INTERNATIONAL VIDEO-ON-DEMAND LICENSE AGREEMENT
THIS INTERNATIONAL VIDEO-ON-DEMAND LICENSE AGREEMENT (“Agreement”), dated as of [______], 2011 (“Effective Date”), is entered into by and between Microsoft Corporation, a Washington corporation with an address at One Microsoft Way, Redmond, Washington 98052 (“Licensee”), on the one hand, and either (i) Culver Digital Distribution Inc., a Delaware corporation with an address at 10202 West Washington Boulevard, Culver City, California 90049, or (ii) in the case of any Exhibit to which any other SPE Entity is a party, then such SPE Entity solely with respect to the Territory(ies) set forth in such Exhibit, on the other hand90232 (“Licensor”). For good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto agree as follows:
PRINCIPAL TERMS AND CONDITIONS
(“Principal Terms”)
1. DEFINITIONS. All capitalized terms used herein and not otherwise defined in this Agreement shall have the meanings set forth below.
1.1 “Actual Retail Price” shall mean for each Included Program, the actual amount paid or payable by each Customer (whether or not collected by Licensee) on account of such Customer’s selection of such Included Program from the Licensed Service, excluding sales, use, consumption, value added, goods and/or services taxes and similar taxes at the prevailing rate in the applicable Territory. No other deductions shall be allowed unless otherwise agreed in writing between the parties.
1.2 “Affiliate” means, with respect to any person, any other person that, either directly or indirectly through one or more intermediaries, Controls, is Controlled by or is under common Control with such person.
1.3 “Approved Devices” shall mean individually addressed and addressable IP-enabled Xbox Consoles, Personal Computers and, Zunes and Tablets, each of which are designed to implement the Usage Rules and support the Approved Format, including, without limitation, the Security Solution encompassed within the Approved Format, the Approved Transmission Means, and the Content Protection Obligations and Requirements set forth in Schedule C, as applicable. The parties acknowledge and agree that any device that is not an Xbox Console, a Personal Computer or a Zune, including, without limitation, other game consoles, set-top-boxes, portable media devices and mobile phones that do not run Zune-branded applications, shall not be an “Approved Device.”
1.4 “Approved Format” shall mean a digital electronic media file compressed and encoded for secure transmission and storage in Standard Definition resolution format, and, subject to Section 3.5 of the Principal Terms, in High Definition resolution format, and protected by the Security Solution. Without limiting Licensor’s rights in the event of a Security Breach, Licensor shall have the right to withdraw its approval of any Approved Format in the event that such Approved Format is materially altered by its publisher, such as a versioned release of an Approved Format or a change to an Approved Format, to the extent that it materially and adversely alters the security systems or usage rules previously supported. For the avoidance of doubt, “Approved Format” shall include the requirement that a file remain in its approved level of resolution and not be down- or up-converted. Notwithstanding the immediately preceding sentence, automated conversion of a Standard Definition and/or High Definition file of an Included Program through the Approved Device (as distinguished from Licensee delivering a file of an Included Program to an Approved Device in a specification other than what has been mutually agreed) shall not be prohibited; provided, that the conversion of such file does not result in the Included Program being displayed at a resolution equal to or greater than 720p (in the case of a Standard Definition resolution file) or greater than 1080p (in the case of a High Definition resolution file).
1.5 “Approved Transmission Means” shall mean, subject to the last sentence hereof, the Transmission via Electronic Downloading and/or Streaming of audio-visual content to one (1) Approved Device over the public, free-to-the-consumer (other than any common carrier/ISP charges or similar charges) global network of interconnected networks (including the so-called Internet, Internet2 and World Wide Web) using technology that is currently known as Internet Protocol (“IP”), whether transmitted over cable, DTH, FTTH, ADSL/DSL, Broadband over Power Lines or other means (the “Internet”). For the avoidance of doubt, “Approved Transmission Means” shall not include delivery over any so-called “walled garden” or closed ADSL/DSL, cable or FTTH service or other subscriber-based system or service. For clarity, Licensor acknowledges that as of the Effective Date, the Licensed Service is not delivered via any so-called “walled garden” or closed ADSL/DSL, cable or FTTH service or other subscriber-based system or service. “Approved Transmission Means” does not include any means of Viral Distribution and such transmission means may only be enabled upon Licensor’s prior written approval of the applicable implementation and technology; it being understood that such approval is not currently given by Licensor.
1.6 “Availability Date” with respect to an Included Program shall mean the date on which such Included Program is first made available for exhibition hereunder as specified in Section 3.3 of the Principal Terms.
1.7 “Avail Term” shall have the meaning set forth in Section 2.2 of the Principal Terms.
1.8 “Bandwidth Test” shall have the meaning set forth in Schedule F.
1.9 “Control” means the power to direct the management and policies of a person, through ownership of voting securities, by contract or otherwise.
1.10 “Current Film” with respect to each Territory shall have the meaning set forth in the applicable Exhibit.
1.11 “Customer” shall refer to each unique user on an Approved Device authorized to receive an exhibition of an Included Program as part of the Licensed Service.
1.12 “Customer Transaction” shall mean any instance whereby a Customer orders and is authorized to receive an exhibition of an Included Program as part of the Licensed Service; provided that neither a Transmission of solely a Promotional Preview nor solely a Bandwidth Test shall be considered a Customer Transaction.
1.13 “Digitally Delivered Home Entertainment”, or “DHE” shall mean that mode of home video distribution in which an electronic digital file embodying a program is transmitted to an end user pursuant to an authorized transaction for which the end user pays a per-transaction fee whereby such end user is licensed to retain such program for playback up to an unlimited number of times. “DHE” shall not include operating on a subscription basis or a negative option basis (i.e., a fee arrangement whereby a consumer is charged alone, or in any combination, a service charge, a separate DHE charge or other charge but is entitled to a reduction or series of reductions thereto on a program-by program basis if such consumer affirmatively elects not to receive or have available for reception such program), nor shall “DHE” include, without limitation, pay-per-view, video-on-demand, free-on-demand, advertiser-supported-on-demand, manufacture-on-demand or retail location-based download on demand to a DVD or other physical storage medium that is not a portable video device such as a Zune or iPod (e.g., download via in-store kiosks), physically delivered home video (e.g., DVD and Blu-Ray Disc), premium pay television, basic television or free broadcast television exhibition.
1.13 1.14 “Electronic Downloading” shall mean the transmission of a digital file containing audio-visual content from a remote source, which file may be stored and the content thereon viewed on a “progressive download” basis and/or at a time subsequent to the time of its transmission to the viewer.
1.14 1.15 “Exhibit” means each exhibit executed by Licensee and an SPE Entity in connection with this Agreementattached hereto and incorporated by reference herein which sets forth the Territory(ies) in which Licensee may exercise the rights granted by the applicable Licensor hereunder and any additional or different terms and conditions applicable to each such Territory. Upon full execution of an Exhibit, (a) such Exhibit shall be deemed attached to this Agreement, (b) the terms and conditions of this Agreement shall be incorporated into and govern such Exhibit, and (c) such Exhibit (and the terms and conditions of this Agreement as incorporated therein) shall be solely between Licensee and the SPE Entity that has executed such Exhibit. In the event of any conflict or inconsistency between the terms of this Agreement and any Exhibit, the terms of the Exhibit will prevail solely with respect to the Territory(ies) stated therein.
1.15 1.16 “High Definition” or “HD” shall mean any resolution that is (a) 1080 vertical lines of resolution or less (but at least 720 vertical lines of resolution) or (b) 1920 lines of horizontal resolution or less (but at least 1280 lines of horizontal resolution) but in no event higher than 1920 horizontal lines of resolution by 1080 vertical lines of resolution; provided, however, that a Stream of an Included Program purchased in High Definition may fall below 720 vertical lines of resolution or 1280 lines of horizontal resolution from time to time due to network congestion or other technical reasons.
1.16 1.17 “Home Theater” means on-demand exhibition and/or sell-through of any program on a premium basis prior to the Home Video Street Date of such program.
1.17 1.18 “Home Video Street Date” for each Included Program in a Territory shall mean the date on which such Included Program is first made available in such Territory to the general public for sale or rental in DVD format and/or via DHE. For the avoidance of doubt, “DVD” means digital video discs in general, and includes Blu-ray discs as well as manufacture-on-demand or retail location-based download on demand to a DVD or other physical storage medium that is not a portable video device such as a Zune or iPod (e.g., download via in-store kiosks)..
1.18 1.19 “Included Program” shall mean each Current Film and Library Film that Licensee licenses in accordance with the terms of this Agreement.
1.19 1.20 “Library Film” with respect to each Territory shall have the meaning set forth in the applicable Exhibit.
1.20 1.21 “Licensed Language” shall mean for each Included Program distributed in the applicable Territory, the language(s) set forth in the applicable Exhibit.
1.21 1.22 “Licensed Service” shall mean individually and collectively the video-on-demand program distribution services currently known as “Xbox Live Video Marketplace” (the “Xbox Service”) and “Zune Marketplace Live” (the “Zune Service”) respectively, as such services may be modified and/or rebranded from time to time, which are, and (without limiting Schedule A, Article 19) at all times during the Term shall be, owned and operated by Licensee (it being acknowledged that Licensee may engage Third Party Contractors to perform various operations in connection with the operation of the Licensed Service in accordance with the terms of this Agreement). For purposes of clarification, with respect to each Territory, “Licensed Service” shall mean the version of the Licensed Service made commercially available by Licensee in such Territory. Licensor and Licensee acknowledge that Licensee may merge, combine and/or re-brand the Xbox Service and/or the Zune Service in Licensee’s sole discretion so long as the resulting service remains owned and operated by Licensee (subject to the engagement of Third Party Contractors as permitted hereunder) at all times during the remainder of the Term. The Licensed Service may be supported in part by advertising, subject to Schedule A, Article 12.7. The Licensed Service may not be sub-distributed.
1.22 1.23 “License Period” with respect to each Included Program shall mean the period during which Licensee is authorized to make such Included Program available for exhibition hereunder, as specified in Section 3.4 of the Principal Terms.
1.23 1.24 “Licensor” means each entity specified as such in the applicable Exhibit.
1.24 1.25 “Licensor Content” shall mean collectively, the Included Programs, trailers, metadata, Advertising Materials, marks and logos and all other material delivered or made available by Licensor or approved by Licensor in accordance with this Agreement or any other written arrangement between Licensee and any SPE Entity.
1.25 1.26 “Other Distributor” shall mean any party that distributes Licensor’s or any other SPE Entity’s feature films in the applicable Territory during the Term on a VOD basis for Personal Use, other than Licensee.
1.26 1.27 “Other Motion Picture Provider” means a provider of motion pictures on a VOD basis for exploitation in the applicable Territory via the Licensed Service.
1.27 1.28 "Party Mode" shall refer to an application that allows a Customer, upon completing a Customer Transaction for an Included Program, to join other Customers, each of whom have also completed a Customer Transaction for such Included Program, in simultaneously (or near simultaneously) viewing such Included Program in accordance with the Usage Rules and is designed to provide the following functionality: (a) Customers may reduce the size of an Included Program so that it covers part but not all of such Customers’ screens; (b) such Included Program may be surrounded by a frame containing graphics which may include avatars representing the Customers watching the Included Program; (c) the Customers may communicate (by voice and/or text) with each other while viewing the Included Program; and (d) the Customers may select and display on the screens of all such Customers animated graphics (which may include associated audio) depicting their reactions to the Included Program chosen from an on-screen menu, which such communications, animated graphics, associated audio and on-screen menu may overlay the audio and/or video of the Included Program.
1.29 “Performance Collection Society” for a Territory shall have the meaning assigned to such term in the applicable Exhibit.
1.28 1.30 “Personal Computer” shall mean an individually addressed and addressable IP-enabled desktop, or laptop, tablet or other device with a hard drive, external and/or internal keyboard and monitor and/or touch screen, designed for multiple office and other applications using a silicon chip/microprocessor architecture. “Personal Computer” shall not include Zunes, Tablets, game consoles (including Xbox Consoles), set-top-boxes, portable media devices (other than tablets), PDAs, or mobile phones.
1.29 1.31 “Personal Use” shall mean the personal, private viewing of a program and shall not include non-theatrical exhibition, any viewing or exhibition for which (or in a venue in which) an admission, access or viewing fee is charged, or any other public exhibition or viewing.
1.30 1.32 “Primary Licensed Language” shall mean, for each Included Program distributed in the applicable Territory, the language in which materials for such Included Program must be delivered for such Territory, as set forth in the applicable Exhibit.