SONY PICTURES TELEVISION INC. and iN DEMAND L.L.C.
This Agreement (the “Agreement”) dated as of August 31, 2006, is between SONY PICTURES TELEVISION INC. (“Licensor”) and iN DEMAND L.L.C. (“Licensee”).
1.DEFINITIONS:
(a)“Accounting Period” shall mean, with respect to each Included Picture: (i) a period commencing on the date on which such Included Picture is first Exhibited hereunder and ending on the date 60 days thereafter (or, if such date is not the last day of a calendar month, the last day of the calendar month in which such date occurs); and (ii) each calendar month thereafter for so long as there are monies due and owing Licensor hereunder.
(b)“Authorized Systems”shall mean: (i) all of Licensee’s affiliated systems as of the date hereof set forth on ExhibitD; (ii) any other system that contractually affiliates with Licensee for PPV and/or VOD and that as of the date of such affiliation with Licensee is authorized by Licenseeto exhibit on a PPV or VOD basis motion pictures for which Sony controls PPV or VOD rights on the terms and conditions of this Agreement; and (iii) any other system approved by Licensor (such approval not to be unreasonably withheld).
(c)“Authorized Means” shall mean delivery by means of cable, SMATV, MDS, MMDS, IPTV delivered to subscribers via conditional access technology (but not, for the avoidance of doubt, the Worldwide Web or the Internet) and, solely for HITS2Home, DTH satellite (other than on any satellite used by DirecTV for its direct broadcast services to a Settop Box).
(d)“Authorized VOD System” shall mean each Authorized System that licenses Major Studio theatrical motion pictures from Licensee for exhibition on a VOD basis.
(e)“Caching” shall mean non-permanent storage or temporary buffering of less than an entire motion picture so as to enable exhibition of such motion picture on a continuous basis and/or with VCR Functionality until the end of the 24 hour viewing period of such motion picture.
(f)“Classics Picture” shall mean each Current Picture that was initially theatrically released in the United States by Sony Pictures Classics.
(g)[INTENTIONALLY OMITTED]
(h)“DirecTV” shall mean DirecTV and its successors.
(i)“Domestic Box Office” shall mean, with respect to a motion picture, United States and Canadian box office receipts as reported in Variety or The Hollywood Reporter as of the date 90 days prior to the beginning of the month in which such motion picture’s Availability Date occurs.
(j)“Early Avail Terms” shall mean Early PPV Avail Terms and Early VOD Avail Terms (as such terms are respectively defined in Section 8 hereof).
(k)“Internet” shall mean that global, public, free to the consumer (other than an access/ISP change but not for the avoidance of doubt, a closed IPTV system) non-proprietary digital network that interconnects computers and other receiving devices so as to allow open two-way access using Internet protocol for the origination, use and/or reception of content, without regard to the actual transmission means/delivery system (e.g., cable, fiber, etc.).
(l)“Major Studio” shall mean Sony, Universal, Fox, Paramount, Warner Bros., DreamWorks, MGM and Disney (and their respective successors), and their respective releasing labels.
(m)“PPV” shall mean the point-to-multi-point delivery of a single program for exhibition on television sets or other monitors for Residential Use and for which a consumer is required to pay a single fee (not on a negative option basis) in order to receive from the operator a single exhibition of such program (and/or multiple exhibitions of such program over a period of not more than 24 hours) at a time or times pre-established, as between the operator and the consumer, by the operator. PPV shall not include Sell-Through Video Downloading. Notwithstanding the foregoing, Licensor shall have the unilateral right to increase the foregoing viewing period by prior written notice to Licensee and if Licensor makes a particular Included Picture available to another PPV provider in the Territory during its License Period for a viewing period greater than 24 hours (other than as part of a reasonably limited test), Licensor shall offer Licensee the opportunity to exhibit such title for the same viewing period provided Licensee matches all the terms and conditions related to such exhibition (including without limitation financial terms and copy protection measures) agreed by such other licensee.
(n)“PPV Service” shall mean Licensee’s PPV service.
(o)“Pay TV Agreement” shall mean, with respect to a Current Picture, a written agreement for the initial exhibition of such Current Picture in the Territory by means of subscription television.
(p)“Push Download” shall mean any download of any Included Picture to a Settop Box where such download was not ordered by the subscriber and where such Included Picture is stored in its entirety on the Settop Box for purposes of availability on a PPV and/or VOD basis.
(q)“Residential Use” shall mean the right to exhibit a program or programsin residential homes and private dwelling units (including fraternity and sorority houses, dormitories, hotels, motels, inns, lodges, hospitals, nursing homes, convalescent homes, military bases, ships, oil rigs and prisons) or common residential areas in firehouses and oil rigs (“Subscribers”), and (except as expressly set forth above with respect to common residential areas in firehouses and oil rigs) not the right to exhibit such program or programs in any common area or area open to the general public or in any area to which an admission fee is charged, nor shall “Residential Use” include the right to exhibit or authorize the exhibition of a program on any mobile or cellular device, regardless of the location in which such exhibition occurs.
(r)“Sell-Through Video Downloading” shall mean the point-to-point delivery of a single program for which the purchaser thereof is required to pay a single fee in order to receive or store a copy of such program that such purchaser may keep long term or in perpetuity. The fact that a single program may be delivered so that it is coincidentally received by more than one person or entity shall not render such delivery to be other than “point-to-point.” Sell-Through Video Downloading shall not include VOD.
(s)“Settop Box” shall mean an addressable settop box (including, without limitation, an equivalent built-in component(e.g., a built-in component that provides access directly to a digital television by means of a conditional access card or similar technology), but not a portable device or mobile/cellular phone) authorized by an Authorized System.
(t)“SPE” shall have the meaning assigned to such term in Section 6(a) hereof.
(u)“Subscribers” shall have the meaning assigned to such term in Section 1(q) hereof.
(v)“Subscriber Transaction” shall mean any instance in which a subscriber is authorized to view an Included Program on Licensee’s VOD or PPV services, whether or not payment is actually received.
(w)“VCR Functionality” shall mean the ability of a viewer to fast-forward, pause or rewind a program being viewed.
(x)“VCR Functionality Exhibitions” shall mean the exhibition hereunder of any Included Picture through a Settop Box provided to consumers by Licensee or such Authorized System and that has VCR Functionality integrated therein.
(y)“VOD” shall mean the point-to-point delivery of a single program for exhibition on television sets or other monitors for Residential Use and for which a consumer is required to pay a single fee (not on a negative option basis) in order to receive from the operator a single exhibition of such program (and/or multiple exhibitions of such program over a period of not more than 24 hours) at a time or times pre-established, as between the operator and the consumer, by the consumer. The fact that a single program may be delivered so that it is coincidentally received by more than one person or entity shall not render such delivery to be other than “point-to-point”. VOD shall not include Sell-Through Video Downloading. Notwithstanding the foregoing, Licensor shall have the unilateral right to increase the foregoing viewing period by prior written notice to Licensee and if, Licensor makes a particular included Picture available to another VOD provider in the Territory during its License Period for a viewing period greater than 24 hours (other than as part of a reasonably limited test), Licensor shall offer Licensee the opportunity to exhibit such title for the same viewing period, provided Licensee matches all the terms and conditions related to such exhibition (including without limitations financial terms and copy protection measures) agreed by such other licensee.
(z)“VOD Offering” shall mean Licensee’s offering of VOD programming.
(aa)“Year” shall have the meaning assigned to such term in Section 3 hereof.
2.RIGHTS:
(a)Licensor grants to Licensee the non-exclusive right and license under copyright to exhibit and to authorize Authorized Systems to exhibit by Authorized Means each Included Picture in the Authorized Languages throughout the Territory during its License Period on a PPV basis as part of the PPV Service and on a VOD basis as part of the VOD Offering. Internet delivery, HDTV (other than as set forth herein), home video (including, without limitation, Sell-Through Video Downloadingand subscription television (including on a negative option basis) are expressly excluded from the rights granted herein.
(b)Neither Licensee nor any Authorized System shall charge subscribers any monthly or other periodic fees for access to the PPV Service or to the VOD Offering, other than: (i) a monthly or periodic access, service or equipment use fee also applicable to programming other than the PPV Service, the VOD Offering and/or any Included Picture, when such fee also covers the ability to receive the basic or entry (i.e., lowest) tier of service (which tier does not consist solely of the PPV Service and/or the VOD Offering) and, in the case of VOD, when such fee also covers the ability to receive the basic or entry (i.e., lowest) tier of digital service (which tier does not consist solely of the PPV Service and/or the VOD Offering); and (ii) an equipment use fee also applicable to programming other than the PPV Service, the VOD Offering and/or any Included Picture, when such fee also covers the ability to receive the basic or entry (i.e., lowest) tier of addressability; provided, however, such monthly or periodic access, service or equipment use fee shall not be credited against the single fee payable by the consumer for the PPV and/or VOD exhibition of any Included Picture.
(c)Nothing in this Agreement shall prohibit Licensee or any Authorized System from authorizing Subscribers to view Included Pictures through devices that enable VCR Functionality, and the availability of VCR Functionality shall not be relevant to the computation of license fees hereunder.
(d)Licensee and each Authorized System may make Included Pictures available hereunder through a Push Download subject to compliance with a copy protection standard reasonably acceptable to Licensor, which standard shall be no more restrictive upon Licensee and the Authorized Systems than the standard imposed upon any other PPV or VOD provider of Included Pictures in the Territory through a Push Download.The use of Push Download in connection with the exhibition of any Included Picture hereunder shall not be relevant to the computation of license fees hereunder.
(e)Pursuant to the rights granted herein with regard to PPV and VOD, an Included Picture may only be retained by the consumer for subsequent viewing at a time later than the delivery thereof by Licensee or an Authorized System, as the case may be, if: (i) the consumer elects to record and store such Included Picture on a Settop Box or other recording device pursuant to a separate, independent action (i.e., an action in addition to the act of electing to purchase such exhibition); or (ii) if there is not such separate, independent action, and such Included Picture is recorded and stored on the Settop Box, such Included Picture is automatically deleted from the Settop Box within 24 hours after such Included Picture is delivered to the Settop Box. The foregoing notwithstanding, a Push Download of an Included Picture shall not in and of itself be deemed to be “retained by the consumer” for purposes of this Section 2(e), and Caching shall not be deemed to be “retained by the consumer” for purposes of this Section 2(e).
(f)All licenses, rights and interests in, to and with respect to the Included Pictures not specifically granted to Licensee hereunder or pursuant to any other agreement are, as between Licensor and Licensee, specifically and expressly reserved to Licensor and may be fully exploited by Licensor subject to the provisions of Section 9 hereof.
3.OUTPUT TERM: The “Output Term” shall commence on September 1, 2007 and end on December 31, 2010. Each 12 month period commencing on September 1 during the Output Term is herein referred to as a “Year”, provided that the final “Year” of the Output Term shall be the 16-month period beginning September 1, 2009 and ending December 31, 2010.
4.TERRITORY: The “Territory” shall be: (i) United States, its commonwealths, territories and possessions (including, without limitation, Puerto Rico, the U.S. Virgin Islands, Guam and Saipan); and (ii) if and to the extent Sony unilaterally controls the requisite rights for VOD and/or PPV exhibition hereunder during the entire applicable License Period, the Bahamas, Bermuda, the Cayman Islands, Curacao, the Netherlands Antilles (including, without limitation, St. Maarten), and the West Indies (provided that the exploitation of such rights in such countries does not conflict with other windows in such countries (including, without limitation, theatrical and home video)).
5.AUTHORIZED LANGUAGES: English and, if available, Spanish.
6.INCLUDED PICTURES: Each of the programs described below is herein referred to as an “Included Picture”.
(a)Current Pictures: “Current Picture” shall mean each motion picture with an Availability Date during the Output Term for which Licensor (or an entity directly or indirectly owned and unilaterally controlled by Licensor or Sony Pictures Entertainment Inc. (individually and collectively, “SPE”)) unilaterally controls the requisite rights for VOD and/or PPV exhibition hereunder and that meets the following criteria (“Eligibility Criteria”)(each of which may be waived by Licensee in its sole discretion if such title is made available by Licensor in its discretion):
(i)(x) Is in the English language or (y) is a Classics Picture produced in a language other than English with a Domestic Box Office equal to or in excess of $15,000,000; and
(ii)Was produced substantially in color; and
(iii)Is not a documentary or a concert film; and
(iv)Is not rated by the MPAA more restrictively than “R” (or a comparable rating if a new rating system replaces the MPAA rating system); and
(v)Was, within the preceding 12 months: (A) initially theatrically released in the United States by SPE or another Major Studio, (B) initially theatrically released in the United States and for which SPE unilaterally controls the U.S. subscription television rights or the U.S. home video rights, or (C) solely for purposes of exhibition on a VOD basis, is one of up to five motion pictures per Year produced, co-produced, co-financed and/or distributed by Sony, and initially released in the United States directly to home video by Sony; and
(vi)Solely for purposes of exhibition on a PPV basis and notwithstanding the provisions of Section6(a)(i) above:
(1)Either has a Domestic Box Office equal to or in excess of $10,000,000; or
(2)Is one of up to four motion pictures per Year, in any language and irrespective of Domestic Box Office (and which may have been released direct to video by Sony notwithstanding sub-section(v) above). Licensor shall consult with Licensee with respect to the designation of such four motion pictures and shall present potential motion pictures for licensing under this sub-clause (2) with Availability Dates in at least six calendar months of each Year.
For the avoidance of doubt, in the event that Licensor makes available a motion picture for which Licensee waives any Eligibility Criteria as provided above, such motion picture shall be a Current Picture hereunder, and all Current Pictures are Included Pictures.
(b)Restricted Pictures: With respect to each motion picture that meets the Eligibility Criteria and for which Sony controls the requisite rights for VOD and/or PPV exhibition hereunder but does not unilaterally control such rights (due to A-list talent approval restrictions), such motion picture shall not be offered to any other PPV or VOD provider in the Territory without Licensor offering such motion picture to Licensee on the same terms and conditions (unless the party with the requisite consent or approval right prohibits such offer to Licensee). In the event that Licensee elects so to include such motion picture hereunder, such motion picture shall be a Current Picture hereunder.
(c)Library Pictures: The parties shall have the right to include from time to time by mutual written agreement a title that meets the requirements of Section 6(a) but fails to fulfill one or more of the Eligibility Criteria (each, a “Library Picture”) for exploitation hereunder on the following terms: