Date: [TBD] SERVICES AGREEMENT (1) DIGITAL CINEMA ... Cinema/DCDC/DCDC... · 12/06/11 draft date:...

12/06/11 DRAFT

Date: [TBD]

SERVICES AGREEMENT

(1) DIGITAL CINEMA DISTRIBUTION COALITION

and

(2) [CONTENT PROVIDER]

DCDC TEMP.doc 12.06.11 of 22

This SERVICES AGREEMENT (this “Agreement”) is dated [TBD] (the “Effective Date”).

PARTIES:

(1) DIGITAL CINEMA DISTRIBUTION COALITION LLC, a Delaware limited liability company, whose registered office is at _____________________________________ (“DCDC”); and

(2) [Content Provider], a company [incorporated] in ___________, whose principal office is located at _______________________________________ (“Customer”)

BACKGROUND:

Customer wishes to engage DCDC on a non-exclusive basis to perform digital cinema content delivery services as described in this Agreement, and DCDC is willing to provide such services for Customer as set out in this Agreement. Capitalized terms used in this Background section have the meanings either set out in Paragraph 1 or above.

OPERATIVE PROVISIONS:

1. DEFINITIONS

1.1 For purposes of this Agreement the following capitalized terms shall have the following meanings:

“Affiliate” means any corporation, limited liability company, partnership, joint venture or other entity which, directly or indirectly, is owned or controlled by, owns or controls, or is under common ownership or control with a Party.

“Catch Server” means the server computer appliance located at each Receive Site that contains receivers which are tuned to (a) recognize and receive particular satellite transponder transmissions and other forms of digital signal input containing content in digital form, and (b) either route that content to other devices at the Receive Site or store such content as backup for subsequent exhibition at the Receive Site.

“Confidential Information” means either Party’s proprietary or confidential information, including without limitation (a) for Customer, Customer Content, marketing and release information, and information about non-released motion picture Customer Content and other new Customer Content, (b) for DCDC, information about its business plan, finances, deployment plans, network and technology and the Customer Work Records, and (c) for both Parties, information relating to the business of each Party and such Party’s Affiliates, and such Party’s and its Affiliates’ business processes, pricing and client and supplier lists.

“Composition Play List” means a self-contained representation of a single complete Customer Content motion picture or trailer, as defined by the current version of SMPTE S429-7.

“Content Delivery Network” means the digital content multicast delivery network over which DCDC provides the Services comprised primarily of satellite links (including a network operations center, an uplink to satellites, a downlink to the antenna and Catch Server at the Receive Sites), and high speed terrestrial cable or fiber links.


“Contract Year” means each twelve (12) month period commencing on the Effective Date.

“Customer Content” means the digital content, which may include without limitation advertisements or other pre-show materials, trailers, feature motion pictures and other DCPs, and so-called alternative content, such as Live Streaming Event/Programming, that Customer provides to DCDC for delivery over the Content Delivery Network.

“Delivery Date” means the date that the designated Customer Content must be received by the Catch Server at designated Receive Sites as reflected in the Firm Booking accepted by DCDC.

“DCI Spec” means (a) the Digital Cinema System Specification together with its errata issued by Digital Cinema Initiatives, LLC, and (b) any applicable specifications formally approved and adopted by SMPTE.

“Digital Cinema Package” or “DCP” means a valid content package that is prepared according to (a) the specifications described in the then-current versions of SMPTE standards S429 series and the DCI Spec, and (b) the digital cinema naming convention described at http://digitalcinemanamingconvention.com.

“Firm Booking” shall have the meaning given in Schedule 1.

“Intellectual Property Rights” means all rights, whether vested or contingent, registered or unregistered, in the nature of patents, copyrights, design rights, trademarks, service marks, trade names, trade secrets, know-how, database rights, actual property rights or any other intellectual property or proprietary rights and all applications, renewals, extensions, continuations, continuations-in-part, divisions or reissues for the same, all economic rights, neighboring rights, connected rights and rights of exploitation of whatever kind and in any manner, in the case of any of the foregoing now known or hereafter devised anywhere in the world or otherwise.

“Live Streaming Event/Programming” means a video and/or audio IP stream, however encoded, encapsulated, or encrypted, containing programmatic material which is (a) live at the source, and (b) captured electronically at the source for simultaneous transmission over the Content Delivery Network to Receive Sites for “real-time” exhibition there or for storage at such sites for so-called “encore performances” at a later time.

“MPAA” means the Motion Picture Association of America.

“Parties” means Customer and DCDC, and each shall be a “Party”.

“Purchase Order” means an order for Services issued by Customer in the format used by Customer from time to time including, to the extent Customer desires to pre-book transmission time, the relevant Request Form as required by Schedule 1.

“Receive Site(s)” means the motion picture theater(s) equipped to be part of the Content Delivery Network pursuant to an agreement between DCDC and the operator of such Receive Site, a list of which Receive Sites shall be provided to Customer from time to time.


http://digitalcinemanamingconvention.com/

“Scheduled Booking Rules” means the process and requirements for booking and confirming delivery of Customer Content over the Content Delivery Network as described in Schedule 1.

“Services” means Customer Content delivery services as further described in Paragraph 4.

“Store and Forward Event Programming” means audio and video programming transmitted on the Content Delivery Network which is intended for short-term storage at the Receive Site(s) on either the Catch Server or some other digital storage device at such Receive Site(s) for later playback by the Receive Site in one or more of its auditoriums.

“Studio Booking” means the booking of a theater by Customer to play its Customer Content in such theater pursuant to booking terms agreed between Customer and the operator of such theater.

“Supplemental Package” means a DCP which does not contain a full set of assets required to play the associated Composition Play List, but refers to assets provided in another DCP (such other DCP known as the “OV” or “Original Version”).

“Term” means the duration of this Agreement as set out in Paragraph 2.

“Validation of Technical Integrity” means the testing undertaken by DCDC or its subcontractor.

"Viruses" means viruses, malware and any other disabling devices, code, keys, or techniques which could be capable of impairing (a) use of any Customer Content, and/or (b) the processing environment in which any Customer Content is received or to which any Customer Content is transmitted.

All other capitalized terms have the meanings provided in this Agreement.

1.2 The headings in this Agreement do not affect the interpretation of this Agreement. References to any “Schedules” are to schedules to this Agreement. References to “Paragraphs” are, unless otherwise stated, to clauses in the main body of this Agreement and to paragraphs in any Schedules.

1.3 Unless the context otherwise so requires:

(a) references to Customer and DCDC include their permitted successors and assigns;

(b) references to statutory provisions include those statutory provisions as amended or re-enacted; and

(c) the singular shall mean the plural and vice-versa and any references to a person shall mean a partnership, limited liability company, incorporated body or other entity and vice-versa.

1.4 In the case of conflict or ambiguity between any provision contained in the body of this Agreement and any Purchase Order, the provision in the body of this Agreement shall take precedence to the extent of such conflict or ambiguity. Any Customer terms of trade stated or referenced in a Purchase Order, or any terms or conditions in a


Purchase Order to which DCDC has not specifically agreed in writing (except for details required in a Request Form) shall not be binding on DCDC.

2. TERM

2.1 The term of DCDC’s engagement under this Agreement shall commence on the Effective Date and shall continue for a period of five (5) years terminating on the fifth anniversary of the Effective Date (the “Initial Term”) unless extended in accordance with Paragraph 2.2.

2.2 The Parties will have the option to extend the Term for three (3) additional successive one (1) year periods (each an “Extended Term”) after expiration of the Initial Term of this Agreement or any Extended Term (as the case may be) upon mutual written agreement at least ninety (90) days before the end of the Initial Term or any Extended Term.

3. SCOPE OF WORK

3.1 DCDC shall perform the Services on a non-exclusive basis as agreed by the Parties from time to time pursuant to Purchase Orders issued by Customer and accepted by DCDC in accordance with this Agreement.

3.2 DCDC agrees to provide Customer, within ninety (90) days following execution of this Agreement, a Receive Site deployment plan (the “Deployment Plan”) for the Content Delivery Network. Subject to the Deployment Plan, DCDC anticipates a minimum deployment of three hundred and fifty (350) Receive Sites per year during the first three (3) Contract Years of the Initial Term (the “Minimum Deployment Commitment”). The Deployment Plan shall identify specific Receive Sites and deployment timing for each such Receive Site. The sole and exclusive remedy of Customer, and the entire liability of DCDC, for any failure to meet the Minimum Deployment Commitment shall be relief from the Volume Commitment (as defined below in Paragraph 5.7) in any period in which the Minimum Deployment Commitment is not achieved. DCDC may make changes to the Deployment Plan at any time in its reasonable business judgment. DCDC shall provide Customer with the then-current version of the Deployment Plan upon any request therefor from Customer.

3.3 Customer will issue Purchase Orders to DCDC either electronically or in writing as Customer elects for all Services requested under this Agreement.

3.4 Customer expressly acknowledges and agrees that DCDC may subcontract, in whole or in part, the Services under this Agreement. Without limiting the generality of the foregoing, Customer acknowledges and agrees that ingest, delivery and customer service may be subcontracted to a third party service provider.

4. SERVICES AND SERVICE LEVELS

4.1 DCDC’s Services shall include:

(a) Subject to Paragraph 4.6, and provided the Customer Content is submitted to DCDC in accordance with the Scheduled Booking Rules and pass the Validation of Technical Integrity, the delivery of Customer Content, via satellite or high speed terrestrial links, to Receive Sites in the United States and Canada as necessary to meet Delivery Dates; and


(b) 24x7 customer support by telephone in the English language with two (2) hour telephone response time.

4.2 Customer acknowledges and agrees that DCDC’s obligations set forth in this Paragraph 4 are subject to Customer’s compliance with its obligations set forth in this Agreement. DCDC shall have no liability hereunder, including without limitation any obligation to issue Service Credits (as defined below), to the extent that DCDC's failure to meet any obligation set forth in this Paragraph 4 is caused by or attributable to Customer's failure to comply with its obligations set forth in this Agreement.

4.3 DCDC shall ingest Customer Content within two (2) hours of receipt from Customer.

4.4 DCDC shall perform the Validation of Technical Integrity on Customer Content received from Customer within eight (8) hours of receipt, and DCDC shall notify Customer of the results of such procedures within two (2) hours following completion of such validation check. The Validation of Technical Integrity shall be for identification and verification purposes only. DCDC shall have no obligation with respect to quality of image or playback of Customer Content.

4.5 If Customer has delivered its Customer Content to the Ingest Point (as defined in Schedule 1) as required based on the Scheduled Booking Rules set forth in Schedule 1, and provided the Customer Content passes the Validation of Technical Integrity, DCDC shall ensure that such Customer Content is delivered to the Receive Sites by the Delivery Date and stored in such a way as to protect against accessibility by the exhibitor theater management system (“TMS”) prior to a valid booking of that Customer Content with respect to the applicable Receive Site.

4.6 In the event of satellite or terrestrial delivery failure, DCDC shall cause the Customer Content to be delivered to each affected Receive Site with a Studio Booking by hard drive. Provided that (a) Customer has delivered the subject Customer Content to DCDC in accordance with the terms of a Firm Booking, and (b) the Customer Content passes the Validation of Technical Integrity, DCDC shall ensure that such hard drive is delivered to such Receive Site(s) by the Delivery Date.

4.7 The Catch Server installed at the Receive Site(s) shall be connected in a manner with such Receive Site’s TMS such that, once the Receive Site has been “booked” by the Customer to play the Customer Content in question, within one (1) hour of receipt of such booking confirmation, the subject Customer Content will appear on the visible partition of the Catch Server’s storage mechanism for access by such Receive Site’s TMS.

4.8 The Catch Server shall have capacity to store feature film Customer Content for a minimum of six (6) weeks following the applicable Delivery Date. Unless mutually agreed in writing otherwise, DCDC will delete feature film Customer Content from the Catch Server six (6) weeks following the Delivery Date. Trailer Customer Content will be deleted from the Catch Server after a period of _____________.

4.9 DCDC shall report to Customer as follows:

(a) Status Updates: DCDC will report the status of Customer Content at multiple milestones and integration points within the Content Delivery Network, including, for example, successful ingest, commencement of uplink, successful delivery, and pull-over to the Receive Site TMS. DCDC will enable


such reporting through a secure web portal, so that Customer will be able to track Customer Content at such milestones and points. Customer only will be able to have access to and to see its own Customer Content, which will be secured from access by other customers of DCDC.

(b) Volume Reports: DCDC will report, on a quarterly basis, the number of overall deliveries through the Content Delivery Network by type (features, pre-shows, trailers, Live Streaming Event/Programming) and terabytes of data transmitted.

(c) Financial Reports: DCDC will provide quarterly and annual revenue reports.

(d) DCDC or its designated service provider will provide standard APIs for the export of status data and the import of booking data within _________ months following the Effective Date.

4.10 Notwithstanding anything to the contrary set forth herein, the sole and exclusive remedy of Customer, and the entire liability of DCDC, for any failure to meet the any obligation under this Paragraph 4 shall be the service credits set forth in Schedule 3 attached hereto (the "Service Credits").

[Note to draft: Service specifications for live streaming remain under development by DCDC. DCDC will supplement the foregoing services discussion with obligations related to live streaming.]

5. CUSTOMER’S OBLIGATIONS

5.1 Customer will adhere to the Scheduled Booking Rules as set forth in Schedule 1.

5.2 Upon placing a Purchase Order for Services, Customer shall deliver or have delivered to the Ingest Point any and all Customer Content and other materials or information necessary for the performance of the Services under this Agreement and pursuant to the Purchase Order (including without limitation the number of booked Receive Sites, the Delivery Date, the date of delivery of the Customer Content to the Ingest Point, and the Pencil Booking Request Form or the Firm Booking Request Form as required by the Scheduled Booking Rules). DCDC will not be held liable for failure to meet Delivery Dates if the Customer Content is not received as required by the Scheduled Booking Rules set forth in Schedule 1.

5.3 Customer shall ensure that Customer Content is provided to DCDC and that the Customer Content is free from error and has been validated as compatible for playback on the digital cinema equipment at the Receive Site.

5.4 Customer shall ensure that Customer Content and any media used to provide Customer Content to DCDC is free from Viruses.

5.5 Customer shall provide DCDC with a semi-annual forecast of Customer Content to be delivered to the Ingest Point in the subsequent six (6) month period, including Receive Sites, target Delivery Dates, exhibition dates, and Customer Content file sizes for each projected release.

5.6 Customer agrees to provide DCDC with all such additional information and assistance as DCDC may reasonably require from time to time in order to facilitate


the performance of the Services and/or compliance by DCDC with its obligations under any service contract relating to the Content Delivery Network.

5.7 Customer agrees to deliver to DCDC a minimum of [x] theatrical motion picture Customer Content, [x] trailers, and [x] Store and Forward Programming shows for distribution over the Content Delivery Network during each Contract Year (collectively, the “Volume Commitment”).

[Note to draft: Customer obligations for live streaming remain under development by DCDC. DCDC will supplement the foregoing discussion with obligations related to live streaming.]

6. PRICES AND PAYMENT

6.1 DCDC shall charge Customer for the Services performed under this Agreement as set forth on Schedule 2 attached hereto and incorporated by reference. Such charges are subject to change in any Extended Term upon thirty (30) days prior written notice to Customer. In addition, such charges do not include federal, state or local sales, use, property, excise, services or other taxes now or hereafter levied. Customer shall remit such taxes directly to the applicable taxing authorities. Any taxes or amounts in lieu thereof paid or payable by DCDC in respect of any such taxes or the charges invoiced in accordance with this Agreement (excepting only taxes on DCDC's net income) shall be for Customer's account and shall be reimbursed to DCDC upon DCDC's invoice therefor.

6.2 Upon completion of the Services (as evidenced by confirmation of delivery to the Catch Server for the applicable Customer Content) set out in a particular Purchase Order, DCDC shall invoice Customer for the subject Services.

6.3 Customer agrees to pay invoices within thirty (30) days following the date of such invoice. If any charges invoiced hereunder are disputed in good faith by Customer, Customer may suspend payment solely of the disputed portion of such invoice by: (a) paying the undisputed amount; (b) promptly sending a written explanation of the dispute to DCDC; and (c) using its reasonable efforts to promptly resolve any such dispute. Customer shall pay the amount established to be due under any such disputed portion of an invoice within thirty (30) days after resolution of the dispute.

6.4 Interest shall accrue on all payments received after their applicable due date at the rate of the lesser of one and one-half percent (1-1/2%) per month or the highest rate allowable by applicable law.

6.5 [To the extent that DCDC revenues in a given calendar year exceed operating costs (plus $2 million in operating reserves) (the "Excess Revenues"), and after recoupment by DCDC’s members of their total capital investments in DCDC plus five percent (5%) interest thereon from the date of such investments (the "Repayment Obligation"), DCDC shall issue to Customer rebates that may be applied to future charges payable hereunder (the “Initial Pro-rata Rebates”) in the amount of Customer's pro-rata share of the Excess Revenues based on the charges payable by Customer for its usage of the Content Delivery Network in the immediately preceding calendar year relative to the charges payable by DCDC's other customers for usage of the Content Delivery Network in such immediately preceding calendar year. DCDC will in good faith review the amount and consistency of rebate payments over the Term and shall, as appropriate, adjust rebates to the extent warranted by such review. In addition, Customer shall have the right during the Term to audit and


examine the books and records of DCDC, during normal business hours and upon at least thirty (30) days’ advance written notice to DCDC, to the extent necessary to determine the accuracy of rebates issued to Customer hereunder. All information derived from such books and records shall be deemed to be DCDC’s Confidential Information, will be held in strict confidence by Customer, and will be used by Customer only for purposes of determining the accuracy of rebates issued to Customer under this Agreement. In the event the audit reveals an adjustment required hereunder to the rebates issued to Customer, DCDC shall implement such adjustment on an invoice to Customer within thirty (30) days of such determination. Any audit conducted hereunder may be performed no more than once annually. Notwithstanding anything herein to the contrary, upon termination or expiration of this Agreement for any reason, Customer's right to any rebates under this Agreement shall immediately terminate and Customer shall have no future right to such rebate, including without limitation pursuant to any future agreement between DCDC and such Customer.] [Note to draft: This rebate mechanism is under review by DCDC tax and securities counsel and is subject to change based on such review.]

7. NO PREFERENTIAL TREATMENT

DCDC's members shall (a) not be eligible for more favorable charges than the charges available to Customer or any other customer of DCDC, subject to the Repayment Obligation, and (b) be subject to the Scheduled Booking Rules to the same extent as Customer or any other customer of DCDC.

8. PUBLICITY

Any press releases or publicity relating to this Agreement by either Party shall be subject to the other Party’s prior written approval in each instance. Neither Party may engage in publicity of any kind regarding the Services without the other Party's express prior written consent. By the operation of this Agreement, neither Party acquires any right to use, and must not use, the other Party's name or any derivation of such name, or trademarks, trade names or designs of such other Party or its Affiliates in advertising, publicity or promotion, to express or to imply endorsement of products or services, nor in any other manner whatsoever without the prior written approval of such other Party.

9. STANDARD OF PERFORMANCE

9.1 DCDC agrees that all Services shall be performed in a professional and workmanlike manner, with reasonable skill and ability and to generally accepted industry standards.

9.2 DCDC shall, at DCDC’s sole option and as Customer's sole remedy for any breach of Paragraph 9.1, replace, re-perform, or refund amounts paid for any Services that do not conform to the requirements of Paragraph 9.1. Any replaced or re-performed work will be at no additional cost to Customer.

9.3 EXCEPT AS EXPRESSLY SET FORTH HEREIN, DCDC HEREBY DISCLAIMS AND CUSTOMER WAIVES ALL REPRESENTATIONS AND WARRANTIES (WHETHER EXPRESS, IMPLIED, OR STATUTORY), INCLUDING WITHOUT LIMITATION, ANY WARRANTY OR CONDITION OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE, NONINFRINGEMENT OR TITLE.


10. INSURANCE

DCDC shall provide and maintain, at its own expense, during its rendition of Services (a) Worker’s Compensation and related insurance as prescribed by the law applicable to the employees performing the Services; (b) employer’s liability Insurance with limits of not less than five million dollars ($5,000,000) for each occurrence; (c) comprehensive/commercial general liability insurance including products liability with combined single limit of not less than five million dollars ($5,000,000) per occurrence, including coverage for Contractors Protective Liability, products liability and completed operations, and not containing an exclusion for explosion, collapse and underground coverage; (d) comprehensive motor vehicle liability insurance, including coverage for owned, hired, leased, rented and non-owned vehicles of not less than five million dollars ($5,000,000) for combined single limit for bodily injury, including death and/or property damage; and (e) professional liability insurance covering the effects or errors and omissions in the performance of professional duties with limits of not less than five million dollars ($5,000,000) for each occurrence.

11. BUSINESS CONTINUITY

DCDC shall (a) develop, submit to Customer for review, and implement a business continuity plan (“BCP”) that meets generally accepted industry standards; (b) update and test the operability of the BCP to ensure that the BCP is fully operational; (c) certify to Customer upon request by Customer (but no more than once every year during the Term) that the BCP is fully operational; and (D) implement the BCP upon the occurrence of a disaster or other circumstances that have a substantial adverse effect on DCDC's business.

12. RIGHT OF AUDIT

DCDC shall keep complete and accurate records and documentation relating to Services performed for Customer pursuant to this Agreement in accordance with generally accepted industry standards (“Customer Work Records”). Upon reasonable advance written notice, and subject to Paragraph 23, DCDC shall make Customer Work Records available, during normal business hours, to Customer or any authorized representative of Customer for inspection at all reasonable times during the Term and for twelve (12) months following termination of this Agreement, provided that Customer agrees not to audit such Work Records more than one (1) time during any twelve (12) month period.

13. GENERAL REPRESENTATIONS AND WARRANTIES OF THE PARTIES

13.1 Each Party represents and warrants that:

(a) such Party:

(i) is duly organized, validly existing and in good standing under the laws of its jurisdiction of organization;

(ii) has the power and authority to carry on its business as proposed and as now conducted; and

(iii) has the power to execute, deliver and perform this Agreement;


(b) the execution, delivery and performance by such Party of this Agreement:

(i) has been duly authorized by all requisite company action of such Party;

(ii) will not violate or be in conflict with any applicable law, any judgment, order, writ, injunction, decree or consent of any court or other judicial authority applicable to such Party, or any material instrument, agreement, document, arrangement or other understanding to which such Party is a party or by which such Party may be bound;

(c) there are no actions, suits or proceedings pending or threatened affecting such Party that involves the transactions contemplated in this Agreement or the ability of such Party to perform its obligations under this Agreement; and

(d) this Agreement is the legal, valid and binding obligation of such Party, enforceable in accordance with its terms and conditions.

14. OWNERSHIP

14.1 All Customer Content shall at all times be and remain the property of Customer. DCDC agrees not to assert any ownership rights (including, without limitation, any Intellectual Property Rights) in Customer Content during the Term or at any time thereafter.

14.2 DCDC shall execute all documents and take all steps necessary to give effect to Paragraph 14.1.

15. RETURN OF CUSTOMER CONTENT

DCDC will not assert against Customer, Customer’s successors, licensees or assignees any lien however arising against any Customer Content deposited with or held by DCDC under this Agreement for any reason, including, without limitation, unpaid charges incurred by Customer, Customer’s successors, licensees, assignees or any other party. If Customer requests the return of any or all Customer Content in DCDC’s possession at any time, DCDC shall promptly return such Customer Content to Customer (at no cost to Customer) and/or shall cooperate with Customer or Customer’s agents in removing such Customer Content from DCDC's possession. All files on local or stand alone servers used for servicing and files on servicing archives will be deleted upon Customer’s request. Upon written request, DCDC will supply a certificate of destruction confirming compliance with such requirements on a by-title basis.

16. CONFLICTING ORDERS

16.1 In the event DCDC receives any instructions, demands or claims from any person, firm or corporation other than Customer ("Other Claimant") with respect to any Customer Content deposited with or held by DCDC under this Agreement which are inconsistent with the then current instructions from Customer, DCDC shall not take any action, but shall promptly request in writing additional instructions from Customer, and Customer shall promptly respond to such request.

16.2 If Customer instructs DCDC to act in a manner inconsistent with the Other Claimant's demands referred to in Paragraph 16.1, or if Customer fails to respond to such


request for additional instructions within seven (7) days of receipt of such request, DCDC shall comply with Customer's original instructions and Customer shall indemnify, defend and hold harmless DCDC against any claims, loss, liability, cost or expense in connection with DCDC's failure to honor the demands of such Other Claimant.

16.3 Nothing contained in this Paragraph 16 shall require DCDC to act in contravention of any applicable law, regulation, decree or order.

17. COMPLIANCE WITH APPLICABLE LAWS

The Services (including, without limitation, the engagement of any subcontractors for the provision of the Services) shall be provided by DCDC in compliance with all laws, relevant legislation, regulations, and other requirements of any relevant government or governmental agency applicable to the subject territory (“Laws”). The standard of compliance to be achieved by DCDC to the Laws shall be consistent with practices of the relevant industry in the subject territory. In all cases the costs of compliance with such Laws shall be borne by DCDC.

18. INDEMNITY

18.1 DCDC agrees to indemnify, defend and hold harmless Customer and Customer’s Affiliates and their respective owners, principals, directors, officers, employees, agents and representatives from any liabilities, damages, losses, expenses, demands, or judgments, including without limitation reasonable legal fees and expenses, to the extent arising out of any claim or suit brought by a third party alleging:

(a) that the Services infringe the Intellectual Property Rights of such third party (other than claims principally derived from the Customer Content and DCDC’s use of the Customer Content); or

(b) personal injury, death or loss of or damage to property is the result of DCDC’s grossly negligent acts or omissions or willful misconduct in providing the Services to Customer.

18.2 Customer agrees to indemnify, defend and hold harmless DCDC and DCDC’s Affiliates and their respective owners, principals, directors, officers, employees, agents and representatives from any and all liabilities, damages, losses, expenses, demands, or judgments, including without limitation reasonable legal fees and expenses, to the extent arising out of any claim or suit brought by a third party alleging:

(a) that Customer Content or display of the Customer Content infringes the Intellectual Property Rights of such third party; or

(b) personal injury, death or loss of or damage to property is the result of Customer’s grossly negligent acts or omissions or willful misconduct under this Agreement.

19. ANTI PIRACY

19.1 DCDC may not (and shall not authorize any third party to) copy, sublicense, or provide any third party with access to any Customer Content except to perform


obligations under the Agreement or to return such Customer Content to Customer, or to a third party designated by Customer, according to Customer's written instructions. Physical assets containing Customer Content, if any, shall be stored by DCDC or its subcontractors in MPAA-approved or other Customer authorized secure environments when not in use.

19.2 DCDC shall establish and employ, and cause all subcontractors to employ, security procedures that protect against any theft or unauthorized access, copying, exhibition, transmission or removal of Customer Content from DCDC's or any subcontractor’s possession.

19.3 DCDC shall notify each of Customer and a representative of the MPAA by telephone and e-mail or fax regarding any loss or theft or unauthorized access, copying, distribution or use of Customer Content (a “Security Failure”) promptly after any of the foregoing becomes known to DCDC.

19.4 Upon receipt by DCDC of written notice from Customer that a Security Failure has occurred and is continuing, the Parties will promptly meet and confer in good faith to discuss an appropriate solution to remedy such Security Failure and will use reasonable commercial efforts to reach a remedy acceptable to Customer. During the pendency of any Security Failure, Customer’s Volume Commitment shall be suspended, provided that (a) if Customer decides in its sole discretion to book a transmission of Customer Content despite such Security Failure, the provisions of this Agreement will apply with respect to such Customer Content, and (b) if Customer decides in its sole discretion to provide Customer Content for transmission to any third party experiencing a Security Failure with respect to the same manufacturer’s component(s) as are causing or resulting in the Security Failure with respect to DCDC, then Customer’s Volume Commitment shall be reinstated despite the continuance of such Security Failure.

20. TERMINATION

20.1 Notwithstanding Paragraph 2, this Agreement may be terminated immediately by notice in writing without penalty:

(a) By either Party if the other Party is in material or continuing breach of any of its obligations under this Agreement and fails to remedy the breach (if capable of remedy) for a period of thirty (30) days after written notice by the other Party; or

(b) By either Party with immediate effect if the other Party is insolvent or fails to pay its debt obligations generally when due, makes an assignment for the benefit of creditors, seeks relief under any bankruptcy law or similar law for the protection of debtors, or a bankruptcy petition is filed against such Party or a receiver or trustee is appointed (privately or judicially) for such Party or a substantial portion of such Party’s assets and is not discharged or otherwise resolved to the other Party’s satisfaction within thirty (30) days of such filing or appointment, as the case may be.

21. EFFECT OF TERMINATION

21.1 Upon termination of this Agreement, Customer shall remit payment to DCDC for Services performed prior to the effective date of termination.


21.2 Any termination of this Agreement under Paragraph 20 shall be without prejudice to any other rights or remedies of either Party under this Agreement or at law and shall not affect any accrued rights or liabilities of either Party at the date of termination.

21.3 The following Paragraphs shall survive termination of this Agreement: Paragraphs [1, 12, 14, 18, 21, 22, 23, 26, 27, 28.1, 29, 30 and 32].

22. LIMITATION OF LIABILITY

22.1 Neither Party shall be liable, in contract, tort (except in the event of gross negligence or willful misconduct) or for breach of statutory duty or in any other way for:

(a) any loss of revenues, profits, data, contracts, or business or any failure to realize anticipated savings;

(b) any loss of goodwill or reputation; or

(c) any special, indirect, or consequential damages or losses,

suffered or incurred by the other Party arising out of or in connection with any matter under this Agreement, regardless of whether such damages or loss was foreseeable and regardless of whether informed or having direct or imputed knowledge of the possibility of such damages or loss in advance.

22.2 Subject to Paragraph 22.1 above, the liability of either Party to the other Party in each Contract Year arising out of or in connection with this Agreement shall not exceed the aggregate amounts actually paid and/or payable to DCDC by Customer in such Contract Year pursuant to this Agreement.

23. CONFIDENTIALITY

23.1 Except as required by law, both Parties shall ensure that all Confidential Information disclosed by one Party (“Disclosing Party”) to the other Party (“Receiving Party”) in accordance with this Agreement or which may at any time until termination of this Agreement come into the Receiving Party’s knowledge, possession or control shall not be used for any purposes other than those reasonably required or permitted by this Agreement and shall remain confidential and shall not be disclosed by the Receiving Party to any third party (including, without limitation, the press, media, friends, family, acquaintances and the general public) except insofar as such disclosure may be required for the proper operation of this Agreement and then only under appropriate confidentiality provisions approved by the Disclosing Party.

23.2 The obligations of confidentiality in Paragraph 23.1 shall cease to apply to any particular item of Confidential Information once it becomes public knowledge other than by any act or default of the Receiving Party.

23.3 DCDC acknowledges that no reproduction or dissemination of Customer Content is permitted except as expressly set out in this Agreement. DCDC shall ensure that all employees and independent sub-contractors of DCDC will be made aware of this Paragraph 23 and shall ensure that all such persons are bound by obligations of confidentiality no less stringent than contained in this Paragraph 23.

23.4 The existence of this Agreement and of any relationship between the Parties concerning the subject matter of this Agreement is Confidential Information, and


neither Party will publish or permit to be published any information about their relationship, unless that information has first been approved for publication by the other Party.

24. NOTICES

24.1 Any notice or other communication to be given under this Agreement shall be in writing and signed by or on behalf of the Party giving it and may be served by leaving it at or sending it by fax, registered mail or via a courier to the address and for the attention of the relevant Party set out in Paragraph 24.2 (or as otherwise notified by that Party under this Agreement). Notices may not be sent by E-mail. Any notices so served by fax or mail shall be deemed to have been received:

(a) In the case of fax, four (4) hours after the time of dispatch;

(b) In the case of recorded delivery or registered mail, forty-eight (48) hours from the date of mailing; and

(c) In the case of a courier, on the next business day.

24.2 The addresses of the Parties for the purposes of Paragraph 24.1 are as follows:

For Customer:

With a copy to:

For DCDC:

24.3 In proving such service it shall be sufficient to prove that the envelope containing such notice was properly addressed and delivered either to the address shown on it or into the custody of the courier or postal authorities as a pre-paid recorded delivery or registered post letter, or transmitted by fax to that address.

25. FORCE MAJEURE

25.1 In this Agreement “force majeure” shall mean any cause preventing either Party (the “Excused Party”) from performing any or all of its obligations which arises from or is attributable to acts, events, omissions or accidents beyond the reasonable control of the Excused Party, including without limitation any act of God, war, riot, terrorism, fire, acts of government.

25.2 If an Excused Party is prevented or delayed in the performance of any of its obligations under this Agreement by force majeure, the Excused Party shall promptly serve notice in writing on the other Party (the “Other Party”) specifying the nature and extent of the circumstances giving rise to force majeure and shall, subject to service of such notice and the provisions of Paragraph 25.3, have no liability (including without limitation any obligation to issue Service Credits) with respect to the performance of such of its obligations, and the Other Party shall have no right to exercise any remedy hereunder (including without limitation any right to terminate this Agreement) to the extent such obligations are prevented by the force majeure events during the continuance of such events and for such time after they cease as is


necessary for the Excused Party using commercially reasonable efforts to recommence its affected operations in order for it to perform its obligations.

25.3 If an Excused Party is prevented from performance of its obligations for a continuous period in excess of thirty (30) days, the Other Party may terminate this Agreement immediately on service of written notice upon the Excused Party, in which case neither Party shall have any liability to the other except that rights and liabilities which accrued prior to such termination shall continue to exist.

25.4 The Excused Party shall use commercially reasonable efforts to bring the force majeure event to a close or find a solution by which this Agreement may be performed despite the continuance of the force majeure event.

26. WAIVER

No failure or delay by either Party in enforcing its respective rights will prejudice or restrict the rights of that Party and no waiver of any such rights or of any breach of any contractual terms will be deemed to be a waiver of any other right or of any later breach.

27. CUMULATIVE REMEDIES

Subject to the specific limitations set out in this Agreement, no remedy conferred by any provision of this Agreement is intended to be exclusive of any other remedy except as expressly provided for in this Agreement and each and every remedy shall be cumulative and shall be in addition to every other remedy given under this Agreement or existing at law or in equity by statute or otherwise.

28. SEVERABILITY AND FURTHER ASSURANCE

28.1 If any of the provisions of this Agreement are judged to be illegal or unenforceable, the continuation in full force and effect of the remainder of the provisions will not be prejudiced unless the substantive purpose of this Agreement is then frustrated, in which case either Party may terminate this Agreement immediately on written notice.

28.2 Customer shall do or procure to be done all such further acts and things and execute or procure the execution of all such other documents as DCDC may from time to time reasonably require for the purpose of giving DCDC the full benefit of the provisions of this Agreement.

28.3 DCDC shall do or procure to be done all such further acts and things and execute or procure the execution of all such other documents as Customer may from time to time reasonably require for the purpose of giving Customer the full benefit of the provisions of this Agreement.

29. NO PARTNERSHIP OR AGENCY

The relationship between the Parties is that of independent contractors. Neither Party is agent for the other Party, and neither Party has any authority to make any contract, whether expressly or by implication, in the name of the other Party, without such other Party’s prior written consent for express purposes connected with the performance of this Agreement.


30. ENTIRE AGREEMENT AND VARIATIONS

30.1 This Agreement and the documents referred to herein constitute the entire agreement and understanding of the Parties and supersede any previous agreement between the Parties relating to the subject matter of this Agreement.

30.2 Each of the Parties acknowledges and agrees that in entering into this Agreement and the documents referred to in it, it does not rely on and shall have no remedy in respect of any statement, representation, warranty or understanding (whether negligently or innocently made) of any person (whether a Party or not) other than as expressly set out in this Agreement as a warranty. The only remedy available to it for breach of any such warranty shall be for breach of contract under the terms of this Agreement. Nothing in this Paragraph 30 shall however operate to limit or exclude any liability for fraud.

30.3 No variation of the terms and conditions of this Agreement will be valid unless confirmed in writing by authorized signatories of both Parties on or after the date of this Agreement.

31. ASSIGNMENT

Except as expressly permitted under Paragraph 3.4, neither Party may assign this Agreement or any benefits or interests arising under this Agreement without the prior written consent of the other Party, which will not be unreasonably withheld or delayed. DCDC agrees that it will be responsible for the fulfillment of its obligations hereunder notwithstanding the performance of such obligations by its subcontractor(s).

32. GOVERNING LAW AND JURISDICTION

This Agreement shall be construed in accordance with the laws of the State of California of the United States of America without regard to its conflicts of laws provisions. Any and all controversies, claims or disputes arising out of or related to this Agreement or the interpretation, performance or breach thereof, including, but not limited to, alleged violations of state or federal statutory or common law rights or duties, and the determination of the scope or applicability of this Agreement to arbitrate (“Dispute”), except as set forth in subparagraphs (b) and (c), below, shall be resolved according to the procedures set forth in subparagraph (a), below, which shall constitute the sole dispute resolution mechanism hereunder:

(a) Arbitration: In the event that the Parties hereto are unable to resolve any Dispute informally, then such Dispute shall be submitted to final and binding arbitration. The arbitration shall be initiated and conducted according to either the JAMS Streamlined (for claims under $250,000) or the JAMS Comprehensive (for claims over $250,000) Arbitration Rules and Procedures, except as modified herein, including the Optional Appeal Procedures, at the Los Angeles office of JAMS, or its successor (“JAMS”) in effect at the time the request for arbitration is made (the “Arbitration Rules”). The arbitration shall be conducted in Los Angeles County before a neutral arbitrator appointed in accordance with the Arbitration Rules. The arbitrator shall follow California law and the Federal Rules of Evidence in adjudicating the Dispute. The Parties waive the right to seek punitive damages and the arbitrator shall have no authority to reward such damages. The arbitrator will provide a detailed written statement of decision, which will be part of the arbitration


award and admissible in any judicial proceeding to confirm, correct or vacate the award. Unless the Parties hereto agree otherwise, the neutral arbitrator and the members of any appeal panel shall be former or retired judges or justices of any California state or federal court with experience in matters involving the entertainment industry. If either Party refuses to perform any or all of its obligations under the final arbitration award (following appeal, if applicable) within thirty (30) days of such award being rendered, then the other Party may enforce the final award in any such court of competent jurisdiction in Los Angeles County. The Party seeking enforcement shall be entitled to an award of all costs, fees and expenses, including reasonable attorneys’ fees, incurred in enforcing the award, to be paid by the Party against whom enforcement is ordered.

(b) Injunctive Relief: Notwithstanding the foregoing, either Party shall be entitled to seek injunctive relief in the state and federal courts of Los Angeles County.

(c) Other Matters: Any Dispute or portion thereof, or any claim for a particular form of relief (not otherwise precluded by any other provision of this Agreement) that may not be arbitrated pursuant to applicable state or federal law may be heard only in a court of competent jurisdiction in Los Angeles County.

Signed for and on behalf of

CUSTOMER:

Signature ..............................................

Name (print) .........................................

Title ......................................................

Signed for and on behalf of

DIGITAL CINEMA DISTRIBUTION COALITION LLC:

Signature ..............................................

Name (print) .........................................

Title ......................................................


SCHEDULE 1

SCHEDULED BOOKING RULES

Overriding Principles to the Booking Process:

Pencil Booking Request Forms (as defined below) may be submitted up to three hundred sixty-five (365) days in advance of a proposed Delivery Date, and should be submitted by Customer as far in advance of the Delivery Date as possible.

Pencil Booking Request Forms will not be accepted by DCDC if requested by Customer less than thirty (30) days prior to Customer’s proposed Delivery Date for the subject Customer Content. Only Firm Booking Request Forms (as defined below) will be considered for acceptance during such time period.

Request Forms (defined below) must specify that Customer will deliver the subject Customer Content to the ingest point(s) specified by DCDC from time to time (the "Ingest Point") no later than ten (10) days prior to the Delivery Date specified by Customer.

If a Firm Booking Request Form is accepted by DCDC, and Customer thereafter requests to deliver the subject Customer Content to DCDC less than ten (10) days before the specified Delivery Date, DCDC will make reasonable efforts to accommodate the request and transmit such Customer Content, provided that (i) such request is made at least forty (40) days prior to the specified Delivery Date; (ii) such Customer Content is actually delivered to the Ingest Point no later than seven (7) days before the specified Delivery Date; and (iii) Customer agrees to pay any additional charges that may be incurred as a result of such transmission rescheduling, including without limitation the costs of delivering hard drives if necessary to meet the Delivery Date. If such request is made less than forty (40) days before the specified Delivery Date, or if the Customer Content in question is delivered to the Ingest Point less than seven (7) days prior to the Delivery Date, then DCDC may not be able to reschedule a transmission of Customer’s Content, nor to resell the time committed based on Customer’s Firm Booking. As a result: (i) DCDC shall have no liability to Customer in the event DCDC fails to meet Customer’s proposed Delivery Date; and (ii) Customer shall pay for time committed based on Customer’s Firm Booking and the additional rescheduled time and the manufacture and distribution of hard drives necessary to deliver the Customer Content to Receive Sites.

Booking Process:

There are three options for booking transmission time reservations: Pencil Bookings, Pencil Booking Challenges, and Firm Bookings:

(a) Pencil-Bookings . Customer may obtain a right of first refusal for transmission time (a “Pencil Booking”) on a specific date by submitting to DCDC a Pencil Booking request form in the format specified by DCDC from time to time (“Pencil Booking Request Form”) for any Customer Content, or for a series of multicast or broadcast programming scheduled for the same day and time every week or every month (“Recurring Events”). Such Pencil Booking Request Form shall include the proposed Delivery Date and the date Customer agrees to deliver the Customer Content to DCDC. DCDC or its subcontractor will notify Customer in writing if it accepts such Pencil Booking within (1) business day following receipt of the complete Pencil Booking Request Form. If the reservation date requested by Customer is already subject to another DCDC customer’s Pencil Booking, Customer’s request will be treated as a “Pencil Booking Challenge” with Customer treated as the “third


party customer of DCDC” and such other DCDC customer treated as “Customer”, each as described in Paragraph (b) below. An accepted Pencil Booking will be cancelled thirty (30) days prior to the proposed Delivery Date unless sooner converted to a Firm Booking (by the completion and the submission of a Firm Booking Request Form and DCDC’s acceptance thereof) by Customer. There is no charge for making or cancelling a Pencil Booking.

(b) Pencil Booking Challenges. A “Pencil Booking Challenge” occurs when a third party customer of DCDC submits a Pencil Booking Request Form for a date for which DCDC has previously accepted a Pencil Booking Request Form from Customer. DCDC or its subcontractor will notify Customer by email when the reservation date requested by Customer is subject to a Pencil Booking Challenge. Customer shall have two (2) business days to submit a Firm Booking Request Form for the date for the transmission of Customer’s Content, or alternatively, relinquish the time slot assigned by DCDC or its subcontractor on the date that is subject to the Pencil Booking Challenge. If Customer fails to respond within two (2) business days or decides to relinquish the date and the reserved time slot previously assigned by DCDC or its subcontractor, the third party customer of DCDC issuing the Pencil Booking Challenge will be required to submit a Firm Booking Request Form to DCDC within two (2) business days. Customer, or the third party customer of DCDC submitting the Firm Booking Request Form in the event Customer relinquishes the reservation, must then prepay in full all charges associated with such Firm Booking and shall not be eligible for any refund in the event that the Firm Booking is thereafter cancelled.

(c) Firm Bookings . A “Firm Booking” is a fully-committed, non-refundable, non-challengeable transmission time reservation. Customer may request a Firm Booking by submitting to DCDC a completed Firm Booking request form in the format specified by DCDC from time to time (a “Firm Booking Request Form” and together with the Pencil Booking Request Form, the “Request Forms”). Such Firm Booking Request Form shall include the proposed Delivery Date and the date Customer agrees to deliver the Customer Content to DCDC. Within one (1) business day following the submission by Customer of a completed Firm Booking Request Form, DCDC or its subcontractor will notify Customer in writing if such Firm Booking has been accepted. A multicast or broadcast is considered a “Firm Booking” upon the submission by Customer and the acceptance by DCDC of a Firm Booking Request Form with respect thereto. A Firm Booking is a commitment by Customer to utilize the transmission time assigned by DCDC or its designee on the date designated in the Firm Booking Request Form. All Firm Bookings are subject to the Cancellation Fees set forth below. Once a multicast or broadcast has been confirmed as a Firm Booking, any change to the date of the Firm Booking shall be considered a new booking and subject to availability at that time.

(d) Cancellation Fees . In the event of a cancellation of a Firm Booking, Customer agrees to pay as a “Cancellation Fee” the amount that would have been due under Schedule 2 for the cancelled services.


SCHEDULE 2

PRICES


CONTENT TYPE FEE PER TRANSMISSION TO BOOKED THEATER

MINIMUM FEES

Theatrical Motion PicturesSingle 2D, Single 3D or 2D/3D (sent concurrently) (including up to 10 Supplemental Packages)Up to 300 GB $55.00 $7,500 per title301GB to 350 GB $68.75 $8,500 per title 351GB to 400 GB $82.50 $9,500 per title401GB to 600 $110.00 $10,500 per title

Theatrical Trailers(unlimited versions)Up to [38] GB

$5.00 N/A

Pre-Shows & AdvertisingUp to [6] GB

$55,000/month N/A

Live Streaming Event Programming 2D

$1,500/hr. $5,000.00per event

Live Streaming Event Programming 3D

$3,600/hr. $7,500.00per event

Store Forward Event Programming 2D(additional charges if > 300GB)

$55.00 $6,000.00per event

Store & Forward Event Programming 3D(additional charges if > 300GB)

$55.00 $7,500.00per event

SCHEDULE 3

SERVICE CREDITS

[TBD]


Date: [TBD] SERVICES AGREEMENT (1) DIGITAL CINEMA ... Cinema/DCDC/DCDC... · 12/06/11 draft date:...

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