Exhibit 10
LICENSE AGREEMENT FOR INTERNET TRANSMISSION
This License Agreement for Internet Transmission ("Agreement") is
entered into
as of April 21, 2009 (the "Effective Date") by and between Netflix,
Inc., a
Delaware corporation with its principal place of business at 100
Winchester
Circle, Los Gatos, CA 95032 ("Netflix") and National Lampoon, Inc.,
a California
corporation, with its principal place of business at 8228 Sunset
Boulevard, Los
Angeles, CA 90046. ("Distributor").
Recitals
Netflix is a subscription entertainment service providing its
subscribers with
access to motion pictures, television and other digital
entertainment products
in a variety of formats.
Distributor is in the business of distributing certain Titles, as
defined below.
Netflix and Distributor desire to enter into a relationship whereby
Distributor
will grant Netflix a license to distribute Titles to subscribers
within the
Territory, as defined below, all in accordance with the terms and
conditions set
forth below.
Agreement
In consideration of the mutual promises contained herein and such
other good and
valuable consideration, the parties agree as follows:
1. Definitions.
1.1. "Applications" shall mean web
applications created by developers using
Application
Programming Interfaces (commonly known as APIs) released
by Netflix,
which web applications will enable subscribers and other
users, as
applicable, to, for example, access the Netflix website; add
or remove a
movie from a Netflix "queue"; or watch, via Internet
Transmission, a trailer, Promotional Sample or Title.
1.2. "End Date" shall mean, for each
Title, the date such Title may last be
made
available for exhibition on and distribution through the
Netflix
Service, as
detailed on Schedule A attached hereto.
1.3. "Internet Transmission" shall mean
the transmission of data via
Internet
Protocol, UDP or other network protocols or architectures and
any
successor means, methods, processes or technologies now or
hereafter
devised for the transmission of digital data, including
without
limitation through use of client software contained on a
Blu-ray disc
or other optical media.
1.4. "High Definition" shall mean a
scanning line structure greater than
DVD quality
(greater than 720x480 NTSC or 720x576 PAL).
1.5. "License Fees" shall have the meaning
set forth in Section 4.1 below.
1.6. "Netflix-Enabled Device" or "NED"
shall mean any device capable of
receiving
data via Internet Transmission and which implements security
and copy
protection specifications no less protective than those
provided by
Netflix to any similarly situated provider, including
without
limitation (i) a desktop or laptop computer; (ii) an
Internet-enabled television set; (iii) an Internet-enabled set
top
box,
including a box that offers an integrated personal digital
video
recorder
(DVR); (iv) an Internet-enabled DVD and/or Blu-ray player;
(v) a game
console; (vi) a portable device; (vii) a media center
extender;
and (viii) a device with a general web browser interface.
1.7. "Netflix Service" shall mean a
subscription service that provides
subscribers
(which includes those with a free trial subscription) with
unlimited,
on-demand access to motion pictures, television and other
entertainment products in a variety of formats, including
without
limitation
High Definition, and uses various delivery mechanisms to
deliver such
content, including without limitation distribution via
Internet
Transmission. For the avoidance of doubt, the Netflix Service
shall
include either of the following distribution models: (i)
distribution
of content both in optical disc format (e.g., DVD,
Blu-ray) and
via Internet Transmission, including through
Applications, to NEDs and (ii) distribution of content solely
via
Internet
Transmission, including through Applications, to NEDs.
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1.8. "Source Material" shall mean the
source files for the Titles and
associated
trailers, artwork, promotional materials and metadata, the
delivery
specifications for which are detailed in Schedule B attached
hereto, as
such requirements may be updated from time to time by
mutual
written agreement of the parties.
1.9. "Start Date" shall mean, for each
Title, the date such Title may first
made
available for exhibition on and distribution through the
Netflix
Service, as
detailed on Schedule A attached hereto.
1.10. "Term" shall mean the period commencing on
the Effective Date and
ending on
the expiration date of the last to expire Title License
Period.
1.11. "Territory" shall mean the United States
(including without
limitation
the 50 States, the District of Columbia and Puerto Rico)
and all its
territories, possessions, commonwealths and protectorates.
1.12. "Titles" shall mean those motion pictures,
television programs and
other
digital entertainment products listed in Schedule A, as such
list may be
updated from time to time by mutual written agreement of
the
parties.
1.13. "Title License Period" shall mean, for
each Title, the period
commencing
on the applicable Start Date and expiring on the applicable
End Date
detailed on Schedule A.
2. Grant of Licenses.
2.1. Titles License. Distributor grants to
Netflix (and its authorized
third party
contractors) during the Term a limited, non-exclusive
right and
license to exhibit and distribute an unlimited quantity of
Titles (and
associated Source Material) within the Territory by way of
Internet
Transmission via the Netflix Service to NEDs. Distributor
also grants
to Netflix (and its authorized third party contractors)
during the
Term a limited, non-exclusive right and license to copy,
install,
compress, uncompress, encode, decode, encrypt, decrypt
display,
use, cache, store and transmit the Titles (and associated
Source
Material) for purposes of such approved exhibition and
distribution
as well as for limited testing and demonstration
purposes.
2.2. Marketing and Promotion.
2.2.1. Trademark License. Distributor grants to
Netflix (and its
authorized third party contractors) during the Term a
limited, non-exclusive right and license to copy, install,
display, use, cache, store, transmit, exhibit and distribute
Distributor's trademark(s) and logo(s) identified on
Schedule C (collectively, "Distributor Marks") for purposes
of exercising its rights under this Section 2.
2.2.2. Marketing; Pre-premotion. Subject to
Section 4.3, Netflix
shall have the right to, commencing thirty (30) calendar
days prior to each Title's Start Date, market and promote
the availability of such Title through the Netflix Service,
including through the display of Source Material and
Distributor Marks, in accordance with its standard
merchandising and marketing policies.
2.2.3. Promotional Samples; Promotion to
Non-Subscribers.
Distributor
grants to Netflix (and its authorized third
party contractors) during the Term a limited, non-exclusive
right and license to edit and modify the Titles to create
short promotional samples for the Titles, each no longer
than two (2) minutes in length ("Promotional Samples").
Distributor further grants to Netflix during the Term a
limited, non-exclusive right and license to (a) exhibit and
distribute, by way of Internet Transmission, including via
Applications, Source Material (excluding Titles) and
Promotional Samples to subscribers and other users for
purposes
of marketing and promoting the availability of the
Titles through the Netflix Service and (b) copy, install,
compress, uncompress, encode, decode, encrypt, decrypt,
display, use, cache, store and transmit such materials for
purposes of such approved exhibition and distribution. For
the avoidance of doubt, Netflix need not encrypt Promotional
Samples or trailers.
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2.3. Withdrawal by Netflix.
Notwithstanding anything to the contrary in
this
Agreement, Netflix shall have the right to temporarily suspend
or
permanently
withdraw any Title from the Netflix Service at any time
for any
reason.
2.4. Withdrawal by Distributor.
Distributor shall have the right to
permanently
withdraw "National Lampoon's The Legend of Awesomest
Maximus"
("LOAM") from this Agreement upon Distributor securing a
theatrical
release for LOAM within North America.
2.5. Encryption; Copy Protection. Netflix
agrees that it shall use
commercially
reasonable means to ensure that each Title delivered to
its
subscribers is, at Netflix's expense, encoded and encrypted
using
encoding and
encryption technologies that are no less protective than
those
provided by Netflix to any similarly situated distributor.
2.6. Notwithstanding anything to the
contrary herein, Netflix shall be
permitted to
offer the Netflix Service, including the Titles licensed
hereunder,
on NEDs where a Netflix Service subscriber is required to
use a third
party service provider and/or make payment to a third
party to
access the Netflix Service (e.g., pay an additional charge or
subscription
fee paid to a service provider in order to access the
Netflix
Service or a tier of or bundled service that provides access
to the
Netflix Service). By way of example only, the Netflix Service
may be
offered through a game console such as the Sony PlayStation 3
or Microsoft
Xbox, wherein access to the Netflix Service by
subscribers
through such NED requires the payment of a recurring,
material fee
to Sony Corporation of America or Microsoft Corporation
(in addition
to subscription fees billed by Netflix) for access to the
Netflix
Service or a tier of or bundled service that includes the
Netflix
Service.
2.7. In the event that Netflix acquires
the rights to distribute a Title on
the Netflix
Service through its affiliate relationship with Starz
Entertainment, LLC during such
Title's Title License Period, Netflix
shall have
the right to withdraw that Title from this Agreement upon
written
notice to Distributor. In such an event, Distributor shall
refund or
credit to Netflix, at Netflix's option and within thirty
(30)
calendar days of the effective date of such notice, a prorated
amount of
the applicable License Fee paid to Distributor, calculated
as of the
effective date of such notice.
3. License Fees.
3.1. License Fees. For each Title set
forth in Schedule A, Netflix shall
pay
Distributor the amount set forth in Schedule A (each, a
"License
Fee").
3.2. Payment Details. Netflix's payment
obligations with respect to a Title
shall arise
upon delivery and acceptance of Source Material.
Accordingly,
Distributor shall issue an invoice for one hundred
percent
(100%) of the License Fee for a Title upon the delivery and
acceptance
of the relevant Source Material pursuant to Section 4
below. Such
amounts shall be due and payable no later than sixty (60)
calendar
days from the date of invoice. All amounts cited in this
Agreement
are in, and all payments to Distributor shall be made in,
United
States Dollars.
4. Delivery.
4.1 Source Material. Distributor
shall create and deliver, at its sole
expense,
Source Material for each Title to the address provided by
Netflix no
earlier than ninety (90) calendar days and no later than
thirty (30)
calendar days prior to the applicable Start Date or such
other date
otherwise agreed to in writing by the parties.
Simultaneously with each such delivery, Distributor shall email
a
completed
version of the metadata form attached hereto as Schedule D
to Netflix
at EDproductinfo@netflix.com. Source Material shall be
loaned to
Netflix for the purpose of encoding and shall be destroyed
by Netflix
within ninety (90) calendar days of the expiration of the
applicable
Title License Period. Title to the Source Material shall at
all times
remain in Distributor.
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4.2 Specifications. All Source
Material shall be provided to Netflix in
accordance
with the specifications set forth in Schedule B. For the
avoidance of
doubt, in the event that Source Material is provided to
Netflix in
encrypted format, including for example on DVD, Netflix
shall be
permitted to decrypt such media as necessary prior to
encoding
and/or encode directly from such media. Distributor
represents,
warrants and covenants that Source Material shall be
delivered in
the highest quality and resolution available to
Distributor,
including without limitation High Definition, and that
if, during
the applicable Title License Period, a higher quality or
resolution
version of any Source Material becomes available to
Distributor,
or is made available by Distributor to any other third
parties,
Distributor shall provide that version, without cost, to
Netflix.
4.3 Acceptance. Upon Netflix's
receipt of the Source Material for a Title,
Netflix
shall have thirty (30) calendar days in which to send
Distributor
written notice of its acceptance ("Notice of Acceptance")
or rejection
("Notice of Rejection") of the Source Material for that
Title, such
acceptance or rejection to be reasonably determined by
Netflix. In
the event that Netflix displays or distributes files
created from
Source Material on or from the Netflix Service prior to
issuing a
Notice of Acceptance or a Notice of Rejection, then such
Source
Material shall automatically be deemed accepted by Netflix.
4.4 Rejection. Upon Distributor's
receipt of a Notice of Rejection, if
any,
Distributor shall, without delay and at its sole expense,
replace
the
defective Source Material. In event that Distributor is unable
to
provide an
acceptable Source Material replacement, Netflix shall not
be obligated
to pay any License Fee with respect to the relevant Title
and the
parties shall instead negotiate in good faith to replace such
Title with a
comparable film or program.
5. Representations and Warranties; Indemnification; Limitation on
Liability.
5.1. Netflix. Netflix represents, warrants
and covenants that (i) it has
the full
right, power, legal capacity and authority to enter into and
fully
perform its obligations under this Agreement; and (ii) there
are
not now any
liens, claims, encumbrances, legal proceedings, agreements
or
understandings which might conflict or interfere with, limit,
derogate
from or be inconsistent with any of Netflix's
representations, warranties or covenants contained in this
Section
5.1.
5.2. Distributor. Distributor represents,
warrants and covenants that (i)
it has the
full right, power, legal capacity and authority to enter
into and
fully perform its obligations under this Agreement; (ii)
there are
not now any liens, claims, encumbrances, legal proceedings,
agreements
or understandings with respect to any Titles (and
associated
Source Material and Promotional Samples) hereunder that
could or
would interfere with Netflix's distribution or other
exploitation
thereof or materially impact the rights granted to
Netflix
hereunder or which might conflict or interfere with, limit,
derogate
from, or be inconsistent with any of Distributor's
representations, warranties or covenants contained in this
Section
5.2; (iii)
it has and shall maintain during the Term all necessary
rights,
titles, authorizations, consents and interests, including
without
limitation from all third party rights holders for each Title,
necessary to
grant Netflix the licenses granted in this Agreement;
(iv) it has
satisfied and shall satisfy during the Term all third
party
obligations of any kind with respect to the Titles (and
associated
Source Material and Promotional Samples) and their
distribution
and exploitation in accordance with this Agreement,
including
without limitation all guild residuals and participations,
and Netflix
shall have no obligation for any such past, current or
future
charges or similar payments; (v) Netflix's distribution and
other
exploitation of the Titles (and associated Source Material and
Promotional
Samples) and Distributor Marks in accordance with this
Agreement
shall not violate or infringe any rights of any third party,
including
without limitation any third party intellectual property
rights,
contract rights, moral rights, rights of publicity, and rights
of privacy,
or defame or constitute unfair competition against such
third party;
and (vi) the Titles (and associated Source Material and
Promotional
Samples) and Netflix's distribution and other exploitation
of same in
accordance with this Agreement shall not violate any
applicable
law, rule or regulation.
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5.3. Indemnification.
5.3.1. Netflix will defend, indemnify and hold
harmless
Distributor, its directors, officers and employees from any
and all loss, damage, claim, liability or expense (including
legal fees and costs) actually incurred as a result of a
third party claim ("Claim") arising out of a breach or
alleged breach of the representations and warranties made in
Section 5.1.
5.3.2. Distributor will defend, indemnify and
hold harmless
Netflix, its directors, officers, employees, authorized
third party contractors and NED manufacturing partners from
any Claim arising out of a breach or alleged breach of the
representations and warranties made in Section 5.2.
5.3.3. Indemnification Procedure. A party seeking
indemnification
("Indemnified Party") shall promptly notify the other party
("Indemnifying Party") in writing of any Claim of which it
becomes aware. The Indemnifying Party shall control the
defense,
settlement, adjustment or compromise of any such
Claim; provided that the Indemnifying Party may not settle
any Claim on behalf of the Indemnified Party without first
obtaining the Indemnified Party's written authorization. The
Indemnified Party may employ its own counsel at its own
expense, and, at the Indemnifying Party's reasonable request
and expense, shall cooperate and assist the Indemnifying
Party with respect to the negotiation, defense or settlement
of any such Claim, but shall have no right or authority to
settle any such Claim on behalf of the Indemnifying Party
without first obtaining the Indemnifying Party's written
authorization. In the event of a settlement of any such
Claim, each party agrees not to disclose the terms of the
settlement without
first obtaining the other party's written
authorization. Any authorization sought under this Section
5.3 shall not be unreasonably delayed or withheld.
5.4 Limitation of Liability. EXCEPT
FOR EACH PARTY'S INDEMNIFICATION
OBLIGATIONS
AS SET FORTH IN SECTION 5.3, IN NO EVENT SHALL EITHER
