Sales Agency Agreement

SALES AGENCY AGREEMENT


THIS SALES AGENCY AGREEMENT (the "Agreement") is made effective as of 2/07/01 ("Effective Date") between DIRECTV, Inc., a California corporation ("DIRECTV"), and Nucentrix Broadband Networks, Inc. f/k/a Heartland Wireless Communications, Inc., a Delaware corporation ("Sales Agent"), with reference to the following:


A. DIRECTV operates a direct broadcast satellite service ("DBS Service") through which consumers may receive video, audio and other programming using specialized satellite receiving equipment ("DIRECTV System").


B. Pursuant to that certain Agreement dated as of April 5, 1998, as amended from time to time (the "Previous Agreement"), by and between DIRECTV and Sales Agent, Sales Agent became and continues to act as one of DIRECTV's commissioned sales agents for its DBS Service and to solicit consumers to order certain DIRECTV programming packages and services which are identified in Exhibit A attached hereto, as the same may be amended from time to time ("DIRECTV Programming Packages").


C. The parties desire to terminate the Previous Agreement and execute this Agreement, pursuant to which Sales Agent will continue to act as a commissioned sales agent of DIRECTV.


NOW, THEREFORE, the parties hereby agree as follows:


1. APPOINTMENT OF SALES AGENT.


1.1 TERMINATION OF THE PREVIOUS AGREEMENT. The parties hereby agree to terminate the Previous Agreement as of the Effective Date of this Agreement. Notwithstanding anything to the contrary contained herein, the parties agree and acknowledge that certain rights and obligations under the Previous Agreement, which by their terms, extend beyond such termination, shall survive such termination, including, without limitation, (a) payment by DIRECTV of Prepaid Programming Commissions for Approved Activations in connection with DIRECTV System units purchased by Sales Agent prior to the Effective Date of this Agreement; (b) right by DIRECTV to chargeback Sales Agent for any Prepaid Programming Commissions paid under the terms of the Previous Agreement; (c) payment by DIRECTV of Continuing Service Fees for Qualifying Subscribers procured by Sales Agent under the terms of the Previous Agreement; (d) payment by DIRECTV of the Subsidy (as defined in the Previous Agreement) in accordance with the terms of the Previous Agreement and (e) the obligations under Section E(3) of the Previous Agreement, provided that the obligations thereunder to repay the difference between the Aggregate Minimum Gross Revenues and the actual gross revenues, if any, shall not accrue until (i) April 4, 2003 or (ii) the termination of this Agreement by DIRECTV for a material breach by Sales Agent, whichever is earlier.


1.2 APPOINTMENT. DIRECTV hereby appoints Sales Agent as its sales agent to solicit subscriptions for the DIRECTV Programming Packages ("Subscriptions"), on the terms and conditions contained herein. Sales Agent may solicit Subscriptions only from single family residential households in the contiguous United States. Sales Agent may solicit Subscriptions only for the DIRECTV Programming Packages identified in Exhibit A attached hereto, and not any other programming packages or services DIRECTV may offer. DIRECTV may amend the list of DIRECTV Programming Packages from time to time on written notice to Sales Agent. Sales Agent hereby accepts such appointment and shall use its commercially reasonable efforts to solicit Subscriptions and to promote and enhance DIRECTV's business, reputation and goodwill. Notwithstanding the foregoing, the parties acknowledge the existence of a Cooperative Marketing Agreement between DIRECTV and Sales Agent, whereby Sales Agent became a "System Operator" of DIRECTV in connection with certain types of multi-dwelling units.


1.3 NO EXCLUSIVITY REQUIRED OF DIRECTV. DIRECTV may itself solicit Subscriptions from consumers, either directly, indirectly, or in conjunction with any third party, and may authorize parties other than Sales Agent to act as sales agents to solicit Subscriptions, for any compensation and upon any other


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terms as DIRECTV may determine in its discretion. Such compensation and terms may differ from those provided Sales Agent in this Agreement. Sales Agent acknowledges that DIRECTV and such other parties may compete with Sales Agent in the solicitation of Subscriptions.


1.4 LIMITED EXCLUSIVITY REQUIRED OF SALES AGENT. During the term of this Agreement, Sales Agent shall not, and shall ensure that its affiliates (i.e., any subsidiary of which Sales Agent owns greater than 50% of the outstanding voting stock) shall not directly or indirectly, market, sell or solicit sales of, or take orders for, or distribute (a) any direct broadcast satellite service programming packages or other related services to residential households in the United States, other than DIRECTV Programming Package or (b) any equipment used for, or associated with, any direct broadcast satellite service, other than the DIRECTV Programming Packages or equipment associated therewith, or any such services or associated equipment provided by an affiliate of DIRECTV (collectively, the "Exclusivity Commitment"). Company understands and agrees that a breach of Company's Exclusivity Commitment shall be a material breach of this Agreement, and DIRECTV may terminate this Agreement immediately upon written notice to Sales Agent.


2. SALES AGENT'S GENERAL OBLIGATIONS.


2.1 STOREFRONT LOCATION. Throughout the term of the Agreement, at least one of Sales Agent's locations must be a storefront location, unless otherwise agreed by DIRECTV in writing.


2.2 RETAIL DISPLAYS. Sales Agent shall prominently display, in a high traffic area at each of its locations and in a manner reasonably directed by DIRECTV, point of sale materials provided or approved by DIRECTV and a demonstration DIRECTV System unit which provides a live feed of DIRECTV programming on a monitor of no less than 17 inches, unless otherwise agreed in writing by DIRECTV. Sales Agent shall keep such DIRECTV System turned on and tuned to such channels as DIRECTV may designate during normal business hours.


2.3 TRAINING. DIRECTV shall provide training and training materials regarding its DBS Service to Sales Agent's training personnel, as DIRECTV reasonably deems necessary. Sales Agent shall train its own employees to the satisfaction of DIRECTV. DIRECTV may require Sales Agent's employees to attend supplementary training classes from time to time. DIRECTV shall not be responsible for any expenses and compensation of Sales Agent's employees during such training.


2.4 SALES PERSONNEL. Sales Agent may allow only its employees (and not any other independent contractors, sub-agents or other parties) to solicit, take or deliver any orders for DIRECTV Programming Packages except with DIRECTV's prior written consent, which may be withheld in DIRECTV's discretion.


2.5 ADVERTISING.


(a) Sales Agent agrees to use its commercially reasonable efforts to market DIRECTV Programming Packages and services and shall spend an average of thirty dollars ($30.00) per "Qualifying Subscriber" (as defined below) in connection with such advertising efforts.


(b) DIRECTV agrees to assist Sales Agent in the marketing and promotion of DIRECTV Programming Package through matching of Company's actual advertising spending (the "Advertising Co-Op Fund"). In order to receive the Advertising Co-Op Fund, Sales Agent must obtain DIRECTV's prior approval for the applicable advertising programs and the spending therefor (the "Approved Programs"). For every dollar spent by Sales Agent in connection with the Approved Programs of the DIRECTV Programming Packages in accordance with this Agreement, DIRECTV will pay Sales Agent the Advertising Co-Op Fund in an amount up to fifteen dollars ($15.00) per Qualifying Subscriber. Sales Agent shall provide documentation as reasonably requested by DIRECTV which verifies the advertising costs incurred by Sales Agent for the Approved Programs. Sales Agent agrees that it will apply the Advertising Co-Op Fund throughout the term of the Agreement toward the advertising of the DIRECTV Programming Packages to potential Qualifying Subscribers. DIRECTV will provide the Advertising Co-Op Fund to Company within sixty-five (65) days of verification of Sales Agent's actual advertising spending in accordance with this Section.


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2.6 BENCHMARKS. Sales Agent agrees that it will procure, activate and retain seven thousand five hundred (7,500) new Qualifying Subscribers for each calendar year during the term of this Agreement (the "Minimum Benchmark"); provided, however, that the parties agree that any "Qualifying Subscribers" procured by Sales Agent under the Previous Agreement during 2001 shall be included for determining whether Sales Agent met the Minimum Benchmark hereunder for calendar year 2001. The failure to achieve such Minimum Benchmark during any calendar year shall result in a reduction in the Continuing Service Fees as described in Exhibit D.


2.7 STANDARD POLICIES. DIRECTV may, from time to time in its sole discretion, provide to Sales Agent those Policies and Procedures developed by DIRECTV for its commissioned sales agents, and Sales Agent that it will follow and abide by the policies and procedures related to taking orders for and the promotion of DIRECTV Programming Packages as specified from time to time in such Policies and Procedures (subject to the provisions of this Section). DIRECTV may incorporate such Policies and Procedures as they apply to Company into this Agreement, by notifying Sales Agent at least thirty (30) days in advance of the date on which such Policies and Procedures are to become effective subject to, only in the case of an item which materially and adversely affects Sales Agent, Sales Agent's written consent (which shall not be unreasonably withheld). If Sales Agent fails to provide DIRECTV written notice of either such consent or refusal to give such consent within twenty (20) days after receiving such notice, Sales Agent shall be deemed to have consented. If Sales Agent provides a written notice reasonably withholding such consent, then DIRECTV may elect, in its sole discretion, either (a) to continue the relationship as subject to this Agreement without incorporating the proposed Policies and Procedures or (b) to immediately terminate this Agreement with no further obligation to Sales Agent. Any material noncompliance by Sales Agent with those Policies and Procedures to which Sales Agent consented (or to which Sales Agent is deemed to have consented), which Sales Agent does not cure to DIRECTV's satisfaction within thirty (30) days after DIRECTV provides Sales Agent a written notice of such material noncompliance, shall be a material default of this Agreement.


2.8 STANDARD OF CONDUCT. In all of its activities as a sales agent for DIRECTV and in its own DIRECTV System business, Sales Agent shall conduct itself in a commercially reputable and ethical manner, shall comply with all applicable laws, and shall engage in no deceptive sales practice or other practice which impugns DIRECTV's commercial reputation and goodwill.


2.9 NO TYING. In no event may Sales Agent condition the sale of a DIRECTV Programming Package upon the customer's acquisition of any other product or service (other than approved DIRECTV System), except as approved by DIRECTV in writing.


2.10 BOOKS AND RECORDS. Each party shall provide the other party with accounting support and all information necessary to support subscriber requests and to verify such party's compliance with the terms of this Agreement. Each party shall maintain accurate records of all matters that relate to such party's obligations under this Agreement in accordance with generally accepted accounting principles and practices uniformly and consistently applied in a format that will permit audit. Each party shall retain such records for a period of at least three (3) years from the date of final payment. To the extent that the records may be relevant in determining whether a party is complying with its obligations hereunder, the other party and its authorized representatives shall have access to the records for inspection and audit at all reasonable times during normal business hours.


3. SALES AGENT'S DIRECTV SYSTEM BUSINESS.


3.1 SALES AGENT'S OWN ACCOUNT. Sales Agent shall conduct all of its DIRECTV System sale, lease, installation, warranty, maintenance, and repair business ("DIRECTV System Business") for its own account and not as an agent for DIRECTV. At the request of DIRECTV, Sales Agent shall display notices to its customers, in such form, places and manner as DIRECTV may reasonably require, of such fact and that Sales Agent and not DIRECTV shall be responsible for all of Sales Agent's actions in this regard. DIRECTV disclaims any control over Sales Agent's DIRECTV System Business except to the limited extent expressly provided herein to support and protect its activities as a sales agent for DIRECTV's DBS Service.


3.2 APPROVED EQUIPMENT. All DIRECTV System offered by Sales Agent for use with DIRECTV's DBS Service must be compatible with such Service and manufactured by a supplier approved by


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DIRECTV. DIRECTV shall notify Sales Agent of such approved DIRECTV System and suppliers. Sales Agent may take orders for DIRECTV Programming Packages hereunder only from customers to whom it sells or leases DIRECTV System.


4. RATES AND TERMS OF SERVICES.


4.1 RATES. DIRECTV may determine the content, pricing, terms, and conditions of its Programming Packages in its discretion. Sales Agent shall not represent that DIRECTV Programming Packages may be obtained on any different terms or rates, shall not impose additional or different terms and shall not offer customers any discount, rebate, or other material benefits in consideration for subscribing to them, except as expressly authorized by DIRECTV in writing. Notwithstanding anything to the contrary contained herein, at all times during the term of this Agreement, DIRECTV Programming Packages shall include DIRECTVs "Most Widely Distributed Package." For purposes of this Agreement, the term "Most Widely Distributed Package" shall mean that DIRECTV programming package that is most widely subscribed to by subscribers of DIRECTV programming. DIRECTV shall use its commercially reasonable efforts to provide Sales Agent no less than sixty (60) days prior notice (or such lesser period of time as may be available to DIRECTV) of any price and programming content changes.


4.2 CHANGES. DIRECTV may change the content, pricing, terms, conditions, and availability of its Programming Packages from time to time in its discretion. DIRECTV shall notify Sales Agent of such changes as soon as practicable. Sales Agent shall promptly replace point of sale materials as necessary.


4.3 MISREPRESENTATIONS. If Sales Agent misrepresents or fails to fully disclose any prices or other terms of DIRECTV Programming Packages to any customer, it shall reimburse DIRECTV any amount which DIRECTV is compelled, or in its reasonable judgment according to its standard practices decides, to pay or credit the customer in compensation for such misrepresentation. In addition, DIRECTV shall be entitled, after written 30-day notice to Sales Agent, to offset any such payment or credit by DIRECTV to customers as a result of Sales Agent's misrepresentations or omissions against any amounts owed to Sales Agent by DIRECTV.


5. ORDERS FOR SERVICE.


5.1 ORDER PROCEDURES. Sales Agent shall comply with the procedures set forth in Exhibit B attached hereto, as the same may --------- be amended by DIRECTV from time to time upon written notice, regarding the receipt and delivery of orders for DIRECTV Programming Packages ("Orders"). All Orders shall be subject to acceptance or rejection by DIRECTV in its reasonable discretion.


5.2 NO FINANCING OR COLLECTION OF FEES. Sales Agent shall not provide financing for Subscriptions or collect Subscription fees or other money due to DIRECTV from DIRECTV subscribers ("Subscribers"), and all Subscription fees shall be billed directly to the Subscriber by DIRECTV, unless otherwise approved in writing by DIRECTV. Failure to comply with the provisions of this Section 5.2 shall be deemed a material breach by Sales Agent.


6. SALES AGENT COMPENSATION.


6.1 PREPAID PROGRAMMING COMMISSIONS. In consideration of Sales Agent's services in procuring Orders for DIRECTV Programming Packages, DIRECTV shall pay Sales Agent commissions ("Prepaid Programming Commissions") in the amounts and on the terms and conditions set forth in the Commission Schedule attached hereto as Exhibit C, subject to later chargeback on the terms described in Section 6.6, upon both of the following events (collectively an "Approved Activation"):


(a) DIRECTV's receipt of an Order for a DIRECTV Programming Package which is initially procured by Sales Agent and delivered to DIRECTV in accordance with DIRECTV's order procedures as set forth in Exhibit B; and


(b) DIRECTV's acceptance of such Order ...