PROGRAM SERVICE AGREEMENT
Exhibit
10.1
PROGRAM
SERVICE AGREEMENT
THIS
SERVICE AGREEMENT (hereinafter, “Agreement”),
made
this 23rd day of May 2007, between CSI Digital, Inc., an Oregon corporation
incorporated under the laws of the State of Oregon with offices at 000 XX
Xxxxxxxxxx, Xxxxx 000, Xxxxxxxx, XX 00000 (“CSI Digital”), and Microwave
Satellite Technologies,
Inc. (MST) a New Jersey corporation with offices at 000-000 Xxxxxx Xxxx,
Xxxxxxxxx, XX 00000 (“Customer”).
CSI
Digital and Customer shall each be referred to herein individually as a
“Party”
and
collectively as the “Parties.”
WHEREAS,
CSI Digital (and its designees or partners), is procuring, installing and
constructing certain
super
headend facilities (the “Super
Headend”)
that
will enable CSI Digital to aggregate video and audio channel programming, encode
those channels into MPEG-4 format, and up-convert and re-transmit those
channels
via one or more satellites to Customer’s downlink facilities or those of its own
customers (collectively,
the
“Transport
Services”);
WHEREAS,
CSI Digital intends to offer such Transport Services to video program customers
operating
within
the United States and its territories;
WHEREAS,
CSI Digital (and its designees or partners) intend to provide authorized access
to satellite
delivered cable television programming services (“Programming
Services”)
WHEREAS,
Customer desires to procure from CSI Digital, and CSI Digital desires to provide
to Customer,
the Transport Services and/or Programming Services which Customer intends to
use
as a component
part of
its own integrated, end-to -end programming that it will offer to its own retail
customers within the United States (the “retail customers”).
NOW,
THEREFORE, in consideration of the mutual covenants and undertakings contained
herein, and
subject
to and on the terms and conditions herein set forth, the Parties hereto agree
as
follows:
ARTICLE
1
TERM
1.1. Term.
This Agreement shall be effective as of the date first set forth above. CSI
Digital shall commence
provision of the Transport Services as of July 23, 2007 (the “Transport Service
Commencement
Date”)
and, unless sooner terminated in accordance with the provisions contained
herein, this Agreement shall continue for a period of five (5) years from the
“Transport Service Commencement Date” (the “Term”), provided that, in the event
CSI Digital is not ready and able to provide the Transport Services in
accordance with the specifications set forth in Exhibits
A and B
hereto
as of the Transport Service Commencement Date, and that MST is ready to receive
the content, then, no later than September 23, 2007, CSI Digital shall provide
the services as described in Exhibit
G
hereto.
ARTICLE
2
CSI
DIGITAL TRANSPORT AND PROGRAMMING SERVICES
2.1 Transport
Services.
(a) From
and
after the Transport Service Commencement Date and continuing during the
remainder of the Term, CSI Digital shall provide to Customer the Transport
Services, which consist of the Super
Headend and space segment services as more particularly described in Exhibits
A, and B
hereto.
As a part
of the
Transport Services, during the Term, CSI Digital (and its designees or partners)
shall also provide Super Headend Operational Center services (the “SHOC
Services”)
to
Customer 24 hours per day, 365 days per year, as described in Exhibits
A and B.
For the
avoidance of doubt, CSI Digital shall provide the SHOC Services only to
Customer, not Customer’s retail customers.
(b) Customer
shall ensure that its own facilities and operations conform to the
specifications set forth in Exhibits
A and B and H hereto.
Customer’s use of its own conditional access system, including equipment
co-location and interface with CSI Digital’s facilities, shall be subject to the
Parties’ mutual agreement regarding the terms and conditions of such use as
provided for via a separate agreement to be executed by the Parties. If such
terms and conditions are agreed upon, Customer‘s use of its own conditional
access system shall not in any case hinder CSI Digital’s ability to re-purpose
the space segment capacity used by CSI Digital to provide the Transport
Services.
(c) CSI
Digital may in its sole discretion introduce from time to time during the Term
additional services as part of its Super Headend platform, such as Video on
Demand content or Pay Per View content services, or other services within CSI
Digital’s existing services portfolio. If and when CSI Digital decides
to offer any such service, it shall promptly make Customer aware of the
availability of such services. In
the
event that Customer desires to obtain any such services from CSI Digital then
CSI Digital shall meet and negotiate with Customer the terms and conditions
related to the use thereof through an amendment of this Agreement.
(d) The
Parties will conduct review meetings approximately every six (6) months
following the Transport Service Commencement Date to discuss the commercial
performance of the Transport Services.
2.2
Channel
Lineup.
(a) Exhibit
C
hereto sets forth the programming services with respect to which CSI Digital
will provide the Transport Services hereunder, which shall be subject to change
by CSI Digital upon, where practicable, not less than sixty (60) days prior
written notice to Customer (the “Channel Lineup”). If so requested
by Customer, CSI Digital’s transmission of additional programming services
beyond those contained in
the
Channel Lineup will be subject to CSI Digital’s receipt of additional
compensation from Customer in an
amount
to be mutually agreed upon.
2.3
Programming
Services.
(a) Programming
Services are the satellite cable programming channels which Customer
may
receive for distribution within a System Location as set forth in Exhibit C
hereto.
2.4
MPEG
Related Patent License Fees.
(a) CSI
Digital represents and warrants to Customer that CSI Digital itself does not
require any
MPEG
patent licenses in order to perform its obligations under this Agreement and
is
not liable for payment
of any
fees associated therewith. CSI Digital shall indemnify Customer in accordance
with Section 6.1 against any claims that Customer is liable for payment of
any
such license fees arising out of CSI Digital’s breach of such representation and
warranty.
(b) Except
as
provided in subparagraph (a), any license and/or user fees related to the
transmission,
delivery or use by Customer of MPEG-4 linear programming signals during the
Term, which are not
covered by CSI Digital’s encoding vendors, shall be the sole responsibility of
Customer and Customer shall indemnify
CSI Digital in accordance with Section 6.1 against any claims that CSI Digital
(and its designees or
partners) is liable for payment of such fees as they pertain to Customer’s use
of MPEG-4 linear programming signals.
ARTICLE
3
CUSTOMER
SERVICES
3.1 Customer
Services.
Customer
will offer the Programming Services as its own integrated, end-to-end
programming transmission service (the “Customer Services”) to retail customers
that reside or are located within
the United States of America and its protected territories (the “Territory”).
Under no circumstances shall
Customer
provide any services that utilize CSI Digital’s Transport Services to any person
or entity outside the Territory. In connection with its provision of the
Customer Services, Customer shall be solely responsible for all
billing and collection, sales and promotional support, software maintenance,
ad
insertion services, initial set-up
technical support and all on-going technical support to its own retail
customers. As part of its service offering, Customer shall use best efforts
to
obtain the necessary affiliate program carriage rights from Programmers to
receive, distribute and exhibit the program content included in the Program
Service.
3.2 Retail
Customers.
(a) Before
providing the first of any Customer Services to a retail customer base, Customer
shall give detailed written notice of the proposed services to CSI Digital
as
provided in Section 10.14 below, together
with a list of the applicable Programming Services. CSI Digital shall promptly,
but not later than five
business
days of receipt of Customer’s notice, seek confirmation from the applicable
Programmer(s) of Customer’s
authorization to receive and distribute the Programming Services for which
authorization is sought.
(b) If
CSI
Digital receives notice from a Programmer of any expiration, termination, or
curtailment (e.g., black-out notice) of the Customer’s previously confirmed
authority, CSI Digital shall so advise
Customer by written notice, and Customer shall, within three (3) business days
of receipt of such notice
(or
sooner if required by CSI Digital’s applicable transport rights agreement with a
Programmer) comply with the instructions given by the Programmer in its notice
to CSI Digital. Customer acknowledges and agrees that CSI
Digital may deactivate all or portion of its delivery of the Programming
Services to Customer to the extent
required
to comply with the requirements of Programmers that are parties to CSI Digital’s
Transport Rights agreements.
(c) Unless
deactivation is requested or otherwise effected by CSI Digital pursuant to
subparagraph
(b) above, Customer shall give CSI Digital at least sixty (60) days’ prior
written notice of its
deactivation of its distribution of any Programming Service.
(d) To
the
extent provided in Section 6.1 below, Customer shall indemnify and hold CSI
Digital (and its designees and partners) harmless from all losses of any kind,
arising out of (i) the failure to obtain
any requisite consent from CSI Digital, or (ii) any claim by a retail customer
that CSI Digital, relying in good
faith upon a Programmer notice, failed to provide that retail customer with
previously authorized Program
Service.
(e) If
Customer charges its own retail customers a service fee on a “per program”
basis, it may not charge any retail customer a fee for Customer’s transport of a
particular Program Service that is different
than that charged for its transport of other Program Services without prior
authorization. For example,
if
Customer charges its retail customer a separate fee for the transport of Fox
News, it may not charge a different fee for the transport of the Weather
Channel.
3.3
The Programming Services (including commercials) shall be delivered to
Customer’s local head-end
facilities in their entirety, without time delay (or acceleration),
interruption, alteration, addition, deletion, or
editing
of any thereof.
ARTICLE
4
SERVICE
CHARGES
4.1
Monthly
Service Fee.
(a) With
respect to each calendar month during the Term, beginning on the Transport
Service Commencement
Date and Programming Service Commencement Date (with the first and last months
prorated), Customer
agrees to pay to CSI Digital a monthly service fee (“MSF”), which shall be
computed by multiplying the
then-current average number (the “Monthly Subscriber Average”) of Service
Subscribers (as defined below)
by the
applicable monthly service rates as set forth in Exhibit D. The Monthly
Subscriber Average shall be computed as follows: the current month’s end balance
Service Subscribers shall be added to the previous month’s end balance of such
subscribers and the sum thereof shall be divided by two (2). Gratis Account
Subscribers (as defined below) shall not be included for purposes of determining
the Monthly Subscriber Average. CSI Digital may change the service rates set
forth in Exhibit D from time to time upon no less than forty five (45) days
prior written notice to Customer; provided, however, that any individual rate
increase shall not exceed 25%. Once the initial Customer regional head-end
is
activated, CSI Digital shall use the estimated number of service subscribers
set
forth in Customer’s initial month’s projections to calculate the estimated MSF.
Upon receipt of the initial Service Subscriber Activity report, pursuant to
subparagraph (c) below, CSI Digital
shall then compare the estimated MSF with the actual initial MSF and CSI Digital
shall make a debit or
credit
adjustment to its MSF invoice reflecting the actual subscriber
count.
(b) As
used
herein, the term:
(i) “Service
Subscriber” shall mean each party authorized by Customer to receive Programming
Services (irrespective of any payment delinquency). A Service Subscriber may
include, but shall not be limited to, hotel and motel guest rooms, private
offices, and patient rooms in hospitals, and bulk rate subscribers
who are occupants of multiple dwelling complexes. For residential Service
Subscribers, each single
residential dwelling unit regardless of the number of integrated
receiver-decoders (“IRD”) authorized by Customer
shall be deemed a Service Subscriber; for hotel/motel rooms, hospital patient
rooms, private business
offices,
and multiple dwelling complexes, the number of bulk rate Service Subscribers
shall be determined by dividing the total monthly bulk rate charged by Customer
to each multiple dwelling complexes by theaverage monthly service rate charged
by Customer per non-bulk rate subscriber to the Programming
Service.
(ii) “Gratis
Account Subscriber” means a Service Subscriber that is a school or educational
institution, or an employee of a Customer, to whom Programming Services are
provided free of charge and from whom neither CSI nor the Customer receives
subscriber fees or other compensation during the
entire
applicable month. Customer shall use commercially reasonable, good faith efforts
to minimize the
number
of Gratis Account Subscribers.
(iii) “Affiliate”
means an entity that directly or indirectly (through one or more intermediaries)
controls, is controlled by, or is under common control with the entity
concerned.
(c)
Within three (3) business days after the end of each month during the Term,
Customer shall
submit to CSI Digital a true and correct report substantially in the form
attached hereto as Exhibit E (the “Subscriber
Activity Report”), certified by a duly authorized officer, and providing the
following information:
(i) The
total
number of Service Subscribers as of the last day of the prior and current
reporting months and the name and location of each Authorized System (including
the calculation of bulk rate subscribers and the number of high definition
and
standard definition subscribers);
(ii) The
number of Gratis Account Subscribers;
(iii) Such
other information and reports as may reasonably be required by CSI Digital,
and
such reports as Customer may furnish to other programming services or program
suppliers for general and non-confidential use.
CSI
Digital shall have the right to modify the form of the Subscriber Activity
Report required of Customer
hereunder.
If
Customer fails to furnish its Subscriber Activity Report in a timely manner,
the
Parties agree that applicable number
of
Service Subscribers served by such defaulting customer for the applicable
reporting month shall be
deemed
to be 110% of the most recent subscriber data that is available. If and when
Customer provides the actual subscriber data, the next succeeding MSF payment
will be trued up to reflect any underpayment or overpayment by
Customer.
4.2 Payment.
The MSF
payment shall be paid pursuant to the following schedule:
(a) CSI
Digital shall send Customer an invoice for the relevant MSF payment based on
the
information contained in the Subscriber Activity Reports delivered by Customer
(Customer’s subscriber projections
or additional information as may result from any audits performed pursuant
to
Section 4.3 below).
Customer
shall pay all amounts no later than fifteen (15) days after its receipt of
the
relevant invoice. All payments
made or to be made under this Agreement shall be made in United States Dollars,
and shall be made
by check
or in accordance with wire instructions given by CSI Digital.
(b) Overdue
payments are subject to a late charge, calculated and compounded monthly,
and
calculated at an annual rate of either (i) one percent (1%) over the prime
rate
available in New York City, as published
in the Wall Street Journal on the first Monday (or the next bank business day)
following the payment
due
date; or (ii) twelve percent (12%), whichever shall be higher. If the amount
of
the late payment charge exceeds the maximum permitted by law, the charge will
be
reduced to that maximum amount.
4.3
Audit
Rights.
CSI
Digital shall have the right, exercisable in its sole discretion and in each
case
upon at
least seven (7) days’ advance notice, to verify the calculation and payment of
the MSF payments, and Customer shall provide its best efforts to CSI Digital
and
its internal and external auditors and other
representatives
designated by CSI Digital from time to time with all reasonably necessary access
during normal
business
hours to personnel, books, records, documents and information to enable them
to
verify the accuracy and completeness of reports and the number of Service
Subscribers as of the last day of the prior and current reporting months (each,
an “Audit”) and the MSF payments hereunder. Customer shall provide any
assistance reasonably
requested by CSI Digital in conducting any such Audit. Customer shall promptly
pay to CSI Digital
any
amount demonstrated by the results of the audit to be owed to CSI Digital.
In
the event a dispute arises with
respect to amounts claimed by CSI Digital, the Parties agree to work in good
faith to resolve such dispute.
If the
Parties are unable to resolve such dispute, either Party may submit the matter
to binding arbitration pursuant to the procedures set forth in Section 10.8(c)
below. Such audits shall be conducted at CSI Digital’s sole cost, except that
Customer shall reimburse CSI Digital for its reasonable costs and expenses
of
performance of any audit if Customer has underpaid CSI Digital by an aggregate
of more than three percent (3%) during any 6 consecutive months of the audited
period. The information derived from and the process of such review shall be
subject to the confidentiality provisions of Section 10.2 and any third party
auditor or representative shall be required to acknowledge in writing its
agreement to such confidentiality provisions.
4.4 Recordkeeping.
Customer
shall maintain at its respective principal place of business complete and
accurate records of and supporting documentation for all transactions, financial
and non-financial, that result from or are created in connection with its
performance of its obligations hereunder, as well as the Customer Services
in
accordance with the requirements of generally accepted accounting principles
applied on a
consistent basis. Customer shall retain records related to the performance
of
obligations under this Agreement
for at
least two (2) years after expiration of the Term.
4.5 Service
Interruption Credits.
The MSF
payment shall be subject to a true-up if Customer demonstrates
that it was entitled to, and receives, a service credit against a future invoice
as a result of a Service
Failure
as defined in Exhibit
F
(an
“Interruption
Credit”).
In that
case, the amount of such Interruption Credit shall be deducted from the invoice
with respect to which the next MSF payment is due, provided that the amount
of
Interruption Credits deducted from any MSF payment shall not exceed ten (10)
percent of that MSF payment, and in such an event, the additional Interruption
Credits will be trued up through deduction from subsequent MSF
payments.
4.6 Maximization
of Business.
(a) Customer
shall, consistent with good business practice, use commercially reasonable,
good
faith efforts to maximize the number of retail customers.
(b) During
the Term, neither Customer nor any Affiliates of Customer shall provide any
services currently described in Exhibits A and B, directly or indirectly, to
any
unauthorized third party.
(c) During
the Term, neither Customer nor any related Affiliates of Customer, shall obtain
Transport Rights directly from CSI Digital Inc.’s wholesale partners nor from
parties in competition with
CSI
Digital Inc. or its Transport partners for content that is or could be provided
by CSI Digital or
its
Transport partners.
4.7 FCC
Obligations.
Customer
will be responsible for ensuring that it complies with applicable FCC
requirements related to the Emergency Alert System and public interest
programming requirements. CSI Digital
shall obtain and maintain any required FCC authorizations in order to provide
the Transport Services to
Customer.
ARTICLE
5
REPRESENTATIONS
AND WARRANTIES
5.1 Representations
and Warranties.
(a) Each
Party represents, warrants and covenants that as of the date of this Agreement
(i)
it
has, and shall continue to have during the Term, the right (including but not
limited to contractual rights),
power
and authority to enter into and perform its obligations hereunder and the
execution, delivery and performance
of this Agreement shall not result in the breach or non-performance of any
document, instrument
or
agreement by which it is bound; (ii) the execution, delivery and performance
of
this Agreement have been duly authorized by all necessary corporate or limited
liability company action; and (iii) this Agreement constitutes legal, valid
and
binding obligations of such Party.
(b) CSI
Digital represents and warrants that it possesses all rights and licenses
necessary to provide the Transport Services, including but not limited to all
rights and licenses necessary to the procurement and delivery of the Programming
Services (“collectively the “Transport Rights”) and hereby covenants that it
shall maintain such Transport Rights during the Term.
5.2 DISCLAIMER
OF WARRANTIES.
CSI
DIGITAL (ITS DESIGNEES AND PARTNERS) MAKE NO WARRANTIES, EITHER EXPRESS OR
IMPLIED REGARDING THE SERVICES PROVIDED HEREUNDER, INCLUDING, BUT NOT LIMITED
TO, THE IMPLIED WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR
PURPOSE, EVEN IF CSI DIGITAL HAS BEEN MADE AWARE OF SUCH PURPOSE, WARRANTIES
ALLEGED TO ARISE AS A RESULT OF CUSTOM AND USAGE.
ARTICLE
6
INDEMNIFICATION
6.1 Indemnification.
Subject
to Section 7.2 below, each Party hereby agrees to defend, indemnify,
and
hold
harmless the other and its officers, directors, affiliates, partners, designees,
agents and employees (the “Indemnities”)
from and
against any damages, costs (including reasonable attorneys' fees), losses,
or
other liabilities
(collectively, a “Loss”),
which
any of the foregoing may incur with respect to any claim, demand, or action
arising out of the indemnifying party’s breach of its obligations under this
Agreement. This Section 6.1
shall
survive the termination of this Agreement.
ARTICLE
7
7.1 NO
CONSEQUENTIAL DAMAGES.
NEITHER
PARTY SHALL BE LIABLE TO THE OTHER PARTY FOR ANY INDIRECT, SPECIAL, PUNITIVE,
CONSEQUENTIAL OR INCIDENTAL DAMAGES, INCLUDING LOST PROFITS OR ECONOMIC LOSS,
WHICH THE OTHER PARTY MAY SUFFER AS A RESULT OF THIS AGREEMENT EVEN IF SUCH
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF DAMAGE OR LOSS.
ARTICLE
8
INTELLECTUAL
PROPERTY
8.1CSI
Digital Materials.
CSI
Digital (and its designees or partners) shall be the sole and
exclusive owner
of
(a) the Materials owned by it as of the effective date hereof, (b) the Materials
acquired by it on or after
the
effective date hereof and used by it in the performance of the Super Headend
and
SHOC Services, (c) the derivative works of its Materials created by CSI Digital
(and its designees or partners), (d) all Materials developed by CSI Digital
(and
its designees or partners) in the course of the performance of its obligations
under this Agreement, including United States and foreign intellectual property
rights therein, and (e) the specifications in the Technical Annex related to
monitoring and control, redundancy, routing and simulcrypt-based
conditional access platform. As used herein, the term “Materials”
means
software, literary works, other works
of
authorship, specifications, design documents and analyses, programs, program
listings, programming
tools,
documentation, reports, drawings and similar work product.
8.2 CSI
Digital Intellectual Property.
All of
CSI Digital’s rights to its Intellectual Property shall at all times remain the
property of CSI Digital, and Customer shall not have any right to use such
Intellectual Property. As used herein, the term “Intellectual
Property”
means
all forms of intellectual property rights and protections
throughout the world and includes without limitation all right, title and
interest arising under EU or U.S.
or
foreign common or statutory law in and to all: (a) patents and all filed,
pending or potential applications
for
patents, including any reissue, reexamination, division, continuation or
continuation-in-part applications throughout the world now or hereafter filed;
(b) trade secret rights and equivalent rights and all goodwill associated
therewith; (c) copyrights, other literary property or authors' rights, whether
or not protected by copyright or as a mask work; and (d) marks, proprietary
indicia, trademarks, trade names, symbols, domain names, rights in databases,
logos and/or brand names.
8.3 Customer
Materials.
Customer
shall be the sole and exclusive owner of (a) the Materials (as defined
herein above) owned by it as of the effective date hereof or acquired by it
on
or after the effective date
hereof,
(b) the derivative works of its Materials created by Customer, and (c) all
Materials developed by Customer
in the course of the performance of its obligations under this Agreement,
including United States and
foreign
intellectual property rights therein.
8.4 Customer
Intellectual Property.
All of
Customer’s rights to its Intellectual Property (as defined herein
above) shall at all times remain the property of Customer, and CSI Digital
shall
not have any right to use
such
Intellectual Property.
ARTICLE
9
TERMINATION
9.1 Termination
For Default.
If any
Party (the “Defaulting
Party”)
fails to
perform any material obligation under this Agreement, the Party suffering such
default (the “Non-Defaulting
Party”)
may give
written notice to the Defaulting Party specifying the nature of such failure
or
default and stating that the Non-Defaulting Party intends to terminate this
Agreement if such failure or default is not cured within thirty (30) days of
such written notice (or within ten (10) days, in the event of a default in
the
payment of money). If any such
failure or default is not cured within the applicable cure period, the
Non-Defaulting Party may, in addition to
other
remedies available at law or equity, immediately elect to terminate this
Agreement. Any termination or expiration
of this Agreement pursuant to this Section 9.1, will not release the Defaulting
Party from any liability
arising
from any breach or violation by that Party of the terms of this Agreement prior
to the expiration or termination.
9.2 Effect
of Non-Default termination by customer.
If
Customer desires to cancel Agreement for any
reason
other than default, a payment of 50% of the previous month’s invoiced billing
times the months remaining in the contract must be paid upon
termination.
9.3 Effect
of Non-Default Termination.
Upon
termination of this Agreement under Section 9.2 above,
neither party will have any further liability or obligation under this Agreement
except for the survival of
indemnification under Section 6.1 and the specified termination
payment.
ARTICLE
10
GENERAL
PROVISIONS
10.1 Press
Releases.
(a) Neither
party shall, without the advance written consent of the other party (which
may
be granted or withheld in the sole discretion of such party), issue any press
release respecting this Agreement or the terms hereof or otherwise disclose
this
Agreement or the terms hereof to any other party, except as may otherwise be
required by applicable securities disclosure or other laws. Notwithstanding,
the
Parties agree to work in good faith to develop a mutually acceptable press
release after execution of this Agreement.
(b) In
the
event either party shall be required by applicable laws to disclose all or
any
part of this Agreement in, or attach all or any part of this Agreement to,
any
regulatory filing or statement, each party agrees to discuss and work
cooperatively, in good faith, with the other party, to protect, to the extent
possible, those items or matters which the other party deems confidential and
which may, in accordance with applicable laws, be deleted therefrom. The party
seeking to disclose the terms and conditions hereof shall provide the
other
party with the version of the Agreement which it intends to file no later than
three (3) business days prior
to the
planned date of such disclosure. Neither party presently intends to file this
Agreement, or any portion thereof, in any regulatory filing required by
applicable laws.
10.2 Confidential
Information.
(a) Confidential
Information disclosed by each party to the other in connection with this
Agreement will be used only for the performance of each party’s obligations
under this Agreement. Confidential information may not be disclosed to any
third
party. As used herein, the term “Confidential Information”
means
information of a party to this Agreement that if provided or disclosed to the
other in writing
is
marked as confidential or proprietary, or if disclosed orally, the receiving
party should reasonably construe under the circumstances is intended to be
kept
confidential, including this Agreement. No information of the disclosing party
will be considered Confidential Information to the extent the
information:
(i) is
or
subsequently becomes publicly available without receiving party's breach of
any
obligation owed disclosing party; or
(ii) is
in the
possession of the recipient prior to the disclosure, or thereafter is
independently developed by recipient's employees or consultants who have had
no
prior access to the information; or
(iii) is
received from a third party without an obligation of confidence to the third
party.
(b) Confidential
Information disclosed under this Agreement by one party to the other will
be
protected by the recipient from further disclosure, publication, and
dissemination to the same degree and using the same care and discretion as
the
recipient applies to protect its own confidential or proprietary
information
from
undesired disclosure, publication and dissemination but no less than a
reasonable degree of care. A recipient
of Confidential Information may disclose such Confidential Information to the
extent required by law, regulation,
or court order to be disclosed, but the recipient must, to the extent feasible,
first notify the disclosing
party so
that such
party hasthe
opportunity to seek an appropriate protective order or other relief, and
provided further
that the Receiving Party shall disclose only that portion of the Confidential
Information which is legally
required
to be disclosed and, as appropriate, request confidential treatment of the
Confidential Information by the court.
(c) Confidential
Information disclosed under this Agreement may be disclosed to a receiving
Party's employees (including contract employees) or consultants who participate
in the performance of obligations under this Agreement if the employees and
consultants have been made aware of their responsibilities under this Agreement
and the consultants (including contract employees) have signed a statement
agreeing to be bound by the terms of this Agreement with respect to
confidentiality.
(d) The
Receiving Party recognizes and agrees that the Confidential Information is
of a
special, unique and extraordinary character which gives it a peculiar value
the
loss of which cannot be reasonably or adequately compensated in damages, and
that a breach of this Agreement will cause irreparable damage
and injury to the Disclosing Party. The Receiving Party, therefore, expressly
agrees that the Disclosing
Party
shall be entitled to injunctive and/or other equitable relief to prevent a
breach of the provisions of this Agreement,
or any part thereof, in addition to any other remedies available to the
Disclosing Party. All remedies
available to the Disclosing Party hereunder are cumulative, and may, to the
extent permitted by law, be exercised concurrently or separately. The exercise
by the Disclosing Party of any one remedy shall not be deemed to be an election
of such remedy or to preclude the exercise of any other remedy. A failure or
delay by the Disclosing Party in exercising any right, privilege or remedy
shall
neither operate as a waiver thereof nor modify
the terms of this Agreement, nor shall any single or partial exercise by the
Disclosing Party of any right, privilege
or remedy preclude any other or further exercise of the same or of any other
right, privilege or remedy.
(e) Either
party’s failure to fulfill its obligations and conditions with respect to any
use, disclosure, publication, release, or transfer to any third person of the
other party’s Confidential Information or breach
of
any restrictions or obligations of any licenses granted, constitutes a material
breach of this Agreement
if the
disclosure adversely affects the other party in any material respect. In that
event the non-breaching party may, at its option and in addition to any other
remedies that it may have, terminate this Agreement, and its obligations and
any
rights or licenses granted hereunder upon fifteen (15) calendar days written
notice to the breaching party. In addition to any other remedies it may have,
the non-breaching party shall have the right to demand, the immediate return
of
any Confidential Information provided to the breaching party under this
Agreement, and all copies of the Confidential Information in any
form.
(f) Upon
expiration or termination of this Agreement, each party shall, upon request
of
the other
party, return all Confidential Information of the other party or certify its
destruction. The obligations of
each
party with regard to maintaining the confidentiality of information received
hereunder shall survive termination and be in effect for five (5) years after
the date of termination.
10.3 Export
Control.
Any
technology provided by either party that is controlled for export purposes
may
require prior approval by the appropriate U.S. Government agency, either the
U.S. Department of State (DOS)
or
the U.S. Department of Commerce (DOC). Should the technology provided by either
party be export
controlled, such party will be bound by U.S. export statutes and regulations
and
shall comply with all export control requirements.
10.4 Independent
Contractors.
This
Agreement does not constitute or serve to establish a partnership, joint
venture, agency or any other form of business association whereby one party
may
in any manner become liable or responsible for the acts or omissions of the
other party by virtue of the existence of this
Agreement and the promises made herein. The relationship between the Parties
shall be that of independent
contractors. Neither party is the agent of the other party, nor may either
party
bind the other party. Each party is solely responsible for its own profits,
losses, and costs. Each party shall be solely responsible for the withholding
or
payment of all applicable federal, state and local income taxes, applicable
import and export taxes, social security taxes and other payroll taxes with
respect to its employees, as well as any taxes, contributions or other
obligations imposed by applicable state unemployment or workers’ compensation
acts. Each party has sole authority and responsibility to hire, fire and
otherwise control its employees.
10.5 Entire
Agreement; Amendment.
This
Agreement, together with all Exhibits hereto, sets forth
the
entire understanding of the Parties and supersedes any and all prior agreements,
arrangements or understandings relating to the subject matter hereof. No
amendment to this Agreement shall be effective or binding unless it is made
in
writing by authorized representatives of the Parties.
10.6 Enforceability.
If any
part of any provision of this Agreement or any other agreement, document
or writing given pursuant to or in connection with this Agreement shall be
invalid or unenforceable
under
applicable law, said part shall be ineffective to the extent of such invalidity
only, without in any way affecting the remaining parts of said provision or
the
remaining provisions of this Agreement.
10.7 Governing
Law.
The
provisions of this Agreement shall be governed by, and construed in accordance
with, the laws of the State of New York without reference to its conflicts
of
law principles.
10.8 Dispute
Resolution.
(a) Any
dispute, controversy or claim between the Parties arising out of this Agreement,
including
any dispute as to the existence, construction, validity, interpretation,
enforceability or breach of this
Agreement (the “Dispute”),
shall be
exclusively and finally resolved as set forth hereafter.
(b) In
the
event of any Dispute between the Parties hereunder, the Parties shall first
attempt to
resolve the dispute at the management level. The Parties’ management
representatives shall use commercially
reasonable efforts to resolve the Dispute on an informal basis. The designated
management representatives of the Parties shall meet as often as the Parties
deem necessary to gather and furnish to the other party all information with
respect to the matter in issue which the Parties believe to be appropriate
and
germane in connection with the dispute. The designated management
representatives shall discuss the problem and negotiate in good faith in an
effort to resolve the Dispute in a timely fashion.
(c) In
the
event that the designated management representatives fail to reach an agreement
within fifteen (15) business days of the date of the Initiation Date (or such
longer date as may be agreed to by the Parties in writing), then either party
may initiate a binding arbitration action conducted in accordance with
the
Commercial Arbitration Rules (the “Rules”) of the American Arbitration
Association (“AAA”). The Parties
shall
attempt to select a single neutral arbitrator to hear the Dispute. Such
arbitrator need not be affiliated with the AAA. If the Parties fail to agree
on
a single neutral arbitrator within ten (10) business days of the filing of
the
demand for arbitration, then three neutral arbitrators shall be appointed in
accordance with the Rules. The arbitration award shall be in writing and shall
specify the factual and legal basis for the award. The arbitration shall be
conducted in Washington, D.C., and judgment upon the award rendered by the
arbitrator(s) may be
entered
in any court having jurisdiction thereof. Neither party shall be entitled to
seek or recover punitive damages
in considering or fixing any award under these proceedings. The governing law
shall be pursuant to
the laws
of the State of New York.
(d) Unless
otherwise ordered by the arbitrator(s), the costs of the mediation and
arbitration,
including AAA administration fee, the arbitrator's fee, and costs for the use
of
facilities during the hearings, shall be borne equally by the Parties.
Attorneys’ fees and costs may be awarded to the prevailing or most prevailing
party at the discretion of the arbitrator(s).
10.9 Force
Majeure.
(a) The
parties obligations to perform under this Agreement shall be suspended during
the period
and to the extent that such party is prevented or hindered from complying
therewith by any cause beyond such
party’s reasonable control, including without limitation, acts of God, strikes,
acts of terrorism, fire, flood,
power
failures or surges, epidemics, riots, theft, lock outs and other labor disputes,
civil disturbances, injunctions and other government orders or legal
requirements (whether under the export control laws or otherwise), accidents,
acts of war or conditions arising out of or attributable to war (whether
declared or undeclared), and the non-performance by suppliers or
contractors.
(b) If
Customer’s MSF payments to CSI Digital do not meet any of the applicable
Performance Metrics set forth in Section 10.9(a) above due to acts of God,
acts
of terrorism, fire, flood, epidemics, riots, theft or civil disturbances, acts
of war or conditions arising out of or attributable to war (whether declared
or
undeclared), the commencement date of each Benchmark Period shall be extended
by
a number of days equal to the period in which such force majeure event is
pending; provided, however, that for purposes of this Section 10.9 the Force
Majeure period shall not be deemed to have commenced until the date on which
Customer gives CSI Digital written notice of the occurrence of such force
majeure event, and Customer
shall give CSI Digital prompt written notice following the cessation of such
force majeure event. For the
avoidance of any doubt, a force majeure event shall not affect any obligations
to pay fees arising under this
Agreement.
10.10
Non-Exclusive.
Nothing
in this Agreement shall prevent CSI Digital from entering into similar
arrangements with, or otherwise providing services to, any other person or
entity. Without limiting the generality of the foregoing, nothing in this
Agreement shall be construed as prohibiting CSI Digital from marketing,
offering, selling or otherwise providing services or products to its other
existing or prospective customers,
including those that are directly or indirectly competitive with the services
and products offered by
Customer.
10.11
Survival.
The
terms and conditions of this Agreement (including all Exhibits hereto) regarding
confidentiality, payment, warranties, liability and indemnity will survive
the
termination or expiration of this Agreement, along with any other provisions
that by their sense and content are intended to survive the performance,
termination or expiration of the Agreement for so long as necessary to carry
out
the intent and purpose of the Agreement.
10.12
Waiver.
The
failure of either party at any time to enforce any of the provisions of this
Agreement or any right under this Agreement, or to exercise any option provided,
will in no way be construed to be a waiver of the provisions, rights, or options
or in any way to affect the validity of this Agreement. The failure
of either party to exercise any rights or options under the terms or conditions
of this Agreement shall not
preclude
or prejudice the exercising of the same or any other right under this Agreement.
Unless expressly
stated
herein, no remedy or right provided in this Agreement is intended to be a sole
or exclusive remedy.
10.13
Compliance
with Laws.
Each
party agrees to comply with all laws applicable to its performance of this
Agreement and is responsible, at its sole cost and expense, for obtaining any
all governmental licenses, permits, authorizations, and approvals that may
be
required in connection with its performance of this Agreement.
10.14
Notices.
All
notices or other communications which are required or permitted herein shall
be
in writing and sufficient if delivered personally, sent by prepaid overnight
air
courier, or sent by registered or certified mail, postage prepaid, return
receipt requested, addressed as follows:
If
to
Customer, to:
Xxxxx
X.
Xxxxxxxxx
President
Microwave
Satellite Technologies, Inc.
000-000
Xxxxxx Xxxx
Xxxxxxxxx,
XX 00000
With
a
copy (which shall not constitute notice) to:
Xxxxxx
X.
Xxxx, Esq.
0000
Xxx
Xxxxxx, X.X.
Xxxxxxx
Xxxxx
Xxxxxxxxxx,
X.X. 00000
If
to CSI
Digital, to:
Xxxxx
X.
Xxxxx
President
CSI
Digital, Inc.
000
XX
Xxxxxxxxxx, Xxxxx 000
Xxxxxxxx,
XX 00000.
or
at
such other address as the party to whom notice is to be given may have furnished
to the other party in writing
in accordance herewith. Any such communication shall be deemed to have been
given when delivered
if
delivered personally, on the business day after dispatch if sent by overnight
air courier, or upon delivery or refusal thereof if sent by postage prepaid
certified mail, return receipt accepted.
10.15
Successors and Assignments. 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, which
consent will not be unreasonably withheld; provided however, no consent shall
be
necessary in the event
of an
assignment by either party to a successor entity resulting from a merger,
acquisition or consolidation or assignment to an entity under common control,
controlled by or in control of CSI Digital Inc.. For purposes of this
Agreement, 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.
10.16
Multiple
Counterparts.
This
Agreement may be executed in several counterparts, each of which shall
be
deemed an original, and all such counterparts together shall constitute but
one
and the same instrument.
The
Parties hereby agree that facsimile signatures are valid and binding on the
Parties.
10.17
No
Third-Party Beneficiary.
The
provisions of this Agreement are for the benefit solely of the Parties hereto
and their permitted assigns, and no third party may seek to enforce or benefit
from these provisions.
10.18
Most
Favored.
CSI
Digital represents, warrants and agrees that all discounts, commissions and
other terms relating to the price and/or the terms and conditions at which
Customer acquires the Transport Services
or the services (“Alternative Services”) described in this Agreement
(collectively, the “Terms”) are at least
as
favorable as those now offered by CSI Digital to any other comparable Customer
in connection with the
provision of Transport Services or Alternative Services. If, during the Term
of
this Agreement, CSI Digital should enter into an arrangement with any other
comparable Customer in terms of subscriber count, with respect to CSI Digital’s
provision of Transport Services or Alternative Services, providing greater
benefits or more favorable Terms, this Agreement shall thereupon be deemed
to be
automatically amended to provide the same to Customer. CSI Digital agrees to
provide Customer with prompt written notice of any such
arrangements.
IN
WITNESS WHEREOF, the Parties hereto have executed this Agreement as of the
day
and year first above
written.
Microwave
Satellite Technologies, Inc.
/s/
Xxxxx X. Matarrazo
By:
Xxxxx
X. Xxxxxxxxx
Title:
President
Date:
June 2, 2007
CSI
Digital, Inc.
/s/
Xxxxx X. Xxxxx 6/2/2007
By:
Xxxxx
X. Xxxxx
Title:
President
Date:
June 2, 2007
