Affiliation Agreement - Playboy Entertainment Group Inc., Spice Entertainment Inc., Spice Hot Entertainment Inc. and Time Warner Cable Inc.
AFFILIATION AGREEMENT
THIS AFFILIATION AGREEMENT (the "Agreement") dated as of July 8, 2004
(the "Effective Date") is by and between PLAYBOY ENTERTAINMENT GROUP, INC.,
SPICE ENTERTAINMENT, INC., and SPICE HOT ENTERTAINMENT, INC., all of which are
Delaware corporations (collectively, "Network"), and TIME WARNER CABLE INC., a
Delaware corporation ("Affiliate").
The parties, intending to be legally bound, hereby agree as follows:
1. CERTAIN DEFINITIONS AND REFERENCES
(a) Certain Definitions. As used herein, the following terms have
the meanings indicated:
"Available Window" shall mean the period of time during which a VOD
Program (as defined in Section 2(a)) is licensed to Affiliate for transmission,
distribution and exhibition on a Video-on-Demand (as defined below) basis, which
period of time shall be specified in each VOD Schedule (as defined in Section
5(a)), but in any event shall be at least thirty (30) days. The Available Window
may be extended by Affiliate for a twenty-four (24) hour period after the End
Date (as defined below).
"Cable Technology" means the delivery of video programming by
coaxial, fiber-optic or other type of cable or other method of delivery, other
than via an Internet Web Site or World Wide Web. Notwithstanding the foregoing,
the use of IP technology or any other technology now existing or developed in
the future to deliver video programming shall not be prohibited if and for so
long as such use of IP technology or other technology employs a conditional
access and control method under the control of Affiliate or other Time Warner
Company, and that has been commercially-adopted by Affiliate or such other Time
Warner Company, for delivery of cable programming services to a set-top box or
other Affiliate-authorized reception device or equipment.
"End Date" shall mean the last day of the Available Window with
respect to a particular VOD Program.
"Internet" means the global network of interconnected computer
networks, each using the Transmission Control Protocol/Internet Protocol
(TCP/IP) (and/or such other standard network interconnection protocols (e.g.,
WAP) as may be adopted from time to time) that is used to transmit content that
is directly or indirectly delivered to a computer, television, set top box,
wireless application or other digital electronic device for display to an
end-user, and that is delivered through any means, including without limitation
online browsers, commercial online services, offline browsers (a browser that
allows users to access a site without requiring an online
1
<PAGE>
connection), push technology or electronic mail, whether through telephone
networks, cable networks, satellite transmissions, wireless transmissions or
otherwise.
"Internet Web Site" means a site located on the Internet that is
accessible to the general public by means of the World Wide Web and a derivative
Uniform Resource Locator address.
"Linear Service(s)" means the Playboy TV Service, the Playboy TV En
Espanol Service and each Spice Service.
"Net Revenue" means gross revenue accrued by a System (as defined
below), less any refunds, credits or chargebacks provided by such System.
*****
"Operating Area" means that geographic area within which a System is
(if required) authorized by the appropriate governmental agency, authority or
instrumentality to operate an audio or video distribution facility and is
operating or is obligated to operate or become operational.
"Other Distribution Methods" means satellite master antenna
television systems ("SMATVs"), multipoint distribution services ("MDSs"), and
multichannel multipoint distribution services ("MMDSs").
"Pay Per View Purchase" means the purchase of the Service by, and
the delivery to, a Subscriber via a System on a transactional "per title" basis,
"per day" basis or a daily "block basis" (i.e., a three, six, or twelve hour
block of time).
"Playboy TV En Espanol Service" means the adult entertainment
premium linear pay television programming service currently known as "Playboy TV
En Espanol," as more fully described in Section 4(c) below.
"Playboy TV En Espanol SVOD Service" means the SVOD (as defined
below) version of the Playboy TV En Espanol Service, as more fully described in
Section 4(d) below.
"Playboy TV Service" means the adult entertainment premium linear
pay television programming service as more fully described in Section 4(a)
below.
"Playboy TV SVOD Service" means the SVOD (as defined below) version
of the Playboy TV Service, as more fully described in Section 4(b) below.
"Program" means an individual full motion audiovisual film, event or
other program.
2
<PAGE>
"Services" means, collectively, the following services: the Playboy
TV Service, the Playboy TV En Espanol Service, the Playboy TV SVOD Service, the
Playboy TV En Espanol SVOD Service, the Spice Services and the VOD Package
Service(s).
"Spice Services" means the adult entertainment premium linear pay
television programming services currently known as "Spice," "Spice 2," "Spice
Live," Spice Hot," "Hot Network," "Hot Zone," "Spice Ultimate," "A Taste of
Spice," "Spice HD," and any additional Spice Services each, as more fully
described in Section 4(e) below.
"Subscriber" means a person or entity capable of receiving a Service
distributed via a System hereunder, excluding any commercial establishment or
facility that charges an admission fee, cover charge, minimum or like sum.
"Subscription Purchase" means the purchase of a Service by, and the
delivery of such Service to, a Subscriber via a System on a monthly (or other
periodic) subscription basis and/or any other basis that does not constitute a
Pay Per View Purchase or VOD Purchase (as defined below).
"Subscription Purchaser" means a Subscriber who makes a Subscription
Purchase.
"Subscription Video on Demand" or "SVOD" means an offering of
Programs made available on a Subscription Purchase basis (for or without an
additional charge), which Programs are made available to Subscription Purchasers
on a VOD basis.
"SVOD Services" means, collectively, the Playboy TV SVOD Service and
the Playboy TV En Espanol SVOD Service.
"System" means a Time Warner Cable System that is owned or managed
by a Time Warner Company (as defined herein) and distributes a Service, as
evidenced by the monthly reports submitted to Network pursuant to Section 9(a).
*****
"Video-On-Demand" or "VOD" means the transmission and exhibition of
a Program to a set-top box, DVR, PVR (as each such term is generally used in the
cable television industry) or such other receiving equipment provided or
authorized by Operator, at a Subscriber's request in a manner such that the
transmission of such Program may occur immediately or almost immediately upon
such Subscriber's request and not pursuant to a prescribed schedule.
"VOD Compatible" shall mean to be compatible with and meet the
industry standard specifications for encoding programs and meta data files for
VOD distribution, which specifications as of the date first set forth above are
acknowledged to be Cable Laboratories ("CL") VOD 1.1 specifications, but which
specifications may change from time to time during the Term to
3
<PAGE>
meet the industry standard specification, so long as such change is generally
being made in the cable television industry and has been adopted by Affiliate.
"VOD Purchase" means each purchase by a Subscriber of a Program
offered on a VOD basis (but expressly excluding Subscription Purchases of any
SVOD Service).
"VOD Package Service" means each package of not less than *****
Programs and not more than *****, in the aggregate, of Programs that Network
provides to Affiliate for distribution to Subscribers on a VOD basis, as more
fully described in Section 4(f) below. Network may, from time to time, offer
Affiliate a package of Programs that includes fewer than ***** or that exceeds,
in aggregate, *****, and, if approved by Affiliate in writing, such package of
Programs shall be deemed a VOD Package Service hereunder.
"VOD Services" shall mean, collectively, the Playboy TV SVOD
Service, the Playboy TV En Espanol SVOD Service and the VOD Package Services.
(b) Certain References. As used herein, references "person" shall
mean an individual or a corporation, partnership, joint venture, trust, joint
stock company, association, incorporated organization (including a group acting
in concert) or other entity.
2. RIGHTS
(a) Grant of Rights. During the Term, Network hereby grants to
Affiliate, and Affiliate hereby accepts from Network, the non-exclusive right
and license to receive the signal for each Service, to digitize, compress or
otherwise technologically manipulate the signal for each Service and to exhibit
and distribute each Service via Cable Technology to any Subscriber located in an
Operating Area and, additionally, via Other Distribution Methods, in any area of
a county in which an Operating Area is located and in any county adjacent to
such a county. During the Term, Network hereby grants to Affiliate (i) the
non-exclusive right and license to distribute the Programs offered as part of
the Playboy TV SVOD Service to Subscription Purchasers, the Playboy TV En
Espanol SVOD Service to Subscription Purchasers and each VOD Package Service to
Subscribers, each on a VOD basis (collectively, the "VOD Programs"), which shall
include the right and license to receive, decrypt, copy, or otherwise
technologically manipulate the VOD Programs to make them available to
Subscribers on a VOD basis and (ii) the non-exclusive right and license to copy
and store the VOD Programs in a digital form on any medium now or hereafter
available in order to (x) make such VOD Programs available to Subscribers on a
VOD basis, (y) to distribute such VOD Programs to multiple Subscribers, at any
given time, and (z) to deliver multiple streams of such VOD Programs from a
single copy. Affiliate's compression or other technological manipulation of a
VOD Program hereunder shall not have a material adverse impact on a viewer's
perception of such VOD Program. The fact that VOD Programs are compressed or
otherwise technologically manipulated in a manner such that they are VOD
Compatible shall not by itself be deemed to result in a material adverse impact
on a viewer's perception of such VOD Program. With respect to each VOD Program,
the license granted to Affiliate hereunder shall permit each Subscriber to view
4
<PAGE>
such VOD Program for an unlimited number of times within a twenty-four (24) hour
period (or any lesser period, as determined by Affiliate in its sole
discretion).
(b) Sublicense and Bulk Distribution Rights. During the Term,
Affiliate shall have the right to grant sublicenses hereunder to third-party
distributors of cable television programming or services via Other Distribution
Methods in an Operating Area, in any area of a county in which an Operating Area
is located and in any county adjacent to such a county. Each Service that is
distributed on a Subscription Purchase basis may be distributed by each System
on a bulk rate basis to multiple dwelling unit complexes, including without
limitation apartment complexes, condominiums, cooperatives, hotels and motels.
(c) Addition and Deletion of Systems. If a system first satisfies
the definition of a Time Warner Cable System after Affiliate's initial launch of
a Service in any System (an "Acquired System"), then any then-existing agreement
governing carriage of such Service between or among Network and any one or more
third parties applicable to any such Acquired System shall terminate and cease
to be effective with respect to such Acquired System as of the effective date of
the acquisition, and such Acquired System shall automatically be added as a
"System" hereunder and, if such Time Warner Cable System is the only or the last
remaining system to which such other affiliation agreement relates, such other
affiliation agreement shall terminate, and neither such deletion nor such
termination shall constitute or be deemed to cause a breach thereof or hereof.
3. TERM. The term of this Agreement shall commence on the Effective Date
and shall continue through *****. The term shall automatically renew for
successive one (1) year periods, commencing upon the expiration of the initial
term (in the case of the first renewal term) or the preceding renewal term (in
the case of any other renewal term) of this Agreement, unless (i) the initial
term or any renewal term of this Agreement shall have been terminated in
accordance with this Agreement prior to the expiration hereof or (ii) either
party shall have given written notice to the other party that this Agreement
shall not be renewed at least sixty (60) days prior to such expiration. The
"Term" of this Agreement shall refer to the initial term together with any
renewal terms thereof.
4. CONTENT OF THE SERVICES
(a) Playboy TV Services Description. Each Playboy TV Service is and
shall at all times during the Term be a 24-hour per day, 7-day per week,
professionally-produced, premium programming service that as of the Effective
Date consists of two (2) separate feeds of adult programming, currently known as
"Playboy TV Classic" and "Playboy TV Director's Cut." At all times during the
Term, (i) the "Playboy TV Classic" feed shall consist solely of adult films that
are acquired by Network that adhere to and comply, in all respects, with
Traditional Cable Edited Standards, and of other adult Programs that
5
<PAGE>
comply, in all respects, with a blend of the Traditional Cable Edited Standards
and the Partial Edited Standards (each as defined below); and (ii) the "Playboy
TV Director's Cut" feed shall consist solely of adult Programs, including adult
films licensed from third parties, all of which shall comply, in all respects,
with the Partial Edited Standards and Playboy TV original Programs, which shall
consist of a mix of Programs that comply, in all respects, with either the
Traditional Cable Edited Standards or the Partial Edited Standards. In no event
shall any of the programming contained in the Playboy TV Service exceed the
limitations imposed by, or otherwise be more explicit than programming that
complies, in all respects, with the Partial Edited Standards. "Traditional Cable
Edited Standards" shall mean the editing and content standards described in
Paragraph 1 of Exhibit B, attached hereto. "Partial Edited Standards" shall mean
the editing and content standards described in Paragraph 2 of Exhibit B, as
attached hereto. At all times during the Term, each Playboy TV Service feed
shall consist of programming similar, in all material respects, to that
described on the program schedules attached hereto as Exhibit C-1.
Notwithstanding the foregoing, the parties acknowledge that Network does not
intend to maintain and may, upon sixty (60) days' prior written notice to
Affiliate, discontinue transmission of the Playboy TV Classic feed after *****.
(b) Playboy TV SVOD Service Description. The Playboy TV SVOD Service
shall at all times during the Term mean the package, at any given time, of
Programs derived solely from the Playboy TV Service and made available by
Network to Affiliate for distribution on a SVOD basis, and, at any given time,
shall be comprised of a substantially similar relative mix of Programs compliant
with Traditional Cable Edited Standards and Partial Edited Standards as then
contained in the Playboy TV Director's Cut feed of the Playboy TV Service. In no
event shall the Playboy TV SVOD Service programming delivered to Affiliate
exceed the limitations imposed by, or otherwise be more explicit than
programming that complies, in all respects, with the Partial Edited Standards.
The Playboy TV SVOD Service shall consist of a minimum of ***** hours and a
maximum of ***** hours of VOD Programs a month. Each calendar month of the Term,
Network shall replace no less than ***** of the number of hours of VOD Programs
contained in the Playboy TV SVOD Service with new adult Programs (i.e. Programs
that have not previously been included as part of the Playboy TV SVOD Service).
(c) Playboy TV En Espanol Service. The Playboy TV En Espanol Service
is and shall at all times during the Term be a 24-hour per day, 7-day per week,
professionally-produced, premium programming service that consists solely of
Spanish language and/or Spanish-dubbed adult Programs, including adult films
licensed from third parties, all of which shall comply, in all respects, with
the Partial Edited Standards, and Playboy TV original Programs, which shall
consist of a mix of Programs that comply, in all respects with either the
Traditional Cable Edited Standards or the Partial Edited Standards. In no event
shall any of the programming contained in the Playboy TV En Espanol Service
exceed the limitations imposed by, or otherwise be more explicit than
programming that complies, in all respects, with the Partial Edited Standards.
At all times during the Term, the Playboy TV En Espanol Service shall consist of
programming similar in all material respects, to that described on the program
schedule attached hereto as Exhibit C-2.
(d) Playboy TV En Espanol SVOD Service Description. The Playboy TV
En Espanol SVOD Service shall at all times during the Term mean the package, at
any given time, of Programs derived solely from the Playboy TV En Espanol
Service and made available by Network to Affiliate for distribution on a SVOD
basis, and, at any given time, be comprised of a
6
<PAGE>
substantially similar relative mix of Programs compliant with Traditional Cable
Edited Standards and Partial Edited Standards as then contained in the Playboy
TV En Espanol Service. In no event shall the Playboy TV En Espanol SVOD Service
programming delivered to Affiliate exceed the limitations imposed by, or
otherwise be more explicit than programming that complies, in all respects, with
the Partial Edited Standards. The Playboy TV En Espanol SVOD Service shall
consist of a minimum of ***** hours and a maximum of ***** hours of Programs a
month. Each calendar month of the Term, Network shall replace no less than *****
of the number of hours of VOD Programs contained in the Playboy TV En Espanol
SVOD Service with new adult Programs (i.e. Programs that have not previously
been included as part of the Playboy TV En Espanol SVOD Service delivered to
Affiliate). It is acknowledged that the Playboy TV En Espanol SVOD Service is
not, as of the Effective Date, being transmitted by Network. *****.
(e) Spice Service(s). Each of the Spice Services shall comply, at
all times during the Term, with the following content descriptions, as
applicable:
(i) Spice Description. The Service known as "Spice" is a
24-hour per day, 7-day per week, professionally-produced premium programming
service that consists of adult Programs of the type, quality and genre of that
exhibited on such Service in April 2004, as shown in the programming schedule
attached hereto as Exhibit C-3, and that complies with Traditional Cable Edited
Standards.
(ii) Spice 2 Description. The Service known as "Spice 2" is a
24-hour per day, 7-day per week, professionally-produced premium programming
service that consists of adult Programs of the type, quality and genre of that
exhibited on such Service in April 2004, as shown in the programming schedule
attached hereto as Exhibit C-4, and that complies with Traditional Cable Edited
Standards.
(iii) Hot Network Description. The Service known as "Hot
Network" is a 24-hour per day, 7-day per week, professionally-produced premium
programming service that consists of adult Programs of the type, quality and
genre of that exhibited on such Service in April 2004, as shown in the
programming schedule attached hereto as Exhibit C-5, and that complies with
Partial Edited Standards.
(iv) Hot Zone Description. The Service known as "Hot Zone" is
a 24-hour per day, 7-day per week, professionally-produced, premium programming
service that consists of adult Programs of the type, quality and genre of that
exhibited on such Service in April 2004, as shown in the programming schedule
attached hereto as Exhibit C-6, and that complies with Partial Edited Standards.
(v) Spice Live Description. The Service known as "Spice Live"
is a 24-hour per day, 7-day per week, professionally-produced, premium
programming service that consists of adult Programs of the type, quality and
genre of that exhibited on such Service in April 2004, as shown in the
programming schedule attached hereto as Exhibit C-7, and that complies with
Partial Edited Standards.
7
<PAGE>
(vi) Spice Hot Description. The Service known as "Spice Hot"
is a 24-hour per day, 7-day per week, professionally-produced, premium
programming service that consists of adult Programs of the type, quality and
genre of that exhibited on such Service in April 2004, as shown in the
programming schedule attached hereto as Exhibit C-8, and that complies with
Partial Edited Standards.
(vii) Spice Ultimate Description. The Service known as "Spice
Ultimate" is a 24-hour per day, 7-day per week, professionally-produced, premium
programming service that consists of adult Programs of the type, quality and
genre of that exhibited on such Service in June 2004, as shown in the
programming schedule attached hereto as Exhibit C-9, and that complies with
Partial Edited Standards.
(viii) A Taste of Spice Description. The Service known as "A
Taste of Spice" is a 24-hour per day, 7-day per week, professionally-produced,
premium programming service that consists of adult Programs of the type, quality
and genre of that exhibited on such Service in April 2004, as shown in the
programming schedule attached hereto as Exhibit C-10, and that complies with
Traditional Cable Edited Standards.
(ix) Spice HD Description. The Service known as "Spice HD" is
a professionally-produced, premium programming service that consists of adult
Programs, all of which shall be transmitted in a high definition format (i.e., a
minimum resolution of 720p (1280 x 720 progressive) ("HD Format"), of the type,
quality and genre of that exhibited on such Service in April 2004, as shown in
the programming schedule attached hereto as Exhibit C-11, and that complies with
Partial Edited Standards.
(x) Additional Spice Services. Network shall provide Affiliate
with ninety (90) days' prior written notice of any additional Spice Service that
Network intends to develop and launch after the Effective Date (or, if the
circumstances do not permit such notice, as soon as reasonably practicable), and
together with such notice shall provide a description of such additional Spice
Service and a programming schedule for a one month period for such Service. None
of the programming contained in each additional Spice Service that Affiliate
elects to distribute and that is provided to Affiliate hereunder shall exceed
the limitations or otherwise be more explicit than programming that complies, in
all respects, with the Partial Edited Standards.
(f) VOD Package Service(s). Each VOD Package Service shall consist
at all times during the Term of a uniquely-branded package of not less than
***** adult Programs, each of which in no event shall exceed the limitation or
otherwise be more explicit than programming that complies with Partial Edited
Standards, the duration of which Programs, in aggregate, shall not exceed more
than *****. Each calendar month of the Term, Network shall replace no less than
***** of the Programs contained in each VOD Package Service with new adult
Programs (i.e. Programs that have not previously been included as part of any
VOD Package Service delivered to Affiliate). At all times during the Term,
Network shall provide to Affiliate no fewer than ***** VOD Package Services.
Network may make available to Affiliate additional VOD Package Services that
comply in all respects with the description set forth in the
8
<PAGE>
first sentence of this Section 4(f), for distribution to Subscribers on a VOD
basis. Further, Network may, from time to time, offer Affiliate a package of
Programs that includes fewer than ***** Programs or that exceeds, in aggregate,
***** and, if approved by Affiliate in writing, such package of Programs shall
be deemed a VOD Package Service hereunder. Network may change an End Date of a
previously scheduled VOD Program in the event of any third-party rights issues,
provided that Network makes the same change in End Date for such VOD Program
with respect to all other distributors distributing such VOD Program. Upon
receipt of a written request from Network for such a change in End Date, TWC
shall use commercially reasonable efforts to cease making available to
Subscribers any VOD Program that is the subject of such written request, within
twenty-four (24) hours after receipt of such request.
(g) General Restrictions. During the Term, none of the Services
shall include: (i) any "infomercials," as such term is commonly understood in
the cable industry or any programming constituting the direct on-air marketing
and sale of products; or (ii) any advertisements for "900" or "976" telephone
services, any other telephone services which bill a caller for placing or
confirming the call (other than for the telephone company's cost of the call).
At least thirty (30) days prior to the commencement of each calendar month
during the Term, Network shall provide a programming schedule for each Linear
Service (a "Schedule") to Affiliate, Attention: Programming Department. Network
shall use commercially reasonable efforts to create a Network-maintained
business-to-business web site (the "Web Site"), and upon the launch of such Web
Site shall provide notice thereof to Affiliate and make the Schedules available
to Affiliate via such Web Site. The selection, scheduling, substitution,
cancellation and withdrawal of programming included in each such Service, or any
portion thereof, shall at all times remain within the discretion and control of
Network, and Network shall have the right to change the content or format of the
programming of such Service at any time during the Term; provided, however,
that, at all times during the Term, the content of each such Service shall
comply in all respects with all applicable terms set forth in Sections 4(a)-(f).
Nothing contained in this Section 4(g) shall be construed to limit Network's
right to cablecast 800 and 900 numbers on any Service, for the purposes of
polling viewers, conducting contests or offering products and/or services
pursuant to Section 11(g) herein.
(h) Vertical Blanking Interval. Network acknowledges that all of the
signal distribution capacity contained within the bandwidth of the signal of
each Service, including the analog bandwidth and the appropriate equivalent
portion of the digital signal for such Service (including, without limitation,
any MPEG private data stream) (other than, in each case, traditional television
video and audio including stereo audio signals), including, without limitation,
the vertical blanking interval ("VBI") and audio subcarriers and any other
portions of the bandwidth that may be created or made useable as a result of the
digitization or compression or other non-analog formatting of the signal
(collectively, "Non-Traditional and VBI Signals"), is not essential to, or
necessary for, the delivery or distribution of such Service by Affiliate as
contemplated hereunder. Network agrees that any and all rights in and to any and
all Non-Traditional and VBI Signals and the use thereof are and will be held
exclusively by Affiliate and the Systems and that nothing contained herein shall
restrict Affiliate or the Systems from using any and all Non-Traditional and VBI
Signals by any means or for any purpose so long as such use does not materially
degrade or interfere with the quality of the principal video and audio
9
<PAGE>
signal of the applicable Service. Notwithstanding the foregoing, for each
service distributed by a System, Affiliate shall distribute (x) the primary
video and accompanying audio of such Service and (y) the following
Non-Traditional and VBI Signals contained within the signal of such Service to
Subscribers: (i) closed-captioning for the hearing impaired for the programming
then being transmitted, (ii) up to one (1) second language audio for the
programming then being transmitted, (iii) program content advisory materials for
the programming then being transmitted, (iv) program identification codes for
the programming then being transmitted, used by Nielsen Media Research in the
preparation of program ratings, that Affiliate is required to carry for full
power television broadcast stations entitled to carriage under Section 76.56 of
the Rules and Regulations of the Federal Communications Commission ("FCC"), (v)
data or information that the FCC or other applicable law or regulation requires
either Network or Affiliate to transmit at any time, and (vi) with respect to
each VOD Service, Metadata Files (as defined in Section 5(b)) for each VOD
program developed as part of such Service (the Non-Traditional and VBI Signals
set forth in clauses (i) through (vi) are collectively referred to as "Required
Materials"); provided, that in each case there shall be no fee or other
consideration due from Subscribers, Affiliate or any System in respect of the
Required Materials other than the Fees (as defined in Section 8(a)). Network
represents, warrants and covenants that, except as expressly provided herein,
nothing other than the video and accompanying principal audio signals of each
Service and the Required Materials are necessary for the delivery and
distribution of such Service to Subscribers in Time Warner Cable Systems as
contemplated under this Agreement. Notwithstanding the forgoing, the signal
distribution capacity contained within the bandwidth of the signal of each
Service between Network's transmission point and Affiliate's Systems' headends
or other first downlink facilities shall belong exclusively to Network.
(i) No Embedding. Notwithstanding any other provision of this
Agreement, but subject to the obligation to carry the principal video and
accompanying audio signals, for each Service, Affiliate shall not be obligated
to distribute any material, information, data, images, sounds or features
contained or embedded in or around any portion of the feed (whether analog or
digital) provided to Affiliate (for each Service, the "Signal") that is not
Required Material or part of the principal video and accompanying audio signals
for such Service. Network agrees that, for each Service, it shall not embed any
material or information into or around any portion of the Signal that cannot be
removed, blocked or deleted by all of the Systems using equipment then-existing
and available in such Systems (which is expressly permitted hereunder and, in
respect of which, Network agrees to provide Affiliate such reasonable assistance
and information as Affiliate may request) and, then, only so long as such
removal, blockage or deletion will not remove, block, interfere with or impede
in any way the principal video and accompanying audio signals for any Service or
any of the Required Materials. Notwithstanding the foregoing for each Service,
Network agrees that it shall not in any event embed any material, information,
data, images, sounds or features into or around any portion of the Signal that
resides in line 21 or such other line of the VBI (or its digital equivalent) in
which any Required Material is transmitted or which would in any detectable
manner impede, interfere with or degrade the function of any hardware, software,
firmware or any other equipment or devices then in use by Affiliate. Network
represents and warrants with respect to each Service, that, other than the
Required Material, it is not currently engaged in any such embedding and agrees
to provide to Affiliate (i) ninety (90) days' prior written notice of its
intention to embed any information in or around the
10
<PAGE>
Signal prior to the commencement of such embedding (or, if due to reasons beyond
the reasonable control of Network, the circumstances do not permit such notice,
as soon as reasonably practicable); (ii) prompt written notice of its actual
embedding of any information in or around the Signal; and (iii) prompt written
notice of its movement of any information already embedded in the Signal, which
notice shall describe with specificity the information Network intends to so
embed, has embedded or has moved, as the case may be, and the technical
placement of such information within the Signal. Network further represents and
warrants that it is not using, and covenants and agrees that during the Term it
shall not use, any part of Affiliate's or any System's physical plant for a
return path for any reason whatsoever, including without limitation, for any
"trigger" or signal related to such embedded information.
(j) Services Provided in Entirety. During the Term, Network shall
provide each of the Services in its entirety to Affiliate. When the phrase "in
its entirety" is used in this Section 4(j) with respect to Linear Services, it
means that each Subscriber of Affiliate receiving the Linear Service shall be
able to receive, at all points in time, programming received at each such point
in time by any other subscriber to the Linear Service, and if any subscriber to
the Linear Service is receiving, at a given point in time, programming that is
different than the programming received by any Subscriber of Affiliate receiving
the Linear Service at such point in time, Affiliate shall have the unconditional
right to elect which of such programming it desires to receive and utilize at
any System, which programming it desires to subdistribute as permitted by this
Agreement, and/or which programming it will authorize for reception by satellite
subscribers who are customers of Affiliate or an affiliate of Affiliate. Without
limiting the generality of the foregoing, Network shall not "black out" any
Linear Service programming in any System, and none of the Linear Services shall
include any programming for which Network seeks a surcharge fee. Affiliate shall
have the right hereunder to distribute, and Network shall provide to Affiliate,
any and all additional feeds of each Linear Service (including without
limitation any additional time zone feed, SAP feed and/or HD Format feed) on any
tier or level of service and at no additional cost. For purposes of
clarification, any Subscriber receiving multiple feeds of a Linear Service shall
be counted as only one Subscriber of such Linear Service. When the phrase "in
its entirety" is used in this Section 4(j) with respect to the VOD Services, it
shall mean that, with respect to each VOD Service, Network shall make available
to Affiliate, under the terms and conditions herein, any national model of VOD
Program offerings being made available to any other distributors of such VOD
Service. Notwithstanding anything in this Section 4 to the contrary, Network
shall deliver to Affiliate two versions of each VOD Package Service to be
delivered hereunder, one edited pursuant to Traditional Cable Edited Standards
and the other edited pursuant to Partial Edited Standards.
(k) High Definition Programming. Network shall provide to Affiliate,
no later than sixty (60) days following each such HD Program's initial
exhibition on any Service, no fewer than ***** (i.e. HD Programs that have not
previously been provided for delivery to Subscribers on a VOD Purchase basis)
Programs produced, transmitted and/or exhibited in HD Format (each, an "HD
Program") per month during the Term to make available to Subscribers on a VOD
Purchase basis, and hereby grants to Affiliate the non-exclusive right to
exhibit and distribute each such HD Program to its Subscribers on a VOD Purchase
basis. Notwithstanding the foregoing, the parties acknowledge and agree that
Network has granted the exclusive rights to
11
<PAGE>
distribute Playboy TV Service Programs that are produced in an HD Format
("Playboy HD Programs") to another distributor of the Services for the period
through and including ***** (the "Exclusivity Period"). Network shall have no
obligation to provide Affiliate with such Playboy HD Programs during such
Exclusivity Period, unless Network provides the Playboy HD Programs to any
additional distributor, in which case Network shall give prompt written notice
thereof to Affiliate, and at Affiliate's election Network shall provide the
Playboy HD Programs to Affiliate from the date on which Network provides the
Playboy HD Programs to such additional distributor. Provided that, at the
expiration of the Exclusivity Period, Network has renewed such exclusive grant
of rights (or granted another distributor of the Services the exclusive rights
to distribute such Playboy HD Programs) (a "Renewal"), Network shall continue to
have no obligation to provide Affiliate with such Playboy HD Programs, through
such Renewal period. In no event shall any HD Program delivered to Affiliate or
any System hereunder exceed the limitation or otherwise be more explicit than
programming that complies with Partial Edited Standards.
(l) Non-Conforming Programming. If for any reason, including without
limitation causes beyond the control of Network, Affiliate determines that any
Service's programming is not in compliance with the applicable provisions of
Sections 4(a) through (g), and Network has failed to cure such non-compliance
within ten (10) days of written notice ("cure period") from Affiliate of such
non-compliance, Affiliate may, at its option, discontinue carriage of such
Service on any or all Systems and delete such System or Systems from this
Agreement with respect to such Service, effective at any time by giving Network
thirty (30) days' prior written notice. Affiliate reserves the right to delete
any Program(s) from such Service or cease carriage of such Service during the
cure period.
(m) Customized Services. Affiliate may request, from time to time,
the creation and delivery by Network of customized Linear Services and/or VOD
Services comprised of adult Programs of one or more genres of adult programming,
provided however, that (subject to the terms set forth in the third sentence of
Section 4(k)) Network shall not be required to include any Playboy HD Programs
in any customized Linear and/or VOD Services during any Exclusivity Period or
Renewal thereof. Upon receipt of such request, Network shall develop such
customized programming service ("Customized TWC Service"). In the event that
Network would incur material costs and expenses to create such Customized TWC
Service, Network shall notify Affiliate in writing thereof, and the parties
shall discuss, in good faith, the terms and conditions governing the creation of
such Customized TWC Service. In the event that Network creates and delivers a
Customized TWC Service hereunder, Network shall provide to Affiliate at least
the same number of minutes for promotional spots for the promotion of
Affiliate's products and services ("Promotional Spots") that Network provides to
any other distributor of a customized service, but no less than ***** of such
Promotional Spots. Affiliate shall deliver to Network the Promotional Spots in a
mutually agreed upon format and Network shall integrate such Promotional Spots
into the feed for the Customized TWC Service, which Promotional Spots shall be
reasonably evenly distributed throughout such Customized TWC Service.
Notwithstanding anything in Section 4(j) to the contrary, if Network has created
(or intends to create) a customized programming service and is distributing (or
intends to distribute) such customized programming service to any other
distributor of multichannel video programming
12
<PAGE>
services (a "Third Party Customized Service") and Affiliate does not, at the
time of such delivery, receive such Third Party Customized Service, Network
shall not be deemed in breach of Section 4(j); provided however that Network has
provided Affiliate notice of such Third Party Customized Service and offered to
Affiliate a similar customized service, and Affiliate has, at the time of
determination, elected not to carry such service.
5. VOD PROGRAMS
(a) Selection of VOD Programs. For each VOD Package Service that
Affiliate intends to launch, Network shall provide to Affiliate or its designee,
no later than ninety (90) days prior to such intended launch, a schedule
containing a list and description of the Programs that will be included in such
VOD Package Service(s) and which conform to the applicable content description
set forth in Section 4(f) above, in the form attached hereto as Exhibit D ("VOD
Schedule"). Network shall provide each VOD Schedule for each month thereafter no
later than sixty (60) days prior to the applicable month. Network may, upon
notice to Affiliate, provide VOD Schedules via the Web Site. The title (i.e.,
the name and/or metadata) of each Program included in each VOD Schedule must be
acceptable to Affiliate. Within thirty (30) days of receipt of each VOD
Schedule, Affiliate shall notify Network of the titles of such Programs that
Affiliate rejects from such VOD Schedule, and Network shall work in good faith
with Affiliate to modify such titles in a manner that is mutually agreeable to
the parties. In the event that the parties do not mutually agree to a title for
any given Program, Network shall promptly provide to Affiliate supplemental
lists of adult feature Programs from which Affiliate may select Programs to be
included on the VOD Package Services, until such time as the total number of
hours of Programs selected by Network is equal to or greater than twenty (20).
If Affiliate provides no notice of its rejection of any Program titles, Network
shall deliver all the Programs on the VOD Schedule pursuant to Section 5(b).
(b) Delivery of VOD Programs. At least thirty (30) days prior to the
first day of the calendar month to which a VOD Schedule applies, Network shall,
at Network's sole cost and expense, encode each VOD Program to be VOD
Compatible. With respect to each such VOD Program, Network shall deliver, in
accordance with Section 6(a), a package of files consisting of the primary video
and accompanying audio, and any Required Material thereto, for each such encoded
VOD Program, and (ii) metadata for such VOD Program prepared in accordance with
the CL VOD 1.1 specifications (for each VOD Program, a "Metadata File").
6. DELIVERY AND DISTRIBUTION OF THE SERVICE
(a) Transmission and Reception of the Services. Network shall, at
its expense, (i) transmit a digital signal for each Service via a domestic
communications satellite(s) commonly used for transmission of cable television
programming signals, and (ii) fully encode and scramble the satellite signal for
each of those Services using technology, standards, practices and procedures
which are generally accepted throughout the cable television industry. As of the
Effective Date, each Service will be delivered via the applicable satellite
designated in Exhibit E attached hereto. Network shall deliver each VOD Program,
in accordance with Section 5(b), to the entity listed on Exhibit F attached
hereto or such other designee as mutually agreed upon by
13
<PAGE>
the parties, such agreement not to be unreasonably withheld ("Affiliate
Designee") or via such other delivery method as may be mutually agreed upon by
the parties. Subject to the provisions of Sections 6(b) and (c), Affiliate shall
provide and operate or cause to be provided and operated all equipment and
facilities (including earth stations and decryption devices) necessary as of the
date a Service is launched by a System for the reception of such signal and the
distribution of such Service's signal to such System's Subscribers. Network
represents that no facilities or equipment are necessary for such reception and
distribution which a cable television system operator would not otherwise use in
connection with the reception and distribution of satellite signals transmitted
by most widely distributed cable television programming.
(b) Change in Satellite. If Network proposes to change the satellite
via which the Signal for any of the Services other than VOD Services is
transmitted to a satellite different from that via which it is then presently
transmitted, Network will give at least one hundred eighty (180) days' (or, if
due to reasons beyond Network's reasonable control, the circumstances do not
permit such notice, as soon as reasonably practicable) prior written notice to
Affiliate, provided however that Affiliate acknowledges that a force majeure
event (as described in Section 12) may prevent Network from providing the
foregoing notice, in which event Network shall provide as much advance notice as
is reasonably practicable. If, in order to receive a Service after such change,
any System would incur expenses for additional satellite reception equipment,
Network shall, at Network's sole and absolute discretion, within thirty (30)
days after receiving written notice from Affiliate to the effect that such
System would incur such expenses, either (i) reimburse such System for such
expenses, or (ii) provide to such System, at Network's sole cost and expense,
such additional satellite transmission reception equipment as is necessary to
enable Affiliate to receive the applicable Service(s) after such change.
(c) Change in Encryption Method or Digitization. If Network proposes
to change the method via which the Signal for any of the Services are encoded,
scrambled or digitized to a method different from that via which it is presently
encoded, scrambled or digitized, Network will give at least one hundred eighty
(180) days' (or, if due to reasons beyond Network's reasonable control, the
circumstances do not permit such notice, as soon as reasonably practicable)
prior written notice to Affiliate and Network shall provide to each System, at
Network's sole expense, any additional decryption equipment, provided however,
that if Network fails to provide such additional decryption equipment to a
System or a System would incur expenses for additional digitization equipment in
order to continue to receive a Service after such change, Network shall, at
Network's sole and absolute discretion, within thirty (30) days after receiving
written notice from Affiliate to the effect that such System would incur such
expenses, (i) reimburse such System for such expenses, or (ii) provide to such
System, at Network's sole cost and expense, such decryption and/or other
equipment as is necessary to enable Affiliate to receive and distribute the
applicable Service(s) in accordance with the terms of this Agreement after such
change.
(d) Other Technological Changes. Except as otherwise provided in
Sections 6(b) and 6(c), Network shall not materially change the technology,
standards, practices or procedures utilized in connection with the delivery of
the Services unless such change is generally being made in the cable television
industry.
14
<PAGE>
(e) Service Signal Quality. Network shall deliver to each System a
video and audio signal for each Service of a quality at least as high as the
quality of the video and audio signal delivered with respect to other widely
distributed adult entertainment pay cable television programming. Without
limiting the generality of the preceding sentence, Network shall deliver to each
System a video and audio signal for each Service that meets or exceeds all
applicable standards under any applicable federal or state law, rule, regulation
or order.
(f) Carriage. Systems that distribute any of the Services shall do
so in accordance with the following:
(i) Each System that distributes the Playboy TV Service will
distribute such Service on a full-time basis and may distribute such Service on
a Subscription Purchase basis and/or Pay Per View Purchase basis.
(ii) Each System that distributes the Playboy TV En Espanol
Service will distribute such Service on a full-time basis and may distribute
such Service on a Subscription Purchase basis, Pay Per View Purchase basis
and/or as part of a package or tier of Spanish-language or bilingual programming
services (a "Spanish Language Package"). Subscribers who receive a Spanish
Language Package shall be known as "Spanish Language Package Subscribers."
(iii) Each System that distributes a Spice Service will
distribute such Service on a full-time basis and may distribute such Service on
a Pay Per View Purchase basis.
(iv) Each System may distribute each VOD Package Service on a
VOD basis only. Each System carrying a VOD Package Service hereunder may make
the VOD Programs that comprise such VOD Package Service accessible to
Subscribers, in its discretion, (i) via a virtual channel dedicated to such VOD
Package Service or via any other branded entry point that is identified by the
applicable VOD Package Service title or brand (such channel or entry point, a
"Branded Entry Point"); and/or (ii) aggregated together with other adult
programming via other entry points (e.g., via alphabetical listings, listings by
genre). Affiliate agrees to consider in good faith genre descriptions for the
programs that will appear on the Adult Portal.
(v) Playboy TV SVOD may only be distributed to those
Subscribers that receive the Playboy TV Service on a Subscription Purchase
basis. Affiliate may make the Playboy TV SVOD Service available to Subscribers
for or without an additional charge.
(vi) Playboy TV En Espanol SVOD may only be distributed to those
Subscribers that receive Playboy TV En Espanol on a Subscription Purchase basis
and to Spanish Language Package Subscribers. Affiliate may make the Playboy TV
En Espanol SVOD Service available to Subscribers for or without an additional
charge.
15
<PAGE>
(g) Packaging; Channel. Each System that elects to distribute a
Service hereunder may package the Service with other premium services. Affiliate
(or the Systems) will have exclusive right to designate the channel(s) over
which each Service will be carried and will have the right to change such
designation from time to time and at any time. The packaging of any Service
shall be subject to the payment of Fees in accordance with Section 8 and the
minimum payment amounts stated therein from each Service. For purposes of
calculating the Fees for each Service packaged with other premium services in a
System, the Net Revenue shall be an amount equal to that proportion of the total
Net Revenues generated by such package offering that is attributable to the
applicable Service, based on the standard retail prices, in such System, charged
to a Subscriber for such Service and each of the other services comprising the
package offering.
(h) Discontinuation of Services. Affiliate shall have the right from
time-to-time during the Term and in its sole discretion to discontinue carriage
of any Service on any System(s) by giving Network at least thirty (30) days'
prior written notice thereof.
(i) New York City Systems. Subject to the foregoing Section 6(h),
each New York City System shall offer the Playboy TV Service on a Subscription
Purchase and Pay Per View Purchase basis to digital Subscribers of such New York
City System. Network and the New York City Systems shall jointly develop and
engage in sufficient marketing efforts to adequately promote such offering of
the Playboy TV Service on a Subscription Purchase basis.
7. ALTERNATIVE DISTRIBUTION
Except as otherwise expressly permitted herein, and except where the
primary purpose is to market paid services and/or products, Network shall not
exhibit or distribute, and shall not grant to any third party the right to
exhibit or distribute, in any Operating Area, all or any portion of any of the
Services, or any programming comprising a portion of any Service, such that end
users or customers may view such portions or programming for no or minimal
charge or fee: (i) via any Internet Web Site or over any local or wide area
computer network serving more than one hundred (100) persons (unless such
computer network is maintained by Network for its own employees), including in
multimedia, interactive, three-dimensional or other augmented or enhanced
format, (ii) via any broadcast station or cable programming network other than
such Service; in either case, whether simulcast, time-shifted, repackaged or
distributed through any "video on demand" mechanism ("Alternative Distribution
Means"); provided, however, that, subject to Section 13, the foregoing (ii)
shall not restrict Network from providing each Service to any multi-channel
video programming provider. Notwithstanding the foregoing, nothing contained
herein shall prevent Network from exhibiting or distributing, or granting any
third party the right to exhibit or distribute at no or minimal charge:
(A) segments of Programs contained in a Service via such Service's
Web site, provided, however, that each such segment is no longer than three (3)
minutes in duration and such exhibition or distribution promotes subscription to
the applicable Service.
16
<PAGE>
(B) segments of Programs contained in a Service that have been cable
edited such that each such segment has a rating, or had it been rated would have
received a rating, no more restrictive than "TVMA" in accordance with the
then-current NCTA standards (which as of the date hereof consist of the TV
Parental Guidelines attached hereto as Exhibit A-1).
(C) segments of Programs contained in a Service so long as (1) no
such segment is of a duration greater than ten (10) minutes and (2) a Program is
not exhibited or distributed in its entirety as segments during any calendar
day.
In the event that Network fails to comply with the restrictions
contained in this Section 7, Network shall cure such breach upon ten (10) days
written notice. Without limiting any of Affiliate's rights or remedies, should
Affiliate incur any actual financial loss as a result of Network's failure to
comply with the limitations contained in this Section 7, Affiliate shall be
entitled to receive reasonable off-set against its monthly Fees payable
hereunder, provided that Affiliate provides Network written documentation
evidencing such loss.
8. FEES
(a) Service Fees. For each calendar month of the Term, Affiliate
shall pay to Network, in consideration for the licenses granted herein, the
applicable fees for each Service carried by each System during such calendar
month, calculated in accordance with the provisions set forth below (for each
Service, the "Fee").
(b) Playboy TV Service.
(i) Pay Per View Purchases. For each System, *****, carrying
the Playboy TV Service hereunder, the Fee for Pay Per View Purchases of the
Playboy TV Service shall equal the greater of (x) ***** per Pay Per View
Purchase of the Playboy TV Service and (y) either (A) ***** of the Net Revenue
during the applicable calendar month for Pay Per View Purchases of the Playboy
TV Service, *****, or (B) ***** during such calendar month for Pay Per View
Purchases of the Playboy TV Service, *****. The number of Services carried by a
System shall be calculated in accordance with Section 8(j) below. *****, the Fee
for Pay Per View Purchases of the Playboy TV Service shall equal the greater of
(xx) ***** per Pay Per View Purchase of the Playboy TV Service and (yy) ***** of
the Net Revenue during such calendar month for Pay Per View Purchases in such
System.
(ii) Subscription Purchases
(A) If a System, *****, either (x) does not offer the
Playboy TV SVOD Service to such System's Subscribers, or (y) offers the Playboy
TV SVOD Service to such System's Subscribers for an additional fee, the Fee for
each calendar month for Subscription Purchases of the Playboy TV Service shall
equal the greater of (1) ***** per Subscription Purchase and (2) either (A)
***** of the Net Revenue during the applicable calendar month for Subscription
Purchases, *****, or (B) ***** of the Net Revenue during such calendar month for
Subscription Purchases, *****. The number of Services carried by a System shall
be calculated in accordance with Section 8(j) below. ***** (xx) does not offer
the Playboy TV SVOD Service to such System's Subscribers, or (yy) offers the
Playboy TV SVOD Service
17
<PAGE>
to such System's Subscribers for an additional fee, the Fee for each calendar
month for Subscription Purchases of the Playboy TV Service shall equal the
greater of (AA) ***** per Subscription Purchase and (BB) ***** of the Net
Revenue during such calendar month for Subscription Purchases in such System.
(B) If a System, *****, offers the Playboy TV SVOD
Service to Playboy TV Service Subscribers for no additional fee, the Fee for
each calendar month for Subscription Purchases of the Playboy TV Service shall
equal the greater of (x) ***** per Subscription Purchase and (y) either (A)
***** of the Net Revenue during the applicable calendar month for Subscription
Purchases, *****, or (B) ***** of the Net Revenue during such calendar month for
Subscription Purchases, *****. The number of Services carried by a System shall
be calculated in accordance with Section 8(j) below. ***** the Playboy TV SVOD
Service to Playboy TV Service Subscribers for no additional fee, the Fee for
each calendar month for Subscription Purchases of the Playboy TV Service shall
equal the greater of (xx) ***** per Subscription Purchase and (yy) ***** of the
Net Revenue during such calendar month for Subscription Purchases in such
System.
(c) Playboy TV SVOD Service.
(i) If a System offers the Playboy TV SVOD Service to such
System's Playboy TV Service Subscribers for no additional fee, then Affiliate
shall have no obligation to pay any additional fee to Network in connection with
such System's carriage of the Playboy TV SVOD Service.
(ii) If a System offers the Playboy TV SVOD Service to such
System's Playboy TV Service Subscribers for an additional fee (i.e., on a
Subscription Purchase basis) the Fee for the Playboy TV SVOD Service for each
calendar month shall equal ***** of the Net Revenue during such calendar month
for Subscription Purchases of the Playboy TV SVOD Service.
(d) Playboy TV En Espanol Service.
(i) Pay Per View Purchases. For each System carrying the
Playboy TV En Espanol Service, the Fee for Pay Per View Purchases of the Playboy
TV En Espanol Service shall equal the greater of (x) ***** per Pay Per View
Purchase of the Playboy TV En Espanol Service and (y) either (A) ***** of the
Net Revenue during the applicable calendar month for Pay Per View Purchases of
the Playboy TV En Espanol Service, *****, or (B) ***** of the Net Revenue during
such calendar month for Pay Per View Purchases the Playboy TV En Espanol
Service, *****. The number of Services carried by a System shall be calculated
in accordance with Section 8(j) below.
(ii) Subscription Purchases
(A) If a System either (x) does not offer the Playboy TV
En Espanol SVOD Service to such System's Subscribers, or (y) offers the Playboy
TV SVOD En Espanol Service to such System's Subscribers for an additional fee,
the Fee for each calendar
18
<PAGE>
month for Subscription Purchases of the Playboy TV En Espanol Service shall
equal the greater of (1) ***** (or ***** for each New York City System) per
Subscription Purchase and (2) either (A) ***** of the Net Revenue during such
calendar month for Subscription Purchases, *****, or (B) ***** of the Net
Revenue during such calendar month for Subscription Purchases, *****. The number
of Services carried by a System shall be calculated in accordance with Section
8(j) below.
(B) If a System offers the Playboy TV En Espanol SVOD
Service to such Playboy TV En Espanol Subscribers for no additional fee, the Fee
for Subscription Purchases of Playboy TV En Espanol for each calendar month
shall equal the greater of (x) ***** per Subscription Purchase or (y) either (A)
***** of the Net Revenue during such calendar month for Subscription Purchases,
*****, or (B) ***** of the Net Revenue during such calendar month for
Subscription Purchases, *****. The number of Services carried by a System shall
be calculated in accordance with Section 8(j) below.
(iii) Spanish Language Package. If a System offers the Playboy
TV En Espanol Service as part of a Spanish Language Package to such System's
Subscribers, the Fee for the Playboy TV En Espanol Service shall be ***** per
Subscriber of such Spanish Language Package, or ***** per Subscriber to the
extent that such System offers Playboy TV En Espanol SVOD Service together with
the Playboy TV En Espanol Service for no additional fee, regardless of whether
such Subscriber elects to receive the Playboy TV En Espanol Service. *****.
(e) Playboy TV En Espanol SVOD Service.
(i) If a System offers the Playboy TV En Espanol SVOD Service
to such System's Playboy TV En Espanol Service Subscribers for no additional
fee, then Affiliate shall have no obligation to pay any additional fee in
connection with such System's carriage of the Playboy TV En Espanol SVOD
Service.
(ii) If a System offers the Playboy TV En Espanol SVOD Service
to such System's Playboy TV En Espanol Service Subscribers for an additional fee
(i.e., on a Subscription Purchase basis) the Fee for the Playboy TV En Espanol
SVOD Service for each calendar month shall equal ***** of the Net Revenue during
such calendar month for Subscription Purchases of the Playboy TV En Espanol SVOD
Service.
(f) Spice Service(s) (other than the Spice HD Service).
(i) Single Spice Service. *****, for each System carrying only
one (1) Spice Service during the applicable calendar month, the Fee for Pay Per
View Purchases of the Spice Service shall equal the greater of ***** per Pay Per
View purchase or ***** of the Net Revenue during such calendar month for such
Pay Per View Purchases.
(ii) Two Spice Services. Subject to the Spice Live Service Fee
Waiver set forth in Section 8(h) below, for each System carrying two (2) Spice
Services during the applicable calendar month, the Fee for Pay Per View
Purchases shall equal the greater of
19
<PAGE>
***** per Pay Per View Purchase or ***** of the Net Revenue during such calendar
month for such Pay Per View Purchases.
(iii) Three or More Spice Services. Subject to the Spice Live
Service Fee Waiver set forth in Section 8(h) below, for each System carrying
three (3) or more Spice Services during the applicable calendar month, the Fee
for Pay Per View Purchases shall equal the greater of ***** per Pay Per View
Purchase or ***** of the Net Revenue during such calendar month for such Pay Per
View Purchases.
(g) HD Programs (including the Spice HD Service). For each System
carrying HD Programs hereunder, (i) the Fee for Pay Per View Purchases of the HD
Programs shall equal the greater of ***** per Pay Per View Purchase ***** of the
Net Revenue during the applicable calendar month for Pay Per View Purchases of
HD Programs; and (ii) the Fee for VOD Purchases of the HD Programs shall equal
the greater of ***** per VOD Purchase or ***** of the Net Revenue during the
applicable calendar month for VOD Purchases of HD Programs;
(h) *****
(i) VOD Package Service(s) Charge. For each System carrying the VOD
Package Service(s) hereunder, the Fee for the VOD Package Service(s) for each
calendar month shall equal the greater of ***** per VOD Purchase of a VOD
Program from a VOD Package Service or ***** of the Net Revenue during such
calendar month for such VOD Purchases from the VOD Package Service(s).
(j) *****
(k) Additions and Deletions of Systems. For purposes of calculating
the Fees hereunder, Subscribers in Systems added to this Agreement shall be
deemed added as of the first day of the month following such addition, and
Subscribers in Systems that are deleted hereunder in accordance with the terms
of this Agreement or that cease to constitute Time Warner Cable Systems, shall
be deemed deducted as of the first day of the month following such deletion or
cessation.
(l) Other Adjustments. Notwithstanding anything contained herein to
the contrary, the number of Subscribers for any month shall not include (i)
Subscribers who are not required to pay for the level or tier of service on
which the Service is distributed or (ii) Subscribers who have not paid the
amount which they are required to pay for the level or tier of service on which
the Service is distributed and who subsequently have distribution of such level
or tier of service to them terminated.
(m) Due Date. The Fees payable hereunder for each calendar month
shall be due forty-five (45) days after the end of such month. In the event of a
good faith dispute regarding any Fees, Affiliate shall pay those portions of the
Fees not in dispute in accordance with this Section 8, and before or at the time
of payment, Affiliate shall notify Network of the grounds for disputing the
unpaid balance. No such disputed Fees shall be due or payable by
20
<PAGE>
Affiliate to Network nor subject to the recovery of prejudgment interest unless
and until such dispute has been resolved to the satisfaction of Affiliate and
Network.
(n) Retroactive Adjustments. If a payment of Fees due hereunder for
any month has been made, and the amount of such payment exceeds the amount of
the Fees which was actually due hereunder for such month (regardless of when
such adjustment is made), then Affiliate shall have the right to set off against
any amounts then or thereafter due to Network (or, upon demand, Network shall
pay to Affiliate) an amount equal to such excess. If a payment of Fees due
hereunder for any month has been made, and the amount of such payment is less
than the amount of the Fees which was actually due Network hereunder for such
month (regardless of when such adjustment is made), then Affiliate shall upon
demand, pay to Network an amount equal to the difference between the amount due
and the amount actually paid.
(o) Bulk Billed Subscribers. Notwithstanding anything contained
herein to the contrary, the number of Subscription Purchases in a multiple
dwelling unit complex (including without limitation apartment buildings, hotels
and motels) that is billed for any Subscription Purchase basis Service on a bulk
rate basis shall equal *****.
(p) Calculation of Fees and Subscription Purchases. For purposes of
calculating the Fees hereunder, as applicable, the number of Subscription
Purchases or Subscribers (as applicable) for the applicable calendar month shall
be calculated by adding the number of Subscription Purchases or Subscribers (as
applicable) as of the first day of such calendar month and as of the last day of
such calendar month and dividing the result by two. Subscription Purchases and
Subscribers in Systems in which a Service is launched following the Effective
Date shall be deemed added as of the first day on the month following such
addition, and Subscription Purchases and Subscribers in Systems in which
distribution of a Service is terminated in accordance with the terms hereof, and
in Systems that cease to constitute Time Warner Cable Systems, shall be deemed
deducted as of the first day of the month following such deletion or cessation.
9. REPORTS
(a) Reports. Within forty-five (45) days after the end of each
calendar month during the Term, Affiliate shall send to Network a statement or
statements that sets forth, on a System by System basis, with respect to each
Service as applicable (i) the number of Services carried by such System, (ii)
the total number of Subscription Purchasers, and including the number of Spanish
Language Package Subscribers, (iii) the number of Pay Per View Purchases, (iv)
with respect to VOD Purchases, by Program ID Number (as provided by Network as
part of the Metadata File for each VOD Program) the retail price of the VOD
Program, (v) with respect to SVOD Services, the Program ID Number (as provided
by Network as part of the Metadata File for each SVOD Program) and the aggregate
number of times each SVOD Program is accessed, and (vi) such other information
as may be reasonably necessary to support the computation of the Fees due to
Network for such calendar month. If reasonably practicable and if Affiliate
elects to do so, Affiliate shall send such statement(s) to Network in electronic
form. Network acknowledges and agrees that Affiliate's collection, storage and
release of any information or
21
<PAGE>
data, and of information or data used to derive the information identified in
this Section 9(a), as well as any audit undertaken by Network in accordance with
Section 9(b), shall be subject to any internal Affiliate's privacy policies and
all applicable laws, rules and regulations.
(b) Audit Right. During the Term and for one (1) year thereafter,
unless a dispute arises between the parties, in which case, for at least one (1)
year after the resolution of such dispute, Affiliate shall maintain accurate and
complete books and records in accordance with generally accepted accounting
principles and practices that are directly related to the Services to the extent
necessary to verify the Fees due hereunder. Upon not less than sixty (60) days'
prior written notice, Network shall have the right, during the Term and for one
(1) year thereafter, to examine during normal business hours at Affiliate's
corporate offices, such relevant books and records of Affiliate necessary to
verify the Fees due hereunder; provided, that such examinations shall not be
conducted more frequently than once annually and shall be limited to the then
current calendar year and the prior calendar year. Network will be deemed to
have waived any and all claims which it may have with respect to an underpayment
of Fees due unless it gives written notice of such claims to Affiliate upon the
earlier of two (2) years after the date on which payment of such Fees was due
or, within six (6) months after the conclusion of such examination.
(c) Compliance. Network represents, covenants and warrants that each
Service complies, and will continue to comply, with all origination cablecasting
regulations of the FCC, including but not limited to 47 C.F.R.
ss.ss.76.205-76.221 (political equal time, personal attach, lotteries and
sponsorship identification), as the same any be amended from time to time
("Origination Cablecasting Requirements"), and that Network shall provide
Affiliate all necessary documentation required thereunder for Affiliate to
timely meet its documentation and public file requirements under the Origination
Cablecasting Requirements. In the event that any other programming offered by
each Service shall be among the kind of programming which is regulated by
federal, state or local law, as the same may apply to cable television systems
and cable operators, or other non-broadcast television distributors, then
Network shall provide to Affiliate all statements, records or other documents in
the Network's possession, custody and control reasonably necessary for Affiliate
to demonstrate timely compliance as a cable operator or distributor with such
laws and regulations.
10. PROMOTION AND ADVERTISING
(a) Network's Names and Marks. Affiliate acknowledges that the name
and marks of Playboy Enterprises International, Inc., including without
limitation "PLAYBOY," "PLAYMATE," "PLAYBOY TV," "PLAYBOY TELEVISION," "PLAYBOY
TV EN ESPANOL," "SPICE," "SPICE 2," "SPICE LIVE," "SPICE HOT," "SPICE HOT
NETWORK," "SPICE HOT ZONE," "HOT NETWORK," "HOT NET," "HOT ZONE," "SPICE
ULTIMATE," "A TASTE OF SPICE," "SPICE HD," and the RABBIT HEAD Design, (and the
names of certain programs which appear in the Service) (the "Network Marks") and
the programming provided in the Services, as between Affiliate and Network, are
the exclusive property of Network or its suppliers and that Affiliate has not
and will not acquire any proprietary rights therein by reason of this Agreement.
Affiliate shall not use the Network Marks without the prior written consent of
Network, except that Affiliate may use the Network Marks in routine promotional
materials, channel line-ups, print and electronic program guides and on the Web
sites of Affiliate or any System without the prior written consent of
22
<PAGE>
Network, provided that such use conforms to the written style guidelines (if
any) for such Network Marks provided by Network to Affiliate. Nothing contained
herein shall limit or restrict the right of Affiliate, the Systems or any
third-party distributors of any Service hereunder to use such names and marks
(i) in connection with the exercise of its or their rights hereunder or (ii) as
permitted under any other contract or agreement, in connection with any local
advertising inserted in any cable television service or programming if the
sponsor of such advertisement had the right to use such names and marks therein
or otherwise than under this Agreement.
(b) Cross Channel Promotions of Affiliated Services. Except as
otherwise expressly authorized in this Agreement, Network shall not promote,
market or advertise on any Service any other cable programming service which is
affiliated or associated with Network ("Cross Promotions") unless such other
service is then being distributed by the Systems on which such Cross Promotions
are to appear, or such System has the option to distribute such Service under
the terms of this Agreement but has elected not to do so. The practice of
"nesting" or "incubating" (whether or not for the express purpose of inducing
subscriptions to) a cable programming service by showcasing such service within
an existing service shall be considered a means to "promote, market or
advertise" such service hereunder. Network agrees that the Services will not air
any promotional spot (whether alone or in conjunction with any other person)
that identifies another method of video distribution that offers a service not
available on the relevant Affiliate System. Affiliate shall have the right to
preempt all material that violates the foregoing.
(c) Advertising Avails. Network shall not include more than fifteen
(15) minutes of commercial announcement availabilities, interstitials,
promotional announcements and other non-programming material, including without
limitation permitted Cross Promotions, in each Service (collectively,
"Non-Programming Material") during any hour of such Service, of which commercial
announcement availabilities (i.e., third party advertising for products or
services) shall consist of no greater than two (2) minutes. *****.
(d) *****
11. REPRESENTATIONS, WARRANTIES AND COVENANTS
(a) Network's Authorization. Network represents and warrants that:
(i) Network is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware; (ii) Network has the requisite
power and authority to execute and deliver this Agreement and to fully perform
its obligations hereunder; (iii) the execution, delivery and performance of this
Agreement has been duly authorized by all corporate and board of directors'
actions necessary on the part of Network; (iv) Network is not subject to any
contractual or other legal obligation which will in any way interfere with its
full performance of this Agreement; and (v) the individual executing this
Agreement on behalf of Network has the authority to do so.
23
<PAGE>
(b) Ownership of and Responsibility for each Service. Network
represents, warrants and covenants that it has and throughout the Term will have
the right to grant the licenses granted herein, free and clear of all liens,
restrictions, charges, claims and encumbrances, that it has obtained and will
maintain all licenses, permits, exemptions, authorizations and consents
necessary to fully perform this Agreement (except with respect to music
performance licenses, which Network represents and warrants that it has, by the
date this Agreement is fully executed, applied for a "through-to-the-viewer"
music performance license from each of ASCAP and BMI, and Network shall use its
best efforts to obtain a "through-to-the-viewer" music performance license from
those organizations) and that neither the Services nor any programming contained
therein, if and when presented by Affiliate in the manner and at the times
permitted herein (i) is or will be libelous, slanderous, obscene, or defamatory;
(ii) violates or infringes or will knowingly violate or infringe the civil or
property rights, copyrights (including, without limitation, music
synchronization and performance rights and dramatic and non-dramatic music
rights), trademark rights, patent rights or rights of privacy of any person; or
(iii) violates any law or regulation.
(c) Insurance. Network represents, warrants and covenants that (i)
it has obtained an errors and omissions insurance policy covering each Service
and all elements thereof from a nationally recognized insurance carrier and in
accordance with industry standards of no less than $5 million per occurrence;
(ii) such insurance shall remain in full force and effect throughout the Term;
(iii) Affiliate shall be named as an additional insured on the insurance policy;
(iv) Network shall provide Affiliate with documentation to such effect with ten
(10) days of the execution hereof; (v) Network shall provide Affiliate with
appropriate proof of issuance of a policy continuing in force and effect which
shall evidence no lapse in coverage; and (vi) Network shall provide Affiliate
with thirty (30) days written notice (or if circumstances do not permit such
notice as soon as reasonably practicable) of any material changes in such
policy.
(d) CPOEA. Without limiting the generality of Section 11(b) hereof,
Network represents, warrants and covenants that (i) each Service (including any
and all programming contained therein) is, and throughout the Term shall be, in
all respects in compliance with the requirements of the Child Protection and
Obscenity Enforcement Act of 1988, as amended by the Child Protection
Restoration and Penalties Enhancement Act of 1990, and all rules and regulations
promulgated thereunder (collectively, the "CPOEA"), and does not contain any
material that would require Licensor to comply with the record keeping
requirements of the CPOEA and (ii) there shall be no "minor" (as such term is
most liberally construed pursuant to the laws of any state) appearing in any of
the Services.
(e) Affiliate's Authorization. Affiliate represents and warrants
that: (i) Affiliate is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware; (ii) Affiliate has the
requisite power and authority to execute and deliver this Agreement and to fully
perform its obligations hereunder; (iii) the execution, delivery and performance
of this Agreement has been duly authorized by all action necessary on the part
of Affiliate; (iv) Affiliate is not subject to any contractual or other legal
obligation which will in any way interfere with its full performance of this
Agreement; and (v) the individual executing this Agreement on behalf of
Affiliate has the authority to do so.
24
<PAGE>
(f) Affiliate's Trademarks. Network represents and warrants that it
shall not use, and no right or license is herein granted to Network to use, any
of the trade names, trademarks, copyrights, styles, slogans, titles, logos or
service marks of Affiliate, TWI, TWE, TWEAN, any other System or any other Time
Warner Company.
(g) Publicity. Neither Network nor Affiliate shall initiate or have,
and shall not permit its officers, directors, partners, shareholders, employees,
agents, representatives or affiliates to initiate or have, any oral or written
communication (including, without limitation, announcements, correspondence and
advertisements) with or directed to any person (including, without limitation,
the press, the public, Subscribers, the trade and governmental and
quasi-governmental agencies, authorities and instrumentalities) (i) which
concerns (A) the negotiation (or other transactions in contemplation of),
termination, renewal, non-renewal or expiration of this Agreement or of any
other prior, then current or proposed agreement, arrangement or understanding
with any Time Warner Company relating to the distribution of the Services or (B)
any modification or amendment hereof or thereof; (ii) which would or could
adversely affect relations between either Network, or Affiliate, any Time Warner
Company or System, on the one hand, and Subscribers, potential subscribers or
such agencies, authorities or instrumentalities, on the other had, without the
prior written approval of the form and content of such communication by Network
or Affiliate, respectively; provided, that such approval shall not be required
if such communication is required by (X) an applicable law, rule or regulation
or (Y) an order of a court or governmental agency, authority or instrumentality
of competent jurisdiction; provided, further, that, prior to communication
without such approval, the communicating party shall have given reasonable prior
notice to the other party of such intended communication and, if requested by
such other party, shall have used reasonable efforts at the communicating
party's expense to obtain a protective order or similar protection for the
benefit of the other party. In no event shall either party attempt or permit its
officers, directors, partners, shareholders, employees, agents, representatives
or affiliates to interfere with such relations. Clause (ii) of the preceding
sentence shall not apply to (A) any national advertising or promotion by Network
in connection with the Services, (B) any proceeding before any judicial body, or
(C) communications with Congress or with any other branch or agency of the
Federal government. This Section 11(g) shall not prevent Network from
cablecasting "800" or "900" telephone numbers for such purposes as polling
viewers, conducting contests or offering products and/or services to viewers or
from responding to mail received from viewers; provided, that such activities
and responses shall not contain communications, materials, information or text
that could adversely affect Affiliate. This Section 11(g) shall survive the
expiration or termination of this Agreement (regardless of the reason for such
expiration or termination) for a period of two (2) years.
(h) Confidentiality. The terms and conditions, other than the
existence and duration, of this Agreement shall be kept confidential by the
parties hereto and shall not be disclosed by either party to any third party
except: (i) as may be required by any court of competent jurisdiction,
governmental agency, law or regulation (in such event, the disclosing party
shall notify the other party before disclosing this Agreement); (ii) as part of
the normal reporting or review procedure to a party's accountants, auditors,
agents, legal counsel, and employees of partners, parent and subsidiary
companies, provided such accountants, auditors,
25
<PAGE>
agents, legal counsel, and employees of partners, parent and subsidiary
companies agree in writing to be bound by this Section 11(h); and (iii) to
enforce any of a party's rights pursuant to this Agreement.
12. FORCE MAJEURE
Neither party shall have any liability to the other party for any
failure to perform hereunder, if such failure is due to: an act of God;
inevitable accident; fire; lockout; strike or other labor dispute; riot or civil
commotion; act of government or governmental instrumentality (whether federal,
state or local); act of terrorism; failure of performance by a common carrier;
failure in whole or in part of technical facilities or satellites; or other
cause (excluding financial inability or difficulty of any kind) beyond such
party's reasonable control.
13. *****
26
<PAGE>
14. INDEMNIFICATION AND OTHER REMEDIES
(a) Indemnification by Network. Network shall indemnify Affiliate
and each other Time Warner Company, each System, the persons which directly own
the Systems and their respective affiliates (including controlling persons and
related companies), officers, directors, shareholders, employees and agents
(each, an "Affiliate Indemnitee") for, and shall hold them harmless from and
against, any and all losses, settlements, claims, actions, suits, proceedings,
investigations, judgments, awards, damages and liabilities (collectively,
"Losses" and, individually, a "Loss") which are sustained or incurred by or
asserted against any of them and which arise out of or relate to (i) any breach
of this Agreement by Network or (ii) any or all of the Services, the content
thereof or programming contained therein or the delivery or distribution thereof
(including, without limitation, any Loss arising out of libel, slander,
defamation, indecency, obscenity, invasion of right of privacy or infringement
or violation of copyrights, music synchronization or performance rights,
dramatic or non-dramatic music rights, trademark rights, patent rights or other
contractual or proprietary rights), including without limitation Losses that
arose or accrued before the Effective Date, except to the extent that any such
Losses are based upon or arising out of any material (such as local advertising)
added by Affiliate or any affiliate of Affiliate (as to which added material
furnished by Affiliate or any affiliate of Affiliate shall, to the like extent,
indemnify Network, and their respective affiliates (including controlling
persons and related companies), officers, directors, shareholders, employees and
agents (each, a "Network Indemnitee") and shall reimburse them for any and all
legal, accounting and other fees, costs and expenses (collectively, "Expenses")
reasonably incurred by any of them in connection with investigating, mitigating
or defending any such Loss; provided, however, that Network will not have any
obligation or liability under this Section 14(a) to the extent that Affiliate
has an obligation or liability with respect to the same Loss under Section
14(b). Affiliate Indemnitee shall give Network prompt notice of any claim or
litigation to which its indemnity applies, provided that the Network's
obligations shall not be affected by any delay or failure in providing such
notice unless Network reasonably demonstrates that the defense or settlement of
the claim was materially prejudiced thereby. Network shall have the right to
assume the defense of such claim or litigation (other than the entry of a guilty
plea or similar plea by or on behalf of Affiliate in a criminal or
quasi-criminal action) with counsel selected by Network and approved by
Affiliate (which approval shall not be unreasonably withheld by Affiliate), in
which case the Affiliate Indemnitee will cooperate with the reasonable requests
of Network, at Network's expense, in Affiliate Indemnitee's defense of such
claim or litigation and shall have the right, but not the obligation, to join in
and be represented by its own counsel, at its own expense. Notwithstanding the
foregoing, (i) Network will not be obligated to indemnify Affiliate Indemnitees
in the event of a criminal prosecution involving an allegation of,
27
<PAGE>
or any claim alleging, violation of the laws in connection with the content of
the Service if Affiliate, or each Affiliate Indemnitee enters a guilty plea
(over Network's objection) or makes any other disclosures to the public (without
the approval of Network) that materially prejudice the defense of such
prosecution, provided that disclosures made in the course of grand jury,
deposition or trial testimony or other similar testimony shall not be deemed
disclosures to the public, hereunder; and (ii) Network shall not agree to any
compromise or settlement terms with respect to claims for which Network has an
indemnification obligation hereunder that affect Affiliate's rights or
obligation other than the payment of a financial settlement by Network (that
releases Affiliate from liability) without Affiliate's prior written approval.
Within sixty (60) days of the Effective Date Affiliate shall provide Network
with notice of any Losses of which Affiliate has knowledge that arose or accrued
before the Effective Date.
(b) Indemnification by Affiliate. Affiliate shall indemnify Network
and each Network Indemnitee for, and shall hold them harmless from and against,
any and all Losses which are sustained or incurred by or asserted against any of
them and which arise out of and relate to (i) any breach of this Agreement by
Affiliate or (ii) the addition of material to or the deletion of material from
the content of the Services by Affiliate or the Systems and shall reimburse them
for any and all Expenses reasonably incurred by any of them in connection with
investigating, mitigating or defending any such Loss, provided, however, that
Affiliate will not have any obligation or liability under this Section 14(b) to
the extent that Network has an obligation or liability with respect to the same
Loss under Section 14(a). Network Indemnitee shall give Affiliate prompt notice
of any claim or litigation to which its indemnity applies, provided that the
Affiliate's obligations shall not be affected by any delay or failure in
providing such notice unless Affiliate reasonably demonstrates that the defense
or settlement of the claim was materially prejudiced thereby. Affiliate shall
have the right to assume the defense of such claim or litigation (other than the
entry of a guilty plea or similar plea by or on behalf of Network in a criminal
or quasi-criminal action) with counsel selected by Affiliate and approved by
Network (which approval shall not be unreasonably withheld by Network), in which
case the Network Indemnitee will cooperate with the reasonable requests of
Affiliate, at Affiliate's expense, in the Network Indemnitee's defense of such
claim or litigation and shall have the right, but not the obligation, to join in
and be represented by its own counsel, at its own expense. Affiliate shall not
agree to any compromise or settlement terms with respect to claims for which
Affiliate has an indemnification obligation hereunder that affect Network's
rights or obligation other than the payment by Affiliate of a financial
settlement (that releases Network from liability), without Network's prior
written approval.
(c) Overdue Payments. If any amount due hereunder is not paid when
due or within thirty (30) days thereafter, the payor shall pay, in addition to
such amount, interest on such amount at a rate of ***** per month (or, if lower,
the maximum rate permitted by law) from the date on which such amount was due
through the date on which payment of such amount is made.
(d) Consequential Damages. Neither Affiliate nor any other Time
Warner Company, or any System, or third-party distributor of any Service, on the
one hand, nor Network, on the other hand, shall, for any reason or under any
legal theory, be liable to the other or any third party for any special,
indirect, incidental or consequential damages or for loss of profits,
28
<PAGE>
revenues, data or services, regardless of whether such damages or
loss was foreseeable and regardless of whether it was informed or had direct or
imputed knowledge of the possibility of such damages or loss in advance.
(e) Cumulative Remedies. All rights, powers and remedies afforded to
a party hereunder, by law, in equity or otherwise shall be cumulative (and not
alternative) and shall not preclude assertion or seeking by a party of any other
rights or remedies.
15. TERMINATION
(a) Bankruptcy. If a party (i) becomes bankrupt or insolvent,
however evidenced, (ii) admits in writing its inability to pay its debts when
due, (iii) makes a general assignment for the benefit of creditors, (iv) has
appointed, voluntarily or involuntarily, any trustee, receiver, custodian or
conservator with respect to it or a substantial part of its property, (v) files,
or has filed against it, a voluntary or involuntary petition in bankruptcy or
(vi) makes any arrangement or otherwise becomes subject to any proceedings under
the bankruptcy, insolvency, reorganization or similar laws of the United States
or any state, then the other party shall have the right at any time thereafter
to terminate this Agreement by giving written notice to such party.
(b) Breach. In addition to any other termination rights set forth in
this Agreement, either party shall have the right to terminate this Agreement by
giving written notice to the other party if the other party has materially
breached this Agreement and such breach shall not have been fully cured;
provided, that if such breach is fully curable, such party shall not have the
right to terminate this Agreement unless such party shall have given written
notice to the other party of such breach and the other party shall have failed
to fully cure such breach within thirty (30) days after such notice shall have
been given. Notwithstanding the foregoing, and without limiting Affiliate's
rights and remedies, if (x) Network breaches Section 11(b) or (d), Affiliate may
terminate this Agreement if such breach or noncompliance is not cured within
twenty-four (24) hours of Affiliate's written notice thereof and (y) Affiliate
determines in good faith, that any Service includes programming that violates
the Traditional Cable Edited Standards or Partial Edited Standards, as
applicable, Affiliate may, upon notice to Network, discontinue carriage of the
applicable Service.
(c) Effective Date of Termination. If a party exercises any option
or right to terminate this Agreement as provided herein, such termination shall
become effective on the date on which notice of exercise of such option or right
shall have been given (or on such later date as may be specified in such
notice).
(d) Survival. Sections 8(n) 9(b), 10(a), 11(a), 11(b), 11(d), 11(e),
11(f), 11(g), 13(b), 13(c), 14, 15(d), 16 and 17 shall survive the expiration or
termination of this Agreement for any reason.
(e) Service Combinations. In the event that a Service is merged
with, or Network acquires control of, or Network is
29
<PAGE>
acquired by or merges with, or control of Network is acquired by, or a Service
is acquired by, any other programming service or the owner of any other
programming service, if Affiliate has (at the time of such merger or
acquisition) an affiliation agreement with any such other service or entity,
notwithstanding anything to the contrary in such other affiliation agreement,
Affiliate's rights under Section 6(h) above ("Discontinuation of Services")
shall remain in effect with respect to each Service and/or any merged Service.
(f) Legislative Action. If by reason of regulatory or legislative
action or interpretation (i) volume discounts of the type provided herein become
unlawful or unenforceable, (ii) Affiliate is required to pay a higher net
effective per subscriber rate for the Service, (iii) the amount which can be
charged to subscribers for any Service or the level or tier of service on which
any Service is carried is restricted or limited, (iv) the level or tier of
service on which any Service can be carried is restricted or limited, (v) its
provision of any Service programming violates any law, rule, regulation or order
or (vi) Affiliate is otherwise deprived in any material respect of the overall
net economic benefits of this Agreement or the distribution of any Service,
Network shall, upon Affiliate's request, renegotiate in good faith with
Affiliate the terms of this Agreement with respect to such Service. If the
parties have not agreed in writing as to renegotiated terms and conditions of
this Agreement, then Affiliate shall have the right at any time after thirty
(30) days after such notice shall have been given to terminate this Agreement
with respect to the affected Service as to any or all Systems by giving written
notice to Network.
16. NOTICES
All notices required or permitted to be given pursuant to this
Agreement shall be given in writing, shall be transmitted by personal delivery,
by registered or certified mail, return receipt requested, postage prepaid, or
by a nationally recognized overnight delivery service and shall be addressed as
follows:
When Network is the intended recipient:
Playboy Entertainment Group, Inc.
2706 Media Center Drive
Los Angeles, California 90065
ATTN: Programming Distribution
with a copy to
General Counsel
Playboy Enterprises International Inc.
680 N. Lake Shore Drive
Chicago, Illinois 60611
When Affiliate is the intended recipient:
30
<PAGE>
Time Warner Cable Inc.
290 Harbor Drive
Stamford, Connecticut 06902
Attention: Executive Vice President, Programming
with a copy to:
Time Warner Cable Inc.
290 Harbor Drive
Stamford, Connecticut 06902
Attention: Executive Vice President and General Counsel
A party may designate a new address to which notices required or permitted to be
given pursuant to this Agreement shall thereafter be transmitted by giving
written notice to the other party. Each notice transmitted in the manner
described in this Section 16 shall be deemed to have been given, received and
become effective for all purposes at the time it shall have been (i) delivered
to the addressee as indicated by the return receipt (if transmitted by mail),
the affidavit of the messenger (if transmitted by personal delivery), the
records of the overnight delivery service (if transmitted by such service) or
the answer back or call back (if transmitted by telecopier) or (ii) presented
for delivery to the addressee as so indicated during normal business hours, if
such delivery shall have been refused for any reason.
17. MISCELLANEOUS
(a) Relationship. Neither party shall be or hold itself out as the
agent of the other party under this Agreement. Nothing contained herein shall be
deemed to create, and the parties do not intend to create, any relationship of
partners or joint venturers as between Affiliate and Network, and neither party
is authorized to or shall act toward third parties or the public in any manner
which would indicate any such relationship. Likewise, no supplier of advertising
or programming or anything else included in any Service by Network shall be
deemed to have any privity of contract or direct contractual or other
relationship with Affiliate by virtue of this Agreement or Affiliate's carriage
of such Service hereunder. Network disclaims any present or future right,
interest or estate in or to the transmission facilities of Affiliate and any
affiliate of Affiliate and the parents, subsidiaries, partnerships or joint
venturers controlling the Systems on which any Service is transmitted, such
disclaimer being to acknowledge that neither Affiliate nor the transmission
facilities of the Systems (nor the owners thereof) are common carriers.
(b) Governing Law. The validity, interpretation, performance and
enforcement of this Agreement shall be governed by the law of the State of New
York (without giving effect to the laws, rules or principles of the State of New
York regarding conflicts of laws). The respective obligations of the parties
under this Agreement are subject to all applicable federal, state and local
laws, rules and regulations (including, without limitation, the Communications
Act of 1934, as amended, the Cable Communications Policy Act of 1984, as
amended, and the rules and regulations of the Federal Communications Commission
thereunder).
31
<PAGE>
(c) Forum; Jury Trial. Each party agrees that any proceeding arising
out of or relating to this Agreement or the breach or threatened breach of this
Agreement may be commenced and prosecuted in a court in the State of New York.
Each party consents and submits to the non-exclusive personal jurisdiction of
any court in the State of New York in respect of any such proceeding. Each party
consents to service of process upon it with respect to any such proceeding by
registered mail, return receipt requested, and by any other means permitted by
applicable laws and rules. Each party waives any objection that it may now or
hereafter have to the laying of venue of any such proceeding in any court in the
State of New York and any claim that it may now or hereafter have that any such
proceeding in any court in the State of New York has been brought in an
inconvenient forum. Each party waives trial by jury in any such proceeding.
(d) Entire Agreement. This Agreement together with the Schedules and
Exhibits attached hereto constitute the entire contract between the parties with
respect to the subject matter hereof and cancels and supersedes all of the
previous or contemporaneous contracts, representations, warranties and
understandings (whether oral or written) by, between or among the parties with
respect to the subject matter hereof.
(e) Binding Effect; Assignment. This Agreement shall be binding upon
the parties and their respective successors and assigns and shall inure to the
benefit of the parties and their respective successors and permitted assigns.
Neither party shall assign any of its rights or delegate any of its duties under
this Agreement (by operation of law or otherwise) without the prior written
consent of the other party. Notwithstanding the foregoing, no such consent shall
be required in connection with any such assignment or delegation by (i)
Affiliate to any Time Warner Company or any person which controls, is controlled
by or is under common control with Affiliate or any Time Warner Company; (ii)
Network to any affiliate of Network; or (iii) Network to any other entity in
connection with a merger, consolidation or sale by Network of all or
substantially all of its assets, provided however, that upon an assignment by
Network pursuant to the foregoing (iii), Affiliate shall have the right to
terminate this Agreement immediately upon written notice to Network without any
further liability or obligation of any kind under this Agreement. Any assignment
of rights or delegation of duties under this Agreement by a party without the
prior written consent of the other party, if such consent is required hereby,
shall be void. Except as otherwise provided herein, no person shall be a
third-party beneficiary of this Agreement.
(f) Headings. The headings set forth in this Agreement have been
inserted for convenience of reference only, shall not be considered a part of
this Agreement and shall not limit, modify or affect in any way the meaning or
interpretation of this Agreement.
(g) Survival of Representations. All representations and warranties
set forth herein shall survive the execution and delivery of this Agreement and
the consummation of the transactions contemplated hereby.
(h) Amendments; Modifications; Consents; Waivers. Except as
otherwise contemplated herein no addition to, and no cancellation, renewal,
extension, modification or amendment of, this Agreement shall be binding upon a
party unless such addition, cancellation, renewal, extension, modification or
32
<PAGE>
amendment is set forth in a written instrument which states that it adds to,
amends, cancels, renews, extends or modifies this Agreement and which is
executed and delivered on behalf of each party by, in the case of Network, an
officer of Network and, in the case of Affiliate, by its Senior Vice President,
Programming or any more senior executive in the Programming Department,
Executive Vice President, President or Chairman (each an "Authorized Person");
provided, however, that any Authorized Person may, by written authorization,
designate another person to execute and deliver such an instrument. Unless
authorized in writing pursuant to the preceding proviso, the employees and
officers of Affiliate's regional divisions and Systems are not Authorized
Persons. Without in any way limiting either party's right to withhold any
consent or waiver contemplated by this Agreement or requested by the other
party, or to reject any proposed modification to or amendment of this Agreement,
each party agrees that the other party shall have the right to condition its
grant of any requested consent hereunder, its grant of any requested waiver of
any provision hereof or its acceptance of any proposed modification hereof or
amendment hereto on receipt of such commissions, compensation or other financial
accommodation or consideration as it may, in its sole discretion, determine
appropriate.
(i) Waivers Limited. No waiver of any provision of this Agreement
shall be binding upon a party unless such waiver is set forth in a written
instrument which is executed and delivered on behalf of such party by, in the
case of Network, an officer of Network and, in the case of Affiliate, by an
Authorized Person. Such waiver shall be effective only to the extent
specifically set forth in such written instrument. Neither the exercise (from
time to time and at any time) by a party of, nor the delay or failure (at any
time or for any period of time) to exercise, any right, power or remedy shall
constitute a waiver of the right to exercise, or impair, limit or restrict the
exercise of, such right, power or remedy or any other right, power or remedy at
any time and from time to time thereafter. No waiver of any right, power or
remedy of a party shall be deemed to be a waiver of any other right, power or
remedy of such party or shall, except to the extent so waived, impair, limit or
restrict the exercise of such right, power or remedy.
(j) No Inference Against Author. Each party acknowledges that this
Agreement was fully negotiated by the parties and agrees, therefore, that no
provision of this Agreement shall be interpreted against any party because such
party or its counsel drafted such provision.
(k) Counterparts. This Agreement may be signed in any number of
counterparts, each of which (when executed and delivered) shall constitute an
original instrument, but all of which together shall constitute one and the same
instrument. This Agreement shall become effective and be deemed to have been
executed and delivered by both of the parties at such time as counterparts shall
have been executed and delivered by each of the parties, regardless of whether
each of the parties has executed the same counterpart. It shall not be necessary
when making proof of this Agreement to account for any counterparts other than a
sufficient number of counterparts which, when taken together, contain signatures
of both of the parties.
33
<PAGE>
(l) Prior Carriage of the Services. The parties acknowledge and
agree that each Time Warner Cable System that carried or is carrying a Service
on or before the Effective Date has been granted all rights necessary to
receive, exhibit and the distribute such Service, from the launch of such
Service on such Time Warner Cable System and continuing through and including
the Effective Date. Network waives all claims against Affiliate and each such
Time Warner Cable System alleging any breach of any copyright or other
intellectual property rights or rights or other contractual or proprietary
rights arising out of any Time Warner Cable System's carriage of any Service on
or before the Effective Date, including without limitation any claims relating
to fees paid in connection with any or all New York City System's carriage of
any Service on or before the Effective Date.
34
<PAGE>
IN WITNESS WHEREOF, the parties have duly executed and delivered this
Agreement as of the date first above written.
TIME WARNER CABLE INC.
By: /s/ Lynne Costantini
----------------------------------------------------
Name: Lynne Costantini
--------------------------------------------------
Title: Senior Vice President
-------------------------------------------------
PLAYBOY ENTERTAINMENT GROUP, INC.
By: /s/ Craig Simon
----------------------------------------------------
Name: Craig Simon
--------------------------------------------------
Title: Senior Vice President Sales & Affiliate Relations
-------------------------------------------------
SPICE ENTERTAINMENT GROUP, INC.
By: /s/ Craig Simon
----------------------------------------------------
Name: Craig Simon
--------------------------------------------------
Title: Senior VP Sales & Affiliate Relations
-------------------------------------------------
SPICE HOT ENTERTAINMENT GROUP, INC.
By: /s/ Craig Simon
----------------------------------------------------
Name: Craig Simon
--------------------------------------------------
Title: Senior VP Sales & Affiliate Relations
-------------------------------------------------
35