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EXHIBIT 10.4
SATELLITE SERVICES, INC.
PROGRAMMING SUPPLY AGREEMENT
THIS AGREEMENT, dated January 28, 1996, is made by and between
SATELLITE SERVICES, INC., a Delaware corporation ("SSI"), and INTERMEDIA
PARTNERS IV, L.P., ("Operator").
RECITALS
WHEREAS, SSI is an indirect wholly-owned subsidiary of
TeleCommunications, Inc., ("TCI") which has an interest in Operator, said
interest is described on Exhibit A hereto; and
WHEREAS, Operator owns interests (which may be direct or indirect,
through a chain of ownership in corporate and/or partnership entities or
otherwise) in certain audio or visual distribution facilities consisting of
cable (those facilities now owned or hereafter acquired shall be referred to
hereinafter as the "System" or "Systems") which provide cable television
services to various communities pursuant to valid cable television franchises or
other authorization where authorization is required, which systems' headends are
listed on Exhibit B attached hereto and incorporated herein by this reference,
as it may be amended from time to time; and
WHEREAS, Operator desires to appoint SSI as the non-exclusive agent of
Operator for obtaining and managing certain cable television or
satellite-delivered programming services as listed on Exhibit C hereto; as it
may be amended from time to time, and Operator desires to appoint SSI as the
exclusive agent for managing cable television and satellite-delivered
programming services for delivery to the subscribers of the Systems, and SSI
desires to accept such appointment, in the course of its normal business
practices as of the Effective Date first written above and upon the terms and
conditions set forth below; and
WHEREAS, Operator recognizes that it is one of a large number of
entities affiliated with SSI and acknowledges that while SSI will endeavor in
all instances to obtain the right to include Operator within the terms of any
affiliation agreement for the carriage of cable television or
satellite-delivered programming, SSI cannot guarantee to Operator that it will
be able to obtain such right.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, Operator and SSI agree as follows:
1. DEFINITIONS.
As used herein the following terms shall have the respective meanings
set forth below (terms defined in the
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singular to have the same meanings when used in the plural and vice versa):
1.1 Basic Service: The level of cable television service offered by a
System to its Subscribers (as defined below) and received by all of such
System's Subscribers.
1.2 Cable Television Service: "Cable television service" includes any
satellite-delivered audio service and any satellite-delivered video service,
whether delivered by television or otherwise.
1.3 Plan: The plan to be adopted by the committee described in Section
4.2 hereof relating to the selection, billing, management and collection
practices for all Programming Services carried on any System, which Plan will
include, but will not be limited to, those SSI Programming Services identified
on Exhibit C hereto (as defined below).
1.4 Premium Service: A Programming Service for which a separate
subscription charge is customarily imposed (i.e., a service which is sold on an
a la carte basis).
1.5 Programming Service: Any cable television programming service other
than locally available, free, standard, over-the-air broadcast television
signals or free programming on a public, educational or governmental channel.
"SSI Programming Services" shall consist of those Programming Services to be
supplied by SSI under SSI Affiliation Agreements (as defined below) to Operator
under this Agreement and shall be listed on Exhibit C hereto, as it may be added
to or deleted from, from time to time. As used in this paragraph, the term
"free" shall mean programming for which the System does not pay either pursuant
to an affiliation agreement, under copyright law, or otherwise.
1.6 Service Subscribers: As to each SSI Programming Service supplied
hereunder, the Subscribers in the Systems who receive from Operator SSI
Programming Service.
1.7 Tier Package: A group of cable television services for which a
charge is imposed in addition to or in excess of the charge for Basic Service.
1.8 SSI Affiliation Agreement(s): An agreement between SSI and a
supplier of an SSI Programming Service pursuant to which SSI purchases such SSI
Programming Service.
1.9 Subscriber: Each location to which a System provides any cable
television service directly or through a third party. Subscriber shall include
(but shall not be limited to) each dwelling (whether in a single-family or
multi-unit building), hotel or motel guest room, bar, hospital room, university
or college campus dormitory room or other location, restaurant and
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other residential, commercial or other location in which any cable television
service is received. If a System provides an SSI Programming Service to multiple
dwelling complexes, including (but not limited to) apartments, hotels and
motels, on a bulk-rate basis, and if the applicable SSI Affiliation Agreement
permits, the number of Service Subscribers attributable to each such bulk-rate
Subscriber shall be equal to the total monthly retail rate charged a complex for
the level of service on which the such SSI Programming Service is carried
divided by the standard monthly retail rate charged a non-bulk rate Service
Subscriber in the applicable System for such level of service. Notwithstanding
the foregoing, if the definition of "Subscriber" in any SSI Affiliation
Agreement is different than the definition set forth in this Section 1.9, the
definition set forth in the applicable SSI Affiliation Agreement shall control
for the purposes of such SSI Affiliation Agreement. The number of Subscribers
shall be determined as to any Programming Service pursuant to the pertinent SSI
Affiliation Agreement as of the last day of each month unless otherwise required
or permitted under the pertinent SSI Affiliation Agreement.
2. PURCHASE; PROGRAMMING RESPONSIBILITY.
2.1 Except as otherwise provided herein and to the extent permitted by
the SSI Affiliation Agreements, SSI agrees to provide to Operator, and Operator
agrees to buy and procure from SSI, the Programming Services desired by the
Systems, subject to the terms and conditions of this Agreement and of the SSI
Affiliation Agreements; provided, however, that Operator shall not be required
to purchase from SSI, and may purchase directly from the supplier thereof, any
Programming Service if Operator is able to do so at a cost lower than the cost
to Operator under the pertinent SSI Affiliation Agreement and if Operator fully
complies with the following requirements at all times: (a) From and after the
date of this Agreement, SSI shall have the right at all times to require
Operator to refrain from commencing carriage of any Programming Service if SSI
has not directly entered into an SSI Affiliation Agreement with the supplier of
such Programming Service, or if SSI has an Affiliation Agreement with the
supplier of such Programming Service only as a successor in interest to another
entity; (b) if Operator purchases a Programming Service directly from a supplier
at a cost lower than the cost to Operator under the pertinent SSI Affiliation
Agreement, Operator shall provide a copy of the affiliation agreement, letter
agreement or other contract relating to such Programming Service to SSI, upon
SSI's request, unless such agreement, letter or contract contains a
confidentiality provision precluding SSI's review thereof and such agreement,
letter or contract pertains to cable television systems which are not Systems.
Operator acknowledges and agrees that the carriage by Operator of any
Programming Service contrary to SSI's disapproval pursuant to this Agreement
shall constitute a breach of this Agreement and entitle SSI to immediately
terminate this Agreement.
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2.2 Operator hereby offers to SSI, and SSI hereby accepts, the
exclusive agency and authority to manage Operator's Programming Services in the
Systems, with full and exclusive authority to make and execute decisions on
behalf of Operator with respect to the management, selection, billing and
collection of Programming Services, during the term of this Agreement. Further,
SSI is authorized to control and direct the promotion and marketing of the
Programming Services, the sale of available commercial time in connection with
the Programming Services and all other matters associated therewith to the
extent necessary to insure that such promotion, sales and marketing efforts do
not violate any of the terms of the SSI Affiliation Agreements. SSI shall use
reasonable efforts to give Operator at least thirty (30) days advance written
notice of any action taken or decision made under this Section 2.2, and in any
event shall give Operator notice of such action taken or decision made no later
than ten (10) days thereafter.
2.3 Operator acknowledges and agrees that SSI shall at all times have
sole and complete discretion in negotiating and executing SSI Affiliation
Agreements. Operator acknowledges and agrees that Operator is only one of a
large number of entities affiliated with SSI on behalf of whom SSI negotiates
SSI Affiliation Agreements, and that SSI may not always be able to obtain the
most favorable rates and terms with respect to Operator. Operator acknowledges
and agrees that SSI shall have no liability whatsoever to Operator with respect
to or arising out of any SSI Affiliation Agreement or other contract or any term
or condition of any such contract or agreement or for any failure of SSI to
obtain the most favorable rates or terms with respect to Operator. Operator also
acknowledges and agrees that, from time to time, SSI Affiliation Agreements
might include restrictions on SSI Programming Services (such as pricing and
tiering restrictions) which are not present in other contracts, and that SSI
shall have no liability to Operator for the existence of any such restrictions.
2.4 Operator shall be ineligible to obtain any SSI Programming Service
under this Agreement unless and until Operator complies fully and accurately
with any and all requests for information and documentation made by SSI from
time to time in its sole and absolute discretion; provided, however, that SSI
shall impose no such requirement unless it is reasonably necessary in order to
comply with or administer an Affiliation Agreement.
2.5 Operator shall fully comply with all requirements imposed by SSI
immediately upon notice thereof. Without limitation, Operator shall comply with
the following requirements from and after the date, and during the term, of this
Agreement:
(a) By signing this Agreement, Operator hereby acknowledges
receipt of that certain Satellite Services, Inc. Affiliate Reporting
Procedures which
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may be amended by SSI from time to time (the "Procedures"). Operator
shall at all times fully comply with all requirements set forth in the
Procedures.
(b) Each time Operator launches or deletes carriage of an SSI
Programming Service on any System, or acquires or divests itself of a
System, SSI will be under no obligation to, and will not, reflect or
cause such launch, deletion, acquisition or divestiture to be effective
under this Agreement until such time as Operator shall have fully and
accurately complied with all of the reporting requirements set forth in
the Procedures, including, without limitation, Operator's obligation to
ensure the accuracy and completeness of Exhibits A and B at all times.
(c) Upon notice from SSI, Operator shall comply with all
requirements which are imposed on it by SSI for the purpose of
complying with the SSI Affiliation Agreements.
3. TERM.
3.1 The term of this Agreement shall be a seven (7) year period
commencing on the date hereof and, thereafter, this Agreement shall be
automatically renewed for successive one (1) year periods, unless sooner
terminated (i) by either party upon at least sixty (60) days' written notice
prior to the expiration of any such period, (ii) by agreement of the parties, or
(iii) otherwise pursuant to this Agreement.
3.2 Notwithstanding Section 3.1 hereof, this Agreement may be
terminated as provided below upon the happening of any of the following events:
(a) In the event that either party has made any material
misrepresentation herein or fails to keep, observe or perform any
material covenant, agreement, term or provision of this Agreement to be
kept, observed or performed by it (including the obligation to make all
payments when due and payable), the other party may terminate this
Agreement by giving at least sixty (60) days' prior written notice to
the former party, provided that, if such misrepresentation or failure
is subject to being cured, the party who has made such
misrepresentation or failure may avoid the effect of this provision by
effecting a complete cure within thirty (30) days of such notice.
(b) As to any System or Systems, by either party upon prior
written notice to the other, if SSI or an affiliated company does not
own the required interest in such System or Systems which enables SSI
to provide
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Programming Services to Operator pursuant to the SSI Affiliation
Agreements.
(c) At SSI's option, immediately upon the termination of
Tele-Communications, Inc's., or an affiliate's, ownership interest in
Operator.
(d) By SSI, immediately upon the violation by Operator of any
confidentiality provision contained in this Agreement.
(e) At SSI's option, upon sixty (60) days' prior written
notice by SSI of Operator's failure to provide information required by
SSI hereunder or to comply with the provisions of any SSI Affiliation
Agreement after notification by SSI.
3.3 Operator hereby represents, warrants and covenants to SSI that any
information provided in or pursuant to this Agreement, including, without
limitation, the Exhibits hereto, as amended from time to time, shall be true,
correct, and complete in all respects at all times. Operator shall notify SSI
immediately regarding any change in any such information. Subject to Sections
16.1 and 3.2(a) hereof, Operator hereby agrees that any violation of this
representation, warranty and covenant shall be grounds for the immediate
termination of this Agreement, at SSI's election.
3.4 Termination of this Agreement in accordance with this Section 3
shall not affect the rights of Operator or SSI with respect to any damages
either has suffered as a result of any breach of this Agreement, nor shall it
affect the rights of Operator or SSI with respect to any liabilities or claims
accruing, or based upon events occurring, prior to the date of termination.
4. SUPPLY OF PROGRAMMING.
4.1 Exhibit C attached hereto sets forth the SSI Programming Services.
Promptly following the latest of (i) the execution hereof, (ii) the acquisition
by Operator of any Systems after the date of this Agreement, or (iii) the
provision to SSI by Operator of all information and documentation requested with
respect to any such SSI Programming Service or System, as necessary, SSI will
cause an order to be filed with the appropriate suppliers of the SSI Programming
Services and otherwise take the steps required to assure the earliest possible
availability of such SSI Programming Services in such Systems. From time to time
hereafter and upon request of Operator, SSI will consult with Operator with
respect to the terms of the Plan and will submit to Operator a revised Plan,
reflecting all changes to the existing Plan that SSI and Operator have agreed
upon, within thirty (30) days after such agreement has been reached. In the
event that any revised Plan
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provides for Operator to furnish to its Subscribers any Programming Services not
then provided in the Systems, SSI shall confirm whether it can supply each such
Programming Service to Operator and, if it can, shall specify the terms at which
each such Programming Service shall be offered to Operator. Any Programming
Services added to the Systems after the date hereof pursuant to any revised Plan
(after the adoption of a Plan pursuant to Section 4.2 below) may be added to
Exhibit C hereof and, then, shall be an SSI Programming Service. If SSI cannot
provide an additional Programming Service under a revised Plan to Operator at
more favorable terms and conditions than Operator could obtain elsewhere, then
subject to Section 2.1 hereof, Operator may purchase such Programming Service
elsewhere, provided that SSI consents prior to such purchase.
4.2 The selection, billing, management and collection practices
relating to the Programming Services shall be recommended to SSI by a committee
of three members, two of which shall be representatives of SSI and one of which
shall be a representative of Operator. SSI shall establish the Plan in
accordance with such recommendation, but the Plan shall be subject to amendment
in accordance with subsequent recommendations of such committee. A majority vote
of the committee shall be required for any action taken by it, including any
amendments to the Plan or to Exhibit C hereto. Each party will designate their
representatives by written notice to the other.
4.3 If, during the term of this Agreement, any of the SSI Affiliation
Agreements (pursuant to which any SSI Programming Service is provided hereunder)
is terminated or expires and is not renewed, or SSI ceases generally to
distribute any such Programming Service pursuant to any of such SSI Affiliation
Agreements, then SSI shall as soon as practicable so notify Operator in writing
and the SSI Programming Service affected thereby shall be deleted from Exhibit
C; provided, however, that SSI agrees to use its reasonable efforts to give
Operator at least thirty (30) days' prior written notice of the deletion of any
such programming. SSI shall have no further obligation to supply the deleted SSI
Programming Service to Operator, and SSI shall incur no cost or liability to
Operator relating directly or indirectly to such deletion. SSI shall notify
Operator without delay of any written threat of a termination notice received by
SSI relating to any of the SSI Affiliation Agreements referred to in the Plan.
4.4 SSI shall make available to Operator its pro rata share of all
promotional material, program guides, time spots for local advertising,
promotional fees and other benefits available or extended to SSI under the SSI
Affiliation Agreements for the SSI Programming Services furnished to Operator
hereunder. Operator's pro rata share of such benefits shall be equal to the
ratio of the number of Service Subscribers (or Subscribers, as appropriate) in
the Systems who receive the applicable SSI Programming Service compared to the
number of
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Service Subscribers (or Subscribers, as appropriate) receiving the applicable
SSI Programming Services in all cable television systems, including the Systems,
to which SSI supplies such SSI Programming Service. To the extent permitted by
the SSI Affiliation Agreements, SSI hereby grants to Operator, or will cause to
be granted to Operator, all licenses or sublicenses of the proprietary rights in
any SSI Programming Services sold to Operator hereunder (including the names,
logos and marks relating to the SSI Programming Services) as may be necessary
for Operator to sell or promote the SSI Programming Service during the term of
this Agreement; provided, however, that Operator agrees hereby not to engage in
any conduct which could constitute the infringement of any such proprietary
rights.
4.5 To the extent permitted by the SSI Affiliation Agreements and
subject to Section 5.1(c), SSI will grant to Operator the right to distribute
and redistribute any SSI Programming Service to hotels, motels, hospitals,
universities, satellite master antenna television systems ("SMATVs"), individual
dwelling units or other locations by means of equipment capable of receiving the
SSI Programming Services directly from satellite ("TVROs"), multipoint
distribution services ("MDSs"), multichannel multipoint distribution services
("MMDSs") and any other commercial establishments within franchise areas of the
Systems; provided, however, that Operator shall cause any redistributee or
subdistributee to comply with all of the pertinent terms and conditions of this
Agreement and of all of the pertinent terms and conditions of the applicable SSI
Affiliation Agreements; and further provided that any such subdistribution or
redistribution shall not affect in any manner Operator's obligations pursuant to
this Agreement, including, but not limited to, Operator's obligations with
respect to reporting and payment. SSI will immediately notify Operator of the
grant by SSI to Operator of any of the above-referenced rights.
5. CARRIAGE BY OPERATOR.
5.1 Operator agrees that its carriage of the SSI Programming Services
pursuant to this Agreement shall be subject to the restrictions concerning
carriage of such Programming Services which are imposed by the suppliers of the
SSI Programming Services pursuant to the SSI Affiliation Agreements; provided,
however, that Operator shall only be required to comply with such restrictions
after the date of written notification by SSI to Operator of such restrictions.
Without limiting the generality of the foregoing, Operator agrees
(except if and as notified by SSI of specific requirements of an SSI Affiliation
Agreement to the contrary) with respect to each SSI Programming Service as
follows:
(a) Without the prior written consent of the
supplier of any SSI Programming Service, Operator
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shall not promote or market to any Subscriber any programming other
than the SSI Programming Service in any manner which might imply that
any programming not distributed by the SSI Programming Service is part
of or is connected in any way with the SSI Programming Service.
(b) Operator shall cause each System not to exhibit or
transmit the SSI Programming Service, or any part thereof, at any time
other than as scheduled by the SSI Programming Service.
(c) Operator shall cause each System to deliver the SSI
Programming Service to its Service Subscribers by coaxial cable, SMATV
or optical fibers only, and by no other means of delivery except as
otherwise authorized by SSI.
(d) Operator shall cause each System to identify one of its
channels for the carriage of each SSI Programming Service ("Service
Channel"), and Operator shall provide complete channel line-ups to SSI,
including changes or additions thereto. Operator may substitute an
alternative Service Channel to telecast the SSI Programming Service
only if such substitution is permitted by the pertinent Affiliation
Agreement, and if Operator gives SSI prior written notification of such
substitution. No SSI Programming Service may be shown on the same
channel as any "adult-only" programming or any programming that has
received, or had it been rated would have received, an "X" or "NC-17"
rating by the Motion Picture Association of America. Channels may be
used for more than one SSI Programming Service, but only to the extent
permitted by the SSI Affiliation Agreements.
(e) The Systems may distribute each SSI Programming Service on
a full-time basis only. Operator shall cause each System to distribute
each SSI Programming Service during the hours it is carried by the
Systems, without alteration, deletion, addition, editing or delay of
any kind.
(f) Operator shall not make available all or any part of any
SSI Programming Service or the trademarks of such SSI Programming
Service for any sponsorship, advertising, promotional, public service
or commercial announcement of any party, product or service.
(g) Operator shall not knowingly permit and shall take all
necessary and reasonable precautions to prevent, any unlawful or
unauthorized use, reproduction, exhibition or distribution of the SSI
Programming Services (except that this shall not
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prohibit the connection of subscribers' video recorders, VCRs or other
devices susceptible to use for home duplication of video programming),
and Operator shall cause each System to employ strict security systems
and procedures to prevent any such unlawful or unauthorized use,
reproduction, exhibition or distribution of the SSI Programming
Services.
(h) Operator shall not carry any SSI Programming Service as
part of a Tier Package or on an a la carte basis without prior written
notice to SSI and verification from SSI that such carriage does not
violate any provision of the Affiliation Agreement with respect to such
SSI Programming Service.
(i) Operator shall not delete any Programming Service (whether
an SSI Programming Service or not) from any System unless such deletion
(i) is permitted by the Plan and/or the SSI Affiliation Agreements, as
the case may be, (ii) does not adversely affect SSI's rates and (iii)
SSI is given prior written notice of such deletion, as required by SSI.
(j) In the event that SSI, under SSI Affiliation Agreements,
has exclusively or is the exclusive redistributor or subdistributor in
operating areas of Systems, Operator will fully conform its conduct and
activities to the standards required of SSI under the pertinent SSI
Affiliation Agreements.
(k) Each System shall deliver a video and audio signal of each
SSI Programming Service to its Service Subscribers of a quality
equivalent to the lesser of the following: (i) other cable television
programming services, or (ii) the technical quality provided by the
distributor of such SSI Programming Service.
(l) Any use by Operator of the vertical blanking interval or
audio subcarriers shall not degrade, or otherwise interfere with, the
picture quality of any SSI Programming Service or the audio portion of
any SSI Programming Service signal which is the principal audio
frequency of such SSI Programming Service.
(m) Operator shall use reasonable efforts to promote the SSI
Programming Services within the Operating Areas of the Systems.
"Operating Areas" shall mean that geographic area where each System is
authorized by appropriate governmental authority to operate a cable
television system and is operating a cable television system within
such area, and any geographic area where such System is obligated to
build and/or operate a cable television system.
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(n) Operator shall, to the extent permitted by applicable law,
cooperate with SSI in any marketing tests, surveys, rating polls and
other research in connection with the SSI Programming Services.
5.2 Operator shall give SSI all such notices of launches, deletions,
acquisitions and divestitures as required by the Procedures, as amended from
time to time.
6. DISCLAIMER OF TITLE; SERVICE MARKS.
6.1 SSI does not claim title or copyright in itself to any SSI
Programming Service being sold hereunder or to any name or mark relating
thereto. Operator acknowledges and agrees that SSI is merely an agent of
Operator for the licensing of SSI Programming Services and that SSI is granting
to Operator only such right or title to such SSI Programming Services as SSI may
hold at any given time pursuant to the SSI Affiliation Agreements.
6.2 Operator acknowledges and agrees that the names, logos and marks
relating to the SSI Programming Services (and the names of certain programs
which appear in the Programming Services) are and will at all times remain the
exclusive property of the owners of the SSI Programming Services (and suppliers
thereto) and neither SSI nor Operator has or shall acquire any proprietary or
other rights therein by reason of this Agreement or any activity relating to or
arising out of this Agreement. Operator acknowledges and agrees that SSI and the
pertinent suppliers of the SSI Programming Services shall have the complete
right to approve any and all of Operator's mentioning or using of such names,
logos or marks and any and all of Operator's publicity about the owners of the
SSI Programming Services or the products or programming included in the SSI
Programming Services prior to such mentioning, use, or publicity. Use by
Operator of such names, logos and marks in routine promotional materials such as
program guides, program listings and bill stuffers shall be deemed approved
unless SSI or the supplier of the pertinent SSI Programming Service specifically
notifies Operator to the contrary or unless an SSI Affiliate Agreement provides
to the contrary. Upon written notice to Operator from SSI or a supplier of an
SSI Programming Service so requesting, Operator shall provide SSI or the
supplier so requesting with all promotional materials using any of the names or
marks relating to the pertinent SSI Programming Service or the supplier thereof
prior to using such materials, and Operator shall not use any such materials
unless and until they have been specifically approved by the pertinent supplier.
7. RATES AND PAYMENT.
7.1 For all SSI Programming Services supplied to Operator, Operator
shall pay to SSI the rates described in Section 7.2 and 7.3. Operator's
payments made pursuant to this Section 7 shall be made to SSI at the address
for SSI set forth in Section 14 of this Agreement to the attention of the
Accounting Department. Operator's payments shall be made within thirty (30)
days of the last day of the month to which the invoice or statement relates.
7.2 (a) Except as otherwise provided in Section 7.2(b), the rates per
Subscriber or Service Subscriber, as the case may be, for any SSI Programming
Service supplied pursuant to this Agreement shall be equal (subject to
rounding) to the effective rates per Subscriber or Service Subscriber, as the
case may be, paid by SSI to the suppliers of such SSI Programming Services
pursuant to the SSI Affiliation Agreements, and such rates paid by Operator to
SSI shall be adjusted as and when such rates paid by SSI are adjusted.
Promptly after receipt by SSI of notice from its suppliers of any rate
adjustment relating to any of the SSI Programming Services supplied hereunder,
SSI shall notify Operator of the amount and effective date of such adjustment.
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(b) *Confidential Information Omitted.
7.3 *Confidential Information Omitted.
7.4 *Confidential Information Omitted.
7.5 *Confidential Information Omitted.
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7.6 *Confidential Information Omitted.
8. REPORTING.
8.1 Operator shall deliver to SSI, to the attention of the Accounting
Department by overnight mail (Federal Express or other overnight courier
service), not more than fifteen (15) days after the end of each calendar month,
a subscriber data report on a computer disc which is fully compatible with Excel
5 (or which is compatible with other software required by SSI after giving six
(6) months' prior written notice to Operator of the required change in software)
on forms provided by the SSI Accounting Department, setting forth such
information as to the Subscribers in the Systems and the Service Subscribers for
each SSI Programming Service certified as complete and correct by an executive
officer of Operator. The forms provided by the SSI Accounting Department shall
be used by Operator for purposes of this Section 8 until and unless SSI notifies
Operator of any additional or different forms, which forms shall thereafter be
submitted by Operator to SSI in order to comply with the reporting requirements
of SSI's suppliers hereunder. Operator shall at all times fully and accurately
complete and comply with the reporting system set forth in this Agreement and in
the Procedures, as amended by SSI from time to time. In the event that Operator
has fewer than ten (10) head-ends, and only for such time as Operator has fewer
than ten (10) head-ends, Operator shall have the right to use another reporting
system if SSI and Operator are able to mutually agree to a different system;
provided, however, that SSI shall have no obligation to agree to any different
system. In the event that Operator fails to timely deliver any of the reports
required pursuant to this Agreement or the Procedures, or in the event that any
such reports are inaccurate or incomplete, the administrative fee calculated in
accordance with Section 7.3 shall be doubled for each month in which any report
has not been timely delivered and/or is inaccurate or incomplete.
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8.2 Upon written request of SSI, Operator shall furnish SSI with copies
of such portions of all regular and periodic reports which Operator shall or may
be required to file with any federal, state or local regulatory agency
(including, but not limited to, the Federal Communications Commission), as
pertain to the Subscribers in the Systems, the Service Subscribers or the
Programming Services. Notwithstanding anything in the foregoing to the contrary,
Operator shall not be required to furnish to SSI any such report unless and
until such report shall be available for inspection by the public generally at
the agency at which such report shall have been filed.
8.3 Operator shall keep and maintain accurate books and records of all
matters relating to this Agreement in accordance with generally accepted
accounting principles. During the term of this Agreement and for three (3) years
after the termination of this Agreement, such books and records shall be
available to SSI (or its agent or a supplier of an SSI Programming Service or
its agent) for inspection and audit, at the inspecting party's expense, at
Operator's offices upon reasonable notice to Operator for the purpose of
determining the amounts due to SSI hereunder or to a supplier and verifying (i)
compliance with the SSI Affiliation Agreements, and (ii) the reports rendered to
SSI pursuant to this Agreement. Notwithstanding the preceding sentence, nothing
contained in this Agreement shall require Operator to allow SSI to inspect or
otherwise disclose any documents which are confidential or the disclosure of
which may, in the opinion of legal counsel reasonably satisfactory to SSI,
subject Operator to civil or criminal liability or enforcement action. SSI's
right to perform such audit shall be limited to twice in any twelve-month period
during the term of this Agreement or after the termination hereof and shall be
limited to an audit with respect to amounts to be paid in the current and two
prior calendar years only, except to the extent that an SSI Affiliation
Agreement requires more frequent or additional audits.
8.4 Operator hereby acknowledges and agrees that SSI shall impose such
administrative, informational and reporting requirements as are necessary in
order for SSI to administer and comply with the SSI Affiliation Agreements.
Operator acknowledges and agrees that Operator shall not be eligible for
inclusion under any such SSI Affiliation Agreement unless and until all such
administrative, informational and reporting requirements are satisfied in full
by Operator.
8.5 Operator shall not make any physical changes on or to any discs or
statements except with SSI's prior written consent. Until such time as Operator
fully complies with all reporting requirements pursuant to this Agreement and
the Procedures with respect to any launch, deletion, acquisition or divestiture,
SSI will not give its consent to Operator to modify any discs or statements and
will not account for such launch, deletion, acquisition or divestiture in its
invoices or statements to
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Operator, and, with respect to any continued carriage (or launch) of any SSI
Programming Service in an acquired System, Operator shall pay the supplier
thereof directly until such reporting requirements are fully satisfied.
9. REPRESENTATIONS AND WARRANTIES.
9.1 Operator hereby represents, warrants and covenants to SSI
throughout the term of this Agreement as follows:
(a) Operator is a limited partnership duly organized and
validly existing and in good standing under the laws of the State of
California; Operator has the power and authority to enter into this
Agreement and to fully perform its obligations hereunder; Operator is
under no contractual or other legal obligation which shall in any way
interfere with its full, prompt and complete performance hereunder; and
the individual executing this Agreement on behalf of Operator has the
authority to do so.
(b) The execution, delivery and performance of this Agreement
by Operator and the compliance with, and fulfillment of, the terms and
conditions hereof, will not as of the date hereof, (i) violate any
provisions of any federal, state or local laws, statutes or ordinances,
rules or regulations, judicial or administrative orders, awards,
judgments or decrees applicable to Operator or to any System; (ii)
conflict with, result in a breach of, or constitute a default under,
any agreement, license, franchise or instrument to which Operator or
any System is a party or by which it is bound; or (iii) conflict with
Operator's articles of incorporation or bylaws or partnership
agreement(s), as appropriate.
(c) Operator and each System is duly licensed and in
compliance with all existing laws and regulations to which it is
subject, whether federal, state or local, including, without
limitation, such as may pertain to the conduct of its cable television
business and other pay television business, if any, and in sending,
receiving and distributing the Programming Services, including but not
limited to, all applicable rules and regulations of the Federal
Communications Commission, and the requirements of all franchises,
permits, and approvals issued by regulatory authorities, except where
the failure to be in compliance would not have a material adverse
effect on Operator, and its respective subsidiaries and Systems, taken
as a whole.
(d) Operator shall not add any material to any
of the SSI Programming Services, including, without
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limitation, any advertising inserted by Operator or materials used by
Operator in advertising or promoting the SSI Programming Services,
which contains any material which will libel, slander or defame any
person, or violate any person or entity's right of privacy or publicity
or include any obscenity and the materials prepared by Operator or
added by Operator to any of the SSI Programming Services shall not
violate, infringe upon or give rise to any adverse claim with respect
to any contract right, common law right or any other right of any party
(including, without limitation, any copyright, trademark, literary or
dramatic right, music synchronization right, right of privacy or
publicity or music performance right) or violate any law.
(e) As of the Effective Date, Operator has performed in
accordance with all of the terms and conditions of this Agreement and
has, as required hereunder, complied with the restrictions set forth in
the SSI Affiliation Agreements.
9.2 SSI hereby represents and warrants to Operator that it is a
corporation duly organized and validly existing under the laws of the State of
Delaware; SSI has the power and authority to enter into this Agreement and to
fully perform its obligations hereunder; SSI is under no contractual or other
legal obligation which shall in any way interfere with its full, prompt and
complete performance hereunder; and the individual executing this Agreement on
behalf of SSI has the authority to do so.
10. AVAILABILITY OF INDEMNITIES.
SSI makes no representation or warranty as to whether the SSI
Programming Services, or any of them, are free of the rightful claim of any
third person by way of alleged or proven libel, slander, defamation, invasion of
privacy or publicity, or violation or infringement of copyright (including music
performance rights for any and all performances through to Operator's
subscribers), literary, dramatic or music synchronization rights or obscenity or
any other form or forms of speech (whether or not protected by the Constitution
of the United States or any state) or otherwise arising out of the content of
the SSI Programming Services as furnished by the suppliers thereof; provided,
however, SSI covenants that, to the extent permitted by law and any SSI
Affiliation Agreement, any and all of the indemnities given by the suppliers of
the SSI Programming Services and set forth in any of the SSI Affiliation
Agreements pursuant to which SSI from time to time provides any SSI Programming
Service hereunder shall extend to the Systems as a result of Operator's purchase
of such SSI Programming Services hereunder. SSI agrees to take all action
necessary to enforce
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any such indemnity on behalf of the Systems upon the request of Operator and at
Operator's cost and expense.
11. INDEMNIFICATION.
11.1 Operator shall indemnify, defend and forever hold harmless SSI,
its affiliates, SSI's suppliers of SSI Programming Services pursuant to
Affiliation Agreements, and each of their respective officers, directors,
shareholders, partners and employees, and the successors and assigns of any
thereof, from and against any and all claims, judgments, liabilities, losses,
costs, damages or expenses (including, without limitation, reasonable counsel
fees, disbursements, administrative and/or court costs) that SSI or any such
indemnitee may suffer arising from, out of, or relating to, (a) any breach of
Operator's covenants, representations or warranties under this Agreement, or
under the Procedures; (b) the distribution by Operator of Programming Services
(including, without limitation, SSI Programming Services) except to the extent
the claim, judgment, liability, loss or expense arises from or relates to a
breach by SSI of its covenants under this Agreement or a breach by SSI of the
SSI Affiliation Agreements which is not caused by an act or failure to act of
Operator; (c) any deletion or material added by Operator to any Programming
Service (including, without limitation, SSI Programming Services) which deletion
or addition gives rise to losses, liabilities, claims, costs, judgments, damages
or expenses, including, without limitation, reasonable counsel fees and court
costs; (d) any breach or violation by SSI of any of the terms or provisions of
any SSI Affiliation Agreement which is caused, directly or indirectly, in whole
or in part, by Operator, through any action or inaction, after Operator has been
notified by SSI in writing that such violation or breach would result; or (e)
any violation or breach by Operator of any of the confidentiality provisions of
this Agreement or the Procedures, including, without limitation, any violation
or breach which in any manner, directly or indirectly, results in an increase in
rates owed by SSI or any of its affiliates to the suppliers of Programming
Services (including, without limitation, SSI Programming Services). No claim for
indemnity hereunder shall be based upon, or include as a measure of damages,
lost profits or other consequential damages.
11.2 SSI shall indemnify, defend and forever hold harmless Operator,
its affiliates and each of their respective officers, directors, shareholders,
partners and employees, and the successors and assigns of any thereof, from and
against any and all claims, judgments, liabilities, losses, costs, damages or
expenses (including, without limitation, reasonable counsel fees, disbursements,
court and/or administrative costs) that Operator or any such indemnitee may
suffer as a result of, (a) any breach by SSI of its covenants, representations
or warranties under this Agreement; or (b) a breach by SSI of the terms of the
SSI Affiliation Agreements in connection with the provision of SSI Programming
Services to the Systems if by
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virtue of such breach the suppliers of such SSI Programming Services assert a
claim against Operator or any such indemnitee, provided in either case that such
breach by SSI is not a result of an act or failure to act of Operator. No claim
for indemnity hereunder shall be based upon, or include as a measure of damages,
lost profits or other consequential damages.
11.3 In connection with any indemnification provided for in this
Section 11, each party shall so indemnify the other only if such other party
claiming indemnity shall give the indemnifying party prompt notice of any claim
or litigation to which its indemnity applies. Whenever it shall come to the
attention of a party that it has suffered or incurred, or may suffer or incur,
any loss with respect to a single item or an aggregate of items covered by this
Section 11, such party shall promptly so notify the other party in writing, and
shall tender the defense of such claim to the other party. If a claim to which
these indemnification provisions apply arises out of a suit or other demand by a
third party against the indemnified party, its affiliates, subsidiaries, agents
or assigns, the indemnified party will cause notice thereof to be promptly given
to the indemnifying party, unless the indemnified party shall have been advised
by counsel that there may be one or more legal defenses available to it which
are different from or additional to those available to the indemnifying party.
If the indemnifying party accepts defense of any tendered claim, the
indemnifying party will pay all amounts resulting therefrom to the extent of the
indemnification required hereunder. If the indemnified party does not accept the
defense of any tendered claim for the reason referred to above or the
indemnifying party does not accept the defense of a tendered claim, the
indemnifying party will nevertheless provide reasonable cooperation to the
indemnified party in the defense of same and will pay all amounts resulting from
the indemnified party's defense to the extent of the indemnification required
hereunder, and the indemnified party will consult with the indemnifying party
prior to effecting any settlement thereof. Each party agrees that it will not
settle or permit the settlement of any matter giving rise to any loss without
the prior written consent of the other party, which shall not be unreasonably
withheld or delayed.
11.4 The terms and conditions of this Section 11 shall survive the
expiration or termination of this Agreement, regardless of the reason for such
expiration or termination.
12. LIMITATION OF LIABILITY.
SSI shall not be liable to Operator or any other party with respect to
any nonperformance or delay in performance of its obligations hereunder if such
failure or delay is due wholly or in part to failure of equipment, action or
claims by any third party, labor dispute or any cause beyond SSI's reasonable
control.
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13. ASSIGNMENT AND DELEGATION.
Neither party may assign this Agreement or any right accruing
hereunder, or delegate its performance in whole or in part, unless approved
prior thereto in writing by the other party in its sole and absolute discretion;
provided, however, that SSI may assign its rights and delegate its obligations
of performance hereunder, without the prior consent of Operator, to an affiliate
of SSI. Any such assignment or delegation without such prior approval except as
provided in the previous sentence shall be null and void.
14. NOTICES.
Any notice or communication given pursuant to this Agreement shall be
in writing and delivered personally or via courier service or mailed by
certified mail, return receipt requested, postage prepaid or via facsimile
transmission as follows:
If to SSI to:
Satellite Services, Inc.
Terrace Tower II
5619 DTC Parkway
Englewood, CO 80111-3000
Fax: (303) 488-3208
Attention: President
With a copies to the same address, marked:
Attention: Vice President of Programming
Administration
If to Operator to:
InterMedia Management, Inc.
235 Montgomery Street
Suite 420
San Francisco, California 94104
Fax Number: (415) 397-3978
Attention: Leo J. Hindery, Jr., General Partner
With a copy to the same address, marked:
Attention: Legal Department
or to such other address or addresses as either party may designate by notice
given pursuant hereto. Such notice shall be deemed given when received by the
other party, except in the case of mailed notices which shall be deemed given
three days after the date when duly mailed and except in the case of
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notices sent by overnight courier which shall be deemed given on the business
day next succeeding the day presented to such overnight courier for delivery and
except in the case of facsimile transmission, which shall be deemed given on the
date of transmission if a business day, or on the next business day after the
day of transmission if not transmitted on a business day.
15. CONFIDENTIALITY
Neither Operator nor SSI shall disclose (whether orally or in writing,
or by press release or otherwise) to any third party (other than their
respective officers, directors and employees, in their capacity as such, and if
Operator is a partnership or joint venturer, the managing general partner of
Operator (and if such managing general partner is not an individual, but rather
a business entity, then the senior, executive individual in direct control of
the operations of such business entity), the respective auditors and attorneys
of SSI and Operator; provided, however, that the disclosing party agrees to be
responsible for any breach of the provisions of this Section 15 by such
permitted third parties, any information with respect to the terms and
provisions of this Agreement, and Operator shall not disclose any information
with respect to the rates for SSI Programming Services, the terms and provisions
of the Procedures, or any Affiliation Agreement, and SSI shall not disclose any
information obtained in any inspection and/or audit of Operator's books and
records, except: (i) to the extent necessary (but redacted to the greatest
extent possible) to comply with the valid order of a court of competent
jurisdiction, in which event the party making such disclosure shall so notify
the other as promptly as practicable (and, if possible, prior to making such
disclosure) and shall seek confidential treatment of such information; (ii) as
part of its normal reporting or review procedure to its parent company, its
auditors and its attorneys; provided, however, that the disclosing party agrees
to be responsible for any breach of the provisions of this Section 15 by such
parent company, its auditors and attorneys; (iii) in order to enforce its rights
or perform its obligations pursuant to this Agreement; or (iv) if mutually
agreed by SSI and Operator, in advance of such disclosure, in writing. Further,
Operator hereby acknowledges the extraordinarily confidential nature of the
Affiliation Agreements and hereby fully waives any and all rights, now or
existing in the future, to ever see or have disclosed to it any term or
provision of any Affiliation Agreement of SSI except as required (and then,
redacted to the greatest extent possible) by a final order of a court of
competent jurisdiction. The provisions of this Section 15 shall survive the
expiration or termination (for any reason) of this Agreement.
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16. MISCELLANEOUS.
16.1 Amendments; Waivers. This Agreement may be amended, modified or
canceled, and any terms, covenants or conditions hereof may be waived, only by a
written instrument executed by the parties hereto or, in the case of a waiver,
by the party waiving noncompliance. No delay on the part of any party hereto in
exercising any right, power or privilege hereunder shall operate as a waiver
thereof; nor shall any waiver on the part of any party hereto of any right,
power or privilege hereunder operate as a waiver of any other right, power or
privilege hereunder; nor shall any single or partial exercise of any right,
power or privilege hereunder preclude any other or further exercise thereof or
the exercise of any other right, power or privilege hereunder.
16.2 Entire Agreement. This Agreement constitutes the entire agreement
between the parties with respect to the subject matter hereof, superseding all
prior agreements or understandings, written or oral.
16.3 Captions. Captions contained in this Agreement are inserted only
as a matter of convenience and in no way define, limit, extend or describe the
scope of this Agreement or the intent of any of its provisions.
16.4 Enforceability. If any provision of this Agreement or the
application thereof to any person or circumstance shall to any extent be held in
any proceeding to be invalid or unenforceable, the remainder of this Agreement,
or the application of such provision to persons or circumstances other than
those to which it was held to be invalid or unenforceable, shall not be affected
thereby and the parties further agree hereby to negotiate in good faith with
respect to an equitable modification of the provisions or application thereof
held to be invalid.
16.5 Governing Law. This Agreement shall be governed by and construed
in accordance with the internal laws of the State of New York without regard to
principles of choice of laws.
16.6 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be considered an original and all of which
shall constitute one and the same instrument.
16.7 Successors. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and, subject to Section 13, their respective
successors and assigns. The provisions of this Agreement are for the exclusive
benefit of the parties hereto and their permitted assigns, and no other person
is intended to be a third party beneficiary or to have any rights by virtue of
this Agreement.
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16.8 No Inference Against Author. Operator and SSI each acknowledge
that this Agreement was fully negotiated by the parties and, therefore, no
provision of this Agreement shall be interpreted against any party because such
party or its legal representative drafted such provision.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.
SATELLITE SERVICES, INC., a
Delaware corporation
By /s/ Nancy Valentine
-----------------------------------
Nancy Valentine
Its: Vice President of Programming
Administration
INTERMEDIA PARTNERS IV, L.P., a
California limited partnership
By InterMedia Capital Management IV, L.P.
Its: General Partner
By /s/ Leo J. Hindery, Jr.
--------------------------------
Its: Managing General Partner
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EXHIBIT A
to
SATELLITE SERVICES, INC.
PROGRAMMING SUPPLY AGREEMENT
by and between
Satellite Services, Inc. and
InterMedia Partners IV, L.P.
Dated as of January 28, 1996
OWNERSHIP INTEREST OF TCI COMMUNICATIONS, INC. IN OPERATOR
TCI Communications, Inc. has a 33% partnership interest in Operator.
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EXHIBIT B
to
SATELLITE SERVICES, INC.
PROGRAMMING SUPPLY AGREEMENT
by and between
Satellite Services, Inc. and
InterMedia Partners IV, L.P
Dated as of January 28, 1996
SYSTEM HEADENDS AND OPERATOR'S OWNERSHIP INTERESTS THEREIN
Operator owns 100% of the assets of the systems served by the headends listed
below:
Gibbs, TN
Thompson, TN
Baggett, TN
Hendersonville, TN
Waverly, TN
Montery, TN
Ft. Campbell, TN
Kingsport, TN
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EXHIBIT C
to
SATELLITE SERVICES, INC.
PROGRAMMING SUPPLY AGREEMENT
by and between
Satellite Services, Inc. and
InterMedia Partners IV, L.P
Dated as of January 28, 1996
PROGRAMMING SERVICES
TO BE DETERMINED
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