Document:

Exhibit 10.08

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

AMENDED AND RESTATED
AFFILIATION AGREEMENT

FOR DTH SATELLITE EXHIBITION

OF CABLE NETWORK PROGRAMMING

 

 

DIRECTV, INC.

 

and

 

COLORADO SATELLITE BROADCASTING, INC.

 

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

AMENDED AND RESTATED
AFFILIATION AGREEMENT

 

FOR DTH SATELLITE EXHIBITION

 

OF CABLE NETWORK PROGRAMMING

 

AGREEMENT, made as of this 15th day of June, 2010, by and between
COLORADO SATELLITE BROADCASTING, INC., a Colorado corporation (“Programmer”),
and DIRECTV, INC., a California corporation (“DIRECTV”).

 

WHEREAS:

 

A.            DIRECTV and
Programmer entered into a written agreement entitled Amended and Restated
Affiliation Agreement for DTH Satellite Exhibition of Cable Network Programming
dated September 24, 2007 (the “2007 Agreement”) whereby Programmer granted
DIRECTV the right to distribute certain adult programming television networks
owned and operated by Programmer (individually the “Service,” or collectively
the “Services”, as defined in Section 1.2.1 below) via the DTH
Distribution System (as defined in Section 1.1.2 below) in the United
States, its territories and possessions, including Puerto Rico (the “Territory”)
as restricted herein; and

 

B.            The parties
desire to amend various terms of the 2007 Agreement and herein restate the 2007
Agreement in its entirety.

 

NOW, THEREFORE, IT IS MUTUALLY AGREED AS
FOLLOWS:

 

1.             Grant of
Rights.

 

1.1           Distribution; Certain
Definitions.

 

1.1.1        Programmer hereby grants to
DIRECTV the non-exclusive right to distribute the Services in the Territory via
the DTH Distribution System to DIRECTV Subscribers (as defined in Section 1.1.2
below) during the Term (as defined in Section 6.1 below) hereof.  DIRECTV
shall have the right to use the names, titles or logos of the Services or any
of its programs, or the names, voices, photographs, music, likenesses or
biographies of any individual participant or performer in, or contributor to,
any program or any variations thereof, subject to the warranties and
restrictions set forth in this Agreement.

 

2

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

1.1.2        The term “DTH Distribution
System” shall mean the distribution system for video and other programming
services whereby the programming satellite signal or feed is received from
Programmer’s Delivery Source (as defined in Section 1.3.3 below) by a
DIRECTV turnaround earth-station facility which compresses and processes the
signal or feed and then uplinks it to a DTH communications satellite (a “DTH
Satellite”) for transmission to DIRECTV Subscribers.  DTH Distribution System shall also include
any other method of distribution that DIRECTV currently and/or subsequently
uses to deliver the Services feed to DIRECTV Subscribers, including, without
limitation, MMDS and terrestrial-based transmission infrastructures such as
Internet protocol, fiber optic, twisted pairs and coaxial cable, provided that
in connection with such delivery methods, DIRECTV complies with the
following:  (i) the end users to
whom DIRECTV distributes the Services are DIRECTV Subscribers;  (ii) the branding and packaging that is
received by such DIRECTV Subscribers is substantially the same as the branding
and packaging received by DIRECTV Subscribers that receive the Services via
DIRECTV’s direct to home satellites.  “DIRECTV
Subscribers” shall mean those customers (both residential and non-residential)
authorized by DIRECTV to receive service via the DTH Distribution System,
excluding any customer who to DIRECTV’s knowledge: (A) charges an
admission fee, cover charge, minimum or the like; or (B) distributes all
or any part of the Services to viewers who are not located in the same
residence, dwelling unit, store, hospital room, hotel room or suite, motel room
or suite, office or other singular facility occupied, owned, leased or
otherwise controlled by the customer entitled to receive the Services.  In all events, the DTH Distribution System
shall mean and include all technologies used to connect a DIRECTV Subscriber’s
network of authorized reception devices (e.g., wireless technology used to
connect one or more set-top-boxes).

 

1.1.3        If Programmer grants or has
granted to any other distributor that distributes a Service in the Territory
the right to receive and distribute such Service(s) and/or any Segments
(as defined in Section 1.2.1 below) of Service programming (as any such
Segments appear on the Service(s)) or Programmer or an Affiliated Company (as
defined in Section 8.1 below) distributes the Service(s) (or any
portion thereof) itself via a “New Distribution Method” (as defined below)
(including, without limitation, for use in connection with an Authentication
Service, as described in Section 1.1.4 below), then Programmer will
promptly notify DIRECTV thereof in writing and make available to DIRECTV the
right to receive and distribute such programming to DIRECTV Subscribers via
such New Distribution Method under the same terms and conditions such rights
were made available such other distributor directly in exchange for such
rights, provided that if DIRECTV cannot reasonably satisfy such terms and
conditions, Programmer shall offer DIRECTV comparable terms and
conditions.  “New
Distribution Method” shall mean, with respect to any other
distributor of a Service in the Territory, any distribution method, device,
distribution technology or format (for example, distribution to hand-held
devices, streamlining to a web site); provided that, in all events, the current
distribution 

 

3

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

methods
of cable television, telco (e.g., via Internet protocol or traditional fiber
lines), direct to home satellite, SMATV and multipoint distribution service (all
as currently utilized in the multichannel video distribution business) shall
not be considered a New Distribution Method.

 

1.1.4        Without limiting the scope
of Sections 1.1.2 or 1.1.3 above, Programmer
hereby grants to DIRECTV the following New Distribution Method rights: DIRECTV
shall have the right to distribute all such Service programming purchased by
Service Subscribers pursuant to this Agreement via the Internet, wireless,
mobile and similar technologies, without payment of any incremental license
fees or other consideration to Programmer, to Authenticated Service Subscribers’
(as defined below) computers, set-top-boxes, mobile devices or other authorized
devices (including, without limitation, via streaming or download) at no
additional fee or charge incremental to such Authenticated Service Subscribers’
PPV programming charge (other than an equipment charge, access fee or other
similar infrastructure charge) during the viewing window for each PPV purchase
of Service programming (the “Authentication Service”).  In the event that DIRECTV wishes to charge an
incremental fee to its Authenticated Service Subscribers in connection with any
of the above New Distribution Methods, then the parties shall negotiate in good
faith an appropriate license fee in connection with any related incremental
revenues.   “Authenticated Service Subscribers” shall mean solely those Service
Subscribers (as defined in Section 2.4.1 below) who, prior to receiving
any Service programming via the Authentication Service,  have been authenticated as DIRECTV
Subscribers that subscribe to Service programming; provided that, the manner in
which such subscribers are authenticated shall be comparable in effectiveness
to the authentication of subscribers receiving the Service as part of a package
of services from the DTH Distribution System. 
Prior to DIRECTV’s launch of the Authentication Service, the parties
shall negotiate in good faith the terms and conditions thereof (e.g., which
party is serving the content, delivery format, technical specifications,
holdbacks, advertising, etc.); provided that, the terms and conditions
granted to Affiliate with respect to the Authentication Service shall be no
less favorable to Affiliate than the terms and conditions provided to any other
distributor in connection with any similar service or offering, provided
further that if any such terms and conditions are not relevant to Affiliate or
reasonably feasible taking into consideration Affiliate’s technology and
distribution platform, the parties shall agree upon appropriate comparable
terms and conditions as negotiated in good faith.

 

1.2           The Services.

 

1.2.1        The “Services”
shall mean and consist of the national feed (or, if Programmer uses multiple
feeds for the Services, such other of such multiple feeds designated by
DIRECTV) of the following [***] programming services: (i) the programming
service commonly known as “Juicy”, which shall consist of thematically
organized [***] scenes which

 

4

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

are sourced from various movies (each [***] segment shall contain up to
[***] scenes and shall in no instance show less than [***] scenes (collectively
a “Segment”)); and (ii) the programming service commonly known as “Real”,
which shall consist of a minimum of [***] unique programs per [***] and [***]
unique programs per [***], including [***] channel premiers per [***] and [***]
channel premiers per [***]. A program may repeat during [***] after its
premiere [***], thereafter it shall not air for a minimum of [***] on Real or
for a minimum of [***] after any subsequent [***] run.  Furthermore, no
program on Real shall repeat more than [***] during any given [***].  All programs on Real will employ a [***] in
which scripted [***] scenes simulate [***] situations.  Juicy shall contain a minimum of [***] unique
Segments per [***] ([***] unique Segments comprised of [***] unique [***]
scenes per [***]).  While [***] of Segments will be created during the
Term, all Segments shall be [***] in that no Segment is ever [***] with the
[***] scenes in the [***]. A Segment may [***] after its initial [***] and a
[***] scene may [***] during [***] after its [***]. Thereafter, a segment
and/or a scene shall not [***] for at least [***] or for a minimum of [***]
after any subsequent [***] run. 
Furthermore, no Segment shall [***] more than [***] during any given
[***].  Segments shall be no less than
[***] in duration.  The daily start time
for Real is [***] and the daily start time for Juicy is [***]; provided that
Programmer shall make commercially reasonable efforts to accommodate any
request by DIRECTV to modify such start times. 
The Services shall be comprised of [***] adult programming depicting
[***] and [***] situations and [***] among consenting adults.  [***] programming (including individual
programs) shall not be exhibited on more than one Service during any [***]
during the Term.  Subject to the
foregoing, the Services shall at all times be [***] the degree of explicitness
of programming currently featured on competing adult services such as the
services currently known as [***] (subject to the description and limitations
in Exhibit A, as illustrated by the programming schedules in Exhibit C).

 

Notwithstanding the foregoing, upon [***] written notice to Programmer,
DIRECTV shall have the sole option at any time during the Term to (A) replace
any one of the Services with any other programming service of the same edit
standard (i.e., [***]) distributed by Programmer in the Territory and to
distribute such other service under the terms hereof and/or (B) distribute
as an additional Service hereunder (subject to the terms hereof) any or all of
the “Additional Services” described on Exhibit D.  Programmer represents and warrants that the
Services shall reflect adult content limited to the [***] version, as described
in Exhibit A and Schedule I thereto, and shall not contain or depict any
acts set forth in the [***] columns of Schedule I to Exhibit A, or
otherwise prohibited by Exhibit A. 
The Services shall not contain any [***]. Notwithstanding the foregoing,
Programmer shall have the right to include Programmer’s brand or trademark
identification on the Services and to include promotional tags or spots solely
for purposes of promoting upcoming programs on the Services (no more than [***]
in each [***] segment of programming content, inclusive of any Programmer’s
Avails (as defined in Section 3 hereof)); provided that in no case shall
such tags or spots promote any programming service other than the

 

5

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

Services unless otherwise agreed to by the parties (including, without
limitation, any online programming offering). 
The Services shall be delivered to DIRECTV in their entirety, meaning
that the programming on the Services, as received by any Service Subscriber at
a given point in time, shall be the same as the programming that is received by
all other subscribers to the Services at such point in time.  If Programmer or an
Affiliated Company (as defined in Section 8.1 hereof) distributes itself
or provides (or offers) any other programming rights, including, without
limitation, DVR push down, high definition, video-on-demand, interactive or
gaming rights (including, without limitation, data and informational
enhancements to the programming contained in or delivered along with the
Services) to any other distributor of the Services in the Territory, then
Programmer shall promptly offer to DIRECTV such rights upon terms and
conditions that are no less favorable to DIRECTV than those provided to the
Other Distributor; provided, however, that if such terms and conditions are not
relevant to DIRECTV or DIRECTV is not reasonably capable of complying with such
terms and conditions taking into consideration DIRECTV’s business, including,
without limitation, DIRECTV’s technology and DIRECTV’s national platform, then
the parties shall negotiate comparable obligations, terms and conditions in
good faith.  The
terms hereunder that cannot be reduced to an economic value shall be no less
favorable to DIRECTV than such terms that are provided to Other Distributors.

 

1.2.2        All rights and
title in and to the entire contents of the Services, including, but not limited
to, films and recordings thereof, title or titles, names, trademarks, concepts,
stories, plots, incidents, ideas, formulas, formats, general content and any
other literary, musical, artistic, or other creative material included therein
shall, as between Programmer and DIRECTV, remain vested in Programmer.

 

1.2.3        DIRECTV is
authorized to distribute the Services using satellite master antenna television
system (or similar system) (“SMATV”) operators (including telephone companies
and similar service providers) that serve multiple dwelling locations, master
planned communities, multiple dwelling unit (“MDU”) buildings or complexes or
commercial or business establishments with multiple television viewing sites
via such SMATV systems directly to end users within such buildings or
establishments, subject to Section 1.1.2 above.

 

1.2.4        Programmer
shall not propose or impose upon DIRECTV, nor shall DIRECTV be obligated to
pay, any [***] for receipt and distribution of the Services.

 

1.3           Other
Distribution Obligations.  In
addition, the parties agree as follows:

 

1.3.1        Subject to Programmer’s
obligations hereunder and DIRECTV’s rights under Section 17, DIRECTV shall
distribute the Services in its entirety, in the order and at the time
transmitted by Programmer without any intentional and willful editing, delays,

 

6

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

alterations,
interruptions, deletions or additions (collectively, the “Alterations”)
excepting: (i) DIRECTV’s electronic guides (including without limitation,
any mosaic or similar guides), (ii) news bulletins and other public
announcements as may be required by emergencies or applicable law; and (iii) a
DIRECTV Subscriber’s use of equipment, programming or other data supplied by
DIRECTV or any third party to make Alterations to the Signal as viewed on a
monitor/television screen. Programmer acknowledges that the DTH Distribution
System requires and applies digital compression and encryption processes prior
to transmission and decryption and decompression processes upon reception and
agrees that such processing does not constitute an alteration and/or other
modification of the Services.  Programmer
shall fully encrypt the satellite signals of the Services utilizing encryption
technology commonly used in the satellite distribution industry.

 

1.3.2        Subject to the terms and
conditions of this Agreement, the terms and conditions upon which DIRECTV
distributes the Services to DIRECTV Subscribers (including, without limitation,
Service packaging and retail prices charged, discounts, etc.) shall be
determined by DIRECTV in its sole discretion; provided that DIRECTV may offer
each Service to DIRECTV Subscribers on a [***] basis (each, a “PPV Offering”)
and/or in a [***] (as defined in Section 4 of Exhibit B).   PPV Offerings shall be made available in
blocks of [***] each (or such other period as the parties shall agree), but not
[***] each unless Programmer consents in writing, which consent shall not be
unreasonably withheld (any such block of time, a “PPV Program”).  If, at any time during the Term, Programmer
allows any other distributor to offer a Service to viewers in a manner which is
more favorable to such other distributor than to DIRECTV (e.g., imposing less
restrictive requirements on such other distributor than those set forth
immediately above) (“More Favorable Packaging Terms”), then DIRECTV shall
immediately be entitled to such More Favorable Packaging Terms.

 

1.3.3        Programmer
shall, at its sole expense, deliver the feeds of the Services from a U.S.
domestic communications satellite in the Territory commonly used for
transmission of television programming (or, at Programmer’s option and expense,
a fiber optic or other facility reasonably acceptable to DIRECTV) (the “Delivery
Source”) to either or both (as designated by DIRECTV) of DIRECTV’s uplink and
broadcast facilities currently located in Castle Rock, Colorado and Los
Angeles, California (collectively, the “Broadcast Centers”).  In connection with the foregoing, Programmer
shall, at its sole cost and expense, provide DIRECTV with [***] receivers and
decoders for the Services for each of the Broadcast Centers.  Programmer shall have in place appropriate
back-up procedures and process, or shall reserve back-up fiber links between
Programmer’s broadcast center and its satellite uplink center (VYVX), such that
in the event of a failure of the first satellite or fiber link, delivery of the
Services to DIRECTV shall be only minimally interrupted.  The format of the backup feeds shall be the
same format as the primary feeds of the Services.  As of the Effective Date (defined in Section 6.1),
the feeds of the Services shall be delivered from [***].  The delivery of all feeds hereunder shall be
pursuant to the technical

 

7

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

specifications
set forth at Exhibit “E” hereto.

 

1.3.4        Programmer and DIRECTV shall
use their respective commercially reasonable efforts to maintain for the
Services a high quality of signal transmission in accordance with their
respective technical standards and procedures. Programmer agrees to include
closed-captioning and/or video description of the audio portion of the Services
as delivered by Programmer to DIRECTV in a manner sufficient to allow DIRECTV
to comply with any applicable closed-captioning and/or video description
obligations as may be imposed upon DIRECTV or Programmer the rules and
regulations of the Federal Communications Commission (“FCC”) or other
governmental body during the Term, as modified from time to time, and
Programmer shall provide DIRECTV certificates of compliance in connection
therewith with the above obligations on a [***] basis during the Term. Other
than as required pursuant to the immediately preceding sentence, DIRECTV shall
have no liability in connection with Programmer’s failure to prepare, insert or
include closed-captioning and/or video description in the Services as required
by this Section 1.3.4.  Accordingly
Programmer shall indemnify, defend and hold harmless DIRECTV, as provided in Section 8
hereof, against and from any and all losses, liabilities, claims, costs
(including without limitation, any costs of preparing and including
closed-captioning and/or video description in the Services), damages and
expenses, including without limitation, fines, forfeitures, attorneys’ fees,
disbursements and court or administrative costs, arising out of third party
claims (including, without limitation, the action of any Governmental
Authority, as such term is defined in Section 5.2.10 below) as a result of
Programmer’s breach of this Section 1.3.4.

 

1.4           Program Guide.  During the Term, Programmer, at its sole cost
and expense, shall provide the daily programming schedule for the Services to
Tribune Media Service (or such other service designated by DIRECTV) in order
that DIRECTV may access the program schedule for purposes on the on-screen program
guide.

 

1.5           VBI.  Programmer
acknowledges that digitizing and compressing of the signals of the Services
(the “Signal”) will result in changes to the Signal.  As a consequence, the DTH Distribution System
does not currently retransmit any data or information contained in the VBI of
the Signals except line 21, fields 1 and 2 (or its digital equivalent), and
only carries a single mono secondary audio program provided that such secondary
audio is programmed twenty-four (24) hours per day/seven (7) days per week
(“SAP”), and, in each case, only when carried in accordance with CEA-608 or
CEA-708 (or successor industry standards), as applicable.  Accordingly, in no event shall DIRECTV be
obligated to transmit more than the primary video and a single stereo pair of
primary audio programs to be associated with the Signal, a single mono SAP
associated with the Signal, and line 21, fields 1 and 2 of the VBI.  Programmer reserves and retains all rights in
and to all signal distribution capacity contained

 

8

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

within the bandwidth of the Signal, including without
limitation, the VBI and audio subcarriers from its transmission point to the
point of reception by DIRECTV.  DIRECTV
retains and reserves any and all rights in and to,  and may use in its sole discretion, all distribution capacity contained
within the bandwidth of the Signals, including, without limitation, the VBI and
audio subcarriers, from the point of reception by DIRECTV to the DIRECTV
Subscribers in the Territory.  Programmer
shall not have any rights to use any part of a DIRECTV Subscriber’s return path
for any reason whatsoever.

 

1.6           Change of Satellite.  In the event Programmer either (i) changes
the satellite to which the Services are transmitted to a satellite or other
transmission medium not susceptible to viewing or utilization by DIRECTV’s
then-existing earth station equipment without affecting the receipt of the
signals of any other programming or other services then received (or committed
to be received) by such DIRECTV, (ii) changes the technology used by
Programmer to encrypt the Services to a technology not compatible with DIRECTV’s
then-existing descrambling equipment, or (iii) compresses, digitizes or
otherwise modifies the signal of the Services in such a manner that it cannot
be received or utilized by DIRECTV, then DIRECTV shall have the right to
discontinue carriage of the Services, immediately; provided that this right of
discontinuance and deletion shall not apply to DIRECTV if Programmer agrees to
promptly reimburse DIRECTV for (I) the cost to acquire and install
equipment necessary for DIRECTV to receive the signal of the Services from such
new satellite or other transmission medium, and/or (II) the cost to
acquire and install equipment necessary for DIRECTV to descramble and/or
utilize the signal of the Services; Programmer agrees to [***] provide DIRECTV
with [***] prior written notice of a satellite or technology change as set
forth in subsections (i) through (iii) above.

 

1.7           On-Screen Logos.  It is understood and agreed that DIRECTV may
superimpose a logo or “bug” in a corner of the screen identifying DIRECTV over
the programming of the Services; provided however that DIRECTV’s bug shall
appear only intermittently during any portion of the Services, and provided
further that DIRECTV shall not delete the Service’s own promotion bug or its
on-screen graphics.

 

1.8           Alternate Distribution of
Service Programming.  For the
sake of clarity, distribution of a Service in its entirety, regardless of
distribution method, is subject to [***]. 
Therefore, other than Programmer’s compliance with [***] and the other
terms and conditions of this Agreement, there are no limitations on Programmer’s
ability to authorize unaffiliated third parties to distribute a Service in its
entirety.  Programmer itself (and its
Affiliated Companies) shall not, however, be permitted to [***] a Service (or
any other [***] service substantially similar to a Service) in its
entirety.  Distribution of portions of a
Service are not subject to [***] or otherwise restricted hereunder; provided,
however, that such distribution is subject to the

 

9

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

following
limitations: [***].  Any Programs that no
longer meet the definition of Current Programming may be distributed
[***].  “Current Programming” means Programs
that were first exhibited on a Service within [***].

 

2.             Reports and
Payments.

 

2.1                                 Reports;
Payments; Audit Rights. 
Within [***] during the Term, DIRECTV shall furnish Programmer (i) a
statement containing a report of (A) the total number of [***] as of
[***]; (B) the number of [***] (defined as the number of [***] for the
Services authorized by DIRECTV for reception by DIRECTV Subscribers, net of any
[***] and/or [***] subject to a [***] (as defined in Paragraph 2 of Exhibit “B”))
for the relevant [***]; and (C) the total amount of [***] (as defined in Exhibit B,
attached hereto, and made a part hereof) for the relevant [***] and (ii) payment
of the License Fees for the relevant [***], calculated pursuant to Section 2.2
and Exhibit B.  Programmer shall
accord confidential treatment to any information contained in the
aforementioned statement in accordance with Section 15.  At Programmer’s request, DIRECTV shall permit
Programmer’s independent representatives to review, during the Term (no more
than [***]) and for [***] after the end of the Term and on [***] basis, such
DIRECTV Subscriber records as required for the sole purpose of verifying such
statements at reasonable times, upon reasonable advance written notice and
during normal business hours at DIRECTV’s offices.  Any third party auditors retained by
Programmer shall be a certified public accountant and/or firm specializing in
media audits that has no conflict with DIRECTV (subject to DIRECTV’s reasonable
approval).  Such
review shall be at Programmer’s sole cost and expense, unless such review
reveals an underpayment of more than [***], in which case, DIRECTV shall
reimburse Programmer the reasonable cost of such audit and shall promptly make
payment of any fees due and owing, provided (I) DIRECTV does not have a
bona fide dispute with the audit findings; and (II) such audit costs shall
not exceed such underpayment.  Such
review shall be conducted during reasonable business hours and in such manner
as not to interfere with DIRECTV’s normal business activities and shall not
continue for more than [***] so long as Programmer is given timely and
reasonable access to the applicable DIRECTV Subscriber records.  Programmer shall not have the right to
examine or inquire into any matters or items which are embraced by or contained
in any such statement after the expiration of [***] from and after the date of
mailing of such statement, and such statement shall be final and conclusive
upon Programmer upon the expiration of such [***] period notwithstanding that
the matters or items embraced by or contained therein may later be contained or
referred to in a cumulative statement pertaining to more than one accounting
period.  Such cumulative statement shall
not be subject to audit by Programmer to the extent the material contained
therein was first reflected on a statement submitted more than [***] prior to
the date of mailing of such cumulative statement.  Programmer shall be forever barred from
maintaining or instituting any action or proceeding based upon, or in anyway

 

10

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

relating
to, any matters that are embraced by or reflected on any statement rendered
hereunder, or the accuracy of any item appearing therein, unless written objection
thereto shall have been delivered by Programmer to DIRECTV within [***] after
the date of mailing of the statement on which such transaction or items was
first reflected and unless such action or proceeding is commenced within [***]
after delivery of such written objection. 
Programmer may not commence a new audit until all prior audits have been
closed (i.e., after such closure is confirmed in writing by Programmer) and the
results have been presented to DIRECTV.  If Programmer shall audit DIRECTV’s books and
records, then Programmer shall, within [***] of the conclusion of such audit (i.e., after the auditors conclude the
audit at DIRECTV’s offices), inform DIRECTV in writing of any claim resulting
therefrom (including a true copy of any third party audit), and, except for the claims set forth in such
notice, all statements rendered by DIRECTV with respect to the period covered
by such audit shall be conclusive and binding on the parties and not subject to
further audit.  The information
derived from and the process of such review shall be subject to the
confidentiality provisions of Section 15, and any third party auditor
shall be required to acknowledge in writing its agreement to such
confidentiality provisions.

 

2.2           License Fees.  As full and complete compensation for DIRECTV’s
right to distribute the Services, DIRECTV shall pay to Programmer, on a [***]
basis, for each Service Subscriber receiving the Services from DIRECTV for such
[***], a “License Fee” determined pursuant to Programmer’s rate card for the
Services set forth in Exhibit B hereto.

 

2.3           Late or
Non-Payments.  Any amounts
that are not subject to a bona fide dispute by DIRECTV and not paid by DIRECTV
after (i) the date payment is due pursuant to the first sentence of Section 2.1
and (ii) [***] after DIRECTV’s receipt of written notice from Programmer
of such failure by DIRECTV, shall accrue interest at the rate of [***] or the
maximum allowed by law, whichever shall be the lesser, from the date such
amounts were due until they are paid.

 

2.4           [***].

 

2.4.1        [***].

 

2.4.2        At DIRECTV’s
election, Programmer shall (i) permit DIRECTV’s independent
representatives to review, during the Term (no more than [***]) and for [***],
such Programmer records as required for the sole purpose of verifying
Programmer’s compliance with the terms of Section 2.4, at reasonable
times, upon reasonable advance written notice and during normal business hours
at Programmer’s offices, or (ii) provide to DIRECTV an annual statement,
certified by Programmer’s chief financial officer, certifying compliance with
the provisions of Section 2.4.  Such
review shall be at DIRECTV’s sole cost and expense, unless such review

 

11

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

reveals
an overpayment by DIRECTV of more than [***], in which case, Programmer shall
promptly reimburse DIRECTV for the reasonable cost of such audit and shall
promptly make payment of any monies due and owing, provided (A) Programmer
does not have a bona fide dispute with the audit findings; and (B) such
audit costs shall not exceed such overpayment. 
The information derived from and the process of such review shall be
subject to the confidentiality provisions of Section 15, and any third
party auditor shall be required to acknowledge in writing its agreement to such
confidentiality provisions.

 

3.                                       Advertising.

 

Subject to Section 1.2.1 above, Programmer hereby represents and
warrants that the Services shall not contain any [***] during the Term;
provided, however, that Programmer shall have the right to include [***] on the
Services up to a total of [***] at the end of each [***] of programming (“Programmer’s
Avails”).  Programmer’s Avails may be
covered by DIRECTV via the insertion of [***] (“DIRECTV Avails”).  Subject to the foregoing, under no
circumstances may [***] promote any [***]. 
The Avails provided by Programmer to DIRECTV shall be no less favorable
(in terms of the [***] of the Avails and so forth) than those provided to any
other distributor of the Services. 
Programmer shall properly [***], all Avails to enable DIRECTV to
[***].  Under no circumstances shall a
Service be permitted to include, directly or indirectly, [***].  For the avoidance of doubt, Programmer’s
Avails shall not contain any promotion of any [***].

 

4.             Marketing and
Promotion.

 

In addition to other rights granted herein, Programmer hereby grants to
DIRECTV, during the Term and in the Territory only, the following rights, but
not the obligation, to be exercised by DIRECTV in its sole discretion with
respect to its marketing of the Services: (i) the right to use any and all
marketing materials reasonably requested from Programmer by DIRECTV (which
materials shall be provided at [***] to DIRECTV) for the purpose of marketing
the Services; (ii) the right to manufacture and produce its own marketing
materials, subject to the prior approval of Programmer, such approval not to be
unreasonably withheld or delayed; and (iii) the right to use the names,
voices, music, recordings, images, and likenesses of any and all performers in
and other persons related to the Services, and the right to use Programmer’s
name and logo to market the Services [***]. 
Programmer shall promote DIRECTV’s carriage of the Services [***] as it
promotes the carriage of the Services by any other [***] (including, without
limitation, the [***] and [***]); provided, however, that Programmer shall
provide DIRECTV with prior written notification of any [***] of DIRECTV’s [***]
of the Services by Programmer, and any such [***] shall be subject to DIRECTV’s
prior approval.  Notwithstanding the
foregoing, DIRECTV may cease marketing and promoting the Services if DIRECTV,
in its absolute sole determination, reasonably believes that marketing or
promoting the Services may be politically harmful to

 

12

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

DIRECTV
or its Affiliated Companies or adversely affect the corporate image that
DIRECTV or its Affiliated Companies desires to maintain at such time.  In the event that DIRECTV, in its sole
discretion, elects to undertake a [***] on behalf of the Services, DIRECTV
shall furnish a [***] to Programmer, and Programmer and DIRECTV shall work in
good faith to jointly implement such plan.

 

5.             Representations,
Warranties and Covenants.

 

5.1           By DIRECTV.  DIRECTV warrants, represents and covenants to
Programmer that it:

 

5.1.1        is in
compliance with and will comply with all material Laws (as defined below) with
respect to its rights and obligations under this Agreement, including without
limitation, all relevant provisions of the Cable Television Consumer Protection
and Competition Act of 1992 (as may be amended and any successor, replacement
or similar Law or statute) and any and all regulations issued pursuant thereto
(as used herein, “Law” shall mean any FCC and any other governmental (whether
international, federal, state, municipal or otherwise) statute, law, rule,
regulation, ordinance, code, directive or order, including without limitation,
any court order);

 

5.1.2        has the power and authority
to enter into this Agreement and to fully perform its obligations hereunder;

 

5.1.3        shall distribute the Services
in the Territory in accordance with and subject to the terms and conditions set
forth in this Agreement;

 

5.1.4        shall, except as otherwise
set forth herein, (A) arrange and pay for reception of the Services
(excluding any authorization fees) from the U.S. domestic communications
satellite from time-to-time designated by Programmer to DIRECTV with DIRECTV’s
approval of such designation; and (B) acquire and maintain, at DIRECTV’s
sole expense, any equipment, including, without limitation, backup or reserve
descramblers, which may be necessary to decode and unscramble the signal(s) for
the Services;

 

5.1.5        shall not, without
Programmer’s consent, knowingly authorize or cause or knowingly permit any
portion of the Services to be recorded, duplicated, cablecast, exhibited or
otherwise used (except on a videocassette recorder or other home or personal
recording device for private, noncommercial use) for any purpose other than for
distribution by DIRECTV at the time the same is made available;

 

13

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

5.1.6        shall not, without
Programmer’s prior written approval, use the names, titles or logos of the
Services or any of its programs, or the names, voices, photographs, likenesses
or biographies of any individual participant or performer in, or contributor
to, any program or any variations thereof, for any purpose other than in
material intended to advise DIRECTV Subscribers or potential DIRECTV
Subscribers of the availability and scheduling of the Services or as a channel
identifier.  The restrictions set forth
in this Section 5.1.6 shall apply only to the extent they are applied by
Programmer uniformly with respect to all of its distributors of the Services,
and shall not apply if DIRECTV has received a valid authorization from a third
party for any of the uses described in this Section 5.1.6;

 

5.1.7        has obtained, and shall
maintain in full force during the Term hereof, such federal, state and local
authorizations as are material and necessary to operate the business it is
conducting in connection with its rights and obligations under this Agreement;
and

 

5.1.8        the obligations created by
this Agreement, in so far as they purport to be binding on DIRECTV, constitute
legal, valid and binding obligations of DIRECTV enforceable in accordance with
their terms.

 

5.2           By Programmer.  Programmer warrants, represents and covenants
to DIRECTV that:

 

5.2.1        to its best knowledge after
diligent review and receipt of advice of counsel with respect hereto, it is in
compliance with and will throughout the Term continue to comply with all Laws
applicable to, or with respect to, the Services and the provision of the
Services to DIRECTV, and Programmer’s rights and obligations under this
Agreement with respect to the Services and Programmer’s obligations hereunder,
including without limitation, FCC rules and regulations governing the
Services, if any, all relevant provisions of the Cable Television Consumer
Protection and Competition Act of 1992, and the Communications Act of 1934, the
effective portions of the Communications Decency Act of 1996 (as any or all may
be amended and any successor, replacement or similar Laws) and any regulations
promulgated under any applicable law or any of the foregoing;

 

5.2.2        it has the power and
authority to enter into this Agreement and to fully perform its obligations
hereunder and once executed this Agreement shall constitute a valid and binding
agreement of Programmer enforceable in accordance with its terms;

 

5.2.3        the general quality and
quantity of programming on the Services shall not materially change from that
existing as of the date of this Agreement, and the genre of programming shall
not materially change from that described in Section 1.2.1 and existing on
the

 

14

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

date
of this Agreement;

 

5.2.4        it has obtained, and shall
maintain in full force during the Term hereof, such federal, state and local
authorizations as are material and necessary to operate the business it is
conducting in connection with its rights and obligations under this Agreement;

 

5.2.5        it has secured and shall
maintain in full force during the Term hereof all rights necessary for DIRECTV
to use and enjoy its rights in connection with its distribution of the Services
and all programming provided as part thereof, as a whole or in parts, as PPV
Offerings in the Territory, including, without limitation, obtaining or all
necessary trademarks, copyrights, licenses and any and all other proprietary
intellectual property and other use rights necessary in connection with, and
for DIRECTV’s distribution of, the Services (including without limitation, the
right to use the names, titles or logos of the Services or any of its programs,
the promotional materials supplied or approved by Programmer,  the names, voices, photographs, music,
likenesses or biographies of any individual participant or performer in, or
contributor to, any program or any variations thereof) and to perform its
obligations hereunder and grant the rights granted pursuant to Section 1;

 

5.2.6        it shall not, without
DIRECTVs prior written approval, use the name or logo for “DIRECTV” or any
other works owned or controlled by DIRECTV (and its related companies);

 

5.2.7        as of the date hereof, the
programming on the Services consists of and during the Term hereof such
programming shall consist of, that programming described in Section 1.2.1;

 

5.2.8        there are no (and it
covenants that it shall not enter into directly or indirectly, allow or
otherwise permit any) affiliation, distribution or any other agreements,
whether written or oral, granting to distributors and/or any other third party,
person or entity any form or type of exclusive or other rights that would limit
or restrict in any way DIRECTV’s rights to distribute the Services in the
Territory;

 

5.2.9        the obligations created by this Agreement, in so far
as they purport to be binding on Programmer constitute legal, valid and binding
obligations of Programmer enforceable in accordance with their terms;

 

5.2.10      it has not (and none of its
principals or Affiliated Companies have) been convicted for the criminal
violation of, and/or has not been found by the FCC or other federal, state or
local governmental authority with appropriate jurisdiction (collectively, the

 

15

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

“Governmental
Authority”) to have violated, any federal, state or local law or regulation as
applicable concerning illegal, indecent or obscene material or the transmission
thereof (the “Obscenity Laws”), and Programmer is not currently aware of any
pending investigation (including, without limitation, a grand jury
investigation) involving the Services (or any content included in the Services)
or any pending proceeding against Programmer (or any of its principals or
Affiliated Companies) for the violation of any Obscenity Laws;

 

5.2.11      it will notify DIRECTV as
soon as possible, but in no event later than the close of business on the same
Business Day upon which Programmer receives notice of, or becomes aware of, any
pending investigation by any Governmental Authority, or any pending criminal
proceeding against Programmer (or any of its principals or Affiliated
Companies), which investigation or proceeding concerns distribution of the
Services or programming in the Services, including without limitation,
investigations and/or proceedings concerning potential violations of Obscenity
Laws.  For purposes of this Section 5(2)(11),
Programmer shall be deemed to be aware of any such investigation or proceeding
if any of the directors, officers, outside attorneys or employees of managerial
status of Programmer or an Affiliated Company has received any communication
about or otherwise becomes aware of any such investigation or proceeding;

 

5.2.12      the Services, and all
programming provided as part thereof, Programmer provides DIRECTV hereunder (A) is
not intended to be obscene and, to the best of Programmer’s knowledge after
diligent review, would not be found to be obscene in any jurisdiction in the
Territory, and (B) complies with and, at all times that this Agreement is
in effect, shall comply with the description and associated restrictions set
forth in the definition of “Service” and “Services” in Section 1.2.1, Exhibit A
and Schedule I thereto, including, without limitation, Programmer represents
and warrants that the Services shall reflect adult content limited to the [***]
type, as described in Schedule I, and shall under no circumstances contain or
depict any acts set forth in the [***] column thereof;

 

5.2.13      to its best knowledge after
diligent review and receipt of advice of legal counsel with experience in such
matters, it is in compliance with and will throughout the Term continue to
comply with 18 USC 2257 or 28 CFR 75 or any successor legislation or code. 
Programmer has prepared, maintained and executed, and at all times during the
Term and for a period of seven (7) years thereafter shall, prepare,
maintain and execute any documents or records, and provide Affiliate with
copies of any documents or records which are required by Title 18, U.S.C. §
2257, as amended, and/or the associated regulations found at 28 C.F.R. 75.1 et.
seq., as amended, and/or any successor statute or regulation (“Section 2257”). 
Programmer warrants and represents that it is in possession of such documents
and records, and maintains them in accordance with Section 2257.
 Programmer agrees to appoint a “record custodian” as

 

16

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

required
under Section 2257, and will keep DIRECTV apprised of the physical address
where all required records are compiled and maintained pursuant to Section 2257,
along with the name of the records custodian.  Programmer will display a
conspicuous disclosure statement on all depictions of ‘actual sexually explicit
conduct’ contained in the Services as required by Section 2257, which
statement identifies the records custodian for the content and describes the
physical location where the records relating to the content may be inspected as
required under applicable law.  If required by law, Programmer will be
identified as a “primary producer” in any and all disclosure statements
associated with the Services pursuant to Section 2257.  Programmer
further agrees to cooperate with DIRECTV in connection with any inspections or
government inquiries initiated pursuant to Section 2257.  
DIRECTV shall have the right to inspect such documents and records at any time
during regular business hours at Programmer’s location for maintaining the
records with five (5) business days’ prior written notice from DIRECTV;

 

5.2.14      it has and throughout the
Term will have a “through-to-the-viewer” license (as such term is commonly
understood in the entertainment industry) from the applicable music performing
rights societies and organizations (i.e., ASCAP, BMI and SESAC), in
respect of all music rights contained in the Services;

 

5.2.15      it has, and shall have
throughout the Term, the sole and exclusive right and authority to authorize
the exhibition, distribution and marketing of the Services, and the ability to
grant any or all of the rights actually granted and those contemplated
hereunder shall remain exclusively with Programmer throughout the Term; and

 

5.2.16      as of date hereof, it is in
compliance with [***].

 

6.             Term;
Termination.

 

6.1           Term; Extension.  The term of this Agreement shall be for the
period commencing on June 15, 2010 (the “Effective Date”) and continuing
through [***] (the “Term”). DIRECTV shall have the option, in its sole
discretion, to extend the Term on the same terms and conditions for [***].

 

6.2           Termination for
Breach, Bankruptcy; Discontinuance of Business.  In addition to any other rights or remedies,
in equity or at law, this Agreement may be terminated by either party (the “Affected
Party”), in its discretion, at any time after any of the following occurrences,
except as provided in this Agreement, with respect to the other party (the “Other
Party”):

 

6.2.1        any breach of any material
representation, warranty or covenant

 

17

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

made
herein or the failure by the Other Party, its successors or assigns to perform
any material obligation hereunder which is not cured within [***] after receipt
of written notice thereof from the Affected Party or as to which reasonable
steps to cure have not been commenced within such period (or are not thereafter
diligently pursued and completed within [***]);

 

6.2.2        the filing of a petition in
bankruptcy or for reorganization by or against the Other Party under any
bankruptcy act; the assignment by the Other Party for the benefit of its
creditors, or the appointment of a receiver, trustee, liquidator or custodian
for all or a substantial part of the Other Party’s property, and the order of
appointment is not vacated within thirty (30) days; or the assignment or
encumbrance by the Other Party of this Agreement contrary to the terms hereof;
or

 

6.2.3        if DIRECTV discontinues
operation of the DTH Distribution System, or Programmer discontinues operation
and distribution of the Services. 
Neither party shall have any further liability to the other, other than
as set forth in Section 6.6 below, for the discontinuance of the DTH
Distribution System or the Services, as the case may be; provided that such
discontinuance is not in connection with, and does not arise from, DIRECTV’s or
Programmer’s breach of this Agreement.

 

6.3           Termination by
DIRECTV.  In addition to any other
rights or remedies, in equity or at law, and except as set forth in subsection
6.3.3, DIRECTV may terminate any Service, or this Agreement, upon thirty (30)
days’ prior written notice to Programmer:

 

6.3.1        if at any time
the general quality and quantity of programming on the Services materially
changes from that existing as of the date of this Agreement, or the genre of
programming materially changes from that described in Section 1.2.1 and
existing on the date of this Agreement, as determined by DIRECTV in its sole
discretion; [***];

 

6.3.2        in the event of
a Programmer Transfer (as defined below) other than (A) with DIRECTV’s
prior written consent to the assignment of this Agreement to a new entity,
which consent shall not be unreasonably withheld, (B) as the result of a
merger into or sale or transfer directly or indirectly to a wholly-owned
subsidiary, (C) or a transfer of a percentage of the assets or stock
ownership of Programmer or the Services where Programmer retains ownership of
at least fifty percent (50%) of the assets or stock thereof.   “Programmer Transfer” shall mean a change in
the ownership of Programmer (or the parent of Programmer) or any transfer,
conveyance, exclusive license, transfer or disposition of all or substantially
all of the assets or business of Programmer (or the parent of Programmer),
whether by operation of law or otherwise, the result of which is that a new
entity, person or group of persons, directly or indirectly, has the ability (A) to
elect or control the votes of the majority of the board of directors

 

18

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

or
other governing body of Programmer (or the parent of Programmer), (B) to
control more than 50% of the voting interests of Programmer (or the parent of
Programmer), or (C) to direct or cause the direction of the general
management and policies of Programmer (or the parent of Programmer); or

 

6.3.3        for any reason,
as determined by DIRECTV in its sole discretion, as follows: (A) with
respect to the two Services described in the first paragraph of Section 1.2.1
(or any successor to either such Service), upon six (6) months prior
written notice, and (B) with respect to any Services that are incremental
to the two Services described in the first paragraph of Section 1.2.1,
upon ninety (90) days prior written notice.

 

6.5           Offsets.  Without limiting any other
remedies available to it under this Agreement, by law or at equity and,
notwithstanding anything to the contrary herein, DIRECTV shall have the right
[***] to withhold and reserve from any monies whatsoever payable to Programmer
or its designee hereunder, sums reasonably sufficient to secure DIRECTV from
and against Programmer’s material breach of any of its obligations under this
Agreement [***].

 

6.6           Force Majeure.  Notwithstanding any other provision in this
Agreement, neither Programmer nor DIRECTV shall have any liability to the other
or any other person or entity with respect to any failure of Programmer or
DIRECTV, as the case may be, to transmit or distribute the Services or perform
its obligations hereunder if such failure is due to any failure or degradation
in performance of the Delivery Source or the DTH Satellite(s) or
transponders on such satellites (as applicable) or of the DTH Distribution
System (in which case, DIRECTV shall be excused from its distribution
obligations under this Agreement), or of any scrambling/descrambling equipment
or any other equipment owned or maintained by others (including, without
limitation, DIRECTV’s automated billing and authorization system), any failure
at the origination and uplinking center used by Programmer or DIRECTV, any labor
dispute, fire, flood, riot, legal enactment, government regulation, Act of God,
or any cause beyond the reasonable control of Programmer or DIRECTV, as the
case may be (a “Force Majeure”), and such non-performance shall be excused for
the period of time such failure(s) causes such non-performance; provided,
however, that if DIRECTV determines in its sole discretion that it is
commercially or technically unfeasible to cure a Force Majeure with respect to
the DTH Distribution System or DTH Satellite and so notifies Programmer, then
either party may terminate this Agreement effective upon written notice to the
other party.  The parties acknowledge and
agree that although the Services may at any given time be uplinked to only one
of several DTH Satellites, failure or degradation in any of such DTH Satellites
may require DIRECTV to reduce the number of programming services available for
allocation among all of the DTH Satellites, with such reduction including,
without limitation, curtailment or termination

 

19

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

of the distribution of the Services by DIRECTV, at DIRECTV’s sole
discretion.  Accordingly, Programmer
further acknowledges and agrees that the provisions set forth in the first
sentence of this Section 6.6 shall apply and shall exculpate DIRECTV and
excuse the performance of DIRECTV hereunder in the event of a failure or
degradation of any of the DTH Satellites or the transponders on any such
satellites, regardless of whether the satellite to which the Services are uplinked
at the time of such failure or degradation is itself the subject of such
failure or degradation.

 

6.7           Survival.  Termination of this Agreement pursuant to
this Section 6 shall not relieve either party of any of its liabilities or
obligations under this Agreement, including without limitation those set forth
below in Section 8, which shall have accrued on or prior to the date of
such termination.

 

7.             Separate
Entities.  No officer,
employee, agent, servant or independent contractor of either party hereto or
their respective subsidiaries or DIRECTVs shall at any time be deemed to be an
employee, servant or agent of the other party for any purpose whatsoever, and
the parties shall use commercially reasonable efforts to prevent any such
misrepresentation.  Nothing in this
Agreement shall be deemed to create any joint venture, partnership or
principal-agent relationship between Programmer and DIRECTV, and neither shall
hold itself out in its advertising or in any other manner which would indicate
any such relationship with the other.

 

8.             Indemnification;
Limitation of Liability; Insurance.

 

8.1           By Programmer.  Programmer shall indemnify, defend and hold
harmless each of DIRECTV, its Affiliated Companies (as defined below), DIRECTV’s
contractors, subcontractors and authorized distributors and the directors,
officers, employees and agents of DIRECTV, such Affiliated Companies and such
contractors, subcontractors and distributors (collectively, the “DIRECTV
Indemnitees”) from, against and with respect to any and all claims, damages,
liabilities, costs and expenses (including reasonable attorneys’ and expert’s
fees) incurred in connection with any third party claim (including, without
limitation, a claim by any Governmental Authority) against any of the DIRECTV
Indemnitees arising out of (i) Programmer’s breach or alleged breach of
any provision of this Agreement, (ii) any content contained in the
Services, (iii) the distribution or cablecast of any programming of the
Services which violates or requires payment for use or performance of any
copyright, right of privacy or literary, music performance or dramatic right or
other intellectual property right, or that violates any Law or that infringes
upon the rights of any third party, (iv) Programmer’s advertising and
marketing of the Services, (v) any other materials, including advertising
or promotional copy, supplied or permitted by Programmer, and/or (vi) the
preparation and delivery of the Signal by Programmer up to the point of
authorized reception by DIRECTV at its Broadcast Center.  In

 

20

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

addition,
Programmer shall pay and hold the DIRECTV Indemnitees harmless from any
federal, state, or local taxes or fees which are based upon revenues derived
by, or the operations of, Programmer.  As
used in this Agreement, “Affiliated Company(ies)” shall mean, with respect to
any person or entity, any other person or entity directly or indirectly
controlling, controlled by or under common control (i.e., the power to
direct affairs by reason of ownership of voting stock, by contract or otherwise)
with such person or entity and any member, director, officer or employee of
such person or entity.

 

8.2           By DIRECTV.  DIRECTV shall indemnify and hold harmless
each of Programmer, its Affiliated Companies, Programmer’s contractors,
subcontractors and authorized distributors, each supplier to Programmer of any
portion of the Services hereunder and each participant therein and the
directors, officers, employees and agents of Programmer, such Affiliated
Companies, such contractors, subcontractors and distributors and such suppliers
and participants therein (collectively, the “Programmer Indemnitees”) from,
against and with respect to any and all claims, damages, liabilities, costs and
expenses (including reasonable attorneys’ and experts’ fees) incurred in
connection with any third party claim (including, without limitation, a claim
by any Governmental Authority) against the Programmer Indemnitees arising out
of (i) DIRECTV’s breach or alleged breach of any provision of this
Agreement, (ii) the distribution by DIRECTV of the Services (except with
respect to claims relating to the content of the Services for which Programmer
is solely responsible pursuant to Section 8.1(ii) and Section 8.1(iii)),
(iii) DIRECTV’s advertising and marketing of the Services (except with
respect to such advertising and marketing materials or content supplied or
approved by Programmer), and (iv) any other materials, including
advertising or promotional copy, supplied by DIRECTV.  In addition, DIRECTV shall pay and hold
Programmer harmless from any federal, state, or local taxes or fees, including
any fees payable to local franchising authorities, which are based upon
revenues derived by, or the operations of, DIRECTV.

 

8.3           Survival.  Termination of this Agreement shall not affect
the continuing obligations of each of the parties hereto as indemnitors
hereunder.  The party wishing to assert
its rights set forth in this Section 8 shall promptly notify the other in
writing of any claim or legal proceeding with respect to which such party is
asserting such right.  Upon the written
request of an indemnitee, the indemnitor will (1) assume the sole control
of the defense and settlement of any claim, demand or action against such
indemnitee and/or (2) allow the indemnitee to participate in the defense
thereof, such participation to be at the expense of the indemnitee.  Settlement by the indemnitee without the
indemnitor’s prior written consent shall release the indemnitor from the
indemnity as to the claim, demand or action so settled.

 

8.4           NOTWITHSTANDING
ANYTHING TO THE CONTRARY IN THIS AGREEMENT:

 

21

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

8.4.1        IN NO EVENT SHALL ANY PARTY
BE LIABLE FOR ANY INCIDENTAL OR CONSEQUENTIAL DAMAGES, WHETHER FORESEEABLE OR
NOT, OCCASIONED BY ANY FAILURE TO PERFORM OR THE BREACH OF ANY OBLIGATION
UNDER THIS AGREEMENT FOR ANY CAUSE WHATSOEVER, WHETHER BASED ON NEGLIGENCE.

 

8.4.2        IN NO EVENT SHALL ANY
PROJECTIONS, FORECASTS, ESTIMATIONS OF SALES AND/OR MARKET SHARE OR EXPECTED
PROFITS, OR OTHER ESTIMATIONS OR PROJECTIONS BY PROGRAMMER OR DIRECTV OR ANY OF
THEIR DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR AFFILIATES, REGARDING OR
RELATED TO PROGRAMMER’S OR DIRECTV’S DTH BUSINESS BE BINDING AS COMMITMENTS OR, IN
ANY WAY, PROMISES BY PROGRAMMER OR DIRECTV.

 

8.5.          Insurance.             Without limiting Programmer’s
representations, warranties and indemnification obligations under this
Agreement, Programmer shall secure, at its sole cost and expense, the insurance
policy (the “Insurance” and/or the “Policy” set forth in this paragraph.  Programmer shall obtain a media/professional
liability insurance policy covering Programmer’s distribution of the Services
during the Term (including the distribution by DIRECTV authorized under this
Agreement) [***] in the minimum amount of [***] dollars [***] per claim and
[***] dollars [***] in the aggregate, with a deductible of not greater than
[***] dollars[***].  The Policy shall be
in form and substance reasonably acceptable to DIRECTV, and shall name DIRECTV
(and those “Affiliates” (defined below) identified by DIRECTV) as insureds
thereon.  The Insurance shall contain an
endorsement that negates the “other insurance” claims in the Policy, and shall
contain a statement that the insurance being provided therein is primary.  For purposes of this Agreement, “Affiliate”
shall mean any corporation or other person or entity controlling, or controlled
by, or under common control with a party or third person, as the case may
be.  Programmer shall provide DIRECTV and
those Affiliates identified by DIRECTV with a certificate evidencing the
Insurance required by this paragraph on or before the Services Commencement
Date.  Programmer shall ensure that
DIRECTV is notified in writing thirty (30) days in advance of any actual or
proposed change to such insurance, and no such change (and no such Insurance,
nor DIRECTV’s failure to disapprove of or object to the lack thereof) shall
diminish Programmer’s obligations under this Agreement.

 

9.             Notices.  Except as set forth below, all notices
hereunder shall be in writing and delivered by hand or sent by certified mail,
postage prepaid and return receipt requested, fax, or by an overnight delivery
service to the receiving party at its address set forth above or as otherwise
designated by written notice.  Notice to
Programmer shall be provided as follows:

 

22

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

Colorado Satellite Broadcasting, Inc.

7007 Winchester Circle, Suite 200

Boulder, CO 80301

Attention:  Ken Boenish, President

Fax:  (303) 527-2872

cc:  General Counsel

Fax:
(303) 527-2872

 

Notice
to DIRECTV shall be provided as follows:

 

DIRECTV, Inc.

2230 East Imperial Highway

El Segundo, California 90245

Attention:  Senior Vice President,
Programming

Fax:  (310) 964-5416

cc:  Executive Vice President and
General Counsel

Fax:  (310) 964-4991

 

Notice
given by hand shall be considered to have been given on the date delivered or,
if delivery is refused, as of the date presented.  Notice given by mail shall be considered to
have been given five (5) days after the date of mailing, postage prepaid
certified (return receipt requested). 
Notice given by facsimile machine shall be considered to have been given
on the date receipt thereof is electronically acknowledged.  Notice given by an overnight delivery service
shall be considered to have been given on the next business day.

 

10.           Waiver.  The failure of any party to insist upon
strict performance of any provision of this Agreement shall not be construed as
a waiver of any subsequent breach of the same or similar nature.  Subject to Section 8.4 above, all rights
and remedies reserved to either party shall be cumulative and shall not be in
limitation of any other right or remedy which such party may have at law or in
equity.

 

11.           Binding Agreement;
Assignment.  Subject to
DIRECTV’s rights under Section 6.3.2, this Agreement shall be binding upon
the parties hereto and their respective successors and assigns, except that it
may not be assigned by transfer, by operation of law or otherwise, without the
prior written consent of the non-transferring party, which shall not be
unreasonably withheld; provided, however, that DIRECTV may assign
its rights and obligations under this Agreement, in whole or in part (including
without limitation, DIRECTV’s right to distribute the Services) (i) to an
Affiliated Company or to a successor entity to DIRECTV’s DTH business; (ii) to
a third party

 

23

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

as
part of preparing to go or going public or as part of a merger, consolidation
or sale of all substantially all of the assets of DIRECTV or (iii) to a
third party, provided DIRECTV remains primarily liable for the performance of
such third party’s obligations hereunder.

 

12.           Laws of California.  This Agreement shall be governed by and
construed in accordance with the laws of the State of California applicable to
contracts made and to be fully performed therein by residents of the State of
California, except to the extent that the parties’ respective rights and
obligations are subject to mandatory local, State and Federal laws or
regulations. The parties hereby agree that the jurisdiction of, or the venue
of, any action brought by either party shall be in a state or federal district
court sitting in the Los Angeles, California and both parties hereby agree to
waive any right to contest such jurisdiction and venue.

 

13.           Entire Agreement and Section Headings.  This Agreement, of which the Exhibits
attached hereto form an integral part, sets forth the entire agreement and
understanding of the parties relating to the subject matter hereof, and
supersedes all prior agreements, arrangements, or understandings relating to
the subject matter hereof (including, without limitation, the 2007
Agreement).  This Agreement shall not be
modified other than in a writing, signed by each of the parties hereto. The
section headings hereof are for the convenience of the parties only and shall
not be given any legal effect or otherwise affect the interpretation of this
Agreement.

 

14.           Severability.  The parties agree that each provision of this
Agreement shall be construed as separable and divisible from every other
provision and that the enforceability of any one provision shall not limit the
enforceability, in whole or in part, of any other provision hereof.  In the event that a court of competent
jurisdiction determines that a restriction contained in this Agreement shall be
unenforceable because of the extent of time or geography, such restriction
shall be deemed amended to conform to such extent of time and/or geography as
such court shall deem reasonable.

 

15.           Confidentiality.

 

15.1         The parties agree that they
and their employees have maintained and will maintain, in confidence, the terms
and provisions of this Agreement, as well as all data, summaries, reports,
proprietary information, trade secrets and information of all kinds, whether
oral or written, acquired or devised or developed in any manner from the other
party’s personnel or files (the “Confidential Information”).  In the event Confidential Information is
requested by a third party pursuant to a discovery request, subpoena or other
such request or device, the party to whom such request is directed shall notify
the other party in writing in order to afford the party an opportunity to
object.  Notwithstanding the above,
Confidential Information may be disclosed in the following circumstances: (i) (A) by
mutual agreement; (B) to the extent necessary to

 

24

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

comply
with the law (including SEC reporting requirements) or the valid order of a
court of competent jurisdiction, in which event the disclosing party shall so
notify the other party as promptly as practicable (and, in any event, prior to
making any disclosure) and shall seek confidential treatment of such
information (including by redacting any such information to the greatest extent
possible), or in connection with any arbitration proceeding; (C) as part
of its normal reporting or review procedure to its parent company, its auditors
and its attorneys, and such parent company, auditors and attorneys agree to be
bound by the provisions of this Section 15; (D) in order to enforce
any of its rights pursuant to this Agreement; or (E) in the case of
DIRECTV, to the NRTC, potential investors, insurers, financing entities or any
entity engaged in DIRECTV’s DBS business; provided,  however, that
such person described above agrees to be bound by the provisions of this Section 15;
or (ii)(A) at the time of disclosure to the recipient the Confidential
Information is in the public domain; or (B) after disclosure to the
recipient the Confidential Information becomes part of the public domain by
written publication through no fault of the recipient.  During the Term, neither party shall issue an
independent press release with respect to this Agreement or the transactions
contemplated hereby without the prior written consent of the other party.  Breach of this last sentence shall be deemed
a material breach of this Agreement.

 

15.2         Notwithstanding Section 15.1,
Programmer specifically acknowledges and agrees that any lists of DIRECTV’s
customers or users, and all information related to such customers and users, is
confidential and proprietary information of DIRECTV and cannot be disclosed by
Programmer or used by Programmer for any purpose or use whatsoever, other than
for its review at DIRECTV’s offices as part of Programmer’s audit rights
hereunder to determine if Programmer has been paid the License Fees due to it
by DIRECTV.  Also notwithstanding Section 15.1,
Programmer further acknowledges and agrees that under no circumstances will it
in any way: disclose information (whether personally identifiable or not) to
any third party regarding DIRECTV’s customers or users or engage in any direct
mailing or telephone solicitation which DIRECTV’s customers or users do not
previously and expressly approve (whether orally or in writing) or previously
and expressly request (whether orally or in writing), or which DIRECTV does not
previously and expressly approve in writing in DIRECTV’s sole discretion.

 

16.           Inadequacy of Money Damages.  Programmer and DIRECTV hereby acknowledge and
agree that DIRECTV’s distribution and marketing of the Services pursuant to the
terms and conditions contained herein are of the essence of this
Agreement.  DIRECTV further acknowledges
and agrees that such carriage and marketing requirements, subject to Force
Majeure and other conditions of this Agreement, are special and unique, and
that Programmer may not be adequately compensated by the payment of money damages
in the event that

 

25

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

DIRECTV
failed to comply with any of such requirements. 
Programmer acknowledges and agrees that the grant of rights to DIRECTV
hereunder are special and unique, and that DIRECTV may not be adequately
compensated by the payment of money damages in the event that Programmer failed
to comply with any of its obligations under this Agreement, including without
limitation, providing access to any Service programming to DIRECTV, as required
hereunder.

 

17.           Cessation of Program
Distribution.   If DIRECTV in
good faith reasonably believes that DIRECTV’s provision of any of the
programming on the Services either violates any Law or could be found by a
court or administrative agency to violate any Law (a “Law Violation” or “Potential
Law Violation”) or reasonably believes in good faith at any time that any of
the programming on the Services is adversely affecting the corporate image that
DIRECTV desires to maintain at such time (an “Image Problem”) then,
notwithstanding anything to the contrary in this Agreement, (i) immediately
following written notice to Programmer in the case of a Law Violation or Potential
Law Violation, or (ii) no sooner than [***] following written notice to
Programmer in the case of an Image Problem (if DIRECTV elects to terminate this
Agreement as provided in this Section 17): DIRECTV may terminate this
Agreement, or DIRECTV may cease distributing the offending programming or the
Services (in any portion of the Territory, or the entire Territory, as DIRECTV
shall determine in its sole discretion based on the genesis of the Law
Violation; Potential Law Violation or Image Problem) until DIRECTV determines
in DIRECTV’s sole discretion that there will be no Image Problem because the
Service programming at that subsequent time is consistent with the corporate
image that DIRECTV then desires to maintain or DIRECTV reasonably determines that
a Law Violation or Potential Law Violation will not again occur.

 

18.           Survival of Representations
and Warranties.  All
representations and warranties contained herein or made by the parties, and
each of them, in connection herewith shall survive any independent
investigation made by either party.

 

19.           Program Carriage
Acknowledgement.  Programmer
acknowledges each of the following:  (i) DIRECTV
has not required a financial interest as a condition for carriage of the
Service; (ii) DIRECTV has not coerced Programmer to provide, or retaliated
against Programmer for failing to provide, exclusive rights against any other
multichannel video programming service as a condition for carriage of the
Service; and (iii) DIRECTV has not engaged in conduct the effect of which
is to unreasonably restrain the ability of Programmer to compete fairly.

 

20.           Counterparts.  This Agreement may be executed in several
counterparts, each of which shall be deemed an original and all such
counterparts together shall constitute but one and the same instrument.  The parties also agree that this Agreement
shall be binding upon the faxing by each party of a signed signature page thereof
to the other party.  If such a faxing
occurs, the

 

26

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

parties
agree that they will each also immediately post, by Federal Express, a fully
executed original counterpart of the Agreement to the other party.

 

27

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

IN
WITNESS WHEREOF, the undersigned parties have caused this Agreement to be
executed by their duly authorized representatives as of the day and year first
above written.

 

 

	
   

  	
  DIRECTV, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Toby Berlin

  
	
   

  	
   

  	
  Name:
  Toby Berlin

  
	
   

  	
   

  	
  Title:
  Vice President, Programming Acquisitions

  
	
   

  	
   

  	
  Date:
  July 6, 2010

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  COLORADO
  SATELLITE BROADCASTING, INC.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  By:

  	
  /s/
  Ken Boenish

  
	
   

  	
   

  	
  Name:
  Ken Boenish

  
	
   

  	
   

  	
  Title:
  President

  
	
   

  	
   

  	
  Date: July 6, 2010

  

 

28

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

EXHIBIT A

 

DESCRIPTION OF THE SERVICE

 

The
programming content of the Services shall comply strictly with the provisions
of this Exhibit A and the attached Schedule 1.  In addition to the definition set forth in Section 1.2.1
of the Agreement, the Services shall adhere to the industry’s strictest set of
standards and practices (the “Industry’s Standards and Practices”) for adult
programming, which will not be circumvented, and shall comply with the
following standards and practices (the “Standards and Practices”) (which shall
control if they conflict with the Industry’s Standards and Practices) (any act
or portrayal which is prohibited below or which the Industry’s Standards and
Practices prohibit to be presented in audiovisual material shall be deemed a “Prohibited
Act”).

 

The
Services shall offer tasteful [***] adult programming (feature films and
interstitials) substantially the same in content, quality and production values
as appears on the Services on the date hereof. 
It is understood and acknowledged by Programmer that the Services may
contain acts of the type listed on Schedule I to this Exhibit A under the
heading [***].  Subject to the
restrictions set forth herein, the Services’ programming shall consist
primarily of [***].

 

None
of the programming or promotional materials of the Services shall condone or
present [***] in any form, nor contain any activity which equates [***].  Additionally, under no circumstances shall
any programming on the Services contain any scenes of [***].

 

[***]
situations may be presented on the Services as a matter of course; however,
there shall be no depiction of any [***] acts in the [***] of Schedule I hereof
except such acts as are also included in the [***].

 

The
Services may include [***]; however, the Services shall not include [***].

 

29

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

SCHEDULE I TO EXHIBIT A

 

PROGRAMMING STANDARDS

 

[Programming
Standards Rating Schedule Omitted.]

 

[***]

 

30

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

EXHIBIT B

 

PROGRAMMER’S RATE CARD

 

[***]

 

31

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

EXHIBIT C

 

PROGRAMMING SCHEDULE

 

(see attached)

 

[Programming Schedule by
Title and Time Omitted]

 

[***]

 

32

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this
exhibit, has been filed with the Securities and Exchange Commission together
with such request for confidential treatment.

 

EXHIBIT D

 

ADDITIONAL SERVICES

 

[***]

 

33

 

Portions of this Exhibit have been redacted
pursuant to a request for confidential treatment under Rule 24b-2 of the
General Rules and Regulations under the Securities Exchange Act.  Omitted information, marked “[***]” in this exhibit,
has been filed with the Securities and Exchange Commission together with such
request for confidential treatment.

 

EXHIBIT E

 

DELIVERY SPECIFICATIONS

 

[***]

 

34Exhibit 10.1

 

TIME SHARING AGREEMENT

 

This
Agreement is made, effective as of August 5, 2010, by and between JOHNSON
MANAGEMENT, LLC, a limited liability company organized under the laws of the
State of South Carolina, with principal offices at 340 East Main Street, Suite 500,
Spartanburg, South Carolina 29302 (hereinafter referred to as “Lessor”), and
ADVANCE AMERICA, CASH ADVANCE CENTERS, INC., with principal offices at 135
N. Church Street, Spartanburg, SC 29306 (hereinafter referred to as “Lessee”);

 

RECITALS

 

WHEREAS,
Arizona, LLC (“Owner”) is the owner of that certain civil Aircraft bearing the
United States Registration Number [redacted] (“the Aircraft” or “Aircraft”), a
[redacted];

 

WHEREAS,
Lessor has legal possession of the Aircraft under an aircraft dry-lease between
the Owner and Lessor dated January 1, 2009;

 

WHEREAS,
Lessor employs a fully qualified flight crew to operate the Aircraft; and

 

WHEREAS,
Lessor and Lessee desire to lease said Aircraft with flight crew on a
non-exclusive time sharing basis as defined in Section 91.501 (c) (1) of
the Federal Aviation Regulations (“FAR”);

 

The
parties agree as follows:

 

1.             Lessor agrees to lease the Aircraft
to Lessee pursuant to the provisions of FAR 91.501 (c) (1) and to
provide a fully qualified flight crew for all operations.  This Agreement shall commence on the date
that it is signed and continue for one year after said date.  Thereafter, this Agreement shall be
automatically  renewed on a month to
month basis, unless sooner terminated by either party as hereinafter
provided.  Either 

 

1

 

party
may at any time terminate this Agreement upon thirty (30) days written notice
to the other party, delivered personally or by certified mail, return receipt
requested, at the address for said other party as set forth above.

 

2.             Lessee shall pay Lessor for each
flight conducted under this Agreement the actual expenses of each specific
flight as authorized by FAR Part 91.501 (d).  These expenses include

 

(a)                                  Fuel, oil,
lubricants, and other additives;

 

(b)                                 Travel expenses
of the crew, including food, lodging and ground transportation;

 

(c)                                  Hangar and tie
down costs away from the Aircraft’s base of operation;

 

(d)                                 Insurance
obtained for the specific flight;

 

(e)                                  Landing fees,
airport taxes and similar assessments including, but not limited to IRC Section 4261
and related excise taxes;

 

(f)                                    Customs,
foreign permit, and similar fees directly related to the flight;

 

(g)                                 In-flight food
and beverages;

 

(h)                                 Passenger ground
transportation;

 

(i)                                     Flight planning
and weather contract services; and

 

(j)                                     An additional
charge not to exceed 100% of the expenses listed in subparagraph (a) of
this paragraph.

 

3.             Lessor will pay all expenses
related to the operation of the Aircraft when incurred, and will provide an
invoice and bill Lessee for the expenses enumerated in paragraph 2 above on the
last day of the month in which any flight or flights for the 

 

2

 

account
of Lessee occur.  Lessee shall pay Lessor
for said expenses within fifteen (15) days of receipt of the invoice and bill
therefor.

 

4.             Lessee will provide Lessor with
requests for flight time and proposed flight schedules as far in advance of any
given flight as possible, and in any case, at least twenty-four (24) hours in
advance of Lessee’s planned departure. 
Requests for flight time shall be in a form whether written or oral,
mutually convenient to, and agreed upon by the parties.  In addition to the proposed schedules and flight
times Lessee shall provide at least the following information for each proposed
flight at some time prior to scheduled departure as required by the Lessor or
Lessor’s flight crew:

 

(a)                                  proposed
departure point;

 

(b)                                 destination;

 

(c)                                  date and time of
flight;

 

(d)                                 the number of
anticipated passengers;

 

(e)                                  the nature and
extent of luggage and/or cargo to be carried

 

(f)                                    the date and
time of return flight, if any; and

 

(g)                                 any other
information concerning the proposed flight that may be pertinent or required by
Lessor or Lessor’s flight crew.

 

5.             Lessor shall have final authority
over the scheduling of the Aircraft, provided, however, that Lessor will use
its best efforts to accommodate Lessee’s needs and to avoid conflicts in
scheduling.

 

6.             Lessor shall be solely responsible
for securing maintenance, preventive maintenance and required or otherwise
necessary inspections on the Aircraft, and shall take such requirements into
account in scheduling the Aircraft.  No
period of maintenance, preventative maintenance or inspection shall be delayed
or postponed for the purpose of scheduling the Aircraft, unless said
maintenance or inspection can be 

 

3

 

safely
conducted at a later time in compliance with all applicable laws and
regulations, and within the sound discretion of the pilot in command.  The pilot in command shall have final and
complete authority to cancel any flight for any reason or condition which in
his judgment would compromise the safety of the flight.

 

7.             Lessor shall employ, pay for and
provide to Lessee a qualified flight crew for each flight undertaken under this
Agreement.

 

8.             In accordance with applicable
Federal Aviation Regulations, the qualified flight crew provided by Lessor will
exercise all of its duties and responsibilities in regard to the safety of each
flight conducted hereunder.  Lessee
specifically agrees that the flight crew, in its sole discretion, may terminate
any flight, refuse to commence any flight, or take other action which in the
considered judgment of the pilot in command is necessitated by considerations
of safety.  No such action of the pilot
in command shall create or support any liability for loss, injury, damage or
delay to Lessee or any other person.  The
parties further agree that Lessor shall not be liable for delay or failure to
furnish the Aircraft and crew pursuant to this Agreement when such failure is
caused by government regulation or authority, mechanical difficulty, war, civil
commotion, strikes or labor disputes, weather conditions, or acts of God.

 

9.             At all times during the term of
this Lease, Lessor shall cause to be carried and maintained, at Lessor’s cost
and expense, physical damage insurance with respect to the Aircraft in the
amount set forth below:

 

	
  Aircraft
  Physical Damage (No Deductible While In Motion or Not in Motion)

  	
   

  	
  The
  Greater of Current Market Value or the Minimum Amount Required by Lender

  

 

At
all times during the term of this Lease, Lessor shall also cause to be carried
and maintained, at lessor’s cost and expense, third party aircraft liability
insurance, passenger legal liability insurance, property damage liability
insurance, and medical expense insurance in the amounts set forth below:

 

4

 

	
  Combined
  Liability Coverage for Bodily Injury and Property Damage Including Passengers
  –

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  Each
  Occurrence

  	
   

  	
  No
  Less Than $50,000,000.00

  
	
   

  	
   

  	
   

  
	
  Medical
  Expense Coverage – Each Person

  	
   

  	
  $5,000.00

  

 

Lessor
shall also bear the cost of paying any deductible amount on any policy of
insurance in the event of a claim or loss.

 

Any
policies of insurance carried in accordance with this Lease: (i) shall
name lessee as an additional insured; and (ii) shall contain a waiver by
the underwriter thereof of any right of subrogation against Lessee.  Each liability policy shall be primary
without right of contribution from any other insurance which is carried by
Lessee or Lessor and shall expressly provide that all of the provisions thereof,
except the limits of liability, shall operate in the same manner as if there
were a separate policy covering each insured.

 

Lessor
shall submit this Lease for approval to the insurance carrier for each policy
of insurance on the aircraft.  Lessor
shall arrange for a Certificate of Insurance evidencing appropriate coverage as
to the Aircraft and the satisfaction of the requirements set forth above to be
given by its insurance carriers to Lessor.

 

10.                                 Lessee warrants
that:

 

(a)                                  It will use the
Aircraft for and on account of its own business only, and will not use the
Aircraft for the purpose of providing transportation of passengers or cargo in
air commerce for compensation or hire;

 

(b)                                 It shall
refrain from incurring any mechanics or other lien in connection with
inspection, preventative maintenance, maintenance or storage of the Aircraft,
whether permissible or impermissible under this Agreement, nor shall there be
any attempt 

 

5

 

by any party hereto to convey, mortgage, assign, lease or any way
alienate the Aircraft or create any kind of lien or security interest involving
the Aircraft or do anything or take any action that might mature into such a
lien; and

 

(c)                                  During the term
of this Agreement, it will abide by and conform to all such laws, governmental
and airport orders, rules and regulations, as shall from time to time be
in effect relating in any way to the operation and use of the Aircraft by a
timesharing Lessee.

 

11.           For purposes of this Agreement, the
permanent base of operation of the aircraft shall be Spartanburg, SC.

 

12.           Neither this Agreement nor any party’s
interest herein shall be assignable to any other party whatsoever.  This Agreement shall inure to the benefit of
and be binding upon the parties hereto, their heirs, representatives and
successors

 

6

 

13.                                 TRUTH IN
LEASING STATEMENT

 

THE AIRCRAFT, A 2000 LEARJET, INC.
31A, MANUFACTURER’S SERIAL NO.  193,
CURRENTLY REGISTERED WITH THE FEDERAL AVIATION ADMINISTRATION AS N129JD HAS
BEEN MAINTAINED AND INSPECTED UNDER FAR PART 91 DURING THE 12 MONTH PERIOD
PRECEDING THE DATE OF THIS LEASE.

 

THE AIRCRAFT WILL BE MAINTAINED AND INSPECTED UNDER FAR PART 91
FOR OPERATIONS TO BE CONDUCTED UNDER THIS LEASE.  DURING THE DURATION OF THIS LEASE, JOHNSON
MANAGEMENT, LLC, 340 EAST MAIN STREET, SUITE 500, SPARTANBURG, SOUTH CAROLINA
29302, IS CONSIDERED RESPONSIBLE FOR OPERATIONAL CONTROL OF THE AIRCRAFT
UNDER THIS LEASE.

 

AN EXPLANATION OF FACTORS BEARING ON OPERATIONAL CONTROL AND PERTINENT
FEDERAL AVIATION REGULATIONS CAN BE OBTAINED FROM THE NEAREST FAA FLIGHT
STANDARDS DISTRICT OFFICE.

 

THE “INSTRUCTIONS FOR COMPLIANCE WITH TRUTH IN LEASING REQUIREMENTS”
ATTACHED HERETO ARE INCORPORATED HEREIN BY REFERENCE.

 

I, THE UNDERSIGNED, DAN C. BREEDEN, JR., AS MANAGER OF JOHNSON
MANAGEMENT, LLC, 340 EAST MAIN STREET, SUITE 500, SPARTANBURG, SOUTH CAROLINA
29302 CERTIFY THAT IT IS RESPONSIBLE FOR OPERATIONAL CONTROL OF THE AIRCRAFT
AND THAT I UNDERSTAND THE RESPONSIBILITIES FOR COMPLIANCE WITH APPLICABLE
FEDERAL AVIATION REGULATIONS.

 

IN WITNESS WHEREOF, the parties have executed this Agreement.

 

JOHNSON
MANAGEMENT, LLC

 

	
  By:

  	
  /s/
  Dan C. Breeden, Jr.

  	
   

  
	
   

  	
  Dan
  C. Breeden, Jr., Manager

  	
   

  

 

ADVANCE
AMERICA, CASH ADVANCE CENTERS, INC.

 

	
  By:

  	
  /s/
  Kenneth E. Compton

  	
   

  
	
  Name:

  	
  Kenneth
  E. Compton

  	
   

  
	
  Title:

  	
  President
  and Chief Executive Officer

  	
   

  

 

7

 

INSTRUCTIONS FOR COMPLIANCE WITH “TRUTH IN LEASING”

REQUIREMENTS

 

1.                                       Mail a copy of
the lease to the following address via certified mail, return receipt
requested, immediately upon execution of the lease (14 C.F.R. 91.23 requires
that the copy be sent within twenty-four hours after it is signed):

 

Federal
Aviation Administration

Aircraft
Registration Branch

ATTN:  Technical Section

P.O. Box
25724

Oklahoma
City, Oklahoma 73125

 

2.                                       Telephone the
nearest Flight Standards District Office at least forty-eight hours prior to
the first flight under this lease.

 

3.                                       Carry a copy of
the lease in the aircraft at all times.

 

8

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00176-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00176-of-00352.parquet"}]]