Exhibit 10.11

 

STRICTLY CONFIDENTIAL

 

CONFIDENTIAL TREATMENT REQUESTED FOR PORTIONS OF THIS DOCUMENT. PORTIONS FOR
WHICH CONFIDENTIAL TREATMENT IS REQUESTED HAVE BEEN MARKED WITH THREE ASTERISKS
[***] AND A FOOTNOTE INDICATING “CONFIDENTIAL TREATMENT REQUESTED”. MATERIAL
OMITTED HAS BEEN FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 

DATED ***

 

AGREEMENT

 

BETWEEN

 

Cathay Pacific Airways Limited

AND

Hong Kong Dragon Airlines Limited

 

AND

 

Inflight Productions Limited

 

For the Supply of

 

Programming and Production Services    ·

For Inflight

Entertainment

 

 

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TABLE OF CONTENT

 

1. DEFINITIONS AND INTERPRETATION   4         2. PROVISION OF SERVICES   8      
  3. TERM   8         4. IFP'S OBLIGATIONS   8         5. AIRLINE OBLIGATION  
13         6. SERVICE COSTS   15         7. SHARING OF COST SAVING   20        
8. PAYMENT SCHEDULE, INVOICING AND REPORTING   21         9. CANCELLATION   21  
      10. APPROVAL PROCESS   22         11. BUDGET PROCESS AND MEETINGS   23    
    12. BUSINESS PARTNERS   24         13. INTELLECTUAL PROPERTY RIGHTS   24    
    14. INSURANCE   25         15. REPRESENTATIONS AND WARRANTIES   25        
16. TERMINATION   25         17. INDEMNITY BY IFP   26         18. ENTIRE
AGREEMENT   27         19. REMEDIES CUMULATIVE   27         20. NO WAIVER   27  
      21. SEVERANCE   27         22. AMENDMENT   27         23. CONFIDENTIALITY
  27         24. ADVERTISING   28         25. ASSIGNMENT   28         26.
EXPENSES   28         27. FORCE MAJEURE   28         28. AUDIT   29         29.
RIGHT OF REPLACEMENT   29        

 

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30. NO AGENCY OR PARTNERSHIP   30         31. NOTICES   30         32.
SUCCESSORS   31         33. LAW AND JURISDICTION   31

 

SCHEDULE 1- PROGRAMME SPECIFICATIONS 33     SCHEDULE 2- PROGRAMMING GUIDELINES
51     SCHEDULE 3- CONTACT AND DELIVERY DETAILS 53     SCHEDULE 4 - BUDGET FOR
*** 56     SCHEDULE 5- KEY PERFORMANCE INDICATORS 57

 

 

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THIS AGREEMENT is dated *** and is made:

 

BETWEEN

 

(1)CATHAY PACIFIC AIRWAYS LIMITED, a company incorporated under the laws of Hong
Kong, with its place of business at Cathay City, 8 Scenic Road, Hong Kong
International Airport, Lantau, Hong Kong (hereinafter referred to as "Cathay"),

 

(2)HONG KONG DRAGON AIRLINES LIMITED, a company incorporated under the laws of
Hong Kong, with its place of business at Dragonair House, 11 Tung Fai Road, Hong
Kong International Airport, Lantau, Hong Kong (hereinafter referred to as
"Dragonair") (with Cathay and Dragonair together referred to as "the Airline")

 

(3)INFLIGHT PRODUCTIONS LIMITED, a company incorporated under the laws of United
Kingdom, with its place of business at 15 Stukeley Street, London, WC2B 5LT,
United Kingdom (hereinafter referred to as "IFP"),

 

(together the "Parties" and each a "Party" as the case may be).

 

BACKGROUND

 

(A)The Airline wishes to appoint IFP to provide inflight programming services
for Audio, Western Movies and Western Short Feature Programmes on the Airlines'
Aircraft including but not limited to the following:

 

(i)For Audio programming, the services include, but are not limited to,
negotiation of Mechanical Royalties and Presenter fees, account management,
industry expertise and technical processes such as programming, editing,
duplication, encoding, quality control, labelling etc. and delivery;

 

(ii)For video programming of Western Movies and Western Short Features, the
services include, but are not limited to, negotiation of License Fees, account
management, industry expertise and technical processes such as programming,
editing, encoding, subtitling, quality control, labelling, etc. and delivery;

 

(B)IFP has considerable expertise in the above areas and has represented to
Airline that it is well qualified to be appointed hereunder. The Parties wish to
enter into this Agreement to set out the terms on which IFP will provide the
Services to the Airline.

 

BY WHICH IT IS AGREED as follows:-

 

1. DEFINITIONS AND INTERPRETATION

 

1.1Unless the context otherwise requires in this Agreement, the following
expressions have the following meanings:-

 

"AOD"   means audio on demand and shall comprise of Music Albums and Audio
Programmes, offered to passengers on Aircraft equipped with an AVOD system,
which are accessed using AOD functions such as fast forward, rewind and pause;  
    "AVOD"   means audio and video on demand and means Cathay's digital system
using video and audio compression to supply Programmes to passengers when
requested;

 

 

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"Agreement"   means this agreement and any and all schedules, appendices and
exhibits attached to it or incorporated in it by reference, as varied from time
to time in accordance with its terms;       "Aircraft"   means all aircraft
whether video cassette based (Non-AVOD Aircraft) or AVOD equipped (AVOD
Aircraft) operated by the Airline, during the Term of this Agreement;      
"Asian Movies"   means featured film which is shown in Asian language including
but not limited to Cantonese, Mandarin, Japanese, Korean and Hindi;       "Asian
Short Features"   means short features programme which is shown in Asian
language including but not limited to Cantonese, Mandarin, Japanese and Hindi;  
    "Audio"   means audio programmes that include Radio Channel, Music Albums
and Boarding Music, refer to programme specification in Schedule 1;      
"Boarding Music"   means the music played on board Aircraft prior to take off
and landing;       "Business Partners"   means any other supplier,
sub-contractor, consultant, agent, licensor, either future or existing,
nominated by the Airline;       "BOP"   means the Airlines' Budget Operating
Plan circulated annually between August and October each year detailing flights
and routes scheduled for the following year. It is a guideline document only and
subject to change;       "COs"   mean the CDs which are used on non-AVOD
Aircraft incorporating the Radio Channel Programmes;       "Digital Media"  
means Programmes in the form of an encoded compression file rather than a video
cassette or CDs;       "Distributor"   means the distributor from whom a
Programme is licensed and who owns the right to License and distribute the
Programme for airline use;       "Duplication"   means the act of making
cassette copies from the Master for video programmes and the act of making
copies from the Intermaster for audio programmes;       "Effective Date"   means
*** (April on board cycle);       "Encoding"   means the process of transforming
the Programme into a digitally compressed file ;       "Exhibition"   means the
estimated number of flights on which the Programmes will be shown, otherwise
known as screenings, which are calculated from the Airline's BOP during each
annual budget process;

 

 

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"Exhibition Period"   means the time period during which the Airline is
authorised to exhibit the Programmes on board the Aircraft.       "Flashcard"  
means the proprietary card containing digital storage used to transfer music and
speech onto aircraft IFE Systems;       "IFE"   means the Airline's inflight
entertainment programmes;       "Interactive Screens"   means the screens, which
show information regarding the Programmes to help passengers navigate and use
the AVOD system in order to arrive at the desired Programme choice;      
"Intermaster"   means digitally encoded CD combining two or more Radio
Programmes, used to duplicate CDs for onboard use;       "Key Performance
Indicators"   means a set of agreed parameters by which the Airline measures the
performance of IFP, refer to Schedule 5 for details;       "License"   means an
agreement given by a Distributor to permit the use of the Programmes on the
Aircraft;       "License Fee"   means the amount negotiated by IFP, and paid by
the Airline, that permits the Airline to play the contracted Programmes;      
"Management Fee"   means the annual fees agreed between the Parties for IFP to
carry out the Services;       "Mechanical Royalties"   means those royalties and
fees required to copy musical works from one medium to another during the
recording and duplication process;       "Master"   means the original master
copy of a Programme Licensed from the Distributor;       "MPAA"   means the
Movie Pictures Association of America;       "Music Albums"   means a selection
of music albums which form Cathay's Audio-on-Demand library and are updated
regularly as required by Cathay;       "Performance Reviews"   means the review
which will be conducted twice a year whereby the Airline will review IFP's
performance against the agreed Key Performance Indicators.       "Presenter"  
means the professional radio presenter or artist employed to work specifically
on the Airline's account;       "Programmes"   means programmes to be supplied
by IFP under terms and conditions of this Agreement. These programmes include
all Western Movies, Western Short Features Programmes and all Audio programmes.

 

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"Programming Costs"   means the total cost incurred in compiling the Audio
Programmes based on an hourly rate and time in the audio studio and on a
computer edit facility;       "Public Performance Rights"   means the right to
perform music on board the Aircraft including that contained in Audio, Western
Movies and Western Short Features;       "Personnel"   mean IFP's personnel who
will provide the Services to the Airline during the Term of the Agreement;      
"Radio Channel"   means the channels under which Audio Programmes compiled by
IFP are offered to all passengers on board an Aircraft;       "Services"   mean
the supply of all required services for inflight programming for Audio, Western
Movies and Western Short Features Programmes for Airline by IFP hereunder
including the services specified in Clause 4 of this Agreement;       "Service
Costs"   has the meaning ascribed to it in Clause 6;       "Sting"   means
airline, channel or genre promotional material;       "Sub-load Ticket"   means
a ticket issued by the Airline to IFP for meetings in Hong Kong, which is not a
confirmed ticket but a stand-by ticket and has the same boarding priority as if
IFP's Personnel were an Airline employee travelling on business;      
"Technical Costs"   mean the total of technical costs including editing,
subtitling, encoding, duplication, quality control and labelling costs;      
"Term"   has the meaning ascribed to it in Clause 3;       "Western Movies"  
means featured films which is shown in English and selected European languages
including Italian, French, German and Dutch, refer to programme specifications
in Schedule 1; and       "Western Short Features"   means short features
programme which is shown in English, refer to programme specifications in
Schedule 1.

 

1.2In this Agreement, unless the context otherwise requires:-

 

1.2.1references to Clauses and Schedules are to the clauses of and schedules to
this Agreement;

 

1.2.2Clause headings and the table of contents are for convenience only and have
no legal effect;

 

1.2.3references to (or to a specified provision of) this Agreement or any other
document are to this Agreement, that document or that provision as in force for
the time being and as amended, varied or supplemented in accordance with its
terms;

 

1.2.4references to (or to a specified provision of) any Ordinance or enactment
are to that Ordinance or enactment or that provision as amended, modified,
extended, re-enacted, consolidated or replaced and in force for the time being;

 

 

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1.2.5words importing the singular include the plural and vice versa;

 

1.2.6words importing one gender include any other gender;

 

1.2.7references to persons includes bodies corporate, firms or unincorporated
associations; and

 

1.2.8the Schedule(s) form(s) part of this Agreement and references to this
Agreement include the Schedule(s).

 

2.PROVISION OF SERVICES

 

2.1IFP agrees to continue to provide the Services and the Airline hereby agrees
to accept the provision of such Services from IFP, on and subject to the terms
set out in this Agreement.

 

2.2The Parties hereby agree that as consideration for the provision of such
Services by IFP, the Airline shall pay for such Services in the manner provided
for in Clause 6.

 

3.TERM

 

3.1The parties acknowledge that IFP have been providing the Services to the
Airline since ***, and this Agreement shall be deemed to have commenced as of
*** and shall continue to be in force until *** ('Initial Term), unless either
Party terminates this Agreement in accordance with Clause 16 or until such date
as the Parties otherwise agree in writing (the "Term").

 

4. IFP'S OBLIGATIONS

 

4.1Account Servicing

 

4.1.1IFP warrants that all Personnel involved in the performance of the Services
will be of high caliber and suitably skilled and experienced to perform properly
the tasks assigned to them. IFP must provide dedicated account management
available to deal with all operational and financial issues and available at
time zone permissible hours to deal with requests made by the Airline.

 

4.2For Audio Programming:

 

4.2.1Programming

 

(a)IFP shall supply the Airline with a varied selection of Audio Programmes as
specified in SCHEDULE 1 - PROGRAMME SPECIFICATIONS for each agreed Exhibition
Period.

 

(b)IFP shall be responsible for suggesting a selection of Audio Programmes to
match the Airline's demographics issued to IFP from time to time and the
guideline document detailed in SCHEDULE 2 - PROGRAI\1MING GUIDELINES for each
agreed Exhibition Period. The said programming guidelines may be updated from
time to time upon mutual agreement of the Parties.

 

(c)IFP shall ensure that each Audio Programme is consistent throughout and
features songs and artists, which are relevant to the title of the Radio Channel
or the Music Album category.

 

(d)The Airline shall retain the right to amend the number of Audio Programmes,
Radio Channels, Music Album categories, frequency and general programme
specification during the period of the Agreement. However, if the current
specification changes substantially then the Parties agree to review the
Management Fee.

 

 

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4.2.2Royalties and Presenters

 

(a)IFP will negotiate all Presenter fees, and shall ensure that all fees are
competitive and favourable to the Airline.

 

(b)IFP shall use best endeavours to ensure that no Presenter used on any of the
Radio Channels shall work in the same capacity for a direct competitor of the
Airline without prior permission of the Airline, such permission not to be
unreasonably withheld.

 

(c)IFP shall be responsible for clearing Mechanical Royalties for the Audio
Programmes and obtaining permission for it and/or Airline to copy, duplicate,
store on IFE equipment, record and use the Audio Programmes on the Airlines'
Aircraft as anticipated hereunder including in respect of all copyright works
comprised in the Audio Programmes including in all music, lyrics, songs and
sound recordings and for paying all Mechanical Royalties and other fees due to
the copyright owner or the relevant royalty body in the country where the
Programmes are produced or as required. In the UK, the rights are held by PPL
(Phonographic Performance Ltd) representing record companies and MCPS
(Mechanical Copyright Protection Society) representing composers, authors and
publishers. Mechanical Royalties are also payable to equivalent agencies in
locations where the Programme is produced outside the UK;

 

(d)IFP will advise the Airline in advance of the Presenters and Mechanical
Royalties fees negotiated on the Airline's behalf. IFP warrants that it will use
best endeavours to negotiate favourable terms for the Airline and will provide
the Airline with realistic indicative pricing during the annual budget process
for approval by the Airline. IFP will not agree to or commit to any Presenter
Fees or Mechanical Royalties that are greater than as stipulated in the annual
budget without Airlines' consent.

 

(e)IFP hereby warrants that it will secure all rights required for Airline to
copy and load Audio Programmes onto its Aircraft and for the same to be used in
AOD format or otherwise and will be solely liable for any claims by any rights
holder in any territory.

 

4.2.3Technical & Logistics

 

(a)Editing

 

i)IFP shall be responsible for editing Audio in accordance with the requirements
of the Airline. Editing will generally involve IFP editing the Audio Programme
to combine and mix music and speech content to the agreed duration, to include
advertisements and other materials as requested by the Airline and to remove any
material detailed in SCHEDULE 2 PROGRAMMING GUIDELINES.

 

ii)IFP shall indemnify the Airline for any loss or damage arising or suffered
due to errors or negligence in terms of editing, such as incorrect Stings or
incorrectly placed advertisements. The total of such liability shall be limited
to the total cost of Duplication and editing for the particular Programme(s) in
question. IFP will not be liable under this clause if the error or negligence is
the result of another third party.

 

(b)Duplication and Encoding

 

i)IFP shall arrange Duplication of all Audio Programmes in CD format, Encoding
of the Programme in Digital Media format and/or Duplication of the Boarding
Music in Flashcard format according to specifications required by the Airline.

 

ii)IFP will use best endeavours to recycle Boarding Music Flashcards where
possible.

 

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iii)IFP warrants that all Duplication and Encoding of Audio Programmes shall be
to the technical standard specified by the manufacturers of the IFE equipment
selected for installation by the Airline on its Aircraft and shall otherwise be
undertaken to best industry standards. The technical standard and format of the
CDs, Digital Media and Flashcards supplied to the Airline shall comply with the
technical requirements of the Airlines' equipment and any other technical
requirements specified by the Airlines' designated engineers or representatives
and shall otherwise be of merchantable quality and fit for purpose.

 

(c)Quality Control and Labelling

 

i)IFP shall be responsible for all quality control and labelling of all CDs in
accordance with the label list issued by the Airline. IFP acknowledges that
quality control and correct labelling is of the utmost importance and IFP shall
be responsible for loss and damage suffered by the Airline due to incorrect
labelling or poor quality control procedures. Should there be any mistakes in
labelling or quality control, IFP will be responsible for rectifying the
situation at their own cost.

 

(d)Delivery

 

i)IFP shall arrange for the delivery of the required number of CDs, the Digital
Media and the Flashcards containing the Audio Programmes for each Exhibition
Period to the delivery addresses set out in SCHEDULE 3 -CONTACT AND DELIVERY or
such address as is otherwise specified by the Airline no later than the date of
the agreed monthly timeline prior to the commencement of each Exhibition Period.

 

ii)Time of delivery shall be of the essence. In case of late delivery Airline
may at its discretion choose to accept a payment equal to the total value of all
the Programming Costs and Technical Costs arising under this Agreement for that
particular month or such pro-rata payment as the parties shall agree, as full
compensation for such late delivery.

 

4.3For Video Programming (Western Movies and Western Short Features):

 

4.3.1Programming

 

(a)IFP shall supply the Airline with a varied selection of Western Movies and
Western Short Features Programmes as specified in SCHEDULE 1 - PROGRAMME
SPECIFICATIONS for each agreed Exhibition Period.

 

(b)IFP shall be responsible for suggesting a selection of Western Movies and
Western Short Features Programmes to match the Airline's demographics issued to
IFP from time to time and the guideline document detailed in SCHEDULE 2 -
PROGRAMMING GUIDELINES for each agreed Exhibition Period. The said programming
guidelines may be updated from time to time upon mutual agreement of the
Parties.

 

(c)The Airline shall retain the right to amend the number of Western Movies and
Western Short Features Programmes, channels, frequency and general programme
specification during the period of the Agreement. However, if the current
specification changes substantially then the Parties agree to review the
Management Fee.

 

4.3.2Licensing

 

(a)IFP will negotiate License Fees with Distributors based on the Exhibitions
and commitments agreed with the Airline during the annual budget process.

 

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(b)IFP shall obtain Licenses for the Western Movies and Western Short Features
Programmes from Distributors, subject to the rights held by each Distributor.
Such License shall set forth the Western Movies and Western Short Features
Programme title, Exhibition Period and the length (in number of minutes) of the
Programme.

 

(c)IFP will advise the Airline in advance of any License Fee and any other fees
payable for exhibition of the Western Movies and Western Short Features
Programmes negotiated on the Airline's behalf, where such License Fees may
exceed the amount agreed in the annual budget. IFP warrants that it will use
best endeavours to negotiate favourable terms for the Airline and will provide
the Airline with realistic indicative pricing during the annual budget process
for approval by the Airline. IFP will not agree or commit to any Licence Fees or
other fees that are greater than as stipulated in the budget, without Airlines'
consent.

 

(d)At the request of the Airline, IFP will license Western Movies and Western
Short Features Programmes, in dual language format whether dubbed or subtitled.
Any additional costs will be agreed in advance with the Airline during the
annual budget process.

 

(e)If a language, whether dubbed or subtitled, is created specifically for the
Airline, dependant on the revenue of the booking to the Distributor, the Airline
may have to bear the Technical Costs of the relevant Programme, for example, the
encoding of language. IFP will advise the cost in writing to the Airline for
approval prior to the booking being placed in the event that the costs are
outside the scope of the budget.

 

4.3.3Technical & Logistics

 

(a)Following approval of the Western Movies and Western Short Features
Programmes as detailed in Clause 10,

 

i)IFP shall arrange Duplication of the relevant Programmes in cassette format
(VHS, V8 or Hi-8) according to the tape quantity required by the Airline; and/or

 

ii)IFP shall arrange Encoding of the relevant Programmes in Digital Media
according to the standard required by the Airline,

 

IFP shall ensure that all such Duplication and Encoding is permitted under the
relevant Licences.

 

(b)Editing

 

i)IFP shall be responsible for arranging of Editing all Western Movies and
Western Short Features Programmes according to the requirements of the Airline.
Editing will generally involve the Distributor's designated laboratories in
Hollywood or IFP editing the Programme to include advertisements, the Airline's
logos, channel Stings, warning boards, and other materials as requested by the
Airline and removing sensitive scenes as outlined in the guidelines detailed in
SCHEDULE 2- PROGRAMMING GUIDELINES. -

 

ii)IFP shall indemnify the Airline for any loss or damage arising or suffered
due to errors or negligence in terms of editing, such as incorrect Stings or
incorrectly placed advertisements. The total of such liability shall be limited
to the total cost of Duplication and editing for the particular Programme(s) in
question. IFP will not be liable under this clause if the error or negligence is
the result of another third party.

 

(c)Subtitling

 

i)IFP shall arrange subtitling of all Western Movies and Western Short Features
Programmes where required by the Airline.

 

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(d)Duplication and Encoding

 

i)IFP warrants that all Duplication and Encoding of all Western Movies and
Western Short Features Programmes shall be to the technical standard specified
by the manufacturers of the IFE equipment selected for installation by the
Airline on its Aircraft and shall otherwise be undertaken to best industry
standards. The technical standard and format of the cassette and the Digital
Media supplied to the Airline shall comply with the technical requirements of
the Airlines' equipment and any other technical requirements specified by the
Airlines' designated engineers or representatives and shall otherwise be of
merchantable quality fit for purpose.

 

ii)IFP shall be responsible for the Encoding of advertisements and shall be
required to coordinate with the Airline's nominated Business Partners in order
to ensure that the advertisements are encoded correctly and according to the
timelines agreed between the Parties.

 

(e)Quality Control and Labelling

 

i)IFP shall be responsible for all quality control and the labelling of all
Western Movies and Western Short Features Programmes in accordance with the
label list issued by the Airline.

 

ii)IFP acknowledge that quality control and correct labelling is of the utmost
importance and IFP shall be responsible for loss and damage suffered by the
Airline due to incorrect labelling or poor quality control procedures, unless
due to reasons attributable to the Airline.

 

iii)Should there be any mistakes in labelling or quality control, IFP will be
responsible for rectifying the situation at their own cost.

 

(f)Delivery

 

i)IFP shall arrange for the delivery of the required number of cassettes and the
Digital Media containing the Western Movies and Western Short Features
Programmes for each Exhibition Period to the address set out in SCHEDULE 3 -
CONTACT AND DELIVERY or such other address as is otherwise specified by Airline
no later than the date of the agreed monthly timeline prior to the commencement
of each Exhibition Period.

 

ii)Time of delivery shall be of the essence. In case of late delivery Airline
may at its discretion choose to accept a payment equal to the total value of the
License Fees and Technical Costs arising under this Agreement for that
particular month or such pro-rata payment as the parties shall agree, as full
compensation for such late delivery.

 

(g)Tape Destruction for Western Movies

 

i)IFP shall be responsible for the destruction and degaussing of all Western
Movie Programme cassettes returned by the Airline to IFP or IFP's nominated
subcontractor.

 

ii)IFP warrants that it is solely liable for the performance of any
sub-contractor appointed to perform this activity and that any sub-contractor
used will follow the guidelines set out by the Distributors and the MPAA when
destroying and degaussing the cassettes.

 

4.4Third Parties

 

4.4.1IFP shall as required by Airline supply the Airlines' nominated Business
Partners with full details of the Programmes, including photographs, inclusion
in the Airlines' inflight entertainment guides, the Interactive Screens of the
!FE system, onboard advertising and the Airlines' websites in accordance with a
timetable to be agreed by the Parties from time to time.

 

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4.4.2IFP will provide or contract with strategic third parties in order to
provide the equipment, materials, technology, software, goods and personnel
which are required by IFP to ensure that it fulfills its obligations hereunder.

 

4.4.3IFP warrants that when contracting with third parties such as Distributors
and Presenters, commitments made in any agreements with such parties shall not
exceed the commitments including timelines agreed with the Airline. The Airline
will not be liable for any liabilities arising or incurred by IFP relating to
IFP contracting with third parties beyond the parameters agreed with and scope
of authority provided by Airline.

 

4.5IFP hereby undertakes with the Airline that it shall at all times during the
continuance of this Agreement:-

 

4.5.1provide the Services in accordance with the terms of this Agreement, to the
highest business standards, and in an efficient and competent manner with due
and professional skill and care;

 

4.5.2comply with all applicable laws, ordinances, regulations and relevant
standards in the performance of the Services;

 

4.5.3all physical items and media supplied hereunder including COs, cassettes
and the like will be provided to specification and will be of merchantable
quality and fit for purpose.

 

4.6In the event that IFP fails to provide the Services or the Services do not
conform to the standards or specifications set out in this Agreement, the
Airline, without prejudice to any other right it may have, shall be entitled
to:-

 

4.6.1request IFP to, at the cost and expense of FP, to redeliver any Services
which are deficient or non-conforming;

 

4.6.2request that IFP carry out relevant repairs or rectification of the
relevant Services at such place as reasonably requested by the Airline;

 

4.6.3carry out the repairs or rectification of the relevant Services itself or
by others and hold IFP accountable therefor; and/or

 

4.6.4withhold all or part of the payment of the Service Costs until the Services
in question are satisfactorily provided or corrected or where the Service Costs
have been paid, request IFP to refund the Service Costs on a pro rata basis in
respect of the Services in question.

 

4.7Upon notification by the Airline under Clause 4.6 of any deficiency in or
non-compliance of the Services, IFP shall promptly take such action as may be
required by the Airline pursuant to Clause 4.6.

 

4.8In the event that in the Airline's opinion, IFP has failed to satisfactorily
carry out the actions specified in any of Clauses 4.6.1 to 4.6.4 as required by
the Airline, the Airline shall be entitled to: -

 

4.8.1refuse to accept any Services or any further performance ofIFP without
liability;

 

4.8.2engage any person to provide the Services and require IFP to bear the full
cost thereof; and/or

 

4.8.3terminate this Agreement and treat itself as discharged by IFP's breach.

 

5.AIRLINE OBLIGATION

 

5.1Programming

 

5.1.1In the event that the Airline procures programmes through sources other
adherence to technical specification, copyrights and all other associated
exhibition rights and fees in relation to such programmes.

 

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5.2Information

 

5.2.1The Airline will provide details of the BOP by no later than October each
year of this Agreement in order for IFP to calculate the required flight levels
for movie License Fees and the required quantities of Cassettes,
CDs,Intermasters and Flashcards for the following year's budget.

 

5.2.2The Airline will at times to be agreed advise IFP of the required quantity
and format of the cassettes, CDs, Flashcards, Digital Media for each Exhibition
Period.

 

5.2.3The Airline shall agree to keep IFP informed as to the technical
specification of equipment installed on each Aircraft, and the relevant
specification for each applicable IFE system. The Airline shall give IFP notice
of any change or addition in specification in accordance with the monthly
timeline.

 

5.2.4The Airline shall agree to provide updated retrofit plans, demographics and
available survey results to IFP; however, IFP must proactively request
information of this nature in order to provide the Services.

 

5.2.5The Airline shall notify IFP of the labelling requirements and packaging
requirements in preparation for shipment.

 

5.3Advertising & Promotional Material

 

5.3.1The Airline or its appointed agents shall supply written details to IFP of
any sponsorship, advertising, airline logos etc to be included in the Programmes
in accordance with the monthly timeline. Such details shall include the name of
each sponsor or advertiser, the duration of the advertisement and any special
instructions pertaining to the placing of the advertisement.

 

5.3.2The Airline or its appointed agents shall arrange for the delivery to IFP
of the advertisements required for insertion in accordance with the monthly
timeline. Such advertisements shall normally be delivered on Betacam SP together
with a review copy on VHS.

 

5.3.3In the event that the Airline chooses to use promotional material of the
Programmes, it must use the promotional material supplied by the Distributors
and comply with all written instructions supplied with such promotional
material. The Airline agrees not to modify such material in any way and to use
the promotional material solely for the Airline's inflight entertainment guides,
the Interactive Screens of the IFE system, onboard advertising and the Airlines'
websites. It is the responsibility of the Airline to obtain permission for any
other use of the promotional materials of the Programmes.

 

5.4Video Cassettes, CDs and Digital Media

 

5.4.1The Airline shall use its reasonable endeavours to ensure that the video
cassettes, CDs or Digital Media incorporating Programmes remain in Cathay's or
Dragonair's possession and control (as the case may be) for the authorised
Exhibition Period.

 

5.4.2The Airline will use reasonable endeavours to prevent damage to or loss,
theft, conversion or destruction of any cassette, CDs or Digital Media
incorporating the Programmes. The Airline will notify IFP in writing of any such
damage, theft, loss conversion or destruction and will cooperate with IFP and or
the Distributor in any reasonable attempt to recover such cassettes, CDs or
Digital Media.

 

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5.4.3The Airline shall undertake not to duplicate, copy, edit, exhibit, promote
or sell any of the cassettes, CDs or Digital Media other than the permitted use
of the Programmes on flights operated by the Airline and excepting material that
is the property of the Airline.

 

5.4.4At the conclusion of the agreed Exhibition Period for a Programme, the
Airline shall within forty five (45) days of the end of the Exhibition Period;

 

(a)Return the movie cassettes to the address detailed in SCHEDULE 3 - CONTACT
AND DELIVERY for IFP to arrange destruction of the cassettes; and

 

(b)erase all Digital Media from the Aircraft's digital servers.

 

5.5Music Royalties Licenses

 

5.5.1The Airline shall make all necessary payments for any and all rights,
Licenses and other clearances for the performance of music contained in the
soundtrack of the Programmes or advertisement that may be applicable by Public
Performance Rights regulations in the Airlines' country of registration.

 

6.SERVICE COSTS

 

6.1In consideration of the Services to be rendered by IFP under this Agreement,
the Airline shall pay to IFP the fees specified below (the "Service Costs"). The
detailed budget is included in SCHEDULE 4- BUDGET FOR ***.

 

6.2For Audio Programming

 

6.2.1Management Fee

 

(a)The annual Management Fee for Audio has been agreed by the parties and will
be reviewed annually pursuant to Clause 11 or as otherwise agreed by the parties
and will be paid in equal instalments on a monthly basis. The Management Fee
comprises a labour cost, overhead cost and a profit margin and these costs will
be taken into account in fixing any adjustment to the Management Fee.

 

(b)Labour Cost:

 

i)should include costs of in-house labour working directly on the Airlines'
account, for example, Personnel involved in account servicing, programming,
logistics support, etc. Labour costs related to technical processes, such as
editing, Encoding, Duplication, quality control and labelling should not be
included in any assessment of labour costs for the purposes of assessing the
Management Fee;

 

ii)should reflect actual salary cost and include all staff benefits, insurance,
pension, healthcare, tax, and other benefits; and

 

iii)will be calculated based on the estimated man-days required and man-day
rates of each of IFP's Personnel involved in the provision of the Services.

 

(c)Overhead Cost:

 

i)should include all non-labour related operating costs, including rent, rates,
labour cost related to support services such as finance, I.T., and other like
costs required for the provision of the Services. Overhead costs related to
technical processes should not be included and they should be covered by the
rates of technical services; and

 

ii)should be presented as a percentage of the labour cost, namely, *** for this
Agreement.

 

 

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(d)Profit Margin:

 

i)should be calculated as a percentage of total of the labour cost and overhead
cost, namely, *** for this Agreement.]

 

(e)The agreed annual Management Fee for Audio is fixed and firm for the duration
of this Agreement, unless agreed otherwise between the parties taking into
account any adjustment in labour costs and overhead costs.

 

6.2.2Programming Cost

 

(a)Programming Cost shall include the hourly rates for programming in a studio
and using a computer edit facility, but does not include the cost of the
producers.

 

(b)Programming Cost shall be agreed during the annual budget meetings and will
be discussed on a Programme by Programme basis showing a detailed breakdown of
the hours spent using studio and computer for each Audio Programme. It will also
include the Programming Costs related to AOD Music Albums and Boarding Music.

 

(c)The agreed rate for programming in studio is *** for Radio Channels produced
in Hong Kong, *** for Radio Channels produced in Singapore and *** for Radio
Channels produced in London and Los Angeles. The agreed rate for programming
using a computer edit facility is ***.

 

6.2.3Presenter Cost

 

(a)IFP will use best endeavours to provide competitive prices for costs of
Presenters and will ensure that such costs charged to the Airline shall not
exceed those agreed between the Parties during the annual budget review process.

 

(b)Presenter costs will be charged to the Airline at cost with no mark up or
commission whatsoever and will be subject to review on an annual basis.

 

6.2.4Mechanical Royalties

 

(a)IFP shall be responsible for using best efforts to understand the relevant
royalty laws and negotiating favourable Mechanical Royalties on behalf of the
Airline. The current agreement is *** of the cost related to music production
(Management Fee and Programming Cost), CD Duplication and Encoding.

 

(b)Mechanical Royalties will be charged to the Airline at cost with no mark up.

 

6.2.5Technical Costs

 

(a)All Technical Costs of whatever nature will be charged to the Airline at
cost, with no additional mark up or commission. All Technical Costs will be
subject to review on an annual basis and shall not exceed costs stipulated in
the annual budget unless agreed by Airline.

 

(b)Duplication Cost

 

i)For Cathay, 6 CDs are used to contain the 22 Radio Channels and the agreed
unit cost is ***. Intermasters are used for the Duplication of the Radio
Channels and the agreed unit cost is ***. Flashcards are used for the
Duplication of Boarding Music and the agreed unit cost ***.

 

ii)For Dragonair, 4 CDs are used to contain 16 Radio Channels and the agreed
unit cost is *** per CD. Intermasters are used for the Duplication of the Radio
Channels and the agreed unit cost is ***. Flashcards and Cassettes are used for
the Duplication of Boarding Music and the agreed unit cost is *** for Flashcard
and *** for cassette.

 

 

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iii)Costs relating to Duplication includes costs for quality checking/labelling
and all associated Duplication costs.

 

iv)Duplication costs charged to the Airline will remain fixed and firm for the
duration of this Agreement unless subject to a decrease due to efficiencies in
working practice. Duplication costs may not exceed the costs stipulated for
Duplication in the annual budget unless agreed by Airline.

 

(c)Encoding Cost for Cathay

 

i)The agreed encoding rate is *** per minute for encoding of Radio Channels, ***
per minute for encoding of Boarding Music in Flashcard for Panasonic System, and
*** per minute for encoding of Boarding Music in CD Rom for KID System.

 

ii)The Cost of Encoding includes costs for quality checking and all associated
Encoding costs.

 

iii)Encoding costs charged to the Airline will remain fixed and firm for the
duration of this Agreement unless subject to a decrease due to efficiencies in
working practice. Encoding costs may not exceed the costs stipulated for
Encoding in the annual budget unless agreed by the Airline.

 

6.3For Video Programming

 

6.3.1Management Fee

 

(a)The annual Management Fee for video Programmes has been agreed by the parties
and will be reviewed annually pursuant to Clause 11 or as otherwise agreed and
will be paid in equal instalments on a monthly basis. The Management Fee
comprises labour cost1 overhead cost and a profit margin and these costs will be
taken into account in fixing any adjustment to the Management Fee.

 

(b)Labour Costs:

 

i)should include costs of in-house labour working directly on the Airline's
account1 for example1 Personnel involved in account servicing, programming,
logistics support, etc. Labour costs related to technical processes, such as
editing, Encoding, Duplication, quality control and labelling should not be
included in the labour costs for the purposes of assessing the Management Fee;

 

ii)should reflect actual salary cost and include all staff benefitS1 insurance,
pension, healthcare 1 tax 1 and other benefits; and

 

iii)will be calculated to each category, Western Movies and Western Short
Features1 based on the estimated man-days required and man-day rates of each of
IFP's Personnel involved in the provision of the Services for each category.

 

(c)Overhead Costs:

 

i)should include all non-labour related operating costs, including rent, rates,
labour cost related to support services such as finance, I.T., and other like
costs required for the provision of the Services. Overhead costs related to
technical processes should not be included and they should be covered by the
rates of technical services; and

 

ii)should be presented as a percentage of the Labour Cost, namely/*** for this
Agreement.

 

(d)Profit Margin:

 

i)should be calculated as a percentage of tota l of the labour cost a nd
overhead cost namely1 *** for this Agreement.

 

 

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(e)The agreed annual Management Fee for video is fixed and firm for the duration
of this Agreement, unless agreed otherwise between the parties, taking into
account any adjustment in labour costs and overhead costs.

 

6.3.2License Fees

 

(a)In all circumstances, IFP will use best endeavours to negotiate favourable
and continuously improving rates and terms with Distributors and will pass on
any reduction in price to the Airline. IFP will on request provide the Airline
the details of terms negotiated with Distributors including copies of relevant
agreements.

 

(b)The Parties will jointly agree the necessary commitments to be made with
individual Distributors.

 

(c)License Fees will be charged to the Airline at cost with no mark up or
commission whatsoever and will be subject to review on an annual basis.

 

6.3.3Technical Costs

 

(a)All Technical Costs of whatever nature will be charged to the Airline at
cost, with no additional mark up or commission. All Technical Costs will be
subject to review on an annual basis and shall not exceed the costs stipulated
in the annual budget unless otherwise agreed.

 

(b)In the event that the same programme is used for both Cathay and Dragonair,
the Technical Costs should be equally shared between Cathay and Dragonair.

 

(c)Master Cost

 

i)For Western Movies, the master costs are included in the cost of License Fees;

 

ii)For Western Short Features, the master cost is charged by the Distributors
and the budgeted master cost is *** for 30-minute Programmes and *** for
60-minute Programmes. IFP will ensure that the Master costs charged to the
Airline shall not exceed those agreed between the Parties during the annual
budget review process. Any increase in budgeted costs must be agreed in advance
by Airline.

 

(d)Insertion Fee for Western Movie Programmes

 

i)The insertion fee refers to the cost to insert advertisements, channel Stings,
and warning boards into the Programmes.

 

ii)IFP will use best endeavours to provide competitive prices for insertion fees
and will ensure that the insertion fees charged to the Airline shall not exceed
those agreed between the Parties during the annual budget review process. The
budgeted insertion fee is *** per movie and this may not be increased unless the
Airline provides approval in advance.

 

(e)Editing Cost for Western Short Feature Programmes

 

i)The Editing refers to the process to insert advertisements, channel stings,
warning boards to the Programmes and removal of sensitive scenes from the
Programmes.

 

ii)Editing Cost is calculated based on the hourly rates of ***, the number of
edit hours required and the cost of betacam SP tape for each cassette length, as
agreed between the Parties during the annual budget review process. The agreed
unit editing cost is *** for 135-minute programme and *** for 60-min programme
and *** for 60-minute programme shown on AVOD system only.

 

 

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iii)The hourly rates of *** for Editing will remain fixed and firm for the
duration of this Agreement unless subject to a decrease due to efficiencies in
working practice.

 

iv)Editing costs may not exceed the costs stipulated in the annual budget unless
agreed by the parties.

 

(f)Subtitling Cost

 

i)IFP will use best endeavours to provide competitive prices for subtitling
costs and will ensure that the subtitling cost charged to the Airline shall not
exceed those agreed between the Parties during the annual budget review process.
The budgeted subtitling cost is *** for 30-minute programme and *** for 50-
minute programme and these may not be increased unless the Airline provides
approval in advance.

 

(g)Duplication Cost

 

i)Duplication for Western Movies is performed by the Distributor's designated
laboratories in Hollywood. IFP will use best endeavours to provide competitive
prices for Duplication and will ensure that the Duplication rates charged to the
A irline shall not exceed those agreed between the Parties during the annual
budget review process. The lock-up cost and applicable tax of *** will be added
to the Duplication cost. The budgeted Duplication rates are:

 

  VHS Tape   V8 or Hi-8 Tape For Cathay:       120-minute ***   *** Kids Movies
***   *** For Dragonair:       120-minute ***   *** Kids Movies ***   ***

 

ii)Duplication for Western Short Features is performed by IFP. The agreed
duplication rates are:

 

  VHS Tape   V8 or Hi-8 Tape For Cathay:       135-minute ***   *** 60-minute
***   *** For Dragonair:       130-minute ***   *** 80-minute ***   ***
60-minute ***   *** 30-minute ***   ***

 

iii)Duplication cost charged to the Airline will remain fixed and firm for the
duration of this Agreement unless subject to a decrease due to efficiencies in
working practice. For the avoidance of doubt Duplication costs may not exceed
the costs stipulated for Duplication in the annual budget unless agreed in
advance by Airline.

 

(h)Encoding Cost

 

i)Encoding for Western Movies is performed by the Distributor's designated
laboratories in Hollywood. IFP will use best endeavours to provide competitive
prices for Encoding and will ensure that the Encoding rates charged to the
Airline shall not exceed those agreed between the Parties during the annual
budget review process. The budgeted Encoding rate is *** for recall fee, *** per
minute for single language, *** per minute for dual language, *** per minute for
adding a second language to a recall file and *** for cost of encryption and
output.

 

 

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ii)Encoding for Western Short Features and advertisements is performed by IFP.
The agreed encoding rate is *** per minute for single language and dual
language. Encoding Cost charged to the Airline will remain fixed and firm for
the duration of this Agreement unless subject to a decrease due to efficiencies
in working practice.

 

iii)If the Digital Media of a Western Movie is available in IFP's library, IFP
will offer the Airline a recall rate of *** per minute.

 

iv)For the avoidance of doubt Encoding costs may not exceed the costs stipulated
for Encoding in the annual budget unless agreed in advance by Airline.

 

(i)Cost of Quality Control, Labelling and Destruction

 

i)For Western Movies, IFP will use best endeavours to provide competitive prices
for quality control, la belling and destruction and will ensure that the costs
charged to the Airline shall not exceed those agreed between the Parties during
the annual budget review process. The agreed unit price per cassette is ***.

 

ii)For Western Short Features, the costs of Quality Control and Labelling are
covered by the Duplication Cost and Encoding Cost while destruction of cassette
is performed by the Airline.

 

6.4Other Costs

 

6.4.1The cost of providing all Services hereunder (other than as specified above
as being the subject of specific fees and charges) including the cost of
co-ordinating, managing and sending promotional materials to the relevant
parties, for the Interactive Screens will be covered by the Management Fee for
Audio and video.

 

6.4.2IFP will send master cassettes and other material to Hong Kong or IFP's
London office via the Airline's designated courier company, who will invoice the
Airline directly.

 

6.4.3If IFP incur costs over budget in providing Services and such increase in
costs are not agreed in advance by Airline, then IFP shall be responsible for
such costs.

 

7.SHARING OF COST SAVING

 

7.1The Airline agrees to share a portion of the cost savings achieved by IFP
through the negotiation of the License Fees for Western Movies and Western Short
Features as an incentive to IFP to optimize License Fees in favour of the
Airline.

 

7.2For Western Movies:

 

7.2.1For the period of ***

 

(a)The saving in License Fees has been calculated based on rates proposed in the
IFP response to the RFP minus the actual spend on License Fees (excluding the
deal with ***); and

 

(b)The Airline has shared with *** of the saving achieved which was ***.

 

7.2.2For the year of ***

 

(a)The saving in License Fees shall be calculated based on a target reduction of
*** (or another amount to be mutually agreed) from the rates agreed in the
annual budget minus the actual spend on License Fees; and

 

(b)The Airline will share with IFP *** of the saving achieved or *** whichever
is lower provided that the IFP scores an average of *** or higher on the Key
Performance Indicators during the two Performance Reviews per year.

 

 

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7.3For Western Short Features:

 

7.3.1For the period of ***

 

(a)The saving in License Fees has been calculated based on rates proposed in the
IFP response to the RFP minus the actual spend on License Fees (excluding the
deal with ***); and

 

(b)The Airline has shared with IFP *** of the saving achieved which was ***.

 

7.3.2For the year of ***

 

(a)The saving in License Fees shall be calculated based on a target reduction of
*** (or another amount to be mutually agreed) from the rates agreed in the
annual budget minus the actual spend on License Fees; and

 

(b)The Airline will share with IFP *** of the saving achieved or *** whichever
is lower provided that the IFP scores an average of *** or higher on the Key
Performance Indicators during the two Performance Reviews per year.

 

8.PAYMENT SCHEDULE, INVOICING AND REPORTING

 

8.1IFP shall issue invoices in US Dollar or UK Pounds to the Airline the month
prior to the Exhibition Period concerned, i.e. the invoice will be received by
the Airline on the 1st day of the month prior to the Exhibition Period in
question. For example, the Airline will receive invoices for January play cycle
by 1st December.

 

8.2Encoding fees will be charged as per the budgeted amount using an average for
each title based on the number of languages required. A reconciliation against
actual will take place on a quarterly basis and a credit or invoice will be
issued for the difference.

 

8.3Quotations for any additional requirements not detailed in the annual budget
must be sent in advance to the Manager Inflight Communication and Entertainment
of the Airline for approval. Only expenses that have been pre-approved by the
Airline will be payable by the Airline.

 

8.4Amounts payable by the Airline under this Agreement shall absent dispute be
paid in full within forty five (45) days of the end of the month after the
receipt by the Airline of the relevant invoice from IFP. All monthly invoices
from IFP shall be addressed for the attention of the Airline's Manager Inflight
Communication and Entertainment.

 

8.5A summary report of the expenses will be provided to the Airline twice a
year. The Parties will agree the format for such report.

 

8.6If any withholding, deduction or retention is required by law to be made by
the Airline in respect of any payments made to IFP under this Agreement,IFP
shall not be entitled to be paid or reimbursed the amount of such withholding,
deduction or retention or to be paid an extra amount to ensure that it receives
the payment it would have received if such withholding, deduction or retention
were not ma-de.

 

9.CANCELLATION

 

9.1The Airline may require IFP to change, reject, cancel or stop any and all
bookings, or previously agreed Programmes, and IFP shall in such circumstances
take all possible steps to comply, provided that IFP can do so within its
contractual obligations to Distributors, and other suppliers, as such
obligations have been entered into in accordance with the authority provided by
Airline. IFP shall be fully responsible for any liabilities or costs incurred
due to IFP entering into contracts with Distributors which provide for
commitments greater than that agreed to by Airline. If Airline changes, cancels
or stops any previously agreed bookings, it will pay IFP reasonable costs of
work completed to date relating to the bookings in question, based on the terms
of Clause 6. In the event of this occurrence, IFP will provide supporting
documentation needed to determine the amount of payment and will use best
endeavours to mitigate the cost to the Airline. IFP shall not be entitled to any
such payment if Airlines' changed, cancelled or cessation of a booking is due to
a breach by IFP on its obligation hereunder.

 

 

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9.2In the event that a Programme agreed to by the Parties as detailed in Clause
10 subsequently becomes unavailable by the Distributor, then IFP will use best
endeavours to ensure that any additional costs incurred by the Airline from any
third party or Business Partners as a result of such late change in a Programme
title are covered by the Distributor. Such costs may include but are not limited
to costs related to integration, Interactive Screen changes, translation and
will be covered by the Distributor in terms of a credit payment or reduction in
future licence fees from the Distributor in question.

  

10.APPROVALPROCESS

10.1IFP shall provide the Airline with a selection of recommendations for each
Programme including a synopsis of the content for video Programmes and a line up
of proposed tracks and artists for audio Programmes according to the monthly
programming timeline.

 

10.1.1For Western Movie Programmes, it is approximately nine (9) weeks prior to
the first day of the scheduled Exhibition Period.

 

10.1.2For Western Short Feature Programmes, it is approximately fifteen (15)
weeks prior to the first day of the scheduled Exhibition Period.

 

10.1.3For Audio Programmes, it is approximately thirteen (13) weeks prior to the
first day of the scheduled Exhibition Period.

 

10.2The Airline shall confirm the Programmes to be produced or licensed
according to the monthly programming timeline.

 

10.2.1For Western Movie Programmes, it is approximately eight (8) weeks prior to
the first day of the scheduled Exhibition Period.

 

10.2.2For Western Short Feature Programmes, it is approximately fourteen (14)
weeks prior to the first day of the scheduled Exhibition Period.

 

10.2.3For Audio Programmes, it is approximately twelve (12) weeks prior to the
first day of the scheduled Exhibition Period.

 

10.3The following procedures should be followed for the approval process:

 

10.3.1In the event of a notification by the Airline that any of the Programmes
proposed in Clause 10.1 for approval are unsuitable for any reason and rejected
by the Airline, IFP shall arrange for alternative Programmes to be suggested for
immediate consideration by the Airline.

 

10.3.2The process described in Clause 10.3.1 shall be repeated until such time
as the Airline has approved the suggested Programme line up for the Exhibition
Period in question and such process shall be undertaken in accordance with a
timetable as may be agreed by the Parties. Once approved by the Airline, the
Airline shall be liable for any additional costs incurred by IFP in implementing
any further changes or amendments to the Programme(s) as requested by the
Airline.

 

10.4The Airline's written approval of the Programmes will be IFP's authority to
proceed. The Airline will endeavour to provide approvals within the time period
detailed in Clause 10.2.

 

10.5Any reference in this Agreement to the Airline's written approval shall mean
written approval by representatives of the Airline who are authorised to approve
IFP's work and whose names are set out below:

 

 

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"Authorised Person" of the Airline

 

Manager, Product

 

Manager Inflight Communication & Entertainment

 

10.6Any reference in this Agreement to Airline's written approval regarding
commercial and contractual issues shall mean written approval by representatives
of the Airline who are authorised to approve IFP's commercial and contractual
issues and whose names are set out below:

 

"Authorised Person" of the Airline Manager

 

Purchasing, Marketing & Product Assistant

 

Purchasing Manager - Marketing

 

10.7Any change to the foregoing authorised persons during the term of this
Agreement will be notified in writing by the Airline to IFP.

 

10.8For the purposes of this Agreement "written approval" shall include approval
signified by:

 

10.8.1fax on the Airline's notepaper bearing the signature of an Authorised
Person;

 

10.8.2oral approval given by an Authorised Person provided this is in
circumstances where time does not permit written approval and is subsequently
supported by written confirmation within 24 hours; and

 

10.8.3e-mail emanating from the personal e-mail address of an Authorised Person.

 

10.9Where approvals or consents are required from Airline, Cathay has the
authority to provide the same on behalf of itself and Dragonair, and IFPshall
only obtain such approvals or consents from Cathay accordingly.

 

10.10Where an obligation is owed to IFP hereunder by Airline, such obligation
shall be satisfied by either Cathay or Dragonair performing or undertaking the
obligation.

 

11.BUDGET PROCESS AND MEETINGS

 

11.1Budget Process

 

11.1.1In September every year the Parties will jointly determine the annual
costs for all aspects of the Services for the following year. *** Budget is
included in SCHEDULE 4 - BUDGET FOR ***.

 

11.1.2IFP will be responsible for drafting the budget, and providing indicative
pricing for annual costs for all aspects of the Services.

 

11.1.3The Parties will jointly calculate the required number of Exhibitions,
number of cassettes and COs to be used for the following year's budget using the
information provided by the Airline.

 

11.2Meetings

 

11.2.1Throughout the year, the Parties will be expected to meet on a regula r
basis in order to conduct performance reviews, discuss strategy, analyse
passenger feedback and survey results, decide themes and finalise budgets and
commercial issues.

 

11.2.2In order to conduct such meetings, if such meetings are to be held in Hong
Kong, the Airline will provide Sub-load Tickets to relevant IFP Personnel, as
deemed necessary. The issuance of tickets will be at the sole discretion of the
Manager Inflight Communication and Entertainment of the Airline. At all times
IFP's employees must adhere to the Airline's Sub-load travel policy issued to
IFP from time to time.

 

 

*** Confidential treatment requested.

 

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11.2.3 On a bi-annual basis (twice every year), the Parties will conduct a
Performance Review whereby the Airline will score IFP's performance against a
set of predetermined Key Performance Indicators while IFP will give feedback on
the Airline's performance. The Key Performance Indicators and the Airline
feedback form are detailed in SCHEDULE 5 - KEY PERFORMANCE INDICATORS.

 

12.BUSINESS PARTNERS

 

12.1IFP shall co-operate fully with all the Airline's suppliers who have been
appointed to provide the Airline's IFE services. IFP shall endeavour to ensure
that all aspects of the Services are correctly integrated where necessary with
other work, services, materials, processes and equipment supplied or operated by
the Airline's Business Partners in fulfilment of the Services and in meeting the
deadlines laid down by the Airline or the Airline's Business Partners. The
Airline will ensure that its Business Partners who have been appointed to
provide services that are relevant to this Agreement cooperate with IFP as
reasonably necessary for IFP to perform the Services under this Agreement.

 

12.2.IFP warrants that it will use best endeavours to work co-operatively with
all nominated Business Partners of the Airline to ensure that attention to
detail, timelines, minimisation of additional costs and on time delivery are
ensured for the Services.

 

13.INTELLECTUAL PROPERTY RIGHTS

 

13.1The Airline retains all Intellectual Property Rights in all specifications,
documents and reports supplied to IFP by the Airline in connection with this
Agreement and the Services.

 

13.2.IFP will be responsible for obtaining and warrants that it will obtain all
copyright permissions and Exhibition rights and all other similar rights and
permissions relating to the Programmes required to enable the Airline to use the
Programmes on all Aircraft as anticipated hereunder, including all rights to
duplicate, load and for passengers to use such Programmes and associated
copyright works and all charges, fees, or royalties chargeable for the exercise
of the above rights and liabilities shall be borne by FP.

 

13.3IFP further warrants that the Exhibitions of the Programmes (including any
foreign language sound track and/or subtitles) and reproduction or use of the
Programmes will not infringe the copyright, performing rights, moral rights or
any other rights of any third party whatsoever and that the Programmes will not
be obscene or defamatory.

 

13.4Ownership and all copyright and all other intellectual property rights in
the Programmes shall be retained at all times by the original Distributors,
suppliers or copyright owners.

 

13.5All rights, title and interest in material, such as airline logos, fillers
or advertisements which are inserted in Programmes exclusively for the - Airline
(including all Intellectual Property Rights therein) shall vest in and/or remain
the property of the Airline or the third party supplier of such material (as the
case may be).

 

13.6For the purposes of this Clause, "Intellectual Property Rights" means
patents, trademarks, design rights (whether registrable or otherwise),
applications for any of the foregoing, copyright, database rights, know-how,
trade or business names and other similar rights or obligations whether
registrable or not in any country.

 

13.7The parties acknowledge that Airline will be responsible for paying any
royalties due to Phonographic Performance (South East Asia) Ltd and CASH in
respect of Public Performance Rights and the performance of music and sound
recordings on Aircraft.

 

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14.INSURANCE

 

14.1Without limiting any obligation of IFP hereunder, it is agreed that IFP
shall effect and maintain at its own expense at all times for the duration of
this Agreement the following policies of insurance:-

 

14.1.1Workers' Compensation and Employers' Liability Insurance with a limit of
liability of not less than *** covering all claims and liabilities in respect of
the death of or injury to any person employed by, or who is deemed to be a
worker of IFP or any sub-contractor of IFP in connection with the provision of
the Services;

 

14.1.2Insurance covering general third party liability with a limit of liability
of not less than ***; and

 

14.1.3such other insurance as reasonably requested by the Airline in writing
from time to time.

 

14.2IFP shall:-

 

14.2.1observe and perform all terms and conditions of such insurance and pay all
deductibles;

 

14.2.2on request provide the Airline with the certificates or policies of the
insurances, other details of the insurance and evidence of currency and premium
payment; and

 

14.2.3ensure that all insurance arranged by IFP are effected with reputable
financially secure insurers approved by the Airline and that all insurance is on
terms acceptable to the Airline.

 

14.3If IFP fails to take out any of the insurance required under this Clause,
the Airline may at its sole discretion take out and maintain such insurances and
deduct the costs from any moneys due to IFP or treat the failure to insure as a
material breach under this Agreement.

  

15.REPRESENTATIONS AND WARRANTIES

 

15.1Each Party represents and warrants to other Party as follows:-

 

15.1.1it is a company or corporation duly incorporated under the laws of the
place of its incorporation and has the corporate power and authority to accept
the terms of this Agreement and to perform its obligations under it; and

 

15.1.2its entry into this Agreement has been duly and validly authorised and all
requisite corporate action has been taken in order to make such entry valid and
binding upon it in accordance with the terms of this Agreement.

  

16.TERMINATION

 

16.1Either Party may terminate this Agreement by giving to the other Party no
less than *** notice in writing after the Initial Term.

 

16.2Either Party may terminate this Agreement with immediate effect by sending a
written notice to the other Party if:

 

16.2.1that other Party commits a material breach of its obligations under this
Agreement and, in the case of a breach capable of remedy as determined under
Clause 16.3, such breach is not remedied within fourteen (14) days of that other
Party being specifically required to do so;

 

16.2.2a receiver, manager, administrator or like person takes possession or is
appointed of the whole or any part of the undertaking or property of that other
Party;

 

*** Confidential treatment requested.  

 

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16.2.3an order is made by a Court for the winding-up of that other Party or a
resolution is passed by the shareholders of that other Party for its winding-up,
except for the purposes of amalgamation or reconstruction in such manner that
the resulting company is bound by and assumes the obligations imposed on that
other Party by this Agreement;

 

16.2.4that other Party ceases to pay its debts or becomes unable to pay its
debts;

 

16.2.5anything having a similar effect with any of the events referred to in
Clauses 16.2.2 to 16.2.4 inclusive under the law of any jurisdiction occurs in
relation to that other Party;

 

16.2.6that other Party disposes of the whole or any substantial part of its
undertaking or assets; or

 

16.2.7that other Party ceases or threatens to cease to carry on all or any
substantial part of its business.

 

16.3For the purposes of Clause 16.2.1, a breach shall be considered capable of
remedy if the Party in breach can comply with the provision in question in all
respects to the sole satisfaction of the other Party, other than as to the time
of performance, provided that time of performance is not of the essence.

 

16.4The termination of this Agreement shall be without prejudice to any rights,
obligations and liabilities of any Party which have accrued at the time of
termination.

 

16.5Upon any termination of this Agreement (howsoever occasioned), IFP shall
forthwith deliver up to the Airline all copies of any information and data
supplied to IFP hereunder and shall certify to the Airline that no copies of
such information or data have been retained.

 

17.INDEMNITY BY IFP

 

17.1IFP shall indemnify on demand and hold harmless the Airline and its
employees, directors, agents and officers from and against any and all costs,
damages, expenses, losses, claims or liability incurred by it (including all
costs and expenses which the Airline may incur in defending any proceedings)
arising out of or in connection with (directly or indirectly) this Agreement,
including but not limited to:-

 

17.1.1any breach of any terms of this Agreement or the performance of the
Services by IFP;

 

17.1.2any breach of any warranty or undertaking given by IFP or implied by
applicable law in relation to the Services or the provision of the Services;

 

17.1.3any negligent or wrongful act or omission of IFP or its employees,
directors, agents or officers;

 

17.1.4any disputes, claims or proceedings brought by a third party alleging that
the Services (or the provision thereof) or the Programmes and/or associated
materials provided by IFP hereunder or the copying or use thereof infringe any
patent, copyright, design right, trademark or other intellectual property rights
of any other person; and/or

 

17.1.5any non-compliance of the Services with the specifications set out in
SCHEDULE 1- PROGRAMME SPECIFICATIONS.

 

except to the extent that such costs, damages, expenses, losses, claims or
liability are due to the gross negligence or wilful misconduct of the Airline or
its employees, directors, agents or officers.

 

17.2This indemnity shall survive termination of this Agreement.

  

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18.ENTIRE AGREEMENT

 

18.1This Agreement supersedes any agreements made or existing between the
Parties before or simultaneously with this Agreement in respect of the provision
of services similar to the Services (all of which shall be deemed to have been
terminated by mutual consent with effect from the commencement date of this
Agreement but without prejudice to the rights and liabilities of the Parties
accrued before such date), and constitutes the entire understanding between the
Parties in relation to the subject matter of this Agreement.

 

19.REMEDIES CUMULATIVE

 

19.1The rights of the Parties under this Agreement are cumulative and do not
exclude or restrict any other rights (except as otherwise provided in the
Agreement).

 

20.NO WAIVER

 

20.1No delay or failure by either Party to exercise any of its powers, rights or
remedies under this Agreement shall operate as a waiver of them, nor shall any
single or partial exercise of any such powers, rights or remedies preclude any
other or further exercise of them. No provision of this Agreement and no breach
of any provision of this Agreement shall be waived, altered or modified except
by written instrument. No waiver of any breach shall affect or alter this
Agreement, but each and every provision of this Agreement shall continue in full
force and effect with respect to any other breach then existing or subsequent
breach of any provision.

 

21.SEVERANCE

 

21.1If any provision of this Agreement is not or ceases to be legal, valid,
binding a nd enforceable under the law of any jurisdiction, neither the
legality, validity, binding effect or enforceability of the remaining provisions
under that law nor the legality, validity, binding effect or enforceability of
that provision under the law of any other jurisdiction shall be affected.

 

22.AMENDMENT

 

22.1No amendment to this Agreement will be effective unless in writing and
executed by all the Parties.

 

23.CONFIDENTIALITY

 

23.1Each Party shall treat as confidential all confidential information obtained
from the other pursuant to this Agreement and shall not divulge such information
to any person (except to such party's own employees and then only to those
employees who need to know the same) and shall not use the information for any
purpose other than for which it was provided without the other Party's prior
written consent. This clause shall not extend to information (i) which was
rightfully in consent. This clause shall not extend to information (i) which was
rightfully in the possession of such Party prior to the commencement of
negotiations leading to this Agreement, (ii) which is already public knowledge
or becomes so at a future date (otherwise than in breach of this clause), (iii)
which is trivial or obvious, (iv) which is required to be disclosed to comply
with any court order or stock exchange requirement, or (v) where disclosure is
required by law. Each Party shall ensure that its employees are aware of and
comply with the provisions of this clause. If IFP appoints any sub-contractor
then IFP may disclose confidential information to such subcontractors, subject
to Airline's prior consent, which shall not be unreasonably withheld, and such
sub-contractors or assignees agreeing to the same confidentiality terms as
contained herein.

 

23.2The provisions of this Clause 23 shall survive the expiration or termination
of this Agreement.

  

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23.3In particular during and after termination of this Agreement IFP
acknowledges its responsibility to treat in complete confidence all the
demographic, marketing and sales information and statistics relating to the
Airlines' business which Airline may supply IFP in the course of this Agreement.

  

24.ADVERTISING

 

24.1Neither IFP or its affiliates nor any of its employees, agents or
subcontractors shall mention the name of the Airline in any advertisement,
public relations exercise or promotional material relating to or arising out of
this Agreement without the prior written permission of the Airline. Such
permission shall not be unreasonably withheld.

  

25.ASSIGNMENT

 

25.1No Party may assign or subcontract any of the rights or obligations of that
Party under this Agreement without the prior written consent of other Party to
this Agreement. Such consents shall not be unreasonably conditioned, withheld or
delayed except that the Airline may assign or sub-contract the whole or any part
of its rights or obligations to any of its subsidiaries or affiliates.

 

25.2In the event of the Airline consenting to any sub-contracting of the whole
or any part of this Agreement, IFP undertakes and warrants to the Airline as
follows:

 

25.2.1that any agreement between IFP and such a sub-contractor shall be in the
same form as the relevant parts of this Agreement and without limitation the
agreement with a subcontractor shall include provisions regarding
confidentiality and liability for loss, termination, force majeure, damage,
negligence and infringement to intellectual property rights where appropriate;

 

25.2.2that the sub-contractor shall comply with its obligations under such
Agreement so as to ensure that all the obligations of IFP under this Agreement
are fully performed and IFP shall be responsible for all liabilities, acts and
omissions of any subcontractor; and

 

25.2.3that if it subcontracts any part of the Services, that its subcontractors
shall be fully experienced, properly qualified and properly organised, equipped
and financed to undertake such subcontracted Services.

 

25.3If in the course of providing the Services during the Term of this Agreement
IFP decides to use the services of any company in which IFP has a material
financial interest, IFP will declare this and before commissioning such services
obtain the consent of the Airline thereto.

  

26.EXPENSES

 

26.1Each of the Parties is responsible for that Party's own legal and other
expenses incurred in the negotiation, preparation and completion of this
Agreement.

  

27.FORCE MAJEURE

 

27.1In this Agreement, "force majeure" shall mean any cause preventing a 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 Party so prevented, including without limitation, strikes,
lock-out or other industrial disputes (whether involving the workforce of the
Party so prevented or of any other Party), act of God, war, riot, civil
commotion, malicious damage, compliance with any law or governmental order,
rule, regulation or direction, accident, breakdown of plant or machinery, fire,
flood, or storm.

 

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27.2If a Party is prevented or delayed in the performance of any of its
obligations under this Agreement by force majeure, that Party shall immediately
serve notice in writing on 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 to performance of its obligation under Clause 27.4, have no
liability in respect of the performance of such of its obligations as are
prevented by the force majeure events during the continuation of such events,
and for such time after they cease as is necessary for that Party, using all
reasonable endeavours, to recommence its affected operations in order for it to
perform its obligations.

 

27.3If a Party is prevented from performance of its obligations for a continuous
period in excess of three (3) months, the other Party may terminate this
Agreement immediately on service of written notice upon the Party so prevented,
in which case no Party shall have any liability to any other except that rights
and liabilities which accrued prior to such termination shall not be affected.

 

27.4The Party claiming to be prevented or delayed in the performance of any of
its obligations under this Agreement by reason of force majeure shall use all
reasonable endeavours to bring the force majeure event to a close or to find a
solution by which the Agreement may be performed despite the continuance of the
force majeure event.

  

28.AUDIT

 

28.1In respect of all expenditure and costs which is incurred by IFP hereunder
and which is reimbursable by the Airline under this Agreement, IFP shall
maintain such accounts and records (the 'Records) as are reasonably necessary
for the purpose of enabling the Airline to conduct an audit of that expenditure.

 

28.2IFP will allow the Airline, by its own personnel or by a professionally
qualified independent auditor, access to all the Records during the term of this
Agreement and for 12 months afterwards on not less than 10 days written notice
at any time during normal business hours for the purposes of auditing or
otherwise inspecting them, provided that in the absence of exceptional
circumstances IFP shall not be obliged to allow such access or inspection more
than once during any 6 month period.

 

28.3Should any audit or inspection of the Records by the Airline reveal that the
Airline has been overcharged, IFP shall reimburse to the Airline the amount of
the overcharge within 7 days and should the total overcharge for the year exceed
HK$100,000 then the Airline will also refund any professional costs related to
the performance of the audit (i.e. the cost of the auditors).

 

28.4IFP will afford to the Airline all reasonable assistance in the carrying out
of such audit, whilst the Airline and its auditor will ensure that any
information obtained in the course of the audit concerning IFP's business is
kept in the strictest confidence and not used for any purpose other than the
proper conduct of the audit.

  

29.RIGHT OF REPLACEMENT

 

29.1The Airline reserves the right to demand the replacement at any time by
giving three (3) months’ notice of any employee agent or subcontractor of IFP
working on the Airline's account if in the opinion of the Airline the
performance of such person is unsatisfactory. The Airline agrees to inform IFP
in writing of the reasons and supporting evidence for the demand to replace such
employee, agent or sub-contractor. If IFP receives such a demand it shall
replace such person.

 

29.2IFP warrants that the core team will remain as specified at the outset of
this Agreement unless any of this core team leaves IFP. In such circumstances,
IFP warrants that it will replace such personnel with personnel of the same or
higher caliber and experience.

 

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29.3It is imperative that a dedicated account manager is appointed to work on
the Airline account. Should the current account manager leave IFP for whatever
reason, the Airline is entitled to review the resumes of any prospective
candidates for this role and approve the appointment, since working with the
account manager will be a critical factor in the success of the working
relationship of the Parties.

  

30.NO AGENCY OR PARTNERSHIP

 

30.1Nothing in this Agreement shall constitute or be deemed to constitute a
partnership between the Parties hereto or constitute IFP as agents of the
Airline for any purpose whatsoever and IFP shall have no authority or power to
bind the Airline or to contract in the name of or create a liability against the
Airline in any way or for any purpose. For the avoidance of doubt in all its
contracts for third party goods or services, IFP shall act as principal at law.

  

31.NOTICES

 

31.1Every notice or communication under this Agreement must be in writing and
may, without prejudice to any other form of delivery, be delivered personally or
sent by post or transmitted by fax or email.

 

31.1.1In the case of posting, the envelope containing the notice or
communication must be addressed to the intended recipient at the authorised
address of that Party and must be properly stamped or have the proper postage
prepaid for delivery by the most expeditious service available (which will be
airmail if that service is available) and, in the case of a fax or email, the
transmission must be sent to the intended recipient at the authorised number or
address of that Party.

 

31.1.2Subject to Clause 31.2, for the purpose of Clause 31, please refer to
SCHEDULE 3 - CONTACT AND DELIVERY DETAILS for the authorised address, fax number
and email of each Party.

 

31.2No change in any of the particulars set out in SCHEDULE 3 - CONTACT AND
DELIVERY DETAILS will be effective against a Party until it has been notified to
that Party.

 

31.3A notice or communication will be deemed to have been duly given and
received:-

 

31.3.1on personal delivery to an addressee or on a business day to a place for
the receipt of letters at that addressee's authorised address; or

 

31.3.2in the case of posting, where the addressee's authorised address is in the
same country as the country of posting, at 10 a.m. (local time at the place
where the address is located) on the second business day after the day of
posting; or

 

31.3.3in the case of posting, where the addressee's authorised address is not
the same country as the country of posting, at 10 a.m. (local time at the place
where that address is located) on the fifth business day after the day of
posting; or -

 

31.3.4in the case of a fax, on issue to the sender of an O.K. result
confirmation report or, if the day of issue is not a business day, at 10 a.m.
(local time where the authorised fax number of the intended recipient is
located) on the next business day or

 

31.3.5in the case of an email, when the sender receive acknowledgement from the
address.

 

31.4For the purpose of Clause 31.3, a "business day" means a day which is not a
Saturday or a Sunday or a public holiday in the country of posting or
transmission or in the country where the authorised address or fax number of the
intended recipient is located and, where a notice is posted, which is not a day
when there is a disruption of postal services in either country which prevents
collection or delivery.

 

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32.SUCCESSORS

 

32.1This Agreement is binding on the successors of each Party.

 

33.LAW AND JURISDICTION

 

33.1This Agreement is governed by and will be construed in accordance with Hong
Kong law.

 

33.2The parties submit to the non-exclusive jurisdiction of the Hong Kong courts
and each Party waives any obligation to proceeding in Hong Kong on the grounds
of venue or inconvenient forum.

 

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IN WITNESS whereof the Parties hereto have caused this Agreement to be duly
executed by their authorised representatives the day and year first above
written

 

Signed for   Witnessed by:   CATHAY PACIFIC AIRWAYS LTD. by:               /s/
Alex McGowan   /s/ Eva Chan   Alex McGowan   Eva Chan   Manager Product  
Assistant Purchasing Manager - Marketing           Date: ***   Date: ***        
  Signed for   Witnessed by:   HONG KONG DRAGON AIRLINES LTD.       by its duly
authorized agent:               /s/ Alex McGowan   /s/ Eva Chan   Alex McGowan  
Eva Chan   Manager Product   Assistant Purchasing Manager - Marketing          
Date: ***   Date: ***           Signed for   Witnessed by:   INFLIGHT
PRODUCTIONS LTD.       by:               /s/ Joan Barker   /s/ Janet Winstanley
  Joan Barker   Janet Winstanley   Sales & Marketing Director   Client Services
Manager           Date: ***   Date: ***  

 

 

*** Confidential treatment requested.

 

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SCHEDULE 1 -PROGRAMME SPECIFICATIONS

 

For Cathay:

 

Specification of Western Movies

 

1.Overall Strategy for Movies

 

(a)Cathay aims to present a diverse and interesting range of movies from
Hollywood's blockbusters to popular Asian movies, from the hottest new releases
to classic movies.

 

(b)The selection includes new releases, popular blockbusters and internationally
acclaimed art house movies in multiple languages catering to the Cathay's
diverse demographic mix. The languages include English, Cantonese, Mandarin,
Japanese, Korean, Hindi, French, Italian and German

 

(c)Movies are only available on routes of over 2 hours 40 minutes flying time.

 

(d)On regional aircraft, *** movies are offered each month on the Distributed
Channels (*** on inbound flights and *** on outbound flights) in all classes.

 

(e)On long-haul Aircraft equipped with Panasonic 3000 IFE system, *** movies are
offered each month on the Distributed Channels (*** on inbound flights and ***
 on outbound flights) in Economy Class while *** movies are offered each month
on the AVOD system in First and Business Class.

 

(f)On long-haul Aircraft equipped with Panasonic eX2 IFE system, ***  Movies on
the AVOD system are offered in all classes.

 

2.Movies Categories

 

(a)A total of 50 movies are offered each month under the following categories:

  

 

 

Quantity available each flight

    Distributed Channel     Categories Regional aircraft Long-haul aircraft AVOD
Description New Release *** *** *** Hollywood's hottest new blockbusters. (***
of them are updated every month.) Re-View *** *** ***

Hit movies from the past few years. (*** of them are

updated every month.)

Arthouse *** *** *** The best independent films and arthouse movies. (*** of
them are updated every month.) Asia on Film *** *** ***

Quality Asian cinema selected from the best in the region.

(*** of them are updated every month.)

Disney *** *** *** A selection of Disney movies for the young ones aboard. (***
of them is updated every month.) Your Favourites *** *** *** Our selection of
specially- themed movies. (*** of them are updated every month.) Total *** ***
***  

 

 

*** Confidential treatment requested.

 

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3.Specification of Western Movies

 

(a)Please refer to the Video Channel Line-up for details.

 

(b)The quantity of movies shown below is the total number of movies required
every month for both inbound and outbound flights.

 

Categories Quantity Movie Code Language Subtitles For distributed channels of
long-haul flights of all aircraft: New Releases *** 0/B: A, C,E, G, I, K 1/B: B,
D, F, H J L English (+1) Chinese Re-View *** 0/B: M 1/B: N English ( +1) Chinese
Arthouse *** 0/B: 0 1/B: p Original Chinese Disney *** 0/B: Y, AA 1/B: Z, BB
English and Cantonese N/A For distributed channels of long-haul flights of
long-haul aircraft only: Re-View *** 0/B: CC 1/B: DD English (+1) Chinese
(optional) Arthouse *** 0/B: EE 1/ B: FF Original Chinese (optional) For AVOD of
long-haul flights of long-haul aircraft only: Re-View *** N/A English (+1)
Chinese (optional) Arthouse *** N/A Original Chinese (optional) Your Favourites
*** N/A English (+1) Chinese (optional) TOTAL ***                  

(c)Remarks:

"0/B" means outbound flight, "1/B" means inbound flight

The following movies are held over from the previous month:

*** movies from New Releases

*** movies from Disney

*** movies from Re-View in AVOD system

*** movies from Arthouse in AVOD system

*** movies from Your Favourites in AVOD system

"English (+1)" means the movie should be in English and it is preferable to have
audio soundtrack of an additional language, which can be French, German,
Italian,Japanese or Korean.

•"Original" means the audio soundtrack should be in original language of the
movie, e.g. English, French, German and Italian.

"Chinese (optional)" mea ns it is preferable to have Chinese subtitles if it is
available.

(d)Other Requirements

There should be at least one movie with each of the additional languages in the
movie mix each month.

•For ***  out of the *** movies held over in the New Release category, the
choice of additional language should be different from the one shown in the
previous month.

 

*** Confidential treatment requested.  

 

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Specification of Western Short Features

 

1.Overall Strategy for Short Features

 

(a)Popular TV programmes are acquired from around the world. The selection
includes popular sitcoms, lifestyle, documentary and sport programmes in
English, Cantonese, Mandarin, Japanese and Hindi.

 

(b)As well as high rating shows, we also seek to include a variety of niche
programming that has received critical acclaim.

 

(c)A total of up to *** of Western Short Features is offered on Distributed
Channels (***  on inbound flights and ***  on outbound flights) in all classes
of regional Aircraft and in Economy Class of long-haul Aircraft equipped with
Panasonic 3000 IFE system.

 

(d)Over *** of Western Short Features are shown on AVOD system each month in
First and Business Class of long-haul Aircraft equipped with Panasonic 3000 IFE
system and in all classes of long-haul Aircraft equipped with Panasonic eX2 IFE
system.

 

(e)On routes over 2 hours 40 minutes flying time, compilations of 135-minute
short feature programmes are shown on repeating cycles. There are 8 TV channels
on flights operated by regional Aircraft while there are 12 TV channels on
flights operated by long-haul Aircraft.

 

(f)On routes under 2 hours 40 minutes flying time, compilations of 50-minute
short feature programmes are shown on repeating cycles. There are 20 TV channels
on flights operated by regional Aircraft while there are 26 TV channels on
flights operated by long-haul Aircraft.

 

(g)All programmes, except those in the TV Series category (TV box sets) are
updated monthly, while at least one box set is updated every month. For short
features offered on the Disney Channel, 2 hours of the programming is updated
every 3 months.

 

(h)50-minute and 135-minute programming blocks are combinations of 30-minute
programmes and 50-minute programmes. The number of programmes selected in a
programming block may vary depending on the actual runtime of the programmes
included. Extra fillers may be required to fill up a 50-min. or 135-min.
programming block.

 

2.Short Features Categories

 

(a)Over 80 hours of short features are offered each month under the following
categories:

 

 

Categories

 

Quantity

 

Description

 

HKTV

30 min x ***

50 min x *** 

***

 

 

Cantonese programmes and variety shows

 

TV Asia

30 min x ***

60 min x *** 

 

 

An entertaining selection of Asian short features

  

 

*** Confidential treatment requested.

  

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Comedy

30 min x ***

 

Smash-hit comedies from all around the globe

 

E! Entertainment

30min x *** 

60min x ***

 

 

Gossip, style news and celebrity interviews from Hollywood

 

Lifestyle & Reality

30 min x ***

60 min x *** 

 

 

Must-watch international reality and lifestyle shows

 

 

*** Confidential treatment requested.

  

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Categories

 

Quantity

 

Description

 

Drama

 

60 min x ***

 

 

Action, romance and more from the world's hottest dramas

 

Documentary

30 min x ***

60 min x ***

 

 

Riveting and thought-provoking documentaries

 

Discovery

60 min x ***

 

Exploring the history and mysteries of our planet

 

Disney Channel

 

30 min x ***

 

 

The most popular cartoons from the Disney Channel

 

Sport

30min x ***

60 min x ***

 

 

News, profiles and highlights from the sporting world

 

News & Sports

15 min x ***

(Daily)

30 min x ***

(Weekly)

***

 

(1 Hour)

 

Daily news and coverage of major sporting events

 

TV Series

(Box Sets)

30 min x ***

3 x 60 minx ***

(21 hours)

 

Get hooked on box-sets of the hottest

TV shows on the planet

 

Total

 

***

 

 

(b)Remarks:

•TV Series is only available in the AVOD library. It consists of *** Drama box
sets (***  x 60 min), *** Documentary box set (*** x 60 min) and *** Comedy box
set (***  x 30 min). Drama and Documentary box sets are updated quarterly, while
the Comedy box set is updated bi-monthly.

 

3.Channel Line-up for Distributed Channels

 

  No. of channels available on each flight   Flights over 2 hr. 40 min.
(Long-haul flights) Flights under 2 hr. 40
min. (Short-haul flights) Category Regional
Aircraft Long-haul
Aircraft Regional
Aircraft Long-haul
Aircraft HKTV *** *** *** *** TV Asia *** *** *** *** Comedy *** *** *** *** E!
Entertainment

***(Outbound)

*** *** *** Lifestyle & Reality

*** (Inbound)

*** *** *** Drama

*** (Inbound)

*** *** *** Documentary

*** (Outbound)

*** *** ***

 

 

*** Confidential treatment requested.

 

 

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Discovery *** *** *** *** Disney Channel *** *** *** *** Sport *** *** *** ***
News & Sports *** *** *** ***

 

Total

***

(Inbound)

***

(Outbound)

***

(Inbound)

***

(Outbound)

*** ***

 

 

*** Confidential treatment requested.

 

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4.Specification of Western Short Features

 

(a)Please refer to the Video Channel Line-up for details.

 

(b)The quantity shown below is the total number of Western Short Features
Programmes required every month for both inbound and outbound flights.

 

Categories Quantity Language Subtitles

 

Comedy

30 min x***

 

English

Chinese

(5 hours)

 

E! Entertainment

30 min x *** 60 min x ***

 

English

 

N/A

 

Lifestyle & Reality

30 min x *** 60 min x ***

 

English

 

N/A

 

Drama

60 min x ***

 

English

Chinese

(6 hours)

 

Documentary

30 min x *** min x ***

 

English

 

N/A

 

Discovery

60 min x ***

 

English

 

N/A

 

Disney Channel

30 min x ***

English and

Cantonese

 

N/A

 

Sport

30 min x *** 60 min x ***

 

English

 

N/A

 

TV Series

(Box Sets)

30 min x ***

(Comedy)

3 x 60 min x ***

 

(2 Drama, 1Documentary) ***

 

 

 

English

 

 

N/A

TOTAL ***    

 

(c)Remarks:

•Chinese subtitles are required for *** hours of programmes in the category of
Comedy and *** hours of programmes in the category of Drama.

•Drama and Documentary box sets are updated quarterly, while Comedy box set is
updated bi-monthly.

 

Technical Specification for Western Movies and Western Short Features

(a)Specification for Broadcast Channels

•NTSC system

VHS cassettes

•Stereo

(b)Specification for AVOD

•Encoding: MPEG 1 @ 352 x 240

Constant bit rate

Video bit rate @ 1.5 Mb/s

•Audio bit rate @ 128kb/s

NTSC@ 30 fps

 

 

*** Confidential treatment requested.

 

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Specification of Audio

 

1.Overall Strategy for Audio

 

(a)Cathay strives to bring passengers the best audio entertainment in the sky.
The music incorporates various genres and styles from all around the world. It
is carefully chosen to suit all musical tastes. There are currently 22 broadcast
radio channels in 9 different languages for passengers to select from. The
programmes range from the latest pop and rock to classical, jazz, relaxation
tips and interviews with the stars. They are available for passengers of all
classes.

 

(b)Audio on Demand (AOD) system with a CD library is available to passengers in
First and Business Class on long-haul aircraft equipped with Panasonic 3000 IFE
system and passengers in all classes on long-haul aircraft equipped with
Panasonic eX2 IFE system. There is also a Juke Box function that allows
passengers to compile their own song list.

 

(c)There are currently 10 categories featuring approximately 150 CD albums from
around the globe. 15 CDs are updated on a monthly basis. In addition to the CD
library, 12 CDs are selected specifically for children.

 

(d)Boarding music is produced every year and is played on all flights during
take off and landing for passengers to relax and enjoy.

 

2.Radio Channels

 

(a)There are a total of 22 customised radio channels available in all classes on
all routes. All channels are broadcast in a repeating cycle of 120 minutes.

 

 

No.

Channel name

 

Description

Update

frequency

 

Language

1 Hot:HK

Hosted programme with the greatest

Cantonese pop from HK charts. Upbeat & Lively, targets passengers of 20s to 40s.

Monthly Cantonese 2 A Musical Journey Hosted programme with the most memorable
tunes. Stories interweave between songs. Targets more mature _Qassengers.
Monthly Cantonese 3 Mandarin Zone Hosted programme with latest Mandarin hits
including artist interviews. Monthly Mandarin 4 Chinese All Time Hits Hosted
programme with the most memorable Chinese hits from the good old days. Monthly
Cantonese 5 J-Pop Hosted programme with the latest Japanese Pop music or New
Enka. Monthly Japanese 6 Mumbai Beat Hosted programme with a mix of Indian
fusion, Bollywood remixes, Bollywood songs, ghazals and older film music.
Monthly Indian

- 7 Philippine Soundwave Hosted programme the latest and best from the
Philippine music world. Monthly Tagalog 8 Classical Moods Popular and familiar
light classics from the great composers, uninterrupted. (No Presenter) Monthly
N/A 9 Classical Choice Hosted programme with a mix of favourite pieces from the
lighter side of the classical-music repertoire, with works by a varied
collection of composers. Monthly English 10 All Time Hits Hosted programme with
favourite hits from the 50s, 60s and 70s. Monthly English

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No. Channel name Description Update frequency Language 11 Rewind Hosted by
programme with the 80's to 90's Q_op or rock show. Monthly English 12 Popzone
Hosted programme with the fastest moving, high-flying chart show direct from
Planet Pop! All the latest tracks are here from some of the biggest stars in
music today. Monthly English 13 Rock Hosted programme with a selection of the
best rock in the sky as he plays new and classic music from some of the world's
greatest bands. Monthly English 14 Dancescape Hosted programme with the DJ's
personal selection, get in the beat or simply chill out to these tunes. Monthly
English 15 Easy Moods Hosted programme with a mellow mix of light contemporary
love songs and ballads from a diverse group of artists. Monthly English 16 Jazz
Hosted programme with a collection of cool, laid-back jazz. Monthly English 17
Serenity two hours of physical and mental relaxation, peaceful music, health and
travel tips etc. (No presenter) Bi-monthly English 18 Music Special Hosted
programme with two hours of music and celebrity_ interviews. Bi-monthly English
19 J-Medley Hosted programme with older pop songs and all time hits from 70s to
early 2000s. This channel also includes some instrumental pieces, light jazz and
well-known Enka. Bi-monthly Japanese 20 Korean Music Box Hosted programme with
music from the movies,TV and chart-topping artists of Korea. Bi-monthly Korean
21 Malay Hits Hosted programme with the current Malaysian music. A big portion
of the channel will spotlight the latest Malay pop songs, and there are also
some more popular Indonesian pop songs. Bi-monthly Malay 22 Thai Mix Hosted
programme with a variety of Thai contemporary hits. Bi-monthly Thai

(b)Each audio channel is 120 minutes in length and has approximately 26 tracks.

 

(c)All channels, except 'Classical Moods' and "Serenity", are hosted with one
presenter. (d) The presenters must be suitable for Cathay's demographics, and
should not have strong accents.

 

(e)There are currently no sponsored channels.

 

(f)Jingles are sometimes used and are permitted. (g) Presenters usually make
reference to Cathay.

 

(h)Presenters may conduct interviews with celebrities or guests where
appropriate.

 

(i)Method of recording is flexible as long as the end product is suitable for
inflight listening. They can be recorded either on computer or in studio.

 

(j)16 channels a re updated every month while 6 channels a re updated
bi-monthly.

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3.Audio on Demand (AOD) Library

 

(a)The AOD Library is available to passengers in First and Business Class on
long-haul aircraft equipped with Panasonic 3000 IFE system and passengers in all
classes on long-haul aircraft equipped with Panasonic eX2 IFE system. There are
currently 10 categories featuring up to 150 CD albums.

 

Genre Description All Time Hits "Best of ...." compilations from major artists
and specifically to feature officially released 'Greatest Hits' albums by
international selling artists. Classic Albums Classic albums are generally
considered to have stood the test of time, and remained popular throughout
changing trends in recent music history, e.g. Hotel California of Eagles, Sgt.
Pepper's Lonely Hearts Club Band of Beatles. Rock & Pop

The biggest new releases and internationally renowned pop and rock performers,
Western pop COs from the US and UK charts, e.g. Confessions On The Dance Floor
of Madonna a nd X & Y of Coldplav.

Easy Listening A cool and pop collection of contemporary easy listening ballads.
Country A dedicated channel for 'Country' enthusiasts. Jazz A dedicated channel
for 'Jazz' enthusiasts. Focus on internationally popular artists. Soundtracks
Introduce classic musicals, soundtracks of movies like Grease, Saturday Night
Fever etc. Classical Includes classical and opera music. Mostly well-known
popular favourites with a few more challenging works. Cantonese Latest Cantonese
pop albums, plus new releases of older artists (e.g. Greatest Hits releases).
New albums of old songs including New and Best of, e.g. Tribute to Leslie
Cheung. Asian Selection Primarily pop for Mandarin like Fish Leong, Stefanie
Sun, old COs like Teresa Teng,Emil Chau; Korean e.g. BoA, Rain & Japanese
including some old albums like The best of Pink Lady, New Enka e.g.
KiyoshiHikawa ; Japanese easy listening e.g. Ken Hirai & Rimi Natsukawa; and
selections from other countries occasionally (Philippines, Hindi).

 

(b)There is currently a CD library of approximately 150 COs.

 

(c)There is a Juke Box function that allows passengers to compile their own song
list. (d) 15 COs will be changed every month to ensure that the assortment is
up-to-date.

 

(e)The COs are divided into 10 categories a nd a minimum of five COs is required
in each category.

 

(f)In addition to the CD library, 12 COs are specially selected for children,
aged from 3 to teen. COs in the Kids category are updated on ad hoc basis as
agreed between the parties.

 

4.Boarding Music

 

(a)Boarding music is played during take off and landing when the IFE system is
switched off.

 

(b)Flashcards (2 types: PCMCIA and Compact Flash) are used for boarding music.

 

(c)3 sets of boarding music are produced every year: 1st set is used in January,
February, July and August, 2nd set is used in March, April, September and
October and 3rd set is used in May, June, November and December.

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(d)Boarding music is 30 minutes long and can range from 3 to 7 tracks depending
on the length of the track.

 

(e)For existing Panasonic PRAM System, 6 flashcards are required per year, based
on 2 duplications for each new variation of boarding music (i.e. 3 variations
produced per year)

 

(f)For Airbus A340-600 iPRAM System, 1 flashcard is needed per aircraft that
holds ALL boarding music for a whole year. Under current practice, the flashcard
is sourced locally by Cathay and Cathay's engineers programme the boarding music
into the flashcards.

 

(g)Requirements for boarding music: it should be non-intrusive, easy listening
and reflect Cathay's branding.

 

Technical Specifications for Audio

 

1.Radio Channels

 

(a)One set of CDs is required for each aircraft and extra sets of CDs are
required as buffer.

 

(b)All CDs should contain mono tracks and there are no stereo tracks. On each
CD, there should be 4 mono tracks.

 

(c)For aircraft equipped with Panasonic eX2 !FE system, the "Radio Channels"
will be run in AOD format. For all other aircraft, the "Radio Channels" will be
run on CD format.

 

(d)The update frequency and channels per track information are detailed below:

 

CD no.  

Channel

no.

  Current Categories  

Programme

Cycle

CD 1ex   4   Hot: HK   Monthly     5   A Musical Journey         6   Mandarin
Zone         7   Chinese All Time Hits     CD 2 ex   8   J-Pop   Monthly     9  
Mumbai Beat         10   Philippine Soundwave         11   Classical Moods    
CD 3 ex   12   Classical Choice   Monthly     13   All Time Hits         14  
Rewind         15   Pop Zone     CD 4 ex   16   Rock   Monthly     17  
Dancescape         18   Easy Moods         19   Jazz     CD sex   20   Serenity
  Bi-monthly     21   Music Special         22   J-Medley         23   Korean
Music Box     CD 6 ex   24   Malay Hits   Bi-monthly     25   Thai Mix    

  

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2.AOD specification

 

(a)Audio Elementary Stream: AES

Layer 1& 2 Audio (MP1MP2 NOT MP3)

Joint stereo/stereo/mono/dual

•Bit rate @ 128 Kbs

Sample Rate @ 44.1KHz

 

(b)Transport stream file format:

 

•PAT PID = OxOO   PMT PID = Ox3F

•PCR PID = Ox30

•Video ES 1PID = Ox30

•Audio ES 1PID=Ox31

Audio ES 1PID = Ox32 OPTIONAL

•Audio ES 1PID=Ox33 OPTIONAL

•Audio ES 1PID=Ox34 OPTIONAL

 

3.Boarding Music specification

 

(a)For the current Panasonic IFE System, PRAM is used. Model is RDA X7673-01 and
RDAX7675-01 which supports 40MB PCMCIA flashcards. All flashcards need to be
encoded by the Panasonic encoder. IFP is required to update the flashcards with
the encoded contents

 

(b)For Airbus A340-600 iPRAM System, the unit is integrated into the Airbus FAP
unit which supports up to 256MB COMPACT FLASH flashcards. The contents are
encoded in MP3 format and put on the flashcard via the KID Compiler tool. IFP is
required to provide the content in a CD for Cathay to update it to the COMPACT
FLASH flashcard on the aircraft.

 

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For Dragonair:

 

Specification of Western Movies

 

1. Overall Strategy for Movies

 

(a)Dragonair aims to present a diverse and interesting range of movies from
Hollywood's blockbusters to popular Asian movies, with content free from
controversial topics touching on political, racial, cultural and religious
issues.

 

(b)The selection includes new releases, popular blockbusters and Asian movies in
multiple languages catering to the airline's diverse demographic mix.

 

(c)Movies are only available on routes over 2 hours 40 minutes flying time.

 

(d)*** movies are offered each month, ***are Hollywood movies, *** are Asian
movies and *** are movies from Disney, i.e. *** movies on inbound flights and
*** on outbound flights.

 

(e)The Hollywood movies are shown on both mainscreen and personal TV while Asian
movies and Disney movies are shown on personal TV only.

 

(f)The Hollywood movies are updated on bi-weekly basis, the Asian movies are
updated on monthly basis while the Disney movies are updated on quarterly basis.

 

(g)For the movies shown on the Japanese routes, they are required to be
duplicated with English and Japanese audio soundtracks to cater for the Japanese
passengers. Chinese subtitles are required.

 

(h)For Western movies, there is English soundtrack with appropriate Chinese
subtitles. For Film Asia movies, there is original language soundtrack with
Chinese and English subtitles.

 

2.Movie Categories

 

(a)A total of *** movies, *** for inbound flights and *** for outbound flights,
are offered each month under the following categories:

 

Categories   Description  

Quantity

Required

Blockbusters  

Showcasing all the action from the biggest

Hollywood blockbusters

  *** Film Asia   Get ahead with this fine selection of the latest Asian movies
  *** Disney   Disney movies for the kids and the whole family   ***

 

3.Specification of Western Movies

 

(a)Please refer to the Video Channel Line-up for details.

 

(b)The quantity shown below is the total number of programmes required every
month for both inbound and outbound flights.

 

   Categories   Language   Subtitles  

Update

Frequency

 

Quantity

per cycle

Blockbusters   English   Chinese   Bi-weekly   *** Disney   English and
Cantonese   N/A   Quarterly   ***

 

(c)Chinese subtitles can be in Traditional Chinese or Simplified Chinese.

 

 

*** Confidential treatment requested.

 

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Specification of Western Short Features

 

1.Overall Strategy for Short Features

 

(a)In view of Dragonair's operating network, the majority of the routes have a
flying time of under 2 hours and 40 minutes. As such, only short feature
programmes will be broadcasted on these routes, resulting in a demand for a wide
variety of quality short feature programmes in the genres of lifestyle, sports,
documentary, popular sitcoms, business and entertainment, etc.

 

(b)For routes less than 2 hours flying time, compilations of 60-minute short
feature programmes are shown on repeating cycles. For routes between 2 hours and
2 hours 40 minutes, compilations of 80-minute programmes are shown. For routes
over 2 hours 40 minutes flying time, movies and compilations of 135-minute are
shown.

 

(c)There is 1 main-screen channel on all classes of the A321 fleet. There are 5
PTV channels on First Class and 1 main-screen channel on Business and Economy
class on the A33R fleet while there are 10 PTV channels on all classes of the
A33A and A33L fleets.

 

(d)All programmes are updated monthly except for those featured in the
mainscreen that they are updated bi-weekly and programmes in Disney & Disney
Channel that they are updated quarterly. The programming is different for
inbound and outbound flights.

 

(e)For SO-minute and 135-minute programming blocks, they are combination of 30-
minute and 60-minute programmes. The number of programmes selected in a
programming block may vary depending on the actual runtime of the programmes
included. Extra fillers may be required to fill up an 80-minute or 135-minute
programming block.

 

(f)The 60-minute and 80-minute short feature programming blocks showing on
main-screen of the A33R and A321 aircraft are updated bi-weekly and they will be
shown on the channel of "On Air TV". The programmes shown on the main-screen
channels cannot be repeated due to the lack of channel choices as well as the
presence of frequent fliers on our regional flights.

 

(g)The language requirements for Western short feature programmes should include
a soundtrack in English with appropriate Chinese subtitles. For Asian short
feature programmes, there should be original languages soundtrack (Cantonese,
Mandarin or Japanese, etc.) with English subtitles.

 

2.Short Feature Categories

 

(a)A total of *** hrs of programmes are offered each month under the following
categories:

 

Categories   Description  

Quantity per

Month

Asian TV

_(Cantonese)

  Lifestyle, travel, and variety shows, documentary, magazine programmes.   ***
hrs Asian TV (Mandarin)   Lifestyle, travel, and variety shows, documentary,
magazine programmes. (Mandarin)   *** hrs Comedy   Sitcoms, popular shows   ***
hrs Discovery   Documentaries about nature, science, history and culture.   ***
hrs Lifestyle   Technological trends, fashion, fine dinning/cooking, travel,
design (e.g. interior, architecture), modern living   *** hrs Sports   Profiles,
classic matches, documentaries from the world of sport   *** hrs Drama  
Dramatic, action, romantic TV hits from US & UK   *** hrs

 

 

*** Confidential treatment requested.

 

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Categories   Description  

Quantity per

Month

Business   Current affairs, documentaries and profiles from a business
perspective.   *** hrs Ent-Magazine   Gossip, news and interviews from behind
the scenes from Hollywood and beyond. Light- hearted Reality TV shows and
contests.   *** hrs

Disney

Channel

  Animation and TV hits for the kids and the whole family (Disney)_   *** hrs

 

3.Specification of Western Short Features

 

(a)Please refer to the Video Channel Line-up for details.

 

(b)The quantity shown below is the total number of programmes required every
month for both inbound and outbound flights.

 

Categories   Language   Subtitles  

Quantity per

Month

Comedy   English   Chinese   *** hrs Discovery   English   Chinese   *** hrs
Lifestyle   English   Chinese   ***hrs Sports   English   Chinese   ***hrs Drama
  English   Chinese   *** hrs Business   English   Chinese   *** hrs
Ent-Magazine   English   Chinese   *** hrs

Disney

Channel

  Cantonese   N/A   *** hrs

 

(c)Chinese subtitles can be in Traditional Chinese or Simplified Chinese.

 

Technical Specification for Western Movies and Western Short Features

 

(a)Specification for Broadcast Channels

 

•NTSC system

•VHS cassettes

•Hi-8 tapes

Stereo broadcast

 

 

*** Confidential treatment requested.

 

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Specification of Audio

 

1.Overall Strategy for Audio

 

(a)Tune in to On Air Radio, Dragonair's hip 16-channel selection of inflight
airwaves for passengers of all cabin classes. With a wide range of premium audio
entertainment showcasing the newest and best of East and West, timeless classics
of rock and jazz, stirring orchestral performances and music from favourite
movies, as well as soothing sounds and mellow melodies to relax with, the
programming strategy of On Air Radio is simply to give the greatest choice of
audio entertainment to Dragonair's passengers.

 

(b)On Air Radio's 16-customised audio channels are available in all cabin
classes on IFE-equipped aircraft. All channels are broadcast in a repeating
cycle of 120 minutes. Of which, 4 channels are presented by DJs.

 

2.Radio Channels

 

(a)There are a total of 16 customised radio channels available in all classes on
all routes. All channels are broadcast in a repeating cycle of 120 minutes.

 

No.  

Channel

name

  Description  

Update

frequency

  Language 1   Canto Pop   Hosted Programme. Includes an artist feature segment
which showcases three tracks from a single artist, plus a review of their
musical history and sometimes an interview.   Monthly   Cantonese 2  

Mandarin

Pop

 

Hosted programme. The hottest

stars from Hong Kong, Taiwan, Mainland China and Asia are featured in this
jam-packed Mandarin pop show featuring all the latest hits!

  Monthly   Mandarin 3  

Chinese

Gold

  Hosted programme with the very best Chinese Gold hits including an hour each
of Cantonese and Mandarin tracks, to take passengers on a musical iournev
throuqh time!   Monthly  

Cantonese

& Mandarin

4   Pop Hits  

Hosted programme. An up-tempo

and fun mix of new and forthcoming releases plus some more established tracks
from the international pop charts.

  Monthly   English 5  

Classical

Moods

  Popular and familiar light classics from the great composers, uninterrupted.
(No presenter)   Monthly   N/A 6   Jazz   A collection of cool, laid-back jazz.
(No presenter)   Monthly   English 7   Rewind  

A programme of 80's to 90's pop or

rock show. (No presenter)

  Monthly   English 8   Easy Moods  

A mellow mix of light contemporary

love songs and ballads from a diverse group of artists. (No presenter)

  Monthly   English 9   Rock   A selection of the best rock in the sky as we
play new and classic music from some of the world's greatest bands. (No
presenter)   Monthly   English 10  

All Time

Hits

 

A programme of favourite hits from

the 50s, 60s and 70s. (No presenter)

  Monthly   English

 

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No.

 

Channel

name

 

 

Description

 

Update

frequency

 

 

Language

11   Dancescape   Get in the beat or simply chill out to these tunes. (No
presenter)   Monthly   English 12   J-Pop  

The latest Japanese Pop music or

New Enka. (No presenter)

  Monthly   Japanese 13  

Korean

Music Box

  Music from the movies,TV and chart-topping artists of Korea. (No presenter)  
Bi-monthly   Korean 14   Thai Mix   A variety of Thai contemporary hits. (No
presenter)   Bi-monthly   Thai 15  

Taiwanese

Favourites

  A great mix of current Taiwanese or Min Nan song, plus recent classics. The
selection of music will have huge appeal to the target audience. (No presenter)
  Bi-monthly   Taiwanese 16  

Chinese

Classical

  An enchanting and captivating mix of traditional Chinese classical music
played on traditional instruments, plus pieces composed by famous Chinese
composers for western orchestras. (No presenter)   Bi-monthly   N/A

 

(b)Each audio channel is 120 minutes in length and has approximately 26 tracks.

 

(c)All channels, except 'Canto Pop', 'Mandarin Pop', 'Pop Hits' and 'Chinese
Gold', are not hosted.

 

(d)The presenters must be suitable for Dragonair's demographics, and should not
have strong accents.

 

(e)Jingles are sometimes used and are permitted.

 

(f)    Presenters usually make reference to Dragonair.

 

(g)A monthly marketing message (i.e. related to promotions, latest news, selling
of the Dragonair's brand) will be provided to the presenter on the 13th of each
month, so that it will be included in each hosted channel's talks, for
programmes to be run 2 months later.

 

(h)Presenters may conduct interviews with celebrities or guests where
appropriate.

 

(i)Method of recording is flexible as long as the end product is suitable for
inflight listening. They can be recorded either on computer or in studio.

 

3.Boarding Music

 

(a)Boarding music is played on all flights during take off and landing for
passengers to relax and enjoy. Dragonair commissioned local musician Johnny Yim
to compose five exclusive tracks of ambient music representing five unique
aspects of our region's cultures.

 

(b)Dragonair commissioned the exclusive composition of the 5 instrumental" music
pieces for use as ambient music and/or any purposes as it desires.

 

(c)Since the Masters for the boarding music have been produced, IFP is only
required to update and encode the flashcards and cassettes according to this
schedule.

 

4.Technical Specifications

 

(a)Broadcast specifications

 

One set of CDs is required for each Aircraft in the Dragonair Fleet and extra
sets of CDs are required as buffer. 

•All CDs should contain mono tracks and there are no stereo tracks. On each CD,
there should be 4 mono tracks.

 

CX and KA Western Programming Agreement - IFP Final ***Page 49 of 57

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(b)Boarding Music Specifications

 

A combination of PRAM/BGM Reproducers that supports flashcards and cassette
tapes is used across the Dragonair's fleet of A330, A321 and A320 aircraft. The
models that support flashcards are RDAX7675-51 and RDAX7675-01. The models that
support cassette tapes are RDAX7271KA01, RDAX7271ZZZZ and RDAX7271CX01.

•All flashcards and cassette tapes need to be encoded by the Panasonic encoder.
IFP is required to update the flashcards and cassette tapes with the encoded
contents

•There are 2 storage formats for the Boarding Music. Below is a summary of the
BGM Source and storage formats of the respective aircraft:

 

Fleet Boarding Music Source

 

A330   Flashcard   Cassette   A320   Flashcard   Cassette   A321   Flashcard HYA
      Yes   HSD       Yes   HTD   Yes HYB       Yes   HSE       Yes   HTE   Yes
HYD       Yes   HSF       Yes   HTF   Yes HYE       Yes   HSG       Yes   HTG  
Yes HYF       Yes   HSH       Yes   HTH   Yes HYG   Yes       HSI       Yes  
HTI   Yes HYH   Yes       HSJ       Yes         HYI   Yes       HSK   Yes      
      HYJ   Yes       HSL   Yes             HYO   Yes       HSM   Yes          
  HWF   Yes       HSN   Yes             HWG   Yes                         A330  
Flashcard   Cassette   A320   Flashcard   Cassette   A321   Flashcard HWH   Yes
                        HWI   Yes                         HWJ   Yes            
            HWK   Yes                        

 

No of cassette based a/c                 12

No of flashcard based a/c               21

 

(c)Boarding Music Update Schedules & Process

 

•Cassette tape-based aircraft - In view of the durability of the cassettes and
to pre-empt wear and tear, cassettes are updated on a bi-monthly basis, in each
ODD month.

•Flashcard-based aircraft - As the boarding music is stored digitally in the
system memory, the boarding music only needs to be updated whenever the- actual
boarding music is required for change.

•Due to the Panasonic IFE systems' proprietary encoding requirements, the
boarding music update for flashcards and cassettes must be performed at a
facility equipped with the relevant Panasonic encoder hardware and software.

 

CX and KA Western Programming Agreement - IFP Final ***Page 50 of 57

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SCHEDULE 2- PROGRAMMING GUIDELINES

 

For Video Programmes

 

1.For Western Movies, wherever possible, the threatical (unedited) version is
preferred.

 

2.For Western Short Features, only episode-based programmes should be considered
and TV serial should not be selected as long as programme is offered as
broadcast channels instead of AVOD.

 

3.Programmes selected must not contain the following scenes or elements, or the
related scenes or elements must be edited out :

 

3.1Full frontal nudity

 

3.2Derogatory portrayal of China or Chinese citizens

 

3.3Possession I Satanism

 

3.4Active promotion of other airlines

 

3.5Explicit sex scene, including special sexual orientation

 

3.6Extremely strong language and swearing

 

3.7Extensive nudity

 

3.8Extreme violence, including extreme scenes of blood and gore

 

4.Attention must be brought to Cathay if programmes contain the following
elements:

 

4.1Scenes or reference to aircraft crashes, hijacks, disasters, and
hostage-taking

 

4.2Controversial political issues, including criticism of Communist doctrine or
Government

 

4.3Religious content, including scenes disrespectful to sacred animals

 

4.4Containing explicit reference to Cathay Pacific or other airlines

 

5.For Western Movies, movie rating (e.g. R, PG-13) from terrestrial release must
be provided for reference. Attention must be brought to the Airline if any NC-17
is recommended.

 

6.Applicable warnings and intensity levels must be indicated for each movie
during title selection recommendation:

 

6.1Warnings

 

  A: Strong adult themes - Including drug use, criminal acts, etc.         C:
Aircraft incidents           L: Strong language           N: Nudity           P:
Political themes           R: Religious content           S: Sexual content    
      V: Violence, blood or gore  

 

6.2Intensity Levels

 

•The Intensity levels of each warning should be indicated by High (H), Medium
(M), or Low (L).

 

•e.g. For a TV programme with a high intensity of strong language, medium
violence, and low sexual content, the warnings should be indicated as followed:
L (H), V (M), S (L)

 

CX and KA Western Programming Agreement - IFP Final ***Page 51 of 57

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For Audio Programmes

 

1.Audio content must not contain:

 

1.1Offensive swearing

 

1.2Religious criticism

 

1.3Controversial political issues

 

1.4Interviews should not be overtly promotional

 

1.5Reference to aircraft disasters or crashes

 

1.6Promotion of competitive airlines

 

1.7Derogatory portrayal of China or Chinese citizens

 

1.8Presenters or interviewees with language and dialect, which may be hard to
follow,for example, Irish,Scottish, Afro-Caribbean.

 

CX and KA Western Programming Agreement - IFP Final ***Page 52 of 57

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SCHEDULE 3 -CONTACT AND DELIVERY DETAILS

 

Contact Information of the Airline:

 

8/F North Tower

Cathay Pacific City

8 Scenic Road

Hong Kong International Airport

Lantau, Hong Kong

 

Contact Person:

Mr. Clement Au

Manager Inflight Communication and Entertainment

Tel:        (852) 2747 5148

Fax:       (852) 2141 5148

EmaiI:   Clement_au@cathaypacific.com

 

Ms. Eva Chan

Assistant Purchasing Manager - Marketing

Tel:        (852) 2747 4187

Fax:       (852) 21414187

Email:    eva_chan@cathaypacific.com

 

Contact Information of IFP:

 

15 Stukeley Street

London WC2B

5LT United

Kingdom

 

Contact Person:

Ms. Janet Winstanley

Client Services Manager

Tel:        (44) 20 7400 0733

Fax:        (44) 20 7400 0745

Email:    janet.winstanley@inflightproductions.com

 

Delivery Address for Promotional Materials:

 

ACP Magazines Asia Limited

Suite 604-605

625 King's Road

North Point, Island East

Hong Kong

 

Contact Person:

Elisabeth Attwood

Entertainment editor

Tel:       (852) 3921 7051

Fax :      (852) 39217099

Email:   eattwood@acpmagazines.com.hk

 

CX and KA Western Programming Agreement - IFP Final ***Page 53 of 57

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Delivery Address for Video Cassettes:

 

For Cathay:

Cathay Pacific Airways

C/0 HAECO

2/F, 80 South Perimeter Road

Hong Kong International Airport

Lantau, Hong Kong

 

Contact Person:

Mr. Frankie Leung

Tel:      (852) 2787 6336

Fax:     (852) 2767 6852

Email: ow.leung@haeco.com

 

For Dragonair:

Dragonair

C/O Cabin Services of

China Aircraft Services Ltd.

4N505 Passenger Terminal Building

1Cheong Hong Road

Hong Kong International Airport

Lantau, Hong Kong

 

Contact Person:

Mr. Patrick Chan

Tel:     (852) 2261 2311

Fax:    (852) 2261 2312

Email: patrick.chan@casl.com.hk

 

Delivery Address for Audio COs:

 

For Cathay:

Cathay Pacific Airways

C/0 HAECO

2/F, 80 South Perimeter Road

Hong Kong International Airport

Lantau, Hong Kong

 

Contact Person:

Mr. Frankie Leung

Tel:     (852) 2787 6336

Fax:    (852) 2767 6852

Email: ow.leung@haeco.com

 

For Dragonair:

Cathay Pacific Airways

C/0 HAECO

2/F, 80 South Perimeter Road

Hong Kong International Airport

Lantau, Hong Kong

 

Contact Person:

Mr. Victor Kwan

Tel:    (852) 2767 6776

Email: victor.kwan@haeco.com

  

CX and KA Western Programming Agreement - IFP Final ***Page 54 of 57

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Delivery Address for Boarding Music Flashcard:

 

Cathay Pacific Airways

Product Department

8/F North Tower

Cathay City

8 Scenic Road

Hong Kong International Airport

Lantau, Hong Kong

 

For Cathay:

Contact Person:

Ms. Mimi Chan

Tel:     (852) 2747 5345

Fax:    (852) 2141 5345

Email: mimi_chan@cathaypacific.com

 

For Dragonair:

Contact Person

Ms. Mun Wong

Tel:     (852) 2747 4133

Fax:    (852) 2141 4133

Email: siu_mun_wong@cathaypacific.com

 

Delivery Address for Digital Media for Media Integration for Cathay:

 

Inflight Productions Limited

15 Stukeley Street

London WC2B

SLT United

Kingdom

 

Contact Person:

Mr. Marc Fegredo

AVOD Coordinator

Tel:     (44) 207 400 8582

Fax:    (44) 207 400 0707

Email: marc.fegredo@inflightproductions.com

 

Delivery Address for the Airline to return the cassette of Western Movies for
destruction:

 

Inflight Productions Inc

Suite 201,615 N Nash St.

El Segundo, CA 90245

USA

 

Contact Person:

Ms. Sharon Engelenburg, Operations Manager

Tel:    (1) 310 414 6900 ext 114

Email: sharon.engelenburg@inflightproductions.com

  

CX and KA Western Programming Agreement - IFP Final ***Page 55 of 57

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SCHEDULE 4- BUDGET FOR ***

 

(To be inserted)

 

***

 

 

*** Confidential treatment requested.

 

CX and KA Western Programming Agreement - IFP Final ***Page 56 of 57

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SCHEDULE 5- KEY PERFORMANCE INDICATORS

 

(To be inserted)

 

CX and KA Western Programming Agreement - IFP Final ***Page 57 of 57

 

tsackground o/26/2UU

  

Key Performance Indicators - IFP Production Services

 

Evaluation Period:

 

Overview

The Key Performance Indicators are a set of recognized parameters by which CX
measures the service providers performance

 

Frequency

The basis of the Key performance indicators outlined in this document will be
completed every 6 months as part of the

Supplier Performance Evaluation Process. The reviews are likely to take place in
July and January.

 

The KPI's will be evaluated on an annual basis to ensure they accurately reflect
appropriate parameters for measurement.

 

Scoring Panel

In response to the evaluation process key members of CX who interface with the
service provider on a regular basis will complete the evaluation sheet judging
the service provider against each of the 6 constructs outlined and will give a
score ranging from 1 - 5 as detailed below.

 

Scoring Mechanism

Each person scoring the performance of the service provider will enter a "1"
under the appropriate score, I.e. 5, 4, 3, 2, or 1 for each statement. The KPI
spreadsheet will automatically calculate the overall scores.

 

Totally Satisfied/Far exceeds expectations 5 Mostly Satisfied/Always meets but
at times exceeds expectations 4 Somewhat Satisfied/meets expectations 3
Dissatisfied/below expectations 2 Fail 1

 

Comments will be provided during the review process for each of the 6 sections.
Where a "1" or "2" has been awarded, specific comments related to that
particular score will be detailed and shared with the service provider.

  

Schedule 5a - Key Performance IndicatorsPage 1 of 9

 

 

••••,ovation

 

360 Degree Feedback

 

Supplier: Inflight Productions Limited

 

Duration: _________________

 

The aim of 360 degree feedback is for the supplier to provide feedback on Cathay
Pacific's performance. It should focus on ways in which an improvement in
Cathay's way of working could help the supplier perform the role for which they
have been appointed more efficiently. The feedback is meant to be constructive
and will help identify areas for Cathay to focus in order to improve the working
relationship and efficiency of the supplier.

 

Scores:

5:     Excellent

4:     Good

3:     Average

2:     Development Needed

1:     Poor / Disappointing

 

Please underline and bold the score for the evaluation period, e.g. 2.

 

    1.   Communication SCORE     •     Lines of communication are clearly
defined and effective (i.e. work in practice) 1 2 3 4 5     •     Levels of
authority and decision making power are clearly understood. 12 3 4 5     •    
Role responsibilities within the IFE team and APD team are clearly set out and
defined. (Does confusion arise as to who performs which role?) 1 2 3 4 5     •
    Important information told to one member of CX is disseminated to the
correct people. 1 2 3 4 5     •     A coherent message is given from all contact
points within CX (are there conflicting messages?) 1 2 3 4 5     •     Deadlines
and timescales are clearly communicated 1 2 3 4 5     Overall Score 12345    
Comments           2.   Personnel and working relationship SCORE     •    
People are quick to respond to queries and emails. 1 2 3 4 5     •     Approvals
on programming suggestions are timely. 12345     •    Cx personnel are easy to
deal with, professional, yet helpful and approachable. 12345     •    Cx
personnel have adequate knowledge of IFE technical issues required to perform
their role effectively? 12345    

 

Schedule Sb - IFP Feedback to Cathay

 

 

 

 

 

Overall Score 12345     Comments           5.   Information sharing SCORE     • 
   The format and analysis of survey results and AVOD usage data is easy to
understand and well presented. 1 2 3 4 5     •      CX provides regular updates
with regards information related to Cathay, such as new routes, new initiatives
etc.     1 2 3 4 5 •      Cx provides correct duplication volumes in sufficient
time.       OveraII Score 1 2 3 4 5     Comments 12345         6.   Third
Parties SCORE     •     Cx helps to ensure that third party suppliers integrate
well. 1 2 3 4 5     •    Cx understands the challenges of working with other
third parties. 1 2 3 4 5     •    Cx is effective at coordinating themes and
ideas among all IFE suppliers. 1 2 3 4 5     •    Cx helps to ensure that third
party suppliers meet their deadlines. 1 2 3 4 5     Overall Score 12345    
Summary      

 

Schedule 5b - IFP Feedback to Cathay

 

 

 

 

AGREEMENT BETWEEN

CATHAY PACIFIC AIRWAYS LIMITED, HONG KONG DRAGON AIRLINES LIMITED AND INFLIGHT
PRODUCTIONS LIMITED

 

For the Supply of Programming and Production Services

for Inflight Entertainment (Western Programmes)

 

AGREEMENT AMENDMENT

 

This AGREEMENT AMENDMENT ("Amendment") is dated *** and Is made between Cathay
Pacific Airways Limited ("Cathay"), Hong Kong Dragon Airlines Limited
("Dragonair") and Infilght Productions Limited ("IFP") to amend the AGREEMENT
("Agreement") which was made on ***, as amended by Agreement Amendment which was
made on *** and the extension notice letter which was made on ***.

 

RECITALS

 

The parties agree to extend the Term of the Agreement for *** months and the
Term will be further renewed for another *** subject to Cathay's/Dragonalr's
discretion.

 

The definitions in the Agreement are incorporated by reference into this
Amendment,and shall be deemed to have the same meanings as those ascribed to
them In the Agreement unless otherwise set forth herein.

 

NOW, THEREFORE,the parties agree this Agreement Amendment to supersede the
previous extension letter dated *** and to amend the Agreement as follows:

 

1.At the end of the Term of the Agreement at ***, the Term shall be extended for
***. Subject to written notice from Cathay to IFP at least three (3) months
prior to the expiry of the Agreement, the Agreement shall be further extended
for ***.

 

2.The Regional AVOD Movie License rates shall be reduced starting from *** till
***,as per the commercial proposal sent from IFP to Cathay on ***.

 

Distributor  

LH/PTV Rate

(averaqe over 3 months)

 

Regional AVOD Rate

(averaqe over 3 months)

Disney   ***   *** Paramount   ***   *** Sony   ***   *** Universal   ***   ***
Twentieth Century Fox   ***   *** Warner Brothers   ***   *** Cincsky   ***  
*** ElM   ***   *** Jaguar   ***   *** TSI   ***   ***

 

3.The following Service Costs shall be amended starting from *** till *** as
stated in *** commercial proposal:

 

3.1The Recall Fees shall be covered by *** for the New Release titles booked by
Cathay within the first 3 months of release.      3.2 The unit rate for VHS
Duplication Cost shall be aligned to *** for all lengths up to 150 minutes at
the Lab. Aero for both Cathay and Dragonair:

 

    VHS Tape 135-minute   *** 90- minute   *** 60-minute   ***

 

 

*** Confidential treatment requested.

 

 

 

 

3.3The unit rate for V8 Duplication Cost shall be aligned to *** at Lab. Aero
for Dragonair:

 

    V8 Tape 135-mlnute   *** 90-minute   ***

 

3.4The unit rate for BGM Flashcard Duplication Cost shall be reduced from ***
for Dragonair.

 

4.All other terms and conditions of the Agreement shall remain In full force and
effect.

 

IN WITNESS whereof the Parties hereto have caused this Agreement to be duly
executed by their authorised representatives the day and year first above
written.

 

Signed for   Witnessed by: CATHAY PACIFIC AIRWAYS LTD. by:           /s/ Gloria
Chow-Vanderwell   /s/ Penny Chan Name: Gloria Chow-Vanderwell   Name: Penny Chan
Job Title: Product Manager   Job Title: Assistant Purchasing Manager Cathay
Pacific Airways Ltd.   Cathay Pacific Airways Ltd.       Date: ***   Date: ***  
    Signed for   Witnessed by: HONG KONG DRAGON AIRLINES LTD.     by its duly
authorized agent:           /s/ Gloria Chow-Vanderwell   /s/ Penny Chan Name:
Gloria Chow-Vanderwell   Name: Penny Chan Job Title: Product Manager   Job
Title: Assistant Purchasing Manager Cathay Pacific Airways Ltd.   Cathay Pacific
Airways Ltd.       Date: ***   Date: ***       Signed for   Witnessed by:
INFLIGHT PRODUCTIONS LTD.     by:           /s/ Roberts G. Hamler   /s/ Suzi
Hennessy Name: Roberts G. Hamler   Name: Suzi Hennessy Job Title: CEO   Job
Title: VP Operations Inflight Productions Limited   Inflight Productions Limited
      Date: ***   Date: ***

 

 

*** Confidential treatment requested.