Affiliation Agreement [Amendment No. 1] - Spice Inc. and Satellite Services Inc.
AMENDMENT NO. 1
TO SPICE
AFFILIATION AGREEMENT
THIS AMENDMENT, made as of Sept. 29, 1994, is by and between Spice, Inc., a New
York corporation ("Network"), and Satellite Services, Inc., a Delaware
corporation ("Affiliate"), and, with the exception of paragraph 13 hereto,
amends that certain Affiliation Agreement dated as of November 1, 1992 (the
"Agreement") between Network and Affiliate. All capitalized terms not otherwise
defined herein shall have the meaning ascribed to such terms in the Agreement.
NOW, THEREFORE, in consideration of the mutual covenants set forth herein,
the parties hereto agree as follows:
1. Section 4(a) is hereby amended to read in its entirety as follows:
"(a) During the Term, Network shall, at its own expense, deliver a
signal of the Service to the earth station of each System, to each Satellite
Subscriber and to any other location in the continental United States designated
by Affiliate by transmitting such signal via a domestic satellite commonly used
for transmission of domestic cable television programming and shall, at its own
expense, fully encode the satellite signal of the Service utilizing scrambling
technology commonly used in the domestic cable television industry. Except as
otherwise provided in this Section 4(a), Affiliate shall, at its own expense,
furnish an earth station and all other facilities necessary for the receipt of
such satellite transmission and the delivery of such signal to the Service Cable
Subscribers and PPV Cable Subscribers (each as defined below). In the event
Network either (i) changes the satellite to which the Service is transmitted, to
a satellite not susceptible to viewing by a System's or Systems' then-existing
earth station equipment, (ii) changes the technology used by Network to encrypt
the Service to a technology not compatible with a System's or Systems' then
existing descrambling equipment, or (iii) compresses, digitizes, or otherwise
modifies the signal of the Service in such manner that it cannot be received or
utilized by a System or Systems, then Affiliate shall have the right to delete
from Schedule 1 of this Agreement, immediately, any such System or Systems, and
to discontinue carriage of the Service on any such System or Systems, provided
that this termination right shall not apply to any System or Systems if, (1)
Network agrees, unconditionally, to reimburse such System or Systems, as the
case may be, (A) for the cost of acquiring and installing new equipment
necessary to descramble, receive, and or utilize the signal of the Service,
and/or (B) for the cost of acquiring and installing equipment reasonably
necessary for such System or Systems to receive the Service from such new
satellite; (2) physical space exists at the then-existing headend or earth
station site to accommodate the necessary equipment; and (3) current zoning and
other restrictions permit such additional equipment."
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2. Sections 5(a)(i) through (iv) are amended to read in their entirety as
follows:
"(i) "PPV Satellite Subscriber" means someone who is both a
Satellite Subscriber and who utilizes the Service as a PPV service by making a
purchase through Affiliate or an affiliate of Affiliate. Except for purposes of
Section 5(c) hereof, PPV Satellite Subscribers shall include Combination PPV
Satellite Subscribers. "PPV Satellite Fees" are those Fees payable by Affiliate
to Network in connection with sales of the Service to PPV Satellite Subscribers.
(ii) "Service Satellite Subscriber" means someone who is both
a Satellite Subscriber and a Service Subscriber (as defined below) who utilizes
the Service as a Subscription service. Except for purposes of Section 5(b)
hereof, Service Satellite Subscribers shall include Combination Service
Satellite Subscribers. "Service Satellite Fees" are those Fees payable by
Affiliate to Network in connection with sales of the Service to Service
Satellite Subscribers.
(iii) "PPV Cable Subscriber" means someone who is provided the
Service by Affiliate or an affiliate of Affiliate hereunder, who utilizes the
Service as a PPV service and who receives the Service by means other than
Satellite. Except for purposes of Section 5(c) hereof, PPV Cable Subscribers
shall include Combination PPV Cable Subscribers. "PV Cable Fees" are those Fees
payable by Affiliate to Network in connection with sales of the Service to PPV
Cable Subscribers.
(iv) "Service Cable Subscriber" means someone who both
receives the Service by means other than Satellite and is a Service Subscriber
and who utilizes the Service as a Subscription service. Except for purposes of
Section 5(b) hereof, Service Cable Subscribers shall include Combination Service
Cable Subscribers. "Service Cable Fees" are those Fees payable by Affiliate to
Network in connection with sales of the Service to Service Cable Subscribers."
3. Section 5(a)(x) of the Agreement is hereby amended to read in its
entirety as follows:
(x) "Addressable Subscriber" means a cable television system
subscriber whose television set is connected (or who has been issued equipment
by the operator of the cable television system to permit a connection) on the
subscriber's premises, or by interdiction, to equipment operated by Affiliate,
or an affiliate of Affiliate, that allows the channel on which the Service is
received to be turned on or off (i.e., "authorized" or "deauthorized") from a
central location, controlled by the operator of the pertinent System or such
operator's agent or designee."
4. Attached hereto is Exhibit B to the Agreement, and any and all
references in the Agreement to Exhibit B is hereby deemed to be a reference to
Exhibit B attached hereto.
5. Sections 5(b)(i) through (iii) of the Agreement are hereby
amended to read in their entirety as follows:
(b) Subscription
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(i) For each calendar month during the Term, Affiliate will
pay Network as a Service Cable Fee for each Service Cable Subscriber an amount
equal to the greater of (A) *****, or (B) ***** of the Gross Receipts
attributable to such Service Cable Subscriber. When the Service is sold to a
Service Cable Subscriber in combination with other services (excluding a package
which contains the cable television service known as "Spice 2" (the "Multiplex
Service")) for a package charge (as, for example, in a tier or in a package of a
la carte or other services), the Gross Receipts attributable to a Service Cable
Subscriber for the Service shall be equal to the total charge for the tier or
package of services sold in combination with the Service, multiplied by a
fraction, the numerator of which is ***** and the denominator of which is the
numerator plus the aggregate of the net effective rates per subscriber charged
to Affiliate by each of the other service providers of the services included in
the tier or package of a la carte or other services; provided, however, that the
amounts charged to Affiliate for each of the services in the package or tier
shall not be disclosed by Affiliate to Network but, at Network's request, in
order to assure Network of compliance with this provision, Affiliate shall make
such charges and any pertinent calculations available to a representative of
KPMG Peat Marwick (which representative is neither Network's nor Affiliate's) on
a confidential basis, at Network's cost. This provision shall survive
termination or expiration of this Agreement.
Affiliate shall pay a Service Satellite Fee to Network in the following amounts
for each Service Satellite Subscriber (based on the subscription term purchased
by such Satellite Subscriber), regardless of whether such Service Satellite
Subscriber purchases the Service alone as an a la carte service or as part of a
tier or package of a la carte or other services and regardless of the Gross
Receipts attributable thereto:
Service Satellite Fee
Per Service Satellite
Service Term Subscriber
------------ ---------------------
1 Month *****
3 Months *****
6 Months *****
1 Year *****
Notwithstanding the foregoing, if the Service is sold to a Service Cable
Subscriber in combination with the Multiplex Service (a "Combination Service
Cable Subscriber"), Affiliate will pay Network as a Service Cable Fee for each
Combination Service Cable Subscriber an amount equal to the greater of (A)
*****, or (B) ***** of the Gross Receipts attributable to such Combination
Service Cable Subscriber for purchase of both the Service and the Multiplex
Service. If the Service and the Multiplex Service are sold in combination with
other services for a package charge (as, for example, in a tier or in a package
of a la carte or other services), the Gross Receipts attributable to a
Combination Service Cable Subscriber for the Service and the Multiplex Service
shall be equal to the total charge for the tier or package of services sold in
combination with the Service, multiplied by a fraction, the numerator of which
is $2.19 and the denominator of which is the numerator plus the aggregate of the
net effective rates per subscriber charged to Affiliate by each of the other
service providers of the services included in the tier or package of a la carte
or other services; provided, however, that the amounts charged to Affiliate for
each of the services in the package or tier shall not be disclosed by Affiliate
to Network but,
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at Network's request, in order to assure Network of compliance with this
provision, Affiliate shall make such charges and any pertinent calculations
available to a representative of KPMG Peat Marwick (which representative is
neither Network's nor Affiliate's) on a confidential basis, at Network's cost.
This provision shall survive termination or expiration of this Agreement.
If the Service is sold to a Service Satellite Subscriber in combination with the
Multiplex Service (a "Combination Service Satellite Subscriber"), the Service
Satellite Fees for both the Service and the Multiplex Service shall equal the
following amounts for each Combination Service Satellite Subscriber, based on
the subscription term purchased by such Combination Service Satellite
Subscriber:
Service Subscription
Fee Per Combination Service
Service Term Satellite Subscriber
------------ ---------------------------
1 Month *****
3 Months *****
6 Months *****
1 Year *****
(ii) The number of Service Satellite Subscribers, Combination
Service Satellite Subscribers, Service Cable Subscribers, or Combination Service
Cable Subscribers (as the case may be) for whom Affiliate shall pay each month
shall be the average of (A) the number of Service Satellite Subscribers,
Combination Service Satellite Subscribers, Service Cable Subscribers, or
Combination Service Cable Subscribers (as the case may be) on the first day of
the month, and (B) the number of Service Satellite Subscribers, Combination
Service Satellite Subscribers, Service Cable Subscribers, or Combination Service
Cable Subscribers (as the case may be) on the last day of the month. Service
Satellite Subscribers, Combination Service Satellite Subscribers, Service Cable
Subscribers, or Combination Service Cable Subscribers (as the case may be) shall
include each occupied dwelling (whether in a single family or multi-unit
building), hotel or motel guest room, drilling rig, nursing home room, dormitory
room or other location in which the Service (and, if applicable, the Multiplex
Service) is received. If Affiliate provides the Service (and, if applicable, the
Multiplex Service) to multiple dwelling complexes, including, but not limited
to, apartments, hotels and motels, on a bulk-rate basis, the number of Service
Satellite Subscribers, Combination Service Satellite Subscribers, Service Cable
Subscribers, or Combination Service Cable Subscribers (as the case may be)
attributable to each such bulk-rate subscriber shall be equal to the total
monthly retail rate charged a complex for the Service (and, if applicable, the
Multiplex Service) divided by the standard monthly retail rate charged non-bulk
rate Service Satellite Subscribers, Combination Service Satellite Subscribers,
Service Cable Subscribers, or Combination Service Cable Subscribers (as the case
may be) for the Service (and, if applicable, the Multiplex Service) in the
applicable System or by the pertinent Satellite distributor, as the case may be.
The monthly number of Service Satellite Subscribers, Combination Service
Satellite Subscribers, Service Cable Subscribers, or Combination Service Cable
Subscribers shall each be calculated, stated and reported separately.
(iii) The Service Cable Fees and Service Satellite Fees
payable by Affiliate to Network hereunder shall be due and payable forty-five
(45) days after the end of the
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calendar month to which they relate. In the event that the Service is sold to
Service Satellite Subscribers or Combination Service Satellite Subscribers for a
term greater than one month, the Service Satellite Fees payable with respect to
such Service Satellite Subscriber or Combination Service Satellite Subscriber
shall be due and payable forty-five (45) days after the end of the calendar
month in which delivery of the Service to such Service Satellite Subscriber
commences; provided that if Affiliate does not receive full payment for a term
(or gives a credit), Affiliate shall receive a like credit against the Service
Satellite Fees.
6. Section 5(c)(i) of the Agreement is hereby amended to read in its
entirety as follows:
"(c) PPV
(i) For each customer of Affiliate who receives and pays for
one (1) complete and technically satisfactory viewing of one viewing segment of
the Service as a PPV service as a PPV Cable Subscriber, Affiliate will pay
Network a PPV Cable Fee in an amount equal to the greater of, (A) (i) ***** for
orders taken from the date of full execution hereof through October 31, 1995,
(ii) ***** for orders taken from November 1, 1995 through October 31, 1998 (iii)
***** for orders taken from November 1, 1998 through October 31, 2001 and (iv)
***** for orders from November 1, 2001 through the end of the Initial Term, or
(B) the Network Share of the Gross Receipts paid by such PPV Cable Subscriber.
With respect to PPV Cable Subscribers, "Network Share" shall equal the following
percentage of the Gross Receipts paid by each PPV Cable Subscriber: ***** from
the date of execution of this Agreement by both parties hereof through October
31, 1995 and ***** from November 1, 1995 through the end of the Initial Term.
For each customer of Affiliate who receives and pays for one (1) complete and
technically satisfactory viewing of one viewing segment of the Service as a PPV
service as a PPV Satellite Subscriber (provided that it is technically feasible
to sell the Service on a PPV basis to PPV Satellite Subscribers), Affiliate will
pay Network a PPV Satellite Fee in an amount equal to the greater of (C) (i)
***** for orders taken from the date of full execution hereof through October
31, 1995, (ii) ***** for orders taken from November 1, 1995 through October 31,
1998, (iii) ***** for orders taken from November 1, 1998 through October 31,
2001, and (iv) ***** for orders taken from November 1, 2001 through the end of
the Initial Term, or (D) the Network Share of the Gross Receipts paid by such
PPV Satellite Subscriber. With respect to PPV Satellite Subscribers, the Network
Share of the Gross Receipts shall be *****.
Notwithstanding the foregoing, if the Service is sold to a PPV Cable Subscriber
in combination with the Multiplex Service as a PPV service (a "Combination PPV
Cable Subscriber"), Affiliate will pay Network a PPV Cable Fee for each
Combination PPV Cable Subscriber who receives and pays for one (1) complete and
technically satisfactory viewing of one viewing segment of each of the Service
and the Multiplex Service in an amount equal to the greater of, (A) (i) *****
for orders taken from the date of full execution hereof through October 31,
1995, (ii) ***** for orders taken from November 1, 1995 through October 31,
1998, (iii) ***** for orders taken from November 1, 1998 through October 31,
2001 and (iv) ***** for orders from November 1, 2001 through the end of the
Initial Term, or (B) the Network Share of the Gross Receipts paid by such PPV
Cable Subscriber. With respect to Combination PPV Cable Subscribers, "Network
Share" shall equal ***** of the Gross Receipts paid by each Combination PPV
Cable Subscriber. If the Service is sold to a PPV Satellite Subscriber in
combination with the Multiplex Service as a PPV
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service (provided that it is technically feasible to sell the Service on a PPV
basis to PPV Satellite Subscribers) (a "Combination Satellite PPV Subscriber"),
Affiliate will pay Network a PPV Satellite Fee for each PPV Satellite Subscriber
who receives and pays for one (1) complete and technically satisfactory viewing
of one viewing segment of each of the Service and the Multiplex Service,
Affiliate will pay Network a PPV Satellite Fee in an amount equal to the greater
of (C) (i) ***** for orders taken from the date of full execution hereof through
October 31, 1995, (ii) ***** for orders taken from November 1, 1995 through
October 31, 1998, (iii) ***** for orders taken from November 1, 1998 through
October 31, 2001, and (iv) ***** for orders taken from November 1, 2001 through
the end of the Initial Term, or (D) the Network Share of the Gross Receipts paid
by such Combination PPV Satellite Subscriber. With respect to Combination PPV
Satellite Subscribers, the Network Share of the Gross Receipts shall be *****.
Notwithstanding the foregoing, each System and each Satellite distributor shall
have the right to discount the price of a PPV viewing of the Service during the
first thirty (30) days after the launch of the Service in such System or by such
Satellite distributor, respectively, and during no more than two (2) ten (10)
day periods each calendar year. For orders taken during such first thirty (30)
days and during each such ten (10) day period, Affiliate shall be required to
pay to Network minimum PPV Satellite Fees or PPV Cable Fees (as the case may be)
of ***** per each complete and technically satisfactory viewing of a viewing
segment of the Service as a PPV service, rather than the minimum PPV Satellite
Fees or PPV Cable Fees specified in this Section 5(c)(i). Furthermore, there
shall be no PPV Satellite Fee or PPV Cable Fee (as the case may be) payable by
Affiliate to Network for any PPV viewing of the Service by a subscriber who pays
for such viewing by remitting a coupon provided by Affiliate or by an affiliate
of Affiliate to subscribers that have not ordered a PPV movie or event in the
six (6) months immediately preceding the issuance of such coupon.
Notwithstanding the foregoing, if in any month the sum of the PPV Cable Fees
payable hereunder and the PPV Cable Fees payable under the agreement between
Network and Affiliate for the distribution of the Multiplex Service (the
"Multiplex Agreement") (excluding PPV Cable Fees attributable to Combination PPV
Cable Subscribers under this Agreement and the Multiplex Agreement) do not equal
or exceed an amount equal to the product of the Minimum Average Percentage (as
defined herein) multiplied by the sum of the Gross Receipts paid by PPV Cable
Subscribers (excluding Combination PPV Cable Subscribers) who receive and pay
for one (l) complete and technically satisfactory viewing of one viewing segment
of either the Service or the Multiplex Service (the "Minimum Average PPV Fee"),
Affiliate shall pay' to Network the Minimum Average PPV Fee in lieu of PPV Cable
Fees under this Agreement and the Multiplex Agreement. For purposes of this
Agreement, the Minimum Average Percentage shall mean the arithmetic mean average
of the Network Share payable under this Agreement in the pertinent month with
respect to PPV Cable Subscribers to the Service and the Network Share (as
defined in the Multiplex Agreement) payable under the Multiplex Agreement in the
pertinent month with respect to PPV Cable Subscribers to the Multiplex Service."
7. Section 5(c)(iii) of the Agreement is hereby amended to read in its
entirety as follows:
"(iii) The PPV Cable Fees and/or PPV Satellite Fees (as the case may be)
payable by Affiliate to Network hereunder for exhibition to PPV Cable
Subscribers, Combination PPV Cable Subscribers, PPV Satellite Subscribers, and
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Combination PPV Satellite Subscribers (as the case may be) during a Reporting
Period (as defined below) during the Term shall be due and payable forty-five
(45) days after the end of the calendar month which includes the last day of the
Reporting Period. (The term "Reporting Period" shall mean the days from the end
of each System's or Satellite distributor's last monthly reporting period (which
date may vary in each System or for each Satellite distributor from the 20th of
the calendar month to the last day of the calendar month) to the end of the
System's or Satellite distributors then current monthly reporting period.)
Affiliate shall have the right, however, to make credit adjustments to any
month's payment in an amount equal to the portion of a previous month's PPV
Cable Fees and/or PPV Satellite Fees which represents an overpayment."
8. The first sentence of Section 5(e). of the Agreement is hereby amended
to read as follows:
(e) Each System shall have the right to expend funds for a market or
community research survey, which survey shall be primarily for the purpose of
determining the market response to adult television programming."
9. Commencing as of the date of execution of this Amendment,
notwithstanding anything set forth in Section 7(a)(ii) of the Agreement to the
contrary regarding payment by Network of certain contributions to Systems and
Satellite distributors for certain catalogues or guides used by such Systems and
Satellite distributors, Network shall remit such contributions to the
appropriate Systems and Satellite distributors no later than forty-five (45)
days after receipt of the documentation required to be provided to Network
pursuant to Section 7(a)(ii) of the Agreement.
10. Section 7(b) of the Agreement is hereby amended to read in its
entirety as follows:
"7(b) Network shall send to Affiliate, not later than forty-five (45) days
after the end of each calendar month for which payment pursuant to Section 7
hereof is due, a statement on a form mutually acceptable to Affiliate and
Network which sets forth all pertinent information to compute the amount due to
Affiliate for such calendar month. Network shall deliver such statement to
Affiliate prior to or along with the amount payable to Affiliate as provided in
this Agreement. Notwithstanding the foregoing, in the event that Network is paid
gross shopping revenue by a fulfillment agency or other agent on a quarterly
basis, Network shall send to Affiliate the reports and payments hereunder not
later than forty-five (45) days after the end of each such quarter, which report
and payment shall relate to such quarter.
11. Section 7(d) of the Agreement is hereby amended to read in its
entirety as follows:
(d) Network agrees that in the event Network does any direct on-air
marketing and sale of products or services, including, but not limited to, sales
through "800", "900" or "976" telephone services, Network will:
(i) provide Affiliate with lists of the names of respondents
from within the zip code areas of the Systems who respond to such direct on-air
marketing and sales, for use by Affiliate or the Systems, and
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(ii) Network shall pay to Affiliate *****.
Network agrees that no direct on-air marketing or sale of products or services
will advertise, promote, sell, or contain any: (1) illegal products or services;
(2) products or items which invade the body; or (3) sexual appliances or items
used for simulated sexual intercourse.
12. Section 8(f) is hereby amended to read in its entirety as follows:
(f) Without limiting the provisions of Section 8(e) or Section 8(g)
hereof, Network will indemnify, defend and forever hold Affiliate and
Affiliate's affiliated companies, and each of Affiliate's and Affiliate's
affiliated companies' respective officers, directors, employees, partners and
agents, harmless from and against any and all losses, liabilities, claims,
costs, damages and expenses (including, without limitation, fines, forfeitures,
attorneys' fees, disbursements and administrative or court costs) arising
directly or indirectly out of: (1) sales or marketing of any products or
services by, through, or on the Service (including, but not limited to, claims
related to product liability, patent, trademark, copyright infringement, right
of privacy or publicity, personal injury, express or implied warranties, or
obscenity,) or (2) the content of the Service (in its entirety) or the use and
delivery of the Service under this Agreement (including, but not limited to,
sponsorship, promotional and advertising spots, any background music and
anything else inserted by any party other than Affiliate), including, without
limitation, any losses, liabilities, claims, costs, damages and expenses based
upon any lien, encumbrance, charge, lis pendens, administrative proceeding,
government investigation or litigation relating to the Service, any program
included therein or any component thereof, or based upon alleged or proven
libel, slander, defamation, invasion of the right of privacy or the right of
publicity, or violation or infringement of copyright (including music
performance rights for any and all performances through to subscribers),
literary or music synchronization rights, obscenity or any other form or forms
of speech (whether or not protected by the Constitution of the United States or
any State) or otherwise arising out of the content of the Service.
13. The parties agree that all the obligations, terms, provisions and
conditions set forth in the Agreement, as amended by Sections 1, 3, 8, 10, 11,
and 12 hereby, shall apply to the exhibition, distribution, subdistribution, and
authorized reception of the television programming service currently known as
"Spice 2" (the "Multiplex Service"), as if the Multiplex Service were the
"Service" as defined in the Agreement, with the exception of the following
amendments to the Agreement applicable only to the Multiplex Service (the
agreement for the provision of the Multiplex Service, as described in this
paragraph, shall be referred to herein as the Multiplex Agreement):
a. Section 4 of the Multiplex Agreement is hereby amended by the
addition of the following new Section 4(i):
"4(i) Notwithstanding anything contained in this Agreement to
the contrary, no System or Satellite Distributor shall exhibit, distribute,
subdistribute or authorize the reception of the Service unless such System or
Satellite Distributor is also exhibiting, distributing, of authorizing the
reception of the pay-per-view television programming service known as "Spice" or
"Spice 1" (the "Base Service"); provided, however, that this paragraph shall
apply
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only if such System or Satellite Distributor has rights to exhibit, distribute,
subdistribute or authorize the reception of the Base Service."
b. Section 4 of the Multiplex Agreement is hereby amended by the
addition of the following new Section 4(j):
"4(j) Notwithstanding anything contained in this Agreement to
the contrary, the Service may not be carried by a System more hours per day
(based on weekly averages of hours of carriage) than the Base Service is carried
by such System; provided, however, that this paragraph shall apply only if such
System has rights to exhibit, distribute, subdistribute or authorize the
reception of the Base Service."
c. Section 5(b)(i) of the Multiplex Agreement is hereby amended to
read in its entirety as follows:
"(b) Subscription
(i) For each calendar month during the Term, Affiliate will
pay Network as a Service Cable Fee for each Service Cable Subscriber an amount
equal to the greater of (A) *****, or (B) ***** of the Gross Receipts
attributable to such Service Cable Subscriber. When the Service is sold to a
Service Cable Subscriber in combination with other services (excluding a package
which includes the Base Service) for a package charge (as, for example, in a
tier or in a package of a la carte or other services), the Gross Receipts
attributable to a Service Cable Subscriber for the Service shall be equal to the
total charge for the tier or package of services sold in combination with the
Service, multiplied by a fraction, the numerator of which is the a la carte
retail price for the Service, and the denominator of which is the numerator plus
the aggregate of the a la carte rates charged for each of the other services
including in the tier or package; provided, however, that the amounts charged to
Affiliate for each of the services in the package or tier shall not be disclosed
by Affiliate to Network but, at Network's request, in order to assure Network of
compliance with this provision, Affiliate shall make such charges and any
pertinent calculations available to a representative of KPMG Peat Marwick (which
representative is neither Network's nor Affiliate's) on a confidential basis, at
Network's cost. This provision shall survive termination or expiration of this
Agreement. Affiliate shall pay a Service Satellite Fee to Network in the
following amounts for each Service Satellite Subscriber, based on the
subscription term purchased by such Satellite Subscriber, regardless of whether
such Service Satellite Subscriber purchases the Service alone, as an a la carte
service or as part of a tier or package of a la carte or other services and
regardless of the Gross Receipts attributable thereto:
Service Satellite Fee
Per Service Satellite
Service Term Subscriber
------------ ----------------------
1 Month *****
3 Months *****
6 Months *****
1 Year *****
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Notwithstanding the foregoing, if the Service is sold in combination with the
Base Service to Service Cable Subscribers or Service Satellite Subscribers,
Service Cable Fees and Service Satellite Fees shall be paid in accordance with
Section 5 of the Affiliation Agreement dated as of November 1, 1992 between
Spice, Inc. and Satellite Services, Inc. (the "Base Agreement"), as amended, and
no Service Cable Fees or Service Satellite Fees shall be payable hereunder,"
d. Section 5(b)(iii) of the Agreement is hereby amended to read in
its entirety as follows:
"(iii) The Service Cable Fees and Service Satellite Fees
payable by Affiliate to Network hereunder shall be due and payable forty-five
(45) days after the end of the calendar month to which they relate. In the event
that the Service is sold to Service Satellite Subscribers for a term greater
than one month, the Service Satellite fees payable with respect to such Service
Satellite Subscriber shall be due and payable forty-five (45) days after the end
of the calendar month in which delivery of the Service to such Service Satellite
Subscriber commences; provided that if Affiliate does not receive full payment
for a term (or gives a credit), Affiliate shall receive a like credit against
the Service Satellite Fees."
e. Section 5(c)(i) of the Multiplex Agreement is hereby amended to
read in its entirety as follows:
"(c) PPV
(i) For each customer of Affiliate who receives and pays for
one (l) complete and technically satisfactory viewing of one viewing segment of
the Service as a PPV service as a PPV Cable Subscriber, Affiliate will pay
Network a PPV Cable Fee in an amount equal to the greater of, (A) (i) ***** for
orders taken from the date of full execution hereof through February 28, 1996,
(ii) ***** for orders taken from March 1, 1996 through October 31, 1998 (iii)
***** for orders taken from November 1, 1998 through October 31, 2001 and (iv)
***** for orders from November 1, 2001 through the end of the Initial Term, or
(B) the Network Share of the Gross Receipts paid by such PPV Cable Subscriber.
For purposes of this subparagraph, "Network Share" shall equal the following
percentage of the Gross Receipts paid by each PPV Cable Subscriber: ***** from
the date of execution of this Agreement by both parties hereof through February
28, 1996; ***** from March 1, 1996 through October 31, 1998; and ***** from
November 1, 1998 through the end of the Initial Term. For each customer of
Affiliate who receives and pays for one (1) complete and technically
satisfactory viewing of one viewing segment of the Service as a PPV service as a
PPV Satellite Subscriber, Affiliate will pay Network a PPV Satellite Fee in an
amount equal to ***** of the Gross Receipts paid by such PPV Satellite
Subscriber.
Notwithstanding the foregoing, each System and each Satellite distributor shall
have the right to discount the price of a PPV viewing of the Service during the
first thirty (30) days after the launch of the Service in such System or by such
Satellite distributor, respectively, and during no more than two (2) ten (10)
day periods each calendar year. For orders taken during such first thirty (30)
days and during each such ten (10) day period, Affiliate shall be required to
pay to Network minimum PPV Satellite Fees or PPV Cable Fees (as the case may be)
of ***** per each complete and technically satisfactory viewing of a viewing
segment of the Service as a PPV
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<PAGE>
service, rather than the minimum PPV Satellite Fees or PPV Cable Fees specified
in this Section 5(c)(i). Furthermore, there shall be no PPV Satellite Fee or PPV
Cable Fee (as the case may be) payable by Affiliate to Network for any PPV
viewing of the Service by a subscriber who pays for such viewing by remitting a
coupon provided by Affiliate or by an affiliate of Affiliate to subscribers that
have not ordered a PPV movie or event in the six (6) months immediately
preceding the issuance of such coupon.
Notwithstanding the foregoing, if the Service is sold in combination with the
Base Service to PPV Cable Subscribers or PPV Satellite Subscribers, PPV Cable
Fees and PPV Satellite Fees shall be paid in accordance with the Base Agreement,
as amended, and no PPV Cable Fees or PPV Satellite Fees shall be payable
hereunder. In addition, if in any month Minimum Average PPV Fees are due in
accordance with Section 5(c)(i) of the Base Agreement, no PPV Cable Fees shall
be due and payable hereunder for such month under this Agreement with respect to
PPV Cable Subscribers."
f. Section 5(d) of the Multiplex Agreement is hereby deleted in its
entirety.
g. Section 5 of the Multiplex Agreement is hereby amended by the
addition of the following new Section 5(j):
"(j) Notwithstanding anything contained in this Agreement to
the contrary, the retail price of the Service charged to a Service Cable
Subscriber, a PPV Cable Subscriber, a Satellite Service Subscriber, or a PPV
Satellite Subscriber shall not exceed the standard retail price (exclusive of
special promotions) charged by such System or Satellite distributor in the same
month to a Service Cable Subscriber, a PPV Cable Subscriber, a Satellite Service
Subscriber, or a PPV Satellite Subscriber (as the case may be and as those terms
are defined in the Base Agreement) receiving the Base Service; provided,
however, that this paragraph shall apply only if such System or Satellite
Distributor has rights to exhibit, distribute, subdistribute or authorize the
reception of the Base Service."
h. Section 7(a)(ii) of the Multiplex Agreement is hereby
deleted in its entirety.
i. Exhibit B of the Multiplex Agreement is hereby replaced by
Exhibit B-1 attached hereto.
j. The parties shall execute such further documents (including
without limitation an Affiliation Agreement in the same form as the Multiplex
Agreement as described herein) to give effect to this paragraph.
14. This Amendment, the Agreement, and the Multiplex Agreement shall be
construed and enforced to give effect to each provision hereof and thereof. Any
reference in the Agreement to itself, or in this Amendment to the Agreement,
shall be deemed a reference to the Agreement as modified and amended hereby,
unless otherwise stated. The Agreement, as so modified and amended, shall be and
remain in full force and effect.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.
SPICE, INC.,
a New York corporation
By: /s/ Steven Saril
----------------------------------
Name: Steven Saril
--------------------------------
Title: Executive Vice President
-------------------------------
Sales and Marketing
AGREED:
Satellite Services, Inc.,
a Delaware corporation
By: /s/ Jedd S. Palmer
--------------------------------
Name: Jedd S. Palmer
Title: Vice President, Programming
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