (or, at HITS' option, are likely to
become subject to any such claim, demand or action), HITS shall, at its sole
option and expense: (i) procure for TVN the right to continue using the Licensed
Materials, or the infringing portion thereof, within the scope of the License
and in accordance with this Agreement; (ii) modify the Licensed Materials, or
the infringing portion thereof, to be noninfringing; or (iii) terminate the
License.
9.3 Exclusions from HITS Indemnity. Notwithstanding Section 9.2, HITS
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shall have no obligation under clause (ii) of that Section to the extent that
any claim of infringement, misuse or misappropriation is based upon (i) the
combination, operation or use of the Licensed Materials with other equipment,
code, programs or data not approved by HITS, if such infringement, misuse or
misappropriation would not have occurred but for such combination, operation or
use with such other equipment, code, programs or data; (ii) any modification of
the Licensed Materials, other than a modification by HITS; (iii) any use of the
Licensed Materials outside the scope of the License; or (iv) any Third Party
Imbedded Software.
9.4 Sole Remedy. HITS' obligations under Section 9.2 shall be TVN's sole
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and exclusive remedy in the event of any infringement, misuse or
misappropriation or copyrights, trademarks, trade secrets, patents, or any other
intellectual or proprietary property rights of third parties.
9.5 Notification and Defense of Claims. The obligations of HITS under
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clause (ii) Section 9.2 are conditioned and contingent upon:
(a) TVN providing the HITS with prompt written notice of any claim,
demand or action for which indemnity is sought, and affording the HITS the
opportunity and authorization to defend or settle such claim, demand or action
on its own, at its expense, with counsel selected by HITS; and
(b) TVN cooperating fully with the HITS in the defense or settlement
of the indemnified claim, demand or action, at the TVN's expense, such
cooperation including (without limitation) making available to HITS all
pertinent information in TVN's control.
10. Remedies and Limitation of Liability.
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10.1 Injunctive Relief. TVN acknowledges that if TVN breaches its
-----------------
obligations (other than payment obligations) under this Agreement HITS will be
irreparably harmed, and that damages will be inadequate to compensate HITS for
such breach. Accordingly, without limiting any other right or remedy of HITS for
or in respect of such a breach, HITS shall be entitled to mandatory and/or
injunctive relief with respect thereto.
10.2 Limited Remedies.
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(a) HITS SHALL NOT BE LIABLE TO TVN OR ANY OTHER PARTY FOR ANY
SPECIAL, CONSEQUENTIAL, PUNITIVE, EXEMPLARY OR INCIDENTAL
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DAMAGES ARISING OUT OF THIS AGREEMENT, SET-TOP AUTHORIZATION SERVICES, THE
LICENSED MATERIALS, OR ANY USE OR APPLICATION THEREOF, INCLUDING BUT NOT LIMITED
TO LOST PROFITS. IN NO EVENT SHALL THE LIABILITY OF HITS UNDER THIS AGREEMENT,
OR IN ANY WAY RELATING TO THE SET-TOP AUTHORIZATION SERVICES, THE LICENSED
MATERIALS, OR ANY USE OR APPLICATION THEREOF, EXCEED THE AMOUNT OF FEES ACTUALLY
PAID BY TVN PURSUANT TO SECTION 5.1 OF THIS AGREEMENT.
(b) Notwithstanding any contrary provision of this Agreement, HITS
shall not be responsible for and shall not be in default of this Agreement as a
result of, nor shall it be held liable for any damages, claims, losses, or costs
and expenses on account of, any interruption of Set-Top Authorization Services,
if such interruption results in whole or in part from any cause beyond HITS's
reasonable control, including, without limitation, the following ("Service
Interruptions"):
(i) errors, omissions, delays, or performance problems caused by
TVN's, any TVN Affiliate's or another third party's billing system, or by any
other equipment of TVN, any TVN Affiliate or any third party, including but not
limited to the inability of TVN Affiliates' headends to receive or process Set-
Top Authorization Services or to send such services to the set-tops, or the
failure of Set-Tops or scrambling/encryption systems deployed by TVN or any TVN
Affiliate.
(ii) the failure of TVN or any TVN Customer to provide HITS with
written instructions as to various headend configurations needed for HITS to
provide Set-Top Authorization Services, including changes as they occur from
time to time;
(iii) damage to any equipment or interruptions in Set-Top
Authorization Services caused by events of Force Majeure;
(iv) interference from other communications systems, whether
licensed or not, that use the same frequency bands as the Set-Top Authorization
Services;
(v) any interruption or out-of-specification performance of any
satellite transponders associated with Set-Top Authorization Services;
(vi) conditions that threaten the safety of operations and
maintenance personnel which are beyond the control of HITS;
(vii) occasional interruptions due to passing of the sun within
the beam width of any receiving antenna systems associated with Set-Top
Authorization Services during the spring and fall equinox periods;
11
(viii) degradation or interruptions of protection systems and
degradation or interruption of signals due to protection switching or to
scrambler or video protection switching;
(ix) outage, interruptions or degradations due to rain
attenuation of signals;
(x) interruptions for testing or maintenance and downtime for
scheduled backups;
(xi) any failure of TVN to fulfill its obligations hereunder or
to any TVN Affiliates;
(xii) any compliance by HITS with any action by any court,
agency, legislature or other governmental authority that makes it unlawful for
HITS to provide the Set-Top Services Authorization or any part thereof in
accordance with this Agreement; or
(xiii) any failure of Licensed Materials to perform, including
any bugs or errors in any Licensed Materials.
10.3 No Warranties. EXCEPT ONLY AS SPECIFICALLY STATED IN THIS AGREEMENT,
-------------
HITS MAKES NO WARRANTIES, EXPRESS OR IMPLIED, WITH RESPECT TO SET-TOP
AUTHORIZATION SERVICES OR THE LICENSED MATERIALS, INCLUDING BUT NOT LIMITED TO
WARRANTIES OF MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE, AND ALL SUCH
WARRANTIES ARE HEREBY DISCLAIMED AND EXCLUDED.
11. Miscellaneous.
--------------
11.1 Taxes. TVN shall pay any and all sales, use, excise or other taxes
-----
(other than taxes measured on the gross income of HITS) assessed or payable by
reason of or with respect to this Agreement and the transactions contemplated
hereby.
11.2 Media Releases. Except for any announcement intended solely for the
--------------
internal distribution of HITS and TVN, or any disclosure required by legal,
accounting, or regulatory requirements (as to which the limitations of Section
11.3 shall apply), all media releases (including but not limited to promotional
or marketing material) by HITS and TVN or the respective employees or agents of
any of them, which specifically identify HITS or TVN in the context of this
Agreement shall be coordinated with and approved in writing by HITS and TVN
prior to the release thereof. Such approvals shall not be unreasonably withheld
or delayed. Customer and HITS may state, without prior approval, in their
promotional and advertising material that the Set-Tops Authorization Services
are provided to TVN by HITS.
12
11.3 Confidentiality. Each Party to this Agreement agrees that all terms
---------------
and conditions of this Agreement and all Proprietary Information (as defined
herein) furnished to such Party by the other Party shall be: (i) held in trust
and confidence for the disclosing Party; (ii) used only in performance of this
Agreement; (iii) not copied (unless required for performance of this Agreement)
without permission of the disclosing Party; and (iv) not disclosed to anyone
other than employees or agents of a Party to this Agreement who have agreed to
hold the Proprietary Information in trust and confidence and who have need to
use such Proprietary Information for the purposes of this Agreement.
"Proprietary Information" means any ideas, plans or information, including,
without limitation, information of a technological or business nature (including
but not limited to all trade secrets, technology, intellectual property, data,
summaries, reports, or mailing lists, whether written or oral and, if written,
however produced or reproduced) which is received by the receiving Party or
otherwise disclosed to the receiving Party from or by the disclosing Party, that
is marked as confidential or proprietary or bears a marking of like import, or
that the disclosing Party states is to be considered proprietary or
confidential, or that would logically be considered proprietary or confidential
under the circumstances of its disclosure. Information will not be deemed to be
Proprietary Information and the receiving Party shall have no obligation with
respect thereto, or to any party thereof, to the extent such information (i) is
approved by prior written authorization of the disclosing Party for release by
the receiving Party; (ii) is disclosed in order to comply with a judicial order
issued by a court of competent jurisdiction or with government laws or
regulations, in which event the receiving Party shall give prior written notice
to the disclosing Party of such disclosure as soon as practicable and shall
cooperate with the disclosing Party in using all reasonable efforts to obtain an
appropriate protective order or equivalent, provided, that the information shall
continue to be Proprietary Information to the extent it is covered by such
protective order or equivalent; (iii) become generally available to the public
through any means other than a breach by the receiving Party of its obligations
under this Agreement; (iv) was in the possession of the receiving Party without
obligation of confidentiality prior to receipt or disclosure under this
Agreement as evidenced by written records made prior to such receipt or
disclosure; or (v) is developed independently by the receiving Party without use
of or benefit from any Proprietary Information.
11.4 Relationship of the Parties. It is expressly understood that the
---------------------------
Parties intend by this Agreement to establish the relationship of independent
contractors, and do not intend to undertake the relationship of principal and
agent or to create a joint venture or partnership between themselves or their
respective successors in interest. Neither Party shall have any authority to
create or assume, in the name of or on behalf of the other Party any obligation,
expressed or implied, nor to act or purport to act as an agent or legally
empowered representative of the other Party hereto for any purpose whatsoever.
11.5 Notices. All notices, requests, demands, applications, services of
-------
process, and other communications which are required to be or may be given under
this Agreement shall be in writing and shall be deemed to have been duly given
if sent by telecopy or facsimile transmission, answer back requested, or
delivered by courier or mailed, certified first class mail, postage prepaid,
return receipt requested, to the parties to this Agreement at the following
addresses:
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To HITS:
National Digital Television
0000 Xxxx Xxx Xxxxx Xxxx
Xxxxxxxxx, XX 00000
Attention: Xx. Xxxx Xxxxxx
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
Tele-Communications, Inc.
0000 XXX Xxxxxxx
Xxxxxxxxx, XX 00000
Attention: Legal Department
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
To TVN:
0000 Xxxx Xxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxx, XX 00000
Attention: Xx. Xxxxxx Xxxxx, President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
with a copy to:
0000 Xxxx Xxxxxxx Xxxxxx
0xx Xxxxx
Xxxxxxx, XX 00000
Attention: Mr. Xxxxxx Xxxxxx, Sr. Executive Vice President
Telephone: (000) 000-0000
Telecopy: (000) 0000000
or to such other address as either party shall have furnished to the other by
notice given in accordance with this Section. Such notice shall be effective,
(i) if delivered in person or by courier, upon actual receipt by the intended
recipient, or (ii) if sent by telecopy or facsimile transmission, on the date of
transmission unless transmitted after normal business hours, in which case on
the following day, (iii) if mailed, upon the date of first attempted delivery.
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11.6 Waiver. No obligation or condition of this Agreement shall be waived
------
by either party except by written consent. No act or failure to act shall serve
as a waiver. Any right or remedy available to either party shall not be
exclusive, unless otherwise provided within this Agreement, and all rights and
remedies may be cumulatively enforced.
11.7 Amendments. No modification of this Agreement shall be binding upon
----------
either party unless in writing and signed by both parties.
11.8 Governing Law. This Agreement shall be construed in accordance with
-------------
the laws of the Xxxxx xx Xxxxxxxx xxx xx xxx Xxxxxx Xxxxxx. The parties
stipulate that the preferred foam, venue and court for any legal action taken
with regard to this Agreement shall be in the District Court for Arapahoe
County, or the United States District Court for the Sate of Colorado, consent to
the jurisdiction of such courts, and waive any right to assert that any such
court constitutes an inconvenient or improper foam.
11.9 Assignment. TVN shall not assign any of its rights or delegate any of
----------
its duties under this Agreement without the prior written consent of HITS,
except (following written notice by TVN to HITS) to an entity controlled by TVN
or another entity with respect to which the representations and warranties
stated in Section 8.2 are accurate (substituting such other entity for TVN in
such representation, in the case of an assignment to such other entity). With
the exception of a public offering of the capital stock of TVN following which
Xx. Xxxxxx Xxxxx maintains operating control of TVN, any event that would cause
the representations and warranties in Section 8.2 not to be tree and accurate on
a continuing basis shall constitute an assignment of this Agreement for purposes
of this paragraph. Any attempted assignment or delegation without such consent
shall be null and void.
11.10 Attorneys' Fees and Costs. If any suit is brought, or an attorney
-------------------------
retained to collect any money due under this Agreement, or to collect a judgment
for breach of this Agreement, the prevailing party shall be entitled to recover,
in addition to any other remedy, reimbursement for attorney's fees, court costs,
investigation costs and other related expenses incurred in connection therewith.
11.11 Force Majeure. Neither Party will be in default or otherwise liable
-------------
for any delay in or failure of its performance under this Agreement where such
delay or failure arises by reason of any act of God, acts of the common enemy,
the elements, electrical storms, earthquake, floods, fires or other natural
disasters, epidemics, quarantine restrictions, national emergency or war,
sabotage, riots, acts of governmental authority, willful or criminal misconduct
of third parties, strikes, failure or delay in transportation, freight embargoes
or other causes beyond its control ("Force Majeure"); provided that financial
inability does not constitute an event of Force Majeure.
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HITS and TVN have caused this Agreement to be executed by their duly
authorized representatives or officers as of the day and year first written
above.
National Digital Television, Inc.
dba Headend in the Sky(R)
By: /s/ Xxxxx X. Xxxxxx
-------------------------------------
Name: Xxxxx X. Xxxxxx
------------------------------
Title: Sr. Vice President
-----------------------------
TVN Entertainment Group
By: /s/ Xxxxxx X. Xxxxx
-------------------------------------
Name: Xxxxxx X. Xxxxx
------------------------------
Title: President & CEO
-----------------------------
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SCHEDULE A
1. Access Control Database Set-up & Maintenance for cable system headends.
2. General Instrument MPEG II set-top (and those fully compatible)
initializations, authorizations, de-authorizations.
3. IRT Provisioning needed for set-top authorizations (i.e., association of
services, headend configurations and encryption parameters).
4. Schedule Management for PPV.
5. Code Download of set-top firmware, operating systems.
6. The protocol specifications based on DCE for a single TVN billing system
interface including ANI functions within limits of current ANI usage by
HITS.
7. Ability to establish set-top parameters by headend defaults and control a
limited number of parameters controllable through the billing system
interface.
8. UNDP functions used to create out-of-band control streams and related
encoder interfaces.
9. Impulse pay-per-view capability using store and forward (TVN will be
responsible for purchasing, installing, maintaining of Data Collectors at
headends which contains software excluded under this agreement).
10. National Provisioning of Prevue Interactive Guide (excludes licenses and
data related to the Prevue guide).
NOTE: Excluded features are (but not limited to); Analog addressability
(including PPV), non-General Instrument MPEG II digital set-top control,
UCS/Encoder control interface, headend monitoring, remote configuration
abilities, any DTH specific functions. Also excludes any third party license
which includes those associated with General Instrument Corporation, Oracle,
Hewlett Packard and others.
