Exhibit 10.2
ACCESS TELEVISION NETWORK, INC.
CHANNEL NESTING AGREEMENT
This agreement made as of this 23rd day of April, 1997, by and between
Access Television Network, Inc., a Delaware corporation with its principal place
of business at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (hereinafter
referred to as "Access") and The Recovery Network, a California Corporation,
with its principal place of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇, (hereinafter referred to as "Programmer").
In consideration of the mutual and several covenants set forth in this
Agreement, the parties hereby agree to the following:
ARTICLE 1. DEFINITIONS
As used herein, the following terms shall have the respective meanings stated
below:
1.01 Access Affiliates. Cable Television Systems that utilize Access as
their national sales representatives for certain times made available on
channels delivered to their Subscribers.
1.02 Cable Television System. An entity delivering multi-channel
programming services to Subscribers that directly or indirectly controls the
management of the programming carried; a Cable Television System may consist of
more than one franchise and more than one headend, and is usually characterized
as a business which serves a geographical area under common management and which
sets its own rates for services.
1.03 Programming Exhibition Inventory. Specifically identifiable times
made available for sale by Access on all or parts of the Access Network.
1.04 Subscriber. For the purposes of this definition, the number of
subscribers at any time shall equal the number of active separate billing
addresses (excluding commercial accounts) shown at the close of business on such
day in the billing records for the tiers of service on the Cable Television
System that include the channel on which the Program Exhibition Inventory is
carried.
1.05 Programming Service. Video programming provided by Programmer to
Access for distribution on the Access Network.
1.06 Access Network. The system for delivering Access programming to
Subscribers of Access Affiliates.
1.07 Rate. The dollar rate per thirty (30) minute time period on the
Access Network charged by Access to Programmer as identified in Exhibit "A" of
this Channel Nesting Agreement.
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1.08 Program Schedule. The daily and weekly schedule of times that the
Programming Service will be run on the Access Network as identified in Exhibit
"A" of this Channel Nesting Agreement.
1.09 Program Log. A complete log of all elements of a program broken
down into 1 second intervals, with identification of each element which
corresponds to identification on the actual program videotapes.
1.10 Discrepancy Report. A report detailing service interruptions and
signal degradation which is filed within 24 hours of the occurrence.
ARTICLE 2. NATURE OF AGREEMENT
2.01 Purpose. The purpose of this Channel Nesting Agreement is to set
forth the terms and conditions by which Access will distribute the Programming
Service.
2.02 Right of Last Refusal. For the term of this Agreement, and for a
period of one (1) year from its (i) expiration, or (ii) any period of extension
should Access still be in delivey and distribution of programming as set forth
in this agreement, Programmer agrees to grant Access the right to match in all
material terms any bona fide offer presented to Programmer for uplinking,
playback, encoding and/or transponder leasing services required by Programmer in
delivering the same service or services in the same manner and scope as in this
agreement and so long as such service or services are continued without
interruption. Upon receipt of notification of such an offer to Programmer,
Access shall have thirty (30) days with which to meet all material terms of such
offer. If Access fails to respond to or to meet the material terms of such an
offer within this thirty (30) day period, Access waives all rights granted to
Access by this Section 2.02 of this Agreement.
2.03 Terms of Agreement. This Channel Nesting Agreement shall begin as
of the date first written above, and shall continue for fifty two (52) weeks
unless otherwise terminated as provided herein.
ARTICLE 3. PROGRAMMER RESPONSIBILITIES
3.01 Delivery of Programming Service. Programmer is responsible for
the delivery of the Programming Service to Access and costs associated with
such, either by (i) providing one (1) complete set of video tapes in the Beta-SP
format to Access no later than 5:00 pm (PST) on the Thursday preceding the
(Monday-Sunday) week of the Program Schedule for those programs; or (ii)
causing to be delivered to the satellite uplinking facility as designated by
Access, a feed of the Programming Service in a manner consistent with other
video signals received by such facility. Access reserves the right to refuse any
programming delivered by Programmer if such programming fails to meet generally
acceptable technical or content standards. Such content standards shall not
violate the general standards of the National Cable television Association or
National Association of Broadcasters as they relate to contests, sweepstakes,
profanity
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or any other type of programming which might violate or encourage the violation
of any state or federal law. Programmer will provide Access with one (1)
complete set of video tapes representing one day's programming to be used in the
event Access fails to receive video tapes for any given week.
3.01.1 Element Log. Programmer shall provide a log of all elements
which make up the scheduled programming for each day of the program schedule
along with the programming. The log will describe the events comprising the
programming in as little as one second intervals, each event will correspond to
an identifier on the programming tapes.
3.01.2 Programmer Expansion. Programmer may contact cable systems,
wireless cable, LMDS, MMDS, and other forms of television distribution for the
purpose of expanding its audience.
3.02 Programmer Representations and Warranties. Programmer represents
and warrants that it is duly organized and authorized to conduct business, to
bind itself to this agreement and has in good standing all necessary
authorizations, franchises, permits and licenses with respect to the Programming
Service it provides, including but not limited to copyright, right of privacy,
trade name, dramatic right, motion picture right, literary right, music
performance right, music synchronization right or any other right of any person
or entity, and that the Programming Service will not knowingly provide
programming containing any libelous, slanderous, defamatory or otherwise
objectionable material including without limitation, any material that would
constitute illegal competition or violation of trade practice.
ARTICLE 4. ACCESS RESPONSIBILITIES
4.01 Distribution of Programming Service. Access agrees to cause the
distribution of the Programming Service to all Access Affiliates according to
the days and times as specified in the Program Schedule. Such programming shall
be distributed as identified in the Program Schedule and in a form which meets
technical specifications as described in Exhibit B. Access and any Access
Affiliate shall not be liable to Programmer for any failure to run the Program
Service as identified in the Program Schedule and the daily program log or any
schedule of commercial or promotional announcements as identified in Section
4.02 of this Agreement, but shall make best efforts to satisfy the Program
Schedule and/or schedule of commercial and promotional announcements as
identified in Section 4.02 of this Agreement. In the event, for whatever reason,
that the Program Service does not run according to the Program Schedule, and
such failure is not the result of any action or omission on the part of
Programmer, Access shall immediately notify Programmer and Programmer shall have
the right to either (i) reschedule such portions of the Programming Service to
both parties satisfaction, or (ii) to receive a pro rata reduction in the
charges for such portion of the omitted Program Schedule. Access hereby
acknowledges that Programmer relies on any such reschedule as being comparable
because of sale of advertising.
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4.01.1 Recovery Network. The programming shall be separately
identified as Recovery Network. The programming shall not be subject to
disclaimers as attached to "info-mercials" identifying content as commercial in
nature.
4.02 Insertion of Commercial Announcements. Access agrees in accordance
with the Programming Log to cause the insertion of up to fourteen (14) minutes
per hour of commercial and/or promotional announcements into the Programming
Service along with channel Id's, network promos and other customary features and
elements, such announcements to be delivered to Access with a schedule for their
insertion and in the format as contained for the Programming Service in Section
3.01 of this Agreement.
4.02.1 Program Log and As Aired Log. Access shall monitor all
programming distributed and provide Programmer with an "as aired" log detailing
any deviation from the Program Log and the actual programming aired. This report
shall include a description of any corrective action taken by Access if any and
shall be signed by Access' operator at the beginning and end of each hour of
programming and all details initialed. This original log shall be submitted to
Programmer within 24 hours of airing. Access will provide an electronic, machine
readable report of the aired log. The format of this report will be jointly
developed by Access and Programmer.
4.02.2 Transmission Path Monitoring and Reporting. Access shall monitor
its Network during transmission of programming for purposes of verifying
transmission to subscribers. Any service interruption or failure of distribution
will be documented by Access and reported, in writing, to Programmer. Such
discrepancy report shall contain details including but not limited to time,
duration, nature of interruption or degradation of reception. Such reports will
be submitted upon the event of interruption within 24 hours.
4.02.3 During the term of the agreement, Access shall provide
Programmer a monthly report detailing Access's subscriber base. Access grants
Programmer the right to verify such a report by granting Programmer reasonable
access to its data base monthly for the sole purpose of such verification.
Access will provide a separate report of all systems added or deleted. Access
will notify the Network of all new affiliate agreements or cancellations within
ten (10) days of receipts regardless of the planned date of launch or
termination.
4.03 Access shall provide quality control and experienced personnel to
maintain a high quality on-air look including:
(a) engineering management personnel to design, construct, and assure
overall technical quality;
(b) operation management to supervise operations, personnel and
equipment performance and to maintain equipment within the performance
parameters specified herein;
(c) a designated management-level person as a contact acceptable to
Programmer who will address all business and contractual issues including the
on-air
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look to insure that Programmer's reasonable expectations for network operations
are being met.
4.02.5 Access shall furnish, operate and maintain origination
facilities for the origination of programming as described in Exhibit "C".
4.04 Access Representations and Warranties. Access represents and
warrants that it is duly organized and authorized to conduct business in the
locations where its Affiliate Cable systems are providing cable television
services. It has in good standing all necessary authorizations, franchises,
permits and licenses of Federal, State and local authorities to conduct all its
businesses and has taken all necessary corporate or other action to authorize
the execution and delivery of the Programming Service subject to this Agreement.
Access has in existence all facilities, equipment and personnel to distribute
Programmer's programming to Access Affiliates at technical standards equal to
the usual and customary standards in the industry and that it has facilities
available to assemble and integrate all the elements required to produce
finished programming as described in Exhibits "B" and "C" attached. Access is
duly authorized to execute this Agreement and the undersigned is duly authorized
to bind Affiliate hereto, this Agreement is a valid and binding obligation of
Access, enforceable in accordance with its terms.
4.05 Authorization Services. Access will provide authorization and
deauthorization services to all affiliates of Recovery network who are not
otherwise receiving the Access feed for Recovery Network Programming.
Authorization and deauthorization actions shall be executed in a timely manner
upon written or verbal communication from designated Recovery Network
personnel. The Recovery Network will pay for equipment required at affiliate
location in order to add Recovery Network programming, provided that other
Access programming is not transmitted to affiliate subscribers. Access will pay
for equipment if Access programming is also transmitted to subscribers. If
Access programming is added to the transmission within the duration of this
contract or within six months of commencing of transmission for the new
affiliate. Access will reimburse the Recovery Network for any expenditures made
for equipment. Access will coordinate and install the equipment at the affiliate
locations and will bear the costs.
ARTICLE 5. FINANCIAL
5.01 Payment. For each month in which the Program Service is run on the
Access Network, Programmer agrees to remit to Access 75% of the payment for that
month no later than 10 days prior to the beginning of that month, except that
payment due for May shall include 75% of the prorated amount due for the period
April 23rd to April 30th. Such payment shall be based on the Program Schedule
contained on Exhibit "A" to this Agreement. Within 30 days of the expiration of
this Agreement, Programmer agrees to provide Access with the entire 25% balance
due for all months in which the Programming Service was distributed by Access.
5.02 Limitations of Financial Liabilities. Each party shall be liable
for any taxes assessed to each. Access shall not be liable for and programmer
shall forever hold
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Access harmless from any and all taxes, fees, licenses which result from
distribution of the Programming Service.
ARTICLE 6. MISCELLANEOUS
6.01 Notices. All notices provided for in the agreement shall be in
writing, sent by registered or certified mail, by overnight express, or personal
delivery, postage prepaid, to Access and Programmer at the addresses set forth
at the beginning of this Agreement, unless otherwise notified in writing.
6.02 Right to Amend Agreement. This Agreement may be amended or added
to at any time only with the written consent of both parties.
6.03 Right to Extend Agreement. The term of this Agreement may be
extended upon the written consent of both parties for a period of one (1) year
provided that the rate for time per million homes served, as contained in
Exhibit "A" to this Agreement, does not increase more than 15%, in which case
both parties agree to negotiate such extension of term in good faith. Each party
must notify the other, in writing, sixty (60) days prior to the end of the Term
of its intention to extend the term.
6.04 Governing Law. This Agreement shall be governed by and interpreted
in accordance with the laws of the State of California.
6.05 Agreement Binding on Successors. This Agreement shall be binding
on and inure to the benefit of the respective successor and assigns of the
parties, except to the extent of any contrary provision in this Agreement.
6.06 Indemnification.
(a) Each party hereto shall indemnify and forever hold harmless the
other, its successors and assigns, for, from and against any claims, loss or
damage, cost or expense (including without limitation, reasonable attorney's
fees), resulting from any misrepresentation made by each or any breach or
alleged breach by it of any representation or warranty or any other provision of
this Agreement.
(b) In any case in which indemnification is being sought hereunder, the
Party seeking indemnification shall afford the Indemnifying Party the
opportunity of participating in the litigation, settlement or other disposition
of such claim. The Indemnified Party shall fully cooperate with the Indemnifying
Party in connection which such litigation, settlement or other disposition.
6.07 Attorney's Fees. Should any litigation or arbitration be commenced
between or among the parties hereto or their representative concerning any
provisions of this Agreement or the rights and duties of any person or entity in
relation thereto, the party or parties prevailing in such litigation or
arbitration shall be entitled, in addition to such other relief as may be
granted, to such reasonable sums as have actually been paid as and for their or
its attorney's fees, costs of suit, witness fees and other costs, disbursements
and expenses reasonable incurred in preparation of litigation or
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arbitration which shall be determined by the court in such litigation or
arbitration in such arbitration or in a separate action brought for that
purpose.
6.08 Force Majeure. No party to this Agreement shall have any claims
against the other for failure to provide or exhibit any of the Programming
Service provided such failure is a result of Acts of God or such other
unforeseeable occurrence(s) and/or outside the control of Access or the
Affiliate, and provided further that if such an event should occur, the party
experiencing the failure shall immediately notify the other party and shall take
corrective action at the first opportunity.
6.09 Relationship Between Parties. This is an Agreement for
representation for the sale of Program Exhibition Inventory. No provision or
provisions of the agreement expressed or implied shall be construed to create a
legal partnership, joint venture, or other business entity among the parties
hereto. For the purposes herein, Access and Programmer shall each be treated as
a corporation. Programmer agrees that it shall have its sole recourse against
Access as an entity, and not against Access's individual partners or their
respective assets either jointly or severally, and Access shall likewise have
recourse against Recovery Network, Inc. and not against any individual.
6.10 Termination. This Agreement may be terminated by either party at
the end of the Term or as set forth below in this section 6.10. If either party
hereto should file a petition for bankruptcy, or shall become insolvent,
reorganized or make any assignment for the benefit of creditors, or make any
arrangement to be subject to any other proceeding under the bankruptcy laws of
the United States or the bankruptcy or insolvency laws of any state, then the
other party shall, at its option, have the right to terminate this agreement
upon thirty (30) days written notice and the other party's obligation hereunder
shall cease thirty (30) days from the date of such notice. In the event of a
material breach of this Agreement by Access, Programmer shall have the right
upon seven (7) days written notice, to terminate this Agreement and all
obligations hereunder shall cease seven (7) days after the date of such notice.
Access may terminate this Agreement upon material breach by Programmer if such
material breach is not cured within thirty (30) days of receiving written
notice. Should Access's subscriber base diminish by 10% or more, Programmer may
elect to terminate the agreement upon thirty days written notice. Programmer in
any instance may delete either hour specified by giving Access seven (7) days
written notice.
6.11 Entire Agreement. This instrument contains the entire agreement of
the parties relating to the rights granted and obligations assumed in this
instrument, and supersedes any and all prior Affiliation or other Agreements
between the parties on the subject matter. Any oral representations or
modifications concerning this instrument shall be of no force or effect unless
contained in a subsequent written modification signed by the parties hereto.
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IN WITNESS WHEREOF, the parties have executed this Amendment to the Affiliation
Agreement on the date first stated above.
ACCESS TELEVISION NETWORK, INC.
By: ______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, President
PROGRAMMER
__________________________________
By:_______________________________
Name:_____________________________
Title:____________________________
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EXHIBIT A
The following contains the schedule of rates for time provided by Access to
Programmer. This schedule contains the maximum rate to be charged Programmer
based on anticipated 5% monthly growth in the number of households served by
Access Affiliates which carry programming. In no event shall Programmer be
charged more than $60,000 per calendar month for the first six (6) months of
this Agreement, or $65,000 per calendar month for the subsequent six (6)
months of this Agreement. The actual charge for each calendar month shall be
based on the actual monthly number of households served by Access
Affiliates, charges for such growth shall not exceed 5% per month. The
number of billable households receiving programming shall be determined by
adding the number of subscribers reported at the beginning of each month to
the number at the end of each month and dividing by two (2).
Access Television Network, Inc. Satellite Channel 2 Signal:
Monday through Sunday, 6 am - 7 am (EST) Channel 2
Month Daily Rate
----- ----------
April 1997 $1,576
May $1,655
June $1,738
July $1,825
August $1,916
September $2,012
October $2,112
November S2,217
December $2,328
January 1998 $2,445
February $2,567
March $2,696
Access Television Network. Inc. Satellite Channel 1 Signal:
Monday through Sunday, 10 pm - 11 pm (EST) Channel 1
Month Daily Rate
----- ----------
April 1997 S525
May $551
dune $579
July $608
August $638
September $670
October $703
November S739
December $775
January 1998 $814
February $855
March $898
In addition, Access shall provide Programmer with playback, encoding, uplinking
and satellite transponder time on its satellite Channel 2 for the hours 9pm -
10pm (EST) and 11 pm - 12 am (EST), Monday through Sunday at cost plus 20%
which shall be in addition to any charges detailed above and shall be exempted
from the $60,000 and $65,000 monthly maximum contained in the above paragraph.
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EXHIBIT B
TRANSMISSION SERVICES. Transmission Services shall be provided for the
Programmer channel to be transmitted in a digital compressed mode to the
transponder on a 24 hour per day basis, as follows:
1. The satellite transmission facility shall consist of a 9.0 meter
antenna or its equivalent or larger, that complies with 2% spacing.
2. Access shall provide a protected microwave and/or fiber path from
its origination facility to its transmission facility, if inter-facility
transport is required, with equipment meeting the Technical Specifications. One
or more redundant paths shall be provided and switched into service if a failure
occurs in the primary paths.
3. Appropriate testing will be conducted by Access prior to the
invitation of specific Services in order to ensure that the facilities provided
by Access meet the following Technical Specifications:
A. There will be a full-time channel with video exciter or
upconverter and HPA in a fully automatic 2:N switching configuration.
There will be two protection HPAs and upconverters or exciters
protecting the Programmer's services as well as others up to a maximum
of 12 services per protection configuration.
B. Sufficient uninterrupted (UPS) and back-up generator power and
HVAC for all technical and equipment areas shall be provided.
C. the design goal for analog services shall be broadcast quality
standard EIA RS-250-B satellite relay from the input of the protection
switch, including a satellite loop using a 9 meter or larger antenna,
to the output of the receive monitoring switch. The loop performance is
subject to the transponder used meeting minimum performance as set
forth below.
D. The design goal for compressed services, if any, shall be video
and audio performance as specified by the compression system
manufacturer. Industry standards for compressed video services are not
available and manufacturer specifications shall be used until
appropriate standards have been accepted. Specification manuals will be
available for inspection and review at the Access offices and copies
may be obtained from General Instrument Corp.
E. The maintenance limits of the analog system, and where
appropriate the compression system, shall be:
Video channel signal to noise (greater than) 10kHz) 52.0dB
Video channel differential gain 10%
Video channel differential phase 4%
Video channel chrominance to luminance delay 60nS
Audio channel signal to noise (greater than) 1kHz) 54.0 dB
Audio channel harmonic distortion (1 kHz) 1%
(Audio channels shall be tested at peak program level of + 18 dBm)
F. The microwave and/or fiber optics facility used to transport the
channels from the origination facility to the compression/transmission
facility, if any, shall be protected, including automatic protection
switching. The design goal for microwave systems shall be ANSI
T1.502-1988 short haul and the maintenance limit shall be ANSI
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T1.502-1988 medium haul performance. The design goal for fiber optics
systems shall be ANSI T1.502-1998 medium haul and the maintenance limit
shall be as follows: (Audi channels shall be tested at peak program level of
+1 Bdm)
Video channel signal to noise (greater than 10kHz) 50.0 dB
Video channel differential gain 8%
Video channel differential phase 2%
Video channel chrominance to luminance delay 50 nS
Audio channel signal to noise (greater than 1 kHz) 54.0 dB
Audio channel harmonic distortion (1 kHz) 1%
(Audio channels shall be tested at peak program level of +18 dBm)
COMPRESSION SERVICES. Access shall use a Digicypher I compression and
encryption system on the transponder specified until June 1997 and at that
time shall commence using Digicypher II. Access shall accomplish transition
to Digicypher II without interruption to delivery of Programming. Access
shall bear all costs of all change of equipment for all Programmer
Affiliates operational at the time of transition.
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EXHIBIT C
ORIGINATION SERVICES:
1. Origination Services shall be provided for two (2) Channels entitled
Recovery Network as follows:
Air Playback. The origination shall consist of the playback of video
tapes, the airing of satellite turn-around programming and automated DTMF tone
insertion.
1.1 Traffic Services shall be provided as follows:
Access shall provide one full-time traffic assistant. Initially traffic
will be accomplished on a system operated by technicians, provided by Access. At
Programmer's option and with sixty (60) days prior notice Access will transfer
traffic functions to a traffic software system.
2. Source tapes for primary and back-up programming, promotional and
interstitial material supplied to Access by Programmer shall be Beta SP video
tape stock and shall be manufactured in accordance with NTSC broadcast
standards. All tape stock shall be supplied by and shall remain the property of
Programmer. Programmer acknowledges that it is directly responsible for
arranging for and paying the costs of the following: (i) costs for shipping of
its tape material to and from the origination facility in Irvine, CA; (ii) the
delivery of any satellite turnaround programming to the origination facility;
and (iii) any third party-provided fiber optic, transponder or microwave
transport. Access will provide climatically-controlled storage for library video
tapes, not to exceed 2,500 tapes.
3. Access shall use an equipment configuration in the provision of
Origination Services to Programmer substantially as follows:
(a) an automated switcher with audio follow video and manual backup
capability with character generator, down stream keying capability and
audio-over capabilities for announce insertion;
(b) an automated playback system with five (5) Beta SP tape machines
for air play and two (2) record decks for the Channels;
(c) associated synchronization equipment conforming to broadcast
EIA-RS-170-A standards, including sync generators, signal generators, and time
base correctors;
(d) associated audio/video distribution and routing equipment, racks,
consoles and test equipment;
(e) a comprehensive monitoring system to view outgoing and return
signals to monitor the signal at various points throughout the transmission
path;
(f) sufficient uninterrupted (UPS) and back-up generator power and HVAC
for all technical and equipment areas;
(g) equipment providing output signals, per channel, of discrete stereo
audio and standard NTSC video for delivery to its compression and/or
transmission facility in accordance with the technical specifications.
All origination equipment shall meet manufacturers specifications in effect
at the time of purchase. Unless specific brand type or model of equipment is
specified above, access shall have the right to use such equipment as Access
deems appropriate to perform the services.
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