EXHIBIT 10.7.3
Execution Version
AFFILIATION AGREEMENT
FOR DBS SATELLITE EXHIBITION
OF CABLE NETWORK PROGRAMMING
DIRECTV, INC.
and
CROWN MEDIA UNITED STATES, LLC
(formerly known as ODYSSEY HOLDINGS, L.L.C.)
Execution Version
AFFILIATION AGREEMENT
FOR DBS SATELLITE EXHIBITION
OF CABLE NETWORK PROGRAMMING
AGREEMENT, made as of this 6th day of March, 2000, by and between Crown
Media United States, LLC, a Delaware limited liability company ("Programmer"),
and DIRECTV, INC., a California corporation ("Affiliate").
WHEREAS:
A. Affiliate has established a direct broadcast service ("DBS")
satellite-based television system in North America;
B. Affiliate desires to obtain the rights to distribute "Odyssey" (the
"Service," as defined in Section 1(b) below) via the DBS Distribution System (as
defined in Section 1(a) below) in the United States, its territories and
possessions, including Puerto Rico (the "Territory"); and
C. Affiliate is a party to that certain DBS Distribution Agreement,
dated April 10, 1992, as amended, with the National Rural Telecommunications
Cooperative ("NRTC") for the distribution to subscribers in certain counties and
zip codes in the United States of programming via the DBS Distribution System.
NOW, THEREFORE, IT IS MUTUALLY AGREED AS FOLLOWS:
1. Grant of Rights.
(a) Distribution; Certain Definitions. Programmer hereby
grants to Affiliate (which as used for all purposes in this Agreement shall mean
DIRECTV, (which shall include its designee, the NRTC and/or its members) the
nonexclusive right to distribute the Service in the Territory via the DBS
Distribution System to DIRECTV Subscribers via televisions, personal computers
or other authorized reception devices and platforms when such computer, devices
and platforms are used as television monitors during the Term (as defined in
Section 6(a) below) hereof. The term "DBS Distribution System" shall mean the
distribution system for video and other programming services whereby the
programming satellite signal or feed is received from Programmer's transponder
source by a DIRECTV turnaround earth-station facility which compresses and
processes the signal or feed and then uplinks it at one of the DIRECTV
Frequencies on a DBS communications satellite (a "DBS Satellite") for
transmission to DIRECTV Subscribers. "DIRECTV Frequencies" shall mean the DBS
operating frequencies associated with an orbital location or locations, for
which Affiliate or an Affiliated Company (as defined in Section 8(a) below) is
the Federal Communications Commission ("FCC")-authorized permittee. "DIRECTV
Subscribers" shall
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mean those customers (both residential and non-residential) authorized by
Affiliate to receive DBS service via the DBS Distribution System.
(b) The Service. The "Service" shall mean and consist of the
national feed (or, if Programmer uses multiple feeds for the Service, such other
of such multiple feeds designated by Affiliate) in the Territory of the
programming service commonly known as "Odyssey Network," which shall consist of
programming focused on today's family and multi-faith inspirational programming,
including classic movies, original programming (with its first run on the
Service) and programming for personal and spiritual growth from Hallmark
Entertainment, Jim Henson Company, Odyssey and other entities, as represented by
the programming schedule set forth on Exhibit A hereto and incorporated herein
by reference, presented on a 24-hour per day, 7 days a week schedule. The
selection, rescheduling, substitution and withdrawal of any program or portion
thereof contained in the Service shall remain within the sole discretion and
control of Programmer subject to Section 6(c)(i) below. The Service shall be
delivered to DIRECTV in its entirety, meaning that the programming on the
Service, as received by any Service Subscriber at a given point in time, shall
be the same as the programming received by all other subscribers to the Service
at such point in time, provided that Programmer may transmit multiple feeds of
the Service for different time zones. All rights and title in and to the entire
contents of the Service, including, but not limited to, films and recordings
thereof, title or titles, names, trademarks, concepts, stories, plots,
incidents, ideas, formulas, formats, general content and any other literary,
musical, artistic, or other creative material included therein shall, as between
Programmer and Affiliate, remain vested in Programmer. Programmer and Affiliate
agree that "Infomercials," defined as program-length direct sales commercials or
programming, including, but not limited to, "sponsor-owned promotional
programming," shall not comprise more than twenty (20) hours of programming of
the Service in each week and shall be appropriate for family viewing. Anything
herein to the contrary notwithstanding, Infomercials shall only be broadcast
during the hours between 12:00 midnight and 9:00 a.m. Eastern Time for the East
Coast feed, or between 12:00 midnight and 9:00 a.m. Pacific Time for the West
Coast feed. Programmer's inclusion of Infomercials in the Service shall be
subject to Section 1(d) below. If Programmer does not provide the Service in its
entirety to Affiliate (i.e., the programming received by any subscriber to the
Service at a given point in time is different from the programming received by
any Service Subscriber at such point in time except for multiple feeds for
different time zones), then, in addition to any other remedies available to
Affiliate, at law or in equity, Affiliate shall have the right to receive,
exhibit, distribute, and authorize the reception of the programming included in
the Service as provided to Affiliate and/or such additional programming provided
to any other subscriber to the Service. Programmer shall not propose or impose
upon Affiliate, nor shall Affiliate be obligated to pay, any surcharge or other
cost (other than the License Fees provided for in Section 2 hereof) for receipt
and distribution of the Service.
(c) Other Distribution Obligations. In addition, the parties
agree as follows:
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(i) Subject to Programmer's obligations hereunder and
Affiliate's rights under Section 17, Affiliate shall distribute the Service on a
full time basis as transmitted by Programmer, in its entirety, in the order and
at the time transmitted by Programmer without any intentional and willful
editing, delays, alterations, interruptions, deletions or additions (excepting
Affiliate's commercial or other announcements, as permitted by Section 3 hereof)
and any insertions permitted pursuant to the provisions of Sections 1(d)
hereof). Programmer acknowledges that the DBS Distribution System requires and
applies digital compression and encryption processes prior to transmission and
decryption and decompression processes upon reception and agrees that such
processing does not constitute an alteration and/or other modification of the
Service. No later than January 1, 2003, Programmer shall fully encrypt the
satellite signal of the Service utilizing encryption technology commonly used in
the satellite distribution industry. Programmer shall, at its sole expense,
deliver the Service (as a turnaround, live feed) to DIRECTV from a domestic
communications satellite in the Territory commonly used for transmission of
television programming (or, at Programmer's option and expense, a fiber optic or
other facility reasonably acceptable to DIRECTV) to DIRECTV's broadcast
facilities located in Castle Rock, Colorado and Los Angeles, California
("Broadcast Facilities") or such other locations(s) as may be designated by
DIRECTV to Programmer in writing. Programmer shall provide Affiliate with two
receivers and decoders necessary to receive and decode the Service for each of
Affiliate's broadcast facilities in Castle Rock, Colorado and Los Angeles,
California.
(ii) Programmer and Affiliate shall use their respective
commercially reasonable efforts to maintain for the Service a high quality of
signal transmission in accordance with their respective technical standards and
procedures. Programmer agrees to include closed-captioning of the audio portion
of the Service as delivered by Programmer to DIRECTV in a manner sufficient to
allow DIRECTV to comply with any closed-captioning obligations for the Service
as may be imposed upon DIRECTV or Programmer by FCC (or other governmental)
rules and regulations during the Term, as modified from time to time. Other than
as required pursuant to the immediately preceding sentence. Affiliate shall have
no liability in connection with Programmer's failure to prepare, insert or
include closed-captioning in the Service as required by this Section 1(c)(ii).
Accordingly, Programmer shall indemnify, defend and hold harmless Affiliate, as
provided in Section 8 hereof, against and from any and all losses, liabilities,
claims, costs (including without limitation, any costs of preparing and
including closed-captioning in the Service), damages and expenses, including
without limitation, fines, forfeitures, attorneys' fees, disbursements and court
or administrative costs, arising out of Programmer's breach of this Section
1(c)(ii).
(d) Programming Guide. During the Term, Programmer shall
provide the daily programming schedule for the Service (including any
Infomercials contained therein) to Tribune Media Service in order that Affiliate
may access the program schedule for purposes of the on-screen program guide.
Programmer hereby represents and warrants that it currently does not allow any
distributors to substitute commercial programming in lieu of infomercials
("Step-on-Rights"). In the event Programmer grants another distributor of the
Service (the
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"Other Distributor") Step-on-Rights, then Programmer will promptly offer
Affiliate such Step-on-Rights pursuant to terms and conditions that are
substantially similar to the terms and conditions directly related to the grant
of the Step-on-Rights to the Other Distributor.
(e) VBI. Affiliate reserves all rights in and to the signal
distribution capacity within the bandwidth of the Service as received at
Affiliate's system, including, without limitation, the capacity related to the
"vertical blanking interval" ("VBI"). Programmer acknowledges that Affiliate's
standard procedures as of the date of this Agreement strip out or do not include
any information (other than closed-captioning and voluntary ratings material)
that Programmer may insert in the VBI, and Affiliate shall not be obligated to
reconstruct or reinsert any such material on behalf of Programmer. While
Affiliate currently provides voluntary rating information to Service Subscribers
and currently intends to continue providing such information, Affiliate shall
not be obligated to continue doing so unless required by law. Affiliate will
provide Programmer thirty (30) days prior written notice if Affiliate
discontinues providing voluntary rating information, provided such
discontinuance must be based on reasonable business basis. Notwithstanding the
foregoing, to the extent Programmer supplies closed-captioning for the hearing
impaired within the VBI, such closed-captioning shall be contained in line 21 of
field one of the VBI as established by FCC rules (or in such location as the FCC
rules may permit from time to time), and Programmer hereby authorizes Affiliate
to provide Service Subscribers with the ability to receive such
closed-captioning and Affiliate agrees to pass such closed-captioning through to
Service Subscribers.
(f) New Service. Subject to the limitations set forth in the
last two sentences of this paragraph (f), Programmer agrees that it will not use
the Service to nest or incubate another cable television programming service
within the Service, nor will it "clone" the Service into a second cable
television programming service by migrating programming from the Service to any
such second service which is distributed by Programmer in the Territory unless
Programmer provides any such second cable television programming service to
Affiliate without requiring the payment of additional License Fees and Affiliate
agrees to carry such second service. Notwithstanding the foregoing, Programmer
may allow no more than two (2) of its top five (5) Nielsen rated primetime
programs and no more than twenty-five percent (25%) of the programming on the
Service, including such programs to be telecast either simultaneously or within
a 24-hour period from initial telecast, as part of another program produced or
controlled by Programmer; provided that portions of the Service (including
entire programs) may appear on a time-shifted or delayed (e.g., at least 24
hours after initial telecast) on another channel or service, so long as the
amount of such time-shifted or delayed programming shall not exceed twenty-five
percent (25%) of the Service on a daily basis; provided that the foregoing
limitations shall not apply to programming which does not appear on such other
channels or service within thirty (30) days of its distribution on the Service.
Affiliate is under no obligation or expectation to carry or transmit such second
channel except as may be agreed to under negotiated terms and conditions between
the parties. In the event that Programmer seeks to nest, incubate, or clone a
second cable television programming service other than in accordance with the
foregoing limitations, Programmer will provide prompt advance written notice to
Affiliate and the parties shall
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discuss and Affiliate will consider Programmer's proposal in good faith, but in
no event shall Affiliate be obligated to agree to such proposal or to waive any
of its rights and remedies.
(g) Change of Satellite. In the event Programmer either (i)
changes the satellite to which the Service is transmitted to a satellite or
other transmission medium not susceptible to viewing or utilization by
Affiliate's then-existing earth station equipment without affecting the receipt
of the signals of any other programming or other services then received (or
committed to be received) by such Affiliate, (ii) changes the technology used by
Programmer to encrypt the Service to a technology not compatible with
Affiliate's then-existing descrambling equipment, or (iii) compresses, digitizes
or otherwise modifies the signal of the Service in such a manner that it cannot
be received or utilized by Affiliate, then Affiliate shall have the right to
discontinue carriage of the Service, immediately; provided that this right of
discontinuance and deletion shall not apply to Affiliate if Programmer agrees to
promptly reimburse Affiliate for (I) the cost to acquire and install equipment
necessary for Affiliate to receive the signal of the Service from such new
satellite or other transmission medium, and/or (II) the cost to acquire and
install equipment necessary for Affiliate to descramble, receive and/or utilize
the signal of the Service. Programmer agrees to provide Affiliate with at least
ninety (90) days' prior written notice of a satellite or technology change as
set forth in subsections (i) through (iii) above.
(h) On-Screen Logos. It is understood and agreed that
Affiliate may superimpose a logo or "bug" in a corner of the screen identifying
Affiliate over the programming of the Service; provided, however, that
Affiliate's bug shall appear only intermittently during any portion of the
Service, and provided further that Affiliate shall not delete the Service's own
promotion bug or its on-screen graphics.
2. Reports and Payments.
(a) Reports; Payments; Audit Rights. Within forty-five (45)
days after the end of each month during the Term, Affiliate shall furnish
Programmer a statement containing the number of "Service Subscribers" (defined
as DIRECTV Subscribers authorized by Affiliate to receive the Service), as
calculated by Affiliate as the average of the total number of Service
Subscribers on the first and last day of the applicable month (the "Monthly
Subscriber Level") together with payment of the License Fees, if any, in respect
of such Service Subscribers, calculated pursuant to Section 2(b). Programmer
shall accord confidential treatment to any information contained in the
aforementioned statement in accordance with Section 15. At Programmer's written
request no more than once per year, Affiliate shall provide Programmer a
statement by Affiliate's Chief Financial Officer that certifies Affiliate's
compliance with the provisions of this Section 2(a) and the accuracy of
Affiliate's reports.
(b) License Fees. As full and complete compensation for
Affiliate's right to distribute the Service, Affiliate shall pay to Programmer,
on a monthly basis, for each Service Subscriber receiving the Service from
Affiliate for such month, a "License Fee" determined pursuant to the rates set
forth in Exhibit A attached hereto and incorporated
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herein. Said rates shall comply with all applicable Laws. As used herein, "Law"
shall mean any FCC and any other governmental (whether international, federal,
state, municipal or otherwise) statute, law, rule, regulation, ordinance, code,
directive and order, including without limitation, any court order.
Notwithstanding anything to the contrary herein, Programmer acknowledges and
agrees that there shall be no License Fee payable with respect to the
distribution of the Service for a three (3) year period commencing on the
Service Commencement Date (defined in Section 6(a) below).
(c) Late or Non-Payments. Any amounts not paid by Affiliate by
the date payment is due pursuant to the first sentence of Section 2(a), shall
accrue interest at the rate of one percent (1%) per month compounded monthly or
at the highest lawful rate, whichever shall be the lesser, from the date such
amounts were due until they are paid. If Programmer engages the services of any
collection agency or independent legal counsel to collect past due fees owed to
Programmer by Affiliate under this Agreement, Programmer shall be entitled to
full reimbursement from Affiliate for all reasonable costs and expenses incurred
in such collection efforts.
(d) Most Favored Nation. Programmer agrees that if, at any
time during the Term, Programmer allows any other distributor to distribute the
Service in the Territory or in any portion thereof by any technology whatsoever,
(an "Other Distributor"), and if Programmer charges such Other Distributor
service fees, provides volume discounts, penetration or other discounts,
reductions, rebates, support, commissions, revenue sharing or caps, advertising
availabilities, or channel position fees or limits payments, or offers to or
provides other terms or conditions which effectively provide discounts to
service fees or provide other rights of economic value, which, taken as a whole
over the Term measured on an annual basis, are more favorable to such Other
Distributor than to Affiliate ("Favored Fees"), then Programmer shall promptly
notify Affiliate in writing of such Favored Fees and any conditions accepted by
such Other Distributor in consideration for the grant of the Favored Fees (the
"Conditions"). Affiliate shall be immediately entitled to incorporate into this
Agreement the Favored Fees effective as of the first day of the month following
the date on which Programmer first allows such Other Distributor to distribute
the Service in exchange for the Favored Fees for that portion of the Term during
which such Other Distributor receives such Favored Fees; provided, however,
Affiliate's right to incorporate such Favored Fees shall be conditioned upon
Affiliate's concurrent acceptance of any relevant and appropriate Conditions
(such relevancy and appropriateness shall be subject to good faith negotiation
by the parties). Nothing in the preceding sentence shall require Affiliate to
incorporate the Favored Fees into this Agreement. At Affiliate's written request
no more than once each calendar year, Programmer shall provide to Affiliate a
statement by Programmer's Chief Financial Officer that , certifies Programmer's
compliance with the provisions of this Section 2(d).
(e) Bulk Billing. Affiliate shall have the right to calculate
License Fees with respect to the distribution of the Service to any location
containing multiple sites such as rooms, units, seats, televisions, etc., at
which the Service may be received at such multiple sites within the location,
including, without limitation, hotels, motels, commercial office
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buildings, hospitals and other healthcare facilities, university dormitories,
prisons, multiple dwelling facilities, commercial buses, ships, trains and oil
rigs, bars and restaurants and similar commercial locations (each, a "Bulk-Rate
Facility(ies)"for which Affiliate bulk bills, as follows: "Bulk Bill Service
Subscribers" shall be included as Service Subscribers under Section 2(b) above,
and such Bulk Bill Service Subscribers shall be calculated monthly by dividing
Affiliate's total monthly revenues received (net of applicable taxes, refunds
and rebates) from each account at Bulk-Rate Facilities attributable to the level
of service received at the Bulk-Rate Facility including the Service, by the
non-bulk bill prices of such level of service.
(f) Airline Distribution. Affiliate shall be entitled to
distribute the Service to private aircraft at License Fees calculated according
to this Agreement (i.e., based on the number of Service Subscribers attributed
to such aircraft). Affiliate shall be entitled to distribute the Service to
commercial aircraft on substantially the same financial terms and conditions as
Affiliate distributes other basic cable network programming. Programmer
acknowledges and agrees that Affiliate may not receive payment for such
distribution of the Service to commercial aircraft, and in such case, no License
Fees shall be owed by Affiliate to Programmer with respect thereto.
3. Format for Service. Programmer shall make two (2) minutes per hour
available in the schedule of the Service (such available time defined as
"Avails") for commercial or other announcements to be used by Affiliate or by
third parties identified by Affiliate, and shall provide Affiliate with
reasonable advance notice thereof, provided that for those occasionally
occurring programs on the Service in which there is available to Programmer no,
or less than two (2) minutes per hour of, commercial announcement time,
Programmer will not make any of such commercial announcement time available to
Affiliate during such hours. The Avails provided by Programmer to Affiliate
shall be no less favorable, in terms of scheduling, availability, length and so
forth, than those provided to any Other Distributor of the Service. If the total
amount of commercial announcement time on the Service (not including time
allocated to Affiliate hereunder) increases to more than fourteen (14) minutes
per hour, the commercial announcement time made available to Affiliate shall
increase by fifty percent (50%) of such increase and every increase thereafter
(e.g. if Programmer increases the total amount of commercial announcement time
on the Service above the foregoing maximum by sixty (60) seconds, Affiliate will
receive thirty (30) seconds of such additional commercial announcement time).
Programmer shall properly "tone switch", using industry recognized equipment,
via inaudible signals, all commercial announcement minutes to enable Affiliate
to insert its commercial announcements. Affiliate shall insert its authorized
commercial or other announcements only in the positions and at the times which
Programmer designates via cue tones and without interruption of any program of
the Service. Affiliate shall be solely responsible for all materials inserted by
Affiliate within the Service, and, subject to Section 8, shall fully indemnify
and hold Programmer harmless from and against any and all claims and costs
arising out of or related to the content of Affiliate's Avails pursuant to this
Section 3. Affiliate agrees that it shall not provide any commercial or other
announcements which do not comply with applicable governmental codes or
Programmer's reasonable policies and practices and, in each case, of which
Affiliate has actual knowledge.
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4. Marketing and Promotion.
(a) Packaging. Affiliate shall include the Service in
Affiliate's "Family Package" (or any successor package thereto), which is
Affiliate's tier of at least five (5) family-oriented programming services, or
as part of a more widely-distributed package at DIRECTV's sole discretion, as
well as such other additional program packages (residential or otherwise) as
Affiliate may determine in its sole discretion. In addition to offering the
foregoing package(s), Affiliate may also offer the Service on an la carte basis.
(b) Programmer's Sales and Marketing Materials. Programmer
shall provide Affiliate, upon Affiliate's request, with promotional and
marketing advice for purposes of Affiliate's marketing of the Service.
Programmer shall promptly provide Affiliate, upon the same terms as provided to
any Other Distributor, with any and all promotional, marketing or other related
or similar materials of (or related to) the Service which it produces or
generally makes available to such Other Distributor. If Affiliate shall request
additional such materials, then Programmer shall promptly provide such materials
to Affiliate and Affiliate shall reimburse Programmer for the actual costs
thereof Subject to Section 2(d) above, Affiliate acknowledges that Programmer
may occasionally develop targeted marketing campaigns for one or more Other
Distributors, which Programmer will not be required to provide to Affiliate
under this subsection.
(c) Cooperative Marketing Funds. Programmer shall pay or
reimburse to Affiliate, on a quarterly basis, up to fifteen percent (15%) of
gross revenues from the License Fees paid to Programmer under Section 2(b) for
the prior year, as reimbursement for the expenses incurred by Affiliate during
such prior year as national support for marketing, advertising and promoting the
Service. Such payment shall be made within thirty (30) days after the date
Affiliate has delivered to Programmer documentation evidencing the amount and
nature of any such expenditures. Where an expenditure of Affiliate has been made
for more than one programming service, an equitable allocation of such
expenditure shall be made by Affiliate based on dividing the amount of the
expenditure by the number of services marketed, promoted or advertised by such
expenditure.
(d) Launch Support Fee. Programmer shall pay to Affiliate a
one-time, upfront national marketing/launch support payment (the "Launch Fee")
of Five Hundred Thousand Dollars ($500,000) in support of the launch of the
Service and the "Family Package" platform, such Launch Fee to be paid within
fifteen (15) days after the Service Commencement Date.
(e) Access to Talent. During the Term, to the extent permitted
by the terms of any talent agreements between Programmer and the applicable
talent, Programmer will provide access to talent/performers appearing on the
Service, at no cost to either Affiliate or Programmer, for promotional
activities (including on-air promotional spots and print advertising) to promote
the Service and the DIRECTV "Family Package" platform.
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(f) Programmer Marketing Plan. In addition to any other
marketing commitments set forth herein, Programmer agrees that it shall provide
marketing, promotion and advertising in support of the Service ("Marketing
Support") and the DIRECTV "Family Package" platform. The parties shall negotiate
in good faith a detailed marketing plan. Programmer agrees that the monetary
value of the Marketing Support that Programmer shall provide to Affiliate shall
equal at least One Million Dollars ($1,000,000) per year for a three (3) year
period commencing on the Service Commencement Date and continuing through the
third anniversary thereof.
(g) Dealer Showroom Accounts. Affiliate shall be entitled to
authorize agents authorized to sell Affiliate's programming services, including
without limitation, consumer electronic equipment dealers, TVRO dealers,
telephone companies, private cable companies, direct sales agents, and other
agents to receive the Service for the sole purpose of demonstrating to their
potential retail customers the functioning of satellite reception equipment and
Affiliate's services, including the Service. Such agents shall not be deemed
Service Subscribers, and therefore, no License Fees shall be payable for
distribution of the Service in such manner to such agents.
(h) VIP Accounts. During the Term of the Agreement, Affiliate
shall be entitled to authorize "VIP" subscriber accounts for Affiliate's
employees, key customers, vendors to receive the Service; provides the number of
such VIP accounts shall not exceed 0.25% of total DIRECTV Subscribers and such
VIP accounts are not charged for any other cable programming services. Such VIP
accounts shall not be deemed Service Subscribers, and therefore, no License Fees
shall be payable for such VIP accounts. During the Term of the Agreement,
Affiliate shall provide to Programmer authorization of up to fifteen (15) VIP
accounts for Affiliate's "Total Choice" package (or a successor package selected
by Affiliate) as well as the "Family Package" programming tier, to be
distributed by Affiliate without charge by Programmer, provided, however,
Programmer acknowledges and agrees that such accounts shall be allocated solely
without charge, to Programmer's affiliates and employees, and Programmer shall
be responsible for all hardware and installation costs associated with such
accounts, and all charges other than those related to the applicable Total
Choice or successor package.
(i) Free Preview. Affiliate shall have the right, from time to
time, as part of marketing and sales promotions for Affiliate's services, to
offer the Service free of charge to current subscribers to the "Total Choice"
package or other programming package (and not to the "Family Package") or
potential Service Subscribers for up to ninety (90) days in any year, or to
provide other promotional programs (including rebates, coupons or gift
certificates) that effectively allow Service Subscribers or potential Service
Subscribers to receive the Service without charge for one month or more (all
such promotions, "Free Promotions"). Affiliate shall not be obligated to pay any
License Fees for Service Subscribers who are receiving such Free Promotions,
during such Free Promotion with respect to each Service Subscriber.
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(j) Enhanced Video/Interactive Programming. Affiliate shall
have the right to retransmit, over the DBS Satellites, any and all of the
following promptly upon Programmer making such content available to any Other
Distributor pursuant to the terms that are at least as favorable to Affiliate as
those terms given to the Other Distributor: (i) data and informational
enhancements to the programming contained in or delivered along with the
Service, as a continuous stream of information and data (or otherwise) and
designed to augment the programming contained in the Service ("Enhanced Video
Content"); and (ii) Web pages from Programmer's web site(s) to Affiliate's
customer's hard drives whether accessed via such customer's set-top boxes or
otherwise ("Web Caching", and together with the Enhanced Video Content and other
interactive services offered by Programmer, the "Interactive Services").
Programmer agrees that it shall make the Enhanced Video Content and the Web
Caching available to Affiliate on terms that are at least as favorable to
Programmer as those given to any Other Distributor. In addition, if Programmer
is developing such interactive services, Programmer shall consult with Affiliate
with respect to the transmission technology interface that may be needed by
Affiliate or DIRECTV Subscribers in order to receive the Interactive Services.
Programmer shall utilize "industry standard" technologies with respect to the
delivery and reception of such Interactive Services.
(k) Website Links. Each of Affiliate and Programmer shall use
commercially reasonable efforts to provide "hot links" to each other's web
sites.
5. Representations, Warranties and Covenants.
(a) By Affiliate. Affiliate warrants, represents and covenants
to Programmer that it:
(i) is in compliance with and will comply with all
material Laws with respect to its rights and obligations under this Agreement,
including without limitation, all relevant provisions of the Cable Television
Consumer Protection and Competition Act of 1992 (as may be amended and any
successor, replacement or similar Law or statute) and any and all regulations
issued pursuant thereto;
(ii) has the power and authority to enter into this
Agreement and to fully perform its obligations hereunder;
(iii) shall distribute the Service in the Territory in
accordance with and subject to the terms and conditions set forth in this
Agreement;
(iv) shall (A) arrange and pay for reception of the
Service (excluding any authorization fees) from the U.S. domestic communications
satellite from time-to-time designated by Programmer to Affiliate with
Affiliate's approval of such designation ("Programmer's U.S. Satellite"); and
(B) acquire and maintain, at Affiliate's sole expense, any equipment, including,
without limitation, backup or reserve descramblers, which may be necessary to
decode and unscramble the signal(s) for the Service;
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(v) shall not, without Programmer's consent, knowingly
authorize or cause or knowingly permit any portion of the Service to be
recorded, duplicated, cablecast, exhibited or otherwise used (except on a
videocassette recorder or other home or personal taping device for private,
noncommercial use) for any purpose other than for distribution by Affiliate at
the time the same is made available;
(vi) shall not, without Programmer's prior written
approval, use the name of or logo for "Odyssey" or the names, titles or logos of
the Service or any of its programs, or the names, voices, photographs,
likenesses or biographies of any individual participant or performer in, or
contributor to, any program or any variations thereof, for any purpose other
than in material intended to advise DIRECTV Subscribers or potential DIRECTV
Subscribers of the availability and scheduling of the Service or as a channel
identifier. The restrictions set forth in this Section 5(a)(vi) shall apply only
to the extent they are applied by Programmer uniformly with respect to all of
its distributors of the Service, and shall not apply if Affiliate has received a
valid authorization from a third party for any of the uses described in this
Section 5(a)(vi); and
(vii) has obtained, and shall maintain in full force
during the Term hereof, such federal, state and local authorizations as are
material and necessary to operate the business it is conducting in connection
with its rights and obligations under this Agreement; and
(viii) the obligations created by this Agreement, in so
far as they purport to be binding on Affiliate constitute legal, valid and
binding obligations of Affiliate enforceable in accordance with their terms.
(b) By Programmer. Programmer warrants, represents and
covenants to Affiliate that:
(i) it is in compliance with and will comply with all
material Laws with respect to its rights and obligations under this Agreement,
including without limitation, all relevant provisions of the Cable Television
Consumer Protection and Competition Act of 1992 (as may be amended and any
successor, replacement or similar Law or statute) and any and all regulations
issued pursuant thereto;
(ii) it has the power and authority to enter into this
Agreement and to fully perform its obligations hereunder and once executed this
Agreement shall constitute a valid and binding agreement of Programmer
enforceable in accordance with its terms;
(iii) it has obtained, and shall maintain in full force
during the Term hereof, such federal, state and local authorizations as are
material and necessary to operate the business it is conducting in connection
with its rights and obligations under this Agreement;
(iv) it has obtained or will obtain all necessary
trademarks, copyrights, licenses and any and all other proprietary intellectual
property and other use rights
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necessary in connection with, and for Affiliate's distribution of, the Service
(including without limitation, the right to use the name of or logo for "Odyssey
Network" or the names, titles or logos of the Service or any of its programs, or
the names, voices, photographs, music, likenesses or biographies of any
individual participant or performer in, or contributor to, any program or any
variations thereof) and to perform its obligations hereunder and grant the
rights granted pursuant to Section 1;
(v) it shall not, without Affiliate's prior written
approval, use the name or logo for "DIRECTV" or other names and logos owned or
controlled by Affiliate (and its Affiliated Companies as defined in Section 8
below) without the prior written consent of Affiliate;
(vi) there are no (and it covenants that it shall not
enter into directly or indirectly, allow or otherwise permit any) affiliation,
distribution or any other agreements, whether written or oral, granting to
distributors and/or any other third party, person or entity any form or type of
exclusive or other rights that would limit or restrict in any way Affiliate's
rights to distribute the Service in the Territory pursuant to this Agreement;
and
(vii) The obligations created by this Agreement, in so
far as they purport to be binding on Programmer constitute legal, valid and
binding obligations of Programmer enforceable in accordance with their terms.
6. Term; Termination.
(a) Term; Extension; Service Commencement Date. The term of
this Agreement shall be for the period commencing on the date hereof and ending
on the earlier of the following: (i) commencement of the Term of the Affiliation
Agreement for DBS Satellite Exhibition of Cable Networking Programming between
Programmer and Affiliate, dated as of August 20, 2001; or (ii) the sixth
anniversary of the Service Commencement Date (the "Term"). The "Service
Commencement Date" means the earlier of (i) the date on which Affiliate
commences distribution of the Service over a DBS Satellite for
revenue-generating purposes, as determined by Affiliate in its sole discretion;
or (ii) the launch date of Affiliate's "Family Package". If the Service
Commencement Date has not occurred by December 31, 2000, Programmer may, in its
sole discretion, terminate this Agreement.
(b) Termination for Breach, Bankruptcy; Discontinuance of
Business. This Agreement may be terminated by either party (the "Affected
Party"), in its discretion, at any time after any of the following occurrences,
except as provided in this Agreement, with respect to the other party (the
"Other Party"):
(i) the failure by the Other Party, its successors or
assigns to perform any material obligation hereunder which is not cured within
thirty (30) days after receipt of written notice thereof from the Affected Party
or as to which reasonable steps to cure have not been commenced within such
period (or are not thereafter diligently pursued and completed within an
additional thirty (30) days);
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(ii) the filing of a petition in bankruptcy or for
reorganization by or against the Other Party under any bankruptcy act; the
assignment by the Other Party for the benefit of its creditors, or the
appointment of a receiver, trustee, liquidator or custodian for all or a
substantial part of the Other Party's property, and the order of appointment is
not vacated within thirty (30) days; or the assignment or encumbrance by the
Other Party of this Agreement contrary to the terms hereof; or
(iii) if Affiliate discontinues operation of the DBS
Distribution System, or Programmer discontinues operation and distribution of
the Service, in either which case neither party shall have any further liability
to the other.
(c) Termination by Affiliate. Affiliate may, subject to a
sixty (60) day cure period pursuant to the terms set forth in Section 6(b)(i),
terminate this Agreement upon ninety (90) days' prior written notice to
Programmer:
(i) if at any time the general quality and quantity of
programming (including, without limitation, the percentage of broadcast time
during which new seasonal material is presented) on the Service materially
changes from that existing as of the date of this Agreement, or the genre of
programming materially changes from that described in Section 1(b) and existing
on the date of this Agreement; or
(ii) in the event that a transfer or sale by Programmer
does not comply with Section 11 below.
(d) Force Majeure. Notwithstanding any other provision in this
Agreement, neither Programmer nor Affiliate shall have any liability to the
other or any other person or entity with respect to any failure of Programmer or
Affiliate, as the case may be, to transmit or distribute the Service or perform
its obligations hereunder if such failure is due to any failure or degradation
in performance of Programmer's U.S. Satellite or the DBS Satellite(s) or
transponders on such satellites (as applicable) or of the DBS Distribution
System (in which case, Affiliate shall be excused from its distribution
obligations under this Agreement), or of any scrambling/descrambling equipment
or any other equipment owned or maintained by others (including, without
limitation, Affiliate's automated billing and authorization system), any failure
at the origination and uplinking center used by Programmer or Affiliate, any
labor dispute, fire, flood, riot, legal enactment, government regulation, Act of
God, or any cause beyond the reasonable control of Programmer or Affiliate
(financial inability excepted), as the case may be (a "Force Majeure"), and such
non-performance shall be excused for the period of time such failure(s) causes
such non-performance; provided, however, that if Affiliate determines in its
sole discretion that it is commercially or technically unfeasible to cure a
Force Majeure with respect to the DBS Distribution System or DBS Satellite and
so notifies Programmer, then either party may terminate this Agreement effective
upon written notice to the other party. The parties acknowledge and agree that
although the Services may at any given time be uplinked to only one of several
DBS Satellites, failure or degradation in any of such DBS Satellites may require
Affiliate to reduce the number of
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programming services available for allocation among all of the DBS Satellites,
with such reduction including, without limitation, curtailment or termination of
the distribution of the Service by Affiliate, at Affiliate's sole discretion,
provided that in connection with such determination, Affiliate will accord good
faith consideration to Programmer's relationship with Affiliate and the parties'
mutual interest. Accordingly, Programmer further acknowledges and agrees that
the provisions set forth in the first sentence of this Section 6(d) shall apply
and shall exculpate Affiliate and excuse the performance of Affiliate hereunder
in the event of a failure or degradation of any of the DBS Satellites or the
transponders on any such satellites, regardless of whether the satellite to
which the Service is uplinked at the time of such failure or degradation is
itself the subject of such failure or degradation.
(e) Survival. Termination of this Agreement pursuant to this
Section 6 shall not relieve either party of any of its liabilities or
obligations under this Agreement, including without limitation those set forth
below in Section 8, which shall have accrued on or prior to the date of such
termination.
7. Separate Entities. No officer, employee, agent, servant or
independent contractor of either party hereto or their respective subsidiaries
or affiliates shall at any time be deemed to be an employee, servant or agent of
the other party for any purpose whatsoever, and the parties shall use
commercially reasonable efforts to prevent any such misrepresentation. Nothing
in this Agreement shall be deemed to create any joint venture, partnership or
principal-agent relationship between Programmer and Affiliate, and neither shall
hold itself out in its advertising or in any other manner which would indicate
any such relationship with the other.
8. Indemnification; Limitation of Liability.
(a) By Programmer. Programmer shall indemnify, defend and hold
harmless each of Affiliate, its Affiliated Companies (as defined below),
Affiliate's contractors, subcontractors and authorized distributors and the
directors, officers, employees and agents of Affiliate, such Affiliated
Companies and such contractors, subcontractors and distributors (collectively,
the "Affiliate Indemnitees") from, against and with respect to any and all
claims, damages, liabilities, costs and expenses (including reasonable
attorneys' and expert's fees) incurred in connection with any claim against any
of the Affiliate Indemnitees arising out of (i) Programmer's breach of any
provision of this Agreement, (ii) material or programming supplied by Programmer
pursuant to this Agreement, including any Interactive Services, and distributed
by Affiliate in accordance with this Agreement, (iii) the distribution or
cablecast of any programming of the Service which violates or requires payment
for use or performance of any copyright, right of privacy or literary, music
performance or dramatic right, (iv) Programmer's advertising and marketing of
the Service, and/or (v) any other materials, including advertising or
promotional copy, regarding the Service, supplied or expressly approved by
Programmer. Notwithstanding the foregoing, if the law requires that the
distributor obtain music performance licenses for the Service separately from
the programmer, Programmer shall not be responsible for obtaining such license
nor will Programmer indemnify Affiliate for any costs associated with the
failure to have such a license. If the only music
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performance rights licenses available to Affiliate (after good faith
negotiations by Programmer for a non-income based license) are based upon
distributors' incomes, Programmer will indemnify Affiliate for such music
performance license(s) (except to the extent that any breach of the license is
based upon a misstatement of Affiliate's income), and the parties shall
negotiate in good faith for an equitable division of the license payments. In
addition, Programmer shall pay and hold the Affiliate Indemnitees harmless from
any federal, state, or local taxes or fees which are based upon revenues derived
by, or the operations of, Programmer. As used in this Section 8, "Affiliated
Company(ies)" shall mean, with respect to any person or entity, any other person
or entity directly or indirectly controlling, controlled by or under common
control (i.e., the power to direct affairs by reason of ownership of voting
stock, by contract or otherwise) with such person or entity and any member,
director, officer or employee of such person or entity.
(b) By Affiliate. Affiliate shall indemnify and hold harmless
each of Programmer, its Affiliated Companies, Programmer's contractors,
subcontractors and authorized distributors, each supplier to Programmer of any
portion of the Service hereunder and each participant therein and the directors,
officers, employees and agents of Programmer, such Affiliated Companies, such
contractors, subcontractors and distributors and such suppliers and participants
therein (collectively, the "Programmer Indemnitees") from, against and with
respect to any and all claims, damages, liabilities, costs and expenses
(including reasonable attorneys' and experts' fees) incurred in connection with
any claim against the Programmer Indemnitees arising out of (i) Affiliate's
breach of any provision of this Agreement, (ii) the distribution by Affiliate of
the Service, including, without limitation, the insertion of commercial or other
announcements pursuant to Section 3 hereof (except with respect to claims
relating to the content of the Service for which Programmer is solely
responsible pursuant to Section 8(a)(ii) and Section 8(a)(iii)), (iii)
Affiliate's advertising and marketing of the Service (except with respect to
such advertising and marketing materials or content supplied or approved by
Programmer), and (iv) any other materials, including advertising or promotional
copy, supplied or approved by Affiliate. In addition, Affiliate shall pay and
hold Programmer harmless from any federal, state, or local taxes or fees,
including any fees payable to local franchising authorities, which are based
upon revenues derived by, or the operations of, Affiliate.
(c) Survival. Termination of this Agreement shall not affect
the continuing obligations of each of the parties hereto as indemnitors
hereunder. The party wishing to assert its rights set forth in this Section 8
shall promptly notify the other of any claim or legal proceeding with respect to
which such party is asserting such right. Upon the written request of an
indemnitee, the indemnitor will (1) assume the defense of any claim, demand or
action against such indemnitee and/or (2) allow the indemnitee to participate in
the defense thereof, such participation to be at the expense of the indemnitee.
Settlement by the indemnitee without the indemnitor's prior written consent
shall release the indemnitor from the indemnity as to the claim, demand or
action so settled.
(d) NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS
AGREEMENT:
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(1) IN NO EVENT SHALL ANY PARTY BE LIABLE FOR ANY
INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER FORESEEABLE OR NOT, OCCASIONED BY
ANY FAILURE TO PERFORM OR THE BREACH OF ANY OBLIGATION UNDER THIS AGREEMENT FOR
ANY CAUSE WHATSOEVER, WHETHER BASED ON NEGLIGENCE OR OTHERWISE.
(2) IN NO EVENT SHALL ANY PROJECTIONS, FORECASTS,
ESTIMATIONS OF SALES AND/OR MARKET SHARE OR EXPECTED PROFITS, OR OTHER
ESTIMATIONS OR PROJECTIONS BY AFFILIATE OR ANY OF ITS DIRECTORS, OFFICERS,
EMPLOYEES, AGENTS OR AFFILIATES, REGARDING OR RELATED TO AFFILIATE'S DBS
BUSINESS BE BINDING AS COMMITMENTS OR, IN ANY WAY, PROMISES BY AFFILIATE.
9. Notices. Except as set forth below, all notices hereunder shall be
in writing and delivered by hand or sent by certified mail, return receipt
requested, fax, or by an overnight delivery service to the receiving party at
its address set forth above or as otherwise designated by written notice. Notice
to Programmer shall be provided as follows:
If by mail, overnight,
facsimile or Crown Media United States, LLC
personal delivery: 12700 Ventura Boulevard, Suite 2000
Studio City, California 91604
Attention: Chief Operating Officer
Fax: (818) 755-2474
cc: Senior Vice President, Network Distribution
and Service
Fax: (818) 755-2625
Senior Vice President, Business & Legal Affairs
Fax: (818) 755-2461
Notice to Affiliate shall be provided as follows:
If by mail DIRECTV, Inc.
or facsimile: P.O. Box 92424
Los Angeles, California 90009
Attention: Senior Vice President, Programming
Fax: (310) 535-5426
cc: General Counsel
Fax: (310) 726-4991
If by overnight or DIRECTV, Inc.
personal delivery: 2230 East Imperial Highway
El Segundo, California 90245
Attention: Senior Vice President, Programming
cc: General Counsel
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Notice given by mail shall be considered to have been given five (5) days after
the date of mailing, postage prepaid certified or registered mail. Notice given
by facsimile machine shall be considered to have been given on the date receipt
thereof is electronically acknowledged. Notice given by an overnight delivery
service shall be considered to have been given on the next business day.
10. Waiver. The failure of any party to insist upon strict performance
of any provision of this Agreement shall not be construed as a waiver of any
subsequent breach of the same or similar nature. All rights and remedies
reserved to either party shall be cumulative and shall not be in limitation of
any other right or remedy which such party may have at law or in equity.
11. Binding Agreement; Assignment. Subject to Affiliate's rights under
Section 6(c)(ii), this Agreement shall be binding upon the parties hereto and
their respective successors and assigns, except that it may not be assigned by
transfer, by operation of law or otherwise, without the prior written consent of
the non-transferring party, which shall not be unreasonably withheld or delayed;
provided, however, that either Programmer or Affiliate may assign its rights and
obligations under this Agreement without such consent, including without
limitation, Affiliate's right to distribute the Service (i) to an Affiliated
Company or to a successor entity whether by sale of assets, merger or otherwise;
(ii) to a third party as part of preparing to go or going public or as part of a
merger, consolidation or sale of all or substantially all of a party's assets or
(iii) to a third party, provided the transferring party remains primarily liable
for the performance of such third party's obligations hereunder.
12. Laws of California. This Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable to
contracts made and to be fully performed therein by residents of the State of
California, except to the extent that the parties' respective rights and
obligations are subject to mandatory local, State and Federal laws or
regulations.
13. Entire Agreement and Section Headings. This Agreement sets forth
the entire agreement and understanding of the parties relating to the subject
matter hereof, and supersedes all prior agreements, arrangements, or
understandings relating to the subject matter hereof. This Agreement shall not
be modified other than in a writing, signed by each of the parties hereto. The
section headings hereof are for the convenience of the parties only and shall
not be given any legal effect or otherwise affect the interpretation of this
Agreement.
14. Severability. The parties agree that each provision of this
Agreement shall be construed as separable and divisible from every other
provision and that the enforceability of any one provision shall not limit the
enforceability, in whole or in part, of any other provision hereof. In the event
that a court of competent jurisdiction determines that a restriction contained
in this Agreement shall be unenforceable because of the extent of time or
geography, such restriction shall be deemed amended to conform to such extent of
time and/or geography as such court shall deem reasonable.
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Execution Version
15. Confidentiality. The parties agree that they and their employees
have maintained and will maintain, in confidence, the terms and provisions of
this Agreement, as well as all data, summaries, reports or information of all
kinds, whether oral or written, acquired or devised or developed in any manner
from the other party's personnel or files (the "Confidential Information"), and
that they have not and will not reveal the same to any persons not employed by
the other party except: (A) at the written direction of the other party; (B) to
the extent necessary to comply with the law or the order of a court of competent
jurisdiction, in which event the disclosing party shall so notify the other
party as promptly as practicable (and, if possible, prior to making any
disclosure) and shall seek confidential treatment of such information, or in
connection with any arbitration proceeding; (C) as part of its normal reporting
or review procedure to its parent company, its auditors and its attorneys, and
such parent company, auditors and attorneys agree to be bound by the provisions
of this Section 15; (D) in order to enforce any of its rights pursuant to this
Agreement; (E) to the NRTC, potential investors, insurers, and financing
entities; provided, however, that such person described above agrees to be bound
by the provisions of this Section 15; or (F) if at the time of disclosure the
Confidential Information is in the public domain through no fault of the
disclosing party. Promptly after the date set forth in the first sentence of
this Agreement, the parties shall use their best reasonable efforts to agree
upon a mutually acceptable press release with respect to the parties' general
business relationship under this Agreement and to jointly issue and release such
press release at a date mutually agreed upon. During the Term, neither party
shall issue an independent press release with respect to this Agreement or the
transactions contemplated hereby without consulting with the other party and
obtaining the prior written consent of the other party.
16. Inadequacy of Money Damages.
Programmer and Affiliate hereby acknowledge and agree that
Affiliate's distribution and marketing of the Service pursuant to the terms and
conditions contained herein are of the essence of this Agreement. Affiliate
further acknowledges and agrees that such carriage and marketing requirements,
subject to Force Majeure and other conditions of this Agreement, are special and
unique, and that Programmer would not be adequately compensated by the payment
of money damages in the event that Affiliate failed to comply with any of such
requirements and Programmer shall be entitled to specific performance of such
requirements. Programmer further acknowledges and agrees that the grant of
rights to Affiliate hereunder are special and unique, and that Affiliate would
not be adequately compensated by the payment of money damages in the event that
Programmer failed to comply with any of its obligations under this Agreement,
including without limitation, providing access to any Service programming to
Affiliate, as required hereunder and Affiliate shall be entitled to specific
performance of such obligations.
17. Cessation of Program Distribution.
(a) If Affiliate determines that its provision of any Service
programming
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violates any Law, then, following written notice to Programmer, Affiliate may
cease distributing such programming to the extent, but only to the extent,
necessary and for the time necessary, as reasonably determined by Affiliate, to
prevent such violation of Law from continuing. However, if a bona fide dispute
exists between Programmer and Affiliate as to whether a violation of any Law has
occurred, Affiliate shall not cease distributing such programming unless
Affiliate has received either (i) notice of and delivers a copy (if the action
is in written form) to Programmer of an Indictment (as defined below), or a
threat of any such Indictment, from any entity with jurisdiction or claiming to
have jurisdiction to enforce such Law, alleging or stating that the provision of
such programming is or could be a violation of such Law, or (ii) an opinion
letter to Affiliate from outside counsel that may be retained by Affiliate
stating that, in its opinion, the distribution of such programming appears to be
or could be found to be in violation of any Law that is currently being, is
threatened to be, or there exists a material likelihood will be, enforced.
Furthermore, if Affiliate ceases to distribute such programming and if a bona
fide dispute exists as to whether a violation of such Law has occurred, then
Programmer shall have the immediate right to seek a temporary restraining order
(as its sole and exclusive remedy prior to any final judicial order), on notice
of four (4) hours or more to Affiliate, to prevent the cessation of such program
distribution based on the non-existence of any such violation of such Law.
Affiliate shall be entitled to oppose Programmer's attempts to obtain any such
injunctive relief, including any temporary restraining order, but hereby agrees
to the following:
(i) Affiliate will not contest the jurisdiction of,
or the venue of, any action brought by Programmer in a federal district court
sitting in the Central District Court of California;
(ii) for a period of five (5) consecutive days after
such cessation of program service by Affiliate, Affiliate will make itself
available to accept service by telecopy or personal delivery on a 24-hour-a-day
basis; and
(iii) if Programmer is seeking a temporary
restraining order, Affiliate will not challenge the sufficiency of notice from
Programmer of an impending hearing if such notice is served at least four (4)
hours before the scheduled court hearing.
As used herein, "Indictment" shall mean an indictment, summons, cease and desist
order, or other similar order or filing.
18. Survival of Representations and Warranties. All representations and
warranties contained herein or made by the parties, and each of them, in
connection herewith shall survive any independent investigation made by either
party.
19. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all such
counterparts together shall constitute but one and the same instrument. The
parties also agree that this Agreement shall be binding upon the faxing by each
party of a signed signature page thereof to the other party. If such a faxing
occurs, the parties agree that they will each also immediately post, by Federal
Express, a fully executed original counterpart of the Agreement to the other
party.
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Execution Version
20. Dispute Resolution and Arbitration.
(a) Initial Dispute Resolution Procedures. Any dispute or
disagreement between Programmer and Affiliate arising out of this Agreement
shall be resolved according to the following dispute resolution procedure:
First, such dispute shall be addressed to each party's project manager (or
equivalent level manager) for discussion and attempted resolution. If any such
dispute cannot be resolved by such project managers within five (5) business
days from the date that either party gives notice that such dispute or
disagreement exists, then such dispute shall be immediately referred to the
appropriate, respective vice presidents (or equivalent level person) for
discussion and attempted resolution.
(b) Arbitration Procedures. If a dispute cannot be resolved to
the mutual satisfaction of both parties within five (5) business days (or such
longer period as may be mutually agreed upon) after the second-tier referral
described in Section 20(a), such dispute shall be referred to arbitration in Los
Angeles, California before three arbitrators in accordance with the Commercial
Arbitration Rules (the "Arbitration Rules") of the American Arbitration
Association, in effect on the date that notice of such dispute was originally
given. The three arbitrators shall be appointed as follows: Each party may
select one arbitrator and, thereafter these two shall select the third and final
arbitrator. If the two selected arbitrators cannot agree upon the third
arbitrator within five (5) days of their selection, then the third and final
arbitrator shall be selected by and according to the Arbitration Rules. Once
appointed, the arbitrators shall appoint a time and place for a pre-hearing
status conference not more than fourteen (14) days from the date of their
appointment, and shall appoint a time and place for a final hearing not more
than forty-five (45) days from the date of the status conference. The final
hearing shall conclude no later than thirty (30) days after its commencement.
The party that demands arbitration of the unresolved dispute or disagreement
shall specify in writing the matter to be submitted to arbitration. The
arbitrators shall render a single written decision setting forth an award and
stating with reasonable detail the reasons for the decision reached. Any cash
component of the award shall be payable in United States dollars through a bank
in the United States. Each party shall bear its own cost of preparing for and
presenting its case; and the cost of arbitration, including the fees, and
expenses of the arbitrators will be shared equally by the parties.
(c) Enforcement. The arbitration award shall be final and
binding upon the parties and may be confirmed by the judgment of any court
having appropriate jurisdiction, including without limitation California.
(d) Injunctive Relief. Notwithstanding the forgoing, but
subject to Subsection 20(a) above, neither Programmer nor Affiliate shall be
bound by the foregoing dispute resolution and/or arbitration procedures in this
Section 20 in the event that it seeks preliminary or interim injunctive or other
equitable relief.
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IN WITNESS WHEREOF, the undersigned parties have caused this Agreement
to be executed by their duly authorized representatives as of the day and year
first above written.
DIRECTV, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
CROWN MEDIA UNITED STATES, LLC
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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EXHIBIT A
PROGRAMMING SCHEDULE
EXHIBIT B
PROGRAMMER'S RATE CARD
<Table>
<Caption>
YEAR LICENSE FEE*
2000 $0.00
2001 $0.00
2002 $0.00
2003 $0.12
2004 $0.135
2005 $0.15
2006 $0.16
</Table>
* The License Fee shall be $0.00 for the three (3) year period
commencing on the Service Commencement Date and continuing through the
third anniversary of the Service Commencement Date. Commencing on the
date that immediately follows the third anniversary of the Service
Commencement Date, the License Fee shall be as set forth above for the
applicable year.