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DHE LICENSE AGREEMENT
THIS DHE LICENSE AGREEMENT (this “Agreement”), dated as of December 10, 2009 (“Effective Date”), is entered into by and between Culver Digital Distribution Inc., a Delaware corporation and affiliate of Sony Pictures Home Entertainment Inc. (“Licensor”), and Verizon Corporate Services Group Inc., a corporation organized and existing under the laws of New York (“Licensee”). For good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
GENERAL TERMS AND CONDITIONS OF DHE LICENSE AGREEMENT
(“General Terms”)
1. DEFINITIONS. All capitalized terms used herein and not otherwise defined in this Agreement shall have the meanings set forth below.
“Approved Delivery” means (i) for Approved Set-Top Boxes, the secured Encrypted delivery of audio-visual content via Streaming to an Approved Set-Top Box to subscribers of the Approved System, (ii) for Target Devices (and not for Portable Devices), the secured Encrypted delivery of audio-visual content via Electronic Downloading to a Target Device over the public, free to the consumer (other than a common carrier/ISP access charge) network of interconnected networks known as the Internet/World Wide Web (the “Internet”), using technology which is currently known as Internet Protocol (“IP”) and/or Streaming; and (iii) for Portable Devices (and not for Target Devices), Side Loading. “Approved Delivery” shall not include (a) any means of Viral Distribution or (b) transmission in cellular phone network video service platforms and/or transmission by means that are predominantly used by cellular networks.
“Approved Device” means each Approved IP Device and Approved Set-Top Box, collectively.
“Approved Format” means (i) with regard to playback on an Approved Set-Top Box, a digital electronic media file compressed and encoded for secure transmission and/or storage in a resolution specified by Licensor (a) in accordance with the resolution specifications set forth in Schedule C and the digital rights management (“DRM”) with the license settings/configuration and Content Protection Requirements (as set forth in Schedules B-1 and B-2), as applicable, each Schedule attached hereto and incorporated herein by this reference or (b) such other format as Licensor and Licensee may agree in writing and (ii) with regard to playback on an Approved IP Device, a digital electronic media file compressed and encoded for secure transmission and storage (a) in accordance with the resolution specifications set forth in Schedule C in the Windows Media Player (version 9 or higher) format and protected by Windows Media Series 10 DRM technology with the license settings/configuration set forth in Schedule B-2; or (b) such other format as Licensor may approve in writing at Licensor’s sole discretion. Unless otherwise authorized by this Agreement, in no event shall an Approved Format allow for the copying or moving of an Included Program (whether within the receiving device, to another device or to a removable medium). In addition, without limiting Licensor’s rights in the event of a Security Breach, Licensor shall have the right to withdraw its approval of any Approved Format in the event that such Approved Format is materially altered or changed by its publisher, such as a versioned release of an Approved Format, such that the alteration or change materially alters the security systems or usage rules previously supported and that Licensor believes in good faith will affect the secure delivery of the Included Programs to the Approved Devices. Licensor acknowledges that its right to withdraw its approval of any Approved Format is not intended as a means for more broadly terminating Licensee’s rights to distribute Licensor’s titles on a DHE basis. For the avoidance of doubt, “Approved Format” shall include the requirement that a file remain in its approved level of resolution and not be down- or up-converted; provided that the foregoing shall not restrict playback in a format that is optimal for Portable Devices.
“Approved IP Device” means each Target Device and/or Portable Device collectively.
“Approved Set-Top Box” means a provisioned set-top device which is made available to Subscribers of the Approved System and required for the reception, decoding and display of audio visual programming on a television set. Each “Approved Set-Top Box” must support and comply with the content protection requirements set forth herein, including, without limitation those contained in Schedules B-1 and B-2. “Approved Set-Top Box” shall not include a personal computer or mobile or portable device.
“Approved System” means that certain closed video distribution system (i) delivered via fiber optic, coaxial cable and/or copper cable, (ii) currently known as “FiOS,” (iii) located solely in the Territory, (iv) which supports the Approved Delivery of electronic audio-visual content and (v) which is, at all times during the Term, wholly owned, controlled and operated by Licensee and/or wholly-owned affiliates of Verizon Communications Inc. Licensee represents, warrants, and covenants that the Approved System does and at all times during the Term shall conform to the provisions of Schedule A, Article 9.
“Availability Date” means, with respect to an Included Program, the date on which such program is first made available to Licensee for distribution on a DHE basis hereunder, as specified in Section 3.2 of the General Terms.
“Digital Locker” means the rights repository within a Subscriber’s Account corresponding to the Included Programs acquired pursuant to valid Subscriber Transactions.
“Digital Locker Functionality” shall mean the functionality that allows a Subscriber’s Included Programs to be managed by a Digital Locker, which enables a Subscriber to access and obtain on demand at such Subscriber’s discretion a Stream of a Included Program previously acquired pursuant to a valid Subscriber Transaction in the Approved Format from a “digital locker” to a Streaming Device.
“Encrypted” means, with respect to a signal, that both the audio and video portions of such signal have been changed, altered or encoded to securely and effectively prevent the intelligible reception of such signal without the use of authorized decoding equipment to restore both the audio and video signal integrity.
“High Definition” or “HD” shall mean any resolution that is (a) 1080 vertical lines of resolution or less (but at least 720 vertical lines of resolution) or (b) 1920 lines of horizontal resolution or less (but at least 1280 lines of horizontal resolution).
“Included Program” means a feature-length program, regardless of what medium such program was first released, made available by Licensor to Licensee for license on a DHE basis in the Territory.
“Licensed Language” for an Included Program means the original language version (if the original language version is in English) or, if the original language version is not in English, shall mean the original language version dubbed or subtitled in English.
“Licensed Service” means the non-advertising supported DHE electronic sell-through video distribution service that at all times during the Term shall be (i) located at the following uniform resource locator (“URL”): mediastore and accessible through the user interface on an Approved Set-Top Box; (ii) branded as the “Verizon Media Store” and shall not be co-branded; and (iii) wholly-owned, controlled and operated by Licensee, except in the case of Verizon Wireless which operates under a joint venture arrangement with Vodafone Group which is currently known as Cellco Partnership d/b/a Verizon Wireless.
“Long-Form Promotional Preview” means a video clip consisting of no longer than the first two (2) minutes of consecutive footage (“Maximum Preview Duration”) from any Included Program.
“Playback License” shall mean an authorization under the DRM of the Approved Format permitting playback of an Included Program on an Approved Device in accordance with the Usage Rules. The Playback License must be issued by the Licensed Service in order for the Subscriber to play an Included Program. The number of Playback Licenses permitted to be issued in connection with any single Subscriber Transaction shall in no event be more than the number and type of Approved Devices specified in the Usage Rules. For the avoidance of doubt, Playback Licenses shall be composed of the decryption or license key necessary to enable viewing of a copy of an Included Program.
“Portable Device” shall mean a portable device that (i) supports the Approved Format, (ii) satisfies the content protection requirements set forth in Schedules B-1 and B-2 attached hereto and (iii) receives Included Programs solely by the Approved Delivery applicable to Portable Devices.
“Side Loading” means the transfer of an Included Program from a Subscriber’s Target Device to such Subscriber’s Portable Device by means of locally connecting (physically via cable or via WiFi or LAN/WAN or similar technology) the applicable Portable Device to the applicable Target Device, for the purpose of viewing such Included Program solely on such Portable Device. For the avoidance of doubt, Side Loading shall not include the direct download transmission of an Included Program to a Portable Device from the Internet or the Licensed Service.
“Standard Definition” or “SD” shall mean (a) for NTSC, any resolution equal to or less than 480 lines of vertical resolution (and equal to or less than 720 lines of horizontal resolution) and (b) for PAL, any resolution equal to or less than 576 lines of vertical resolution (and equal to or less than 720 lines of horizontal resolution).
“Streaming Device” means Approved Set-Top Boxes or Target Devices that are capable of receiving a Stream of an Included Program.
“Subscriber Transaction” means any instance whereby a Subscriber is authorized to receive an exhibition of all or a part of an Included Program as part of the Licensed Service.
“Target Device” means an IP-enabled device that (i) supports the Approved Format, (ii) satisfies the content protection requirements set forth in Schedules B-1 and B-2 attached hereto and (iii) receives Included Programs solely by the Approved Delivery applicable to Target Devices. The parties acknowledge and agree that Portable Devices, including, without limitation, mobile phones, shall not be “Target Devices”.
“Territory” means the United States and its territories and possessions.
“Usage Rules” means the content usage rules applicable to each Included Program available on the Licensed Service, as set forth in the attached Schedule U.
“Viral Distribution” means the retransmission and/or redistribution of an Included Program, either by the Licensee or by the Subscriber, by any method, in a viewable, unencrypted form (other than as expressly allowed herein), including, without limitation, (i) peer-to-peer file sharing as such practice is commonly understood in the online context, (ii) digital file copying or retransmission or (iii) burning, downloading or other copying to any removable medium (such as DVD) from the initial download targeted by the Licensed Service (other than as specifically set forth herein in the Usage Rules) and distribution of copies of an Included Program viewable on any such removable medium.
2. LICENSE; DECE; TERM.
Subject to Licensee’s full and timely compliance with the terms and conditions of this Agreement, Licensor hereby grants to Licensee, and Licensee hereby accepts, a limited non-exclusive, non-transferable, non-sublicensable license to distribute on the terms and conditions set forth herein each Included Program in Standard Definition on a DHE basis during the Term on the Licensed Service, solely in the Licensed Language to Subscribers in the Territory, delivered by Approved Delivery in the Approved Format, for exhibition on an Approved Device for Personal Use, pursuant solely in each instance to a Subscriber Transaction and subject at all times to the DRM and Content Protection Requirements (as set forth in Schedules B-1 and B-2) and the Usage Rules. Licensee shall have the right to exploit the DHE rights using VCR Functionality. Licensor shall not be subject to any holdback at any time with respect to the exploitation of any Included Program in any version, language, territory or medium, or by any transmission means, in any format, to any device in any venue or in any territory.
Licensee may enable Digital Locker Functionality for Included Programs subject to the Usage Rules and the Content Protection Requirements. In the event the Agreement is (a) terminated by Licensee pursuant to Section 17.2 or Section 17.4 of Schedule A or (b) expires, then Licensee’s right to enable Digital Locker Functionality for Included Programs shall survive (subject to the terms of this Agreement, the Usage Rules and Content Protection Requirements (as set forth in Schedule B-1)) for up to five (5) years following any such expiration or termination of the Agreement. Notwithstanding the foregoing, if the Agreement is terminated by Licensor pursuant to Section 9.4 of Schedule A or Section 17.1 of Schedule A, Licensee shall cease enabling Digital Locker Functionality for Included Programs as soon as commercially reasonable but in no event later than thirty (30) days from the date such termination is effective.
Licensee shall have the right to allow “pre-ordering” (download requested by a Subscriber prior to the Availability Date of an Included Program) of an Encrypted file by a Subscriber in anticipation of a Subscriber Transaction over Authorized Delivery Means; provided that such file cannot be downloaded (without Licensor’s approval), decrypted or otherwise viewed prior to (y) the Availability Date for such Included Program and (z) the completion of a Subscriber Transaction in respect thereof; provided further that such pre-ordering is otherwise in compliance with this Agreement.
“Push downloads” (i.e., downloads initiated by Licensee rather than Subscriber) of Encrypted files to Subscribers in anticipation of Subscriber Transactions over Authorized Delivery Means may be allowed (i) subject to Licensor’s prior written approval and (ii) provided that such file cannot be decrypted or otherwise viewed prior to (a) the Availability Date for each such Included Program and (b) the completion of a Subscriber Transaction in respect thereof; subject to Licensor’s reasonable verification of the implementation process thereof.
The parties acknowledge that the Usage Rules set forth herein reflect the formats, devices and content protection security systems currently approved by Licensor. The parties agree to discuss in good faith expanding the Usage Rules, when so deemed appropriate, which rules may include the transfer or transmission of an Included Program by secure transfer to removable media (e.g., DVD) and/or enabling a means of Viral Distribution or via cellular phone network video service platforms and/or transmission by means that are predominantly used by cellular networks; provided, however, that any such transfer, copying, transmission and/or distribution may only be enabled upon Licensor’s prior written approval of the applicable implementation and technology, it being understood that such approval is not currently given by Licensor. Licensor acknowledges that Subscribers may make back-up copies of non-playable files embodying Included Programs on recordable DVD-ROM media, excluding CSS-Compliant or AACS-compliant optical discs (until such time, if any, as Licensee is notified in writing by Licensor that such optical discs have been approved for use with the Licensed Service). Licensor shall have the right to notify Licensee in writing from time to time that the Usage Rules applicable to an Approved Format or an Approved Device shall be changed by a date certain as to all Included Programs (each, an “Update”). Licensee shall adhere to and apply each Update prospectively from notice thereof to all Included Programs. Upon request from Licensee to enable offering its customers, who purchase an Included Program, the ability to “burn” such Included Program on DVDs capable of being played on DVD players (or similar devices) Licensor and Licensee shall discuss the granting of such “burn” rights to Licensee; provided that Licensor shall be under no obligation to grant such “burn” rights. For clarity, in order to ensure that a Customer can continue to access an Included Program that it purchased from the Licensed Service, Licensee shall have the right to continue to support older versions of DRM technology to the extent that (i) such versions were used at the time a Customer purchased the Included Program from Licensee and (ii) such version continue to robustly support the Usage Rules and Content Protection Requirements.
Without limiting any of the content protection requirements set forth in the Agreement, the parties hereto acknowledge the evolving nature of content protection and DECE standards. Licensee hereby agrees to (i) engage in good faith conversations with DECE about becoming a participating member, it being understood that Licensee shall be under no obligation to become a participating member, (ii) use good faith efforts to migrate the DHE offerings to comply with DECE standards within a commercially reasonable time after the publication of such standards (a “DECE Migration”), it being understood that Licensee shall be under no obligation to undertake a DECE Migration, and (iii) if Licensee ultimately supports DECE Standards, work in good faith to license DECE content from Licensor.
The term during which Licensor shall be required to make programs available for licensing and Licensee shall be required to license programs hereunder shall commence on the Effective Date, and shall terminate on June 30, 2011, unless earlier terminated in accordance with the terms of this Agreement (the “Initial Term”). Prior to the expiration of the Initial Term, the parties may mutually agree in writing to extend the Initial Term for one additional one-year period (the “Extension Period”). The Initial Term and the Extension Period, if any, shall together be the “Term” and each of the Initial Term and Extension Period, if any, shall be a “Term Year.”
The termination or expiration of the Term shall not affect any of the provisions of this Agreement which are expressly or by implication to come into or continue in force after such termination or expiration.
3. COMMITMENT.
Commitment. Licensee shall license from Licensor as Included Programs hereunder the following: (i) all Price Tier 1 Included Programs generally made available by Licensor on a non-exclusive basis for DHE distribution in the Territory with an Availability Date during the Term and (ii) at least (a) two hundred (200) Price Tier 2 and/or Price Tier 3 Included Programs within six (6) months of the Effective Date, (b) four hundred and fifty (450) Price Tier 2 and/or Price Tier 3 Included Programs within twelve (12) months of the Effective Date and (c) six hundred and fifty (650) Price Tier 2 and/or Price Tier 3 Included Programs within eighteen (18) months of the Effective Date. Licensor shall provide Licensee with periodic availability lists setting forth the Included Programs for licensing hereunder.
Availability Date. The Availability Date for each Included Program shall be determined by Licensor in its sole discretion, provided, however, that the Availability Date for each Included Program shall be no later than the DHE Street Date for such title.
“DHE Street Date” shall mean the “standard” date on which a program is first generally made available by Licensor on a non-exclusive basis for DHE distribution in the Territory. Licensor may elect, in its sole discretion, to make any Included Program available for exclusive distribution through a single distributor, or non-exclusive distribution through other distributors, in the Territory prior to the DHE Street Date for such Included Program (“Delayed Picture”); provided, however, that the number of Delayed Pictures shall in no event exceed a number that is equal to 10% of the number of titles that Licensor generally makes available on a non-exclusive basis for DHE distribution in the Territory and that Licensor shall use good faith efforts to provide exclusive distribution opportunities to Licensee.
4. PROGRAMMING.
All Included Programs shall be made continuously available to Subscribers on the Licensed Service during the Term. Without limiting the foregoing, on an overall annual basis, the Included Programs shall be generally consistent with regard to all aspects of programming, including, without limitation, allocation of space on the Licensed Service interface, as the comparable content of any other similarly situated supplier taking into account the applicable terms and conditions of Licensee’s agreement with such similarly situated supplier (it being understood that Licensee’s use of a non-discriminatory methodology, such as alphabetical listings, shall comply with the terms of this paragraph, and that Licensee is free to feature certain programs under any topical menus, such as “What’s Hot” or “Currently Featured”). Notwithstanding the terms of this paragraph, Licensee reserves the right to offer special promotions or campaigns with, or to provide preferential placement to programs of, individual programmer supplier if such programmer supplier provides additional consideration for such promotion or placement.
Promotional Previews. Licensee shall have the right to use Promotional Previews on the Licensed Service in accordance with Schedule A, Section 12.1, subject to any contractual restrictions of which Licensor notifies Licensee. Notwithstanding anything to the contrary herein, in the event that any guild, union, or collective bargaining agreements to which Licensor or its affiliates is or becomes a party requires a maximum duration for video clips that is shorter than the Maximum Preview Duration in order to avoid a residual, reuse or other fee in connection therewith, Licensee shall either (i) shorten the duration of each Promotional Preview on the Licensed Service in accordance with the terms of the notice (“Revised Preview Duration”) as soon as reasonably possible, but in no event longer than five (5) business days after receipt of such notice or (ii) cease using Promotional Previews. Notwithstanding anything to the contrary herein, Licensor shall have the right to terminate (a) Licensee’s right to use a Promotional Preview for a particular Included Program on a case-by-case basis if Licensor reasonably believes that such Promotional Preview is not appropriate for all audiences or may violate the terms of any of Licensor’s agreements with, or may adversely affect Licensor’s material relations with, any third party if Licensor withdraws such general right from all other DHE distributors in the Territory and (b) Licensee’s general right to use Promotional Previews under this Agreement if Licensor withdraws such general right from all other DHE distributors in the Territory. Licensor shall give Licensee written notice of any such termination, in which event Licensee shall cease using the applicable Promotional Preview(s) within two (2) business days after receipt of such notice.
Licensee shall not be permitted in any event to offer or conduct promotional campaigns for the Included Programs offering free buys, including, without limitation, “two-for-one” promotions (by coupons, rebate or otherwise), without Licensor’s prior written consent, not to be unreasonably withheld. Licensee shall not charge any club fees, access fees, monthly service fees or similar fees for general access to the Licensed Service (excluding standard equipment or set-top box fees) (whether direct or indirect) without Licensor’s prior written consent.
5. DISTRIBUTOR PRICE.
The “Distributor Price” for each Included Program shall be determined by Licensor in its sole discretion. Licensor currently anticipates categorizing Included Programs into one of the following pricing tiers, with the corresponding initial price points in U.S. Dollars: (i) Price Tier 1: $15.50, (ii) Price Tier 2: $8.50 and (iii) Price Tier 3: $7.00. Licensor shall notify Licensee of the Distributor Price for each Included Program in a written notice to Licensee from time to time. The parties agree that for each Included Program initially categorized in Price Tier 1, the Distributor Price for Price Tier 1 shall continue to apply to such Included Program through the date that is ninety (90) days following the date Licensor elects in its sole discretion to re-categorize the pricing tier for such Included Program to a tier other than “Price Tier 1”. Licensor may on reasonable written notice to Licensee update Distributor Prices and/or add or remove pricing tiers at any time in Licensor’s sole discretion pursuant to the notice procedures set forth in Section 5.2 of the General Terms; provided that if Licensor raises the Distributor Price for an Included Program more than ten percent (10%) in a Term Year then Licensee shall have the right to cease distributing such Included Program on the Licensed Service.
Notice of any adjustment to the Distributor Price for an Included Program (“Repricing”) shall be set forth in a written notice to Licensee not less than fifteen (15) days prior to the effective date of such Repricing.
The price charged to a Subscriber by Licensee (“Subscriber Price”) for each Subscriber Transaction shall be established by Licensee in its sole discretion. Licensor’s “Suggested Subscriber Price,” if any, for each Included Program or pricing tier shall be set forth in the availability list or Repricing notice for such Included Program or pricing tier.
6. TECHNICAL CREDITS.
Licensee may offer a Subscriber an additional copy and/or an additional decryption key (“Technical Credits”) for an Included Program solely as follows: One (1) additional copy of an Included Program or one (1) additional decryption key may be offered without charge to any Subscriber who has paid the Subscriber Price for an Included Program and who requests such copy or decryption key for a recovery purpose (e.g., a hardware or software loss or malfunction or a device or software replacement or upgrade) on Licensee’s customer service number or technical help website. Additional Technical Credits shall be allowed solely in the event that such Subscriber represents, and such representation is not contradicted by evidence or behavior, that such Subscriber has had a hardware or software malfunction that renders one or more copies of a validly purchased Included Program unviewable or that the Approved Device to which an Included Program was delivered has been replaced or upgraded. Licensee shall not issue Technical Credits for any Included Programs that have been withdrawn and/or excluded from the Licensed Service pursuant to Articles 6 and 18 of Schedule A; provided, however, that in those instances where Licensee would otherwise have issued a Technical Credit for a program that has been withdrawn or excluded from the Licensed Service, Licensee may elect to provide Subscriber with a refund for such program and apply the amount of such refund as a credit when calculating Total Actuals (“Withdrawn Program Credit”), subject to the monthly cap set forth in Section 7.3.2 of the General Terms.
Licensee shall use commercially reasonable efforts to actively monitor and report to Licensor whenever Technical Credit requests suggest fraudulent activity on the part of a Subscriber.
7. LICENSE FEES; PAYMENTS.
In partial consideration of the rights granted hereunder, Licensee shall pay to Licensor a license fee as determined in accordance with this Article 7 (the “License Fee”). The License Fee specified herein is a net amount unreduced by any tax, levy or charge, the payment of which shall be the responsibility of Licensee.
For each Term Year during the Term, the aggregate license fee for all Included Programs on the Licensed Service that have an Availability Date in such Term Year shall be the aggregate total of the Total Actuals for such Term Year, as set forth below:
Total Actuals. For each Included Program, the “Total Actuals” shall be calculated as the aggregate total of the product of each Customer Transaction and the Distributor Price for such Included Program.
Payment Terms. Licensee shall pay to Licensor Total Actuals for each Customer Transaction within forty-five (45) days of the end of the month during which such Customer Transaction took place; provided that (i) bona fide Technical Credits in an amount not to exceed one percent (1%) of the proceeds of all Customer Transactions during the applicable calendar month shall not count as Customer Transactions for the purpose of calculating Total Actuals for such month and (ii) Licensee may deduct the amount of any Withdrawn Program Credits in an amount not to exceed one percent (1%) of the proceeds of all Customer Transactions during the applicable calendar month in order to arrive at the Total Actuals for such month.
8. REMAINING TERMS. The remaining terms and conditions of this Agreement are set forth in Schedules A through D and U, attached hereto. In the event of a conflict between any of the terms of these documents, this Agreement shall control over Schedules A through D and U.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
|Culver Digital Distribution Inc. |Verizon Corporate Services Group Inc. |
|By: |By: |
|Its: |Its: |
Schedule A
Standard Terms and Conditions for DHE License Agreement
The following are the standard terms and conditions governing the license set forth in the License Agreement to which this Schedule A is attached.
DEFINITIONS
“Account” shall mean a single Subscriber’s account with verified credentials, which shall (a) consist of at least a user identification and password of sufficient length or combination of letters and numbers to prevent brute force attacks, (b) include reasonable measures to prevent unwanted sharing of such credentials (i.e., allowing access to active credit card or other financially sensitive information), and (c) be transmitted securely to ensure privacy and protection against attacks.
“Business Day” shall mean any day other than (i) a Saturday or Sunday or (ii) any day on which banks in Los Angeles, California are closed or authorized to be closed.
“Commercial Establishments” shall include, but not be limited to, restaurants, bars, lounges, any place which charges a direct or indirect fee for admission and other public and private facilities open to the general public.
“Digitally Delivered Home Entertainment” or “DHE” shall mean that mode of home video distribution in which an electronic digital file embodying a program is transmitted to an end user pursuant to an authorized transaction whereby such end user is licensed to retain such program for playback an unlimited number of times.
“DVD” shall mean the standard DVD (digital versatile disk) format commonly used, as of the date of this Agreement, to distribute pre-recorded motion picture home entertainment products in the retail channel; provided, however, that “DVD” excludes any successors and/or derivatives of the current standard DVD format, such as audio-only DVDs (e.g., DVD Audio, SACD and Mini DVD), high definition DVDs (e.g., “Blu-ray,” “HD-DVD” or red-laser technology), limited-play DVDs (e.g., Flexplay), ecopies and UMD/PSP.
“Electronic Downloading” shall mean the transmission of a digital file containing audio-visual content from a remote source, which file may be stored and the content thereon viewed on a “progressive download” basis and/or at a time subsequent to the time of its transmission to the viewer.
“Event of Force Majeure” in respect of a party shall mean any reasonably unforeseeable act, cause, contingency or circumstance beyond the reasonable control of such party, including, without limitation, any governmental action, nationalization, expropriation, confiscation, seizure, allocation, embargo, prohibition of import or export of goods or products, regulation, order or restriction (whether foreign, federal or state), war (whether or not declared), civil commotion, disobedience or unrest, insurrection, public strike, riot or revolution, fire, flood, drought, other natural calamity, damage or destruction to plant and/or equipment, or any other accident, condition, cause, contingency or circumstance (including without limitation, acts of God within or without the United States), but shall not include an inability to pay for whatever reason.
“Non-FiOS Account” means an Account of a Subscriber who does not have any type of subscription to the Approved System.
“Private Residence” shall mean a private residential dwelling unit, and shall exclude Transient Dwelling Units, Public Areas and Commercial Establishments.
“Public Areas” shall include, but not be limited to, public or common rooms, waiting rooms, lobbies and public meeting rooms, or other similar areas which are open to the general public.
“Qualifying Studio” means Sony Pictures Entertainment, Paramount Pictures, Twentieth Century Fox, Universal Studios, Metro-Goldwyn-Mayer, The Walt Disney Company, Warner Bros., Lionsgate, New Line Cinema, and any of their respective affiliates.
“Security Breach” shall mean a condition that results or may result in: (i) the unauthorized availability of any Included Program or any other motion picture from the Licensed Service; or (ii) the availability of any Included Program on, or means to transfer any Included Program to, devices that are not Approved Devices, or transcode to formats that are not Approved Formats and/or transmit through delivery means that are not Approved Delivery means; or (iii) a circumvention or failure of the Licensee’s secure distribution system, geofiltering technology or physical facilities; which condition(s) may, in the reasonable good faith judgment of Licensor, result in actual or threatened harm to Licensor.
“Streaming” shall mean the transmission of a digital file containing audio-visual content from a remote source for viewing concurrently with its transmission, which file, except for temporary caching or buffering of a portion thereof (but in no event the entire file), may not be store or retained for viewing at a later time (i.e., no leave-behind copy – no playable copy as a result of the stream – resides on the receiving device).
“Subscriber” shall refer to each unique user with the ability to receive the Licensed Service on an Approved Device.
“Subscriber Transaction” shall mean any instance whereby a Subscriber selects and is authorized to receive an exhibition of an Included Program as part of the Licensed Service.
“Territorial Breach” shall mean a Security Breach that creates a risk that any of the Included Programs will be delivered to persons outside the Territory, where such delivery outside the Territory may, in the sole good faith judgment of Licensor, result in actual or threatened harm to Licensor.
“Transient Dwelling Units” shall refer to private or semi-private dwelling units in a hotel, motel, hospital, nursing home, dormitory, prison or similar structure, institution or place of transient residence, not including Public Areas therein.
“VCR Functionality” shall mean the capability of a subscriber to perform any or all of the following functions with respect to the delivery of an Included Program: stop, start, pause, play, rewind and fast forward.
RESTRICTIONS ON LICENSE.
Licensee agrees that, without the specific written consent of Licensor, or except as otherwise set forth herein: (a) the license granted hereunder may not be assigned, licensed or sublicensed in whole or in part; (b) no Included Program may be delivered, transmitted or exhibited other than as set forth at Section 2.1 of the General Terms; (c) no person or entity shall be authorized or permitted via an Approved System by Licensee to do any of the acts forbidden herein; and (d) Licensee shall not have the right to transmit, exhibit or deliver the Included Programs in a High Definition, up-converted or analogous format or in a low resolution, down-converted format. Licensee shall not advertise or represent the exhibition of the Included Programs as “high definition.” Licensor reserves the right to conduct an initial inspection of and approve the picture quality and user experience of the Licensed Service within sixty (60) days of the Effective Date. Thereafter, when Licensee makes any modification that results in a material adverse change to the picture quality and user experience of the Licensed Service, Licensee shall so notify Licensor, and Licensor shall have the right to inspect and approve such modified picture quality and user experience.
Licensee shall promptly notify Licensor of any unauthorized transmissions or exhibitions of any Included Program available on the Licensed Service of which it becomes aware.
TERMS OF SERVICE. Without limiting any other obligation of Licensee hereunder, prior to making an Included Program available hereunder, Licensee shall (i) provide conspicuous notice of the terms and conditions pursuant to which a Subscriber may use the Licensed Service and receive Included Programs (“Terms of Service” or “TOS”) and (ii) include provisions in the TOS stating, among other things and without limitation, that: (a) Subscriber is obtaining a license under copyright to the Included Program; (b) Subscriber’s use of the Included Program must be in accordance with the Usage Rules; (c) except for the rights explicitly granted to Subscriber, all rights in the Included Program are reserved by Licensee and/or Licensor; and (d) the license terminates upon breach by Subscriber and upon termination the Included Program(s) involved with such breach must be deleted and/or disabled. Licensee shall contractually bind all users of the Licensed Service to adhere to the TOS and Usage Rules prior to the completion of each Subscriber Transaction and shall make Licensor an intended third party beneficiary of such agreement between Subscriber and Licensee.
RESERVATION OF RIGHTS. All licenses, rights and interest in, to and with respect to the Included Programs, the elements and parts thereof, and the media of exhibition and exploitation thereof, not specifically granted herein to Licensee, including, without limitation, theatrical, non-theatrical, mobile, home video, pay-per-view, pay television, basic television, free broadcast television, High Definition television, video-on-demand, subscription-video-on demand, and any so-called PVR or “personal video recorder” 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 this Agreement. It is explicitly understood that the entering into of this Agreement shall not be construed as granting to Licensee or any other person or entity any interest in the copyright or any other right in the Included Programs or the images or sound embodied therein, and nothing contained in this Agreement is intended to convey or will convey to Licensee any ownership or other proprietary interests in the Included Programs or the images or sound embodied therein and Licensor retains the right to fully exploit the Included Programs without limitation.
PROGRAMMING/NUMBER OF EXHIBITIONS.
All Included Programs shall be made continuously available to Subscribers on the Licensed Service, it being understood that if Licensor withdraws an Included Program pursuant to Section 6 below, Licensee shall not be in breach of this Section 5.1 with respect to such withdrawn Included Program.
Notwithstanding anything contained herein to the contrary, Licensee agrees that (i) no Adult Program shall be exhibited, promoted or listed on the same or previous screen (other than the home page of the Licensed Service, which may contain a textual link with a section of the user interface exhibiting, promoting or listing Adult Programs) as a screen on the Licensed Service on which an Included Program is promoted or listed, and (ii) no Adult Program will be classified within the same genre/category as any Included Program. If Licensee violates the terms of this Section 5.2 with respect to the Licensed Service, then, without limiting any other rights or remedies of Licensor hereunder, Licensor shall have the right to cause Licensee to immediately cease exploiting any or all Included Programs. As used herein, “Adult Program” shall mean any motion picture or related promotional content that has either been rated NC-17 (or successor rating, or if unrated would likely have received an NC-17 rating, other than a title released by a Qualifying Studio), or a title otherwise deemed not to be an Adult Program by Licensor in its sole discretion) or X or is unrated and would have likely received an X if it had been submitted to the MPAA for rating.
Licensee shall notify Licensor of the various genres/categories (e.g., drama, comedy, horror, suspense, romance, etc.), in which programs will generally be classified on the Licensed Service and shall use commercially reasonable efforts notify Licensor before it modifies, adds to or removes any such genres/categories. Licensor shall have the right to suggest one or more genres/categories in which each Included Program is to be included from among the available genres/categories, and shall use good faith efforts to do so not later than thirty (30) days prior to each such Included Program’s Availability Date; provided that Licensee shall ultimately designate the genres/categories for the Included Programs. Notwithstanding the foregoing, Licensor shall have the right to object reasonably to the inclusion of an Included Program in a particular genre/category on the Licensed Service. In the event Licensor provides Licensee with such an objection with regard to an Included Program, the parties will discuss in good faith the removal of such Included Program from the genre/category at issue.
The Included Programs shall on a non-discriminatory basis receive treatment with regard to all aspects of programming, including, without limitation, allocation of space on the Licensed Service interface, and prominence within the genre/categories, as the DHE films of any other Qualifying Studios contained in the Licensed Service taking into account the applicable terms and conditions of Licensee’s agreement with such Qualifying Studios (it being understood that Licensee’s use of a non-discriminatory methodology, such as alphabetical listings shall comply with the terms of this paragraph, and that Licensee is free to feature certain programs under any topical menus, such as “What’s Hot” or “Currently Featured”); provided, however, that nothing herein shall restrict Licensee from offering preferential or enhanced treatment solely to one or more content providers so long as Licensee uses good faith efforts to offer Licensor opportunities to receive similar treatment on the same terms and conditions as are provided to such other content providers.
MPAA Ratings; Anti-Piracy Warnings
If Licensor provides Licensee with the MPAA rating information about a particular Included Program in the metadata for such Included Program, then Licensee shall display such MPAA rating information for each Included Program in the following manner: (i) the MPAA rating, as well as the description of the reasons behind the rating (e.g., “Rated PG-13 for some violence”), must be displayed in full on the main product page for such Included Program within the Licensed Service alongside other basic information for such Included Program such as, by way of example, run time, release date and copyright notice, and such information must be displayed before a Subscriber Transaction is initiated; and (ii) once a Subscriber Transaction has been completed, each time the Included Program is listed in a menu display of the Subscriber’s movie library within the Licensed Service, the MPAA rating icon must be displayed next to the Included Program title. In addition, the Licensed Service must implement parental controls that allow a Subscriber with password-protected access to the Licensed Service to restrict users of that account from Electronically Downloading or Streaming Included Programs or viewing Promotional Previews for Included Programs that do not carry a specific MPAA rating (e.g., restrict access to Included Programs that carry any rating above “G”).
With respect to all Included Programs distributed by Licensee pursuant to this Agreement, Licensee shall display the following anti-piracy warning in the file attributes, “Properties” or similar summary information screen for each Included Program, which information may be accessed by Subscribers by accessing the “About” or “Options” information for each Electronically Downloaded or Streamed Included Program: “FBI ANTI-PIRACY WARNING: UNAUTHORIZED COPYING IS PUNISHABLE UNDER FEDERAL LAW.” In addition, if at any time during the Term (i) Licensee implements functionality as part of the Licensed Service that enables the inclusion of an FBI warning or similar anti-piracy message that is played back or otherwise displayed before the start of a movie, and/or (ii) distributes motion pictures that include an FBI warning or similar-anti piracy message that plays back before the start of a movie, then Licensor shall have the option of including an FBI Warning or other anti-piracy message in the same manner with respect to the Included Programs distributed by Licensee hereunder, provided that the content and design of such message shall reasonably determined by Licensor.
If, at any time during the Term, (i) the MPAA issues updated rules or otherwise requires the display of MPAA rating information for digitally-distributed motion pictures in a manner different than the requirements set forth in Section 5.5.1 above; and/or (ii) any U.S. governmental body with authority over the implementation of the so-called “FBI Anti-Piracy Warning,” requires that such warning be implemented in a manner different from the manner set forth in Section 5.5.2 above, then Licensor shall provide written notice to Licensee of such new requirements and Licensee shall comply with those requirements as a condition of continuing to distribute Included Programs pursuant to this Agreement. In the event Licensee does not promptly comply with updated instructions issued by Licensor pursuant to this Section 5.5.3, Licensor shall have the right, but not the obligation, to withdraw the affected Included Program(s) upon written notice to Licensee if Licensor believes that Licensee’s continued distribution in the manner that does not comply with the updated instructions will violate the material terms of any written agreement or other material requirement imposed on Licensor by the MPAA or any governmental body administering the use of such information or warnings, as applicable.
WITHDRAWAL OF PROGRAMS. Licensor shall have the right to withdraw any Included Program from the Licensed Service (and as soon as practicable after written notice from Licensor, Licensee shall cease to make such program available on the Licensed Service and shall cease to promote such program’s availability on the Licensed Service) if (i) Licensor reasonably believes that it does not have, or no longer has, or there is actual or threatened litigation regarding, the rights necessary to authorize Licensee to distribute Included Programs as provided herein; (ii) Licensor reasonably believes that Licensee’s continued distribution of Included Programs will violate the terms of any of Licensor’s agreements with any applicable copyright owner, artist, composer, producer, director, publisher, distributor or similar third party rights holder; (iii) Licensor reasonably believes that Licensee’s continued distribution of Included Programs may adversely affect Licensor’s material relations with any applicable copyright owner, artist, composer, producer, director, publisher, distributor or similar third party rights holder; (iv) upon 30 days’ prior written notice, if Included Programs are placed on moratorium, as such term is customarily used in the home video distribution industry, or (v) upon 30 days’ prior written notice, Licensor, or an affiliate of Licensor, elects to theatrically re-release or reissue such Included Program or to make a theatrical or television remake, sequel or prequel of such Included Program. In the event of any withdrawal of an Included Program pursuant to this Article 6 before the last day of the Term, Licensor shall promptly commence a good faith attempt to agree with Licensee as to a substitute program, which Licensee would have the right to exhibit for the remainder of the Term (as well as such other rights and obligations hereunder) as if such substitute program were an Included Program. Withdrawal may, as specified by Licensor, apply to all features and functionalities licensed pursuant to this Agreement with respect to the withdrawn Included Program (e.g., no future Subscriber Transactions may be allowed) or only to certain portions of such features and functionalities with respect to the withdrawn Included Program (e.g., future Subscriber Transactions may be prohibited post-withdrawal while Digital Locker Functionality may continue to be enabled); provided that Licensor may only withdraw Digital Locker Functionality with respect to an Included Program if the basis for such withdrawal falls under subsection (i), (ii), or (iii) (to the extent that Licensor reasonably believes that Licensee’s continued enabling of Digital Locker Functionality for the Included Programs may adversely affect Licensor’s material relations with any applicable copyright owner, artist, composer, producer, director, publisher, distributor or similar third party rights holder) above. Withdrawal of an Included Program under this Article 6, or the failure to agree upon a substitute program or reduction in License Fee therefor, shall in no event be deemed to be, or in any way constitute a breach of this Agreement and Licensee shall not be entitled to any rights or remedies as a result of such withdrawal including, without limitation, any right to recover for lost profits or interruption of its business. Licensor acknowledges that its right to withdraw Included Programs is intended solely as a right to remove individual titles and is not intended as a means for more broadly terminating Licensee’s rights to distribute Licensor’s titles on a DHE basis.
PAYMENT.
Unless and until Licensee is otherwise notified by Licensor, all payments due to Licensor hereunder shall be made in U.S. Dollars, without offset or deduction of any kind, as follows (or to such other account as Licensor hereafter shall notify Licensee) on the date such payments are required to be made: (a) by wire transfer to Licensor at Mellon Client Services Center, 500 Ross Street, Room 154-0940, Pittsburgh, PA 15262-0001; ABA Routing #: 043000261; Account #: 0090632; Account Name: Culver Digital Distribution; Reference: Verizon DHE Distribution or (b) by corporate check or cashier’s check sent to Licensor in immediately available funds either (i) if by mail, to Culver Digital Distribution; Dept. 1101; P.O. Box 121101; Dallas, TX 75312-1101; Reference: Verizon DHE Distribution or (ii) if by overnight delivery or courier service, to Culver Digital Distribution; Lockbox Number 891101; 888 S. Greenville Avenue, Suite 200; Richardson, TX 75081-5044; Reference: Verizon DHE Distribution.
Amounts which become due to Licensor hereunder (including, without limitation, any advances or guarantee payments) shall immediately be due and payable and shall immediately be non-recoupable, non-refundable and not subject to rebate, deduction or offset of any kind. Without prejudice to any other right or remedy available to Licensor, if Licensee fails to pay any license fees when due and payable, interest shall accrue on any such overdue amount until such time as the overdue amount is paid in full, at a rate equal to the lesser of two percent (2%) plus the prime rate announced from time to time in the U.S. edition of the Wall Street Journal (the “Prime Rate”) or the permitted maximum legal rate.
All prices and payments stated herein shall be exclusive of and made free and clear of and without deduction or withholding for or on account of any tax, duty or other charges, of whatever nature imposed by any taxing or governmental authority.
PHYSICAL MATERIALS AND TAXES.
Prior to the Availability Date for each Included Program, Licensor shall make available to Licensee, in Licensor’s discretion, either one (1) digital file in Licensor’s predetermined specifications or a videotape (each, a “Copy”) of such Included Program (together with subtitle script files and Advertising Materials, as defined at Schedule A, Section 12.1, to the extent cleared and available), in the original language version in a form capable of encoding and/or wrapping in the Approved Format in effect as of such date. Costs of creating and providing digital Copies and digital Advertising Materials, including, without limitation, encoding, duplication, one-way shipping and forwarding charges and insurance, shall be borne by Licensor. In the event that Licensee requires any digital files that deviate from Licensor’s predetermined specifications or Licensor elects to provide a videotape Copy or physical Advertising Materials, Licensor will issue an access letter for the appropriate materials and Licensee will be responsible for any necessary encoding, transcoding, handling and delivery at Licensee’s sole expense. All costs of any subtitling and dubbing in the Licensed Languages, including, without limitation, direct out-of-pocket costs of duplication/encoding, shipping and forwarding charges and insurance, shall be borne by Licensee. Upon request from Licensee, the parties shall, in good faith, discuss alternative methods of encoding and delivery, including, without limitation, repurposing materials for video on demand delivery for DHE distribution, which methods may create cost savings; provided that Licensor shall be under no obligation to authorize any such alternative delivery methods. Encoding, transcoding, subtitling and dubbing shall take place at facilities approved by Licensor, and all encoding, transcoding, subtitling and dubbing quality is subject to Licensor’s approval (not to be unreasonably withheld or delayed). Licensee shall also be responsible for concatenating applicable Licensor logos and any associated costs thereof. In any event, the number of Copies and Advertising Materials delivered to Licensee in connection with an Included Program shall be in Licensor’s sole discretion.
Within thirty (30) days following the last day of the Term, Licensee shall at Licensor’s election either return all Copies to Licensor or erase or degauss all such Copies and supply Licensor with a certification of erasure or degaussing of such.
Licensee shall pay and hold Licensor forever harmless from and against any and all taxes (including interest and penalties on any such amounts but other than corporate income and similar taxes), payments or fees required to be paid to any third party now or hereafter imposed or based upon the licensing, rental, delivery, exhibition, possession, or use hereunder to or by Licensee of the Included Programs or any print or any Copy of an Included Program hereunder, including, without limitation, any payments due to BMI, SESAC or ASCAP.
Upon the loss, theft or destruction (other than as required hereunder) of any Copy of an Included Program, Licensee shall promptly furnish Licensor with proof of such a loss, theft or destruction by affidavit setting forth the facts thereof.
Each Copy of the Included Programs and all Advertising Materials are the property of Licensor, subject only to the limited right of use expressly permitted herein, and Licensee shall not permit any lien, charge, pledge, mortgage or encumbrance to attach thereto.
In no event shall Licensor be required to deliver Copies in any language version other than the Licensed Language version. Notwithstanding the foregoing, if Licensor makes such language versions available to other DHE distributors in the Territory it shall make such version available to Licensee, provided that any failure by Licensor to do so shall not constitute a breach of this Agreement.
CONTENT PROTECTION & SECURITY.
General. Licensee represents and warrants that it and the Approved System have put in place secure and effective security systems and technologies to prevent theft, pirating, unauthorized exhibition (including, without limitation, exhibition via the Approved System to non-Subscribers and exhibition outside the Territory), unauthorized copying or duplication of any video reproduction or compressed digitized copy of any Included Program and that such security systems, procedures and technologies are and shall be no less stringent or robust than those which Licensee employs with respect to films licensed from other Qualifying Studios or than the industry standard. Licensee shall maintain and upgrade such security systems, procedures and technologies (including, without limitation, encryption methods) as commercially reasonable to prevent theft, pirating, unauthorized exhibition (including, without limitation, exhibition to non-Subscribers and exhibition outside the Territory), unauthorized copying or duplication of any video reproduction or compressed digitized copy of any Included Program. Licensee shall comply and shall cause the Approved System to comply with all commercially reasonable instructions and specifications provided by Licensor concerning the storage and management of its digital files and materials for the Included Programs, at Licensee’s sole expense or at both parties’ expense as mutually agreed to by the parties hereto. Neither Licensee nor the Approved System shall authorize any use of any video reproduction or compressed digitized copy of any Included Program for any purpose other than as is expressly permitted herein. Licensor or its representative, at Licensor’s expense and upon execution of a mutually acceptable non-disclosure agreement, shall have the right, not more than once per twelve (12) month period unless necessary to address a particular material security concern, to inspect and review Licensee’s and the Approved System’s security systems, procedures and technologies at Licensee’s and the Approved System’ places of business (including off-site facilities, if any) as Licensor deems reasonably necessary, provided such inspection is conducted during regular business hours and does not interfere materially with Licensee’s operations.
Obligation to Monitor for Hacks. Licensee shall take commercially reasonable measures as are reasonably necessary to determine the existence of Security Breaches or Territorial Breaches on the Approved System and shall promptly notify Licensor if any such occurrences are discovered.
Suspension Notice. Licensee shall notify Licensor promptly upon learning of the occurrence of any Security Breach or Territorial Breach, and shall provide Licensor with specific information describing the nature and extent of such occurrence. Licensor shall have the right to suspend (i) the availability (“Suspension”) of its Included Programs, in whole or in part, on the Licensed Service and the Approved System and (ii) Licensee’s right to enable Digital Locker Functionality for Included Programs at any time during the Term in the event of a Security Breach or Territorial Breach by delivering a written notice to the Licensee of such suspension (a “Suspension Notice”). Upon its receipt of a Suspension Notice, the Licensee (a) shall and shall cause the Approved System to take steps to remove the affected Included Programs or make affected the Included Programs inaccessible from the Licensed Service and (b) cease enabling Digital Locker Functionality for Included Programs as soon as commercially feasible (but in no event more than three (3) business days after receipt of such notice).
Reinstatement/Termination. If the cause of the Security Breach that gave rise to a Suspension is corrected, repaired, solved or otherwise addressed in the sole judgment of Licensor, the Suspension shall terminate upon written notice from Licensor and (i) Licensor’s obligation to make its Included Programs available on the Licensed Service/Approved System and (ii) Licensee’s right to enable Digital Locker Functionality for Included Programs shall immediately resume. For clarity, no period of Suspension shall extend the Term in time, and upon a notice that a Suspension has ended, the Term shall end as otherwise provided in the Agreement unless earlier terminated in accordance with another provision of this Agreement. Upon receipt of such written notice, Licensee shall and shall cause the Approved System to include the Included Programs on the Licensed Service/Approved System as soon thereafter as practicable. If more than two (2) Suspensions occur during the Term, or any single Suspension lasts for a period of three months or more, Licensor shall have the right, but not the obligation, to terminate this Agreement (“Security Breach Termination”) by providing written notice of such election to the Licensee.
Content Protection Requirements and Obligations. Licensee shall at all times utilize content protection and DRM standards no less stringent or robust than the standards attached hereto as Schedules B-1 and B-2 and incorporated herein by this reference.
CUTTING, EDITING AND INTERRUPTION. Licensee shall not make, or authorize any others to make, any modifications, deletions, cuts, alterations or additions in or to any Included Program without the prior written consent of Licensor. For the avoidance of doubt, no panning and scanning, time compression or similar modifications shall be permitted. Without limiting the foregoing, Licensee shall not delete the copyright notice or credits from the main or end title of any Included Program or from any other materials supplied by Licensor hereunder. No exhibitions of any Included Program hereunder shall be interrupted for intermission, commercials or any other similar commercial announcements of any kind.
RETRANSMISSION. As between Licensor and Licensee, (a) Licensor is the owner of all retransmission and off-air videotaping rights in the Included Programs and all royalties or other monies collected in connection therewith, and (b) Licensee shall have no right to exhibit or authorize the exhibition of the Included Programs by means of retransmission or to authorize the off-air copying of the Included Programs.
PROMOTION.
Licensee shall have the right to use or authorize the use of written summaries, extracts, synopses, photographs, trailers or other materials prepared and provided or made available by Licensor or, if not prepared by Licensor, approved in writing in advance by Licensor (“Advertising Materials”), solely for the purpose of advertising, promoting and publicizing the exhibition of the Included Programs on the Licensed Service in the Territory and the right to advertise, publicize and promote, or authorize the advertising, publicity and promotion of the exhibition of any Included Program on the Licensed Service in the Territory during the time periods specified below:
If Licensor establishes a date prior to which no marketing or promotion may occur for any title (“Announce Date”), Licensee may not “pre-promote” such title, to include, without limitation: (a) solicit any pre-orders; (b) advertise referencing price or release date; or (c) use any title-related images or artwork. Violation of this provision shall constitute a material breach of the Agreement. If no Announce Date is specified by Licensor, Licensee shall not pre-promote any Included Program more than sixty (60) days prior to its Availability Date unless otherwise directed by Licensor and in no event may Licensee promote any title prior to receiving an availability list for such title.
Licensee shall not promote any Included Program after the expiration of the Term or after the withdrawal of such Included Program hereunder.
Licensee shall use any marketing, promotional and advertising materials provided by Licensor in a manner consistent with the following:
a) If any announcement, promotion or advertisement for an Included Program is more than ten (10) days in advance of such program’s Availability Date, Licensee shall only announce and/or promote and/or advertise (in any and all media) its future availability on the Licensed Service by referring to its specific Availability Date. By way of example, in such case “Coming to ______ September 10” would be acceptable, but “Coming soon on _______” would not be acceptable; or
b) If any announcement, promotion or advertisement for an Included Program is ten (10) or fewer days in advance of such program’s Availability Date, Licensee shall have the right to announce and/or promote and/or advertise (in any and all media) its future availability by referring generally to its upcoming availability or referring to its specific Availability Date. By way of example, in such case both “Coming to _______ September 10” and “Coming soon on _______” would be acceptable.
Licensor, at its own expense, may insert Licensor-specified trailers promoting Included Programs or feature wraps promoting Included Programs and merchandise associated with Included Programs (including, without limitation, cross-promotional merchandize offered by promotional partners of Included Programs) at the beginning of each Included Program and in an amount not to exceed sixty seconds (:60).
At Licensor’s request, Licensee shall provide to Licensor a copy of any program schedules or guides (including those delivered by electronic means, if any) for the Licensed Service immediately upon publication or delivery thereof.
Licensee covenants and warrants that (i) it shall fully comply with any and all instructions furnished in writing to Licensee with respect to the Advertising Materials used by Licensee in connection with this Article 12 (including size, prominence and position of Advertising Materials); (ii) it shall not modify, edit or make any changes to the Advertising Materials without Licensor’s prior written consent; (iii) names and likenesses of the characters, persons and other entities appearing in or connected with the production of Included Programs (“Names and Likenesses”) shall not be used separate and apart from the Advertising Materials; and (iv) Advertising Materials, Names and Likenesses, Licensor’s name or logo, and Included Programs shall not be used so as to constitute an endorsement or testimonial, express or implied, of any party, product or service, including, without limitation, the Licensed Service, Licensee, or any program service or other service provided by Licensee; nor shall the same be used as part of a commercial tie-in. Any advertising or promotional material created by Licensee, any promotional contests or giveaways to be conducted by Licensee and any sponsorship of any Included Program (as distinguished from the standard practice of selling commercial advertising time) shall require the prior written consent of Licensor and shall be used only in accordance with Licensor’s instructions.
Licensee shall market, advertise and/or promote all Included Programs on a fair, equitable and non-discriminatory basis vis-a-vis films provided by other Qualifying Studios for DHE exhibition on the Licensed Service. The Included Programs shall receive promotional and marketing placement on the Licensed Service’s home page (or a menu subcategory from which other Qualifying Studios’ DHE films are made available), genre/category pages, navigators, graphic user interface, cross-channel real estate, barker channel and in any other available promotional medium (to the extent permissible with the other provisions of this Article 12) on a non-discriminatory basis as compared to any Qualifying Studio providing films for DHE exhibition on the Licensed Service); provided, however, that nothing herein shall restrict Licensee from offering preferential or enhanced marketing or advertising treatment solely to one or more content providers so long as Licensee uses good faith efforts to offer Licensor opportunities to receive similar treatment on the same terms and conditions as are provided to such other content providers.
Licensee shall not be obligated to include Licensor or the Included Programs in specific marketing initiatives for which another filmed content provider has provided to Licensee additional consideration; provided, however, that at Licensor’s request, Licensee will engage in similar marketing initiatives with Licensor, at Licensor’s expense, on similar terms and conditions.
Licensor and Licensee will work in good faith to develop marketing initiatives to promote the availability of the Included Programs on the Licensed Service.
The rights granted in this Article 12 shall be subject to, and Licensee shall comply with, any and all restrictions or regulations of any applicable guild or union and any third party contractual provisions with respect to the advertising and billing of the Included Program as Licensor may advise Licensee. In no event shall Licensee be permitted to use any excerpts from an Included Program other than as provided by Licensor and in no case in excess of two minutes (or such shorter period as Licensor may notify Licensee from time-to-time) in the case of a single continuous sequence, or four minutes in the aggregate from any single Included Program (or such shorter period as Licensor may notify Licensee in writing from time to time).
Appropriate copyright notices shall at all times accompany all Advertising Materials. Any promotion or advertising via the Internet is subject to the terms and conditions of the Internet and Email Promotion Policy attached hereto as Schedule D.
Within thirty (30) calendar days after the last day of the Term, Licensee shall destroy (or at Licensor’s request and Licensor’s expense, return to Licensor) all Advertising Materials for such Included Program.
Except for the promotion of the Licensed Service, Included Programs and other films and programs available on the Licensed Service, no advertising will be exhibited on the Licensed Service; provided further, however, that in no event shall advertising be featured on the specific pages of the Licensed Service on which Licensee makes available to Subscribers the Included Programs. Promotions of the Included Programs shall not contain negative messages about any lawful means of film distribution, including, without limitation, home video/DVD purchase or rental, provided that Licensee shall be free to promote the bona fide benefits of the Licensed Service (e.g., “No late fees!” or “Order from home!”) without reference to other means of film distribution.
LICENSOR’S REPRESENTATIONS AND WARRANTIES. Licensor hereby represents and warrants to Licensee that:
It is a company duly organized under the laws of the state of its organization and has all requisite corporate power and authority to enter into this Agreement and perform its obligations hereunder;
The execution and delivery of this Agreement by Licensor has been duly authorized by all necessary corporate action.
This Agreement has been duly executed and delivered by, and constitutes a valid and binding obligation of Licensor, enforceable against such party in accordance with the terms and conditions set forth in this Agreement, except as such enforcement is limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors’ rights generally, and by general equitable or comparable principles;
The performing and mechanical reproduction rights to any musical compositions works contained in each of the Included Programs, are either (i) controlled by ASCAP, BMI, SESAC or similar musical rights organizations, collecting societies or governmental entities having jurisdiction in the Territory, (ii) controlled by Licensor to the extent required for the licensing of the exhibition and/or manufacturing of copies of the Included Programs in accordance herewith or (iii) in the public domain. Licensor does not represent or warrant that Licensee may exercise the performing rights and/or mechanical reproduction rights in the music without obtaining a valid performance and/or mechanical reproduction license and without payment of a performing rights royalty, mechanical royalty or license fee, and if a performing rights royalty, mechanical royalty or license fee is required to be paid in connection with the exhibition or manufacturing copies of an Included Program, Licensee shall be responsible for the payment thereof and shall hold Licensor free and harmless therefrom. Licensor shall furnish Licensee with all necessary information regarding the title, composer, publisher, recording artist and master owner of such music.
LICENSEE’S REPRESENTATIONS AND WARRANTIES. Licensee hereby represents, warrants and covenants to Licensor that:
It is a company duly organized under the laws of the state of its organization and has all requisite corporate power and authority to enter into this Agreement and perform its obligations hereunder;
The execution and delivery of this Agreement by Licensee has been duly authorized by all necessary corporate action.
This Agreement has been duly executed and delivered by, and constitutes a valid and binding obligation of Licensee, enforceable against such party in accordance with the terms and conditions set forth in this Agreement, except as such enforcement is limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors’ rights generally, and by general equitable or comparable principles;
Licensee has obtained and shall maintain all licenses and other approvals necessary to own and operate the Licensed Service in the Territory and otherwise exploit the rights granted hereunder;
Licensee shall be responsible for and pay the music performance rights and/or mechanical reproduction fees and royalties, if any, as set forth in Section 13.4 above;
No Included Program shall be transmitted or exhibited except in accordance with the terms and conditions of this Agreement. Without limiting the generality of the foregoing, no Included Program shall be transmitted or exhibited to any person other than a Subscriber within the Territory in the medium of DHE, or transmitted other than by Approved Delivery in an Approved Format to Approved Devices on the Licensed Service, subject at all times to the Usage Rules;
Licensee shall not authorize, and shall take all reasonable precautions to prevent, the reception of the Included Programs via the Approved System in locations which are not Private Residences.
INDEMNIFICATION.
Licensor shall indemnify and hold harmless Licensee and its representatives (with respect to a party, its officers, directors, equity owners, employees and other representatives and its parents, subsidiaries and affiliates and their officers, directors, equity owners, employees and other representatives (collectively, the “Representatives”)) from and against any and all claims, damages, liabilities, costs and expenses, including reasonable outside counsel fees, arising from or in connection with the breach by Licensor of any of its representations or warranties or any material provisions of this Agreement and claims that any of the Included Programs, under U.S. law, infringe upon the trade name, trademark, copyright, music synchronization, literary or dramatic right or right of privacy of any claimant (not including music performance and mechanical reproduction rights which are covered under Section 13.4 of this Schedule) or constitutes a libel or slander of such claimant; provided that Licensee shall promptly notify Licensor of any such claim or litigation. Notwithstanding the foregoing, the failure to provide such prompt notice shall diminish Licensor’s indemnification obligations only to the extent Licensor is actually prejudiced by such failure. In addition, Licensor shall not be required to indemnify Licensee or its Representatives for any claims resulting from Licensee exhibiting an Included Programs or using Advertising Materials in a form other than as delivered by Licensor, or due to Licensee’s editing or modification of any Included Programs or Advertising Materials, or due to Licensee’s authorization of a third party to do any of the foregoing.
Licensee shall indemnify and hold harmless Licensor and its Representatives from and against any and all claims, damages, liabilities, costs and expenses, including reasonable counsel fees, arising from or in connection with (i) the breach of any representation, warranty or other provision of this Agreement by Licensee, (ii) the exhibition of any material (other than material contained in Included Programs or Advertising Materials as delivered by Licensor exhibited in strict accordance with this Agreement and Licensor’s instructions therefor), in connection with or relating, directly or indirectly, to such Included Programs or (iii) the infringement upon or violation of any right of a third party other than as a result of the exhibition of the Included Programs in strict accordance with the terms of this Agreement; provided that Licensor shall promptly notify Licensee of any such claim or litigation. Notwithstanding the foregoing, the failure to provide such prompt notice shall diminish Licensee’s indemnification obligations only to the extent Licensee is actually prejudiced by such failure.
In any case in which indemnification is sought hereunder:
At the indemnifying party’s option, the indemnifying party may assume the handling, settlement or defense of any such claim or litigation. If the indemnifying party assumes the handling, settlement or defense of any such claim or litigation, the party to be indemnified shall cooperate in the defense of such claim or litigation, and the indemnifying party’s obligation with respect to such claim or litigation shall be limited to holding the indemnified party harmless from any final judgment rendered on account of such claim or settlement made or approved by the indemnifying party in connection therewith, and expenses and reasonable attorneys fees of the indemnified party incurred in connection with the defense of such claim or litigation prior to the assumption thereof by the indemnifying party and any reasonable out-of-pocket expenses for performing such acts as the indemnifying party shall request. If the indemnifying party does not assume the handling, settlement or defense of any such claim or litigation, the indemnifying party shall, in addition to holding the indemnified party harmless from the amount of any damages awarded in any final judgment entered on account of such claim, reimburse the indemnified party for reasonable costs and expenses and reasonable attorneys fees of the indemnified party incurred in connection with the defense of any such claim or litigation; and
The party seeking indemnification shall fully cooperate with the reasonable requests of the other party in its participation in, and control of, any compromise, settlement, litigation or other resolution or disposition of any such claim. The indemnifying party shall not consent to the entry of any final judgment in any action without the indemnified party’s prior written approval except, in the case where Licensor is the indemnifying party, where such consent involves the agreement not to further exploit an Included Program.
LIMITATION OF LIABILITY. NOTWITHSTANDING ANY PROVISION IN THIS AGREEMENT TO THE CONTRARY, EXCEPT IN THE CASE OF INDEMNIFICATION FOR A THIRD PARTY CLAIM HEREUNDER OR FOR BREACH OF CONFIDENTIALITY OBLIGATIONS, NEITHER PARTY TO THIS AGREEMENT SHALL BE LIABLE TO THE OTHER PARTY FOR LOSS OF PROFITS, LOSS OF BUSINESS, OR SPECIAL, INDIRECT, INCIDENTAL, EXEMPLARY, CONSEQUENTIAL OR PUNITIVE DAMAGES, WHETHER FORESEEABLE OR NOT, ARISING FROM THE PERFORMANCE OR NONPERFORMANCE OF THIS AGREEMENT, OR ANY ACTS OR OMISSIONS ASSOCIATED THEREWITH OR RELATED TO THE SERVICE, WHETHER THE BASIS OF THE LIABILITY IS BREACH OF CONTRACT, TORT (INCLUDING NEGLIGENCE AND STRICT LIABILITY), STATUTES, OR ANY OTHER LEGAL THEORY .
STATEMENTS; REPORTS; SCHEDULES.
Within forty-five (45) days following the end of each month of the Term, Licensee shall provide to Licensor and its designee, if any, a statement (“Statement”) detailing the information specified by Licensor for the Licensed Service from time to time including, but not limited to: (i) the total number of Subscriber Transactions for each Included Program made available by Licensor, (ii) the Subscriber Price applicable to each such Subscriber Transaction, (iii) the Distributor Price for each Included Program; (iv) the total number of Subscriber Transactions for all Included Programs made available by Licensor; and (v) the number of Technical Credits issued with respect to Included Programs. Licensee shall use commercially reasonable efforts to provide such other information that Licensor may reasonably request. Licensee shall make available Statements on a regular basis at Licensee’s expense on the same terms and conditions offered to other Qualifying Studios providing films for DHE exhibition on the Licensed Service. Licensee may further provide aggregate (anonymous) demographic information about Subscribers who engaged in each Subscriber Transaction if and when such information becomes available to Licensee, but in any event, if and when Licensee provides such information to any other Qualifying Studio (on the same terms and conditions offered to such other Qualifying Studios) providing films for DHE exhibition on the Licensed Service.
To the extent Licensee provides such information to any other Qualifying Studio providing films for DHE exhibition on the Licensed Service (on the same terms and conditions offered to such other Qualifying Studios), within forty-five (45) days following the end of each month of the Term, Licensee may provide to Licensor and its designee, if any, a statement in electronic form (“Subscriber Statement”) detailing, on a Subscriber-by- Subscriber basis, the rights licensed to Subscriber with respect to each Included Program, including, without limitation, (y) the then-current Usage Rules associated with each Included Program provided to the Subscriber and (z) the entitlements Subscriber has exercised with respect to such Included Program (e.g., if the then-current Usage Rules allow Subscriber to download a copy that can be played on a PC, as well as a copy that can be played on a portable device, Licensee’s statements shall detail whether Subscriber has or has not downloaded each such permitted copy); provided; however, that such statements shall not include any personally-identifiable Subscriber information. Licensee shall use reasonable commercial efforts to supply the above reporting on a more frequent basis; provided, in any event, the foregoing reporting shall be supplied to Licensor on no less frequent a basis than that provided to any other content provider.
Licensee shall make available to Licensor and its designee, if any, starting as soon as technically feasible but in no event later than three (3) months after Licensee commercially launches the Licensed Service, quarterly reports with respect to Approved Devices and Electronic Downloading and Streaming delivery of Included Programs as set forth in the attached Schedule E. Apart from and in addition to the foregoing, Licensee shall deliver to Licensor any reporting it generates internally with respect to Electronic Downloading and/or Streaming delivery of the Included Programs.
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.
To the extent such information is not subject to confidentiality restrictions and to the extent Licensee provides such information to any other Qualifying Studio providing films for DHE exhibition on the Licensed Service (on the same terms and conditions offered to such other Qualifying Studios), Licensee may provide Licensor within forty-five (45) days following the end of each calendar month of the Term with a report in electronic form setting forth pricing and performance data (aggregated and not reported on a title by title basis) for the Licensed Service and all DHE programming (other than Adult Programs) exhibited during such quarter on the Licensed Service including, but not limited to: (i) the actual aggregate number of Subscribers to the Licensed Service on the last day of such month (ii) the average number of titles offered in each genre or category of the Licensed Service during such calendar quarter, (iii) the number of DHE buys per title by genre or category such month; and (iv) the average retail price charged per genre or category during such calendar quarter.
To the extent Licensor provides any non-confidential market and subscriber information, including, but not limited to, research and studies highlighting consumer viewing and acquisition behavior, buy rate information by category/genre and in the aggregate, price sensitivity and the impact of promotions and bundling, focus group surveys and demographic studies, to other Qualifying Studio providing films for DHE exhibition on the Licensed Service, Licensee shall provide such information to Licensor (on the same terms and conditions offered to such other Qualifying Studios).
TERMINATION.
Without limiting any other provision of this Agreement and subject to Section 17.3 of this Schedule, upon the occurrence of a Licensee Termination Event (as defined below), Licensor may, in addition to any and all other rights which it may have against Licensee, immediately terminate this Agreement or any license with respect to an Included Program by giving written notice to Licensee. Whether or not Licensor exercises such right of termination, Licensor shall, upon the occurrence of any Licensee Event of Default (as defined below), have no further obligation to deliver Copies or Advertising Materials to Licensee and Licensor shall have the right to require Licensee, at Licensor’s expense, to immediately return all Copies and Advertising Materials to Licensor. In addition to any and all other remedies in respect of a Licensee Event of Default which Licensor may have under applicable law, Licensor shall be entitled to recover from Licensee all payments past due from Licensee to Licensor hereunder, together with interest, compounded monthly, at the lesser of (x) two percent (2%) plus the Prime Rate and (y) the maximum rate permitted by law. Furthermore, upon a Licensee Event of Default, Licensor shall have the right to immediately suspend delivery of all Included Programs and materials with respect thereto and/or suspend Licensee’s right to exploit any Included Programs, licensed hereunder, without prejudice to any of its other rights hereunder. As used herein, a “Licensee Event of Default”: the occurrence of any of the following: (A) Licensee (x) fails to timely perform or breaches any of its material obligations hereunder or otherwise materially breaches this Agreement, (y) fails to make timely payment of fees under this Agreement or (z) assigns or otherwise transfers this Agreement in violation of this Agreement; or (B) upon (i) Licensee becoming unable to pay its debts; (ii) a petition being presented or a meeting being convened for the purpose of considering a resolution for the making of an administration order, the winding-up, bankruptcy or dissolution of Licensee; (iii) Licensee becoming insolvent; (iv) a petition under any bankruptcy or analogous act being filed by or against Licensee (which petition, if filed against Licensee, shall not have been dismissed by the relevant authority within thirty (30) days thereafter); (v) Licensee executing an assignment for the benefit of creditors; (vi) a receiver being appointed for the assets of Licensee; (vii) Licensee taking advantage of any applicable bankruptcy, insolvency or reorganization or any other like statute; or (viii) the occurrence of any event analogous to the foregoing. As used herein a “Licensee Termination Event” shall mean (I) the occurrence of a curable Licensee Event of Default described in subclause (A) above that Licensee has failed to cure within thirty (30) days written notice from Licensor of the occurrence of such default or, if such default is the failure to pay any installment or overage, within five (5) Business Days of notice from Licensor, (II) the occurrence of a non-curable Licensee Event of Default described in subclause (A) above and (III) the occurrence of a Licensee Event of Default described in subclause (B) above.
Subject to Section 17.3 of this Schedule, in the event Licensor materially defaults in the performance of its material obligations hereunder or otherwise materially breaches this Agreement or Licensor becomes insolvent, or a petition under any bankruptcy act shall be filed by or against Licensor (which petition, if filed against Licensor, shall not have been dismissed within thirty (30) days thereafter), or Licensor executes an assignment for the benefit of creditors, or a receiver is appointed for the assets of Licensor, or Licensor takes advantage of any applicable insolvency or reorganization or any other like statute (each of the above acts is hereinafter referred to as a “Licensor Event of Default”), and Licensor fails to cure such Licensor Event of Default within thirty (30) days after delivery by Licensee to Licensor of written notice of such Licensor Event of Default, then Licensee may, in addition to any and all other rights which it may have against Licensor, immediately terminate this Agreement by giving written notice to Licensor.
Notwithstanding anything to the contrary contained in Sections 17.1 or 17.2 hereof, no termination of this Agreement for any reason shall relieve or discharge, or be deemed or construed as relieving or discharging, any party hereto from any duty, obligation or liability hereunder which was accrued as of the date of such termination (including, without limitation, the obligation to pay any amounts payable hereunder accrued as of such date of termination).
In the event that Licensee discontinues its Licensed Service for more than three (3) consecutive months such that no programs are available for license on a DHE basis from the Licensed Service during such period, Licensee may terminate this Agreement upon thirty (30) written notice to Licensor.
EXCLUSION RIGHT. Notwithstanding anything contained in this Agreement to the contrary, Licensee hereby acknowledges that Licensor may be unable to license a program to Licensee on the terms set forth in this Agreement due to certain arrangements between Licensor and individuals involved in the production or financing of such program that require Licensor to obtain the approval of such individuals prior to the licensing of such program (“Third Party Exclusion Right”); provided that Licensor does so for all distributors of such programs on a DHE basis. In any such circumstance, Licensor hereby agrees to use reasonable, good faith business efforts to obtain the approvals necessary to allow Licensor to license such program to Licensee under the terms of this Agreement. Notwithstanding anything contained herein to the contrary, Licensor and Licensee hereby agree that Licensor’s inability to obtain such necessary approvals and to license any such program to Licensee under the terms of this Agreement shall not be deemed to be, or in any way constitute, a breach of this Agreement. If Licensor is unable to obtain such necessary approvals, Licensor shall give Licensee written notice thereof and shall have no further obligations to Licensee with respect to such program.
ASSIGNMENT. Licensee shall not assign, transfer or hypothecate its rights hereunder, in whole or in part, whether voluntarily or by operation of law without Licensor’s prior written approval, such approval not to be commercially unreasonably withheld or delayed; provided that Licensor’s prior written approval shall not be required for Licensee to assign this Agreement to a wholly-owned affiliate of Verizon Communications Inc., so long as the assignee agrees in writing to be bound by the terms of this Agreement.
NON-WAIVER OF BREACH; REMEDIES CUMULATIVE. A waiver by either party of any of the terms or conditions of this Agreement shall not, in any instance, be deemed or construed to be a waiver of such terms or conditions for the future or of any subsequent breach thereof. No payment or acceptance thereof pursuant to this Agreement shall operate as a waiver of any provision hereof. All remedies, rights, undertakings, obligations and agreements contained in this Agreement shall be cumulative and none of them shall be in limitation of any other remedy, right, undertaking, obligation, or agreement of either party.
GOVERNING LAW; DISPUTE RESOLUTION. This Agreement shall be interpreted and construed in accordance with the substantive laws (and not the law of conflicts) of the State of California and the United States of America with the same force and effect as if fully executed and to be fully performed therein. All actions or proceedings arising in connection with, touching upon or relating to this Agreement, the breach thereof and/or the scope of the provisions of this Section 21 (a “Proceeding”) shall be submitted to JAMS (“JAMS”) for binding arbitration under its Comprehensive Arbitration Rules and Procedures if the matter in dispute is over $250,000 or under its Streamlined Arbitration Rules and Procedures if the matter in dispute is $250,000 or less (as applicable, the “Rules”) to be held solely in Los Angeles, California, U.S.A., in the English language in accordance with the provisions below.
(a) Each arbitration shall be conducted by an arbitral tribunal (the “Arbitral Board”) consisting of a single arbitrator who shall be mutually agreed upon by the parties. If the parties are unable to agree on an arbitrator, the arbitrator shall be appointed by JAMS. The arbitrator shall be a retired judge with at least ten (10) years experience in commercial matters. The Arbitral Board shall assess the cost, fees and expenses of the arbitration against the losing party, and the prevailing party in any arbitration or legal proceeding relating to this Agreement shall be entitled to all reasonable out-of-pocket third party expenses (including, without limitation, reasonable attorney’s fees). Notwithstanding the foregoing, the Arbitral Board may require that such fees be borne in such other manner as the Arbitral Board determines is required in order for this arbitration clause to be enforceable under applicable law. The parties shall be entitled to conduct discovery in accordance with Section 1283.05 of the California Code of Civil Procedure, provided that (a) the Arbitral Board must authorize all such discovery in advance based on findings that the material sought is relevant to the issues in dispute and that the nature and scope of such discovery is reasonable under the circumstances, and (b) discovery shall be limited to depositions and production of documents unless the Arbitral Board finds that another method of discovery (e.g., interrogatories) is the most reasonable and cost efficient method of obtaining the information sought.
(b) There shall be a record of the proceedings at the arbitration hearing and the Arbitral Board shall issue a Statement of Decision setting forth the factual and legal basis for the Arbitral Board's decision. If neither party gives written notice requesting an appeal within ten (10) business days after the issuance of the Statement of Decision, the Arbitral Board's decision shall be final and binding as to all matters of substance and procedure, and may be enforced by a petition to the Los Angeles County Superior Court or, in the case of Licensee, such other court having jurisdiction over Licensee, which may be made ex parte, for confirmation and enforcement of the award. If either party gives written notice requesting an appeal within ten (10) business days after the issuance of the Statement of Decision, the award of the Arbitral Board shall be appealed to three (3) neutral arbitrators (the "Appellate Arbitrators"), each of whom shall have the same qualifications and be selected through the same procedure as the Arbitral Board. The appealing party shall file its appellate brief within thirty (30) days after its written notice requesting the appeal and the other party shall file its brief within thirty (30) days thereafter. The Appellate Arbitrators shall thereupon review the decision of the Arbitral Board applying the same standards of review (and all of the same presumptions) as if the Appellate Arbitrators were a California Court of Appeal reviewing a judgment of the Los Angeles County Superior Court, except that the Appellate Arbitrators shall in all cases issue a final award and shall not remand the matter to the Arbitral Board. The decision of the Appellate Arbitrators shall be final and binding as to all matters of substance and procedure, and may be enforced by a petition to the Los Angeles County Superior Court or, in the case of Licensee, such other court having jurisdiction over Licensee, which may be made ex parte, for confirmation and enforcement of the award. The party appealing the decision of the Arbitral Board shall pay all costs and expenses of the appeal, including the fees of the Appellate Arbitrators and the reasonable outside attorneys’ fees of the opposing party, unless the decision of the Arbitral Board is reversed, in which event the costs, fees and expenses of the appeal shall be borne as determined by the Appellate Arbitrators.
(c) Subject to a party's right to appeal pursuant to the above, neither party shall challenge or resist any enforcement action taken by the party in whose favor the Arbitral Board, or if appealed, the Appellate Arbitrators, decided. Each party acknowledges that it is giving up the right to a trial by jury or court. The Arbitral Board shall have the power to enter temporary restraining orders and preliminary and permanent injunctions. Neither party shall be entitled or permitted to commence or maintain any action in a court of law with respect to any matter in dispute until such matter shall have been submitted to arbitration as herein provided and then only for the enforcement of the Arbitral Board’s award; provided, however, that prior to the appointment of the Arbitral Board or for remedies beyond the jurisdiction of an arbitrator, at any time, either party may seek pendente lite relief in a court of competent jurisdiction in Los Angeles County, California, without thereby waiving its right to arbitration of the dispute or controversy under this section. All arbitration proceedings (including proceedings before the Appellate Arbitrators) shall be closed to the public and confidential and all records relating thereto shall be permanently sealed, except as necessary to obtain court confirmation of the arbitration award. Notwithstanding anything to the contrary herein, Licensee hereby irrevocably waives any right or remedy to seek and/or obtain injunctive or other equitable relief or any order with respect to, and/or to enjoin or restrain or otherwise impair in any manner, the production, distribution, exhibition or other exploitation of any motion picture, production or project related to Licensor, its parents, subsidiaries and affiliates, or the use, publication or dissemination of any advertising in connection with such motion picture, production or project. The provisions of this Section 21 shall supersede any inconsistent provisions of any prior agreement between the parties.
NOTICES. All notices hereunder shall be in writing and shall be sent by certified (return receipt requested) or registered mail, by air courier service, by personal delivery to the address or fax number of the party for whom it is intended as follows, or to such other address or fax number as any party may hereafter specify in writing:
If to Licensor, to: Culver Digital Distribution Inc., 10202 West Washington Boulevard, Culver City, CA 90232, Attention: Executive Vice President, Fax no.: 1-310-244-1744, with a copy to: Sony Pictures Entertainment Inc., 10202 West Washington Boulevard, Culver City, CA 90232, Attention: General Counsel, Facsimile No.: 1-310-244-0510.
If to Licensee, to Verizon, 140 West St. 22nd Floor, New York, New York 10007, Attention: Vice President, Programming, With copy to: Verizon, FiOS TV Business & Legal Affairs, 140 West Street, 27th Floor, New York, NY 10007, Attention: Associate General Counsel
General. Notice given by personal delivery shall be deemed given upon delivery and notice given by overnight delivery or courier service shall be deemed given the first Business Day following the Business Day of delivery to the overnight delivery service.
FORCE MAJEURE. Neither party shall in any manner whatsoever be liable or otherwise responsible for any delay or default in, or failure of performance resulting from or arising out of or in connection with any Event of Force Majeure, and no such delay, default in, or failure of performance shall constitute a breach by either party hereunder. In Event of Force Majeure, the affected performing party will promptly notify the other party in writing of the nature and anticipated length of continuance of such Event of Force Majeure, and during such period both parties will be excused from performance hereunder. If the Force Event of Force Majeure event continues for ninety (90) consecutive days, or is reasonably expected to continue for ninety (90) consecutive days, then the party other than the non-performing party may terminate this Agreement upon thirty (30) days prior written notice.
CONFIDENTIALITY. Other than as may be required by law, or governmental authority, or to enforce its rights hereunder, and subject to the following sentence, neither party shall, without the express written consent of the other, publicly divulge or announce, or in any manner disclose to any third party, other than its attorneys, advisors, directors, employees, agents, shareholders, accountants, parent entities or auditors, and, in the case of Licensor, its profit participants, or pursuant to Guild obligations (each of whom shall be subject to the confidentiality provision hereof) on a need-to-know basis, any of the specific terms and conditions of this Agreement, including, without limitation, the License Fees payable hereunder. Neither party shall issue any press release regarding the existence of or terms of this Agreement without the prior written consent of the other party.
AUDIT. Licensee shall keep and maintain all relevant information and documents at its principal place of business in connection with Licensee’s reporting and payment obligations under this Agreement and copies of the statements referred to in Article 15 of this Schedule. During the Term and for a period of one (1) year thereafter Licensor shall have the right to engage an accounting firm (which shall be an independent representative and which the parties acknowledge includes Sargoy Stein Rosen & Shapiro LLP, Pricewaterhouse Coopers LLP, KPMG LLP and Ernst & Young LLP) during normal business hours to audit and check at Licensee’s principal place of business, Licensee’s books and records pertaining to the accuracy of the statements and other financial information delivered to Licensor by Licensee and the amount of the license fees paid or payable hereunder; provided, however, that Licensor shall not be entitled to conduct more than one such audit in any twelve (12) month period. If an examination establishes an error in Licensee’s computation of license fees due with respect to the Included Programs, Licensee shall immediately pay the amount of underpayment, and if the underpayment is five percent (5%) or more, Licensee shall pay the License Fees plus interest thereon from the date such payment was originally due at a rate equal to the lesser of two percent (2%) plus the Prime Rate and the maximum rate permitted by applicable law. If such error is in excess of ten percent (10%) of such license fees due for the period covered by such audit, Licensee shall, in addition to making immediate payment of the additional license fees due plus interest in accordance with the previous sentence, pay to Licensor (i) the reasonable out-of-pocket third party costs and expenses incurred by Licensor for any audit, and (ii) reasonable out-of-pocket attorneys fees incurred by Licensor in enforcing the collection thereof. In the event that the rate of interest set forth in this Section exceeds the maximum permitted legal interest rate, such rate shall be automatically reduced to the maximum permitted legal interest rate, and all other terms and conditions of this Agreement shall remain in full force and effect. Licensor’s claims related to an audit shall be waived if Licensor fails to make any claim based on such audit within twelve (12) months after the completion of the audit; provided, however, that the auditor has timely received all relevant information and documents requested from Licensee.
CAPTIONS/DRAFTING. Article, Section or other headings contained in this Agreement are for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. In interpreting the terms and conditions of this Agreement, no presumption shall be interpreted for or against a party as a result of the role of such party or such party’s counsel in the drafting of this Agreement.
CONFLICTING LAW OR REGULATION. If any provision in this Agreement is determined by a court or arbitrator of competent jurisdiction to be invalid or unenforceable (for any reason, including, without limitation, in connection with “competition” legislation), such determination shall not affect any other provision, each of which shall be construed and enforced as if such invalid or unenforceable provision were not contained herein.
NO THIRD PARTY BENEFICIARIES. This Agreement is entered into for the express benefit of the parties hereto, their successors and permitted assigns and is not intended, and shall not be deemed, to create in any other natural person, corporation, company, and/or any other entity whatsoever any rights or interest whatsoever, including, without limitation, any right to enforce the terms hereof.
ENTIRE UNDERSTANDING. This Agreement includes the entire understanding of the parties with respect to the subject matter hereof, and all prior agreements (written or oral) with respect to such subject matter have been merged herein. No representations or warranties have been made other than those expressly provided for herein. This Agreement may not be modified, except by a written instrument signed by the parties, and this provision may not be waived except by written instrument signed by the parties.
Schedule B-1
Content Protection Requirements And Obligations
This Schedule B-1 is attached to and a part of that certain DHE License Agreement, dated November __, 2009 (the “Agreement”), between Culver Digital Distribution Inc. and Verizon Corporate Services Group Inc. All defined terms used but not otherwise defined herein shall have the meanings given them in the Agreement.
General Content Security & Service Implementation
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”).
The Content Protection System shall:
i) be approved in writing by Licensor (including any upgrades or new versions, which Licensee shall submit to Licensor for approval upon such upgrades or new versions becoming available),
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.
1. Encryption.
1. The Content Protection System shall use cryptographic algorithms for encryption, decryption, signatures, hashing, random number generation, and key generation and the utilize time-tested cryptographic protocols and algorithms, and offer effective security equivalent to or better than AES 128 or CSA3.
2. New keys must be generated each time 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.
3. 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, without limitation, portions of the decrypted content) or streamed encrypted content into permanent storage
4. Keys, passwords, and any other information that are critical to the cryptographic strength of the Content Protection System may never be transmitted or stored in unencrypted form.
5. Decryption of (i) content protected by the Content Protection System and (ii) CSPs (as defined in Section 2.1 below) related to the Content Protection System shall take place in an isolated processing environment. Decrypted content must be encrypted during transmission to the graphics card for rendering
6. The Content Protection System shall encrypt the entirety of the A/V content, including, without limitation, all video sequences, audio tracks, sub pictures, menus, subtitles, and video angles. Each video frame must be completely encrypted.
2. Key Management.
1. 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.
2. CSPs shall never be transmitted in the clear, transmitted to unauthenticated recipients, or stored unencrypted in memory.
3. Integrity.
1. The Content Protection System shall maintain the integrity of all protected content. The Content Protection System shall detect any tampering with or modifications to the protected content from its originally encrypted form.
2. Each installation of the Content Protection System on an end user device shall be individualized and thus uniquely identifiable. For example, if the Content Protection System is in the form of client software, and is copied or transferred from one device to another device, it will not work on such other device without being uniquely individualized.
4. The Licensed Service shall prevent the unauthorized delivery and distribution of Licensor’s content (for example, user-generated / user-uploaded content) and shall use reasonable efforts to filter and prevent such occurrences.
Digital Rights Management
Any Digital Rights Management used to protect Included Programs must support the following:
5. A valid license, containing the unique cryptographic key/keys, other necessary decryption information, and the set of approved usage rules, shall be required in order to decrypt and play each piece of content.
6. Each license shall bound to either a (i) specific individual end user device or (ii) domain of registered end user devices in accordance with the Usage Rules.
7. Licenses bound to individual end user devices shall be incapable of being transferred between such devices.
8. Licenses bound to a domain of registered end user devices shall ensure that such devices are only registered to a single domain at a time. An online registration service shall maintain an accurate count of the number of devices in the domain (which number shall not exceed the limit specified in the usage rules for such domain). Each domain must be associated with a unique domain ID value.
9. If a license is deleted, removed, or transferred from a registered end user device, it must not be possible to recover or restore such license except from an authorized source.
Conditional Access Systems
Any Conditional Access System used to protect Included Programs must support the following:
10. Content shall be protected by a robust approved scrambling or encryption algorithm in accordance Section 1 above.
11. ECM’s shall be required for playback of content, and can only be decrypted by those Smart Cards that are authorized to receive the content or service. Control words must be updated and re-issued as ECM’s at a rate of no less than once every 7 seconds.
12. Control Word sharing shall be prohibited, The Control Word must be protected from unauthorized access.
Protection Against Hacking
13. Playback licenses, revocation certificates, and security-critical data shall be cryptographically protected against tampering, forging, and spoofing.
14. The Content Protection System shall employ industry accepted tamper-resistant technology on hardware and software components (e.g., technology to prevent such hacks as a clock rollback, spoofing, use of common debugging tools, and intercepting unencrypted content in memory buffers).
15. The Content Protection System shall employ tamper-resistant software. Examples of tamper resistant software techniques include, without limitation:
1. Code and data obfuscation: The executable binary dynamically encrypts and decrypts itself in memory so that the algorithm is not unnecessarily exposed to disassembly or reverse engineering.
2. Integrity detection: Using one-way cryptographic hashes of the executable code segments and/or self-referential integrity dependencies, the trusted software fails to execute and deletes all CSPs if it is altered prior to or during runtime.
3. Anti-debugging: The decryption engine prevents the use of common debugging tools.
4. Red herring code: The security modules use extra software routines that mimic security modules but do not have access to CSPs.
16. The Content Protection System shall implement secure internal data channels to prevent rogue processes from intercepting data transmitted between system processes.
17. The Content Protection System shall prevent the use of media player filters or plug-ins that can be exploited to gain unauthorized access to content (e.g., access the decrypted but still encoded content by inserting a shim between the DRM and the player).
REVOCATION AND RENEWAL
18. The Content Protection System shall provide a mechanism that revokes, upon written notice from Licensor of its exercise of its right to require such revocation in the event any CSPs are compromised, any and all playback licenses issued to (i) specific individual end user device or (ii) domain of registered end user devices.
19. The Content Protection System shall be renewable and securely updateable in event of a breach of security or improvement to the Content Protection System.
20. The Content Protection System shall be upgradeable, to allow for backward compatibility if desired and allow for integration of new rules and business models.
ACCOUNT AUTHORIZATION
21. Content Delivery. Content, licenses, control words and ECM’s shall only be delivered from a network service to registered devices associated with an account with verified credentials. Account credentials must be transmitted securely to ensure privacy and protection against attacks.
22. Services requiring user authentication:
The credentials shall consist of at least a User ID and password of sufficient length to prevent brute force attacks.
Licensee shall take steps to prevent users from sharing account credentials. In order to prevent unwanted sharing of such credentials, account credentials may provide access to any of the following (by way of example):
content library
purchasing capability (e.g. access to the user’s active credit card or other financially sensitive information)
personal information
administrator rights over the user’s account.
RECORDING
23. PVR Requirements. Any device receiving playback licenses must not implement any personal video recorder capabilities that allow recording, copying, or playback of any protected content except as explicitly specified in the usage rules.
24. Copying. The Content Protection System shall prohibit recording of protected content onto recordable or removable media, except as specified in the agreed usage rules.
Outputs
25. Analog Outputs.
If the licensed content can be delivered to a device which has analog outputs, the Content Protection System must ensure that the devices meet the analog output requirements listed in this section.
1. The Content Protection System shall enable Macrovision content protection technology on all analog outputs from end user devices. Licensee shall pay all royalties and other fees payable in connection with the implementation and/or activation of such content protection technology allocable to content provided pursuant to the Agreement.
2. The Content Protection System shall enable CGMS-A content protection technology on all analog outputs from end user devices. Licensee shall pay all royalties and other fees payable in connection with the implementation and/or activation of such content protection technology allocable to content provided pursuant to the Agreement.
26. Digital Outputs.
1. 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”). Defined terms used but not otherwise defined in this Digital Outputs Section shall have the meanings given them in the DTCP or HDCP license agreements, as applicable.
1. A device that outputs decrypted protected content provided pursuant to the Agreement using DTCP shall:
1. Deliver system renewability messages to the source function;
2. 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;
3. Map the analog protection system (“APS”) bits associated with the program to the APS field of the descriptor;
4. Set the image_constraint_token field of the descriptor as authorized by the corresponding license administrator;
5. Set the eligible non-conditional access delivery field of the descriptor as authorized by the corresponding license administrator;
6. Set the retention state field of the descriptor as authorized by the corresponding license administrator;
7. Deliver system renewability messages from time to time obtained from the corresponding license administrator in a protected manner; and
8. Perform such additional functions as may be required by Licensor to effectuate the appropriate content protection functions of these protected digital outputs.
2. A device that outputs decrypted protected content provided pursuant to the Agreement using HDCP shall:
1. 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
2. Verify that the HDCP Source Function is fully engaged and able to deliver the protected content in a protected form, which means:
1. HDCP encryption is operational on such output,
2. 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
3. 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.
27. Exception Clause for Standard Definition, Uncompressed Digital Outputs on Windows-based PCs and Macs running OS X or higher:
HDCP must be enabled on all uncompressed digital outputs (e.g. HDMI, Display Port), unless the customer’s system cannot support HDCP (e.g., the content would not be viewable on such customer’s system if HDCP were to be applied).
28. Upscaling: Device may scale Included Programs in order to fill the screen of the applicable display; provided that Licensee’s marketing of the device shall not state or imply to consumers that the quality of the display of any such upscaled content is substantially similar to a higher resolution to the Included Program’s original source profile (i.e. Standard Definition content cannot be represented as High Definition content).
Embedded Information
29. Watermarking. The Content Protection System or playback device must not remove or interfere with any embedded watermarks in licensed content.
30. Embedded Information. Licensee’s delivery systems shall “pass through” any embedded copy control information without alteration, modification or degradation in any manner;
31. Notwithstanding the above, any alteration, modification or degradation of such copy control information and or watermarking during the ordinary course of Licensee’s distribution of licensed content shall not be a breach of this Embedded Information Section.
Geofiltering
32. 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.
33. Licensee shall periodically review the geofiltering tactics and perform upgrades to the Content Protection System to maintain “state of the art” geofiltering capabilities.
Network Service Protection Requirements.
34. All Included Programs must be received and stored at content processing and storage facilities in a protected and encrypted format using an approved protection system.
35. Document security policies and procedures shall be in place. Documentation of policy enforcement and compliance shall be continuously maintained.
36. Access to content in unprotected format must be limited to authorized personnel and auditable records of actual access shall be maintained.
37. Physical access to servers must be limited and controlled and must be monitored by a logging system.
38. Auditable records of access, copying, movement, transmission, backups, or modification of content must be securely stored for a period of at least three years.
39. Content servers must be protected from general internet traffic by “state of the art” protection systems including, without limitation, firewalls, virtual private networks, and intrusion detection systems. All systems must be updated to incorporate the latest security patches and upgrades.
40. All facilities which process and store content must be available for Motion Picture Association of America and Licensor audits upon the request of Licensor.
41. At Licensor’s written request, security details of the network services, servers, policies, and facilities shall be provided to and must be explicitly approved in writing by Licensor. Any changes to the security policies, procedures, or infrastructure must be submitted to Licensor for approval, if Licensor makes a written request for such information.
42. Content must be returned to Licensor or securely destroyed pursuant to the Agreement at the end of such content’s license period including, without limitation, all electronic and physical copies thereof.
Schedule B-2
DRM BUSINESS RULES AND License Settings
MICROSOFT DRM SETTING REQUIREMENTS
For Standard Definition Content Only on PCs
Windows DRM Version 10 Rights
Licensee shall comply with the following minimum DRM settings on all permitted play-back devices:
These rights apply to standard and high definition content. For avoidance of doubt, delivery and playback of high definition content to/on PCs is prohibited. Some rights listed are not available in previous versions of Microsoft DRM. Rights for previous version of Microsoft DRM which have been deprecated by Microsoft DRM 10, must use rights settings consistent with Microsoft DRM 10 settings. Rights for later versions of Microsoft DRM must use rights settings which in combination have the same final result or better as described in the following tables.
Licensor acknowledges that third party manufacturers of soft- and hardware (including but not limited to Microsoft and graphic card manufacturers) are not under control of Licensee and Licensee cannot control and/or influence their implementation of the Microsoft DRM output copy protection technology. Therefore, Licensee cannot be held responsible or liable for any such third party implementation.
Solely for the purposes of the below tables, the following definitions shall apply:
"Analog Protection System (APS) trigger bits (APSTB)" means the bits as specified (a) for NTSC video signals, in IEC 61880 (for inclusion of such value on Line 20) or EIA-608-B (for inclusion of such value on Line 21) or (b) for YUV (525/60 systems) signals, in IEC 61880 (for inclusion of such value on Line 20) or EIA-608-B (for inclusion of such value on Line 21).
"Analog Television Output" means such typical consumer electronics analog connectors as SCART, YPrPb, S-Video and Consumer RGB.
"CGMS-A" means the Copy Generation Management System (Analog) as specified for PAL, SECAM or YUV analog video signals, in IEC 61880 (for inclusion on Line 20) or in EIA-608-B (for inclusion on Line 21) or in EIA-805 (for inclusion on Line 41) for YUV (525/60 systems) signals or in ETSI 300294 for PAL, SECAM and YUV (625/50 systems) signals.
"HDCP" means High-Bandwidth Digital Content Protection ("HDCP") protected output. The HDCP specification and license agreement are available from Digital Content Protection, LLC at .
"Output Protection Level" means a number included in WMDRM policy that corresponds to the content protection that must be applied when passing WMDRM Content. The Output Protection Level may be determined by the content owner and may be assigned by the Licensee within the WMDRM implementation.
"WMDRM Content" means audiovisual content that has been encrypted and recorded using WMDRM.
Deprecated rights are not listed and must not be enabled or specified.
|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 |250 |If the Output Protection Level specified in the WMDRM License is greater than or|
|Uncompressed Video Content | |equal to 101 and less than or equal to 250 and a Licensed Product is Passing the|
| | |video portion of uncompressed decrypted WMDRM Content to Digital Video Outputs, |
| | |the Licensed Product must attempt to engage HDCP to protect the video portion of|
| | |uncompressed decrypted WMDRM Content; however, Licensed Product may Pass the |
| | |video portion of uncompressed decrypted WMDRM Content to Digital Video Outputs |
| | |even if HDCP cannot be engaged. |
|Output Protection Levels for Analog Video |200 |For passing the Analog Video Content of decrypted WMDRM Content to Analog |
|Content | |Television Outputs of Authorized Set Top Boxes over which Licensee has design |
| | |specification control or are branded or marketed by Licensee, CGMS-A must be |
| | |engaged with the CGMS-A field in the copy set to ‘11’ (“no more copies”) |
| | |Furthermore Licensee shall set this Output Protection Level for WMDRM Content |
| | |that is delivered to Personal Computers. |
|Output Protection Levels for Compressed |n/a |Licensed Products must not Pass the video portion of compressed decrypted WMDRM |
|Digital Video | |Content to any Output. |
Schedule C
RESOLUTION SPECIFICATIONS
Included Programs will be encoded in accordance with the following specifications:
Playback on Approved Set-Top Boxes:
Video codec 525i MPEG-2/ SD625i MPEG-2
Audio codec M1L2
Frame rate 23.98
Source master type NTSC Preferred / PAL optional
Source master aspect type 16x9 preferred 4x3 (1.33) if no widescreen available
Encoding process CBR
Frame structure IBBP
Intra picture 15
Chroma sampling 4 :2 :0
Pixel Array (aspect ratio) 720x480
Total video bitrate 8,400kbps
Audio sampling rate 48 kHz
Total audio bitrate 224kbps
Total bitrate 8,624kbps
Playback on Target Devices:
Resolution 720x480
Frame Rate 24 fps
Video Bitrate 1500 Kbps
Audio Bitrate 192 Kbps
Audio Sampling Rate 44.1,48 Khz
Playback on Portable Devices:
Resolution 400x240
Frame Rate 20 fps
Video Bitrate 400 Kbps
Audio Bitrate 48 Kbps
Audio Sampling Rate 44.1,48 Khz
Licensee may submit for Licensor’s approval additional resolution specifications for Side Loading to Approved Devices and Licensor shall in good faith review such additional specifications; it being understood that Licensor shall be under no obligation to approve such additional resolution specifications.
Schedule D
Internet and Email Promotion Policy
Licensee’s right to promote, market and advertise (“Promote”) the upcoming distribution on the Licensed Service of the programs (“Programs”) licensed by Sony Pictures Entertainment Inc. or its affiliate (“SPE”) pursuant to the license agreement (“License Agreement”) to which this Policy is attached as set forth in the License Agreement shall include the limited, non-exclusive, non-transferable right to Promote by means of the Internet and messages transmitted electronically over the Internet (“Email”) subject to the additional terms and conditions set forth herein (the “Policy”). “Promotion” means the promotion, marketing or advertising of the distribution of the Programs on the Licensed Service. Each capitalized term used and not defined herein shall have the definition ascribed to it in the License Agreement. All Promotions by means of the Internet and Email are subject to the additional provisions governing Promotion set forth in the License Agreement and any other terms and conditions that may be provided to Licensee by SPE in the future. To the extent there is a conflict between this Policy and such other terms or conditions, this Policy shall govern.
General. Except as otherwise approved by SPE, Licensee shall not Promote the Programs over the Internet except by means of the website owned or controlled by Licensee (the “Website”) or by means of Email from the service licensed under the License Agreement (“Licensed Service”). “Internet” means the public, global, computer-assisted network of interconnected computer networks that employs Internet Protocol (“IP”) or any successor thereto. If Licensee contracts with any third party to build, host, administer or otherwise provide services in connection with its Website, a Microsite, or any Internet or Email Promotion, then Licensee shall ensure that such third party fully complies with all provisions of this Policy pertaining thereto, including, without limitation, the requirement: (i) to conduct such activities in accordance with security standards as provided and approved by SPE; (ii) to comply with all Laws (as defined below); and (iii) to maintain the privacy and security of Email addresses provided by Licensee (if any) in order to protect against unauthorized access, disclosure and use. Licensee shall not require any user of the Website or any Microsite to register or provide personally identifiable information as a precondition to access the Website or Microsite. Except as expressly authorized herein or otherwise expressly approved by SPE, Licensee shall not Promote any Programs on the Internet or via Email, or otherwise use on the Internet or in any Email any materials of SPE or relating to any Programs (including, without limitation, any copyright, trademark, service mark, logos or other intellectual property). In the event that Licensee wishes to pursue any Internet or Email promotional activities not expressly authorized by this Policy, each such activity shall be subject to SPE’s specific prior written approval. To the extent any Website or Microsite includes interactive features such as chatrooms, web logs, or message boards (collectively, “Interactive Features”), then as between Licensee and SPE, Licensee shall be solely responsible for the content of such Interactive Features and for any users’ conduct, and such Website or Microsite shall expressly disclaim any endorsement or sponsorship of such Interactive Features by SPE. Notwithstanding the foregoing nothing herein shall limit Licensee’s promotion of the Licensed Service over the Internet.
Territory. Licensee shall use commercially reasonable efforts to ensure that each Promotion is conducted in and restricted to viewers in the Territory and shall not, directly or indirectly, aim any Promotion to viewers outside of the Territory. To the extent the geographic location of an e-mail address can be determined, Licensee shall use commercially reasonable efforts to ensure that each Email Promotion shall be sent only to Email addresses located in the Territory.
Advertising/Revenue. No part of the Promotion shall: (i) advertise, market or promote any entity, product or service other than the Program; (ii) contain commercial tie-ins; (iii) sell or offer to sell any product or service; or (iv) be linked to any of the foregoing, except as expressly approved by SPE. Except as otherwise agreed upon, no Promotion shall be conducted so as to generate revenue in any manner, other than as an incidence of increased distribution of the Program resulting from the Promotion. Nor shall Licensee charge or collect fees of any kind or other consideration, for access to the Promotion or any Program material, including, without limitation, registration fees, bounty or referral fees. Advertisements that are commonly known in the industry as “banner ads” and “pop-ups” that are purchased and displayed on the Website independent of and without regard to, reference to, or association with any Program shall not violate the previous sentence; provided any such advertisements (i) do not appear on or during any Microsite or any page devoted to promotion of any Program, Programs or SPE product; (ii) are placed in and appear in a manner independent of and unassociated with any Program, and (iii) shall be stopped and removed by Licensee within 24 hours of Licensor notifying Licensee that any such advertisements, in Licensor’s sole discretion, are unacceptable.
Materials. Unless specifically authorized by SPE in writing in each instance, each Promotion shall use only promotional materials: (i) from or from SPE press kits; (ii) strictly in accordance with the terms for their use set forth herein, in the License Agreement, on and in the SPE press kits, as applicable; and (iii) without editing, addition or alteration. Notwithstanding anything to the contrary contained herein, under no circumstances shall Licensee remove, disable, deactivate or fail to pass through to the consumer any anti-copying, anti-piracy or digital rights management notices, code or other technology embedded in or attached to the promotional materials. If any copyrighted or trademarked materials are used in any Promotion, they shall be accompanied by and display, in each instance, the copyright, trademark or service mark notice for the relevant Program (or episode) set forth on or in the SPE press kit, as applicable. Still photographs posted on the Website may not exceed a resolution of 300dpi, and if offered for free download, the download resolution shall not exceed 72 dpi. Video clips and trailers shall not be made available for download. An Email Promotion may embed or attach an authorized still photograph, provided the resolution of such photograph does not exceed 72dpi. For any photographs made available to Licensees on or from SPE press kits otherwise SPE shall provide the dpi resolution information for such photographs.
Warning. Each page containing a Promotion shall (i) prominently include the following warning: “All copyrights, trademarks, service marks, trade names, and trade dress pertaining to [insert Program title] are proprietary to Sony Pictures Entertainment Inc., its parents, subsidiaries or affiliated companies, and/or third-party licensors. Except as expressly authorized in this promotion, and only to the extent so authorized, no material pertaining to [insert Program title] may be copied, reproduced, republished, uploaded, posted, transmitted or distributed in any way.”; or (ii) prominently include a link to the Website terms and conditions page which shall prominently include either the foregoing warning or another warning against downloading, duplicating and any other unauthorized use of material on the Website.
URLs. None of the following shall be used as the URL or domain name for the Website or any Microsite: (i) the title or any other element of a Program, including, without limitation, character names and episode names and storylines; and (ii) copyrighted works, trade marks, service marks and other proprietary marks of SPE or a Program; provided that Licensee may use the name of the Program as a subset of Licensee’s name, registered domain name or name of the Licensed Service (e.g., if Licensee’s registered domain name is “,” and the Program is “XYZ,” Licensee may use the following URL: “XYZ”); or as a subdirectory to name a page devoted solely to such Program within the Website or a Microsite.
Microsites. Licensee may, at its own cost and expense, develop a subsite located within its Website dedicated solely to the Promotion of upcoming exhibition(s) of a Program on the Licensed Service (each such subsite, a “Microsite”) subject to the following additional terms and conditions. Licensee shall notify SPE promptly of the creation of any Microsite. If SPE provides to Licensee the form and content for the Microsite (the “Template”), Licensee shall not alter or modify any element of such Template (including, without limitation, any copyright notice, trade or service mark notice, logo, photographs or other images) without SPE’s prior written approval in each instance, provided that Licensee may use any one or more elements of such Template without using all elements of the Template. All right and title in and to the Template shall remain in SPE. All right and title in and to the Microsite using the Template, including copyrights, shall vest in SPE upon creation thereof, whether or not the Microsite was created by or paid for by Licensee. To the extent that any right or title in the Microsite is deemed not to so vest in SPE, then to the fullest extent permissible by law, License hereby irrevocably assigns such right and title to SPE. Upon request by SPE, Licensee shall provide SPE with periodic traffic reports of all visits made to the Microsite during the Term.
Email Promotions. Without limitation to anything contained herein, the following additional terms and conditions shall apply to Email Promotions:
Sender’s Address. Email Promotions shall be sent by Licensee, which email address shall clearly identify the Licensed Service as the sender of the Email. Licensee shall not use the Program name (or any other element of a Program, including, without limitation, character names and/or episode names or storylines) or copyrighted works, trade marks, service marks or other proprietary marks of SPE or a Program as part of its Email address.
Opt-Out. Each Email Promotion: (i) shall be sent only to individuals who have actively elected to receive such Emails from the Licensed Service; and (ii) shall contain an opt-out option to prevent the receipt of further Email Promotions.
Costs. Except with respect to the provision of Program materials supplied on or in SPE press kits, Licensee shall be solely responsible for: (i) all costs and expenses of any kind or nature associated with its Promotions; (ii) all costs and expenses of any kind or nature associated with its compliance with any Laws in connection with its Promotions; and (iii) any reuse fees, third party fees and/or any other compensation of any kind or nature arising from its Promotional use of any Program materials, except as expressly authorized by SPE in this Policy, or otherwise.
Compliance With Law and Security. Notwithstanding anything to the contrary contained in this Policy, Licensee shall ensure that each Promotion, the Website, any webpages thereof that contain Program material, any Microsites, any Emails that contain Program material, and databases containing personally identifiable information and Email addresses used in Email Promotions (which must be maintained in a secure environment) and the acquisition, use and storage of all such data, shall at all times be in full compliance with and in good standing under the laws, rules, regulations, permits and self-regulatory codes of the Territory, and the country (if different) of Licensee’s domicile, including, without limitation, consumer protection, security and personal information management (PIM), privacy and anti-spam laws (collectively, “Laws”).
Violations. If SPE determines that the Promotion is in violation of this Policy, the License Agreement, or any applicable Law, then SPE will provide Licensee with written notice thereof. Promptly upon receipt of such notice, and in no event later than 24 hours thereafter, Licensee shall correct the specified violation (including, without limitation, by removing the offending content from the Website, Microsite or Email). Licensee’s failure to do so within the time specified shall constitute an unremedied default under the License Agreement (notwithstanding any longer cure periods provided for therein), entitling SPE to terminate the License Agreement with respect to the applicable Program by written notice with immediate effect.
Schedule E
Additional Reporting Requirements for Streaming and Electronic Downloading
With respect to Included Programs Electronically Downloaded and/or Streamed to Approved Devices, Licensee shall provide the following information with respect to (i) the previous calendar quarter and (ii) the entirety of the Term in a form or format reasonably acceptable to Licensor:
a. Average and maximum number of Approved Devices registered per Account, broken down by Target Devices, Portable Devices and Approved Set-Top Boxes.
b. Average and maximum number of Approved Device registrations per Account, broken down by Target Devices, Portable Devices and Approved Set-Top Boxes.
c. Average number of Approved Device de-registrations per Account, broken down by Target Devices, Portable Devices and Approved Set-Top Boxes.
d. Total number of Accounts flagged for attempting to initiate 2 Stream sessions from 3 different geographical locations within the Territory within 24 hours.
e. Total number of Accounts flagged for attempting to initiate 2 Stream sessions from 7 different geographical locations within the Territory within 24 hours.
f. Total number of Streams per Account.
g. Total number of Electronic Downloads per Account.
h. Average and total Streams per Included Program per Account.
i. Average and total Electronic Downloads per Included Program per Account.
j. Average and maximum number of Streams per Included Program per Account.
k. Average and maximum number of Electronic Downloads per Included Program per Account.
l. Total number of Approved Devices per Account, broken down by Target Devices, Portable Devices and Approved Set-Top Boxes.
m. Total number of registrations for each Approved Device, broken down by Target Devices, Portable Devices and Approved Set-Top Boxes.
Licensor and Licensee will work in good faith to develop and include additional reporting metrics regarding the Electronic Downloading and/or Streaming of Included Programs to Approved Devices.
Schedule U
USAGE RULES
“Usage Rules” means the following:
Registration of Devices
i. The Subscriber may Register (as defined below), per Account up to five (5) Approved Devices of any combination; provided that (i) Approved Set-Top Boxes may not be Registered to Non-FiOS Accounts and (ii) all Approved Set-Top Boxes are provisioned by Licensee and located in a single household (as determined by the billing address of the applicable Account) will count as one (1) Approved Device for the applicable Account. A single Approved Device may only be Registered to one (1) Account at any given time. “Register” means the registration of an Approved Device to a single Account via the Licensed Service.
ii. Subject to the limit set forth in paragraph (i) above, the Subscriber may elect to de-Register any given Approved Device and Register additional Approved Devices to his Account at any time during the Term in such Subscriber’s discretion; provided, however, that the Subscriber shall be prohibited from Registering to his Account any Approved Device that has been Registered and de-Registered by the Licensed Service more than two (2) times during the previous 12 months.
iii. Upon de-Registration of any given Approved Device from an Account, such device may no longer receive and/or playback any Included Programs for such Account, and further, playback of all Included Programs from such Account must immediately be disabled on all such Approved Devices (a “Verified de-Registration”).
iv. Notwithstanding the foregoing, in the event of a catastrophic failure or loss of an Approved Device (a “Device Failure Event”), where the evocation of the Playback Licenses cannot be confirmed, Licensee shall be permitted to issue replacement Playback Licenses and Included Programs to a Customer on the Approved Device that experienced the Device Failure Event or for replacement Approved Devices that are Registered to the Subscriber’s Account when the Subscriber contacts Licensee to confirm such catastrophic failure (a “Resolution of a Device Failure Event”); provided, that, in such circumstances, Licensee will employ commercially reasonable measure to detect fraudulent activity related to Playback License and Included Programs replacement. Further, notwithstanding any of the foregoing, the procedure for the Resolution of a Device Failure Event shall not be permitted by Licensee more than two (2) times per calendar year per Included Program per Customer account; provided, that Licensee will employ commercially reasonable measure to detect fraudulent activity related to Playback License replacement for any Resolution of a Device Failure Event.
Delivery and Playback
v. An Approved Device must be Registered to an Account at the time the Subscriber requests delivery (and in order to receive such delivery) of an Included Program via the applicable Approved Delivery to such Approved Device.
vi. Pursuant to a Subscriber Transaction, subject to the limit set forth in paragraph (i) above, Licensee may permit a Subscriber to have an Included Program and its associated Playback Licenses active on (i.e., viewable on), at any one time, up to five (5) Approved Devices that are Registered to the Subscriber’s Account of any combination per Subscriber Transaction. The Subscriber must acquire Playback Licenses from the Licensed Service via his or her Account to play back such Included Program on each such Approved Device. Notwithstanding anything to the contrary herein, Licensee shall ensure that, at any given time, no more than two (2) Streams of the same Included Program acquired pursuant to a valid Subscriber Transaction and stored in the Digital Locker associated with such Subscriber’s Account are delivered to such Subscriber’s Approved Devices (the “Simultaneous Streaming Limit”); provided that Streams to all Approved Set-Top Boxes located in a single household (as determined by the billing address of the applicable Account and regulated by Licensee by provisioning the Approved Set-Top Boxes) will count as one (1) Stream at any given time. If a Stream request is initiated from an Account that attempts to exceed the Simultaneous Streaming Limit, the request will be denied.
vii. In order to use Digital Locker Functionality with respect to any Included Program, the Subscriber must be logged in and authenticated to his Account. Such login shall enable full administrative and ownership control of such Account, including, without limitation, the ability to change password, Register/de-Register Approved Devices, modify subscription options and/or purchase content for such Account based on stored value (e.g. credit card on file).
viii. Without limiting the generality of the foregoing, (i) a maximum of one (1) copy of each Included Program may be Electronically Downloaded to each Target Device Registered to the Subscriber’s Account; provided, that after the initial Electronic Download of an Included Program to such Target Device, Licensee may authorize up to one (1) additional Electronic Download of such Included Program to such Target Device per Term Year, and (ii) at any given time, a maximum of one (1) copy of each Included Program may be Side Loaded to each Portable Device Registered to an Account. Licensor acknowledges that the Licensed Service, Approved Format and DRM will enable Subscribers to back-up or copy and transfer encrypted files for Included Programs, which encrypted files are not playable on their own and require a valid Playback License (which may be obtained by Subscribers and issued by the Licensed Service only as specified in this Agreement) to be viewable.
ix. Included Programs may be securely output from Approved Devices to an associated television set, video monitor or display device solely within a local area network within a private residence in compliance with the requirements of Schedule B-1. For the avoidance of doubt, the output functionality set forth in the immediately preceding sentence refers only to a Subscriber’s ability to stream Included Programs within a Subscriber’s home network which is distinct from the term “Streaming” as defined in this Agreement.
Miscellaneous
x. Licensor shall have the right to notify Licensee in writing from time-to-time that the Usage Rules shall be changed by a date certain to all Included Programs (each, an “Update”). Licensee shall adhere to and apply each Update prospectively from notice thereof to all Included Programs. Furthermore, should such notice so direct and should such Update liberalize the Usage Rules applicable to an Included Program, Licensee shall apply each such Update retroactively to any Included Program previously distributed by the Licensed Service to Subscribers; provided, however, that Licensee agrees to distribute such Update for previously distributed Included Programs on a pass-through basis (i.e., charging no more, if anything, to the Subscriber than Licensee is charged by Licensor) and provided that Licensee and Licensor shall reasonably cooperate to ensure that the pass-through of any such Update does not impose an uncompensated material cost on Licensee. For clarity, in order to ensure that a Customer can continue to access an Included Program that it purchased from the Licensed Service, Licensee shall have the right to continue to support older versions of DRM technology to the extent that (i) such versions were used at the time a Customer purchased the Included Program from Licensee and (ii) such version continue to robustly support the Usage Rules and Content Protection Requirements.
xi. Notwithstanding anything to the contrary contained in this Agreement, in the event that Licensee implements, with respect to audio-video content available on the Licensed Service from any other content supplier, digital locker functionality or customer usage rules or corresponding features or limitations applicable to such other supplier’s content and that are more restrictive to the customer than the Digital Locker Functionality or Usage Rules contained herein for Included Programs, Licensee shall promptly notify Licensor thereof and offer to Licensor the option to similarly restrict the Digital Locker Functionality or Usage Rules with respect to Included Programs.
Fraud Detection
xii. Licensee shall require that each Subscriber has agreed to be bound by and comply with the Licensed Service’s terms and conditions, which terms shall, at a minimum, set forth the permitted use of Included Programs by a Subscriber, including that such programs are available to members for personal, non-commercial use only. Licensee will establish commercially reasonable procedures in accordance with prevailing industry standards to provide for appropriate action to be undertaken, in Licensee’s good faith discretion, with respect to any Subscriber who violates the Terms of Use. Licensee shall use commercially reasonable efforts to ensure that playback licenses for a single Account are only delivered to the relevant Account holder.
xiii. Licensee will use appropriate anti-fraud methods to prevent unauthorized access of Accounts.
xiv. Licensee shall use commercially reasonable efforts to monitor stream sessions locations derived from an IP address. For a single Subscriber, any stream session that is initiated in three (3) separate locations within 24 hours will be cause for the Account to be flagged. Once flagged, Licensee will monitor such Subscriber’s activity to determine if the Account should be deactivated. If an Account is detected to have stream session initiations requested from within seven (7) separate locations within 24 hours, Licensee will automatically deactivate such Account and flag it for immediate review.
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