MMDS Affiliation Agreement

EXHIBIT 10.1


MMDS AFFILIATION AGREEMENT


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EXHIBIT 10.1


CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED SEPARATELY
WITH THE COMMISSION


MMDS AFFILIATION AGREEMENT


MMDS AFFILIATION AGREEMENT (this "Agreement") dated as of the 4th day of August, 1997 by and between TelQuest Satellite Services LLC, a Delaware limited liability company ("TelQuest"), and CS Wireless Systems, Inc., a Delaware corporation ("Affiliate").


RECITALS:


A. TelQuest intends to develop and operate a satellite system ("Satellite System") utilizing transponders initially on C-band and subsequently on Ku-band frequencies for the purpose of providing digital video information and data through MMDS operators (i) for MMDS head-end in-the-sky services ("HITS Services") and (ii) for direct-to-home ("DTH") subscription services ("DTH Services" and together with HITS Services, the "Satellite Services").


B. Affiliate currently owns or holds a majority interest in and operates MMDS wireless cable systems through which Affiliate provides video programming services to its subscribers and such wireless cable systems are identified on SCHEDULE A hereto (the wireless cable systems identified in this recital, together with any additional or subsequent systems as may be added from time to time in accordance herewith, hereinafter referred to collectively as the "Affiliate Systems" and individually as an "Affiliate System").


C. Affiliate desires to utilize TelQuest's Satellite System for the purpose of enhancing Affiliate's provision of video programming services to its subscribers.


D. TelQuest agrees to provide Satellite Services to Affiliate on the Satellite System by providing HITS Services to Affiliate's head-ends and DTH Services directly to Affiliate DTH Subscribers (as defined below) in Affiliate's Service Area (as defined below), and Affiliate agrees to purchase the Satellite Services, on the terms and conditions contained herein.


NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements set forth herein, the parties agree as follows:


1. DEFINITIONS. As used in this Agreement, the following terms shall have the


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meanings assigned to them below:


a. "AGREEMENT" means this MMDS Affiliation Agreement dated as of August 4, 1997 by and between TelQuest and Affiliate.


b. "AFFILIATE" has the meaning set forth in the Preamble.


c. "AFFILIATE SUBSCRIBERS" shall mean, collectively, all the Affiliate DTH Subscribers and all of the Affiliate MMDS Subscribers.


d. "AFFILIATE DTH SUBSCRIBERS" shall mean all subscribers receiving TelQuest Programming through the utilization of the DTH Services hereunder and, for purposes of SECTION 9, the sum of (a) the average number of residential (individual dwelling unit) customers who (i) have been receiving TelQuest Programming during the last thirty (30) days and (ii) are not currently more than sixty (60) days past due on their account or pending disconnection for any reason and (b) commercial and multiple dwelling unit ("MDU") accounts, such as hotels, motels, apartment houses and multifamily homes, provided that the number of "Affiliate DTH Subscribers" serviced by each commercial and MDU account shall be deemed to be an amount equal to the quotient of (x) the monthly basic service revenue derived from such commercial and MDU account (excluding any charges for taxes or other non-recurring items) divided by (y) the Affiliate's per subscriber charge for DTH Service.


e. "AFFILIATE MMDS SUBSCRIBERS" shall mean all residential, commercial and bulk-billed customers receiving TelQuest Programming through the utilization of the HITS Services hereunder, via either digital MMDS or a hybrid MMDS transmission platform, and, for purposes of SECTION 9, the sum of (a) the average number of residential (individual dwelling unit) customers who (i) have been receiving TelQuest Programming during the last thirty (30) days and (ii) are not currently more than sixty (60) days past due on their account or pending disconnection for any reason and (b) commercial and MDU accounts, such as hotels, motels, apartment houses and multifamily homes, provided that the number of "Affiliate MMDS Subscribers" serviced by each commercial and MDU account shall be deemed to be an amount equal to the quotient of (x) the monthly basic service revenue derived from such commercial or MDU account (excluding any charges for taxes or other non-recurring items) divided by (y) the Affiliate's per subscriber charge for service.


f. "AFFILIATE SYSTEM(S)" has the meaning set forth in the Recitals.


g. "BTA" shall mean Basic Trading Area.


h. "CPE" has the meaning set forth in SECTION 16.


i. "CPI" shall mean the Consumer Price Index (All items) for the Urban Consumers/U.S. (New Series) as published by the United States Department of Labor, Bureau of Labor Statistics, or such other index as mutually agreed upon between TelQuest and


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Affiliate.


j. "DTH" has the meaning set forth in the Recitals.


k. "DTH SERVICES" has the meaning set forth in the Recitals.


l. "FORCE MAJEURE" has the meaning set forth in SECTION 13.


m. "HITS SERVICES" has the meaning set forth in the Recitals.


n. "INDEMNIFIED PARTY" has the meaning set forth in SECTION 20.


o. "INDEMNIFYING PARTY" has the meaning set forth in SECTION 20.


P. "INITIAL TERM" has the meaning set forth in SECTION 2.


q. "IRT(S)" has the meaning set forth in SECTION 3(b).


r. "LAUNCH DATES" has the meaning set forth in SECTION 3(d).


s. "MONTHLY FEE" has the meaning set forth in SECTION 9.


t. "PERFORMANCE STANDARDS" has the meaning set forth in SECTION 15(a).


u. "SATELLITE(S)" shall mean the C-band satellite and/or Ku-band satellite on which TelQuest leases transponder capacity for the provision of the Satellite Services.


v. "SATELLITE SERVICES" has the meaning set forth in the Recitals.


w. "SATELLITE SYSTEM" has the meaning set forth in the Recitals.


x. "SERVICE AREA" is the BTA for a given Affiliate System as specified on SCHEDULE A.


y. "SUCCESSOR SATELLITE(S)" shall mean any replacement or successor satellites(s) to the initial Satellites on which TelQuest leases transponder capacity for the provision of the Satellite Services.


z. "TECHNICAL SPECIFICATIONS" has the meaning set forth in SECTION 5.


aa. "TELQUEST" has the meaning set forth in the Preamble.


bb. "TELQUEST PROGRAMMING" has the meaning set forth in SECTION 4(a).


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cc. "TERM" has the meaning set forth in SECTION 2.


dd. "TRANSPONDER AGREEMENT" has the meaning set forth in SECTION 18(e).


ee. "UPLINK FACILITIES" has the meaning set forth in SECTION 6(a).


2. TERM. TelQuest shall commence providing Satellite Services under this Agreement as of September 1, 1997. This Agreement will commence as of the date hereof and shall continue for a period of ten (10) years (the "Initial Term") unless sooner terminated in accordance with SECTION 22. Thereafter, this Agreement shall be automatically renewed for additional five-(5) year terms unless either party gives written notice of its desire and intention to terminate at least one (1) year prior to the expiration of the Initial Term or any five-(5) year renewal term thereafter (the Initial Term together with any renewal term hereinafter referred to as the "Term").


3. PROVISION OF SATELLITE SERVICES.


a. TelQuest hereby agrees to provide Satellite Services to Affiliate by delivering the TelQuest Programming to the Satellite(s), causing the transmission of the TelQuest Programming by the Satellite(s) to the Affiliate's head-end(s) and subscribing consumer residences, and authorizing Affiliate's reception of TelQuest HITS Service at Affiliate's head-end(s) and authorizing consumer reception of TelQuest's DTH Services at subscribing consumer residences in the Service Areas. TelQuest shall provide Satellite Services via uplink facilities and satellites owned, leased or operated by TelQuest or via service agreements with other suitable satellite, and/or satellite uplink providers. TelQuest's uplink facilities will initially be located in Hawley, PA. Affiliate acknowledges that initially, TelQuest shall provide only HITS Services under this Agreement until such time as TelQuest is capable of providing both HITS and DTH Services. In the event TelQuest is unable to provide DTH Services, this Agreement shall remain in full force and effect with respect to TelQuest's provision of HITS Services in accordance with the terms of this Agreement.


b. In connection with the HITS Services, TelQuest shall deliver TelQuest Programming to the Satellite(s), cause the transmission of the TelQuest Programming by the Satellite(s) to the Affiliate's head-ends and authorize each Affiliate System head-end Integrated Receiver Transcoder ("IRT") to receive the signals for TelQuest Programming in accordance with the Technical Specifications. Affiliate shall, at its own cost and expense, obtain and install one or more satellite earth stations, a sufficient number of IRTs to receive TelQuest Programming, and any other equipment and software necessary to receive, digitally reprocess and distribute the HITS Services signals. Each such digital head-end shall be operational and maintained by Affiliate in good working order and in compliance with all applicable laws. It shall be the responsibility of Affiliate to activate and "turn-on" the Affiliate MMDS Subscribers.


c. In connection with the DTH Services, TelQuest shall deliver TelQuest


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Programming to the Satellite(s), cause the transmission of the TelQuest Programming by the Satellite(s) to the subscribing consumer residences and authorize receivers installed by Affiliate or its agent(s) at subscribing consumer residences to receive the signals of TelQuest Programming.


d. Affiliate shall be responsible for the reception of the Satellite System transmission of TelQuest Programming for HITS Services and shall cause TelQuest Programming to be delivered on Affiliate Systems commencing with the respective launch dates ("Launch Dates") for Affiliate Systems set forth on SCHEDULE A. Affiliate shall diligently endeavor to commence delivering TelQuest Programming on the applicable Launch Dates, and in the event Affiliate begins delivering TelQuest Programming on any date other than that set forth as the anticipated Launch Date, Affiliate shall promptly notify TelQuest in writing of such actual Launch Date. In the event Affiliate does not commence delivering TelQuest Programming within ninety (90) days following the anticipated Launch Date, TelQuest shall have a right to (i) terminate satellite services with respect to such Affiliate System or (ii) revoke exclusivity for the Service Area of such Affiliate System. Affiliate may add Affiliate Systems in areas not serviced by TelQuest with applicable Launch Dates as the Affiliate in its discretion desires during the Term, but shall do so only upon written approval by TelQuest, which shall not be unreasonably withheld, on no less than thirty (30) days' prior written notice to TelQuest to which TelQuest agrees to respond in writing within fifteen (15) days, and upon such approval said Affiliate Systems and Launch Dates shall be incorporated herein by reference.


e. Affiliate shall deliver that portion of the TelQuest Programming to Affiliate MMDS Subscribers as it chooses in its sole discretion, subject to the terms of Affiliate's MMDS carriage agreements and digital transport amendments. Affiliate will use reasonable commercial efforts to ensure TelQuest Programming will be received only by Affiliate MMDS Subscribers who are identified, charged for and pay a special charge for the privilege of receiving TelQuest Programming, or are otherwise authorized to receive TelQuest Programming. TelQuest reserves the right to terminate this Agreement should said Affiliate fail to utilize reasonable commercial efforts in ensuring sufficient and reasonable security to prohibit, to the extent possible, unauthorized reception of TelQuest Programming.


f. Affiliate shall not deliver or make available TelQuest Programming to any Affiliate Subscriber except in accordance with the payments to TelQuest provided for in SECTION 8.


g. In the event TelQuest has reason to believe that TelQuest Programming is being received by an unauthorized person or persons within a given Service Area, TelQuest shall notify Affiliate. Affiliate shall take such reasonable steps as are appropriate to investigate such information and take reasonable actions to ensure that TelQuest Programming is received only by authorized persons, including the initiation of legal action; provided, however, Affiliate shall only be required to take such action if such unauthorized use is the result of an act or omission of Affiliate. TelQuest also reserves the right to take whatever legal action is necessary in its sole discretion to prosecute and prevent those who are the unauthorized


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recipients of TelQuest Programming from obtaining same within the jurisdiction of the Service Area of Affiliate. In the event TelQuest determines to commence legal action, it shall first notify Affiliate at least ten (10) days prior to commencing such action.


4. TELQUEST PROGRAMMING.


a. TelQuest shall initially deliver the digital video programming ("TelQuest Programming") listed on SCHEDULE B hereto, which has been approved in advance by Affiliate. TelQuest shall have the right in its sole discretion to add or remove programming to and from the TelQuest Programming line-up from time to time upon notice to Affiliate. TelQuest shall determine in its sole discretion the TelQuest Programming to be delivered to Affiliate's DTH Subscribers.


b. In connection with procuring TelQuest Programming for the provision of HITS Service, TelQuest shall provide Affiliate with execution copies of digital transport amendments to Affiliate's MMDS carriage agreements with programmers in order to permit Affiliate to access TelQuest's digital satellite feed of such programming as part of the HITS Service. TelQuest shall use reasonable commercial efforts to assist in facilitating such arrangements with programmers, and Affiliate agrees to cooperate in such effort. Affiliate shall be solely responsible for any and all programming costs associated with the TelQuest Programming delivered in connection with the HITS Service. Affiliate represents to TelQuest that it has, or will have prior to launching HITS Service in its Service Area(s), for each of its Service Areas, MMDS carriage agreements with programmers covering all of the initial TelQuest Programming to be delivered by TelQuest in connection with the HITS Service. Affiliate shall maintain all such MMDS carriage agreements in full force and effect during the Term as necessary to comply with the terms of this Agreement. At the request of Affiliate, TelQuest shall use reasonable efforts to assist Affiliate in facilitating MMDS carriage agreements with programmers through the services of Wireless Programming Cooperative, L.L.C.


c. In connection with procuring TelQuest Programming for the provision of DTH Service, TelQuest shall enter into DTH affiliation agreements with programmers in order to permit TelQuest to deliver such programming to Affiliate's DTH Subscribers as part of the DTH Service. TelQuest shall be solely responsible for any and all programming costs associated with the TelQuest Programming delivered by TelQuest in connection with the DTH Service. Affiliate and TelQuest agree to cooperate in addressing and remedying any double payments to programmers resulting from the provision of HITS Service and DTH Service to Affiliate Subscribers.


5. TECHNICAL SPECIFICATIONS FOR SATELLITE SERVICES.


The initial technical specifications with respect to the receipt of the Satellite Services on TelQuest's Satellite System are set forth on SCHEDULE C hereto (the "Initial Technical Specifications"). The parties agree to cooperate in establishing and coordinating


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additional technical specifications for the receipt of Satellite Services (the "Additional Technical Specifications" together with the Initial Technical Specifications, the "Technical Specifications").


6. MODIFICATIONS AND MAINTENANCE OF THE SATELLITE SYSTEM.


a. TelQuest shall have the responsibility during the Term, at TelQuest's sole cost and expense to operate and maintain TelQuest's satellite uplink facilities (the "Uplink Facilities") for the Satellite System as may be necessary to provide the Satellite Services to the Affiliate Systems as provided herein.


[CONFIDENTIAL PORTION HAS BEEN OMITTED AND FILED WITH THE COMMISSION]


b. TelQuest will upgrade its Uplink Facilities at its own cost from time to time as it deems necessary to take advantage of future improvements in digital encoding and compression and related technologies, in accordance with the Technical Specifications, in order to increase the quality and/or quantity of the TelQuest Programming to be provided to the Affiliate Systems hereunder.


c. TelQuest shall (a) at all times preserve and keep in full force and effect the rights material to its business and (b) comply at all times and in all material respects with the provisions of all permits, licenses or other similar authorizations relating to such business, including without limitation any obligations or agreements with respect to signal transmission, certifications and permits and all other agreements, licenses and sublicenses, and leases and subleases to which it is a party, and will suffer no loss of forfeiture thereof or thereunder except for immaterial losses or forfeitures which in the aggregate would not be ...