Strategic Agreement - DirecTV Enterprises Inc., DirecTV Inc. and Broadband Sports Inc.
BROADBAND SPORTS, INC.
STRATEGIC AGREEMENT
This Strategic Agreement (this "Agreement") is made and entered into as of
April 12, 2000 (the "Effective Date"), by and between DIRECTV Enterprises, Inc.,
a Delaware corporation ("Enterprises") and DIRECTV, Inc., a California
corporation and a wholly-owned subsidiary of Enterprises ("DTV"), on the one
hand, and Broadband Sports, Inc., a Delaware corporation ("BBS"), on the other
hand. Enterprises and DTV are sometime referred to herein collectively as
"DIRECTV". Enterprises, DTV and BBS shall each constitute a "Party" under this
Agreement and shall collectively constitute the "Parties" under this Agreement.
RECITALS
WHEREAS, DIRECTV has established a direct broadcast satellite ("DBS")
service-based multi-channel distribution system in the USA currently known as
"DIRECTV";
WHEREAS, BBS is a leading provider of content to sports enthusiasts;
WHEREAS, BBS and DIRECTV desire to enter into this Agreement to set forth
the terms upon which the Parties may engage in investment, programming and
advertising/promotional opportunities;
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein and for other good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, BBS and DIRECTV agree as set forth
herein:
1. DEFINITIONS:
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The following terms and variations thereof, as used herein, shall have the
meanings listed below. Terms not defined in this Section shall have the
meanings ascribed to them elsewhere in the Agreement.
"Affiliated Company": With respect to any Person, another Person
controlled by, under common control with or controlling (i.e., the power to
direct affairs by reason of ownership of voting stock, by contract or
otherwise) such Person.
"Ancillary Equity Agreements": The following additional agreements
(individually or collectively, as the context so indicates): (a) the Stock
Purchase Agreement in the form attached hereto as Exhibit "A" and
incorporated herein by this reference; (b) the Warrant Agreement in the
form attached hereto as Exhibit "B" and incorporated herein by this
reference; and (c) the Investor Rights Agreement in the form attached
hereto as Exhibit "C" and incorporated herein by this reference.
"BBS Properties": Internet web sites on the World Wide Web that are owned,
managed, maintained or otherwise controlled by BBS or its agents from time
to time. As of the Effective Date, the BBS Properties includes
AthletesDirect, College Sports Xchange, Pro Sports Xchange, RotoNewsDirect,
SportsAuthenticsDirect and SportsWritersDirect.
"Common Stock": The shares of the common stock of BBS, $.001 par value per
share.
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"Competing Multi-Channel System": Any multi-channel television
distribution system, including without limitation any multi-channel cable
or satellite-delivered television distribution system, operated wholly or
predominantly in the USA, other than the DTV System. By way of example (but
not limitation), a Competing Multi-Channel System would include, for
example, the Dish Network and Time Warner Cable, but would not include, for
example,
"DTV Programming Services": Any programming service, whether owned or
operated by DTV or by a third Person, distributed over the DTV System to
DTV Subscribers.
"DTV Subscribers": Those customers (both residential and non-residential
customers) authorized by DTV to receive the DTV System.
"DTV System": The DBS service owned and operated by DIRECTV and/or its
Affiliates currently known as "DIRECTV" which utilizes DBS communications
satellites located at 101 degrees W.L. to provide programming to
subscribers in the United States (and any successor service).
"Impression": An on-line user's exposure to an advertisement, including,
without limitation, to the applicable advertiser's trademark or logo; or
any teaser, icon, or link to an Internet site of or designated by such
advertiser.
"Internet Sports Provider": An on-line service, web-site or Internet
destination that features, as its predominant category of content, any or
any combination of the following: sports-related news, sports information,
sports programming, sales of sports-related memorabilia and/or sales of
licensed professional/collegiate team wear, apparel or products.
"Laws": Any FCC and any other governmental (whether international, federal,
state, municipal or otherwise) statute, law, rule, regulation, ordinance,
code, directive and order, including, without limitation, any court order.
"Person": Any natural person, corporation, division of a corporation,
partnership, trust, joint venture, limited liability company, association,
company, estate, unincorporated organization or government or any agency or
political subdivision thereof.
"Professional League Packages" Those "season packages" of live professional
sports league programming made available by DIRECTV to its DTV Subscribers.
The Professional League Packages currently made available by DTV are the
"MLB Extra Innings" package (comprised of Major League Baseball games) (the
"MLB Package"), "NFL Sunday Ticket" package (comprised of National Football
League games) (the "NFL Package"), the "NBA League Pass" package (comprised
of National Basketball Association games) (the "NBA Package") and the "NHL:
Center Ice" package (comprised of National Hockey League games) (the "NHL
Package").
"Public Financing": The initial public offering of securities of BBS
pursuant to a firmly underwritten sale of Common Stock registered by the
Company in compliance with the Securities Exchange Act of 1934 resulting in
proceeds to BBS of at least $20,000,000.
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"TWOS": The full motion video program promoting DTV sports
programming/packages entitled "This Week on Sports" currently running on
the TWOS Channel of the DTV System.
"TWOS Channel": The full motion video programming service promoting DTV
sports programming/packages currently operated and programmed by DTV and
made available to all DTV Subscribers. On the Effective Date, the TWOS
Channel appears on Channel 212 on the DTV System and is currently channel-
mapped to Channels 601 and 701 on the DTV System.
"TWOS Term": The thirty-six (36) month period commencing on August 1, 2000
(subject to the provisions of Section 4.8 below).
2. ISSUANCE OF BBS SECURITIES TO ENTERPRISES:
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2.1 Issuance: Subject only to Enterprises' execution and delivery to BBS
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of the Ancillary Equity Agreements and Enterprises' delivery to BBS of
the Upfront Stock Purchase Price, BBS shall issue to Enterprises (i)
6,804,417 shares of Common Stock (subject to increase pursuant to
Section 2.2(a), the "Upfront Stock") and (ii) a warrant (the
"Warrant") to purchase an additional 13,608,834 shares of Common
Stock. BBS has advised Enterprises that it anticipates a reverse split
of the number of shares of Common Stock and the Parties expressly
understand that the share numbers described in this Section 2 refer to
pre-split shares.
2.2 Pre-Public Financing Adjustments: Notwithstanding the provisions of
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Section 2.1 above, if, immediately prior to the consummation of a
Public Financing, the then number of shares of Common Stock of BBS
determined on a fully-diluted basis (including all Common Stock
issuable upon the conversion or exercise of any warrant, right or
other security of BBS and excluding the Upfront Stock, the Warrant and
any shares of Common Stock being sold in connection with the Public
Financing) (the "Actual Number of Common Shares") differs from
355,341,779 by more than 1,000,000 shares, then the following shall
apply:
(a) If the Actual Number of Common Shares, is greater than
356,341,779, Enterprises shall have the right, but not the
obligation, prior to the Public Financing, to purchase an
additional number of shares of Common Stock (as Upfront Stock) so
that the aggregate number of shares of Common Stock purchased by
Enterprises as Upfront Stock is equal to two percent (2%) of
ninety percent (90%) of the quotient obtained by dividing the
Actual Number of Common Shares by 0.94 (i.e., 0.018 times [the
Actual Number of Common Shares divided by 0.94]). The per share
purchase price for any such additional shares of Common Stock
shall be as set forth in Section 2.3 below. If Enterprises makes
the foregoing election, then, in addition, BBS shall issue
additional warrants to Enterprises (as part of the Warrant) so
that the aggregate number of shares of Common Stock underlying
the Warrant is equal to four percent (4%) of ninety percent (90%)
of the quotient obtained by dividing the Actual Number of Commons
Shares by 0.94 (i.e., 0.036 times [the Actual Number of Common
Shares divided by 0.94]. The exercise price for any such
additional warrants shall be as set forth in Section 2.4 below.
(b) If the Actual Number of Common Shares, is less than 354,341,779,
then the Parties shall determine the "Adjustment Factor" and an
amount equal to Adjustment Factor (if any) shall be applied
either as a reduction in the Channel Access Payment, a
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reduction in the TWOS Sponsorship Payment, a grant to BBS of
additional "spots" on the TWOS Channel (or a combination of the
foregoing, as mutually determined by the Parties). The
"Adjustment Factor" shall equal the product of (i) the positive
difference (the "Adjustment Number") obtained by subtracting an
amount equal to two percent (2%) of ninety percent (90%) of the
quotient obtained by dividing the Actual Number of Common Shares
(post-split) by 0.94 (i.e., 0.018 times [the Actual Number of
Common Shares (post-split) divided by 0.94]) from 6,804,417
(after being adjusted post-split) multiplied by (ii) the positive
difference, if any, obtained by subtracting twelve dollars ($12)
from the actual per share price of Common Stock issued in
connection with the Public Financing.
2.3 Upfront Stock Pricing: The per share price for the Upfront Stock shall
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be $1.20 per share (for pre-split shares) and the aggregate total
purchase price (the "Upfront Stock Purchase Price") shall be paid by
Enterprises to BBS in cash, against delivery of appropriate stock
certificates.
2.4 Warrant Pricing: The exercise price for the Warrants shall be $1.40
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per share (for pre-split shares); provided, however, that in the event
that, within six (6) months from the Effective Date, BBS shall issue
Common Stock in a single sale or a series of related sales (whether a
private sale, Public Financing or other public sale) involving a
committed stock purchase price of more than $10,000,000 (or a number
of Common Shares in excess of 7,500,000) at a price (taking into
account cash and non-cash consideration received by BBS in connection
with such issuance) other than $1.40 per share (subject to
proportional adjustment to reflect any stock split or similar
recapitalization event), then, with reference to the first such sale
(only and as applicable), the per share exercise price for the
Warrants shall be revised upward or downward (as applicable) to a per
share price equal to the per share price for the Common Stock sold in
connection with such first sale. By way of clarification, the exercise
price of the Warrant shall only be subject to a single adjustment
pursuant to the provisions of this Section 2.4.
2.5 Vesting of the Warrants/Exercise Period: The Warrants shall vest over
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the three (3) year period commencing on the Effective Date as follows:
one third (1/3) shall vest in four (4) equal quarterly increments
during the one year period commencing on the Effective Date; one third
(1/3) shall vest on the second anniversary of the Effective Date; and
one third (1/3) shall vest on the third anniversary of the Effective
Date. All Warrants shall remain exercisable for a period of three (3)
years from vesting.
2.6 Ancillary Equity Agreements: Concurrently herewith the Parties shall
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execute and deliver the Ancillary Equity Agreements. The Parties
respective rights, obligations and restrictions with respect to the
BBS securities being issued under this Agreement (including, without
limitation, registration rights in favor of Enterprises and certain
pre-initial public offering dilution protection in favor of
Enterprises) are, to the extent not described herein, set forth in the
Ancillary Equity Agreements.
2.7 Board Representation: Subject to applicable law in each instance:
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(a) Upon the closing of the Public Financing, BBS shall immediately
expand the size of the Board of Directors to nine directors and
appoint to the Board of Directors (subject to the majority vote of the
remaining directors, which BBS shall solicit and use its best efforts
to obtain, in accordance with BBS' by-laws), to fill the vacancy, one
individual designated by Enterprises to serve on the Board of
Directors. The director designated by
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Enterprises shall, upon his/her appointment, continue to serve as a
director until the next election of directors.
(b) As long as Enterprises continues to own a number of shares of
Common Stock (adjusted for stock splits and similar occurrences) that
is greater than fifty percent (50%) of the aggregate of the number of
Upfront Shares plus the number of shares of Common Stock purchased by
Enterprises (from time-to-time) upon exercises of the Warrants,
Enterprises shall be entitled to designate one individual to be
nominated to the Board of Directors by BBS. Any individual so
designated by Enterprises pursuant to this Section 2.7(b) is referred
to herein as the "Designee."
(c) During the period provided in Section 2.7(b) above, BBS shall
nominate the Designee for election as a director as part of the
management slate that is included in the proxy statement (or consent
solicitation or similar document) of BBS relating to the election of
directors, and shall provide the same support for the election of each
such Designee as it provides to other persons standing for election as
directors of BBS as part of BBS' management slate.
(d) In the event that any Designee shall cease to serve as a director
for any reason (other than the failure of the stockholders of BBS to
elect such person as director), the vacancy resulting therefrom shall
be filled by (subject to the majority vote of the remaining directors,
which BBS shall solicit and use its best efforts to obtain, in
accordance with BBS' by-laws) an individual designated by Enterprises
in accordance with Section 2.7(b) above.
(e) BBS will reimburse each Designee that serves as a director for all
reasonable costs and expenses (including travel expenses) incurred in
connection with such director's attendance at meetings of the Board of
Directors or any committee of the Board of Directors upon which such
director serves, in accordance with BBS' policies regarding
reimbursement of director expenses. BBS shall indemnify and advance
expenses to each such director to the same extent it indemnifies and
advances expenses to its other directors pursuant to its
organizational documents and applicable law.
(f) In each instance, the individual designated by Enterprises as its
Designee (and the individual initially designated by Enterprises under
Section 2.7(a) above) shall be an executive officer of Enterprises.
(g) Following the Public Financing and through the period described in
Section 2.7(b), Enterprises shall have the right to have its designee
participate in all meetings of the Board of Directors of BBS in an
advisory capacity ("Advisory Designee"). The provisions of Section
2.7(f) shall apply with respect to the selection of such Advisory
Designee and the provisions of Section 2.7(e) above with regard to
reimbursement of expenses shall also apply to such Advisory Designee.
Notwithstanding the foregoing, however (i) Enterprises rights under
this Section 2.7(g) shall not apply at any time during which an
individual designated by Enterprises (under Section 2.7(a) above or as
a Designee, as applicable) is a duly appointed/elected member of the
Board of Directors of BBS and (ii) it is understood by the Parties
that the provisions of this Section 2.7(g) are intended to provide a
"back-up" mechanism to ensure that Enterprise will have the ability to
have a designee participate in meetings of the Board of Directors of
BBS in the event that, despite the best efforts of BBS, the Parties
are unsuccessful in having a designee of the Enterprises appointed to
Board of Directors of BBS.
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3. TWOS SPONSORSHIP:
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3.1 Primary Internet Sports Advertising Sponsor: During the TWOS Term,
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DIRECTV agrees that it shall not provide or permit advertising on the
TWOS Channel for any other Internet Sports Provider, other than the
following (collectively, the "Special Internet Sports Providers"):
3.2 Payment for the TWOS Sponsorship: BBS shall pay to DIRECTV the amount
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of $2,400,000 (the "TWOS Sponsorship Payment") over the TWOS Term, as
follows: (a) $750,000 equally over the five (5) month period
commencing on August 1, 2000 and ending December 31, 2000; and (b)
$1,650,000 equally over the thirty-one (31) month period commencing
January 1, 2001. However, if, pursuant to the provisions of Section
4.8 below, the TWOS Term does not commence until October 1, 2000, then
the foregoing payments (and the aforesaid five (5) month and thirty-
one (31) month payment periods) shall be correspondingly delayed.
Monthly payments of the TWOS Sponsorship Payments shall be paid by BBS
after the conclusion of the applicable month but no later than forty-
five (45) days after receipt by BBS of an invoice from DIRECTV.
3.3 Sponsorship Elements: In exchange for agreeing to make the TWOS
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Sponsorship Payment, BBS shall be entitled to the following
programming/promotional time on the TWOS Channel during the TWOS Term
("Sponsorship Elements"):
(a) During each annual period during the TWOS Term (the first
annual period being the twelve month period commencing on
the first day of the TWOS Term and so forth), BBS shall have
the right to include feature segments (
) focusing on specific BBS
personality/product/promotion (approximately 3 minutes in
duration) (each, a "Feature Segment"). The Feature Segments
shall be run as part of, or adjacent to each airing of TWOS
(other than the BBS Programming and subject to the
provisions of Section 3.4 below) that may be aired on the
TWOS Channel, but in no event less frequently than once per
hour (other than during the BBS Programming Block(s) and
subject to the provisions of Section 3.4 below).
(b) One (1) :30 segment to air adjacent to each airing of the
Feature Segments noted above, utilizing an in-studio host
directing viewers to AthleteDirect web sites (or, at BBS'
election, to other BBS Properties ) (each, a "Tie-In
Segment").
(c) :30 second avails per hour in each hour for the
portion of any month when the Feature Segments provided in
subparagraph (a) above are not being
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aired, for use in conjunction with the promotion of BBS
Programming and/or BBS Properties.
All of the above segments and avails shall be subject to DIRECTV's
editorial standards and practices. DIRECTV shall provide BBS with a
copy of its editorial standards and practices prior to the
commencement of the TWOS Term and shall provide BBS with a copy of any
modifications made thereto by DIRECTV from time-to-time during the
TWOS Term.
3.4 Programming Adjustments: Currently, DIRECTV continuously loops TWOS on
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the TWOS Channel twenty-four (24) hours a day, seven (7) days a week.
Of the daily programming time remaining on the TWOS Channel after
excluding the Primary Programming Block (and, if applicable, the
Additional Programming Block) described in Section 4 below, DIRECTV
shall be entitled to decrease by up to four (4) hours per day the
number of hours that TWOS runs on the TWOS Channel without having any
obligation to BBS to run the Feature Segment or Tie-In Segment or
provide the avails described in subparagraph (c) of Section 3.3 above
in conjunction with the replacement programming inserted in place of
TWOS during such four (4) hour period. If, however, DIRECTV decreases
the hours that TWOS is airing on the TWOS Channel by more than four
(4) hours per day (again, after excluding the Primary Programming
Block and, if applicable, the Additional Programming Block, described
in Section 4.2 below), then, in those hours calculated beyond such
four (4) hours (the "Reprogrammed Hours"), the following shall apply:
(a) With respect to up to four (4) Reprogrammed Hours per day,
DIRECTV shall be entitled to air its replacement programming
without any obligation to attach or include BBS' applicable
Feature Segment and Tie-In Segment in or to such replacement
programming. However, during each such Reprogrammed Hour, (i)
during the week when the Featured Segment is otherwise being
aired, BBS shall be entitled to :30 second avails per
hour in each Reprogrammed Hour (for promotional use in accordance
with the provisions of subparagraph (c) of Section 3.3 above) and
(ii) during the balance of the month, BBS shall continue to be
entitled to its avails in each such hour under subparagraph (c)
of Section 3.3 above. In addition, with respect to the week(s)
when the Featured Segment and Tie-In Segment would have otherwise
been aired during the Reprogrammed Hours, DIRECTV shall calculate
the number of hours when the Featured Segment and Tie-In Segment
are not aired during such Reprogrammed Hours and, at such time as
the amount of such "shortfall" hours is equal to an entire
"programming week equivalent" (i.e., 168 hours less the number of
hours in a week represented by the BBS Programming Block(s) and
less the number of hours in a week represented by the up to four
(4) hours per day of replacement programming referenced in the
second sentence of this Section 3.4), then in the immediately
following month DIRECTV shall be required to air an additional
week of Featured Segments and Tie-In Segments to "make good" to
BBS for such lost programming time (it being understood that
during such "make good" week, the provisions of subparagraph (c)
of Section 3.3 above shall not apply, except and to the extent
that BBS would be entitled to such avails pursuant to clause (i)
of this subparagraph (a), if applicable with respect to the "make
good" week).
(b) With respect to any Reprogrammed Hours per day in excess of the
four (4) Reprogrammed Hours per day referred to in subparagraph
(a) above, BBS' rights
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with respect to its Sponsorship Elements shall apply with respect
to the replacement programming to the same extent that they apply
to TWOS.
3.5 TWOS Channel Carriage: At all times during the TWOS Term, DIRECTV
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shall provide the TWOS Channel to all DTV Subscribers as part of
DIRECTV's "basic" tier. At present, the Parties do not contemplate
that, at any time during the TWOS Term, DIRECTV will carry any other
channel on the DTV System that is primarily programmed to promote
sports programming and sports packages that is/are available on the
DTV System, excluding, however, the following (the "Exempt Promotional
Channels"): (a) any non-full motion, sports programming "menu" or
schedule channel, (b) any non-full motion channel for ordering DTV
sports programming and sports packages and (c) DIRECTV's "Big Event"
channel, so long as the most significant portion of the sports
programming/packages promotions thereon are promoting, directly or
indirectly, the special events featured on "Big Event'). However, if
DIRECTV does determine to carry any other channel on the DTV System
that is primarily programmed to promote sports programming and sports
packages that is/are available on the DTV System) (each, a "Covered
Promotional Channel", which term expressly excludes the TWOS Channel
and any Exempt Promotional Channels), then, with respect to each such
Covered Promotional Channel, the following shall apply: (i) BBS shall
be entitled to four (4): 30 second avails per hour on each such
Covered Promotional Channel during each hour that such Covered
Promotional Channel is on the air (for promotional use in accordance
with the provisions of subparagraph (c) of Section 3.3 above); (ii)
the provisions in favor of BBS under Section 3.1 shall equally apply
to each such Covered Promotional Channel; and (iii) if DIRECTV is
prepared to allow a third Person to produce/provide programming for
any such Covered Promotional Channel, then, prior to entering into a
production/programming agreement with such third Person, DIRECTV shall
give BBS a right of first negotiation to discuss in good faith the
possibility of BBS being the Person that provides such
production/programming services. Notwithstanding the provisions of the
foregoing clause (iii), if the third Person with whom DIRECTV is in
discussions regarding production/programming services for a Covered
Promotional Channel is
, then DIRECTV shall be entitled to
enter into an arrangement with such Person in connection with such
Covered Promotional Channel without offering BBS the "first
negotiation" right set forth in clause (iii) above.
4. BBS PROGRAMMING BLOCK (S):
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4.1 Channel Access Consideration: As partial consideration for DIRECTV
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making the channel access described below in this Section 4 available
to BBS, BBS shall make payment to DIRECTV of a channel access fee of
$1,000,000 (the "Channel Access Fee"), payable in three installments
of $333,333, $333,333 and $333,334 on the first, second and third
anniversary of the commencement of the TWOS Term, respectively.
Notwithstanding the foregoing, if,
, the Channel Access
Fee shall be increased by an amount equal to product of (a) the number
of shares of Upfront Stock purchased by Enterprises (as recalculated
post-split, but after deducting from such number an amount equal to
the Adjustment Number, if any, under Section 2.2(b) above)
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multiplied by (b) the difference between fourteen dollars ($14) and
the greater of twelve dollars ($12) or the actual per share price of
Common Stock issued in connection with the Public Financing, such
product to be either, at BBS' option, (i) grossed-up to take into
account the time value of money (calculated using the prevailing
federal funds rate) and proportionally spread across the three (3)
installments of the Channel Access Fee set forth in this Section 4.1
or (ii) paid in full on the first anniversary of the commencement of
the TWOS Term.
4.2 Access to Programming Time: At all times during the TWOS Term, DIRECTV
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shall make the TWOS Channel available to BBS for no less than five (5)
hours per day for BBS to provide sports-related programming, as
described below (the "BBS Programming") (the "Primary Programming
Block"). The BBS Programming shall run during one of the two following
time periods, to be selected by DIRECTV no later than May 1, 2000: 5
pm - 10 pm EST (Time Period 1) or 9 pm - 2 am EST (Time Period 2). At
the option of DIRECTV, DIRECTV may also make available to BBS three
(3) additional hours per day of programming on the TWOS Channel (the
"Additional Programming Block" and, together with the Primary
Programming Block, the "BBS Programming Block(s)"), which capacity
shall be provided in a single block of time that may or may not be
contiguous to the Primary Programming Block, but which shall, in any
event, run no earlier than 8 am EST. Such option to provide the
Additional Programming Block must be exercised by DIRECTV no later
than March 1, 2001. If DIRECTV exercises such option, DIRECTV shall
maintain the ability to run TWOS on additional DIRECTV channels on the
DTV System, in DIRECTV's discretion, during the time period of the BBS
Programming Block(s), provided, however, that (a) the Sponsorship
Elements shall be made available with (or in, as applicable) TWOS on
such additional channel(s) during such times and (b) the provisions of
Section 3.1 in favor of BBS with respect to the TWOS Channel shall
extend to such additional channels at all times during the period of
the BBS Programming Block(s) on the TWOS Channel.
4.3 Content of BBS Programming Blocks: BBS shall integrate promotional
---------------------------------
content for DIRECTV sports package offerings into the BBS Programming.
The Parties agree that (i) all such programming shall be at least
thirty (30) minutes in length (including commercial and promotional
time in and adjacent to such programming), (ii) the BBS Programming
will be originally produced by or on behalf of BBS, with new
programming (in whole or in part) to be provided on a weekly basis (at
least 48 weeks/year), (iii) subject to clause (i), BBS shall be
entitled to "loop" its BBS Programming (in whole or in part) during
the BBS Programming Block(s) and (iv) the BBS Programming shall not be
co-branded with, nor otherwise be presented as being a co-production
between BBS and, any third party DTV Programming Service that features
sports programming (e.g., ESPN, etc.). The BBS Programming, production
values, content and look and feel shall: (a) be of a quality at least
equivalent to that of the current TWOS show; (b) be subject to
DIRECTV's editorial and creative approval, which shall not be
unreasonably withheld (
), and (c) provide a
direct tie-in to the sports packages offered by DIRECTV. BBS and
DIRECTV shall negotiate and agree within the sixty (60) day period
commencing on the Effective Date on the procedures and schedules to
enable DIRECTV to approve the BBS Programming and to discuss the
extent to which BBS may "brand" the BBS Programming Block(s) (in
addition to "branding" the BBS Programming itself). The BBS
Programming Block(s)shall contain
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no more than twelve (12) minutes of: 30 second avails per hour, of
which DIRECTV shall have the right to use three (3) minutes of such:
30 second avails at no charge to DIRECTV; such avails shall be used
for the placement of advertising by DIRECTV or such third Persons as
DIRECTV may designate, provided that such third Persons shall not
include any other Internet Sports Provider, other than a Special
Internet Sports Provider. BBS shall be responsible for selling avails
aired during the BBS Programming Block(s), except for avails provided
to DIRECTV as described above. Advertising contained in the BBS
Programming Block(s) shall be subject to DIRECTV's contractual
obligations and restrictions
and DIRECTV's standard
advertising policies and guidelines (with DIRECTV agreeing to provide
BBS with a copy of such policies and guidelines prior to the
commencement of the TWOS Term and with a copy of any modifications
made thereto by DIRECTV from time-to-time during the TWOS Term), and
such advertising shall not advertise any
. BBS and DIRECTV shall mutually agree on the
rate card for advertising contained in the BBS Programming, consistent
with DIRECTV's then-current rate card for TWOS advertising (to be
provided by DIRECTV to BBS from time-to-time, but at least quarterly),
such mutual agreement to include mutual agreement as to appropriate
discounts off the rate card, if any, to be made available to
advertisers. The BBS Programming may include such items as features,
interview segments, sports updates and sports merchandising segments,
provided that no more than of BBS Programming
time will be devoted to merchandising. DIRECTV shall receive a royalty
of of net sales of products and merchandise (net
sales being defined as cash received by BBS less product costs,
shipping and fulfillment costs, credit card charges, taxes and
returns) sold on BBS Programming during the BBS Programming Blocks.
BBS shall pay DIRECTV's applicable royalties, if any, on a quarterly
basis, with adjustments to be made between quarterly periods for
reserves and other occurrences requiring a calculation adjustment.
Prior to BBS' inclusion of any merchandising segments, the Parties
shall meet to discuss the manner in which BBS intends to track and
differentiate sales of merchandise to which DIRECTV is entitled to a
royalty, such methodology to also focus on trying to direct BBS'
merchandising customers to BBS and away from DIRECTV for related
customer assistance. DIRECTV shall have audit rights with respect to
the merchandising royalty contemplated herein, such audit right to be
(a) limited to reviewing the relevant books and records of BBS
pertaining to the applicable merchandising activities, (b) exercisable
once per annum, during normal business hours and for not more than ten
(10) business days and (c) conducted by a Big 5 accounting firm or
such other accounting firm requested by DIRECTV and approved by BBS.
4.4 BBS Programming Operations: Upon notice by DIRECTV (which notice
--------------------------
DIRECTV shall use commercially reasonable efforts to provide within
six (6) months after the Effective Date), the BBS Programming will be
delivered by BBS, at BBS's sole cost and expense, to DIRECTV's Los
Angeles uplink center via fiber, pursuant to DIRECTV's standard
delivery requirements. Until such notice, the BBS Programming will be
taped and will be delivered to DIRECTV in accordance with DIRECTV's
standard procedures. DIRECTV
10
<PAGE>
shall bear no liability for any tapes that are not received by DIRECTV
or that are received after the relevant deadlines for such tapes, or
are otherwise received after the relevant deadlines for such tapes, or
are otherwise not delivered in accordance with the DIRECTV procedures.
4.5 Other Considerations: DIRECTV will at all times during the TWOS Term
--------------------
continue to "channel map" the TWOS Channel to at least one channel
"slot" located adjacent to (and preceding) the channel grouping on the
DTV System that is dedicated to sports programming. The BBS
Programming shall be branded by BBS (in accordance with the "branding"
discussions contemplated by Section 4.3 above), provided that BBS will
make such branding consistent with the look and feel of the TWOS
Channel, and provided further that such branding, when exhibited on
the TWOS Channel, shall contain a secondary reference to DIRECTV (and,
at DIRECTV's election, DIRECTV will have the right to superimpose the
DIRECTV "bug" on-air during the BBS Programming). The BBS branding
will appear on the banner description included as part of the DIRECTV
on-screen guide when BBS Programming is delivered.
4.6 Promotion of the TWOS Channel/BBS Programming: DIRECTV will continue
---------------------------------------------
to promote the TWOS Channel consistent with past practices, including
on-air (: 30 avails) and bill stuffer promotions; provided, however,
DIRECTV will air no less than total on-air
avails for the TWOS Channel per week. During every quarter, no less
than of such TWOS on-air promotions shall
be used to promote the BBS Programming on TWOS (the "BBS Programming
Spots"). Such promotional materials promoting the BBS Programming
shall be produced by BBS, subject to review and approval by DIRECTV,
not to be unreasonably withheld, it being understood and agreed that
such promotional materials shall be "branded" by BBS and may, at BBS'
option, include a promotional component (of up to ten (10) seconds)
identifying the location of BBS Properties on-line. The BBS
Programming Spots shall be dispersed on a representative basis across
the DTV Programming Services (and across the day parts of such DTV
Programming Services;
) described on Exhibit "D" attached hereto and incorporated
herein by this reference;
. By way of clarification, if BBS does not elect to utilize the
full complement of its BBS Programming Spots in a particular week, the
un-utilized spots will be deemed forfeited (i.e., they cannot be
"banked" and rolled into a subsequent period).
4.7 Additional Promotion of the TWOS Channel: DIRECTV shall also provide
----------------------------------------
BBS with one (1) page, at no cost to BBS, in each edition of ON Sports
Magazine during the TWOS Term to promote BBS Programming on the TWOS
Channel.
4.8 Delay in Commencement of TWOS Term: The Parties have determined that
----------------------------------
the TWOS Term will commence August 1, 2000; however:
11
<PAGE>
(a) On or prior to May 15, 2000, BBS shall provide DIRECTV with
written notice confirming that BBS will be able to commence
programming the Primary Programming Block (in accordance with the
requirements of this Section 4) on August 1, 2000. If BBS is
unable to provide such confirmation, then the commencement of the
TWOS Term shall be delayed (for all purposes under this
Agreement, including, without limitation, the provisions of this
Section 4 and Section 3 above) to October 1, 2000 (but the
duration of the TWOS Term, as so delayed, shall remain thirty-six
(36) months); provided further, that in the event that BBS is
unable to commence programming the Primary Programming Block (in
accordance with the requirements of this Section) prior to
January 1, 2001 (and/or does not provide DIRECTV with at least
sixty (60) days prior notice of its capability to commence
programming the Primary Programming Block (in accordance with the
requirements of this Section) prior to January 1, 2001), then BBS
shall forfeit the rights and privileges provided under this
Section 4; and
(b) If BBS has not consummated the Public Financing by August 1,
2000, then the commencement of the TWOS Term shall be delayed
(for all purposes under this Agreement, including, without
limitation, the provisions of this Section 4 and Section 3 above)
to October 1, 2000 (but the duration of the TWOS Term, as so
delayed, shall remain thirty-six (36) months).
5. CROSS PROMOTION OF PRODUCTS: DIRECTV and BBS will use commercially
---------------------------
reasonable efforts to cross-market products (such as BBS' My Baseball
Daily and DIRECTV's Professional League Packages) to each other's
subscriber base.
6. MARKETING OBLIGATIONS:
---------------------
6.1 Incentives: If DIRECTV so requests, BBS will provide DIRECTV with the
----------
following in-kind promotional incentives, during the three (3) year
period commencing on August 1, 2000. BBS shall provide electronic
product subscriptions to BBS' on-line subscription products (e.g., My
Baseball Daily) mutually agreed by the Parties in the amount of up to
in the first 12 months and up to (in the
aggregate) over the next 24 months, and shall also provide up to
in sports memorabilia to be mutually selected, during each of
the three (3) annual twelve (12) month periods commencing August 1,
2000. In calculating the value of the electronic product subscriptions
and the sports memorabilia, (a) in the case of electronic product
subscriptions, reference shall be made to (i) the prices at which BBS
currently makes such products available to consumers (other than
during special promotional periods), with respect to those electronic
product subscriptions currently published by BBS or (ii) the prices at
which BBS is generally selling such subscriptions (other than during
special promotional periods), with respect to those electronic product
subscriptions hereafter published by BBS, and (b) in the case of
memorabilia, reference shall be made to the prices at which BBS is
then making such products available to consumers. DIRECTV shall
determine the households, in its sole discretion, that are to be
provided with the materials contemplated under this Section 6.1
(provided, however, that each such household shall be (or become) a
subscriber to one or more of DIRECTV's sports packages) and the
Parties shall hereafter meet to establish appropriate procedures for
affecting the on-line delivery of the electronic product subscriptions
to such identified households.
12
<PAGE>
6.2 Athlete Appearances: In addition, during each year of the three (3)
-------------------
year period set forth in Section 6.1 above, BBS will make at least
(in the aggregate) "A" level talent athletes from the BBS
roster of "signed" athlete available to DIRECTV for an appearance or
interview/photo session promoting relevant Professional League
Packages on the DTV System ("Athlete Appearances"). DIRECTV may use
such material to promote its Professional League Packages across such
media as On Sports, TWOS, DIRECTVsports.com and other on-air spots,
printed advertising and online advertising. The content and the extent
of the use of such promotions and its placement shall be subject to
the approval of the athlete in all cases, which approval shall not be
unreasonably withheld. BBS and DIRECTV shall, upon DIRECTV's request,
meet from time-to-time to discuss possible candidates for Athlete
Appearances and the scope of activities/usage likely to be approved by
such candidates; provided, that BBS agrees to provide Athlete
Appearances in the particular sport(s) requested by DIRECTV (so long
as
); provided
further, that while BBS agrees to give due consideration to the
requests and desires of DIRECTV, BBS shall continue to have, subject
only to the immediately preceding proviso, the right, as between BBS
and DIRECTV, in its sole discretion to make the final determination as
to which "A" level talent athletes shall provide the Athlete
Appearances.
. Examples of "A" level talent include:
(d)
BBS will handle all expenses associated with providing athletes to DTV
(appearance fees, travel/ boarding expenses, etc.) in connection with
Athlete Appearances.
6.3 DIRECTV Purchase of Advertising on BBS Web-Sites: If DIRECTV does not
------------------------------------------------
exercise its option to have BBS program the Additional Programming
Block, then DIRECTV shall purchase advertising Impressions on the BBS
Properties ("BBS Advertising") equal to not less than the following
aggregate sums (as measured using BBS' then standard advertising rate
card, but with an appropriate discount to reflect a level of discount,
if any, then provided by BBS for comparably sized advertising
commitments): $1,250,000 during the period of April 1, 2002 to March
31, 2003 and $1,250,000 during the period of April 1, 2003 to March
31, 2004. The timing and placement of the purchased advertising (if
applicable) shall be mutually agreed upon by the Parties at the time.
DIRECTV may use any BBS Advertising purchased hereunder only as
follows: (a) DIRECTV may use the BBS Advertising for the placement of
advertising regarding DIRECTV's equipment, generic DIRECTV service
offers that do not identify any particular programming, DIRECTV's
Professional League Packages or DIRECTV programming
packages/programming offers in connection with customer acquisition
and/or customer up-grade (it being agreed that such offers may make
reference to "Total Choice Sports" but shall not otherwise emphasize,
although they may incidentally refer to, any DTV Programming Service
that emphasizes sports); and (b) DIRECTV may use up to of the BBS
Advertising in any calendar quarter to promote third party
13
<PAGE>
products and services unrelated to DIRECTV, subject, however, to BBS'
prior written consent, which shall not be unreasonably withheld (the
"Third Party Advertising"). BBS shall be deemed to have pre-approved
Third Party Advertising by the following third Persons, subject to
approval of the creative elements (to assure compliance with BBS'
standards and practices regarding Third Party Advertising on the BBS
Properties): DIRECTV system hardware manufacturers, retailers of
DIRECTV system hardware and DIRECTV services and DIRECTV advanced
product partners, such as WINK and TiVo.
7. RIGHTS TO "MATCH":
-----------------
7.1 Default Internet Sports Website: If DIRECTV determines to provide
-------------------------------
access to Internet websites through the DTV System, and if, in
connection therewith, DIRECTV elects to group such Internet websites
by theme or content category, then the following shall apply: if the
Internet sports websites (if any) are grouped in a distinct area and
such area is accessed through a central "click through" or "button-
through" device, and if DIRECTV is prepared to allow any Internet
sports website to be the "default" Internet sports website within such
area (e.g., to be the first Internet sports website to appear upon
entry to such area or the Internet sports website that will be
"defaulted" to if no further viewing election is made by a viewer
while in such area), then BBS shall be provided the opportunity to bid
to match any offer provided by (or made to) DIRECTV to become the
"default" Internet sports website on the DTV System, provided, that
BBS understands it cannot match an offer (and DIRECTV shall not be
obligated to offer BBS the opportunity to match an offer) in which a
principle component of consideration includes an item or items for
which BBS cannot provide a reasonable equivalent type (as opposed to
amount) of consideration, including, without limitation, cross
promotion in non-Internet media. By way of clarification, DIRECTV's
obligations under this Section 7.1 shall not be applicable to the
distribution of web sites by third party Internet service providers
(e.g., AOL or WebTV) that utilize DIRECTV receiving equipment as a
means of supporting delivery to consumers of Internet content, so long
as DIRECTV does not have any editorial control over, or any control
over the selection of the Internet sports web sites delivered by, such
third party Internet service providers.
7.2 Advertising Inventory Opportunity: BBS shall be provided the
---------------------------------
opportunity to purchase available advertising avails on sports and
non-sports related DTV Programming Services, in an amount no less than
that level of inventory made available by DIRECTV to any other
Internet provider focused primarily on sports.
7.3 Mechanics: The procedures attendant to the opportunities provided to
---------
BBS under Sections 7.1 and 7.2 above shall be hereafter negotiated in
good faith by the Parties, it being the intent of the Parties that
such procedures be fair and reasonable and give due regard to each
Parties' interests and concerns.
8. WEB-SITE CARRIAGE: If DIRECTV shall hereafter enter into an agreement to
-----------------
deliver one or more third Person sports websites (that are otherwise
accessible over the Internet) on the DTV System (excluding, for this
purposes, websites belonging to the professional sports leagues that
provide DIRECTV with the Professional Sports Packages), DIRECTV shall so
advise BBS and, upon BBS's request, negotiate in good faith with BBS with
respect to the delivery of one or more BBS Properties on the DTV System,
it being understood that DIRECTV shall have no further obligation other
than to negotiate in good faith. By way of clarification, DIRECTV's
obligations under this Section 8 shall not be applicable to the
distribution of web sites by third party Internet service providers
(e.g., AOL or WebTV) that
14
<PAGE>
utilize DIRECTV receiving equipment as a means of supporting delivery to
consumers of Internet content, so long as DIRECTV does not have any
editorial control over, or any control over the selection of the Internet
sports web sites delivered by, such third party Internet service
providers.
9. CROSS LICENSES: Each of the Parties hereby grants to the other a limited
--------------
license to use the trademarks and logos of the other in connection with
activities expressly contemplated by this Agreement; all such usage by
the applicable licensee shall be within the applicable licensor's
guidelines for the protection and preservation of such trademarks and
logos (such guidelines, and any updates, to be provided by each Party to
the other from time-to-time during the term of this Agreement). From and
after the Effective Date, the Parties shall negotiate and enter into more
formal reciprocal license agreements more particularly setting forth the
terms and conditions of use. Nothing herein shall be construed to provide
for a transfer or assignment by a Party to the other Parties of any
rights to such first Party's trademarks and logos (beyond the limited
license contemplated by the first sentence of this Section 9).
10. CONFIDENTIALITY: Each Party understands that during the term of this
---------------
Agreement it may have access to, or there may be disclosed to it
("Recipient"), certain information not generally known to the public
about the other party ("Discloser") or other parties with whom Discloser
is doing business (including, without limitation, information relating to
its technical, marketing, product and/or business affairs) (hereinafter
collectively referred to as "Confidential Information"). During and after
the term of this Agreement, Recipient will (a) take such precautions (but
no less than reasonable precautions) to protect the confidentiality of
the Confidential Information of Discloser as Recipient takes to protect
its own similar confidential information; and (b) not disclose any
Confidential Information of Discloser to any third party without the
express authorization of an officer of Discloser other than to (a) those
of its employees, agents and advisors who have a need to know such
information to enable Recipient to perform its obligations hereunder, who
are advised of the confidential and proprietary nature of such
information, and who are subject to a duty of loyalty and confidentiality
to Recipient and (b) a potential private investor in a Party or a
potential purchaser of a Party (or of all or substantially all of the
assets of a Party) and its representatives, all on a need to know basis
and subject to such potential investor/purchaser executing a
confidentiality agreement pursuant to which such potential
investor/purchaser agrees, on behalf of itself and its representatives,
to comply with the confidentiality provisions of this Section.
In the event Recipient is directed to disclose any Confidential
Information of Discloser by operation of law or in connection with a
judicial or governmental proceeding or inquiry, it will promptly notify
Discloser in writing and will assist Discloser in seeking a suitable
protective order or assurance of confidential treatment and in taking any
other steps deemed reasonably necessary by Discloser to preserve the
confidentiality of any such information; nevertheless, Recipient may
disclose only that portion of Discloser's Confidential Information as is
required to comply with any applicable judicial or governmental order and
will afford Discloser a reasonable opportunity to review and comment on
the text of any such disclosure before it is made by Recipient.
Recipient's obligations contained in this paragraph will not apply to any
information that: (i) is rightfully in the possession of Recipient from a
source other than Discloser prior to the time of disclosure of said
information to Recipient hereunder ("Time of Receipt"); (ii) is in the
public domain prior to the Time of Receipt; (iii) becomes part of the
public domain after the Time of Receipt by any means except an
unauthorized act or omission or breach of this Agreement on the part of
Recipient or any of
15
<PAGE>
its employees, agents or advisors; (iv) is supplied to Recipient after
the Time of Receipt without restriction by a third party who is under no
obligation to Discloser to maintain such information in confidence; or
(v) is developed by or for Recipient independently of and without
reference to any Confidential Information of Discloser.
11. REPRESENTATIONS AND WARRANTIES:
------------------------------
11.1 Of BBS: BBS represents and warrants that: (i) BBS has full authority
------
to enter into this Agreement and to make the grants and licenses made
hereunder without violating the rights of, or any agreement
involving, any other Person; (ii) all obligations owed or to be owed
to third Persons by BBS with respect to the activities contemplated
to be undertaken by BBS pursuant to this Agreement are or will be
fully satisfied by BBS, such that DIRECTV will not have any
obligations with respect thereto; and (iii) BBS is not contractually
or legally restricted from performing its obligations under this
Agreement.
11.2 Of DIRECTV: DIRECTV represents and warrants that: (i) it has full
----------
authority to enter into this Agreement and to make the grants and
licenses made hereunder without violating the rights of, or any
agreement involving, any other Person; (ii) all obligations owed or
to be owed to third Persons by DIRECTV with respect to the activities
contemplated to be undertaken by DIRECTV pursuant to this Agreement
are or will be fully satisfied by DIRECTV, such that BBS will not
have any obligations with respect thereto; and (iii) DIRECTV is not
contractually or legally restricted from performing its obligations
under this Agreement.
12. INDEMNIFICATION:
---------------
12.1 Indemnification Obligations: Each Party (the "Indemnifying Party")
---------------------------
shall indemnify, defend and hold harmless the other Party (the
"Indemnified Party") and the Indemnified Party's Affiliates,
officers, directors, employees, agents, successors and assigns
(collectively with the Indemnified Party, the "Indemnified Group")
from, against and with respect to any and all claims, damages,
liabilities, costs and expenses (including, without limitation,
reasonable attorneys' fees and costs) incurred in connection with any
claim against the Indemnified Group arising out of (a) the
Indemnifying Party's breach of any of its obligations, agreements or
covenants under this Agreement, (b) a breach of any representation or
warranty made by the Indemnifying Party under this Agreement, (c) any
libel, slander, defamation, invasion of privacy or violation or
infringement of copyright, trademark or other third party proprietary
rights as a result of any services, materials, programming, channel
capacity or advertising performed or provided by the Indemnifying
Party pursuant to or in furtherance of the activities contemplated
under this Agreement, (d) any violation of Law committed by the
Indemnified Party or (e) in the case of BBS, the presentation,
marketing or selling of any products or services on the BBS
Programming Block (s) (other than those included in the "spots"
appearing during the BBS Programming Block(s) that were made
available to DIRECTV pursuant to Section 4.3 above) and/or the use by
consumers of such products or services.
12.2 Defense of Third Party Claims: The Indemnified Party shall promptly
-----------------------------
notify the Indemnifying Party in writing of any third party claim or
litigation to which the indemnification provisions of Section 12.1
apply, and the Indemnifying Party shall assume the defense of any
such claim or litigation (provided, that the Indemnified Party shall
have the right to engage separate counsel of its choice and
participate in the defense, negotiation and settlement of such action
or proceeding, but shall bear the fees and
16
<PAGE>
expenses of such separate counsel retained by the Indemnified Party
and the Indemnified Party shall cooperate in the defense of such
claim at no cost or charge to the Indemnifying Party, other than for
performing such acts as the Indemnifying Party shall request). If,
for any reason, the Indemnifying Party shall fail to appoint counsel
on a timely basis, or otherwise fails to confirm its assumption of
the defense of any applicable claim, the Indemnified Party may engage
its own counsel and the reasonable costs and expenses made in
connection therewith shall be paid by the Indemnifying Party. The
Indemnified Party shall have the right to approve or disapprove the
settlement or disposition of any such claim or litigation proposed by
the Indemnifying Party, which right shall expire twenty (20) days
following the Indemnified Party's receipt of written notice thereof.
The Indemnifying Party shall not have the right to enter into any
settlement or compromise unless, in connection therewith, the
Indemnifying Party obtains from the claimants a full release of all
related claims against the Indemnified Group and does not otherwise
purport to adversely affect or curtail the Indemnified Group's
proprietary rights or interests.
13. LIMITATION OF LIABILITY: SUBJECT TO THE INDEMNIFICATION OBLIGATIONS OF
-----------------------
THE PARTIES UNDER SECTION 12 WHICH APPLY IN THE EVENT OF ANY THIRD PARTY
CLAIM GIVING RISE TO SUCH INDEMNIFICATION OBLIGATIONS, NEITHER PARTY
SHALL BE LIABLE TO THE OTHER PARTY WITH RESPECT TO ITS OBLIGATIONS UNDER
THIS AGREEMENT OR OTHERWISE FOR CONSEQUENTIAL, EXEMPLARY, SPECIAL,
INDIRECT, INCIDENTAL OR PUNITIVE DAMAGES EVEN IF THE PARTY HAS BEEN
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES.
14. SPECIAL TERMINATION PROVISIONS: The following shall be in addition to the
------------------------------
termination rights of the Parties under Section 15 below:
(a) If the Public Financing has not occurred prior to the day after the
six (6) month anniversary of the Effective Date, DIRECTV shall have
the right, exercisable by written notice provided to BBS not later
than five (5) business days after such anniversary, to terminate
this Agreement upon ten (10) business days prior written notice. In
the event of any such termination under this subparagraph (a), (i)
DIRECTV shall nevertheless retain all of its Upfront Stock plus any
Warrants exercised prior to said termination, (ii) DIRECTV shall
forfeit any further rights to (including any rights to exercise) any
then unvested or unexercised Warrants, (iii) BBS shall nevertheless
remain obligated to make the Channel Access Payment in accordance
with the provisions of Section 4.1 above) and shall promptly pay
DIRECTV the additional sum of $3,500,000 and (iv) the remaining
obligations of the Parties hereunder (including, without limitation,
those arising under Sections 3, 4 and 5) shall terminate on a
prospective basis, except as provided in Section 16.5 below.
(b) If this Agreement is otherwise terminated by DIRECTV pursuant to the
provisions of Section 15.2 below, then, BBS shall promptly pay to
DIRECTV (without limiting, and in addition to, any damages that
DIRECTV may be entitled to elsewhere in this Agreement for such
breach) (a) (i) the sum of $3,500,000 if such breach occurs during
2000 or (ii) $1,500,000 if such breach occurs during 2001 plus (b)
the then remaining unpaid portion of the Channel Access Fee.
17
<PAGE>
(c)
, then BBS shall have the
right, exercisable by written notice provided to DIRECTV not later
than thirty (30) days after BBS's receipt of written notice from
DIRECTV of such future obligations and restrictions, to terminate
this Agreement upon sixty (60) days prior written notice. In the
event of any such termination under this subparagraph (c), the
consequences shall be the same as arise in connection with a
termination under subparagraph (a) above (except that the $3,500,000
figure in clause (iii) of subparagraph (a) shall be reduced to
$1,500,000 if such termination occurs in 2001 and shall not be
payable, in whole or in part, if such termination occurs after
2001).
15. TERMINATION: This Agreement may be terminated by a Party, in its
-----------
discretion, at any time after any of the following occurrences:
15.1 Termination by BBS: BBS may terminate this Agreement under the
------------------
following circumstances:
(a) Breach of Material Obligation: DIRECTV fails to perform any
-----------------------------
material agreement, term or covenant under this Agreement,
unless (i) DIRECTV cures such failure within thirty (30) days
after receipt of such written notice thereof from BBS or (ii)
DIRECTV has diligently commenced reasonable steps to cure such
failure within such thirty (30) day period and thereafter
diligently and completely cures such failure within an
additional thirty (30) day period;
(b) Breach of Representation/Warranty: Any representation or
---------------------------------
warranty made by DIRECTV hereunder proves to be inaccurate in
any material respect, in which case BBS shall have the right to
terminate this Agreement upon thirty (30) days prior written
notice to DIRECTV of such inaccuracy.
(c) Insolvency: Upon the filing of a voluntary or involuntary
----------
petition in bankruptcy by or against DIRECTV or upon the
appointment of a receiver, trustee, liquidator or custodian for
all or a substantial part of DIRECTV's property, provided, that
in the case of an involuntary petition or appointment, BBS shall
not have the right to terminate if the applicable involuntary
action is vacated within thirty (30) days.
15.2 Termination by DIRECTV: DIRECTV may terminate this Agreement under
----------------------
the following circumstances:
(a) Breach of Material Obligation: BBS fails to perform any material
-----------------------------
agreement, term or covenant under this Agreement, unless (i) BBS
cures such failure within thirty (30) days after receipt of such
written notice thereof from DIRECTV or (ii) BBS has diligently
commenced reasonable steps to cure such failure within such
thirty (30) day period and thereafter diligently and completely
cures such failure within an additional thirty (30) day period;
18
<PAGE>
(b) Breach of Representation/Warranty: Any representation or
---------------------------------
warranty made by BBS hereunder proves to be inaccurate in any
material respect, in which case DIRECTV shall have the right to
terminate this Agreement upon thirty (30) days prior written
notice to BBS of such inaccuracy.
(c) Insolvency: Upon the filing of a voluntary or involuntary
----------
petition in bankruptcy by or against BBS or upon the appointment
of a receiver, trustee, liquidator or custodian for all or a
substantial part of BBS's property, provided, that in the case
of an involuntary petition or appointment, DIRECTV shall not
have the right to terminate if the applicable involuntary action
is vacated within thirty (30) days.
15.3 Remedies: The foregoing termination rights are in addition to a
--------
Party's other rights at law or in equity or pursuant to any other
provision of this Agreement.
16. MISCELLANEOUS:
-------------
16.1 Invoices: The Parties agree that, in respect of any payment hereunder
--------
not otherwise specifically provided for as to date of payment, each
Party shall invoice the other Party for any amount due to it
hereunder and payment shall be due and payable no later than forty-
five (45) calendar days following receipt of such invoice. The
failure by a Party to provide a timely invoice to another Party shall
not constitute a waiver by it of its right to receive such amounts
but the corresponding payment shall not be deemed due and payable
until the expiration of the due date as determined in this Section.
16.2 Severability: If any term or other provision of this Agreement is
------------
invalid, illegal or incapable of being enforced by reason of any Law
or public policy, all other terms and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby
is not affected in any manner materially adverse to either Party.
Upon such determination that any term or other provision is invalid,
illegal or incapable of being enforced, the Parties shall negotiate
in good faith to modify this Agreement so as to effect the original
intent of the Parties as closely as possible in an acceptable manner
in order that the transactions contemplated hereby are consummated as
originally contemplated to the greatest extent possible.
16.3 No Waiver: The failure of either Party to partially or fully exercise
---------
any right or the waiver by either Party of any breach, shall not
prevent a subsequent exercise of such right or be deemed a waiver of
any subsequent breach of the same or any other term of this
Agreement.
16.4 Assignment: Neither Party may assign any of its rights or obligations
----------
under this Agreement to any other Person without the other Party's
prior written consent; provided, that either Party may assign its
rights and obligations under this Agreement to an Affiliate, to a
third Person which acquires all or substantially all of such Party's
assets or to a third Person into which such Party may be merged or
consolidated, provided that the applicable assignee agrees to assume
all of the assigning Party's obligations hereunder and subject to the
further understanding that the assigning Party shall nevertheless
remain liable for its obligations hereunder (notwithstanding such
assignment) in the absence of a contrary written agreement with the
non-assigning Party. However, in the event this Agreement is assigned
by BBS to a provider of sports video programming (i.e., a Person
19
<PAGE>
who distributes one or more cable programming sports channels in the
United States such as ESPN, FoxSports, etc.), then the BBS
Programming Restrictions set forth below shall apply, commencing as
of the effective date of such assignment. Notwithstanding anything to
the contrary set forth above: (a) BBS may not assign this Agreement
or delegate any of its obligations under this Agreement to a Person
that controls, is controlled by or is under common control with one
or more Competing Multi-Channel System(s) (a "CMCS Person"); and (b)
in the event of a change-of-control of BBS by way of a merger,
consolidation or otherwise that results in BBS being controlled by a
CMCS Person, DIRECTV shall have the right to terminate this Agreement
upon sixty (60) days prior written notice (the consequences of such
termination being the same as arise in connection with a termination
under Section 14.(c) above). The "BBS Programming Restrictions" are
as follows: The BBS Programming is not intended to provide a vehicle
for delivery of a sports programming channel (or portion thereof)
that would ordinarily be the subject of a programming affiliation
agreement between DIRECTV and the provider, nor is it intended to
provide a forum to create subscriber demand for such an affiliation
agreement. Accordingly, the BBS Programming shall not be modified,
promoted or provided in any way that would contravene such intended
restrictions. In addition, (i) the branding of the BBS Programming
shall not be changed without the consent of DIRECTV, which may be
withheld in its discretion and (ii) references to programming
channels or programming providers (whether or not currently
distributed on the DIRECTV System) in the content of the BBS
Programming shall be subject to the consent of DIRECTV, which may be
withheld in its discretion.
16.5 Survival: Upon expiration or termination of this Agreement, the
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provisions of Sections 10, 12 and 14 above shall survive.
16.6 Governing Law/Jurisdiction: This Agreement and all matters collateral
--------------------------
hereto shall be construed and enforced in accordance with the laws of
the State of California applicable to contracts executed and
performed entirely therein. Each of the Parties hereby irrevocably
agrees that the state and federal courts located in Los Angeles,
California shall have sole jurisdiction over any suit or other
proceeding arising out of or based upon this Agreement and each Party
hereto hereby waives any claim that it is not subject personally to
the jurisdiction of said courts of that any such suit or proceeding
is brought in an inconvenient forum or improper venue. Each of the
Parties hereto irrevocably agrees that service of process in any such
suit or other proceeding shall be properly made (without limitation)
if delivered to the address(es) set forth in Section 16.12 below.
16.7 Third Party Beneficiaries: No other Persons shall be deemed a third
-------------------------
party beneficiary of this Agreement. Nothing in this Agreement,
express or implied, is intended to confer upon any other Person any
legal or equitable right, benefit or remedy of any nature whatsoever
under or by reason of this Agreement.
16.8 Amendments: This Agreement may not be amended or modified except by
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an instrument in writing signed by both BBS and DIRECTV.
16.9 Force Majeure: Neither Party shall be liable to the other Party for
-------------
any losses or damages incurred by such other Party for breach of any
representation, warranty or covenant made by it in this Agreement or
for failure or delay in providing any services or content described
in this Agreement where such breach, failure or delay is due to acts
of God, failure of carriers, labor disputes, war, public disaster,
failure or delay in software encoding, any failure or degradation in
performance of the DBS satellite(s) or
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transponders on such satellites (as applicable) or of the DTV
System, or any other cause beyond its control (each, a "Force
Majeure Event"). Any failure or delay in performance of this
Agreement shall be excused for the period of time such Force Majeure
Event(s) causes such non-performance; provided, however, that if
DIRECTV determines in its sole discretion that it is commercially or
technically unfeasible to cure a Force Majeure Event with respect to
the DTV System or DBS satellite(s) and so notifies BBS, then either
Party may terminate this Agreement effective upon written notice to
the other Party (the consequences of such termination being the same
as provided in the event of a termination under Section 14.(c)
above). The Parties acknowledge and agree that although the TWOS
Channel (including BBS Programming) may at any given time be
uplinked to only one of several DBS satellites, failure or
degradation in any of such DBS satellites may require DIRECTV to
reduce the number of services available for allocation among all of
the DBS satellites, with such reduction including, without
limitation, curtailment or termination of the distribution of the
TWOS Channel (including BBS Programming) by DIRECTV, at DIRECTV's
sole discretion; in such instance, however, each of the Parties
shall have the termination rights set forth in the immediately
preceding sentence.
16.10 Program Guides: During the TWOS Term, DIRECTV shall provide BBS with
--------------
the monthly program guide for the DTV System, not later than the
time that DIRECTV provides such monthly guides to its DTV
Subscribers.
16.11 Counterparts: This Agreement may be executed in one or more
------------
counterparts, each of which when executed shall be deemed to be an
original but all of which taken together shall constitute one and
the same agreement.
16.12 Notices: All notices hereunder shall be in writing and shall be sent
-------
by certified mail (return receipt requested) or registered mail, by
air courier service, by personal delivery or by facsimile confirmed
by mail (provided that notices of breaches under this Agreement may
not be made by facsimile) to the address (or fax number) of the
Party for whom it is intended, as follows:
BBS: Broadband Sports, Inc., 2120 Colorado Avenue, Suite 200, Santa
Monica, California 90404, Fax No. 310\453-8101, Attn: Vice
President, Business Development, with a separate copy to the
attention of Vice President, General Counsel.
To DIRECTV: DIRECTV, 2230 E. Imperial Hwy, El Segundo, California
90245, Fax No. 310\535-5420, Attn: Vice President of New Ventures,
with a separate copy to the attention of the General Counsel, Fax
No. 310\726-4991.
All notices shall be deemed to have been given (a) on the fifth
business days after the date when sent by registered or certified
mail, if sent by mail, (b) on the first business day after the date
of delivery to an air courier service, if sent by air courier or (c)
on the date of receipt, if sent by personal delivery or facsimile.
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16.13 Captions: The headings of sections and subsections contained in this
--------
Agreement are intended for convenience only, and they shall not be
of any effect in construing the contents of the respective sections
and subsections.
16.14 Entire Agreement: This Agreement, together with the Ancillary
----------------
Security Agreements, sets forth the entire agreement between the
Parties on this subject and supersedes all prior negotiations,
understandings and agreements between the Parties concerning the
subject matter.
IN WITNESS WHEREOF, BBS and DIRECTV have each executed this
Agreement as of the Effective Date.
BROADBAND SPORTS, INC. DIRECTV ENTERPRISES, INC.
By: By:
----------------------------- --------------------------
Name: Name:
Title: Title:
DIRECTV, INC.
By:
--------------------------
Name:
Title:
22
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EXHIBIT A
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STOCK PURCHASE AGREEMENT
23
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EXHIBIT B
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WARRANT AGREEMENT
24
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EXHIBIT C
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INVESTOR RIGHTS AGREEMENT
25
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EXHIBIT D
---------
LIST OF DTV PROGRAMMING SERVICES FOR PURPOSES OF SECTION 4.5
26