Exhibit 10.1.1
Portions of this exhibit have been omitted pursuant to a request for
confidential treatment filed with the
Securities and Exchange Commission. The
omissions have been indicated by asterisks
("*****"),
and the omitted text
has
been filed separately with the Securities
and Exchange Commission.
AFFILIATION AGREEMENT
THIS
AGREEMENT made as of the 1st day of November, 1992 is by and between
SPICE, INC., a New York corporation
("Network"), and Satellite Services, Inc., a
Delaware corporation ("Affiliate").
1.
RIGHTS:
(a) Grant of
Rights. Network hereby grants to Affiliate, and
Affiliate hereby accepts, the following rights relating to the pay-per-view
television programming service known as "Spice," whether
in its current analog
format or in any other digitized,
compressed,
modified, replaced or otherwise
manipulated format (the "Service"):
(i) the non-exclusive right, but not the obligation, to
exhibit, distribute, subdistribute and authorize the reception of the
Service
(for the purposes described in Section 4 (e) hereof), by cable or other wire
transmission service, whether now existing
or developed in the future, ("Cable")
in the Distribution Areas (as defined herein) of the System or Systems (as
defined herein), if any, set forth by Affiliate on
Schedule 1, as such Schedule
1 may be added to or deleted from,
from time to time,
pursuant to the terms
of
this Agreement;
(ii) the non-exclusive right, but not the obligation, to
exhibit, distribute, subdistribute and authorize the reception of the
Service
(for the purposes described in Section 4(e) hereof)
by satellite master antenna
television systems ("SMATV"), by multipoint distribution services ("MDS"), by
multichannel multipoint distribution
services ("MMDS"), by Satellite (as defined
below), and by any other means of
distribution whether now existing or developed
in the future (all such technologies
including SMATV, MDS,
MMDS, Satellite
and
any other means of distribution
whether now existing
or developed in the future
(other than cable) shall be referred to hereinafter, collectively, as
"Alternative Technologies") in (A) Operating Areas (as defined herein), (B)
other areas of counties in which Operating
Areas are wholly or partially located
but which areas are not the subject of a
cable television
franchise or
license
or, if a cable television franchise or license exists, the operator of such
franchise or license is not distributing
the Service, and (C)
areas of counties
(which are contiguous to such counties where an Operating Area is wholly or
partially located) which are not the
subject of a cable television franchise or
license or, if a cable television
franchise or license
exists, the operator
of
such franchise or license is not
distributing
the Service (the areas
described
in subsections (A), (B), and (C) of this Section
1(a)(ii) shall be
referred to
hereinafter, collectively, as a System's
"Distribution Area"); and
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(iii) the
non-exclusive right,
but not the
obligation,
to
exhibit, distribute, subdistribute and authorize the reception of the
Service
(for the purposes described in Section 4(e) hereof)
nationwide
(including the
fifty United States, the District of Columbia and the
territories,
possessions
and commonwealths of the United States) to any person or entity
("Satellite
Subscribers") by means of equipment
capable of receiving
audio/visual
signals
and/or programming directly from a satellite,
including,
but not limited
to,
C-Band and Ku-Band signals, as digitized, compressed, modified, replaced or
-otherwise manipulated, whether now existing or developed in the future,
including tier-bit access rights ("Satellite"). Without the prior written
authorization of Network, the Service may not be exhibited or otherwise
distributed to Satellite Subscribers in: Tennessee, Mississippi, Alabama,
Oklahoma, North Carolina or Utah.
The rights set forth in this Section 1(a), and elsewhere
under this
Agreement, are also granted hereby to any affiliate of
Affiliate.
As used in
this Agreement, an affiliate of Affiliate shall
include any entity meeting the
requirements of paragraphs I.1, II or III of Exhibit A
hereto, regardless
of
whether such entity is a cable television
system.
"Operating Area"
of a cable
television
system shall mean that
geographic area where the owner of the
system is authorized by appropriate
governmental authority to operate an audio or video distribution facility
through Cable and is operating an audio or
video distribution
facility through
Cable within such area; provided, however,
that if a franchise or license is not
required for the distribution of television services by Cable in a
particular
geographic area, then the operating Area of a
system shall mean that geographic
area where the system is operating regardless of the presence or absence of
a
franchise or license.
(b) Affiliate shall have the right to elect to include,
under
this Agreement, and to demand authorization from Network, if necessary, any
cable television system consisting of Cable which, (i) meets the System
Qualifications of Exhibit A hereto, and (ii) either carries the Service or
commits to carry the Service, by giving Network written notice within thirty
(30) days of the commencement of such carriage (individually, a "System" or,
collectively, "Systems"). Upon receipt of such
notice or upon the launch of the
Service by a System, Schedule 1 hereof
shall be deemed to include such System(s)
as of the later of: (i) the launch
date of the
Service on such
System(s),
or
(ii) the date of acquisition of such
System(s) by Affiliate. Any then-existing
agreement with Network applicable to any
such System for carriage of the Service
shall terminate and shall cease to be
effective with respect
to such System as
of the effective date of the addition or deemed addition of such System to
Schedule 1. Affiliate shall have the right,
in Affiliate's sole
discretion, to
discontinue carriage of the service on any or
all Systems, and to delete any or
all Systems from Schedule 1, by providing
Network with written
notice within
thirty (30) days of such deletion or
discontinuance;
provided, however, if such
deletion or discontinuance is due to political, legal or community issues, no
such notice by Affiliate will be required
to delete or discontinue the Service.
(c) Notwithstanding
any provision of this Agreement to the
contrary, Affiliate shall not intentionally authorize any use of the
Service:
(i) in a room
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open to the public in a commercial
establishment (including, without limitation,
public areas of any restaurant, tavern, bar, club, fraternal organization,
hospital or correctional facility), or (ii)
in any communal room in an otherwise
residential building (including without
limitation, any lobby
or social room in
an apartment house, dormitory, drilling rig or similar
place). Furthermore,
Affiliate shall take all reasonable
precautions to prevent
such impermissible
uses from occurring through the facilities
of a System.
2.
TERM:
(a) Unless
terminated
sooner pursuant to the terms of this
Agreement, the Term of this Agreement shall
consist of the Initial Term and any
number of Renewal Terms. The Initial Term of this Agreement
shall commence upon
the date of complete execution of this
Agreement and shall terminate on November
30, 2002 unless terminated sooner pursuant
to the terms of this Agreement.
(b) This Agreement shall automatically renew for successive five
(5)
year periods (each a "Renewal Term") after the Initial
Term, and each Renewal
Term, unless either, (i) this Agreement is
terminated earlier in accordance with
the terms hereof, or (ii) Affiliate
provides a minimum of sixty (60) days' prior
written notice to Network of its intent to terminate this Agreement, in
Affiliate's sole discretion, prior to the
end of the Initial Term or any Renewal
Term. As used herein, the word "Term" shall
mean, collectively, the Initial Term
and any number of Renewal Terms.
3. CONTENT
OF THE SERVICE:
(a) Throughout the Term, the Service shall be commercial-free and
shall consist of twenty-four (24) hours per day of high
quality, non-rated
cable-version adult programming
intended for an adult
audience, similar to
the
program schedule attached hereto as Exhibit
B, but also including special Events
as described in Section 5 below.
Notwithstanding
the foregoing, the Service
shall not contain any programming
depicting rape, necrophilia, sadism, sado
masochism, bestiality, bondage, incest or programming involving or
suggesting
sexual activity with, between or among,
minors. Network agrees that, during each
calendar month of the Term, Network will send one (1) copy of its monthly
program schedule to Affiliate, in care of:
Vice President, Programming.
(b) During
the Term, Network shall provide the Service in its
entirety to Affiliate. When the phrase "in its entirety" is used in this
section, it means that each subscriber of
Affiliate receiving the Service shall
receive, at all points in time, the same
programming received at each such point
in time by any other subscriber to the Service, and if any subscriber to the
Service is receiving, at such point in time, programming
that is different than
the programming received by any subscriber
of Affiliate receiving the Service at
that point in time, Affiliate shall have the
unconditional right to elect which
programming it desires to receive and utilize at any System and which
programming it will authorize for
reception.
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4.
DELIVERY AND DISTRIBUTION OF THE SERVICE:
(a) During the Term,
Network shall, at its
own expense, deliver
a
signal of the Service to the earth
station of each
System, to each Satellite
Subscriber and to any other location in the
continental United States designated
by Affiliate by transmitting such signal
via a domestic
satellite commonly used
for transmission of domestic cable
television programming
and shall, at its own
expense, fully encode the satellite signal
of the Service utilizing scrambling
technology commonly used in the domestic
cable television
industry. Except
as
otherwise provided in this Section 4(a),
Affiliate shall, at its own expense,
furnish an earth station and all other
facilities
necessary for the
receipt of
such satellite transmission and the
delivery of such signal to the Service Cable
Subscribers and PPV Cable Subscribers (each as defined below). In the event
Network either (i) changes the satellite to
which the Service is transmitted, to
a satellite not susceptible to viewing by a
System's or Systems'
then-existing
earth station equipment, or (ii) changes the technology used by Network to
encrypt the Service, to a technology not compatible
with a System's or Systems'
then existing descrambling equipment, then Affiliate shall have the right to
delete from Schedule 1 of this Agreement, immediately, any such System or
Systems, and to discontinue carriage of the Service on any such System or
Systems, provided that this termination
right shall not apply
to any System or
Systems if, (1) Network agrees, unconditionally, to reimburse such System or
Systems, as the case may be, (A) for the
cost of acquiring and
installing new
equipment necessary to descramble the
signal of the Service,
and/or (B) for the
cost of acquiring and installing
equipment reasonably
necessary for such System
or Systems to receive the Service from such
new satellite;
(2) physical
space
exists at the then-existing headend or earth station site to
accommodate
the
necessary equipment; and (3) current zoning and other
restrictions permit such
additional equipment.
(b) Network shall
provide to each System
distributing the
Service
and to each Satellite Subscriber a video
and audio signal of a technical quality
equivalent to the greater of the following: (i) comparable to the technical
quality of audio and video signals delivered by other television programming
services; or (ii) the technical standards
set forth in Exhibit C hereof. If, at
any time during the Term, Network converts to a digital format, Network and
Affiliate shall negotiate in good faith to
agree upon replacement specifications
for Exhibit C; provided, however, that the technical quality of the video and
audio signal under the replacement specifications shall not be of a lesser
technical quality than the video and audio
signal quality of the
Service as of
the month immediately preceding the conversion to digital technology. Each
System will deliver a principal video and audio signal of the Service to its
Service Cable Subscribers and PPV Cable Subscribers of a technical quality
comparable to other cable television programming services, but in no event
higher than the technical quality provided
by Network.
(c) The Systems,
if any, may distribute the Service as a fully
pre-emptible service. Network agrees that
Affiliate will have complete authority
to control and to designate the channel(s) over which the Service is to be
carried on each System.
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(d) Each System
retains and reserves
any and all rights in
and to
all signal distribution capacity contained within the
bandwidth of the Service
as received at each System, including,
without limitation, the vertical blanking
interval and audio subcarriers (and any
other portions of the bandwidth that may
be created as a result of the conversion of the signal of the Service to a
digital format). Network shall not use any portion
of the bandwidth other than
as provided herein without the prior written consent of Affiliate. Nothing
herein shall preclude Affiliate from exercising and exploiting
such rights by
any means and in any locations freely and without restriction; provided,
however, that any such use by Affiliate or the Systems
shall not degrade,
or
otherwise interfere with, the picture quality of the Service or the audio
portion of the Service signal which is the
principal audio carriage frequency of
the Service.
(e) Each System or other distribution facility or enterprise may
offer the Service, (i) as a Subscription
(as defined below) service, and/or (ii)
as a PPV (as defined below) service.
(f) In each
of the Systems, Affiliate shall employ reasonable
security measures to prevent pirating,
theft or unauthorized
exhibition of the
Service, or any portion thereof, or of any
advertising or promotional materials.
Except as provided in Section 4(g) below,
neither Affiliate,
nor any affiliate
of Affiliate, shall authorize others to copy, tape or otherwise
reproduce any
part of the Service without Network's prior
written authorization and shall take
reasonable and practical security measures to prevent the unauthorized or
otherwise unlawful copying, taping or other reproduction of the Service,
by
others, through the facilities of any
System. Affiliate shall not be responsible
for home taping by anyone viewing the
Service. Network
acknowledges
that this
Section 4(f) does not restrict Affiliate's practice of (i) connecting its
subscribers' videotape recorders, VCRs or other devices susceptible
to use for
home duplication of video programming to the facilities of a System;
or (ii)
promoting home taping of the Service by
subscribers.
(g) Affiliate
and any System
shall have the right, at their own
expense, to make taped copies of any
transmissions of the Service programming,
which taped programming may be used by such System for one or more of the
purposes described in Section 4(e) above,
for exhibition and sale at times other
than at the times of original satellite
transmission by Network.
(h) Network hereby grants Affiliate the right to receive the
signal
of the Service, to digitize, compress, modify, replace or otherwise
manipulate
the signal, and to transmit the signal as
so altered (the "Altered Signal") to a
satellite or to a central location for redistribution to terrestrial or other
reception sites capable of receiving and
utilizing the Altered
Signal. Network
hereby grants Affiliate the right to
deliver the Altered Signal for the uses set
forth in Section 1(a) of this Agreement, provided that no such alteration,
transmission, redistribution, reception or other use will cause a change
in a
viewer's perception of the principal video
or principal audio
presentation of
the Service. Furthermore, Network shall not change the
signal of the Service in
such a way as to technically or
technologically
defeat, or otherwise
interfere
with, Affiliate's rights under this Section
4(h).
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<PAGE>
5.
FEES:
(a) In consideration
of the terms and
conditions set forth herein,
Affiliate shall pay the Fees set forth
below. Each of the
four categories
of
Fees defined below (PPV Satellite Fees,
Service Satellite Fees, PPV Cable Fees
and Service Cable Fees) shall be
calculated, stated and
reported separately. As
used herein, the following terms will have
the following meanings:
(i) "PPV Satellite
Subscriber"
means someone who is both a
Satellite Subscriber and who utilizes the Service as a
PPV service by making a
purchase through Affiliate or an affiliate of
Affiliate. "PPV
Satellite Fees"
are those Fees payable by Affiliate to
Network in connection
with sales of the
Service to PPV Satellite Subscribers.
(ii) "Service Satellite Subscriber" means someone who is
both
a Satellite Subscriber and a Service
Subscriber (as defined below) who utilizes
the Service as a Subscription service. "Service Satellite Fees" are those
Fees
payable by Affiliate to Network in connection with sales of the Service to
Service Satellite Subscribers.
(iii) "PPV Cable Subscriber" means someone who is provided the
Service by Affiliate or an affiliate of Affiliate
hereunder,
who utilizes the
Service as a PPV service and who receives the Service by means other than
Satellite. "PPV Cable Fees" are those Fees
payable by
Affiliate to Network
in
connection with sales of the Service to PPV
Cable Subscribers.
(iv) "Service
Cable Subscriber" means someone who both
receives the Service by means other than
Satellite and is a
Service Subscriber
and who utilizes the Service as a
Subscription service. "Service Cable Fees" are
those Fees payable by Affiliate to Network in connection with sales of the
Service to Service Cable Subscribers.
(v) "Fees" means PPV Satellite Fees, Service Satellite Fees,
PPV Cable Fees and Service Cable Fees (collectively) payable by Affiliate to
Network during the Initial Term.
Fees payable by
Affiliate to Network during a
Renewal Term are referred to herein as
Renewal Fees.
(vi) "Pay-per-view" or
"PPV" means the authorization of a PPV
Satellite Subscriber or PPV Cable
Subscriber to receive at least a single motion
picture, event or other program
included in the
Service for a fee separate and
distinct from fees paid by such PPV
Satellite Subscriber or PPV Cable Subscriber
for other television or audio services.
Viewing segments may include, but are
not limited to, pay-per-view, pay-per-night, pay-per-weekend, or any other
continuous segment of seventy-two (72) or
fewer consecutive hours of the Service
received on a pay-per-view basis.
(vii) "Subscription"
means the authorization of a Service
Cable Subscriber or Service Satellite Subscriber to receive the Service
as a
monthly
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subscription service either on an a la carte
basis or as part of a
package of
other services, or both.
(viii) "Service
Subscriber"
means each customer to whom
Affiliate or an affiliate of Affiliate
knowingly provides the
Service directly,
through an affiliate, or, as permitted by
this Agreement, through a third party,
as a Subscription service.
(ix) "Special Event" means an occasional, high-profile adult
comedy or sports event or program
(other than a motion
picture or other typical
adult dramatic or comedy program) produced originally for the Service,
premiering on the Service, and first appearing on the Service no more
than one
(1) year from its completion date. Network
may not include more than one Special
Event on the Service in any six (6) month
period (except that,
with the consent
of Affiliate (such consent to be in
Affiliate's sole and exclusive discretion),
Network may include a Special Event on the
Service more
frequently than once in
a six (6) month period), and no adult
comedy, sports event
or program event may
be treated as a Special Event for more than twelve (12) exhibitions on the
Service. Further, no adult comedy,
sports event or
program may be treated as a
Special Event unless Network provides
Affiliate with at
least seventy-five (75)
days prior written notice of the premiere
on the Service of such Special Event.
(x) "Addressable
Subscriber"
means a PPV
Cable Subscriber
whose television set is connected on the
PPV Cable Subscriber's
premises, or by
interdiction, to equipment, issued by Affiliate, that allows the channel on
which the Service is received to be turned on or off (i.e.,
"authorized"
or
"deauthorized") from a central location, controlled by the operator of the
System.
(xi) "Gross Receipts"
means the amount billed for the Service
to a PPV Cable Subscriber, PPV Satellite Subscriber, Service Satellite
Subscriber or Service Cable Subscriber (as the case may be) less
applicable
taxes, franchise fees or other charges, levies or assessments imposed by
governmental entities or agencies thereof
attributable to the
purchase or sale
of the Service or any portion thereof.
(xii) "Network Share" means that portion of the Gross Receipts
which is payable by Affiliate as Fees or Renewal Fees to Network pursuant to
this Agreement.
(b) Subscription
(i) For each calendar
month during the Term,
Affiliate will
pay Network as a Service Cable Fee for each
Service Cable
Subscriber an
amount
equal to the greater of (A) ***** or (B) ***** of the Gross Receipts
attributable to such Service Cable Subscriber. When the Service is sold to a
Service Cable Subscriber in combination
with other services for a package charge
(as, for example, in a tier or in a package of a la
carte or other
services),
the Gross Receipts attributable to a Service Cable Subscriber for the Service
shall be equal to the total charge for the tier or package of
services sold in
combination with the Service, multiplied by
a fraction, the numerator of
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which is $1.59 and the denominator of which is the
numerator plus the aggregate
of the net effective rates per subscriber charged to Affiliate by each of
the
other service providers of the services included
in the tier or package of a la
carte or other services; provided, however, that the amounts charged to
Affiliate for each of the services in the
package or tier shall not be disclosed
by Affiliate to Network but, at Network's
request, in order to assure Network of
compliance with this provision, Affiliate shall make such charges and any
pertinent calculations available to a
representative of KPMG Peat Marwick (which
representative is neither Network's nor
Affiliate's) on a confidential basis, at
Network's cost. This provision shall survive
termination or
expiration of this
Agreement. Affiliate shall pay a Service
Satellite Fee to
Network of $7.00 per
month for each Service Satellite
Subscriber
regardless of whether
such Service
Satellite Subscriber purchases the Service
alone, as an a la carte service or as
part of a tier or package of a la carte or
other services and
regardless of the
Gross Receipts attributable thereto.
(ii) The number of Service Satellite Subscribers or Service
Cable Subscribers (as the case may be) for whom
Affiliate shall pay each month
shall be the average of (A) the number of Service Satellite Subscribers or
Service Cable Subscribers (as the case may be) on the first
day of the month,
and (B) the number of Service Satellite
Subscribers or Service Cable Subscribers
(as the case may be) on the last day of the
month. Service Satellite Subscribers
or Service Cable Subscribers (as the case may be) shall include
each occupied
dwelling (whether in a single family or multi-unit building), hotel or motel
guest room, drilling rig, nursing home
room, dormitory room or other location in
which the Service is received. If Affiliate provides the Service to
multiple
dwelling complexes, including, but not limited to, apartments, hotels and
motels, on a bulk-rate basis, the number of Service
Satellite Subscribers or
Service Cable Subscribers (as the case may be) attributable to each such
bulk-rate subscriber shall be equal to the total
monthly retail rate charged a
complex for the Service divided by the standard
monthly retail rate charged a
non-bulk rate Service Satellite Subscriber or Service Cable
Subscriber (as the
case may be) for the Service in the applicable System or by the pertinent
Satellite distributor, as the case may be. The monthly number of Service
Satellite Subscribers and the monthly number
of Service Cable Subscribers shall
each be calculated, stated and reported
separately.
(iii) The Service Cable Fees and Service Satellite Fees
payable by Affiliate to Network
hereunder shall be due and payable
forty-five
(45) days after the end of the calendar
month to which they relate.
(c) PPV
(i) For each customer
of Affiliate who
receives and pays for
one (1) complete and technically
satisfactory viewing
of one viewing segment of
the Service as a PPV service as a PPV Cable Subscriber, Affiliate will pay
Network a PPV Cable Fee in an amount
equal to the greater
of, (A) (i) ***** for
orders taken from the date of full
execution hereof
through November 30,
1995,
(ii) ***** for orders taken from December 1, 1995 through November 30, 1998
(iii) ***** for orders taken from December
1, 1998 through November 30, 2001 and
(iv) ***** for orders from December 1, 2001
through the end of the Initial Term,
or (B) the Network Share of the Gross
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Receipts paid by such PPV Cable Subscriber. With respect to PPV Cable
Subscribers, "Network Share" shall equal the
following percentage
of the Gross
Receipts paid by each PPV Cable Subscriber:
***** percent ***** from the date of
execution of this Agreement by both parties
hereof through November 30, 1995 and
***** percent ***** from December 1, 1995
through the end of the Initial Term.
For each customer of Affiliate who receives and pays for one (1)
complete and
technically satisfactory viewing of one
viewing segment of the Service as a PPV
service as a PPV Satellite Subscriber, Affiliate will pay Network a PPV
Satellite Fee in an amount equal to the greater of (C) (i) ***** for orders
taken from the date of full execution hereof through November 30, 1995, (ii)
***** for orders taken from December 1, 1995 through
November 30, 1998,
(iii)
***** for orders taken from December 1,
1998 through November 30, 2001, and (iv)
***** for orders taken from December 1, 2001 through the end of the Initial
Term, or (D) the Network Share of the Gross
Receipts paid by such
PPV Satellite
Subscriber. With respect to PPV Satellite
Subscribers, the
Network Share of the
Gross Receipts shall be *****. Notwithstanding the foregoing, each System and
each Satellite distributor shall have the right to discount
the price of a PPV
viewing of the service during the first
thirty (30) days after the launch of the
Service in such System or by such Satellite distributor, respectively, and
during no more than two (2) ten (10) day
periods each calendar
year. For orders
taken during such first thirty (30) days and during each such ten (10) day
period, Affiliate shall be required to pay
to Network minimum PPV Satellite Fees
or PPV Cable Fees (as the case may be) of ***** per each complete and
technically satisfactory viewing of a viewing segment of the Service as a
PPV
service, rather than the minimum PPV
Satellite Fees or PPV Cable Fees specified
in either (A) or (C) of this Section
5(c)(i). Furthermore, there shall be no PPV
Satellite Fee or PPV Cable Fee (as the case
may be) payable
by Affiliate to
Network for any PPV viewing of the
Service by a
subscriber
who pays for such
viewing by remitting a coupon provided by Affiliate or by an affiliate of
Affiliate to subscribers that have not ordered a PPV movie
or event in the six
(6) months immediately preceding the
issuance of such coupon.
(ii) In lieu of the
PPV Satellite
Fees or PPV
Cable Fees
payable as calculated pursuant to Section 5(c)(i) above,
for each PPV Satellite
Subscriber or PPV Cable Subscriber (as the case may be) who receives
and pays
for one (1) complete and technically satisfactory viewing of a Special Event
included in the Service, Affiliate will pay Network a PPV Satellite
Fee or PPV
Cable Fee (as the case may be) equal to the greater of (A) a minimum dollar
amount to be set by Network or (B) ***** of
the Gross Receipts
paid by such PPV
Satellite Subscriber or PPV Cable Subscriber (as the case may be).
Notwithstanding the above, however, any and all PPV Satellite
Fees or PPV Cable
Fees paid by Affiliate to Network for any
Special Event shall be
subject in all
respects to Section 13(g) of this Agreement
(including the minimum dollar amount
payable by Affiliate hereunder).
(iii) The PPV Cable
Fees and/or PPV
Satellite Fees (as the
case may be) payable by Affiliate to
Network hereunder
for exhibition to PPV
Cable Subscribers and PPV Satellite Subscribers (as the case may be)
during a
Reporting Period (as defined below) during the Term shall be due and
payable
forty-five (45) days after the end of the
calendar month which includes the last
day of the Reporting Period. (The term "Reporting Period" shall mean the days
from the end of each System's or
Satellite
9
<PAGE>
distributor's last monthly reporting period
(which date may vary in each System
or for each Satellite distributor from the 20th of the calendar
month to the
last day of the calendar month) to the end of the System's or Satellite
distributor's then current monthly reporting
period.) Affiliate
shall have the
right, however, to make credit adjustments to any
month's payment in an amount
equal to the portion of a previous
month's PPV Cable Fees
and/or PPV
Satellite
Fees which represents an overpayment.
(d) Addressable Subscribers Volume Discount
(i) On the first day of each calendar quarter of the Term, for
orders taken during such calendar quarter of the Term, the Network Share with
respect to PPV Cable Subscribers as determined above may be reduced below the
Network Share otherwise stated above based upon the number of Addressable
Subscribers in all of the Systems on the
first day of such calendar quarter, as
follows:
<TABLE>
<CAPTION>
If the Number of Addressable Subscribers in
Then, the
Network Share for each Month of
all Systems on the First Day of a Calendar
such
Calendar Quarter Hereunder Shall be
Quarter is:
Reduced By the Following Percentage of the
Gross Receipts:
<S>
<C>
2,000,000 - 2,999,999
*****
3,000,000 - 3,999,999
*****
4,000,000 - 4,999,999
*****
5,000,000 - 5,999,999
*****
6,000,000 - 6,999,999
*****
</TABLE>
(e) Each System shall have the right to e
