DLA DRAFT 1/17/2013 VOD & SVOD L ICENSE AGREEMENT THIS VOD & SVOD LICENSE AGREEMENT (together with all exhibits, attachments and schedules hereto, “Agreement ”), dated as of [_________ __, 20__] (“Agreement Date ”), is entered into by CPT Holdings, Inc., a Delaware corporation with an address at 10202 W. Washington Boulevard, Culver City, California 90232 (“Licensor ”), and DLA, Inc., a Delaware corporation with an address at 1550 Biscayne Boulevard, Miami, Florida 33132 (“Licensee ”). The parties hereto agree as follows: PRINCIPAL TERMS AND CONDITIONS OF VOD/SVOD LICENSE AGREEMENT (“VOD/SVOD Terms ”) 1. DEFINITIONS. When used in this Agreement (and not otherwise defined herein) the following capitalized terms have the meanings set forth below. Section references are to sections in these VOD/SVOD Terms unless stated otherwise. 1.1 “Subscription Video-On-Demand ” or “SVOD ” means the point-to-point electronic delivery of an audio-visual program or programs from a remote source to a customer in response to such customer’s request (a) for which such customer is charged a fixed material periodic fee (no more frequently than monthly), and not on a per-program(s) or per exhibition(s) basis, which fee is unaffected in any way by the purchase of other programs, products or services, but not referring to any fee in the nature of an equipment rental or purchase fee or activation or installation fee or any fee for a programming package through which a customer must buy the SVOD service; and (b) the exhibition start time of which is at a time specified by the customer in its discretion. SVOD shall not include, without limitation, VOD, free or advertiser-supported video-on-demand, pay-per-view, electronic sell-through, manufacture-on-demand, in-store digital download (i.e., kiosks), home video, premium pay television, basic television or free broadcast television exhibition. 1.2 “SVOD Availability Date ” with respect to an SVOD Included Program means the date on which such SVOD Included -1-
Transcript
DLA DRAFT 1/17/2013
VOD & SVOD L ICENSE AGREEMENT
THIS VOD & SVOD LICENSE AGREEMENT (together with all exhibits, attachments and schedules hereto, “Agreement”), dated as of [_________ __, 20__] (“Agreement Date”), is entered into by CPT Holdings, Inc., a Delaware corporation with an address at 10202 W. Washington Boulevard, Culver City, California 90232 (“Licensor”), and DLA, Inc., a Delaware corporation with an address at 1550 Biscayne Boulevard, Miami, Florida 33132 (“Licensee”). The parties hereto agree as follows:
PRINCIPAL TERMS AND CONDITIONS OF VOD/SVOD LICENSE AGREEMENT (“VOD/SVOD Terms”)
1. DEFINITIONS. When used in this Agreement (and not otherwise defined herein) the following capitalized terms have the meanings set forth below. Section references are to sections in these VOD/SVOD Terms unless stated otherwise.
1.1 “Subscription Video-On-Demand” or “SVOD” means the point-to-point electronic delivery of an audio-visual program or programs from a remote source to a customer in response to such customer’s request (a) for which such customer is charged a fixed material periodic fee (no more frequently than monthly), and not on a per-program(s) or per exhibition(s) basis, which fee is unaffected in any way by the purchase of other programs, products or services, but not referring to any fee in the nature of an equipment rental or purchase fee or activation or installation fee or any fee for a programming package through which a customer must buy the SVOD service; and (b) the exhibition start time of which is at a time specified by the customer in its discretion. SVOD shall not include, without limitation, VOD, free or advertiser-supported video-on-demand, pay-per-view, electronic sell-through, manufacture-on-demand, in-store digital download (i.e., kiosks), home video, premium pay television, basic television or free broadcast television exhibition.
1.2 “SVOD Availability Date” with respect to an SVOD Included Program means the date on which such SVOD Included Program is first made available to Licensee for exhibition on a SVOD basis hereunder, as specified in Section 4.2.2.
1.3 “SVOD Included Program” means all Features Films and Television Episodes licensed by Licensee on an SVOD basis hereunder pursuant to Section 4.1.2.
1.4 “SVOD License Period” with respect to an SVOD Included Program means the period during which Licensee shall make such SVOD Included Program available for exhibition on a SVOD basis hereunder, as specified in Section 4.3.2.
1.5 “SVOD Service” means the SVOD programming service (and, for clarification, not the lower tiered SVOD service which will be offered at a lower price or for free by Licensee or its Authorized Operators) in the Territory, which is (a) wholly owned, controlled and operated by Licensee or the applicable Authorized Operator set forth in Schedule D, (b) branded “NEON”, “Claro Video” or the applicable brand name set forth on Schedule D (or a successor brand of the foregoing), and (c) accessible on (i) an Approved Personal Computer, (ii) an Approved Connected Device (other than an Approved Personal Computer) through an embedded Playback Application, and (iii) an Approved Set-Top Box. Except as permitted in Section 2 of the
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Standard Terms and Conditions and otherwise permitted herein, the SVOD Service shall be non-advertiser supported and may not be sub-distributed, co-branded, syndicated, “white labeled” or “powered” (e.g., “Yahoo! Video powered by [_________]”).
1.6 “SVOD Subscriber” means each unique user located in the Territory who has subscribed to the SVOD Service and is authorized to receive, decrypt and view an exhibition of an SVOD Included Program on the SVOD Service in accordance with the terms hereof.
1.7 “SVOD Usage Rules” means the content usage rules applicable to SVOD Included Programs available on the SVOD Service, as set forth in the attached Schedule F.
1.8 “Video-On-Demand” or “VOD” means the point-to-point electronic delivery of a single audio-visual program from a remote source to a customer in response to such customer’s request (a) for which the customer is charged a material per-transaction fee solely for the privilege of viewing each separate exhibition of such program during the VOD Viewing Period (or multiple exhibitions of such program, each commencing during the VOD Viewing Period), which fee is unaffected in any way by the purchase of other programs, products or services, but not referring to any fee in the nature of an equipment rental or purchase fee or activation or installation fee; and (b) the exhibition start time of which is at a time specified by the customer in its discretion. Video-On-Demand shall not include, without limitation, SVOD, free or advertiser-supported video-on-demand, pay-per-view, electronic sell-through, manufacture-on-demand, in-store digital download (i.e., kiosks), home video, premium pay television, basic television or free broadcast television exhibition.
1.9 “VOD Availability Date” with respect to a VOD Included Program means the date on which such VOD Included Program is first made available to Licensee for exhibition on a Video-On-Demand basis hereunder, as specified in Section 4.2.1.
1.10 “VOD Included Program” means all Current Films and Library Films licensed by Licensee on a VOD basis hereunder pursuant to Section 4.1.1.
1.11 “VOD License Period” with respect to a VOD Included Program means the period during which Licensee shall make such VOD Included Program available for exhibition on a Video-On-Demand basis hereunder, as specified in Section 4.3.1.
1.12 “VOD Service” means the VOD programming service in the Territory, which is (a) wholly owned, controlled and operated by Licensee or the applicable Authorized Operator set forth on Schedule D, (b) branded “Neon” (or a successor brand), “Claro Video” (or a successor brand) or the applicable brand name set forth on Schedule D, and (c) accessible on (i) an Approved Personal Computer, (ii) an Approved Connected Device (other than an Approved Personal Computer) through an embedded Playback Application, and (iii) an Approved Set-Top Box via an Authorized System. Except as permitted in Section 2 of the Standard Terms and Conditions and otherwise permitted herein, the VOD Service shall be non-advertiser supported and may not be sub-distributed, co-branded, syndicated, “white labeled” or “powered” (e.g., “Yahoo! Video powered by [_________]”).
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1.13 “VOD Subscriber” means each unique user located in the Territory who is authorized to receive, decrypt and view an exhibition of a VOD Included Program on the VOD Service in accordance with the terms hereof.
1.14 “VOD Subscriber Transaction” means any instance whereby a VOD Subscriber is authorized by Licensee to receive an exhibition of all or a part of a single VOD Included Program as part of the VOD Service.
1.15 “VOD/SVOD Approved Delivery Means” means the Encrypted delivery via Streaming of audio-visual content (i) to an Approved Set-Top Box, (ii) to an Approved Connected Device over the public, free to the consumer (other than a common carrier/ISP charge) global network of interconnected networks (including the so-called Internet, Internet2 and World Wide Web) using IP technology, whether transmitted over cable, DTH, FTTH, ADSL/DSL, broadband over power lines or other means (“Internet Delivery”), and (iii) to an Approved Mobile Device over cellular wireless networks integrated through the use of 2G (GSM, CDMA), 3G (UMTS, CDMA-2000), 4G (LTE, WiMAX), or any additional protocols, or successor or similar technology that is generally accepted as industry standard or as may be agreed in writing from time to time (“Mobile Delivery”). “VOD/SVOD Approved Delivery Means” does not include, without limitation, delivery via Viral Distribution or delivery on an Electronic Download basis.
1.16 “VOD/SVOD Avail Term” means the term during which Licensor shall be required to make titles available for licensing on a VOD or SVOD basis hereunder, as applicable, and Licensee shall be required to license titles for exhibition on a VOD or SVOD basis hereunder, as applicable, as specified in Section 3.1.
1.17 “VOD Usage Rules” means the content usage rules applicable to VOD Included Programs available on the VOD Service, as set forth in the attached Schedule E.
1.18 “VOD Viewing Period” means, with respect to a VOD Subscriber Transaction, the time period (a) commencing at the time the VOD Subscriber is initially technically enabled to view a VOD Included Program but in no event earlier than its VOD Availability Date, and (b) ending on the earlier of (i) 48 hours thereafter and (ii) the expiration of the VOD License Period for such VOD Included Program.
2. LICENSE.
2.1 Subject to Licensee’s full and timely compliance with its obligations hereunder, Licensor hereby grants to Licensee, and Licensee hereby accepts, a limited non-exclusive, non-transferable, non-sublicensable license to exhibit on the terms and conditions set forth herein: (a) each VOD Included Program in its Authorized Version and in the Licensed Language during its VOD License Period on a Video-On-Demand basis on the VOD Service delivered to a VOD Subscriber within the Territory by means of the VOD/SVOD Approved Delivery Means pursuant solely to a VOD Subscriber Transaction, for viewing within such Subscriber’s Private Residence or viewing as a Personal Use solely during the applicable VOD Viewing Period, in accordance with the VOD Usage Rules and subject at all times to the Content Protection Obligations and Requirements set forth in Schedule C, and (b) each SVOD Included Program in
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its Authorized Version and in the Licensed Language during its SVOD License Period on a SVOD basis on the SVOD Service delivered to an SVOD Subscriber within the Territory by means of the VOD/SVOD Approved Delivery Means, for viewing within such SVOD Subscriber’s Private Residence or viewing as a Personal Use, in accordance with the SVOD Usage Rules and subject at all times to the Content Protection Obligations and Requirements set forth in Schedule C. Licensee shall have the right to exploit the foregoing rights using VCR Functionality. Licensor shall not be subject to any holdback at any time with respect to the exploitation of any Included Program in any version, language, territory or medium or by any transmission means, in any format to any device in any venue or in any territory; provided, however, that Licensor shall not offer more than 10% of the SVOD Included Programs for free or otherwise as part of a free VOD service. Notwithstanding the foregoing, the parties agree that the terms of Section 2 of the Standard Terms and Conditions shall apply.
2.2 Resolution . Licensee shall exhibit all VOD Included Programs and SVOD Included Programs in Standard Definition and, to the extent High Definition materials are available and provided to any other Licensee in the Territory, in High Definition. Notwithstanding the foregoing, Licensor shall make all Current Features available to Licensee for exhibition in Standard Definition and High Definition.
3. AVAIL TERM; TERM
3.1 VOD/SVOD Avail Term . The “VOD/SVOD Avail Term” consists of the Initial VOD/SVOD Avail Term together with the VOD/SVOD Extension Period, if any. The “Initial VOD/SVOD Avail Term” commences on March 1, 2013, and terminates two (2) years thereafter on April 30, 2014. Thereafter, the Initial VOD/SVOD Avail Term automatically extends for two (2) additional 12-month periods (each, a “VOD/SVOD Extension Period”) unless Licensor, in its sole discretion, gives Licensee notice of non-extension at least 90 days prior to the expiration of the then current VOD/SVOD Avail Term. The initial 14 month period beginning March 1, 2013 and each 12-month period thereafter beginning May 1, 2014 during the VOD/SVOD Avail Term beginning is an “VOD/SVOD Avail Year,” with the first such Avail Year being “VOD/SVOD Avail Year 1,” the second being “VOD/SVOD Avail Year 2,” the third, if any, being “VOD/SVOD Avail Year 3,” and the fourth, if any, being “VOD/SVOD Avail Year 4.” It is acknowledged that the VOD License Period for a VOD Included Program or the SVOD License Period for an SVOD Included Program may expire after the end of the VOD/SVOD Avail Term.
3.2 VOD/SVOD Term . The “VOD/SVOD Term” of this Agreement commences on the Agreement Date and expires on the earlier to occur of (a) the last day of the last VOD License Period or SVOD License Period to expire hereunder and (b) the termination of this Agreement in accordance with the terms hereof.
4. COMMITMENT; AVAILABILITY DATE; LICENSE PERIOD.
4.1 Commitment .
4.1.1 VOD Included Program Commitment . Licensee shall license from Licensor as VOD Included Programs hereunder: (a) all Current Films with a VOD Availability Date during the VOD/SVOD Avail Term, and (b) at least 30 Library Films in each VOD/SVOD Avail Year. Notwithstanding the foregoing, Licensee shall not be required to license from
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Licensor as VOD Included Programs hereunder more than fifteen (15) Current Films that are DTVs (or such lower number of DTVs that Licensor makes available to Licensee for licensing hereunder) in each VOD/SVOD Avail Year. Licensor shall provide Licensee with periodic availability lists setting forth each Current Film and each Library Film to be licensed hereunder, along with its VOD Availability Date, whether HD or 3D versions are available and all Licensed Language versions available. The availability list of VOD Included Programs for Avail Year 1 is attached hereto as Exhibit G, and by no later than 90 days prior to the beginning of each subsequent Avail Year, Licensor shall provide Licensee with an availability list of Current Films and Library Films from which Licensee shall select the Library Films to be licensed for such Avail Year in accordance with this Section 4.1.1. All availability lists provided subsequent to Avail Year 1 shall contain Current Films and Library Films that are comparable in quality and quantity to the Current Films and Library Films set forth in availability list attached hereto as Exhibit G. If Licensee fails to select the Library Films required to be licensed under this Section 4.1.1 within 30 days after receiving such availability list, Licensor shall have the right to designate such Library Films.
4.1.2 SVOD Included Program Commitment . Licensee shall license from Licensor as SVOD Included Programs hereunder in each VOD/SVOD Avail Year: (a) 125 Library Films (of which there shall be a minimum of 10 in Tier A, 45 in Tier B and 45 in Tier C), (b) 700 Library Series Television Episodes, (c) 45 Early Window Films (of which there shall be a minimum of 15 DTVs, MFTs, and/or Foreign Films), (d) 100 Current Series Television Episodes, (e) 100 Non-Returning Series Television Episodes, and (f) 150 Local Series Television Episodes. Licensor shall provide Licensee with periodic availability lists setting forth the Library Films, Library Series Episodes, Early Window Films, Current Series Television Episodes, Non-Returning Series Television Episodes and Local Series Television Episodes to be available for license hereunder (the “Available SVOD Programs”), along with its VOD Availability Date, whether HD or 3D versions are available, all Licensed Language versions available, and the Tier (defined below) into which the Included Program falls. The availability list of Available SVOD Programs for Avail Year 1 is attached hereto as Exhibit G and by no later than 90 days prior to the beginning of each subsequent VOD/SVOD Avail Year, Licensor shall provide Licensee with an availability list of Available SVOD Programs to be licensed for such VOD/SVOD Avail Year in accordance with this Section 4.1.2. All availability lists provided subsequent to Avail Year 1 shall contain Available SVOD Programs that are comparable in quality and quantity to those Available SVOD Programs set forth in the availability list attached hereto as Exhibit G. If Licensee fails to select the Feature Films and Television Episodes required to be licensed under this Section 4.1.2 within 30 days after receiving such availability list, Licensor will have the right to designate such Library Films and Television Episodes. Whether a SVOD Included Program falls within Tier A, B or C (the “Tier”) shall be determined by Licensor in accordance with a single set of criteria that is consistently applied to each such SVOD Included Program with respect to other licensees on a global basis.
4.1.3 The availability list for Avail Year 1 shall include the first four (4) seasons of “Breaking Bad” (the “Breaking Bad Episodes”) and for each subsequent Avail Year, the availability lists will include the Breaking Bad Episodes plus any other available seasons for Breaking Bad; provided, however, that the Breaking Bad Episodes and any subsequent Breaking Bad episodes chosen by Licensee as Included Programs shall be over and above the commitments of Licensee set forth in 4.1.1 and 4.1.2 above and thus cannot be used to offset
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such commitments. [DLA/SONY TO CONFIRM DETAILS]
4.2 Availability Date .
4.2.1 VOD Availability Date . The VOD Availability Date for each VOD Included Program shall be as determined by Licensor in its sole discretion; provided, that the VOD Availability Date for each Current Film shall in no event be later than 59 days after the LVR for such VOD Included Program and Licensor shall use reasonable commercial efforts to provide Licensee with the earliest possible VOD Availability Date for all Current Films.
4.2.2 SVOD Availability Date . The SVOD Availability Date for each SVOD Included Program shall be as determined by Licensor in its sole discretion.
4.3 License Period .
4.3.1 VOD License Period . The VOD License Period for each VOD Included Program commences on its VOD Availability Date and ends on the earlier of: (a) a date established by Licensor in its sole discretion; provided, that (i) such date in the case of a Current Film shall in no event be earlier than 60 days after such Current Film’s VOD Availability Date; provided that Licensor shall use its commercially reasonable efforts to set such date 90 days or more after such Current Film’s VOD Availability Date, and (ii) such date in the case of a Library Film shall in no event be earlier than 12 months after such Library Film’s VOD Availability Date and (b) the termination of this Agreement for any reason. Notwithstanding anything to the contrary herein, Licensor shall have the right to substitute a comparable new title to complete the VOD License Period of any Library Film that Licensor elects to withdraw, effective at any time after the initial 6 months of such Library Film’s VOD License Period have elapsed.
4.3.2 SVOD License Period . The SVOD License Period for each SVOD Included Program shall commence on its SVOD Availability Date and shall end on the earlier of (a) a date established by Licensor in its sole discretion; provided, that such date shall in no event be earlier than 12 months after such SVOD Included Program’s SVOD Availability Date, and (b) the termination of this Agreement for any reason.
5. PROGRAMMING/EXHIBITIONS.
5.1 VOD Exhibitions . Licensee shall make each VOD Included Program continuously available at all times on the VOD Service throughout the duration of their respective VOD License Periods. In addition to the foregoing, the VOD Included Programs shall receive due prominence on the VOD Service consistent with programs with similar genre and appeal from any other major studio content provider taking into consideration quality of the VOD Included Programs relative to the programs provided by such other major studio content provider, as determined by Licensee, and taking into consideration Licensee commercial incentives.
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5.2 SVOD Exhibitions . Licensee may make each SVOD Included Program available on the SVOD Service at any time during such SVOD Included Program’s SVOD License Period as determined by Licensee in its sole discretion.
6. LICENSE FEES; PAYMENT. Licensee shall pay to Licensor the VOD License Fee and the SVOD License Fee (collectively, “VOD/SVOD License Fee”) determined in accordance with this Article 6. Except as otherwise set forth herein, the License Fee is a net amount unreduced by any tax, levy or charge, the payment of which shall be the responsibility of Licensee.
6.1 VOD License Fee . For each VOD/SVOD Avail Year, the “VOD License Fee” equals the greater of (a) the aggregate total of the VOD Per-Program License Fees due for all VOD Included Programs with a VOD Availability Date in such VOD/SVOD Avail Year and (b) the VOD Annual Minimum Fee for such VOD/SVOD Avail Year.
6.1.1 “VOD Per-Program License Fee” for each VOD Included Program equals the product of (i) the total number of VOD Subscriber Transactions for such VOD Included Program, multiplied by (ii) the greater of the Actual VOD Retail Price and the Deemed VOD Price for such VOD Included Program, multiplied by (iii) the applicable VOD Licensor’s Share.
(a) “Actual VOD Retail Price” means for each VOD Included Program, the actual amount paid or payable by each Subscriber (whether or not collected by Licensee) on account of such Subscriber’s selection of such VOD Included Program from the VOD Service, excluding sales, use, consumption and similar taxes. No other deductions shall be allowed unless otherwise agreed in writing between the parties. The Actual VOD Retail Price for each VOD Included Program shall be established by Licensee in its sole discretion.
(b) “Deemed VOD Price” for each category of VOD Included Programs in each country of the Territory shall mean the following, excluding sales, use, consumption and similar taxes:
Country
SD Current
Films
SD Library Films
HD Current
Films
HD Library Films
Argentina ARS 8.26 ARS 7.90 ARS 9.92 ARS 9.48Brazil BRL 5.92 BRL 3.35 BRL 8.54 BRL 5.60Chile CLP 1672 CLP 1490 CLP 2,512 CLP 2,512
[DEEMED VOD PRICES ARE SUBJECT TO DLA FINANCE REVIEW]
(c) “VOD Licensor’s Share” shall mean:
Category of VOD Included Program VOD Licensor’s
ShareCurrent Films (based on the number of days of such title’s VOD Availability Date from LVR)
0-14 days after LVR 70%15-44 days after LVR 65%45-59 days after LVR, or if no LVR occurred
60%
Mega-Hit Library Films 55%Other Library Films 50%
6.1.2 “VOD Annual Minimum Fee” for each VOD/SVOD Avail Year shall mean:
VOD/SVOD Avail Year 1 US$150,000VOD/SVOD Avail Year 2 US$225,000VOD/SVOD Avail Year 3, if any US$300,000VOD/SVOD Avail Year 4, if any US$300,000
6.2 SVOD License Fee . For each VOD/SVOD Avail Year, the “SVOD License Fee” equals the greater of: (a) the SVOD Annual Minimum Fee and (b) the aggregate total of the Actual SVOD License Fees for such VOD/SVOD Avail Year.
6.2.1 “SVOD Annual Minimum Fee” for each VOD/SVOD Avail Year shall mean the amounts set forth in the chart below:
VOD/SVOD Avail Year 1 US$7,000,000VOD/SVOD Avail Year 2 US$7,350,000VOD/SVOD Avail Year 3, if US$7,717,500
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anyVOD/SVOD Avail Year 4, if any US$8,103,375
Notwithstanding the foregoing, if the average number of SVOD Subscribers to the SVOD Service during any month in the applicable VOD/SVOD Avail Year (“Actual SVOD Subscribers”) exceeds 1 million, the SVOD Annual Minimum Fee shall be increased in increments (such increases in the SVOD Annual Minimum Fee, “Incremental SVOD Annual Minimum Fee Increases”) based on the total number of Actual SVOD Subscribers and applicable for the month in which such increase in triggered and thereafter with respect to the remainder of such VOD/SVOD Avail Year, as follows:
Actual SVOD Subscribers
Incremental SVOD Annual Minimum Fee Increase
VOD/SVOD Avail Year 1
VOD/SVOD Avail Year 2
VOD/SVOD Avail Year 3 (if any)
VOD/SVOD Avail Year 4(if any)
Greater than 1 million but less than or equal to 2 million
Greater than 3 million US$4,000,000 US$4,200,000 US$4,410,000 US$4,630,500
For the avoidance of doubt, all increases in the SVOD Annual Minimum Fee shall be added to the amounts set forth in the first chart of this Section 6.2.1 and to any other Incremental SVOD Annual Minimum Fee Increase.
6.2.2 “Actual SVOD License Fee” for each VOD/SVOD Avail Year means the aggregate total of the applicable rate card (“Rate Card”) for each and every SVOD Included Program licensed during such VOD/SVOD Avail Year, which is set forth on Schedule I hereto. Notwithstanding the foregoing, if the Actual SVOD Subscribers during any month in the applicable VOD/SVOD Avail Year exceeds 1 million, the Rate Card shall be increased in increments (such increases in the Rate Card, “Incremental Rate Card Increases”) for the month in which such increase is triggered and thereafter with respect to the remainder of such VOD/SVOD Avail Year, based on the total number of Actual SVOD Subscribers, as follows:
Actual SVOD Subscribers
Incremental Rate Card Increases
Greater than 1 million but less than or equal to 2 million 71.43%Greater than 2 million but less than or equal to 3 million 33.33%Greater than 3 million 25.00%
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For the avoidance of doubt, all increases in the Rate Card shall be compounded against the amounts set forth in Schedule I and against any other Incremental Rate Card Increase.
6.2.3 The following is provided solely for purposes of illustrating an example of the Incremental SVOD Annual Minimum Fee Increase and the Incremental Rate Card Increase: Assume that in VOD/SVOD Avail Year 3 Licensee starts out the year at 2.1 million Actual SVOD Subscribers and reaches a total number of Actual SVOD Subscribers of 3.1 million in August of VOD/SVOD Avail Year 3. Further, assume that at the beginning of the VOD/SVOD Avail Year 3, the SVOD Annual Minimum Fee exceeded the aggregate total of the Actual SVOD License Fees and thus Licensee was paying a base SVOD License Fee of $9,922,500 ($5,512,500 + $4,410,000 = $9,922,500):
(a) The SVOD Annual Minimum Fee shall equal the SVOD Annual Minimum Fee of $7,717,500 plus the following Incremental SVOD Annual Minimum Fee Increases: (i) $5,512,500 (since the Actual SVOD Subscribers exceeded 1 million for the entirety of VOD/SVOD Avail Year 3); plus (ii) $4,410,000 (since the Actual SVOD Subscribers exceeded 2 million for the entirety of VOD/SVOD Avail Year 3); plus (iii) $1,837,500 ($4,410,000 x 5/12 = $1,837,500 since the Actual SVOD Subscribers exceeded 3 million for 5 months of VOD/SVOD Avail Year 3) for a total SVOD Annual Minimum Fee of $19,477,500.
(b) The Actual SVOD License Fee would be recalculated by factoring in the Incremental Rate Card Increases for each of the SVOD Included Programs. For example, an Early Window Feature with US Box Office <$10M and <12 months after Pay + Black Period shall have a Fee per Title of $88,333.33 calculated as follows: (i) $35,000; plus (ii) $25,000 ($35,000 x .7143) = $25,000.50); plus (iii) $20,000 ($60,000 x .3333 = $20,000); plus (iv) $8,333.33 (($80,000 x .25) x 5/12 = $8,333.33).
(c) Assuming the SVOD Minimum Fee as calculated in subsection (a) above exceeds the Actual SVOD License Fee as recalculated based on the Incremental Rate Card Increases, Licensee would owe an additional amount to Licensor of $9,555,000 ($19,477,500 - $9,922,500).
6.3 Payment Terms.[ DLA/SONY TO DISCUSS ]
6.3.1 VOD . Licensee shall pay the VOD License Fees for each VOD/SVOD Avail Year as follows: (a) for VOD/SVOD Avail Year 1, 100% of the VOD Annual Minimum Fee upon the full execution of this Agreement, and (b) for VOD/SVOD Avail Years 2, 3 (if applicable), and 4 (if applicable), 100% of the applicable VOD Annual Minimum Fee no later than 60 days prior to the start of each such VOD/SVOD Avail Year. Each payment of the VOD Annual Minimum Fee for a VOD/SVOD Avail Year shall be applied against the aggregate total of all VOD Per-Program License Fees earned for all VOD Included Programs with a VOD Availability Date in such VOD/SVOD Avail Year. If the aggregate total of all actual VOD Per-Program License Fees due and payable for a VOD/SVOD Avail Year exceeds the amount of the VOD Annual Minimum Fee, such excess amount is the “VOD Overage.” For purposes of calculating the VOD Overage, VOD Per-Program License Fees shall be converted from the applicable foreign currency into US Dollars at the exchange rate published by The Wall Street Journal (“WSJ Rate”) on the first Business Day of the month in which such VOD Per-Program License Fees are earned (e.g., all VOD Per-Program License Fees earned during the month of October shall be converted to US Dollars using the WSJ Rate published on the first Business Day of October). Licensee shall pay any VOD Overage in US Dollars in accordance with
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Section 7.1 of Schedule A within 30 days after the end of the month during which the VOD Subscriber Transaction giving rise to such VOD Overage occurs.
6.3.2 SVOD . Licensee shall pay the SVOD License Fees for each VOD/SVOD Avail Year, including any Incremental SVOD Annual Minimum Fee Increases and Incremental Rate Card Increases applicable to each such VOD/SVOD Avail Year as of the start of each such VOD/SVOD Avail Year, as follows: (a) for VOD/SVOD Avail Year 1, 25% upon the full execution of this Agreement and the remaining 75% in equal monthly installments payable on the last day of each month of the VOD/SVOD Avail Year 1, and (b) for VOD/SVOD Avail Years 2, 3 (if applicable), and 4 (if applicable), 25% by no later than 60 days prior to the first day of such VOD/SVOD Avail Year and 75% in equal monthly installments payable on the last day of each month of the applicable VOD/SVOD Avail Year. For purposes of clarification, the SVOD License Fees payable as set forth above shall be calculated taking into consideration the number of SVOD Subscribers as of the end of the month immediately prior to the date that is 30 days prior to the first payment due date for the applicable VOD/SVOD Avail year (the “Base SVOD License Fee”). In addition, if, at any time during a VOD/SVOD Avail Year, the total number of Actual SVOD Subscribers triggers an increase to be made to the Base SVOD License Fee based on an Incremental SVOD Annual Minimum Fee Increase and Incremental Rate Card Increase (“Triggering Event”), Licensee shall recalculate the SVOD License Fee based on the Incremental SVOD Annual Minimum Fee Increase and Incremental Rate Card Increases (the “Recalculated SVOD License Fee” and shall pay to Licensor an amount equal to the Recalculated SVOD License Fee minus the Base SVOD License Fee (the “SVOD License Fee Overage”). The SVOD License Fee Overage shall be payable in equal monthly installments over the remainder of the applicable VOD/SVOD Avail Year commencing 30 days after the end of the month during which such Triggering Event occurs and continuing to be paid on the monthly anniversary of such date.
7. REMAINING TERMS. The remaining terms and conditions of this Agreement are set forth in Schedules A through I attached hereto. In the event of a conflict between any of the terms of these VOD/SVOD Terms and Schedules A through I, the terms of these VOD/SVOD Terms shall control.
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SCHEDULE A
STANDARD TERMS AND CONDITIONS
The following are the standard terms and conditions governing the license set forth in the License Agreement to which this Schedule A is attached.
1. DEFINITIONS
1.1 "Approved Connected Blu-ray Player" means a device that is capable of playing Blu-ray and receiving protected audiovisual content via a built-in IP connection, and transmitting such content to a television or other display device. An Approved Connected Blu-ray Player shall support the Approved Delivery Means, meet the Content Protection Requirements set forth in Schedule C and implement the Usage Rules.
1.2 “Approved Connected Device” means each of the following: Approved Connected Blu-ray Player, Approved Connected Television, Approved Set-Top-Box, Approved Mobile Phone, Approved Tablet, Approved Game Console, Approved Streaming Media Player and Approved Personal Computer.
1.3 “Approved Connected Television” means an individually addressed and addressable IP-enabled television capable of receiving and displaying protected audiovisual content via a built-in IP connection. An Approved Connected Television shall support the Approved Delivery Means, meet the Content Protection Requirements set forth in Schedule C and implement the Usage Rules.
1.4 “Approved Delivery Means” means the VOD/SVOD Approved Delivery Means or the DHE Approved Delivery Means, as applicable.
1.5 “Approved Device” shall mean an Approved Connected Device or Approved Set-Top Box, as applicable.
1.6 “Approved Game Console” means a device designed primarily for the playing of electronic games which is also capable of receiving protected audiovisual content via a built-in IP connection, and transmitting such content to a television or other display device. An Approved Game Console shall support the Approved Delivery Means, meet the Content Protection Requirements set forth in Schedule C and implement the Usage Rules.
1.7 “Approved Mobile Phone” means an individually addressed and addressable IP-enabled mobile hardware device generally receiving transmission of a program over a transmission system designed for mobile devices such as GSM, UMTS, LTE and IEEE 802.11 (“wifi”) and designed primarily for the making and receiving of voice telephony calls. An Approved Mobile Phone shall support the Approved Delivery Means, meet the Content Protection Requirements set forth in Schedule C and implement the Usage Rules.
1.8 “Approved Personal Computer” means an IP-enabled desktop or laptop device with a hard drive or embedded/on-board flash storage, keyboard and monitor, designed for multiple office and other applications using a silicon chip/microprocessor architecture. An Approved Personal Computer must support one of the following operating systems: Windows XP, Windows 7, Mac OS, subsequent versions of any of these, and other operating system agreed in writing with Licensor. In addition, an Approved Personal Computer shall support the Approved Delivery Means, meet the Content Protection Requirements set forth in Schedule C and implement the Usage Rules.
1.9 “Approved Set-Top Box” means a set-top device that is designed for the reception, decoding and display of audio-visual content exclusively on an associated video monitor or conventional television set, which utilizes decryption and provides conditional access to the Licensed Service by a technology approved in writing by Licensor. An Approved Set-Top Box shall implement the Usage Rules, support the Approved Delivery Means and comply with the Content Protection Obligations and Requirements set forth in Schedule C attached hereto.
1.10 “Approved Streaming Media Player” shall mean a Roku box, Apple TV device or any other similar set top box device that is not programmable by the end user and is capable of playing receiving protected audiovisual content via a built-in IP connection. An Approved Streaming Media Player shall support the Approved Delivery Means, meet the Content Protection Requirements set forth in Schedule C and implement the Usage Rules.
1.11 “Approved Tablet” means any individually addressed and addressable IP-enabled device with a built-in screen and a touch screen keyboard, for which user input is primarily via touch screen, that is designed to be highly portable, not designed primarily for making voice calls, and runs on one of the following operating systems:
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iOS, Windows embedded Compact (formerly known as Windows CE), Android (where the implementation is marketed as “Android” and is compliant with the Android Compliance and Test Suites (CTS) and Compatibility Definition Document (CDD)), or RIM’s QNX Neutrino. An Approved Tablet shall support the Approved Transmission Means, meet the Content Protection Requirements set forth in Schedule C and implement the Usage Rules.
1.12 “Authorized Operator” means each of the entities set forth on Schedule D which shall at all times during the term be wholly- or majority-owned by the applicable entity set forth on Schedule D.
1.13 “Authorized System” means each of the systems set forth on Schedule D over which the Licensed Service is authorized to be transmitted. Each Authorized System is, and shall at all times during the Term be, located solely in the country(ies) within the Territory set forth in Schedule D and wholly-owned and operated by the Authorized Operator set forth on Schedule D.
1.14 “Authorized Version” with respect to an Included Program means the version made available by Licensor to Licensee for distribution on a VOD or SVOD basis hereunder, as applicable. Unless otherwise mutually agreed, “Authorized Version” shall in not include any 3D version of an Included Program; provided, however, that if Licensor is providing the HD and/or 3D version to any other of its licensees in the Territory, Licensee shall have access to such HD and/or 3D version also.
1.15 “Availability Date” means VOD Availability Date or SVOD Availability Date, as applicable.
1.16 “Avail Term” means the VOD/SVOD Avail Term.
1.17 “Business Day” means any day other than (i) a Saturday or Sunday or (ii) any day on which banks in Los Angeles, California are closed or authorized to be closed.
1.18 “Commercial Establishments” shall include, but not be limited to, restaurants, lounges, any place that charges a direct or indirect fee for admission, and other public or private facilities.
1.19 “Current Film” means a Feature Film (a) that is initially released theatrically, direct-to-video (“DTV”) or on television (“MFT”) in the United States or the Territory, (b) for which a Licensed Language version is available out of stock on hand, (c) with an Availability Date during the Avail Term, (d) the Availability Date for which is (i) for theatrical releases other than Sony Pictures Classics releases, no more than 12 months after its initial theatrical release in the United States or the Territory, or, in the case of a Sony Pictures Classics release, no more than 14 months after its initial theatrical release in the United States or the Territory, (ii) for a DTV, no more than 6 months after its LVR in the United States or the Territory, or (iii) for a MFT, no more than 6 months after its initial television exhibition in the United States or the Territory, and (e) for which Licensor controls without restriction all rights, licenses and approvals necessary to grant the rights granted hereunder (“Necessary Rights”); provided, however, that Licensor shall be deemed to have Necessary Rights if there are any restrictions contractually agreed to by Licensor for purposes of excluding any Included Programs from Licensee..
1.20 “Current Series” means a Television Series (other than a Local Series) for which Licensor unilaterally controls without restriction all Necessary Rights that Licensor makes available for license hereunder that has new episodes broadcast on television in the Territory or the U.S. for the first time during the Avail Term and has an Availability Date no earlier than 1 year after local broadcast in the Territory.
1.21 “Early Window Film” means a Feature Film (other than a Library Film, but including DTVs, MFTs, Foreign Films and Local Films) for which Licensor unilaterally controls without restriction all Necessary Rights which Licensor makes available for license hereunder with an Availability Date that is no more than thirty six (36) months from the LVR. Each Early Window Film that is a DTV, MFT or Local Film shall be designated by Licensor as a Premium Tier or Non-Premium Tier.
1.22 “Electronic Download” means the transmission of a digital file containing audio-visual content from a remote source, which file may be stored and the content thereon viewed at a time subsequent to the time of its transmission to the viewer.
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1.23 “Encrypted” means, with respect to a signal, that both the audio and video portions of such signal have been changed, altered or encoded to securely and effectively prevent the intelligible reception of such signal without the use of fully authorized decoding equipment to restore both the audio and video signal integrity.
1.24 “Event of Force Majeure” in respect of a party means any reasonably unforeseeable act, cause, contingency or circumstance beyond the reasonable control of such party, including, without limitation, any governmental action, nationalization, expropriation, confiscation, seizure, allocation, embargo, prohibition of import or export of goods or products, regulation, order or restriction (whether foreign, federal or state), war (whether or not declared), civil commotion, disobedience or unrest, insurrection, public strike, riot or revolution, fire, flood, drought, other natural calamity, damage or destruction to plant and/or equipment, or any other accident, condition, cause, contingency or circumstance (including without limitation, acts of God within or without the United States), but shall not include an inability to pay for whatever reason.
1.25 “Feature Film” means a feature-length motion picture for which Licensor unilaterally controls without restriction all Necessary Rights which Licensor makes available for license hereunder, including Current Films, Early Window Films, Foreign Films and Library Films.
1.26 “Foreign Film” means a Feature Film for which Licensor unilaterally controls without restriction all Necessary Rights which Licensor makes available for license hereunder that is theatrically released outside the U.S. and not theatrically released in the U.S.
1.27 “High Definition” means any resolution that is (a) 1080 vertical lines of resolution or less (but at least 720 vertical lines of resolution) and (b) 1920 lines of horizontal resolution or less (but at least 1280 lines of horizontal resolution).
1.28 “Included Program” means VOD Included Program or SVOD Included Program, as applicable.
1.29 “Library Film” means a Feature Film made available by Licensor during the Avail Term for which Licensor unilaterally controls without restriction all Necessary Rights and that does not qualify as a Current Film hereunder due to its failure to meet the criteria set forth in subclause (d) of the definition of “Current Film”, which Licensor shall designate as Tier A, Tier B or Tier C.
1.30 “Library Series” means a Television Series (other than a Local Series) for which Licensor unilaterally controls without restriction all Necessary Rights which Licensor makes available for license hereunder, including all broadcast seasons thereof, with an Availability Date that is at least 3 years following the last season of production, which Licensor shall designate as Tier A, Tier B or Tier C.
1.31 “License Period” means VOD License Period or SVOD License Period, as applicable.
1.32 “Licensed Language” for each Included Program means (a) if exhibited in the Territory in countries other than Brazil, its original language version, or, if its original language version is not Spanish, the original language version dubbed or subtitled in Spanish, and (b) if exhibited in Brazil, its original language version, or if its original language version is not Portuguese, the original language version dubbed or subtitled in Portuguese.
1.33 “Licensed Service” means the VOD Service or SVOD Service, as applicable.
1.34 “Local Film” means a Feature Film that was produced in the Territory with Spanish or Portuguese as its original language for which Licensor unilaterally controls without restriction all Necessary Rights that Licensor makes available for license hereunder.
1.35 “Local Series” means a Television Series that was produced in the Territory with Spanish or Portuguese as its original language for which Licensor unilaterally controls without restriction all Necessary Rights that Licensor makes available for license hereunder, including teleseries and telenovelas.
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1.36 “Local Video Release” or “LVR” means, with respect to an Included Program, latest to occur of the date on which such Included Program is first made available to the general public in Argentina, Mexico and Brazil in the standard DVD format.
1.37 “Major Studio” means Licensor, Paramount Pictures, Twentieth Century Fox, Universal Studios, DreamWorks SKG, The Walt Disney Company, Warner Bros., and any of their respective affiliates and subsidiaries.
1.38 “Mega-Hit Library Film” means a Library Film with North America Box Office Gross Receipts of U.S. $50 million or greater or a Library Film listed on the Deemed Megahit Library Films List set forth on Schedule H.
1.39 “Non-Returning Series” means a Television Series (other than a Local Series) that (i) has been cancelled or is no longer in production and (ii) does not qualify as a Current Series hereunder, for which Licensor unilaterally controls without restriction all Necessary Rights, which Licensor makes available for license hereunder, including all broadcast seasons thereof, with an Availability Date that is less than 3 years following the last season of production.
1.40 “North American Box Office Gross Receipts” with respect to an Included Program shall mean the highest aggregate United States and Canadian gross box office receipts earned by such film, as reported in Daily Variety or The Hollywood Reporter. If Licensor believes that the latest of such reports is not the most current number of such receipts, it shall have the right to provide a certificate setting forth the correct amount.
1.41 “Personal Use” means the personal, private viewing of a program and shall not include any viewing or exhibition for which (or in a venue in which) an admission, access or viewing fee is charged, or any other public exhibition or viewing.
1.42 “Playback Application” means a Licensed Service-branded (and not co-branded) application that (i) via Internet Delivery and/or Mobile Delivery, as applicable, enables Subscribers to Stream and watch Included Programs, (ii) provides integrated playback of digital audio-visual content (i.e., without requiring the launch of a new browser window) or provides playback in a new browser window that is Licensed Service-branded (and not co-branded), (iii) can be uniquely identified by, and can be revoked by, Licensee and/or the applicable Approved Operator and (iv) meets the content protection requirements in Schedule C.
1.43 “Private Residence” means a private residential dwelling unit, and shall exclude Transient Dwelling Units, Public Areas and Commercial Establishments.
1.44 “Public Areas” include, without limitation, public or common rooms, waiting rooms, lobbies and public meeting rooms, or other similar areas which are open to the public.
1.45 “Security Breach” means a condition that results or may result in: (i) the unauthorized availability of any Included Program or any other motion picture, whether on any Approved Device or via the Approved Delivery Means; or (ii) the availability of any Included Program on, or means to transfer any Included Program to, devices that are not Approved Devices, or transcode to formats that are not approved pursuant to Schedule C and/or transmit through delivery means that are not Approved Delivery Means; or (iii) a circumvention or failure of the Licensee’s secure distribution system, geofiltering technology or physical facilities; which condition(s) may, in the reasonable good faith judgment of Licensor, result in actual or threatened harm to Licensor. If there is a Security Breach that occurs other than as a result of a material breach of this Agreement by Licensee, that is referred to as an “Unintentional Security Breach”.
1.46 “Standard Definition” means (a) for NTSC, any resolution equal to or less than 480 lines of vertical resolution (and equal to or less than 720 lines of horizontal resolution) and (b) for PAL, any resolution equal to or less than 576 lines of vertical resolution (and equal to or less than 720 lines of horizontal resolution).
1.47 “Streaming” means the transmission of a digital file containing audio-visual content from a remote source for viewing concurrent with its transmission, which file may not be stored or retained for viewing at a later time (except for temporary caching to a maximum buffer of 15 minutes for virtual real-time viewing).
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1.48 “Subscriber” means VOD Subscriber or SVOD Subscriber, as applicable.
1.49 “Subscriber Transaction” means a VOD Subscriber Transaction.
1.50 “Term” means the VOD/SVOD Term.
1.51 “Territory” means the following countries, and their respective territories, possessions, commonwealths, trusteeships and protectorates, as follows: Brazil, Mexico, Central America (i.e., Belize, Costa Rica, Guatemala, El Salvador, Honduras, Nicaragua and Panama), South America (i.e., Argentina, Bolivia, Chile, Columbia, Ecuador, French Guyana, Guayana, Paraguay, Peru, Surinam, Uruguay and Venezuela) and the Caribbean (i.e., Anguilla, Antigua, Barbuda, Aruba, Barbados, British Virgin Islands, Cayman Islands, Dominica, Dominican Republic, Grenada, Guadeloupe, Haiti, Jamaica, Martinique, Montserrat, the Netherlands Antilles, St. Kitts and Nevis, St. Lucia, St. Vincent and the Grenadines, Trinidad, Tobago, the Turk and Caicos, Bermuda, St. Martin, and Curacao.
1.52 “Television Episode” means a one-half or one broadcast hour (as applicable) episode of a television series made available by Licensor during the Avail Term and for which Licensor unilaterally controls without restriction the Necessary Rights.
1.53 “Television Series” means a single series of Television Episodes including all broadcast seasons thereof.
1.54 “Territorial Breach” means a Security Breach that creates a risk that any of the Included Programs will be delivered to persons outside the Territory, where such delivery outside the Territory may, in the sole good faith judgment of Licensor, result in actual or threatened harm to Licensor.
1.55 “Transient Dwelling Units” shall refer to private or semi-private dwelling units in a hotel, motel, hospital, nursing home, dormitory, prison or similar structure, institution or place of transient residence, not including Public Areas therein.
1.56 “Usage Rules” means the VOD Usage Rules or the SVOD Usage Rules, as applicable.
1.57 “VCR Functionality” means the capability of a Subscriber to perform any or all of the following functions with respect to the exhibition of an Included Program: stop, start, pause, play, rewind and fast forward but not including recording capability.
1.58 “Viral Distribution” means the retransmission or redistribution of an Included Program, either by the Licensee or by the Subscriber, by any method, including, without limitation: (a) peer-to-peer file sharing (as such practice is commonly understood in the online context, (b) digital file copying or retransmission, or (c) burning, downloading or other copying of such Included Program to any removable medium (such as a DVD) from the initial download targeted by the Licensed Service and distributing copies of such Included Program on such removable medium.
2. RESTRICTIONS & OTHER TERMS OFTHE LICENSE.
2.1 Licensee agrees that without the prior written consent of Licensor, or except as otherwise set forth in this Agreement: (a) the license granted hereunder may not be assigned, licensed or sublicensed in whole or in part; (b) no Included Program may be delivered, transmitted, exhibited or authorized for reception other than as set forth in Article 2 of the VOD/SVOD Terms; (c) no person or entity shall be authorized or permitted by Licensee to do any of the acts forbidden herein; and (d) Licensee shall not have the right to transmit or deliver the Included Programs in an up-converted or analogous format or in a low resolution or analogous format. Licensor reserves the right to inspect and approve the picture quality and user experience of the Licensed Service with Licensee’s prior consent, with such consent not to be unreasonably withheld. Licensee shall immediately notify Licensor of any unauthorized transmissions or exhibitions of any Included Program of which it becomes aware.
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2.2 Licensee shall not be permitted in any event to (a) offer or conduct promotional campaigns for the VOD Included Programs offering free buys, including without limitation “two-for-one” promotions (by coupons, rebate or otherwise) or (b) bundle the VOD Included Programs with other programs, without Licensor’s prior written consent. Licensee shall not charge any club fees, access fees, monthly service fees or similar fees for general access to the VOD Service (whether direct or indirect), or offer the VOD Included Programs on a subscription basis or negative option basis (i.e., a fee arrangement whereby a customer is charged alone, or in any combination, a service charge, a separate video-on-demand charge or other charge but is entitled to a reduction or a series of reductions thereto on a title-by-title basis if such customer affirmatively elects not to receive or have available for reception such title) without Licensor’s prior written consent. Licensee shall not be permitted to bundle the VOD Service or SVOD Service with any other products or service offering. Licensee may offer free trials of the SVOD Service, but shall do so in strict accordance with the requirements set forth in Section 12.12 of this Schedule A.
2.3 For purposes of clarification, the following terms shall apply to the license during the Term:
2.3.1 Licensee will be entitled to authorize, at no charge agents who are authorized to market, promote and/or sell the Licensed Service, including without limitation, retailers, telecommunication companies and direct sales agents to receive the SVOD Service for the sole purpose of demonstrating to potential customers the SVOD Service and such agents shall not be deemed to be SVOD Subscribers hereunder (“Dealer Showrooms”); provided, however that such Dealer Showrooms shall not exceed five percent (5%) of the SVOD Subscribers at any time during the Term; and
2.3.2 Licensee will be entitled to authorize, at no charge “VIP” subscriber accounts for Licensee’s employees, key customers, vendors, and other similar parties to receive the Licensed Service without charge and such VIP accounts shall be deemed to be SVOD Subscribers hereunder.
2.3.3 Licensee will have the right to authorize at no charge exhibition of all or a part of a VOD Included Program as part of the VOD Service for purposes of testing (“Test Exhibitions”) and Licensee will have the right to provide credits for technical and other reasonably justifiable issues with the exhibition of any VOD Included Program as determined by Licensee (the “Creditable VOD Exhibitions”) and such Creditable VOD Exhibitions shall not constitute VOD Subscriber Transactions provided, however, that the Test Exhibitions and Creditable Exhibitions shall not, in aggregate, exceed a cap of five percent (5%) of VOD Subscriber Transactions at any time during the Term.
2.4 Notwithstanding anything to the contrary set forth herein, nothing herein shall prevent Licensee from partnering with third parties (not on a “white-label” basis) to promote and market the Licensed Service to end users utilizing branding of such third parties.
2.5 Nothing herein shall prevent Licensee from offering one or more genre-themed packages or tiers within the SVOD Service (e.g., kids, sports, documentaries, music, Bollywood, etc.) (the “Genre-based SVOD Services) subject to the following restrictions: (i) Licensee must keep all major studio programming and the SVOD Included Programs in the SVOD Service (even if they are also in another Genre-based SVOD Service) and (ii) major studio programming may only be included in the Genre-based SVOD Service to the extent such programming falls within the applicable genre. For the avoidance of doubt, (a) there will be no genre-based package of the SVOD Service that is primarily comprised mainstream feature films and/or television programs from the major studios; and (b) any subscriber to a Genre based SVOD Service will constitute a Subscriber for purposes of this Agreement.
3. RESERVATION OF RIGHTS. All licenses, rights and interest in, to and with respect to the Included Programs, the elements and parts thereof, and the media of exhibition and exploitation thereof, not specifically granted herein to Licensee, including, without limitation, theatrical, non-theatrical, home video, pay-per-view, sell-through, pay television, basic television, and free broadcast television, shall be and are specifically and entirely reserved by and for Licensor. Without limiting the generality of the foregoing, Licensee acknowledges and agrees that Licensee has no right in the Included Programs or the images or sound embodied therein, other than the right to exhibit the Included Programs in strict accordance with the terms and conditions set forth in this Agreement. It is
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explicitly understood that the entering into of this Agreement shall not be construed as granting to Licensee or any other person or entity any interest in the copyright or any other right in the Included Programs or the images or sound embodied therein, and nothing contained in this Agreement is intended to convey or will convey to Licensee any ownership or other proprietary interests in the Included Programs or the images or sound embodied therein and Licensor retains the right to fully exploit the Included Programs without limitation.
4. TERMS OF SERVICE. Without limiting any other obligation of Licensee hereunder, prior to making an Included Program available hereunder through the internet, Licensee shall (i) provide conspicuous notice of the terms and conditions pursuant to which a Subscriber may use the Licensed Service and Included Programs, (“Terms of Service” or “TOS”) and (ii) include provisions in the TOS stating, among other things and without limitation, that: (a) Subscriber is obtaining a license under copyright to the Included Program, (b) Subscriber’s use of the Included Program must be in accordance with the Usage Rules, (c) except for the rights explicitly granted to Subscriber, all rights in the Included Program are reserved by Licensee and/or Licensor, and (d) the license terminates upon breach by Subscriber, and upon termination the Included Program(s) will be inaccessible to Subscriber. Licensee shall contractually bind all users of the Licensed Service as distributed through the interent to adhere to the TOS and Usage Rules prior to the completion of each initial subscription to the SVOD Service or each VOD Subscriber Transaction.
5. PROGRAMMING/NUMBER OF EXHIBITIONS.
5.1 Notwithstanding anything contained herein to the contrary, Licensee agrees that (i) Adult Programs shall not constitute more than 20% of total programming available on the Licensed Service during the term hereof, (ii) no Adult Program shall be exhibited, promoted or listed on the same or previous screen as a screen on the Licensed Service on which an Included Program is promoted or listed, and (iii) no Adult Program will be classified within the same genre/category as any Included Program. If Licensee violates the terms of this Section 5.1 with respect to the Licensed Service, then Licensor shall have the right to cause Licensee to immediately cease exploiting any or all Included Programs. As used herein, “Adult Program” shall mean any motion picture or related promotional content that has either been rated NC-17 (or obtained an equivalent rating in the Territory) or if unrated would likely have received an NC-17 rating, other than a title released by a Major Studio or a title otherwise deemed not to be an Adult Program by Licensor in its sole discretion, or X (or obtained an equivalent rating in the Territory) or is unrated and would have likely received an X if it had been submitted to the MPAA for rating.
5.2 Licensee shall notify Licensor of the various genres/categories (e.g., drama, comedy, horror, suspense, romance, etc.), in which programs will generally be classified on the Licensed Service and shall use reasonable efforts to notify Licensor before it modifies, adds to or removes any such genres/categories. Licensor shall have the right to designate one or more genres/categories in which each Included Program is to be included from among the available genres/categories within the applicable Avail List, and shall use good faith efforts to do so not later than thirty (30) days prior to each such Included Program’s Availability Date. In addition, Licensee may include an Included Program in additional genres/categories.
5.3 The VOD and SVOD Included Programs shall receive no less space on the VOD and SVOD Service, as applicable interface designated for the promotion of Major Studios’ VOD and SVOD, as applicable, than any other Major Studio taking into consideration quality of the Included Programs relative to other content as determined by Licensee and any commercial incentives. Licensee shall ensure that with respect to the VOD Included Programs, all aspects of programming and promotions, including, without limitation, allocation of space on the VOD Service interface, as applicable, placement and prominence on the home page or within the genre/categories pages, navigators, graphic user interfaces, cross-channel real estate, barker channel and any other available promotional medium (to the extent permitted under this Agreement) shall be on an fair, equitable and non-discriminatory basis vis-à-vis other programming of similar category and genre provided by other Major Studio Licensors under similar commercial circumstances, taking into taking into consideration quality of the Included Programs relative to other content as determined by Licensee.
5.4 Anti-Piracy Warnings .
5.4.1 Licensee shall display the following anti-piracy warnings (or such other anti-piracy warning provided by Licensor for any Territory) on the Licensed Service : (i) in the English language versions of the Licensed Service in the US, “CRIMINAL COPYRIGHT INFRINGEMENT IS THEFT. IT IS INVESTIGATED BY FEDERAL LAW ENFORCEMENT AGENCIES AT THE NATIONAL IPR COORDINATION CENTER
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INCLUDING HOMELAND SECURITY INVESTIGATIONS AND IS PUNISHABLE BY UP TO 5 YEARS IN PRISON AND A FINE OF $250,000;” and (ii) in Territories where the Licensed Service is offered in a language other than English, “ANTI-PIRACY WARNING: THE UNAUTHORIZED REPRODUCTION OR DISTRIBUTION OF THIS COPYRIGHTED WORK IS ILLEGAL” or such other antipiracy warning as required in such Territory. In addition, if at any time during the Term (i) Licensee implements functionality on a broad scale as part of the Licensed Service that enables the inclusion of an anti-piracy warning or similar antipiracy message that is played back or otherwise displayed before the start of a movie, and/or (ii) distributes motion pictures that include an anti-piracy warning or similar-anti piracy message that plays back before the start of a movie, then Licensor shall have the option of including the anti-piracy warning set forth above or other anti-piracy message in the same manner with respect to the Included Programs distributed by Licensee hereunder, provided that the content and design of such message shall be reasonably determined by Licensor.
5.4.2 If, at any time during the Term, any governmental body with authority over the implementation of an anti-piracy warning in the Territory requires that such warning be implemented in a manner different from the manner set forth in Section 5.4.1 above, then Licensor shall provide written notice to Licensee of such new requirements and Licensee shall comply with those requirements as a condition to distribute Included Programs pursuant to this Agreement. In the event that Licensor does not promptly comply with the updated instructions issued by Licensor pursuant to this Section 5.4.2, Licensor shall have the right, but not the obligation, to withdraw the affected Included Program(s) upon written notice to Licensee if Licensor believes that Licensee’s continued distribution in a manner that does not comply with the updated instructions will violate the material terms of any written agreement or other material requirement imposed on Licensor by any governmental body administering the use of such warnings.
6. WITHDRAWAL OF PROGRAMS. Licensor may withdraw any program and/or related materials at any time because of (a) an Event of Force Majeure, loss of rights, unavailability of necessary materials, any pending or potential litigation, judicial proceeding or regulatory proceeding, in order to minimize the risk of liability, or for a DVD moratorium, or (b) upon thirty (30) days’ prior written notice, if Licensor elects to theatrically re-release or reissue such program or make a theatrical, direct-to-video or television remake or sequel thereof. If Licensor exercises such right of withdrawal, Licensee shall (i) remove such withdrawn Included Program from the Licensed Service within three (3) Business Days of receiving notice from License if the Authorized Operator is Licensee or its affiliate; and (ii) use commercially reasonable best efforts to remove such withdrawn Included Program from the Licensed Service within three (3) Business Days of receiving notice from Licensor if the Authorized Operator is an unaffiliated third party. In the event of any withdrawal of an Included Program pursuant to this Article 6 before the last day of the License Period for such program, Licensor shall promptly provide Licensee with a substitute program, which Licensee would have the right to exhibit for the remainder of the License Period of the withdrawn program as well as such other rights and obligations as if such substitute program were an Included Program. Withdrawal of an Included Program under this Article 6 shall in no event be deemed to be, or in any way constitute a breach of this Agreement and except as provided herein, Licensee shall not be entitled to any rights or remedies as a result of such withdrawal including, without limitation, any right to recover for lost profits or interruption of its business.
7. PAYMENT.
7.1 Unless and until Licensee is otherwise notified by Licensor, all payments due to Licensor hereunder shall be made in United States Dollars by wire transfer to the following account:
Bank Name: JP Morgan ChaseBank Address: 4 Metrotech Center, 7th Floor, Brooklyn, NY 11245ABA Routing #: 021000021Account #: 304192791Swift Code (foreign wires only): CHASUS33Account Name: CPT Holdings, Inc.Account Address: Culver City, CAReference: DLA VOD/SVOD Licensing Agreement / Month Reporting
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7.2 Except when currency conversion costs are imposed or levied by any local governmental authority, Licensee shall be solely responsible for all costs of any currency conversion to United States Dollars, and such costs shall not reduce the amounts due to Licensor hereunder.
7.3 Amounts which become due to Licensor hereunder (including, without limitation, any advances or guarantee payments) shall immediately be due and payable and shall immediately be non-recoupable, non-refundable and not subject to rebate, deduction or offset of any kind. Without prejudice to any other right or remedy available to Licensor, if Licensee fails to pay any license fees or advances or guarantees when due and payable, interest shall accrue on any such overdue amount until such time as the overdue amount is paid in full, at a rate equal to the lesser of one hundred percent (100%) of the prime rate announced from time to time in the U.S. edition of The Wall Street Journal (the “Prime Rate”) or the permitted maximum legal rate.
7.4 All prices and payments stated herein shall be exclusive of and made free and clear of and without deduction or withholding for or on account of any tax, duty or other charges, of whatever nature imposed by any taxing or governmental authority unless such deduction or withholding is required by applicable law, in which case Licensee shall: (i) withhold the legally required amount from payment; (ii) remit such amount to the applicable taxing authority; and (iii) within thirty (30) days of Licensee’s receipt of the original documentation or a certified copy evidencing such payment (“Withholding Tax Receipt”) deliver such Withholding Tax Receipt to Licensor. In the event Licensee does not provide a Withholding Tax Receipt in accordance with the preceding sentence, Licensee shall be liable to and shall reimburse Licensor for the withholding taxes deducted from license fees.
7.5 Notwithstanding anything to the contrary set forth herein, Licensee and Licensor acknowledges and agree that if Licensee (and/or any authorized Operator in the Territory) pay the CONDECINE “per title” tax on any VOD Included Program pursuant to applicable Brazilian law, including but not limited to MP 2228-1/2001 and Ancine´s Instrução Normativa 105/2011 (or subsequent rules relating thereto), then Licensee shall have the right to recoup the full amount of such CONDECINE with priority from the Licensor´s VOD License Fee applicable to such VOD Included Program.
8. PHYSICAL MATERIALS AND TAXES.
8.1 For each Included Program, Licensor shall make available to Licensee at least sixty (60) days prior to the Availability Date for such Included Program two (2) encoded digital files in accordance with the specifications set forth in Schedule J (each, a “Copy”), together with available Advertising Materials (defined at Schedule A, Section 12.1) and music cue sheets. Licensee shall pay to Licensor an administrative fee (“Administrative Fee”) for each Copy of an Included Program made available by Licensor as follows: (i) US$325 for each Copy of a Feature Film made available in Standard Definition, (ii) US$590 for each Copy of a Feature Film made available in High Definition, (iii) US$165 for each Copy of a one-broadcast hour Television Episode made available in Standard Definition, (iv) US$295 for each Copy of a one-broadcast hour Television Episode made available in High Definition, (v) US$80 for each Copy of a one-half broadcast hour Television Episode made available in Standard Definition and (vi) US$150 for each Copy of a one-half broadcast hour Television Episode made available in High Definition. Licensee shall pay the Administrative Fee for each Included Programs by no later than 30 days prior to the Availability Date for such Included Program. For the avoidance of doubt, Licensee shall only be charged one Administrative Fee for each Included Program. [DLA REVIEWING THESE ADMINISTRATIVE FEES] To the extent Licensee requires digital files which deviate from the Copy specifications or requires tape masters, Licensor will issue an access letter to Licensee for the appropriate materials and Licensee will be responsible for encoding or transcoding, handling and delivery and the associated costs. Licensee shall also be responsible for reformatting available audio/subtitle files outside the specifications provided herein, and the associated cost, which cost, for the avoidance of doubt, are not included in the Administrative Fee.
8.2 In no event shall Licensor be required to deliver Copies in any Licensed Language version other than the original language version. To the extent available, Licensor will provide Spanish and Portuguese subtitle files and Spanish and Portuguese audio tracks. If Licensor makes a program available for which Licensor does not have available a Copy dubbed or subtitled in Spanish and/or Portuguese, and Licensee wishes to license such program as an Included Program hereunder, then at Licensor’s election, Licensee shall have the right to create such dubbed or subtitled Licensed Language version at Licensee’s sole cost. If Licensee creates such version, it shall do so in strict
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accordance with all third party contractual restrictions to which Licensee is contractually bound and Licensor’s technical specifications. Licensee shall be responsible for obtaining all necessary third party clearances for such Licensed Language version, such that any subsequent use of such materials by Licensor or its designee in any country in all media shall be free and clear of any residual or reuse fees. Immediately upon Licensee’s completion of the original dubbing or subtitling of such Included Program, Licensee shall forward to Licensor a copy of such dubbed or subtitled version and Licensee shall also allow Licensor unrestricted access, at no charge to Licensor, to the master of such dubbed and/or subtitled version. Following the conclusion of the License Period for such Included Program licensed hereunder or any other termination of this Agreement, Licensee shall deliver to Licensor the master and all copies of all dubbed and subtitled versions of such Included Program.
8.3 Within thirty (30) days following the last day of the VOD/SVOD Term, Licensee shall at Licensor’s election either return all Copies to Licensor or erase or degauss all such Copies and supply Licensor with a certification of erasure or degaussing of such.
8.4 Upon the loss, theft or destruction (other than as required hereunder) of any Copy of an Included Program, Licensee shall promptly furnish Licensor with proof of such a loss, theft or destruction by affidavit setting forth the facts thereof.
8.5 Each Copy of the Included Programs and all Advertising Materials are the property of Licensor, subject only to the limited right of use expressly permitted herein, and Licensee shall not permit any lien, charge, pledge, mortgage or encumbrance to attach thereto.
8.6 In no event shall Licensor be required to deliver Copies in any language version other than the Licensed Language version.
9. CONTENT PROTECTION & SECURITY.
9.1 General . Licensee represents and warrants that it has put in place effective, stringent and robust security systems and technologies in accordance with industry standard in the Territory to prevent theft, pirating, unauthorized exhibition (including, without limitation, exhibition to non-Subscribers and exhibition outside the Territory), unauthorized copying or duplication of any video reproduction or compressed digitized copy of any Included Program and that such security systems, procedures and technologies are and shall be no less stringent or robust than those which Licensee employs with respect to films licensed from other licensors or than industry standard. Licensee shall maintain and update such security systems, procedures and technologies (including, without limitation, encryption methods) with commercially available and compatible updates generally provided by Licensee’s vendors to their clients as necessary to prevent theft, pirating, unauthorized exhibition (including, without limitation, exhibition to non-Subscribers and exhibition outside the Territory), and unauthorized copying or duplication of any video reproduction or compressed digitized copy of any Included Program. Licensee shall comply with Licensor’s specifications concerning the storage and management of its digital files and materials for the Included Programs at Licensee’s sole expense, and as such specifications may be updated at any time during the Term; provided that such specifications are necessary to comply with the content protection requirements set forth herein or are otherwise necessary to comply with industry standard practices in the Territory for content protection. Licensee shall not authorize any use of any video reproduction or compressed digitized copy of any Included Program for any purpose other than as is expressly permitted herein. Licensor or its representative shall have the right to inspect and review Licensee’s security systems, procedures and technologies at Licensee’s places of business (including off-site facilities, if any) as Licensor deems necessary to determine compliance with the terms of this Agreeement, provided such inspection is conducted during regular business hours, does not interfere materially with Licensee’s operations, Licensor has attempted to resolve the need to inspect through written questionairres, calls and interviews with Licensee personnel and provides Licensee with at least thirty days prior written notice and specific detail of any non-compliance with the terms of this Agreement that has given rise to a need to inspect.
9.2 Obligation to Monitor for Hacks . Licensee shall take such measures as are reasonably necessary and consistent with industry standard in the Terrritory to determine the existence of Security Breaches or Territorial Breaches and shall promptly notify Licensor if any such occurrences are discovered.
9.3 Suspension Notice . Licensee shall notify Licensor immediately upon learning of the occurrence of any Security Breach or Territorial Breach, and shall provide Licensor with specific information describing the nature and
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extent of such occurrence. Licensor shall have the right to suspend the availability (“Suspension”) of those Included Programs on the Licensed Service that are adversely affected by such Securoty Breach or Territorial Breach (the “Affected Programs”) at any time during the Term in the event of a Security Breach or Territorial Breach by delivering a written prior notice to the Licensee of such suspension which notice shall provide detail justifying such Security Breach or Territorial Breach as well as the Affected Programs (a “Suspension Notice”). Upon its receipt of a Suspension Notice, the Licensee shall to take steps immediately to remove the Included Programs or make the Included Programs inaccessible from the Licensed Service as soon as commercially feasible (but in no event more than three (3) calendar days after receipt of such notice for Licensee and Authorized Operators who are Licensee’s affiliates ).
9.4 Reinstatement/Termination . If the cause of the Security Breach that gave rise to a Suspension is corrected, repaired, solved or otherwise addressed, the Suspension shall terminate and Licensor’s obligation to make its Included Programs available on the Licensed Service shall immediately resume. For clarity, no period of Suspension shall extend the Term in time, and upon a notice that a Suspension has ended, the Term shall end as otherwise provided in the Agreement unless earlier terminated in accordance with another provision of this Agreement; provided, however, that in the event of an Unintentional Security Breach, the Term will be extended for the time that Suspension was imposed and Licensor shall provide substitute programs for the Included Programs that were the subject of the Suspension. Upon receipt of such written notice, Licensee shall include the Included Programs on the Licensed Service as soon thereafter as practicable. If more than one Suspension (that is not a result of an Unintentional Security Breach) occurs during the Avail Term, or any single Suspension (that is not a result of an Unintentional Security Breach) lasts for a period of three months or more, Licensor shall have the right, but not the obligation, to terminate this Agreement (“Security Breach Termination”) by providing written notice of such election to the Licensee.
9.5 Content Protection Requirements and Obligations . Licensee shall at all times utilize content protection standards no less stringent or robust than the standards attached hereto as Schedule C and incorporated herein by this reference.
10. CUTTING, EDITING AND INTERRUPTION. Licensee shall exhibit each Included Program as delivered by Licensor in its entirety in the form delivered by Licensor in the Licensed Language. Licensee shall not make, or authorize any others to make, any modifications, deletions, cuts, alterations or additions in or to any Included Program without the prior written consent of Licensor except as otherwise provided herein. For the avoidance of doubt, no panning and scanning, time compression or similar modifications shall be permitted. Without limiting the foregoing, Licensee shall not delete the copyright notice or credits from the main or end title of any Included Program or from any other materials supplied by Licensor hereunder. No exhibitions of any Included Program hereunder shall be interrupted for intermission, commercials or any other similar commercial announcements of any kind.
11. RETRANSMISSION. As between Licensor and Licensee, (a) Licensor is the owner of all retransmission and off-air videotaping rights in the Included Programs and all royalties or other monies collected in connection therewith, and (b) Licensee shall have no right to exhibit or authorize the exhibition of the Included Programs by means of retransmission or to authorize the off-air copying of the Included Programs.
12. PROMOTION.
12.1 Licensee shall have the right to use or authorize the use of written summaries, extracts, synopses, photographs, trailers or other materials prepared and provided or made available by Licensor or, if not prepared by Licensor, approved in writing in advance by Licensor (“Advertising Materials”), solely for the purpose of advertising, promoting and publicizing the exhibition of the Included Programs on the Licensed Service in the Territory and the right to advertise, publicize and promote, or authorize the advertising, publicity and promotion of the exhibition of any Included Program on the Licensed Service in the Territory during the time periods specified below:
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12.1.1 Licensee shall have the right to promote on the Licensed Service and otherwise to the general public the upcoming availability of each Included Program during the period starting no more than 30 days before its Availability Date and to continue promoting such availability through the last day of its License Period.
12.1.2 Licensee may promote the upcoming exhibition of an Included Program on the Licensed Service in printed materials distributed directly and solely to Subscribers not earlier than 30 days prior to the Availability Date of such Included Program and continue promoting such availability through the last day of such Included Program’s License Period.
12.1.3 Notwithstanding anything to the contrary in Section 12.1.1 and Section 12.1.2 above, if the Availability Date for any Included Program is less than 45 days after its LVR, Licensor shall in its sole discretion for each such program provide a date on which Licensee may begin marketing or promoting such program (“Announce Date”). Prior to the Announce Date, Licensee may not “pre-promote” such program, including, without limitation: (a) solicit any pre-orders; (b) advertise referencing price or release date; or (c) use any title-related images or artwork. Violation of this provision shall constitute a material breach of the Agreement. If no Announce Date is specified by Licensor, Licensee shall not pre-promote any such Included Program more than thirty (30) days prior to its Availability Date unless otherwise directed by Licensor and in no event may Licensee promote any title prior to receiving an availability list for such title.
12.1.4 Licensee shall not promote any VOD or SVOD Included Program after the expiration of the VOD or SVOD License Period, as applicable, for such Included Program.
12.1.5 Licensee shall use any marketing, promotional and advertising materials provided by Licensor in a manner consistent with the following:
(a) If any announcement, promotion or advertisement for an Included Program is more than ten (10) days in advance of such program’s Availability Date, Licensee shall only announce and/or promote and/or advertise (in any and all media) its future availability on the Licensed Service by referring to its specific Availability Date. By way of example, in such case “Coming to ______ September 10” would be acceptable, but “Coming soon on _______” would not be acceptable; or
(b) If any announcement, promotion or advertisement for an Included Program is ten (10) or fewer days in advance of such program’s Availability Date, Licensee shall have the right to announce and/or promote and/or advertise (in any and all media) its future availability by referring generally to its upcoming availability or referring to its specific Availability Date. By way of example, in such case both “Coming to _______ September 10” and “Coming soon on _______” would be acceptable.
12.2 Licensor agrees to cooperate in good faith with Licensee to provide materials for use on Licensee’s barker channel (e.g., 10 minute versions of trailers for Included Programs, first episodes, etc.).
12.3 Licensee covenants and warrants that (i) it shall fully comply with any and all instructions, after receiving such instructions in writing, with respect to the Advertising Materials used by Licensee in connection with this Article 12 (including size, prominence and position of Advertising Materials); (ii) it shall not modify, edit or make any changes to the Advertising Materials without Licensor’s prior written consent; (iii) names and likenesses of the characters, persons and other entities appearing in or connected with the production of Included Programs (“Names and Likenesses”) shall not be used separate and apart from the Advertising Materials; and (iv) Advertising Materials, Names and Likenesses, Licensor’s name or logo, and Included Programs shall not be used so as to constitute an endorsement or testimonial, express or implied, of any party, product or service, including, without limitation, the Licensed Service, Licensee, or any program service or other service provided by Licensee; nor shall the same be used as part of a commercial tie-in. Any advertising or promotional material created by Licensee, any promotional contests or giveaways to be conducted by Licensee and any sponsorship of any Included Program (as distinguished from the standard practice of selling commercial advertising time) shall require the prior written consent of Licensor and shall be used only in accordance with Licensor’s written instructions.
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12.4 The rights granted in this Article 12 shall be subject to, and Licensee shall comply with, any and all restrictions or regulations of any applicable guild or union and any third party contractual provisions with respect to the advertising and billing of the Included Program after such receiving written notice of such restrictions or regulations from Licensor.
12.5 Appropriate copyright notices shall at all times accompany all Advertising Materials provided that such notices are provided in writing to Licensee by Licensor.
12.6 Any promotion or advertising via the Internet is subject to the terms and conditions of the Internet Promotion Policy attached hereto as Schedule B.
12.7 Within thirty (30) calendar days after the last day of the VOD/SVOD Term, , Licensee shall destroy (or at Licensor’s request, return to Licensor) all Advertising Materials for such Included Program.
12.8 For purposes of clarification, Licensee may include third-party advertisements within the SVOD Service (“Advertising”); provided, however that Licensee may not provide any Advertising of any kind preceding (i.e., “pre roll”), following (i.e., “post roll”) or within any Included Program or on any Included Program “buy” screen without Licensor’s prior written consent, which consent may be given or withheld in Licensor’s sole discretion. Promotions of the Included Programs may position Video-On-Demand and/or Subscription Video-On-Demand in a positive light, but in no event shall any such promotion, including, without limitation, any promotion of the Licensed Service or promotions on the Licensed Service or otherwise, contain negative messages about any lawful means of film distribution, including, without limitation, home video/DVD purchase or rental, provided that Licensee shall be free to promote the bona fide benefits of the Licensed Service (e.g., “No late fees!” or “Order from home!”) without reference to other means of film distribution.
12.9 Notwithstanding anything to the contrary herein, Licensee shall be permitted to make the SVOD Service, including, without limitation, the SVOD Included Programs and Advertising Materials hereunder, available for promotional purposes to non-SVOD Subscribers in the Territory, solely via the Approved Delivery Means and solely as exhibited on such non-SVOD Subscribers’ Approved Devices in accordance with all relevant provisions herein at no charge to such non-SVOD Subscribers and for a limited trial period not to exceed one (1) month in each instance (“Free Trial”). Licensee’s right to include SVOD Included Programs in each Free Trial is subject to the following:
12.9.1 In addition to the SVOD Included Programs, all other programs available on the SVOD Service must be made available for exhibition to non-SVOD Subscribers as part of the Free Trial.
12.9.2 Prior to enabling a trial period for a Free Trial for a non-SVOD Subscriber, Licensee will require such non-SVOD Subscriber to input account credentials, including, without limitation, credit card information and address.
12.9.3 Licensee may not enable a trial period for a Free Trial for any non-SVOD Subscriber who was previously authorized by Licensee using the same account credentials to participate in a Free Trial within the last 12 months.
12.9.4 Notwithstanding anything to the contrary herein, upon written notice to Licensee, Licensor shall have the right to withdraw in its sole discretion and for any reason any SVOD Included Program from being included in the Free Trial at any time. If Licensor exercises such right of withdrawal, Licensee shall (i) remove such withdrawn SVOD Included Program from the Free Trial within three (3) Business Days of receiving notice from License if the Authorized Operator is Licensee or its affiliate; and (ii) use commercially reasonable best efforts to remove such withdrawn SVOD Included Program from the Free Trial within three (3) Business Days of receiving notice from Licensor if the Authorized Operator is an unaffiliated third party. Withdrawal of an SVOD Included Program under this subsection 12.10.4 shall in no event be deemed to be, or in any way constitute a breach of this Agreement and Licensee shall not be entitled to any rights or remedies as a result of such withdrawal, including, without limitation, any right to recover for lost profits or interruption of its business.
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13. LICENSOR’S REPRESENTATIONS AND WARRANTIES. Licensor hereby represents and warrants to Licensee that:
13.1 It is a company duly organized under the laws of the state of its organization and has all requisite corporate power and authority to enter into this Agreement and perform its obligations hereunder;
13.2 The execution and delivery of this Agreement by Licensor has been duly authorized by all necessary corporate action;
13.3 This Agreement has been duly executed and delivered by, and constitutes a valid and binding obligation of Licensor, enforceable against such party in accordance with the terms and conditions set forth in this Agreement, except as such enforcement is limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors’ rights generally, and by general equitable or comparable principles;
13.4 The Included Programs do not infringe any third party intellectual property rights;
13.5 Licensor shall comply with federal, state and local laws, ordinances, rules and regulations applicable to Licensor’s grant of rights hereunder.
13.6 The performing rights to any musical works contained in each of the Included Programs, are either (i) controlled by ASCAP, BMI, SESAC or similar musical rights organizations, collecting societies or governmental entities having jurisdiction in the Territory, (ii) controlled by Licensor to the extent required for the licensing of the exhibition of the Included Programs in accordance herewith or (iii) in the public domain. Licensor does not represent or warrant that Licensee may exercise the performing rights in the music without obtaining a valid performance license and without payment of a performing rights royalty and if a performing rights royalty is required to be paid in connection with the exhibition of an Included Program, Licensee shall be responsible for the payment thereof and shall hold Licensor free and harmless therefrom. Licensor shall furnish Licensee with all necessary information regarding the title, composer, publisher, recording artist and master owner of such music.
14. LICENSEE’S REPRESENTATIONS AND WARRANTIES. Licensee hereby represents, warrants and covenants to Licensor that:
14.1 It is a company duly organized under the laws of the state of its organization and has all requisite corporate power and authority to enter into this Agreement and perform its obligations hereunder;
14.2 The execution and delivery of this Agreement by Licensee has been duly authorized by all necessary corporate action;
14.3 This Agreement has been duly executed and delivered by, and constitutes a valid and binding obligation of Licensee, enforceable against such party in accordance with the terms and conditions set forth in this Agreement;
1.1 Licensee has obtained and shall maintain all licenses and other approvals necessary to own and operate the Licensed Service in the Territory and it shall comply with federal, state and local laws, ordinances, rules and regulations applicable to Licensee’s exercise of its rights and performing its obligations hereunder;
14.4 Licensee shall be responsible for and pay the music performance rights, if any are necessary, as set forth in Section 13.4 above;
14.5 No Included Program shall be transmitted or exhibited except in accordance with the terms and conditions of this Agreement; and
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15. INDEMNIFICATION.
15.1 Licensor shall indemnify and hold harmless Licensee and its representatives (with respect to a party, its officers, directors, equity owners, employees and other representatives and its parents, subsidiaries and affiliates and their officers, directors, equity owners, employees and other representatives (collectively, the “Representatives”)) from and against any and all claims, damages, liabilities, costs and expenses, including reasonable counsel fees, arising from or in connection with the breach by Licensor of any of its representations or warranties or any material provisions of this Agreement and claims that any of the Included Programs infringe upon the trade name, trademark, copyright, music synchronization, literary or dramatic right or right of privacy of any claimant (not including music performance rights which are covered under Section 13.6 of this Schedule)) or constitutes a libel or slander of such claimant or otherwise violate any other right of a third party or violate any applicable law, rule or regulation; provided that Licensee shall promptly notify Licensor of any such claim or litigation. Notwithstanding the foregoing, the failure to provide such prompt notice shall diminish Licensor’s indemnification obligations only to the extent Licensor is actually prejudiced by such failure. In addition, Licensor shall not be required to indemnify Licensee or its Representatives for any claims resulting from Licensee exhibiting an Included Programs or using Advertising Materials in a form other than as delivered by Licensor, or due to Licensee’s editing or modification of any Included Programs or Advertising Materials, or due to Licensee’s authorization of a third party to do any of the foregoing.
15.2 Licensee shall indemnify and hold harmless Licensor and its Representatives from and against any and all claims, damages, liabilities, costs and expenses, including reasonable counsel fees, arising from or in connection with (i) the breach of any representation, warranty or other material provision of this Agreement by Licensee, (ii) the exhibition of any material (other than material contained in Included Programs or Advertising Materials or any other materials as delivered by Licensor and exhibited in strict accordance with this Agreement and Licensor’s instructions therefor), in connection with or relating, directly or indirectly, to such Included Programs, (iii) claims by Subscribers that Licensee has violated or breached its terms of service, (iv) the infringement upon or violation of any right of a third party as a result of the Included Programs being exhibited on the Licensed Service other than as a result of the exhibition of the Included Programs in strict accordance with the terms of this Agreement; provided that Licensor shall promptly notify Licensee of any such claim or litigation. Notwithstanding the foregoing, the failure to provide such prompt notice shall diminish Licensee’s indemnification obligations only to the extent Licensee is actually prejudiced by such failure.
15.3 In any case in which indemnification is sought hereunder:
15.3.1 At the indemnifying party’s option, the indemnifying party may assume the handling, settlement or defense of any such claim or litigation. If the indemnifying party assumes the handling, settlement or defense of any such claim or litigation, the party to be indemnified shall cooperate in the defense of such claim or litigation, and the indemnifying party’s obligation with respect to such claim or litigation shall be limited to holding the indemnified party harmless from any final judgment rendered on account of such claim or settlement made or approved by the indemnifying party in connection therewith, and expenses and reasonable attorneys fees of the indemnified party incurred in connection with the defense of such claim or litigation prior to the assumption thereof by the indemnifying party and any reasonable out-of-pocket expenses for performing such acts as the indemnifying party shall request. If the indemnifying party does not assume the handling, settlement or defense of any such claim or litigation, the indemnifying party shall, in addition to holding the indemnified party harmless from the amount of any damages awarded in any final judgment entered on account of such claim, reimburse the indemnified party for reasonable costs and expenses and reasonable attorneys fees of the indemnified party incurred in connection with the defense of any such claim or litigation; and
15.3.2 The party seeking indemnification shall fully cooperate with the reasonable requests of the other party in its participation in, and control of, any compromise, settlement, litigation or other resolution or disposition of any such claim. The indemnifying party shall not consent to the entry of any final judgment in any action without the indemnified party’s prior written approval except, in the case where Licensor is the indemnifying party, where such consent involves the agreement not to further exploit an Included Program.
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16. STATEMENTS; REPORTS; SCHEDULES.
16.1 Statements .
16.1.1 Beginning as soon as practicable following the full execution of this Agreement, within forty five (45) days following the end of each month of the Term, Licensee shall provide to Licensor and its designee, if any, a statement in electronic form (“Statement”) detailing the information specified by Licensor for the Licensed Service, broken out by Authorized System and by country within the Territory, from time to time including, but not limited to:
(a) the actual number of unique VOD Subscribers on the VOD Service during such month;
(b) the actual number of VOD Subscriber Transactions for each VOD Included Program for such month on the VOD Service;
(c) the Actual VOD Retail Price and Deemed VOD Price per VOD Subscriber Transaction for each VOD Included Program licensed in such month; and
(d) the actual number of SVOD views for each SVOD Included Program for such month on the SVOD Service.
Additionally, Licensee shall provide the following within forty-five (45) following the end of each month of the Terms but only if Licensee is providing such information to any other Licensee:
(a) the actual number of unique viewers of each SVOD Included Program;
(b) the average viewing duration of each SVOD Included Program, if available;
(c) the actual number of SVOD Subscribers on the SVOD Service on the first day and last day of such month; and
(d) the actual monthly subscription fee charged to SVOD Subscribers on the SVOD Service in such month..
16.1.2 Each payment made pursuant to this Agreement shall be accompanied by an accounting statement, broken out by Authorized System and by country within the Territory, including the following information:
(a) appropriate calculations of the VOD License Fee, including the aggregate VOD Per-Program License Fee due for each VOD Included Program, the Actual VOD Retail Price charged per VOD Subscriber Transaction for such VOD Included Program, and the actual number of VOD Subscriber Transactions for such VOD Included Program;
(b) appropriate calculations of the SVOD License Fee, including the number of Actual SVOD Subscribers for such reporting period; and
(c) appropriate calculations of the VOD Overages and SVOD Overages, if any.
16.2 At Licensor’s election, Licensor may appoint a third party designee to receive or access the foregoing data for purposes of reorganizing or presenting such data as requested by Licensor provided that any such designee agrees to keep such information confidential.
16.3 At Licensor’s reasonable request, which shall be made no more than twice during each year of the Term, and subject to Licensee’s reasonable prior approval, Licensee may provide to Licensor all relevant non-confidential market and subscriber information, including, but not limited to, research and studies highlighting consumer viewing and acquisition behavior, buy rate information by category/genre and in the aggregate, price sensitivity and the impact of promotions and bundling, focus group surveys and demographic studies. Licensor may make suggestions to Licensee regarding the direction of ongoing research.
17. TERMINATION.
17.1 Without limiting any other provision of this Agreement and subject to Section 17.3 of this Schedule, upon the occurrence of a Licensee Termination Event (as defined below), Licensor may, in addition to any and all
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other rights which it may have against Licensee, immediately terminate this Agreement or any license with respect to an Included Program by giving written notice to Licensee; provided however that, in the event of any Licensee Terminaiton Event as a result of an Event of Default by an Authorized Operator, Licensor agrees that it will limit its right to suspend its obligations under this Agreement or terminate solely with respect to the Authorized Operator, provided the following conditions have been satisfied: (a) Licensee continues to take all steps necessary to cure the Licensee Termination Event, including, without limitation, terminating all agreements with such Authorized Operator with respect to the Included Programs, (b) causing such Authorized Operator to cease carrying and distributing the Included Programs, and (c) causing such Authorized Operator to immediately return any and all materials related to the Included Programs. For purposes of clarification, it is acknowledged and agreed that Licensee shall remain liable for any and all damages incurred by or on behalf of Licensor in connection with such breach by the Authorized Operator. In addition to any and all other remedies in respect of a Licensee Event of Default which Licensor may have under applicable law, Licensor shall be entitled to recover from Licensee all payments past due from Licensee to Licensor hereunder, together with interest, compounded monthly, at the lesser of (x) 100% of the Prime Rate and (y) the maximum rate permitted by law, plus reasonable attorneys fees, and all costs and expenses, including collection agency fees, incurred by Licensor to enforce the provisions thereof. Furthermore, upon a Licensee Event of Termination, Licensor shall have the right to immediately suspend delivery of all Included Programs and materials that are adversely affected by the Event of Default that gave rise to the Event of Termination (the “EOT Affected Programs”), without prejudice to any of its other rights hereunder provided that Licensor shall deliver a written prior notice to the Licensee of such suspension which notice shall set forth the details of such Licensor Termination Event (an “EOT Suspension Notice”). Upon its receipt of an EOT Suspension Notice, the Licensee shall to take steps immediately to remove the EOT Affected Programs or make the EOT Affected Programs inaccessible from the Licensed Service as soon as commercially feasible (but in no event more than three (3) business days after receipt of such notice for Licensee and Authorized Operators who are affiliates). If the cause of the Event of Default that gave rise to a EOT Suspension Notice is corrected, repaired, solved or otherwise addressed, the suspension shall terminate and Licensor’s obligation to make its Included Programs available on the Licensed Service shall immediately resume. As used herein, a “Licensee Event of Default”: the occurrence of any of the following: (A) Licensee (x) materially defaults in the performance of any of its material obligations hereunder , (y) fails to make timely payment of fees under this Agreement or any other agreement between Licensor and Licensee or (z) assigns or otherwise transfers this Agreement in violation of this Agreement; or (B) upon (i) Licensee becoming unable to pay its debts; (ii) a petition being presented or a meeting being convened for the purpose of considering a resolution for the making of an administration order, the winding-up, bankruptcy or dissolution of Licensee; (iii) Licensee becoming insolvent; (iv) a petition under any bankruptcy or analogous act being filed by or against Licensee (which petition, if filed against Licensee, shall not have been dismissed by the relevant authority within thirty (30) days thereafter); (v) Licensee executing an assignment for the benefit of creditors; (vi) a receiver being appointed for the assets of Licensee; (vii) Licensee taking advantage of any applicable bankruptcy, insolvency or reorganization or any other like statute; or (viii) the occurrence of any event analogous to the foregoing. As used herein a “Licensee Termination Event” means (I) the occurrence of a curable Licensee Event of Default described in subclause (A) or subclause (B) above that Licensee has failed to cure within thirty (30) days written notice from Licensor of the occurrence of such default or, if such default is the failure to pay any installment or overage, within five (5) Business Days of notice from Licensor, (II) the occurrence of a non-curable Licensee Event of Default described in subclause (A) or in subclause (B) above.
17.2 Without limiting any other provision of this Agreement, upon the occurrence of a Licensor Termination Event (as defined below), Licensee may, in addition to any and all other rights which it may have against Licensor, immediately terminate this Agreement by providing written notice to Licensor. As used herein, a “Licensor Event of Default” means the occurence of any of the following: (A) Licensor materially defaults in the performance of any of its material obligations hereunder or (B) (i) Licensor becomes unable to pay its debts; (ii) a petition being presented or a meeting being convened for the purpose of considering a resolution for the making of an administration order, the winding-up, bankruptcy or dissolution of Licensor; (iii) Licensor becomes insolvent; (iv) a petition under any bankruptcy or analogous act being filed by or against Licensor (which petition, if filed against Licensor, shall not have been dismissed by the relevant authority within thirty (30) days thereafter); (v) Licensor executing an assignment for the benefit of creditors; (vi) a receiver being appointed for the assets of Licensor; (vii) Licensor taking advantage of any applicable bankruptcy, insolvency or reorganization or any other like statute; or (viii) the occurrence of any event analogous to the foregoing. As used herein a “Licensor Termination Event” means (I) the occurrence of a curable Licensor Event of Default described in subclause (A) or subclause (B) above that Licensor has failed to cure within thirty (30) days written notice from Licensor of the occurrence of such
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default, (II) the occurrence of a non-curable Licensee Event of Default described in subclause (A) above or subclause (B) above..
17.3 Notwithstanding anything to the contrary contained in Sections 17.1 or 17.2 hereof, no termination of this Agreement for any reason shall relieve or discharge, or be deemed or construed as relieving or discharging, any party hereto from any duty, obligation or liability hereunder which was accrued as of the date of such termination (including, without limitation, the obligation to pay any amounts payable hereunder accrued as of such date of termination).
18. EXCLUSION RIGHT. Notwithstanding anything contained in this Agreement to the contrary, Licensee hereby acknowledges that Licensor may be unable to license a program that constitutes a Current Film to Licensee on the terms set forth in this Agreement due to certain arrangements between Licensor and individuals involved in the production or financing of such program that require Licensor to obtain the approval of such individuals prior to the licensing of such program (“Third Party Exclusion Right”). In any such circumstance, Licensor hereby agrees to use reasonable, good faith business efforts to obtain the approvals necessary to allow Licensor to license such program to Licensee under the terms of this Agreement. Notwithstanding anything contained herein to the contrary, Licensor and Licensee hereby agree that Licensor’s inability to obtain such necessary approvals and to license any such program to Licensee under the terms of this Agreement shall not be deemed to be, or in any way constitute, a breach of this Agreement. If Licensor is unable to obtain such necessary approvals, Licensor shall give Licensee written notice thereof and shall have no further obligations to Licensee with respect to such program; provided, however, that Licensor shall be required to provide Licensee with a reasonably comparable substitute program..
19. ASSIGNMENT. Neither party shall assign, transfer or hypothecate its rights hereunder, in whole or in part, whether voluntarily or by operation of law (including, without limitation, by merger, consolidation or change in control), without the other’s prior written approval; provided, however that each party shall have the right to assign this Agreement, in whole or in part to any Affiliate.
20. NON-WAIVER OF BREACH; REMEDIES CUMULATIVE. A waiver by either party of any of the terms or conditions of this Agreement shall not, in any instance, be deemed or construed to be a waiver of such terms or conditions for the future or of any subsequent breach thereof. No payment or acceptance thereof pursuant to this Agreement shall operate as a waiver of any provision hereof. All remedies, rights, undertakings, obligations and agreements contained in this Agreement shall be cumulative and none of them shall be in limitation of any other remedy, right, undertaking, obligation, or agreement of either party.
21. GOVERNING LAW. This Agreement shall be interpreted and construed in accordance with the substantive laws (and not the law of conflicts) of the State of California and the United States of America with the same force and effect as if fully executed and to be fully performed therein. All actions or proceedings arising in connection with, touching upon or relating to this Agreement, the breach thereof and/or the scope of the provisions of this Section 21 (a “Proceeding”) shall be submitted to JAMS (“JAMS”) for binding arbitration under its Comprehensive Arbitration Rules and Procedures if the matter in dispute is over $250,000 or under its Streamlined Arbitration Rules and Procedures if the matter in dispute is $250,000 or less (as applicable, the “Rules”) to be held solely in Los Angeles, California, U.S.A., in the English language in accordance with the provisions below.
21.1 Each arbitration shall be conducted by an arbitral tribunal (the “Arbitral Board”) consisting of a single arbitrator who shall be mutually agreed upon by the parties. If the parties are unable to agree on an arbitrator, the arbitrator shall be appointed by JAMS. The arbitrator shall be a retired judge with at least ten (10) years experience in commercial matters. The Arbitral Board shall assess the cost, fees and expenses of the arbitration against the losing party, and the prevailing party in any arbitration or legal proceeding relating to this Agreement shall be entitled to all reasonable expenses (including, without limitation, reasonable attorney’s fees). Notwithstanding the foregoing, the Arbitral Board may require that such fees be borne in such other manner as the Arbitral Board determines is required in order for this arbitration clause to be enforceable under applicable law. The parties shall be entitled to conduct discovery in accordance with Section 1283.05 of the California Code of Civil Procedure, provided that (a) the Arbitral Board must authorize all such discovery in advance based on findings that the material sought is relevant to the issues in dispute and that the nature and scope of such discovery is reasonable under the circumstances, and (b) discovery shall be limited to depositions and production of documents unless the Arbitral
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Board finds that another method of discovery (e.g., interrogatories) is the most reasonable and cost efficient method of obtaining the information sought.
21.2 There shall be a record of the proceedings at the arbitration hearing and the Arbitral Board shall issue a Statement of Decision setting forth the factual and legal basis for the Arbitral Board's decision. If neither party gives written notice requesting an appeal within ten (10) business days after the issuance of the Statement of Decision, the Arbitral Board's decision shall be final and binding as to all matters of substance and procedure, and may be enforced by a petition to the Los Angeles County Superior Court or, in the case of Licensee, such other court having jurisdiction over Licensee, which may be made ex parte, for confirmation and enforcement of the award. If either party gives written notice requesting an appeal within ten (10) business days after the issuance of the Statement of Decision, the award of the Arbitral Board shall be appealed to three (3) neutral arbitrators (the “Appellate Arbitrators”), each of whom shall have the same qualifications and be selected through the same procedure as the Arbitral Board. The appealing party shall file its appellate brief within thirty (30) days after its written notice requesting the appeal and the other party shall file its brief within thirty (30) days thereafter. The Appellate Arbitrators shall thereupon review the decision of the Arbitral Board applying the same standards of review (and all of the same presumptions) as if the Appellate Arbitrators were a California Court of Appeal reviewing a judgment of the Los Angeles County Superior Court, except that the Appellate Arbitrators shall in all cases issue a final award and shall not remand the matter to the Arbitral Board. The decision of the Appellate Arbitrators shall be final and binding as to all matters of substance and procedure, and may be enforced by a petition to the Los Angeles County Superior Court or, in the case of Licensee, such other court having jurisdiction over Licensee, which may be made ex parte, for confirmation and enforcement of the award. The party appealing the decision of the Arbitral Board shall pay all costs and expenses of the appeal, including the fees of the Appellate Arbitrators and the reasonable outside attorneys' fees of the opposing party, unless the decision of the Arbitral Board is reversed, in which event the costs, fees and expenses of the appeal shall be borne as determined by the Appellate Arbitrators.
21.3 Subject to a party's right to appeal pursuant to the above, neither party shall challenge or resist any enforcement action taken by the party in whose favor the Arbitral Board, or if appealed, the Appellate Arbitrators, decided. Each party acknowledges that it is giving up the right to a trial by jury or court. The Arbitral Board shall have the power to enter temporary restraining orders and preliminary and permanent injunctions. Neither party shall be entitled or permitted to commence or maintain any action in a court of law with respect to any matter in dispute until such matter shall have been submitted to arbitration as herein provided and then only for the enforcement of the Arbitral Board’s award; provided, however, that prior to the appointment of the Arbitral Board or for remedies beyond the jurisdiction of an arbitrator, at any time, either party may seek pendente lite relief in a court of competent jurisdiction in Los Angeles County, California without thereby waiving its right to arbitration of the dispute or controversy under this section. All arbitration proceedings (including proceedings before the Appellate Arbitrators) shall be closed to the public and confidential and all records relating thereto shall be permanently sealed, except as necessary to obtain court confirmation of the arbitration award. Notwithstanding anything to the contrary herein, Licensee hereby irrevocably waives any right or remedy to seek and/or obtain injunctive or other equitable relief or any order with respect to, and/or to enjoin or restrain or otherwise impair in any manner, the production, distribution, exhibition or other exploitation of any motion picture, production or project related to Licensor, its parents, subsidiaries and affiliates, or the use, publication or dissemination of any advertising in connection with such motion picture, production or project. The provisions of this Section 21 shall supersede any inconsistent provisions of any prior agreement between the parties.
22. NOTICES. All notices hereunder shall be in writing and shall be sent by certified (return receipt requested) or registered mail, by air courier service, by personal delivery, or by facsimile to the address or fax number of the party for whom it is intended as follows, or to such other address or fax number as any party may hereafter specify in writing:
22.1 If to Licensor, to: CPT Holdings, Inc., c/o Sony Pictures Entertainment Inc., 10202 West Washington Boulevard, Culver City, CA 90232, Attention: Executive Vice President, Legal Affairs, Fax no.: 1-310-244-2169, with a copy to: Sony Pictures Entertainment Inc., 10202 West Washington Boulevard, Culver City, CA 90232, Attention: General Counsel, Facsimile No.: 1-310-244-0510.
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22.2 If to Licensee, to: 1550 Biscayne Boulevard, Miami, Florida 33132; Attention: Lin Cherry, SVP & General Counsel; Fax no: 305-894-3544.
22.3 General . Notice given by personal delivery or facsimile shall be deemed given upon delivery and notice given by overnight delivery or courier service shall be deemed given the first Business Day following the Business Day of delivery to the overnight delivery service.
2. FCPA. It is the policy of Licensee and Licensor to comply and contractually require that others comply with the U.S. Foreign Corrupt Practices Act, 15 U.S.C. Section 78dd-1 and 78dd-2, and all other applicable anti-corruption laws (collectively, “FCPA”). Licensee and Licensor represent, warrant and covenant that: (i) each is aware of the FCPA and will advise all persons and parties supervised by it of the requirements of the FCPA; (ii) neither party has and will not, and to its knowledge, no one acting on its behalf has taken or will take any action, directly or indirectly, in violation of the FCPA; (iii) neither Licensee nor Licensor has in the last 5 years been accused of taking any action in violation of the FCPA; (iv) neither Licensee nor Licensor has and will not cause any party to be in violation of the FCPA; (v) should Licensee or Licensor learn of, or have reason to know of, any request for payment that is inconsistent with the FCPA, Licensee or Licensor shall immediately notify the other party; and (vi) neither Licensee nor Licensor is a “foreign official” as defined under the U.S. Foreign Corrupt Practices Act, represents a foreign official, and will not share any fees or other benefits of this contract with a foreign official. Licensee and Licensor will indemnify, defend and hold harmless the other party and its respective Representatives for any and all liability arising from any violation of the FCPA caused or facilitated by Licensee or Licensor, as applicable. In the event either Licensor or Licensee deems that it has reasonable grounds to suspect that the other party has violated the FCPA, Licensor or Licensee and its respective Representatives shall have the right to review and audit, at its own expense, any and all books and financial records of the other party at any time, and Licensor or Licensee, as applicable shall be entitled partially or totally to suspend its performance hereunder until such time it is proven to the satisfaction of Licensor or Licensee as applicable that the other party has not violated the FCPA. In the event Licensor or Licensee determines, in its sole discretion (whether through an audit or otherwise), that the other has violated the FCPA, either in connection with this Agreement or otherwise, Licensor or Licensee, as applicable, may terminate this Agreement immediately upon written notice to other party. Such suspension or termination of this Agreement shall not subject Licensor or Licensee, as applicable, to any liability, whether in contract or tort or otherwise, to the other party or any third party, and the rights to indemnification or audit of Licensor or Licensee, as applicable with respect to the FCPA shall survive such suspension or termination of this Agreement.
23. FORCE MAJEURE. Neither party shall in any manner whatsoever be liable or otherwise responsible for any delay or default in, or failure of performance resulting from or arising out of or in connection with any Event of Force Majeure, and no such delay, default in, or failure of performance shall constitute a breach by either party hereunder.
24. CONFIDENTIALITY. Other than as may be required by law, or governmental authority, or to enforce its rights hereunder, and subject to the following sentence, neither party shall, without the express written consent of the other, publicly divulge or announce, or in any manner disclose to any third party, other than its attorneys, advisors, directors, employees, agents, shareholders, accountants, parent entities or auditors, and, in the case of Licensor, its profit participants, or pursuant to Guild obligations (each of whom shall be subject to the confidentiality provision hereof) on a need-to-know basis, any Confidential Information. “Confidential Information” shall mean and include (i) the specific terms and conditions of this Agreement, including, without limitation, the License Fees payable hereunder; and (ii) information and documents exchanged between the parties in connection with this Agreement; provided, however, that Confidential Information shall not include (x) information which the receiving party can demonstrate was known to the receiving party prior to disclosure by the disclosing party; (y) information which is in the public domain or which enters the public domain other than as a result of a breach of this Agreement; or (z) information that the receiving party independently develops or independently becomes aware of from a third party without, to the knowledge of the receiving party, a duty of confidentiality to the disclosing party. Neither party shall issue any press release regarding the existence of or terms of this Agreement without the prior written consent of the other party.
25. AUDIT. Licensee shall keep and maintain complete and accurate books of account and records at its principal place of business in connection with each of the Included Programs and pertaining to Licensee’s compliance with
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the terms hereof, including, without limitation, copies of the statements referred to in Article 16 of this Schedule. Licensor shall have the right during business hours to audit and check at Licensee’s principal place of business, Licensee’s books and records pertaining to the accuracy of the statements and other financial information delivered to Licensor by Licensee and the amount of the license fees paid or payable hereunder. The exercise by Licensor of any right to audit or the acceptance by Licensor of any statement or payment, whether or not the subject of an audit, shall not bar Licensor from thereafter asserting a claim for any balance due, and Licensee shall remain fully liable for any balance due under the terms of this Agreement. If an examination establishes an error in Licensee’s computation of license fees due with respect to the Included Programs, Licensee shall immediately pay the amount of underpayment, plus interest thereon from the date such payment was originally due at a rate equal to the lesser of one hundred percent (100%) of the Prime Rate and the maximum rate permitted by applicable law. If such error is in excess of 3% of such license fees due for the period covered by such audit, Licensee shall, in addition to making immediate payment of the additional license fees due plus interest in accordance with the previous sentence, pay to Licensor (i) the costs and expenses incurred by Licensor for any audit, and (ii) reasonable attorneys fees incurred by Licensor in enforcing the collection thereof. In the event that the rate of interest set forth in this Section exceeds the maximum permitted legal interest rate, such rate shall be automatically reduced to the maximum permitted legal interest rate, and all other terms and conditions of this Agreement shall remain in full force and effect.
26. LIMITATION OF LIABILITY. Neither party shall be liable to the other for special, consequential or incidental losses.
27. CAPTIONS/DRAFTING. Article, Section or other headings contained in this Agreement are for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. In interpreting the terms and conditions of this Agreement, no presumption shall be interpreted for or against a party as a result of the role of such party or such party’s counsel in the drafting of this Agreement.
28. CONFLICTING LAW OR REGULATION. If any provision in this Agreement is determined by a court or arbitrator of competent jurisdiction to be invalid or unenforceable (for any reason, including, without limitation, in connection with “competition” legislation), such determination shall not affect any other provision, each of which shall be construed and enforced as if such invalid or unenforceable provision were not contained herein.
29. NO THIRD PARTY BENEFICIARIES. This Agreement is entered into for the express benefit of the parties hereto, their successors and permitted assigns and is not intended, and shall not be deemed, to create in any other natural person, corporation, company, and/or any other entity whatsoever any rights or interest whatsoever, including, without limitation, any right to enforce the terms hereof.
30. ENTIRE UNDERSTANDING. This Agreement includes the entire understanding of the parties with respect to the subject matter hereof, and all prior agreements (written or oral) with respect to such subject matter have been merged herein. No representations or warranties have been made other than those expressly provided for herein. This Agreement may not be modified, except by a written instrument signed by the parties, and this provision may not be waived except by written instrument signed by the parties.
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SCHEDULE B
INTERNET PROMOTION POLICY [SUBJECT TO DLA MARKETING REVIEW]
Licensee’s right to promote, market and advertise (“Promote”) the upcoming exhibition(s) on the Licensed Service of the programs (“Programs”) licensed by Sony Pictures Entertainment Inc. or its affiliate (“SPE”) pursuant to the license agreement (“License Agreement”) to which this Policy is attached as set forth in the License Agreement shall include the limited, non-exclusive, non-transferable right to Promote by means of the Internet and messages transmitted electronically over the Internet (“Email”) subject to the additional terms and conditions set forth herein (the “Policy”). “Promotion” means the promotion, marketing or advertising of the exhibition of the Programs (and not the Licensed Service itself) on the Licensed Service. Each capitalized term used and not defined herein shall have the definition ascribed to it in the License Agreement. All Promotions by means of the Internet and Email are subject to the additional provisions governing Promotion set forth in the License Agreement and any other terms and conditions that may be provided to Licensee by SPE in the future. To the extent there is a conflict between this Policy and such other terms or conditions, this Policy shall govern.
1. General . Licensee shall not Promote the Programs over the Internet except by means of the website owned or controlled by Licensee (the “Website”) or by means of Email from the service licensed under the License Agreement (“Licensed Service”); provided, however, that nothing herein shall prevent Licensee from promoting the Licensed Service on any Website it determines. “Internet” means the public, global, computer-assisted network of interconnected computer networks that employs Internet Protocol (“IP”) or any successor thereto. If Licensee contracts with any third party to build, host, administer or otherwise provide services in connection with its Website, a Microsite, or any Internet or Email Promotion, then Licensee shall ensure that such third party fully complies with all provisions of this Policy pertaining thereto, including, without limitation, the requirement: (i) to conduct such activities in accordance with security standards as provided and approved by SPE; (ii) to comply with all Laws (as defined below); (iii) to maintain the privacy and security of Email addresses provided by Licensee (if any) in order to protect against unauthorized access, disclosure and use; and (iv) to not use such Email addresses (if any) for any purpose other than to deliver the Email Promotions. Licensee shall not require any user of the Website or any Microsite to register or provide personally identifiable information as a precondition to access the Website or Microsite or receipt of Email Promotions. Except as expressly authorized herein, Licensee shall not Promote any Programs on the Internet or via Email, or otherwise use on the Internet or in any Email any materials of SPE or relating to any Programs (including, without limitation, any copyright, trademark, service mark, logos or other intellectual property). In the event that Licensee wishes to pursue any Internet or Email promotional activities not expressly authorized by this Policy, each such activity shall be subject to SPE’s specific prior written approval. To the extent any Website or Microsite includes interactive features such as chatrooms, web logs, or message boards (collectively, “Interactive Features”), then as between Licensee and SPE, Licensee shall be solely responsible for the content of such Interactive Features and for any users’ conduct, and such Website or Microsite shall expressly disclaim any endorsement or sponsorship of such Interactive Features by SPE.
2. Territory . Licensee shall use commercially reasonable efforts to ensure that each Promotion is conducted in and restricted to viewers in the Territory and shall not, directly or indirectly, aim any Promotion to viewers outside of the Territory. To the extent the geographic location of an e-mail address can be determined, each Email Promotion shall be sent only to Email addresses located in the Territory.
3. Advertising/Revenue . No part of the Promotion shall: (i) advertise, market or promote any entity, product or service other than the Program; (ii) contain commercial tie-ins; (iii) sell or offer to sell any product or service; or (iv) be linked to any of the foregoing. No Promotion shall be conducted so as to generate revenue in any manner, other than as an incidence of increased viewership of the Program resulting from the Promotion. Nor shall Licensee charge or collect fees of any kind or other consideration, for access to the Promotion or any Program material, including, without limitation, registration fees, bounty or referral fees. Advertisements that are commonly known in the industry as “banner ads” and “pop-ups” that are purchased and displayed on the Website independent of and without regard to, reference to, or association with any Program shall not violate the previous sentence; provided any such advertisements (i) do not appear on or during any Microsite or any page devoted to promotion of any Program, Programs or SPE product; (ii) are placed in and appear in a manner independent of and unassociated with
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any Program, and (iii) shall be stopped and removed by Licensee within 24 hours of Licensor notifying Licensee that any such advertisements, in Licensor’s sole discretion, are unacceptable.
4. Materials . Unless specifically authorized by SPE in writing in each instance, each Promotion shall use only promotional materials: (i) from SPTI.com or from SPE press kits; (ii) strictly in accordance with the terms for their use set forth herein, in the License Agreement, on SPTI.com and in the SPE press kits, as applicable; and (iii) without editing, addition or alteration. Notwithstanding anything to the contrary contained hereinabove, under no circumstances shall Licensee remove, disable, deactivate or fail to pass through to the consumer any anti-copying, anti-piracy or digital rights management notices, code or other technology embedded in or attached to the promotional materials. If any copyrighted or trademarked materials are used in any Promotion, they shall be accompanied by and display, in each instance, the copyright, trademark or service mark notice for the relevant Program (or episode) set forth on SPTI.com or in the SPE press kit, as applicable. Still photographs posted on the Website may not exceed a resolution of 300dpi, and if offered for free download, the download resolution shall not exceed 72 dpi. Video clips and trailers shall not be made available for download. An Email Promotion may embed or attach an authorized still photograph, provided the resolution of such photograph does not exceed 72dpi.
5. Warning . Each page containing a Promotion shall (i) prominently include the following warning: “All copyrights, trademarks, service marks, trade names, and trade dress pertaining to [insert Program title] are proprietary to Sony Pictures Entertainment Inc., its parents, subsidiaries or affiliated companies, and/or third-party licensors. Except as expressly authorized in this promotion, and only to the extent so authorized, no material pertaining to [insert Program title] may be copied, reproduced, republished, uploaded, posted, transmitted, or distributed in any way.”; or (ii) prominently include a link to the Website terms and conditions page which shall prominently include either the foregoing warning or another warning against downloading, duplicating and any other unauthorized use of material on the Website.
6. URLs . None of the following shall be used as the URL or domain name for the Website or any Microsite: (i) the title or any other element of a Program, including, without limitation, character names and episode names and storylines; and (ii) copyrighted works, trade marks, service marks and other proprietary marks of SPE or a Program; provided that Licensee may use the name of the Program as a subset of Licensee’s name, registered domain name or name of the Licensed Service (e.g., if Licensee’s registered domain name is “Licensee.com,” and the Program is “XYZ,” Licensee may use the following URL: “Licensee.com/XYZ”); or as a subdirectory to name a page devoted solely to such Program within the Website or a Microsite.
7. Microsites . Licensee may, at its own cost and expense, develop a subsite located within its Website dedicated solely to the Promotion of upcoming exhibition(s) of a Program on the Licensed Service (each such subsite, a “Microsite”) subject to the following additional terms and conditions. Licensee shall notify SPE promptly of the creation of any Microsite. If SPE provides to Licensee the form and content for the Microsite (the “Template”), Licensee shall not alter or modify any element of such Template (including, without limitation, any copyright notice, trade or service mark notice, logo, photographs or other images) without SPE’s prior written approval in each instance, provided that Licensee may use any one or more elements of such Template without using all elements of the Template. All right and title in and to the Template shall remain in SPE. All right and title in and to the Microsite, including copyrights, shall vest in SPE upon creation thereof, whether or not the Microsite was created by or paid for by Licensee. To the extent that any right or title in the Microsite is deemed not to so vest in SPE, then to the fullest extent permissible by law, License hereby irrevocably assigns such right and title to SPE. Upon request by SPE, Licensee shall provide SPE with periodic traffic reports of all visits made to the Microsite during the License Period for the Program.
8. Email Promotions . Without limitation to anything contained herein, the following additional terms and conditions shall apply to Email Promotions:
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8.1 Sender’s Address . Email Promotions shall be sent by Licensee only from the Email address identified on the Website as the Licensed Service’s primary Email address, which address shall clearly identify the Licensed Service as the sender of the Email. Licensee shall not use the Program name (or any other element of a Program, including, without limitation, character names and/or episode names or storylines) or copyrighted works, trade marks, service marks or other proprietary marks of SPE or a Program as part of its Email address.
8.2 Opt-Out . Each Email Promotion: (i) shall be sent only to individuals who have actively elected to receive such Emails from the Licensed Service; and (ii) shall contain an opt-out option to prevent the receipt of further Email Promotions.
9. Costs . Except with respect to the provision of Program materials supplied on SPTI.com or in SPE press kits, Licensee shall be solely responsible for: (i) all costs and expenses of any kind or nature associated with its Promotions; (ii) all costs and expenses of any kind or nature associated with its compliance with any Laws in connection with its Promotions; and (iii) any reuse fees, third party fees and/or any other compensation of any kind or nature arising from its Promotional use of any Program materials, except as expressly authorized by SPE in this Policy.
10. Compliance With Law and Security . Notwithstanding anything to the contrary contained in this Policy, Licensee shall ensure that each Promotion, the Website, any webpages thereof that contain Program material, any Microsites, any Emails that contain Program material, and databases containing personally identifiable information and Email addresses used in Email Promotions (which must be maintained in a secure environment) and the acquisition, use and storage of all such data, shall at all times be in full compliance with and in good standing under the laws, rules, regulations, permits and self-regulatory codes of the Territory, and the country (if different) of Licensee’s domicile, including, without limitation, consumer protection, security and personal information management (PIM), privacy and anti-spam laws (collectively, “Laws”).
11. Violations . If SPE determines that the Promotion is in violation of this Policy, the License Agreement, or any applicable Law, then SPE will provide Licensee with written notice thereof. Promptly upon receipt of such notice, and in no event later than 24 hours thereafter, Licensee shall correct the specified violation (including, without limitation, by removing the offending content from the Website, Microsite or Email). Licensee’s failure to do so within the time specified shall constitute an unremedied default under the License Agreement (notwithstanding any longer cure periods provided for therein), entitling SPE to terminate the License Agreement with respect to the applicable Program by written notice with immediate effect.
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SCHEDULE C
CONTENT PROTECTION REQUIREMENTS AND OBLIGATIONS
General Content Security & Service Implementation1. Content Protection System. All content delivered to, output from or stored on a device must be
protected by a content protection system that includes a digital rights management or conditional access system, encryption and digital output protection (such system, the “Content Protection System”).
2. The Content Protection System shall:
(i) be approved in writing by Licensor (, and(ii) be fully compliant with all the compliance and robustness rules associated therewith, and (iii) use rights settings that are in accordance with the requirements in the Usage Rules, this
Content Protection Schedule and this Agreement, and(iv) be an implementation of one the content protection systems approved for UltraViolet services
by the Digital Entertainment Content Ecosystem (DECE), and said implementation meets the compliance and robustness rules associated with the chosen UltraViolet approved content protection system, or
(v) be an implementation of Microsoft WMDRM10 and said implementation meets the associated compliance and robustness rules, or
(vi) if a conditional access system, be a compliant implementation of a Licensor-approved, industry standard conditional access system, or
(vii) be a compliant implementation of other Content Protection System approved in writing by Licensor.
The UltraViolet approved content protection systems are:a. Marlin Broadbandb. Microsoft Playreadyc. CMLA Open Mobile Alliance (OMA) DRM Version 2 or 2.1d. Adobe Flash Access 2.0 (not Adobe’s Flash streaming product) e. Widevine Cypher ®f. “Cisco PowerKeyg. Marlin MS3 (Marlin Simple Secure Streaming)a. Microsoft Mediaroomsb. Motorola MediaCipherc. Motorola Encryptonite (also known as SecureMedia Encryptonite)d. Nagra (Media ACCESS CLK, ELK and PRM-ELK)e. NDS Videoguardf. Verimatrix VCAS conditional access system and PRM (Persistent Rights Management)”g. DLA’s HLS Key Exchange and DRM Solution subject to Section 10.1 below.
3. If Licensee supports or facilitates any video or audio content sharing or upload service for its Users, the Licensed Service shall use appropriate technology (e.g. digital fingerprint and filtering techniques) to prevent the unauthorized delivery and distribution of Licensor’s content across such content sharing or upload services.
4. Intentionally omitted.
5. Intentionally omitted.
6. Intentionally omitted.
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CI Plus [SUBJECT TO FURTHER DLA REVIEW]7. Any Conditional Access implemented via the CI Plus standard used to protect Licensed Content
must support the following:
7.1. Have signed the CI Plus Content Distributor Agreement (CDA), or commit in good faith to sign it as soon as reasonably possible after the Effective Date, so that Licensee can request and receive Service Operator Certificate Revocation Lists (SOCRLs). The Content Distributor Agreement is available at http://www.trustcenter.de/en/solutions/consumer_electronics.htm .
7.2. ensure that their CI Plus Conditional Access Modules (CICAMs) support the processing and execution of SOCRLs, liaising with their CICAM supplier where necessary
7.3. ensure that their SOCRL contains the most up-to-date CRL available from CI Plus LLP.
7.4. Not put any entries in the Service Operator Certificate White List (SOCWL, which is used to undo device revocations in the SOCRL) unless such entries have been approved in writing by Licensor.
7.5. Set CI Plus parameters so as to meet the requirements in the section “Outputs” of this schedule:
Streaming8. Generic Internet Streaming Requirements
The requirements in this section 8 apply in all cases where Internet streaming is supported.
8.1. Streams shall be encrypted using AES 128 (as specified in NIST FIPS-197) or other robust, industry-accepted algorithm with a cryptographic strength and key length such that it is generally considered computationally infeasible to break.
8.2. Encryption keys shall not be delivered to clients in a cleartext (un-encrypted) state.
8.3. The integrity of the streaming client shall be verified before commencing delivery of the stream to the client.
8.4. Licensee shall use a robust and effective method (for example, short-lived and individualized URLs for the location of streams) to ensure that streams cannot be obtained by unauthorized users.
8.5. The streaming client shall NOT cache streamed media for later replay but shall delete content once it has been rendered except only with respect to temporary caching and buffering.
9. Microsoft Silverlight
The requirements in this section “Microsoft Silverlight” only apply if the Microsoft Silverlight product is used to provide the Content Protection System.
9.1. Microsoft Silverlight is approved for streaming if using Silverlight 4 or later version.
10. Apple http live streaming
The requirements in this section “Apple http live streaming” only apply if Apple http live streaming is used to provide the Content Protection System.
10.1. Licensee shall migrate from use of the Apple-provisioned key management and storage for http live streaming (“HLS”) (implementations of which are not governed by any
compliance and robustness rules nor any legal framework ensuring implementations meet these rules) to use (for the protection of keys used to encrypt HLS streams) of an industry accepted DRM or secure streaming method which is governed by compliance and robustness rules and an associated legal framework, within a mutually agreed timeframe.
10.2. Http live streaming on iOS devices may be implemented either using applications or using the provisioned Safari browser.
10.3. The URL from which the m3u8 manifest file is requested shall be unique to each requesting client.
10.4. The m3u8 manifest file shall only be delivered to requesting clients/applications that have been authenticated in some way as being an authorized client/application.
10.5. The streams shall be encrypted using AES-128 encryption (that is, the METHOD for EXT-X-KEY shall be ‘AES-128’).
10.6. The content encryption key shall be delivered via SSL (i.e. the URI for EXT-X-KEY, the URL used to request the content encryption key, shall be a https URL).
10.7. Output of the stream from the receiving device shall not be permitted unless this is explicitly allowed elsewhere in the schedule. No APIs that permit stream output shall be used in applications (where applications are used).
10.8. The client shall NOT cache streamed media for later replay (i.e. EXT-X-ALLOW-CACHE shall be set to ‘NO’) except for temporary caching or buffering.
10.9. iOS implementations (either applications or implementations using Safari and Quicktime) of http live streaming shall use APIs within Safari or Quicktime for delivery and display of content to the greatest possible extent. That is, implementations shall NOT contain implementations of http live streaming, decryption, de-compression etc but shall use the provisioned iOS APIs to perform these functions.
10.10. iOS applications, where used, shall follow all relevant Apple developer best practices and shall by this method or otherwise ensure the applications are as secure and robust as possible.
10.11. iOS applications shall include functionality which detects if the iOS device on which they execute has been “jailbroken” and shall disable all access to protected content and keys if the device has been jailbroken.
REVOCATION AND RENEWAL11. The Licensee shall have a policy which ensures that clients and servers of the Content Protection
System are promptly and securely updated, and where necessary, revoked, in the event of a security breach (that can be rectified using a remote update) being found in the Content Protection System and/or its implementations in clients and servers. Licensee shall have a policy which ensures that patches including System Renewability Messages received from content protection technology providers (e.g. DRM providers) and Licensors are promptly applied to clients and servers.
ACCOUNT AUTHORIZATION12. Content Delivery. Content, licenses, control words and ECM’s shall only be delivered from a
network service to registered devices associated with an account with verified credentials. Account credentials must be transmitted securely to ensure privacy and protection against attacks.
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13. Services requiring user authentication:
The credentials shall consist of at least a User ID and password of sufficient length to prevent brute force attacks, or other mechanism of equivalent or greater security (e.g. an authenticated device identity).
Licensee shall take steps to prevent users from sharing account credentials. In order to prevent unwanted sharing of such credentials, account credentials may provide access to any of the following (by way of example):
- purchasing capability (e.g. access to the user’s active credit card or other financially sensitive information)
- administrator rights over the user’s account including control over user and device access to the account along with access to personal information.
RECORDING14. PVR Requirements. Any device receiving protected content must not implement any personal
video recorder capabilities that allow recording, copying, or playback of any protected content except as explicitly allowed elsewhere in this agreement and except for a single, non-transferrable encrypted copy on STBs and PVRs, recorded for time-shifted viewing only, and which is deleted or rendered unviewable at the earlier of the end of the content license period or the termination of any subscription that was required to access the protected content that was recorded.
15. Copying. The Content Protection System shall prohibit recording of protected content onto recordable or removable media, except as such recording is explicitly allowed elsewhere in this agreement.
Embedded Information16. The Content Protection System or playback device must not intentionally remove or interfere with
any embedded watermarks or embedded copy control information in licensed content.
17. Notwithstanding the above, any alteration, modification or degradation of such copy control information and or watermarking during the ordinary course of Licensee’s distribution of licensed content shall not be a breach of this Embedded Information Section.
Outputs18. Analogue and digital outputs of protected content are allowed if they meet the requirements in
this section and if they are not forbidden elsewhere in this Agreement..
19. Digital Outputs. If the licensed content can be delivered to a device which has digital outputs, the Content Protection System shall prohibit digital output of decrypted protected content. Notwithstanding the foregoing, a digital signal may be output if it is protected and encrypted by High-Bandwidth Digital Copy Protection (“HDCP”) or Digital Transmission Copy Protection (“DTCP”).
20. A device that outputs decrypted protected content provided pursuant to the Agreement using DTCP shall:
20.1. Map the copy control information associated with the program; the copy control information shall be set to “copy never” in the corresponding encryption mode indicator and copy control information field of the descriptor;
20.2. At such time as DTCP supports remote access set the remote access field of the descriptor to indicate that remote access is not permitted.
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21. Exception Clause for Standard Definition (only), Uncompressed Digital Outputs on Windows-based PCs, Macs running OS X or higher, IOS and Android devices). HDCP must be enabled on all uncompressed digital outputs (e.g. HDMI, Display Port), unless the customer’s system cannot support HDCP (e.g., the content would not be viewable on such customer’s system if HDCP were to be applied).
22. Upscaling: Device may scale Included Programs in order to fill the screen of the applicable display; provided that Licensee’s marketing of the Device shall not state or imply to consumers that the quality of the display of any such upscaled content is substantially similar to a higher resolution to the Included Program’s original source profile (i.e. SD content cannot be represented as HD content).
]Geofiltering23. Licensee shall take affirmative, reasonable measures to restrict access to Licensor’s content to
within the territory in which the content has been licensed.
24. Licensee shall periodically review the effectiveness of its geofiltering measures (or those of its provider of geofiltering services) and perform upgrades so as to maintain “state of the art” geofiltering capabilities. This shall include, for IP-based systems, the blocking of known proxies.
25. Without limiting the foregoing, Licensee shall utilize geofiltering technology in connection with each Customer Transaction that is designed to limit distribution of Included Programs to Customers in the Territory, and which consists of (i) for IP-based delivery systems, IP address look-up to check for IP address within the Territory and (ii) either (A) with respect to any Customer who has a credit card or other payment instrument (e.g. mobile phone bill or e-payment system) on file with the Licensed Service, Licensee shall confirm that the payment instrument was set up for a user within the Territory or (B) with respect to any Customer who does not have a credit card or other payment instrument (e.g. mobile phone bill or e-payment system) on file with the Licensed Service, Licensee will require such Customer to enter his or her home address (as part of the Customer Transaction) and will only permit the Customer Transaction if the address that the Customer supplies is within the Territory.
Network Service Protection Requirements.26. All licensed content must be received and stored at content processing and storage facilities in a
protected format using an industry standard protection systems.
27. Document security policies and procedures shall be in place. Documentation of policy enforcement and compliance shall be continuously maintained.
28. Access to content in unprotected format must be limited to authorized personnel and auditable records of actual access shall be maintained.
29. Physical access to servers must be limited and controlled and Licensee will use commercially reasonable efforts to monitor such access by a logging system. [DLA to send description of what we do]
30. Auditable records of access, copying, movement, transmission, backups, or modification of content must be securely stored.
31. Content servers must be protected from general internet traffic by “state of the art” protection systems including, without limitation, firewalls, virtual private networks, and intrusion detection systems. All systems must be regularly updated to incorporate the latest security patches and upgrades.
32. All facilities which process and store content must be available for Motion Picture Association of America and Licensor audits upon the request of Licensor all at no cost to Licensee and only with respect to Licensee’s compliance with the terms of this Agreement.
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33. Content must be returned to Licensor or securely destroyed pursuant to the Agreement at the end of the Term including, without limitation, all electronic and physical copies thereof.
High-Definition Restrictions & RequirementsIn addition to the foregoing requirements, all HD content (and all Stereoscopic 3D content) is subject to the following set of restrictions & requirements:
34. General Purpose Computer Platforms. HD content is expressly prohibited from being delivered to and playable on General Purpose Computer Platforms (e.g. PCs, Tablets, Mobile Phones) unless explicitly approved by Licensor. If approved by Licensor, the additional requirements for HD playback on General Purpose Computer Platforms will be:
34.1. Allowed Platforms
34.1.1. HD content for General Purpose Computer Platforms is only allowed on the device platforms (operating system, Content Protection System, and device hardware, where appropriate) specified elsewhere in this Agreement.
34.2. Robust Implementation
34.2.1. Implementations of Content Protection Systems on General Purpose Computer Platforms shall use hardware-enforced security mechanisms, including secure boot and trusted execution environments, where possible.
34.2.2. Implementation of Content Protection Systems on General Purpose Computer Platforms shall, in all cases, use state of the art obfuscation mechanisms for the security sensitive parts of the software implementing the Content Protection System.
34.3. Digital Outputs:
34.3.1. For avoidance of doubt, HD content may only be output in accordance with section “Digital Outputs” above unless stated explicitly otherwise below.
34.3.2. If an HDCP connection cannot be established, as required by section “Digital Outputs” above, the playback of Current Films over an output on a General Purpose Computing Platform (either digital or analogue) must be limited to a resolution no greater than Standard Definition (SD).
34.3.3. An HDCP connection does not need to be established in order to playback in HD over a DVI output on any General Purpose Computer Platform that was registered for service by Licensee on or before 31st December, 2011. Note that this exception does NOT apply to HDMI outputs on any General Purpose Computing Platform
34.3.4. With respect to playback in HD over analog outputs on General Purpose Computer Platforms that were registered for service by Licensee after 31 st
December, 2011, Licensee shall either (i) prohibit the playback of such HD content over all analogue outputs on all such General Purpose Computing Platforms or (ii) ensure that the playback of such content over analogue outputs on all such General Purpose Computing Platforms is limited to a resolution no greater than SD.
34.3.5. Notwithstanding anything in this Agreement, if Licensee is not in compliance with this Section, then, upon Licensor’s written request, Licensee will temporarily disable the availability of Current Films in HD via the Licensee service within thirty (30) days following Licensee becoming aware of such non-compliance or Licensee’s receipt of written notice of such non-compliance from Licensor until
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such time as Licensee is in compliance with this section “General Purpose Computing Platforms”; provided that:
34.3.5.1. if Licensee can robustly distinguish between General Purpose Computing Platforms that are in compliance with this section “General Purpose Computing Platforms”, and General Purpose Computing Platforms which are not in compliance, Licensee may continue the availability of Current Films in HD for General Purpose Computing Platforms that it reliably and justifiably knows are in compliance but is required to disable the availability of Current Films in HD via the Licensee service for all other General Purpose Computing Platforms, and
34.3.5.2. in the event that Licensee becomes aware of non-compliance with this Section, Licensee shall promptly notify Licensor thereof; provided that Licensee shall not be required to provide Licensor notice of any third party hacks to HDCP.
34.4. Secure Video Paths:
The video portion of unencrypted content shall not be present on any user-accessible bus in any analog or unencrypted, compressed form. In the event such unencrypted, uncompressed content is transmitted over a user-accessible bus in digital form, such content shall be either limited to standard definition (720 X 480 or 720 X 576), or made reasonably secure from unauthorized interception.
34.5. Secure Content Decryption.
Decryption of (i) content protected by the Content Protection System and (ii) sensitive parameters and keys related to the Content Protection System, shall take place such that it is protected from attack by other software processes on the device, e.g. via decryption in an isolated processing environment.
35. [DLA TO PROVIDE LANGUAGE ON HD ANALOGUE & ANALOGUE SUNSETS]
36. Additional Watermarking Requirements. [DLA TO COME BACK WITH LANGUAGE]
Physical media players manufactured by licensees of the Advanced Access Content System are required to detect audio and/or video watermarks during content playback after 1st February, 2012 (the “Watermark Detection Date”). Licensee shall require, within two (2) years of the Watermark Detection Date, that any new devices capable of playing AACS protected Blu-ray discs and capable of receiving and decrypting protected high definition content from the Licensed Service that can also receive content from a source other than the Licensed Service shall detect and respond to the embedded state and comply with the corresponding playback control rules. [INFORMATIVE explanatory note: many studios, including Sony Pictures, insert the Verance audio watermark into the audio stream of the theatrical versions of its films. In combination with Verance watermark detection functions in Blu-ray players, the playing of counterfeit Blu-rays produced using illegal audio and video recording in cinemas is prevented. All new Blu-ray players MUST now support this Verance audio watermark detection. The SPE requirement here is that (within 2 years) any devices that Licensees deploy (i.e. actually make available to subscribers) which can play Blu-ray discs (and so will support the audio watermark detection) AND which also support internet delivered content, must use the exact same audio watermark detection function on internet delivered content as well as on Blu-ray discs, and so prevent the playing of internet-delivered films recorded illegally in cinemas. Note that this requirement only applies if you deploy device yourself, and these devices support both the playing of Blu-ray content and the delivery of internet services (i.e. are connected Blu-ray players). No server side support of watermark is required by Licensee systems.]Stereoscopic 3D Restrictions & RequirementsThe following requirements apply to all Stereoscopic 3D content. All the requirements for High Definition content also apply to all Stereoscopic 3D content.
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37. Downscaling HD Analogue Outputs. All devices receiving Stereoscopic 3D Included Programs shall limit (e.g. down-scale) analogue outputs for decrypted protected Included Programs to standard definition at a resolution no greater than 720X480 or 720 X 576,”) during the display of Stereoscopic 3D Included Programs.
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SCHEDULE D
AUTHORIZED SYSTEMS
Country Network Name Network Brand Name Platforms Service
Argentina AMX Argentina S.A. ClaroMobile; Telephone; Broadband
VOD/SVOD
Argentina Telecom Argentina S.A. Arnet PlayCable; Broadband; Telephone; Mobile
VOD/SVOD
Argentina Contenidos para Internet, S.A. VICOO Broadband
VOD/SVOD
Aruba Cable Television of Aruba N.V. Setar Cable
VOD/SVOD
Brazil Videomar Rede Nordeste S.A. Net Fortaleza Cable; Broadband;
TelephoneCHECK
Brazil Net Brasil S.A./Net Serviços de Comunicação S.A. NOW!, NET Broadband; Cable;
DLA, under the MyNeon brand (or such other brand as DLA may use from time to time)
MyNeon Various
VOD/SVOD
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SCHEDULE E
VOD USAGE RULES
1. Users must have an active Account (an “Account”) prior to purchasing content for VOD rental. All Accounts must be protected via account credentials consisting of at least a userid and password.
2. VOD Included Programs shall be delivered to Approved Devices by streaming only and shall not be downloaded (save for a temporary buffer required to overcomes variations in stream bandwidth)
3. VOD Included Programs shall not be transferrable between Approved Device.
4. VOD Included Programs may be viewed during the VOD Viewing Period only.
5. All Approved Devices on which content can be viewed shall be registered with the Licensee by the User.
6. The User may register up to 5 (five) Approved Devices.
7. It shall be possible for the User to de-register devices within their allocation of 5 (five) and register new devices into the 5 (five). The frequency of this registration and de-registration by Users shall be monitored and controlled to prevent fraud.
8. With respect to each VOD Subscriber Transaction, only a single, registered Approved Device can receive a stream of the applicable VOD Included Program at any one time.
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SCHEDULE F
SVOD USAGE RULES
1. These rules apply to the playing of SVOD content on any IP connected Approved Device.
2. Users must have an active Account (an “Account”). All Accounts must be protected via account credentials consisting of at least a userid and password.
3. All content delivered to Approved Devices shall be streamed only and shall not be downloaded (save for a temporary buffer required to overcomes variations in stream bandwidth) nor transferrable between devices.
4. All devices receiving streams shall have been registered with the Licensee by the user.
5. The user may register up to 5 (five) Approved Devices which are approved for reception of SVOD streams.
6. At any one time, there can be no more than 2 (two) simultaneous streams of an SVOD Included Program.
7. Licensee shall employ effective mechanisms to discourage the unauthorised sharing of account credentials. Such effective mechanisms could include ensuring that unauthorised sharing of Account credentials exposes sensitive details or capabilities, such as significant purchase capability or credit card details.
8. Licensee shall not support or facilitate any service allowing users to share or upload video content unless Licensee employs effective mechanisms (e.g. content fingerprinting and filtering) to ensure that Licensor content (whether an SVOD Included Program or not) is not shared in an unauthorised manner on such content sharing and uploading services.
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EXHIBIT G
AVAILABILITY LIST FOR AVAIL YEAR 1
G-1document.docx
SCHEDULE H
DEEMED MEGA-HIT LIBRARY FILMS
Rel Year Walker # Title2005 R9326300000 Legend Of Zorro2003 R9524000000 Adaptation2000 W2120800000 Pollock1999 F9404400000 Girl, Interrupted1998 R9143300000 Mask Of Zorro1994 F9311000000 Next Karate Kid, The1993 R9220500000 Look Who‘s Talking Now1993 F9200400000 Remains Of The Day1991 R8927300000 Fisher King, The1989 R8751300000 Glory1989 F8751800000 Karate Kid III, The1989 R8719200000 Steel Magnolias1984 F8400700000 Karate Kid, The1983 F8302900000 Big Chill, The1982 F8201500000 Annie (1982)1979 F8080900000 19411979 F8081000000 All That Jazz1979 F7901100000 China Syndrome, The1978 F7900600000 California Suite1978 F7900200000 Midnight Express (1978)1977 F7800100000 Deep, The1976 F7601200000 Taxi Driver1975 F7501400000 Funny Lady1975 F7501500000 Shampoo1973 F7400500000 Way We Were, The1972 F7300300000 Butterflies Are Free1971 F7201600000 Last Picture Show, The 1970 F7100500000 Five Easy Pieces1969 F7001000000 Bob & Carol & Ted & Alice (1969)1969 F7001100000 Cactus Flower1969 F7000200000 Easy Rider1969 F7001600000 Marooned1968 F6900700000 Funny Girl1968 E0094786000 Lion In Winter1968 F6900900000 Oliver!1967 F6801700000 Guess Who’s Coming To Dinner (1967)1967 F6800300000 To Sir, With Love (1967)1966 F6702300000 Man For All Seasons, A1965 F6602800000 Born Free (1965)1965 F6502600000 Cat Ballou (1965)1965 F6600400000 Ship Of Fools1963 F6400600000 Running Man, The (1963)1962 F0071400000 Lawrence Of Arabia (Original)1961 F0060300000 Guns Of Navarone, The1959 F0040100000 Anatomy Of A Murder1959 F0041700000 Suddenly, Last Summer1957 F0023000000 Bridge On The River Kwai, The (Original Version)1956 F0082600000 Picnic (1955)1954 F0914700000 Caine Mutiny, The1954 F0914800000 On The Waterfront1953 F0024100000 From Here To Eternity (1953)1953 F7318500000 Salome1950 F0053100000 Born Yesterday1949 F0903500000 All The King‘s Men (1949)1949 F0903200000 Jolson Sings Again1947 F0407200000 Jolson Story, The1941 F7119800000 Here Comes Mr. Jordan1939 F0004500000 Mr. Smith Goes To Washington1938 F0003000000 You Can’t Take It With You
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1937 F7118500000 Awful Truth, The (1937)1937 F0001200000 Lost Horizon (1937)1936 F0001000000 Mr. Deeds Goes To Town (1936)1934 F7016400000 It Happened One Night1982 F8300800000 Tootsie2005 F2500200000 Longest Yard, The (2005)1996 J9366200000 Jerry Maguire2006 F2502500000 Talladega Nights: The Legend Of Ricky Bobby2007 F2700700000 Superbad2003 R9621300000 S.W.A.T. (2003)2007 F2204400000 Ghost Rider2009 X5576000000 District 91986 F8600500000 Karate Kid: Part II, The1992 F9106000000 League Of Their Own, A1979 F8000900000 Kramer Vs. Kramer1980 F8100700000 Stir Crazy2008 F2701900000 Step Brothers
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SCHEDULE I
SVOD INCLUDED PROGRAMS
RATE CARD
Early Window Films (per US BO) Per Title Rate Card < 1 million Actual SVOD Subscribers
Months after Pay + Black Period: <12 13-24 25-36>$150M $200,000 $140,000 $98,000
* After Avail Year 1, the Per-Title Rate Card set forth above shall be subject to a 5% increase in each Avail Year.
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SCHEDULE JTECHNICAL STANDARDS FOR MATERIALS
All materials must adhere to the following guidelines:
1. Materials Specifications
a. Video Specifications
1080p, 16x9 aspect ratio program material, at 24 frames per second
The video information must conform to: SMPTE 292M, SMPTE 274M at 1125 total lines with active video being 1920 samples horizontally and 1080 lines vertically.
The following criteria apply:
Luminance level should not exceed 100 IRE units.
Chrominance level should not exceed 100 IRE units in bars and 120 IRE units in program.
Set up level should not exceed zero IRE units
“Ratings Measuring” data, “Interactive” data, “water-marking” inserted in the VANC or embedded into the Active Video and/or embedded in the Audio must be noted on a separate TXT file for eMaster media files and on the physical material submitting tapes.
All titles and credits must be contained within the Safe Title Area as specified in SMPTE RP 218.
b. Audio Specifications
Program audio shall be delivered without static, dropouts, distortion, heavy dynamic compression or heavy limiting.
Reference tones shall be set at -20dbfs @ 1Khz and be present on all tracks which program audio will be present.
When measured using digital metering, 0 reference is defined as -20db down from the maximum full-scale digital level (dbfs) allowed by the AES/EBU digital audio standard of the tape machine. i.e. reference = -20dbfs.
Audio shall be digitized at 48 kHz, locked to video.
Audio shall conform to SMPTE RP-155 for reference level and headroom.
No noise reduction or pre-emphasis shall be used.
Average program level (Absolute level) shall not exceed 0VU / -20dfs except for occasional peaks normally present in soundtracks.
Peak program levels shall be determined by using Peak Program Meters (PPM). VU meters are not to be used to determine Peak Program Levels (PPL).
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Dialog loudness shall comply to ITU-R BS.1770 Loudness specification and should be measured using a Dolby LM100 Broadcast Loudness meter set to “long term” level monitoring.
All multiple track recordings must be properly phased and separation shall correspond properly with visual separation.
There should be no discernible aberration in lip sync. Audio sync relative to video frame shall not deviate by more than +/- 15ms.
c. Time Code Specification:
Continuous SMPTE drop frame time code (DFTC) as specified in SMPTE 12M shall be recorded as longitudinal time code on all delivered videotape.
The time code shall be synchronous to the recorded video.
Multiple videotape copies furnished to Operator with the same program content must contain identical time code.
If the videotape contains vertical interval time code (VITC) it shall contain the same time and be synchronous to the longitudinal time code (LTC).
SMPTE time code should be continuous from SOT (Start of Tape) at 00:58:00:00 to 60 seconds post-program.
VITC (Vertical Interval Time Code) shall be inserted in accordance with SMPTE RP188, SMPTE 291M and RP164 as outlined below; into VANC space, line 9
ID (DID) number should be set to 60h (hex) and the Secondary ID (SID) number should be set to 60h (hex). Data count word set to 10h (hex).
2. Technical Specifications for HD Media Files (eMaster).
HD eMaster Content Specification
HD Content Summary
Container Video Audio
Format MXF Format MPEG-2 Format AES3 Audio
Video Format Component. Bit Rate 1152Kbps
GOP Structure I Frames Only Sample Rate 48Khz
Profile/Level 4:2:2/High Channels 8
Resolution 1920x1080 Bits Per Sample 24
Chroma Format 4:2:2
Frame Rate 24 FPS
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Picture Scanning Type/Order Progressive
Bit Rate 50Mbps
Display Aspect Ratio 16:9
3. HD Materials Audio Track Configuration for eMaster and Tape Delivery (as applicable)
Monolingual. Surround Sound
Channel 1 – Stereo LT
Channel 2 – Stereo RT
Channel 3 – Surround Left
Channel 4 – Surround Right
Channel 5 – Surround Center
Channel 6 – Surround Low Frequency Effects (LFE)
Channel 7 – Surround Left Rear
Channel 8 – Surround Right Rear
Multilingual. Surround Sound (Dolby E 5.1+2)
Channel 1 – ENGLISH Stereo LT
Channel 2 – ENGLISH Stereo RT
Channel 3 – ENGLISH Dolby E Stream*
Channel 4 – ENGLISH Dolby E Stream*
Channel 5 – SPANISH Stereo LT
Channel 6 – SPANISH Stereo RT
Channel 7 – SPANISH Dolby E Stream*
Channel 8 – SPANISH Dolby E Stream*
Channel 9 – PORTUGUESE Stereo LT
Channel 10 – PORTUGUESE Stereo RT
H-5
Channel 11 – PORTUGUESE Dolby E Stream*
Channel 12 – PORTUGUESE Dolby E Stream*
Bilingual. Surround Sound (Dolby E 5.1+2)
Channel 1 – Stereo LT, Original Language
Channel 2 – Stereo RT, Original Language
Channel 3 – Dolby E Stream, Original Language
Channel 4 – Dolby E Stream, Original Language
Channel 5 – Stereo LT, Secondary Audio Program
Channel 6 – Stereo RT, Secondary Audio Program
Channel 7 – Dolby E Stream, Secondary Audio Program
Channel 8 – Dolby E Stream, Secondary Audio Program
Alternatively, Licensee can also accept and process the below listed audio configurations.
Bilingual: Discrete Two Channel Stereo
Channel 1 – Stereo program LT
Channel 2 – Stereo program RT
Channel 3 – Stereo, Secondary Audio Program LT
Channel 4 – Stereo, Secondary Audio Program RT
Monolingual Stereo and Surround Sound (Dolby E 5.1+2)
Channel 1 – Stereo Left LT
Channel 2 – Stereo Right RT
Channel 3 – Dolby E Stream*
Channel 4 – Dolby E Stream*
Bilingual Surround Sound (Dolby E 5.1+2)
Channel 1 – Dolby E Stream*, Original Language
H-6
Channel 2 – Dolby E Stream*, Original Language
Channel 3 – Dolby E Stream*, Secondary Audio Program
Channel 4 – Dolby E Stream*, Secondary Audio Program
4. Content Delivery Specifications – Standard Definition (SD) assets
All assets must be submitted in a digital medial file with program only, no bars and tone, no slates, no ratings cards or texts in the material. Use primary stereo mix (usually English Lt Rt). Any stereo mixes on the source tape should also be captured as stereo WAV files at native bit depth. Alternatively Licensee also accepts DigiBeta Tapes for material submission
Tapes and media files must delivered in a single continuous tape (when possible) or media file with no commercial blanks or interruptions throughout the feature (edited master).
Tapes and media files shall be free of dropouts, flash frames, and glitches.
Tapes shall be recorded on VTRs which have been maintained and calibrated in compliance with the manufacture’s specifications.
All Standard Definition (SD) materials must adhere to the following guidelines:
a. Video
Aspect ratio: Standard NTSC version of the program shall be either a 4 : 3 full screen display, 16 : 9 Full Height Anamorphic or a letterbox image in 4 : 3 display
Time Code : Longitudinal SMPTE Drop Frame Time Code
The video test signal and the program material shall meet the following technical specifications:
Video Levels: Reference color bars shall be a true indication of the program’s chroma gain and phase, sync amplitude, video and pedestal levels.
o A1 - Peak chrominance shall not exceed 110 IRE units.
o A2 - Peak luminance shall not exceed 100 IRE units.
o A3 - Pedestal shall not exceed 7.5 IRE units.
Blanking:
o B1 - Horizontal blanking shall be at 10.8 ±.02 micro seconds, maximum
o B2 - Vertical blanking shall be at 21 ± 0.5 lines, maximum.
o B3 - Both horizontal and vertical blanking shall meet RS170A specifications for NTSC
o B4 - Programs available with line 21 captioning shall be delivered with captioning intact.
o B5 - Captions must conform to specifications described in EIA document #608. Luminance level of the line 21 data must be 50 IRE ± 5 IRE.
H-7
Sync Level:
o 40 IRE units, maximum.
o Set Up/Black Level: 7.5 IRE units, maximum
SMPTE/EBU N10 Standards:
o E1 - Maximum Luminance: 700 mV
o E2 - Minimum Luminance: 0 mV
o E3 - Range: 700 mV
o E4 - Maximum Chrominance: 350 mV
o E5 - Minimum Chrominance: -350 mV
o E6 - Range: 700 mV
o E7 - Sync: -300 mV
o E8 - Peak to Peak : 1 Vpp
Luminance: If Master contains character generator or graphics inserted material, the following specifications shall be met:
o F1 - Peak luminance shall not exceed 90 IRE.
o F2 - Peak-to-peak chrominance shall not exceed 50 IRE.
o F3 - Peak chrominance plus luminance shall not exceed 100 IRE.
b. Audio
The audio dynamic range of program material must be suitable for television broadcast. Average should be between -20dB and -10dB. Instantaneous audio peaks shall not exceed +10dB over average level.
The M&E track must be in synchronization with the video and any dialogue track.
Along with the color bars, there must be a 1 kHz tone recorded at -20dB level and the program audio must reference the tone at the beginning of the tape. The tone must be on all 4 audio channels.
All audio shall be recorded with Dolby NR.
Additional Considerations For SD Materials Delivered on Tape.
Digital Betacam NTSC tape, in 525 line NTSC format, with SMPTE Drop Frame time code. No audio element can be delivered separate from the video element.
A minimum of 60 seconds of color bars and test audio tone shall be recorded on the head of the tape. The test signals must accurately reflect the program material recorded on the program tape.
H-8
10 second slate for each cut with: cut number, program title, episode number, length of program and audio configuration.
10 seconds countdown should start before the content. The last 2 seconds of the countdown should be recorded with black video.
30 seconds of black video shall be recorded after the content.
The program material shall not contain visible artifacts that are within the ability of the distributor to correct using its best reasonable efforts or visible head switching, tape scratches, or dropouts.
The recorder(s) and player(s) producing the master shall be set to factory preset settings.
Compression should be kept to a minimum and tape-to-tape or file-to-tape variable speeding shall not be utilized in generating a master for the program material.
5. Technical Specifications for Standard Definition (SD) Media Files (eMaster).
Material shall be delivered according to the SMPTE D10 specs (Aka IMX)
Container Video Audio
Format MXF
Format IMX D10 MPEG-2
Format PCM Audio
Video Format Component Bit Rate Uncompressed
GOP Structure I Frames Only Sample Rate 48Khz
Profile/Level 4:2:2 @main Channels 8
Resolution 720x512 Bits Per Sample 24
Chroma Format 4:2:2
Frame Rate 24Fps Preferred or 29.97
Picture Scanning Type/Order
Progressive (preferred)
Or interlaced @ 29.97
Bit Rate 30, 40 or 50 Mbps
Display Aspect Ratio
Same as Source (16:9 or 4:3)
H-9
6. SD Materials Audio Track Configuration for eMaster and Tape Delivery (as applicable)
Audio Monolingual Stereo
o Channel 1 – Stereo Left LT
o Channel 2 – Stereo Right RT
o Channel 3 – M&E
o Channel 4 – M&E
Audio Monolingual Stereo and Surround Sound (Dolby E 5.1+2)
o Channel 1 – Stereo Left LT
o Channel 2 – Stereo Right RT
o Channel 3 – Dolby E Stream*
o Channel 4 – Dolby E Stream*
Audio Bilingual Discrete Two Channel Stereo
o Channel 1 – Stereo Program LT, Original Language
o Channel 2 – Stereo Program RT, Original Language
o Channel 3 – Stereo, Secondary Audio Program LT
o Channel 4 – Stereo, Secondary Audio Program RT
Audio Surround sound, Dolby E 5.1+2 stream configuration:
o Channel 1: Front Left
o Channel 2: Front Right
o Channel 3: Center
o Channel 4: Low Frequency Effects (LFE)
o Channel 5: Left Rear Surround
o Channel 6: Right Rear Surround
o Channel 7: Left Total (LT)
o Channel 8: Right Total (RT)
a. Audio files
For the surround sound or alternate languages, each one of the channels on the source tape must be
H-10
recorded as an individual channel and they must comply with the following specifications:
o File tape: Wave
o Extension: WAV
o Format: PCM
o Sampling rate: 48 KHz
o Channels: Mono
o Resolution: Native bit-depth
o The audio files must conform with the master tape delivered to Licensee.
7. METADATA
A separate file containing the metadata for each asset delivered to Licensee is also required. Licensee adheres to the CableLabs specification for metadata preparation. Metadata template must be completed and returned in electronic format.
8. IMAGES
Each asset should have at least one dedicated and specific piece of artwork. All images should be finished and contain the asset’s title and/or episode title, when applicable. Digitally delivered artwork should follow the guidelines defined below:
Format: .jpeg or .tif
High-resolution (at least 150 dpi)
9. EPK & PREVIEWS & Promos
An Electronic Press Kit that includes interviews, behind the scenes previews and/or trailers are also required for each asset, when applicable and available. Tapes or digital files are accepted and it must follow the specification detailed on this document.
10. TRANSLATIONS AND SUBTITLTES
All assets must be accompanied by an original script and its translated to Portuguese and Spanish sub-file when available. Licensee uses the *.STL (EBU) default code for subtitles in Italic. The standard for Licensee subtitling follows the 37 characters per line, maximum of 2 lines per subtitle.
Alternatively, Licensee may also accept the subtitle in the formats listed below
SRT
SLT
SMI
TXT
H-11
PAQ
SUB
11. Down-Converting High Definition to Standard Definition. If Licensor supplies to Licensee programming in high definition and Licensee creates a standard definition version for the purpose of an exhibition in accordance herewith (“SD Version”) along with the high definition version (“HD Version”), Licensee:
(i) Image Composition: shall respect and preserve the original aspect ratio of the active image within the frame of the HD programming/materials when creating the SD Version. Licensee is not permitted to reformat the image aspect ratio in any way, for example, by using techniques such as pan & scan, 4X3 center-cut extraction or any other aspect ratio reformatting that will alter the original image composition of the director-approved transfer;
(ii) Color Space Conversion: acknowledges that the color spaces of HD and SD content have different gamut specifications (HD: ITU-R Rec 709, SD: ITU-R Rec 601) and that Licensee will use reasonable commercial efforts to employ widely accepted, first class devices which realize the color space conversion from HD to SD, as per SMPTE EG 36;
(iii) Sound Quality: shall not derive a two (2) channel version of the sound track from the 5.1 version but shall use the Lt/Rt version supplied by Licensor;
(iv) All Digital: shall ensure that all of the above processes involved in the creation of SD Versions will be of a digital nature and that any SD Version so created exists in a digital form and exhibits no extraneous artifacts arising from the creation process;
(v) Content Protection Requirements: shall comply with all content protection requirements described in this Agreement for any SD Version created by Licensee;
(vi) No Up-Conversion: is not authorized to up-convert SD Content to HD; and
(vii) Approved Conversion Technology: shall only use Approved Conversion Technology. “Approved Conversion Technology” means equipment conforming to industry best practice, for example, down-converters embedded in devices such as appropriately optioned Sony HDCAM and HDCAM SR VTRs, Seachange BMC or Grass Valley K2 video servers; and dedicated downconversion equipment such as Snell&Willcox Ukon or Alchemist, Digital Rapids Stream, Ateme KFE or Telestream Flip Factory, provided the aspect ratio of the original is maintained.
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