HomeMy WebLinkAbout2001-045 Waiver - Charter CommunicationsWAIVER
OF
CERTAIN RIGHTS
BY CHARTER COMMUNICATIONS, INC.
This Waiver is made this2~day of May 2001, by Charter Communications, Inc.
RECITALS:
Charter Communications, Inc. or its predecessor ("Charter") and Soda Mountain
Broadcasting, Inc. ("Soda Mountain'') have previously entered into a distribution arrangement for
the carriage of KMFD, a cable programming service including programs licensed from The WB
Television Network, by Charter on its cable television system within the Medford, Oregon
Designated Market Area ("Medford DMA");
Charter acknowledges that Soda Mountain and City of Ashland, Oregon d/b/a Ashland
Fiber Network ("AFN") are negotiating and intend to execute a distribution agreement for AFN's
carriage of KMFD;
The undersigned confirms that he has been authorized to execute this Waiver on behalf of
Charter.
CHARTER THEREFORE AGREES AS FOLLOWS:
Charter hereby waives any and all exclusive rights it may have as against AFN under any
and all previously executed or future distribution arrangements with Soda Mountain for the
distribution of KMFD by AFN, or its successors and assigns that remain under the control of the
City of Ashland, over AFN's cable system within the Medford DMA.
Charter agrees not to take any action that would interfere with AFN's carriage of KMFD
over AFN's cable system within the Medford DMA.
Dated:
J0h~. geiver
Counsel for Charter Communications, Inc.
CITY OF
SHLAND
May 29,2001
Arthur H. Harding
Fleischman and Walsh, L.L.P.
Attorneys at Law
1400 Sixteenth Street, NW
Washington, D.C. 20036
RE: City of Ashland, Oregon, dba Ashland Fiber Network v. WB Television Network,
et al. CSR-5597-P
For your records enclosed is one fully-executed copy of the final Affiliation Agreement
between Soda Mountain Broadcasting, Inc., and the City of Ashland, Oregon, dba Ashland
Fiber Network, regarding the television programming service.
Paul Nolte
City Attomey
Enclosure
c: Jim Deason
G:~lega N>AUL\Telecom munica tion s~Cable~Affiliatio~ Agreement Cover L~' 0501.wpd
LEGAL DEPARTMENT
30 East Main Street
A,shland. Oregon 97520
w~wv.ashland.o~.us
Tel: 541-488-5350
Fax: 541-488-5311 FAI~
TrY: 800-735-2900
noltep~,ashland.o~.us stephens~,ashland.or.us
AFFILIATION AGREEMENT
TABLE OF CONTENTS
3.
4.
5.
6.
7.
8.
RIGHTS ............................................................ 1
(a) Grant of Rights .................................................. 1
(b) Mode of Distribution ............................................. 1
(c) Distribution Territory ............................................. 1
AFFILIATE'S DISTRIBUTION OBLIGATION .............................. 2
SYSTEM CHANNEL POSITIONS ........................................ 2
ADDITION OF SYSTEMS .............................................. 2
AFTER ACQUIRED SYSTEMS .......................................... 3
AFTER ACQUIRED BROADCASTERRIGHTS ............................. 3
CONTENT OF THESERVICE ........................................... 4
(a)
(b)
(c)
(d)
(e)
(0
(g)
WB and Syndicated Programs ...................................... 4
Affiliate to Receive All Service Programming ........................... 4
Programs Only On Service ......................................... 5
Program Schedule ............................................... 5
Limitations on Content ............................................ 5
Content Violations ............................................... 6
Local Programming Inserts ......................................... 7
10.
11.
12.
ADVERTISING ...................................................... 8
(a) Time Sales ..................................................... 8
(b) Content Restrictions on Advertising .................................. 8
(c) Restriction on Hiring Salespersons ................................... 8
(d) Sales Sub-performer .............................................. 9
FINANCIAL BASIS .................................................. 10
(a) Eligibility for Affiliate Share ....................................... 10
(b) Calculation of Affiliate Share ...................................... 10
(c) Accounting by Broadcaster ........................................ 11
BRANDING OF SERVICE ............................................. 11
BLACKOUT OF DUPLICATIVE PROGRAMMING ......................... 12
13.
14.
15.
16.
17.
18.
19.
CLOSED CAPTIONING ............................................... 13
DELIVERY AND DISTRIBUTION OF THE SERVICE ...................... 13
(a)
(b)
(c)
(d)
(e)
(0
(g)
(h)
(i)
0)
Delivery of Signal ............................................... 13
Digitally Encoded Signal .......................................... 14
Headend Equipment ............................................. 14
Other Equipment or System Changes ................................. 15
Affiliate's Carriage of Service ...................................... 16
Carriage on Basic Tier ........................................... 16
No Copying of Service ........................................... 16
Copying Rights ................................................. 17
Transmission of Service to Third Parties .............................. 17
Three Dimensional, Multi-media or Other Distribution of the Service ........ 18
FEES .............................................................. 18
RECORDS AND AUDIT .............................................. 18
PROMOTION ....................................................... 19
(a) Promotional Spots .............................................. 19
(b) Research ...................................................... 19
(c) Proprietary Marks .............................................. 20
(d) Promotional Branding ............................................ 20
INTERFERENCE WITH AFFILIATE'S RELATIONSHIPS ................... 21
WARRANTIES AND INDEMNITIES
(a)
(b)
(c)
(d)
(e)
.................................... 22
Broadcaster's General Warranties ................................... 22
Broadcaster's Warranties Re: Programming ........................... 23
Broadcaster's Warranties Re: Insurance .............................. 24
Affiliate's Warranties ............................................ 25
Indemnification ................................................. 25
(i) Mutual Indemnification ..................................... 25
(ii) Broadcaster's Additional indemnification ....................... 25
(iii) Indemnification Procedure .................................. 26
20. EARLY TERMINATION RIGHTS ....................................... 27
(a)
Termination By Broadcaster ....................................... 27
(i) Material Breach .......................................... 27
(ii) Bankruptcy .............................................. 27
(iii) Delayed Launch Date ...................................... 28
(iv) Permanent Discontinuation Of Service ......................... 28
(b)
Termination By Affiliate .......................................... 28
(i) Material Breach .......................................... 28
21.
22.
23.
24.
(ii) Bankruptcy .............................................. 29
(iii) Interruption of Service ..................................... 29
(iv) Permanent Discontinuation Of Service ......................... 29
(v) Programming ............................................ 29
FORCE MAJEURE ................................................... 29
NOTICES .......................................................... 30
CONFIDENTIALITY; PRESS RELEASES ................................ 31
MISCELLANEOUS
(a)
(b)
(c)
(d)
(e)
(0
(g)
(h)
(i)
(j)
(k)
Assigment; Binding Effect; Reorganization ........................... 33
Entire Agreement; Amendments; Waivers ............................. 34
Governing Law ................................................. 34
Relationship ................................................... 35
Affiliate Favorable Temps ......................................... 35
Severability .................................................... 37
No Inference Against Author ...................................... 37
No Third Party Beneficiaries ....................................... 37
Headings ..................................................... 37
Non-Recourse ................................................. 37
Performance of Certain Obligations ................................. 38
SCHEDULE 1 (Systems)
EXHIBIT A (System Qualifications)
EXI-IIBIT B (Program Schedule)
EXHIBIT C (Television Markets)
iii
Glossary
This Glossary provides definitions for terms used in the attached Affiliation Agreement.
Each of the defined terms contained in the Affiliation Agreement have the same meanings as the
terms defined in this Glossary. This Glossary is incorporated by this reference into the body of
the Affiliation Agreement.
"Cable" includes cable or any other wire or fiber optic transmission system or any other
transmission path provided by a material substance, whether now existing or developed in the
future.
"Cable System(s)" means any point-to-multipoint Cable television system that: (A) meets the
System Qualifications of Exhibit A hereto, and (B) distributes video programming by Cable.
"Initial System(s)" mean any Cable System(s) listed on Schedule 1 to the Affiliation Agreement
at the time the Agreement is executed.
"Launch Date" means, for each System, the date on which a Cable System commences carriage
of the Service to Service Subscribers.
"Local Programming" means local news and informational programming produced by
Broadcaster for inclusion on the Service.
iv
"Operating Area" of a Cable System means any geographic area in the Territory where the
owner or operator of the Cable System is authorized by appropriate governmental authority to
operate a Cable System; provided, however, that if a franchise or license is not required for the
distribution of television services in a particular geographic area in the Territory, then the
Operating Area of a Cable System or enterprise shall mean that geographic area where the Cable
System is operating regardless of the presence or absence of a franchise or license.
"Satellite Master Antenna System" ("SMATV") means a delivery system that operates like a
Cable System but is located on private property such as a condominium or an apartment complex
without occupying any public rights-of-way.
"Service" means those uniquely branded non-broadcast programming services that Broadcaster
provides to multichannel video programming distributors ("MVPDs") in the Television Markets in
its Territory, which services consist of the programming described in Section 8(a) of this
Agreement, either in its current format or in any other format, whether digitized, compressed,
modified, replaced or otherwise manipulated, and any successor to a substantial portion of the
programming in the event any such Service is renamed or discontinued.
"Service Subscriber" means each location to which Affiliate, pursuant to the Agreement,
intentionally authorizes the distribution of the Service, directly or through an affiliated entity.
Service subscribers shall include each occupied single family dwelling, each occupied dwelling in a
multiple unit complex, and each bar, restaurant and other residential or commercial location where
the service is received.
"System(s)" means each Cable System that Affiliate elects to include under this Agreement and
that has launched and is distributing the Service.
"Television Market" mean the Designated Market Area (as such term is commonly understood
in the U.S. domestic broadcast television industry) ("DMA"), or, if DMA falls from general or
standardized usage, the parties hereto shall negotiate in good faith to agree on a replacement term
to demarcate local television markets in a substantially similar manner.
"Territory" means all Television Markets in which Broadcaster is authorized to provide the
Service for distribution by cable operators and other multichannel video programming
distributors, which Television Markets shall be identified on Exhibit C hereto.
vi
AFFILIATION AGREEMENT
THIS AGREEMENT, dated as of June 1, 2001, is between Soda Mountain Broadcasting,
Inc. ("Broadcaster"), and the City of Ashland, Oregon d/b/a Ashland Fiber Network ("Affiliate"
or "AFN"), regarding the television programming service known as the "Service".
The parties agree as follows:
1. RIGHTS:
(a) Grant of Rights: Broadcaster hereby grants Affiliate, and Affiliate hereby accepts,
the non-exclusive right and obligation (to the extent expressly set forth below) to distribute the
Service, in accordance with the terms of this Agreement.
(b) Mode of Distribution: Affiliate may distribute the Service by its Cable Systems
and may also distribute and subdistribute the Service to any satellite master antenna television
system CSMATV").
(c) Distribution Territory: Affiliate may distribute the Service only in the "Operating
Areas" of "Cable Systems," and distribution by SMATV shall only be on SMATV systems in
such Operating Areas.
2. AFFILIATE'S DISTRIBUTION OBLIGATION:
As of the "Launch Date," Affiliate has the obligation to distribute, and monitor the
security of, the Service on the Systems listed on Schedule 1. However, if a System is transferred
to a third party and is no longer managed by Affiliate, then Affiliate's obligation to distribute the
Service on such System shall terminate as of the effective date of transfer. However, ifAffliate
sells or otherwise transfers a System, Affiliate shall require buyer, as a condition to such transfer,
to agree that such System remain subject to the terms and conditions of this Agreement.
3. SYSTEM CHANNEL POSITIONS:
Not later than thirty (30) days prior to a System's Launch Date, Affiliate will provide
Broadcaster with the channel position on which the Service will be launched on such System.
Such channel positions shall also be identified on Schedule 1.
4. ADDITION OF SYSTEMS:
Affiliate may launch the Service on any Cable System in the Territory. Affiliate shall
provide Broadcaster with not less than thirty (30) days prior written notice of its intent to launch
the Service on a Cable System. As of the Launch Date of the Service on a Cable System, that
Cable System shall be deemed added to Schedule 1 as a "System" hereunder. Following the
launch of the Service on any such additional Cable System, Affiliate shall revise Schedule 1 to add
such Cable System as a System hereunder, and identify the channel position on which the Service
will be carried on such System, and provide said Schedule, as amended, to Broadcaster as soon as
reasonably practicable.
5. AFTER ACQUIRED SYSTEMS:
If after the date hereof Affiliate acquires a Cable System in the Territory that, as of the
effective date of acquisition, is distributing the Service, then, in accordance with Section 4 above,
Affiliate shall have the right to add such Cable System to Schedule 1 of this Agreement, and such
Cable System shall become a System hereunder upon providing not less than thirty (30) days'
prior written notice to Broadcaster.
6. AFTER ACQUIRED BROADCASTER RIGHTS:
If after the date hereof Broadcaster acquires the right to disseminate the Service in a
Television Market not included in the Territory as of the date of execution of this Agreement,
then (i) any Cable System located in such Television Market and carrying the Service on the
effective date of such acquisition shall become a System hereunder, (ii) the Territory shall be
amended to include such Television Market, and (iii) Exhibit C shall be amended to include such
Television Market. Thereafter, Broadcaster will provide said Exhibit C, as amended, to Affiliate
as soon as reasonably practicable.
Unless earlier terminated as provided herein, the "Term" of this Agreement shall
commence on the date hereof and shall expire ten (10) years later.
8. CONTENT OF THE SERVICE:
(a) WB and Syndicated Programs: Programming on the Service shall consist of all
programming broadcast on The WB Television Network, (or future name if The WB Television
Network is rebranded) including, without limitation, prime time programming and children's
programming aired on weekends and weekday afternoons (subject to preemption for Local
Programming as permitted hereunder). The remaining programming on the Service shall consist
primarily of broadcast-window syndicated programming and may include infomercial
programming subject to the limitations set forth below. The Service, as provided in each
Television Market, shall be locally branded, locally integrated and localized by Broadcaster with
certain market-specific content thereby creating the on-air look and feel of a unique local
television station.
(b) Affiliate to Receive All Service Programming: Broadcaster shall provide the
Service in its entirety to each System commencing on its Launch Date. The programming on the
Service (other than any System-specific promotional announcements provided by Affiliate and
authorized to be inserted into the Service at each System headend by Broadcaster, such right of
authorization being expressly subservient to any rights held by Affiliate pursuant to Section 17
and Section 24) as provided by the Broadcaster to each System at a given time shall be the same
as, and in the same form, format and order as, the programming on the Service as it is provided to
any and all other multichannel video programming distributors authorized to carry the Service in
the same Television Market. Broadcaster shall not impose upon Affiliate, nor shall Affiliate be
obligated to pay, any surcharge or other cost for receipt and distribution of the Service in its
entirety including, without limitation, the Local Programming. Subject to the foregoing, and
provided that all of the programming of the Service is uplinked in pattern, Broadcaster shall not
be required to distribute the programming in the same order in all Television Markets in its
Territory, and shall be entitled to distribute an earlier, eastern version of the Service and a later,
time-shifted, western version of the Service. All Systems located in the Eastern and Central Time
Zones shall distribute the eastern version of the Service; all Systems located in the Pacific Time
Zone shall distribute the western version of the Service; and all Systems located in the Mountain
Time Zone may distribute either the eastern or the western version of the Service.
(c) Programs Only On Service: Broadcaster will not authorize the broadcast
television exhibition of the Service or any program included therein within the Territory, except
for a de minimis amount (i.e., less than two (2) hours each day, none of which shall be first-mn,
WB Television Network prime time programming) of programming that appears on the Service
and for which Broadcaster has acquired rights independently of the Service specifically for
broadcast on Broadcaster's local broadcast television stations (i.e., so-called "double-mn"
programming).
(d) Program Schedule: Programming on the Service shall be comparable, in overall
type, mix and quality, to the programming on the program schedule attached as Exhibit B.
(e) Limitations on Content: The Service will not contain: (i) programming that has
received, or had it been rated would have received, an MPAA "X" or "NC-17" rating;
(ii) religious programming, other than up to three (3) hours each week, all of which must occur on
Sunday mornings; (iii) a sufficient quantity of music videos such that the Service could be
characterized as a music video service; (iv) children's programming in excess of eight (8) hours
per day; (v) live or taped excerpts or entire portions of actual courtroom trials, hearings or other
similar proceedings as a primary component of the programming, except as part of continuing
news coverage of an event during Local Programming; (vi) pay-per-view movies or events;
(vii) financial news, except local programming, which may contain financial news, as long as such
programming does not cause the Service to be a "financial news service" (as described herein);
(viii) blackouts, except as provided in Section 11 hereof; (ix) home shopping programming; or
(x) infomercial programming except between the hours of 2:00 a.m. and 6:00 a.m., prevailing
Eastern time, for Systems receiving an eastern version of the Service, and between the hours of
2:00 a.m. and 6:00 a.m., prevailing Pacific time, for Systems receiving a western version of the
Service. A "financial news service" means a service that carries more than fifteen (15) minutes
per hour of regularly scheduled business or financial news in any hour during the period beginning
at 7:00 a.m. and ending at 5:00 p.m., Central Time, on any business day. However, the Service
may carry up to one (1) full hour of regularly scheduled financial or business news per day
(between 7:00 a.m. and 5:00 p.m., Central Time) without being considered a financial news
service. The telecast of graphic textual display of stock quotations or other graphic financial
information carried in the form generally known as a stock ticker shall not in and of itself be
considered the telecast of a "financial news service."
(f) Content Violations: If for any reason, including, without limitation, causes beyond
the control of Broadcaster, Affiliate, in good faith, determines that the Service includes
programming prohibited in Section 8(e) hereof and/or does not include programming that
conforms to the content covenant set forth in Section 8(d) above and as referenced in Exhibit B,
and Broadcaster has failed to cure such content violation within thirty (30) days of notice of such
violation from Affiliate, then, at the conclusion of such notice period, Affiliate may, in addition to
any and all remedies available to Affiliate, discontinue carriage of the Service on any or all
Systems, effective at any time by giving notice to Broadcaster within thirty (30) days thereof,
which notice may overlap in whole or in part with the cure period set forth above.
(g) Local Programming Inserts: Commencing not later than one (1) year after
seventy-five percent (75%) of the households in a Television Market are passed by Cable
television distributors whose distribution facilities are interconnected and are distributing the
Service, Broadcaster may, but is not obligated to, insert in the Service in such Television Market
any or all of the following locally-produced, cable-dedicated programming: (i) up to four (4),
thirty (30)-minute segments each day for local news programming (to be inserted in the Service as
follows: (x) morning news (either 5:00 a.m. to 6:00 a.m., local time or 6:00 a.m. to 7:00 a.m.
local time); (y) afternoon news (12:00 noon to 12:30 p.m.); and (z) late news (either 10:00 p.m.
to 10:30 p.m., Eastern or Pacific time, or 11:00 p.m. to 11:30 p.m., Central or Mountain time)),
(ii) up to three (3) hours on Sunday between the hours of 10:00 a.m. and 1:00 p.m. for
programming of local events that are of local interest (and including up to one (1) hour of
religious programming), and (iii) up to twenty-five (25) hours each year for programming of local
events that are of local interest. No local insert opportunities set forth in this Section 8(g) shall be
"zoned" (i.e., all Local Programming and advertising shall be distributed by Broadcaster on a
Television Market-wide basis) or used for the insertion of home-shopping or infomercial
programming. Broadcaster is solely responsible for the production and delivery of Local
Programming. The parties shall negotiate in good faith regarding the use of any interconnection
for the delivery the Local Programming to each System.
9. ADVERTISING:
(a) Time Sales: Broadcaster has the exclusive right to sell, and the obligation to use
commercially reasonable efforts (with the goal of maximizing advertising revenue on the Service)
to sell, ail of the designated commercial time contained within the Service made available to
Broadcaster. All sales of commercial time shall be made either for cash or as a barter for
programming that will appear on the Service within the Television Market (e.g., Broadcaster
cannot sell commercial announcement time on the Service in exchange for programming that will
appear on any broadcast television station). Broadcaster shall only sell commercial time contained
in the Service on a Television Market-wide basis, and shall not "zone" or otherwise localize
distribution of any such advertising. Broadcaster may sell political advertising on the Service only
if such advertising does not require Affiliate or any System to provide, either on the Service or on
any other programming service, additional air time, commercial promotions or other time to any
person or organization under the FCC's "political equal time" regulations.
(b) Content Restrictions on Advertising: Broadcaster shall not include in the Service
any advertisements for "800," "888," "900," or "976" telephone services, or other telephone
services or similar services that bill a caller for placing or confirming the call (other than for the
telephone company's cost of the call), that relate directly or indirectly to gambling or sexual
activities, to the occult or any adults-only services, or to any services that are directed at children.
(c) Restriction on Hiring Salespersons: Broadcaster shall not, without the consent of
Affiliate, hire any person to sell commercial time on the Service in a Television Market if such
person was, within three (3) months preceding the date of such hire, employed by Affiliate, or any
entity affiliated with Affiliate, to sell cable television advertising in such Television Market. If
Broadcaster hires any such person and Affiliate notifies Broadcaster that such hire is in breach of
this Agreement, then Broadcaster shall have thirty (30) days from Affiliate's notice to cure such
breach. Likewise, Affiliate shall not hire, without the consent of the general manager of the
pertinent local broadcast television station, any person to sell advertising for its System(s) in a
Television Market if such person was, at any time during the three (3) months immediately
preceding the date of such hire, employed by Broadcaster, or any entity affiliated with
Broadcaster, to sell commercial advertising time for Broadcaster's local broadcast television
station in such Television Market. IfAffliate hires any such person and Broadcaster notifies
Affiliate that such hire is in breach of this Agreement, then Affiliate shall have thirty (30) days
from Broadcaster's notice to cure such breach.
(d) Sales Sub-performer: If, during any year after the first anniversary of the Launch
Date, Affiliate receives notice from the Executive Committee of WeB Broadcasters (the
"Executive Committee") that Broadcaster is a "Sales Sub-performer," then Affiliate shall notify
Broadcaster. For a period of six (6) months from Affiliate's notice, Affiliate and Broadcaster
shall negotiate in good faith to agree on the steps to be taken by Broadcaster to improve its
performance in connection with the sale of commercial announcement time on the Service made
available to Broadcaster. If Broadcaster and Affiliate are unable to agree as to such steps within
such six (6) month period, then Affliate shall have the right to terminate this Agreement and to
continue carriage of the Service with another market designee selected by the Executive
Committee.
10. FINANCIAL BASIS:
(a) Eligibility for Affiliate Share:
Any System serving 1,000 or more subscribing households shall be entitled to receive an
"Affiliate Share" as set forth in subsection (b) below. Eligibility to receive an "Affiliate Share"
shall terminate for any System that fails to serve 1,000 or more subscribing households for three
consecutive months, and eligibility shall resume upon provision of service by such System to
1,000 or more subscribing households for three consecutive months.
(b) Calculation of Affiliate Share:
(i) For Systems in a Television Market distributing the Service on a channel
between two (2) and eighteen (18) (inclusive). the "Affiliate Share" in the aggregate shall be ten
percent (10%) of all revenues collected that month from advertisers for announcements actually
sold and run on the Service by such System in such Television Market, including revenue from
infomercial programming, net only of ordinary and reasonable commissions and agency fees
("Gross Revenues").
(ii) For Systems distributing the Service above channel eighteen (18), the
"Affiliate Share" in the aggregate shall be seven and one-half percent (7.5%) of Gross Revenues.
Notwithstanding the foregoing, if, in the month for which the Affiliate Share is being calculated,
at least seventy-five percent (75%) of the Service subscribers in Cable Systems distributing the
Service are receiving the Service on a channel between two (2) and eighteen (18) (inclusive) (the
"75% Threshold"), then the Affiliate Share for all Systems in all Television Markets shall be ten
percent (10%) of Gross Revenues. For example, if AFN had 500,000 Service subscribers in Cable
Systems receiving the Service and at least 375,000 of such Service subscribers were in Cable
10
Systems distributing the Service on a channel between two (2) and eighteen (18) (inclusive), then
the Affiliate Share for AFN would be ten percent (10%) of Gross Revenues for all of its Cable
Systems distributing the Service. IfAFN meets the 75% Threshold and acquires a Cable System
and, as a result thereof, ceases to meet the 75% Threshold, AFN shall have six (6) months from
the effective date of acquisition of such Cable System to meet the 75% Threshold and, in the
interim, shall receive ten percent (10%) of Gross Revenues. If there are two (2) or more
distributors of the Service in any Television Market (at least one of which is AFN), then
Broadcaster shall allocate the Affiliate Share between or among such distributors based on the
percentage of subscribers to the Service that are served by each such distributor in such
Television Market (adjusted as appropriate for any differential in the percentage of Gross
Revenues constituting each distributor's Affiliate Share).
(c) Accounting by Broadcaster: Within thirty (30) days of the end of each month,
Broadcaster shall rebate to Affiliate the Affiliate Share, together with a monthly and a year-to-
date share report identifying, by Television Market, the aggregate advertising revenues collected
for sales of commercial time (including revenues from infomercial programming, if any) on the
Service for the pertinent period, the Affiliate Share, including the calculation setting forth how the
Affiliate Share was determined, and the identity of the advertisers who paid Broadcaster during
the pertinent period. Nothing in this subsection (ii) shall be construed as requiring Broadcaster to
report advertising revenue received from each advertiser separately.
11. BRANDING OF SERVICE:
The Service shall be co-branded by Broadcaster using the names and service marks of the
System and the local broadcast television station. All co-branding shall be rotated throughout the
11
day and shared equally between the System and the local broadcast television station.
Notwithstanding the foregoing, if there are two (2) or more distributors of the Service in a
particular Television Market (at least one of which is Affiliate) and Broadcaster is distributing
Local Programming in such Television Market, then, on such programming, Broadcaster shall
only use the brand of its local broadcast television station (or a derivative thereof) or the local
brand of the Service, neither of which shall incorporate or include any reference to any name,
logos or brand of any multichannel video programming distributor. None of the co-branding
described in this Section 10 shall imply that Affiliate has any attributable ownership interest in the
entity that owns or controls the Service.
12. BLACKOUT OF DUPLICATIVE PROGRAMMING:
While this Agreement is in full force and effect, Affiliate agrees not to carry on any System
any distant broadcast station that is affiliated with, and broadcasts the programming offered by,
The WB Television Network. IfAffliate receives a timely written notice from Broadcaster or
another broadcast television station that a System is required to "blackout" (i.e., refrain from
distributing) (i) programming contained on the Service as a result of network non-duplication or
syndicated exclusivity rules of the FCC, if applicable; or (ii) programming that is broadcast on a
distant broadcast television signal that is imported into the Television Market in which the System
is located and carded on such System, but for which Broadcaster has acquired from the program
rights holder exclusive distribution rights in such Television Market, then, unless Affiliate is not
obligated by applicable law to black out such programming, Affiliate shall blackout such
programming. If Affiliate uses reasonable efforts but fails to implement a required blackout,
12
Affiliate shall neither be in breach of this Agreement nor incur liability to Broadcaster as a resuk
of such failure.
13. CLOSED CAPTIONING:
Broadcaster shall, at its sole expense, include as part of the signal of the Service, closed-
captioning to the full extent required by law and to the extent required to ensure that Affiliate is in
compliance with ail laws requiring closed captioning. This includes, without limitation, meeting
all benchmarks for captioning programming as set forth in Part 79 of FCC regulations.
Broadcaster also agrees to cooperate with Affiliate to the extent necessary to establish compliance
with any such laws or regulations. Broadcaster acknowledges and agrees that neither Affiliate nor
any System shall have any liability in connection with Broadcaster's failure to prepare, insert or
include closed-captioning in the Service as required by this Section 13. In addition, Broadcaster
shall indemnify, defend and forever hold harmless Affiliate, AFN, and each of their respective
present and former officers, shareholders, directors, employees, partners and agents, as provided
in Section 19 hereof, against and from any and all Losses arising out of Broadcaster's breach of
this Section 13 with respect to any Local Programming inserted into the Service by Broadcaster.
14. DELIVERY AND DISTRIBUTION OF THE SERVICE:
(a) Delivery of Signal: Broadcaster or its agent, at its own expense, and without any
cost to Affiliate or any System, shall deliver an encrypted signal of the Service (utilizing
encryption technology commonly used in the domestic Cable television industry) to the earth
station of each System.
13
(b) Digitally Encoded Signal: Broadcaster shall deliver to each System a digitally
encoded video and audio signal of the Service ora technical quality at least equivalent to the
technical quality of audio and video signals delivered by other cable television programming
services.
(c) Headend Equipment: If, as of the Launch Date, a System of Affiliate is serving
fewer than 1,000 subscribing households, then Affiliate shall be solely responsible for all costs
arising from or relating to the delivery, installation, maintenance and repair of all of the equipment
reasonably necessary for such System serving fewer than 1,000 subscribing households to receive
and properly integrate the signal of the Service for distribution to Service Subscribers, including,
without limitation, the "network-in-a-box" system (as defined herein) (collectively, the "Headend
Equipment"). If, as of the Launch Date, a System of Affiliate is serving more than 1,000
subscribing households, then Broadcaster or its agent shall be solely responsible for these costs
for each such System serving more than 1,000 subscribing households. For purposes hereof, a
"network-in-a-box system" shall be a mm-key delivery and distribution system that distributes a
national feed of uniform television programming as described in Section 8 hereof via satellite to
headend receive equipment, where it is commingled by digital storage, server and processor
equipment with customized and localized interstitial programming, together with commercial and
promotional announcements; such announcements and interstitial programming shall also have
been delivered to such equipment by a satellite feed. At such time as any System provides Service
to more than 1,000 households, Broadcaster shall arrange for the installation, at no cost to
Affiliate, of any necessary equipment to allow commercial insertions to the Service at such
System's headend, assuming that such equipment has not already been installed by Affiliate. In
14
the event of the expiration or termination of this Agreement as to a System, any Headend
Equipment installed by Broadcaster at Broadcaster's expense shall be returned to Broadcaster.
(d) Other Equipment Or System Changes: In addition, if necessary, Broadcaster shall,
at its own expense, purchase, install, maintain and operate all other equipment necessary for the
receipt, commingling and processing of such satellite transmissions, so they are ready to be
delivered to Service Subscribers by Affiliate. In the event Broadcaster or another person either (i)
changes a satellite being used for such transmissions to a satellite or other transmission medium
not susceptible to viewing or utilization by a System'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 System, (ii) changes the technology used by
Broadcaster or its agent to encrypt the Service to a technology not compatible with a System'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 a System, then
Broadcaster shall promptly reimburse such System for (A) the cost to such System to acquire and
install equipment necessary for such System to receive the signal of the Service from such new
satellite or other transmission medium, and/or (B) the cost to such System to acquire and install
equipment necessary for such System to descramble, receive and/or utilize the signal of the
Service. Broadcaster agrees to provide Affiliate with at least one hundred twenty (120) days'
prior written notice of a satellite or technology change as set forth in subsections (i) through (iii)
above; provided, however, that if a satellite change is the result of a force majeure event as set
forth in Section 21 hereof, Broadcaster agrees to provide Affiliate with written notice as soon as
practicable. Notwithstanding anything in this Section or in this Agreement to the contrary,
15
Affiliate may utilize either the signal of the Service delivered by Broadcaster or the signal of the
Service delivered by any other entity authorized by Broadcaster to distribute the Service.
(e) Affiliate's Carriage of Service: Each System may carry the Service in an analog
format, a digital or modified format, or in any combination thereof, but only as a full-time service.
Except as otherwise provided in this Agreement, the Systems shall distribute the Service, without
alteration, editing or delay. Once the Service is launched on a System, Affiliate shall not change
the channel position for the Service unless there is a good faith business reason for such change
and, if there is a channel change, Affiliate will provide Broadcaster notice of any such change as
soon as reasonably practicable but in no event less than thirty (30) days prior to such change. In
addition, following the effective date of such change in channel position, Affiliate shall revise
Schedule 1 to reflect such change and provide said Schedule, as amended, to Broadcaster as soon
as reasonably practicable.
(f) Carriage on Basic Tier: Each System shall distribute the Service only on the basic
service tier or expanded basic service tier (as such terms are commonly understood in the cable
television industry).
(g) No Copying of Service: Except as otherwise permitted herein, Affiliate shall not
itself, and shall not authorize others to, copy, tape or otherwise reproduce any part of the Service
without Broadcaster'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 and Affiliate may promote home
taping as part of Affliate's marketing efforts. Broadcaster acknowledges that this Section 14(g)
16
does not restrict Affiliate's practice of connecting its subscribers' videocassette recorders, or other
devices susceptible to use for home duplication of video programming, to the facilities of a
System.
(h) Copying Rights: If Broadcaster grants or offers any third party, or has granted or
offered any third party (including an affiliate of Broadcaster), or acquiesces in the exercise by any
third party (including an affiliate of Broadcaster), any right to copy, tape or reproduce any portion
of the Service programming and to exhibit, distribute and sell such portions of the Service
programming, via a file server or any other technology, at times other than the time of original
transmission by Broadcaster, then Broadcaster shall promptly offer such right to Affiliate on terms
and conditions, each one of which is no less favorable than the grant or offer of, or the
acquiescence in, such right in respect of such third party; provided, however, that such terms or
conditions must relate solely to the exercise of such right to copy, tape, reproduce, exhibit,
distribute and sell such portions of the Service programming.
(i) Transmission of Service to Third Parties: Broadcaster hereby grants Affiliate the
right (but not the obligation) to transmit the signal of the Service as received by any System to the
Cable television system(s) of one or more third parties which likewise have agreements with
Broadcaster to distribute the Service; provided that each such third party is authorized by
Broadcaster pursuant to a written agreement or otherwise to receive and/or distribute the signal
of the Service. Broadcaster also hereby grants Affiliate the right (but not the obligation) to
receive the signal of the Service from a third party who has an agreement with Broadcaster to
distribute the Service in the pertinent Television Market.
17
(j) Three Dimensional, Multi-media or Other Distribution of the Service: Broadcaster
agrees that if it grants or offers to any third party, or has granted or offered to any third party
(including an affiliate of Broadcaster), or acquiesces in the exercise by any third party (including
an affiliate of Broadcaster) of, any right to exhibit, distribute, subdistribute and/or authorize the
reception of (i) any three-dimensional or other augmented or enhanced version of the Service or
the Service programming, whether or not such version is offered in conjunction with or separate
from the Service, or (ii) any multimedia, interactive or computer application(s) relating to or
based on the Service or the Service programming, whether or not such application is offered in
conjunction with or separate from the Service, then Broadcaster shall promptly offer such right to
Affiliate on terms and conditions, each one of which is no less favorable than the grant or offer of,
or the acquiescence in, such right in respect of such third party; provided, however, that such
terms or conditions must relate solely to the exercise of such exhibition, distribution,
subdistribution and/or authorization rights.
15. FEES:
In consideration of the terms and conditions set forth herein, Affiliate shall not pay
Broadcaster any license fees or an3, payment of any kind whatsoever during the Term for the
rights granted herein.
16. RECORDS AND AUDIT:
Broadcaster will keep and maintain accurate books and records of all matters directly
relating to this Agreement in accordance with generally accepted accounting principles,
consistently applied. During the Term and for one (1) year after the termination of this
18
Agreement, such books and records shall be available to Affiliate for inspection and audit, during
normal business hours, at Affiliate's expense, at Broadcaster's offices upon at least thirty (30)
days' prior notice to Broadcaster. Affiliate's right to perform such audit shall be limited to once
in any twelve (12) month period during the Term and once during the year following termination
of this Agreement, and shall be limited to an audit with respect to amounts to be paid in the
current calendar year and immediately preceding calendar year only. If Affiliate audits
Broadcaster's books hereunder, Affiliate must make any claim against Broadcaster within the
earlier of three (3) months after Affiliate's representative leaves Broadcaster's offices, or twenty-
four (24) months after the close of the earliest month that is the subject of such claim. In
addition, any claim, if and when made, must relate to the then-current calendar year only. Ifa
claim is not made within any limitation set forth herein, then all amounts paid hereunder shall be
deemed final and incontestable, and Affiliate will be deemed to have forever and conclusively
waived its right, whether known or unloaown, to collect any shortfalls from Broadcaster for the
period(s) audited.
17. PROMOTION:
(a) Promotional Spots: In each Television Market, Broadcaster may promote the
Service with promotional announcements during programming on the pertinent local broadcast
television station. In addition, in each Television Market, Broadcaster may insert during
programming contained on the Service promotions for Broadcaster's local broadcast television
station in such Television Market.
(b) Research: Broadcaster and Affiliate shall each provide to the other, without cost,
the results of any relevant research, marketing tests, surveys, rating polls and/or other research in
19
the Systems regarding the Service; provided, however, that with respect to any research
performed by an unaffiliated party, such research shall be provided to the other party hereunder
only if such research can be legally copied under the agreement between the unaffiliated party and
Broadcaster or Affiliate, as the case may be, and provided further that Affiliate's ability to share
any such relevant research with Broadcaster shall be subject to all applicable laws regrading
subscriber privacy and nondisclosure of subscriber information.
(c) Proprietary_ Marks: The name and mark "WB" (and the names of certain programs
that appear in the Service) are the exclusive property of The WB Television Network and its
suppliers and Affiliate has not and will not acquire any proprietary rights therein by reason of this
Agreement. Broadcaster shall have the right to approve any use of such names or marks by
Affiliate in publicity about Broadcaster or the products or programming included in the Service,
which approval shall not be unreasonably withheld. Use of such names and marks in routine
promotional materials such as program guides, program listings and bill stuffers shall be deemed
approved unless Broadcaster specifically notifies Affiliate to the contrary prior to such use by
Affiliate.
(d) Promotional Branding: In addition to the co-branding provisions set forth in
Section 11 hereof, Affiliate shall have the right at all times during the Term hereof to require that,
in every place served by a System, and in all media in such place where Broadcaster's brand
appears in conjunction with both (1) the brand of the WB Television Network or its associated
brands, and (2) the brand of any other multichannel video programming distributor, the System's
brand shall (i) also appear in a plainly legible format; and (ii) be no smaller than, and be given no
less prominence or treatment than, either Broadcaster's brand or the brand of any other
20
distributor of the Service that also appears (it being understood that, on the System, the only
brand for the Service shall be Affiliate's brand, except as otherwise permitted by Section 11
hereof for the local brand of the Service to appear). In determining whether such brands are of
equal size, the total logo volume (i.e., the height multiplied by the width in a printed format, or
the number of pixels high multiplied by the number of pixels wide in a video format) shall be
computed. Affiliate shall have the right, in its sole and absolute discretion and at any time, subject
only to the requirement of giving Broadcaster not less than sixty (60) day's advance notice of
such change, to change a System's brand by supplying Broadcaster with the necessary materials
to identify the new brand.
18. INTERFERENCE WITH AFFILIATE'S RELATIONSHIPS:
Broadcaster and Affiliate hereby acknowledge that (i) their interests are often in direct conflict,
(ii) their relationship is ot~en adversarial, and (iii) Broadcaster could cause Affiliate significant harm by
the nature of Broadcaster's communications to Affiliate's subscribers or franchise or licensing
authorities whose opinions and actions could adversely affect Affiliate's Cable television systems or
other video distribution systems or enterprises. Therefore, Broadcaster shall not engage in any
communications with subscribers or franchise or licensing authorities (either directly or indirectly) in
the Operating Area of any Cable System or other video distribution system or enterprise that meets the
System Qualifications of Exhibit A hereto that could reasonably be expected to directly adversely
interfere with Affiliate's relations with the subscribers or franchise or licensing authorities in such
Operating Area or the community comprising such Operating Area. This provision shall not apply (A)
to any proceeding before any judicial body or (B) to communications with Congress or with any other
branch or agency of the Federal government; provided, however, nothing herein shall be deemed to
21
prevent Broadcaster fi-om coveting newsworthy events generally covered by other media in the
relevant Television Market. This Section 16 shall survive the expiration or termination of this
Agreement (regardless of the reason for such expiration or termination) for a period of one (1) year.
Nothing stated in this SeCtion 16 shall be construed as a waiver of any right that Affiliate has or may
have with respect to any communications, whether direct or indirect, by Broadcaster or any other
person or entity concerning Affiliate or on any other subject.
19. WARRANTIES AND INDEMNITIES:
(a) Broadcaster's General Warranties: Broadcaster represents and warrants to
Affiliate that (i) Broadcaster is a corporation duly organized, validly existing and in good standing
under the laws of the state of Oregon; (ii) Broadcaster has the power and authority to enter into
this Agreement and to fully perform its obligations hereunder; (iii) Broadcaster is under no
contractual or other legal obligation that shall in any way interfere with its full, prompt and
complete performance hereunder; (iv) the individual executing this Agreement on behalf of
Broadcaster has the authority to do so; (v) Broadcaster's transmission of the Service is in
compliance with all laws, rules, regulations and court and administrative decrees to which it is
subject, including, without limitation, all applicable rules and regulations of the FCC, the non-
compliance with which would have an adverse effect on Affiliate or the Systems; (vi) Broadcaster
has, or will have acquired at the pertinent time when all or part of the Service is made available to
Affiliate, good title to, and/or each and every property fight (whether relative to tangible or
intangible property), or license, usage or other right necessary or appropriate whatsoever to
effectuate the acts or performances contemplated by, or satisfy the obligations imposed on it
pursuant to, this Agreement, including all permits, rights, licenses and approvals necessary,
22
required or appropriate for any and all performances through to the premises and to the listeners
frequenting the premises of Service Subscribers; (vii) neither the Service, any program related
thereto, nor any component thereof is subject to, or the subject of, any lien, encumbrance, charge,
lis pendens, administrative proceeding, governmental investigation, or litigation pending or
threatened; (viii) the use and exhibition of the Service by Affiliate, as contemplated by this
Agreement, will not cause Affiliate to violate any law, rule, regulation or court or administrative
decree; and (ix) the obligations created by this Agreement, insofar as they purport to be binding
on Broadcaster, constitute legal, valid and binding obligations of Broadcaster enforceable in
accordance with their terms.
(b) Broadcaster's Warranties Re: Programming: Broadcaster represents, warrants and
covenants that the Service complies, and will continue to comply, in all respects with (i) the
commercial matter limitations of the Children's Television Act of 1990, Public Law 101-437
(October 18, 1990) and the regulations of the FCC promulgated thereunder, as the same may
apply to Cable television systems and Cable operators, including, without limitation, 47 C.F.R. §§
76.225 and 76.305, and as the same may be amended from time to time ("Children's Television
Regulations"), and that Broadcaster shall provide Affiliate, upon request, with all required records
demonstrating such compliance under the Children's Television Regulations as are necessary for
Affiliate to demonstrate its compliance as a Cable operator with the commercial matter limitations
and record keeping requirements of the Children's Television Regulations in a timely manner; (ii)
all applicable origination cablecasting regulations of the FCC, if any, including, without
limitation, 47 C.F.R. §§ 76.205 - 76.221 (political equal time, personal attack, lotteries and
sponsorship identification), as the same may be amended from time to time ("Origination
Cablecasting Regulations"), and that Broadcaster shall provide Affiliate, upon request, with all
23
necessary documentation required thereunder for Affiliate to meet its documentation and public
file requirements under the Origination Cablecasting Regulations in a timely manner; and (iii) the
benchmark requirements for captioning programming imposed by Part 79 of FCC regulations, as
the same may be amended from time to time ("Closed Captioning Regulations"), and that
Broadcaster shall provide Affiliate, upon request, with all records necessary for Affiliate to
demonstrate its compliance with the benchmarks imposed by the Closed Captioning Regulations
in a timely manner. In the event that any other programming offered by the Service shall be
among the kind of programming that is regulated by federal, state or local law, as the same may
apply to Cable television systems and Cable operators, or other non-broadcast television
distributors, then Broadcaster shall provide Affiliate, upon request, with all statements, records or
other documents reasonably necessary for Affiliate to demonstrate compliance as a Cable operator
or distributor with such laws and regulations in a timely manner.
(c) Broadcaster's Warranties Re: Insurance: Broadcaster hereby represents, warrants and
covenants that (i) it has procured and shall maintain during the Term, general liability insurance
coveting the Service and all elements thereof from a nationally recognized insurance carrier and in
accordance with industry standards; (ii) such insurance shall have minimum limits of at least
$1,000,000 per occurrence and a $2,000,000 annual aggregate for all claims, and shall carry a
deductible of not more than $10,000 for any single claim; (iii) such insurance shall provide coverage
not only with respect to claims asserted during the term of the insurance policy, but also with respect to
claims that are asserted during a period of not less than three (3) years following expiration of such
term; (iv) Affiliate shall be named as an additional insured on the insurance policy, and such policy shall
provide that the proceeds thereof shall be payable to Affiliate; (v) Broadcaster shall provide Affiliate
with documentation to such effect upon the execution hereof, (vi) at least thirty (30) days prior to the
24
expiration of such policy, Broadcaster shall provide Affiliate with appropriate proof of issuance of a
policy that continues in force and effect the insurance coverage of the insurance so expiring; and (vii)
Broadcaster shall provide Affiliate with thirty (30) days' written notice of any changes in such policy;
provided, however, that Broadcaster shall not make any revisions to such policy that could adversely
affect Affiliate's rights without Affiliate's prior written consent.
(d) Affiliate's Warranties: Affiliate represems and warrants to Broadcaster that (i) Affliate
is a municipality duly organized and validly existing under the laws of the State of Oregon; (ii) Affiliate
has the power and authority to enter into this Agreement and to fully perfom~ its obligations hereunder;
(iii) Affiliate is under no contractual or other legal obligation that shall in any way interfere with its full,
prompt and complete performance hereunder; (iv) the individual executing this Agreement on behalf of
Affiliate has the authority to do so; and (v) the obligations created by this Agreement, insofar as they
purport to be binding on Affiliate, constitute legal, valid and binding obligations of Affiliate enforceable
in accordance with their terms.
(e) Indemnification:
(i) Mutual Indemnification: Affiliate and Broadcaster shall each indemnify, defend
and forever hold hattnless the other, the other's affiliated companies and each of the other's (and the
other's affiliated companies') respective present and former officers, shareholders, directors, employees,
partners and agents, against and from any and all Losses arising out of any breach of any term of this
Agreement or any warranty, covenant or representation contained herein.
(ii) Broadcaster's Additional indemnification: Without limiting Section 19(e)(i)
hereof, Broadcaster shall indemnify, defend and forever hold harmless Affiliate and Affiliate's affiliated
25
companies and each of Affiliate's and Affiliate's affiliated companies' respective present and former
officers, shareholders, directors, employees, partners and agents, against and fi.om any and all Losses
aris'rog directly or indirectly out of(i) the content of the Service or the use and delivery of the Service
hereunder (including, without limitation, Local Programming infomercial programming, sponsorship,
promotional and advertising spots, any background music and anything else inserted by Broadcaster or
any party other than Affiliate), including, without limitation, any Losses based upon any program
included in the Service or any component thereof, or based upon alleged or proven libel, slander,
defamation, invasion of the right of privacy or publicity, or alleged or proven violation or infringement
of copyright (including music performance rights for any and all performances through to Affiliate's
subscribers), literary or music synchronization rights, obscenity, indecency, or any other form or forms
of speech (whether or not protected by the Constitution of the United States or any state) or otherwise
arising out of the content of the Service as furnished by Broadcaster hereunder (provided that Affiliate
shall, to like extent, indemnify Broadcaster for any deletion, other than blackouts pursuant to Section
12 hereof, or addition of material by Affiliate to the Service which deletion fi.om, or addition to, the
Service gives rise to Losses); or (ii) the sale or marketing of any products or services by, through or on
the Service, including, without limitation, claims related to product liability, patent, trademark,
copyright infringement, right of privacy or publicity, express or implied warranties, warranties relating
to compliance with any applicable govemmental laws or regulations and personal injuries (physical,
economic or otherwise), to any person who may use, consume or be affected by the products and
services sold or marketed by, through or on the Service.
(iii) Indemnification Procedure: In connection with any indemnification provided
for in this Section 19, each party shall so indemnify the other only if the party claiming indemnity shah
give the indemnifying party prompt notice of any claim or litigation to which its indemnity applies; it
26
being agreed that the indemnif3an' g party shall have the right to assume the full defense of any or all
negotiations, claims or litigation to which its indemnity applies. The indemnified party will cooperate
fully (at the cost of the indemnififing party) with the indemnifying party in such defense and in the
settlement of such claim or litigation, and the indemnified party shall make no compromise or
settlement of any such claim without the prior written consent of the indemnifying party. The
settlement of any claim or action by the indemnified party without the prior written consent of the
indemnifying party shall release the indemnifying party bom its obligations hereunder with respect to
such claim or action so settled. The provisions of this Section 19 shall survive the expiration or
termination of this A~;reement.
20. EARLY TERMINATION RIGHTS:
(a) Termination By Broadcaster: In addition to Broadcaster's legal rights or pursuant to
other provisions offl~is Agreement, Broadcaster may, by noticing Affiliate, terminate this Agreement: as
tbllows:
(i) Material Breach: If Affiliate is in material breach of this Agreement;
provided, however, that if such breach is of the type that is curable, then Broadcaster shall not
exercise its termination or other rights at law or in equity hereunder unless Broadcaster has, by
notifying Affiliate in writing, given Affiliate at least thirty (30) days from the time such notice is
received by Affiliate to cure such material breach fully and to demonstrate to Broadcaster that
such material breach has been cured, and provided further, that if such breach is confined to a
System or to a limited number of Systems, Broadcaster shall have the right to terminate this
Agreement only as to such System or Systems;
(ii) Bankruptcy: If Affiliate has filed a petition in bankruptcy, is insolvent, or
27
has sought relief under any law related to Affiliate's financial condition or its ability to meet its
payment obligations; or if any involuntary petition in bankruptcy has been filed against Affiliate, or
any relief under any such law has been sought by any creditor(s) of Affiliate, unless such
involuntary petition is dismissed, or such relief is denied within thirty (30) days after it has been
filed or sought;
(iii) Delayed Launch Date: If Affliate has not launched the Service on any
Cable System by September 1, 2001 (unless such delay is caused by Broadcaster's failure to
comply with its obligations pursuant to Section 14 hereof);
(iv) Permanent Discontinuation Of Service: If, on ninety (90) days' prior
written notice to Affiliate, the Service (including any substitutes and replacements therefor and
any successor thereto) is permanently discontinued by Broadcaster in its entirety to all
multichannel video programming distributors in the applicable Television Market; or
(b) Termination By Affiliate: In addition to Affiliate's legal rights, or pursuant to other
provisions of this Agreement, Affiliate may, by notifying Broadcaster, terminate this Agreement as
follows:
(i) Material Breach: If Broadcaster is in material breach of this Agreement;
provided, however, if such breach is of the type that is curable, then Affiliate shall not exercise its
termination or other rights at law or in equity hereunder unless Affiliate has, by notififing
Broadcaster, given Broadcaster at least thirty (30) days from the time such notice is sent, to cure
such material breach fully and to demonstrate to Affiliate that such material breach has been
cured, unless a shorter cure period is specified elsewhere in this Agreement for a specific breach,
in which case such shorter cure period shall apply;
28
(ii) Bankruptcy: if Broadcaster has filed a petition in bankruptcy, is insolvent
or has sought relief under any law related to Broadcaster's financial condition or its ability to meet
its payment obligations; or if any involuntary petition in bankruptcy has been filed against
Broadcaster, or any relief under any such law has been sought by any creditor(s) of Broadcaster,
unless such involuntary petition is dismissed, or such relief is denied, within thirty (30) days after
it has been filed or sought;
(iii) Interruption of Service: In addition to Affiliate's other rights at law or in
equity or pursuant to any other provision of this Agreement, Affiliate may, by notifying
Broadcaster, terminate this Agreement as to one or more particular Television Markets on at least
fifteen (15) days' notice in the event that delivery of the Service in such Television Market is
discontinued or interrupted for a continuous period of forty-five (45) days;
(iv) Permanent Discontinuation Of Service: If the Service is permanently
discontinued by Broadcaster in its entirety to all other multichannel video programming
distributors in the applicable Television Market; or
(v) Programming: If Broadcaster no longer has access to or the right to
disseminate all of the prime time and/or children's programming broadcast on The WB Television
Network in the applicable Television Market, or The WB Television Network does not offer at least
ten (10) hours of programming per week during prime time (8pm to 1 lpm Eastern Time).
21. FORCE MAJEURE:
Except as herein provided to the contrary, neither Affiliate nor Broadcaster shall have any
rights against the other party tbr the non-operation of facilities or the non-furnishing of the Service if
such non-operation or non-furnishing is due to an act of God; inevitable accident; fire; lockout; flood;
29
tornado; hurricane; strike or other labor dispute; riot or civil commotion; earthquake; war; act of
government or governmental instrumentality (whether t~dera[ state or local); failure of performance by
a common carder; failure in whole or in part of technical fac'ilifies; or other cause (financ'ml inability
excepted) beyond such party's reasonable control. In the event of non-operation or non-furnishing of
the Service, Affiliate shall have the right, immediately, to insert programming of its choice on the
channel othemise identified with the Service until such time as the Service is fully operational again.
22. NOTICES:
Any notice or report required hereunder shall be in writing, sent postage prepaid by registered
or certified mail, return receipt requested, or by hand or messenger delivery, or by Federal Express or
s'wnilar overnight delivery sereice, or by facsimile transmission, to the other party, at the following
address (unless either party at any time or times designates another address for itself by noti~'ing the
other party by certified mail),
To Broadcaster: Carolyn S. Chambers
2295 Coburg Road
Eugene, OR 97401
To Affiliate:
Paul Nolte, City Attomey
City of Ashland
City Hall
20 East Main
Ashland, OR 97520
(541) 488-5330 (telephone)
(541) 488-5311 (faesinaile)
Notice or report given by personal delivery is deemed g'rven on delivery. Notice or report given
by mail is deemed given on the earlier of actual receipt thereof or on the fifth day following mailing
thereof in accordance with the notice requirements of this Section. Notice or report given by Federal
Express or similar overnight delivery service shall be deemed given on the next business day follo~4ng
3O
delivery of the notice or report to such service with instructions for overnight delivery. Notice or
report given by facsimile transmission shall be deemed given on the day of transmission if a business
day, or on the next business day after the day of transmission if not transmitted on a business day.
23. CONFIDENTIALITY~ PRESS RELEASES:
Neither party shall disclose (whether orally or in writing, or by press release or otherwise)
to any third party any information with respect to the terms and provisions of this Agreement, any
information obtained by Affiliate in any inspection and/or audit of Broadcaster's books and
records or any infmmation contained in any data or report required or delivered hereunder or any
materials related thereto; and Broadcaster shall not use or disclose to any third party any
information regarding Affiliate's promotion of the Service, including, without limitation, Affiliate's
promotional or marketing plans, programs or strategies or any information (whether personally
identifiable information or not) regarding Affiliate's or any sub-affiliate's Cable television
subscribers including, without limitation, the number of such Cable television subscribers, except
(as to all of the preceding):
to each party's respective officers, directors, employees, auditors and attorneys, in
their capacity as such; provided, however, that the disclosing party agrees to be
responsible for any breach of the provisions of this Section 23 by such officers,
directors, employees, auditors or attorneys;
to the extent necessary (redacted to the greatest extent possible) to comply with law,
including but not limited to the Oregon Public Records Law, ORS Chapter 192, or
with the valid order of an administrative agency or a court of competent jurisdiction;
31
provided, however, that the disclosing party notifies the other party as promptly as
practicable (and, if possible, prior to making such disclosure) and the disclosing
party seeks confidential treatment of such information;
as part of its normal reporting or review procedure to its parent company and such
parent company's auditors and attorneys; provided, however, that the disclosing
party agrees to be responsible for any breach of the provisions of this Section 23 by
such parent company, its auditors or attorneys;
in order to enforce its rights or pert'om its obligations pursuant to this .Agreement,
provided that prior to such disclosure such party shall seek conlidential treatment of
such information;
if mutually agreed upon, in writing, by Affiliate and Broadcaster in advance of such
disclosure;
to a prospective purchaser of a System or broadcast television station in a Television
Market if such prospective purchaser executes a written agreement agreeing to
maintain the confidentiality of such information, subject only to exceptions
comparable to that set forth in this Section 23; and
with respect to Broadcaster's disclosure, to the extent that such information relates
to Affiliate's Cable television subscribers and is independently obtained by
Broadcaster from a third party in a communication that does not violate the
provisions of this Section 23.
This Section 23 shall survive, indefinitely, the expiration or termination of this Agreement
32
regardless of the reason for such expiration or termination.
24. MISCELLANEOUS:
(a) Assignment; Binding Effect; Reorganization: This Agreement, including both its
obligations and benefits, shall redound to the benefit of, and be binding on, the respective
transferees and successors of the parties hereto, except that neither this Agreement nor either
party's rights or obligations hereunder shall be assigned or transferred by either party without the
prior written consent of the other party; provided, however, no consent shall be necessary in the
event of(i) an assignment to a successor entity resulting from a merger, acquisition or
consolidation by either party, (ii) an assignment to an entity under common control, controlled by
or in control of either party or (iii) in the case of Broadcaster, an assignment of this Agreement,
insofar as it pertains to a particular Television Market, to the assignee of the FCC licenses in
respect of the local broadcast station in or adjacent to such Television Market in connection with
the sale of substantially all of the assets of such local broadcast station, provided that such
assignee has the right and obligation to disseminate the Service in such Television Market. Unless
prohibited by any agreement with a federal agency or any other order of a governmental authority
or court of competent jurisdiction, if Broadcaster sells or otherwise disposes of a local broadcast
television station in (or adjacent to) a Television Market, Broadcaster shall require the transferee,
as a condition to such transfer and disposition, to assume, in writing, all of the terms and
conditions of this Agreement. Upon such assumption, Broadcaster's obligations shall, insofar as
they pertain to such Television Market, thereafter terminate as to such Television Market, and
Broadcaster shall have no continuing liability for the performance of the terms hereunder with
respect to the local broadcast television station so transferred and any system in such Television
33
Market shall no longer be considered a System for purposes of this Agreement effective upon the
completion of such transfer. If Affiliate sells or otherwise disposes of its ownership interest in a
System or a part of a System to a third party and, as a result thereof, such System (or part
thereof) no longer meets the System Qualifications of Exhibit A hereto, then Affiliate shall have
no obligation to require the transferee, as a condition to such transfer and disposition, to assume
the terms and conditions of this Agreement.
(b) Entire Agreement; Amendments~ Waivers: This Agreement, including the
Schedules and Exhibits attached hereto which, by this reference, are incorporated in their entirety
herein, contains the entire understanding of the parties hereto and supersedes and abrogates all
contemporaneous and prior understandings of the parties, whether written or oral, relating to the
subject matter hereof~ This Agreement may not be modified except in a writing executed by both
parties hereto. Any waiver of any provision of, or right included in, this Agreement must be in
writing and signed by the party whose rights are being waived. No waiver by either Affiliate or
Broadcaster of any breach of any provision hereof shall be or be deemed to be a waiver of any
preceding or subsequent breach of the same or any other provision of this Agreement. The failure
of Affiliate or Broadcaster to enforce or seek enforcement of the terms of this Agreement
following any breach shall not be construed as a waiver of such breach.
(c) Governing Law: The obligations of Affiliate and Broadcaster under this
Agreement are subject to all applicable federal, state and local laws, rules and regulations
(including, without limitation, the Communications Act of 1934, as the same has been and may be
amended from time to time (the "Act"), and the rules and regulations of the FCC promulgated
thereunder), and this Agreement and all matters or issues collateral thereto shall be governed by
34
the laws of the State of Oregon, without regard to choice of law rules.
(d) Relationship: Neither Affiliate nor Broadcaster shall be, or hold itself out as, the
agent of the other under this Agreement. No subscriber of Affliate shall be deemed to have any
privity of contract or direct contractual or other relationship with Broadcaster by virtue of this
Agreement or Broadcaster's delivery of the Service to Affiliate hereunder. Likewise, no supplier
of advertising or programming or anything else included in the Service by Broadcaster shall be
deemed to have any privity of contract or direct contractual or other relationship with Affiliate by
virtue of this Agreement or Affliate's carriage of the Service hereunder. Nothing contained
herein shall be deemed to create, and the parties do not intend to create, any relationship of
partners, joint venturers or agents, as between Affiliate and Broadcaster, and neither party is
authorized to or shall act toward third parties or the public in any manner that would indicate any
such relationship with the other. Broadcaster disclaims any present or future right, interest or
estate in or to the transmission facilities of Affliate and the parents, subsidiaries, partnerships or
joint venturers controlling the Systems on which the Service is transmitted, such disclaimer being
to acknowledge that neither Affiliate nor the transmission facilities of the Systems (nor the owners
thereof) are common carriers. In addition, nothing contained herein shall be deemed to grant
Affiliate any attributable ownership interest, as defined by applicable FCC rules, in the entity that
owns or controls the Service.
(e) Affiliate Favorable Terms:
(i) Broadcaster agrees that if it gives, or has given, to any third party (A) any
marketing or advertising support or reimbursements, launch support or reimbursements, free or
discounted market materials or any other support, credits, reimbursements, rebates, contributions,
35
adjustments or increases related to the marketing of the Service, whether given directly or
indirectly to such third party, or (B) any other economic or non-economic term, provision,
covenant or consideration (e.g., without limitation, retransmission consent in connection with the
launch of the Service), that are or is more favorable to such third party than Affiliate is receiving
hereunder ((A) and (B) above, individually and collectively, shall be referred to herein as "More
Favorable Provision"), Broadcaster will promptly offer such Mom Favorable Provision to Affiliate
for the same amount of time that such More Favorable Provision is or was available to such third
party. A More Favorable Provision shall include any pertinent term, provision, covenant or
consideration, regardless of whether them is a term, provision, covenant or consideration
concerning the subject matter of such More Favorable Provision in this Agreement or whether
such term, provision, covenant or consideration relates to such third party's entire subscriber base
or less than the entire base (e.g., a More Favorable Provision relating to a "test" or "sample"
group of subscribers).
(ii) For purposes of Section 24(e)(i), the evaluation of whether a provision is a
More Favorable Provision shall include all economic and non-economic terms and provisions of
an agreement that involve financial or other outlays (excluding contingent liabilities) by either
party for the benefit of the other, or that involve direct or indirect consideration paid by either
party to the other, such as discounts, credits, adjustments of any kind including, without
limitation, reimbursements, channel position fees, discounts, credits or rebates, pre-payment of
loans, deductions for uncollected accounts, incentives, cash payments (whether conditional or
not), sales or leases of equipment, studio facility discounts, payment terms and other financing
terms; furthermore, the actual number of subscribers to the Service (rather than projected or
expected subscribers or the number of such third party's subscribers who are not actually
36
subscribers to the Service) will be considered.
(iii) Broadcaster agrees to provide to Affiliate a written certification on each
annual anniversary date of this Agreement, signed by a duly authorized officer of Broadcaster,
stating that Broadcaster has satisfied its obligations under this Section 24(e)(iii).
(f) Severability: The invalidity under applicable law of any provision of this
Agreement shall not affect the validity of any other provision of this Agreement, and in the event
that any provision hereof is determined to be invalid or otherwise illegal, this Agreement shall
remain effective and shall be construed in accordance with its terms as if the invalid or illegal
provision were not contained herein; provided, however, that both parties shall negotiate in good
faith with respect to an equitable modification of the provision, or application thereof, held to be
invalid and provisions logically related thereto.
(g) No Inference Against Author: Broadcaster and Affiliate each acknowledge that
this Agreement was fully negotiated by the parties and, therefore, no provision of this Agreement
shall presumptively be interpreted against any party because such party or its legal representative
drafted such provision.
(h) No Third Party Beneficiaries: The provisions of this Agreement are for the
exclusive benefit of the parties hereto and their permitted assigns, and no third party shall be a
beneficiary of, or have any rights by virtue of, this Agreement.
(i) Headings: The titles and headings of the sections in this Agreement are for
convenience only and shall not in any way affect the interpretation of this Agreement.
(j) Non-Recourse: Notwithstanding anything contained in this Agreement to the
37
contrary, it is expressly understood and agreed by the parties hereto that each and every
representation, warranty, covenant, undertaking and agreement made in this Agreement was not
made or intended to be made as a personal representation, undertaking, warranty, covenant, or
agreement 'on the part of any incorporation, stockholder, director, officer, partner, employee or
agent, past, present or future, or any of them, and any recourse, whether in common law, in
equity, by statute or otherwise, against any of them is hereby forever waived and released.
(k) Performance of Certain Obligations: The ability of Broadcaster to provide to
Affiliate the aspects of the Service set forth in this Section 24(k) is based upon certain
undertakings of a third party (the "Indemnitor") from whom Broadcaster acquired the exclusive
right to disseminate certain programming to be included in the Service on a non-broadcast basis in
the Television Markets that comprise the Territory. In the event Broadcaster fails to perform or
breaches any of the following obligations or undertakings: (i) the closed captioning obligations
set forth in Section 13 hereof, (ii) the obligation to deliver an encrypted signal, as set forth in
Section 14(a) hereof, and (iii) the representation of compliance of the Service with the Children's
Television Regulations, Origination Cablecasting Regulations and Closed Captioning Regulations
set forth in Section 19(b) hereof, then (A) Affiliate shall have no cause of action against
Broadcaster or right to terminate this Agreement (except with respect to breaches relating to
Local Programming) as a result of such failure; (B) Affiliate shall be excused from its performance
under this Agreement; provided, however, that if Broadcaster's failure is confined to a System or
a limited number of Systems, then Affiliate shall only be excused from performance with respect
to such System or Systems; and (C) Broadcaster will assign to Affiliate its rights to sue the
Indemnitor for non-performance of any one or more of the foregoing obligations, and hereby
covenants and represents to Affiliate that it has such rights and the right to assign them to
38
Affiliate.
The parties hereto have executed this Agreement as of the date first above written.
AFFILIATE:
BROADCASTER:
Name: Scott Chambers
Title. ~~,'v,\o-~,oL_~ Title: President
39
SCHEDULE 1
To Affiliation Agreement By and Between
Soda Mountain Broadcasting, Inc.
and
City of Ashland, Oregon
Dated June 1, 2001
SYSTEMS
CHANNEL POSITION
Ashland, OR 67
EXHIBIT A
To Affiliation Agreement By and Between
Soda Mountain Broadcasting, Inc.
and
City of Ashland, Oregon
Dated June 1, 2001
SYSTEM QUALIFICATIONS
I. Affiliate represents and warrants the following regarding each System:
1. that either City or its nominee owns, directly or indirectly, at least a ten percent (10%)
interest in such System. An "indirect" ownership is an interest resulting from ownership through any
series of ownership interests, including corporations, partnerships, joint ventures or other forms of
business organizations; an indirect interest shall be quantified in amount by a series of percentage
multiplications commencing with the City's direct interest and multiplying that by the next most
proximate percentage interest and, then, multiplying in turn each succeeding ownership interest in the
order of their progression away from City by the result of the immediately preceding multiplication
until the most distant percentage interest is multiplied;
2. that Affiliate or an agent of.Affiliate has been authorized, pursuant to a valid written
agreement in full force and effect, to make and execute decisions on behalf of each such System with
respect to the Service, and Affiliate continues throughout the Term to exercise such authority With
respect to matters affecting the distribution of the Service by such System; and
3. that either a franchise or license is not required or a valid franchise or license is in
effect through the Term or the franchisee or licensee has held a valid Cable television franchise or
license and continues to operate in the franchise or license area under a claim of right or is otherwise
lawfully operating or franchisee or licensee has held a valid Cable franchise or license and is
continuing to operate while diligently pursuing, in good faith, its available judicial remedies. For the
above purposes, in the event a franchise or license expires before the end of the Term, such franchise
or license shall be deemed valid for so long as franchisee or licensee is negotiating in good faith With
the franchising or licensing authority for a franchise or license renewal.
II. In the event the City's direct or indirect equity interest in a System decreases below the level
required under Paragraph I hereoi] and provided the City's interest does not decrease to zero, tach
System shall continue to qualify under Paragraph I hereof; provided, however, City's interest in such
System shall increase to the level required under Paragraph I hereofwitlfin eighteen (18) months of
the decrease.
III. In the event Affiliate, or any of the entities that owns or manages Systems hereunder, effects
a corporate separation, reorganization or restructuring (including, without limitation, by a distribution
of stock, or other assets or rights, to its shareholders, partners or joint venturers), the entities
resulting from such transaction (including all interim and supporting entities) will qualify under
Paragraph I hereof, so as to continue to qualify to distribute the Service under the terms and
conditions hereof, as if such separation, reorganization or other restructuring had not occurred.
EXIqIBIT B
To Affiliation Agreement By and Between
Soda Mountain Broadcasting, Inc.
and
City of Ashland, Oregon
Dated June 1, 2001.
PROGRAM SCHEDULE
2000-O1 Season Program Schedule
6:00 AM
6:30 AM
7:00 AM
7:30 AM
8:60 AM
8:30 AM
100+ "'
stabon ,o,..
group
Pacific Time [2nd Quarter] Revised 5/17/Ol
Time I Menday I Tuesday I w dayi ~u~d,~ I F,day I Saturday
Mummies Alive
Monster Rancher
Men h Bla~x: ~he Sedes
Warner Bros. ~steda!
E~eme Ghoslbusters
Roughnecks: Ster~hip Troopers Chronicles
~ EquaJzer
Pok~on
Max Steel
Q~ncy. M.E.
11:OOAM ~e Roctdord Files
11:36AM
Noon lhe Rosie O'Dorf~ll Show
12:30 PM
1:00PM The Pare{t 'Hood
1:30 PM The Parer 'Hood
2:00 PM Roughmcks: Starship Trippers Chronides
2:30 PM Memler Rarcher
3:00 PM Babnan Sey~x:l
3:30 PM Pok~on
4:00 PM Pok~on
4:30 PM W9 Ac~on Bloc~
5:00 PM Sa~l Bylhe
5:30 PM Saved By,he
6:00 PM ~ Drew Care/Show
6:30 PM FHends
7:00 PM Fdends
7:30 PM 'i'he Draw (;;amy Show
Rambo
Double Drago~
E~eme Gheslbust~m
Monster Rancher
Pok~mon
Jackie Chart Adv.
XJ~h)n: Evdudon
Pok~o~ Johto Journeys
lile Zeta Proi~
Sbic Shock
Men ~ Black
~ Lost World
] S~Jlday I Time [
Global Business 6:00 AM
Jim Fowla% Ufe... Wild 6:30 AM
Space Morkeys 7:00 AM
Monster Ranc~ 7:30 AM
Mt~nrnies Ali,e 8:00 AM
SteetShaks 8:30AM
Rouglmecks 9:00 AM
Eximme Ghost}ustars 9:36 AM
E~er/Woma~ 10:00 AM
R. Smith W'dh $¥e 10:30 AM
Ron Hazello~'s Flouse Cals 11:00 AM
Famous Homes & Hideaways 11:30AM
The E~Jtainers Noon
12:30 PM
The RealWodd 'l~e ReaiWa'kt 1:00PM
The RealWodd 'i~e RealWodd 1:30PM
The WB SahJday l'T'e. WB Smday 2:OO PM
Aflemeon aovie Armmoon I~:~e 2:36 PM
Deten~on
Gene~onO!
Pok~on: JJ
8:0OPM 7b~Heaven TuesdayNight Dawson's Cma( Gilnx~eGi~ Sabdna/~Yd~h
Sabdna~r~h
Popstars
Popstas
Movie
Angel Chan~ed Chained
~ Jamie Foxx Show
~ Wayas Sros.
~e Wayans Bros.
~ Jamie Fo~(Shew
The Rocldord Files
bfomercials
b~marciais
~om~iais
Nom~iais
hfomacials
Infomacials
itomacials
Inlom~ials
8:30 PM
9:00 PM
9:30 PM
10:00 PM
10:30 PM
11:00PM
11:30 PM
Midnight
12:30 AM
1:00 AM
1:30AM
2:00 AM
2:30 AM
3:00 AM
3:30 AM
4:00 AM
4:30 AM
5:ffi AM
5:30AM
~ WB Sabxday
A~moon Movie
3:00 PM
3:30 PM
Des~m~on Stard~ 4:00PM
4:30 PM
E.R (rpt) 5:00 PM
5:30 PM
l~e Preteedar (~t) 6:00 PM
6:30 PM
7:00 PM
7:3O PM
8:00 PM
8:30 PM
9:00 PM
0:30 PM
10:06 P~
10:30F~
11:00P~
11:301~
Ea~ EdiUon (~t) Midnight
12:30 AM
F~ous Homes & Hideaways 1:00 AM
E.R. ~ PJs
~ PJs
Eat/Edition Steve Harvey
Sieve Hawey
Pretender I'aldd
Fo~Yow Love
Friends Drew Carey
Riends Draw Carny
lile knmetal E.R. (mt)
Lost Worki (rot.)
Kickiff I
B. Smith Wibh Style 1:30 AM
hfomarcials 2:00 AM
Nom~iab 2:30 AM
hfomerciais 3:00 AM
htornerciais 3:30 AM
Nomarcials 4:00AM
hfomercials 4:30AM
hbmarcials 5:00 AM
Nomaciais 5:30 AM
EXHIBIT C
To Affiliation .Agreement By and Between
Soda Mountain Broadcasting, Inc.
and
City of Ashland, Oregon
Dated June l, 2001
TELEVISION MARKETS
Medford, OR
#125303v7<iManage> -Affiliation Agreement 10-30 - 7.wpd