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SUBSCRIPTION VIDEO-ON-DEMAND LICENSE AGREEMENT This Subscription Video-On-Demand License Agreement (the “Agreement”), dated ______, 2013 (the “Effective Date”), is by and between Sony Pictures Television Distribution Deutschland GmbH and Amazon EU Sarl. This Agreement is comprised of the Special Terms set forth below (the “Special Terms”), the Standard Terms and Conditions attached hereto as Schedule A (the “Standard Terms”), the Content Protection Requirements and Obligations attached hereto as Schedule B (the “CP Schedule”), and any and all Schedules and Exhibits referenced in the Special Terms, Standard Terms or CP Schedule. Initially capitalized terms used, but not otherwise defined, in the Special Terms have the meanings given them in the Standard Terms. This Agreement is not an offer by either party and is not effective unless and until executed and delivered by both parties. Once executed and delivered by both parties, this Agreement shall be deemed effective as of the Effective Date. For the avoidance of doubt, pursuant to that certain Termination Agreement of even date herewith and attached as Schedule F, the Subscription Video-On-Demand License Agreement (Interim Package Agreement), dated as of 7 December 2010, by and between Licensor and Licensee, as amended (the “Prior Agreement”), shall terminate in all respects as of the Effective Date, and this Agreement shall replace the Prior Agreement as the sole governing agreement between the parties or their Affiliates with respect to the license of video content for the Licensed Service in the Territory. Special Terms
1. Licensor: Sony Pictures Television Distribution Deutschland GmbH, with offices located at Liebigstrasse 22, 80538, München, Germany (“Licensor”). 2. Licensee: Amazon EU Sarl, with offices located at 5, Rue Plaetis, L-2338 Luxembourg (“Licensee”). 3. Territory: Federal Republic of Germany and Austria (the “Territory”).”). Comment [U1]: We have removed Luxembourg, Liechtenstein and Switzerland, but would like to 4. Term: The term of this Agreement (the “Term”) shall commence on the retain Austria. Effective Date and, unless earlier terminated pursuant to the Standard Comment [SPE2]: Amazon to revert regarding Austria and Luxemborg. Terms, continue until March 31, 2016. The Term shall be divided into the following segments (each, a “Term Year”): Term Year 1: Effective Date – April 21, 2014 (“Term Year 1”); Term Year 2: April 22, 2014 – April 21, 2015 (“Term Year 2”); Term Year 3: April 22, 2015 – April 21, 2016 (“Term Year 3”). Licensor shall have the right, but not the obligation, to terminate this Agreement at any time during Term Year 3, upon forty-five (45) days’ prior written notice to Licensee, if Licensee reports to Licensor that the Licensed Service has reached Three Million Seven Hundred Fifty Thousand (3,750,000) Subscribers in any single month. 5. Licensed Service: The “Licensed Service” means a single content distribution service: (i) that is owned, controlled, operated and offered to consumers in the Territory by Licensee or its Affiliates; (ii) that is predominantly dedicated Comment [KDE3]: Since Lovefilm is an Affiliate to the exhibition of feature films, television programs and other of Licensee that may be phased out as a separate entity, we’d prefer not to call it out here. audiovisual content on an SVOD and/or TVOD basis from various suppliers (provided that, for the avoidance of doubt and except as the
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parties may otherwise agree in writing, no TVOD rights are being granted by Licensor to Licensee hereunder); (iii) that is Amazon-Branded and Comment [KDE4]: This is obviously an SVOD available at www.lovefilm.de or a successor website wholly owned and only deal, but we anticipate that the Licensed Service will ultimately include a TVOD component. operated by Licensee or its Affiliates; and (iv) for which a Subscriber (except in the case of an Authorized Free Trial) is charged a Subscription Fee for the privilege of receiving access to such service. Except if offered as part of an Authorized Bundle or an Authorized Free Trial: (x) the Subscription Fee shall be unaffected in any way by the purchase of any program, product or service; and (y) the Licensed Service shall have a separately allocable and identifiable monthly Subscription Fee per Subscriber that is paid by Subscribers exclusively for access to the Licensed Service. As a condition to Licensee’s right to exploit any Included Program on the Licensed Service hereunder, the Licensed Service must be offered on an a la carte basis as a stand-alone service. (a) Licensee shall not (i) insert any sponsorship or advertising materials before, after or into the playback of any Included Program on the Licensed Service (including, but not limited to, to pre-, mid- or post- roll sponsorship or advertising), (ii) overlay any sponsorship or advertising materials on top of any Included Program during playback thereof on the Licensed Service, or (iii) include any sponsorship or advertising materials in the video player frame surrounding the playback of any Included Program on the Licensed Service or specifically link advertising outside the frame to the Included Program playing in the frame, in each case without Licensor’s prior written approval; provided, that general advertising (i.e., other advertising that is not displayed directly as a result of the appearance of any Included Program) on the Licensed Service (or other approved websites) shall be permitted in Licensee’s sole discretion; and further provided that, notwithstanding the foregoing, Licensee may insert Amazon head and tail logos (for up to ten (10four (4) seconds) at the beginning and/or end of playback of any Included Program. (b) For the avoidance of doubt, (i) nothing in this Agreement shall be deemed to control the basis on which Licensee or any of its Affiliates may offer programs through any subscription service that does not include the Included Programs, (ii) except as otherwise expressly provided herein with respect to any Included Programs, Licensee shall at all times maintain the right to operate the Licensed Service as it sees fit in its sole and exclusive discretion, and (iii) and (ii) Licensee shall have no obligation to include the Included Programs in the Licensed Service or in the marketing thereof; provided, however, that the election by Licensee not to include any Included Program in the Licensed Service shall not relieve Licensee of its obligation to pay the License Fee owed hereunder for that Included Program. [Note to LF: There are Sections that relate to the service itself and not specifically Sony titles like the T&Cs, Usage Rules, etc.]
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6. Authorized Format: For each Included Program, the “Authorized Format(s)” shall be Standard Definition and High Definition, unless High Definition files are not reasonably available for a particular Library Program, as indicated on Schedule D; but provided, however, that if High Definition files for any Library Program delivered in Standard Definition become reasonably available to Licensor during the Term, Licensor shall promptly re-deliver such Library Program in High Definition at its expense.. The cost of such re-delivery shall be determined in accordance with Section 11 of the Standard Terms. Licensee shall have the right to downconvert, pursuant to Section 11.5 of the Standard Terms, and distribute any Included Program in Standard Definition as well as High Definition. For the avoidance of doubt, Licensee shall have the right to distribute Included Programs in High Definition to any Approved Device with the exception of Personal Computers. and Further Devices, unless otherwise Comment [KDE5]: We expect that ongoing tech approved in writing by Licensor. discussions in the US will authorize HD delivery to Tablets. 7. Approved Devices: (a) Licensee may exhibit and transmit Included Programs only to Comment [KDE6]: We expect that ongoing tech Approved Devices. (as defined in the Standard Terms).. discussions in the US will authorize HD delivery to Tablets. (b) Licensee shall not (and shall not authorize any third party to) exhibit Included Programs via the Licensed Service on any devices other than Approved Devices. If Licensee wishes to exhibit Included Programs via the Licensed Service to Subscribers via any device other than an Approved Device (a “Further Device”), it shall seek Licensor’s prior written approval on a case by case basis in accordance with the following process. (i) At least sixty (60) days prior to the launch of any Further Device, Licensee shall provide Licensor with details of the Further Device, including details of the associated DRM. Licensor shall have thirty (30) days from receipt of such details to notify Licensee in writing of its approval or disapproval of the Further Device as an Approved Device, including its reasoning for any disapproval, and details of the general steps which it requires Licensee to take in order to achieve Licensor’s approval. If Licensor fails to notify Licensee of its approval of the Further Device as an Approved Device within thirty (30) days from receipt of the details specified above, Licensor shall be deemed to have disapproved the Further Device as an Approved Device. (ii) Licensor shall not withhold its approval of any Further Device if: (A) at that time Licensor or any of its Affiliates either: (1) itself exhibits any Like Features in the Territory to Comment [KDE7]: We can agree to this that Further Device; or (2) has approved delivery in the restriction here, but note that our expectation is that a broader approach will be appropriate as we Territory by any third party SVOD service provider to that standardize a global relationship. Further Device of Like Features that have been licensed by Licensor or any Affiliate to that SVOD service provider; and (B) the Technical Solution that Licensee shall employ with respect to deliveries of Included Programs to that Further IN STRICT COMMERCIAL CONFIDENCE Page | 3 AMAZON EUSONY DRAFT APRIL 16MAY 7, 2013 FOR DISCUSSION PURPOSES ONLY – NOT AN OFFER CONFIDENTIAL SUBJECT TO CONTRACT AND MANAGEMENT APPROVAL
Device is at least as secure as the Technical Solution Licensor or any Affiliate employs, or such SVOD service provider has contractually agreed to employ, with respect to such deliveries of Like Features to such Further Device. As used herein, “Technical Solution” means any encryption, DRM technology, copy protection, geo-filtering, anti-piracy, watermarking and other technical and/or security measures, together with the applicable implementation thereof; and “Like Feature” means any Feature Film or Current TV Series. a theatrically-released feature length motion picture in its first or second premium pay window. (iii) If Licensor is prevented under Section 7(b)(ii) from withholding its approval of any Further Device, then: (A) if any such other approval of the Further Device has been granted by Licensor or any Affiliate on a limited (e.g., as to content, device type or transmission means) or temporary (i.e., for a period shorter than the full term of the agreement pursuant to which such SVOD service is authorized to use such Further Device) basis (any such limitation imposed on any other SVOD service, a “Device Approval Limitation”), then Licensor shall have the right to condition its approval of the Further Device on such Device Approval Limitations (in which case Licensor shall notify Licensee in writing of such Device Approval Limitations; provided, however, that Licensor shall not be required to breach any confidentiality obligations it may have with respect to its other approvals of the Further Device). (iv) If Licensor does not, within forty-five (45) days after Licensor’s receipt of Licensee’s proposal for a Further Device, approve the proposed Further Device, [and such Further Device (A) complies with both the content protection requirements of Section 8 of the Special Terms and the usage rules set for in Section 9 of the Special Terms and (B) has been approved for distribution of Like Features through the Licensed Service by at least two (2three (3) Qualifying Studios],, then Licensee may terminate this Comment [KDE8]: Amazon cannot be limited in Agreement by delivery of a written notice to Licensor its ability to launch additional devices, so a termination right is necessary if Sony won’t specifying the effective date of such termination, which approve. We can go no further than the additional termination date shall be no earlier than the later of thirty protection in brackets. (30) days after the delivery of such notice or five (5) Comment [KDE9]: Amazon cannot be limited in Business Days prior to the date Licensee plans to its ability to launch additional devices, so a termination right is necessary if Sony won’t commence the distribution of Like Features through the approve. We can go no further than the additional Licensed Service to the Further Device. protection i 8. Content Protection: (a) Licensee shall comply with the content protection and related obligations in Section 12 of the Standard Terms with respect to the Included Programs.
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(b) In the event that Licensee wishes to make Included Programs available to Subscribers using any content protection or digital rights management technology or solution other than an Approved Format (“New Format”), it shall seek Licensor’s prior written approval on a case by case basis in accordance with the following process. (i) At least sixty (60) days prior to the first date of implementation of the New Format, Licensee shall provide Licensor with details of the New Format and Licensor shall have thirty (30) days from receipt of such details to notify Licensee in writing of its approval or disapproval of the New Format as an Approved Format, including the reasons for any disapproval and details of the general steps which it requires Licensee to take in order to achieve Licensor’s approval. Licensee shall discuss its reasoning for any disapproval in reasonable detail, subject to any confidentiality requirements. (ii) Licensor shall not withhold its approval of any New Format if, at that time, Licensor or any Affiliate either: (A) delivers any Like Features (as defined above) in the Territory protected by such New Format; or (B) has approved for distribution in the Territory by any SVOD service provider Like Features protected by such New Format that have been licensed by Licensor or any Affiliate to such SVOD service, provided that: (1) if any such other approval of the New Format has been granted by Licensor on a limited (e.g., as to content, device type or transmission means) or temporary (i.e., for a period shorter than the full term of the agreement pursuant to which such SVOD service is authorized to use such New Format) basis, or subject to any compliance and robustness rules or settings, which such SVOD service is required to implement for such New Format (any such limitation imposed on any other SVOD service, an “Approval Limitation”), then Licensor shall have the right to condition its approval of the New Format on such Approval Limitations (in which case Licensor shall notify Licensee in writing of such Approval Limitations; provided, however, that Licensor shall not be required to breach any confidentiality obligations it may have with respect to its other approvals of the New Format). (iii) If Licensor does not, within forty-five (45) days after Licensor’s receipt of Licensee’s proposal for a New Format, approve the proposed New Format, and such New Format has been approved for distribution of Like Features through the Licensed Service by at least two (2) Qualifying Studios, then Licensee may terminate this Agreement by delivery of a written notice to Licensor specifying the effective date of
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such termination, which termination date shall be no earlier than the later of thirty (30) days after the delivery of such notice or five (5) Business Days prior to the date Licensee then plans to commence the distribution of Like Features through the Licensed Service using the New Format. (c) If:If (i) the provider of an Approved Format issues a successor or update version or patch solution to that Approved Format in order to address any actual or threatened failure or circumvention of that Approved Format that has, or is reasonably likely to have, the result that Included Programs are available without proper restriction or on devices that are not Approved Devices, which condition(s) is/are likely, in the reasonable and good faith judgment of Licensor, to result in actual or threatened material loss or damage to Licensor (a "DRM Patch"); and (ii) Licensee does not deploy that DRM Patch (or otherwise address Licensor's concerns with respect to the failure or circumvention that prompted the production of the DRM Patch to Licensor's reasonable satisfaction), then Licensor shall have the right to suspend (for so long as Licensee does not deploy that DRM Patch or otherwise address Licensee's concerns to Licensor's reasonable satisfaction) Licensee's right to distribute Included Programs on the Licensed Service using that Approved Format upon twenty-four (24) hours’ prior written notice to Licensee. (d) Licensor shall not exercise its suspension rights hereunder unless it also prohibits any third-party provider of any SVOD service in Europe (i) to whom Licensor or its Affiliates licenses Like Features, and (ii) who has not deployed the applicable DRM Patch, from distributing content using the applicable Approved Format. (e) Licensee’s obligation to pay the full License Fees to Licensor shall remain in effect throughout the period of any such suspension. (f) If Licensee subsequently deploys the DRM Patch (or otherwise addresses Licensor's concerns to Licensor's reasonable satisfaction), it shall notify Licensor of such deployment or remediation and the suspension shall cease immediately on written notice from Licensor, which notice Licensor shall provide as soon as reasonably practicable (and in no event more than five (5) Business Days) following notification of deployment or its determination that it is reasonably satisfied with Licensee’s alternative remediation. Comment [SPE10]: Note that termination due to suspension is already covered in the Standard (g) If the period of any suspension by Licensor pursuant to the foregoing Terms. lasts for more than ninety (90) days, then Licensee shall have the right to terminate this Agreement immediately upon written notice to Licensor. Comment [KDE11]: We need to retain this termination right. Payment during the suspension 9. Usage Rules: (a) Licensee shall have no obligation to register any Approved Devices in (as contemplated by (e)) is the most we can agree connection with the Streaming or Downloading of Included Programs to, and something we don’t typically even provide for majors. through the Licensed Service; provided, however, that (i) all Subscribers must have an active account (an “Account”) and (ii) in order for a Subscriber to log into his/her Account or to associate an
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Approved Device to his/her account, the Subscriber shall be required to input a username and password or other account credentials that shall allow access to the Subscriber’s Account and, [if the Subscriber has stored a credit or debit card number with the Account,][Tim - is it ok that some accounts won’t enable purchasing power? This was in the UK deal], enable purchasing power by such Subscriber. Comment [KDE12]: Amazon does not register Content shall not be transferrable between Approved Devices. Any devices. We authenticate a device and require it to be associated with a particular LF account. Approved Device must be authenticated and associate with only one particular Account. (b) Licensee shall not authorize any single Account to receive more than four (4) concurrent Streams and Downloads of Included Programs through the Licensed Service. Comment [KDE13]: The concurrent streams limitation should provide adequate protection (b) Licensee shall not authorize any single Account to receive through against the “frat house” concerns addressed by the the Licensed Service more than two (2) concurrent streams previously proposed insertions. (including any combination of Playback Licenses and cached streams, plus [Link Layer Protection]) of audio-visual content through the Licensed Service at any one time if any of those concurrent streams is of an Included Program; provided however, that nothing contained herein shall prevent Licensee from allowing an Account to add additional concurrent streams up to a maximum of four (4) concurrent streams for an additional fee [per stream] to such Subscriber. [Tim: What is Link Layer Protection and is it relevant here?] (c) Licensee shall monitor the frequency of registrations and de- registrations of devices by Subscribers and shall take action where the frequency indicates possible fraud and/or account sharing. (d) Licensee shall employ effective mechanisms to discourage the unauthorised sharing of account credentials. Such effective mechanisms could include ensuring that unauthorised sharing of Account credentials exposes sensitive details or capabilities, such as significant purchase capability or credit card details. (c)(e) With respect to any single SubscriberAccount, Licensee shall not issue Playback Licenses for any particular Included Program to more than six (6) Approved Devices at any given time. If any SubscriberAccount to whom Licensee has issued Playback Licenses authorizing playback of any particular Included Program on six (6) Approved Devices wishes to receive a Playback License authorizing playback of a Downloaded Encoded File of that Included Program on an additional Approved Device, Licensee may do so only if the SubscriberAccount de-authorizes the playback of that Included Program on one of the six (6) Approved Devices on which that Included Program is then playable by that SubscriberAccount. As used herein, “Playback Licenses” are licenses that authorize a Subscriberan Account to playback an item of audio-visual content Streamed or Downloaded from the Licensed Service to an Approved Device. IN STRICT COMMERCIAL CONFIDENCE Page | 7 AMAZON EUSONY DRAFT APRIL 16MAY 7, 2013 FOR DISCUSSION PURPOSES ONLY – NOT AN OFFER CONFIDENTIAL SUBJECT TO CONTRACT AND MANAGEMENT APPROVAL
(d)(f) Licensee shall have the right to authorize Subscribers to Download Included Programs on a temporary Download basis to Approved Devices, provided that the following usage rules shall apply with respect to temporary Downloads: (i) No more than twenty-five (25) Included Programs, [Titles (a Title being a single TV episode or a single feature film), including a maximum of fifteen (15) feature length motion pictures],, may be present as unexpired temporary Comment [KDE14]: TBD Downloads for a given SubscriberAccount at any one time, aggregated across all such Subscriber’sAccount’s Approved Devices; and (ii) In each case, the file containing the Included Program must be remotely deleted or auto-deleted or otherwise rendered unviewable on all of a Subscriber’s Approved Devices upon the earliest of (A) the end of the thirty (30) day retention period after temporary Download, (B) the end of the forty- eight (48) hour viewing period for such temporary Download, (C) the expiration of the License Period for such Included Program or (D) the expiration of such Subscriber’s entitlement to access the Licensed Service. ; and (iii) Licensee shall permit each title to be downloaded on no more than 2 occasions, considering all the Subscriber’s Approved Devices, during the license period of such title. (e)(g) Licensee also shall have the right to temporarily Download Instant Playback Segments to any Approved Device supporting secure Download in compliance with this Agreement, so that playback of the Included Program from which such Instant Playback Segment was excerpted shall start nearly instantaneously when selected for viewing by a Subscriber. A license enabling such playback of the Included Program shall only be delivered at such time as the Included Program is selected for viewing by the Subscriber and no earlier (e.g., not upon initial Download). The Downloaded portion of Included Programs shall be sent encrypted and Licensee shall apply DRM in an Approved Format to them, such that each Downloaded file shall be remotely deleted or auto-deleted or rendered unviewable as soon as reasonably and technically possible after (i) the Subscriber views the Included Program; (ii) the Subscriber logs out of his or her Licensed Service account or closes the application from the Approved Device to which such Instant Playback Segment has been Downloaded; or (iii) the end of the License Period for the applicable Included Program, whichever is earliest. For the avoidance of doubt, each downloaded file shall be deleted (auto-deleted or remotely deleted) or rendered unviewable at the end of the License Period for the applicable Included Program, if this has not already occurred. As used herein, “Instant Playback Segments” means one (1) or more excerpts having an aggregate
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duration of no greater than two (2) minutes from any Included Program that Licensee determines a Subscriber may have a potential interest in viewing (e.g., because the Subscriber previously has viewed a portion of that Included Program, has added that Included Program to a “favorites” or “watch” list, has initiated a search in which the Included Program was among the search results, has viewed the Licensed Service product detail page for that Included Program or for related Included Programs such as another episode from the same television series, or has otherwise engaged in conduct that reasonably suggests the potential interest of the Subscriber in viewing that Included Program). An Instant Playback Segment may only be exhibited to Subscribers, and each such exhibition to a Subscriber shall only be as part of the exhibition of an Included Program as a whole and may not be exhibited independently of such Included Program, whether for promotional purposes, transactional purposes or otherwise. The parties hereto acknowledge that Licensor is granting Licensee the right in this Section solely for reasons of enhancing technical playback of Included Programs. (f)(h) Licensee shall also be entitled to deliver Included Programs via Cached Streaming to any Approved Device. As used herein, “Cached Streaming” shall mean delivery of an Included Program in encrypted form to an Approved Device using the applicable Approved Format (e.g., Widevine Cypher, PlayReady) identified in the Standard Terms, where (i) the Included Program may be temporarily stored in a local cache on the Approved Device, (ii) any playback of such temporarily stored Included Program may only be commenced if the Approved Device is then connected to the Internet, and (iii) such temporarily stored Included Program shall be rendered no longer viewable on the earliest to occur of (a) termination of the Licensed Service content delivery software client (“Delivery Client”) on that Approved Device, (b) commencement of playback via the Delivery Client on that Approved Device of another audio-visual program available on the Licensed Service, or (c) twenty-four (24) hours after the Included Program was temporarily stored in a local cache on the Approved Device. Comment [KDE15]: What is the concern here? Amazon requires this for technical reasons for 10. Included Programs: (a) For each Term Year, Licensor shall license to Licensee, and Licensee delivery to Android devices, given their burst shall license from Licensor, starting April 21, 2013, all Early SVOD streaming requirements. Features theatrically released in the Territory with an Availability Date during the Term, and at least seventeen (17), in the aggregate, NTRs, MOWs and or DTVs, all of which must be Early SVOD Features. Ninety (90) days prior to the start of each Term Year, Licensor shall deliver to Licensee a list identifying all features available as Early SVOD Features for such Term year, including their tentative Availability Dates. Licensee shall select at least seventeen (17) NTRs, MOWs and DTVs from such list within thirty (30) days of receipt; provided, that if Licensee fails to select such titles within such thirty
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(30) day period, and such failure is not cured within five (5) days after written notice thereof (for which notification by e-mail will Comment [KDE16]: Let’s discuss whether email suffice) from Licensor, Licensor shall be authorized to select such is acceptable to Sony for all notice requirements. titles on Licensee’s behalf. Licensor shall confirm the Availability Comment [SPE17]: Note: e-mail is appropriate for certain circumstances but a more formal notice Date of all Early SVOD Features no later than sixty (60) days prior to would be required for others. Please identify which the Availability Date of each such Early SVOD Feature, and if an NTR, other places you would like to propose for email MOW or DTV previously selected by Licensee is not available as notification. expected, Licensee shall have an additional ten (10) day period to reselect titles. The Early SVOD Features available as of the Effective Date are identified in Schedule C hereto. (b) Licensee shall license from Licensor, with respect to each Term Year: (i) in Term Year 1, at least one hundred thirty (130) Library Films, of which at least forty-six (46) must be Megahits, and (ii) in each of Term Years 2 and 3, at least one hundred forty (140) Library Films, of which at least forty-nine (49) must be Megahits. The Library Films for Term Year 1 are identified in Schedule D hereto. Comment [KDE18]: TBD (c) Licensee shall license from Licensor, with respect to each Term Year, at least one hundred ninety-one (191) Broadcast Hours of Current TV Series and at least two hundred three (203) Broadcast Hours of Library TV Series. The Current TV Series and Library TV Series for Term Year 1 are identified in Schedule D hereto. (d) For each Term Year after Term Year 1, no later than one hundred twenty (120) days prior to the first day of such Term Year, Licensor shall deliver to Licensee a list identifying at least four hundred (400) Feature Films, four hundred (400) Broadcast Hours of Current TV Series and four hundred (400) Broadcast Hours of Library TV Series available as potential Included Programs (other than Early SVOD Features) for such Term Year. The Feature Films, Current TV Series and Library TV Series included on such list shall include all such titles made available by Licensor for distribution by any third party. Licensee shall select the Included Programs for such Term Year from such list within thirty (30) days of receipt. If Licensee fails to make its selections within such thirty (30) day period, and such failure is not cured within five (5) days after written notice thereof from Licensor, Licensor shall have the right to make such selections on Licensee’s behalf. (e) LicenseeLicensor shall have the right to replace up to twenty-five percent (25%) of Library Megahits with other Library Megahits after six (6) months of their License Periods have elapsed. LicenseeLicensor shall notify LicensorLicensee of any Library Comment [KDE19]: We are unable to agree to Megahits it wishes to replace at least thirty (30) days prior to a refresh right that would allow Sony to pull content we want. Licensee’sLicensor’s desired date of replacement, at which time Licensor shall deliver to Licensee a list of replacement Library Megahits from which to choose. Licensee shall notify Licensor of its selections from such list no later than fifteen (15) days following receipt of such list of replacement titles. If Licensee fails to notify
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Licensor of such selections within such time period, Licensor shall be entitled to make such selections on behalf of Licensee. The License Period for each replacement Library Megahit shall be the remainder of the License Period for the Library Megahit so replaced. For the avoidance of doubt, no extension of such License Period shall be granted for the time required by Licensee to select such replacement Library Megahit or for the time required for encoding and delivery of the files related to the replacement Library Megahit; provided, however, that Licensee shall be permitted to keep the original Library Megahit on the Licensed Service until such time as the replacement title is delivered by Licensor to Licensee. Upon receipt of the replacement Library Megahit, Licensee shall immediately remove from the Licensed Service the original Library Megahit and return any files and materials associated therewith to Licensor promptly. Each such replacement Library Megahit shall be deemed to be an Included Program hereunder. Notwithstanding the foregoing, Licensee shall pay the full License Fee with respect to the Original Library Megahits and no additional License Fee shall be due with respect to the replacement Library Megahits licensed by it hereunder. (f) Licensee shall have the right to replace up to (i) twenty five percent (25%) of Library Features and at least one (1) each of the Current TV Series and Library TV Series with other Library Features, (ii) one (1) season of Current TV Series with another season of Current TV Series and (iii) one (1) season of Library TV Series or Currentwith another season of Library Features, Library TV Series, as applicablein each case, after six (6) months of their respective License Periods have elapsed provided that at least 4 months remain in each such respective License Period. Licensee shall notify Licensor at least Comment [SPE20]: Note: we think the way we thirty (30) days prior to Licensee’s desired date of replacement of drafted this is more clear. each Library Feature, Library TV Series and Current TV Series that it desires to replace (collectively, the “Original Programs”). Licensor shall provide a list of replacement Library Features, Library TV Series and/or Current TV Series no later than fifteen (15) days of receiving such request for replacement from Licensee. Licensee shall notify Licensor of its selections from such list no later than fifteen (15) days following receipt of such list of replacement titles. Each such replacement Library Feature, Library TV Series and Current TV Series shall be deemed to be an Included Program hereunder, and the License Period for such replacement titles shall be the remainder of the License Period for the Included Programs so replaced. For the avoidance of doubt, no extension of such License Period shall be granted for the time required by Licensor to offer replacement Included Programs, the time required for Licensee to select such replacement Included Programs or the time required for encoding and delivery of the files related to the replacement Included Programs; provided, however, that Licensee shall be permitted to IN STRICT COMMERCIAL CONFIDENCE Page | 11 AMAZON EUSONY DRAFT APRIL 16MAY 7, 2013 FOR DISCUSSION PURPOSES ONLY – NOT AN OFFER CONFIDENTIAL SUBJECT TO CONTRACT AND MANAGEMENT APPROVAL
keep the original Included Program on the Licensed Service until such time as the replacement title is ready to be made available on the Licensed Service. Notwithstanding the foregoing, Licensee shall pay the full License Fee with respect to the Original Programs and no additional License Fee shall be due with respect to the replacement Licensed Programs licensed by it hereunder. (g) Licensee shall be solely responsible for all scheduling on the Licensed Service of each Included Program licensed hereunder, subject to Availability Dates and License Periods in accordance with the applicable terms of this Agreement. Comment [KDE21]: We cannot agree to a proposed withdrawal provision that would allow 11. Availability Date: The date Licensee may first make an Included Program available via the Sony to pull attractive content simply because, for Licensed Service (the “Availability Date”) shall be as follows: example, free TV offers more. This is a mutual commitment. (a) For each Early SVOD Feature with a theatrical release in the Comment [SPE22]: We understand Amazon's position on this withdrawal issue and, in the interest Territory (i.e., not an NTR, DTV or MOW), the date immediately of concluding the deal, are willing to agree to following the end of the Premium Pay Window (if any), including concede the point. any holdbacks and black periods permitted by Section 13 below, but in no event later than: twenty-three (23) months after the Local Video Release date of such Early SVOD Feature (or, if no Local Video Release of such Early SVOD Feature has occurred, thirty (30) months after its initial theatrical release in the Territory; (b) For each Early SVOD Feature that is an NTR, DTV or MOW, no later than: thirty-six (36) months after the U.S. release for NTRs, thirty-six (36) months after the DVD street date in the U.S. for DTVs and thirty-six (36) months after the initial television broadcast in the U.S. for MOWs; (c) For each Library Program, the first day of the Term Year for which such Library Program has been licensed; and (d) For Current TV Series, the first day of the Term Year for which such Current TV Series has been licensed. unless mutually agreed by the parties.
12. Licence Period: The period during which Licensee may make an Included Program available via the Licensed Service (the “License Period”) shall be as follows:
(a) For each Early SVOD Feature, six (6) months commencing on such Early SVOD Feature’s Availability Date; provided that, prior to November 1, 2013, the License Period for any Early SVOD Features might be shortened by Licensor to five (5) months, in which case the License Fee shall be accordingly reduced pro rata for such Early SVOD Feature; and (b) For each Library Film, Library TV Series and Current TV Series, twelve (12) months commencing on such Included Program’s
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Availability Date.
13. Holdbacks: (a) During an Early SVOD Feature’s License Period, Licensor shall not: (i) exhibit, or authorize a third party to exhibit, such Early SVOD Feature in the Territory in the Licensed Language via Subscription Pay Television, Free Broadcast Television, Basic Television, SVOD, AVOD, or FVOD (other than on a limited promotional basis (e.g., vouchers or free trials) for VOD, Pay-Per- View or Electronic Sell-Thru, [provided that no such promotions may specifically target any Early SVOD Titles);]); [Need to give Comment [KDE23]: We need to understand Amazon examples – Ian has a document we can use for this?] what’s contemplated here. or (ii) promote, or authorize a third party to promote, any such Comment [KDE24]: n brackets. TBD exhibition, other than the promotion for the Free Broadcast We are unrstand what’s contemplated here. Television exhibition which shall begin no earlier than one (1) month2 months [Note to LF: we cannot agree to a change here due to our contractual obligations in Germany] before the end of Licensee’s License Period for each Early SVOD Film. Notwithstanding the foregoing, Licensor shall have the right to exhibit no more than ten (10) of the Early SVOD Features with an Availability Date in each Term Year (each, a “Selected Title”) within a “Sony”-branded SVOD service conducted and operated wholly by Licensor or its Affiliates and offered solely as part of the Sony PlayStation Network (“PSN”) entertainment service (or a successor entertainment service branded with the successor brand to PSN and operated wholly by Licensor or its Affiliates) (the “PSN SVOD Service”); provided, however, that:
(i) Licensor shall not permit the inclusion of: (A) any Selected Title in the PSN SVOD Service (1) during the first three (3) months of the License Period for such title or (2) without first giving the Licensee at least thirty (30) days’ prior written notice of the date on which each such title shall first be available on the PSN SVOD Service; or (B) more than four (4) Selected Titles in the PSN SVOD Service at any one time; and (ii) If Licensor includes any Selected Title in the PSN SVOD Service, the License Fee payable by Licensee solely with respect to such Selected Title shall be reduced by twenty percent (20%) (and, if Licensee has already paid the License Fee, Licensor shall reimburse Licensee for such overpayment (or credit the same against future License Fees owed hereunder) within thirty (30) days after Licensor’s notice to Licensee of such inclusion). Comment [SPE25]: We understand Amazon's position on this exclusivity issue. In the interest of concluding the deal, we are willing to agree to (b) During a Library Program’s or Current TV Series’ License Period, concede this point. Licensor shall not: (i) exhibit, or authorize a third party to exhibit, such Library Program or Current TV Series in the IN STRICT COMMERCIAL CONFIDENCE Page | 13 AMAZON EUSONY DRAFT APRIL 16MAY 7, 2013 FOR DISCUSSION PURPOSES ONLY – NOT AN OFFER CONFIDENTIAL SUBJECT TO CONTRACT AND MANAGEMENT APPROVAL
Territory in the Licensed Language by means of AVOD or FVOD (other than on a catch-up basis or limited promotional basis (e.g., vouchers or free trials) for VOD or Electronic Sell-Thru); or (ii) promote, or authorize a third party to promote, any such exhibition until two (2) months before the end of the License Period of such Library Program or Current TV Series. (c) For the avoidance of doubt, the three paragraphs above shall not apply to free trials offered in the Territory in the Premium Pay Window, provided that such free trials are made available only to subscribers to platforms offering Subscription Pay Television or SVOD services. For the avoidance of doubt, no holdbacks or exclusivity provisions shall apply hereunder with respect to any Included Program after the end of its License Period. Other than as stated above, no further exclusivity or holdbacks shall apply hereunder to Included Programs.
14. License Fee: (a) Subject to any reductions as set forth in this Agreement, Licensee shall pay Licensor the following fee for each Included Program (the “License Fee”). The License Fee is the only compensation payable to Licensor under this Agreement and constitutes full and complete compensation to Licensor for all rights granted under this Agreement. (b) For each Early SVOD Feature, the License Fee shall be calculated and paid as set forth in Schedule E hereto. The License Fee for each Early SVOD Feature shall not be altered or adjusted based on the number of Subscribers to the Licensed Service or the number of times such Early SVOD Feature is distributed or viewed on the Licensed Service. Notwithstanding the foregoing, the License Fee for Early SVOD Features shall increase by five percent (5%) if and at such time as the number of Subscribers to the Licensed Service reaches the threshold number specified below (the “Trigger Numbers”) during the applicable Term Year (the “Trigger Date”). Such increase shall be applicable for any included Early SVOD Feature with an active License Period (i.e., a License Period that has not yet expired as of the Trigger Date) or with an Availability Date during such Term Year after the Trigger Date. The Trigger Numbers for each Term Year shall be: (i) Term Year 1: Seven Hundred Fifty Thousand (750,000) Subscribers; (ii) Term Year 2: One Million Four Hundred Thousand (1,400,000) Subscribers; and (iii) Term Year 3: Two Million Two Hundred Thousand (2,200,000) Subscribers. Any increase in the Licensee Fee arising under this Section 14(b) shall apply on a going- Comment [KDE26]: Retroactivity was not the forward basis from and after the applicable Trigger Date (with no deal, as confirmed in an email exchange between retroactive application to the beginning of the applicable Term Year), Christoph and Simon. and shall be non-refundable in the event the number of Subscribers Comment [SPE27]: Note: While we do not subsequently falls below the applicable Trigger Number. For the agree that Amazon’s proposal on how increases in license fees should be applied was intended by the avoidance of doubt, in no event may the License Fee increase parties, we will concede this point in order to bring this deal to a close. IN STRICT COMMERCIAL CONFIDENCE Page | 14 AMAZON EUSONY DRAFT APRIL 16MAY 7, 2013 FOR DISCUSSION PURPOSES ONLY – NOT AN OFFER CONFIDENTIAL SUBJECT TO CONTRACT AND MANAGEMENT APPROVAL
pursuant to this Section 14(b) by more than five percent (5%) during any Term Year. (c) For each Library Program and Current TV Series, the License Fee shall be the amount identified in Schedule E hereto. The License Fee for each Library Program and Current TV Series is a flat fee and shall not be altered or adjusted based on the number of Subscribers to the Licensed Service or the number of times such Library Program or Current TV Series is distributed or viewed on the Licensed Service. (d) The License Fee for each Included Program shall be payable in four (4) equal installments, the first installment of which shall become due on the date forty-five (45) days following the end of the calendar quarter in which the Availability Date for such Included Program occurs,such Included Program’s Availability Date and each subsequent installment of which shall be due on the date forty-five (45) days following the end of each subsequent calendar quarter, subject in each case to Licensee’s receipt from Licensor of a valid [VAT] invoice. The five percent (5%) increase in License Fees for Early Comment [SPE28]: Check with James Puttock. SVOD Features contemplated by Section 14(b), if achieved, shall be payable with the regular quarterly payments arising from and after the applicable Trigger Date. (e) As a material inducement to Licensor to grant Licensee the right to offer the Licensed Service through an ISP as set forth in Section 11:
• If the Licensed Service is bundled with an ISP Plan, [in addition to the License Fee increases as a result of the Licensed Service reaching the Trigger Numbers set forth above,] all License Fees set forth herein shall be immediately increased by five percent (5%) (such increase, the “Initial ISP Increase”) for the rest of the Avail Term as of the date of the first bundle was offered to the public (the “First Bundle Effective Date”). For the avoidance of doubt, such increase shall apply to all Included Programs that have an Availability Date on or after the First Bundle Effective Date and, on a pro-rata basis, to all Included Programs for which the date of the First Bundle Effective Date falls within its License Period.
(i) In addition to the above, the then applicable License Fees shall be increased in further increments of 5% (such increases in License Fees, the “Incremental Increases”) for every 250,000
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subscribers [to the Authorized Bundle or total?] in excess of the broadband subscribers serviced by ISPs offering an Authorized Bundle as of the First Bundle Effective Date. [is this on top of the increases due to the Trigger Numbers?] (ii) For the avoidance of doubt, all increases in License Fees shall be compounded against the Initial ISP Increase and against each other Incremental Increase, even when Incremental Increases are triggered simultaneously. (iii) The Incremental Increases shall be effective on the First Bundle Effective Date, and shall be further triggered on any date when the ISP total broadband subscribers exceed the thresholds set forth above. The Incremental Increases shall be calculated whenever reports are available; provided, however that Incremental Increases will be effective retroactively to the extent that the requisite number of broadband subscribers is reached or exceeded since the last report was available. Any growth in broadband subscribers since such last report shall be prorated evenly on a monthly basis across the relevant reporting period for calculation purposes. For example, if data is available only on an annual basis and the growth in subscribers from year 1 to year 2 was 2 million and such growth caused the aggregate number of broadband subscribers to trigger an Incremental Increase, then when the reporting is made available in year 2, such 2 million broadband subscribers shall be considered to have been acquired evenly on a monthly basis such that at the end of each month following year 1, Licensee will be considered to have acquired 166,667 broadband subscribers per month. As such, if the aggregate number of broadband subscribers exceeds 7.5 million in the 5th month following year 1, then the effective date of the Incremental Increase will be on the last day of such 5th month and all such increased License Fees shall be due and payable immediately upon reporting such broadband subscriber data at the beginning of year 2. Each time that the aggregate number of broadband subscribers increases such that a new
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tier is triggered, as set forth in the chart above, the License Fees shall be recalculated for the remainder of the Avail Term. The increased License Fees apply to any Included Programs with an Availability Date on or after the effective date of the Incremental Increase or, on a pro-rata basis, to any Included Programs with a License Period which includes such effective date of the Incremental Increase. For the avoidance of doubt, the 5% increase for all License Fees for each Avail Year after Avail Year 1 pursuant to the final paragraph of Schedule C will continue to apply for all Included Programs made available in each such Avail Year on top of and in addition to the Initial ISP Increase and any Incremental Increases which may also apply. The License Fee increases set forth above, once triggered, shall be irreversible and non-refundable. Without limiting the foregoing, a numerical example of how to calculate the License Fee increases is set forth below: (f) [provide example] (g) Licensor shall have the option, to be exercised in Licensor’s sole discretion, to lengthen the Avail Term by twelve (12) consecutive months (such additional period shall be “Avail Year 4” hereunder). Licensor shall exercise such option, if at all, one hundred twenty (120) days prior to the expiration of Avail Year 3. For the avoidance of doubt, all terms and conditions set forth herein shall apply in Avail Year 4, including the increases in License Fees set forth in this Section 2. Without limiting the generality of the previous sentence, unless otherwise specified, all terms that are specific to Avail Year 3 (including the obligations in Schedule C) shall also apply to Avail Year 4.
(d) 15. Authorized Bundles: (a) In addition to being made available on an a la carte basis as a stand- alone service, the Licensed Service may be offered to consumers as part of an Authorized Bundle where the Subscription Fee for the Licensed Service is part of an aggregate, undifferentiated subscription fee (e.g., no one-off fee) charged for such Authorized Bundle; provided, that: (i) [the subscription fee for any Authorized Bundle must be greater than the Subscription Fee then-charged by Licensee for the Licensed Service offered on an a la carte basis; and][under review];
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(ii) no If the value of the Authorized Bundle may be containing an ISP Plan (including the Licensed Service) is worth at least 200% of the value of the Licensed Service on a standalone basis, then either the brand of the Licensed Service and/or the brand of the ISP can be used for the purposes of promoting and/or marketing the Authorized Bundle with such respective prominence as Licensee determines in its sole discretion, [provided that if a brand other than the brand of the Licensed Service is used for the purposes of promoting and/or marketing the Authorized Bundle, then such subscription service(s) must be premium in nature][to be discussed]; (iii) If the value of the Authorized Bundle containing an ISP Plan (including the Licensed Service) is worth less than 200% of the value of the Licensed Service on a standalone basis, then the leading and most prominent brand used for the purposes of promoting and/or marketing the Authorized Bundle must be the brand of the Licensed Service (ie the Authorized Bundle would be marketed or promotedwith the tagline “Buy Lovefilm and receive the following service(s)…” or similar); (iv) [the Licensed Service shall not be distributed through an Authorized Bundle until after the first six months of the Avail Term have elapsed;] (v) Licensee shall not, and shall cause all ISPs to not, market, advertise or promote either an Authorized Bundle or the Licensed Service as “free””, “at no additional cost”, “gift”, “bonus” or in any other way that suggests that the Licensed Service or the Authorized Bundle is being offered without cost to the subscriber (except in connection with an Authorized Free Trial as described in Section 16).); and (vi) the following additional conditions and limitations shall apply to any Authorized Bundle with an ISP Plan as one of its Authorized Bundle Components: . The Licensed Service must be also be offered by the applicable ISP on a stand-alone basis at the same time, and the retail price for such stand- alone Licensed Service must be prominently displayed to consumers of the bundled Licensed Service on public communications. . [Any Authorized Bundles offered by more than an aggregate of five (5) ISPs during the term shall require Licensor’s written consent, which consent shall be given or withheld in Licensor’s sole discretion.] . The Licensed Service offered through an
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Authorized Bundle shall be clearly and prominently branded with the logo and branding of Licensee or any affiliate wholly owned by Licensee or its parent and shall appear on all places where Included Programs are offered, listed or otherwise appear. . The SVOD Service (whether offered by an ISP on a stand-alone or bundled basis) must be branded only with a brand name of Licensee or an affiliate that is wholly owned by Licensee or its parent (or, provided that Licensee gives Licensor prior written notice thereo. . The Qualifying Studio programs made available on the Licensed Service offered by an ISP (whether on a stand-alone or bundled basis) shall be the same as the Qualifying Studio programs and Included Programs made available on the Licensed Service offered generally by Licensee in the [applicable country][Territory] (i.e., the Licensed Service offered by Licensee not in connection with any third party partnership); [provided, however, that certain Major Studio programs may be excluded solely due to contractual restrictions]. Notwithstanding the foregoing proviso, Licensor shall have the right to give written notice to Licensee to withdraw the availability of Included Programs from the Licensed Service offered or bundled by an ISP due to contractual restrictions. . Licensee shall provide bimonthly notice to Licensor identifying potential ISPs with whom Licensee expects to enter into agreements and ISPs with whom Licensee has signed agreements (to the extent not already included in any prior such notice) for the purpose of promoting, marketing and offering the Licensed Service; it being agreed by the parties that Licensee will not launch the Licensed Service in partnership with any Excluded ISP without first obtaining the written consent of Licensor. Additionally, to the extent that Licensee receives such information from potential ISPs, Licensee shall provide in such notice the following information as of the launch of the Licensed Service in such partnership: [(i) the retail price of the stand- alone Licensed Service to be offered by such
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new ISP, and (ii) the retail price of the initial Authorized Bundle, including the price of the ISP Plan included in such initial bundle, to be offered by such new ISP][under review]. If any such new ISP is not in good standing with Licensor at the time of such notice, or if an entity believed to be a potential ISP and listed as such by Licensee is actually an Excluded ISP, Licensor shall notify Licensee thereof within thirty (30) days, and upon receipt of such notice, such party shall be deemed an Excluded ISP for the remainder of the Term, and the provisions set forth in subsection (c) below shall apply. The failure by Licensor to deliver the foregoing notice to Licensee within such 30-day period shall not preclude Licensor from delivering such notice to Licensee at a later date, it being agreed and acknowledged by Licensor that Licensee may launch the Licensed Service in partnership with such party after the expiration of such 30- day period, and that Licensor’s sole and exclusive remedy for the inclusion of any Included Programs thereon, as applicable, shall be for Licensor to notify Licensee in writing that such entity is an Excluded ISP and that it objects to the inclusion of the Included Programs in the Licensed Service offered by such Excluded ISP, and Licensee shall remove such Included Programs from the Licensed Service offered by such Excluded ISP as soon as reasonably practicable after receipt of such notice. A party is deemed to not be in good standing with Licensor if such party has materially breached an agreement with Licensor, and Licensor has terminated such agreement within 9 months of such material breach. . (b) Notwithstanding anything to the contrary herein, the Licensed Service shall be offered on a standalone basis [in each country in which an ISP SVOD Offering is offered (if at all)][by each ISP that offers the Licensed Service as a part of an Authorized Bundle]. (ii). For clarity, each subscriber who receives the Licensed Service (whether on a stand-alone basis or as part of a bundle) offered by an ISP shall count as a Subscriber for purposes of calculating the License Fees. For further clarity,
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the distribution of the Licensed Service by an ISP pursuant to the terms of this Section 15 shall be subject to all other terms and conditions set forth elsewhere in this Agreement.
16. Authorized Free Trials: (a) Licensee may grant individuals the privilege of receiving access to the Licensed Service (either on an a la carte basis or as part of an Authorized Bundle) free of charge (i.e., without paying a Subscription Fee) in the following circumstances (each, an “Authorized Free Trial”): (i) The individual receives access to the Licensed Service through participation in a Licensed Service trial that is limited to no more than one (1) month in duration; or (ii) The individual receives access to the Licensed Service pursuant to the Refer-a-Friend Program. (b) Notwithstanding the foregoing, no individual may be permitted to receive an Authorized Free Trial if, at any time in the prior twelve (12)-month period, Licensee has authorized an Authorized Free Trial through the same customer account, unless any subsequent Authorized Free Trial in such twelve (12)-month period has been authorized through such same customer account in connection with the purchase of an Amazon-Branded product. (c) As used herein, “Refer-a-Friend Program” means a free trial program: (i) that is only offered to existing Subscribers of the Licensed Service and is offered no more than three (3) times per calendar year per such Subscriber; (ii) in which such Subscriber may not receive more than two (2) “vouchers” per offer to give to friends; and (iii) in which the free trial available via a “voucher” may not last longer than two (2) months. (d) For the avoidance of doubt: each individual participating in an Authorized Free Trial, including pursuant to the Refer-a-Friend Program, shall be deemed a Subscriber to the Service. In all cases, the individual receiving an Authorized Free Trial must register and provide his/her credit card details (or other valid payment method) before the Authorized Free Trial is activated, and unless the customer proactively opts out at the end of the Authorized Free Trial, he/she shall then be billed for the subscription package selected at the outset of the Authorized Free Trial. Authorized Free Trials may not be directly funded by advertising. No Included Program shall be solely featured in marketing or promotion of Authorized Free Trials without Licensor’s prior written consent; provided, however, that the foregoing shall not restrict the right of Licensee to include cover art for an Included Program with cover art for other titles in advertising or promotions for the Licensed Service. (e) In the event that Licensor considers that any Authorized Free Trial
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(excluding the Refer-a-Friend Program) is (or shall be) a Detrimental Promotion, then it shall notify Licensee in writing. If Licensee then fails to cease such Detrimental Promotion within thirty (30) days of receipt of Licensor’s written notice to do so, then Licensor shall have the right (but not the obligation) to either (i) terminate the Agreement on ninety (90) days written notice to Licensee, or (ii) exercise its rights of Withdrawal in accordance with Section 17 of the Standard Terms in respect of individual Included Programs for the remainder of the Detrimental Promotion; or (iii) withdraw all Licensed Content on the Licensed Service for the remainder of the Detrimental Promotion, and in each such event Licensor shall refund a weighted pro rata share (in accordance with Section 17 of the Standard Terms) of any License Fees already paid. A Detrimental Promotion shall be deemed to have been ceased if Licensee has ceased, and caused its Affiliates to cease, taking any steps to operate such promotion and such a promotion shall not be deemed to be in effect only because of the existence of promotional materials in circulation before receipt by Licensee or Licensor’s written notice above and unable to be recalled by Licensee using reasonable efforts. For these purposes, a “Detrimental Promotion” shall mean an offer or promotional campaign which in Licensor’s good faith opinion would have a materially detrimental effect on Licensor’s ability to include any or all Licensed Content in the subsequent window(s). Licensor acknowledges and agrees, however, that it shall not use the foregoing termination or withdrawal right with the intent of materially frustrating the purpose and effect of this Agreement.
To the extent of any inconsistency, the terms and conditions of the relevant Special Terms shall prevail over the Standard Terms.
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IN WITNESS WHEREOF, the undersigned have caused this Agreement to be duly executed by an authorized representative on the dates set forth below.
Sony Pictures Television Distribution Deutschland GmbH
By:
Title:
Date:
Amazon EU Sarl
By:
Title:
Date:
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SCHEDULE A
STANDARD TERMS AND CONDITIONS
FOR THE AVOIDANCE OF DOUBT THESE STANDARD TERMS ARE AGREED SUBJECT TO THE SPECIAL TERMS OF THE AGREEMENT AND IN THE CASE OF INCONSISTENCY BETWEEN THE SPECIAL AND STANDARD TERMS, THE SPECIAL TERMS SHALL TAKE PRECEDENCE
1. DEFINITIONS
The following terms shall have the following meanings when used in this Agreement.
1.1. “Advertising Funded Video on Demand” or “AVOD” means the (point to point delivery) of a single program in response to the request of a viewer:
1.1.1. the commencement of initial viewing of which is at a time specified by the viewer in its sole discretion (i.e., without reference to a list of possible viewing times pre-established by the service provider); and
1.1.2. offered without any charge (except any technical fee) being made to the viewer on an advertising-supported basis.
Without limiting the generality of the foregoing, “AVOD” shall not include operating on a VOD or SVOD basis, Pay-Per-View or Electronic Sell-Thru. AVOD shall not include VCR Functionality.
1.2. “Advertising Materials” means (i) the names, logos, trailers, publicity images and other publicity materials supplied by Licensor to Licensee for any Included Program pursuant to this Agreement and (ii) any Previews.
1.3. “Affiliate” means any entity that directly or indirectly wholly owns and controls, is wholly owned and controlled by, or is under wholly common ownership and control with Licensor or Licensee, as applicable.
1.4. “Amazon” means Amazon.com, Inc. and any of its Affiliates (e.g., Licensee).
1.5. “Amazon Branded” means branded with any brand owned or controlled by Amazon (e.g., “Amazon” or “LoveFilm”). “Amazon Brand” means any brand owned or controlled by Amazon.
1.6. “Amazon Shipping Service” means the shipping service currently known as “Amazon Prime” or any other Amazon Branded free or discounted shipping service.
1.7. “Approved Delivery Means” means delivery in the Approved Format by means of Internet Delivery to and for viewing on Approved Devices.
1.8. “Approved Device” means any Connected TV, Connected Blu-Ray Player, Personal Computer, Game Console, OTT STB, Mobile Phone or Tablet that supports an Approved Format and satisfies the CP Schedule and Usage Rules set forth herein.
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1.9. “Approved Format” means an Encoded File compressed and encoded for transmission and protected with any DRM approved in the CP Schedule.
1.10. “Authorized Bundle” means the Licensed Service bundled together with an Amazon Branded product and/or any Authorized Bundle Component.
1.11. “[“Authorized Bundle Component” means any: (A) Amazon Branded Digital Subscription Service; (B) Amazon Shipping Service; (C) DVD/Blu-ray Service and (D) any third-party broadband, Internet or cellular service provider.a broadband data service plan offered Comment [KDE29]: We need to retain these by an ISP [and, if applicable, other services which are (as of the date of this Agreement) bundling rights, and to build in rights for such providers to act as our billing agent. We should customarily bundled with such data service plans (e.g., voice services) only] (collectively, presumably discuss, but can provide language in the an “ISP Plan”); provided, however, that an Authorized Bundle Component may not next turn. include any linear multi-channel or adult content offerings.
1.12. “Availability Date” has the meaning set out in the Special Terms.
1.13. “Basic Television” means a linear service of pre-scheduled programming intended for real-time viewing, which is delivered to residential subscribers within the Territory for viewing on a standard television set, on the basis of a monthly or other periodic subscription fee charged for the first or lowest tier of service containing broadcast signals in excess of any obligatory subscription charge for the subscriber to receive Free Broadcast Television signals carried by such delivery system, but excluding (without limitation) any Subscription Pay Television service and any fee charged for the subscriber to receive the same.
1.14. “Broadcast Hour” means a run time on U.S. television of sixty (60) minutes, including commercial breaks.
1.15. “Business Day” means any day other than a Saturday, Sunday or holiday on which banks in Los Angeles, U.S.A. or Munich, Germany, are closed for business.
1.16. “Commercial Establishment” means a place of public accommodation or other commercial establishment, including, but not be limited to, restaurants, bars, and lounges.
1.17. “Competitor” means any digital video provider that distributes Included Programs or other audio-visual content licensed by Licensor to consumers in the Territory on an on- demand, subscription basis.
1.18. “Confidential Information” means all nonpublic information disclosed by any of Licensee, its Affiliates, or any agents of any of them (on the one hand), or Licensor, its Affiliates or any agents of any of them (on the other hand) to the other party, its Affiliates or any agents of any of them that is designated as confidential or that, given the nature of the information or the circumstances surrounding its disclosure, reasonably should be considered as confidential.
1.19. “Connected BlueBlu-Ray Player” means a device capable of playing Blu-ray discs which is also capable of receiving protected audiovisual content via a built-in IP connection, and transmitting such content to a television or other display device. A Connected Blu-
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ray Player shall meet the content protection requirements in the CP Schedule and support the Approved Format.
1.20. “Connected TV” means a television capable of receiving and displaying protected audiovisual content via a built-in IP connection. A Connected TV shall meet the content protection requirements in the CP Schedule and support the Approved Format.
1.21. “Current TV Series” shall mean episodic television programming (i) for which Licensor controls all rights necessary to enable exploitation thereof by Licensee hereunder and (ii) that prior to its Availability Date has been exhibited on Free Broadcast Television, Basic Television, Subscription Pay Television and/or SVOD in the Territory; and (iii) that had its initial airing of the last episode of the last season on Free Broadcast Television, Basic Television, Subscription Pay Television and/or SVOD in the Territory no earlier than four (4) years before the Availability Date.
1.22. “Digital Subscription Service” means any subscription-based service provided by Amazon via the Internet through which customers are able to electronically access and/or store digital content, including, without limitation, digital text-based content (digital books, periodicals, documents, etc.), digital audio content (music, audio books, podcasts, etc.), digital gaming, and other software applications (e.g., applications available through the “Amazon Appstore”), or digital video content.
1.23. “Downloading” means the digital transmission of audio-visual content in a format that allows for ongoing viewing of the applicable audio-visual content and the storage of the applicable audio-video content on a receiving device. “Download” has a correlative meaning.
1.24. “DVD/Blu-ray Service” means the service owned and operated by Licensee or any of its Affiliates that allows customers in the Territory to purchase or rent on a subscription basis physical DVDs, Blu-ray discs and/or game cartridges that are physically delivered to such customers, provided that:
(i) to activate their subscription, customers must select a subscription package, register and provide their credit card details (or other valid payment method) before the subscription is activated; and
(ii) Included Programs shall not be used to market or promote any such DVD/Blu- ray Service, except with Licensor’s prior written approval.
1.24.1. “Electronic Sell-Thru” means an on-demand digital video service which both (i) offers the consumer electronic delivery of programs selected by the consumer for purchase by the consumer on a “sell-thru” basis (as distinguished from rental) for ownership with permanent retention (or continuing technical access based on such a “one-time” transactional purchase (e.g.with respect any Authorized Bundle in which the Licensed Service is combined with any subscription service(s) offered by Licensee or its Affiliates, Licensee shall notify Licensor at least 2 business days in IN STRICT COMMERCIAL CONFIDENCE Page | 26 AMAZON EUSONY DRAFT APRIL 16MAY 7, 2013 FOR DISCUSSION PURPOSES ONLY – NOT AN OFFER CONFIDENTIAL SUBJECT TO CONTRACT AND MANAGEMENT APPROVAL
advance of the launch of any such Authorized Bundle during the Term, such notice to state the included subscription package (and price), and the price of the overall Authorized Bundle; provided, however, that in no event shall Licensee be obligated to disclose to Licensor any information that Licensee considers in its sole discretion to be confidential or commercially sensitive or disclosure of which Licensee in its sole discretion considers to be prohibited by law. Within 5 business days post the launch of any Authorized Bundle during the Term, Licensee shall notify Licensor of the following: details of the offer, products and individual retail values of each service, the consumer proposition and length of offer availability. Any such details shall comprise confidential information and shall be subject to Section 28 of the Standard Terms. [Note to LF: This is only a notice provision. We would like to keep this per the UK deal.] Comment [SPE30]: TBD in connection with bundling proposal. 1.25.1.1. storage and access via “Ultraviolet”)), as an alternative to retail purchase of such programs on VHS, DVD or other pre-recorded form, and (ii) does not operate on a subscription basis and only offers the opportunity to purchase different programs together for a combined retail price to an extent consistent with custom and practice in relation to DVD sales from time to time.
1.26.1.25. “Early SVOD Feature” means a Feature Film, including NTRs, DTVs and MOWs, (i) for which Licensor controls all rights necessary to authorize the distribution thereof under the terms of this Agreement, (ii) that complies with the Availability Date criteria specified in the Special Terms, (iii) that, prior to its Availability Date, has only have been exhibited in the Territory during its first Premium Pay Window by no more than one First Pay Provider on Subscription Pay Television or on an SVOD basis, and (iv) that, prior to its Availability Date, was not exhibited in the Territory [(excluding, in each case, any trials/vouchers during the first Premium Pay Window)][Paul: is this the concept you wanted?] via (a) any AVOD service, (b) any FVOD service, (c) Free Broadcast Television, (d) Basic Television, (other than during the first Premium Pay Window), (e) Subscription Pay Television (other than during the First Premium Pay Window),) , or (f) any SVOD service (other than during the any SVOD service operated during such Early SVOD Feature’s first Premium Pay Window). Early SVOD Features shall be classified as:
“MegaHits” - a Feature Film which achieved German Box Office Admissions of at least One Million Two Hundred Thousand (1,200,000);
“Current A” - a feature film which achieved German Box Office Admissions of at least Seven Hundred Thousand (700,000) but less than One Million Two Hundred Thousand (1,200,000);
“Current B” - a feature film which achieved German Box Office Admissions of at least Four Hundred Thousand (400,000) but less than Seven Hundred Thousand (700,000);
“Current C” - a feature film which achieved German Box Office Admissions of at least One Hundred Thousand (100,000) but less than Four Hundred Thousand (400,000);
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“Current D” – a feature film which achieved which achieved German Box Office Admissions of less than One Hundred Thousand (100,000);
“DTV” - a Feature Film which was produced for direct to video release;
“NTR” - a Feature Film which did not have a theatrical release in the Territory but is not a DTV; or
“MOW” - a feature film that was initially exhibited on a television network.
1.26. “Electronic Sell-Thru” means an on-demand digital video service which both (i) offers the consumer electronic delivery of programs selected by the consumer for purchase by the consumer on a “sell-thru” basis (as distinguished from rental) for permanent Comment [SPE31]: Note: we do not consider retention (or continuing technical access based on such a “one-time” transactional this product to be owned by consumers. purchase (e.g. storage and access via “Ultraviolet”)), as an alternative to retail purchase of such programs on VHS, DVD or other pre-recorded form, and (ii) does not operate on a subscription basis and only offers the opportunity to purchase different programs together for a combined retail price to an extent consistent with custom and practice in relation to DVD sales from time to time.
1.27. “Encoded File” has the meaning set forth in Section 11.5.
1.28. “Excluded ISP” means [Deutsche Telekom, ______] and any other internet service provider designated by Licensor hereafter as notified by Licensor to Licensee in writing, including, in each case, any entity owned or controlled by the foregoing parties.
1.28.1.29. “Feature Film” means a feature-length (i.e., having a running time, excluding credits, greater than sixty-three (63) minutes in duration) motion picture, excluding (i) any music concert, sports event or documentary, and (ii) [any motion picture that received or would have received a rating of “R18” from the BBFC in the United Kingdom or FSK 18” from Freiwillige Selbstkontrolle Film in Germany and which would reasonably be deemed to be pornographic.].
1.29. “First Pay Provider” means, with respect to an Early SVOD Feature, either the single Subscription Pay Television service provider (including with accompanying SVOD rights) or the single SVOD service provider, in either case to which Licensor licensed such Early SVOD Feature for exclusive exhibition in the Territory during its Premium Pay Window. The current First Pay Provider for each Early SVOD Feature is [______].
1.30. “Free Broadcast Television” means a linear service of pre-scheduled programming intended for real-time viewing, which is delivered by any over-the-air television signal (i.e., VHF or UHF) originating in the Territory by means of terrestrial transmission, and which can be received intelligibly by a standard television antenna, and (where expressly so authorized) re-broadcast within the licensed territory by means of cable or satellite transmission, in each case solely within the Territory (and not outside thereof) for viewing on a standard television set without any fees or charges (other than any compulsory fees charged by a government or governmental agency assessed on those who use television sets).
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1.31. “Free Video on Demand” or “FVOD” means the point to point delivery of a single program in response to the request of a viewer:
1.31.1. the commencement of initial viewing of which is at a time specified by the viewer in its sole discretion (i.e., without reference to a list of possible viewing times pre-established by the service provider); and
1.31.2. offered without any charge being made to the viewer and not supported by advertising.
1.31.3. Without limiting the generality of the foregoing, “FVOD” shall not include operating on a VOD or SVOD basis, Pay-Per-View or Electronic Sell-Thru. FVOD shall not include VCR Functionality.
1.32. “Game Console” means a device designed primarily for the playing of electronic games which is also capable of receiving protected audiovisual content via a built-in IP connection, and transmitting such content to a Television or other display device.
1.33. “German Box Office Admissions” means the German theatrical box office admission numbers for an Early SVOD Feature as of the date twelve (12) months after such Early SVOD Feature’s initial theatrical release in Germany.
1.34. “High Definition” (HD) means a resolution of no less than 720p up to a maximum of 1080p which shall be deemed to include, without limitation, simulation of high definition by means of line-doubling or any other means.
1.35. “Home Theatre” means on-demand exhibition and/or sell-through of any program on a premium basis prior to the LVR of such program.
1.36. “Included Program(s)” means any Early SVOD Features, Current TV Series, Library TV Series and Library Films that are licensed hereunder to Licensee for inclusion on the Licensed Service.
1.37. “Internet Delivery” means the encrypted delivery by Streaming or Download of a digital electronic file over the global, public network of interconnected networks (including the so-called Internet, Internet 2 and World Wide Web), each using technology which is currently known as Internet Protocol (“IP”), free to the consumer (other than a common carrier/ISP access charge), whether transmitted over cable, DTH, FTTH, ADSL/DSL, Broadband over Power Lines or other means. In respect of Internet Delivery:
1.37.1. Licensee shall implement and maintain a standard of technical quality, copy protection/security and geo-filtering (limiting the Licensed Service to customers in the Territory) for such delivery which is of no lesser quality, effectiveness and robustness than those set out in the CP Schedule;
1.37.2. No push VOD shall be permitted; and
1.37.3. Licensee shall employ approved DRM in accordance with the “Approved Format” and the license settings/configurations set forth in Schedule B attached hereto to facilitate the agreed engagement rules for content exploitation.
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[1.37][renumber] “ISP” means an Internet service provider operating in the Territory other than an Excluded ISP.
1.38. “Library Film” means any Feature Film made available during the Term and selected by Licensee for which Licensor controls all necessary rights and that does not qualify as an Early SVOD Feature due to its failure to meet the Availability Date criteria specified for Early SVOD Features in the Special Terms.
1.39. “Library Programs” means, collectively, Library Films and Library TV Series.
1.40. “Library TV Series” means episodic television programming (i) for which Licensor controls all rights necessary to enable exploitation thereof by Licensee hereunder; (ii) that prior to its Availability Date has been exhibited on Free Broadcast Television, Basic Television and/or Subscription Pay Television in the Territory; (iii) and which would not otherwise qualify as Current TV Series.
1.41. “License Fee” has the meaning set out in the Special Terms.
1.42. “License Period” has the meaning set out in the Special Terms.
1.43. “Licensed Language” means, for each Included Program, its original language version or, if its original language version is not German, the original language version together with the original language version dubbed or subtitled in German; provided, however, that if both a dubbed and subtitled version are available, Licensor shall deliver all three (3) such versions to Licensee (original language, dubbed, and subtitled) under and in accordance with Section 11 of these Standard Terms.
1.44. “Licensed Service” has the meaning set out in the Special Terms.
1.45. “Licensee Properties” means (i) the Licensee Site; and (ii) any other web site, web property, application, platform, or online point of presence that is owned or operated by Licensee or its Affiliates or through which any products or services available on or through the Licensee Site are described, syndicated, offered, merchandised, or advertised.
1.46. “Licensee Site” means www.lovefilm.de, any mirrored versions thereof with homepages located at www.lovefilm.de and any successor thereto.
1.47. “Local Video Release” (“LVR”) means, in respect of each Included Program, the first day on which DVDs and/or Blu-ray discs embodying such Included Program are authorized by Licensor or any Affiliate thereof to be made generally available to consumers in any part of the Territory for purchase or rental. [Note to LF: We need this to stay consistent with our German VOD and Pay TV deals.]
1.48. “Maximum Excerpt Duration” has the meaning set forth in Section 14.10.
1.49. “Metadata” means the cast, production team, running time, synopsis, description, rating, and other textual information supplied by Licensor to Licensee for any Included Program pursuant to this Agreement, which Licensor shall localize for the Territory, including, without limitation, by providing, to the extent reasonably available to Licensor, the appropriate rating for each Included Program in the Territory from the IN STRICT COMMERCIAL CONFIDENCE Page | 30 AMAZON EUSONY DRAFT APRIL 16MAY 7, 2013 FOR DISCUSSION PURPOSES ONLY – NOT AN OFFER CONFIDENTIAL SUBJECT TO CONTRACT AND MANAGEMENT APPROVAL
applicable local ratings authority (e.g., FSK). For the avoidance of doubt, Licensor shall provide local ratings for the Territory with respect to any Included Program theatrically released or released on DVD or Blu-ray in the Territory, and, as to any Included Programs not so rated, shall cooperate reasonably with Licensee’s efforts to secure such ratings in the Territory. .
1.50. “Mobile Phone” means an individually addressed and addressable IP-enabled mobile hardware device of a user, generally receiving transmission of a program over a transmission system designed for mobile devices such as GSM, UMTS, LTE and IEEE 802.11 (“wifi”) and designed primarily for the making and receiving of voice telephony calls. Mobile Phone shall not include a Personal Computer or a Tablet.
1.51. “Non-Theatrical” means the exhibition of an audio-visual program initiated in any non- theatrical venue or facility, excluding private domestic residences, provided that such venue or facility is not primarily engaged in the business of exhibiting motion pictures to the public, including: educational institutions (including dormitories); industrial, corporate, retail and commercial establishments; government and civic/community organizations; libraries; museums; parks, beaches, and campgrounds; prisons; churches, convents and monasteries; hospitals, nursing homes and hospices; retirement homes; orphanages; airplanes, cruise ships, ships, river boats, ferries, buses/coaches, and trains; marine and military installations; community and/or social clubs; hotels, motels, inns and lodges; holiday camps; film societies; and cemeteries, by a service provided by such non-theatrical venue.
1.52. “OTT STB” means a set-top box device capable of receiving protected audiovisual content via the open Internet using a built-in IP connection, and transmitting such content to a Television or other display device. Any set-top box device that is capable of receiving content via a closed distribution network (i.e. a so-called “walled garden”) shall not qualify as an OTT STB.
1.53. “Pay-Per-View” means the point-to-multi-point delivery of a program to residential subscribers of a delivery system within the Territory for viewing on a standard television set at a time pre-established by the service provider, for which a separate discrete payment (such as a per program or per day payment) is charged to receive such programming (other than a blanket subscription fee or charge based on the reception of all programming exhibited on a given channel or service), but not referring to any fee in the nature of a television set rental fee. For purposes of clarification only and without limiting the foregoing, “Pay-Per-View” shall include the offer to a subscriber to receive a program or schedule of programming on a near-video-on-demand basis, but shall exclude VOD and Subscription Pay Television.
1.54. “Permitted Non-Residential Use” means the private viewing in a room or place other than a Private Residence, provided, however, that any such viewing for which a premises access fee or other admission charge is imposed to view any Included Program shall not constitute a “Permitted Non-Residential Use”. For the avoidance of doubt no commercial or hotel distribution is permitted.
1.55. “Personal Computer (PC)” means an addressable IP-enabled hardware device of a Subscriber (which can be authenticated using an approved DRM solution), including a IN STRICT COMMERCIAL CONFIDENCE Page | 31 AMAZON EUSONY DRAFT APRIL 16MAY 7, 2013 FOR DISCUSSION PURPOSES ONLY – NOT AN OFFER CONFIDENTIAL SUBJECT TO CONTRACT AND MANAGEMENT APPROVAL
desktop or laptop personal computer., utilizing one of the following operating systems: Microsoft Windows XP, Microsoft Windows 2000, Microsoft Windows NT, Microsoft Windows Vista, Apple, Linux, any future versions of the foregoing (unless Licensor notifies Licensee in writing that such future version is not approved by Licensor) or any other operating system specifically approved, in writing, by Licensor.
1.56. “Premium Pay Window” means the period of time during which a Feature Film is first made available for exploitation in the Territory by means of Subscription Pay Television and/or SVOD exhibition.
1.57. “Preview” has the meaning set forth in Section 14.10.
1.58. “Private Residence” means a private dwelling unit and shall exclude Transient Dwelling Units, Public Areas and Commercial Establishments.
1.59. “Public Areas” means public or common rooms, waiting rooms, lobbies and public meeting rooms or similar areas which are open to the public.
1.60. “Qualifying Studio” means Lionsgate, Paramount Pictures, Twentieth Century Fox Film Corporation, Universal Studios, The Walt Disney Company, and Warner Bros., MGM, NBC, ABC, Fox Broadcasting , CBS and any of their respective Affiliates.
1.61. “Revised Excerpt Duration” has the meaning set forth in Section 14.10.
1.62. “Security Breach” means a Security Flaw that results or may reasonably be expected to result in the unauthorized availability of any viewable copies of an Included Program that originated in its compressed form from files obtained from the Licensed Service which unauthorized availability may, in the reasonable good faith judgment of Licensor, result in actual or threatened harm to Licensor.
1.63. “Security Flaw” means a circumvention or failure of Licensee’s secure distribution system, geofiltering technology or physical facilities.
1.64. “Standard Definition” (SD) means a resolution of 720x480 (NTSC), 720x576 (PAL) or 854x480.
1.65. “Streaming” means the digital transmission of audio-visual content in a so-called “streaming” format for contemporaneous viewing so that the applicable audio-visual content is not intended to be permanently stored on the receiving device. “Stream” has a correlative meaning.
1.66. “Subscription Pay Television” means a linear service of pre-scheduled programming intended for real-time viewing, which is delivered to residential subscribers, whether domestic or non-domestic (including, without limitation, hotels, hospitals and similar multi-unit establishments) within the Territory for viewing on a standard television set, and for which such subscribers are required to pay a separately allocable or identifiable monthly subscription fee in addition to the minimum fee payable to receive Basic Television. Subscription Pay Television does not include programming offered on an Electronic Sell Thru, VOD, PPV or SVOD basis.
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1.67. “Subscriber” means a person in the Territory who is authorized by Licensee to access and receive the Licensed Service through only one (1) Account on an a la carte basis or as part of an Authorized Bundle, including any person so authorized as part of an Authorized Free Trial. For the avoidance of doubt, Subscriber shall only mean a subscriber to Lovefilm’s digital SVOD service, rather than customers of Lovefilm’s DVD delivery service who are not authorized to access Lovefilm’s digital SVOD service. Any Subscriber who is authorized to access the Licensed Service through more than one Account shall count as an additional subscriber with respect to each such additional Account and a separate and additional subscription fee must be charged with respect to each such additional Account.
1.68. “Subscription Fee” means the regular, periodic subscription fee charged a Subscriber, except in the case of an Authorized Free Trial, no more frequently than once a month for the privilege of accessing and receiving the Licensed Service. The Subscription Fee for the Licensed Service received on an a la carte basis (but not when received as part of an Authorized Bundle) must be a distinct, incremental fee. The Subscription Fee for the Licensed Service received as part of an Authorized Bundle may be part of an aggregate, undifferentiated subscription fee charged for such Authorized Bundle.
1.69. “SVOD” means the method of distribution of a program or programs to subscribers in response to the request of such subscribers, for personal use and viewing in their Private Residences on an “on-demand” basis, by a program service for which each subscriber is charged a regular, periodic subscription fee, except for free trials and vouchers approved by Licensor (which fee, in the case of the Licensed Service, shall be the Subscription Fee), and where no “per transaction” or “per exhibition” charge is made to such subscribers as a condition of receiving and/or viewing such programs.
1.70. “Tablet” means any individually addressed and addressable IP-enabled device with a built-in screen and a touch screen keyboard, for which user input is primarily via touch screen, that is designed to be highly portable and not designed primarily for making voice calls., and runs on one of the following operating systems: iOS, Android (where the implementation is marketed as “Android” and is compliant with the Android Compliance and Test Suites (CTS) and Compatibility Definition Document (CDD)), or RIM’s QNX Neutrino (each, a “Permitted Tablet OS”) “Tablet” shall not include Zunes, Personal Computers, Game Consolespersonal computers, game consoles (including Xbox Consoles), set-top-boxes, portable media devices, PDAs or Mobile Phones., mobile phones or any device that runs an operating system other than a Permitted Tablet OS.
1.71. “Territorial Breach” means a Security Flaw that results or may reasonably be expected to result in the delivery of the Included Programs via the Licensed Service to persons outside the Territory, where such delivery outside the Territory may, in the reasonable good faith judgment of Licensor, result in actual or threatened harm to Licensor.
1.72. “Transient Dwelling Unit” shall refer to private or semi-private dwelling units in a hotel, motel, hospital, nursing home, dormitory, prison, or similar structure, institution or place of transient residence, not including Public Areas therein.
1.73. “VCR Functionality” means 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, IN STRICT COMMERCIAL CONFIDENCE Page | 33 AMAZON EUSONY DRAFT APRIL 16MAY 7, 2013 FOR DISCUSSION PURPOSES ONLY – NOT AN OFFER CONFIDENTIAL SUBJECT TO CONTRACT AND MANAGEMENT APPROVAL
pause, play, rewind and fast forward.
1.74. “Video on Demand” or “VOD” means the exhibition of a single program in response to the request of a viewer (i) for which the viewer pays a per transaction fee solely for the privilege of viewing each separate exhibition of such program (or multiple exhibitions over a period not to exceed its viewing period), which fee is unaffected in any way by the purchase of other programs, products or services (subject to packaging, e.g. for sequels) but not referring to any fee in the nature of an equipment rental or purchase fee; (ii) the exhibition start time of which is at a time specified by the viewer in its sole discretion; (iii) which is susceptible of and intended for viewing by such viewer simultaneously with the delivery of such program and (iv) which is displayed on a video screen associated with the device that received delivery of such program from the service provider (such that the program is neither portable or removable from the device). Without limiting the generality of the foregoing, “Video-On-Demand” shall not include operating on a subscription basis (including, without limitation, so-called “subscription video-on- demand”), Pay-Per-View services, Home Theatre, Electronic Sell-Thru, and any transmission of an Included Program in a “high definition”, up- converted or analogous format or in a low resolution, down-converted, transcoded or analogous format. Video on Demand shall not preclude VCR Functionality.
Each of the above definitions of “Basic Television,” “Free Broadcast Television,” “Pay-Per-View,” Non- Theatrical,” “Subscription Pay Television,” “SVOD” and “VOD” shall be mutually exclusive of each other, and of Home Theatre, theatrical, home video and Electronic Sell Thru.
2. TERM
2.1. Term: The Term of this Agreement shall be as set forth in the Special Terms, it being acknowledged that the License Period for an Included Program licensed hereunder may expire after the Term.
3. RIGHTS AND RESTRICTIONS
3.1 Grant of Rights: Licensor grants Licensee a limited license during the Term to make available each Included Program during its License Period on an SVOD basis via the Licensed Service to Subscribers solely within the Territory in an Approved Format by means of the Approved Delivery Means in Standard Definition and High Definition, as applicable, to Approved Devices for reception in Private Residences or for Permitted Non-Residential Use, subject to the requirements specified in this Section 3, and in accordance with the other terms and conditions of this Agreement. Licensee shall have the right to exploit the SVOD rights using VCR Functionality. Such license shall include, without limitation, the right to reproduce and store the Included Programs, Advertising Materials and Metadata in digital form on one or more computer facilities of or under the leased or similar control of Licensee and/or its subcontractors solely for the purposes of effectuating the distribution and marketing of the Included Programs as permitted herein.
3.2 Restrictions on SVOD License: For the avoidance of doubt:
3.1.1. this license does not grant any rights to (a) deliver, transmit or exhibit any Included Program (i) by any means other than as part of the Licensed Service,
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(ii) using a delivery system other than the Approved Delivery Means, (iii) other than on an SVOD basis to Subscribers within the Territory, or (b) authorize any Subscriber to exhibit any Included Program other than in Private Residences or for Permitted Non-Residential Use;
3.1.2. except as otherwise provided in Section 3.1, no rights are granted under this Agreement for any Download or storage of the Included Programs, other than in respect of temporary Downloads as set out in the Special Terms, or by means of any form of delivery via the Internet to any other device, including, for the avoidance of doubt, any remote storage or locker service;
3.1.3. the SVOD rights granted under this Agreement exclude any offering which is in form and/or substance equivalent to TVOD, AVOD, Pay-Per-View, Electronic Sell-Thru (or other delivery of physical and/or embedded media), Pay Television, Non-Theatrical, Home Theatre, Basic Television or Free Broadcast Television; and
3.1.4. no rights are granted for delivery or viewing of any Included Program via any form of portable or mobile telephony device or set top box other than the Approved Devices, provided that Licensor acknowledges that the versions of the PlayReady DRM, Windows Media DRM and Marlin Broadband DRM that are current as of the date hereof permit “Home Networking” (defined as streaming over an authorized and localized home network, including, but not limited to secure streaming over such DRM-compliant localized home network to media adapters connected to televisions, set-top boxes or other consumer electronics audio-visual devices within the home, without any additional copies of the streaming content being authorized or permitted) and Licensor hereby authorizes such Home Networking of the Included Programs in accordance with the copy protection requirements set out in this Agreement solely in respect of the aforementioned DRMs.
3.3 Integration of Metadata: Nothing herein shall, in and of itself, prevent Licensee from (i) integrating textual (i.e., written) Metadata that is otherwise publicly available or ascertainable into the Licensee Properties and/or (ii) allowing members of any other marketing programs designed to drive traffic to the Licensee Properties to use textual Metadata that is otherwise publicly available or ascertainable. Licensee shall be entitled to integrate textual Metadata in the Licensee Properties, and such right, specifically, shall continue after the Term. For the avoidance of doubt Licensee shall use non- Affiliate third party metadata only insofar as the metadata provided by Licensor is incomplete. Licensee shall indemnify and hold harmless Licensor for any claims, damages and costs incurred by Licensor arising out of metadata created by Licensee or its vendors or subcontractors.
3.4 Further Incidental Technical Rights: Licensor also grants Licensee permission to cause such transmission, reproduction and other use of the Included Programs, Advertising Materials and Metadata as mere technological incidents to and for the limited purpose of technically enabling the rights licensed to Licensee under this Agreement (including, but not limited to, caching to enable display).
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3.5 Exercise by Affiliates: All rights granted to Licensee pursuant to this Agreement may be exercised by Licensee or any of its Affiliates; provided, however, that the foregoing shall not alter the rights granted hereunder or relieve Licensee of its obligations hereunder and any act or omission by an Licensee Affiliate that would have been a breach of this Agreement had Licensee performed such act or omission itself shall be deemed to be a breach of this Agreement by Licensee.
3.6 Sub-License: Except as otherwise providedexpressly permitted under Section ___ of in this Agreement, no Included Programs shall be sub-licensed, sub-distributed, made available to any non-Affiliate third party, re-branded or made available under the name, trade mark or logo of any other non-Affiliate third party: that is, no “white labeling” of the Licensed Service (as that term is commonly understood).) or co-branding of the Licensed Service. Except as otherwise providedexpressly permitted under Section ___ of in thethis Agreement, at no time shall Licensee enter into any commercial agreement regarding revenue sharing or other economic arrangements with any third party in relation to any individual Included Program.
3.7 Right to Sub-Contract Operations: For the avoidance of doubt, Licensee shall be able to sub-contract to any sub-contractor aspects of the operations required for the provision of the Licensed Service, provided always that Licensee shall be liable to for any act or omission of such sub-contractor resulting in breach of this Agreement as if such breach was done or failed to be done by Licensee.
4. RESERVATION OF RIGHTS
Licensor reserves all right, title and interest in and to the Included Programs not expressly granted to Licensee herein. For the avoidance of doubt, there shall be no restriction (except where expressly stated otherwise herein, including, without limitation, in Section 13 of the Special Terms) on Licensor’s ability to exploit the Included Programs in the Territory or elsewhere by means of theatrical, home video, Pay-Per-View, Basic Television, Free Broadcast Television, Subscription Pay Television, Home Theatre, high definition television, VOD, via or to any form of television distribution (including, but not limited to, any form of interactive or on-line media (such as the Internet or World Wide Web) or via/to any portable or mobile telephony device) or by means of Electronic Sell-Thru.
5. PROGRAM COMMITMENT
During the Term, Licensor undertakes to license to Licensee, subject to the terms and conditions set out in this Agreement, for exploitation on the Licensed Service those Included Programs as set out in the Special Terms.
6. PROGRAMMING/EXHIBITIONS
The Included Programs are licensed for offer on the Licensed Service for an unlimited number of exhibitions within the License Period for such Included Program.
7. LICENSE PERIOD/AVAILABILITY DATE
The License Periods and Availability Dates for the Included Programs are as set out in the Special Terms. IN STRICT COMMERCIAL CONFIDENCE Page | 36 AMAZON EUSONY DRAFT APRIL 16MAY 7, 2013 FOR DISCUSSION PURPOSES ONLY – NOT AN OFFER CONFIDENTIAL SUBJECT TO CONTRACT AND MANAGEMENT APPROVAL
8. OPERATION OF THE LICENSED SERVICE
8.1. Licensee shall be responsible for encoding and ingesting Included Programs for exploitation on the Licensed Service at its own cost.
8.2. Licensor acknowledges and agrees that Licensee has the sole control over the design, architecture, operation and all other aspects of the Licensed Service, including the sole right to engage in all communications with Subscribers and to provide Subscriber customer services and support as Licensee determines in its discretion subject to the terms of this Agreement.
8.3. Subject to the provisions of this Agreement, Licensee shall have the right to determine in its sole discretion any promotions, giveaways, incentives, competitions or any other promotional or marketing activities for the Licensed Service, including those relating to the availability of the Included Programs thereon.
9. LICENSE FEE
The License Fees for the Included Programs are as set out in the Special Terms
10. PAYMENT; REPORTING
10.1. License Fee: Licensee shall pay the License Fees according to the payment terms set out in the Special Terms and in this Section 10. Subject to the provisions thereof and hereof, Licensee shall make all payments hereunder in a timely manner and without setoff of any kind, and in any event no later than forty-five (45thirty (30) days from the receipt of a valid [VAT] invoice.
10.2. Retail Prices: Licensee shall have the right to establish in its sole discretion the price charged to a Subscriber by Licensee for the Licensed Service from time to time.
10.3. Remittance: All License Fees shall be payable in Euros and shall be paid by Licensee to Licensor by wire transfer, and, for the avoidance of doubt, acceptance thereof by Licensor shall not constitute a waiver of any of Licensor’s rights nor preclude Licensor from questioning the correctness of the same, subject to the terms hereof. Any and all costs associated with any wire transfer shall be borne solely by Licensee.
Unless otherwise instructed by Licensor, all payments shall be to the following account (or such other account as Licensor shall from time to time direct in writing):
[Sony to provide payment details]
10.4. Currency Regulation: To the extent any sums due to Licensor hereunder cannot be sent to Licensor because of currency restrictions or any such other governmental regulations or restriction, such inability to remit payment shall not be deemed a breach of this Agreement for any purpose, provided Licensee gives Licensor prompt written notice of such inability and the reasons therefore, and at Licensor’s election, in Licensor’s sole and absolute discretion, promptly deposits all such sums due to Licensor hereunder in an interest bearing account in the name of Licensor at a bank designated by Licensor where payment is permitted in satisfaction of Licensee’s payment obligations
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hereunder. Licensee shall document all deposits made to such account and the dates thereof.
10.5. Taxes: As between the parties, Licensee shall be solely responsible for collecting and paying to the appropriate taxing authorities any state or local sales or use taxes, value added taxes or similar taxes applicable to amounts paid by Subscribers as consideration for access to the Licensed Service. Unless otherwise stated, the License Fee payable by Licensee to Licensor under this Agreement are inclusiveexclusive of all taxes, such as value added taxes and state or local sales or use taxes (collectively “Transaction Taxes”), that apply to the license of Included Programs to Licensee. To the extent amounts Licensee is required to pay pursuant to Section 10.1 are subject to and include any applicable Transaction Taxes, Licensor shall supply Licensee with a valid tax invoice separately stating these Transaction Taxes to enable Licensee to claim credit for these taxes as applicable. Licensee may provide Licensor with an exemption certificate acceptable to the relevant taxing authority, in which case, Licensor shall not collect the taxes covered by such certificate. Licensor and Licensee shall work together, in good faith, to minimize any sales and use taxes that may apply to the license of Included Programs to Licensee, and Licensor shall have the right to terminate this Agreement on thirty (30) days’ advance written notice to Licensee given any time within the first ninety (90) days of the date on which Licensor determines or is notified in writing that sales and/or use taxes must be collected for the license of Included Programs to Licensee. If requested to do so by Licensor, or as otherwise required by applicable law, Licensee shall supply its VAT identification number to Licensor. Licensee shall not, however, be required to pay any taxes imposed on or measured by Licensor’s net income, net profits, income, profits, revenues, gross receipts or net worth; franchise, doing business, capital, intangible or value added (other than value added taxes in the nature of a sales or use or similar tax) taxes; real property taxes; ad valorem taxes imposed by any governmental authority on the License Fees payable to Licensor under this Agreement; or any similar taxes or taxes in lieu thereof, whether collected by withholding or otherwise. If taxes (other than sales, use or gross receipts) are required to be withheld on any amounts to be paid to Licensor: (i) Licensee shall deduct such taxes from the amount owed to Licensor and pay them to the appropriate taxing authority, as required by applicable law; and (ii) Licensee shall promptly secure and deliver to Licensor a receipt for any taxes withheld, as soon as reasonably practicable and in any event prior to March 16th of the calendar year following the payment to the appropriate taxing authority. [Note: Since this agreement is between a German business and one based in Luxembourg, any VAT will be self-accounted for in Luxembourg (and fully recoverable so there should be no actual cost to Licensee.]
10.6.10.5.1. Reporting: Within thirty (30) days after the end of each calendar quarter duringmonth of the Term, Licensee shall providerprovide to Licensor the following information for each Included Program: (i) the number of unique Streams initiated in that quartermonth, (ii) the number of unique Subscribers by whom those Streams were initiated, (iii) the total aggregate duration of those Streams, (iv) the average duration of each such unique Stream, and (v) the total number of Downloads in that quarter., (vi) total Free Trials, (vii) total Refer a Friend Subscribers and (viii) total Authorized Bundle Subscribers. In addition, at such time as the number of Licensee’s Subscribers shall pass any of the applicable Trigger Numbers set forth in the Special IN STRICT COMMERCIAL CONFIDENCE Page | 38 AMAZON EUSONY DRAFT APRIL 16MAY 7, 2013 FOR DISCUSSION PURPOSES ONLY – NOT AN OFFER CONFIDENTIAL SUBJECT TO CONTRACT AND MANAGEMENT APPROVAL
Terms, Licensee shall provide prompt written notice thereof to Licensor. Comment [KDE32]: Reporting to be discussed.
10.6. Within thirty (30) days after a written request by Licensor, which request may be made no more than two (2) times during the Term Year, Licensee shall provide to Licensor the following information with respect to Subscribers who Streamed or Downloaded an Included Program or other audio visual content in the preceding calendar month through the access tier of the Licensed Service that includes the Included Programs: (a) the percentage of those Subscribers who requested Downloads to more than five (5) Approved Devices, and (b) the percentage of those Subscribers who Streamed such audio-visual content to more than six (6) Approved Devices. Beginning with the calendar month during which the Effective Date occurs, Licensee shall calculate the number of Subscribers for each calendar month of the Term as of the 15th day of such calendar month (such number, the “Monthly Subscriber Count). Within thirty (30) days after the end of each month of the Term, Licensee shall report to Licensor the following information (collectively, the “Subscriber Count Data”): (a) the Monthly Subscriber Count for that month and (b) the aggregate number of Subscribers who Streamed or Downloaded an Included Program or other audio visual content that month through the access tier of the Licensed Service that includes the Included Programs. Licensor will designate in writing to Licensee no more than five (5) individual Licensor employees who will be permitted access to and knowledge of the Subscriber Count Data (each, a “Designated Subscriber Count Recipient”), including at least one (1) Designated Subscriber Count Recipient to whom Licensee should deliver the reports of Subscriber Count Data. Licensor acknowledges that the Subscriber Count Data is Confidential Information subject to the NDA [NEED TO DEFINE CONFIDENTIALITY AGREEMENT]. Without limiting Licensor’s obligations under the NDA, Licensor will restrict possession and knowledge of the Subscriber Count Data only to the Designated Subscriber Count Recipients and will not disclose the Subscriber Count Data to any other person or entity. Licensor may change the Designated Subscriber Count Recipients from time to time by providing advance written notice to Licensee.
11. Licensor may appoint a third party designee to receive or access the above data for purposes of reorganizing or presenting such data directly to Licensor, provided that any such designee agrees to keep and maintain such information as Confidential Information of Licensee and to be subject to confidentiality restrictions as protective as those set forth herein. All data provided by Licensee to Licensor pursuant to this Section 10 shall be in writing and delivered via e-mail to Florian_Haase- [email protected], [email protected] and [email protected] or such other email addresses as Licensor may hereafter specify in writing, or via such other method of delivery as Licensor may hereafter specify in writing.
11.12. DELIVERY MATERIALS
11.1.12.1. Digital Delivery: Unless otherwise prevented by reasons beyond its reasonable control, Licensor shall, at Licensee’s expense in accordance with Section 11.7 below, deliver to Licensee or Licensee’s nominated third party pursuant to Section 3.7 one (1) digital copy in the Licensed Language version (“Copy”), together with (a) subtitles for use with the Copies, and (b) closed captioning files for all Included Programs as required by applicable law, in each case in the relevant Licensed Languages and in accordance with the specifications mutually agreed by the parties and attached hereto as Exhibit B
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(“Technical Guidelines”), at least one hundred twenty (120)30 days prior to the Availability Date for all Included Programs in the form of an HD file if Licensor has access to an HD file. For any Included Program that Licensor delivers without closed captions, Licensor authorizes Licensee, at Licensee’s sole expense, to have captions for such episode created by a captioning service (“Lovefilm Created Captions”) and to deliver such captions with the applicable Included Program; provided, however, that (i) Licensee shall indemnify Licensor for any damages, liabilities and costs arising from a claim by a third party (including any governmental authority) arising out of the production or distribution of such Lovefilm Created Captions, and (ii) Licensee shall as promptly as practicable cease using the Lovefilm Created Captions and begin using closed caption files supplied by Licensor if Licensor elects to provide such files.
11.2.12.2. Lab Access: In the event Licensee requires Copies at a different specification from that set out in Exhibit B, such Copies shall be supplied by way of lab access to a video master at Licensee’s expense. Where Copies are supplied by way of lab access, Licensor shall supply Licensee with a laboratory access letter providing all necessary details and granting Licensee permission to obtain the relevant Copies in such digital format specification as has been approved by Licensor.
11.3.12.3. Technical Guidelines: Each Copy shall meet the technical specifications set forth in the Technical Guidelines. Amendments to the Technical Guidelines shall be by agreement between the parties only and there shall be no obligation on Licensor to upgrade the quality of the Copies provided to a specification higher than the Technical Guidelines.
11.4.12.4. Technical Acceptance: In the event that any Copy is rejected by Licensee for a failure to comply with the Technical Guidelines (except as otherwise provided in Section 11.6), then Licensor shall at its option and cost supply a replacement Copy as soon as reasonably possible and shall use commercially reasonable efforts to supply such replacement within seven (7) days of notification by Licensee, provided that if Licensor determines with good reason that it is not practicable to remedy such defect or to create a replacement Copy of the Included Program which meets the required standards, Licensor may elect to withdraw the Included Program, in accordance with Section 17.1 below.
11.5.12.5. Permitted Digitized Copies: Licensee shall be entitled to make digitized copies from each Copy in accordance with the encoding formats established by Licensee for the Licensed Service from time to time (any such encoded copy of an Included Program, an “Encoded File”), at Licensee’s sole cost, to be used solely in accordance with the terms hereof; provided, however, that (a) Licensee may not create Encoded Files in an up- converted or analogous format in which the Encoded File has a higher resolution than the Copy from which it was created, (b) any Standard Definition Encoded File created from a High Definition Copy must maintain the aspect ratio of the Copy from which it was created and (c) all Copies are protected as specified in Schedule B. If Licensor includes any anti-piracy warning in any Copy delivered hereunder, Licensee shall not delete such warning in any digitized copies it creates from that Copy.
11.6.12.6. Encode Outside Technical Guidelines: In the event a Copy is rejected because
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of file size and a different encode outside the Technical Guidelines is required as a result, Licensor shall undertake such encode at its own expense.
11.7.12.7. Delivery Costs: All costs relating to any physical shipping of any delivery materials shall be borne by Licensee in the event the Licensee elects not to receive the delivery materials digitally. No delivery costs shall be payable for delivery materials received by Licensee digitally. For the avoidance of doubt this does not affect the Administration Fee payable under Section 11.8 below.
11.8.12.8. Administration Fee: In relation to each Included Program for which a Copy is supplied in accordance with Section 11.1 above, Licensor shall provide such Copy free of charge where such version of the Copy is in a format already formatted for such use. Should Licensee request a format not currently supported, Licensor and Licensee shall share the cost of such provision 50:50. Comment [KDE33]: Note to Sony: This is the first we’ve heard about our HD file format being 11.9.12.9. No ownership or interest: Licensee is not granted any ownership of, or interest nonstandard. TBD in, any Copy (or any ownership of any Included Program embodied in any Encoded File or other copy created by Licensee thereof). Licensee’s use of the Copies is expressly limited to the licenses granted hereunder. All right, title and interest in the Included Programs, elements and parts thereof (including, without limitation, in promotional materials) and media of exhibition not specifically granted by this Agreement to Licensee are specifically and entirely reserved to Licensor and, other than as expressly otherwise stated in this Agreement, may be fully exploited and utilized by Licensor without limitation at all times, including (other than as expressly otherwise stated in this Agreement) during the License Period for any Included Program, without regard to the extent to which any such rights may be competitive with Licensee or the license granted hereunder.
11.10.12.10. Retention Of Copies After Expiry Of License Period: Subject to Section 17, Licensee shall be entitled to retain all permitted Copies of all Included Programs following expiry of the License Period for customer support purposes only until the expiry of such obligations to provide such customer support in accordance with the Terms of Service and consumer statutory rights.
11.11.12.11. Return of Copies: Subject to Section 11.10, no later than sixty (60) days after the later of the end of the last to expire License Period hereunder or the expiration of any agreement between Licensor or Licensee for distribution of the Included Programs, at Licensor’s written request all Copies of Included Program supplied to Licensee by Licensor pursuant to the terms of this Section 11 shall be destroyed or degaussed by Licensee and such destruction or degaussing shall be confirmed in writing by Licensee to Licensor, provided that at Licensor’s option Licensee shall return such Copies to Licensor, at Licensor’s cost as to shipping, rather than destroy or degauss such Copies.
11.12.12.12. No further language: In no event shall Licensor be required to deliver Copies in any language version other than the Licensed Language version.
11.13.12.13. Loss, etc: If any Copy is lost, stolen, destroyed or damaged after delivery by Licensor to a shipping agent and before arrival at its destination, Licensee shall notify Licensor in writing of such loss, theft, destruction, or damage and all details known to IN STRICT COMMERCIAL CONFIDENCE Page | 41 AMAZON EUSONY DRAFT APRIL 16MAY 7, 2013 FOR DISCUSSION PURPOSES ONLY – NOT AN OFFER CONFIDENTIAL SUBJECT TO CONTRACT AND MANAGEMENT APPROVAL
Licensee relating to such occurrence promptly after becoming aware thereof. Licensor shall, upon written notification of such occurrence, make and deliver to Licensee another Copy at Licensee’s expense.
11.14.12.14. No Charges: Licensee shall not grant or authorise any lien, charge, pledge, mortgage or other encumbrance to attach to any rights to exploit the Included Programs or any Copy granted or delivered under this Agreement, and shall use reasonable efforts to prevent any such attachment.
11.15.12.15. Source of Copies: Licensee agrees that with respect to each Included Program licensed hereunder, it shall obtain all Copies from Licensor or its designee and from no other source and by no other method.
11.16.12.16. Music Cue Sheets: Licensor shall provide Licensee with access to its website located at https://euconnect.spe.sony.com/spidr (or any successor website) to enable Licensee to download music cue sheets in respect of each Included Program.
12.13. COPY PROTECTION AND SECURITY
12.1.13.1. General: Licensee shall not authorize any use of any video reproduction or compressed digitized copy of any Included Program specifically licensed under this Agreement for any purpose other than as is expressly permitted herein.
12.2.13.2. Security/Content Protection: In all respects, the rights granted under this Agreement shall be subject to the technical quality and copy/protection security aspects of the Licensed Service complying with the attached Schedule B.
12.3.13.3. Inspection: Licensor shall have the right to send its employees or representatives approved by Licensee (which approval may not be unreasonably withheld) to inspect and review Licensee’s security systems, procedures and technologies (“Security Systems”) at Licensee’s places of business (including off-site facilities, if any, used by Licensee) as Licensor reasonably deems necessary; provided, however, that (i) such inspection is conducted on reasonable advance notice (and in any event no less than seven (7) days’ advance notice), during regular business hours, not in the fourth calendar quarter of the year, and not more frequently than once every six (6) months (unless a greater frequency is necessary in order to address a particular security concern), (ii) does not interfere materially with Licensee’s operations, and (iii) is limited in scope so as to avoid, to the greatest extent practicable, access to Licensee’s Confidential Information, proprietary systems and technology. Any individuals who take part in any such inspection on Licensor’s behalf must be obligated, under written confidentiality agreements that are customary in form and substance, to maintain as confidential any information received in any such inspection.
12.4.13.4. Suspension Notice: Licensee shall notify Licensor within forty-eight (48) hours 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 require Licensee to suspend the availability of the Included Programs on the Licensed Service (“Suspension”) at any time during the Term in the event of a Security Breach or Territorial Breach by delivery of a written
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notice to the Licensee of such Suspension (a “Suspension Notice”); provided, however, that (i) if a Security Breach involves a failure of only a specific Approved Format, the Suspension Notice shall not require Licensee to suspend distribution on the Licensed Service of Included Programs using any other Approved Format and (ii) if a Security Breach also affects Competitors who are providing an SVOD service in the Territory that delivers Like Features, Licensor shall not exercise its Suspension rights hereunder unless Licensor also prohibits such other affected Competitors from distributing Licensor’s content using the same Approved Format. Upon its receipt of a Suspension Notice, Licensee shall take steps to suspend distribution on the Licensed Service of the affected Included Program(s), as soon as technically feasible (but in no event more than three (3) calendar days after Licensee’s receipt of such notice).
12.5.13.5. Reinstatement/Termination. If the cause of the Security Flaw that gave rise to a Suspension is satisfactorily corrected, repaired, solved or otherwise addressed as determined by Licensor in its sole but reasonable discretion, the Suspension shall terminate upon Licensor’s delivery to Licensee of notice thereof. Licensor shall provide such notice within a commercially reasonable period of time following Licensor’s determination that it desires to terminate the Suspension and Licensor’s obligation to make the Included Programs available on the Licensed Service shall 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 herein. If (i) any Suspension lasts for a period of ninety (90) dayssix (6) months or more, either party and (ii) as a result of such Suspension more than twenty-five percent (25%) of all Subscribers at the time of commencement of such Suspension are materially impacted or there has been a measurable reduction of twenty-five percent (25%) of exhibitions over such same six month period, and provided that at least two Qualifying Studios who provide 1st or 2nd Pay window content do not suspend the availability of their content on the Licensed Service as a result of the Security Flaw that gave rise to such Suspension, Licensee shall have the right, but not the obligation, to terminate this Agreement solely in respect of the Early SVOD Features only by providing not less than thirty (30) days advance written notice of such election, in which case the License Fee. In the event the Licensee exercises the termination rights in respect of the Early SVOD Features as set out above Licensor shall be reduced on a pro rata basis. , at its sole discretion, have the right to terminate the remainder of the Agreement (i.e. Library Titles and other content) by providing not less than thirty (30) days advance written notice of such election.
12.6.13.6. For the avoidance of doubt, the parties acknowledge that a Security Breach or Territorial Breach may be related to an Approved Format or otherwise beyond the reasonable control of Licensee (including, without limitation, the failure of any Approved Device properly to implement the applicable Approved Format) in circumstances where breach of this Agreement by Licensee, or failure to deploy a DRM Patch as set out in Section 8 of the Special Terms, has not caused the Security Breach or Territorial Breach, and that in such event, Licensor’s Suspension rights provided in this Section 12 of shall be Licensor’s sole and exclusive remedy for such Security Breach or Territorial Breach.
12.7.13.7. Without limiting Licensor’s rights in the event of a Security Breach or Territorial Breach or under Section 12.4, Licensor shall have the right to withdraw its approval of IN STRICT COMMERCIAL CONFIDENCE Page | 43 AMAZON EUSONY DRAFT APRIL 16MAY 7, 2013 FOR DISCUSSION PURPOSES ONLY – NOT AN OFFER CONFIDENTIAL SUBJECT TO CONTRACT AND MANAGEMENT APPROVAL
any Approved Format or Approved Device in the event that such Approved Format or Approved Device is materially altered by its publisher or manufacturer, or the publisher or manufacturer fails to update such Approved Format or Approved Device, in a manner that Licensor determines is materially detrimental to the protection of Included Programs, such as a change to an Approved Format or Approved Device that alters the security systems previously supported by the Approved Format or Approved Device; provided, however, that (i) Licensor shall not exercise its withdrawal rights hereunder unless Licensor also prohibits the use of the Approved Format or Approved Device by all Competitors who are providing an SVOD service in the Territory that delivers Like Features from distributing content using the Approved Format or to the Approved Device, as applicable, (ii) Licensor shall provide reasonably-detailed written notice to Licensee of the reasons for such opinion (“DRM/Device Issues”), and (iii) if Licensee (or the applicable technology provider or device manufacturer) does not correct such DRM/Device Issues to Licensor’s reasonable satisfaction within sixty (60) days after receipt by Licensee of such notice from Licensor, Licensor shall have the right to revoke the approval granted with respect to the applicable Approved Format or Approved Device upon further written notice to Licensee, which revocation shall be effective ten (10) Business Days after Licensee’s receipt of such further notice (provided, that during such sixty (60) day period Licensor shall respond promptly and in good faith to any written proposals received from Licensee regarding potential solutions to correct such DRM/Device Issues and if Licensor, in its good faith reasonable opinion, does not believe that any such proposal corrects such DRM/Device Issues to Licensor’s reasonable satisfaction, then Licensor shall provide reasonably-detailed written notice to Licensee of the reasons for such opinion). If Licensor exercises its right hereunder to revoke its approval with respect to any Approved Format or Approved Device, Licensee may treat such revocation as a Suspension Notice under this Section 12. For the avoidance of doubt, changes to any Approved Format or Approved Device that do not alter the security systems or usage settings previously supported by the Licensed Service shall not, in and of themselves, be changes that entitle Licensor to withdraw the Approved Format or Approved Device.
12.8.13.8. Content Protection Requirements and Obligations: Licensee shall at all times comply with the CP Schedule.
12.9.13.9. Unauthorized Use Outside Permitted Residences: Licensor may notify Licensee of any access by Subscribers of Included Programs via the Licensed Services that is unauthorized due to the access being outside of Private Residences and for uses other than Permitted Non-Residential Uses and that results in actual or threatened material harm to Licensor and, within forty-eight (48) hours of Licensee’s receipt of such notice, Licensee shall take such actions as it deems reasonably appropriate, it being understood that suspending access to the Included Programs by the user account associated with that Subscriber is deemed reasonably appropriate.
12.10.13.10. Video Sharing Functionality. If the Licensed Service itself includes Video Sharing Functionality, [or if Licensee makes the Licensed Service available via any Authorized Bundle in which the Licensed Service is combined with a subscription service offered by Licensee or its Affiliates that includes Video Sharing Functionality,] then Licensor (without prejudice to any other legal rights it may have) shall have the right, on IN STRICT COMMERCIAL CONFIDENCE Page | 44 AMAZON EUSONY DRAFT APRIL 16MAY 7, 2013 FOR DISCUSSION PURPOSES ONLY – NOT AN OFFER CONFIDENTIAL SUBJECT TO CONTRACT AND MANAGEMENT APPROVAL
forty-five (45) days’ prior written notice to Licensee (a) to suspend this Agreement for one period of no more than one hundred twenty (120) consecutive days and/or (b) terminate this Agreement on at least 45 days’ prior written notice to Licensee, if Licensee or its Affiliates have not implemented (with respect to such Video Sharing Functionality) filtering technology that has been approved either by (i) Licensor (such approval not to be withheld where either (A) such filtering technology can be shown to detect unauthorised content in at least ninety percent (90%) of cases or (B) such filtering technology (or an earlier version thereof) is used by Licensor or its Affiliates on any service provided by Licensor or its Affiliates within the Territory or has been approved by Licensor or its Affiliates for use within the Territory by another licensee to whom Licensor or its Affiliates licenses like features) or (ii) at least three (3) Qualifying Studios who license like features to Licensee, to terminate this Agreement. for inclusion in the Licensed Service or such Sony/Amazon Authorized Service Combination (as applicable) (“Approved Filtering Technology”). In the event of suspension of this Agreement by Licensor under this Section 12.10, Licensee shall not owe any License Fees for the duration of such period of suspension and Licensor shall within thirty (30) days of the end of such period of suspension refund to Licensee on a straight-line pro- rata basis (and not, for the avoidance of doubt, on a weighted basis as described in Section 17.4 of the Standard Terms) any License Fees already paid based on the proportion of each Included Program’s License Period falling during such period of suspension. Any such suspension shall not serve to extend the Term of the Agreement. In the event of termination of this Agreement by Licensor under this Section 12.10, Licensor shall within thirty (30) days of such termination refund to Licensee on a pro- rata basisstraight-line pro-rata basis (and not, for the avoidance of doubt, on a weighted basis as described in Section 17.4 of the Standard Terms) any License Fees already paid based on the proportion of each Included Program’s License Period falling after the date this Agreement is terminated. For the avoidance of doubt, Licensor’s right to suspend this Agreement under this Section 12.10 is in addition to, rather than an alternative to, its right to terminate this Agreement under this Section 12.10. Where Licensor elects to terminate this Agreement under this Section 12.10, Licensor must do so with respect to the Agreement in its entirety. [Subject to Sony review.]
13.14. CUTTING AND EDITING
13.1.14.1. Authorisation: With respect to any Included Program that Licensee elects to distribute on the Licensed Service, Licensee shall exhibit such Included Program as delivered by Licensor in its entirety; provided that, subject to Licensor’s prior written consent and to any contractual or guild restrictions to which Licensor is subject, where notified by Licensor to Licensee in writing, Licensee may make such minor cuts or eliminations, at Licensor’s own expense, as are necessary to comply with any and all applicable legislation, regulations, codes, guidelines or orders issued by any duly authorized public censorship authority, provided that where Licensor is reasonably satisfied that any Included Program is not capable of being edited to so comply within the scope of editing rights granted to Licensee under this Section 13.1, Licensor may withdraw such Included Program pursuant to Section 17.1. For the avoidance of doubt, this Section 13.1 shall not be deemed to impair Licensee’s rights with respect to trailers, excerpts or Previews as set forth in Sections 13.3, 14.8 and 14.10.
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13.2.14.2. Artistic/Pictorial Quality: Notwithstanding the foregoing, Licensee shall not have the right to make any such cuts that shall adversely affect the artistic or pictorial quality of such Included Programs or materially interfere with its continuity and shall not delete any copyright or trademark notice or credits incorporated in the Included Programs as delivered by Licensor.
13.3.14.3. Trailers: Licensee may use any trailers and electronic press kits provided by Licensor to promote the Included Programs. Without limiting Licensee’s rights under Section 14.10, Licensee may produce trailers for the Included Programs using authorized material in accordance with this Section 13, on the basis that all rights in each such trailer shall be deemed to vest in Licensor subject in all respects to Licensor’s prior written (for which email shall suffice) approval of each such trailer created by Licensee.
14.15. ADVERTISING
14.1.15.1. General. In addition to the marketing restrictions and obligations contained in the Special Terms, the following general principles shall apply in respect of Licensee’s marketing and promotion of the Included Programs and the availability thereof on the Licensed Service:
(i) Other than the use by Licensee of the Approved Materials (as defined below) in Licensee’s regular marketing and promotional activity (on the Licensee Properties and in customer emails designed to drive traffic to the Licensee Properties) regarding the availability of content on the Licensed Service (as opposed to specific promotional activity), for which no additional restrictions apply other than those expressly set forth in this Agreement including use within the terms of the Marketing Guidelines (as defined below and provided that, for those purposes, any requirement in the Marketing Guidelines to obtain Licensor’s consent to use the Approved Materials shall be deemed of no effect to the extent that such use would otherwise be permitted by this Section 14.1), all marketing and specific promotional activities by Licensee of the Included Programs is subject to Licensor’s prior written approval;
(ii) Licensor shall not unreasonably withhold approval of ‘calls to view’ marketing messages; and
(iii) any implication that an Included Program is free, other than through an Authorized Free Trial, is not permitted.
14.2.15.2. Licensee’s Right to Market and Promote: Licensee shall have the right to market and promote the Included Programs during the Term in its sole and absolute discretion but always in accordance with this Section 14 in its entirety, the marketing guidelines attached hereto as Exhibit C (“Marketing Guidelines”), as such guidelines may be amended by Licensor from time to time (provided that, following such amendment(s): (i) such guidelines shall be no more restrictive than as of the date of this Agreement; and (ii) that any such amendment(s) apply to all licensees of Licensor’s content who are providing SVOD services in the Territory) and the terms and conditions of this Agreement.
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14.3.15.3. Approved Materials: Licensor shall provide Licensee with access to its website located at www.spti.com (or any successor website) for the purpose of downloading publicity and promotional material (“Approved Materials”) in respect of each Included Program electronically, including, without limitation, key art, written summaries, extracts, synopses, and photographs, for use in accordance with this Agreement.
14.4.15.4. Use of Materials: Licensee may use Advertising Materials solely for the purpose of advertising, promoting and publicizing the exhibition of the Included Programs on the Licensed Service and shall not, without the prior written consent of Licensor: (i) modify, edit or make any changes to the Advertising Materials, provided that Licensee may resize or reformat the Advertising Materials and Licensee may insert a “pre-roll” head logo of an Amazon Brand (and for clarity, not for any third-party brand) not to exceed ten (10) seconds in duration, prior to the commencement of playback of Included Programs via the Licensed Service; or (ii) promote the distribution of any Included Programs by means of contest or giveaway.
14.5.15.5. Direct Promotion: Any promotion of the exhibition of any Included Program on the Licensed Service in print, radio, television, mass physical mail-outs (other than mail to Subscribers) and billboards, shall be subject to submission of a prior written request for Licensor’s prior written consent, which shall not be unreasonably withheld or delayed.
14.6.15.6. Positive Promotion: Licensee’s promotions may position SVOD in a positive light but in no event shall Licensee use any Included Program in any promotion with the intent to denigrate other means of film distribution (including home video/DVD rental), or any Competitor.
14.7.15.7. Promotion of Included Programs: Subject to the provisions of this Section 14, Licensee shall have the right in the Territory, with respect to each Included Program licensed hereunder and during and thirty (30) days prior to the License Period for the Included Program, to include in any promotional or advertising materials used to advertise and publicize the exhibitions of such Included Program, the names or likenesses of actors appearing in it, the name of Licensor and any other person or company connected with the production of such Included Program and receiving credit in the titles thereof or any trademark used in connection with such Included Program (“Identification and Credits”). Other than any advertisement that includes no Advertising Materials other than Approved Materials, any such advertisement shall be done in accordance with Licensor’s written instructions as to such Identification and Credits notified on Licensor’s website located at www.spti.com or directly communicated in writing from Licensor to Licensee from time to time. Licensee covenants that (a) other than in the case of the use of Approved Materials, it shall fully comply with all instructions furnished in writing to Licensee with respect to such Identification and Credits (including size, prominence and position) and (b) Identification and Credits (whether in the case of the use of Approved Materials on the Licensee Properties or otherwise) shall not be used by Licensee so as to constitute an endorsement, express or implied, of any party, product or service other than such Included Program and (c) the names and likenesses of the characters, persons and other entities appearing in or connected with the production of Included Programs shall not
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be used separate and apart from the Advertising Materials (unless otherwise permitted pursuant to a separate agreement with Licensee), which shall be used solely for the purpose of advertising and promotion of the exhibition of such Included Programs on the Licensed Service.
14.8.15.8. Media: Subject to the provisions of this Section 14, Licensee shall have the right to advertise, publicize and promote the exhibition of an Included Program licensed hereunder by any means or media, provided that: (i) Licensee shall not exhibit or authorize others to exhibit any excerpts from such Included Program other than for use in promotions exhibited on the Licensed Services promoting the exhibition of such Included Program on the Licensed Services, which excerpts shall not exceed two minutes and thirteen seconds (2:13) in length per scene, and subject to an aggregate cap of four (4) minutes per Included Program, unless specifically authorized by Licensor in writing; (ii) any distribution by or on behalf of Licensee in any recorded physical media (including, without limitation, CD Rom or DVD) of any copy of any part of an Included Program shall be subject to Licensor’s prior written consent on a case by case basis; and (iii) Licensor makes no representation or warranty with respect to the use of any music contained in an Included Program for promotional purposes and that Licensee shall be responsible for clearing all music rights with respect to any music contained in such excerpts.
14.9.15.9. Copyright Notices: Other than in the case of the use of Approved Materials (provided, that if any Approved Materials contains any copyright notices Licensee shall not remove such notices), appropriate copyright notices, always in accordance with Licensee’s instructions and as provided in the provisions set out in the www.spti.com website referred to above (or its successor), shall at all times accompany all Advertising Materials.
14.10.15.10. Previews: Licensee may create, and provide Subscribers with the opportunity to view, Previews of Included Programs only on the Licensed Service. For the purposes of this Agreement, “Preview” means the exhibition on the Licensed Service of no more than the first three minutes (“Maximum Excerpt Duration”) of each item of Included Programs to current or potential Subscribers in order to encourage Subscribers to subscribe to the Licensed Service. Notwithstanding the foregoing, if any guild, union, or collective bargaining agreements to which Licensor (or any of its Affiliates) is a party (or to which it becomes a party), in the future requires a maximum duration for video clips that is shorter than the Maximum Excerpt Duration in order to avoid a residual, reuse, or other fee in connection therewith (“Revised Excerpt Duration”), Licensor shall notify Licensee in writing as soon as is reasonably possible after Licensor becomes aware of such requirement. Such written notice shall specify such Revised Excerpt Duration and set forth the date on which Licensee shall conform to such Revised Excerpt Duration. Licensee shall, no later than the date specified in such written notice by Licensor (provided, however, that Licensee shall, at a minimum, have at least five (5) Business Days after Licensee’s receipt from Licensor of such written notice to do so), either (a) cease using Previews or, (b) if Licensee wishes to continue to use any Preview, reduce the duration thereof so that it does not exceed such Revised Excerpt Duration. In addition to and without limiting any other remedy available to Licensor hereunder, in the event that Licensee exceeds the Maximum Excerpt Duration or any Revised Excerpt IN STRICT COMMERCIAL CONFIDENCE Page | 48 AMAZON EUSONY DRAFT APRIL 16MAY 7, 2013 FOR DISCUSSION PURPOSES ONLY – NOT AN OFFER CONFIDENTIAL SUBJECT TO CONTRACT AND MANAGEMENT APPROVAL
Duration after the date Licensee is required to implement such Revised Excerpt Duration hereunder, Licensee shall indemnify Licensor for the costs of any residual, reuse or other fee due by Licensor (or its Affiliates) under the applicable guild, union, or collective bargaining agreement(s) as a result thereof. Further, and without limiting the foregoing, Licensor may, on a case-by-case basis, notify Licensee in writing if Licensor believes, in good faith and on a non-discriminatory basis, that it is inappropriate for Licensee to exhibit (or to continue to exhibit) a Preview of a Included Program (which written notice shall specify the particular item(s) which gives rise to such belief), in which event Licensee shall not exhibit (or within five Business Days after receipt of such written notice cease exhibiting) such Preview; provided, however, that Licensor shall not withdraw Licensee’s general right to use Previews under this Agreement unless it is withdrawing such right from all Competitors in the Territory (unless the cause giving rise to such withdrawal relates to a unique aspect of the Licensed Service and does not apply to such Competitors).
15.16. AUDIT
15.1.16.1. Audit Right: Licensor, through an independent certified public accounting firm selected by Licensor and reasonably acceptable to Licensee (“Approved Auditor”), shall have the right, not more than once per year, at Licensor’s sole cost and expense (except as otherwise provided in Section 15.2) during normal business hours, upon at least fifteen (15) Business Days’ prior written notice to Licensee, to audit and review, at Licensee’s address set forth herein (or such other address as may be designated by Licensee as its principal business address by notice given by Licensee to Licensor in accordance with Section 24 as the place where such books and records are kept), Licensee’s books and records pertaining to the accuracy of any Reports delivered to Licensor by Licensee (the “Audit Rights”), provided that any and all such information viewed and recorded during the course of the audit shall be deemed Confidential Information of Licensee and each employee or authorised representative of any Approved Auditor that visits Licensee’s premises shall be required to enter into a confidentiality agreement with Licensor on terms no less onerous than those set out Section 28 below in relation to that Confidential Information. Licensor shall not conduct any such audit during the last quarter of the calendar year (i.e., during the months of October, November and December), shall use commercially reasonable efforts to conclude any such audit within a period of not more than ten (10) Business Days, and shall in any event conduct the audit in such manner as not unreasonably to interfere with the normal business activities of Licensee. Licensor shall not have the right to audit any books and records pertaining to any period previously audited at any time under this Agreement. The exercise by Licensor at any time and from time to time of its Audit Rights or the acceptance by Licensor of any Report or payment by Licensee shall be without prejudice to any of Licensor’s rights or remedies arising under this Agreement in respect of any inaccuracy or inadequacy thereof, and shall not in any way prohibit Licensor from thereafter disputing the accuracy or adequacy of any such Report or payment, respectively, and Licensee shall at all times remain fully liable for any payment due under the terms hereof.
15.2.16.2. Applicable Rate: If the results of any such review or audit by Licensor establish that Licensee has misrepresented any item bearing upon or relating to the License Fees IN STRICT COMMERCIAL CONFIDENCE Page | 49 AMAZON EUSONY DRAFT APRIL 16MAY 7, 2013 FOR DISCUSSION PURPOSES ONLY – NOT AN OFFER CONFIDENTIAL SUBJECT TO CONTRACT AND MANAGEMENT APPROVAL
due or payable to Licensor under this Agreement, Licensee shall recompute and make immediate payment of the License Fees due under this Agreement. Additionally, in the event any such review or audit establishes that the actual License Fees due under this Agreement for any quarterly period exceed the License Fees reported by Licensee to be due for such period by ten percent (10%) or more, Licensee shall pay (i) all reasonable out-of-pocket costs and expenses incurred by Licensor for the review and audit in respect of such period, and (ii) all reasonable outside attorneys’ fees incurred by Licensor in connection with enforcing the collection thereof.
16.17. ANTI-PIRACY; ADULT CONTENT
16.1.17.1. The parties shall discuss in good faith how the parties can cooperate to implement Licensor’s anti-piracy initiatives.
16.2.17.2. In order to ensure that any programming, or any promotion for programming, that is considered “erotic” in Germany or is otherwise unrated by Freiwillige Selbstkontrolle Film and would reasonably be deemed to be pornographic (“Adult Content”) may not be viewed contiguously to any Included Program by operation of the viewer’s command functions (except where intentionally so operated by a viewer), Licensee shall organise the Licensed Service so that Adult Content is accessed through a separate access route to any Included Program at least two (2) clicks away from any Included Program. Licensee shall refrain from advertising or otherwise promoting any Included Program in printed materials, on the same page or adjacent page as Adult Content. At any time Included Programs are available on the Licensed Service, Adult Content shall not constitute more than twenty percent (20%) of the total video content available on the Licensed Service.
17.18. WITHDRAWAL OF PROGRAMS
17.1.18.1. Right to Withdraw: Notwithstanding anything to the contrary contained in this Agreement, Licensor shall have the right to withdraw any Included Program from the Licensed Service by providing written notice to Licensee in the event that (a) 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 use, market, promote, license, distribute, and/or transmit such Included Program as provided under this Agreement, (b) Licensor reasonably believes that Licensee’s continued use, marketing, promotion, license, distribution, and/or transmission of any Included Program may adversely affect Licensor’s material relations with any applicable copyright owner, artist, composer, producer, director, publisher, or other similar third- party rights holder, (c) 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, or (d) the circumstances giving rise to the right of withdrawal of an Included Program under Section 11.4 or Section 13.1 hereof are satisfied (any such withdrawal hereunder, a “Withdrawal”, and “Withdraw” and “Withdrawn” shall have correlative meanings). Notwithstanding the foregoing, (i) Licensor shall be entitled to Withdraw an Included Program hereunder only if it simultaneously withdraws similar distribution rights to such Included Program from all Competitors in the Territory (unless the cause giving rise to such Withdrawal relates to
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an aspect of the Licensed Service and does not apply to such Competitors), and (ii) Licensor shall not enter into any agreement with any other distributor of audio-visual content in the Territory that would require Licensor to Withdraw any Included Program hereunder. Nothing in this Section 17.1 is intended to relieve Licensor of any of its other obligations under this Agreement (including, without limitation, its indemnification obligations). Withdrawal of a Included Program pursuant to this Section 17.1, or failure to agree on a substitution title pursuant to Section 17.3, 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, except as set forth in this Section 17. Licensor acknowledges and agrees, however, that it shall not use the foregoing withdrawal rights with the intent of materially frustrating the purpose and effect of this Agreement.
17.2.18.2. Withdrawal From Licensed Service: In the event Licensor Withdraws a Included Program from the Licensed Service pursuant to Section 17.1, Licensee shall cease to make such Withdrawn Included Program available on the Licensed Service and shall cease to promote such Included Program’s availability on the Licensed Service within seventy-two (72) hours after Licensee’s receipt of the Withdrawal notice from Licensor. Furthermore, in the event of any such Withdrawal by Licensor of a Included Program that has been available on the Licensed Service for fewer than ninety (90) days, Licensor promptly shall reimburse Licensee for the reasonable out-of-pocket costs directly associated with Licensee’s encoding (if any), posting and then removing such Included Program.
17.3.18.3. Substitution: If Licensee withdraws any Included Program from the Licensed Service during its License Period either as a result of (i) Withdrawal of that Included Program by Licensor pursuant to Section 17.1 or (ii) any third party claim Licensee receives alleging that Licensor does not have the ability to grant the rights in such Included Program set forth in this Agreement, Licensor shall use commercially reasonable efforts to deliver to Licensee within ten (10) Business Days following such withdrawal a substitute program for distribution pursuant to the terms of this Agreement that is reasonably acceptable to Licensee, on the basis that Licensee shall have the right to exhibit such substitute program for the remainder (as of the date of withdrawal) of the License Period of the withdrawn Included Program and shall have such rights and obligations with respect to such substitute program as if such substitute program were an Included Program licensed hereunder. In the event the parties do not agree on a substitute program within thirty (30) days of Licensee’s withdrawal from the Licensed Service of an Included Program as set forth in this Section 17.3, Licensor shall reduce the License Fee payable for such Included Program either (x) in the case of an Early SVOD Feature a weighted basis in accordance with the formula set out in Section 17.4 below based on the number of days remaining in its License Period as of the date of withdrawal (or, if Licensee has overpaid Licensor for the License Fee, Licensor shall reimburse Licensee for such overpayment within thirty (30) days of the date of withdrawal) or (y) in the case of a Library Program, pro rata on a straight-line basis based on the number of days remaining in its License Period as of the date of withdrawal (or, if Licensee has overpaid Licensor for the License Fee, Licensor shall reimburse Licensee for such overpayment within thirty (30) days of the date of withdrawal). In the event Licensor withdraws any Early SVOD Feature pursuant to this IN STRICT COMMERCIAL CONFIDENCE Page | 51 AMAZON EUSONY DRAFT APRIL 16MAY 7, 2013 FOR DISCUSSION PURPOSES ONLY – NOT AN OFFER CONFIDENTIAL SUBJECT TO CONTRACT AND MANAGEMENT APPROVAL
Section 17, Licensor shall have no right to relicense the SVOD rights to such title in the Territory during the remainder of the License Period for such title.
17.4.18.4. Withdrawal Fees Calculations: If an Early SVOD Feature is withdrawn and no substitute is agreed in accordance with the provisions of this Section 17, then the License Fee payable for such Included Program shall be the relevant License Fee multiplied by the percentage set out below.
Withdrawal during the month following Availability Date % of License Fee Payable
1 40%
2 60%
3 75%
4 85%
5 95%
6 100%
18.19. EXCLUSION
18.1.19.1. Limitations on Rights to License: Licensee hereby acknowledges that, from time to time during the Term, Licensor may be unable to license any Included Program to Licensee on the terms set forth in this Agreement due to certain contractual arrangements between Licensor and individuals or entities involved in the production or financing of such Included Program that require Licensor to obtain the approval of such individuals prior to the licensing of such Included Program.
18.2.19.2. Reasonable Efforts to Obtain Approval: In any such circumstance, Licensor hereby agrees to use commercially reasonable efforts to obtain the approvals necessary to allow Licensor to license such Included Program to Licensee under the terms of this Agreement.
18.3.19.3. No Breach of Agreement: Notwithstanding anything herein to the contrary, Licensor and Licensee hereby agree that Licensor’s inability to obtain such necessary approvals and to license any such Included 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, provided that Licensor has used commercially reasonable efforts to obtain such necessary approvals.
18.4.19.4. Notice: 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.
19.20. LICENSOR WARRANTY
Without limiting any other representation, warranty or covenant of Licensor herein, Licensor IN STRICT COMMERCIAL CONFIDENCE Page | 52 AMAZON EUSONY DRAFT APRIL 16MAY 7, 2013 FOR DISCUSSION PURPOSES ONLY – NOT AN OFFER CONFIDENTIAL SUBJECT TO CONTRACT AND MANAGEMENT APPROVAL
hereby represents and warrants to Licensee that:
19.1.20.1. It has the full right, power and authority to enter into this Agreement;
19.2.20.2. This Agreement is a valid and binding obligation of Licensor;
19.3.20.3. The performing and mechanical rights in the music, if any, in the Included Program licensed hereunder are either:
19.3.1.20.3.1. controlled by GEMA or a performing or mechanical rights society having jurisdiction in the Territory; or
19.3.2.20.3.2. in the public domain; or
19.3.3.20.3.3. controlled by Licensor to the extent required for the purposes of this license.
Licensor does not represent or warrant that Licensee may exercise the performing or mechanical rights (as applicable) in the music without obtaining a valid license and without the payment of a performing or mechanical rights royalty or license fee for such music, and if Licensee is required to pay such a performing or mechanical rights royalty or license fee, Licensee shall be responsible for the payment thereof and shall hold Licensor free and harmless therefrom. Licensor shall furnish Licensee, upon request, with all necessary information concerning the Included Program, composer and publisher of all such music; and
19.4.20.4. This Agreement has been duly executed and delivered by, and constitutes a valid and binding obligation of Licensor, enforceable against Licensor in accordance with the terms and conditions set forth in this Agreement.
20.21. LICENSEE WARRANTY
Without limiting any other representation, warranty or covenant of Licensee herein, Licensee hereby represents, warrants and covenants to Licensor that:
20.1.21.1. It has the full right, power and authority to enter into this Agreement;
20.2.21.2. This Agreement is a valid and binding obligation of Licensee;
20.3.21.3. Licensee shall use and distribute the Included Programs made available pursuant to this Agreement strictly in accordance with the terms of this Agreement;
20.4.21.4. Licensee shall not affirmatively encourage or enable the unauthorized reception and use of the Included Programs; and
20.5.21.5. This Agreement has been duly executed and delivered by, and constitutes a valid and binding obligation of Licensee, enforceable against Licensee in accordance with the terms and conditions set forth in this Agreement.
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21.22. INDEMNITY
21.1.22.1. Licensor shall indemnify and hold harmless Licensee and its representatives (with respect to a party, its officers, directors, equity owners, employees and other representatives and its parents, subsidiaries and Affiliates (and their officers, directors, equity owners, employees and other representatives (collectively, the “Representatives”)) from and against any and all third-party claims, damages, liabilities, costs and expenses, including reasonable outside counsel fees, to the extent they arise from or in connection with (i) the breach by Licensor of any of its representations or warranties or any provision of this Agreement or (ii) any third party claim that any of the Included Programs, the Advertising Materials or Metadata, when used in strict accordance with this Agreement, infringe upon the trade name, trademark, copyright, music synchronization, literary or dramatic right, other intellectual property right, or right of privacy of any claimant or constitute a libel or slander of such claimant or otherwise violate the right of any party or violate any law; provided, however, 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.
21.2.22.2. Licensee shall indemnify and hold harmless Licensor and its Representatives from and against any and all third-party claims, damages, liabilities, costs and expenses, including reasonable outside counsel fees, to the extent they arise from or in connection with (i) the breach by Licensee or its subcontractors of any representation, warranty or other provision of this Agreement, or (ii) the infringement by the Licensed Service upon, or violation of any right of a third party or violation of any law by the Licensed Service (other than claims for which Licensor is obligated to indemnify Licensee pursuant to Section 21.1(ii)); provided, however, 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.
21.3.22.3. In any case in which indemnification is sought hereunder:
21.3.1.22.3.1. At the indemnifying party’s option, the indemnifying party may assume the handling, settlement or defense of any such claim or litigation. If the indemnifying party assumes the handling, settlement or defense of any such claim or litigation, the party to be indemnified shall cooperate in the defense of such claim or litigation, and the indemnifying party’s obligation with respect to such claim or litigation shall be limited to holding the indemnified party harmless from (i) any final judgment rendered on account of such claim, (ii) any settlement made or approved by the indemnifying party in connection therewith, (iii) any 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 (iv) 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
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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 outside attorneys’ fees of the indemnified party incurred in connection with the defense of any such claim or litigation; and
21.3.2.22.3.2. The indemnified party shall fully cooperate with the reasonable requests of the other party in the other party’s 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 and such consent involves the agreement not to further exploit an Included Program.
22.23. LIABILITY
EXCEPT FOR ANY BREACH OF A PARTY’S OBLIGATIONS UNDER SECTION 28 (CONFIDENTIALITY), THE INDEMNIFICATION OBLIGATIONS SET FORTH IN SECTION 21 (INDEMNITY), OR DAMAGES ARISING FROM A PARTY’S GROSS NEGLIGENCE, WILLFUL MISCONDUCT, OR FRAUD, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW, NEITHER PARTY SHALL UNDER ANY CIRCUMSTANCES BE LIABLE FOR ANY SPECIAL, INCIDENTAL OR CONSEQUENTIAL DAMAGES WHATSOEVER (INCLUDING, BUT NOT LIMITED TO, DAMAGES FOR LOSS OF PROFITS OR CONFIDENTIAL INFORMATION, FOR BUSINESS INTERRUPTION, AND FOR ANY OTHER PECUNIARY OR OTHER LOSS WHATSOEVER) ARISING OUT OF OR IN CONNECTION WITH THIS AGREEMENT, REGARDLESS OF WHETHER SUCH LIABILITY ARISES IN TORT (INCLUDING NEGLIGENCE), STRICT LIABILITY, BREACH OF CONTRACT OR BREACH OF WARRANTY, AND REGARDLESS OF WHETHER EITHER PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. EXCEPT FOR ANY BREACH OF A PARTY’S OBLIGATIONS UNDER SECTION 28 (CONFIDENTIALITY), THE INDEMNIFICATION OBLIGATIONS SET FORTH IN SECTION 21 (INDEMNITY), THE PARTIES’ OBLIGATIONS WITH RESPECT TO THE PAYMENT (OR, IF APPLICABLE, REFUND) OF LICENSE FEES, OR DAMAGES ARISING FROM A PARTY’S GROSS NEGLIGENCE, WILLFUL MISCONDUCT, FRAUD OR INTENTIONAL DISTRIBUTION OR INTENTIONAL EXPLOITATION OF A SUBSCRIPTION TITLE IN A MANNER NOT PERMITTED BY SECTION 3.1 (GRANT OF RIGHTS), THE TOTAL, AGGREGATE LIABILITY OF EITHER PARTY ARISING FROM OR RELATED TO THIS AGREEMENT SHALL IN NO EVENT EXCEED TEN MILLION DOLLARS ($10,000,000) PER TERM YEAR. THE LIMITATIONS ON LIABILITY SET FORTH IN THIS SECTION 2223 (LIABILITY) SHALL APPLY NOTWITHSTANDING THE FAILURE OF ESSENTIAL PURPOSE OF ANY OF THE LIMITED REMEDIES SET FORTH IN THIS AGREEMENT. EACH PARTY ACKNOWLEDGES THAT THE COMPENSATION PAYABLE HEREUNDER REFLECTS THE ALLOCATION OF RISK SET FORTH IN THIS AGREEMENT AND THAT NEITHER PARTY WOULD ENTER INTO THIS AGREEMENT WITHOUT THESE LIMITATIONS ON LIABILITY
23.24. DEFAULT AND TERMINATION
23.1.24.1. Termination for Events of Default: In the event either party defaults (including the failure to make one hundred percent (100%) of License Fee payments due, irrespective of any termination, but subject to proration and reimbursement as described in Section 23.3) in the performance of any of its material obligations hereunder or becomes insolvent, or a petition under any bankruptcy act shall be filed by
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or against the party (which petition shall not have been dismissed within sixty (60) days thereafter), or a party executes an assignment for the benefit of creditors, or a receiver is appointed for the assets of the party, or the party takes advantage of any applicable insolvency or reorganization or any other like statute (each of the above acts is hereinafter referred to as an “Event of Default”), and the party which has committed the Event of Default fails to cure such Event of Default within thirty (30) days (or ten (10) days for payment obligations) (assuming such breach is curable) after delivery by the other party of written notice of an Event of Default, then the other party may, in addition to any and all other rights which it may have hereunder, immediately terminate this Agreement by giving written notice to the party which has committed the Event of Default.
23.2.24.2. Effect of Termination: No termination of this Agreement for any reason by either Party shall relieve or discharge, or be deemed or construed as relieving or discharging, either Party 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 unpaid License Fees owed hereunder as of such date of termination, but subject to proration and reimbursement as described in Section 23.3). Without limiting any other remedies available to the Parties hereunder, upon termination of this Agreement for any reason: (i) Licensee shall promptly pay Licensor all License Fees, if any, due and payable as of the effective date of such termination (but subject to proration and reimbursement as described in Section 22.3): (ii) Licensee shall promptly stop distributing included Programs on the Licensed Service; and (iii) any provision of this Agreement which, by its nature or express terms should survive, shall survive such termination or expiration, including, but not limited to, Sections 18 through 29.
23.3.24.3. Proration of License Fees: Other than termination by Licensor hereunder pursuant to Section 23.1 due to Licensee’s failure to perform of any of its material obligations and to cure such Event of Default, if this Agreement is terminated for any reason prior to the natural expiration of the Term, then (i) the License Fee shall be reduced by prorating the portion of the License Fee attributable to each Included Program based on the proportion of that Included Program’s License Period falling after the date the Agreement is terminated, and (ii) if Licensee has overpaid Licensor for the License Fee, Licensor shall reimburse Licensee for such overpayment within thirty (30) days of the termination. Except as expressly set forth in this Agreement, amounts which become due to Licensor hereunder shall be non-recoupable and non-refundable.
24.25. NOTICES
AllExcept as otherwise set forth herein, all notices, claims, certificates, requests, demands and other communications under this Agreement shall be made in writing and shall be delivered by hand or sent by telecopy, or sent by prepaid reputable courier or reputable express mail service and shall be deemed given when so delivered by hand, faxed or courier, or if sent by express mail, two (2) Business Days after mailing to the parties at the following addresses (or at such other address for a party as shall be specified by like notice):
24.1.25.1. Licensee:
Amazon EU Sarl IN STRICT COMMERCIAL CONFIDENCE Page | 56 AMAZON EUSONY DRAFT APRIL 16MAY 7, 2013 FOR DISCUSSION PURPOSES ONLY – NOT AN OFFER CONFIDENTIAL SUBJECT TO CONTRACT AND MANAGEMENT APPROVAL
5, rue Plaetis L-2338 Luxembourg Attention: Associate General Counsel, Video Facsimile: +352 2789 0060
With a copy to:
Amazon Digital Media, Inc. c/o Amazon.com 410 Terry Avenue North Seattle, WA 98109 Attention: General Counsel Facsimile: +1 206 266 7010
24.2 Licensor:
Sony Pictures Distribution Deutschland GmbH Liebigstrasse 22 80538 München Attn: Geschäftsführer Facsimile: +49 89 568 259 40
with a copy to:
Columbia Pictures Corporation Limited Sony Pictures Europe House 25 Golden Square London W1f 9LU Attn: Senior Executive Vice President, Europe Facsimile: +44 207 533 1120
with a copy to:
Sony Pictures Television, a division of CPT Holdings, Inc. 10202 West Washington Boulevard Culver City, California 90232 USA Attn.: President, Sony Pictures Television Facsimile: +1-310 244 6353
25.26. ASSIGNMENT
Neither party may assign any of its rights or obligations under this Agreement without the prior written consent of the other, except that either may assign any of its rights and obligations under this Agreement without consent: (i) to any Affiliate (provided, however, that any such assignment shall not relieve the assigning party of its obligations hereunder); and (ii) in connection with any merger, consolidation, reorganization, sale of all or substantially all of its related assets, or similar transaction; provided however, that in the event that Licensee merges, consolidates, reorganizes, sells all or substantially all of its related assets, or enters into a similar IN STRICT COMMERCIAL CONFIDENCE Page | 57 AMAZON EUSONY DRAFT APRIL 16MAY 7, 2013 FOR DISCUSSION PURPOSES ONLY – NOT AN OFFER CONFIDENTIAL SUBJECT TO CONTRACT AND MANAGEMENT APPROVAL
transaction with a Qualifying Studio or its theatrical motion picture production or distribution affiliates, then Licensor shall have the right to terminate this Agreement by providing Licensee thirty (30) days advance written notice. This Agreement inures to the benefit of and shall be binding on the parties’ permitted assignees, transferees and successors.
26.27. 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. As used herein, “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 Territory), but shall not include an inability to pay for whatever reason.
27.28. GOVERNING LAW; CONSENT TO JURISDICTION
This Agreement shall be interpreted and construed in accordance with the substantive laws (and not the law of conflicts) of the State of New York 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 27 (a “Proceeding”) shall be submitted [to JAMS (“JAMS”)] for binding arbitration, either under its Comprehensive Arbitration Rules and Procedures if the matter in dispute is over Two Hundred Fifty Thousand Dollars ($250,000) or under its Streamlined Arbitration Rules and Procedures if the matter in dispute is Two Hundred Fifty Thousand Dollars ($250,000) or less (as applicable, the “Rules”), such arbitration to be held solely in Los Angeles, California U.S.A., in the English language, in accordance with the provisions herein. Each arbitration shall be conducted by an arbitral tribunal (the “Arbitral Board”) consisting of a single arbitrator who shall be mutually agreed upon by the parties. If the parties are unable to agree on an arbitrator, the arbitrator shall be appointed by JAMS. The arbitrator shall be a retired judge with at least ten (10) years’ experience in commercial matters. The Arbitral Board shall assess the cost, fees and expenses of the arbitration against the losing party, and the prevailing party in any arbitration or legal proceeding relating to this Agreement shall be entitled to all reasonable expenses (including, without limitation, reasonable attorneys’ 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, 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
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method of obtaining the information sought. 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 maybe enforced by a petition to a court of competent jurisdiction, 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 New York State Supreme Court, Appellate Division reviewing a judgment of the New York State Supreme 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 a court of competent jurisdiction, 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. 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 without thereby waiving its right to arbitration of the dispute or controversy under this Section 27. 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.
28.29. CONFIDENTIALITY
28.1.29.1. No Disclosure: Each party hereby covenants and agrees that, except as may be required by law or pursuant to subpoena or order of any judicial, legislative, executive, regulatory or administrative body or to enforce its rights under this Agreement, or solely with respect to the exercise by any third party participants (such third party participant to be bound by written confidentiality obligations equal in effect to those set forth in this Section 28) in any of the Included Programs of any audit rights granted to such participants neither it nor any of its officers, directors, employees, Affiliates or agents shall, directly or IN STRICT COMMERCIAL CONFIDENCE Page | 59 AMAZON EUSONY DRAFT APRIL 16MAY 7, 2013 FOR DISCUSSION PURPOSES ONLY – NOT AN OFFER CONFIDENTIAL SUBJECT TO CONTRACT AND MANAGEMENT APPROVAL
indirectly, disclose to any third party or make any public statement or announcement regarding the terms of this Agreement or any Confidential Information of the other party provided pursuant to this Agreement including, but not limited to, the License Fees and all other financial terms and all other terms and conditions of this Agreement, unless, with respect to public statements or announcements, (a) the substance and form of the announcement or statement is agreeable to both parties and (b) the parties agree that such announcement or statement shall be made.
28.2.29.2. Legal Disclosure: The receiving party may disclose Confidential Information pursuant to a subpoena or order of any judicial, legislative, executive, regulatory or administrative body that has jurisdiction over it, provided that the disclosing party shall (i) give written notice (in advance of making such disclosure, if possible) to the other party of the disclosing party’s applicable disclosure obligation(except to the extent the receiving party’s compliance with the foregoing would cause it to violate a court order or other legal requirement), (ii) disclose only such information as is required by the governmental entity or otherwise required by law, and (iii) use commercially reasonable efforts (in light of the particular circumstances) to seek and obtain confidential treatment of such disclosure and to give the non-disclosing party the opportunity to review and comment upon the form of disclosure. To the extent that either party is required by law or pursuant to subpoena or order of any judicial, legislative, executive, regulatory or administrative body that has jurisdiction over it to disclose the terms of this Agreement, such party shall seek confidential treatment of any terms so disclosed and shall, to the extent practicable, permit the other party to review the disclosures being made.
28.3.29.3. Residual Information: Notwithstanding anything else in this Section 28, each party is free to use for any purpose the Residual Information resulting from access to, or work with, the Confidential Information of the other party, provided that it maintains the confidentiality of the Confidential Information as provided herein. “Residual Information” means information in a non-tangible form, which may be retained in the minds of the persons who have had access to the confidential information, including ideas, concepts, know-how or techniques contained therein. Neither party has any obligation to limit or restrict the roles undertaken by such persons or to pay royalties to the other party for any work resulting from the use of Residual Information. However, the foregoing does not grant a license to either party to use or otherwise exploit the other party’s copyrights or patents.
28.4.29.4. Public Announcements: If Licensee intends to issue a press release that mentions Licensor as a supplier of content to the Licensed Service, then Licensee shall provide to Licensor for its review a draft of such press release no later than five (5) Business Days prior to its public release and Licensor shall have the right to approve the release of such press release and/or the content of such public release (which consent shall not be unreasonably withheld, conditioned or delayed). Other than such initial press release, neither Licensor nor Licensee shall issue a press release or make any other public announcement or public disclosure of any kind with respect to this Agreement, the terms hereof or the transactions contemplated hereby without the other party’s prior written consent; provided, however, that the foregoing shall not compromise Licensee’s rights to promote and merchandise the Included Programs as provided herein; provided, further, that Licensee and its Affiliates shall have the right to publicize IN STRICT COMMERCIAL CONFIDENCE Page | 60 AMAZON EUSONY DRAFT APRIL 16MAY 7, 2013 FOR DISCUSSION PURPOSES ONLY – NOT AN OFFER CONFIDENTIAL SUBJECT TO CONTRACT AND MANAGEMENT APPROVAL
the nature of this Agreement and the availability of the Included Programs in a manner materially consistent with the content of such initial press release.
29.30. MISCELLANEOUS
29.1.30.1. Remedies Non-Exclusive: This Agreement shall be binding upon and inure to the benefit of Licensee and Licensor and their respective successors and assigns. No remedy conferred by any of the specific provisions of this Agreement is intended to be exclusive of any other remedy which is otherwise available at law, in equity, by statute or otherwise and except as otherwise expressly provided for herein, each and every other remedy shall be cumulative and shall be in addition to every other remedy given hereunder or now or hereafter existing at law, in equity, by statute or otherwise. The election of any one or more of such remedies by any of the parties hereto shall not constitute a waiver by such party of the right to pursue any other available remedies.
29.2.30.2. Variation/Waiver: This Agreement may be amended only by a written agreement executed by all of the parties hereto. No breach of any provision hereof may be waived unless in writing and the waiver of any one breach shall not be deemed to be a waiver of any other breach of the same or any other provision hereof.
29.3.30.3. No Third Party Benefit: 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.
29.4.30.4. Headings: Clause, section or other headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this Agreement; and, no provision of this Agreement shall be interpreted for or against any party because that party or its legal representative drafted the provision.
29.5.30.5. Entire Agreement: This Agreement constitutes the entire agreement between the parties and all prior understandings are merged herein. This Agreement may be executed in any number of counterparts and all of such counterparts taken together shall constitute one and the same instrument.
29.6.30.6. Severability: In the event that any provision of this Agreement or the application of any such provision to any circumstance is adjudged to be void and/or unenforceable or otherwise contrary to or in breach of any law or regulation or of any competent regulatory authority seeks the amendment or deletion of any provision of this Agreement, the parties shall as soon as reasonably practicable consult with a view to amending this Agreement by severing and striking out such provision and negotiating in good faith an alternative provision or amendment which substantially gives effect to the parties’ intentions at the date hereof and which no longer breaches or is contrary to any law (and/or where applicable satisfies the concerns of such regulatory authority); provided that in the event that the parties are unable within two (2) months of commencement of such consultations to agree such an alternative provision or amendment which, in the reasonable opinion of both parties, substantially gives effect IN STRICT COMMERCIAL CONFIDENCE Page | 61 AMAZON EUSONY DRAFT APRIL 16MAY 7, 2013 FOR DISCUSSION PURPOSES ONLY – NOT AN OFFER CONFIDENTIAL SUBJECT TO CONTRACT AND MANAGEMENT APPROVAL
to their respective original intentions, then either party may by serving written notice on the other terminate this Agreement without further liability.
For purpose of this Section “law” shall mean (i) any law, statute, regulation, instruction, direction, guideline or code of conduct of any governmental or other regulatory authority or agency of competent jurisdiction, or (ii) any term of condition in or direction issued pursuant to any statutory license applicable to any party.
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EXHIBIT A TO SCHEDULE A
APPROVED HHPS/H.264 SECURITY SOLUTION USING SSL CLIENT SIDE CERTIFICATION
1) Output Protection.
a) Analog outputs (if present on the Approved Device) shall either:
i) be disabled, or
ii) support CGMS-A.
b) Uncompressed digital video output, if present, shall support HDCP.
c) Compressed digital video (MPEG-4, or similar) output designed for transport of video streams to other devices (as opposed to rendered streams designed to be directly connected to a television or video display) shall be disabled.
2) Approved Device Security Features. Approved Devices shall be designed to:
a) include firmware that is updatable on the client only by firmware signed (or otherwise authenticated) by the Approved Device manufacturer;
b) implement a “secure boot” process designed to verify the integrity of its firmware at boot time;
c) prevent access to content security keys or access control metadata via any external connection to the Approved Device, other than via transmissions over IP connections using SSL or other encrypted communication protocols between the client Approved Device, Approved Device manufacturer/service provider and/or Licensee servers;
d) make available to the Licensed Service client software a partitioned, persistent, protected storage facility for the purpose of storing customer account authentication credentials and other access control metadata;
e) implement a security model designed to (i) prevent access by third party code to the protected storage facility that stores Licensee specific keys, credentials, or access control metadata and (ii) prevent third party applications from interfering with content protection systems;
f) if the Approved Device includes a persistent storage system, disable access to the persistent storage system with respect to Included Programs delivered by the Licensed Service;
g) include a unique identifier which can be validated and authenticated by the Approved Device manufacturer or Licensee; and
h) support revocation of access rights on a Approved Device-by-Approved Device basis in the event that authentication credentials are compromised.
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3) Networking Requirements.
a) All Included Programs shall be delivered to the Approved Device via HTTPS or RTMPE using signed, time-expiring URLs. Licensee shall migrate away from use of RTMPE in accordance with the timetable set out in Section 1.6 of the Standard Term.
b) The Approved Device shall validate that the server-side certificate properly chains up to a valid root CA certificate.
c) Device authentication on the Approved Device shall be performed utilizing one of the following processes:
i. client-side SSL certificate authentication by Licensee’s server, including validating that the client-side certificate properly chains up to a valid root CA certificate;
ii. shared secret, where, at the time of provision, each request is signed by the Approved Device using the shared secret key embedded in its protected memory; or
iii. the Approved Device’s manufacturer operates a mediating server, which receives and authenticates requests from the applicable Approved Devices.
d) For the purposes of this Section 3, only certificates signed by Licensee, its Affiliates, the Approved Device manufacturer or any commercially reputable certification authority shall be deemed to be valid root CA certificates.
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EXHIBIT B TO SCHEDULE A Comment [A34]: Note to Sony: Exhibit under review by Amazon technical/ops team. APPROVED DELIVERY FORMAT (TECHNICAL GUIDELINES)
Licensor Delivery Materials
SD - File HD - File HD - File - Alternative Option
Delivery Spec MPEG2 20mbps HD XDCAM 422 HD ProRes
OV 5.1 (where available, otherwise OV 5.1 (where available, OV 5.1 (where available, otherwise Audio stereo) otherwise stereo) stereo)
OV Stereo (where OV Stereo (where available, otherwise available, otherwise OV Stereo (where available, mono) mono) otherwise mono)
16x9 OAR (where available, otherwise 16x9 OAR (where 16x9 OAR (where available, Aspect Ratio 4x3) available, otherwise 4x3) otherwise 4x3)
Where Available: Text files (.TXT). Separate entities. Not burnt in. Available from https://euconnect.spe.sony.com/spidr (or any successor website notified by Licensor) Subtitles to enable Licensee download
Administratio n Fee
Feature Length TBD TBD TBD
Broadcast Hour TBD TBD TBD
Broadcast Half Hour TBD TBD TBD
Option 1
Wrapper QuickTime Self contained
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Video Codec ProRes 422 HQ Video Bit Rate VBR Bit-rate is dependent on the material itself – meaning the active video picture on the screen, resolution and frame rate Frame Rate 25 Progressive Aspect Ratio 16x9 or 4x3 Display Aspect Ratio 1.33, 1.66, 1.78, 1.85, 2.35 or Must be one consistent aspect 2.40 ratio throughout Chroma 4:2:2 The color space on this file type is Y’CbCr. Frame Size HD: 1920x1080 HD preferred SD: 720x576 Audio/Video Duration Same duration within 300ms Audio Codec PCM/uncompressed Audio Sample Rate 48KHz Audio Bit Depth 16 or 24 24 preferred Audio Channels 2.0 only. Must include unique PID’s. Conformed 5.1 audio may be Channel configuration: Tracks 1, supplied in separate file. 2: Lt, Rt or Track 1: Interleaved stereo If 5.1 is supplied all six channels of audio should be supplied as an embedded .mov file (without video). Audio Loudness Minimum -24dB LKFS cumulative to a tolerance of -2dB Audio Peaks Not to exceed -2dBFS Subtitles Must be conformed, burned in and reside in picture safe Other Requirements - Audio and video must be interleaved and in sync in single mezzanine file - Must be picture-to-picture - Must not contain FBI slates, piracy’s slates, rating/certification slates, extra features, black empty video space after feature/credits, or extraneous logos (production company logos should stay) - Must not contain trailer preview or advertisements at the head or tail IN STRICT COMMERCIAL CONFIDENCE Page | 66
- Must not include watermarks - Must contain end credits - Must have correct title card - Must be fully localized for target territory; title card, subtitles, audio, main and end credits. - Must not have bad/dropped/repeated frame - Must not have ghosting - Must not have digital hits - Must not end abruptly
Option 2
Wrapper QuickTime Self contained Video Codec Photo JPEG 100% (PJPEG) Video Bit Rate CBR or VBR Photo-JPEG has a spatial quality scale – not bit-rate. The active video picture, resolution and frame rate determines the bit- rate. With the quality scale set to 100%, the color space goes from Y’CbCr’ to RGB (4:4:4) and becomes lossless as opposed to lossy Frame Rate 25 Progressive Aspect Ratio 16x9 or 4x3 Display Aspect Ratio 1.33, 1.66, 1.78, 1.85, 2.35 or Must be one consistent aspect 2.40 ratio throughout Chroma 4:2:2 Frame Size HD: 1920x1080 HD preferred SD: 720x576 Audio/Video Duration Same duration within 300ms Audio Codec PCM/uncompressed Audio Sample Rate 48KHz Audio Bit Depth 16 or 24 24 preferred Audio Channels 2.0 only. Must include unique PID’s. Conformed 5.1 audio may be Channel configuration: Tracks 1, supplied in separate file. 2: Lt, Rt or Track 1: Interleaved stereo. If 5.1 is supplied all six channels
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of audio should be supplied as an embedded .mov file (without video). Audio Loudness Minimum -24dB LKFS cumulative to a tolerance of -2dB Audio Peaks Not to exceed -2dBFS Subtitles Must be conformed, burned in and reside in picture safe Other Requirements - Audio and video must be interleaved and in sync in single mezzanine file - Must be picture-to-picture - Must not contain FBI slates, piracy’s slates, rating/certification slates, extra features, black empty video space after feature/credits, or extraneous logos (production company logos should stay) - Must not contain trailer preview or advertisements at the head or tail - Must not include watermarks - Must contain end credits - Must have correct title card - Must be fully localized for target territory; title card, subtitles, audio, main and end credits. - Must not have bad/dropped/repeated frame - Must not have ghosting - Must not have digital hits - Must not end abruptly
Option 3
Wrapper MPEG2 transport stream Video Codec MPEG2 i-frame or Long GOP (12 frame GOP) Video Profile & Level HD: 422P@HL HD preferred SD: 422P@ML Video Bit Rate HD: 80Mbps HD preferred SD: 50Mbps Frame Rate 25 Progressive Aspect Ratio 16x9 or 4x3 Display Aspect Ratio 1.33, 1.66, 1.78, 1.85, 2.35 or Must be one consistent aspect 2.40 ratio throughout IN STRICT COMMERCIAL CONFIDENCE Page | 68
Chroma 4:2:2 Frame Size HD: 1920x1080 HD preferred SD: 720x576 Audio/Video Duration Same duration within 300ms Audio Codec PCM/uncompressed Audio Sample Rate 48KHz Audio Bit Depth 16 or 24 24 preferred Audio Channels 2.0 only. Single interleaved stereo audio Conformed 5.1 audio may be track. supplied in separate file. If 5.1 is supplied all six channels of audio should be supplied as an embedded .mov file (without video). Audio Loudness Minimum -24dB LKFS cumulative to a tolerance of -2dB Audio Peaks Not to exceed -2dBFS Subtitles Must be conformed, burned in and reside in picture safe Other Requirements - Audio and video must be interleaved and in sync in single mezzanine file - Must be picture-to-picture - Must not contain FBI slates, piracy’s slates, rating/certification slates, extra features, black empty video space after feature/credits, or extraneous logos (production company logos should stay) - Must not contain trailer preview or advertisements at the head or tail - Must not include watermarks - Must contain end credits - Must have correct title card - Must be fully localized for target territory; title card, subtitles, audio, main and end credits. - Must not have bad/dropped/repeated frame - Must not have ghosting - Must not have digital hits - Must not end abruptly
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EXHIBIT C TO SCHEDULE A
MARKETING GUIDELINES
[SEE ATTACHED]
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EXHIBIT D TO SCHEDULE A
APPROVED DEVICES
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SCHEDULE B Comment [A35]: Note to Sony: Exhibit under review by Amazon technical team. CONTENT PROTECTION REQUIREMENTS AND OBLIGATIONS
This Schedule B is attached to and a part of that Subscription Video-On-Demand License Agreement, dated ______, 2013 (the “Agreement”), between Sony Pictures Television Distribution Deutschland GmbH and Amazon EU Sarl. 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 in Section 1.6 of the Standard Terms,
(ii) be fully compliant with all the compliance and robustness rules associated therewith,
(iii) use only those rights settings that meet the agreed usage rules, and
(iv) be considered to meet sections 1 (“Encryption”), 2 (““Key Management”), 3 (“Integrity”), 5 (“Digital Rights Management”), 10 (“Protection Against Hacking”), 11 (“License Revocation”), 12 (“Secure Remote Update”), 16 (“PVR Requirements”), and 17 (“Copying”) of this Schedule B if (i) the Content Protection System is an Approved Format or (ii) the Content Protection System is an implementation of one the content protection systems approved by the Digital Entertainment Content Ecosystem (DECE), and said implementation meets the compliance and robustness rules associated with the chosen DECE approved content protection system. The DECE approved content protection systems are:
a. Marlin Broadband
b. Microsoft Playready
c. CMLA Open Mobile Alliance (OMA) DRM Version 2 or 2.1
d. Adobe Flash Access 2.0 (not Adobe’s Flash streaming product)
e. Widevine Cypher ®
1. Encryption.
1.1. 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 (as specified in NIST FIPS-197) or ETSI DVB CSA3.
1.2. 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..
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1.3. Keys, passwords, and any other information that are critical to the cryptographic strength of the Content Protection System (“critical security parameters”, CSPs) may never be transmitted or permanently or semi-permanently stored in unencrypted form. Memory locations used to temporarily hold CSPs must be securely deleted and overwritten as soon as possible after the CSP has been used.
1.4. If the device hosting the Content Protection System allows download of software then 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.
1.5. The Content Protection System shall encrypt the entirety of the A/V content, including, without limitation, all video sequences, audio tracks, sub pictures, menus, Previews, and video angles. Each video frame must be completely encrypted. Notwithstanding the forgoing Licensee may deliver up to the first 2 minutes and 12 seconds of an Included Program unencrypted for the purposes of marketing, for streaming services only (and not for temporary download).
2. Key Management.
2.1. The Content Protection System must include measures to protect all CSPs. “CSPs” shall mean all keys, passwords, and other information which are required to maintain the security and integrity of the Content Protection System.
2.2. CSPs shall never be transmitted in the clear or transmitted to unauthenticated recipients (whether users or devices.
3. Integrity.
3.1. The Content Protection System shall include systems to 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.
3.2. Each installation of the Content Protection System on an end user device shall be individualized and thus uniquely identifiable. This may be achieved by use of a unique key bound to the client device
4. Uploading. See Special Terms for restrictions.
Digital Rights Management (“DRM”)
5. Any Digital Rights Management used to protect Included Programs must support the following:
5.1. 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.
5.2. Each license shall bound to specific individual end user device.
5.3. Licenses bound to individual end user devices shall be incapable of being usable on other devices.
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5.4. To the extent technically possible, 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.
5.5. Secure Clock. For all content which has a time-based window (e.g. VOD, catch-up, SVOD) associated with it, the Content Protection System shall implement a secure clock. The secure clock must be protected against modification or tampering and detect any changes made thereto. If any changes or tampering are detected, the Content Protection System must revoke the licenses associated with all content employing time limited license or viewing periods.
Conditional Access Systems
6. Any Conditional Access System used to protect Included Programs must support the following:
6.1. Content shall be protected by a robust approved scrambling or encryption algorithm in accordance section 1 above.
6.2. ECM’s shall be required for playback of content, and can only be decrypted by those Smart Cards or other entities that are authorized to receive the content or service. Control words must be updated and re-issued as ECM’s at a rate that reasonably prevents the use of unauthorized ECM distribution, for example, at a rate of no less than once every 7 seconds.
6.3. Control Word sharing shall be prohibited, The Control Word must be protected from unauthorized access.
Streaming
7. Generic Streaming Requirements
The requirements in this section 67 apply in all cases where streaming is supported.
7.1. Streams shall be encrypted using AES 128 (as specified in NIST FIPS-197) or other robust, industry-accepted algorithm with a cryptographic strength and key length such that it is generally considered computationally infeasible to break.
7.2. Encryption keys shall not be delivered to clients in a cleartext (un-encrypted) state.
7.3. Licensee shall use a robust and effective method (for example, short-lived and individualized URLs for the location of streams) designed to ensure that streams cannot be obtained by unauthorized users.
8. Adobe Flash Streaming by RTMPE Requirements
The requirements in this section 78 only apply if the Adobe Flash RTMPE product is used to provide the Content Protection System.
8.1. Adobe RTMPE is approved for streaming using the following Adobe product versions or later:
8.1.1. Client side: Flash Player 10.0.22
8.1.2. Server side: FMS 3.51 and FMS 3.03
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8.2. Progressive downloading of licensed content is prohibited.
8.3. Flash Encoded Content (including FLV and F4V file formats) must be streamed using Adobe RTMP-E protocol.
8.4. Flash servers shall be configured such that RTMP-E is enabled, and RTMP is disabled. No content shall be available through both RTMP and RTMP-E.
8.5. Flash Media Servers shall be configured such that SWF Verification is enabled.
8.6. Licensee’s and/or its designated CDN shall implement “Token Authentication”, i.e. mechanism that creates a short-lived URL (no longer than 24 hours) for content by distributing a “token” to the client only at such a time it is authorized to receive the VOD Stream.
8.7. Licensee must migrate from RTMP-E (stream encryption) to PlayReady, Widevine, Flash Access or other DRM approved by Licensor in writing and be in full compliance with all content protection provisions herein before 31st December 2011.
9. Microsoft Silverlight
The requirements in this section 89 only apply if the Microsoft Silverlight product is used to provide the Content Protection System.
9.1. Microsoft Silverlight is approved for streaming if using Silverlight 2 or later version, or Silverlight 4 or later where Licensee has control over the version of Silverlight.
9.2. When used as part of a streaming service only (with no download), Playready licenses shall only allow streaming and not downloading.
Protection Against Hacking
10. Any system used to protect Included Programs must support the following:
10.1. Playback licenses, revocation certificates, and security-critical data shall be cryptographically protected against tampering, forging, and spoofing.
10.2. 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).
10.3. The Content Protection System shall be designed, as far as is commercially and technically reasonable, to be resistant to “break once, break everywhere” attacks.
10.4. The Content Protection System shall employ tamper-resistant software. Examples of tamper resistant software techniques include, without limitation:
10.4.1. 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.
10.4.2. 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.
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10.4.3. Anti-debugging: The decryption engine prevents the use of common debugging tools.
10.4.4. Red herring code: The security modules use extra software routines that mimic security modules but do not have access to CSPs.
10.5. The Content Protection System shall implement secure internal data channels to prevent rogue processes from intercepting data transmitted between system processes.
10.6. 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
11. License Revocation. Where revocation functionality is not mandated by DRM compliance rules, Licensee shall obtain up to date device revocation lists from the appropriate authorized source, disseminate these lists to Licensee DRM license servers and shall use these lists to revoke either specific individual end user devices or device types, as specified in the revocation lists.
12. Secure remote update. The Content Protection System shall be renewable and securely updateable in event of a breach of security or improvement to the Content Protection System.
13. The Licensee shall have a policy which is intended to ensure that clients and servers of the Content Protection System are promptly and securely updated in the event of a Security Breach (that can be rectified using a remote update) being found in the Content Protection System and/or its implementations in clients and servers.
ACCOUNT AUTHORIZATION
14. Content Delivery. Content licenses shall only be delivered from a network service to registered devices (other than Personal Computers) associated with an account with verified credentials. Account credentials must be transmitted securely to ensure privacy and protection against attacks.
15. Services requiring user authentication:
The credentials shall consist of at least a Subscriber ID and password of sufficient length intended to prevent brute force attacks.
Licensee shall monitor the quantity of streaming occurring on a regular basis (at least monthly) and shall investigate accounts which have registered over 150 hour use in any given month.
RECORDING
16. 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 allowed elsewhere in this Agreement.
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17. Copying. The Content Protection System shall prohibit recording of protected content onto recordable or removable media, except as such recording is explicitly allowed elsewhere in this Agreement.
18. Digital Outputs.
18.1. If the licensed content can be delivered to a device which has digital outputs, the Content Protection System must signal for High Definition Copy Protection (“HDCP”), Digital Transmission Copy Protection (“DTCP”) or Windows Media DRM for Networked Devices (WMDRM-ND) to be enabled. 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.
18.1.1.1. A device that outputs decrypted protected content provided pursuant to the Agreement using DTCP shall 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;
18.2. A device that outputs decrypted protected content provided pursuant to the Agreement using HDCP shall:
18.3. If requested by Licensor, and if appropriate mechanisms to support SRM’s are available, deliver a file associated with the protected content named “HDCP.SRM” and, if that file is present, pass such file to the HDCP source function in the device as a System Renewability Message if there is an appropriate mechanism to pass that file; and
18.3.1. Signal that the HDCP Source Function should be fully engaged and able to deliver the protected content in a protected form.
18.4. Licensor acknowledges that where device is not directly controlled by Licensee, Licensee does not control whether any devices actually implements any output protection technology signaled by Licensee hereunder and agrees that Licensee shall not be responsible for any failure of any device to do so.
19. Exception Clause for Standard Definition, Uncompressed Digital Outputs on Windows- based PCs and Macs running OS X or higher):
Licensee shall signal for HDCP to 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)
20. Upscaling: Device may scale Included Programs in order to fill the screen of the applicable display; provided that Licensee’s marketing of the Device shall not state or imply to consumers that the quality of the display of any such upscaled content is substantially similar to a higher resolution to the Included Program’s original source profile (i.e. SD content cannot be represented as HD content).
[Embedded Information
21. Watermarking. The Content Protection System or playback device must not remove or interfere with any embedded watermarks in licensed content.
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22. Embedded Information. Licensee’s delivery systems shall “pass through” any embedded copy control information without alteration, modification or degradation in any manner;
23. 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
24. Licensee shall utilize the following geofiltering techniques in connection with distribution of Included Programs via any Licensed Service designed to limit distribution of Included Programs to Subscribers in the Territory: (i) IP address look-up to check for IP address within the Territory and (ii) with respect only to Subscribers who pay a discrete fee specifically for access to any Licensed Service (and excluding any Subscribers granted access to any Licensed Service by virtue of a subscription to any other paid subscription product), either (A) if a credit card is used to pay such discrete fee, Licensee shall confirm that the country code of the bank or financial institution issuing such credit card (or the billing address for such credit card) corresponds with a geographic area that is located within the Territory, with Licensee only to permit the payment of such discrete fee if the country code of the bank or financial institution issuing such credit card (or the billing address for such credit card) corresponds with a geographic area that is located within the Territory or (B) with respect to any Subscriber who does not use a credit card to pay such discrete fee, Licensee shall require such Subscriber to enter his or her home address as part of the subscription fee payment process and shall only permit the subscription to the Licensed Service if the address that the Subscriber supplies is within the Territory. Licensor agrees that Licensee shall be deemed to be exercising the rights granted herein solely within the Territory as long as Licensee implements geo-filtering in accordance with this section 2524. Licensee shall periodically review the geofiltering tactics described herein and perform upgrades as determined necessary in its sole discretion to maintain “state of the art” geofiltering capabilities.
Network Service Protection Requirements.
25. All licensed content must be received and stored at content processing and storage facilities in a protected system or encrypted format.
26. Documented security policies and procedures shall be in place. Changes and exceptions to such policies and procedures shall be documented.
27. Access to content in unprotected format must be limited to authorized personnel and auditable records of actual access shall be maintained.
28. Physical access to servers must be limited and controlled and must be monitored by a logging system.
29. Auditable records of access, copying, movement, transmission, backups, or modification of content must be securely stored for a period of at least one year.
30. Content servers must be protected from general internet traffic by “state of the art” protection systems as reasonably deemed appropriate by Licensee including, for example, firewalls, virtual private networks, and intrusion detection systems. All systems must be regularly updated to incorporate the latest security patches and upgrades.
High-Definition Restrictions & Requirements
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In addition to the foregoing requirements, all HD content is subject to the following set of restrictions & requirements:
31. General Purpose Computer Platforms: HD content is expressly prohibited from being delivered to and playable on General Purpose Computer Platforms (e.g. PCs, Android and iOS devices) unless explicitly approved by Licensor on a device by device basis as set out in the Special Terms. If approved by Licensor, the additional requirements for HD playback on PCs shall include the following:
31.1. Secure Video Paths:
The video portion of unencrypted content shall not be present on any user- accessible bus in any analog or unencrypted, compressed form. In the event unencrypted, uncompressed content is transmitted over a user-accessible bus in digital form, such content shall be either limited to Standard Definition or made reasonably secure from unauthorized interception.
31.2. Digital Outputs:
For avoidance of doubt, HD content may only be output in accordance with section 19 and section 20 above.
31.3. Hardware Root of Trust
The Content Protection System (CPS) and/or the Approved Device on which the CPS executes shall use a hardware means (“Hardware Root of Trust”) which prevents compromise via software attacks, of the Content Protection System. For example, the Hardware Root of Trust may provide some or all of the following functions:
• hardware defences against reverse engineering of software
• hardware assisted software tamper resistance
• hardware secure key storage (and or key use)
• hardware assisted verification of software
31.4. [Hardware Support for Deployed Devices
All General Purpose Computer Platforms (devices) deployed by Licensee after December 31, 2013 shall support hardware-enforced security mechanisms, including trusted execution environments and secure boot. ]
31.5. Secure Content Decryption.
Decryption of (i) content protected by the Content Protection System and (ii) CSPs (as defined in section 2.1 above) 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
HD Requirements
In addition to the foregoing requirements, all HD content is subject to the following set of content protection requirements:
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32. Analogue Sunset, All Analogue Outputs, December 31, 2013
In accordance with industry agreement, after December 31, 2013, any device manufactured after 31st December 2013 that is not capable of disabling ALL analogue outputs during the rendering of Included Programs shall not become an Approved Device hereunder.
33. Analogue Sunset, HD Analogue Outputs
In accordance with industry agreement effective after December 31, 2011, Licensee shall, where possible, signal for analogue outputs to be limited to 520,000 pixels (a “Constrained Image”) or less.
34. [Additional Watermarking Requirements
Physical media players manufactured by licensees of the Advanced Access Content System are required to detect audio and/or video watermarks during content playback after 1st February, 2012 (the “Watermark Detection Date”). Licensee shall require, within two (2) years of the Watermark Detection Date, that any new devices capable of playing AACS protected Blu-ray discs and capable of receiving and decrypting protected high definition content from the Licensed Service that can also receive content from a source other than the Licensed Service shall detect and respond to the embedded state and comply with the corresponding playback control rules. ]
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SCHEDULE C
EARLY SVOD FEATURES KNOWN AS OF THE EFFECTIVE DATE
Release Title German Box Availability Date Year Office
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SCHEDULE D
Year 1 Current TV selection BREAKING BAD - SEASON 01 44 7 CURRENT TV SERIES BREAKING BAD - SEASON 02 44 13 CURRENT TV SERIES BREAKING BAD - SEASON 03 44 13 CURRENT TV SERIES BREAKING BAD - SEASON 04 44 13 CURRENT TV SERIES BREAKING BAD - SEASON 05 44 8 CURRENT TV SERIES BREAKING BAD - SEASON 06 44 8 CURRENT TV SERIES Tentative Avail Date 08/2013 SHIELD, THE - SEASON 01 44 13 CURRENT TV SERIES SHIELD, THE - SEASON 02 44 13 CURRENT TV SERIES SHIELD, THE - SEASON 03 44 15 CURRENT TV SERIES SHIELD, THE - SEASON 04 44 13 CURRENT TV SERIES SHIELD, THE - SEASON 05 44 1211 CURRENT TV SERIES SHIELD, THE - SEASON 06 44 1110 CURRENT TV SERIES SHIELD, THE - SEASON 07 44 14 CURRENT TV SERIES TUDORS, THE - SEASON 01 55 10 CURRENT TV SERIES TUDORS, THE - SEASON 02 55 10 CURRENT TV SERIES TUDORS, THE - SEASON 03 55 8 CURRENT TV SERIES TUDORS, THE - SEASON 04 55 10 CURRENT TV SERIES
[list of Features to come]
Year 1 Library TV selection MARRIED...WITH CHILDREN - 22 13 LIBRARY TV SERIES SEASON 01 MARRIED...WITH CHILDREN - 22 22 LIBRARY TV SERIES SEASON 02 MARRIED...WITH CHILDREN - 22 22 LIBRARY TV SERIES SEASON 03 MARRIED...WITH CHILDREN - 22 23 LIBRARY TV SERIES SEASON 04 MARRIED...WITH CHILDREN - 22 25 LIBRARY TV SERIES SEASON 05 MARRIED...WITH CHILDREN - 22 26 LIBRARY TV SERIES SEASON 06 MARRIED...WITH CHILDREN - 22 26 LIBRARY TV SERIES SEASON 07 MARRIED...WITH CHILDREN - 22 26 LIBRARY TV SERIES SEASON 08 MARRIED...WITH CHILDREN - 22 28 LIBRARY TV SERIES SEASON 09 MARRIED...WITH CHILDREN - 22 26 LIBRARY TV SERIES SEASON 10 MARRIED...WITH CHILDREN - 22 24 LIBRARY TV SERIES SEASON 11 NANNY, THE (1993) - SEASON 01 22 24 LIBRARY TV SERIES NANNY, THE (1993) - SEASON 02 22 24 LIBRARY TV SERIES NANNY, THE (1993) - SEASON 03 22 26 LIBRARY TV SERIES
NANNY, THE (1993) - SEASON 04 22 26 LIBRARY TV SERIES NANNY, THE (1993) - SEASON 05 22 23 LIBRARY TV SERIES NANNY, THE (1993) - SEASON 06 22 22 LIBRARY TV SERIES
SCHEDULE E
LICENSE FEES
German Box Term Year Term Year Term Category Office 1 2 Year 3 Admissions Fixed Term Early SVOD Features USD USD USD Megahits 1.200.000 $390.000 $616.000 $968.000 Current A 700.000 $312.000 $478.500 $726.000 Current B 400.000 $218.400 $357.500 $522.500 Current C 100.000 $171.600 $269.500 $379.500 Current D $108.000 $178.750 $242.000 NTR/DTV/TVM $40.200 $64.350 $97.350 Pro Rata Discount for Y1 titles that will only have 5mths License Period instead of 6 mths
Term Term Year Term Category German Box Office Year 1 2 Year 3 >1.2MM ADM GER and/or $ $ $ Library Megahit Deemed Megahits 22.000 26.400 33.000 $ $ $ Standard Library 11.000 13.200 16.500
Term Year Term Year Category 1 Term Year 2 3 Library TV series per broadcast $ $ hour 3.850 $ 5.500 8.800
Term Year Term Year Category 1 Term Year 2 3 Current TV series per broadcast hour $7.150 $11.000 $17.600