Agreement - Spice Networks Inc. and Satellite Services Inc.
[Satellite Services Inc. Logo] December 18, 1997 MAILING ADDRESS:
Post Office Box 5630
Denver, CO, 80217-5630
(303) 267-5500
Mr. Steve Saril
President
Spice Networks
536 Broadway, 7th Floor
New York, NY 10012
Dear Steve:
This letter confirms our agreement that effective October 1, 1996, the Fees
payable for PPV Digital Cable Subscribers for Spice or both Spice and The Adam &
Eve Channel ("AEC") (together, the "Spice Networks") in each System where Spice
or the Spice Networks are distributed via the digital platform operated by
National Digital Television Center, Inc., d/b/a Headend in the Sky ("HITS")
shall in no event collectively exceed, for such Systems, an amount (the
following are referred to as the "Rate Caps") equal to: (1) ***** per month per
Digital Addressable Subscriber if one or both of the Spice Networks are the only
adult Channel(s) carried on such System, or (2) ***** per month per Digital
Addressable Subscriber if one or both of the Spice Networks are not the only
Adult Channel(s) carried on such System. A "Digital Addressable Subscriber"
shall mean an Addressable Subscriber in a System who receives television
programming from HITS in a digital format utilizing equipment through which such
Addressable Subscriber can also receive a digital PPV viewing segment of one or
both of the Spice Networks. A "PVC Digital Cable Subscriber" is a Digital
Addressable Subscriber who is a PPV Cable Subscriber, and who purchases a
viewing segment of one or both of the Spice Networks from a HITs provided
signal. An "Adult Channel" shall mean a cable television programming service or
channel where a majority of the programming regularly consists, during the hours
of ***** system local time, of sexually explicit adult-oriented programming,
similar to Playboy TV, AdultVision, Spice, AEC, Spice Hot or more explicit adult
programming. In clarification of the foregoing, Action PPV, Request 5, Hot
Choice, or any similarly themed PPV service shall not constitute an Adult
Channel, unless such channel changes its format to a format substantially
similar to that of an Adult Channel.
The availability of the Rate Caps are conditioned upon (i) the aggregate license
fees payable to Spice by SSI for both analog and digital distribution of the
Spice Networks in any month are no less than ***** of the Baseline; (ii) AEC
being included in the HITS programming lineup; and Spice being included in the
primary transponder grouping known as *****; and (iii) HITS *****
<PAGE>
Mr. Steve Saril
December 18, 1997
Page 2
to Spice for the Spice Networks, or Spice having otherwise agreed to terms of
carriage with HITS. If after the date hereof, the number of Addressable
Subscribers in Systems is increased or decreased from the number of Addressable
Subscribers in such Systems as of the date hereof (the "Baseline Subs"), the
Baseline shall be adjusted for any month to an amount equal to the Baseline
multiplied by a fraction, the numerator of which is the number of Addressable
Subscribers in such Systems in such month, and the denominator of which is the
Baseline Subs.
The "Baseline" shall mean an amount equal to the average monthly amount due to
Network under the Affiliation Agreement dated as of November 1, 1992 between
Network and SSI ("the Affiliation Agreement") for the months of October,
November, and December, 1997. Capitalized terms in this letter agreement shall
have the same meaning as the definitions of such terms in the Affiliation
Agreement, which, as amended, shall remain in full force and effect.
Sincerely,
SPICE NETWORKS, INC.
By: /s/ Steve Saril
Steve Saril
President
ACCEPTED AND AGREED TO:
SATELLITE SERVICES, INC.
By: /s/ J. Hinderg
Name:
Title: