* Indicates where text has been omitted pursuant to a request for confidential
treatment. The omitted text has been filed separately with the Securities and
Exchange Commission.
CHANNEL DISTRIBUTION AGREEMENT
between
MULTICHOICE AFRICA (PROPRIETARY) LIMITED
and
ELECTRONIC MEDIA NETWORK LIMITED
Mallinicks
▇▇ ▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇ ▇▇▇ ▇▇▇
TABLE OF CONTENTS
1. PARTIES.................................................................3
2. DEFINITIONS AND INTERPRETATION..........................................3
3. INTRODUCTION...........................................................16
4. GRANT OF RIGHTS........................................................17
5. TERM...................................................................21
6. PER SUBSCRIBER FEES, REPORTING AND PAYMENT.............................21
7. RECORDS AND AUDIT......................................................29
8. PROPRIETARY AND INTELLECTUAL PROPERTY RIGHTS...........................31
9. DELIVERY AND TRANSMISSION OF CHANNELS..................................32
10. TIERING...............................................................35
11. ENCRYPTION AND DISTRIBUTION OF THE CHANNELS...........................37
12. SMS...................................................................40
13. ADVERTISING...........................................................41
14. OPEN TIME.............................................................42
15. PROGRAMMING...........................................................42
16. MARKETING.............................................................45
17. ANALOGUE PROGRAMME GUIDE..............................................49
18. DIGITAL PROGRAMME GUIDE...............................................50
19. ELECTRONIC PROGRAMMING GUIDE..........................................51
20. REPRESENTATIONS AND WARRANTIES........................................52
21. INDEMNITIES...........................................................54
22. THIRD PARTY INFRINGEMENTS OF VIEWING CARDS............................55
23. PROGRAMME SUPPLIER OBLIGATIONS........................................56
24. PARTIAL TERMINATION...................................................56
25. TERMINATION AND REMEDIES..............................................58
26. FORCE MAJEURE.........................................................64
27. GOVERNING LAW AND DISPUTES............................................65
28. RESTRUCTURING FOR TAX OR REGULATORY REASONS...........................66
29. CONFIDENTIALITY.......................................................67
30. NOTICES...............................................................68
31. MISCELLANEOUS.........................................................69
SCHEDULE 1
SCHEDULE 2A
SCHEDULE 2B
SCHEDULE 3
SCHEDULE 4
SCHEDULE 5
+SCHEDULE 6
SCHEDULE 7
SCHEDULE 8
SCHEDULE 9
SCHEDULE 10
2
CHANNEL DISTRIBUTION AGREEMENT made on 18 June 1998 between:
1. PARTIES
1.1. MULTICHOICE AFRICA (PROPRIETARY) LIMITED, a company registered
in South Africa, whose principal place of business is at ▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ("MultiChoice"); and
1.2. ELECTRONIC MEDIA NETWORK LIMITED a company registered in
South Africa whose principal place of business is at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ("M-Net").
2. DEFINITIONS AND INTERPRETATION
In this Agreement -
2.1. clause headings are inserted for convenience only and shall
not be taken into account in construing this Agreement;
2.2. references to clauses are references to the clauses of this
Agreement;
2.3. if any provision in a definition is a substantive provision
conferring rights or imposing obligations on any Party, effect
shall be given to it as if it were a substantive clause in the
body of this Agreement, notwithstanding that it is only
contained in the interpretation clause;
2.4. if any period is referred to in this Agreement by way of
reference to a number of days, the days shall be reckoned
exclusively of the first and inclusively of the last day
unless the last day falls on a Saturday, Sunday or public
holiday within the Republic of South Africa, in which case the
last day shall be the next succeeding day which is not a
Saturday, Sunday or public holiday;
3
2.5. unless the context clearly indicates a contrary intention, an
expression which denotes any one gender includes the other
genders, a natural person includes an artificial person and
vice versa, the singular includes the plural and vice versa
and the following expressions bear the meanings assigned to
them below and cognate expressions bear corresponding meanings
"Accounting Period" : each calendar month during this
Agreement (with the exception of the
last Accounting Period which will
end on the final day of this
Agreement);
"Affiliate" : either
a) in relation to both
Parties, any Person which,
directly or indirectly:
(i) is controlled by that
Party; or
(ii) controls that Party;
(iii) is under common control
with that Party;
or
b) in relation to MultiChoice:
(i) any Person in whom
MultiChoice has a direct
shareholding greater than
or equal to 30% of the
issued share capital; or
(ii) any Person where
MultiChoice, directly or
indirectly has the right to
appoint or remove directors
holding a majority of the
voting rights at meetings
of the board of directors
of such Person;
"Agreement" : this document together with the
Schedules attached hereto;
4
"A la Carte
Channels" : any television programme service
which is marketed by MultiChoice as
a so-called "stand alone channel"
i.e. a channel which is not marketed
as part of a group of other channels
and does not form part of either the
Premium Tier, Free Tier or the Basic
Tier or any other tier of television
programme services;
"Basic Tier" : an envisaged standard MultiChoice
programming tier which, if
implemented, will consist of
television programme services
administered via the MultiChoice
subscriber management system, and
will include, without limitation,
all programme services, which are
from time to time included in such
tier subject to the provisions of
this Agreement, but will exclude all
A la Carte Channels, Free Channels
and channels comprising the Premium
Tier;
"Channels" : those programme services referred to
in clause 4.1. of this Agreement as
currently named or as they may be
renamed in the future;
"Channel Signals" : the signals comprising the Channels;
"Clearances" : all consents, clearances and
licenses required from the copyright
holders of the programming
transmitted as part of the Channels
to distribute such programming in
the Territory, including all
clearances and licenses from
programming suppliers contracted as
such by M-Net and all necessary
music, mechanical transfer and
public performing
5
rights clearances;
"Commercial
Subscriber" : any Person who owns or operates any
premises, establishment or location
in the Territory, whether operated
for commercial gain or otherwise,
containing rooms for occupation
including hotels, motels, inns,
bungalow parks and guest houses, who
has been authorised by MultiChoice
to receive and decrypt the Channel
Signals;
"Communal
Subscriber" : any Person who owns or operates any
premises, establishment, area or
location in the territory, whether
operated for commercial gain or not,
which is a community meeting place,
including but not limited to
restaurants, clubs, bars, pubs and
the like and is capable of receiving
and has been duly authorised by
MultiChoice specifically to receive
and decrypt the Channel Signals;
"Computicket" : Computicket Limited, a company
registered in South Africa, having
its principal place of business in
Cape Town;
"CPI" : when used in connection with amounts
expressed in Rands means the
weighted average consumer price
index, all items, as notified by the
South African Secretary of
Statistics, of the 12 (twelve) areas
specified in the notice with the
average for 1990 as the base which
equals 100 (one hundred) or when
used in connection with amounts
expressed in United States Dollars
means the United States
6
Consumer Price Index as published by
the United States Department of
Commerce. In the case of either
index being replaced by an index of
a different nature, such index shall
be used duly adjusted as if the same
index is used, provided that if such
index is replaced by an index with a
different base, the replacing index
shall be used but it shall be
adjusted in order to correspond with
the index as set out above. All
adjustments to either index shall be
made by a firm of Chartered
Accountants and Auditors agreed by
the Parties or, in the absence of
agreement, by a firm nominated by
the President for the time being of
the South African Institute of
Chartered Accountants;
"Decoder" : an individually addressable
stand-alone device or an integrated
satellite receiver/decoder existing
now or developed in the future,
capable of receiving and, when
enabled, of decrypting the Channels'
Signals, either alone or in
conjunction with a Viewing Card;
"Delivery Failure" : any material disruption,
discontinuance or interruption in or
other interference with the delivery
of the Channels' Signals by M-Net to
MultiChoice (but excluding
interruption for routine
maintenance, adjustment or repair of
the delivery satellite);
"Effective Date" : * 1995
"Employee Subscribers": any person who is an employee of
M-Net, MultiChoice, M-Web,
SuperSport, Computicket and other
associated companies agreed by the
Parties
7
from time to time who, for the
payment of a discounted amount, is
duly authorised to decrypt the
Channels' Signals and to view the
Channels in unencrypted format;
"Encryption" : the scrambling and encryption of the
Channels' Signals so that such
Signals can only be decrypted and
viewed either by means of a
compatible Decoder only or by the
insertion of an enabled Viewing Card
in such Decoder;
"Free Tier" : the MultiChoice programming tier
consisting of the Free Channels;
"Free Channels" : the television programme services
for which a Viewing Card is required
and for which no subscription fee is
payable by any person for the right
to view such programme services in
an unencrypted format;
"Free TV Systems" : any form of television or other
transmission system by means of
which a person can receive audio
visual programming or services on a
television set without charge (other
than compulsory fees charged by a
government or governmental agency
assessed on those who use television
sets) including free satellite and
free cable systems;
"Gross Subscription
Revenue" : the total amount of fees excluding
discounts, for each country
comprising the Territory actually
billed (whether or not received) by
MultiChoice or its Affiliates to all
Subscribers during a particular
Accounting Period.
8
"Hotel Room" : a room in any premises,
establishment or location, owned or
operated by a Commercial Subscriber,
which is wired and equipped to
decrypt the Channel Signals and to
view the Channels on a television
set in that room in unencrypted
format;
"Marks" : the trade names, trade marks, logos,
and service marks used from time to
time in connection with the
Channels, the name of the Channels,
the titles of the programmes
transmitted as part of the Channels
and the corporate names of M-Net,
being Marks belonging solely and
exclusively to M-Net or the owner of
the copyright in the relevant
programme(s) ("the Relevant Owner"),
as the case may be;
"M-Web" : M-Web Limited, a company registered
in South Africa, whose principal
place of business is in Cape Town;
"MUD (Multiple
Unit Dwelling)
Subscriber" : any person who owns or operates any
premises, establishment or location
in the territory, whether operated
for commercial gain or otherwise,
containing individual living units
including, but not limited to,
blocks of flats, townhouse
complexes, cluster home complexes
(and specifically excluding those
premises, establishments and
locations owned or operated by
Commercial Subscribers) who have
been authorised by MultiChoice on a
bulk billing basis to receive and
decrypt the Channel Signals;
9
"MUD Unit" : a dwelling unit in any premises,
establishment or location, owned or
operated by a MUD Subscriber, which
is wired and equipped to decrypt the
Channel Signals and to view the
Channels on a television set in that
dwelling unit in unencrypted format;
"MultiChoice
Bouquets" : the MultiChoice C Bouquet and the
MultiChoice Ku Bouquet;
"MultiChoice C
Bouquet" : all the DSTV visual, audio and data
programme services digitally
transmitted via the C band beam of
the Satellite and in respect of
which MultiChoice provides SMS;
"MultiChoice
Ku Bouquet" : all the DSTV visual, audio and data
programme services digitally
transmitted via the Ku band beam of
the Satellite and in respect of
which MultiChoice provides SMS;
"MultiChoice SUD
Subscriber Charge" : the monthly price charged by
MultiChoice to a SUD Subscriber for
the right to view the Channels in an
unencrypted format, it being
understood that different prices may
be charged by MultiChoice within
each country comprising the
Territory and in respect of
different methods of delivery of the
Channels' Signals;
"MultiChoice Marks" : the tradenames, trademarks, logos
and service marks belonging to and
used from time to time by
10
MultiChoice and its Affiliates
excluding the Marks;
"Open Time" : periods of time on Pay TV Systems
during which programmes and services
broadcast on such systems may be
viewed in unencrypted format without
the payment of a fee in respect of
such programmes and services;
"Parties" : the parties to this Agreement;
"Pay Per View" : the scheduled television exhibition
of programmes which are transmitted
via Pay TV Systems in respect of
which a separate fee is payable in
order to view each event or group of
events;
"Pay TV Systems" : any cable system, multi-point
microwave distribution system,
over-the-air television system,
close circuit television system,
satellite master antenna television
system, direct to home system,
television receive only system,
hotel/motel television system,
privately maintained satellite
receiving antennae and all other
forms of pay or subscription
television or communication systems
and any other telecast, broadcast or
transmission system, now known or
hereafter discovered or developed,
by means of which a Person can
receive audio-visual programming or
services substantially in Encrypted
format, where a fee is payable by
such Person for the right to view
and/or participate in such
programmes and services in
unencrypted format (except for Open
Time), but excluding Pay Per View;
11
"Pay TV Viewers" : Persons in the Territory who are
capable of receiving programming
services by means of Pay TV Systems;
"Person" : individual, company, partnership,
trust, unincorporated association,
government authority or agency or
any other entity;
"Per Subscriber Fees" : the fees payable by MultiChoice to
M-Net determined according to the
provisions of this Agreement;
"Piracy" : the unauthorised use of the
MultiChoice algorithm to decrypt the
Channel Signals and/or the
unauthorised reception of the
Channels inside or outside the
Territory and/or the unauthorised
distribution or broadcasting of the
Channel Signals and/or the
authorised or unauthorised reception
of the Channels outside the
Territory and/or the unimpaired
and/or unauthorised reception of the
Channels and or Channel by any
Person other than a Subscriber;
"Premium Movie
Channel" : a channel consisting of first run
feature length films, being mainly
current first run feature length
films, where a "current" film is one
which had a United States theatrical
release no more than 36 months
previously and a "first run" film is
one which has not previously been
exhibited on any television service
or television channel which is
broadcast or distributed via Pay or
Free TV Systems in the Territory and
a "film" is a motion picture which
was originally produced in the
English language (which
12
shall include a film containing
limited portions of dialogue that
are spoken in a foreign language but
originally subtitled in the English
language). In terms of this
definition, "mainly" shall be
determined over an average 4 (four)
month period and shall mean a
predominant percentage except: (i)
where a predominant percentage is
not available from programme
suppliers; or (ii) where the terms
proposed by programming suppliers
(excluding Affiliates of M-Net) are
so commercially unreasonable when
considered in view of M-Net's rights
and obligations under this Agreement
that M-Net could not be expected to
acquire a predominant percentage on
such terms, in which event "mainly"
shall mean either (i) in respect of
the former situation, that
percentage which is available from
programme suppliers; or (ii) in
respect of the latter situation, the
percentage that M-Net can reasonably
be expected to acquire on such terms
provided, however, that any such
determination shall take into
consideration, without limitation,
M-Net's rights and obligations under
this Agreement;
"Premium Movie/
Sports Channel" : a channel which is a combination of
a Premium Movie Channel and a
Premium Sports Channel;
"Premium Sports
Channel" : a channel which consists of sports
and sports related coverage, a
significant proportion of which is
live coverage, of a cross-section of
Premium Sports (at least three such
sports during any particular month),
and provides live local studio links
between
13
programmes or events;
"Premium Sports" : leading South African and major
international sporting events,
tournaments or matches, as the case
may be, primarily focusing on but
not necessarily limited to, the
sports of rugby, soccer, cricket,
golf, tennis and boxing;
"Premium Tier" : a premium programming tier which
would consist of premium television
programme services administered via
the MultiChoice subscriber
management system and would include
the programme services set out in
Schedule 1 and all other programme
services which would from time to
time be included in such tier,
subject to the provisions of this
Agreement, from the date upon which
MultiChoice tiers the MultiChoice
Bouquet;
"Promotional
Advertisements" : advertisements which aim to promote
the MultiChoice Ku and C Bouquets,
as applicable;
"RAVE (Restricted
Access Viewing
Establishment)
Subscriber" : any person who is sold and marketed
to by MultiChoice under a separate
rate and who owns or operates a
common area in an institution in the
Territory which has been wired and
equipped to receive and decrypt the
Channel Signals, such as but not
limited to hospitals, nursing homes,
prisons, offices, schools,
factories, fire stations, police
stations, military installations,
oil rigs and the like
14
but excluding any private rooms or
living areas in such institutions,
which, for the avoidance of doubt,
shall be MUD Units);
"Satellite" : the PanAmSat 4 satellite or such
other satellite having substantially
the same footprint and power as may
be determined by MultiChoice from
time to time in accordance with
clause 9.9;
"SMS" : subscriber management services
supplied from time to time by
MultiChoice as stipulated in this
Agreement;
"Subscribers" : all Persons who have contracted to
pay a fee to MultiChoice to receive
any or all of the Channels, on an
audio visual monitor, including, but
not limited to, SUD Subscribers, MUD
Subscribers, Commercial Subscribers,
Communal Subscribers, RAVE
Subscribers and notwithstanding the
fat that no fee is payable by such
persons, VIP Subscribers;
"SUD (Single Unit
Dwelling) Subscriber" : any person who owns, leases or
occupies a private single dwelling
unit or other dwelling unit in the
Territory and has been sold and
marketed to by MultiChoice including
Employee Subscribers on an
individual basis and is duly
authorised to receive and decrypt
the Channel Signals;
"SuperSport" : SuperSport Limited, a company
registered in South Africa, whose
principal place of business is in
Johannesburg;
15
"Territory" : the continent of Africa excluding
those countries listed in paragraph
1.1 of Schedule 2A of this Agreement
but including those Indian Ocean
Islands set out in paragraph 1.2 of
Schedule 2A;
"Transmission Failure": any material disruption,
discontinuance or interruption in or
other interference with the delivery
of the Channels' Signals by
MultiChoice to Subscribers (but
excluding interruption for routine
maintenance, adjustment or repair of
the Uplink Facility or Satellite);
"Transponder Costs" : the cost of the transponder capacity
for the Channels paid by M-Net as
set out in clause 9.8;
"VIP Subscriber" : any Person of strategic or
promotional importance either to
MultiChoice or M-Net whom either of
the Parties have agreed to authorise
to decrypt the Channels' Signals and
to view the Channels in unencrypted
format without the payment of any
fee;
"Viewing Card" : an electronic smart card which, when
it is enabled by or on behalf of
MultiChoice and inserted into a
Decoder, is designed to decrypt the
Channels' Signals and which enables
the Subscriber to view, inter alia,
the Channels in unencrypted format.
3. INTRODUCTION
3.1. It is recorded that -
3.1.1. MultiChoice and M-Net are Parties to an existing
agreement, which took
16
effect on * 1995 (the "Analogue Agreement"), and
which deals with the analogue distribution by
MultiChoice of the M-Net Domestic and M-Net Africa
channels in Africa;
3.1.2. this Agreement is entered into as being supplementary
to, rather than in replacement of the Analogue
Agreement and shall be construed accordingly;
3.1.3. to the extent that this Agreement conflicts with the
Analogue Agreement then this Agreement shall prevail
to the exclusion of the Analogue Agreement.
3.2. It is also recorded that M-Net is party to an existing
agreement with CNE for the exclusive distribution of its
channel, M-Net Egypt, in Egypt. M-Net and MultiChoice agree to
hold good faith discussions with a view to including Egypt in
the definition of Territory in this Agreement when the
agreement with CNE expires and should MultiChoice no longer
hold any financial interest in CNE.
4. GRANT OF RIGHTS
4.1. M-Net hereby grants to MultiChoice the * right to distribute
and license the reception and redistribution of, and to
market, the channels known as M-Net (Domestic) ("MND"), M-Net
(Africa ) ("MNA"), Movie Magic (Domestic) ("MMD"), Movie Magic
(Africa) ("MMA"), KTV ("KTV") and SuperSport ("SS") from the
Effective Date, throughout the Territory by means of Pay TV
Systems (excluding the analogue distribution of MND and MNA
which is governed by the Analogue Agreement), on the terms set
out herein.
4.2. In addition, but subject to the terms and conditions of this
Agreement, M-Net undertakes that M-Net and/or any Affiliate of
M-Net *
17
4.3. It is recorded that:
4.3.1. the MND channel is a 24 hour per day premium general
entertainment channel and is comprised predominantly
of premium Pay TV programmes consisting mainly of
current feature films consistent with a Premium Movie
Channel, occasional specials, occasional series,
(predominantly) live sport consistent with a
Premium Sports Channel, local production and
children's programming primarily targeting audience
needs in South Africa, Namibia and Lesotho, Southern
Zimbabwe, Southern Mozambique, Swaziland, and
Botswana;
4.3.2. the MNA channel is a premium general entertainment
channel comprised predominantly of premium Pay TV
programmes consisting mainly of current feature films
consistent with a Premium Movie Channel, occasional
specials, occasional series and local productions,
and children's programmes, primarily targeting
audience needs in Africa excluding South Africa,
Namibia and Lesotho, Southern Zimbabwe, Southern
Mozambique, Swaziland, and Botswana, and is
transmitted on at least a 16 hour per day basis;
4.3.3. the MMD and MMA channels are Premium Movie Channels
transmitted on at least a 20 hour per day basis,
which target South African and African Pay TV Viewers
respectively; notwithstanding the definition of
Premium Movie Channel, it is agreed and understand
that MMA and MMD shall, from time to time, include
occasional library movies and that movies will
premiere on the MND channel prior to being screened
on MMD and MMA. Nevertheless, the Parties shall, from
time to time, review in good faith the provisions of
this clause in the best interests of both Parties
with a view, when appropriate, to procuring that a
percentage of movies will premier first on MMD and
MMA;
18
4.3.4. the KTV channel is comprised of children's programmes
targeting all African Pay TV viewers and is
transmitted on a 12 hour per day basis from 07h00 to
19h00 (Central African Time);
4.3.5. the SS channel is a 24 per hour day Premium Sports
Channel and is also referred to as Supersport 1.
4.4. Where the hours of transmission of MNA and/or KTV are
increased, the Per Subscriber Fees payable by MultiChoice to
M-Net hereunder shall not increase as a result thereof.
4.5. In consideration of the * rights granted by M-Net to
MultiChoice in terms of clause 4.1, MultiChoice undertakes
that MultiChoice and all of its Affiliates shall not, during
the Term:
4.5.1. *
4.5.2. *
19
4.6. In regard to Pay Per View:
4.6.1. MultiChoice shall have a right of first refusal to
market and licence, on a sole and exclusive basis,
any Pay Per View programmes in respect of which M-Net
acquires the Pay Per View distribution rights from
time to time for such distribution within the
Territory or part thereof.
4.6.2. M-Net shall notify MultiChoice forthwith upon
acquiring Pay Per View distribution rights for the
Territory for any such programmes, whereupon the
Parties shall negotiate in good faith the terms of
such distribution by MultiChoice.
4.6.3. If the Parties fail to agree the terms for such
distribution within a period of 60 days from the
notification by M-Net, M-Net (i) shall not itself be
entitled to undertake such Pay Per View distribution,
and (ii) undertakes that it shall not authorise the
Pay Per View distribution of the relevant programme
in the Territory by a third party SMS provider (the
"Third Party"); without first having afforded
MultiChoice the opportunity, on 60 (sixty) days
notice (or such shorter period as may be agreed
between the Parties, taking into account the date of
broadcast of the relevant event) in writing to
MultiChoice, to conclude an agreement on terms and
conditions substantially the same as those agreed
with the Third Party for such Pay Per View
distribution.
4.6.4. M-Net shall have a right of first refusal to supply a
full service Pay Per View, offering 24 (twenty four)
hours per day consisting of premium movies
(consistent with the definition of Premium Movie
Channel) and/or Premium Sports Programming for sole
and exclusive distribution by MultiChoice in the
Territory.
4.7. M-Net shall be entitled to sell or syndicate its programmes
known as Egoli, ▇▇▇▇▇ ▇▇▇▇▇▇▇ and Front Row and also films and
one-off local productions (i.e. one-off specials) in which
M-Net has invested, for third party distribution in the
Territory by any means whatsoever.
20
4.8. M-Net shall not be entitled to sell or otherwise syndicate in
any other programmes which have been or are to be included in
any of the Channels for third party distribution in the
Territory by any means whatsoever save that:
4.8.1. M-Net shall be entitled to approach MultiChoice, on a
case by case basis, in relation to the sale or
syndication of other programmes in order to obtain
MultiChoice's approval which shall not be
unreasonably withheld to syndicate same to a third
party broadcaster in the Territory.
4.8.2. *
5. TERM
5.1. Notwithstanding the date of signature hereof, the Agreement
shall be deemed to have commenced on the Effective Date and
shall continue thereafter for a period of 10 (ten) years.
5.2. During the last year of the Term the Parties shall renegotiate
the fees and commercial terms which will apply during the *
years following the Term. If the Parties are able to agree
such fees and commercial terms then this Agreement shall
automatically continue for a further * years on the same terms
and conditions set out herein and in the Standard Terms.
6. PER SUBSCRIBER FEES, REPORTING AND PAYMENT
6.1. In consideration of the grant of rights to MultiChoice as set
out in clause 4.1, MultiChoice shall pay to M-Net in respect
of each Accounting Period, a Per Subscriber Fee in respect of
each Subscriber as set out in Schedule 3 hereto;
21
6.2. It is recorded that MultiChoice intends offering incentives to
potential subscribers to persuade such potential subscribers
to purchase a Viewing Card and/or commence payment of monthly
subscription charges; excluding circumstances where a
subscriber is in default of any obligation to MultiChoice. The
incentives may take the form of one or two free viewing
periods ("Free Trials") not exceeding 1 (one) months
cumulative duration during any year (calculated with reference
to the Effective Date or any anniversary thereof); provided
that all such Free Trials involving the Channels shall be
subject to the prior written consent of M-Net, which consent
M-Net shall be entitled to withhold if any supplier of
programmes or material to M-Net has not given its consent to a
Free Trial. M-Net undertakes to use its reasonable endeavors
to obtain the consent of such suppliers to such Free Trials as
may be reasonably requested by MultiChoice.
6.3. *
6.4. It is recorded that at the date of signature hereof the
subscriber charge payable to MultiChoice by SUD Subscribers
within the Ku Band footprint of the Satellite who receive the
Channel Signals on a Direct to Home basis (the "Ku SUD
Subscriber Charge") * per Ku SUD Subscriber inclusive of VAT.
The determination of the Ku SUD Subscriber Charge shall be
22
within the reasonable direction of MultiChoice; provided,
however, that MultiChoice shall consult with M-Net prior to
any increase in the Ku SUD Subscriber Charge.
6.5. Price Increases
6.5.1. Increases in the Per Subscriber Fees payable in
respect of the digital distribution of the Channels
in South Africa (the "South African Digital
Increase") shall be negotiated in good faith between
the Parties on an annual basis with a view to
implementing the South African Digital increase on *
each year during the Term. The factors that shall be
taken into account in determining the South African
Digital Increase shall include but not be limited to:
(i) the basis of determining the previous year's
South African Digital Increase;
(ii) the increase in the CPI in respect of the then
preceding calendar year;
(iii) the Rand/US Dollar exchange rate movement in
respect of the then preceding calendar year;
(iv) the total amount of Per Subscriber Fees paid to
M-Net by MultiChoice in respect of the digital
distribution of the Channels in South Africa during
the then preceding calendar year; and, after taking
into consideration any and all additional channels
added to MultiChoice Ku Band Bouquet in the preceding
year, the percentage proportion that this represents
in relation to MultiChoice's overall programming
costs for the then preceding calendar year;
(v) the quality of the Channels, including the number
of major Hollywood studios contracted to supply
movies to M-Net in respect of the then preceding
calendar year;
(vi) M-Net's programming acquisition costs in respect
of the then preceding calendar year;
(vii) economic forecast materials or data which could
have a bearing on the business of either M-Net or
MultiChoice in respect of the calendar year following
implementation of the South African Digital Increase;
23
(viii) the results of the latest retail price survey
conducted on behalf of the Parties; and
(ix) the forecast growth in Subscribers for the then
following calendar year: (collectively, the "South
African Digital Increase Factors").
6.5.2. The respective increases in the Per Subscriber Fees
payable in respect of the digital distribution and
analogue distribution of the Channels outside South
Africa (the "ROT Digital and Analogue Increases")
shall also be negotiated in good faith between the
Parties on an annual basis with a view to
implementing the ROT Digital and Analogue Increases
on * each year during the Term. If notwithstanding
reasonable endeavours the parties are unable to reach
agreement on the ROT Digital and Analogue Increases
then the previous year's Per Subscriber Fees shall be
increased by the percentage increase in the USA CPI
occurring in the 12 (twelve) months period prior to
the relevant increase.
6.5.3. The Parties shall use all reasonable endeavours to
ensure that their respective Chief Financial Officers
reach agreement in respect to the South African
Digital Increase prior to * each year, with a view to
implementing such increases on * or thereafter. If,
notwithstanding such reasonable endeavours, the
Parties are unable to reach agreement on the South
African Digital Increase, then the matter shall first
be referred to the Parties' respective Chief
Executive Officers who shall use all reasonable
endeavours to reach agreement concerning the relevant
increase or increases, taking into account the South
African Digital Increase Factors (in respect of the
South African Digital Increase). If the Chief
Executive Officers fail to reach agreement by * then
the matter shall be referred to the Parties'
respective chairpersons who shall use all reasonable
endeavours to reach agreement taking into account the
relevant applicable increase factors. If the Parties'
chairpersons fail to reach agreement by * then the
matter shall be referred to the President (for the
time being) of the South African Institute of
Chartered Accountants who shall be asked to appoint a
suitably
24
qualified expert to determine the South African
Digital Increase taking into account the South
African Digital Increase Factors, who shall be
requested to use all reasonable endeavours to make
such a determination by not later than * and who
shall be entitled to consult with any employees or
officers of either Party at his discretion. For the
avoidance of doubt, if at the time of a proposed
referral to the chairpersons envisaged above, the
chairpersons are the same individual, then the
referral shall be directly from the Chief Executive
Officers to the President (for the time being) of the
South African Institute of Chartered Accountants by
not later than *
6.5.4. For the avoidance of doubt, if, notwithstanding the
provisions of sub-clauses 6.5.1 to 6.5.3 inclusive,
the South African Digital Increase has not been
determined by * in any particular year during the
Term, then: (i) MultiChoice shall not be entitled to
increase the retail charge levied on Subscribers
arising from their entitlement to receive the
MultiChoice Ku Band Bouquet until the South African
Digital Increase has been determined; and (ii) the
Per Subscriber Fees payable in respect of the digital
distribution of the Channels in South Africa shall
not be increased until the retail charge levied on
Subscribers arising from their entitlement to receive
the MultiChoice Ku Band Bouquet has been increased
pursuant to the determination of the South African
Digital Increase and such increased retail charge has
been applied on the first day of an Accounting
Period.
6.5.5. Increases in the Per Subscriber Fees in respect of
analogue distribution on the Channels in South Africa
shall be implemented on * during each year of the
Term and shall be proportionate to the increase in
the retail charge to Subscribers (excluding VAT) who
receive the Channels by analogue means, applied in
respect of the twelve month period preceding the
relevant * increase implementation date.
6.5.6. Increases in the Per Subscriber Fees payable in
respect of the analogue distribution of MDN and
Community Service Network ("CSN") shall be
25
proportionate to the increase in the charge
(excluding VAT) to Subscribers for MND and CSN
collectively for so long as they are sold
collectively.
6.5.7. If MultiChoice decides to sell MND to Subscribers
separately from CSN, then it shall notify M-Net and
the Parties shall negotiate the mechanism by which
the Per Subscriber Fees payable in respect of MND
hereunder will be varied.
6.6. Minimum Guarantees
6.6.1. Should M-Net be required to pay any minimum
guarantees to * * pursuant to an agreement between *
* whether in short form or long form, MultiChoice
undertakes and guarantees that it shall pay to M-Net
the minimum guarantees payable by M-Net in respect of
those 20 countries listed in Schedule 2B hereto but
only in respect of a maximum of 10,000 (ten thousand)
Subscribers for all such countries taken together.
The amount payable by MultiChoice to M-Net pursuant
to the guarantee set out in this clause 6.7.1 shall
be 10,000 less the actual number of Subscribers in
all Schedule 2B countries during the relevant period
multiplied by the actual programming cost payable per
Subscriber paid by M-Net to * in respect of the
countries set out in Schedule 2B for that period. If
M-Net removes any country from Schedule 2B in terms
of clause 24 or if M-Net appoints a third party
distributor under clause 24.6.2, then the number of
Subscribers in respect of which MultiChoice
guarantees payment under this clause 6.7.1 shall be
reduced by 500 in respect of each such removed
country. Any amount payable by MultiChoice in
accordance with this clause 6.7 will be payable by
MultiChoice to M-Net on the last day of the
Accounting Period in which such amounts are payable
by M-Net to * and will be set out in an invoice which
will be submitted by M-Net to MultiChoice conditional
on the submission by MultiChoice to M-Net of the
information set out in Schedule 4 in accordance with
clause 7.
26
6.6.2. M-Net shall make available, upon reasonable notice by
MultiChoice, and MultiChoice shall be entitled to
examine and take copies of, all relevant books,
records and/or contracts or extracts thereof
containing information which may be required for the
determination and verification of (i) any minimum
guarantees payable by M-Net to * and (ii) the actual
programming per Subscriber cost paid by M-Net to * as
referred to in clause 6.7.1.
6.7. All Per Subscriber Fees payable by MultiChoice to M-Net
pursuant to the provisions of this Agreement:
6.7.1. which relate to the distribution of the MNET Analogue
channel in South Africa and MultiChoice Ku and C
Bouquets will be payable in South African Rand
monthly in arrears within 15 (fifteen) days of the
last day of each Accounting Period applying (where
applicable) the US Dollar/South African Rand exchange
rates (as published by the Standard Bank of South
Africa from time to time) applicable on the last day
of the Accounting Period, in respect of which payment
is due; and
6.7.2. which relate to the analogue distribution of the
Channels in South Africa will be payable in South
African Rand monthly in arrears within 15 (fifteen)
days of the last day of each Accounting Period;
6.7.3. which relate to any of the Channels transmitted in
analogue format or by terrestrial means outside of
South Africa will be payable in South African Rand
annually in arrears within 15 (fifteen) days after 31
March in respect of the preceding 12 (twelve)
Accounting Periods of the Term (pro rated where
applicable), calculated on a monthly basis for each
Accounting Period comprising the relevant year with
reference to the average US Dollar/South African Rand
exchange rate over the Accounting Period to which
such payment relates, as published from time to time
by the Standard Bank of South Africa Limited.
6.8. With effect from the Start Date, MultiChoice shall deliver to
M-Net a statement (i)
27
(ii) subject to the consent of M-Net which shall not be
unreasonably withheld or delayed, such other date as
MultiChoice may advise from time to time but which will be no
later than fifteen (15) days after the end of each Accounting
Period, MultiChoice shall deliver to M-Net a report relating
to that Accounting Period recording in detail the information
set out in Schedule 4 and such report shall be certified as
accurate in all respects by the MultiChoice Chief Executive or
Chief Financial Officer or such other person who may be
appointed by either of the aforementioned.
6.9. Following receipt of the report referred to in clause 6.9,
M-Net shall deliver to MultiChoice an invoice showing the Per
Subscriber Fees due by MultiChoice to M-Net and MultiChoice
shall pay such invoice in full in accordance with clauses 6.1
and 6.8 above.
6.10. Any payment made by either Party in terms of this Agreement
shall, except in the case of fraud or manifest error or, in
the case of payment by MultiChoice to M-Net where M-Net's
records are subject to an audit by a supplier of programming
to M-Net, be deemed to be accurate and complete if neither
Party has disputed the accuracy of completeness of such
payment by notice to the other within 12 (twelve) months from
the date of receipt by the relevant Party of such payment.
6.11. Notwithstanding any inability to obtain exchange control
approvals from any country in the Territory to remit Per
Subscriber Fees to South Africa, MultiChoice shall make
payment of all such Per Subscriber Fees to M-Net in South
Africa in accordance with this Agreement.
6.12. Neither Party shall be entitled to apply set off in respect of
any fees or charges due in terms of this Agreement or related
agreements.
6.13. MultiChoice and/or its Affiliates shall be liable for all bad
debts arising out of failure to collect such subscription
fees.
6.14. It is recorded that the portion of the per Subscriber charge
which is reflected in this
28
Agreement as a Per Subscriber Fee is collected by MultiChoice
acting as an agent for M-Net. Accordingly, MultiChoice in
consideration for the grant of the rights set out in clause 4
acts as M-Net's agent in the collection and payment to M-Net
of Per Subscriber Fees which are payable by MultiChoice to
M-Net in terms of this Agreement.
6.15. Subject to the provisions of clause 31.2 and provided that
there will be no additional fees or costs of whatsoever kind
payable under this Agreement as a result of the following
assignment, M-Net may, upon not less than one month's notice
in writing to MultiChoice, assign all of its rights, in
relation to SS only, to receive payment in terms of this
clause 6, to SuperSport. On receipt of such notice,
MultiChoice shall thereafter be obliged to effect payment of
any Per Subscriber Fees payable hereunder in respect of the
rights so assigned, directly to SS (or at the request of M-Net
to M-Net as agent for SS). Such payment shall be on full
discharge of MultiChoice's obligations to in respect of all
rights granted in terms of this Agreement.
7. RECORDS AND AUDIT
7.1. Notwithstanding the certification of the monthly reports
contemplated in 6.9, MultiChoice shall supply to M-Net within
120 (one hundred and twenty) days of each anniversary of the
Effective Date, or in the case of termination of this
Agreement for whatever reason, within 120 (one hundred and
twenty) days of the date of termination, a statement certified
by the duly appointed auditors of MultiChoice certifying the
completeness and accuracy of all information contained in all
of the reports and statements supplied by MultiChoice to M-Net
in respect of the preceding year or aforesaid portion as the
case may be.
7.2. MultiChoice shall keep, or cause to be kept, and shall
maintain for a period of 5 years, complete, detailed and
accurate records and books of account in respect of its
subscriber base including, but not limited to, the number of
Subscribers in each Accounting Period and of all payments
effected under this agreement, and such records shall contain
all information which may be required for the determination
and verification of all Per Subscriber Fees paid or payable
under this Agreement and
29
of all information required for the purposes of the reports
contemplated in 6.9.
7.3.
7.3.1. During this Agreement and subject to clause 8.1,
M-Net shall be entitled to examine or audit the books
and/or records contemplated in clause 7.2 and take
copies and extracts therefrom during normal business
hours upon not less than 5 (five) days prior written
notice, provided that such inspection or audit shall
take place not more frequently than once in any 12
(twelve) month period except if a material
discrepancy is found in which case M-Net shall have
the right to make two further such inspections within
the same twelve month period.
7.3.2. MultiChoice shall permit independent auditors and/or
representatives appointed by any supplier of
programming to M-Net to examine, inspect or audit the
books and records contemplated in 7.2 in accordance
with the provisions contained in 7.3.1; provided that
such independent auditors and/or representatives are
appointed solely on the basis that they convey the
results (rather than any documents supporting the
results) of any audit report to the programme
supplier concerned.
7.4. If any inspection or audit carried out by or on behalf of
M-Net pursuant to clause 7.3 reveals that MultiChoice has
under-reported the amount payable to M-Net, then,
notwithstanding clause 6.11, MultiChoice shall make immediate
payment to M-Net of the amount due and owing. If any
inspection or audit reveals that MultiChoice has over-reported
the amount payable to M-Net, then, notwithstanding clause
6.11, M-Net shall immediately raise a credit note for the
appropriate refund to MultiChoice save where M-Net has paid
programme suppliers based on inaccurate figures and is unable
to obtain refunds from such suppliers, notwithstanding all
reasonable efforts being made by M-Net to do so, in which
event the amount to be refunded to MultiChoice shall be
reduced accordingly.
7.5. All costs of auditing, excluding costs incurred by MultiChoice
pursuant to clause 7.1, shall be borne by M-Net unless any
report or information submitted to M-Net by
30
MultiChoice is found to be materially inaccurate, in which
case the costs shall be borne by MultiChoice. For the purposes
of this clause 7.5 a report or any information which differs
in respect of any figure from the correct figure by more than
5% shall be deemed to be materially inaccurate.
7.6. Should M-Net incur any liability to pay any interest, fine or
penalty to third parties as a direct result of incorrect,
inaccurate, incomplete or late reporting by MultiChoice,
MultiChoice shall indemnify M-Net to the full extent of the
amount of such interest, fine or penalty actually paid by
M-Net.
8. PROPRIETARY AND INTELLECTUAL PROPERTY RIGHTS
8.1. M-Net acknowledges that all proprietary and intellectual
property rights (specifically including MultiChoice's
confidential Subscriber data base) arising from the conduct by
MultiChoice of its business shall, as between M-Net and
MultiChoice vest exclusively in MultiChoice.
8.2. M-Net shall, with MultiChoice's prior written consent, which
consent MultiChoice shall not be entitled unreasonably to
withhold or delay, be furnished by MultiChoice with the
identities and addresses of all Subscribers for the sole
purpose of conducting market research and/or relationship
direct marketing during the term of this Agreement (as
specified in Schedule 5 to this Agreement or as determined
otherwise by agreement between the Parties); provided that,
subject to clause 8.3, MultiChoice shall not otherwise be
obliged to disclose to M-Net the identity and addresses of
Subscribers in any circumstances whatsoever.
8.3. MultiChoice shall, as soon as its systems enable it to do so,
(which MultiChoice will use all reasonable endeavours to
expedite) provide M-Net within 48 hours after the last day of
each 3 month period of this Agreement (i.e. on a quarterly
basis) with a list of the names and addresses of all MUD
Subscribers, Commercial Subscribers and the number of MUD
Units and Hotel Rooms, respectively, (where applicable) within
the premises operated by each MUD and Commercial Subscriber,
for each country comprising the Territory. M-Net will be
entitled to provide the information
31
contemplated in this clause 8.3 to any supplier of programming
to M-Net.
8.4. In each case, M-Net shall treat such identity and addresses of
subscribers as confidential and shall not utilise or disclose
any such names and addresses to any person for any purposes
other than as set out in 8.2 above or, in the case of
information supplied pursuant to 8.3, for the purposes of
disclosing such information to its programme suppliers. The
obligations described in this sub-clause shall be regarded as
material obligations of M-Net. Upon termination of this
Agreement other than by reason of default by M-Net,
MultiChoice shall undertake one mailshot to all Subscribers to
the Channels on behalf of M-Net, subject to MultiChoice
approving the content and wording of the mailshot (such
approval not to be unreasonably withheld) and M-Net shall, for
the avoidance of doubt, be entitled to include in the mailshot
its address and telephone number to enable Subscribers to
contact M-Net.
9. DELIVERY AND TRANSMISSION OF CHANNELS
9.1. M-Net shall, with effect from the Effective Date, at its own
cost and in accordance with the signal quality specifications
set out in Schedule 6 hereto deliver the Channels' Signals to
the MultiChoice Satellite uplink facility which is situated at
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ (the "Facility").
MultiChoice may elect to change the location of the Facility
in which event M-Net shall deliver the Channels' Signals to
such new location; provided that all additional costs
necessarily incurred by M-Net as a result of such change of
location shall be for the account of MultiChoice and shall be
payable by MultiChoice to M-Net on demand.
9.2. M-Net shall ensure that the quality of the Channels' Signals
as delivered in accordance with this Agreement is sufficient
at all times to ensure that if they are properly transmitted
by MultiChoice by means of the Satellite and (if applicable)
by rebroadcast systems, all Subscribers with properly
functioning Decoders will be able to receive a clear broadcast
quality signal for the Channels, without interruption or
interference.
32
9.3. If Delivery Failure is anticipated or occurs, M-Net shall
notify MultiChoice as soon as practicable and M-Net shall take
all reasonably possible steps to prevent and/or rectify
Delivery Failure.
9.4. The Channels' Signals shall, upon being received at the
Facility, be transmitted by MultiChoice or its Affiliates, on:
9.4.1. such terrestrial and rebroadcast transmission
networks as may be required to ensure reception of
the Channels as provided hereunder by Non-DTH
Subscribers as part of existing television
programming packages offered as at the date hereof by
MultiChoice in the Territory in accordance with
Schedule 7 hereto; and
9.4.2. the Satellite on both Ku and C Band transponders as
part of the MultiChoice Bouquets to be offered by
MultiChoice in the Territory in accordance with the
Ku and C band coverage areas reflected in Schedule 8
hereto; and
9.4.3. such other terrestrial and/or rebroadcast
transmission networks or other non-DTH transmission
networks as may be required to deliver any of the
Channels to non direct to home Subscribers who
subscribe to any of the Channels as a result of such
Channels' inclusion in non-DTH MultiChoice television
channel(s) bouquet(s) which is/are developed in the
Territory after the Effective Date.
9.5.
9.5.1. MultiChoice shall, in respect of the transmission of
the Channels' Signals on the Satellite, ensure that:
9.5.1.1. the Channels' Signals are of a clear
broadcast quality; and
9.5.1.2. the Channels' Signals comply with the
technical criteria set out in CCIR601
(rating 4);
33
9.5.1.3. comparable bit rates will be used for
comparable television channels on the
MultiChoice Bouquets; and
9.5.1.4. the minimum bit rate used for the Channels
when employing statistical multiplexing
technology will not be less than the bit
rate used for comparable channels and may be
more than that bit rate, subject always to
availability and cost;
9.5.2. MultiChoice shall, in respect of the transmission of
the Channels' Signals on any terrestrial and
rebroadcast transmission network, ensure that the
Channels' Signals are of a clear broadcast quality
equivalent to any Free TV system within the relevant
country and comply with the specifications and
service levels set out in Schedule 9.
9.6. M-Net shall at any stage during this Agreement be entitled to
appoint an independent technical representative to ensure
compliance with the provisions of clause 9.5 and MultiChoice
shall, in such instance, grant all reasonable access to all
relevant transmission facilities.
9.7. If Transmission Failure is anticipated or occurs, MultiChoice
shall notify M-Net as soon as practicable and MultiChoice
shall take all reasonably possible steps to prevent and/or
rectify Transmission Failures.
9.8. In consideration of the transmission of the Channels' Signals
by MultiChoice via the Satellite in terms of this clause 9,
M-Net shall throughout the Term pay to MultiChoice, in respect
of each Accounting Period, Transponder Costs of an amount
equal to the monthly transponder, uplink, staff, overhead and
related operational costs of transmission of the Channels on
the Satellite (such Transponder costs being calculated pro
rata with reference to that proportion of transponder capacity
being used by the Channels when compared to the total amount
of transponder capacity being used by all channels on the
MultiChoice Bouquets). For the avoidance of
34
doubt nothing in this clause 9.8 shall be construed as
requiring M-Net to pay any costs associated with dormant
transponder capacity not used for transmission of the
MultiChoice Bouquets.
9.9. MultiChoice, in recognition of the fact that M-Net pays the
Transponder Costs in accordance with 9.8, undertakes that, if
sufficient satellite transponder capacity is not available to
transmit all of the channels comprising the Basic Tier and the
Premium Tier and the A la Carte Channels or the MultiChoice
Bouquet, then MultiChoice will in utilising such transponder
capacity as may be available to MultiChoice treat the Channels
in the same manner as MultiChoice treats any other channels
which are supplied by a programme supplier who pays fees in
respect of transponder capacity and the Channels will be given
preference over any channel in respect of which transponder
costs are not paid by the programme supplier.
10. TIERING
10.1. MultiChoice undertakes that the Channels shall be transmitted
and packaged as premium channels in the MultiChoice Bouquets
throughout the Term, and shall be included in the Premium Tier
from the date upon which MultiChoice tiers the MultiChoice
Bouquet. In addition, MultiChoice further undertakes that the
Channels shall be marketed as premium channels on non
direct-to-home Pay TV Systems in South Africa, Lesotho,
Botswana, Namibia, Nigeria, Ghana, Kenya, Uganda, Tanzania and
Zambia in accordance with Schedule 7 hereto. The Channels
shall continue to be transmitted in this manner on such non
direct to home pay TV systems during the Term provided that
MultiChoice or its Affiliates are able to maintain the
necessary broadcast licences and such other permissions as may
be required and provided further that MultiChoice is able to
continue providing subscriber management services in these
countries on a basis that is commercially viable; provided
further that:
10.1.1. in those countries set out Schedule 7 where
MultiChoice has the rights to transmit a television
channel on one frequency only, the frequency shall be
used for either MNA or MND, or subject to M-Net's
consent, SS, depending
35
on whether the rights acquired by M-Net in respect of
the relevant channel cover the relevant country;
10.1.2. in those countries set out in Schedule 7 where
MultiChoice has the rights to transmit television
channels on 2 frequencies only, MultiChoice shall
distribute in accordance with 10.1.1, one of the
Channels contemplated in that clause on the first
frequency and shall distribute any other Channel on
the second frequency;
10.2. It is recorded that the tiering structure and/or
channel/programming content of the MultiChoice C Bouquet may
be different to that of the MultiChoice Ku Bouquet, and in
addition, the tiering structure and/or the channel/programming
content of the MultiChoice Bouquets may differ from country to
country and/or area to area within the Territory.
10.3. The Channels shall also be included, whenever this is deemed
desirable by MultiChoice acting in accordance with the
criteria and requirements referred to hereunder, as part of
any non direct to home Pay TV Systems set up after the
Effective Date in countries forming part of the Territory
where such Pay TV Systems are managed by MultiChoice or an
Affiliate. The criteria and requirements which MultiChoice
shall adhere to in this regard are as follows:
10.3.1. in countries forming part of the Territory where
MultiChoice has rights to transmit a television
channel on either one or two frequencies, M-Net may
nominate its preferred Channel or Channels, as the
case may be, for such transmission and MultiChoice
shall consult with M-Net prior to the finalisation of
MultiChoice's decision concerning such transmission,
taking into account the needs of the Territory.
10.3.2. M-Net shall be entitled to attend all meetings and/or
negotiations between MultiChoice, its Affiliates and
any local Pay TV Systems operator in any part of the
Territory called by MultiChoice for the specific
purpose of discussing the proposed inclusion or
exclusion of any of the Channels in or from such non
direct to home Pay TV Systems and MultiChoice shall
give
36
M-Net reasonable and timely notice of all such
meetings.
10.4. For the avoidance of doubt MultiChoice shall only be entitled
to supply Communal Subscribers with the SS Channel and no
other Channel shall be supplied to any Communal Subscriber.
10.5. MultiChoice shall not knowingly cause, allow or permit any
Channel or any part thereof other than SS to be exhibited in
any common area in a non-residential establishment.
10.6. MultiChoice shall not be entitled to charge Subscribers any
specific subscription fee for the right to receive the MMD or
MMA channels. In addition, MMD may only be distributed by
MultiChoice to Subscribers who have the right to receive MND
(and MMA to subscribers who have the right to receive MNA).
10.7. For the avoidance of doubt, the Parties record that
MultiChoice shall only distribute the relevant Channels in the
appropriate countries as set out in Schedule 7.
10.8. Subject to the provisions of this Agreement, MultiChoice shall
have the right to charge such Viewing Card connection fee
and/or such other subscription charges as MultiChoice may
determine in its discretion.
11. ENCRYPTION AND DISTRIBUTION OF THE CHANNELS
11.1. During this Agreement, MultiChoice shall -
11.1.1. Encrypt the Channels' Signals before transmitting the
Channels' Signals from the Facility and shall ensure
that, subject to clause 14, the Channels' Signals are
Encrypted when transmitted into the Territory by the
Satellite;
11.1.2. procure the transmission of the Channels' Signals
(together with all over-the-air addressing
information) from the Facility to the Territory by
means of the Satellite;
37
11.1.3. conclude, in its name or through its
nominees, agents or Affiliates, subscription
agreements with Subscribers and potential
subscribers, which agreements confer upon
Subscribers the right to receive and decrypt
the Channels' Signals and to view, inter
alia, the Channels in unencrypted format, on
such terms (including the price to such
Subscribers) as MultiChoice may determine,
subject to the provisions of this Agreement;
and
11.1.4. procure that each Subscriber is in
possession of such enabled Viewing Card as
may be necessary to receive and decrypt the
Channels' Signals.
11.1.5. at all times ensure that Subscribers pay for
their right to receive the Channels save as
provided elsewhere in this Agreement;
11.1.6. shall in no circumstances whatsoever enable
any Decoder in any area for which an
admission fee is charged other than a
Decoder operated by a Communal Subscriber
and then solely in respect of the SS Channel
(in conjunction with the Supersport
Package);
11.1.7. shall not knowingly enable any Decoder to
receive the Channels outside the Territory
nor shall MultiChoice promote the Channels
outside the Territories.
11.2. MultiChoice warrants that MultiChoice shall at all times (save
for the MND Open Time window) encrypt the Channels using the
Irdeto technology or such other form of substituted encryption
technology as may be determined by MultiChoice and approved by
M-Net provided that such approval shall not be unreasonably
delayed or withheld.
11.3. MultiChoice shall notify M-Net as soon as is practicable but,
in any event, at least 60 (sixty) days prior to any proposed
material change to any of its encryption systems or devices.
11.4. M-Net and any programme supplier with whom M-Net concludes any
agreement
38
shall be entitled on reasonable notice to MultiChoice to
inspect the premises of MultiChoice, and/or its Affiliates,
for the purposes of ascertaining the safety and security
measures implemented by MultiChoice and/or its Affiliates
pursuant to this Agreement. However, neither M-Net nor any
programme supplier shall be entitled to have access to any
confidential information which is proprietary to MultiChoice
save that an appropriately qualified third party nominated by
M-Net or the relevant programme supplier, as the case may be,
will be permitted to verify the information requested without
divulging to M-Net or the relevant programme supplier the
confidential information itself, provided that third party has
signed MultiChoice's standard confidentiality agreement.
11.5. MultiChoice shall ensure that all decoders are correctly
enabled and tiered to receive the channels and hereby
indemnifies M-Net against any damages, liabilities, fines or
penalties sustained or incurred by M-Net arising out of or
connected to a breach of this clause 11.5 by MultiChoice.
11.6. MultiChoice shall immediately notify M-Net of any Piracy of
which it becomes aware and shall, together with M-Net,
determine the steps which should be taken, such as the
upgrading of decoders and/or other anti-piracy campaigns in
order to cause such Piracy to cease and shall keep M-Net fully
informed of the implementation of such steps; provided that if
the Parties are not able to agree on the steps which should be
taken then this matter shall be determined in accordance with
clause 27. If M-Net incurs or suffers expenses, damages,
losses, penalties or fines as a result of Piracy which was
known to MultiChoice but not notified by MultiChoice to M-Net
then MultiChoice shall indemnify M-Net and hold it harmless
from and against all such expenses, damages, losses, penalties
or fines.
11.7. MultiChoice shall, if it becomes aware that Piracy is
occurring pursuant to a breach of the encryption technology
contemplated in clause 11.2, exercise all rights which it has
or may have against Irdeto BV ("Irdeto") whether at common law
or in terms of the agreement between MultiChoice and Irdeto
relating to the use of the Irdeto Technology in order to
procure the termination of the Piracy within the shortest time
which is reasonably possible.
39
12. SMS
During this Agreement MultiChoice shall provide SMS in respect of the
Channels, such SMS to consist, inter alia, of the following:
12.1. maintaining a current computerised subscriber database capable
of recording sufficient details of each Subscriber, including
records of the status of Subscribers;
12.2. administering the subscriptions of Subscribers by producing
and (when required) distributing in the Territory contracts
for new Subscribers and setting up and maintaining an
infrastructure whereby the subscription contracts are
collected, returned and recorded;
12.3. procuring the distribution, sale, maintenance and repair of
Decoders in the Territory;
12.4. obtaining and distributing Viewing Cards to Subscribers (if
applicable) and issuing replacement Viewing Cards from time to
time as MultiChoice may deem appropriate;
12.5. enabling new Subscribers and disenabling defaulting
Subscribers or those wishing to cancel their subscriptions,
via the conditional access over-the-air addressing system;
12.6. administering the upgrades and downgrades for Subscribers who
request a variation in their chosen programme package;
12.7. handling the despatch of invoices in respect of the collection
of subscription monies payable by subscribers or administering
payments in respect thereof;
12.8. receive and respond promptly to all enquiries from the public
and subscribers within the Territory concerning the Channels
and, in particular establish and maintain telephonic customer
help and support lines and customer service centres within
each country in which the Channels are broadcast by means of
non direct to home pay TV Systems;
40
12.9. timeously communicating all changes in the scheduling or
programming of the Channels which are notified by M-Net to
MultiChoice to the customer service centres contemplated in
12.8;
12.10. supplying M-Net in November of each year with MultiChoice's
projections for subscriber growth for the forthcoming
financial year.
13. ADVERTISING
13.1. All advertising revenue from the flighting of advertisements
on the Channels shall be for M-Net's sole benefit.
13.2. It is recorded that a separate agreement has been reached
between the Parties regarding the allocation of time, inter
alia, for Promotional Advertisements on the Channels and
channel-specific and event-specific promotions on other
channels in the applicable MultiChoice Bouquet.
13.3. In respect of MND and CSN collectively, M-Net will provide
MultiChoice, free of charge, with airtime with a reach of 150
audience rating points ("ARs") per month for the sole purpose
of screening Promotional Advertisements. MultiChoice shall be
entitled, in respect of those Promotional Advertisements
utilising the ARs, to incorporate any promotional materials
promoting the MultiChoice Bouquets, including materials that
are channel specific. With respect to promotional materials
that are programme specific, MultiChoice shall be required to
obtain M-Net's consent before proceeding.
13.4. The Promotional Advertisements referred to in clause 13.2
above shall be booked in accordance with guidelines to be
agreed between the Parties from time to time.
13.5. The air time provided for Promotional Advertisements on the
Channels or on the MultiChoice Bouquets, if not used in an
Accounting Period will not be transferable to
41
any subsequent Accounting Period.
13.6. The scheduling of the promotional slots shall be at M-Net's
discretion, provided that:
13.6.1. M-Net shall consult with MultiChoice from time to
time regarding such scheduling; and
13.6.2. the scheduling shall be based on a regular pattern to
be agreed between the Parties from time to time.
14. OPEN TIME
14.1. Notwithstanding MultiChoice's obligations to encrypt the
Channels, M-Net shall, in its sole discretion, but after
consultation with MultiChoice determine from time to time
periods of Open Time during which the MND channel shall be
transmitted in an unencrypted format and shall notify
MultiChoice of such periods. Subsequent to the implementation
of tiered broadcasting by MultiChoice, MultiChoice shall,
during such periods, transmit the MND Channel in an
unencrypted format to all Subscribers within the Ku-band
footprint of the Satellite and to all other Persons within
such footprint in possession of a Decoder.
14.2. The Parties record that, until determined otherwise by M-Net
in accordance with clause 14.1, the periods of Open Time will
be 17:00 to 19:00 (CAT) each day of the week.
15. PROGRAMMING
15.1. The programmes comprising the Channels will be determined by
M-Net in its sole discretion and in accordance with the terms
of this Agreement. All copyright to the Channels' Signals and
the broadcasts in respect of the Channels shall remain vested
in M-Net.
42
15.2. M-Net will ensure that the content (including advertising) of
the Channels complies with the applicable laws, regulatory
codes, orders and directions issued from time to time by any
competent regulatory authority in South Africa, and M-Net
shall use its reasonable endeavours to do the same with regard
to any other countries in which the Channels are exhibited
from time to time by way of terrestrial non direct to home
distribution systems ("non DTH countries").
15.3. If M-Net becomes aware of the fact that the content of the
Channels does not comply with applicable laws and regulations
in any such non DTH countries, it shall advise MultiChoice of
such fact as soon as practicable and the Parties undertake to
meet and to negotiate, in good faith, with a view to agreeing
the action which should be taken in respect of such country;
provided that if the Parties are unable to reach agreement
then MultiChoice shall be entitled, in respect of the relevant
non DTH country to terminate the distribution of the relevant
Channel in such non DTH country via the relevant non direct to
home network but shall not be entitled to withdraw the country
from the Territory and shall, further, not be entitled to
black out any Channel (or part thereof) in respect of which
such advice has been received and action has not been agreed.
15.4. MultiChoice recognises that it will be difficult for M-Net to
keep abreast of all censorship laws, rules, regulatory codes,
orders and directions applicable throughout the Territory.
MultiChoice will be obliged to pass on information relating to
such censorship laws, rules, regulatory codes, orders and
directions which are reasonably likely to be relevant to the
Channels and which are applicable in the Territory, that
MultiChoice may come across in the course of its business
activities in the Territory. However, nothing in this clause
15.4 shall be construed as obliging MultiChoice to familiarise
itself with all such laws, rules, regulatory codes, orders and
directions, that may be applicable in the Territory.
15.5. M-Net shall not be liable to MultiChoice and/or to any
Affiliate for any breach of laws, rules, regulatory codes,
orders, directions or regulations arising from the exhibition
by MultiChoice of the Channels in the Territory or in any
country forming
43
exhibition by MultiChoice of the Channels in the Territory or
in any country forming part of the Territory in circumstances
where M-Net is unable to comply with or to ascertain the laws,
rules, regulatory codes, orders, directions or regulations of
the relevant country forming part of the Territory and has
given MultiChoice 30 days prior written notice in writing that
it is unable to do so.
15.6. Notwithstanding the provisions of 15.1 and the obligation
placed on M-Net to obtain Clearances in respect of the
programming which is included in the Channels, the obtaining
of clearances by M-Net in respect of all rights concerning all
music which is included in the Channels ("Music Rights") shall
be dealt with in accordance with this clause. M-Net shall use
reasonable endeavours to procure the clearance of all Music
Rights in respect of the Territory. The Parties record that
the obtaining of clearances in respect of Music Rights may
necessitate the payment, in those countries within the
Territory in which the Channels are distributed via a non
direct to home distribution system, to Music Rights
collection agencies or other organisations within such
countries. M-Net shall use its reasonable endeavours to
negotiate with and effect payment to such agencies or
organisations and MultiChoice shall offer its advice and
assistance to M-Net to facilitate such negotiations. If,
notwithstanding M-Net's reasonable endeavours, M-Net is unable
to clear the necessary Music Rights in respect of any country
on commercially viable terms then M-Net shall inform
MultiChoice in writing of the nature of the rights which M-Net
has been unable to clear and the reasons for such failure. *
44
15.7. MultiChoice shall not, without the consent of M-Net, in any
way add to, alter or delete any part of the programming
comprising the Channels (other than as provided for in this
Agreement) and shall ensure that the Channel Signals are
distributed contemporaneously and on an uninterrupted basis at
all times except for encryption or by agreement.
15.8. MultiChoice undertakes to use its reasonable endeavours to
protect the copyright of authors of the works exhibited
pursuant to this agreement and the copyright of M-Net of any
broadcast of the Channels. Should MultiChoice become aware of
any third party infringing the rights of M-Net or the rights
of copyright holders of works exhibited as part of the
Channels, pursuant to the exhibition of the Channels,
MultiChoice will promptly inform M-Net of all the
circumstances of the infringement within MultiChoice's
knowledge at the time. Should M-Net decide to take legal or
other action of any kind against any such party, MultiChoice
shall assist M-Net in every reasonable way requested by M-Net
in pursuing any such action. Each Party shall, however, bear
its own costs arising out of or pursuant to such action,
unless otherwise agreed between the Parties. It is recorded
that M-Net has obligations similar to the aforegoing
obligations in its agreements with its programme suppliers.
15.9. Should MultiChoice decide to take legal or other action of any
kind against any Party alleged to be infringing the rights of
M-Net in relation to any material provided by M-Net,
MultiChoice shall first seek and obtain the written consent of
M-Net to such action and further shall keep M-Net fully
informed of the progress of such action. M-Net shall be
obliged to assist MultiChoice in every reasonable way
requested by MultiChoice in pursuing such action. Each Party
shall however bear its own costs arising out of or pursuant to
such action, unless otherwise agreed between the Parties.
16. MARKETING
16.1. MultiChoice shall promote and market the Channels to Pay TV
Viewers in the Territory and shall conduct marketing and
promotion activities with a view to maximising the number of
Subscribers to the Channels. The nature of such activities
45
shall, subject to the provisions of this Agreement, be in the
absolute discretion of MultiChoice. The marketing and
promotion shall be of a high standard and shall not reflect
adversely upon the Channels or M-Net or any programme supplier
contracted as such by M-Net.
16.2. The Parties shall develop guidelines for the preparation,
production, distribution and otherwise of all promotional and
marketing material which relates or is connected in any way to
the Channels ("the Guidelines"). MultiChoice undertakes that
all marketing and promotional material which in any way refers
or relates to the Channels will comply with such Guidelines.
16.3. If M-Net undertakes any promotion of the Channels, then it
shall ensure that -
16.3.1. all promotional materials are prepared and
distributed in accordance with the Guidelines;
16.3.2. any such materials do not in any way reflect
adversely on MultiChoice or imply that any programme
service in the MultiChoice Bouquet (other than the
Channels or any other programme service owned by
M-Net) is owned, operated or controlled by it.
16.4. M-Net shall provide to MultiChoice, at M-Net's cost, monthly
listings of the programme schedules for the Channels, which
shall, whenever possible, be provided at least ninety (90)
days before the start of the calendar month in which such
programmes are to be transmitted and which shall be provided
in such format as MultiChoice may reasonably require from time
to time. Such listings shall be as accurate as possible and
M-Net shall notify MultiChoice promptly upon any change being
made thereto and MultiChoice shall, in turn, employ all
reasonable endeavours to make such changes in all promotional,
advertising and marketing materials and also to reflect such
changes in the electronic programming guide. MultiChoice may
use such information in any printed or electronic media in
order to market and promote the Channels.
46
16.5. MultiChoice acknowledges that the Marks belong solely and
exclusively either to M-Net or the Relevant Owner. M-Net
hereby grants to MultiChoice (or where the Relevant Owner is
not M-Net, M-Net will use its reasonable endeavours to procure
that the Relevant Owner grants to MultiChoice) a licence to
use the Marks during the Agreement (free of charge to
MultiChoice) in all media for the sole purpose of advertising
and marketing the MultiChoice Bouquets and/or the Channels,
such licence to be restricted to the non-commercial usage of
such Marks and to terminate automatically if this Agreement
terminates. MultiChoice's use of the Marks shall be in
accordance with the Guidelines. All goodwill in the Marks
shall automatically vest in M-Net or the Relevant Owner, as
appropriate. MultiChoice shall at its own cost promptly make
available to M-Net, at its reasonable request, copies of any
promotional advertising material created or disseminated by
MultiChoice which mentions or uses any of the Marks.
16.6. M-Net acknowledges that the MultiChoice Marks belong solely
and exclusively either to MultiChoice or to Affiliates of
MultiChoice. MultiChoice hereby grants to M-Net a licence to
use the MultiChoice Marks during this Agreement (free of
charge to M-Net) in all media for the sole purpose of
advertising and marketing the MultiChoice Bouquets and/or
the Channels, such licence to be restricted to the
non-commercial usage of such marks and to terminate
automatically if this Agreement terminates. M-Net's use of
the MultiChoice Marks shall be in accordance with the
Guidelines. All goodwill in the MultiChoice Marks shall
automatically vest in MultiChoice or the Relevant Owner, as
appropriate. M-Net shall at its own cost promptly make
available to MultiChoice, at its reasonable request, copies
of any promotional advertising material created or
disseminated by M-Net which mentions or uses any of the
MultiChoice Marks.
16.7. M-Net will provide MultiChoice with such research results from
image tracking and disconnect, quantitative and qualitative
studies (unless, in the case of particular quantitative and/or
qualitative studies, M-Net determines that these are of
sufficient strategic importance to be damaging if provided to
MultiChoice) as may be necessary and useful for MultiChoice to
position, market and sell the Channels and to enhance the
service which MultiChoice offers to Subscribers. In return
MultiChoice shall
47
provide M-Net with access to the market research which is
carried out by MultiChoice concerning the Channels and the
MultiChoice Bouquets, and MultiChoice shall provide regular
reports to M-Net concerning MultiChoice's GAP survey results.
M-Net may, in addition, request MultiChoice to include certain
incremental supplementary market research relating to the
Channels as part of the ongoing MultiChoice market research
to which M-Net has access pursuant to this clause and such
incremental research will be conducted by MultiChoice but at
M-Net's incremental cost. Each Party will make research
results and reports available to the other within 21 days of
such results or reports becoming available to the Party
commissioning the relevant research.
16.8. M-Net will make available to MultiChoice, free of charge on a
monthly basis, a variety of materials, including in tape
format, promoting the Channels, insofar as the rights granted
to M-Net by its licensors permit it to do so.
16.9. Each Party will be entitled to preview promotional materials
produced by the other for the purposes of ascertaining factual
accuracy prior to the production of such promotional materials
and each Party shall comply with any reasonable instructions
issued by the other concerning the rectification of factual
errors. MultiChoice shall, in addition, be obliged: (1) to
obtain M-Net's approval to access M-Net's tape library for the
purposes of obtaining and using recorded extracts from, or
relating to, the Channels for promotional purposes; and (2) to
clear with M-Net, at the conceptual stage, all promotional and
marketing material pertaining to the Channels and/or
MultiChoice Bouquet, whether for broadcast or other
distribution, where such material will incorporate material
owned by M-Net or which M-Net has obtained from its programme
suppliers. M-Net shall not unreasonably withhold or delay its
approval (which shall be deemed to be given if M-Net has not
responded within one working day save in exceptional
circumstances where M-Net has indicated that the approval will
take longer).
16.10. MultiChoice shall promptly inform M-Net in the event that
MultiChoice becomes aware that a significant decrease in the
availability of Decoders in the Territory has occurred or is
likely to occur.
48
17. ANALOGUE PROGRAMME GUIDE
17.1. MultiChoice shall be responsible, at its cost and expense,
subject to clauses 17.3 and 17.4, for compiling a monthly
television guide magazine (the "Analogue Guide") including a
separate programme guide section of at least 10 pages in
length setting out details of the programming comprising the
Channels, for distribution to analogue Subscriber in the
Territory. The Analogue Guide shall include information to be
supplied to MultiChoice by M-Net in digital data format
concerning the programmes on the Channels during the month to
which the relevant edition of the Analogue Guide relates.
Editorial control of the Analogue Guide shall vest in
MultiChoice, subject to due consultation with M-Net; provided
that all pages allocated to M-Net pursuant to clause 17.2
shall be subject to M-Net's approval and shall be submitted to
M-Net in electronic final proof form prior to the reproduction
of the magazine and the guide to which such pages relate. In
addition, the clearance procedure contemplated in clause 16.9
shall apply in respect of all visual material which is
included in the guide which is proprietary to M-Net or to any
programme supplier contracted as such by M-Net.
17.2. It is recorded that M-Net is currently allocated 30 (thirty)
pages in respect of the Analogue Guide and the Digital Guide
(as defined hereafter) at the MultiChoice programme guide per
page rate card less a 30% (thirty percent) discount with no
Oracle or other commissions applied. M-Net shall continue to
be obliged to take up and pay for the aforementioned pages
allocated to it.
17.3. M-Net shall be entitled to purchase such additional insert and
advertising pages in the Analogue and Digital Guides from
MultiChoice as MultiChoice may determine in its discretion at
the price rate referred to in clause 17.2 and M-Net shall be
entitled to sell such pages to any Person and retain the whole
of the proceeds of such sales. No such sales shall be
concluded by M-Net without MultiChoice's prior written
confirmation (which shall not be unreasonably delayed or
withheld) of the availability of such inserts or pages and the
prices applicable thereto.
49
17.4. One Analogue Guide per month shall be mailed by MultiChoice to
each analogue Subscriber to the Channels at MultiChoice's cost
save that M-Net shall bear any additional mailing costs in
respect of any additional pages requested by it in terms of
clause 17.3. MultiChoice shall also provide M-Net with such
additional programme guides as M-Net may order from
MultiChoice and MultiChoice shall be entitled to charge M-Net
for such programme guides at a rate agreed upon between the
Parties.
17.5. Sales of pages of advertising and inserts in the Analogue
Guide will be effected by M-Net or its nominee who will bear
all the cost of the sales but retain 20% of the net proceeds
of the sales of advertising and inserts as a commission or
such other amount as may be agreed by the Parties from time to
time.
17.6. All costs associated with the production of the magazine and
programme Analogue Digital Guide, including but not limited
to printing, distribution and mailing, shall be borne by
MultiChoice save for those costs which are borne by M-Net at
present in accordance with the usual course of business
between the Parties, such as, for example, certain charges
relating to transparencies, duplication, picture scanning,
photography and database subscribers (M-Lib) which shall
continue to be borne by M-Net.
17.7. MultiChoice shall allocate to M-Net at least 8 cover pages of
the Analogue Guide, at no extra cost, and M-Net shall be
entitled in its sole discretion to determine the topics which
will comprise such cover pages, save that the purpose of such
cover pages will be the promotion of all or any of the
Channels.
18. DIGITAL PROGRAMME GUIDE
18.1. MultiChoice may, at its sole discretion, compile television
guide magazines (the "Digital Guides") for distribution to
digital Subscribers. MultiChoice shall include in each of the
Digital Guides a selection of highlights from the listings
schedules for the Channels, as well as inclusion in the
listing of programme titles in the central section of the
Digital Guides, for as long as MultiChoice, in its sole
discretion,
50
continues to produce the Digital Guides. Editorial control of
the Digital Guides shall vest solely in MultiChoice, subject
to due consultation with M-Net; provided that all pages
allocated to M-Net pursuant to clause 18.2, if produced by
MultiChoice, shall be subject to M-Net's written approval and
shall be submitted to M-Net in final proof form prior to the
printing of the magazine and guide to which such pages relate.
In addition, the clearance procedure contemplated in clause
16.9 shall apply in respect of all visual material which is
included in the guide which is proprietary to M-Net or any
programme supplier contracted as such by M-Net.
18.2. MultiChoice shall mail one Digital Guide per month to each
applicable Subscriber to the Channels at MultiChoice's cost
save that the mailing costs of any pages purchased by M-Net in
terms of clause 17.3 shall be borne by M-Net.
18.3. The Parties have appointed Oracle as exclusive agent to sell
pages of advertising and inserts in both the Analogue and
Digital Guides on the terms and conditions of the agency
appointment as set out in the Letter of Understanding.
19. ELECTRONIC PROGRAMMING GUIDE
19.1. The Parties record that MultiChoice has developed an
electronic programming guide which will be made available to
Subscribers within the Territory. All costs and expenses
associated with the development and the provision of the
electronic programming guide shall be for the account of
MultiChoice, unless otherwise agreed between the Parties.
19.2. MultiChoice undertakes to consult with M-Net prior to the
final determination of the format of the electronic
programming guide; provided that MultiChoice undertakes, for
as long as MultiChoice, in its sole discretion, continues to
make such guide available, to afford to the Channels, the
first three positions in the default mode of such electronic
programme guide, or where Channels are grouped by genre, the
first position of the applicable genre, and in addition, the
same prominence in such electronic programming guide as is
afforded to the Channels in the magazine and
51
guide in respect of the Ku band portion of the Territory;
provided further that nothing in this clause shall be
construed as precluding MultiChoice from earning additional
revenue from any channel which pays additional charges for
extra space in any electronic marketing materials aimed at
marketing the MultiChoice Bouquets or any part thereof.
20. REPRESENTATIONS AND WARRANTIES
20.1. M-Net and MultiChoice each represents, warrants and undertakes
to the other that it has the requisite power and authority to
enter into this Agreement and to perform fully its obligations
hereunder.
20.2. MultiChoice represents, warrants and undertakes to M-Net that:
20.2.1. MultiChoice will use and will procure that its
Affiliates use all reasonable endeavours to obtain
and hold such licences, consents and permissions as
are required from any third party and each
appropriate governmental authority and/or regulatory
body or authority for MultiChoice and such Affiliates
to perform their obligations under this Agreement (if
any) and that such licences, consents and permissions
are and will during this Agreement remain in full
force and effect and that MultiChoice is not in
breach of any of the terms of the same and
MultiChoice will not knowingly do or permit anything
to be done which might cause any such licences,
consents or permissions awarded to or obtained by it
to be suspended or revoked;
20.2.2. MultiChoice shall not record the Channels or any part
thereof and shall not knowingly permit any other
Person so to do, except as may be required by law or
otherwise to comply with the terms of any licence,
consent or permission referred to in clause 20.2.1.
or as may be agreed to in writing between the
Parties;
20.2.3. The Channels' Signals will only be transmitted in an
Encrypted format over Pay TV Systems except as may be
permitted by M-Net in accordance with
52
clause 14;
20.2.4. Save as disclosed there is no significant breach of
the security of the Encryption technology as at the
date of signature hereof and shall employ all
reasonable security systems and procedures to prevent
any loss, theft, Piracy of which it become aware,
unauthorised use, reception or copying of the
Channels or any part thereof and shall immediately
notify M-Net if it knows that such an event has
occurred in accordance with clause 11.6.
20.3 M-Net represents, warrants and undertakes to MultiChoice that:
20.3.1. subject to clause 15.6, it has or will secure prior
to the delivery of the Channels' Signals all
Clearances required of M-Net in relation to the
broadcast, transmission and distribution of the
Channels throughout the Territory and, in
particular, that M-Net will subject to any
notification by M-Net to MultiChoice in terms of
clause 15.6, at all times during this Agreement hold
and comply with the terms of the Clearances and will
not do nor permit anything to be done nor omit to do
anything which might cause any such Clearances to be
suspended or revoked;
20.3.2 subject to clause 15, ensure compliance with the
applicable laws, rules, regulatory codes, orders and
directions issued from time to time by any competent
regulatory authority within the Territory, and with
relevant legislation enacted within the Territory
relating to the content of and/or advertising
contained in the Channels (except in relation to any
advertising inserted into the Channels by
MultiChoice);
20.3.3. it shall ensure that, subject to clause 15, neither
the Channels provided to MultiChoice by M-Net nor any
part thereof will infringe the copyright, performing
right, trademark, or other proprietary right or
interest of any third party or will constitute a
misuse of any confidential information of a third
party within the Territory;
53
20.3.4. it shall retain possession of copies of the
transmissions of the Channels for such period and in
such form as is required to be retained by all
applicable South African regulations or legislation
and shall at the reasonable request of MultiChoice
provide (free of charge) a copy of any such part of
the transmissions of the Channels to any relevant
South African regulatory authority or agency;
20.3.5. it shall ensure that during this Agreement the
Channels retain their current quality, presentation,
style and character;
20.3.6. *
21. INDEMNITIES
21.1. MultiChoice hereby indemnifies M-Net and holds it harmless
from and against all liabilities, claims, costs, damages and
expenses (including, without limitation, reasonable legal
costs reasonably and properly incurred pursuant to a claim by
a third party) arising out of any breach by MultiChoice or any
Affiliate of MultiChoice of any term, condition,
representation, warranty, undertaking or obligation contained
in this Agreement.
21.2. M-Net hereby indemnifies MultiChoice and holds it harmless
from and against all liabilities, claims, costs, damages and
expenses (including, without limitation, reasonable legal
costs reasonably and properly incurred pursuant to a claim by
a third party) arising out of any breach by M-Net or any
Affiliate of M-Net of any term, condition, representation,
warranty, undertaking or obligation contained in this
Agreement.
21.3. MultiChoice hereby indemnifies M-Net and holds it harmless
against all liabilities, claims, costs, damages and expenses
(including, without limitation, reasonable legal costs
reasonably and properly incurred pursuant to a claim by a
third party) arising
54
out of any claim brought about as a result of MultiChoice or
any of its Affiliates not obtaining any licence, consent any
permission referred to in clause 20.2.1, notwithstanding its
reasonable endeavours to do so.
21.4. If either Party wishes to assert a right to be indemnified for
claims by third parties as set forth in this clause 21 it
shall:
21.4.1. promptly notify the other of the claim or legal
proceeding which gives rise to such right as soon as
reasonably practicable upon becoming aware of the
same;
21.4.2. afford the other the opportunity to participate in
and fully control any compromise, settlement or other
resolution or disposition of such claim or
proceedings (subject to being fully indemnified by
that other Party); and
21.4.3. co-operate fully with any reasonable request of the
other Party in respect of the third Party claim, but
that other Party shall pay the costs of the
participation in and control of any compromise,
settlement or resolution or other disposition of such
claim or proceeding.
21.5. After the termination of this Agreement, the indemnity set out
in this clause 21 shall cease to have any force or effect
except in relation to antecedent breach by MultiChoice or
M-Net.
21.6. Notwithstanding the aforegoing, neither Party shall be liable
to the other for any indirect or consequential loss or damage
including, without limitation, loss of business or profits
arising out of any breach of this Agreement.
22. THIRD PARTY INFRINGEMENTS OF VIEWING CARDS
Each Party shall notify the other forthwith in the Territory upon
becoming aware that Viewing Cards intended for Subscribers and issued
by MultiChoice are being supplied outside the Territory or Pirated
(whether inside or outside the Territory) and M-Net shall, if
55
so requested by MultiChoice, provide all reasonable assistance to
MultiChoice in taking appropriate action to prevent or combat such
distribution or piracy, provided that all costs and expenses incurred
by M-Net in this regard shall be for the account of MultiChoice.
23. PROGRAMME SUPPLIER OBLIGATIONS
23.1. The Parties record that M-Net, pursuant to agreements with
suppliers of programming to M-Net, ("the Supplier Agreements")
has assumed certain obligations which are set out in Schedule
10. MultiChoice undertakes that it will not take any action
which causes M-Net to breach such obligations. In addition,
MultiChoice undertakes to procure that all of MultiChoice's
Affiliates comply in full with the obligation assumed by
MultiChoice in terms of this clause 23.1.
23.2. MultiChoice agrees not to knowingly take any action which may
have the effect of frustrating the Supplier Agreements (or any
term of any such agreement) and to assume liability for and
indemnify M-Net against any and all liabilities, claims cost
and expenses arising out of actions by MultiChoice and/or its
Affiliates contrary to the obligations set out in Schedule 10
which may be amended by agreement between the Parties from
time to time in accordance with changes or additions to the
terms and conditions of the Supplier Agreements.
24. PARTIAL TERMINATION
24.1. If any Clearance, necessary regulatory clearance, permission,
licence or approval (the "Approvals") obtained by M-Net
terminates or is terminated (other than by reason of M-Net's
breach or failure to renew such Approval other than as a
consequence of a breach by MultiChoice of its obligations
hereunder); or
24.2. if M-Net demonstrates to MultiChoice that any such Approval
has been varied by (or that the renewal of such an Approval
would result in) the imposition on M-Net of a material
monetary burden which makes the provision of all or any of the
Channels to any country within the Territory not commercially
viable for M-Net; or
56
24.3. if MultiChoice determines that the provision of the Channels
to any of the countries set out in Schedule 2B, results
pursuant to clause 6.7.1, in the imposition on MultiChoice of
a material monetary burden which makes the provision of any of
the Channels to any such country not commercially viable for
MultiChoice;
24.4. if MultiChoice wishes to terminate the distribution of any of
the Channels in the countries set out in Schedule 7 hereto
either for commercial reasons or as a consequence of a failure
to maintain the necessary broadcast licences or other
permissions in any of such countries;
24.5. if Piracy in any countries within the Territory is of such a
nature that M-Net is or is likely to be in breach of its
programme licensing agreements with its Licensors; or
24.6. if any re-broadcast operators authorised by MultiChoice to
rebroadcast any of the Channels within any country in the
Territory has failed or is failing to provide accurate
detailed accounting and reporting information in terms of this
Agreement to M-Net, such that M-Net is or is likely to be in
breach of its programme licensing agreement with its
Licensors;
then the relevant Party shall consult with the other Party
with a view to determining the appropriate action to be taken
in respect of the relevant country provided that if the
Parties are unable to reach agreement within a reasonable
period, then on the giving of 180 days written notice by M-Net
to MultiChoice where clauses 24.1, 24.2,24.5 or 24.6 apply or
by MultiChoice to M-Net where clauses 24.3 or 24.4 apply, the
notifying Party shall be entitled to remove such country from
the Territory or Schedule 2B, as applicable, and this
Agreement shall cease to apply in respect of such country,
without any liability of M-Net to MultiChoice or vice versa
except in respect of Per Subscriber Fees due and payable or
guarantee payments accrued at the date of withdrawal of such
country (but always subject to any contrary provisions in
clause 6.7).
The notifying Party may only remove a country from the ambit
of this Agreement in
57
terms of this clause 24 in circumstances where it has fully
explained and disclosed to the other Party the nature of the
relevant difficulty and has consulted with the other Party in
accordance with this clause 24 provided that in terms of this
clause 24:
24.6.1. Neither Party shall be entitled to remove South
Africa from the Territory; and
` 24.6.2. M-Net shall be entitled subsequent to the removal of
any country, in terms of clauses 24.3 or 24.4, to appoint any
person to distribute the Channels within the relevant country
and to provide such other ancillary services as may be
provided.
25. TERMINATION AND REMEDIES
25.1. A Party may terminate this Agreement without prejudice to any
other rights or remedies available to such Party either at law
or in terms of this Agreement, including without limitation,
the right to claim damages (either in addition to or in
substitution for such termination) at any time by giving
notice in writing to the other Party where:
25.1.1. the other Party has committed a material breach of
any of its obligations under the Agreement which is
incapable of remedy; or
25.1.2. the other Party has committed a material breach of
any of its obligations under the Agreement which is
capable of remedy and which the other Party has not
remedied within 60 (sixty) days of receipt of written
notice to do so (or, in the case of M-Net issuing
notice subsequent to a breach of a Supplier Agreement
caused by MultiChoice's default, then such lesser
period (if any) set out in the relevant Supplier
Agreement or, in the case of M-Net issuing a notice
subsequent to both MultiChoice's default and notice
by the relevant supplier, then such lesser period (if
any) set out in the relevant Supplier Agreement less
a reasonable period for M-Net to receive such notice
and
58
issue notice as contemplated herein); or
25.1.3. the other Party has committed a second or subsequent
material breach of any of its obligations under this
Agreement after having remedied an earlier similar
breach during the preceding 6 months after written
notice to do so;
25.1.4. proceedings are started for the other Party's winding
up, dissolution or reorganisation (otherwise than
while solvent and for the purpose of a bona fide
reconstruction or amalgamation) or for the
appointment of a receiver, trustee or similar officer
of any or all of the other Party's revenues or
assets; or
25.1.5. the other Party ceases to carry on business or
suffers any execution or distress over a material
part of its assets; or
25.1.6. the other Party becomes bankrupt or insolvent or
files any application, petition or action for relief
under any bankruptcy, insolvency or moratorium law;
or
25.1.7. the other Party admits in writing its inability to
pay its debts or is unable to pay its debts as they
fall due; or
25.1.8. the other Party suffers any similar event of
insolvency or bankruptcy under the terms of the
jurisdiction of its domicile; or
25.1.9. an application is made for an administration (or
similar) order to be made in respect of the other
Party; or
25.1.10. the other Party suspends or threatens to suspend its
operations.
25.2. In addition, and without prejudice to any other rights or
remedies which M-Net may have either at law or in terms of
this Agreement, including, without limitation the right to
claim damages (either in addition to or in substitution for
such termination), M-Net may terminate this agreement at any
time by giving notice in writing to
59
MultiChoice where:
25.2.1. M-Net, pursuant to a breach of any provision of this
Agreement by MultiChoice, breaches any Supplier
Agreement with any major studio which is or becomes a
member of the Motion Picture Association of America
and such Supplier Agreement is terminated pursuant to
such breach, without notice to M-Net to remedy such
breach; provided that M-Net shall be required to
exercise such right to terminate within 30 days of
the date of termination of the relevant Supplier
Agreement; or
25.2.2. Transmission Failure occurs for an average of 15
minutes per day over any period of 30 days within a
continuous period of 90 days or for a continuous
period of 30 days; provided that if such Transmission
Failure occurs in only one country (with the
exception of South Africa) and relates solely to the
non direct to home transmission system within such
country M-Net shall be entitled to terminate this
Agreement only with respect to the country in which
such transmission failure occurs and this Agreement
shall cease to apply in respect of such country;
provided further that where such Transmission Failure
occurs for lesser periods than those contemplated in
this clause 25.2.2 and such Transmission Failure
constitutes a breach by MultiChoice of its
obligations in terms of this Agreement, M-Net shall
not be entitled to terminate this Agreement but shall
be restricted to such other rights and remedies as
may be available to M-Net either at law or in terms
of this Agreement. For the avoidance of doubt, M-Net
shall be entitled to terminate this Agreement as a
whole where the Transmission Failure (described
above) occurs only in South Africa.
25.3. In addition, MultiChoice may terminate this agreement without
prejudice to any other rights or remedies available to
MultiChoice either at law or in terms of this agreement
including, without limitation, the right to claim damages
(either in addition to or in substitution for such
termination) at any time by giving notice in writing to M-Net
where Delivery Failure occurs for an average of 15 minutes per
day over any period of 30 days within a continuous period of
90 days or for a continuous
60
period of 30 days. Where Delivery Failure occurs in respect of
one or more (but not all) the Channels, MultiChoice shall be
entitled to elect whether to terminate this Agreement as a
whole or in relation only to those Channels affected by the
Delivery Failure. Where Delivery Failure occurs for lesser
periods than those contemplated in this clause 25.3 and such
Delivery Failure constitutes a breach by M-Net of its
obligations in terms of this Agreement, MultiChoice shall not
be entitled to terminate this Agreement but shall be
restricted to such other rights and remedies as may be
available to MultiChoice either at law or in terms of this
Agreement.
25.4. Notwithstanding any provision to the contrary contained in
this Agreement, should standards of quality, presentation,
style and character of any of the Channels becomes
significantly inferior during the course of this agreement as
demonstrated by consistent independent market research
conducted by an independent body jointly appointed by the
Parties ("Independent Market Research") over a four month
period. MultiChoice shall be entitled to give notice to M-Net
requiring the standard as at the Effective Date to be
restored. Such request shall be considered at a review forum
to be held by the Parties not later than 30 days after such
request and at a second review forum to be held not later than
30 days thereafter. Should the standard as at the Effective
Date not be restored to the reasonable satisfaction of
MultiChoice within 120 days (or such longer period as may be
agreed between the Parties) after the second review forum,
MultiChoice shall be entitled, after a period of 30 days of
negotiation between the Parties regarding the exclusivity of
and fees payable for the applicable Channel, in the event that
agreement cannot be reached, to terminate this Agreement in
respect of the Channel concerned but shall not be entitled to
terminate this Agreement in its entirety.
25.5. If either the composition, standards, quality, character or
style of the MultiChoice C Bouquet or the MultiChoice Ku
Bouquet become(s) significantly inferior during the course of
this Agreement or the packaging of other channels on either of
the MultiChoice Bouquets is detrimental to the growth of
Subscribers having the right to receive the Channels, both as
demonstrated by consistent Independent Market Research
conducted over a four month period, then M-Net shall be
entitled to give notice to MultiChoice requiring the standard
to be restored. Such request shall be
61
considered at a review forum to be held by the Parties not
later than 30 days after such request and at a second review
to be held not later than 30 days thereafter. If the standard
is not restored to the reasonable satisfaction of M-Net within
120 days (or such longer period as may be agreed between the
Parties) after the second review forum, M-Net shall be
entitled, after a period of negotiation between the Parties
regarding the exclusivity of and fees payable for the
Channels, in the event that agreement cannot be reached, to
terminate this Agreement in respect of the applicable C or Ku
MultiChoice Bouquet only and not the Agreement in its
entirety. If, as a result of termination of this Agreement in
respect of the Ku MultiChoice Bouquet, it proves commercially
unviable for M-Net to acquire the programming rights for
distribution of the Channels in the C-Band Territory as part
of the MultiChoice C Bouquet, then M-Net shall be entitled to
terminate this Agreement in its entirety upon at least 6 (six)
months written notice to MultiChoice.
25.6. Notwithstanding any provision to the contrary contained in
this Agreement.
25.6.1. should any of the Channels defined in clause 4.3 with
reference to a Premium Movie Channel -
25.6.1.1. cease to fall within the parameters
of the definition of a Premium Movie
Channel; or
25.6.1.2. when compared over a period of at
least three months, in terms of
programming quality and content to
three other English premium movie
channels (on other non MultiChoice
bouquets) as determined by an
independent third party, but at
least one of which must be
distributed in a market where
competing movie channels exist,
cease to be comparable to or better
than such channels; or
25.6.2. should any of the Channels defined in clause 4.3 with
reference to a Premium Sports Channel cease to fall
within the parameters of the definition of a Premium
Sports Channel -
then MultiChoice shall be entitled, upon 3 (three) months
notice to M-Net, to terminate this Agreement in respect of the
Channel concerned but shall not be
62
entitled to terminate this Agreement in its entirety.
25.7. Notwithstanding the provisions of this agreement which provide
otherwise, if this Agreement is terminated for any reason
whatsoever, MultiChoice shall be obliged to continue
transmitting the Channels' Signals in terms of and in
accordance with the provisions of this Agreement and providing
SMS in accordance with this Agreement for a period of 120 days
calculated from the date of such termination. For the
avoidance of doubt, the provisions of this clause 25.7 shall
survive the termination of this Agreement and, notwithstanding
such termination, M-Net shall be liable to pay to MultiChoice
Transponder Costs in respect of such 120 day period and
MultiChoice shall be liable to pay to M-Net Per Subscriber
Fees in respect of such 120 day period provided that neither
Party shall be restrained from entering into negotiations of
any nature whatsoever with any other Person relating, in the
case of M-Net to the distribution of the Channel Signals
within the Territory and, in the case of MultiChoice, to the
inclusion of any other channels in the MultiChoice Bouquet
including on the Premium Tier.
25.8. Within 20 (twenty) days after the termination of the period
contemplated in 25.7 (howsoever occasioned), each Party shall
at the direction of the other either destroy or return to the
other Party all materials furnished to it under this agreement
and in its possession or under its control (other than copies
and extracts of audit documents taken under clause 7.3) and
each Party shall certify in writing to the other Party that
the relevant direction has been complied with.
25.9. Except as may otherwise be agreed immediately on termination
of this Agreement for whatever reason, MultiChoice shall at
the expiry of the period contemplated in 25.7 disenable
Subscribers from receiving and decrypting the Channels'
Signals whereafter Subscribers and shall cease to be entitled
to receive and decrypt the Channels.
25.10. Termination of this Agreement by either Party for whatever
reason shall not prejudice or affect the rights or remedies of
such Party against the other Party in
63
respect of any antecedent breach of this Agreement.
25.11. In the event that more than 50% (fifty percent) of the
shareholding in either Party is acquired by a new shareholder
in a manner that allows such new shareholder to control the
relevant Party, then the Party not affected by such change in
control shall be entitled upon 60 (sixty) days notice to
terminate this Agreement.
26. FORCE MAJEURE
26.1. A Party shall not be liable for any loss suffered by the other
Party arising out of delay in or prevention of performance of
the Party's obligations due to any cause or reason beyond its
control, such as Satellite failure, Acts of God, war (declared
or undeclared), strikes, riots, political insurrection,
rebellion, revolution, fire, flood, explosion, prohibition of
import, acts or orders of Government or any agency or
instrumentality thereof (whether de facto or de jure), or any
law or regulation having force of law.
26.2. The Party whose performance is delayed or prevented shall
immediately give notice in writing to the other Party.
26.3. If a Party's performance is delayed by such a cause the
Party shall be entitled to a reasonable extension not
exceeding 30 days for performance. If performance is or will
be delayed for longer than this period the performance shall
be regarded as having been prevented.
26.4. If a Party's performance is prevented by such a cause the
Parties shall:
26.4.1. if the obligation of which performance is prevented
is not material, make such financial or other
adjustment between them as may be equitable;
26.4.2. if the obligation of which performance is prevented
is material, endeavour in good faith to agree on an
alternative basis for achieving the objects of this
Agreement. If agreement on an alternative basis is
not reached this
64
Agreement shall terminate and -
26.4.2.1. either Party may retain the other's
performance to the extent
performance has taken place;
26.4.2.2. if a Party does not elect to retain
the other's performance the other
Party may nevertheless require that
Party to retain the performance,
unless to do so would be inequitable
in the circumstances;
26.4.2.3. if a Party elects or is required to
retain the other's performance, the
Parties shall make such financial
adjustment between them as may be
equitable.
27. GOVERNING LAW AND DISPUTES
27.1. This Agreement shall be governed by and construed in all
respects in accordance with the laws of South Africa.
27.2 If any dispute arises at any time between any of the Parties
in connection with this Agreement including without
limitation, the formation or existence of, the implementation
of or the interpretation or application of, the Parties'
respective rights and obligations in terms of or arising out
of this Agreement or its breach or termination or the
performance or non-performance of any Party's obligations
hereunder or which relates in any way to any matter affecting
the interests of the Parties in terms of this Agreement, and
the Parties are unable to resolve their dispute, any Party may
refer the matter in dispute, in the first instance, to the
respective chief executive officers of the Parties for
resolution.
27.3. If, after having been referred under clause 27.2, the matter
in dispute shall not have been resolved by the said chief
executive officers within 30 (thirty) days of such matter
having been so referred, any Party may refer the matter in
dispute for determination by final arbitration in Johannesburg
in accordance with the Arbitration ▇▇▇ ▇▇▇▇ or any replacement
Act, by 3 (three) arbitrators (unless the Parties agree in
65
writing to have a single arbitrator only), 1 (one) of whom
shall be appointed by the referring Party(ies), a further 1
(one) of whom shall be appointed by the opposing Party(ies)
and the third appointed by the 2 (two) so chosen. In the event
of the referring Party(ies) or the opposing Party(ies) failing
to appoint an arbitrator and/or failing agreement between the
2 (two) arbitrators within 14 (fourteen) days of their
appointment upon the appointment of a third arbitrator, such
arbitrator or arbitrators shall be appointed by the president
for the time being of the Law Society of the Transvaal on the
written request of either the referring Party(ies) or the
opposing Party(ies). The arbitrator shall establish the
procedural rules applicable to the proceedings. The
arbitration shall be conducted in the English language. The
arbitrator, if so required by any of the Parties, shall order
the Parties to make discovery of all documents relevant to the
issues in the arbitration. Any award of such arbitration shall
be finally binding upon the Parties and may be entered into
and enforced by any court having jurisdiction.
27.4. This clause shall not preclude any Party from obtaining
interim relief on an urgent basis from a court of competent
jurisdiction pending any decision of the arbitrator.
27.5. The provisions of this clause 27 -
27.5.1. constitute an irrevocable consent by the Parties to
any proceedings in terms hereof and no Party shall be
entitled to withdraw therefrom or claim at any such
proceedings that it is not bound by such provisions;
27.5.2. are severable from the rest of this Agreement and
shall remain in effect despite the termination of or
invalidity for any reason of this Agreement.
28. RESTRUCTURING FOR TAX OR REGULATORY REASONS
28.1. The Parties shall co-operate with each other and take all such
reasonable steps (including the re-structuring of this
Agreement) as may be legally available to them -
28.1.1. to minimise the incidence of any taxes, levies,
imposts, duties, charges, fees,
66
deductions, withholdings, restrictions or clauses of
any description on any amounts payable by or to a
Party pursuant to this Agreement;
28.1.2. to avoid the imposition by any competent regulatory
authority of any burdensome obligation on either of
the Parties,
provided that in taking such steps the Parties shall preserve
the commercial intention underlying this Agreement.
28.2. In the event that this Agreement or any term in it is
determined to be void and/or unenforceable by any competent
regulatory or judicial authority, the Parties shall consult
one another with a view to amending this Agreement to the
satisfaction of such regulatory or judicial authority,
provided that in the event that the Parties are unable within
three months of such authority's decision to agree an
amendment satisfactory to such authority which, in the
reasonable opinion of both Parties, substantially gives effect
to their respective original intentions, either Party may, by
serving written notice on the other, terminate this Agreement
without further liability.
29. CONFIDENTIALITY
29.1. Subject to clause 29.2, each Party undertakes to the other
that it will treat as confidential the terms of this Agreement
together with all information whether of a technical nature or
otherwise relating in any manner to the business or affairs of
the other Party as may be communicated to it hereunder or
otherwise in connection with this Agreement and will not
disclose such information to any person, firm or company
(other than to its auditors and other professional advisers)
or to the media, and will not use such information other than
for the purposes of this Agreement, subject always to any
prior specific authorisation in writing by the other Party to
such disclosure or use.
29.2. The provisions of clause 29.1 shall not apply to any
information which:
67
29.2.1. is in the public domain other than by default of the
recipient Party;
29.2.2. is obtained by the recipient Party from a bona fide
third Party having the right to disseminate such
information;
29.2.3. is or had already been independently generated by the
recipient Party;
29.2.4. is required to be disclosed by any programme supplier
contracted as such by M-Net or any Affiliate of M-Net
or by law or the valid order of a court of competent
jurisdiction or the request of any governmental or
other regulatory authority or agency, in which event
the disclosing Party shall so notify the other as
promptly as practicable (and if possible prior to
making any disclosure) and shall use its reasonable
endeavours to seek confidential treatment of such
information.
29.3. The obligations contained in this clause 29 shall endure
beyond the termination of this Agreement without limit in time
except and until any confidential information enters the
public domain otherwise than through default of the Party
receiving the same.
30. NOTICES
30.1. Notices and communications under this agreement shall be given
in writing and may be delivered to the relevant Party or sent
by registered air mail or facsimile to the address of that
Party or that Party's facsimile number specified in 30.2 which
shall be regarded as the respective Parties domiciliar citandi
et executandi.
30.2. Notices and communications shall be addressed as follows:
30.2.1. if to MultiChoice: ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇
Fax No: ▇▇ ▇▇ ▇▇ ▇▇▇-▇▇▇▇
30.2.2. if to M-Net: ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇
▇▇▇▇▇▇
Fax No: ▇▇ ▇▇ ▇▇ ▇▇▇-▇▇▇▇
or such other address of a Party, person and/or fax number as
that Party shall have notified in writing to the other Party.
30.3. Notices and communications shall be given and made in the
English language.
31. MISCELLANEOUS
31.1. NO PARTNERSHIP
Nothing in this Agreement shall be deemed to create any joint
venture, partnership or principal and agent relationship
between MultiChoice and M-Net except with regard to the
collection of Per Subscriber Fees where MultiChoice acts as
the agent of M-Net in accordance with provisions of this
agreement and neither such Party shall hold itself out in its
advertising or otherwise in any manner which would indicate or
imply any such relationship with the other.
31.2. ASSIGNMENT
Neither Party shall be entitled to assign, transfer or
otherwise encumber this Agreement or any of the rights or
obligations hereunder without the prior written consent of the
other (such consent not to be unreasonably withheld or
delayed), save that either Party may transfer any of its
obligations to an Affiliate, provided that (i) the relevant
Party (being the assignor) shall guarantee the performance of
such obligations by such Affiliate; (ii) the relevant Party
shall be jointly and severally liable together with such
Affiliate for the fulfilment by such Affiliate of such
obligations; (iii) the relevant Party shall indemnify the
other Party against any loss sustained by it as a result of
the non performance of such obligations; (iv) if the relevant
Party is M-Net, and if M-Net sells or transfers its ownership
of any of the Channels, it shall itself remain bound by clause
4.2 throughout the Term and shall, in addition, procure that
the assignee binds itself to the undertaking set out in clause
4.2
69
hereof; and for the avoidance of doubt, the Fees payable by
MultiChoice to M-Net under this Agreement shall not increase
as a consequence of such sale or transfer of ownership; and
(v) in the event that the assignee ceases to be an Affiliate,
it shall immediately reassign all assigned rights and
obligations back to the Relevant Party unless the prior
consent of the other Party shall have been obtained.
31.3. SUBCONTRACTING
MultiChoice shall be entitled to appoint Affiliate and/or
third party sub-contractors to perform any of its rights or
obligations set out herein upon notifying M-Net thereof in
writing provided that MultiChoice shall remain liable to M-Net
as primary obligor in respect of any rights and/or obligations
sub-contracted in terms of this clause 31.3.
31.4. ENTIRE AGREEMENT
This Agreement constitutes the entire understanding between
the Parties relating to the subject matter of this Agreement
and no oral representations, warranties or promises shall be
implied as terms of this Agreement.
31.5. WAIVER
Any waiver by either Party of a breach of any term or
condition of this Agreement shall be in writing and shall not
be deemed to be a continuing waiver or a waiver of any other
or subsequent breach unless the written notice so provides.
AS WITNESS whereof this Agreement was executed by the Parties on the day and
year first above written.
SIGNED BY /s/ ▇▇▇ Volkwyn ) /s/ ▇▇▇▇▇▇ Safzides
)
for and on behalf of )
70
MULTICHOICE AFRICA (PROPRIETARY) )
LIMITED )
in the presence of: )
SIGNED BY /s/ ▇▇▇▇▇▇▇ ▇▇▇ ) /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
)
for and on behalf of )
ELECTRONIC MEDIA NETWORK )
LIMITED )
in the presence of: )
71
SCHEDULE 1
PREMIUM TIER CHANNELS
M-Net (Domestic) : MND
Movie Magic (Domestic) : MMD
KTV
Super Sport : SS
Movie Magic (Africa) : MMA
M-Net (Africa) : MNA
SuperSport II : SS II
SCHEDULE 2A
SPECIFIC INCLUSIONS AND SPECIFIC EXCLUSIONS TO THE TERRITORY
1.1 THOSE PARTS OF WEST AND NORTH AFRICA EXCLUDED FROM THE TERRITORY
1.1.1 Completely excluded
Algeria
Chad
Djibouti
Egypt
Gambia
Guinea-Bissau
Libya
Mauritania
Morocco
Senegal
Somalia
Tunisia
1.1.2 Partially Excluded (including approximate percentage of
country excluded assuming that all satellite dishes are
pointing to the relevant horizon)
Sierra Leone 30 (thirty) per cent
Guinea 50 (fifty) per cent
Mali 90 (ninety) per cent
Spanish Sahara 20 (twenty) per cent
1.2 THE INDIAN OCEAN ISLANDS INCLUDED AS PART OF THE TERRITORY
The Cornoros
Mauritius
The Seychelles
Madagascar
Reunion
SCHEDULE 2B
Those countries in respect of which minimum guarantees are payable
by MultiChoice
Angola
Benin
Burkina Faso
Burundi
Central African Republic
Congo
Equatorial Guinea
Eritrea
Ethiopia
Guinea
Liberia
Mali
Niger
S>o TormII and Principe
Reunion
Rwanda
Sierre Leone
Togo
Western Sahara (also known as Spanish Sahara)
Zanzibar
SCHEDULE 3*
SCHEDULE 4
INFORMATION TO BE REPORTED ON BY MULTICHOICE FOR EACH ACCOUNTING PERIOD
1.1 Total number of actual Subscribers
- on first day of Accounting Period
- on last day of Accounting Period
1.2 Total number of Equated Subscribers (including all information which
may be necessary in order to calculate the number of Equated
Subscribers)
- on first day of accounting period
- on last day of accounting period
1.3 The information set out in 1.1 and 1.2 by Subscriber category ie:
1.3.1 SUD Subscribers
1.3.2 MUD Subscribers by sub-category of Subscribers (including
the number of Wired Rooms)
- apartments
- hotels/motels and other transient dwellings
- hospitals
- all other MUD subscribers
1.3.3 Communal Subscribers (including number of Television Sets)
1.3.4 Commercial Subscribers
1.3.5 VIP Subscribers
1.3.6 Employee Subscribers
1.3.7 Free Trials given in accordance with clause 6.3.
1.4 The information set out in 1.1, 1.2 and 1.3 on a country by country
basis in respect of each country within the territory
1.5 The information required in terms of 1.1, 1.2, 1.3 and 1.4 in respect
of each Channel together with the MultiChoice SUD Subscriber Charge,
charged by MultiChoice in respect of each Channel within each country
and the actual revenue derived by MultiChoice.
1.6 The information required in terms of 1.1, 1.2, 1.3, 1.4 and 1.5 showing
the number of Subscribers receiving each channel via DTH distribution
systems reflecting the Subscribers receiving via the C-Band and those
receiving via the Ku-Band of the Satellite and the number of
Subscribers receiving each Channel via non-direct to home distribution
systems
SCHEDULE 5
M-Net Market Research
- Framework Market Segmentation
- Image Tracking
- Delphi Segmentation
- KTV Quantitative and Qualitative
- M-Net Advertising Campaign Survey
- Local Productions Qualitative and Quantitative
- Super Sport Image Tracking
- Disconnect Survey
- TVQ Panel
This schedule may be amended from time to time by mutual agreement between the
parties.
SCHEDULE 6
SIGNAL QUALITY SPECIFICATIONS
1. VIDEO
The following specifications detail the minimum requirements for the
video output signal that will be delivered to the MultiChoice's
equipment from the M-Net Network Switching Room.
1.1 ANALOGUE DELIVERY
Standard : PAL
Level : 1V p-p
Impedance : 75 ohm
Signal to noise ratio: : -48 dB
(Unified weighted CCIR Rec.567-3)
Frequency response : 30 Hz to 5.5 MHZ
+/- 0.3 dB
Group delay response : 30 Hz to 5.5 MHZ
+/- 25 nS
1.2 DIGITAL DELIVERY
Standard : SMPTE 259m
PAL sourced
: 270 Mbits per sec SDI
1.3 GENERAL
1.3.1 The video signal subjective quality shall confirm to
CCIR 500-2 quality rating 5.
1.3.2 In the case of the signal being delivered by a
compressed digital system, the video bit rate shall
be at least 8 MB/S.
1.3.3 Standard converters must be avoided where possible.
2. AUDIO
2.1 ANALOGUE DELIVERY
Maximum level : + 6dBm
Reference Level : 0 dBm
Impedance : 600 ohm
Frequency response : 15 Hz to ▇▇ ▇▇▇
▇/- ▇ ▇▇
▇▇▇▇▇▇-▇▇-▇▇▇▇▇ ratio : -55 dB
(CCIR 468-3 Q-Pk mean weighted)
2.2 DIGITAL DELIVERY
Standard : AES/EBU digital
(not imbedded)
SCHEDULE 7
A. MULTICHOICE - PROVISION OF EXISTING SMS TO M-NET CHANNELS FOR NON DTH
SUBSCRIBERS IN
(i) NIGERIA:
MNA (West) [- covered by Analogue Agreement]
SS on a 24 hour basis
MM and KTV totalling 24 hours, being 12 hours each per day
(ii) GHANA:
MNA (West) [- covered by Analogue Agreement]
MM and SS on a 24-hour basis
(iii) KENYA AND UGANDA:
MNA (East), MM and SS on a 24 hour basis [MNA - covered by Analogue
Agreement
(iv) TANZANIA:
From October 1997:
MNA (East), SS on a 24 hour basis [MNA - covered by Analogue Agreement
(v) ZAMBIA:
SS and MNA (East) on a 24 hour basis
(vi) LESOTHO:
MND
(vii) NAMIBIA:
MND, SS 24
(viii) BOTSWANA:
MNA (East): SS 24
(ix) ZAIRE (Congo):
MNA (West), SS 24
(x) MALAWI:
MNA (East), SS 24
(xi) RWANDA:
MNA (East), SS 24
(xii) BURUNDI
MNA East, SS24
(xiii) MALI:
SS, MNA
(xiv) ST HELENA:
SS 24
SCHEDULE 8
PanAmSat 4 Footprints
[GRAPHIC OMITTED]
PAS-4 Southern Africa Horizontal Beam Ku-Band (CONTOURS 55, 54, 53, 52, 50, 48,
46, 44 dBW)
[GRAPHIC OMITTED]
PAS-1 Africa Beam V C-Band (CONTOURS 39, 38, 37, 35, 33, 31, 29, 27 dBW)
SCHEDULE 9
SPECIFICATIONS AND SERVICE LEVELS
MAX NORM HOURS UNSCHEDULED MAX NORM HOURS SCHEDULED
CATEGORY DOWN DURA- LOW LOW DOWN DURA- LOW LOW
TIME TION POWER POWER TIME TION POWER POWER
PER PER PER PER PER PER PER PER
ANNUM EVENT ANNUM EVENT ANNUM EVENT ANNUM EVENT
SATELLITE 17 4 12 4 12 2 12 4
TRANSMISSION
("A")
TERRESTRIAL 17 4 12 4 12 2 12 4
OR OTHER
REBROADCAST
TRANSMISSION
("B")
NETWORK AVAILABILITY: 99-8% PER MONTH BASED ON 24 HOURS OF
(BOTH A & B) BROADCASTING PER DAY
RESPONSE TIMES: NORMAL OFFICE HOURS (7:30 TO 23:00) 1 HOUR
(BOTH A & B) AFTER HOURS (23:00 TO 07:30) 2 HOURS
EQUIPMENT MAINTENANCE: i) PREVENTATIVE MAINTENANCE : THREE MONTHLY
(BOTH A & B) ii) BASIC REGULAR MAINTENANCE : WEEKLY
iii) SYSTEM CHECKS : DAILY
MONITORING: 24 HOURS PER DAY
AUDIO VISUAL QUALITY
(BOTH A & B)
REPORTING: DAILY: TELEPHONICALLY / E-MAIL
(Both A & B) WEEKLY: E-MAIL
MONTHLY: DETAILED WRITTEN REPORT (ON A COUNTRY BY
COUNTRY BASIS IN RESPECT OF DIRECT TO HOME AND NON
DIRECT TO HOME TRANSMISSION SYSTEMS)
STANDBY FACILITY: 24 HOURS A DAY
(BOTH A & B)
SCHEDULE 10
A. MultiChoice - Provision of SMS for M-Net Channels to DTH Ku Band
Subscribers
South Africa, Lesotho, Namibia, Botswana, Zimbabwe and Swaziland
MND - Premium Tier
MM - Premium Tier
SS - Premium Tier
KTV - Premium Tier
B. MultiChoice - Provision of Future SMS for M-Net Channels to DTH C band
Subscribers.
The Territory (excluding South Africa, Lesotho, Botswana, Zimbabwe and
Swaziland)
MNA - Premium Tier
SS - Premium Tier
MMA - Premium Tier
KTV - Premium Tier
SCHEDULE 11
LETTER AGREEMENT BETWEEN ORACLE AND MULTICHOICE
SCHEDULE 12*