Affiliation Agreement for DTH Satellite Exhibition of Cable Network Programming - DirecTV Inc. and Colorado Satellite Bradcasting Inc.
AFFILIATION AGREEMENT
FOR DTH SATELLITE EXHIBITION
OF CABLE NETWORK PROGRAMMING
DIRECTV, INC.
and
COLORADO SATELLITE BROADCASTING, INC.
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AFFILIATION AGREEMENT
FOR DTH SATELLITE EXHIBITION
OF CABLE NETWORK PROGRAMMING
AGREEMENT, made as of this 31st day of March, 2006 (the "Effective
Date"), by and between COLORADO SATELLITE BROADCASTING, INC., a Colorado
corporation ("Programmer"), and DIRECTV, INC., a California corporation
("DIRECTV").
WHEREAS:
A. DIRECTV has established a direct to home ("DTH") satellite-based
television system in North America for the distribution of video, audio, data
and/or other services, including programming distributed on a pay-per-view,
pay-per-block and pay-per-night basis (collectively referred to as "PPV"); and
B. DIRECTV desires to obtain the rights to distribute the adult
programming television networks owned and operated by Programmer and currently
known as "TEN*Clips" and "TEN" (individually the "Service," or collectively the
"Services", as defined in Section 1.2.1 below) via the DTH Distribution System
(as defined in Section 1.1.2 below) in the United States, its territories and
possessions, including Puerto Rico (the "Territory") as restricted by Section 17
below.
NOW, THEREFORE, IT IS MUTUALLY AGREED AS FOLLOWS:
1. Grant of Rights.
1.1 Distribution; Certain Definitions.
1.1.1 Programmer hereby grants to DIRECTV the non-exclusive
right to distribute the Services in the Territory via the DTH Distribution
System to DIRECTV Subscribers (as defined in Section 1.1.2 below) during the
Term (as defined in Section 6.1 below) hereof. DIRECTV shall have the right to
use the names, titles or logos of the Services or any of its programs, or the
names, voices, photographs, music, likenesses or biographies of any individual
participant or performer in, or contributor to, any program or any variations
thereof, subject to the warranties and restrictions set forth in this Agreement.
1.1.2 The term "DTH Distribution System" shall mean the
distribution system for video and other programming services whereby the
programming satellite signal or feed is received from Programmer's Delivery
Source (as defined in Section 1.3.3 below) by a DIRECTV turnaround earth-station
facility which compresses and processes the signal or feed and then uplinks it
to a DTH communications satellite (a "DTH Satellite") for transmission to
DIRECTV Subscribers. DTH Distribution System shall also
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include any other method of distribution that DIRECTV currently
and/or subsequently uses to deliver the Services feed to DIRECTV Subscribers,
including, without limitation, MMDS and terrestrial-based transmission
infrastructures such as Internet protocol, fiber optic, twisted pairs and
coaxial cable, provided that in connection with such delivery methods, DIRECTV
complies with the following: (i) the end users to whom DIRECTV distributes the
Services are DIRECTV Subscribers; (ii) the branding and packaging that is
received by such DIRECTV Subscribers is substantially the same as the branding
and packaging received by DIRECTV Subscribers that receive the Services via
DIRECTV's direct to home satellites. "DIRECTV Subscribers" shall mean those
customers (both residential and non-residential) authorized by DIRECTV to
receive DTH service via the DTH Distribution System, excluding any customer who
to DIRECTV's knowledge: (A) charges an admission fee, cover charge, minimum or
the like; or (B) distributes all or any part of the Services to viewers who are
not located in the same residence, dwelling unit, store, hospital room, hotel
room or suite, motel room or suite, office or other singular facility occupied,
owned, leased or otherwise controlled by the customer entitled to receive the
Services.
1.1.3 If Programmer grants or has granted to any other
distributor that distributes a Service in the Territory the right to receive and
distribute such Service(s) and/or any Segments (as defined in Section 1.2.1
below) of Service programming (as any such Segments appear on the Service(s)) or
Programmer or an Affiliated Company (as defined in Section 8.1 below)
distributes the Service(s) (or any portion thereof) itself via a "New
Distribution Method" (as defined below), then Programmer will promptly notify
DIRECTV thereof and make available to DIRECTV the right to receive and
distribute such programming to DIRECTV Subscribers via such New Distribution
Method under the same terms and conditions such rights were made available such
other distributor directly in exchange for such rights, provided that if DIRECTV
cannot reasonably satisfy such terms and conditions, Programmer shall offer
DIRECTV comparable terms and conditions. "NEW DISTRIBUTION METHOD" shall mean,
with respect to any other distributor of a Service in the Territory, any
distribution method, device, distribution technology or format (for example,
distribution to hand-held devices, streamlining to a web site); provided that,
in all events, the current distribution methods of cable television, telco
(e.g., via Internet protocol or traditional fiber lines), direct to home
satellite, SMATV and multipoint distribution service (all as currently utilized
in the multichannel video distribution business) shall not be considered a New
Distribution Method.
1.2 The Services.
1.2.1 The "Services" shall mean and consist of the national
feed (or, if Programmer uses multiple feeds for the Services, such other of such
multiple feeds designated by DIRECTV) of the following 24-hour per day, 7-day
per week programming services: (i) the programming service commonly known as
"TEN*Clips", which shall consist of thematically organized sex scenes which are
sourced from various movies (each ninety (90) minute segment on TEN*Clips shall
contain up to eight (8) individual sex scenes and shall in no instance show less
than five (5) scenes (collectively a "Segment")); and (ii) the programming
service commonly known as "TEN", which shall consist of a mix of quality
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near full-length adult features (including network specials, double features and
compilations). TEN shall feature a minimum of 285 unique movies per quarter and
95 unique movies per calendar month. Among the aforementioned unique movies, TEN
shall feature 60 channel premiers per quarter and 20 channel premiers per
calendar month. Both Services shall be comprised of non-hosted, taped (no
"live") adult programming depicting heterosexual and lesbian situations and
nudity among consenting adults. At no time shall identical programming be
exhibited on more than one Service during any month of the Term. The Services
shall at all times be identical to (or softer than) the degree of explicitness
of programming currently featured on competing adult services such as the
services currently known as Spice Hot or The Hot Zone (subject to the
description and limitations in Exhibit A, as illustrated by the programming
schedule in Exhibit C).
Notwithstanding the foregoing, upon thirty (30) days written notice to
Programmer, DIRECTV shall have the sole option at any time during the Term to
replace any one of the Services with any other programming service of the same
edit standard (i.e., "XX") distributed by Programmer in the Territory and to
distribute such other service under the terms hereof (Programmer's other
services currently offered in the "XX" edit standard include TEN*Blue and
TEN*Blox). Programmer represents and warrants that the Services shall reflect
adult content limited to the "XX" version, as described in Exhibit A and
Schedule I thereto, and shall not contain or depict any acts set forth in the
"XX 1/2" or "XXX" columns of Schedule I to Exhibit A, or otherwise prohibited by
Exhibit A. The Services shall not contain any paid programming, including,
without limitation, infomercials, home shopping programming, fundraising or
religious programming. Notwithstanding the foregoing, Programmer shall have the
right to include Programmer's brand or trademark identification on the Services
and to include promotional tags or spots solely for purposes of promoting
upcoming programs on the Services (no more than fifteen (15) minutes in each
ninety (90) minute segment of programming content); provided that in no case
shall such tags or spots promote any programming service other than the
Services. The Services shall be delivered to DIRECTV in their entirety, meaning
that the programming on the Services, as received by any Service Subscriber at a
given point in time, shall be the same as the programming that is received by
all other subscribers to the Services at such point in time. If Programmer or an
Affiliated Company (as defined in Section 8.1 hereof) distributes itself or
provides (or offers) any other programming rights, including, without
limitation, DVR push down, high definition, video-on-demand, interactive or
gaming rights (including, without limitation, data and informational
enhancements to the programming contained in or delivered along with the
Services) to any other distributor of the Services in the Territory, then
Programmer shall promptly offer to DIRECTV such rights upon terms and conditions
that are no less favorable to DIRECTV than those provided to the Other
Distributor; provided, however, that if such terms and conditions are not
relevant to DIRECTV or DIRECTV is not reasonably capable of complying with such
terms and conditions taking into consideration DIRECTV's business, including,
without limitation, DIRECTV's technology and DIRECTV's national platform, then
the parties shall negotiate comparable obligations, terms and conditions in good
faith. The terms hereunder that cannot be reduced to an economic value shall be
no less favorable to DIRECTV than such terms that are provided to Other
Distributors.
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1.2.2 All rights and title in and to the entire contents of
the Services, including, but not limited to, films and recordings thereof, title
or titles, names, trademarks, concepts, stories, plots, incidents, ideas,
formulas, formats, general content and any other literary, musical, artistic, or
other creative material included therein shall, as between Programmer and
DIRECTV, remain vested in Programmer.
1.2.3 DIRECTV is authorized to distribute the Services using
satellite master antenna television system (or similar system) ("SMATV")
operators (including telephone companies and similar service providers) that
serve multiple dwelling locations, master planned communities, multiple dwelling
unit ("MDU") buildings or complexes or commercial or business establishments
with multiple television viewing sites via such SMATV systems directly to end
users within such buildings or establishments, subject to Section 1.1.2 above.
1.2.4 Programmer shall not propose or impose upon DIRECTV,
nor shall DIRECTV be obligated to pay, any surcharge or other cost (other than
the License Fees provided for in Section 2 hereof) for receipt and distribution
of the Services.
1.3 Other Distribution Obligations. In addition, the parties
agree as follows:
1.3.1 Subject to Programmer's obligations hereunder and
DIRECTV's rights under Section 17, DIRECTV shall distribute the Services on a
PPV basis as transmitted by Programmer, in its entirety, in the order and at the
time transmitted by Programmer without any intentional and willful editing,
delays, alterations, interruptions, deletions or additions (collectively, the
"Alterations") excepting: (i) DIRECTV's electronic guides (including without
limitation, any mosaic or similar guides), (ii) news bulletins and other public
announcements as may be required by emergencies or applicable law; and (iii) a
DIRECTV Subscriber's use of equipment, programming or other data supplied by
DIRECTV or any third party to make Alterations to the Signal as viewed on a
monitor/television screen. Programmer acknowledges that the DTH Distribution
System requires and applies digital compression and encryption processes prior
to transmission and decryption and decompression processes upon reception and
agrees that such processing does not constitute an alteration and/or other
modification of the Services. Programmer shall fully encrypt the satellite
signals of the Services utilizing encryption technology commonly used in the
satellite distribution industry.
1.3.2 Subject to the terms and conditions of this
Agreement, the terms and conditions upon which DIRECTV
distributes the Services to DIRECTV Subscribers, including, without limitation,
Service packaging and retail prices charged, shall be determined by DIRECTV in
its sole discretion. DIRECTV shall offer the Services to DIRECTV Subscribers
individually or packaged a la carte and/or in a "Cascade" (as defined in Section
3 of Exhibit B) on a pay-per-view, pay-per-night, pay-per-title and/or
pay-per-time-period basis (each, a "PPV Offering"), in blocks of at least
90-minutes each (or such other period as the parties shall agree), but not to
exceed 24 hours each unless Programmer consents in writing, which consent shall
not be unreasonably withheld (any such block of time, a "PPV Program").
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1.3.3 Programmer shall, at its sole expense, deliver the
feeds of the Services from a U.S. domestic communications satellite in the
Territory commonly used for transmission of television programming (or, at
Programmer's option and expense, a fiber optic or other facility reasonably
acceptable to DIRECTV) (the "Delivery Source") to either or both (as designated
by DIRECTV) of DIRECTV's uplink and broadcast facilities currently located in
Castle Rock, Colorado and Los Angeles, California (collectively, the "Broadcast
Centers") no later than April 3, 2006. In connection with the foregoing,
Programmer shall, at its sole cost and expense, provide DIRECTV with two
receivers and decoders for the Services for each of the Broadcast Centers.
Programmer shall have in place appropriate back-up procedures and process, or
shall reserve back-up fiber links between Programmer's broadcast center and its
satellite uplink center (VYVX), such that in the event of a failure of the first
satellite or fiber link, delivery of the Services to DIRECTV shall be only
minimally interrupted. The format of the backup feeds shall be the same format
as the primary feeds of the Services. As of the Service Commencement Date
(defined in Section 6.1), the feeds of the Services shall be delivered from
Intelsat IA13, transponder 24. The delivery of all feeds hereunder shall be
pursuant to the technical specifications set forth at Exhibit "C" hereto.
1.3.4 Programmer and DIRECTV shall use their respective
commercially reasonable efforts to maintain for the Services a high quality of
signal transmission in accordance with their respective technical standards and
procedures. Programmer agrees to include closed-captioning and/or video
description of the audio portion of the Services as delivered by Programmer to
DIRECTV in a manner sufficient to allow DIRECTV to comply with any applicable
closed-captioning and/or video description obligations as may be imposed upon
DIRECTV or Programmer the rules and regulations of the Federal Communications
Commission ("FCC") or other governmental body during the Term, as modified from
time to time, and Programmer shall provide DIRECTV certificates of compliance in
connection therewith with the above obligations on a quarterly basis during the
Term. Other than as required pursuant to the immediately preceding sentence,
DIRECTV shall have no liability in connection with Programmer's failure to
prepare, insert or include closed-captioning and/or video description in the
Services as required by this Section 1.3.4. Accordingly Programmer shall
indemnify, defend and hold harmless DIRECTV, 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
and/or video description in the Services), damages and expenses, including
without limitation, fines, forfeitures, attorneys' fees, disbursements and court
or administrative costs, arising out of third party claims (including, without
limitation, the action of any Governmental Authority, as such term is defined in
Section 5.2.10 below) as a result of Programmer's breach of this Section 1.3.4.
1.4 Program Guide. During the Term, Programmer, at its sole cost
and expense, shall provide the daily programming schedule for the Services to
Tribune Media Service (or such other service designated by DIRECTV) in order
that DIRECTV may access the program schedule for purposes on the on-screen
program guide.
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1.5 VBI. Programmer acknowledges that digitizing and
compressing of the signals of the Services (the "Signal") will result in changes
to the Signal. As a consequence, the DTH Distribution System does not currently
retransmit any data or information contained in the VBI of the Signals except
line 21, fields 1 and 2, and only carries a single mono secondary audio program
provided that such secondary audio is programmed twenty-four (24) hours per
day/seven (7) days per week ("SAP"). Accordingly, in no event shall DIRECTV be
obligated to transmit more than the primary video and a single stereo pair of
primary audio programs to be associated with the Signal, a single mono SAP
associated with the Signal, and line 21, fields 1 and 2 of the VBI. Programmer
reserves and retains all rights in and to all signal distribution capacity
contained within the bandwidth of the Signal, including without limitation, the
VBI and audio subcarriers from its transmission point to the point of reception
by DIRECTV. DIRECTV retains and reserves any and all rights in and to, and may
use in its sole discretion, all distribution capacity contained within the
bandwidth of the Signals, including, without limitation, the VBI and audio
subcarriers, from the point of reception by DIRECTV to the DIRECTV Subscribers
in the Territory. Programmer shall not have any rights to use any part of a
DIRECTV Subscriber's return path for any reason whatsoever.
1.6 Change of Satellite. In the event Programmer either (i)
changes the satellite to which the Services are transmitted to a satellite or
other transmission medium not susceptible to viewing or utilization by DIRECTV's
then-existing earth station equipment without affecting the receipt of the
signals of any other programming or other services then received (or committed
to be received) by such DIRECTV, (ii) changes the technology used by Programmer
to encrypt the Services to a technology not compatible with DIRECTV's
then-existing descrambling equipment, or (iii) compresses, digitizes or
otherwise modifies the signal of the Services in such a manner that it cannot be
received or utilized by DIRECTV, then DIRECTV shall have the right to
discontinue carriage of the Services, immediately; provided that this right of
discontinuance and deletion shall not apply to DIRECTV if Programmer agrees to
promptly reimburse DIRECTV for (I) the cost to acquire and install equipment
necessary for DIRECTV to receive the signal of the Services from such new
satellite or other transmission medium, and/or (II) the cost to acquire and
install equipment necessary for DIRECTV to descramble and/or utilize the signal
of the Services; Programmer agrees to exercise best efforts to provide DIRECTV
with at least ninety (90) days' prior written notice of a satellite or
technology change as set forth in subsections (i) through (iii) above.
1.7 On-Screen Logos. It is understood and agreed that DIRECTV
may superimpose a logo or "bug" in a corner of the screen identifying DIRECTV
over the programming of the Services; provided however that DIRECTV's bug shall
appear only intermittently during any portion of the Services, and provided
further that DIRECTV shall not delete the Service's own promotion bug or its
on-screen graphics.
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2. Reports and Payments.
2.1 Reports; Payments; Audit Rights. Within sixty (60) days
after the end of each month during the Term, DIRECTV shall furnish Programmer
(i) a statement containing a report of (A) the total number of DIRECTV
Subscribers as of the last day of the relevant month; (B) the number of "PPV
Orders" (defined as the number of PPV orders for the Services authorized by
DIRECTV for reception by DIRECTV Subscribers, net of any cancelled orders and/or
orders subject to a "Technical Credit" (as defined in Paragraph 2 of Exhibit
"B")) for the relevant month; and (C) the total amount of Gross Receipts (as
defined in Exhibit B, attached hereto, and made a part hereof) for the relevant
month and (ii) payment of the License Fees for the relevant month, calculated
pursuant to Section 2.2 and Exhibit B. Programmer shall accord confidential
treatment to any information contained in the aforementioned statement in
accordance with Section 15. At Programmer's request, DIRECTV shall permit
Programmer's independent representatives to review, during the Term (no more
than once each calendar year) and for one (1) year after the end of the Term and
on a one-time basis, such DIRECTV Subscriber records as required for the sole
purpose of verifying such statements at reasonable times, upon reasonable
advance written notice and during normal business hours at DIRECTV's offices.
Any third party auditors retained by Programmer shall be a certified public
accountant and/or firm specializing in media audits that has no conflict with
DIRECTV (subject to DIRECTV's reasonable approval). Such review shall be at
Programmer's sole cost and expense, unless such review reveals an underpayment
of more than five percent (5%) of License Fees due, in which case, DIRECTV shall
reimburse Programmer the reasonable cost of such audit and shall promptly make
payment of any fees due and owing, provided (I) DIRECTV does not have a bona
fide dispute with the audit findings; and (II) such audit costs shall not exceed
such underpayment. Such review shall be conducted during reasonable business
hours and in such manner as not to interfere with DIRECTV's normal business
activities and shall not continue for more than seven (7) days so long as
Programmer is given timely and reasonable access to the applicable DIRECTV
Subscriber records. Programmer shall not have the right to examine or inquire
into any matters or items which are embraced by or contained in any such
statement after the expiration of twelve (12) months from and after the date of
mailing of such statement, and such statement shall be final and conclusive upon
Programmer upon the expiration of such twelve (12) month period notwithstanding
that the matters or items embraced by or contained therein may later be
contained or referred to in a cumulative statement pertaining to more than one
accounting period. Such cumulative statement shall not be subject to audit by
Programmer to the extent the material contained therein was first reflected on a
statement submitted more than twelve (12) months prior to the date of mailing of
such cumulative statement. Programmer shall be forever barred from maintaining
or instituting any action or proceeding based upon, or in anyway relating to,
any matters that are embraced by or reflected on any statement rendered
hereunder, or the accuracy of any item appearing therein, unless written
objection thereto shall have been delivered by Programmer to DIRECTV within
twelve (12) months after the date of mailing of the statement on which such
transaction or items was first reflected and unless such action or proceeding is
commenced within twelve (12) months after delivery of such written objection.
Programmer may not commence a new audit until all prior audits have been closed
(i.e., after such closure is confirmed in writing by Programmer) and the results
have been presented to
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DIRECTV. If Programmer shall audit DIRECTV's books and records, then Programmer
shall, within sixty (60) days of the conclusion of such audit (i.e., after the
auditors conclude the audit at DIRECTV's offices), inform DIRECTV in writing of
any claim resulting therefrom (including a true copy of any third party audit),
and, except for the claims set forth in such notice, all statements rendered by
DIRECTV with respect to the period covered by such audit shall be conclusive and
binding on the parties and not subject to further audit. The information derived
from and the process of such review shall be subject to the confidentiality
provisions of Section 15, and any third party auditor shall be required to
acknowledge in writing its agreement to such confidentiality provisions.
2.2 License Fees. As full and complete compensation for
DIRECTV's right to distribute the Services, DIRECTV shall pay to Programmer, on
a monthly basis, for each Service Subscriber receiving the Services from DIRECTV
for such month, a "License Fee" determined pursuant to Programmer's rate card
for the Services set forth in Exhibit B hereto.
2.3 Late or Non-Payments. Any amounts that are not subject to
a bona fide dispute by DIRECTV and not paid by DIRECTV after (i) the date
payment is due pursuant to the first sentence of Section 2.1 and (ii) ten (10)
days after DIRECTV's receipt of written notice from Programmer of such failure
by DIRECTV, shall accrue interest at the rate of one percent (1%) per month or
the maximum allowed by law, whichever shall be the lesser, from the date such
amounts were due until they are paid.
2.4 Most Favored Nation.
2.4.1 Programmer agrees that if, at any time during the Term
(or any portion thereof), Programmer distributes or Programmer allows
(including, without limitation, by way of agreements that Programmer previously
entered into) or offers to allow any other distributor to distribute a Service
(or any Segment contained in a Service) in the Territory or in any portion
thereof by any technology whatsoever at a net effective rate per Service
subscriber that is lower than the net effective rate per "Service Subscriber"
(defined as a DIRECTV Subscriber authorized by Affiliate to receive the
Services) charged to DIRECTV hereunder ("Favored Fees"), then Programmer shall
promptly notify DIRECTV in writing of such Favored Fees and DIRECTV shall be
immediately entitled to incorporate into this Agreement the Favored Fees
effective as of the first day on which Programmer first allows or makes the
offer to allow such other distributor to distribute the Service(s) in exchange
for the Favored Fees (and for so long as such Favored Fees are available to such
other distributor). Nothing in the preceding sentence shall require DIRECTV to
incorporate the Favored Fees into this Agreement. Notwithstanding anything to
the contrary herein, if the Favored Fees contain such obligations, terms and
conditions that are not relevant to DIRECTV or DIRECTV is not reasonably capable
of complying with such terms and conditions taking into consideration DIRECTV's
business, including, without limitation, DIRECTV's technology and DIRECTV's
national platform, then Programmer shall provide DIRECTV with comparable
obligations, terms and conditions. In determining net effective rates, all
direct and indirect economic outlays in connection with or related to carriage
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of the Service(s) shall be considered, whether embodied in an agreement relating
to the Service(s) or otherwise (e.g., side letters or commitments such as
advertising purchases), including, without limitation, discounts, credits,
commissions, rebates, revenue sharing, channel position fees, advertising
purchases, launch or marketing support, or other adjustments of any kind, or
other goods or services offered by such other distributor. In determining net
effective rates, actual numbers of Service Subscribers shall be used. In no
event shall DIRECTV be required to incorporate the following as a condition to
incorporating the Favored Fees: (i) the other distributor's term hereunder
(however, DIRECTV may, in its sole discretion, elect to have the same Term as
provided to the other distributor); (ii) less favorable penetration, packaging
or subscriber benchmark requirements; (iii) launch of additional services,
programs or networks; (iv) a requirement that is designed or intended to, or
that operates to, frustrate or interfere with, or otherwise have the effect of
discriminating against DIRECTV or frustrating or circumventing the application
of this Section 2.4 and DIRECTV's ability to receive any Favored Fees; or (v) a
condition that is not specifically conditioned and directly related and
indivisible from any Favored Fees.
2.4.2 At DIRECTV's election, Programmer shall (i) permit
DIRECTV's independent representatives to review, during the Term (no more than
once each calendar year) and for one (1) year and on a one-time basis only
thereafter, such Programmer records as required for the sole purpose of
verifying Programmer's compliance with the terms of Section 2.4, at reasonable
times, upon reasonable advance written notice and during normal business hours
at Programmer's offices, or (ii) provide to DIRECTV an annual statement,
certified by Programmer's chief financial officer, certifying compliance with
the provisions of Section 2.4. Such review shall be at DIRECTV's sole cost and
expense, unless such review reveals an overpayment by DIRECTV of more than five
percent (5%), in which case, Programmer shall promptly reimburse DIRECTV for the
reasonable cost of such audit and shall promptly make payment of any monies due
and owing, provided (A) Programmer does not have a bona fide dispute with the
audit findings; and (B) such audit costs shall not exceed such overpayment. The
information derived from and the process of such review shall be subject to the
confidentiality provisions of Section 15, and any third party auditor shall be
required to acknowledge in writing its agreement to such confidentiality
provisions.
3. Advertising.
Subject to Section 1.2.1 above, Programmer hereby represents and
warrants that the Services shall not contain any advertising, direct sales or
infomercials during the Term; provided, however, that Programmer shall have the
right to include third party advertising on the Services up to a total of four
minutes in each 90-minute block of programming; and provided further that each
90 minute block of programming on the Services shall include four separate
30-second announcements that may be covered by DIRECTV via the insertion of
commercial or other announcements (including, without limitation, promotions for
any or all adult programming services distributed by DIRECTV) (such available
time defined as "Avails"). Subject to the foregoing, under no circumstances may
such announcements promote any form of competing adult entertainment, including
but not limited to: adult web sites, adult chat lines, adult wireless services,
adult pay-per-view events, adult movie channels, or adult DVDs. The Avails
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provided by Programmer to DIRECTV shall be no less favorable (in terms of the
nature, use, scheduling, availability, length of the Avails and so forth) than
those provided to any other distributor of the Services. Programmer shall
properly "tone switch", using industry recognized equipment, via inaudible
signals, all Avails to enable Affiliate to insert its commercial announcements
within 60 days of the Service Commencement Date.
4. Marketing and Promotion.
In addition to other rights granted herein, Programmer hereby grants to
DIRECTV, during the Term and in the Territory only, the following rights, but
not the obligation, to be exercised by DIRECTV in its sole discretion with
respect to its marketing of the Services: (i) the right to use any and all
marketing materials reasonably requested from Programmer by DIRECTV (which
materials shall be provided at no cost to DIRECTV) for the purpose of marketing
the Services; (ii) the right to manufacture and produce its own marketing
materials, subject to the prior approval of Programmer, such approval not to be
unreasonably withheld or delayed; and (iii) the right to use the names, voices,
music, recordings, images, and likenesses of any and all performers in and other
persons related to the Services, and the right to use Programmer's name and logo
to market the Services without the payment of additional consideration or of any
additional monies whatsoever. Programmer shall promote DIRECTV's carriage of the
Services at least as favorably as it promotes the carriage of the Services by
any other distributor (including, without limitation, the frequency, prominence
and calling by specific name); provided, however, that Programmer shall provide
DIRECTV with prior written notification of any planned promotion of DIRECTV's
carriage of the Services by Programmer, and any such promotion shall be subject
to DIRECTV's prior approval. Notwithstanding the foregoing, Affiliate may cease
marketing and promoting the Services if Affiliate, in its absolute sole
determination, reasonably believes that marketing or promoting the Services may
be politically harmful to Affiliate or its Affiliated Companies or adversely
affect the corporate image that Affiliate or its Affiliated Companies desires to
maintain at such time. In the event that DIRECTV, in its sole discretion, elects
to undertake a marketing campaign on behalf of the Services, DIRECTV shall
furnish a marketing plan and budget to Programmer, and Programmer and DIRECTV
shall work in good faith to jointly implement such plan.
5. Representations, Warranties and Covenants.
5.1 By DIRECTV. DIRECTV warrants, represents and covenants
to Programmer that it:
5.1.1 is in compliance with and will comply with all material
Laws (as defined below) with respect to its rights and obligations under this
Agreement, including without limitation, all relevant provisions of the Cable
Television Consumer Protection and Competition Act of 1992 (as may be amended
and any successor, replacement or similar Law or statute) and any and all
regulations issued pursuant thereto (as used herein, "Law" shall mean any FCC
and any other governmental (whether international, federal, state, municipal or
otherwise) statute, law, rule, regulation, ordinance, code, directive or order,
including without limitation, any court order);
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5.1.2 has the power and authority to enter into this Agreement
and to fully perform its obligations hereunder;
5.1.3 shall distribute the Services in the Territory in
accordance with and subject to the terms and conditions set forth in this
Agreement;
5.1.4 shall, except as otherwise set forth herein, (A) arrange
and pay for reception of the Services (excluding any authorization fees) from
the U.S. domestic communications satellite from time-to-time designated by
Programmer to DIRECTV with DIRECTV's approval of such designation; and (B)
acquire and maintain, at DIRECTV's sole expense, any equipment, including,
without limitation, backup or reserve descramblers, which may be necessary to
decode and unscramble the signal(s) for the Services;
5.1.5 shall not, without Programmer's consent, knowingly
authorize or cause or knowingly permit any portion of the Services to be
recorded, duplicated, cablecast, exhibited or otherwise used (except on a
videocassette recorder or other home or personal recording device for private,
noncommercial use) for any purpose other than for distribution by DIRECTV at the
time the same is made available;
5.1.6 shall not, without Programmer's prior written approval, use
the names, titles or logos of the Services or any of its programs, or the names,
voices, photographs, likenesses or biographies of any individual participant or
performer in, or contributor to, any program or any variations thereof, for any
purpose other than in material intended to advise DIRECTV Subscribers or
potential DIRECTV Subscribers of the availability and scheduling of the Services
or as a channel identifier. The restrictions set forth in this Section 5.1.6
shall apply only to the extent they are applied by Programmer uniformly with
respect to all of its distributors of the Services, and shall not apply if
DIRECTV has received a valid authorization from a third party for any of the
uses described in this Section 5.1.6;
5.1.7 has obtained, and shall maintain in full force during the
Term hereof, such federal, state and local authorizations as are material and
necessary to operate the business it is conducting in connection with its rights
and obligations under this Agreement; and
5.1.8 the obligations created by this Agreement, in so far as
they purport to be binding on DIRECTV, constitute legal, valid and binding
obligations of DIRECTV enforceable in accordance with their terms.
5.2 By Programmer. Programmer warrants, represents and covenants
to DIRECTV that:
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5.2.1 to its best knowledge after diligent review and receipt of
advice of counsel with respect hereto, it is in compliance with and will
throughout the Term continue to comply with all Laws applicable to, or with
respect to, the Services and the provision of the Services to DIRECTV, and
Programmer's rights and obligations under this Agreement with respect to the
Services and Programmer's obligations hereunder, including without limitation,
FCC rules and regulations governing the Services, if any, all relevant
provisions of the Cable Television Consumer Protection and Competition Act of
1992, and the Communications Act of 1934, the effective portions of the
Communications Decency Act of 1996 (as any or all may be amended and any
successor, replacement or similar Laws) and any regulations promulgated under
any applicable law or any of the foregoing;
5.2.2 it has the power and authority to enter into this Agreement
and to fully perform its obligations hereunder and once executed this Agreement
shall constitute a valid and binding agreement of Programmer enforceable in
accordance with its terms;
5.2.3 the general quality and quantity of programming on the
Services shall not materially change from that existing as of the date of this
Agreement, and the genre of programming shall not materially change from that
described in Section 1.2.1 and existing on the date of this Agreement;
5.2.4 it has obtained, and shall maintain in full force during
the Term hereof, such federal, state and local authorizations as are material
and necessary to operate the business it is conducting in connection with its
rights and obligations under this Agreement;
5.2.5 it has secured and shall maintain in full force during the
Term hereof all rights necessary for DIRECTV to use and enjoy its rights in
connection with its distribution of the Services and all programming provided as
part thereof, as a whole or in parts, as PPV Offerings in the Territory,
including, without limitation, obtaining or all necessary trademarks,
copyrights, licenses and any and all other proprietary intellectual property and
other use rights necessary in connection with, and for DIRECTV's distribution
of, the Services (including without limitation, the right to use the names,
titles or logos of the Services or any of its programs, the promotional
materials supplied or approved by Programmer, the names, voices, photographs,
music, likenesses or biographies of any individual participant or performer in,
or contributor to, any program or any variations thereof) and to perform its
obligations hereunder and grant the rights granted pursuant to Section 1;
5.2.6 it shall not, without DIRECTVs prior written approval, use
the name or logo for "DIRECTV" or any other works owned or controlled by DIRECTV
(and its related companies);
5.2.7 as of the date hereof, the programming on the Services
consists of and during the Term hereof such programming shall consist of, that
programming described in Section 1.2.1;
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5.2.8 there are no (and it covenants that it shall not enter into
directly or indirectly, allow or otherwise permit any) affiliation, distribution
or any other agreements, whether written or oral, granting to distributors
and/or any other third party, person or entity any form or type of exclusive or
other rights that would limit or restrict in any way DIRECTV's rights to
distribute the Services in the Territory;
5.2.9 the obligations created by this Agreement, in so far as
they purport to be binding on Programmer constitute legal, valid and binding
obligations of Programmer enforceable in accordance with their terms;
5.2.10 it has not (and none of its principals or Affiliated
Companies have) been convicted for the criminal violation of, and/or has not
been found by the FCC or other federal, state or local governmental authority
with appropriate jurisdiction (collectively, the "Governmental Authority") to
have violated, any federal, state or local law or regulation as applicable
concerning illegal, indecent or obscene material or the transmission thereof
(the "Obscenity Laws"), and Programmer is not currently aware of any pending
investigation (including, without limitation, a grand jury investigation)
involving the Services (or any content included in the Services) or any pending
proceeding against Programmer (or any of its principals or Affiliated Companies)
for the violation of any Obscenity Laws;
5.2.11 it will notify DIRECTV as soon as possible, but in no
event later than the close of business on the same Business Day upon which
Programmer receives notice of, or becomes aware of, any pending investigation by
any Governmental Authority, or any pending criminal proceeding against
Programmer (or any of its principals or Affiliated Companies), which
investigation or proceeding concerns distribution of the Services or programming
in the Services, including without limitation, investigations and/or proceedings
concerning potential violations of Obscenity Laws. For purposes of this Section
5(2)(11), Programmer shall be deemed to be aware of any such investigation or
proceeding if any of the directors, officers, outside attorneys or employees of
managerial status of Programmer or an Affiliated Company has received any
communication about or otherwise becomes aware of any such investigation or
proceeding;
5.2.12 the Services, and all programming provided as part
thereof, Programmer provides DIRECTV hereunder (A) is not intended to be obscene
and, to the best of Programmer's knowledge after diligent review, would not be
found to be obscene in any jurisdiction in the Territory, and (B) complies with
and, at all times that this Agreement is in effect, shall comply with the
description and associated restrictions set forth in the definition of "Service"
and "Services" in Section 1.2.1, Exhibit A and Schedule I thereto, including,
without limitation, Programmer represents and warrants that the Services shall
reflect adult content limited to the "XX" type, as described in Schedule I, and
shall under no circumstances contain or depict any acts set forth either of the
"XX 1/2" or "XXX" columns thereof; and
5.2.13 as of date hereof, it is in compliance with the most
favored nations provision set forth in Section 2.4 hereof.
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6. Term; Termination.
6.1 Term; Extension; Service Commencement Date. The term of this
Agreement shall be for the period commencing on the date hereof and ending on
the second anniversary of the Service Commencement Date (the "Term"). The
"Service Commencement Date" means the date on which DIRECTV commences
distribution of the Services over a DTH Satellite for revenue-generating
purposes, as determined by DIRECTV in its sole discretion. DIRECTV shall have
the option, in its sole discretion, to extend the Term for an additional period
of up to two (2) years.
6.2 Termination for Breach, Bankruptcy; Discontinuance of
Business. In addition to any other rights or remedies, in equity or at law, this
Agreement may be terminated by either party (the "Affected Party"), in its
discretion, at any time after any of the following occurrences, except as
provided in this Agreement, with respect to the other party (the "Other Party"):
6.2.1 the failure by the Other Party, its successors or
assigns to perform any material obligation hereunder which is not cured within
thirty (30) days after receipt of written notice thereof from the Affected Party
or as to which reasonable steps to cure have not been commenced within such
period (or are not thereafter diligently pursued and completed within an
additional thirty (30) days);
6.2.2 the filing of a petition in bankruptcy or for
reorganization by or against the Other Party under any bankruptcy act; the
assignment by the Other Party for the benefit of its creditors, or the
appointment of a receiver, trustee, liquidator or custodian for all or a
substantial part of the Other Party's property, and the order of appointment is
not vacated within thirty (30) days; or the assignment or encumbrance by the
Other Party of this Agreement contrary to the terms hereof; or
6.2.3 if DIRECTV discontinues operation of the DTH
Distribution System, or Programmer discontinues operation and distribution of
the Services. Neither party shall have any further liability to the other, other
than as set forth in Section 6.6 below, for the discontinuance of the DTH
Distribution System or the Services, as the case may be; provided that such
discontinuance is not in connection with, and does not arise from, DIRECTV's or
Programmer's breach of this Agreement.
6.3 Termination by DIRECTV. In addition to any other rights or
remedies, in equity or at law, DIRECTV may terminate this Agreement upon thirty
(30) days' prior written notice to Programmer:
6.3.1 if at any time the general quality and quantity of
programming on the Services materially changes from that existing as of the date
of this Agreement, or the genre of programming materially changes from that
described in Section 1.2.1 and
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existing on the date of this Agreement, as determined by DIRECTV in its sole
discretion; provided, however, that DIRECTV first provides Programmer with
written notice specifying in detail the material changes giving rise to
DIRECTV's determination and provides Programmer with forty-eight (48) hours to
cure;
6.3.2 in the event of a Programmer Transfer (as defined
below) other than (A) with DIRECTV's prior written consent to the assignment of
this Agreement to a new entity, which consent shall not be unreasonably
withheld, (B) as the result of a merger into or sale or transfer directly or
indirectly to a wholly-owned subsidiary, (C) or a transfer of a percentage of
the assets or stock ownership of Programmer or the Services where Programmer
retains ownership of at least fifty percent (50%) of the assets or stock
thereof. "Programmer Transfer" shall mean a change in the ownership of
Programmer (or the parent of Programmer) or any transfer, conveyance, exclusive
license, transfer or disposition of all or substantially all of the assets or
business of Programmer (or the parent of Programmer), whether by operation of
law or otherwise, the result of which is that a new entity, person or group of
persons, directly or indirectly, has the ability (A) to elect or control the
votes of the majority of the board of directors or other governing body of
Programmer (or the parent of Programmer), (B) to control more than 50% of the
voting interests of Programmer (or the parent of Programmer), or (C) to direct
or cause the direction of the general management and policies of Programmer (or
the parent of Programmer); or
6.4 Offsets. Without limiting any other remedies available to it
under this Agreement, by law or at equity and, notwithstanding anything to the
contrary herein, DIRECTV shall have the right (exercisable after Programmer's
failure to cure timely a material breach in accordance with the below) to
withhold and reserve from any monies whatsoever payable to Programmer or its
designee hereunder, sums reasonably sufficient to secure DIRECTV from and
against Programmer's material breach of any of its obligations under this
Agreement which is not cured within ten (10) days after receipt of written
notice thereof from the DIRECTV.
6.5 Force Majeure. Notwithstanding any other provision in this
Agreement, neither Programmer nor DIRECTV shall have any liability to the other
or any other person or entity with respect to any failure of Programmer or
DIRECTV, as the case may be, to transmit or distribute the Services or perform
its obligations hereunder if such failure is due to any failure or degradation
in performance of the Delivery Source or the DTH Satellite(s) or transponders on
such satellites (as applicable) or of the DTH Distribution System (in which
case, DIRECTV shall be excused from its distribution obligations under this
Agreement), or of any scrambling/descrambling equipment or any other equipment
owned or maintained by others (including, without limitation, DIRECTV's
automated billing and authorization system), any failure at the origination and
uplinking center used by Programmer or DIRECTV, any labor dispute, fire, flood,
riot, legal enactment, government regulation, Act of God, or any cause beyond
the reasonable control of Programmer or DIRECTV, as the case may be (a "Force
Majeure"), and such non-performance shall be excused for the period of time such
failure(s) causes such non-performance; provided, however, that if DIRECTV
determines in its sole discretion that it is commercially or technically
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unfeasible to cure a Force Majeure with respect to the DTH Distribution System
or DTH Satellite and so notifies Programmer, then either party may terminate
this Agreement effective upon written notice to the other party. The parties
acknowledge and agree that although the Services may at any given time be
uplinked to only one of several DTH Satellites, failure or degradation in any of
such DTH Satellites may require DIRECTV to reduce the number of programming
services available for allocation among all of the DTH Satellites, with such
reduction including, without limitation, curtailment or termination of the
distribution of the Services by DIRECTV, at DIRECTV's sole discretion.
Accordingly, Programmer further acknowledges and agrees that the provisions set
forth in the first sentence of this Section 6.5 shall apply and shall exculpate
DIRECTV and excuse the performance of DIRECTV hereunder in the event of a
failure or degradation of any of the DTH Satellites or the transponders on any
such satellites, regardless of whether the satellite to which the Services are
uplinked at the time of such failure or degradation is itself the subject of
such failure or degradation.
6.6 Survival. Termination of this Agreement pursuant to this
Section 6 shall not relieve either party of any of its liabilities or
obligations under this Agreement, including without limitation those set forth
below in Section 8, which shall have accrued on or prior to the date of such
termination.
7. Separate Entities. No officer, employee, agent, servant or
independent contractor of either party hereto or their respective subsidiaries
or DIRECTVs shall at any time be deemed to be an employee, servant or agent of
the other party for any purpose whatsoever, and the parties shall use
commercially reasonable efforts to prevent any such misrepresentation. Nothing
in this Agreement shall be deemed to create any joint venture, partnership or
principal-agent relationship between Programmer and DIRECTV, and neither shall
hold itself out in its advertising or in any other manner which would indicate
any such relationship with the other.
8. Indemnification; Limitation of Liability; Insurance.
8.1 By Programmer. Programmer shall indemnify, defend and hold
harmless each of DIRECTV, its Affiliated Companies (as defined below), DIRECTV's
contractors, subcontractors and authorized distributors and the directors,
officers, employees and agents of DIRECTV, such Affiliated Companies and such
contractors, subcontractors and distributors (collectively, the "DIRECTV
Indemnitees") from, against and with respect to any and all claims, damages,
liabilities, costs and expenses (including reasonable attorneys' and expert's
fees) incurred in connection with any third party claim (including, without
limitation, a claim by any Governmental Authority) against any of the DIRECTV
Indemnitees arising out of (i) Programmer's breach or alleged breach of any
provision of this Agreement, (ii) any content contained in the Services, (iii)
the distribution or cablecast of any programming of the Services which violates
or requires payment for use or performance of any copyright, right of privacy or
literary, music performance or dramatic right, (iv) Programmer's advertising and
marketing of the Services, and/or (v) any other materials, including advertising
or promotional copy, supplied or permitted by Programmer. In addition,
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Programmer shall pay and hold the DIRECTV Indemnitees harmless from any federal,
state, or local taxes or fees which are based upon revenues derived by, or the
operations of, Programmer. As used in this Agreement, "Affiliated Company(ies)"
shall mean, with respect to any person or entity, any other person or entity
directly or indirectly controlling, controlled by or under common control (i.e.,
the power to direct affairs by reason of ownership of voting stock, by contract
or otherwise) with such person or entity and any member, director, officer or
employee of such person or entity.
8.2 By DIRECTV. DIRECTV shall indemnify and hold harmless each of
Programmer, its Affiliated Companies, Programmer's contractors, subcontractors
and authorized distributors, each supplier to Programmer of any portion of the
Services hereunder and each participant therein and the directors, officers,
employees and agents of Programmer, such Affiliated Companies, such contractors,
subcontractors and distributors and such suppliers and participants therein
(collectively, the "Programmer Indemnitees") from, against and with respect to
any and all claims, damages, liabilities, costs and expenses (including
reasonable attorneys' and experts' fees) incurred in connection with any third
party claim (including, without limitation, a claim by any Governmental
Authority) against the Programmer Indemnitees arising out of (i) DIRECTV's
breach or alleged breach of any provision of this Agreement, (ii) the
distribution by DIRECTV of the Services (except with respect to claims relating
to the content of the Services for which Programmer is solely responsible
pursuant to Section 8.1(ii) and Section 8.1(iii)), (iii) DIRECTV's advertising
and marketing of the Services (except with respect to such advertising and
marketing materials or content supplied or approved by Programmer), and (iv) any
other materials, including advertising or promotional copy, supplied by DIRECTV.
In addition, DIRECTV shall pay and hold Programmer harmless from any federal,
state, or local taxes or fees, including any fees payable to local franchising
authorities, which are based upon revenues derived by, or the operations of,
DIRECTV.
8.3 Survival. Termination of this Agreement shall not affect the
continuing obligations of each of the parties hereto as indemnitors hereunder.
The party wishing to assert its rights set forth in this Section 8 shall
promptly notify the other of any claim or legal proceeding with respect to which
such party is asserting such right. Upon the written request of an indemnitee,
the indemnitor will (1) assume the sole control of the defense and settlement of
any claim, demand or action against such indemnitee and/or (2) allow the
indemnitee to participate in the defense thereof, such participation to be at
the expense of the indemnitee. Settlement by the indemnitee without the
indemnitor's prior written consent shall release the indemnitor from the
indemnity as to the claim, demand or action so settled.
8.4 NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT:
8.4.1 IN NO EVENT SHALL ANY PARTY BE LIABLE FOR ANY
INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER FORESEEABLE OR NOT, OCCASIONED BY
ANY FAILURE TO PERFORM OR THE BREACH OF ANY OBLIGATION UNDER THIS AGREEMENT FOR
ANY CAUSE WHATSOEVER, WHETHER BASED ON NEGLIGENCE.
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8.4.2 IN NO EVENT SHALL ANY PROJECTIONS, FORECASTS,
ESTIMATIONS OF SALES AND/OR MARKET SHARE OR EXPECTED PROFITS, OR OTHER
ESTIMATIONS OR PROJECTIONS BY PROGRAMMER OR DIRECTV OR ANY OF THEIR DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS OR AFFILIATES, REGARDING OR RELATED TO PROGRAMMER'S
OR DIRECTV'S DTH BUSINESS BE BINDING AS COMMITMENTS OR, IN ANY WAY, PROMISES BY
PROGRAMMER OR DIRECTV.
8.5. Insurance. Without limiting Programmer's representations,
warranties and indemnification obligations under this Agreement, Programmer
shall secure, at its sole cost and expense, the insurance policy (the
"Insurance" and/or the "Policy" set forth in this paragraph. Programmer shall
obtain a media/professional liability insurance policy covering Programmer's
distribution of the Services during the Term (including the distribution by
DIRECTV authorized under this Agreement) and for one (1) year thereafter in the
minimum amount of three million dollars ($3,000,000) per claim and five million
dollars ($5,000,000) in the aggregate, with a deductible of not greater than one
hundred thousand dollars ($100,000). The Policy shall be in form and substance
reasonably acceptable to DIRECTV, and shall name DIRECTV (and those "Affiliates"
(defined below) identified by DIRECTV) as insureds thereon. The Insurance shall
contain an endorsement that negates the "other insurance" claims in the Policy,
and shall contain a statement that the insurance being provided therein is
primary. For purposes of this Agreement, "Affiliate" shall mean any corporation
or other person or entity controlling, or controlled by, or under common control
with a party or third person, as the case may be. Programmer shall provide
DIRECTV and those Affiliates identified by DIRECTV with a certificate evidencing
the Insurance required by this paragraph on or before the Services Commencement
Date. Programmer shall ensure that DIRECTV is notified in writing thirty (30)
days in advance of any actual or proposed change to such insurance, and no such
change (and no such Insurance, nor DIRECTV's failure to disapprove of or object
to the lack thereof) shall diminish Programmer's obligations under this
Agreement.
9. Notices. Except as set forth below, all notices hereunder shall be
in writing and delivered by hand or sent by certified mail, postage prepaid and
return receipt requested, fax, or by an overnight delivery service to the
receiving party at its address set forth above or as otherwise designated by
written notice. Notice to Programmer shall be provided as follows:
Colorado Satellite Broadcasting, Inc.
7007 Winchester Circle, Suite 200
Boulder, CO 80301
Attention: Ken Boenish, President
Fax: (303) 527-2872
cc: General Counsel
Fax: (303) 527-2872
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Notice to DIRECTV shall be provided as follows:
DIRECTV, Inc.
2230 East Imperial Highway
El Segundo, California 90245
Attention: Senior Vice President, Programming
Fax: (310) 964-5416
cc: Executive Vice President and General Counsel
Fax: (310) 964-4991
Notice given by hand shall be considered to have been given on the date
delivered or, if delivery is refused, as of the date presented. Notice given by
mail shall be considered to have been given five (5) days after the date of
mailing, postage prepaid certified (return receipt requested). Notice given by
facsimile machine shall be considered to have been given on the date receipt
thereof is electronically acknowledged. Notice given by an overnight delivery
service shall be considered to have been given on the next business day.
10. Waiver. The failure of any party to insist upon strict performance
of any provision of this Agreement shall not be construed as a waiver of any
subsequent breach of the same or similar nature. Subject to Section 8.4 above,
all rights and remedies reserved to either party shall be cumulative and shall
not be in limitation of any other right or remedy which such party may have at
law or in equity.
11. Binding Agreement; Assignment. Subject to DIRECTV's rights under
Section 6.3.2, this Agreement shall be binding upon the parties hereto and their
respective successors and assigns, except that it may not be assigned by
transfer, by operation of law or otherwise, without the prior written consent of
the non-transferring party, which shall not be unreasonably withheld; provided,
however, that DIRECTV may assign its rights and obligations under this
Agreement, in whole or in part (including without limitation, DIRECTV's right to
distribute the Services) (i) to an Affiliated Company or to a successor entity
to DIRECTV's DTH business; (ii) to a third party as part of preparing to go or
going public or as part of a merger, consolidation or sale of all substantially
all of the assets of DIRECTV or (iii) to a third party, provided DIRECTV remains
primarily liable for the performance of such third party's obligations
hereunder.
12. Laws of California. This Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable to
contracts made and to be fully performed therein by residents of the State of
California, except to the extent that the parties' respective rights and
obligations are subject to mandatory local, State and Federal laws or
regulations. The parties hereby agree that the jurisdiction of, or the venue of,
any action brought by either party shall be in a state or federal district court
sitting in the Los Angeles, California and both parties hereby agree to waive
any right to contest such jurisdiction and venue.
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13. Entire Agreement and Section Headings. This Agreement sets forth
the entire agreement and understanding of the parties relating to the subject
matter hereof, and supersedes all prior agreements, arrangements, or
understandings relating to the subject matter hereof. This Agreement shall not
be modified other than in a writing, signed by each of the parties hereto. The
section headings hereof are for the convenience of the parties only and shall
not be given any legal effect or otherwise affect the interpretation of this
Agreement.
14. Severability. The parties agree that each provision of this
Agreement shall be construed as separable and divisible from every other
provision and that the enforceability of any one provision shall not limit the
enforceability, in whole or in part, of any other provision hereof. In the event
that a court of competent jurisdiction determines that a restriction contained
in this Agreement shall be unenforceable because of the extent of time or
geography, such restriction shall be deemed amended to conform to such extent of
time and/or geography as such court shall deem reasonable.
15. Confidentiality.
15.1 The parties agree that they and their employees have
maintained and will maintain, in confidence, the terms and provisions of this
Agreement, as well as all data, summaries, reports, proprietary information,
trade secrets and information of all kinds, whether oral or written, acquired or
devised or developed in any manner from the other party's personnel or files
(the "Confidential Information"), and that they have not and will not reveal the
same to any persons not employed by the other party except: (i) (A) by mutual
agreement; (B) to the extent necessary to comply with the law (including SEC
reporting requirements) or the valid order of a court of competent jurisdiction,
in which event the disclosing party shall so notify the other party as promptly
as practicable (and, if possible, prior to making any disclosure) and shall seek
confidential treatment of such information, or in connection with any
arbitration proceeding; (C) as part of its normal reporting or review procedure
to its parent company, its auditors and its attorneys, and such parent company,
auditors and attorneys agree to be bound by the provisions of this Section 15;
(D) in order to enforce any of its rights pursuant to this Agreement; or (E) in
the case of DIRECTV, to the NRTC, potential investors, insurers, financing
entities or any entity engaged in DIRECTV's DBS business; provided, however,
that such person described above agrees to be bound by the provisions of this
Section 15; or (ii)(A) at the time of disclosure to the recipient the
Confidential Information is in the public domain; or (B) after disclosure to the
recipient the Confidential Information becomes part of the public domain by
written publication through no fault of the recipient. During the Term, neither
party shall issue an independent press release with respect to this Agreement or
the transactions contemplated hereby without the prior written consent of the
other party. Breach of this last sentence shall be deemed a material breach of
this Agreement.
15.2 Notwithstanding Section 15.1, Programmer specifically
acknowledges and agrees that any lists of DIRECTV's customers or users, and all
information related to
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such customers and users, is confidential and proprietary information of DIRECTV
and cannot be disclosed by Programmer or used by Programmer for any purpose or
use whatsoever, other than for its review at DIRECTV's offices as part of
Programmer's audit rights hereunder to determine if Programmer has been paid the
License Fees due to it by DIRECTV. Also notwithstanding Section 15.1, Programmer
further acknowledges and agrees that under no circumstances will it in any way:
disclose information (whether personally identifiable or not) to any third party
regarding DIRECTV's customers or users or engage in any direct mailing or
telephone solicitation which DIRECTV's customers or users do not previously and
expressly approve (whether orally or in writing) or previously and expressly
request (whether orally or in writing), or which DIRECTV does not previously and
expressly approve in writing in DIRECTV's sole discretion.
16. Inadequacy of Money Damages. Programmer and DIRECTV hereby
acknowledge and agree that DIRECTV's distribution and marketing of the Services
pursuant to the terms and conditions contained herein are of the essence of this
Agreement. DIRECTV further acknowledges and agrees that such carriage and
marketing requirements, subject to Force Majeure and other conditions of this
Agreement, are special and unique, and that Programmer may not be adequately
compensated by the payment of money damages in the event that DIRECTV failed to
comply with any of such requirements. Programmer acknowledges and agrees that
the grant of rights to DIRECTV hereunder are special and unique, and that
DIRECTV may not be adequately compensated by the payment of money damages in the
event that Programmer failed to comply with any of its obligations under this
Agreement, including without limitation, providing access to any Service
programming to DIRECTV, as required hereunder.
17. Cessation of Program Distribution. If DIRECTV in good faith
reasonably believes that DIRECTV's provision of any of the programming on the
Services either violates any Law or could be found by a court or administrative
agency to violate any Law (a "Law Violation" or "Potential Law Violation") or
reasonably believes in good faith at any time that any of the programming on the
Services is adversely affecting the corporate image that DIRECTV desires to
maintain at such time (an "Image Problem") then, notwithstanding anything to the
contrary in this Agreement, (i) immediately following written notice to
Programmer in the case of a Law Violation or Potential Law Violation, or (ii) no
sooner than 30 days following written notice to Programmer in the case of an
Image Problem (if DIRECTV elects to terminate this Agreement as provided in this
Section 17): DIRECTV may terminate this Agreement, or DIRECTV may cease
distributing the offending programming or the Services (in any portion of the
Territory, or the entire Territory, as DIRECTV shall determine in its sole
discretion based on the genesis of the Law Violation; Potential Law Violation or
Image Problem) until DIRECTV determines in DIRECTV's sole discretion that there
will be no Image Problem because the Service programming at that subsequent time
is consistent with the corporate image that DIRECTV then desires to maintain or
DIRECTV reasonably determines that a Law Violation or Potential Law Violation
will not again occur.
18. Survival of Representations and Warranties. All representations and
warranties contained herein or made by the parties, and each of them, in
connection herewith shall survive any independent investigation made by either
party.
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<PAGE>
19. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all such
counterparts together shall constitute but one and the same instrument. The
parties also agree that this Agreement shall be binding upon the faxing by each
party of a signed signature page thereof to the other party. If such a faxing
occurs, the parties agree that they will each also immediately post, by Federal
Express, a fully executed original counterpart of the Agreement to the other
party.
IN WITNESS WHEREOF, the undersigned parties have caused this Agreement
to be executed by their duly authorized representatives as of the day and year
first above written.
DIRECTV, INC.
By: /s/Toby Berlin
Name: Toby Berlin
Title: VP of Programming
Date: April 4, 2006
COLORADO SATELLITE BROADCASTING, INC.
By: /s/ Ken Boenish
Name: Ken Boenish
Title: President
Date: April 4, 2006
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