MUSIC VIDEO REPRODUCTION AND EXHIBITION AGREEMENT
Exhibit
10.17
This
Music Video Reproduction and Exhibition Agreement (the “Agreement”), dated as of
October 26, 2006 (the “Effective Date”), is made by and between Global Music
International, Inc. d/b/a Independent Music Network d/b/a “IMN TV”, ▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (hereinafter “Company”) and SONY BMG
MUSIC ENTERTAINMENT, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (hereinafter
“SONY BMG," "us" or "we").
WHEREAS,
SONY BMG is in the business of, interalia, developing, producing,
marketing, promoting, distributing and otherwise exploiting recorded music,
including Music Videos;
WHEREAS,
Company produces, programs and operates an audiovisual programming distribution
service that is delivered by means of Service Transmissions via the Wireless
Platform for exhibition, performance and display on
Approved Handsets through Approved Distribution Channels solely as part of
and
in connection with the Video Service in the Territory;
WHEREAS,
Company desires to reproduce, exhibit, perform and display, as applicable,
SONY
BMG Videos in connection with the Video Service in accordance with
the terms, conditions and limitations prescribed in this Agreement;
NOW,
THEREFORE, in consideration of the
mutual promises contained herein and other good valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, the parties agree
as
follows:
1. GRANT
OF RIGHTS
1.01. (a) General;
Approved Distribution Channels; Wireless
Platform. Subject to the other terms,
conditions and limitations prescribed elsewhere in this Agreement, SONY BMG
hereby grants Company a non-exclusive, non-transferable, limited right, without
any right to subdelegate, to do solely the following solely during the Term
and
solely in the Territory (the “Grant of Rights”):
(1) To
reproduce up to two (2) copies of each of the SONY BMG Videos (without editing,
excerpting or alteration of any kind) (each, an "Ephemeral Copy") and
maintain such reproductions on Company Servers, solely for use in connection
with the facilitation of Service Transmissions delivered from the Company
Servers via the Wireless Platform for exhibition,
performance and display on Approved Handsets through Approved Distribution
Channels solely as part of and in connection with the Video Service in the
Territory; and
(2) To
deliver each SONY BMG Video in its entirety, without editing or alteration
of
any kind solely by means of Service Transmissions via the Wireless Platform
for
exhibition, performance and display on Approved Handsets of End Users through
Approved Distribution Channels, which are rendered for playback on such Approved
Handsets solely for the personal, non-commercial use of the End User recipient,
solely as part of and in connection with the Video Service in the Territory
in
accordance with the Technical and Security Specifications attached as Exhibit
A-1 hereto, the Functionality Specifications attached as Exhibit A-2 hereto,
and
the other terms, conditions and limitations prescribed elsewhere in this
Agreement, as of the applicable Availability Date designated by SONY BMG for
the
particular SONY BMG Video in the territory concerned. For the
avoidance of doubt, SONY BMG Videos may not be delivered by means of any digital
or analog transmission medium other than the Wireless Platform, or exhibited,
performed or displayed by means of any Electronic Devices other than Approved
Handsets, in whole or in part, directly or indirectly, Wireless
Platform.
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(b) Each
Service Transmission of each SONY BMG Video shall be delivered in a manner
which
makes the exhibition, performance and display of SONY BMG Video concerned in
reasonably close proximity to a prominent, proximate Buy Offer to purchase
the
Related Products from third-party mobile retailers approved in writing in
advance by SONY BMG in its sole discretion.
(c) Approved
Distribution Channels. Notwithstanding the foregoing or
anything elsewhere herein, the Grant of Rights hereunder shall be limited to
Service Transmissions delivered to Approved Handsets of End Users as part of
the
Company Application, as distributed through such distribution channels that
are
approved by SONY BMG in advance and in writing, in each instance, pursuant
to
this Agreement to offer SONY BMG Videos as part of the Video
Service. As of the Effective Date, the following distribution
channels shall be deemed approved by SONY BMG as Approved Distribution
Channels:
(i)
the
Company Application as incorporated in the “IMNTV” folder of the Rhapsody Radio
mobile application, as distributed by Sprint Nextel’s Sprint PCS Vision mobile
service in the territory of the United States;
(ii)
the
Company Application as incorporated in the “Real TV” mobile application, as
distributed by Sprint Nextel’s Sprint PCS Vision mobile service in the territory
of the United States;
(iii) the
Company Application as incorporated in the “Real TV” mobile application, as
distributed by Cingular Wireless’s “Allover” mobile service network in the
territory of the United States; and
(iv) the
Company Application as in incorporated in the “IMNTV” mobile application, as
distributed by China Unicom in the territory of China.
Notwithstanding
the foregoing or anything elsewhere herein, SONY BMG shall retain the right,
in
its sole discretion, to rescind its approval of any such distribution channel
as
an Approved Distribution Channel at any time, upon fifteen (15) days’ prior
notice to Company.
2. TERM
2.01.
(a) The term of
this Agreement (the "Term") will begin as of the Effective Date, and will
continue for a period of one (1) year, unless sooner terminated in accordance
with the terms hereof.
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(b) The
parties hereto hereby acknowledge that SONY BMG’s prior approval of each of the
following elements are condition precedents to (x) the effectiveness of the
Grant of Rights prescribed in Article 1 for the applicable country of the
Territory, and (y) SONY BMG’s delivery of SONY BMG Videos to Company pursuant to
subparagraph 4.01(a) for the applicable country of the Territory: the Technical
and Security Specifications (in accordance with the definition
of “Technical and Security Specifications” in Article 14 below) for
the applicable country of the Territory; the Functionality Specification (in
accordance with the definition of “Functionality Specifications” in
Article 14 below) for the applicable country of the Territory; the DRM (in
accordance with the definition of “DRM” in Article 14 below) for the
applicable country of the Territory and the elements of the video chyron (in
accordance with subparagraph 7.04(a) below) for the applicable country of the
Territory. Provided that Company has not breached any of its material
representations, warranties, covenants or agreements and has used best efforts
to deliver the foregoing elements to SONY BMG for its written approval as and
to
the extent required under this Agreement for the applicable country of the
Territory, and SONY BMG withholds its approval thereof in a manner that is
arbitrary, capricious and without any bona-fide good faith basis or reason
for
so withholding such approval for the applicable country of the Territory, then,
Company will have the right to terminate the Term of this Agreement insofar
as
it pertains to the applicable country of the Territory (which, for the avoidance
of doubt, may be the entire Territory), exercisable by notice to SONY BMG
delivered no earlier than five (5) business days following the date of SONY
BMG’s rejection of the last of the applicable elements for the applicable
country of the Territory and no later than ten (10) days following the date
of
SONY BMG’s rejection of the last of the applicable elements for the applicable
country of the Territory. If the Term is Agreement is terminated by
Company pursuant to this subparagraph 2.01(b) insofar as it pertains to any
country of the Territory (which, for the avoidance of doubt, may be the entire
Territory), SONY BMG shall promptly return to Company the full amount of all
Advances, Revenue Guarantees and Content Preparation Fees previously paid to
Company attributable to the country in respect of which the termination of
the
Term relates to (which, for the avoidance of doubt, may be the entire
Territory); provided, however, that if such termination of the Term relates
solely to the territory of China (and not to the territory of the United
States), SONY BMG will be entitled to retain a non-returnable, non-recoupable
sum in the amount of Fifty Thousand Dollars (US$50,000)(the “Kill Fee”), the
provisions of paragraph 12.02 below will immediately apply for the country
concerned, and Company shall have no further obligations to SONY BMG under
this
Agreement insofar as it pertains to the applicable country of the
Territory.
3. TERRITORY
3.01. (a) As
used herein, the “Territory” shall mean the United States and
China.
(b) Notwithstanding
the foregoing or
anything elsewhere herein, within thirty (30) days following the complete
execution of this Agreement, SONY BMG will deliver to Company a grant of rights,
to be embodied in one or more written documents, fully and effectively executed
by Sony BMG’s affiliated company in China (sometimes referred to herein as the
“Applicable Affiliate”) in a form substantially in accordance with Exhibit E
attached hereto, so as to give effect to the rights granted to Company under
this Agreement in relation to SONY BMG Materials delivered to consumers located
within the countries of operation of the Applicable Affiliate in accordance
with
and subject to the terms of this Agreement.
(c) Notwithstanding
the foregoing or anything elsewhere herein, Company acknowledges that SONY
BMG’s
rights with respect to particular titles of SONY BMG Videos and other items
of
SONY BMG Materials may be limited geographically to one or more countries of
the
Territory. SONY BMG reserves the right to designate SONY BMG Videos
and other items of SONY BMG Materials as available for exploitation under the
Grant of Rights granted herein in some or all of the Territory on a
country-by-country, title-by-title, item-by-item, and the Grant of Rights
granted under this Agreement with respect to such SONY BMG Materials will be
limited geographically in accordance with such designations made by SONY
BMG.
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4.
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DELIVERY
OF SONY BMG VIDEOS; AVAILABILITY DATE;
TAKE-DOWNS
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4.01. (a) SONY
BMG shall deliver copies of the SONY BMG Videos that are selected by SONY BMG
in
its sole discretion and are eligible for exploitation under the Grant of Rights
in accordance with the Content Delivery Specifications attached hereto as
Exhibit D; provided, however, that (i) SONY BMG’s failure to deliver any
particular such copies in any instance(s) shall not be deemed a breach of this
Agreement, and (ii) SONY BMG shall have no obligation to deliver any copies
of
the SONY BMG Videos unless and until SONY BMG has approved each of the elements
referenced in subparagraph 2.01(b) above.
.
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(b) At
all times during the Term, SONY BMG shall have the right at its sole discretion,
effective immediately upon notice to Company (which notice may, notwithstanding
anything to the contrary herein, be via telephone, facsimile, electronic mail
or
any other effective method of communication)(each, a "Take-Down Notice"),
to exclude or withdraw any items of SONY BMG Materials (including any SONY
BMG
Videos) from the scope of the Grant of Rights for any
reason in some or all of the territories that constitute the Territory, as
SONY
BMG may direct. Upon SONY BMG's delivery of each Take-Down Notice,
Company shall immediately (but in no event later than twenty four (24) hours
from the date of delivery of such Take-Down Notice), remove from the Video
Service all copies of the applicable SONY BMG Materials, including all Ephemeral
Copies, referenced in the applicable Take-Down Notice and the provisions of
paragraph 12.02 shall apply in respect of the applicable items of SONY BMG
Materials.
4.02. Availability
Date. For each SONY BMG Video in the
applicable country of the Territory, the "Availability
Date" shall mean the date that is designated by SONY BMG in its sole
discretion for the initial exhibition, performance and display of the
SONY BMG Video concerned via the Video Service.
4B. Established
Artist Promotions.
(a) During
the Term, SONY BMG and Company will work together in good faith to develop
artist specific and/or SONY BMG Video specific features, spotlights, contests
and other marketing and promotional opportunities for prominent display via
the
Video Service in the applicable country of the Territory (“Featured
Promotions”). Any such Featured Promotions will be no less
frequent, and no less prominent in terms of size, type, appearance and other
attributes as any other features, spotlights, contests and other
marketing/promotional features displayed via the Video Service for any
third-party record company or recording artist in the applicable country of
the
Territory.
(b) Omitted
without implication.
5. ADVANCES;
CONTENT PREPARATION FEE; REVENUE GUARANTEE
5.01. Advances.
(a) United
States. In consideration of the rights
granted hereunder with respect to the territory of the United
States, Company shall pay SONY BMG a non-returnable,
non-refundable Advance in the amount of Fifty Thousand United States Dollars
(US$50,000) by wire transfer into the Account in immediately available funds,
promptly following the complete execution of this Agreement (but in no event
later than five (5) business days following the complete execution of this
Agreement).
(b) China. In
consideration of the rights granted hereunder with respect to the territory
of
China, Company shall pay the applicable Affiliate a
non-returnable, non-refundable Advance in the amount of Fifty Thousand United
States Dollars (US$50,000) by wire transfer into the Applicable Affiliate
Account in immediately available funds, promptly following the complete
execution of this Agreement (but in no event later than five (5) business days
following the complete execution of this Agreement).
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5.02. Content
Preparation Fee.
(a) United
States. In consideration of content
preparation and delivery services rendered by SONY BMG hereunder in respect
of
the territory of the United States, Company shall pay to SONY BMG a
non-returnable, non-recoupable content preparation and delivery fee in the
amount of ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Dollars (US$100,000) (the
“Content Preparation Fee” for the U.S.) by wire transfer into the Account
in immediately available funds, promptly following SONY BMG’s approval of each
of the elements referenced in subparagraph 2.01(b) above (but in no event
later than five (5) business days following such approval).
(b) China. In
consideration of content preparation and delivery services rendered by the
Applicable Affiliate hereunder in respect of the territory of China, Company
shall pay to the Applicable Affiliate a non-returnable, non-recoupable content
preparation and delivery fee in the amount of ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
Dollars (US$100,000) (the “Content Preparation Fee” for China) by wire
transfer into the Applicable Affiliate Account in immediately available funds,
promptly following SONY BMG’s approval of each of the elements referenced in
subparagraph 2.01(b) above (but in no event later than five (5) business
days following such approval ).
5.03. Revenue
Guarantee.
(a) United
States. In respect of each calendar
month following the U.S. Launch Date, Company shall pay to the Applicable
Affiliate, on a calendar monthly basis in respect of each calendar month during
the Term, the greater of (i) the Service Fees due pursuant to section 6.01
below
attributable to the exploitation of SONY BMG Materials in the United States,
or
(ii) a minimum revenue guarantee (the “Revenue Guarantee”) of Fifty
Thousand United States Dollars (US$50,000) per calendar month. The
Revenue Guarantee shall be paid within ten (10) days following the end of each
such calendar month directly into the Account on behalf of SONY BMG, without
offset or deductions of any kind. As used herein, "U.S. Launch
Date" is the date of the non-beta commercial launch of the Video Service via
any Approved Distribution Channel in the United States. Company shall
send SONY BMG a notice accurately confirming such U.S. Launch Date by no later
than five (5) business days following such U.S. Launch Date.
(b) China. In
respect of each calendar month following the China Launch Date, Company shall
pay to SONY BMG, on a calendar monthly basis in respect of each calendar month
during the Term, the greater of (i) the Service Fees due pursuant to section
6.01 below attributable to the exploitation of SONY BMG Materials in China
or
(ii) a minimum revenue guarantee (the “Revenue Guarantee”) of Fifty
Thousand United States Dollars (US$50,000) per calendar month. The
Revenue Guarantee shall be paid within ten (10) days following the end of each
such calendar month directly into the Applicable Affiliate Account on behalf
of
the Applicable Affiliate, without offset or deductions of any
kind. As used herein, "China Launch Date" is the date of the
non-beta commercial launch of the Video Service via any Approved Distribution
Channel in China. Company shall send SONY BMG a notice accurately
confirming such China Launch Date by no later than five (5) business days
following such China Launch Date.
6. SERVICE
FEES
6.01. (a) In
consideration of the rights granted to Company in respect of the use and
exploitation of SONY BMG Materials in connection with the Video Service, Company
shall pay to SONY BMG at the end of each calendar month (and in accordance
with
the provisions of this Article 6) a fee (the “Service Fee”) in an amount
equal to equal to the greater of the amounts prescribed in clauses (1) and
(2)
below:
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(1)
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Revenue
Share Calculation. Fifty percent (50%) of the
Gross Revenue during such month; or
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(2)
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Per
Subscriber Minimum.
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(A) United
States. In respect of the version of
the Video Service distributed in the United States, the number of End Users
during such month multiplied by Forty Two and One-Half Cents (US $.425);
and
(B) China. In
respect of the version of the Video Service distributed in China, the number
of
End Users during such month multiplied by Thirty Cents (US
$.30).
The
Service Fee shall be payable in United States Dollars. To the extent
that any amounts payable hereunder are required to be converted from a currency
other than United States Dollars to United States Dollars, such conversion
shall
be made at the exchange rate for such other currency published in the Wall
Street Journal on the last business day of each calendar month.
(b) As
used herein, the following terms shall have the following meanings:
(1)
“Bounty Revenues” shall mean all gross monies (including non-refundable
advances and guarantees, however characterized) paid or payable by or on behalf
of any Person (including, for the avoidance of doubt and without limitation,
so-called “affiliate program” fees, so-called “referral fees” and customer
acquisition fees), whether structured as a one-time payment or as a recurring
revenue share, as well as the fair market value of any non-cash consideration,
attributable to the acquisition or retention of End Users and potential End
Users to or from any electronic property to another, directly or
indirectly.
(2) “Gross
Margin Revenues” shall mean all gross monies (including non-refundable
advances and guarantees, however characterized) paid or payable by or on behalf
of any Person attributable to the sale, lease or license of any products or
services via the Video Service, after deducting (a) any and all taxes paid
by
the consumer as part of the applicable sale, and (b) an amount equal to the
actual, out-of-pocket wholesale price paid by Company to any unaffiliated third
parties in consideration of any such products or services purchased for resale
(i.e., the cost of goods sold).
(3) “Gross
Revenue” shall mean the aggregate of: (i) Subscription Revenues; (ii) all
Net Advertising Revenues; (iii) all Bounty Revenues; (iv) all Gross Margin
Revenues; and (v) all other gross monies (including non-refundable advances
and
guarantees, however characterized) paid or payable by or on behalf of any Person
to the extent actually paid or credited to or on behalf of such Person in
connection with the operation and/or exploitation of the Video Service,
including, for the avoidance of doubt, the exploitation of End User
Information. For purposes of determining Gross Revenue hereunder, any
non-cash consideration shall be accounted for on the basis of the fair market
value of the property or services concerned. As between Company and
SONY BMG, Company shall be solely responsible for the amount of any and all
unpaid or uncollected gross monies that would otherwise constitute “Gross
Revenue” hereunder if actually paid (i.e., Company shall be solely responsible
for all so-called “bad debt”). For the avoidance of doubt, Gross
Revenue shall include any and all monies or other consideration, however
characterized, retained by or on behalf of any Person, including Company’s
agents, service providers, distributors and resellers, as the case may be (i.e.,
all such monies and other consideration are to be determined and calculated
“at
source”).
(5) Omitted
without implication.
(6) “Net
Advertising Revenues” shall mean all gross monies(including non-refundable
advances and guarantees, however characterized) paid or payable by or on behalf
of any Person that are attributable to the sale of Advertisements, less
Company’s actual, out-of-pocket expenditures for advertising sales agency
commissions actually paid by Company to unaffiliated third-party advertising
sales agencies (subject to a maximum deduction in all events of fifteen percent
(15%) of such monies). (Company hereby represents and warrants to
SONY BMG that as of the Effective Date, the Video Service does not contain
any
Advertisements.)
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(7) Omitted
without implication.
(8) ”Subscription
Revenues” means all gross monies paid or payable by or on behalf of any
Person (including non-refundable advances and guarantees, however characterized)
attributable to access by End Users (or by trial users to the extent revenues
are derived therefrom, directly or indirectly) to the
Video Service (including, for the avoidance of doubt and without limitation,
all
subscription, access, service operation, and other fees or remuneration, however
characterized), in whole or in part, directly or indirectly.
6.02. Omitted
without implication.
6.03. (a) (1) Company
shall compute the Service Fees and any other payments accrued hereunder as
of
the end of each calendar quarter hereunder (Company hereby represents and
warrants to SONY BMG that at all times during the Term, all Financial Clearing
Services will be undertaken by Approved Distribution Channels, and that all
accountings of Service Fees hereunder will be based and derived solely from
accountings made from Approved Distribution Channels to Company hereunder as
of
the end of each calendar quarter during the Term) on a country-by-country basis;
provided, however, that to the extent, if at all, that SONY BMG is required
to
make any payments to any Persons in respect of the rights contemplated under
section 7.03(e)(2) below on a more frequent basis than a calendar quarterly
period, SONY BMG will have the right to require Company to make a payment on
such more frequent basis in an amount owed equal to SONY BMG’s actual,
out-of-pocket cost of such expenditures for the applicable period, and any
amounts to be paid to SONY BMG shall be treated as an additional Advance against
Service Fees payable in respect of the then next calendar quarterly
accounting. Within ten (10) days following the end of each such
quarter hereunder, Company shall send SONY BMG separate accountings for each
of
SONY BMG (in respect of exploitations of SONY BMG Materials in the United
States) and the Applicable Affiliate (in respect of exploitations of SONY BMG
Materials in China) covering that computation for the country concerned setting
forth a description and calculation of the applicable payments in detail
sufficient to support the calculations of the amounts paid, in accordance with
the reporting specifications attached hereto as Exhibit C, including the
aggregate number of Service Transmissions embodying SONY BMG Videos via the
Video Service during the preceding quarter (the "Quarterly Report").
Company, will pay into the Account on behalf of SONY BMG (in respect of
exploitations of SONY BMG Materials in the United States) and into the
Applicable Affiliate Account on behalf of the Applicable Affiliate (in respect
of exploitations of SONY BMG Materials in the United States), without offset
or
deductions of any kind, the Service Fees and other sums that have accrued and
are payable to SONY BMG on a quarterly basis by no later than the close of
business ten (10) business days following the end of the calendar quarter
concerned for all exploitations of SONY BMG Videos during the preceding
quarterly period.
(2) (A) Without
limiting the generality of the foregoing or anything elsewhere herein, at all
times during the Term, Company will make available to SONY BMG a
password-protected, secure electronic database and data tracking tool (the
“Extranet") for access by SONY BMG on a twenty-four (24) hours per day, seven
(7) days per week basis, containing so-called “real time” reporting of usage of
SONY BMG Materials under this Agreement of the categories of information
described in Exhibit G attached hereto.
(B) The
Extranet shall also contain such additional information as SONY BMG may
reasonably request from time-to-time during the Term, and in no event shall
the
Extranet contain less information than the information provided to any other
providers of recorded audio or audiovisual content in connection with the
Service.
(C) At
all times during the Term, SONY BMG shall have the unrestricted ability to
make
copies of any information contained in the Extranet, including, for the
avoidance of doubt and without limitation, so-called "page views", in
both human readable form (e.g., printed copies) and machine readable form (e.g.,
computer files).
(b) At
all times during the Term, Company shall maintain comprehensive standard
management reporting systems capable of tracking the information required to
be
maintained and reported to SONY BMG in connection with this
Agreement.
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(c) All
payments becoming due to SONY BMG under this Agreement will be made in full
by
Company without any offset or deduction.
(d) Company
shall pay interest at the rate of one and one-half percent (1.5%) per month,
or
the maximum rate permitted by law, whichever is less, from the date due, on
any
required payment that is not made on or before its due date, without prejudice
to any other rights SONY BMG may have in connection with such
delinquency.
6.04. Company
shall cause the independent public accounting firm that audits Company’s books
and records to prepare in respect of each of Company’s fiscal years during the
Term an agreed upon procedures report (each, a “Procedures Report”)
verifying that the financial and other information contained on the Quarterly
Reports correspond directly to the underlying books and records of Company,
without adjustment and/or reconciling items. Such books and records
shall be the basis for Company’s own audited financial statements and shall be
subject to an adequate system of internal accounting controls surrounding the
assertions of completeness, accuracy, occurrence proper period and
valuation. Each such Procedures Report shall be delivered to SONY BMG
by no later than forty-five (45) days following the end of fiscal year covered
by the Procedures Report.
6.05. (a) Company
shall maintain accurate and complete records and books of account in accordance
with GAAP applied on a consistent basis that contain any documentation
reasonably necessary for SONY BMG to compute and verify the payments payable
to
SONY BMG hereunder, and to verify all of the information required to be
delivered to or otherwise made available to SONY BMG in connection with the
performance of this Agreement. No more than once per year, and no
more than once in respect of any particular Quarterly Report rendered hereunder,
and only within two (2) years following the termination or expiration of the
Term, SONY BMG’s representatives will have the right to examine the books and
records described in the first sentence of this paragraph at any time during
Company’s normal business hours, upon no less than twenty-one (21) days’ advance
notice, and to make copies of them and extract information from them, which
books, records and copies shall, for the avoidance of doubt, be deemed
Confidential Information hereunder.
(b) During
the Term, and until the date that is two (2) years following the expiration
or
termination of the Term, SONY BMG shall have the option (the “Approved
Distribution Channel Financial Audit Option”), exercisable by notice to Company
at any time, to require Company to conduct an examination of the books and
records of or related to any Approved Distribution Channels that contain any
documentation reasonably necessary for SONY BMG to verify the accuracy of
payments paid or payable by or on behalf of the Approved Distribution Channel
concerned to or on behalf of Company in connection with the exploitation of
the
SONY BMG Materials via the Video Service. If, during the Term, and
until the date that is one (1) year following the expiration or termination
of
the Term, Company conducts an examination of the books and records of any
Approved Distribution Channels, to verify the accuracy of payments paid or
payable by or on behalf of the Approved Distribution Channel concerned to or
on
behalf of Company, Company shall notify SONY BMG not less than sixty (60) days
prior to the commencement of such examination, and SONY BMG shall have the
right
to exercise a Approved Distribution Channel Financial Audit Option in
conjunction with the examination concerned. In the event that SONY
BMG exercises its Approved Distribution Channel Financial Audit Option, Company
shall conduct the examination concerned through an auditor designated by SONY
BMG in its sole discretion at company’s sole cost and expense, subject to the
next sentence. In the event that any examination of an Approved
Distribution Channel’s books and records pursuant to SONY BMG’s exercise of a
Approved Distribution Channel Financial Audit Option results in a recovery
of
any monies due to SONY BMG under this Music Video Reproduction and Exhibition
Agreement in excess of One Hundred Dollars ($100), Company shall immediately
pay
over to SONY BMG the full amount of SONY BMG’s Proportionate Share of total
monies recovered by Company under the applicable audit (which in no event may
exceed the full amount of SONY BMG’s Proportionate Share of total monies
recovered by Company under the applicable audit in any event), and SONY BMG
shall reimburse Company for SONY BMG’s Proportionate Share of Company’s actual,
out-of-pocket cost of the audit concerned promptly following SONY BMG’s receipt
of notice from Company containing such documentation as SONY BMG may reasonably
deem necessary evidencing such actual, out-of-pocket costs and Company’s payment
thereof to the auditor concerned. As used herein, “SONY BMG’s
Proportionate Share” shall mean a fraction, the numerator of which is the total
amount of monies recovered by Company under the applicable audit that are due
and owing to SONY BMG and are otherwise payable to SONY BMG under this
Agreement, and the denominator of which is the total amount of monies recovered
by Company under the applicable audit (including, for the avoidance of doubt,
the total amount of monies recovered by Company under the applicable audit
that
are due and owing to SONY BMG and are otherwise payable to SONY BMG under this
Agreement).
-8-
(c) Company
shall maintain accurate and complete records and books of account in accordance
with GAAP applied on a consistent basis that contain any documentation
reasonably necessary for SONY BMG to compute and verify the payments payable
to
SONY BMG hereunder, and to verify all of the information required to be
delivered to or otherwise made available to SONY BMG in connection with the
performance of this Agreement. No more than once per year, and no
more than once in respect of any particular Quarterly Report rendered hereunder,
and only within two (2) years following the termination or expiration of the
Term, SONY BMG’s representatives will have the right to examine the books and
records described in the first sentence of this paragraph at any time during
Company’s normal business hours, upon no less than twenty-one (21) days’ advance
notice, and to make copies of them and extract information from them, which
books, records and copies shall, for the avoidance of doubt, be deemed
Confidential Information hereunder.
(c) Company
will cooperate with SONY BMG’s representatives to insure their reasonable (as
construed broadly, in order for SONY BMG to enforce and protect its interests
in
connection with this Agreement) access to such books and records of Company’s
and will furnish such supplemental information and documents as SONY BMG may
request. If the audit establishes that Company has under-accounted and/or
underpaid any Service Fees (deficiency) of ten percent (10%) or more of the
Service Fees reported during the audit period then the reasonable and documented
expenses of such inspection, including fees (but excluding SONY BMG’s overhead
other than in-house auditor costs, the value of which shall be based on the
fair
market value for comparable services were they provided by unaffiliated third
party auditors), shall be borne by Company. Company shall promptly
pay the amount of such deficiency, plus interest, as provided
herein.
6.06. If
SONY BMG does not receive any Quarterly Report as and when required hereunder,
Company shall submit Service Fee payments that are twenty percent (20%) higher
than the Service Fee payments due for the preceding quarter, and payments shall
continue at that increased rate, until SONY BMG receives the late Quarterly
Report. If the amount paid pursuant to this paragraph is less than
the amount actually due, the underpayment shall be subject to paragraph 6.03(d)
above. If the amount paid pursuant to this paragraph is more than the
amount actually due, the overpayment shall be credited against future Service
Fees due to SONY BMG under this Agreement. Nothing herein shall limit
SONY BMG's rights or remedies elsewhere in this Agreement or
otherwise.
6.07.
Company warrants and represents that Company will bear and pay any and all
taxes, duties and customs of any kind, however designated, levied or based
in
any way anywhere in the Territory upon the performance of Company’s obligations
under this Agreement or the sale or resale of any products or services by
Company, including, for the avoidance of doubt and without limitation, all
sales, use, excise, transactional, purchase, value added or similar taxes (other
than income taxes payable by SONY BMG on monies earned by SONY BMG under this
Agreement). Company will execute any documents SONY BMG reasonably
may deem necessary or desirable to evidence Company liability for such
taxes. If any claim is made against SONY BMG for such taxes, Company
will promptly remit to SONY BMG such sums together with any penalties and
interest assessed.
6.08. For
a period of two and one-half (2½) years following the last day of the Term,
Company shall retain all transaction data and other data or information
reasonably necessary for SONY BMG and Company to determine and verify all
amounts due or payable hereunder and for accounting purposes, including, without
limitation, each of the items required in each Quarterly Report.
7. OPERATION
OF THE SERVICE; RESTRICTIONS
7.01. Company
will use all SONY BMG Materials in an unaltered form. Company
warrants and represents that Company shall not directly or indirectly allow
any
of the SONY BMG Materials to be edited, altered or otherwise modified, either
in
whole or in part, directly or indirectly. Without limiting the
generality of the foregoing, all SONY BMG Videos included in the Video Service,
including all Ephemeral Copies derived from encoded digital files delivered
by
SONY BMG to Company under paragraph 4.01 above, shall be in the same form and
format, including the same codecs, bitrates, frame rates, screen resolutions,
sampling rates and other parameters, as the corresponding SONY BMG Video is
delivered to Company under paragraph 4.01 above, without alteration, editing
and/or transcoding of any kind, in whole or in part.
7.02.
(a) All
rights in any SONY BMG Materials furnished by SONY BMG or used by Company at
SONY BMG’s request in connection with the Video Service, including the copyright
and the right to secure copyright, shall be SONY BMG’s property throughout the
universe and in perpetuity.
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(b) All
matters relating to the SONY BMG Authorized Trademarks deemed advisable by
SONY
BMG’s attorneys shall be determined in SONY BMG’s sole
discretion. SONY BMG shall not be deemed unreasonable in rejecting
any requested change to the use of the SONY BMG Authorized Trademarks with
respect to the Video Service upon the advice of SONY BMG’s
attorneys.
7.03. (a) Company
shall be solely responsible for creating, maintaining and distributing the
Video
Service in accordance with the Technical and Security and the Functionality
Specifications.
(b) Except
as expressly provided in this Agreement, Company shall, at its sole expense,
be
solely responsible for conducting all business activities related to the Video
Service.
(c) Except
as expressly set forth herein, as between SONY BMG and Company, Company hereby
assumes all liability which may arise from products and services, as the case
may be, rendered to End Users and liability for injuries to and by servants,
agents, employees or the general public in connection with operation of the
Video Service. Except as expressly set forth herein, all business
risks related to the Video Service shall be borne solely by
Company.
(d) All
costs and expenses incurred in insuring against loss, theft or damage of any
materials delivered to Company by SONY BMG (“Delivery Materials”) shall
be borne by Company. Upon the loss, theft, damage to or destruction of any
Delivery Materials, Company shall promptly furnish SONY BMG with proof thereof
by an affidavit executed by a duly authorized officer of Company which
accurately confirms, with reasonable particularity, the loss, theft or damage
concerned. For any Delivery Materials lost, stolen, destroyed or
damaged after delivery to Company and prior to return to SONY BMG, Company
shall
promptly pay to SONY BMG the reasonable replacement cost thereof, which payment
shall not transfer title thereto to Company or any other Person.
(e) (1) As
between Company and SONY BMG, Company shall be solely responsible for acquiring
all rights, consents, licenses and permissions necessary for the performance,
reproduction, synchronization and other use of Compositions embodied in SONY
BMG
Videos used in connection with the Video Service, and for the payment of all
costs, fees, expenses, charges and royalties, however designated, in connection
with the use and exploitation of such Compositions, as and when required under
such rights, consents, licenses and permissions.
(2) As
between
Company and SONY BMG: (i) SONY BMG shall be responsible for making all union
payments (if any) to the extent, if at all, per-transaction payments are
required by the American Federation of Musicians (AFM) and American Federation
of Television and Radio Artists (AFTRA) arising out of Service Transmissions
of
SONY BMG Materials, (ii) SONY BMG shall be responsible for making all royalty
and other payments required to be made by SONY BMG in respect of Service
Transmissions of SONY BMG Materials to each recording artist, producer, mixer,
remixer and other Person that contributed to the recording or creation of SONY
BMG Videos or other SONY BMG Materials, excluding any royalty or other payments
arising from the acquisition and exploitation of the publishing rights described
in sections 7.03(e)(1) above, which publishing rights, for the avoidance of
doubt, are covered in accordance with such sections.
(3) Except
as
otherwise expressly provided in this Agreement, Company shall be solely
responsible for any and all costs, fees, expenses, charges and royalties,
however designated, in connection with the use and exploitation of SONY BMG
Materials under the Grant of Rights.
-10-
7.04. (a) Each
SONY BMG Video exhibited, performed or displayed via the Video Service shall
contain a so-called “chyron” (as that term is understood in the United States
Phonograph Record industry) which, during the first and last five (5) seconds
of
the exhibition of the SONY BMG Video concerned, displays in human readable
form,
each of the following elements with a degree of size, place and prominence
consistent with a mockup approved by SONY BMG in writing in advance in each
instance, as Sony BMG will direct for the Sony BMG Video concerned: (i) the
title of the SONY BMG Video; (ii) the title of the album from which the SONY
BMG
Video concerned is derived; (iii) the name of the recording artist featured
in
the SONY BMG Video; (iv) the name of the record label used by SONY BMG to market
and distribute such album (e.g., Columbia, Epic or RCA); and (v) the name of
the
director of the SONY BMG Video. Without limiting any of SONY BMG's
rights herein, Company warrants, represents and agrees that, with respect to
any
SONY BMG Artist whose performances are embodied on the SONY BMG Videos utilized
in connection with the Video Service, the credits for such artist, and the
artist credits in any advertising containing the Video Service, shall appear
in
the same size, prominence and type style as the size, prominence, and type
style
used in connection with credits for all artists that are not SONY BMG
Artists.
7.05. (a) Except
as and to the extent expressly permitted elsewhere in this Agreement, Company
shall not, without SONY BMG’s prior written consent in each instance, which
consent SONY BMG may withhold in its unrestricted discretion, make any use
(directly or indirectly) of any SONY BMG Authorized Trademark or of the names,
likenesses or biographical materials of any SONY BMG Artist and/or any other
Persons contributing to the recording or creation of any SONY BMG Materials,
including, for the avoidance of doubt and without limitation, any directors
of
SONY BMG Videos, any producers, mixers and/or remixers, in advertisements,
promotions, press releases or marketing materials used in connection with the
Video Service or otherwise.
7.06. (a) Company
shall not, under any circumstance, (i) attempt to pledge, mortgage or otherwise
encumber (A) the SONY BMG Materials or any other tangible or intangible property
of SONY BMG provided to Company pursuant to this Agreement or (B) any of
Company’s rights under this Agreement or (ii) attack or challenge the validity
of any of SONY BMG’s or its licensor’s copyrights, patents, trademarks or other
intellectual property rights or licenses.
(b) (1) Company's
rights hereunder are non-transferable, non-sublicensable and non-delegable
and
Company acknowledge that: (i) all of the rights granted herein are granted
on a
non-exclusive basis; and (ii) SONY BMG reserves all rights to use, and authorize
third parties to use, any or all of the SONY BMG Materials.
(2) Notwithstanding
the foregoing or anything elsewhere herein: (i) neither Company nor any Person
deriving rights from Company may cut, edit, change, add to, delete, revise
or
otherwise edit or alter SONY BMG Videos in any manner whatsoever, in whole
or in
part, directly or indirectly, (ii) SONY BMG Videos shall only be exhibited,
performed and displayed in their entirety in a linear manner, subject only
to
the End User generated results (e.g., pause, rewind, fast forward and/or replay)
caused by an End User's operation of the interactive functionalities expressly
permitted in the Functionality Specifications attached hereto as Exhibit A-2,
and (iii) SONY BMG Videos shall only be exhibited, performed and displayed
as
audiovisual works (i.e., nothing herein shall be construed as permitting Company
to strip the audio portion of any SONY BMG Video from the video portion thereof,
which, for the avoidance of doubt, is expressly prohibited).
-11-
(3) Company
shall not, and shall not authorize any Person to, whether through acts or
omissions, either directly or indirectly, in whole or in part, create or
facilitate the creation of any digital copies of any SONY BMG Materials (other
than Ephemeral Copies, as and to the extent expressly permitted in this
Agreement). Without limiting the generality of the foregoing or
anything elsewhere herein, if any technology approved by SONY BMG becomes
commercially available on commercially reasonable, non-discriminatory terms
that
is designed to effectively prevent audiovisual materials, such as audiovisual
materials that are exhibited, performed and displayed as part of and in
connection with Service Transmissions via the Video Service, from unauthorized
reproduction, in whole or in part, or from the redistribution of digital copies
by the End User to other Persons in whole or in part (e.g., the MPAA “broadcast
flag”), then: (x) Company will promptly (but in no event later than thirty (30)
days thereafter) acquire all necessary rights, licenses and permissions as
may
be required for Company to use such technology in connection with Service
Transmissions of SONY BMG Materials hereunder promptly following notice from
SONY BMG that accurately confirms the availability of the applicable approved
technology and SONY BMG's approval of such technology for the uses contemplated
herein, and (y) Company will promptly thereafter encode and protect all Service
Transmissions containing SONY BMG Materials in accordance with the
specifications for the applicable technology on a prospective
basis.
(4) Company
warrants, represents and agrees that it will not through its acts or omissions,
directly or indirectly, sell or otherwise dispose of, pledge, mortgage or in
any
way encumber the SONY BMG Materials or any rights herein.
7.07. Company's
rights to use the SONY BMG Materials under the Grant of Rights shall be subject
to all of the terms and conditions of this Agreement, and Company's right to
use
such SONY BMG Materials shall not constitute a transfer of rights to Company
in
or to the SONY BMG Materials or any other intellectual property associated
therewith, except to the extent expressly authorized
herein. For the avoidance of doubt, nothing contained in this
Agreement shall be construed as giving Company or any other Person the right
to
sell, resell or otherwise conduct or authorize the transmission of SONY BMG
Materials, either in whole or in part, as a dealer, retailer, distributor,
subdistributor, merchant, syndicator or otherwise, except to the extent
expressly, if at all, authorized herein.
8. SECURITY
8.01. (a) At
all times during the Term, the SONY BMG Materials shall be stored, hosted,
secured, served and delivered directly to End Users solely from Company Servers
in accordance with the Technical and Security Specifications attached hereto
as
Exhibit A-2 attached hereto.
(b) If
Company becomes aware of any unauthorized access to or unauthorized reproduction
of SONY BMG Materials or other materials or properties owned or controlled
by
SONY BMG in contravention of the terms, conditions and limitations prescribed
in
this Agreement as a result of a breach of security with respect to Company
Servers or any other aspect of Company’s server-side distribution platform,
including network components used in connection with Company Servers (e.g.,
a
server hack), or if Company becomes aware that the security features contained
in the Technical and Security Specifications, solely insofar as they relate
to
server-side security, are capable of circumvention (each a “Server Security
Breach”), Company shall immediately notify SONY BMG (in the event that SONY
BMG was not the Person that made Company so aware) and shall reasonably
cooperate with SONY BMG, at Company’s expense, to promptly cure the Server
Security Breach concerned to SONY BMG’s reasonable satisfaction and Company
shall give SONY BMG such assurances and furnish to SONY BMG such plans as are
reasonably satisfactory to SONY BMG detailing, with reasonable particularity,
the steps that have been taken and the steps that Company proposes to take
to
eliminate the Server Security Breach concerned. In the event that
Company is unwilling or unable to cure such Server Security Breach to SONY
BMG’s
reasonable satisfaction within twenty-four (24) hours of becoming aware of
such
Server Security Breach, SONY BMG shall have the right, in its sole discretion,
as of the end of the aforesaid twenty-four (24) hour period, exercisable by
notice to Company (which notice, for the avoidance of doubt, may,
notwithstanding anything to the contrary elsewhere herein, be via telephone,
confirmed facsimile, confirmed electronic mail or any other effective method
of
communication in respect of which confirmation of delivery is available) to
suspend the running of the Term and the grant of rights by SONY BMG under this
Agreement until such Server Security Breach is cured to SONY BMG’s reasonable
satisfaction (such notice is sometimes referred to herein as a
“Server Security Suspension Notice”). During the pendency of any such suspension
period (x) the Term and the Grant of Rights shall be suspended, (y) Company’s
rights to use the SONY BMG Materials and authorization to exhibit, perform
and
display SONY BMG Videos shall be suspended, and Company shall thereafter cease
all exhibitions, performances and displays of SONY BMG Videos, and
(z) Company shall cease to use the SONY BMG Materials and all SONY BMG Materials
shall be taken-down. Without limiting the generality of the
foregoing, SONY BMG shall be permitted to terminate the Term under Article
12
below if the suspension of the Term under the foregoing provisions of this
subparagraph lasts more than sixty (60) consecutive days (or ninety (90) days
in
any period of one hundred and eighty (180) consecutive days).
-12-
(c) Company
shall employ a technology solution (including a DRM approved by SONY BMG
hereunder) in accordance with the Technical and Security Specifications attached
hereto. Without limiting any other provision of this Agreement
in respect of Company’s enforcement of the Technical and Security
Specifications, in the event that such technology solution (including such
DRM
approved by SONY BMG hereunder) fails to prevent the use of any SONY BMG
Materials in a manner inconsistent with the Technical and Security
Specifications (a “DRM Security Breach”), Company shall immediately
notify SONY BMG (in the event that SONY BMG was not the Person that made Company
so aware) and shall reasonably cooperate with SONY BMG, at Company’s expense, to
promptly cure the DRM Security Breach concerned on a prospective basis to SONY
BMG’s reasonable satisfaction and Company shall give SONY BMG such assurances
and furnish to SONY BMG such plans as are reasonably satisfactory to SONY BMG
detailing, with reasonable particularity, the steps that have been taken and
the
steps that Company proposes to take to eliminate the DRM Security Breach
concerned on a prospective basis. In the event that Company is
unwilling or unable to cure such DRM Security Breach on a prospective basis
to
SONY BMG’s reasonable satisfaction within five (5) days from the date Company
becomes aware of such DRM Security Breach, SONY BMG shall have the right, in
its
sole discretion, as of the end of the aforesaid five (5) day period, exercisable
by notice to Company (which notice, for the avoidance of doubt, may be via
telephone, confirmed facsimile, confirmed electronic mail or any other effective
method of communication in respect of which confirmation of delivery is
available) to suspend the running of the Term and the grant of rights by SONY
BMG under this Agreement until such DRM Security Breach is cured to SONY BMG’s
reasonable satisfaction (such notice is sometimes referred to herein as a
“DRM Security Suspension Notice”). During the pendency of any such
suspension period (x) the Term shall be suspended, (y) Company’s rights to use
the SONY BMG Materials and authorization to exhibit, perform and display SONY
BMG Videos shall be suspended, and Company shall thereafter cease all
exhibitions, performances and displays of SONY BMG Videos, and (z) Company
shall
cease to use the SONY BMG Materials and all SONY BMG Materials shall be
taken-down. Without limiting the generality of the foregoing, SONY
BMG shall be permitted to terminate the Term under Article 12 below if the
suspension of the Term under the foregoing provisions of this subparagraph
lasts
more than sixty (60) consecutive days (or ninety (90) days in any period of
one
hundred and eighty (180) consecutive days).
(c) If
Company becomes aware of any unauthorized access to or unauthorized reproduction
of SONY BMG Materials in contravention of the terms, conditions or limitations
prescribed in this Agreement as a result of a breach of security with respect
to
any Approved Handset, or if Company becomes aware that any of the security
features contained in the Technical and Security Specifications, solely insofar
as they relate to the security of any Approved Handset, are capable of
circumvention (a “Device Security Breach”), Company shall (i) immediately
notify SONY BMG (in the event that SONY BMG was not the Person that made Company
so aware), (ii) reasonably cooperate with SONY BMG, at Company’s expense, to
promptly cure the Device Security Breach concerned to SONY BMG’s reasonable
satisfaction and (iii) give SONY BMG such assurances and furnish to SONY BMG
such plans as are reasonably satisfactory to SONY BMG detailing, with reasonable
particularity, the steps that have been taken and the steps that Company
proposes to take to eliminate the Device Security Breach
concerned. Without limiting SONY BMG’S rights and remedies hereunder
or otherwise, in the event that Company is unwilling or unable to cure such
Device Security Breach to SONY BMG’s reasonable satisfaction within twenty-four
(24) hours of becoming aware of such Device Security Breach, SONY BMG shall
have
the right, in its sole discretion, as of the end of the aforesaid twenty-four
(24) hour period, exercisable by notice to Company (which notice,
notwithstanding anything to the contrary herein, may be delivered via facsimile,
electronic mail or any other effective method of written communication) to
either (1) suspend the running of the Term and the grant of rights by SONY
BMG
under this Agreement until such Device Security Breach is cured to SONY BMG’s
reasonable satisfaction, or (2) deem the applicable Electronics Device rejected
as an Approved Handset on a prospective basis for the remainder of the
Term. During the pendency of any such suspension period, (x) the
running of the Term shall be suspended, and (y) all SONY BMG Materials otherwise
made available via the Video Service shall immediately be disabled or otherwise
taken-down (such SONY BMG Materials are sometimes referred to herein as
“Take-Down Materials”), as SONY BMG shall direct. Without
limiting the generality of the foregoing, SONY BMG shall be permitted to
terminate the Term under Article 12 below if the suspension of the Term under
the foregoing provisions of this subparagraph lasts more than sixty (60)
consecutive days (or ninety (90) days in any period of one hundred eighty (180)
consecutive days.
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8.02. Upon
reasonable advance notice, SONY BMG will have the right, at its own expense,
to
conduct technical audits of the Company and the Video Service for the purpose
of
observing and verifying the storage, hosting, security, serving, delivery and
other use of the SONY BMG Materials, including, for the avoidance of doubt
and
without limitation, all hardware and software components and systems utilized
by
Company and its designees (e.g., Company Servers) that distribute the Video
Service including server logs, and all documentation setting forth policies
and
procedures with respect to security features and formats, wherever any such
hardware and software components and systems and documentation are maintained
or
stored, as applicable, including, without limitation, any and all data centers
and information technology departments performing services or operations in
connection with or on behalf of the Video Service. For the avoidance
of doubt, any information disclosed by Company under this paragraph 8.02 will
be
deemed “Confidential Information” hereunder.
9. WEEKLY
ACTIVITY REPORTS
9.01. (a) In
respect of each calendar week during the Term, Company will provide to SONY
BMG
on a weekly basis a report containing the following information:
(1) A
list containing the aggregate number of exhibitions of each SONY BMG Video
organized by artist, title and “label” (e.g., Epic Records, Columbia
Records, RCA Records, Zomba Records) (including the date, daypart segment and
duration of each such exhibition), sorted by country and on an overall
Territory-wide basis;
(3) A
list containing the top fifty (50) audiovisual works, including music videos
(other than SONY BMG Videos) exhibited by artist, title and “label”
(e.g., Epic Records, Columbia Records, RCA Records) (including the date,
daypart segment and duration of each such exhibition), sorted by country and
on
an overall Territory-wide basis;
(4) A
comparison of the number of Service Transmissions embodying SONY BMG Videos
with
the total number of Service Transmissions of audiovisual works (including Music
Videos) that are not SONY BMG Music), sorted by country and on an overall
Territory-wide basis; and
(5) A
list of the top one hundred (100) selling Related Products sold via the Video
Service through Buy Offer buttons or otherwise; and
(4) A
comparison of the number of Video Service Transmissions embodying Sony BMG
Videos with the total number of Video Service Transmissions
of audiovisual works (including Music Videos) that are not Sony
BMG Videos; and
(5) The
ratio, expressed as a percentage, of all sales of Related Products sold via
Buy
Offers displayed through the Video Service that follow an End User request
in a
reasonably proximate time period after the exhibition of an audiovisual work
including any Sony BMG Videos and other Music Videos (i.e., the “click through”
or “conversion rate” for sales).
Without
limiting the generality for the foregoing, on a weekly basis during the Term,
Company will collect and deliver to SONY BMG a weekly report in an electronic
and printable format, on or before 5:00 PM (EST) each Monday, in respect of
activity of the Video Service during the seven (7) day period commencing on
the
Monday of the preceding calendar week through the preceding Sunday of that
calendar week, containing the data and information described in (and otherwise
in accordance with) the weekly reporting specifications attached hereto as
Exhibit C on an overall basis and on a per Approved Distribution Channel basis
(each, a “Weekly Report”). Notwithstanding the foregoing, if
Company provides additional categories of data, such as aggregated sales
comparisons among record label groups, to any provider of recorded music
content, then Company shall provide such additional data to SONY
BMG.
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10. PROMOTIONAL
OPPORTUNITIES
10.01. (a) (This
paragraph 10.01 will apply only in the event that the Video Service incorporates
artist specific and/or music video specific features, spotlights, contests
and
other marketing and promotional opportunities for any providers of audiovisual
content in connection with the Video Service.)
(b)
During the Term, SONY BMG and Company will work together in good faith to
develop artist specific and/or Music Video specific features, spotlights,
contests and other marketing and promotional opportunities via the
Video Service (“Featured Promotions”). Toward that end, SONY BMG and
Company will make reasonable efforts to participate in regularly scheduled
meetings or conference calls (as the parties may mutually agree) to discuss
SONY
BMG’s release schedule, priorities and marketing and merchandising ideas for
Featured Promotions for each Approved Distribution
Channel.
10.02.
(a)
(This paragraph 10.02 will apply only in the event that the Video Service
incorporates features, placements, merchandising opportunities, spotlights,
contests, recommendations, messaging or other marketing and promotional
opportunities on and in connection with the Video Service)
(b)
(1) Without limiting the generality of the foregoing or
anything elsewhere herein, during the Term, Company shall offer to SONY BMG
on a
gratis basis a reasonably proportionate share of Promotional Opportunities
(as
such proportionate share is determined by reference to the number of albums
sold
by SONY BMG as compared to the number of albums sold by each other Person that
is also a provider of recorded music content to the Video Service in the
Territory during the preceding calendar month, in each case, as reported by
SoundScan (or another provider of reasonably comparable sales data with
reasonably equivalent authority, accuracy and reliability in the event that
SoundScan ceases publication of such information) (i.e., so-called “album market
share"). In the event that SONY BMG avails itself of any such
Promotional Opportunities so offered, SONY BMG shall at all times retain sole
control over the selection of SONY BMG Artists and SONY BMG Materials, subject
to the next sentence. SONY BMG shall consult with Company regarding
the selection of SONY BMG Artists to be the subject of any particular
Promotional Opportunity, provided, however, that SONY BMG and Company
acknowledge and agree that the Promotional Opportunities will include a
reasonable mix of SONY BMG Artists that are so-called "established artists"
and
SONY BMG Artists that so-called "developing artists." In the event
that Company reasonably believes that SONY BMG’s selection of artist(s) and/or
SONY BMG Materials for any Promotional Opportunity is incompatible with the
overall framework of such Promotional Opportunity, then Company shall notify
SONY BMG of Company’s request that SONY BMG select different SONY BMG Artist(s)
and/or SONY BMG Materials, and SONY BMG shall have the right to select in its
sole discretion such different SONY BMG Artist(s) and/or SONY BMG
Materials.
(2) As
used herein, “Promotional Opportunities” shall mean, individually and
collectively, features, placements, merchandising opportunities, spotlights,
contests, recommendations, messaging or other marketing and promotional
opportunities on and in connection with the Video Service.
11.
MOST FAVORED NATIONS
9.01. Company
represents,
warrants and covenants that, as of the Effective Date, it has not entered into,
any agreement or other understanding with any third party provider of recorded
music, artwork or other assets used in connection with the Subscription Video
Service that contains terms and conditions that are more favorable to such
third
party when taken on a “whole agreement basis” than the terms and conditions of
this Agreement when taken on a “whole agreement basis” (such agreement or other
understanding with any such third party is sometimes referred to as a “More
Favorable Agreement”). Company represents, warrants and covenants
that, after the Effective Date, if Company enters into a More Favorable
Agreement, then Company shall promptly provide notice to SONY BMG of such event
and offer to provide to SONY BMG the terms of such More Favorable Agreement
in
lieu of the terms herein.
-15-
9.02. If
SONY BMG chooses to accept such offer, the parties shall promptly amend the
agreement for the remainder of the Term to reflect all of the terms and
conditions of the More Favorable Agreement. Subject to paragraph 9.01
above, SONY BMG shall have the right, not more than once per year of the Term,
upon not less than fifteen (15) business days’ notice to reasonably request that
an independent third party determine whether Company has entered into a
potential More Favorable Agreement with any such third party. If such
independent third party determines that Company has done so, Company shall
offer
to amend this Agreement to reflect, retroactively to the Amendment
Date (as defined below), all of the terms and conditions of the More Favorable
Agreement. If accepted by SONY BMG, the parties shall promptly amend
this Agreement to reflect all of the terms and conditions of the More
Favorable Agreement (the “Amended Agreement”). The date on
which the agreement is so amended shall be referred to as the “Amendment
Date.” Promptly after the Amendment Date, Company shall pay to
SONY BMG the amount by which any amounts it owes to SONY BMG under the Amended
Agreement (including, for the avoidance of doubt, advances, non-recoupable
sums,
service fees (however characterized) and equity consideration) exceeds the
remuneration paid to SONY BMG under this Agreement due hereunder on and after
the Amendment Date. In the event that Company agrees to any provision
in any third-party agreement that would have the effect of permitting such
third
party (each, a “Third Party”) to compare any of the terms of this
Agreement with any terms in such third-party agreement, Company agrees that,
in
connection with such a comparison, Company (i) will only permit such Third
Party
to review the terms of this Agreement by means of an independent third-party
auditor that agrees to maintain the confidentiality of all terms of this
Agreement in a manner consistent with the foregoing provisions of this Article
11 and subject to Article 15 below, and (ii) will not disclose to such Third
Party or to such third-party auditor the identity of SONY BMG as a party to
this
Agreement.
12. TERMINATION
12.01. (a) Immediately
following the occurrence of any Default Event (as defined below), Company shall
be deemed in material breach and default hereof and SONY BMG, in addition to
any
other rights and remedies which SONY BMG has under this Agreement or otherwise,
may upon notice to Company, immediately terminate this Agreement and the Term,
and the provisions of paragraph 12.02 below shall apply. No exercise
of any right or remedy hereunder shall limit SONY BMG’s right to recover damages
by reason of Company’s default, SONY BMG’s right to exercise any other right or
remedy under this paragraph 12.01, or any of SONY BMG’s other rights or
remedies.
(b) As
used herein, a “Default Event” will mean the occurrence of any of the
following events: (i) the failure to timely make payments required hereunder
or
render Quarterly Reports or other reports or information or to cooperate or
render any information or documents required to be furnished or otherwise made
available to SONY BMG as and when required hereunder; provided, however, that,
with respect to any such breach Company will have a period of five (5) business
days from its receipt of SONY BMG’s notice of such breach in which to cure said
breach before it will be deemed a “Default Event”; (ii) a breach of any of
Company’s representations, warranties, covenants or obligations hereunder, or
the failure to fulfill any of Company’s material obligations hereunder; (iii)
the bankruptcy or insolvency of Company, or the dissolution or the liquidation
of Company’s assets, or the filing of a petition in bankruptcy or insolvency for
an arrangement or reorganization by, for or against Company, or the appointment
of a receiver or a trustee for all or a portion of Company’s property, or
Company’s making an assignment for the benefit of creditors; provided, however,
that Company will have a period of sixty (60) consecutive days from its receipt
of any involuntary petition in bankruptcy filed against Company, as applicable,
in which to cure said breach before it will be deemed a “Default Event”; (iv)
Company’s attempt to assign any of Company’s rights, duties or obligations under
this Agreement in contravention of the limitations prescribed elsewhere in
this
Agreement without SONY BMG’s prior written consent, or the succession of any of
those rights to any other Person by operation of law; (v) If as a result of
Company’s acts or omissions any Persons obtain access to SONY BMG Materials in
contravention of the terms and limitations regarding access thereto prescribed
in this Agreement, including any Server Security Breach, DRM Security Breach
or
Device Security Breach that is not cured as and when required in accordance
with
Article 8 above; (vi) If for any reason Company ceases doing business in the
ordinary course and/or there is a substantial diminution in the ability of
Company to effectively carry on its business in general or any aspect thereof
or
the business of the Video Service in particular; and/or (vii) In the event
of a
Change of Control.
-16-
12.02. Upon
termination or expiration of the Term: (i) all rights granted to
Company herein shall immediately terminate; (ii) neither Company nor, for the
avoidance of doubt, any other Person shall thereafter have any right to make
any
use of any SONY BMG Materials or SONY BMG Authorized Trademarks; (iii) Company
shall immediately cease to use the SONY BMG Materials, including any Ephemeral
Copies, computer files or software embodying the SONY BMG Materials; (iv)
Company shall immediately return or destroy or remove, as SONY BMG shall direct,
all of the foregoing materials and all copies of the foregoing materials, and
Company shall promptly furnish SONY BMG with a sworn affidavit, signed by an
officer of Company, in a form satisfactory to SONY BMG in its reasonable
discretion, accurately confirming the foregoing; and (vi) all monies then due
or
to become due to SONY BMG shall become immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by Company. No termination or expiration of this
Agreement shall affect SONY BMG's right to payment of all monies due hereunder
(and the associated accounting in connection therewith).
13. REPRESENTATIONS
AND WARRANTIES
13.01. Company
covenants, represents and warrants that each of the following is true and shall
remain true at all times during the Term:
(a) Company
has the right and power to enter into and fully perform this Agreement and
to
make the commitments Company makes herein, and except as expressly provided
in
this Agreement, has obtained and will retain all necessary licenses, permissions
and consents (including, for the avoidance of doubt, all necessary publishing
licenses in connection with the use of the SONY BMG Videos) and any other
licenses, permissions or consents for which the terms of this Agreement
expressly provide that SONY BMG shall be responsible.
(b) Except
as expressly provided in this Agreement, SONY BMG shall not be subject to any
costs, fees, royalties or other charges in respect of the operation of the
Video
Service and the exploitation of any SONY BMG Materials under the Grant of Rights
granted in this Agreement.
(c) Company
is fully-qualified to perform all obligations as described herein and to
maintain and operate the Video Service as described herein. Company
shall operate the Video Service to the best of Company’s abilities in accordance
with the Functionality Specifications and the Technical and Security
Specifications, and shall not subcontract or otherwise delegate any of Company’s
duties hereunder.
(d) Company
shall own, possess valid licenses to use and/or control at all times during
the
Term, all right, title and interest in and to the Video Service and all
materials embodied, reproduced or otherwise contained therein, and all
copyrights and other rights therein, throughout the Territory, free and clear
of
any and all claims or encumbrances whatsoever therein to the extent necessary
for the operation of the Video Service as described herein. The Video
Service, and the operation and use thereof for the purposes described herein,
shall not, and at no time shall during the Term, violate any law (including,
without limitation, any federal law or regulation) or infringe upon or violate
the rights of any Person, including, without limitation, any trademarks, names,
logos, copyrights, materials or other content Company creates, licenses, uses,
publishes, performs, reproduces, distributes or displays (other than the SONY
BMG Materials or other materials furnished to Company by SONY BMG
hereunder).
(e) As
of the date that Company commences transmission of SONY BMG Materials via the
Video Service, Company will have obtained from all necessary third parties
all
licenses and other rights necessary or advisable in order to create and operate
the Video Service.
-17-
(f) Company
is a corporation duly organized and in good standing under the laws of
Florida.
(g) Each
of the security features utilized by Company shall at all times be of the
highest technical standards and functionality, and shall at all times utilize
systems which are considered the so-called “state-of-the-art”.
(h) The
Service shall not contain or utilize any content or other materials which SONY
BMG deems patently offensive or which, in the judgment of its attorneys, might
subject SONY BMG or Company to unfavorable regulatory action. The Service shall
not contain or utilize any content or other materials that could be construed
by
a reasonable Person as tending to disparage, ridicule, insult, deride,
embarrass, humiliate, taunt or disgrace the reputation or good will of any
SONY
BMG Artists, SONY BMG or any of SONY BMG's Affiliates.
(i) Company
shall not enter into any agreement whatsoever on behalf of SONY BMG, shall
not
make any representations or warranties on behalf of SONY BMG, and shall not
represent to any Person that it has the power, whether express or implied,
to
bind SONY BMG in any way or enter into contracts on SONY BMG’s
behalf.
(j) Company
shall not make any use of any SONY BMG Materials, or authorize any third party
to make any use of any SONY BMG Materials, except as specifically permitted
pursuant to the express terms of this Agreement. Company’s use of any
SONY BMG Materials other than as specifically permitted pursuant to the express
terms of this Agreement shall be subject to SONY BMG’s right of prior review and
written approval in every such instance. For the avoidance of doubt,
and without limiting any of the foregoing, in no event at any time during the
Term shall Company use any SONY BMG Materials, or authorize any third party
to
make any use of any SONY BMG Materials except as otherwise expressly permitted
in this Agreement.
(k) Company
shall use best efforts to ensure the security of all data and information
collected and/or transmitted by the Video Service, and that in connection with
such efforts it shall make use of current, effective and so-called “state of the
art” encryption and anti-piracy technologies.
(m) Company
will not make or facilitate the making of any reproductions or copies of any
SONY BMG Materials except in connection with Ephemeral copies as and to the
extent expressly permitted in this Agreement.
(n) Company
shall not cut, edit, change, add to, delete from or revise any SONY BMG
Materials (or authorize any Person to do any of the foregoing) without the
express prior written consent of SONY BMG in each instance. Without
limiting the scope of the foregoing, Company expressly agrees that it will
not
alter or delete any title, credit or copyright notice, any trademarks or service
marks, or the talent, writing, producing, directing or music credits contained
in the SONY BMG Materials.
(o) Company
will not, directly or indirectly, sell or otherwise dispose of, pledge, mortgage
or in any other way encumber the SONY BMG Materials.
(p) Company
will use commercially reasonable efforts to develop and promote the Video
Service.
-18-
(r) All
elements and components of the Video Service's distribution platform, including
all Company Servers, shall be owned and controlled solely by Company that are
located solely at such locations in the Territory, which locations Company
has
notified SONY BMG in writing with reasonable particularity as to its exact
physical location (e.g., by providing the name of the facility, the street
address of such facility and the main phone number for such
facility). Company will give SONY BMG thirty (30) days’ prior notice
before changing the location of any such Company Servers. As of the
date hereof, the Company Servers are located at: Thorn Communications Inc.,
▇▇
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ (▇▇▇▇▇ ▇▇▇), ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇ (phone:
▇▇-▇▇▇-▇▇▇-▇▇▇▇).
(s) Except
as and to the extent expressly provided elsewhere in this Agreement, Company
shall exclusively provide all content hosting, bandwidth, and other service
and
distribution functions in connection with the Video Service.
(t) Company
will use state-of-the-art safeguards to protect all SONY BMG Materials in
Company’s possession or control.
(u) SONY
BMG Materials shall not be exhibited, performed or displayed, as the case may
be, in a manner that could be construed by a reasonable Person as an endorsement
of any product, service or Person, as so-called "commercial tie-up" or
"commercial tie-in" or any similar use, directly or indirectly, in whole or
in
part without the prior written consent of SONY BMG in each instance, which
consent SONY BMG may withhold in its sole, unrestricted discretion in each
instance.
(v) Company
shall not allow any Person outside the Territory to access the Video
Service.
13.02.
(a) SONY BMG
represents and warrants that it has the right, power and authority to enter
into
and fully perform this Agreement and to make the commitments that SONY BMG
makes
herein.
(b) SONY
BMG represents and warrants that, to the best of its knowledge, the use of
the
SONY BMG Videos (excluding any musical compositions and any dramatic, literary
or other copyrighted works embodied in the soundtrack therein) in accordance
with the terms of this Agreement will not violate or infringe the rights of
any
third parties.
14. ADDITIONAL
DEFINITIONS
“Account”
shall mean SONY BMG’s banking account as established and maintained by SONY BMG
and of which Company have been notified from time-to-time during the
Term. As of the Effective Date, Company shall be deemed to have been
notified of the following banking account: ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, ABA#: ▇▇▇▇▇▇▇▇▇, Account Name: BMG Music, Account#:
323213804.
“Applicable
Affiliate Account” shall mean the Applicable Affiliate’s banking account as
established and maintained by the applicable Affiliate and of which Company
have
been notified from time-to-time during the Term. As of the Effective
Date, Company shall be deemed to have been notified of the following banking
account listed in Exhibit E attached hereto.:
"Advance"
shall mean a prepayment of Service Fees. Company may recoup Advances
solely from Service Fees to be paid or accrued to or on behalf of SONY BMG
pursuant to this Agreement. Advances paid under this Agreement shall
not be returnable to Company or any other Person.
-19-
“Advertisements”
shall mean any and all audio, audiovisual, graphic, textual and other
advertisements, messages, sponsorships or other commercial space that is leased,
licensed or sold to or on behalf of Persons for purposes of advertising,
promotion, marketing, trade or otherwise (e.g., the development, maintenance
or
enhancement of general goodwill).
“Affiliate”
shall
mean, with
respect to any specified Person, any other Person that, directly or indirectly,
through one or more intermediaries, controls, is controlled by, or is under
common ownership or control with, or is owned or controlled by, such specified
Person. As used in this definition, the term “control” (including the
terms “controlling”, “controlled by” and “under common control with”) of a
Person means the ownership of at least fifty percent (50%) of the equity of
such
other Person.
“Approved
Handsets” shall
mean a small, light-weight Electronic Device that (i) is designed for use during
travel, (ii) is at all times capable of establishing and/or maintaining
connectivity to the Wireless Platform, (ii) does not have a Prohibited Digital
Output, and (iii) is primarily used by end users for the transmission and
receipt of voice and data communications via the Wireless
Platform. Without limiting the generality of the preceding sentence,
an essential attribute of such a light-weight Electronic Device is the ability
for it to run and perform all functions solely on the basis of battery power
and
without the use of a continuously recurring connection to an AC, DC, or other
electrical power supply.
"Buy
Offer" shall mean a visible
area within the Deck Page of a recipient of the Video Service utilized to
display the audiovisual programming of the Video Service that contains an
interactive platform (with supporting software and tools) that enables data
to
be delivered via the Wireless Platform to and from an Approved Distribution
Channel utilized to deliver Video Service Transmissions to End Users that
visibly and prominently displays to End Users in clear text offers to purchase
Related Products from third-party mobile retailers as selected by SONY BMG
in
its sole discretion using a so-called “one-click” purchase method which, if
accepted by such Person, results in the consummation of a sale of the applicable
Related Product by the applicable third-party mobile retailer that is fulfilled
by delivery to such Person by such third-party mobile retailer.
“Change
of Control” shall mean the occurrence of any of the following events (solely
for purposes of this definition Company shall mean the Company and/or any
company with which the Company merges or consolidates): (i)The
Permitted Holders cease to be the beneficial owner, directly or indirectly,
of a
majority in the aggregate of the total voting power of the capital stock of
the
Company; (ii) Any person or group, other than one or more Permitted Holders,
is
or becomes the beneficial owner, directly or indirectly, of more than 35% of
the
total voting power of the capital stock of Company and the Permitted Holders
(1)
beneficially own, directly or indirectly, in the aggregate a lesser percentage
of the total voting power of the capital stock of Company than such other person
or group or (2) do not have the right or ability by voting power, contract
or
otherwise to elect or designate for election a majority of the board of
directors of Company; or (iii) A Triggering Person or an Affiliate of a
Triggering Person, acting either alone or as part of a group, directly or
indirectly, (A) becomes the beneficial owner of any voting power of the capital
stock of Company or (B) obtains the right or ability by voting power, contract
or otherwise, to elect or designate for election any one or more members of
the
board of directors of Company. The terms “beneficial owner” and
“group” shall have the meanings given to such terms under the Securities and
Exchange Act of 1934, provided that when “beneficial owner” refers to someone
other than the Permitted Holders, it shall be deemed to include “beneficial
ownership” of all securities that any such person or group has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time. Clauses (i) and (ii) and clause (iii)(B) of the foregoing
provision shall no longer apply in the event (a) there is an initial public
offering of the Company’s shares for at least 20% of the Company’s capital stock
[and] [or] resulting in proceeds to the Company of at least $5,000,000 and
(b)
following such initial public offering, the Permitted Holders no longer (A)
own
a majority of the voting power of the capital stock of the Company or (B) have
the right to elect a majority of the board of directors of the
Company.
“Company
Application” means a computer program (or other set of statements or
instructions, as the case may be) that contains each of the following essential
attributes and functionalities: (i) it incorporates an embedded media player
with audiovisual playback and library management functionality including
management of the applicable End User's User Account; (ii) it integrates the
Company’s Deck Site and connects to the Company Servers in a manner that makes
the Video Service accessible to the end user of such computer program (or other
set of statements or instructions, as the case may be) via Approved Handsets;
(iii) it is marketed and branded solely under the Company Branding; and (iv)
it
is operated in conformity with the Functionality Specifications and the
Technical and Security Specifications, respectively, attached
hereto.
-20-
“Company
Branding” will mean the “IMN TV” Trademarks and any other indicia of
branding owned by Company and generally used by Company in conjunction with
the
Video Service.
"Company
Servers" means the computer servers owned, operated and controlled solely by
Company that are located in the Territory and utilized by the Company in
connection with the Video Service.
“Composition”
shall mean (i) a single musical composition or other dramatic, literary or
other
work embodied in the Recording concerned, irrespective of length, including
all
spoken words and bridging passages, or (ii) a spoken word or dramatic work
(or
portion thereof), irrespective of length, that is thematically related and
embodied by SONY BMG in such Recording.
"Contract
Year" - the annual period beginning on the date of commencement of the Term,
and each subsequent annual period during the Term beginning on the anniversary
of that commencement date (as such Contract Year may be suspended or extended,
and those dates postponed, as provided herein).
“Deck
Page” means a document
that is written in XHTML Basic, XHTML Mobile Profile, WML (i.e., WAP Markup
Language), or another industry standard ▇▇▇▇-up language, that is made available
for viewing by Users on Wireless Devices via the Internet by using WAP, i.e.,
Wireless Application Protocol, (or any other generally accepted
protocols) to effectuate data transmissions.
“Deck
Site” means a collection
of Deck Pages with a common theme or subject matter that are: (a) solely
operated and controlled by Company; and (b) interconnected via Links and
delivered via the Wireless Platform.
“Digital
Copy” shall mean a copy (other than an Ephemeral Copy) or reproduction of
any content, including without limitation the SONY BMG Materials, in a digital
format.
“DRM”
will mean a technology that is designed to provide a secure, reliable process
for the encryption and decryption of digital media files and the enforcement
of
the usage rules applicable to the Music Videos by means of software that is
permanently associated with such digital media file, as approved by SONY BMG
in
writing in advance in its sole discretion for the Music Video
concerned. The parties hereby acknowledge that as of the Effective
Date, Company has not yet submitted a proposed such technology to SONY BMG
for
its approval hereunder. Company hereby agrees that it will submit a
proposed such technology to SONY BMG for its approval hereunder promptly
following the complete execution of this Agreement, and that notwithstanding
anything elsewhere in this Agreement, SONY BMG’s prior approval of such
technology will be deemed a condition precedent to (x) the effectiveness of
the
Grant of Rights prescribed in Article 1, and (y) SONY BMG’s delivery of SONY BMG
Videos to Company pursuant to subparagraph 4.01(a).
"Electronic
Device" shall mean any device designed to (i) accept input of digital or
analog data; (ii) process that input through software, utilities or and other
sets of instructions that control the operation of such electronic device;
and
(iii) produces output and causes a desired result which enables a Person
utilizing such device to perceive a copy or performance, as the case may be,
of
the content embodied in the digital or analog data transmission
concerned.
“End
User” shall mean an end
user of the Video Service located solely in the Territory who accesses or
receives Service Transmissions of SONY BMG Materials and uses the Video Service
solely for personal, non-commercial use.
-21-
“Functionality
Specifications” means the functionality specifications, operational features
and mock-ups of the Video Service, insofar as it includes the SONY BMG
Materials, that is approved by SONY BMG in writing in advance in its sole
discretion for the applicable Approved Distribution Channel, insofar as it
pertains to SONY BMG Materials used in connection with the Video Service. The
parties hereby acknowledge that as of the Effective Date, Company has not yet
submitted proposed such specifications to SONY BMG for its approval
hereunder. Company hereby agrees that it will submit proposed such
specifications to SONY BMG for its approval hereunder promptly following the
complete execution of this Agreement, and that notwithstanding anything
elsewhere in this Agreement, SONY BMG’s prior approval of such specifications
will be deemed a condition precedent to (x) the effectiveness of the Grant
of
Rights prescribed in Article 1, and (y) SONY BMG’s delivery of SONY BMG Videos
to Company pursuant to subparagraph 4.01(a). Once so approved by SONY
BMG in accordance with the terms hereof, such specifications will be deemed
incorporated by reference into this Agreement as the Functionality
Specifications attached as Exhibit A-2 hereto.
"GAAP"
shall mean generally
accepted accounting principles set forth in the opinions and pronouncements
of
the Accounting Principles Board of the American Institute of Certified Public
Accountants and statements and pronouncements of the Financial Accounting
Standards Board, which are in effect from time to time.
“Music
Video” means a short form
audiovisual works featuring, primarily, the audio soundtrack of a sound
recording in synchronization with visual images that is produced by SONY BMG
primarily for promotional exhibition, and is of a type and variety that is
customarily delivered to television broadcast outlets such as MTV for
promotional exhibition by means of Basic Cable.
“Objectionable
Activities”
means any one (1) or more of the following activities: the incorporation,
facilitation, inducement, advocacy or promotion of illegal activity including
without limitation infringement of copyright, trademark, patent or other
intellectual property rights; the depiction or display of sexually explicit
images; the promotion of violence; the promotion of discrimination; the
endorsement of political positions or political candidates; and the
advertisement, sale or promotion of tobacco, firearms, personal hygiene
products, pornography, religious causes or any other subject matter which SONY
BMG deems in its sole, unrestricted discretion to be objectionable.
“Pay-Per-View
Basis” shall mean
an offer to deliver a transmission of programming to a controlled and limited
number of recipients that have affirmatively elected to pay consideration as
a
condition precedent to receiving such transmission, which consideration is
payable on a per program, per Music Video, per event, per day or other time
limited basis (e.g., “pay-per-hour”, “pay-per-title”, “pay-per-day”
etc). For purposes of this paragraph, only, and for no other purpose,
payments of a “de minimis” or “token” nature that are obviously and
substantially less than the reasonable range of fair market value for reasonably
comparable transmissions of programming shall not be deemed to constitute
“consideration” for purposes hereof.
“Permitted
Holders” means those
Persons who as of the Effective Date own or control at least 2% of the
outstanding capital stock of Company and any Person acting in the capacity
of an
underwriter in connection with a public or private offering of the capital
stock
of Company. Company hereby represents and warrants to SONY BMG that as of the
Effective Date, such Persons are ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ (79%) and ▇▇▇▇▇ ▇▇▇▇▇▇▇
(11%).
“Person”
means
any natural
person, legal entity, or other organized group of persons or
entities. (All pronouns, whether personal or impersonal, which refer
to Persons include natural persons and other Persons).
"Phonograph
Record" shall mean a Record as embodied by the manufacturer and/or
distributor in a physical, non-interactive Record configuration (e.g., vinyl
LP's, cassettes, compact discs, videocassettes) prior to its distribution to
the
consumer, as opposed to the transmission or communication of a Record to the
consumer prior to being embodied in a physical Record configuration, whether
or
not it may at some point be embodied in a physical Record configuration, by
the
consumer or under the consumer's direction or control.
-22-
“Prohibited
Digital Output” shall mean a digital output that forms a part of an
Electronic Device that is capable of rendering or transmitting unencrypted
digital data containing television programming, in whole or in
part.
“Prohibited
Entity” will mean a Person that is (A) an entity (or the
parent,
subsidiary, affiliate or licensee of any such entity) against which SONY BMG
or
any licensee, either directly or indirectly, has an actual or potential claim
arising out of the unauthorized recording, manufacture, distribution, sale,
reproduction (or other use) of any SONY BMG Materials or other property or
other
tangible or intangible rights, of which SONY BMG will inform Company, or (B)
an
entity (or the parent, subsidiary, affiliate or licensee of any such entity)
involved in litigation with SONY BMG arising out of the unauthorized recording,
manufacture, distribution, sale, reproduction (or other use) of any SONY BMG
Materials or other property or other tangible or intangible rights. In each
case, Company may request that SONY BMG inform Company whether a potential
acquirer of Company constitutes a Prohibited Entity.
"Record(s)"
shall mean all forms of reproductions, transmissions or communications of
Recordings now or hereafter known, manufactured, distributed, transmitted or
communicated primarily for home use, school use, jukebox use or use in means
of
transportation.
“Related
Products” shall mean
musical and non-musical digital products and services (e.g., digital content
distributed via mobile phones, personal computers and other consumer electronic
equipment and so-called interactive voice response services) associated with
the
SONY BMG Materials licensed hereunder, including, without limitation, music
video downloads, ringtones, ringbacks, voicetones and wallpaper.
"Service
Transmission" means
each delivery of a SONY BMG Music Video by means of Streaming for exhibition,
performance and display on Approved Handsets of End Users through Approved
Distribution Channels, which are rendered for playback on such Approved Handsets
solely for the personal, non-commercial use of the End User recipient, solely
as
part of and in connection with the Video Service in the Territory in accordance
with the Technical and Security Specifications attached as Exhibit A-1 hereto,
the Functionality Specifications attached as Exhibit A-2 hereto, and the other
terms, conditions and limitations prescribed elsewhere in this
Agreement
"SONY
BMG Artist" shall mean recording artists whose featured musical performances
are embodied in a SONY BMG Video.
“SONY
BMG Authorized Trademarks” shall mean any Trademark owned and/or controlled
by SONY BMG and made available to Company pursuant to the terms and conditions
of this Agreement.
“SONY
BMG Materials” shall
mean the SONY BMG Videos and the SONY BMG Authorized Trademarks, together with
any associated metadata and all other artistic and literary materials, ideas,
and intellectual properties owned or controlled by SONY BMG (or its designees,
Affiliates, agents or related companies, as the case may be) furnished or
selected by SONY BMG hereunder and delivered to the Company by SONY BMG in
its
sole discretion for use by Company, as and to the extent expressly permitted
herein.
"SONY
BMG Parties" shall mean
SONY BMG Music Entertainment and its parents, subsidiaries, affiliates,
divisions, components and licensees and each of their officers, agents,
employees, partners, directors, controlling persons and advisors.
“SONY
BMG Video” shall mean,
individually and collectively, each Music Video (i) in respect of which SONY
BMG
has the appropriate reproduction, distribution, transmission, performance,
display and exhibition rights in the applicable country in the Territory, and
(ii) has been delivered by SONY BMG to Company for such purpose under
Article 4 above, subject to SONY BMG’S take-down rights as set forth in Article
4 above and the other exclusions and limitations prescribed elsewhere in this
Agreement.
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“Subscription
Basis” shall mean a transmission of programming that is controlled and
limited to particular recipients, and for which consideration is required to
be
paid or otherwise given by or on behalf of the recipient on a recurring,
periodic basis (e.g., monthly, quarterly or semi-annually) to receive a package
of transmissions that includes such programming.
"Stream"
- a single, encrypted
digital audio transmission of any duration via the Internet whereby such
transmission is contemporaneous with the performance of the sound recording
embodied therein and which cannot be digitally copied, duplicated or stored
in
any manner or medium in whole or in part, directly or indirectly (other than
any
ephemeral copies used solely for so-called “caching” or “buffering”).
“Streaming”; “Streamed” the act or process of transmitting
Streams.
“Technical
and Security Specifications” means the technical and security specifications
for the Video Service that is approved by SONY BMG in writing in advance in
its
sole discretion for the applicable Approved Distribution Channel, insofar as
it
pertains to SONY BMG Materials used in connection with the Video Service. The
parties hereby acknowledge that as of the Effective Date, Company has not yet
submitted proposed such specifications to SONY BMG for its approval
hereunder. Company hereby agrees that it will submit proposed such
specifications to SONY BMG for its approval hereunder promptly following the
complete execution of this Agreement, and that notwithstanding anything
elsewhere in this Agreement, SONY BMG’s prior approval of such specifications
will be deemed a condition precedent to (x) the effectiveness of the Grant
of
Rights prescribed in Article 1, and (y) SONY BMG’s delivery of SONY BMG Videos
to Company pursuant to subparagraph 4.01(a). Once so approved by SONY
BMG in accordance with the terms hereof, such specifications will be deemed
incorporated by reference into this Agreement as the Technical and Security
Specifications attached as Exhibit A-1 hereto.
“Trademarks”
shall mean trademarks and service marks, trade names, brand names, corporate
names, logos, trade dress, and other words, designations, labels, symbols,
designs, colors, color combinations or product configurations, whether
registered or unregistered.
“Triggering
Person” will mean:
(i) a Person or any Affiliate of such Person that is engaged in the business
of
selling or otherwise making available Records (including, for the avoidance
of
doubt, Internet music retailers); (ii) a Person or any Affiliate of such Person
that is engaged in the recording industry; (iii) a Person or any Affiliate
of
such Person that is engaged in the music publishing industry; (iv) a Person
or
any Affiliate of such Person that is engaged in the radio, television and/or
background/foreground music industry; (v) a Person or any Affiliate of such
Person that is engaged in any business that owns or controls a so-called
“portal” Web Site or a consolidated network of Web Sites; (vi) a Person or any
Affiliate of such Person that is engaged in the business of manufacturing and/or
selling consumer electronics devices; (vii) a Person or any Affiliate of such
Person that is engaged in the business of selling blank digital recording media
(other than those products in respect of which appropriate royalties are paid
in
accordance with the Audio Home Recording Act amendments to the United States
Copyright Law), products designed to circumvent copy protection mechanisms
(e.g., audio and/or video stream capture software) or any service that directly
or indirectly facilitates the reproduction, distribution, display and/or
performance of copyrighted materials without the express authorization of the
applicable rightsowners; and/or (viii) any Person or any Affiliate of such
Person that is a Prohibited Entity. In each case, Company may request
that SONY BMG inform Company whether a potential acquirer of Company constitutes
a Triggering Person.
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“Video
Service” shall mean the audiovisual programming service that is produced,
programmed, managed and operated solely by Company and is distributed and
exhibited, performed and displayed solely by means of the Wireless Platform
in
the Territory on a twenty-four (24) hours per day basis, which
service:
(a) is
accessible exclusively by End Users on a Subscription Basis, exclusively through
the Company Application for the private, non-commercial use of End
Users ;
(b) With
respect to both such service and the Company Application, is marketed and
branded solely under the Company Branding;
(c) Consists
entirely of the exhibition, performance and display of Music Videos by means
of
Service Transmissions that are delivered to the approved Handsets of End Users
based upon the End User’s specific request or demand for a particular title of
Music Video (i.e., so-called “video on demand” functionality)(such deliveries
are sometimes referred to herein as “On Demand Plays”) in accordance with
the Functionality Specifications attached as Exhibit A-2 hereto, and the other
terms, conditions and limitations prescribed elsewhere in this
Agreement;
(d)
Stores,
hosts, secures, serves and delivers SONY BMG Materials solely from Company
Servers to approved Handsets in accordance with the Technical and Security
Specifications attached as Exhibit A-1
hereto; and
(e) Does
not contain or utilize any content or other materials that in SONY BMG’s
reasonable opinion constitutes, promotes or advocates any Objectionable
Activities, directly or indirectly.
“Web
Page” shall mean a document that is written in HTML (i.e., Hypertext Markup
Language), or another industry standard ▇▇▇▇-up language, that is made available
for viewing by End Users at a single URL or Domain Name via the World Wide
Web
portion of the Internet by server software using HTTP (i.e., Hypertext Transfer
Protocol) to effectuate data transmission (or server software using any other
generally accepted protocols utilized to effectuate data transmissions via
the
World Wide Web portion of the Internet). “Web Site”
shall mean a collection of Web Pages with a common theme or subject
matter which
are: (a) owned, managed and operated by Company or on behalf of Company, and
(b)
interconnected via Links.
“Wireless
Enabled Device” shall mean any Electronic Device that directly or indirectly
contains, utilizes or otherwise employs the Wireless Platform to effectuate
the
transmission of voice and/or data.
“Wireless
Platform” shall mean any private data network that (i) utilizes radio wave
spectrum in the United States allocated by the Federal Communications Commission
in the 800 MHz frequency band and/or the 1900 MHz frequency band primarily
for
purposes of effectuating, interalia, voice communications and/or
data transmissions, and (ii) is marketed primarily as a cellular telephone
service.
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15. CONFIDENTIALITY
15.01. (a) Each
of SONY BMG and Company (each a “Disclosing Party”) agrees that it shall,
and it shall instruct its respective attorneys, accountants and other
professional advisors (collectively, “Advisors”) to, hold in confidence
and not communicate, transmit, publish, disseminate or otherwise disclose any
of
the terms and conditions of this Agreement or any fact, matter, event or
surrounding circumstance leading to or relating to the negotiation thereof
to
which such party was privy or of which it was otherwise made aware (e.g.,
by being copied on correspondence or by being advised of such fact, matter,
event or circumstance by another party to the negotiation) or any information
regarding the other Party’s business learned in the course of such Party’s
performance hereunder or learned in the course of dealing hereunder
(collectively, “Confidential Information”); provided, however, that
nothing in this paragraph 15.01 shall prohibit disclosure of such Confidential
Information: (1) by each such party to its respective financial officers,
management, bankers or others as may be reasonably necessary in the operation
of
its business, (2) by each such party to its respective Advisors to the
extent that such disclosure is in the opinion of such Advisors required to
enable such Advisors fully to represent the party concerned, (3) in connection
with any legal, governmental or administrative proceeding before any judicial,
governmental or regulatory body, or (4) as otherwise required by law; provided,
however, that if either party seeks to disclose Confidential Information
pursuant to sections (3) or (4) of this sentence, such party: (i) shall use
reasonable efforts to promptly notify the other party of such disclosure so
that
such other party may have the opportunity to seek to cause the record in
connection with the legal, governmental or administrative proceeding concerned,
insofar as it relates to Confidential Information hereunder, to be kept under
seal, and (ii) shall not object to any request by such other party in the
proceeding concerned to keep the Confidential Information concerned under
seal. In addition, as applicable, each party will provide the other
party with a reasonable opportunity to review and comment on any disclosure
in
any of its filings under the securities laws of the applicable country within
the Territory regarding this Agreement and the transactions contemplated
hereunder and, if either party is required to file this Agreement under
applicable securities laws, such party will cooperate in good faith with any
reasonable efforts by the other party to obtain confidential treatment for
those
portions of this Agreement that such other party reasonably
designates.
(b) Notwithstanding
anything to the contrary herein, Confidential Information shall not include
information which:
(1) at
or prior to the time of disclosure by the Disclosing Party was known to or
independently developed by the party receiving such information (a “Receiving
Party”), except to the extent unlawfully appropriated by the Receiving Party
or third party;
(2) at
or after the time of disclosure by the Disclosing Party becomes generally
available to the public through no wrongful or negligent act or omission on
the
Receiving Party’s part;
(3) the
Receiving Party receives from a third party free to make such disclosure without
breach of any legal obligation; or
(4) is
required to be disclosed pursuant to any statute, regulation, order, subpoena
or
document discovery request; provided, however, that in each such instance,
the
Disclosing Party shall use all reasonable efforts to notify the Receiving Party
of such required disclosure in advance and shall cooperate with any efforts
taken by the Receiving Party to oppose such disclosure or to secure the issuance
of a protective order or other protective measure designed to ensure the
confidential treatment of the Confidential Information concerned by the parties
to whom such disclosure is required.
15.02. Neither
party hereto shall, without the prior written consent of the other party, issue
any press release or make any other public announcement or statement relating
to
any terms and conditions of this Agreement or any fact, matter, event or
surrounding circumstance leading to or relating to the negotiation thereof
to
which such party was privy or of which it was otherwise made aware
(e.g., by being copied on correspondence or by being advised of such
fact, matter, event or circumstance by another party to the
negotiation).
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16. NOTICES
16.01. (a) Except
as otherwise specifically provided herein, all notices under this Agreement
shall be in writing and shall be given by courier or other personal delivery
or
by registered or certified mail at the appropriate address below or at a
substitute address designated by notice by the party concerned.
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TO
COMPANY:
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TO
SONY BMG:
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▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
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Each
notice to Sony shall be addressed for the attention of SONY BMG’s Senior Vice
President, Business Affairs & Administration, and a copy of each notice to
Sony shall be sent simultaneously to the SONY BMG MUSIC ENTERTAINMENT Law
Department for the attention of SONY BMG’s Senior Vice President and General
Counsel. Notices shall be deemed given when mailed or, if personally
delivered, when so delivered, except that a notice of change of address shall
be
effective only from the date of its receipt.
(b)
Notwithstanding the foregoing or anything elsewhere herein: (i) each Quarterly
Report attributable to exploitations of SONY BMG Materials in the United States
shall be addressed as follows: SONY BMG Music Entertainment, Royalty Department,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Vice President, Royalty
Accounting; and (ii) each Weekly Report shall be addressed as follows: SONY
BMG
Music Entertainment, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇,
Attention: Senior Director, Operations, SONY BMG Music Digital
Services.
(c) Notwithstanding
the foregoing or anything elsewhere herein: (i) each Quarterly Report
attributable to exploitations of SONY BMG Materials in China shall be addressed
as follows: Beijing StarBright Technical Services Company Limited,
32nd Floor,
Building 9 Jianwai SOHO, ▇▇. ▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇.
17. MISCELLANEOUS
PROVISIONS
17.01. (a) Company
will at all times indemnify and hold harmless the SONY BMG Parties, from and
against any and all claims, damages, liabilities, costs and expenses (including
legal expenses and reasonable counsel fees), excluding SONY BMG Claims (as
defined in subparagraph 17.01(c) below) or any other claims directly and
primarily caused by SONY BMG’s acts or omissions, arising out of: (i) the
operation of the Video Service, (ii) any Person’s use (including but not limited
to unauthorized use or duplication), in connection with the Video Service,
of
any SONY BMG Materials, other than those claims that constitute SONY BMG Claims
(as defined in paragraph 17.01(c) below); or (iii) any breach or alleged breach
by Company of any representation, warranty, covenant or agreement made by
Company herein, including, without limitation, Company’s representation,
warranty and agreement to secure and pay for all third party licenses,
permissions and consents as and to the extent required under this Agreement
(individually and collectively, the “Company Claims”). In the
event of any Company Claim: (i) SONY BMG shall notify Company of the Company
Claim concerned promptly following the date that SONY BMG becomes aware of
it;
(ii) Company shall defend against the Company Claim concerned (at Company’s own
expense) through legal counsel selected by Company with SONY BMG’s consent,
which consent SONY BMG shall not unreasonably withhold; and (iii) each party
shall reasonably cooperate with the other in the defense of the Company Claim
concerned. Company shall be solely responsible for the amount of any
settlement or judgment for such Company Claim and all legal expenses and counsel
fees incurred by Company in connection therewith, subject to subparagraph
17.01(b) below.
-27-
(b) In
the event that Company is either unwilling to defend against the Company Claim
concerned or is otherwise not reasonably defending against the Company Claim
concerned, SONY BMG shall have the right to assume the defense and settlement
of
the Company Claim concerned through legal counsel selected by SONY BMG, but
Company shall be solely responsible at all times for the amount of any
settlement or judgment for such Company Claim, as well as all reasonable legal
expenses and counsel fees incurred by SONY BMG in connection
therewith. Any settlement of a Company Claim shall be subject to
Company’s consent, which consent Company shall not unreasonably
withhold. Notwithstanding the foregoing, in the event that Company
defends against the Company Claim concerned (at Company’s own expense) through
legal counsel selected by Company as provided above, SONY BMG shall have the
right at all times to actively participate in the defense thereof, and to employ
legal counsel selected by SONY BMG at SONY BMG’s own expense, it being
understood that Company shall have the right at all times, in Company’s sole
discretion, to maintain control of the conduct of the defense.
(c) SONY
BMG shall at all times indemnify and hold harmless Company from and against
any
and all third-party claims, losses, damages, liabilities, costs and expenses,
(including, without limitation, legal expenses and reasonable counsel fees),
excluding Company Claims (as defined in paragraph 17.01(a) above) and any other
claims directly and primarily caused by Company’s acts or omissions, arising out
of any breach by SONY BMG of any warranty, representation, covenant or
obligation by SONY BMG hereunder (including, without limitation, any claims
arising from Company’s use of the SONY BMG Videos, and any creative elements
furnished by SONY BMG pursuant to this Agreement, in each instance, as and
to
the extent authorized hereunder in accordance with the terms of this Agreement)
and any claims that the SONY BMG Videos, the SONY BMG Materials or any creative
elements furnished by SONY BMG to Company pursuant to this Agreement,
respectively, cause the infringement of the intellectual property or other
rights of such third party, regardless of whether SONY BMG is in breach of
the
representations and warranties with respect to intellectual property ownership
(individually and collectively, “SONY BMG Claims”). In the
event of any SONY BMG Claim: (i) Company shall notify SONY BMG of the SONY
BMG
Claim concerned promptly following the date that Company becomes aware of it;
(ii) SONY BMG shall defend against the SONY BMG Claim concerned (at SONY BMG’s
own expense) through legal counsel selected by SONY BMG with Company’s consent,
which consent Company shall not unreasonably withhold; and (iii) each party
shall reasonably cooperate with the other in the defense of the SONY BMG Claim
concerned. SONY BMG shall be solely responsible for the amount of any
settlement or judgment for such SONY BMG Claim and all legal expenses and
counsel fees incurred by SONY BMG in connection therewith, subject to
subparagraph (d) below.
(d) In
the event that SONY BMG is either unwilling to defend against the SONY BMG
Claim
concerned or is otherwise not reasonably defending against the SONY BMG Claim
concerned, Company shall have the right to assume the defense and settlement
of
the SONY BMG Claim concerned through legal counsel selected by Company, but
SONY
BMG shall be solely responsible at all times for the amount of any settlement
or
judgment for such SONY BMG Claim, as well as all reasonable legal expenses
and
reasonable counsel fees incurred by Company in connection
therewith. Any settlement of a SONY BMG Claim shall be subject to
SONY BMG’s consent, which consent SONY BMG shall not unreasonably
withhold. Notwithstanding the foregoing, in the event that SONY BMG
defends against the SONY BMG Claim concerned (at SONY BMG’s own expense) through
legal counsel selected by SONY BMG as provided above, Company shall have the
right at all times to actively participate in the defense thereof, and to employ
legal counsel selected by Company at its own expense, it being understood that
SONY BMG shall have the right at all times, in SONY BMG’s sole discretion, to
maintain control of the conduct of the defense.
17.02. Company
acknowledges that the SONY BMG Materials hereunder have a special, unique and
extraordinary character which gives them a peculiar value, and that, in the
event of a breach of any term, condition, representation, warranty, covenant
or
agreement contained in this Agreement, SONY BMG shall be caused irreparable
injury, including loss of goodwill and harm to reputation, which cannot be
adequately compensated in monetary damages. Accordingly, in the event
of any such breach, actual or threatened, SONY BMG shall have, in addition
to
any other legal remedies, the right to injunctive or other equitable
relief. (The preceding sentence shall not be construed to preclude
Company
from
opposing any application for such relief based upon its contest of any other
facts alleged by SONY BMG in support of the application.)
17.03. All
remedies provided for pursuant to this Agreement are cumulative, and no
exercise, or failure to exercise, any option by either party will limit such
party’s right to recover damages or pursue any other remedies available at law
or in equity.
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17.04.
If any provision of this Agreement or the application thereof to any party,
Person or circumstance shall be invalid, illegal or unenforceable to any extent,
the remainder of this Agreement and the application thereof shall not be
affected and shall be enforceable to the fullest extent permitted by
law.
17.05. This
Agreement, including the various Exhibits attached hereto, shall constitute
the
entire agreement between the parties with respect to the subject matter hereof
and shall supersede all previous negotiations, commitments and writings with
respect to such subject matter. No change or termination of this Agreement
shall
be binding upon SONY BMG or Company unless it is made by an instrument signed
by
both SONY BMG and Company. A waiver by either party of any provision
of this Agreement in any instance shall not be deemed a waiver of such
provision, or any other provision hereof, as to any future instance or
occurrence. All remedies, rights, undertakings, and obligations
contained in this Agreement shall be cumulative and none of them shall be in
limitation of any other remedy, right, undertaking, or obligation of either
party. The captions of the Articles, paragraphs, subparagraphs,
sections and subsections in this Agreement are included for convenience only
and
shall not affect the interpretation of any provision.
17.06.
(a) SONY
BMG may assign its rights under this Agreement in whole or in part (but if
in
part, solely for the purpose of assigning SONY BMG’s right to receive monies
payable hereunder as and to the extent so assigned by SONY BMG in its sole,
unrestricted discretion in each instance) to any subsidiary, affiliated or
controlling corporation, to any Person owning or acquiring a substantial portion
of the stock or assets of SONY BMG, or to any partnership or other venture
in
which SONY BMG, and such rights may be similarly assigned by any
assignee. No such assignment shall relieve SONY BMG of any of SONY
BMG’s obligations hereunder. Subject to subparagraph 17.06(b) below,
Company shall not have the right to assign this Agreement or any of its rights
or obligations hereunder, in whole or in part, without SONY BMG’s prior written
consent.
(b) (1) Company
may assign its rights under this Agreement to another Person, in connection
with
a sale or transfer of substantially all of its stock or all of its assets
associated with the Video Service, subject to the following
conditions:
(i) The
acquiring Person cannot be: (A) an entity (or the parent, subsidiary, affiliate
or licensee of any such entity) against which SONY BMG directly or indirectly
has a claim arising out of the unauthorized recording, manufacture,
distribution, sale, reproduction (or other use) of any SONY BMG Materials or
other property or other tangible or intangible rights, (B) an entity (or the
parent, subsidiary, affiliate or licensee of any such entity) involved in
litigation with SONY BMG arising out of the unauthorized recording, manufacture,
distribution, sale, reproduction (or other use) of any SONY BMG Materials or
other property or other tangible or intangible rights, or (C) an entity (or
the
parent, subsidiary, affiliate or licensee of any such entity) engaged in any
unauthorized recording, manufacture, distribution, sale or other activity in
violation of the rights of SONY BMG or any Person from whom SONY BMG derives
rights in or to SONY BMG Materials licensed hereunder; (any such entity
described in clauses (A), (B), or (C) is sometimes referred to as a “Prohibited
Entity”). (In each case, Company may request that SONY BMG inform
Company whether a potential acquirer of Company constitutes a Prohibited
Entity.)
(ii) The
assignment shall not be effective until Company has delivered to SONY BMG an
instrument approved by SONY BMG (such approval not to be unreasonably withheld
or delayed) effecting the assignment and the assignee’s assumption of Company’s
obligations, and SONY BMG has executed that instrument to evidence SONY BMG’s
approval of it (which approval shall not be unreasonably withheld if the
conditions of subsections 17.06(b)(1)(i) – (iv) below herein have been
met);
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(iii) No
such assignment shall relieve Company of its obligations under this Agreement
(unless SONY BMG otherwise agrees in writing); and
(iv) If
such an assignment takes place, any further transfer of the rights assigned
shall be subject to the same conditions.
(2) Any
purported assignment by Company in violation of this subparagraph 17.06(b)
shall
be void. For the avoidance of doubt, Company’s obligations under this
Agreement shall not be diminished or otherwise affected by any such
assignment.
17.07. Unless
specifically set forth in this Agreement, neither party shall be entitled to
recover damages or to terminate the Term by reason of any breach by the other
party of its material obligations, unless the latter party has failed to remedy
the breach within thirty (30) days following receipt of notice thereof (or,
if
the breach concerned cannot be remedied within thirty (30) days, if the latter
party commences to remedy the breach within that time and proceeds to complete
the remedy with reasonable promptness).
17.08. In
entering into this Agreement, the parties shall have the status of independent
contractors. Nothing herein contained shall contemplate or constitute
Company as SONY BMG’s agent or employee, and nothing herein shall constitute a
partnership, joint venture or fiduciary relationship between Company and SONY
BMG.
17.09. THIS
AGREEMENT HAS BEEN ENTERED INTO IN THE STATE OF NEW YORK, AND THE VALIDITY,
INTERPRETATION AND LEGAL EFFECT OF THIS AGREEMENT SHALL BE GOVERNED BY THE
LAWS
OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS ENTERED INTO AND PERFORMED
ENTIRELY WITHIN THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO ANY CONFLICT
OF
LAW PRINCIPLES UNDER NEW YORK LAW). THE NEW YORK COURTS (STATE AND
FEDERAL), SHALL HAVE SOLE JURISDICTION OF ANY CONTROVERSIES REGARDING THIS
AGREEMENT; ANY ACTION OR OTHER PROCEEDING WHICH INVOLVES SUCH A CONTROVERSY
SHALL BE BROUGHT IN THOSE COURTS IN NEW YORK COUNTY AND NOT
ELSEWHERE. THE PARTIES WAIVE ANY AND ALL OBJECTIONS TO VENUE IN THOSE
COURTS AND HEREBY SUBMIT TO THE JURISDICTION OF THOSE COURTS.
17.10. This
agreement may be executed in one or more counterparts, each of which shall
be
deemed an original but all of which shall constitute one and the same
instrument. This agreement shall not become effective until executed
by all proposed parties hereto.
17.11.
Paragraph numbering for administrative purposes only.
17.17. SONY
BMG and Company agree to execute such further documentation and perform such
further actions, including the recordation of such documentation with
appropriate authorities, as may be reasonably requested by the other party
hereto to evidence and effectuate further the purposes and intents set forth
in
this Agreement.
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17.13. Those
provisions of any applicable collective bargaining agreement between SONY BMG
and any labor organization which are required, by the terms of such agreement,
to be included in this Agreement shall be deemed incorporated
herein.
17.14. Each
of the parties shall, from time to time, do and perform such other and further
acts and duly execute and deliver such further documents and assurances as
may
be required by applicable laws or as reasonably requested by the other party
to
establish, maintain and protect such party’s rights and remedies and to carry
out and effect the intent and purpose of this Agreement, including, without
limitation, the execution and delivery of additional documentation and/or
instruments, in recordable form, and the recording or filing of additional
documentation and/or instruments, including, without limitation, any notice,
UCC-1 and/or security agreement in accordance with the laws of such
jurisdictions in which the party concerned may in its sole, reasonable
discretion from time to time deem necessary. Without limiting the
foregoing, each party shall cause any such document and/or additional
instruments which shall be executed to be kept, filed, deposited or recorded,
at
all times, in such places that the other party reasonably shall designate in
its
sole, reasonable discretion in order to perfect and preserve such other party’s
rights in and to the SONY BMG Materials and the SONY BMG Authorized Trademarks,
in the case of SONY BMG, and in the Video Service, in the case of
Company.
IN
WITNESS WHEREOF, the parties hereto have executed this Agreement, effective
as
of the date first above written.
SONY
BMG
MUSIC ENTERTAINMENT
By:____________________________
GLOBAL
MUSIC INTERNATIONAL, INC. D/B/A INDEPENDENT MUSIC NETWORK D/B/A “IMN
TV”
By________________________
-▇▇-
▇▇▇▇▇▇▇
▇-▇
Technical
and Security Specifications
(Reference
– definition of “Technical and Security Specifications” in Article
14)
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Exhibit
A-2
Functionality
Specifications
(Reference
– definition of “Functionality Specifications” in Article
14)
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Exhibit
B
Thee
is no Exhibit B
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Exhibit
C
(Appended
in accordance with subparagraph 6.03(a))
Quarterly
Reporting Specifications
See
attached
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Exhibit
D
Content
Delivery Specifications
See
attached
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Exhibit
E
FROM:
[Applicable Affiliate]
TO: [GLOBAL
MUSIC INTERNATIONAL, INC. D/B/A
INDEPENDENT MUSIC NETWORK D/B/A “IMN TV”] OR [local
affiliate of GLOBAL
MUSIC INTERNATIONAL, INC. D/B/A INDEPENDENT MUSIC NETWORK D/B/A “IMN
TV”]
Gentlemen:
We
refer to the agreement dated
[ ]
made between SONY BMG Music Entertainment and GLOBAL MUSIC INTERNATIONAL,
INC. D/B/A INDEPENDENT MUSIC NETWORK D/B/A “IMN TV” (the “Agreement”) and we
hereby grant to you the applicable rights specified in the Agreement in relation
to music videos together with any associated metadata and all other related
artistic and literary materials, ideas, and intellectual properties owned or
controlled by us which are delivered to the Company by SONY BMG for use by
consumers located within [insertapplicable country or
countries]) in accordance with and subject to the terms and conditions of
the Agreement.
SIGNED: __________________________
DATED: ___________________________
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Exhibit
F
|
|
Amendment
for Additional Grants of Audio Music Content Distribution Rights
By SONY
BMG MUSIC ENTERTAINMENT China Holdings Limited, a Wholly-owned
Subsidiary
of SONY BMG MUSIC
ENTERTAINMENT
|
This
Amendment defines additional grants of distribution rights in addition
to the
full agreement, The Music Video Reproduction and Exhibition Agreement (the
"Agreement"), dated as of October 26,2006 (the "Effective Date"), which
is made
by and between Global Music International, Inc. d/b/a Independent Music
Network
d/b/a "IMN TV", ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (hereinafter
"Company") and SONY BMG MUSIC ENTERTAINMENT, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇
▇▇▇▇ ▇▇▇▇▇ (hereinafter "SONY BMG," "us" or "we").
1. Additional
Definitions
To
amend
Clause 14.ADDITIONAL DEFINITIONS of the full contract with the
following:
"SONY
BMG WIRELESS AUDIO" shall mean, individually and collectively, each
Music Audio in the encoding formats of Master Tone (Ring Tone or True Tone),
Ring Back Tone, and IVR (Interactive Voice Response) (i) in respect of
which
SONY BMG has the appropriate reproduction, distribution, transmission,
performance, display and exhibition rights in the applicable country in
the
Territory, and (ii) has been delivered by SONY BMG to Company for such
purpose
under Article 4 of the full contract, subject to SONY BMG's take-down rights
as
set forth in Article 4 of the full contract and the other exclusions and
limitations prescribed elsewhere in this Agreement.
"AUDIO
SERVICE" shall mean the audio Ring Tone, Ring Back Tone, and Interactive
Voice Response(IVR) services that are produced, programmed, managed and
operated
solely by Company and is distributed and exhibited, performed and displayed
solely by means of the Wireless Platform in the Territory on a twenty-four
(24)
hours per day basis, which service:
(a) is
accessible exclusively by End Users on a Subscription Basis, exclusively
through the Company Application for the private, non-commercial use
of
End Users ;
(b) With
respect to both such service and the Company Application, is
marketed and branded solely under the Company Branding and;
(c) Consists
entirely of the exhibition, performance and display of Music
Audios by means of Service Transmissions that are delivered to the approved
Handsets of End Users based upon the End User's specific request or
demand
for a particular title of Music Audio in accordance with the Functionality
Specifications attached as Exhibit A-2 hereto, and the other terms,
conditions and limitations prescribed elsewhere in this
Agreement;
(d) Stores,
hosts, secures, serves and delivers SONY BMG Materials
solely from Company Servers to approved Handsets in accordance with
the
Technical and Security Specifications attached as Exhibit A-1 hereto;
and
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(e) Does
not
contain or utilize any content or other materials that in SONY
BMG's reasonable opinion constitutes, promotes or advocates any Objectionable
Activities, directly or indirectly.
2. Additional
Grant of Rights
Revise
Clause 1.01 (a) (of the full contract): General; Approved
Distribution Channels; Wireless
Platform. Subject to the
other terms, conditions and limitations prescribed elsewhere in this
Agreement, SONY BMG hereby grants Company a non-exclusive,
non-transferable, limited right, without any right to subdelegate, to
do solely the following solely during the Term and solely in the
Territory (the "Grant of Rights"):
To
include the following additional clauses:
1.01
(a)
(3) To reproduce up to two (2) copies of each of the SONY
BMG WIRELESS AUDIO (each, an "Ephemeral Copy") and maintain such
reproductions on Company Servers, solely for use in connection with the
facilitation of Service Transmissions delivered from the Company Servers
via the
Wireless Platform for exhibition, performance and display on Approved Handsets
through Approved Distribution Channels solely as part of and in connection
with
the Audio Service in the Territory; and
1.01
(a)
(4) To make certain editing, excerpting or alteration of
SONY BMG WIRELESS AUDIO for the sole purpose of transmitting certain
portion of the Music Audio through the intended Audio Services within the
approved Territory; such editing, excerpting or alteration must be supervised
and explicitly by authorized SonyBMG China personnel.
1.01
( c)
(iv) the Company Application as in incorporated in the "IMNTV"
mobile application, as distributed by i) China United Communications Company
Ltd. (China Unicom); ii) China Telecommunications Corporation Company
Ltd. (China Telecom) iii) China Networks Communications Company Ltd. (China
Netcom or CNC); iv) China Mobile Communications Corporation Company Ltd.
(China
Mobile or CMCC) in the territory of China.
3. FEES
and CONDITIONS
All
financial fees and other terms and conditions shall adhere to the fees,
terms,
and conditions stipulated in the full contract, with the exception of the
following change for Sony BMG Wireless Audio rights granted
herein,
Specifically,
IMNTV shall pay 50% of the retail revenue based on the retail price minus
any
carrier fees and SP partner fees (such as fees charged by Unicom Newspace
who is
a Master SP) to Sony BMG for any Sony BMG audio content
delivered. There are no additional upfront fees charged to
IMNTV for the granted additional rights, but there is agreed upon floor
retail
price of both Ring Back Tone and True Tone at no less than 2 RMB, and IVR
at no
less than ▇ ▇▇▇ per minute.
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IN
WITNESS WHEREOF, the parties hereto have executed this Agreement, effective
as
of the date first above written.
SONY
BMG
MUSIC ENTERTAINMENT China Holdings Limited
GLOBAL
MUSIC, INTERNATIONAL, INC. D/B/A INDEPENDENT MUSIC NETWORK
D/B/A
"IMN TV"
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Exhibit
G
Mobile
Music Top Stream Report
See
attached
-41-