Document:

Exhibit
10.1

 

CONTENT PREPARATION AND DISTRIBUTION
SERVICES AGREEMENT

 

by and between

 

ASCENT MEDIA GROUP, INC.

 

and

 

ON COMMAND VIDEO CORPORATION

 

dated as of

 

March 24, 2003

 

Ascent
Media Group and On Command Video Corporation Confidential Information

 

 

LIST OF EXHIBITS

 

	
  Exhibit A

  	
   -

  	
  Content Preparation
  Services Agreement

  
	
   

  	
   

  	
   

  
	
  Exhibit B

  	
   -

  	
  Content Distribution
  Service Level Terms and Conditions

  
	
   

  	
   

  	
   

  
	
  Exhibit C

  	
   -

  	
  Link Budget

  
	
   

  	
   

  	
   

  
	
  Exhibit D

  	
   -

  	
  Mutual Nondisclosure
  Agreement

  
	
   

  	
   

  	
   

  
	
  Exhibit E

  	
   -

  	
  Satellite Specifications

  
	
   

  	
   

  	
   

  
	
  Exhibit F

  	
   -

  	
  Additional Payment
  Terms

  
	
   

  	
   

  	
   

  
	
  Exhibit G

  	
   -

  	
  Limitation of Liability

  
	
   

  	
   

  	
   

  
	
  Exhibit H

  	
   -

  	
  Early Termination Fee

  

 

Confidential Information of Ascent
Media Group and On Command Video Corporation

 

i

 

Content Preparation and Distribution
Services Agreement

 

This  Content
Preparation and Distribution Services Agreement (this “Agreement”),
dated as of March 24, 2003 (the “Effective
Date”), is by and between Ascent Media Group, Inc., a Delaware
corporation with offices at 520 Broadway, 5th Floor, Santa Monica,
CA 90401 (“Ascent”), and On Command Video Corporation, a Delaware
corporation, with offices at 4610 South Ulster Street, 6th Floor,
Denver, CO 80237 (“OCV”). 
“Party”
means each party individually, and “Parties” means OCV and
Ascent.

 

The Parties, for good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, agree as follows:

 

Section
1.    Definitions.

 

As used in this
Agreement, the following defined terms shall have the meanings set forth
below.  Other capitalized terms used in
this Agreement are defined in the context in which they are used and shall have
the meanings there indicated.

 

1.1                               “AMNS Burbank” means Ascent
Media Network Services/Burbank, an operations department of Ascent.

 

1.2                               “Business Day” shall mean
each day included in the definition of Regular Business Hours, except that for
purposes of submitting Transmission Requests, OCV will be deemed to have
submitted the Transmission Request one Business Day prior to such Request if it
submits the request (i) prior to 12 p.m. Pacific Time on the preceding Business
Day for all Transmission Requests scheduled to begin before 12 p.m. the
following Business Day, (ii) prior to 5 p.m. Pacific Time on the preceding
Business Day for all Transmission Requests scheduled to begin after 12 p.m. on
the following Business Day.

 

1.3                               “Content” means the content of
any programming material and associated Scripts included in the OCV VOD
Offering to its end customers, and software associated with the OCV VOD
Offering.

 

1.4                               “Content Distribution Services”
or “Services” means the
maintenance and operation of the Content Distribution System and provision of
the services described in the Service Level Terms and Conditions, attached as
Exhibit B, all in accordance with this Agreement.

 

1.5                               “Content Distribution System”
means a content distribution system consisting of the Uplink Facility and
access to the Satellite Transponder for the purpose of delivering Transmissions
from the Uplink Facility to the Satellite Transponder in accordance with the
terms and conditions of this Agreement.

 

1.6                               “Effective Date” is defined in
the first paragraph of this Agreement.

 

1

 

1.7                               “Equipment” means any
hardware, equipment and related materials (excluding Packages), if any,
transferred to Ascent for use pursuant to this Agreement during the Term.

 

1.8                               “FEC” means the Forward Error
Correction rate applied to Content files. 
Unless otherwise specified by OCV in a Transmission Request, the FEC
rate shall be 5%.

 

1.9                               “Force Majeure Event” is defined in Section
12.

 

1.10                        “Governmental Authorities”
means all international, foreign, United States, state and local governmental
authorities, regulatory bodies and courts having jurisdiction over the terms of
this Agreement.

 

1.11                        “Intellectual Property Rights” means any:

 

(a)                                    patents
whether registered or unregistered;

 

(b)                                  inventions
whether or not capable of protection by patent or registration;

 

(c)                                   rights
in commercial information and technical information, including know-how,
research and development data, manufacturing methods and data, specifications
and drawings, formulas, trade secrets, algorithms, prototypes and research
materials;

 

(d)                                   copyrights
(including without limitation any application, registration or renewal related
thereto), registered designs or design rights (whether or not capable of
protection by registration), trademarks (including without limitation service
marks, logos, sound logos, certification marks, and trade names, together with
any applications, registrations and renewals for any of the foregoing and the
goodwill associated with each), mask work rights, and database rights;

 

(e)                                   applications
for the grant of rights of the foregoing descriptions; and

 

(f)                                      rights
of a similar or analogous nature to any of the foregoing whether in existence
now or in the future and wherever located in the world.

 

1.12                        “Laws” is defined in Section
10.1.7.

 

1.13                        “Licensed Rights” means any and
all rights, licenses, consents and approvals that are necessary for OCV to
provide Ascent with Packages in the form contemplated by this Agreement and for
Ascent to perform its obligations under this Agreement.

 

1.14                        “Link Budget” means the link
budget attached as Exhibit C and incorporated herein.

 

1.15                        “Losses” means all losses,
costs, expenses, liabilities and damages reasonably incurred resulting from or
relating to under any claim, demand, settlement, litigation or final judgment,
and all related reasonable and documented costs and expenses, including
reasonable and documented legal fees, fines, interest and penalties.

 

2

 

1.16                        “Monthly Fee” is defined in
Exhibit F.

 

1.17                        “MPAA” means the Motion
Picture Association of America.

 

1.18                        “OCV VOD Offering” means the
Content for movies, video games and audio music that OCV offers to its end
customers on a video-on-demand basis.

 

1.19                        “Package” means the content
(i.e., programming material and Scripts) for each item of Content, which has
been prepared for Transmission.

 

1.20                        “Payment Past Due Date” is as
defined in Section 9.2.

 

1.21                        “Receive Station” means the
equipment, consisting of a satellite dish and a receive personal computer
(commonly referred to as a “catcher”) at either (i) a hotel, motel, resort or
other location in the continental United States, Hawaii, Alaska, and parts of
Canada and the Caribbean that participates in the OCV VOD Offering, or (ii) any
location for the purpose of system operations or software or system
development.  A hotel, motel or resort
may have more than one catcher and OCV may increase without limitation the
total number of Receive Stations during the Term.

 

1.22                        “Regular Business Hours” means
Monday through Friday, 8 a.m. to 5 p.m. Pacific Time, excluding the following
Ascent holidays, which may be updated from time to time by prior written notice
of Ascent: New Year’s Day, President’s Day, Memorial Day, Independence Day,
Labor Day, Thanksgiving, the day after Thanksgiving and Christmas Day.

 

1.23                        “Satellite” means the
satellite listed on Exhibit E, or such other satellite to which Ascent
is permitted under this Agreement to send Transmissions.

 

1.24                        “Satellite Access Agreement”
means an agreement between Ascent and the Satellite Provider allowing Ascent to
access the Satellite Transponder on terms and conditions agreed by Ascent and
the Satellite Provider.

 

1.25                        “Satellite Access Requirements”
means all technical, operational and access requirements of Ascent set forth in
the Satellite Access Agreement.

 

1.26                        “Satellite Provider” means the
owner, agent or broker of the Satellite to which Ascent will contract with to
receive access to the Satellite Transponder.

 

1.27                        “Satellite Transponder” means
the satellite transponder listed in Exhibit E, or such other satellite
transponder to which Ascent is permitted under this Agreement to send
Transmissions.

 

1.28                        “Scripts” means all data,
text or information associated with programming material.

 

1.29                        “Service Credit” means an
amount credited to OCV due to Service Failures, which shall offset any amount
owed by OCV to Ascent under this Agreement in the second month following the
month such Service Failures occurred.

 

3

 

1.30                        “Service Failure” means any
problem or failure in the Content Distribution System by Ascent to distribute a
Package pursuant to a Transmission Request (as defined in Exhibit B,
Section 1.1.2) that impacts the Transmission schedule.  A Service Failure shall not include any problem
or failure to complete Transmissions due to the failure of the Satellite, the
Satellite Transponder, a Receive Station, OCV or OCV’s failure to meet its
obligations under this Agreement.

 

1.31                        “Store and Forward Hub” means
the transmission origination station (commonly referred to as the “pitcher”).

 

1.32                        “Technology” means
algorithms, designs, drawings, formulae, know-how, ideas, mask works,
inventions, data, programs, improvements, developments, discoveries, concepts,
methodologies, techniques, processes, software, specifications, and other forms
and types of intangible property, in each case whether or not patentable.

 

1.33                        “Term” is as defined in
Section 2.

 

1.34                        “Test Package” is defined in
Section 1.1.13 of Exhibit B.

 

1.35                        “Transmission” means the
transmission of a single or a group of Packages using the Content Distribution
System.

 

1.36                        “Uplink Facility” means,
collectively, an earth station facility, an Internet Protocol (IP)
encapsulator, an HPA, and a Store and Forward Hub, provided and maintained in
accordance with the terms specified in this Agreement.

 

Section
2.  Term.

 

The
term of the Agreement shall commence on April 1, 2003 (the “Commencement Date”) and shall expire five
years after the Commencement Date, unless sooner terminated as provided
under this Agreement (the “Term”).  This Agreement shall be effective as
of the Effective Date.  This Agreement
will automatically terminate upon the expiration of the Term, unless terminated
earlier by mutual agreement in writing by the Parties or as provided in this
Agreement.

 

Section
3.  Contract
Documents.

 

The contract documents
consist of this Agreement and each of the Exhibits (each as may be amended from
time to time in accordance with the terms of this Agreement), which are
attached and incorporated into this Agreement by this reference, except that Exhibit
A is attached for the convenience of the Parties only, and shall be
considered a separate agreement between the Parties.

 

4

 

Section 4.  Description of Services.

 

4.1                               Content Distribution Services.

 

4.1.1                     Transmission Services.  Ascent shall provide all services necessary
to provide Content Distribution Services for OCV as specified under this
Agreement.

 

4.1.2                     Expanded Services.  If Customer wishes to expand the scope of
Content Distribution Services (the “Expanded
Services”), the Parties shall mutually agree in writing on the terms
of such expanded scope of Content Distribution Services, including but not
limited to the related pricing terms, before Ascent has an obligation to
perform the Expanded Services.

 

(a)                                  Satellite Transponder Bandwidth
Option.  To the extent
bandwidth is available, OCV shall have the option to increase the bandwidth of
the Satellite Transponder in 1-Mhz increments for a fee per Mhz set forth in
Section 9.1.1(c).  Once increased, the
bandwidth shall remain at the new level for the duration agreed to by the
Parties.

 

4.1.3                     Ad-Hoc Services.  Ascent shall provide ad-hoc services, such
as software development and documentation for satellite distribution
integration (“Ad-Hoc Services”),
provided that the Parties mutually agree in writing on the terms of the Ad-Hoc
Services, including but not limited to the related pricing terms, before Ascent
has an obligation to perform the Ad-Hoc Services.

 

4.1.4                     Back-Up Services.  If Content Distribution Services are
unavailable for any reason, including a Force Majeure Event, Ascent shall use
commercially reasonable efforts to use alternate Ascent facilities, obtain an
alternate third party provider or identify options to reconfigure the
facilities used for the Content Distribution Services, as needed, in order for
Ascent to continue providing the Content Distribution Services at the same
polarity and utilizing a satellite in the same orbital position as the
Satellite (the “Back-Up Services”).  Subject to subsection (d) below, the terms
of this Section are not intended to limit OCV’s right to exercise all of its
remedies under this Agreement, including its rights under Section 14.5.  Should Ascent provide Back-Up Services:

 

(a)                                  Such
Back-Up Services shall be provided, to the extent possible, through the period
that the Content Distribution Services are unavailable;

 

(b)                                 Ascent
shall have no liability for services, or omission of services, provided by an
alternate third party provider, if the reason for the

 

5

 

unavailability of Content
Distribution Services is a Force Majeure Event;

 

(c)                                  Ascent
shall promptly restore the Content Distribution Services in accordance with Exhibit
B; and

 

(d)                                 OCV
shall not be entitled to Service Credits during the period in which Back-Up
Services are being provided in accordance with the terms and conditions of this
Agreement, including the service level requirements set forth in Exhibit B.

 

(e)                                  OCV
shall continue paying the Monthly Fee (and other applicable fees, if any).

 

4.2                               Content Distribution System.   Ascent shall provide a Content
Distribution System, which shall be operational twenty-four (24) hours a day, seven
(7) days a week.

 

4.3                               Uplink Facility.

 

4.3.1                     Requirements.  Ascent shall provide and maintain an Uplink
Facility meeting the specifications set forth below.  Ascent shall monitor the Uplink Facility twenty-four (24) hours a
day, seven (7) days a week in accordance with the terms and conditions in this
Agreement.  The Uplink Facility shall
have the following specifications:

 

(a)                                  Capable
of transmitting Packages to Satellite Transponder at a 1.5 Mbps sustained
information rate, which is burstable to 3.0 Mbps, or such greater numbers as
the Parties agree upon if OCV exercises its option to increase the bandwidth of
the Satellite Transponder pursuant to Section 4.1.2(a);

 

(b)                                  Digital
video broadcast (DVB) compliant as determined by the Receive Station specifications
provided by OCV;

 

(c)                                  FEC
capability;

 

(d)                                  Satellite
Access Requirements and operation parameters compliant;

 

(e)                                  Federal
Communications Commission (FCC) compliant;

 

(f)                                    Within
three (3) months from the Effective Date, Uplink Facility will have a redundant
uplink, consisting of a radio frequency (RF)
transmit chain, a DVB modulator, an IP encapsulator, a Store and Forward Hub
and a catcher.

 

(g)                                 Provision
of security of the Uplink Facility in compliance with MPAA guidelines,
including physical access control to RF transmit chain, DVB modulator, IP
encapsulator, and Store and Forward Hub, and

 

6

 

application access control to the IP encapsulator and
the Store and Forward Hub; and

 

(h)                                 Storage
of the Content at the Uplink Facility in compliance with MPAA guidelines.

 

4.3.2                     Relocation/Changes.  Ascent may, upon sixty (60) days prior
notice, relocate the Uplink Facility and/or change its configuration so long as
Ascent shall use diligent efforts not to disrupt the Content Distribution
Services.  All terms and conditions
relating to Ascent’s obligations to complete Transmissions and OCV’s remedies
for any failure to do so apply to this subsection.

 

4.3.3                     Satellite Transponder.  Ascent shall enter into an agreement
with the Satellite Provider for a transponder with specifications provided in
Section 4.3.1 above covering the continental United States, Hawaii, Alaska, and
parts of Canada and the Caribbean for the Term.  Such agreement shall obligate the Satellite Provider to provide a
Satellite Transponder that is non-preemptible and protected such that any
failure or unavailability of the Satellite or Satellite Transponder, unless due
to OCV’s breach of this Agreement or its gross negligence or willful misconduct,
will be restored on either another transponder on the Satellite or a New
Satellite then in orbit at no additional cost. 
Ascent acknowledges that its obligations set forth in this Section 4.3.3
constitute material obligations of Ascent.

 

4.3.4                     Acceptability of Satellite Transponder.  OCV acknowledges that the Satellite
Transponder in its current working order is appropriate for use by Ascent in
performing its obligations under this Agreement.

 

4.3.5                     Disclosure to OCV.  Ascent agrees to make diligent efforts to
include in the Satellite Access Agreement a requirement that the Satellite
Provider notify Ascent of any anticipated or current technical problems
relating to the Satellite, including problems with the Satellite’s CPU or
transponder failures.  Ascent agrees to
immediately provide to OCV all non-confidential information in its possession
relating to the performance, problems or capacity of Satellite or the Satellite
Transponder.  To the extent any such
information is deemed confidential, Ascent will seek permission from the
Satellite Provider to share such information with OCV subject to OCV’s
agreement to consider such information as Ascent’s Confidential Information (as
defined in the NDA) and, if required by the Satellite Provider, OCV’s execution
of a nondisclosure agreement with the Satellite Provider.

 

4.3.6                     Compliance with Satellite Access
Agreement.  Ascent agrees to
comply with all Satellite Access Requirements. 
Ascent shall provide OCV with immediate notice if the Satellite Provider
has indicated, whether in writing

 

7

 

or orally, that it considers Ascent to be in
noncompliance or breach of any of the Satellite Access Requirements.

 

4.3.7                     Satellite or Transponder Failure.  Unless due to OCV’s breach of this Agreement
or its gross negligence or willful misconduct, if the Satellite or Satellite
Transponder fails, the Parties agree that the following terms apply:

 

(a)                                  Irreparable
Failure.  If (i) the
Satellite Transponder or Satellite fails and such failure is irreparable as
determined by the Satellite Provider, (ii) the Satellite Transponder or
Satellite is unavailable due to actions of a Governmental Authority, or (iii) a
change of Satellite Transponder is mandated by the Satellite Provider, then
Ascent shall take all reasonable measures to exercise its right under the
Satellite Access Agreement to secure access on an alternative Ku-band
transponder on the Satellite or, if unavailable, on a Ku-Band transponder on a
different satellite of the Satellite Provider then in orbit.  In exercising its rights under the Satellite
Access Agreement, Ascent shall take all reasonable measures to secure an
alternative Ku-band transponder on the same polarity as the Satellite
Transponder, if available.  If the Satellite
Provider does not provide an alterative transponder, Ascent shall take all
reasonable measures to secure access on an alternative Ku-band transponder (an
“Alternative Transponder Agreement”).
Ascent shall assume any cost increase in securing access to an alternative
transponder, provided, however, that to the extent such cost is more than 50%
greater than Ascent’s cost under the pre-existing Satellite Access Agreement,
then (i) OCV shall pay Ascent’s cost in excess of such 50% threshold, and (ii) Ascent
shall provide notice of such cost increase prior to entering into such
Alternative Transponder Agreement; and (iii) Ascent shall comply with a request
by OCV to limit the term of the Alternative Transponder Agreement.  In either event, OCV, at its cost, shall
re-point and re-tune all current Receive Stations to receive Transmissions from
the new transponder.  If Ascent is
unable to obtain an alternative transponder from the Satellite Provider or an
Alternative Transponder Agreement in accordance with the terms of this
subsection, but has fully complied with its obligations under this Agreement,
it shall be construed as a Force Majeure Event retroactive to the date of
failure of the Satellite or Satellite Transponder.

 

(b)                                  Repairable
Satellite or Transponder Failure. 
If the Satellite Transponder or Satellite fails, and the Satellite
Provider has indicated that it will repair such failure within thirty (30)
days, OCV and Ascent shall be subject to the Satellite Provider’s procedures,
and the rights and obligations of Ascent relating to the initiation of
Transmissions shall be postponed until such repairs are completed and the terms
of Section 12 shall apply.  The Parties
agree that should the Satellite Transponder or Satellite fail to be operational
as required for Ascent to perform its

 

8

 

obligations under this Agreement within thirty (30)
days after the date of the Satellite or Satellite Transponder failure, then
such failure will be deemed irreparable and the terms of Section 4.3.7(a) above
shall apply.  Ascent shall use diligent
efforts to work with the Satellite Provider toward the timely repair of the
Satellite Transponder or Satellite.

 

4.3.8                     New Satellite or Satellite Transponder.
Ascent, at its sole cost and expense, may utilize a different Satellite
Transponder or Satellite (either, “New Satellite”) to fulfill its obligations
under this Agreement.  If Ascent decides
to do so and such decision is not the result of a Satellite or Satellite
Transponder Failure, then Ascent shall provide OCV with ninety (90) days prior
written notice of its intent to switch to a New Satellite and the following
terms shall apply:

 

(a)                                  Ascent,
at its cost, shall re-point and re-tune all current Receive Stations to receive
Transmissions from the New Satellite and Ascent shall use commercially
reasonable efforts not to disrupt the Content Distribution Services, and in any
event shall not disrupt scheduled Transmissions for more than an aggregate of
two (2) days.

 

(b)                                  All
terms and conditions of this Agreement relating to the Satellite, Satellite
Transponder and Satellite Access Agreement, shall apply to the New Satellite.

 

(c)                                  Upon
providing OCV with written notice of its decision to switch to a New Satellite,
the Parties will work together to develop a plan to assess and minimize the
impact, if any, on Ascent’s ability to perform Content Distribution Services
under this Agreement.  Ascent shall not
switch to a New Satellite if Ascent reasonably determines that doing so will
materially impact Ascent’s ability to perform the Content Distribution Services
under this Agreement for a period of two (2) days or more, unless Ascent
provides Back-Up Services (where such Back-Up Services distribute Packages to
the pre-existing Satellite Transponder) at no cost to OCV pursuant to Section
4.1.4 of this Agreement and in compliance with the terms and conditions of this
Agreement until all Receive Stations are capable of receiving Transmissions
through the New Satellite.

 

(d)                                  Within
fourteen (14) days after the Parties develop the plan described in Section
4.3.8(c) above, if OCV sends written notice to Ascent that OCV reasonably
determines that OCV will incur significant expense as a result of the switch to
a New Satellite, then Ascent shall not switch access to a New Satellite unless
the Parties agree upon reimbursement terms for OCV’s expenses.

 

(e)                                  OCV’s
failure to send notice pursuant to Section 4.3.8(d) above shall be deemed OCV’s
approval of Ascent’s proposed switch to a New

 

9

 

Satellite subject, however, to Ascent’s compliance
with the terms of Section 4.3.8.

 

4.4                               Service Level Terms and Conditions.  Ascent agrees to provide the services
described in the Service Level Terms and Conditions, attached as Exhibit B
and incorporated into this Agreement.

 

4.5                               Content Preparation Services.  Ascent agrees to provide the services
described in the Content Preparation Services Agreement as attached as Exhibit
A to this Agreement.

 

Section 5.  OCV Obligations.

 

OCV agrees that it shall comply with the responsibilities set forth in
this Section at its sole cost and expense. 
To the extent Ascent is unable to perform its obligations due to OCV’s
failure to perform its obligations, Ascent’s failure to perform shall be
excused until such time as OCV performs its obligations.

 

5.1                               Licensed Rights.  OCV
shall obtain all Licensed Rights
in accordance with Section 10.3.1 of the Agreement.

 

5.2                               Facilitate Flow of Information.  OCV shall facilitate the flow of all information
required by Ascent to perform the Content Distribution Services including,
without limitation, access to appropriate OCV staff.

 

5.3                               Facilitate Access to Upgrades.  OCV shall facilitate the access to any
future OCX hardware and software upgrades to ensure performance and reliability
benchmarks.

 

5.4                               Vendor Relationships.  If required for Ascent to perform its
obligations, OCV will facilitate the relationship between OCV’s vendors or
system integrators (such as DVA) with Ascent, such that Ascent receives
information or assistance required for it to perform services under this
Agreement.

 

5.5                               Equipment.  Subject to Section 11 (Intellectual
Property), OCV will install, maintain, service and upgrade (as needed)
Equipment on Ascent’s premises.

 

5.6                               Service
Level Terms and Conditions. 
OCV shall fulfill its obligations under the Service Level Terms and Conditions attached as Exhibit B to this
Agreement.

 

5.7                               Receive Stations.  OCV shall purchase, install, operate,
monitor and maintain all Receive Stations.

 

5.8                               Compatibility.  OCV shall ensure that the configuration of
all Receive Stations are compatible with the Content Distribution System,
provided such Content Distribution System meets the requirements specified in
this Agreement.

 

10

 

5.9                               Content Obligations.  OCV represents that it is and will remain in
compliance with all its obligations with respect to the Content and the OCV VOD
Offering, whether under contractual arrangement or by Law, and that OCV shall
deliver Content to Ascent for use pursuant to this Agreement that is encrypted,
not corrupt and in a condition in which Ascent is able to perform the Services.

 

Section 6.    OCV Rights.

 

6.1                               Offering to End Customers of OCV.  OCV has sole control and discretion over the
Content offered to its end customers, including, without limitation, all
aspects of scheduling, and all title and rights for Content, and availability
of Content.  OCV has sole control and
discretion over consumer branding and promotion for its end customers.

 

6.2                               Licensed Rights.  OCV has sole control and discretion over the
terms of the Licensed Rights; provided that such Licensed Rights shall include,
at a minimum, those rights that are required for Ascent to perform its
obligations under this Agreement.

 

6.3                               Technology.  OCV has sole control and discretion over
Technology used by OCV for its Equipment, servers and related applications,
subject to Section 5.8.

 

Section 7.  Quality Assurance; Security.

 

7.1                               Project Managers; Meetings.  Each Party shall designate one employee
with decision-making authority to serve as the principal technical contact for
such Party during the term of this Agreement (each a “Project Manager”).  The Project Managers shall work together to
ensure that the Services proceed in a timely manner.  Either Party may change its Project Manager at any time and from
time to time by giving the other Party written notice.  Both Parties agree that the respective
Project Managers shall hold phone calls or meetings on a regular basis, at
times and locations mutually agreed upon, to discuss any matters arising under
this Agreement.

 

7.2                               Inspections.  Ascent shall provide OCV and OCV’s
designated representatives access to Ascent’s facilities involved in providing
the Services to conduct progress reviews, “walk-throughs” and discussions with
personnel and management of Ascent regarding the status and conduct of Ascent’s
performance of its obligations under this Agreement so long as OCV and OCV’s
designated representatives are accompanied by an authorized representative of
Ascent and such access is (i) during Business Hours, (ii) scheduled upon
reasonable advanced notice, (iii) does not disrupt the conduct of Ascent’s
normal business, (iv) complies with all Ascent access control and security
requirements, (v) does not violate any Law or MPAA guideline, and (vi) is
reasonable in time, scope and frequency.

 

11

 

7.3                               Notice and Reporting to OCV.  Subject to any limitations based on Section
4.3.5 of this Agreement and during Business Hours, Ascent agrees to (i)
promptly notify and provide details about any expected or likely delays,
resource shortages or other issues that could affect its ability to provide
timely and/or conforming deliveries and services under the Agreement and (ii)
respond to reasonable requests for information regarding the matters
contemplated in this Agreement by OCV.

 

7.4                               Time of the Essence.  Ascent acknowledges and agrees that time is
of the essence in the performance of its obligations hereunder.  This provision shall not impose any
additional time constraints on matters that have been expressly agreed to
hereunder.

 

7.5                               Restricted Access.  Ascent shall allow only those employees and
authorized agents and independent contractors (collectively, “Ascent
Personnel”) actually providing services under this Agreement to
access the Content and/or Packages, and such Content and/or Packages shall be
accessed only to the extent needed by Ascent Personnel to perform their responsibilities.  Ascent agrees that (i) Content and/or
Packages shall not leave Ascent’s possession or control, except to transfer to
OCV or distribute Content in accordance with OCV’s instructions as contemplated
under this Agreement; and (ii) Ascent shall use Ascent Personnel to effect any
transfer of Content and/or Packages within Ascent’s facilities.

 

7.6                               Notice of Security Issues.  Ascent shall provide prompt notice with
supporting details to OCV if it becomes aware of any of the following: (i) any
failure to conform to the MPAA security guidelines or the requirements in the
Agreement relating to security of Content, Packages, the Uplink Facility or any
part of the Content Distribution System, whether or not such failure results in
any actual unauthorized use or a breach of security; (ii) any unauthorized use
of the Content, Packages or OCV’s Confidential Information; or (iii) any breach
of security relating to storage facilities at Ascent.

 

Section 8.    Link Budget.

 

8.1                               Obligations.  With respect to obligations regarding the Link Budget, the
Parties agree that Ascent (i) shall be responsible only for complying with
uplink configuration matters discussed in the Link Budget, (ii) shall take all
reasonable measures to have the Satellite Provider comply with the space
segment matters discussed in the Link Budget, and (iii) shall not be
responsible for complying with Receive Station matters discussed in the Link
Budget.

 

8.2                               Acceptability of Link Budget.  OCV acknowledges that the Link Budget is
acceptable for use by it and Ascent in performing their respective obligations
under this Agreement.

 

12

 

Section 9.  Payment and Fees.

 

9.1                               Fee Schedule.  In consideration of the Services to be
performed by Ascent, OCV shall pay to Ascent the amounts described below, as
adjusted in accordance with Section 9.2 and offset by any Service Credits.  All Monthly Fees (as defined in Exhibit F)
shall be due and payable 30 days after receipt of an invoice for completed
services.  All other fees shall be due
and payable within 30 days after receipt by OCV of an invoice for completed
services or authorized expense reimbursable by OCV, if applicable.

 

9.1.1                     Content Distribution Services Fees.  The fees for Content Distribution
Services shall be provided in Exhibit F and incorporated herein by
reference.

 

9.1.2                     Content Preparation Services Fees.  The fees for Content Preparation
Services shall be provided in Exhibit A.

 

9.1.3                     Payments.  Payments to Ascent shall be made in U.S.
Dollars via check or wire transfer to the following account:

 

	
  If
  mailed by U.S. Mail:

  	
  Ascent
  Media Group, Inc.

  
	
   

  	
  Dept 2146

  
	
   

  	
  Los Angeles, CA
  90084-2146

  
	
   

  	
   

  
	
  If mailed by courier:

  	
  Ascent Media Group,
  Inc.

  
	
   

  	
  2255 North Ontario
  Street, Suite 350

  
	
   

  	
  Burbank, CA 91504

  
	
  Wire Transfer:

  	
   

  
	
  Bank:

  	
  Wells Fargo Bank, N.A.

  
	
  Address

  	
  San Francisco, CA, USA

  
	
  ABA
  No.:

  	
  121000248

  
	
  Acct
  No.:

  	
  4122834229

  
	
  Account
  Name:

  	
  Ascent Media Group

  
	
  Contact:

  	
  Rebecca Clute, Vice
  President

  
	
   

  	
  Wells Fargo Bank, N.A.

  
	
   

  	
  6001 Topanga Canyon
  Blvd. #205

  
	
   

  	
  Woodland Hills, CA
  91367

  
	
   

  	
  (818)716-3248

  
	
  Swift
  #

  	
  WFBIUS6S

  

 

9.2                               Late Payment.  Undisputed past due payments shall incur a
late payment charge of one and one-half percent (1.5%) thereof per month (or
the maximum rate permitted by law, if less). 
A payment shall be deemed past due thirty-one (31) days after such
payment is due and payable (the “Payment Past Due Date”).  Billing disputes shall be submitted in
writing (including confirmed e-mail

 

13

 

transmission) to Ascent within 30 days after OCV
discovers the billing issue, but in no case later than 90 days after the date
of the invoice.

 

9.3                               Fees Exclusive of Taxes.  All amounts payable under the Agreement are
exclusive of any taxes or other government charges, incurred by Ascent as a
result of provision of the Services, equipment and facilities by Ascent
pursuant to the Agreement.  OCV will pay
any and all (a) sales, use, excise or other taxes (other than taxes measured on
the income of Ascent), and (b) regulatory fees or surcharges of all
Governmental Authorities, applicable to the Services to be provided by Ascent
to OCV.  If OCV is exempt from such
taxes, it shall provide Ascent with a tax-exempt certificate.

 

9.4                               Additional Payment Terms.  The parties agree to the Additional Payment
Terms defined in Exhibit F.

 

Section 10.            Representations and Warranties.

 

10.1                        Mutual Representations and Warranties.  Each Party represents and warrants to the
other that:

 

10.1.1              It has the right, power and authority to
enter into and to fully perform its obligations under this Agreement.

 

10.1.2              When executed and delivered, this
Agreement shall constitute a valid and binding obligation of such Party.

 

10.1.3              It has not entered and shall not enter
into any agreement or arrangement that could reasonably be expected to limit
the performance of its obligations, or diminish or impair the rights of the
other Party, hereunder.

 

10.1.4              There are no liens, encumbrances,
actions, suits or proceedings pending before any Governmental Authority or, to
the knowledge of such Party, threatened against it, that could reasonably be
expected to materially limit the performance of its obligations, or to
materially impair the rights of the other Party, hereunder.

 

10.1.5              No approvals, consents, authorizations,
permissions, licenses, certificates or permits of any third party, other than
the Licensed Rights, are needed for the performance of its obligations
hereunder that have not been obtained and that do not remain in full force and
effect as of the execution hereof.

 

10.1.6              As of the date of this Agreement, (a) it
has neither sought nor has any intention voluntarily to seek the protection of
any bankruptcy law; (b) it has no reason to believe that any of its creditors
has caused or intends to cause it to become the subject of any proceedings
under any bankruptcy law; and (c) it has no knowledge of any state of facts
which, if known to its creditors, (i) would cause it voluntarily to seek the
protection of any

 

14

 

bankruptcy law, or (ii) might reasonably cause any
such creditor to cause it to become the subject of any proceeding under any
bankruptcy law.

 

10.1.7              In the performance of its obligations
hereunder, it shall comply with all applicable laws, rules, regulations,
statutes and ordinances of all governmental entities including local, state,
federal or international, now or hereafter enacted (“Laws”).

 

10.2                        Ascent Representations and Warranties.

 

10.2.1              Performance; Productivity.  Ascent represents and warrants that Ascent
shall perform all services under this Agreement in a professional manner
consistent with industry standards and the terms and conditions of this
Agreement.

 

10.2.2              Non-Infringement.  Ascent represents and warrants that, to the best of its knowledge
and belief, the Content Distribution System and the equipment used by Ascent in
connection with the performance of its obligations hereunder do not infringe
upon or misappropriate any Intellectual Property Right of any third party.

 

10.2.3              No Additional Warranties.  THE WARRANTIES AND REPRESENTATIONS CONTAINED
IN THIS AGREEMENT ARE THE ONLY WARRANTIES AND REPRESENTATIONS MADE BY ASCENT
AND CAN BE AMENDED ONLY BY A WRITTEN INSTRUMENT SIGNED BY AN OFFICER OF ASCENT.  ASCENT EXPRESSLY DISCLAIMS ALL OTHER
WARRANTIES, EXPRESS OR IMPLIED, INCLUDING BUT NOT LIMITED TO ANY WARRANTY OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.

 

10.3                        OCV Representations and Warranties.  OCV represents and warrants that:

 

10.3.1              Licensed Rights. 
OCV has obtained and will maintain throughout the time in
which Ascent uses the Content pursuant to this Agreement, all Licensed Rights
for Ascent to receive, store and transmit Packages in accordance with the terms
of this Agreement and otherwise perform its obligations under this Agreement.

 

10.3.2              Own Use. 
The services to be performed by Ascent are for OCV’s own use to conduct
its business and in no event shall OCV be permitted to resell the Content
Distribution Services, in whole or in part, to any other person or entity.

 

10.3.3              Lawful Purpose.  OCV shall use the Content Distribution Services only for lawful
purposes and in compliance with all Laws.

 

15

 

10.3.4              Non-Infringement.  To the best of its knowledge and belief, the Equipment does not
infringe upon or misappropriate any Intellectual Property Right of any third
party.

 

10.4                        Insurance.  Each Party shall obtain and maintain during
the Term and for one (1) year thereafter (i) Errors and Omissions Insurance, on
a claims made basis, with minimum limits of Ten Million Dollars ($10,000,000),
protecting it and the other Party and its affiliates (its “Affiliates”) from
any errors and omissions of itself under this Agreement, and (ii) Media
Liability Insurance, on an occurrence form basis, with minimum limits of Ten
Million Dollars ($10,000,000), protecting it and the other Party and its
Affiliates from any claims based on the Content.  The foregoing insurance coverage may not be reduced or canceled
without thirty (30) days prior written notice to the other Party.  All insurance shall be primary and not
contributory with regard to any other available insurance held by the other
Party or its Affiliates.  All insurance
shall be written by companies with a BEST Guide rating of A- or better.  Certificates of insurance shall be promptly
furnished to the other Party at its request, and such policies shall include
the other Party and its Affiliates as additional insureds, if the other Party is
not already named as a primary insured on the policies.

 

Section 11.                                   Intellectual Property.

 

11.1                        OCV License.  OCV grants Ascent a non-exclusive
and non-transferable license to use the Packages and Equipment supplied by or
on behalf of OCV under this Agreement during the Term solely for the purpose of
performing Content Distribution Services for OCV in accordance with this
Agreement.  Upon termination or
expiration of this Agreement for any reason, all Packages and Equipment still
in Ascent’s possession shall be immediately returned to OCV.

 

11.2                        OCV Property.  Subject to the license set forth in Section
11.1 above, Ascent shall have no right, title or interest in the Equipment and
Packages, or any Intellectual Property Rights embodied therein.

 

11.3                        Ascent Property.  Ascent, in connection with the performance
and preparation of the work to be performed hereunder may utilize, invent, make
or develop Technology to achieve a particular or desired result in the course
of performing the Services, and Ascent shall retain all Intellectual Property
Rights embodied therein.

 

16

 

Section 12.                                   Force Majeure.

 

Subject to Ascent’s performance of its obligations, if any, relating to
or arising out of the Force Majeure Event (as defined below), Ascent is not
liable, either wholly or in part, for nonperformance or a delay in performance
due to force
majeure or contingencies or causes beyond the reasonable control of
Ascent, including but not limited to shortage of labor, fuel, raw material or
machinery, or fire, flood, Law, political action, acts of War, acts of
terrorism or acts of God (“Force Majeure
Event”).  To the extent
Ascent claims an inability to perform based on a Force Majeure Event, including
Satellite or Satellite Transponder failure, the Monthly Fee shall be reduced
pro rata by the number of days during which Ascent has claimed an inability to
perform.  If Ascent claims an inability
to perform as a result of any Force Majeure event for a period of thirty (30)
consecutive days, then OCV may terminate the Agreement pursuant to Section
14.5(ii).

 

Section 13.                                   Dispute Resolution.

 

13.1                        Informal Dispute Resolution.  Prior to the initiation of any formal proceeding, the Parties
shall first attempt to resolve any dispute informally pursuant to this Section
13.1.  Upon the written request of a
Party, the other Party shall appoint a designated representative who does not
devote substantially all of his or her time to performance under this
Agreement, whose task it will be to meet for the purpose of endeavoring to resolve
such dispute.   The following guidelines
shall apply:

 

13.1.1              The designated representatives shall meet
as often as the Parties reasonably deem necessary in order to gather and
furnish to the other all information with respect to the matter in issue which
the Parties believe to be appropriate and germane in connection with its
resolution.  The representatives shall
discuss the problem and attempt to resolve the dispute without the necessity of
any formal proceeding.

 

13.1.2              During the course of discussion, all
reasonable requests made by one Party to another for non-privileged
information, reasonably related to this Agreement, shall be honored in order
that each of the Parties may be fully advised of the other’s position.

 

13.1.3              The specific format for the discussions
shall be left to the discretion of the designated representatives.

 

13.1.4              If the designated representatives fail to
resolve the dispute, the Parties agree to escalate the dispute resolution
process up to a higher executive level, and then to the CEO level, provided
that the dispute shall not be escalated to any person that has a conflict of
interest between the Parties.  Each
level of informal dispute resolution will be allowed no more than fifteen (15)
days, unless otherwise mutually agreed by the Parties.

 

13.2                        Formal Dispute Resolution.  If the informal dispute resolution
procedures described in the foregoing section do not resolve the dispute, the
Parties shall be free to seek a resolution of the dispute through a court of
competent jurisdiction or

 

17

 

other manner consistent with the terms and conditions
with this Agreement, subject to Section 13.3 below.

 

13.3                        Obligation to Continue Performing.  At OCV’s option, Ascent shall continue to
perform services under this Agreement pending resolution of the dispute,
provided that (i) Ascent shall not be obligated to provide services for more
than a period of sixty (60) days after Ascent provides OCV with notice that it
believes it is entitled or that it intends to terminate this Agreement pursuant
to Section 14; and (ii) OCV is current and continues to timely pay Ascent for
all services under this Agreement pursuant to Section 9, except that all
amounts disputed under Section 9.2 shall also be paid as if undisputed,
provided that Ascent shall return to OCV such disputed amounts that are later
determined by a court of competent jurisdiction to be due and payable to OCV.

 

Section 14.                                   Termination.

 

14.1                        Termination for Cause.  Either Party may terminate this Agreement in
whole but not in part (a) upon thirty (30) days prior written notice, if the
other Party commits a material breach of this Agreement and, in the case of a
breach capable of being cured, fails to cure such breach within such thirty day-period
after receiving written notice detailing the particulars of such breach, or (b)
upon prior written notice by the terminating Party if (i) the other Party files
a petition in bankruptcy or if such a petition is filed against such Party,
(ii) the other Party takes advantage of any insolvency law, (iii) the other
Party makes an assignment for the benefit of creditors, (iv) a receiver,
liquidator or trustee is appointed in respect of all or a substantial portion
of the other Party’s property or affairs, or (v) the other party incurably
breaches a material term of this Agreement.

 

14.2                        Termination for Failure to Pay.  Without limitation of the provisions of
Section 14.1, Ascent may terminate this Agreement, in whole but not in part,
upon written notice to OCV, if OCV fails to pay any amount due and payable by
the Payment Past Due Date after ten (10) days prior written notice by Ascent.

 

14.3                        Termination without Cause.  Beginning one year from the Effective Date,
OCV may terminate the Agreement, in whole but not in part, upon six (6) months
prior written notice, for any reason. 
OCV’s compliance with Section 14.4 shall be its sole liability in
connection with termination pursuant to this Section 14.3.

 

14.4                        Effect of Termination.

 

14.4.1              Expiration or Termination.  Upon the expiration or termination of this
Agreement for any reason:

 

(a)                                  all
licenses granted herein shall immediately terminate;

 

(b)                                  each
Party shall return to the other all tangible materials embodying Confidential
Information of the other in its possession or control; and

 

18

 

(c)                                  Ascent
shall immediately comply with OCV’s instructions with respect to the transfer
of any Packages, Equipment, Content or licensed software in Ascent’s
possession.

 

14.4.2              Early
Termination Fee.  The parties
agree to the Early Termination Fee provision attached as Exhibit H and
incorporated herein by reference.

 

Ascent shall use commercially reasonable efforts to
mitigate its damages (including utilizing a satellite broker or seeking a
release from its obligations under the Satellite Access Agreement) and OCV
shall be entitled to a reimbursement by Ascent of the Early Termination Fee
paid (after taking into account Ascent’s costs and expenses incurred in its
mitigation efforts) to the extent that Ascent receives any payments or release
from payment obligations due to its mitigation efforts.  Other than OCV’s third-party indemnification
and confidentiality obligations, payment by OCV pursuant to this subsection
shall be Ascent’s sole remedy and OCV’s sole liability for any breach or early
termination by OCV.

 

14.5                        Repeated Service Failures.  Notwithstanding any term to the contrary,
OCV may terminate this Agreement upon 30 days’ prior written notice if any of
the following circumstances occur: (i) in any consecutive two month period, OCV
is entitled to a Service Credit equal to 50% of the Monthly Fee for each of the
two months; or (ii) for any reason (including Satellite or Satellite
Transponder Failure or a Force Majeure Event), other than a reason which is
OCV’s fault, the Content Distribution System is not operational for a period of
30 consecutive days.  If OCV terminates
this Agreement pursuant to this Section, then (x) OCV’s sole liability under this Agreement shall be payment of all
amounts owing to Ascent but unpaid through the date of termination, (y) such
termination shall be Ascent’s sole liability and OCV’s sole remedy in
connection with Ascent’s failure to meet its Content Distribution Services
obligations under this Agreement, and (z) both parties’ third-party
indemnification and confidentiality obligations shall survive such
termination.  Notwithstanding the
foregoing, nothing in this subsection shall be construed, upon the occurrence
of the circumstances set forth above in 14.5(i), or (ii) to (aa) require OCV to
terminate this Agreement pursuant to this subsection, (bb) limit OCV’s right to
enforce the termination provision of its choice, or (cc) limit OCV’s remedies
if OCV does not terminate the Agreement pursuant to this subsection.

 

14.6                        Duty of Cooperation.  Upon anticipated expiration or termination
of this Agreement for any reason, Ascent shall reasonably cooperate in the
transitioning of the Content Distribution Services provided under this
Agreement to another service provider. 
Such cooperation shall include reasonable telephonic assistance and
transfer of any documents and files in Ascent’s possession necessary for a new
service provider to perform the Content Distribution Services.  For assistance required after the effective
date of termination or expiration of this Agreement,

 

19

 

OCV shall reimburse
Ascent for its cost (as mutually agreed by the Parties) in providing such
assistance.

 

Section 15.                                   Indemnification.

 

15.1                        Mutual Indemnification.  Ascent and OCV agree to indemnify, defend
and hold the other Party, its parent and affiliated entities, and the officers,
directors, employees, partners, shareholders and agents of each of the
foregoing, harmless from and against any and all Losses arising out of or
caused by (i) the breach of this Agreement by such Party, and (ii) any
misrepresentation by such Party with respect to or in connection with the
Content or Services.

 

15.2                        Indemnification by OCV.  OCV agrees to indemnify, defend and hold
Ascent its parent and affiliated entities, and the officers, directors,
employees, partners, shareholders and agents of each of the foregoing, harmless
from and against any and all Losses (a) arising out of or caused by the Content
or Equipment, including, without limitation, the alleged infringement or
violation of the Content of any Law or of the rights of any third party,
including, but not limited to, breach of contract, defamation, obscenity and
indecency laws, civil right, property right, right of privacy, right of
publicity, copyright, trademark right, or other right of any person, firm or
corporation, and (b) associated with a claim by any owner or other provider of
any of the Content, by any Equipment owner or by any subscriber or end customer
of OCV against Ascent that relates to or arises out of Ascent’s provision of
the Services in compliance with this Agreement.

 

15.3                        Exclusion.  Neither Party shall have an obligation to
indemnify the other Party, which seeks indemnification (the “Indemnified Party”), for any Losses claimed
by the Indemnified Party arising out of, or that would not have arisen but for
the Indemnified Party’s: (i) breach of the Agreement; or (ii) negligence or
willful misconduct.

 

15.4                        Indemnification by Ascent.  Ascent agrees to indemnify, defend and hold
OCV its parent and affiliated entities, and the officers, directors, employees,
partners, shareholders and agents of each of the foregoing, harmless from and
against any and all Losses arising out of the alleged infringement of an
Intellectual Property Right of a third party by the equipment (other than the
Equipment) used by Ascent to provide the Services.

 

15.5                        Notice.  Promptly after receipt of any notice of the
commencement or threatened commencement of any civil, criminal, administrative,
or investigative action or proceeding involving a claim in respect of which the
Indemnified Party will seek indemnification pursuant to this Agreement from the
other Party (“Indemnifying  Party”), such Party shall notify the
Indemnifying Party of such claim in writing. 
No failure to so notify the Indemnifying Party shall relieve it of its
obligations under this Agreement except to the extent that it can demonstrate
actual damages attributable to such failure.  
The Indemnifying Party may, at its option, undertake the defense of any
such claim and permit the Indemnified Party to participate

 

20

 

therein at its own expense.  The settlement of any such claim by the Indemnified Party without
the Indemnifying Party’s prior written consent (which shall not be unreasonably
withheld) shall release the Indemnifying Party from its obligations hereunder
with respect to the claim so settled.

 

Section 16.                                   Disclaimer of Damages.

 

16.1                        Limitation of Liability. 
The parties agree to the Limitation of Liability provision attached
hereto as Exhibit G and incorporated herein by reference.

 

16.2                        Ascent Disclaimer. 
Provided that Ascent has complied with its obligations under this Agreement,
Ascent shall not be liable or responsible for (i) any interception, or damages
caused by interception of a scrambled signal, and (ii) any Content outside the
points where such signal enters into or departs from Ascent’s Content
Distribution System.

 

Section 17.                                   Confidentiality.

 

The Parties agree that they are bound by the terms of the Mutual
Nondisclosure Agreement, dated August 23, 2002, by and between Ascent (under
its former name, Liberty Livewire Corporation) and On Command Corporation
attached hereto as Exhibit D (the “NDA”). The Parties agree that the terms and
conditions of the NDA shall be incorporated by reference and form part of this
Agreement. If there is a conflict between this Agreement and the NDA, the NDA
shall take priority with regard to the creation, maintenance, use and
protection of Confidential Information (as defined in the NDA) to the extent of
the conflict. Notwithstanding the foregoing, the Parties agree that the term of
the NDA shall automatically extend through the Term of this Agreement.

 

Section 18.                                   General Provisions

 

18.1                        Survival.  Sections 1 (Definitions), 11 (Intellectual
Property), 10.4 (Insurance), 14.4 (Effect of Termination), 15
(Indemnification), 16 (Disclaimer of Damages), 17 (Confidentiality), and 18
(General Provisions) shall survive the expiration or termination of this
Agreement for any reason.

 

18.2                        Assignment.  This Agreement shall not be assignable
without the consent of the other Party (such consent not to be unreasonably
withheld or delayed), except that no consent shall be required in connection
with assignment of the Agreement to any entity controlling, controlled by or
under common control with such party or in connection with the merger,
consolidation, sale, or other transfer of all or substantially all the business
and/or assets of OCV or of that part of the OCV’s business used in the
performance of this Agreement. 
Unauthorized assignment shall be void. 
This Agreement shall be binding upon and shall inure to the benefit of
the Parties’ authorized successors and assigns.  Except as expressly provided herein or upon OCV’s prior written
consent, Ascent may not subcontract any portion of the Services.

 

21

 

18.3                        Release Of Information.  Neither Ascent nor OCV shall publicly
announce or disclose the terms and conditions of this Agreement, or advertise
or release any publicity regarding this Agreement, without the prior written
consent of the other Party, except that either Party may disclose the terms of
this Agreement to bona fide potential investors who have executed an agreement
with such Party prohibiting further disclosure or use of any such disclosed
terms in connection with evaluating an investment in such Party.  This provision shall survive the expiration,
termination or cancellation of this Agreement. 
Notwithstanding the foregoing, the Parties shall use commercially
reasonable efforts to issue a joint press release regarding the services
provided hereunder immediately after the execution of this Agreement, and after
such joint press release, either Party may state, in the normal course of its
business, that it does business with the other Party and the general nature of
such business and that the Parties have entered into this Agreement and the nature
of the services.

 

18.4                        Modification.  No representations or statements of any kind
made by a representative of a Party, which are not stated herein, shall be
binding on the Party unless made in writing and signed by a duly authorized
representative of such Party.

 

18.5                        Relationship of Parties.  The Parties are independent contractors and
nothing in this Agreement shall be construed as creating any agency,
partnership, or other form of joint enterprise between the Parties.  Neither Party will have the authority to act
or create any binding obligation on behalf of the other Party.

 

18.6                        Notices.  All notices required or permitted under this
Agreement will be in writing and will be deemed delivered (a) when actually
delivered if delivered in person, (b) one (1) day after being deposited in a
recognized express, overnight delivery service, (c) when actually received if
received by confirmed facsimile and such facsimile transmission is followed by
a mailed copy, or (d) three (3) days after being deposited in the United States
mail service, postage prepaid, addressed to the Party as follows: 

 

22

 

 

	
  If to OCV:

  

  On Command Corporation

  

  4610 S. Ulster

  6th Floor

  Denver, CO 80237

  

  Facsimile: 720-873-3433

  Attention: Tom Lambrecht

  

  with a
  copy to:

  

  On Command Corporation

  4610 S. Ulster

  6th Floor

  Denver, CO 80237

  Facsimile 720-873-3397

  Attention: Pamela Strauss, Esq.

  	
   

  	
  If to Ascent:

  

  

  Ascent Media Group, Inc.

  520 Broadway, 5th Floor

  Santa Monica, CA  90401

  Facsimile:  310-434-7006

  Attention:  José A. Royo

  

  with a
  copy to:

  

  Ascent Media Group, Inc.

  520 Broadway, 5th Floor

  Santa Monica, CA  90401

  Facsimile:  310-434-7005

  Attention:  Legal Department

  

 

Either Party may change its address for notice
purposes by notifying the other Party in accordance with this Section 18.6.

 

18.7                        Governing Law.  This Agreement shall be governed by and
construed in accordance with the laws of the State of California, without
reference to its conflict of laws principles.

 

18.8                        Entire Agreement.  This Agreement, including its Exhibits,
constitutes the entire agreement between the Parties with respect to the
subject matter hereof, and supersedes any prior or contemporaneous written or
oral agreements or understandings between the Parties with respect to the
subject matter hereof.  No amendment or
modification to this Agreement will be effective unless made in writing and
signed by both Parties.  In the event of
any conflict between the terms hereof and those in any exhibits (except for Exhibit
A, which is a stand-alone agreement and is not incorporated herein) hereto,
the terms of this Agreement shall control unless expressly stated otherwise in
this Agreement.

 

18.9                        Waiver.  Failure by either Party to exercise any
rights under this Agreement in any one or more instances will not constitute a
waiver of such rights in any other instance. 
Waiver by a Party of any default under this Agreement will not be deemed
a waiver of any other default.

 

18.10                 Severability.  If any provision of this Agreement shall be declared illegal,
invalid or unenforceable, in whole or in part, by a court of competent
jurisdiction, all other provisions of this Agreement shall remain in full force
and effect.

 

23

 

18.11                 Laws. 
Nothing contained in this Agreement shall be construed so as to require
the commission of any act contrary to Law, and wherever there is any conflict
between any provision of this Agreement and any Law, such Law shall prevail;
provided, however, that in such event the provision(s) of this Agreement so
affected shall be curtailed and limited only to the extent necessary to permit
compliance with the minimum legal requirement, no other provisions of this
Agreement shall be affected thereby and all of such other provisions shall
continue in full force and effect.

 

18.12                 No Third Party Beneficiaries.  The provisions of this Agreement are only
for the benefit of the Parties hereto, and no third party may seek to enforce
or benefit from such provisions.

 

18.13                 Costs. 
Any costs incurred by either Party in enforcing this Agreement shall be
borne by the nonprevailing party.

 

18.14                 Headings.  Headings used in this Agreement are for convenience of reference
only and shall not be used to interpret any aspect of this Agreement.

 

18.15                 Counterparts. This Agreement may be
executed in counterparts, each of which will be considered an original, and all
of which together will constitute one and the same instrument.

 

18.16                 Drafting.  Neither Party shall be deemed to be the
drafter of this Agreement, so that this Agreement shall not be construed
against either Party on the basis that such Party was the drafter thereof.

 

24

 

IN WITNESS WHEREOF, duly authorized
representatives of the undersigned Parties have executed this Agreement, to be
effective as of the Effective Date.

 

 

	
   

  	
  Ascent Media Group, Inc.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Richard C. Fickle

  
	
   

  	
   

  	
  Richard C. Fickle

  
	
   

  	
   

  	
  Executive Vice President

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  On Command Video Corporation

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
   

  	
  /s/ Laurence M. Smith

  
	
   

  	
   

  	
  Laurence M. Smith

  
	
   

  	
   

  	
  Senior Vice President,

  
	
   

  	
   

  	
  Sales and Distribution

  

 

25Exhibit
10.10

 

LEASE
AGREEMENT

 

THIS LEASE AGREEMENT (the
“lease”) is entered into and dated this 1st day of, March, 2003 by and between
Building No. 2 LLC (the “landlord”) and 1st Mariner Bank  (the “Tenant”).

 

RECITALS

 

Landlord agrees to Lease to
Tenant and Tenant agrees to lease from Landlord 4,500 sq. ft of office space,
herein after referred to as “the Premises”, upon the terms and conditions
herein stated.

 

NOW, therefore, in
consideration of the rents, covenants, and agreements herein contained, the
Landlord and Tenant agree as follows:

 

Section 1.                                          Premises, term, and Collection Date

 

a.                                       Lease.  Landlord hereby leases to the
Tenant, and the Tenant rents form the Landlord, the space comprising of
approximately Four Thousand Five Hundred (4,500) square feet of office space,
outlined on the plans attached hereto as exhibit A (the “Premises”), on the
property located at 1511 Highland Avenue, Baltimore, Maryland 21224 (the
“Building”), subject to such rights, easements, covenants, conditions,
restrictions and other interests of record of Landlord and persons other than
Landlord, and to all zoning rules, restrictions and governmental regulations
now in effect by any governmental authority having jurisdiction over the
Premises and Building.

 

b.                                      Initial Term.  The term of this lease shall commence on March 1, 2003  (the “Commencement Date”) and shall extend
for ten years and eight months (the “Initial Term”) thereafter and end on October
31, 2013.

 

c.                                       Rental Year - Defined. 
The term “Rental Year” shall mean the period of twelve (12) consecutive
months following the Commencement Date, and each subsequent twelve-month period
thereafter.

 

1

 

Section 2.                                          Rental

 

a.                                       Annual Base Rent. 
Tenant covenants and agrees to pay to Landlord, as rent for the Premises
for the first Rental Year, the sum of Seventy Four Thousand Two Hundred Fifty
Dollars ($74,250.00) payable in equal monthly installments of Six Thousand One
Hundred Eighty Seven Dollars and 50/100 ($6,187.50).  Thereafter, the annual base Rent shall be adjusted as provided in
paragraph 2.c.

 

b.                                      Payment of Rent. 
All payments of Rent shall be due and paid in advance on the first day
of each month without any setoff or deduction for any reason whatsoever.  Tenant shall deliver all Rent payable and
all statements required thereunder to Landlord at 3301 Boston Street,
Baltimore, Maryland 21224, or any other address, which Landlord may hereafter
designate in writing to Tenant.  Any payment
by Tenant or acceptance by Landlord of a lesser amount than due shall be
treated as a payment on account, and not to be construed to be an accord and
satisfaction or a waiver by Landlord of any sums due hereunder.  Should Tenant fail to pay such rent by the
tenth (10th) day of the month, Tenant shall pay a late payment charge equal to
five percent (5.0%) of the amount due and unpaid.

 

c. Annual Increases. The annual lease payment
shall be increased each year after the initial year by CPI.

 

d. Renewal and Extension.  Tenant shall have the option upon acceptance
by Landlord to renew and extend the term for a time and at a cost mutually
agreeable between Landlord and Tenant, provided that the Tenant, at least
ninety (90) days prior to the expiration of the initial term, gives Landlord
written notice of their intention to exercise such option.  Landlord upon written notice will have
thirty (30) days to acknowledge acceptance of renewal.

 

2

 

Section 3.                                          Utilities and Services

 

Tenant will pay for all water
and sewer, gas and electricity, janitorial services, appropriate repairs and
trash removal services to the Premises together with any taxes thereon, if any
such services are not separately metered to Tenant, Tenant shall pay a
reasonable proportion to be determined by Landlord of all charges jointly
metered with other premises.  Landlord
shall under no circumstances be liable to Tenant in damages or otherwise for
any interruption in service of electricity, water, gas, heat, telephone or
air-conditioning caused by the making of any repairs or improvements in the
Building unless cause by Landlord’s negligence.

 

Section 4.                                          Landlord Insurance

 

Landlord shall be
responsible for maintaining adequate insurance on the building known as 3301
Boston Street, Baltimore, Md. 21224. 
The cost of this insurance will be allocated to each tenant on a pro
rata basis.

 

Section 5.                                          Taxes

 

Tenant shall pay prior to
delinquency all taxes assessed against and levied upon trade fixtures,
furnishings, equipment and all other personal property of Lessee contained in
the premises or elsewhere.  When
possible, Tenant shall cause said trade fixtures, furnishings, equipment and
all other personal property to be assessed and billed separately from the real
property of Landlord.

 

If any of Tenant’s said
personal property shall be assessed with Lessor’s real property, Tenant shall
pay Landlord the taxes attributable to Landlord within 10 days after receipt of
a written statement setting forth the taxes applicable to Lessee’s property.

 

Section 6.                                          Tenant’s Insurance

 

a.                                       Coverage.  Tenant shall procure and
maintain the following insurance coverage:

 

(i) Liability Insurance,
covering public liability, personal and bodily injury and death.  Such insurance shall provide, in the
aggregate, a minimum coverage of One Million Dollars ($ 1,000,000) combined
single limit per occurrence and

 

(ii)
Property damage insurance, written at the cost of replacement, covering the
Premises that Landlord shall have installed, including without limitation, all
contents, fixtures, improvements, floor coverings, wall coverings, furniture,
and other property.

 

3

 

Such policies shall  (i) insure against “all risks” and cover
losses caused by fire and all other casualties, specifically including, but not
limited to, falling objects, earthquakes, and flood, and shall contain a
replacement cost endorsement, (ii) be adjusted upward annually for inflation to
reflect the actual replacement cost of such property, and in any case by any
amount at least equal to the increase in the Consumer Price Index, as defined
in Section 3.  Such insurance shall not
require the payment of a deductible exceeding One Thousand Dollars ($ 1,000.00)

 

Section 7.  Default
Clause

 

Following any of these
events, Landlord may terminate this lease and enter and take possession of the
premises from Tenant, all without waiving any rights, which it may have at law
hereunder, without further notice or demand (all such notices and demands being
hereby waived).  In addition, at the
option of Landlord, the balance of the rents for the remainder of this Lease as
well as all other charges agreed to be paid by Tenant during such period, will
become due and payable immediately by Tenant to Landlord, in addition to any
and all rents and other charges already due and payable and in arrears.

 

a.                                       That Tenant shall fail to pay rent due
hereunder within ten (10) days of due date.

 

b.                                      That Tenant shall fail to commence to cure
any other violation of its covenants within fifteen (15) days after written
notice thereof, or, having commenced to cure the same as aforesaid, should fail
to carry the same to conclusion with due diligence.

 

c.                                       Upon the adjudication of Tenant as a
bankrupt or the appointment of a receiver of its property.

 

Section 8.                                          Exhibits and Addenda

 

a.                                       Exhibit “A”, the floor plan, is part of this
Lease.

 

b.                                      Addendum “A”, Inclusions to Lease, is part
of this Lease.

 

c.                                       Addendum “B”, General Terms of Lease, is
part of this Lease.

 

4

 

IN WITNESS WHEREOF, the
parties hereto have executed this Lease under their respective seals as of the
day and year first above written.

 

 

	
  WITNESS:

  	
  LANDLORD:

  	
   

  
	
   

  	
   

  
	
   

  	
   

  	
  Building
  No. 2 LLC

  	
   

  
	
   

  
	
   

  
	
  /s/ Jo Ann Noah

  	
   

  	
  By:

  	
  /s/
  Edwin F. Hale

  	
  (SEAL)

  
	
   

  	
   

  	
  Edwin
  F. Hale

  	
   

  
	
   

  
	
   

  	
  TENANT:

  	
   

  
	
   

  
	
   

  	
   

  	
  1st
  Mariner Bank

  	
   

  
	
   

  
	
   

  
	
  /s/ Jo Ann Noah

  	
   

  	
  By:

  	
  /s/
  Joseph A. Cicero

  	
  (SEAL)

  
	
   

  	
   

  	
  Joe
  Cicero

  	
   

  

 

5

 

ADDENDUM A

Inclusions To the Lease

 

Section 1.                                          Utilities and Services

 

During the Term of Lease,
Tenant shall have the non-exclusive use, of the common area restroom
facilities, elevators, stairways, hallways, driveways, footway and parking
areas servicing the Building.  Landlord
shall have the right to establish reasonable rules for the use of common
facilities to accommodate the needs and interests of all persons using such
facilities.

 

Additional charges for
electric, water, janitorial in accordance with 3a will be invoiced
monthly.  The tenants pro rata share of
real estate taxes will be invoiced annually.

 

6

 

Addendum B

General Terms of Lease

 

Section 1.                                          Tenant’s Use

 

a.                                       Use of Premises. 
The Premises shall be used and occupied for general office use and no
other purpose.  Tenant shall have access
to the Premises twenty-four hours per day and seven days per week, provided
that Tenant shall comply with Landlord’s standard security systems and
procedures, as in effect from time-to-time.

 

b.                                      No Partnership or Joint Venture. 
Nothing contained in this Lease shall be deemed or construed as making
any party the agent, employee, joint venture, partner, or representative of any
other party.

 

c.                                       Quiet Enjoyment.  So
long as the Tenant complies with this Lease, the Tenant shall be entitled to
the quiet and peaceful use and enjoyment of the Premises, and the Landlord
shall defend such rights of the Tenant against the claims the Landlord, subject
to the terms of this Lease.

 

Section 2.                                          Assignment and Subletting

 

Tenant shall not assign
Lease or sublet the Premises in whole or in part, permit other persons to
occupy said Premise or any part thereof, or grant a license or concession for
all or any part of said Premises except upon the prior written approval of
Landlord’s sole and absolute discretion which should not be unreasonably
withheld.  Any consent by Landlord to an
assignment or subletting of this lease shall not constitute a waiver of the
necessity of such consent as to any subsequent assignment or subletting.

 

Section 3.

 

a. Landlord Obligations.  Landlord shall keep and maintain in good
repair all of the structural elements of the Building including all electrical,
plumbing, heating, air-conditioning or other mechanical installations servicing
the Building, all exterior portions of the Premises (inclusive of doors,
windows, and glass) and the routine maintenance of the interior of the Premises
to the same extent that Landlord maintains the other portions of the Building;
provided that any damage thereto shall not have been caused by Tenant, its agents,
servants, licensees, invitees, contractors or employees, in which event Tenant
shall be responsible therefore and shall promptly perform necessary repairs.

 

7

 

Tenant shall pay for its
pro rata share (including its pro rata share of common area space) of expense
incurred by the landlord as outlined in section 7(f).  Such payment is due within 30 days after invoiced by the
Landlord.

 

b. Tenant Obligations.  Landlord shall have no liability or
obligation to repair or maintain any equipment, facilities, fixtures,
installations, or other property placed or incorporated in the Premises by
Tenant, all of which shall be at the expiration of the Term in as good
condition as when received except for ordinary wear and tear.

 

Section 4.                                          Tenant’s Operations, Alterations, Signs, Etc

 

a. Tenant’s Operations.  Tenant shall  (1) use, maintain and occupy the Premises in a careful, safe,
clean, proper and lawful manner, (2) conduct its business in a respectable,
first-class manner as not degrade the Building or disturb other tenants; (3)
comply with all laws and ordinances and all rules and regulations of
governmental authorities and all recommendations of the Association of Fire
Underwriters or other similar bodies establishing standards for fire insurance
ratings with respect to the use or occupancy of the Premises by Tenant, and (4)
comply such other standards of operation and requirements as the Building Lease
requires of Landlord.

 

b. Tenant’s Alterations.  Tenant shall not make any alterations
whatsoever to the Premises without Landlord’s prior written consent.  All alterations made by Tenant, whether or
not approved by or subject to the approval of Landlord, and all air-conditioning,
heating, lighting, electrical, plumbing equipment and fixtures and all wiring
and other apparatus related to air-conditioning, heating, lighting, electrical
and plumbing equipment installed by Tenant at the Premises (whether or not such
equipment and fixtures are affixed to the Premises as to be removable without
destroying the chattels themselves or the property to which they re affixed and
whether or not such equipment and fixtures are real property or personality)
unless Landlord gives notice to Tenant to remove the same, shall remain upon
the Premises at the expiration or earlier termination of the Term of this lease
and shall become the property of Landlord immediately upon installation
thereof.  Landlord may give Tenant
written notice to remove any or all of the aforesaid alterations or fixtures,
in which event the Tenant shall remove such if the alterations and fixtures as
may be specified in Landlords notice to Tenant and Promptly restore the
Premises to the same good order and conditions as they were in at the
Commencement Date.  Tenant shall not
cause or suffer any liens, including but limited to mechanic’s liens, to attach
to the Premise or the building in which the Premises are located.

 

c. Signs.  Tenant shall not place, suffer to be placed
or maintain any sign, billboard, marquee, awning, decoration, placard,
lettering, advertising matter, or other

 

8

 

thing of any kind (herein collectively
“Sign”), whether permanent or temporary on the exterior of the Premises or on
the glass of any window or door of the Premises without first obtaining
Landlord’s written approval thereof, said approval not to be reasonably
withheld.  Tenant further agrees to
maintain any sign approved by Landlord in good condition and repair at all
times.

 

d. Increase in Insurance.  If anything done, omitted to be done or
suffered to be done by Tenant, or kept, or suffered by cost of fire or other
insurance on the Premises or other property of Landlord in the Building, to be
increased beyond the minimum from time to time applicable to the Premises,
Tenant will pay the amount of such increase within thirty (30) days of the date
of written demand by Landlord.

 

Section 5.                                          Subordination and Estoppel Certificate

 

a. Subordination.  Tenant’s rights under this Lease are and shall
always be subordinate to (i) the terms, conditions, provisions and rights
stated in the Building Lease, (ii) the operation and effect of any mortgage or
deed of trust now or hereafter placed upon the Building or any part thereof by
Landlord or its landlord, or (iii) any renewal, modification, consolidation,
replacement or extension of any such lease, mortgage or deed of trust unless
the lessor, mortgagee or holder of the deed of trust elects in such instrument
to have Tenant’s interest hereunder superior to the interest of the lessor,
mortgagee or holder of such deed of trust. 
This sub-section shall be self-operative and no further instrument or
subordination shall be necessary, but Tenant shall execute promptly any
instrument of subordination that Landlord may request.

 

b. Estoppel Certificate.
Tenant shall from time to time, upon not less than ten (10) days prior written
request by Landlord, provide, execute, acknowledge, and deliver to Landlord
written acknowledgments and statement s may be required of Landlord under the
Building Lease.

 

Section 6.                                          Indemnification

 

a. Tenant shall indemnify, defend and hold Landlord
harmless from and against any and all claims, actions, damages, liabilities,
property damage arising out of or relating to Tenant’s occupancy or use of the
Premises or any other part of the Building or property or other improvement
thereon.  Such Indemnity shall extend to
acts and omissions by Tenant, its employees, agents, contractors, customers, guests,
and any other visitor whomsoever, and include workers compensation claims.

 

b. Landlord shall indemnify, defend and hold Tenant
harmless from and against any and all claims, actions, damages, liabilities,
and expenses, including reasonable attorney’s fees for, or in connection with,
personal injury, bodily injury, loss of life and/or property damage arising out
of or relating to Landlord’s occupancy or use of the

 

9

 

Building other than the Premises. 
Such indemnity shall extend to acts and omissions by Landlord, its
employees, agents, contractors, customers, guests, and any other visitor
whomsoever, and include workers compensation claims.

 

c.                                       Neither party shall have any obligation to
indemnify the other for or open account of the illegal acts of any person.

 

Section 7.                                          Tenant’s Insurance

 

a. General.  Tenant shall procure and maintain the
insurance coverage specified in the lease with insurance companies licensed to
do business in Maryland and having a Best rating of at least “A+”.  Tenant shall also procure and maintain all
insurance required by law, for example, workman’s compensation insurance, in
such amounts and in such form as required by the particular law.  All liability and property damage policies
shall contain an endorsement naming Landlord as a named insured and a loss
payee.  Tenant shall procure the
required coverage promptly, and furnish Landlord with a certificate reflecting
the required coverage and endorsement, and proof of payment of the premiums for
such policies.  Tenant shall provide
Landlord promptly with a copy of all policy renewals and premium notices
(within three (3) days of receipt by Tenant thereof) and with proof of payment
of such premiums no later than thirty (30) days prior to the due date for the
payment of such premium.  All such
insurance coverage shall be exclusive of the cost of legal defense and other
attorney’s fees.  Tenant shall ensure
that the insurance policies contain an endorsement requiring the insurance
company to provide Landlord with a thirty (30) day written notice of any change
in the coverage described herein that Tenant or insurance company proposes to
make.  Tenant hereby assigns the
proceeds of such insurance as provided in this Agreement, and authorizes
Landlord to collect such sums and to execute and endorse in Tenant’s name all
proofs of loss, drafts, checks, and other documents necessary to accomplish
such collections.  Any persons or
entities making payments to Landlord under the terms of this paragraph hereby
are indemnified against and relieved absolutely from any obligation regarding
the payment or application of any sums so paid.

 

b. Supplemental Coverage.  Landlord reserves the right, should one or
more claims be made against such insurance coverage to demand the Tenant
promptly procure additional insurance coverage in such an amount as in
Landlord’s reasonable is necessary and prudent to protect Landlord’s interest
in the Building and under this agreement. 
A demand for additional coverage, in an amount equal to claims that have
been filed and either settled, or are in litigation and with respect to which
Landlord’s counsel has furnished an opinion that the Claimant has a legal cause
of action which may result in the relief sought being granted, shall be deemed
to be reasonable demand.

 

10

 

c. Contractor Insurance.  Tenant shall require any contractor of
Tenant performing work on the Premises to carry and maintain, at no expense to
the Landlord:

 

(i) comprehensive General Liability Insurance,
including contractor’s liability coverage contractual liability coverage
completed operations coverage broad from property damage endorsement and
contractor’s protective liability coverage to afford protection with limits for
each occurrence of not less than Three Million Dollars ($3,000,000.000) with
respect to personal injury, bodily injury or death, and One Million Dollars
($1,000,000.00) with respect to property damage; and

 

(ii) worker’s compensation
or similar insurance in form and amounts required by law.

 

d. Waiver of Subrogation.  Neither party shall be liable to the other
party or to any insurance company (by way of subrogation or otherwise) insuring
the other party for any loss or damage to any building, structure or other
tangible property, or losses under workmen’s compensation laws and benefits,
even though such loss or damage might have been occasioned by negligence of
such party, its agents or employees if any such loss or damage covered by
insurance benefiting the party suffering such damage or loss was required to be
covered by insurance pursuant to this Lease. 
However, if, by reason of the foregoing waiver, either party shall be
unable to obtain any such insurance, such waiver shall be deemed not to have
been made by such party, and provided further that, if either party is unable
to obtain any such insurance without the payment of an additional premium
therefore, then, unless the party claiming the benefit of such additional
premium within thirty (30) days after notice setting forth such requirement and
the amount of the additional premium, such waiver shall be of no force and
effect between such party and such claiming party.

 

Section 8                                             Additional Rent

 

a. Additional Rent.  In addition to Base Rent, Tenant shall pay,
as “Additional Rent” hereunder, (i) Tenant’s Proportionate Share of “Common
Area Costs,” as set forth in Section 8(g) hereof; (ii) Tenant’s Proportionate
Share of premiums for the “Insurance” to be obtained by Landlord for the
Property, as set forth in Section 4 hereof, (iii) Tenant’s Proportionate Share
of “Taxes,” as set forth in Section 9(g) hereof; and (iv) all other sums or
charges due or to become due from Tenant to Landlord hereunder.  Any payment of monies called for herein to
be made by Tenant to Landlord is deemed Additional Rent and shall be
collectible as Additional Rent.

 

b. Common Area Costs.  Tenant agrees to pay as Additional Rent
during each lease year during the Term, Tenant’s Proportionate Share of the
“Common Area Costs,” as hereafter defined. 
For purposes of this Lease, the term “Common Area Costs” shall mean all
costs and expenses incurred by Landlord in operating,

 

11

 

maintaining, repairing, lighting, signing,
cleaning, painting, stripping, insuring, equipping, staffing, heating and
cooling, securing, and policing of the Common Area, including, without
limitation, all costs and expenses associated with the following items or
services, which may be incurred by Landlord in its sole discretion:  (i) maintaining and replacing any and all
alarm and life safety systems and any fire alarm monitoring or testing service
program or fire suppression system installed within the Premises or otherwise
within the improvements which form a part of the Property, including without
limitation any patrol services; (ii) maintenance of irrigation systems serving
the Property; (iii) insurance, including, without limitation, liability
insurance for personal injury, death and property damage, to the extent not
reimbursed by Tenant under Section 13.2 below; (iv) surcharges levied upon or
assessed against parking spaces or areas, payments toward mass transit or car
pooling facilities or otherwise as required by federal, state or local
governmental authorities; (v) all landscaping, including, but not limited to,
lawn maintenance, new plantings and replacement of existing landscaping; (vi)
repairing, cleaning, sweeping, painting, striping, replacing and repaving of
paving, curbs, walkways, guardrails, bumpers, fences, screens, flagpoles,
bicycle racks, signs and other markers, landscaping, drainage pipes, ducts,
conduits, lighting facilities and all other Common Area site amenities; (vii)
maintenance, repair and replacement of utility systems serving the Property,
including, but not limited to, water, sanitary sewer and storm water lines and
drainage systems (whether on-site or off-site), electrical, gas, telephone and
lighting systems (including bulbs, poles, and fixtures) and other utility
lines, pipes and conduits, and all payments of utility charges in connection
with any of the foregoing systems; (viii) maintenance and repair of all
portions of the buildings in the Property including, but not limited to, walls,
roofs and roof flashings, canopies, skylights, signs, planters, benches, fire
exits, doors and hardware, windows, glass and glazing; (ix) inspection,
maintenance, repair and acquisition costs (including depreciation) of any and
all machinery and equipment used in the operation and maintenance of the Common
Area, including personal property taxes and other charges and taxes incurred in
connection with such equipment; (x) cleaning of any exterior glass; (xi)
removal of snow, ice, trash and debris; (xii) maintenance of and compliance
with federal, state or local governmental ambient air and environmental
standards and other laws and regulations; (xiii) all materials, supplies and
services purchased or hired in connection with the operation of the Common
Area; (xiv) compensation and benefits paid to any and all personnel, including,
without limitation, security and maintenance persons, secretaries, bookkeepers
and any other personnel related to the operation of the Common Area; (xv)
management fees charged for management of the Property; and (xvi) an overhead
administrative cost allowance in the amount of fifteen percent (15%) of the
total Common Area Costs.  Tenant’s
Proportionate Share of Common Area Costs shall be paid by Tenant in monthly
installments in such amounts as are estimated and billed by Landlord to Tenant
as of the Commencement Date and then at the beginning of each calendar year
during the Term, each such installment being due on the first day of each
calendar month.  Any period of less than
a full calendar year occurring due to the timing of the Commencement Date shall
be proportionately

 

12

 

adjusted to reflect such partial year.  If at any time during such twelve (12) month
period it shall appear that Landlord has underestimated Tenant’s Proportionate
Share of Common Area Costs (whether attributable to a change in Tenant’s
Proportionate Share, an increase in the projected Common Area Costs for such
period, mathematical error or otherwise), Landlord may re-estimate Tenant’s
Proportionate Share of Common Area Costs and may bill Tenant for any deficiency
which may have accrued during such twelve (12) month period and thereafter the
monthly installment payable by Tenant shall also be adjusted.  Within one hundred twenty (120) days after
the end of each such twelve (12) month (or, if applicable, shorter) period,
Landlord shall deliver to Tenant a statement setting forth the actual Common
Area Costs for such period, Tenant’s Proportionate Share thereof, and the total
amount paid by Tenant to Landlord under this Section 6.3 during such
period.  In the event the amounts paid
by Tenant during such period are greater or lesser than Tenant’s Proportionate
Share of the Common Area Costs as set forth on such statement, Tenant shall pay
to Landlord or Landlord shall credit Tenant’s account (or, if such adjustment
occurs at the end of the Term, pay to Tenant), as the case may be, within
thirty (30) days of receipt of such statement, the amount of any excess or
deficiency.  Failure of Landlord to provide
the statement called for hereunder shall not relieve Tenant from its
obligations under this Section 6.3 or elsewhere in this Lease.

 

Section 9                                             Other

 

a. Limitations. The
Premises may be used only for the purpose or purposes specified in Section
1.1(j) above and for no other purpose or purposes without the prior written
consent of Landlord.  Tenant shall not
at any time leave the Premises vacant, but shall in good faith continuously
throughout the Term conduct and carry on its business in the entire Premises.  Tenant shall not, without Landlord’s prior
written consent, keep anything within the Premises for any purpose or use the
Premises in a manner which causes an increase in the insurance premium cost or
invalidates any insurance policy carried on the Premises or other part of the
Property.  Tenant shall pay as
Additional Rent, upon demand of Landlord; any such increased premium cost due
to or associated with Tenant’s use or occupation of the Premises or its storage
of certain goods.  Anything contained herein
to the contrary notwithstanding, all property kept, stored or maintained within
the Premises by Tenant shall be at Tenant’s sole risk.  Tenant shall not (a) permit any
objectionable or unpleasant odors to emanate from the Premises; (b) place or
permit any radio, television, loudspeaker or amplifier on the roof or outside
the Premises or where the same can be seen or heard from outside the Building
or in the Common Area; (c) place an antenna, awning or other projection on the
exterior of the Premises; (d) solicit business or distribute leaflets or other
advertising material in the Common Area; nor (e) take any other action which in
the exclusive judgment of Landlord would constitute a nuisance or would disturb
or endanger other tenants of the Property or unreasonably interfere with their
use of their respective premises.

 

13

 

b. Environmental.
During the Term and any Renewal Term of the Lease, Tenant warrants, represents
and covenants to and with Landlord as follows: 
The Premises will not contain (A) asbestos in any form, (B) urea
formaldehyde foam insulation, (C) transformers or other equipment which contain
dielectric fluid containing polychlorinated biphenyls, or (D) any flammable
explosives, radioactive materials, hazardous materials, hazardous wastes,
hazardous, controlled or toxic substances, or any pollutant or contaminant, or
related materials defined in or controlled pursuant to the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended (42
U.S.C. Sections 9601 et seq.), the Hazardous Materials Transportation Act, as
amended (49 U.S.C. Sections 1801 et seq.), the Resource Conservation and
Recovery Act, as amended (42 U.S.C. Sections 9601 et seq.), the Federal Water
Pollution Control Act (33 U.S.C. Section 1251 et seq.), the Clean Air Act (42
U.S.C. Section 7401 et seq.), and in the regulations adopted and publications
promulgated pursuant thereto, or any other Federal, state or local
environmental law, ordinance, rule or regulation (collectively, “Environmental
Laws”); or which, even if not so regulated, may or could pose a hazard to the
health or safety of the occupants of the Building (the substances described in
(A), (B), (C) or (D) above being hereinafter collectively referred to as
“Hazardous Materials”); (ii) the Premises will never be used by Tenant for any
activities involving, directly or indirectly, the use, generation, treatment,
transportation, storage or disposal of any Hazardous Materials or to refine,
produce, store, handle, transfer, process or transport “Hazardous Substances”,
as such term is defined in any such Environmental Laws. Tenant (A) shall comply
with the Environmental Laws and all other applicable laws, rules and
regulations or orders pertaining to health, the environment or Hazardous
Materials, (B) shall not store, utilize, generate, treat, transport or dispose
of (or permit or acquiesce in the storage, utilization, generation,
transportation, treatment or disposal of) any Hazardous Materials on or from
the Premises, and (C) shall to cause its employees, licensees and invitees to
comply with the representations, warranties and covenants herein
contained.  In the event of any storage,
presence, utilization, generation, transportation, treatment or disposal of
Hazardous Materials in, on or about the Premises, or in the event of any
Hazardous Materials Release (as hereinafter defined) Tenant shall, at the
direction of Landlord or any federal, state, or local authority or other
governmental authority, remove or cause the removal of any such Hazardous
Materials and rectify any such Hazardous Materials Release, and otherwise
comply or cause compliance with the laws, rules, regulations or orders of such
authority, all at the expense of Tenant, including without limitation, the
undertaking an completion of all investigations, studies, sampling and testing
and all remedial, removal and other actions necessary to clean up and remove
all Hazardous Materials, on, from or affecting the Premises.  If Tenant shall fail to proceed with such
removal or otherwise comply with such laws, rules, regulations or orders within
the cure period permitted under the applicable regulation or order, the same
shall constitute a default under Section 19.1 hereof, and Landlord may, but
shall not be obligated to, do whatever is necessary to eliminate such Hazardous
Materials from the Premises or

 

14

 

otherwise comply with the applicable law,
rule, regulation or order, acting either in its own name or in the name of
Tenant pursuant to this Section, and the cost thereof shall be borne by Tenant
and thereupon become due and payable as additional rent hereunder.  Tenant shall give to Landlord and its agents
and employees access to the Premises for such purposes and hereby specifically
grants to Landlord a license to remove the Hazardous Materials and otherwise
comply with such applicable laws, rules, regulations or orders, acting either
in its own name or in the name of the Tenant pursuant to this Section.  Tenant hereby indemnifies and holds Landlord
and each of its shareholders, subsidiaries, affiliates, officers, directors,
partners, employees, agents and trustees, and any receiver, trustee or other
fiduciary appointed for the Building, harmless from, against, for and in respect
of, any and all damages, losses, settlement payments, obligations, liabilities,
claims, actions or causes of actions, encumbrances, fines, penalties, and costs
and expenses suffered, sustained, incurred or required to be paid by any such
indemnified party (including, without limitation, reasonable fees and
disbursements or attorneys, engineers, laboratories, contractors and
consultants) because of, or arising out of or relating to (A) Tenant’s
violation of any of its representations, warranties and covenants under this
Section 7.5, and (B) any Environmental Liabilities (as herein below defined) in
connection with the Premises For purposes of this indemnification clause,
“Environmental Liabilities” shall include all costs and liabilities with
respect to the future presence, removal, utilization, generation, storage,
transportation, disposal or treatment of any Hazardous Materials or any
release, spill, leak, pumping, pouring, emitting, emptying, discharge,
injection, escaping, leaching, dumping or disposing into the environment (air,
land or water) of any Hazardous Materials (each a “Hazardous Materials
Release”), including without limitation, cleanups, remedial and response
actions, remedial investigations and feasibility studies, permits and licenses
required by, or undertaken in order to comply with the requirements of, any
federal, state or local law, regulation, or agency or court, any damages for
injury to person, property or natural resources, claims of governmental
agencies or third parties for cleanup costs and costs of removal, discharge,
and satisfaction of all liens, encumbrances and restrictions on the Premises
relating to the foregoing.  The
foregoing indemnification and the responsibilities of Tenant under this Section
shall survive the termination or expiration of this Lease.

 

Tenant shall promptly notify Landlord in
writing of the occurrence of any Hazardous Materials Release or any pending or
threatened regulatory actions, or any claims made by any governmental authority
or third party, relating to any Hazardous Materials or Hazardous Materials
Release on or from, the Premises and shall promptly furnish Landlord with
copies of any correspondence or legal pleadings or documents in connection
therewith.  Landlord shall have the
right, but shall not be obligated, to notify any governmental authority of any
state of facts, which may come to its attention with respect to any Hazardous
Materials or Hazardous Materials Release on or from the Premises.  Upon expiration of the Term or any Renewal
Term, as applicable, Tenant shall deliver the Premises to Landlord free of any
and all Hazardous Materials and any liens, encumbrances and restrictions
relating to Environmental Liabilities to
the extent

 

15

 

Tenant was
responsible therefore under the terms of this Section.  Tenant agrees that Landlord shall have the right to conduct, or to have
conducted by its agents or contractors, such environmental inspections of the
Premises, as Landlord shall reasonably deem necessary or advisable from time to
time.  Without limitation of the
foregoing, in the event of the failure of Tenant to comply with any of the
material requirements of any Environmental Laws, and/or any related regulations,
Landlord shall have the right, at the sole option of Landlord, to comply with
such statutory or regulatory requirements, and/or to cure any such default at
Tenant’s sole expense, and all costs and expenses of such compliance and/or
cure shall be due and payable from Tenant to Landlord upon demand as additional
rent hereunder.  Tenant shall procure,
at its sole expense, all permits and licenses required for its operations and
the transaction of business in the Premises (including without limitation, to
the extent applicable to Tenant’s permitted use, special use permits, business
licenses, health department licenses, and other similar licenses, permits and
approvals), and shall otherwise comply with all applicable laws, ordinances and
governmental regulations, as well as all other covenants and restrictions of
record, affecting the Premises, and the conduct of business therein by Tenant,
including without limitation the Americans with Disabilities Act, as the same
may be amended (“ADA”).

 

c. Repair by Tenant.  Maintenance of the air conditioning, hot
water and heating equipment shall be solely the responsibility of Tenant
throughout the entire Term.  Landlord
will invoice tenant monthly for the maintenance contract that will protect the
air conditioning, hot water and heating equipment for tenant.  The service contract will include all
services suggested by the equipment manufacturer within the
operation/maintenance manual and will become effective (and a copy thereof
delivered to Landlord) within thirty (30) days of the date Tenant takes possession
of the Premises.

 

d. Non-Liability.  Landlord and Landlord’s partners, agents,
employees, officers and directors shall not be liable to Tenant or any other
person or entity whomsoever for any damage to property caused by the Premises
or other portions of the Property becoming out of repair or damaged, or by
defect in or failure of equipment, pipes or wiring, or broken glass, or by the
backing up of drains or by gas, water, steam, electricity or oil leaking,
escaping or flowing into the Premises irrespective of the cause. To the extent
Landlord would otherwise be required by Maryland law or common law to correct
any latent or patent defects in the Premises or in the Building of which they
form a part, any obligation on the part of Landlord to correct such latent or
patent defects in the Premises or in the Building shall not extend beyond one
(1) year from the date the Premises are deemed Ready for Occupancy, whether or
not such defects are discovered within such one (1) year period; provided that
the other terms of this Lease shall in all events govern Landlord’s and
Tenant’s respective responsibilities and monetary obligations in connection
with the construction of initial leasehold improvements to the Premises,
correction of “punch-list” items,

 

16

 

and any subsequent repairs and maintenance
to the Premises and the Building. 
Landlord and Landlord’s partners, agents, employees, officers and
directors shall not be liable to Tenant or to Tenant’s employees, agents or
visitors, or to any person or entity whomsoever, for injury to person or damage
to or loss of property (i) occurring in, on or about the Premises, regardless
of the cause, (ii) occurring within the Common Area, if caused by the
negligence or misconduct of Tenant, its officers, partners, employees, agents,
subtenants, licensees or concessionaires, (iii) arising out of the use of the
Premises by Tenant and the conduct of its business therein, (iv) arising out of
any breach or default by Tenant in the performance of its obligations
hereunder, or (v) occasioned by or through the acts or omissions of other
tenants of the Property or of any other persons or entities whomsoever,
excepting only the negligence or willful misconduct of duly authorized employees
and agents of Landlord to the extent the same is not covered under insurance
Tenant is required to carry pursuant to Section 13.1, above; and, in any of
such events, Tenant hereby agrees to indemnify Landlord and Landlord’s
partners, agents, employees, officers and/or directors and hold each of them
harmless from any and all liability, loss, damage, claim, action or expense
(including, without limitation, all court costs and attorneys’ fees) arising
out of such damage or injury due to any of the causes described above (other
than those described in clause (v), above). 
The provisions of this section shall survive the termination of this
Lease with respect to any claims or liability attributable to acts, omissions,
occurrences and/or conditions existing or occurring prior to such
termination.  In no event shall
Landlord, or any of Landlord’s partners, agents, employees, officers and
directors, be liable to Tenant or any of its agents, employees, contractors,
officers or directors for any lost profits or other loss suffered by Tenant,
due to any interruption in Tenant’s business operation from the Premises,
whether caused by the acts or omissions of Landlord, or its agents, employees,
contractors, officers and/or directors, or by any other cause (other than
Landlord’s intentional misconduct), it being acknowledged that Tenant is
capable of obtaining business interruption insurance covering such loss(es)
including a waiver of subrogation endorsement. .  In the event (but solely to the extent) the limitations on
Landlord’s liability set forth in this Lease would be held to be unenforceable
or void under Maryland law in the absence of a modification holding the
Landlord liable to Tenant or to another person for injury, loss, damage or
liability arising from Landlord’s omission, fault, negligence or other
misconduct on or about the Premises, or other areas of the Building appurtenant
thereto or used in connection therewith and not under Tenant’s exclusive
control, then such provision shall be deemed modified as and to the extent (but
solely to the extent) necessary to render such provision enforceable under
applicable Maryland law.  The foregoing
shall not affect the application this Lease to limit the assets available for execution
of any claim against Landlord, or otherwise.

 

e. Substantial Taking.  If more than twenty percent (20%) of the
floor area of the Premises should be taken for any public or quasi-public use
under any governmental law, ordinance or regulation or by right of eminent
domain or by

 

17

 

private purchase in lieu thereof, this Lease
shall terminate and the Rent (excluding Rent accruing with respect to the
period prior to the date of such termination) shall be abated during the
unexpired portion of this Lease, effective on the date physical possession is
taken by the condemning authority.  If
less than twenty percent (20%) of the floor area of the Premises should be
taken as aforesaid, this Lease shall not terminate; however, the Base Rent
payable hereunder during the unexpired portion of this Lease shall be reduced
in proportion to the area taken, effective on the date physical possession is
taken by the condemning authority. 
Following such partial taking, Landlord shall make all necessary repairs
or alterations within the scope of Landlord’s Work as described in Exhibit C
necessary to make the Premises an architectural whole.  If any part of the Common Area shall be
taken as aforesaid, this Lease shall not terminate, nor shall the Rent payable
hereunder be reduced; provided, however, either Landlord or Tenant may
terminate this Lease if the area of the Common Area remaining following such
taking plus any additional parking area provided by Landlord in reasonable
proximity to the Property shall be less than fifty percent (50%) of the area of
the Common Area immediately prior to the taking. Any election to terminate this
Lease in accordance with this provision shall be evidenced by written notice of
termination delivered to the other party within thirty (30) days after the date
physical possession is taken by the condemning authority.  All compensation awarded for any taking for
public purposes, whether permanent or temporary (or the proceeds of private
sale in lieu thereof), of the Premises or Common Area shall be the property of
Landlord, and Tenant hereby assigns its interest in any such award to Landlord;
provided, however, Landlord shall have no interest in any award made to Tenant
for loss of business, relocation expenses and/or for the taking of Tenant’s
fixtures and other personal property of Tenant if a separate award for such
items is made to Tenant and does not diminish the award payable to
Landlord.  Tenant shall in no event be
entitled to any award made for the value of the unexpired Term of this Lease.

 

f. Personal Property and
Fixtures. Tenant shall be liable for all taxes levied against personal
property and trade fixtures placed by Tenant in the Premises.  If any such taxes are levied against
Landlord or Landlord’s property and if Landlord elects to pay the same or if
the assessed value of Landlord’s property is increased by inclusion of personal
and trade fixtures placed by Tenant in the Premises and Landlord elects to pay
the taxes based on such increase, Tenant shall pay to Landlord upon demand that
part of such taxes for which Tenant is primarily liable hereunder.

 

g. Tax Payment.  Tenant agrees to pay its Proportionate Share
of all taxes, assessments and governmental charges of any kind and nature
whatsoever levied or assessed against the Property, any other charges, taxes
and/or impositions now in existence or hereafter imposed by any governmental
authority based upon the privilege of renting the Premises or upon the amount
of rent collected therefore, and any tax, fee, levy, assessment or charge which
is imposed as the result of the transfer of the leasehold interest in the
Premises

 

18

 

created by this Lease (all of the foregoing
being hereinafter referred to collectively as “Taxes”).  Taxes shall also be deemed to include any
special taxing district assessment, which is imposed in order to fund public
facilities for the area in which the Property is located.  During each month of the Term, Tenant shall
make a monthly payment to Landlord equal to one-twelfth (1/12) of its
Proportionate Share of the Taxes on the Property which Landlord reasonably
estimates will be due and payable for the tax year as to which such payments
are being made (the “Tax Payments”). 
Tenant acknowledges that, under current practice, Taxes in Baltimore
County, Maryland are assessed (and required to be paid) in advance, so that it
will be required to fund its Proportionate Share of Taxes for the first Lease
Year in advance, and to make estimated monthly Tax Payments pursuant to this
Section during the same Lease Year (such estimated payments being made in
respect of the next tax year’s bill for Taxes).  Tenant authorizes Landlord to use the funds deposited with
Landlord under this Section to pay the Taxes levied or assessed against the
Property.  Each Tax Payment shall be due
and payable at the same time and in the same manner as the time and manner of
the payment of Base Rent as provided herein. 
The initial monthly Tax Payment is based upon Tenant’s Proportionate
Share of the Taxes on the Property for the fiscal tax year in which the
Commencement Date is to occur, as estimated by Landlord in good faith, and the
monthly Tax Payment is subject to increase or decrease as determined by
Landlord to reflect accurately Tenant’s Proportionate Share of the Taxes.  If following Landlord’s receipt of all Tax
bills for any fiscal tax year Landlord determines that Tenant’s total Tax
Payments for such period are less than Tenant’s actual Proportionate Share of
the Taxes on the Property, Tenant shall pay to Landlord the difference upon
demand; if the total Tax Payments of Tenant exceed Tenant’s actual
Proportionate Share of the Taxes on the Property, Landlord shall retain such
excess and credit it to Tenant’s future Tax Payments, except that, upon
expiration of the Lease Term, Landlord will refund such excess to Tenant within
thirty (30) days after the exact amount of such refund can be calculated.

 

19

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