AMENDED AND RESTATED LICENSE AGREEMENT
Amended and Restated License Agreement
PRINCIPAL TERMS
THIS AMENDED AND RESTATED LICENSE AGREEMENT (THIS “AGREEMENT”) IS ENTERED INTO EFFECTIVE AS OF MARCH 31, 2008 (“EFFECTIVE DATE”) BY AND BETWEEN SONY PICTURES TELEVISION INC. (“LICENSOR”), A COMPANY ORGANIZED AND EXISTING UNDER THE LAWS OF DELAWARE AND A WHOLLY-OWNED SUBSIDIARY OF SONY PICTURES ENTERTAINMENT INC. AND DIRECTV, INC. (“LICENSEE”), A COMPANY ORGANIZED AND EXISTING UNDER THE LAWS OF DELAWARE AND A WHOLLY-OWNED SUBSIDIARY OF DIRECTV GROUP INC. THIS AGREEMENT AMENDS AND RESTATES IN ITS ENTIRETY THAT CERTAIN PAY-PER-VIEW OUTPUT AGREEMENT DATED DECEMBER 4, 1998, AS AMENDED, BY AND BETWEEN COL-STAR, INC. AND LICENSEE (“PRIOR AGREEMENT”). THE PARTIES ACKNOWLEDGE AND AGREE THAT AS OF THE EFFECTIVE DATE, THE PRIOR AGREEMENT SHALL BE TERMINATED AND COL-STAR, INC. SHALL HAVE NO OBLIGATIONS UNDER THIS AGREEMENT. FOR GOOD AND VALUABLE CONSIDERATION, THE RECEIPT AND SUFFICIENCY OF WHICH ARE ACKNOWLEDGED, THE PARTIES HERETO ENTER INTO THIS AGREEMENT ON THE TERMS AND CONDITIONS SET FORTH HEREIN.
1. Definitions.
1. For purposes of this Agreement:
1. “Actual Retail Price” shall mean, for each PPV/VOD Program, the actual amount paid or payable in U.S. Dollars by each Subscriber (whether or not collected by Licensee) on account of such Subscriber’s selection of such PPV/VOD Program from the Licensed Service pursuant to a Subscriber Transaction, after deduction of sales, use, consumption and other taxes (but not taxes creditable against income or like taxes of Licensee); provided, however, that Actual Retail Price shall in no event include any Service Charge. No other deductions shall be allowed unless otherwise agreed in writing between the parties.
2. “Affiliate” shall mean any corporation or other person or entity controlling, controlled by or under common control with a party or third person, as the case may be.
3. “Approved Device” shall mean each Target Device, Portable Device and Extender authorized by Licensee to receive the Licensed Service. “Approved Device” shall not, without Licensor’s prior written approval, include any mobile phone, or device which has the primary purpose of functioning as a game device (except when such game device is used as an Extender).
4. “Closed IP” shall mean the electronic delivery to Subscribers of an encrypted file to a Target Device by means of Internet Protocol (“IP”) using either (i) NDS or other conditional access technology licensed or owned by Licensee and/or (ii) protected by Windows Media DRM 10 (or subsequent versions) having the settings and configuration set forth in Attachment B. Licensee’s obligation to exhibit any Included Program on a Closed IP basis shall be subject to Licensor making available to Licensee such Included Program in digital file format in accordance with Section 1.0(A)(2) of Attachment E-1 or Section 2.0(A)(2) of Attachment E-2, as applicable (provided, that the foregoing does not limit the provisions set forth in Sections 8.1 and 8.2 of Attachment D in any manner whatsoever).
5. “Closed IP Effective Date” shall mean the earlier of (i) the date that is two months after the national commercial launch of the DirecTV-On-Demand Platform in the Territory (i.e., the date Licensee first offers motion pictures via the DirecTV-On-Demand Platform to all Subscribers in the Territory with equipment capable of receiving motion pictures via such DirecTV-On-Demand Platform), and (ii) June 15, 2008.
6. “Current Feature” shall mean a feature-length motion picture (i) that has a Home Video Street Date which is during the Term or not more than sixty (60) days prior to the commencement of the Term, and (ii) for which Licensor and/or any other SPE Entity controls during the applicable License Period the Necessary Rights applicable, as the case may be, to Pay-Per-View or Video-On-Demand (it being understood and agreed that the grant by Licensor or any other SPE Entity to a third party of an exclusive license to exploit, or an agreement restricting Licensor’s exploitation of, the Necessary Rights shall not be deemed to divest Licensor or such other SPE Entity of control of such Necessary Rights for any purpose hereunder). Notwithstanding anything to the contrary contained herein, if any motion picture that would qualify as a Current Feature as set forth above has a Home Video Street date that is more than ten (10) months after its Initial U.S. General Theatrical Release date or, in the case of Sony Pictures Classics releases, that is more than twelve (12) months after its Initial U.S. General Theatrical Release (if such motion picture had a Initial U.S. General Theatrical Release), then Licensee shall have the option to include or exclude such motion picture as a Current Feature hereunder (any such motion picture so excluded by Licensee as a Current Feature shall herein be referred to as an “Excluded Delayed Current Feature” and shall be a Library Film hereunder).
7. “Designated Current Feature” shall mean any theatrically released Current Feature with Domestic Box Office Receipts of no more than $80M (subject to the CPI increase set forth in Section 5.6) and designated in writing by Licensor from time to time during the Term, but not more than two (2) in each Term Year. The parties agree that the Designated Current Features for Term Year 1 shall be This Christmas and Perfect Holiday. A Designated Current Feature licensed hereunder shall be deemed a Library Film for all purposes, including, without limitation, with respect to such Designated Current Feature’s Availability Date, License Period, License Fees and exhibition commitments; provided, however, that any Designated Current Feature made available by Licensor to any Other Provider on a Pay-Per-View or Video-On-Demand basis within the later of (i) six (6) months of its Home Video Street Date, and (ii) twelve (12) months of its Initial U.S. General Theatrical Release: (a) shall be offered to Licensee as a Library PPV Program hereunder on the earliest date such Designated Current Feature is offered to any Other Provider on a Pay-Per-View and/or Video-On-Demand basis, (b) shall be offered to Licensee as a Library VOD Program hereunder on the earliest date such Designated Current Feature is offered to any Other Provider on a Pay-Per-View and/or Video-On-Demand basis; (c) shall have a Library PPV License Period that ends no earlier than the latest expiring Pay-Per-View and/or Video-On-Demand license period afforded to any Other Provider; and (d) shall have a Library VOD License Period that ends no earlier than the latest expiring Pay-Per-View and/or Video-On-Demand license period afforded to any Other Provider.
8. “DirecTV Entities” shall mean Licensee, DTV and any other present or future Subsidiary of DTV.
9. “DTV” shall mean DirecTV Group Inc. and any other entity that succeeds to all or substantially all of the assets of DirecTV Group Inc. or is the surviving entity in any merger to which DirecTV Group Inc. or any successor thereto is a party.
10. “DVR Functionality” shall mean the ability of a viewer to record, view in slow and fast motion, start, stop, pause, re-start, fast-forward, rewind, skip chapters (if chaptering is provided), and other similar functions, subject to the restrictions set forth in Section 2.2.4.4 below.
11. “Excepted Title” shall mean Talladega Nights and The Holiday.
12. “Extender” shall mean any media extender device (e.g. digital media adapters and Windows Media Center Extenders) used for the purpose of DTCP/IP and Windows Media DRM protected streaming of Included Programs from a Target Device within a Subscriber’s household, supporting the requirements set forth on Attachment A (or as may otherwise be approved in writing by Licensor from time to time). For the avoidance of doubt, in no event shall an Included Program be downloaded to an Extender.
13. “Free-On-Demand” shall mean the delivery and exhibition of a program to a consumer (i) for which such consumer is not charged a separately identifiable fee (including, without limitation, a per-program fee, a per-exhibition fee or a separate periodic fee) for the privilege of viewing one or more exhibitions of such program, (ii) the exhibition start times of which are specified by such consumer, (iii) where such exhibition is susceptible of and intended for viewing by such consumer on a viewing device, and (iv) where such exhibition shall not without Licensor’s approval be supported by commercial advertising. “Free-On-Demand” shall not include making programs available for other than Personal Use (e.g. over hotel systems) or distribution on a rental or subscription basis (provided that charging a Service Charge shall not render the offering of Free-On-Demand programming to be a subscription service for any purposes hereunder), or Video-On-Demand, Pay-Per-View and so-called electronic sell through, but shall not preclude DVR Functionality.
14. Home Use” shall mean the viewing of audio-visual programs by consumers within (i) the consumer’s regular primary residence or in any secondary residence (including, without limitation, vacation homes, mobile homes and boats) and/or (ii) locations not accessible by the general public that are owned or controlled by the consumer, such as personal vehicles and private offices.
15. “Home Video” shall mean the delivery of programming to consumers (i) by means of a video cassette, video disk, or any other physical device now known or hereafter invented on which a program is recorded, encrypted or otherwise contained on such physical device at the time such physical device is obtained by the viewer, whereby a program is displayed on a television receiver, computer or any comparable equipment now known or hereafter invented, with such physical device located in the immediate presence of the viewer, or (ii) by means of so-called “electronic sell-through.”
16. “Home Video Street Date” shall mean, for a feature-length motion picture, the date on which such motion picture is first made available to the public for Home Video sale or rental in the Territory, which, in the case of an Included Program, shall be as notified by Licensor to Licensee from time to time as such dates are set.
17. “Initial U.S. General Theatrical Release” shall mean the date of the first release of a motion picture to the general public in more than ten motion picture theaters in the United States, not including test screenings, free or paid previews or screenings primarily for award consideration.
18. “IP Transfer” shall mean the transfer via direct download IP transmission of an Included Program from a Subscriber’s Target Device to such Subscriber’s Portable Device or PC. For the avoidance of doubt, delivery of Included Programs by means of the Directv-On-Demand Platform or any other direct transmission from the Licensed Service to a Portable Device or PC is not an IP Transfer.
19. “Library Film” shall mean any Designated Current Feature, Excluded Delayed Current Feature and any feature-length motion picture that does not qualify as a Current Feature hereunder due to its failure to meet the criteria set forth in subclause (i) of Section 1.1.6.
20. “Licensed Service” shall mean the Pay-Per-View, Video-On-Demand and/or Free-On-Demand service at all times controlled solely by Licensee (or a DTV Entity which is contractually bound by the terms and conditions of this Agreement) and branded as “DIRECTV” (or a successor brand) and available to some or all Subscribers (the parties acknowledge that the name of each individual platform might not include the word “DIRECTV” (e.g., “Movies Now”)). The Licensed Service shall be composed of one or more of the following platforms: (i) the DTH satellite broadcast of programs for exhibition on a Pay-Per-View basis (“Satellite Platform”); (ii) the DTH satellite distribution of pre-scheduled programs booked remotely for recording for exhibition on a Pay-Per-View basis (“Directv Flix Platform”); (iii) the Push Download of programs for exhibition on a Video-On-Demand or Free-On-Demand basis (“Push Video-On-Demand Platform”); and (iv) the Closed IP transmission of programs for exhibition on a Video-On-Demand or Free-On-Demand basis (“Directv-On-Demand Platform”), in each case, subject always to the Usage Rules. Notwithstanding the foregoing, if Licensee wishes to syndicate (including by authorizing viral and/or user syndication; provided, however, that this shall not preclude Licensee from advertising on, and linking from, a third-party website to Licensee’s website), co-brand or jointly control with any third party that is not a DTV Entity solely the website portion of the Directv-On-Demand Platform, then Licensee shall so notify Licensor sixty (60) days prior to such syndication, co-branding or joint control of the website, and request Licensor’s approval thereof. Licensor shall have thirty (30) days from receipt of such notice to grant or withhold such approval (provided that Licensor shall use its reasonable business judgment in granting or withholding such approval). If Licensor withholds approval and Licensee proceeds to syndicate, co-brand or jointly control the website portion of the Directv-On-Demand Platform with a third party that is not a DTV Entity, then Licensor shall have the right to terminate this Agreement solely with respect to the website portion of the Directv-On-Demand Platform upon sixty (60) days prior written notice given to Licensee within such thirty (30) day period (and shall have no obligation to provide for the website portion of the Directv-On-Demand Platform any Included Programs with Availability Dates after the date Licensor sends such notice of termination to Licensee), which termination shall be Licensor’s sole and exclusive right and remedy with respect thereto. If the website portion of the Directv-On-Demand Platform is syndicated, co-branded or jointly controlled with a third party, the same shall in no event deemed to be, or in any way constitute, a breach of this Agreement. For the avoidance of doubt, the foregoing termination right shall not be triggered, and Licensee shall not be in breach of this Agreement, by a mere presence of another brand on or in connection with the Licensed Service.
21. “Major Studio” shall mean MGM, Warner Bros., Sony Pictures, 20th Century Fox, Disney, Paramount and Universal.
22. “Necessary Rights” shall mean those Pay-Per-View, Video-On-Demand, Free-On-Demand and other exploitation rights, licenses and approvals necessary for Licensor to include a motion picture as part of the License hereunder.
23. “Negative Option Basis” shall mean a fee arrangement whereby a Subscriber is charged alone, or in any combination, a Service Charge, a separate PPV Charge or VOD Charge, as applicable, or other charge but is entitled to a reduction or series of reductions thereto on a program-by-program basis in the event such Subscriber affirmatively notifies Licensee of such Subscriber’s determination not to receive or have available for reception such particular program.
24. “Pay-Per-View” shall mean the delivery and exhibition on viewing devices of a program to a consumer (i) for which such consumer pays a single per-consumer transaction fee (“PPV Charge”) for the privilege of viewing one or more exhibitions of such program, and (ii) the exhibition start times of which are specified by the provider of such program. “Pay-Per-View” shall not include making programs available for other than Personal Use (e.g., over hotel systems), or distribution on a free, ad-supported or subscription basis, or Video-On-Demand, Free-On-Demand or so-called electronic sell through, but shall not preclude DVR Functionality or remote booking of a recording of a pre-scheduled program to a Target Device.
25. “PC” shall mean an individually addressed and addressable IP-enabled desktop or laptop device with internal memory, keyboard, and monitor, designed for multiple office and other applications using a silicon chip/microprocessor architecture that is designed to receive audio-visual programming in digital electronic form over IP technology and output such programming for exhibition, which is registered on the Licensed Service to a Subscriber’s account, except as otherwise permitted pursuant to Section 2.2.4.3 below, and supports the requirements set forth on Attachment A (or as may otherwise be approved in writing by Licensor from time to time).
26. “PC Tuner” shall mean a hardware device authorized by Licensee that (i) is made available to Subscribers and enables the reception and decryption of an Included Program via Closed IP or DTH satellite signal and which transcodes such signal to a Windows Media DRM protected file and transmits such file via a secure localized connection to a Subscriber’s PC for display thereon, subject to the portability rights granted herein, (ii) is registered on the Licensed Service to a Subscriber’s account, and (iii) supports the requirements set forth on Attachment A (or as may otherwise be approved in writing by Licensor from time to time).
27. “Personal Use” shall mean Home Use and Portable Use.
28. “Portable Device” shall mean a hardware device that is (i) a portable digital video player supporting the requirements set forth on Attachment A (or as may otherwise be approved in writing by Licensor from time to time) and (ii) registered on the Licensed Service to a Subscriber’s account, except as otherwise permitted pursuant to Section 2.2.4.3 below. Licensee agrees to (a) give Licensor 60 days’ prior written notice of any Portable Device (including sufficient technical specifications thereof) that will be deployed in connection with the Licensed Service after the Effective Date, (b) make itself reasonably available to meet and confer with Licensor about such device upon Licensor’s request, and (c) certify in writing to Licensor that such device complies with all applicable terms and conditions in this Agreement (including, without limitation, the Usage Rules, and the content protection and security requirements set forth in Attachment A and in Section 10 of Attachment D).
29. “Portable Use” shall mean the private viewing by a consumer on a portable digital video player in non-public locations and, provided that the consumer’s use of the portable digital video player in such locations is personal, in public locations; provided, however, that any such viewing shall not constitute a “Portable Use” if the venue charges a fee for the viewing or for entrance into the venue for the sole purpose of the viewing, or if the viewing is on a public screen.
30. “PPV Restrictions” shall mean:
1. Licensee shall have no right to make available any Included Program to Subscribers on a Negative Option Basis or, subject to Section 11.4, to offer to Subscribers for a single fee, a package or bundle consisting of at least one Included Program and one or more other programs, products or services.
2. A PPV Charge shall be required for the privilege of viewing one or more than one exhibition via the Licensed Service of an Included Program (excluding Previews) over a period not to exceed 24 hours, subject to Sections 2.2.4.4 and 2.2.5 (the “PPV Viewing Period”).
3. The restrictions set forth in Section 2.2.4 shall apply.
31. “PPV/VOD Deemed Price” shall mean (i) for a Current PPV Program, the Current PPV Deemed Price, (ii) for a Current VOD Program, the Current VOD Deemed Price, (iii) for a Library PPV Program, the Library PPV Deemed Price, and (iv) for a Library VOD Program, the Library VOD Deemed Price.
32. “PPV/VOD Licensor Share” shall mean (i) for a Current PPV Program, the Current PPV Licensor Share, (ii) for a Current VOD Program, the Current VOD Licensor Share, (iii) for a Library PPV Program, the Library PPV Licensor Share, and (iv) for a Library VOD Program, the Library VOD Licensor Share.
33. “PPV/VOD Program” shall mean a Current PPV Program, Current VOD Program, Library PPV Program or Library VOD Program (and any combination of one or more of the foregoing, “PPV/VOD Programs”).
34. “Preview” shall mean the exhibition of a portion of an Included Program, not to exceed the first five minutes thereof, which may be made available for viewing to a Subscriber free of charge in order to encourage the Subscriber to purchase such Included Program on a Video-On-Demand or Pay-Per-View basis.
35. “Push Download” shall mean the recording of a file embodying an Included Program to a Subscriber’s Target Device at a time specified by Licensee and not in response to the request of such Subscriber, where such file, with respect to such Included Program, is susceptible of exhibition by such Subscriber at a time specified by such Subscriber solely during its License Period. Push Download shall not preclude DVR Functionality. Except as otherwise allowed under Section 9.2.3 of Attachment D, an Included Program that is Push Downloaded to a Set-Top Box shall not be visible to the Subscriber at any time prior to the commencement, or after the expiration, of such Included Program’s License Period.
36. “Service Charge” shall mean any general access charge, hardware licensing charge or other charge made on a “blanket” basis; provided, however, that if such charge permits access to the Included Programs, then such charge must relate to access to multiple program services available to Subscribers and shall not be a separate charge for the right to view Included Programs alone or together solely with the theatrical motion pictures of other providers on a pay-per-view and/or transactional video-on-demand basis.
37. “Set-Top Box” shall mean a hardware device commonly understood as a "set-top box" in the consumer products industry from time to time during the Term that is (i) made available to Subscribers for the secure reception, decryption, decoding and display on a video monitor or television set of Included Programs transmitted by DTH satellite broadcast or Closed IP (it being understood that a Set-Top Box must be capable of receiving Included Programs by DTH satellite broadcast unless such Set-Top Box is used by a Subscriber residing in a multiple dwelling unit serviced by a SMATV or similar system) (ii) registered on the Licensed Service to a Subscriber’s account, and (iii) supports the requirements set forth on Attachment A (or as may otherwise be approved in writing by Licensor from time to time). A "Set-Top Box" shall not include a PC or Portable Device.
38. “Side Loading” shall mean the transfer of an Included Program from a Subscriber’s Target Device to such Subscriber’s Portable Device or PC by means of locally connecting (physically via cable or wirelessly via a secure, localized connection) the applicable Portable Device or PC to the applicable Target Device for viewing solely on such Portable Device or PC. Subject to Section 2.2.4.2, Side Loading may include IP Transfer.
39. “SPE” shall mean Sony Pictures Entertainment Inc. and any other entity that succeeds to all or substantially all of the assets of Sony Pictures Entertainment Inc. or is the surviving entity in any merger to which Sony Pictures Entertainment Inc. or any successor thereto is a party.
40. “SPE Entities” shall mean Licensor, SPE and any other present or future Subsidiary of SPE. Licensor represents and warrants that SPE will be Licensor’s ultimate parent at all times during the Term.
41. “Subscriber” shall mean an authorized residential subscriber of the Licensed Service receiving programs on the Satellite Platform and paying a monthly subscription fee for a package of basic tier programs and/or one or more other services accessible on Approved Devices.
42. “Subscriber Transaction” shall mean a request by a Subscriber for the right to view an Included Program delivered via the Licensed Service (i) on a Pay-Per-View basis for one or more exhibitions of such Included Program within the PPV Viewing Period (whether or not Licensee actually charged or payment is actually received from the Subscriber therefor) or (ii) on a Video-On-Demand basis for one or more exhibitions of such Included Program within VOD Viewing Period (whether or not Licensee actually charges or payment is actually received from the Subscriber therefor). Each request for the right to view an Included Program delivered via the Licensed Service whether or not Licensee actually charges or payment is actually recurred from the Subscriber therefor) shall be deemed a Subscriber Transaction, except if there is a Technical Credit. In no event will a mere Preview be deemed or considered a Subscriber Transaction.
43. “Subscription Pay Television” shall mean a fully encrypted schedule of programming, (i) the signal for which originates in the Territory, (ii) that is provided by a cable television system, a master antenna system, a SMATV system, an MDS System, a DTH system, or a master antenna system which receives programming directly from a satellite to subscribers located solely within the Territory for television viewing simultaneously with the delivery of such programming, and (iii) for which the subscriber is charged a separately allocable or identifiable premium fee for the privilege of viewing such service in addition to any charges for basic television services or other similar services. “Subscription Pay Television” does not include basic television services or programming offered to subscribers only a Pay-Per-View, Video-On-Demand or Free-On-Demand basis.
44. “Subsidiary” shall mean any entity in which another entity (“Shareholder Entity”) either (i) owns or controls, directly or indirectly, more than 50% of the capital stock or similar equity interest or (ii) exercises, directly or indirectly, more than 50% of the shareholders’ voting rights; provided, however, that if pursuant to a shareholders’ agreement or other legally enforceable agreement the Shareholder Entity does not exercise control over the Pay-Per-View, Video-On-Demand and/or Free-On-Demand rights of a motion picture owned or otherwise controlled by a Subsidiary that otherwise meets the criteria specified in (i) or (ii) above and such agreement was not entered into primarily for the purpose of frustrating Licensee’s right to exhibit such motion picture pursuant to this Agreement, then such entity shall not be a “Subsidiary” of SPE for purposes hereof with respect to such motion picture.
45. “Target Device” shall mean any Set-Top Box, PC or PC Tuner that receives any Included Program directly from the Licensed Service. For the avoidance of doubt, a “Target Device” does not include an Extender.
46. “Technical Credit” shall mean (a) a good faith decision by Licensee to credit a Subscriber or refund a payment to a Subscriber in connection with an authorized Subscriber Transaction where the applicable Included Program was not properly viewable by the Subscriber as the result of a substantiated technical failure of a part of the Licensed Service, weather or some other cause outside of the such Subscriber’s control or (b) an authorized Subscriber Transaction for which Licensee does not bill the Subscriber within twenty-four (24) months of the occurrence of such Subscriber Transaction solely due to causes outside of Licensee’s control (e.g., Subscriber terminated his subscription to the Licensed Service or disconnected his Target Device from the Licensed Service immediately after completing the Subscriber Transaction and before such Subscriber Transaction was processed for billing). For clarity, documentation with respect to Technical Credits shall be subject to audit by Licensor as part of its audit of rights hereunder.
47. “Video-On-Demand” shall mean delivery and exhibition of a program to a consumer (i) for which such consumer pays a single per-consumer transaction fee (the “VOD Charge”) for the privilege of viewing one or more exhibitions of such program, (ii) the exhibition start times of which are specified by such consumer and (iii) where such exhibition is susceptible of and intended for viewing by such consumer on a viewing device. “Video-On-Demand” shall not include making programs available for other than Personal Use (e.g., over hotel systems), or distribution on a free, ad-supported, or subscription basis, or Pay-Per-View, Free-On-Demand or so-called electronic sell through, but shall not preclude DVR Functionality.
48. “VOD Restrictions” shall mean:
1. Licensee shall have no right to make available any Included Program on a Negative Option Basis or, subject to Section 11.4, to offer for a single fee, a package or bundle consisting of at least one Included Program and one or more other programs, products or services.
2. A VOD Charge shall be required for the privilege of viewing one or more than one exhibition via the Licensed Service of an Included Program (excluding Previews) over a period not to exceed 24 hours, subject to Sections 2.2.4.4 and 2.2.5 (the “VOD Viewing Period” and, together with the PPV Viewing Period, each a “Viewing Period”).
3. The restrictions set forth in Section 2.2.4 shall apply.
The following terms have the meaning set forth in the sections set forth below:
|Defined Term |Location of Definition |
|Agreement |Preamble |
|Alternate Delivery Platform |§ 9.2.5.5 |
|Availability Date |§ 6 |
|BO Categories |§ 5.6 |
|Categories |§ 5 |
|Current PPV Availability Date |§ 6.1 |
|Current PPV Deemed Price |§ 10.2.1.1 |
|Current PPV Exhibition Commitments |§ 9.2.4 |
|Current PPV License Period |§ 7.1 |
|Current PPV Licensor Share |§ 10.1.1.1 |
|Current PPV Program |§ 5.1 |
|Current VOD Availability Date |§ 6.2 |
|Current VOD Deemed Price |§ 10.2.2.1 |
|Current VOD License Period |§ 7.2 |
|Current VOD Licensor Share |§ 10.1.2.1 |
|Current VOD Program |§ 5.2 |
|Directv Flix Platform |§ 1.1.20 |
|Directv-On-Demand Platform |§ 1.1.20 |
|Domestic Box Office Receipts |§ 5.6 |
|DVR Subscriber |§ 9.2.5.5 |
|Effective Date |Preamble |
|Enhanced Features |§ 11.3 |
|FOD Exhibition Year |§ 9.6 |
|FOD Minimum Fee |§ 10.2.6 |
|Guide Placement |§ 9.4 |
|High Definition |§2.2.1 |
|Included Program |§ 5 |
|Later Current PPV Program |§ 9.2.4.2 |
|Legacy Boxes |§ 2.2.4.4 |
|Library PPV Availability Date |§ 6.3 |
|Library PPV Deemed Price |§ 10.2.3.1 |
|Library PPV License Period |§ 7.3 |
|Library PPV Licensor Share |§ 10.1.3.1 |
|Library PPV List |§ 8.3 |
|Library PPV Program |§ 5.3 |
|Library FOD Availability Date |§ 6.5 |
|Library FOD Availability Period |§ 6.5 |
|Library FOD License Fee |§ 10.2.6, 10.3.2.2 |
|Library FOD License Period |§ 7.5 |
|Library FOD List |§ 8.5 |
|Library FOD Program |§ 5.5 |
|Library VOD Availability Date |§ 6.4 |
|Library VOD Deemed Price |§ 10.2.4.1 |
|Library VOD License Period |§ 7.4 |
|Library VOD Licensor Share |§ 10.1.4.1 |
|Library VOD List |§ 8.4 |
|Library VOD Program |§ 5.4 |
|License |§ 2 |
|License Fees |§ 10 |
|License Period |§ 7 |
|Licensee |Preamble |
|Licensor |Preamble |
|Other PPV Provider |§ 2.2.1.1 |
|Other Provider |§ 2.2.1.1 |
|Other VOD Provider |§ 2.2.1.1 |
|PPV Charge |§ 1.1.24 |
|PPV Viewing Period |§ 1.1.30.2 |
|PPV/VOD License Fee |§ 10.3.2.1 |
|Prior Agreement |Preamble |
|Push Video-On-Demand Platform |§ 1.1.20 |
|Satellite Platform |§ 1.1.20 |
|Shareholder Entity |§ 1.1.44 |
|Term |§ 3 |
|Term Year |§ 3 |
|Territory |§ 4 |
|Usage Rules |§ 2.2.4 |
|Viewing Period |§ 1.1.48.2 |
|VOD Charge |§ 1.1.47 |
|VOD Viewing Period |§ 1.1.48.2 |
2. License. Licensor grants Licensee the nonexclusive right and license under copyright during the Term to distribute to and exhibit on Approved Devices each Included Program during its License Period solely to Subscribers of the Licensed Service for viewing on such Approved Devices in the Territory for Personal Use subject always to the Usage Rules, and otherwise on the terms and conditions set forth below (the “License”).
1. With respect to each Category of Included Program defined in Section 5 below, the License shall further be limited as follows:
1. Current PPV Program. The right so to distribute and exhibit each Current PPV Program during its Current PPV License Period in the medium of Pay-Per-View television broadcast by means of direct-to-home digital broadcast satellite to Target Devices, subject to the PPV Restrictions.
2. Current VOD Program. The right so to distribute and exhibit each Current VOD Program during its Current VOD License Period in the medium of Video-On-Demand television delivered by means of: (a) Push Download to Target Devices or (b) Closed IP to Target Devices, subject to the VOD Restrictions.
3. Library PPV Program. The right so to distribute and exhibit each Library PPV Program during its Library PPV License Period in the medium of Pay-Per-View television delivered by means of direct-to-home digital broadcast satellite to Target Devices, subject to the PPV Restrictions.
4. Library VOD Program. The right so to distribute and exhibit each Library VOD Program during its Library VOD License Period in the medium of Video-On-Demand television delivered by means of: (a) Push Download to Target Devices or (b) Closed IP to Target Devices, subject to the VOD Restrictions.
5. Library FOD Program. The right so to distribute and exhibit each Library FOD Program during its Library FOD License Period in the medium of Free-On-Demand television delivered by means of: (a) Push Download to Target Devices or (b) Closed IP to Target Devices.
2. Additional terms applicable to all Categories of Included Program:
1. Standard Definition/High Definition.
1. For purposes of this Agreement, “High Definition” shall mean audio-visual content with 720 or greater horizontal picture lines. For each Included Program, the License shall be limited to standard definition and shall not include the right to deliver or exhibit Included Programs in High Definition, or to deliver or exhibit Included Programs on an up-converted to High Definition basis; provided, however, that nothing herein shall require Licensee to prohibit Subscribers from upconverting an Included Program to High Definition using such Subscriber’s consumer electronics equipment. Notwithstanding the foregoing, if at any time during the Term Licensor or any other SPE Entity (i) releases any BO Category A+, A, B or C Current VOD Program or Current PPV Program in High Definition physical disc (e.g., Blu-ray Disc) or digital electronic file format, or (ii) grants any third party (whether or not an Affiliate of Licensor) Pay-Per-View provider for Home Use (or for Home Use and Portable Use, but in no event for Portable Use at the exclusion of Home Use) in the Territory (an “Other PPV Provider”) or any third party (whether or not an Affiliate of Licensor) Video-On-Demand provider for Home Use (or for Home Use and Portable Use, but in no event for Portable Use at the exclusion of Home Use) in the Territory (an “Other VOD Provider” and, together with an Other PPV Provider, each an “Other Provider”) the right to exhibit any Included Program(s) in High Definition, then this Agreement shall be deemed automatically amended such that the License shall include the right to distribute and exhibit such Included Program(s) hereunder in High Definition by means of Pay-Per-View and Video-On-Demand (subject to the last sentence of this Section 2.2.1.1.; provided, however, that the foregoing shall not apply if the grant to the Other Provider is solely of the right to exhibit any Included Program(s) in High Definition at a resolution greater than 1080p unless Licensee is willing to match all terms and conditions accepted by such Other Provider that are directly related to the grant to such Other Provider of such High Definition exhibition rights; and provided further, however, that the foregoing shall not apply if Licensor grants such right to exhibit in High Definition solely in conjunction with a day-and-date or pre-day and date test, which shall be limited to two (2) tests during the Term (such tests combined to last cumulatively for no longer than twelve (12) months), provided that each such test (i) is conducted with no more than one (1) Other Provider, (ii) is not conducted with any satellite broadcast distributor, (iii) if such Other Provider has subscribers, is limited to a number of subscribers of such Other Provider equal to or less than 10% of such Other Provider’s total subscriber base, (iv) if such Other Provider does not have subscribers, is limited to a number of users of such Other Provider equal to or less than 10% of the average number of unique users on such Other Provider’s service on a monthly basis over the previous 6 month period, (v) is geographically restricted to be less than national in scope and, if such Other Provider is a cable television system or telephone company, not on all or substantially all of such Other Provider’s local carriers, and (iv) contractually restricts such Other Provider from specifically promoting such Included Program’s availability in high definition on such Other Provider’s platform in comparative advertising against the Licensed Service or satellite broadcast (e.g., “Watch [Included Program’s name] on [Other Provider’s platform name] in high definition before such [Included Program’s name] is available via DIRECTV/satellite broadcast.”). The foregoing notice may, for the avoidance of doubt, be granted with respect to a limited number of titles in the availability notices for such titles issued by Licensor in the ordinary course of business. Notwithstanding the foregoing, Licensee shall have the right to distribute and exhibit any Library FOD Program hereunder in High Definition by means of Free-On-Demand if a High Definition version of such Library FOD Program is available. Notwithstanding the foregoing, if Licensor grants any Other Provider the right to exhibit any Included Program(s) in High Definition, this Agreement shall be deemed automatically amended as referenced above such that the License shall include the right to distribute and exhibit such Included Program(s) hereunder in High Definition by means of (x) Video-On-Demand only if the rights granted by Licensor to the Other Provider included Video-On-Demand rights to the High Definition version of such Included Program, and (y) Pay-Per-View rights in such Included Program if the rights granted by Licensor to the Other Provider included Video-On-Demand and/or Pay-Per-View rights to the High Definition version of such Included Program.
2. Without limiting Section 8 of Attachment D, Licensee understands and agrees that Included Programs made available in for High Definition distribution hereunder may be delivered with a Blu-ray tag (which shall in no event exceed 10 seconds in duration) on each Picture Master, and such Blu-ray tag may not be deleted, cut, or otherwise removed and must be exhibited with each Included Program distributed in High Definition.
2. Advertising and Promotion. For each Included Program, the License shall include the right to advertise and promote the distribution and exhibition of each Included Program hereunder on the terms and conditions set forth herein.
3. Previews. For each Included Program other than a Library FOD Program, the License shall include the right to exhibit Previews, subject, on a prospective basis, to contractual restrictions of which Licensor notifies Licensee (which Preview shall be subject to the same level of parental “lock-out” as the Included Program to which such Preview applies); provided, however, if the length of a Preview shall cause Licensor to be liable pursuant to a guild or union agreement to pay a residual, reuse or other fee in connection therewith, then Licensee shall, at its option, either utilize an amount of time for such Preview such that Licensor will not be so liable (if Licensor is not yet held so liable), or indemnify Licensor for the cost of such residual, reuse or other fee pursuant to Section 16 of Attachment D hereto. If Licensor provides any Other Provider with a Preview right that exceeds five minutes in duration, then Licensor shall provide Licensee with such increased time for Previews subject to the same terms and conditions applicable to such Other Provider. Licensor may, on a case-by-case basis, notify Licensee that Licensor believes, in good faith and on a non-discriminatory basis vis-à-vis an Other Provider to which Licensor licenses any Included Program, that it is inappropriate to display a Preview of such Included Program (which notice shall specify the particular item(s) which gives rise to such belief), in which event Licensee shall not exhibit such Previews.
4. Usage Rules – content outside of Early Window. The License granted herein shall be subject to the “Usage Rules” set forth in this Section 2.2.4. Upon consummation by a Subscriber of a Subscriber Transaction for an Included Program during such Included Program’s License Period, the following Usage Rules shall apply:
1. The Included Program shall be viewable via any Set-Top Box or PC Tuner registered to such Subscriber’s account and, subject to Sections 2.2.4.2 and 2.2.4.3 below, via no more than a combined total of five (5) Portable Devices and/or PCs taken together (e.g., 3 Portable Devices and 2 PCs, or 1 Portable Device and 4 PCs, or 5 Portable Devices and no PCs, etc.). Licensee represents and warrants that the five (5) other Major Studios with whom Licensee has executed a license agreement as of the Effective Date have authorized Licensee to authorize their respective programs to be viewable on, for the payment of a single per-transaction fee by the Subscriber, a combined total of five (5) or more PCs and Portable Devices registered to such Subscriber’s account in addition to the Set-Top Boxes and PC Tuners registered to such Subscriber’s account.
2. Any transfers of an Included Program from a Target Device to a Portable Device or a PC shall be solely by means of Side Loading; provided, however, that Licensee may be authorized to authorize IP Transfers if Licensee implements either (i) a secure and commercially reasonable DRM solution with proximity controls that is approved in writing by Licensor (such approval not to be unreasonably withheld or delayed) or (ii) a version of Windows Media DRM containing such proximity controls when such version becomes commercially available.
3. The Included Program shall be viewable only via Approved Devices registered to such Subscriber. Notwithstanding the foregoing, and without limiting any other provision of this Agreement, a PC and Portable Device receiving a transfer of an Included Program (directly or indirectly via a PC) from a PC Tuner need not be registered to such Subscriber’s account (provided that Licensee shall not advertise to Subscribers that such devices need not be registered) during a period commencing on the first full commercial deployment of the PC Tuner to Subscribers and ending on the earliest of (i) 12 months after the date on which Licensee receives the Microsoft PlayReady SDK suited for the PC Tuner; (ii) 12 months after the date on which the number of PC Tuners deployed to Subscribers exceeds 50,000, and (iii) a date on which Licensee enables the registration of PCs and Portable Devices receiving programming from the PC Tuner for all other Major Studios. Licensee represents and warrants the programming of the five (5) other Major Studios with whom Licensee has executed a license agreement as of the Effective Date will be made available on the Licensed Service for delivery to a PC Tuner and for transfer from a PC Tuner to an unregistered device, consistent with the terms herein.
4. Notwithstanding anything to the contrary contained herein, the Licensed Service may enable a Subscriber to take an independent action to record or download (collectively, “Record”) an Included Program on such Subscriber’s Approved Devices; provided, that, commencing on (a) the Effective Date with respect to Approved Devices other than Set-Top Boxes and (b) April 25, 2008 with respect to Set-Top Boxes only (the “STB Expiration Deadline”), any Included Program Recorded by such Subscriber on any Approved Device shall be deleted or rendered inaccessible from such Approved Device upon (i) with respect to Included Programs other than Library FOD Programs, twenty-four (24) hours after such Subscriber exhausts any Preview rights with respect to such Recorded Included Program, and (ii) with respect to Library FOD Programs, the end of such Included Program’s Library FOD License Period; provided, further that Licensor agrees to enforce the same auto-deletion policy on Other Providers so that Licensee is not competitively disadvantaged in a material way as against any Other Provider. Notwithstanding anything to the contrary contained herein, with respect to Pay-Per-View and Video-On-Demand exhibitions ordered by a Subscriber in advance via telephone or the Internet and Recorded by such Subscriber on a Set-Top Box, such Recorded Included Program shall be deleted or rendered inaccessible no later than 4:00 a.m. local time two days after the day of the initial Recording on such Set-Top Box. Notwithstanding anything to the contrary contained herein, Licensee represents and warrants and Licensor acknowledges that there are approximately (a) 130,000 standard definition first generation DIRECTV TIVO-integrated DVR Set-Top Boxes (“TIVO Set Top Boxes”) and (b) approximately 33,000 Microsoft Ultimate boxes (collectively, such boxes, “Legacy Boxes”) which are the only DVR-integrated Set-Top Boxes issued by Licensee technically incapable of complying with this Section 2.2.4.4. Licensor acknowledges that the failure of such Legacy Boxes to meet such requirement during the Term shall not be deemed a breach of this Agreement. Licensee represents and warrants that it will not issue any more Legacy Boxes after the date hereof. In addition, the parties acknowledge that Licensee will endeavor in good faith to obtain TIVO’s cooperation in the design of software necessary to enable TIVO Set-Top Boxes (other than the Legacy Boxes) to meet the foregoing deletion capabilities by the STB Expiration Deadline, provided that it is understood and agreed that (i) the foregoing capabilities will not be effective with respect to any Subscriber’s TIVO Set-Top Box until such Subscriber connects such Subscriber’s TIVO Set-Top Box to the Licensed Service after Licensee has implemented the enabling software and (ii) Subscriber’s failure so to connect his TIVO Set-Top Box to the Licensed Service shall not constitute a breach hereunder. Notwithstanding anything to the contrary contained herein, Licensee’s unintentional failure to meet the STB Expiration Deadline with respect to any of its Set-Top Boxes shall not be deemed a breach of this Agreement; provided that Licensee is using commercially reasonable efforts to remediate such failure, and such failure does not last on a material number of Set-Top Boxes for a cumulative period of over 12 months. In the event of a breach by Licensee of this Section 2.2.4.4, Licensor shall have the right to terminate this Agreement with respect to the affected platform(s), which termination shall be Licensor’s sole right and exclusive remedy with respect thereto.
5. Without limiting any other right of Licensor hereunder, Licensee’s rights under this Section 2.2.4 shall at all times be subject to Licensee’s compliance with Section 10.2.2 of Attachment D.
6. If at any time during the Term Licensee is competitively disadvantaged in a material way by the Usage Rules as against any Other Provider with different usage rules for the comparable exhibition of any Included Program, Licensee shall have the right to notify Licensor in writing thereof. Licensor shall, within 30 days after receipt of the foregoing notice, (i) review the usage rules that Licensor approved for such Other Provider (taking into consideration implementations applicable to such usage rules, including, without limitation, platform, device, technology, territory and content protection), and (ii) if and to the extent Licensee has been so competitively disadvantaged, and subject to any confidentiality restrictions, notify Licensee of all terms and conditions directly related to the implementation of such usage rules by such Other Provider. Licensee shall have the right (but not the obligation), exercisable within 30 days after receipt of the foregoing written notice, to match such directly related terms and conditions (if Licensee is not reasonably capable of complying with such terms and conditions (taking into consideration Licensee’s technology and national footprint), then Licensor shall use commercially reasonable efforts to provide substantially comparable terms and conditions with which Licensee is capable of complying with respect to all platforms of the Licensed Service; it being agreed and acknowledged by Licensee that Licensor may not be able to accommodate all platforms despite commercially reasonable efforts). Licensor will impose any such terms and conditions on a non-discriminatory basis. If Licensee exercises the foregoing right, this Agreement shall be deemed automatically amended to incorporate such directly related terms and conditions, including, without limitation, such different usage rules with respect to Licensee’s exhibition of the Included Programs.
5. Usage Rules –Early Window content. The License granted herein for Early Window Content shall be subject to the “Usage Rules” set forth in this Section 2.2.5. Upon consummation by a Subscriber of a Subscriber Transaction for an Included Program during such Included Program’s License Period, the following Usage Rules shall apply:
1. The Included Program shall be viewable only via any Set-Top Box registered to such Subscriber’s account.
2. Notwithstanding anything to the contrary contained herein, the Licensed Service may enable a Subscriber to take an independent action to record or download (collectively, “Record”) an Included Program on such Subscriber’s Set-Top Box; provided, that, any Included Program Recorded by such Subscriber on any Approved Device shall be deleted or rendered inaccessible from such Set-Top Box upon twenty-four (24) hours after such Subscriber exhausts any Preview rights with respect to such Recorded Included Program. Notwithstanding anything to the contrary contained herein, with respect to Pay-Per-View and Video-On-Demand exhibitions ordered by a Subscriber in advance via telephone or the Internet and Recorded by such Subscriber on a Set-Top Box, such Recorded Included Program shall be deleted or rendered inaccessible no later than 4:00 a.m. local time two days after the day of the initial Recording on such Set-Top Box.
3. Without limiting any other right of Licensor hereunder, Licensee’s rights under this Section 2.2.4 shall at all times be subject to Licensee’s compliance with Section 10.2.2 of Attachment D.
6. Viewing Period MFN for Licensee. If at any time during the Term, Licensor or any other SPE Entity grants any Other Provider a longer PPV Viewing Period and/or VOD Viewing Period with respect to any Included Program, then Licensor shall notify Licensee in writing thereof and of any terms and conditions contained in the agreement between Licensor or any other SPE Entity and such Other Provider with respect to such Included Program that are directly related to such longer PPV Viewing Period and/or VOD Viewing Period, as applicable. Such notice may, for the avoidance of doubt, be granted with respect to a limited number of titles in the availability notices for such titles issued by Licensor in the ordinary course of business. Licensee shall have the right (but not the obligation), exercisable within 30 days after receipt of the foregoing written notice, to match such directly related terms and conditions with respect to such Included Program (if Licensee is not reasonably capable of complying with such terms and conditions (taking into consideration Licensee’s technology and national footprint), then Licensor shall use commercially reasonable efforts to provide substantially comparable terms and conditions with which Licensee is capable of complying with respect to all platforms of the Licensed Service; it being agreed and acknowledged by Licensee that Licensor may not be able to accommodate all platforms despite commercially reasonable efforts). Licensor will impose any such terms and conditions on a non-discriminatory basis. If Licensee exercises the foregoing right, this Agreement shall be deemed automatically amended such that the License shall include such longer Viewing Period(s) with respect to the exploitation hereunder of (i) Video-On-Demand rights in such Included Program only if the rights granted by Licensor to the Other Provider included Video-On-Demand rights to such Included Program, and (ii) Pay-Per-View rights in such Included Program if the rights granted by Licensor to the Other Provider included Video-On-Demand and/or Pay-Per-View rights to such Included Program.
7. Place-Shifting. If at any time during the Term Licensor or any SPE Entity allows any Other Provider to generally implement place-shifting technology in connection with such Other Provider’s distribution or exhibition of Included Programs, then Licensor shall notify Licensee in writing thereof and of any terms and conditions that are directly related to the allowance of such implementation by such Other Provider. Licensee shall the right (but not the obligation), exercisable within 30 days after the receipt of the foregoing notice, to match such directly related terms and conditions (if Licensee is not reasonably capable of complying with such terms and conditions (taking into consideration Licensee’s technology and national footprint), then Licensor shall use commercially reasonable efforts to provide substantially comparable terms and conditions with which Licensee is capable of complying with respect to all platforms of the Licensed Service; it being agreed and acknowledged by Licensee that Licensor may not be able to accommodate all platforms despite commercially reasonable efforts). Licensor will impose any such terms and conditions on a non-discriminatory basis. If Licensee elects to match, this Agreement shall be automatically amended to incorporate such directly related terms and conditions, including, without limitation, the allowance of the general implementation of the same or substantially similar place-shifting technology in connection with Licensee’s exhibition of the Included Programs.
8. Rights Reserved. All licenses, rights and interests in, to and with respect to the Included Programs and means of exhibition not specifically granted herein to Licensee, and all other rights not expressly granted hereunder, shall be and are specifically entirely reserved to Licensor. The licenses, rights and interests granted to Licensee herein are non-exclusive and accordingly they may be fully exploited and utilized by Licensor (subject to the other terms of this Agreement) without regard to the extent to which any such rights may be competitive with Licensee or the licenses, rights and interests granted hereunder. Licensee acknowledges and agrees that the License granted herein does not include the right to transmit or exhibit any Included Program (i) over hotel/motel pay-per-view or video-on-demand or free-on-demand systems, (ii) to mobile phones, or (iii) to game devices, except when such game devices are used as Extenders.
3. Term. “Term” shall mean the period during which Licensor is obligated to make Included Programs available to Licensee for licensing hereunder, and Licensee is obligated to license such Included Programs as and to the extent set forth herein, and shall commence on the Effective Date and expire on the date five (5) years thereafter (“Expiration Date”); provided, however, that Licensor and Licensee’s rights and obligations hereunder with respect to any Included Program that has an Availability Date during the Term shall continue even after the Term until the conclusion of such Included Program’s License Period. The period commencing on the Effective Date and ending on December 31, 2008 shall be “Term Year 1,” the period commencing on January 1, 2009 and ending on December 31, 2009 shall be “Term Year 2,” the period commencing on January 1, 2010 and ending on December 31, 2010 shall be “Term Year 3,” the period commencing on January 1, 2011 and ending on December 31, 2011 shall be “Term Year 4,” and the period commencing on January 1, 2012 and ending on the Expiration Date shall be “Term Year 5,” and each such periods may be referred to herein as a “Term Year”. For the avoidance of doubt, the rights and obligations of Licensor and Licensee may expressly or by implication precede the Effective Date or survive the expiration of the Term.
4. Territory. “Territory” shall mean the United States, its territories and possessions, including all Native American reservations, all embassies, consulates and other foreign government possessions located therein, and, provided that exhibitions therein are primarily in the English language, Puerto Rico.
5. Included Programs. Each Current Feature and Library Film licensed hereunder shall be an “Included Program” and each Included Program shall fall from time to time in one or more of the “Categories” set forth below.
1. Current PPV Program. “Current PPV Program” shall mean each Current Feature that has a Current PPV Availability Date during the Term; it being agreed that such Included Program shall be a Current PPV Program only during such Included Program’s Current PPV License Period.
2. Current VOD Program. “Current VOD Program” shall mean each Current Feature that has a Current VOD Availability Date during the Term; it being agreed that such Included Program shall be a Current VOD Program, only during such Included Program’s Current VOD License Period.
3. Library PPV Program. “Library PPV Program” shall mean each Library Film that has a Library PPV Availability Date during the Term; it being agreed that such Included Program shall be a Library PPV Program only during such Included Program’s Library PPV License Period.
4. Library VOD Program. “Library VOD Program” shall mean each Library Film that has a Library VOD Availability Date during the Term; it being agreed that such Included Program shall be a Library VOD Program only during such Included Program’s Library VOD License Period.
5. Library FOD Program. “Library FOD Program” shall mean each Library Film that has a Library FOD Availability Date during the Term; it being agreed that such Included Program shall be a Library FOD Program only during such Included Program’s Library FOD License Period.
6. Domestic Box Office Categories. In addition, each Included Program shall be classified by Domestic Box Office Receipts, if any, into the following “BO Categories”:
|A+ |>/= $100M |
|A |>/= $50M to < $100M |
|B |>/= $25M to < $50M |
|C |>/= $10M to < $25M |
|D |>/= $5M to < $10M |
|E |< $5M & Non-Theatrical Releases |
As used herein, “Domestic Box Office Receipts” shall mean, with respect to an Included Program, the aggregate box office revenue from the theatrical release of such Included Program in the United States and Canada as reported in Daily Variety, or, if not available in Daily Variety, then in The Hollywood Reporter or, if also not available in The Hollywood Reporter, then by EDI, or, if not available from EDI, then by another objective trade source agreed by Licensee and Licensor, in each case, as of such Included Program’s Home Video Street Date. The foregoing BO Categories thresholds shall be subject to annual increases effective on each January 1 during the Term at the rate of CPI-U.S. City Average (All Items) taking 2008 as the base year.
7. Library PPV Programs/Library VOD Programs MFN. Any Library Film offered by Licensor or any other SPE Entity to any Other Provider in any annual availability list on a Video-On-Demand or Pay-Per-View basis shall be offered to Licensee as a Library PPV Program and a Library VOD Program as such titles may be cleared for each platform of the Licensed Service. If Licensor alters its general practice of offering Library Films to Other Providers on annual availability lists, then Licensor shall offer Library Films to Licensee according to the same altered practice.
8. Current Feature Rights. If at any time during the Term, Licensor and other SPE Entities collectively fail to control the Necessary Rights with respect to the exploitation hereunder of Pay-Per-View or Video-On-Demand rights in substantially all feature length motion pictures theatrically released by any SPE Entity during the Term (excluding pictures acquired by a SPE Entity due to such SPE Entity’s merger with a third party rights holder or acquisition of a third party film library), Licensee shall have the right to terminate this Agreement by delivering thirty (30) days prior written notice to Licensor. Licensor’s mere failure of the foregoing shall in no event 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 failure, except as otherwise expressly set forth in this Section 5.8. Licensor shall be deemed to control the Necessary Rights in a Current Feature or Library Film if any other SPE Entity controls such rights.
6. Availability Date. “Availability Date” shall mean, for an Included Program, the first date of its License Period and for each Category of Included Program shall be as set forth below.
1. Current PPV Availability Date. “Current PPV Availability Date” shall mean, for a Current Feature, a date established by Licensor in its discretion; provided, however, that, in all events, such date for any Current Feature (except with respect to Designated Current Features) shall be no later than 60 days after such Current Feature’s Home Video Street Date; provided, further, that for any Current Feature (other than an Excepted Title), Licensor shall offer Licensee as a Current PPV Availability Date the earliest date such Current Feature is offered to any Other Provider on a regular Pay-Per-View and/or regular Video-On-Demand basis (i.e., the first date offered to any Other Provider after such Current Feature’s Home Video Street Date, such provision not being intended to expand Licensor’s obligations under Section 8.3 below).
2. Current VOD Availability Date. “Current VOD Availability Date” shall mean for a Current Feature, a date established by Licensor in its discretion; provided, however, that such date for any Current Feature (except with respect to Designated Current Features) shall be no later than 60 days after such Current Feature’s Home Video Street Date; provided, however that for any Current Feature (other than an Excepted Title), Licensor shall offer Licensee as a Current VOD Availability Date the earlier date such Current Feature is offered to any Other Provider on a regular Pay-Per-View and/or Video-On-Demand basis (i.e., the first date offered to any Other Provider after such Current Feature’s Home Video Street Date, such provision not being intended to expand Licensor’s obligations under Section 8.4 below).
3. Library PPV Availability Date. “Library PPV Availability Date” shall mean, for a Library Film, a date established by Licensor in its discretion; provided, however, that such date is no earlier than 61 days after such Library Film’s Home Video Street Date. Licensor shall not be obligated to establish a Library PPV Availability Date for any Library Film except as may be provided in Section 8.3.
4. Library VOD Availability Date. “Library VOD Availability Date” shall mean, for a Library Film, a date established by Licensor in its discretion; provided, however, that such date is no earlier than 61 days after such Library Film’s Home Video Street Date. Licensor shall not be obligated to establish a Library VOD Availability Date for any Library Film except as may be required under Section 8.4.
5. Library FOD Availability Date. “Library FOD Availability Date” shall mean, for a Library Film, a date that falls within a period established by Licensor in its discretion (“Library FOD Availability Period”), and is selected by Licensee in its discretion; provided, however, that such date is no earlier than 61 days after such Library Film’s Home Video Street Date. Licensor shall not be obligated to establish a Library FOD Availability Date for any Library Film except as may be required under Section 8.5.
6. Concurrent or Pre-Home Video Street Date Availability Date MFN. If Licensor or any other SPE Entity makes any theatrically released Current PPV or Current VOD Program available to any Other Provider on a date concurrent with or earlier than such Included Program’s Home Video Street Date (other than in connection with a day-and-date or pre-day and date High Definition test conducted by Licensor as described in Section 2.2.1), then Licensor shall provide Licensee with written notice thereof and of any terms and conditions contained in the agreement between Licensor or such other SPE Entity and the Other Provider with respect to such Included Program that are directly related to such availability date. Licensee shall have the right (but not the obligation), exercisable within 30 days after receipt of the foregoing written notice, to match such directly related terms and conditions with respect to such Included Program (if Licensee is not reasonably capable of complying with such terms and conditions (taking into consideration Licensee’s technology and national footprint), then Licensor shall use commercially reasonable efforts to provide substantially comparable terms and conditions with which Licensee is capable of complying with respect to one or more platforms of the Licensed Service). Licensor will impose any such terms or conditions on a non-discriminatory basis. If Licensee exercises such right, this Agreement shall be deemed automatically amended to incorporate such concurrent or earlier availability date with respect to the exploitation hereunder of (i) Video-On-Demand rights in such Included Program only if the rights granted by Licensor to the Other Provider included Video-On-Demand rights to such Included Program, and (ii) Pay-Per-View rights in such Included Program if the rights granted by Licensor to the Other Provider included Video-On-Demand and/or Pay-Per-View rights to such Included Program, into this Agreement as of the date it became effective to such Other Provider.
7. License Period. “License Period” shall mean for an Included Program, the period during which Licensee shall have the right to distribute and exhibit such Included Program under this Agreement. The License Period for each Category of Included Program shall be as set forth below.
1. Current PPV License Period. “Current PPV License Period” shall mean, for an Included Program, a period commencing on such Included Program’s Current PPV Availability Date and ending on a date established by Licensor in its discretion; provided, however, that such period shall end no earlier than the date 60 days after the Current PPV Availability Date; provided further that in no event shall such Current PPV License Period end earlier than the latest expiring Pay-Per-View and/or Video-On-Demand license period afforded to any Other Provider.
2. Current VOD License Period. “Current VOD License Period” shall mean, for an Included Program, a period commencing on such Included Program’s Current VOD Availability Date and ending on a date established by Licensor in its discretion; provided, however, that such period shall end no earlier than the date 60 days after the Current VOD Availability Date; provided further that such Current VOD License Period shall in no event end earlier than the latest expiring Pay-Per-View and/or Video-On-Demand license period afforded to any Other Provider.
3. Library PPV License Period. “Library PPV License Period” shall mean, for an Included Program, a period commencing on its Library PPV Availability Date and ending on a date to be established by Licensor in its discretion.
4. Library VOD License Period. “Library VOD License Period” shall mean, for an Included Program, a period commencing on its Library VOD Availability Date and ending on a date to be established by Licensor in its discretion; provided, however, that such period shall end no sooner than six months after such Included Program’s Library VOD Availability Date.
5. Library FOD License Period. “Library FOD License Period” shall mean, for an Included Program, a period commencing on its Library FOD Availability Date and ending on a date to be established by Licensor in its discretion; provided, however, that such period shall end no sooner than two (2) months after such Included Program’s Library FOD Availability Date. Licensor shall have the right to terminate the Library FOD License Period of any Library FOD Program upon 90 days prior written notice if Licensor concurrently terminates all non-exclusive third party licenses of Free-On-Demand rights in such Library FOD Program. In such event, Licensor shall provide a comparable replacement motion picture for the equivalent of the remaining Library FOD License Period.
8. Program Notification, Selection and Materials Availability.
1. Current PPV Program. Licensor shall provide Licensee with a written notice setting forth the Current PPV Availability Date, the Current PPV Program License Period, the Initial U.S. Theatrical Release Date and the Home Video Street Date for each Current PPV Program no later than 90 days prior to such Current PPV Program’s Current PPV Availability Date; provided that incidental failures to meet such timing shall not be a breach of this Agreement. Licensee shall have until 60 days prior to such Availability Date in which to deliver to Licensor a booking confirmation for such Included Program provided that in no event shall the failure of Licensee to provide such booking confirmation relieve Licensee of any obligation hereunder. Licensor shall deliver to Licensee, or grant access in the United States to Licensee to, the “Materials,” as defined in and pursuant to Attachment E, for such Included Program no later than 15 Business Days following the receipt of a booking confirmation for an Included Program (it being understood that there may be limited exceptions to the timing of such availability which is, despite Licensor’s commercially reasonable efforts, not possible for Licensor (e.g., Licensor is at such date in the process of revising an Included Program to correct a credit error), and Licensor will keep Licensee reasonably informed of the nature of the delay and expected availability date in such instance).
2. Current VOD Program. Licensor shall provide Licensee with a written notice setting forth the Current VOD Availability Date, the Current VOD License Period, the Initial U.S. Theatrical Release Date and the Home Video Street Date for each Current VOD Program no later than 90 days prior to such Current VOD Program’s Current VOD Availability Date; provided that incidental failures to meet such timing shall not be a breach of this Agreement. Licensee shall have until 60 days prior to such Availability Date in which to deliver to Licensor a booking confirmation for such Included Program provided that in no event shall the failure of Licensee to provide such booking confirmation relieve Licensee of any obligation hereunder. Licensor shall deliver to Licensee, or grant access in the United States to Licensee to, the Materials for such Included Program no later than 15 Business Days following the receipt of a booking confirmation for an Included Program (it being understood that there may be limited exceptions to the timing of such availability which is, despite Licensor’s commercially reasonable efforts, not possible for Licensor (e.g., Licensor is at such date in the process of revising an Included Program to correct a credit error), and Licensor will keep Licensee reasonably informed of the nature of the delay and expected availability date in such instance).
3. Library PPV Program. Licensor shall provide Licensee (i) within 30 days of the Effective Date, a list of Library Films available for license hereunder on a Pay-Per-View basis with respect to Term Year 1 and (ii) following the list provided by Licensor in clause (i) above, by September 1 of each Term Year, a list of Library Films available for license hereunder on a Pay-Per-View basis with respect to the following Term Year, specifying the Library PPV Program Availability Date and the Library PPV License Period for each Library Film (each of the foregoing, a “Library PPV List”). Subject to Section 5.7 hereof, each Library PPV List shall include those Library Films that Licensor has cleared and made available for non-exclusive Pay-Per-View in the Territory (subject to clearance which, for the avoidance of doubt, may impose additional restrictions (e.g., with respect to platform)) as of the date of such Library PPV List. Licensee shall have the right to select from such Library PPV List which Library Films it desires to license for Pay-Per-View exploitation hereunder, and each such Library Film selected by Licensee shall be a Library PPV Program. Licensee shall have 30 days from the date of each Library PPV List in which to deliver to Licensor a booking confirmation for the Library PPV Programs covered thereby provided that in no event shall the failure of Licensee to provide such booking confirmation relieve Licensee of any obligation hereunder. Licensor shall deliver to Licensee, or grant access in the United States to Licensee to, the Materials for such Included Program no later than 15 Business Days prior to each Library PPV Program’s Availability Date (it being understood that there may be limited exceptions to the timing of such availability which is, despite Licensor’s commercially reasonable efforts, not possible for Licensor (e.g., Licensor is at such date in the process of revising an Included Program to correct a credit error), and Licensor will keep Licensee reasonably informed of the nature of the delay and expected availability date in such instance).
4. Library VOD Program. Licensor shall provide Licensee (i) within 30 days of the Effective Date, a list of Library Films available for license hereunder on a Video-On-Demand basis with respect to Term Year 1 and (ii) by September 1 of each Term Year, a list of Library Films available for license hereunder on a Video-On-Demand basis with respect to the following Term Year, specifying the Library VOD Availability Date and the Library VOD License Period for each Library Film (each of the foregoing, a “Library VOD List”). Subject to Section 5.7 hereof, each Library VOD List shall include at least 50 Library Films per Term Year (to be pro rated for any Term Year that is greater or less than 12 months) that Licensor has cleared and made available for non-exclusive Video-On-Demand in the Territory (subject to clearance which may, for the avoidance of doubt, impose additional restrictions (e.g., with respect to platform)) as of the date of such Library VOD List. Licensee shall, subject to Section 9.1.3, have the right to select from such Library VOD List which Library Films it desires to license for Video-On-Demand exploitation hereunder, and each such Library Film selected by Licensee shall be a Library VOD Program. Licensee shall have 30 days from the date of each Library VOD List in which to deliver to Licensor a booking confirmation for the Library VOD Programs covered thereby; provided that in no event shall the failure of Licensee to provide such booking confirmation relieve Licensee of any obligation hereunder. Licensor shall deliver to Licensee, or grant access in the United States to Licensee to, the Materials for such Included Program no later than 15 Business Days prior to each Library VOD Program’s Availability Date (it being understood that there may be limited exceptions to the timing of such availability which is, despite Licensor’s commercially reasonable efforts, not possible for Licensor (e.g., Licensor is at such date in the process of revising an Included Program to correct a credit error), and Licensor will keep Licensee reasonably informed of the nature of the delay and expected availability date in such instance).
5. Library FOD Program. Licensor shall provide Licensee (i) on the Effective Date, a list of Library Films available for license hereunder on a non-exclusive Free-On-Demand basis with respect to the Term Year 1 and (ii) by September 1 of each Term Year, a list of Library Films available for license hereunder on a non-exclusive Free-On-Demand basis with respect to the following Term Year, specifying the Library FOD Availability Period (each of the foregoing, a “Library FOD List”). Each Library FOD List shall include all Library Films that Licensor has cleared and made available for Free-On-Demand in the Territory as of the date of such Library FOD List, it being understood that the clearance of certain titles offered (in excess of the number necessary to meet Licensee’s licensing obligations hereunder) may require ads to be run in connection with each exhibition. Licensee shall have the right to select from such Library FOD List which Library Films it desires to license for Free-On-Demand hereunder, and each Library Film selected by Licensee shall be a Library FOD Program; provided, however, that, with respect to each FOD Exhibition Year, Licensee shall select a number of Library FOD Programs for which the aggregate FOD License Fees equal or exceed the FOD Minimum Fee. Licensee shall have 30 days from receipt of each Library FOD List in which to deliver to Licensor a booking confirmation for the Library FOD Programs covered thereby, including the Library FOD Availability Date Licensee designates for each such Library FOD Program, provided that in no event shall the failure of Licensee to provide such booking confirmation relieve Licensee of any obligation hereunder and Licensor shall have the right to designate the Library FOD Programs if Licensee fails to timely select after written notice from Licensor to Licensee of Licensee’s such failure and a reasonable opportunity to cure such failure of no less than five (5) business days after Licensee’s receipt of such notice. Licensor shall deliver to Licensee, or grant access in the United States to Licensee to, the Materials for such Included Program no later than 30 days prior to each Library FOD Program’s Availability Date (it being understood that there may be limited exceptions to the timing of such availability which is, despite Licensor’s commercially reasonable efforts, not possible for Licensor (e.g., Licensor is at such date in the process of revising an Included Program to correct a credit error), and Licensor will keep Licensee reasonably informed of the nature of the delay and expected availability date in such instance).
9. Channel & Exhibition Commitment.
1. General Terms.
1. Each transmission and exhibition of an Included Program on the Licensed Service shall be encrypted and digitally compressed for home entertainment quality transmission of the Included Programs throughout the Territory.
2. Licensee may, in its discretion, add (but shall not be obligated to add) additional exhibitions and channels of any Included Program available hereunder within its License Period beyond the exhibitions and channel carriage commitments described herein.
3. Additional Exhibition Commitment for Closed IP. In consideration for Licensor’s agreement to amend and restate the Prior Agreement by entering into this Agreement, any Included Program first exhibited on a Pay-Per-View basis or on a Push Download Video-On-Demand basis hereunder that Licensee ceases to so exhibit prior to the expiration of its License Period shall be made continuously available over Closed IP to Subscribers with such Closed IP service during at least that portion of such Included Program’s License Period that coincides with the period commencing on the later of (i) the Closed IP Effective Date and (ii) the date on which Licensee foregoes the Pay-Per-View exhibition or Push Download Video-On-Demand exhibition of such Included Program, as the case may be, and ending on the expiration of its License Period; provided, that such portion of its License Period is at least twenty-one (21) days in length. Subject to Section 9.1.4, any Included Program first exhibited by means of Closed IP shall be continuously exhibited by means of Closed IP for its entire License Period.
4. Notwithstanding any other term of this Agreement, Licensee’s obligations to exhibit any Included Program over Closed IP shall not be effective until after the Closed IP Effective Date. In the event that during the Term Licensee ceases providing feature-length motion pictures on a Video-On-Demand and/or Free-On-Demand basis over Closed IP in the Territory, Licensee shall be released from its obligations (including, without limitation, to pay the FOD Minimum Fee) relating to the exhibition of Included Programs over Closed IP on a Video-On-Demand and/or Free-On-Demand basis, as applicable, provided that Licensee uses commercially reasonable efforts to offer, and Licensor accepts (such acceptance not to be unreasonably withheld), a comparable licensing opportunity and/or value for each terminated Closed IP platform (i.e., Video-On-Demand, Free-On-Demand, or both). If Licensee does not use commercially reasonable efforts to provide a comparable licensing opportunity or if Licensor reasonably withholds approval thereof, then Licensor shall have the right to terminate this Agreement by providing Licensee written notice thereof, which termination shall be effective ninety (90) days after delivery of such notice and shall be Licensor’s sole right and exclusive remedy with respect thereto.
5. Except as otherwise specifically set forth herein, Licensee shall have sole control over the exhibition schedule of each Included Program, including the right to determine if and when each Included Program is exhibited by any authorized means hereunder and the total number of exhibitions for each Included Program.
2. Current PPV Program.
1. Licensee commits to exhibiting all BO Category A+, A, B and C Included Programs with Current PPV Availability Dates during the Term as Current PPV Programs on the Licensed Service as set forth below.
2. Licensee agrees to devote a number of DTH satellite channels on the Licensed Service exclusively and continually for the exhibition of Current PPV Programs.
3. All Current PPV Programs shall be exhibited solely in the tier of channels on the Licensed Service devoted to the exhibition of Major Studio theatrical motion pictures (currently, channels numbered 101-199).
4. In consideration for Licensor’s agreement to amend and restate the Prior Agreement by entering into this Agreement, the economic consideration set forth herein, and Licensor’s grant of all rights granted herein, including, without limitation, the offering of Free-On-Demand rights in the Library FOD Programs, Licensee agrees to exhibit each Current PPV Program during its License Period, for each BO Category of title below, no fewer than the following number of exhibitions, subject to the exceptions described below (“Current PPV Exhibition Commitments”):
1. With respect to Current PPV Programs whose Current PPV License Periods commences during the first three (3) Term Years:
|A+ |720 |
|A |720 |
|B |360 |
|C |50 |
|D |50 if selected by Licensee |
|E |At Licensee’s sole discretion if selected |
2. With respect to Current PPV Programs whose Current PPV License Periods commences during the fourth and fifth Term Years (each a “Later Current PPV Program”):
|A+ |500 |
|A |250 |
|B |125 |
|C |50 |
|D |50 if selected by Licensee |
|E |At Licensee’s sole discretion if selected |
5. Notwithstanding anything to the contrary contained in this Agreement:
1. In the event that Licensee does not exhibit a Later Current PPV Program with a sixty (60) day Current PPV License Period for a number of exhibitions equal to seventy-five percent (75%) of the applicable Current PPV Exhibition Commitment set forth in Section 9.2.4.2 above within the first thirty (30) days of such Later Current PPV Program’s Current PPV License Period, then the applicable Current PPV Exhibition Commitment set forth in Section 9.2.4.1 above shall apply to such Later Current PPV Program in lieu of the applicable Current PPV Exhibition Commitment set forth in Section 9.2.4.2 above.
2. The otherwise applicable Current PPV Exhibition Commitments, as the case may be, for each animated Included Program shall be reduced by 25% each.
3. The above Current PPV Exhibition Commitments, as the case may be, shall be reduced for any title whose run-time (in the form delivered to Licensor, which may be time-compressed) exceeds 120 minutes by an amount proportional to the excess of such title’s runtime over 120 minutes (e.g., a 100 Current PPV Exhibition Commitment is reduced to 50 exhibitions for a four-hour title).
4. The above Current PPV Exhibition Commitments, as the case may be, may be reduced to accommodate Licensee’s lack of capacity due to Licensee’s devotion to the exhibition of NFL games of channels otherwise available for Pay-Per-View programming during Sundays of the regular NFL seasons; provided, however, that Licensee may only reduce its Current PPV Exhibition Commitments pursuant to this Section 9.2.5.4 if and in an amount no less favorable to Licensor than it reduces its Pay-Per-View exhibition commitments for comparable motion pictures with the same availability dates licensed from all other Major Studios on a Pay-Per-View basis pursuant to an “output” agreement.
5. If at any time during the Term the number of Subscribers with a DVR-integrated Set-Top Box (each such Subscriber, a “DVR Subscriber”) who are capable of receiving an Alternate Delivery Platform (as defined below) exceeds the lesser of (i) 3 million and (ii) 1/3 of the total number of DVR Subscribers, Licensee may reduce the above Current PPV Exhibition Commitments for each Current PPV Program, as applicable, by the percentage of DVR Subscribers capable of receiving an exhibition of such Current PPV Program on the Directv Flix Platform, Directv-On-Demand Platform or Push Video-On-Demand Platform (each, an “Alternate Delivery Platform”); provided, that Licensee makes such Included Program available on such Alternate Delivery Platform for a minimum of thirty (30) consecutive days (subject, for the avoidance of doubt, to Section 9.3.3 for any Included Program made available hereunder on the Push Video-On-Demand Platform).
6. Licensee shall not be obligated to devote, at any one time, more than six satellite channels to toward the fulfillment of the Current PPV Exhibition Commitments and Licensee shall not be in breach or default hereof if it has devoted six or more such channels and it does not fulfill the Current PPV Exhibition Commitments.
6. Exhibition Commitment MFN for Current PPV Programs for Licensor. If, pursuant to an output or package (of more than 5 titles) agreement with another feature film provider (other than that certain license agreement between Licensee and DreamWorks, which expires on December 31, 2007), Licensee has an agreement to exhibit on a Pay-Per-View basis during the Term feature length theatrical motion pictures (other than motion pictures licensed by Licensee on a day and date basis with such motion picture’s Home Video Street Date) more frequently or to provide more favorable channel commitments (e.g., number of channels or frequency of exhibitions on a channel) than Licensee has agreed hereunder to exhibit comparable Current PPV Programs (i.e., comparable in all of the following respects: in terms of box office, avail date/window, viewing period, high/standard definition and enhanced features), then Licensee shall promptly notify Licensor in writing thereof and of all directly related terms and conditions contained in such output or package (of more than 5 titles) agreement. Licensor shall have the right (but not the obligation), exercisable within 30 days after receipt of the foregoing written notice, to match all such directly related terms and conditions, and, if Licensor exercises such right, this Agreement shall be deemed automatically amended to incorporate all such directly related terms and conditions, including, without limitation, the more favorable Pay-Per-View exhibition commitments with respect to such comparable Current PPV Programs (i.e., comparable in all of the following respects: in terms of box office, avail date/window, viewing period, high/standard definition and enhanced features). If such more favorable Pay-Per-View exhibition commitments are with respect to a package/limited number of titles, Licensor shall have the right to designate which comparable Current PPV Program(s) (i.e., comparable in all of the following respects: in terms of box office, avail date/window, viewing period, high/standard definition and enhanced features) shall benefit from such more favorable Pay-Per-View exhibition commitments.
3. Current VOD Program.
1. Exhibition Commitment for BO Category D and E Included Programs for Closed IP. In consideration for Licensor’s agreement to amend and restate the Prior Agreement by entering into this Agreement, Licensee shall select and exhibit during each Term Year commencing on the Closed IP Effective Date not less than 20 BO Category D and E Included Programs as Current VOD Programs (such commitment to be pro-rated for any such period that is more or less than 12 months in duration, and to be subject to the availability of closed-captioned versions in accordance with Section 1.0(A)(3) of Attachment E-1), to be selected from Included Programs not exhibited by DTH satellite broadcast; provided, however, that such number of BO Category D and E Included Programs shall be reduced by the number of BO Category D and E Included Programs exhibited as Current PPV Programs during such Term Year. Licensee shall have the right to select such Included Programs, using reasonable efforts to spread their Availability Dates evenly across a Term Year; provided, however, that should Licensor determine after six months have elapsed in any Term Year that Licensee may not be on track to select a sufficient number of Included Programs for such Term Year or that there is a risk that an insufficient number of Included Programs for selection may remain for such Term Year, then Licensor shall have the right to designate the Current VOD Programs to be licensed for the remainder of such Term Year.
2. Virtual Channel MFN for VOD Programs for Licensor. If, pursuant to an output or package (of more than 5 titles) agreement with a feature film provider, Licensee has an agreement to create or allocate during the Term a “virtual” channel dedicated primarily to the feature length motion pictures licensed by such feature film provider on a Video-On-Demand basis, then Licensee shall promptly notify Licensor in writing thereof and of all directly related terms and conditions contained in such output or package (of more than 5 titles) agreement. Licensor shall have the right (but not the obligation), exercisable within 30 days after receipt of the foregoing written notice, to match all such directly related terms and conditions, and, if Licensor exercises such right, this Agreement shall be deemed automatically amended to incorporate all such directly related terms and conditions, including, without limitation, the creation or allocation of a “virtual” channel dedicated solely to Current VOD Programs.
3. Exhibition Commitment MFN for Current VOD Programs for Licensor. If, pursuant to a output or package (of more than 5 titles) agreement with a feature film provider, Licensee has an agreement to (i) make available during the Term by means of Video-On-Demand a greater number of such feature film provider’s motion pictures than the number of comparable Current VOD Programs (i.e., comparable in all of the following respects: in terms of box office, avail date/window, viewing period, high/standard definition and enhanced features) that Licensee has agreed hereunder to make available on a Video-On-Demand basis, or (ii) store any such feature film provider’s motion pictures made available during the Term on a Push Downloaded basis on Set-Top Boxes for a longer duration than Licensor has agreed hereunder to store comparable Current VOD Programs (i.e., comparable in all of the following respects: in terms of box office, avail date/window, viewing period, high/standard definition and enhanced features), or (iii) make available by Closed IP any such feature film provider’s motion pictures for a longer period of time than Licensor has agreed hereunder to make comparable Current VOD Programs (i.e., comparable in all of the following respects: in terms of box office, avail date/window, viewing period, high/standard definition and enhanced features) available by Closed IP, or (iv) afford faster download transmission speeds to any other feature film provider over Closed IP, then Licensee shall promptly notify Licensor in writing thereof and of all directly related terms and conditions contained in such output or package (of more than 5 titles) agreement. Licensor shall have the right (but not the obligation), exercisable within 30 days after receipt of the foregoing written notice, to match all such directly related terms and conditions, and, if Licensor exercises such right, this Agreement shall be deemed automatically amended to incorporate all such directly related terms and conditions, including, without limitation, the greater number of Current VOD Programs “pushed” to Set-Top Boxes, the longer storage duration or the longer period of Closed IP availability, in each case only with respect to such comparable Current VOD Programs (i.e., comparable in all of the following respects: in terms of box office, avail date/window, viewing period, high/standard definition and enhanced features). If such more favorable treatment is with respect to a package/limited number of titles, Licensor shall have the right to designate which comparable Current VOD Program(s) (i.e., comparable in all of the following respects: in terms of box office, avail date/window, viewing period, high/standard definition and enhanced features) shall benefit from such more favorable treatment.
4. Guide Placement MFN. If, pursuant to an output or package (of more than 5 titles) agreement with a feature film provider, Licensee has an agreement to give more favorable placement and/or positioning on Licensee’s electronic program guides (“Guide Placement”) for any motion pictures of such feature film provider on a on a Pay-Per-View and/or Video-On-Demand basis (other than motion pictures offered on a day and date basis with Home Video Street Date) than the Guide Placement Licensee has agreed hereunder to give to any comparable Current PPV Programs or Current VOD Programs (i.e., comparable in all of the following respects: in terms of box office, avail date/window, viewing period, high/standard definition and enhanced features), then Licensee shall promptly provide Licensor with written notice of such more favorable obligations and/or concessions and all directly related terms and conditions, and Licensor shall have 30 days to agree to or reject such more favorable obligations and/or concessions and any and all such directly related terms and conditions. If Licensor exercises such right, then Licensee shall apply such more favorable Guide Placement with respect to the applicable comparable Current PPV Programs or Current VOD Programs (i.e., comparable in all of the following respects: in terms of box office, avail date/window, viewing period, high/standard definition and enhanced features) on a Pay-Per-View and/or Video-On-Demand basis (as applicable) and this Agreement shall be deemed automatically amended to incorporate all such directly related terms and conditions. If such more favorable treatment is with respect to a package/limited number of titles, Licensor shall have the right to designate which comparable Current PPV Programs(s) and/or Current VOD Program(s) (i.e., comparable in all of the following respects: in terms of box office, avail date/window, viewing period, high/standard definition and enhanced features) shall benefit from such more favorable treatment.
5. Library PPV Program and Library VOD Program.
1. Library PPV Program.
1. Licensee makes no exhibition, channel or other commitments with respect to Library PPV Programs; provided, however, that the channels required for any exhibition of Library PPV Programs shall be in addition to Licensee’s other channel and exhibition commitments hereunder.
2. Library VOD Program.
1. During each Term Year commencing on the Closed IP Effective Date, Licensee commits to exhibiting no less than 50 Included Programs as Library VOD Programs on the Licensed Service (such commitment to be pro-rated for any such period that is more or less than 12 months in duration and to be subject to the availability of closed-captioned versions in accordance with Section 1.0(A)(3) of Attachment E-1).
6. Library FOD Program. Commencing on the Closed IP Effective Date, during each calendar year of the Term for which Licensor makes available to Licensee a sufficient number of Library FOD Programs (subject to the availability of closed-captioned versions in accordance with Section 1.0(A)(3) of Attachment E-1) (each an “FOD Exhibition Year”), Licensee shall select a number of Library FOD Programs for which the aggregate FOD License Fees equal or exceed the FOD Minimum Fee. Any exhibition commitments required by this Section 9.6 shall be in addition to Licensee’s other channel and exhibition commitments hereunder. Notwithstanding the foregoing, it is acknowledged that the first and the last FOD Exhibition Year may be for a period of less than twelve (12) months, and the foregoing commitment shall be pro-rated for any FOD Exhibition Year that is for a period of less than twelve (12) months. For the avoidance of doubt, Licensor has made available a “sufficient” number of Library FOD Programs when the aggregate FOD License Fees equal or exceed the FOD Minimum Fee assuming a two month license period for each FOD Library Program. Notwithstanding anything to the contrary contained herein, Licensee shall have no obligation to select any Library FOD Programs (whether due to a delay in launching Licensee’s Closed IP service by June 15, 2008 or any other reason) and Licensee’s exhibition commitments with respect to Library FOD Programs hereunder are satisfied by payment of the FOD Minimum Fee.
10. License Fees. In full and complete consideration for the License of the Included Programs hereunder, Licensee shall pay the fees (“License Fees”) for each Category of Included Program as set forth below.
1. Licensor Share.
1. Current PPV Licensor Share.
1. “Current PPV Licensor Share” shall be: (a) for each Current PPV Program having a Current PPV Availability Date of 30 days or more after Home Video Street Date, 50%; (b) for each Current PPV Program having a Current PPV Availability Date of ≥15 and ≤29 days after Home Video Street Date, 52.5%; and (c) for each Current PPV Program having a Current PPV Availability Date of ≥1 and ≤14 days after Home Video Street Date, 55%.
2. Current VOD Licensor Share.
1. “Current VOD Licensor Share” shall be: (a) for each Current VOD Program having a Current VOD Availability Date of 30 days or more after Home Video Street Date, 60%; (b) for each Current VOD Program having a Current VOD Availability Date of ≥15 and ≤29 days after Home Video Street Date, 62.5%; and (c) for each Current VOD Program having a Current VOD Availability Date of ≥1 and ≤14 days after Home Video Street Date, 65%.
3. Library PPV Licensor Share.
1. “Library PPV Licensor Share” for each Library PPV Program shall be 50%.
4. Library VOD Licensor Share.
1. “Library VOD Licensor Share” for each Library VOD Program shall be 50%.
5. Current VOD Program Split/Share MFN for Licensor. Licensee shall promptly notify Licensor in writing of all directly related terms and conditions of any output agreement it enters into with another feature film provider in which Licensee agrees to offer more favorable licensor shares/splits (or equivalent concepts) to such other feature film provider licensing to Licensee feature length motion pictures on a Video-On-Demand basis (other than on a day-and-date basis with Home Video Street Date) than offered to Licensor hereunder with respect to comparable Current VOD Programs (comparable in all of the following respects: in terms of box office, avail date/window, viewing period, high/standard definition and enhanced features). Licensor shall have the right (but not the obligation), exercisable within 30 days after receipt of the foregoing written notice, to match all such directly related terms and conditions, and if Licensor exercises the foregoing right, this Agreement shall be deemed automatically amended to incorporate all such directly related terms and conditions, including, without limitation, such more favorable licensor shares/splits (or equivalent concepts) with respect to comparable Current VOD Program(s) (comparable in all of the following respects: in terms of box office, avail date/window, viewing period, high/standard definition and enhanced features). If such more favorable licensor shares/splits (or equivalent concepts) is with respect to a package/limited number of titles, Licensor shall have the right to designate which comparable Current VOD Program(s) (comparable in all of the following respects: in terms of box office, avail date/window, viewing period, high/standard definition and enhanced features) shall benefit from such more favorable licensor shares/splits (or equivalent concepts).
2. Deemed Price.
1. Current PPV Deemed Price.
1. The “Current PPV Deemed Price” shall be $3.99 per Subscriber Transaction for a Current PPV Program delivered to a Subscriber in standard definition and $4.99 per Subscriber Transaction for a Current PPV Program delivered to a Subscriber in High Definition.
2. Current VOD Deemed Price.
1. The “Current VOD Deemed Price” shall be $3.99 per Subscriber Transaction for a Current VOD Program delivered to a Subscriber in standard definition and $4.99 per Subscriber Transaction for a Current VOD Program delivered to a Subscriber in High Definition.
3. Library PPV Deemed Price.
1. The “Library PPV Deemed Price” shall be $1.99 per Subscriber Transaction for a Library PPV Program delivered to a Subscriber in standard definition and $2.99 per Subscriber Transaction for a Library PPV Program delivered to a Subscriber in High Definition.
4. Library VOD Deemed Price.
1. The “Library VOD Deemed Price” shall be $1.99 per Subscriber Transaction for a Library VOD Program delivered to a Subscriber in standard definition and $2.99 per Subscriber Transaction for a Library VOD Program delivered to a Subscriber in High Definition.
5. Current PPV Program and Current VOD Program Deemed Price MFN for Licensee. Commencing on the day after the three year anniversary of the Effective Date, Licensor shall promptly notify Licensee in writing of any directly related terms and conditions of any output or package (of more than 5 titles) agreement it or any other SPE Entity enters or has entered into with any Other Provider in which Licensor agrees to offer more favorable deemed prices (or equivalent concepts) to such Other Provider licensing comparable motion pictures (comparable in all of the following respects: in terms of box office, avail date/window, viewing period, high/standard definition and enhanced features) on a Pay-Per-View or Video-On-Demand basis (other than on a day and date basis), as the case may be, than the deemed price agreed to hereunder with respect to any Current PPV Program or Current VOD Program, as applicable. Licensee shall have the right (but not the obligation), exercisable within 30 days after receipt of the foregoing written notice, to such more favorable (to Licensee) deemed prices, provided Licensee agrees to any directly related terms and conditions. If Licensee is not reasonably capable of complying with such terms and conditions (taking into consideration Licensee’s technology and national footprint), then Licensor shall use commercially reasonable efforts to provide substantially comparable terms and conditions with which Licensee is capable of complying with respect to one or more platforms of the Licensed Service. Licensor will impose any such terms or conditions on a non-discriminatory basis. If Licensee exercises the foregoing right, this Agreement shall be deemed automatically amended to incorporate such directly related (or substantially comparable) terms and conditions, including, without limitation, such more favorable (to Licensee) deemed prices (or equivalent concepts); provided, that if such more favorable (to Licensee) deemed price (or equivalent concept) is offered to an Other VOD Provider, such more favorable deemed price (or equivalent concept) shall be applicable to Current VOD Programs and Current PPV Programs hereunder. For the avoidance of doubt, a more favorable (to Licensee) deemed price (or equivalent concept) offered to an Other PPV Provider shall not be applicable to any Current VOD Program.
6. Library FOD License Fee. For each Library FOD Program distributed and exhibited by Licensee hereunder, Licensee shall pay Licensor the Library FOD License Fee for each two-month period during which Licensee distributes and exhibits such Library FOD Program by means of Free-On-Demand during the Library FOD License Period for such Library FOD Program. The “Library FOD License Fee” for each category of Library FOD Program shall be as set forth below; provided, however that the Library FOD License Fees set forth below shall be reduced by 50% for the first 12 months after the Closed IP Effective Date; provided further that the Library FOD License Fees set forth below shall be increased by 12.5% over their previous levels any time after the date which is three years after the Effective Date that the Licensed Service achieves an incremental increase of 500,000 Subscribers with equipment capable of receiving Library FOD Programs and who Licensee has authorized to receive content via the Closed IP service, taking 1.5 million such Subscribers as a base; hence, by way of example, if the Licensed Service at any time after the date which is three years after the Effective Date reaches two million such Subscribers, the “Megahit” fee shall increase thereafter to $8,437.50 and if the Licensed Service at any time reaches 2.5 million such Subscribers, the “Megahit” fee shall increase thereafter to $9,492.19.
|Megahit |Domestic Box Office Receipts ≥$100 million or set forth on Deemed Megahits list attached |$7,500 |
| |hereto as Attachment C | |
|I |Domestic Box Office Receipts >$50 million, ≤ $100 million, post 1989 Release |$6,000 |
|II |Domestic Box Office Receipts < $50 million, post 1989 Release |$3,750 |
|III |1980s Theatrical Release |$3,000 |
|IV |Pre-1980s Theatrical Release and Direct to Videos |$2,250 |
The “FOD Minimum Fee” shall be, subject to Section 9.6, $1 million for each FOD Exhibition Year; provided, however, that such FOD Minimum Fee shall be increased to (i) $1.125 million for each FOD Exhibition Year during which the Licensed Service has at least 1.5 million but less than 2 million such Subscribers at any time during such FOD Exhibition Year, (ii) $1,265,625 for each FOD Exhibition Year during which the Licensed Service has at least 2 million but less than 2.5 million Subscribers at any time during such FOD Exhibition Year, and (iii) 10% over its previous level for each FOD Exhibition Year that the Licensed Service achieves an incremental increase of 500,000 Subscribers over the foregoing 2.5 million Subscribers at any time during such FOD Exhibition Year; provided, however, that the FOD Minimum Fee shall be pro-rated for any FOD Exhibition Year that is for a period of less than twelve (12) months. The amount of any increase in the FOD Minimum Fee for an FOD Exhibition Year shall be applied to such FOD Exhibition Year on a prospective, pro-rated basis; hence, by way of example, if the number of Subscribers reaches 1.5 million during the 6th month of the first FOD Exhibition Year, the FOD Minimum Fee with respect to the remaining 6 months of such FOD Exhibition Year shall be subject to a $62,500 increase.
3. Calculation of License Fees.
1. Licensee shall determine each Actual Retail Price.
2. Licensee shall pay Licensor the License Fees set forth in and determined in accordance with this Section 10.
1. PPV/VOD License Fee. For each PPV/VOD Program during its License Period, the “PPV/VOD License Fee” shall be equal to, for each and every Subscriber Transaction, (i) the greater of the PPV/VOD Deemed Price and the Actual Retail Price charged for such PPV/VOD Program multiplied by (ii) the PPV/VOD Licensor Share.
2. Library FOD License Fee. For any FOD Exhibition Year where a “sufficient” number of Library FOD Programs are made available to Licensee (determined in accordance with Section 9.6 above) for which the aggregate Library FOD License Fees of all such programs equals or exceeds the FOD Minimum Fee, the “Library FOD License Fee” shall be the greater of the (i) FOD Minimum Fee and (ii) the aggregate total of all Library FOD License Fees. Notwithstanding the foregoing, if for any FOD Exhibition Year a sufficient number of Library FOD Programs are not made available to Licensee for which the aggregate Library FOD License Fees of all such programs equals or exceeds the FOD Minimum Fee, the “Library FOD License Fee” shall be the aggregate Library FOD License Fees of all such programs made available.
3. For the purpose of calculating the aggregate PPV/VOD License Fees pursuant to Section 10.3.2.1, Licensee shall be permitted to deduct from the number of Subscriber Transactions included thereunder Technical Credits representing Subscriber Transactions in an amount not to exceed five percent (5%) of the total number of Pay-Per-View Subscriber Transactions, and two percent (2%) of the total number of Video-On-Demand Subscriber Transactions, each in any calendar quarter.
4. If Licensee shall relieve a Subscriber of the obligation to pay for a Subscriber Transaction or give a Subscriber credit in connection therewith (other than a Technical Credit), then the amount otherwise due shall nonetheless be included as the Actual Retail Price in connection with the calculation of PPV/VOD License Fees hereunder.
5. Licensee shall not link a Subscriber Transaction for an Included Program to a subscriber transaction for another motion picture or program (as a blanket charge, group rate or otherwise) without Licensor’s consent; provided, however, that Licensee shall have the right to grant “coupons”, rebates or discounts, etc. in connection with marketing Included Programs to Subscribers; provided further that no such coupon, rebate or discount shall permit a Subscriber to receive an exhibition of an Included Program without paying a fee or, subject to Section 11.4, to bundle Included Programs for a single fee.
6. To the extent a Subscriber pre-pays any portion of such Subscriber’s account, the amount so pre-paid shall not be included as an Actual Retail Price paid unless and until a Subscriber Transaction has occurred which is credited against such pre-payment.
11. Marketing and Promotions.
1. Marketing Co-op. In further consideration for Licensor’s agreement to amend and restate the Prior Agreement by entering into this Agreement, the economic consideration set forth herein, and Licensor’s grant of all rights granted herein, including, without limitation, Free-On-Demand rights in the Library FOD Programs, Licensee shall perform marketing and promotional activities for Included Programs in accordance with tactics mutually agreed by the parties hereto. Subject to such mutual agreement, marketing and promotional activities may include, without limitation, placement on a barker channel, website, Pay-Per-View movie countdown clocks, cross channel promotions, TiVo Showcase, DIRECTV guide, PPV Picks E-Mail, Pay-Per-View web banner, home page, genre/category pages, navigators, graphic user interface and/or any other available promotional medium. Each party agrees to contribute co-op marketing funds of $200,000 per Term Year (pro-rated for any Term Year less or greater than 12 months) (it being agreed that Licensee’s contribution may be in the form of discounted advertising rates, which shall in no event be higher than the discounted rates given to other Major Studios as part of co-op marketing tactics, and other in-kind contributions, the cash value for which shall be assigned and documented by Licensee and delivered to Licensor in accordance with the parties’ past practices); provided, however, that if the number of theatrically released Current Features made available by Licensor for licensing hereunder on a Pay-Per-View and Video-On-Demand basis in a Term Year is less than the average number of theatrically released Current Features made available by Licensor in the previous three (3) calendar years, then Licensee shall be entitled to a pro-rata reduction of its contribution obligations with respect to the following Term Year by the amount of such deficiency.
2. Marketing MFN. If pursuant to an output or package (of more than 5 titles) agreement with another feature film provider (other than that certain license agreement between Licensee and DreamWorks, which expires on December 31, 2007) Licensee has an agreement to give more favorable marketing or promotion (including, without limitation, in print or on-air) of the Pay-Per-View and/or Video-On-Demand exhibitions of any other motion pictures of such other feature film provider than the marketing or promotion Licensee has agreed hereunder to give to any comparable Current PPV Programs or Current VOD Programs (i.e., comparable in all of the following respects: in terms of box office, avail date/window, viewing period, high/standard definition and enhanced features), then Licensee shall promptly provide Licensor with written notice thereof and all directly related terms and conditions contained in such output or package (of more than 5 titles) agreement. Licensor shall have the right (but not the obligation), exercisable within 30 days after receipt of the foregoing written notice, to match all such directly related terms and conditions, and, if Licensor exercises such right, this Agreement shall be deemed automatically amended to incorporate all such directly related terms and conditions, including, without limitation, such more favorable marketing and promotion with respect to such comparable Current PPV Programs and/or Current VOD Program (i.e., comparable in all of the following respects: in terms of box office, avail date/window, viewing period, high/standard definition and enhanced features).
3. Bonus Materials. If Licensor or any other SPE Entity allows any Other Provider to exploit an Included Program on a Pay-Per-View or Video-On-Demand basis involving bonus materials, director commentary and/or chaptering functionality (collectively, “Enhanced Features”) during a time period that overlaps with such Included Program’s applicable License Period hereunder, then Licensor shall notify Licensee thereof in writing and of any directly related terms and conditions. Such notice may, for the avoidance of doubt, be granted with respect to a limited number of titles in the availability notices for such titles issued by Licensor in the ordinary course of business. Licensee shall, provided it matches such directly related terms and conditions with respect to such Enhanced Features (if Licensee is not reasonably capable of complying with such directly related terms and conditions (taking into consideration Licensee’s technology and national footprint), then Licensor shall use commercially reasonable efforts to provide substantially comparable terms and conditions with which Licensee is capable of complying with respect to one or more platforms of the Licensed Service), have the right to include such Enhanced Features with respect to the exploitation hereunder of (i) Video-On-Demand rights in such Included Program only if the Enhanced Features granted by Licensor to the Other Provider included Video-On-Demand to such Included Program, and (ii) Pay-Per-View rights in such Included Program if the Enhanced Features granted by Licensor to the Other Provider included Video-On-Demand and/or Pay-Per-View rights to such Included Program.
1. In addition, Licensee shall use good faith efforts to notify Licensor if, as a general practice, Licensee begins offering feature length motion pictures of any other feature film provider involving Enhanced Features on a Pay-Per-View or Video-On-Demand basis on the Licensed Service.
4. Bundling Programs. If Licensor or any other SPE Entity as a general practice makes bundling of two (2) or more current feature length theatrical motion pictures available to Other Providers, Licensor shall promptly notify Licensee thereof and make such bundling opportunities available to Licensee with respect to Current Features on a non-discriminatory basis and on the same directly related terms and conditions as it offers to Other Providers, provided that if Licensee is not reasonably capable of complying with such terms and conditions (taking into consideration Licensee’s technology and national footprint), then Licensor shall use commercially reasonable efforts to provide substantially comparable terms and conditions with which Licensee is capable of complying with respect to one or more platforms of the Licensed Service. If Licensee as a general practice bundles two (2) or more current feature length theatrical motion pictures of other providers of feature films for sale on a Pay-Per-View or Video-On-Demand basis, Licensee shall promptly notify Licensor thereof and shall make such bundling opportunities available to Licensor with respect to Current Features on a non-discriminatory basis and on the same directly related terms and conditions as it offers to such other providers.
12. General Terms and Conditions. Attachment D to this Agreement is hereby incorporated herein by reference.
(signature page follows)
The parties hereto have executed this Agreement as of the Effective Date.
|SONY PICTURES TELEVISION INC. |DIRECTV, INC. |
|By: |By: |
|Its: |Its: |
Termination of Prior Agreement Acknowledged:
|COL-STAR, INC. |
|By: |
|Its: |
Attachment A
CONTENT PROTECTION REQUIREMENTS AND OBLIGATIONS
The following constitutes certain minimum requirements that Licensee’s operational content protection systems must meet at all times. The requirements are divided into the following categories:
1. Content Protection System
2. Encryption
3. Authentication, Playback and Storage
4. Protection against Hacking
5. Key Management
6. Revocation and Renewal
7. Secure Clock
8. Content and License Delivery
9. Portable Copies
10. Outputs
11. Restricted to Territory
12. Embedded Information
13. Network Service Protection Requirements
14. PVR Requirements
Capitalized terms not defined herein shall have the meanings ascribed to them in the body of the agreement (the “Agreement”).
Content Protection System
All content delivered to, output from or stored on a device must be protected by a content protection system that includes digital rights management, conditional access systems and digital output protection (such system, the “Content Protection System” or “CPS”). The Content Protection System shall (i) be approved in writing by Licensor, (ii) be fully compliant with all the compliance and robustness rules associated therewith, and (iii) use only those rights settings, if applicable, that are approved in writing by Licensor. Upgrades and/or new versions of approved CPSs shall be considered approved by Licensor if those upgrades or new versions do not a have material adverse effect on security and such changes do not change the usage model of Licensee’s implementation using the CPS. Licensor approves Licensee’s Conditional Access currently known as NDS Videoguard, as represented by Licensee to Licensor as of the date hereof, for use by Licensor in accordance with (ii) and (iii) above.
Encryption
Content shall be transmitted to devices in secure, encrypted form.
Content shall never be transmitted digitally between any devices in unencrypted form.
The content protection system shall only decrypt streamed content into memory temporarily for the purpose of decoding and rendering the content and shall never write decrypted content (including portions of the decrypted content) or streamed encrypted content into permanent storage.
The content protection system shall encrypt the entirety of the video portion of the A/V content. Each frame of the video must be completely encrypted.
Each time content is encrypted, it shall be encrypted using one or more unique cryptographic keys.
No two encrypted content files shall be encrypted with the same cryptographic keys.
Keys must be generated using secure cryptographic algorithms such as those defined by NIST FIPS standards.
A single key must not be used to encrypt more data than is appropriate for its key size. A 128 bit key encryption algorithm may encrypt only 264 blocks of data with a single key. Multiple keys must be used for large content files or streams.
Passwords, cryptographic keys or any other information that is critical to the cryptographic strength of the content protection system shall never be transmitted or stored in the clear or reused.
The cryptographic algorithms used for encryption, signatures, hashing, random number generation, and key generation in the content protection system and content delivery mechanism must be nonproprietary, time-tested cryptographic protocols and algorithms, offering reasonable security equivalent to or better than AES 128 for content delivered in HD resolution and DES 56 for content delivered in SD resolution. New keys must be generated each time the content is encrypted. A single key shall not be used to encrypt more than one piece of content, or more data than is considered cryptographically secure. Keys, passwords, and any other information that is critical to the cryptographic strength of the content protection system may never be transmitted or stored in unencrypted form.
Authentication, Playback and Storage
A valid license, containing the unique cryptographic key/keys and other information necessary to decrypt the associated content and the set of usage rules associated with the content, shall be required in order to decrypt and play a specific instance of content.
Each license shall be keyed to work only on a specific individual end user device and shall be incapable of being transferred between devices.
Each installation of the trusted client software on an end user device shall be individualized and thus uniquely identifiable. For example, if the client software is copied or transferred from one computer to a subsequent computer, it will not work on the subsequent computer without being uniquely individualized.
The content protection system shall prohibit recording onto removable media or portable devices except as permitted in Section 2.2.4 of the Agreement.
Protection against Hacking
Playback licenses, revocation certificates and security-critical data shall use commercially reasonable cryptographic protection methods to deter against tampering, forging, and spoofing.
The content protection system shall employ industry accepted tamper-resistant technology on hardware and software components (e.g., to deter such hacks as a clock rollback, spoofing, use of common debugging tools, and intercepting unencrypted content in memory buffers).
For software-only implementations on open computing platforms (e.g., personal computers), the content protection system shall employ tamper resistant software. Examples of tamper resistant software techniques include:
a) Code obfuscation example: The executable binary dynamically encrypts and decrypts itself in memory, so that the algorithm is not unnecessarily exposed to disassembly or reverse engineering.
b) Integrity detection example: Using one-way cryptographic hashes of the executable code segments and/or self-referential integrity dependencies, the trusted software fails to execute if it is altered prior to or during runtime.
c) Anti-debugging example: The decryption engine prevents the use of common debugging tools.
The content protection system shall implement secure internal data channels to attempt to deter rogue processes from intercepting data transmitted between system processes.
The content protection system shall attempt to deter the use of media player filters or plug-ins that can be exploited to gain unauthorized access to content (e.g.: access to the decrypted but still encoded content by inserting a shim between the DRM and the player).
Key Management.
The Content Protection System must protect all critical security parameters (“CSPs”). CSPs shall include, without limitation, all keys, passwords, and other information which are required to maintain the security and integrity of the Content Protection System.
CSPs shall never be transmitted in the clear, transmitted to unauthenticated recipients, or stored unencrypted in memory.
Revocation and Renewal.
The Content Protection System shall be renewable and securely updateable in event of a breach of security or improvement to the Content Protection System.
The Content Protection System shall be upgradeable, allow for backward compatibility if desired and allow for integration of new rules and business models.
Secure Clock.
This section applies to time sensitive usage models including play windows and content expiration.
The Content Protection System shall implement a secure clock. The clock must be secure against modification or tampering, detecting any changes made to the clock. If changes or tampering are detected, the Content Protection System must follow the rights settings specified in the content license in present, which will disable playback associated with all content with time sensitive usage models.
Content and License Delivery.
Content and licenses shall only be delivered from a network service to registered devices associated with an account with verified credentials. As applicable, the credentials shall consist of at least an account number or user id and password sufficient in length to prevent brute force attacks. Access to account credentials shall allow access to active credit card or other financially sensitive information to prevent unwanted sharing of such credentials. Account credentials must be transmitted securely to ensure privacy and protection against attacks.
Portable Copies.
Subject at all times to all requirements and restrictions set forth in Section 2.2.4 of the Agreement, portable copies may be made if they are protected and encrypted by Window Media DRM 10 or higher (including Windows PlayReady DRM) or Licensee’s proprietary Conditional Access System.
Outputs Requirements for Content outside of Early Window.
With respect to VOD distribution, if requested by Licensor, the content protection system shall enable Macrovision and/or Dwight Cavendish Systems (“DCS”) content protection technology on all standard definition analog outputs from end user devices with respect to content provided by Licensor upon Licensee’s enabling the same with respect to content provided by other studios. Licensee shall pay all royalties and other fees payable in connection with the implementation of such content protection technology in registered devices. Licensor shall pay all royalties and other fees payable in connection with the activation of such content protection technology allocable to content provided pursuant to the Agreement.
The Content Protection System shall pass through line 21 CGMS-A content protection technology per CEA-608 on all analog outputs from the Content Protection System. Licensee shall pay all royalties and other fees payable in connection with the implementation of such content protection technology in registered devices. Licensor shall pay all royalties and other fees payable in connection with the activation of such content protection technology allocable to the content provided pursuant to the Agreement.
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 Definition Copy Protection (“HDCP”) or Digital Transmission Copy Protection (“DTCP”) or Windows Media DRM for Network Devices (WMDRM-ND), Windows PlayReady DRM, or Licensee’s proprietary Conditional Access System. Defined terms used but not otherwise defined in this Section 10 shall have the meanings given them in the DTCP or HDCP license agreements, as applicable.
a) A set-top box that outputs decrypted protected content provided pursuant to the Agreement using DTCP shall act in accordance with the DTCP license agreement to:
i) Deliver system renewability messages to the source function;
ii) 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;
iii) When enabled pursuant to the first and second paragraphs of this Section 10 above, map the analog protection system (“APS”) bits associated with the program to the APS field of the descriptor;
iv) Set the eligible non-conditional access delivery field of the descriptor as authorized by the corresponding license administrator;
v) Set the retention state field of the descriptor as authorized by the corresponding license administrator;
vi) Deliver system renewability messages from time to time obtained from the corresponding license administrator in a protected manner; and
b) A set-top box that outputs decrypted protected content provided pursuant to the Agreement using HDCP shall act in accordance with the HDCP license agreement to:
i) If requested by Licensor, deliver a file associated with the protected content named “HDCP.SRM” and a description of its intended effect that allows Licensee to make appropriate customer service preparations, and, if present, pass such file to the HDCP source function in the set-top box as a System Renewability Message; and
ii) Verify that the HDCP Source Function is fully engaged and able to deliver the protected content in a protected form, which means:
iii) HDCP encryption is operational on such output,
iv) Processing of the System Renewability Message associated with the protected content, if any, has occurred as defined in the HDCP Specification, and
v) There is no HDCP Display Device or Repeater on such output whose Key Selection Vector is in such System Renewability Message.
Outputs Requirements for Early Window Content.
No analog outputs are allowed at all. Protected digital outputs only are allowed and such digital outputs shall meet the requirements listed in this section.
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 Definition Copy Protection (“HDCP”) or other output protection approved in writing by Licensor. Defined terms used but not otherwise defined in this Digital Outputs Section shall have the meanings given them in the HDCP license agreements, as applicable.
(a) A Set Top Box that outputs decrypted protected content provided pursuant to the Agreement using HDCP shall:
(i) If requested by Licensor, at such a time as mechanisms to support SRM’s are available, deliver a file associated with the protected content named “HDCP.SRM” and, if present, pass such file to the HDCP source function in the device as a System Renewability Message; and
(ii) Verify that the HDCP Source Function is fully engaged and able to deliver the protected content in a protected form, which means:
(a). HDCP encryption is operational on such output,
(b). Processing of the System Renewability Message associated with the protected content, if any, has occurred as defined in the HDCP Specification, at such a time as mechanisms to support SRM’s are available, and
(c). There is no HDCP Display Device or Repeater on such output whose Key Selection Vector is in such System Renewability Message at such a time as mechanisms to support SRM’s are available.
Restricted to Territory.
The Content Protection System shall take affirmative, reasonable measures to restrict access to Licensor’s content to within the territory in which the content has been licensed.
Licensor affirms that Licensee’s policy requiring subscribers to be located within the Territory and Licensee’s use of satellites with transmit beams designed to minimize signal spillover outside of the Territory is in compliance with this Section 11.
Embedded Information.
Licensee’s delivery systems shall “pass through” any embedded watermark in protected content without alteration, modification or degradation in any manner; provided, however, that if such watermark is altered, modified or degraded resulting from Licensee’s exhibition of the Licensed films in the ordinary course of its operations, such alteration, modification or degradation of such watermark during the ordinary course of Licensee’s distribution of protected content shall not be a breach of this Section 12, however, Licensee agrees to provide commercially reasonable assistance to Licensor to help Licensor resolve such alteration, modification or degradation (it being understood that Licensee shall not be required to incur any material costs in connection therewith).
Licensee shall use commercially reasonable efforts to investigate the implementation of the Verance watermarking technology in applicable Licensee products.
13. Network Service Protection Requirements. For all of the Licensee’s operations sites and facilities transmitting or distributing the licensed content, Licensee shall use commercially reasonable efforts to:
a) Utilize processes and procedures to ensure that the licensed content is received, accessed, processed, distributed, stored, and returned or destroyed only in a secure, authorized manner by authorized personnel;
b) Utilize tape/content library management controls;
c) Utilize visitor access controls for facilities used by Licensee to receive, prepare, store, and deliver licensed content;
d) Utilize restricted area access, physical, and electronic security controls for facilities used by Licensee to receive, prepare, store, and deliver licensed content;
e) Utilize piracy monitoring, detection, and reporting processes and controls
14. PVR Requirements. Use of Approved Devices with personal video recorder capabilities that allow recording, copying, or playback of protected content shall be subject to Section 2.2.4 of the Agreement.
15. Additional Requirements for Early Window Content
a) Personal Computers
Early Window content is expressly prohibited from being delivered to and playable on General Purpose Computer Platforms (e.g. PCs) unless explicitly approved by Licensor.
b) Forensic Watermarking Requirement
For HD content released prior to the Day and Date release of the DVD and/or BluRay version of the content (“Early Window”), The Content Protection System shall be capable of inserting a Licensor approved forensic watermark into the output video. The watermark must contain the sufficient information such that forensic analysis of unauthorized recorded video clips of the output video shall uniquely determine the user account to which the output video was delivered. Upon discovery by the Licensor or Licensee of unauthorized distribution of the licensed content [e.g. such content is found on a peer-to-peer file sharing network] determined to have been delivered to the Licensee, the Licensee shall detect the forensic watermark and determine the user account to which the video was delivered.
Licensee shall have an obligation to monitor for security breaches at all times, including unauthorized distribution by any user of any Early Window content (whether or not such content belongs to Licensor). Licensee shall promptly report the details of any breach to Licensor with respect to Licensor content, and at least the existence of any such breach with respect to third party content. Licensee shall then, at a minimum, terminate the user’s ability to acquire Licensor content from the Licensed Service and – should the breach have occurred with respect to Licensor content – shall either provide information as to the identity of the user to the Licensor or take other action, agreed between Licensee and Licensor, such that there is an agreed and significant deterrent against unauthorized redistribution by that user of Licensor content. Licensee shall also make available to other content providers the existence of any security breach related to Licensor’s content and Licensee shall seek from other content providers the ability to make similar disclosures with respect to their content. Licensee shall also notify the MPAA of any such reportable security breach once a process for MPAA notification is established. If an event occurs that Licensor determines in its own discretion could lead to the unauthorized distribution of licensed content (whether or not such content belongs to Licensor), Licensor shall have immediate suspension and termination rights under this Agreement. [Other remedies for security breaches TBD.]
c) Consumer Communication.
Licensee must have a clear process wherein the consumer cannot select “buy” without first being sure that they are connected with HDCP protected HDMI in order to prevent the consumer’s screen from going black once analog outputs are disabled during a transmission of Early Window content.
Licensee shall inform the consumer that digital watermarks have been inserted in the licensed content such that subsequent illegal copies will be traceable via the watermark back to the consumer’s account and could expose the consumer to legal claims or otherwise provide accountability for illegal behavior. The Licensee shall include a warning to consumer to secure their watermarked content against unauthorized access.
d) Device Authentication
The Device on which the Early Window content is received shall be authenticated and determined to be in an authorized state by the service provider prior to the delivery of Early Window content to that Device.
e) No Remote Access
Users shall only be allowed to access authorized Devices within the household of the User and it SHALL NOT be possible for Users to access Early Window Content remotely from any device in a location outside the User’s household. All parameters governing the possibility of remote access in any relevant content protection system SHALL be set to prohibit remote access during the display of Early Window Content.
Attachment b
WINDOWS DRM VERSION 10 RIGHTS
Deprecated rights are not listed and must not be enabled or specified. If Licensee is currently using Windows Media DRM version 9 or 7.1, Licensee shall upgrade to the most recent version available within six months of the availability of a new version of Windows DRM where technically feasible.
The rights settings for previous version of MS DRM must use settings consistent with those listed in this schedule.
|Right |Setting |Comments |
|AllowPlay |Enabled |This right allows the consumer to play protected content on a computer or device|
|Playcount |Not set |This right specifies the number of times the consumer is allowed to play |
| | |protected content. By default, this right is not set and unlimited playing is |
| | |allowed |
|AllowCopy |Not enabled |This right allows consumers to copy protected content to a device, such as a |
| | |portable player or portable media, that supports Windows Media DRM 10 for |
| | |Portable Devices |
|CopyCount |0 |This right specifies the number of times the consumer is allowed to copy content|
| | |using the AllowCopy right. By default, this right is not set, and unlimited |
| | |copies are allowed. |
|AllowTransferToNonSDMI |Not enabled |This right allows the consumer to transfer the Windows Media file to a device |
| | |that supports Portable Device DRM version 1 or Windows Media DRM 10 for Portable|
| | |Devices. |
|AllowTransferToSDMI |Not enabled |This right allows the consumer to transfer the Windows Media file to a device |
| | |that supports Portable Device DRM version 1 or Windows Media DRM 10 for Portable|
| | |Devices. |
|TransferCount |0 |This right specifies the number of times a consumer can transfer a Windows Media|
| | |file to a device using the AllowTransferToNonSDMI and AllowTransferToSDMI rights|
|AllowBackupRestore |Not enabled |This right allows the consumer to manage licenses by making backup copies and |
| | |restoring licenses from backups |
|AllowCollaborativePlay |Not enabled |This right allows consumers play protected content in a collaborative session |
| | |using peer-to-peer services |
|AllowPlaylistBurn |Not enabled |This right allows consumers to copy a Windows Media file from a playlist to a CD|
| | |in the Red Book audio format |
|MaxPlaylistBurnCount |Not enabled |The maximum number of times a Windows Media file can be copied to a CD as part |
| | |of a particular playlist |
|PlaylistBurnTrackCount |Not enabled |The maximum number of times a Windows Media file can be copied to a CD, |
| | |regardless of what playlist it is in |
|MinimumSecurityLevel. |2,000 |Player applications based on Windows Media Format 9 Series SDK or later with |
| | |strict security requirements. Included devices Windows Media DRM 10 for Portable|
| | |Devices and Network Devices. |
| | |Excludes: Devices based on Windows Media Portable Device DRM v1 or based on |
| | |Windows CE 4.2 and later |
|MinimumClientSDKSecurity |3000 |Windows Media Format 7.1 SDK or later |
|Output Protection Levels for Digital |300 |Licensed Products must engage HDCP using COPP to protect the uncompressed |
|Uncompressed Video Content | |Digital Video Content of decrypted WMDRM Content |
|Output Protection Levels for Digital |400 |Only protected compressed digital outputs allowed |
|Compressed Video Content | | |
|Output Protection Levels for Analog Video |200 |Licensed Products is Passing the Analog Video Content of decrypted WMDRM Content|
|Content | |to Analog Television Outputs, Licensed Products must engage CGMS-A using COPP |
| | |with the CGMS-A field in the copy set to ‘11’ (“no more copies”). |
PPV/VOD Settings
|BeginDate |Not set (valid |This right specifies a date after which the license is valid |
| |immediately) | |
|ExpirationDate |PPV/VOD: Earlier of 1) |This right specifies a date after which the license is no longer valid|
| |End of License Period |and the Windows Media file can no longer be played |
| |and 2) End of Viewing | |
| |Period. FOD: End of | |
| |License Period | |
|ExpirationAfterFirstUse |Not set |This right specifies the length of time (in hours) a license is valid |
| | |after the first time the license is used |
|ExpirationOnStore |Same as Expiration Date|This right specifies the length of time (in hours) a license is valid |
| |(in hours) |after the first time the license is stored on the consumer's computer |
|DeleteOnClockRollback |Enabled |This right deletes the license if the consumer's computer clock is |
| | |reset to an earlier time. Use this right if the license also specifies|
| | |an expiration date |
|DisableOnClockRollback |Enabled |This right disables a license if the consumer's computer clock is |
| | |reset to an earlier time |
|GracePeriod |Not enabled |This right specifies the number of hours during which protected |
| | |content can be played after a device clock becomes unset. |
Attachment c
DEEMED MEGAHITS
| | | |
| |RELEASE YEAR |TITLE |
| | | |
| | | |
|1 |1949 |ALL THE KINGS MEN |
|2 |1953 |FROM HERE TO ETERNITY |
|3 |1954 |ON THE WATERFRONT |
|4 |1957 |BRIDGE ON THE RIVER KWAI |
|5 |1958 |ANATOMY OF A MURDER |
|6 |1962 |LAWRENCE OF ARABIA |
|7 |1966 |MAN FOR ALL SEASONS, A |
|8 |1967 |GUESS WHO'S COMING TO DINNER |
|9 |1967 |THE GRADUATE |
|10 |1968 |FUNNY GIRL |
|11 |1968 |OLIVER! |
|12 |1969 |EASY RIDER |
|13 |1970 |FIVE EASY PIECES |
|14 |1973 |WAY WE WERE, THE |
|15 |1974 |SHAMPOO |
|16 |1975 |FUNNY LADY |
|17 |1976 |TAXI DRIVER |
|18 |1977 |DEEP, THE |
|19 |1978 |MIDNIGHT EXPRESS |
|20 |1979 |CHINA SYNDROME |
|21 |1979 |KRAMER VS. KRAMER |
|22 |1981 |STRIPES |
|23 |1982 |GANDHI |
|24 |1983 |BIG CHILL, THE |
|25 |1984 |KARATE KID, THE |
|26 |1987 |LAST EMPEROR, THE |
|27 |1989 |STEEL MAGNOLIAS |
|28 |1993 |PHILADELPHIA |
| | | |
ATTACHMENT D
GENERAL TERMS AND CONDITIONS
Definitions.
1 All capitalized terms used but not defined in the Agreement or this Attachment D shall have the meanings set forth below:
1 “Business Day” shall mean any day other than (i) a Saturday or Sunday or (ii) any day on which the banks in Los Angeles, California are closed or authorized to be closed.
2 “Channel” with respect to satellite delivery, shall mean Licensee’s provision of the necessary uplink and Licensed Service resources sufficient to allow the viewable reception of a single 24-film frame-per-second, digitally compressed Included Program by Subscribers using a Set-Top Box or PC Tuner.
3 “Channel Carrying Capacity” shall mean, with respect to the Satellite Platform of the Licensed Service, the aggregate number of Channels which such platform is capable of transmitting, as determined by Licensee in its discretion.
4 “Event of Force Majeure” in respect of a party shall mean any act, cause, contingency or circumstance beyond the reasonable control of such party, including, without limitation, to the extent beyond the reasonable control of such party, 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, lack or shortage of, or inability to obtain, any labor, machinery, materials, fuel, supplies or equipment from normal sources of supply, strike, work stoppage or slowdown, lockout or other labor dispute, fire, flood, drought or other natural calamity, weather, sun spots, or other electronic, electro-magnetic, atmospheric or other condition affecting transmission, damage or destruction to plant and/or equipment, satellite transmission failures, loss of any satellite capacity, commandeering of vessels or other carriers resulting from acts of God, or any other accident, condition, cause, contingency or circumstance (including without limitation, acts of God) within or without the United States beyond the reasonable control of such party, but shall not include the insufficiency of, or an inability to pay, funds for whatever reason.
5 “Laws” shall mean all international, federal, national, state, provincial, municipal or other laws, ordinances, orders, statutes, rules or regulations.
6 “Promotional Materials” shall mean written summaries, extracts, synopses, photographs, trailers or other materials relating to the Included Programs cleared for the promotion of the Included Programs and prepared and made available by Licensor or, if not prepared by Licensor, approved in writing in advance by Licensor.
7 Intentionally deleted.
8 “Security Breach” shall mean a condition that results or is reasonably likely to result in: (i) the widespread unauthorized availability to the public (and not merely to hackers or IT professionals) of any Included Program on any Approved Device; (ii) the widespread unauthorized availability to the public (and not merely to hackers or IT professionals) of any Included Program on, or means to transfer and view any Included Program to, devices that are not Approved Devices; or (iii) a widespread unauthorized circumvention or failure of the Licensee’s secure distribution system, geo-filtering technology or physical facilities; which condition(s) may, in the reasonable good faith judgment of Licensor, result in actual or threatened harm to Licensor.
9 “Territorial Breach” shall mean a Security Breach that creates a reasonable risk that any of the Included Programs will be delivered to the public (and not merely to hackers or IT professionals) outside the Territory, where such delivery outside the Territory may result in actual or threatened harm to Licensor. Notwithstanding the foregoing, Licensor acknowledges that incidental (i) overspill of the satellite broadcast signal and (ii) piracy of the satellite signal may occur, which if not marketed, and if not revenue generating to Licensee, shall not be deemed a “Territorial Breach” hereunder.
2 The following terms have the meaning set forth in the sections set forth below:
|Defined Term |Location of Definition |
|Claim |§ 16.1 |
|Errors and Omissions Insurance |§ 20 |
|Implicated Platform |§ 10.3 |
|Indemnified Party |§ 16.1 |
|Indemnifying Party |§ 16.1 |
|Indemnity Notification |§ 16.2 |
|Materials |Attachment E-1 |
|New DRM Requirements |§ 10.1.4 |
|Picture Master |§ 8.1 |
|Promotional Blackout Period |§ 9.2.3.2 |
|Qualified Transferee |§ 21 |
|Reinstatement Notice |§ 10.4 |
|Special Content Protection |§ 10.1.3 |
|Sub-Masters |§ 8.3 |
|Suspension |§ 10.3 |
|Suspension Notice |§ 10.3 |
|Withdrawal Causes |§ 7.6 |
Restrictions on License; Reservation of Rights.
1 Licensee agrees that it is of the essence of the Agreement that, without the specific written consent of Licensor, or except as otherwise set forth herein: (a) other than as set forth in Section 21 hereof, the License may not be assigned, licensed or sublicensed in whole or in part, (b) no Included Program may be delivered, transmitted, exhibited or otherwise shown to anyone other than a Subscriber; (c) no Included Program may be delivered, transmitted, exhibited or otherwise shown by any means other than as set forth in Section 2 of the Agreement; (d) no person or entity shall be authorized by Licensee to do any of the acts forbidden herein or by the Agreement; and (e) except to the extent such rights are granted pursuant to Section 2.2.1 of the Agreement, Licensee shall not have the right to deliver, transmit, exhibit or otherwise show any Included Program in a high definition, up converted or analogous format or in a low resolution, down converted format.
2 Licensee shall promptly notify Licensor of any unauthorized transmissions or exhibitions of any Included Programs of which it becomes aware.
3 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, subscription pay television, basic cable television, free broadcast television, and basic cable television on demand or subscription video-on-demand rights, 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 the Agreement. Except as otherwise set forth in the Agreement, it is explicitly understood that the entering into of the 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 the 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.
License Fees. Licensee shall be responsible for the collection of all sums due from Subscriber Transactions. It is expressly agreed that, as between Licensee and Licensor, Licensee shall bear all collection risk for sums due from Subscriber Transactions, and, except as set forth in the Agreement, all Subscriber Transactions shall be included in the calculation of the aggregate PPV/VOD License Fees regardless of whether and when sums associated therewith are actually paid by the Subscriber.
Payment and Reports.
1 Payment. Licensee shall pay all amounts due under the Agreement in U.S. dollars by wire transfer to Licensor at:
Mellon Client Service Center
Pittsburgh, PA 15262
ABA # 043-000-261
Credit: Sony Pictures Television, Inc.
Sony Pictures Entertainment
Acct # 093-9923
Bank Phone: (412) 234-4381
1 PPV/VOD License Fee. Within 45 days after the end of each calendar month, Licensee shall pay to Licensor the PPV/VOD License Fees with respect to all exhibitions by Licensee of Included Programs that occurred during such month.
2 Library FOD License Fee. Licensee shall pay Licensor the Library FOD License Fee due for each calendar quarter within 45 days after the end of each calendar quarter during the Term.
9 Interest. Any amounts payable by Licensee to Licensor pursuant to any provision of the Agreement that are not the subject of bona fide dispute between the parties, if not paid on the date due shall, unless paid within 15 Business Days after the date due, bear interest at the lower of the reference rate of interest announced from time to time by Bank of America N.T. & S.A. or the highest rate permitted by law from the date payment was originally due until the date actually paid, provided that the foregoing shall in no way detract from Licensee’s obligation to pay Licensor its License Fees at the times and in the manner set forth in Section 4.1 hereof.
10 Statements; Reports; Schedules.
1 Within 45 days after the end of each calendar month, Licensee shall provide to Licensor an accounting statement showing, in reasonable detail, the following information: (a) the number of Subscriber Transactions and Free-On-Demand downloads for each Included Program for such month on the Licensed Service; (b) the Actual Retail Price and Deemed Price per Subscriber Transaction for each PPV/VOD Program licensed in such month; (c) Licensor’s Share for each PPV/VOD Program licensed for such month; (d) the PPV/VOD License Fee and Library FOD License Fee, separately by type of fee and title, as applicable, for each Included Program licensed for such month; (e) the number of Technical Credits granted with respect to Subscriber Transactions in such month and to date as of such month; (f) upon Licensor’s request, no more than twice per year, the actual aggregate number of residential Subscribers; and (g) any other information that Licensee provides to all other Major Studios as a general practice. Licensee shall notify Licensor when (i) 15% or more Subscribers have a PC Tuner, and (ii) the aggregate number of DVR Subscribers capable of receiving an Alternate Delivery Platform exceeds the lesser of (y) 3 million and (z) 1/3 of the total number of DVR Subscribers.
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.
Intentionally Omitted.
Intentionally Omitted.
Licensee Exhibition Rights and Exhibition Obligations.
1 Scheduling of Exhibitions. Licensee shall not be subject to a cap on the number of times it exhibits each Included Program during the License Period associated with such Included Program.
2 Transmission Requirements. Except for Licensee’s use of Included Programs for advertising and/or promotional purposes as set forth in Section 2.2.3 of the Agreement and Section 9 hereof, or unless specifically authorized by Licensor in writing, each Included Program shall be offered in its entirety, without any commercial advertisements, intentional intermissions, cuts, deletions, alterations, modifications, additions or editing of any kind unless specifically authorized by Licensor in advance (with any such authorized changes, if requested by Licensee, being made at Licensee’s sole cost and expense), and shall include all titles, credits, and copyright notices as contained in the version of each Included Program delivered to Licensee. Notwithstanding the foregoing, Licensor acknowledges that all Included Programs shall be digitally compressed and encrypted at Licensee’s sole expense prior to transmission and decrypted and decompressed upon reception and agrees that such processing does not constitute alteration or modification of the Included Programs.
3 Channel Designation. Subject to all other provisions of this Agreement, Licensee shall have the right in its discretion to designate the technical characteristics for the Channels (e.g. encoding, compression) used to distribute and exhibit Included Programs. As part of such rights, Licensee shall not be obligated to assign a specific Channel number for the distribution or exhibition of any Included Program except to the extent required under Section 9.2.3 of the Agreement and shall have the right to change such Channel assignment at any time or from time to time in its discretion.
4 Broadcast Requirements. Licensee shall have the right to decline (and/or cease) the exhibition, distribution and/or exploitation of any Included Program if: (a) such Included Program does not comply with Licensee’s reasonable standards and/or policies, as determined by Licensee; provided, however, that Licensee shall not by reason of this section decline or cease exhibition of any Included Program that has received an MPAA rating no more restrictive than “R” and such standards and practices (1) are applied to all suppliers of features on a non-discriminatory basis and only on the basis of a program content, (2) are not applied primarily for the purpose of frustrating the general intent of the Agreement, and (3) are comparable to and no more restrictive than the standards and practices applied by the major U.S. subscription pay television services (excluding channels intended primarily for children); or (b) if Licensee has a reasonable belief that it or any of its Affiliates or the officers, directors or employees of it or any of its Affiliates might be subject to criminal prosecution as a result of such exhibition.
5 Third Party Equipment and Technology. The parties acknowledge that certain technologies and equipment to be used in connection with the Licensed Service (including, without limitation, Licensee copy protection, smartcard/security technology and the set-top boxes) are being and/or will be developed, manufactured and provided by third parties.
6 Program Withdrawal. Licensor may withdraw any Included Programs or related materials at any time because of (i) an Event of Force Majeure, loss or impairment of rights, unavailability of necessary materials, potential infringement of the rights of third parties, any pending or threatened claim, judicial proceeding or regulatory proceeding, or because Licensor in its good faith business judgment deems it necessary in order to prevent potential litigation or arbitration in order to minimize or avoid a liability to Licensor or any of its Affiliates, or (ii) upon thirty days’ prior written notice, if Licensor elects to theatrically re-release or theatrically reissue such program or make a theatrical, home video or television remake or sequel thereof, provided, such election is consistent with Licensor’s past practices and is not intended to frustrate the intent of this Agreement (all of the foregoing being collectively “Withdrawal Causes”); provided that such Withdrawal Cause does not apply to substantially all Current Features and, provided further that such Withdrawal Cause is not primarily the result of Licensor or any other SPE Entity entering into an agreement in breach of another provision hereof (excluding from this provision an inadvertent breach). Licensor shall, in such event, give Licensee written notice of such withdrawal and set forth in reasonable detail the Withdrawal Cause. Licensee shall not accept any Subscriber Transactions relating to the withdrawn program after its receipt of such notice. It is expressly understood that such notice shall be given if, and only if, Licensor shall simultaneously withdraw the program from all other Pay-Per-View and Video-On-Demand exhibitions, unless the Withdrawal Cause relates solely to Licensee’s (or to a limited number of Other Provider’s in addition to Licensee’s) exhibition of such Included Programs or related materials. If Licensor subsequently makes such program available to any Other Provider for Pay-Per-View or Video-On-Demand exhibition in the Territory during the Term, then it shall also make such program available to Licensee hereunder. Licensor shall use commercially reasonable efforts to provide Licensee with a comparable replacement for any withdrawn Included Program. Withdrawal of an Included Program under this Section 7.6 shall in no event be deemed to be, or in any way constitute, a breach of the Agreement and Licensee shall not be entitled to any rights or remedies as a result of such withdrawal, except as otherwise expressly set forth in this Section 7.6.
Materials.
1 Picture Masters and Promotional Materials. For each Included Program, Licensor shall, in accordance with Section 8.1 through 8.4 (inclusive) of the Agreement, deliver to Licensee, or grant access in the United States to Licensee, to (a) a digital videotape (or other form of tape, including Beta SP) or an encoded digital file (each such videotape or digital file, a “Picture Master”) in the format and quantity specified on Attachment E and (b) the Promotional Materials set forth in Attachment E. It is expressly understood that Licensee’s right to possess or make limited copies of Included Programs to the extent expressly authorized hereunder shall not in any way be construed as granting to Licensee any interest in the copyright in any such Included Program other than the limited license under copyright for Pay-Per-View, Video-On-Demand or Free-On-Demand Personal Use exhibition expressly granted herein. All costs of encoding and duplication of each Picture Master and Promotional Materials shall be at Licensee’s sole cost and expense. Encoding shall take place at Licensor’s place of business or at a post-production house approved by Licensor and with such encoding quality subject to Licensor’s approval. All costs of creating and shipping the Picture Masters and Promotional Materials (including, without limitation, insuring the shipment of Picture Masters and Promotional Materials to Licensee) that Licensee directly incurs shall be borne by Licensee. Notwithstanding the foregoing, and without limiting any other right of Licensor, Licensor shall not be obligated to make materials available hereunder if all payments due to Licensor hereunder are not current.
2 Technical Acceptability. If, within 30 days after the Picture Masters are delivered to Licensee or access thereto is granted to Licensee, Licensee reasonably determines that any of the Picture Masters are not of acceptable technical quality for Pay-Per-View and Video-On-Demand exhibition, in accordance with the specifications set forth in Attachment E, as may be modified with Licensor’s reasonable approval, then it shall so notify Licensor and promptly return such Picture Masters (if delivered to Licensee) and provide to Licensor a technical report, at Licensor’s sole cost and expense. Upon receipt of such notice, Licensor shall promptly (and, in any case, within 15 days of receipt) deliver or grant access in the United States to Licensee technically acceptable (per such technical report) replacement Picture Masters.
3 Sub-Masters. Upon Licensee’s receipt of, or grant of access in the United States to Licensee to, the Picture Masters, Licensee shall be entitled to manufacture and retain (subject to Section 8.4 below) a number of formatted copies of the Picture Masters (the “Sub-Masters”) sufficient to allow Licensee to exploit the rights granted to it hereunder.
4 Return of Masters and Degaussing. Within 30 days after the end of the License Period of each Included Program, or earlier upon Licensor’s written request, Licensee shall at Licensee’s expense return to Licensor all Picture Masters, Promotional Materials and any other materials for such Included Program (including, but not limited to, all dubbed and subtitled versions) in substantially the same condition (except for normal wear and tear) as that in which they were delivered to Licensee or, at Licensor’s request, destroy any such materials and provide Licensor with a certificate of destruction signed by an officer of Licensee. Promptly following the termination of the License Period for each Included Program, Licensee shall degauss the Sub-Masters and provide to Licensor a dated statement certified by a Licensee manager providing that the Sub-Masters were destroyed.
5 Security Measures. Upon the loss, theft or destruction (other than as required hereunder) of any Picture Master or Promotional Materials, Licensee shall promptly furnish Licensor with proof of such a loss, theft or destruction by affidavit setting forth the facts thereof.
6 Use of Pictures Masters and Promotional Materials. All Picture Masters and Promotional Materials are the property of Licensor, subject only to the limited right of use expressly permitted by the Agreement, and Licensee shall not permit any lien, charge, pledge, mortgage or encumbrance to attach thereto.
Promotion and Advertising. In addition to those rights and obligations contained in Section 11 of the Agreement:
1 Promotional Rights. Licensor hereby grants to Licensee the following rights with respect to each Included Program:
1 the right to use the Promotional Materials in the form supplied by Licensor including, but not limited to, the right to create and/or use, written summaries, synopses and extracts for the purpose of advertising, exploitation and publicity of the exhibition of the Included Programs exhibited on the Licensed Service;
2 the right to advertise, publicize and promote the exhibition of the Included Programs by other materials, means or media selected by Licensee (it being understood that Licensee shall not utilize any such advertising rights as an endorsement of (or commercial tie-in with) any product or service other than with respect to the exhibition of such Included Program on the Licensed Service);
3 the right to manufacture and produce its own promotional and publicity materials subject to Licensor’s prior written reasonable approval (not to be unreasonably withheld or delayed) of such materials;
4 the right to use the names, voices, images and likenesses of any and all actors, cast members and other persons who rendered services in or are connected to the production of any Included Program, and Licensor’s name and logo, in order to publicize and/or advertise such Included Program; provided that (i) any and all such uses shall be subject to Section 9.2 hereof, and (ii) no such advertising, promotion or publicity shall constitute an endorsement of any product, service or person by Licensor, its Affiliates, or any person associated with any Included Program; and
5 the right to exercise all or any combination of the rights set forth in Sections 9.1.1 through 9.1.4 above in conjunction with Licensee’s advertising and/or promotional activities, including, without limitation, on or in connection with one or more barker channels.
2 Promotional Limitations and Restrictions. Any and all advertising, promotion and publicity activities related to any Included Program carried out by Licensee or under its authority shall be subject to the limitations and restrictions set forth below.
1 Credit Obligations and Restrictions. Licensee shall at all times comply with any and all credit obligations, and all other restrictions and obligations, imposed upon Licensor in connection with the advertising, promotion and/or publicizing of each Included Program, in accordance with (i) the applicable provisions of the SAG, DGA and WGA Basic Agreements and any other collective bargaining agreements which Licensor advises Licensee are applicable to such Included Program and (ii) such advertising and billing instructions as Licensor shall furnish to Licensee at the time of Licensor’s delivery to Licensee of such Included Program. In this regard, it is expressly agreed that Licensee shall not create any advertising material (other than those directly copying artwork and other materials as delivered to Licensee by Licensor) without first informing Licensor in writing thereof and requesting Licensor to supply the restrictions, if any, applicable thereto.
2 Additional Credit Obligations. If Licensor shall fail to notify Licensee of any applicable restriction(s) or obligation(s) relating to the advertising, promotion and/or publicizing of any Included Program, Licensor may subsequently notify Licensee of such additional restriction(s) or obligation(s) and Licensee shall comply prospectively with such additional restriction(s) or obligation(s); provided, however, that Licensor shall reimburse Licensee for any and all costs incurred by Licensee in connection with such compliance to the extent that Licensee would not have incurred such costs had it been informed of such restriction(s) and/or obligation(s) at the time of Licensor’s delivery to Licensee of such Included Program.
3 Timing. Licensee shall not engage in any advertising, publicity or promotional activities relating to any Included Program prior to (i) with regard to the trade, 45 days prior to the start of its License Period; (ii) with regard to print materials mailed to consumers, the 30th day prior to the commencement of the calendar month in which the License Period for such Included Program starts; or (iii) with regard to all other advertising, more than 30 days prior to the start of its License Period; and, in either case, after the end of its License Period (excepting only use in connection with generic Licensee advertising which indicates programs that Licensee has previously delivered to its Subscribers). Licensor agrees that the restrictions set forth in this Section 9.2.3 are Licensor’s standard provisions relating to the advertising and promotion of Video-On-Demand or Pay-Per-View exhibitions of the Included Programs in the Territory.
1 If any announcement, promotion or advertisement for a Current PPV Program, Current VOD Program, Library PPV Program, Library VOD Program and Library FOD Program:
9.2.3.1.1 is more than ten 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 DirecTV Pay Per View September 10” would be acceptable, but “Coming soon on DirecTV Pay Per View” would not be acceptable; or
9.2.3.1.2 is ten 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 DirecTV Pay Per View September 10” and “Coming soon on DirecTV Pay Per View” would be acceptable.
4 Notwithstanding anything to the contrary contained herein, Licensee shall not promote any Current PPV Program or Current VOD Program for the first fifteen (15) days following the Home Video Street Date of such Included Program in the Territory (“Promotional Blackout Period”), unless such program’s Availability Date is fifteen (15) or fewer days following such program’s Home Video Street Date, in which case Licensee shall have the right to announce and/or promote and/or advertise (in any and all media) such program commencing on such program’s Availability Date; provided, however, that unless otherwise agreed by the parties with respect to a specific Included Program, the promotion of any Included Program in printed materials distributed solely to Subscribers (and not to the general public) shall not be subject to the foregoing restriction, provided, that any such printed materials distributed during an Included Program’s Promotional Blackout Period specifically refers to such Included Program’s Availability Date.
4 Excerpts. Except for material utilized by Licensee in the form delivered to Licensee by Licensor, Licensee shall not utilize or authorize the utilization of, for advertising, publicity or promotional purposes, excerpts from any Included Program which because of their length, or for any other reason by virtue of their exhibition, would cause an additional payment to any person pursuant to the provisions of the SAG Basic Agreement or any other collective bargaining or third party agreement Licensor notifies Licensee is applicable to the Included Program.
5 Reserved Rights.
1 Without limiting the applicability of any other provision of the Agreement or this Attachment D, Licensee shall not utilize or authorize the utilization of any advertising or promotional materials in connection with Included Programs, except for: (1) those Promotional Materials delivered or made available by Licensor to Licensee hereunder, (2) other customary, non-derogatory promotional materials (such as advertisements and/or promotional spots) which are prepared by or for Licensee from the advertising/ promotional materials delivered or made available by Licensor in connection with such Included Program and which either appear in a print medium or are utilized for exhibition on any form(s) of television or radio, or (3) other materials expressly approved in writing by Licensor.
2 Without limiting the generality of Section 9.2.5.1 above, Licensee shall not, except with Licensor’s prior written approval, create any commercial tie-ins or merchandising nor create any promotional materials relating to the Included Programs or elements thereof except for those promotional materials created for exhibition on television or radio or other media (e.g., internet or wireless) or inclusion in print publications (e.g., Licensee shall not create (1) special non-broadcast promotional materials such as button or key chains, or (2) materials of any kind which unduly emphasize or trade upon a particular actor or other person rendering services in connection with an Included Program rather than the Included Program itself). Further, Licensee shall not utilize any promotional materials in a manner derogatory to Licensor, any of its Affiliates or any of their products or promote the exhibition of any Included Program by means of contest.
3 Licensee shall not exercise or authorize the exercise of any rights granted pursuant to this Section 9 with respect to any Included Program at any time, or in any manner, not expressly permitted hereunder.
6 Licensee shall not use the name or logo of Licensor or any of its Affiliates (including, without limitation, Sony Pictures Entertainment Inc., Columbia Pictures, TriStar Pictures, Screen Gems and Sony Pictures Classics) in such a way as to constitute an endorsement or testimonial, express or implied with respect to any party, product or service (other than whatever indirect endorsement may be implied from the distribution of the Included Programs on the Licensed Service and including Licensor’s and/or its Affiliates logo(s) or other corporate identifier(s) immediately before and/or after such Included Programs).
3 No Channel. Licensee may not use Included Programs or elements thereof to create a compilation of entertainment programming or “MTV”-type Channel (other than for use on one or more barker channels).
Content Protection and Security.
1 General.
1 Licensee represents and warrants that it has put in place commercially reasonable security systems and technologies 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 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 comparable feature films (in terms of avail date/window and standard/high definition) licensed from other feature film providers pursuant to output or package (of more than 5 titles) agreements (it being understood that a series of agreements with a single provider shall be treated as a package agreement for the purpose of this Section 10.1.1). Licensee shall maintain and use commercially reasonable efforts to upgrade such security systems, procedures and technologies (including, without limitation, encryption and storage and management methods) 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.
2 Licensor and Licensee shall, if requested by Licensor, meet not more than once each year during the Term to review Licensee’s compliance with the terms of this Section 10 and discuss Licensee’s contemplated upgrades to its security systems and the application of future security technologies (to the extent such contemplated security systems and technologies pertain to the security of the Included Programs on the Licensed Service) and any other matters pertaining to the security of the Included Programs on the Licensed Service (including, without limitation, Licensee’s use of third party technology) (“Annual Briefing”), provided that such Annual Briefing shall not involve discussion of Licensee confidential or proprietary information, except to the extent that Licensee elects to discuss such information, and with the understanding that any such information discussed shall be subject to the confidentiality requirements of this Agreement.
3 Notwithstanding Section 10.1.1 above, if Licensee employs more restrictive security systems, procedures and technologies for its Pay-Per-View and/or Video-On-Demand exhibition of any motion picture licensed from another feature film provider pursuant to an output or package (of more than 5 titles) agreement on a day-and-date or pre-day and date avail date basis than for a comparable (in terms of day-and-date or pre-day and date avail date) Included Program hereunder (“Special Content Protection”), then Licensee shall promptly notify Licensor in writing thereof and of any directly related terms and conditions. Licensor shall have the right (but not the obligation), exercisable within 30 days after receipt of the foregoing written notice, to match such directly related terms and conditions, and if Licensor exercises such right, this Agreement shall be deemed automatically amended to incorporate such directly related terms and conditions, including, without limitation, such Special Content Protection, only for the exhibition of such comparable Included Program (in terms of day-and-date or pre-day and date avail date). Nothing contained herein shall be construed to require Licensee to offer to Licensor a day-and-date or earlier avail date opportunity (and thus the Special Content Protection with respect thereto) if, in Licensee’s reasonable business judgment, Licensee desires to limit such avail date opportunities.
4 Notwithstanding the foregoing, with respect to Special Content Protection in the form of a new DRM (the “New DRM Requirements”), Licensor shall not be required to contribute to any royalties or license fees that may be due with respect to such New DRM Requirements unless Licensee requires all other feature film providers licensing feature films pursuant to an output or package (of more than 5 titles) agreement and receiving the benefit of such New DRM Requirements to contribute to such royalties or license fees. In the event that Licensor is required to contribute to any royalties or license fees pursuant to the foregoing proviso, Licensor shall have the right to benefit from the most favorable terms with respect to such contribution offered to any other feature film provider licensing feature films pursuant to output agreement. By way of example, if such New DRM Requirements require a percentage of each subscriber transaction on the Licensed Service as a license fee, Licensor shall contribute at the lowest percentage offered to any other feature film provider licensing feature films pursuant to an output or package (of more than 5 titles) agreement.
2 Obligation to Monitor for Hacks and Fraud.
1 Licensee shall take such commercially reasonable measures to determine the existence of Security Breaches or Territorial Breaches and shall promptly notify Licensor if any such occurrences are discovered.
2 Following the Closed IP Effective Date, Licensee shall at all times maintain commercially reasonable fraud detection measures designed to detect the unauthorized viewing of Included Programs in violation of the Usage Rules and excessive registrations and de-registrations of Approved Devices from any one Subscriber’s account.
3 Suspension Notice. Licensee shall notify Licensor in writing promptly upon learning of the occurrence of any Security Breach or Territorial Breach, and shall provide Licensor with reasonable, non-proprietary information describing the nature and extent of such occurrence. Licensor shall have the right to suspend the availability (“Suspension”) of one or more Included Programs from the applicable transmission means on the Licensed Service (the “Implicated Platform”) at any time during the Term in the event of a Security Breach or Territorial Breach which remains unresolved for a period of greater than fifteen (15) days by delivering a written notice to Licensee of such Suspension (“Suspension Notice”), provided Licensor imposes any such Suspension on a non-discriminatory basis. A Suspension Notice may relate to any Included Programs affected by such Security Breach or Territorial Breach, but only with respect to such programs’ exhibition on the Implicated Platform. Upon its receipt of a Suspension Notice, Licensee shall take commercially reasonable steps to promptly cease exhibiting such affected Included Programs via the Implicated Platform as soon as commercially feasible (but in no event more than three Business Days after receipt of such notice). A Suspension shall suspend for the length of its duration Licensee’s exhibition and channel commitments with respect to the Implicated Platform.
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 upon Licensor’s delivery to Licensee of a notice thereof (“Reinstatement Notice”) and Licensee’s rights and obligation with respect to any Included Programs affected by such Suspension shall promptly resume. For clarity, no period of Suspension shall extend any License Period or 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 the Agreement. Upon receipt of a Reinstatement Notice, Licensee may include the Included Programs on the Licensed Service to the extent required pursuant to the terms and conditions of the Agreement. If any single Suspension lasts for a period of one month or more, Licensor shall have the right, but not the obligation, to terminate the Agreement with respect to the Implicated Platform by providing written notice of such election to Licensee. Notwithstanding anything to the contrary set forth herein or otherwise in the Agreement, Licensee shall not be liable for any damages of any kind related to any Security Breaches caused solely by a third party system (and not, for the avoidance of doubt, any proprietary conditional access technology employed by Licensee) through no fault of Licensee.
5 Content Protection Requirements and Obligations. Licensee shall, at Licensee’s cost, at all times during the Term comply with the content protection requirements and obligations attached hereto as Attachment A and incorporated herein by this reference; provided however, and notwithstanding anything to the contrary herein (including, without limitation, the provisions of Section 10.1 above), if Licensor or any other SPE Entity allows any Other Provider to employ less restrictive content protection for the comparable exhibition (comparable with respect to territory, platform and device) of any Included Program(s) than that required hereunder (including, without limitation, the content protection requirements and obligations set forth in this Section 10 and/or Attachment A hereto), then Licensor shall promptly inform Licensee thereof and of any directly related terms and conditions. Licensee shall have the right (but not the obligation), exercisable within 30 days after receipt of the foregoing written notice, to match such directly related terms and conditions with respect to such Included Program(s) (if Licensee is not reasonably capable of complying with such terms and conditions (taking into consideration Licensee’s technology and national footprint), then Licensor shall use commercially reasonable efforts to provide substantially comparable terms and conditions with respect to all platforms of the Licensed Service; it being agreed and acknowledged by Licensee that Licensor may be able accommodate some but not all platforms despite commercially reasonable efforts). Licensor will impose any such terms and conditions on a non-discriminatory basis. If Licensee so elects to match, this Agreement shall be deemed automatically amended to incorporate such directly related terms and conditions, including, without limitation, such less restrictive content protection requirements for the exhibition of such Included Programs. For the avoidance of doubt, Licensee shall be entitled to enjoy the benefits of this Section 10.5 regardless of whether Licensor avails itself of the provisions of Section 10.1 above.
Retransmission. As between Licensor and Licensee, (i) 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, if any, and (ii) Licensee shall have no right to exhibit or authorize the exhibition of the Included Programs by means of Cable (as such term is defined by the FCC) transmission.
Parties’ Representations and Warranties. Licensee and Licensor each represent and warrant to the other as follows.
1 Authority, No Breach. It has all of the rights, powers and authority to enter into, and perform fully all of its obligations under, the Agreement. The execution, delivery and performance of the Agreement shall not result in the breach or non-performance of its organizational documents or any agreements it and/or its Affiliates have with any third party.
2 Formation and Existence. It is a corporation organized under the laws of the state of its incorporation and is duly incorporated and validly existing.
3 Corporate Action. It has taken all requisite corporate action to approve execution, delivery and performance of the Agreement, and the Agreement constitutes a legal, valid and binding obligation upon itself and is enforceable in accordance with its terms. Except following an assignment permitted by Section 21 hereof, it shall preserve and maintain its corporate existence.
4 Litigation. There is no outstanding (or, to the best of its knowledge, threatened) judgment, or pending litigation or proceeding, involving or affecting the transactions provided for in the Agreement, except as has been previously or concurrently disclosed in writing by either party to the other. It shall promptly inform the other of any breach of this Section 12.4.
5 Consents. The fulfillment of its obligations hereunder will not constitute a material violation of any existing applicable Law. All material, necessary and appropriate public or private consents, permissions, agreements, licenses, or authorizations have been, or shall be, obtained in a timely manner.
6 No Broker. There is no broker, finder or intermediary involved in connection with the negotiations and discussions incident to the execution of the Agreement, and no broker, finder, agent or intermediary who might be entitled to a fee, commission or any other payment upon the consummation of the Agreement.
7 Compliance with Laws. It shall comply, in all material respects, with all laws applicable to it regarding, with respect to and/or arising out of its rights and obligations under the Agreement.
Licensor’s Representations, Warranties and Certain Covenants.
1 Licensor represents, warrants and covenants that:
1 it owns and controls or will own and control when created all of the rights granted or purported to be granted under the Agreement, including, without limitation, the necessary literary, musical, dramatic, artistic and/or intellectual property rights granted to Licensee without the incurrence by Licensee or its Affiliates of any obligation or liability to any third party, monetary or otherwise; provided, however, that Licensor does not represent or warrant that Licensee may exercise the performing rights in the music without obtaining a valid performance license and (to the extent necessary) paying a performing rights royalty or license fee for those rights controlled by BMI, ASCAP, SESAC or similar organizations;
2 nothing contained in any Included Program licensed to Licensee hereunder or in any other materials to be supplied by Licensor to Licensee under the Agreement, nor any exercise of the rights granted to Licensee hereunder in accordance with the terms of the Agreement, will (i) violate, infringe or conflict with any rights of any person or entity including, without limitation, any copyright, literary, musical, dramatic, artistic, trademark, contract, privacy or publicity rights or the rights to be free from unfair competition and defamation, or any other property or personal right, or (ii) violate any third party’s droit moral or any similar rights. If Licensor exercises its withdrawal rights set forth in Section 7.6 hereof due to issues covered by this Section 13.1.2, such withdrawal shall not constitute a breach of this Section 13.1.2, but Licensor shall indemnify Licensee for all Claims arising prior to withdrawal as provided in Section 16 hereof;
3 neither Licensor nor any other SPE Entity shall license or otherwise authorize the exhibition of any Current PPV Program or Current VOD Program licensed to Licensee hereunder, prior to the commencement of, or during, the License Period for such Current PPV Program or Current VOD Program, as applicable, by means of free television or pay television within the Territory, except for the exhibition of trailers and similar promotional material on television in connection with the theatrical, home video, Pay-Per-View, Video-On-Demand or non-theatrical, music, merchandising and ancillary exploitation of such Current PPV Program or Current VOD Program, as applicable;
4 the performing rights in the music contained in each Included Program licensed to Licensee hereunder are either (a) controlled by ASCAP, BMI or SESAC, (b) in the public domain or (c) controlled by Licensor and all such performing rights controlled by Licensor are included within the rights licensed or purported to be licensed by Licensor to Licensee pursuant to the Agreement without payment of additional consideration;
5 excepting only the music performance rights payments and any payments which Licensee may incur in fulfilling its obligations hereunder, it has paid, or will pay, all amounts that have or may become payable to third parties as a result of any Licensor agreement with such third party by virtue of the use made of any Included Program pursuant to the Agreement and any other amounts that have or become payable with respect to any Included Program or the other materials to be supplied by Licensor hereunder including, without in any manner limiting the generality of the foregoing, any and all payments which may become due to, or claims which may be made by, any union, guild, actor, director, producer, craftsman, musician, composer, performer or other entity or person for services rendered or rights granted in connection with any Included Program licensed to Licensee hereunder by virtue of the use thereof hereunder, including any residual, royalty, participation or contingent compensation of any kind or nature, however determined, reuse, pension, health and welfare fund and payroll tax payments;
6 to the best of Licensor’s knowledge, there are not pending any claims, liens, charges, restrictions or encumbrances on any Included Program licensed to Licensee hereunder that would interfere with the rights of Licensee under the Agreement;
7 each Included Program licensed to Licensee hereunder is and will be protected by copyright throughout the Territory during the Term of the Agreement; and
8 the notice of credit obligations (known by Licensor as the “Synopsis of Paid Advertising Billing Requirements”), if any, delivered to Licensee under the Agreement is and will be a complete and accurate recitation of all credit obligations to all persons, firms, entities or corporations in respect of each related Included Program.
2 Except as set forth in Section 5.8 of the Agreement, Licensee acknowledges and agrees that a breach of any representation or warranty contained in this Section 13 shall not give Licensee the right to terminate this Agreement.
Licensee’s Representations, Warranties and Certain Covenants.
1 Licensee represents, warrants and covenants that:
1 its activities beyond the exhibition, advertising and promotion of Included Programs authorized hereunder shall not (a) violate, infringe, misappropriate or conflict with the rights of any person or entity, including, without limitation, any patent, trade secret, copyright, literary, musical, dramatic, artistic, trademark, contract, privacy or publicity rights or the rights to be free from unfair competition and defamation, or any other property or personal rights or (b) violate any third party’s droit moral or any comparable rights; and
2 If a performing rights royalty or license fee is required to be paid in connection with the exhibition of an Included Program, Licensee shall be responsible for the payment thereof and shall indemnify Licensor therefor.
2 Notwithstanding anything contained herein to the contrary, Licensor acknowledges and agrees that a breach of any representation or warranty contained in this Section 14 shall not give Licensor the right to terminate this Agreement.
Force Majeure. The duties and obligations of the parties hereunder may be suspended upon the occurrence and continuation of any Event of Force Majeure and for a reasonable start-up period thereafter; provided, that the duties and obligations so suspended shall be limited to those affected by such Event of Force Majeure (e.g., a loss of satellite capacity shall not suspend Licensee’s obligations with respect to the Directv-On-Demand Platform or its exhibition commitments for Current VOD Programs, Library VOD Programs and/or Library FOD Programs). 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. The foregoing shall not apply to any payments required to be made by Licensee to Licensor hereunder or to Licensee’s obligation to cease exhibition of any Included Program withdrawn by Licensor pursuant to Section 7.6 hereof, unless the Event of Force Majeure shall directly affect same (e.g., a disaster which causes a closing of the banking system).
Indemnification; Procedure.
1 Each party (the “Indemnifying Party”) shall indemnify and hold the other party and its Affiliates and their respective employees, officers, agents, attorneys, stockholders and directors, and their respective successors, licensees and assigns (each an “Indemnified Party” and, collectively, the “Indemnified Parties”) harmless from and against (and shall pay as incurred) any and all claims, proceedings, actions, damages, costs, expenses and other liabilities and losses (whether under a theory of strict liability, or otherwise) of whatsoever kind or nature, other than contract claims between the parties hereunder (each a “Claim”), incurred by, or threatened, imposed or filed against, any Indemnified Party (including, without limitation, (i) reasonable costs of investigation and defense, which shall include, without limitation, court costs and reasonable attorney, expert and third party fees, and (ii) to the extent permitted by law, any fines, penalties and forfeitures in connection with any proceedings against an Indemnified Party) caused by any breach or alleged breach of the Agreement by the Indemnifying Party. Nothing in this Section 16 shall be construed so as to limit the provisions of Section 22.8 hereof.
2 If any Claim for indemnification arises under this Section 16, then the Indemnified Party shall promptly notify the Indemnifying Party in writing (an “Indemnity Notification”) and shall consult with and keep the Indemnifying Party reasonably informed with respect to the investigation, defense, compromise, settlement, resolution or other disposition of any such Claim; provided, however, that the failure to promptly provide any required Indemnity Notification shall not in any manner diminish an Indemnifying Party’s obligations under the Agreement, except to the extent that a court of competent jurisdiction has finally determined that such failure materially prejudiced the Indemnifying Party.
3 The Indemnifying Party shall have the right, at its cost and expense, to control the defense, negotiation and settlement of any Claim with counsel of its choice. If the Indemnifying Party shall elect to control such defense, then each Indemnified Party shall nevertheless retain the right to employ (at its sole expense) separate counsel of its choice in any action subject to a Claim for indemnity and participate in the defense thereof unless the Indemnifying Party shall have failed promptly to appoint counsel and assume such defense, in which event such fees and expenses of counsel to each Indemnified Party shall be paid by the Indemnifying Party as incurred by the Indemnifying Party and in no way affects the rights of the Indemnified Party.
4 Neither party shall settle, compromise or consent to the entry of any judgment in or otherwise seek to terminate any pending or threatened Claim in respect of which the Indemnified Party is entitled to indemnification hereunder (whether or not the Indemnified Party is a party thereto), without the prior written consent of the other party hereto unless the settlement involves solely the payment of money.
Confidentiality.
1 Confidential Information. During the Term and for a period of two (2) year thereafter, Licensee and Licensor shall hold, and shall cause each of their directors, officers, employees and agents to hold, in confidence the Agreement (including the financial terms and provisions hereof) and all information received pursuant to, or developed in accordance with, the Agreement. Licensee and Licensor hereby acknowledge and agree that all information contained in or furnished pursuant the Agreement, not otherwise known to the public, is confidential and proprietary and is not to be disclosed to third persons without the prior written consent of both Licensee and Licensor. Neither Licensee nor Licensor shall disclose such information to any third party (other than to officers, directors, employees and agents of Licensee or Licensor, as applicable, who have a business reason to know or have access to such information, and only after each of whom agrees to being bound by this Section 17) except:
1 to the extent necessary to comply with any law or the valid order of a governmental agency or court of competent jurisdiction or as part of its normal reporting or review procedure to regulatory agencies, and to provide contractually required information to guilds, unions, profit participants and others having a financial interest in an Included Program; provided, however, that the party making such disclosure shall seek, and use its best efforts to obtain, confidential treatment of said information and shall promptly, to the greatest extent practicable, notify the other party in advance of such disclosure;
2 as part of its normal reporting or review procedure by its parent company, its auditors and its attorneys;
3 upon written notice in advance of such disclosure, in order to enforce its rights and perform its obligations pursuant to the Agreement and agreements with other feature film providers or Other Providers (including each party’s right to disclose provisions of the Agreement to third parties in conjunction with such party’s obligations under most favored nations provisions; provided, however, that the disclosing party shall remove the name of the non-disclosing party, its Affiliates and any other references which would directly identify the non-disclosing party or its Affiliates to such third party in any such disclosure);
4 to the extent necessary to obtain appropriate insurance, to its insurance agent or carrier; provided, however, that such agent agrees to the confidential treatment of such information; and
5 to actual or potential investors and/or lenders, and to actual or potential successors-in-interest and to actual or potential purchasers of Licensee, Licensor or any Affiliate thereof; provided, however, that such person or entity agrees to the confidential treatment of such information, with such agreement evidenced by the prior execution of a confidentiality agreement delivered to the other party to the Agreement in form approved by such party, which approval will not be unreasonably withheld; provided further that the disclosing party shall not be required to disclose the identity of any investor or potential successor in interest provided that (i) the disclosing party represents and warrants to the other party to the Agreement that such investor, lender, potential successor-in-interest or purchaser is a bona fide investor, lender, potential successor-in-interest or purchaser and (ii) the disclosing party shall promptly inform the other party of such investor’s, lender’s, potential successor-in-interest’s or purchaser’s identity should the non-disclosing party believe or understand that any such investor, lender, or potential successor-in-interest has violated its obligations under such confidentiality agreement.
2 Press Releases. The parties agree that no press release or public announcement relating to the Agreement shall be issued without the prior written approval of both parties.
Limitation on Liability and Damages. IN NO EVENT SHALL EITHER PARTY OR ANY OF ITS AFFILIATES BE LIABLE FOR ANY INCIDENTAL, SPECIAL OR CONSEQUENTIAL DAMAGES (INCLUDING, WITHOUT LIMITATION, ANY LOST PROFITS OR LOSS OF BUSINESS, WHETHER FORESEEABLE OR NOT), OCCASIONED BY ANY BREACH OF THE AGREEMENT OR ANY OTHER CAUSE ARISING UNDER OR DIRECTLY RELATING TO THE AGREEMENT. LICENSEE MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, CONCERNING THE FUNCTION, PERFORMANCE AND AVAILABILITY OF COMPRESSION, ENCRYPTION, COPY PROTECTION OR OTHER TECHNOLOGIES AND/OR EQUIPMENT (INCLUDING, WITHOUT LIMITATION, WITH RESPECT TO THE SATELLITES, CHANNELS OR OTHER ASSOCIATED EQUIPMENT). THE LIMITATIONS OF LIABILITY SET FORTH HEREIN SHALL ALSO APPLY TO THE MANUFACTURER OF THE SATELLITE(S) UTILIZED BY THE LICENSED SERVICE (AND ALL AFFILIATES THEREOF). THE FOREGOING LIMITATION SHALL NOT LIMIT EITHER PARTY’S OBLIGATIONS TO INDEMNIFY AS TO THIRD PARTY CLAIMS.
Audit. During the Term, and for a period of twenty-four (24) months thereafter, Licensor’s authorized independent representatives may, during regular business hours and upon reasonable advance written notice of at least twenty (20) Business Days to Licensee, audit such books and records of Licensee as are reasonably necessary to verify the accuracy of payments made to Licensor under this Agreement. Licensor’s representative shall be a third party independent nationally recognized cable audit, law or accounting firm designated by Licensor and approved by Licensee, such approval not to be unreasonably withheld, and such cable, audit, law or accounting firm and/or the individuals involved shall have executed appropriate confidentiality agreements in a form reasonably designated by Licensee prior to the commencement of an audit. Any such audit shall be at Licensor’s sole cost and expense. Licensor may not audit more than one time per year during the Term or more than one time after the expiration of the Term (and, so long as Licensee is promptly responding to the auditor’s reasonable requests for documents and information, no such audit shall continue for more than 45 calendar days), and any such audited information shall be subject to Section 17 of these Standard Terms and any such audit shall be conducted only during reasonable business hours and in such a manner as not unreasonably to interfere with the normal business activities of Licensee. Commencing as of the Effective Date, each audit shall be limited to the two Term Years prior to the then-current Term Year (it being understood that accounting statements covering periods prior to the Effective Date shall be governed by the Prior Agreement). Licensee shall keep and maintain complete and accurate books of account and records in connection with each Included Program. Licensee shall maintain such records with respect to each Included Program at its principal place of business for a period of four (4) years from the date of Licensee’s first exhibition of the particular Included Program. The acceptance by Licensor of any statement or payment shall be without prejudice to any of Licensor’s rights or remedies and shall not bar Licensor from thereafter disputing the accuracy of any such payment or statement, and Licensee shall remain fully liable for any balance due under the terms of this Agreement. If Licensor shall audit Licensee’s books and records, then Licensor shall, within 6 months of the conclusion of such audit, inform Licensee, in writing of any claim resulting therefrom (including a true copy of the auditor’s report), and, except for the claims set forth in such notice, all statements rendered by Licensee with respect to the period covered by such audit and any prior period shall be conclusive and binding on the parties and not subject to further audit. Notwithstanding anything to the contrary contained herein, no provision herein shall limit Licensor’s rights at law in the event that Licensee shall have concealed information from or provided false information or failed to make available all pertinent information requested by Licensor’s auditors. Licensor shall commence an action or proceeding with respect to any such claim within twenty (20) months of the commencement of any audit hereunder or shall forever be barred from bringing same. Licensor may not commence a new audit until all prior audits have been closed (i.e., after delivery of the notice of the auditor’s findings). If an examination establishes an error in Licensee’s computation of the sums due to Licensor for the period covered by such audit, which error is in excess of 5% of the sums due to Licensor for such period (and provided that such error is either acknowledged by Licensee or confirmed by a final non-appealable order of a court of competent jurisdiction), then Licensee shall pay to Licensor, in addition to the additional sums due to Licensor, (i) interest on such additional sums computed at the best rate charged by Licensor’s principal bank to its best customers, as the same may vary from time to time, and (ii) the reasonable direct out-of-pocket costs of such examination (but only to the extent that such sums are actually paid by Licensor to outside auditors, it being expressly understood that Licensee shall not be responsible for any portion of Licensor’s inside costs in connection with such claims); provided, however, that in no event shall the additional sums so paid exceed the amount of the error.
Errors and Omissions Insurance. Prior to the commencement of the License Period for each Included Program, Licensor shall secure, at Licensor’s sole cost and expense, a standard producer’s liability insurance policy covering Licensee’s exhibition, distribution and exploitation of such Included Program in the minimum amount of $3 million/$5 million (“Errors and Omissions Insurance”). Such Errors and Omissions Insurance shall name as additional insureds, Licensee, its Affiliates, its licensees and the officers, directors, agents and employees of the same, and shall contain a statement that the insurance being provided therein is primary and that any errors and omissions insurance carried by Licensee or any of its Affiliates is neither primary nor contributing. Licensor shall maintain such Errors and Omissions Insurance in full force and effect and unmodified throughout such License Period and for one (1) year beyond the termination of such License Period. To the extent that Licensee shall have Errors and Omissions Insurance with regard to its operation of the Licensed Service, Licensee shall provide that Licensor is named as an additional insured on such Errors and Omissions Insurance policy and Licensee will pass through to Licensor the benefit of any of its indemnities from product suppliers.
Assignment. Either party may assign its rights and obligations under the Agreement, in whole only, to a Qualified Transferee; provided, however, that such Qualified Transferee executes an assignment and assumption agreement in a form reasonably acceptable to the non-transferring party. As used herein, a “Qualified Transferee” shall be a person or entity approved by the non-transferring party, as determined by such non-transferring party in its discretion. No such assignment will constitute a novation, unless expressly agreed in writing by both parties. Notwithstanding the foregoing, (i) Licensee may assign its rights and obligations under the Agreement without Licensor’s consent to an Affiliate of Licensee, or a successor to all or substantially all of the assets of Licensee (including by way of merger or consolidation or in the process of “going public”) and (ii) Licensor may assign its rights and obligations under the Agreement without Licensee’s consent to an SPE Entity, or a successor to all or substantially all of the assets of Licensor (including by way of merger or consolidation or in the process of “going public”); provided, that, in each such case, such assignee executes an assignment and assumption agreement for the benefit of the non-assigning party; and provided, further that, if such assignee under clause (i) above is an Affiliate of Licensee that is neither a DirecTV Entity nor an entity that has the ability to perform, and is sufficiently capitalized to meet, all obligations of Licensee set forth under this Agreement (including, without limitation, Licensee’s indemnity obligations), then Licensee shall remain primarily liable for all obligations of Licensee under the Agreement. Licensor may also assign its right to receive payments from Licensee, provided that if any payment is required to be made by Licensee directly to such assignee, (a) a copy of such assignment is delivered to Licensee, together with, written instructions from Licensor regarding payments to such assignee (b) Licensee shall not be obligated to make disbursements to more than one entity in addition to Licensor and (c) such obligation shall remain subject to any and all of Licensee’s defenses and rights of offset hereunder, if any.
Miscellaneous Provisions.
1 Waiver and Amendment.
1 The Agreement may not be amended or modified in any way, and none of its provisions may be waived, except by a writing signed by an authorized officer of the party against whom the amendment, modification or waiver is sought to be enforced.
2 Either party to the Agreement may specifically waive any breach of thereof by the other party, provided that no such waiver shall be binding or effective unless in writing and no such waiver shall constitute a continuing waiver of similar or other breaches, unless otherwise agreed to in writing. A waiving party, at any time, and upon notice given in writing to the breaching party, may direct future compliance with the waived term or terms of the Agreement, in which event the breaching party shall comply as directed from such time forward.
2 Governing Law. THE AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF CALIFORNIA, WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THAT WOULD REQUIRE THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION.
3 Ambiguities. Any ambiguities shall be resolved without reference to which party may have drafted the Agreement.
4 Jurisdiction and Venue. Each of the parties hereto irrevocably agrees that the state and federal courts located in Los Angeles, California shall have sole jurisdiction over any suit or other proceeding arising out of or based upon the Agreement, and each party hereto hereby waives any claim that it is not subject personally to the jurisdiction of said courts or that any such suit or proceeding is brought in an inconvenient forum or improper venue. Each of the parties hereto irrevocably agrees that service of process in any such suit or other proceeding shall be properly made if delivered to the address set forth in Section 22.11 hereof.
5 Integration. The Agreement, attachments and exhibits thereto constitute the entire agreement between the parties as to the subject matter thereof, and supersede all previous understandings, commitments or representations concerning the subject matter thereof. Each party acknowledges that the other party has not made any representations other than those that are contained herein or therein. Without limiting the generality of the foregoing, it is expressly agreed that no changes, deletions or additions to any draft of this Attachment D or the Agreement shall be utilized in any manner in interpreting the intent of the parties with respect to the final executed agreement.
6 No Third Party Beneficiaries. The provisions of the Agreement are for the benefit only of the parties thereto and the Indemnified Parties, and no third party may seek to enforce, or benefit from, these provisions.
7 Captions and Headings. The descriptive headings and/or captions of the several paragraphs of the Agreement are inserted for convenience only and do not constitute a part of the Agreement.
8 Attorneys Fees. The prevailing party in any litigated matter between the parties shall be entitled to payment/reimbursement by the other of its reasonable outside attorney’s fees and expenses, upon any such final determination by a court of competent jurisdiction.
9 Severability. Nothing contained in the Agreement shall be construed so as to require the commission of any act contrary to any law, and wherever there is any conflict between any provision of the Agreement and any law, such law shall prevail; provided, however, that in such event the provisions of the Agreement so affected shall be curtailed and limited only to the extent necessary to permit compliance with the minimum legal requirements, and no other provision of the Agreement shall be affected thereby and all such other provisions shall continue in full force and effect.
10 Relationship of the Parties. Except as may otherwise be expressly provided in the Agreement, no party hereto (nor any of its officers, directors, agents or employees) shall act as, or hold itself out as, an agent of the other party thereto, or take any action or do anything that would create an obligation or liability of the other party thereto or cause any third party to believe that such party is an agent of the other party thereto or that such party is authorized to act on behalf of the other party thereto. The parties hereto do not intend the Agreement, or the relationship hereunder, to constitute a joint venture or partnership of any kind. It is expressly understood and agreed that, subject to the contractual obligations of Licensee regarding the payment of License Fees set forth in the Agreement, Licensee is the sole owner of the all monies derived from the exploitation of the rights granted by Licensor, that Licensee is not holding such monies in trust for Licensor (and that no fiduciary relationship exists between the parties or is borne by Licensee with respect to such moneys), and that Licensor has no ownership interest in such monies.
11 Notice. Any notice, approval, consent or other communication required or permitted to any party or assignee under the Agreement shall be in writing and shall be deemed to have been duly given or made (i) if delivered personally by courier or otherwise, then as of the date delivered or if delivery is refused, then as of the date presented, (ii) if sent or mailed by Federal Express, Express Mail or other overnight mail service to a party at its address appearing below, return receipt requested, then as of the date delivered or if delivery is refused, then as of the date presented, (iii) if sent via the United States mail to a party at its address appearing below, return receipt requested, then as of the date delivered or if delivery is refused, then as of the date presented, and (iv) if sent by facsimile to a party at its facsimile telephone number appearing below, then as of the date on which the appropriate electronic confirmation of receipt is received by the sending party and, if such confirmation occurs after 5:00 P.M., then as of the next Business Day.
TO LICENSEE:
DIRECTV, Inc.
2230 E. Imperial Highway
El Segundo, California 90245
(310) 535-5003
Attention: Derek Chang, Executive Vice President
Telephone: (310) 964- 4893
Facsimile: (310) 964-6230
With a separately delivered copy to:
DIRECTV, Inc.
2230 E. Imperial Highway
El Segundo, CA 90245
Attention: Todd W. Mathers
Vice President, Business and Legal Affairs
Telephone: (310) 964-4252
Facsimile: (310) 964-5416
TO LICENSOR:
Sony Pictures Television Inc.
10202 W. Washington Boulevard
Culver City, California 90232
Attention: President, Distribution
Telephone: (310) 244-8239
Facsimile: (310) 244-1798
With a separately delivered copy to:
Sony Pictures Entertainment Inc.
10202 W. Washington Boulevard
Culver City, California 90232
Attention: General Counsel
Telephone: (310) 244-4692
Facsimile: (310) 244-0510
The parties hereto may change their notice addresses by giving notice thereof in conformity with this Section 22.11.
12 Counterparts. The Agreement may be executed in several counterparts, each of which shall be deemed an original, and all such counterparts together shall constitute but one and the same instrument. The Agreement may also be executed via counterpart facsimiles upon (a) the telecopy by each party of a signed signature page thereof to the other party, with return receipt by telecopy requested and received and (b) the parties’ agreement that they will each concurrently post, by overnight courier, a fully executed original counterpart of the Agreement to the other party.
13 Survival of Representations and Warranties. All representations and warranties contained herein or made by Licensee or Licensor in connection herewith shall survive any independent investigation made by Licensee or Licensor (including, without limitation, the receipt and/or review of any materials or documents pursuant to or arising out of the Agreement).
14 Documents. Each party hereto agrees to execute and, if necessary, to file, subject to Section 17 hereof, with the appropriate governmental entities, such documents as the other party hereto shall reasonably request in order to carry out the purposes of the Agreement.
15 Survival of Provisions. The rights and obligations of the parties pursuant to Sections 3, 4, 8.4, 12 through 14, 16 through 20, and 22 hereof shall survive any expiration or earlier termination of the Agreement. All other rights and obligations of the parties under the Agreement shall cease upon expiration or termination. Anything to the contrary in the Agreement notwithstanding, to the extent that the party from which indemnity pursuant to Section 16 hereof is sought and was appropriately notified that a specific claim for indemnity is being made hereunder such obligations to indemnify shall survive until the final disposition, including any appeals, of such claim.
16 Remedies. No remedy conferred by any of the specific provisions of the Agreement is intended to be exclusive of any other remedy which is otherwise available at law, in equity, by statute or otherwise, and except as otherwise expressly provided for herein, each and every other remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law, in equity, by statute or otherwise. The election of any one of more of such remedies by any of the parties hereto shall not constitute a waiver by such party of the right to pursue any other available remedies.
17 Program Guides. Licensee shall promptly upon publication deliver to Licensor copies of print program guides, if any, published for the Licensee Service for as long as Licensee is authorized to exhibit any Included Program hereunder.
ATTACHMENT E
DELIVERY REQUIREMENTS
The Included Programs shall be delivered to Licensee in accordance with Section 8 of the Agreement and Section 8 of Attachment D and shall conform to the technical specifications set forth in the attached Attachments E-1 and E-2, as applicable.
ATTACHMENT E-1
DIRECTV Delivery Requirements
Standard Definition
1.0 Picture Master
Pursuant to Section 8 of the Agreement and Section 8 of Attachment D, Licensor shall deliver or grant access to a Picture Master to Licensee. If Licensor elects to deliver to Licensee the Picture Master, then the Licensor-provided Picture Master shall meet the specifications set forth below. If Licensor elects to grant access to Licensee, then the Picture Master provided by Licensor to the laboratory through which such access is granted shall meet quality standards such that Licensee (or its third party provider/vendor) can create standard definition materials that meet the specifications set forth below and can generate copies thereof using commercial duplication equipment (it being agreed and acknowledged by Licensee that Licensee shall bear all costs relating to such creation/duplication). For purposes of this document, such copies shall be deemed a Picture Master. The Picture Master, the promotional and ancillary materials, and other materials to be delivered or made available to Licensee under Attachments E-1 and E-2 are sometimes referred to as the “Materials”.
A. Delivery
1. Videotape Delivery
a) Format. The Picture Master shall be in Digital BetaCam format (“Picture Master Tape”). Each Picture Master Tape shall be on one videocassette if so available, it being agreed and acknowledged by Licensee that Licensor shall have no obligation hereunder to create a Picture Master on one videocassette.
b) Access. Picture Master Tapes shall be made available to Licensee via a grant of laboratory access (i.e., not via physical delivery from Licensor directly to Licensee).
1. Digital File Delivery
a) Format. Licensor shall make available to Licensee via a mutually agreed upon third-party provider (it being agreed that such provider shall be TVN initially, and shall be Ascent Media on and after a date no later than January 1, 2009), at Licensee’s election, a Picture Master in either an MPEG 2 Cable Labs file format or a mezzanine source file format at a 12 megabit per second constant bit rate or other format whose quality is not materially lower than such MPEG 2 format (“Picture Master File”), which Licensee (or the agreed upon provider) will, at Licensee’s sole cost and expense, transcode/encode into a file with mutually agreed upon specifications. Notwithstanding the foregoing, if Licensor generally provides to Other Providers Included Programs in a MPEG 4 AVC file format, Licensor shall make Included Programs available to Licensee in such MPEG 4 file format.
b) Metadata. Licensor shall grant to Licensee (and the agreed upon provider) access to various SPE marketing sites containing available metadata for the Picture Master Files. As between Licensor and Licensee, Licensee shall be responsible for continuously monitoring for any updates to the metadata and incorporating such updates into Licensee’s systems.
2. Version. Each Picture Master shall be originated from the version of each Included Program which was theatrically released by Licensor in the United States, or if unavailable, the version released on home video. All Picture Masters shall be in the 4:3 full frame aspect ratio unless otherwise specified. If a closed-captioned version has been completed for such 4:3 full frame Picture Masters, then Licensor shall make available the closed captioned version to Licensee at no cost to Licensee. If a closed-captioned version of a Picture Master has not been completed by Licensor, but is nonetheless required by law (including that Licensee is required by law to exhibit a closed-captioned version), then (i) for any BO Category A+, A, B or C Current VOD Program or Current PPV Program, BO Category D or E Current VOD Programs (to the extent necessary to fulfill Licensee’s commitment set forth in Section 9.3.1 of the Agreement), Library VOD Programs (to the extent necessary to fulfill Licensee’s commitment set forth in Section 9.5.2.1 of the Agreement), and Library FOD Programs (to the extent necessary to fulfill Licensee’s commitment set forth in Section 9.6 of the Agreement), Licensor shall create and make available to Licensee the closed-captioned version at no cost to Licensee, and (ii) for any Included Programs not falling under clause (i) above, Licensor shall make available to Licensee at no cost the materials necessary for Licensee to create such close-captioned version, if available (it being agreed and understood, however, that creating the closed-caption version from such materials shall be at Licensee’s sole cost and expense). In the event that no closed-caption materials are available for a Library PPV Program, Library VOD Program or a Library FOD Program, Licensor agrees to discuss with Licensee the substitution of a Library PPV Program, Library VOD Program or a Library FOD Program, as applicable, for which closed-captioned materials are available, although failure to provide such substitution shall not be a breach under the Agreement. If the Included Program is available in the original aspect ratio (i.e. letterbox/ widescreen format), then Licensor shall make available to Licensee copies of such versions, if so requested by Licensee. If elements of teasers and trailers are available in separate component form (i.e. clean video, clean music, clean announce), then Licensor shall make available to Licensee copies of such versions, if so requested by Licensee.
B. Video Specifications.
2. Recorder Tolerances. The Recorders producing the Picture Master shall be within all format mechanical and electrical tolerances as specified in any SMPTE Recommended Practices and Standards as they relate to Digital betaCam VTRs and tapes.
3. Video Levels.
a. Reference color bars shall be a true indication of the Included Program’s chroma gain and phase, burst and sync amplitude, video and pedestal levels. As such, these color bars should be dubbed from the original source tape rather than added during the dubbing process.
b. Chrominance levels shall nominally be 100 IRE Peak chrominance shall not exceed 105 IRE units.
4. Blanking.
a. Horizontal blanking and vertical blanking shall meet SMPTE 274M specifications.
b. Solely with respect to 4:3 full frame versions, Picture Masters made available with line 21 closed captioning shall be made available with all captioning intact.
5. Video Performance. The Picture Master shall meet ITU-601 specifications and conform to SMPTE 259M.
a. SNR > 62dB (CCIR WTG).
b. Differential phase < 2°, differential gain < 2%.
c. K factor (2T Pulse) < 1%.
d. The Picture Master shall not contain visible analog artifacts such as excessive moiré, microphonics, lag, bloom, banding, or velocity errors.
e. The Picture Master shall not contain visible headswitching, tape scratches, or dropouts.
f. Artifacts from image manipulation devices shall be kept to a minimum. Time compression (tape-to-tape or film-to-tape variable speed) or noise reduction techniques shall not be utilized in generating a Picture Master.
g. The Picture Master shall not contain digital artifacts such as pixelization, posterization, or other anomalies.
6. Character Generator and Graphics. If a Picture Master contains video character generator or graphics inserted material, the following specifications shall be met:
a. Peak luminance shall not exceed 90 IRE.
b. Peak-to-peak chrominance shall not exceed 50 IRE.
c. Peak chrominance plus luminance shall not exceed 100 IRE.
d. Edging level shall be > 7.5 and < 90 IRE.
e. Rise time shall be > 70 nsecs.
7. Capture and Editing.
a. The Telecine Master should preferably be done on a modern film scanner.
b. Video tape editing shall conform to SMPTE 170M-2004 specifications.
c. The Picture Master shall be of the lowest possible generation containing ascending and continuous SMPTE drop-frame time code, as well as VITC on lines 16 and 18. The Picture Master shall also have continuous (unbroken) control track.
d. For a 4:3 Picture Master, the original elements shall be Pan and Scanned or center-cut extracted from the original aspect ratio to a 4:3 aspect ratio.
e. If a “Letterbox” version of a title is available and requested by Licensee, the original aspect ratio should not be altered, and there must be black on the top and bottom with the picture centered vertically in the middle.
C. Audio Specifications. For the avoidance of doubt, any costs related to the adjustment of audio as made available by Licensor (including, without limitation, creating/laydown of Dolby Digital or encoding AC3 tracks), will be incurred by Licensee at its sole cost and expense. If available, Licensor shall provide access to 5.1 English audio, LAS tracks, and Pro-tools sessions upon Licensee’s request.
8. General Audio Specifications. All audio must conform to AES/EBU specifications as outlined in ANSI/SMPTE 272M. In addition:
a. The operating level shall be -20 dB (average peaks at -20 dB) with no peaks exceeding -10 dB (clipping).
b. The minimum frequency response shall be 50 Hz-15 kHz within 2 dB of 1 kHz reference.
c. S/N ratio:
0. (AFM) >85 dB
1. (longitudinal audio tracks) >72 dB @ 3% distortion
d. Distortion (T.H.D. @ 1 kHz reference level):
2. (AFM) < 0.5%
3. (longitudinal audio tracks) < 1.0 % (metal tape)
e. Wow and flutter:
4. (AFM) below measurable levels
5. (Longitudinal audio tracks) < 1 % RMS
f. Video, control track, and time code crosstalk into any audio channel shall be < -80 dB.
9. Stereo Specifications.
a. Left and right interchannel amplitude error shall be < .5 dB.
b. Left and right interchannel phase error shall be < 10° at 10 kHz.
c. Cross-talk between any audio channels shall be < -80 dB.
10. Surround Sound. Included Program available in surround sound shall be made available in the LT/RT (Left Total/Right Total) format.
11. Audio Track Assignments. The Picture Master audio tracks shall be assigned as follows:
a. Channel 1: Monaural, left channel stereo, or LT.
b. Channel 2: Right channel stereo, RT, or monaural if Channel 1 is monaural.
12. Monaural Audio. The Picture Master shall not contain monaural audio synthesized to simulate stereo, except that monaural audio synthesized to simulate stereo may be placed in select parts of the Picture Master for artistic purposes.
2.0 Promotional and Ancillary Materials
This section identifies the promotional and ancillary materials associated with each Included Program to be made available to Licensee pursuant to the Agreement.
A. Promotional Materials
The following promotional materials, if available, shall be made available with respect to each Included Program and will be available electronically for order and/or retrieval by Licensee, if and to the extent available in electronic format:
1. The domestic versions of elements for teasers and theatrical trailers, if available. The audio dialog, music, effects, and narration for teasers and trailers shall be made available on separate tracks, if available.
2. One (1) electronic press kit including TV spots with split audio tracks, if available.
3. Two (2) sets of logo and title treatments, if available.
4. Two (2) sets each containing black and white stills, which shall include a representative selection of shots including close-ups of the major stars, if available.
5. Two (2) sets each containing color transparencies/slides, which shall include a representative selection of shots including close-ups of the major stars and be of suitable quality for full color reproduction, if available.
6. Key art and ad slicks, if available.
7. Behind the scene materials to include raw footage of B-roll material, talent interviews, and peripheral materials, if available.
8. Any music videos associated with the Included Program to aid in the promotion of the Included Program, if available.
9. Other promotional materials, reasonably requested by Licensee, that Licensor generally makes available to similar pay-per-view and/or video-on-demand licensees.
B. A copy of the music cue sheet specifying for each use of music in the Included Program, the composer, publisher (and performing rights society affiliation), length of use and type of use upon request from Licensee and if available.
C. A copy of the conformed script and story synopsis of the Included Program, upon request from Licensee and if available.
D. A memorandum setting forth paid ad obligations and restrictions.
E. A statement of all third party contractual limitations, if any, applicable to Licensee’s exercise of any of its rights under this Agreement.
F. Two (2) screeners of the Included Program (in DVD format). Licensor shall have the right to burn in SMPTE time code on the screeners and/or use other security measures deemed necessary by Licensor;
G. Any other materials or information that Licensor generally makes available to similar pay-per-view licensees.
ATTACHMENT E-2
DIRECTV Delivery Requirements
High Definition
1.0 Reference Documents
a. SMPTE 274M. 1920 X 1080 Scanning and Interface.
b. SMPTE 292M. Bit-Serial Digital Interface for High-Definition Television Systems.
2.0 Picture Master
Subject to Section 2.2.1 of the Agreement and pursuant to Section 8 of the Agreement and Section 8 of Attachment D, Licensor shall deliver or grant access to a Picture Master to Licensee. If Licensor elects to deliver to Licensee the Picture Master, then the Licensor-provided Picture Master shall meet the specifications set forth below. If Licensor elects to grant access to Licensee, then the Picture Master provided by Licensor to the laboratory through which such access is granted shall meet quality standards such that Licensee (or its third party provider/vendor) can create high definition materials that meet the specification set forth below and can generate copies thereof using commercial duplication equipment (it being agreed and acknowledged by Licensee that Licensee shall bear all costs relating to such creation/duplication). For purposes of this document, such copies shall be deemed a Picture Master.
A. Delivery.
1. Videotape Delivery.
a) Format. The Picture Master shall be in HD-CAM or HD-CAM SR format (“Picture Master Tape”). Each Picture Master Tape shall be on one videocassette if so available, it being agreed and acknowledged by Licensee that Licensor shall have no obligation hereunder to create a Picture Master Tape on one videocassette.
b) Access. Picture Master Tapes shall be made available to Licensee via a grant of laboratory access (i.e., not via physical delivery from Licensor directly to Licensee).
2. Digital File Delivery
a) Format. Licensor shall make available to Licensee via a mutually agreed upon third-party provider (it being agreed that such provider shall be TVN initially, and shall be Ascent Media on and after a date no later than January 1, 2009), at Licensee’s election, a Picture Master in either an MPEG 2 Cable Labs file format or a mezzanine source file format at a 50 megabit per second constant bit rate or other format whose quality is not materially lower than such MPEG 2 format (“Picture Master File”), which Licensee (or the agreed upon provider) will, at Licensee’s sole cost and expense, transcode/encode into a file with mutually agreed upon specifications. Notwithstanding the foregoing, if Licensor generally provides to Other Providers Included Programs in a MPEG 4 AVC file format, Licensor shall make Included Programs available to Licensee in such MPEG 4 file format.
b) Metadata. Licensor shall grant to Licensee (or the agreed upon provider) access to various SPE marketing sites containing available metadata for the Picture Masters. As between Licensor and Licensee, Licensee shall be responsible for continuously monitoring for any updates to the metadata and incorporating such updates into Licensee’s systems.
3. Version. Each Picture Master shall be originated from the version of each Included Program which was theatrically released by Licensor in the United States, or if unavailable, the version released on home video. All Picture Masters shall be in the 16:9 aspect ratio unless otherwise specified. If a closed-captioned version has been completed for such 16:9 Picture Masters, then Licensor shall make available the closed captioned version to Licensee at no cost to Licensee. If a closed-captioned version for such 16:9 Picture Master has not been completed by Licensor, but is nonetheless required by law (including that Licensee is required by law to exhibit a closed-captioned version), then Licensor shall create and make available to Licensee the closed-captioned version at no cost to Licensee, provided, that Licensee delivers the booking confirmation for the High Definition exhibition of such Included Program within 10 Business Days of receiving the availability notice therefor. Otherwise, Licensor shall make available to Licensee at no cost the materials necessary for Licensee to create such close-captioned version, if available (it being agreed and understood, however, that creating the closed-caption version from such materials shall be at Licensee’s sole cost and expense). In the event that no closed-caption materials are available for a Library PPV Program, Library VOD Program or a Library FOD Program, Licensor agrees to discuss with Licensee the substitution of a Library PPV Program, Library VOD Program or a Library FOD Program, as applicable, for which closed-captioned materials are available, although failure to provide such substitution shall not be a breach under the Agreement. If the Included Program is available in the original aspect ratio (i.e. letterbox/widescreen format), then Licensor shall make available to Licensee copies of such versions, if so requested by Licensee. If elements of teasers and trailers are available in separate component form (i.e. clean video, clean music, clean announce), then Licensor shall make available to Licensee copies of such versions, if so requested by Licensee.
B. Video Specifications.
4. Recorder Tolerances. The Recorders producing the Picture Master shall be within all format mechanical and electrical tolerances.
5. Video Levels.
a) Reference color bars shall be a true indication of each Included Program’s chroma gain and phase, burst and sync amplitude, video and pedestal levels.
b) Peak picture level shall not exceed limits per SMPTE 274M.
6. Scanning and Interface.
a) All content shall be provided in the 1920 X 1080 interlaced 2:1 (1080i) scanning mode with a field rate of 59.94 Hz. Additionally, the picture shall meet all other scanning and sampling specifications outlined in SMPTE 274M for the 1920 X 1080/59.94/2:1 system.
7. Timing and Blanking.
a) Horizontal blanking and vertical blanking shall meet SMPTE 274M specifications.
b) Included Programs available with closed captioning shall be made available with all captioning intact.
8. Video Performance. Each Picture Master shall meet the following video performance specifications:
a) SNR > 62dB (CCIR WTG).
b) K factor (2T Pulse) < 1%.
c) The Picture Master shall not contain visible analog artifacts such as moiré, microphonics, lag, bloom, banding, or velocity errors.
d) The Picture Master shall not contain visible headswitching, tape scratches, or dropouts.
e) Artifacts from image manipulation devices shall be kept to a minimum. Time compression (tape-to-tape or film-to-tape variable speed) or noise reduction techniques shall not be utilized in generating a Picture Master.
f) The Picture Master shall not contain digital artifacts such as pixelization, posterization, or other anomalies.
9. Character Generator and Graphics. If a Picture Master contains character generator or graphics inserted material, the peak picture levels shall not exceed the limits specified in SMPTE 274M.
10. Capture and Editing.
a) Cameras/film chains shall employ 3 tube/chip transducers capable of at least 1920 lines horizontal resolution.
b) Video tape editing shall be performed under SMPTE 274M conditions.
c) The Picture Master shall be of the lowest possible generation containing ascending and continuous SMPTE drop-frame time code (at 0 VU on address track as well as VITC on lines mutually agreeable to the Licensor and Licensee) and continuous (unbroken) control track.
C. Audio Specifications. For the avoidance of doubt, any costs related to the adjustment of audio as made available by Licensor (including, without limitation, creating/laydown of Dolby Digital or encoding AC3 tracks), will be incurred by Licensee at its sole cost and expense. If available, Licensor shall provide access to 5.1 English audio, LAS tracks, and Pro-tools sessions upon Licensee’s request.
3.0 Promotional and Ancillary Materials
Promotional and Ancillary material provided for the High Definition tape content shall be the same as for the standard definition tape content.
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