general terms and conditions of vod license …deals... · 1.13 “vod service” shall mean the us...

VOD & DHE LICENSE AGREEMENT

THIS VOD & DHE LICENSE AGREEMENT (this “Agreement”), dated as of February 1, 2011 (“Effective Date”), is entered into by and between Culver Digital Distribution, Inc., a Delaware corporation with an address at 10202 West Washington Boulevard, Culver City, California 90232 (“Licensor”), and Best Buy Stores, L.P., a Virginia limited partnership with an address at 7601 Penn Avenue, South Richfield, Minnesota 55423 (“Licensee”). For good and valuable consideration, the sufficiency of which is hereby acknowledged, the parties hereto agree as follows:

GENERAL TERMS AND CONDITIONS OF VOD LICENSE AGREEMENT (“VOD General Terms”)

DEFINITIONS. All capitalized terms used herein and not otherwise defined in this Agreement shall have the meanings set forth below. All other terms utilized in this Agreement but not defined in this Section 1 shall be as defined in Section 1 of Schedule A hereto.

1.

1.1 “Canadian VOD Service” shall mean the video-on-demand program distribution service in Canada branded “Best Buy CinemaNow” or such other brand that Licensee may determine and notify Licensor thereof, which is, and shall at all times during the VOD Term be accessible via the website located at www.cinemanow.ca and wholly-owned, controlled and operated by Licensee or its designee.

1.2 “Current Feature” shall mean a feature-length audio-visual program (a) that is initially released theatrically, direct-to-video (“DTV”) or on television (“MFT”) in the United States or the Territory, (b) with a VOD Availability Date during the VOD Avail Term, (c) the Availability Date for which is either (i) no more than twelve (12) months after its initial theatrical release in the Territory, or, in the case of a Sony Pictures Classics release, no more than fourteen (14) months after its initial theatrical release in the Territory, or (ii) with respect to DTV, no more than six (6) months after its Home Video Street Date, or (iii) with respect to MFT, no more than six (6) months after its initial television exhibition in the Territory, and (d) for which Licensor unilaterally controls without restriction all rights, licenses and approvals necessary to grant the rights granted hereunder (“Necessary Rights”).

1.3 “Library Feature” shall mean any feature-length audio-visual programming made available during the VOD Avail Term for which Licensor unilaterally controls without restriction all Necessary Rights and that does not qualify (or no longer qualifies) as a Current Feature hereunder due to its failure to meet the criteria set forth in subclause (c) of Section 1.1 of the VOD General Terms.

1.4 “Other VOD Distributors” shall mean any other third party licensing the VOD Included Programs on a VOD basis from Licensor in the Territory during the VOD Avail Term.

1.5 “US VOD Service” shall mean the video-on-demand program distribution service in the fifty states of the United States of America and the District of Columbia, including all U.S. Territories, U.S. Possessions and Puerto Rico, branded “Best Buy CinemaNow” or such other brand that Licensee may determine and notify Licensor thereof, which is, and shall at all

2 Best Buy - CDD VOD DHE License Agreement 2011 1 21 (FINAL).docx

times during the VOD Term be accessible via the website located at www.cinemanow.com and wholly-owned, controlled and operated by Licensee or its designee.

1.6 “VOD Authorized Version” shall mean for any VOD Included Program the version made available by Licensor to Licensee in Licensor’s sole discretion for such VOD Included Program.

1.7 “VOD Availability Date” with respect to a program shall mean the date on which such program is first made available for exhibition hereunder as specified in Section 4.2 of the VOD General Terms.

1.8 “VOD Avail Term” shall have the meaning set forth in Section 3.1 of the VOD General Terms.

1.9 “VOD Customer” shall refer to each unique user on an Approved Device authorized to receive an exhibition of a VOD Included Program from the VOD Service.

1.10 “VOD Customer Transaction” shall mean any instance whereby a VOD Customer is authorized to receive an exhibition of all or part of a VOD Included Program as part of the VOD Service.

1.11 “VOD Included Program” shall mean each Current Feature and Library Feature Licensee licenses on a Video-On-Demand basis in accordance with the terms of this Agreement.

1.12 “VOD License Period” with respect to each VOD Included Program shall mean the period during which Licensee makes such VOD Included Program available for exhibition hereunder.

1.13 “VOD Service” shall mean the US VOD Service and the Canadian VOD Service.

1.14 “VOD Usage Rules” shall mean the content usage rules applicable to VOD Included Programs available on the VOD Service, as set forth in the attached Schedule B-3.

1.15 “VOD Viewing Period” shall mean, with respect to each order of a VOD Included Program, the time period (i) commencing at the time a VOD Customer is initially technically enabled to view such VOD Included Program but in no event earlier than its VOD Availability Date, and (ii) ending on the earlier of (a) 24 hours with respect to VOD Included Programs on the US VOD Service (48 hours with respect to VOD Included Programs on the Canadian VOD Service) after the VOD Customer first commences viewing such VOD Included Program and (b) the expiration of the VOD License Period for such VOD Included Program.

2. LICENSE.

2.1 Rights Granted. Licensor hereby grants to Licensee, and Licensee hereby accepts, a non-exclusive, non-transferable, non-sublicensable license during the VOD Term to exhibit each VOD Included Program during its VOD License Period in its VOD Authorized Version and the Licensed Language on the VOD Service solely to VOD Customers in the Territory, on a Video-On-Demand basis delivered by an Approved Transmission Means in an Approved Format solely for reception as a Personal Use on Approved Devices pursuant solely in each instance to a VOD Customer Transaction and subject at all times to the Content Protection Requirements (as set forth in Schedule B-2) and the VOD Usage Rules. Licensee shall have the right to exploit the Video-On-Demand rights using VCR Functionality. This Agreement shall


not create any holdback on Licensor’s right to exploit any VOD Included Program in any version, language, territory or medium, or by any transmission means, in any format, to any device in any venue or in any territory at any time.

2.2 Promotional Restrictions. Licensee shall not be permitted in any event to offer or conduct promotional campaigns for the VOD Included Programs offering free buys, including without limitation “two-for-one” promotions (by coupons, rebate or otherwise) without Licensor’s prior written consent. Licensee shall not charge any club fees, access fees, monthly service fees or similar fees (but not referring to any equipment purchase or rental fee; provided that such fee or any portion thereof is not creditable against any customer per transaction fees) for general access to the VOD Service (whether direct or indirect), or offer the VOD Included Programs on a subscription or negative option basis (i.e., a fee arrangement whereby a consumer is charged alone, or in any combination, a service charge, a separate video on demand 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) without Licensor’s prior written consent.

2.3 High Definition. The parties agree that, unless otherwise authorized by Licensor in writing, Licensee shall distribute the VOD Included Programs on a VOD basis pursuant to the Agreement in Standard Definition resolution. Licensor may, in its sole discretion, authorize Licensee to distribute specific Current Features and Library Features in High Definition resolution on a VOD basis by providing Licensee with written notice of which Current Features or Library Features are available to Licensee for distribution in High Definition on a VOD basis pursuant to this Agreement.

3. TERM

3.1 The initial term during which Licensor shall be required to make programs available for licensing and Licensee shall be required to license programs hereunder shall commence on the Effective Date (such date to also be known as, the “VOD Initial Avail Date”), and shall terminate on January 31, 2012 (“VOD Initial Avail Term”). The VOD Initial Avail Term shall automatically extend for one (1) additional 12-month period (“VOD Extension Period”) following the expiration of the VOD Initital Avail Term unless either party gives the other party not less than thirty (30) days written notice prior to expiration of the VOD Initial Avail Term of its election not to extend the VOD Initial Avail Term. The VOD Initial Avail Term and the VOD Extension Period, if any, shall be the “VOD Avail Term” and each 12-month period during the VOD Avail Term shall be a “VOD Avail Year,” with the first VOD Avail Year being “VOD Avail Year 1,” and the second being “VOD Avail Year 2.” It is acknowledged that the VOD License Period for each VOD Included Program may expire after the end of the VOD Avail Term.

3.2 Term. The “VOD Term” of this Agreement shall commence on the Effective Date and shall expire on the earlier to occur of (i) the last day of the last VOD License Period to expire hereunder or (ii) the earlier termination of this Agreement.

3.3 In addition, the termination or expiration of the VOD Avail Term or any VOD License Period, howsoever occasioned, shall not affect any of the provisions of this Agreement


which are expressly or by implication to come into or continue in force after such termination or expiration.

4. LICENSING COMMITMENT/LICENSE PERIOD.

4.1 Licensing Commitment. Licensee shall license from Licensor hereunder the following number of VOD Included Programs during each VOD Avail Year of the VOD Avail Term: (a) with respect to each of the US VOD Service and the Canadian VOD Service, all Current Features with a VOD Availability Date during the VOD Avail Term; (b) with respect to the US VOD Service, at least 75 Library Features and (c) with respect to the Canadian VOD Service, at least 75 Library Features. Licensor shall provide Licensee with periodic availability lists setting forth the Current Features and Library Features available for licensing on the US VOD Service and the Canadian VOD Service hereunder along with their respective VOD Availability Dates.

4.2 Availability Date. The VOD Availability Date for each VOD Included Program shall be as determined by Licensor in its sole discretion; provided, however, that the VOD Availability Date for each Current Feature shall be no later than the date on which Licensor first makes such film generally available for the “standard” residential Video-On-Demand window on a non-exclusive basis for VOD distribution in the Territory (i.e., the availability date for other residential VOD distributors who do not pay additional consideration of more than a de minimus amount for an earlier date or who are not granted exhibition rights on a limited test basis).

4.3 License Period. The VOD License Period for each VOD Included Program shall commence on its VOD Availability Date and shall expire on the date established by Licensor in its sole discretion; provided, that the VOD License Period for each Current Feature shall end no earlier than the earliest of (i) 60 days after its VOD Availability Date (ii) the date on which Licensor’s “standard” residential Video-On-Demand window for the Territory ends and (iii) the termination of this Agreement for any reason.

5. LICENSE FEE; PAYMENT. Licensee shall pay to Licensor a license fee determined in accordance with this Article 5 (the “VOD License Fee”). The VOD License Fee specified herein is a net amount unreduced by any tax, levy or charge, the payment of which shall be the responsibility of Licensee (except for taxes relating to Licensor’s income). The VOD License Fee for each VOD Avail Year during the VOD Avail Term shall be the aggregate total of all VOD Per-Program License Fees due for all VOD Included Programs whose VOD Availability Date occurs during each such VOD Avail Year, calculated as set forth below.

5.1 VOD Per-Program License Fee: For each VOD Included Program during its License Period, the “VOD Per-Program License Fee” equals the product of the (a) the total number of VOD Customer Transactions for such VOD Included Program, multiplied by (b) the greater of the VOD Actual Retail Price and the VOD Deemed Retail Price for such VOD Included Program, multiplied by (c) the applicable VOD Licensor Share.

5.2 Definitions

5.2.1 As used herein, “VOD Actual Retail Price” shall mean the actual amount paid or payable by each VOD Customer (whether or not collected by Licensee) on account of said VOD Customer’s selection of a VOD Included Program from the VOD Service.


5.2.2 As used herein, “VOD Deemed Retail Price” shall mean: (i) US$3.99 for each Current Feature in Standard Definition distributed in the United States; (ii) CAD$4.99 for each Current Feature in Standard Definition distributed in Canada; (iii) US$4.99 for each Current Feature in High Definition distributed in the United States; (iv) CAD$5.99 for each Current Feature in High Definition distributed in Canada; (v) US$2.99 for each Library Feature in Standard Definition distributed in the United States; (vi) CAD$3.99 for each Library Feature in Standard Definition distributed in Canada; (vii) $3.99 for each Library Feature in High Definition distributed in the United States and (viii) CAD$4.99 for each Library Feature in High Definition distributed in Canada. For purposes of clarification, the VOD Deemed Retail Price shall be a net amount unreduced by any tax, levy or charge, the payment of which shall be the responsibility of Licensee.

5.2.3 As used herein, “VOD Licensor’s Share” shall mean (i) for each Current Feature with a VOD Availability Date greater than or equal to 30 days after its Home Video Street Date or, if no home video release occurred, 60%; (ii) for each Current Feature with a VOD Availability Date greater than or equal to 1 but no more than 29 days after its Home Video Street Date, 65%; (iii) for each Current Feature with a VOD Availability Date on its Home Video Street Date (i.e., day and date), 70%; and (iv) for each Library Feature, 50%.

6. MATERIALS. Prior to the VOD Availability Date for each VOD Included Program, Licensor shall make available to Licensee (or, upon Licensee’s request, a third party approved in writing by Licensor, who shall initially be Sonic Solutions,) a digital source file (each, a “Copy”) of such VOD Included Program, together with any metadata and Advertising Materials (as defined at Schedule A, Section 12.1) to the extent cleared and readily available, in a form capable of encoding and/or wrapping in the Approved Format in effect as of such date and otherwise in accordance with the “Delivery Standards and Encoding Specifications” set forth in Schedule D hereto. Copies provided by Licensor to Licensee for distribution in the Approved Format shall be delivered pre-encoded in the MPEG-2 8 Mbps format and in such event, Licensee shall have the obligation to wrap such copies in the Approved Format. Except for VOD Included Programs that Licensor has previously delivered to Licensee pursuant to the DHE General Terms, and for which Licensee has paid the Servicing Fee (as defined in the DHE General Terms), all costs (including, without limitation, duplication/encoding, shipping and forwarding charges, and insurance) shall be borne solely by Licensor. All costs of creating and delivering Advertising Materials shall be borne solely by Licensor.

7. PROMOTIONS. Without limiting any other provisions hereof, Licensee shall market and promote the VOD Included Programs in accordance with the terms and conditions set forth in this Section 7, Section 12 of Schedule A and the “Marketing, Placement and Promotion Guidelines for Included Programs” set forth in Schedule E hereto and incorporated herein by reference.

7.1 Except as set forth in Section 7.4, Licensee shall have the right to promote on the VOD Service and otherwise to the general public the upcoming availability of each VOD Included Program during the period starting no more than fifteen (15) days before its VOD Availability Date and to continue promoting such availability through the last day of its VOD License Period.


7.2 Licensee may promote the upcoming exhibition of a VOD Included Program on the VOD Service in printed materials distributed directly and solely to VOD Customers not earlier than thirty (30) days prior to the VOD Availability Date of such VOD Included Program and continue promoting such availability through the last day of such VOD Included Program’s VOD License Period.

7.3 Licensee shall not promote any VOD Included Program (i) after the expiration of the VOD License Period for such VOD Included Program or (ii) notwithstanding anything herein to the contrary, with respect to any VOD Included Program whose VOD Availability Date occurs at least fifteen (15) days after such program’s Home Video Street Date, during the first fifteen (15) days following the Home Video Street Date of such VOD Included Program in the Territory.

7.4 With respect to any VOD Included Program whose VOD Availability Date occurs on or within fifteen (15) days after such program’s Home Video Street Date (a “Within Fifteen Days Included Program”), if Licensor establishes a date prior to which no marketing or promotion may occur for any VOD Included Program (“VOD Announce Date”), Licensee may not “pre-promote” such title, to include, without limitation: (a) solicit any pre-orders; (b) advertise referencing price or release date; or (c) use any title-related images or artwork. Violation of this provision shall constitute a material breach of the Agreement. If no VOD Announce Date with respect to a Within Fifteen Days Included Program is specified by Licensor, Licensee shall not pre-promote any Within Fifteen Days Included Program more than sixty (60) days prior to its VOD Availability Date unless otherwise directed by Licensor.

7.5 Licensee shall use any marketing, promotional and advertising materials provided by Licensor in a manner consistent with the following:

7.5.1 If any announcement, promotion or advertisement for a VOD Included Program is more than ten (10) days in advance of such program’s VOD Availability Date, Licensee shall only announce and/or promote and/or advertise (in any and all media) its future availability on the VOD Service by referring to its specific VOD Availability Date. By way of example, in such case “Coming to ______ September 10” would be acceptable, but “Coming soon on _______” would not be acceptable; or

7.6 If any announcement, promotion or advertisement for a VOD Included Program is ten (10) or fewer days in advance of such program’s VOD Availability Date, Licensee shall have the right to announce and/or promote and/or advertise (in any and all media) its future availability by referring generally to its upcoming availability or referring to its specific VOD Availability Date. By way of example, in such case both “Coming to _______ September 10” and “Coming soon on _______” would be acceptable.

8. REMAINING TERMS. The remaining terms and conditions of this Agreement are set forth in Schedules A through F, attached hereto and incorporated herein by reference. In the event of a conflict between any of the terms of these documents this Agreement shall control over Schedules A through F.


GENERAL TERMS AND CONDITIONS OF DHE LICENSE AGREEMENT

(“DHE General Terms”) 1. DEFINITIONS. All capitalized terms used herein and not otherwise defined in this Agreement shall have the meanings set forth below.

1.1 “Canadian DHE Service” shall mean the DHE program distribution service in Canada which is, and shall at all times during the DHE Term be, branded “Best Buy CinemaNow” or such other brand that Licensee may determine and notify Licensor thereof, which is, and shall at all times during the DHE Term be accessible via the website located at www.cinemanow.coa and wholly-owned, controlled and operated by Licensee.

1.2 “DHE Authorized Version”: for any DHE Included Program, shall mean the version made available by Licensor to Licensee in Licensor’s sole discretion.

1.3 “DHE Availability Date” with respect to a program shall mean the date on which such program is first made available for the exercise of the rights licensed hereunder as specified in Section 5.3 of the DHE General Terms.

1.4 “DHE Customer” shall mean each unique user of the DHE Service authorized by Licensee to receive, decrypt and play a copy of a DHE Included Program from the DHE Service in accordance with the terms and conditions hereof.

1.5 “DHE Customer Transaction” shall mean each instance in which a DHE Customer is authorized by Licensee to receive, decrypt and play a copy of a DHE Included Program from the DHE Service by delivery from the DHE Service to one Approved Device.

1.6 “DHE Included Program” shall mean a program, regardless of what medium such program was first released, made available by Licensor to Licensee for license on a DHE basis in the Territory.

1.7 “DHE Service” shall mean the US DHE Service and the Canadian DHE Service.

1.8 “DHE Usage Rules” shall mean the content usage rules applicable to each DHE Included Program available on the DHE Service, as set forth in the attached Schedule C-2.

1.9 “Digital Locker Functionality” shall mean the functionality which enables Customers to access and obtain on demand at such Customer’s discretion up to an unlimited number of re-Transmissions of such Customer’s Included Program(s) previously paid for and acquired pursuant to a Customer Transaction in the Approved Format from the Licensed Service to an Approved Device(s) via the applicable Approved Transmission Means.

1.10 “Playback License” shall mean an authorization under the DRM of the Approved Format permitting playback of a DHE Included Program on an Approved Device in accordance with the DHE Usage Rules. The Playback License must be issued by the DHE Service in order for the DHE Customer to play a DHE Included Program. The number of Playback Licenses


permitted to be issued in connection with any single DHE Customer Transaction shall in no event be more than the number and type of Approved Devices specified in the Usage Rules. For the avoidance of doubt, Playback Licenses shall be composed of the decryption or license key necessary to enable viewing of a copy of a DHE Included Program.

1.11 “Television Episode” shall mean a serialized half broadcast-hour, broadcast television program hour episodes, or other short-form content.

1.12 “Television Series” shall mean a single series of Television Episodes, including all broadcast seasons thereof.

1.13 “US DHE Service” shall mean the DHE program distribution service in the fifty states of the United States of America and the District of Columbia, including all U.S. Territories, U.S. Possessions and Puerto Rico which is, and shall at all times during the DHE Term be, branded “Best Buy CinemaNow” or such other brand that Licensee may determine and notify Licensor thereof, which is, and shall at all times during the DHE Term be accessible via the website located at www.cinemanow.com and wholly-owned, controlled and operated by Licensee.

2. TERM.

2.1 The initial term during which Licensor shall be required to make programs available for licensing and Licensee shall be required to license programs hereunder shall commence on the Effective Date (such date to also be known as, the “DHE Initial Avail Date”), and shall terminate on January 31, 2012 (“DHE Initial Avail Term”). The DHE Initial Avail Term shall automatically extend for one (1) additional 12-month period (“DHE Extension Period”) following the expiration of the DHE Initital Avail Term unless either party gives the other party not less than thirty (30) days written notice prior to expiration of the DHE Initial Avail Term of its election not to extend the DHE Initial Avail Term. The DHE Initial Avail Term and the DHE Extension Period, if any, shall be the “DHE Avail Term” and each 12-month period during the DHE Avail Term shall be a “DHE Avail Year,” with the first DHE Avail Year being “DHE Avail Year 1,” and the second being “DHE Avail Year 2.”

2.2 Term. The “DHE Term” of this Agreement shall commence on the Effective Date and shall expire on the earlier to occur of (i) the expiration of the VOD Term, and (ii) the earlier termination of this Agreement.

3. LICENSE.

3.1 Licensor grants to Licensee, and Licensee hereby accepts, a non-exclusive, non-transferable, non-sublicensable license to distribute each DHE Included Program, in its DHE Authorized Version and the Licensed Language solely in the medium of DHE delivered by an Approved Transmission Means in an Approved Format to the Approved Device of a DHE Customer of the DHE Service for Personal Use in the Territory pursuant solely in each instance to a DHE Customer Transaction and subject at all times to the DRM settings (as set forth in Schedule C-1), Content Protection Requirements (as set forth in Schedule B-2 and, solely with respect to the DHE distribution of Feature Films (as defined below) in High Definition resolution


hereunder, Schedule C-3) and the DHE Usage Rules. This Agreement shall not create any holdback on Licensor’s right to exploit any DHE Included Program in any version, language, territory or medium, or by any transmission means, in any format, to any device in any venue or in any territory at any time.

3.2 Licensee shall not be permitted in any event to offer or conduct promotional campaigns for the DHE Included Programs offering free buys, including without limitation “two-for-one” promotions (by coupons, rebate or otherwise) without Licensor’s prior written consent. Licensee shall not charge any club fees, access fees, monthly service fees or similar fees (but not referring to any equipment purchase or rental fee; provided that such fee or any portion thereof is not creditable against any customer per transaction fees) for general access to the DHE Service (whether direct or indirect), or offer the DHE Included Programs on a subscription or 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) without Licensor’s prior written consent.

3.3 Licensee may enable Digital Locker Functionality for Included Programs subject to the DHE Usage Rules and the Content Protection Requirements set forth in Schedule B-1. In the event the Agreement is (a) terminated by Licensee pursuant to Section 17.2 of Schedule A or (b) expires, then Licensee’s right to enable Digital Locker Functionality for Included Programs shall survive (subject to the terms of this Agreement, DRM settings (as set forth in Schedule C-1), Content Protection Requirements (as set forth in Schedule B-2 and, solely with respect to the DHE distribution of Feature Films (as defined below) in High Definition resolution hereunder, Schedule C-3) and the DHE Usage Rules) for up to five (5) years following any such expiration or termination of the Agreement. Notwithstanding the foregoing, if the Agreement is terminated by Licensor pursuant to Section 9.5 of Schedule A or Section 17.1 of Schedule A, Licensee shall cease enabling Digital Locker Functionality for Included Programs as soon as commercially reasonable but in no event later than thirty (30) days from the date such termination is effective.

4. LICENSING COMMITMENT.

4.1 Feature Films. Licensee shall distribute on the terms and conditions set forth herein the following number of DHE Included Programs that are not Television Episodes (“Feature Films”) made available by Licensor during the DHE Term commencing on such program’s DHE Availability Date: (a) with respect to each of the US DHE Service and the Canadian DHE Service, all such Feature Films that are categorized as “Price Tier 1” programs pursuant to Section 6.1 and (b) with respect to each of the US DHE Service and the Canadian DHE Service, at least 150 Feature Films that are categorized as “Price Tier 2” or “Price Tier 3” programs pursuant to Section 6.1.

4.2 Television Episodes. Licensor shall make available certain Television Episodes to Licensee for distribution in Standard Definition and/or High Definition hereunder, which Television Episodes and their respective resolutions (i.e., SD or HD) shall be determined by Licensor in its sole discretion, and Licensee shall have the right (but not the obligation) to license from Licensor hereunder any or all such Television Episodes in such resolutions.


5. AVAILABILITY.

5.1 Licensor shall deliver to Licensee as soon as practicable after the full execution of this Agreement a list of the programs to be made available as DHE Included Programs for both the US DHE Service and the Canadian DHE Service hereunder (the “Initial Program List”).

5.2 Licensor shall notify Licensee in writing (“Availability Notice”) on a periodic basis of additional programs to be made available as DHE Included Programs for both the US DHE Service and the Canadian DHE Service hereunder. During the initial six months of the DHE Term, Licensor shall deliver each Availability Notice as far in advance of the DHE Availability Date for the applicable DHE Included Program as is reasonably practical (but in no event will Licensor be required to deliver any Availability Notice more than 45 days in advance of the applicable DHE Availability Date). After the initial six months of the DHE Term, Licensor shall deliver each Availability Notice to Licensee not less than 45 days prior to the DHE Availability Date for each such DHE Included Program.

5.3 The DHE Availability Date for each DHE Included Program shall be determined by Licensor in its sole discretion; provided, however, that the DHE Availability Date for each DHE Included Program shall be no later than its Home Video Street Date.

5.4 Notwithstanding anything to the contrary in this Agreement, Licensor may elect, in its sole discretion, to make any DHE Included Program available for exclusive distribution through a single distributor, or non-exclusive distribution through other distributors, in the Territory prior to the DHE Availability Date for such DHE Included Program hereunder (“Delayed Picture”); provided, however, that the number of Delayed Pictures shall in no event exceed a number that is equal to 10% of the number of titles that Licensor generally makes available on a non-exclusive basis for DHE distribution in the Territory.

6. DISTRIBUTOR PRICE

6.1 Non-Television Episodes. “DHE Distributor Price” for each DHE Included Program that is not a Television Episode (“Feature Film”) shall be determined by Licensor in its sole discretion. Licensor currently anticipates categorizing such programs into one of the following pricing tiers, with the corresponding initial price points (a) for Standard Definition distributed in the United States, (i) Price Tier 1: US$15.50; (ii) Price Tier 2: US$8.50; and (iii) Price Tier 3: US$7.00, (b) for Standard Definition distributed in Canada, (i) Price Tier 1: CAD$19.00; (ii) Price Tier 2: CAD$10.00; and (iii) Price Tier 3: CAD$7.50 and (c) for High Definition distributed in the United States, (i) Price Tier 1: US$19.50, (ii) Price Tier 2: US$15.50, and (iii) Price Tier 3: to be discussed by the parties in good faith. For the avoidance of doubt, no Feature Films shall be distributed in High Definition in Canada. The parties acknowledge that, as of the date hereof, they have not agreed on initial price points for Tier 3 Feature Films distributed in High Definition. If the parties have not come to agreement with respect to the foregoing by the time Licensor re-prices a Feature Film distributed in High Definition into Tier 3 as set forth in this Section 6.1, Licensee shall have the right to cease distributing such Feature Film in High Definition on the Licensed Service as of the effective date of such Repricing. Licensor shall notify Licensee of the DHE Distributor Price for each DHE Included Program in a written notice to Licensee from time to time. Licensor may update DHE Distributor Prices and/or add or remove pricing tiers at any time in Licensor’s sole discretion pursuant to the notice procedures set forth in Article 22 of Schedule A. Notice of any adjustment


to the DHE Distributor Price for a DHE Included Program that is not a Television Episode (“Repricing”) shall be set forth in a written notice to Licensee not less than 30 days prior to the effective date of such Repricing.

6.2 Television Episodes. The “DHE Distributor Price” for each DHE Included Program that is a Television Episode shall be equal to: 70% of the greater of (a) (1) US$1.99 or CAD$2.49, as applicable, if the Television Episode is offered in Standard Definition or (2) US$2.99 or CAD$3.49, as applicable if the Television Episode is offered in High Definition and (b) the actual amount paid or payable by the DHE Customer (whether or not collected by Licensee) on account of said DHE Customer’s selection of such Television Episode from the DHE Service.

6.3 The price charged to a DHE Customer by Licensee (“DHE Customer Price”) for each Customer Transaction shall be established by Licensee in its sole discretion. Licensor’s Suggested Customer Price or “SCP,” if any, for each DHE Included Program or pricing tier shall be set forth in the Availability Notice or Repricing notice for such program or pricing tier.

7. TECHNICAL CREDITS. Licensee may offer a DHE Customer an additional copy and/or an additional decryption key (“Technical Credits”) for a DHE Included Program solely as follows: one additional copy of a DHE Included Program or one additional decryption key may be offered without charge to any DHE Customer who has paid the DHE Customer Price for a DHE Included Program and who requests such copy or decryption key for a recovery purpose (e.g., a hardware or software loss or malfunction or a device or software replacement or upgrade) in accordance with Licensee’s terms of service. Additional Technical Credits shall be allowed solely in the event there is no contradicted evidence or behavior suggesting that such DHE Customer has not had a hardware or software malfunction that renders one or more copies of a validly purchased DHE Included Program unviewable or that the Approved Device to which a DHE Included Program was delivered has been replaced or upgraded. Licensee shall not issue Technical Credits in any circumstance where the DHE Customer is able to use the Digital Locker Functionality in compliance with this Agreement to Stream or Electronic Download the applicable DHE Included Program without receiving a Technical Credit from Licensee. Licensee shall not issue Technical Credits for any programs that have been withdrawn and/or excluded from the DHE Service pursuant to Articles 6 and 18 of Schedule A; provided, however, that in those instances where Licensee would otherwise have issued a Technical Credit for a program that has been withdrawn or excluded from the DHE Service, Licensee may elect to provide DHE Customer with a refund for such program and apply the amount of such refund as a credit when calculating DHE Total Actuals (“Withdrawn Program Credit”), subject to the monthly cap set forth in Section 8.2 below.

7.1 For the avoidance of doubt, such Technical Credits shall apply only to Approved Formats for which DHE Usage Rules do not permit the DHE Customer to maintain multiple or moveable personal copies of the DHE Included Programs.

7.2 Licensee shall report to Licensor on a monthly basis for the previous month how many Technical Credits have been issued as a percentage of all DHE Customer Transactions with respect to the DHE Included Programs.

7.3 Further, Licensee shall actively monitor and report to Licensor wherever Licensee


(a) has actual knowledge of fraudulent Technical Credit requests with respect to Licensor’s content or (b) becomes aware of a pattern of repeated Technical Requests or other evidence which suggests fraudulent Technical Credit activity on the part of a consumer.

8. FEES & PAYMENTS. Licensee shall pay to Licensor, with respect to each DHE Included Program, each of the following (together, “DHE License Fees”)

8.1 The Servicing Fees described below; and

8.2 The “DHE Total Actuals,” which are the sum total of each and every DHE Distributor Price for each and every DHE Customer Transaction without deduction, withholding or offset of any kind; provided, however, that (i) bona fide Technical Credits in an amount not to exceed 1% of the proceeds of all DHE Customer Transactions in any month shall not count as DHE Customer Transactions for the purpose of calculating DHE Total Actuals for such month, and (ii) Licensee may deduct the amount of any Withdrawn Program Credits in an amount not to exceed 1% of the proceeds of all DHE Customer Transactions issued during the applicable calendar month in order to arrive at the DHE Total Actuals for such month.

9. MATERIALS; SERVICING FEE

9.1 Prior to the DHE Availability Date for each DHE Included Program, Licensor shall make available to Licensee (or, upon Licensor’s request, a third party approved in writing by Licensor, which shall initially be Sonic Solutions), a digital source file (each, a “Copy”) of such DHE Included Program, together with any metadata and Advertising Materials (as defined at Schedule A, Section 12.1) to the extent cleared and available, in a form capable of encoding and/or wrapping in the Approved Format in effect as of such date, and otherwise in accordance with the “Delivery Standards and Encoding Specifications” set forth in Schedule D hereto. Copies provided by Licensor to Licensee for distribution in the Approved Format shall be delivered pre-encoded in the MPEG-2 8 Mbps format and in such event, Licensee shall have the obligation to wrap such copies in the Approved Format.

9.2 In the event that the content network provider for the DHE Service is no longer the “RoxioNow”branded service provided by Sonic Solutions or any of its wholly-owned subsidiaries, the materials for each newly provided DHE Included Program will be subject to a non-recoupable per title “Servicing Fee” at Licensor’s standard rates. In the event that a Servicing Fee is payable by Licesenee, Licensee shall pay the Servicing Fee for each DHE Included Program no later than fifteen (15) days following Licensee’s receipt of the Copy and related materials (but in no event later than the date Licensee makes such DHE Included Program available on the DHE Service).

10. PROMOTIONS. Without limiting any other provision hereof, Licensee shall market and promote the DHE Included Programs in accordance with this Section 10, Section 12 in Schedule A, and the “Marketing, Placement and Promotion Guidelines for Included Programs” set forth in Schedule E hereto and incorporated herein by reference.

10.1 If Licensor establishes a date prior to which no marketing or promotion may occur for any title (“DHE Announce Date”), Licensee may not “pre-promote” such title, to include, without limitation: (a) solicit any pre-orders; (b) advertise referencing price or release date; or (c) use any title-related images or artwork. Violation of this provision shall constitute a


material breach of the Agreement. If no DHE Announce Date is specified by Licensor, Licensee shall not pre-promote any DHE Included Program more than sixty (60) days prior to its DHE Availability Date unless otherwise directed by Licensor and in no event may Licensee promote any title prior to receiving an Availability Notice for such title.

10.2 Licensee shall use any marketing, promotional and advertising materials provided by Licensor in a manner consistent with the following:

10.2.1 If any announcement, promotion or advertisement for a DHE Included Program is more than ten (10) days in advance of such program’s DHE Availability Date, Licensee shall only announce and/or promote and/or advertise (in any and all media) its future availability on the DHE Service by referring to its specific DHE Availability Date. By way of example, in such case “Coming to ______ September 10” would be acceptable, but “Coming soon on _______” would not be acceptable; or

10.2.2 If any announcement, promotion or advertisement for a DHE Included Program is ten (10) or fewer days in advance of such program’s DHE Availability Date, Licensee shall have the right to announce and/or promote and/or advertise (in any and all media) its future availability by referring generally to its upcoming availability or referring to its specific DHE Availability Date. By way of example, in such case both “Coming to _______ September 10” and “Coming soon on _______” would be acceptable.

11. REMAINING TERMS. The remaining terms and conditions of this Agreement are set forth in Schedules A through F, attached hereto. In the event of a conflict between any of the terms of these documents this Agreement shall control over Schedules A though F.

(Remainder of Page Intentionally Left Blank)


SCHEDULE A

STANDARD TERMS AND CONDITIONS OF LICENSE AGREEMENT

The following are the standard terms and conditions governing the license set forth in the License Agreement to which this Schedule A is attached.

1. DEFINITIONS

1.1 “Account” shall mean a single Customer’s account with verified credentials, which shall (a) consist of at least a user identification and password of sufficient length to prevent brute force attacks, (b) include reasonable measures to prevent unwanted sharing of such credentials (i.e., allowing access to active credit card or other financially sensitive information), and (c) be transmitted securely to ensure privacy and protection against attacks.

1.2 “Approved Device” shall mean Downloading Devices and Streaming Devices, each of which are designed to implement the Usage Rules and support the Approved Format, the applicable Approved Transmission Means and the Content Protection Obligations and Requirements set forth in Schedule B-2 (and solely with respect to the DHE distribution of Feature Films in High Definition resolution hereunder, Schedule C-3).

1.3 “Approved Format” shall mean a digital electronic media file compressed and encoded for secure transmission and storage in a resolution specified by Licensor (a) in the Windows Media Player format (Version 9 or higher) and protected by the Windows Media Series 10 DRM with the license settings/configuration set forth in Schedules B-1 and C-1, as applicable (as such settings may be modified with Licensor’s prior written consent), (b) in Approved Streaming Format solely with respect to Streaming Devices, or (c) in such other codecs and DRMs as Licensor may approve from time to time in its sole discretion. Licensor and Licensee agree to use good faith efforts to discuss the addition of new codecs and DRMs pursuant to subsection (c) above upon the request of either party, but Licensor shall be under no obligation to approve any specific additional codec or DRM. 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 and adversely altered by its publisher, such as a versioned release of a Approved Format or a change to a Approved Format that 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 and shall not allow for the copying or moving of a digital file (whether within the receiving device, to another device or to a removable medium).

1.4 “Approved Set-Top Box” shall mean an IP-enabled set-top device that is designed for the reception, decoding and display of audio-visual content exclusively on an associated video monitor or conventional television set, utilizes decryption, provides conditional access by means of a Licensor approved technology, is enabled to access and exhibit substantially all audio-visual content generally available on the Internet, is capable of implementing the Usage Rules, and supports the Approved Format, the Approved Transmission Means and the Content Protection Obligations and Requirements set forth in Schedule C. Approved Set-Top Boxes do not include Game Consoles, Personal Computers, Portable Devices, or any set-top device enabled to access or exhibit only a limited selection of Included Programs.


1.5 “Approved Streaming Format” shall mean a digital electronic media file compressed and encoded for secure streaming transmission in a resolution specified by Licensor for Streaming Devices, in accordance with Widevine Cypher 4.2 DRM with the license settings/configuration set forth on Schedule B-1 for VOD and Schedule C-1 for DHE , both attached hereto and incorporated herein by this reference, as the same may be updated from time-to-time with the mutual written consent of the parties.

1.6 “Approved Transmission Means” shall mean the delivery of audio-visual content (a) via Electronic Downloading to a Downloading Device over the public, free to the consumer (other than a common carrier/ISP access charge) network of interconnected networks (including the so-called Internet, Internet2 and World Wide Web), each 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”); (b) with Licensor’s prior written approval, which may be given or withheld in Licensor’s sole discretion on a system-by-system basis, for downloading on a Downloading Device over a closed distribution network or networks (including a subscription service that offers programming not generally available on the World Wide Web or a so-called “walled garden” or closed ADSL/DSL, cable or FTTH service), each using IP technology, whether transmitted over cable, DTH, FTTH, ADSL/DSL, BPL or other means (“Closed System”); and (c) via Streaming to Streaming Devices only, of audio-visual content transmitted over the Internet using IP technology. “Approved Transmission Means” does not include (i) 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 or (ii) Side Loading. Provided that such methods comply with the provisions of this Agreement, including without limitation the Content Protection Requirements set forth in Schedules B-2 and C-3, “Approved Transmission Means” may include “push download” (download initiated by Licensee rather than Customer of encrypted files to Customers in anticipation of Customer Transactions over Approved Transmission Means) and/or “pre-ordering” (download requested of a file of an Included Program by a Customer prior to the Availability Date of an Included Program) provided that, in each case, such file cannot be decrypted or otherwise viewed prior to: (y) the Availability Date for each such Included Program and (z) the completion of a Customer Transaction in respect thereof, subject to Licensor’s reasonable verification of the implementation process thereof; and, provided further, that such push downloading or pre-ordering is otherwise in compliance with this Agreement.

1.7 “Availability Date” shall mean the DHE Availability Date or the VOD Availability Date as the context requires.

1.8 “Business Day” shall mean any day other than (i) a Saturday or Sunday or (ii) any day on which banks in Los Angeles, California are closed or authorized to be closed.

1.9 “Canadian Service” shall mean the Canadian DHE Service and the Canadian VOD Service.

1.10 “Customer(s)” shall mean each DHE Customer and VOD Customer.

1.11 “Customer Transaction” shall mean each DHE Customer Transaction and VOD Customer Transaction.


1.12 “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 a customer pursuant to an authorized transaction whereby such customer is licensed to retain such program for playback an unlimited number of times.

1.13 “Downloading Devices” shall mean Personal Computers, Game Consoles an Approved Set-Top Boxes and Blu-Ray players (or other similar devices).

1.14 “DVD” shall mean the standard DVD (digital versatile disk) format commonly used, as of the Effective Date, to distribute pre-recorded motion picture home entertainment products in the retail channel and “DVD” excludes any successors and/or derivatives of the current standard DVD format, such as audio-only DVDs (e.g., DVD Audio, SACD, and Mini DVD), HD DVDs, limited-play DVDs (e.g., Flexplay), ecopies, and UMD/PSP.

1.15 “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.

1.16 “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 like accident, condition, cause, contingency or circumstance (including without limitation, acts of God within or without the United States), but shall not include an inability to pay for whatever reason.

1.17 “Game Console” shall mean an IP-enabled hardware device used by a Customer that (i) is designed primarily for playing video games, (ii) supports the Approved Format, (iii) is capable of implementing the Usage Rules, (iv) satisifies the Content Protection Obligations and Requirements set forth in Schedule B-2 and (v) receives Included Programs solely by the Approved Transmission Means applicable to Downloading Devices.

1.18 “HD DVD” shall mean High Definition digital versatile disk s (e.g., “Blu-Ray,” “HD-DVD” or red-laser technology) format commonly used, as of the Effective Date, to distribute pre-recorded motion picture home entertainment products in the retail channel.

1.19 “High Definition” shall mean any resolution that is (a) 1080 vertical lines of resolution or less (but at least 720 vertical lines of resolution) and (b) 1920 lines of horizontal resolution or less (but at least 1280 lines of horizontal resolution).

1.20 “Home Video Street Date” for each Included Program means the date on which such Included Program is first made available in the Territory on a non-exclusive basis to the general public in (unless otherwise specified herein) (a), with respect to Included Programs in Standard Definition format, the DVD format and (b) with respect to Included Programs in High Definition format, the HD DVD.


1.21 “Included Programs” shall mean the VOD Included Programs and the DHE Included Programs.

1.22 “Licensed Language” shall mean for each Included Program, the original language version if English, or the original language version dubbed or subtitled in English.

1.23 “Licensed Service” shall mean the VOD Service and the DHE Service.

1.24 “Other DHE Distributors” shall mean any other third party licensing the DHE Included Programs on a DHE basis from Licensor in the Territory during the DHE Avail Term.

1.25 “Other Distributors” shall mean the Other VOD Distributors and/or the Other DHE Distributors as the context requires.

1.26 “Personal Computer” shall mean an IP-enabled desktop or laptop device with a hard drive, keyboard and monitor, designed for multiple office and other applications using a silicon chip/microprocessor architecture and shall not include any Portable Devices.

1.27 “Personal Use” shall mean the private, non-commercial viewing by one or more persons on the conventional television set associated with the Approved Device in non-public locations and, provided that the consumer’s use of Approved Devices in such locations is personal and non-commercial, in public locations; provided, however, that any such viewing for which a premises access fee or other admission charge is imposed (other than any fee related only to access such non-residential venue for other general purposes) or any such viewing that is on a monitor provided by such non-residential venue (or by a third party under any agreement or arrangement with such non-residential venue) shall not constitute a “Personal Use.”

1.28 “Portable Device” shall mean portable media devices (such as the Apple iPod), PDAs or mobile phones, or any device running an operating system designed for portable or mobile devices, including, without limitation, Microsoft Smartphone, Microsoft Windows CE, Microsoft Pocket PC and future versions thereof.

1.29 “Promotional Preview” with respect to an Included Program shall mean a video clip commencing at the beginning of such Included Program and running no longer than a consecutive two minutes eleven seconds (2:11) thereafter (“Maximum Preview Duration”), with no additions, edits or any other modifications made thereto.

1.30 “Qualifying Studio” means Sony Pictures Entertainment, Paramount Pictures, Twentieth Century Fox, Universal Studios, Metro-Goldwyn-Mayer, The Walt Disney Company and Warner Bros., and any of their respective affiliates licensing video-on-demand and/or digitally delivered home entertainment rights in the Territory.

1.31 “Security Breach” shall mean a condition that results or, in Licensor’s good faith reasonable opinion is likely to result in: (i) material unauthorized availability of Included Programs or motion pictures on any Approved Device, Approved Format or Approved Transmission Means; or (ii) the availability of Included Programs on, or means to transfer Included Programs to, devices that are not Approved Devices, or transcode to formats that are not Approved Formats and/or transmit through delivery means that are not Approved Transmission Means; or (iii) a circumvention or failure of the Licensee’s secure distribution system, geofiltering technology or physical facilities; which condition(s) may, in the reasonable good faith judgment of Licensor, result in harm to Licensor.


1.32 “Set-Top Box” shall mean a device that (i) receives, decodes, stores and streams a digital audio-visual content signal, (ii) outputs such signal for display on an associated television or video monitor (which shall exclude, among others, display on mobile phones), and (iii) is capable for acting as a two-way interface for the selection by a viewer of such audio-visual content for exhibition.

1.33 “Side Loading” shall mean the transfer of an Included Program from a Customer’s Approved Device to any other device by means of locally connecting (physically via cable or wirelessly via a localized connection, but in no event via IP) the applicable other device to the applicable Approved Device for viewing solely on such other device.

1.34 “Standard Definition” shall mean (a) for NTSC, any resolution equal to or less than 480 lines of vertical resolution (and equal to or less than 720 lines of horizontal resolution) and (b) for PAL, any resolution equal to or less than 579 lines of vertical resolution (and equal to or less than 720 lines of horizontal resolution).

1.35 “Streaming” shall mean the transmission of a digital file containing audio-visual content from a remote source for viewing concurrently with its transmission, which file, except for temporary caching or buffering of a portion thereof (but in no event the entire file), may not be store or retained for viewing at a later time (i.e., no leave-behind copy – no playable copy as a result of the stream – resides on the receiving device).

1.36 “Streaming Device” shall mean an individually addressed and addressable IP-enabled hardware device used by a Customer, Downloading Device including without limitation Personal Computers, Game Consoles, individually addressed and addressable IP-enabled digital television sets, Blu-Ray players and other similar devices, that contains an integrated Licensee-branded playback client, (ii) supports the Approved Format, (iii) is capable of implementing the Usage Rules, (iv) satisifies the Content Protection Obligations and Requirements set forth in Schedule B-2 and (v) receives Included Programs solely by the Approved Transmission Means applicable to Streaming Devices.

1.37 “Term” shall mean the VOD Term and the DHE Term.

1.38 “Territorial Breach” shall mean a Security Breach that creates a material risk that any of the Included Programs will be delivered to persons outside the Territory, where such delivery outside the Territory may, in the sole good faith judgment of Licensor, result in harm to Licensor.

1.39 “Territory” shall mean the fifty states of the United States of America and the District of Columbia, including all U.S. Territories, U.S. Possessions and Puerto Rico and Canada.

1.40 “US Service” shall mean the US DHE Service and the US VOD Service.

1.41 “Usage Rules” shall mean the VOD Usage Rules and the DHE Usage Rules.

1.42 “VCR Functionality” shall mean the capability of a subscriber to perform any or all of the following functions with respect to the delivery of an Included Program: stop, start, pause, play, rewind and fast forward.

1.43 “Video-On-Demand” or “VOD” shall mean the point to point delivery of a single program to a viewer 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


during its VOD Viewing Period (or multiple exhibitions, each commencing during its VOD Viewing Period), which fee is unaffected in any way by the purchase of other programs, products or services; and (ii) the exhibition start time of which is at a time specified by the viewer in its discretion. For the avoidance of doubt, a single Video-On-Demand exhibition that commences during a VOD Included Program’s VOD Viewing Period may play-off for the uninterrupted duration of such VOD Included Program. “Video-On-Demand” shall not include operating on a subscription basis (including, without limitation, so-called “subscription video-on-demand”), nor shall “Video-On-Demand” include pay-per-view, DHE, premium pay television, basic television or free broadcast television exhibition.

1.44 “Viral Distribution” shall mean the retransmission and/or redistribution of an Included Program, either by the Licensee or by the Customer, by any method, in a viewable, unencrypted form (other than as expressly allowed herein) including, but not limited to: (i) user-initiated peer-to-peer file sharing as such practice is commonly understood in the online context, (ii) digital file copying or retransmission, or (iii) burning, downloading or other copying to any removable medium (such as DVD) from the initial download targeted by the Licensed Service (other than as specifically set forth herein in the Usage Rules) and distribution of copies of an Included Program viewable on any such removable medium.

2. RESTRICTIONS ON LICENSE.

2.1 Licensee agrees that without the specific written consent of Licensor, or except as otherwise set forth herein: (a) Licensee shall not have the right to transmit, exhibit or deliver the Included Programs in a high definition, up-converted or analogous format or in low resolution, down-converted format; (b) neither the DHE Service nor the VOD Service shall be co-branded, sublicensed or white labeled; and (c) the license hereunder expressly prohibits the storage, recording or so-called secure burn of any Included Program (other than as expressly permitted herein) until such time as otherwise agreed in writing between the parties.

2.2 Licensee shall immediately notify Licensor of any unauthorized transmissions or exhibitions of any Included Program of which it becomes aware.

2.3 As between Licensor and Licensee, Licensee shall be fully responsible for customer support and maintenance of Included Programs distributed by Licensee during the Term and thereafter, including replacing files and associated license entitlements.

3. RESERVATION OF RIGHTS. All licenses, rights and interest in, to and with respect to the Included Programs, the elements and parts thereof, and the media of exhibition and exploitation thereof, not specifically granted herein to Licensee, including, without limitation, theatrical, non-theatrical, home video (including without limitation standard DVD (digital versatile disk), successors and/or derivatives of the current standard DVD format, audio-only DVDs (e.g., DVD Audio, SACD, and Mini DVD), high definition DVDs (e.g., “Blu-Ray,” “HD-DVD” or red-laser technology), limited-play DVDs (e.g., Flexplay), ecopies, and UMD/PSPDVD), pay-per-view, pay television, basic television, free broadcast television, high definition television, subscription-video-on demand, and any so-called PVR or “personal video recorder” rights, shall be and are specifically and entirely reserved by and for Licensor. Without limiting the generality of the foregoing, Licensee acknowledges and agrees that (a) Licensee has no right in the Included Programs or the images or sound embodied therein, other than the right


to distribute the Included Programs in accordance with the terms and conditions set forth in this Agreement; (b) this Agreement does not grant to Licensee or any other person or entity any right, title or interest in or to the copyright or any other intellectual property right in the Included Programs, and nothing contained in this Agreement is intended to convey or will convey to Licensee any ownership or other proprietary interests in the Included Programs; and (c) Licensor retains the right to fully exploit the Included Programs and Licensor’s rights in the Included Program’s without limitation or holdback of any kind, whether or not competitive with Licensee.

4. TERMS OF SERVICE. Without limiting any other obligation of Licensee hereunder, prior to making an Included Program available hereunder, Licensee shall (i) provide conspicuous notice of the terms and conditions pursuant to which a Customer may use the Licensed Service and Included Programs, (“Terms of Service” or “TOS”) and (ii) include provisions in the TOS stating substantively, among other things and without limitation, that: (a) Customer is obtaining a license under copyright to the Included Program, (b) Customer’s use of the Included Program must be in accordance with the Usage Rules, (c) except for the rights explicitly granted to Customer, all rights in the Included Program are reserved by Licensee and/or Licensor, and (d) the license terminates upon breach by Customer and upon termination the Included Program(s) will be inaccessible to Customer. Licensee shall contractually bind all users of the Licensed Service to adhere to the TOS and Usage Rules prior to the completion of each initial Customer Transaction (or at any other time if required by the TOS or Usage Rules) by any Customer and shall make Licensor (or all licensors in the aggregate) an intended third party beneficiary of such agreement between Customer and Licensee.

5. PROGRAMMING.

5.1 (a) All VOD Included Programs shall be made continuously available for distribution to VOD Customers on the VOD Service during their respective VOD License Periods and (b) all DHE Included Programs shall be made continuously available for distribution to DHE Customers on the DHE Service during the DHE Term on the terms and conditions set forth herein; provided that it shall not be a breach of this provision if an Included Program is not made available on its Availablity Date as a result of delays caused by the Licensee’s ordinary course procedures to prepare the Copy of such Included Program for distribution on the Licensed Service so long as such Included Program is made available for distribution on the Licensed Service as soon as reasonably practicable following the Availabilty Date of such Included Program.

5.2 Notwithstanding anything contained herein to the contrary, Licensee agrees that (i) no Adult Program shall be exhibited, promoted or listed on the same or previous screen (other than the home page of the Licensed Service, which may contain a textual link with a section of the user interface exhibiting, promoting or listing Adult Programs) as a screen on the Licensed Service on which an Included Program is promoted or listed and (ii) no Adult Program will be classified within the same genre/category as any Included Program. Notwithstanding the foregoing, nothing contained herein shall be interpreted or construed as prohibiting Licensee from (a) listing Included Programs on alphabetic lists of all available VOD or DHE titles (including lists divided by appropriate categories), (b) permitting Included Programs to be listed with other available VOD or DHE titles in search results generated by consumer-controlled searches of available VOD or DHE titles, and/or (c) permitting Included Programs to be listed with other available VOD or DHE titles in recommendation engines and other, similar user-


specific sections of the Licensed Service. If Licensee violates the terms of this Section 5.2 with respect to the Licensed Service, then Licensor shall have the right to cause Licensee to immediately cease exploiting any or all Included Programs. As used herein, “Adult Program” shall mean adult content (as such term is used in the industry, but which does not include R rated titles, NC-17 rated (or unrated titles likely to have received an NC-17 rating) released by a Qualifying Studio, or NC-17 rated (or unrated titles likely to have received an NC-17 rating) otherwise deemed not to be adult content in the reasonable good faith judgment of Licensor) or pornography.

5.3 Licensee shall notify Licensor of the various genres/categories (e.g., drama, comedy, horror, suspense, romance, etc.), in which programs will generally be classified on the Licensed Service and shall use reasonable efforts to notify Licensor before it modifies, adds to or removes any such genres/categories. Licensee shall use good faith efforts to classify each Included Program within one or more of the available genres/categories in an appropriate manner. Licensor shall have the right at any time to object to a classification of an Included Program that is, in the sole and good faith judgment of Licensor, derogatory or inappropriate, and to require Licensee to promptly reclassify such Included Program in the genres/categories designated by Licensor.

5.4 The Included Programs shall receive no less favorable treatment in the aggregate with regard to all aspects of programming, including, without limitation, allocation of space on the Licensed Service interface, and prominence within the genre/categories, as the programming of any other content provider, with the exception of special promotions, exclusives and other similar marketing campaigns, as well as programs funded by any particular content provider (collectively, “Special Promotions”).

5.5 Promotional Previews. Licensee shall have the right to use Promotional Previews on the Licensed Service in accordance with Schedule A, Section 12.1, subject to any contractual restrictions of which Licensor notifies Licensee in advance. Notwithstanding anything to the contrary herein, in the event that any guild, union, or collective bargaining agreements to which Licensor or its affiliates is or becomes a party requires a maximum duration for video clips that is shorter than the Maximum Preview Duration in order to avoid a residual, reuse or other fee in connection therewith, Licensor shall so notify Licensee in writing and Licensee shall either (i) shorten the duration of each Promotional Preview on the Licensed Service in accordance with the terms of the notice (“Revised Preview Duration”) as soon as reasonably possible, but in no event longer than two (2) business days after receipt of such notice, or (ii) cease using Promotional Previews. In addition to and without limiting any other remedy available to Licensor hereunder, in the event that Licensee exceeds the Maximum Preview Duration or any Revised Preview Duration (in the case of a Revised Preview Duration, after Licensee shortens the duration of such preview in accordance with the preceding sentence), Licensee shall indemnify Licensor for the costs of any residual, reuse or other fee payable by Licensor or its affiliates under the applicable guild, union or collective bargaining agreement(s) as a result thereof. Without limiting the foregoing, Licensor shall have the right to terminate (a) Licensee’s right to use a Promotional Preview for a particular Included Program on a case-by-case basis if Licensor reasonably believes that such Promotional Preview is not appropriate for all audiences or may violate the terms of any of Licensor’s agreements with, or may adversely affect Licensor’s material relations with, any third party and (b) Licensee’s general right to use Promotional Previews under this Agreement if Licensor withdraws such general right from all


Other Distributors in the Territory. Licensor shall give Licensee written notice of any such termination, in which event Licensee shall cease using the applicable Promotional Preview(s) within two business days after receipt of such notice.

5.6 Rating Agencies; Anti-Piracy Warnings

5.6.1 If Licensor provides Licensee, in writing, with rating information from the Motion Picture Association of America (“MPAA”) or its Canadian equivalent (collectively with the MPAA, the “Rating Agencies” and each a “Rating Agency”) for a particular Included Program, then Licensee shall display such Rating Agency rating information for each Included Program in the following manner: (i) the applicable Rating Agency rating icon(s), as well as the description of the reasons behind the rating, if applicable (e.g., “Rated PG-13 for some violence”), must be displayed in full on the main product page for such Included Program within the Licensed Service alongside other basic information for such Included Program such as, by way of example, run time, release date and copyright notice, and such information must be displayed before a Customer Transaction is initiated; and (ii) once a Customer Transaction has been completed, each time the Included Program is listed in a menu display of the Customer’s movie library within the Licensed Service, the applicable Rating Agency rating icon(s) for the Included Program must be displayed next to the Included Program title. In addition, the next major product release of the Licensed Service will implement parental controls that allow a Customer with password-protected access to the Licensed Service to restrict users of that Account from completing a Customer Transaction for Included Programs or viewing Promotional Previews for Included Programs that do not carry a specific Rating Agency rating (e.g., restrict access to Included Programs that carry any rating above “G” or its Canadian equivalent).

5.6.2 With respect to all Included Programs distributed by Licensee pursuant to this Agreement, Licensee shall display the following anti-piracy warning in the file attributes, “Properties” or similar summary information screen for each Included Program, which information may be accessed by Customers by accessing the “About” or “Options” information for each Electronically Downloaded or Streamed Included Program: “FBI ANTI-PIRACY WARNING: THE UNAUTHORIZED REPRODUCTION OR DISTRIBUTION OF THIS COPYRIGHTED WORK IS ILLEGAL. CRIMINAL COPYRIGHT INFRINGEMENT, INCLUDING INFRINGEMENT WITHOUT MONETARY GAIN, IS INVESTIGATED BY THE FBI AND IS PUNISHABLE BY UP TO 5 YEARS IN FEDERAL PRISON AND A FINE OF $250,000.” In addition, if at any time during the Term (i) Licensee implements functionality as part of the Licensed Service that enables the inclusion of an FBI warning or similar anti-piracy message that is played back or otherwise displayed before the start of a movie, and/or (ii) distributes motion pictures that include an FBI warning or similar-anti piracy message that plays back before the start of a movie, then Licensor shall have the option of including an FBI Warning or other anti-piracy message in the same manner with respect to the Included Programs distributed by Licensee hereunder, provided that the content and design of such message shall be reasonably approved by Licensor.

5.6.3 If, at any time during the Term, (i) a Rating Agency issues updated rules or otherwise requires the display of the Rating Agency rating information for digitally-


distributed motion pictures in a manner different than the requirements set forth in Section 5.3.1 above; and/or (ii) any U.S. governmental body with authority over the implementation of the so-called “FBI Anti-Piracy Warning,” requires that such warning be implemented in a manner different from the manner set forth in Section 5.6.2 above, then Licensor shall provide written notice to Licensee of such new requirements and Licensee shall use commercially reasonable efforts to promptly comply with those requirements. Licensor shall have the right, but not the obligation, to withdraw the affected Included Program(s) upon written notice to Licensee if Licensor believes that Licensee’s continued distribution in a manner that does not comply with the updated instructions will violate the material terms of any written agreement or other material requirement imposed on Licensor by the MPAA or any governmental body administering the use of such information or warnings, as applicable.

6. WITHDRAWAL OF PROGRAMS. Licensor shall have the right to withdraw any Included Program from the Licensed Service (and as soon as practicable after written notice from Licensor, Licensee shall cease to make such program available on the Licensed Service and shall cease to promote such program’s availability on the Licensed Service) if (i) Licensor reasonably believes that it does not have, or no longer has, or there is actual or threatened litigation regarding, the rights necessary to authorize Licensee to distribute such Included Program as provided herein; (ii) Licensor reasonably believes that Licensee’s continued distribution of such Included Programs will violate the terms of any of Licensor’s agreements with any applicable copyright owner, artist, composer, producer, director, publisher, distributor or similar third party rights holder; (iii) Licensor reasonably believes that Licensee’s continued distribution of such Included Program may adversely affect Licensor’s material relations with any applicable copyright owner, artist, composer, producer, director, publisher, distributor or similar third party rights holder; (iv) if such Included Program is placed on moratorium, as such term is customarily used in the home video distribution industry; or (v) upon 30 days’ prior written notice, Licensor, or an affiliate of Licensor, elects to theatrically re-release or reissue such Included Program or to make a theatrical or television remake, sequel or prequel of such Included Program. Withdrawal may, as specified by Licensor in accordance with Licensor’s reasonable good faith compliance with its rights and obligations, apply to all features and functionalities licensed pursuant to this Agreement with respect to the withdrawn Included Program (e.g., no future Customer Transactions may be allowed and Digital Locker Functionality shall be disabled post-withdrawal) or only to certain portions of such features and functionalities with respect to the withdrawn Included Program (e.g., future Customer Transactions may be prohibited post-withdrawal while Digital Locker Functionality may continue to be enabled). Notwithstanding anything herein to the contrary, Licensor shall continue to have the right to withdraw Included Programs after the expiration or termination of the Term, in which event such withdrawal shall apply to post-withdrawal Digital Locker Functionality. Licensee shall not be entitled to any right or remedy solely as a result of any withdrawal permitted hereunder. Licensor shall use commercially reasonable efforts to treat Licensee in the same manner as it treats all similarly situated Other Distributors with regard to withdrawals.


7. PAYMENT.

7.1 Payment Terms. VOD Per-Program License Fees and DHE License Fees shall be paid to Licensor within thirty (30) days after the end of the calendar month during which such VOD Per-Program License Fees and DHE License Fees are earned.

7.2 Unless and until Licensee is otherwise notified by Licensor, all payments due to Licensor hereunder shall be made in US dollars with respect to the US Service and in Canadian dollars with respect to the Canadian Service and either (a) by wire transfer to Licensor as follows: Mellon Client Services Center; 500 Ross Street, Room 154-0940, Pittsburgh, PA 15262-0001; ABA Routing #: 043000261; Account #: 0090632; Account Name: Culver Digital Distribution Inc; Account Address: Culver City, California; or (b) by corporate check or cashier’s check sent to Licensor in immediately available funds as follows: c/o Culver Digital Distribution Inc., Dept. 1101, P.O. Box 121101, Dallas, Texas 74312-1101; Reference: Best Buy VOD Distribution or Best Buy DHE Distribution (as appropriate).

7.3 As between the parties, Licensee shall be responsible for processing all transactions and the billing and collection of all monies due from Customers in connection with the exploitation of the Included Programs on the Licensed Service as permitted herein; provided that Licensee may retain third parties to perform the forgoing services. In the event that Licensee retains any such third party, Licensee shall (i) inform such third party of all related obligations, (ii) not authorize any person or entity to do any of the acts forbidden herein and (iii) remain solely liable for the performance of all obligations and responsible for all acts and omissions of such third parties. Licensee shall at all time be solely liable for the payment of the Royalties due to Licensor hereunder.

7.4 Amounts which become due to Licensor hereunder (including, without limitation, any advances or guarantee payments) shall immediately be due and payable and shall immediately be non-recoupable, non-refundable and not subject to rebate, deduction or offset of any kind. Without prejudice to any other right or remedy available to Licensor, if Licensee fails to pay any license fees or advances or guarantees when due and payable, and after written notice thereof from Licensor, Licensee does not cure within ten (10) days of such notice, interest shall accrue on any such overdue amount until such time as the overdue amount is paid in full, at a rate equal to the lesser of one hundred ten percent (110%) of the prime rate announced from time to time in the U.S. edition of the Wall Street Journal (the “Prime Rate”) or the permitted maximum legal rate.

7.5 The parties acknowledge and agree that the provisions of this Article 7 are of the essence. Licensee covenants and agrees to make all payments to Licensor hereunder in a timely manner.

8. PHYSICAL MATERIALS AND TAXES.

8.1 Within forty-five (45) days following (a) the last day of the last VOD License Period with respect to each VOD Included Program and (b) the DHE Avail Term with respect to each DHE Included Program, Licensee shall erase or degauss all such copies and, upon Licensor’s request, supply Licensor with a certification of erasure or degaussing of such.

8.2 In the event the Agreement is terminated for any reason, upon expiration of the Term, upon Licensor’s request pursuant to a Suspension Notice, and, with respect to any Included


Program, if such Included Program has been withdrawn pursuant to Article 6 of this Schedule, Licensee shall within seven (7) days destroy, delete or disable all copies and Advertising Materials in its possession and, upon Licensor’s request provide Licensor with a certificate of destruction.

8.3 Licensee shall pay and hold Licensor forever harmless from and against any and all taxes (including interest and penalties on any such amounts but other than corporate income and similar taxes) or other levies, if any, required to be paid to any third party now or hereafter imposed or based upon the licensing, rental, delivery, exhibition, possession, or use hereunder to or by Licensee of the Included Programs or any print or any Copy of an Included Program hereunder.

8.4 Upon the loss, theft or destruction (other than as required hereunder) of any Copy of an Included Program, Licensee shall promptly furnish Licensor with proof of such a loss, theft or destruction by affidavit setting forth the facts thereof.

8.5 Each Copy of the Included Programs and all Advertising Materials are the property of Licensor, subject only to the limited right of use expressly permitted herein, and Licensee shall not permit any lien, charge, pledge, mortgage or encumbrance to attach thereto.

8.6 In no event shall Licensor be required to deliver copies in any language version other than the Licensed Language version.

9. CONTENT PROTECTION & SECURITY.

9.1 General. Licensee represents and warrants that it has put in place state of the art secure and effective, stringent and robust security systems and technologies to prevent theft, pirating, unauthorized exhibition (including, without limitation, exhibition to non-Customers and exhibition outside the Territory), unauthorized copying or duplication of any video reproduction or compressed digitized copy of any Included Program and that such security systems, procedures and technologies are and shall be no less stringent or robust than those which Licensee employs with respect to films licensed from other licensors or than industry standard. Licensee shall maintain and upgrade such security systems, procedures and technologies (including, without limitation, encryption methods) as Licensee shall determine in its sole discretion is necessary to prevent theft, pirating, unauthorized exhibition (including, without limitation, exhibition to non-Customers and exhibition outside the Territory), and unauthorized copying or duplication of any video reproduction or compressed digitized copy of any Included Program. Licensee shall comply with Licensor’s reasonable specifications concerning the storage and management of its digital files and materials for the Included Programs at Licensee’s sole expense, and as such specifications may be updated at any time during the Term. Licensee shall not authorize any use of any video reproduction or compressed digitized copy of any Included Program for any purpose other than as is expressly permitted herein. Licensor or its authorized representative shall have the right, upon advance written notice, once during each year of the Term, to inspect and review Licensee’s security systems, procedures and technologies at Licensee’s places of business (including off-site facilities, if any) as Licensor deems necessary, provided such inspection is conducted during regular business hours and does not interfere materially with Licensee’s operations.


9.2 Obligation to Monitor for Hacks. Licensee shall take such measures as are reasonably necessary to determine the existence of Security Breaches or Territorial Breaches and shall promptly notify Licensor if any such occurrences are discovered.

9.3 Suspension Notice. Licensee shall notify Licensor within two (2) calendar days after receipt of such notice 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. Licensee shall promptly take such interim steps as are necessary to resolve and prevent recurrence of such Security Breach or Territorial Breach, and to mitigate any adverse impact arising there from. Upon Licensor’s reasonable request, Licensee shall provide Licensor with a report of any corrective taken to address the Security Breach or Territorial Breach. Licensor and Licensee shall work together in good faith to determine a mutually agreeable solution to resolve and prevent recurrence of the Security Breach or Territorial Breach, including a timetable for such resolution (“Breach Solution”). Licensee shall promptly implement such Breach Solution and keep Licensor regularly updated on progress toward such solution.

9.4 Notwithstanding any other rights or remedies available to Licensor or any other provision of the Agreement, in the event of failure by Licensee to timely develop or implement a Breach Solution, or if a Security Breach or Territorial Breach results in, or is reasonably anticipated by Licensor to result in, significant unauthorized distribution, availability or use of Included Programs, Licensor shall have the right to suspend the availability (“Suspension”) of its Included Programs on the Licensed Service (including all Digital Locker Functionality) by delivering a written notice to the Licensee of such suspension (a “Suspension Notice”). Upon its receipt of a Suspension Notice, the Licensee shall take steps immediately to remove the Included Programs or make the Included Programs inaccessible from the Licensed Service as soon as commercially feasible (but in no event more than three (3) calendar days after receipt of such notice).

9.5 Reinstatement/Termination. If the cause of the Security Breach that gave rise to a Suspension is corrected, repaired, solved or otherwise addressed in the sole reasonable judgment of Licensor, the Suspension shall terminate upon written notice from Licensor and Licensor’s obligation to make its Included Programs available on the Licensed Service shall immediately resume. For clarity, no period of Suspension shall extend the Term in time, and upon a notice that a Suspension has ended, the Term shall end as otherwise provided in the Agreement unless earlier terminated in accordance with another provision of this Agreement. Upon receipt of such written notice, Licensee shall include the Included Programs on the Licensed Service as soon thereafter as practicable. If more than one (1) Suspension occurs during the Avail Term, or any single Suspension lasts for a period of three (3) months or more, Licensor shall have the right, but not the obligation, to terminate this Agreement (“Security Breach Termination”) by providing written notice of such election to the Licensee.

9.6 Content Protection Requirements and Obligations. Licensee shall at all times utilize content protection and DRM standards no less stringent or robust than the standards attached hereto as Schedules B-1, B-2 and C-1 (as applicable), and the Usage Rules attached hereto as Schedules C-2 and B-3 (as applicable) and incorporated herein by this reference. With respect to the distribution of DHE Included Programs that are Feature Films in High Definition, Licensee


shall also implement the content protection requirements set forth in Schedule C-3. In the event of a conflict between the terms of Schedule C-3 and Schedule B-2, then, with respect to the distribution and playback of DHE Included Programs that are Feature Films in High Definition, the terms of Schedule C-3 shall control.

9.7 DECE/UltraViolet. Without limiting any of the content protection requirements set forth in the Agreement, Licensee hereby agrees to enter into good faith discussions to migrate its DHE offerings to comply with DECE/UltraViolet standards within six (6) months after the publication of such standards and related legal agreements.

10. CUTTING, EDITING AND INTERRUPTION. Licensee shall not make, or authorize any others to make, any modifications, deletions, cuts, alterations or additions in or to any Included Program without the prior written consent of Licensor. For the avoidance of doubt, no panning and scanning, time compression or similar modifications shall be permitted. Without limiting the foregoing, Licensee shall not delete the copyright notice or credits from the main or end title of any Included Program or from any other materials supplied by Licensor hereunder. No exhibitions of any Included Program hereunder shall be interrupted for intermission, commercials or any other similar commercial announcements of any kind.

11. RETRANSMISSION. As between Licensor and Licensee, (a) Licensor is the owner of all retransmission and off-air videotaping rights in the Included Programs and all royalties or other monies collected in connection therewith, and (b) Licensee shall have no right to exhibit or authorize the exhibition of the Included Programs by means of retransmission or to authorize the off-air copying of the Included Programs.

12. PLACEMENT, MARKETING AND PROMOTION.

12.1 Licensee shall have the right to use or authorize the use of written summaries, extracts, synopses, photographs, trailers or other materials prepared and provided or made available by Licensor or, if not prepared by Licensor, approved in writing in advance by Licensor (“Advertising Materials”) and, subject to Section 5.5 of Schedule A, Promotional Previews, solely for the purpose of advertising, promoting and publicizing the exhibition of the Included Programs on the Licensed Service in the Territory and the right to advertise, publicize and promote, or authorize the advertising, publicity and promotion of the exhibition of any Included Program on the Licensed Service in the Territory during the time periods specified, with respect to VOD Included Programs on the VOD Service, in Article 7 of the VOD General Terms and, with respect to DHE Included Programs on the DHE Service, Article 10 of the DHE General Terms.

12.2 Licensee shall not promote any Included Program after it is withdrawn from distribution hereunder by Licensor.

12.3 An Included Program will not be packaged or bundled specifically for distribution with other programs, products or services without Licensor’s prior written consent.

12.4 Licensee covenants and warrants that (i) it shall fully comply with any and all instructions furnished in writing to Licensee with respect to the Advertising Materials used by


Licensee in connection with this Article 12 (including size, prominence and position of Advertising Materials); (ii) it shall not modify, edit or make any changes to the Advertising Materials without Licensor’s prior written consent; (iii) names and likenesses of the characters, persons and other entities appearing in or connected with the production of Included Programs (“Names and Likenesses”) shall not be used separate and apart from the Advertising Materials; and (iv) Advertising Materials, Names and Likenesses, Licensor’s name or logo, and Included Programs shall not be used so as to constitute an endorsement or testimonial, express or implied, of any party, product or service, including, without limitation, the Licensed Service, Licensee, or any program service or other service provided by Licensee; nor shall the same be used as part of a commercial tie-in. Any advertising or promotional material created by Licensee, any promotional contests or giveaways to be conducted by Licensee and any sponsorship of any Included Program (as distinguished from the standard practice of selling commercial advertising time) shall require the prior written consent of Licensor and shall be used only in accordance with Licensor’s instructions.

12.5 The rights granted in this Article 12 shall be subject to, and Licensee shall comply with, any and all restrictions or regulations of any applicable guild or union and any third party contractual provisions with respect to the advertising and billing of the Included Program as Licensor may advise Licensee in writing. In no event shall Licensee be permitted to use any excerpts from an Included Program other than as provided by Licensor and in no case in excess of two minutes (or such shorter period as Licensor may notify Licensee from time-to-time) in the case of a single continuous sequence, or four minutes in the aggregate from any single Included Program (or such shorter period as Licensor may notify Licensee from time to time).

12.6 Appropriate copyright notices shall at all times accompany all Advertising Materials.

12.7 Within thirty (30) calendar days after the last day of the License Period for each Included Program, Licensee shall destroy all Advertising Materials for such Included Program.

12.8 Licensee may display advertisements on the Licensed Service; provided that, without Licensor’s prior written consent in its sole discretion, advertisements on the Licensed Service may not be associated with or tied to an Included Program. Notwithstanding anything to the contrary herein, advertisement may not (i) imply any endorsement or connection to the Included Program; (ii) specifically be sold by Licensee for placement on a particular page with an Included Program or any artist associated therewith (e.g., not a randomly rotating banner ad or a so-called “run-of-site” ad); or (iii) appear (a) on any page where the Included Program is featured alone, (b) on any page that a Customer is required to view at any time after the Customer initiates a Customer Transaction on the Licensed Service (e.g., a “shopping cart” page) or (c) in-stream, whether immediately preceding (pre-roll), within (interstitial) or following (post-roll) Included Programs. Licensee acknowledges that the primary purpose of the Licensed Service is to sell licensed video content and not advertising. Promotions of the Included Programs may position Video-On-Demand and DHE in a positive light, but in no event shall any such promotion, including, without limitation, any promotion of the Licensed Service or promotions on the Licensed Service or otherwise, contain negative messages about any lawful means of film distribution, including, without limitation, home video/DVD purchase or rental, provided that Licensee shall be free to promote the bona fide benefits of the VOD Service and


DHE Service (e.g., “No late fees!” or “Order from home!”) without reference to other means of film distribution. If Licensee offers to another supplier of films (including any Qualifying Studio) a share of the advertising revenue generated on the Licensed Service, Licensee shall offer to Licensor the same on no less favorable terms and Licensor shall have the right to accept such option at any time.

13. LICENSOR’S REPRESENTATIONS AND WARRANTIES. Licensor hereby represents and warrants to Licensee that:

13.1 It is a company duly organized under the laws of the state of its organization and has all requisite corporate power and authority to enter into this Agreement and perform its obligations hereunder.

13.2 The execution and delivery of this Agreement by Licensee has been duly authorized by all necessary corporate action.

13.3 This Agreement has been duly executed and delivered by, and constitutes a valid and binding obligation of Licensee, enforceable against such party in accordance with the terms and conditions set forth in this Agreement.

13.4 The performing and mechanical reproduction rights to any musical works contained in each of the Included Programs, are either (i) controlled by ASCAP, BMI, SESAC or similar musical rights organizations, collecting societies or governmental entities having jurisdiction in the Territory, (ii) controlled by Licensor to the extent required for the licensing of the exhibition and/or manufacturing of copies of the Included Programs in accordance herewith, or (iii) in the public domain. Licensor does not represent or warrant that Licensee may exercise the performing rights and/or mechanical reproduction rights in the music without obtaining a valid performance and/or mechanical reproduction license and without payment of a performing rights royalty, mechanical royalty or license fee, and if a performing rights royalty, mechanical royalty or license fee is required to be paid in connection with the exhibition or manufacturing copies of an Included Program, Licensee shall be responsible for the payment thereof and shall hold Licensor free and harmless therefrom. Licensor shall furnish Licensee with all necessary information regarding the title, composer, publisher, recording artist and master owner of such music.

14. LICENSEE’S REPRESENTATIONS AND WARRANTIES. Licensee hereby represents, warrants and covenants to Licensor that:

14.1 It is a company duly organized under the laws of the state of its organization and has all requisite corporate power and authority to enter into this Agreement and perform its obligations hereunder.

14.2 The execution and delivery of this Agreement by Licensee has been duly authorized by all necessary corporate action.

14.3 This Agreement has been duly executed and delivered by, and constitutes a valid and binding obligation of Licensee, enforceable against such party in accordance with the terms and conditions set forth in this Agreement.


14.4 Licensee has obtained and shall maintain all licenses and other approvals necessary to own and operate the Licensed Service in the Territory and otherwise exploit the rights granted hereunder.

14.5 Licensee shall be responsible for and pay the music performance rights and mechanical reproduction fees and royalties, if any, as set forth in Section 13.4 above.

14.6 No Included Program shall be transmitted or exhibited except in accordance with the terms and conditions of this Agreement. Without limiting the generality of the foregoing, no Included Program shall be transmitted or exhibited to any person other than a Customer within the Territory in the medium of Video-On-Demand (with respect to VOD Included Programs) or DHE (with respect to DHE Included Programs), or transmitted other than by Approved Transmission Means in an Approved Format to Approved Devices on the Licensed Service for a Personal Use, subject at all times to the Usage Rules.

14.7 Licensee shall not permit, and shall use commercially reasonable efforts to prevent, the reception of the Included Programs for anything other than Personal Uses.

14.8 Licensee shall comply with all laws and regulations applicable to the operation of the Licensed Service.

15. INDEMNIFICATION.

15.1 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 claims, damages, liabilities, costs and expenses, including reasonable counsel fees, arising from or in connection with the breach by Licensor of any of its representations or warranties or any material provisions of this Agreement and claims that any of the Included Programs, under U.S. law, infringe upon the trade name, trademark, copyright, music synchronization, literary or dramatic right or right of privacy of any claimant (not including music performance and mechanical reproduction rights which are covered under Section 13.4 of this Schedule) or constitutes a libel or slander of such claimant; provided that Licensee shall promptly notify Licensor of any such claim or litigation of which it becomes aware. Notwithstanding the foregoing, the failure to provide such prompt notice shall diminish Licensor’s indemnification obligations only to the extent Licensor is actually prejudiced by such failure. In addition, Licensor shall not be required to indemnify Licensee or its Representatives for any claims resulting from Licensee exhibiting an Included Programs or using Advertising Materials in a form other than as delivered by Licensor, or due to Licensee’s editing or modification of any Included Programs or Advertising Materials, or due to Licensee’s authorization of a third party to do any of the foregoing.

15.2 Licensee shall indemnify and hold harmless Licensor and its Representatives from and against any and all claims, damages, liabilities, costs and expenses, including reasonable counsel fees, arising from or in connection with (i) the breach of any representation, warranty or other provision of this Agreement by Licensee, (ii) the exhibition of any material (other than


material contained in Included Programs or Advertising Materials as delivered by Licensor and exhibited in accordance with this Agreement and Licensor’s instructions therefor), in connection with or relating, directly or indirectly, to such Included Programs or (iii) the infringement upon or violation of any right of a third party (including without limitation infringement upon or violation of a third party patent, copyright, trade name, trademark, source mark, trade secret of other intellectual property right by the Licensed Service), other than as a result of the exhibition of the Included Programs or Advertising Materials in accordance with the terms of this Agreement; provided that Licensor shall promptly notify Licensee of any such claim or litigation of which it becomes aware. 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.

15.3 In any case in which indemnification is sought hereunder:

15.3.1 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 any judgment rendered on account of such claim or settlement made or approved by the indemnifying party in connection therewith, and expenses and reasonable attorneys fees of the indemnified party incurred in connection with the defense of such claim or litigation prior to the assumption thereof by the indemnifying party and any reasonable out-of-pocket expenses for performing such acts as the indemnifying party shall request. If the indemnifying party does not assume the handling, settlement or defense of any such claim or litigation, the indemnifying party shall, in addition to holding the indemnified party harmless from the amount of any damages awarded in any judgment entered on account of such claim, reimburse the indemnified party for reasonable costs and expenses and reasonable attorneys fees of the indemnified party incurred in connection with the defense of any such claim or litigation; and

15.3.2 The party seeking indemnification shall fully cooperate with the reasonable requests of the other party in its participation in, and control of, any compromise, settlement, litigation or other resolution or disposition of any such claim. The indemnifying party shall not consent to the entry of any judgment in any action without the indemnified party’s prior written approval except, in the case where Licensor is the indemnifying party, where such consent involves the agreement not to further exploit an Included Program.

16. STATEMENTS; REPORTS; SCHEDULES.

16.1 VOD Service Reporting. Licensee shall provide to Licensor and its designee, if any, on a monthly basis (or, if possible, on a biweekly or weekly basis, and in any event on no less frequent basis than that provided to any other content provider), a statement in electronic form (“VOD Statement”) detailing the information specified by Licensor for each of the US VOD Service and the Canadian VOD Service from time to time including, but not limited to: (i) the actual aggregate number of VOD Customers to the VOD Service on the last day of such month if Licensee provides this information to any other content provider, (ii) for each VOD Included


Program, the number of VOD Customer Transactions for such VOD Included Program for such month on the VOD Service, (iii) with respect to each VOD Customer Transaction, the title of applicable VOD Included Program and whether such VOD Included Program was in High Definition or Standard Definition, (iv) the VOD Actual Retail Price and VOD Deemed Price per VOD Customer Transaction for each VOD Included Program licensed in such month (including the type of currency), (v) VOD Licensor’s Share for each VOD Included Program licensed for such month, (vi) a calculation of the VOD Per-Program License Fee for each VOD Included Program licensed for such month, (vii) the VOD License Fee paid to date as of such month; and (viii) such other information that Licensee is providing to other content provider. Licensee shall provide real-time VOD Statements to Licensor if and when Licensee provides such reports to any other Qualifying Studio.

16.2 DHE Service Reporting.

16.2.1 Licensee shall provide to Licensor and its designee, if any, on a monthly basis (or, if possible, on a biweekly or weekly basis, and in any event on no less frequent basis than that provided to any other content provider), a statement in electronic form (“DHE Statement”) detailing the information specified by Licensor for each of the US DHE Service and the Canadian DHE Service from time to time including, but not limited to: (i) for each such DHE Included Program, the title of such program (including season and episode name, as applicable), and the total number of DHE Customer Transactions for each DHE Included Program made available by Licensor, (ii) with respect to such DHE Customer Transaction, the title of the DHE Included Program (including season and episode name, as applicable) and whether such DHE Included Program was exhibited in High Definition or Standard Definition), (iii) the DHE Customer Price applicable to each such DHE Customer Transaction and the type of currency in which the DHE Customer Price was billed to, and collected from, the DHE Customer with respect to such transaction, (iv) the DHE Customer Price for each DHE Included Program, and (vi) such other information about the DHE Included Programs that Licensee is providing to other content providers. Licensee shall provide real-time DHE Statements to Licensor if and when Licensee provides such reports to any other Qualifying Studio.

16.2.2 If and when Licensee provides such information to any other content provider, Licensee shall provide to Licensor and its designee, if any, a statement in electronic form (“DHE Customer Statement”) detailing, on a DHE Customer-by-DHE Customer basis, the rights licensed to DHE Customer with respect to each DHE Included Program, including, without limitation (y) the then-current DHE Usage Rules associated with each DHE Included Program provided to the DHE Customer and (z) the entitlements DHE Customer has exercised with respect to such DHE Included Program (e.g., if the then-current DHE Usage Rules allow DHE Customer to download a copy that can be played on the PC, as well as a copy that can be played on a portable device, Licensee’s statements shall detail whether DHE Customer has or has not downloaded each such permitted copy); provided; however, that such statements shall not include any personally-identifiable DHE Customer information.

16.3 Other Licensed Service Reporting. If Licensee generally provides to any other Qualifying Studios or other similarly situated content providers any additional information relating to the Licensed Service at any time during the Term, Licensee shall provide such


additional information to Licensor on a no less favorable and frequent basis. Such additional information may include, but is not limited to:

16.3.1 A report setting forth pricing and performance data (aggregated and not reported on a title by title basis) for all Video-On-Demand programming (other than Adult Programs) exhibited on the US VOD Service and the Canadian VOD Service and DHE programming (other than Adult Programs) exhibited on the US DHE Service and the Canadian DHE Service during the relevant reporting period including, but not limited to: (i) the average number of titles offered in each genre or category of each VOD Service and DHE Service during such reporting period, (ii) the average number of Video-On-Demand buys per title and DHE buys per title by genre and category during such reporting period; (iii) the average retail price charged per title by genre or category during such reporting period; (iv) aggregate total Video-On-Demand transactions and DHE transactions by day; (v) aggregate total Video-On-Demand transactions and DHE transactions by time of day; (vi) ranking of the top 100 VOD titles and top 100 DHE titles by performance; (vii) the number of unique users and customers on each VOD Service and DHE Service for all programming, and (viii) market basket analysis of customer purchases of the VOD Included Programs and aggregated Video-On-Demand programming and of customer purchases of the DHE Included Programs and aggregated DHE programming (e.g., average quantities purchased per transaction, average Dollar value of purchases, etc.).

16.3.2 Relevant non-confidential market and subscriber information, including, but not limited to, research and studies highlighting consumer viewing and acquisition behavior, buy rate information by category/genre and in the aggregate, price sensitivity and the impact of promotions and bundling, focus group surveys and demographic studies. If Licensee provides the foregoing information to Licensor, Licensor shall have the right to make suggestions to Licensee regarding the direction of ongoing research.

16.3.3 Aggregate (anonymous) demographic information about Customers who engaged in each Customer Transaction.

16.4 Reporting for Included Programs on Streaming Devices. Licensee shall provide to Licensor and its designee, if any, starting as soon as technically feasible after Licensee commercially launches the Streaming functionality on the Licensed Service, quarterly reports with respect to Streaming Devices and Streaming delivery of Included Programs as set forth in the attached Schedule G.

16.5 At Licensor’s election and cost, Licensor may appoint a third party designee to receive or access the data referenced in this Article 16 for purposes of reorganizing or presenting such data as requested by Licensor provided that any such designee agrees to keep such information confidential.

16.6 All reports and other information provided by Licensor to Licensee pursuant to this Section 16 shall be in writing and delivered via e-mail to [email protected] or to such other e-mail address or via such other method of delivery as Licensor may hereafter specify in writing.

17. TERMINATION


17.1 Without limiting any other provision of this Agreement and subject to Section 17.3 of this Schedule, upon the occurrence of a Licensee Termination Event (as defined below), Licensor may, in addition to any and all other rights which it may have against Licensee, immediately terminate this Agreement or any license with respect to an Included Program by giving written notice to Licensee and/or accelerate the payment of all monies payable under this Agreement, including the full, non-refundable payment of 100% of the license fees described in this Agreement regardless of any early termination of this Agreement due to a Licensee Termination Event, such that they are payable immediately. Whether or not Licensor exercises such right of termination, Licensor shall, upon the occurrence of any Licensee Event of Default (as defined below), have no further obligation to deliver Included Programs or Advertising Materials to Licensee and Licensor shall have the right to require Licensee to immediately return all copies of Included Programs and Advertising Materials to Licensor. In addition to any and all other remedies in respect of a Licensee Event of Default which Licensor may have under applicable law, Licensor shall be entitled to recover from Licensee all payments then past due (with respect to which Licensor has received notice and has not cured such payment within ten (10) days) from Licensee to Licensor hereunder, together with interest, compounded monthly, at the lesser of (x) 110% of the Prime Rate and (y) the maximum rate permitted by law, plus reasonable outside attorneys fees utilized in the enforcing the collection thereof, and all costs and expenses, including collection agency fees, incurred by Licensor to enforce the provisions thereof. Furthermore, upon a Licensee Event of Default, Licensor shall have the right to immediately suspend delivery of all Included Programs and materials with respect thereto and/or suspend Licensee’s right to exploit any Included Programs, licensed hereunder, without prejudice to any of its other rights hereunder. As used herein, a “Licensee Event of Default”: the occurrence of any of the following: (A) Licensee (x) fails to timely perform or breaches any of its material obligations hereunder or otherwise materially breaches this Agreement, (y) fails to make timely payment of fees under this Agreement or (z) assigns or otherwise transfers this Agreement in violation of this Agreement; or (B) upon (i) Licensee becoming unable to pay its debts; (ii) a petition being presented or a meeting being convened for the purpose of considering a resolution for the making of an administration order, the winding-up, bankruptcy or dissolution of Licensee; (iii) Licensee becoming insolvent; (iv) a petition under any bankruptcy or analogous act being filed by or against Licensee (which petition, if filed against Licensee, shall not have been dismissed by the relevant authority within thirty (30) days thereafter); (v) Licensee executing an assignment for the benefit of creditors; (vi) a receiver being appointed for the assets of Licensee; (vii) Licensee taking advantage of any applicable bankruptcy, insolvency or reorganization or any other like statute; or (viii) the occurrence of any event analogous to the foregoing. As used herein a “Licensee Termination Event” shall mean (I) the occurrence of a curable Licensee Event of Default described in subclause (A) above that Licensee has failed to cure within thirty (30) days written notice from Licensor of the occurrence of such default or, if such default is the failure to pay any installment or overage, within five (5) Business Days of receipt of notice from Licensor, (II) the occurrence of a non-curable Licensee Event of Default described in subclause (A) above and (III) the occurrence of a Licensee Event of Default described in subclause (B) above.

17.2 Subject to Section 17.3 of this Schedule, in the event Licensor materially defaults in the performance of any of its material obligations hereunder or Licensor becomes insolvent, or a petition under any bankruptcy act shall be filed by or against Licensor (which petition, if filed


against Licensor, shall not have been dismissed within thirty (30) days thereafter), or Licensor executes an assignment for the benefit of creditors, or a receiver is appointed for the assets of Licensor, or Licensor takes advantage of any applicable insolvency or reorganization or any other like statute (each of the above acts is hereinafter referred to as a “Licensor Event of Default”), and Licensor fails to cure such Licensor Event of Default within thirty (30) days after delivery by Licensee to Licensor of written notice of such Licensor Event of Default, then Licensee may, in addition to any and all other rights which it may have against Licensor, immediately terminate this Agreement by giving written notice to Licensor.

17.3 Notwithstanding anything to the contrary contained in Sections 17.1 or 17.2 hereof, no termination of this Agreement for any reason shall relieve or discharge, or be deemed or construed as relieving or discharging, any party hereto from any duty, obligation or liability hereunder which was accrued as of the date of such termination (including, without limitation, the obligation to pay any amounts payable hereunder accrued as of such date of termination).

18. EXCLUSION RIGHT. Notwithstanding anything contained in this Agreement to the contrary, Licensee hereby acknowledges that Licensor may be unable to license a program to Licensee on the terms set forth in this Agreement due to certain arrangements between Licensor and individuals involved in the production or financing of such program that require Licensor to obtain the approval of such individuals prior to the licensing of such program (“Third Party Exclusion Right”). In any such circumstance, Licensor hereby agrees to use commercially reasonable, good faith efforts to obtain the approvals necessary to allow Licensor to license such program to Licensee under the terms of this Agreement. Notwithstanding anything contained herein to the contrary, Licensor and Licensee hereby agree that Licensor’s inability to obtain such necessary approvals and to license any such program to Licensee under the terms of this Agreement shall not be deemed to be, or in any way constitute, a breach of this Agreement. If Licensor is unable to obtain such necessary approvals, Licensor shall give Licensee written notice thereof and shall have no further obligations to Licensee with respect to such program. Licensor shall use commercially reasonable efforts to treat Licensee in the same manner as it treats all similarly situated Other Distributors with regard to Third Party Exclusion Rights.

19. ASSIGNMENT. Licensee shall not assign, transfer or hypothecate its rights hereunder, in whole or in part, whether voluntarily or by operation of law (including, without limitation, by merger, consolidation or change in control), without Licensor’s prior written approval. Notwithstanding the foregoing, Licensee may assign its rights and obligations under this Agreement without Licensor’s consent to an entity that is a successor to all or substantially all of the assets of Licensee (including by way of merger or consolidation); provided such entity is not a competitor of Licensor and provided, further, such entity executes an assignment and assumption agreement for the benefit of Licensor; provided, however, that following any assignment by Licensee pursuant to this sentence, Licensor may terminate this Agreement at any time upon thirty (30) days written notice.

20. NON-WAIVER OF BREACH; REMEDIES CUMULATIVE. A waiver by either party of any of the terms or conditions of this Agreement shall not, in any instance, be deemed or construed to be a waiver of such terms or conditions for the future or of any subsequent breach thereof. No payment or acceptance thereof pursuant to this Agreement shall operate as a waiver


of any provision hereof. All remedies, rights, undertakings, obligations and agreements contained in this Agreement shall be cumulative and none of them shall be in limitation of any other remedy, right, undertaking, obligation, or agreement of either party.

21. GOVERNING LAW. 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.

22. CONSENT TO JURISDICTION; WAIVER OF JURY TRIAL. Any action or proceeding seeking to enforce any provision of, or based on any right arising out of, this Agreement, shall be brought against any of the parties exclusively in the courts of the State of New York, County of New York, or, if it has or can acquire jurisdiction, in the United States District Court for the Southern District of New York. Each of the parties consents to the exclusive jurisdiction of such courts (and of the appropriate appellate courts) in any such action or proceeding and waives in all respects any claim or objection which it may have based on lack of personal jurisdiction, improper venue or forum nonconveniens. Process in any action or proceedings referred to in the preceding sentence may be served on a party to this Agreement at the address for notices for such party set forth in Section 23 hereto. THE PARTIES HEREBY WAIVE THEIR RIGHT TO JURY TRIAL WITH RESPECT TO ALL CLAIMS AND ISSUES ARISING UNDER, IN CONNECTION WITH, TOUCHING UPON OR RELATING TO THIS AGREEMENT, THE BREACH THEREOF AND/OR THE SCOPE OF THE PROVISIONS OF THIS SECTION, WHETHER SOUNDING IN CONTRACT OR TORT, AND INCLUDING ANY CLAIM FOR FRAUDULENT INDUCEMENT THEREOF.

23. NOTICES. All notices hereunder shall be in writing and shall be sent by certified (return receipt requested) or registered mail, by air courier service, by personal delivery, or by facsimile to the address or fax number of the party for whom it is intended as follows, or to such other address or fax number as any party may hereafter specify in writing:

23.1 If to Licensor, to Sony Pictures Entertainment Inc., 10202 West Washington Boulevard, Culver City, CA 90232 U.S.A., Attention: General Counsel, Facsimile No.: 1-310-244-0510, with a copy to: Sony Pictures Entertainment Inc., 10202 West Washington Boulevard, Culver City, CA 90232, U.S.A., Attention: Executive Vice President, Legal Affairs, Fax no.: +1-310-244-2169.

23.2 If to Licensee, Best Buy, 7601 Penn Avenue, South Richfield, MN 55423 U.S.A., Attention: VP, Content, Facsimile No.: +1-612-292-2323, with a copy to: Best Buy, 7601 Penn Avenue, South Richfield, MN 55423 U.S.A., Attention: General Counsel, Facsimile No.: +1-612-292-2323.

23.3 General. Notice given by personal delivery or facsimile shall be deemed given upon delivery and notice given by overnight delivery or courier service shall be deemed given the first Business Day following the Business Day of delivery to the overnight delivery service.

24. 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.

25. CONFIDENTIALITY. Other than as may be required by law, or governmental authority, or to enforce its rights hereunder, and subject to the following sentence, neither party shall, without the express written consent of the other, publicly divulge or announce, or in any manner disclose to any third party, other than its attorneys, advisors, directors, employees, agents, shareholders, accountants, parent entities or auditors, and, in the case of Licensor, its profit participants, or pursuant to Guild obligations (each of whom shall be subject to the confidentiality provision hereof) on a need-to-know basis, any of the specific terms and conditions of this Agreement, including, without limitation, the License Fees payable hereunder. Neither party shall issue any press release regarding the existence of or terms of this Agreement without the prior written consent of the other party, which shall not be unreasonably withheld.

26. AUDIT. During the Term and for two years thereafter, Licensee shall keep and maintain complete and accurate books of account and records at its principal place of business in connection with each of the Included Programs and pertaining to Licensee’s compliance with the terms hereof, including, without limitation, copies of the statements referred to in Article 16 of this Schedule. During such record retention period, upon thirty (30) business days’ notice, and no more than once per calendar year, Licensor shall have the right during business hours to audit and check at Licensee’s principal place of business, Licensee’s books and records, including relevant electronic data and systems data, pertaining to the accuracy of the statements and other financial information delivered to Licensor by Licensee and the amount of the license fees paid or payable hereunder. The exercise by Licensor of any right to audit or the acceptance by Licensor of any statement or payment, whether or not the subject of an audit, shall not bar Licensor from thereafter asserting a claim for any balance due, and Licensee shall remain fully liable for any balance due under the terms of this Agreement, provided that Licensor may only audit any particular record once. If an examination establishes an error in Licensee’s computation of license fees due with respect to the Included Programs, Licensee shall immediately pay the amount of any underpayment. If the underpayment is in excess of five percent (5%) of the license fees for the period covered by such audit, Licensee shall pay interest thereon from the date such payment was originally due at a rate equal to the lesser of one hundred ten percent (110%) of the Prime Rate and the maximum rate permitted by applicable law. If such error is in excess of ten percent (10%) of such license fees due for the period covered by such audit, Licensee shall, in addition to making immediate payment of the additional license fees due plus interest in accordance with the previous sentence, pay to Licensor (i) the reasonable, out-of-pocket costs and expenses incurred by Licensor in connection with any such audit, and (ii) reasonable outside attorneys fees actually incurred by Licensor in enforcing the collection thereof. In the event that the rate of interest set forth in this Section exceeds the maximum permitted legal interest rate, such rate shall be automatically reduced to the maximum permitted legal interest rate, and all other terms and conditions of this Agreement shall remain in full force and effect.

27. LIMITATION OF LIABILITY. Except with respect to breaches of section 25 (Confidentiality), indemnification payments owed to third parties, fraud, gross negligence or


willful misconduct, neither party shall be liable to the other for special, consequential or incidental damages or for lost profits.

28. CAPTIONS/DRAFTING. Article, Section or other headings contained in this Agreement are for convenience only and shall not affect in any way the meaning or interpretation of this Agreement. In interpreting the terms and conditions of this Agreement, no presumption shall be interpreted for or against a party as a result of the role of such party or such party’s counsel in the drafting of this Agreement.

29. CONFLICTING LAW OR REGULATION. If any provision in this Agreement is determined by a court or arbitrator of competent jurisdiction to be invalid or unenforceable (for any reason, including, without limitation, in connection with “competition” legislation), such determination shall not affect any other provision, each of which shall be construed and enforced as if such invalid or unenforceable provision were not contained herein.

30. NO THIRD PARTY BENEFICIARIES. This Agreement is entered into for the express benefit of the parties hereto, their successors and permitted assigns and is not intended, and shall not be deemed, to create in any other natural person, corporation, company, and/or any other entity whatsoever any rights or interest whatsoever, including, without limitation, any right to enforce the terms hereof.

31. ENTIRE UNDERSTANDING. This Agreement includes the entire understanding of the parties with respect to the subject matter hereof, and all prior agreements (written or oral) with respect to such subject matter have been merged herein. No representations or warranties have been made other than those expressly provided for herein. This Agreement may not be modified, except by a written instrument signed by the parties, and this provision may not be waived except by written instrument signed by the parties.

SCHEDULE B-1 Windows DRM Version 10 Rights Deprecated rights are not listed and must not be enabled or specified. Only standard definition or lower resolution content is permitted. If Licensee is currently using Windows Media DRM version 9 or 7.1, Licensee shall upgrade to the most recent version available within six months of the availability of a new version of Windows DRM where technically feasible. The rights settings for previous version of MS DRM must use settings consistent with those listed in this schedule.

Right Setting Comments AllowPlay Enabled This right allows the consumer to play protected

content on a computer or device Playcount Not set This right specifies the number of times the consumer

is allowed to play protected content. By default, this right is not set and unlimited playing is allowed

AllowCopy Not enabled

This right allows consumers to copy protected content to a device, such as a portable player or portable media, that supports Windows Media DRM 10 for Portable Devices

CopyCount 0 This right specifies the number of times the consumer is allowed to copy content using the AllowCopy right. By default, this right is not set, and unlimited copies are allowed.

AllowTransferToNonSDMI Not enabled

This right allows the consumer to transfer the Windows Media file to a device that supports Portable Device DRM version 1 or Windows Media DRM 10 for Portable Devices.

AllowTransferToSDMI Not enabled


TransferCount 0 This right specifies the number of times a consumer can transfer a Windows Media file to a device using the AllowTransferToNonSDMI and AllowTransferToSDMI rights

AllowBackupRestore Not enabled

This right allows the consumer to manage licenses by making backup copies and restoring licenses from backups

AllowCollaborativePlay Not enabled

This right allows consumers play protected content in a collaborative session using peer-to-peer services

AllowPlaylistBurn Not enabled

This right allows consumers to copy a Windows Media file from a playlist to a CD in the Red Book audio format

MaxPlaylistBurnCount Not enabled

The maximum number of times a Windows Media file can be copied to a CD as part of a particular playlist

PlaylistBurnTrackCount Not enabled

The maximum number of times a Windows Media file can be copied to a CD, regardless of what playlist it is in

MinimumSecurityLevel. 2,000 Player applications based on Windows Media Format 9 Series SDK or later with strict security requirements. Included devices Windows Media DRM 10 for Portable Devices and Network Devices. Excludes: Devices based on Windows Media Portable Device DRM v1 or based on Windows CE 4.2 and later

MinimumClientSDKSecurity Not Set Windows Media Format 7.1 SDK or later Output Protection Levels for Digital Uncompressed Video Content

SD=250 HD=300

SD content: The Licensed Product must attempt to engage HDCP to protect the video portion of uncompressed decrypted WMDRM Content. Licensed Products must attempt to verify that the HDCP source function is engaged and able to deliver protected content, which means HDCP encryption is operational on the Output; however, the Licensed Product may Pass the video portion of uncompressed decrypted WMDRM Content to Digital Video Outputs even if it fails to verify that the HDCP source function is engaged. HD content: Licensed Products must engage HDCP to protect the uncompressed Digital Video Content of decrypted WMDRM Content

Output Protection Levels for Digital Compressed Video Content

400 Only protected compressed digital outputs allowed

Output Protection Levels for Analog Video Content

200 (or 150 for SD only)

Licensed Products is Passing the Analog Video Content of decrypted WMDRM Content to Analog Television Outputs, Licensed Products must engage CGMS-A with the CGMS-A field in the copy set to ‘11’ (“no more copies”).

VOD Settings (Temporary Download) BeginDate Start of VOD

window This right specifies a date after which the license is valid

ExpirationDate End of VOD window

This right specifies a date after which the license is no longer valid and the Windows

Media file can no longer be played ExpirationAfterFirstUse 24 Hours (US)

48 Hours (Canada)This right specifies the length of time (in hours) a license is valid after the first time the license is used

ExpirationOnStore 30 days This right specifies the length of time (in hours) a license is valid after the first time the license is stored on the consumer's computer

DeleteOnClockRollback Not enabled This right deletes the license if the consumer's computer clock is reset to an earlier time. Use this right if the license also specifies an expiration date

DisableOnClockRollback Enabled This right disables a license if the consumer's computer clock is reset to an earlier time

GracePeriod Not enabled This right specifies the number of hours during which protected content can be played after a device clock becomes unset.

Widevine DRM Profile: Content protection to the device AES 128-bit scrambling in CBC mode or equivalent.

Content is encrypted as part of the encoding/packaging process before content enters the content distribution network. The content is encrypted in its entirety.

Content protect outputs The Widevine DRM triggers output protects such as HDCP, Macrovision, and C-GMSA. Widevine will securely pass and trigger output protections when the hardware supports this capability. Content will not be passed if the hardware does not support this functionality. Widevine does not interfere or obscure consensus watermarks.

DRM Metadata and message authentication

Authentication using HMAC with 256-bit key and SHA-2 (256 bit) Hash, or with RSA 2048-bit signature (RSASSA-PKCS1-v1_5) over (at least) SHA-1 Hash.

DRM and message encryption (where necessary)

RSA 2048-bit encryption combined with AES 128-bit scrambling in CBC mode. All Widevine internal communications are mutually authenticated, process privacy, and process integrity. This is accomplished via the use of the Widevine Secure Message Manager (SMM).

Key Usage Separate keys are used for authentication and encryption. Each session, license, and asset has

separate keying material Each time content is encrypted it is encrypted with unique keying material. No two encrypted content files are encrypted with the same unique cryptographic key.

Key Expiration Symmetric keys are used as session keys or content protection keys are freshly generated and expire at the end of the session. License keys expire based on the CinemaNow business rules – see Digital Content Locker Usage Models. Device registration keys are permanently assigned at time of device manufacture to a device and are not expected to expire. Other asymmetric keys have expiration periods commensurate with their usage, but these periods are planned to be in excess of 10 years.

Device Registration Keys Asymmetric Keys – 2048 bit RSA – unique to the device

Session Keys Symmetric Keys – 128-bit AES – unique to the session

Content Protection Keys Symmetric Keys – 128-bit AES – unique to a portion of the content

License Keys Symmetric Keys – 128-bit AES – unique to the device

Symmetric Key Exchange Symmetric key encrypted by 2048-bit RSA key. – unique to the device

Message Digest All message digests are SHA-1 (160-bit). Random Number Generation The RNG is in compliance to FIPS 140-2 Section 4.7

tests for randomness DRM Client Identity Each Widevine client is uniquely identified and

bound to the device. The Widevine Cypher client uses class and identity ridges to establish trust with the Device – in the device manufacturing process is provided a Physical Device ID that identifies the client and this is later binded to the CinemaNow Device ID

Decrypted content security Widevine never allows unprotected content to be stored unless the CCI allows for unrestricted copies.

DRM client renewability Widevine’s downloadable clients (Cypher VSC) are renewable via network or other distribution methods.

Revocation of license/device Widevine’s DRM has positive revocation initiated from CinemaNow without user initiation.

Robustness and tamper protections Widevine agreements with device manufacturers include the robustness rules below. In addition to the hardware robustness rules; Widevine employs both Widevine invented and third party obfuscation, encryption, integrity and other techniques to protect the software components.

Widevine Device Robustness Rules: The Streaming Device should be designed and manufactured in such a way to comply with the following security robustness rules or software (network renewable mechanisms must be provided to ensure robustness): 1. The Streaming Device should not expose any mechanism through probing points, service menus or functions that will enable somebody to defeat or expose any of the implemented security measures. 2. The Streaming Device should have an externally non-readable and nonwritable Boot-loader. 3. All code loaded by the Boot-loader should first be authenticated by the Bootloader. 4. Internal keys and decrypted content should be protected from any external access. This includes physical access by monitoring data busses. This also includes access via data interfaces like Ethernet ports, serial links and USB ports. 5. The Streaming Device should implement tamper resistant key protection. 6. The Streaming Device should implement intrusion detection. 7. The Streaming Device should trigger an alarm and may erase keys at the detection of any security related intrusion. 8. The Streaming Device should be designed and manufactured with one or more unique parameters stored in read-only memory. These values should be used to uniquely identify the Streaming Device during the authentication process. 9. The Streaming Device should protect against the external revealing or discovery of any unique parameters that are used to uniquely identify the receiving device. 10. The Streaming Device should protect against any attempt to discover and reveal the methods and algorithms of generating keys. 11. Non-encrypted content should not be present on any user accessible busses. User accessible buses refer to buses like PCI busses and serial links. User accessible buses exclude memory buses, CPU buses and portions of the receiving device’s internal architecture. 12. The flow of non-encrypted content and keys between both software and hardware distributed components in the Streaming Device should be protected from interception and copying. 13. Software functions should perform self checking functions to detect unauthorized modification. 14. The Streaming Device should protect against the disabling of the anti-taping control functionality. 15. The Streaming Device should disable the decryption process of content after the detection of any unauthorized modification of any of the software functions involved in the security implementation.

16. The Streaming Device hardware components should be designed in such a way to prevent attempts to reprogram, remove or replace any of the hardware components involved in the security solution on the receiving device. 17. The Streaming Device should disable the decryption process of content after the detection of the reprogramming, removal or replacement of any of the hardware components involved in the security solution of the receiving device. 18. Widevine keyboxes will be factory provisioned enabling a hardware root of trust. 19. Output protections such as HDCP and C-GMSA must be supported and trigging APIs shall be exposed to the Widevine DRM.

SCHEDULE B-2

CONTENT PROTECTION REQUIREMENTS AND OBLIGATIONS

General Content Security & Service Implementation Content Protection System. All content delivered to, output from or stored on a device must be protected by a content protection system that includes digital rights management, conditional access systems and digital output protection (such system, the “Content Protection System”). The Content Protection System shall:

(i) be approved in writing by Licensor (including any upgrades or new versions, which Licensee shall submit to Licensor for approval upon such upgrades or new versions becoming available),

(ii) be fully compliant with all the compliance and robustness rules associated therewith, and (iii) use only those rights settings, if applicable, that are approved in writing by Licensor. (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”), 17 (“Copying”) of this schedule if 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, or the Content Protection System is an implementation of Microsoft WMDRM10 and meets the associated compliance and robustness rules. 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..

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 and decrypted content must be encrypted during transmission to the graphics card for rendering

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, subtitles, and video angles. Each video frame must be completely encrypted.

2. Key Management.

2.1. The Content Protection System must protect all CSPs. CSPs shall include, without limitation, all keys, passwords, and other information which are required to maintain the security and integrity of the Content Protection System.

2.2. 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 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. For example, if the Content Protection System is in the form of client software, and is copied or transferred from one device to another device, it will not work on such other device without being uniquely individualized.

4. The Licensed Service shall prevent the unauthorized delivery and distribution of Licensor’s content (for example, user-generated / user-uploaded content) and shall use reasonable efforts to filter and prevent such occurrences.

Digital Rights Management 5. Any Digital Rights Management used to protect Licensed Content 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 either a (i) specific individual end user device or (ii) domain of registered end user devices in accordance with the approved usage rules.

5.3. Licenses bound to individual end user devices shall be incapable of being transferred between such devices.

5.4. Licenses bound to a domain of registered end user devices shall ensure that such devices are only registered to a single domain at a time. An online registration service shall maintain an accurate count of the number of devices in the domain (which number shall not exceed the limit specified in the usage rules for such domain). Each domain must be associated with a unique domain ID value.

5.5. 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.

5.6. 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 Licensed Content 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 7 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. The integrity of the streaming client shall be verified by the streaming server before commencing delivery of the stream to the client.

7.4. Licensee shall use a robust and effective method (for example, short-lived and individualized URLs for the location of streams) to ensure that streams cannot be obtained by unauthorized users.

8. Flash Streaming Requirements

The requirements in this section 8 only apply if the Adobe Flash 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

8.2. Licensee will make reasonable commercial efforts to stay up to date with the “then current” versions of the above Adobe products.

8.3. Progressive downloading of licensed content is prohibited.

8.4. Flash Encoded Content (including FLV and F4V file formats) must be streamed using Adobe RTMP-E protocol.

8.5. 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.

8.6. Flash Media Servers shall be configured such that SWF Verification is enabled.

8.7. Licensee’s and/or its designated CDN shall implement “Token Authentication”, i.e. mechanism that creates a short-lived URL (approx 3-5 minutes) for content by distributing a “token” to the client only at such a time it is authorized to receive the VOD Stream.

8.8. Licensee must migrate from RTMP-E (stream encryption) to Adobe DRM i.e. Flash Media Rights Management Server successor “Flash Access 2.0” (file-based encryption) or other DRM approved by Licensor in writing within 6 months of the commercial launch of Flash Access 2.0 and be in full compliance with all content protection provisions herein;.

8.9. Licensee must make reasonable commercial efforts to comply with Adobe compliance and robustness rules for Flash Server products at such a time when they become commercially available.

9. Microsoft Silverlight

The requirements in this section 9 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.

9.2. When used as part of a streaming service only (with no download), Playready licenses shall only be of the the SimpleNonPersistent license class.

9.3. Within 6 months of the commercial launch of Silverlight 4, Licensee shall migrate to Silverlight 4 and be in full compliance with all content protection provisions herein or;.

9.3.1. Within 6 months of the commercial launch of Silverlight 4, Licensee shall migrate to alternative, Licensor-approved DRM/streaming protection technology in full compliance with content protection requirements herein.

Protection Against Hacking 10. Any system used to protect Licensed Content 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.

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. The Content Protection System shall provide mechanisms that revoke,

upon written notice from Licensor of its exercise of its right to require such revocation in the event any CSPs are compromised, (a) the instance of the Content Protection System with the compromised CSPs, and (b) any and all playback licenses issued to (i) specific individual end user device or (ii) domain of registered end user devices.

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 ensures 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, control words and ECM’s shall only be delivered from a network service to registered devices associated with an account with verified credentials. Account credentials must be transmitted securely to ensure privacy and protection against attacks.

15. Services requiring user authentication:

The credentials shall consist of at least a User ID and password of sufficient length to prevent brute force attacks.

Licensee shall take steps to prevent users from sharing account credentials. In order to prevent unwanted sharing of such credentials, account credentials may provide access to any of the following (by way of example):

- purchasing capability (e.g. access to the user’s active credit card or other financially sensitive information)

- administrator rights over the user’s account including control over user and device access to the account along with access to personal information.

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.

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.

Outputs 18. Analogue Outputs.

If the licensed content can be delivered to a device which has analog outputs, the Content Protection System must ensure that the devices meet the analogue output requirements listed in this section.

18.1. The Content Protection System shall enable CGMS-A content protection technology on all analog outputs from end user devices. Licensee shall pay all royalties and other fees payable in connection with the implementation and/or activation of such content protection technology allocable to content provided pursuant to the Agreement.

19. Digital Outputs.

If the licensed content can be delivered to a device which has digital outputs, the Content Protection System must ensure that the devices meet the digital output requirements listed in this section.

19.1. The Content Protection System shall prohibit digital output of decrypted protected content. Notwithstanding the foregoing, a digital signal may be output if it is protected and encrypted by High Definition Copy Protection (“HDCP”) or Digital Transmission Copy Protection (“DTCP”). Defined terms used but not otherwise defined in this Digital Outputs Section shall have the meanings given them in the DTCP or HDCP license agreements, as applicable.

19.1.1. A device that outputs decrypted protected content provided pursuant to the Agreement using DTCP shall:

19.1.1.1. Deliver system renewability messages to the source function;

19.1.1.2. Map the copy control information associated with the program; the copy control information shall be set to “copy never” in the corresponding encryption mode indicator and copy control information field of the descriptor;

19.1.1.3. Map the analog protection system (“APS”) bits associated with the program to the APS field of the descriptor;

19.1.1.4. Set the image_constraint_token field of the descriptor as authorized by the corresponding license administrator;

19.1.1.5. Set the eligible non-conditional access delivery field of the descriptor as authorized by the corresponding license administrator;

19.1.1.6. Set the retention state field of the descriptor as authorized by the corresponding license administrator;

19.1.1.7. Deliver system renewability messages from time to time obtained from the corresponding license administrator in a protected manner; and

19.1.1.8. Perform such additional functions as may be required by Licensor to effectuate the appropriate content protection functions of these protected digital outputs.

19.1.2. A device that outputs decrypted protected content provided pursuant to the Agreement using HDCP shall:

19.1.2.1. If requested by Licensor, at such a time as mechanisms to support SRM’s are available, deliver a file associated with the protected content named “HDCP.SRM” and, if present, pass such file to the HDCP source function in the device as a System Renewability Message; and

19.1.2.2. Verify that the HDCP Source Function is fully engaged and able to deliver the protected content in a protected form, which means:

19.1.2.2.1. HDCP encryption is operational on such output,

19.1.2.2.2. Processing of the System Renewability Message associated with the protected content, if any, has occurred as defined in the HDCP Specification, at such a time as mechanisms to support SRM’s are available, and

19.1.2.2.3. There is no HDCP Display Device or Repeater on such output whose Key Selection Vector is in such System Renewability Message at such a time as mechanisms to support SRM’s are available.

20. Exception Clause for Standard Definition, Uncompressed Digital Outputs on Windows-based PCs and Macs running OS X or higher):

HDCP must be enabled on all uncompressed digital outputs (e.g. HDMI, Display Port), unless the customer’s system cannot support HDCP (e.g., the content would not be viewable on such customer’s system if HDCP were to be applied)

21. 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 22. Watermarking. The Content Protection System or playback device must not remove or interfere

with any embedded watermarks in licensed content.

23. Embedded Information. Licensee’s delivery systems shall “pass through” any embedded copy control information without alteration, modification or degradation in any manner;

24. 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 25. The Content Protection System shall take affirmative, reasonable measures to restrict access to

Licensor’s content to within the territory in which the content has been licensed.

26. Licensee shall periodically review the geofiltering tactics and perform upgrades to the Content Protection System to maintain “state of the art” geofiltering capabilities.

27. Without limiting the foregoing, Licensee shall utilize geofiltering technology in connection with each Customer Transaction that is designed to limit distribution of Included Programs to Customers in the Territory, and which consists of (i) either IP address look-up to check for IP address within the Territory, or (ii) confirmation that the billing address associated with the credit card being used for such purchase corresponds with a geographic area that is located within the Territory, or (iii) confirmation that the Customer’s home address is within the Territory.

Network Service Protection Requirements. 28. All licensed content must be received and stored at content processing and storage facilities in a

protected and encrypted format using a “state of the art” protection system.

29. Document security policies and procedures shall be in place. Documentation of policy enforcement and compliance shall be continuously maintained.

30. Access to content in unprotected format must be limited to authorized personnel and auditable records of actual access shall be maintained.

31. Physical access to servers must be limited and controlled and must be monitored by a logging system.

32. Auditable records of access, copying, movement, transmission, backups, or modification of content must be securely stored for a period of at least three years.

33. Content servers must be protected from general internet traffic by “state of the art” protection systems including, without limitation, firewalls, virtual private networks, and intrusion detection systems. All systems must be regularly updated to incorporate the latest security patches and upgrades.

34. All facilities which process and store content must be available for Motion Picture Association of America and Licensor audits upon the request of Licensor.

35. At Licensor’s written request, security details of the network services, servers, policies, and facilities that are relevant to the security of the Licensed Service (together, the “Licensed Service Security Systems”) shall be provided to the Licensor, and Licensor reserves the right to subsequently make reasonable requests for improvements to the Licensed Service Security Systems. Any substantial changes to the Licensed Service Security Systems must be submitted to Licensor for approval, if Licensor has made a prior written request for such approval rights.

36. Content must be returned to Licensor or securely destroyed pursuant to the Agreement at the end of such content’s license period including, without limitation, all electronic and physical copies thereof.

High-Definition Restrictions & Requirements In addition to the foregoing requirements, all HD content is subject to the following set of restrictions & requirements:

37. Personal Computers HD content is expressly prohibited from being delivered to and playable on General Purpose Computer Platforms (e.g. PCs) unless explicitly approved by Licensor. If approved by Licensor, the additional requirements for HD playback on PCs will include the following:

37.1. 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 such unencrypted, uncompressed content is transmitted over a user-accessible bus in digital form, such content shall be either limited to standard definition (720 X 480 or 720 X 576), or made reasonably secure from unauthorized interception.

37.2. Digital Outputs:

For avoidance of doubt, HD content may only be output in accordance with Section 22 and Section 23 above.

37.3. 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

37.4. Secure Content Decryption.

Decryption of (i) content protected by the Content Protection System and (ii) CSPs (as defined in Section 2.1 below) related to the Content Protection System shall take place in an isolated processing environment. Decrypted content must be encrypted during transmission to the graphics card for rendering

HD Day & Date Requirements In addition to the foregoing requirements, all HD content is subject to the following set of content protection requirements:

38. Analogue Sunset.

After December 31, 2011, all Approved Devices shall limit (e.g. down-scale) analog outputs for decrypted protected Included Programs to standard definition at a resolution no greater than 720X480 or 720 X 576.

39. Additional Watermarking Requirements.

At such time as physical media players manufactured by licensees of the Advanced Access Content System are required to detect audio and/or video watermarks during content playback (the “Watermark Detection Date”), Licensee shall require, within two (2) years of the Watermark Detection Date, that any new devices 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.

SCHEDULE B-3

VOD USAGE RULES “VOD Usage Rules” means the following: Registration of Devices

i. The VOD Customer may register, per Account up to five (5) Approved Devices of any combination. A single Approved Device may only be registered to one (1) Account at any given time.

ii. Subject to the limit set forth in paragraph (i) above, the VOD Customer may elect to deregister any given Approved Device and register additional Approved Devices to his Account at any time during the Term in such VOD Customer’s discretion; provided, however, that the VOD Customer shall be prohibited from registering to his Account any Streaming Device that has been registered to (and de-registered from) more than two (2) other Accounts during the previous 12 months.

iii. Upon deregistration of any given Approved Device from an Account, such device

may no longer receive and/or playback any VOD Included Programs for such Account, and further, if the deregistered device is a Downloading Device, playback of all VOD Included Programs that were Electronically Downloaded via such Account must immediately be disabled on such Downloading Device.

Delivery and Playback

iv. An Approved Device must be registered to an Account at the time the VOD Customer requests delivery (and in order to receive such delivery) of a VOD Included Program via the applicable Approved Transmission Means to such device.

v. Pursuant to a VOD Customer Transaction, Licensee may permit a VOD Customer

to have the VOD Included Program active on (i.e., viewable on) on no more than one (1) Approved Device per VOD Customer Transaction. To this end, the VOD Customer must select either to Electronically Download a copy of the VOD Included Program to one (1) Downloading Device or to Stream a copy of the VOD Included Program to one (1) Streaming Device. For the avoidance of doubt, the VOD Customer may not Stream the VOD Included Program if he selects the option to Electronically Download, or vice versa.

vi. If the VOD Customer elects to Electronically Download the VOD Included

Program onto a Downloading Device, such the file for such VOD Included Program shall be deleted and/or rendered inaccessible upon the earliest of (a) the

end of such VOD Included Program’s VOD Viewing Period and (b) the day thirty (30) days after such VOD Included Program was initially delivered.

vii. If the VOD Customer elects to Stream the VOD Included Program onto a

Streaming Device, such VOD Included Program may be Streamed to such device solely during the VOD Viewing Period for viewing on such device. In order to initiate a Stream of a VOD Included Program, the VOD Customer must be authenticated into his Account.

viii. Each Account may only have one active authenticated user session at a time.

ix. VOD Included Programs may be securely streamed from Approved Devices to an

associated television set, video monitor or display device solely within a local area network within a private residence in compliance with the requirements of Schedule B-1. For the avoidance of doubt, the streaming functionality set forth in the immediately preceding sentence refers only to a VOD Customer’s ability to stream VOD Included Programs within a Customer’s home network which is distinct from the term “Streaming” as defined in this Agreement.

Miscellaneous

x. Licensee shall prohibit Viral Distribution and the transfer, download, recording or

copying of a VOD Included Program for viewing from an Approved Device to any other device, including, without limitation, portable media devices.

xi. Licensor shall have the right to notify Licensee in writing from time-to-time that

the VOD Usage Rules shall be changed by a date certain to all VOD Included Programs (each, a “VOD Update”). Licensee shall adhere to and apply each Update prospectively from notice thereof to all VOD Included Programs. Furthermore, should such notice so direct and should such VOD Update liberalize the VOD Usage Rules applicable to a VOD Included Program, Licensee shall apply each such Update retroactively to any VOD Included Program previously distributed by the VOD Service to VOD Customers; provided, however, that Licensee agrees to distribute such VOD Update for previously distributed VOD Included Programs on a pass-through basis (i.e., charging no more, if anything, to the VOD Customer than Licensee is charged by Licensor) and provided that Licensee and Licensor shall reasonably cooperate to ensure that the pass-through of any such VOD Update does not impose an uncompensated material cost on Licensee.

xii. Notwithstanding anything to the contrary contained in this Agreement, in the

event that Licensee establishes, with respect to audio-video content available on the VOD Service from any other content supplier customer usage rules or corresponding features or limitations applicable to such other supplier’s content and that are more restrictive to the customer than the VOD Usage Rules contained herein for VOD Included Programs, Licensee shall promptly notify Licensor

thereof and offer to Licensor the option to similarly restrict the VOD Usage Rules with respect to VOD Included Programs.

Schedule C-1

WINDOWS DRM VERSION 10 RIGHTS FOR DHE Deprecated rights are not listed and must not be enabled or specified. Only standard definition or lower resolution content is permitted. If Licensee is currently using Windows Media DRM version 9 or 7.1, Licensee shall upgrade to the most recent version available within six months of the availability of a new version of Windows DRM where technically feasible. The rights settings for previous version of MS DRM must use settings consistent with those listed in this schedule. Right Setting Comments AllowPlay Enabled This right allows the consumer to play protected

content on a computer or device Playcount Not set This right specifies the number of times the consumer

is allowed to play protected content. By default, this right is not set and unlimited playing is allowed

AllowCopy Not enabled

This right allows consumers to copy protected content to a device, such as a portable player or portable media, that supports Windows Media DRM 10 for Portable Devices

CopyCount 0 This right specifies the number of times the consumer is allowed to copy content using the AllowCopy right. By default, this right is not set, and unlimited copies are allowed.

AllowTransferToNonSDMI Not enabled


AllowTransferToSDMI Not enabled


TransferCount 0 This right specifies the number of times a consumer can transfer a Windows Media file to a device using the AllowTransferToNonSDMI and AllowTransferToSDMI rights

AllowBackupRestore Not enabled

This right allows the consumer to manage licenses by making backup copies and restoring licenses from backups

AllowCollaborativePlay Not enabled

This right allows consumers play protected content in a collaborative session using peer-to-peer services

AllowPlaylistBurn Not enabled

This right allows consumers to copy a Windows Media file from a playlist to a CD in the Red Book audio format

MaxPlaylistBurnCount Not The maximum number of times a Windows Media

enabled file can be copied to a CD as part of a particular playlist

PlaylistBurnTrackCount Not enabled

The maximum number of times a Windows Media file can be copied to a CD, regardless of what playlist it is in

MinimumSecurityLevel. 2,000 Player applications based on Windows Media Format 9 Series SDK or later with strict security requirements. Included devices Windows Media DRM 10 for Portable Devices and Network Devices. Excludes: Devices based on Windows Media Portable Device DRM v1 or based on Windows CE 4.2 and later

MinimumClientSDKSecurity Not Set Windows Media Format 7.1 SDK or later Output Protection Levels for Digital Uncompressed Video Content

SD=250 HD=300

SD content: The Licensed Product must attempt to engage HDCP to protect the video portion of uncompressed decrypted WMDRM Content. Licensed Products must attempt to verify that the HDCP source function is engaged and able to deliver protected content, which means HDCP encryption is operational on the Output; however, the Licensed Product may Pass the video portion of uncompressed decrypted WMDRM Content to Digital Video Outputs even if it fails to verify that the HDCP source function is engaged. HD content: Licensed Products must engage HDCP to protect the uncompressed Digital Video Content of decrypted WMDRM Content

Output Protection Levels for Digital Compressed Video Content

400 Only protected compressed digital outputs allowed

Output Protection Levels for Analog Video Content

200 Licensed Products is Passing the Analog Video Content of decrypted WMDRM Content to Analog Television Outputs, Licensed Products must engage CGMS-A with the CGMS-A field in the copy set to ‘11’ (“no more copies”).

Widevine DRM Profile: Content protection to the device AES 128-bit scrambling in CBC mode or equivalent.

Content is encrypted as part of the encoding/packaging process before content enters the content distribution network. The content is encrypted in its entirety.

Content protect outputs The Widevine DRM triggers output protects such as

HDCP, Macrovision, and C-GMSA. Widevine will securely pass and trigger output protections when the hardware supports this capability. Content will not be passed if the hardware does not support this functionality. Widevine does not interfere or obscure consensus watermarks.

DRM Metadata and message authentication

Authentication using HMAC with 256-bit key and SHA-2 (256 bit) Hash, or with RSA 2048-bit signature (RSASSA-PKCS1-v1_5) over (at least) SHA-1 Hash.

DRM and message encryption (where necessary)

RSA 2048-bit encryption combined with AES 128-bit scrambling in CBC mode. All Widevine internal communications are mutually authenticated, process privacy, and process integrity. This is accomplished via the use of the Widevine Secure Message Manager (SMM).

Key Usage Separate keys are used for authentication and encryption. Each session, license, and asset has separate keying material Each time content is encrypted it is encrypted with unique keying material. No two encrypted content files are encrypted with the same unique cryptographic key.

Key Expiration Symmetric keys are used as session keys or content protection keys are freshly generated and expire at the end of the session. License keys expire based on the CinemaNow business rules – see Digital Content Locker Usage Models. Device registration keys are permanently assigned at time of device manufacture to a device and are not expected to expire. Other asymmetric keys have expiration periods commensurate with their usage, but these periods are planned to be in excess of 10 years.

Device Registration Keys Asymmetric Keys – 2048 bit RSA – unique to the device

Session Keys Symmetric Keys – 128-bit AES – unique to the session

Content Protection Keys Symmetric Keys – 128-bit AES – unique to a portion of the content

License Keys Symmetric Keys – 128-bit AES – unique to the device

Symmetric Key Exchange Symmetric key encrypted by 2048-bit RSA key. – unique to the device

Message Digest All message digests are SHA-1 (160-bit). Random Number Generation The RNG is in compliance to FIPS 140-2 Section 4.7

tests for randomness DRM Client Identity Each Widevine client is uniquely identified and

bound to the device. The Widevine Cypher client uses class and identity ridges to establish trust with the Device – in the device manufacturing process is provided a Physical Device ID that identifies the client and this is later binded to the CinemaNow Device ID

Decrypted content security Widevine never allows unprotected content to be stored unless the CCI allows for unrestricted copies.

DRM client renewability Widevine’s downloadable clients (Cypher VSC) are renewable via network or other distribution methods.

Revocation of license/device Widevine’s DRM has positive revocation initiated from CinemaNow without user initiation.

Robustness and tamper protections Widevine agreements with device manufacturers include the robustness rules below. In addition to the hardware robustness rules; Widevine employs both Widevine invented and third party obfuscation, encryption, integrity and other techniques to protect the software components.

Widevine Device Robustness Rules: The Streaming Device should be designed and manufactured in such a way to comply with the following security robustness rules or software (network renewable mechanisms must be provided to ensure robustness): 1. The Streaming Device should not expose any mechanism through probing points, service menus or functions that will enable somebody to defeat or expose any of the implemented security measures. 2. The Streaming Device should have an externally non-readable and nonwritable Boot-loader. 3. All code loaded by the Boot-loader should first be authenticated by the Bootloader. 4. Internal keys and decrypted content should be protected from any external access. This includes physical access by monitoring data busses. This also includes access via data interfaces like Ethernet ports, serial links and USB ports. 5. The Streaming Device should implement tamper resistant key protection. 6. The Streaming Device should implement intrusion detection. 7. The Streaming Device should trigger an alarm and may erase keys at the detection of any security related intrusion. 8. The Streaming Device should be designed and manufactured with one or more unique parameters stored in read-only memory. These values should be used to uniquely identify the Streaming Device during the authentication process. 9. The Streaming Device should protect against the external revealing or discovery of any unique parameters that are used to uniquely identify the receiving device. 10. The Streaming Device should protect against any attempt to discover and reveal the methods and algorithms of generating keys. 11. Non-encrypted content should not be present on any user accessible busses. User accessible buses refer to buses like PCI busses and serial links. User accessible buses exclude memory buses, CPU buses and portions of the receiving device’s internal architecture. 12. The flow of non-encrypted content and keys between both software and hardware distributed components in the Streaming Device should be protected from interception and copying. 13. Software functions should perform self checking functions to detect unauthorized modification. 14. The Streaming Device should protect against the disabling of the anti-taping control functionality. 15. The Streaming Device should disable the decryption process of content after the detection of any unauthorized modification of any of the software functions involved in the security implementation.

16. The Streaming Device hardware components should be designed in such a way to prevent attempts to reprogram, remove or replace any of the hardware components involved in the security solution on the receiving device. 17. The Streaming Device should disable the decryption process of content after the detection of the reprogramming, removal or replacement of any of the hardware components involved in the security solution of the receiving device. 18. Widevine keyboxes will be factory provisioned enabling a hardware root of trust. 19. Output protections such as HDCP and C-GMSA must be supported and trigging APIs shall be exposed to the Widevine DRM.

SCHEDULE C-2

DHE USAGE RULES

“DHE Usage Rules” shall include the following:

Authentication

o Consumers must authenticate prior to being granted content access rights and prior to downloading content for disconnected usage scenarios.

o To authenticate, a consumer must supply a unique username and password combination.

o To protect against fraud, the username and password must be tied to an account and grant either: 1) access to credit card information, or 2) purchasing authority.

o For devices with limited consumer interface capabilities (such as portables), authentication may be accomplished through a more robust device (such as a PC) that is connected to the limited device.

o The service is obligated to maintain a record of a consumer’s utilization of rights to the permanent copies.

Fraud Prevention

o The service must monitor access patterns to verify that no fraudulent usage is in evidence.

o At a minimum, access verification much take active steps to detect simultaneous access of content and repeated, ongoing access to content from the account across multiple geographic locations.

o If the service accepts content from sources that cannot represent and warrant their rights to distribute that content, service is obligated to assess presence of the Verance CCI watermark and filter out any unauthorized content that contains the watermark.

Access pattern monitoring borrows from the idea of credit card fraud detection. For example, if a consumer buys something with a credit card in LA and then shortly thereafter uses that credit card in Japan, a credit card company will often request consumer verification of the behavior to make certain that the usage is not fraudulent. A content service can do similar fraud detection to ensure that consumers are not sharing accounts.

Registration and Deauthorization of Approved Devices

xiii. The number of Approved Devices on which playback of DHE Included Programs is

enabled that may be registered to a Customer Account at any given time shall be either:

a. Up to five (5) Downloading Devices; or b. Up to four (4) Downloading Devices, plus an unlimited number of Streaming

Devices; provided that Licensor reserves the right in its sole discretion to establish a limit on the number of Streaming Devices, which limit shall be effective within sixty (60) days from Licensor’s provision of such notice to Licensee.

xiv. Subject to the limit set forth in subsection (i) above, a Customer may elect to deauthorize

any given Approved Device and register additional Approved Devices to his or her Customer Account at any given time during the Term in such Customer’s discretion; provided that the Customer shall be prohibited from playback of a DHE Included Program on any Streaming Device that during the previous three (3) months has been registered to, and deauthorized from, more than two (2) other Customer Accounts that have completed a Customer Transaction for a DHE Included Program (each, a “Frozen Device”). Licensee may enable playback of DHE Included Programs on one (1) Frozen Device per Customer Account for any Customer who requests such additional device registration for a recovery purpose (e.g., a hardware malfunction or a device repair) via Licensee’s customer service number or technical help website. Additional Frozen Devices shall be enabled solely in the event that such Customer represents, and such representation is not contradicted by evidence or behavior, that such Customer has had a hardware malfunction that renders a validly purchased DHE Included Program unviewable or that the Frozen Device to which a DHE Included Program was delivered had been repaired or updated.

xv. An Approved Device may only be registered to one (1) Customer Account at any given

time. Upon deauthorization of an Approved Device from a Customer Account, such device may no longer receive and/or play DHE Included Programs from such account and, further, if the deauthorized device is a Downloading Devices, playback of all DHE Included Programs downloaded to such account must immediately be disabled on such device.

Delivery and Playback of DHE Included Programs

xvi. An Approved Device must be registered to a Customer Account at the time the Customer

requests delivery and in order to receive delivery via an Approved Transmission Means of a DHE Included Program in an Approved Format to such device.

xvii. DHE Included Programs that a Customer is authorized to receive, decrypt and play

subject to a Customer Transaction shall be the only DHE Included Programs transmitted to Approved Devices.

xviii. Subject to the limit set forth in subsection (i) above, Licensee may permit a Customer to

have DHE Included Programs purchased pursuant to a Customer Transaction active on (i.e., viewable on) all Approved Devices currently registered to his or her Customer Account. Customers must acquire decryption keys for each additional Approved Device via their password-protected Customer Accounts on the Service.

xix. In order to use Digital Locker Functionality and/or Streaming Functionality, the

Customer must be logged in and authenticated to his or her Customer Account on the Service.

xx. Licensee shall ensure that no more than one (1) stream of a DHE Included Program per

Customer Account is delivered at any given time, with the exception that a DHE Included Program may be streamed simultaneously to two (2) Streaming Devices if both Streaming Devices are registered to the same Customer Account and have the same IP address, and the IP address is not listed as a proxy by means of checking against the Digital Envoy Service.

xxi. If a stream request is initiated from a Customer Account that exceeds the permitted limit

of simultaneous streams, Licensee will not technically enable such stream.

xxii. Each Customer Account may have more than one (1) active, authenticated user session at any given time based on the total number of Approved Devices; provided, however, that in the event that more than one (1) user session is active and authenticated for a single Customer Account simultaneously from two (2) or more locations, no more than one (1) stream shall be initiated.

xxiii. A DHE Included Program in the Approved Streaming Format shall be viewable solely

on Streaming Devices, and a DHE Included Program in the Approved Format agreed by the parties under subsection (a) of the definition of “Approved Format,” shall be viewable solely on Downloading Devices.

Miscellaneous

xxiv. Any transfer, copying, transmission and/or distribution of DHE Included Programs may

only be enabled as per the content protection requirements and usage rules detailed herein. Without limiting the generality of the foregoing, DHE Included Programs may be securely streamed from Approved Devices to an associated television set, video monitor or display device solely within a local area network within a private residence in compliance with the requirements of Schedules B-2 and C-3, as applicable. For the avoidance of doubt, the streaming functionality set forth in the immediately preceding sentence refers only to a Customer’s ability to stream DHE Included Programs within a Customer’s home network which is distinct from the term “Streaming Functionality” as defined in this Agreement.

xxv. Viral Distribution shall be prohibited.

xxvi. Licensor shall have the right to notify Licensee in writing from time-to-time that the

Usage Rules applicable to an Approved Format or Approved Device shall be changed by a date certain to all DHE Included Programs (each, an “Update”). Licensee shall adhere to and apply each Update prospectively from notice thereof to all DHE Included Programs. Furthermore, should such notice so direct and should such Update liberalize the Usage Rules applicable to a program, Licensee shall apply each such Update retroactively to any DHE Included Program previously distributed by the Service to Customers; provided, however, that Licensee agrees to distribute such Update for previously distributed DHE Included Programs on a pass-through basis (i.e., charging no more, if anything, to the Customer than Licensee is charged by Licensor) and provided that Licensee and Licensor shall reasonably cooperate to ensure that the pass-through of any such Update does not impose an uncompensated material cost on Licensee.

xxvii. For a DHE Included Program in the Approved Format agreed by the parties under subsection (b) of the definition of “Approved Format,” “Usage Rules” shall mean such rules as the parties may mutually agree upon, to be set forth on a separate written schedule to be attached hereto.

SCHEDULE C-3

CONTENT PROTECTION REQUIREMENTS AND OBLIGATIONS APPLICABLE TO THE DISTRIBUTION OF HIGH DEFINITION FEATURE FILMS ON A DHE BASIS

1. Watermarking. Licensee will discuss with Licensor in good faith the implementation of Watermark Technology (defined below) to prevent unauthorized playback of watermarked High Definition Feature Films on HD-capable Approved Devices. For purposes hereof, “Watermark Technology” means the Verance Copy Management System for audiovisual content, employed in accordance with Verance specifications and applicable rules in effect as of the date of this Agreement. 2. Security Solution Robustness. With respect to the playback of High Definition Feature Films, the Content Protection System shall employ Licensor-approved 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). Examples of tamper resistant software techniques include, without limitation:

a. 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. b. 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. c. Anti-debugging: The decryption engine prevents the use of common debugging tools. d. Red herring code: The security modules use extra software routines that mimic security modules but do not have access to CSPs.

3. Output Protections

a. No High Definition Feature Films may be output over compressed outputs on Approved Devices. b. With respect to the output of High Definition Feature Films over uncompressed outputs on Approved Devices, Licensee shall require that HDCP is enabled. c. Notwithstanding the foregoing, with respect to the output of High Definition Feature Films over uncompressed outputs on Approved Devices that are Personal Computers, if 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), Licensee must ensure that the playback of High Definition Features Films over such outputs is in a resolution no greater than Standard Definition (which playback must be in accordance with the output requirements specified in Schedule B-2); provided that Licensee may implement Digital Video Interface version 1.0 (“DVI”) without HDCP and allow High Definition Feature Films to be output in High Definition on such interface on Personal Computer platforms until December 31, 2011, after which date Licensee shall down-res High Definition Feature Films to a resolution no greater than Standard Definition for playback over DVI (which playback must be in accordance with the output requirements specified in Schedule B-2).

d. In addition to the foregoing, with respect to the playback of High Definition Feature Films over analog outputs on Approved Devices that are manufactured after December 31, 2011,

Licensee shall either (i) prohibit the playback of such content over analog outputs on all such Approved Devices or (ii) ensure that the playback of such content over analog outputs on all such Approved Devices is limited to a resolution no greater than Standard Definition.

SCHEDULE D DELIVERY STANDARDS AND ENCODING SPECIFICATIONS

Titles delivered to the end-consumer will be encoded in 1.2 Mbps and/or 1.5 Mbps. Licensor will provide the movies to Licensee or designated 3rd party in appropriate mezzanine format to enable Licensee or 3rd party to create end-consumer output files as documented below.If Licensor makes additional encoded files generally available for digital downloads and if Licensee meets Licensor’s implementation and delivery requirements, Licensor will make the additional files available to Licensee.

The following specifications document the end-user output file specifications. Licensor will deliver appropriate and agreed-upon mezzanine format to enable creation of the file specs below.

HIGH – 1200 kbps Variable Detail Notes Codec WMV-9 Video / WM9PRO-Audio Source master types DBC or HD digital master Source master aspect type 16x9 (1.78, 1.85, 2.35) Preferred

4x3FF (1.33) if no widescreen available

Source master audio type N/A Final WMV code is Stereo Encoding Process 2 Pass VBR VBR Peak bit rate 4,000 kbps Pixel Array (aspect ratio) 640 x 480 adjust as needed 4x3 (1.33) 640x480 Total bit rate 1,200 kbps Total video bit rate 1,062 kbps Total audio bit rate 128 kbps

PREMIER – 1500 kbps Variable Detail Notes Codec WMV-9 Video / WM9PRO-Audio Source master types DBC or HD digital master Source master aspect type 16x9 (1.78, 1.85, 2.35) Preferred

4x3FF (1.33) if no widescreen available

Source master audio type Final WMV encode is 5.1 Surround (unless Surround is not available for a title)

Encoding Process 2 Pass VBR VBR Peak bit rate 4,000 kbps Pixel Array (aspect ratio) 640 x 480 (1.85) adjust as needed 4X3 (1.33) 640x480 Total bit rate 1,500 kbps Total video bit rate 1,308 kbps Total audio bit rate 192 kbps

SCHEDULE E

PLACEMENT, MARKETING & PROMOTION GUIDELINES

General Guidelines

With respect to Licensee’s marketing, placement and promotional activities related to the Service and programs made available for license therein (regardless of whether other suppliers structure such availability as a license or a sale), Licensor’s titles shall be treated in a Non-Discriminatory Manner (as defined below) and Licensee shall afford Licensor’s titles generally no less favorable treatment than programs provided by any other supplier (excepting paid-for promotions or other special exclusives where another supplier provides separate benefits to Licensee (“Excepted Promotions”)) .

Customer newsletters/ mailings

Licensor’s titles shall receive non-discriminatory treatment with respect to placement of titles promoted with box art or other title-related artwork in all general, non-studio supported customer newsletters/mailings (e.g., including weekly e-mail newsletter)

Licensor’s new releases and “new-to-format” releases shall be treated in a Non-Discriminatory manner with respect to placement and/or being featured in a customer newsletter/mailing.

Inclusion of Licensor titles in advertising

Without limiting the foregoing minimum placement obligations, Licensor’s titles shall receive placement within Licensee advertisements in a Non-Discriminatory Manner (excepting Excepted Promotions).

The foregoing obligations apply irrespective of whether Licensee pays for the advertisements or places the advertisements through barter or other mechanism.

Placement within Store pages

On (i) Overall Service home page and (ii) any genre pages, Licensor’s titles shall be treated in a Non-Discriminatory Manner (e.g., with respect to placement and allocation of single-title promotional buttons, placement within top-of-page banners, etc.).

In space dedicated to listing all titles (e.g., list at bottom of page), Licensor shall

receive placement in a Non-Discriminatory Manner (e.g., placement in alphabetical order) and no less favorable treatment than provided to any other supplier.

Promotional campaigns

Licensor shall receive no less favorable treatment than any other studio in terms of prominence of promotions in the ordinary course of business (e.g., space, placement, marketing, advertising associated with promotions) and relative frequency of promotions provided that Licensor’s offering is generally comparable in terms of attractiveness to the customer and/or Licensee as such other studio’s offering. Licensor shall be treated in a Non-Discriminatory Manner with respect to

promotions created by Licensee involving multiple studios.

Quarterly Meetings

Licensee and Licensor agree to meet on a quarterly basis to discuss the advertising, marketing, placement, and promotion of Licensor’s titles including:

- Placement and promotion of Licensor titles within the Service - Inclusion of Licensor titles in newsletters/mailings - Dedicated supplier store - Licensor priority titles - Licensor promotional campaigns - Inclusion of Licensor titles in multi-studio promotional campaigns - Previous and planned inclusion of Licensor titles in Licensee advertising as

referenced above

Service features

Non-Discriminatory Service Features. Subject to the Licensor’s limitations, certain features of the Service, such as “Frequency of Promotion” and “Promotion” (as each such term is defined below) shall be implemented by Licensee in a Non-Discriminatory Manner. These features are defined as follows:

- Frequency of Promotion – The number of times a title is pre-promoted and promoted in all media.

- Promotion – The use of special footage (TV spots, trailers, featurettes, interviews, etc.), if materials are made available, metadata (i.e., synopses, cast, production, notes, news, box office, etc.) and special marketing campaigns (premiums, sweepstakes, viral marketing, etc.) to promote an Included Program during its Availability Period. Depending on user preference, equivalent exposure shall be given on pop-up consoles or email messages sent to users announcing new titles.

- Placement of Trailers – With respect to placement, functionality and prominence of trailers, Licensor’s trailers shall be treated in a Non-Discriminatory Manner and shall receive no less favorable treatment than trailers from other suppliers.

Equal Protection Service Features. Subject to Licensor’s limitations, and inherent

differences such as key art style and length of title, other features of the Service, such as “Pre-Promotion,” “Delivery,” “Functionality,” “Search Functions” and “Presentation” (as each such term is defined below) shall be implemented by Licensee in a manner that provides generally equal treatment for each Included Program among all titles available on the Service. These features are defined as follows:

- Pre-promotion – The duration of the period before the first availability date during which promotion to users is permitted.

- Delivery – The speed (including the amount of bandwidth used) of delivering a title.

- Functionality – The number of steps needed to locate and order a title. - Search Functions – The search methods offered to users to locate titles by

categories and/or key words (e.g., new releases, most frequently selected titles, title, genre, cast, director, director of photography, producer, studio, etc.).

- Presentation – Unless otherwise specified herein, the size and quality of text, images and trailers (if made available by Licensor) used to present a title on the Service. Subject to Licensors’ compression and encoding, the quality of the playback image of a title should be equivalent for all titles on the Service utilizing the same codec.

Definition of “Non-Discriminatory Manner”

As used in this Schedule, Licensee shall be deemed to have acted in a “Non-Discriminatory Manner” if Licensee allocates screen time, placement and space on the Service (including, but not limited to, equivalent frequency, size, and prominence of the title treatment, key art and other text or images identifying the Included Programs) on a licensor-blind basis, or without regard to the identity of the licensor (other than with regard to Excepted Promotions).

Separate Obligations

The marketing and promotion guidelines set forth in this Schedule D shall be separate and apart from, and shall not operate to alter or modify, Licensee’s obligations under any other agreement between Licensor and Licensee regarding the distribution or promotion of programming.

SCHEDULE F

ADDITIONAL REPORTING REQUIREMENTS FOR STREAMING

With respect to DHE Included Programs Streamed to Streaming Devices, Licensee shall provide the following information in a form or format reasonably acceptable to, or specified by, Licensor:

a. Average and maximum number of Streaming Devices registered per Account.

b. Average and maximum number of Streaming Device registrations per Account.

c. Average number of Streaming Device de-registrations per Account.

d. Total number of simultaneous Streams permitted to 2 Streaming Devices identified as belonging to the same IP address per the DHE Usage Rules.

e. Total number of Accounts flagged for attempting to initiate 2 Stream sessions from 3 different territories within 24 hours.

f. Total number of Accounts disabled for attempting to initiate 2 stream sessions from 7 different territories within 24 hours.

g. Total number of Streams per Account.

h. Average and maximum number of Streams per DHE Included Program.

i. Average and maximum number of Streams per DHE Included Program per Account.

j. Total number of Streaming Devices per Account.

k. Total number of registrations for each Streaming Device.

l. Streaming activity in the aggregate, generally in the following form:

Number of Streaming

Devices

Number of Streams 1 2 3 4 5 6 7 8 9 or

more 1 2 100 3

The number in each cell of the above table will represent the aggregate number of DHE Customer Transactions with respect to which, in the prior quarter, the DHE Included Program that was the subject of such DHE Customer Transactions was (a) Streamed to the indicated number of Streaming Devices; and (b) Streamed the indicated number of times. For example, the number 100 in the table above indicates that there were 100

DHE Customer Transactions with respect to which, in the prior quarter, the DHE Included Program that was the subject of such DHE Customer Transactions was streamed exactly 3 times, to exactly 2 separate Streaming Devices.

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