EXHIBIT 10.7.2
AFFILIATION AGREEMENT
FOR DBS SATELLITE EXHIBITION
OF CABLE NETWORK PROGRAMMING
DIRECTV, INC.
and
CROWN MEDIA UNITED STATES, LLC
(formerly known as ODYSSEY HOLDINGS, L.L.C.)
[*] Portion omitted and filed separately with the Securities and Exchange
Commission pursuant to a request for confidential treatment.
AFFILIATION AGREEMENT
FOR DBS SATELLITE EXHIBITION
OF CABLE NETWORK PROGRAMMING
AGREEMENT, made as of August 20, 2001, by and between Crown Media
United States, LLC, a Delaware limited liability company ("Programmer"), and
DIRECTV, INC., a California corporation ("Affiliate").
WHEREAS:
A. Affiliate has established a direct broadcast service ("DBS")
satellite-based television system in North America;
B. Affiliate desires to obtain the rights to distribute the "Hallmark
Channel" (the "Service," as defined in Section 1(b) below) via the DBS
Distribution System (as defined in Section 1(a) below) in the United States, its
territories and possessions, including Puerto Rico (the "Territory");
C. Affiliate is a party to that certain DBS Distribution Agreement,
dated April 10, 1992, as amended, with the National Rural Telecommunications
Cooperative ("NRTC") for the distribution to subscribers in certain counties and
zip codes in the United States of programming via the DBS Distribution System;
and
D. DIRECTV Enterprises, Inc. ("Enterprises"), an affiliate of
Affiliate, is a party to that certain Stock Purchase Agreement, dated August 20,
2001, ("Stock Purchase Agreement") with Crown Media Holdings, Inc. ("Crown
Holdings") pursuant to which Enterprises has received a stock interest in Crown
Holdings in connection with: Enterprises' payment of certain cash consideration
to Crown Holdings; Affiliate's entering into this Affiliation Agreement; and the
agreement of Enterprises and Affiliate to certain other undertakings.
NOW, THEREFORE, IT IS MUTUALLY AGREED AS FOLLOWS:
1. Grant of Rights.
(a) Distribution; Certain Definitions. Programmer hereby
grants to Affiliate (which as used for all purposes in this Agreement shall mean
DIRECTV, (which shall include its designee, the NRTC and/or its members) the
nonexclusive right to distribute the Service in the Territory via the DBS
Distribution System to DIRECTV Subscribers via televisions, personal computers
or other authorized reception devices and platforms when such computer, devices
and platforms are used as television monitors during the Term (as defined in
Section 6(a) below) hereof, and Affiliate shall distribute the Service subject
to the
terms and conditions hereof, which distribution obligation constitutes an
inducement for Crown Holdings to enter into the Stock Purchase Agreement and
shall be regarded as if it were a portion of the consideration under the Stock
Purchase Agreement. The term "DBS Distribution System" shall mean the
distribution system for video and other programming services whereby the
programming satellite signal or feed is received from the programmers'
transponder sources by a DIRECTV turnaround earth-station facility which
compresses and processes the signal or feed and then uplinks it at one of the
DIRECTV Frequencies on a DBS communications satellite (a "DBS Satellite") for
transmission to DIRECTV Subscribers. "DIRECTV Frequencies" shall mean the DBS
operating frequencies associated with an orbital location or locations, for
which Affiliate or an Affiliated Company (as defined in Section 8(a) below) is
the Federal Communications Commission ("FCC")-authorized permittee. "DIRECTV
Subscribers" shall mean those customers (both residential and non-residential)
authorized by Affiliate to receive one or more programming services via the DBS
Distribution System.
(b) The Service. The "Service" shall mean and consist of the
national feed (or, if Programmer uses multiple feeds for the Service, such other
of such multiple feeds designated by Affiliate) in the Territory of the
programming service commonly known as the "Hallmark Channel," which shall
consist of programming offering a diverse mix of family-friendly programming,
including classic movies, original programming series and/or specials, dramas,
comedies, programming targeted to young persons, entertainment series and/or
specials, docu-drama-type programming and inspirational programming. The
programming schedule, as of the date that the Service Rebranding commences (the
"Service Rebranding Commencement Date"), is attached hereto as Exhibit A and
incorporated herein by reference. The Service shall be presented on a 24-hour
per day, 7 days a week schedule. Commencing on January 1, 2002 and every six (6)
months thereafter for the remainder of the Term, Programmer shall provide
Affiliate with the current programming schedule for the Service. The selection,
rescheduling, substitution and withdrawal of any program or portion thereof
contained in the Service shall remain within the sole discretion and control of
Programmer, provided that Programmer shall comply with the requirements set
forth in Section 6(c)(i) below. The Service shall be delivered to DIRECTV in its
entirety, meaning that the programming on the Service, as received by any
Service Subscriber at a given point in time, shall be the same as the
programming received by all other subscribers to the Service at such point in
time, provided that Programmer may transmit multiple feeds of the Service for
different time zones. All rights and title in and to the entire contents of the
Service, including, but not limited to, films and recordings thereof, title or
titles, names, trademarks, concepts, stories, plots, incidents, ideas, formulas,
formats, general content and any other literary, musical, artistic, or other
creative material included therein shall, as between Programmer and Affiliate,
remain vested in Programmer. Programmer and Affiliate agree that "Infomercials,"
defined as program-length direct sales commercials or programming, including,
but not limited to, "sponsor-owned promotional programming," shall not comprise
more than [*] hours of programming of the Service in each week and shall be
appropriate for family viewing. Anything herein to the contrary notwithstanding,
Infomercials shall only be broadcast during the hours between 12:00 midnight and
9:00 a.m. Eastern Time for the East Coast feed, or between 12:00 midnight and
9:00 a.m. Pacific Time for the West Coast feed. Programmer's
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inclusion of Infomercials in the Service shall be subject to Section 1(d) below.
If Programmer does not provide the Service in its entirety to Affiliate (i.e.,
the programming received by any subscriber to the Service at a given point in
time is different from the programming received by any Service Subscriber at
such point in time except for multiple feeds for different time zones), then, in
addition to any other remedies available to Affiliate, at law or in equity,
Affiliate shall have the right to receive, exhibit, distribute, and authorize
the reception of the programming included in the Service as provided to
Affiliate and/or such additional programming provided to any other subscriber to
the Service. Programmer shall not propose or impose upon Affiliate, nor shall
Affiliate be obligated to pay, any surcharge or other cost (other than the
License Fees provided for in Section 2 hereof) for receipt and distribution of
the Service.
(c) Other Distribution Obligations. In addition, the parties
agree as follows:
(i) Subject to Programmer's obligations hereunder and
Affiliate's rights under Section 17, Affiliate shall distribute the Service on a
full time basis as transmitted by Programmer, in its entirety, in the order and
at the time transmitted by Programmer without any intentional and willful
editing, delays, alterations, interruptions, deletions or additions (excepting
Affiliate's commercial or other announcements, as permitted by Section 3 hereof)
and any insertions permitted pursuant to the provisions of Sections 1(d)
hereof). Programmer acknowledges that the DBS Distribution System requires and
applies digital compression and encryption processes prior to transmission and
decryption and decompression processes upon reception and agrees that such
processing does not constitute an alteration and/or other modification of the
Service. No later than January 1, 2003, Programmer shall fully encrypt the
satellite signal of the Service utilizing encryption technology commonly used in
the satellite distribution industry. Programmer shall, at its sole expense,
deliver the Service (as a turnaround, live feed) to DIRECTV from a domestic
communications satellite in the Territory commonly used for transmission of
television programming (or, at Programmer's option and expense, a fiber optic or
other facility reasonably acceptable to DIRECTV) to DIRECTV's broadcast
facilities located in Castle Rock, Colorado and Los Angeles, California
("Broadcast Facilities") or such other locations(s) as may be designated by
DIRECTV to Programmer in writing. Programmer shall provide Affiliate with two
receivers and decoders necessary to receive and decode the Service for each of
Affiliate's broadcast facilities in Castle Rock, Colorado and Los Angeles,
California.
(ii) Programmer and Affiliate shall use their
respective commercially reasonable efforts to maintain for the Service a high
quality of signal transmission in accordance with their respective technical
standards and procedures. Programmer agrees to include closed-captioning of the
audio portion of the Service as delivered by Programmer to DIRECTV in a manner
sufficient to allow DIRECTV to comply with any closed-captioning obligations for
the Service as may be imposed upon DIRECTV or Programmer by FCC (or other
governmental) rules and regulations during the Term, as modified from time to
time. Other than as required pursuant to the immediately preceding
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sentence. Affiliate shall have no liability in connection with Programmer's
failure to prepare, insert or include closed-captioning in the Service as
required by this Section 1(c)(ii). Accordingly, Programmer shall indemnify,
defend and hold harmless Affiliate, as provided in Section 8 hereof, against and
from any and all losses, liabilities, claims, costs (including without
limitation, any costs of preparing and including closed-captioning in the
Service), damages and expenses, including without limitation, fines,
forfeitures, attorneys' fees, disbursements and court or administrative costs,
arising out of Programmer's breach of this Section 1(c)(ii).
(d) Programming Guide. During the Term, Programmer shall
provide the daily programming schedule for the Service (including any
Infomercials contained therein) to Tribune Media Service in order that Affiliate
may access the program schedule for purposes of the on-screen program guide.
Programmer hereby represents and warrants that it currently does not allow any
distributors to substitute commercial programming in lieu of infomercials
("Step-on-Rights"). In the event Programmer grants another distributor of the
Service (the "Other Distributor") Step-on-Rights, then Programmer will promptly
offer Affiliate such Step-on-Rights pursuant to terms and conditions that are
substantially similar to the terms and conditions directly related to the grant
of the Step-on-Rights to the Other Distributor.
(e) VBI. Affiliate reserves all rights in and to the signal
distribution capacity within the bandwidth of the Service as received at
Affiliate's system, including, without limitation, the capacity related to the
"vertical blanking interval" ("VBI"). Programmer acknowledges that Affiliate's
standard procedures as of the date of this Agreement strip out or do not include
any information (other than closed-captioning and voluntary ratings material)
that Programmer may insert in the VBI, and Affiliate shall not be obligated to
reconstruct or reinsert any such material on behalf of Programmer. While
Affiliate currently provides voluntary rating information to Service Subscribers
and currently intends to continue providing such information, Affiliate shall
not be obligated to continue doing so unless required by law. Affiliate will
provide Programmer thirty (30) days prior written notice if Affiliate
discontinues providing voluntary rating information, provided such
discontinuance must be based on reasonable business basis. Notwithstanding the
foregoing, to the extent Programmer supplies closed-captioning for the hearing
impaired within the VBI, such closed-captioning shall be contained in line 21 of
field one of the VBI as established by FCC rules (or in such location as the FCC
rules may permit from time to time), and Programmer hereby authorizes Affiliate
to provide Service Subscribers with the ability to receive such
closed-captioning and Affiliate agrees to pass such closed-captioning through to
Service Subscribers.
(f) New Service. Subject to the limitations set forth in the
last two sentences of this paragraph (f), Programmer agrees that it will not use
the Service to nest or incubate another cable television programming service
within the Service, nor will it "clone" the Service into a second cable
television programming service by migrating programming from the Service to any
such second service which is distributed by Programmer in the Territory unless
Programmer provides any such second cable television programming service to
Affiliate [*] and Affiliate agrees to [*] In the event that Programmer seeks to
nest,
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incubate, or clone a second cable television programming service other than in
accordance with the foregoing limitations, Programmer will provide prompt
advance written notice to Affiliate and the parties shall discuss and Affiliate
will consider Programmer's proposal in good faith, but in no event shall
Affiliate be obligated to agree to such proposal or to waive any of its rights
and remedies.
(g) Change of Satellite. In the event Programmer either (i)
changes the satellite to which the Service is transmitted to a satellite or
other transmission medium not susceptible to viewing or utilization by
Affiliate's then-existing earth station equipment without affecting the receipt
of the signals of any other programming or other services then received (or
committed to be received) by such Affiliate, (ii) changes the technology used by
Programmer to encrypt the Service to a technology not compatible with
Affiliate's then-existing descrambling equipment, or (iii) compresses, digitizes
or otherwise modifies the signal of the Service in such a manner that it cannot
be received or utilized by Affiliate, then Affiliate shall have the right to
discontinue carriage of the Service, immediately; provided that this right of
discontinuance and deletion shall not apply to Affiliate if Programmer agrees to
promptly reimburse Affiliate for (I) the cost to acquire and install equipment
necessary for Affiliate to receive the signal of the Service from such new
satellite or other transmission medium, and/or (II) the cost to acquire and
install equipment necessary for Affiliate to descramble, receive and/or utilize
the signal of the Service. Programmer agrees to provide Affiliate with at least
ninety (90) days' prior written notice of a satellite or technology change as
set forth in subsections (i) through (iii) above.
(h) On-Screen Logos. It is understood and agreed that
Affiliate may superimpose a logo or "bug" in a corner of the screen identifying
Affiliate over the programming of the Service; provided, however, that
Affiliate's bug shall appear only intermittently during any portion of the
Service, and provided further that Affiliate shall not delete the Service's own
promotion bug or its on-screen graphics.
2. Reports and Payments.
(a) Reports; Payments; Audit Rights. Within forty-five (45)
days after the end of each month during the Term, Affiliate shall furnish
Programmer a statement containing the number of "Service Subscribers" (defined
as DIRECTV Subscribers authorized by Affiliate to receive the Service), as
calculated by Affiliate as the average of the total number of Service
Subscribers on the first and last day of the applicable month (the "Monthly
Subscriber Level") together with payment of the License Fees, if any, in respect
of such Service Subscribers, calculated pursuant to Section 2(b). Programmer
shall accord confidential treatment to any information contained in the
aforementioned statement in accordance with Section 15. At Programmer's written
request no more than once per year, Affiliate shall provide Programmer a
statement by Affiliate's Chief Financial Officer that certifies Affiliate's
compliance with the provisions of this Section 2(a) and the accuracy of
Affiliate's reports.
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(b) License Fees. As full and complete compensation for
Affiliate's right to distribute the Service, Affiliate shall pay to Programmer,
on a monthly basis, for each Service Subscriber receiving the Service from
Affiliate for such month, a "License Fee" determined pursuant to the rates set
forth in Exhibit B attached hereto and incorporated herein (the "Exhibit B
License Fees"). Said rates shall comply with all applicable Laws. As used
herein, "Law" shall mean any FCC and any other governmental (whether
international, federal, state, municipal or otherwise) statute, law, rule,
regulation, ordinance, code, directive and order, including without limitation,
any court order. [*]
(c) Late or Non-Payments. Any amounts not paid by Affiliate by
the date payment is due pursuant to the first sentence of Section 2(a), shall
accrue interest at the rate of one percent (1%) per month compounded monthly or
at the highest lawful rate, whichever shall be the lesser, from the date such
amounts were due until they are paid. If Programmer engages the services of any
collection agency or independent legal counsel to collect past due fees owed to
Programmer by Affiliate under this Agreement, Programmer shall be entitled to
full reimbursement from Affiliate for all reasonable costs and expenses incurred
in such collection efforts.
(d) [*]
(e) Bulk Billing. Affiliate shall have the right to calculate
the Exhibit B License Fees, if applicable, with respect to the distribution of
the Service to any location containing multiple sites such as rooms, units,
seats, televisions, etc., at which the Service may be received at such multiple
sites within the location, including, without limitation, hotels, motels,
commercial office buildings, hospitals and other healthcare facilities,
university dormitories, prisons, multiple dwelling facilities, commercial buses,
ships, trains and oil rigs, bars and restaurants and similar commercial
locations (each, a "Bulk-Rate Facility(ies)" for which Affiliate bulk bills, as
follows: "Bulk ▇▇▇▇ Service Subscribers" shall be included as Service
Subscribers under Section 2(b) above, and such Bulk ▇▇▇▇ Service Subscribers
shall be calculated monthly by dividing Affiliate's total monthly revenues
received (net of applicable taxes, refunds and rebates) from each account at
Bulk-Rate Facilities attributable to the level of service received at the
Bulk-Rate Facility including the Service, by the non-bulk ▇▇▇▇ prices of such
level of service.
(f) Airline Distribution. Affiliate shall be entitled to
distribute the Service to private aircraft at License Fees calculated according
to this Agreement (i.e., based on the number of Service Subscribers attributed
to such aircraft). Affiliate shall be entitled to distribute the Service to
commercial aircraft on substantially the same financial terms and conditions as
Affiliate distributes other basic cable network programming. Programmer
acknowledges and agrees that Affiliate may not receive payment for such
distribution of the Service to commercial aircraft, and in such case, no License
Fees shall be owed by Affiliate to Programmer with respect thereto.
3. Format for Service. Programmer shall make two (2) minutes per hour
available in the schedule of the Service (such available time defined as
"Avails") for commercial or other announcements to be used by Affiliate or by
third parties identified by
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Affiliate, and shall provide Affiliate with reasonable advance notice thereof,
provided that for those occasionally occurring programs on the Service in which
there is available to Programmer no, or less than two (2) minutes per hour of,
commercial announcement time, Programmer will not make any of such commercial
announcement time available to Affiliate during such hours. The Avails provided
by Programmer to Affiliate shall be no less favorable, in terms of scheduling,
availability, length and so forth, than those provided to any Other Distributor
of the Service. If the total amount of commercial announcement time on the
Service (not including time allocated to Affiliate hereunder) increases to more
than fourteen (14) minutes per hour, the commercial announcement time made
available to Affiliate shall increase by fifty percent (50%) of such increase
and every increase thereafter (e.g. if Programmer increases the total amount of
commercial announcement time on the Service above the foregoing maximum by sixty
(60) seconds, Affiliate will receive thirty (30) seconds of such additional
commercial announcement time). Programmer shall properly "tone switch", using
industry recognized equipment, via inaudible signals, all commercial
announcement minutes to enable Affiliate to insert its commercial announcements.
Affiliate shall insert its authorized commercial or other announcements only in
the positions and at the times which Programmer designates via cue tones and
without interruption of any program of the Service. Affiliate shall be solely
responsible for all materials inserted by Affiliate within the Service, and,
subject to Section 8, shall fully indemnify and hold Programmer harmless from
and against any and all claims and costs arising out of or related to the
content of Affiliate's Avails pursuant to this Section 3. Affiliate agrees that
it shall not provide any commercial or other announcements which do not comply
with applicable governmental codes or Programmer's reasonable policies and
practices and, in each case, of which Affiliate has actual knowledge.
4. Marketing and Promotion.
(a) Packaging. Affiliate shall include the Service in
Affiliate's most highly-penetrated tier(s) or package(s) of video programming
services, currently Affiliate's "Total Choice" package, [*]. For purposes of
this Section, "DIRECTV Subscribers" shall not include subscribers that receive
the "DIRECTV Limited" package (or a successor or equivalent package thereto)
and/or only one or more of the following services via the DIRECTV Distribution
System: [*]. In the event that Affiliate restructures or otherwise changes its
Total Choice package, Affiliate shall distribute the Service on all successor
package(s) or tier(s) to such package and remains subject to the distribution
requirement in the first sentence of this Section. Affiliate shall market and
promote on a national basis the DIRECTV Distribution System and the "Total
Choice" package (or the successor(s) thereof) (including, without limitation,
the rebranded "Hallmark" Service) including, without limitation, through
national acquisition marketing efforts to prospective subscribers of the DIRECTV
Distribution System through television, print and/or such other media as DIRECTV
determines in its sole discretion.
(b) Programmer's Sales and Marketing Materials. Programmer
shall provide Affiliate, upon Affiliate's request, with promotional and
marketing advice for purposes of Affiliate's marketing of the Service.
Programmer shall promptly provide Affiliate,
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upon the same terms as provided to any Other Distributor, with any and all
promotional, marketing or other related or similar materials of (or related to)
the Service which it produces or generally makes available to such Other
Distributor. If Affiliate shall request additional such materials, then
Programmer shall promptly provide such materials to Affiliate and Affiliate
shall reimburse Programmer for the actual costs thereof. Subject to Section 2(d)
above, Affiliate acknowledges that Programmer may occasionally develop targeted
marketing campaigns for one or more Other Distributors, which Programmer will
[*] under this subsection.
(c) Cooperative Marketing Funds. Programmer shall pay or
reimburse to Affiliate, on a quarterly basis, up to [*] of gross revenues from
the Exhibit B License Fees, if applicable, paid to Programmer under Section 2(b)
for the prior year (the "Cooperative Marketing Funds"), as reimbursement for the
expenses incurred by Affiliate during such prior year as national support for
marketing, advertising and promoting the Service. Such payment shall be made
within thirty (30) days after the date Affiliate has delivered to Programmer
documentation evidencing the amount and nature of any such expenditures. Where
an expenditure of Affiliate has been made for more than one programming service,
an equitable allocation of such expenditure shall be made by Affiliate based on
dividing the amount of the expenditure by the number of services marketed,
promoted or advertised by such expenditure. Notwithstanding anything to the
contrary herein, Programmer shall only pay or owe the Cooperative Marketing
Funds during the period when Affiliate is obligated to pay the Exhibit B License
Fees to Programmer.
(d) Access to Talent. During the Term, to the extent permitted
by the terms of any talent agreements between Programmer and the applicable
talent, Programmer will provide access to talent/performers appearing on the
Service, at no cost to either Affiliate or Programmer, for promotional
activities (including on-air promotional spots and print advertising) to promote
the Service and the DIRECTV "Total Choice" platform.
(e) Programmer Marketing Plan. [*] Programmer agrees that it
shall provide marketing, promotion and advertising in support of the Service
("Marketing Support") and the DIRECTV "Total Choice" platform and/or any
successor platform(s). The parties shall negotiate in good faith a detailed
marketing plan. Programmer agrees that the monetary value of the Marketing
Support that Programmer shall provide to Affiliate shall equal at least [*] per
year for the three (3) year period continuing through July 31, 2004 and [*] per
year for the three (3) year period commencing on August 1, 2004 and continuing
through July 31, 2007, provided that for the 2001 year, the total amount of the
Marketing Support that Programmer shall provide to Affiliate under this
Agreement and under the parties' Affiliation Agreement for DBS Satellite
Exhibition of Cable Network Programming dated as of March 6, 2000 ("Odyssey
Agreement") for the "Odyssey" Service shall in no event exceed [*].
(f) Dealer Showroom Accounts. Affiliate shall be entitled to
authorize agents authorized to sell Affiliate's programming services, including
without limitation, consumer electronic equipment dealers, TVRO dealers,
telephone companies, private cable
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companies, direct sales agents, and other agents to receive the Service for the
sole purpose of demonstrating to their potential retail customers the
functioning of satellite reception equipment and Affiliate's services, including
the Service. Such agents shall not be deemed Service Subscribers, and therefore,
no License Fees shall be payable for distribution of the Service in such manner
to such agents.
(g) VIP Accounts. During the Term of the Agreement, Affiliate
shall be entitled to authorize "VIP" subscriber accounts for Affiliate's
employees, key customers, vendors to receive the Service; provides the number of
such VIP accounts shall not exceed [*]% of total DIRECTV Subscribers and such
VIP accounts are not charged for any other cable programming services. Such VIP
accounts shall not be deemed Service Subscribers, and therefore, no License Fees
shall be payable for such VIP accounts. During the Term of the Agreement,
Affiliate shall provide to Programmer authorization of up to [*] VIP
accounts for Affiliate's "Total Choice" package (or a successor package(s)
selected by Affiliate) to be distributed by Affiliate without charge by
Programmer, provided, however, Programmer acknowledges and agrees that such
accounts shall be allocated solely without charge, to Programmer's Affiliated
Companies and employees, and Programmer shall be responsible for all hardware
and installation costs associated with such accounts, and all charges other than
those related to the applicable Total Choice or successor package.
(i) Free Preview. Affiliate shall have the right, from time to
time, as part of marketing and sales promotions for Affiliate's services, to
offer the Service as part of the "Total Choice" package free of charge to
potential subscribers of the "Total Choice" package for up to ninety (90) days
in any year or to current subscribers of the "Total Choice" package for up to
thirty (30) days, or to provide other promotional programs (including rebates,
coupons or gift certificates) that effectively allow current or potential
subscribers of the "Total Choice" package to receive the Service as part of the
"Total Choice" package without charge for one month or more (all such
promotions, "Free Promotions"). Affiliate shall not be obligated to pay any
License Fees for such current or potential subscribers who are receiving such
Free Promotions, during such Free Promotion with respect to each subscriber.
(j) Enhanced Video/Interactive Programming. Affiliate shall
have the right to retransmit, over the DBS Satellites, any and all of the
following promptly upon Programmer making such content available to any Other
Distributor pursuant to the terms that are at least as favorable to Affiliate as
those terms given to the Other Distributor: (i) data and informational
enhancements to the programming contained in or delivered along with the
Service, as a continuous stream of information and data (or otherwise) and
designed to augment the programming contained in the Service ("Enhanced Video
Content"); and (ii) Web pages from Programmer's web site(s) to Affiliate's
customer's hard drives whether accessed via such customer's set-top boxes or
otherwise ("Web Caching", and together with the Enhanced Video Content and other
interactive services offered by Programmer, the "Interactive Services").
Programmer agrees that it shall make the Enhanced Video Content and the Web
Caching available to Affiliate on terms that are at least as favorable to
Programmer as those given to any Other Distributor. In addition, if Programmer
is developing such interactive services, Programmer shall consult with Affiliate
with respect to
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the transmission technology interface that may be needed by Affiliate or DIRECTV
Subscribers in order to receive the Interactive Services. Programmer shall
utilize "industry standard" technologies with respect to the delivery and
reception of such Interactive Services.
(k) Website Links. Each of Affiliate and Programmer shall use
commercially reasonable efforts to provide "hot links" to each other's web
sites.
5. Representations, Warranties and Covenants.
(a) By Affiliate. Affiliate warrants, represents and covenants
to Programmer that it:
(i) is in compliance with and will comply with all
material Laws with respect to its rights and obligations under this Agreement,
including without limitation, all relevant provisions of the Cable Television
Consumer Protection and Competition Act of 1992 (as may be amended and any
successor, replacement or similar Law or statute) and any and all regulations
issued pursuant thereto;
(ii) has the power and authority to enter into this
Agreement and to fully perform its obligations hereunder;
(iii) shall distribute the Service in the Territory
in accordance with and subject to the terms and conditions set forth in this
Agreement;
(iv) shall (A) arrange and pay for reception of the
Service (excluding any authorization fees) from the U.S. domestic communications
satellite from time-to-time designated by Programmer to Affiliate with
Affiliate's approval of such designation ("Programmer's U.S. Satellite"); and
(B) acquire and maintain, at Affiliate's sole expense, any equipment, including,
without limitation, backup or reserve descramblers, which may be necessary to
decode and unscramble the signal(s) for the Service;
(v) shall not, without Programmer's consent,
knowingly authorize or cause or knowingly permit any portion of the Service to
be recorded, duplicated, cablecast, exhibited or otherwise used (except on a
videocassette recorder or other home or personal taping device for private,
noncommercial use) for any purpose other than for distribution by Affiliate at
the time the same is made available;
(vi) shall not, without Programmer's prior written
approval, use the name of or logo for "Hallmark" or the names, titles or logos
of the Service or any of its programs, or the names, voices, photographs,
likenesses or biographies of any individual participant or performer in, or
contributor to, any program or any variations thereof, for any purpose other
than in material intended to advise DIRECTV Subscribers or potential DIRECTV
Subscribers of the availability and scheduling of the Service or as a channel
identifier. The restrictions set forth in this Section 5(a)(vi) shall apply only
to the extent they are applied by Programmer uniformly with respect to all of
its distributors of the Service, and
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shall not apply if Affiliate has received a valid authorization from a third
party for any of the uses described in this Section 5(a)(vi); and
(vii) has obtained, and shall maintain in full force
during the Term hereof, such federal, state and local authorizations as are
material and necessary to operate the business it is conducting in connection
with its rights and obligations under this Agreement; and
(viii) the obligations created by this Agreement, in
so far as they purport to be binding on Affiliate constitute legal, valid and
binding obligations of Affiliate enforceable in accordance with their terms.
(b) By Programmer. Programmer warrants, represents and
covenants to Affiliate that:
(i) it is in compliance with and will comply with all
material Laws with respect to its rights and obligations under this Agreement,
including without limitation, all relevant provisions of the Cable Television
Consumer Protection and Competition Act of 1992 (as may be amended and any
successor, replacement or similar Law or statute) and any and all regulations
issued pursuant thereto;
(ii) it has the power and authority to enter into
this Agreement and to fully perform its obligations hereunder and once executed
this Agreement shall constitute a valid and binding agreement of Programmer
enforceable in accordance with its terms;
(iii) it has obtained, and shall maintain in full
force during the Term hereof, such federal, state and local authorizations as
are material and necessary to operate the business it is conducting in
connection with its rights and obligations under this Agreement;
(iv) it has obtained or will obtain all necessary
trademarks, copyrights, licenses and any and all other proprietary intellectual
property and other use rights necessary in connection with, and for Affiliate's
distribution of, the Service (including without limitation, the right to use the
name of or logo for "Hallmark Network" or the names, titles or logos of the
Service or any of its programs, or the names, voices, photographs, music,
likenesses or biographies of any individual participant or performer in, or
contributor to, any program or any variations thereof) and to perform its
obligations hereunder and grant the rights granted pursuant to Section 1;
(v) it shall not, without Affiliate's prior written
approval, use the name or logo for "DIRECTV" or other names and logos owned or
controlled by Affiliate (and its Affiliated Companies as defined in Section 8
below) without the prior written consent of Affiliate;
(vi) there are no (and it covenants that it shall not
enter into directly or indirectly, allow or otherwise permit any) affiliation,
distribution or any other agreements,
-11-
whether written or oral, granting to distributors and/or any other third party,
person or entity any form or type of exclusive or other rights that would limit
or restrict in any way Affiliate's rights to distribute the Service in the
Territory pursuant to this Agreement;
(vii) The obligations created by this Agreement, in
so far as they purport to be binding on Programmer constitute legal, valid and
binding obligations of Programmer enforceable in accordance with their terms;
and
(viii) The Service Rebranding shall be maintained for
at least two (2) years from the Service Rebranding Commencement Date.
6. Term; Termination.
(a) Term; Extension; Service Commencement Date.
(i) Subject to earlier termination as set forth herein, the
term of this Agreement shall commence not later than twenty-four (24) hours
after the Share Delivery Date, as defined in the Stock Purchase Agreement. The
term shall end on December 31, 2007 (the "Term").
(ii) If the on-air rebranding of the "Odyssey" service to the
"Hallmark Channel" service ("Service Rebranding") is not maintained for at least
two (2) years from the Service Rebranding Commencement Date, Affiliate may, in
its sole discretion, upon written notice to Programmer terminate this Agreement
and/or distribute the Service for the remainder of the Term hereunder pursuant
to the terms of the Odyssey Affiliation Agreement.
(b) Termination for Breach, Bankruptcy; Discontinuance of
Business. This Agreement may be terminated by either party (the "Affected
Party"), in its discretion, at any time after any of the following occurrences,
except as provided in this Agreement, with respect to the other party (the
"Other Party"):
(i) the failure by the Other Party, its successors or
assigns to perform any material obligation hereunder which is not cured within
thirty (30) days after receipt of written notice thereof from the Affected Party
or as to which reasonable steps to cure have not been commenced within such
period (or are not thereafter diligently pursued and completed within an
additional thirty (30) days);
(ii) the filing of a petition in bankruptcy or for
reorganization by or against the Other Party under any bankruptcy act; the
assignment by the Other Party for the benefit of its creditors, or the
appointment of a receiver, trustee, liquidator or custodian for all or a
substantial part of the Other Party's property, and the order of appointment is
not vacated within thirty (30) days; or the assignment or encumbrance by the
Other Party of this Agreement contrary to the terms hereof; or
-12-
(iii) if Affiliate discontinues operation of the DBS
Distribution System, or Programmer discontinues operation and distribution of
the Service, in either which case neither party shall have any further liability
to the other.
(c) Termination by Affiliate. Affiliate may, subject to a
sixty (60) day cure period pursuant to the terms set forth in Section 6(b)(i),
terminate this Agreement upon ninety (90) days' prior written notice to
Programmer:
(i) if at any time the general quality and quantity
of programming (including, without limitation, the percentage of broadcast time
during which new seasonal material is presented) on the Service materially
changes from that existing as of the date of this Agreement, or the genre of
programming materially changes from that described in Section 1(b) and existing
on the date of this Agreement provided that a withdrawal, rescheduling or
substitution of programs, by itself, will not be deemed to constitute such a
material change; or
(ii) in the event that a transfer or sale by
Programmer does not comply with Section 11 below.
(d) Force Majeure. Notwithstanding any other provision in this
Agreement, neither Programmer nor Affiliate shall have any liability to the
other or any other person or entity with respect to any failure of Programmer or
Affiliate, as the case may be, to transmit or distribute the Service or perform
its obligations hereunder if such failure is due to any failure or material
degradation in performance of Programmer's U.S. Satellite or the DBS
Satellite(s) or transponders on such satellites (as applicable) or of the DBS
Distribution System (in which case, Affiliate shall be excused from its
distribution obligations under this Agreement), or of any
scrambling/descrambling equipment or any other equipment owned or maintained by
others (including, without limitation, Affiliate's automated billing and
authorization system), any failure at the origination and uplinking center used
by Programmer or Affiliate, any labor dispute, fire, flood, riot, legal
enactment, government regulation, Act of God, or any cause beyond the reasonable
control of Programmer or Affiliate (financial inability excepted), as the case
may be (a "Force Majeure"), and such non-performance shall be excused for the
period of time such failure(s) causes such non-performance; provided, however,
that if Affiliate determines in its sole discretion that it is commercially or
technically unfeasible to cure a Force Majeure with respect to the DBS
Distribution System or DBS Satellite and so notifies Programmer, then either
party may terminate this Agreement effective upon written notice to the other
party. The parties acknowledge and agree that although the Services may at any
given time be uplinked to only one of several DBS Satellites, failure or
degradation in any of such DBS Satellites may require Affiliate to reduce the
number of programming services available for allocation among all of the DBS
Satellites, with such reduction including, without limitation, curtailment or
termination of the distribution of the Service by Affiliate, at Affiliate's sole
discretion, provided that, in connection with such determination, Affiliate will
accord good faith consideration to Programmer's relationship with Affiliate and
the parties' mutual interest. Accordingly, Programmer further acknowledges and
agrees that the provisions set forth in the first sentence of this Section 6(d)
shall apply and shall exculpate Affiliate and excuse the performance of
Affiliate hereunder in
-13-
the event of a failure or degradation of any of the DBS Satellites or the
transponders on any such satellites, regardless of whether the satellite to
which the Service is uplinked at the time of such failure or degradation is
itself the subject of such failure or degradation. [*].
(e) Survival. Termination of this Agreement pursuant to this
Section 6 shall not relieve either party of any of its liabilities or
obligations under this Agreement, including without limitation those set forth
below in Section 8, which shall have accrued on or prior to the date of such
termination.
(f) Cross-Defaults. Notwithstanding anything to the contrary
herein, in the event there is a material breach of this Agreement (subject to
the cure period and procedure set forth in Section 6(b)(i) above) by Affiliate
(the "DIRECTV Default"), then such DIRECTV Default shall constitute a material
breach by DIRECTV Enterprises, Inc. under Section 5.4 of the Stock Purchase
Agreement. In such event, the determination of damages, if any, arising from the
DIRECTV Default may be based, among other things, upon the value of the DIRECTV
Shares (as defined in the Stock Purchase Agreement) provided by Crown Media
Holdings, Inc. and the value of the consideration provided by Programmer in
connection with this Agreement, provided that other relevant factors shall also
be considered such as the nature and materiality of the DIRECTV Default, the
relative significance of the DIRECTV Default to this entire Agreement and
provided that the amount of such damages is commensurate with such factors.
Notwithstanding anything to the contrary herein, in no event shall the Crown
Media Holdings, Inc. or an Affiliated Company have a direct claim or remedy
against the DIRECTV Shares or any of DIRECTV's rights under the Stock Purchase
Agreement or the Amended Stockholders Agreement (as defined in the Stock
Purchase Agreement) or hinder, impair or adversely affect such rights to any
extent whatsoever. In the event there is a material breach of the Stock Purchase
Agreement by Crown Media Holdings, Inc. (a "Company Default"), then such Company
Default shall constitute a material breach by Programmer under this Agreement.
7. Separate Entities. No officer, employee, agent, servant or
independent contractor of either party hereto or their respective subsidiaries
or Affiliated Companies shall at any time be deemed to be an employee, servant
or agent of the other party for any purpose whatsoever, and the parties shall
use commercially reasonable efforts to prevent any such misrepresentation.
Nothing in this Agreement shall be deemed to create any joint venture,
partnership or principal-agent relationship between Programmer and Affiliate,
and neither shall hold itself out in its advertising or in any other manner
which would indicate any such relationship with the other.
-14-
8. Indemnification; Limitation of Liability.
(a) By Programmer. Programmer shall indemnify, defend and hold
harmless each of Affiliate, its Affiliated Companies (as defined below),
Affiliate's contractors, subcontractors and authorized distributors and the
directors, officers, employees and agents of Affiliate, such Affiliated
Companies and such contractors, subcontractors and distributors (collectively,
the "Affiliate Indemnitees") from, against and with respect to any and all
claims, damages, liabilities, costs and expenses (including reasonable
attorneys' and expert's fees) incurred in connection with any claim against any
of the Affiliate Indemnitees arising out of (i) Programmer's breach of any
provision of this Agreement, (ii) material or programming supplied by Programmer
pursuant to this Agreement, including any Interactive Services, and distributed
by Affiliate in accordance with this Agreement, (iii) the distribution or
cablecast of any programming of the Service which violates or requires payment
for use or performance of any copyright, right of privacy or literary, music
performance or dramatic right, (iv) Programmer's advertising and marketing of
the Service, (v) Programmer's breach or default of any provision of any license,
agreement or instrument to which Programmer or Affiliated Company of Programmer
is a party that is caused by Programmer's obligations hereunder and/or (vi) any
other materials, including advertising or promotional copy, regarding the
Service, supplied or expressly approved by Programmer. Notwithstanding the
foregoing, if the law requires that the distributor obtain music performance
licenses for the Service separately from the programmer, Programmer shall not be
responsible for obtaining such license nor will Programmer indemnify Affiliate
for any costs associated with the failure to have such a license. If the only
music performance rights licenses available to Affiliate (after good faith
negotiations by Programmer for a non-income based license) are based upon
distributors' incomes, Programmer will indemnify Affiliate for such music
performance license(s) (except to the extent that any breach of the license is
based upon a misstatement of Affiliate's income), and the parties shall
negotiate in good faith for an equitable division of the license payments. In
addition, Programmer shall pay and hold the Affiliate Indemnitees harmless from
any federal, state, or local taxes or fees which are based upon revenues derived
by, or the operations of, Programmer. As used in this Agreement, "Affiliated
Company(ies)" shall mean, with respect to any person or entity, any other person
or entity directly or indirectly controlling, controlled by or under common
control (i.e., the power to direct affairs by reason of ownership of voting
stock, by contract or otherwise) with such person or entity and any member,
director, officer or employee of such person or entity.
(b) By Affiliate. Affiliate shall indemnify and hold harmless
each of Programmer, its Affiliated Companies, Programmer's contractors,
subcontractors and authorized distributors, each supplier to Programmer of any
portion of the Service hereunder and each participant therein and the directors,
officers, employees and agents of Programmer, such Affiliated Companies, such
contractors, subcontractors and distributors and such suppliers and participants
therein (collectively, the "Programmer Indemnitees") from, against and with
respect to any and all claims, damages, liabilities, costs and expenses
(including reasonable attorneys' and experts' fees) incurred in connection with
any claim against the
-15-
Programmer Indemnitees arising out of (i) Affiliate's breach of any provision of
this Agreement, (ii) the distribution by Affiliate of the Service, including,
without limitation, the insertion of commercial or other announcements pursuant
to Section 3 hereof (except with respect to claims relating to the content of
the Service for which Programmer is solely responsible pursuant to Section
8(a)(ii) and Section 8(a)(iii)), (iii) Affiliate's advertising and marketing of
the Service (except with respect to such advertising and marketing materials or
content supplied or approved by Programmer), (iv) any other materials, including
advertising or promotional copy, supplied or approved by Affiliate and (v)
Affiliate's breach or default of any provision of any license, agreement or
instrument to which Affiliate or Affiliated Company of Affiliate is a party that
is caused by Affiliate's obligations hereunder. In addition, Affiliate shall pay
and hold Programmer harmless from any federal, state, or local taxes or fees,
including any fees payable to local franchising authorities, which are based
upon revenues derived by, or the operations of, Affiliate.
(c) Survival. Termination of this Agreement shall not affect
the continuing obligations of each of the parties hereto as indemnitors
hereunder. The party wishing to assert its rights set forth in this Section 8
shall promptly notify the other of any claim or legal proceeding with respect to
which such party is asserting such right. Upon the written request of an
indemnitee, the indemnitor will (1) assume the defense of any claim, demand or
action against such indemnitee and/or (2) allow the indemnitee to participate in
the defense thereof, such participation to be at the expense of the indemnitee.
Settlement by the indemnitee without the indemnitor's prior written consent
shall release the indemnitor from the indemnity as to the claim, demand or
action so settled.
(d) NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS
AGREEMENT:
(1) IN NO EVENT SHALL ANY PARTY BE LIABLE FOR ANY
INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER FORESEEABLE OR NOT, OCCASIONED BY
ANY FAILURE TO PERFORM OR THE BREACH OF ANY OBLIGATION UNDER THIS AGREEMENT FOR
ANY CAUSE WHATSOEVER, WHETHER BASED ON NEGLIGENCE OR OTHERWISE.
(2) SUBJECT TO SECTION 2(B) ABOVE, IN NO EVENT SHALL
ANY PROJECTIONS, FORECASTS, ESTIMATIONS OF SALES AND/OR MARKET SHARE OR EXPECTED
PROFITS, OR OTHER ESTIMATIONS OR PROJECTIONS BY AFFILIATE OR ANY OF ITS
DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR AFFILIATED COMPANIES, REGARDING OR
RELATED TO AFFILIATE'S DBS BUSINESS BE BINDING AS COMMITMENTS OR, IN ANY WAY,
PROMISES BY AFFILIATE.
9. Notices. Except as set forth below, all notices hereunder shall be
in writing and delivered by hand or sent by certified mail, return receipt
requested, fax, or by an overnight delivery service to the receiving party at
its address set forth above or as otherwise designated by written notice. Notice
to Programmer shall be provided as follows:
-16-
If by mail, overnight,
facsimile or Crown Media United States, LLC
personal delivery: ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Operating Officer
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
cc: Senior Vice President, Network Distribution
and Service
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Senior Vice President, Business & Legal Affairs
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Notice to Affiliate shall be provided as follows:
If by mail DIRECTV, Inc.
or facsimile: ▇.▇. ▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President, Programming
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
cc: General Counsel
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
If by overnight or DIRECTV, Inc.
personal delivery: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: Senior Vice President, Programming
cc: General Counsel
Notice given by mail shall be considered to have been given five (5) days after
the date of mailing, postage prepaid certified or registered mail. Notice given
by facsimile machine shall be considered to have been given on the date receipt
thereof is electronically acknowledged. Notice given by an overnight delivery
service shall be considered to have been given on the next business day.
10. Waiver. The failure of any party to insist upon strict performance
of any provision of this Agreement shall not be construed as a waiver of any
subsequent breach of the same or similar nature. All rights and remedies
reserved to either party shall be cumulative and shall not be in limitation of
any other right or remedy which such party may have at law or in equity.
11. Binding Agreement; Assignment. Subject to Affiliate's rights under
Section 6(c)(ii), this Agreement shall be binding upon the parties hereto and
their respective successors and assigns, except that it may not be assigned by
transfer, by operation of law or otherwise, without the prior written consent of
the non-transferring party, which shall not be
-17-
unreasonably withheld or delayed; provided, however, that either Programmer or
Affiliate may assign its rights and obligations under this Agreement without
such consent, including without limitation, Affiliate's right to distribute the
Service (i) to an Affiliated Company or to a successor entity whether by sale of
assets, merger or otherwise; (ii) to a third party as part of preparing to go or
going public or as part of a merger, consolidation or sale of all or
substantially all of a party's assets or (iii) to a third party, provided the
transferring party remains primarily liable for the performance of such third
party's obligations hereunder.
12. Laws of California. This Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable to
contracts made and to be fully performed therein by residents of the State of
California, except to the extent that the parties' respective rights and
obligations are subject to mandatory local, State and Federal laws or
regulations.
13. Entire Agreement and Section Headings. Except for the Stock
Purchase Agreement, this Agreement sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof, and
supersedes all prior agreements, arrangements, or understandings relating to the
subject matter hereof, including the Odyssey Agreement (subject to Section
6(a)(ii) above). This Agreement shall not be modified other than in a writing,
signed by each of the parties hereto. The section headings hereof are for the
convenience of the parties only and shall not be given any legal effect or
otherwise affect the interpretation of this Agreement.
14. Severability. The parties agree that each provision of this
Agreement shall be construed as separable and divisible from every other
provision and that the enforceability of any one provision shall not limit the
enforceability, in whole or in part, of any other provision hereof. In the event
that a court of competent jurisdiction determines that a restriction contained
in this Agreement shall be unenforceable because of the extent of time or
geography, such restriction shall be deemed amended to conform to such extent of
time and/or geography as such court shall deem reasonable.
15. Confidentiality. The parties agree that they and their employees
have maintained and will maintain, in confidence, the terms and provisions of
this Agreement, as well as all data, summaries, reports or information of all
kinds, whether oral or written, acquired or devised or developed in any manner
from the other party's personnel or files (the "Confidential Information"), and
that they have not and will not reveal the same to any persons not employed by
the other party except: (A) at the written direction of the other party; (B) to
the extent necessary to comply with the law or the order of a court of competent
jurisdiction, in which event the disclosing party shall so notify the other
party as promptly as practicable (and, if possible, prior to making any
disclosure) and shall seek confidential treatment of such information, or in
connection with any arbitration proceeding; (C) as part of its normal reporting
or review procedure to its parent company, its auditors and its attorneys, and
such parent company, auditors and attorneys agree to be bound by the provisions
of this Section 15; (D) in order to enforce any of its rights pursuant to this
Agreement; (E) to the NRTC, potential investors, insurers, and financing
entities; provided, however, that such
-18-
person described above agrees to be bound by the provisions of this Section 15;
or (F) if at the time of disclosure the Confidential Information is in the
public domain through no fault of the disclosing party. Promptly after the date
set forth in the first sentence of this Agreement, the parties shall use their
best reasonable efforts to agree upon a mutually acceptable press release with
respect to the parties' general business relationship under this Agreement and
to jointly issue and release such press release at a date mutually agreed upon.
During the Term, neither party shall issue an independent press release with
respect to this Agreement or the transactions contemplated hereby without
consulting with the other party and obtaining the prior written consent of the
other party.
16. Inadequacy of Money Damages.
Programmer and Affiliate hereby acknowledge and agree that
Affiliate's distribution and marketing of the Service pursuant to the terms and
conditions contained herein are of the essence of this Agreement. Affiliate
further acknowledges and agrees that such carriage and marketing requirements,
subject to Force Majeure and other conditions of this Agreement, are special and
unique, and that Programmer would not be adequately compensated by the payment
of money damages in the event that Affiliate failed to comply with any of such
requirements and Programmer shall be entitled to specific performance of such
requirements. Programmer further acknowledges and agrees that the grant of
rights to Affiliate hereunder are special and unique, and that Affiliate would
not be adequately compensated by the payment of money damages in the event that
Programmer failed to comply with any of its obligations under this Agreement,
including without limitation, providing access to any Service programming to
Affiliate, as required hereunder and Affiliate shall be entitled to specific
performance of such obligations.
17. Cessation of Program Distribution.
(a) If Affiliate determines that its provision of any Service
programming violates any Law, then, following written notice to Programmer,
Affiliate may cease distributing such programming to the extent, but only to the
extent, necessary and for the time necessary, as reasonably determined by
Affiliate, to prevent such violation of Law from continuing. However, if a bona
fide dispute exists between Programmer and Affiliate as to whether a violation
of any Law has occurred, Affiliate shall not cease distributing such programming
unless Affiliate has received either (i) notice of and delivers a copy (if the
action is in written form) to Programmer of an Indictment (as defined below), or
a threat of any such Indictment, from any entity with jurisdiction or claiming
to have jurisdiction to enforce such Law, alleging or stating that the provision
of such programming is or could be a violation of such Law, or (ii) an opinion
letter to Affiliate from outside counsel that may be retained by Affiliate
stating that, in its opinion, the distribution of such programming appears to be
or could be found to be in violation of any Law that is currently being, is
threatened to be, or there exists a material likelihood will be, enforced.
Furthermore, if Affiliate ceases to distribute such programming and if a bona
fide dispute exists as to whether a violation of such Law has occurred, then
Programmer shall have the immediate right to seek a temporary restraining order
(as its sole and exclusive remedy prior to any final judicial order), on notice
-19-
of four (4) hours or more to Affiliate, to prevent the cessation of such program
distribution based on the non-existence of any such violation of such Law.
Affiliate shall be entitled to oppose Programmer's attempts to obtain any such
injunctive relief, including any temporary restraining order, but hereby agrees
to the following:
(i) Affiliate will not contest the jurisdiction of,
or the venue of, any action brought by Programmer in a federal district court
sitting in the Central District Court of California;
(ii) for a period of five (5) consecutive days after
such cessation of program service by Affiliate, Affiliate will make itself
available to accept service by telecopy or personal delivery on a 24-hour-a-day
basis; and
(iii) if Programmer is seeking a temporary
restraining order, Affiliate will not challenge the sufficiency of notice from
Programmer of an impending hearing if such notice is served at least four (4)
hours before the scheduled court hearing.
As used herein, "Indictment" shall mean an indictment, summons, cease and desist
order, or other similar order or filing.
18. Survival of Representations and Warranties. All representations and
warranties contained herein or made by the parties, and each of them, in
connection herewith shall survive any independent investigation made by either
party.
19. Counterparts. This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all such
counterparts together shall constitute but one and the same instrument. The
parties also agree that this Agreement shall be binding upon the faxing by each
party of a signed signature page thereof to the other party. If such a faxing
occurs, the parties agree that they will each also immediately post, by Federal
Express, a fully executed original counterpart of the Agreement to the other
party.
20. Dispute Resolution and Arbitration.
(a) Initial Dispute Resolution Procedures. Any dispute or
disagreement between Programmer and Affiliate arising out of this Agreement
shall be resolved according to the following dispute resolution procedure:
First, such dispute shall be addressed to each party's project manager (or
equivalent level manager) for discussion and attempted resolution. If any such
dispute cannot be resolved by such project managers within five (5) business
days from the date that either party gives notice that such dispute or
disagreement exists, then such dispute shall be immediately referred to the
appropriate, respective vice presidents (or equivalent level person) for
discussion and attempted resolution.
(b) Arbitration Procedures. If a dispute cannot be resolved to
the mutual satisfaction of both parties within five (5) business days (or such
longer period as may be mutually agreed upon) after the second-tier referral
described in Section 20(a), such dispute
-20-
shall be referred to arbitration in Los Angeles, California before three
arbitrators in accordance with the Commercial Arbitration Rules (the
"Arbitration Rules") of the American Arbitration Association, in effect on the
date that notice of such dispute was originally given. The three arbitrators
shall be appointed as follows: Each party may select one arbitrator and,
thereafter these two shall select the third and final arbitrator. If the two
selected arbitrators cannot agree upon the third arbitrator within five (5) days
of their selection, then the third and final arbitrator shall be selected by and
according to the Arbitration Rules. Once appointed, the arbitrators shall
appoint a time and place for a pre-hearing status conference not more than
fourteen (14) days from the date of their appointment, and shall appoint a time
and place for a final hearing not more than forty-five (45) days from the date
of the status conference. The final hearing shall conclude no later than thirty
(30) days after its commencement. The party that demands arbitration of the
unresolved dispute or disagreement shall specify in writing the matter to be
submitted to arbitration. The arbitrators shall render a single written decision
setting forth an award and stating with reasonable detail the reasons for the
decision reached. Any cash component of the award shall be payable in United
States dollars through a bank in the United States. Each party shall bear its
own cost of preparing for and presenting its case; and the cost of arbitration,
including the fees, and expenses of the arbitrators will be shared equally by
the parties.
(c) Enforcement. The arbitration award shall be final and
binding upon the parties and may be confirmed by the judgment of any court
having appropriate jurisdiction, including without limitation California.
(d) Injunctive Relief. Notwithstanding the forgoing, but
subject to Subsection 20(a) above, neither Programmer nor Affiliate shall be
bound by the foregoing dispute resolution and/or arbitration procedures in this
Section 20 in the event that it seeks preliminary or interim injunctive or other
equitable relief.
IN WITNESS WHEREOF, the undersigned parties have caused this Agreement
to be executed by their duly authorized representatives as of the day and year
first above written.
DIRECTV, INC.
By:
------------------------------------
Name:
------------------------------
Title:
-----------------------------
CROWN MEDIA UNITED STATES, LLC
By:
------------------------------------
Name:
------------------------------
Title:
-----------------------------
-21-
EXHIBIT A
PROGRAMMING SCHEDULE
-1-
EXHIBIT B
PROGRAMMER'S RATE CARD
YEAR LICENSE FEE
2001 $[*]
2002 $[*]
2003 $[*]
2004 $[*]
2005 $[*]
2006 $[*]
2007 $[*]
-1-