EXHIBIT 10.5
CONFIDENTIAL TREATMENT REQUESTED BY ACCESS INTEGRATED
TECHNOLOGIES, INC. OF CERTAIN PORTIONS OF THIS AGREEMENT IN ACCORDANCE
WITH RULE 24B-2 UNDER THE SECURITIES EXCHANGE ACT OF 1934.
DIGITAL CINEMA DEPLOYMENT AGREEMENT
THIS DIGITAL CINEMA DEPLOYMENT AGREEMENT ("AGREEMENT") is made and entered
into as of October 12, 2005 by and between Twentieth Century Fox Film
Corporation ("DISTRIBUTOR") and Christie/AIX, a Delaware corporation
("CHRISTIE/AIX").
WHEREAS, Christie/AIX is in the business of deploying and funding the
deployment of digital projection systems for theatrical presentations in the
United States and Canada.
WHEREAS, Distributor produces and distributes movies and is interested in
distributing digital versions of movies.
WHEREAS, Christie Digital Systems USA, Inc., a California corporation
("Christie"), is in the business of supplying digital projectors for use in
theatrical presentations in the United States and Canada.
WHEREAS, concurrently with the execution of this Agreement, Christie has
executed a Guaranty in favor of Distributor, to guarantee obligations of
Christie/AIX to Distributor under this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained in this Agreement, and for other good and valuable consideration, the
sufficiency of which the parties acknowledge, the parties agree as follows:
1. DEFINITIONS
(a) "AFFILIATE" means, with respect to any party, any corporation or other
entity which Controls, is Controlled by or is under common Control with such
party.
(b) "CHRISTIE" has the meaning specified in the third Whereas clause above.
(c) "CHRISTIE CHANGE IN CONTROL" means any transaction, or series of
transactions, pursuant to which the Ultimate Controlling Party of Christie
immediately prior to such transaction or series of transactions either (i)
ceases to directly or indirectly Control Christie, or (ii) is acquired by way
of merger, tender offer, takeover , stock sale, going private transaction,
assets acquisition or other reorganization.
(d) "CHRISTIE/AIX CHANGE IN CONTROL" means any transaction, or series of
transactions, pursuant to which the Ultimate Controlling Party of
Christie/AIX immediately prior to such transaction or series of transactions
either (i) ceases to directly or indirectly Control Christie/AIX, or (ii) is
acquired by way of merger, tender offer, takeover , stock sale, going private
transaction, assets acquisition or other reorganization.
(e) "CONTRACT YEAR" means a one-year period beginning on November 1st of one
year and ending on October 31st of the following year. The first "CONTRACT
YEAR" is November 1, 2005 to October 31, 2006.
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(f) "CONTROL" of a party means the power (through security ownership,
economic interest, contractual entitlement, arrangement, understanding,
relationship or any other means), direct or indirect, to determine the
policies or management of such party, whether through the power to elect,
appoint or approve, directly or indirectly, the directors, officers, managers
or trustees of such party or otherwise.
(g) "DCI" means Digital Cinema Initiatives, LLC.
(h) "DCI SPEC" means the Digital Cinema System Specification V1.0 issued July
20, 2005 by DCI.
(i) "DIGITAL SYSTEM" means collectively one or more Projection Systems, a
central storage server connecting all Projection Systems within a complex, a
theater management system, and such other system components and software as
are required to meet the standards set forth in the DCI Spec.
(j) "DIGITAL TITLE" means a digitized version of a theatrical motion picture
released by a motion picture studio.
(k) "ENDEMIC QUALITY FAILURE" means, for the calendar quarter commencing
January 1, 2007 and for each calendar quarter thereafter during the term of
this Agreement, the failure of more than *** percent (***%) of the Projection
Systems deployed as of the commencement of such calendar quarter to perform
in accordance with the DCI Spec at any time during such quarter, which
failures need not be concurrent.
(l) "ENGAGEMENT" means the period of time beginning with an opening date of a
Digital Title within a complex and ending on the closing date of that Digital
Title within that same complex.
(m) "EXHIBITOR" means the owner or operator of one or more complexes used for
the exhibition of motion pictures.
(n) "INSTALLATION DATE" means, in respect of a Digital System, the date on
which the Digital System becomes operational.
(o) "PROJECTION SYSTEM" means collectively a system deployed by Christie/AIX
consisting of a DLP Cinema 2k projector, capable of both 2-D and 3-D display,
and a digital cinema server for each screen. Each Projection System will be a
part of a Digital System.
(p) "ROLL-OUT PERIOD" means *** through ***.
(q) "SECURITY FAILURE" means the occurrence of events or circumstances which
establish that compliance with the DCI Spec is not adequate to protect
content displayed on the Digital Systems from unauthorized use or
distribution.
(r) "TERRITORY" means the United States, including its territories and
possessions, and Canada.
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(s) "ULTIMATE CONTROLLING PARTY" means, in respect of Christie and
Christie/AIX, the highest tier publicly traded corporation which as of the
date of this Agreement directly or indirectly Controls Christie or
Christie/AIX, respectively.
2. TERM. The term of this Agreement will commence on October 12, 2005
("EFFECTIVE DATE") and terminate on October 31, 2020 (the "TERM").
3. DEPLOYMENT.
(a) Christie/AIX will begin deployment of the Digital Systems immediately
upon reaching written agreement concerning the theatrical release of Digital
Titles with (i) Distributor and at least two of Buena Vista Pictures
Distribution, Paramount Pictures Corporation, Sony Pictures Entertainment
Inc., Universal City Studios LLLP, and Warner Bros. Entertainment Inc. (each
a "MAJOR STUDIO") or, alternatively, with Distributor, one Major Studio and
both DreamWorks SKG and New Line Cinemas; and (ii) at least one Exhibitor.
Notwithstanding the foregoing, Christie/AIX reserves the right to commence
deployment at any time prior to entering into such written agreements.
Subject to Section 29, Christie/AIX will retain the services of Christie to
install the Digital Systems. If for any reason Christie/AIX has not deployed
a minimum of *** fully operational Digital Systems by ***, Christie/AIX may
terminate this Agreement with no further obligation to Distributor.
(b) If for any reason Christie/AIX does not meet either of the following
minimum requirements, Distributor may terminate this Agreement with no
further obligation to Christie/AIX:
(i) Deploy a minimum of *** fully operational Projection Systems by ***;
or
(ii) Deploy fully operational Projection Systems in greater than ***% of
the screens in any complex where any Projection System is deployed by
Christie/AIX.
(c) If on the first day of any Contract Year other than the first Contract
Year fewer than *** fully operational Projection Systems are then deployed by
Christie/AXI, Distributor may terminate this Agreement with no further
obligation to Christie/AIX;
(d) If for any reason Christie/AIX does not meet either of the following
minimum requirements, other than by reason of failing to obtain debt
financing on reasonable terms, Distributor may terminate this Agreement with
no further obligation to Christie/AIX:
(i) Deploy a minimum of *** fully operational Projection Systems no later
than ***; or
(ii) Deploy a minimum of *** fully operational Projection Systems no later
than the end of the Roll-Out Period.
(e) Christie/AIX will require each Exhibitor to which Digital Systems are
deployed to agree, in substance, to:
(i) not do anything which would render Digital Systems non-compliant with,
or prevent Digital Systems from being non-compliant with, the DCI Spec
during the term of this Agreement;
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(ii) maintain during the term of this Agreement an adequate theater staff
properly trained in the use of Digital Systems;
(iii) maintain Digital Systems in good order and repair during the term of
this Agreement; and
(iv) for so long as this Agreement is in effect, to comply with the
following (in whatever wording the following concept may be expressed):
So long as greater than *** percent (**%) of the screens in any complex
are equipped with Projection Systems, then, if a theatrical motion picture
which an Exhibitor desires to license from Distributor for exhibition in
such complex is available from Distributor in both a Digital Title version
and a film print version, Exhibitor will license and exhibit the Digital
Title version rather than the film print version on a Projection System in
such complex provided that there is a screen equipped with a Projection
System that is open to be booked with the Digital Title version commencing
on the opening date of that theatrical motion picture.
(f) Nothing in this Agreement shall apply to complexes located or Digital
Titles exhibited outside of the Territory.
(g) Christie/AIX shall only deploy Projection Systems to complexes existing
as of the date of this Agreement for auditoriums in such complexes existing
as of the date of this Agreement, except that *** percent (***%) of all fully
operational Projection Systems which are deployed pursuant to this Agreement
shall not be subject to restriction under this Section 3(g).
4. INTENTIONALLY OMITTED
5. DCI SPEC COMPLIANCE. When the technology necessary to make Digital Systems
compliant with the DCI Spec becomes available, Christie/AIX will (a) thereafter
deploy only Digital Systems which are compliant with the DCI Spec and (b) within
four (4) months after such availability upgrade all Digital Systems previously
deployed to bring such Digital Systems into compliance with the DCI Spec, at no
incremental cost to Distributor, provided that by March 31, 2006 all Digital
Systems then deployed will be compliant with the DCI Spec. All Digital Systems
deployed by Christie/AIX will, from the time of first deployment, have JPEG2000
capability and the capability of receiving digital content in any form expressly
permitted by the DCI Spec. Christie/AIX represents and warrants that it will
require all Exhibitors utilizing Digital Systems to permit Distributor or its
authorized representative to verify compliance of such Digital Systems with the
DCI Spec and to observe installation methods and utilization of Digital Systems,
and that it will require all Exhibitors to cooperate fully with on-site
Distributor inspections.
6. CHANGES TO THE DCI SPEC. In the event the DCI Spec is amended or modified in
any material respect, the parties will, at the request of either party, meet and
confer and negotiate in good faith on matters of interest or concern to either
party relating to any such amendment or modification, including, but not limited
to, whether upgrades will be made to the Digital Systems deployed hereunder so
that they comply with any such amendment or modification to the DCI Spec and
whether and/or the extent to which either party will bear any or all of the cost
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of any such upgrades required for the Digital Systems deployed hereunder to
comply with any such amendment or modification to the DCI Spec.
7. DISTRIBUTOR'S OBLIGATION REGARDING DIGITAL RELEASES.
(a) Notwithstanding any other provision of this Agreement, Christie/AIX
acknowledges that the decision of whether to license any particular movie to
any particular complex lies entirely within Distributor's unilateral
discretion. Christie/AIX further acknowledges that for each of Distributor's
movies, Distributor will select the distribution pattern and select the
complex(es) that Distributor unilaterally believes in its business judgment
to be appropriate for its movie, considering all relevant circumstances.
Christie/AIX acknowledges and accepts that Distributor's licensing decisions
will not be based solely upon whether an Exhibitor has installed any Christie
Digital Cinema Projection System.
(b) If Distributor or an Affiliate of Distributor whose films are released by
Distributor agrees with an Exhibitor to license a motion picture to a screen
at which a Digital System is deployed and fully operational, Distributor will
make the motion picture available, subject to ATTACHMENT B, as a Digital
Title; provided, however, that:
(i) Distributor has no obligation to make available as a Digital Title any
motion picture produced or released by Fox Searchlight Pictures, Inc.;
(ii) During any time Christie/AIX has deployed in total *** or fewer fully
operational Projection Systems, Distributor has no obligation to make any
motion picture available as a Digital Title, and the provisions of
ATTACHMENT B will not apply;
(iii) In any Contract Year in which the number of fully operational
Projection Systems deployed by Christie/AIX under this Agreement as of the
first day of such Contract Year does not exceed *** fully operational
Projection Systems, then the provisions of Attachment B will not apply and
Distributor will make available as Digital Titles in that Contract Year a
minimum number of Digital Titles equal to ten (10) multiplied by a
fraction, the numerator of which is the number of full calendar months
remaining in such Contract Year at the time *** Projection Systems have
been deployed, and the denominator of which is *** (***), except that: (A)
if fewer than two (2) months remain in such Contract Year at the time that
*** Projection Systems have been deployed and are fully operational,
Distributor will have no obligation to make any motion pictures available
as Digital Titles for the remainder of such Contract Year and (B) if
Christie/AIX deploys at least *** fully operational Projection Systems by
March 1, 2006, Distributor will make available at least *** (***) Digital
Titles in the first Contract Year and, in each case, the provisions of
ATTACHMENT B will not apply.
(iv) In any Contract Year in which the number of fully operational
Projection Systems deployed by Christie/AIX under this Agreement as of the
first day of such Contract Year exceeds *** fully operational Projection
Systems but does not exceed *** fully operational Projection Systems, then
Distributor will make available at least *** (***) Digital Titles in such
Contract Year and the provisions of ATTACHMENT B will not apply.
(v) Distributor is permitted to provide physical film prints for showing
on a screen to which a Digital Title has been licensed by Distributor but
only (A) where such physical film print is provided in advance as a
precautionary measure for use solely in the event the Digital System
associated with such screen malfunctions, or (B) where such physical film
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print is provided in response to a Digital System malfunction which has
prevented any full showing of the Digital Title on such screen.
8. DISTRIBUTOR'S OBLIGATION REGARDING VIRTUAL PRINT FEES AND WATERMARKING
LICENSE FEES.
(a) Distributor or its Affiliates will pay to Christie/AIX one virtual print
fee ("VPF") in the applicable amount set forth on ATTACHMENT C for each
Engagement of a Digital Title on a Projection System made by Distributor or
any of those Affiliates for which an election has been made, on a picture by
picture basis, pursuant to the provisions of section 9, regardless of the
number of exhibitions of such Digital Title during the time of such
Engagement. Distributor will not pay a VPF for:
(i) trailers;
(ii) material of less than 15 minutes duration which Distributor programs
and licenses to be exhibited only with the Digital Title (e.g., short
subjects, cartoons);
(iii) moveovers, i.e., presentation of a Digital Title on a screen other
than where it opened at the beginning of the Engagement, but within the
same complex; or presentations on a screen not actually booked by
Distributor;
(iv) a screen where the Digital System malfunctions (by reason of system
defects and not due to operator error or power surges) preventing two (2)
or more consecutive exhibitions of a Digital Title, except that on up to
ten (10) occasions aggregated Territory-wide per Contract Year,
Christie/AIX may charge a VPF where only two (2) consecutive exhibitions
are missed;
(v) exhibition on a Digital System more than 10 years after the
Installation Date of that Digital System;
(vi) studio screenings, including Exhibitor trade screenings, studio
premieres and sneak preview screenings; or
(vii) any private or governmental non-commercial screenings for which no
admission is charged.
(b) If Christie/AIX licenses watermarking technology in order to have Digital
Systems comply with the DCI Spec, Distributor will negotiate with
Christie/AIX to determine what additional fee should be paid by Distributor
for the watermarking technology, provided however that (i) the fee will be
based upon Christie/AIX's actual direct out-of-pocket costs pro-rated over
all of Christie/AIX's customers; (ii) the maximum fee will be an increase of
$*** per VPF; and (iii) the cost to Distributor to recover the watermark
identification shall not exceed any comparable DCI compliant watermarking
systems.
9. DISTRIBUTOR'S AFFILIATES. This Agreement applies to all movies released by
Distributor regardless of whether the films are produced by Distributor or its
Affiliates with the exception of movies produced or released by Fox Searchlight.
Distributor may, at its election, include in this Agreement, on a picture by
picture basis, any other motion picture in which Distributor or any of its
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Affiliates has distribution rights or a financial interest. Christie/AIX will
calculate and charge VPFs in the manner set forth in Attachment C based upon all
Digital Titles which Distributor releases combined with the Digital Titles for
those Affiliates which Distributor has elected to have included in this
Agreement.
10. QUALITY, RELIABILITY AND PERFORMANCE. Christie/AIX or its permitted
assignees will retain title to and will be responsible for maintaining and
servicing the Digital Systems for the Term. Christie/AIX or its permitted
assignees, agents, representatives or subcontractors will:
(a) maintain an adequate staff of technicians to provide technical support
via telephone to Exhibitors utilizing the Digital Systems. Such telephone
technical support will be available to each Exhibitor from 5:00 a.m. Pacific
Time to 2:00 a.m. Pacific time the following morning, seven days per week;
(b) provide a 2-hour on-site response time to complex locations in the United
States (except that on any ten (10) occasions aggregated Territory-wide in
any Contract Year response time may be within 4 hours), and on-site response
time as promptly as possible in Canada, to provide technical assistance,
repairs and maintenance for Digital Systems;
(c) maintain the highest levels of quality and reliability in the design,
manufacture, deployment, performance and support of its Digital Systems;
(d) perform all services, including delivery, installation, and maintenance,
in a first class manner, and comply with minimum standards of quality and
security which Distributor and Christie/AIX agree upon from time to time; and
(e) perform all services with fully trained and technically qualified
personnel. Christie/AIX will change and improve its services whenever
necessary to meet industry standards set by the DCI Spec and to maintain its
position as a leader in the digital cinema industry.
11. INVOICING, RECORD KEEPING AND AUDITS.
(a) Christie/AIX will issue one invoice to Distributor per month for VPFs, in
the month following the month in which the payment obligation for the VPFs
accrues. Distributor will pay invoices net forty-five (45) days from the date
of the invoice. Distributor will pay Christie/AIX only if the invoices are
substantiated to Distributor's reasonable satisfaction. Distributor reserves
the right to demand and receive explanation and further supporting
documentation for any invoice before payment.
(b) During the Roll-Out Period, Christie/AIX will provide to Distributor
monthly written reports showing:
(i) all complex locations at which Digital Systems were installed during
the prior month;
(ii) all complex locations at which Digital Systems became fully
operational during the prior month;
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(iii) the number of screens, by complex location, for which Projection
Systems were installed during the prior month, and the identifying screen
number or location of each such screen within the complex where such
screen is located;
(iv) the number of screens, by complex location, for which Projection
Systems became fully operational during the prior month, and the
identifying screen number or location of each such screen within the
complex where such screen is located;
(v) the nature of all upgrades made by Christie/AIX or its subcontractors
to Digital Systems during the prior month, the complex location of each
such upgraded Digital System, the number of screens, by complex location,
affected by such upgrades, and the identifying screen number or location
of each such screen within the complex where such screen is located;
(vi) the new location, by complex location and by identifying screen
number or location within such complex, to which any installed Projection
System is relocated during the prior month; and
(vii) all Projection Systems, by complex location, which have been removed
from service during the prior month, and the identifying screen number or
location within the complex of the screen for which such Projection System
was removed from service.
(c) Upon the installation of Digital Systems, Christie/AIX will promptly
furnish to Distributor certification by Christie (or the appropriate
subcontractor if other than Christie) that such Digital Systems are in
compliance with the requirements of Section 5.
(d) After the Roll-Out Period, Christie/AIX will provide to Distributor
monthly written reports showing:
(i) the nature of all upgrades made by Christie/AIX or its subcontractors
to Digital Systems during the prior month, the complex location of each
such upgraded Digital System, the number of screens, by complex location,
affected by such upgrades, and the identifying screen number or location
of each such screen within the complex where such screen is located;
(ii) the new location, by complex location and by identifying screen
number or location within such complex, to which any installed Projection
System is relocated during the prior month; and
(iii) all Projection Systems, by complex location, which have been removed
from service during the prior month, and the identifying screen number or
location within the complex of the screen for which such Projection System
was removed from service.
(e) Christie/AIX will provide to Distributor or Distributor's designee for
security or key management the unique server coding information for each
Projection System required for use in key management.
(f) At Distributor's written request, Christie/AIX will, at the next service
call made by Christie/AIX or its subcontractors to any Digital System
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designated by Distributor in such written request, provide such information
as Distributor requests with respect to the compliance of such Digital System
with the DCI Spec.
(g) Christie/AIX will make available to Distributor all reports of all
exhibitions of Digital Titles on Digital Systems. Christie/AIX will, for at
least four (4) years from the date of invoice, keep records of all
information on which invoices to Distributor are based and records of rates
charged to other customers for which Christie/AIX provided the same or
similar services.
(h) Distributor will regularly report to Christie/AIX locations and dates of
all bookings of Digital Titles by Distributor to such locations. Distributor
will, for at least four (4) years, keep records of all bookings of Digital
Titles, and Christie/AIX, at its sole expense, will have the right to audit
such records, during normal business hours and upon at least 15 days prior
written notice, solely for the purpose of verifying amounts payable by
Distributor to Christie/AIX.
(i) Distributor, at its sole expense, will have the right to audit, during
normal business hours and upon reasonable advance notice, such records for
the purpose of verifying Christie/AIX and Exhibitor obligations to
Distributor, and for the purpose of verifying Christie/AIX's compliance with
its obligations under this Agreement, including but not limited to the
provisions of Sections 17 and 22. Distributor will bear the cost and expense
of such audit unless a material discrepancy is found, in which case the cost
of the audit will be borne by Christie/AIX. A discrepancy is material if it
involves an overpayment of 5% or more.
12. LIMITATIONS ON LIABILITY.
(a) Limitations.
(i) Except as provided in Section 12(a)(iii) below, 19, 24 or 27,
Distributor's only remedy for Christie/AIX's breach of section 3 or 10 of
this Agreement is to terminate this Agreement.
(ii) Without limiting the provisions of Section 12(a)(i), 19, 24 or 27,
and except as provided in Section 12(a)(iii) below, Christie/AIX shall
not, provided that Christie/AIX is in compliance with the requirements of
Section 5, have any liability to Distributor for any losses arising out of
or relating to the quality or reliability of Digital Systems or any
breaches or breakdowns of security.
(iii) If a Digital System malfunctions (by reason of system defects and
not due to operator error or power surges), Christie/AIX's only liability
for the missed exhibition(s) (other than as provided in Sections 19, 24 or
27) will be to reimburse Distributor's out-of-pocket costs (excluding only
the actual print cost) up to a maximum amount of $*** per malfunction,
incurred to substitute a 35mm print at a screen where exhibition of a
Digital Title would be delayed more than 2 hours due to such malfunction;
provided however, that on up to ten (10) occasions aggregated
Territory-wide per Contract Year such reimbursement will be waived where
no more than two (2) consecutive exhibitions are missed.
(b) Nothing contained in this Agreement limits the liability of Christie/AIX
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(i) for its willful or negligent acts; or
(ii) arising out of any personal injury, death or property damage
attributable to manufacturing defects in the Digital Systems or to any
installation, maintenance or support services provided with respect to
Digital Systems.
(c) Nothing contained in this Section 12 limits the liability of Christie/AIX
in respect of its indemnification obligations under Section 24.
13. EXCLUDED COSTS. Distributor is responsible for costs of digital print
content preparation and distribution, including any and all costs relating to
producing, encoding, encrypting, packaging, watermarking (other than
watermarking which is part of the DCI Spec), marketing and delivering Digital
Titles. Distributor is also responsible for costs of key generation, delivery
and management. Distributor will not be responsible for payment to Christie/AIX
of any cost items arising out of or in connection with the deployment of Digital
Systems, including without limitation installation, testing, training, and other
on-site costs, all of which, as between Distributor and Christie/AIX, are
Christie/AIX expenses
14. PROGRAM EXTENSION. The provisions of this Agreement apply up to a maximum of
4000 Projection Systems deployed by Christie/AIX during the Roll-Out Period. The
provisions of this Agreement will not apply or be extended to other deployments
of Projection Systems during or after the Roll-Out Period, other than as
expressly provided for by separate written agreement of Christie/AIX and
Distributor. Neither Christie/AIX nor Distributor will be obligated to so extend
the program contemplated by this Agreement.
15. NON-EXCLUSIVITY / NON-INTERFERENCE. The program contemplated by this
Agreement is non-exclusive and each party is free at all times to make
agreements with others concerning digital cinema. Christie/AIX agrees that time
is of the essence in performing its obligations under this Agreement.
Christie/AIX may not enter into undertakings with third parties which would
interfere with the performance of its obligations under this Agreement.
16. PRESS RELEASE/NO USE OF FOX NAME.
(a) Except as required under applicable law, neither of the parties may
disclose the content of this Agreement to any third party other than an
Affiliate (and any disclosure to an Affiliate will be on a strictly
confidential basis), or make any public statement or announcement regarding
this Agreement or the content hereof, without the prior written approval of
the other party. The parties shall negotiate in good faith a mutually
satisfactory press release regarding this Agreement.
(b) By the operation of this Agreement, Christie/AIX does not acquire any
right to use, and shall not use, the name "Fox" or any trademarks, trade
names or intellectual property of Distributor or its Affiliates in
advertising, publicity or promotion, to express or to imply endorsement of
products or services, or in any other manner whatsoever without the prior
written approval of Distributor.
17. MOST FAVORABLE TERMS.
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(a) AGGREGATE TERMS. If Christie/AIX or its Affiliates provide a comparable
program to any other motion picture distributor at rates that, net of all
consideration, are lower than those charged to Distributor under this
Agreement, then it will reduce the rate charged to Distributor to the lower
rate, effective as of the date Christie/AIX or its Affiliates commenced
charging the lower rate, or afforded other consideration, to the other motion
picture distributor. Under this Section 17, "CONSIDERATION" means anything of
value, however denominated, afforded by Christie/AIX or its Affiliates to
motion picture distributors including, but not limited to, all incentives,
credits, discounts, up-front payments, loans, free services, rebates and
adjustments.
(b) LINE ITEMS. If Christie/AIX or its Affiliates provide a comparable
program to another motion picture distributor for which any separate line
item is at a rate lower than the rate charged to Distributor under this
Agreement for such line item, then it will notify Distributor in writing of
the entire pricing schedule it is providing to the other motion picture
distributor. Distributor will have the option, exercisable in its sole
discretion within 30 days of receipt of the notice, to substitute into this
Agreement the entire pricing schedule utilized for the other motion picture
distributor.
(c) CONTRACT TERMS. No term of this Agreement shall be less favorable to
Distributor in any material respect as compared to any other agreement
entered into between Christie/AIX and any other motion picture distributor
which relates to the same general subject matter as this Agreement.
18. INTENTIONALLY OMITTED
19. PARTIAL OR COMPLETE TERMINATION FOR QUALITY/RELIABILITY FAILURES.
(a) In the event that (i) within any rolling twelve (12) month period a
Projection System malfunctions on *** (***) or more occasions by reason of
system defects (and not due to operator error or power surges) resulting in
missed exhibitions, whether or not cured, or (ii) a Projection System
malfunctions by reason of a system defect (and not due to operator error or
power surges) resulting in *** (***) or more consecutive missed exhibitions
and is not restored to working order within *** (***) days after the
occurrence of the malfunction, then Distributor shall have the right to
terminate this Agreement solely as to the Projection System involved.
(b) In the event an Endemic Quality Failure occurs, and such Endemic Quality
Failure is not cured within *** (***) days after notice thereof is given by
Distributor to Christie/AIX, Distributor shall have the right to terminate
this Agreement. Christie/AIX will notify Distributor of any Endemic Quality
Failure of which it becomes aware.
20. TERMINATION.
(a) In addition to the termination rights set forth in other provisions of
this Agreement, Distributor may immediately terminate this Agreement, in
whole or in part, upon written notice to Christie/AIX if:
(i) there is any violation of the confidentiality or security provisions
of Sections 21 and 22, respectively;
--------------------------------------------------------------------------------
*** CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE OMISSIONS.
11
(ii) Christie/AIX ceases to support the program contemplated by this
Agreement;
(iii) Christie/AIX makes any assignment for the benefit of creditors or
files a petition in bankruptcy or is adjudged bankrupt or becomes
insolvent or is placed in the hands of a receiver or if any of the
equivalent of any of the foregoing proceedings or acts referred to in this
clause, though known or designated by some other name or term occurs;
(iv) Christie/AIX breaches any other material term or provision of this
Agreement and fails to cure such breach within 45 days after being
notified of such breach, so long as Christie/AIX commences immediately and
diligently upon notice to remedy such breach;
(v) there is a Christie/AIX Change of Control or a Christie Change of
Control without the prior written consent of Distributor, which consent
will not be unreasonably withheld; or
(vi) Christie/AIX assigns this Agreement in violation of Section 26.
(b) Christie/AIX may terminate this Agreement, in whole or in part, upon
written notice to Distributor if Distributor breaches any material term or
provision of this Agreement and fails to cure such breach within 45 days
after being notified of such breach, so long as Distributor commences
immediately and diligently upon notice to remedy such breach.
21. CONFIDENTIAL INFORMATION. Distributor and Christie/AIX agree to keep
confidential this Agreement and all its provisions, along with any and all
information furnished to it by the other party or the other party's Affiliates,
representatives or independent public accountants in connection with this
Agreement, except to the extent (i) any such information is or becomes generally
available to the public other than as a result of disclosure by Distributor or
Christie/AIX or their respective Affiliates; (ii) any such information is
required to be disclosed by a court of competent jurisdiction or governmental
agency pursuant to subpoena or similar power; or (iii) any such information was
or becomes available to Distributor or Christie/AIX or their respective
Affiliates on a non-confidential basis and from a source (other than a party to
this Agreement or any advisor or Affiliate of such party) that is not bound by a
confidentiality agreement, and Distributor and Christie/AIX will instruct their
respective Affiliates, officers, employees and other representatives having
access to such information of such obligation of confidentiality. Distributor
agrees that auditors engaged by any other motion picture distributor conducting
a most favored nations audit of Christie/AIX shall have access to this Agreement
to the same extent as Distributor's auditors have access to agreements between
Christie/AIX and other motion picture distributors pursuant to the provisions of
Section 11, provided that such auditors are bound by the foregoing
confidentiality obligations. The foregoing obligations will survive the
termination or cancellation or rescission of this Agreement and the same will
not relieve the parties of their obligations regarding confidentiality.
22. SECURITY PROCEDURES.
(a) Christie/AIX represents and warrants that it will implement and maintain
security procedures, to safeguard all Digital Titles, including but not
limited to during transport of any kind by or on behalf of Christie/AIX, from
damage and loss due to any cause, including but not limited to conversion,
misuse, destruction, loss, theft, loan, gift, misdelivery, or other
12
misappropriation, and that the security procedures it maintains, must be
equivalent in all respects to the highest standards prevailing in the
industry and agrees that the same will continue to be true during the Term.
Christie/AIX will provide Distributor with descriptive and verifying
documentation of its security procedures and will immediately notify
Distributor in writing if there is a breach or alleged breach of the security
procedures.
(b) Christie/AIX grants Distributor the right to periodic inspection of
Christie/AIX's security procedures, and promises that it will cooperate with
Distributor to the fullest extent possible in such periodic inspections and
resultant recommendations.
23. INSURANCE.
(a) Christie/AIX will maintain during the term of this Agreement:
(i) Commercial General Liability Insurance including contractual and
products/completed operations, with minimum limits of $10,000,000 on a per
occurrence basis, and Automobile Liability coverage with minimum combined
single limits of $10,000,000, protecting Christie/AIX and Distributor from
claims for personal or bodily injury (including death) and property damage
which may arise from or in connection with the performance of
Christie/AIX's obligations under this Agreement or from or out of any
wrongful or negligent act or omission of Christie/AIX, its Affiliates, and
their respective officers, directors, agents, contractors or employees;
(ii) Errors and Omissions Insurance on a claims made basis with minimum
limits of $2,000,000 per claim during the Roll-Out Period and $5,000,000
per claim after the Roll-Out Period;
(iii) Workers' Compensation Insurance as required by applicable law and
Employer's Liability Insurance with minimum limits of $1,000,000 per
occurrence.
(b) All such insurance required in this Section 23 must be evidenced on
standard industry forms and must provide that the coverage may not be reduced
or canceled unless thirty (30) days unrestricted prior written notice is
furnished to Distributor. All insurance must be primary and not contributory
with regard to any other available insurance to Distributor. All insurance
must be written by companies with a BEST Guide rating of B+ VII or better.
Christie/AIX must furnish certificates of insurance (or copies of policies,
if required by Distributor) to Distributor before commencing performance
under this Agreement, and such policies must include Distributor and its
Affiliates as "additional insureds" and contain a waiver of subrogation. (The
"additional insured" requirement applies to all coverages except Workers'
Compensation and Employers Liability. The waiver of subrogation applies to
all coverages.) Distributor's payment obligations under this Agreement are
contingent upon receipt of certificates of insurance which comply with the
above. Waiver of this requirement for a payment or several payments does not
constitute waiver of this requirement for any other payment.
24. INDEMNIFICATION.
(a) Each party (the "INDEMNIFYING PARTY") will, at its sole expense, defend,
indemnify and hold harmless the other party and its Affiliates, and the
13
officers, directors, agents, employees and assigns of each (collectively, the
"INDEMNIFIED Parties"), from and against any and all claims, demands, suits,
judgments, losses or expenses of any nature whatsoever (including reasonable
attorneys' fees expended in actions for claims under this Agreement or in
pursuing any rights granted under this Agreement against the Indemnifying
Party) arising directly or indirectly from or out of:
(i) any wrongful or negligent act, error or omission of the Indemnifying
Party, its officers, directors, agents, contractors, or employees;
(ii) any occupational injury or illness sustained by an employee or agent
of the Indemnifying Party in furtherance of the Indemnifying Party's
performance under this Agreement, to the extent benefits pursuant to
applicable Workers' Compensation laws are claimed against or held to be
payable by any Indemnified Party;
(iii) any failure of the Indemnifying Party to perform its obligations
under this Agreement in accordance with the highest generally accepted
professional standards;
(iv) the Indemnifying Party's violation of the rights of any third party
(other than intellectual property rights as provided for in paragraphs (b)
and (c) below); and
(v) any other material breach of the Indemnifying Party's obligations,
representations and warranties as set forth in this Agreement.
(b) Christie/AIX will, at its sole expense, defend, indemnify and hold
harmless Distributor, and the Indemnified Parties of Distributor, from and
against any and all claims, demands, suits, judgments, losses or expenses of
any nature whatsoever (including reasonable attorneys' fees) arising out of
(i) the actual or alleged infringement of Digital Systems on any patent,
trademark, trade name, designs, copyright or other intellectual property
rights of any third party or (ii) the manufacture, deployment, operation or
malfunction of any Digital System deployed hereunder; provided, however,
Christie/AIX shall have no obligation or liability under this paragraph (b)
with respect to any actual or alleged infringement of any Digital Title
supplied by Distributor or its Affiliates or other content supplied by
Distributor or its Affiliates shown on Digital Systems, on any patent,
trademark, copyright or other intellectual property rights of any third
party;
(c) Distributor will, at its sole expense, defend, indemnify and hold
harmless Christie/AIX, and the Indemnified Parties of Christie/AIX, from and
against any and all claims, demands, suits, judgments, losses or expenses
arising out of the actual or alleged infringement of any Digital Title
supplied by Distributor or its Affiliates or other content supplied by
Distributor or its Affiliates shown on Digital Systems, on any patent,
trademark, copyright or other intellectual property rights of any third
party;
(d) The Indemnifying Party may not, without the Indemnified Party's written
consent, settle any Claim if such settlement arises from or is part of any
criminal action, suit or proceeding or contains a stipulation to or admission
or acknowledgment of any wrongdoing (whether in contract, tort or otherwise)
on the part of the Indemnified Party.
(e) Notwithstanding the foregoing, the Indemnified Parties may, in their
absolute discretion, employ attorneys of their own choice and institute or
14
defend any claim, action or proceeding and take other appropriate steps to
protect all rights, title and interest in and to any trademarks, trade names,
designs, or other intellectual property or other materials or property
provided to the Indemnifying Party by the Indemnified Party under this
Agreement, and in connection therewith, settle, compromise, or in any manner
dispose of any such claim, action or proceeding and satisfy any judgment that
may be rendered in any manner, as the Indemnified Party may in its sole
discretion may determine.
(f) The indemnities contained herein are not limited by the insurance
requirements set forth in Section 23. The provisions of this Section 24 will
survive the expiration or earlier termination of this Agreement.
25. WARRANTIES.
(a) Distributor represents and warrants to Christie/AIX that Distributor has
the full right, power and authority to enter into and perform this Agreement.
(b) Christie/AIX represents and warrants to Distributor and its Affiliates
(collectively, the "COMPANIES") that Christie/AIX has the full right, power
and authority to enter into and perform this Agreement; and that Christie/AIX
will comply with all applicable Federal, state and local laws including
licensing and permit requirements.
(c) Christie/AIX agrees, represents and warrants that: (i) the media on which
any software that is embedded or otherwise utilized within the Digital
Systems will not contain any computer instructions whose purpose is to
disrupt, damage or interfere with Distributor's or its Affiliates' use of any
Digital Title or any of their data, programs or computer or
telecommunications facilities for their commercial purposes; and (ii) unless
expressly authorized in writing by Distributor, the software will not contain
any key, node lock, time-out, logic bomb or other function, implemented by
any means, which may restrict Distributor's or its Affiliates' use of or
access to any Digital Title, programs, data or equipment. Nothing contained
in this paragraph (c) restricts the monitoring of Digital System performance
and operation for maintenance and support purposes.
26. ASSIGNMENT. This Agreement is not assignable by Christie/AIX, directly or
indirectly, by operation of law or otherwise, and whether by way of merger,
consolidation, reorganization, sale of assets or otherwise, without obtaining
the prior written consent of Distributor, which may be granted or withheld in
Distributor's absolute discretion, and any such attempted assignment without
obtaining such prior written consent will be void. No assignment will relieve
the assignor from its obligations under this Agreement. Notwithstanding the
foregoing, Christie/AIX may assign this Agreement to a bankruptcy remote vehicle
("BRV") established in connection with the financing of the acquisition of
Digital Systems for deployment as contemplated by this Agreement, and, in
connection with any such financing, Christie/AIX or any such BRV may grant
security interests in or collaterally assign this Agreement in favor of any bank
or insurance company which is directly or indirectly publicly held and whose
primary business is finance or insurance or any collateral agent for any such
banks or insurance companies (the "FINANCING PARTY"); provided, however, that
any such assignment will not relieve the assignor from its obligations under
this Agreement. Neither the BRV or the Financing Party may be affiliated with an
Exhibitor, distributor or producer of theatrical motion pictures.
27. FORCE MAJEURE.
15
(a) If any loss or damage of any kind occurs by reason of any act or omission
of either party due to, or if either party is substantially delayed in, or
prevented from the performance of any of the covenants (other than the payment
of money) on its part to be performed pursuant to this Agreement on account of,
any cause beyond its control, including but not limited to acts of God, the
elements, the public enemy, strikes, walk-outs, fire, failure of transportation
agencies, Security Failures, inability to obtain, or the failure of others to
deliver, or the delay of others in delivering, raw stock or other necessary
material, machinery or equipment, to the extent such party uses reasonable
efforts and due diligence to recover and resume performance, it shall be excused
and the period of such delay shall be disregarded in calculating the time of its
performance and no claim, offset or cause of action shall lie against any party
at any time on account thereof.
(b) Without limiting the generality of the foregoing, upon written notice by
Distributor to Christie/AIX that a Security Failure has occurred and is
continuing, the parties shall promptly meet and confer in good faith to discuss
an appropriate solution to remedy such Security Failure and shall use reasonable
commercial efforts to reach a reasonable remedy acceptable to both parties. If
within one hundred twenty (120) days after such notice the parties are unable to
agree on an appropriate remedy for such Security Failure, or if within one
hundred eighty (180) days after such notice Christie/AIX has not implemented a
mutually agreeable remedy to such Security Failure, Distributor shall have the
right to terminate this Agreement by written notice to Christie/AIX.
28. RELATIONSHIP BETWEEN THE PARTIES. The parties expressly agree that the
relationship between them is that of two principals dealing with each other as
independent contractors. Accordingly, nothing contained in this Agreement nor
activities undertaken by the parties pursuant to this Agreement or the program
contemplated by this Agreement will be deemed to create a joint venture,
partnership, employment or agency relationship between Christie/AIX and
Distributor or Christie/AIX and the Companies. Further, Christie/AIX is solely
responsible for the payment of all Federal, state and local income taxes, social
security taxes, Federal and state unemployment insurance and similar taxes and
all other assessments, contributions, dues or sums payable as a result of or in
connection with the performance of this Agreement by Christie/AIX and
Christie/AIX will sign and file all related returns, forms and certificates
(including I-9) with respect to any of the foregoing. Christie/AIX has no
authority to bind or contract on behalf of Distributor or the Companies and
shall not hold itself out to any third party as having any such authority.
Christie/AIX is not entitled to participate in, or to receive any benefits from,
any of the Companies' benefit or similar programs, specifically including, but
not limited to, coverage under the Companies' worker's compensation program. The
Companies have no obligation whatsoever to compensate Christie/AIX on account of
any damages or injuries which Christie/AIX may sustain as a result, or in the
course, of Christie/AIX's performance under this Agreement.
29. SUBCONTRACTORS. If Christie/AIX uses the services of any subcontractors
("SUBCONTRACTORS") to perform services for Christie/AIX in conjunction with its
obligations under this Agreement, Christie/AIX warrants and represents that it
will: (i) identify in advance to Distributor who it intends to use; (ii) allow
Distributor to approve Christie/AIX's choice prior to Christie/AIX's engaging
the services, which approval will not be unreasonably withheld; and (iii)
provide Subcontractors with written instructions on security which require the
Subcontractor to meet all security measures imposed by Distributor on
Christie/AIX. Christie/AIX will remain, in all respects, directly and primarily
liable to Distributor for all services that it elects to have performed by
16
Subcontractors. Distributor approves Christie as a Subcontractor of
Christie/AIX, and clauses (i) and (ii) above have no application to Christie.
30. ADDITIONAL DOCUMENTS. At either party's request, the other party will
provide and execute any documents required by Federal, state and local
authorities, insurance companies and all other documents consistent with the
terms in this Agreement which are reasonably necessary to carry out the intent
and purpose of this Agreement.
31. NOTICES. Notices will be effective when delivered to the specified address
and must be sent via certified mail; expedited delivery; or by messenger
service, with each of the foregoing providing for a written confirmation of
delivery; or via facsimile. Unless otherwise specified by written notice, notice
information for Distributor and Christie/AIX are as follows:
Distributor: Twentieth Century Fox Film Corporation
Attention: Xxxxxx Xxxxx, Executive Vice President
00000 Xxxx Xxxx Xxxxxxxxx
Xxxxxxxx 00, Xxxx 000
Xxx Xxxxxxx, XX 00000
Fax No: 000-000-0000
With a copy to: Twentieth Century Fox Film Corporation
Attention: Legal Department, and
Attention: Xxxxxxx Xxxxxx, Esq.
0000 Xxxxxx xx xxx Xxxxx
Xxxxx 0000
Xxx Xxxxxxx, XX 00000
Fax No: 000-000-0000
Christie/AIX: Christie/AIX, Inc.
c/o Access Integrated Technologies, Inc.
Attention: Xxxx Xxxxxxxx, Esq.
00 Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxxxxxx, XX 00000
32. MISCELLANEOUS.
(a) CHOICE OF LAW. This Agreement will be governed by and construed in
accordance with the laws of the State of California applicable to contracts
made and to be wholly performed within such State (without giving effect to
any conflict of laws principles under California law).
(b) JUDICIAL INTERPRETATION. Should any provision of this Agreement require
judicial interpretation, it is agreed that the terms of this Agreement will
not be more strictly construed against the party who prepared this Agreement,
it being further agreed that each party has participated in the negotiation
of this Agreement and was given sufficient opportunity to consult legal
counsel before the execution of this Agreement.
17
(c) COUNTERPARTS. This Agreement may be executed in one or more counterparts,
including by facsimile transmission, each of which will be deemed an original
and all of which together will constitute one and the same instrument.
(d) HEADINGS. The headings and titles contained in this Agreement are for the
sake of convenience only and have no bearing on the content or substance of
this Agreement.
(e) SEVERABILITY. If any provision of this Agreement is adjudicated void,
illegal, invalid or unenforceable, the remaining terms and conditions will
not be affected, and each of the remaining terms and conditions of this
Agreement will be valid and enforceable to the fullest extent permitted by
law, unless a party demonstrates by a preponderance of the evidence that the
invalid provision was an essential economic term of the Agreement.
(f) FULL EXECUTION. This Agreement will not be effective until fully executed
by all of the parties or their duly authorized representatives.
(g) ENTIRE AGREEMENT. This Agreement, including any exhibits and attachments,
contains the entire understanding of the parties relating to the subject
matter contained in this Agreement and supersedes all prior discussions and
writings between them. In the event of any inconsistency between the
provisions of this Agreement and the provisions of any exhibit or attachment
to this Agreement, the provisions contained in this Agreement will prevail.
This Agreement may not be modified by language contained in any purchase
order, invoice or other business form, and may only be amended by a written
instrument signed by the duly authorized representatives of each of the
parties which expressly amends this Agreement. If Distributor pays
Christie/AIX pursuant to an invoice, purchase order or other business form
submitted by Christie/AIX, the terms of this Agreement will prevail if the
terms of this Agreement are inconsistent with the terms of the invoice.
(h) SURVIVAL. Any provision of this Agreement which by its terms is intended
to survive the expiration or termination of this Agreement, including but not
limited to Sections 11, 17, 21 and 24, shall survive such expiration or
termination.
IN WITNESS WHEREOF, Distributor and Christie/AIX have executed this Agreement
as of the date first above written.
CHRISTIE/AIX, INC. TWENTIETH CENTURY FOX FILM
CORPORATION
By: /s/ A. Xxxx Xxx By:
------------------------ -----------------------------
A. Xxxx Xxxx, CEO Authorized Officer
18
ATTACHMENT LIST
A INTENTIONALLY OMITTED
B MINIMUM DIGITAL TITLE AVAILABILITY
C VIRTUAL PRINT FEES
19
ATTACHMENT B
MINIMUM DIGITAL TITLE AVAILABILITY
During each Contract Year specified below, the number of Distributor
Digital Titles will, as a percentage of all Distributor wide release titles
(defined as *** or more screens on initial national release) during that
Contract Year, equal or exceed the applicable percentage shown below. (If the
percentage results in a fractional number, Distributor may round down to the
next whole number.)
---------------------------------------------------------------------------
CONTRACT YEAR MINIMUM PERCENTAGE
---------------------------------------------------------------------------
---------------------------------------------------------------------------
1st ***
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2nd ***
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3rd ***
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4th ***
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5th ***
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6th ***
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7th ***
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8th ***
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9th ***
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10th ***
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11th ***
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12th ***
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In calculating the minimum percentages above, Distributor may exclude from the
number of wide release titles per Contract Year the number of movies specified
below. In the event the full number of allowed exclusions in any Contract Year,
including any unused exclusions carried forward from a prior Contract Year, are
not used in any Contract Year, the unused exclusions may be carried over into
subsequent Contract Years.
CONTRACT YEAR NUMBER TO BE EXCLUDED
1st *** movies
2nd *** movies
3rd and thereafter *** movies per Contract Year
The requirements of this Attachment B apply to all titles released by
Distributor, whether such titles are produced by Distributor or any of its
Affiliates, and do not apply to any titles released directly by any of
Distributor's Affiliates
--------------------------------------------------------------------------------
*** CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE OMISSIONS.
20
ATTACHMENT C
VIRTUAL PRINT FEES ("VPF")
1. STANDARD RATE. The first *** VPFs paid by Distributor to Christie/AIX in any
Contract Year will be at the applicable rate set forth in the table below (the
"STANDARD RATE").
---------------------------------------------------
CONTRACT YEAR VIRTUAL PRINT FEE
---------------------------------------------------
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1st ***
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2nd ***
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3rd ***
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4th ***
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5th ***
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6th ***
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7th ***
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8th ***
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9th ***
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10th ***
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11th ***
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12th ***
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13th ***
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14th ***
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15th ***
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2. DISCOUNTS. Distributor will be entitled to the greater of any applicable
discount under Section 2A below or any applicable discount under Section 2B
below. Sections 2A and 2B are in the alternative and are not cumulative, and the
maximum discount available under this Section 2 shall not exceed ***%
A. DISCOUNT BASED ON NUMBER OF PARTICIPATING DISTRIBUTORS.
(a) For purposes of this Section 2A, "Major Distributors" means ***,
***, ***, ***, and ***, or in lieu of any of the foregoing, any Affiliate of any
of the foregoing which is a primary releasing entity for its motion pictures,
together with any additional entity which releases more than *** motion pictures
a year that have an initial national release of more than *** screens. To the
extent that any Major Distributor is merged with or taken over by any other
Major Distributor, the successor entity shall count as two studios for purposes
of this Section 2A.
(b) If by the end of the second Contract Year:
(i) a total of *** (***) Major Distributors have executed
agreements with Christie/AIX which relate to the same general subject matter as
this Agreement, then in the second through twelfth Contract Years VPFs will be
reduced by ***% from the amounts set forth in the table in Section 1 or Section
3, as applicable; or
(ii) a total of *** (***) or more Major Distributors have
executed agreements with Christie/AIX which relate to the same general subject
--------------------------------------------------------------------------------
*** CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE OMISSIONS.
21
matter as this Agreement, then in the second through twelfth Contract Years VPFs
will be reduced by ***% from the amounts set forth in the table in section 1 or
Section 3, as applicable.
B. DISCOUNT BASED ON NUMBER OF VPFS.
(i) the first *** VPFs paid by Distributor to Christie/AIX in any
Contract Year will be at the applicable rate set forth in the table in Section 1
or Section 3, as applicable;
(ii) thereafter, the next *** VPFs paid by Distributor to
Christie/AIX in such Contract Year (i.e. *** - *** VPFs) will be at a discount
of ***% from the applicable rate set forth in the table in Section 1 or Section
3, as applicable;
(iii) thereafter, the next *** VPFs paid by Distributor to
Christie/AIX in such Contract Year (i.e. *** - *** VPFs) will be at a discount
of ***% from the applicable rate set forth in the table in Section 1 or Section
3, as applicable; and
(iv) thereafter, any VPFs paid by Distributor to Christie/AIX in
such Contract Year (VPFs in excess of *** VPFs) will be at a discount of ***%
from the applicable rate set forth in the table in Section 1 or Section 3, as
applicable.
3. DEPLOYMENT OF LESS THAN *** PROJECTION SYSTEMS. In the event that less than
*** Projection Systems have been deployed as of the end of the second Contract
Year, then the Standard Rate shall be revised as follows:
---------------------------------------------------
CONTRACT YEAR VIRTUAL PRINT FEE
---------------------------------------------------
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1st ***
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2nd ***
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3rd ***
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4th ***
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5th ***
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6th ***
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7th ***
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8th ***
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9th ***
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10th ***
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11th ***
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12th ***
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13th ***
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14th ***
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15th ***
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4. AFFILIATES. VPFs for Digital Titles released by Distributor will be
combined with VPFs on titles for Affiliates which Distributor has elected to
have included in this Agreement pursuant to Section 9, for the purpose of
determining total VPFs paid in order to calculate discounts. For example, if in
a given Contract Year, Distributor pays *** VPFs and an Affiliate of Distributor
pays *** VPFs, the total VPFs for the purposes of calculating discounts will be
*** and the first *** VPFs paid by Distributor or its Affiliate are paid
according to the applicable rate set forth above and the following *** VPFs paid
--------------------------------------------------------------------------------
*** CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE OMISSIONS.
22
by either Distributor or its Affiliate will qualify for a discount of ***% under
Section 2B (without limiting the possibility of a higher discount under Section
2A) from the applicable VPF rate according to the Contract Year.
5. TEN YEAR LIMIT. Although the VPFs set forth in the tables above are
specified according to Contract Year, Christie/AIX will charge a VPF for any
Digital System for only the ten (10) year period following the Installation Date
of that Digital System. For example:
(a) if a Digital System is installed during the 1st Contract Year and the
table provided in Section 1 is applicable, VPFs on that Digital System
will be (before any applicable discount):
(i) $*** for the remainder of the 1st Contract Year,
(ii) $*** for the 2nd and 3rd Contract Years,
(iii)$*** for the 4th and 5th Contract Years,
(iv) $*** for the 6th Contract Year through the expir ation of the ten
(10) year period occurring in the 11th Contract Year, and
(v) $*** for the remainder of the 11th Contract Year and for the 12th,
13th, 14th and 15th Contract Years; and
(b) if a Digital System is installed during the 2nd Contract Year and the
table provided in Section 1 is applicable, VPFs on that Digital System
will be (before any applicable discount):
(i) $*** for the remainder of the 2nd Contract Year,
(ii) $*** for the 3rd Contract Year,
(iii)$*** for the 4th and 5th Contract Years,
(iv) $*** for the 6th Contract Year through the expiration of the ten
(10) year period occurring in the 12th Contract Year, and
(v) $*** for the remainder of the 12th Contract Year and for the 13th,
14th, and 15th Contract Year.
--------------------------------------------------------------------------------
*** CONFIDENTIAL PORTIONS HAVE BEEN OMITTED AND FILED
SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.
ASTERISKS DENOTE OMISSIONS.
23
