EXHIBIT 10.71
DIGITAL MUSIC EXPRESS AFFILIATION AGREEMENT
Between
INTERNATIONAL CABLECASTING TECHNOLOGIES INC.
And
PRIMESTAR(R) PARTNERS
Dated as of
January 25, 1996
TABLE OF CONTENTS
HEADING PAGE NO.
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1. DEFINITIONS............................................................. 1
2. TERM.................................................................... 1
3. RIGHTS.................................................................. 1
4. CONTENT OF THE SERVICE.................................................. 1
(a) Channels........................................................... 1
(b) Simulcast Option................................................... 2
(c) Other Content...................................................... 2
(d) [*]................................................................ 2
5. DELIVERY OF THE SERVICE BY ICT.......................................... 2
(a) ICT's Transmission of Service...................................... 2
(b) Technical Information to Be Provided............................... 2
6. DISTRIBUTION OF THE SERVICE BY AFFILIATE................................ 3
(a) The DBS Distribution System........................................ 3
(b) Quality of Transmissions........................................... 3
(c) Equipment and Maintenance.......................................... 3
(d) Security Measures.................................................. 3
(e) No Alteration, Editing or Delay.................................... 3
7. AFFILIATE DISTRIBUTION OPTIONS.......................................... 3
8. LICENSE FEES FOR PRIVATE RESIDENCES..................................... 4
(a) Basic Service...................................................... 4
(b) Premium Tier Service............................................... 4
(c) Premium Only Service............................................... 4
(d) Performance Rights Increase........................................ 4
(e) Accounting Periods................................................. 4
(f) Late Payments...................................................... 4
(g) No Gratis Distribution............................................. 4
9. REPORTS AND AUDITS...................................................... 5
(a) Accounting Report Forms............................................ 5
(b) Books and Records.................................................. 5
(c) Music Performance Reports.......................................... 5
(d) Re-sale Certificates............................................... 5
10. LAUNCH, MARKETING AND CARRIAGE OF SERVICE............................... 5
11. RESEARCH................................................................ 6
12. PROPRIETARY MARKS....................................................... 7
(a) Rights in Proprietary Marks........................................ 7
(b) Use of Proprietary Marks........................................... 7
(c) No Adverse Use by Affiliate........................................ 7
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* Indicates that material has been ommitted and confidential treatment has been
requested therefore. All such omitted material has been filed separately with
the Commission pursuant to Rule 24b-2.
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TABLE OF CONTENTS
HEADING PAGE NO.
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13. LIMITATIONS ON RIGHTS AND RESERVATION OF RIGHTS.................. 7
(a) Limitations on Rights....................................... 7
(b) Reservations of Rights...................................... 8
14. TERMINATION...................................................... 8
15. WARRANTIES AND INDEMNITIES....................................... 8
(a) ICT's Warranties............................................ 8
(b) Affiliate's Warranties...................................... 9
(c) Mutual Indemnification...................................... 9
(d) Intellectual Property Indemnification....................... 9
(e) Notice of Claims............................................ 9
(f) Survival.................................................... 10
16. FORCE MAJEURE.................................................... 10
17. NOTICES.......................................................... 10
18. CONFIDENTIALITY.................................................. 11
19. ASSIGNMENT AND INSOLVENCY........................................ 11
(a) Assignment; Binding Effect; Reorganization.................. 11
(b) Insolvency of Affiliate..................................... 12
20. MISCELLANEOUS.................................................... 12
(a) Entire Agreement; Amendments; Waivers....................... 12
(b) Governing Law............................................... 12
(c) Relationship................................................ 12
(d) Severability................................................ 12
(e) No Inference Against Author................................. 12
(f) Headings.................................................... 13
(g) No Third-Party Beneficiaries................................ 13
(h) Counterparts................................................ 13
(i) Schedules................................................... 13
[*]
SCHEDULE A - Glossary of Terms........................................ 15
1. Service.......................................................... 15
2. Private Residence................................................ 15
3. Commercial Establishment......................................... 15
4. Distribution Area................................................ 15
5. Affiliate Subscribers............................................ 15
6. Distributors..................................................... 15
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* Indicates that material has been omitted and confidential treatment has been
requested therefore. All such omitted material has been filed separately
with the Commission pursuant to Rule 24b-2.
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TABLE OF CONTENTS
HEADING PAGE NO.
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SCHEDULE B - Commercial Establishments.................................... 16
1. Service to Commercial Establishments................................. 16
2. License Fees For Commercial Establishments........................... 16
3. Calculation of Fees When Service is Packaged......................... 16
4. Support Services..................................................... 16
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AFFILIATION AGREEMENT
THIS AGREEMENT ("Agreement"), dated as of January 25, 1995, is by and
between INTERNATIONAL CABLECASTING TECHNOLOGIES INC., a Delaware corporation,
with offices at ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ ("ICT") and PRIMESTAR PARTNERS, L.P., with offices at ▇
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ("Affiliate").
WHEREAS:
A. Affiliate has established or is in the process of establishing a
direct broadcast service satellite-based television system in North America
("DBS Distribution System"); and
B. Affiliate desires to obtain the right to distribute the "Service" (as
defined herein), known as "Digital Music Express", via the DBS Distribution
System.
NOW, THEREFORE, IT IS MUTUALLY AGREED AS FOLLOWS:
1. DEFINITIONS.
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Attached hereto as Schedule "A" is a glossary containing the
definitions of capitalized terms used in this Agreement.
2. TERM.
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The term of this Agreement shall be for five (5) years commencing as of the
date hereof.
3. RIGHTS.
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ICT hereby grants to Affiliate, and Affiliate hereby accepts, the
right and the obligation during the term hereof to launch and distribute the
Service throughout the Distribution Area by means of the DBS Distribution System
for reception at Private Residences and Commercial Establishments, and to
authorize Affiliate's Distributors (pursuant to terms and conditions, including
fees, determined by Affiliate) to market and sell the Service to Affiliate
Subscribers. The provisions regarding the distribution of the Service for
reception at Commercial Establishments are set forth on Schedule "B" attached
hereto.
4. CONTENT OF THE SERVICE.
----------------------
(a) Channels. The Service as provided by ICT shall consist of at least
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sixty (60), but no more than One Hundred and Twenty (120) channels of audio
music transmitted without commercial interruption, 24 hours a day, 7 days a
week, in digital format. The channels will each be comprised of a different
format of music, including, for example, but without limitation, jazz,
classical, adult contemporary, rock, country, urban, "oldies" and Latin music.
ICT may, upon reasonable notice to Affiliate, make changes in the channels or in
the genre of music. Channels may be added or deleted by ICT from time to time,
provided that the rights and obligations of ICT and Affiliate shall remain
unaffected thereby, except as otherwise set forth herein; and, provided further,
in the event that (a) ICT adds channels to the total number of channels of the
Service as of the launch date of the Service by Affiliate, Affiliate shall have
the right, but not the obligation,
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to carry such additional channels, and (b) the Service consists of fewer than
sixty (60) channels, Affiliate shall have the right to terminate this Agreement
upon thirty (30) days notice thereof to ICT. There are currently seventy-two
(72) channels fully programmed, and one hundred twenty (120) channels shall be
available by the end of 1995. ICT shall use reasonable efforts to provide that
the content of the Service is generally consistent with national broadcast
standards applicable to musical programming.
(b) Simulcast Option. Affiliate may, at its option, and at its sole cost
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and expense, add channels ("Simulcast Channels") to be transmitted along with
the Service for the simulcast of other programming. Simulcast Channels may only
be transmitted and received by utilizing the proprietary technology referred to
in Paragraph 6, below. In no event shall Affiliate's carriage of Simulcast
Channels (i) affect ICT's right to receive license fees pursuant to Paragraph 8
below, which shall remain unaffected by such carriage; or (ii) cause ICT to
incur any liability, cost or expense whatsoever.
(c) Other Content. The Service shall also include such data, transmission
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formats and other content as may be, in the reasonable judgment of ICT,
necessary or appropriate to the transmission, reception and processing of the
signal carring the Service, provided, however, that if ICT changes such data,
transmission formats or other content after Affiliate launches the Service, and
such change results in any additional costs to Affiliate or its Distributors to
receive the Service and/or to provide the Service to Affiliate Subscribers,
then, Affiliate shall have the right to immediately terminate this Agreement
unless ICT promptly pays such costs.
(d) *
5. DELIVERY OF THE SERVICE BY ICT.
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(a) ICT's Transmission of Service. Throughout the term hereof, ICT shall
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transmit the Service's signal in such a manner that it is able to be received
using Affiliate's then current technology.
(b) Technical Information To Be Provided. ICT shall provide to Affiliate in
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a timely manner all Information as may be necessary or appropriate concerning
the following matters: (i) the technical specifications of the manner in which
the Service will be provided to Affiliate, (ii) the technical specifications of
all land-based equipment which Affiliate will be required to provide hereunder
for reception and further transmission of the audio signals; and (iii) the
technical information necessary for the deciphering or unscrambling of ICT's
encrypted code. It is
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* Indicates that material has been omitted and confidential treatment has
been requested therefore. All such omitted material has been filed
separately with the Commission pursuant to Rule 24b-2.
2
specifically understood, however, that nothing in the foregoing provisions shall
be deemed either to give Affiliate any right in ICT's proprietary technology or
to require ICT to provide any information with respect thereto not required by
Affiliate in order to fulfill its obligations under this Agreement.
6. DISTRIBUTION OF THE SERVICE BY AFFILIATE.
----------------------------------------
(a) The DBS Distribution System. Throughout the term hereof Affiliate shall
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distribute the Service only via the DBS Distribution System. The term "DBS
Distribution System" shall mean the distribution system for television
programming services whereby the Service's signal is received at Affiliate's
uplink facility and then is up-linked to a DBS communications satellite for
transmission to Affiliate Subscribers.
(b) Quality of Transmissions. Affiliate shall monitor the quality of the
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transmission of the Service to Service Subscribers, and shall promptly take all
commercially reasonable steps necessary to maintain the high digital quality of
the transmission, and to correct any problems with the transmission of the
Service which are within Affiliate's ability to control.
(c) Equipment and Maintenance. Affiliate and/or its Distributors shall
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supply, install, service and maintain or shall arrange for the supply,
installation, servicing and maintenance, at its and/or their own cost and
expense, all such facilities, equipment and hardware, including, without
limitation, equipment necessary to receive the Service from the satellite,
wiring and tuner/receivers as may be necessary and appropriate for the
transmission of the Service to each Affiliate Subscriber. The tuner/receivers to
be utilized for the reception of the Service by Affiliate Subscribers shall be
either (i) the equipment provided by Affiliate and/or its Distributors for the
reception of other television programming services, (ii) equipment provided by
Affiliate and/or its Distributors for audio only reception, or (iii) equipment
manufactured by a manufacturer authorized by ICT for audio only reception. The
specifications for the tuner/receivers to be installed at the premises of
Affiliate Subscribers shall be such that they shall be compatible with standard
stereophonic equipment requiring left and right audio jacks; and such that shall
be addressable on a receiver-by-receiver and channel-by-channel basis.
(d) Security Measures. Affiliate shall take commercially reasonable and
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practical security measures to prevent the reception of the Service by any
person or at any location which is not at the time in question a Affiliate
Subscriber.
(e) No Alternation, Editing or Delay. Affiliate will distribute the Service
--------------------------------
during the hours it is provided by ICT, without alteration, editing or delay of
any kind, except as otherwise specifically permitted by ICT.
7. AFFILIATE DISTRIBUTION OPTIONS.
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Affiliate and Affiliate's Distributors shall have the option to
distribute the Service to Affiliate Subscribers (a) as a Basic Service with a
Premium Tier, or (b) as a Premium Only Service. Basic Service shall be defined
as the delivery of at least fourteen (14) but not more than thirty (30) channels
of the Service to all Affiliate Subscribers as part of Affiliate's basic
service and for which no separate charge is made; provided, however, that ICT
acknowledges that until such time as Affiliate converts its DBS Distribution
System to a successor, high power satellite, Affiliate will not transmit to
Affiliate Subscribers more than ten (10) channels of the Service. Premium Tier
shall be defined as the delivery of at least thirty (30) channels more than the
number of channels
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delivered in Basic Service to an Affiliate Subscriber at a time when all other
Affiliate Subscribers are receiving Basic Service. Premium Only Service shall be
defined as the delivery of the Service to an Affiliate Subscriber at a time when
no Affiliate Subscribers are receiving Basic Service. Notwithstanding the
foregoing, until Affiliate converts its DBS Distribution System to a successor,
high power satellite, Affiliate and Affiliate's Distributors shall have the
right to deliver only Basic Service to Affiliate Subscribers. Following such
conversion, a total of no less than forty-five (45) channels of the Service
shall be offered to Affiliate Subscribers. Affiliate shall have the right, with
ICT's advice and counsel, to select which of the Service's channels to provide
to Affiliate Subscribers.
8. LICENSE FEES FOR PRIVATE RESIDENCES.
-----------------------------------
(a) Basic Service. The monthly license fee for Basic Service shall be
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[*] per Affiliate Subscriber. This license fee may be increased annually by the
percentage amount of any increase in the United States Consumer Price Index (All
Urban Index) over the prior calendar year, with 1995 being the base year (the
"CPI Increase").
(b) Premium Tier Service. The monthly license fee for the Premium Tier
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Service shall be an additional charge (i.e., in addition to the fee for the
Basic Service) of [*] for each Affiliate Subscriber receiving the Premium Tier
Service.
(c) Premium Only Service. The monthly license fee for Premium Only Service
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shall be [*] for each Affiliate Subscriber receiving Premium Only Service.
Notwithstanding the foregoing, in the event that Affiliate achieves a
penetration rate such that 15% or more of Affiliate Subscribers receive the
Service on a Premium Only Service basis, the license fee shall be reduced to [*]
only for those subscribers constituting the group of Affiliate Subscribers above
fifteen percent (15%) penetration.
(d) Performance Rights Increase. The license fees set forth in this
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paragraph 8 may be increased by ICT by the amount of any increase at the time in
question of the license fees payable by ICT in the aggregate to American Society
of Composers and Publishers, Inc. ("ASCAP"), Broadcast Music Inc. ("BMI") and
SESAC ("SESAC") (or their respective successors) and to any other entity,
government authority or other person in connection with the performance rights
or other copyrights necessary for the production, transmission and performance
of the Service for Affiliate Subscribers at Private Residences as contemplated
by this Agreement and paid or to be paid by ICT; [*]
(e) Accounting Periods. The license fees payable with respect to a given
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calendar month shall be due and payable thirty (30) days after the end of that
calendar month.
(f) Late Payments. Any license fee that is unpaid after it is due shall
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accrue interest at one and one-half percent per month or the highest lawful
rate, whichever is less, from the due date until payment is received by ICT.
(g) No Gratis Distribution. Affiliate shall pay to ICT the license fees
----------------------
set forth in this paragraph 8 with respect to each Affiliate Subscriber
receiving the Service for each month during the term hereof. [*]
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* Indicates that material has been omitted and confidential treatment has
been requested therefore. All such material has been filed separately with
the Commission pursuant to Rule 24b-2.
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9. REPORTS AND AUDITS.
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(a) Accounting Report Forms. Affiliate shall deliver to ICT, not later
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than thirty days after the end of each calendar month, a statement, with respect
to license fees payable for the month reported, including license fees for both
Private Residences and Commercial Establishments, on a form provided by ICT, or
on a form provided by Affiliate which will be subject to ICT's reasonable
approval and which contains all reporting information required by ICT.
(b) Books and Records. Affiliate agrees to keep and maintain accurate
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books and records of all matters directly relating to the payment of all license
fees under this Agreement in accordance with generally accepted accounting
principles. During the term and until two (2) years after the last license fee
is required to be paid hereunder, such books and records shall be reasonably
available for inspection and audit by ICT, its employees or agents, at the
expense of ICT, at Affiliate's offices, upon reasonable notice to Affiliate.
Notwithstanding the foregoing, in the event an audit of Affiliate's books and
records results in a deficiency variance in Affiliate's accounting payments
which is 5% or more, then Affiliate shall pay or reimburse ICT for all
reasonable expenses incurred by ICT in connection with the audit. The right of
ICT to perform such inspection and audit shall be limited to once in any twelve
(12) month period and shall be limited to an inspection and audit with respect
to amounts payable in the current and prior two (2) calendar years only.
(c) Music Performance Reports. Affiliate shall provide ICT with accurate
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and timely reports as may be required by ASCAP, BMI, SESAC, or any other music
performance licensing entity. Such reports shall be made on the forms prescribed
by the licensing entity, which forms shall be provided to Affiliate by ICT. ICT
may, by notice, change such forms from time to time to reflect reporting
requirements to ASCAP, BMI and/or SESAC.
(d) Re-sale Certificates. Affiliate shall provide ICT with such tax
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exemption/resale certificates and other similar documents as may be required by
ICT in each state or other jurisdiction in which Affiliate distributes the
Service hereunder.
10. LAUNCH, MARKETING AND CARRIAGE OF SERVICE.
-----------------------------------------
Affiliate shall use reasonable efforts to promptly launch the Service
throughout the Distribution Area and to actively market the Service to Affiliate
Subscribers throughout the term
5
hereof. Upon request by Affiliate ICT shall provide Affiliate with ICT's
promotional, marketing and sales materials, provided that Affiliate shall
reimburse ICT for ICT's cost of providing such materials. As an incentive to
Affiliate to promptly launch the Service to Private Residences and Commercial
Establishments as Basic Service with a Premium Tier following Affiliate's
conversion of its DBS Distribution System to a successor, high power satellite,
Affiliate shall have the right, in its sole discretion, to choose one of the
following: [*]
11. RESEARCH.
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ICT may, from time to time, undertake marketing tests, surveys, rating
polls or other research in connection with the Service. Affiliate shall use its
reasonable efforts to
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* Indicates that material has been omitted and confidential treatment has
been requested therefore. All such omitted material has been filed
separately with the Commission pursuant to Rule 24b-2.
6
cooperate with ICT and to provide ICT with data in connection with research
conducted by ICT, subject to any applicable federal, state or local laws or
regulations and Affiliate policies, and further provided that ICT shall pay or
promptly reimburse Affiliate for any out-of-pocket expenses incurred by
Affiliate at ICT's request, and shall provide Affiliate with a copy of the
results of such tests, survey, poll or other research.
12. PROPRIETARY MARKS.
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(a) Rights in Proprietary Marks. ICT hereby grants to Affiliate and
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Distributors the right and obligation to use, in connection with its rights and
obligations hereunder, the trade names trademarks, service marks and logos
("Proprietary Marks") designated, from time to time, by ICT as the Proprietary
Marks of the Service, including, without limitation, the names "Digital Music
Express", "DMX" and "DMX For Business". Affiliate and Distributors shall use
the Proprietary Marks only in the form and manner (including color and style of
type) and with appropriate legends prescribed from time to time by ICT, and
shall not use or authorize the use of any other trademark or service ▇▇▇▇ in
combination with the Proprietary Marks without prior written approval of ICT.
Affiliate and Distributors may use their own trade names, trademarks, service
marks or logos in identifying themselves as authorized distributors of the
Service, provided that such trade names, trademarks, service marks or logos
shall not be commingled with or used in juxtaposition with the Proprietary Marks
in such manner as to represent directly or indirectly that Affiliate or
Distributor is involved with the production or ownership of the Service.
Affiliate and Distributors shall not use, or cause the use of, the Proprietary
Marks in any unlawful or deceptive manner or in any way that shall directly or
indirectly tend to impair or lessen the value of the Proprietary Marks.
(b) Use of Proprietary Marks. Affiliate and Distributors shall use the
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Proprietary Marks and no others, to designate the Service and shall in no event
present the Service as any other service or as being from any programming source
other than ICT. Notwithstanding the foregoing, Affiliate and Distributors shall
have the right to market, promote and sell the Service with other audio services
in a package called "PRIME AUDIO(R).", provided, however, that such marketing
and promotion shall, in all instances, include one or more of the Proprietary
Marks. In using the Proprietary Marks, Affiliate and Distributors shall fully
comply with all requirements of which it has notice relating to such use as ICT,
from time to time, may institute in its reasonable judgement, provided that such
requirements are not inconsistent with the rights granted by this Agreement to
Affiliate and Distributors as of the date hereof.
(c) No Adverse Use by Affiliate. Nothing contained in this Agreement
---------------------------
shall give Affiliate or Distributors any interest in the Proprietary Marks,
other than the right to use the Proprietary Marks to identify the Service.
Without limiting the generality of the foregoing, nothing contained in this
Agreement shall give Affiliate or Distributors any rights as a licensee to use
the Proprietary Marks to identify services or products provided or produced by
Affiliate or Distributors. Affiliate and Distributors shall not use or cause the
use of the Proprietary Marks in any manner inconsistent with the terms of this
paragraph 12.
13. LIMITATIONS ON RIGHTS AND RESERVATION OF RIGHTS.
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(a) Limitations on Rights. The rights granted herein do not include any
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right of Affiliate or any other person or entity to:
7
(i) Record, or make or manufacture any recordings or other
reproductions of the Service or any part thereof, except as otherwise permitted
by law;
(ii) Transmit, re-transmit, or authorize the transmission of, or to
otherwise in any manner deliver the Service or any part thereof to any location
which is not an Affiliate Subscriber; or
(iii) Insert any commercial announcements into the Service or
interrupt any performance of the Service for the making of any commercial
announcements except as otherwise provided in sub-paragraph 4(d) hereof.
(b) Reservation of Rights. Except as expressly set forth in this
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Agreement, Affiliate shall have no interest in the Service (including the
accompanying program data), the Proprietary Marks (as herein defined), or any
other rights or property of ICT, all of which are expressly reserved and shall
remain the rights and property of ICT.
14. TERMINATION.
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If either party has made any material misrepresentations herein or
breaches any of the material terms or conditions of this Agreement and fails to
cure such breach within sixty (60) days after receipt of written notice of the
breach from the other party, then the party giving such notice shall have the
right to terminate the term of this Agreement. In the event of any such
termination, or upon the expiration or other termination of the term hereof,
Affiliate shall have the continuing obligation to pay accrued license fees
hereunder, and ICT shall have a like obligation to redeem any accrued credit
hereunder. License fees payable hereunder after termination shall include with
respect to Private Residences, amounts due up to and including the month during
which the termination occurs, and with respect to Commercial Establishments
amounts due pursuant to Paragraph 2 of Schedule B of this Agreement. Further,
upon any such termination or expiration Affiliate shall (a) permanently cease
using the Proprietary Marks, (b) permanently cease using any marks or symbols
similar to the Proprietary Marks, (c) make all alterations necessary to
distinguish its business from any identity with ICT, and (d) immediately return
to ICT all technical, research and marketing materials or materials provided by
ICT or developed from materials provided by ICT.
15. WARRANTIES AND INDEMNITIES.
--------------------------
(a) ICT's Warranties. ICT represents and warrants to Affiliate as follows:
(i) ICT is a corporation duly organized and validly existing under the laws of
the State of Delaware; (ii) ICT has the power and authority to enter into this
Agreement and to fully perform its obligation hereunder; (iii) ICT is under no
contractual or other legal obligation which shall in any way interfere with its
full, prompt and complete performance hereunder; (iv) the individual executing
this Agreement on behalf of ICT has the authority to do so; (v) ICT is in
material compliance with all laws to which it is subject, including, without
limitation, all applicable rules and regulations, if any, of the Federal
Communications Commission; (vi) ICT has, or will have acquired at the pertinent
time all or part of the Service is made available to Affiliate, good title to,
and/or each and every property right (whether relative to tangible or intangible
property), or license, usage or other right necessary or appropriate whatsoever
to effectuate the acts or performances contemplated by, or satisfy the
obligations imposed on it pursuant to this Agreement, including, without
8
limitation, all permits, rights, licenses and approvals necessary, required or
appropriate for any and all performances through to the premises and to the
listeners frequenting the premises of Service Subscribers; (vii) neither the
Service, any program related thereto, or any component thereof is subject to, or
the subject of, any lien, encumbrance, charge, lis pendens, administrative
proceeding, governmental investigation, or litigation pending or threatened;
(viii) the use and exhibition of the Service by Affiliate, as contemplated by
this Agreement, will not cause Affiliate to violate any law, rule, regulation or
court or administrative decree; and (ix) the obligations created by this
Agreement, insofar as they purport to be binding on ICT constitute valid and
binding obligations of ICT in accordance with their terms.
(b) Affiliate's Warranties. Affiliate represents and warrants to ICT as
----------------------
follows: (i) Affiliate is a limited partnership duly organized and validly
existing under the laws of Delaware; (ii) Affiliate has the power and authority
to enter into this Agreement and to fully perform its obligation hereunder;
(iii) Affiliate is under no contractual or other legal obligation which shall in
any way interfere with its full, prompt and complete performance hereunder; (iv)
the individual executing this Agreement on behalf of Affiliate has the authority
to do so; (v) Affiliate is in material compliance with all laws to which it is
subject, including, without limitation, all applicable rules and regulations, if
any, of the Federal Communications Commission; and (vi) the obligations created
by this Agreement, insofar as they purport to be binding on Affiliate constitute
valid and binding obligations of Affiliate in accordance with their terms.
(c) Mutual Indemnification. Affiliate and ICT shall each indemnify and
----------------------
forever hold harmless the other, the other's affiliate companies and their
respective partners, officers directors, employees and agents from and against
any and all claims, liabilities, costs, damages and expenses (including, without
limitation, reasonable counsel fees of counsel of the other party's choice)
arising out of any breach or claimed breach of any representation or any of its
obligations pursuant to this Agreement.
(d) Intellectual Property Indemnification. ICT shall indemnify Affiliate
-------------------------------------
from and against any and all claims, liabilities costs, damages and expenses
(including, without limitation, reasonable counsel fees of counsel of the other
party's choice) arising out of the content or distribution of the Service
pursuant to (and as permitted by) this Agreement, to the extent that such
claims, liabilities, costs, damages and expenses are: (i) based upon alleged
libel, slander defamation, or invasion of the right of privacy; (ii) based upon
alleged violation or infringement of copyright, literary, dramatic music
synchronization or music performance rights; (iii) based upon the distribution
of the Service as furnished by ICT without any deletions or additions by
Affiliate or any other person except as permitted hereby; and (iv) not based on
any material added to the Service by Affiliate or any other person (as to which
deletions or added material, to the extent effected by Affiliate, Affiliate
shall, to the like extent, indemnify ICT).
(e) Notice of Claims. In connection with any indemnification provided for
----------------
in this Agreement, 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; it being agreed that the
indemnifying party shall have the right to assume the defense of any or all
claims or litigation to which its indemnity applies and that the indemnified
party will cooperate fully (at the cost of the indemnifying party) with the
indemnifying party in such defense and in the settlement of such claim or
litigation.
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(f) Survival. The representations, warranties and indemnities contained
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in this paragraph 15 shall continue throughout the term of this Agreement, and
the indemnities shall survive the expiration or termination of this Agreement,
regardless of the reason for such expiration or termination.
16. FORCE MAJEURE.
-------------
Except as herein provided to the contrary, neither Affiliate nor ICT
shall have any rights against the other party hereto for the non-operation of
facilities (including general satellite or transponder failure) or the non-
furnishing of the Service if such non-operation or non-furnishing is due to an
act of God; inevitable accident; fire; lockout; strike, or other labor dispute;
riot or civil commotion; act of government or governmental instrumentality
(whether federal, state or local); failure in whole or in part of transmission
facilities; or any other cause beyond such party's reasonable control. The
foregoing notwithstanding, if during any month, as a result of any cause outside
of ICT's reasonable control, the satellite transmission of the Service to
Affiliate is interrupted, whether as a result of satellite failure or other
failure of a function or facility to be provided by ICT hereunder, Affiliate's
sole and exclusive remedy with respect to ICT shall be that, if Affiliate
reduces the fees payable for the Service by Affiliate Subscribers with respect
to such failure, the fees otherwise payable to ICT pursuant to this Agreement
with respect to such month, such Service Subscribers and such Service, shall be
reduced by the same proportion as the reduction bears to the amount such Service
Subscribers would have otherwise been required to pay to Affiliate.
17. NOTICES.
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Any notice or report given or required to be given under this
Agreement shall be in writing, shall be sent postage prepaid by registered or
certified mail, return receipt requested or by hand or messenger delivery, or by
Federal Express or similar overnight delivery service, or by facsimile
transmission, to the other party, at the following address (unless either party
at any time or times designates another address for itself by notifying the
other party thereof by certified mail, in which case all notices to such party
thereafter shall be given at its most recently so designated address):
To Affiliate: PrimeStar Partners, L.P.
Three Bala Plaza West
Seventh Floor
Bala Cynwyd, Pennsylvania 19004
Attn: Vice President, Marketing
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a courtesy copy to:
PrimeStar Partners, L.P.
Three Bala Plaza West
Seventh Floor
Bala Cynwyd, Pennsylvania 19004
Attn: Legal Department
10
To ICT: International Cablecasting Technologies Inc.
11400 ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Chairman
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
With a courtesy copy to:
▇▇▇▇▇ ▇▇▇▇▇, Esq.
Edelstein & ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Tel: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any notice or report given by personal delivery shall be deemed given on
delivery. Any notice or report given by mail shall be deemed given on the
earlier to occur of actual receipt thereof or on the fifth day following mailing
thereof. Any notice or report given by Federal Express or similar overnight
delivery service shall be deemed given on the next business day following
delivery of the notice or report to such service with instructions for overnight
delivery. Any notice or report given by facsimile transmission shall be deemed
given when a separate written and personally signed acknowledgment of receipt
thereof is received (by facsimile transmission or otherwise) from the recipient.
18. CONFIDENTIALITY.
---------------
Without the prior consent of the other, neither Affiliate nor ICT
shall disclose to any third party (other than its respective employees, in their
capacity as such, who have a need to know in the performance of their ordinary
employee functions, or parties with which Affiliate or ICT is participating in a
joint venture, which need to know as part of such joint venture, provided in
either case, such employees and parties agree to be bound by the provisions of
this paragraph) including, without limitation, any municipality or other
governmental entity, any information with respect to the terms and provisions of
this Agreement, or any information obtained in any inspection or audit of the
other party's books and records, except: (i) to the extent necessary to comply
with law or 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 partners, its auditors, its attorneys or to
performing rights societies; or (iii) in order to enforce its rights pursuant to
this Agreement.
19. ASSIGNMENT AND INSOLVENCY.
-------------------------
(a) Assignment; Binding Effect; Reorganization. This Agreement, including
------------------------------------------
both its obligations and benefits, shall inure to the benefit of, and be binding
on, the respective transferees and successors of the parties, except that
neither this Agreement nor either party's rights or obligations hereunder shall
be assigned or transferred by either party without the prior written consent of
the other party such consent not to be unreasonably withheld; provided,
11
however no consent shall be necessary in the event of any assignment to a
successor entity resulting from a merger, acquisition or consolidation by either
party or assignment to any entity under common control, controlled by or in
control of either party.
(b) Insolvency. If either party hereto makes an assignment for the
----------
benefit of its creditors, or commences bankruptcy, receivership, insolvency,
reorganization, dissolution or liquidation proceedings, then such party shall be
deemed to be in default of its obligations under this Agreement, and the other
party shall be entitled to exercise any and all remedies provided at law or in
equity or otherwise provided in this Agreement.
20. MISCELLANEOUS.
-------------
(a) Entire Agreement; Amendments; Waivers. This Agreement contains the
-------------------------------------
entire under-standing of the parties, and supersedes all prior understandings of
the parties relating to the distribution of the Service. This Agreement may not
be modified except in writing executed by both parties hereto. Any waiver must
be in writing and signed by the party whose rights are being waived, and no
waiver by either Affiliate or ICT of any breach of any provision hereof shall be
or be deemed to be a waiver of any subsequent breach of the same or any other
provision of this Agreement.
(b) Governing Law. The obligations of Affiliate and ICT under this
------------
Agreement are subject to all applicable federal, state and local laws, rules and
regulations (including but not limited to the Communications Act of 1934, the
Cable Communications Policy Act of 1984 and the Cable TV Consumer Protection and
Competitor Act of 1992, each as amended and the rules and regulations of the
Federal Communications Commission), and this Agreement and all matters or issues
collateral thereto shall be governed by the laws of the State of California,
without regard to conflicts of law rules.
(c) Relationship. Neither Affiliate nor ICT shall be or hold itself out
------------
as, the agent of the other under this Agreement. No subscriber of Affiliate
shall be deemed to have any privity of contract or direct contractual or other
relationship with ICT by virtue of this Agreement or ICT's delivery of the
Service to Affiliate hereunder. Nothing contained herein shall be deemed to
create, and the parties do not intend to create herein, any relationship of
partners, joint venturers or agents, as between Affiliate and ICT, and neither
party is authorized to or shall act toward third parties or the public in any
manner which would indicate any such relationship with the other. ICT disclaims
any present or future right, interest or estate in or to the transmission
facilities of Affiliate on which the programming signals delivered by Affiliate
are transmitted, such disclaimer being to acknowledge that neither Affiliate nor
the transmission facilities are common carriers.
(d) Severability. The invalidity under applicable law of any provision of
------------
this Agreement shall not affect the validity of any other provision of this
Agreement, and in the event that any provision hereof would be determined to be
invalid or otherwise illegal, this Agreement shall remain effective and shall be
construed in accordance with its terms as if the Invalid or illegal provision
were not contained herein; provided, however, that both parties shall negotiate
in good faith with respect to any equitable modification of the provisions, or
application thereof, held to be invalid.
(e) No Inference Against Author. ICT and Affiliate each acknowledge that
---------------------------
this
12
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.
(f) Headings. Paragraph headings contained in this Agreement are for
--------
convenience only, and are not to be deemed to be part of the substantive
provisions hereof, and are not to be considered in the construction or
interpretation of this Agreement.
(g) No Third-Party Beneficiaries. The provisions of this Agreement are
----------------------------
for the exclusive benefit of the parties hereto and their permitted assigns, and
no third party shall be a beneficiary of, or have any rights by virtue of, this
Agreement.
(h) Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original and all of which shall
constitute one and the same Agreement, and shall become effective when each
party has received an original counterpart which has been executed by the other
party.
(i) Schedules. The schedules referred to herein and attached hereto are a
---------
part of this Agreement and are incorporated herein by reference.
[*]
---------------
* Indicates that material has been omitted and confidential treatment has
been requested therefore. All such omitted material has been filed
separately with the Commission pursuant to Rule 24b-2.
13
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
AFFILIATE: ICT:
BY: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇ BY: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------ ---------------------------------
PRINT NAME: ▇▇▇▇ ▇▇▇▇▇▇▇ PRINT NAME: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
---------------------- -------------------------
Its: President Its: Executive Vice President
----------------------------- --------------------------------
14
SCHEDULE A DMX AFFILIATION AGREEMENT
GLOSSARY OF TERMS
1. Service. The term "Service" shall mean ICT's premium digital audio
-------
service, known as "Digital Music Express".
2. Private Residence. The term "Private Residence" shall mean any
-----------------
single-dwelling-unit private residence or any multiple-dwelling unit private
residence (such as an apartment building or residential hotel, but not a
transient or temporary residence establishment and not a nursing or rest home)
in which the Service is, or is to be, performed only in private residential
areas thereof and not in any public or common areas thereof.
3. Commercial Establishment. The term "Commercial Establishment" shall
------------------------
mean any premises whatsoever (including, without limitation, any restaurant,
bar, office, work-place, place of business, school, park, place frequented by
the public, hotel, motel, club, nursing or rest home, or showroom), whether or
not business is conducted at such premises, except for a premises which is A
Private Residence; it being understood that in the case of a shopping center,
mall or other multiple-business facility, each separate business occupying a
distinct space within such facility shall be deemed to constitute a separate
Commercial Establishment.
4. Distribution Area. The term "Distribution Area", shall mean that
-----------------
geographic area in North America where, at the time in question, Affiliate is
distributing any programming service.
5. Affiliate Subscribers. The term "Affiliate Subscribers" shall mean
---------------------
any subscribers who receive any programming service from Affiliate, whether or
not such subscriber is paying for the Service.
6. Distributor. "Distributor" shall mean any entity authorized by
-----------
Affiliate to market, promote and sell the Service to Affiliate Subscribers.
15
SCHEDULE B DMX AFFILIATION AGREEMENT
COMMERCIAL ESTABLISHMENTS
1. Service to Commercial Establishments. Affiliate may only distribute
------------------------------------
the Service to Commercial Establishments pursuant to this Schedule B.
2. License Fees For Commercial Establishments. Affiliate shall pay to ICT
------------------------------------------
as a monthly license fee for each Affiliate Subscriber which is a Commerical
Establishment and which receives the Service hereunder, a sum equal to the
greater of (i) 33% of the Commercial Establishment's Music Service Payments (as
defined below) for such month; (ii) Nine Dollars ($9.00), plus the Music Rights
Payments (as defined below) if such Commercial Establishment is responsible for
Music Rights Payments; or (iii) Fifteen Dollars ($15.00) if ICT is responsible
for Music Rights Payments. If a Commercial Establishment begins or terminates
receiving the Service on a day other than the first of the month, Affiliate will
owe the monthly license fee for the full month prorated by the number of days in
the month that Service was received by such Commercial Establishment.
"Music Service Payments," with respect to a Commercial Establishment shall
mean the total of all amounts billed to or on account of such Commercial
Establishment by Affiliate in connection with the Service, for the month in
question, after deducting therefrom any such amounts, if any, as are paid by ICT
as Music Rights Payments with respect to such Commercial Establishment.
"Music Rights Payments" shall mean the amount which at the time in question
is the sum of the monthly average license fees per Commercial Establishment
payable by ICT in the aggregate to American Society of Composers and Publishers,
Inc. ("ASCAP"), Broadcast Music Inc. ("BMI") and SESAC, INC. ("SESAC") (or their
respective successors) and to any other entity, government authority or other
person in connection with the performance rights or other copyrights necessary
for the production, transmission and performance of the Service as contemplated
by this Agreement. The license fees set forth in this paragraph 2 may be
increased by ICT by the percentage amount of any increase at the time in
question of the Music Rights Payments; *
3. Calculation of Fees When Service is Packaged. When the Service is
--------------------------------------------
provided to a Commercial Establishment by a Distributor for a package charge,
the Gross Music Payments attributable to the Service shall be deemed to be the
average Gross Music Payments for the other Commercial Establishments in the area
served by such Distributor received the Service during such month on an a la
carte basis, or if there are no such other Commercial Establishments, the
average Gross Music Payments during the prior six months of all Commercial
Establishments who received the Service on an a la carte basis.
4. Support Services. ICT shall provide Affiliate with sales personnel
----------------
training, and sales materials in connection with the offering of the Service to
Commercial Establishments, in accordance with the practices and procedures of
ICT's commercial division.
---------------
* Indicates that material has been omitted and confidential treatment has
been requested therefore. All such omitted material has been filed
separately with the Commission pursuant to Rule 24b-2.
16
