Exhibit 10.3
AFFILIATION AGREEMENT
THIS AGREEMENT, made as of the 19th day of April, 2001, is by
and between Hispanic Television Network, Inc., a Delaware corporation
("Network"), and Satellite Services, Inc., a Delaware corporation ("Affiliate"),
regarding the cable television programming service currently known as "HTVN"
(whether in its current format or in any other format) (the "Service"). The
parties hereby mutually agree as follows:
1. RIGHTS:
(a) GRANT OF RIGHTS. Network hereby grants to Affiliate and
any affiliates of Affiliate, the non-exclusive right, but not the obligation, to
distribute and subdistribute the Service by any distribution technology(ies) or
platform(s), whether now existing or developed in the future. The rights granted
to Affiliate in this Section 1(a) and elsewhere in this Agreement are also
granted hereby to any affiliate of Affiliate. As used in this Agreement, an
"affiliate of Affiliate" shall include any entity that Affiliate adds to this
Agreement, provided that such entity meets the requirements of Exhibit A hereto
as if such entity were a video distribution system or enterprise.
(b) ADD AND DELETE RIGHTS. Affiliate shall have the right,
upon written notice to Network within thirty (30) days thereof, to elect to
include under this Agreement and to distribute the Service to, any system or
enterprise that meets the System Qualifications of Exhibit A hereto and by which
or to which Affiliate has distribution rights pursuant to this Agreement. Any
such system or enterprise that meets the System Qualifications of Exhibit A
hereto, and that Affiliate elects to include under this Agreement, shall be
referred to in this Agreement, individually, as a "System" or, collectively, as
"Systems", as set forth on Schedule 1 hereto, as such Schedule 1 may be added to
or deleted from, from time to time, pursuant to the terms of this Agreement.
Upon the addition of a System to this Agreement, any then-existing agreement
between or among Network and any one or more third parties applicable to such
System for distribution of the Service shall terminate and cease to be
effective. Affiliate shall have the right, in its sole discretion, to delete the
Service from any or all Systems by providing Network with written notice within
thirty (30) days of such deletion. Without limiting the foregoing, Affiliate
shall have the right to delete from this Agreement any System that is divested
or otherwise ceases to meet the System Qualifications of Exhibit A hereto,
and/or that is not managed by Affiliate or an affiliate of Affiliate.
2. TERM:
(a) Unless earlier terminated pursuant to the terms of this
Agreement, the "Term" of this Agreement shall consist of, collectively, the
Initial Term (as defined herein) and any number of Renewal Terms (as defined
herein). The
"Initial Term" of this Agreement shall be for ten (10) years, commencing as
of the date hereof.
(b) This Agreement shall automatically renew for successive
five (5)-year periods (each a "Renewal Term") after the expiration of the
Initial Term and each Renewal Term, unless either (i) this Agreement is
terminated earlier in accordance with the terms hereof, (ii) Affiliate provides
written notice to Network of its intent to terminate this Agreement a minimum of
thirty (30) days prior to the end of the Initial Term or any Renewal Term, or
(iii) Network provides written notice to Affiliate of its intent to terminate
this Agreement a minimum of thirty (30) days prior to the end of the second
Renewal Term or any Renewal Term thereafter.
3. CONTENT OF THE SERVICE:
(a) Throughout the Term, the Service shall be a twenty-four
(24) hour per day, seven (7) day per week, professionally produced,
satellite-delivered Spanish language programming service consisting exclusively
of Spanish-language general entertainment programming, including (but not
limited to) Mexican-produced movies, variety, talk and other shows, educational
programs, children's programming, boxing and other sports programming, and news,
all similar (in terms of the nature, content, type and quality of programs) to
the programming on the program schedule attached hereto as Exhibit B. During
each month of the Term, Network shall send a copy of its monthly program
schedule to Affiliate, in care of: Programming Department. Network agrees that
the Service (including any advertisements contained therein) will not contain
(i) programming that has received, or had it been rated would have received, an
MPAA "X" or "NC-17" rating; (ii) more than two (2) hours per calendar day of
religious programming, provided that none of such religious programming shall be
of a proselytizing nature that includes any solicitation or request for
donations, contributions or payments of any kind, whether monetary or otherwise;
(iii) a sufficient quantity of music videos such that the Service could be
characterized as a music video service; (iv) a sufficient quantity of children's
programming such that the Service could be characterized as a children's
programming service; (v) live or taped excerpts or entire portions of actual
courtroom trials, hearings or other similar proceedings as a substantial
component of the programming; (vi) pay-per-view movies or events; (vii)
financial news; (viii) blackouts; (ix) surcharges; (x) promotion or marketing of
"800," "888," "900," or "976" telephone services, or other similar services that
xxxx a caller for placing or confirming the call (other than for the telephone
company's cost of the call), that relates directly or indirectly to gambling,
the occult, astrological, psychic, sexual or romantic activities or other
adults-only services, or that is directed at children; or (xi) direct on-air
sales programming (as defined herein) in excess of three (3) hours in any one
(1) calendar day, which may only occur between the hours of 12:00 a.m. and 6:00
a.m., prevailing Eastern Time, subject to the qualifications set forth in
Section 3(i) hereof, provided that none of such direct on-air sales programming
shall be telecast on the weekends.
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(b) Network shall make available to Affiliate not less than
four (4) minutes of commercial announcement time per hour of the Service, to be
used at Affiliate's option and control. All commercial announcement time
provided to Affiliate hereunder shall be equally distributed throughout each and
every hour of the Service and shall not occur between the actual or apparent end
of one program and the actual or apparent beginning of another program. If
Network increases the total amount of commercial announcement time on the
Service to more than twelve (12) minutes per hour, then Affiliate shall receive
fifty percent (50%) of such increase and every increase thereafter. Network
shall "tone-switch," using industry-recognized equipment, all of Affiliate's
commercial announcement time. Affiliate and Network shall each have the right to
retain for itself all of the proceeds derived from the sale of its commercial
announcement time.
(c) If for any reason, Affiliate, in good faith, determines
that the Service includes programming prohibited in Section 3(a) hereof and/or
includes programming that deviates from the content as required in Sections 3(a)
and 3(f) hereof and as referenced in Exhibit B, Affiliate shall have the right
to (i) discontinue distribution of the Service on any or all Systems; (ii)
preempt the deviating and/or prohibited programming; and/or (iii) receive credit
against the Fees or Renewal Fees (both as defined herein) in the proportion that
the hours of prohibited and/or deviating programming each day bears to the total
hours the Service is transmitted each day, such credit to be applied against the
Fees or Renewal Fees in any month.
(d) Periodically throughout the Term, on the Service, Network
shall promote the fact that the programming on the Service is paid, in part, by
the license fees paid by Affiliate. Affiliate shall have the right to approve
such promotions prior to their dissemination or publication.
(e) During the Term, the programming on the Service, as
received by any Service Subscriber (as defined herein) at a given point in time,
shall be the same as the programming received by all other subscribers to the
Service at such point in time. If it is not, then Affiliate shall have the
unconditional right to receive and distribute, at no extra cost whatsoever, the
programming included in the Service as provided to Affiliate and/or such other
programming.
(f) At least twenty percent (20%) of the hours of the
programming on the Service each day shall be original programming distributed
exclusively on the Service at all times throughout the Term. No episode will
appear on the Service in the same time slot more than twice in any seven (7)-day
period and no episode will appear on the Service more than three (3) times in
any seven (7)-day period regardless of the time slot. For purposes of this
Agreement, "original programming" shall mean (i) programming that is produced by
or on behalf of Network; (ii) programming that is significantly altered or
customized or includes interstitial
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programming or introductory program openings and closings, in either case
sufficient to "brand" or identify the programming as a production of Network;
or (iii) programming that has not previously been exhibited or distributed by
any other video or audio programming services distributor in the United
States or its territories, commonwealths or possessions.
(g) Network agrees that during the Term it shall, at its sole
expense, include as part of the signal of the Service, closed-captioning to the
full extent, if any, required by law and to the extent required to ensure that
Affiliate is in compliance with any and all laws requiring closed captioning
regardless of whether such law imposes the obligation to include closed
captioning on Network, Affiliate or a third party. This includes, without
limitation, meeting any and all benchmarks for captioning programming as set
forth in Part 79 of Federal Communications Commission ("FCC") regulations.
Network also agrees to cooperate with Affiliate to the extent necessary to
establish compliance with any such laws or regulations. Network acknowledges and
agrees that, except as set forth in Section 4(d) hereof with respect to the
delivery of closed-captioning service to Service Subscribers, neither Affiliate,
any affiliate of Affiliate, any System nor any other system or enterprise
distributing the Service hereunder shall have any liability in connection with
Network's failure to prepare, insert or include closed-captioning in the Service
as required by this Section 3(g). Accordingly, Network shall indemnify, defend
and forever hold harmless Affiliate, any affiliate of Affiliate and each of
their respective present and former officers, shareholders, directors,
employees, partners and agents, as provided in Section 8 hereof, against and
from any and all losses, liabilities, claims, costs (including, without
limitation, any costs of preparing and including closed-captioning in the
Service), damages and expenses, including, without limitation, fines,
forfeitures, attorneys' fees, disbursements and court or administrative costs,
arising out of Network's breach of this Section 3(g).
(h) Network agrees that in the event the Service is broadcast
on a full-time basis (I.E., more than twelve (12) hours per day) by a television
station (an "HTVN Station") in the television market of any of Affiliate's
systems, then Affiliate may continue to distribute the satellite-delivered
signal of the Service or, if it is not already distributed, launch the
satellite-delivered signal of the Service in such system; provided, however,
notwithstanding anything to the contrary contained in Section 5(a), any Fees in
effect with respect to the satellite-delivered signal of the Service in such
system shall be waived for so long as such HTVN Station broadcasts the signal of
the Service. If an HTVN Station broadcasts Service programming on only a
part-time basis (I.E., less than twelve (12) hours per day), then Affiliate
shall be entitled to a pro-rata discount of the Fees, if any, payable on behalf
of the Service Subscribers in such system based on the number of hours per day
such Service programming is broadcast by such HTVN Station. In addition,
notwithstanding anything contained in Section 5(a) hereof to the contrary, in
the event that the
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Service or a material portion of the Service programming is made available
over the internet (whether free or subject to a charge), via video streaming
or otherwise, then the Fees then in effect shall be reduced according to the
provisions of Section 13(f) hereof for so long as the Service or the Service
programming is distributed over the internet; provided, however, that if a
net effective rate per subscriber calculation is not available or not
logically quantifiable or related, then such calculation shall be made on a
"net economic term" basis (E.G., if an internet service provider is paying a
flat fee for distribution of the Service or material portion thereof over the
internet, then Affiliate shall have the right to elect to pay such flat fee
for unlimited distribution of the Service).
(i) For purposes of this Agreement, "direct on-air sales
programming" shall mean any programming that includes the direct on-air
marketing, offering for sale and/or sales of products and/or services,
including, without limitation, home shopping, infomercials and direct response
advertising, regardless of the length of such programming except that direct
on-air sales programming shall not include Network's regularly scheduled
commercial announcement time (I.E., the commercial announcements distributed
throughout the Service during other programming that are generally thirty (30)
seconds or less in length and primarily used for promotional announcements or
third party advertising of products and services that are not directly sold to
the viewer during such commercial announcements). Any direct on-air sales
programming included in the Service shall be subject to preemption upon at least
thirty (30) days' notice to Network. If direct on-air sales programming is
preempted by any System(s), Affiliate shall have the right in such System(s) to
insert programming and advertisements of its choice on the channel otherwise
identified with the Service during the period that the Service contains any
direct on-air sales programming.
4. DELIVERY AND DISTRIBUTION OF THE SERVICE:
(a) During the Term, Network, at its expense, (x) shall
deliver a signal of the Service to each System, to each subscriber receiving the
Service by satellite hereunder, and, for purposes of Section 4(h) hereof, to
other locations within the continental United States designated by Affiliate, in
its discretion, by transmitting such signal via a domestic satellite commonly
used for transmission of cable television programming, and (y) shall fully
encrypt the satellite signal of the Service utilizing encryption technology
commonly used in the domestic cable television industry. Except as otherwise
provided in this Section 4(a), Affiliate shall, at its own expense, furnish all
other facilities necessary for the receipt of such satellite transmission and
the delivery of such signal of the Service to Service Subscribers. In the event
Network changes the satellite or encryption technology or otherwise modifies the
signal of the Service in such a manner that it cannot be received or utilized by
a System or Systems, then Affiliate shall have the right to discontinue carriage
of the Service, immediately, in any such System or Systems
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unless Network agrees, unconditionally, promptly to reimburse such System or
Systems, as the case may be, for the costs to acquire and install the
necessary equipment to receive and/or utilize the signal of the Service.
Network agrees to provide Affiliate with at least one hundred twenty (120)
days' prior written notice of a satellite or technology change except that,
if a satellite change is the result of a force majeure event as set forth in
Section 10 hereof, Network agrees to provide Affiliate with written notice as
soon as practicable. Affiliate may utilize either the signal of the Service
delivered by Network or the signal of the Service delivered by any other
entity authorized by Network to distribute the Service.
(b) Network shall deliver to each System and to each
subscriber receiving the Service by satellite hereunder a video and audio signal
of the Service of a technical quality at least comparable to the technical
quality of audio and video signals delivered by other cable television
programming services. Each System, if any, will deliver to its Service
Subscribers a principal video and audio signal of the Service of a technical
quality at least comparable to the quality of other cable television programming
services delivered by such System to its subscribers in the same format as the
Service, but in no event shall such System be required to deliver such signals
of a technical quality higher than the technical quality of the video and audio
signal of the Service as delivered by Network hereunder.
(c) Each System or other video distribution system or
enterprise may distribute the Service full-time or part-time, using an analog,
digital or any other format (or combination of formats). Except as otherwise
provided herein, the Systems, if any, will distribute the Service during the
hours it is distributed without alteration, editing or delay. Affiliate will
have complete authority to control the channel(s) over which the Service is to
be carried on each System.
(d) Network retains and reserves any and all rights in and to
all signal distribution capacity contained within the bandwidth of the signal of
the Service, including, without limitation, the vertical blanking interval or
its digital equivalent ("VBI"), audio subcarriers and all other distribution
capacity contained within the bandwidth of the signal of the Service between
Network's uplink facilities and the Systems or Affiliate's other first downlink
facilities. Affiliate retains and reserves any and all rights in and to, and may
use in its sole discretion, all signal distribution capacity contained within
the bandwidth of the signal of the Service, including, without limitation, the
VBI, audio subcarriers or channels and any other portions of the bandwidth that
may be created or made usable as a result of the conversion of the signal of the
Service from its current format to any other format, from each System or other
first downlink facility to the Service Subscribers served by such System or
other first downlink facility so long as the exercise of such rights does not
materially adversely interfere with the picture quality of the Service or the
principal audio component of the Service. Notwithstanding the foregoing, if
Network uses (i) one (1) line of the VBI contained within the bandwidth of the
signal of the
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Service for closed-captioning for the hearing impaired, and/or (ii) one (1)
or more lines of the VBI contained within the bandwidth of the signal of the
Service (which number of lines shall be limited to the minimum number of
lines necessary to comply with applicable law) solely and exclusively for the
transmission of data for the identification and rating of video programming
that contains sexual, violent or other indecent material in accordance with
applicable law, then Affiliate shall transmit such closed-captioning service,
and/or identification and rating data, as the case may be, so long as (A)
Network delivers the same to Affiliate in a format reasonably specified by
Affiliate, and (B) Network does not transmit any other information on the
same line(s) of the VBI as any closed-captioning service and/or identification
and rating data. Furthermore, Network covenants that it shall deliver any
closed-captioning service and/or identification and rating data to Affiliate
in a format reasonably specified by Affiliate. In the event that Network uses
the signal distribution capacity contained within the bandwidth of the signal
of the Service for the transmission of any other service or product, Network
shall not promote such service or product on the Service without the prior
written consent of Affiliate. Network acknowledges that Affiliate (1) has no
obligation to transmit through to its Service subscribers any interactive,
data or electronic commerce applications associated with, accompanying or
transmitted with the principal video and audio signal of the Service, and
(2) may digitize or redigitize the signal of the Service utilizing certain
technology, the effect of which may be to reduce the data rate and/or
resolution related to the Service, and that the implementation of any such
technology is permitted by this Agreement.
(e) Each System or other video distribution system or
enterprise may carry the Service on the basic level of service, on any tier, in
a package or packages of other services, a la carte, or in any combination
thereof.
(f) Except as otherwise permitted herein, Affiliate shall not
itself, and shall not authorize others to, tape or otherwise reproduce any part
of the Service without Network's prior written consent. Affiliate shall not be
responsible for home taping by anyone viewing the Service and may connect its
subscribers' videocassette recorders or other in-home duplication devices to the
facilities of a System. Affiliate may also promote home taping as part of its
marketing efforts.
(g) Network agrees that if it offers or has offered, or grants
or has granted (including, without limitation, any grant by Network's
acquiescence in a third party's exercise of rights not expressly granted to it)
to any third party (including an affiliate of Network): (i) the right to
distribute a three-dimensional or other augmented or enhanced version of the
Service or the Service programming, (ii) the right to distribute a multimedia,
interactive and/or computer application(s) related to or based on the Service or
the Service programming, or (iii) the right to copy, tape or reproduce any
portion of the Service programming and to exhibit, distribute and sell such
portions of the Service programming, via a file server or any
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other technology, at times other than the time of original transmission by
Network, (subsections (i), (ii) and (iii) of this Section 4(g) are
individually and collectively referred to herein as "Alternative Applications
Right(s)"), then Network shall promptly offer such Alternative Applications
Right(s) to Affiliate on terms and conditions, each one of which is at least
as favorable as that offered or granted to any such third party, provided,
that any such terms and conditions must relate solely to the exercise of the
pertinent Alternative Application Right.
(h) Affiliate shall have the right to digitize, compress
and/or reuplink the Service for distribution to Systems and Service Subscribers,
and to other affiliated and unaffiliated distributors so long as any such other
distributor is authorized by Network (pursuant to a written agreement or
otherwise) to distribute the Service in any format. Network shall not interfere
with Affiliate's (or its affiliates') ability to digitize and compress the
Service.
(i) Affiliate shall have the right to transmit the signal of
the Service as received by any System to unaffiliated distributors so long as
any such distributor is authorized by Network (pursuant to a written agreement
or otherwise) to distribute the Service. Affiliate shall have the right to
receive the signal of the Service from any other distributor of the Service.
5. FEES:
(a) [NEED TO DISCUSS MONTH FREE] In consideration of the terms
and conditions set forth herein, Affiliate shall pay Network fees as provided
for in this Section 5 ("Fee(s)"). For each calendar month during the Term,
Affiliate shall pay a Fee for each Service Subscriber who receives the Service
hereunder. The monthly Fee for each Service Subscriber shall be as follows:
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Year Analog Fee Digital Basic Fee Digital Tier Fee
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2000 Free Free Free
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2001 $0.050 $0.070 $0.085
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2002 CPI Adjusted Fee CPI Adjusted Fee $0.09
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2003 - 2010 CPI Adjusted Fee CPI Adjusted Fee CPI Adjusted Fee
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Notwithstanding the foregoing, Network shall waive the Fee for
each System for the first twelve (12) months immediately following the month in
which the System first launches the Service.
For purposes of this Agreement:
The "Analog Fee" shall apply to each Service Subscriber
who receives the Service in an analog format.
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The "Digital Basic Fee" shall apply to each Service Subscriber
who receives the Service in a digital format in either (i) the package of
digital video programming services that is the most highly penetrated package of
digital services (excluding "Digital Lifeline") offered by such System, or (ii)
any package of video programming services consisting of Spanish or other foreign
language services and any number of English language services, provided that a
Service Subscriber is not required to purchase any other package(s) of video
programming services in order to receive the Service.
"Digital Lifeline" shall mean a tier or collection of services
that may include any data or non-video programming service, telephony,
transactional services, banking and/or alarm services, gaming, email, a
navigator or program guide, promotional guides or channels, pay-per-view or
premium services, public educational and governmental channels (including,
without limitation, channels such as MEU, C-Span, C-Span2, C-Span Extra and
Cal-Span), community bulletin boards, any service required by law to be
provided, and no more than two (2) other discretionary services to be used at
the option of such System.
The "Digital Tier Fee" shall apply to each Service Subscriber
who receives the Service in a digital format on a basis other than as defined in
subsection (i) and (ii) above.
The "CPI Adjusted Fee" shall be the Fee for the immediately
preceding Calendar Year increased by the CPI for such year. "CPI" shall mean the
Consumer Price Index, Urban, U.S. City Average of "All Items", as published by
the Bureau of Labor Statistics of the United States Department of Labor (or any
successor thereto).
(b) "Service Subscriber(s)" shall mean each location to which
Affiliate, pursuant to this Agreement, intentionally authorizes the Service
directly, through an affiliate, or through the subdistribution of the Service to
an unaffiliated third party. Service Subscribers shall include each occupied
residential or commercial location where the Service is intentionally authorized
by Affiliate. If Affiliate (or other distributor that distributes the Service
hereunder) provides the Service to multiple unit complexes on a bulk-rate basis,
then the number of Service Subscribers attributable to each such bulk-rate
subscriber shall be equal to the total monthly retail rate the complex is
charged for the Service or for the level or package of services in which the
Service is distributed, divided by the standard monthly retail rate a non-bulk
rate subscriber is charged for the Service or for such level or package of
services; provided, however, in no event will the number of Service Subscribers
calculated for any such complex exceed the actual number of occupied dwelling
units receiving the Service in such complex. Notwithstanding the foregoing,
Service Subscriber shall not include (i) employees of Affiliate or any of its
affiliates who are not charged for the Service; (ii) public officials,
administrative personnel or public buildings that are not charged for the
Service; (iii) subscribers who have not paid
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their monthly rate for a given month and are subsequently disconnected; or
(iv) any location to which Affiliate or its affiliate indirectly provides the
Service as provided in Sections 4(h) and 4(i) hereof. Any subscriber who
receives the Service in more than one (1) package of services, on more than
one (1) basis from any System(s), or via more than one (1) distribution
technology from Affiliate and/or any affiliate of Affiliate, shall be
included in the Service Subscriber count as only one (1) Service Subscriber.
(c) For purposes of the payment of Fees or Renewal Fees, the
number of Service Subscribers shall be equal to the average of the actual number
of Service Subscribers as of the last day of the month preceding the month at
issue and the actual number of Service Subscribers as of the last day of the
month at issue.
(d) Network shall have the right to negotiate the Fee(s)
applicable to any Renewal Term ("Renewal Fees"). The Fees in effect for the last
year of the Initial Term or any Renewal Term for which Renewal Fees were agreed
to by the parties, shall remain in effect until the parties agree on the new
Renewal Fees. In the event that at least sixty (60) days prior to the expiration
of the Initial Term or any Renewal Term, Affiliate and Network have failed to
agree on the Renewal Fees and either party notifies the other party that it
chooses to cease negotiations of the Renewal Fees, then Network shall give
Affiliate notice of the rates to be paid per Service Subscriber and such rate
shall be deemed the Renewal Fee per Service Subscriber to be paid during the
succeeding Renewal Term. Affiliate may then, at its option, exercise its right
to delete the Service or may continue to provide the Service pursuant to this
Agreement.
(e) Network agrees that the revenues from the Fees and Renewal
Fees will be used primarily for the purpose of developing or acquiring original
and/or exclusive programming for the Service.
(f) In order to determine subscriber preferences, Affiliate
shall have the right to preview the Service free of any obligation to pay Fees
therefor for periods of up to one (1) month.
6. REPORTS:
(a) No later than forty-five (45) days after the end of each
calendar month for which Fees or Renewal Fees are payable, Affiliate shall send
Network a mutually acceptable statement setting forth the total number of
Service Subscribers and any other information that is necessary to compute the
amount due to Network for such calendar month. No later than forty-five (45)
days after the end of each calendar month for which Network is required to make
a payment to Affiliate hereunder, Network shall send to Affiliate a mutually
acceptable statement setting forth all information necessary to compute the
amount due to Affiliate for such
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calendar month. Affiliate and Network shall deliver their respective
statements to the other prior to or along with the amount payable as provided
herein.
(b) In order to verify the compliance with or determine
whether full effect has been given to the provisions of this Agreement
(including the provisions of Section 13(f) hereof), each party, at its expense,
shall have the right, during the Term and for one (1) year thereafter, to
inspect and audit at the offices of the audited party during normal business
hours all relevant books and records, upon reasonable notice to the audited
party. Each party's right to perform such audit shall be limited to once in any
consecutive twelve (12)-month period. Any audit shall be limited to an audit
with respect to amounts to be paid in the current calendar year and immediately
preceding calendar year only, and any claim, which must relate to the
then-current calendar year or the immediately preceding calendar year, must be
made within the earlier of three (3) months after the auditing party leaves the
audited party's offices, or twenty-four (24) months after the close of the
earliest month that is the subject of a claim, or the auditing party will be
deemed to have waived its right, whether known or unknown, to collect any
shortfalls from the audited party for the period(s) audited.
7. PROMOTION:
(a) Except to the extent prohibited by any of Network's
agreements regarding distribution of the programming on the Service, Affiliate,
for the purpose of promoting the Service, may create, edit, reproduce and
exhibit promotional segments or clips of the programming on the Service. Network
shall use its best efforts to obtain all the rights necessary for Affiliate to
utilize the programming comprising the Service in the manner set forth in this
Section 7(a).
(b) Network may not undertake marketing tests, surveys and/or
other research in the Systems in connection with the Service without Affiliate's
prior written consent.
(c) Network agrees to provide the following marketing support
to Affiliate in connection with launches of the Service:
______________________________. In addition, in the event the Service is
broadcast on a full time basis (I.E., more than twelve (12) hours per day) by an
HTVN Station in any of Affiliate's systems, then Network agrees that such HTVN
Station shall broadcast, at no cost to Affiliate, _______ (__) , thirty-second
(:30) spots each day promoting Affiliate, AT&T Broadband, LLC, AT&T Corp. or the
products and services offered by any of the foregoing entities, at Affiliate's
sole discretion, at times mutually agreed upon by the parties. Affiliate shall
have sole responsibility to produce and deliver all advertising spots to the
HTVN Station on a timely basis and in a useable format and broadcast-ready
state. The HTVN Station shall furnish Affiliate with statements of performance
regarding the advertising spots, in accordance with its customary reporting
procedures.
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(d) Affiliate acknowledges that the name and xxxx "HTVN" (and
the names of certain programs that appear in the Service) are the exclusive
property of Network and its suppliers and that Affiliate has not and will not
acquire any proprietary rights therein by reason of this Agreement. Network
shall have the right to approve any use of such names or marks by Affiliate in
publicity about Network or the products or programming included in the Service.
Use of such names and marks in routine promotional materials such as program
guides, program listings and xxxx stuffers shall be deemed approved unless
Network specifically notifies Affiliate to the contrary prior to such use by
Affiliate.
(e) If the Service contains any direct on-air sales
programming, then Network shall pay to Affiliate (i) the then-prevailing
industry average home shopping service rebate, currently five percent (5%), of
the Net Sales (as defined herein) on all products and services sold to
respondents in the zip code area of the Systems, and (ii) twenty percent (20%)
of the compensation received by Network from a third party for the purchase of
direct on-air sales programming time on the Service based on the amount of time
purchased by such third party. "Net Sales" means gross sales less taxes, fees,
returns and allowances, freight out and cash discounts. Network shall provide
Affiliate with lists of the names and addresses of respondents from within the
zip code areas of the Systems who respond to direct on-air sales programming,
for use by Affiliate and its affiliates.
(f) Network and Affiliate hereby acknowledge that Network
could cause Affiliate significant harm by the nature of Network's communications
to Affiliate's subscribers, governmental entities or franchise or licensing
authorities whose opinions and actions could adversely affect Affiliate.
Therefore, Network shall not engage in any communications with subscribers,
governmental entities or franchise or licensing authorities in the areas served
by Affiliate and its affiliates without Affiliate's prior written approval, if
such communications could reasonably be expected to adversely interfere with
Affiliate's relations with the subscribers, governmental entities or franchise
or licensing authorities in such areas. This provision shall not apply (i) to
any national advertising by Network in connection with the Service, (ii) to any
proceeding before any judicial body, or (iii) to communications with Congress or
with any other branch or agency of the Federal government. This Section 7(f)
shall survive termination of this Agreement for two (2) years.
8. WARRANTIES AND INDEMNITIES:
(a) Each party represents and warrants to the other that (i)
it is duly organized, validly existing and in good standing under the laws of
the state under which it is organized, (ii) it has the power and authority to
enter into this Agreement and to perform fully its obligations hereunder; (iii)
it is under no contractual or other
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legal obligation that shall in any way interfere with its full, prompt and
complete performance hereunder; (iv) the individual executing this Agreement
on its behalf has the authority to do so; and (v) the obligations created by
this Agreement, insofar as they purport to be binding on it, constitute
legal, valid and binding obligations enforceable in accordance with their
terms.
(b) Network represents, warrants and covenants that the
Service complies, and will continue to comply, in all respects with (i) the
commercial matter limitations of the Children's Television Act of 1990, Public
Law 101-437 (October 18, 1990) and the regulations of the FCC promulgated
thereunder from time-to-time ("Children's Television Regulations"); (ii) all
origination cablecasting regulations of the FCC, as the same may be amended from
time to time ("Origination Cablecasting Regulations"); and (iii) the benchmark
requirements for captioning programming imposed by Part 79 of FCC regulations,
as the same may be amended from time to time ("Closed-Captioning Regulations"),
and that Network shall provide Affiliate with all records necessary for
Affiliate to demonstrate its compliance with the Children's Television
Regulations and the benchmarks imposed by the Closed Captioning Regulations, and
to meet its documentation and public file requirements under the Origination
Cablecasting Regulations, in a timely manner. In the event that any other
programming offered by the Service shall be regulated by federal, state or local
law, as the same may apply to Affiliate, its affiliates and other non-broadcast
distributors, then Network shall provide Affiliate with all documents reasonably
necessary for Affiliate to demonstrate compliance with such laws and regulations
in a timely manner.
(c) In addition, Network represents and warrants that all
components of any systems/product utilized or relied upon by Network to perform
the activities authorized or contemplated by this Agreement are designed to be
used prior to, during and after the calendar year 2000 A.D., and that the
systems/product will operate during each such time period without error or
interruption relating to date data, including without limitation, any error or
interruption relating to, or the product of, date data which represents or
references different centuries or more than one century, or leap year, in any
level of any systems/product hardware or software, including, without
limitation, microcode, firmware, application programs, user interfaces, files
and databases (such representation and warranty being referred to as "Year 2000
Compliant"). In the event that any system/product is not Year 2000 Compliant,
Network shall, at no additional cost to Affiliate, promptly modify the
system/product so as to ensure that the system/product is Year 2000 Compliant.
In such event, each party reserves all other rights and obligations under this
Agreement.
(d) Affiliate and Network shall each indemnify, defend and
forever hold harmless the other, the other's affiliated companies and each of
the other's (and the other's affiliated companies') respective present and
former officers, shareholders, directors, employees, partners and agents
("Network Indemnitees" and "Affiliate
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Indemnitees," respectively), against and from any and all losses, liabilities,
claims, costs, damages and expenses, including, without limitation, fines,
forfeitures, attorneys' fees, disbursements and court or administrative costs
(collectively, "Costs"), arising out of any breach of any term of this
Agreement or any warranty, covenant or representation contained herein.
(e) Without limiting Section 8(d) hereof, Network shall
indemnify, defend and forever hold harmless the Affiliate Indemnitees against
and from any and all Costs, arising directly or indirectly out of (i) the
content of the Service (including, without limitation, advertising spots, direct
on-air sales programming and music performance rights through to Service
Subscribers) or the use and delivery of the Service hereunder, including,
without limitation, any Costs based upon any suit, lien, encumbrance, charge,
LIS PENDENS, administrative proceeding, governmental investigation, or
litigation pending or threatened (provided that Affiliate shall, to like extent,
indemnify the Network Indemnitees for Costs arising from any deletion or
addition of content by Affiliate to the Service); (ii) the sale or marketing of
any products or services by, through or on the Service, including, without
limitation, claims related to product liability, patent, trademark, copyright
infringement, right of privacy or publicity, express or implied warranties,
warranties relating to compliance with any applicable governmental laws or
regulations and personal injuries (physical, economic or otherwise), to any
person who may use, consume or be affected by the products and services sold or
marketed by, through or on the Service; (iii) Network's failure to comply with
all laws, rules, regulations and court and administrative decrees to which it is
subject or any other failure on Network's part that causes Affiliate to violate
any law, rule, regulation or court or administrative decree; and (iv) Network's
failure to have acquired at the pertinent time when all or part of the Service
is made available to Affiliate, good title to, and/or each and every property
right or other right necessary for it to satisfy the obligations imposed on it
pursuant to this Agreement.
(f) A party claiming indemnity under this Section 8 must give
the indemnifying party prompt notice of any claim, and the indemnifying party
shall have the right to assume the full defense of any claims to which its
indemnity applies. The indemnified party, at the indemnifying party's cost, will
cooperate fully with the indemnifying party in such defense of any such claim.
If the indemnified party compromises or settles any such claim without the prior
written consent of the indemnifying party, then the indemnifying party shall be
released from its indemnity obligations with respect to the claim so settled.
(g) Network represents, warrants and covenants that it has
procured and shall maintain during the Term, at its sole expense, the following
insurance coverage from a nationally-recognized insurance carrier and in
accordance with industry standards: (i) Commercial General Liability insurance,
on current standard forms as promulgated by the Insurance Services Office
("ISO"), that, at a minimum,
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covers Premises and Operations, Products and Completed Operations, Blanket
Contractual Liability for both Oral and Written Contracts and Broad Form
Property Damage (as such coverages are defined in the ISO) at liability
limits of not less than $1,000,000 each occurrence for Bodily Injury and
Property Damage, $1,000,000 each occurrence and $1,000,000 in the aggregate
for Products and Completed Operations, and $1,000,000 policy General
Aggregate; and (ii) Media Perils Liability insurance (Broadcasters'
Liability/Errors and Omissions) that, at a minimum, covers Network's media
activities, including, without limitation, production of programming, the
Service and all elements thereof and all programming distributed by Network
pursuant to this Agreement (including, without limitation, original
programming, marketing activities, sales promotions and other activities),
with coverage for, at a minimum, the offenses of defamation of character or
reputation, invasion of privacy, infringement of trademark, title, slogan,
trade name or service xxxx, infringement of copyright or misappropriation of
ideas, and at a liability limit of $3,000,000 in any one (1) policy period
and a maximum self-insured retention of $5,000 or such other retention as
agreed to by Affiliate in its sole and absolute discretion. Each insurance
policy required by this Section 8(g) shall be endorsed to provide that (A)
Affiliate is named as an additional insured, that the proceeds thereof are
payable to Affiliate and that the policy provides primary and non-contributory
coverage to Affiliate, irrespective of any insurance carried by Affiliate,
whether it be primary, excess, contingent or on any other basis; (B) the
insurer waives any rights of subrogation it may have against Affiliate; and
(C) the policy provides coverage on an "occurrence", and not a "claims-made",
basis. Network shall provide to Affiliate standard XXXXX certificates of
insurance as evidence of maintenance of all insurance policies required by
this Section 8(g) prior to or contemporaneously with the execution hereof.
Such certificates shall indicate that the pertinent insurance policy shall
not be canceled or modified except upon delivery of thirty (30) days' prior
written notice to Affiliate; provided, however, that Network shall not make
any revisions to any policy that could adversely affect Affiliate's rights
without Affiliate's prior written consent. In addition, such certificates
shall indicate coverage for the entire Term, or Network shall provide to
Affiliate, not later than thirty (30) days prior to the expiration of any
policy, a subsequent certificate of insurance as evidence that the pertinent
insurance continues in full force and effect.
(h) The representations, warranties and indemnities contained
in this Section 8 shall continue throughout the Term and the indemnities shall
survive the termination of this Agreement, regardless of the reason for such
termination.
9. EARLY TERMINATION RIGHTS:
(a) In addition to Network's other rights to terminate this
Agreement, Network may, by notifying Affiliate, terminate this Agreement: (i) if
Affiliate is in material breach of this Agreement and Affiliate has not cured
such breach within thirty (30) days of Network's notice of such breach;
provided, however,
-15-
if such breach is confined to a System or to a limited number of Systems,
Network shall have the right to terminate this Agreement only as to such
System or Systems; (ii) if Affiliate has filed a petition in bankruptcy, is
insolvent, or has sought relief under any law related to Affiliate's
financial condition or its ability to meet its payment obligations; or (iii)
if any involuntary petition in bankruptcy has been filed against Affiliate,
or any relief under any such law has been sought by any creditor(s) of
Affiliate, unless such involuntary petition is dismissed, or such relief is
denied, within thirty (30) days after it has been filed or sought.
(b) In addition to Affiliate's other rights to terminate this
Agreement, Affiliate may, by notifying Network, terminate this Agreement: (i) if
Network is in material breach of this Agreement and Network has not cured such
breach within thirty (30) days of Affiliate's notice of such breach, unless a
shorter cure period is specified elsewhere in this Agreement for a specific
breach, in which case such shorter cure period will apply; (ii) if Network has
filed a petition in bankruptcy, is insolvent or has sought relief under any law
related to Network's financial condition or its ability to meet its payment
obligations; (iii) if any involuntary petition in bankruptcy has been filed
against Network, or any relief under any such law has been sought by any
creditor(s) of Network, unless such involuntary petition is dismissed, or such
relief is denied, within thirty (30) days after it has been filed or sought; or
(iv) on at least fifteen (15) days' notice in the event that delivery of the
Service is discontinued or interrupted for a continuous period of fifteen (15)
days.
10. FORCE MAJEURE:
Neither Affiliate nor Network shall have any rights against
the other party hereto for the non-operation of facilities or the non-furnishing
of the Service if such non-operation or non-furnishing is due to an act of God
or other cause (financial inability excepted) beyond such party's reasonable
control (a "Force Majeure Event"). If the Service is interrupted or discontinued
as a result of a Force Majeure Event, Affiliate shall have the right,
immediately, to insert programming of its choice on the channel otherwise
identified with the Service until the Service is fully operational again. Credit
will be given to Affiliate on that portion of the Service that is affected by
any interruption during any month equal to the product of (x) the Fees or any
Renewal Fees that would be due for such month, assuming no interruption of
Service during such month, multiplied by (y) a fraction, the numerator of which
is the total number of hours that the Service is interrupted during such month
and the denominator of which is the total number of hours that the Service would
have been distributed absent such interruption(s).
11. NOTICES:
Any notice or report given under this Agreement shall be in
writing, shall be sent postage prepaid by certified mail, return receipt
requested, or by hand delivery, or by Federal Express or similar overnight
delivery service, or by facsimile
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transmission, to the other party, at the following address (unless either
party at any time or times designates another address for itself by notifying
the other party by certified mail, in which case all notices to such party
thereafter shall be given at its most recently so designated address):
To Network: Hispanic Television Network, Inc.
0000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxx 00000
Facsimile Number: (000) 000-0000
Attention: ____________________
To Affiliate: Satellite Services, Inc.
X.X. Xxx 0000
Xxxxxx, Xxxxxxxx 00000-0000
or
000 Xxxxxxxxx Xxxxx Xxxx
Xxxxxxxxx, Xxxxxxxx 00000
Facsimile Number: (000) 000-0000
Attention: President
cc: Legal Department
Facsimile: (000) 000-0000
Notice or report given by hand delivery shall be deemed given
on delivery. Notice or report given by mail shall be deemed given on the earlier
to occur of actual receipt or on the fifth day following mailing if sent in
accordance with the notice requirements of this Section 11. Notice or report
given by Federal Express or similar overnight delivery service shall be deemed
given on the next business day following delivery of the notice or report to
such service with instructions for overnight delivery. Notice or report given by
facsimile transmission shall be deemed given on the day of transmission if a
business day, or on the next business day after the day of transmission if not
transmitted on a business day.
12. CONFIDENTIALITY:
The terms and conditions, including the existence and
duration, of this Agreement shall be kept confidential, except for disclosure as
may be required by law, regulation, court or government agency of competent
jurisdiction (redacted to the greatest extent possible). This confidentiality
provision shall survive the termination of this Agreement.
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13. MISCELLANEOUS:
(a) ASSIGNMENT; BINDING EFFECT; REORGANIZATION. This Agreement
shall be binding on the respective transferees and successors of the parties
hereto, except that neither this Agreement nor either party's rights or
obligations hereunder shall be assigned or transferred by either party without
the prior written consent of the other party; provided, however, that no consent
is necessary in the event of (i) an assignment to a successor entity resulting
from a merger, acquisition or consolidation by either party or assignment to an
entity under common control, controlled by or in control of either party; or
(ii) an assignment by Affiliate to an entity that aggregates foreign-language or
similar genre programming for distribution to multiple systems operators or
other television programming distributors. In the event of a change of control
or ownership of the Service or Network, this Agreement shall continue but, upon
the date of such change in control, Affiliate, at its option, may either package
and distribute the Service without regard to the restrictions, if any, contained
in Section 4(e) hereof; or delete any or all Systems from Schedule 1 hereto. For
purposes of this Section 13(a), the term "control" means the power to direct the
management and policies of an entity, directly or indirectly, whether through
the ownership of voting securities, by contract or otherwise.
(b) SERVICE COMBINATIONS. In the event that the Service is
acquired by or merged or combined with, or Network acquires control of, any
other programming service(s), if Affiliate has (at the time of such merger,
combination or acquisition) an affiliation agreement regarding distribution of
such other service(s), Affiliate has the option to choose to continue
distribution of the Service and of such other service, and/or of any surviving
service after such merger, combination or acquisition, under either this
Agreement or under such other affiliation agreement. If Affiliate does not have
an affiliation agreement regarding distribution of such other service, Affiliate
shall have the option to elect to have this Agreement continue to apply to the
Service after such merger, combination or acquisition, and/or to any surviving
service after such merger, combination or acquisition.
(c) ENTIRE AGREEMENT; AMENDMENTS; WAIVERS; CUMULATIVE
REMEDIES. This Agreement, including the Schedule and Exhibits attached hereto,
contains the entire understanding of the parties hereto and supersedes and
abrogates all contemporaneous and prior understandings of the parties, whether
written or oral, relating to the subject matter hereof. This Agreement may not
be modified except in a writing executed by both parties hereto. Any waiver of
any provision of this Agreement must be in writing and signed by the party whose
rights are being waived. No waiver of any breach of any provision hereof shall
be or be deemed to be a waiver of any preceding or subsequent breach of the same
or any other provision of this Agreement. The failure of Affiliate or Network to
enforce or seek enforcement of the terms of this Agreement following any breach
shall not be construed as a waiver of
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such breach. All remedies, whether at law, in equity or pursuant to this
Agreement shall be cumulative.
(d) GOVERNING LAW. The obligations of Affiliate and Network
under this Agreement are subject to all applicable federal, state and local
laws, rules and regulations, and this Agreement and all matters or issues
collateral thereto shall be governed by the laws of the State of New York,
without regard to its choice of law rules (except Section 5-1401 of the New York
General Obligations Laws).
(e) RELATIONSHIP. Neither party shall be, or hold itself out
as, the agent of the other or as joint venturers under this Agreement. No
subscriber of Affiliate shall be deemed to have any privity of contract or
direct contractual or other relationship with Network and no supplier of
advertising or programming or anything else included in the Service by Network
shall be deemed to have any privity of contract or direct contractual or other
relationship with Affiliate by virtue of this Agreement. Network disclaims any
present or future right, interest or estate in or to the transmission facilities
of Affiliate and its affiliates, such disclaimer being to acknowledge that
neither Affiliate nor the transmission facilities of the Systems (nor the owners
thereof) are common carriers.
(f) FAVORABLE TERMS.
(i) Network agrees that if it offers or has offered,
or grants or has granted (including, without limitation, any
grant by Network's acquiescence in a third party's exercise of
rights not expressly granted to it), to any third party
(including an affiliate of Network) (A) a lower net effective
rate per subscriber for the Service than Affiliate is paying
per Service Subscriber hereunder, (B) any marketing or
advertising support or reimbursements, launch support or
reimbursements, free or discounted marketing materials or any
other support, credits, reimbursements, rebates,
contributions, adjustments or incentives related to the
marketing of the Service, whether given directly or indirectly
to such third party, or (C) any other economic or non-economic
term, provision, covenant or consideration, that are or is
more favorable to such third party than Affiliate is receiving
hereunder ((A), (B) and (C) above, individually and
collectively, shall be referred to herein as "More Favorable
Provision"), Network will promptly offer such More Favorable
Provision to Affiliate for the same amount of time that such
More Favorable Provision is or was available to such third
party. A More Favorable Provision shall include any pertinent
term, provision, covenant or consideration, regardless of
whether there is a term, provision, covenant or consideration
concerning the subject matter of such More Favorable Provision
in this Agreement or whether such term, provision, covenant or
consideration relates to such third party's entire
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subscriber base or less than the entire base (E.G., a More
Favorable Provision relating to a "test" or "sample" group of
subscribers).
(ii) For purposes of this Section 13(f), the
calculation of net effective rate shall include all economic
and non-economic terms and provisions of an agreement that
involve financial or other outlays (excluding contingent
liabilities) by either party for the benefit of the other or
in direct or indirect connection with the rates for the
Service, or that involve direct or indirect consideration paid
by either party to the other, such as discounts, credits,
adjustments of any kind, including, without limitation, actual
per subscriber rates, volume or other discounts,
reimbursements, channel position fees, discounts, credits or
rebates, pre-payment of loans, deductions for uncollected
accounts, incentives, cash payments (whether conditional or
not), sales or leases of equipment, studio facility discounts,
payment terms and other financing terms. In determining "net
effective rates," the actual number of subscribers to the
Service (rather than projected or expected subscribers or the
number of such third party's subscribers who are not actually
subscribers to the Service) will be considered.
(iii) For purposes of this Section 13(f), and for
purposes of comparing the actual rate per subscriber to the
Service payable by Affiliate to the actual rate per subscriber
to the Service payable by a third party that is distributing
the Service via a common delivery system through which
multiple parties may distribute services (E.G., OVS
providers), the calculation of the penetration of the Service
for such third party shall be based on the total number of
customers receiving programming services through such common
delivery system, regardless of the number of distributors
providing services through such common delivery system.
(iv) Network agrees to provide to Affiliate a
written certification on each annual anniversary date of this
Agreement, signed by a duly authorized officer of Network,
stating that Network has satisfied its obligations under this
Section 13(f).
(g) SEVERABILITY. The invalidity under applicable law of any
provision of this Agreement shall not affect the validity of any other provision
of this Agreement, and in the event that any provision hereof is determined to
be invalid or otherwise illegal, this Agreement shall remain effective and shall
be construed in accordance with its terms as if the invalid or illegal provision
were not contained herein.
-20-
(h) NO INFERENCE AGAINST AUTHOR. Network and Affiliate each
acknowledge that this Agreement was fully negotiated by the parties and,
therefore, no provision of this Agreement shall be interpreted against any party
because such party or its legal representative drafted such provision.
(i) NO THIRD PARTY BENEFICIARIES. The provisions of this
Agreement are for the exclusive benefit of the parties hereto and their
permitted assigns, and no third party shall be a beneficiary of, or have any
rights by virtue of, this Agreement.
(j) HEADINGS. The titles and headings of the sections in this
Agreement are for convenience only and shall not in any way affect the
interpretation of this Agreement.
(k) NON-RECOURSE. Notwithstanding anything contained in this
Agreement to the contrary, it is expressly understood and agreed by the parties
hereto that each and every representation, warranty, covenant, undertaking and
agreement made in this Agreement was not made or intended to be made as a
personal representation, undertaking, warranty, covenant, or agreement on the
part of any individual, and any recourse, whether in common law, in equity, by
statute or otherwise, against any individual is hereby forever waived and
released.
(l) TAXES. To the extent required by applicable law, Affiliate
shall have the right to withhold any portion of any amounts payable by Affiliate
to Network and to pay any such amounts over to any appropriate governmental
authority. Network shall provide such assistance as is necessary to enable
Affiliate to discharge its obligation to withhold and/or pay taxes on Network's
behalf and shall indemnify Affiliate as provided in Section 8 hereof from and
against any and all Costs arising directly or indirectly out of any tax or other
amount withheld, paid or otherwise collected by Affiliate on Network's behalf,
or owed or paid by Network to any governmental entity.
The parties hereto have executed this Agreement as of the date first
above written.
AFFILIATE: NETWORK:
By: /s/ Xxxxxx Xxxxx By: /s/ Xxxxxxx Xxxxxxxx
Title: Title:
------------------------ ---------------------------
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SCHEDULE 1
To Affiliation Agreement By and Between
Hispanic Television Network, Inc. and
Satellite Services, Inc.
Dated ___________, 2001
SYSTEMS
-22-
EXHIBIT A
To Affiliation Agreement By and Between
Hispanic Television Network, Inc. and
Satellite Services, Inc.
Dated ___________, 2001
SYSTEM QUALIFICATIONS
I. Affiliate represents and warrants the following regarding
each System listed on Schedule 1 hereof:
1. that: (a) either (i) AT&T Broadband, LLC, AT&T Corp. or any
person or entity under common control with, controlling or controlled by AT&T
Broadband, LLC or AT&T Corp. (the "Control Group") (AT&T Broadband, LLC, AT&T
Corp. and the Control Group shall be hereinafter referred to as "AT&T"; any
reference to AT&T herein shall be deemed to be a reference to either AT&T
Broadband, LLC, AT&T Corp. or the Control Group or any combination thereof as is
necessary to qualify the greatest number of television distribution facilities
hereunder) or its nominee owns, directly or indirectly, at least a twenty-five
percent (25%) interest in the general manager of the System pursuant to a valid
written agreement in full force and effect; or (ii) AT&T or its nominee owns,
directly or indirectly, a ten percent (10%) interest in such System or owns an
interest or obligation by which AT&T, directly or indirectly, owns a right
(whether conditional or not) to convert into or acquire, directly or indirectly,
an interest equal to at least the required interest. An "indirect" ownership is
an interest resulting from ownership through any series of ownership interests,
including corporations, partnerships, joint ventures or other forms of business
organizations; an indirect interest shall be quantified in amount by a series of
percentage multiplications commencing with AT&T's direct interest and
multiplying that by the next most proximate percentage interest and, then,
multiplying in turn each succeeding ownership interest in the order of their
progression away from AT&T by the result of the immediately preceding
multiplication until the most distant percentage interest is multiplied; and (b)
either a franchise or license is not required or a valid franchise or license is
in effect through the Term or the franchisee or licensee has held a valid cable
television franchise or license and continues to operate in the franchise or
license area under a claim of right or is otherwise lawfully operating or
franchisee or licensee has held a valid cable franchise or license and is
continuing to operate while diligently pursuing, in good faith, its available
judicial remedies. For the above purposes, in the event a franchise or license
expires before the end of the Term, such franchise or license shall
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be deemed valid for so long as franchisee or licensee is negotiating in good
faith with the franchising or licensing authority for a franchise or license
renewal; and
2. that with respect to each System in which AT&T or its
nominee owns, directly or indirectly, less than a fifty percent (50%) interest,
Affiliate or an agent has been authorized, pursuant to a valid written agreement
in full force and effect, to make and execute decisions on behalf of each such
System with respect to the Service, including, without limitation, billing and
collection of fees, and Affiliate continues throughout the Term to exercise such
authority with respect to matters affecting the distribution of the Service by
such System.
II. In the event AT&T's direct or indirect equity interest in a System or in the
entity managing such System decreases below the level required under Paragraph I
hereof, and provided AT&T's interest does not decrease to zero, such System
shall continue to qualify under Paragraph I hereof; provided, however, AT&T's
interest in such System shall increase to the level required under Paragraph I
hereof within eighteen (18) months of the decrease.
III. In the event Affiliate, or any of the entities that owns or manages systems
or enterprises that qualify hereunder, effects a corporate separation,
reorganization or restructuring (including, without limitation, by a
distribution of stock, or other assets or rights, to its shareholders, partners
or joint venturers), the systems or enterprises of the entity resulting from
such transaction (including all interim and supporting entities) and/or all of
such resulting entities, in the aggregate, will qualify under Paragraph I
hereof, so as to continue to qualify to distribute the Service under the terms
and conditions hereof, as if such separation, reorganization or other
restructuring had not occurred.
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EXHIBIT B
To Affiliation Agreement By and Between
Hispanic Television Network, Inc. and
Satellite Services, Inc.
Dated ___________, 2001
PROGRAM SCHEDULE
See Attached.
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